OrthoPediatrics Corp. (“OrthoPediatrics” or
the “Company”) (Nasdaq: KIDS), a company focused exclusively on
advancing the field of pediatric orthopedics, today announced that
it has acquired Boston Orthotics & Prosthetics (“Boston
O&P”), a leader in pediatric orthotic management for over 50
years. Additionally, in advance of the acquisition, the Company
closed a debt financing with MidCap Financial which provides up to
$80 million of capital, through the combination of a term loan and
revolving loan, replacing its prior unused $50 million line of
credit.
Boston Orthotics & Prosthetics is a
profitable company offering leading bracing, orthotic and
prosthetic technology for the non-operative treatment of children
whose lives have been impacted by scoliosis, plagiocephaly, and
various neuromuscular disorders. The custom, patient specific
Boston Brace for Scoliosis, lower limb orthoses and Dynamic
Movement Orthoses (DMO), as well as the Boston Band for
plagiocephaly are among the most advanced, individualized braces
available to treat pediatric orthopedic conditions today. Boston
O&P’s products will expand OrthoPediatrics’ existing Specialty
Bracing division (“OPSB”), a flagship house of brands and
innovative products, to further penetrate the largest segments of
the $500 million U.S. pediatric orthopedic specialty bracing
market. It is estimated 80% of pediatric orthopedic care happens
before and after surgery.
“We are thrilled to announce the acquisition of
Boston O&P, an organization that shares our mission to help
children whose lives have been impacted by orthopedic conditions.
We are now the first company to have a role supporting the entire
continuum of care for pediatric orthopedic patients. This
opportunity significantly expands our newly launched
OrthoPediatrics Specialty Bracing division and is reflective of the
opportunity we saw with pediatric surgical implants at the
Company’s founding. The large majority of pediatric orthopedic
patients are not surgical candidates, and specialty bracing remains
an underserved market. Boston O&P offers unique products
designed specifically to address unmet pediatric needs in several
of the largest non-surgical orthopedic treatment markets. Adding
their complementary portfolio to our platform will offer additional
options to our current surgeon customers to help manage patients
before and after surgery,” said Dave Bailey, Chief Executive
Officer of OrthoPediatrics.
Partnering with world class medical facilities,
including Boston Children’s Hospital, Children’s Hospital of
Philadelphia, Nationwide Children’s Hospital in Columbus, Ohio, and
Phoenix Children’s Hospital, Boston O&P maintains 26 patient
care clinics across the U.S. Boston O&P’s recent annual
historical revenue is approximately $25 million.
“This acquisition enables us to serve more
patients as an extension of our growth strategy to surround our
pediatric orthopedic surgeon customers with the most comprehensive
portfolio of pediatric orthopedic treatment devices. Mr. Bailey
continued, “Combined, our businesses have helped over one million
children globally and we look forward to helping the next million
together by expanding the number of clinics and aggressively
launching new products that meet unmet needs for children and their
caregivers. Over time, we aspire to support all 300 high volume
children’s hospitals in the U.S.”
Boston O&P General Manager, Tom Morrissey
echoed his excitement for the transaction, stating “We are very
excited and proud to be joining the OrthoPediatrics team. It is
truly amazing how similar the two companies are and in our shared
passion for taking care of kids. We remain committed to improving
the quality of pediatric orthotic and prosthetic care and related
products kids receive, and the resources OrthoPediatrics will
provide can expedite greatly the achievement of that mission. We
cannot wait to get started to build the new OrthoPediatrics’ newly
launched Specialty Bracing division.”
Transaction Details and Debt
Financing
Under terms of the transaction, signed and
closed on January 5, 2024, OrthoPediatrics has acquired Boston
O&P for an upfront cash payment of $22 million. Post closing,
OrthoPediatrics cash and restricted cash balance is approximately
$60 million.
In advance of the acquisition, OrthoPediatrics
entered into a new credit agreement with MidCap Financial,
consisting of term loan and revolving loan. The term loan
provides up to $30 million of capital and the revolving loan
provides up to an additional $50 million, for a total availability
of $80 million. The credit agreement replaces the previously unused
$50 million line of credit with Squadron Capital. In advance of the
acquisition, OrthoPediatrics drew an initial $10 million from the
term loan.
Forward-Looking Statements
This press release includes "forward-looking
statements" within the meaning of U.S. federal securities laws,
including the statements regarding the benefits of OrthoPediatrics’
acquisition of Boston O&P, and other statements identified by
the use of words such as "may," "might," "will," "should,"
"expect," "plan," "anticipate," "could," "believe," "estimate,"
"project," "target," "predict," "intend," "future," "goals,"
"potential," "objective," "would" and other similar expressions.
Forward-looking statements involve risks and uncertainties, many of
which are beyond OrthoPediatrics’ control. Important factors could
cause actual results to differ materially from those in the
forward-looking statements, including, among others: the risks
related to COVID-19, the continued impact such pandemic may have on
the demand for our products, and our ability to respond to the
related challenges; and the risks, uncertainties and factors set
forth under "Risk Factors" in OrthoPediatrics’ Annual Report on
Form 10-K filed with the Securities and Exchange Commission
(the "SEC") on March 1, 2023 as updated and supplemented by
our other SEC reports filed from time to time. Forward-looking
statements speak only as of the date they are made. OrthoPediatrics
assumes no obligation to update forward-looking statements to
reflect actual results, subsequent events, or circumstances or
other changes affecting such statements except to the extent
required by applicable securities laws.
About Boston Orthotics &
Prosthetics
Boston Orthotics & Prosthetics is a
leader in pediatric orthotics and the world’s most trusted provider
of non-surgical scoliosis treatment options. For more than half a
century, Boston Orthotics & Prosthetics has been dedicated
to advancing the specialized orthotics and prosthetics profession
with educational support, training, and cutting-edge technology and
treatment techniques for the management of scoliosis,
plagiocephaly, and various neuromuscular disorders.
About OrthoPediatrics Corp.
Founded in 2006, OrthoPediatrics is an
orthopedic company focused exclusively on advancing the field of
pediatric orthopedics. As such it has developed the most
comprehensive product offering to the pediatric orthopedic market
to improve the lives of children with orthopedic conditions.
OrthoPediatrics currently markets 70 products that serve three of
the largest categories within the pediatric orthopedic market. This
product offering spans trauma and deformity, scoliosis, and sports
medicine/other procedures. OrthoPediatrics’ global sales
organization is focused exclusively on pediatric orthopedics and
distributes its products in the United States and over 70 countries
outside the United States. For more information, please
visit www.orthopediatrics.com.
About MidCap Financial
MidCap Financial is a middle-market focused,
specialty finance firm that provides senior debt solutions to
companies across all industries. As of September 30, 2023,
MidCap Financial provides administrative or other services for over
$48 billion of commitments*. MidCap Financial is managed by Apollo
Capital Management, L.P., a subsidiary of Apollo Global
Management, Inc, pursuant to an investment management
agreement. Apollo had assets under management of approximately $631
billion as of September 30, 2023, in credit, private equity
and real assets funds. For more information about MidCap Financial,
please visit http://www.midcapfinancial.com. For more information
about Apollo, please visit http://www.apollo.com. *Including
commitments managed by MidCap Financial Services Capital Management
LLC, a registered investment adviser, as reported under Item 5.F on
Part 1 of its Form ADV.
Investor Contact
Philip Trip TaylorGilmartin
Groupphilip@gilmartinir.com 415-937-5406
OrthoPediatrics (NASDAQ:KIDS)
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