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    KIDS
    Earnings call· Jun 2026(Q2 FY26)

    ORTHOPEDIATRICS Q2 FY26 earnings call KIDS

    Aug 4, 2026 Source

    Executive summary

    OrthoPediatrics Q2 FY26 — Record Patient Impact and Adjusted EBITDA, Raised Full-Year Revenue Guidance

    OrthoPediatrics achieved record patient impact and adjusted EBITDA in Q2 FY26, driven by strong performance in trauma and deformity and OPSB, alongside healthy international growth. Management raised full-year revenue guidance, expressing confidence in their strategy and the early contributions from their multi-year product launch super cycle, which is expected to drive sustained growth, margin expansion, and improved capital efficiency. The company is focused on balancing profitable revenue growth with disciplined capital allocation, leading to a significant improvement in free cash flow usage.

    Highlights

    5

    • Helped nearly 46,000 children in Q2 FY26, a new record, increasing cumulative impact to 1.4 million kids.

    • Revenue increased 15% year-over-year to $70.5 million in Q2 FY26.

    • Adjusted EBITDA reached a record $6.8 million in Q2 FY26, up from $4.1 million in Q2 FY25.

    • Free cash flow usage reduced by $11 million, or 78%, versus the prior year in Q2 FY26.

    • Full-year revenue guidance raised to a range of $265 million to $269 million, representing 12% to 14% growth.

    Concerns

    2

    • Scoliosis revenue declined 9% year-over-year in Q2 FY26, primarily due to zero 7D unit sales and significantly lower OUS set sales.

    • Non-GAAP net loss per share increased to $0.26 in Q2 FY26, compared to $0.11 in Q2 FY25, mainly due to unrealized non-cash foreign exchange losses.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $265M-$269M
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    approximately $25M
    high materiality
    High
    Full-year 2026 Set Deployment
    approximately $10M
    medium materiality
    High
    Full-year 2026 Free Cash Flow
    break-even or better
    high materiality
    High
    H2 2026 Free Cash Flow
    positive
    high materiality
    High
    3P Small-Mini Full Market Release
    early 2027
    medium materiality
    High
    eLLi First Inpatient Procedures
    late 2026
    medium materiality
    High
    Veraxis First Cases
    early next year
    low materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Total Company
    Record revenue for Q2 FY26.
    		$70.5M15%——
    Trauma & Deformity (T&D)
    Primary driver of total company performance, driven by increased sales across core implant systems, share gains, procedure demand, and early contributions from new platforms.
    Early contributions from new platform launches, including 3P HipSmall beta release and first 3P Small-Mini surgical cases performed
    		$52.6M26%——
    Scoliosis
    Reported revenue decline due to zero 7D unit sales and lower international set sales in Brazil, but underlying implant sales were strong and summer schedule extended into Q3.
    Mid-teens implant growth (excluding timing-related items)Zero 7D unit salesSignificantly lower OUS set sales124 surgeons trained on VerteGlide
    		$16.9M-9%——
    OPSB (Specialty Bracing)
    Outstanding quarter, major strategic catalyst, supported by strong clinic execution, same-store growth, volume growth, and new product introductions.
    Adoption of DF2 in over 150 children's hospitalsModular hip brace portfolio progressingmacu4 launchedTRAXIO Halo Gravity Traction System progressingTractorFIX pending launch
    		—20%+——
    International
    Driven by strong execution and continued demand for pediatric-specific technologies, with structural improvements in Brazil contributing.
    Record performance in EuropePartially offset by set sales timing in BrazilBenefiting from EU MDR approvals for T&D portfolio, scoliosis products, and external fixation devices
    		$15.7M22%——
    U.S.
    Represents 78% of total revenue, driven by strong performance in trauma and deformity and OPSB.
    		$54.8M14%——
    Sports Medicine and Other
    Compared to $0.9 million in the prior year period.
    		$1.0M———

    Operational metrics

    17
    Children helped (Q2)
    46,000new record
    Q2 FY26

    Most meaningful performance metric, representing patient impact.

    Children helped (cumulative)
    1.4M
    Q2 FY26 end

    Cumulative patient impact since inception.

    Gross profit margin
    74%up from 72% in Q2 FY25
    Q2 FY26

    Improvement driven by favorable product mix.

    Total operating expenses
    $56.4M+3% YoY ($1.8M increase)
    Q2 FY26

    Managed growth in operating expenses.

    Sales and marketing expenses
    $21.3M+11% YoY ($2.2M increase)
    Q2 FY26

    Increase driven by sales-related activities.

    General and administrative expenses
    $32.8M+8% YoY ($2.4M increase)
    Q2 FY26

    Increase primarily due to personnel supporting growth initiatives.

    Research and development expenses
    $2.3Mvs $2.2M in Q2 FY25
    Q2 FY26

    Consistent R&D investment.

    Total other expense
    $2.9Mvs $3.6M income in Q2 FY25
    Q2 FY26

    Primarily due to foreign exchange rate fluctuations.

    GAAP net loss per share
    $0.30vs $0.30 in Q2 FY25
    Q2 FY26

    Consistent GAAP net loss per share.

    Non-GAAP net loss per share
    $0.26vs $0.11 in Q2 FY25
    Q2 FY26

    Increased primarily due to FX impact.

    Adjusted EBITDA
    $6.8Mvs $4.1M in Q2 FY25
    Q2 FY26

    Record adjusted EBITDA for the company.

    Cash, short-term investments, and restricted cash
    $47.9M
    Q2 FY26 end

    Balance at the end of the quarter.

    Term loan availability
    $20M
    Q2 FY26 end

    Remaining available under term loan.

    Set deployment
    $2.9Mvs $4.6M in Q2 FY25
    Q2 FY26

    Disciplined set deployment focused on high-return systems.

    DF2 adoption
    150
    Q2 FY26

    DF2 is surpassing performance expectations and quickly becoming the new standard of care.

    OPSB clinics
    45+
    Q2 FY26

    Network of clinics continues to expand.

    VerteGlide surgeons trained
    124
    Q2 FY26

    Additional training completed for the VerteGlide system.

    Industry KPIs

    9
    MetricValueDetails
    Pricing realized price—
    New product launch ramp—
    Procedure volume growthstrong
    FCF conversion leverage guidanceFCF usage: $3.1M; FCF guidance: break-even or better; Adjusted EBITDA guidance: ~$25M; Revenue guidance: $265M-$269MUSD
    Installed base system placementsSet deployment: $2.9M; 7D units: 0USD (set deployment), units (7D)
    Segment franchise organic growthT&D: 26%; OPSB: 20%+; International: 22%; Scoliosis: -9% (reported), mid-teens (implants only)%
    Consumables recurring revenue mix—
    Sales force commercial capacity build—
    Pivotal trial clinical evidence milestones—

    Product announcements

    11
    ProductTypeDetails
    3P Hip systemmilestone
    3P Small-Minilaunch
    PNP Retrograde and PNP Skeletal Dysplasiaroadmap
    DF2milestone
    Modular hip brace portfoliolaunch
    macu4launch
    TRAXIO Halo Gravity Traction Systemmilestone
    TractorFIXroadmap
    VerteGlidemilestone
    eLLiroadmap
    Veraxisroadmap

    Deals & partnerships

    2
    OSSIOExclusive distribution agreement

    Brings bio-integrative metal-free fixation technology to children's hospitals nationwide, leveraging the same commercial model as existing implants. Expands treatment options and complements the 3P Small-Mini product launch.

    Brazilian distributorPurchase of one of their Brazilian distributors

    Made structural improvements in Brazil, steadily improving cash collection, normalizing ordering patterns, and supporting additional growth and market penetration over time.

    Risks & headwinds

    4
    Scoliosis revenue decline due to specific timing-related itemsQ2 FY26

    -9% YoY for Q2 FY26

    Mitigation: Underlying implant sales grew mid-teens; strong summer schedule extending into Q3; new product launches (VerteGlide, eLLi) expected to drive future growth.

    Zero 7D unit sales impacting scoliosis growthQ2 FY26

    Zero units sold in Q2 FY26 (compared to multiple units in prior comparable period)

    Mitigation: Expect to see some 7D sales throughout the balance of the year and into next year; management is confident in overall guidance despite this impact.

    Significantly lower OUS set sales in scoliosis (Brazil)Q2 FY26

    Not quantified, but noted as 'significantly lower'

    Mitigation: Balancing cash collections with demand; managing business for profitable revenue growth; structural improvements in Brazil (distributor acquisition) improving cash collection and ordering patterns.

    Unrealized non-cash foreign exchange rate differencesQ2 FY26

    $2.9M total other expense (vs $3.6M income in Q2 FY25)

    Mitigation: None explicitly stated; inherent in international business operations.

    What to watch in Q3 FY26

    5

    Full-year revenue guidance

    Q3 FY26 earnings call
    Current$265M-$269M (12%-14% growth)
    TargetReaffirmed or raised

    Why it matters

    Indicates continued strong performance and the impact of the super cycle on overall company growth.

    Accordingly, we are raising our full year guidance to a range of $265 million to $269 million, representing 12% to 14% growth.

    Q&A highlights

    7

    Why is the full-year guidance only 13% growth despite strong Q2 performance and positive momentum?

    Management stated the guidance reflects an appropriate level of conservatism, acknowledging business seasonality and timing-dependent revenue streams like capital equipment and international stocking distributors. They expressed confidence in achieving the guidance and potentially over-delivering.

    “I think we continue to apply an appropriate level of conservatism. And as we continue to execute through the second half of the year, we'll feel more confident, obviously, in raising that in the third quarter and then hopefully again in the -- and over-delivering again in the fourth quarter.”

    asked by Frederick Wise · answered by Fred Hite

    2 min read6 chapters

    Detailed Narrative

    01

    Innovation Super Cycle Driving Future Growth

    OrthoPediatrics is in the early stages of a multi-year product launch super cycle, which is expected to be a significant driver of growth, profitability, and free cash flow. These new technologies, spanning all parts of the business, offer stronger economics with higher ASPs, higher gross margins, and faster return on capital. While early contributions were seen in Q2 FY26, the full impact is anticipated over the next several quarters and years, providing durable growth.

    02

    Strong Trauma & Deformity Performance

    The Trauma & Deformity (T&D) business delivered exceptional 26% year-over-year growth in Q2 FY26, driven by increased sales across core implant systems, continued share gains, and robust procedure demand. Early contributions from new platforms like 3P Hip are building, with meaningful set deployment occurring late in June. The 3P Small-Mini system also initiated a small beta release with positive early clinical feedback, with full market release expected in early 2027.

    03

    OPSB Business Continues Robust Expansion

    The specialty bracing (OPSB) business once again delivered outstanding growth of over 20% in Q2 FY26, serving as a major strategic catalyst. This growth is fueled by strong clinic execution, same-store growth, volume expansion, and new product introductions from the super cycle, such as DF2, the modular hip brace portfolio, and macu4. The TRAXIO Halo Gravity Traction System is also progressing, contributing meaningfully to both revenue and profitability.

    04

    Scoliosis Business Undercurrents Remain Strong

    Despite a reported 9% decline in scoliosis revenue in Q2 FY26 due to zero 7D unit sales and significantly lower international set sales in Brazil, the underlying business fundamentals remain robust. Scoliosis implant sales grew in the mid-teens, supported by a strong summer surgical schedule extending into Q3. The early adoption of VerteGlide is positive, and the eLLi smart implant is on track for first inpatient procedures in late 2026, positioning the segment for accelerated future growth.

    05

    International Growth and EU MDR Impact

    International revenue grew 22% in Q2 FY26, highlighted by record performance in Europe. This growth is benefiting from EU MDR approvals for the T&D portfolio, scoliosis products, and external fixation devices, which are providing broader access to European markets. In Brazil, structural improvements, including the acquisition of a distributor, are steadily improving cash collection and normalizing ordering patterns, supporting future market penetration.

    06

    Financial Inflection Point Achieved

    OrthoPediatrics has reached an inflection point in its financial trajectory, demonstrating sustained revenue growth, improved profitability, and dramatically reduced cash usage. The company achieved a record adjusted EBITDA of $6.8 million and reduced free cash flow usage by 78% year-over-year. This disciplined capital allocation and focus on higher-quality revenue streams position the company to achieve positive free cash flow in H2 2026 and break-even or better for the full year.

    AI-generated summary of the company’s earnings call. Not investment advice.