Orthofix Medical (NASDAQ:OFIX) lowered its 2026 outlook after third-quarter results fell short of management’s expectations, as softer U.S. spine procedure volumes and supplier delays constrained its ability to support demand.
Third-quarter net sales were $207.9 million, up 2.3% year over year, with gains in Limb Reconstruction and Therapeutic Solutions helping offset weaker spine performance. The company now expects full-year pro forma net sales of $825 million to $830 million and adjusted EBITDA of $86 million to $88 million.
President and CEO Massimo Calafiore said Orthofix is accelerating changes to its U.S. spine distribution network, concentrating resources on stronger partners and products while simplifying its portfolio and aligning costs. The changes, together with supplier delays, are expected to pressure sales in the near term.
Spine Challenges and Recovery Plan
Global spinal implants, biologics and enabling technologies generated $107.4 million in quarterly sales, down approximately 1% from a year earlier. Global spine fixation sales rose 1% on a constant-currency basis, while U.S. spine fixation declined 5%.
CFO Julie Andrews said supplier delays and instrument-set constraints limited Orthofix’s ability to consistently support demand among its top 30 distributors. Their growth slowed to the mid-single digits but remained above the market, she said.
Calafiore told analysts that procedure volumes were weaker among some top customers, but said he did not believe the company was losing market share. He attributed the supply issues to delays in instrument manufacturing and certain interbody product lines, and said the company was working with suppliers to resolve them by the end of the fourth quarter.
Orthofix is exiting lower-performing distributor relationships and redeploying instrument sets to its core partners, which Calafiore said account for approximately 80% of U.S. spinal implant revenue. He said the company expects progress in stages, beginning with better inventory and instrument availability before stronger growth from core products and partners.
The company continues to expect a full market launch of its VIRATA spinal implant system for open procedures later in the fourth quarter. Orthofix also received two 510(k) clearances during the quarter for software enhancements to its 7D navigation system.
Other Businesses Provide Growth
Therapeutic Solutions posted $64 million in sales, up 4% year over year. Calafiore said the business achieved 4% volume growth, above the market, while maintaining strong margins and cash generation.
Global Limb Reconstruction sales increased 9% on a constant-currency basis to $36.4 million, supported by international demand. Andrews said the FITBONE and TRUELOK Elevate platforms each grew more than 20%, although U.S. Limb Reconstruction growth was essentially flat.
In September, Orthofix submitted a 510(k) premarket notification for an automated version of TRUELOK Elevate. Calafiore said the company is also pursuing potential additional indications for its technologies, including diabetic foot ulcer.
U.S. biologics sales were roughly flat sequentially despite typical seasonal softness, which management viewed as a sign of stabilization. Calafiore said the business returned to positive year-over-year growth in October, though Andrews cautioned that sustained improvement is still needed.
Outlook and European Timing Effects
Adjusted EBITDA for the third quarter rose to $26 million, or 12.5% of pro forma net sales, from $24.6 million, or 12.1%, a year earlier. Andrews attributed the improvement primarily to cost discipline and resource alignment, partly offset by lower spine revenue, unfavorable geographic mix and reduced operating leverage.
The revised full-year outlook reflects the third-quarter performance, continued spine-market softness, the anticipated effects of the U.S. spine changes, international Limb Reconstruction order timing and foreign-exchange headwinds. The non-GAAP pro forma guidance excludes the discontinued M6 product lines.
For the fourth quarter, Orthofix expects sequential growth from normal seasonality and inventory purchases under a European distributor arrangement. Most of the approximately $15 million sales benefit expected from that arrangement in 2026 should be recognized in the fourth quarter, Andrews said. Related inventory cash outflows are expected this year, while cash receipts are expected in 2027.
Orthofix expects its European Medical Device Regulation strategy for spine to create an approximately $22 million sales headwind in 2027. Andrews described it as a temporary, regulatory-driven revenue timing effect rather than a change in underlying demand.
The company plans to provide formal 2027 guidance on its fourth-quarter call. Excluding the MDR effect, Andrews said management expects core revenue growth to be positive next year as it works through supplier issues and begins the year with a full quarter of VIRATA launch activity.
About Orthofix Medical (NASDAQ:OFIX)
Orthofix Medical Inc is a medical device company focused on spinal and orthopedic solutions. The company develops, manufactures and distributes products designed to help treat spinal disorders, support bone healing and address orthopedic trauma and related musculoskeletal conditions.
Its product portfolio includes spinal fixation and interbody systems, biologics and bone-grafting products, bone growth stimulation devices, and technologies for spinal motion preservation and deformity correction.
