KIDS filing — read by section

Item 8. Financial Statements and Supplementary Data

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
 
 To the shareholders and the Board of Directors of OrthoPediatrics Corp. 
 
 Opinions on the Financial Statements and Internal Control over Financial Reporting 
 
 We have audited the accompanying consolidated balance sheets of OrthoPediatrics Corp. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). We have also audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. 
 
 Basis for Opinions 
 
 The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
 
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. 
 
 Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 
 
 Definition and Limitations of Internal Control over Financial Reporting 
 
 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 
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 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
 
 Critical Audit Matter 
 
 The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 
 
 Other Intangible Assets – Trademarks – Refer to Notes 2 and 5 to the financial statements 
 
 Critical Audit Matter Description 
 
 As described in Notes 2 and 5 of the consolidated financial statements, the Company records trademarks within their consolidated balance of Other Intangible Assets. We identified the specific trademarks related to Pega Medical, MD Ortho, Orthex, and ApiFix, which are components of the Other Intangible Assets consolidated balance, as our critical audit matter. Impairment testing of the trademarks is performed on an annual basis, and more frequently if events and circumstances indicated that the asset might be impaired. The fair values of the trademarks are based on a relief from royalty method, and impairment charges were recorded during 2025 related to the Orthex and ApiFix trademarks, which are components of the total impairment charge of $4,228,000 recorded during 2025. This approach requires significant estimates and assumptions including preparation of forecasted revenue, selection of a royalty rate and discount rate and estimate of the terminal year revenue growth rate. 
 
 The principal considerations for our determination that performing procedures related to the annual trademark impairment assessments of Pega Medical, MD Ortho, Orthex, and ApiFix is a critical audit matter are (i) the significant judgments required to be exercised by management when developing the fair value estimates of its trademarks; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, discount rates, and royalty rates for the trademarks; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. 
 
 The determination and extent of audit procedures related to these assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s assessment of the fair value of these specific trademarks. 
 
 How the Critical Audit Matter Was Addressed in the Audit 
 
 Our audit procedures related to the estimate of the fair value of the Pega Medical, MD Ortho, Orthex and ApiFix trademarks included the following, among others: 
 
 • We tested the effectiveness of controls over management’s evaluation of the fair value of its trademarks, including those over the selection of the discount rates, royalty rates and management’s development of future revenues. 
 
 • We evaluated the reasonableness of management’s forecast of future revenue by comparing the forecast for each trademark to: 
 – Historical revenues. 
 – Projected revenues. 
 – Publicly available industry information. 
 – Evidence obtained in other areas of the audit. 
 
 • With the assistance of fair value specialists, we evaluated the reasonableness of the Company’s estimate of fair value for each trademark by: 
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 – Assessing the appropriateness of the Company’s valuation methodology. 
 – Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation. 
 – Comparing the Company’s selected discount rate to an independently estimated range of discount rates using a process consistent with generally accepted valuation practices. 
 – Evaluating the reasonableness of the terminal growth rate through comparison to industry reports. 
 – Assessing the reasonableness of the selected royalty rate used in the fair value analysis by comparing against an independently-sourced set of comparable licensing agreements. 
 
 /s/ Deloitte & Touche LLP 
 
 Indianapolis, Indiana 
 March 4, 2026 
 
 We have served as the Company's auditor since 2015. 
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 ORTHOPEDIATRICS CORP. 
 CONSOLIDATED BALANCE SHEETS 
 (in thousands, except share and per share information) 
 
 As of December 31, 
 2025 2024 
 ASSETS 
 Current assets: 
 Cash $ 19,556 $ 43,820 
 Restricted cash 2,064 1,957 
 Short-term investments 41,295 25,013 
 Accounts receivable - trade, net of allowances of $ 1,501 and $ 1,145 , respectively 
 53,838 42,357 
 Inventories, net 133,790 117,005 
 
 Prepaid expenses and other current assets 5,876 7,021 
 
 Total current assets 256,419 237,173 
 Property and equipment, net 49,555 50,596 
 Other assets: 
 Amortizable intangible assets, net 64,802 64,427 
 Goodwill 109,269 93,844 
 Other intangible assets 12,909 16,752 
 Other non-current assets 15,676 10,417 
 Total other assets 202,656 185,440 
 Total assets $ 508,630 $ 473,209 
 LIABILITIES AND STOCKHOLDERS' EQUITY 
 Current liabilities: 
 Accounts payable - trade $ 18,786 $ 8,908 
 Accrued compensation and benefits 13,693 13,888 
 
 Current portion of long-term debt with affiliate 170 160 
 Current portion of acquisition installment payable 2,194 1,347 
 Other current liabilities 11,354 9,659 
 
 Total current liabilities 46,197 33,962 
 Long-term liabilities: 
 Long-term term loan 48,189 23,957 
 Long-term convertible note 48,486 47,913 
 Long-term debt with affiliate, net of current portion 283 451 
 Other long-term debt, net of current portion 2,862 635 
 Acquisition installment payable, net of current portion 2,898 2,452 
 Deferred income taxes 3,582 3,381 
 Other long-term liabilities 9,537 5,892 
 Total long-term liabilities 115,837 84,681 
 Total liabilities 162,034 118,643 
 Commitments and contingencies (Note 17) 
 
 Stockholders' equity: 
 Common stock, $ 0.00025 par value; 50,000,000 shares authorized; 25,093,792 shares and 24,217,508 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively 
 6 6 
 Additional paid-in capital 622,325 600,897 
 Accumulated deficit ( 275,212 ) ( 235,564 ) 
 Accumulated other comprehensive loss ( 523 ) ( 10,773 ) 
 Total stockholders' equity 346,596 354,566 
 Total liabilities and stockholders' equity $ 508,630 $ 473,209 

 See notes to consolidated financial statements. 
 
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 ORTHOPEDIATRICS CORP. 
 CONSOLIDATED STATEMENTS OF OPERATIONS 
 (in thousands, except share and per share information) 
 Year Ended December 31, 
 2025 2024 2023 
 
 Net revenue $ 236,348 $ 204,727 $ 148,732 
 Cost of revenue 63,687 56,129 37,479 
 Gross profit 172,661 148,598 111,253 
 Operating expenses: 
 Sales and marketing 72,726 64,296 52,824 
 General and administrative 119,832 102,789 73,300 
 Intangible asset impairment 4,638 1,836 985 
 Restructuring 5,601 3,653 — 
 Research and development 9,102 11,034 10,895 
 Total operating expenses 211,899 183,608 138,004 
 Operating loss ( 39,238 ) ( 35,010 ) ( 26,751 ) 
 Other expenses (income): 
 Interest expense (income), net 5,996 2,621 ( 198 ) 
 Loss on early extinguishment of debt — 3,230 — 
 Fair value adjustment of contingent consideration — — ( 2,980 ) 
 Other (income) expense ( 6,046 ) 1,068 ( 2,261 ) 
 Total other (income) expenses, net ( 50 ) 6,919 ( 5,439 ) 
 Net loss before income taxes ( 39,188 ) ( 41,929 ) ( 21,312 ) 
 Income tax expense (benefit) 460 ( 4,107 ) ( 338 ) 
 
 Net loss $ ( 39,648 ) $ ( 37,822 ) $ ( 20,974 ) 
 
 Weighted average shares outstanding 
 Basic 23,459,425 23,077,704 22,675,477 
 Diluted 23,459,425 23,077,704 22,675,477 
 Net loss per share 
 Basic $ ( 1.69 ) $ ( 1.64 ) $ ( 0.92 ) 
 Diluted $ ( 1.69 ) $ ( 1.64 ) $ ( 0.92 ) 

 See notes to consolidated financial statements. 
 
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 ORTHOPEDIATRICS CORP. 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS 
 (in thousands) 
 Year Ended December 31, 
 2025 2024 2023 
 Net loss $ ( 39,648 ) $ ( 37,822 ) $ ( 20,974 ) 
 Other comprehensive income (loss): 
 Foreign currency translation adjustment 9,988 ( 5,090 ) ( 1,631 ) 
 Unrealized gain (loss) on short term investments 230 ( 276 ) 68 
 Adjustment for realized gains 32 119 1,437 
 Other comprehensive income (loss), net of tax 10,250 ( 5,247 ) ( 126 ) 
 Comprehensive loss $ ( 29,398 ) $ ( 43,069 ) $ ( 21,100 ) 

 See notes to consolidated financial statements. 
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 ORTHOPEDIATRICS CORP. 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
 ( in thousands, except share information) 
 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity 
 Shares Value 
 Balance at January 1, 2023 22,877,962 $ 6 $ 560,810 $ ( 176,768 ) $ ( 5,400 ) $ 378,648 
 Net income — — — ( 20,974 ) — ( 20,974 ) 
 Restricted stock 304,889 — 10,526 — — 10,526 
 Stock option exercise 670 — 21 — — 21 
 Consideration for MedTech and Rhino acquisitions 54,884 — 2,752 — — 2,752 
 Stock portion of ApiFix anniversary installment payment 140,003 — 6,178 — — 6,178 
 
 Other comprehensive loss — — — — ( 126 ) ( 126 ) 
 Balance at December 31, 2023 23,378,408 $ 6 $ 580,287 $ ( 197,742 ) $ ( 5,526 ) $ 377,025 
 Net loss — — — ( 37,822 ) — ( 37,822 ) 
 
 Restricted stock 589,000 — 13,548 — — 13,548 
 Consideration for MedTech and Rhino acquisitions 4,288 — 133 — — 133 
 Stock portion of ApiFix anniversary installment payment 245,812 — 6,929 — — 6,929 
 Other comprehensive loss — — — — ( 5,247 ) ( 5,247 ) 
 Balance at December 31, 2024 24,217,508 $ 6 $ 600,897 $ ( 235,564 ) $ ( 10,773 ) $ 354,566 
 Net loss — — — ( 39,648 ) — ( 39,648 ) 
 Restricted stock 786,795 — 17,396 — — 17,396 
 Issuance of common stock 64,065 — 1,494 — — 1,494 
 Stock portion of the MedTech anniversary installment 10,830 — 226 — — 226 
 Consideration for distributor acquisition 14,594 — 250 — — 250 
 Capital contribution associated with reclassification of MedTech liability to equity — — 2,062 — — 2,062 
 Other comprehensive income — — — — 10,250 10,250 
 
 Balance at December 31, 2025 25,093,792 $ 6 $ 622,325 $ ( 275,212 ) $ ( 523 ) $ 346,596 

 See notes to consolidated financial statements. 
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 ORTHOPEDIATRICS CORP. 
 CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (in thousands) 
 Year Ended December 31, 
 2025 2024 2023 
 OPERATING ACTIVITIES 
 Net loss $ ( 39,648 ) $ ( 37,822 ) $ ( 20,974 ) 
 Adjustments to reconcile net income (loss) to net cash used in operating activities: 
 Goodwill and other intangible asset impairments 6,512 1,836 985 
 Depreciation and amortization 21,119 19,080 17,385 
 Loss on early extinguishment of debt — 3,230 — 
 Stock-based compensation 17,778 13,548 10,526 
 Fair value adjustment of contingent consideration — — ( 2,980 ) 
 Accretion of acquisition installment payable 89 661 1,372 
 Deferred income taxes ( 153 ) ( 4,736 ) ( 1,163 ) 
 Non-cash other 244 90 — 
 Changes in certain operating assets and liabilities, net of acquisitions: 
 Accounts receivable - trade ( 9,366 ) ( 4,749 ) ( 9,724 ) 
 Inventories ( 8,469 ) ( 13,197 ) ( 26,279 ) 
 Prepaid expenses and other current assets 414 ( 1,561 ) 94 
 Accounts payable - trade 8,167 ( 4,280 ) 1,491 
 
 Accrued expenses and other liabilities 1,248 537 6,852 
 Other ( 2,786 ) 315 ( 4,631 ) 
 Net cash used in operating activities ( 4,851 ) ( 27,048 ) ( 27,046 ) 
 INVESTING ACTIVITIES 
 Acquisition of Boston O&P, net of cash acquired — ( 20,225 ) — 
 Other acquisitions, including clinics, net of cash acquired ( 15,502 ) ( 2,882 ) — 
 Acquisition of MedTech, net of cash acquired — — ( 3,097 ) 
 Acquisition of Rhino assets — — ( 546 ) 
 
 Sale of short-term marketable securities — 49,855 112,904 
 
 Purchase of short-term marketable securities ( 15,000 ) ( 25,000 ) ( 48,600 ) 
 Investment in private companies and purchases of licenses ( 2,017 ) ( 647 ) ( 2,106 ) 
 Purchases of property and equipment ( 11,110 ) ( 14,263 ) ( 16,878 ) 
 Net cash (used in) provided by investing activities ( 43,629 ) ( 13,162 ) 41,677 
 FINANCING ACTIVITIES 
 Proceeds from issuance of debt 25,000 73,533 9,424 
 Payment of debt issuance costs — ( 3,407 ) — 
 Proceeds from exercise of stock options — — 21 
 Installment payment for ApiFix — ( 2,250 ) ( 2,000 ) 
 Installment payment for MedTech — ( 1,250 ) — 
 
 Payments on mortgage notes ( 158 ) ( 152 ) ( 144 ) 
 Payments on clinic acquisition notes ( 867 ) ( 1,108 ) — 
 Payment on debt — ( 12,231 ) — 
 Net cash provided by financing activities 23,975 53,135 7,301 
 Effect of exchange rate changes on cash 348 ( 175 ) 633 
 NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH ( 24,157 ) 12,750 22,565 
 Cash and restricted cash, beginning of period 45,777 33,027 10,462 
 Cash and restricted cash, end of period $ 21,620 $ 45,777 $ 33,027 
 
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 2025 2024 2023 
 SUPPLEMENTAL DISCLOSURES 
 Cash paid for interest $ 6,516 $ 2,752 $ 42 
 Transfer of instruments between property and equipment and inventory $ 279 $ 420 $ 57 
 Issuance of common shares for ApiFix installment $ — $ 6,929 $ 6,178 
 Issuance of common shares to acquire MedTech $ — $ — $ 2,274 
 Issuance of common shares for MedTech installment $ 226 $ 133 $ — 
 Issuance of common shares in connection with Boston O&P acquisition $ 233 $ — $ — 
 Issuance of common shares to acquire Rhino assets $ — $ — $ 478 
 Issuance of common shares to settle an obligation with a vendor $ 1,261 $ — $ — 
 Issuance of common shares to acquire distributor $ 250 $ — $ — 
 Capital contribution associated with reclassification of MedTech liability to equity $ 2,062 $ — $ — 
 Debt issuance costs not yet paid $ — $ — $ 127 

 See notes to consolidated financial statements. 
 
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 ORTHOPEDIATRICS CORP. 
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
 As of December 31, 2025 and 2024 and for the three years in the period ended 
 December 31, 2025 
 ( dollars in thousands, except per share information or as otherwise stated ) 
 
 NOTE 1 – BUSINESS 
 
 OrthoPediatrics Corp., a Delaware corporation, is a medical device company committed to designing, developing and marketing anatomically appropriate implants, instruments and specialized braces for children with orthopedic conditions, giving pediatric orthopedic surgeons and caregivers the ability to treat children with technologies specifically designed to meet their needs, 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 ®, VerteGlide TM , 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 typically manufactured in-house. We also operate multiple O&P clinics delivering leading pediatric non-surgical O&P treatment. 
 
 We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis and sports medicine/other 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 braces as well as provide O&P clinic services to meet the specialized 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. 
 
 NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES 
 
 Basis of Presentation 
 
 The accompanying consolidated financial statements include the accounts of OrthoPediatrics Corp. and its wholly-owned subsidiaries (collectively, the “Company,” “we,” “our” or “us”). All intercompany balances and transactions have been eliminated. 
 
 We have prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements have been prepared assuming our Company will continue as a going concern. We have experienced recurring losses from operations since our inception and had an accumulated deficit of $ 275,212 and $ 235,564 as of December 31, 2025 and 2024, respectively. 
 
 Use of Estimates 
 
 Preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as of the date of the consolidated financial statements. By their nature, these judgments are subject to an inherent degree of uncertainty. We use historical experience and other assumptions as the basis for our judgments and estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in these estimates will be reflected in our consolidated financial statements. 
 
 Foreign Currency Transactions 
 
 We currently bill our international stocking distributors in U.S. dollars, resulting in minimal foreign exchange transaction expense. 
 
 Beginning in early 2017 and continuing through 2025, we expanded operations and established legal entities outside the United States, permitting us to sell under an agency model direct to local hospitals internationally. The 
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 countries we serve under the agency model include the United Kingdom, Ireland, Australia, New Zealand, Canada, Belgium, the Netherlands, Poland, Italy, Israel, Germany, Switzerland, and Austria. 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 and 2024, we hired operating and sales representatives in Germany and Australia, respectively, to better serve our customers. In 2024, we hired a European operations director to continue our growth in the European market, and we opened warehouses in Germany and Australia. In 2025, we opened a warehouse in the Netherlands. In November 2025, we established a legal entity in Brazil to sell and distribute directly to the local market. The financial statements of our foreign subsidiaries are accounted for in local functional currencies and have been translated into U.S. dollars using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. Foreign currency translation adjustments have been recorded as a separate component of the consolidated statements of comprehensive loss. 
 
 Fair Value of Financial Instruments 
 
 The accounting standards related to fair value measurements define fair value and provide a consistent framework for measuring fair value under the authoritative literature. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. This guidance only applies when other standards require or permit the fair value measurement of assets and liabilities. The guidance does not expand the use of fair value measurements. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels. 
 
 Level 1 – Quoted prices in active markets for identical assets or liabilities; 
 
 Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data; and 
 
 Level 3 – Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data. 
 
 The Company's financial instruments include cash, restricted cash, cash equivalents, short-term investments, accounts receivable, accounts payable, acquisition installment payables, contingent consideration and long-term debt. The carrying amounts of accounts receivable, accounts payable, acquisition installment payables and long-term debt approximate the fair value due to the short-term nature or market rates of these instruments. The company bases the fair value of short-term investments on quoted market prices for identical or comparable assets except for investments classified as asset backed securities or certificates of deposit which we identify as Level 2. These securities are predominately priced by third parties, either a pricing vendor or dealer. When a quoted price in an active market for an identical security is not available these third parties will utilize an alternative market approach, such as a recent trade or matrix pricing, or an income approach, such as a discounted cash flow pricing model that calculates values from observable inputs such as quoted interest rates, yield curves and other observable market information. Contingent consideration represents conditional amounts that the Company is either required to pay, or receive, in connection with certain acquisitions. The fair value of the contingent consideration payment is considered a level 3 fair value measurement and was determined with the assistance of an independent valuation specialist at the original issuance date and as of the balance sheet date. See Note 6 for further discussion of financial instruments that carried a fair value on a recurring and nonrecurring basis. 
 
 Revenue from Contracts with Customers 
 
 In accordance with ASC 606, " Revenue from Contracts with Customers ," revenue is recognized when our performance obligations under the terms of a contract with our customer are satisfied. This typically occurs when we transfer control of our products to the customers. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, and excludes any sales incentives or taxes collected from a customer which are subsequently remitted to government authorities. 
 
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 Revenue Recognition – United States 
 
 Revenue in the United States is generated primarily from the sale of our implants, specialized braces, O&P clinic services and, to a much lesser extent, from the sale of our instruments. Sales of our implants and instruments in the United States are primarily to hospital accounts through independent sales agencies. We recognize revenue when our performance obligations under the terms of a contract with our customer are satisfied. For our implants and instruments, this typically occurs when we transfer control of our products to the customer, generally upon implantation or when title passes upon shipment. The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase product for their own inventory, and revenue is recognized when the hospital obtains control of the product, typically either upon shipment or delivery of the product dependent on the terms of the contract. Sales of our bracing products are sold to stocking distributors, hospitals, orthotist and other medical professionals or directly to end customers. For such sales, we consider our performance obligation to be settled upon shipment, and revenue is recognized at that time. For our O&P clinics, we recognize revenue when our custom manufactured braces or other products are fitted to and accepted by patients. Revenue from these O&P clinics is primarily derived from contracts with third party payors. At, or subsequent to delivery, an invoice is issued to the third-party payor, which primarily consists of commercial insurance companies, Medicare, Medicaid and private or patient pay individuals. Revenue is recognized for the amounts expected to be received from payors based on contractual reimbursement rates, which are net of estimated contractual discounts and other implicit price concessions. These revenue amounts are further revised as claims are adjudicated, which may result in additional disallowances, which are considered as part of the transaction price and recorded as a reduction of revenues. 
 
 Revenue Recognition – International 
 
 Outside of the United States, we sell our products, including our specialized braces, directly to hospitals through independent sales agencies or to independent stocking distributors. Generally, the distributors are allowed to return products, and some are thinly capitalized. Based on a history of reliable collections, we have concluded that a contract exists and revenue should be recognized when we transfer control of our products to the customer, generally when title passes upon shipment. Additionally, based on our history of immaterial returns from international customers, we have historically estimated no reserve for returns. 
 Beginning in early 2017 and continuing through 2025, we expanded operations and established legal entities outside the United States, permitting us to sell under an agency model direct to local hospitals internationally. The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase products for their own inventory, and revenue is recognized when title passes upon shipment. 
 
 Cash, Cash Equivalents and Short Term Investments 
 
 We maintain cash in bank deposit accounts which, at times, may exceed federally insured limits. To date, we have not experienced any loss in such accounts. We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents. The carrying amounts reported in the balance sheets for cash are valued at cost, which approximates fair value. 
 
 The Company invests in available-for-sale short term investments. The Company has the ability, if necessary, to liquidate without penalty any of its short term investments to meet its liquidity needs in the next twelve months. As such, those investments with contractual maturities greater than one year from the date of purchase are classified as short-term on the accompanying consolidated balance sheets. The Company includes unrealized gains or losses, as a component of other comprehensive income in stockholders' equity. If the adjustment to fair value reflects a decline in the value of the investment, the Company evaluates whether any impairment is a result of a credit loss or other factors. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, significance of a security's loss position, adverse conditions specifically related to the security, and the payment structure of the security. There were no such losses recognized in the accompanying consolidated statements of operations. Additionally, the Company recognizes any previously unrealized gain or loss at the time the Company liquidates any of its investments based on the value at the time of liquidation. In 2025, 2024, and 2023, the Company recognized gains of $ 32 , $ 119 , and $ 1,437 , respectively, that were previously unrealized. 
 
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 Restricted Cash 
 
 In conjunction with the sale of Vilex, $ 1,250 was placed into a separate escrow account. This cash is reported as restricted cash on the December 31, 2025 and 2024 consolidated balance sheets. These funds were to remain restricted until August 31, 2021 at which time, they were to be released to the Company subject to no claims related to the purchase; however, due to the pending IMED Surgical litigation, the cash remains reported as restricted until the conclusion of the legal matter. See Note 17 - Commitments and Contingencies for further detail. The Company also maintains restricted cash of EUR 625 at its Netherlands entity for potential Italian tenders. 
 
 Accounts Receivable 
 
 Accounts receivable are uncollateralized customer obligations due under normal trade terms, generally requiring payment within 30 days from the invoice date in the United States and within 90 days internationally. Account balances with invoices over 30 or 90 days past due for domestic and international accounts, respectively, are considered delinquent. For O&P clinic goods and services, accounts receivables are adjusted for unapplied cash and estimated allowances for implicit price concessions (like disallowed revenue and patient non-payments). These allowances are based on historical collection experience for different primary payor class groups (Medicare and non-Medicare). Management uses historical data to estimate collections by aging category and adjusts these estimates as needed based on trends and new information. No interest is charged on past due accounts. Payments of accounts receivable are applied to the specific invoices identified on the customer's remittance advice or, if unspecified, to the customer's account as an unapplied credit. 
 
 The carrying amount of accounts receivable is reduced by an allowance that reflects management's best estimate of the amounts that will not be collected, determined principally on the basis of historical experience, management's assessment of the collectability of specific customer accounts and the aging of the accounts receivable. All accounts or portions thereof deemed to be uncollectible or to require an excessive collection cost are written off against the established reserve. 
 
 The following table summarizes activity in our reserves recorded against accounts receivable: 
 
 December 31, 
 2025 2024 2023 
 Balance at beginning of year $ 1,145 $ 1,373 $ 1,056 
 Adjustments charged to expense 278 101 499 
 Write-offs & other adjustments ( 202 ) ( 1,132 ) ( 182 ) 
 Carrying amount as a result of acquisitions 280 803 — 
 Balance at end of year $ 1,501 $ 1,145 $ 1,373 

 Inventories, net 
 
 Our global inventory, which primarily consists of implants and instruments held in our warehouses, with third-party independent sales agencies or distributors, or consigned directly with hospitals, are considered finished goods and are purchased from third parties. Inventory is stated at the lower of cost or net realizable value, with cost determined using the first-in-first-out method. 
 
 The implant and bracing inventory is classified as a current asset because it is expected to be sold, consumed, or converted into cash within a year or within the normal operating cycle of the business. We adjust inventory values to reflect usage patterns and life cycle. We continuously monitor our global inventory for excess or obsolete items in relation to estimated forecasted product demand and the product life cycle. A significant decrease in demand could result in an increase in the amount of excess inventory on hand, which could lead to additional charges for excess and obsolete inventory. As of December 31, 2025 and 2024, our excess and obsolete inventory reserve was $ 7.7 million and $ 9.6 million, respectively. 
 
 Charges for excess and obsolete inventory are included in cost of revenue and were insignificant for the year ended December 31, 2025, and $ 914 and $ 995 for the years ended December 31, 2024 and 2023, respectively. We also incurred an additional charge during 2024 of $ 1,756 for excess and obsolete inventory in connection with our 2024 Restructuring Plan that is included within restructuring expense in the consolidated statement of operations. See Note 4 - Restructuring for additional information. 
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 Property and Equipment, net 
 
 Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the assets. When assets are retired or otherwise disposed of, costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations for the period. Maintenance and repairs that prolong or extend the useful life are capitalized, whereas standard maintenance, replacements, and repair costs are expensed as incurred. 
 
 Instruments are hand-held devices, specifically designed for use with our implants and are used by surgeons during surgery. Instruments deployed in the field are carried at cost less accumulated depreciation and are recorded in property and equipment, net on the consolidated balance sheets. 
 
 Sample inventory consists of our implants and instruments, and is maintained to market and promote our products. Sample inventory is carried at cost less accumulated depreciation. 
 
 Depreciable lives are generally as follows: 
 Building and building improvements 25 to 30 years 
 
 Furniture and fixtures 5 to 7 years 
 
 Computer equipment 3 to 5 years 
 
 Business software 3 years 
 
 Office and other equipment 5 to 7 years 
 
 Instruments 5 years 
 
 Sample inventory 2 years 
 
 Amortizable Intangible Assets, net 
 
 Amortizable intangible assets primarily relate to customer relationships, capitalized software, patents and licenses, and non-competition agreements related to our acquisitions. Amortization is calculated on a straight-line basis over the estimated useful life of the asset. Amortization for patents and licenses commences at the time of patent approval, and for licenses upon market launch, respectively. Amortization for assets acquired commences upon acquisition. Intangible assets are amortized over a 3 to 20 year period. 
 
 Amortizable intangible assets are assessed for impairment upon triggering events that indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by the associated asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the intangible assets. Due to management's decision to exit its Telos regulatory consulting business in 2025, it was determined to fully write-off any remaining customer relationship intangible asset. We recorded an impairment charge of $ 0.4 million for the year ended December 31, 2025 within intangible asset impairment expense in the consolidated statement of operations. No impairment charges for amortizable intangible assets were recorded in 2024 or 2023. 
 
 Goodwill and Other Intangible Assets 
 
 Our goodwill represents the excess of the cost over the fair value of net assets acquired. The determination of the value of goodwill and intangible assets arising from acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of net tangible and intangible assets acquired. Goodwill is not amortized and is assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstances warrant such a review. Goodwill is tested at the reporting unit level as defined in the Glossary to ASC 350. Per this definition, a reporting unit is an operating segment or one level below an operating segment. The Company has determined the reporting units to be surgical implants and the bracing reporting units established with the acquisition of MD Ortho, Boston O&P and O&P clinics. The goodwill is considered to be impaired if we determine that the carrying value of either of our reporting units exceeds its respective fair value. Management made the decision to exit its Telos regulatory consulting business, in the third quarter of 2025, resulting in a write-off of its entire goodwill balance. This goodwill impairment charge was recorded within restructuring expense in the consolidated statement of operations. 
 
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 The Company tests goodwill for impairment annually in the fourth quarter by either performing a qualitative evaluation or a quantitative test. The quantitative assessment for goodwill requires us to estimate the fair value of our two reporting units using either an income or market approach or a combination thereof. The goodwill is considered to be impaired if we determine that the carrying value of either of our reporting units exceeds its respective fair value. In 2025, we performed a quantitative analysis of our two reporting units. Fair value was determined using a combination of the income approach (discounted cash flows) and the market approach, which are weighted based on the relevance and availability of observable inputs for each reporting units. The income approach uses a reporting unit's projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions appropriate to the Company's reporting unit. The discounted cash flow model uses projections based on management's best estimates of economic and market conditions over the projected period using the best information available, including growth rates in revenues, costs and estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, weighted average cost of capital and changes in future working capital requirements. 
 
 The market approach considered valuation multiples of comparable publicly traded companies and recent market transactions. 
 
 For all reporting units tested as part of our annual assessment, the estimated fair value exceeded the carrying value, and no impairment was recorded. 
 
 We have indefinite-lived trademark assets that are reviewed for impairment by performing a quantitative analysis, which occurs annually in the third quarter, utilizing balances as of August 1, or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net discounted cash flows expected to be generated by the associated asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. The calculation of the fair value of the trademark assets involves Level 3 fair value measurements. To estimate the fair value of the trademark asset and associated impairment, we utilized the relief-from-royalty method, which is a form of the income approach. This approach requires us to make significant estimates and assumptions including preparation of forecasted revenue, selection of a royalty rate and discount rate and estimate of the terminal year revenue growth rate. 
 
 During 2025, 2024, and 2023, the Company completed a quantitative analysis whereby we determined the fair value of the ApiFix trademark asset to be below the carrying value. The primary reason for the impairment is the lower forecasted revenue of our ApiFix product than previously expected. Additional partial impairment charges were recorded in 2025 related to our MedTech and Orthex trademark assets, due to lower forecasted revenues, and a full impairment of the Telos tradename was recorded in connection with our decision to exit this business in 2025. We recorded impairment charges of $ 4,228 , $ 1,836 , and $ 985 for the years ended December 31, 2025, 2024, and 2023, respectively, to reduce the carrying amount of the intangible assets to their estimated fair values. 
 
 Investments in Privately Held Companies 
 
 The Company determines whether its investments in privately held companies are debt or equity based on their characteristics. The Company also evaluates the investee to determine if the entity is a variable interest entity (“VIE”) and, if so, whether the Company is the primary beneficiary of the VIE, in order to determine whether consolidation of the VIE is required. If consolidation is not required and the Company does not have voting control of the entity, the investment is evaluated to determine if the equity method of accounting should be applied. The equity method applies to investments in common stock or in substance common stock where the Company exercises significant influence over the investee. 
 
 Investments in privately held companies determined to be equity securities are accounted for as non-marketable securities. The Company adjusts the carrying value of its non-marketable equity securities for changes from observable transactions for identical or similar investments of the same issuer, less impairment. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized as a component of other expenses (income) in the consolidated statements of operations. 
 
 Investments in privately held companies determined to be debt securities are accounted for as available-for-sale or held-to-maturity securities unless the fair value option is elected. The Company has investments of $ 3,629 , and 
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 $ 2,180 as of December 31, 2025 and 2024, respectively, which are recorded within other non-current assets on its consolidated balance sheet. 
 
 Acquisition Payable and Contingent Consideration 
 
 Upon the completion of an acquisition the Company may record an acquisition installment payable, contingent consideration or both. Both are recorded at their fair values as determined by management with the assistance of an independent valuation specialist at the original issuance date and are adjusted on a recurring basis. Accretion of interest expense attributable to the acquisition installment payable are recorded as a component of interest expense (income), net. Changes in the fair value of the contingent consideration are included in fair value adjustments of contingent consideration. Both are included as a component of other expenses (income) on the consolidated statements of operations. The amount of expense recorded was $ 89 , $ 661 and $ 1,372 for the years ended December 31, 2025, 2024 and 2023, respectively, related to the accretion of the acquisition installment payable. Adjustments in the fair value of the contingent consideration payment were recognized as income of $ 0 , $ 0 and $ 2,980 for the years ended December 31, 2025, 2024 and 2023, respectively. Following the fourth year anniversary of our acquisition of ApiFix in April 2024, the sales performance period associated with our ApiFix system sales milestone ended, and no additional amounts were owed to the sellers. 
 
 Shipping and Handling Costs 
 
 Shipping and handling costs that are billed to the customer are included in net revenue and were $ 1,537 , $ 1,385 and $ 1,244 , for the years ended December 31, 2025, 2024 and 2023, respectively. Shipping and handling costs that are not billed to the customer are included in sales and marketing expenses and were $ 7,519 , $ 6,827 and $ 5,655 , for the years ended December 31, 2025, 2024 and 2023, respectively. 
 
 Cost of Revenue 
 
 Cost of revenue consists primarily of products purchased from third-party suppliers, excess and obsolete inventory adjustments, inbound freight, royalties, material, labor and overhead related to the manufacturing of our braces. Our implants and instruments are manufactured to our specifications by third-party suppliers who meet our manufacturer qualifications standards. We purchase the raw materials to make our specialized bracing products in our facilities in Wayland, IA, Edenbridge, UK, and Boston, MA. Our manufacturing sites as well as our third-party manufacturers are required to meet Food and Drug Administration (the “FDA”), International Organization for Standardization and other country-specific quality standards. The majority of our implants, instruments, and braces are produced in the United States. 
 
 Sales and Marketing Expenses 
 
 Sales and marketing expenses primarily consist of commissions to our domestic and select international independent sales agencies and consignment distributors, as well as compensation, commissions, benefits and other related costs, including stock-based compensation, for personnel we employ. Commissions and bonuses are generally based on a percentage of sales. Our international independent stocking distributors purchase instrument sets and replenishment stock for resale, and we do not pay commissions or any other sales related costs for international sales to distributors. 
 
 Advertising Costs 
 
 Advertising costs consist primarily of print advertising, trade shows, and other related expenses. Advertising costs are expensed as incurred and are recorded as a component of sales and marketing expense. Advertising costs were $ 3,427 , $ 2,395 and $ 2,409 for the years ended December 31, 2025, 2024 and 2023, respectively. 
 
 Research and Development Costs 
 
 Research and development costs are expensed as incurred. Our research and development expenses primarily consist of costs associated with engineering, product development, consulting services, outside prototyping services, outside research activities, materials, development and protection of our intellectual property portfolio, as well as other costs associated with development of our products. Research and development costs also include related personnel and consultants’ compensation expense, including stock-based compensation. 
 
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 Stock-Based Compensation 
 
 Prior to our IPO, we maintained an Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”) that provides for grants of options and restricted stock to employees, directors and associated third-party representatives of our company as determined by the Board of Directors. The 2007 Plan had authorized 1,585,000 shares for award. 
 
 Immediately prior to our IPO, we adopted our 2017 Incentive Award Plan (the “2017 Plan”) which replaced the 2007 Plan. The 2017 Plan provides for grants of options and restricted stock to officers, employees, consultants or directors of our Company. The 2017 Plan has authorized 1,832,460 shares for award. 
 
 In 2024 we adopted the 2024 Incentive Award Plan (the "2024 Plan") which replaced the 2017 Plan. The 2024 Plan provides for grants of options and restricted stock to officers, employees, consultants or directors of the Company. The 2024 Plan has authorized 1,629,000 shares for award. As of December 31, 2025, the 2024 Plan had 526,707 shares available for issuance. 
 
 Options holders, upon vesting, may purchase common stock at the exercise price, which is the estimated fair value of our common stock on the date of grant. Option grants generally vest immediately or over a three-year period. No stock options were granted in any of the periods presented. 
 
 Restricted stock may not be transferred prior to the expiration of the restricted period. The restricted stock that has been granted under the 2017 Plan typically vests at the end of a three-year period. Remaining grants under the 2017 Plan will vest by February 2027. Generally under the 2024 Plan, restricted stock vests at the end of a three-year period. We have elected to recognize the reversal of stock compensation expense when a restricted stock forfeiture occurs as opposed to estimating future forfeitures. 
 
 We record the fair value of restricted stock at the grant date. Stock-based compensation is recognized ratably over the requisite service period, which is generally the restriction period for restricted stock. 
 
 Comprehensive Loss 
 
 Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss includes foreign currency translation adjustments and unrealized gains (losses) on marketable securities. 
 
 Income Taxes 
 
 We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. 
 
 We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance. 
 
 We record uncertain tax positions on the bases of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the positions and (2) for those tax positions that do not meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. 
 
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 Litigation and Contingencies 
 
 Accruals for litigation and contingencies are reflected in the consolidated financial statements based on 
 management’s assessment, including advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings and/or the expected resolution of contingencies. Liabilities for estimated losses are accrued if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount is reasonably estimable. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s results of operations in a given period. 
 
 Debt Issuance Costs 
 
 Debt issuance costs are deferred and presented as a reduction to long-term debt. Debt issuance costs are amortized using the effective interest rate method over the term of the loan. Amortization of deferred debt issuance costs are included within interest expense (income), net in the consolidated statements of operations. 
 
 Leases 
 
 At the inception of a contractual arrangement, the Company determines whether the contract is or contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding right-of-use asset upon lease commencement using a discount rate based on a borrowing rate commensurate with the term of the lease. 
 
 The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. Assumptions made by the Company at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease. 
 
 Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. To estimate its incremental borrowing rate, the Company considers its current interest rate on its secured Term Loan, adjusted as necessary based on the lease term and the Company’s credit spread. 
 
 The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its operating lease right-of-use assets within other non-current assets. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets. 
 
 Recent Accounting Pronouncements 
 
 In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-06 " Disclosure Improvements - Codification Amendments in Response to SEC's Disclosure Update and Simplification Initiative ." This amendment modifies the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. For entities subject to the SEC's existing disclosure requirements and entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K 
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 becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. Amendments in this ASU should be applied prospectively. The Company continues to analyze this ASU. The update is specific to disclosures and, therefore, is not expected to have a material impact to the consolidated financial statements. 
 
 In December 2023, the FASB issued ASU No. 2023-09, " Income Taxes (Topic 740): Improvements to Income Tax Disclosures " (ASU 2023-09), which enhances the transparency and decision usefulness of income tax disclosures. Adjustments to the annual disclosure of income taxes include: (1) A tabular rate reconciliation comprised of eight specific categories, (2) Income taxes paid, disaggregated between significant national, state, and foreign jurisdictions, (3) Eliminates requirements to disclose the nature and estimate of reasonably possible changes to unrecognized tax benefits in the next 12 months or that an estimated range cannot be made, and (4) Adds a requirement to disclose income (or loss) from continuing operations before income tax expense (or benefit) by national and foreign, and income tax expense (or benefit) from continuing operations disaggregated between national, state and foreign. The ASU is effective for public business entities for fiscal years beginning on or after December 15, 2024 with early adoption permitted. The amendments in ASU 2023-09 were adopted by the Company on a prospective basis. There was no material impact to the Company's financial statements as a result of adopting ASU 2023-09. 
 
 In November 2024, the FASB issued ASU No. 2024-03, "Disaggregation of Income Statement Expenses" which requires disaggregated disclosure of income statement expenses into specified categories in disclosures within the footnotes to the financial statements. The standard is effective for annual periods beginning after December 15, 2026. We are currently evaluating the effect of this ASU on our consolidated financial statements and disclosures. 
 
 NOTE 3 – BUSINESS COMBINATIONS AND ASSET ACQUISITIONS 
 
 Boston Brace International, Inc. 
 
 On January 5, 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. 
 
 Under the terms of the stock purchase agreement, the Company paid to the shareholders of Boston O&P consideration of $ 21,535 in cash and $ 233 in common stock, after adjusting for closing net working capital, transaction expenses, and funded indebtedness. Additionally, certain employees and executives of Boston O&P also received awards of restricted stock of the Company which will vest in three years subject to continuous service. The Restricted Stock Award Agreements were to approximately 170 individuals for an aggregate of approximately 83,000 shares representing approximately $ 2,500 (based on a share price of $ 30.12 , which was the average closing price during the four-month period ending on January 4, 2024) and were granted pursuant to the 2017 Plan. The restricted stock is not considered part of the purchase consideration. 
 
 The following table summarizes the total consideration paid for Boston O&P and the allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date: 
 
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 Fair value of estimated total acquisition consideration $ 21,737 
 Assets: 
 Cash 1,310 
 Accounts receivable - trade 2,749 
 Inventories 1,075 
 Prepaid expenses and other current assets 447 
 Property and equipment 6,259 
 Amortizable intangible assets 2,963 
 Other intangible assets 3,610 
 Other non-current assets 2,987 
 Total assets 21,400 
 Liabilities: 
 Accounts payable-trade 581 
 Other current liabilities 2,064 
 Long-term debt, including current portion 1,157 
 Deferred tax liability 2,617 
 Other non-current liabilities 1,803 
 Total liabilities 8,222 
 Less: total net assets 13,178 
 Goodwill $ 8,559 

 The fair value of identifiable intangible assets and certain long-lived assets were based on valuations using a combination of the income and cost approach, inputs which would be considered Level 3 under the fair value hierarchy. The estimated fair value and useful life of identifiable intangible assets are as follows: 
 
 Amount Remaining Economic Useful Life 
 Trademarks / Names $ 3,610 Indefinite 
 
 Customer Relationships & Other 2,963 12 years 
 $ 6,573 

 The following table represents the unaudited pro forma net revenue and net loss assuming the acquisition of Boston O&P occurred on January 1, 2023. 
 
 Year Ended December 31, 
 2024 2023 
 Net revenue $ 205,158 $ 176,154 
 Net loss $ ( 37,849 ) $ ( 20,510 ) 

 In 2024, Boston O&P purchased all the issued and outstanding share capital or acquired the assets of multiple domestic orthotic and prosthetic device clinics. Total consideration for all O&P clinics acquired during 2024 was approximately $ 4,818 in total consideration, which comprised of cash of $ 3,388 and promissory notes in the original principal amount of $ 1,430 payable in installments with an interest rate of 5.0 % per annum. We allocated $ 680 to customer relationship intangible assets and $ 3,367 to goodwill, and the rest to net working capital and other assets acquired and liabilities assumed. 
 
 In 2025, Boston O&P purchased all the issued and outstanding membership interest or acquired the assets of multiple orthotic and prosthetic device clinics. Total consideration for all O&P clinics acquired was approximately $ 9,042 , which comprised of cash of $ 6,796 and promissory notes in the original principal amount of $ 2,475 , with a weighted average interest rate of 4.9 % per annum. The sellers may also be entitled to an earnout of up to $ 1,475 , if gross revenues exceed a threshold in the first year after closing. The sellers promissory notes may also be subject to adjustments if gross revenue targets are not achieved in the first year after the applicable closing. We 
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 allocated $ 2,268 to customer relationship intangible assets and $ 5,680 to goodwill, and the rest to net working capital and other assets acquired and liabilities assumed. The allocation of the purchase price is considered preliminary. 
 
 OP EU B.V. 
 
 In July 2025, OP EU B.V., a wholly-owned Netherlands based subsidiary of the Company, purchased all of the issued and outstanding share capital of orthotic and prosthetic device clinics located in Ireland. Total consideration was approximately EUR 1,473 which comprised of cash of EUR 1,200 and a promissory note in the original principal amount of EUR 390 , with an interest rate of 4.0 % per annum. The sellers promissory note may be subject to adjustments if net sales targets are not achieved. We allocated EUR 390 to customer relationship intangible assets and EUR 1,101 to goodwill, and the rest to net working capital and other assets acquired and liabilities assumed. The allocation of the purchase price is considered preliminary. 
 
 OrthoPediatrics EU Limited 
 
 In August 2025, OrthoPediatrics EU Limited, a wholly-owned UK based subsidiary of the Company, purchased all of the issued and outstanding share capital of a designer and manufacturer of clubfoot bracing located in the UK. Total consideration was approximately GBP 3,537 , which was comprised of cash of GBP 2,506 and promissory notes in the original principal amount of GBP 1,100 , with an interest rate of 5.0 % per annum. We allocated GBP 695 to customer relationship intangible assets, GBP 766 to goodwill and the rest to net working capital and other assets acquired and liabilities assumed. The allocation of the purchase price is considered preliminary. 
 
 Orthopediatrics do Brasil Ltda. 
 
 On November 25, 2025, Orthopediatrics do Brasil Ltda., a wholly-owned Brazil based subsidiary of the Company, purchased all of the issued and outstanding share capital of a local distributor. Total consideration was approximately BRL $ 41,552 which is comprised of BRL $ 23,128 of upfront cash, 14,594 shares of the Company's common stock representing approximately BRL $ 1,329 , and approximately BRL $ 24,023 in anniversary payments, or approximately BRL $ 17,043 after giving effect to the time value of money. The total consideration transferred, as calculated after discounting future payments to present value, is preliminary and subject to certain limitations and customary adjustments. The Company is obligated to make anniversary payments of: (i) BRL $ 2,762 on the first anniversary of the closing date, and (ii) BRL $ 5,315 on each of the subsequent four anniversaries of the closing date. All anniversary payments are to be made in a combination of cash and shares of our common stock. As of December 31, 2025, we recorded a current portion of these future anniversary payments of USD $ 442 within current portion of acquisition installment payable, and USD $ 2,668 within acquisition installment payable, net of current portion on our consolidated balance sheet. 
 
 We allocated BRL $ 5,550 to customer relationship intangible assets, BRL $ 1,440 to non-compete agreements, BRL $ 6,312 to goodwill, and the rest to net working capital and other assets acquired and liabilities assumed, including inventories of BRL $ 30,530 . The allocation of the purchase price is considered preliminary. 
 
 Rhino Pediatric Orthopedic Designs, Inc. 
 
 On July 1, 2023, the Company completed an acquisition of assets, including inventory and certain intangible assets, of Rhino Pediatric Orthopedic Designs, Inc. ("Rhino"). Rhino's product portfolio included several pediatric orthopedic products in the bracing and soft goods space, including the Cruiser TM , Kicker TM , and Rhino Stomper TM . The Company paid $ 1,024 in total consideration for the assets which was comprised of $ 546 of cash, including $ 46 of transactions costs, and 11,133 shares of the Company’s common stock, par value $ 0.00025 per share, representing approximately $ 478 (based on closing price of $ 42.91 on July 1, 2023). 
 
 Medtech Concepts LLC 
 
 On May 1, 2023, the Company purchased all of the issued and outstanding membership interest of Medtech Concepts LLC, a Delaware limited liability company (“MedTech”). MedTech has developed an early-stage, pre-commercial enabling technology platform designed to increase efficiency in the perioperative environment. The solution combines hardware, software, and data analytics to help streamline operative care and support better decision making in the operating room. In the future, the Company believes this enabling technology platform will provide valuable intraoperative resources for surgeons that will improve decision making, drive operating room 
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 efficiency, and ultimately improve healthcare for children. The Company also expects that the acquisition will further support future market share gains for its implant systems, similar to what the Company has experienced with the FIREFLY® Technology and the 7D Surgical FLASH TM Navigation platform. No revenue was recorded from this platform in 2023, 2024 or 2025. 
 
 The sellers of MedTech are being paid a purchase price of approximately $ 15,274 in the following manner: (i) cash in the aggregate amount of $ 3,000 was paid on May 1, 2023, the transaction closing date (the “Closing Date”); (ii) 43,751 unregistered shares of the Company’s common stock, par value $ 0.00025 per share, representing approximately $ 2,274 (based on a closing share price of $ 51.98 on May 1, 2023), were issued on the Closing Date; and (iii) an aggregate of $ 2,500 payable 50 % in cash and 50 % in shares of unregistered common stock, will be paid on each of the first four anniversaries of the Closing Date, all subject to the conditions set forth in the Membership Interest Purchase Agreement (as amended, the "Purchase Agreement") relating to the transaction. 
 
 The Company concluded that the business acquired did not comprise an integrated set of activities that meet the definition of a business and therefore did not result in the acquisition of a business. Instead, the Company accounted for the transaction as an asset acquisition for accounting purposes. 
 
 Under the Purchase Agreement, a number of future payments in the form of common stock are contingent on continued service through each applicable payment anniversary date. As such, these amounts have been excluded from measuring the cost of the acquisition. The result is $ 4,500 of stock compensation which will be recognized on a straight-line basis over the four-year service period. Future cash payments and stock issuances that are not contingent on continuous service are included in the calculation of consideration. The total consideration is $ 10,043 after discounting the future guaranteed fixed payments to their present value. Additionally, since this was treated as an asset acquisition, the Company included $ 97 of transaction costs in the total consideration. The table below reconciles the payments and issuances to total consideration transferred after discounting the future payments to present value. 
 
 Consideration Present Value 
 Cash consideration $ 3,000 $ 3,000 
 Issuance of common stock 2,274 2,274 
 Anniversary payments 5,500 4,672 
 Transaction costs 97 97 
 Total consideration transferred $ 10,871 $ 10,043 

 As result of this asset acquisition, the Company recorded a trademark asset in the amount of $ 520 with an indefinite useful life and an intellectual property asset relating to software acquired of $ 9,523 which is being amortized over a useful life of ten years . 
 
 During the year ended December 31, 2024, the Company paid the first anniversary payment consisting of $ 1,250 in cash and issued 4,288 of the Company's common stock approximating $ 133 which reduced the amount of the acquisition installment payable on our consolidated balance sheet. The present value of the remaining acquisition installment payable is $ 3,799 as of December 31, 2024, of which $ 1,347 is recorded as a current liability. In addition, we issued 38,594 shares of our common stock to one individual on the first anniversary date in exchange for their continued service through the vesting date which had been accounted for as stock-based compensation expense in the post-combination consolidated financial statements. 
 
 Kevin Unger, a member of the Company’s Board of Directors (the “Board”) through April 28, 2023, was one of the sellers in the transaction. As a result, the Board formed a special committee comprised of independent and disinterested directors (the “Special Committee”) with the exclusive authority to review, evaluate, and negotiate, or reject, the potential MedTech acquisition. The Purchase Agreement and the transactions contemplated thereby were approved by both the Special Committee and the full Board (with Mr. Unger abstaining). 
 
 On May 9, 2025, as part of the Company’s ongoing efforts to preserve cash, we amended the Purchase Agreement (the “Amendment”) such that the fixed cash portion of all three remaining anniversary payments (with an aggregate gross value of $ 3,750 ) will now be settled through the issuance of unregistered shares of our common stock. The future equity issuances to one of the sellers (with an aggregate value of $ 2,250 ) is contingent upon their continuous service through the applicable third and fourth anniversary dates. The number of shares 
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 that is contingently issuable at the third and fourth anniversary dates is based on the volume-weighted average price over the thirty trading days ending on the second business day prior to the applicable anniversary date. As the monetary amount is fixed and known as of the date of the Amendment, the share-settled liability is being recorded on a straight-line basis over the service period as additional stock-based compensation expense. 
 
 During the year ended December 31, 2025, the Company paid the second anniversary payment by issuing 10,830 unregistered shares of our common stock approximating $ 226 to one of the sellers, which reduced the amount of the acquisition installment payable on our consolidated balance sheet. In addition, we issued 97,467 unregistered shares of our common stock, approximately $ 1,250 in value, of which 50 % had previously been recognized as stock-based compensation expense in the post-combination consolidated financial statements, and the other 50 % had been recorded within the acquisition installment payable on the consolidated balance sheet. We also recorded a capital contribution for $ 2,026 upon execution of the Amendment, which represented the present value of the fixed cash payments that would be paid at the third and fourth anniversary dates, and derecognized the related acquisition installment payable which had previously been recorded on our consolidated balance sheet. As of December 31, 2025, the Company has recorded a share-settled liability of $ 1,982 related to the Amendment, of which $ 1,752 is recorded as a current liability. 
 
 NOTE 4 - RESTRUCTURING 
 
 In the fourth quarter of 2024, we initiated a global restructuring plan (the "2024 Restructuring Plan"). The 2024 Restructuring Plan aims to improve operational efficiency, exit our physical site in Israel, and reduce costs by integrating the ApiFix product into the broader OP Scoliosis portfolio, and effect additional staff reduction across all of OrthoPediatrics Corp. In 2025, the Company made the decision to restructure Telos by dissolving the local operation and continuing staff reductions across the Company. In 2024, we recognized expenses of $ 3,653 related to reducing the ApiFix portfolio inventory, reserving for excess inventory, and employee termination benefits. In 2025, we recognized expenses of $ 5,601 related to the restructuring of Telos and continuing staff reductions as part of the 2024 Restructuring Plan, which includes $ 1,431 of non-cash stock-based compensation expense. 
 
 The Company's restructuring expenses are comprised of the following: 
 
 Year Ended December 31, 2025 Year Ended December 31, 2024 
 Severance and employee costs $ 3,490 $ 1,196 
 Goodwill write-off 1,874 1,771 
 Other exit costs 237 686 
 $ 5,601 $ 3,653 

 The following table summarizes the changes in our accrued restructuring balance, which is included in either accrued expenses and other current liabilities or other long-term liabilities in the accompanying consolidated balance sheets. Such costs are all expected to be paid by December 31, 2027. 
 
 Accrued Restructuring Balance 
 Balance at December 31, 2023 $ — 
 Restructuring charges 1,306 
 Payments ( 234 ) 
 Balance at December 31, 2024 $ 1,072 
 Restructuring charges $ 1,605 
 Payments ( 1,869 ) 
 Balance at December 31, 2025 $ 808 

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 NOTE 5 - GOODWILL AND INTANGIBLE ASSETS 
 
 Goodwill 
 
 Changes in the carrying amount of goodwill were as follows: 
 
 Total 
 
 Goodwill at January 1, 2025 $ 93,844 
 Clinic and other acquisitions 9,156 
 Boston O&P measurement period adjustment 233 
 Goodwill impairment ( 1,874 ) 
 Foreign currency translation impact 7,910 
 Goodwill at December 31, 2025 
 $ 109,269 

 Management made the decision to exit its regulatory consulting business, performed by Telos in the third quarter of 2025, resulting in a write-off of its entire goodwill balance. This goodwill impairment charge was recorded within restructuring expenses in the consolidated statements of operations. 
 
 Intangible Assets 
 
 As of December 31, 2025, the balances of amortizable intangible assets were as follows: 
 Weighted-Average Amortization Period 
 Gross Intangible Assets Accumulated Amortization Net Intangible Assets 
 Patents 9.3 years $ 49,939 $ ( 18,854 ) $ 31,085 
 Intellectual Property and Capitalized Software 7.1 years 16,056 ( 5,642 ) 10,414 
 Customer Relationships & Other 9.7 years 26,278 ( 6,107 ) 20,171 
 License agreements 2.5 years 10,453 ( 7,321 ) 3,132 
 Total amortizable assets $ 102,726 $ ( 37,924 ) $ 64,802 
 
 As of December 31, 2024, the balances of amortizable intangible assets were as follows: 
 
 Weighted-Average Amortization Period 
 Gross Intangible Assets Accumulated Amortization Net Intangible Assets 
 Patents 10.2 years $ 45,064 $ ( 13,984 ) $ 31,080 
 Intellectual Property and Capitalized Software 8.2 years 16,027 ( 4,065 ) 11,962 
 Customer Relationships & Other 11.5 years 21,850 ( 4,783 ) 17,067 
 License agreements 2.7 years 10,710 ( 6,392 ) 4,318 
 Total amortizable assets $ 93,651 $ ( 29,224 ) $ 64,427 
 
 We recorded a full impairment of our Telos customer relationship intangible asset of $ 410 , which is recorded within intangible asset impairment expense in the consolidated statements of operations. Amortization expense was $ 8,165 , $ 7,812 and $ 7,149 for the years ended December 31, 2025, 2024 and 2023, respectively. Future amortization expenses are expected as follows: 
 Year Ending December 31: 
 2026 $ 8,582 
 2027 7,995 
 2028 7,164 
 2029 6,938 
 2030 6,758 
 Thereafter 27,365 
 Total $ 64,802 

 Licenses are tied to product launches and do not begin amortizing until the product is launched to the market. Anticipated market launches are expected to occur through 2026 for products for which we previously obtained licensing rights. 
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 Trademarks are recorded as indefinite-lived intangible assets in the amounts of $ 12,909 and $ 16,752 as of December 31, 2025 and 2024, respectively. In 2022, we acquired trademarks associated with MD Ortho and Pega Medical for approximately $ 2,410 and $ 3,878 , respectively. In 2023, we acquired trademarks associated with MedTech and Rhino for approximately $ 520 and $ 140 , respectively. In 2024, we acquired trademarks associated with Boston O&P for approximately $ 3,610 . Trademarks are recorded in other intangible assets on the consolidated balance sheets. 
 
 During 2025, 2024, and 2023, we completed a quantitative analysis whereby we determined the fair value of certain of our trademark assets was below the carrying value. We recorded impairment charges of $ 4,228 , $ 1,836 and $ 985 for the years ended December 31, 2025, 2024 and 2023, respectively, to reduce the carrying amount of the intangible asset to its estimated fair value. 
 
 NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS 
 
 The Company measures certain financial assets and liabilities at fair value. The accounting standards related to fair value measurements define fair value and provide a consistent framework for measuring fair value under the authoritative literature. 
 
 The following tables summarize the assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024, respectively. 
 December 31, 2025 
 Level 1 Level 2 Level 3 Total 
 Financial Assets 
 
 Short-term Investments 
 Corporate Bonds $ — $ 17,852 $ — $ 17,852 
 Treasury Bonds $ 16,956 $ — $ — $ 16,956 
 Asset-Backed Securities $ — $ 6,058 $ — $ 6,058 
 Exchange Trade Mutual Funds $ 429 $ — $ — $ 429 
 
 December 31, 2024 
 Level 1 Level 2 Level 3 Total 
 Financial Assets 
 
 Short term Investments 
 Corporate Bonds $ 10,598 $ — $ — $ 10,598 
 Treasury Bonds $ 9,274 $ — $ — $ 9,274 
 Asset-Backed Securities $ 4,889 $ — $ — $ 4,889 
 
 Exchange Trade Mutual Funds $ 252 $ — $ — $ 252 

 The Company's level 1 assets consist of short-term, liquid investments with original maturity of three months or less at inception and other short term investments which are comprised of exchange traded mutual funds and marketable securities with a maturity date greater than 3 months. 
 
 The Company's level 2 assets pertain to corporate bonds and asset-backed securities. These securities are predominately priced by third parties, either by a pricing vendor or dealer with significant inputs observable in active markets. 
 
 The Company's Level 3 instruments consist of contingent consideration. The fair value of the contingent consideration liability assumed in business combinations is recorded as part of the purchase price consideration of the acquisition and is determined using a discounted cash flow model or probability simulation model. The significant inputs of such models are not always observable in the market, such as forecasted annual revenues, expected volatility and discount rates. The adjustments in the fair value of the contingent consideration payments resulted in income of $ 0 , $ 0 and $ 2,980 for the years ended December 31, 2025, 2024 and 2023, respectively. There was no contingent consideration recorded on the consolidated balance sheet as of December 31, 2025 and 2024. 
 
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 NOTE 7 - PROPERTY AND EQUIPMENT, NET 
 
 Property and equipment, net consisted of the following: 
 December 31, 
 2025 2024 
 Land $ 2,350 $ 2,350 
 Building and building improvements 11,168 11,318 
 Computer equipment and software 6,458 5,029 
 Office and other equipment 7,056 6,377 
 Instruments 68,698 60,878 
 Sample inventory 3,419 3,419 
 Construction in progress 8,271 7,342 
 107,420 96,713 
 Less: accumulated depreciation ( 57,865 ) ( 46,117 ) 
 Total property and equipment, net $ 49,555 $ 50,596 

 Depreciation expense is primarily included in general and administrative expenses and was $ 12,022 , $ 10,948 and $ 10,236 for the years ended December 31, 2025, 2024 and 2023, respectively. 
 
 NOTE 8 – ACCRUED COMPENSATION AND BENEFITS 
 
 Accrued compensation and benefits consisted of the following: 
 December 31, 
 2025 2024 
 Accrued compensation and related costs $ 5,281 $ 6,368 
 Accrued commissions 8,412 7,520 
 Total accrued compensation and benefits $ 13,693 $ 13,888 

 NOTE 9 - DEBT AND CREDIT ARRANGEMENTS 
 
 Long-term debt consisted of the following: 
 December 31, 
 2025 2024 
 Term loan and final payment $ 51,000 $ 25,500 
 Convertible note 50,000 50,000 
 Mortgage payable to affiliate 453 611 
 Acquisition promissory notes 4,557 1,372 
 Total debt 106,010 77,483 
 Less: debt discount and issuance costs 4,326 3,630 
 Less: current maturities 1,866 897 
 Long-term debt, net of current maturities $ 99,818 $ 72,956 

 Braidwell Term Loan 
 
 On August 5, 2024, the Company and its wholly owned domestic subsidiaries, as borrowers (collectively, the “Credit Parties”), entered into that certain Credit Agreement and Guaranty (the “Term Loan Agreement”), by and among the Credit Parties, any additional borrowers from time to time party thereto, any guarantors from time to time party thereto, one or more funds managed by Braidwell LP (“Braidwell”), as lenders, the other lenders from time to time party thereto (together with Braidwell, the “Term Lenders”), and Wilmington Trust, National Association, as agent (the “Term Agent”). The Term Loan Agreement provides for (i) an initial term loan facility in the initial principal amount of $ 25,000 , which was funded in its entirety on August 12, 2024 and (ii) a delayed draw term loan facility (the “DDTL”) in an aggregate principal amount not to exceed $ 25,000 , which, subject to certain conditions set forth in the Term Loan Agreement, may be drawn until August 5, 2025. On June 27, 2025, the Company withdrew the delayed draw on the term loan in the amount of $ 25,000 . 
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 Loans borrowed pursuant to the Term Loan Agreement (the “Term Loans”) bear interest at a rate per annum equal to SOFR Interest Rate (as defined in the Term Loan Agreement and with a floor of 3.25 %) plus 6.50 %. The Company has the option to make a payment-in-kind interest payment equal to 1.00 % per annum of the interest rate. The Term Loans do not amortize and will be interest-only until the August 5, 2029 maturity date, at which time all unpaid principal and accrued and unpaid interest, fees and expenses due under the Term Loan Agreement will become due and payable. The Company paid certain upfront fees and agency fees in connection with the Term Loan Agreement. 
 
 The Company may pay all or a portion of the outstanding principal and accrued and unpaid interest under the Term Loan Agreement at any time upon prior notice to the Term Lenders subject to (i) a repayment fee schedule of, depending on when the repayment is made, 3.00 % of the principal amount of any such repayment during the first 12 months of the Term Loan Agreement or applicable DDTL funding date, 2.00 % of the principal amount of any such repayment during months 13 through 24 of the Term Loan Agreement or applicable DDTL funding date, 1.00 % of the principal amount of any such repayment during months 25 through 36 of the Term Loan Agreement or applicable DDTL funding date, and —% thereafter and (ii) an exit fee equal to 2.00 % of the principal amount of any such repayment ("Final Payment"). The Term Loan Agreement contains customary mandatory prepayment provisions. Once repaid or prepaid, the Term Loans may not be reborrowed. 
 
 The Term Loan Agreement includes customary conditions to borrowing, representations and warranties and covenants, including affirmative covenants and negative covenants that restrict the Credit Parties’ and their subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. The Term Loan Agreement also has financial covenants requiring the Credit Parties to (i) maintain at all times unrestricted cash held in US accounts subject to Lenders’ first priority lien equal to at least 25 % of the aggregate principal amount of any outstanding Term Loans and (ii) maintain certain minimum net product sales over a trailing twelve-month period as set forth therein. 
 
 The Term Loan Agreement also contains customary events of default, including among other things, the Credit Parties’ failure to make any principal or interest payments when due, the occurrence of certain bankruptcy or insolvency events, or the Credit Parties’ breach of the covenants under the Term Loan Agreement. Upon the occurrence of an event of default, the Term Lenders may, among other things, accelerate the Credit Parties’ obligations under the Term Loan Agreement. 
 
 As security for their obligations under the Term Loan Agreement, the Credit Parties granted the Term Agent a continuing first priority security interest in substantially all of their assets (including intellectual property), subject to certain customary exceptions. 
 
 Braidwell Convertible Note 
 
 In addition to the Term Loans, on August 5, 2024, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Braidwell Transaction Holdings LLC – Series 10 (the “Purchaser”), whereby the Purchaser agreed to purchase $ 50,000 in aggregate principal amount of the Company’s 4.75 % Convertible Senior Notes due February 15, 2030 (the “Convertible Notes”) for an aggregate purchase price of $ 49,500 . The Convertible Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of August 12, 2024, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). 
 
 The Convertible Notes represent the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the Convertible Notes; and (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness. 
 
 The Convertible Notes accrue interest at a rate of 4.75 % per annum, payable quarterly in arrears on February 15, May 15, August 15, and November 15 of each year, beginning on November 15, 2024. The Convertible Notes will mature on February 15, 2030, unless earlier repurchased, redeemed, or converted. Before November 15, 2029, noteholders will have the right to convert their Convertible Notes only upon the occurrence of certain events, including, but not limited to, the Company’s common stock trading above 130 % of the conversion price for a 
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 specified period, the Convertible Notes per $1 in principal amount trading below 98 % of the product of the trading price of the Company’s common stock and the conversion rate, and certain fundamental changes to corporate structure. From and after November 15, 2029, noteholders may convert their Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election. The initial conversion rate is 24.4021 shares of common stock per $1 principal amount of Convertible Notes, which represents an initial conversion price of approximately $ 40.98 per share of common stock. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. 
 
 The Convertible Notes are redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after February 21, 2028 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if (i) the Convertible Notes are Freely Tradable (as defined in the Indenture) and any accrued and unpaid additional interest pursuant to the Convertible Notes has been paid as of the redemption date, and (ii) the last reported sale price per share of the Company’s common stock exceeds 140 % of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. In addition, calling any Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption. 
 
 If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Convertible Notes at a cash repurchase price equal to the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock. 
 
 The Convertible Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Convertible Notes (which, in the case of a default in the payment of interest on the Convertible Notes, will be subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease, or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company in its obligation to convert a note in accordance with the Indenture upon the exercise of the conversion right with respect thereto, if not cured within two business days after its occurrence; (v) a default by the Company in its other obligations or agreements under the Indenture or the Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (vi) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $ 25,000 ; (vii) the rendering of certain judgments against the Company or any of its significant subsidiaries for the payment of at least $ 25,000 where such judgments are not discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished; and (viii) certain events of bankruptcy, insolvency, and reorganization involving the Company or any of the Company’s significant subsidiaries. 
 
 If an Event of Default involving bankruptcy, insolvency, or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of Convertible Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole 
 115 

 remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Convertible Notes for up to 180 days at a specified rate per annum not exceeding 0.50 % on the principal amount of the Convertible Notes. 
 
 The debt facilities replaced the $ 80,000 Credit, Security, and Guaranty Agreement with MidCap Funding IV Trust and MidCap Financial Trust and other parties named therein, dated December 29, 2023 (the "MidCap Credit Agreement"). There was approximately $ 10,000 outstanding under the MidCap Credit Agreement and it was terminated in connection with the Term Loan Agreement. 
 
 MidCap Credit Agreement 
 
 Borrowings under the MidCap Credit Agreement accrued interest at an annual rate equal to the greater of (a) One Month Term SOFR plus 6.50 % or (b) 9.0 % and interest on the Revolving Loan would have accrued at the greater of (a) One Month Term SOFR plus 4.0 % or (b) 6.50 % (the “Applicable Rate”). The Company paid MidCap an unused commitment fee in an amount equal to the per annum rate of 0.50 % (computed on the basis of a year of 360 days and the actual number of days elapsed) times the daily unused portion of the revolving credit commitment. The unused commitment fee was payable quarterly in arrears. 
 
 Borrowings under the MidCap Credit Agreement were made under a term loan (the "MidCap Term Loan") of $ 10,000 and a Revolving Loan of $ 50,000 , payable, jointly and severally, by the Company and each of its subsidiaries party thereto. The MidCap Term Loan and Revolving Loan matured at the earlier of (i) December 1, 2028; (ii) the occurrence of any transaction or series of transactions pursuant to which any person or entity in the aggregate acquire(s) 35 % or more of the voting capital stock of the Company; (iii) a change in the majority of the Company’s Board of Directors over a 12-month period; (iv) the Company ceases to own directly or indirectly, 100% of the capital stock of any of its subsidiaries (with the exception of any subsidiaries permitted to be dissolved, merged or otherwise disposed of by the MidCap Credit Agreement), or (v) the occurrence of a change in control, fundamental change, deemed liquidation event or terms of similar import under any document or instrument governing or relating to debt of or equity interests of the Company. No amounts were drawn under the Revolving Loan as of December 31, 2023 or at any time during 2024. 
 
 Borrowings under the MidCap Credit Agreement were secured by a security interest in the Company’s and other Borrowers' assets. The MidCap Credit Agreement provided for customary events of default. If an event of default is not cured within the time periods specified (if any), the Lenders and Agent would have had the right to accelerate the Company’s payment of principal and interest in addition to other rights and remedies. The MidCap Credit Agreement included certain customary non-financial covenants, and also include certain financial covenants related to the Company achieving minimum revenue targets over a trailing twelve month period and maintaining minimum liquidity of $ 10,000 . The MidCap Credit Agreement was amended on May 3, 2024 to clarify the inputs into the financial covenant calculations. 
 
 As a result of the termination of the MidCap Credit Agreement, the Company recorded a loss on the extinguishment of debt in the amount of $ 3,230 on the consolidated statement of operations for the year ended December 31, 2024. 
 
 Other Debt 
 
 In connection with the purchase of our office and warehouse space in Warsaw, Indiana in August 2013, we entered into a mortgage note payable to Tawani Enterprises Inc., an affiliate of Squadron. Pursuant to the terms of the mortgage note, we pay Tawani Enterprises Inc. monthly principal and interest installments of $ 16 with interest compounded at 5 % until maturity in 2028, at which time a final payment of remaining principal and interest is due. The mortgage is secured by the related real estate and building. As of December 31, 2025 and 2024, the mortgage balance was $ 453 and $ 611 , respectively, of which current principal due of $ 170 and $ 160 , respectively, was included in current portion of long-term debt. 
 
 Interest expense relating to notes payable to Squadron and mortgage note payable with Tawani wa s $ 27 , $ 35 and $ 42 for the years ended December 31, 2025, 2024 and 2023, respectively. 
 
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 Acquisition Promissory Notes 
 
 As of result of multiple acquisitions in 2025 and 2024, as part of the consideration transferred, the Company is contracted to pay promissory notes to the previous owners. As of December 31, 2025, we had $ 4,557 remaining in present value, of which $ 1,696 is classified as short-term on the consolidated balance sheet. The payments are paid in installments with interest rates ranging from 4.0 % to 5.0 % per annum. 
 
 At December 31, 2025, the aggregate future principal payments on our debt arrangements, including the Final Payment, are as follows: 
 
 Year Ending December 31: 
 2026 1,852 
 2027 2,975 
 2028 140 
 2029 51,034 
 2030 50,009 
 Thereafter — 
 Total $ 106,010 

 NOTE 10 - INCOME TAXES 
 
 Total income tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 was allocated as follows: 
 2025 2024 2023 
 Total income tax expense (benefit) $ 460 $ ( 4,107 ) $ ( 338 ) 

 For the years ended December 31, 2025, 2024 and 2023 loss before taxes of the Company consists of the following: 
 2025 2024 2023 
 Domestic $ ( 37,060 ) $ ( 27,327 ) $ ( 12,582 ) 
 Foreign ( 2,128 ) ( 14,602 ) ( 8,730 ) 
 Total $ ( 39,188 ) $ ( 41,929 ) $ ( 21,312 ) 

 The components of income tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 are as follows: 
 2025 2024 2023 
 Current: 
 Federal $ — $ — $ — 
 State 116 104 85 
 Foreign 497 525 740 
 613 629 825 
 
 Deferred: 
 Federal $ — $ — $ — 
 State — — — 
 Foreign ( 153 ) ( 2,107 ) ( 1,163 ) 
 
 Decrease in valuation allowance — ( 2,629 ) — 
 Total income tax expense (benefit) $ 460 $ ( 4,107 ) $ ( 338 ) 

 117 

 The reconciliation between the effective tax rate and the statutory tax rate is as follows: 
 
 Year Ended December 31, 2025 
 Amount Percent 
 U.S. Federal Statutory Tax Rate $ ( 8,258 ) 21.0 % 
 State and Local Income Taxes, Net of Federal Income Tax Effect (a) $ 92 ( 0.2 ) % 
 Foreign Tax Effects 
 Canada 
 Current non-cash Tax Adjustments $ 593 ( 1.5 ) % 
 Other $ ( 94 ) 0.2 % 
 Israel $ 1,277 ( 3.3 ) % 
 Other Foreign Jurisdictions $ ( 293 ) 0.7 % 
 Tax Credits 
 Foreign Tax Credits $ 426 ( 1.1 ) % 
 Changes in Valuation Allowance $ 8,170 ( 20.8 ) % 
 Nontaxable or Nondeductible Items 
 Excess tax benefits from stock plans $ 1,069 ( 2.7 ) % 
 Elimination $ ( 657 ) 1.7 % 
 Other $ 190 ( 0.5 ) % 
 Other Adjustments 
 Unborn foreign tax deduction $ ( 1,895 ) 4.8 % 
 Other $ ( 160 ) 0.4 % 
 Effective Tax Rate $ 460 ( 1.2 ) % 

 (a) State taxes in Massachusetts, New York, New York City and Texas made up the majority of the tax effect in this category. 
 
 December 31, 
 2024 2023 
 Federal statutory rate 21.0 % 21.0 % 
 State statutory rate, net of federal benefit 1.8 % 1.2 % 
 Effect of foreign rates different from statutory 0.5 % 0.2 % 
 Change in state rate 0.4 % ( 0.3 ) % 
 Excess tax benefits from stock plans ( 1.2 ) % ( 0.2 ) % 
 Nondeductible/nontaxable or other items 9.3 % ( 3.3 ) % 
 Unborn foreign tax deduction ( 1.7 ) % ( 0.5 ) % 
 US benefit of foreign branches 8.0 % 8.6 % 
 Nondeductible executive compensation ( .1 ) % ( 1.0 ) % 
 Change in valuation allowance ( 28.2 ) % ( 24.1 ) % 
 Income tax benefit 9.8 % 1.6 % 

 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The primary temporary differences that give rise to the deferred tax assets and liabilities are certain inventory adjustments, depreciation and amortization, interest expense, stock-based compensation and net operating loss carryforwards. 
 
 118 

 The deferred tax assets and liabilities consisted of the following at December 31, 2025 and 2024: 
 2025 2024 
 Deferred tax assets: 
 Inventories, net $ 3,562 $ 4,236 
 Stock-based compensation 6,482 4,996 
 Loss carryforwards 63,587 50,831 
 Credit carryforwards 176 176 
 Interest carryforward 1,181 534 
 
 Lease liabilities 3,012 2,103 
 Other 1,761 1360 
 Total deferred tax assets 79,761 64,236 
 Valuation allowance ( 65,313 ) ( 53,742 ) 
 Net deferred tax assets 14,448 10,494 
 Deferred tax liabilities: 
 Intangibles ( 12,074 ) ( 8,726 ) 
 Property and equipment ( 2,929 ) ( 2,933 ) 
 Right-of-use assets ( 3,027 ) ( 2,216 ) 
 Total deferred tax liabilities ( 18,030 ) ( 13,875 ) 
 Deferred tax liabilities, net $ ( 3,582 ) $ ( 3,381 ) 

 The deferred tax assets were fully offset by a valuation allowance at December 31, 2025 and 2024, with the exception of certain deferred tax liabilities in Canada in 2025 and 2024. The Company has recorded tax expense during the year ended December 31, 2025, and tax benefit during the year ended December 31, 2024, for losses generated in certain foreign jurisdictions. 
 
 As of December 31, 2025, we had available federal, state and foreign tax loss carryforwards of $ 172,205 , $ 103,707 and $ 37,770 , respectively. We had available federal tax credits of $ 176 . Net operating losses ("NOLs") generated prior to December 31, 2017 will begin to expire in 2028. Federal net operating losses generated after January 1, 2018 will have an indefinite carryforward period. An ownership change under Section 382 of the Internal Revenue Code was deemed to occur on May 30, 2014. Given the limitation calculation, we anticipate approximately $ 23,920 in losses generated prior to the ownership change date will be available to be utilized after applying the limitation. The estimated annual limitation is $ 1,062 . A second ownership change under Section 382 was deemed to occur on December 11, 2018. The estimated annual limitation is $ 9,736 , which is increased by $ 22,430 over the first five years as a result of an unrealized built in gain. NOLs sustained prior to May 30, 2014 will still be constricted by the lower limitation. 
 
 Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. As a result, a full valuation continues to be recorded against the Company's net deferred tax assets, with the exception of Canada. 
 
 We are subject to taxation in the United States, Indiana and various other state and international jurisdictions. As of December 31, 2025, all tax years from 2008 remain open to examination by the major taxing jurisdictions to which we are subject due to our net operating loss and credit carryforwards from those years. We believe that the income tax filing positions will be sustained on audit and do not anticipate any adjustments that will result in a material change. Therefore, no reserve for uncertain income tax positions has been recorded. Interest and penalties, if any, associated with income tax examinations will be recorded as a component of income taxes. 
 
 At December 31, 2025, our foreign operations held cash totaling $ 4,368 . We have not provided for foreign withholding tax on the undistributed earnings from our non-U.S. subsidiaries that are considered to be indefinitely reinvested. If such earnings were to be distributed, any foreign withholding tax would not be significant. 
 
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 Income Taxes Paid 
 2025 2024 2023 
 Federal $ — $ — $ — 
 New York 29 — 43 
 Texas 40 — 28 
 Canada 57 513 223 
 Other Jurisdictions 45 79 27 
 Total Income Taxes Paid $ 171 $ 592 $ 321 
 
 Listed jurisdictions represents those whose income taxes paid exceeds 5% of total income taxes paid, net of refunds. 
 
 NOTE 11 - STOCKHOLDERS’ EQUITY 
 
 Stock Options 
 
 The fair value for options granted at the time of issuance were estimated at the date of grant using a Black-Scholes options pricing model. Significant assumptions included in the option value model include the fair value of our common stock at the grant date, weighted average volatility, risk-free interest rate, dividend yield and the forfeiture rate. There were no stock options granted in any of the periods presented. 
 
 Our stock option activity and related information are summarized as follows: 
 Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (in Years) 
 Outstanding at January 1, 2023 3,556 $ 30.97 1.3 
 Forfeited or expired ( 2,886 ) $ 30.97 
 Exercised ( 670 ) $ 30.97 
 Outstanding at December 31, 2023 — $ — — 
 
 Outstanding at December 31, 2024 — $ — — 
 Outstanding at December 31, 2025 — $ — — 

 Options generally include a time-based vesting schedule permitting the options to vest ratably over three years . At December 31, 2025 and 2024, all options were fully vested. 
 
 There was no stock-based compensation expense on stock options for all periods presented. 
 
 Restricted Stock 
 
 Our restricted stock activity and related information are summarized as follows: 
 Restricted Stock Awards Weighted-Average Remaining Contractual Terms (in Years) Restricted Stock Units Weighted-Average Remaining Contractual Terms (in Years) 
 Outstanding at January 1, 2023 403,324 1.4 10,080 2.5 
 Granted 311,689 4,005 
 Forfeited ( 6,800 ) ( 234 ) 
 Vested ( 115,760 ) — 
 Outstanding at December 31, 2023 592,453 1.6 13,851 1.7 
 Granted 560,252 7,900 
 Forfeited ( 12,503 ) ( 200 ) 
 Vested ( 96,009 ) — 
 Outstanding at December 31, 2024 1,044,193 1.5 21,551 1.2 
 Granted 704,691 10,500 
 Forfeited ( 25,329 ) ( 1,120 ) 
 Vested ( 215,462 ) ( 9,966 ) 
 Outstanding at December 31, 2025 1,508,093 1.4 20,965 1.4 
 
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 At December 31, 2025, there was $ 19,114 of unrecognized compensation expense remaining related to our service-based restricted stock awards. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.4 years. 
 
 Stock-based compensation expense on restricted stock amounted to $ 17,778 , $ 13,548 and $ 10,526 for the years ended December 31, 2025, 2024 and 2023, respectively, and is classified as follows: 
 
 Year Ended December 31, 
 2025 2024 2023 
 Sales and marketing $ 2,189 $ 1,774 $ 1,422 
 General and administrative 12,650 10,502 8,405 
 Research and development 1,508 1,170 699 
 Restructuring 1,431 102 — 
 Total $ 17,778 $ 13,548 $ 10,526 

 In connection with its approval of the Term Loan Agreement, Purchase Agreement, the Indenture and Convertible Notes, on August 2, 2024, the Board of Directors of the Company also approved a stock repurchase program of up to $ 5,000 in aggregate investment of the Company’s outstanding common stock, contingent upon the closing of the Term Loan and the Convertible Notes. The stock repurchases may, at the discretion of management, be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions or pursuant to a Rule 10b5-1 plan all as effected in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The Company is not obligated to purchase any shares under the program, and the program may be discontinued at any time. No shares have been purchased under this program as of December 31, 2025. The dollar limit on repurchases under the program after December 31, 2024 was reduced to $ 250 per annum. 
 
 NOTE 12 – NET LOSS PER SHARE 
 
 The following is a reconciliation of basic and diluted net loss per share attributable to common stockholders: 
 Year Ended December 31, 
 2025 2024 2023 
 Net loss $ ( 39,648 ) $ ( 37,822 ) $ ( 20,974 ) 
 Less: Earnings allocated to participating securities — — — 
 Net loss available to common shareholders $ ( 39,648 ) $ ( 37,822 ) $ ( 20,974 ) 
 
 Denominator for basic and diluted net loss per share 
 Weighted average shares outstanding for basic 23,459,425 23,077,704 22,675,477 
 Weighted average shares outstanding for diluted 
 23,459,425 23,077,704 22,675,477 
 
 Loss per share: 
 Basic $ ( 1.69 ) $ ( 1.64 ) $ ( 0.92 ) 
 Diluted $ ( 1.69 ) $ ( 1.64 ) $ ( 0.92 ) 

 Our basic and diluted net loss per share is computed using the two-class method. The two-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock that includes non-forfeitable rights to dividends are considered participating securities. 
 
 For the periods presented with a net loss the weighted average shares outstanding remains consistent between basic and diluted as the effect would have been anti-dilutive. 
 
 The following table shows the contingently issuable and convertible equity shares that were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive: 
 
 Year Ended December 31, 
 2025 2024 2023 
 
 Restricted stock 1,529,058 1,065,744 606,304 
 
 1,529,058 1,065,744 606,304 

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 The contingently issuable shares in the table above do not include shares of our common stock associated with our obligation to issue a variable number of our common shares as a result of our recent acquisitions, or our convertible note. As of December 31, 2025, we are obligated to issue additional shares of our common stock to the sellers of certain acquisitions. See Note 3 - Business Combinations and Asset Acquisitions for additional information. We are obligated to issue additional shares of our common stock to Braidwell in the event that our Convertible Notes are converted into shares of common stock. See Note 9 - Debt and Credit Arrangements for additional information. 
 
 NOTE 13 – BUSINESS SEGMENT 
 
 Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. We have one operating and reportable segment, OrthoPediatrics, which designs, develops and markets anatomically appropriate specialized braces, implants and devices for children with orthopedic problems. Our chief operating decision-maker, our Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance, accompanied by disaggregated revenue information by product category. The Chief Executive Officer is regularly provided with consolidated expenses consistent with those presented in the consolidated statements of operations. We do not assess the performance of our individual product categories on measures of profit or loss, or other asset-based metrics. Therefore, the information below is presented only for revenue by category and geography. 
 
 Product sales attributed to a country or region includes product sales to hospitals, physicians and distributors and is based on the final destination where the products are sold. No individual customer accounted for more than 10% of total product sales for any of the periods presented. No customer accounted for more than 10% of consolidated accounts receivable as of December 31, 2025 or 2024. 
 
 Disaggregated revenue - product sales by source were as follows: 
 Year Ended December 31, 
 Product sales by geographic location: 2025 2024 2023 
 U.S. $ 186,403 $ 161,163 $ 111,010 
 International 49,945 43,564 37,722 
 Total $ 236,348 $ 204,727 $ 148,732 

 Year Ended December 31, 
 Product sales by category: 2025 2024 2023 
 Trauma and deformity $ 166,301 $ 145,126 $ 106,781 
 Scoliosis 66,047 55,153 37,933 
 Sports medicine/other 4,000 4,448 4,018 
 Total $ 236,348 $ 204,727 $ 148,732 

 No individual country with sales originating outside of the United States accounted for more than 10% of consolidated revenue for the years ended December 31, 2025, 2024 and 2023. 
 
 No individual country outside of the United States held long-lived assets in excess of 10% of consolidated long-lived assets as of December 31, 2025, 2024 or 2023. 
 
 NOTE 14 - RELATED PARTY TRANSACTIONS 
 
 In addition to the mortgage with Squadron and its affiliate (refer to Note 9), we currently use Structure Medical, LLC (“Structure Medical”) as one of our suppliers. Structure Medical is affiliated with Squadron and a supplier with which we maintain certain long-term agreements. Our aggregate payments to Structure Medical for inventory purchases were $ 1,931 , $ 1,006 and $ 1,060 for the years ended December 31, 2025, 2024 and 2023, respectively. 
 
 NOTE 15 - EMPLOYEE BENEFIT PLAN 
 
 We have a defined-contribution plan, OrthoPediatrics 401(k) Retirement Plan (the “401(k) Plan”), which includes a cash or deferral (Section 401(k)) arrangement. The 401(k) Plan covers those employees who meet certain 
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 eligibility requirements and elect to participate. Employee contributions are limited to the annual amounts permitted under the Internal Revenue Code. The 401(k) Plan allows us to make a discretionary matching contribution. Discretionary matching contributions are determined annually by management. OrthoPediatrics Corp. matches up to 4 % of our employees' salaries. Employees of MD Ortho and Boston O&P receive contribution matches up to 3 % of their salary. For the years ended December 31, 2025, 2024 and 2023, the total 401(k) match resulted in expense of $ 1,383 , $ 1,130 and $ 900 , respectively. 
 
 NOTE 16 – LEASES 
 
 As of December 31, 2025, and 2024 we have recorded an operating lease liability of $ 11,992 and $ 7,781 , respectively, and a corresponding right-of-use asset of $ 12,048 and $ 8,237 , respectively, on our consolidated balance sheets. The increases during 2025 and 2024 are primarily the result of our Boston O&P acquisition and our subsequent O&P clinic acquisitions where office space is leased at or in close proximity to pediatric hospitals to better serve our patients. 
 
 Short-term lease costs were not material for the years ended December 31, 2025, 2024 or 2023. The components of lease expense and supplemental cash flow information were as follows for the years ended December 31, 2025, 2024 and 2023: 
 
 For the Years Ended December 31, 
 2025 2024 2023 
 Operating lease cost $ 4,104 $ 1,776 $ 263 
 Cash paid for amounts included in the measurement of lease liabilities $ 3,175 $ 2,082 $ 305 
 Right-of-use assets obtained in exchange for new lease liabilities, including leases assumed through business combinations $ 6,911 $ 8,957 $ 706 

 Supplemental balance sheet information related to our operating leases as of December 31, 2025 and 2024 includes: 
 
 As of December 31, 
 2025 2024 
 Right-of-use assets recognized in Other non-current assets $ 12,048 $ 8,237 
 Lease liabilities recognized in Other current liabilities 3,053 2,120 
 Lease liabilities recognized in Other long-term liabilities 8,939 5,661 
 Weighted-average remaining lease term 4.5 years 4.5 years 
 Weighted-average discount rate 10.3 % 11.2 % 

 Our future minimum lease payments as of December 31, 2025 were: 
 
 For the Years Ended December 31, 
 2026 $ 4,082 
 2027 3,460 
 2028 2,715 
 2029 2,119 
 2030 1,203 
 Thereafter 1,529 
 Total 15,108 
 Less imputed interest 3,116 
 Total $ 11,992 

 NOTE 17 – COMMITMENTS AND CONTINGENCIES 
 
 Legal Proceedings 
 
 From time to time, we are involved in various legal proceedings arising in the ordinary course of our business. 
 
 IMED Surgical - Software Ownership Dispute 
 
 On October 16, 2020, the Company, its wholly-owned subsidiary, Orthex, LLC (“Orthex”), the Company’s largest investor, Squadron, and certain other defendants, were named in a lawsuit filed by IMED Surgical, LLC, a New 
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 Jersey company ("IMED"), in Broward County, Florida Circuit Court. In the lawsuit, IMED claims, among other things, that it is the rightful owner of certain patented point-and-click planning software being used by the Company, Orthex and Squadron (specifically, U.S. Patent No. 10,258,377 (titled “Point and click alignment method for orthopedic surgeons, and surgical and clinical accessories and devices,” issued on April 16, 2019) (hereinafter, the “’377 Patent”). 
 
 In June 2019, the Company purchased all the issued and outstanding units of membership interests in Orthex, and all the issued and outstanding shares of stock of Vilex in Tennessee, Inc. for $ 60,000 in total consideration. Vilex and Orthex are primarily manufacturers of foot and ankle surgical implants, including cannulated screws, fusion devices, surgical staples and bone plates, as well as the Orthex Hexapod technology, a system of rings, struts, implants, hardware accessories, and the Point & Click Software used to treat congenital deformities and limb length discrepancies. On December 31, 2019, the Company divested substantially all of the assets relating to Vilex's adult product offerings to a wholly-owned subsidiary of Squadron, in exchange for a $ 25,000 reduction in a term note owed to Squadron in connection with the initial acquisition. As part of the sale, the Company also executed an exclusive license arrangement with Squadron providing for perpetual access to certain intellectual property, including the ‘377 Patent. According to the lawsuit, the other defendants, who are unrelated to the Company, assigned the ‘377 Patent to Orthex in violation of certain agreements with IMED. IMED, among other things, requests that the defendants be ordered to convey and assign to IMED all of their rights, title and interests in and to the ’377 Patent and seeks certain compensatory, consequential and unjust enrichment damages from Orthex and the unrelated defendants. 
 
 On May 13, 2021, the Court ordered the lawsuit stayed pending arbitration. To the extent IMED desires to further pursue the matter, it must first do so through a separate arbitration proceeding. In mid-November 2021, IMED initiated an arbitration proceeding; however, IMED failed to pay the fees it was required to pay for the arbitration to continue, resulting in the arbitration panel terminating the arbitration proceedings in mid-October 2022. In connection with the stay order, the Court also ordered the Company, Orthex and Squadron to give notice to IMED before any attempt to dispose, assign, sell or otherwise encumber the ‘377 Patent. The Company, Orthex and Squadron filed an appeal of this component of the order, but the appellate court affirmed the lower court’s decision. The Company, Orthex and Squadron have not sought to further pursue an appeal of the subject order. 
 
 On February 3, 2023, the Court partially lifted the stay in this case for the sole purpose of, as clarified by the Court's order on March 7, 2023, "permitting any party to argue any motion challenging the events that occurred which led to the arbitration panel's termination order." No filing was made in response to that order. No further filings were made in this case until October 30, 2023, when defendants filed a motion to dismiss. 
 
 On December 12, 2023, the Court ordered IMED has until March 13, 2024, to appear before the Court and show cause why this case should not be dismissed for failure to pursue arbitration consistent with the Court’s orders. On March 13, 2024, a hearing took place to discuss the status of IMED’s effort to re-initiate arbitration. Thereafter, on March 25, 2024, the Court ordered, if, by April 27, 2024, IMED has not begun arbitration, resolved this case, or substantiated (in the form of an attorney and client declaration) that it has executed an agreement with a litigation funder to pay for arbitration proceedings, to pay the balance due to the subject arbitration association and to re-instate the arbitration, the Court will dismiss this case without prejudice. On April 26, 2024, IMED informed the Court it has executed an agreement with a litigation funder to pay for arbitration proceedings, to pay the balance due to the subject arbitration association, and to reinstate the arbitration, and is in the final stages of resolving the balance due to the subject arbitration association. 
 
 On September 20, 2024, the Court dismissed IMED’s lawsuit, without prejudice, for failure to prosecute. However, contemporaneously, IMED re-initiated arbitration. 
 
 Although we believe the Company has strong defenses to the IMED arbitration and we intend to vigorously defend the claims asserted against us, arbitration can involve complex factual and legal questions, and an adverse resolution of such proceedings could have a material adverse effect on our business, operating results and financial condition. 
 
 We are not presently a party to any other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate materially affect our financial position or results of operations or cash flows. 
 
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 Purchase Obligations and Performance Requirements 
 
 As a result of entering into a license agreement for the exclusive distribution of the 7D Surgical FLASH TM Navigation platform during 2021, the Company agreed to a minimum purchase commitment for the first twelve months of that agreement. As of December 31, 2021 the remaining balance of the commitment was $ 1,900 . For all subsequent years, the Company met the minimum purchase commitment. Additionally, the contract requires future purchase commitments based upon a percentage of historical purchases. As a result and as of December 31, 2025, the Company has a minimum purchase commitment for approximately $ 1,092 for the year ending December 31, 2026. 
 
 On July 20, 2021, we entered into an amended license agreement, resulting in a five-year extension of our exclusive distribution rights of the FIREFLY Technology. As a component of the agreement the Company is required to meet minimum performance metrics, measured by the number of spine procedures in the fiscal year which used the FIREFLY products against the annual requirement in the agreement. This includes any scheduled surgeries whereby the Company has committed to payment of the product. The number of required surgeries varies each year of the agreement. During the years ended December 31, 2024 and 2023, the Company did not reach the minimum performance metrics. As such, the Company recorded $ 1,760 and $ 2,000 as a component of cost of revenue for the shortfall which occurred during 2024 and 2023, respectively. On May 15, 2025, the Company issued 55,143 unregistered shares of the Company's common stock to Mighty Oak to satisfy the obligation that existed for past unmet minimum performance metrics related to 2024. In 2025, the agreement was amended and extended through 2030. The amended agreement modified the minimum performance metrics to be based on a purchase requirement of $ 3,500 annually through 2030 instead of the number of spine procedures. The amended threshold of units purchased was met in 2025, so there was no shortfall recorded during 2025. 
 
 Royalties 
 
 As of December 31, 2025, we are contracted to pay royalties to individuals and entities that provide research and development services, which range from 0.5 % to 20 % of sales. Currently, we have no minimum royalty commitments. 
 
 We have products in development that have royalty commitments. In any development project, there are significant variables that will affect the amount and timing of these payments and as of December 31, 2025, we have not been able to determine the amount and timing of payments. We do not anticipate these future payments will have a material impact on our financial results. 
 
 NOTE 18 - SUBSEQUENT EVENT 
 
 On February 1, 2026, the Company and OrthoPediatrics EU Limited, a wholly owned subsidiary of the Company, entered into a Stock Purchase Agreement (the “Purchase Agreement”) with the shareholders (the “Sellers”) of London Orthotic Consultancy Consolidated Ltd (“LOC”), pursuant to which OrthoPediatrics EU Limited acquired all of the issued and outstanding shares of capital stock of LOC. LOC has two subsidiaries which were acquired as part of the transaction: (i) The London Orthotic Consultancy Limited; and (ii) L.O.C. Manufacturing Limited. 
 
 Under the terms of the Purchase Agreement, OrthoPediatrics EU Limited paid to the Sellers: (i) GBP 5,400 in cash, subject to customary adjustments related to working capital and indebtedness; (ii) GBP 600 pursuant to promissory notes with interest at the rate of 4.5 percent per annum, payable in full on the 1-year anniversary of the closing. The sellers may also be entitled to an earnout payment of up to GBP 1,700 , if certain financial performance metrics of LOC and its subsidiaries exceeds a threshold in the first year after closing. 
 
 Pursuant to the Purchase Agreement, the Sellers and one employee of LOC will also receive awards of restricted stock of the Company which will each vest over a three-year period. Restricted stock awards having an aggregate award value of $ 235 will be granted on January 2, 2027, and restricted stock awards having an aggregate award value of $ 168 will be granted on January 2, 2028. 
 
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 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
 
 None.
ORTHOPEDIATRICS CORP 10-K

Item 8. Financial Statements and Supplementary Data
