Good morning, everyone, and thank you for joining us at this year's Canaccord Genuity Global Growth Conference. My name is Caitlin Cronin, and I'm on the Medical Device team here at Canaccord Genuity. I'm joined today by OrthoPediatrics Corp., a medical device company dedicated to developing orthopedic solutions exclusively for the pediatric population. With me today are Dave Bailey, CEO, and Fred Hite, CFO. Before we begin, I want to remind everyone of any relevant disclosures which can be found on our conference and our firm website. With that, I will hand it over to management.
Great. Thank you very much. Really appreciate the opportunity to be here. I'm going to go through a few slides that just outline the business. My colleague Fred will close with a few financial slides, and then hopefully there'll be some good questions from the audience. My name is Dave Bailey. I'm the President and CEO of OrthoPediatrics Corp. OrthoPediatrics Corp. is a company that's founded on the cause of improving the lives of children with orthopedic conditions. We're the only such company that exists, the only company that focuses exclusively on pediatric orthopedics. Since our founding, I'm proud to report that we've helped over 1.2 million children with our devices. Historically, when we started the business, there's been five major challenges for pediatric orthopedic surgeons. Kids that we treat have unique clinical conditions.
Oftentimes, our customers have had to use repurposed adult implants, cutting, bending different devices to make them work in children. There had been historically very limited new product development, new technologies that have gone through the FDA specifically for kids. There had been no specialized sales force, no one who is standing in the operating room with pediatric orthopedic surgeons, and certainly a very substantial lack of industry support. That got worse, actually, before it got better with consolidation of some of the major adult players that have defocused in pediatric orthopedics. Since we built the company, we have now over 80 unique pediatric systems, focused heavily on product development and innovation. We continue to make robust investments in our R&D and have scaled many different small acquisitions and partnerships. We now serve 100% of the top children's hospitals in the United States and in Canada.
We would estimate that probably 95% of children's hospitals in the developed world are customers of our products. We have 230 domestic salespeople, and we sell in 75 countries around the world. As mentioned, we are the leading provider of clinical education and training for pediatric orthopedic surgeons on every continent. All of this has produced year-over-year growth of 20%, nearly 20% for the last nearly two decades. The market is sizable, although certainly I think the larger competitors are not focused here. We estimate the marketplace at about $6.2 billion globally, and the U.S. addressable market with our products at about $2.6 billion. As I've said, this is a very benign competitive marketplace. Generally speaking, we compete with ourselves, particularly in many product categories where there's no products like ours. There's no competitor at all. We feel like it requires a special commercial channel.
Ultimately, there's a very substantial lack of focus on these pediatric conditions that are unique to our patient population. We have five strategic pillars that have guided our strategy for a number of years and continue to do so. We have a laser focus on high-volume children's hospitals. We are not out calling on community physicians who may dabble in pediatric orthopedics. We're calling on Boston Children's, for example, or Children's Hospital of Philadelphia. That's where we spend our time. We aspire to surround the pediatric orthopedic surgeon with literally all the products they could use. There would be never a reason to have to go to any other company. We think that's a huge value proposition that we offer.
We have been working very hard post-IPO in 2017 to deploy instrument sets, making sure that our customers have access to our products and providing fantastic sales support, not just a warm body in the room, but somebody who understands the clinical conditions that our surgeons treat. We expand our addressable market through substantial investment in R&D, and we've made a number of very successful acquisitions over the course of the last several years. Lastly, our investment in clinical education aspires to train the next generation of pediatric orthopedic surgeons. At this stage, nearly every fellowship, every fellow in pediatric orthopedics goes through at least one, if not multiple, pediatric orthopedic sponsored fellowships that are fellowships that are training and education fellowships that are funded exclusively by OP.
Our target market, we focus on, again, these high-volume children's hospitals where about 1,500 - 1,600 pediatric orthopedic surgeons treat about 62% of the patient population. We believe that market opportunity is about $1.6 billion. A highly concentrated market opportunity in about 300 children's hospitals in the United States. We see a similar market opportunity outside of the United States. where there's a very focused group of hospitals that treat the majority of these patients. We have a very broad portfolio starting back to our earliest days in 2008, where we sold simple products like cannulated screws. PD plates is a product that is designed to aid children in having to have major surgery to correct limb deformities. As we've progressed up to the IPO, we would argue that our earlier products moved to become more clinically significant. Now we have nearly 80 or over 80 products that treat this patient population.
Post-IPO, I would argue we've made more investments in, I would say, clinically significant disruptive technologies. I think our product portfolio has become dramatically more impactful to the patient population and to our customer base, while we've made investments in areas of great complexity like external fixation, where you see our Orthex device as well as our PMP products that are now market leaders in fracture fixation for femurs and tibias, now moving into scoliosis. We'll talk a little bit more about our investment in early-onset scoliosis, which is one of the great catalysts for growth in the future. We've also been successful in many acquisitions and partnerships. OrthoPediatrics has aspired to really create an ecosystem around our business. I believe we're viewed by the marketplace as the good guys. We're doing things that generally the large ortho and medtech players aren't interested or aren't focused on.
We like it that way. We like the fact that those people would want to partner with us. We're often approached by large medtech as well as small medtech to acquire their smaller devices where they have very limited focus, but know there's a major unmet need for pediatric orthopedics. We are not anyone's direct competitor. We're not in a bare-knuckle struggle necessarily for market share with companies like Medtronic. We've been fortunate to be able to license technologies from Medtronic, one such technology included with our Vertiglide system that we will launch here next week.
I think that's also led companies like you see on the slide here, MD Orthopaedics, Pega Medical, ApiFix, these types of companies to be willingly acquired by OrthoPediatrics, generally focused on small companies with interesting technologies that benefit children, but that would benefit from the scale of the commercial engine and the fact that we sell in 75 markets outside of the United States. More recently, and you've heard us probably talk about this on our calls, we've launched into the specialty bracing business, where about 80% of the time, pediatric orthopedic surgeons spend their time not in the operating room, but in clinic. Within the last year and a half, we acquired a business called Boston OMP right here in Boston. Boston OMP is really the model for what we aspire to see around the United States. Boston was the pioneer of a scoliosis brace called the Boston Scoliosis Brace.
I would say almost every child who has scoliosis before they have surgery has a Boston brace. We have a custom manufacturing center here in Boston where we make these custom devices and ship these devices all over the world. Boston actually owns, and now we own, at the time of the acquisition, we owned 26 specialty clinics. Those specialty clinics were primarily focused around the Boston, Massachusetts area, as well as Children's Hospital of Philadelphia, very isolated to the Eastern Seaboard. Our aspiration has been to scale the Boston business, both the clinic as well as the products that Boston and we are developing around the United States as relative to around the world. We believe this is a very large untapped market in pediatric orthopedics, represents about a $500 million opportunity.
As I mentioned earlier, we think about 80% of our surgeons' time is spent outside of the operating room, focused on avoiding taking our children to the operating room. It's a very different dynamic, our customer, than maybe some of the adult orthopedists who generally are surgeons first trying to take people to the OR. Most of the time, our surgeons are trying to avoid taking kids to the OR. This represents a great strategic opportunity for the business to continue to build a bigger moat around the company, expands our TAM, is a very capital-friendly section of our business. Frankly, since the acquisition, it's probably been the thing that our customers have been the most excited about because we're treating kids before they may need our products or may need our implant products, which has developed a nice halo around the rest of our product portfolio.
Devices, we believe this business is at minimum inside the Children's Hospital, $500 million. We think there are in the future opportunities to potentially expand into motion-assist devices. We're, in fact, currently working on a spine halo traction device, casting fracture fixation devices. There are a number of areas that we think within the specialty bracing we can continue to expand. The last of our five pillars is our focus on clinical education and training. I would argue that nearly all of the pediatric orthopedic surgeons that exist that are under the age of 45 or 50 have now gone through very specific non-commercial training provided by OrthoPediatrics or our KOLs or supported by OrthoPediatrics. We have historically given nearly 3% of our top-line revenue in support of clinical education and training.
We believe that if we establish that commitment with the younger pediatric orthopedic surgeons, that's the right thing to do to advance the entire industry. It is certainly paying off as our younger surgeons now become chiefs at major institutions. We are also the largest supporter of every major surgical society in pediatric orthopedics on every continent, the Pediatric Orthopedic Society in North America, which we recently attended, European, the International Pediatric Orthopedic Society, and in fact, we helped found the Middle Eastern Pediatric Orthopedic Society. We are very well recognized by the chiefs and the KOLs in pediatric orthopedics as their partner to help educate the next generation of pediatric orthopedists. Just to name a few catalysts, we are going to go back and talk briefly about OPSB as well as the EOS portfolio.
Within trauma and limb deformity, which is generally speaking our largest business, trauma and limb deformity, we continue to have success and expand our intramedullary nailing platform. If you listen to our calls, you'll often hear me talking about PMP tibia, PMP femur. We are the market leader in pediatric nailing, and we still have a ways to go. There are additional iterations and more PMP tibia coming. Hopefully, there will be an expanding intramedullary device, which would be a new thing for us and rapidly expand that business. We are also investing in a number of solutions for rare bone diseases, which we are already a market leader in with our Fossey-Duval telescopic nail, but making further investments there. As we'll talk additionally more, we are expanding our specialty bracing portfolio with heavy R&D in this area.
One such product that you hear often from us is a product called DF2, which is growing very rapidly and changing the standard of care for children with femur fractures under the age of 8. On the scoliosis side, we continue to advance in scoliosis fusion surgery. We continue to advance on the non-fusion side of scoliosis surgery with ApiFix and different iterations of ApiFix that make it more applicable to more patients. More recently, we've invested heavily in early-onset scoliosis, which at the end of the presentation, we'll have a few slides on. Lastly, we've made heavy investments and have nice partnerships on the enabling technology side. We get the question often, is robotics the future in pediatric surgery? The answer to that at this stage is no.
We don't see that quite often yet, but we do see navigation solutions and OR-based solutions that improve care and capture data as critical to the future of pediatric scoliosis surgery and pediatric orthopedic surgery in general. We have worked on technology for three-dimensional deformity correction with Orthex, as well as the 7D navigation system that is included in our scoliosis franchise and continues to help us take share within that business. We've made nice advancements there and continue to invest there. It's a big reason why we're driving growth across the entire portfolio. Talked a little bit about the EOS products, but I just want to spend a little more time defining what that marketplace really looks like. Early-onset scoliosis is a section of our scoliosis business that is children who are generally under the age of eight years old.
These are children that are treated by probably the most elite pediatric orthopedic surgeons in the world. Their pathologies are frankly horrible, and oftentimes it compresses their heart and lungs. The work that we are doing and no other company in the space is doing is working with the top KOL surgeons to develop solutions that can hopefully not only help straighten kids' spines, but save lives for pediatric patients. I'm extremely proud to report that after the successful launch of our ribbon pelvic fixation system last year, with any luck, we will do our first surgery with the VertiGlide system. Again, a system technology launched by Medtronic or licensed from Medtronic, FDA approved in April. We aspire to do our first surgery on Monday. It's a big catalyst for our scoliosis fusion business.
It's driving demand in our fusion franchise because it's being used by physicians that may not have had a great or had a relationship with our scoliosis business in the past. VertiGlide is certainly a catalyst. On the heels of our Vertiglide launch, we have a product that we're working for approval with the FDA right now called ELLY. ELLY is an electromechanical growing technology, an intramedullary rod that goes into the child's spine, that is fixated on the child's spine, and then has a tiny microminiaturized electronic motor, utilizes a radiofrequency transmitter that also communicates with an antenna that drives growth in a child's spine, again, opening the chest wall, opening up the chest cavity so that the child can develop normal heart-lung function. This was last year.
We received breakthrough device designation by the FDA, and we're back and forth in communication with the FDA, hoping for FDA approval in first surgeries next year. This represents, in the United States., a $50 - $100 million market opportunity for us with extremely limited competitors. Surgeons are literally having to MacGyver their way through these surgeries, cobbling together multiple systems to make this work. A big blue ocean opportunity for us here and a real win for the pediatric patient population. Lastly, you hear us talk a lot about OPSB. We think OPSB is an incredibly strong way for us to grow in a much more capital-efficient manner. That business is growing very rapidly. In the last few quarters, we've seen it grow well in excess of 20%. We have a very aggressive plan to expand multiple markets.
When we acquired Boston OMP, like I'd mentioned, they had about 26 clinics. At this stage, I think we're up to well over 40 clinics and looking to expand and expand further throughout the balance of the year. We've also accelerated R&D. Not only do we need clinics and clinicians who can help the surgeons, but we also need new products. This is an area that has been wildly underinvested in by industry. We're working with a number of surgeons to hopefully launch four to five new products every year for the next several years. We have been scaling our sales channel. Previous to OrthoPediatrics and OPSB, there really hadn't been anyone selling to the clinics or selling these services to pediatric orthopedic surgeons. You can imagine through our commercial channel, we've been very successful at that.
We said at our investor day last year in September that our aspiration in 2025 was to expand into four new markets, four new territories. We announced in our Q2 earnings call that we had now expanded into six, and that you could probably expect us to continue on a rapid pace of expansion. As I had mentioned, the interest in this is extremely high for surgeons. We expect to be in 26 of 80 territories here within the next three years. We view this entire thing as an opportunity to grow a business to several hundred million dollars over the course of the next few years. With that, turn it over to Fred.
Thanks, Dave. This slide shows our sales starting back in 2008 when we sold our first implant. You can see across the time period aggressive growth, both on the blue bar, which is the domestic sales, as well as the green, which is international. International sales started in 2011, 2012, and today is as big as the entire company was when we went public back in 2016. For the year 2025, we have around $240 million of revenue projected. In the second quarter of this year, we just generated a record revenue of over $61 million. That was $6.5 million higher than our previous quarter high revenue. The growth of the business with all of the products and all of the growth drivers that Dave explains continues to advance nicely. We look at the full year of 2025. I mentioned guidance is $237 - $242 million on the top line.
Adjusted EBITDA is $15 - $17 million. That is on top of 2024 adjusted EBITDA of $8.5 million. For the first time, we are now projecting to be cash flow break-even, so free cash flow break-even in the fourth quarter of this year and also free cash flow break-even for the full year of 2026. We are making improvements on both the profit side of the business as well as the cash side of the business. Right now, the total growth for 2025, as you can see, is $16 - $18 million. We also are predicting about $15 million of set deployment. We have consigned sets that we put on the field to improve the utilization of our inventory and our products in the field. Historically, we've done $15 - $20 million. In 2025, that's going to be a $15 million number for us.
With that, just a quick summary, only diversified company specifically focused on pediatric orthopedics. That's not just on the implant side, but also on the services side. Large underpenetrated market, very, very broad, over 80 products that we offer. We're surrounding that surgeon with everything they need. We're the only provider that's really committed to clinic education. With that comes surgeons that are committed to us and supporting us in the future. We have a proven commercial execution. We're the only channel to market in this space in orthopedics. We have a very attractive financial profile that is improving every quarter as we move forward. Thank you very much.
I had aspired to give us more time, but I think I took too much time. Any questions about the business we could help you with? We must have given you too much detail.
No, I just want to highlight just the Q2 and what kind of came out of those results.
Yeah, so in the second quarter, as I mentioned, revenue over $61 million. It was a record quarter for us. Gross margin positive, adjusted EBITDA, so very strong scoliosis. Revenue in the quarter was over 34% growth for us, second quarter of this year, second quarter of last year. Overall revenue was 16, 17% in the first half. Our guidance is 16 - 18%. The growth is going to pick up a little bit in the second half of the year. We think the scoliosis business will continue that revenue growth, strong revenue growth, followed by the T&D business. As I mentioned before, getting to free cash flow positive in the fourth quarter will be the first time the business has been able to do that. We're very much looking forward to the fourth quarter.
Can you elaborate a little bit more about the 7D navigation system placements, ASP?
Yeah, so the 7D navigation system we actually license with, and we have access to the children's hospitals through a partnership with OrthoFix. We're the exclusive go-to-market provider of that product into all of the children's hospitals in the United States. It certainly does have application well beyond pediatric orthopedics into adult spine surgery, given our focus only on pediatric spine surgery for the device. That's why that partnership works really well. I think the unit economics there, generally, we deploy these, either sell or lease these units to hospitals, and they're normally on some type of rebate contract. The technology is the enabling technology because it's radiation-free navigation. It's very specifically helpful to children who are much more susceptible to disease long-term related to radiation. We have high demand for that type of navigation solution. That exposes our customers to our implant systems that they use in conjunction with that.
Generally, we see in accounts where 7D navigation is applied, a $500,000 or so implant usage uplift across a three to five-year period of time. The economics work great, and it certainly drives share gain for us.
Sure.
Okay, thank you very much.