Orthofix Medical (OFIX) TD Cowen 46th Annual Health Care Conference summary

Strategic transformation and business reset

• Leadership overhaul and operational restructuring addressed fragmented channels and capital constraints, setting the stage for sustainable, profitable growth over the past two years.

• Commercial footprint optimized, with U.S. spine sales now concentrated among top 30 distributors, driving improved execution and predictability.

• Debt refinanced in November 2024, lowering interest rates, improving terms, and increasing liquidity to support long-term growth.

• Innovation pipeline ignited, with over a dozen product launches planned in the next 18 months, including Verata Open and MIS platforms.

• Eight consecutive quarters of EBITDA margin expansion, with cash burn reduced from over $100 million to near breakeven by 2025.

Growth outlook and financial targets

• Targeting 6.5%-7.5% net sales CAGR from 2026 to 2028, with mid-teens adjusted EBITDA margin by 2028, up from just over 10.5% in 2025.

• Growth to be driven by distributor optimization, new product launches, and tailwinds from prior restructuring.

• Top 30 distributors grew 27% over the trailing 12 months, providing a strong foundation for future sales.

• CapEx expected to rise to $45-$50 million in 2026 to support launches and margin improvement initiatives, up from $35 million in prior years.

• Legal expenses related to former leadership expected to decline, further improving free cash flow.

Segment highlights and market positioning

• Bone Growth Therapy (BGT) holds over 50% market share in spine and is #2 in the $250 million fracture subsegment, with cross-selling opportunities supporting other business lines.

• BGT is a high-margin business, providing funding for growth in spine and Limb Reconstruction; regulatory headwinds are minimal and short-term.

• Limb Reconstruction rebranded and focused on four clinical categories, targeting a $2.6 billion market, with U.S. business growing 16% last year.

• Recent launches (TrueLok Elevate, FitBone) and next-gen automation expected to drive double-digit U.S. growth and higher contribution margins as scale increases.

• Enabling technology franchise (7D navigation) offers fast, accurate, radiation-free navigation with flexible acquisition models, seeing 30% increase in placements and strong pull-through.