• Net Sales: $215.7 million in Q4 2024, representing 8% year-over-year growth on a constant currency basis.
• Adjusted EBITDA: $23.9 million in Q4, with 130 basis points of margin expansion.
• Free Cash Flow: $15.2 million in Q4 and $21.1 million in the second half of 2024.
• Cash Balance: Approximately $85.7 million at the end of Q4, including restricted cash.
• Spine Fixation Revenue: Grew 12% in the USA, driven by new product launches and distributor network expansion.
• Bone Growth Therapies Revenue: Increased by 9% to $63.9 million in Q4.
• Orthopedics Revenue: Grew 18% globally to $35.8 million in Q4, with 21% growth in the USA.
• 2025 Guidance: Expected net sales of $818 million to $826 million, with non-GAAP adjusted EBITDA of $82 million to $86 million.
• Gross Margin: Expected to be approximately 71% for 2025.
• Operating Expenses: Expected to decrease by approximately 100 basis points in 2025.

• Warning! GuruFocus has detected 9 Warning Signs with OFIX.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Orthofix Medical Inc (NASDAQ:OFIX) achieved a record-setting year in 2024, with significant growth across all major product lines.
• The company reported an 8% year-over-year growth in net sales for Q4 2024, reaching $215.7 million.
• Orthofix's Bone Growth Therapy business experienced a record year, with a 9% growth in Q4, driven by new customer conversions.
• The company successfully expanded its U.S. spinal fixation business, growing more than double the market growth rate.
• Orthofix improved its financial strength with $21 million in positive free cash flow in the second half of 2024 and negotiated a new term loan with better terms.

Negative Points

• Orthofix Medical Inc (NASDAQ:OFIX) decided to discontinue the M6-C and M6-L artificial disc product lines, which have been a headwind to the company's top-line growth.
• The company faces a $4 million negative impact from foreign currency fluctuations in 2025.
• Orthofix anticipates variability in growth rates due to the timing and volume of stocking distributor and tender orders.
• The company expects Q1 2025 to be slightly below the low end of its full-year net sales growth guidance due to timing issues.
• Orthofix is sunsetting non-core orthopedic products in the U.S. that do not align with its strategic focus, which may impact short-term sales.

Q & A Highlights

Q: Why did Orthofix decide to discontinue the M6 product line despite ongoing studies? A: Massimo Calafiore, President and CEO, explained that the decision was based on a strategic review of the product portfolio. The declining demand for M6 and a renewed focus on spine deformity led to the decision. The company aims to start 2025 with a stronger growth trajectory by reallocating resources to more promising areas.

Q: What are Orthofix's current thoughts on mergers and acquisitions (M&A)? A: Massimo Calafiore stated that while M&A is not a primary focus for 2025, the company has strengthened its balance sheet and credit facility, positioning itself to take advantage of market opportunities that align with its portfolio if they arise.

Q: Can you provide details on the 7D FLASH Navigation system's performance in 2024? A: Massimo Calafiore highlighted that 2024 was a record year for the 7D system, with a 150% year-over-year increase in earnout agreements. The system's strong performance is creating long-term relationships with hospitals and surgeons, contributing to the company's strategic goals.

Q: Is there any margin impact from exiting the M6 product lines? A: Julie Andrews, CFO, mentioned that the impact has been considered in the 2025 guidance. More detailed financial impacts will be provided in the Q1 2025 earnings call.

Q: What are the expected impacts of the new product launches in 2025? A: Massimo Calafiore expressed optimism about several upcoming product launches across all business units. He highlighted the new interbody product in spine and the TrueLok Elevate system in orthopedics as key drivers for growth in 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.