OFIX

Orthofix is a sub-scale medtech (spinal hardware, bone-growth therapies, limb reconstruction) still digesting its January 2023 all-stock 'merger of equals' with SeaSpine. The operational trend is genuinely improving: FY2025 revenue of $822.3M grew 2.9% reported (4.1% pro-forma constant currency after stripping the discontinued M6 discs), gross margin expanded to 68.8% from 68.3%, and the net loss narrowed for a second straight year to -$92.2M from -$126M (2024) and -$151M (2023). The MD&A shows the core franchises actually working — Global Spine Fixation +10.1%, BGT +5.9%, Global Limb Reconstruction +8.4% — and management is deliberately killing the money-losing M6 cervical/lumbar disc lines (down 55.4%) to redeploy capital toward 'more profitable growth opportunities.' Crucially, the business now generates cash: operating cash flow was a positive $33.3M (+29.3%), and with $77.3M of D&A (largely non-cash merger amortization) sitting inside the -$81.4M operating loss, the underlying cash economics are far better than the GAAP loss suggests.

The balance sheet supports the runway to see this through. Cash of $82.0M, current assets of $417M against $170M current liabilities (2.45x current ratio), and no current portion of debt against $157M long-term debt give liabilities/equity of a manageable 0.89x. Management explicitly states it believes cash, investments, and credit facilities are sufficient for anticipated needs. At $9.94 the market cap is only $399M — 0.5x sales — so the stock already prices in a company that never earns a real margin; you are not paying up for optimism here.