LEWISVILLE, Texas--(BUSINESS WIRE)--Orthofix Medical Inc. (NASDAQ:OFIX) today reported its financial results for the second quarter ended June 30, 2020. Net sales were $73.1 million, earnings per share (“EPS”) was ($0.96) and adjusted EPS was ($0.59).

“Despite the significant impact of COVID-19 in the second quarter, we continued to execute successfully against our strategic initiatives,” said Orthofix President and Chief Executive Officer Jon Serbousek. “In particular, with the regulatory clearances of the Firebird™ SI Fusion System and the JuniOrtho™ Plating System, we believe we are making progress in creating a high-velocity new product innovation program.”

Mr. Serbousek continued, “After reaching a low point in April, revenues rebounded sequentially in both May and June in large part due to the business continuity initiatives we put into place as well our emphasis on accelerating our commercial efforts. For example, even in spite of the lower elective procedure volumes during the quarter, Motion Preservation U.S. sales continued to outperform our expectations, with rapid adoption of the M6-C™ artificial cervical disc. Looking to the balance of the year, we are optimistic about the continued recovery in our business and markets and intend to continue to invest in our strategic initiatives aimed at driving growth in the business while maintaining the strength of our balance sheet to best position Orthofix for long-term success. However, we believe it is still difficult to accurately predict the ongoing disruption that will be caused by the pandemic.”

Financial Results Overview

The following table provides net sales by major product category by reporting segment:

Gross profit decreased $40.1 million to $50.0 million, primarily attributable to the decline in net sales as a result of COVID-19. Gross margin decreased to 68.3% compared to 77.7% in the prior year period.

Net loss was ($18.4) million, or ($0.96) per share, compared to net loss of ($0.5) million, or ($0.03) per share in the prior year period. Adjusted net loss was ($11.3) million, or ($0.59) per share, compared to adjusted net income of $5.5 million, or $0.28 per share in the prior year period.

EBITDA was ($9.0) million, compared to $6.4 million in the prior year period. Adjusted EBITDA was ($5.6) million, or (7.6%) of net sales, compared to $17.3 million, or 14.9% of net sales, in the prior year period.

Liquidity

As of June 30, 2020, cash, cash equivalents, and restricted cash totaled $173.4 million compared to $70.4 million as of December 31, 2019. As of June 30, 2020, the Company had $100.0 million in borrowings under the five year $300 million secured revolving credit facility. Cash flow from operations increased $21.8 million to $30.1 million, while free cash flow increased $22.8 million to $20.8 million.

In July 2020, the Company repaid $50.0 million related to its borrowings under the secured revolving credit facility. Subsequent to this payment, the Company had $50.0 million in borrowings under the secured revolving credit facility.

COVID-19 Impact

The global Coronavirus Disease 2019 ("COVID-19") pandemic is significantly affecting the Company’s patients, communities, employees and business operations. The pandemic has led to the temporary closure of businesses, restrictions on travel and the implementation of physical distancing measures around the world. However, the Company remains focused on protecting the health and wellbeing of its employees, partners, patients, and the communities in which it operates while assuring the continuity of its business operations.

At this time, the future trajectory of the COVID-19 pandemic remains very uncertain, both in the U.S. and in other markets. Given these various uncertainties, it is unclear the extent to which lingering slowdowns in elective procedures will affect the Company’s business during the second half of 2020 and beyond. The expected effects of COVID-19 on the Company’s business will depend on various factors including (i) the comfort level of patients in returning to clinics and hospitals, (ii) the extent to which localized elective surgery shutdowns occur, (iii) the unemployment rate’s effect on potential patients lacking medical insurance coverage, and (iv) general hospital capacity constraints occurring because of the need to treat high volumes of COVID-19 patients. As such, the Company is not providing quantitative guidance for the third quarter of 2020 or for the full year at this time.

About Orthofix

Orthofix Medical Inc. is a global medical device company focused on musculoskeletal products and therapies. The Company’s mission is to improve patients' lives by providing superior reconstruction and regenerative musculoskeletal solutions to physicians worldwide. Headquartered in Lewisville, Texas, Orthofix’s spine and orthopedic extremities products are distributed in over 70 countries via the Company's sales representatives and distributors. For more information, please visit www.orthofix.com.