OrthoPediatrics (KIDS) Q1 2025: Scoliosis Revenue Jumps 34% as Portfolio Expansion Accelerates Share Gains
Scoliosis and OPSB franchises drove broad-based growth for OrthoPediatrics, with strong execution on product launches and set deployment translating to improved profitability and sharply reduced cash burn. Leadership raised full-year revenue guidance, signaling confidence in sustained market share gains and a clear path to free cash flow break-even by 2026.
Summary
- Portfolio Breadth Drives Adoption: Scoliosis and trauma launches are accelerating share gains across U.S. and select international markets.
- Profitability Transition Underway: Adjusted EBITDA loss halved and free cash flow improved, with positive inflection expected by year-end.
- Clinic and Territory Expansion: OPSB growth and new clinics provide a repeatable playbook for capital-efficient scale.
Performance Analysis
OrthoPediatrics delivered 17% revenue growth in Q1 2025, with U.S. sales up 19% and international up 11%. The scoliosis segment led with 34% growth, reflecting rapid adoption of new fusion systems, bracing, and enabling technologies such as 7D navigation. Trauma and deformity revenue, accounting for the majority of total sales, rose 14% on the back of strong demand for recently launched products like PMP tibia and DF2. OPSB, the specialty bracing business, grew more than 20% and is emerging as a substantial, capital-efficient growth engine.
Gross margin improved to 73%, aided by a higher mix of domestic revenue and lower international set sales, though management flagged potential future moderation as international set deployments resume. Adjusted EBITDA loss narrowed by more than half, and free cash flow usage fell 36% year-over-year, reflecting disciplined operating expense management despite ongoing investments in personnel, R&D, and clinic expansion. The company ended the quarter with $60.8 million in cash and maintained ample liquidity for set deployments and growth initiatives.
- Scoliosis Outperformance: New product launches and 7D placements are unlocking major accounts and driving above-market growth.
- OPSB Traction: Territory and clinic expansion is on track, with early signs of repeatable, scalable growth and potential international upside.
- Cash Burn Declines: Operating leverage is materializing, with a clear glidepath to free cash flow positivity in Q4 2025 and breakeven in 2026.
International growth was strong in agency markets like Canada and Australia, but was offset by deliberate pullback in Latin America to protect cash flow, underscoring a focus on profitable growth over pure top-line expansion.
Executive Commentary
"Our ability to execute on our commitments, our consistent track record of sales growth through share-taking, as well as deliberate step function improvements in adjusted EBITDA and cash usage are just a few small aspects of what continues to set us apart and enable us to maintain our position as the clear-cut market leader in pediatric orthopedics."
David Bailey, President and Chief Executive Officer
"Adjusted EBITDA was a loss of $0.4 million in the first quarter of 2025, over 50% improvement when compared to a loss of $1.1 million for the first quarter of 2024. In the first quarter of 2025, free cash flow usage was $8.4 million, representing a significant reduction of 36% when compared to the same period in the prior year."
Fred Height, Chief Operating and Financial Officer
Strategic Positioning
1. Scoliosis Platform Expansion
The breadth of the scoliosis portfolio is now a competitive differentiator, with recent FDA approvals for VertiGlide and expanded indications for DF2 enabling OrthoPediatrics to address the full continuum of care, from bracing to fusion and early onset solutions. 7D navigation deployments act as a wedge, opening new accounts and cross-selling opportunities for fusion and bracing technologies. Management highlighted that no other competitor matches this focused pediatric spine offering, which is resonating at major children's hospitals and driving rapid share gains.
2. OPSB (Orthopedic Specialty Bracing) Scale-Up
OPSB is emerging as a high-growth, capital-light business line, with 20%+ growth and new clinics launched in North Carolina and other territories. The company is refining a repeatable playbook for U.S. expansion and has begun exploratory discussions for international clinics, which are not yet included in the current total addressable market (TAM) estimate. Product launches such as Thrive Carbon Fiber Braces and Unfo Metatarsus Abductus Brace broaden the offering and support clinic ramp-up, while early data from established clinics in Colorado and Florida confirm the scaling opportunity.
3. Set Deployment and Cash Efficiency
Prior investments in set deployment are compounding, with increased utilization of previously consigned sets driving incremental revenue without the need for additional capital outlay. Management reiterated that 2025 adjusted EBITDA will fully fund new set deployments, and that positive free cash flow is expected in Q4 2025, with full-year breakeven in 2026. This transition from investment mode to self-funding is a crucial milestone for long-term value creation and capital discipline.
4. International and Regulatory Catalysts
International growth remains a lever, especially as EU MDR approval for trauma, deformity, and scoliosis systems unlocks new market potential. The initial wave of approvals will modernize legacy offerings and make the full U.S. portfolio available to European surgeons, positioning the business for share gains in underpenetrated regions. Management is also pursuing selective expansion in Western Europe for OPSB, leveraging regulatory pathways that are more straightforward than U.S. processes.
5. R&D and Innovation Pipeline
OrthoPediatrics is accelerating R&D, with multiple product launches planned for 2025 and beyond. The pipeline includes new bracing solutions, a next-generation fusion system, and further integration of implant and bracing technologies. The company’s partnership with the Crossroads Pediatric Device Consortium underscores its commitment to innovation and leadership in pediatric orthopedics.
Key Considerations
This quarter highlights OrthoPediatrics’ successful shift from pure top-line growth to a more balanced model emphasizing profitability, cash flow, and sustainable scale. The company’s unique pediatric focus, robust product pipeline, and disciplined capital allocation create a strong foundation for long-term leadership in a historically underserved market.
Key Considerations:
- Scoliosis Momentum: Sustained double-digit growth is being driven by new product launches, 7D navigation, and increased account penetration.
- OPSB Expansion Potential: Early U.S. clinic ramp validates the model, while international expansion could drive future TAM upside.
- Gross Margin Dynamics: Higher domestic mix supports margins, though future international set sales could moderate gains.
- Cash Flow Inflection: Operating leverage is materializing, with management confident in achieving free cash flow positivity by Q4 2025.
- Regulatory and Product Catalysts: EU MDR approvals and a robust launch calendar position the company for accelerated international growth and product mix improvement.
Risks
International set sales and Latin America exposure remain a drag on profitability, and management is actively limiting new deployments in these regions to protect cash flow. Gross margin could face future pressure if the international mix increases or if set deployment outpaces revenue growth. Regulatory delays, especially for EU MDR approvals, could slow international expansion, while execution risk remains as the company scales OPSB and integrates new product launches.
Forward Outlook
For Q2 2025, OrthoPediatrics expects:
- Continued revenue momentum from scoliosis and trauma launches
- Further ramp in OPSB clinics and new product adoption
For full-year 2025, management raised guidance to:
- Revenue of $236 to $242 million (15% to 18% growth)
- Gross margin of 72% to 73%
- Adjusted EBITDA of $15 to $17 million
- Positive free cash flow in Q4 2025 and full-year breakeven in 2026
Management cited robust U.S. demand, strong product launch cadence, and minimal tariff exposure as key tailwinds, while maintaining a cautious stance on international set sales and summer seasonality.
- Seasonal volume in summer months is a major variable for the remainder of the year.
- International growth will be paced to prioritize cash conversion and profitability.
Takeaways
OrthoPediatrics is executing a well-defined playbook for profitable growth, with clear evidence of operating leverage and a differentiated pediatric focus. Investors should monitor the pace of OPSB expansion, international regulatory catalysts, and the company’s ability to sustain margin improvement as top-line growth continues.
- Share Gains Accelerate: Scoliosis and trauma launches are driving above-market growth and deeper account penetration, especially in the U.S.
- Profitability Milestones in Sight: Adjusted EBITDA improvements and sharply reduced cash burn signal a credible path to self-funded growth.
- Pipeline and Regulatory Catalysts: Multiple product launches and EU MDR approvals could unlock further upside, but execution and mix management will be critical as the business scales.
Conclusion
OrthoPediatrics is shifting decisively from growth-at-all-costs to a balanced, self-funding business model, leveraging its unique pediatric franchise and robust innovation pipeline. With increased guidance and clear margin expansion, the company is positioned to solidify its leadership as the pediatric orthopedics market continues to evolve.
Industry Read-Through
The quarter underscores a broader industry shift toward highly specialized, patient-focused platforms in MedTech, where breadth of offering and clinical integration drive market share gains. OrthoPediatrics’ success with set deployment, clinic expansion, and strong U.S. mix highlights the value of capital efficiency and operational discipline as growth companies mature. Peers in orthopedics and specialty medtech should note the compounding effects of portfolio breadth, targeted R&D, and disciplined international expansion, as well as the importance of navigating regulatory hurdles to unlock underpenetrated markets.