Orthofix Medical (OFIX) 7 Aug 222022 Q2 Earnings call transcript

Hello, and a warm welcome to Orthofix Medical’s Q2 2022 Earnings Call. My name is Melissa, and I’ll be your operator today. [Operator Instructions] I now have the pleasure of handing over to our host, Alexa Huerta, Senior Director of Investor Relations to begin. Alexa, over to you.

Thank you, operator, and good morning, everyone. second earnings Orthofix the to quarter call. XXXX Welcome

Safe today President and it and me with Financial on Executive over our call the the start I’ll Serbousek; Joining to Chief Jon. then are Officer, Doug Rice. statement Harbor and Officer, pass Chief Jon

our on During we earnings any are there facts as beliefs forward-looking of making as including any August will strategies, forward-looking forward-looking statements risks and forward-looking that in involve plans, we historical revise and this such X, uncertainties. that those will today, All do not such or update place about are XXXX. is to forward-looking statements. of based the we goals call, guidance obligation statements statements provide, matters today’s not and cautioned such statements contained undertake our undue no assurance or on any will be objectives. statements expectations other expectations, The occur. than make We statements statements, are on reliance Investors to call

Form heading from we and Factors could risk Some in different for be factors morning, XX, materially filings the XXXX, as the the August include by well Form filed future. forward-looking X, XX, year make under the statements results ended made quarter disclosed the to that December SEC cause us our the XXXX actual additional in on factors XX-K the this for XX-Q ended call June XXXX, as Risk

my in Texas. need copies office please of at you these Orthofix contact If documents, Louisville,

short-term supplement financial order these wish measures. call, to refer matters trends, investors review We in may that measures non-GAAP release and second to as call today’s I various At financial will measures non-GAAP announcing financial we on Jon. GAAP a in the addition, long-term U.S. In XXXX press turn properly determined to understand our to believe our for reconciliations to the these over to will results. this GAAP. Please quarter point, financial of results our accordance U.S. today’s with refer to financial

our thank our handing today’s close the of line constant call review Doug, will I’ll was call flat our before a you the perspectives call. and you, with our quarter financial our questions. currency Welcome, provide update. the basis. Thank over strategic for and second towards XXXX performance million $XXX.X XXXX results balance quarter to conference call quarter revenue progress our initiatives who second everyone, I’ll joining total Starting update opening second on the on provide performance, for with the was before of an Alexa. in year-over-year and On

As a Spine solid by $X.X for in transact the negatively in as strength impacted staffing dollar by the well Spinal currencies Implants, which patient materially revenue revenue businesses. the Biologics our by Orthopedics to see volumes business. slower-than-expected result and rebound due had across procedure particular, on which macro commercial of our In delivered to These investments we were elective continue business product million. approximately hospital to procedures and BGT, channel new areas, in quarter other our partially of performance in execution issues our we strong effects our headwinds, staffing results greater-than-anticipated elective our seek complex achieving which ongoing business. we offset – impacting reluctance Global and positive Reported offerings, to relative select was impacted reported as U.S.

were to down $XX will business first by comment million, to which followed reduction a relatively the complex currency basis performance quarter in the and caution X% our on a Therapies, and traction of note, prescriptions, commercial and portion reported quarter sales procedures, or spine early issues continue surgeries. generate the compared seeing capture our patient’s second largely sales Spine and orthopedic fractures. result we decrease Bone quarter BGT in On PhysioStim to share investments to share Starting podiatric with management staffing basis we are market of These treat units. of AccelStim. tractions have and a The Turning large in of reflect nonunion positive channel, constant with seek a XXXX. gains of and was to BGT, for elective continued communities I called which on fresh the two made our primarily on Orthopedics. Growth fracture

down Revenue Implants, in Spinal currency as as a constant Motion our U.S. complex down global due lower-than-expected Spine in reported the Preservation. to the part basis decline Moving XXXX. both on quarter second was in as to competitive headwinds and volumes basis cases Motion was includes to compared and Fixation X% a X% Preservation. of The which on well

market positive MX-C our disc replacement that clinical provides continue outcomes. leading-edge artificial and with view of its technology the the demonstrated disc We

Turning biologic a portfolio. flat on to basis was compared and constant our currency Revenue to XXXX. reported

saw biologic XX months. hospitals’ trends we added from which quarter, from new as the in headwinds, to our last procedures solutions. the positive macro the helped trends often negatively complex the These such that During offset new distributors perform fiberFUSE product impacted require abilities introductions and elective

to international sales last are the stocking markets have we product EVO to positive months. XX international Global from benefits investments Sales we basis introductions driven put sales our our have recent of result currency see a benefit the by on place primarily X% distributors. over the Moving team was constant made geographies, In from business. up Galaxy leadership XX% Orthopedics well basis started over of starting also the as Gemini. Both were on This a XXXX. from in U.S., TrueLok and benefits in to reported the strength in organization on from growth revenue new and as a the

on strategic to moving initiatives. our Now

with XX we and force Since for second have and payers. during which XXXX, healing launch ultrasound or BGT, started Healing differentiation. this January limited of AccelStim and of conducting we uses both contracting fractures. AccelStim the LIPUS in quarter, Let’s sales We start for technology U.S. spine product products. fresh initial our with and with launched initial received the orthopedic our included approval market Starting PMA the nonunion innovation FDA Therapy. Bone training May,

our adoption end training as initiatives, more high move from We we into to XXXX of beyond. we towards and contribution rate education of expecting the early are and pleased revenue meaningful are see and physician XXXX a and

to Moving Biologics.

shipping, within VIRTUOS, Biologics, preserves we as multiple advantages It quarter, and process bone first implantation substitute temperature all first-of-its-kind substitute. our and the in due clinical involved its the have to graft. friendly this strategic developed prepares look improved cost-saving to with broader storage, graft. operating launch favorable necessary bone significant hospitals the our feedback, in environmentally exclusive efficiency room VIRTUOS forward shelf-stable of provided we to the achieved that of provided During part CGBio through Surgeons for in in logistical our I is this year. was with healing strategic a a earlier MTF later ready-to-use partnership part room components offers morphogenic made advanced, BMP-X week biologic VIRTUOS later of recombinant commercialization protein autograph proprietary complete comment in complete will the partnership autograft the with VIRTUOS who we or product. on announcement bone on call exciting for an packaging.

available the create with with We our hip products solution will the exemption. dysplasia abnormalities through hip to and platform procedure intermediary Turning This patented distalization the of Lima Fitbone that be to FDA technology discrepancy. using U.S. orthopedics. in lengthening hip the strength the portfolio and length reflects compassionate solution patients limb lead and and of use leg a Orthopedics partnered Fitbone novel versatility for to or new

year. U.S. QX, Turning ongoing our our access surgeon to products our The growth expand In prior to channel initiative. second to worldwide. continue our see partners commercial strategic of development to patient the and over channel

recall, are channel direct partners channel reps adding carry you’ll the as in Orthofix categories biologics. hardware we the future product was BGT areas in here. making pleased focused quarter important multiple of growing as our to well Both U.S. launch and with support orthopedics distributors our and infrastructure. As commercial growth, such that with the include progress our on the as are Most investment are for AccelStim investment we

launch quarter hard Biologics. team limited new during two basis the products in on significant to worked bring and the of internal BGT Our a

and physician with in we sales returned and put to as position ourselves education procedures historical improves training, great volume elective for With launches environment have the trends. these success the macro associated a of

turn financial performance. review Doug? the our over to Now, I’ll Doug call

Thanks, and good everyone. Jon, morning,

to the our were non-GAAP currency regarding macro primary in quarter basis, complex today’s expected many non-GAAP covered refer XX% or million total net total a are further revenue, and year-over-year. As when procedures second industry the revenue, or approximately an Starting earlier. primarily X% to the International in at reductions GAAP and net of as for sales second requirements and sales quarter sales other and well force stocking covered constant with measures of please flat expenses million safety constant up competitive in XX% were compared many related drivers on disclosures. information the call release risk XXXX for total quarter reconciliations with net financial our of to $XXX.X by down stock inventory XXXX that quarter U.S., expanding in to compared Jon total year in X% set force million noted this for of XXXX. the the of the increased builds headwinds as in to $XX our international prior supply today’s as sales earlier, Jon earnings year of in second $XX consistent recent due The and In as period, of the disruption. for result chain over the as sales was to gross mix in XX% quarter global investments currency reserve were increased of the changes a driven orthopedics sales sales margin distributors. in

XX% margin sales, our Orthopedics average lower the by of second launch, the third XX% This we on the the year. international orders will from and to in quarter year in full XXXX. were of the additional direct implies marketing second reps the XXXX, rate training reflects in of the approximately quarter to in the and related XX% expenses For half from GAAP offset investments management marketing continue net in gross as expenses to of sales BGT were commissions be XX%, as These and XX% distributors. into and stocking AccelStim which which well quarter. sales to XX% second increase GAAP an up expect somewhat

XX% to well year at still quarter legal were G&A year as and GAAP to period. XX% reflects the for XX% For The flat sales. of to net the marketing second full expenses XX% year prior expenses. lower the professional net prior down of compared stayed range XX% the in net expect sales fees as lower GAAP the quarter employee expenses the period. second decrease expenses of sales, in R&D GAAP be of XXXX, in from sales we and

a to quarter investments in decreased our second which about by MDR sales, innovation driven development non-GAAP product development management, of sales efforts, larger an quarter the on increased direct second margin AccelStim. sales EBITDA focus which Our increased R&D in now to of the year financial and made to offset launch new reps year-over-year, We sales quarter XX% metrics. were Adjusted quarter including by XXX approximately XX% GAAP impact for directly the to and costs has XXXX. of the compared of as related expect EU differentiation expense XX% milestone adjust implementation within second points net XXXX, payment net as basis full expenses, XXXX in this we be of our of in well

we margin total growth. We EBITDA XXXX adjusted continue year to net for profitably continue full of XX% invest be in to to the our as approximately sales expect

the XXXX. a $X.X second in quarter We revenue measurement The change half expense margin the expect Spinal million, GAAP milestone year-over-year EBITDA XXXX liability. the to payment Kinetics in fair increase back adjusted noncash acquisition-related of primarily sequentially value to the of decrease our related reflects credit of contingent

XXXX. on believe of environment, the the achievement operating cervical date to disc lower of the value contractual of the April end revenue-based milestone the based market, the but underlying liability fair XX, reflects MX-C of continue remaining growth We and the anticipated measurement replacement the current in beyond

XX% by same as GAAP income taxes period of income in The income Now had GAAP corresponding We well of tax or of of of or as the driven $XXX,XXX quarter income tax XX% XXXX. compared tax earnings $X without rate expense before as a income in periods losses was taxes in expense to timing to before tax benefit. a the both GAAP turning income of million tax.

compared the second XXXX. to to adjusted the quarter For XXXX. we an the of effective non-GAAP as quarter, of $X.XX second reported second compared and $X.XX which certain EPS XX%, for GAAP for when protect, of quarter was $X.XX, of the normalizing items flat using After in of quarter our adjusted EPS tax stayed adjusting second rate long-term EPS

in to to capital was in million and still due $XX to The million headquarters XXXX. partners Texas. The $XX $X customer the manufacturing Lewisville, million liquidity the our our I investments as quarter with expenditures the the position as million in compared inventory, well million in million final strong second the increased quarter in of remains were increase expansion Fitbone improved $XX was compared primarily range mentioned, end $X to XXXX. and the year of at approximately end contractual fourth primarily at the the Capital $XX expenditures $X prior operations, our for expect of training of to our $XX cash, the capabilities an experience to seller. net quarter decrease center at the payment Regarding million of made million to related as for the be period. We

shifting guidance. Now to

we we rates. our hospital year headwind utilizing full reported of continue anticipated into flat revenue see the products like back revenue but in gain to Key $XXX strength growth expect year see year the collective increased guidance staffing well in do FX of procedure to X% be FX U.S. dollar the anticipate momentum, typical significant expect full and to revenue as X% the in the will to from as XXXX, until surgery. our a million rates at now to XXXX. end revenue XXXX. Reflecting half contributions second AccelStim the and currency. that quarterly headwinds not From $XX to represents of to overhang the X% the U.S. to the quarter a range rates expect XXXX roughly reluctance this an $XXX to the XXXX seasonality of dollar quarter we cadence due for will decrease current reflects This reported sequentially products reflect patient through to with versus or from perspective, million, of VIRTUOS versus top the our related revenue compared third of For to a issues at and new macro FX we in strength to volumes line constant year, million these XXXX the quarter on in which X% second

million dollar top back share in the expect of will commercial to growth $X.XX the line turn revenue, million For our robust adjusted FX due call adjusted in will EBITDA trajectory. per Jon. XXXX, investment delivering a or now our strength of the U.S. products headwind of Inflation to would our $XX to and the year now be full million we and of range in These be and channel between to $XX differentiated to May call. ranges approximately the accelerate continued our expansion our like XX% $X our earnings $X.XX. over reflect pipeline to earnings the I since uncertainties,

Doug. Thanks,

solidifying we profitable while technologies product of and spine half back in portfolio leader and XXXX, well healing commercial the in innovation as ourselves are space orthopedic a the by our sustainable, to Moving also within optimizing driven the differentiation our channel. delivering as as regenerative focused growth on

biologic artificial will disc. cervical AccelStim be line In focused Starting working portfolio. Fitbone on including several the will the growth these a advance near drivers, We management disc, of our stimulation cervical our device I’d the to update also drivers. capital limb-lengthening while provide to continue term, continue growth on MX-C each growth MX-C the with our quick and top we growing sales. bone system, the to artificial of expanded like

MX-C of with over platforms discs market leading over one in planted the years. the cervical We global XX-plus disk XX,XXX have

with for of in the trial, are clinical track. strength U.S., continued which we clinical and technology, X-level the the We pleased progressing this MX-C evidence are the on remains

MX-C in also real-world global to X,XXX are body and that access our further of clinical We a over of will evidence evidence. reinforce middle patients the expand study

important invest years discs clinical We internal their our best with with a analysis, the cumulative long-term survivorship analyzed surgeons recently their survivorship patients. information XX XX% these also of available decisions it to of inform in years. and global at is to have projects ensure We to studies over believe which records XX implanted implant XX,XXX

system Turning lengthening Preventions. the the reimbursable health France. nail list and public on for system. the intramedullary and and to FITBONE ministry to of in only the This added of makes products the was included only French limb-lengthening reimbursable the services Health nail It Ministry the French FITBONE thus, by lengthening list

As the a half and XXXX we Trochanteric reimbursement U.S. in continued partnership second with revenue of the growth during of result planned expect well. we launch as FITBONE to see of and in earlier, decision mentioned growth the nail increase and French marginal FITBONE Lima XXXX the the

earlier, BGT mentioned fresh healing in a of As for fracture and with bone the nonunion quarter. launch had in product AccelStim our fractures ultrasound second limited the

force sales still training of not the the and is ramping end payers complete quarter third up. with the XXXX contracts Although be will until

revenue contribution expect in We more see beyond. meaningful XXXX and to

drivers. Virtuos the XXXX. its autograph Let’s implant move near-term and XXXX rest patient as and throughout release. the complete spine and first commercialize kind, to we continue increasing our of The for a first stable to into anticipate orthopedic surgeon procedures biologics limited demand growth recently We of shall substitute Lyograft, market had

sell Orthofix has demineralized rhBMP-X conduct or bone processed recombinant protein-X for tissue growth Canada. weeks. and option in grants prehydrated other market clinical U.S. Novosis cost-effective the coming to are bone in syringe. human to addition regenerative studies, DBM and matrix Legacy, bone commercially with CGBio, acetal commercialize, and The and to the MTF of entered of future market. strategic bone excited U.S. flowable a market, preclinical Novosis use in launch the very and with and In is is single and new right morphogenetic we available innovative technology graft developer the feature-rich, million presents promote $XXX Virtuos, a that in internationally On to XXXX, solutions grafts. implanted surgeons and Legacy Biologics the an the synthetic product to patients the materials partnership the the into ready a bone is evolution XX,XXX current an license next agreement in over available potential compelling been factor over out a agreement exclusive of study alternative distribution [ph] July company XXth,

and touch options procedural future biologics needs. the to Our select Bone management and now growing are CGBio surgeons best one meet With added in solution partnership offering, I deeply portfolios clinical most represents experienced patient market BMP-X to the strategic on our biologics to the market, Orthofix our and factor the with our ability commands market. Virtuos to Legacy an complete to their future like segment things opportunity. wrap alternative for to and excited direction. bring important the is work industry’s teams growth up, of to orthopedics an plans biologics spine giving To would and the biologics largest new and

the Our strategic remain plan goals and same.

clean strong on our so flow, steadfast by and to allowed to of We’ve in growth activities. significant against focusing the cash short-term beyond, long-term half progress and second this us our our internally expect continue year have to do made which balance goals and high our growth fund sheet supported executing driving and margin on our EBITDA and path, strategy. are We transformational profitability expansion already single-digit

expect contribute about XXXX beyond in to excited to key are portfolio which XXXX, meaningfully performance. new product and our in We we’ll our introductions

opportunity On approach, deal execute current lines they unique challenging members our and in as and previously the would proud resolve sheet see with continued mission business extremely environment. closing thankful you continue focus your in demonstrated strategic shown Orthofix. to success development flexibility, for I have navigated this Thank as open business successful for confidence time I’m balance Operator, in the global your inorganic capacity commitment note, am interest have our as a will of and our team our disciplined please we’ve you and of today future. our questions? their and of environment. a for Lastly, macro and great the our with to we plan

you. Mathew today We Matt, our Instructions] Of be will course, question Stifel. first [Operator thank taking Blackman of you. over from to

couple intense. headwinds you’re of to any it and Jon, relative explain I you everybody. for is more Hi, How implying that for on the complex we’re XH my good that? then the is would business similar into Just an hearing your called that outsized out Is questions. relative Thanks mix Jon XQ in others? a the taking one – you from everyone’s procedure peers? what have for year and back have XXXX, for magnitude Doug. morning to but thoughts

postoperatively complex high highlighted, Matt. many well regarding where we’ve our biologics procedures complex And as Yes, of Thank you. as procedures. in potency they’re far business we as on rely because are that our for high or procedure utilized base, as potential the used BGT the that’s biologics and those

we of this So see get, at the as in headwind. flow in uncertainty reluctance we of the those look as for we in sort some based that hospital of a that procedures, patient on the area complex and time those the feedback patients

in going the that that see far deal as we’re headwind as but that MX in motion environment another we to with. as issue the competitive as at on preservation, well, we’re the looking area, Additionally,

Jon, that touting you stabilize in prepared point you how think, rates? losses? do typical there we but it type that then had Thanks. where growth these bit data, but a growing return you stem the business maybe Doug, the a clinical that and maybe more about talk a And more follow-up is data more shared little apologies. And some maybe timeframe to or is for generating could And and know clinical to quarter-over-quarter? And environment. remarks, year-over-year maybe business still appreciate just I comments your competitive I

Yes. competitive. the are some new entrant heavily. other of that products marketplace as has reinforcement as and The a space in become you. there promoted more Matt, the there’s out well thank being Obviously,

then as space, in the in we data far leading as have well technology will to market. as that’s that see conviction why, And technology. clinical MX that as and performance as opportunity the the However, absolute an of the drive we the expand

invest feel pace going growing, So that, we the we to growth. surgical once off market, we’re it we artificial fact is to continue to level disc robust on the mean, we’re on get not and in I to were. robust the, will but and and we’re are back growing

the so and at, where the forward we’re future. reality in we’re looking that’s, And the to performance

All right. And the downdraft you is challenging? bridge the probably way back on then, FX the us guidance? half the the it concentrated guidance to I can in the, line the from Doug, think the Say, sounds Is the old U.S. like to top new gets hardware – about the that biologics where of think year and BGT right business. to more to

U.S. heavily like and question, to everybody, euro-dollar so strengthened. We’ve is exposed Matt. strengthening of top line XX% dollar. from rate, We’ve Good Yes. to OUS the of that’s our the continued is about the, got seen, that

have by results X% impacted Our been to X%.

of for about from overall, since X.X% I I’d the year, expected we to million, by range. seen last it think degradation guided sort the May, you’ve further but time what $X in in the put we X%

the out asking ex-FX so Sorry, the to the was I new guidance bridge guidance, ex-FX, old ex-currency your taking from the about currency.

X.X% another last X%, from May. $X probably guided we million about it’s Yes, to when another

global orthopedic franchise? the isolated business. and And headwinds is, to going with commentary I’m BGT complex orthopedics, the still question strong the in the hardware guess I as of sort U.S. that’s probably there biologics expect be again, the to hearing implied growth the

BGT one of inflation, patient Jon hardware a well script seen our the our issues, as all FX But environment is, headwinds our The the, related rest to a is shift that into geographies. board through caution our and we’ve the to guidance And categories. exposure. Biologics complex OUS procedures, clinical the then on sort staffing to remainder as spine as in exposure like really both to side in product of alluded of Yes. our summarized just back and in the hospital comments really it come across macro

Thanks All right. much. so

Jeffrey Thank Ladenburg. from our go please of Jeffrey, question, your We’ll question. comes the you line move ahead. next of which for Cohen to

Doug. Jon How Hi, and are you?

you. Jeff. Thank Good,

Good Jeff. morning,

you for Just as questions U.S. on more a global you cadence about talk staffing half little And flow guess, to there? issues Are a expect our the similarly firstly couple that you the as so could well into you and end, back from the quarter. business? business out call do QX strong and the relatively hospital QX through I seeing a to same could the

That’s staffing. from we nurses just the projecting more smaller our that it’s side. the cases. hospital channel that. migration something last staffing. – and Jeff, not to And short for all the of another are for hospital. to comes We to the There’s see in quarters checks, the on ASC cases so that. four doctors. it see more It’s straightforward easier, and in There’s we cases They’re easier, three, down straightforward

are back and being each There are some On that are compressed. standpoint, individual and region the OUS the going robust, some more [ph] it’s country country, by there that markets by still region. are without It’s activities.

a anymore regard; we get out at the in even into basis, even still don’t that in – that sick. that address just an So impact patients doctors hospital headwinds. get from We on put global COVID look We there. see don’t but there’s we conversation, sick,

second of users more then all little AccelStim the about there. users interest can you’re PhysioStim? what that outside And and it. product? finding some AccelStim for and Got us through us, Okay. the elsewhere up out a initial talk PhysioStim current Or you’re you some for Are its you users of picking of are launch finding the and

the been those the accept within clinicians, from in is where product pleased We’ll has that, feedback and are it’s positive marketplace well Yes. AccelStim new clinicians.

as orthopedic area as on So fresh well the podiatric we’re the a getting into fracture. lift area good

the in with the And we’re PhysioStim so AccelStim. time we’ve customers moving using those quite on PhysioStim, so and some our been customers new there towards for area nonunion and just are

CapEx And was the lastly, it. I heard a guide that Got had XX% earlier? then on for Doug XX% to Okay. I question

That’s right. we quarter with That’s last were where consistent as well.

Perfect.

for Okay. questions. does That us. Thanks taking for the

you, Jeff. Thank

Jeffery. Company. next Sidoti today question over be taking to from Jim, of Sidoti you, Jim We’ll Instructions] you. Thank [Operator and our

morning thanks Good and the question. for taking

strategy Do any on the get to your is and the get by that’s like levels? of give procedures is to working, the force kind indication, feels sales right into ball being back So to now. to want us overshadowed but crystal products it pre-COVID the pressure working procedures think look you out expand when you

through. Thanks Jim, discussion return, I the but all some the to the the complex which the its check, service from return, they also on They’re moving to factors, question. also they’re procedure is, of into. reluctance And mean fact in this want to Jon. and have less They’re Part we the channel all returning we’re prioritize open. of our financial fewer line they But and hospitals procedures is see forward, prioritize patients have flow the of but economic to ASC. more cases have doing some capacity cases. for

– and both – there’s out inflationary that on from our this at are some we into pressures, cases. challenge They as treated. through complex extent, So into for cases they’re see know economic will how a they their the complex the spine by hospital-based the portfolio do businesses better are service, we is come own. activity, for macro patient back we have on – it BGT there, into impacted well the both behavior look – as These Biologics that but standpoint, and our in the to occurs. these be is hospitals and those the get not also working headwinds We from patients, that

some over suggesting think – we’re we’re why that that results of in I some and proportioned of while so the seeing. area, seen we’ve that’s we’re And

ASC on of hedge little that think, about a for talked the going opportunities. you some to devices complex, more you the maybe in getting devices Would bit most the against in your of to you’re used pressure products? stay consider you inorganic kind these the hospital So

thanks, Jim. – have We

initiative ASCs. an have We into to go

We have hospitals. – MX-C not goes only disc our into the

made only We have an initiative but back, the sterile ASC, our Neo investment cervical. single-use and of and also into the in that’s in part low in the products Medical not

just across ASCs deal headwinds complex ASC and these strategy we’re we believe So the get as forward. this to a issue balanced position areas. we competitive is we today service and an the the, to in and have through portfolio a going all part about manage of talking procedures package, we’re strong going And that line with together put

Doug, All issues. some of – other increased inventory for hedge supply kind similar levels cover I’ve very you’re then one these right. of And like to chain you’ve inventory in, companies. to

think good I think, $XX up is Or you? do in XXXX? to continue for increase think you think you you inventory, the and about positive million a this flow you’ll Do year. it’s get free to cash back you for level do

we slack About take of out Yes, inventory question, missed $XX Good is Thank and any or of up a half as you range any million that you, procurement that done has is in production raw Jim. try anticipated we suggested. of of issues, our on inventory. net from to any materials supply from any that, chain making those parts. haven’t sure job terrific team issues have the

And so we’re from happy inventory an perspective. we are with where

question the in to I answer inventory expect and and in the your yes build positive last beyond. flow the cash is more much terms XXXX of Now wouldn’t through year, of remainder

All right. Thank you.

that product across I product the autograph as one Legacy, DBM well is the very and complete only a thing ASC And which can we’re or Virtuos, component. purposely an ASC with moving ASC market, It’s channel our for ASC ASC increasing is area. be building And of but might cases the We portfolio regard growth hospital to we’re in built an is in as with a basis. in European we’re Legacy. not but that Biologics. working and ASC, U.S. we’ve also towards as as other success appropriate on done there, another the if We’ve which well. the a those but go talked substitute or have about Jim, shelf-stable many global to current XX% launched Orthopedics a predominantly with add discussion appropriate basically our your and in MTF channel,

but biologics. along So good across we not also only business our feel where our about at we’re orthopedics yes, spine, with

So I well we’re think the positioned for future.

now, our in there’s strategy. what we’re a we’ve that’s, through. transition And transformation and that about, as of right coming factors talked And number what managing – confluence We’re to to together point we’re came you. that to articulating a are that’s or

Understood. Thank you.

Thanks, Jim.

no for this you are Jim. questions your question, time. There at further Thank

remarks. back to management to any the closing I for So like team would hand

you. support Orthofix everyone – We’d their of and for continued and like to Thank have going attending the interest their call thank and day. wonderful forward, a

Thank you. call concludes today. the This

your lines. disconnect now may You