Good morning, everybody. Thank you for joining us. My name is Matt Blackman, the newest member of the TD Cowan MedTech Research Team.

And welcome to the, I was told, 46th annual TD Cowan Healthcare Conference, almost as old as I am. And I'm thrilled today to have with us the senior leadership from OrthoFix. To my left, Julie Andrews, the CFO. To my far left, many of you know Julie Dewey. thank you both for making the trip up here really great to see you um and i thought you know maybe we'd start sort of big picture um you've accomplished a lot in two years uh and i thought it might just be helpful to take a step back and julie just tell us what you and the team sort of walked into uh when you joined uh again about two years ago um and you know talk to how the company was positioned competitively uh you've had significant overhaul of the management team portfolio and i think in particular uh you know where you've uh chopped a lot of wood is on the sort of financial health of the business um and then we'll transition and we'll talk about what uh what you've done to fix all that thank you thanks matt yeah so when we stepped in two

years ago you know we inherited a company that had strong assets but an operating model and financial profile that weren't positioned to deliver sustainable profitable growth strategically the portfolio had real strengths a leader leadership position in bone growth therapy and a differentiated enabling technology platform but these assets weren't leveraged in a coordinated way and then the c-spine merger had brought you know much needed innovation to the spine business But also brought along with it complexity and cash burn and a commercial channel that was fragmented and inconsistent. In addition, you know, the organization had experienced senior leadership turnover. And what we walked into was a business that was capital constrained, low levels of profitability and overly dependent on a fragmented U.S. commercial channel. So we were very clear eyed that the business foundation needed to be reset and rebuilt before, you know, we could the story could inflect. And so that's what we've been focused on, you know, over the past two years.

and and maybe so you know take us through again a lot has happened um you know whether it's on the salesforce side in the spine business uh realigning reprioritizing uh different assets within uh bgt limary khan um just maybe the highlights of what you've accomplished uh over these last two years and then you know the next question will be you know where we go from here

Yeah. So, you know, first we focused the business on profitable growth and really reshaped the spend and capital allocation around profitable growth, optimized our commercial footprint, and then migrated our U.S. spine business to a far more aligned distributor base. So today, over 75% of our U.S. spine sales come from our top 30 distributors, up from less than half at the start of 2024. And that shift alone has really meaningfully improved our execution and our predictability, particularly as we look into the future. We hired a world-class leadership team with extensive med tech experience and really deep expertise and experience in the spine and orthopedic space. We refinanced our debt in November 2024, and that lowered interest rates and better terms, but also we added extra capacity to bolster our access to capital and really shore up our liquidity. And so this really optimized our capital structure and supports our long-term profitable growth. At the same time, we really ignited our innovation engine. And so we're entering right now an 18-month cycle of more than a dozen launches across, you know, our businesses. But that includes our Verrata Open and Verrata MIS platforms and really positions as well for multi-year growth across spine, BGT, and limb reconstruction. And this financial impact is really showing up. We had eight consecutive quarters of EBITDA margin expansion, and we've moved from a business that was burning cash, you know, two years ago at the end of 2023, had used more than $100 million in cash to, you know, where we were in 2025, just about break even, a use of $1 million in cash. And that really provides the foundation for continued EBITDA margin expansion and sustained positive free cash flow.

I think that was one of the favorite my favorite charts that we put in our initiation was sort of the before the before Massimo and Julie and the after Massimo and Julie. It was it's pretty striking. It's my favorite chart. Oh, I did think of you when we put that in there and all the heavy lifting you've had to do. Certainly. And I guess the last thing that's to come is sort of seeing that all that heavy lift translate into accelerating top line growth. And obviously, the sort of new product cycle is critical to that, but also the distribution realignment that you've done. I wanted to touch on a couple of things. I think you also gave a metric of that 75% of the business being the top 30 growing over the last 12 months.

27%, yeah. So 27% trailing 12-month growth out of that top 30 distributors. So something to really be excited about as we look into the future.

And a great leading indicator. and again before you get some of the contributions from these new products coming as well correct and could you also talk a little bit about this is going a little off script apologize but um i think there was an effort within this distributor relationship to move to i don't know if exclusive is right but more exclusive bag carrying is that what's playing

out with this this top 30. yeah so i mean what what our you know approach was as we really optimized our spine channel our u.s commercial channel was to really move to more scalable exclusive distributor partnerships or meaningfully exclusive distributor partnerships and that's what we've really seen play out which is you know for us you know when we joined there was you know i don't even want to say the number of of spine distributors that we had but uh and i'd say distributors was sometimes a bit of a a euphemism for a guy with a relationship with one surgeon and so now we're really moving to you know businesses that are large distributor partners you know many reps that are representing us in the field with strong surgeon relationships so a much more stable and predictable sales force and sales channel. Okay so the the I think I've

even used this in our conversations we may even put in the note it feels like the the business itself is primed for uh better growth ahead and more profitable growth ahead so and you've painted a picture you have a three-year lrp tell us what this could be in the next three years what you expect it to be in terms of the top line growth and then we'll drill down into the individual

segments okay thank you yeah i mean we're looking at you know we envision orthofix as you know a scaled consistently growing innovation driven med tech company with a strong commercial engine more efficient operating model and a financial profile that really is leveraging the full and reflecting the full leverage of the transformation we take and as we look at our lrp lrp over the next three years you know we're targeting six and a half to seven and a half percent uh net sales CAGR from 26 to 28 mid teens adjusted EBITDA margin in 2028 so that's going from we just COMPLETED 2025 AT JUST NORTH OF 10 AND A HALF PERCENT, SO MEANINGFUL EXPANSION FROM WHERE WE ARE, EVEN THOUGH WE'VE ALREADY SEEN SOME MEANINGFUL EXPANSION, BUT CONTINUED MEANINGFUL EXPANSION, AND THEN POSITIVE FREE CASH FLOW GENERATIONS. SO WE REALLY FEEL LIKE WE'VE BUILT A FOUNDATION, AND NOW WE'RE READY TO KIND OF LEVERAGE AND FULLY CAPTURE WHAT WE'VE BUILT.

AND SO ONE OF THE QUESTIONS THAT I GET THAT PEOPLE ARE ASKING IS, THAT'S 6 AND A HALF to seven percent that's great i think you exited you'll correct me if i'm wrong uh and an approved organic growth rate in 25 but still not at that six and a half to seven and maybe it was around four percent organic so just bridge us uh over the next few years how you climb into that range and i think we'll probably leave it to the interval friend individual franchise conversation but uh we'll talk to sort of what if there are individual products in particular that help you

that help you walk that growth rate higher yeah so I think as you think about you know our bridge and our kind of inflection point on our revenue growth is one really fully capturing the benefits of our distributor transitions and the optimization of our commercial channel you know we've already talked about some of that other statistics there but now 75 percent of our growth is coming from or 75 percent of our sales is coming from this top 30 distributor group that's growing you know trailing 12 months 20 27 27 percent we have a very strong innovation pipeline that's coming up more than a dozen launches over the next 18 months we'll have the full commercial launch of varada you know which is our uh open uh varada open which is our new degen pedicle screw system and then we'll have our alpha launch of varada mis in the second half of 2026 as well and these represent these are platform launches so we'll be building on to Verata over the next couple of years so really represents a multi-year growth opportunity for us in spine and then you know we'll have a full year contribution from Trulock Elevate and our Fitbone bone transport and trochanteric nails so we're really excited about what those launches have to do and we can get into some more details when we talk about and then you're also going to

anniversary in 26 I know there was one particular price headwind that you were facing and so that gives you some natural lift and then probably anniversary some of the dislocation which inevitably happens when you realign and optimize the sales force you've got some of those tailwinds as well as things just not being as bad at the prior years yeah i mean if you think about

the work that we did kind of i would say somewhat you know quietly and behind the scenes well you know in the u.s we still were growing the spine market at above market growth rates but during that time we also terminated more than 60 distributors um in the limb reconstruction business we sunset over 30 product lines to get more focus and so we've had an awful lot going on behind the scenes um this you know certainly created some headwind but now we you know we believe we're phased as we start to anniversary all of those to really get into where uh you know

a new cycle and an inflection point so and could you juxtapose 18 sorry i forgot how many products you said you're launching over the next 18 months but maybe compare that over a dozen and the prior

18 months what was that number smaller yeah smaller I would say you know single digits um probably lowest single digits so I think we're really excited about you know this next you know kind of cycle that we're entering into and the focus that we have there and then I just

wanted to touch on the mid teensy but uh that feels to me like a mile post rather than a goal post and right so if you're able to sustain this six and a half to seven and a half percent somewhere in that range type growth rate on the top line i suspect i mean i it's a different organization today but you know legacy orthofix had approached 20 ebitda margins is there anything structurally that prevents you from moving above and beyond that mid-teens number i don't think so

i mean it's we've talked about it before yeah it's a it's a mile post not a goal post and i think you know our businesses and particularly you know spine and limb reconstruction are really about scale and so I think we have you know a bit of a you know a journey that we'll be on in terms of

our EBITDA margin expansion over a number of years and then cash flow obviously also improving some of that's working capital what what's left to do to to continue to clean that up such that you continue to drop through more money it's more revenues to the bottom line yeah yeah so I mean we

STILL HAVE SOME YOU KNOW HANG OVER THAT WE'RE WORKING THROUGH ON THE LEGAL SIDE AND SO I THINK YOU KNOW OUR LINE OF SIGHT IS THIS YEAR WE BELIEVE THAT WE'LL BE CLEARING MOST OF THAT IT'S BEEN QUITE A HEADWIND IN OUR FREE CASH FLOW AND EXPECTED TO BE THIS YEAR AS WELL SO I THINK AS WE AND WE'VE BEEN VERY DISCIPLINED AND VERY FOCUSED ON THE WORKING CAPITAL WHICH HAS REALLY HELPED KIND OF TURN THE STORY AROUND IS REALLY OUR WORKING CAPITAL FOCUS So we certainly won't lose sight of that. I think we've, you know, gotten, you know, the low hanging fruit there, certainly. But then as we go forward, a much lower level of, you know, legal expense and legal settlement and continued kind of focus on improved.

And just to be clear on the legal side, this is not product related. Not product related. Related to the former leadership team. Correct. So that's important, too. And then how do we think about CapEx in general, particularly in light of 18, sorry, a dozen new products over the next 18 months? Is there an investment cycle that needs to happen over the next 12 to 18 months as you build out sets and such or within the bounds of what we've seen historically?

Yeah, I think it's going to be a little more this year. So I think we guided actually, we gave external guidance on this number when we did our announcement last week, 45 to 50 million for 2026 is what we're expecting. That's up from about 35 million for the past couple of years. So, again, that's to support our launches, as well as, you know, some of our targeted initiatives to improve growth margin do have a capital outlay. We expect, obviously, a good return on that investment in order to make that. But so this year will be a little bit heavier and probably next year as well. But very, you know, sustainable within our revenue growth and profile. AND SO WE FEEL GOOD ABOUT THAT, AGAIN, SHIFTING SOME OF WHAT WE'VE BEEN OUTLAYING ON OTHER RESTRUCTURING AND LEGAL THINGS TO THE BUSINESS.

OKAY, THIS IS WHERE I OPEN THE KIMONO A LITTLE BIT AND TAKE A HIT. BUT I JUST WANT YOU TO, IN YOUR VIEW, AND JULIE, YOU AS WELL, WHAT ARE WE MISSING? WHAT ARE INVESTORS MISSING?

I WAS SO HOPING YOU WOULD ASK THAT QUESTION.

um what because i you know for full disclosure um i am hold rated uh but uh obviously spent quite a bit of time on this story so tell me what what am i wrong about so i think when we when we sit

you know when we sit here it's really how underappreciated just how much heavy lifting has gone on at orthofix and how fundamentally different we are as a company today over the past you know couple of years so i don't think that that necessarily has been fully appreciated as you look over the last two years in all the areas of the company that have been rebuilt you've got the effects of the work that was done i don't think of are fully showing up yet so when you think about things like our optimized commercial channel that julie talked about All the product launches that are coming up, the innovation pipeline, even beyond that, you know, 27, 28 and beyond. And then you look at all the operational improvements that have gone on just to make the company structurally better. I think those are at the beginning of being reflected and not yet fully in the in the valuation. So I think collectively we believe all of those elements position us in a favorable way right now. and it's a good opportunity for folks to learn more about the company and where

we're going agreed and 26 is also a year where some of the noise we've talked about some of it but also we haven't mentioned m6 that goes away and so then you know the real growth trajectory of the spine franchise in particular I think begins to show without having to X out certain things and okay fair enough so let's now let's talk about the business and we're gonna start with bone growth therapy which I think not misunderstood but maybe under appreciated part of the story I think I've been pleasantly surprised at the sustainable level of growth above the end market I think that's a testament to the portfolio which I think is arguably the broadest of any on the market so maybe helpful if you take a step back just help people understand what that segment is um and uh you know why that portfolio is unique and um and then we can take it from there

yeah so thanks matt yeah so bone growth therapy i mean for us it's a really important foundational business uh we have you know we're market leaders in the spine segment of that business we have over 50 market share and then you know within fracture which we really opened up in the last few years. We have opportunity there still. We're number two market share player there and we believe that we can further penetrate that market. We certainly, you know, our portfolio and our clinical indications are stronger than, you know, our competitors and we really have, you know, proven that we can be consistent strong executors there. Not only led by our product portfolio but we have a really strong commercial channel and then I would say a best in class back office support network which is really important in this market with it you know when you're working with durable medical equipment and you sort of

touched on it the synergies that maybe are not sort of immediately apparent for folks I know I get a lot of people saying well they just monetize that business and sell it well tell us why it's core to the business I think there is a cross-selling opportunity but there's also it helps fund the rest of the business as well so maybe sort of talk to that that'd be helpful yeah I

I mean, so it's, you know, cross-selling is really important with that business, kind of both ways, right? So we have integrated call points. So many of the surgeons who, you know, use us for spine or limb recon solutions are the same clinicians that are treating non-unions or fracture. So it, you know, gets our foot in the door for our, you know, BGT business. Conversely, our BGT business is often in accounts where they may not be using our spine or limb reconstruction products. And so, again, it's kind of an avenue in to a call point that we may not naturally have. And we're finding that, you know, as we deepen kind of our penetration with enabling technology like 7D or with our new implants or with biologics, we're also able to then bring BGT in as an incremental value driver and you know the reverse also being true so we think it's a powerful part it is you know a higher margin part of the business and does actually you know help you know fund as we're in growth cycles on spine and limb reconstruction help fund those businesses but we also see that you know we believe we have an untapped opportunity and fracture, really being at the beginning of our story on limb reconstruction in the U.S., that we can more systematically target limb reconstruction surgeons with our BGT portfolio.

Can you just remind us again the size of the fracture subsegment of the market?

It's about $250 million.

And you're number two in that space. Is it a wide, still a wide?

It's still a wide, yeah, a pretty wide gap.

And these are typically the same physicians that are prescribing the non-union stuff, too or no is it a is it a separate call point of just sort of to understand how

you you grind that higher yes it's typically a you know this the same physicians are typically doing non-union and fracture together it is a pretty fragmented market though and so it's very different from spine so as we're able to go into more accounts with our you know market now we believe a market-leading limb reconstruction portfolio we're getting access to those surgeons who we may not have really naturally had a call point with in the past and that's going to

be a good segue in a second but I just want to make sure anything I think we're you know I worry is not the right word but you know the reimbursement sort of the regulatory backdrop in BGT anything to

be sensitive I can take that one so we are really well positioned in our BGT business from an overall reimbursement standpoint we've got robust clinical data which of course is the foundational element for that we did mention on our earnings call that cms initiated the team's pilot program in january in a few episode of care categories that would one of those categories being bgt so we mentioned that the annual impact of that program is immaterial we expect the annual impact to be immaterial um we do see an overall one percent um headwind on our on our q1 but that'll be a one

timer and um you know after that and what is that yeah i didn't get a chance to mechanistically what so is that one point on price or one point on utilization what what is our overall company

no that i understand but what it's just it's it's timing of utilization basically yeah right it's not price it's timing of utilization okay so basically um you know the important thing to

take away we don't expect it to change physician prescribing behavior but in terms of just managing that the hospital will need to manage the timing of it a little bit more closely got it okay so

let's segue and now talk about uh limb reconstruction um and maybe sort of same framework just tell us what it is the backdrop of that market and where you're positioning and I think you know most importantly some of the new products that I think are finally going to have some commercial traction I've been talking about the limb ring con business and fit bone for like five years particularly in the international markets been waiting for in the US but give us just some flavor of what that business is how you're positioned in it and why it's gonna be a growth driver

from here. Okay. Thanks, Matt. Yeah, so I mean, I think, you know, in my seat, the business that I'm probably most excited about is our limb reconstruction business. And really, it kind of goes back to our really focused strategy that we now have in this business. We've even gone through very recently here in Q1 of rebranding. So we used to refer to it as orthopedics. We're now call it our limb reconstruction business, and that's how you'll see us refer to it in the future. And we've really are focusing around four high value clinical categories, limb preservation, limb lengthening, complex fracture management, and extremity deformity correction. And these represent a $2.6 billion market opportunity. And, you know, it's really focused on, you know, we've had strength outside the US, but really a very small business inside the US. And so we're really focused on executing in the US and really capturing that market opportunity in the u.s and this is driven by our more focused portfolio and our efforts there so we had the global launch at last year of trulock elevate a fit bone bone transport in the u.s and fit bone truck and tear lengthening nail so this will be our first year of all of those launches and they really expanded our addressable market and you know strengthened our competitive positioning we have a more aligned commercial strategy we brought in some real talent in our commercial leadership organization in 2025. And, you know, I think we've sunset products that weren't core to what we're focusing on and believe that we really have momentum as we go in the future. We, the U.S. business grew 16% last year. It was at Q4, it was at 8%. That was really kind of that lower growth rate was driven by the sunsetting of those products that we talk about. But as we kind of go to the second half of this year, we expect the U.S. limb reconstruction construction business to return to double digit growth, and kind of maintain that over a number of years. And then we have, you know, I'd say, a continued cadence of innovation and evidence that we're bringing to that. And so we're layering in next generation automation into Trulock Elevate and Fitbone, and then really also focusing investments on clinical evidence where, particularly on the Trulock Elevate side, that is a market really development opportunity. So very large TAM, not treated how the we're trying to treat the market today and turn our procedure into standard of care and so investing in that clinical evidence is going to be really important to developing that market and so together these elements you know we we believe give us a much stronger platform to scale the US limb reconstruction business in a disciplined sustainable way and how big a business do you think

this could be in five years if we think about the mix the US in particular I I guess I'm honestly not trying to back into long-term guidance by franchise, but it would seem to me that just given where the portfolio is today, the small base you have, and the outsized growth, that it should be a more substantial piece of the business when we are here for the 51st annual TD County Conference.

So I think, you know, it is a small base that we're starting from, right? So even though it is going to be, you know, a strong growth driver for orthofix and growing above, you know, the corporate average over the next several years, it is starting from 35, $40 million base. So we've got, I would say, what's exciting to me is we have a long horizon for this. It's a great market opportunity, and, you know, I think, you know, the sky could be the limit. I'm not putting a number on it today, but it's going to be, you know, a meaningful contributor as it progresses over the coming years.

Nick, can you compare and contrast? Obviously, the end market is growing faster, I would think, than traditional spine, but also the capital intensity and the competitive intensity as well. When I think about some of these end markets, I don't think about a lot of innovation. I think about some of the big companies, and I don't know if Synthes is a big competitor, but there's dislocation. It would seem like you're coming at a time when there's opportunity as well to capitalize on, you know, what's been a fairly stagnant in terms of an innovation market.

So limb reconstruction is fundamentally different market than, you know, the traditional U.S. spine fusion. And we believe that difference is a strategic advantage for Orthofix. So it is, you know, spine's very consolidated. with, you know, several large players driving most of the volume. Whereas in limb reconstruction, there's very few companies that are really prioritizing this space. We believe that we're the first to really create this category and call it limb reconstruction and really put very focused efforts around building out this business. So we believe, you know, this creates room for a focus leader to elevate the care pathway and expand the market. It's really defined by, you know, clinical evidence and by complexity and specialization. And that's, you know, Orthofix does that really well. And so it's kind of a move away from kind of commodity procedures into something that's very specialized. And then very attractive economics and long-term growth drivers. So healthier mix, durable demand, you know, higher value cases. And so we believe that, you know, this is going to be a strategic and financial complement to our business.

So when we think about contribution margins, probably outsize relative to some of the other, particularly the core spine business.

Over time. I mean, you know, right now, again, it's a small, not at scale business, but over time, we believe that will be the case.

As you build a revenue base in particular. Okay, I got a minute and 50 seconds to punch through. But enabling tech, I think the other area of interest here is your burgeoning enabling tech franchise, in particular 7D. In a minute and 37 seconds, can you just tell us what, from a navigation standpoint, 7D does? And I think most important, just compare and contrast with the other big pieces of capital we see being sold by your competitors, how it's different.

All right, so I'll start, and Julie, I'm sure we'll tag on. but 70 excuse me is a um offers really fast um highly accurate radiation free navigation something other navigation systems don't this isn't a robot this is a navigation system so just to you know compare and contrast there um it's has machine vision technology so think about a self-driving car to really help that surgeon navigate through complexity in a streamlined way, facilitating the workflow, has a small footprint so it works really well in a regular OR or in a more space constrained ASC, all in a package that, and I'll let Julie talk about the economics of it, but you don't have to just purchase it straight capital. We offer a Voyager earn out program which is a program that um we will place the unit in a facility and then in you know they're using our hardware and over time they earn the the piece of of equipment so that's why uh that's been really um a focus for us particularly in the last year versus you know straight capital we'll take everybody's money but you know if if they want to go with a different model we have that too, in addition to a lease program. So it's a really, you know, very, you know, piece of equipment, piece of navigation equipment that's becoming more and more a reflection and, you know, indispensable piece of equipment for surgery today. And Julie, if you could just finish on the

success you're seeing in the pull through for those Voyager programs, which is pretty impressive.

Yeah, so yeah, our pull through. So Julie talked about the Voyager earn out program where we had 30% increase in placements last year. But what we're seeing is that collectively the accounts that we have an earn out system with are kind of over prescribing to their volume commitment over purchasing their volume commitment by more than 50%. So that's a great thing. I think, you know, Matt, just really quickly kind of to wrap up, you know, orthofix today, I think is fundamentally stronger than where we were three, you know, two years ago. ago commercially aligned innovation driven and operating with far greater financial disciplines so we think the opportunity ahead is meaningfully greater than what's reflected today and i agree

and you've done a great job along and massimo's done a pretty good job too um but thank you so much really appreciate it it's great to see both of you and thank you all for attending thank you