Orthofix at Stifel 2025 Healthcare Conference: Strategic Growth and Challenges

On Wednesday, 12 November 2025, Orthofix Medical Inc (NASDAQ:OFIX) participated in the Stifel 2025 Healthcare Conference, showcasing its strategic growth and operational challenges. While the company reported exceeding revenue and EBITDA expectations for Q3 2025, it faced hurdles in international stocking orders and pricing strategies. Orthofix remains committed to profitable growth and enhancing free cash flow.

Key Takeaways

• Orthofix exceeded Q3 revenue and EBITDA consensus, with a 6% revenue growth rate.
• The company focuses on U.S. Spine procedure growth and distributor transitions.
• Orthofix is launching new products like Verada and TruLock Elevate to drive future growth.
• Gross margin expansion is targeted through supplier consolidation and insourcing strategies.
• Management highlights ongoing transformation and underappreciated company value.

Financial Results

• Q3 2025 revenue and EBITDA both beat consensus estimates.
• Revenue growth reached 6%, with a positive free cash flow of $2.5 million.
• EBITDA margin expanded by approximately 230 basis points for the seventh consecutive quarter.
• U.S. Spine procedures grew by 10%, with pricing remaining mostly flat.
• Adjusted EBITDA guidance for 2025 implies a 10.5% margin, aiming for mid-teens by 2027.

Operational Updates

• Orthofix targets above-market growth in U.S. Spine, focusing on distributor consolidation.
• The Verada launch is underway, with a full launch expected in the second half of 2026.
• The company is leveraging the Voyager program to optimize capital equipment purchases.
• Orthofix's Orthopedics segment focuses on trauma and diabetic foot conditions.

Future Outlook

• Orthofix anticipates positive revenue growth in 2026 with new product launches and distributor transitions.
• Gross margin is expected to expand by 300 basis points by 2027 through operational efficiencies.
• The company is optimistic about its Orthopedics business, driven by new developments and team expansion.

Q&A Highlights

• Early international stocking orders significantly contributed to Q3 revenue beat.
• U.S. Spine pricing is expected to remain stable, with minimal erosion.
• Distributor transition is ongoing, enhancing growth and profitability.
• U.S. gross margins are approximately 15% higher than outside the U.S.

For more detailed insights, readers are encouraged to refer to the full conference call transcript.

Full transcript - Stifel 2025 Healthcare Conference:

Tom Stefan, Analyst, Stifel MedTech: Great. Good morning, everyone. Tom Stefan with Stifel MedTech. Really excited to have Orthofix here with us today. Massimo, Julie, Julie, thanks for joining.

Thanks for

Massimo Calafiore, Orthofix: having us.

Tom Stefan, Analyst, Stifel MedTech: Maybe I'll just kick things off, and and if you can sort of level set the audience, Massimo or Julie, start by quickly recapping the recent third quarter print and kind of what you view as some of the the key highlights.

Julie Dewey, Orthofix: Yes. So I mean, we I'll let Massimo follow-up, but I'll start. Good Q3, our top line, we beat revenue, beat consensus on revenue EBITDA, and we're free cash flow positive in the quarter, $2,500,000 had an accelerating revenue growth rate. Our revenue growth was 6% for Q3 and around two thirty basis points of EBITDA margin expansion, which was our seventh quarter consecutive quarter of EBITDA margin expansion. So all around solid performance that we saw within the quarter.

Massimo Calafiore, Orthofix: Yes. And from the commitment that we made since the beginning in all of the areas of on all of the focus areas for us, we beat the market in a very significant way. So you saw the growth that we had in United States in spine, which is actually speaking highly about all of the new strategy that we are developing, implementing about distribution, great growth in the orthopedic side in United States. BGT keep growing above market even if we are proudly the leader in the specific category. So I was very pleased about how the company performed.

Tom Stefan, Analyst, Stifel MedTech: That's great. Great recap, and we'll certainly dive into some of those dynamics deeper. Want to jump into kind of revenue and some near term questions. And Julie, I went down this road in Q and A on the call, believe, but wanted to revisit it and dig a little deeper. I think you mentioned that you beat 3Q revs by about 3,000,000, but didn't raise the midpoint of the guide.

So Julie, maybe if you can talk about some of the factors that may have played into that sort of cadence and dynamic.

Julie Dewey, Orthofix: Yeah. I mean the primary driver of our beat in Q3 was some stocking orders in international. And so just from a timing perspective, they came in a bit earlier from we expected them in Q4. They came in in Q3. And so really, that's why we're not raising, you know, raising guidance.

It was timing of stocking orders. All of our, you know, U. S. Businesses are accelerating either maintaining growth rate or accelerating growth rate into the fourth quarter, and it was really just that timing of international stocking orders. And then in addition, that was US or international spine on the international ortho side.

Last year had some stocking orders that will not repeat this Q4. So there's some comparability there too. But it's really all around timing of international stocking orders.

Tom Stefan, Analyst, Stifel MedTech: Got it. Okay. So timing of stocking orders in 3Q twenty twenty five for OUS spine and then 4Q twenty twenty five you face a difficult OUS orthopedics comp. Is Correct. That Got it.

Okay, perfect. Super helpful. And Massimo, you mentioned U. S. Spine, I want to spend some time there.

Procedure growth, really strong at plus 10%. Momentum seems to be accelerating. What do you kind of view as durable U. S. Spine Procedure volume growth moving forward?

Massimo Calafiore, Orthofix: Yes. Our goal is to keep growing above market. And I see that the floor that we have right now is something that we can achieve. Given that we need to remember that if you just see our spinal hardware, we still subscale compared to many. There is a confusion between the size of the organization per se and how big is our spine hardware business is.

And we see each other as a market taker in the space for many years to come. The dislocation that is coming that in the marketplace is taking is a positive sign for us. We commercializing a product line that is very competitive, is very fresh. We talk about our innovation how we are investing in innovation with Verada to really close the circle and put a ball on a product line that has led us attract the surgeon and commercial talent out there. But all of this is still within mind our philosophy of profitable growth.

So at the end, for us to create value, we need to connect the dots between the like our customer on one side and the shareholder community on the other side. So EBITDA positive free cash flow has been is going to be always our North Star to drive growth.

Tom Stefan, Analyst, Stifel MedTech: Absolutely. That's great. Super helpful. So maybe floor on U. S.

Spine procedure growth, think above market. And Julie, maybe for you, just the other side of that U. S. Spine growth equation being price, what about U. S.

Price? You'll lap the ongoing price headwinds, I think, fairly soon. So how do we think about price contribution to U. S. Buying growth moving forward?

Julie Dewey, Orthofix: So I mean, overall, I think if you look at our long range guidance, we assume about a 1% to 2% price erosion. I think really the reality is that, I mean, our pricing has really been flat if you exclude the one account that we're in the process of annualizing now. But so it's been pretty flat as we've looked at it. But long range guidance, we kind of assume a 1% to 2%.

Tom Stefan, Analyst, Stifel MedTech: Got it. Super helpful. And then Massimo, you mentioned this earlier on the distributors, but the targeted distributor transition seem to be, I'd say, already having a positive impact on the business. What inning are we in with these changes? Or I guess asked another way, like how long can this remain as an incremental growth driver for U.

S. Buy?

Massimo Calafiore, Orthofix: Yes. We are still in the middle of the road. The situation that we found when we start with Orthofix was a commercial organization that's very highly fragmented and has been a mandate for us to start to consolidate creating start to invest in distributor can actually can scale. It's going to be always an ongoing, let's say, an ongoing work that we have to do in the foreseeable future. I see this strategy divided the let's say in three pieces.

In one piece, in areas where it is very highly fragmented, we consolidate. In we are looking at geographic areas where we are not present to go and attract the talent that fits our profile. And we are very diligent on making sure that we don't rush on decision. And on the other side, now it's going to be our goal to make sure that within this top 30, we're going to keep bringing them up, help them to actually scale and to create a stronger partnership and loyalty with us. So I'm very excited.

We're bringing the 20 plus experience in the space in order to leverage the relationship that we have. And as you said, it's paying off.

Tom Stefan, Analyst, Stifel MedTech: Got it. That's great. And then maybe to pivot a bit within U. S. Spine, just to capital.

Massimo, can you talk a bit about 7D placement demand trends? And notably, kind of what the capital equipment purchasing environment looks like in The U. S. Sort of from your perspective?

Massimo Calafiore, Orthofix: Yes. We didn't we had a pretty good quarter. We didn't give any numbers, but, we just said that we were up compared to last year. So good results there for us. What we are doing in order to be a little bit less, let's say, less sensitive from our overall change of the capital environment.

Since Julia and I started, we focused really on creating earn outs agreement with our hospital. We call Voyager program. So pretty much there is no capital outlay upfront for the enabling technologies, but they the enabling technologies getting paid over time with the utilization of implants or biologics. It's very important to us for multiple reasons. A, because we saw that historically, the company that lever the companies that were able to leverage cap the capital equipment for earn out has been very successful in both in orthopedics and in spine.

So hardware utilization is important. We believe in the quality of our product. So we start to see that if the 7D, when we close an earn out contract, the overall utilization of our implants in the account increase. As we said that in aggregate, all of the accounts that have 7D available, they are 50% up from what their commitment purchase. So a great indication of the quality of both of the 7D on our implant.

And lastly, is a good indicator for all of you because if the analysis goes well for implant always means that is a new account for us. And now with biologic, if we have a strong presence in the account, can add the biologic together to as a pull through. So 7D strategy, I think that we can clearly say that is paying off.

Tom Stefan, Analyst, Stifel MedTech: Got it. Makes sense. And then last one here just on capital equipment. Are hospitals kind of shifting their purchasing mindset to sort of those types of selling programs, maybe more with earn outs. You know, are you hearing that from from customers that that sort of preferred relative to outright purchase?

Massimo Calafiore, Orthofix: I think that it really depends from it's a twofold. It depends of the account. You know, of course, some of them, it depends from the account and the experience that they had in the past. Within the Voyager program, what we offer, for instance, that is different from others, we have a free software updates. We are very responsive and we don't charge for maintenance that we need to do on the machine.

Other competitors actually do creating some kind of sour taste on this on some of the sometimes in the the on on the account where we try to go. So I think that is highly depend of the previous experience that they have and, of course, of their financial situation. But what we have in our favor is what I just said, that knowing the experience that they had in the past is not just we are not just competing with the technology, but also we are competing with our ability to create a very smooth experience with our program for all the accounts. So between the surgeon support and the fact that we are making we are thinking also not just for this with the surgeon also, are thinking also about the administrators that they need to manage their programs, we are seeing a very good reception of it.

Tom Stefan, Analyst, Stifel MedTech: Got it. That's great. Super helpful. Wanted to spend some time on Verada. And, Massimo, maybe I'll I'll stick with you.

Just to kick things off here, maybe if you can briefly explain to us the value proposition of Verata and its and its key points of differentiation.

Massimo Calafiore, Orthofix: Mhmm. So first of all, Verata is the first is the first product that we that we are launching that was fully designed with seven d with the experience with seven d in mind. So as every enabling technology platform, seven d is an open platform. But when when with Virata in mind, we are we designed the system in a way to create a much much smoother user experience in the OR. From the technical perspective, you know, besides the the the differentiation in the screw design, Verata is like the sum of multiple years of experience in the space on designing this kind of system.

And that's been interesting to me to see that during the alpha launch, we target just new account. And so and we did that for obvious reason. A, to start to make sure that we increase our surgeon pool. But from the alpha perspective, we want to make sure that surgeon with different experience had a better experience with Verata. And again, and the results so far has been fairly positive.

From the operational side, from the clinical side, during the merger between C Spine and Orthofix, Orthofix had a specific patent, there's a specific IP around the screw heads and, the pompone mechanism of the screw heads with the shank. And what brings to and what it brings on one side in the OR, let the surgeon to be, to give the surgeon the ability to change and game plan during the case which kind of tulip to use. But from the company perspective, from the hospital perspective, we shrunk the amount of screw and saw the volume of sets that we need to say in the OR. So I'm very excited because for these three reasons: A, the fact that it's going to keep validating the quality of of 70. B, the differentiation that we're going to give in the in the OR to the surgeon to game plan and make real time decision for that are the best for the patient and see for the decrease of cost to serve that we're going to bring with an item that is the most widely used device in the OR.

Every time you have a fusion, a lumbar fusion, you always have

Tom Stefan, Analyst, Stifel MedTech: a Got pedicle it. Super helpful there. And just in terms of the launch road map, so currently in the alpha launch, what does that entail? And then kind of where do you go from there to ultimately get you to the targeted 2H twenty six full launch?

Massimo Calafiore, Orthofix: Yeah. I think that the vast majority of the time is going to be just the waiting time to receive the instrument set. So we're going to close the alpha end of this year, thirty, forty five days to redesign, and now is gonna be the time to place the order. So it's gonna be just a waiting time to make sure that we have the inventory in available in house.

Tom Stefan, Analyst, Stifel MedTech: Got it. Okay. And so I guess with that in mind, do we think about Verrada as more of a 2027 incremental driver? Or can it maybe start to help drive growth incrementally in the 2026? Maybe for you, Julie.

Julie Dewey, Orthofix: Yes. So it will definitely drive growth in the 2026, but 2027 will have the full year impact. And so I think it accelerate into 2027.

Massimo Calafiore, Orthofix: Got it. Also to think about Virata, it's a multiyear development program. Right now, what we are launching it what the Alpha launch, it just focused on the open market, which is the lion's share of the overall spine market in 2026, while we are going to manufacture start to manufacturing the sets for VEDATA open, we're going to start alpha for the MIS version, which is going to be launched, you can infer, in 2027. In 2027, we're going to start the alpha for the for the deformity version that is going to be launched in the following years. So it's a big program for us.

It's a great investment that is going to bring sequential growth, sequential catalyst for us the spine side for That's multiple great.

Tom Stefan, Analyst, Stifel MedTech: Maybe to pivot to kind of 2026 or I guess sort of stick with 2026. Julie, I know you're not guiding, but maybe if you can talk about just kind of key puts and takes as we think about revenue next year.

Julie Dewey, Orthofix: Yeah. So I think, you know, we see you know, we're setting ourselves up, you know, for to have a positive year next year. I think, you know, the Verada launch midyear. It'll be our first full year of TruLock Elevate in our foot bone nail. And then, of course, the distributor transitions that we did this year, you know, will have a full year impact from those as well.

So we, you know, you see that we have a lot of tailwinds going into the year. I think, you know, it takes I'm going to say, you know, I think we've done as much as we can to de risk the number. If there's external factors, it's price or something like that. But beyond and, you know, timing of product launches, but we feel good about going into next year.

Tom Stefan, Analyst, Stifel MedTech: Got it, that's great. Wanted to kind of drill in deeper on one sort of new dynamic we're getting more familiar with, but for bone growth therapy, believe there were some CMS changes that potentially could have an early impact early next year. Julie, can you explain what this is and maybe how we should be thinking about that in the context of BGT revenue next year, notably in the first quarter?

Julie Dewey, Orthofix: So this Julie will take that.

Julie Dewey, Orthofix: Julie Dewey.

Julie Dewey, Orthofix: So CMS is implementing a pilot program in January in certain episode of care categories, BGT being one of them. We expect though the annual impact for us will be immaterial based on what we've seen. And we don't importantly, I think we don't expect it to change physician prescribing behavior at all, which would be a real impact for us. So no impact on physician prescribing behavior, and hospitals will just manage the timing. CMS occasionally does these programs.

Hospitals have had to deal with this before, so immaterial impact on an annual basis for us next year.

Tom Stefan, Analyst, Stifel MedTech: Okay, great. Super helpful. And then I want to move to kind of margins and profitability. And I'll start on gross margin. The 2027 financial targets included the goal of, I think, 300 bps of GM expansion.

To kick things off here, talk about kind of key drivers of that.

Julie Dewey, Orthofix: Yes. So there's three primary key drivers that we've talked about. One of those is supplier and they're primarily targeted towards our spine margins as that's where we're below industry, you know, industry norms. And so from a spine perspective, supplier consolidation, I think, you know, as the organization has grown, has not necessarily been strategic in its supply base, and so we're working through that. It's been very transactional, just PO based.

So working through, you know, narrowing our supply base, going through contracting, getting volume commitments and volume discounts. The second thing is in sourcing our warehousing and distribution, which has been outsourced for the spine business and really not the ability to leverage economies of scale there. So we're insourcing that and consolidating that with our facilities in Dallas, Texas area. And then, the third is insourcing some screw manufacturing to our manufacturing facility that we have for our orthopedics business in Verona, Italy, and seeing some, you know, economies of scale and some reduced cost there. And then really kind of underlying all of that is, you know, some mix benefit we expect to see as well from growing The U.

S. Business and particularly the international U. S. Business much faster than the OUS business.

Tom Stefan, Analyst, Stifel MedTech: Is there as a follow-up to that, between U. S. And OUS, is there a rough way to think about kind of the gross margin differential there?

Julie Dewey, Orthofix: I mean, we necessarily break that out, but I would say just say generally speaking, you're probably going to have a 15 plus percent margin difference between the two.

Tom Stefan, Analyst, Stifel MedTech: Got it. Got it. Okay, great.

Massimo Calafiore, Orthofix: And then And given how we go to market, the cost to serve is still comparable.

Tom Stefan, Analyst, Stifel MedTech: Got it. Makes sense. Maybe working my way down the P and L. Midpoint of 2025 adjusted EBITDA guidance, hopefully, I have some numbers correct, I think implies 10.5% for full year 2025. You're targeting mid teens by 2027.

So let's say that's 15% on the low end or at least 200 bps per annum. That's above this year tracking toward, I think, 100 bps on a pro form a basis year over year. So we just discussed gross margin, I think a lot of levers, but broadly speaking, talk about your level of confidence in achieving this 2027 target.

Julie Dewey, Orthofix: Yes. I mean, one, on a pro form a basis, yes, 100, but I think you know, we took action and part of the discontinuation of M6 was to improve at our EBITDA profile. So if you look at it kind of from that perspective and where we started, it's going to be around 200, a little over 200 basis point EBITDA margin expansion. And so I think, you know, again, we're going to see the flow through from the gross margin expansion. We'll be a little less than 100 bps on that this year, so that's going to be, you know, contributing as we go into the '26, 27, a little above what we've seen this year.

We're exiting at 72%, so 100 basis point improvement on our exit, but not for the full year print. And then we really believe that from a leverage perspective on our SG and A, excluding commissions, marketing costs, those types of things, that we really have the organization that we need to be able to scale to a much larger revenue number. So we expect that leverage to pull through as well.

Tom Stefan, Analyst, Stifel MedTech: That's great. And as a follow-up to that, Massimo, we talked about the distributor transitions. I think there's a lot of top line benefits there, and we've seen the top 30 distributors really performing strongly. Talk about the margin impact from the consolidation, from your actions with The U. S.

Kind of commercial footprint.

Massimo Calafiore, Orthofix: I don't think that we're going to talk about this.

Julie Dewey, Orthofix: Yes. I mean, I would say it's generally less of a margin impact and more of where you'll see efficiencies is on, you know, working capital and set deployment because they're much more efficient typically with your assets than having a lot of small non scale distributors. So that's where you see the impact is more on the, working capital and set utilization side.

Massimo Calafiore, Orthofix: Right. Yeah. Because while I made the comparison with what we do internationally, while internationally they buy the instrumentation, the instrument set and the implants, Our distributors in United States, the instrument set is proper is our asset that we give to our distributor to perform the procedure. This is why I think that the real the benefit for us and I keep talking about scale is because now you can do a higher amount of surgeries with less asset that you pretty much mobilize it just for the specific distributor. So what we like of the strategy that, again, is connected also not just on growth but also on profitability.

Tom Stefan, Analyst, Stifel MedTech: Got it. That's great. And then maybe last one on margin. So the 2027 adjusted EBITDA margin goal, Julie, how do we think about the path to getting there between 2026 and 2027? Is linear a reasonable assumption?

Is it weighted more toward a certain year? Just curious, you know, as we kind of figure all these inputs, what's kind of timing of that pathway?

Julie Dewey, Orthofix: Yeah, I mean we expect it to be weighted a little bit more towards '27. We've said that kind of since the beginning just because some of the gross margin initiatives are a longer tail. You know, think about the supplier consolidation. That'll be, you know, to late next year when we get that fully implemented. And so again, that'll be a 2027 impact, so a little bit, you know, kind of back end loaded in the timing.

Tom Stefan, Analyst, Stifel MedTech: Got it. Makes sense. Maybe to pivot in the last couple minutes, I'll try to squeeze one or two more in. Orthopedics, we haven't talked too much about. Massimo, your outlook for that business, and I'll drill in with a more specific question.

Do you believe a growth acceleration next year on the top line is within the range of outcomes as we think about TRULOC being more incremental, other new products? What's kind of, let's call it, the intermediate to long term outlook for the Orthopedics business?

Massimo Calafiore, Orthofix: Look, I see that, for sure the business is not decelerating, the one I can tell you wholeheartedly, and mostly because what you just said. I'm very bullish about what we're doing there given that we identify we identified a specific segment of trauma where we can actually have a meaningful product differentiation. We are the only company with internal, external system to address all of these complex cases. We identified within this $2,600,000,000 opportunities this segment of curing diabetic foot with our TL Elevate. And so between the investment we're doing on FitBond, between all of the work that we're doing around market creation around Elevate and all of the work there's also we're doing there commercially, we are building up a team of leaders that actually manage a multibillion dollar franchise in the past.

I think that we have a great opportunity there.

Tom Stefan, Analyst, Stifel MedTech: That's great. That's great. And this might be a good segue into the last question I have in about a minute. But Massimo, just to wrap things up, I mean, what do you think is the most underappreciated part of the ortho fix story or parts, if there are many in your view?

Massimo Calafiore, Orthofix: I think that the main I think what we are facing right now is this under appreciation of our company that coming out from pretty difficult years was able to really change the foundation of the business. The improvement that we did on free cash flow is remarkable. All of the seven they continue beating that is continue beating our expectation on EBITDA. Think that is seventh quarter that we keep delivering it. The fact that our portfolio is built in a way that it can let us go in the account from a multiple point of access.

And the fact that we can grow above market without a big depletion of our of, you know, of our capital is kind of something that I think that is highly under underappreciated. And but, again, I think that I believe that we have everything in our disposable everything available to be to show the market that our technology can win, our focused strategy can win and that we can do everything with in mind this profitable growth mantra.

Tom Stefan, Analyst, Stifel MedTech: It's a great note to end on. Massimo, Julie, Julie, thanks so much.

Julie Dewey, Orthofix: Thank you.

Massimo Calafiore, Orthofix: Thank you.

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