What changed in this filing

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Item 1. Business

2025-03-05 compared with 2024-03-08 · 108 added, 91 removed, 608 unchanged (25% of the section changed)

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was converted to a Delaware corporation on November 30, 2007.

We sell our specialized products, including PediLoc ® , PediPlates ® , Cannulated Screws, PediFlex TM nail, PediNail TM , PediLoc ® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSE TM Spine, BandLoc TM , Pediatric Nailing Platform | Femur, Devise Rail, Orthex ® , The Fassier-Duval Telescopic Intramedullary System ® , SLIM TM Nail, The GAP Nail TM , The Free Gliding SCFE Screw System TM , GIRO ® Growth Modulation System, PNP Tibia System, ApiFix ® Mid-C System and Mitchell Ponseti ® specialized bracing products to various hospitals and medical facilities throughout the United States and various international markets.

We currently use a contract manufacturing model for the manufacturing of implants and related surgical instrumentation while our clubfoot orthopedic products are manufactured in house.

We sell our specialized products, including PediLoc ® , PediPlates ® , Cannulated Screws, PediFlex TM nail, PediNail TM , PediLoc ® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSE TM Spine, BandLoc TM , Pediatric Nailing Platform | Femur, Devise Rail, Orthex ® , The Fassier-Duval Telescopic Intramedullary System ® , SLIM TM Nail, The GAP Nail TM , The Free Gliding SCFE Screw System TM , GIRO ™ Growth Modulation System, PNP Tibia System, ApiFix ® Mid-C System, Mitchell Ponseti ® and Boston Brace 3D ® specialized bracing products to various hospitals and medical facilities throughout the United States and various international markets.

We currently use a contract manufacturing model for the manufacturing of implants and related surgical instrumentation while our orthopedic bracing products are manufactured in-house.

We also operate multiple orthotic and prosthetic ("O&P") clinics delivering leading pediatric non-surgical O&P treatment.

The Company began selling its products in the United States in 2008 and internationally in 2011.

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In order to further enhance our operations in Europe, we established operating companies in the Netherlands and Germany in March 2019 and April 2022, respectively.

In 2023, we hired operating and sales representatives in Germany to better serve our customers.

In 2023, we hired operating and sales representatives in Germany to better serve our customers and opened a warehouse in January 2024.

In February 2024, we opened a warehouse in Australia and hired operating and sales representatives.

The Company routinely explores opportunities to acquire or invest in complementary products, technologies or businesses.

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In 2023, we acquired MedTech Concepts LLC and their digital healthcare hardware and software designed to improve operating room efficiencies, as well as assets from Rhino Pediatric Orthopedic Designs, Inc.

which offers specialty braces.

which offers specialty bracing products.

In 2024, the Company purchased all of the issued and outstanding share capital of Boston Brace International, Inc., a Massachusetts corporation ("Boston O&P").

Boston O&P has developed and manufactures pediatric orthotic and prosthetic devices, including non-surgical scoliosis treatment options, and provides related clinical services.

In 2024, Boston O&P completed an acquisition of substantially all of the assets, including inventory, related to orthotic and prosthetic device clinics located in Virginia and Maryland.

Boston O&P also purchased all issued and outstanding share capital of clinics in Florida as well as multiple clinics in Colorado.

In addition to acquisitions, we also look for partnerships which can provide us with complementary enabling technologies.

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In 2023, we entered into a license agreement with Ora Medical resulting in exclusive distribution rights of the Levity gait assist device.

These partnerships allow for exclusive distribution in children's hospitals across the United States and serve as supporting avenues for us to focus on high-volume children's hospitals.

In 2024, we entered into a license and supply agreement with Innovation Lab to bring the Move-D tm brace to market.

partnerships allow for exclusive distribution in children's hospitals across the United States and serve as supporting avenues for us to focus on high-volume children's hospitals.

On August 15, 2022, we raised net proceeds of approximately $139.3 million from a public offering of (a) 1,091,250 shares our common stock, and (b) pre-funded warrants exercisable for an aggregate of up to 1,525,000 shares of common stock to Squadron Capital LLC (“Squadron”), our largest investor.

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On September 20, 2022, the Company issued an aggregate of 1,525,000 shares of common stock to Squadron upon exercise of the pre-funded warrants.

On December 29, 2023, the Company replaced a $50 million line of credit agreement with Squadron Capital, LLC which was scheduled to expire on January 1, 2024 with a new $80 million credit agreement with MidCap Financial which includes a $50 million line of credit and a $30 million term loan.

On August 05, 2024, the Company replaced an $80 million credit agreement with MidCap Financial with a $100 million term loan and private placement arrangement with Braidwell LP which includes a $50 million term loan and $50 million of convertible notes.

The term loan consists of an initial term loan of $25 million and access to a delayed draw term loan facility for an additional $25 million, subject to certain terms and conditions.

Our largest investor is Squadron, a private investment firm based in Granby, Connecticut.

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As of December 31, 2024, the Company and its subsidiaries had 562 full-time equivalent employees.

Environmental, Social and Governance ("ESG")

Social Impact

OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions.

Since inception we have impacted the lives of over 1,140,000 children, when including those served by our acquired companies.

We believe we should continue to expand our social efforts while minimizing our impact to the environment and ensuring corporate governance.

In 2021, we created an internal ESG team, which reports directly to our Board’s Governance Committee, to identify ESG topics for disclosure by assessing both the impact on our business and the importance to our stakeholders.

We encourage you to review our ESG page and summary report which can be found under the "About" section of our corporate website for more detailed information regarding our ESG efforts and current initiatives.

On our website, among other information, are the following highlights:

• OrthoPediatrics cares about our environmental impact while working in a highly regulated industry and we are certified according to ISO 13485.

Our team in Warsaw, Indiana recently implemented an enhanced recycling program and our team in the United Kingdom created a carbon reduction plan.

• The Company and its associates regularly participate in philanthropic causes important to our local communities.

We also partner with charitable organizations that provide pediatric orthopedic care around the world.

We believe we should continue to expand our social impact, create an inclusive culture, and ensure good corporate governance practices.

• The Company and its associates regularly participate in numerous philanthropic causes important to our local communities.

We also partner with over 40 charitable organizations that provide pediatric orthopedic care around the world.

In 2020, we were named as "Corporate Partner of the Year" by the World Pediatric Project - with whom we continue to work with to provide access to medical care for children in developing countries.

• We are committed to fostering an environment that is respectful, compassionate, and inclusive of everyone in our community, which is communicated in our diversity and inclusion policy.

For seven years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana.

For eight years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana.

• The Company and its Board of Directors understand the value of diversity.

In 2022 and again in 2023, the Company added diverse Directors to our Board and will continue its Board diversity initiative in the future.

We believe effectively managing our priorities, as well as increasing our transparency related to ESG programs, will help create long-term value for our stakeholders.

We expect to continue to increase our disclosures and communicate our ESG efforts in future SEC filings.

Nothing on our website shall be deemed part of or incorporated by reference into this Annual Report on Form 10-K.

We believe effectively managing our priorities, as well as increasing our transparency related to social impact programs, will help create long-term value for our stakeholders.

We expect to continue to increase our disclosures and communicate our social impact efforts in future SEC filings.

AVAILABLE INFORMATION

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We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis and sports medicine product offering to the pediatric orthopedic market in order to improve the lives of children with orthopedic conditions.

We design, develop and commercialize innovative orthopedic implants, instruments and specialty braces to meet specific needs of pediatric surgeons and their patients, who we believe have been largely neglected by the orthopedic industry.

We design, develop and commercialize innovative orthopedic implants, instruments and specialty bracing products as well as provide O&P clinic services to meet specific needs of pediatric surgeons and their patients, who we believe have been largely neglected by the orthopedic industry.

We currently serve three of the largest categories in this market.

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We address this unmet market need and sell the broadest product offering specifically designed for children with orthopedic conditions.

We currently market 53 surgical and bracing systems that serve three of the largest categories within the pediatric orthopedic market:

We currently market over 75 surgical and bracing systems that serve three of the largest categories within the pediatric orthopedic market:

(i) trauma and deformity correction, (ii) scoliosis and (iii) sports medicine procedures.

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As of December 31, 2024, our U.S.

sales organization consisted of multiple direct sales representatives as well as nearly 40 independent sales agencies employing approximately 200 focused sales representatives.

sales organization consisted of multiple direct sales representatives as well as over 40 independent sales agencies employing over 230 focused sales representatives.

Increasingly, these sales agencies are making us the anchor line in their businesses or representing us exclusively.

Sales from such sales agencies represent ed 66% an d 68% of our global revenue in 2023 and 2022, respectively.

Outside of the United States, our sales organization consisted o f a network of more than 70 independent stocking distributors, 14 independent sales agencies and multiple direct sales representatives.

Sales from such sales agencies represent ed 59% and 66% of our global revenue in 2024 and 2023, respectively.

Outside of the United States, our sales organization consisted o f a network of more than 70 independent stocking distributors, 14 indepen dent sales agencies and multiple direct sales representatives.

We sell our products in over 75 countries outside of the United States.

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We believe clinical education is critical to advancing the field of pediatric orthopedics.

Cumulatively, we are the largest financial contributor to the five primary pediatric orthopedic surgical societies that conduct pediatric

clinical education and research.

Cumulatively, we are the largest financial contributor to the five primary pediatric orthopedic surgical societies that conduct pediatric clinical education and research.

We are a major sponsor of continuing medical education, or CME, courses in pediatric spine and pediatric orthopedics, which are focused on fellows and young surgeons.

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We believe we have a history of efficient capital utilization, and we intend to scale our business model by continuing to implement the successful strategy that has sustained our growth.

This strategy includes increasing investment in consigned implant and instrument sets in the United States and select international markets, expanding our innovative product lines of specialized surgical and bracing products by leveraging our efficient product development process, strengthening our global sales and distribution infrastructure, broadening our commitment to clinical education and research, and deepening our culture of continuous improvement.

This strategy includes increasing investment in consigned implant and instrument sets in the United States and select international markets, selective clinic acquisitions, greenfield clinic expansion, expanding our innovative product lines of specialized surgical and bracing products by leveraging our efficient product development process, strengthening our global sales and distribution infrastructure, broadening our commitment to clinical education and research, and deepening our culture of continuous improvement.

Due to the high concentration of pediatric orthopedic surgeons in comparatively few hospitals, we believe we can accelerate the penetration of our addressable market in a capital-efficient manner and further strengthen our position as the category leader in pediatric orthopedics.

The primary challenges to maintaining our growth in a market that has not historically relied on age-specific implants and instruments have been insufficient implant/instrument sets and overcoming older surgeons’ familiarity with repurposing adult implants for use in children as well as expanding our specialty bracing offerings.

Our efforts in surgeon training, collaboration and marketing address the inertia of using repurposed adult products, particularly with younger surgeons.

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Accordingly, they generally represent a single call point for our broad range of pediatric orthopedic implants, instruments and specialty bracing.

In 2023, there were more t han 1,520 mem bers of Pediatric Orthopaedic Society of North America (POSNA), as compared to approximately 33,400 practicing orthopedic surgeons in the United States focused on the treatment of adults.

In 2024, there were more than 1,500 me m bers of Pediatric Orthopaedic Society of North America (POSNA), as compared to approximately 33,400 practicing orthopedic surgeons in the United States focused on the treatment of adults.

The number of fellowships in pediatric orthopedics continues to grow.

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$610 million $340 million $80 million $775 million $250 million $165 million

We estimate that the United States represented approximatel y 45% of the total global orthopedic implant market, both adult and pediatric, and that this geographic segmentation similarly applies to the global pediatric orthopedic implant market.

We estimate that the United States represented approximately 45% of the total global orthopedic implant market, both adult and pediatric, and that this geographic segmentation similarly applies to the global pediatric orthopedic implant market.

Overviews of the three categories of the trauma and deformity, scoliosis and sports medicine markets that we currently serve, and the smart implant market that we are planning to enter, are as follows:

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Trauma and deformity correction surgical procedures involve placing metal plates and screws on the outside of the bone or long nails inside the canal of the bone, known as flexible and rigid intramedullary nails, to stabilize fractures and allow them to heal.

Trauma and deformity procedures also include osteotomies, or surgical cutting of the bone, the use of metal implants or external fixation to correct angular bone deformities or limb length discrepancies.

Trauma and deformity procedures also include osteotomies, or surgical cutting

of the bone, the use of metal implants or external fixation to correct angular bone deformities or limb length discrepancies.

Trauma and deformity also includes specialized bracing products which are non-surgical in nature.

Scoliosis procedures involve the use of spinal implants, such as pedicle screws and rods, to correct curvature of the spine as a result of scoliosis, trauma or tumors.

Scoliosis treatment also includes specialized bracing products which are non-surgical in nature.

Sports Medicine

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The vast majority of these procedures were performed in ambulatory surgery centers.

Sports medicine also includes specialized bracing products which are non-surgical in nature.

Smart Implants

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Trauma and Deformity Scoliosis

Surgical Implants Fusion Non-Fusion Specialty Bracing Sports Medicine

High-Volume Children's Hospitals Target Market $375 million $210 million $70 million $500 million $80 million

Surgical Implants Fusion Non-Fusion Specialty Bracing Sports Medicine Enabling Technology

High-Volume Children's Hospitals Target Market $375 million $260 million $70 million $500 million $80 million $300 million

In the future, we expect to expand our market opportunity by addressing additional categories of the pediatric orthopedic market, such as craniomaxilloacial, upper extremity, pediatric orthopedic oncology, pelvis, and other sports-related injuries along with numerous specialty bracing categories.

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• Participation of Pediatric Orthopedic Surgeons in New Product Development.

With the assistance of our Medical Director, a highly respected former pediatric orthopedic surgeon, we engage with pediatric orthopedic surgeons to understand their clinical needs and develop new implants, instruments, surgical techniques and specialized braces that will allow them to better serve their patients.

With the assistance of our Medical Director, a highly respected former pediatric orthopedic surgeon, we engage with pediatric orthopedic surgeons or orthotists to understand their clinical needs and develop new implants, instruments, surgical techniques and specialized braces that will allow them to better serve their patients.

We also respond to surgeons’ requests for customized implants and instruments to improve their workflows and enhance their clinical outcomes.

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• Comprehensive Portfolio of Innovative Orthopedic Products Designed Specifically for Children.

We have developed a comprehensive portfolio of implants, instruments and specialty braces specifically designed to treat children with orthopedic conditions.

We have developed a comprehensive portfolio of implants, instruments and specialty bracing products specifically designed to treat children with orthopedic conditions.

In 2024, we estimate that our products were used to help approxima tely 138,000 chil dren, and over 1,140,000 since inception, when including those served by our acquired companies.

We currently market 53 surgical and specialized bracing systems, which address pediatric trauma and deformity, scoliosis and sports medicine procedures.

We currently market over 75 surgical and specialized bracing systems, which address pediatric trauma and deformity, scoliosis and sports medicine procedures.

Our products include features that provide specific advantages for pediatric orthopedic surgeons and their patients, such as surgical instrumentation specifically designed for use in children, proper anatomical sizes and contouring, and proprietary designs that address the unique skeletal anatomy and physiology of a growing child.

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We have devoted significant time and resources to developing deep relationships with pediatric orthopedic surgeons and supporting clinical education to advance the practice of pediatric orthopedic medicine.

This enables us to engage and collaborate with thought-leading surgeons and academic institutions around the world in order to develop products and technologies specifically

designed to meet the needs of pediatric orthopedic surgeons and their patients.

This enables us to engage and collaborate with thought-leading surgeons and academic institutions around the world in order to develop products and technologies specifically designed to meet the needs of pediatric orthopedic surgeons and their patients.

Our dedication to the pediatric orthopedic community is evidenced by our leading support of the five major pediatric orthopedic surgical societies that conduct pediatric clinical education and research.

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As of December 31, 2024, our U.S.

sales organization consisted of multiple direct sales representatives as well as nearly 40 independent sales agencies employing approximately 200 sales representatives.

sales organization consisted of multiple direct sales representatives as well as over 40 independent sales agencies employing over 230 sales representatives.

Outside of the United States, we work with a network of more than 70 independent stocking distributors, 14 independent sales agencies and multiple direct sales representatives.

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We believe this culture allows us to attract and retain talented, high performing professionals.

For seven years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana.

For eight years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana.

We believe our focus and commitment to pediatric orthopedics has also enhanced our reputation among pediatric orthopedic surgeons as the only diversified orthopedic company focused on their specialty.

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This high concentration of procedures and our focused sales organization will enable us to address the pediatric orthopedic surgery market in a capital-efficient manner.

• Provide a broad product portfolio of implant systems, specialty braces, and enabling technologies uniquely designed to treat children by surrounding pediatric orthopedic surgeons with all the products they need.

• Provide a broad product portfolio of implant systems, specialty bracing products, and enabling technologies uniquely designed to treat children by surrounding pediatric orthopedic surgeons with all the products they need.

We intend to leverage our market knowledge and our relationships with leading pediatric orthopedic surgeons to continue developing innovative technologies and bringing them to market quickly.

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Due to the high concentration of pediatric orthopedic surgeons in comparatively few hospitals, we believe we can accelerate the penetration of our addressable market efficiently while supporting our customers with the only global sales and distribution channel focused exclusively on pediatric orthopedics.

We also intend to continue to expand our network of clinics to serve our customers.

• Expand addressable market through aggressive investment in research and development and select acquisition opportunities.

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We have developed a comprehensive portfolio of implants, instruments and specialty bracing solutions specifically designed to treat children with orthopedic conditions within the three categories of the pediatric orthopedic market that we currently serve.

We currently market 53 surgical and specialized bracing systems that address pediatric trauma and deformity correction, scoliosis and sports medicine/other procedures.

We currently market over 75 surgical and specialized bracing systems that address pediatric trauma and deformity correction, scoliosis and sports medicine/other procedures.

Many of our products are available in a variety of sizes and configurations to address a wide range of patient conditions and surgical requirements.

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Trauma and Deformity Correction

Our trauma and deformity correction product line includes more than 7,000 implants, external fixation, specialized braces and bone graft substitutes for the femur, tibia, upper and lower extremities.

Our trauma and deformity correction product line includes more than 7,000 implants, instruments, external fixation components, specialized braces and bone graft substitutes for the femur, tibia, pelvis, upper and lower extremities as well as providing clinical O&P services.

Our global revenue from this category for the year ended December 31, 2024 was $145.1 million, an increase of 36% over the prior year, and represented 71% of total revenue.

Global revenue from this category for the years ended December 31, 2023 and 2022 was $106.8 million and $85.1 million or 72% and 70% of total revenue, respectively.

Our scoliosis product category includes our RESPONSE TM systems for treating spinal deformity in children, the BandLoc TM 5.5mm/6.0mm sub-laminar banding system, FIREFLY ® Pedicle Screw Navigation Guides, 7D Flash TM Naviation image guidance system and ApiFix ® Mid-C System.

Our global revenue from this category for the year ended December 31, 2024 was $55.2 million, or 27% of total revenue, which represented an increase of 45% over the prior year.

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Sports Medicine/Other

Our sports medicine/other product category primarily includes our ACL, MPFL Reconstruction system and Telos.

Our sports medicine/other product category primarily includes our ACL, MPFL Reconstruction system and Telos as well as providing clinical O&P services.

Our global revenue from this category for the year ended December 31, 2024 was $4.4 million, or 2% of total revenue, which represented an increase of 11% over the prior year.

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Generally speaking, we have three product development objectives across the organization:

(i) develop innovative new systems that enable surgeons to advance the field of pediatric orthopedics and allow us to focus on categories of the pediatric orthopedic market we are not currently addressing;

(ii) build-out our current portfolio of products with line extensions that allow these systems to be used in more types of surgeries or non-surgical applications;

and (iii) make improvements to our current implants, instruments, and specialty braces that improve quality and reduce their cost.

(i) develop innovative new implant and bracing systems that enable surgeons to advance the field of pediatric orthopedics and allow us to focus on categories of the pediatric orthopedic market we are not currently addressing;

(ii) build-out our current portfolio of products with line extensions that allow these implant and bracing systems to be used in more types of surgeries or non-surgical applications;

and (iii) make improvements to our current implants, instruments, and specialty bracing products that improve quality and reduce their cost.

We have a large number of new product ideas under development within the areas of spinal implants, active growing smart implants, trauma implant systems, limb deformity implant systems, and non-surgical devices.

We aspire to launch at least one new system and/or line extension/product improvement every quarter across the Company.

We aspire to launch at least one new implant system and/or line extension/product improvement every quarter across the Company as well as 4-5 new specialty bracing products each year.

We have a deep pipeline of new systems that are currently under development, including the following projects.

3P™ | Pediatric Plating Platform

In 2022, we began development of a new plate and screw platform, called 3P, to modernize and revolutionize trauma and deformity treatment in both the upper and lower extremity.

We anticipate a limited launch of the first system, 3P Hip, in the second quarter of 2025, and of the next system, 3P Small/Mini, toward the end of 2025, followed by launches of additional systems throughout 2026-2028.

These systems will provide surgeons

unparalleled coverage for all plating indications, standardized implants and instruments to improve surgical workflow and inventory efficiency, and novel implants to address currently unmet needs.

Pediatric Nailing Platform | Tibia

We anticipate a full-scale launch in the first half of 2024 for our recently introduced innovative Pediatric Nailing Platform | Tibia, that will use a similar instrument platform to the Pediatric Nailing Platform | Femur system, which was introduced in 2018.

We anticipate a continuation of our full-scale launch in 2025 for our recently introduced innovative Pediatric Nailing Platform | Tibia, that will use a similar instrument platform to the Pediatric Nailing Platform | Femur system, which was introduced in 2018.

This new to the market system will treat deformities and traumatic injuries of the tibia.

Pediatric Nailing Platform | Retrograde Femur

Building upon the tremendous success of our PNP | Femur and PNP | Tibia systems, we are developing a retrograde femoral nailing system designed to support pediatric indications where entry through the knee is preferred.

This system will leverage existing instrumentation where possible and we anticipate having the most comprehensive small canal offering available on the market at launch.

GIRO™ Growth Modulation System

The GIRO™ is a tether device that will be fully launched in 2025, intended for guided growth and deformity correction.

Supplementing our flagship PediPlate system, this device offers multi-directional flexibility utilizing a cable assembly designed to improve bone contouring and aiding in minimally invasive treatment, with consideration of a future indication for guided rotational correction.

Active Growing Implants

We are developing a new generation of smart implants, which we refer to as our Active Growing Implants.

We are nearing final development of a new generation of smart implants, which we refer to as our Active Growing Implants, electromechanical lengthening implant or eLLi TM .

Our Active Growing Implants will utilize a power source of significantly greater strength and control than current magnetic technology and will be adjustable at the time of implantation and non-invasively over the course of treatment to accommodate the changing clinical needs of patients as they heal, grow and age.

We made significant development progress on this in 2023.

This new technology will be available for early onset scoliosis and potentially limb deformity.

RESPONSE TM Rib and Pelvic System

Our RESPONSE TM Rib and Pelvic System is designed to aid surgeons in the treatment of early onset scoliosis, a debilitating form of scoliosis that affects very young children.

We expect to beta launch the system in early 2024 with a full-scale launch in late 2024.

We made significant development progress on this in 2024 including receiving Breakthrough Device designation from the FDA.

This new technology will be available to address severe pathology associated with early onset scoliosis in the near future.

Growth Guidance for Scoliosis - VerteGlide™

We are developing VerteGlide, a next-generation growth guidance technology for treating certain forms of early onset scoliosis.

We have developed VerteGlide, a next-generation growth guidance technology for treating certain forms of early onset scoliosis.

This procedure uses rods and pedicle screws attached to specific points in the spine and configured similar to a “track and trolley” system which allows the spine to grow naturally while correcting a spinal curve.

We completed development and we are now working with the FDA on regulatory clearance.

We expect a beta launch of this system in 2025 and a full-scale launch in 2026.

Development of Operative Planning Software

We have a number of initiatives underway involving the development of both pre-operative planning and intraoperative use software to assist surgeons in the treatment of spinal, trauma and deformity correction conditions as well as the utilization of the Company’s product solutions for these conditions.

These projects encompass both educational and software as a medical device type offerings leveraging MedTech Concepts LLC's Playbook product offering.

Next Generation Scoliosis Fusion System

We are in final development of our next generation scoliosis fusion system, which will include the ultimate surgical experience for pediatric spinal fusion.

The system is designed exclusively for pediatric patients and their surgeons, including innovative implant and instrument designs with an advanced digital platform to optimize the procedure.

We expect to launch this system in the first half of 2026.

Development of Surgical Workflow Optimization Software

We have a number of initiatives underway involving the development of pre-operative planning and intraoperative workflow software to assist surgeons in the treatment of spinal, trauma, and deformity correction conditions as well as the utilization of the Company's product solutions for these conditions.

These projects encompass both educational and software as a medical device type offerings leveraging our new Playbook product offering.

External Fixation Systems

We plan to continue development to support the strengthening of our external fixation product portfolio.

In 2023, we launched our enhanced software and surgical planning software.

Further development will focus on hardware and software upgrades as well as a completely new system for emergency fracture management.

We continue to invest in strengthening our external fixation portfolio, with software improvements launched in 2023 and hardware line extensions in 2024.

In 2025 we will launch a new Titanium HA Pin offering to support both Orthex ® and Drive systems, designed to improve fatigue life and increase flexibility to promote rapid bone healing.

Further development will continue to focus on hardware and software upgrades as well as a completely new system for emergency fracture management and to aid in deformity osteotomy stabilization.

Research and Product Development

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As of December 31, 2024, our U.S.

sales organization consisted of multiple direct sales representatives as well as nearly 40 independent sales agencies employing approximately 200 focused sales representatives.

sales organization consisted of multiple direct sales representatives as well as over 40 independent sales agencies employing over 230 focused sales representatives.

Increasingly, these sales agencies are making us the anchor line in their businesses or representing us exclusively.

Sales to customers from such agencies represen ted 59% of our global revenue in 2024 and 66% in 2023.

Outside of the United States, our sales organi zation consisted of a network of more than 70 independent stocking distributors, 14 independent sales agencies and multiple direct sales representatives.

We sell our products in over 70 countries outside of the United States, including the largest markets in the European Union, Latin America and the Middle East, as well as South Africa, Australia and Japan.

Outside of the United States, our sales organization consisted of a network of more than 70 independent stocking distributors, 14 independent sales agencies and multiple direct sales representatives.

We sell our products in over 75 countries outsid e of the United States, including the largest markets in the European Union, Latin America and the Middle East, as well as South Africa, Australia and Japan.

We believe our distributors are well regarded by pediatric orthopedic surgeons in their respective markets.

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In the near term, we expect to selectively expand the number of international markets we serve, as well as to deepen our penetration of important existing markets such as Brazil and Germany.

In 2023, we hired operating and sales representatives in Germany to better serve our customers.

In 2024, we opened warehouses in Germany and Australia, and hired a European operations director to continue our growth in the European market.

We have developed intensive training programs for our global sales organization.

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We are also a major sponsor of CME courses in pediatric spine and pediatric orthopedics.

Annually, we sponsor the largest industry meetings including the Annual International Children's Spine Symposium, Annual Pediatric Orthopedic Surgical Techniques Course, Akron Pediatric Orthopedic Residents Review Course and the annual PediOrthoWest resident review program.

Annually, we sponsor the largest industry meetings, including the International Children's Spine Symposium, Pediatric Orthopedic Surgical Techniques Course, Akron Pediatric Orthopedic Residents Review Course and the PediOrthoWest resident review program.

We have a growing commitment to the clinical research performed by surgeons.

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Our products are primarily manufactured to our specifications by third-party suppliers who meet our manufacturer qualification standards.

MD Ortho's specialized bracing products are manufactured on-site in our Iowa facility.

Our third-party manufacturers meet FDA and other country-specific quality standards, supported by our internal specifications and procedures.

MD Ortho's specialized clubfoot bracing products are manufactured on-site in our Iowa facility and our Boston O&P facility manufactures numerous braces, including our Boston Brace 3D ® , our DF2 brace and our cranial helmets.

Our internal manufacturing, as well as our third-party manufacturers, meet FDA and other country-specific quality standards, supported by our internal specifications and procedures.

We believe these manufacturing relationships allow us to work with suppliers who have well-developed specialized competencies, minimize our capital investment, control costs and shorten cycle times, all of which we believe allow us to compete with larger volume manufacturers of orthopedic implants.

We work closely with our suppliers with a goal of ensuring our inventory needs are met while maintaining high quality and reliability.

All of our device contract manufacturers are required to be ISO 13485 certified and are registered establishments with the FDA.

All our manufacturing entities, as well as our device contract manufacturers, are required to be ISO 13485 certified and are registered establishments with the FDA.

Our internal quality management group conducts comprehensive on-site inspection audits of our suppliers to ensure they meet FDA and other country-specific requirements, as necessary.

In addition, we and our

suppliers are subject to periodic unannounced inspections by U.S.

In addition, we and our suppliers are subject to periodic unannounced inspections by U.S.

and international regulatory authorities to ensure compliance with quality regulations.

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Our issued U.S.

patents expire between 2024 and 2040, subject to payment of required maintenance fees, annuities and other charges.

patents expire between 2025 and 2043, subject to payment of required maintenance fees, annuities and other

As of December 31, 2024, we owned 42 U.S.

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• speed to market.

We have competitors in each of our three product categories, including the DePuy Synthes Companies (a subsidiary of Johnson & Johnson), Medtronic plc, Smith & Nephew plc and Orthofix.

We have competitors in each of our three product categories, including Johnson & Johnson MedTech (a subsidiary of Johnson & Johnson), Medtronic plc, Smith & Nephew plc, Orthofix, and Hanger clinics.

We believe we have the broadest pediatric product offering across these categories relative to these competitors.

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We recognize that building connections between our employees, their families, and the communities we serve creates a fulfilling and positive workplace.

We also partner with organizations around the world that provide pediatric orthopedic care for the disadvantaged.

We also partner with over 40 charitable organizations, including medical missions, and other organizations which advance health, wellness and education initiatives for kids - as well as various civic organizations that advance

the communities where we work and live.

Specifically, we have partnered with the World Pediatric Project, to whom we provide surgical products and treatment for children in developing countries, some of whom are flown to the United States for surgery.

In 2020, we were named as "Corporate Partner of the Year" by the World Pediatric Project and we continued our support of this cause in subsequent years.

We encourage you to review our Environmental, Social and Governance ("ESG") page under the "About" section of our corporate website for more detailed information regarding our ESG efforts and current initiatives, including a link to our Diversity & Inclusion Policy.

We encourage you to review our Social Impact page under the "About" section of our corporate website for more detailed information regarding our social impact efforts and current initiatives, including a link to our Diversity & Inclusion Policy.

Nothing on our website, including our Diversity & Inclusion Policy, shall be deemed part of or incorporated by reference into this Annual Report on Form 10-K.

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Under the FDCA, medical devices are classified into one of three classes — Class I, Class II or Class III — depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.

Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation (QSR), facility registration and product

listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.

Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA.

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The purpose of the HDE provision is to encourage the discovery and use of devices intended to benefit patients in the treatment and diagnosis of diseases or conditions that affect not more than 8,000 individuals in the United States per year.

The FDA may grant an HDE, which is an exemption from the effectiveness requirements of sections 514 and 515 of the FDCA Act, if the FDA determines that the device meets certain criteria.

The FDA may grant an HDE, which is an exemption from the effectiveness requirements of sections 514 and 515 of

the FDCA Act, if the FDA determines that the device meets certain criteria.

After HDE approval, the medical device may only be used after Institutional Review Board ("IRB") approval has been obtained.

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• the federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government.

The government may assert that claim includes items or services resulting from a violation of the federal Anti-Kickback Statute and constitutes a false or fraudulent claim for purposes of the false claims statute;

The government may assert that claim includes items or services resulting from a

violation of the federal Anti-Kickback Statute and constitutes a false or fraudulent claim for purposes of the false claims statute;

• clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices;

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• correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

• complying with the new federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database (GUDID);

• complying with the federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database (GUDID);

• the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations;

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Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the federal Anti-Kickback Statute has been violated.

In addition, a person or entity does not need to have actual

knowledge of the statute or specific intent to violate it in order to have committed a violation.

In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Moreover, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act (described below).

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A claim includes “any request or demand” for money or property presented to the U.S.

The federal civil False Claims Act also applies to false submissions that cause the government to be paid less than the amount to which it is entitled, such as a rebate.

The federal civil False Claims Act also applies to false submissions that

cause the government to be paid less than the amount to which it is entitled, such as a rebate.

Intent to deceive is not required to establish liability under the civil federal civil False Claims Act.

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The Regulation implements significant changes to the EU data protection regime.

Unlike the E-Privacy and Data Protection Directives, the Regulation has direct effect in each EU Member State, without the

need for further enactment.

Unlike the E-Privacy and Data Protection Directives, the Regulation has direct effect in each EU Member State, without the need for further enactment.

The Regulation strengthened individuals’ rights and imposed stricter requirements on companies processing personal data and increases financial penalties for non-compliance.

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Foreign Corrupt Practices Act of 1977 or FCPA.

We are required to comply with the FCPA, which generally prohibits covered entities and their intermediaries from engaging in

bribery or making other prohibited payments to foreign officials for the purpose of obtaining or retaining business or other benefits.

We are required to comply with the FCPA, which generally prohibits covered entities and their intermediaries from engaging in bribery or making other prohibited payments to foreign officials for the purpose of obtaining or retaining business or other benefits.

In addition, the FCPA imposes accounting standards and requirements on publicly traded U.S.

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In some countries, government reimbursement is the predominant program available to patients and hospitals.

Our commercial success depends in part on the extent to which governmental authorities, private health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which our products are used.

Our commercial success depends in part on the extent to which governmental authorities, private

health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which our products are used.

Failure by physicians, hospitals, ambulatory surgery centers and other users of our products to obtain sufficient coverage and reimbursement from third-party payors for procedures in which our products are used, or adverse changes in government and private third-party payors’ coverage and reimbursement policies.

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To receive payment, healthcare practitioners must submit claims to insurers using these codes for payment for medical services.

CPT codes are assigned, maintained and annually updated by the American Medical Association and its CPT Editorial

CPT codes are assigned, maintained and annually updated by the American Medical Association and its CPT Editorial Board.

If the CPT codes that apply to the procedures performed using our products are changed or deleted, reimbursement for performances of these procedures may be adversely affected.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business