Orthopediatrics Corp (NASDAQ: KIDS)

Sector: Healthcare Industry: Medical Devices CIK: 0001425450
Market Cap 396.80 Mn
P/B 1.14
P/E -8.70
P/S 1.74
ROIC (Qtr) -9.88
Div Yield % 0.00
Rev 1y % (Qtr) 12.23
Total Debt (Qtr) 100.75 Mn
Debt/Equity (Qtr) 0.29
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About

OrthoPediatrics Corp., a Delaware corporation, is a prominent player in the medical device industry, with its stock symbol being KIDS on the NASDAQ stock exchange. The company specializes in designing, developing, and commercializing anatomically appropriate implants, instruments, and specialized braces for children with orthopedic conditions. With its headquarters in the United States, the company has established a strong presence in the global pediatric orthopedic market. OrthoPediatrics' primary business activities revolve around the design,...

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Investment thesis

Bull case

  • Healthy cash reserves of 18.88M provide 14.02x coverage of short-term debt 1.35M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 310.67M provides 3.08x coverage of total debt 100.75M, indicating robust asset backing and low credit risk.
  • Strong free cash flow of (29.43M) provides 2.47x coverage of acquisition spending (11.91M), indicating disciplined M&A strategy.
  • Short-term investments of 40.90M provide solid 1.65x coverage of other current liabilities 24.72M, indicating strong liquidity.
  • Tangible assets of 310.67M provide robust 12.57x coverage of other current liabilities 24.72M, indicating strong asset backing.

Bear case

  • Operating cash flow of (19.19M) barely covers its investment activities of (38.78M), with a coverage ratio of 0.49, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 18.88M against inventory of 128.81M, the 0.15 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Investment activities of (38.78M) provide weak support for R&D spending of 9.76M, which is -3.97x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 18.88M provide limited coverage of acquisition spending of (11.91M), which is -1.59x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of (19.19M) shows concerning coverage of stock compensation expenses of 17.25M, with a -1.11 ratio indicating potential earnings quality issues.

Peer comparison

Companies in the Medical Devices
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ABT Abbott Laboratories 173.80 Bn 32.73 5.47 12.94 Bn
2 SYK Stryker Corp 141.15 Bn 43.48 5.62 15.86 Bn
3 MDT Medtronic plc 123.47 Bn 25.92 3.55 29.10 Bn
4 BSX Boston Scientific Corp 112.80 Bn 38.92 5.62 11.44 Bn
5 EW Edwards Lifesciences Corp 45.66 Bn 33.38 7.76 0.70 Bn
6 DXCM Dexcom Inc 27.52 Bn 32.91 5.90 1.34 Bn
7 STE STERIS plc 24.13 Bn 34.08 4.14 2.05 Bn
8 PODD Insulet Corp 17.33 Bn 70.38 6.87 1.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.91 2.13
EV to Cash from Ops. EV/CFO -23.36 2.75
EV to Debt EV to Debt 4.45 17.25
EV to EBIT EV/EBIT -11.08 2.89
EV to EBITDA EV/EBITDA -17.50 4.53
EV to Free Cash Flow [EV/FCF] EV/FCF -15.23 29.36
EV to Market Cap EV to Market Cap 1.13 25.09
EV to Revenue EV/Rev 1.97 32.80
Price to Book Value [P/B] P/B 1.14 4.73
Price to Earnings [P/E] P/E -8.70 -2.04
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 40.22
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 1.59
Dividend per Basic Share Div per Share (Qtr) 0.00 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -0.37
Interest Coverage Int. cover (Qtr) -7.51 196.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 44.18 -152.08
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -64.40 8,476.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.44
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -46.03 -792.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -192.80 3.79
EBIT Growth (1y) % EBIT 1y % (Qtr) -28.73 -301.80
EBT Growth (1y) % EBT 1y % (Qtr) -41.36 -121.44
EPS Growth (1y) % EPS 1y % (Qtr) -59.35 -87.51
FCF Growth (1y) % FCF 1y % (Qtr) 39.89 10.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 16.73 38.21
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.46 0.55
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.57 1.80
Current Ratio Curr Ratio (Qtr) 7.40 4.18
Debt to Equity Ratio Debt/Equity (Qtr) 0.29 1.20
Interest Cover Ratio Int Coverage (Qtr) -7.51 196.93
Times Interest Earned Times Interest Earned (Qtr) -7.51 196.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -9.20 -2,396.63
EBIT Margin % EBIT Margin % (Qtr) -17.79 -2,478.60
EBT Margin % EBT Margin % (Qtr) -20.15 -2,690.42
Gross Margin % Gross Margin % (Qtr) 71.70 30.80
Net Profit Margin % Net Margin % (Qtr) -20.10 -2,821.53