Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number: 001-38242

OrthoPediatrics Corp.

(Exact name of registrant as specified in its charter)


Delaware			26-1761833
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)


2850 Frontier Drive Warsaw, IN 46582			(574) 268-6379
(Address of principal executive offices, including zip code)			(Registrant’s telephone number, including area code)

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.00025 par value per share

KIDS

Nasdaq Global Market

________________________________________________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 2, 2024, the registrant had 24,214,426 outstanding shares of common stock, $0.00025 par value per share.

OrthoPediatrics Corp.

Form 10-Q

For the Quarterly Period Ended June 30, 2024

TABLE OF CONTENTS


		Page No.
Note Regarding Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets - June 3 0 , 2024 and December 31, 2023	4
	Condensed Consolidated Statements of Operations - Three and Six Months Ended June 3 0 , 2024 and 2023	5
	Condensed Consolidated Statements of Comprehensive Loss - Three and Six Months Ended June 3 0 , 2024 and 2023	6
	Condensed Consolidated Statements of Stockholders' Equity - Three and Six Months Ended June 3 0 , 2024 and 2023	7
	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 3 0 , 2024 and 2023	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4	Controls and Procedures	34

PART II. OTHER INFORMATION
Item 1	Legal Proceedings	36
Item 1A	Risk Factors	36
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3	Defaults Upon Senior Securities	36
Item 4	Mine Safety Disclosures	37
Item 5	Other Information	37
Item 6	Exhibits	37
Exhibit Index		38
Signatures		40

NOTE REGARDING FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical facts, contained in this quarterly report, including statements regarding our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition, are forward-looking statements. You can often identify forward-looking statements by words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "target," "ongoing," "plan," "potential," "predict," "project," "should," "will" or "would," or the negative of these terms or other terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors, such as the impact of widespread health emergencies, such as COVID-19 and respiratory syncytial virus, that may cause our results, activity levels, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements. Forward-looking statements may include, among other things, statements relating to:

•our ability to achieve or sustain profitability in the future;

•our ability to raise additional capital to fund our existing commercial operations, develop and commercialize new products and expand our operations;

•our ability to commercialize our products in development and to develop and commercialize additional products through our research and development efforts, and if we fail to do so we may be unable to compete effectively;

•our ability to generate sufficient revenue from the commercialization of our products to achieve and sustain profitability;

•our ability to comply with extensive government regulation and oversight both in the United States and abroad;

•our ability to maintain and expand our network of third-party independent sales agencies and distributors to market and distribute our products; and

•our ability to protect our intellectual property rights or if we are accused of infringing on the intellectual property rights of others.

We cannot assure you that forward-looking statements will prove to be accurate, and you are encouraged not to place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations expressed or implied by the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this quarterly report, in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 8, 2024 and in other reports filed with the SEC that discuss the risks and factors that may affect our business. Other than as required by law, we undertake no obligation to update or revise any forward-looking statements to reflect new information, events or circumstances occurring after the date of this quarterly report.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ORTHOPEDIATRICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands, Except Share Data)


	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	28,927	$	31,055
Restricted cash	1,963		1,972
Short-term investments	—		49,251
Accounts receivable - trade, net of allowances of $1,026 and $1,373, respectively	42,028		34,617
Inventories, net	116,366		105,851


Prepaid expenses and other current assets	4,499		3,750

Total current assets	193,783		226,496
Property and equipment, net	53,482		41,048
Other assets:
Amortizable intangible assets, net	67,848		69,275
Goodwill	90,512		83,699
Other intangible assets	18,669		15,287
Other non-current assets	6,467		2,940
Total other assets	183,496		171,201

Total assets	$	430,761	$	438,745

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade	$	17,002	$	12,649
Accrued compensation and benefits	12,616		11,325

Current portion of long-term debt with affiliate	156		152
Current portion of acquisition installment payable	1,304		10,149



Other current liabilities	8,491		7,391
Total current liabilities	39,569		41,666
Long-term liabilities:
Long-term debt, net of current portion	9,250		9,297
Long-term debt with affiliate, net of current portion	532		611
Acquisition installment payable, net of current portion	2,371		3,551
Deferred income taxes	4,739		5,483
Other long-term liabilities	3,007		1,112
Total long-term liabilities	19,899		20,054

Total liabilities	59,468		61,720








Stockholders' equity:
Common stock, $0.00025 par value; 50,000,000 shares authorized; 24,216,738 shares and 23,378,408 shares issued as of June 30, 2024 and December 31, 2023, respectively	6		6
Additional paid-in capital	593,087		580,287

Accumulated deficit	(211,576)		(197,742)
Accumulated other comprehensive loss	(10,224)		(5,526)
Total stockholders' equity	371,293		377,025
Total liabilities and stockholders' equity	$	430,761	$	438,745

See notes to condensed consolidated financial statements.

ORTHOPEDIATRICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In Thousands, Except Share and Per Share Data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue	$	52,802	$	39,559	$	97,487	$	71,147
Cost of revenue	12,003		9,534		24,514		17,561
Gross profit	40,799		30,025		72,973		53,586
Operating expenses:
Sales and marketing	16,593		13,533		30,762		26,082
General and administrative	27,329		19,112		52,059		36,269

Research and development	2,543		2,966		5,541		5,412
Total operating expenses	46,465		35,611		88,362		67,763
Operating loss	(5,666)		(5,586)		(15,389)		(14,177)
Other expense (income):
Interest expense, net	261		294		898		84
Fair value adjustment of contingent consideration	—		(2,304)		—		(2,974)
Other expense (income), net	120		(289)		96		(620)
Total other expense (income), net	381		(2,299)		994		(3,510)
Loss before income taxes	$	(6,047)	$	(3,287)	$	(16,383)	$	(10,667)
Provision for income taxes (benefit)	(18)		(401)		(2,549)		(975)


Net loss	$	(6,029)	$	(2,886)	$	(13,834)	$	(9,692)
Weighted average shares outstanding
Basic and diluted	23,145,064		22,704,723		22,982,921		22,587,022

Net loss per share
Basic and diluted	$	(0.26)	$	(0.13)	$	(0.60)	$	(0.43)

See notes to condensed consolidated financial statements.

ORTHOPEDIATRICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited) (In Thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(6,029)	$	(2,886)	$	(13,834)	$	(9,692)
Other comprehensive loss:
Foreign currency translation adjustment	(3,263)		(1,858)		(4,689)		(2,820)
Unrealized gain (loss) on short-term investments	—		(7)		109		610
Adjustment for realized gain on securities	—		—		(118)		(301)
Other comprehensive loss, net of tax	(3,263)		(1,865)		(4,698)		(2,511)
Comprehensive loss	$	(9,292)	$	(4,751)	$	(18,532)	$	(12,203)

See notes to condensed consolidated financial statements.

ORTHOPEDIATRICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In Thousands, Except Share Data)


		Three and Six Months Ended June 30, 2024
							Accumulated
					Additional		Other		Total
	Common Stock		Paid-in		Accumulated	Comprehensive	Stockholders'
		Shares	Value				Capital		Deficit		Loss		Equity
Balance at January 1, 2024		23,378,408	$	6			$	580,287	$	(197,742)	$	(5,526)	$	377,025
Net loss		—	—				—		(7,805)		—		(7,805)
Other comprehensive loss		—	—				—		—		(1,435)		(1,435)

Restricted stock		162,003	—				2,799		—		—		2,799


Balance at March 31, 2024		23,540,411	$	6			$	583,086	$	(205,547)	$	(6,961)	$	370,584
Net loss		—	—				—		(6,029)		—		(6,029)
Other comprehensive loss		—	—				—		—		(3,263)		(3,263)
Stock portion of MedTech anniversary payment		4,288	—				133		—		—		133
Stock portion of ApiFix anniversary installment		245,812	—				6,929		—		—		6,929

Restricted stock		426,227	—				2,939		—		—		2,939
Balance at June 30, 2024		24,216,738	$	6			$	593,087	$	(211,576)	$	(10,224)	$	371,293

See notes to condensed consolidated financial statements.

ORTHOPEDIATRICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In Thousands, Except Share Data)


	Three and Six Months Ended June 30, 2023
									Accumulated
					Additional				Other		Total
	Common Stock			Paid-in	Accumulated		Comprehensive		Stockholders'
	Shares	Value			Capital		Deficit		Loss		Equity
Balance at January 1, 2023	22,877,962	$	6		$	560,810	$	(176,768)	$	(5,400)	$	378,648
Net loss	—	—			—		(6,806)		—		(6,806)
Other comprehensive loss	—	—			—		—		(646)		(646)

Restricted stock	264,156	—			1,959		—		—		1,959


Balance at March 31, 2023	23,142,118	$	6		$	562,769	$	(183,574)	$	(6,046)	$	373,155
Net loss	—	—			—		(2,886)		—		(2,886)
Other comprehensive loss	—	—			—		—		(1,865)		(1,865)

Restricted stock	14,591	—			3,456		—		—		3,456
Consideration for MedTech acquisition	43,751	—			2,274		—		—		2,274
Stock portion of ApiFix anniversary installment	140,003	—			6,178		—		—		6,178
Balance at June 30, 2023	23,340,463	$	6		$	574,677	$	(186,460)	$	(7,911)	$	380,312

See notes to condensed consolidated financial statements.

ORTHOPEDIATRICS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In Thousands)


	Six Months Ended June 30,
	2024		2023
OPERATING ACTIVITIES
Net loss	$	(13,834)	$	(9,692)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization	9,807		7,928
Stock-based compensation	5,738		5,415
Fair value adjustment of contingent consideration	—		(2,974)
Accretion of acquisition installment payable	537		812
Deferred income taxes	(2,955)		(975)

Changes in certain operating assets and liabilities:
Accounts receivable - trade	(4,583)		(8,964)
Inventories, net	(10,420)		(11,860)

Prepaid expenses and other current assets	(403)		72
Accounts payable - trade	4,150		9,724

Accrued expenses and other liabilities	959		1,325
Other	(1,778)		(1,645)


Net cash used in operating activities	(12,782)		(10,834)

INVESTING ACTIVITIES
Acquisition of Boston O&P, net of cash acquired	(20,693)		—
Acquisition of MedTech	—		(3,097)
Sale of short-term marketable securities	49,855		72,347
Purchase of short-term marketable securities	—		(44,600)

Purchases of property and equipment	(13,144)		(10,563)


Net cash provided by investing activities	16,018		14,087

FINANCING ACTIVITIES
Installment payment for ApiFix	(2,250)		(2,000)
Installment payment for MedTech	(1,250)		—
Payments on acquisition note	(928)		—
Payment of debt issuance costs	(343)		—
Payments on mortgage notes	(71)		(71)
Net cash used in financing activities	(4,842)		(2,071)

Effect of exchange rate changes on cash, cash equivalents and restricted cash	(531)		(335)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2,137)		847

Cash, cash equivalents and restricted cash, beginning of year	$	33,027	$	10,462
Cash, cash equivalents and restricted cash, end of period	$	30,890	$	11,309










SUPPLEMENTAL DISCLOSURES
Cash paid for interest	$	760	$	11

Transfer of instruments between property and equipment and inventory	$	281	$	367
Issuance of common shares for ApiFix installment	$	6,929	$	6,178
Issuance of common shares for MedTech installment	$	133	$	2,274
Right-of-use assets obtained in exchange for lease liabilities	$	—	$	293
Debt issuance costs not yet paid	$	67	$	—

See notes to condensed consolidated financial statements.

ORTHOPEDIATRICS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollars In Thousands, Except Share and Per Share data)

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. We sell our specialized products, including PediLoc®, PediPlates®, Cannulated Screws, PediFlexTM nail, PediNailTM, PediLoc® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSETM Spine, BandLoc Duo®, Pediatric Nailing Platform | Femur, Devise Rail, Orthex®, The Fassier-Duval Telescopic Intramedullary System®, SLIMTM Nail, The GAP NailTM, The Free Gliding SCFE Screw SystemTM, GIRO® Growth Modulation System, PNP Tibia System, ApiFix® Mid-C System and Mitchell Ponseti® specialized bracing products to various hospitals and medical facilities throughout the United States and various international markets. We currently use a contract manufacturing model for the manufacturing of implants and related surgical instrumentation while our orthopedic bracing products are manufactured in-house plus clinical services.

We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis, sports medicine and specialty bracing and clinical services 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 specialized braces to meet the needs of pediatric surgeons or orthotists 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 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed 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.

Unaudited Interim Condensed Consolidated Financial Statements

We have prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the annual consolidated financial statements as of and for the year ended December 31, 2023 and related notes thereto contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 8, 2024. The financial data and other financial information disclosed in the notes to the accompanying condensed consolidated financial statements are also unaudited. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations thereunder.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2023 and, in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the financial statements for the interim periods. The results of

operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year or for any other period.

The accompanying condensed 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 $211,576 and $197,742 as of June 30, 2024 and December 31, 2023, respectively. Management continues to monitor cash flows and liquidity on a regular basis. We believe that our cash balance at June 30, 2024 and expected cash flows from operations for the next twelve months subsequent to the issuance of the accompanying condensed consolidated financial statements, are sufficient to enable us to maintain current and essential planned operations for more than the next twelve months.

Use of Estimates

Preparation of our condensed 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 condensed 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.

Significant Accounting Policies

There have been no changes in the Company's significant accounting polices as disclosed in Note 2 to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K.

Reclassification

In the condensed consolidated financial statements, the Company has reclassified stock-based compensation to conform to the current period presentation. All stock-based compensation was previously recorded within general and administrative expenses, and such costs have now been allocated between general and administrative expenses, research and development expenses and sales and marketing expenses. The current presentation results in stock-based compensation expense being recorded in the same manner in which the award recipient's payroll costs are classified. This reclassification did not affect previously reported total operating expenses, loss before income taxes, or net loss in the condensed consolidated statements of operations.

The following tables present the impact of the reclassification on our condensed consolidated statements of operations:


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Sales and marketing (prior presentation)	$	13,165	$	25,381

Reclassification	368		701
Sales and marketing (new presentation)	$	13,533	$	26,082


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
General and administrative (prior presentation)	$	19,654	$	37,320

Reclassification	(542)		(1,051)
General and administrative (new presentation)	$	19,112	$	36,269


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Research and development (prior presentation)	$	2,792	$	5,062

Reclassification	174		350
Research and development (new presentation)	$	2,966	$	5,412

Financial Instruments and Concentration of Credit Risk

Financial instruments that could subject the Company to credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable. We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents.The Company performs ongoing credit evaluations of customers and maintains a reserve for expected credit losses. The Company believes the risk of credit losses associated with accounts receivable is low given the history of collections and customer base. Additionally, the Company considers the risk for credit losses associated with short-term investments to be low given the types of investments which primarily include Certificates of Deposits and Treasury Bonds.

Recent Accounting Pronouncements

In October 2023, the FASB issued 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 becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. Amendments in this Update 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 condensed consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." The standard requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity's CODM. The amendments in this update also expand the interim segment disclosure requirements. This authoritative guidance will be effective for us in fiscal 2024 for annual periods and in the first quarter of fiscal 2025 for interim periods, with early adoption permitted. We are currently evaluating the effect of this new guidance on our consolidated financial statements and disclosures.

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. The ASU is effective for public companies for fiscal years beginning on or after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-09 should be applied on a prospective basis. Retrospective application is permitted. We are currently evaluating the effect of this new guidance 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 $22,000 in cash, subject to customary adjustments related to 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 Company’s 2017 Incentive Award Plan. The restricted stock units are not considered part of the purchase consideration.

The following table summarizes the total consideration paid for Boston O&P and the preliminary allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date:


Fair value of estimated total acquisition consideration	$	22,000
Assets
Cash	1,307
Accounts receivable - trade	2,876
Inventories	1,093
Prepaid expenses and other current assets	378
Property and equipment	4,360
Amortizable intangible assets	3,720
Other intangible assets	3,650
Other non-current assets	2,038
Total assets	19,422
Liabilities
Accounts payable-trade	581
Other current liabilities	1,630
Long-term debt, including current portion	1,157
Deferred tax liability	2,268
Other non-current liabilities	1,003
Total liabilities	6,639
Less: total net assets	12,783
Goodwill	$	9,217

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	$	3,650	Indefinite

Customer Relationships & Other	3,720		12 years
	$	7,370

The following table represents the pro forma net revenue and net loss assuming the acquisition of Boston O&P occurred on January 1, 2023.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue	$	52,802	$	45,837	$	97,918	$	84,272
Net loss	$	(6,029)	$	(2,770)	$	(13,809)	$	(9,460)

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 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 FLASHTM Navigation platform. No revenue was recorded from this platform in 2023, and the Company does not anticipate material revenue contributions from the platform in 2024.

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 (the "Purchase Agreement"), as amended, 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 is being 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 three and six months ended June 30, 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 balance sheet. 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).

NOTE 4 - GOODWILL AND INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:


	Total



Goodwill at January 1, 2024	$	83,699
Boston O&P acquisition	9,217
Foreign currency translation impact	(2,404)
Goodwill at June 30, 2024	$	90,512

Intangible Assets

As of June 30, 2024, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	10.7 years	$	44,328	$	(12,215)	$	32,113
Intellectual Property & Capitalized Software	8.6 years	16,027		(3,296)		12,731
Customer Relationships & Other	11.9 years	22,294		(4,070)		18,224
License Agreements	3.4 years	10,733		(5,953)		4,780
Total amortizable assets		$	93,382	$	(25,534)	$	67,848

As of December 31, 2023, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	11.2 years	$	45,646	$	(11,008)	$	34,638
Intellectual Property & Capitalized Software	9.1 years	16,026		(2,524)		13,502
Customer Relationships & Other	12.4 years	18,862		(3,270)		15,592
License Agreements	3.8 years	10,733		(5,190)		5,543
Total amortizable assets		$	91,267	$	(21,992)	$	69,275

Licenses are tied to product launches and do not begin amortizing until the product is launched to the market.

Trademarks are non-amortizing intangible assets which were $18,669 and $15,287 as of June 30, 2024 and December 31, 2023, respectively. Trademarks are recorded in Other intangible assets on the condensed consolidated balance sheets. The change in balance during the six months ended June 30, 2024 was driven by foreign currency translation adjustments and the Boston O&P acquisition.

During 2023, management determined that a triggering event occurred, indicating that it was more likely than not the fair value of the ApiFix trademark asset was less than the carrying value. As such, the Company completed a quantitative analysis whereby we determined the fair value of the ApiFix trademark asset was below the carrying value. We recorded an impairment charge of $985 for the year ended December 31, 2023 to reduce the carrying amount of the intangible asset to its estimated fair value.

NOTE 5 - 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. 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 following table summarizes the assets and liabilities measured at fair value on a recurring basis as of December 31, 2023. The balance of short-term investments was zero at June 30, 2024.















	December 31, 2023
	Level 1		Level 2		Level 3		Total
Financial Assets

Short-term investments
Certificates of Deposit	$	—	$	25,792	$	—	$	25,792
Exchange Trade Mutual Funds	$	5,015	$	—	$	—	$	5,015
Treasury Bonds	$	18,235	$	—	$	—	$	18,235

Other	$	207	$	—	$	—	$	207

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 certain asset-backed securities, collateralized by non-mortgage-related consumer debt, or certificates of deposit. 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 contingent consideration was zero as of both June 30, 2024 and December 31, 2023.

NOTE 6 - DEBT AND CREDIT ARRANGEMENTS

Long-term debt consisted of the following as of the dates indicated:


	June 30, 2024		December 31, 2023
Term loan and final payment	$	10,300	$	10,300
Mortgage payable to affiliate	688		763
Acquisition note payable	229		—
Total debt	11,217		11,063
Less: debt discount and issuance costs	1,279		1,003
Less: current maturities	156		152
Long-term debt, net of current maturities	$	9,782	$	9,908

On December 29, 2023, the Company entered into an $80 million Credit, Security and Guaranty Agreement (the “Credit Agreement”) by and among (i) the Company and other borrowers party to the Credit Agreement (collectively, the “Borrowers”), (ii) MidCap Funding IV Trust, as Agent (“Agent”), (iii) MidCap Financial Trust, as Term Loan Servicer (“Servicer”), and (iv) the financial institutions or other entities from time to time party thereto as Lenders (collectively, “Lenders”). Under the terms of the Credit Agreement, the Lenders have provided to Borrowers a term loan in an aggregate principal amount that will not exceed $30 million available in three tranches of $10 million each subject to certain draw conditions (the “Term Loan”) and a revolving loan in an aggregate principal amount that will not exceed

$50 million (the “Revolving Loan”). Borrowings are available subject to certain levels of working capital for the Revolving Loan. As of June 30, 2024, the borrowing availability under the Revolving Loan was approximately $19.0 million. The second tranche of the Term Loan is eligible to be drawn between July 1, 2024 through June 30, 2025. The third tranche of the Term Loan is eligible to be drawn between January 1, 2025 through June 30, 2025. The Company must meet certain cash usage requirements at the time of each draw to be eligible to access these term loans. Interest on the Term Loan will accrue at the greater of (a) One Month Term SOFR plus 6.50% or (b) 9.0% and interest on the Revolving Loan will accrue at the greater of (a) One Month Term SOFR plus 4.0% or (b) 6.50% (the “Applicable Rate”) and will be payable monthly by the Borrowers. The Term Loans may be prepaid in full through December 29, 2024 with payment of a 3.00% prepayment premium, after which they may be prepaid in full through December 29, 2025 with payment of a 2.00% prepayment premium, after which they may be prepaid in full through December 29, 2026 with payment of a 1.00% prepayment premium, after which they may be prepaid in full with no prepayment premium. An additional final payment of 3.00% ("Final Payment") of the amount of the Terms Loans advanced by the Lenders will be due upon prepayment or repayment of the Terms Loans in full, and is accounted for as debt discount. The first tranche of $10 million was issued under the Term Loan upon execution. Payments of principal and all accrued but unpaid interest will be due and payable upon 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 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. The loans under the Credit Agreement are secured by a security interest in the Company’s and other Borrowers' assets. The Credit Agreement provides for customary events of default. If an event of default is not cured within the time periods specified (if any), the Lenders and Agent have the right to accelerate the Company’s payment of principal and interest in addition to other rights and remedies.

The Credit Agreement includes 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 million. The Credit Agreement was amended on May 3, 2024 to clarify the inputs into the financial covenant calculations. No other changes were made to the Credit Agreement. The Company was in compliance with all covenants under the Credit Agreement, as amended, as of June 30, 2024 and December 31, 2023.

The debt facilities available under the Credit Agreement replace the Fourth Amended and Restated Loan and Security Agreement with Squadron Capital, LLC ("Squadron"), (as amended, the “Squadron Loan Agreement”), which provided the Company with a $50 million revolving credit facility. During the year ended December 31, 2023, there was no indebtedness outstanding under the Squadron Loan Agreement and it was terminated in connection with the Credit Agreement.

Borrowings under the Squadron Loan Agreement accrued interest at an annual rate equal to the greater of (a) six month SOFR plus 8.69% and (b) 10.0%, and the Company was permitted to make interest only payments on amounts outstanding. Prior to December 31, 2021, the interest rate on the facility had been equal to the greater of (a) three month LIBOR plus 8.61% and (b) 10.0%. The Company paid Squadron 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 Squadron Loan Agreement were made under a Second Amended and Restated Revolving Note, dated June 13, 2022 (the “Amended Revolving Note”), payable, jointly and severally, by the Company and each of its subsidiaries party thereto. The Amended Revolving Note matured at the earlier of: (i) the date on which any person or persons acquire (x) capital stock of the Company

possessing the voting power to elect a majority of the Company’s Board of Directors (whether by merger, consolidation, reorganization, combination, sale or transfer), or (y) all or substantially all of the Company’s assets, determined on a consolidated basis; and (ii) January 1, 2024.

Borrowings under the Squadron Loan Agreement were secured by substantially all of the Company's assets and were unconditionally guaranteed by each of its subsidiaries with the exception of Vilex in Tennessee, Inc. ("Vilex"). There were no traditional financial covenants associated with the Squadron Loan Agreement. However, there were negative covenants that prohibited us from, among other things, transferring any of our material assets, merging with or acquiring another entity, entering into a transaction that would result in a change of control, incurring additional indebtedness, creating any lien on our property, making investments in third parties and redeeming stock or paying dividends, in each case subject to certain exceptions.

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. At June 30, 2024, the mortgage balance was $688 of which current principal of $156 was included in the current portion of long-term debt. As of December 31, 2023, the mortgage balance was $763 of which current principal due of $152 was included in the current portion of long-term debt.

The aggregate interest expense relating to the notes payable to Squadron, the mortgage note payable to Tawani Enterprises Inc. and the term loan with MidCap was $421 and $11 for the three months ended June 30, 2024 and 2023, respectively, and $760 and $22 for the six months ended June 30, 2024 and 2023, respectively.

NOTE 7 - INCOME TAXES

The Company utilizes an estimated annual effective tax rate to determine its provision or benefit for income taxes for interim periods. The income tax provision or benefit is computed by multiplying the estimated annual effective tax rate by the year-to-date pre-tax book income (loss).

For the six months ended June 30, 2024, the income tax benefit was $2,549 compared to $975 for the six months ended June 30, 2023. Our effective income tax rate was 15.6% and 9.1% for the six months ended June 30, 2024 and 2023, respectively. The higher effective rate compared to the prior period is from the remeasurement of the valuation allowance subsequent to recording the deferred tax liability as a result of the purchase accounting from the Boston O&P acquisition.

The deferred tax assets were fully offset by a valuation allowance at June 30, 2024 and December 31, 2023, with the exception of certain deferred tax liabilities recognized in a foreign jurisdiction as a result of fair value adjustments recorded upon the acquisition of ApiFix, Ltd. and Pega Medical. The Company has recorded a tax benefit for losses generated in Israel and a tax expense for income generated in Canada during the period ended June 30, 2024.

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 June 30, 2024. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

NOTE 8 - STOCKHOLDERS’ EQUITY

Restricted Stock

Our restricted stock activity and related information are summarized as follows:


		Weighted-Average		Weighted-Average
	Restricted	Remaining	Restricted	Remaining
	Stock	Contractual Terms	Stock	Contractual Terms
	Awards	(in Years)	Units	(in Years)
Outstanding at January 1, 2024	592,453	1.6	13,851	1.7
Granted	556,109		7,900
Forfeited	(6,473)		(100)
Vested	(95,116)		—
Outstanding at June 30, 2024	1,046,973	2.0	21,651	1.7

On June 11, 2024, we granted an aggregate of 345,985 shares of restricted stock to eight members of management. The restricted stock was granted pursuant to the Company's 2024 Incentive Award Plan. While restricted stock awards generally vest over three years, these restricted stock awards provide for a vesting period ending on March 15, 2027 in order to align the vesting dates with the vesting dates of other restricted stock awards held by members of management.

At June 30, 2024, there was $25,764 of unrecognized compensation expense remaining related to our service-based restricted stock awards and restricted stock units. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.0 years or earlier upon an elimination of the restriction period as a result of a change in control event.

Stock-based compensation expense on restricted stock amounted to $2,939 and $3,456 for the three months ended June 30, 2024 and 2023, respectively, and $5,738 and $5,415 for the six months ended June 30, 2024 and 2023, respectively.

NOTE 9 – NET LOSS PER SHARE

The following is a reconciliation of basic and diluted net loss per share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net loss	$	(6,029)	$	(2,886)	$	(13,834)	$	(9,692)

Weighted average shares outstanding for basic and diluted	23,145,064		22,704,723		22,982,921		22,587,022
Net loss per share - basic and diluted	$	(0.26)	$	(0.13)	$	(0.60)	$	(0.43)

Our basic and diluted net loss per share is computed using the two-class method. For purposes of our equity disclosures and calculation of weighted average shares for basic earnings per share calculations, 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 remained consistent between basic and diluted as the effect of any outstanding common stock equivalents would have been anti-dilutive.

The contingently issuable shares in the paragraph 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 of Pega Medical, ApiFix or MedTech. See Note 3 for additional information regarding our commitment to issue future equity under the MedTech acquisition. Additionally, as a component of the acquisition of ApiFix, the Company is obligated to make anniversary installment payments on the second, third and fourth anniversary of the acquisition date. These payments included a minimum cash component with the remaining settled in common stock. See Note 3 under Item 8 in the Company's Annual Report on Form 10-K for additional information regarding this business combination. During the three and six months ended June 30, 2024, the final anniversary payment was made to ApiFix and no additional shares of common stock are issuable under the ApiFix acquisition.

NOTE 10 – 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, which designs, develops and markets anatomically appropriate 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. We determined that disaggregating revenue into these categories achieves the disclosure objective of illustrating the differences in the nature, timing and uncertainty of our revenue streams. 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 the three and six months ended June 30, 2024 or 2023. No individual customer accounted for more than 10% of consolidated accounts receivable as of June 30, 2024 and December 31, 2023.

Product sales by source were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Product sales by geographic location:	2024		2023		2024		2023
U.S.	$	41,249	$	29,587	$	75,554	$	53,388
International	11,553		9,972		21,933		17,759
Total	$	52,802	$	39,559	$	97,487	$	71,147


	Three Months Ended June 30,				Six Months Ended June 30,
Product sales by category:	2024		2023		2024		2023
Trauma and deformity	$	37,771	$	27,514	$	71,073	$	50,909
Scoliosis	13,682		10,893		23,886		17,966
Sports medicine/other	1,349		1,152		2,528		2,272
Total	$	52,802	$	39,559	$	97,487	$	71,147

NOTE 11 - RELATED PARTY TRANSACTIONS

In addition to the expired debt and credit agreements and mortgage with Squadron (the Company's largest investor) and its affiliate (see Note 6), 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. We made aggregate payments to Structure Medical for inventory purchases of $141 and $149 for the three months ended June 30, 2024 and 2023, respectively, and $523 and $395 for the six months ended June 30, 2024 and 2023, respectively.

NOTE 12 - 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 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. We have elected to match our employees' 401(k) contributions up to 4% of employees' salary. Additionally, employees of MD Ortho receive contribution matches up to 3% of their salary.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Leases

As of June 30, 2024, the Company has recorded a lease liability of $4,162 and corresponding right-of-use asset of $4,539 on its condensed consolidated balance sheet. We assumed $1,579 of operating right-of-use assets and lease liabilities in connection with our acquisition of Boston O&P.

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 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. However, as of June 30, 2024, IMED has not re-initiated arbitration.

Although we believe the Company has strong defenses to the IMED lawsuit and we intend to vigorously defend the claims asserted against us, arbitration and litigation 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.

Boston O&P Litigation

This lawsuit arises from the alleged wrongful death of a patient following his January 2016, tracheal and laryngeal resection procedure at Boston Children’s Hospital, which was performed by two physicians named as defendants in the suit. The Plaintiffs allege that as a result of the patient’s post-operative care, which included placing his neck in a position of flexion in a modified brace provided by Boston O&P, the patient was paralyzed, and years later, he died due to complications caused by his paralysis. The Company acquired all of the outstanding shares of Boston O&P on January 5, 2024 as described more fully under Note 3 - Business Combinations and Asset Acquisitions.

The lawsuit commenced in December 2018, in Suffolk Superior Court in Boston, Massachusetts. The Plaintiffs assert counts of negligence against each individual defendant, lack of informed consent against the physician defendants, failure to warn, breach of warranty and alleged improper use against Boston O&P, and loss of consortium against all defendants. Trial is currently scheduled to begin in December 2025.

Although we believe Boston O&P has strong defenses to this lawsuit and we intend to vigorously defend the claims asserted against us, litigation 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.

Purchase Obligations and Performance Requirements

As a result of entering into a license agreement for the exclusive distribution of the 7D Surgical FLASHTM Navigation platform during 2021, the Company agreed to a minimum purchase commitment for the first twelve months of that agreement. Additionally, the contract requires future purchase commitments based upon a percentage of historical purchases. As a result and as of June 30, 2024, the remaining purchase commitment under the agreement was $1,092 for the year ended December 31, 2024 and $1,456 for the year ended December 31, 2025.

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. The Company analyzes its projected achievement of these performance metrics and accrues for any estimated shortfall. During the six months ended June 30, 2024, the Company recorded an expense of $976 based on current estimates. The Company recorded $576 of expense for the six months ended June 30, 2023.

Royalties

As of June 30, 2024, 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.

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 June 30, 2024, 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 14 – SUBSEQUENT EVENT

Term Loan Agreement

On August 5, 2024 (the “Signing Date”), 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 $25.0 million, which will be funded in its entirety on the Closing Date (as defined therein) and (ii) a delayed draw term loan facility (the “DDTL”) in an aggregate principal amount not to exceed $25.0 million, which, subject to certain conditions set forth in the Term Loan Agreement, may be drawn until the date that is 12 months after the Signing Date.

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 is obligated to pay 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 0.00% thereafter and (ii) an exit fee equal to 2.00% of the principal amount of any such repayment. 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 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.

Proceeds from the Term Loans will be used to pay existing debt, transaction fees incurred in connection with the Term Loan Agreement and the Notes (as defined below), up to $5.0 million to repurchase shares of the Company’s common stock, and for working capital needs and general corporate purposes of the Credit Parties.

Indenture and Convertible Notes

On August 5, 2024, the Company also entered into a Purchase Agreement (the “Purchase Agreement”) with Braidwell Transaction Holdings LLC – Series 10 (the “Purchaser”), whereby the Purchaser has agreed to purchase $50.0 million in aggregate principal amount of the Company’s 4.75% Convertible Senior Notes due February 15, 2030 (the “Notes”). The Notes will be issued pursuant to, and will governed by, an indenture (the “Indenture”), to be dated as of the closing date of the issue and sale of the Notes, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

The Notes will be the Company’s senior, unsecured obligations and will be (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 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 Notes will 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 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 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 specified period, the Notes per $1,000 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 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 $1,000 principal amount of Notes, which represents an initial conversion price of approximately $40.98 per share of common stock. The conversion rate and conversion price will be 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 Notes will be 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 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if (i) the Notes are Freely Tradable (as defined in the Indenture) and any accrued and unpaid additional interest pursuant to the 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 Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that 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 Notes at a cash repurchase price equal to the principal amount of the 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 Notes will 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 Notes (which, in the case of a default in the payment of interest on the 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 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 $25.0 million; (vii) the rendering of certain

judgments against the Company or any of its significant subsidiaries for the payment of at least $25.0 million 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 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 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 Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole 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 Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes.

Proceeds from the Notes will be used to pay existing debt of approximately $10.0 million, transaction fees (including original issue discount, prepayment penalties, advisor fees, trustee/agent fees and attorney fees) incurred in connection with the Purchase Agreement, Indenture and Notes of approximately $6.5 million, and for working capital needs and general corporate purposes of the Company and its subsidiaries.

Stock Repurchase Program

In connection with its approval of the Term Loan Agreement, Purchase Agreement, the Indenture and Notes, on August 2, 2024, the Board of Directors of the Company also approved a stock repurchase program of up to $5.0 million in aggregate investment of the Company’s outstanding common stock, contingent upon the closing of the Term Loan and the Notes. On a share basis using the closing price of the Company’s common stock on August 2, 2024 of $29.56, the amount of common stock subject to the repurchase program represents approximately 0.7% of the Company’s outstanding common stock. 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. The actual timing, number, and share price of shares purchased under the repurchase program will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market and economic conditions, and applicable legal requirements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the condensed consolidated financial statements and related notes thereto contained elsewhere in this quarterly report, as well as the information under "Note Regarding Forward-Looking Statements."

The description of our business included in this quarterly report is summary in nature and only includes material developments that have occurred since the latest full description. The full description of the history and general development of our business is included in "Item 1. Description of Business" section

of the Company's Annual Report on Form 10-K filed with the SEC on March 8, 2024, which section is incorporated herein by reference.

Overview

We sell implants, instruments and specialized braces to our customers for use by pediatric orthopedic surgeons, orthotists or physical therapists to treat orthopedic conditions in children. We provide our implants in sets that consist of a range of implant sizes and include the instruments necessary to perform the surgical procedure. In the United States and a few selected international markets, our customers typically expect us to have full sets of implants and instruments on site at each hospital but do not purchase the implants until they are used in surgery. Accordingly, we must make an up-front investment in inventory of consigned implants and instruments before we can generate revenue from a particular hospital and we maintain substantial levels of inventory at any given time. In the international markets where we sell to stocking distributors or in the case of our braces, we transfer control of our products to the distributor or customer when title passes upon shipment.

We currently market 71 surgical and specialized bracing systems that serve three of the largest categories within the pediatric orthopedic market: (i) trauma and deformity correction, (ii) scoliosis and (iii) sports medicine/other. We rely on a broad network of third parties to manufacture the components of our products, which we then inspect and package. We believe our innovative products promote improved surgical accuracy, increase consistency of outcomes and enhance surgeon confidence in achieving high standards of care. In the future, we expect to expand our product offering within these categories, as well as to address additional categories of the pediatric orthopedic market.

The majority of our revenue has been generated in the United States, where we sell our products through a network of multiple direct sales representatives as well as 40 independent sales agencies employing 216 sales representatives specifically focused on pediatrics. These independent sales agents are trained by us, distribute our products and are compensated through sales-based commissions and performance bonuses. We do not sell our products through or participate in physician-owned distributorships, or PODs.

We market and sell our products internationally in over 70 countries, through independent stocking distributors and sales agencies. Our independent distributors manage the billing relationship with each hospital in their respective territories and are responsible for servicing the product needs of their surgeon customers. In 2017, we began to supplement our international stocking distributors with sales agencies using direct sales programs in the United Kingdom, Ireland, Australia and New Zealand where we sell directly to the hospitals. We began selling direct to Canada in September 2018, Belgium and the Netherlands in January 2019, Italy in March 2020 and Germany, Switzerland and Austria in January 2021. 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 January 2023, we established a direct sales organization in Germany, the Company's first direct selling organization serving an international market. In our international markets, excluding Germany, we work through sales agencies that are paid a commission, similar to our U.S. sales model. These arrangements have generated an increase in revenue and gross margin.

We believe there are significant opportunities for us to strengthen our position in U.S. and international markets by increasing investments in consigned implant and instrument sets, strengthening our global sales and distribution infrastructure, expanding our product offering and expanding clinics to many other childrens hospitals.

Environmental, Social and Governance ("ESG") Activities

OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions. Since inception we have impacted the lives of over 1,000,000 children, when including those served by our acquired companies. We believe we should continue to expand our social efforts while minimizing our impact to the environment and ensuring corporate governance. In 2021, we created an internal ESG team, which reports directly to our Board’s Governance Committee, to identify ESG topics for disclosure by assessing both the impact on our business and the importance to our stakeholders.

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

•OrthoPediatrics cares about our environmental impact while working in a highly regulated industry and we are certified according to ISO 13485. Our team in Warsaw, Indiana recently implemented an enhanced recycling program and our team in the United Kingdom created a carbon reduction plan.

•The Company and its associates regularly participate in philanthropic causes important to our local communities. We also partner with charitable organizations that provide pediatric orthopedic care around the world. In 2020, we were named as "Corporate Partner of the Year" by World Pediatrics - with whom we work to provide access to medical care for children in developing countries.

•We are committed to fostering an environment that is respectful, compassionate, and inclusive of everyone in our community which is communicated in our diversity and inclusion policy. For eight years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana.

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

We believe effectively managing our priorities, as well as increasing our transparency related to ESG programs, will help create long-term value for our stakeholders. We expect to increase our disclosures and communicate our ESG efforts in future SEC filings.

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

Trends and Uncertainties

From time to time we acquire, make investments in or license other technologies, products and business that may enhance our capabilities, complement our current products or expand the breadth of our markets or customer base. As a result of these transactions, we may record certain intangible assets, including goodwill and trademarks, which are subject to annual impairment testing. Fair value is based on our current assessment of the expected future cash flows based on recent results and other specific market factors. During 2023 and 2022, we determined that a triggering event had occurred indicating it was more likely than not the fair value of the ApiFix trademark was less than the associated carrying

value. Subsequently, the Company completed a quantitative analysis and concluded that the fair value was in fact less than the carrying value and a partial impairment losses of $1.0 million and $3.6 million were recorded in 2023 and 2022, respectively. We believe that the expected future cash flows in the most recent calculations represent management’s best estimate; however, if actual results differ materially from these estimates, we could record an additional impairment charge which could be material to our consolidated financial statements and have an adverse impact on our results of operations.

In 2022 and 2023, there was a significant and unprecedented increase in cases of respiratory syncytial virus, or RSV, and other respiratory illnesses. RSV is a common respiratory virus that follows a seasonal pattern. The typical season shows an increase in mid-September, peaks in late December and drops around mid-April. In 2023 the United States experienced a significant increase in RSV activity outside of the typical peak season as well as a heightened impact during the winter months. The volume of elective procedures utilizing our products were negatively impacted as a significant percent of hospital capacity was absorbed to cover the increase in RSV-related hospitalizations. This had a negative impact on our sales volume in 2022 and 2023 and may continue to do so into the future. We are unable to accurately determine exactly how this will impact us in the future.

As a result of the COVID-19 pandemic, we experienced significant business disruption throughout the last several years. Elective procedures were delayed in some cases as hospitals continue to struggle with adequate staffing levels. As a majority of our products are utilized in elective surgeries or procedures, the deferrals of such surgeries and procedures have had, and may continue to have, a significant negative impact on our business and results of operations. Throughout the pandemic, we took a variety of steps to address the impact. We continue to monitor the impact of the pandemic on our employees and customers and the markets in which we operate and will take further actions that are considered prudent to address the pandemic. We cannot accurately predict with certainty the full extent to which the pandemic will impact demand for our products in the future.

We encourage the readers of this document to read our risk factors in their entirety contained in Item 1A “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 8, 2024 and in other reports filed with the SEC that discuss the risks and factors that may affect our business.

Summary of Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023

The following table sets forth our results of operations for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):


	Three Months Ended June 30,								Six Months Ended June 30,
	2024		2023		Increase (Decrease)		%		2024		2023		Increase (Decrease)		%
Net revenue	$	52,802	$	39,559	$	13,243	33	%	$	97,487	$	71,147	$	26,340	37	%
Cost of revenue	12,003		9,534		2,469		26	%	24,514		17,561		6,953		40	%
Sales and marketing expenses	16,593		13,533		3,060		23	%	30,762		26,082		4,680		18	%
General and administrative expenses	27,329		19,112		8,217		43	%	52,059		36,269		15,790		44	%

Research and development expenses	2,543		2,966		(423)		(14)	%	5,541		5,412		129		2	%
Other expense (income), net	381		(2,299)		2,680		(117)	%	994		(3,510)		4,504		(128)	%
Provision for income taxes (benefit)	(18)		(401)		383		96	%	(2,549)		(975)		(1,574)		(161)	%


Net loss	$	(6,029)	$	(2,886)	$	3,143	109	%	$	(13,834)	$	(9,692)	$	4,142	43	%

Net Revenue

The following tables set forth our net revenue by geography and product category for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Product sales by geographic location:	2024		2023		2024		2023
U.S.	$	41,249	$	29,587	$	75,554	$	53,388
International	11,553		9,972		21,933		17,759
Total	$	52,802	$	39,559	$	97,487	$	71,147
	Three Months Ended June 30,				Six Months Ended June 30,
Product sales by category:	2024		2023		2024		2023
Trauma and deformity	$	37,771	$	27,514	$	71,073	$	50,909
Scoliosis	13,682		10,893		23,886		17,966
Sports medicine/other	1,349		1,152		2,528		2,272
Total	$	52,802	$	39,559	$	97,487	$	71,147

Net revenue increased $13.2 million, or 33%, from $39.6 million for the three months ended June 30, 2023 to $52.8 million for the three months ended June 30, 2024. Net revenue increased $26.3 million, or 37%, from $71.1 million for the six months ended June 30, 2023 to $97.5 million for the six months ended June 30, 2024. The increase during the three and six month periods ended June 30, 2024 was primarily driven by the addition of Boston O&P sales, as well as strong performance across global Trauma and Deformity, domestic Scoliosis and OP Specialty Bracing.

Trauma and deformity sales increased $10.3 million, or 37%, from $27.5 million during the three months ended June 30, 2023, to $37.8 million for the three months ended June 30, 2024. Sales increased $20.2 million, or 40%, from $50.9 million during the six months ended June 30, 2023, to $71.1 million for the six months ended June 30, 2024. The increase for the three and six month periods ended June 30, 2024 was primarily driven by strong growth across numerous product lines, specifically our Cannulated Screws, PNP Femur, PediPlate, external fixation and Pega systems, as well as the addition of Boston O&P. Scoliosis sales increased $2.8 million, or 26%, from $10.9 million during the three months ended June 30, 2023, to $13.7 million for the three months ended June 30, 2024. Sales increased $5.9 million, or 33%, from $18.0 million during the six months ended June 30, 2023, to $23.9 million for the six months ended June 30, 2024. The increase for three and six month period ended June 30, 2024 was primarily driven by increased sales of our RESPONSE 5.5/6.0 and ApiFix systems and revenue generated from 7D Technology, as well as the addition of Boston O&P. Sports medicine / other increased $0.2 million, or 17%, during the three months ended June 30, 2024. Revenue increased $0.3 million, or 11%, during the six months ended June 30, 2024. Nearly all the change in each category was due to an increase or decrease in the unit volume sold and not a result of price changes.

Cost of Revenue and Gross Margin

Cost of revenue increased $2.5 million, or 26%, from $9.5 million for the three months ended June 30, 2023 to $12.0 million for the three months ended June 30, 2024. Cost of revenue increased $7.0 million, or 40%, from $17.6 million for the six months ended June 30, 2023 to $24.5 million for the six months ended June 30, 2024. The increases were due primarily to sales volume, including the added cost of revenue associated with the revenue generated by acquisitions. Gross margin was 77% and 76% for the three months ended June 30, 2024 and June 30, 2023, respectively. The gross margin was 75% for each of the six months ended June 30, 2024 and June 30, 2023.

Sales and Marketing Expenses

Sales and marketing expenses increased $3.1 million, or 23%, to $16.6 million for the three months ended June 30, 2024 from $13.5 million for the three months ended June 30, 2023. Sales and marketing expenses increased $4.7 million, or 18%, to $30.8 million for the six months ended June 30, 2024 from $26.1 million for the six months ended June 30, 2023. The changes in the three and six month periods ended June 30, 2024 were due primarily to increased sales commission expenses, as well as the addition of Boston O&P.

General and Administrative Expenses

General and administrative expenses increased $8.2 million, or 43%, from $19.1 million for the three months ended June 30, 2023 to $27.3 million for the three months ended June 30, 2024, and increased $15.8 million, or 44%, from $36.3 million for the six months ended June 30, 2023 to $52.1 million for the six months ended June 30, 2024. The increases for the three and six month periods ended June 30, 2024 were due primarily to the addition of Boston O&P. Stock compensation increased $0.3 million for the six months ended June 30, 2024 due to the increase in personnel and also as a result of restricted stock issued as part of the Boston O&P acquisition.

Depreciation and amortization expenses increased $0.7 million, or 17%, from $4.1 million for the three months ended June 30, 2023 to $4.8 million for the three months ended June 30, 2024, and increased $1.9 million, or 24%, from $7.9 million for the six months ended June 30, 2023 to $9.8 million for the six months ended June 30, 2024. The increase in depreciation for the three and six month periods ended June 30, 2024 was primarily due to higher set deployments and increased amortization associated with acquisitions, as well as the addition of Boston O&P.

Research and Development Expenses

Research and development expenses decreased $0.4 million, or 14%, from $3.0 million for the three months ended June 30, 2023 to $2.5 million for the three months ended June 30, 2024, and increased $0.1 million, or 2%, from $5.4 million for the six months ended June 30, 2023 to $5.5 million for the six months ended June 30, 2024. The fluctuations for the three and six month periods ended June 30, 2024 were primarily due to the timing of product development and the addition of personnel to support the future growth of the business during the first quarter of 2024.

Total Other (Income) Expenses

Other expense was $0.4 million for the three months ended June 30, 2024 compared to other income of $2.3 million for the three months ended June 30, 2023, a change of $2.7 million or 117%, and other expense was $1.0 million for the six months ended June 30, 2024 compared to other income of $3.5 million for the six months ended June 30, 2023, a change of $4.5 million or 128%. The change for both periods ended June 30, 2024 was primarily due to the fair value adjustment of contingent consideration associated with our ApiFix acquisition, which generated income in the comparative prior year period, partially offset by an increase to net interest expense related to the new Term Loan with MidCap.

Liquidity and Capital Resources

We have incurred operating losses since inception which resulted in negative cash flows used in operating activities of $12.8 million and $10.8 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $211.6 million. We anticipate that our losses will continue in the near term as we continue to expand our product portfolio and invest in additional consigned implant and instrument sets to support our expansion into existing and new markets. Since inception, we have funded our operations primarily with proceeds from the sales of our common

and preferred stock, convertible securities and debt, as well as through sales of our products. At June 30, 2024, we had cash and cash equivalents, restricted cash and short-term investments of $30.9 million.

Cash Flows

The following table sets forth our cash flows from operating, investing and financing activities for the periods indicated (dollars in thousands):


	Six Months Ended June 30,
	2024		2023
Net cash used in operating activities	$	(12,782)	$	(10,834)

Net cash provided by investing activities	16,018		14,087

Net cash used in financing activities	(4,842)		(2,071)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(531)		(335)
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(2,137)	$	847

Cash Used in Operating Activities

Net cash used in operating activities was $12.8 million and $10.8 million for the six months ended June 30, 2024 and 2023, respectively. The primary use of this cash was to fund our operations related to the development and commercialization of our products in each of these periods. Net cash used for working capital was $12.1 million for the six months ended June 30, 2024 compared to $11.3 million for the six months ended June 30, 2023. The increase in cash used in operating activities was primarily driven by inventory purchases to support sales growth as well as changes in accounts receivable and accounts payable associated with the increased sales and acquired inventory, respectively.

Cash Provided by Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2024 was $16.0 million compared to $14.1 million for the six months ended June 30, 2023. Net cash provided by investing activities for the six months ended June 30, 2024 consisted primarily of the sale of short-term marketable securities offset by purchases of property, plant and equipment of $13.1 million, the majority of which is instrument sets. The change in cash related to investing activities is primarily driven by business combinations and the purchase of short term marketable securities which decreased from the prior year.

Cash Used in Financing Activities

Net cash used in financing activities for the six months ended June 30, 2024 was $4.8 million consisting of $2.3 million related to the ApiFix fourth and final anniversary payment and $1.3 million related to the MedTech first year anniversary payment. Net cash used in financing activities for the six months ended June 30, 2023 was $2.1 million consisting of $2.0 million related to the ApiFix third year anniversary payment.

On August 2, 2024, the Board of Directors of the Company approved a limited stock repurchase program of up to $5.0 million in aggregate investment of the Company’s outstanding common stock, $0.00025 par value per share. On a share basis, using the closing price of the Company's common stock on August 2, 2024 of $29.56 the amount of common stock subject to the repurchase program represents approximately 0.7 percent of the Company’s outstanding shares. The Company has not yet repurchased any shares of its common stock pursuant to the repurchase program. In August 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted. Among other things, the IRA imposes a new 1.0 percent excise tax on the fair market value of stock repurchased after December 31, 2022 by publicly traded U.S. corporations (like the Company). With certain exceptions, the value of stock repurchased is determined net of stock issued in the year, including shares issued pursuant to compensatory arrangements.

Indebtedness

The Company is party to a $80 million Credit, Security and Guaranty Agreement with Midcap Funding IV Trust and Midcap Financial Trust and other parties named therein. As of June 30, 2024, there was $10 million outstanding indebtedness under the Credit Agreement.

In August 2013, pursuant to the purchase of our office and warehouse space, we entered into a mortgage note payable to Tawani Enterprises Inc., the owner of which is a member of Squadron’s management committee. Pursuant to the terms of the mortgage note, we pay Tawani Enterprises Inc. monthly principal and interest installments of $15,543, with interest compounded at 5% until maturity in August 2028, at which time a final payment of remaining principal and interest will become due.

See Note 6 - Debt and Credit Arrangements in Item 1 for further detail regarding our debt.

Pediatric Orthopedic Business Seasonality

Our revenue is typically higher in the summer months and holiday periods, driven by higher sales of our trauma and deformity and scoliosis products, which is influenced by the higher incidence of pediatric surgeries during these periods due to recovery time provided by breaks in the school year. Additionally, our scoliosis patients tend to have additional health challenges that make scheduling their procedures variable in nature.

Critical Accounting Policies and Significant Judgments and Estimates

There were no material changes to our critical accounting policies that are disclosed in our audited consolidated financial statements for the year ended December 31, 2023 filed with the SEC on March 8, 2024.

Recent Accounting Pronouncements

See Note 2 - Significant Accounting Policies in Item 1 Financial Statements of Part 1 of this Quarterly report on Form 10-Q for a description of recent accounting pronouncements applicable to our condensed consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We consider our greatest potential area of market risk exposure to be interest rate risk related to our indebtedness and foreign currency exchange rate risk on our operating results. Quantitative and qualitative disclosures about exchange rate risk are included in Item 7A "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K for 2023. There were no material changes from the information provided therein.

ITEM 4. CONTROLS AND PROCEDURES

a.Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) at the end of the period covered by this quarterly report.

Based on this evaluation, we concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the

reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We recognize that any controls system, no matter how well designed and operated, can provide only reasonable assurance of achieving its objectives, and our management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

b. Changes in Internal Control over Financial Reporting

On January 5, 2024, the Company completed the acquisition of Boston O&P. The Company continues to evaluate Boston O&P's systems and controls and to integrate them into the Company's existing control structure. Except as it relates to the integration of the Boston O&P business, there were no changes in our internal control over financial reporting during the period covered by this quarterly report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in various legal proceedings arising in the ordinary course of our business.

A discussion of certain of those legal proceedings is contained in Note 13 – Commitments and Contingencies (under the heading “Legal Proceedings”) of the notes to the condensed consolidated financial statements included in Item 1. Financial Statements of Part I of this quarterly report on Form 10-Q, which discussion is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this quarterly report, you should carefully consider the factors discussed in “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 8, 2024. There have been no material changes to these Risk Factors since the filing of our Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a. Sale of Unregistered Securities.

On April 1, 2024, the Company issued 245,812 unregistered shares of its common stock, $0.00025 par value per share, as the Fourth Anniversary payment related to the previous acquisition of ApiFix. The shares were valued at $28.19 per share on the date of issuance.

On May 1, 2024, the Company issued 42,882 unregistered shares of its common stock, $0.00025 par value per share, in connection with the First Anniversary payment related to the previous acquisition of MedTech. The shares were valued at $31.04 per share on the date of issuance.

On August 2, 2024, the Board of Directors of the Company approved a limited stock repurchase program of up to $5.0 million in aggregate investment of the Company’s outstanding common stock, $0.00025 par value per share. If not yet repurchased as of December 31, 2024, the dollar limit on repurchases thereafter is reduced to $250,000 per annum. The program does not have an expiration date. However, it may be discontinued by the Board of Directors at any time. The Company has not yet repurchased any shares of its common stock pursuant to the repurchase program.

b. Use of Proceeds.

None.

c. Issuer Purchases of Equity Securities.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

a. Information required under Form 8-K.

None.

b. Modifications to nomination process.

None.

c. Insider trading arrangements.

During the three months ended June 30, 2024, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non Rule 10b5-1 trading arrangement", as each term is defined in Item 408(a) of Regulation S-K, except as follows:

On May 31, 2024, Mr. Greg Odle, the Company's President of Scoliosis, adopted a trading

plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The plan provides for the sale of up to 7,500 shares of the Company's common stock. The plan has an effective date of August 29, 2024 and will terminate on August 28, 2025, subject to early termination for certain specified events set forth in the plan.

ITEM 6. EXHIBITS

The following exhibits are included within this Report or incorporated herein by reference.

Exhibit

Number

Description

2.1w

Share Purchase Agreement, dated April 1, 2020, by and among OrthoPediatrics Corp., ApiFix Ltd. (“ApiFix”), certain controlling shareholders of ApiFix, and the sellers’ representative named therein (Incorporated by reference to Exhibit 2.1 of registrant's Form 8-K filed on April 1, 2020) (SEC File No. 001-38242)

2.2w

Agreement and Plan of Merger, dated April 1, 2022, by and among OrthoPediatrics Corp., OrthoPediatrics Iowa Holdco, Inc., Mitchell Designs, Inc. (“Designs”), and John Mitchell, the sole shareholder of Designs (Incorporated by reference to Exhibit 10.1 of registrant's Form 8-K filed on April 4, 2022) (SEC File No. 001-38242)

2.3w

Membership Interest Purchase Agreement, dated May 1, 2023, by and among OrthoPediatrics Corp., Kevin Unger, DINZE LLC, and the sole member of DINZE LLC (Incorporated by reference to Exhibit 2.1 of registrant's form 8-K filed on May 1, 2023) (SEC File No. 001-38242)

2.4w

Stock Purchase Agreement, dated January 5, 2024, by and among OrthoPediatrics Corp., Boston Brace International, Inc., GreatBanc Trust Company, solely in its capacity as trustee of Boston Brace International, Inc. Employee Stock Ownership Trust, the Selling Equityholders (as defined therein), and Thomas Morrissey, solely in his capacity as Sellers' Representative (incorporated by reference to Exhibit 2.1 of registrant's Form 8-K filed on January 8, 2024) (SEC File No. 001-38242)

3.1

Amended and Restated Certificate of Incorporation of OrthoPediatrics Corp. (Incorporated by reference to Exhibit 3.1 of registrant's Form 8-K filed on October 16, 2017) (SEC File No. 001-38242)

3.2

Amended and Restated Bylaws of OrthoPediatrics Corp. (Incorporated by reference to Exhibit 3.2 of registrant's Form 8-K filed on October 16, 2017) (SEC File No. 001-38242)

4.1

Specimen stock certificate evidencing the shares of common stock (Incorporated by reference to Exhibit 4.1 of registrant's Amendment No. 3 to Form S-1 filed on October 2, 2017) (SEC File No. 333-212076)

4.2

Registration Rights Agreement, by and between the registrant and Squadron, dated as of May 30, 2014 (Incorporated by reference to Exhibit 4.2 of registrant's Form S-1 filed on June 16, 2016) (SEC File No. 333-212076)

4.3

First Amendment to Registration Rights Agreement, by and between the registrant and Squadron, dated October 16, 2017 (Incorporated by reference to Exhibit 10.2 of registrant's Form 8-K filed on October 16, 2017) (SEC File No. 001-38242)

4.4

Stockholders Agreement, by and between the registrant and Squadron, dated October 16, 2017 (Incorporated by reference to Exhibit 10.1 of registrant's Form 8-K filed on October 16, 2017) (SEC File No. 001-38242)

10.1

OrthoPediatrics Corp. Non-Employee Director Compensation Policy, effective January 1, 2023 (Incorporated by reference to Exhibit 10.1 of registrant’s Form 8-K filed on May 1, 2023) (SEC File No. 001-38242)

10.2

Credit, Security and Guaranty Agreement, dated December 29, 2023, by and among OrthoPediatrics Corp., MidCap Financial Trust, and other parties named therein (incorporated by reference to Exhibit 10.1 of registrant's Form 8-K filed on January 2, 2024 (SEC File No. 001-38242)

10.3

Credit Agreement and Guaranty, dated as of August 5, 2024, by and among OrthoPediatrics Corp. and its wholly owned domestic subsidiaries, as borrowers, the guarantors from time to time party thereto, the lenders from time to time party thereto, and Wilmington Trust, National Association, as agent (incorporated by reference to Exhibit 10.1 of registrant's Form 8-K filed on August 5, 2024 (SEC File No. 001-38242)

10.4

Purchase Agreement, dated August 5, 2024, by and between OrthoPediatrics Corp. and Braidwell Transaction Holdings LLC - Series 10 (incorporated by reference to Exhibit 10.2 of registrant's Form 8-K filed on August 5, 2024 (SEC File No. 001-38242)

31.1

Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document (The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101)

w The exhibits and schedules to the applicable agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a copy of any schedule omitted from such agreement to the SEC upon request.

* Exhibits that describe or evidence management contracts or compensatory plans or arrangements required to be filed as Exhibits to this Report.

+ Filed herewith.

++ Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



August 6, 2024	By:	/s/ David R. Bailey
		David R. Bailey President and Chief Executive Officer
		(Principal Executive Officer)



August 6, 2024	By:	/s/ Fred L. Hite
		Fred L. Hite Chief Financial Officer and Chief Operating Officer
		(Principal Financial and Accounting Officer)

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David R. Bailey, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of OrthoPediatrics Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/s/ David R. Bailey
David R. Bailey
President and Chief Executive Officer
(Principal Executive Officer)

Date: August 6, 2024

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Fred L. Hite, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of OrthoPediatrics Corp.;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/s/ Fred L. Hite
Fred L. Hite
Chief Financial Officer and Chief Operating Officer
(Principal Financial and Accounting Officer)

Date: August 6, 2024

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of OrthoPediatrics Corp. (the “Company”) for the quarterly period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, David R. Bailey, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of the Company.

This certificate is being furnished solely for purposes of Section 906 and is not being filed as part of the Report.


/s/ David R. Bailey
David R. Bailey
President and Chief Executive Officer
(Principal Executive Officer)

Date: August 6, 2024

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of OrthoPediatrics Corp. (the “Company”) for the quarterly period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Fred L. Hite, Chief Financial Officer and Chief Operating Officer of the Company, hereby certifies, pursuant to 18 Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.the information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of the Company.

This certificate is being furnished solely for purposes of Section 906 and is not being filed as part of the Report.


/s/ Fred L. Hite
Fred L. Hite
Chief Financial Officer and Chief Operating Officer
(Principal Financial and Accounting Officer)

Date: August 6, 2024

COVER - shares	6 Months Ended
COVER - shares	Jun. 30, 2024	Aug. 02, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	001-38242
Entity Registrant Name	OrthoPediatrics Corp
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-1761833
Entity Address, Address Line One	2850 Frontier Drive
Entity Address, City or Town	Warsaw
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46582
City Area Code	574
Local Phone Number	268-6379
Title of Each Class	Common Stock, $0.00025 par value per share
Trading Symbol(s)	KIDS
Name of each exchange on which registered	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		24,214,426
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Central Index Key	0001425450
Current Fiscal Year End Date	--12-31

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 28,927	$ 31,055
Restricted cash	1,963	1,972
Short-term investments	0	49,251
Accounts receivable - trade, net of allowances of $1,026 and $1,373, respectively	42,028	34,617
Inventories, net	116,366	105,851
Prepaid expenses and other current assets	4,499	3,750
Total current assets	193,783	226,496
Property and equipment, net	53,482	41,048
Other assets:
Amortizable intangible assets, net	67,848	69,275
Goodwill	90,512	83,699
Other intangible assets	18,669	15,287
Other non-current assets	6,467	2,940
Total other assets	183,496	171,201
Total assets	430,761	438,745
Current liabilities:
Accounts payable - trade	17,002	12,649
Accrued compensation and benefits	12,616	11,325
Current portion of long-term debt with affiliate	156	152
Current portion of acquisition installment payable	1,304	10,149
Other current liabilities	8,491	7,391
Total current liabilities	39,569	41,666
Long-term liabilities:
Acquisition installment payable, net of current portion	2,371	3,551
Deferred income taxes	4,739	5,483
Other long-term liabilities	3,007	1,112
Total long-term liabilities	19,899	20,054
Total liabilities	59,468	61,720
Stockholders' equity:
Common stock, $0.00025 par value; 50,000,000 shares authorized; 24,216,738 shares and 23,378,408 shares issued as of June 30, 2024 and December 31, 2023, respectively	6	6
Additional paid-in capital	593,087	580,287
Accumulated deficit	(211,576)	(197,742)
Accumulated other comprehensive loss	(10,224)	(5,526)
Total stockholders' equity	371,293	377,025
Total liabilities and stockholders' equity	430,761	438,745
Nonrelated Party
Long-term liabilities:
Long-term debt, net of current portion	9,250	9,297
Related Party
Long-term liabilities:
Long-term debt, net of current portion	$ 532	$ 611

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 1,026	$ 1,373
Common stock, par value (in dollars per share)	$ 0.00025	$ 0.00025
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	24,216,738	23,378,408

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
Net revenue	$ 52,802	$ 39,559	$ 97,487	$ 71,147
Cost of revenue	12,003	9,534	24,514	17,561
Gross profit	40,799	30,025	72,973	53,586
Operating expenses:
Sales and marketing	16,593	13,533	30,762	26,082
General and administrative	27,329	19,112	52,059	36,269
Research and development	2,543	2,966	5,541	5,412
Total operating expenses	46,465	35,611	88,362	67,763
Operating loss	(5,666)	(5,586)	(15,389)	(14,177)
Other expense (income):
Interest expense, net	261	294	898	84
Fair value adjustment of contingent consideration	0	(2,304)	0	(2,974)
Other expense (income), net	120	(289)	96	(620)
Total other expense (income), net	381	(2,299)	994	(3,510)
Loss before income taxes	(6,047)	(3,287)	(16,383)	(10,667)
Provision for income taxes (benefit)	(18)	(401)	(2,549)	(975)
Net loss	$ (6,029)	$ (2,886)	$ (13,834)	$ (9,692)
Weighted average shares outstanding - basic (in shares)	23,145,064	22,704,723	22,982,921	22,587,022
Weighted average shares outstanding for diluted (in shares)	23,145,064	22,704,723	22,982,921	22,587,022
Net loss per share - basic (in dollars per share)	$ (0.26)	$ (0.13)	$ (0.60)	$ (0.43)
Net loss per share - diluted (in dollars per share)	$ (0.26)	$ (0.13)	$ (0.60)	$ (0.43)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Statement of Comprehensive Income [Abstract]
Net loss	$ (6,029)	$ (2,886)	$ (13,834)	$ (9,692)
Other comprehensive loss:
Foreign currency translation adjustment	(3,263)	(1,858)	(4,689)	(2,820)
Unrealized gain (loss) on short-term investments	0	(7)	109	610
Adjustment for realized gain on securities	0	0	(118)	(301)
Other comprehensive loss, net of tax	(3,263)	(1,865)	(4,698)	(2,511)
Comprehensive loss	$ (9,292)	$ (4,751)	$ (18,532)	$ (12,203)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Medtech	ApiFix Ltd	Common Stock	Common Stock Medtech	Common Stock ApiFix Ltd	Additional Paid-in Capital	Additional Paid-in Capital Medtech	Additional Paid-in Capital ApiFix Ltd	Accumulated Deficit	Accumulated Other Comprehensive Loss
Beginning balance at Dec. 31, 2022	$ 378,648			$ 6			$ 560,810			$ (176,768)	$ (5,400)
Beginning balance (in shares) at Dec. 31, 2022				22,877,962
Increase (Decrease) in Stockholders' Equity
Net loss	(6,806)									(6,806)
Other comprehensive loss	(646)										(646)
Restricted stock (in shares)				264,156
Restricted stock	1,959						1,959
Ending balance at Mar. 31, 2023	373,155			$ 6			562,769			(183,574)	(6,046)
Ending balance (in shares) at Mar. 31, 2023				23,142,118
Beginning balance at Dec. 31, 2022	378,648			$ 6			560,810			(176,768)	(5,400)
Beginning balance (in shares) at Dec. 31, 2022				22,877,962
Increase (Decrease) in Stockholders' Equity
Net loss	(9,692)
Other comprehensive loss	(2,511)
Ending balance at Jun. 30, 2023	380,312			$ 6			574,677			(186,460)	(7,911)
Ending balance (in shares) at Jun. 30, 2023				23,340,463
Beginning balance at Mar. 31, 2023	373,155			$ 6			562,769			(183,574)	(6,046)
Beginning balance (in shares) at Mar. 31, 2023				23,142,118
Increase (Decrease) in Stockholders' Equity
Net loss	(2,886)									(2,886)
Other comprehensive loss	(1,865)										(1,865)
Stock portion of MedTech acquisition (in shares)					43,751
Stock portion of MedTech anniversary payment		$ 2,274						$ 2,274
Stock portion of ApiFix anniversary installment (in shares)						140,003
Stock portion of ApiFix anniversary installment			$ 6,178						$ 6,178
Restricted stock (in shares)				14,591
Restricted stock	3,456						3,456
Ending balance at Jun. 30, 2023	380,312			$ 6			574,677			(186,460)	(7,911)
Ending balance (in shares) at Jun. 30, 2023				23,340,463
Beginning balance at Dec. 31, 2023	377,025			$ 6			580,287			(197,742)	(5,526)
Beginning balance (in shares) at Dec. 31, 2023				23,378,408
Increase (Decrease) in Stockholders' Equity
Net loss	(7,805)									(7,805)
Other comprehensive loss	(1,435)										(1,435)
Restricted stock (in shares)				162,003
Restricted stock	2,799						2,799
Ending balance at Mar. 31, 2024	370,584			$ 6			583,086			(205,547)	(6,961)
Ending balance (in shares) at Mar. 31, 2024				23,540,411
Beginning balance at Dec. 31, 2023	377,025			$ 6			580,287			(197,742)	(5,526)
Beginning balance (in shares) at Dec. 31, 2023				23,378,408
Increase (Decrease) in Stockholders' Equity
Net loss	(13,834)
Other comprehensive loss	(4,698)
Ending balance at Jun. 30, 2024	371,293			$ 6			593,087			(211,576)	(10,224)
Ending balance (in shares) at Jun. 30, 2024				24,216,738
Beginning balance at Mar. 31, 2024	370,584			$ 6			583,086			(205,547)	(6,961)
Beginning balance (in shares) at Mar. 31, 2024				23,540,411
Increase (Decrease) in Stockholders' Equity
Net loss	(6,029)									(6,029)
Other comprehensive loss	(3,263)										(3,263)
Stock portion of ApiFix anniversary installment (in shares)					4,288	245,812
Stock portion of ApiFix anniversary installment		$ 133	$ 6,929					$ 133	$ 6,929
Restricted stock (in shares)				426,227
Restricted stock	2,939						2,939
Ending balance at Jun. 30, 2024	$ 371,293			$ 6			$ 593,087			$ (211,576)	$ (10,224)
Ending balance (in shares) at Jun. 30, 2024				24,216,738

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
OPERATING ACTIVITIES
Net loss	$ (13,834)	$ (9,692)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	9,807	7,928
Stock-based compensation	5,738	5,415
Fair value adjustment of contingent consideration	0	(2,974)
Accretion of acquisition installment payable	537	812
Deferred income taxes	(2,955)	(975)
Changes in certain operating assets and liabilities:
Accounts receivable - trade	(4,583)	(8,964)
Inventories, net	(10,420)	(11,860)
Prepaid expenses and other current assets	(403)	72
Accounts payable - trade	4,150	9,724
Accrued expenses and other liabilities	959	1,325
Other	(1,778)	(1,645)
Net cash used in operating activities	(12,782)	(10,834)
INVESTING ACTIVITIES
Acquisition of Boston O&P, net of cash acquired	(20,693)	0
Acquisition of MedTech	0	(3,097)
Sale of short-term marketable securities	49,855	72,347
Purchase of short-term marketable securities	0	(44,600)
Purchases of property and equipment	(13,144)	(10,563)
Net cash provided by investing activities	16,018	14,087
FINANCING ACTIVITIES
Payments on acquisition note	(928)	0
Payment of debt issuance costs	(343)	0
Payments on mortgage notes	(71)	(71)
Net cash used in financing activities	(4,842)	(2,071)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(531)	(335)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2,137)	847
Cash, cash equivalents and restricted cash, beginning of year	33,027	10,462
Cash, cash equivalents and restricted cash, end of period	30,890	11,309
SUPPLEMENTAL DISCLOSURES
Cash paid for interest	760	11
Transfer of instruments between property and equipment and inventory	281	367
Right-of-use assets obtained in exchange for lease liabilities	0	293
Debt issuance costs not yet paid	67	0
ApiFix Ltd
FINANCING ACTIVITIES
Installment payment for ApiFix	(2,250)	(2,000)
SUPPLEMENTAL DISCLOSURES
Issuance of common shares in acquisition	6,929	6,178
Medtech
FINANCING ACTIVITIES
Installment payment for ApiFix	(1,250)	0
SUPPLEMENTAL DISCLOSURES
Issuance of common shares in acquisition	$ 133	$ 2,274

BUSINESS	6 Months Ended
BUSINESS	Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BUSINESS	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. We sell our specialized products, including PediLoc®, PediPlates®, Cannulated Screws, PediFlexTM nail, PediNailTM, PediLoc® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSETM Spine, BandLoc Duo®, Pediatric Nailing Platform \| Femur, Devise Rail, Orthex®, The Fassier-Duval Telescopic Intramedullary System®, SLIMTM Nail, The GAP NailTM, The Free Gliding SCFE Screw SystemTM, GIRO® Growth Modulation System, PNP Tibia System, ApiFix® Mid-C System and Mitchell Ponseti® specialized bracing products to various hospitals and medical facilities throughout the United States and various international markets. We currently use a contract manufacturing model for the manufacturing of implants and related surgical instrumentation while our orthopedic bracing products are manufactured in-house plus clinical services. We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis, sports medicine and specialty bracing and clinical services 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 specialized braces to meet the needs of pediatric surgeons or orthotists 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Unaudited Interim Condensed Consolidated Financial Statements

operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year or for any other period.

Use of Estimates

Significant Accounting Policies

There have been no changes in the Company's significant accounting polices as disclosed in Note 2 to the audited consolidated financial statements included in the 2023 Annual Report on Form 10-K.

Reclassification

The following tables present the impact of the reclassification on our condensed consolidated statements of operations:


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Sales and marketing (prior presentation)	$	13,165	$	25,381

Reclassification	368		701
Sales and marketing (new presentation)	$	13,533	$	26,082


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
General and administrative (prior presentation)	$	19,654	$	37,320

Reclassification	(542)		(1,051)
General and administrative (new presentation)	$	19,112	$	36,269


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Research and development (prior presentation)	$	2,792	$	5,062

Reclassification	174		350
Research and development (new presentation)	$	2,966	$	5,412

Financial Instruments and Concentration of Credit Risk

Recent Accounting Pronouncements

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

Boston Brace International, Inc.


Fair value of estimated total acquisition consideration	$	22,000
Assets
Cash	1,307
Accounts receivable - trade	2,876
Inventories	1,093
Prepaid expenses and other current assets	378
Property and equipment	4,360
Amortizable intangible assets	3,720
Other intangible assets	3,650
Other non-current assets	2,038
Total assets	19,422
Liabilities
Accounts payable-trade	581
Other current liabilities	1,630
Long-term debt, including current portion	1,157
Deferred tax liability	2,268
Other non-current liabilities	1,003
Total liabilities	6,639
Less: total net assets	12,783
Goodwill	$	9,217


	Amount		Remaining Economic Useful Life
Trademarks / Names	$	3,650	Indefinite

Customer Relationships & Other	3,720		12 years
	$	7,370

The following table represents the pro forma net revenue and net loss assuming the acquisition of Boston O&P occurred on January 1, 2023.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue	$	52,802	$	45,837	$	97,918	$	84,272
Net loss	$	(6,029)	$	(2,770)	$	(13,809)	$	(9,460)

Rhino Pediatric Orthopedic Designs, Inc.

Medtech Concepts LLC


	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

GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:


	Total



Goodwill at January 1, 2024	$	83,699
Boston O&P acquisition	9,217
Foreign currency translation impact	(2,404)
Goodwill at June 30, 2024	$	90,512

Intangible Assets

As of June 30, 2024, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	10.7 years	$	44,328	$	(12,215)	$	32,113
Intellectual Property & Capitalized Software	8.6 years	16,027		(3,296)		12,731
Customer Relationships & Other	11.9 years	22,294		(4,070)		18,224
License Agreements	3.4 years	10,733		(5,953)		4,780
Total amortizable assets		$	93,382	$	(25,534)	$	67,848

As of December 31, 2023, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	11.2 years	$	45,646	$	(11,008)	$	34,638
Intellectual Property & Capitalized Software	9.1 years	16,026		(2,524)		13,502
Customer Relationships & Other	12.4 years	18,862		(3,270)		15,592
License Agreements	3.8 years	10,733		(5,190)		5,543
Total amortizable assets		$	91,267	$	(21,992)	$	69,275

Licenses are tied to product launches and do not begin amortizing until the product is launched to the market.

FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

The following table summarizes the assets and liabilities measured at fair value on a recurring basis as of December 31, 2023. The balance of short-term investments was zero at June 30, 2024.















	December 31, 2023
	Level 1		Level 2		Level 3		Total
Financial Assets

Short-term investments
Certificates of Deposit	$	—	$	25,792	$	—	$	25,792
Exchange Trade Mutual Funds	$	5,015	$	—	$	—	$	5,015
Treasury Bonds	$	18,235	$	—	$	—	$	18,235

Other	$	207	$	—	$	—	$	207

DEBT AND CREDIT ARRANGEMENTS

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

DEBT AND CREDIT ARRANGEMENTS

Long-term debt consisted of the following as of the dates indicated:


	June 30, 2024		December 31, 2023
Term loan and final payment	$	10,300	$	10,300
Mortgage payable to affiliate	688		763
Acquisition note payable	229		—
Total debt	11,217		11,063
Less: debt discount and issuance costs	1,279		1,003
Less: current maturities	156		152
Long-term debt, net of current maturities	$	9,782	$	9,908

INCOME TAXES	6 Months Ended
INCOME TAXES	Jun. 30, 2024
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES The Company utilizes an estimated annual effective tax rate to determine its provision or benefit for income taxes for interim periods. The income tax provision or benefit is computed by multiplying the estimated annual effective tax rate by the year-to-date pre-tax book income (loss). For the six months ended June 30, 2024, the income tax benefit was $2,549 compared to $975 for the six months ended June 30, 2023. Our effective income tax rate was 15.6% and 9.1% for the six months ended June 30, 2024 and 2023, respectively. The higher effective rate compared to the prior period is from the remeasurement of the valuation allowance subsequent to recording the deferred tax liability as a result of the purchase accounting from the Boston O&P acquisition. The deferred tax assets were fully offset by a valuation allowance at June 30, 2024 and December 31, 2023, with the exception of certain deferred tax liabilities recognized in a foreign jurisdiction as a result of fair value adjustments recorded upon the acquisition of ApiFix, Ltd. and Pega Medical. The Company has recorded a tax benefit for losses generated in Israel and a tax expense for income generated in Canada during the period ended June 30, 2024. 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 June 30, 2024. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Restricted Stock

Our restricted stock activity and related information are summarized as follows:


		Weighted-Average		Weighted-Average
	Restricted	Remaining	Restricted	Remaining
	Stock	Contractual Terms	Stock	Contractual Terms
	Awards	(in Years)	Units	(in Years)
Outstanding at January 1, 2024	592,453	1.6	13,851	1.7
Granted	556,109		7,900
Forfeited	(6,473)		(100)
Vested	(95,116)		—
Outstanding at June 30, 2024	1,046,973	2.0	21,651	1.7

NET LOSS PER SHARE

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

NET LOSS PER SHARE

The following is a reconciliation of basic and diluted net loss per share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net loss	$	(6,029)	$	(2,886)	$	(13,834)	$	(9,692)

Weighted average shares outstanding for basic and diluted	23,145,064		22,704,723		22,982,921		22,587,022
Net loss per share - basic and diluted	$	(0.26)	$	(0.13)	$	(0.60)	$	(0.43)

BUSINESS SEGMENT

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

BUSINESS SEGMENT

Product sales by source were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Product sales by geographic location:	2024		2023		2024		2023
U.S.	$	41,249	$	29,587	$	75,554	$	53,388
International	11,553		9,972		21,933		17,759
Total	$	52,802	$	39,559	$	97,487	$	71,147


	Three Months Ended June 30,				Six Months Ended June 30,
Product sales by category:	2024		2023		2024		2023
Trauma and deformity	$	37,771	$	27,514	$	71,073	$	50,909
Scoliosis	13,682		10,893		23,886		17,966
Sports medicine/other	1,349		1,152		2,528		2,272
Total	$	52,802	$	39,559	$	97,487	$	71,147

RELATED PARTY TRANSACTIONS	6 Months Ended
RELATED PARTY TRANSACTIONS	Jun. 30, 2024
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS In addition to the expired debt and credit agreements and mortgage with Squadron (the Company's largest investor) and its affiliate (see Note 6), 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. We made aggregate payments to Structure Medical for inventory purchases of $141 and $149 for the three months ended June 30, 2024 and 2023, respectively, and $523 and $395 for the six months ended June 30, 2024 and 2023, respectively.

EMPLOYEE BENEFIT PLAN	6 Months Ended
EMPLOYEE BENEFIT PLAN	Jun. 30, 2024
Retirement Benefits [Abstract]
EMPLOYEE BENEFIT PLAN	EMPLOYEE BENEFIT PLANWe 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 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. We have elected to match our employees' 401(k) contributions up to 4% of employees' salary. Additionally, employees of MD Ortho receive contribution matches up to 3% of their salary.

COMMITMENTS AND CONTINGENCIES	6 Months Ended
COMMITMENTS AND CONTINGENCIES	Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES Leases As of June 30, 2024, the Company has recorded a lease liability of $4,162 and corresponding right-of-use asset of $4,539 on its condensed consolidated balance sheet. We assumed $1,579 of operating right-of-use assets and lease liabilities in connection with our acquisition of Boston O&P. 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 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. However, as of June 30, 2024, IMED has not re-initiated arbitration. Although we believe the Company has strong defenses to the IMED lawsuit and we intend to vigorously defend the claims asserted against us, arbitration and litigation 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. Boston O&P Litigation This lawsuit arises from the alleged wrongful death of a patient following his January 2016, tracheal and laryngeal resection procedure at Boston Children’s Hospital, which was performed by two physicians named as defendants in the suit. The Plaintiffs allege that as a result of the patient’s post-operative care, which included placing his neck in a position of flexion in a modified brace provided by Boston O&P, the patient was paralyzed, and years later, he died due to complications caused by his paralysis. The Company acquired all of the outstanding shares of Boston O&P on January 5, 2024 as described more fully under Note 3 - Business Combinations and Asset Acquisitions. The lawsuit commenced in December 2018, in Suffolk Superior Court in Boston, Massachusetts. The Plaintiffs assert counts of negligence against each individual defendant, lack of informed consent against the physician defendants, failure to warn, breach of warranty and alleged improper use against Boston O&P, and loss of consortium against all defendants. Trial is currently scheduled to begin in December 2025. Although we believe Boston O&P has strong defenses to this lawsuit and we intend to vigorously defend the claims asserted against us, litigation 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. Purchase Obligations and Performance Requirements As a result of entering into a license agreement for the exclusive distribution of the 7D Surgical FLASHTM Navigation platform during 2021, the Company agreed to a minimum purchase commitment for the first twelve months of that agreement. Additionally, the contract requires future purchase commitments based upon a percentage of historical purchases. As a result and as of June 30, 2024, the remaining purchase commitment under the agreement was $1,092 for the year ended December 31, 2024 and $1,456 for the year ended December 31, 2025. 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. The Company analyzes its projected achievement of these performance metrics and accrues for any estimated shortfall. During the six months ended June 30, 2024, the Company recorded an expense of $976 based on current estimates. The Company recorded $576 of expense for the six months ended June 30, 2023. Royalties As of June 30, 2024, 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. 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 June 30, 2024, 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.

SUBSEQUENT EVENT	6 Months Ended
SUBSEQUENT EVENT	Jun. 30, 2024
Subsequent Events [Abstract]
SUBSEQUENT EVENT	SUBSEQUENT EVENT Term Loan Agreement On August 5, 2024 (the “Signing Date”), 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 $25.0 million, which will be funded in its entirety on the Closing Date (as defined therein) and (ii) a delayed draw term loan facility (the “DDTL”) in an aggregate principal amount not to exceed $25.0 million, which, subject to certain conditions set forth in the Term Loan Agreement, may be drawn until the date that is 12 months after the Signing Date. 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 is obligated to pay 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 0.00% thereafter and (ii) an exit fee equal to 2.00% of the principal amount of any such repayment. 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 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. Proceeds from the Term Loans will be used to pay existing debt, transaction fees incurred in connection with the Term Loan Agreement and the Notes (as defined below), up to $5.0 million to repurchase shares of the Company’s common stock, and for working capital needs and general corporate purposes of the Credit Parties. Indenture and Convertible Notes On August 5, 2024, the Company also entered into a Purchase Agreement (the “Purchase Agreement”) with Braidwell Transaction Holdings LLC – Series 10 (the “Purchaser”), whereby the Purchaser has agreed to purchase $50.0 million in aggregate principal amount of the Company’s 4.75% Convertible Senior Notes due February 15, 2030 (the “Notes”). The Notes will be issued pursuant to, and will governed by, an indenture (the “Indenture”), to be dated as of the closing date of the issue and sale of the Notes, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Notes will be the Company’s senior, unsecured obligations and will be (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 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 Notes will 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 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 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 specified period, the Notes per $1,000 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 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 $1,000 principal amount of Notes, which represents an initial conversion price of approximately $40.98 per share of common stock. The conversion rate and conversion price will be 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 Notes will be 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 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if (i) the Notes are Freely Tradable (as defined in the Indenture) and any accrued and unpaid additional interest pursuant to the 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 Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that 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 Notes at a cash repurchase price equal to the principal amount of the 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 Notes will 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 Notes (which, in the case of a default in the payment of interest on the 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 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 $25.0 million; (vii) the rendering of certain judgments against the Company or any of its significant subsidiaries for the payment of at least $25.0 million 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 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 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 Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole 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 Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes. Proceeds from the Notes will be used to pay existing debt of approximately $10.0 million, transaction fees (including original issue discount, prepayment penalties, advisor fees, trustee/agent fees and attorney fees) incurred in connection with the Purchase Agreement, Indenture and Notes of approximately $6.5 million, and for working capital needs and general corporate purposes of the Company and its subsidiaries. Stock Repurchase Program In connection with its approval of the Term Loan Agreement, Purchase Agreement, the Indenture and Notes, on August 2, 2024, the Board of Directors of the Company also approved a stock repurchase program of up to $5.0 million in aggregate investment of the Company’s outstanding common stock, contingent upon the closing of the Term Loan and the Notes. On a share basis using the closing price of the Company’s common stock on August 2, 2024 of $29.56, the amount of common stock subject to the repurchase program represents approximately 0.7% of the Company’s outstanding common stock. 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. The actual timing, number, and share price of shares purchased under the repurchase program will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market and economic conditions, and applicable legal requirements.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net loss	$ (6,029)	$ (7,805)	$ (2,886)	$ (6,806)	$ (13,834)	$ (9,692)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024 shares
Trading Arrangements, by Individual
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Greg Odle [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On May 31, 2024, Mr. Greg Odle, the Company's President of Scoliosis, adopted a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The plan provides for the sale of up to 7,500 shares of the Company's common stock. The plan has an effective date of August 29, 2024 and will terminate on August 28, 2025, subject to early termination for certain specified events set forth in the plan.
Name	Greg Odle
Title	President
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	August 29, 2024
Expiration Date	August 28, 2025
Arrangement Duration	364 days
Aggregate Available	7,500

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Jun. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation and Unaudited Interim Condensed Consolidated Financial Statements	Basis of Presentation The accompanying condensed 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. Unaudited Interim Condensed Consolidated Financial Statements We have prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the annual consolidated financial statements as of and for the year ended December 31, 2023 and related notes thereto contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 8, 2024. The financial data and other financial information disclosed in the notes to the accompanying condensed consolidated financial statements are also unaudited. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations thereunder. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2023 and, in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the financial statements for the interim periods. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year or for any other period. The accompanying condensed consolidated financial statements have been prepared assuming our Company will continue as a going concern.
Use of Estimates	Use of Estimates Preparation of our condensed 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 condensed 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.
Reclassification	Reclassification In the condensed consolidated financial statements, the Company has reclassified stock-based compensation to conform to the current period presentation. All stock-based compensation was previously recorded within general and administrative expenses, and such costs have now been allocated between general and administrative expenses, research and development expenses and sales and marketing expenses. The current presentation results in stock-based compensation expense being recorded in the same manner in which the award recipient's payroll costs are classified. This reclassification did not affect previously reported total operating expenses, loss before income taxes, or net loss in the condensed consolidated statements of operations.
Financial Instruments	Financial Instruments and Concentration of Credit Risk Financial instruments that could subject the Company to credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable. We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents.The Company performs ongoing credit evaluations of customers and maintains a reserve for expected credit losses. The Company believes the risk of credit losses associated with accounts receivable is low given the history of collections and customer base. Additionally, the Company considers the risk for credit losses associated with short-term investments to be low given the types of investments which primarily include Certificates of Deposits and Treasury Bonds.
Concentration of Credit Risk	Financial Instruments and Concentration of Credit Risk Financial instruments that could subject the Company to credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable. We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents.The Company performs ongoing credit evaluations of customers and maintains a reserve for expected credit losses. The Company believes the risk of credit losses associated with accounts receivable is low given the history of collections and customer base. Additionally, the Company considers the risk for credit losses associated with short-term investments to be low given the types of investments which primarily include Certificates of Deposits and Treasury Bonds.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In October 2023, the FASB issued 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 becomes effective, with early adoption prohibited. For all other entities, the amendments will be effective two years later. Amendments in this Update 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 condensed consolidated financial statements. In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." The standard requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity's CODM. The amendments in this update also expand the interim segment disclosure requirements. This authoritative guidance will be effective for us in fiscal 2024 for annual periods and in the first quarter of fiscal 2025 for interim periods, with early adoption permitted. We are currently evaluating the effect of this new guidance on our consolidated financial statements and disclosures. 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. The ASU is effective for public companies for fiscal years beginning on or after December 15, 2024, with early adoption permitted. The amendments in ASU 2023-09 should be applied on a prospective basis. Retrospective application is permitted. We are currently evaluating the effect of this new guidance on our consolidated financial statements and disclosures.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Schedule of Reclassifications

The following tables present the impact of the reclassification on our condensed consolidated statements of operations:


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Sales and marketing (prior presentation)	$	13,165	$	25,381

Reclassification	368		701
Sales and marketing (new presentation)	$	13,533	$	26,082


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
General and administrative (prior presentation)	$	19,654	$	37,320

Reclassification	(542)		(1,051)
General and administrative (new presentation)	$	19,112	$	36,269


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Research and development (prior presentation)	$	2,792	$	5,062

Reclassification	174		350
Research and development (new presentation)	$	2,966	$	5,412

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed


Fair value of estimated total acquisition consideration	$	22,000
Assets
Cash	1,307
Accounts receivable - trade	2,876
Inventories	1,093
Prepaid expenses and other current assets	378
Property and equipment	4,360
Amortizable intangible assets	3,720
Other intangible assets	3,650
Other non-current assets	2,038
Total assets	19,422
Liabilities
Accounts payable-trade	581
Other current liabilities	1,630
Long-term debt, including current portion	1,157
Deferred tax liability	2,268
Other non-current liabilities	1,003
Total liabilities	6,639
Less: total net assets	12,783
Goodwill	$	9,217

Schedule of Indefinite-Lived Intangible Assets Acquired as Part of Business Combination


	Amount		Remaining Economic Useful Life
Trademarks / Names	$	3,650	Indefinite

Customer Relationships & Other	3,720		12 years
	$	7,370

Schedule of Business Acquisition, Pro Forma Information

The following table represents the pro forma net revenue and net loss assuming the acquisition of Boston O&P occurred on January 1, 2023.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue	$	52,802	$	45,837	$	97,918	$	84,272
Net loss	$	(6,029)	$	(2,770)	$	(13,809)	$	(9,460)

Schedule of Total Consideration Transferred after Discounting Future Payments

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

GOODWILL AND INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:


	Total



Goodwill at January 1, 2024	$	83,699
Boston O&P acquisition	9,217
Foreign currency translation impact	(2,404)
Goodwill at June 30, 2024	$	90,512

Schedule of the Balances of Amortizable Intangible Assets

As of June 30, 2024, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	10.7 years	$	44,328	$	(12,215)	$	32,113
Intellectual Property & Capitalized Software	8.6 years	16,027		(3,296)		12,731
Customer Relationships & Other	11.9 years	22,294		(4,070)		18,224
License Agreements	3.4 years	10,733		(5,953)		4,780
Total amortizable assets		$	93,382	$	(25,534)	$	67,848

As of December 31, 2023, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	11.2 years	$	45,646	$	(11,008)	$	34,638
Intellectual Property & Capitalized Software	9.1 years	16,026		(2,524)		13,502
Customer Relationships & Other	12.4 years	18,862		(3,270)		15,592
License Agreements	3.8 years	10,733		(5,190)		5,543
Total amortizable assets		$	91,267	$	(21,992)	$	69,275

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table summarizes the assets and liabilities measured at fair value on a recurring basis as of December 31, 2023. The balance of short-term investments was zero at June 30, 2024.















	December 31, 2023
	Level 1		Level 2		Level 3		Total
Financial Assets

Short-term investments
Certificates of Deposit	$	—	$	25,792	$	—	$	25,792
Exchange Trade Mutual Funds	$	5,015	$	—	$	—	$	5,015
Treasury Bonds	$	18,235	$	—	$	—	$	18,235

Other	$	207	$	—	$	—	$	207

DEBT AND CREDIT ARRANGEMENTS (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt consisted of the following as of the dates indicated:


	June 30, 2024		December 31, 2023
Term loan and final payment	$	10,300	$	10,300
Mortgage payable to affiliate	688		763
Acquisition note payable	229		—
Total debt	11,217		11,063
Less: debt discount and issuance costs	1,279		1,003
Less: current maturities	156		152
Long-term debt, net of current maturities	$	9,782	$	9,908

STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Restricted Stock Activity

Our restricted stock activity and related information are summarized as follows:


		Weighted-Average		Weighted-Average
	Restricted	Remaining	Restricted	Remaining
	Stock	Contractual Terms	Stock	Contractual Terms
	Awards	(in Years)	Units	(in Years)
Outstanding at January 1, 2024	592,453	1.6	13,851	1.7
Granted	556,109		7,900
Forfeited	(6,473)		(100)
Vested	(95,116)		—
Outstanding at June 30, 2024	1,046,973	2.0	21,651	1.7

NET LOSS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Schedule of Reconciliation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders

The following is a reconciliation of basic and diluted net loss per share:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net loss	$	(6,029)	$	(2,886)	$	(13,834)	$	(9,692)

Weighted average shares outstanding for basic and diluted	23,145,064		22,704,723		22,982,921		22,587,022
Net loss per share - basic and diluted	$	(0.26)	$	(0.13)	$	(0.60)	$	(0.43)

BUSINESS SEGMENT (Tables)

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Schedule of Product Sales by Geographic Location

Product sales by source were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Product sales by geographic location:	2024		2023		2024		2023
U.S.	$	41,249	$	29,587	$	75,554	$	53,388
International	11,553		9,972		21,933		17,759
Total	$	52,802	$	39,559	$	97,487	$	71,147

Schedule of Product Sales by Category


	Three Months Ended June 30,				Six Months Ended June 30,
Product sales by category:	2024		2023		2024		2023
Trauma and deformity	$	37,771	$	27,514	$	71,073	$	50,909
Scoliosis	13,682		10,893		23,886		17,966
Sports medicine/other	1,349		1,152		2,528		2,272
Total	$	52,802	$	39,559	$	97,487	$	71,147

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basis of Presentation (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Accumulated deficit	$ 211,576	$ 197,742

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Reclassification [Line Items]
Sales and marketing	$ 16,593	$ 13,533	$ 30,762	$ 26,082
General and administrative	27,329	19,112	52,059	36,269
Research and development	$ 2,543	2,966	$ 5,541	5,412
Previously Reported
Reclassification [Line Items]
Sales and marketing		13,165		25,381
General and administrative		19,654		37,320
Research and development		2,792		5,062
Reclassification
Reclassification [Line Items]
Sales and marketing		368		701
General and administrative		(542)		(1,051)
Research and development		$ 174		$ 350

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS - Narrative (Details) $ / shares in Units, $ in Thousands					3 Months Ended	6 Months Ended
	Jun. 11, 2024	Jan. 05, 2024 USD ($) individual $ / shares shares	Jul. 01, 2023 USD ($) $ / shares shares	May 01, 2023 USD ($) $ / shares shares	Jun. 30, 2024 USD ($) $ / shares shares	Jun. 30, 2024 USD ($) $ / shares shares	Jun. 30, 2023 USD ($)	Dec. 31, 2023 $ / shares
Business Acquisition
Cash paid to acquire						$ 20,693	$ 0
Common stock, par value (in dollars per share) \| $ / shares					$ 0.00025	$ 0.00025		$ 0.00025
Rhino Pediatric Orthopedic Designs, Inc.
Business Acquisition
Total consideration transferred			$ 1,024
Cash consideration			546
Asset acquisition			46
Issuance of common stock			$ 478
Medtech Concepts LLC
Business Acquisition
Total consideration transferred				$ 15,274
Cash consideration				3,000
Asset acquisition				97
Issuance of common stock				$ 2,274
Business combination, consideration paid In cash (as a percent)				50.00%
Stock based compensation capitalized				$ 4,500
Stock based compensation service period (in years)				4 years
Total consideration transferred				$ 10,871
Asset acquisition, contingent consideration cash consideration					$ 1,250	$ 1,250
Asset acquisition, contingent consideration (in shares) \| shares					4,288	4,288
Asset acquisition, contingent consideration, value					$ 133	$ 133
Medtech Concepts LLC \| Present Value
Business Acquisition
Cash consideration				3,000
Asset acquisition				97
Issuance of common stock				2,274
Total consideration transferred				10,043
Restricted Stock
Business Acquisition
Vesting period (in years)	3 years
Share-Based Payment Arrangement \| Medtech Concepts LLC
Business Acquisition
Asset acquisition, contingent consideration (in shares) \| shares					38,594
Intellectual Property & Capitalized Software \| Medtech Concepts LLC
Business Acquisition
Finite-lived intangible assets acquired				$ 9,523
Intangible asset, useful life (in years)				10 years
Trademarks \| Medtech Concepts LLC
Business Acquisition
Indefinite-lived intangible assets acquired				$ 520
Common Stock \| Rhino Pediatric Orthopedic Designs, Inc.
Business Acquisition
Asset acquisition, consideration (in shares) \| shares			11,133
Common stock, par value (in dollars per share) \| $ / shares			$ 0.00025
Asset acquisition, acquisition price (per share) \| $ / shares			$ 42.91
Common Stock \| Medtech Concepts LLC
Business Acquisition
Asset acquisition, consideration (in shares) \| shares				43,751
Common stock, par value (in dollars per share) \| $ / shares				$ 0.00025
Asset acquisition, acquisition price (per share) \| $ / shares				$ 51.98
Aggregate value of equity consideration				$ 2,500
Business combination, consideration of unregistered common stock (as a percent)				50.00%
Boston Brace International, Inc.
Business Acquisition
Cash paid to acquire		$ 22,000
Issuance of common stock		$ 2,500
Boston Brace International, Inc. \| Restricted Stock
Business Acquisition
Vesting period (in years)		3 years
Business combination, number of individuals received restricted stock awards \| individual		170
Consideration for acquisition (in shares) \| shares		83,000
Share acquisition price (in dollars per share) \| $ / shares		$ 30.12

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jan. 05, 2024	Jun. 30, 2024	Dec. 31, 2023
Liabilities
Goodwill		$ 90,512	$ 83,699
Boston Brace International, Inc.
Business Acquisition
Fair value of estimated total acquisition consideration	$ 22,000
Assets
Cash	1,307
Accounts receivable - trade	2,876
Inventories	1,093
Prepaid expenses and other current assets	378
Property and equipment	4,360
Amortizable intangible assets	3,720
Other intangible assets	3,650
Other non-current assets	2,038
Total assets	19,422
Liabilities
Accounts payable-trade	581
Other current liabilities	1,630
Long-term debt, including current portion	1,157
Deferred tax liability	2,268
Other non-current liabilities	1,003
Total liabilities	6,639
Less: total net assets	12,783
Goodwill	$ 9,217

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS - Indefinite-Lived Intangible Assets Acquired as Part of Business Combination (Details) - Boston Brace International, Inc. $ in Thousands	Jan. 05, 2024 USD ($)
Business Acquisition
Other intangible assets	$ 3,650
Amortizable intangible assets	3,720
Fair value of identifiable intangible assets	7,370
Customer Relationships & Other
Business Acquisition
Amortizable intangible assets	$ 3,720
Remaining economic useful life (in years)	12 years
Trademarks / Names
Business Acquisition
Other intangible assets	$ 3,650

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS - Business Acquisition, Pro Forma Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]
Net revenue	$ 52,802	$ 45,837	$ 97,918	$ 84,272
Net loss	$ (6,029)	$ (2,770)	$ (13,809)	$ (9,460)

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS - Schedule of Discounting the Future Payments (Details) - Medtech Concepts LLC $ in Thousands	May 01, 2023 USD ($)
Business Acquisition
Cash consideration	$ 3,000
Issuance of common stock	2,274
Anniversary payments	5,500
Transaction costs	97
Total consideration transferred	10,871
Present Value
Business Acquisition
Cash consideration	3,000
Issuance of common stock	2,274
Anniversary payments	4,672
Transaction costs	97
Total consideration transferred	$ 10,043

GOODWILL AND INTANGIBLE ASSETS - Changes in Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2024 USD ($)
Goodwill
Goodwill, beginning balance	$ 83,699
Boston O&P acquisition	9,217
Foreign currency translation impact	(2,404)
Goodwill, ending balance	$ 90,512

GOODWILL AND INTANGIBLE ASSETS - Amortizable Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets, Net [Abstract]
Gross Intangible Assets	$ 93,382	$ 91,267
Accumulated Amortization	(25,534)	(21,992)
Net Intangible Assets	$ 67,848	$ 69,275
Patents
Finite-Lived Intangible Assets, Net [Abstract]
Weighted-Average Amortization Period	10 years 8 months 12 days	11 years 2 months 12 days
Gross Intangible Assets	$ 44,328	$ 45,646
Accumulated Amortization	(12,215)	(11,008)
Net Intangible Assets	$ 32,113	$ 34,638
Intellectual Property & Capitalized Software
Finite-Lived Intangible Assets, Net [Abstract]
Weighted-Average Amortization Period	8 years 7 months 6 days	9 years 1 month 6 days
Gross Intangible Assets	$ 16,027	$ 16,026
Accumulated Amortization	(3,296)	(2,524)
Net Intangible Assets	$ 12,731	$ 13,502
Customer Relationships & Other
Finite-Lived Intangible Assets, Net [Abstract]
Weighted-Average Amortization Period	11 years 10 months 24 days	12 years 4 months 24 days
Gross Intangible Assets	$ 22,294	$ 18,862
Accumulated Amortization	(4,070)	(3,270)
Net Intangible Assets	$ 18,224	$ 15,592
License Agreements
Finite-Lived Intangible Assets, Net [Abstract]
Weighted-Average Amortization Period	3 years 4 months 24 days	3 years 9 months 18 days
Gross Intangible Assets	$ 10,733	$ 10,733
Accumulated Amortization	(5,953)	(5,190)
Net Intangible Assets	$ 4,780	$ 5,543

GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Jun. 30, 2024	Dec. 31, 2023
Business Acquisition
Other intangible assets		$ 18,669	$ 15,287
Trademarks
Business Acquisition
Other intangible assets		$ 18,669	$ 15,287
Trademarks \| ApiFix Ltd
Business Acquisition
Trademark impairment	$ 985

FAIR VALUE OF FINANCIAL INSTRUMENTS - Schedule of Assets and Liabilities Measured at Fair Value (Details) - Fair Value, Recurring - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments	$ 0
Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		$ 25,792,000
Exchange Trade Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		5,015,000
Treasury Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		18,235,000
Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		207,000
Level 1 \| Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		0
Level 1 \| Exchange Trade Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		5,015,000
Level 1 \| Treasury Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		18,235,000
Level 1 \| Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		207,000
Level 2 \| Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		25,792,000
Level 2 \| Exchange Trade Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		0
Level 2 \| Treasury Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		0
Level 2 \| Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		0
Level 3 \| Certificates of Deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		0
Level 3 \| Exchange Trade Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		0
Level 3 \| Treasury Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		0
Level 3 \| Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Short-term investments		$ 0

DEBT AND CREDIT ARRANGEMENTS - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Debt Instrument
Long term debt	$ 11,217	$ 11,063
Less: debt discount and issuance costs	1,279	1,003
Less: current maturities	156	152
Long-term debt, net of current maturities	9,782	9,908
Revolving Credit Facility \| Term Loan
Debt Instrument
Long term debt	10,300	10,300
Mortgage payable to affiliate
Debt Instrument
Long term debt	688	763
Less: current maturities		152
Acquisition note payable \| Acquisition note payable
Debt Instrument
Long term debt	$ 229	$ 0

DEBT AND CREDIT ARRANGEMENTS - Narrative (Details)			3 Months Ended		6 Months Ended
DEBT AND CREDIT ARRANGEMENTS - Narrative (Details)	Dec. 29, 2023 USD ($) tranche	Jun. 13, 2022	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Debt Instrument
Long term debt			$ 11,217,000		$ 11,217,000		$ 11,063,000
Current portion of long-term debt with affiliate			156,000		156,000		152,000
Interest expense			$ 421,000	$ 11,000	$ 760,000	$ 22,000
Mortgage payable to affiliate
Debt Instrument
Interest rate (as a percent)			5.00%		5.00%
Monthly interest and principal installments					$ 16,000
Long term debt			$ 688,000		688,000		763,000
Current portion of long-term debt with affiliate							152,000
Revolving Credit Facility \| Security and Guaranty Agreement
Debt Instrument
Long term debt face amount	$ 80,000,000
Debt instrument, maximum distribution per tranche	$ 30,000,000
Debt instrument, number of tranches \| tranche	3
Debt instrument, liquidity requirement			10,000,000		10,000,000
Line of Credit Facility, Remaining Borrowing Capacity			19,000,000		19,000,000
Revolving Credit Facility \| Term Loan
Debt Instrument
Debt instrument, maximum distribution per tranche	$ 10,000,000
Proceeds from lines of credit	$ 10,000,000
Debt instrument, debt repayment trigger, as a basis of capital stock ownership (percent)	35.00%
Long term debt			10,300,000		10,300,000		$ 10,300,000
Revolving Credit Facility \| Revolving Loan
Debt Instrument
Debt instrument, maximum distribution per tranche	$ 50,000,000
Percentage of prepayment of facility (percent)	3.00%
Revolving Credit Facility \| Revolving Loan \| Option One
Debt Instrument
Interest rate (as a percent)	9.00%
Revolving Credit Facility \| Revolving Loan \| Option Two
Debt Instrument
Applicable debt rate (percent)	6.50%
Revolving Credit Facility \| Revolving Loan \| Option Three
Debt Instrument
Debt prepayment premium (percent)	3.00%
Revolving Credit Facility \| Revolving Loan \| Option Four
Debt Instrument
Debt prepayment premium (percent)	2.00%
Revolving Credit Facility \| Revolving Loan \| Option Five
Debt Instrument
Debt prepayment premium (percent)	1.00%
Revolving Credit Facility \| Revolving Loan \| SOFR \| Option One
Debt Instrument
Debt instrument, basis spread on variable rate (as a percent)	6.50%
Revolving Credit Facility \| Revolving Loan \| SOFR \| Option Two
Debt Instrument
Debt instrument, basis spread on variable rate (as a percent)	4.00%
Revolving Credit Facility \| Fourth Amended Loan Agreement
Debt Instrument
Interest rate (as a percent)		10.00%
Revolving credit facility			$ 50,000,000		$ 50,000,000
Unused commitment fee percentage (as a percent)		0.50%
Revolving Credit Facility \| Fourth Amended Loan Agreement \| SOFR
Debt Instrument
Debt instrument, basis spread on variable rate (as a percent)		8.69%
Revolving Credit Facility \| Fourth Amended Loan Agreement \| Three Month LIBOR
Debt Instrument
Debt instrument, basis spread on variable rate (as a percent)		8.61%

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
INCOME TAXES (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income tax benefit	$ 18	$ 401	$ 2,549	$ 975
Effective income tax rate (as a percent)			(15.60%)	(9.10%)

STOCKHOLDERS' EQUITY - Restricted Stock (Details) - shares		6 Months Ended	12 Months Ended
	Jun. 11, 2024	Jun. 30, 2024	Dec. 31, 2023
Restricted Stock
Restricted Stock
Outstanding at period start (in shares)		592,453
Granted (in shares)	345,985	556,109
Forfeited (in shares)		(6,473)
Vested (in shares)		(95,116)
Outstanding at period end (in shares)		1,046,973	592,453
Weighted-Average Remaining Contractual Terms (in Years)
Weighted-average remaining contractual terms (in years)		2 years	1 year 7 months 6 days
Restricted Stock Units (RSUs)
Restricted Stock
Outstanding at period start (in shares)		13,851
Granted (in shares)		7,900
Forfeited (in shares)		(100)
Vested (in shares)		0
Outstanding at period end (in shares)		21,651	13,851
Weighted-Average Remaining Contractual Terms (in Years)
Weighted-average remaining contractual terms (in years)		1 year 8 months 12 days	1 year 8 months 12 days

STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Jun. 11, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award
Stock-based compensation				$ 5,738	$ 5,415
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Granted (in shares)	345,985			556,109
Unrecognized compensation expense		$ 25,764		$ 25,764
Unrecognized compensation expense, weighted average period of recognition (in years)				2 years
Vesting period (in years)	3 years
Stock-based compensation		$ 2,939	$ 3,456	$ 5,738	$ 5,415

NET LOSS PER SHARE - Reconciliation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Earnings Per Share [Abstract]
Net loss	$ (6,029)	$ (7,805)	$ (2,886)	$ (6,806)	$ (13,834)	$ (9,692)
Weighted average shares outstanding for basic (in shares)	23,145,064		22,704,723		22,982,921	22,587,022
Weighted average shares outstanding for diluted (in shares)	23,145,064		22,704,723		22,982,921	22,587,022
Net loss per share - basic (in dollars per share)	$ (0.26)		$ (0.13)		$ (0.60)	$ (0.43)
Net loss per share - diluted (in dollars per share)	$ (0.26)		$ (0.13)		$ (0.60)	$ (0.43)

BUSINESS SEGMENT - Narrative (Details)	6 Months Ended
BUSINESS SEGMENT - Narrative (Details)	Jun. 30, 2024 segment
Segment Reporting [Abstract]
Number of operating segments	1
Number of reportable segments	1

BUSINESS SEGMENT - Schedule of Revenue by Geographical Location (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues from External Customers and Long-Lived Assets
Total	$ 52,802	$ 39,559	$ 97,487	$ 71,147
U.S.
Revenues from External Customers and Long-Lived Assets
Total	41,249	29,587	75,554	53,388
International
Revenues from External Customers and Long-Lived Assets
Total	$ 11,553	$ 9,972	$ 21,933	$ 17,759

BUSINESS SEGMENT - Schedule of Revenue by Category (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Segment Reporting Information
Total	$ 52,802	$ 39,559	$ 97,487	$ 71,147
Trauma and deformity
Segment Reporting Information
Total	37,771	27,514	71,073	50,909
Scoliosis
Segment Reporting Information
Total	13,682	10,893	23,886	17,966
Sports medicine/other
Segment Reporting Information
Total	$ 1,349	$ 1,152	$ 2,528	$ 2,272

RELATED PARTY TRANSACTIONS (Details) $ in Thousands	3 Months Ended		6 Months Ended
RELATED PARTY TRANSACTIONS (Details) $ in Thousands	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) supplier	Jun. 30, 2023 USD ($)
Structure Medical, LLC \| Supplier
Related Party Transaction
Payments to related party \| $	$ 141	$ 149	$ 523	$ 395
Affiliated Entity
Related Party Transaction
Number of related party suppliers \| supplier			1

EMPLOYEE BENEFIT PLAN (Details)	6 Months Ended
EMPLOYEE BENEFIT PLAN (Details)	Jun. 30, 2024
Business Acquisition
Employer contribution as a percentage of employees' salary (as a percent)	4.00%
MD Orthopaedics
Business Acquisition
Employer contribution as a percentage of employees' salary (as a percent)	3.00%

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands			1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 20, 2021	Dec. 31, 2019	Jun. 30, 2019	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Long-term Purchase Commitment
Operating lease liability				$ 4,162		$ 4,162
Operating lease, right-of-use asset				$ 4,539		$ 4,539
Operating Lease, Liability, Current, Statement of Financial Position				Other long-term liabilities		Other long-term liabilities		Other long-term liabilities
Operating Lease, Right-of-Use Asset, Statement of Financial Position				Assets, Noncurrent, Excluding Property, Plant And Equipment		Assets, Noncurrent, Excluding Property, Plant And Equipment		Assets, Noncurrent, Excluding Property, Plant And Equipment
Purchase obligation, to be paid, remainder of fiscal year				$ 1,092		$ 1,092
Purchase obligation, to be paid, year one				1,456		1,456
Cost of revenue				12,003	$ 9,534	$ 24,514	$ 17,561
Minimum
Long-term Purchase Commitment
Royalty agreement percentage (as a percent)						0.50%
Maximum
Long-term Purchase Commitment
Royalty agreement percentage (as a percent)						20.00%
Firefly Technology \| License Agreements
Long-term Purchase Commitment
Finite lived intangible asset useful life extension period (in years)	5 years
Cost of revenue						$ 976
Trademark impairment							$ 576
Squadron Capital LLC \| Team Note B \| Affiliated Entity
Long-term Purchase Commitment
Repayments of related party debt		$ 25,000
Boston O&P
Long-term Purchase Commitment
Operating lease, right-of-use asset				$ 1,579		$ 1,579
Vilex and Orthex
Long-term Purchase Commitment
Fair value of estimated total acquisition consideration			$ 60,000

SUBSEQUENT EVENT (Details)		6 Months Ended
SUBSEQUENT EVENT (Details)	Aug. 05, 2024 USD ($) $ / shares	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Aug. 02, 2024 USD ($) $ / shares
Subsequent Event
Payment of debt issuance costs		$ 343,000	$ 0
Subsequent Event \| Scenario, Plan
Subsequent Event
Payment of debt issuance costs	$ 10,000,000
Repayments of debt	6,500,000
Subsequent Event \| Term Loan Agreement
Subsequent Event
Share repurchase program, authorized, amount				$ 5,000,000
Share price \| $ / shares				$ 29.56
Authorized shares as a percentage of outstanding stock (percent)				0.70%
Subsequent Event \| Term Loan Agreement \| Scenario, Plan
Subsequent Event
Long term debt face amount	$ 25,000,000
Interest rate (as a percent)	6.50%
Payment in kind interest rate per annum (percent)	1.00%
Debt instrument, exit fee (percent)	2.00%
Debt covenant, required cash on hand as a percentage of outstanding debt (percent)	25.00%
Share repurchase program, authorized, amount	$ 5,000,000
Subsequent Event \| Term Loan Agreement \| Scenario, Plan \| Period One
Subsequent Event
Debt instrument early repayment fee (percent)	3.00%
Subsequent Event \| Term Loan Agreement \| Scenario, Plan \| Period Two
Subsequent Event
Debt instrument early repayment fee (percent)	2.00%
Subsequent Event \| Term Loan Agreement \| Scenario, Plan \| Period Three
Subsequent Event
Debt instrument early repayment fee (percent)	1.00%
Subsequent Event \| Term Loan Agreement \| Scenario, Plan \| Period Four
Subsequent Event
Debt instrument early repayment fee (percent)	0.00%
Subsequent Event \| Term Loan Agreement \| Scenario, Plan \| Minimum
Subsequent Event
Debt instrument, basis spread on variable rate (as a percent)	3.25%
Subsequent Event \| Delayed Draw Term Loan Facility \| Scenario, Plan
Subsequent Event
Revolving credit facility	$ 25,000,000
Subsequent Event \| 4.75% Convertible Senior Notes \| Scenario, Plan
Subsequent Event
Interest rate (as a percent)	4.75%
Proceeds from the issuance of convertible debt	$ 50,000,000
Debt conversion price (percent)	130.00%
Debt covenant, percentage trigger for conversion, as a percentage of principal (percent)	98.00%
Debt instrument, convertible, conversion ratio	0.0244021
Debt instrument, convertible, conversion price (in dollars per share) \| $ / shares	$ 40.98
Debt covenant, debt conversion trigger as a percentage of conversion price (percent)	140.00%
Debt covenant, default trigger	$ 25,000,000
Debt covenant, percentage of debt in default that would trigger recall (percent)	25.00%
Debt covenant, special interest rate upon debt default (percent)	0.50%

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