OFIX 10-K & 10-Q changes, risk factors and insider trading

Physicians have increasingly have moved from independent, out-patient practice settings toward employment by hospitals and other larger healthcare organizations, which align physicians’ product choices with their employers’ price sensitivities and adds to pricing pressures. Hospitals have introduced and may continue to introduce new pricing structures into their contracts to contain healthcare costs, including fixed price formulas and capitated and construct pricing.

Generally, we have obtained 510(k) clearance to manufacture, market, and sell the products we market in the U.S. and the right to affix the CE mark to the products we market in the EEA. To date, we have not been required to generate new clinical data to support our 510(k) clearances, CE marks, or product registrations in other countries. However, the E.U. MDR, which replaced the prior medical device directives in May 2021, requirerequires submission of certain pre- and post-market data to maintain our CE marks. Additionally, we recently completed an analysis of which of our product systems will require submission of clinical data pursuant to MEDDEV 2.7.1 rev 4, which sets forth the EC’sEuropean Commission's ("EC") guidance on the clinical evaluation of medical devices. Accordingly, and in line with our vision to deliver clinical value, we have commenced clinical data collection activities for certain of our marketed products as more fully described elsewhere in this Item 1A.

With the passage of the American Recovery and Reinvestment Act of 2009, funds have been appropriated for the U.S. Department of Health and Human Services’HHS’ Agency for Healthcare Research and Quality ("AHRQ") to conduct comparative effectiveness research to determine the effectiveness of different drugs, medical devices, and procedures in treating certain conditions and diseases. Some of our products or procedures performed with our products could become the subject of such research. It is unknown what effect, if any, this research may have on our business. Further, future research or experience may indicate that treatment with our products does not improve patient outcomes, improves patient outcomes less than we initially expected, or carries previously undiscovered risks. Such results would reduce demand for our products, affect sustainable reimbursement from third-party payors, significantly reduce our ability to achieve expected revenue, and could cause us to withdraw our products from the market and could prevent us from sustaining or increasing profitability. Moreover, if future results and experience indicate that our products cause unexpected or serious complications or other unforeseen negative effects, we could be subject to significant legal liability, negative publicity, and damage to our reputation, and we could experience a dramatic reduction in sales of our products, all of which would have a material adverse effect on our business, financial condition, and results of operations. The spine medical device market has been particularly prone to potential product liability claims that are inherent in the testing, manufacture, and sale of medical devices and products for spine surgery procedures.

In the U.S., Federal and State privacy and security laws require certain of our operations to protect the confidentiality of personal information including patient medical records and other health information. In Europe, the Data Protection Directive requires us to manage individually identifiable information in the E.U., and the GDPR may impose fines of the greater of 20 million Euros or four percent of our global revenue in the event of violations. Some countries have also passed laws that require individually identifiable data on their citizens to be maintained on local servers and that may restrict the transfer or processing of that data. We are also subject to the California Consumer Privacy Act (the "CCPA"), which went into effect in January 2020. In November 2020, California passed the California Privacy Rights Act (the "CPRA"), which builds on the CCPA and expands consumer privacy rights to more closely align with the GDPR. The CPRA went into effect on January 1, 2023, and applies to information collected on or after January 1, 2022. The CCPA and CPRA, among other things, create new data privacy obligations for covered companies and provide new privacy rights to California residents, including the right to opt out of certain disclosures of their information. The CCPA also created a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach. It remains unclear what, if any, additional modifications will be made to the CPRA by the California legislature or how it will be interpreted. We believe that we meet the expectations of applicable regulations and that the ongoing costs of compliance with such rules are not material to our business, but could become material due to new regulations. There is no guarantee that we will be able to comply with these regulations. We work with PIIpersonal identifiable information and PHI, and we may not be able to avoid the negative reputational and other effects that might ensue from a significant data breach or failure to comply with applicable data privacy regulations, each of which could have significant adverse effects on our business, financial condition, or results of operations.

We contract with third-party manufacturers to produce many of our products like many other companies in the medical device industry. If we or any such manufacturer failfails to meet production and delivery schedules, it could have an adverse impact on our ability to sell such products. Further, whether we directly manufacture a product or utilize a third-party manufacturer, shortages and spoilage of materials, labor stoppages, product recalls, manufacturing defects, and other similar events could delay production and inhibit our ability to bring a new product to market in timely fashion. For example, the supply of the Trinity ELITEElite and Trinity Evolution allografts are derived from human cadaveric donors, and our ability to market the tissues depends on MTF Biologics continuing to have access to donated human cadaveric tissue and their continued maintenance of high standards in their processing methodology.

Outside suppliers, some of whom are sole-source suppliers, provide us with products, raw materials, and components used in manufacturing our products. We strive to maintain sufficient inventory of products, raw materials, and components so that our production will not be significantly disrupted if a particular product, raw material, or component is not available to us for a period of time, including as a result of a supplier's loss of its International Organization of Standardization ("ISO") or other certification or as a result of any of the disruptions described above under the risk factor titled "If any of our manufacturing, development, or research facilities are damaged and/or if our manufacturing processes are interrupted, we could experience supply disruptions and/or lost revenues and our business could be seriously harmed including as the result of natural disasters and other catastrophic events outside our control." For example, a certain number of our products require titanium, which is sourced from third partythird-party suppliers. Although the titanium required for such products is not directly sourced from Russia, the current war between Russia and Ukraine and the resulting geopolitical events and consequences are negatively impacting the wider titanium supply chain. These geopolitical events and consequences, including the imposition of sanctions, may negatively impact the ability of our local supply sources to timely supply titanium to us. In addition, some of our suppliers may choose to discontinue making their products available in the E.U. rather than follow MDR, which would require us to identify alternate supply sources for those products. Any such disruption in our production could harm our reputation, business, financial condition, and results of operations.

Further, under the Food and Drug AdministrationFDA Safety and Innovation Act ("FDASIA"),Act, which includes the Medical Device User Fee Amendments of 2012, as well as other medical device provisions, all U.S. and foreign manufacturers must have an FDA Establishment Registration and complete Medical Device listings for sales in the U.S. While we believe that our facilities materially comply with these requirements, we also source products from foreign contract manufacturers. It is possible that some of our foreign contract manufacturers will not comply with applicable requirements and choose not to register with the FDA. In such an event, we will need to determine if there are alternative foreign contract manufacturers who comply with the applicable requirements. If such a foreign contract manufacturer is a sole supplier of one of our products, there is a risk that we may not be able to source another supplier.

Further, we face significant challenges and risks in managing our geographically dispersed distribution network and retaining the independent sales representatives and distributors who make up that network, and as we launch new products and increase our marketing efforts with respect to existing products, we plan to expand the reach of our marketing and sales efforts and may need to hire new independent sales representatives and distributors. Independent sales representatives and distributors require significant technical expertise in various areas such as spinal care practices, spine injuries and disease, and spinal health and they require training and time to achieve full productivity. We may not attract or retain qualified independent sales representatives and distributors or enter into agreements with them on favorable or commercially reasonable terms, if at all. This could be due to a number of factors, including, but not limited to, perceived deficiencies, or gaps, in our existing product portfolio, intense competition for services of independent sales representatives and distributors, unreasonable demands by existing independent sales representatives and distributors, or the disruption associated with restrictive covenants to which representatives or distributors may be subject and potential litigation and expenses associated therewith. We may also experience unforeseen disengagement from independent sales representatives and distributors who have worked with us for many years. Even if we enter into agreements with additional qualified independent sales representatives or distributors, it often takes six to twelve months for new sales representatives or distributors to reach full operational effectiveness and they may not generate revenue as quickly as we expect them to, commit the necessary resources to effectively market and sell our products, or ultimately succeed in selling our products. Our success will depend largely on our ability to continue to hire, train, retain, and motivate qualified independent sales representatives and distributors. If we cannot expand our sales and marketing capabilities domestically and internationally, if we fail to train new independent sales representatives and distributors adequately, or if we experience high turnover in our sales network, we may not commercialize our products adequately, or at all, which would adversely affect our business, results of operations, and financial condition.

availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us; and having to comply with various U.S. and international laws, including the Foreign Corrupt Practices Act (the "FCPA") and anti-money laundering laws, and violation by our independent sales representatives or distributors of such laws.

In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third partythird-party with authorized access, adequately protect our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor or other third party,third-party, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive, and time-consuming, and the outcome is unpredictable.

Product liability claims are expensive to defend, divert our management’s attention and, if we are not successful in defending the claim, can result in substantial monetary awards against us or costly settlements. Further, successful product liability claims made against one or more of our competitors could cause claims to be made against us or expose us to a perception that we are vulnerable to similar claims. Any product liability claim brought against us, with or without merit and regardless of the outcome or whether it is fully pursued, may result in: decreased demand for our products, injury to our reputation, significant litigation costs, product recalls, loss of revenue, the inability to commercialize new products or product candidates, and adverse publicity regarding our products. Any of these may have a material and adverse effect on our reputation with existing and potential customers and on our business, financial condition, and results of operations. In addition, a recall of some of our products, whether or not the result of a product liability claim, could result in significant costs and loss of customers.

In September 2023, following an investigation conducted by independent outside legal counsel, our Board of Directors terminated the employment of Keith Valentine, John Bostjancic, and Patrick Keran, who had served respectively as the Company’s President and Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer. The Company notified each of Messrs. Valentine, Bostjancic, and Keran that their respective terminations were being made for "Cause," as defined in applicable employment-related agreements (including each executive’s respective Change in Control and Severance Agreement, dated June 19, 2023).

Several litigation and arbitration matters against the Company (and in certain cases, current and former directors and officers) are pending in connection with these terminations. These matters include (i) arbitration claims by the three former executives against the Company for alleged breach of contract, defamation, false light invasion of privacy and deceit in connection with such terminations of employment, including payment of severance amounts and the value of forfeited equity grants,Company, (ii) a consolidated securities class action complaintscomplaint alleging violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 in connection with the Company’s public disclosures during the periods preceding such terminations, and (iii) a consolidated derivative complaint alleging claims against certain of the Company’s current and former officers and directors based on the same allegations made in the securities class action complaints. Additional lawsuits or proceedings against the Company and/or its current or former directors and officers in connection with these matters may be filed in the future.

In the event that any of these claims, or other future related or unrelated claims, are successful, they could result in costs to us that couldmay negatively affect our near-term liquidity and financial condition. This may in turn significantly adversely affect our business and operations. In addition, these matters may also divert management’s attention and resources, which could adversely affect the operation of our business while such claims proceed.

Because some of our revenue, operating expenses, assets, and liabilities are denominated in foreign currencies, we are subject to foreign exchange risks that could adversely affect our operations and reported results. To the extent that we incur expenses or recognize net sales in currencies other than the U.S. Dollar, any change in the values of those foreign currencies relative to the U.S. Dollar could cause our profits to decrease or our products to be less competitive against those of our competitors. To the extent that our current assets denominated in foreign currency are greater or less than our current liabilities denominated in foreign currencies, we have potential foreign exchange exposure. The fluctuations of foreign exchange rates during 20242025 had ana unfavorablefavorable impact of $0.2$2.9 million on net sales outside of the U.S. Although we seek to manage our foreign currency exposure by matching non-dollar revenues and expenses, exchange rate fluctuations could have a material adverse effect on our results of operations in the future. To minimize such exposures, we may enter into currency hedges from time to time.

We are subject to taxes in the U.S. and numerous foreign jurisdictions. Significant judgment and interpretation of tax laws are required to estimate our tax liabilities. Tax laws and rates in various jurisdictions may be subject to significant change as a result of political and economic conditions. Our effective income tax rate could be adversely affected by changes in those tax laws,laws and regulations, changes in the mix of earnings among tax jurisdictions, changes in the valuation of our deferred tax assets and liabilities, vesting of equity awards at a price below the original valuation, historical entity classification elections, and the resolution of matters arising from tax audits.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years, or 15 years for such expenditures incurred outside of the U.S. ThisOn July 4, 2025, the One Big Beautiful Bill Act was enacted, which eliminated this requirement related to such expenditures for activities performed in the U.S. The remaining requirement may have a significant impact on our cash tax liability and our effective tax rate as we perform research and development in the U.S., Italy, and Canada.

We hold our cash and cash equivalents used to meet our working capital and operating expense needs in deposit accounts at multiple financial institutions. The balances held in these accounts typically exceed the Federal Deposit Insurance Corporation ("FDIC") standard deposit insurance limit or similar applicable government guarantee schemes. If a financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of such uninsured funds. Any such loss or lack of access to these funds could adversely impact our short-term liquidity and ability to meet our operating expense obligations.

Investors should not rely on recent or historical trends to predict future stock prices, financial condition, results of operations, or cash flows. Our stock price, like that of other medical device companies, can be volatile and can be affected by, among other things: speculation, coverage, or sentiment in the media or the investment community; the announcement of new, planned or contemplated products, services, technological innovations, acquisitions, divestitures, or other significant transactions by us or our competitors; our quarterly financial results and comparisons to estimates by the investment community or financial outlook provided by us; the financial results and business strategies of our competitors; publication of research reports about us or our industry or changes in recommendations or withdrawal of research coverage by securities analysts; changes in laws or regulations affecting our business, including tax legislation; changes in accounting standards, policies, guidance, interpretations, or principles; threatened or actual litigation or governmental investigations; and inflation, market volatility or downturns caused by outbreaks, epidemics, pandemics, geopolitical tensions or conflicts, or other macroeconomic dynamics. General or industry specific market conditions or stock market performance or domestic or international macroeconomic and geopolitical factors unrelated to our performance may also may affect the price of our stock.

In addition, the stock market in general, and the stocks of medical device companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. This could limit or prevent investors from readily selling their shares and may otherwise negatively affect the liquidity of our common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market for a company’s securities. Such litigation,litigation ifhas been instituted against us,us and may be instituted against us in the future, and could result in substantial costs, divert our management’s attention and resources, and harm our business, financial condition, and results of operations.

ThereIn isrecent years there has been an increasingincreased focus on the governance of environmental and social risks. A number of our customers who are payors or distributors have adopted, or may adopt, procurement policies that include ESG provisions that their suppliers or manufacturers must comply with, or they may seek to include such provisions in their terms and conditions. An increasingA number of participants in the medical device industry arehave also joiningjoined voluntary ESG groups or organizations, such as the Responsible Business Alliance. These ESG provisions and initiatives are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with, given the complexity of our supply chain and the outsourced manufacturing of certain components of our products. If we are unable to comply, or are unable to cause our suppliers to comply, with such policies or provisions, a customer may stop purchasing products from us, and may take legal action against us, which could harm our reputation, revenue, and results of operations.

ThereIn isrecent years there has been an increasingincreased focus from certain investors, customers, consumers, and other stakeholders concerning corporate citizenship and sustainability matters. We could be perceived as not acting responsibly in connection with these matters. In addition, various regulators around the world currently require, or may in the future require, increased reporting of company ESG metrics, which willmay raise our costs of ESG compliance. Our business could be negatively impacted by such requirements. Any such requirements or matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business.

The following discussion and analysis of our financial condition and result of operations should be read in conjunction with "Forward-Looking Statements" and our consolidated financial statements and notes thereto appearing elsewhere in this Annual Report. The discussion and analysis below is focused on our 20242025 and 20232024 financial results, including comparisons of our year-over-year performance between these years. Discussion and analysis of our 20222023 fiscal year specifically,year, as well as the year-over-year comparison of our 20232024 financial performance to 2022,2023, is located in Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023,2024, filed with the SEC on MarchFebruary 5,25, 2024,2025, which is available on our website at www.orthofix.com and the SEC’s website at www.sec.gov.

Orthofix is a global medical technology company headquartered in Lewisville, Texas. By providing medical technologies that heal musculoskeletal pathologies, we deliver exceptional experiences and life-changing solutions to patients around the world. Orthofix offers a comprehensive portfolio of spinal hardware, bone growth therapies, specialized orthopedic solutions, biologics, and enabling technologies, including the 7D FLASH navigation system.

In January 2023 we completed a “merger of equals” transaction with SeaSpine whereby we acquired SeaSpine became a wholly owned subsidiary of the Company via an all-stock merger (the "Merger").merger. For additional discussion of the merger with SeaSpine, see Note 4 of the Notes to the Consolidated Financial Statements in Item 8 of this Annual Report. The shares of common stock of Orthofix, as the corporate parent entity in the combined company structure, continue to trade on NASDAQ under the symbol "OFIX".

- Bone Growth Therapies, whichBGT manufactures, distributes, sells, and provides support services for market-leading devices used adjunctively in high-risk spinal fusion procedures and to treattreats both nonunion and acute fractures in the orthopedic space. Bone Growth TherapiesBGT uses distributors and a direct sales channel to sell its devices and provide associated support services to hospitals, healthcare providers, and patients in the U.S.

- Spinal Implants, Biologics, and Enabling Technologies is comprised of a broad portfolio of spine fixation and motion preservation implant products used in surgical procedures of the spine, one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments,segments and image-guided surgical solutions to facilitate degenerative, minimally invasive, and complex surgical procedures. Spinal Implants, Biologics, and Enabling Technologies products are sold through a network of distributors and sales representatives to hospitals and healthcare providers on a global basis for Spinal Implants and Enabling Technologies, and primarily within the U.S. for Biologics.

Bone Growth TherapiesBGT net sales increased $20.9$13.8 million, or 9.8%,5.9%, driven by (i) anfavorable increasechanges in average sales prices, (ii) increases in gross order volumes from our continued investment in our direct sales channels for both the spine and fracture markets, (ii) capitalization of cross-selling opportunities, and (iii) continued market share growth and adoption of AccelStim Spinal Implants, Biologics, and Enabling Technologies net sales, excluding sales from the M6 product lines, increased $23.1$11.6 million, or 5.5%,2.8%, primarily due to increased sales growth from new and existing high-volume distributiondistributor partners, particularlypartners within SpinalSpine Implants and Biologics,Fixation, which saw growth in each of ourits cervical, interbody, thoracolumbar, and demineralized bone matricesthoracolumbar franchises; growth in these areas werewas partially offset by a decline in motionBiologics preservation netNet sales from the M6 product lines decreased $13.0 million, or 55.4%, as a result of the announcement and discontinuation of the product lines in 2025 to focus resources and investments in more profitable growth opportunities Global OrthopedicsLimb Reconstruction offers products and solutions thatfor allowthe physicians to successfully treat a variety of orthopedic conditions specifically related tounderserved limb reconstruction andmarket that encompasses four pillars: deformity correctioncorrection, unrelatedlimb tolengthening, thecomplex spine.fracture management, and limb preservation. Global OrthopedicsLimb distributesReconstruction sells its products world-wide through a global network of distributors and sales representatives to sellhospitals, orthopedichealthcare products to hospitalsorganizations, and healthcare providers.

Net sales increased $8.9$10.5 million, or 7.7%8.4% on a reported basis and 7.9%5.3% on a constant currency basis U.S. growth of $4.7$5.3 million, or 16.4%,15.8%, largely due to investments made in recent product launches, commercial execution within our sales channel, and from growth within our OSCARTrueLok PROand Fitbone product linelines International growth of $4.3$1.2 million, or 5.0%1.4% on a constant currency basis, primarily driven by recentsales productfrom launchesnew products launched in Europethe past three years and partially offset by large orders made by NGOs in the timingprior year Increase of certain tender offers and stocking distributor orders Decrease of $0.2$3.9 million due to movement in foreign currentcurrency exchange rates, which had ana unfavorablefavorable impact on net sales in 20242025

Increase in gross profit driven by net sales growth across allBGT, principalSpinal Implants, Enabling Technologies, and Limb Reconstruction product categories Increase in gross profit of $23.9$12.2 million driven by a reduction ofin amortization of the inventory fair value step-up recognized in the Merger, which is beingwas amortized over the expected sales cycles of the acquired inventory and concluded in December 2024 Partially offset by a decrease in gross profit of $4.6 million resulting from increased inventory reserve expenses, primarily driven by our decision to discontinue the M6 product lines in order to focus resources and investments on more profitable growth opportunities

Acquisition-related AmortizationAmortization, Impairment, and Remeasurement

Acquisition-related amortizationamortization, impairment, and remeasurement increased $9.6$2.9 million Increase of $9.6$11.0 million in amortization and impairment expense of acquired intangibles, primarily associated with the impairment of certain acquired intangible assets as a result of the discontinuation of the M6 product lines and other product portfolio decisions Decrease of $8.0 million associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC ("Lattus") assumed in the Merger

Non-operating Income (Expense)

Non-operating income (expense) largely consists of net interest income and expense, transaction gains and losses from changes in foreign currency exchange rates, changes in fair value related to our equity holdings in certain privately-held companies, and credit losses recognized on certain convertible debt investments. Foreign exchange gains and losses are primarily a result of several of our foreign subsidiaries holding trade and intercompany payables or receivables in currencies (most notably the U.S. Dollar) other than their functional currency.

Interest expense, net, increaseddecreased $21.0$12.1 million

UnfavorableFavorable change of $13.3$11.4 million attributableassociated to an increase in outstanding indebtedness compared to prior year Unfavorable change of $6.9 million attributable towith the extinguishment of theour former Financing Agreement with Blue Torch Finance LLC Unfavorableand from favorable interest rates and amortization of debt issuance costs after refinancing our outstanding indebtedness in November 2024 Favorable change of $0.8$0.9 million resulting from interest earned on certain Employee Retention Credit refunds received during 2025 Partially offset by an unfavorable change of $0.2 million as a result of the conversion of theour former convertible loan with Neo Medical into preferred equity securities in the second quarter of 2024 and subsequent sale of such securities in the fourth quarter of 2024 Other expense,income (expense), net, increased $8.7$17.7 million UnfavorableFavorable change of $6.0$7.3 million associated with changes in foreign currency exchange rates, as we recorded a non-cash remeasurement lossgain of ($4.4$2.9 million) in 20242025 compared to a gainloss of $1.6$4.4 million in 20232024 UnfavorableFavorable change of $2.5$5.1 million, related to impairments totaling $6.8 million associated with gains and losses recognized on certain investments measured at fair value in prior year and partially offset by a $1.7 million gain recognized in the prior year upon conversion of the Neo Medical convertible loan into shares of equity Favorable change of $4.8 million from the receipt of Employee Retention Credit refunds received during 2025

Increase of $5.2 million associated with lower financial statement losses partially offset by valuation allowances Decrease of $2.0 million associated with foreign income inclusion Decrease of $1.5 million associated with statue expirations on uncertain tax positions Decrease of $2.4 million associated with financial statement expenses not deductible for tax, including executive and equity compensation A reconciliation of the effective tax rate for each year is reported in Note 20 to the Notes to the Consolidated Financial Statements contained in Item 8 of this Annual Report.

Cash flows from operating activities increased $71.5 million Favorable change in net lossDecrease of $25.4 million Favorable change of $11.4$24.0 million associated with non-cash gains and losses, such as depreciation, amortization, and impairments, inventory reserve expenses, the amortization of the inventory fair value step-up recognized in the Merger, share-basedremeasurement compensation,of inventorycontingent reserveconsideration expenses, depreciation and amortization, and gains and losses resulting fromobligations, changes in fairthe valuevaluation of certaininvestment assetssecurities, and liabilitiesshare-based Favorablecompensation changeexpense Decrease of $34.7$2.2 million relating to changes in working capital accounts, primarily attributable to changes in accounts receivable, inventories, prepaid expenses and other current assets, accounts payable, and other current liabilities Two of our primary working capital accounts are accounts receivable and inventory.inventories. Day’sDays sales in receivables were 57 days at December 31, 2024, compared to 59 days atboth December 31, 20232025, and 2024 (calculated using fourth quarter net sales and ending accounts receivable). Inventory turns improved to 1.5 times at December 31, 2025, compared to 1.3 times at December 31, 2024, compared to 1.2 times at December 31, 2023, respectively (calculated using trailing twelve month cost of goods sold and ending net inventories).

Cash flows from investing activities increaseddecreased $5.6$7.0 million

Decrease in spend of $27.2 million in capital expenditures and $0.4 million in other investing activities Increase of $7.4 million relating to the sale of the Neo Medical preferred equity securities in 2024 Partially offset by aan decrease in spend of $29.4$0.3 million attributablein tocapital cashexpenditures acquiredand as$0.1 a result of the Mergermillion in 2023other investing activities

Cash flows from financing activities decreased $14.6$51.5 million Decrease of $13.5$55.1 million associated with net borrowing activities related to our credit facilities and assumption of SeaSpine's outstanding indebtedness atin the timeprior of the Mergeryear Decrease of $1.3$4.0 million in debt issuance costs associated with thecontingent Creditconsideration Agreement with Oxford Finance LLCpayments Partially offset by an increase of $0.2$4.6 million in net proceeds from the issuance of common shares Further offset by a favorable change of $3.1 million in debt issuance costs associated with our credit facilities

On November 7, 2024, the Company, as borrower, and its U.S. subsidiarieswe entered into a $275.0 million secured credit agreement (the "Credit Agreement") with Oxford Finance LLC, as administrative agent and as collateral agent ("Oxford") and certain lenders party thereto, including Oxford, K2 HealthVentures LLC, and HSBC Ventures USA Inc. Certain of the Company’sour foreign subsidiaries joined the Credit Agreement as guarantors shortly after the signing date. The Credit Agreement provides for a $160.0 million senior secured term loan (the "Initial Term Loan"), and a $65.0 million senior secured delayed draw term loan facility (the "Term B Loan"). Draws under the Term B Loan are at the Company’sour option from January 1, 2025 through June 30, 2026, subject to, among other conditions, theour Company’s continuingcontinued compliance with a pro-forma total debt-to-EBITDA leverage ratio of less than 4.0x. EBITDA is a non-GAAP financial measure which represents earnings before interest income (expense), income taxes, depreciation, amortization, and other negotiated addbacks and adjustments. In addition, at Oxford's discretion, an additional $50.0 million of draw capacity is available to the Company, through January 1, 2029 (the "Term C Loan" and, together with the Term B Loan, the "Delayed Draw Term Loans" and collectively with the Initial Term Loan, the "Credit Facilities"). The Initial Term Loan and Delayed Draw Term Loans, to the extent ultimately drawn, will each mature in November 2029, following an interest-only payment period ending December 2028, and monthly amortization of principal and accrued interest between January 2029 and November 2029.

As of December 31, 2024, we had $160.0 million outstanding borrowings under the Credit Agreement related to the Initial Term Loan. As of December 31, 2024, we had not made any borrowings under the Delayed Draw Term Loans. For additional information regarding the credit facility, see Note 11 of the Notes to the Consolidated Financial Statements in Item 8 of this Annual Report.

In connection withUnder the Merger,terms we assumedof a contingent consideration obligation underin a purchase agreement betweenassumed in the SeaSpine and Lattus executed in December 2022. Under the terms of the agreement,Merger, we may be required to make installment payments at certain dates based on future net sales of certain products (the "Lateral Products"). We made a payment under this arrangement of $6.3 million during the year ended December 31, 2025. The estimated fair value of the remaining contingent consideration arrangement as of December 31, 2024,2025, was $15.4$7.9 million; however, the actual amount ultimately paid could be higher or lower than the estimated fair value of the contingent consideration. As of December 31, 2024,2025, we classified $7.1the million of theremaining contingent consideration liability of $4.3 million and $3.6 million within other current liabilities and the remaining $8.3 million within other long-term liabilities.liabilities, respectively. For additional discussion of this matter, see Note 12 of the Notes to the Consolidated Financial Statements in Item 8 of this Annual Report.

Unremitted foreign earnings were $15.7 million as of December 31, 2024. The Company’s investment in foreign subsidiaries continues to be indefinite in nature; however, the Company may periodically repatriate a portion of these earnings to the extent that it does not incur significant additional tax liability.

As a result of our operations, we are subject to certain contractual obligations with material cash requirements. Our material contractual obligations include, but are not limited to (i) our contingent consideration arrangement under a purchase agreement between SeaSpine and Lattus assumed in the Merger, (ii) contingent consideration arrangements associated with certain asset acquisitions or business combinations, of which material obligations are described above, (iiiii) operating lease and finance lease obligations, and (iviii) uncertain tax positions.

Our discussion of operating results is based upon the consolidated financial statements and accompanying notes. The preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis, we evaluate these estimates, which are based on historical experience and various other assumptions that management believebelieves to be reasonable under the circumstances at that point in time. Actual results may differ, significantly at times, from these estimates.

The process for recognizing revenue involves significant assumptions and judgments for certain of our revenue streams. Revenue recognition policies are "critical accounting estimates" because changes in the assumptions used to develop the estimates could materially affect key financial measures, including net sales, gross margin,profit, operating income, adjusted EBITDA, and net income.

Bone Growth TherapiesBGT revenue is largely attributable to the U.S. and is comprised of third-party payor transactions and wholesale revenue.

For revenue derived from third-party payors, including commercial insurance carriers, health maintenance organizations, preferred provider organizations, and governmental payors, such as Medicare, in connection with the sale of our Bone Growth TherapiesBGT products, we recognize revenue when the stimulation product is fitted to and accepted by the patient and all applicable documents that are required by the third-party payor have been obtained. Amounts paid by these third-party payors are generally based on fixed or allowable reimbursement rates. These revenues are recorded at the expected or preauthorized reimbursement rates, net of any contractual allowances or adjustments. Certain billings are subject to review by the third-party payors and may be subject to adjustment.

Wholesale revenue is related to the sale of our Bone Growth TherapiesBGT products directly to physicians and other healthcare providers. Wholesale revenues are typically recognized upon shipment and receipt of a confirming purchase order, which is when the customer obtains control of the promised goods.

Biologics revenue is largely attributable to the U.S. and is mostly processed from within our Irvine facility. In addition, we have a long-standing collaborative arrangement with MTF Biologics ("MTF") that provides exclusive global marketing rights to MTF's TrinityVirtuos and Trinity Elite tissues, and exclusive rights to market the FiberFuse producttissues families.in the U.S. We receive marketing fees from MTF based on sales of products covered under the collaborative arrangement. MTF is considered the principal in these arrangements; therefore, we recognize these marketing service fees on a net basis upon shipment of the product to the customer and receipt of a confirming purchase order.

Spinal Implants and Global OrthopedicsLimb Reconstruction products are distributed world-wide, with U.S. sales largely comprised of commercial revenue and international sales derived from commercial sales and through stocking distributor arrangements.

Commercial revenue is largely related to the sale of our Spinal Implants and Global OrthopedicsLimb Reconstruction products to hospital customers. Commercial revenues are recognized when these products have been utilized and a confirming purchase order has been received from the hospital.

The process for estimating the ultimate collection of accounts receivable involves significant assumptions and judgments. The determination of the contractual life of accounts receivable, the aging of outstanding receivables, as well as the historical collections, write-offs, and payor reimbursement experience over the estimated contractual lives of such receivables, are integral parts of the estimation process related to reserves for expected credit losses and the establishment of contractual allowances. Accounts receivable are analyzed on at least a quarterly basis to assess the adequacy of both reserves for expected credit losses and contractual allowances. Revisions in allowances for expected credit loss estimates are recorded as an adjustment to bad debt expense within sales, general, and administrative expenses. Revisions to contractual allowances are recorded as an adjustment to net sales. These estimates are periodically tested against actual collection experience. In addition, we analyze our receivables by geography and by customer type, where appropriate, in developing estimates for expected credit losses. We elected the practical expedient provided within Accounting Standard Update 2025-05, which allows us to assume that current macroeconomic conditions as of the balance sheet date persist for the remaining contractual life of current accounts receivable.

We believe our allowance for credit losses is sufficient to cover customer credit risks; however, a 10% change in our allowance for credit losses as of December 31, 2024,2025, would result in an increase or decrease to sales, general, and administrative expense of $0.7$0.8 million. Additionally, we believe our estimate to establish contractual allowances is sufficient to cover customerrisk creditof riskssubsequent contractual adjustments; however, a 10% change in our reserve for contractual allowances as of December 31, 2024,2025, would result in an increase or decrease to net sales of $0.4 million. Our allowance for credit losses and estimation of contractual allowances are "critical accounting estimates" because changes in the assumptions used to develop the estimates could materially affect key financial measures, including net sales, gross margin,profit, operating income, adjusted EBITDA, net income, and accounts receivable.

Reserves for excess, slow moving, and obsolete inventory are calculated as the difference between the cost of inventory and marketnet realizable value and are based on assumptions and judgments about new product launch periods, overall product life cycles, forecasted demand, and market conditions. In the event of a decrease in demand for our products, excess product production, or a higher incidence of inventory obsolescence, we couldmay be required to increase our inventory reserves, which would increase cost of sales and decrease gross profit. We regularly evaluate our exposure for inventory write-downs. If conditions or assumptions used in determining the market value or forecasted demand change, additional inventory adjustments in the future may be necessary. Our inventory allowance is a "critical accounting estimate" because changes in the assumptions used to develop the estimate could materially affect key financial measures, including gross profit, operating income, adjusted EBITDA, net income, and inventory.inventories.

We test goodwill at least annually for impairment, and between annual tests if indicators of potential impairment exist. These indicators include, among others, significant declines in sales, earnings, or cash flows, or the development of a material adverse change in the business climate. Assessing goodwill impairment involves a high degree of judgment due to the estimates and assumptions used. WeOur believevaluation of goodwill is a "critical accounting estimate" because significant changes in the estimates and assumptions involved in the impairment assessment to be critical because significant changes in such estimates and assumptions could materially affect key financial measures, including operating income and net income.

In the fourth quarterquarters of 2024,both 2024 and 2025, we performed a quantitative assessment for our annual goodwill impairment analysis, which did not result in an impairment charge. Upon performing our assessment, we determined the Global Spine reporting unit's fair value exceeded its carrying value and concluded there were no indicators of impairment. These qualitative assessments considered all relevant factors specific to the reporting units, including macroeconomic conditions, industry and market considerations, overall financial performance, and relevant entity-specific events.

Other than as disclosed above, there have been no material changes from the risk factors disclosed in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025.

The following discussion and analysis of Orthofix Medical Inc.'s (sometimes referred to as the "Company," "we," "us" or "our") financial condition and results of operations should be read in conjunction with the discussion under the heading "Forward-Looking Statements" and our condensed consolidated financial statements and related notes thereto appearing elsewhere in this Form 10-Q.

We are a global medical technology company dedicated to advancing healing and restoring mobility for patients with complex musculoskeletal conditions. Headquartered in Lewisville, Texas, we deliver technology-enabled solutions that support improved clinical outcomes and more efficient care across the continuum. We offer a focused and differentiated portfolio spanningof spinal implants, therapeutic solutions, limb reconstruction systems, biologics and enabling technologies, including the 7D FLASH Navigation System. Our technology-enabled solutions are designed to support surgeons across the continuum of care and improve outcomes for patients. Learn more at Orthofix.com and follow Orthofixus on LinkedIn. Information included on our website is not incorporated into, ornor does it otherwise createscreate a part of, this report.

Notable financial metrics in the firstsecond quarter of 2026 and recent achievements include the following:

FirstSecond quarter 2026 reported net loss of $(20.915.8) million and non-GAAP pro forma adjusted EBITDA of $9.7$20.1 million, reflecting impacts from geography mix and commercial transitions.million.

Our operations are managed through two reporting segments: Global Spine and Global Limb Reconstruction. The following tabletables providesprovide net sales by product category and reporting segment:

* Results above for each of Spinal Implants, Biologics, and Enabling Technologies; Global Spine; and pro forma net sales exclude the impact from discontinuation of its M6-C artificial cervical disc and M6-L artificial lumbar disc product lines (together, the "M6 artificial discs" or "M6 product lines.lines"). Since pro forma net sales represent a non-GAAP measure, see the reconciliation above of the Company's pro forma net sales to its reported figures under U.S. GAAP. The Company's reported figures under U.S. GAAP represent each of the pro forma line items discussed above plus the impact from discontinuation of the M6 product lines.

Net sales of $32.8$37.7 million, an increase of $3.0$4.4 million or 10.2%13.2% on a reported basis and 3.0%11.0% on a constant currency basis U.S. net sales declinegrowth of $0.1$0.2 million, or 0.8%,1.6%, largely due to timing of large capital sales orders, partially offset by growth from new products launched in the past three yearsyears, partially offset by the timing of large capital sales orders International sales increase of $3.1$3.5 million, or 4.6%15.0% on a constant currency basis, primarily driven by sales of new products launched in the past three years Net sales increase of $0.7 million due to movement in foreign currency exchange rates, which had a favorable impact during the quarter Net sales of $70.5 million, an increase of $7.4 million or 11.8% on a reported basis and 7.2% on a constant currency basis U.S. net sales were relatively flat compared to the prior year International sales increase of $4.5 million, or 10.1% on a constant currency basis, primarily driven by sales of new products launched in the past three years and partially offset by the timing of large tender orders and capital sales in the prior year Net sales increase of $2.2$2.9 million due to movement in foreign currency exchange rates, which had a favorable impact during the quarter

Research and development expense was relatively consistent with the prior year period, as increased personnel-related costs were substantially offset by lower nonrecurring charges recognized in the prior year Research and development expense decreased $4.4 million Decrease of $4.8$5.2 million related to impairments and costs associated with the discontinuation of the M6 product lines and other organizational restructuring activities that occurred in 2025 Partially offset by an increase of $0.4$0.6 million in clinical studiescompensation and productbenefits development costsexpenses

Acquisition-related amortization, impairment, and remeasurement increased $0.8 million Increase of $1.6 million associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC ("Lattus") assumed in the merger with SeaSpine Holdings Corporation (the "Merger") Partially offset by a decrease of $0.9 million in amortization expense primarily resulting from impairments of certain acquired intangible assets recorded in the prior year Acquisition-related amortization, impairment, and remeasurement decreased $14.0$13.2 million Decrease of $15.4$16.2 million in amortization expense primarily associated with the impairment of certain acquired intangible assets as a result offrom the discontinuation of the M6 product lines Partially offset by an increase of $1.4$3.0 million associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the merger with SeaSpine Holdings Corporation (the "Merger")

Unfavorable change of $1.4$1.2 million attributable to an increase in interest expense following the funding of the $65.0 million Term B Loan in January 2026 Partially offset by a favorableUnfavorable change of $0.2$0.8 million resultingassociated fromwith interest earned on certain Employee Retention Credit refunds received induring the firstsecond quarter of 20262025 Other income (expense), net decreased $2.0$6.5 million Unfavorable change of $2.0$3.5 million associated with foreign currency exchange rates, as we recorded a non-cash remeasurement loss of $0.9$0.7 million in firstsecond quarter of 2026 compared to a gain of $1.1$2.7 million in the firstsecond quarter of 2025 Unfavorable change of $2.9 million associated with the receipt of Employee Retention Credit refunds received during the second quarter of 2025 Interest expense, net increased $3.3 million Unfavorable change of $2.2 million attributable to an increase in interest expense following the funding of the $65.0 million Term B Loan in January 2026 Unfavorable change of $0.6 million associated with interest income earned on certain Employee Retention Credit refunds received during 2025 and 2026 Unfavorable change of $0.5 million in interest expense associated with finance lease obligations and the amortization of debt issuance costs Other income (expense), net decreased $8.5 million Unfavorable change of $5.5 million associated with foreign currency exchange rates, as we recorded a non-cash remeasurement loss of $1.7 million in 2026 compared to a gain of $3.8 million in 2025 Unfavorable change of $2.9 million associated with the receipt of Employee Retention Credit refunds received during 2025

Cash, cash equivalents, and restricted cash at MarchJune 31,30, 2026, totaled $120.9$104.4 million compared to $85.1 million at December 31, 2025. The following table presents the net change in cash, cash equivalents, and restricted cash for the threesix months ended MarchJune 31,30, 2026, and 2025, respectively:

Cash flows used infrom operating activities decreased $0.8$17.1 million DecreaseImprovement in net loss of $32.2$30.5 million Decrease of $31.3$35.1 million associated with non-cash gains and losses, such as depreciation, amortization, and impairments, and inventory reserve expenses, remeasurement of contingent consideration obligations, changes in the valuation of investment securities, and share-based compensation expenseexpenses Decrease of $0.1$12.5 million relating to changes in working capital accounts, primarily attributable to changes in accounts receivable, inventories, and otheraccounts current liabilitiespayable Two of our primary working capital accounts are accounts receivable and inventory. Days sales in receivables were 6359 days atas Marchof 31,June 30, 2026, compared to 6158 days atas Marchof 31,June 30, 2025 (calculated using firstsecond quarter net sales and ending accounts receivable). Inventory turns decreased to 1.41.3 times as of MarchJune 31,30, 2026 compared to 1.5 times as of MarchJune 31,30, 2025 (calculated using trailing twelve-month cost of goods sold and ending net inventories).

Cash flows used in investing activities increased $3.8$9.3 million Increase in spend of $3.9$9.5 million in capital expenditures and partially offset by decreasean increase of $0.1 million in other investing activities

Cash flows from financing activities increased $64.6$64.4 million Increase of $64.0 million associated with net borrowing activities related to our credit facilities in the first quarter of 2026 compared to the prior year period Favorable change of $0.5 million in debt issuance costs associated with our credit facilities in the first quarter 2026 compared to the prior year period

On November 7, 2024, we entered into a $275.0 million secured credit agreement (the "Credit Agreement") with Oxford Finance LLC, as administrative agent and as collateral agent ("Oxford") and certain lenders party thereto, including Oxford, K2 HealthVentures LLC, and HSBC Ventures USA Inc. Certain of our foreign subsidiaries joined the Credit Agreement as guarantorseither a borrower or guarantor shortly after the signing date. The Credit Agreement provides for a $160.0 million senior secured term loan (the "Initial Term Loan") and a $65.0 million senior secured delayed draw term loan facility (the "Term B Loan") which Term B Loan was fully funded on January 15, 2026. In addition, at Oxford's discretion, an additional $50.0 million of draw capacity is available through January 1, 2029 (the "Term C Loan" and, together with the Term B Loan, the "Delayed Draw Term Loans" and collectively with the Initial Term Loan, the "Credit Facilities").

The Credit Agreement contains financial covenants requiring us to maintain a minimum level of liquidity at all times and to maintain a maximum total debt-to-EBITDA leverage ratio (measured on a quarterly basis) during the term of the facility. As of MarchJune 31,30, 2026, we were in compliance with all required financial covenants.

As of MarchJune 31,30, 2026, we had $225.0 million of outstanding borrowings under the Credit Agreement related to the Initial Term Loan and the Term B Loan. We have not made any borrowings under the Term C Loan as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, we had no borrowings on our available lines of credit in Italy, which provide up to an aggregate amount of €5.5 million ($6.4$6.3 million).

Under the terms of a contingent consideration obligation in a purchase agreement assumed in the Merger, we may be required to make installment payments to Lattus (the "Lattus Contingent Consideration") at certain dates based on future net sales of certain products (the "Lateral Products"). We made payments of $6.3 million under this arrangement during the year ended December 31, 2025. The estimated fair value of the remainingLattus contingentContingent consideration arrangementConsideration as of MarchJune 31,30, 2026, was $8.7$9.5 million. The actual amount ultimately paid could be higher or lower than the estimated fair value of the contingentLattus consideration.Contingent Consideration. As of MarchJune 31,30, 2026, we classified the remaining contingentLattus considerationContingent Consideration liability of $4.7 million and $4.0$9.5 million within other current liabilities and other long-term liabilities, respectively. For additional discussion of this matter, see Note 6 of the Notes to the Unaudited Condensed Consolidated Financial Statements.liabilities.

As of MarchJune 31,30, 2026, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, cash flows, liquidity, capital expenditures or capital resources that are material to investors.

There have been no material changes in any of our material contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.2025 ("2025 10-K").

Our discussion of operating results is based upon the condensed consolidated financial statements and accompanying notes. The preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our critical accounting estimates are described in Item 7 of our Annual2025 Report on Form 10-K for the year ended December 31, 2025.10-K. There have been no significant changes to our critical accounting estimates during the quarter covered by this report.