Orthofix Reports Third Quarter 2019 Results • Jon Serbousek to succeed Brad Mason as President and Chief Executive Officer on

Orthofix Reports Third Quarter 2019 Results

LEWISVILLE, Texas - October 28, 2019 - Orthofix Medical Inc. (NASDAQ:OFIX) today reported its financial results for the third quarter ended September 30, 2019. Net sales were $113.5 million, loss per share ("EPS") was ($2.14) and adjusted EPS was $0.41.

"While we are very pleased with the sales trajectory of the M6 cervical disc in the U.S. and the continued strong performance of Biologics tissue sales, spine leadership vacancies, the delay of several large stocking orders in Extremities and the uncertainty around the CEO transition timing negatively impacted other parts of our business in the third quarter," said Brad Mason, President and Chief Executive Officer. "The good news is that these issues are temporary and not reflective of the core value proposition at Orthofix and the opportunity for growth and shareholder value creation. Jon Serbousek hit the ground running and is fully engaged and focused on recruiting candidates for the vacant leadership positions. We expect the momentum of the M6-C disc and the experience and value that the new spine leadership team brings will have a positive impact on future performance."

Financial Results Overview

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

Gross profit increased $0.9 million to $88.6 million. Gross margin decreased to 78.1% compared to 78.5% in the prior year period.

Based on the initial success observed in our launch of the M6-C artificial cervical disc in the U.S. market, our long-term forecasts of net sales now indicate a greater likelihood of achieving the potential revenue-based milestone payments associated with the Spinal Kinetics acquisition. As such, we recognized expenses during the quarter of $22.3 million associated with the remeasurement of these potential milestone payment liabilities.

Net loss was ($40.5) million, or ($2.14) per share, compared to net loss of ($1.2) million, or ($0.07) per share in the prior year period, primarily driven by the remeasurement of the potential Spinal Kinetics milestone payment liabilities discussed above. Adjusted net income from continuing operations was $7.9 million, or $0.41 per share, compared to adjusted net income of $8.3 million, or $0.44 per share in the prior year period.

EBITDA was ($20.8) million, compared to $3.6 million in the prior year period, largely due to the remeasurement of the potential Spinal Kinetics milestone payment liabilities. Adjusted EBITDA was $20.3 million, or 17.9% of net sales, compared to $21.4 million, or 19.2% of net sales, in the prior year period.

As of September 30, 2019, cash, cash equivalents, and restricted cash totaled $57.5 million compared to $72.2 million as of December 31, 2018. Cash flow from operations for the nine months ended September 30, 2019 decreased $8.7 million to $20.1 million when compared to the prior year period, while free cash flow decreased $12.9 million to $5.2 million.

As of September 30, 2019, the Company had no outstanding indebtedness and borrowing capacity of $125 million under its previous credit facility. On October 25, 2019, the Company, and certain of its wholly-owned subsidiaries, entered into a Second Amended and Restated Credit Agreement (the "Amended Credit Agreement") with JPMorgan Chase Bank, N.A., as Administrative Agent, and certain lender parties thereto. The Amended Credit Agreement provides for a $300 million secured revolving credit facility maturing in October 2024.

For the year ending December 31, 2019, the Company expects the following results, including the impact of any expected changes in foreign currency exchange rates.

1 Represents a year-over-year increase of 1.5% to 2.2% on a reported basis

2 Represents a year-over-year decrease of 275.9% to 265.1%

3 Represents a year-over-year decrease of 11.0% to 8.7%

4 Represents a year-over-year decrease of 273.6% to 263.9%

5 Represents a year-over-year decrease of 13.4% to 10.6%

Orthofix will host a conference call today at 4:30 PM Eastern time to discuss the Company's financial results for the third quarter of 2019. Interested parties may access the conference call by dialing (844) 809-1992 in the U.S. and (612) 979-9886 outside the U.S., and referencing the conference ID 5592946. A replay of the call will be available for two weeks by dialing (855) 859-2056 in the U.S. and (404) 537-3406 outside the U.S., and entering the conference ID 5592946. A webcast of the conference call may be accessed by going to the Company's website at www.orthofix.com, by clicking on the Investors link and then the Events and Presentations page.

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.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended ("the Exchange Act"), and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "projects," "intends," "predicts," "potential," or "continue" or other comparable terminology. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to further update any such statement, or the risk factors described in Part I, Item 1A under the heading Risk Factors in our Form 10-K for the year ended December 31, 2018, to reflect new information, the occurrence of future events or circumstances or otherwise.

ORTHOFIX MEDICAL INC.

Condensed Consolidated Statements of Operations

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Condensed Consolidated Balance Sheets

ORTHOFIX MEDICAL INC.

Non-GAAP Financial Measures

The following tables present reconciliations of operating income (loss), net income (loss), EPS, and net cash from operating activities, in each case calculated in accordance with U.S. generally accepted accounting principles ("GAAP"), to, as applicable, non-GAAP financial measures, referred to as "EBITDA," "Adjusted EBITDA," "Adjusted net income," "Adjusted EPS," and "Free cash flow" that exclude items specified in the tables. A more detailed explanation of the items excluded from these non-GAAP financial measures, as well as why management believes the non-GAAP financial measures are useful to them, is included following the reconciliations.

EBITDA and Adjusted EBITDA

Constant currency is a non-GAAP measure, which is calculated by using foreign currency rates from the comparable, prior-year period, to present net sales at comparable rates. Constant currency can be presented for numerous GAAP measures, but is most commonly used by management to analyze net sales without the impact of changes in foreign currency rates.

EBITDA is a non-GAAP financial measure, which is calculated by adding interest expense, net; income tax (expense)/benefit; and depreciation and amortization to net income/(loss). EBITDA provides management with additional insight to its results of operations. EBITDA is the primary metric used by our Chief Operating Decision Maker in managing our business.

Adjusted EBITDA, Adjusted Net Income and Adjusted EPS

These non-GAAP financial measures provide management with additional insight to its results of operations and are calculated using the following adjustments:

Amounts previously reported as "Domestication to Delaware" have been reclassified to this line item to conform to current period presentation, resulting in an increase in strategic investments of $1.0 million and $3.7 million for the three and nine months ended September 30, 2018

Also included in this line are adjustments totaling $0.04 and $0.05 per share in the presentation of Adjusted EPS to account for the difference in the weighted average number of shares outstanding for GAAP and Non-GAAP reporting purposes due to our reported net loss position under GAAP and net income position under Non-GAAP for the three and nine months ended September 30, 2019, respectively, as these charges were the primary driver of our net loss position

Free cash flow is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operating activities. Free cash flow is an important indicator of how much cash is generated or used by our normal business operations, including capital expenditures. Management uses free cash flow as a measure of progress on its capital efficiency and cash flow initiatives.

Usefulness and Limitations of Non-GAAP Financial Measures

Management uses non-GAAP measures to evaluate performance period-over-period, to analyze the underlying trends in our business, to assess performance relative to competitors and to establish operational goals and forecasts that are used in allocating resources. Management uses these non-GAAP measures as the basis for assessing the ability of the underlying operations to generate cash. In addition, management uses these non-GAAP measures to further its understanding of the performance of our business units.

Material Limitations Associated with the Use of Non-GAAP Financial Measures

The non-GAAP measures used in this press release may have limitations as analytical tools, and should not be considered in isolation or as a replacement for GAAP financial measures. Some of the limitations associated with the use of these non-GAAP financial measures are that they exclude items that reflect an economic cost and can have a material effect on cash flows. Similarly, certain non-cash expenses, such as equity compensation, do not directly impact cash flows, but are part of total compensation costs accounted for under GAAP.

Compensation for Limitations Associated with Use of Non-GAAP Financial Measures

We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance. The GAAP results provide the ability to understand our performance based on a defined set of criteria. The non-GAAP measures reflect the underlying operating results of our businesses, which we believe is an important measure of our overall performance. We provide a detailed reconciliation of the non-GAAP financial measures to our most directly comparable GAAP measures, and encourage investors to review this reconciliation.

Usefulness of Non-GAAP Financial Measures to Investors

We believe that providing non-GAAP financial measures that exclude certain items provides investors with greater transparency to the information used by senior management in its financial and operational decision-making. Management believes it is important to provide investors with the same non-GAAP metrics it uses to supplement information regarding the performance and underlying trends of our business operations in order to facilitate comparisons to its historical operating results and internally evaluate the effectiveness of our operating strategies. Disclosure of these non-GAAP financial measures also facilitates comparisons of our underlying operating performance with other companies in the industry that also supplement their GAAP results with non-GAAP financial measures.

Orthofix Medical Inc.