Orthofix Medical (NASDAQ: OFIX) has updated its financial outlook, noting a recovery in bone growth stimulation reimbursement, improved trends in biologics and limb reconstruction, and an anticipated €15 million inventory order in Europe. However, the company is countering a sharp decline among smaller U.S. spine distributors, which has been steeper than expected. CFO Julie Andrews stated that third-quarter revenue is expected to align with second-quarter figures, with modest year-over-year EBITDA margin expansion.
During the Canaccord Genuity Growth Conference, CEO Massimo Calafiore indicated that a temporary reimbursement pricing alteration had a $1 million impact in Q2 but is set to be recovered in Q3. The company is also focusing on larger distributor partnerships in its spine business to steer resources effectively. Despite current challenges, improvements in the biologics segment and a strong top distributor performance, which accounts for 80% of revenue, are promising signs for future growth.
Orthofix has removed its free cash flow guidance for now but aims to improve from a $108 million cash outflow in 2023 to near breakeven by 2025. Further, management has delayed reintroducing long-range forecasts, seeking stability in its U.S. spine business before doing so. The current annual price pressure on products remains around 1-2%.
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