ORTHOPEDIATRICS CORP 10-K

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock has been listed on the Nasdaq Global Market under the symbol "KIDS" since October 12, 2017. Prior to that date, there was no established public trading market for our common stock. DIVIDEND POLICY We have not declared or paid any cash dividends on our common stock. We have no present intention to pay dividends in the foreseeable future, but rather intend to retain all of our consolidated earnings to finance future growth. Any future determination to pay dividends will be made at the discretion of our Board of Directors. See the “CAPITAL” section of “Management's Discussion & Analysis of Financial Condition and Results of Operations” included as Item 7 of this Annual Report on Form 10-K and Note 12 of the Notes to Consolidated Financial Statements included as Item 8 of this Annual Report on Form 10-K for a discussion regarding dividend restrictions. HOLDERS OF RECORD At the close of business on March 9, 2021, the number of shares outstanding was 19,658,335. There were 187 stockholders of record on that date. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS There were no equity securities purchased by the issuer or any affiliated purchaser for the three months ended December 31, 2020. RECENT SALES OF UNREGISTERED SECURITIES None except as otherwise described in a Current Report on Form 8-K or a Quarterly Report on form 10-Q. EQUITY COMPENSATION PLAN INFORMATION The following table provides information about the Company’s common stock that may be issued under equity compensation plans as of December 31, 2020. Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercised price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensations plans (excluding securities reflected in first column) Equity compensation plans approved by stockholders 449,532 $ 34.23 799,969 Total 449,532 $ 34.23 799,969 71 ITEM 6. SELECTED FINANCIAL DATA The following selected financial data has been derived from our audited consolidated financial statements. (In Thousands, Except Share Data) 2020 2019 2018 2017 2016 Operations Net revenue $ 71,078 $ 72,552 $ 57,559 $ 45,620 $ 37,298 Cost of revenue 16,047 17,933 14,879 11,170 10,931 Gross profit 55,031 54,619 42,680 34,450 26,367 Operating loss (1) (3) (26,755) (9,077) (9,553) (6,472) (6,127) Total other expenses 6,912 3,608 2,472 2,460 445 Net loss from continuing operations before provision for income taxes (1) (3) (33,667) (12,685) (12,025) (8,932) (6,572) Provision for income taxes (benefit) (723) — — — — Loss from discontinued operations — (1,046) — — — Net loss (1) (3) (32,944) (13,731) (12,025) (8,932) (6,572) Adjusted EBITDA (4) (5,871) (1,066) (3,476) (58) (995) Per Share Data Net loss from continuing operations per share attributable to common stockholders - basic and diluted (2) $ (1.82) $ (0.87) $ (0.96) $ (5.86) $ (7.14) Net loss from discontinued operations per share attributable to common stockholders - basic and diluted — (0.07) — — — Net loss per share attributable to common stockholders - basic and diluted $ (1.82) $ (0.94) $ (0.96) $ (5.86) $ (7.14) Balance Sheet Data Total assets $ 320,412 $ 194,564 $ 112,105 $ 82,301 $ 30,676 Total liabilities 85,644 52,203 30,373 34,806 24,682 Redeemable convertible preferred stock — — — — 71,303 Total stockholders' equity (deficit) 234,768 142,361 81,732 47,495 (65,309) (1) The 2018 and 2017 results include $1,986 and $2,049 noncash accelerated restricted stock expense related to our October 2017 IPO. (2) The 2017 Net loss per share attributable to common stockholders - basic and diluted includes the impact of the $16,000 Series A preference payment paid in common stock partially offset by the impact of the $5,965 forfeiture of 50% of the Series B accumulated dividends related to our October 2017 IPO. (3) The 2016 results includes $1,979 of expenses related to our aborted IPO. (4) EBITDA is a non-GAAP financial measure which consists of net loss attributable to OrthoPediatrics Corp. before interest, provision for income taxes (benefit), other expense (income) and depreciation and amortization. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA adjusted to add back stock-based compensation expense, accelerated vesting of restricted stock upon our IPO, acquisition related costs (consisting of accounting and legal fees), fair value adjustment of contingent consideration, initial public offering costs and accrued legal settlement costs. Adjusted EBITDA is presented because we believe it is a useful indicator of our operating performance. Management uses the measure as a measure of the Company's operating performance and for planning purposes, including financial projections. We believe this measure is useful to investors as supplemental information because it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe Adjusted EBITDA is useful to its management and investors as a measure of comparative operating performance from period to period. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and it should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, the measure is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as debt service requirements, capital expenditures and other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and other potential cash requirements. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using Adjusted EBITDA on a supplemental basis. Our definition of this measure is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. 72 The schedule below contains a reconciliation of Net loss from continuing operations to Adjusted EBITDA. (In Thousands, Except Share Data) 2020 2019 2018 2017 2016 Net Loss from Continuing Operations $ (32,944) $ (12,685) $ (12,025) $ (8,932) $ (6,572) Interest expense, net 3,412 3,538 2,255 2,490 1,476 Provision for income taxes (benefit) (723) — — — — Other expense (income) (20) 70 217 (30) (1,031) Depreciation and amortization 8,010 4,671 2,892 2,405 1,902 Stock-based compensation 6,196 2,603 1,199 1,429 1,251 Accelerated vesting of restricted stock upon our IPO — — 1,986 2,049 — Acquisition related costs 336 737 — — — Fair value adjustment of contingent consideration 3,520 — — — — Initial public offering costs — — — — 1,979 Accrued legal settlement costs 6,342 — — — — Adjusted EBITDA $ (5,871) $ (1,066) $ (3,476) $ (58) $ (995)