# Orthofix Medical Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [Orthofix Medical Inc.](/companies/ofix.md) (CIK 884624)
- Form: 10-Q
- Filed: 2025-08-05
- Accepted by EDGAR: Aug 5, 2025, 11:05 ET
- Period: 2025-06-30
- Accession: 0000950170-25-102384
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/884624/000095017025102384/ofix-20250630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/884624/000095017025102384/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $203.1m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $396.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $63.6m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $135.6m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $139.5m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | $261.2m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $15.9m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $35.7m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2025-04-01 to 2025-06-30 | $136.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2025-01-01 to 2025-06-30 | $269.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | −$16.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$64.9m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | −$142.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $819.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$14.1m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$67.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.36 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$1.71 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.36 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$1.71 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 39,501,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 39,317,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$6.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $13.8m | us-gaap:PaymentsToAcquireProductiveAssets |
| Cash and equivalents | at 2025-06-30 | $65.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $395.8m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $837.2m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $148.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $378.8m | us-gaap:Liabilities |
| Long-term debt | at 2025-06-30 | $157.0m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2025-06-30 | $458.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,683 characters.

The following discussion and analysis of Orthofix Medical Inc.'s (sometimes referred to as "we," "us" or "our") financial condition and results of operations should be read in conjunction with the discussion under the heading "Forward-Looking Statements" and our condensed consolidated financial statements and related notes thereto appearing elsewhere in this Form 10-Q.

### Executive Summary

We are a global medical technology company headquartered in Lewisville, Texas. By providing medical technologies that heal musculoskeletal pathologies, we deliver exceptional experiences and life-changing solutions to patients around the world. We offer a comprehensive portfolio of spinal hardware, bone growth therapies, specialized orthopedic solutions, biologics, and enabling technologies, including the 7D FLASH navigation system. To learn more, visit Orthofix.com and follow on LinkedIn. Information included on our website is not incorporated into, or otherwise creates a part of, this report.

Notable financial metrics in the second quarter of 2025 and recent achievements include the following:

- Second quarter 2025 net sales of $203.1 million, including sales from our M6 artificial cervical and lumbar discs, and pro forma net sales of $200.7 million, excluding sales from our M6 discs, representing an increase of 2% on a reported basis and 4% on a pro forma constant currency basis compared to second quarter 2024
- U.S. Spine Fixation net sales growth of 5% and procedure volume growth of 7% compared to second quarter 2024
- Bone Growth Therapies ("BGT") net sales of $62.6 million, representing growth of 6%, with BGT Fracture net sales growth of 7% compared to second quarter 2024
- Global Orthopedics net sales of $33.3 million, achieving constant currency growth of 5%, and U.S. Orthopedics net sales growth of 28% compared to second quarter 2024
- Initiated global commercial launch of the TrueLok Elevate Transverse Bone Transport ("TBT") System – the first FDA-cleared device for TBT to correct non-unions and bony or soft tissue deformities or defects
- Announced U.S. commercial launch of the Reef L Interbody System – completes Reef interbody product family with a full-spectrum solution for lateral lumbar spinal fusion procedures
- Second quarter 2025 net loss of $(14.1) million on a reported basis; Non-GAAP pro forma adjusted EBITDA of $20.6 million, with pro forma adjusted EBITDA margin expanding approximately 190 basis points compared to reported non-GAAP adjusted EBITDA for the second quarter 2024
- Six consecutive quarters of adjusted EBITDA margin expansion; positive free cash flow of $4.5 million for second quarter 2025

### Results of Operations

The following table provides certain items in our condensed consolidated statements of operations as a percent of net sales:

*(Unaudited)*

|  | Three Months Ended June 30, 2025 (%) | 2024 (%) | Six Months Ended June 30, 2025 (%) | 2024 (%) |
| --- | ---: | ---: | ---: | ---: |
| Net sales | 100.0 | 100.0 | 100.0 | 100.0 |
| Cost of sales | 31.3 | 32.2 | 34.2 | 32.3 |
| Gross profit | 68.7 | 67.8 | 65.8 | 67.7 |
| Sales, general, and administrative | 67.3 | 67.5 | 67.9 | 68.7 |
| Research and development | 7.8 | 9.1 | 9.0 | 9.7 |
| Acquisition-related amortization, impairment, and remeasurement | 1.5 | 3.7 | 5.3 | 3.3 |
| Operating loss | (7.9) | (12.5) | (16.4) | (14.0) |
| Net loss | (6.9) | (16.8) | (16.9) | (17.9) |

23

### Net Sales by Product Category and Reporting Segment

Our operations are managed through two reporting segments: Global Spine and Global Orthopedics. The following table provides net sales by product category by reporting segment:

*(Unaudited, U.S. Dollars, in millions)*

|  | Three Months Ended June 30, 2025 | 2024 | Change | Constant Currency Change |
| --- | ---: | ---: | ---: | ---: |
| Bone Growth Therapies | $62.6 | $59.1 | 5.8% | 5.8% |
| Spinal Implants, Biologics and Enabling Technologies\* | 104.8 | 103.1 | 1.6% | 1.6% |
| Global Spine\* | 167.4 | 162.2 | 3.2% | 3.2% |
| Global Orthopedics | 33.3 | 30.6 | 8.9% | 5.3% |
| **Pro forma net sales\*** | **200.7** | **192.8** | **4.1%** | **3.5%** |
| Impact from discontinuation of M6 product lines | 2.5 | 5.8 | (57.5%) | (57.8%) |
| Reported net sales | $203.1 | $198.6 | 2.3% | 1.7% |

*(Unaudited, U.S. Dollars, in millions)*

|  | Six Months Ended June 30, 2025 | 2024 | Change | Constant Currency Change |
| --- | ---: | ---: | ---: | ---: |
| Bone Growth Therapies | $117.6 | $111.6 | 5.4% | 5.4% |
| Spinal Implants, Biologics and Enabling Technologies\* | 209.1 | 205.4 | 1.8% | 1.8% |
| Global Spine\* | 326.7 | 317.0 | 3.1% | 3.1% |
| Global Orthopedics | 63.1 | 57.9 | 9.0% | 8.2% |
| **Pro forma net sales\*** | **389.8** | **374.9** | **4.0%** | **3.9%** |
| Impact from discontinuation of M6 product lines | 6.9 | 12.3 | (44.0%) | (43.9%) |
| Reported net sales | $396.7 | $387.2 | 2.5% | 2.4% |

\* Results above for each of Spinal Implants, Biologics, and Enabling Technologies; Global Spine; and pro forma net sales exclude the impact of the Company's discontinuation of its M6 product lines. As pro forma net sales represent a Non-GAAP measure, see the reconciliation above of the Company's pro forma net sales to its reported figures under U.S. GAAP. The Company's reported figures under U.S. GAAP represent each of the pro forma line items discussed above plus the impact from discontinuation of the M6 product lines shown above.

Global Spine

Global Spine offers the following product categories:

- Bone Growth Therapies, which manufactures, distributes, sells, and provides support services for market-leading devices used adjunctively in high-risk spinal fusion procedures and treats both nonunion and acute fractures in the orthopedic space. Bone Growth Therapies uses distributors and a direct sales channel to sell its devices and provide associated support services to hospitals, healthcare providers, and patients in the U.S.
- Spinal Implants, Biologics, and Enabling Technologies is comprised of a broad portfolio of spine fixation implant products used in surgical procedures of the spine, which includes one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments and image-guided surgical solutions to facilitate degenerative, minimally invasive, and complex surgical procedures. Spinal Implants, Biologics, and Enabling Technologies products are sold through a network of distributors and sales representatives to hospitals and healthcare providers on a global basis for Spinal Implants and Enabling Technologies, and primarily within the U.S. for Biologics.

#### Three months ended June 30, 2025 compared to 2024

Net sales of $169.8 million, an increase of $1.8 million or 1.1%

- Bone Growth Therapies net sales increased $3.4 million, or 5.8%, largely driven by (i) favorable changes in average sales prices, (ii) increase in gross order volumes from our continued investment in our direct sales channels for both the spine and fracture markets, and (iii) continued share growth of AccelStim
- Spinal Implants, Biologics, and Enabling Technologies net sales, excluding sales from the M6 product lines, increased $1.7 million, or 1.6%, primarily due to increased sales growth from new and existing high-volume distribution partners, particularly within Spinal Implants, which saw growth in its cervical and thoracolumbar franchises; growth in these areas were partially offset by a decline in Biologics net sales
- Net sales from the M6 product lines decreased $3.3 million, or 57.6%, as a result of the announcement and discontinuation of the product lines to focus resources and investment in more profitable growth opportunities

#### Six months ended June 30, 2025 compared to 2024

Net sales of $333.7 million, an increase of $4.3 million or 1.3%

- Bone Growth Therapies net sales increased $6.0 million, or 5.4%, largely driven by (i) favorable changes in average sales prices, (ii) increase in gross order volumes from our continued investment in our direct sales channels for both the spine and fracture markets, and (iii) continued share growth of AccelStim
- Spinal Implants, Biologics, and Enabling Technologies net sales, excluding sales from the M6 product lines, increased $3.7 million, or 1.8%, primarily due to increased sales growth from new and existing high-volume distribution partners, particularly within Spinal Implants, which saw growth in each of cervical, interbody, thoracolumbar, and spine fixation franchises; growth in these areas were partially offset by a decline in Biologics net sales
- Net sales from the M6 product lines decreased $5.4 million, or 44.0%, as a result of the announcement and discontinuation of the product lines to focus resources and investment in more profitable growth opportunities

Global Orthopedics

Global Orthopedics offers products and solutions for the underserved limb reconstruction market that encompasses four pillars: deformity correction, limb lengthening, complex fracture management, and limb preservation. Global Orthopedics sells its products through a global network of distributors and sales representatives to hospitals, healthcare organizations, and healthcare providers.

#### Three months ended June 30, 2025 compared to 2024

Net sales of $33.3 million, an increase of $2.7 million or 8.9% on a reported basis and 5.3% on a constant currency basis

- U.S. growth of $2.1 million, or 27.7%, largely due to investments made in recent product launches, commercial execution within our sales channel, and from growth within our TrueLok and Fitbone product lines
- International sales decreased $0.5 million, or 2.2% on a constant currency basis, primarily driven by large orders made by non-governmental organizations in the prior year partially offset by growth within our TrueLok and Fitbone product lines in Europe
- Increase of $1.1 million due to movement in foreign currency exchange rates, which had a favorable impact on net sales in the quarter

#### Six months ended June 30, 2025 compared to 2024

Net sales of $63.1 million, an increase of $5.2 million or 9.0% on a reported basis and 8.2% on a constant currency basis

- U.S. growth of $3.0 million, or 18.7%, largely due to investments made in recent product launches, commercial execution within our sales channel, and from growth within our TrueLok, Fitbone, and OSCAR PRO product lines
- International growth of $1.8 million, or 4.3% on a constant currency basis, primarily driven by recent product launches in Europe and timing of certain tender offers and stocking distributor orders
- Increase of $0.4 million due to movement in foreign currency exchange rates, which had a favorable impact on net sales in the quarter

### Gross Profit

*(Unaudited, U.S. Dollars, in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | % Change | Six Months Ended June 30, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $203,121 | $198,620 | 2.3% | $396,767 | $387,228 | 2.5% |
| Cost of sales | 63,588 | 63,871 | (0.4%) | 135,615 | 125,237 | 8.3% |
| Gross profit | $139,533 | $134,749 | 3.6% | $261,152 | $261,991 | (0.3%) |
| Gross margin | 68.7% | 67.8% | 0.9% | 65.8% | 67.7% | -1.8% |

#### Three months ended June 30, 2025 compared to 2024

Gross profit increased $4.8 million

- Increase in gross profit of $3.0 million driven by a reduction of amortization of the inventory fair value step-up recognized in the merger with SeaSpine Holdings Corporation (the "SeaSpine Merger"), which were amortized over the expected sales cycles of the acquired inventory and concluded in December 2024
- Increase in gross profit also driven by net sales growth across all principal product categories and from reduced headcount and overhead costs as a result of our decision to discontinue the M6 product lines
- Partially offset by an increase in inventory reserve expenses of $2.8 million, primarily driven by our decision to discontinue the M6 product lines in order to focus resources and investments on more profitable growth opportunities

#### Six months ended June 30, 2025 compared to 2024

Gross profit decreased $0.8 million

- Decrease in gross profit of $11.6 million resulting from an increase in inventory reserve expenses, primarily driven by our decision to discontinue the M6 product lines in order to focus resources and investments on more profitable growth opportunities
- Partially offset by increase in gross profit of $6.1 million driven by a reduction of amortization of the inventory fair value step-up recognized in the SeaSpine Merger, which were amortized over the expected sales cycles of the acquired inventory and concluded in December 2024
- Further offset by an increase in gross profit driven by net sales growth across all principal product categories

### Sales, General, and Administrative Expense

*(Unaudited, U.S. Dollars, in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | % Change | Six Months Ended June 30, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales, general, and administrative | $136,493 | $134,218 | 1.7% | $269,474 | $265,909 | 1.3% |
| As a percentage of net sales | 67.2% | 67.6% | (0.4%) | 67.9% | 68.7% | (0.8%) |

#### Three months ended June 30, 2025 compared to 2024

Sales, general, and administrative expense increased $2.3 million

- Increase of approximately $4.0 million in compensation related costs, including variable compensation, due to the increase in net sales and from increased headcount
- Increase of $3.9 million associated with certain legal matters, including our ongoing arbitration claims with former executives and the related securities class action complaints
- Partially offset by a decrease of $5.3 million in succession charges as a result of changes made in our executive leadership positions in the prior year

#### Six months ended June 30, 2025 compared to 2024

Sales, general, and administrative expense increased $3.6 million

- Increase of $7.4 million related to impairments on certain assets and losses incurred as a result of our decision to discontinue the M6 product lines
- Increase of $4.6 million associated with certain legal matters, including our ongoing arbitration claims with former executives and the related securities class action complaints
- Partially offset by a decrease of $6.1 million in succession charges as a result of changes made in our executive leadership positions in the prior year
- Partially offset by a decrease of $2.3 million in integration-related costs, mostly stemming from severance expenses and professional fees incurred in the prior year

### Research and Development Expense

*(Unaudited, U.S. Dollars, in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | % Change | Six Months Ended June 30, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and development | $15,934 | $18,049 | (11.7%) | $35,700 | $37,541 | (4.9%) |
| As a percentage of net sales | 7.8% | 9.1% | (1.3%) | 9.0% | 9.7% | (0.7%) |

#### Three months ended June 30, 2025 compared to 2024

Research and development expense decreased $2.1 million

- Primarily due to synergies achieved of around $2.5 million in comparison to the second quarter of 2024 as a result of our recent restructuring activities, mostly related to headcount, professional fees, and reduced spend for clinical studies as a result of our decision to discontinue the M6 product lines
- Partially offset by an increase in legal settlement expenses of $0.5 million

#### Six months ended June 30, 2025 compared to 2024

Research and development expense decreased $1.8 million

- Primarily due to synergies achieved of around $6.0 million in comparison to 2024 as a result of our recent restructuring activities, mostly related to headcount, professional fees, and reduced spend for clinical studies as a result of our decision to discontinue the M6 product lines
- Further driven by a reduction of $0.7 million in costs to comply with the European Union Medical Device Regulations
- Partially offset by $3.7 million related to the impairments associated with our discontinuation of the M6 product lines and other organizational restructuring activities
- Partially offset by an increase in legal settlement expenses of $0.5 million

### Acquisition-related Amortization, Impairment, and Remeasurement

*(Unaudited, U.S. Dollars, in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | % Change | Six Months Ended June 30, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Acquisition-related amortization, impairment, and remeasurement | $3,109 | $7,388 | (57.9%) | $20,854 | $12,784 | 63.1% |
| As a percentage of net sales | 1.5% | 3.7% | (2.2%) | 5.3% | 3.2% | 2.1% |

Acquisition-related amortization, impairment, and remeasurement consists of (i) amortization and impairment related to intangible assets acquired through business combinations or asset acquisitions and (ii) remeasurement of related contingent consideration arrangements, which are recognized immediately upon acquisition.

#### Three months ended June 30, 2025 compared to 2024

Acquisition-related amortization, impairment, and remeasurement decreased $4.3 million

- Decrease of $3.8 million associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the SeaSpine Merger
- Decrease of $0.4 million in amortization expense of acquired intangibles, primarily as a result of our decision in the first quarter of 2025 to discontinue the M6 product lines and other product portfolio decisions

#### Six months ended June 30, 2025 compared to 2024

Acquisition-related amortization, impairment, and remeasurement increased $8.1 million

- Increase of $13.7 million in amortization and impairment expense of acquired intangibles, primarily associated with the impairment of certain acquired intangible assets as a result of the discontinuation of the M6 product lines and other product portfolio decisions
- Partially offset by a decrease of $5.6 million associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the SeaSpine Merger

### Non-operating Income and Expense

*(Unaudited, U.S. Dollars, in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | % Change | Six Months Ended June 30, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense, net | $(3,950) | $(4,943) | (20.1%) | $(8,456) | $(9,501) | (11.0%) |
| Other income/(expense), net | 5,730 | (2,510) | (328.3%) | 6,976 | (3,784) | (284.4%) |

#### Three months ended June 30, 2025 compared to 2024

Interest expense, net decreased $1.0 million

- Favorable change of $0.8 million associated with interest earned associated with certain Employee Retention Credit refunds received during the second quarter of 2025
- Favorable change of $0.3 million attributable to a decrease in interest expense resulting from the amortization of debt issuance costs

Other income (expense), net increased $8.2 million

- Favorable change of $3.6 million associated with foreign currency exchange rates, as we recorded a non-cash remeasurement gain of $2.7 million in the second quarter of 2025 compared to a loss of $0.9 million in the second quarter of 2024
- Increase of $2.8 million associated with the receipt of Employee Retention Credit refunds received during the second quarter of 2025
- Increase of $1.4 million associated with the impairment of certain investments measured at fair value in the prior year

#### Six months ended June 30, 2025 compared to 2024

Interest expense, net decreased $1.0 million

- Favorable change of $0.8 million associated with interest earned associated with certain Employee Retention Credit refunds received during the second quarter of 2025
- Favorable change of $0.7 million attributable to a decrease in interest expense resulting from the amortization of debt issuance costs
- Partially offset by a decrease of $0.3 million of interest income as a result of the conversion of our former convertible loan with Neo Medical into preferred equity securities in the second quarter of 2024

Other income (expense), net increased $10.8 million

- Favorable change of $6.2 million associated with foreign currency exchange rates, as we recorded a non-cash remeasurement gain of $3.8 million in 2025 compared to a loss of $2.4 million in 2024
- Increase of $2.8 million associated with the receipt of Employee Retention Credit refunds received during the second quarter of 2025
- Increase of $1.4 million associated with the impairment of certain investments measured at fair value in the prior year

### Income Taxes

*(Unaudited, U.S. Dollars, in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | % Change | Six Months Ended June 30, 2025 | 2024 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Income tax (benefit) expense | $(142) | $1,084 | (113.1%) | $819 | $1,935 | (57.7%) |
| Effective tax rate | 1.0% | (3.3%) | 4.3% | (1.2%) | (2.9%) | 1.7% |

#### Three months ended June 30, 2025 compared to 2024

- The decrease in tax expense compared to the prior year period is primarily due to decreased tax on foreign operations and tax benefit related to certain long-lived intangible assets
- The primary factor affecting our tax expense for the second quarter of 2025 compared to the prior year period was tax amortization on certain acquired intangibles and financial statement losses not benefitted

#### Six months ended June 30, 2025 compared to 2024

- The decrease in tax expense compared to the prior year period is primarily due to decreased tax on foreign operations and tax benefit related to certain long-lived intangible assets
- The primary factor affecting our tax expense for the second quarter of 2025 compared to the prior year period was tax amortization on certain acquired intangibles and financial statement losses not benefitted

### Liquidity and Capital Resources

Cash, cash equivalents, and restricted cash at June 30, 2025, totaled $68.7 million compared to $85.7 million at December 31, 2024. The following table presents the net change in cash, cash equivalents, and restricted cash for the six months ended June 30, 2025, and 2024, respectively:

*(Unaudited, U.S. Dollars, in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Change |
| --- | ---: | ---: | ---: |
| Net cash used in operating activities | $(6,752) | $(9,611) | $2,859 |
| Net cash used in investing activities | (13,833) | (20,583) | 6,750 |
| Net cash provided by financing activities | 1,989 | 21,678 | (19,689) |
| Effect of exchange rate changes on cash | 1,547 | (375) | 1,922 |
| Net change in cash and cash equivalents | $(17,049) | $(8,891) | $(8,158) |

The following table presents free cash flow, a non-GAAP financial measure, which is calculated by subtracting capital expenditures from net cash from operating activities:

*(Unaudited, U.S. Dollars, in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | Change |
| --- | ---: | ---: | ---: |
| Net cash used in operating activities | $(6,752) | $(9,611) | $2,859 |
| Capital expenditures | (13,845) | (20,533) | 6,688 |
| Free cash flow | $(20,597) | $(30,144) | $9,547 |

### Operating Activities

Cash flows from operating activities increased $2.9 million

- Favorable change in net loss of $2.3 million
- Favorable change of $6.9 million associated with non-cash gains and losses, such as depreciation and amortization, inventory reserve expenses, the amortization of the inventory fair value step-up recognized in the SeaSpine Merger, remeasurement of contingent consideration obligations, and share-based compensation expense
- Unfavorable change of $6.3 million relating to changes in working capital accounts, primarily attributable to changes in other current assets and accounts receivable

Two of our primary working capital accounts are accounts receivable and inventory. Days sales in receivables were 58 days at June 30, 2025, compared to 57 days at June 30, 2024 (calculated using second quarter net sales and ending accounts receivable). Inventory turns improved to 1.5 times as of June 30, 2025 compared to 1.2 times as of June 30, 2024 (calculated using trailing twelve-month cost of goods sold and ending net inventories).

### Investing Activities

Cash flows used in investing activities decreased $6.8 million

- Decrease in spend of $6.7 million in capital expenditures

### Financing Activities

Cash flows from financing activities decreased $19.7 million

- Decrease of $25.0 million associated with net borrowing activities related to our credit facilities
- Partially offset by an increase of $3.5 million in net proceeds from the issuance of common shares
- Further offset by a favorable change of $1.9 million in debt issuance costs associated with our credit facilities

#### Credit Facilities

On November 7, 2024, we entered into a $275.0 million secured credit agreement (the "Credit Agreement") with Oxford Finance LLC, as administrative agent and as collateral agent ("Oxford") and certain lenders party thereto, including Oxford, K2 HealthVentures LLC, and HSBC Ventures USA Inc. Certain of our foreign subsidiaries joined the Credit Agreement as guarantors shortly after the signing date. The Credit Agreement provides for a $160.0 million senior secured term loan (the "Initial Term Loan") and a $65.0 million senior secured delayed draw term loan facility (the "Term B Loan"). Draws under the Term B Loan are at our option from January 1, 2025 through June 30, 2026, subject to, among other conditions, our continued compliance with a pro-forma total debt-to-EBITDA leverage ratio of less than 4.0x. EBITDA is a non-GAAP financial measure which represents earnings before interest income (expense), income taxes, depreciation, amortization, and other negotiated addbacks and adjustments. In addition, at Oxford's discretion, an additional $50.0 million of draw capacity is available through January 1, 2029 (the "Term C Loan" and, together with the Term B Loan, the "Delayed Draw Term Loans" and collectively with the Initial Term Loan, the "Credit Facilities"). The Initial Term Loan and Delayed Draw Term Loans, to the extent ultimately drawn, will each mature in November 2029, following an interest-only payment period ending December 2028, and monthly amortization of principal and accrued interest between January 2029 and November 2029.

The Credit Agreement contains financial covenants requiring us to maintain a minimum level of liquidity at all times and to maintain a maximum total debt-to-EBITDA leverage ratio (measured on a quarterly basis) during the term of the facility. As of June 30, 2025, we were in compliance with all required financial covenants.

As of June 30, 2025, we had $160.0 million of outstanding borrowings under the Credit Agreement related to the Initial Term Loan. We have not made any borrowings under the Delayed Draw Term Loans as of June 30, 2025.

As of June 30, 2025, we had no borrowings on our available lines of credit in Italy, which provide up to an aggregate amount of €5.5 million ($6.5 million).

### Other

For information regarding contingencies, see Note 7 to the Notes to the Unaudited Condensed Consolidated Financial Statements contained herein.

#### Lattus Spine LLC ("Lattus") Contingent Consideration

Under the terms of a contingent consideration obligation in a purchase agreement assumed in the SeaSpine Merger, we may be required to make installment payments at certain dates based on future net sales of certain products (the "Lateral Products"). The estimated fair value of the contingent consideration arrangement as of June 30, 2025, was $14.0 million; however, the actual amount ultimately paid could be higher or lower than the estimated fair value of the contingent consideration. As of June 30, 2025, we classified the remaining contingent consideration liability of $10.5 million and $3.5 million within other current liabilities and other long-term liabilities, respectively. For additional discussion of this matter, see Note 6 of the Notes to the Unaudited Condensed Consolidated Financial Statements.

### Off-balance Sheet Arrangements

As of June 30, 2025, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, cash flows, liquidity, capital expenditures or capital resources that are material to investors.

### Contractual Obligations

There have been no material changes in any of our material contractual obligations as disclosed in our Form 10-K for the year ended December 31, 2024.

### Critical Accounting Estimates

Our discussion of operating results is based upon the condensed consolidated financial statements and accompanying notes. The preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our critical accounting estimates are described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our critical accounting estimates during the quarter covered by this report.

### Recently Issued Accounting Pronouncements

See Note 2 of the Notes to the Unaudited Condensed Consolidated Financial Statements for detailed information regarding the status of recently issued or adopted accounting pronouncements.

### Non-GAAP Financial Measures

We believe that providing non-GAAP financial measures that exclude certain items provides investors with greater transparency to the information used by senior management in its financial and operational decision-making. We believe it is important to provide investors with the same non-GAAP financial measures used to supplement information regarding the performance and underlying trends of our business operations to facilitate comparisons to historical operating results and internally evaluate the effectiveness of our operating strategies. Disclosure of these non-GAAP financial measures also facilitates comparisons of our underlying operating performance with other companies in the industry that also supplement their U.S. GAAP results with non-GAAP financial measures.

The non-GAAP financial measures used in this filing may have limitations as analytical tools and should not be considered in isolation or as a replacement for U.S. GAAP financial measures. Some limitations associated with the use of these non-GAAP financial measures are that they exclude items that reflect an economic cost that can have a material effect on cash flows.

#### Constant Currency

Constant currency is calculated by using foreign currency rates from the comparable, prior year period to present net sales at comparable rates. Constant currency can be presented for numerous U.S. GAAP measures but is most commonly used by management to analyze net sales without the impact of changes in foreign currency rates.

#### Free Cash Flow

Free cash flow is calculated by subtracting capital expenditures from net cash from operating activities. Management uses free cash flow as an important indicator of how much cash is generated or used by our normal business operations, including capital expenditures. Management uses free cash flow as a measure of progress on its capital efficiency and cash flow initiatives.

## Market risk

As filed, 123 characters.

There have been no material changes to our market risks as disclosed in our Form 10-K for the year ended December 31, 2024.

## Controls and procedures

As filed, 1,357 characters.

### Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to provide reasonable assurance that the information required to be disclosed in reports filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. These include controls and procedures designed to ensure that this information is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2025. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2025.

### Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 157 characters.

There have been no material changes from the risk factors disclosed in "Part I, Item 1A. Risk Factors" in our Form 10-K for the year ended December 31, 2024.

Filed Aug 5, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-102384. Last ingested by Listed: Oct 24, 2026, 14:59 ET. No prices; not investment advice.