오소피디아트릭스(KIDS) 2026년 3분기 실적 콘퍼런스 콜: 매출 19% 증가, 가이던스 상향

핵심 요약

• 오소피디아트릭스(OrthoPediatrics Corporation, NASDAQ: KIDS)가 2026년 3분기 매출로 전년 동기($6,120만 달러) 대비 19% 증가한 역대 최대치인 7,270만 달러를 기록했다고 발표했다.
• 외상 및 변형 부문 매출은 19% 증가한 5,260만 달러를 기록했으며, 척추측만증 부문 매출은 18% 증가한 1,920만 달러를 기록했다. 해외 매출은 18% 늘어난 1,480만 달러를 달성했다.
• 조정 EBITDA는 역대 최대인 690만 달러로 약 10%의 이익률을 기록했다. 잉여현금흐름은 전년 동기 대비 500만 달러 개선되어 160만 달러 흑자를 기록했다.
• 경영진은 2026년 전체 매출 전망치(가이던스)를 2억 7,000만~2억 7,300만 달러(14%~16% 성장 의미)로 상향 조정했으며, 조정 EBITDA 가이던스는 약 2,500만 달러로 재확인했다.
• 3P 히프(3P Hip), 트랙시오(Traxio), 버티글라이드(VerteGlide) 등 신제품이 성장에 기여했으나, 경영진은 혁신 슈퍼사이클의 많은 제품이 아직 제한적으로 출시된 상태이며 2027년 이후 더 큰 영향을 미칠 것이라고 밝혔다.
• OPSB 사업은 신제품, 동일 매장 매출 성장, 클리닉 확장에 힘입어 20% 이상 성장했다. 현재 해당 사업 부문은 60개 이상의 클리닉과 34개의 시스템을 보유하고 있다.

주요 재무 데이터

사업 및 운영 실적

기존 임플란트 제품의 점유율 확대가 여전히 회사의 가장 큰 성장 동력으로 작용했다. 경영진은 신제품 역시 계약 협상력을 강화하고 병원에 이미 배치된 기존 시스템의 활용도를 높여 자본 효율성과 잉여현금흐름을 뒷받침하고 있다고 밝혔다.

3P 히프(3P Hip) 시스템은 본격적으로 상업 출시되어 매출에 기여하기 시작했다. 3P 스몰(3P Small)과 3P 미니(3P Mini)는 제한적 출시 상태를 유지하고 있으며, 경영진은 2027년 상반기에서 중반 사이에 전면 시장 출시를 목표로 하고 있다. PNP 레트로그레이드(PNP Retrograde)는 9월 말 FDA 승인을 받았고 10월 첫 수술 사례를 완료했으며, 2027년 중반경 전면 시장 출시가 예상된다.

OPSB 부문은 20% 이상의 성장을 기록했다. 페디힙 리지드 보조기(PediHip Rigid Brace)는 전면 시장 출시에 들어갔고, 니 트랙터 픽스(Knee Tractor FIX)는 제한적 출시를 시작했다. 초기에 제한 공급된 트랙시오(Traxio) 수량이 완판되면서 회사는 2027년 생산 계획을 앞당기고 있다. OPSB의 클리닉 네트워크는 60개 이상으로 확대되었으나, 신규 클리닉(그린필드)은 첫 6개월 동안 초기 비용이 발생한다.

척추측만증 부문의 성장은 7D 장비 판매보다는 주로 임플란트 수요를 반영했다. 버티글라이드(VerteGlide) 도입이 지속적으로 확대되어 약 125명의 외과의가 정식 교육을 받았고 약 40개 병원에서 해당 시스템을 사용 중이다. 경영진은 임상시험용 의료기기 면제(IDE)에 대한 FDA 승인을 전제로, eLLi 전동 성장형 임플란트의 입원 수술이 2027년 초 시작될 것으로 예상하고 있다. 본격적인 상업적 기회는 2028년과 2029년에 찾아올 것으로 전망된다.

해외 시장 성장은 유럽·중동·아프리카(EMEA) 지역이 이끌었으며, EU 의료기기 규정(MDR) 승인에 따라 추가 제품 출시가 가능해졌다. 경영진은 현재의 해외 실적이 본격적인 슈퍼사이클보다는 주로 기존 제품과 초기 출시 제품에 의한 것이라고 설명했다. 중남미 지역의 성장은 매출채권 위험 노출을 제한하기 위한 세트 판매 제한, 특히 브라질에서의 제한 조치로 인해 다소 둔화되었다.

경영진 가이던스

경영진은 2026년 4분기 매출총이익률을 약 73%로 예상하고 있다. 또한 3분기에 약 70만 달러의 시점 관련 비용이 영향을 미친 후, 판매 및 마케팅 레버리지가 개선될 것으로 기대하고 있다.

회사는 절제된 속도로 제품 세트를 배치하는 한편, 2027년 이후에도 양(+)의 잉여현금흐름을 유지한다는 방침이다. 경영진은 더 넓은 시장에 상업 출시되는 제품들이 2027년 성장을 뒷받침할 것으로 기대하지만, 향후 가이던스에서 불확실한 7D 장비 판매나 세트 판매에 의존할 계획은 없다고 밝혔다.

리스크 및 관전 포인트

• 4분기 전년 동기 비교 대상에는 브라질 대상 세트 판매와 상당한 규모의 7D 장비 판매가 포함되어 있어 재현되지 않을 수 있다.
• 많은 슈퍼사이클 제품이 여전히 제한적 출시 상태에 있어, 시장 안착은 교육, 임상 피드백, 세트 가용성 및 규율 있는 자본 배치에 달려 있다.
• OPSB 클리닉 개설 속도를 높이는 것은 신규 지점이 일정 수준의 환자 수를 확보하기 전까지 초기 투자가 필요하므로 단기 비용 압박을 가할 수 있다.
• 해외 시장 성장은 중남미, 특히 브라질에서의 세트 판매에 대한 회사의 신중한 접근법으로 인해 제약을 받을 수 있다.
• eLLi 수술 시기 및 최종 상업화는 FDA의 결정과 전면 시장 출시 전 요구되는 수술 건수에 달려 있다.

애널리스트 Q&A 주요 내용

경영진은 2026년 잉여현금흐름 손익분기점 달성 이상을 확신한다고 밝혔다. 연초 대비 누적 현금 사용량은 약 600만 달러로 4분기에 약 600만 달러의 잉여현금흐름 창출이 필요한 상황이며, 회사는 2025년 4분기에 1,000만 달러를 창출한 바 있다.

수익성과 관련해 경영진은 슈퍼사이클 제품들이 일반적으로 더 높은 평균판매단가(ASP), 더 견조한 임플란트 마진, 자본 효율성이 높은 수술 기구 세트를 특징으로 한다고 설명했다. 또한 이들 제품은 더 넓은 병원 계약을 지원하고 기존 제품에 대한 유인 수요(pull-through demand)를 창출한다.

경영진은 소아 정형외과 수술 환경이 건전하다고 평가하며, 2026년 4분기 또는 2027년에 진입하면서 수술 건수를 위협할 만한 요인은 보이지 않는다고 밝혔다.

OPSB 확장에 대해 경영진은 소아 전문 보조기 클리닉에 대한 수요가 여전히 견조하다고 밝혔다. 성장 기회는 오소피디아트릭스가 이미 임플란트 협력 관계를 구축한 병원에서 우선순위가 부여되고 있으나, 인력 수급 상황과 비용 규율로 인해 동시에 개설할 수 있는 속도에는 제한이 있다.

실적 발표 전화회의 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good afternoon, and welcome to OrthoPediatrics Corporation's Third Quarter 2026 Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Trip Taylor from the Gilmartin Group for a few introductory comments.

Philip Taylor

Thank you for joining today's call. With me from the company are David Bailey, President and Chief Executive Officer; and Fred Hite, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to numerous risks and uncertainties, and the company's actual results may differ materially. For a discussion of those risk factors, I encourage you to review the company's most recent annual report on Form 10-K, which was filed with the SEC on March 4, 2026, and its subsequent quarterly reports on Form 10-Q.

During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for investors in evaluating its operations period-over-period. For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its third quarter earnings release.

Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for OrthoPediatrics financial results prepared in accordance with GAAP. In addition, the content on this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, October 27, 2026. Except as required by law, the company undertakes no obligation to revise or update any statements to reflect events or circumstances taking place after the date of this call. With that, I would like to turn the call over to David Bailey, President and Chief Executive Officer.

David Bailey

Thanks, Trip. Good afternoon, everyone, and thank you for joining us today. This was an outstanding quarter for OrthoPediatrics, and I want to begin with the metric that matters most to us. During the quarter, we helped nearly 42,000 children, bringing our total impact to over 1.4 million kids helped. I'm proud of what our team and our clinical partners continue to accomplish. We are reaching more patients each day with our pediatric-focused products, increasing the quality of care and improving outcomes for kids around the world. For the third quarter, we delivered record revenue of $72.7 million, up 19% over the prior year, with substantial growth across all of our businesses.

Ongoing share gains across our legacy product portfolio served as a key driver alongside robust implant demand, a rapidly growing OPSB franchise and strong overall international results. Our existing portfolio continues to deliver, while the Super Cycle is starting to contribute growth with additional product launches on the horizon. The combination of top line performance and improving profitability gives us a solid foundation as we enter our next chapter of growth. As a result, we are raising our full year revenue guidance to $270 million to $273 million, representing growth of 14% to 16%.

Beyond the top line, we continue to make significant progress on margins and profitability with record adjusted EBITDA and positive free cash flow in the quarter. We are very pleased with our continued ability to grow the business while strengthening its financial profile and driving leverage. At the same time, it's clear we are investing in innovation while staying focused on expenses, working capital and capital deployment.

Now -- let's talk briefly about our performance in the context of our innovation Super Cycle. We are extremely encouraged by the revenue contributions of our recent product launches, such as 3P Hip, Traxio and VerteGlide to the third quarter performance. As utilization ramps, we are beginning to see the positive impact of these products, both in a clinical settings and in our P&L, which is proving the value of our work for the kids and clinicians who rely on our technology. That said, many of the products within our Super Cycle are still in the very early stages of full market release with limited customer availability or in their limited launches. Those products in the limited launch phase are not yet meaningfully contributing to growth, but many of these products, combined with our recent full launches set us up well for multiple years of growth.

The bottom line here is that we are still early in the multiyear cycle, and we believe the largest opportunities for market expansion, deeper portfolio penetration, revenue impact and leverage are still ahead of us. We are being thoughtful with our set deployment strategy, bringing sets to market at a steady pace as we move multiple innovations from development into the hands of surgeons and clinicians while ensuring that we manage the free cash flow implications to ensure we remain free cash flow breakeven or better in 2026 and free cash flow positive in 2027 and beyond.

Importantly, we are not just innovating new versions of products. These products address substantial clinical needs our surgeon partners experience every day, and our engineering and commercial teams are working with clinicians to turn those needs into pediatric-specific solutions that cannot be addressed by any other products or companies in orthopedics. We continue to focus on platform and product family development, and each additional innovation creates another opportunity to serve patients with unique clinical conditions and deepens our role across pediatrics. As the Super Cycle progresses, the opportunities we have with these differentiated pediatric-specific technologies are extending beyond revenue growth. Many of these systems are designed to support attractive product economics with higher ASP, ROI and more efficient capital deployment.

Additionally, they're generating negotiating power in contracting while driving pull-through of legacy products. With our commercial infrastructure already in place, we can better serve the market with greater sales force efficiency and improve operating leverage. Our OSSIO partnership, which continues to do well, highlights these efficiencies in action. OSSIO's biointegrated technologies broaden our portfolio alongside our complementary Bioretec partnership while leveraging our existing commercial infrastructure.

Overall, we see the Super Cycle as a multiyear growth, margin and capital efficiency story. As we advance our pipeline, we continue bringing products to market in a measured fashion, balancing cash usage. This plan positions the Super Cycle as a long-term sustainable growth driver and allows us to best support our customers along the way.

Moving to our businesses. Trauma and Deformity delivered revenue of $52.6 million, up 19%. Continued share gains within our legacy implant portfolio and healthy demand for Super Cycle products, together with OPSB's growth drove this strong performance.

Our established systems remain an important growth engine, and we are building on that position of strength as new pediatric-specific technologies expand the opportunities our teams can pursue. Our pediatric plating platform, also known as 3P, is off to an extremely promising start. We continue to see success with the 3P Hip system, which has progressed from limited to a full commercial launch and is already contributing early revenue.

Moving down the 3P pipeline, 3P Small and 3P Mini are currently in limited launch. We are pleased to see the 3P platform move beyond its initial offering toward a broader range of solutions designed for pediatric anatomy and procedure needs with more to come as we develop the full platform to become the most comprehensive pediatric plating product platform in the history of pediatrics.

We continue to advance our Super Cycle with teams focused on careful rollout, surgeon support and feedback as these systems progress. In addition to the progress with 3P, we also recently reached important milestones in our pediatric nailing platform. In September, we announced that we had surpassed 1,000 PNP Tibial nail implantations. Elsewhere following FDA clearance in late September, PNP Retrograde Limited launched, and we had our first successful cases in October with very positive surgeon feedback.

The system includes anatomic nails for trauma and straight nails for deformity and builds on our ongoing success with PNP Femur and PNP Tibia and leverages existing PNP instrumentation. We're planning full commercialization for PNP Retrograde while continuing the ongoing deployment of PNP Tibia in 2027. Taken together, 3P Hip, 3P Small, 3P Mini, PNP Tibia and PNP Retrograde in addition to our OSSIO partnership, show how much opportunity is in front of us in 2027 and beyond. While some of these products are not expected to contribute significant revenue in 2026, their release shows that the Super Cycle is progressing as planned, and we expect a bigger growth opportunity to come in 2027 and beyond as we move toward full launches and wider adoption. Our focus is now on training, service and clinical feedback to support those introductions.

Turning to Specialty Bracing. OPSB once again delivered an outstanding quarter with growth above 20%. Similar to the prior quarter, new products, same-store sales growth and clinic expansion continue to drive this rapidly growing franchise, and we're very pleased that our bracing offerings continue to broaden our reach outside the operating room. OPSB has become an increasingly key part of our pediatric orthopedic platform and our long-term growth strategy. Within OPSB, the Super Cycle of new product launch and development is hitting a fever pitch with no end in sight.

In September, we completed the full market release of the PediHip Rigid Brace, also known as the Hippo. This product expands our hip care offering for children 3 years of age and younger, including developmental dysplasia of the hip and postoperative stabilization. It addresses a significant pediatric need within our growing hip care portfolio. In October, we also announced the limited launch of the OPSB Knee Tractor FIX Contracture Management Orthosis. This knee product is designed to address preexisting or developing contractures in children and young adults undergoing tibial external fixation.

By connecting directly to ORTHEX and external fixation technologies, Knee Tractor FIX demonstrates the breadth of our portfolio across the continuum of care. These launches build on a portfolio that has been transformed over the last few years and now includes DF2, our modular hip braces, macu4 and the recently launched Traxio Halo Gravity traction system. As a reminder, Traxio supports halo gravity traction therapy in pediatric spine care and illustrates the connection between OPSB and our surgical systems.

Together, these offerings expand the range of solutions we can provide for our customers. For example, of hospital interest in Traxio, we have already completely sold out of the initial limited units and are accelerating our 2027 build to meet the market demand as we move to full market release. As our OPSB products continue to grow, we now have 34 OPSB systems, up from 31 at the start of the year, representing more than 1/3 of our total product portfolio.

Notably, our bracing product development is having a large impact on OPSB growth overall. We also extended our clinic footprint this quarter, and we're pleased to report that we now have over 60 clinics, more than double our clinic total just a few years ago. These key metrics show solid progress across our 3-pillar OPSB strategy, including sales rep growth, new product development and clinic expansion. We're encouraged by the momentum we're building in OPSB.

We're bringing new products to market while our clinic and commercial teams expand access to grow the business. Connections to our surgical portfolio create additional opportunities to serve our clinical partners and support long-term growth. and our consistent execution makes us highly confident in where the franchise is headed.

In scoliosis, global revenue increased 18% to $19.2 million in the third quarter. Continued share gains with the RESPONSE Fusion system were an important driver of that growth. Our established Fusion products continue to win business and drive our exceptional performance, while newer systems enhance our ability to support pediatric spine surgeons' additional needs.

OrthoPediatrics is the only provider offering a full range of solutions to treat scoliosis across the entire continuum of care, including the most complex and severe pediatric spinal deformities, both inside and outside of the operating room. While we placed 170 unit this quarter compared with no units sold in the third quarter of 2025, it was not a major growth driver, and the recurring utilization revenue was similar in both periods. With this in mind, our scoliosis results this quarter primarily reflect strong underlying implant demand.

We're also seeing growing surgeon adoption of VerteGlide, and we remain excited about its role in expanding treatment options for EOS patients with complex spinal pathologies. That adoption is contributing to our scoliosis growth and broadening the range of solutions we can offer surgeons. Our deep scoliosis portfolio, including VerteGlide, ApiFix, RESPONSE Fusion, Traxio, FIREFLY, 7D and our pediatric bracing products and services, not to mention the ongoing development and first inpatient procedure of our electromechanical growing implant eLLi in early 2027 and the limited launch of our next-generation fusion system, Veraxis, reinforces our ability to support patients across this continuum of care. inside and outside of the operating room. The setup for our scoliosis business over the next several years is very good, and we continue to develop and launch solutions that meet unmet needs for this very complicated condition.

Moving to our international business. Revenue increased 18% to $14.8 million in the third quarter. We saw very strong growth in EMEA across trauma and deformity, scoliosis and bracing. LatAm also delivered solid underlying performance, excluding the headwinds from lower set sales. Overall, our international teams are executing well with meaningful portfolio demand supporting the quarter's results.

Product launches in EMEA enabled by recent EU MDR approvals are ongoing, and we're still in the early stages of the rollout. We are thrilled about the opportunity to bring these products to European clinicians, helping to close significant clinical gaps for kids in those regions. And the recent strength of our international business only adds to our confidence.

In summary, we are proud of our third quarter results. Record revenue reflects continued share gains across our legacy portfolio, broad-based implant demand, strong momentum at OPSB and solid international execution. Our results demonstrate the strength of the pediatric platform we've built, and we're still early in our product development Super Cycle. The full impact of our recently limited launch products is still ahead of us as we move toward full commercial launches.

We believe we are strongly positioned to deliver growth at scale, and we look forward to building on this quarter with the goal of helping more children than ever before. With that, I'd like to turn the call over to Fred to provide more detail on our financial results. Fred?

Fred Hite

Thanks, Dave. Taking a closer look at the P&L, our third quarter of 2026 record revenue of $72.7 million increased 19% compared to $61.2 million in the third quarter of 2025. The increase in revenue in the third quarter was driven by strong demand across implants and OPSB, growth in both trauma and deformity and scoliosis, solid international performance and continued execution across the business.

U.S. revenue was $57.9 million, a 19% increase compared to $48.7 million in the third quarter of 2025, representing approximately 80% of total revenue. Growth in the quarter was driven by strength in trauma and deformity, scoliosis and continued OPSB performance. Total international revenue was $14.8 million, representing growth of 18% compared to $12.5 million in the third quarter of 2025 and approximately 20% of total revenue.

International growth was underscored by robust European sales, partially offset by set sales timing in LatAm. In the third quarter of 2026, Trauma and Deformity global revenue of $52.6 million increased 19% compared to $44.1 million in the prior year period. Growth was primarily driven by strong growth across numerous product lines, specifically our cannulated screws, PNP FEMUR, PediPlates, the addition of 3P Hip as well as continued OPSB growth.

In the third quarter of 2026, scoliosis global revenue was $19.2 million, representing growth of 18% compared to $16.3 million in the prior year period. Scoliosis performance was primarily driven by increased revenue generated from VerteGlide as well as RESPONSE.

Finally, Sports Medicine other revenue in the third quarter of 2026 was $0.9 million compared to $0.8 million in the prior year period. Looking at a few key metrics. For the third quarter of 2026, gross profit margin was 74%, in line with the prior year period. Total operating expense was $58.2 million in the third quarter of 2026, up 6% compared to $54.7 million in the prior year period.

The increase was mainly driven by increased sales commission expense as well as additional personnel supporting clinic expansion and small-scale acquisitions. Sales and marketing expenses increased $4.4 million or 24% compared to the prior year period of $23.1 million, driven largely by increased sales commission expense and an overall increase in volume of units sold. General and administrative expenses increased $2.9 million or 10% year-over-year to $32.0 million in the third quarter of 2026, primarily due to the additional personnel supporting clinic expansion, small-scale acquisitions as well as increases in noncash stock comp, depreciation and amortization.

Intangible asset impairment was $0.6 million in the third quarter of 2026 related to our annual impairment analysis where we determined the fair value of 2 trademark assets were below their respective carrying values. During the third quarter of 2026, there were no restructuring expenses as compared to $2.3 million of restructuring expenses in the third quarter of 2025.

Research and development expenses were $2.5 million in the third quarter of 2026, up from $2.3 million in the prior year period. Total other expense was $1.8 million for the third quarter of 2026 compared to $2.5 million for the same period last year. The year-over-year change was primarily driven by a $0.8 million noncash fair value adjustment of contingent consideration. GAAP net loss per share for the period was $0.25 per basic and diluted share compared to $0.50 per basic and diluted share for the same period last year. Non-GAAP net loss per share for the period was $0.23 per basic and diluted share compared to $0.24 per basic and diluted share for the same period last year.

Adjusted EBITDA was a record $6.9 million in the third quarter of 2026 compared to $6.2 million in the third quarter of 2025. This represents an adjusted EBITDA margin of approximately 10%, driven by revenue growth and operating leverage as we balance growth investment with expense discipline.

We ended the third quarter with $45 million in cash, short-term investment and restricted cash, and we still have another $20 million of term loan available to us. Set deployment was $2.5 million in the third quarter of 2026 compared to $4.1 million in the third quarter of 2025. We continue to focus set deployment on higher return systems and remain disciplined in allocating capital to support growth. Free cash flow generated in the third quarter of 2026 was $1.6 million compared to $3.4 million used in the third quarter of 2025. This $5 million improvement was driven by growing adjusted EBITDA, disciplined set deployment and working capital improvements.

Turning to guidance. We are raising our full year 2026 revenue guidance to be in the range of $270 million to $273 million, representing growth of 14% to 16%. We're also reiterating our adjusted EBITDA guidance of approximately $25 million. We continue to expect to deploy approximately $10 million in sets and to achieve free cash flow breakeven or better in 2026 and beyond.

Overall, we are executing well against our strategy to translate strong revenue growth into robust financial performance through expense discipline and a deliberate focus on selective growth investments with high returns. This quarter's results support our strategy and further reinforce durable long-term value creation across our businesses. Operator, let's open the call for Q&A.

Operator

[Operator Instructions] Our first question comes from Caitlin Roberts with Canaccord Genuity.

질의응답

Caitlin Roberts

Congrats on the quarter. Maybe just starting off with the adjusted EBITDA and the free cash flow expectations for the rest of the year. It seems like with the set spend, you have maybe a similar amount of set spend left for the Q4. I mean where is the leverage in the business you expect to come from for -- to hit that -- the guidance from an adjusted EBITDA and free cash flow perspective?

Fred Hite

Yes, absolutely. So in the third quarter, we did have some higher sales and marketing expenses. So it's 31.5% of sales as compared to 30.5% of sales last year. The good news is all 6 of our top partners, sales partners, distributors achieved quota. And so their year-to-date kicker on the performance kicked in and generated higher commissions for us. We will claw back some of that in the fourth quarter. So some of this is timing, but that was one driver.

The second driver is just, I think, continued investments in the start-up clinics and rolling out the new products that we've been talking about and focusing on delivering future revenue. But if you look at the business, year-to-date, we're at $16 million of EBITDA compared to $10 million at this time last year. So that's a 60% improvement year-over-year and the revenue is up 16%. So we're overall very, very pleased with how we perform and how we're managing the balance of revenue growth, additional EBITDA and then cash flow. For the third quarter, we did turn positive. So it's the second quarter the business has been positive free cash flow, a couple of million bucks compared to using $3 million last year, so a $5 million improvement.

Year-to-date, we're at about $6 million of usage. So we need to generate $6 million of positive in the fourth quarter to get to the breakeven or better for the year. And in the fourth quarter of last year, we generated $10 million. So very, very confident that the free cash flow will absolutely get to breakeven or better for the year.

Caitlin Roberts

Wonderful. And just a question on the procedural environment and seasonality. I mean, what did you see in Q3? And what are you seeing heading into the Q4?

David Bailey

Yes. We've had very healthy procedure volumes. I think the environment in children's hospitals, at least for pediatric orthopedics has been very, very strong. I know there's been some mixed commentary out there from other companies, but at least so far, what we have seen, certainly throughout Q3 with the revenue growth that we posted, you can expect that we saw very, very nice volumes. We've seen great volumes in our clinics. And I think we don't see anything that would put that in jeopardy heading into Q4 and as we move into 2027. So very positive outlook, I think, as we go forward.

Operator

Our next question comes from Rick Wise with Stifel.

Frederick Wise

Great to see another solid quarter across the board here. Maybe talk to us a little bit about the fourth quarter a little more. You raised obviously, low end, high end by roughly in line with the beat. But in the fourth quarter, and I appreciate the seasonal element here, but you -- as you said, Dave, you're gaining share, more of the products that are launched are picking up steam, more launching, OPSB doing great. Why wouldn't we imagine that the -- just thinking about the midpoint of your range, putting the fourth quarter at something roughly like $69 million. Why couldn't that prove conservative given all those elements? Or is that too optimistic?

David Bailey

Well, I think that we are trying to make sure that we don't get ahead of ourselves here as we do. Fred holds us back in all of these things. So we're going to try to stay -- keep our guide in check. I also would point out that in Q4 of last year, we had set sales to Brazil, and it's not -- it's possible that, that won't happen here again in Q4. We also did have pretty substantial 7D unit sales in Q4. And so I think a measured approach with some conservatism built into Q4 and built into the guide here is called for. And we could get a number of 7D units in Q4, we'll see. But I don't think we want to bank on those. And that's why we have set the guide the way we have throughout the year, and we'll continue to keep the guide where it is for Q4.

Frederick Wise

Yes. And I'm going to stay for now focused on the guidance. And help us think -- I know you're -- if you were ready to give 2027 guidance, you would do it, you haven't, but I still got to ask about it. Help us think through those just some of the puts and takes as we think about '27. Again, you're executing well. You're saying, David, that demand is strong. But I'm particularly focused on the new products and the impact of this Super Cycle moving into ever fuller launch with each passing quarter. I mean, you started this year, I think, guiding us 11% to 13%. Now we're up to 14% to 16% growth. Why wouldn't the setup for next year be more in this kind of a mid-teens or better range as opposed to on the more conservative end? And maybe again, talk about some of the puts and takes that we should be thinking about.

Fred Hite

Yes. I think I would say we'll probably be consistent in our methodology. We did sell a couple of units of 7D in 2026. We may sell a unit or 2 here in the fourth quarter. And we're not going to count on that and put that in our guidance in future periods. We did sell some sets here in 2026, although lower than we did in 2025.

Again, we're not going to count on that and include those dollars in our guidance as we continue to try to manage the profitability of the business and improve the cash flow of the business. Offsetting those, obviously, are -- is the good news from the new product launches. And as Dave said, it's still early. Those will be developing in 2027. They won't be in full force -- but we will definitely see a favorable impact from those in 2027, which will drive growth for the business.

Operator

Our next question comes from Matthew O'Brien with Piper Sandler.

Unknown Analyst

This is [ Anna ] here on for Matt today. I wanted to ask again on the Super Cycle. Obviously, you've got a lot of new products coming down the pike over the next few years, which we're all excited about clearly. But I was wondering beyond the benefit to the top line, how you expect the innovation pipeline to really contribute from a profitability standpoint? And what those main drivers of any profitability improvements would be, whether it's mix, pricing, more efficient use of instrument sets, scale, all of the above? Yes, anything there would be helpful. And then I have a follow-up.

David Bailey

Great. Well, I think you hit the nail on the head. It's a little bit of all of the above. Each one of these products have a higher ASP. You can assume that the implant margin of the business is improving. And we continue to get leverage on the contracting with all of these products, which is pulling through our existing legacy products. So I think the impact of Super Cycle products certainly is contributing to top line revenue, will contribute nicely in 2027 and beyond. But the fact remains is these sets are more efficient. They're far more capital efficient with higher ASPs, higher margin, and they return cash faster.

And again, they have the benefit of pulling through a number of the other products that in large part are already deployed setting in children's hospitals, and we get more usage of those products, which obviously has an impact on free cash flow. So I think, again, Super Cycle having positive impacts across the business overall. I would also point to the fact that within OPSB, the Super Cycle products there are contributing really nicely. I mean, certainly, the clinic expansion and same-store sales are driving top line, but I think we're very, very pleased with the output that we're getting from the R&D team on the OPSB side.

Products like DF2 are really, really growing. I think we have nearly half of all the children's hospitals in the U.S. have already adopted DF2 here just over the last few years. And those are nice margin products that don't require any inventory deployment on our side. And so all of these products combined, I think, will benefit the P&L, certainly benefit free cash flow over the course of the next several years.

Unknown Analyst

Got it. That's helpful. And then I guess just on that second point there, on the OPSB clinic expansion. I don't know if you mentioned how many territories you're in today? I know you said 60 clinics total. And the long-term target has been 27 territories by the end of '27. I was looking at my notes, it seems like you were in 13 territories the last you said anything. So just wondering how you're planning on maybe roughly doubling your territory exposure over the next 15 months or so and what the main criteria guiding decisions about opening or acquiring these new clinics is and your confidence in your ability to reach this target and in a cash effective manner?

David Bailey

What's really exciting on the clinic expansion side is just the demand opportunity for us. I would say we are well ahead of our territory expansion and at 60-plus clinics, we probably have more clinics now than we thought we would have at this time. So I'm very pleased with what the team has been able to uncover there in terms of both greenfield opportunities and a few of the acqui-hire opportunities. I think as we continue to open more clinics, it's providing more opportunities. Surgeons are talking, hospitals are talking, talking about the positive experiences they have with our OPSB clinics because they're focused exclusively on the pediatric bracing side, pediatric bracing care.

And there just seems to be more and more demand, more and more opportunity for us to open clinics -- and we want to continue that momentum. We're probably maybe a little ahead of where we thought we would be, and we certainly don't want to slow that back. It does have a bit of an impact on the P&L because we -- opportunities to grow clinics come and there's an expense associated with that, but we really don't want to slow down. I think we want to extinguish as much of the demand as possible.

And with 60 clinics and 300 children's hospitals, there's an enormous runway of growth opportunities for us. And when you combine that with surgeon access to all of these new products that are used sometimes sold directly to the hospital, in other cases, sold through our clinics, it's just a really exciting setup for the next several years.

Operator

Our next question comes from Ryan Zimmerman with U.S. Bancorp, BTIG.

Unknown Analyst

This is[ Izzy ] on for Ryan. I just wanted to go back to the Super Cycle, if we could for a while. Dave, I know you talked about the number of products that are just beginning their limited market release. So I was hoping if you could provide some commentary on timing as to when we might see these move into full launches and what you like to see prior to fully launching the product?

David Bailey

Yes. So at this stage, we're in full market release of the 3P Hip. So that is the only product within the 3P family right now that's in full market release. We will be launching more and more sets of the 3P Hip over the course of the next several quarters. So growth we will see in the trauma and deformity business from 3P Hip will be very similar to kind of the long tail of growth you see with all of our products. I mean, at this stage, we're still launching the PNP Tibia and it's been out a few years, but still driving very, very strong growth.

So 3P, 3P Tibia is still in commercial release, but very early at least for 3P Hip in commercial release. The 3P Small and Mini, we have very few sets out there. We're starting to do procedures at some of the KOL hospitals, the key opinion leader hospitals where we have designed the products. We're getting very positive results, and we like what we've seen so far. But I think the small mini is probably a first half to middle -- first half of next year type of story when we move into full market release.

On the scoliosis side, VerteGlide is moving really from early adoption and just having a few sets to getting more and more sets of VerteGlide out there. I think we have now some 125 surgeons or so trained, upwards of 40 hospitals that have been utilizing VerteGlide. So it is really moving into full commercial release. But again, a long tail of growth opportunity for us there. So I think VerteGlide will be a story for us in 2027 as well as the 3P Small/Mini, 3P Hip. On the PNP Retrograde side, we haven't talked as much about that with you all over the last 6 months or so. But I think we did point that we thought we were going to get first cases by the end of 2026. very pleased that, that went through FDA very rapidly. Our suppliers had product available to us. We put a few sets out and started doing first cases here in October. Those results look very good and are giving us confidence that we can get sets on order, and that's probably a full market release sometime mid next year.

So we've got a really nice setup with the products that are just now in full release. We'll start releasing products, more products in 2027. And again, you know how long the tail of growth these things have. We're trying to be judicious with how many sets we deploy at one time, balancing the need for growth against positive free cash flow and certainly projecting positive free cash flow in 2027.

And so there is a bit of a tug of war sometimes with our business leaders as to how many sets we want to deploy. But I think we'll continue to be, I don't want to say conservative, but not overly aggressive in our use of cash. And I think we have a really nice setup here for all of these -- so many of these Super Cycle products in 2027 that will not just benefit numbers in 2027, but for the next 2 years, 3 years and in the future. And there's more products that we're not even talking about yet that are in product development that next year, we'll start to have beta launches. So the cycle is, again, just starting, and I like where this is heading over the next few years.

Unknown Analyst

That's really helpful. And with that context in mind, how should we think about contributions to the OUS business? I know we saw that strong 18% this quarter, which came ahead of our own expectations. So will we continue to see a similar ramp in these international markets? How are the Super Cycle products contributing there?

David Bailey

So at this stage, the Super Cycle products really aren't contemplated for the international markets. We have so many products that we haven't launched, particularly in Europe yet that have been legacy products now in the U.S. that we just now have received EU MDR approval for. So I think the growth that you're seeing, particularly in EMEA is as a result of continued market demand for a lot of legacy products, some of the early green shoots of EU MDR products that are getting to market and really seeing really nice scoliosis growth in Europe.

You may remember, but just a few years ago, we essentially didn't have a scoliosis presence in Europe. And because of the work of our regulatory teams and getting several products on the scoliosis side approved through EU MDR, we now have the majority of the product portfolio, particularly the response product portfolio available in Europe, and that's driving a lot of growth. I would point out, too, that a number of the products on the OPSB side are much easier to get approvals for outside of the United States. And again, they don't require us consigning inventory. So we are planning and starting to sell products, particularly like DF2 to international markets, although we're probably just barely in the batter's box in terms of our opportunities for some of those OPSB products outside of the United States.

Yes, I think you could expect us to see strong international growth throughout -- obviously, you've seen it throughout 2026. I think there's, again, a nice setup for us outside of the United States as more and more of these products get there. Our bracing business continues to grow outside of the U.S., but it is slightly offset by the work that we're doing in LatAm. Once again, in the quarter, we restricted set sales, particularly to Brazil. Most of those set sales were on the scoliosis side, which actually makes our 18% scoliosis number look even more impressive.

And we are going to be very smart and very conservative about how we move some of those products into the markets where we don't want to have the larger AR balances. So I think we're getting it right in Brazil. I think we're getting it right in LatAm, but some of the growth that you're seeing on the international business is being tempered by some of the performances we're getting out of LatAm and particularly Brazil.

Operator

Our next question comes from Mike Matson with Needham & Company.

Michael Matson

I guess I wanted to start with one on contracting. You made some comments there. I'm just curious about how many of your hospital customers are under contracts? And how does that sort of affect your business in those facilities? Is it result in kind of like market share gains or anything like that?

David Bailey

Yes. So the majority of our hospitals are on some form of contract. Obviously, most are on simple pricing contracts related to the products that they have been using over the course of the last several years. Our sales team, the company overall commercial team is trying to get more and more usage of the products that are in the hospital already. Just because they're in the hospital doesn't mean that every surgeon in the hospital is utilizing that.

So when we bring a product like 3P Hip, admittedly, there's still limited volumes of sets, and we don't want to use our cash as aggressively as maybe we would have in the past. And so there's some scarcity for some of these products, particularly when we've seen some of the competitive products from other companies be pulled from the market. We have just, frankly, so many in of one kind of no threat of substitute products that it does allow us, Mike, to go into a hospital and build on the contracts, the pricing contracts that we have and hopefully convert some of those pricing contracts into either single vendor or maybe high dual vendor contracts that get us 50%, 60%, 70%, maybe even 80% market share.

And what that does is not only allows those hospitals to access the new products in the Super Cycle, which is great for them, great for their patients, great for us, but it also pulls through some of those legacy sets that are on the shelf oftentimes. So it doesn't require us deploying more capital. those sets are on the shelf and then gets a higher compliance rate to some of the less differentiated technologies like cannulated screws, like flexible nails.

And we are seeing growth in those product lines right now. That's why you hear me lead off every one of these calls with probably still the #1 driver of growth for us is gaining market share within the legacy products. And again, I think what we really like about that is it isn't requiring a bunch of additional set deployment. And so as those sets become better utilized, that has a very positive impact on free cash flow for us.

Michael Matson

Okay. Got it. And then just looking at kind of the P&L for the first 3 quarters of the year, from an operating expense perspective, it looks like R&D and G&A have been relatively flat year-over-year, but sales and marketing looks like it's tracking kind of more in line with your sales growth, about 15%, 16% growth, if my math is correct. So not that that's a bad thing, but I guess just wondering, is there any potential to generate leverage in sales and marketing? Or just given the investments you're having to make, is that going to kind of grow more in line with sales in future periods?

Frederick Wise

Yes. So in the first couple of quarters, we did get a little bit of leverage. Obviously, sales in the second quarter were much higher than they were in the first quarter, which drove the sales and marketing dollars up second quarter as compared to the first quarter, but the percentages was still pretty good. I would say the third quarter was a bit of an anomaly where it was a little higher than last year, and we don't expect that, that's going to repeat. So there will be some leverage that we will gain in the fourth quarter and then some additional leverage that we'll gain going into next year as well. So I would call third quarter a bit of anomaly and probably not expected to see that type of an increase in the future.

Operator

Our next question comes from Ben Haynor with Lake Street Capital Markets.

Benjamin Haynor

First for me, just on OPSB, I mean, it really sounds like that's going great guns. Just thinking back a couple of years, if you started talking about this, it really seems like the economics and maybe even the mix between acqui-hire and de novo is kind of tracked to what you guys thought. I guess, is that a fair statement? And with how fast you've rolled these things out there, should we think about this as kind of every opportunity that you get where either there's an acqui-hire or a good location that you can get within a hospital that kind of take it? Just big picture, any thoughts there?

David Bailey

Yes. And I think you're right in terms of this it has gone extremely well. I think the unit economics or the location economics have worked as we thought they would work. Certainly, as we've said, greenfield locations take longer, and there is more upfront expense before you drive revenue. So we are balancing how fast we want to greenfield more and more locations. We're not necessarily turning down any options, but I do think that we're trying to balance the best options that drive profitability most rapidly. And obviously, we are balancing those with accounts where we have very, very solid relations on the implant side.

You're hearing a lot of the OPSB new products they also tie out in some cases to some of the implant systems we sell. So Traxio is the halo gravity traction system. There's a surgical procedure that has hardware associated with it. We currently don't sell the hardware, but we will in the future. And that will be a new product for us, but that ties into usage of VerteGlide. It ties into usage of our Fusion system. And so we're seeing a nice synergy between those systems.

Same thing with the knee Tractor FIX, where we're seeing the tie out of hospitals who are using ORTHEX and then utilizing those ORTHEX patients going to our clinics and getting the Tractor FIX system. I think that is a perfect synergy. And so some -- we're being fairly judicious about where we target new clinic opportunities. And a lot of those new clinic opportunities are in places where we have again, very strong relationships, already good contracting, high usage of our implant systems. And in those places, you can imagine, there's an extremely high demand.

We're getting pulled into those conversations by hospitals and by physicians, which is fantastic. I mean that's what you would always hope for. I just think that there is some limit just from a total personnel that we can't do them all at once. And so that's probably the limiting factor here and just the fact that we don't want to get ahead of ourselves on the expense side.

Benjamin Haynor

Got it. That makes sense. And then just thinking about the DF2 being in half of children's hospitals now. Are there, I guess, any commonalities between those hospitals or maybe the ones that are -- it's not in yet? And then with the 30-odd other kind of OPSB products, do you see sort of adoption curves that look like DF2 in any of them or all of them for that matter?

David Bailey

Well, a number of the 30 products that we started with came with the Boston O&P acquisition or the MD O acquisition. I would argue that particularly with our clubfoot bracing products, we have extremely high market share in the U.S. and really outside of the United States. So adoption has been -- is very, very high, probably not a huge volume of growth there for some of those 30 products.

But products like DF2, I mean, I've been doing this a long time, nearly 20 years. I'm not certain I've seen a faster adoption of any product we've ever developed and really a complete change to what now is the gold standard in terms of how you take care of these young children with femur fractures and on virtual elimination of Spica casting. I think some of the pathway to adoption is -- it's different in every account. I would say the first half of those places are places where we probably had maybe slightly better relationships on the implant side and surgeons who heard about DF2 early and are very aggressively wanting their hospitals to stock. I would guess over the course of the next few years that DF2 will become ubiquitous in every children's hospital in the United States and around the world.

And so it's still got growth ahead of it. I also think that not every product on the OPSB side is going to be DF2, completely changing the gold standard. But I do think we have some products in the pipeline that will -- and if you look at the economics of a product line like DF2, it is very, very good. This has relatively high ASPs, certainly not that of a scoliosis procedure or a PNP FEMUR, but relatively high ASPs, really nice margin and no set deployment required.

And so the more products like DF2 that we can develop, we can get to market and frankly, just the patient impact of a product like DF2 and some of these new products that the OPSB team is developing, it's really remarkable. It's why we do this. And if we can do this and do this well, impact patients in a very positive way and do it in a very economically friendly way for the business, then we want to do more of that. I think that's what you hear in my excitement on the R&D side of OPSB. We just think we've got more DF2s out there, and it's going to be very exciting in the future.

Operator

Our next question comes from Matthew Blackman with TD Cowen.

Unknown Analyst

Fred, this is [ Drew ] on for Matt. Dave, a couple of product questions for you. And then Fred, I have a question on EBITDA. But Dave, you talked about -- you mentioned this earlier that you're up to about 125 new surgeons trained on VerteGlide. I was wondering if you might be able to update that metric. I think that was the number from last quarter. And then curious where you're kind of seeing that growth from or that user base coming from? Is that existing users or de novo users? And any way to quantify the pull-through that you're seeing today in the portfolio? And then for eLLi, maybe timing might have slipped a little bit from what you were saying for the last quarter with first inpatient cases starting in '27. Just maybe what has to happen for you to kind of get that across the finish line? What's left to do? And you said last quarter, too, that this could be a bigger product than VerteGlide. Could that actually happen in 2027? Or is it going to take time for this one to ramp up?

David Bailey

Yes. A lot to unpack there. So the 125 on the VerteGlide, I think, is the formal training that we have done. We did not have any very large-scale surgeons traveling to a specific location to be trained on VerteGlide in the quarter. We certainly are training surgeons every day at a local level. So I'm not sure the total volume of surgeons that we now have trained, but I can give you an updated number. I think the -- what we have seen in terms of the user base of VerteGlide continues to grow. It's a combination of users who are using it more frequently because they had a great experience, combined with completely new users.

We don't have long-term data out, but I would say that we hope within the next year or so that we're going to be getting patients to a few years out, which would be very impactful for the business, and we're tracking all of these patients. So VerteGlide is a complex procedure. There's not been very many good solutions for EOS over the course of many years.

And so I think we're very pleased with the rate of adoption, the user base. And I will say that some of the accounts some pretty substantial accounts for us right now on the scoliosis side are as a result of the fact that surgeons had such a great user experience with VerteGlide. It's always been our strategy to deliver these very complex surgical solutions in places where other companies aren't willing to invest and then obviously drive the revenue and the patient impact from those procedures, but also drive pull-through from RESPONSE.

And the underlying implant growth in the quarter was very strong. And I think you could assume that's not all VerteGlide. A lot of that is pull-through and new users of our RSPONSE Fusion side. With respect to eLLi, frankly, this is going to come down to an FDA decision. I think we're doing the work that we need to do. We need to get our IDE approved. I can't guarantee exactly when that timing is, but I think we're close. And certainly, we will notify the market when we get that approved. I do think we will be doing surgeries certainly, it doesn't look like we'll be doing surgeries by the end of this year, but it looks like into early 2027.

And we will continue to have an ongoing discussion with the FDA about how many of those procedures are required before we can move to full market release. Again, eLLi is a very complex device, as you know. And you are right in saying that we believe eLLi can be substantially larger opportunity for us than VerteGlide. It will have some impact on 2027, but it will probably be in a limited release fashion. This is more a 2028, 2029 story. That said, when we get the device fully approved, we think this is going to have a very rapid surgeon uptick. When surgeons see this technology, when they see it in the lab, the feedback is extremely positive.

We have a number of surgeons that are willing to travel to Warsaw for VIP visits. And one of the things they all want to see is EI because I think it is so compelling. So it's a big opportunity when you partner eLLi with Veraxis or with VerteGlide. And then next year, we do the early release or the beta release of Veraxis, our new Fusion system, combined with Traxio and the surgical opportunity with Traxio as well. That's why I point that the next year, the next several years really on the scoliosis business look quite bright for us.

Unknown Analyst

Got it. And Fred, just for you on EBITDA. Is there any way that you might be able to -- and I know there's a few moving pieces in the third quarter to the fourth quarter with sales and marketing and the fair value adjustment here. But is there any way to parse out kind of what you're spending or maybe said differently, how profitable the clinics are and how that's driving EBITDA? And then fourth quarter, you're going to have 60% drop-through kind of by my math. Like it's probably not sustainable, but maybe how do we kind of think about a sustainable drop-through number as you're still focusing on growth, but also profitability?

Frederick Wise

Yes, absolutely. So the growth in OPSB is kind of 2-sided, right? So the ones that are up and running, have good volume going through there, look very, very good. The ones that are brand new are similar to our models, but they're obviously costing money for the first 6 months as we get them established.

We've got some models and some numbers we put in our investor deck for some time now, and I would say we're tracking towards those very favorably. But clearly, when we're opening new greenfield clinics, in particular, there is an investment upfront. So it's kind of a mixed bag, growing the ones that are there and established and then also investing for the future at the same time. So that's on the OPSB side. There's probably, I don't know, $700,000 maybe of timing that fell into the third quarter that's not going to repeat in the fourth quarter. So we'll get that advantage.

And as I mentioned earlier, year-to-date EBITDA is growing at 60% year-over-year compared to 16% revenue growth on a year-to-date basis. And we think those are pretty impressive results, and we would expect that level of performance to continue into the future.

Operator

Our next question comes from Ravi Misra with Truist Securities.

Ravi Misra

So just a couple of questions on OUS and then maybe one, I'll start first with gross margin. Just trying to figure out nice solid gross margin beat even with 7D sales. So can you maybe parse out the benefit from kind of mix versus pricing and volumes here? And how we should be thinking about that in the fourth quarter? And then I'll just ask the OUS questions upfront. First, just OSSIO, are you thinking about any OUS distribution for that product? And second, just for OPSB, you mentioned it's not on consignment. I'm just curious what the go-to-market model is to make this a more substantial portion of the revenue going forward?

Fred Hite

Yes, absolutely. So very pleased with the gross margin, 74%, equal to last year. This year, we did have 7D units. Last year, we had none, and that obviously does drag it down a little bit. As we've mentioned in the past, the implant business has a stronger gross margin than OPSB, but the contribution margin from OPSB is equal to the implant business. So as the OPSB business is growing faster, that does put pressure on the gross margin. So we were able to offset that pressure with favorable performance. Also having domestic growing faster than the OUS helps the business and the contribution of the new products that we talked about definitely helps that gross margin rate. I think 73% is probably the right number for the fourth quarter, which will put us in a very strong position for the full year.

Yes. On the international questions, Ravi, we really haven't contemplated OSSIO outside of the United States. Not saying that, that isn't possible at some point in time. But at this stage, our focus is being rolling these products out in the U.S., and we're extremely early in that process. And so I haven't gotten to how it could happen outside of the United States. But again, it's a possibility at some point in time in the future. When we talk about the OPSB products, so we go to market with those products in a few different ways. Some of those products simply get ordered directly either through our sales team, through our implant sales team or our OPSB teams, and we sell those directly to the hospital. We sell those directly to whether it's the emergency room or the hospital clinic.

And so we literally manufacture them in one of our locations and ship them directly and get paid shortly thereafter. And so there's no stocking requirements from our perspective or on our side to consign that inventory. Then others of our OPSB products obviously get sold through our clinics. And so it's less of a wholesale transaction, and we manufacture it for a patient that comes into one of our clinics. It gets fitted, applied -- the brace gets applied in our clinics, and then we bill insurance directly for that clinic visit, which is, you can imagine, quite profitable for us in that instance.

Either way, we like the go-to-market strategy of both. It gives us opportunities to sell to hospitals that we may not have a clinic or we may not even be contemplating clinics. And products like DF2 are placed oftentimes in the operating room or placed on a patient some cases, even in the doctor's office or in the emergency room. And so they're not as applicable for one of our OPSB clinics. Traxio is a product that is literally sold to the hospital. It's a capital -- small capital sale within the residuals of some of the reusables. And eventually, Traxio will have an implant component to it, hopefully here in the next few quarters. And so that is OPSB product that is sold directly to the hospital that doesn't touch any of our clinics. So it is a bit of a mixed bag in terms of how we go to market with those products. Each one of them has a unique sales strategy and go-to-market strategy. And in any event, we like the demand profile of these products. We like the margin of these products, and we like the fact that there's no inventory requirements. And so the more we do of those products, I think the better we'll be.

Operator

I'm showing no further questions at this time. I'd like to turn the call back over to Dave for closing remarks.

David Bailey

Great. Thanks, operator. Well, once again, thank you all for joining us this evening. I think we'll be at a number of conferences upcoming. And so Fred and I look forward to seeing you in the future. Thanks for your interest, and have a great evening.

Operator

Thank you for your participation. You may now disconnect.