OrthoPediatrics (KIDS) TD Cowen 46th Annual Health Care Conference summary

Financial and operational highlights

• Achieved strong free cash flow in Q4, with $10 million positive FCF, marking the first quarter of positive free cash flow and nearly doubling EBITDA on an annualized basis.

• Guidance for 2026 includes 11%-13% top-line growth, $25 million in positive adjusted EBITDA, and at least break-even free cash flow.

• Inventory deployment is expected to decrease to $10 million in 2026 from $17 million in 2025, reflecting improved efficiency and asset utilization.

• International growth, especially in Europe and Latin America, exceeded expectations in Q4 and is projected to remain strong in 2026, aided by recent EU MDR approvals.

• Focus on balancing top-line growth with profitability and working capital improvements, particularly in international markets.

Business segment performance and strategy

• Trauma & Deformity (T&D) business is foundational, with over 40 systems in major pediatric centers globally and a benign competitive landscape due to regulatory hurdles for competitors.

• New product launches in T&D, including the 3P Hip System and upcoming Small-Mini and Knee/Femur systems, are expected to drive a "super cycle" of growth, with at least one major system launch annually.

• Specialty bracing (OPSB) business is growing over 20% annually, with a $500 million TAM and significant runway as market penetration expands from 20 to 80 target markets.

• OPSB offers higher contribution margin due to lower selling costs and minimal capital deployment, supporting aggressive expansion.

• Scoliosis segment, about 25% of global revenue, is gaining share with innovative products like VerteGlide and RESPONSE Rib, targeting underserved early onset scoliosis markets.

Competitive positioning and differentiation

• Pediatric focus creates a unique market position, with limited direct competition and high barriers to entry due to regulatory and portfolio requirements.

• Product development cycles are long, with less frequent need for generational upgrades compared to adult ortho or spine markets.

• The company is viewed as indispensable by pediatric orthopedic surgeons and hospitals, offering a comprehensive portfolio that is difficult for competitors to replicate.

• Synergies between implant and bracing businesses deepen customer relationships and drive cross-portfolio adoption.

• Strategic focus on organic growth, operational efficiency, and capital discipline underpins long-term profitability and market leadership.