OrthoPediatrics (KIDS) Stock Forecast & Price Target

OrthoPediatrics Corp reported 4Q24 sales of $52.7 million, reflecting a year-over-year organic growth of approximately 22%, aligning with company preannouncements. The company achieved a significant 61.8% growth in Scoliosis sales, contributing $15.6 million and underscoring robust performance in this segment, which now constitutes 30% of total revenue. With increasing revenue and improved EBITDA margins, the outlook for OrthoPediatrics emphasizes potential for operating leverage, reduced cash burn, and ongoing growth in the pediatric orthopedic market.

OrthoPediatrics Corp is facing a challenging financial outlook due to the expectation of flat long-term annual gross margins at 72%-73%, a decline from previous expectations, primarily driven by a reclassification of expenses. The company is also encountering risks associated with slower revenue growth, particularly from newly acquired products, and increasing cash burn, which is reflected in an operating margin of -26.7%, significantly underperforming consensus estimates. Additionally, the gross margin of 67.5% is substantially below the expected 74.2%, exacerbated by the reclassification of general and administrative expenses into cost of goods sold, further indicating financial strain.