Orthofix Q2 2026 earnings: Revenue grew as adjusted EBITDA margin narrowed

Orthofix Medical (NASDAQ: OFIX) reported Q2 2026 net sales of $210.9 million, up 3.8% from $203.1 million a year earlier, while diluted loss per share widened to $0.39 from $0.36. The GAAP operating loss narrowed substantially, but higher interest expense and an unfavorable swing in other income left the net loss wider, while adjusted EBITDA margin declined. Global Limb Reconstruction led growth, and Orthofix raised its full-year sales and adjusted EBITDA guidance.

Core financial results

Reported growth was affected by the discontinued M6 product lines, which contributed $2.4 million in the prior-year quarter but almost nothing in Q2 2026. Excluding M6, pro forma sales increased 5.1%, or 4.7% at constant currency.

GAAP gross margin improved because the prior-year results included larger merger and M6-related costs. On the more comparable non-GAAP basis, adjusted gross margin declined to 71.7% from 72.7%, and adjusted EBITDA was slightly lower despite revenue growth.

All figures in the table are quarterly. Pro forma and adjusted measures exclude the financial effects of the discontinued M6 product lines.

Business and segment performance

Global Limb Reconstruction was the fastest-growing reporting segment, supported by international performance and demand across key growth platforms. Global Spine grew more moderately, although Orthofix said Spine Fixation within that segment delivered double-digit constant-currency growth.

The product categories below overlap with the segment totals: Therapeutic Solutions and Spinal Implants, Biologics and Enabling Technologies together comprise Global Spine.

Therapeutic Solutions grew despite a temporary Medicare reimbursement reduction affecting bone growth stimulators during part of the quarter. Reimbursement was subsequently restored to its previous level. Orthofix also said Biologics stabilized and began regaining momentum, although it did not disclose a separate growth figure for that business.

Operating improvement did not yet translate into lower net losses or positive cash flow

The GAAP operating loss narrowed by approximately $7.9 million as gross profit increased by $10.2 million. SG&A expense rose by about $1.5 million, while R&D expense was nearly unchanged.

Below the operating line, net interest expense increased to $6.1 million from $4.0 million. Other income and expense also moved from $5.7 million of income in Q2 2025 to $0.8 million of expense, an unfavorable swing of approximately $6.5 million. These items more than offset the improvement in operating results, causing the net loss to widen.

Cash generation also remained under pressure. For the first six months of 2026—not the quarter alone—operating cash outflow and capital expenditures both increased, widening the free cash flow deficit.

Cash, cash equivalents and restricted cash totaled $104.4 million at June 30, down from $120.9 million at March 31. Orthofix attributed the sequential decline to arbitration award and settlement payments related to claims from three former executives terminated in 2023.

Long-term debt stood at $221.6 million, compared with $157.4 million at December 31, 2025. Financing activities provided $66.4 million during the first half of 2026.

Full-year guidance

Orthofix raised both full-year 2026 sales and adjusted EBITDA guidance following the restoration of Medicare reimbursement, its second-quarter performance and its updated expectations for the rest of the year. The company expects approximately 5% pro forma constant-currency sales growth at the midpoint and 80 basis points of adjusted EBITDA margin expansion from 2025.

The guidance is non-GAAP, excludes the discontinued M6 product lines and uses current foreign exchange rates. Management said the EBITDA outlook reflects cost discipline while accommodating planned growth investments and geographic mix dynamics.

Recent insider transactions

The supplied transaction records show several purchases by directors and a greater-than-10% beneficial owner, along with one disclosed officer sale. The following entries include sufficient date, transaction type and value information.

Risks investors should monitor

• Adjusted margin pressure: Adjusted gross margin declined by one percentage point, while adjusted EBITDA margin fell by 0.7 percentage point despite higher pro forma sales.
• Cash consumption: First-half operating cash outflow widened, and higher capital spending pushed free cash flow to negative $47.1 million.
• Debt and interest costs: Long-term debt increased from year-end, while quarterly net interest expense rose to $6.1 million and contributed to the wider net loss.
• Reimbursement and business-mix sensitivity: Temporary Medicare reimbursement pressure constrained Therapeutic Solutions during the quarter. Although reimbursement has been restored, the episode demonstrates how payment changes can affect demand and guidance.

Summary

Orthofix produced moderate revenue growth and substantially reduced its GAAP operating loss in Q2 2026, led by Global Limb Reconstruction and continued Spine Fixation demand. However, adjusted margins declined, below-the-line expenses widened the net loss and first-half free cash flow remained negative. The main points to monitor are whether restored Medicare reimbursement supports Therapeutic Solutions, whether Biologics continues to recover and whether the company can deliver its higher guidance while improving cash generation.