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What changed in ORTHOPEDIATRICS CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ORTHOPEDIATRICS CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+377 added−350 removedSource: 10-K (2026-03-04) vs 10-K (2025-03-05)

Top changes in ORTHOPEDIATRICS CORP's 2025 10-K

377 paragraphs added · 350 removed · 317 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

105 edited+15 added−7 removed220 unchanged
Biggest changeBoston O&P also purchased all issued and outstanding share capital of clinics in Florida as well as multiple clinics in Colorado. In addition to acquisitions, we also look for partnerships which can provide us with complementary enabling technologies. For example, in 2021 we extended our license agreement for our exclusive distribution rights of the FIREFLY ® Technology.
Biggest changeIn 2025, Orthopediatrics do Brasil Ltda., a wholly-owned Brazil based subsidiary of the Company, purchased all of the issued and outstanding share capital of a local distributor. In addition to acquisitions, we also look for partnerships which can provide us with complementary enabling technologies.
In the near term, we expect to selectively expand the number of international markets we serve, as well as to deepen our penetration of important existing markets such as Brazil and Germany. In 2024, we opened warehouses in Germany and Australia, and hired a European operations director to continue our growth in the European market.
In the near term, we expect to selectively expand the number of international markets we serve, as well as to deepen our penetration of important existing markets such as Brazil and Germany. In 2024, we hired a European operations director to continue our growth in the European market, and we opened warehouses in Germany and Australia.
Regulation of Medical Devices in Other Foreign Countries We are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of: • design, development, manufacturing and testing; • product standards; • product safety; • product safety reporting; • marketing, sales and distribution; • packaging and storage requirements; • labeling requirements; • content and language of instructions for use; • clinical trials; • record keeping procedures; • advertising and promotion; • recalls and field corrective actions; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; 26 • import and export restrictions; • tariff regulations, duties and tax requirements; • registration for reimbursement; and • necessity of testing performed in country by distributors for licensees.
Regulation of Medical Devices in Other Foreign Countries We are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of: • design, development, manufacturing and testing; • product standards; • product safety; 26 • product safety reporting; • marketing, sales and distribution; • packaging and storage requirements; • labeling requirements; • content and language of instructions for use; • clinical trials; • record keeping procedures; • advertising and promotion; • recalls and field corrective actions; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • import and export restrictions; • tariff regulations, duties and tax requirements; • registration for reimbursement; and • necessity of testing performed in country by distributors for licensees.
The government may assert that claim includes items or services resulting from a 23 violation of the federal Anti-Kickback Statute and constitutes a false or fraudulent claim for purposes of the false claims statute; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with the federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database (GUDID); • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
The government may assert that claim includes items or services resulting from a violation of the federal Anti-Kickback Statute and constitutes a false or fraudulent claim for purposes of the false claims statute; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with the federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database (GUDID); • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; • the federal Open Payments ("Sunshine") program and various state and foreign laws on reporting remunerative relationships with healthcare providers (HCPs); • the federal Anti-Kickback Statute (and similar state laws) prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as Medicare or Medicaid; • the federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government.
These include: • establishment registration and device listing with the FDA; 23 • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; • the federal Open Payments ("Sunshine") program and various state and foreign laws on reporting remunerative relationships with healthcare providers (HCPs); • the federal Anti-Kickback Statute (and similar state laws) prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as Medicare or Medicaid; • the federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government.
We sell our specialized products, including PediLoc ® , PediPlates ® , Cannulated Screws, PediFlex TM nail, PediNail TM , PediLoc ® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSE TM Spine, BandLoc TM , Pediatric Nailing Platform | Femur, Devise Rail, Orthex ® , The Fassier-Duval Telescopic Intramedullary System ® , SLIM TM Nail, The GAP Nail TM , The Free Gliding SCFE Screw System TM , GIRO ™ Growth Modulation System, PNP Tibia System, ApiFix ® Mid-C System, Mitchell Ponseti ® and Boston Brace 3D ® specialized bracing products to various hospitals and medical facilities throughout the United States and various international markets.
We sell our specialized products, including PediLoc ® , PediPlates ® , Cannulated Screws, PediFlex TM nail, PediNail TM , PediLoc ® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSE TM Spine, BandLoc TM , Pediatric Nailing Platform | Femur, Devise Rail, Orthex ® , The Fassier-Duval Telescopic Intramedullary System ® , SLIM TM Nail, The GAP Nail TM , The Free Gliding SCFE Screw System TM , GIRO ™ Growth Modulation System, PNP Tibia System, ApiFix ® Mid-C System, Mitchell Ponseti ® , VerteGlide TM , and Boston Brace 3D ® specialized bracing products to various hospitals and medical facilities throughout the United States and various international markets.
The MDR includes further controls and requirements on the following activities: • high level of request for premarket clinical evidence for high risk devices; • increased scrutiny of technical files for implantable devices; • monitoring of notified bodies, by independent auditors; 25 • increased requirements regarding vigilance and product traceability (specifically related to labeling requirements); • increased regulation for non-traditional roles such as importer and distributor; and • Post-Market Clinical Follow-up that requires significantly greater clinical data specific to our devices, which leads to greater costs for collecting such data than under the MDD.
The MDR includes further controls and requirements on the following activities: • high level of request for premarket clinical evidence for high risk devices; • increased scrutiny of technical files for implantable devices; • monitoring of notified bodies, by independent auditors; • increased requirements regarding vigilance and product traceability (specifically related to labeling requirements); • increased regulation for non-traditional roles such as importer and distributor; and • Post-Market Clinical Follow-up that requires significantly greater clinical data specific to our devices, which leads to greater costs for collecting such data than under the MDD.
Overviews of the three categories of the trauma and deformity, scoliosis and sports medicine markets that we currently serve, and the smart implant market that we are planning to enter, are as follows: Trauma and Deformity Correction Trauma and deformity correction surgical procedures involve placing metal plates and screws on the outside of the bone or long nails inside the canal of the bone, known as flexible and rigid intramedullary nails, to stabilize fractures and allow them to heal.
Overviews of the three categories of the trauma and deformity, scoliosis and sports medicine markets that we currently serve, and the smart implant market that we are planning to enter, are as follows: Trauma and Deformity Correction Trauma and deformity correction surgical procedures involve placing metal plates and screws on the outside of the bone or long nails inside the canal of the bone, known as flexible and rigid intramedullary nails, to stabilize 12 fractures and allow them to heal.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation (QSR), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include 22 compliance with the applicable portions of the Quality System Regulation (QSR), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Our internal quality management group conducts comprehensive on-site inspection audits of our suppliers to ensure they meet FDA and other country-specific requirements, as necessary. In addition, we and our suppliers are subject to periodic unannounced inspections by U.S. and international regulatory authorities to ensure compliance with quality regulations. We maintain certain long-term contracts with our key suppliers.
Our internal quality management group conducts comprehensive on-site inspection audits of our suppliers to ensure they meet FDA and other country-specific 20 requirements, as necessary. In addition, we and our suppliers are subject to periodic unannounced inspections by U.S. and international regulatory authorities to ensure compliance with quality regulations. We maintain certain long-term contracts with our key suppliers.
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. We also operate multiple orthotic and prosthetic ("O&P") clinics delivering leading pediatric non-surgical O&P treatment. The Company began selling its products in the United States in 2008 and internationally in 2011.
We currently use a contract manufacturing model for the manufacturing of implants and related surgical instrumentation while our orthopedic bracing products are typically manufactured in-house. We also operate multiple orthotic and prosthetic ("O&P") clinics delivering leading pediatric non-surgical O&P treatment. The Company began selling its products in the United States in 2008 and internationally in 2011.
Both regulators and ethics committees also require the submission of serious adverse event reports during a study and may request a copy of the final study report. The Medical Devices Regulation ("MDR") entered into force in May 2017 and, due to the COVID-19 pandemic, was postponed from its original application date of May 2020 to May 2021.
Both regulators and ethics committees 25 also require the submission of serious adverse event reports during a study and may request a copy of the final study report. The Medical Devices Regulation ("MDR") entered into force in May 2017 and, due to the COVID-19 pandemic, was postponed from its original application date of May 2020 to May 2021.
Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.
Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its 27 facts and circumstances.
We expect additional state and federal healthcare reform measures to be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure. Anti-Bribery and Corruption Laws Our U.S. operations are subject to the U.S.
We expect additional state and federal healthcare reform measures to be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure. 30 Anti-Bribery and Corruption Laws Our U.S. operations are subject to the U.S.
In some countries, government reimbursement is the predominant program available to patients and hospitals. Our commercial success depends in part on the extent to which governmental authorities, private 30 health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which our products are used.
In some countries, government reimbursement is the predominant program available to patients and hospitals. Our commercial success depends in part on the extent to which governmental authorities, private health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which our products are used.
The FDA may grant an HDE, which is an exemption from the effectiveness requirements of sections 514 and 515 of 22 the FDCA Act, if the FDA determines that the device meets certain criteria. After HDE approval, the medical device may only be used after Institutional Review Board ("IRB") approval has been obtained.
The FDA may grant an HDE, which is an exemption from the effectiveness requirements of sections 514 and 515 of the FDCA Act, if the FDA determines that the device meets certain criteria. After HDE approval, the medical device may only be used after Institutional Review Board ("IRB") approval has been obtained.
We have a deep pipeline of new systems that are currently under development, including the following projects. 3P™ | Pediatric Plating Platform In 2022, we began development of a new plate and screw platform, called 3P, to modernize and revolutionize trauma and deformity treatment in both the upper and lower extremity.
We have a deep pipeline of new systems that are currently under development, including the following projects. 17 3P™ | Pediatric Plating Platform In 2022, we began development of a new plate and screw platform, called 3P, to modernize and revolutionize trauma and deformity treatment in both the upper and lower extremity.
To obtain 510(k) clearance, we must submit to the FDA a 510k submission demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market. A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device).
To obtain 510(k) clearance, we must submit to the FDA a 510(k) submission demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market. A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device).
A claim includes “any request or demand” for money or property presented to the U.S. government. The federal civil False Claims Act also applies to false submissions that 27 cause the government to be paid less than the amount to which it is entitled, such as a rebate.
A claim includes “any request or demand” for money or property presented to the U.S. government. The federal civil False Claims Act also applies to false submissions that cause the government to be paid less than the amount to which it is entitled, such as a rebate.
These projects encompass both educational and software as a medical device type offerings leveraging our new Playbook product offering. 18 External Fixation Systems We continue to invest in strengthening our external fixation portfolio, with software improvements launched in 2023 and hardware line extensions in 2024.
These projects encompass both educational and software as a medical device type offerings leveraging our new Playbook product offering. External Fixation Systems We continue to invest in strengthening our external fixation portfolio, with software improvements launched in 2023 and hardware line extensions in 2024.
On March 12, 2014, the European Parliament formally passed a revised proposal of the Regulation, and the Council of the European Union published its general approach on June 15, 2015. Trilogue discussion between the European Commission, European Parliament and Council of the European Union have concluded and the GDPR came into force May 25, 2018.
On March 12, 2014, the European Parliament formally passed a revised proposal of the Regulation, and the Council of the European Union published its general approach on June 15, 2015. Trilogue discussion between the European 29 Commission, European Parliament and Council of the European Union have concluded and the GDPR came into force May 25, 2018.
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.
Seasonality of our Products 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.
Trauma and deformity procedures also include osteotomies, or surgical cutting 12 of the bone, the use of metal implants or external fixation to correct angular bone deformities or limb length discrepancies. Trauma and deformity also includes specialized bracing products which are non-surgical in nature.
Trauma and deformity procedures also include osteotomies, or surgical cutting of the bone, the use of metal implants or external fixation to correct angular bone deformities or limb length discrepancies. Trauma and deformity also includes specialized bracing products which are non-surgical in nature.
High-Volume Children's Hospitals Target Market $375 million $260 million $70 million $500 million $80 million $300 million In the future, we expect to expand our market opportunity by addressing additional categories of the pediatric orthopedic market, such as craniomaxilloacial, upper extremity, pediatric orthopedic oncology, pelvis, and other sports-related injuries along with numerous specialty bracing categories. 13 Our Exclusive Focus on Pediatric Orthopedic Surgery and Bracing We believe we are the only company that has committed the resources necessary to create a global sales and product development infrastructure focused on the pediatric orthopedic implant and bracing market.
High-Volume Children's Hospitals Target Market $375 million $260 million $70 million $500 million $80 million $300 million In the future, we expect to expand our market opportunity by addressing additional categories of the pediatric orthopedic market, such as craniomaxillofacial, upper extremity, pediatric orthopedic oncology, pelvis, and other sports-related injuries along with numerous specialty bracing categories. 13 Our Exclusive Focus on Pediatric Orthopedic Surgery and Bracing We believe we are the only company that has committed the resources necessary to create a global sales and product development infrastructure focused on the pediatric orthopedic implant and bracing market.
We also partner with over 40 charitable organizations, including medical missions, and other organizations which advance health, wellness and education initiatives for kids - as well as various civic organizations that advance 21 the communities where we work and live.
We also partner with over 40 charitable organizations, including medical missions, and other organizations which advance health, wellness and education initiatives for kids - as well as various civic organizations that advance the communities where we work and live.
To receive payment, healthcare practitioners must submit claims to insurers using these codes for payment for medical services. CPT codes are assigned, maintained and annually updated by the American Medical Association and its CPT Editorial Board.
To receive payment, healthcare 31 practitioners must submit claims to insurers using these codes for payment for medical services. CPT codes are assigned, maintained and annually updated by the American Medical Association and its CPT Editorial Board.
These systems will provide surgeons 17 unparalleled coverage for all plating indications, standardized implants and instruments to improve surgical workflow and inventory efficiency, and novel implants to address currently unmet needs.
These systems will provide surgeons unparalleled coverage for all plating indications, standardized implants and instruments to improve surgical workflow and inventory efficiency, and novel implants to address currently unmet needs.
Since inception we have impacted the lives of over 1,140,000 children, when including those served by our acquired companies. We believe we should continue to expand our social impact, create an inclusive culture, and ensure good corporate governance practices. • The Company and its associates regularly participate in numerous philanthropic causes important to our local communities.
Since inception we have impacted the lives of over 1,291,000 children, when including those served by our acquired companies. We believe we should continue to expand our social impact, create an inclusive culture, and ensure good corporate governance practices. • The Company and its associates regularly participate in numerous philanthropic causes important to our local communities.
These teams meet frequently and make decisions regarding new products, inventory builds and promotional activities, thus enhancing our agility and the speed of decision making. We believe this culture allows us to attract and retain talented, high performing professionals. For eight years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana.
These teams meet frequently and make decisions regarding new products, inventory builds and promotional activities, thus enhancing our agility and the speed of decision making. We believe this culture allows us to attract and retain talented, high performing professionals. For nine years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana.
These laws may limit or restrict the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals.
These laws may limit or restrict the advertising and promotion of our products to the general public and may impose 28 limitations on our promotional activities with healthcare professionals.
In 2024, we conducted numerous training workshops focused on fellows and surgeons early in their careers. We believe our commitment to clinical education advances pediatric orthopedic surgery and increases our account presence, while promoting familiarity with our products and loyalty among fellows and young surgeons. We aspire to be viewed as the partner of pediatric orthopedic surgeons around the world.
In 2025, we conducted numerous training workshops focused on fellows and surgeons early in their careers. We believe our commitment to clinical education advances pediatric orthopedic surgery and increases our account presence, while promoting familiarity with our products and loyalty among fellows and young surgeons. We aspire to be viewed as the partner of pediatric orthopedic surgeons around the world.
Our dedication to the pediatric orthopedic community is evidenced by our leading support of the five major pediatric orthopedic surgical societies that conduct pediatric clinical education and research. In 2024, we conducted numerous training workshops focused on fellows and surgeons early in their careers. We are a major sponsor of CME courses in pediatric spine and pediatric orthopedics.
Our dedication to the pediatric orthopedic community is evidenced by our leading support of the five major pediatric orthopedic surgical societies that conduct pediatric clinical education and research. In 2025, we conducted numerous training workshops focused on fellows and surgeons early in their careers. We are a major sponsor of CME courses in pediatric spine and pediatric orthopedics.
We estimate that over 62% of U.S. pediatric trauma and deformity and sco liosis procedures in 2015 were performed in approximately 300 hospitals. We believe that this high concentration of procedures and our focused sales organization will enable us to address the pediatric orthopedic surgery market in a capital-efficient manner.
We estimate tha t over 62% of U.S. pediatric trauma and deformity and sco liosis procedures in 2015 were performed in approximately 300 hospitals. We believe that this high concentration of procedures and our focused sales organization will enable us to address the pediatric orthopedic surgery market in a capital-efficient manner.
These surgical systems are summarized below. 16 Trauma and Deformity Correction Our trauma and deformity correction product line includes more than 7,000 implants, instruments, external fixation components, specialized braces and bone graft substitutes for the femur, tibia, pelvis, upper and lower extremities as well as providing clinical O&P services.
These surgical systems are summarized below. 16 Trauma and Deformity Correction Our trauma and deformity correction product line includes more than 14,000 implants, instruments, external fixation components, specialized braces and bone graft substitutes for the femur, tibia, pelvis, upper and lower extremities as well as providing clinical O&P services.
This system will leverage existing instrumentation where possible and we anticipate having the most comprehensive small canal offering available on the market at launch. GIRO™ Growth Modulation System The GIRO™ is a tether device that will be fully launched in 2025, intended for guided growth and deformity correction.
This system will leverage existing instrumentation where possible and we anticipate having the most comprehensive small canal offering available on the market at launch. GIRO™ Growth Modulation System The GIRO™ is a tether device that was fully launched in 2025, intended for guided growth and deformity correction.
In 2024, there were more than 1,500 me m bers of Pediatric Orthopaedic Society of North America (POSNA), as compared to approximately 33,400 practicing orthopedic surgeons in the United States focused on the treatment of adults. The number of fellowships in pediatric orthopedics continues to grow.
In 2025, there were more than 1,500 me m bers of Pediatric Orthopaedic Society of North America (POSNA), as compared to approximately 33,400 practicing orthopedic surgeons in the United States focused on the treatment of adults. The number of fellowships in pediatric orthopedics continues to grow.
We are a major sponsor of continuing medical education, or CME, courses in pediatric spine and pediatric orthopedics, which are focused on fellows and young surgeons. In 2024, we conducted numerous training workshops. We believe these workshops help surgeons recognize our commitment to their field.
We are a major sponsor of continuing medical education, or CME, courses in pediatric spine and pediatric orthopedics, which are focused on fellows and young surgeons. In 2025, we conducted numerous training workshops. We believe these workshops help surgeons recognize our commitment to their field.
Our Product Portfolio We have developed a comprehensive portfolio of implants, instruments and specialty bracing solutions specifically designed to treat children with orthopedic conditions within the three categories of the pediatric orthopedic market that we currently serve. We currently market over 75 surgical and specialized bracing systems that address pediatric trauma and deformity correction, scoliosis and sports medicine/other procedures.
Our Product Portfolio We have developed a comprehensive portfolio of implants, instruments and specialty bracing solutions specifically designed to treat children with orthopedic conditions within the three categories of the pediatric orthopedic market that we currently serve. We currently market 87 surgical and specialized bracing systems that address pediatric trauma and deformity correction, scoliosis and sports medicine/other procedures.
In addition to these organizations, we support eight pediatric orthopedic fellowships. Our support of these organizations and fellowships demonstrates our commitment to the clinical training and research they sponsor. We believe this support enhances our reputation as the category leader in pediatric orthopedics.
In addition to these organizations, we support several pediatric orthopedic fellowships. Our support of these organizations and fellowships demonstrates our commitment to the clinical training and research they sponsor. We believe this support enhances our reputation as the category leader in pediatric orthopedics.
Boston O&P has developed and manufactures pediatric orthotic and prosthetic devices, including non-surgical scoliosis treatment options, and provides related clinical services. In 2024, Boston O&P completed an acquisition of substantially all of the assets, including inventory, related to orthotic and prosthetic device clinics located in Virginia and Maryland.
Boston O&P has developed and manufactures pediatric orthotic and prosthetic devices, including non-surgical scoliosis treatment options, and provides related clinical services. In 2024, Boston O&P completed acquisitions of substantially all of the assets, including inventory, related to orthotic and prosthetic device clinics located in Virginia and Maryland.
We address this unmet market need and sell the broadest product offering specifically designed for children with orthopedic conditions. We currently market over 75 surgical and 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 procedures.
We address this unmet market need and sell the broadest product offering specifically designed for children with orthopedic conditions. We currently market 87 surgical and 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 procedures.
The system is designed exclusively for pediatric patients and their surgeons, including innovative implant and instrument designs with an advanced digital platform to optimize the procedure. We expect to launch this system in the first half of 2026.
The system is designed exclusively for pediatric patients and their surgeons, including innovative implant and instrument designs with an advanced digital platform to optimize the procedure. We expect to launch this system in the fourth quarter of 2026.
We also partner with over 40 charitable organizations that provide pediatric orthopedic care around the world.
We also partner with over 45 charitable organizations that provide pediatric orthopedic care around the world.
We have developed a comprehensive portfolio of implants, instruments and specialty bracing products specifically designed to treat children with orthopedic conditions. In 2024, we estimate that our products were used to help approxima tely 138,000 chil dren, and over 1,140,000 since inception, when including those served by our acquired companies.
We have developed a comprehensive portfolio of implants, instruments and specialty bracing products specifically designed to treat children with orthopedic conditions. In 2025, we estimate that our products were used to help approxima tely 151,000 chil dren, and over 1,291,000 since inception, when including those served by our acquired companies.
Increasingly, these sales agencies are making us the anchor line in their businesses or representing us exclusively. Sales to customers from such agencies represen ted 59% of our global revenue in 2024 and 66% in 2023.
Increasingly, these sales agencies are making us the anchor line in their businesses or representing us exclusively. Sales to customers from such agencies represen ted 56% of our global revenue in 2025 and 59% in 2024.
Scoliosis Our scoliosis product category includes our RESPONSE TM systems for treating spinal deformity in children, the BandLoc TM 5.5mm/6.0mm sub-laminar banding system, FIREFLY ® Pedicle Screw Navigation Guides, 7D Flash TM Naviation image guidance system and ApiFix ® Mid-C System as well as providing clinical O&P services.
Scoliosis Our scoliosis product category includes our RESPONSE TM systems for treating spinal deformity in children, the BandLoc TM 5.5mm/6.0mm sub-laminar banding system, FIREFLY ® Pedicle Screw Navigation Guides, 7D Flash TM Navigation image guidance system, VerteGlide TM , ApiFix ® Mid-C System, the Boston 3D scoliosis brace, as well as providing clinical O&P services.
Increasingly, these sales agencies are making us the anchor line in their businesses or representing us exclusively. Sales from such sales agencies represent ed 59% and 66% of our global revenue in 2024 and 2023, respectively.
Increasingly, these sales agencies are making us the anchor line in their businesses or representing us exclusively. Sales from such sales agencies represent ed 56% and 59% of our global revenue in 2025 and 2024, respectively.
In 2025 we will launch a new Titanium HA Pin offering to support both Orthex ® and Drive systems, designed to improve fatigue life and increase flexibility to promote rapid bone healing.
In 2025, we had a limited launch of a new Titanium HA Pin offering to support both Orthex ® and Drive systems, designed to improve fatigue life and increase flexibility to promote rapid bone healing.
The discovery of previously unknown problems with any of our products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.
The discovery of previously unknown problems with any of our products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls. 24 Enforcement Powers The FDA has broad regulatory enforcement powers.
Development of Surgical Workflow Optimization Software We have a number of initiatives underway involving the development of pre-operative planning and intraoperative workflow software to assist surgeons in the treatment of spinal, trauma, and deformity correction conditions as well as the utilization of the Company's product solutions for these conditions.
Development of Surgical Workflow Optimization Software We have a number of initiatives underway involving the development of pre-operative planning, which leverages machine learning and artificial intelligence, and intraoperative workflow software to assist surgeons in the treatment of spinal, trauma, and deformity correction conditions as well as the utilization of the Company's product solutions for these conditions.
As of December 31, 2024, 13 of our U.S. issued patents have pending continuation or divisional applications in process which may provide additional intellectual property protection if issued as U.S. patents. Our issued U.S. patents expire between 2025 and 2043, subject to payment of required maintenance fees, annuities and other 20 charges.
As of December 31, 2025, 18 of our U.S. issued patents have pending continuation or divisional applications in process which may provide additional intellectual property protection if issued as U.S. patents. Our issued U.S. patents expire between 2026 and 2044, subject to payment of required maintenance fees, annuities and other charges.
Outside of the United States, our sales organization consisted o f a network of more than 70 independent stocking distributors, 14 indepen dent sales agencies and multiple direct sales representatives. We sell our products in over 75 countries outside of the United States.
Outside of the United States, our sales organization consisted o f a network of more than 80 independent stocking distributors, over 40 indepen dent sales agencies and several direct sales representatives. We sell our products in over 75 countries outside of the United States.
As of December 31, 2024, we owned 42 U.S. trademark registrations and 10 pending U.S. trademark applications, as well as 88 registrations in other jurisdictions worldwide. We also rely upon trade secrets, know-how and continuing technological innovation, and may in the future rely upon licensing opportunities, to develop and maintain our competitive position.
As of December 31, 2025, we owned 40 U.S. trademark registrations and 12 pending U.S. trademark applications, as well as 100 registrations in other jurisdictions worldwide. We also rely upon trade secrets, know-how and continuing technological innovation, and may in the future rely upon licensing opportunities, to develop and maintain our competitive position.
Regulations in the United Kingdom Effective January 31, 2020, the United Kingdom of Great Britain and Northern Ireland, or the UK, withdrew from the European Union, or EU. New regulations specific to the UK went into effect beginning January 1, 2021 with a transitional period through June 30, 2025.
We received our MDR certification on December 10, 2025. Regulations in the United Kingdom Effective January 31, 2020, the United Kingdom of Great Britain and Northern Ireland, or the UK, withdrew from the European Union, or EU. New regulations specific to the UK went into effect beginning January 1, 2021 with a transitional period through June 30, 2025.
Our global revenue from this category for the year ended December 31, 2024 was $145.1 million, an increase of 36% over the prior year, and represented 71% of total revenue. Global revenue from this category for the years ended December 31, 2023 and 2022 was $106.8 million and $85.1 million or 72% and 70% of total revenue, respectively.
Our global revenue from this category for the year ended December 31, 2025 was $166.3 million, an increase of 15% over the prior year, and represented 70% of total revenue. Global revenue from this category for the years ended December 31, 2024 and 2023 was $145.1 million and $106.8 million or 71% and 72% of total revenue, respectively.
We have grown our revenue from approximately $10.2 million for the year ended December 31, 2011 to $204.7 million for the year ended December 31, 2024. The compound annual growth rate for the Company from 2011 through 2024 is 25.9%. This growth was partially obtained through strategic acquisitions.
We have grown our revenue from approximately $10.2 million for the year ended December 31, 2011 to $236.3 million for the year ended December 31, 2025. The compound annual growth rate for the Company from 2011 through 2025 is 25.2%. This growth was partially obtained through strategic acquisitions.
Outside of the United States, we work with a network of more than 70 independent stocking distributors, 14 independent sales agencies and multiple direct sales representatives. We sell our products in over 75 countries outside of the United States.
Outside of the United States, we work with a network of more than 80 independent stocking distributors, over 40 independent sales agencies and several direct sales representatives. We sell our products in over 75 countries outside of the United States.
We have developed intensive training programs for our global sales organization. We expect our sales agencies and distributors to continue to deepen their knowledge of pediatric clinical conditions, surgical procedures and our products, thus increasing their effectiveness. Our domestic and international sales representatives are usually present in the operating room during surgeries in which our products are used.
We expect our sales agencies and distributors to continue to deepen their knowledge of pediatric clinical conditions, surgical procedures and our products, thus increasing their effectiveness. Our domestic and international sales representatives are usually present in the operating room during surgeries in which our products are used.
We currently market over 75 surgical and specialized bracing systems, which address pediatric trauma and deformity, scoliosis and sports medicine procedures.
We currently market 87 surgical and specialized bracing systems, which address pediatric trauma and deformity, scoliosis and sports medicine/other procedures.
Our global revenue from this category for the year ended December 31, 2024 was $55.2 million, or 27% of total revenue, which represented an increase of 45% over the prior year. Global revenue from this category for the years ended December 31, 2023 and 2022 was $37.9 million and $33.4 million or 25% and 27% of total revenue, respectively.
Our global revenue from this category for the year ended December 31, 2025 was $66.0 million, or 28% of total revenue, which represented an increase of 20% over the prior year. Global revenue from this category for the years ended December 31, 2024 and 2023 was $55.2 million and $37.9 million or 27% and 25% of total revenue, respectively.
Pediatric Nailing Platform | Tibia We anticipate a continuation of our full-scale launch in 2025 for our recently introduced innovative Pediatric Nailing Platform | Tibia, that will use a similar instrument platform to the Pediatric Nailing Platform | Femur system, which was introduced in 2018. This new to the market system will treat deformities and traumatic injuries of the tibia.
Pediatric Nailing Platform | Tibia We continued our full-scale launch in 2025 for our innovative Pediatric Nailing Platform | Tibia, that uses a similar instrument platform to the Pediatric Nailing Platform | Femur system, which was introduced in 2018. This new to the market system is designed to treat deformities and traumatic injuries of the tibia.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of actions, which may result in any of the following sanctions: • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; • recalls, withdrawals, or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying requests for 510(k) clearance or PMA approvals of new products or modified products; • withdrawing 510(k) clearances or PMA approvals that have already been granted; • refusal to grant export or import approvals for our products; or • criminal prosecution. 24 Regulation of Medical Devices in the EEA All medical devices placed on the market in the EEA must meet the relevant essential requirements laid down in Annex I of Directive 93/42/EEC concerning medical devices, or the Medical Devices Directive ("MDD").
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of actions, which may result in any of the following sanctions: • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; • recalls, withdrawals, or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying requests for 510(k) clearance or PMA approvals of new products or modified products; • withdrawing 510(k) clearances or PMA approvals that have already been granted; • refusal to grant export or import approvals for our products; or • criminal prosecution.
The manufacturer may then apply the UKCA Mark to the device, which allows the device to be placed on the market throughout the UK. Once the product has been placed on the market in the UK, the manufacturer must comply with requirements for reporting incidents and field safety corrective actions associated with the medical device.
The manufacturer has applied the UKCA Mark to the device, which allows the device to be placed on the market throughout the UK. Ongoing, the manufacturer must comply with requirements for reporting incidents and field safety corrective actions associated with the medical device.
Our global sales management organization leads a network of sales agencies, stocking distributors as well as direct sales representatives. As of December 31, 2024, our U.S. sales organization consisted of multiple direct sales representatives as well as over 40 independent sales agencies employing over 230 focused sales representatives.
Our global sales management organization leads a network of sales agencies, stocking distributors as well as direct sales representatives. As of December 31, 2025, our U.S. sales organization consisted of several direct sales representatives as well as over 30 independent sales agencies employing 232 focused sales representatives.
Our global sales management organization leads a network of sales agencies, stocking distributors as well as direct sales representatives. As of December 31, 2024, our U.S. sales organization consisted of multiple direct sales representatives as well as over 40 independent sales agencies employing over 230 focused sales representatives.
Our global sales management organization leads a network of sales agencies, stocking distributors as well as direct sales representatives. As of December 31, 2025, our U.S. sales organization consisted of several direct sales representatives as well as over 30 independent sales agencies employing over 232 focused sales representatives.
We expect a beta launch of this system in 2025 and a full-scale launch in 2026. Next Generation Scoliosis Fusion System We are in final development of our next generation scoliosis fusion system, which will include the ultimate surgical experience for pediatric spinal fusion.
In 2025, we received regulatory clearance from the FDA and in the third quarter had a beta launch of this system. We expect a full-scale launch in 2026. Next Generation Scoliosis Fusion System We are in final development of our next generation scoliosis fusion system, which will provide the ultimate surgical experience for pediatric spinal fusion.
As of December 31, 2024, the Company had consolidated total assets of $473.2 million, consolidated total liabilities of $118.6 million and stockholders’ equity of $354.6 million. As of December 31, 2024, the Company and its subsidiaries had 562 full-time equivalent employees. Social Impact OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions.
As of December 31, 2025, the Company had consolidated total assets of $508.6 million, consolidated total liabilities of $162.0 million and stockholders’ equity of $346.6 million. As of December 31, 2025, the Company and its subsidiaries had 602 full-time equivalent employees. Social Impact OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions.
Those filings are accessible on the SEC’s website at http://www.sec.gov . 9 The Company We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis and sports medicine product offering to the pediatric orthopedic market in order to improve the lives of children with orthopedic conditions.
The Company We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis and sports medicine/other product offering to the pediatric orthopedic market in order to improve the lives of children with orthopedic conditions.
According to Life Science Intelligence, Inc., in a study that we commissioned, approximately 29% of ACL reconstruction procedures completed in the United States in 2015 were in patients under the age of 18. The vast majority of these procedures were performed in ambulatory surgery centers. Sports medicine also includes specialized bracing products which are non-surgical in nature.
According to Life Science Intelligence, Inc., in a study that we commissioned, approximately 29% of ACL reconstruction procedures completed in the United States in 2015 were in patients under the age of 18. The vast majority of these procedures were performed in ambulatory surgery centers.
Additionally, during 2022, 2023 and 2024, we funded The Foundation for Advancing Pediatric Orthopaedics ("Foundation") as a 501(c)(3) public charity. The Foundation channels OrthoPediatrics' clinical education funding together with contributions from the general public to support non-commercial education programs and clinical research.
Additionally, during 2023, 2024 and 2025, we funded The Armstrong Children's Orthopedic Alliance (ACOA) ("Foundation") as a 501(c)(3) public charity. The Foundation channels OrthoPediatrics' clinical education funding together with contributions from the general public to support non-commercial education programs and clinical research.
Our global revenue from this category for the year ended December 31, 2024 was $4.4 million, or 2% of total revenue, which represented an increase of 11% over the prior year. Global revenue from this category for the years ended December 31, 2023 and 2022 was $4.0 million and $3.8 million or 3% and 3% of total revenue, respectively.
Our global revenue from this category for the year ended December 31, 2025 was $4.0 million, or 2% of total revenue, which represented a decrease of 10% from the prior year. Global revenue from this category for the years ended December 31, 2024 and 2023 was $4.4 million and $4.0 million or 2% and 3% of total revenue, respectively.
Outside of the United States, our sales organization consisted of a network of more than 70 independent stocking distributors, 14 independent sales agencies and multiple direct sales representatives.
Outside of the United States, our sales organization consisted of a network of more than 80 independent stocking distributors, over 40 independent sales agencies and several direct sales representatives.
There is also a directive specifically addressing Active Implantable Medical Devices (Directive 90/385/EEC). The most fundamental essential requirement is that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users and others.
The most fundamental essential requirement is that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users and others.
For the years ended December 31, 2024, 2023 and 2022, our revenue was $204.7 million, $148.7 million and $122.3 million, respectively. As of December 31, 2024, our accumulated deficit was $235.6 million.
For the years ended December 31, 2025, 2024 and 2023, our revenue was $236.3 million, $204.7 million and $148.7 million, respectively. As of December 31, 2025, our accumulated deficit was $275.2 million.
The term loan consists of an initial term loan of $25 million and access to a delayed draw term loan facility for an additional $25 million, subject to certain terms and conditions. Our largest investor is Squadron, a private investment firm based in Granby, Connecticut.
The term loan consists of an initial term loan of $25 million and a delayed draw term loan facility of an additional $25 million, withdrawn in June 2025. Our largest investor is Squadron, a private investment firm based in Granby, Connecticut.
We anticipate a limited launch of the first system, 3P Hip, in the second quarter of 2025, and of the next system, 3P Small/Mini, toward the end of 2025, followed by launches of additional systems throughout 2026-2028.
We completed a limited launch of the first system, 3P Hip, in the third quarter of 2025, and we expect the next system, 3P Small/Mini, to launch in the first half of 2026, followed by launches of additional systems throughout 2027-2028.
Our global sales management organization leads a network of sales agencies, stocking distributors as well as direct sales representatives. As of December 31, 2024, our U.S. sales organization consisted of multiple direct sales representatives as well as over 40 independent sales agencies employing over 230 sales representatives.
Our global sales management organization leads a network of sales agencies, stocking distributors as well as direct sales representatives. As of December 31, 2025, our U.S. sales organization consisted of several dire ct sales representatives as well as over 30 independent sales agencies employing over 232 sales representatives.
We have exclusive distribution rights to both of these complementary technologies, allowing for exclusive distribution in children's hospitals across the United States. Sports Medicine/Other Our sports medicine/other product category primarily includes our ACL, MPFL Reconstruction system and Telos as well as providing clinical O&P services.
We have exclusive distribution rights to both of these complementary technologies, allowing for exclusive distribution in children's hospitals across the United States. Sports Medicine/Other Our sports medicine/other product category primarily includes our ACL, MPFL Reconstruction system, MY01 perfusion sensing technology, iotaSOFT cochlear insertion robot, and Telos.
We collaborate with pediatric orthopedic surgeons in developing new surgical and bracing systems that improve the quality of care. We have an efficient product development process that relies upon teams of engineers, commercial personnel and surgeon advisors.
We collaborate with pediatric orthopedic surgeons in developing new surgical and bracing systems that improve the quality of care. We have an efficient product development process that relies upon teams of engineers, 10 commercial personnel and surgeon advisors. We believe our products are characterized by stable pricing, few reimbursement issues and attractive gross margins.
We believe our products are characterized by stable pricing, few reimbursement issues and attractive gross margins. 10 We believe clinical education is critical to advancing the field of pediatric orthopedics. Cumulatively, we are the largest financial contributor to the five primary pediatric orthopedic surgical societies that conduct pediatric clinical education and research.
We believe clinical education is critical to advancing the field of pediatric orthopedics. Cumulatively, we are the largest financial contributor to the five primary pediatric orthopedic surgical societies that conduct pediatric clinical education and research.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we fail to successfully commercialize our products or services, we may never receive a return on the substantial investments in product development, sales and marketing, regulatory compliance, manufacturing and quality assurance we have made, as well as further investments we intend to make, which may cause us to fail to generate revenue and gain economies of scale from such investments. 33 In addition, potential customers may decide not to purchase our products or services, or our customers may decide to cancel orders due to changes in treatment offerings, research and development plans, adverse clinical outcomes, difficulties in obtaining coverage or reimbursement for procedures using our products, difficulties obtaining approval from a hospital, complications with manufacturing or the utilization of technology developed by other parties, all of which are circumstances outside of our control.
Biggest changeIn addition, potential customers may decide not to purchase our products or services, or our customers may decide to cancel orders due to changes in treatment offerings, research and development plans, adverse clinical outcomes, difficulties in obtaining coverage or reimbursement for procedures using our products, difficulties obtaining approval from a hospital, complications with manufacturing or the utilization of technology developed by other parties, all of which are circumstances outside of our control.
The Notes may from time to time in the future be convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
The Convertible Notes may from time to time in the future be convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
State attorneys general can also bring a civil action to 59 enjoin a HIPAA violation or to obtain statutory damages on behalf of residents of his or her state; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and state laws related to insurance fraud in the case of claims involving private insurers.
State attorneys general can also bring a civil action to enjoin a HIPAA violation or to obtain statutory damages on behalf of residents of his or her state; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and state laws related to insurance fraud in the case of claims involving private insurers.
These provisions include: • a classified board of directors so that not all directors are elected at one time; • a prohibition on stockholder action through written consent; • no cumulative voting in the election of directors; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director; • a requirement that special meetings of stockholders be called only by the board of directors, the chairman of the board of directors, the chief executive officer or, in the absence of a chief executive officer, the president; • an advance notice requirement for stockholder proposals and nominations; • the authority of our board of directors to issue preferred stock with such terms as our board of directors may determine; and • a requirement of approval of not less than 66 2∕3% of all outstanding shares of our capital stock entitled to vote to amend any bylaws by stockholder action, or to amend specific provisions of our amended and restated certificate of incorporation.
These provisions include: • a classified board of directors so that not all directors are elected at one time; • a prohibition on stockholder action through written consent; • no cumulative voting in the election of directors; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director; 70 • a requirement that special meetings of stockholders be called only by the board of directors, the chairman of the board of directors, the chief executive officer or, in the absence of a chief executive officer, the president; • an advance notice requirement for stockholder proposals and nominations; • the authority of our board of directors to issue preferred stock with such terms as our board of directors may determine; and • a requirement of approval of not less than 66 2∕3% of all outstanding shares of our capital stock entitled to vote to amend any bylaws by stockholder action, or to amend specific provisions of our amended and restated certificate of incorporation.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: • any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our products; • any of our pending patent applications may issue as patents; • we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; • we were the first to make the inventions covered by each of our patents and pending patent applications; • we were the first to file patent applications for these inventions; • others will not develop similar or alternative technologies that do not infringe our patents; • any of our patents will be found to ultimately be valid and enforceable; 64 • any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; • we will develop additional proprietary technologies or products that are separately patentable; or • our commercial activities or products will not infringe upon the patents of others.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: • any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our products; • any of our pending patent applications may issue as patents; • we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; • we were the first to make the inventions covered by each of our patents and pending patent applications; • we were the first to file patent applications for these inventions; • others will not develop similar or alternative technologies that do not infringe our patents; • any of our patents will be found to ultimately be valid and enforceable; • any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; • we will develop additional proprietary technologies or products that are separately patentable; or • our commercial activities or products will not infringe upon the patents of others.
Any potential intellectual property litigation also could force us to do one or more of the following: 65 • stop making, selling, importing or using products or technologies that allegedly infringe the asserted intellectual property; • lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; incur significant legal expenses; • pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; • pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; • redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive or infeasible; and • attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have.
Any potential intellectual property litigation also could force us to do one or more of the following: • stop making, selling, importing or using products or technologies that allegedly infringe the asserted intellectual property; • lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; incur significant legal expenses; • pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; • pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; • redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive or infeasible; and • attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil penalties, including treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil penalties, including treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; 59 • the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters.
In addition, failure to comply with applicable QSR requirements or later discovery of previously unknown problems with our products or manufacturing processes could result in, among other things: warning letters or untitled letters; fines, injunctions or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of our products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA’s or Notified Body's refusal to grant pending or future clearances or approvals for our products; clinical holds; refusal to permit the import or export of our products; and criminal prosecution of us or our employees.
In addition, failure to comply with applicable QSR requirements or later discovery of previously unknown problems with our products or manufacturing processes could result in, among other things: warning letters or untitled letters; fines, injunctions or civil penalties; suspension or withdrawal of approvals or clearances; seizures or recalls of our products; total or partial suspension of production or distribution; 56 administrative or judicially imposed sanctions; the FDA’s or Notified Body's refusal to grant pending or future clearances or approvals for our products; clinical holds; refusal to permit the import or export of our products; and criminal prosecution of us or our employees.
Factors that could cause volatility in the market price of our common stock include, but are not limited to: • actual or anticipated fluctuations in our financial condition and operating results; 67 • actual or anticipated changes in our growth rate relative to our competitors; • commercial success and market acceptance of our products; • continued selling of shares by shareholders with large holdings; • success of our competitors in developing or commercializing products; • ability to commercialize or obtain regulatory approvals for our products, or delays in commercializing or obtaining regulatory approvals; • strategic transactions undertaken by us; • additions or departures of key personnel; • product liability claims; • prevailing economic conditions; • disputes concerning our intellectual property or other proprietary rights; • FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry; • healthcare reform measures in the United States; • sales of our common stock by our officers, directors or significant stockholders; • future sales or issuances of equity or debt securities by us; • business disruptions caused by earthquakes, fires or other natural disasters; • issuance of new or changed securities analysts’ reports or recommendations regarding us; and • short interest reports and or trading.
Factors that could cause volatility in the market price of our common stock include, but are not limited to: • actual or anticipated fluctuations in our financial condition and operating results; • actual or anticipated changes in our growth rate relative to our competitors; • commercial success and market acceptance of our products; • continued selling of shares by shareholders with large holdings; • success of our competitors in developing or commercializing products; • ability to commercialize or obtain regulatory approvals for our products, or delays in commercializing or obtaining regulatory approvals; • strategic transactions undertaken by us; • additions or departures of key personnel; • product liability claims; • prevailing economic conditions; • disputes concerning our intellectual property or other proprietary rights; • FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry; • healthcare reform measures in the United States; • sales of our common stock by our officers, directors or significant stockholders; • future sales or issuances of equity or debt securities by us; 68 • business disruptions caused by earthquakes, fires or other natural disasters; • issuance of new or changed securities analysts’ reports or recommendations regarding us; and • short interest reports and or trading.
Failure to comply with applicable regulations could jeopardize our ability to sell our products and result in enforcement actions such as: warning letters; fines; injunctions; civil penalties; termination of distribution; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future clearances or approvals; withdrawals or suspensions of current clearances or approvals, resulting in prohibitions on sales of our products; and in the most serious cases, criminal penalties.
Failure to comply with applicable regulations could jeopardize our ability to sell our products 53 and result in enforcement actions such as: warning letters; fines; injunctions; civil penalties; termination of distribution; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future clearances or approvals; withdrawals or suspensions of current clearances or approvals, resulting in prohibitions on sales of our products; and in the most serious cases, criminal penalties.
In the 510(k) clearance process, before a device may be marketed, the FDA must determine that a proposed device is “substantially equivalent” to a legally-marketed “predicate” device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (pre-amendments device), a device that was originally 53 on the U.S. market pursuant to an approved PMA and later down-classified, or a 510(k)-exempt device.
In the 510(k) clearance process, before a device may be marketed, the FDA must determine that a proposed device is “substantially equivalent” to a legally-marketed “predicate” device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (pre-amendments device), a device that was originally on the U.S. market pursuant to an approved PMA and later down-classified, or a 510(k)-exempt device.
In addition, we may face claims by third parties that our agreements with employees, contractors or consultants obligating them to assign intellectual property to us are ineffective or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such intellectual property.
In addition, we may face claims by third parties that our agreements with employees, contractors or consultants obligating them to assign intellectual property to us are ineffective or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding 67 intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such intellectual property.
Regardless of the merit or eventual outcome, product liability claims may result in: • decreased demand for our products; • injury to our reputation; • significant litigation costs; • substantial monetary awards to or costly settlements with patients; • product recalls; • material defense costs; • loss of revenue; • the inability to commercialize new products or product candidates; and • diversion of management attention from pursuing our business strategy.
Regardless of the merit or eventual outcome, product liability claims may result in: • decreased demand for our products; • injury to our reputation; • significant litigation costs; 52 • substantial monetary awards to or costly settlements with patients; • product recalls; • material defense costs; • loss of revenue; • the inability to commercialize new products or product candidates; and • diversion of management attention from pursuing our business strategy.
A major earthquake, fire or other disaster (such as a major flood, tsunami, volcanic eruption or terrorist attack) affecting our facilities, or those of our suppliers, could significantly disrupt our operations, and delay or prevent product shipment or installation during the time required to repair, rebuild or replace our suppliers’ damaged 52 manufacturing facilities; these delays could be lengthy and costly.
A major earthquake, fire or other disaster (such as a major flood, tsunami, volcanic eruption or terrorist attack) affecting our facilities, or those of our suppliers, could significantly disrupt our operations, and delay or prevent product shipment or installation during the time required to repair, rebuild or replace our suppliers’ damaged manufacturing facilities; these delays could be lengthy and costly.
For example, the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, provided for a 0.5% annual increase in payment rates under the Medicare Physician Fee Schedule, or PFS, through 2019, but no annual update from 2020 through 2025. 44 MACRA also introduced a Quality Payment Program, or QPP, for Medicare physicians, nurses and other “eligible clinicians” beginning in 2019.
For example, the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, provided for a 0.5% annual increase in payment rates under the Medicare Physician Fee Schedule, or PFS, through 2019, but no annual update from 2020 through 2025. MACRA also introduced a Quality Payment Program, or QPP, for Medicare physicians, nurses and other “eligible clinicians” beginning in 2019.
Such a breach could expose us to business interruption, lost revenue, ransom payments, remediation costs, liabilities to affected parties, cybersecurity protection costs, lost assets, litigation, regulatory scrutiny and actions, reputational harm, customer dissatisfaction, harm to our vendor relationships, or loss of market share. 51 We may be subject to various litigation claims and legal proceedings.
Such a breach could expose us to business interruption, lost revenue, ransom payments, remediation costs, liabilities to affected parties, cybersecurity protection costs, lost assets, litigation, regulatory scrutiny and actions, reputational harm, customer dissatisfaction, harm to our vendor relationships, or loss of market share. We may be subject to various litigation claims and legal proceedings.
We may experience ownership changes in the future as a result of 36 subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations.
We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations.
We do not carry insurance for all categories of risk that our business may encounter. Some of the policies we currently maintain include general liability, foreign liability, employee benefits liability, property, umbrella, workers’ compensation, products liability and directors’ and officers’ insurance. We do not know, however, if these policies 45 will provide us with adequate levels of coverage.
We do not carry insurance for all categories of risk that our business may encounter. Some of the policies we currently maintain include general liability, foreign liability, employee benefits liability, property, umbrella, workers’ compensation, products liability and directors’ and officers’ insurance. We do not know, however, if these policies will provide us with adequate levels of coverage.
To enforce compliance with the healthcare regulatory laws, certain enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business.
To enforce compliance with the healthcare regulatory laws, certain enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divert management’s attention 60 from the business.
We do not always conduct independent reviews of patents issued to third parties. In addition, patent applications in the United States and elsewhere can be pending for many years before issuance, or unintentionally abandoned patents or applications can be revived, so there may be applications of others now pending or recently revived patents of which we are unaware.
We do not always conduct independent reviews of patents issued to third parties. In addition, patent applications in the United States and elsewhere can be 65 pending for many years before issuance, or unintentionally abandoned patents or applications can be revived, so there may be applications of others now pending or recently revived patents of which we are unaware.
If 43 we are unable to adequately address our customers’ needs, it could negatively impact sales and market acceptance of our products, and we may not generate sufficient revenue to sustain profitability. As we launch new products and increase our marketing efforts with respect to existing products, we will need to expand the reach of our marketing and sales networks.
If we are unable to adequately address our customers’ needs, it could negatively impact sales and market acceptance of our products, and we may not generate sufficient revenue to sustain profitability. As we launch new products and increase our marketing efforts with respect to existing products, we will need to expand the reach of our marketing and sales networks.
If we are required to change contract manufacturers due to any termination of our relationships with our contract manufacturers, we may lose revenue, experience manufacturing delays, incur increased costs or otherwise suffer impairment to our customer relationships. We cannot guarantee that we will be 62 able to establish alternative manufacturing relationships on similar terms or without delay.
If we are required to change contract manufacturers due to any termination of our relationships with our contract manufacturers, we may lose revenue, experience manufacturing delays, incur increased costs or otherwise suffer impairment to our customer relationships. We cannot guarantee that we will be able to establish alternative manufacturing relationships on similar terms or without delay.
For example, these stockholders could attempt to delay or prevent a change in control of the company, even if 69 such a change in control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of the company or our assets and might affect the prevailing price of our common stock.
For example, these stockholders could attempt to delay or prevent a change in control of the company, even if such a change in control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of the company or our assets and might affect the prevailing price of our common stock.
An interruption in our commercial operations could occur if we encounter delays or difficulties in securing these products, and if we cannot obtain an acceptable substitute. If we are required to transition to new third-party suppliers for certain products, the use of products furnished by these alternative suppliers could require us to alter our operations.
An interruption in our commercial operations could occur if we encounter delays or difficulties in 63 securing these products, and if we cannot obtain an acceptable substitute. If we are required to transition to new third-party suppliers for certain products, the use of products furnished by these alternative suppliers could require us to alter our operations.
We believe there are only a limited number of individuals with the requisite skills to serve in many of our key positions, and the loss or incapacity of existing members of our executive management team could negatively impact our operations if we experience difficulties in hiring qualified successors.
We believe there are only a limited number of individuals 47 with the requisite skills to serve in many of our key positions, and the loss or incapacity of existing members of our executive management team could negatively impact our operations if we experience difficulties in hiring qualified successors.
If we do not obtain access to hospital facilities in a timely manner, or at all, via these VAC and purchase contract processes, or otherwise, or if we are unable to secure contracts in a timely manner, or at all, our operating costs will increase, our sales may decrease, and our operating results may be harmed.
If we do not obtain access to hospital facilities in a timely manner, or at all, via these VAC and purchase contract processes, or otherwise, or if we are unable to secure contracts in a timely manner, or at all, our operating costs will increase, our sales may 43 decrease, and our operating results may be harmed.
We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded if we were to prevail may not be commercially meaningful. In addition, proceedings to enforce or defend our patents could put our patents at risk of being invalidated, held unenforceable or interpreted narrowly.
We may not 64 prevail in any lawsuits that we initiate and the damages or other remedies awarded if we were to prevail may not be commercially meaningful. In addition, proceedings to enforce or defend our patents could put our patents at risk of being invalidated, held unenforceable or interpreted narrowly.
In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be 66 disclosed or misappropriated, or if any such information was independently developed by a competitor, our business and competitive position could be harmed.
In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, our business and competitive position could be harmed.
If one or more of these analysts cease coverage of the company or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price and trading volume to decline. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If one or more of these analysts cease coverage of the company or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price and trading volume to decline. 71 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In order to successfully commercialize our products and services, we will need to continue to expand our marketing efforts to develop new relationships and expand existing relationships with customers, to obtain regulatory clearances or approvals for our products in additional countries, to achieve and maintain compliance with all applicable regulatory requirements and to develop and commercialize our products and services with new features or for additional indications.
In order to successfully commercialize our products and services, we will need to continue to expand our marketing efforts to develop new relationships and expand existing relationships with customers, to obtain regulatory clearances or approvals for our products in additional countries, to achieve and maintain compliance 34 with all applicable regulatory requirements and to develop and commercialize our products and services with new features or for additional indications.
Product defects or other errors may occur in the future. Depending on the corrective action we take to redress a product’s deficiencies or defects, the regulatory authority may require, or we may decide, that we will need to obtain new approvals or clearances for the device before we may market or distribute the corrected device.
Product defects or other errors may occur in the future. Depending on the corrective action we take to redress a product’s deficiencies or defects, the regulatory authority may require, or we may decide, that we will need to obtain new approvals or clearances for the device 57 before we may market or distribute the corrected device.
Although we believe the safety procedures of our manufacturers for handling and disposing of these materials and waste products comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials.
Although we believe the safety procedures of our manufacturers for handling 61 and disposing of these materials and waste products comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other 70 employees.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
We determined that an ownership change occurred on May 30, 2014, resulting in a limitation of approximately $1.1 million per year being imposed on the use of our pre-change NOLs of approximately $45.2 million. A second ownership change occurred on December 11, 2018.
We determined that an ownership change occurred on May 30, 2014, resulting in a limitation of approximately $1.1 million per year being imposed on the use of our pre-change NOLs of 37 approximately $45.2 million. A second ownership change occurred on December 11, 2018.
Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business. 39 We may seek to grow our business through acquisitions or investments in new or complementary businesses, products or technologies, through the licensing of products or technologies from third parties or other strategic alliances, and the failure to manage acquisitions, investments, licenses or other strategic alliances, or the failure to integrate them with our existing business, could have a material adverse effect on our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.
Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business. 40 We may seek to grow our business through acquisitions or investments in new or complementary businesses, products or technologies, through the licensing of products or technologies from third parties or other strategic alliances, and the failure to manage acquisitions, investments, licenses or other strategic alliances, or the failure to integrate them with our existing business, could have a material adverse effect on our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.
If an independent sales agency or distributor were to depart and be retained by one of our competitors, we may be unable to prevent them from helping competitors solicit business from our existing customers, which could further adversely affect our sales.
If an independent sales agency 62 or distributor were to depart and be retained by one of our competitors, we may be unable to prevent them from helping competitors solicit business from our existing customers, which could further adversely affect our sales.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth and gross margins; • our rate of progress in establishing coverage and reimbursement arrangements with domestic and international commercial third-party payors and government payors; • the cost of expanding our operations and offerings, including our sales and marketing efforts; • our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our products; • the cost of research and development activities; • the effect of competing technological and market developments; • costs related to international expansion; and 34 • the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth and gross margins; • our rate of progress in establishing coverage and reimbursement arrangements with domestic and international commercial third-party payors and government payors; • the cost of expanding our operations and offerings, including our sales and marketing efforts; • our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our products; • the cost of research and development activities; 35 • the effect of competing technological and market developments; • costs related to international expansion; and • the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
Notwithstanding the DHHS’s concern about PODs, the number of PODs in the spinal surgery industry may continue to grow as economic pressures increase throughout the industry, hospitals, insurers and physicians search for ways to reduce costs and, in the case of the physicians, search for ways to increase their incomes.
Notwithstanding the DHHS’s concern about PODs, the number of PODs in the spinal surgery industry may continue to grow as economic 46 pressures increase throughout the industry, hospitals, insurers and physicians search for ways to reduce costs and, in the case of the physicians, search for ways to increase their incomes.
The loss of key personnel could disrupt our operations and negatively affect our ability to achieve strategic objectives. 47 • Costs and Financial Impact: The restructuring plan involves upfront costs, including severance payments, lease termination expenses, and other related costs.
The loss of key personnel could disrupt our operations and negatively affect our ability to achieve strategic objectives. • Costs and Financial Impact: The restructuring plan involves upfront costs, including severance payments, lease termination expenses, and other related costs.
For example, in response to industry and healthcare provider concerns regarding the predictability, consistency and rigor of the 510(k) clearance process, the FDA initiated an evaluation, and in January 2011, announced several proposed actions intended to reform the 510(k) clearance process.
For example, in response to industry and healthcare provider concerns regarding the predictability, consistency and rigor of the 510(k) clearance process, the FDA initiated an evaluation, and in 54 January 2011, announced several proposed actions intended to reform the 510(k) clearance process.
Although we have implemented a company policy requiring our employees and consultants to comply with the FCPA and similar laws, such policy may not be effective at preventing all potential FCPA or other violations.
Although we have implemented a company policy requiring our employees and consultants to 49 comply with the FCPA and similar laws, such policy may not be effective at preventing all potential FCPA or other violations.
If we are unable to address these risks and challenges effectively, our international operations may not be successful and our business could be harmed. 49 Climate change and related legislative and regulatory initiatives may materially affect our business and results of operations.
If we are unable to address these risks and challenges effectively, our international operations may not be successful and our business could be harmed. Climate change and related legislative and regulatory initiatives may materially affect our business and results of operations.
The FDA continues to review its 510(k) clearance process, which could result 55 in additional changes to regulatory requirements or guidance documents, which could increase the costs of compliance or restrict our ability to maintain current clearances.
The FDA continues to review its 510(k) clearance process, which could result in additional changes to regulatory requirements or guidance documents, which could increase the costs of compliance or restrict our ability to maintain current clearances.
Depending on the continued severity and ultimate duration of any widespread health emergency, the negative effects on our business, results of operations and financial condition could be material. 32 Unfavorable economic conditions could adversely affect our business, financial condition or results of operations.
Depending on the continued severity and ultimate duration of any widespread health emergency, the negative effects on our business, results of operations and financial condition could be material. Unfavorable economic conditions could adversely affect our business, financial condition or results of operations.
In addition, the existence of the Notes may encourage short selling by market participants because the conversion of the Notes could be used to satisfy short positions or anticipated conversion of the Notes into shares of our common stock could depress the price of our common stock.
In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions or anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our common stock.
We do not maintain key man life insurance with any of our employees. We have employment agreements with each of the members of our senior management; however, the existence of these employment agreement does not guarantee our retention of these employees for any period of time.
We do not maintain key man life insurance with any of our employees. We have employment agreements with each of the members of our senior management; however, the existence of these employment agreements does not guarantee our retention of these employees for any period of time.
Our international business operations are subject to a variety of risks, including: • difficulties in staffing and managing foreign and geographically dispersed operations; • having to comply with various U.S. and international laws, including export control laws and the U.S.
Our international business operations are subject to a variety of risks, including: 48 • difficulties in staffing and managing foreign and geographically dispersed operations; • having to comply with various U.S. and international laws, including export control laws and the U.S.
Any products not yet CE-marked or products with significant changes that require additional notified review are subject to the MDR as of May 2021, including the requirement of obtaining QSR certification under the MDR.
Any products not yet CE-marked or products with significant changes that require additional notified review are subject to the MDR as of May 2021, including the requirement 58 of obtaining QSR certification under the MDR.
Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic partnerships or acquire companies or products by using our shares of common stock as consideration.
Further, an inactive market may also impair our ability to raise capital by selling shares of our common 69 stock and may impair our ability to enter into strategic partnerships or acquire companies or products by using our shares of common stock as consideration.
Conversion of the Notes will dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock. The conversion of some or all of the Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Notes.
Conversion of the Convertible Notes will dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock. The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Convertible Notes.
Provisions in the indenture governing the Notes could delay or prevent an otherwise beneficial takeover of us. Certain provisions in the Notes and the indenture governing the Notes could make a third-party attempt to acquire us more difficult or expensive.
Provisions in the indenture governing the Convertible Notes could delay or prevent an otherwise beneficial takeover of us. Certain provisions in the Convertible Notes and the indenture governing the Convertible Notes could make a third-party attempt to acquire us more difficult or expensive.
If we fail to obtain any required licenses or make any necessary changes to our products or technologies, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products.
If we fail to obtain any required licenses or make any necessary 66 changes to our products or technologies, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products.
For example, if a takeover constitutes a fundamental change (as defined in the indenture governing the Notes), then noteholders will have the right to require us to repurchase their Notes for cash.
For example, if a takeover constitutes a fundamental change (as defined in the indenture governing the Convertible Notes), then noteholders will have the right to require us to repurchase their Convertible Notes for cash.
In addition, if a takeover constitutes a make-whole fundamental change (as defined in the indenture governing the Notes), then we may be required to temporarily increase the conversion rate.
In addition, if a takeover constitutes a make-whole fundamental change (as defined in the indenture governing the Convertible Notes), then we may be required to temporarily increase the conversion rate.
We may also be subject to patient information privacy and security regulation by both the federal government and the states and foreign 58 jurisdictions in which we conduct our business.
We may also be subject to patient information privacy and security regulation by both the federal government and the states and foreign jurisdictions in which we conduct our business.
On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2025 unless additional Congressional action is taken.
On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2026 unless additional Congressional action is taken.
Many of our current and potential competitors have substantially greater sales and financial resources than we do. In addition, these companies may have more established 38 distribution networks, entrenched relationships with orthopedic surgeons and greater experience in launching, marketing, distributing and selling products. In addition, new market participants continue to enter the orthopedic industry.
Many of our current and potential competitors have substantially greater sales and financial resources than we do. In addition, these companies may have more established 39 distribution networks, entrenched relationships with orthopedic surgeons and greater experience in launching, marketing, distributing and selling products. In addition, new market participants continue to enter the orthopedic industry.
We also cannot be certain that the businesses, products or technologies we acquire or invest in will become or remain profitable. 40 We may be unable to gain the support of leading hospitals and key opinion leaders, which may make it difficult to establish our products as a standard of care and achieve market acceptance.
We also cannot be certain that the businesses, products or technologies we acquire or invest in will become or remain profitable. 41 We may be unable to gain the support of leading hospitals and key opinion leaders, which may make it difficult to establish our products as a standard of care and achieve market acceptance.
Our products are also subject to similar state regulations and various laws and regulations of foreign countries governing manufacturing. Our third-party manufacturers or our own specialty brace manufacturing in Iowa may be found to be non-compliant with applicable regulations, which could cause delays in the delivery of our products.
Our products are also subject to similar state regulations and various laws and regulations of foreign countries governing manufacturing. Our third-party manufacturers or our own specialty brace manufacturing in Iowa, Boston, and the UK may be found to be non-compliant with applicable regulations, which could cause delays in the delivery of our products.
Our business involves the use of hazardous materials and we and our third-party manufacturers must comply with environmental laws and regulations, which may be expensive and restrict how we do business. The activities of our third-party manufacturers and our specialty brace manufacturing in Iowa may involve the controlled storage, use and disposal of hazardous materials.
Our business involves the use of hazardous materials and we and our third-party manufacturers must comply with environmental laws and regulations, which may be expensive and restrict how we do business. The activities of our third-party manufacturers and our specialty brace manufacturing in Iowa, Boston and the UK may involve the controlled storage, use and disposal of hazardous materials.
Additionally, these products and any future products might not be accepted by the orthopedic surgeons or the third-party payors who reimburse for the procedures performed with our products or may not 37 be successfully commercialized due to other factors.
Additionally, these products and any future products might not be accepted by the orthopedic surgeons or the third-party payors who reimburse for the procedures performed with our products or may not 38 be successfully commercialized due to other factors.
In such circumstances, we may not achieve expected sales, growth or profitability. 41 If orthopedic surgeons fail to safely and appropriately use our products, or if we are unable to train orthopedic surgeons on the safe and appropriate use of our products, we may be unable to achieve our expected growth.
In such circumstances, we may not achieve expected sales, growth or profitability. 42 If orthopedic surgeons fail to safely and appropriately use our products, or if we are unable to train orthopedic surgeons on the safe and appropriate use of our products, we may be unable to achieve our expected growth.
We market and sell our products i n over 75 co untries outside of the United States. For the years ended December 31, 2024, 2023 and 2022, approximately 21%, 25% and 24% of our revenue was attributable to our international customers, respectively. These customers are generally allowed to return products, and some are thinly capitalized.
We market and sell our products i n over 75 co untries outside of the United States. For the years ended December 31, 2025, 2024 and 2023, approximately 21%, 21% and 25% of our revenue was attributable to our international customers, respectively. These customers are generally allowed to return products, and some are thinly capitalized.
Among other ways in which it may impact our business, the Affordable Care Act: • established a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; • implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; and • expanded the eligibility criteria for Medicaid programs. 60 The Trump Administration and the U.S.
Among other ways in which it may impact our business, the Affordable Care Act: • established a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; • implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; and • expanded the eligibility criteria for Medicaid programs.
While we have no history of warranty claims, have no warranty reserves and had no warranty expense for the years ended December 31, 2024, 2023 or 2022, we bear the risk of warranty claims on the products we supply.
While we have no history of warranty claims, have no warranty reserves and had no warranty expense for the years ended December 31, 2025, 2024 or 2023, we bear the risk of warranty claims on the products we supply.
Our ability to market, distribute, and sell our products through our network of distributors and agencies has been adversely affected as a result of precautionary responses to the COVID-19 pandemic, including travel restrictions, suspension and shutdown orders and other measures intended to limit person-to-person contact.
Our ability to market, distribute, and sell our products through our network of distributors and agencies was adversely affected as a result of precautionary responses to the COVID-19 pandemic, including travel restrictions, suspension and shutdown orders and other measures intended to limit person-to-person contact.
Climate-related events may cause us to experience higher attrition, losses and additional costs to maintain our business operations. Furthermore, the global business community has increased its political and social awareness regarding climate change. The United States has entered into international agreements in an attempt to reduce global temperatures, including reentering the Paris Agreement. Additionally, the U.S.
Climate-related events may cause us to experience higher attrition, losses and additional costs to maintain our business operations. Furthermore, the global business community has increased its political and social awareness regarding climate change. The United States has entered into international agreements in an attempt to reduce global temperatures. Additionally, the U.S.
Compliance with these requirements is a prerequisite to be able to affix the UKCA Mark to our products, without which they cannot be sold or marketed in the UK. To demonstrate compliance with the essential requirements we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.
Compliance with these requirements is a prerequisite to be able to affix the CE Mark to our products, without which they cannot be sold or marketed in the EEA. To demonstrate compliance with the essential requirements we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.
Based on the beneficial ownership of our common stock as of December 31, 2024, our officers and directors, together with holders of 5% or more of our outstanding common stock and their respective affiliates, beneficially own approximately 32.5% of our outstanding common stock.
Based on the beneficial ownership of our common stock as of December 31, 2025, our officers and directors, together with holders of 5% or more of our outstanding common stock and their respective affiliates, beneficially own approximately 32.6% of our outstanding common stock.
Furthermore, our contract manufacturers could require us to move to another one of their production facilities. This could disrupt our ability to fulfill orders during a transition and impact our ability to utilize our current supply chain. In addition, we currently use Structure Medical, LLC and Vilex, LLC, Squadron-affiliated entities, as suppliers for some of the components of our products.
Furthermore, our contract manufacturers could require us to move to another one of their production facilities. This could disrupt our ability to fulfill orders during a transition and impact our ability to utilize our current supply chain. In addition, we currently use Structure Medical, LLC, a Squadron-affiliated entity, as a supplier for some of the components of our products.
In addition, holders of an aggregate of approximately 7,324,230 shares of our common stock will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.
In addition, holders of an aggregate of approximately 7,373,067 shares of our common stock will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.
If our available cash balances, borrowing capacity, net proceeds from prior stock offerings and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our products as a result of the risks described in this Annual Report on Form 10-K, we may seek to sell common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing.
If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our products as a result of the risks described in this Annual Report on Form 10-K, we may seek to sell common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing.
In the United States, our products are primarily sold by multiple direct sales representatives as well as a net work of nearly over 40 independent sales agencies. We may not be successful in maintaining strong relationships with our independent sales agencies.
In the United States, our products are primarily sold by several direct sales representatives as well as a net work of nearly over 30 independent sales agencies. We may not be successful in maintaining strong relationships with our independent sales agencies.
Sales through two of our independent sales agencies in the United States accounted fo r 9.8% and 8.8%, respectively, of our global revenue in 2024. Sales through two of our independent sales agencies in the United States accounted for 10.8% and 10.7%, respectively, of our global revenue in 2023.
Sales through two of our independent sales agencies in the United States accounted fo r 10.7% and 9.0%, respectively, of our global revenue in 2025. Sales through two of our independent sales agencies in the United States accounted for 9.8% and 8.8%, respectively, of our global revenue in 2024.
Foreign Corrupt Practices Act of 1977, or the FCPA, and anti-money laundering laws; • differing regulatory requirements for obtaining clearances or approvals to market our products; • changes in, or uncertainties relating to, foreign rules and regulations that may impact our ability to sell our products, perform services or repatriate profits to the United States; • tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell our products in certain foreign markets; • fluctuations in foreign currency exchange rates; • imposition of limitations on or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures; • differing multiple payor reimbursement regimes, government payors or patient self-pay systems; • imposition of differing labor laws and standards; • economic, political or social instability in foreign countries and regions; • an inability, or reduced ability, to protect our intellectual property, including any effect of compulsory licensing imposed by government action; and • availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us. 48 We expect we will continue expanding into other international markets; however, our expansion plans may not be realized, or if realized, may not be successful.
Foreign Corrupt Practices Act of 1977, or the FCPA, and anti-money laundering laws; • differing regulatory requirements for obtaining clearances or approvals to market our products; • changes in, or uncertainties relating to, foreign rules and regulations that may impact our ability to sell our products, perform services or repatriate profits to the United States; • tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell our products in certain foreign markets; • fluctuations in foreign currency exchange rates; • imposition of limitations on or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures; • differing multiple payor reimbursement regimes, government payors or patient self-pay systems; • imposition of differing labor laws and standards; • economic, political or social instability in foreign countries and regions; • an inability, or reduced ability, to protect our intellectual property, including any effect of compulsory licensing imposed by government action; and • availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us.
Sales through two of our independent sales agencies in the United States accounted for 11.4% and 10.7%, respectively, of our global revenue in 2022. If any such agenc y or distributor were to cease to sell and market our products, our sales could be adversely affected.
Sales through two of our independent sales agencies in the United States accounted for 10.8% and 10.7%, respectively, of our global revenue in 2023. If any such agenc y or distributor were to cease to sell and market our products, our sales could be adversely affected.
We have incurred losses in the past and may be unable to achieve or sustain profitability in the future. We incurred operating losses in all fiscal years since inception. We had operating losses of $35.0 million, $26.8 million and $25.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.
We have incurred losses in the past and may be unable to achieve or sustain profitability in the future. We incurred operating losses in all fiscal years since inception. We had operating losses of $39.2 million, $35.0 million and $26.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.
As a result of ongoing losses, as of December 31, 2024, we had an accumulated deficit of $235.6 million. We expect to continue to incur significant product development, clinical and regulatory, sales and marketing and other expenses. The operating losses we incur may fluctuate significantly from quarter to quarter.
As a result of ongoing losses, as of December 31, 2025, we had an accumulated deficit of $275.2 million. We expect to continue to incur significant product development, clinical and regulatory, sales and marketing and other expenses. The operating losses we incur may fluctuate significantly from quarter to quarter.
As of December 31, 2024, we had a total of 24,217,508 outstanding shares of common stock, all of which may be resold in the public market immediately without restriction, other than shares owned by our affiliates, which may be sold pursuant to Rule 144 under the Securities Act, subject to the conditions of Rule 144 including volume limitations.
As of December 31, 2025, we had a total of 25,093,792 outstanding shares of common stock, all of which may be resold in the public market immediately without restriction, other than shares owned by our affiliates, which may be sold pursuant to Rule 144 under the Securities Act, subject to the conditions of Rule 144 including volume limitations.
In order to sell our products in the UK (England, Wales and Scotland) our products must comply with the requirements of the UK Medical Device Regulations when they go into effect in 2025.
In order to sell our products in the UK (England, Wales and Scotland) our products must comply with the requirements of the UK Medical Device Regulations that went into effect in 2025.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe require third-party service providers with access to personal, confidential, or proprietary information to implement and maintain comprehensive cybersecurity practices consistent with applicable legal standards.
Biggest changeWe require third-party service providers with access to personal, confidential, or proprietary information to implement and maintain comprehensive cybersecurity practices consistent with applicable legal standards. We have implemented, and continue to evaluate and deploy, artificial intelligence–based information technology systems in certain aspects of our operations.
It assesses the experience of management personnel responsible for preventing, mitigating, detecting, and remediating any cyber incidents, including the VP of Information Technology as well as third-party 71 providers.
It assesses the experience of management personnel responsible for preventing, mitigating, detecting, and remediating any cyber incidents, including the VP of Information Technology as well as third-party providers.
Added
The use of such systems presents risks, including data security, privacy, regulatory compliance, and the potential for system errors or misuse, which could adversely affect our business, financial condition, or results of operations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, the Company maintains an office in Israel, warehouses in Germany and Australia and several flex office spaces in Europe, which allow us access to office space when needed. We believe our current facilities are suitable and adequate to meet our current needs.
Biggest changeWe also lease approximately 5,000 square fee of manufacturing and office space in the UK to support our bracing products. In addition, the Company maintains an office in each of Israel, Brazil, and the UK; warehouses in Germany, the Netherlands, Brazil, and Australia and several flex office spaces in Europe, which allow us access to office space when needed.
We may add new facilities or expand existing facilities as we add employees, and we believe suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations.
We believe our current facilities are suitable and adequate to meet our current needs. We may add new facilities or expand existing facilities as we add employees, and we believe suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. 72
Following our acquisition of Boston Brace in 2024, we own approximately 77,000 square feet of office and manufacturing space in Boston and lease approximately 13,700 of clinic space throughout the United States.
Following our acquisition of Boston Brace in 2024, we own and lease approximately 85,000 square feet of office and manufacturing space in Boston and around the United States and lease approximately 10,000 of clinic space throughout the United States and one clinic in Ireland.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFinancial Statements of Part II of this Annual Report on Form 10-K, which discussion is incorporated herein by reference. 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, results of operations or cash flows.
Biggest changeFinancial Statements of Part II of this Annual Report on Form 10-K, which discussion is incorporated herein by reference. 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, results of operations or cash flows. ITEM 4.
Added
MINE SAFETY DISCLOSURES Not applicable. 73 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSTOCK PERFORMANCE GRAPH The graph below compares the cumulative total stockholder return on our common stock with the cumulative total stockholder returns on the Nasdaq Composite Index, Russell 2000 Index and S&P Healthcare Equipment Select Industry Index for the periods indicated.
Biggest changeEQUITY COMPENSATION PLAN INFORMATION See Item 12 of Part III of this Annual Report on Form 10-K for information regarding Securities Authorized for Issuance Under Equity Compensation Plans. 74 STOCK PERFORMANCE GRAPH The graph below compares the cumulative total stockholder return on our common stock with the cumulative total stockholder returns on the Nasdaq Composite Index, Russell 2000 Index and S&P Healthcare Equipment Select Industry Index for the periods indicated.
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as part of Publicly announced Plans or Programs Maximum Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs October 2024 — $ — — $ 5,000,000 November 2024 — — — 5,000,000 December 2024 — — — 5,000,000 Total — $ — — $ 5,000,000 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.
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as part of Publicly announced Plans or Programs Maximum Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs October 2025 — $ — — $ 5,000,000 November 2025 — — — 5,000,000 December 2025 — — — 5,000,000 Total — $ — — $ 5,000,000 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.
The graph assumes that $100 was invested on December 31, 2019, in 73 our common stock and each of the indices and that all dividends, if any, were reinvested. No cash dividends have been declared on our common stock.
The graph assumes that $100 was invested on December 31, 2019, in our common stock and each of the indices and that all dividends, if any, were reinvested. No cash dividends have been declared on our common stock.
Stockholder returns over the indicated periods should not be considered indicative of future stockholder returns. *$100 invested on December 31, 2019 in stock or index, including reinvestment of dividends 2019 2020 2021 2022 2023 2024 Orthopediatrics Corp. $ 100 $ 88 $ 127 $ 85 $ 69 $ 49 NASDAQ Composite Index 100 142 174 113 167 216 Russell 2000 Index 100 118 135 106 122 134 S&P Healthcare Equipment Select Industry Index 100 132 139 103 100 104
Stockholder returns over the indicated periods should not be considered indicative of future stockholder returns. *$100 invested on December 31, 2020 in stock or index, including reinvestment of dividends 2020 2021 2022 2023 2024 2025 OrthoPediatrics Corp. $ 100 $ 127 $ 85 $ 69 $ 49 $ 38 NASDAQ Composite Index 100 174 113 167 216 260 Russell 2000 Index 100 135 106 122 134 150 S&P Healthcare Equipment Select Industry Index 100 139 103 100 104 103
HOLDERS OF RECORD At the close of business on March 1, 2025, the number of shares outstanding was 24,286,590. There were 684 stockholders of record on that date. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS The following table presents information relating to our purchases of equity securities during the three months ended December 31, 2024.
HOLDERS OF RECORD At the close of business on February 28, 2026, the number of shares outstanding was 25,278,787. There were 602 stockholders of record on that date. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS The following table presents information relating to our purchases of equity securities during the three months ended December 31, 2025.
Removed
RECENT SALES OF UNREGISTERED SECURITIES None, except as otherwise described in a Current Report on Form 8-K or a Quarterly Report on Form 10-Q filed with respect to the period covered by this Annual Report on Form 10-K.
Added
RECENT SALES OF UNREGISTERED SECURITIES On November 25, 2025, the Company issued 14,594 shares of its common stock, $0.00025 par value per share, in connection with the purchase of all the issued and outstanding share capital of a local distributor in Brazil. The shares were valued at $19.09, representing the closing share price per share on the date of issuance.
Removed
EQUITY COMPENSATION PLAN INFORMATION See Item 12 of Part III of this Annual Report on Form 10-K for information regarding Securities Authorized for Issuance Under Equity Compensation Plans.
Added
The issuance of common stock was made in reliance upon an exemption provided under Section 4(a)(2) of the Securities Act of 1933, as amended. See Note 3 - Business Combinations and Asset Acquisitions for further details regarding this acquisition.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+20 added−10 removed65 unchanged
Biggest changeOther Income (Expense) Our other income (expense) primarily consists of (i) fair value adjustments of contingent consideration associated with our ApiFix acquisition, (ii) accreted interest expense related to the acquisition installment payables, (iii) interest costs associated with our debt obligations, and (iv) loss on early debt extinguishment. 78 Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table sets forth our results of operations for the years ended December 31, 2024 and 2023: (in thousands, except percentages) 2024 2023 Increase (Decrease) % Increase (Decrease) Net revenue $ 204,727 $ 148,732 $ 55,995 38 % Cost of revenue 56,129 37,479 18,650 50 % Sales and marketing expenses 64,296 52,824 11,472 22 % General and administrative expenses 102,789 73,300 29,489 40 % Trademark impairment 1,836 985 851 86 % Restructuring expense 3,653 — 3,653 100 % Research and development expenses 11,034 10,895 139 1 % Other expenses (income), net 6,919 (5,439) 12,358 227 % Provision for income taxes (benefit) (4,107) (338) 3,769 1,115 % Net loss $ (37,822) $ (20,974) $ 16,848 80 % Revenue The following tables set forth our revenue by geography and product category for the years ended December 31, 2024 and 2023: Revenue by Geography Year Ended December 31, (in thousands, except percentages) 2024 % of revenue 2023 % of revenue U.S. $ 161,163 79% $ 111,010 75% International 43,564 21% 37,722 25% Total $ 204,727 100% $ 148,732 100% Revenue by Product Category Year Ended December 31, (in thousands, except percentages) 2024 % of revenue 2023 % of revenue Trauma and deformity $ 145,126 71% $ 106,781 72% Scoliosis 55,153 27% 37,933 25% Sports medicine/other 4,448 2% 4,018 3% Total $ 204,727 100% $ 148,732 100% Net revenue increased $56.0 million, or 38%, from $148.7 million for the year ended December 31, 2023 to $204.7 million for the year ended December 31, 2024.
Biggest changeOther (Income) Expense Our other income (expense) primarily consists of (i) fair value adjustments of contingent consideration associated with our ApiFix acquisition, (ii) accreted interest expense related to the acquisition installment payables, (iii) interest costs associated with our debt obligations, and (iv) loss on early debt extinguishment. 79 Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table sets forth our results of operations for the years ended December 31, 2025 and 2024: (in thousands, except percentages) 2025 2024 Increase (Decrease) % Increase (Decrease) Net revenue $ 236,348 $ 204,727 $ 31,621 15 % Cost of revenue 63,687 56,129 7,558 13 % Sales and marketing expenses 72,726 64,296 8,430 13 % General and administrative expenses 119,832 102,789 17,043 17 % Intangible asset impairment 4,638 1,836 2,802 153 % Restructuring expense 5,601 3,653 1,948 53 % Research and development expenses 9,102 11,034 (1,932) (18) % Other expenses (income), net (50) 6,919 (6,969) 101 % Provision for income taxes (benefit) 460 (4,107) (4,567) (111) % Net loss $ (39,648) $ (37,822) $ 1,826 5 % Revenue The following tables set forth our revenue by geography and product category for the years ended December 31, 2025 and 2024: Revenue by Geography Year Ended December 31, (in thousands, except percentages) 2025 % of revenue 2024 % of revenue U.S. $ 186,403 79% $ 161,163 79% International 49,945 21% 43,564 21% Total $ 236,348 100% $ 204,727 100% Revenue by Product Category Year Ended December 31, (in thousands, except percentages) 2025 % of revenue 2024 % of revenue Trauma and deformity $ 166,301 70% $ 145,126 71% Scoliosis 66,047 28% 55,153 27% Sports medicine/other 4,000 2% 4,448 2% Total $ 236,348 100% $ 204,727 100% Net revenue increased $31.6 million, or 15%, from $204.7 million for the year ended December 31, 2024 to $236.3 million for the year ended December 31, 2025.
In order to further enhance our operations in Europe, we established operating companies in the Netherlands and Germany in March 2019 and April 2022, respectively. In 2023 and 2024, we hired operating and sales representatives in Germany as salaried employees to better serve our customers and opened warehouses in Germany and Australia in 2024.
In order to further enhance our operations in Europe, we established operating companies in the Netherlands and Germany in March 2019 and April 2022, respectively. In 2023 and 2024, we hired operating and sales representatives in Germany as salaried employees to better serve our customers, and in 2024 we opened warehouses in Germany and Australia.
Goodwill is not amortized and is assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstances warrant such a review. The goodwill is considered to be impaired if we determine that the carrying value of either of our reporting units exceeds its respective fair value.
Goodwill is not amortized and is assessed for impairment using fair value measurement techniques on an annual 85 basis or more frequently if facts and circumstances warrant such a review. The goodwill is considered to be impaired if we determine that the carrying value of either of our reporting units exceeds its respective fair value.
The revenue generated in the United States from our bracing products is sold directly to orthopedic surgeons, orthotists, physical therapists or, at certain times, directly to the end customer. 75 We market and sell our products internationally in over 75 coun tries through independent stocking distributors and sales agencies.
The revenue generated in the United States from our bracing products is sold directly to orthopedic surgeons, orthotists, physical therapists or, at certain times, directly to the end customer. 76 We market and sell our products internationally in over 75 coun tries through independent stocking distributors and sales agencies.
All deferred tax assets were fully offset by a valuation allowance, with the exception of certain deferred tax liabilities in Canada in 2024, and Canada and Israel in 2023, and no income tax benefit has been recognized in continuing operations related to the NOLs which have valuation allowances.
All deferred tax assets were fully offset by a valuation allowance, with the exception of certain deferred tax liabilities in Canada in 2024 and 2025, and Canada and Israel in 2023, and no income tax benefit has been recognized in continuing operations related to the NOLs which have valuation allowances.
Overview We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis and sports medicine product offering to the pediatric orthopedic market in order to improve the lives of children with orthopedic conditions.
Overview We are the only global medical device company focused exclusively on providing a comprehensive trauma and deformity correction, scoliosis and sports medicine/other product offering to the pediatric orthopedic market in order to improve the lives of children with orthopedic conditions.
The typical season shows an increase in mid-September, peaks in late December and drops around mid-April; however, in 2022 the United States experienced a significant increase during the summer and fall months and in 2023 the United States experienced a significant increase in January and February as well as October through December months.
The 77 typical season shows an increase in mid-September, peaks in late December and drops around mid-April; however, in 2022 the United States experienced a significant increase during the summer and fall months and in 2023 the United States experienced a significant increase in January and February as well as October through December months.
We recognize the cost of revenue on our braces sold to other O&P clinics not owned by us when they are shipped and the cost of our O&P clinic services when the customized 77 brace has been fitted and accepted by the patient.
We recognize the cost of revenue on our braces sold to other O&P clinics not owned by us when they are shipped and the cost of our O&P clinic services when the customized brace has been fitted and accepted by the patient.
Our implants and instruments are manufactured to our specifications by third-party suppliers. We purchase the raw materials to make our specialized bracing products in our own facilities in Iowa and Boston. The majority of our implants and instruments are produced in the United States.
Our implants and instruments are manufactured to our specifications by third-party suppliers. We purchase the raw materials to make our specialized bracing products in our own facilities in Iowa, the UK, and Boston. The majority of our implants and instruments are produced in the United States.
We expect our cost of revenue to increase in absolute dollars due primarily to increased sales volume and changes in the geographic mix of our sales as our international operations tend to have a higher cost of revenue as a percentage of sales.
We expect our cost of revenue to increase in 78 absolute dollars due primarily to increased sales volume and changes in the geographic mix of our sales as our international operations tend to have a higher cost of revenue as a percentage of sales.
An additional Section 382 ownership change was deemed to have occurred following our follow-on offering in December 2018 resulting in a limitation of approximately $9.7 million per year.
An additional Section 382 ownership change was deemed to have occurred following our follow-on offering in December 2018 resulting in a limitation of approximately $9.7 million per year. 86
These revenue amounts are further revised as claims are adjudicated, which may result in additional disallowances, which are considered as part of the transaction price and recorded as a reduction of revenues. 83 Outside of the United States, we sell our products directly to hospitals through independent sales agencies or to independent stocking distributors.
These revenue amounts are further revised as claims are adjudicated, which may result in additional disallowances, which are considered as part of the transaction price and recorded as a reduction of revenues. 84 Outside of the United States, we sell our products directly to hospitals through independent sales agencies or to independent stocking distributors.
Revenue Recognition In the United States and in fourteen international markets, we primarily sell our implants, and to a much lesser extent our instruments, through third-party independent sales agencies to medical facilities and hospitals. For such sales, revenue and associated cost of revenue is recognized when a product is used in a procedure.
Revenue Recognition In the United States and in sixteen international markets, we primarily sell our implants, and to a much lesser extent our instruments, through third-party independent sales agencies to medical facilities and hospitals. For such sales, revenue and associated cost of revenue is recognized when a product is used in a procedure.
Sales of our bracing products are sold to stocking distributors, hospitals, orthotist and other medical professionals or directly to end customers. Revenue is recognized for braces generally when title passes upon shipment. Our O&P clinics recognize revenue when our custom manufactured braces or other products are fitted to and accepted by patients.
Sales of our bracing products are sold to stocking distributors, hospitals, orthotists and other medical professionals or directly to end customers. Revenue is recognized for braces generally when title passes upon shipment. Our O&P clinics recognize revenue when our custom manufactured braces or other products are fitted to and accepted by patients.
Each of our systems are designed to include implantable products that come in different sizes and shapes to accommodate the surgeon’s needs. Typically, a small number of the set components are used in each surgical procedure. Certain components within each set may become obsolete before other components based on the usage patterns.
Each of our systems are designed to include implantable products that come in different sizes and shapes to accommodate the surgeon’s needs. Typically, a small number of the set components are used in each surgical procedure. Certain components within each set may become excess before other components based on the usage patterns.
Revenue from these O&P clinic is primarily derived from contracts with third party payors. At, or subsequent to delivery, an invoice is issued to the third-party payor, which primarily consists of commercial insurance companies, Medicare, Medicaid, and private or patient pay individuals.
Revenue from these O&P clinics is primarily derived from contracts with third party payors. At, or subsequent to delivery, an invoice is issued to the third-party payor, which primarily consists of commercial insurance companies, Medicare, Medicaid, and private or patient pay individuals.
Net cash provided by financing activities in 2024 consisted of $73.5 million from the proceeds of the Credit Agreement with Braidwell and sale of our Convertible Notes, offset by $12.2 million of cash used to repay our term loan and revolving facility with MidCap, $3.4 million of debt issuance costs, and $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 provided by financing activities for 2024 consisted of $73.5 million from the proceeds of the Credit Agreement with Braidwell and sale of our Convertible 82 Notes, offset by $12.2 million of cash used to repay our term loan and revolving facility with MidCap, $3.4 million of debt issuance costs, $2.3 million related to the ApiFix fourth and final anniversary payment, and $1.3 million related to the MedTech first year anniversary payment.
Social Impact OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions. Since inception we have impacted the lives of ove r 1,140,000 children, when including those served by our acquired companies.
Social Impact OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions. Since inception we have impacted the lives of ove r 1,291,000 children, when including those served by our acquired companies.
Our long-term cash requirements under various contractual obligations and commitments include: • Debt obligations and interest payments - See Note 9 - Debt and Credit Arrangements in Item 8 for further detail regarding our debt and the timing of expected future principal and interest payments. 82 • Acquisition installment payables, net of current portion and contingent consideration - See Note 3 - Business Combinations and Asset Acquisitions in Item 8 for further detail regarding our obligations and timing of expected future payments. • Minimum purchase obligations - Purchase obligations include agreements for purchases of product in the normal course of business, including minimum quantities required pursuant to our license agreements.
Our long-term cash requirements under various contractual obligations and commitments include: • Debt obligations and interest payments - See Note 9 - Debt and Credit Arrangements in Item 8 for further detail regarding our debt and the timing of expected future principal and interest payments. 83 • Acquisition installment payables, net of current portion - See Note 3 - Business Combinations and Asset Acquisitions in Item 8 for further detail regarding our obligations and timing of expected future payments. • Minimum purchase obligations - Purchase obligations include agreements for purchases of product in the normal course of business, including minimum quantities required pursuant to our license agreements.
Generally, the distributors are allowed to return products, and some are thinly capitalized. Based on a history of reliable collections, we have concluded that a contract exists and revenue should be recognized when we transfer control of our products to the customer, generally when title passes upon shipment.
Generally, the distributors are allowed to return products. Based on a history of reliable collections, we have concluded that a contract exists and revenue should be recognized when we transfer control of our products to the customer, generally when title passes upon shipment.
We currently mar ket over 75 su rgical 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. We rely on a broad network of third parties to manufacture the components of our products, which we then inspect and package.
We currently mar ket 87 su rgical 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.
Subsequently, the company completed a quantitative analysis and concluded that the fair value was in fact less than the carrying value and impairment losses of $1.8 million, $1.0 million, and $3.6 million were recorded in 2024, 2023, and 2022, respectively.
Subsequently, the Company completed a quantitative analysis and concluded that the fair value was in fact less than the carrying value and impairment losses of $4.2 million, $1.8 million, $1.0 million and $3.6 million were recorded in 2025, 2024, 2023, and 2022, respectively.
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. We operate approximately 30 orthotic and prosthetic ("O&P") clinics in the United States serving children's hospitals in numerous states.
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. We operate over 45 orthotic and prosthetic ("O&P") clinics in the United States serving children's hospitals in numerous states.
For a discussion and analysis of the year ended December 31, 2023 compared to December 31, 2022, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 8, 2024.
For a discussion and analysis of the year ended December 31, 2024 compared to December 31, 2023, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 5, 2025.
This section discusses our results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
This section discusses our results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024.
We include insurance expenses in general and administrative expenses, as well as costs related to the maintenance and protection of our intellectual property portfolio. Our general and administrative expenses also include the depreciation of our capitalized instrument sets, which represented $8.4 million, $7.9 million and $6.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.
We include insurance expenses in general and administrative expenses, as well as costs related to the maintenance and protection of our intellectual property portfolio. Our general and administrative expenses also include the depreciation of our capitalized instrument sets, which represented $9.3 million, $8.4 million and $7.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.
See Note 17 - Commitments and Contingencies in Item 8 for further detail regarding these requirements. • Clinic acquisition promissory notes - See Note 17 - Commitments and Contingencies in Item 8 for further detail regarding our clinic acquisition promissory notes. • Lease Obligations - See Note 16 - Leases in Item 8 for further detail regarding our lease obligations. • Royalties - See Note 17 - Commitments and Contingencies in Item 8 for further detail regarding minimum royalty obligations.
See Note 17 - Commitments and Contingencies in Item 8 for further detail regarding these requirements. • Lease Obligations - See Note 16 - Leases in Item 8 for further detail regarding our lease obligations. • Royalties - See Note 17 - Commitments and Contingencies in Item 8 for further detail regarding minimum royalty obligations.
During 2024, 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.
During 2025, 2024, 2023, and 2022, we determined that a triggering event had occurred indicating it was more likely than not the fair value of certain trademark assets were less than the associated carrying value.
We sell our implants and instruments through a networ k of multiple direct sales representatives as well as nearly over 40 independent sales agencies employing approximately 230 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 performanc e bonuses.
We sell our implants and instruments through a networ k of several direct sales representatives as well as over 30 independent sales agencies employing approximately 232 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 performanc e bonuses.
We also invested $14.3 million in property and equipment, primarily instrument sets which were consigned in the United States and select international markets.
We also invested $11.1 million in property and equipment, primarily instrument sets which were consigned in the United States and select international markets.
We also invested $16.9 million in property and equipment, primarily instrument sets which were consigned in the United States and select international markets. Cash Provided By Financing Activities Net cash provided by financing activities was $53.1 million and $7.3 million for the years ended December 31, 2024 and 2023, respectively.
We also invested $14.3 million in property and equipment, primarily instrument sets which were consigned in the United States and select international markets. Cash Provided By Financing Activities Net cash provided by financing activities was $24.0 million and $53.1 million for the years ended December 31, 2025 and 2024, respectively.
The acquisition installment payable is related to the acquisition of MedTech. See Note 3 - Business Combinations and Asset Acquisitions in Item 8 for further detail of the acquisition and the acquisition installment payables.
See Note 3 - Business Combinations and Asset Acquisitions in Item 8 for further detail of the acquisition and the acquisition installment payables.
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 and changes in other operating assets and liabilities was $23.3 million and $32.2 million for the years ended December 31, 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 and changes in other operating assets and liabilities was $10.8 million and $22.9 million for the years ended December 31, 2025 and 2024, respectively.
Liquidity and Capital Resources We have incurred operating losses since inception and negative cash flows from operating activities of $27.0 million, $27.0 million and $21.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $235.6 million.
Liquidity and Capital Resources We have incurred operating losses since inception and negative cash flows from operating activities of $4.9 million, $27.0 million and $27.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $275.2 million.
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.
We expect to continue to increase our disclosures and communicate our social impact efforts in future SEC filings. 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.
Net cash used in investing activities in 2024 was primarily related to the purchase of short-term investments of $25.0 million and cash paid for the acquisitions of Boston O&P of $20.2 million and other clinics of $2.9 million, which was partially offset by the sales of short-term marketable securities of $49.9 million.
Net cash used in 2024 was primarily related to the purchase of short-term marketable securities of $25.0 million and the acquisition of Boston O&P of $20.2 million, which was partially offset by the sale of short-term marketable securities of $49.9 million.
Since inception, we have 80 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. As of December 31, 2024, we had cash, cash equivalents and restricted cash of $45.8 million and short-term investments of $25.0 million for a total of $70.8 million.
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. As of December 31, 2025, we had cash, cash equivalents and restricted cash of $21.6 million and short-term investments of $41.3 million for a total of $62.9 million.
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. 76 In 2023 and 2022, there was a significant and unprecedented increase in cases of respiratory syncytial virus, or RSV, and other respiratory illnesses.
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.
The increase was due primarily to increased sales commission expenses and an overall increase in volume of u nits sold. Sales and marketing expenses also increased by approximately $1.6 million as a result of the acquisitions. Sales and marketing expenses for the year ended December 31, 2024 were approximately 31% of revenue compared to 36% for 2023 .
The increase was due primarily to increased sales commission expenses due to an overall increase in volume of u nits sold. Sales and marketing expenses for the year ended December 31, 2025 were approximately 31% of revenue compared to 31% for 2024 .
Nearly all the change in each category was due to a change in the unit volume sold and not a result of price changes. Cost of Revenue and Gross Margin Cost of revenue was $56.1 million and $37.5 million for the years ended December 31, 2024 and 2023, respectively.
Sports medicine / other decreased $0.4 million, or 10%. Nearly all the change in each category was due to a change in the unit volume sold and not a result of price changes. Cost of Revenue and Gross Margin Cost of revenue was $63.7 million and $56.1 million for the years ended December 31, 2025 and 2024, respectively.
Cash Flows The following table sets forth our cash flows from operating, investing and financing activities for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (27,048) $ (27,046) Net cash (used in) provided by investing activities (13,162) 41,677 Net cash provided by financing activities 53,135 7,301 Effect of exchange rate changes on cash (175) 633 Net increase in cash and restricted cash $ 12,750 $ 22,565 Cash Used in Operating Activities Net cash used in operating activities was $27.0 million for both the years ended December 31, 2024 and 2023, respectively.
Cash Flows The following table sets forth our cash flows from operating, investing and financing activities for the periods indicated: Year Ended December 31, (in thousands) 2025 2024 Net cash used in operating activities $ (4,851) $ (27,048) Net cash used in investing activities (43,629) (13,162) Net cash provided by financing activities 23,975 53,135 Effect of exchange rate changes on cash 348 (175) Net (decrease) increase in cash and restricted cash $ (24,157) $ 12,750 Cash Used in Operating Activities Net cash used in operating activities was $4.9 million and $27.0 million for the years ended December 31, 2025 and 2024, respectively.
Total Other Expenses (Income) Total other expense increased $12.4 million year over year, with other expense of $6.9 million for the year ended December 31, 2024 compared to other income of $5.4 million for the year ended December 31, 2023.
Total Other Expenses (Income) Total other expense decreased $7.0 million year over year, with other income of $0.1 million for the year ended December 31, 2025 compared to other expense of $6.9 million for the year ended December 31, 2024.
We have indefinite lived trademark assets that are reviewed for impairment by performing a quantitative analysis, which occurs annually in the fourth quarter or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
We have indefinite lived trademark assets that are reviewed annually for impairment by performing a quantitative analysis, or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net discounted cash flows expected to be generated by the associated asset.
We adjust inventory values to reflect these usage patterns and life cycle. In addition, we continue to introduce new products, which we believe will increase our revenue. As a result, we may be required to take additional charges for excess and obsolete inventory in the future.
In addition, we continue to introduce new products and acquire new companies or technologies, which we believe will increase our revenue and also increases our on-hand inventory. As a result, we may be required to take additional charges for excess and obsolete inventory in the future.
As of December 31, 2024, the carrying value of these three trademarks was $7.2 million. Net Operating Losses As of December 31, 2024, we had federal, state and foreign tax net operating loss carryforwards, or NOLs, of approximately $136.6 million, $85.4 million and $35.2 million, respectively, which begin to expire, if not utilized, beginning in 2028.
Net Operating Losses As of December 31, 2025, we had federal, state and foreign tax net operating loss carryforwards, or NOLs, of approximately $172.2 million, $103.7 million and $37.8 million, respectively, which begin to expire, if not utilized, beginning in 2028.
During 2024, the primary uses of cash used in operating activities was driven by inventory purchases of $13.2 million to support sales growth as well as an increase in accounts receivable of $4.7 million, and a decrease to accounts payable of $4.3 million.
During 2025, the primary uses of cash used in operating activities was driven by inventory purchases of $8.5 million to support sales growth as well as an increase in accounts receivable of $9.4 million. These uses of cash were partially offset by cash inflows from accounts payable of $8.2 million.
Th e increase was primarily driven by the addition of Boston O&P sales of $30.0 million, as well as strong performance across global Trauma and Deformity, Scoliosis and OP Specialty Bracing.
Th e increase was primarily driven by strong performance across global Trauma and Deformity, Scoliosis and OP Specialty Bracing, as well as recent acquisitions.
This approach requires us to make significant estimates and assumptions including preparation of forecasted revenue, selection of a royalty rate and discount rate and estimate of the terminal year revenue growth rate.
To estimate the fair value of the trademark asset and associated impairment, we utilized an income approach, or discounted cash flow model. This approach requires us to make significant estimates and assumptions including preparation of forecasted revenue, selection of a royalty rate and discount rate and estimate of the terminal year revenue growth rate.
These arrangements have generated an increase in revenue and gross margin. For the years ended December 31, 2024, 2023 and 2022, international sales accounted for approximately 21%, 25% and 24% of our revenue, respectively.
For the years ended December 31, 2025, 2024 and 2023, international sales accounted for approximately 21%, 21% and 25% of our revenue, respectively.
The Company recorded restructuring expenses of $3.7 million for the year ended December 31, 2024 compared to $0 for the year ended December 31, 2023. The expense was a result of a 2024 global Restructuring Plan comprised the reduction of our Israeli physical site, reducing the ApiFix portfolio inventory, reserving for excess inventory, and certain employee termination benefits.
The expense for the year ended December 31, 2024 comprised of the reduction of our Israeli physical site, reducing the ApiFix portfolio inventory, reserving for excess inventory, and certain employee termination benefits. The increase in expense for the year ended December 31, 2025, was primarily due to the restructuring of Telos.
Trauma and deformity revenue, which includes the impact from acquired businesses, increased $38.3 million, or 36%, 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.
Trauma and deformity revenue, which includes the impact from acquired businesses, increased $21.2 million, or 15%, primarily driven by strong growth across numerous product lines, specifically our Cannulated Screws, PNP Femur, PediPlate, external fixation and Pega systems. Sco liosis revenue increased $10.9 million, or 20%, primarily driven by increased sales of our RESPONSE 5.5/6.0 and 7D Technology .
The primary reason for the impairment is the lower forecasted revenue of our ApiFix product than previously expected. We recorded impairment charges of $1.8 million, $1.0 million, and $3.6 million for the years ended December 31, 2024, 2023, and 2022, respectively, to reduce the carrying amount of the intangible asset to its estimated fair value.
We recorded impairment charges of $4.2 million, $1.8 million, $1.0 million, and $3.6 million for the years ended December 31, 2025, 2024, 2023, and 2022, respectively, to reduce the carrying amount of the intangible asset to its estimated fair value. Following the impairment, the newly calculated fair value becomes the new accounting basis and carrying value of the trademark.
A significant decrease in demand could result in an increase in the amount of excess inventory on hand, which could lead to additional charges for excess and obsolete inventory. The need to maintain substantial levels of inventory impacts our estimates for excess and obsolete inventory.
A significant decrease in demand could result in an increase in the amount of excess inventory on hand, which could lead to additional charges for excess and obsolete inventory. As of December 31, 2025 and 2024, our excess and obsolete inventory reserve was $7.7 million and $9.6 million, respectively.
Changes in these assumptions could have a significant impact on the fair value of trademarks. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets.
If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. The calculation of the fair value of the trademark assets involves Level 3 fair value measurements.
The increase was primarily due to the timing of product development and the addition of personnel to support the future growth of the business during 2024. Restructuring Expense The 2024 Restructuring Plan aims to improve operational efficiency, reduce costs by integrating the ApiFix product into the broader OP Scoliosis portfolio, and additional staff reduction across all of OrthoPediatrics Corp.
Restructuring Expense The 2024 Restructuring Plan aims to improve operational efficiency, reduce costs by integrating the ApiFix product into the broader OP Scoliosis portfolio, and additional staff reduction across all of OrthoPediatrics Corp. In 2025, the Company made the decision to restructure Telos by dissolving the local operation and continuing staff reductions across the Company.
In a few cases, hospitals purchase our products for their own inventory, and such revenue and associated cost of revenue is recognized when a product is shipped or delivered and the title and risk of loss passes to the customer.
In a few cases, hospitals purchase our products for their own inventory, and such revenue and associated cost of revenue is recognized when control of the product transfers to the customer, typically upon shipment. Approximately 68% and 70% of our global revenues in 2025 and 2024, respectively, is from the usage and sale of consigned inventory.
Inventory, which consists of implants and instruments included in deployed sets in the field or held in our warehouse, is considered finished goods and is purchased from third parties. We evaluate the carrying value of our inventory in relation to the estimated forecast of product demand, which takes into consideration the life cycle of the products.
We evaluate the carrying value of our inventory in relation to the estimated forecast of product demand, which takes into consideration the life cycle of the products. Most of our inventory is non-sterile, metallic implants and instruments that do not have an expiration date or shelf life.
We believe effectively managing our priorities, as well as increasing our transparency related to social impact programs, will help create long-term value for our stakeholders. We expect to continue to increase our disclosures and communicate our social impact efforts in future SEC filings.
For nine years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana. We believe effectively managing our priorities, as well as increasing our transparency related to social impact programs, will help create long-term value for our stakeholders.
Recoverability is measured by a comparison of the carrying amount to future net discounted cash flows expected to be generated by the associated asset. Calculating net discounted cash flows requires us to make significant estimates and assumptions related to forecasts of future revenues and discount rates.
Calculating net discounted cash flows requires us to make significant estimates and assumptions related to forecasts of future revenues and discount rates. Changes in these assumptions could have a significant impact on the fair value of trademarks.
General and Administrative Expenses General and administrative expenses increased $29.5 million, or 40%, from $73.3 million for the year ended December 31, 2023 to $102.8 million for the year ended December 31, 2024. The increase was due primarily to the addition of Boston O&P.
General and Administrative Expenses General and administrative expenses increased $17.0 million, or 17%, from $102.8 million for the year ended December 31, 2024 to $119.8 million for the year ended December 31, 2025. The increase was due primarily to acquisitions. Stock-based compensation increased $2.1 million due to an increase in personnel.
See Note 5 - Goodwill and Intangible Assets for further details. Research and Development Expenses Research and development expenses increased $0.1 million, or 1%, from $10.9 million for the year ended December 31, 2023 to $11.0 million for the year ended December 31, 2024.
Research and Development Expenses Research and development expenses decreased $1.9 million, or 18%, from $11.0 million for the year ended December 31, 2024 to $9.1 million for the year ended December 31, 2025. The decrease was primarily due to the timing of product development.
Cash (Used in) Provided by Investing Activities Net cash (used in) provided by investing activities was $(13.2) million and $41.7 million for the years ended December 31, 2024 and 2023, respectively.
Cash Used in Investing Activities Net cash used in investing activities was $43.6 million and $13.2 million for the years ended December 31, 2025 and 2024, respectively. Net cash used in investing activities in 2025 was primarily related to the purchase of short-term investments of $15.0 million and cash paid for acquisitions of $15.5 million.
We had a net loss of $37.8 million for the year ended December 31, 2024, compared to a net loss of $21.0 million for the year ended December 31, 2023.
During 2024, we increased inventory by $13.2 million as we deployed additional inventory and accounts receivable increased by $4.7 million. We had a net loss of $39.6 million for the year ended December 31, 2025, compared to a net loss of $37.8 million for the year ended December 31, 2024.
The change 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 of $3.0 million , the early extinguishment of the MidCap Credit Agreement in the third quarter 2024 of $3.2 million , and additional interest expense of $2.6 million, net related to our indebtedness.
Additional interest expense of $3.4 million, net related to our indebtedness was offset by the fact that the Company recorded a loss on the early extinguishment of the MidCap Credit Agreement in the third quarter 2024 of $3.2 million, and additional interest expense of $6.0 million, net related to our indebtedness.
Following the impairment, the newly calculated fair value becomes the new accounting basis and carrying value of the trademark. 84 As of October 1, 2024, the date of our last impairment review, the fair value of three of our trademarks exceeded their respective carrying values by less than 15%, excluding ApiFix described above.
As of August 1, 2025, the date of our last impairment review, the fair value of two of our trademarks exceeded their respective carrying values by less than 10%, excluding those trademarks that were partially or fully impaired that are described above. As of December 31, 2025, the carrying value of these two trademarks was $6.0 million.
RSV is a common respiratory virus that follows a seasonal pattern.
In 2023 and 2022, 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.
Stock-based compensation increased $2.1 million 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 $1.1 million, or 6%, from $17.4 million for the year ended December 31, 2023 to $18.5 million for the year ended December 31, 2024 .
Depreciation and amortization expenses increased $1.4 million, or 7%, from $18.5 million for the year ended December 31, 2024 to $19.9 million for the year ended December 31, 2025 . The increase was primarily due to higher set deployments and increased amortization associated with acquisitions.
See Note 17 - Commitments and Contingencies in Item 8 for additional details of our purchase commitments and performance obligations. Sales and Marketing Expenses Sales and marketing expenses increased $11.5 million, or 22%, from $52.8 million for the year ended December 31, 2023 to $64.3 million for the year ended December 31, 2024.
Gross margin was 73% for the year ended December 31, 2025 and 73% for the year ended December 31, 2024. 80 Sales and Marketing Expenses Sales and marketing expenses increased $8.4 million, or 13%, from $64.3 million for the year ended December 31, 2024 to $72.7 million for the year ended December 31, 2025.
Net cash provided by financing activities for 2023 consisted of the proceeds of 81 $9.4 million, net of issuance costs, from our term loan agreement with MidCap, offset by the cash paid for the acquisition installment to ApiFix of $2.0 million.
Net cash provided by financing activities in 2025 consisted of $25.0 million from the proceeds of the Credit Agreement with Braidwell.
Additionally, based on our history of immaterial returns from international customers, we have historically estimated no reserve for returns. Inventory Valuation Inventory is stated at the lower of cost or net realizable value, with cost determined using the first-in-first-out method.
Additionally, based on our history of immaterial returns from international customers, we have historically estimated no reserve for returns. Inventory Valuation Our global inventory, which primarily consists of implants and instruments held in our warehouses, with third-party independent sales agencies or distributors, or consigned directly with hospitals, are considered finished goods and are purchased from third parties.
During 2024, 2023 and 2022, 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.
During 2025, 2024, 2023 and 2022, we completed a quantitative analysis whereby we determined the fair value of certain trademark assets were below the carrying value. The primary reason for the impairment is the lower forecasted revenue of our ApiFix product than previously expected, and the decision by management to exit our Telos regulatory consulting business.
Removed
For eight years we have been recognized by the Indiana Chamber of Commerce - Best Companies to Work in Indiana. • Th e 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.
Added
In 2025, we opened a warehouse in the Netherlands. In November 2025, we established a legal entity in Brazil to sell and distribute directly to the local market. These arrangements have generated an increase in revenue and gross margin.
Removed
Sco liosis revenue increased $17.2 million, or 45%, 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 $0.4 million, or 11%.
Added
Intangible Asset Impairment During 2025, management completed a quantitative analysis as part of our annual impairment test, and determined the fair value of our ApiFix, MedTech, Orthex and Telos trademark assets were below their respective carrying values.
Removed
Gross margin was 73% for the year ended December 31, 2024 and 75% for the year ended December 31, 2023. The increases were due primarily to sales volume, including the added cost of revenue associated with the revenue generated by acquisitions. The gross margin includes a minimum performance 79 obligation fee on the Firefly licensing agreement.
Added
Additionally, in connection with our decision to exit our Telos regulatory consulting business, we wrote off the remaining carrying value of its customer relationship intangible asset. We recorded an impairment charge of $4.6 million and $1.8 million during the years ended December 31, 2025 and 2024, respectively. See Note 5 - Goodwill and Intangible Assets for further details.
Removed
The lower rate was driven by Boston O&P and MD Ortho sales, which are sold at a significantly lower sales commission, and lower commissions on other newly acquired products.
Added
The Company recorded restructuring expenses of $5.6 million for the year ended December 31, 2025, which included the write-off of goodwill associated with the Telos business of $1.9 million, compared to $3.7 million for the year ended December 31, 2024.
Removed
The increase was primarily due to higher set deployments and increased amortization associated with acquisitions, as well as the addition of Boston O&P. Trademark Impairment The Company recorded a partial impairment charge of $1.8 million and $1.0 million associated with the ApiFix trademark during the years ended December 31, 2024 and 2023, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed7 unchanged
Biggest changeWe estimate that an immediate 10% adverse change in foreign exchange rates not currently pegged to the U.S. dollar would have increased our reported net loss by an immaterial amount for the years ended December 31, 2024, 2023 and 2022. 85
Biggest changeWe estimate that an immediate 10% adverse change in foreign exchange rates not currently pegged to the U.S. dollar would have increased our reported net loss by an immaterial amount for the years ended December 31, 2025, 2024 and 2023. 87
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our cash and short term investment balances as of December 31, 2024 and 2023 are related to our investment portfolio which consists largely of debt instruments of high quality corporate issuers.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our cash and short term investment balances as of December 31, 2025 and 2024 are related to our investment portfolio which consists largely of debt instruments of high quality corporate issuers.
Our policy also limits the amount of credit exposure to any one issue, issuer and type of instrument. As of December 31, 2024, we only held investments in securities of a short-term nature classified as cash equivalents or short-term investments.
Our policy also limits the amount of credit exposure to any one issue, issuer and type of instrument. As of December 31, 2025, we only held investments in securities of a short-term nature classified as cash equivalents or short-term investments.
Based upon our overall interest rate exposure as of December 31, 2024, a change of 10% in interest rates, assuming the amount of our investment portfolio and overall economic environment remains constant, would not have a material effect on interest income.
Based upon our overall interest rate exposure as of December 31, 2025, a change of 10% in interest rates, assuming the amount of our investment portfolio and overall economic environment remains constant, would not have a material effect on interest income.
A hypothetical interest rate change of 1% on our term loan would have changed interest expense for the year ended December 31, 2024 by $0.1 million or by $0.3 million if the amount funded under our Term Loan Agreement had been outstanding for a full calendar year.
A hypothetical interest rate change of 1% on our term loan would have changed interest expense for the year ended December 31, 2025 by $0.3 million or by $0.5 million if the amount funded under our Term Loan Agreement had been outstanding for a full calendar year.
Our long-term debt as of December 31, 2024 is related to the Company's term loan and Convertible Notes with Braidwell. As of December 31, 2024, we had outstanding borrowings under our Term Loan Agreement of $25.0 million.
Our long-term debt as of December 31, 2025 is related to the Company's term loan and Convertible Notes with Braidwell. As of December 31, 2025, we had outstanding borrowings under our Term Loan Agreement of $50.0 million.

Other KIDS 10-K year-over-year comparisons