Company: OFIX
Filing Date: 2025-05-06
Form Type: 8-K
Source: 0000950170-25-063953
Chunk: 3

Company: Orthofix Medical Inc.
Filing Date: 2025-05-06
Form: 8-K
Item: Item 2.02
Chunk 3
---
 non-cash gain or loss and is not related to the Company's core operating performance.

• Litigation and investigation-related costs
 - Inclusive of (i) adverse or favorable legal judgments or negotiated legal settlements and certain related legal expenses and (ii) amounts incurred in relation to and as a result of the Board of Directors’ investigation conducted by independent outside legal counsel that resulted in the departure of three former executive officers and certain charges stemming from these actions. These charges are primarily recorded within sales, general, and administrative expenses. Management excludes these items when evaluating the Company's operating results as these costs and/or benefits can vary significantly based on the timing, frequency, and magnitude of litigation matters.

• Succession charges
 - Costs related to the transition of certain executive officers, including any cessation and onboarding amounts, consulting services, and other related expenses, which are primarily recorded as sales, general, and administrative expenses. Management excludes this item when evaluating the Company's operating results as these costs associated with events that are not expected to recur at a similar frequency and magnitude in the future.

• Long-term income tax rate adjustment
 - Reflects management’s expectation of a long-term normalized effective tax rate of 28% for 2024 and 2025 results, which is based on current tax law and current expected adjusted income; actual reported tax expense will ultimately be based on GAAP earnings and may differ from the expected long-term normalized effective tax rate due to a variety of factors, including the resolutions of issues arising from tax audits with various tax authorities, the ability to realize deferred tax assets, and the tax impact of certain reconciling items that are excluded in determining adjusted net income (loss).

• Restructuring costs and impairments related to M6 product lines
- Restructuring costs, including severance-related benefits, and impairment charges incurred as a result of the Company’s decision to discontinue its M6 artificial disc product lines. Management excludes this item when evaluating the Company's operating results as these costs associated with this event are one-time in nature and are not related to the Company's expected ongoing operations.

Usefulness and Limitations of Non-GAAP Financial Measures

Management uses non-GAAP measures to evaluate performance period-over-period, analyze the underlying trends in the Company's business, assess the Company's performance relative to its competitors, and establish operational goals and forecasts used in allocating resources. Management uses these non-GAAP measures as the basis for evaluating the ability of the Company's underlying operations

to generate cash, prior to required investments in working capital,