Here we have CEO of OrthoPediatrics, David Bailey, with us. Thank you for coming out. Appreciate you taking the time to make it out to Boston. I think where we'd like to start out, you know, past few years, you made a couple of changes to the business, particularly on the acquisition side. Boston, the Boston O&P deal being- -being the most recent one. Really helped shift the business from more of a specific orthopedic implant business to a more holistic pediatric orthopedics company. So why don't we just start off with just at a higher level state of the union of where OP is, and, and where you see the business sitting today, and, and how do you see it evolving over, over the next couple of years? Yeah. Great, Sam, thanks for having me. This is great. Great day today, busy schedule. So, yeah, OrthoPediatrics has always differentiated ourselves, I think, from a number of the orthopedic assets in that we're, we're not a spine company, we're not a foot and ankle company, we're not a trauma company. We're a pediatric orthopedic implant company or a pediatric orthopedic company. And over the course of the last nearly two decades, you know, there's been a lot of call from our customers to help them treat the entire patient population they treat, both in the operating room and out. And as we started, you know, the business started 17 years ago, primarily in trauma limb deformity, then we evolved into scoliosis, both areas where we've taken, you know, strong share and continue to grow the business. But, you know, we had historically kind of said to the customer, "Hey, we're not ready to enter into some of the other spaces," particularly on the specialty bracing side. You know, when we acquired MDO a few years ago, for the clubfoot bracing product, we said that that was kind of a platform acquisition for us that could help start the specialty bracing business overall. You know, we started at that point in time investing in R&D, in product development, that was specific to specialty bracing, and built some nice product portfolio there, expanded the MDO portfolio, built the DF2 brace that we just launched end of year and has really taken off nicely. And so, you know, the acquisition of Boston was kind of next step for us, not only to, you know, to try to sell the Boston products around the world, so they have about 17 products, but also then to scale the service orientation of that business. So 26 clinics at Boston, serving about 15 children's hospitals, primarily in the upper northeast and on the East Coast. Really, the only business that does that exclusively for pediatric orthopedic surgeons. And so, you know, our goal here is, over time, to really surround the pediatric orthopedic surgeon with everything they use. Mm-hmm. Doing a good job of that on the implant side, now starting to do that on the specialty bracing side. We think the specialty bracing side's, you know, super scalable, like the profit, that it can generate, as well as it's less capital intensive than our- Mm-hmm ... implant business. So it's a lot of good reasons for us to diversify the business, but still focusing on pediatric patient, and it's still the same customer, right? It's pediatric orthopedic surgeons. Yeah, definitely wanna dig into the bracing business, but before we do that, a more macro level question. You know, 2022 and 2023 in particular, a lot of disruption, whether it be respiratory viruses or sort of staffing levels. You know, where do you see, at a bird's-eye view of the industry, is respiratory viruses back to normal levels, staffing back to normal levels? Where do you see the procedure capacity environment back to relative to, I think it had been, you know, like 80-ish% levels in 2023 or so? Yeah, I think we called out in Q1, we felt like we were at, you know, 90%-95% here, and trending towards a pretty normal environment. I think one of the things that we felt was different about what we experienced than maybe, again, some of the adult orthos, is that, you know, almost all of our procedures are done inpatient. They're very complex inpatient procedures, not really candidates to move outpatient. So, you know, the respiratory environment certainly hurt us, but then when we get outside of the respiratory environment. You know, our patients, the outflow or the overflow of our patients when there's a pretty tough environment in terms of staffing, didn't go to the outpatient surgery centers. And so, you know, we were, I think, hampered over the course of probably the last two years with some staffing issues inside children's hospitals. Just generally seeing throughput in children's hospitals not as strong, and I think that's largely behind us. I mean, we called this out in Q1 that we felt, again, probably 95% and that we expected a normal summer. You know, I think things continue to trend in the right direction. What was probably a headwind over the course of the last three or four years, I'd say, is, at worst case, neutral, if not a little bit of a tailwind for us. That's great. So getting back to the bracing business, just level status on the size of that business today. I think you've said over time could be $100 million plus or so. I'm curious, two questions on that. One, you know, how quickly do you think you can get to that level? And do you—when you think about, you know, the Boston O&P obviously bridged a big gap there. You know, when you think about $100 million, is that inclusive of acquisitions along the way, or do you see that as more of an organic number that you can get to over time with the, with Boston in-house? Yeah, so we certainly see that there may be a few acquisition opportunities for us in this space. Probably not of the scale of Boston. There's just no other organization like Boston that's 100% focused in pediatric orthopedics. But, you know, we see, you know, a $100 million line of sight is certainly possible for us. I think this is a $500 million TAM just inside children's hospitals. You know, when we acquired MDO, that business was give or take $10 million, and we've been growing that business north of 20% ever since the acquisition 2.5-3 years ago. And we've developed our own products in that space. So, you know, even before Boston, you know, the hardcore kind of organic product, organic sales growth of our other products—Rhino, MD Orthopaedics, Ora Medical, now DF2—really growing and contributing to top-line revenue growth. You throw Boston in, that was about a $25 million, $25 million company. The majority of Boston's revenues come directly through their 26 clinics. They have a little bit, let's say 10% of their business is wholesale business to other clinics, and so we're working hard to expand that component of this revenue. You know, we can do that right away through our sales channel. And so I think OPSB, so that's our specialty bracing brand as a whole, you could assume that that franchise is growing, you know, north of 20%. We would expect to do that for a long time, separate of the bracing or the clinic expansion strategy. And I think, you know, while we haven't given specific guidance, you know, in the coming several months, I think we'll be able to give more clear guidance to the street about what we expect in terms of the pace of conversion of new clinics. And it's our interest to serve all 300 children's hospitals. Going from 15 now, generating $25 million, scaling up to, you know, serving all 300 children's hospitals over the next little bit, it's easy to see why we're pretty bullish about a business that can, frankly, at the absolute minimum, be a $100 million-dollar franchise for us in the coming few years. Yeah. So looking at Boston, I think it was about a $25 million business. when you acquired it. Guidance assumes it stays at about that level. You know, could we start to see that business grow as we exit the year? And, you know, what would get you confident that you can increase the expected contribution above that $25 million for this year? Yeah, great question. So I wanna parse the difference between Boston on the clinic side- Yeah ... and all other products. There's no question that right now, the specialty bracing business, ex-Boston clinics, is growing well north of kind of our corporate historical growth rate of 20%. So we're already seeing a really strong contribution from all the other products, and certainly Boston products. On the wholesale side, our sales reps can talk about those things. We're working to build out that sales channel. So definitely we would expect to see, you know, some growth of that small segment of Boston. You know, we're gonna be able to give some guidance here, I think, in the next few months around what we expect from the contribution for clinic expansion, especially into 2025. But I think it's fair to say that we are working. We have a very, very large funnel of locations, that- All of them. ... we can scale into. Yeah. The question we have now, and that's why we're being a little cagey here, is that we just wanna make sure that we understand the timing to go from top of funnel to bottom of the funnel and generate revenue. And I think what's a little different about this business, Sam, is that this is not a business where, you know, we go into a new market, and we hope we generate revenue The inbound interest we're getting is directly from our hospitals, directly from our customers, about, "Hey, we would like a Boston clinic. We know what happens at Boston. We know what happens at CHOP. We'd like that level of service with somebody that's 100% focused on us at our location," in Indianapolis, in, you know, San Antonio, wherever that may be. And so once you get the infrastructure put in place, you know you're gonna get the revenue, right? It's not a- Yeah ... we build a bunch of sets, we deploy those sets, we hope that the surgeon uses the product. We're only gonna move into clinic locations where we know we're going to drive revenue. And so, you know, the aspiration here is that a certain portion of our revenue growth in 2025, and for the next several years, becomes a little more formulaic. Right? We know that if we close on X number of clinics and you know, open X number of clinics over a period of time, that this is what we can expect from, from revenue growth. Until we have our arms fully around that- Yeah ... you know, we don't wanna give too much away, but I think that you could expect the 2025 guide and the growth that you would see in 2025 and beyond would have a big chunk of that revenue growth associated with clinic expansion. So you could probably expect that we're working pretty hard on it here. Yeah. Some of those things may happen in the back half of this year. Yeah. I mean, I have on my question list here: How many clinics are you gonna add and how fast? So I won't ask that. But maybe I can ask it in a way that you can actually answer. Just as you think about what are the factors that could hold back and, you know, what are the potential constraining factors on clinic expansion? How are you thinking about that, whether it's... I think you started to talk about it a little bit with seeing the, you know, you gotta understand how long it takes to get from top of funnel-. into actual execution. How are you thinking about, you know, what are the constraints on growth and, and what needs to go into- Yeah ... building out that- Yeah ... clinic footprint over time? Yeah. I think that's a big question. So, you know, we think that it's a relatively small investment to move things from top of funnel to, you know, through the funnel. Let's say $500,000-$1 million. We think that on the short run, that could take six months. Long run, that could take 12-18 months. One of the downsides of the Boston business at this stage is that they're primarily centrally located in the Boston area and Philadelphia area, in the upper northeast. And so, not a lot of expansion west of the Mississippi up until this point. And so it does take, you know, some leasing, and we're gonna have to get some locations, hopefully inside children's hospitals, but certainly close, which takes a little bit of time. Then there is the, the matter of whether if Boston doesn't currently operate within that jurisdiction or in that state, there's some licensing. We don't control that right, of licensing- That's- ... and hiring ... clinic licensing? That's right. Licensing your staff. That's right. Or both? It's primarily clinic licensing. Okay. And so, you know, there's an application process. That could take a little bit of time, and so it's not entirely within our control. Boston's guidance to us is that, hey, this could take a year from kinda zero to, you know, fully operational, and they have some experience with that. Before the acquisition, they had done a few greenfield deals. They had done a few small acquisitions. And so the thinking for us is that when we do greenfield, it's probably gonna take us a year. You know, obviously, the acquisition just happened a few months ago, so, you know, we're starting some of that.... There is also the opportunity to do, you know, almost a, as I think one of our investors call it, an acqui-hire, where you have a small clinic that already has infrastructure, a little bit of infrastructure- is not fully servicing the children's hospital, but may provide an opportunity for us to acquire something, relatively small, scale it, but short-circuit some of the timing. And, you know, the nice thing about this is once a clinic gets running, you're generating revenue almost immediately- Yeah. and these things are generating profit almost immediately. And so, you know, the faster we can scale all this, the better, obviously. So that year timeframe for a greenfield opportunity, is that from sort of siting it to opening the doors? Yeah. Or is that opening from an establishing one to when you get to a full revenue run rate? No, I think once one's established and ready to go- It's generating revenue. kind of day one. Okay. It's just, you know, from, hey, the—we get an inbound interest, Doctor So-and-So, Hospital So-and-So would like to do this. You know, we think that's, again, it's probably a year. Could be less, could be slightly more, but I think that's a reasonable kind of midpoint. So, so safe to assume you're evaluating opportunities for greenfield now that could impact revenue in 2025? Safe to say we're moving forward, yes- Yeah ... on some of that. It's just, it's hard to say at this stage, since we haven't physically done this ourselves. You know, we don't wanna get out ahead of ourselves and say, "Oh, yeah, Sam, it's gonna be, you know. Two a quarter for the next, you know- Yeah ... however many quarters. Of course. But, you know, obviously our expansion strategy here is not to be a minority player in this space. We see this whole TAM as very fragmented, huge opportunity. I mean, again, I mean, we have no shortage of interest from customers- asking us to do this. And so, you know, that's a good opportunity for us. Yeah. Yeah. You know, we traditionally, you know, have executed market dominance strategies here, right? I mean, we wanna be a dominant player in each TAM that we participate in. So, you know, you can do the math, but if you're in a $500 million TAM, and we're gonna wanna be the dominant player, that's how big this business could be over the course of the next- Yeah ... several years. You mentioned the profitability of clinics. How quick to ramp to that profitability and, you know, starting to generate adjusted EBITDA this year, how should we be thinking about the clinic's impact on and ramping the MD or the LSPV? Yeah. Uh- Onto the P&L? Yeah, on the P&L. Yeah. So, you know, you know, we generated $5 million adjusted EBITDA last year. We've the guide is $8 million-$9 million this year. That factors in some of these investments. You know, so we did this deal in January, so we had a sense for what we thought the estimated costs. I think it's manageable within the P&L for us to continue to expand the EBITDA year-over-year. You know, it's, again, our EBITDA expansion is still coming, you know, a close second to our top line revenue growth aspirations. But I think we can still expand adjusted EBITDA while we're scaling into this. And, you know, over time, as we look at this and say there's some huge opportunities to maybe really accelerate this, you know, our posture on that could theoretically change. But I think because of the nature of the investment and it's just not that big of a capital investment here or an expense investment, I think we can manage that within the, you know, the aspiration of continuing to advance and grow the adjusted EBITDA. Yeah. And then taking a bit of a step back to the business as a whole, you know, obviously, the bracing side growing, growing faster than- Sure ... the total company. But with, with the portfolio where it's at today, what do you see OrthoPediatrics' growth profile as over, call it, the 3- to 5-year, sort of medium-term view Yeah, I think we have always viewed ourselves as a 20% grower. I think, you know, we can parse words as to whether we're a pure 20% organic grower or, you know, you know, we had been, I think, for a long time when the company was much smaller. Certainly, you saw organic growth that was well in excess of 20% in Q1. I think you'd be hard-pressed to get Fred and I to call out that we're a 20% organic grower into perpetuity. Frankly, I think we, we weren't benefited by setting ourselves up for that in the past, maybe. But I think, you know, with a little M&A here and there, you know, our aspiration is to be a 20% grower, kind of year-over-year. You know, I think in our guide, we've historically, or at least over the last few years, suggested that that's kind of a high teens organic growth, kind of a minimum, with an aspiration to, you know, to be able to beat that quarter-to-quarter. So I don't see that changing dramatically, at least how w think about our guide for- Yeah ... the next several years. Certainly, this is a new opportunity for us. It's... You know, we're a small player right now in a big TAM, and so as we get further into it, you know, that may have the capacity to accelerate our growth rate. But we're not ready to, you know- Yeah ... say that just yet. Just as we think about the components of growth, I think obviously you're gonna have bracing growing ahead of whatever the total- Sure ... company growth rate. Is it, is it reasonable to assume that, you know, the legacy Trauma and Deformity implants are gonna be below that, and, and Scoliosis will probably be somewhere in between the bracing business and the, and the Trauma and Deformity business? Yeah, I think the Trauma and Deformity, I mean, all of these businesses, particularly in Q1, and I think, you know, if you look back on the quarters, have grown. They're certainly mid- to high-teens growth. Sometimes they're well north of that from a pure organic perspective. You know, the Trauma and Deformity business, we have greater share. We have about 25-30% share inside children's hospitals, and we think that over the course of the next, you know, several years, we will get to what we consider really a market share position of, you know, 50%-55%, maybe even 60%. So we get another doubling in that. Now, whether that happens in three years or five will kind of dictate the level of investment that we wanna make there. Certainly, the capital requirements to continue to grow T&D are big, right? So we're kind of neutralizing some of the capital requirements to maintain our 20% growth rate by investing in specialty bracing. But I think you could assume that T&D, bigger business, grows slightly slower than scoliosis. Scoliosis, a lot of new products set up for next year. I think Scoliosis will produce outsized growth for the next few years for sure, and then OPSB, you know, being a bigger chunk of our, of our top line revenue growth, you know, I would say for the next several years. Yeah. Yeah. So let's jump into some of those new Scoliosis products, and start with the early onset side. You know, just remind us, how big of a chunk of the overall Scoliosis market is represented by EOS? You know, where is your share at in that market today, and you know, what do you think these new products can do in that market? Yeah. So we think that EOS represents about 15% of the Scoliosis, peds scoli market. We have essentially 0%- share at this point, so this is another kind of pure blue ocean, kind of greenfield, whatever analogy, for us. We just launched the RESPONSE Rib and Pelvic System, so just now starting to do cases. The aspiration here, and this is also fragmented, right? Surgeons are working really hard to do some of the most complex, just some of the most complex pediatric spine surgery that exists. And, you know, there's very limited options for these surgeons. So we think that in this space, technology kind of rules the day. If you have the best technology that can eliminate complications in this patient population, we think, you know, the capacity is there for us to take a very, very high share. And so our strategy here is not just to come out with one singular product in the space. EOS is a complicated pathology that sometimes involves the combination of multiple different technologies and, and again, I think a lot of surgeons having to MacGyver their way through some of these procedures with less than ideal solutions or solutions that weren't even made for EOS. And so the thought would be that rib and pelvic comes out, then we have w ell, what's coming out with a guided growth system that we expect to hopefully do first surgeries this year. Okay. It's called VerteGlide. and so that would be another solution, and then the eLLi Growing Rod, which I think you saw, we just received a pediatric breakthrough device designation by the FDA. You know, that's, that's designated as a, a potentially life-saving device, and so that's why that device kind of goes to the front of the line on the FDA side. That would be an electromechanical growing technology, and so I think you fast-forward 15 months from now or so, by far, we have the largest portfolio of EOS products and hopefully technology solutions that meet very, very substantial unmet needs. So the opportunity to take a lot of share in that 15% is there. But I also think that, because of we're making the investments there, where, you know, the historically large adult spine companies, you know, are not focusing aggressively in this space, it brings a level of credibility of our scoliosis platform, our scoliosis fusion business, to pediatric scoliosis surgeons. I think we're getting a lot of traction from, you know, doing the hard stuff, making these tough investments. So I think the halo effect of all of that, you know, drives market share for us as well. So it's not just the EOS products in and of themselves, but it's the impact that it has on our business overall.. And so combination of functionality, purpose built, and sort of organizational focus is what's driving it? Yeah, I think so. And just- It's not that dissimilar than what's been driving- Yeah ... the business for, you know, almost two decades now. Yeah. And so switching to ApiFix, remind us on timelines there for the data that we could be seeing, how that could impact the growth curve there, and just sort of what's the latest on that product and how you see the non-fusion market expanding. Yeah. So, you know, registry completed, although we continue to put more data in- to the registry, we report the data as it, as it comes in. So we don't, we don't actually collate the data ourselves. Our surgeons and those people from the Pediatric Spine Study Group have full access to the raw data, and then there's been some papers. We have two-year data that's come out this year. You know, obviously, as the data ages, that helps the adoption rate of the product. I think the question for most of our customers will be, you know, "When can I remove these devices?" And we don't know the answer to that yet. We do have data from Europe that supports three years holding the curve in either straight or in a good position. Skeletal maturity, you could remove the device and not see a rebound of the curve, but we don't know that information yet. So that's some of the ambiguity that I think is still out there about the device. But you know, we've got our first patients at three years, and we do have some removal, although we're not... It's not FDA indicated right now to—we can't recommend the removal of the device. But as the data strengthens, I think we see more and more users, more and more customers who are interested in the device. I think that, you know, we're moving toward a pretty large minority of children's hospitals that are offering this device to their patients. Maybe it's not, you know, applicable for every one of their patients, obviously. But surgeons who may have been more skeptical, standing on the sidelines saying, "Okay, the data is good. The data looks good. I see this applicable in my patient population," and maybe that's narrow, and as the data comes out, maybe it widens. Again, I think it's pretty steady up and to the right for us. We probably thought a few years ago that, you know, this device, as well as generally VBT, vertebral body tethering, was probably more of a, a big inflection point was gonna occur, and this thing, you know, goes off, you know, goes straight up. But I think both of that. That entire product family, I think, is people are quite interested in, but, it's, it's more of a steady growth, and it's growth that's contributing obviously to greater than 20%- Yeah. In the scoliosis business, and so that's fine, too, right? Yeah. I mean- I don't wanna ask a quick-- we're up on time here, but I wanna ask a quick one on, on Pega. Really impressive Q1 result there. Just, you know, remind us of the drivers of that, and, you know, how sustainable do you think that momentum can be through this year and beyond into 2025 plus? Yeah, I'm not sure 152% international growth is sustainable for the full year. Yeah. But we like that. You know, business grew again by north of 50%, and so what is happening with the Pega product, it's growing aggressively in the U.S., has been really since the acquisition a couple years ago. And that's driven by just market access and sales force. I mean, this was a product that hadn't been talked a lot about by the Pega sales channel. We take over the sales channel, it's growing. You know, we've deployed $several million worth of inventory, and we've deployed products in the Pega portfolio that had really never been deployed, so a lot of new products in the U.S. So it continues to grow, continues to do well in the United States. Outside of the U.S., we're just now starting to see kind of some of this growth because Pega had a stocking distribution channel, multiple locations. We terminated those distributors and, you know, in fact, sales went down in some of those jurisdictions because you can imagine, those distributors weren't gonna buy product when they knew that their time was up. Now we're starting to be able to deploy inventory to our agencies. Sales going through the roof, obviously- with that kind of growth rate. We have the opportunity now with some of the agent sales distributors that were in markets that we didn't have a distributor, to sell more of OrthoPediatrics products in through a larger international channel. So again, those growth rates are probably not sustainable for a long time, but we definitely think that Pega has, you know, a few more years of growth that in front of it, that's gonna grow kinda normal north of our normal kind of 20% corporate growth rate. Great. And then just last question, just to sort of wrap it up. As you, you know, become a more mature company in the orthopedic space or pediatric orthopedic space- You know, how do you view the landscape? You know, do you have ambitions or interests in diversifying beyond orthopedics into a broader pediatric health sort of company? And, you know, how are you thinking about the long-term view of what OP will look like over time? Yeah, I think very long term, we, we think about this, the potential to be more of a pediatric healthcare company. To take some of the learnings from pediatric orthopedics and, you know, the 17 years we've been doing this successfully and think about how could we apply that to other unmet needs in other areas of pediatric healthcare. I think the ecosystem we've created around OP as both a good acquirer and a good partner, is bringing in interested parties to us that, "Hey, can we, can we leverage your infrastructure to make sure that our device is in..." Who knows what? Pediatric general surgery, pediatric cardiology. "Can we leverage your infrastructure, your sales channel, to get this to more and more customers?" We got a tiger by the tail here, I think, though, on the OPSB side. And it's, we got a lot of growth remaining on the trauma, deformity and scoliosis side. So I wouldn't look to see us do that in the short run. But yeah, I think when this, when we have so much share that, top-line revenue growth becomes more challenging for us, it wouldn't be irrational for us to think about, you know, leveraging all this infrastructure and scaling into other pretty sizable TAMs, especially, as you know, orthopediatrics and just ortho in general, is a capital-intensive business. We see a lot of the other subspecialties as, less capital intensive, like OPSB, and those would be really compelling markets for us to enter at some point in time. Great. Well, thank you for taking the time. We, we appreciate having you, and- Thanks. Hope you had a good conference. Great. Appreciate it. Thank you.