Insider transaction activity can help investors cut through the data overload. Corporate insiders have the most up-to-date information on their companies' operations and their trading activity can tell us a lot about a stock’s future potential.
In this report, we are going to highlight some interesting insider buying at Orthopediatrics Corp (KIDS:US). Orthopediatrics is a medical device company that is focused on providing products to the pediatric orthopedic market for children with orthopedic conditions. Its products – which are focused on the areas of trauma and deformity, scoliosis, and sports medicine – are distributed in 44 countries globally. The company is listed on the NASDAQ Global Market and currently has a market capitalization of $942 million.
Orthopediatrics Corp: Insider Buying
Our records show that on 15 March, two board members purchased KIDS stock. Director David Pellizon purchased 3,700 shares at a price of $46.50 per share, spending $172,050 on stock. Meanwhile, Director Harald Ruf purchased 2,880 shares at a price of $46.98 per share, spending $135,302 on stock. Combined, these insiders spent $307,352 on shares.
This insider trading is worth highlighting due to the fact that both of these insiders work at Squadron Capital – Orthopediatrics’ largest shareholder (28% stake). Pellizon – who was previously Managing Director at surgical products company Precision Edge Holdings – is currently the President of Squadron. Meanwhile, Ruf – who has over 35 years of C-Suite level experience in a variety of industries including medical device OEM and medical device manufacturing – is currently COO of Squadron. This background means that these two insiders are likely to have an in-depth understanding of both the company and the fair value of the stock.
Orthopediatrics’ revenues held up well in 2020 given the challenges that medical device manufacturers faced due to Covid-19 disruptions. For the year, full-year 2020 revenue only decreased 2.0% to $71.1 million. Meanwhile, in the fourth quarter, the company registered domestic revenue growth of 26.1% year on year with particular strength in Scoliosis and Sports Medicine, and international sales agency revenue growth of 51%.
Looking ahead, the company expects revenues to grow 31%-38% this year to $93 million-$98 million. The company believes it will see strong contributions from new domestic Orthex (its key product for deformity correction) users, continued acceleration of conversions, and the Orthex European launch in the second quarter of 2021.
“We are optimistic about the outlook in 2021, particularly with the resumption of strong international growth”, said CEO Mark Throdahl recently.
In light of this optimistic tone from management, we see the insider buying here as bullish.