OrthoPediatrics CEO Eyes Hospital Contracts With Up To 80% Share As Rivals' Products Leave Market

OrthoPediatrics wants to convert hospital pricing contracts into single-vendor or "high dual vendor" deals worth 50, 60, 70 "maybe even 80 percent market share," CEO David Bailey told a Needham analyst on the company's third-quarter earnings call on Tuesday. He said the opening comes partly from competitors' products being pulled from the market.

Contracts as a growth lever

Bailey said the majority of hospitals are on some form of contract, mostly simple pricing deals. His sales teams are trying to raise usage of products already in those hospitals, since having a product on site does not mean every surgeon uses it.

He said limited supplies of new sets, including the 3P Hip plate system, create scarcity, and that "we've seen some of the the competitive products from other companies be pulled from the market." He described "no threat of substitute products." Winning a hospital's contract, he said, gives it access to the company's new products and pulls through legacy sets already on its shelves, such as cannulated screws and flexible nails, without more capital.

Share gains in legacy products remain "probably still the number one driver of growth," Bailey said, and better use of existing sets helps free cash flow.

Record quarter, raised outlook

OrthoPediatrics, which makes implants, instruments and braces for children with orthopedic conditions, posted record third-quarter revenue of $72.7 million, up 19% from $61.2 million a year earlier. It raised full-year revenue guidance to $270 million to $273 million, growth of 14% to 16%, and reiterated adjusted EBITDA guidance of about $25 million.

Adjusted EBITDA hit a record $6.9 million, against $6.2 million a year earlier. Free cash flow was $1.6 million, versus $3.4 million used in the third quarter of 2025. The company had $45 million in cash, short-term investments and restricted cash, with another $20 million of term loan available, said Chief Operating and Financial Officer Fred Hite.

In scoliosis, the company placed 170 units in the quarter against none in the third quarter of 2025. Bailey said that was not a major growth driver.

Cash discipline and next launches

Hite said the company still expects to deploy about $10 million in sets this year and to reach free cash flow breakeven or better for 2026. Year to date, free cash flow usage is about $6 million, so it needs about $6 million of positive cash in the fourth quarter.

Bailey said 3P Small and Mini, now in limited launch with very few sets out, are probably a first-half-of-next-year story for full release. The PNP Retrograde nail, cleared by the FDA in late September, saw its first cases in October, with full release probably around mid next year.

Hite put the company's year-to-date adjusted EBITDA at $16 million, against $10 million at this point last year, on revenue growth of 16%.

Sources

• OrthoPediatrics Gets FDA Clearance for PNP Nail System — MarketWatch
• OrthoPediatrics Non-GAAP EPS of -$0.23 misses by $0.02, revenue of $72.7M beats by $4.2M (NASDAQ:KIDS) | Seeking Alpha — seekingalpha.com
• OrthoPediatrics Corp. Reports Third Quarter 2026 Financial — globenewswire.com
• OrthoPediatrics Announces FDA 510(k) Clearance of PNP | — globenewswire.com

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