Globe Newswire08.10.20
COVID-19 is taking a significant bite out of orthopedic medtech finances as it continues its rampage throughout the world.
OrthoPediatrics Corp., a company focused exclusively on advancing the field of pediatric orthopedics, posted a 25.3 percent decrease in total revenue in the second quarter, ended June 30.
Recent Business Highlights
Mark Throdahl, CEO of OrthoPediatrics, commented, “The COVID-19 pandemic is a test of a company’s culture and its leadership. During this crisis, OrthoPediatrics’ associates have risen together to support our surgeons and their patients. Despite the overall sales decline for the quarter from prior year, we have seen significant and consistent monthly improvement throughout the period. We also continue executing across all our key initiatives. These include the acquisition of ApiFix and the domestic launch of its game-changing technology for treating scoliosis, record conversion of new Orthex customers, new product development, regulatory compliance advancements, set consignments, and clinical education support. We maintained our Double Diamond sponsorship of pediatric surgical societies in the U.S. and Europe, when others reduced or eliminated their contributions entirely, which has attracted extensive surgeon notice. We would like to thank our shareholders for their continued support of our recent $70 million capital raise that strengthens our balance sheet. We remain committed to the health and welfare of our associates, guaranteeing their jobs and salaries, and we would like to thank them for their commitment and extraordinary productivity while working from home. Finally, we would like to recognize healthcare providers everywhere for their skill, resilience, and selflessness treating patients during this pandemic.”
Second Quarter 2020 Financial Results
Total revenue for the second quarter of 2020 was $13.6 million, a 25.3 percent decrease compared to $18.2 million for the same period last year. U.S. revenue for the second quarter of 2020 was $12.1 million, a 12.3 percent decrease compared to $13.8 million for the same period last year, representing 89.4 percent of total revenue. International revenue for the second quarter of 2020 was $1.4 million, a 66.8 percent decrease compared to $4.4 million for the same period last year, representing 10.6 percent of total revenue. International markets continue to be impacted by COVID as there are fewer stand-alone pediatric hospitals and procedures are much slower to return. Total revenue performance continued to improve throughout the quarter, particularly domestically which delivered year over year growth in June.
Trauma and Deformity revenue for the second quarter of 2020 was $9.2 million, a 22.4 percent decrease compared to $11.9 million for the same period last year. Scoliosis revenue was $3.8 million, a 34.6 percent decrease compared to $5.9 million for the second quarter of 2019. Sports Medicine/other revenue for the second quarter of 2020 was $0.5 million, a 20.1 percent increase compared to $0.4 million for the same period last year. Trauma procedures continue stronger while Deformity Correction and Scoliosis procedures continue to see the impact of COVID and selective closure of elective surgeries.
Gross profit for the second quarter of 2020 was $10.1 million, a 26.1 percent decrease compared to $13.6 million for the same period last year. Gross profit margin for the second quarter of 2020 was 74 percent, compared to 74.8 percent for the same period last year.
Total operating expenses for the second quarter of 2020 were $17.1 million, a 10.8 percent increase compared to $15.4 million for the same period last year. The increase in operating expenses was driven by a 61 percent increase in general and administration expense primarily as a result of increased non-cash stock compensation as well as depreciation and the transaction expenses incurred for the acquisition of ApiFix. Operating loss for the second quarter of 2020 was ($7) million compared to ($1.8) million for the same period last year.
Net interest expense for the second quarter of 2020 was $1.4 million, compared to $0.6 million for the same period last year.
Net loss for the second quarter of 2020 was ($9.4) million, compared to ($2.6) million for the same period last year. Net loss per share for the period was ($0.54) per basic and diluted share, compared to ($0.18) per basic and diluted share for the same period last year. Adjusted EBITDA for the second quarter of 2020 was ($2.3) million as compared to $0.6 million for the second quarter of 2019.
The change in property and equipment during the second quarter of 2020 was $1.2 million, which compared to $3.6 million for the same period last year. This reflects the deployment of consigned sets, which includes product specific instruments and cases and trays, and acquisition related costs. Including the implants, $5.8 million of consigned sets were deployed during the second quarter of 2020, compared to $9.3 million during the second quarter of 2019.
Due to the rapidly evolving environment and continued uncertainties surrounding the duration and impact of COVID-19, OrthoPediatrics maintains suspension of its revenue growth and set consignment guidance for the full year 2020.
OrthoPediatrics Corp., a company focused exclusively on advancing the field of pediatric orthopedics, posted a 25.3 percent decrease in total revenue in the second quarter, ended June 30.
Recent Business Highlights
- Commenced initial U.S. launch of the ApiFix Minimally Invasive Deformity Correction (ApiFix) system in June following its acquisition in April and are encouraged by the completion of the first cases
- Expanded the domestic sales organization to 164 consultants, up 7.9 percent from second quarter 2019 of 152 consultants
- Deployed $5.8 million of consignment sets in second quarter 2020, compared to $9.3 million in the same period prior year
- Completed follow-on public offering in June with net proceeds of $70.4 million
- Continued Double-Diamond sponsorship for the 2020 Pediatric Orthopaedic Society of North America (POSNA) Virtual Meeting in May
Mark Throdahl, CEO of OrthoPediatrics, commented, “The COVID-19 pandemic is a test of a company’s culture and its leadership. During this crisis, OrthoPediatrics’ associates have risen together to support our surgeons and their patients. Despite the overall sales decline for the quarter from prior year, we have seen significant and consistent monthly improvement throughout the period. We also continue executing across all our key initiatives. These include the acquisition of ApiFix and the domestic launch of its game-changing technology for treating scoliosis, record conversion of new Orthex customers, new product development, regulatory compliance advancements, set consignments, and clinical education support. We maintained our Double Diamond sponsorship of pediatric surgical societies in the U.S. and Europe, when others reduced or eliminated their contributions entirely, which has attracted extensive surgeon notice. We would like to thank our shareholders for their continued support of our recent $70 million capital raise that strengthens our balance sheet. We remain committed to the health and welfare of our associates, guaranteeing their jobs and salaries, and we would like to thank them for their commitment and extraordinary productivity while working from home. Finally, we would like to recognize healthcare providers everywhere for their skill, resilience, and selflessness treating patients during this pandemic.”
Second Quarter 2020 Financial Results
Total revenue for the second quarter of 2020 was $13.6 million, a 25.3 percent decrease compared to $18.2 million for the same period last year. U.S. revenue for the second quarter of 2020 was $12.1 million, a 12.3 percent decrease compared to $13.8 million for the same period last year, representing 89.4 percent of total revenue. International revenue for the second quarter of 2020 was $1.4 million, a 66.8 percent decrease compared to $4.4 million for the same period last year, representing 10.6 percent of total revenue. International markets continue to be impacted by COVID as there are fewer stand-alone pediatric hospitals and procedures are much slower to return. Total revenue performance continued to improve throughout the quarter, particularly domestically which delivered year over year growth in June.
Trauma and Deformity revenue for the second quarter of 2020 was $9.2 million, a 22.4 percent decrease compared to $11.9 million for the same period last year. Scoliosis revenue was $3.8 million, a 34.6 percent decrease compared to $5.9 million for the second quarter of 2019. Sports Medicine/other revenue for the second quarter of 2020 was $0.5 million, a 20.1 percent increase compared to $0.4 million for the same period last year. Trauma procedures continue stronger while Deformity Correction and Scoliosis procedures continue to see the impact of COVID and selective closure of elective surgeries.
Gross profit for the second quarter of 2020 was $10.1 million, a 26.1 percent decrease compared to $13.6 million for the same period last year. Gross profit margin for the second quarter of 2020 was 74 percent, compared to 74.8 percent for the same period last year.
Total operating expenses for the second quarter of 2020 were $17.1 million, a 10.8 percent increase compared to $15.4 million for the same period last year. The increase in operating expenses was driven by a 61 percent increase in general and administration expense primarily as a result of increased non-cash stock compensation as well as depreciation and the transaction expenses incurred for the acquisition of ApiFix. Operating loss for the second quarter of 2020 was ($7) million compared to ($1.8) million for the same period last year.
Net interest expense for the second quarter of 2020 was $1.4 million, compared to $0.6 million for the same period last year.
Net loss for the second quarter of 2020 was ($9.4) million, compared to ($2.6) million for the same period last year. Net loss per share for the period was ($0.54) per basic and diluted share, compared to ($0.18) per basic and diluted share for the same period last year. Adjusted EBITDA for the second quarter of 2020 was ($2.3) million as compared to $0.6 million for the second quarter of 2019.
The change in property and equipment during the second quarter of 2020 was $1.2 million, which compared to $3.6 million for the same period last year. This reflects the deployment of consigned sets, which includes product specific instruments and cases and trays, and acquisition related costs. Including the implants, $5.8 million of consigned sets were deployed during the second quarter of 2020, compared to $9.3 million during the second quarter of 2019.
Due to the rapidly evolving environment and continued uncertainties surrounding the duration and impact of COVID-19, OrthoPediatrics maintains suspension of its revenue growth and set consignment guidance for the full year 2020.