OrthoPediatrics acquires a distressed Boston Orthotics & Prosthetics for $22M

websites – https://www.bostonoandp.com/ and https://www.orthopediatrics.com/

Tiger’s Initial Thoughts

Orthopediatrics (OP) has acquired another “dog” using financial leverage and they will not be able to increase sales to pay back the debt.

This is another distressed asset purchase. BO as a company was on its way down. They have been closing down clinics and lost business to spinal technology or orthotists making their own version.

OP bought MD Orthopedics as a distressed asset also. Floundering companies were the founders were retired and just cashing checks. No growth. No reinvestment in R&D or Sales.

OP also bought ApiFix and did nothing with it. It was a non-accretive purchase and the CEO has downplayed ApiFix in earnings calls.

OrthoPediatrics buys Boston Orthotics & Prosthetics for $22M (Seeking Alpha)

  • OrthoPediatrics (NASDAQ:KIDS) said it has acquired Boston Orthotics & Prosthetics for an upfront cash payment of $22 million.
  • The company said, to advance the deal, it has closed a debt financing with MidCap Financial which provides up to $80 million of capital, through the combination of a term loan and revolving loan.
  • Post closing, KIDS will have cash and restricted cash balance is approximately $60 million.

OrthoPediatrics to acquire Boston Orthotics & Prosthetics (MassDevice)

OrthoPediatrics today announced it acquired Boston Orthotics & Prosthetics for an undisclosed amount.

In addition to the acquisition, OrthoPediatrics closed a debt financing with MidCap Financial to provide up to $80 million of capital through the combination of a term loan and revolving loan to replace its prior unused $50 million line of credit.

Boston Orthotics & Prosthetics offers bracing, orthotic and prosthetic technology for the non-operative treatment of children whose lives have been impacted by scoliosis, plagiocephaly and other neuromuscular disorders. Boston O&P’s products will expand OrthoPediatrics’ existing specialty bracing division.

“We are thrilled to announce the acquisition of Boston O&P, an organization that shares our mission to help children whose lives have been impacted by orthopedic conditions. We are now the first company to have a role supporting the entire continuum of care for pediatric orthopedic patients,” OrthoPediatrics CEO Dave Bailey said in a news release. “This opportunity significantly expands our newly launched OrthoPediatrics Specialty Bracing division and is reflective of the opportunity we saw with pediatric surgical implants at the Company’s founding. The large majority of pediatric orthopedic patients are not surgical candidates, and specialty bracing remains an underserved market. Boston O&P offers unique products designed specifically to address unmet pediatric needs in several of the largest non-surgical orthopedic treatment markets. Adding their complementary portfolio to our platform will offer additional options to our current surgeon customers to help manage patients before and after surgery.”

Boston O&P has partnered with many world-class facilities, including Boston Children’s Hospital, Children’s Hospital of Philadelphia, Nationwide Children’s Hospital in Columbus, Ohio and Phoenix Children’s Hospital. It maintains 26 patient care clinics across the U.S. and its recent annual historical revenue was approximately $25 million.

The acquisition will allow OrthoPediatrics to serve more patients in the U.S. “Combined, our businesses have helped over one million children globally and we look forward to helping the next million together by expanding the number of clinics and aggressively launching new products that meet unmet needs for children and their caregivers. Over time, we aspire to support all 300 high-volume children’s hospitals in the U.S.,” Bailey said.

“We are very excited and proud to be joining the OrthoPediatrics team. It is truly amazing how similar the two companies are and in our shared passion for taking care of kids. We remain committed to improving the quality of pediatric orthotic and prosthetic care and related products kids receive, and the resources OrthoPediatrics will provide can expedite greatly the achievement of that mission. We cannot wait to get started to build OrthoPediatrics’ newly launched Specialty Bracing division,” Boston O&P General Manager Tom Morrissey said.