Orthofix Medical Q4 2023 Earnings Call Transcript

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Provided by Quartr
March 5, 2024

There are 7 speakers on the call.

Operator

Good afternoon, and welcome to Orthofix Medical's Q4 and Full Year 2023 Earnings Call. All participants are in a listen only mode. After the speakers' remarks, we will have a question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the call over to Louisa Smith, Vice President of Gilmartin Group.

Operator

Thank you. Please go ahead.

Speaker 1

Good afternoon, everyone. Welcome to the Orthofix 4th quarter 2023 earnings call. Joining me on the call today are President and Chief Executive, Massimo Calciore and Chief Financial Officer, Julie Andrews. During this call, we will be making forward looking statements that involve risks and uncertainties. All statements other than those of historical facts are forward looking statements, including any earnings guidance we provide and any statements about our plans, beliefs, strategies, expectations, goals, objectives.

Speaker 1

Investors are cautioned not to place undue reliance on such forward looking statements as there is no assurance that the matter contained in such statements will occur. The forward looking statements we will make on today's call are based on our beliefs and expectations as of today, March 5, 2024. We do not undertake any obligation to revise or update such forward looking statements. Some factors that could cause actual results to be materially different from the forward looking statements made by us on the call include the risk factors disclosed under the heading Risk Factors in our Form 10 ks filed this afternoon, March 5, 2024, for the year ended December 31, 2023, as well as additional SEC filings we make in the future. In addition, on today's call, we will refer to various non GAAP financial measures.

Speaker 1

We believe that in order to properly understand our short term and long term financial trends, investors may wish to review these matters as a supplement to the financial measures determined in accordance with U. S. GAAP. Please refer to today's news release announcing our Q4 2023 results for reconciliations of these non GAAP financial measures to our U. S.

Speaker 1

GAAP financial results. At this point, I will turn the call over to Massimo.

Speaker 2

Thank you, Luisa, and thank you, everyone, for joining us this afternoon for MACRIS quarterly earnings call as Orthofix's CEO. I'll begin by saying how happy I am to be part of Orthofix and this impressive organization. The company has strong fundamentals and I believe great potential for future value creation. This is why I joined Orthofix. Yes, the company has been through much change in the last 12 months, but our business fundamentals have remained strong and our talented leaders and committed employees have executed exceptionally well.

Speaker 2

4th quarter performance was no exception. We executed against our guidance, gained momentum and accelerated strategic initiatives. Despite that predictions otherwise, we also expanded our distribution network in our USA Spine sales channel. I'm so pleased to be part of the Orthofix team and that we work to build on past successes, leverage our current momentum and unlock future value creating opportunities. During the last 8 weeks, I've had the chance to speak to many stakeholders and are more encouraged than ever about the opportunity for growth and value creation that is in front of us.

Speaker 2

I joined Orthofix having admired the company and its innovative solutions and my early insights have affirmed those long held beliefs. I want to spend some time on this call sharing my initial thoughts and observation about our business and highlighting some areas we prioritize throughout the year. Then I'll turn the call over to Julie to provide a more in-depth look at our Q4 performance and financial results. 1st and foremost, I observed that the company has remained stable throughout the recent periods of transition, demonstrating our durable business model. I have spent a great deal of time understanding internal operations as well as how Orthofix fits into the markets where we are competing.

Speaker 2

I'm confident in our fundamental strategy across Orthopaedics, Spine, Biologics and Bone Growth Therapies. There should be no misgiving about the ability of this company to serve the evolving clinical needs of surgeons and patients, while also delivering strong growth combined with improved operational efficiencies. We performed well throughout 2023, gaining market share and maintaining a relationship with our partners. Disruption and consolidation within the spinal market specifically have created commercial opportunities in spine and orthopedics. We have taken advantage of these opportunities continuing to build out our network.

Speaker 2

I want to quell any notion that Orthofix is losing distributors. We are adding high value relationship while optimizing our existing sales channel. In the Q4 alone, 8%

Speaker 3

of U.

Speaker 2

S. Sales panel implant sales were attributed to new distributors alone. Additionally, it's important to note that our merger thesis remains intact. With last January's business combination, Orthofix brought together uniquely complementary best in class portfolios to create a compelling product platform across spine and orthopedics. We are well positioned to capture value within specialized market and have already seen the inherent cross selling benefit of being able to leverage our portfolios as a whole.

Speaker 2

I want to highlight that as spine surgery progresses towards data driven solutions, a gap remains in detecting changes in the operating room. Translating a surgical plan to reality requires real time information with the flexibility and tools to adapt. Orthofix is a leader in this space, and we plan to fully leverage the 7d flash navigation system. And third, the growth within Orthofix Spine segment has been supported by 29% increase in our global 7 gs installations over the past year. With continued investment, our next generation advancements in enabling technology and hardware, we've built DuPont's unique foundation and establish us as the partner of choice for surgeons seeking real time data driven in intraverative solutions in Orthopix and Spine.

Speaker 2

The merger between Orthofix and C Spine also created a biologics business unit with best in class products in the 3 of the most significant bond substitute segments: cellular bond mattresses, demineralized bond mattresses and synthetic bond substitutes. The breadth of our biologics portfolio enable Orthofix to meet surgeon preference and procedure specific requirements. Furthermore, biologics is a capital efficient unit, ultimately driving cash and EBITDA gains for the company. As it relates to platform synergies, Biologics remain an integral part of our overall spine and orthopedic start work strategy, carrying with it a diverse offering with the associated clinical data to broaden IDM and GPO access that helps attract and retain spine distributors. Moving to Bond Growth Therapies or BGT, this business is well positioned to continue growing the market and take share.

Speaker 2

We have the industry's only cervical indication and are the only company to offer both lipos and PEM solutions for fracture dealing. In addition, the opportunity to support acute trauma with our excel team solution is propelling the growth of this franchise to available market. Throughout the 2024, we expect to accelerate the cross selling of BGT through our spine and orthopedics sales channels. The orthopedics business has an impressive portfolio and pipeline of highly specialized internal and external solutions for complex limb reconstruction and deformity correction. It is uniquely positioned to read pediatric and adult limb deformity correction, and we are just starting to tap into its potential in the United States.

Speaker 2

Additionally, we have recently rolled out OrthoNex, our case planning software platform for use with our orthopedic products. We'll be expanding the OrthoNEXT application to incorporate many of our products platform across segments. Moving to PECRI priorities for 2024. First off, our mandate is to grow the company and grow it profitably. A key part of the merger thesis was to combine SeaSpine's innovative growth engine with the capital efficiencies of Orthofix.

Speaker 2

Throughout 2023, we have been able to do just that. We have sequentially improved adjusted EBITDA every quarter, and we are effectively managing cash flow to exit 2024 cash flow positive. We believe that profitable growth will be a key differentiator for Orthofix amongst our peers and will ultimately be a driving force in creating shareholder value. We will not subscribe to a growth of our cost mindset, and we intend to use 1 of the Orthofix greatest trends and my second key area of focus, our balanced portfolio platform to accomplish the goal. As stated, the second priority is to further leverage our technologies and sales channels across all product segments.

Speaker 2

We are not a pure play spine company nor a commodity products orthopedics company. Orthofix occupies a unique corner of the end market itself, and we intend to highlight the entire portfolio platform as the key driver of further market share gains. In addition, we believe enabling technology is critical in positioning us for long term sustained growth and future success. The capabilities of 7b to redefine image guided surgery within spine and orthopedics is an increasingly important aspect of how we feel growth. Adding to that, the application of fresh structure and spine indication for our PGT business, layered in with the integration of a surgeon preference market for biologics across Spinal Orthopaedics.

Speaker 2

The complementary nature of our portfolio becomes even more evident. Our products work together to create a best in class offering, each improving the performance of the other and enabling growth through cross selling opportunities. And finally, the 3rd priority is our commitment to innovation. As I've just noted, 7d is a key contributor to our growth engine. We envision that the combination of 7 d with our spinal hardware will strengthen our position in selected market segments, especially in spine deformity, where we expect to emerge as a formidable contender.

Speaker 2

We will also continue to commit the resources, developing high value initiative that will enable profitable growth and market share gain. In recent years, the decision to invest more heavily in BGT by seeking a fracture indication for AXA Steel and select unprecedented growth in the franchise. We have delivered 4 consecutive quarters of double digit growth and the traction in BGT is a direct result of reallocating investments to a high growing business. Similarly, the investment in the FitBond platform and the best in class TruLock Circular Frame platform are driving growth well above historical norms for the business. The current and planned pipeline within Orthopaedics should take this business to a market leading position in complex limb deformity correction.

Speaker 2

We will continue to invest strategically across the entire portfolio and put resources behind products where we can create or deepen market segment and drive above market growth without burdening the bottom line. I'm very pleased with the team's performance in the last several months and incredibly encouraged by my initial findings. Orthofix is on very solid footing and I anticipate being able to share increasingly meaningful updates about key opportunities as we move into the next chapter of our story. With that, I will now turn the call over to Juri for further detail on our Q4 and full year results.

Speaker 1

Thank you, Massimo, and good afternoon, everyone. Like Massimo, I'm very happy to join Orthofix at this important time and look forward to contributing to the company's future success. Before I begin, I'd like to remind you to please refer to our press release published earlier today for information regarding our non GAAP results, including a reconciliation of these results to our GAAP results. Additionally, all percentage changes discussed will be on a year over year basis and revenue growth rates will be on a pro form a constant currency basis unless otherwise noted. In addition, all results of operations that I refer to in my prepared comments will be on a non GAAP as adjusted basis and comparisons to prior year will be on a pro form a basis, including the combined results of Orthofix and SeaSpine in 2022 unless otherwise stated.

Speaker 1

Starting in Q1, we will annualize the impact of the merger and no longer refer to pro form a growth. As noted earlier in the call, Orthofix finished the year with a strong Q4. Operating performance remains on track and we were pleased to deliver net sales above the high end of the range provided in our Q3 call. For my commentary, I'll go through each of our business units and review financial results on the quarter and for the full year as well as provide guidance for 2024. Total company net sales were $200,400,000 in the Q4 of 2023, up 6.9% over prior year.

Speaker 1

For the full year 2023, net sales were 700 and $46,600,000 growing 8.1% on a pro form a constant currency basis and normalizing for a one time stocking order that occurred in the Q3 of 2022 prior to SeaSpine's exit from the European market. Bone Growth Therapies revenue grew 15.3 percent to $58,800,000 in Q4 and delivered 13.5% growth for the full year 2023. The 4th quarter marked 4 consecutive quarters of double digit growth for the BTD franchise. This growth was driven by above market performance in both the spine and fracture channel. We have seen great performance with the AccelStim product from our continued investment in a focused sales channel for the fracture market with growth of 23.6% in the 4th quarter.

Speaker 1

The fracture market is a $200,000,000 plus market and we are just getting started. Global spinal implants, biologics and Enabling Technologies grew 4% this quarter and 6.3% for the full year 2023. As mentioned above, when normalizing for a one time stocking order that occurred in the Q3 of 2022 prior to SeaSpine's exit from the European market. U. S.

Speaker 1

Spine fixation revenue grew 13.5% in the quarter, which is well above market growth rate. To clarify, this excludes Motion Preservation and is a metric we will be providing in future quarters. As we saw in Q3, the performance was driven in large part by more exclusive distributor partnerships, cross contract access and an increased focus on cross selling. New distributor partners added since July 2023 contributed approximately 8% of revenue for U. S.

Speaker 1

Spinal implants in Q4. We are pleased we have been able to maintain existing and build new relationships with our key distributor partners. The global orthopedics business grew 2.7% in the 4th quarter and 5.2% for the full year. Full year growth was led by the U. S.

Speaker 1

With 11.1% growth driven by strong performance with our new TRULOC EVO and our trauma solutions as well as distributor expansion and sales channel investments that remain in 20222023 and best in class surgeon education programs. Now moving on to some detail below the sales line. Beginning with our Q4 non GAAP adjusted gross margins, We delivered 72.2 percent for the quarter, a 330 pro form a basis point improvement over Q4 2022. For the full year, non GAAP adjusted gross margins were 71.4% compared to 68.7 percent for the full year 2022, a 2 70 basis point improvement on a pro form a basis. These increases were primarily due to product mix.

Speaker 1

Due to differences in allocation methodologies and classification of operating expenses between legacy orthofix and legacy Seaspine prior year pro form a numbers are not available. As a result of this, my comments on line item operating expenses will be on a GAAP basis for both Q4 and full year 2023 compared to GAAP results for the prior year. GAAP sales and marketing expenses were 48.8 percent of net sales for the 4th quarter and 51.7% for the full year 2023 compared to 48.5% 49.7% of net sales for Q4 and full year 2022 respectively. The increase in GAAP sales and marketing expenses for the quarter full year is primarily driven by integration related severance, retention cost and stock based compensation associated with the merger and higher commissions as a result of the achievement of certain sales objectives. GAAP, general and administrative expenses were 17.2 percent of net sales for Q4 2023, down from 20.8% in the same quarter prior year.

Speaker 1

The decrease is due to merger related synergies, a reduction of stock based compensation and a lower level of onetime merger related costs, partially offset by legal and investigation costs during the quarter. For the full year, GAAP, general and administrative expenses were 19.4 percent of net sales, up from 17.4% for the prior year. This increase is due to merger and integration related expenses and increase in share based compensation due to the merger and legal and investigation costs. GAAP R and D expenses were 9.5% for the quarter compared to 10.8% for the prior year quarter. The decrease in GAAP R and D expenses was primarily driven by lower spend related to EU MDR Readiness and realization of merger related synergies, which were slightly offset by higher stock based compensation expenses.

Speaker 1

GAAP R and D expenses for the full year 2023 were 10.7%, which was flat to prior year. Merger related synergies were offset by severance and retention expenses related to the merger and development milestone payment that was achieved during the year. For the quarter, non GAAP adjusted EBITDA was $19,600,000 or 9.8 percent of net sales, a 96% increase over Q4 2022 on a pro form a basis. For the full year, non GAAP adjusted EBITDA was $46,300,000 or 6.2 percent of net sales, a 230 basis point improvement driven by higher gross margins and merger related synergies. This represented a 41% drop through on incremental revenue dollars.

Speaker 1

We are encouraged by these results as we are seeing the impact of merger related synergies materialize. From a cash standpoint, our total cash balance, including restricted cash at the end of Q4 was approximately 37,800,000 dollars During the Q4 of 2023, we entered into a 4 year $150,000,000 financing arrangement and as of the end of the year, we had $100,000,000 in borrowings outstanding under this arrangement. We subsequently borrowed an additional $50,000,000 in January 2020 4. Overall, we are pleased with our Q4 in 2023 results. The business showed resilience during a time of transition with growth across all business lines demonstrating the strength of our portfolio.

Speaker 1

We sequentially improved adjusted EBITDA every quarter and exited the year with adjusted EBITDA expansion of 4.40 basis points as we saw the realization of cost synergy. This gives us confidence in our ability to deliver profitable revenue growth as we move into 2024. Now moving on to 2024 full year guidance. We are providing guidance for full year net sales to range between $785,000,000 $795,000,000 representing implied growth of 5% to 7% year over year on a constant currency basis. Please note, our expectations are based on the current foreign exchange rates and do not account for rate changes that may occur throughout 2024.

Speaker 1

Our outlook for full year 2024 non GAAP adjusted EBITDA is $62,000,000 to 67,000,000 From a non GAAP adjusted EBITDA perspective, we expect to deliver approximately 8% EBITDA margin, which represents 42% drop through of 2024 incremental revenue. At the midpoint of our guidance, our 2024 non GAAP adjusted EBITDA guidance represents more than 400 basis points of EBITDA margin improvement over the 1st 2 years, 2023 2024, post close of the merger. This is a result of the $32,000,000 in annualized synergies we have achieved to date and a progression towards delivering $50,000,000 in synergies 3 years post close of the merger. It is also worth noting that we will no longer be adjusting out MDR related expenses as the initial wave of implementation is complete and we believe the current cost represents the ongoing expense to remain in the European market. And finally, we are reiterating our commitment to exit the Q4 of 2024 being cash flow positive.

Speaker 1

While we are not providing quarterly guidance, I do want to provide you with some directional comments on the expected cadence of our business to assist you in modeling our quarterly performance. We expect Q1 and Q2 revenue to be slightly below our full year growth guidance range due to the timing of stocking orders in 2023. Additionally, we expect Q3 to reflect the highest year over year growth rate due to disruption in prior year as we close the quarter. Now for some specifics on the individual line items on the P and L. 1st, on gross margin.

Speaker 1

For 2024, we are expecting gross margin to be in the 71% range in line with 2023. We expect operating expenses to decrease approximately 200 basis points to 300 basis points through leverage on incremental sales and additional cost synergies. Before we move to line items below the operating income line, to assist you with modeling EBITDA, I want to provide you with our outlook for depreciation expense, which for the full year 2024 is in the range of approximately $36,000,000 to $37,000,000 as compared to $33,000,000 in 2023. Stock based compensation expense is anticipated to be in the range of $30,000,000 to $32,000,000 Now let's touch briefly on the items below the operating income line. Our expectation for interest and other is approximately $5,000,000 per quarter.

Speaker 1

We expect our adjusted EBITDA margin improvement of 200 basis points to be weighted more towards the first half of the year as we annualize prior year synergies. We expect the bulk of our remaining synergies to be focused on gross margin improvement and be realized during 2025. To touch briefly on cash, we anticipate cash used to be front end loaded with the magnitude of investment in Q1. With Q2 stepping down relative to Q1 and the second half of the year progressing toward breakeven with Q4 exiting positive. In 2023, we used approximately $108,000,000 of cash for operating capital expenditures.

Speaker 1

A significant portion of this was driven by one time merger related expenses and outsized investments in inventory and instrument sets to drive above market growth in U. S. Spine fixation, which we are realizing. Our ability to utilize these assets to drive growth in 2024 and beyond underlie our belief that we will exit 2024 cash flow positive. At this point, we will open the line for questions.

Operator

Our first question will come from Matthew Blackman from Stifel. Please go ahead. Your line is open.

Speaker 4

All right. Good afternoon, everybody. Thank you so much for taking my questions. Maybe Massimo, to start with you, can you just help us understand what your marching orders are from the Board and what's on the table and what's not in terms of your ability to drive value creation here, divestitures, more M and A, etcetera. Does any help there?

Speaker 4

And then I've got one follow-up for Julie.

Speaker 2

Yes. Thank you, Matt, for the question. Look, the margin burden right now is to create value for the company focused on profitable growth. So my team and I would be solely focused right now on driving the company and creating, let's say, accelerating market growth that is a lot of opportunities out there and really take care of the food portfolio that we have. Like Orthofix is not just a spine company.

Speaker 2

We have a lot of leverage to use in spine, biologic, orthopedics, PGT, enabling technology. So reiterating what I said in my remark, profitable growth and value creation, leveraging the full portfolio and keep working on innovation, leveraging a greater technology that we have in 2017. So right now, focus on execution.

Speaker 4

Got it. I appreciate that. And Julie, if I'm looking at it correctly, I think the 2023 MDR add back was about $9,500,000 Is that right? And does that mean we should be looking at this 2024 guidance sort of on an apples to apples basis approaching mid-seventy million. Is that sort of the right way to think about it?

Speaker 4

And then if I could just tack on there, it would be helpful if you could maybe just describe your guidance philosophy in general. Are these ranges and the ranges you'll provide in the future ranges you have high conviction in and meeting and there's some upside or no we should take them literally? Just help us frame that and then I'll get back in queue. Thank you.

Speaker 1

Sure. Thanks, Matt. Yes, so the MDR expenses for 2023 were $9,500,000 We expect that to ramp down. I think our expectation is that it ramped down to around $3,000,000 and that's kind of the ongoing run rate that we'll see in the business. So if you think about that, that's included in our adjusted EBITDA guidance going forward.

Speaker 1

In terms of philosophy on guidance, we set the guidance at a number that we're confident in. We believe that we can deliver and that's our commitment. We want to be prudent. Massimo and I are both 2 months into the job. But our estimates are informed what we've seen in the pipeline and have also tried to provide some parameters around the quarterly cadence as well.

Speaker 1

But we believe we've said it where we're confident that we can execute against it.

Speaker 4

Got it. Thank you so much.

Operator

Our next question comes from Ryan Zimmerman from BTIG. Please go ahead. Your line is open.

Speaker 3

Good afternoon. Can you hear me okay?

Speaker 2

Yes.

Speaker 3

Hey, guys. First off, congrats on your Q1 here at Orthofix, 1st earnings call, I should say. I got a bunch of questions. I want to follow-up on one of Matt's, but I want to start maybe with segment expectations. And Julie, I really appreciated all the color you gave on quarterly pacing and so forth.

Speaker 3

But when you think about kind of the business segments and specifically within that, when we think about kind of legacy SeaSpine versus legacy Orthofix, I mean the spine business of SeaSpine was kind of putting up kind of low double digit type numbers. And you're guiding the 5% to 7%. I'm wondering kind of how that splits out in terms of kind of your expectations for growth, be it BGT or orthopedics versus the core spine? Any commentary there would be appreciated? And then I have a couple of follow ups.

Speaker 3

Thank you.

Speaker 1

Sure, Ryan. So we're not breaking out specific product line guidance today. So but I think generally speaking, you can we talked about U. S. Spine fixation market or our growth at 13.5% for the quarter.

Speaker 1

And so we feel really good about that. But we're not breaking out specific line item guidance.

Speaker 3

Okay. Fair enough. Sorry, Massimo, did you want to chime in?

Speaker 2

No, no, I'm good.

Speaker 3

Okay. I'll keep rolling. So I want to ask another question, which is about segment profitability. And if you look in the 10 ks, you can see where most of the profits coming from, from a segment perspective. And there's not a lot of profit coming from orthopedics.

Speaker 3

Why remain committed to that business at this point? And what can you do to potentially drive that growth higher? And frankly, is it worth keeping that business given the profitability it ascribes to the company?

Speaker 2

Yes. Look, this is a great question. But we need to remember one foundational thing for Orthopaedics. And Orthopaedics is the DNA of this organization. And if you think how the business is structured, right now, it's totally skewed on in Europe, where we are at the level of maturity that is very, very high.

Speaker 2

I think what we see in front of us is an enormous opportunity in United States where we have a very small market share. So there is a lot of focus investment that right now we are making in the specific market, not just around the marketing and sales, but also innovation. So what you should expect that over time with the market, let's say, if you start to share the market between United States and Europe, with the United States market that grows faster, you will see automatically a much higher profitability. So as I said, we are very excited about all of the opportunities that we have in all of the different market segments, orthopedics is one of them.

Speaker 3

Understood. Appreciate that. And if I could squeeze one more in, just a follow-up to Matt's question. Julie, if I look at kind of operating expenses dropping 200 basis points, 300 basis points, I think it's in the range around 610 maybe call it. Let's say euro MDR costs come down a little bit.

Speaker 3

Where else do you feel like you have opportunity to kind of manage those costs? And just your thoughts there would be appreciated.

Speaker 1

Yes. So we're going to be still annualizing our synergies that we achieved in 2023. And we talked about last year that the majority of that was coming from headcount. So we'll see that go down in 2023 or excuse me, 2024 as we fully annualize those. In addition, part of it is just it's creating leverage on our incremental revenue growth where we don't believe that we need to invest at the same rate, G and A and R and D were holding flat to revenue.

Speaker 1

So that's what we're looking at for our leverage points.

Speaker 3

Okay. Well, thank you both for taking the questions. Much appreciated.

Operator

Our next question comes from Jeff Cohen from Ladenburg Thalmann. Please go ahead. Your line is open.

Speaker 5

Hi. This is actually Destiny on for Jeff. Thank you for taking the questions. I wanted to quickly talk about the BGT segment. Can you describe some of the drivers that are really helping you grow within this growing market and how your growth rate is comparing to the overall market?

Speaker 5

And a special shout out to Jason for getting a promotion. Do you see him adjusting the strategy? Are you as part of your marching orders as was previously asked, is BGT growth really central to it?

Speaker 2

Look, this is a great question. Like we are very excited about this segment for many reasons that I'm sure that you're familiar with. But if you see how the BGT business is divided, we have market leadership market leadership in spine, where we have not just an advantage from the technology perspective, but also from the infrastructure perspective. I think what Jason did and the team has built up a great system to convert all of the order that we have to cash. So the idea is that, okay, how can we bring all this know how that we have on different market?

Speaker 2

And then right now, we are focusing on the fracture market where we have a very good opportunity right now with a very small market share. And so you will see us really focused on the fracture, keep growing well above market and bringing, let's say, all of the EBITDA and the gross margin positive that we see from BGT. So let's say, a great focus, let's say, a great focus on creating value on additional market and spine right now.

Speaker 5

Excellent. Okay. And then, Julie, one for you. I really appreciate the commentary around the synergies, especially on the top line and how it will affect adjusted EBITDA. I'm wondering if you could just give us an update on the current headcount and how the synergies impacted that?

Speaker 1

So I think most of the headcount action was taken last year. And we don't expect to have much more headcount impacted or more headcount impacted this year. You can see in our K, I believe, our headcount numbers.

Speaker 5

Okay, perfect. That does it for me.

Operator

Thank you. Our next question comes from Jason Witz from Roth, MKM. Please go ahead. Your line is open. Jason, your line is open.

Operator

Please go ahead.

Speaker 6

Hi, can you hear me now? I apologize. I think I was muted. Hello?

Speaker 1

We can hear

Speaker 2

you, Jason. Yes, we can hear you.

Speaker 6

Okay. Thank you very much. Hi. Just, I know this is you're not giving line by line guidance by division, but the numbers do look somewhat conservative. Is this just a reflection of, sort of, I think your stated goals, Massimo, when you started, which were profitable growth versus growth high growth or growth with heavy investment.

Speaker 6

Is that the way you should be thinking about it? Or is it just a combination of conservatism, just conservatism, but generally speaking, the business trends look pretty good?

Speaker 1

Yes. I mean, this is Julie. I'll take that. Our business trends look good. We're expecting all of our businesses, while we're not giving line item details, to grow at or above market.

Speaker 1

And like I said earlier, Massimo and I are 2 months into the job. We want to set guidance where we have confidence that we can execute against it and deliver on that commitment. And that's what we believe we've done with the guidance that we've provided.

Speaker 6

Understood. And then, I don't know if you mentioned anything on 7 d. Could you give us some color in terms of placements or sort of what the outlook is for 7 d?

Speaker 2

Look, as Julie said, we're not giving, let's say, right now specific forecast for market segment. But I said during something is important to notice that 2017 has been a great contributor of the success of the Spine franchise, even last year. Like we had 29%, if I remember, of the overall revenue that came from 7 d. And you know that all of the all of our competitors have been successful leveraging enabling technology. And you will see us really focus on a platform that is unique in the marketplace.

Speaker 2

So we are pretty excited about the contribution of 2017 in 2023 and what we can achieve together in 2024.

Speaker 6

Okay. Thanks. And maybe just one follow-up. You kind of addressed this, but I'm just curious kind of what the outlook is. And that is on distributors.

Speaker 6

It sounds like it's stable and you're adding. Can we anticipate that you'll continue to add high quality distributors throughout the year, especially particularly in spine?

Speaker 2

Yes. Thank you for the question. Look, there is a lot of excitement about what we're doing today around spine and orthopedics and we have a very healthy pipeline. So like spine market always go through fluctuation. You see what's happened in the last few years.

Speaker 2

But right now, given the recent mergers, there is even a greater opportunity of reps and a distributor to go get. Look, we are fully capitalized to do that. And the results on Q4 helped us just to show that the thesis of the part of our product is there. So I think towards the year, you see we will be able to keep adding high quality distributors that is going to that married our vision around what we want to accomplish in our fix. So a lot of deal of opportunities out there.

Speaker 6

Wonderful. Appreciate the color. Thanks. I'll jump back in queue.

Speaker 1

Yes. And just to amplify, to clarify on what Massimo said, we had 25% revenue growth in Enabling Technologies last year in Q4, I'm sorry.

Operator

We have no further questions. I would like to turn the call back over to Marcelo Calafiore for any closing remarks.

Speaker 2

Thank you. Look, as said earlier, I close today by reiterating my enthusiasm to be part of Orthopix and my optimism about the company future. My first two months have really underscored the stability of Orthofix fundamentals and the breadth of portfolio offering. I would also to thank all of our employees worldwide for their commitment to Orthofix and their initiative in maintaining momentum across our whole portfolio. We are going to continue building a dynamic organization dedicated to collaboration, innovation and patient care.

Speaker 2

2024 would be a great opportunity for growth and value creation. And I look forward to providing more granularity on specific initiatives in future updates. Thank you.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.

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Orthofix Medical Q4 2023
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