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STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Our stock option activity and related information are summarized as follows:


	Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Terms (in Years)
Outstanding at January 1, 2017	248,201	$	23.81	2.4
Forfeited or expired	(71,242)	$	9.85
Outstanding at December 31, 2017	176,959	$	29.42	2.0
Forfeited or expired	(50,652)	$	27.61
Exercised	(14,213)	$	29.85
Outstanding at December 31, 2018	112,094	$	30.32	1.8
Forfeited or expired	(2,546)	$	27.61
Exercised	(38,920)	$	29.30
Outstanding at December 31, 2019	70,628	$	30.97	1.2

Schedule of Restricted Stock Activity

Our restricted stock activity and related information are summarized as follows:


	Restricted Stock	Weighted-Average Remaining Contractual Terms (in Years)
Outstanding at January 1, 2017	677,241	3.5
Granted	122,069
Forfeited	(13,601)
Outstanding at Vested	(237,704)
Outstanding at December 31, 2017	548,005	0.3
Granted	178,543
Forfeited	(1,335)
Outstanding at Vested	(547,920)
Outstanding at December 31, 2018	177,293	2.2
Granted	154,769
Forfeited	(9,616)
Vested	(4,444)
Outstanding at December 31, 2019	318,002	1.7
Restricted stock exercisable at December 31, 2019	—

Summary of Warrant Activity

Our warrant activity and related information are summarized below:


	Warrants	Weighted-Average Exercise Price
Outstanding at January 1, 2017	44,101	$	27.03
Outstanding at December 31, 2017	44,101	$	27.03
Forfeited or expired	(37,311)	$	26.89
Outstanding at December 31, 2018	6,790	$	27.81
Forfeited or expired	(6,386)	$	27.61
Outstanding at December 31, 2019	404	$	30.97

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash	$ 70,777	$ 60,691
Restricted Cash	1,250	0
Accounts receivable - trade, less allowance for doubtful accounts of $506 and $134, respectively	16,003	8,999
Inventories, net	38,000	25,708
Notes receivable	564	502
Prepaid expenses and other current assets	1,464	1,256
Total current assets	128,058	97,156
Property and equipment, net	21,349	12,768
Other assets:
Amortizable intangible assets, net	14,484	1,921
Goodwill	26,183	0
Other intangible assets	4,490	260
Total other assets	45,157	2,181
Total assets	194,564	112,105
Current liabilities:
Accounts payable - trade	6,467	3,971
Accrued compensation and benefits	4,349	3,552
Current portion of long-term debt with affiliate	124	118
Other current liabilities	2,723	1,576
Total current liabilities	13,663	9,217
Long-term liabilities:
Long-term debt with affiliate, net of current portion	26,067	21,156
Operating lease liabilities	63
Deferred revenue	12,410	0
Total long-term liabilities	38,540	21,156
Total liabilities	52,203	30,373
Commitments and contingencies (Note 14)
Stockholders' equity:
Common stock, $0.00025 par value; 50,000,000 shares authorized; 16,723,128 shares and 14,538,202 shares issued and outstanding as of December 31, 2019 and December 31, 2018	4	4
Additional paid-in capital	271,182	197,442
Accumulated deficit	(128,822)	(115,091)
Accumulated other comprehensive loss	(3)	(623)
Total stockholders' equity	142,361	81,732
Total liabilities and stockholders' equity	$ 194,564	$ 112,105

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Statement of Comprehensive Income [Abstract]
Net loss	$ (13,731)	$ (12,025)	$ (8,932)
Other comprehensive income:
Foreign currency translation adjustment	620	(758)	135
Other comprehensive (loss) income	620	(758)	135
Comprehensive loss	$ (13,111)	$ (12,783)	$ (8,797)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

BUSINESS COMBINATION (Details) - USD ($) $ / shares in Units, $ in Thousands		7 Months Ended	12 Months Ended
	Jun. 04, 2019	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Common stock (in dollars per share)	$ 40.76
Escrow deposit period	20 months
Acquisition related costs			$ 737
Liabilities
Goodwill		$ 26,183	$ 26,183	$ 0
Vilex and Orthex
Business Acquisition [Line Items]
Acquisition of Vilex and Orthex, cash	$ 50,000
Acquisition of Vilex and Othex, common stock (in shares)	245,352
Common stock, par value (in dollars per share)	$ 0.00025
Escrow deposit	$ 3,000
Preliminary fair value of estimated total acquisition consideration	60,184
Assets
Cash	348
Accounts receivable-trade	2,088
Inventories	3,652
Prepaid expenses and other current assets	12
Property and equipment	7,540
Intangible assets	18,770
Operating lease right-of-use asset	323
Total assets	32,733
Liabilities
Accounts payable and accrued liabilities	563
Operating lease liabilities	323
Deferred tax liability	1,175
Other long-term liabilities	68
Total liabilities	2,129
Less: total net assets	30,604
Goodwill	29,580
Measurement period adjustment, accounts receivable - trade		239
Measurement period adjustment, inventory		253
Measurement period adjustment, working capital		92
Measurement period adjustment, deferred tax liability		1,400
Measurement period adjustment, intangibles		510
Measurement period adjustment, goodwill		$ 586
Fair value of identifiable intangible assets	18,770
Vilex and Orthex \| Trademarks and Trade Names
Liabilities
Indefinite-lived intangible assets acquired	4,610
Vilex and Orthex \| Patents
Liabilities
Finite-lived intangible assets acquired	$ 9,980
Remaining Economic Useful Life (in years)	15 years
Vilex and Orthex \| Developed Technology Rights
Liabilities
Finite-lived intangible assets acquired	$ 1,550
Remaining Economic Useful Life (in years)	10 years
Vilex and Orthex \| Customer Relationships
Liabilities
Finite-lived intangible assets acquired	$ 2,570
Remaining Economic Useful Life (in years)	12 years
Vilex and Orthex \| Noncompete Agreements
Liabilities
Finite-lived intangible assets acquired	$ 60
Remaining Economic Useful Life (in years)	5 years

STOCKHOLDERS' EQUITY - Warrants (Details) - $ / shares	12 Months Ended
STOCKHOLDERS' EQUITY - Warrants (Details) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Class of Warrant or Right [Line Items]
Forfeited or expired, weighted average exercise price (in dollars per share)	$ 27.61	$ 26.89
Warrants forfeited or expired (in shares)	(6,386)	(37,311)
Warrants exercise price (in dollars per share)	$ 30.97	$ 27.81	$ 27.03	$ 27.03
Warrants outstanding	404	6,790	44,101	44,101
Term of warrants	10 years
Number of warrants exercised (in shares)	0	0	0
Minimum
Class of Warrant or Right [Line Items]
Warrants exercise price (in dollars per share)	$ 26.27
Maximum
Class of Warrant or Right [Line Items]
Warrants exercise price (in dollars per share)	$ 30.97

BUSINESS	12 Months Ended
BUSINESS	Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BUSINESS	BUSINESS OrthoPediatrics Corp., a Delaware corporation, is a medical device company committed to designing, developing and marketing anatomically appropriate implants and devices for children with orthopedic conditions, giving pediatric orthopedic surgeons and caregivers the ability to treat children with technologies specifically designed to meet their needs. We sell our specialized products, including PediLoc^®, PediPlates^®, Cannulated Screws, PediFlex^TM nail, PediNail^TM, PediLoc^® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSE Spine, BandLoc, Pediguard, Pediatric Nailing Platform \| Femur, Orthex, and QuickPack^TM, to various hospitals and medical facilities throughout the United States and various international markets. We currently use a contract manufacturing model for the manufacturing of implants and related surgical instrumentation. In 2017, we expanded operations and established legal entities in the United Kingdom, Australia and New Zealand, permitting us to sell under an agency model direct to local hospitals in these countries. In September 2018, we further expanded operations in Canada selling direct to local hospitals, and in January 2019 we expanded to Belgium and the Netherlands. Additionally, in March 2019 we established a holding company and an operating company in the Netherlands that are expected to enhance our operations in Europe. On June 4, 2019, we purchased all the issued and outstanding shares of stock of Vilex in Tennessee, Inc. ("Vilex") and all the issued and outstanding units of membership interests in Orthex, LLC ("Orthex") for $60,000 in total consideration. Vilex and Orthex are primarily manufacturers of foot and ankle surgical implants, including cannulated screws, fusion devices, surgical staples and bone plates, as well as Orthex Hexapod technology which is used to treat pediatrics congenital deformities and limb length discrepancies (refer to Note 3). On December 31, 2019, we divested substantially all of the assets relating to Vilex's adult product offerings to a wholly-owned subsidiary of Squadron Capital LLC ("Squadron") in exchange for a $25,000 reduction in a Term Note owed to Squadron in connection with the initial acquisition. As part of the sale, we also executed an exclusive license arrangement with Squadron providing for perpetual access to certain intellectual property and a mutual distribution agreement (refer to Note 4). Our largest investor is Squadron, a private investment firm based in Granby, Connecticut.

INCOME TAXES - Components of income tax expense (benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Deferred:
Federal	$ 1,033	$ (3,663)	$ 8,494
State	37	564	(131)
Total deferred federal and state tax expense (benefit)	1,070	(3,099)	8,363
Total	1,070	(3,099)	8,363
(Decrease) Increase in valuation allowance	(1,070)	3,099	(8,363)
Total tax expense	$ 0	$ 0	$ 0

BUSINESS SEGMENT - Schedule of Revenue by Category (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Net revenue	$ 18,952	$ 20,744	$ 18,200	$ 14,656	$ 14,568	$ 15,820	$ 15,077	$ 12,094	$ 72,552	$ 57,559	$ 45,620
Trauma and deformity
Segment Reporting Information [Line Items]
Net revenue									49,371	39,695	32,801
Scoliosis
Segment Reporting Information [Line Items]
Net revenue									21,485	16,662	11,585
Sports medicine/other
Segment Reporting Information [Line Items]
Net revenue									$ 1,696	$ 1,202	$ 1,234

SIGNIFICANT ACCOUNTING POLICIES - Stock-Based Compensation (Details) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, granted (in shares)	0	0	0
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Options, granted (in shares)	0	0	0
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	6 years
2007 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for award (in shares)	1,585,000
Vesting period (in years)	6 months
2017 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for award (in shares)	1,789,647

DEBT AND CREDIT ARRANGEMENTS

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

DEBT AND CREDIT ARRANGEMENTS

Long-term debt consisted of the following:


	December 31,
	2019		2018
Note payable to Squadron	$	19,891	$	19,856
Revolving credit facility with Squadron	5,000		—
Mortgage payable to affiliate	1,300		1,418
Total debt	26,191		21,274
Less: current maturities	124		118
Long-term debt, net of current maturities	$	26,067	$	21,156

On December 31, 2017, we entered into a Fourth Amended and Restated Loan and Security Agreement, or the Loan Agreement, with Squadron Capital LLC, or Squadron. Pursuant to the Loan Agreement, a majority of the term loan amounts under a previous agreement with Squadron were consolidated into a $20,000 term note, represented by a Term Note A, and a $15,000 revolving credit facility was established. Both facilities include interest only payments and provide for an interest rate equal to the greater of (a) three month LIBOR plus 8.61% and (b) 10%. The Loan Agreement also extended the maturity date to January 31, 2023.

In order to finance a portion of the cash consideration for the acquisition of the Vilex Companies, the Company entered into a first Amendment, or the Amendment, to the Loan Agreement (as so amended, the "Amended Loan Agreement"), with Squadron. The Amended Loan Agreement provided for a new $30,000 term loan facility, represented by a Term Note B, in addition to the existing $20,000 Term Note A and $15,000 revolving credit facility. Similar to the other facilities under the Amended Loan Agreement, the Term Note B was subject to interest only payments at an interest rate equal to the greater of (a) three month LIBOR plus 8.61%, and (b) 10.00%. The Term Note B, which would have matured no later than May 31, 2020, was paid in full on December 31, 2019 using $25,000 received in exchange for the divestiture of the adult product offerings of Vilex and the related Orthex license agreement, and $5,000 from the available Squadron revolving credit facility.

Borrowings under the Amended Loan Agreement are secured by substantially all of the Company's assets and are unconditionally guaranteed by each of its subsidiaries with the exception of Vilex. There are no traditional financial covenants associated with the Amended Loan Agreement. However, there are negative covenants that prohibit us from, among other things, transferring any of our material assets, merging with or acquiring another entity, entering into a transaction that would result in a change of control, incurring additional indebtedness, creating any lien on our property, making investments in third parties and redeeming stock or paying dividends.

The fair value of our notes payable to Squadron was estimated based on prices for the same or similar issues and the current interest rates offered for the debt of the same remaining maturities, which are considered Level 2 inputs in accordance with ASC Topic 820, “Fair Value Measurements and Disclosures.” At December 31, 2019 and 2018, the fair value approximated the carrying value.

In connection with the purchase of our office and warehouse space in Warsaw, Indiana in August 2013, we entered into a mortgage note payable to Tawani Enterprises Inc., an affiliate of Squadron. Pursuant to the terms of the mortgage note, we pay Tawani Enterprises Inc. monthly principal and interest installments of $16 with interest compounded at 5% until maturity in 2028, at which time a final payment of remaining principal and interest is due. The mortgage is secured by the related real estate and building. As of December 31, 2019 and 2018, the mortgage balance was $1,300 and $1,418, respectively, of which current principal due of $124 and $118, respectively, was included in current portion of long-term debt.

At December 31, 2019, the aggregate future principal payments on our debt arrangements are as follows:


2020	$	124
2021	131
2022	137
2023	25,035
2024	152
Thereafter	612
	$	26,191

Interest expense relating to notes payable to Squadron and mortgage note payable with Tawani was $4,229, $2,255 and $2,490 for the years ended December 31, 2019, 2018 and 2017, respectively.

INCOME TAXES - Income taxes from continuing and discontinued operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Income from continuing operations	$ 0	$ 0	$ 0
Income from discontinued operations	(660)	0	0
Income Tax Expense (Benefit), Intraperiod Tax Allocation, Total	$ (660)	$ 0	$ 0

- Definition

Amount of tax expense (benefit) related to a discontinued operation. Includes, but is not limited to, tax expense (benefit) related to income (loss) from operations during the phase-out period, tax expense (benefit) related to gain (loss) on disposal, tax expense (benefit) related to gain (loss) for reversal of write-down (write-down) to fair value, less cost to sell, and tax expense (benefit) related to adjustments of a prior period gain (loss) on disposal.

+ References + Details

COMMITMENTS AND CONTINGENCIES (Details)	12 Months Ended
COMMITMENTS AND CONTINGENCIES (Details)	Dec. 31, 2019 USD ($)
Long-term Purchase Commitment [Line Items]
Minimum annual royalty payment	$ 500,000
Minimum
Long-term Purchase Commitment [Line Items]
Royalty agreement percentage	0.50%
Maximum
Long-term Purchase Commitment [Line Items]
Royalty agreement percentage	20.00%

DISCONTINUED OPERATIONS (Details) - USD ($) $ in Thousands	12 Months Ended
DISCONTINUED OPERATIONS (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net loss from discontinued operations, net of tax	$ 1,046	$ 0	$ 0
Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Divestiture purchase price	25,000
Divestiture purchase price, attributable to deferred revenue	12,410
Net loss from discontinued operations, net of tax	1,046
Disposal Group, Including Discontinued Operation, Assets [Abstract]
Cash	515
Accounts Receivable - trade, less allowance for doubtful accounts	928
Inventories, net	2,060
Prepaid expenses and other current assets	24
Property and equipment, net	6,246
Amortizable intangible assets	980
Goodwill	3,397
Other intangible assets	380
Operating lease right-of-use asset	216
Total assets divested	14,746
Disposal Group, Including Discontinued Operation, Liabilities [Abstract]
Accounts payable - trade	37
Accrued compensation and benefits	171
Operating lease liabilities	199
Deferred tax liability	1,175
Other current liabilities	13
Total liabilities divested	1,595
Net assets sold	13,151
Allocated purchase price	12,590
Loss on divestiture	(561)
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Net revenue	3,069
Cost of revenue	(286)
Sales and marketing	(692)
General and administrative	(2,103)
Other income (expense), net	(9)
Pretax net loss of discontinued operations	(21)
Income tax expense	(464)
Net loss on discontinued operations	$ (485)

INCOME TAXES - Deferred tax assets and liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Inventories, net	$ 1,759	$ 1,183
Stock based compensation	980	443
Loss carryforwards	22,153	22,093
Interest carryforward	655	495
Credit carryforwards	260	416
Intangibles	0	134
Other	417	121
Total deferred tax assets	26,224	24,885
Valuation allowance	(25,392)	(24,321)
Net deferred tax assets	832	564
Deferred tax liabilities:
Intangibles	(113)	0
Property, plant and equipment	(719)	(564)
Total deferred tax liabilities	(832)	(564)
Deferred tax assets, net	$ 0	$ 0

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The quarterly financial data presented should be read in conjunction with the consolidated financial statements and related notes.


	Three Months Ended
	Mar. 31, 2019		Jun. 30, 2019		Sep. 30, 2019		Dec. 31, 2019
Net revenue	$	14,656	$	18,200	$	20,744	$	18,952
Gross profit	10,655		13,619		15,895		14,450
Operating loss	(2,717)		(1,790)		(1,539)		(3,031)
Net loss from continuing operations	(3,020)		(2,459)		(2,877)		(4,329)
Gain (Loss) from discontinued operations	—		159		(213)		(1,100)
Net loss	(3,020)		(2,618)		(2,664)		(5,429)
Net loss attributable to common stockholders	(3,020)		(2,618)		(2,664)		(5,429)
Net loss from continuing operations per share attributable to common stockholders - basic and diluted	$	(0.21)	$	(0.17)	$	(0.19)	$	(0.29)
Net loss from discontinued operations per share attributable to common stockholders - basic and diluted	$	—	$	0.01	$	(0.01)	$	(0.07)
Net loss per share attributable to common stockholders - basic and diluted	$	(0.21)	$	(0.16)	$	(0.20)	$	(0.36)
	Three Months Ended
	Mar. 31, 2018		Jun. 30, 2018		Sep. 30, 2018		Dec. 31, 2018
Net revenue	$	12,094	$	15,077	$	15,820	$	14,568
Gross profit	8,919		11,270		11,977		10,514
Operating loss	(4,395)		(2,120)		(1,172)		(1,866)
Net loss	(5,000)		(2,692)		(1,865)		(2,468)
Net loss attributable to common stockholders	(5,000)		(2,692)		(1,865)		(2,468)
Net loss per share attributable to common stockholders - basic and diluted	$	(0.41)	$	(0.21)	$	(0.15)	$	(0.19)

SIGNIFICANT ACCOUNTING POLICIES - Costs Related to Offerings (Details) - USD ($) $ in Thousands	Dec. 13, 2019	Dec. 11, 2018	Oct. 12, 2017
IPO
Class of Stock [Line Items]
Initial public offering costs, capitalized	$ 235	$ 352	$ 1,840

INCOME TAXES - Components of income from continuing operations before taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Domestic	$ (12,010)	$ (11,768)	$ (8,803)
Foreign	(675)	(257)	(147)
Total	$ (12,685)	$ (12,025)	$ (8,950)

COMMITMENTS AND CONTINGENCIES	12 Months Ended
COMMITMENTS AND CONTINGENCIES	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIESFrom time to time, we are involved in various legal proceedings arising in the ordinary course of our business. On January 20, 2017, K2M, Inc. filed suit against us in the United States District Court for the District of Delaware (K2M, Inc. v. OrthoPediatrics Corp. et al., Case No. 1:17-cv-0061) seeking unspecified damages for alleged infringement of U.S. Patent No. 9,532,816. The complaint was amended on August 21, 2017 to add, among other things, a claim of patent infringement regarding U.S. Patent No. 9,655,664. These patents relate to certain instruments used in our RESPONSE™ spine systems, which represent a portion of our total scoliosis portfolio. We have denied these claims and responded with counterclaims seeking declaratory relief that the patents in question are both invalid and not infringed. The parties attended a court-ordered mediation on October 24, 2017, which did not resolve the dispute, but as we move forward with this matter we welcome constructive discussions on a negotiated settlement. Nevertheless, we view our case as particularly strong and will continue to vigorously defend this matter. On June 28, 2018, the United States Patent and Trademark Office's Patent Trial and Appeal Board ("PTAB") instituted limited review concerning whether certain third parties had described the invention of certain of K2M's patent claims before allegedly invented by K2M. On July 10, 2018, the Court stayed the litigation pending the outcome of PTAB's review. On June 4, 2019, PTAB completed its review, finding, among other things, insufficient evidence of such description by the third parties. In early October 2019, the Court orally lifted the stay in federal district court. Thereafter, on November 19, 2019, K2M amended its complaint to add two (2) additional issued patents, to add claims of patent infringement regarding U.S. Patent Nos. 10,285,735 and 10,292,736 (both issued in May 2019). Like before, these newly issued patents relate to certain instruments used in our RESPONSE spine systems. Additionally, we have denied these most recent claims and responded with counterclaims seeking declaratory relief that the subject patents are both invalid and not infringed. Moreover, on November 20, 2019, the Court issued its Scheduling Order, which in part, set a trial date for April 12, 2021. Subsequently, the parties attended a second court-ordered mediation on February 25, 2020, which did not resolve the dispute, but we continue to welcome constructive discussions on a negotiated settlement. Although we believe that the K2M lawsuit is without merit and will vigorously defend the claims asserted against us, intellectual property litigation can involve complex factual and legal questions, and an adverse resolution of this proceeding could have a material adverse effect on our business, operating results and financial condition. We are not presently a party to any other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate materially affect our financial position or results of operations or cash flows. As of December 31, 2019, we are contracted to pay royalties to individuals and entities that provide research and development services, which range from 0.5% to 20% of sales. Additionally, we have minimum royalty commitments of $500 annually through 2026. We have products in development that have milestone payments and royalty commitments. In any development project, there are significant variables that will affect the amount and timing of these payments and as of December 31, 2019, we have not been able to determine the amount and timing of payments. We do not anticipate these future payments will have a material impact on our financial results.

SIGNIFICANT ACCOUNTING POLICIES - Contributions to Charity Fund (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Contributions to charity fund	$ 0.5	$ 0.2

GOODWILL AND INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Intangible Assets	$ 16,072	$ 2,622
Accumulated Amortization	(1,588)	(701)
Net Intangible Assets	14,484	1,921
Other intangible assets	$ 4,490	$ 260
Patents
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period	17 years 4 months 24 days	10 years 8 months 12 days
Gross Intangible Assets	$ 9,287	$ 127
Accumulated Amortization	(363)	(60)
Net Intangible Assets	$ 8,924	$ 67
Intellectual Property
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period	10 years 8 months 12 days
Gross Intangible Assets	$ 4,020
Accumulated Amortization	(213)
Net Intangible Assets	$ 3,807
License agreements
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period	3 years 4 months 24 days	5 years 3 months 18 days
Gross Intangible Assets	$ 2,765	$ 2,495
Accumulated Amortization	(1,012)	(641)
Net Intangible Assets	$ 1,753	$ 1,854

GOODWILL AND INTANGIBLE ASSETS - Future Amortization Expense (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Year Ending December 31:
2020	$ 1,224
2021	1,187
2022	1,147
2023	1,031
2024	1,027
Thereafter	8,868
Net Intangible Assets	$ 14,484	$ 1,921

SIGNIFICANT ACCOUNTING POLICIES - Shipping and Handling Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cost of revenue	$ 17,933	$ 14,879	$ 11,170
Shipping and Handling, Billed
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cost of revenue	599	513	336
Shipping and Handling, Not Billed
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cost of revenue	$ 2,788	$ 2,148	$ 1,783

DEBT AND CREDIT ARRANGEMENTS - Future Principal Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Maturities of Long-term Debt [Abstract]
2020	$ 124
2021	131
2022	137
2023	25,035
2024	152
Thereafter	612
Long-term debt	$ 26,191	$ 21,274

STOCKHOLDERS' EQUITY - Restricted Stock (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Restricted Stock
Vested (in shares)		(547,920)	(237,704)
Restricted stock
Restricted Stock
Outstanding at period start (in shares)	177,293	548,005	677,241
Granted (in shares)	154,769	178,543	122,069
Forfeited (in shares)	(9,616)	(1,335)	(13,601)
Vested (in shares)	(4,444)
Outstanding at period end (in shares)	318,002	177,293	548,005	677,241
Weighted-Average Remaining Contractual Terms (in Years)
Weighted-Average Remaining Contractual Terms (in years)	1 year 8 months 12 days	2 years 2 months 12 days	3 months 18 days	3 years 6 months
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract]
Unrecognized compensation expense	$ 6,072
Unrecognized compensation expense, weighted average period of recognition	1 year 8 months 12 days
Vesting period	6 years
Stock-based compensation expense	$ 2,603	$ 3,185	$ 3,478
Stock-based compensation expense, discount rate		15.00%
General and Administrative Expense \| Restricted stock
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract]
Non-cash expense related to accelerated vesting of restricted stock		$ 1,986	$ 2,049

STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Stock Options

The fair value for options granted at the time of issuance were estimated at the date of grant using a Black-Scholes options pricing model. Significant assumptions included in the option value model include the fair value of our common stock at the grant date, weighted average volatility, risk-free interest rate, dividend yield and the forfeiture rate. There were no stock options granted in any of the periods presented.

Our stock option activity and related information are summarized as follows:


	Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Terms (in Years)
Outstanding at January 1, 2017	248,201	$	23.81	2.4
Forfeited or expired	(71,242)	$	9.85
Outstanding at December 31, 2017	176,959	$	29.42	2.0
Forfeited or expired	(50,652)	$	27.61
Exercised	(14,213)	$	29.85
Outstanding at December 31, 2018	112,094	$	30.32	1.8
Forfeited or expired	(2,546)	$	27.61
Exercised	(38,920)	$	29.30
Outstanding at December 31, 2019	70,628	$	30.97	1.2

Options generally include a time-based vesting schedule permitting the options to vest ratably over three years. At December 31, 2019 and 2018, all options were fully vested.

There was no stock-based compensation expense on stock options for all periods presented.

Restricted Stock

Our restricted stock activity and related information are summarized as follows:


	Restricted Stock	Weighted-Average Remaining Contractual Terms (in Years)
Outstanding at January 1, 2017	677,241	3.5
Granted	122,069
Forfeited	(13,601)
Outstanding at Vested	(237,704)
Outstanding at December 31, 2017	548,005	0.3
Granted	178,543
Forfeited	(1,335)
Outstanding at Vested	(547,920)
Outstanding at December 31, 2018	177,293	2.2
Granted	154,769
Forfeited	(9,616)
Vested	(4,444)
Outstanding at December 31, 2019	318,002	1.7
Restricted stock exercisable at December 31, 2019	—

At December 31, 2019, there was $6,072 of unrecognized compensation expense remaining related to our service-based restricted stock awards. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.7 years. All restricted stock granted prior to May 2014 vested upon our IPO and the remaining grants under the 2007 Plan vested six months after the IPO.

Stock-based compensation expense on restricted stock amounted to $2,603, $3,185 and $3,478 for the years ended December 31, 2019, 2018 and 2017, respectively. Due to our limited operating history and lack of marketability, prior to our IPO, discounts of 15% were applied when estimating the stock-based compensation for restricted stock awards granted in 2017.

An additional $1,986 and $2,049 of stock-based compensation expense was incurred in 2018 and 2017, respectively, due to the accelerated vesting of restricted shares related to our IPO.

Warrants

Our warrant activity and related information are summarized below:


	Warrants	Weighted-Average Exercise Price
Outstanding at January 1, 2017	44,101	$	27.03
Outstanding at December 31, 2017	44,101	$	27.03
Forfeited or expired	(37,311)	$	26.89
Outstanding at December 31, 2018	6,790	$	27.81
Forfeited or expired	(6,386)	$	27.61
Outstanding at December 31, 2019	404	$	30.97

For all periods presented, the warrants were issued at exercise prices ranging from $26.27 to $30.97 per share. The warrants generally have a 10-year term. No warrants have been exercised during each of the three years in the period ended December 31, 2019. At inception and as of December 31, 2019 and 2018, no fair value was assigned to the warrants.

QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net revenue	$ 18,952	$ 20,744	$ 18,200	$ 14,656	$ 14,568	$ 15,820	$ 15,077	$ 12,094	$ 72,552	$ 57,559	$ 45,620
Gross profit	14,450	15,895	13,619	10,655	10,514	11,977	11,270	8,919	54,619	42,680	34,450
Operating loss	(3,031)	(1,539)	(1,790)	(2,717)	(1,866)	(1,172)	(2,120)	(4,395)	(9,077)	(9,553)	(6,472)
Net loss from continuing operations	(4,329)	(2,877)	(2,459)	(3,020)					(12,685)	(12,025)	(8,932)
Gain (Loss) from discontinued operations	(1,100)	(213)	159	0
Net loss	(5,429)	(2,664)	(2,618)	(3,020)	(2,468)	(1,865)	(2,692)	(5,000)	(13,731)	(12,025)	(8,932)
Net loss attributable to common stockholders	$ (5,429)	$ (2,664)	$ (2,618)	$ (3,020)	$ (2,468)	$ (1,865)	$ (2,692)	$ (5,000)	$ (13,731)	$ (12,025)	$ (23,530)
Net loss from continuing operations per share attributable to common stockholders - basic and diluted (in dollars per share)	$ (0.29)	$ (0.19)	$ (0.17)	$ (0.21)					$ (0.87)	$ (0.96)	$ (5.86)
Net loss from discontinued operations per share attributable to common stockholders - basic and diluted (in dollars per share)	(0.07)	(0.01)	0.01	0					(0.07)	0	0
Net loss per share attributable to common stockholders - basic and diluted (in dollars per share)	$ (0.36)	$ (0.20)	$ (0.16)	$ (0.21)	$ (0.19)	$ (0.15)	$ (0.21)	$ (0.41)	$ (0.94)	$ (0.96)	$ (5.86)

SIGNIFICANT ACCOUNTING POLICIES - Advertising Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Advertising costs	$ 1,422	$ 978	$ 1,128

PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:


	December 31,
	2019		2018
Land	$	1,645	$	1,435
Building and building improvements	1,951		1,053
Computer equipment and software	2,070		1,558
Office and other equipment	751		614
Instruments	21,963		14,266
Sample inventory	2,213		1,859
Construction in progress	3,734		1,850
	34,327		22,635
Less: accumulated depreciation	(12,978)		(9,867)
Total property and equipment, net	$	21,349	$	12,768

Depreciation expense is included in general and administrative expenses and was $3,749, $2,514 and $2,159 for the years ended December 31, 2019, 2018 and 2017, respectively.

EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Thousands	12 Months Ended
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Retirement Benefits [Abstract]
Percentage of employees' contribution match (up to)	3.00%
Employee contributions matched	$ 246	$ 196

RELATED PARTY TRANSACTIONS	12 Months Ended
RELATED PARTY TRANSACTIONS	Dec. 31, 2019
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONSIn addition to the debt and credit agreements and mortgage with Squadron and its affiliate (refer to Note 6), we currently use Structure Medical, LLC (“Structure Medical”) as one of our suppliers. Structure Medical is affiliated with Squadron and we do not have have long-term contracts with them. Our aggregate payments to Structure Medical were $3,933, $4,026 and $4,081 for the years ended December 31, 2019, 2018 and 2017, respectively. On December 31, 2019, the Company divested Vilex for $25,000 to an affiliate of Squadron. In conjunction with the divestiture, the Company also entered into an exclusive perpetual license agreement to permit the purchasers of Vilex the ability to access intellectual property and sell products using the external fixation technology of Orthex, LLC to non-pediatric accounts.

ACCRUED COMPENSATION AND BENEFITS

12 Months Ended

Dec. 31, 2019

ACCRUED COMPENSATION AND BENEFITS

Accrued compensation and benefits consisted of the following:


	December 31,
	2019		2018
Accrued compensation and related costs	$	1,573	$	1,323
Accrued commissions	2,776		2,229
Total accrued compensation and benefits	$	4,349	$	3,552

BUSINESS SEGMENT - Narrative (Details)	12 Months Ended
BUSINESS SEGMENT - Narrative (Details)	Dec. 31, 2019 segment
Segment Reporting [Abstract]
Number of operating segments	1

GOODWILL AND INTANGIBLE ASSETS - Schedule of Goodwill (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Goodwill [Roll Forward]
Goodwill at January 1, 2019	$ 0
Vilex Companies acquisition	29,580
Divestiture of Vilex in Tennessee, Inc.	(3,397)
Goodwill at December 31, 2019	$ 26,183

BUSINESS (Details) - USD ($) $ in Thousands	Jun. 04, 2019	Dec. 31, 2019
Disposed of by sale
Business Acquisition [Line Items]
Divestiture purchase price		$ 25,000
Vilex and Orthex
Business Acquisition [Line Items]
Total consideration	$ 60,000

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

Total income tax expense (benefit) for the years ended December 31, 2019, 2018, and 2017 was allocated as follows:


	2019		2018		2017
Income from continuing operations	$	—	$	—	$	—
Income from discontinued operations	$	(660)	$	—	$	—
Total tax expense	$	(660)	$	—	$	—

The components of income tax expense (benefit) from continuing operations for the years ended December 31, 2019, 2018 and 2017 are as follows:


	2019		2018		2017




Deferred:
Federal	$	1,033	$	(3,663)	$	8,494
State	37		564		(131)
	1,070		(3,099)		8,363
Total	1,070		(3,099)		8,363
(Decrease) Increase in valuation allowance	(1,070)		3,099		(8,363)
Total tax expense	$	—	$	—	$	—

Schedule of Income before Income Tax, Domestic and Foreign

For the years ended December 31, 2019, 2018 and 2017 income from continuing operations before taxes of the Company consists of the following:


	2019		2018		2017
Domestic	$	(12,010)	$	(11,768)	$	(8,803)
Foreign	$	(675)	$	(257)	$	(147)
Total	$	(12,685)	$	(12,025)	$	(8,950)

Schedule of Reconciliation Between the Effective Tax Rate and the Statutory Tax Rate

The reconciliation between the effective tax rate and the statutory tax rate is as follows:


	December 31,
	2019		2018		2017
Federal statutory rate	21.0	%	21.0	%	34.0	%
State statutory rate, net of federal benefit	(0.7)	%	0.9	%	0.8	%
Effect of foreign rates different from statutory	—	%	0.2	%	(0.2)	%
Change in state rate	(1.3)	%	(1.2)	%	3.8	%
Change in federal rate (34% to 21%)	—	%	—	%	(9.8)	%
Nondeductible/nontaxable items	0.3	%	4.9	%	(122.2)	%
Change in valuation allowance	(19.3)	%	(25.8)	%	93.6	%
Income tax expense	—	%	—	%	—	%

Schedule of Deferred Tax Assets and Liabilities

The deferred tax assets and liabilities consisted of the following at December 31, 2019 and 2018:


	2019		2018
Deferred tax assets:
Inventories, net	$	1,759	$	1,183
Stock based compensation	980		443
Loss carryforwards	22,153		22,093
Credit carryforwards	260		416
Interest carryforward	655		495
Intangibles	—		134
Other	417		121
Total deferred tax assets	26,224		24,885
Valuation allowance	(25,392)		(24,321)
Net deferred tax assets	832		564
Deferred tax liabilities:
Intangibles	(113)		—
Property, plant and equipment	(719)		(564)
Total deferred tax liabilities	(832)		(564)
Deferred tax assets, net	$	—	$	—

SUBSEQUENT EVENTS (Details) $ in Thousands	Jan. 04, 2020 USD ($)
Subsequent Event \| Affiliated Entity \| Squadron \| Revolving Loan
Subsequent Event [Line Items]
Payment of revolving credit facility with affiliate	$ 5,000

SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Concentration Risk [Line Items]
Deferred revenue	$ 12,410	$ 0
Cost of revenue	$ 17,933	$ 14,879	$ 11,170
Sales Revenue, Net \| Customer One \| Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk percentage	12.30%	12.10%	10.10%
Sales Revenue, Net \| Customer Two \| Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk percentage	12.20%	11.20%	10.10%

Cover - USD ($) $ in Millions	12 Months Ended
Cover - USD ($) $ in Millions	Dec. 31, 2019	Mar. 03, 2020	Jun. 30, 2019
Cover page.
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2019
Document Transition Report	false
Entity Registrant Name	ORTHOPEDIATRICS CORP
Entity Central Index Key	0001425450
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity File Number	001-38242
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-1761833
Entity Address, Address Line One	2850 Frontier Drive
Entity Address, City or Town	Warsaw
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46582
City Area Code	574
Local Phone Number	268-6379
Title of 12(b) Security	Common Stock, $0.00025 par value per share
Trading Symbol	KIDS
Entity Well Known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Small Business	true
Entity Ex Transition Period	true
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	true
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Public Float			$ 348.9
Entity Common Stock, Shares Outstanding		16,881,192

PROPERTY AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and equipment, net consisted of the following:


	December 31,
	2019		2018
Land	$	1,645	$	1,435
Building and building improvements	1,951		1,053
Computer equipment and software	2,070		1,558
Office and other equipment	751		614
Instruments	21,963		14,266
Sample inventory	2,213		1,859
Construction in progress	3,734		1,850
	34,327		22,635
Less: accumulated depreciation	(12,978)		(9,867)
Total property and equipment, net	$	21,349	$	12,768

BUSINESS SEGMENT

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

BUSINESS SEGMENT

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. We have one operating and reporting segment, OrthoPediatrics (including Orthex), which designs, develops and markets anatomically appropriate implants and devices for children with orthopedic problems. Our chief operating decision-maker, our Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance, accompanied by disaggregated revenue information by product category. We do not assess the performance of our individual product categories on measures of profit or loss, or other asset-based metrics. Therefore, the information below is presented only for revenue by category and geography.

Product sales attributed to a country or region includes product sales to hospitals, physicians and distributors and is based on the final destination where the products are sold. No individual customer accounted for more than 10% of total product sales for any of the periods presented. No customer accounted for more than 10% of consolidated accounts receivable as of December 31, 2019 or 2018.

Product sales by source were as follows:


	Year Ended December 31,
Product sales by geographic location:	2019		2018		2017
U.S.	$	55,055	$	43,461	$	34,909
International	17,497		14,098		10,711
Total	$	72,552	$	57,559	$	45,620


	Year Ended December 31,
Product sales by category:	2019		2018		2017
Trauma and deformity	$	49,371	$	39,695	$	32,801
Scoliosis	21,485		16,662		11,585
Sports medicine/other	1,696		1,202		1,234
Total	$	72,552	$	57,559	$	45,620

No individual country with sales originating outside of the United States accounted for more than 10% of consolidated revenue for the years ended December 31, 2019, 2018 and 2017.

BUSINESS SEGMENT - Schedule of Revenue by Geographical Location (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue	$ 72,552	$ 57,559	$ 45,620
U.S.
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue	55,055	43,461	34,909
International
Revenues from External Customers and Long-Lived Assets [Line Items]
Net revenue	$ 17,497	$ 14,098	$ 10,711

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 506	$ 134
Common stock, par value (in dollars per share)	$ 0.00025	$ 0.00025
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	16,723,128	14,538,202
Common stock, shares outstanding (in shares)	16,723,128	14,538,202

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
OPERATING ACTIVITIES
Net loss	$ (13,731)	$ (12,025)	$ (8,932)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on sale of discontinued operations	210	0	0
Depreciation and amortization	4,671	2,892	2,405
Stock-based compensation	2,603	3,185	3,478
Changes in certain current assets and liabilities:
Accounts receivable - trade	(5,820)	(3,801)	(1,505)
Inventories	(9,767)	(4,801)	(4,410)
Prepaid expenses and other current assets	(137)	(425)	(598)
Accounts payable - trade	2,401	(1,524)	1,952
Accrued expenses and other liabilities	1,946	947	258
Other	(1)	(31)	135
Net cash used in operating activities - continuing operations	(17,625)	(15,583)	(7,217)
Net cash used by operating activities - discontinued operations	(144)	0	0
Net cash used in operating activities	(17,769)	(15,583)	(7,217)
INVESTING ACTIVITIES
Acquisition of Vilex, net of cash acquired	(49,836)	0	0
Purchase of notes receivable	0	(502)	0
Purchases of licenses	(270)	(210)	(1,337)
Purchases of property and equipment	(11,816)	(5,253)	(5,207)
Net cash used in investing activities	(61,922)	(5,965)	(6,544)
FINANCING ACTIVITIES
Proceeds from issuance of debt with affiliate	30,000	0	7,992
Repayments of Lines of Credit	0	(4,065)	0
Proceeds from issuance of common stock, net of issuance costs	59,996	43,425	53,775
Payment of preferred stock dividends	0	0	(5,965)
Proceeds from exercise of stock options	1,141	410	0
Shares surrendered by employees to pay taxes on restricted shares	0	0	(990)
Repayments of Notes Payable	(118)	(113)	(78)
Net cash provided by financing activities	91,019	39,657	54,734
Effect of exchange rate changes on cash	8	0	0
NET INCREASE IN CASH	11,336	18,109	40,973
Cash, beginning of year	60,691	42,582	1,609
Cash and restricted cash, end of period	72,027	60,691	42,582
SUPPLEMENTAL DISCLOSURES
Cash paid for interest	4,229	2,255	2,490
Accretion of redeemable convertible preferred stock	0	0	4,563
Transfer of instruments from property and equipment to inventory	1,037	362	1,249
Acquisition consideration of common shares	10,000	0	0
Intellectual property license (See Note 4)	12,410	0	0
Divestiture consideration allocated to assets held for sale (See Note 4)	12,590	0	0
Payment of Term Note B with revolving credit facility (See Note 8)	$ 5,000	$ 0	$ 0

QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Quarterly Financial Information

The quarterly financial data presented should be read in conjunction with the consolidated financial statements and related notes.


	Three Months Ended
	Mar. 31, 2019		Jun. 30, 2019		Sep. 30, 2019		Dec. 31, 2019
Net revenue	$	14,656	$	18,200	$	20,744	$	18,952
Gross profit	10,655		13,619		15,895		14,450
Operating loss	(2,717)		(1,790)		(1,539)		(3,031)
Net loss from continuing operations	(3,020)		(2,459)		(2,877)		(4,329)
Gain (Loss) from discontinued operations	—		159		(213)		(1,100)
Net loss	(3,020)		(2,618)		(2,664)		(5,429)
Net loss attributable to common stockholders	(3,020)		(2,618)		(2,664)		(5,429)
Net loss from continuing operations per share attributable to common stockholders - basic and diluted	$	(0.21)	$	(0.17)	$	(0.19)	$	(0.29)
Net loss from discontinued operations per share attributable to common stockholders - basic and diluted	$	—	$	0.01	$	(0.01)	$	(0.07)
Net loss per share attributable to common stockholders - basic and diluted	$	(0.21)	$	(0.16)	$	(0.20)	$	(0.36)
	Three Months Ended
	Mar. 31, 2018		Jun. 30, 2018		Sep. 30, 2018		Dec. 31, 2018
Net revenue	$	12,094	$	15,077	$	15,820	$	14,568
Gross profit	8,919		11,270		11,977		10,514
Operating loss	(4,395)		(2,120)		(1,172)		(1,866)
Net loss	(5,000)		(2,692)		(1,865)		(2,468)
Net loss attributable to common stockholders	(5,000)		(2,692)		(1,865)		(2,468)
Net loss per share attributable to common stockholders - basic and diluted	$	(0.41)	$	(0.21)	$	(0.15)	$	(0.19)

SUBSEQUENT EVENTS	12 Months Ended
SUBSEQUENT EVENTS	Dec. 31, 2019
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTSOn January 4, 2020, the Company paid $5,000 on the revolving loan agreement with Squadron. On March 1, 2020, the Company expanded to eight international agents with the conversion of its Italian distributor to an agent allowing the Company to sell direct to the Italian market.

DEBT AND CREDIT ARRANGEMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consisted of the following:


	December 31,
	2019		2018
Note payable to Squadron	$	19,891	$	19,856
Revolving credit facility with Squadron	5,000		—
Mortgage payable to affiliate	1,300		1,418
Total debt	26,191		21,274
Less: current maturities	124		118
Long-term debt, net of current maturities	$	26,067	$	21,156

Schedule of aggregate future principal payments

At December 31, 2019, the aggregate future principal payments on our debt arrangements are as follows:


2020	$	124
2021	131
2022	137
2023	25,035
2024	152
Thereafter	612
	$	26,191

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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+ Details

INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

On December 22, 2017, the Tax Cuts and Jobs Act (the Tax Act) was signed into United States tax law. The Tax Act made broad and complex changes to the U.S. tax code, including, but not limited to, (1) reduction of the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) elimination of the corporate alternative minimum tax (AMT); (3) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (4) current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) a new limitation on deductible interest expense; (6) limitations on the deductibility of certain executive compensation; (7) limitations on the use of FTCs to reduce the U.S. income tax liability; and (8) limitations on net operating losses (NOLs) generated after December 31, 2017, to 80 percent of taxable income.

The SEC staff issued SEC Staff Accounting Bulletin No. 118, "Income Tax Accounting Implications of the Tax Cuts and Jobs Act" (SAB 118), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, "Income Taxes." In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should

continue to apply ASC 740 on the basis of the provisions of the laws that were in effect immediately before the enactment of the Tax Act.

The Tax Act reduced the US federal corporate tax rate from a graduated rate up to 35% to a flat rate of 21%, effective January 1, 2018. The Company adjusted its deferred tax assets and liabilities at December 31, 2017 to reflect the Tax Act’s reduction of corporate income tax rates which are expected to be in effect in future years as the deferred tax assets and liabilities are realized. The effect of this provisional adjustment in the deferred provision for income taxes is a discrete net expense of $11,095, however this is offset with a reduction in the valuation allowance as of December 31, 2018.

Total income tax expense (benefit) for the years ended December 31, 2019, 2018, and 2017 was allocated as follows:


	2019		2018		2017
Income from continuing operations	$	—	$	—	$	—
Income from discontinued operations	$	(660)	$	—	$	—
Total tax expense	$	(660)	$	—	$	—

For the years ended December 31, 2019, 2018 and 2017 income from continuing operations before taxes of the Company consists of the following:


	2019		2018		2017
Domestic	$	(12,010)	$	(11,768)	$	(8,803)
Foreign	$	(675)	$	(257)	$	(147)
Total	$	(12,685)	$	(12,025)	$	(8,950)

The components of income tax expense (benefit) from continuing operations for the years ended December 31, 2019, 2018 and 2017 are as follows:


	2019		2018		2017




Deferred:
Federal	$	1,033	$	(3,663)	$	8,494
State	37		564		(131)
	1,070		(3,099)		8,363
Total	1,070		(3,099)		8,363
(Decrease) Increase in valuation allowance	(1,070)		3,099		(8,363)
Total tax expense	$	—	$	—	$	—

The reconciliation between the effective tax rate and the statutory tax rate is as follows:


	December 31,
	2019		2018		2017
Federal statutory rate	21.0	%	21.0	%	34.0	%
State statutory rate, net of federal benefit	(0.7)	%	0.9	%	0.8	%
Effect of foreign rates different from statutory	—	%	0.2	%	(0.2)	%
Change in state rate	(1.3)	%	(1.2)	%	3.8	%
Change in federal rate (34% to 21%)	—	%	—	%	(9.8)	%
Nondeductible/nontaxable items	0.3	%	4.9	%	(122.2)	%
Change in valuation allowance	(19.3)	%	(25.8)	%	93.6	%
Income tax expense	—	%	—	%	—	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The primary temporary differences that give rise to the deferred tax assets and liabilities are certain inventory adjustments, depreciation and amortization, interest expense, stock based compensation and net operating loss carryforwards.

The deferred tax assets and liabilities consisted of the following at December 31, 2019 and 2018:


	2019		2018
Deferred tax assets:
Inventories, net	$	1,759	$	1,183
Stock based compensation	980		443
Loss carryforwards	22,153		22,093
Credit carryforwards	260		416
Interest carryforward	655		495
Intangibles	—		134
Other	417		121
Total deferred tax assets	26,224		24,885
Valuation allowance	(25,392)		(24,321)
Net deferred tax assets	832		564
Deferred tax liabilities:
Intangibles	(113)		—
Property, plant and equipment	(719)		(564)
Total deferred tax liabilities	(832)		(564)
Deferred tax assets, net	$	—	$	—

The deferred tax assets were fully offset by a valuation allowance at December 31, 2019 and 2018, and no income tax benefit has been recognized in continuing operations for each of the three years in the period ended December 31, 2019. During 2019, the Company assumed certain deferred tax liabilities in connection with the acquisition of Vilex, which allowed for a release of $1,124 of the valuation allowance. Such amount was recognized in discontinued operations. As of December 31, 2019, we had available federal tax loss carryforwards of $86,807, state loss carryfowards of $64,026 and tax credits for federal and state tax purposes of $260. Net operating losses generated prior to December 31, 2017 will begin to expire in 2028. Federal net operating losses generated after January 1, 2018 will have an indefinite carryforward period. An ownership change under Section 382 of the Internal Revenue Code was deemed to occur on May 30, 2014. Given the limitation calculation, we anticipate approximately $16,200 in losses generated prior to the ownership change date will be subject to potential limitation. The estimated annual limitation is $1,062. A second ownership change under Section 382 was deemed to occur on December 11, 2018. The estimated annual limitation is $9,736, which is increased by $22,430 over the first five years as a result of an unrealized built in gain. NOLs sustained prior to May 30, 2014 will still be constricted by the lower limitation.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2019. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

We are subject to taxation in the United States, Indiana and various other state and international jurisdictions. As of December 31, 2019, all tax years from 2008 remain open to examination by the major taxing jurisdictions to which we are subject due to our net operating loss and credit carryforwards from those years. We believe that the income tax filing positions will be sustained on audit and do not anticipate any adjustments that will result in a material change. Therefore, no reserve for uncertain income tax positions has been recorded. Interest and penalties, if any, associated with income tax examinations will be to record such items as a component of income taxes.

At December 31, 2019, our foreign operations held cash totaling $2,035. Except for the nontaxable repayment of intercompany loans, our intent is to permanently reinvest these funds to our U.S. operations. Under the worldwide taxation system in effect prior to the enactment of the Tax Act, US corporate income tax applied to all of a company’s income, regardless of whether it was earned in the US or overseas. However, foreign income earned by a foreign subsidiary of a U.S. corporation was generally not taxed until the foreign earnings were repatriated to the US. Enactment of The Tax Act created a territorial tax system under which future dividends of earnings of foreign subsidiaries already subjected to the transition tax under the Act will not be subject to federal income tax, with the exception of foreign exchange rate gains or losses on distributions, capital gains on sale of investment, foreign withholding taxes, and certain state taxes. Based upon the Company’s facts and circumstances, no previously accumulated untaxed earnings and profits existed in the foreign jurisdictions, and therefore, the

company did not recognize a transition tax liability. The Tax Act also creates a new requirement that Global Intangible Low Taxed Income (“GILTI”) earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of 1) 10 percent of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it was a U.S. shareholder over 2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. The Company did not have any current foreign earnings and therefore GILTI did not apply for the year ended December 31, 2019 and 2018. Under US GAAP, we are allowed to make an accounting policy choice of either 1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or 2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). We have selected the period cost method. As a result, we have not provided deferred taxes related to the temporary differences that upon reversal will affect the amount of income subject to GILTI in the period.

SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
SIGNIFICANT ACCOUNTING POLICIES (Policies)	Dec. 31, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements include the accounts of OrthoPediatrics Corp. and its wholly-owned subsidiaries, OrthoPediatrics US Distribution Corp., OrthoPediatrics EU Limited, OrthoPediatrics AUS PTY LTD, OrthoPediatrics NZ Limited, OP EU B.V., and OP Netherlands B.V., Vilex in Tennessee, Inc., and Orthex, LLC (collectively, the “Company,” “we,” “our” or “us”). All intercompany balances and transactions have been eliminated. Following the acquisition of Vilex, we received Board approval to take the steps necessary to divest the non-core Vilex assets and the divestiture was completed on December 31, 2019. As a result, the results of Vilex have been classified as discontinued operations within the consolidated financial statements. We have prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements have been prepared assuming our Company will continue as a going concern.
Use of Estimates	Use of EstimatesPreparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as of the date of the consolidated financial statements. By their nature, these judgments are subject to an inherent degree of uncertainty. We use historical experience and other assumptions as the basis for our judgments and estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in these estimates will be reflected in our consolidated financial statements.
Foreign Currency Transactions	Foreign Currency Transactions We currently bill our international distributors in U.S. dollars, resulting in minimal foreign exchange transaction expense. Beginning in the second quarter of 2017, we began selling direct within the United Kingdom, Ireland, Australia and New Zealand and billing using the local currency for each country. In September 2018, we began selling direct in Canada and in January 2019 we expanded to Belgium and the Netherlands. Additionally, in March 2019 we established a holding company and an operating company in the Netherlands that are expected to enhance our operations in Europe. The financial statements of our foreign subsidiaries are accounted for and have been translated into U.S. dollars using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. Foreign currency translation adjustments have been recorded as a separate component of the consolidated statements of comprehensive loss.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The accounting standards related to fair value measurements define fair value and provide a consistent framework for measuring fair value under the authoritative literature. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. This guidance only applies when other standards require or permit the fair value measurement of assets and liabilities. The guidance does not expand the use of fair value measurements. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels. Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data; and Level 3 – Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data. We do not have any assets or liabilities that are measured on a recurring basis under the presented fair value hierarchy.
Revenue from Contracts with Customers	Revenue from Contracts with Customers The Company adopted ASC 606, "Revenue From Contracts with Customers (ASC 606)", on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. The adoption of ASC 606 did not have any impact on the Company's consolidated historical financial statements. The reported results for 2019 and 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of "ASC 605, Revenue Recognition (ASC 605)." In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, and excludes any sales incentives or taxes collected from a customer which are subsequently remitted to government authorities. Revenue Recognition – United States Revenue in the United States is generated primarily from the sale of our implants and, to a much lesser extent, from the sale of our instruments. Sales in the United States are primarily to hospital accounts through independent sales agencies. We recognize revenue when our performance obligations under the terms of a contract with our customer are satisfied. This typically occurs when we transfer control of our products to the customers, generally upon implantation or when title passes upon shipment. The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase product for their own inventory, and revenue is recognized when the products are shipped and the title and risk of loss passes to the customer. Pricing for each customer is dictated by a unique pricing agreement, which does not generally include rebates or discounts. Sales to two of our independent sales agencies accounted for 12.3% and 12.2% of our revenue in 2019. Sales to two of our independent sales agencies accounted for 12.1% and 11.2% of our revenue in 2018, respectively. Sales to two of our independent sales agencies accounted for 10.1% and 10.1% of our revenue in 2017, respectively. In conjunction with the sale of Vilex, we entered into an exclusive perpetual license agreement to permit the purchasers of Vilex the ability to sell products using the external fixation technology of Orthex, LLC to non-pediatric accounts. This license agreement was valued at $12,410 and recorded as deferred revenue on our December 31, 2019 balance sheet. This deferred revenue will be recognized on a proportional basis relative to the total expected Orthex sales subject to this license and distribution arrangement. Revenue Recognition – International Outside of the United States, we primarily sell our products through independent stocking distributors. Generally, the distributors are allowed to return products, and some are thinly capitalized. Based on our history of collections and returns from international customers, prior to 2019, we concluded that collectibility was not reasonably assured at the time of delivery for certain customers who had not evidenced a consistent pattern of timely payment. Accordingly, in the past we did not recognize international revenue and associated cost of revenue at the time title transfers for these customers for whom collectibility had not been deemed probable based on the customer’s history and ability to pay, but rather when cash had been received. Following a review of our collection history, we deemed collectibility was probable for all international stocking distributors effective January 1, 2019. Based on a history of reliable collections, we have concluded that a contract exists and revenue should be recognized when we transfer control of our products to the customer, generally upon implantation or when title passes upon shipment. In early 2017, we expanded operations and established legal entities in the United Kingdom, Australia and New Zealand and in Canada in September 2018. In January 2019 we expanded to Belgium and the Netherlands permitting us to sell under an agency model direct to local hospitals in these countries. Additionally, in March 2019 we established a holding company and an operating company in the Netherlands that are expected to enhance our operations in Europe . The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase products for their own inventory, and revenue is recognized when the products are shipped and the title and risk of loss passes to the customer. Pricing for each customer is dictated by a unique pricing agreement, which does not generally include rebates or discounts.
Cash and Cash Equivalents	Cash We maintain cash in bank deposit accounts which, at times, may exceed federally insured limits. To date, we have not experienced any loss in such accounts. We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents. The carrying amounts reported in the balance sheets for cash are valued at cost, which approximates fair value. Restricted Cash In conjunction with the sale of Vilex, $1,250 was placed into a separate escrow account. This cash is reported as restricted cash on the December 31, 2019 consolidated balance sheet. These funds will remain restricted until August 31, 2021 at which time, they will be released to the Company subject to no claims related to the purchase.
Accounts Receivable	Accounts Receivable Accounts receivable are uncollateralized customer obligations due under normal trade terms, generally requiring payment within 30 days from the invoice date. Account balances with invoices over 30 days past due are considered delinquent. No interest is charged on past due accounts. Payments of accounts receivable are applied to the specific invoices identified on the customer's remittance advice or, if unspecified, to the customer's account as an unapplied credit. The carrying amount of accounts receivable is reduced by an allowance that reflects management's best estimate of the amounts that will not be collected, determined principally on the basis of historical experience, management's assessment of the collectability of specific customer accounts and the aging of the accounts receivable. All accounts or portions thereof deemed to be uncollectible or to require an excessive collection cost are written off to the allowance for doubtful accounts.
Inventories, net	Inventories, net Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in-first-out method. Inventories, which consist of implants and instruments held in our warehouse or with third-party independent sales agencies or distributors, are considered finished goods and are purchased from third parties. We evaluate the carrying value of our inventories in relation to the estimated forecast of product demand, which takes into consideration the life cycle of the product. A significant decrease in demand could result in an increase in the amount of excess inventory on hand, which could lead to additional charges for excess and obsolete inventory. The need to maintain substantial levels of inventory impacts our estimates for excess and obsolete inventory. Each of our implant systems are designed to include implantable products that come in different sizes and shapes to accommodate the surgeon’s needs. Typically, a small number of the set components are used in each surgical procedure. Certain components within each set may become obsolete before other components based on the usage patterns. We adjust inventory values, as needed, to reflect these usage patterns and life cycle. In addition, we continue to introduce new products, which may require us to take additional charges for excess and obsolete inventory in the future.
Property and Equipment, net	Property and Equipment, net Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the assets. When assets are retired or otherwise disposed of, costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations for the period. Maintenance and repairs that prolong or extend the useful life are capitalized, whereas standard maintenance, replacements, and repair costs are expensed as incurred. Instruments are hand-held devices, specifically designed for use with our implants and are used by surgeons during surgery. Instruments deployed within the United States, United Kingdom, Australia, New Zealand, Canada, Belgium and Netherlands are carried at cost less accumulated depreciation and are recorded in property and equipment, net on the consolidated balance sheets. Sample inventory consists of our implants and instruments, and is maintained to market and promote our products. Sample inventory is carried at cost less accumulated depreciation.
Amortizable Intangible Assets, net	Amortizable Intangible Assets, net Amortizable intangible assets include fees necessary to secure various patents and licenses, and the value of internally developed software, customer relationships and non-competition agreements related to the acquisition of Orthex. Amortization is calculated on a straight-line basis over the estimated useful life of the patents and licenses. Amortization for patents and licenses commences at the time of patent approval, and for licenses upon market launch, respectively. Intangible assets are amortized over a 3 to 20 year period. Amortizable intangible assets are assessed for impairment upon triggering events that indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by the associated asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the intangible assets. No impairment charges were recorded in any of the periods presented.
Other Intangible Assets	Goodwill and Other Intangible Assets Our goodwill represents the excess of the cost over the fair value of net assets acquired. The determination of the value of goodwill and intangible assets arising from acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of net tangible and intangible assets acquired. Goodwill is not amortized and is assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstances warrant such a review. The goodwill is considered to be impaired if we determine that the carrying value of our one reporting unit exceeds its respective fair value. No impairment changes were recorded in the current year. We have indefinite lived tradename assets that are reviewed for impairment by performing a quantitative analysis, which occurs annually in the fourth quarter or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by the associated asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. No impairment charges were recorded in any of the periods presented.
Cost of Revenue	Cost of RevenueCost of revenue consists primarily of products purchased from third-party suppliers, excess and obsolete inventory adjustments, inbound freight, and royalties. Our implants and instruments are manufactured to our specifications by third-party suppliers who meet our manufacturer qualifications standards. Our third-party manufacturers are required to meet Food and Drug Administration (the “FDA”), International Organization for Standardization and other country-specific quality standards. The majority of our implants and instruments are produced in the United States.
Sales And Marketing Expenses	Sales and Marketing ExpensesSales and marketing expenses primarily consist of commissions to our domestic and select international independent sales agencies and consignment distributors, as well as compensation, commissions, benefits and other related costs for personnel we employ. Commissions and bonuses are generally based on a percentage of sales. Our international independent stocking distributors purchase instrument sets and replenishment stock for resale, and we do not pay commissions or any other sales related costs for international sales to distributors.
Advertising Costs	Advertising Costs Advertising costs consist primarily of print advertising, trade shows, and other related expenses. Advertising costs are expensed as incurred and are recorded as a component of sales and marketing expense.
Research and Development Costs	Research and Development CostsResearch and development costs are expensed as incurred. Our research and development expenses primarily consist of costs associated with engineering, product development, consulting services, outside prototyping services, outside research activities, materials, development and protection of our intellectual property portfolio, as well as other costs associated with development of our products. Research and development costs also include related personnel and consultants’ compensation expense.
Stock-Based Compensation	Stock-Based Compensation Prior to our IPO, we maintained an Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”) that provides for grants of options and restricted stock to employees, directors and associated third-party representatives of our company as determined by the Board of Directors. The 2007 Plan had authorized 1,585,000 shares for award. Immediately prior to our IPO, we adopted our 2017 Incentive Award Plan (the “2017 Plan”) which replaced the 2007 Plan. The 2017 Plan provides for grants of options and restricted stock to officers, employees, consultants or directors of our Company. The 2017 Plan has authorized 1,789,647 shares for award. Options holders, upon vesting, may purchase common stock at the exercise price, which is the estimated fair value of our common stock on the date of grant. Option grants generally vest immediately or over a three years period. No stock options were granted in any of the periods presented. Restricted stock may not be transferred prior to the expiration of the restricted period. The restricted stock that has been granted under the 2007 Plan has restriction periods that generally last until the earlier of six years from the date of grant, or an initial public offering or change in control, as defined in the 2007 Plan. All restricted stock granted prior to May 2014 vested upon our IPO and the remaining grants under the 2007 Plan vested six months after the IPO. Generally under the 2017 plan, restricted stock vests over a three year period. We have elected to recognize the reversal of stock compensation expense when a restricted stock forfeiture occurs as opposed to estimating future forfeitures. We record the fair value of restricted stock at the grant date. Stock-based compensation is recognized ratably over the requisite service period, which is generally the restriction period for restricted stock. In determining the fair value of our common stock at the grant date for awards issued prior to our IPO, which is the basis for the fair value of stock based awards, we use the market approach, which is based on the assumption that the value of an asset is equal to the value of a substitute asset with the same characteristics. In using the market approach, we consider both the guideline public company method and the precedent transaction method. Given the absence of a public trading market for our common stock at that time, we exercise reasonable judgment and consider a number of objective and subjective factors to determine the best estimate of the fair value of our common stock, including: the preferences and dividends of our redeemable convertible preferred stock relative to those of our common stock; our operating results and financial conditions, including our level of available capital resources; equity market conditions affecting comparable public companies; general U.S. market conditions; and the lack of marketability of our common stock. Prior to our IPO, for restricted stock awards we applied a discount for lack of marketability to the fair value of common shares due to estimate the impact of valuing a minority interest in our Company as a closely held, non-public company with no liquid market for its shares.
Comprehensive Income (Loss)	Comprehensive Income (Loss)Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) includes foreign currency translation adjustments.
Income Taxes	Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance. We record uncertain tax positions on the bases of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the positions and (2) for those tax positions that do not meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.
"Emerging Growth Company" Reporting Requirements	“Emerging Growth Company” Reporting Requirements We qualify as an “emerging growth company” as defined in the JOBS Act. For as long as a company is deemed to be an emerging growth company, it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. Among other things, we are not required to provide an auditor attestation report on the assessment of the internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002. Section 107 of the JOBS Act also provides that an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. In April 2017, the SEC adopted new rules that included an inflation-adjusted threshold in the definition of an emerging growth company. Under the new inflation-adjusted threshold, we would cease to be an emerging growth company on the last day of the fiscal year in which our annual gross revenues exceed $1.07 billion. This is an increase of $70 million from the previous $1 billion threshold.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 “Leases,” which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted the standard on January 1, 2019. The new standard requires lessees to recognize both the right-of-use assets and lease liabilities in the balance sheet for most leases, whereas under previous GAAP only finance lease liabilities (previously referred to as capital leases) were recognized in the balance sheet. In addition, the definition of a lease has been revised which may result in changes to the classification of an arrangement as a lease. Under the new standard, an arrangement that conveys the right to control the use of an identified asset by obtaining substantially all of its economic benefits and directing how it is used is a lease, whereas the previous definition focuses on the ability to control the use of the asset or to obtain its output. Quantitative and qualitative disclosures related to the amount, timing and judgments of an entity’s accounting for leases and the related cash flows are expanded. Disclosure requirements apply to both lessees and lessors, whereas previous disclosures related only to lessees. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. Lessor accounting is also largely unchanged. The new standard provides a number of transition practical expedients, which the Company has elected, including: •a "package of three" expedients that must be taken together and allow entities to (1) not reassess whether existing contracts contain leases, (2) carryforward the existing lease classification, and (3) not reassess initial direct costs associated with existing leases, and •an implementation expedient which allows the requirements of the standard in the period of adoption with no restatement of prior periods. The adoption of the new standard on January 1, 2019 did not result in material right of use asset or lease obligation for operating leases recorded in the Company's consolidated balance sheets, primarily due to an insignificant number of lease contracts or other contracts that meet the standard for consideration as a lease under the definitions discussed above. The Company has limited operating leases for office equipment maintained at its headquarters, but does lease any real estate or office space. In conjunction with the Company's acquisition of Vilex and Orthex on June 4, 2019, the Company acquired two leased facilities in Tennessee and Florida. The Company analyzed each lease agreement and recorded a right-of-use asset and liability of $77 for Orthex and $246 for Vilex, respectively, on its consolidated balance sheet as of the acquisition date. The Vilex balances were recorded to assets held for sale, and were removed concurrent with the sale of Vilex to Squadron on December 31, 2019. As of December 31, 2019, the Company's right-of-use asset and liabilities were $64 and $63, respectively, associated with Orthex. In June 2016, the FASB issued ASU No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments". The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financials assets including trade receivables held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The Company will adopt ASU 2016-16 effective January 1, 2023. The adoption of this guidance is not expected to have a significant impact on the Company's consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". This pronouncement eliminates Step 2 from the goodwill impairment test and requires an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Under this guidance, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. It is effective for reporting periods beginning after December 15, 2020, although earlier adoption is permitted. The Company is evaluating the effect of this pronouncement on its consolidated financial statements in future periods. In December 2019, the FASB issued ASU No. 2019-12 "Income Taxes: Simplifying the Accounting for Income Taxes" intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside cost basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. The Company is currently assessing the impact of this standard on the consolidated financial position and results of operations.
Shipping and handling costs
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Revenue from Contracts with Customers	Shipping and Handling Costs Shipping and handling costs that are billed to the customer are included in net revenue and were $599, $513 and $336, for the years ended December 31, 2019, 2018 and 2017, respectively. Shipping and handling costs that are not billed to the customer are included in sales and marketing expenses and were $2,788, $2,148 and $1,783, for the years ended December 31, 2019, 2018 and 2017, respectively.

STRATEGIC ARRANGEMENTS	12 Months Ended
STRATEGIC ARRANGEMENTS	Dec. 31, 2019
Research and Development [Abstract]
STRATEGIC ARRANGEMENTS	STRATEGIC ARRANGEMENTS Effective December 1, 2007, we entered into a 10 year agreement with Case Western Reserve University (“CASE”) to assist in certain aspects of our research and development. Effective August 2, 2017, we entered into an Amended and Restated License Agreement to account for additional licensed product extend the agreement for another ten years. The main focus of this research and development involves leveraging our exclusive rights to the Hamann-Todd Collection of the Cleveland National History Museum, the world's largest pediatric osteological collection, to assist in the design of implants which match pediatric bone curvature and structure. In exchange for services, CASE receives certain royalties and up-front fees. The royalties and certain fees are contingent upon our obtaining FDA approval and the launch of our products into the marketplace. CASE receives a minimum annual royalty of $10 or a royalty of 3% of net sales on products, whichever is greater. Additionally, for each new product developed, CASE will receive milestone payments of $5 for FDA approval to sell our products within the United States and a milestone payment of $10 for general product launch. Additionally, CASE receives a royalty of 3% of net sales on products fully developed and being sold in the marketplace. The royalty expense recognized related to the CASE agreement is recorded as a component of cost of revenue and amounted to $153, $145 and $148 for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019 and 2018, $39 and $36, respectively, was due to CASE. In conjunction with the sale of Vilex, the company entered into a cross license agreement with the buyer of Vilex to permit both companies to sell the Vilex and Orthex products, respectively, to certain customers for an indefinite term. The Orthex license agreement was determined to have a value of $12,410 and is recorded as deferred revenue on the Company's December 31, 2019 consolidated balance sheet. This deferred revenue will be recognized on a proportional basis relative to the total expected Orthex sales subject to this license and distribution arrangement.

EMPLOYEE BENEFIT PLAN	12 Months Ended
EMPLOYEE BENEFIT PLAN	Dec. 31, 2019
Retirement Benefits [Abstract]
EMPLOYEE BENEFIT PLAN	EMPLOYEE BENEFIT PLANWe have a defined-contribution plan, OrthoPediatrics 401(k) Retirement Plan (the “401(k) Plan”), which includes a cash or deferral (Section 401(k)) arrangement. The 401(k) Plan covers those employees who meet certain eligibility requirements and elect to participate. Employee contributions are limited to the annual amounts permitted under the Internal Revenue Code. The 401(k) Plan allows us to make a discretionary matching contribution. Discretionary matching contributions are determined annually by management. Effective January 1, 2019, we have elected to match our employees' 401(k) contributions up to 3% of employees' salary. For the years ended December 31, 2019 and 2018, we matched $246 and $196, respectively of our employees' 401(k) contributions.

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Statement [Abstract]
Net revenue	$ 72,552	$ 57,559	$ 45,620
Cost of revenue	17,933	14,879	11,170
Gross profit	54,619	42,680	34,450
Operating expenses:
Sales and marketing	31,284	26,563	20,527
General and administrative	26,664	20,938	16,972
Research and development	5,748	4,732	3,423
Total operating expenses	63,696	52,233	40,922
Operating loss	(9,077)	(9,553)	(6,472)
Other expenses:
Interest expense, net	3,538	2,255	2,490
Other expense (income)	70	217	(30)
Total other expenses	3,608	2,472	2,460
Net loss from continuing operations	(12,685)	(12,025)	(8,932)
Net loss from discontinued operations	(1,046)	0	0
Net loss	(13,731)	(12,025)	(8,932)
Net loss attributable to common stockholders	$ (13,731)	$ (12,025)	$ (23,530)
Weighted average number of shares - basic and diluted (in shares)	14,624,194	12,567,387	4,017,330
Net loss from continuing operations per share attributable to common stockholders - basic and diluted (in dollars per share)	$ (0.87)	$ (0.96)	$ (5.86)
Net loss from discontinued operations per share attributable to common stockholders - basic and diluted (in dollars per share)	(0.07)	0	0
Net loss per share attributable to common stockholders - basic and diluted (in dollars per share)	$ (0.94)	$ (0.96)	$ (5.86)

GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Thousands	Jun. 04, 2019	Dec. 31, 2019	Dec. 31, 2018
Indefinite-lived Intangible Assets [Line Items]
Non-amortizing intangible assets		$ 4,490	$ 260
Trademarks
Indefinite-lived Intangible Assets [Line Items]
Non-amortizing intangible assets		$ 4,490	$ 260
Trademarks \| Orthex
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets acquired	$ 4,230

NET LOSS PER SHARE - Antidilutive Securities (Details) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Oct. 12, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	389,034	296,177	769,065
Conversion ratio (in shares)				1
Redeemable Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Conversion ratio (in shares)	1
Restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	318,002	177,293	548,005
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	70,628	112,094	176,959
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	404	6,790	44,101

INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 11, 2018	May 30, 2014
Operating Loss Carryforwards [Line Items]
Tax Cuts And Jobs Act Of 2017, change in tax rate, income tax expense (benefit)		$ 11,095
Tax credit carryforward	$ 260
Estimated limitation on losses generated prior to ownership change date				$ 16,200
Estimated annual limitation of losses			$ 9,736	$ 1,062
Increase of estimated annual limitation of first five years			$ 22,430
Reserve for uncertain income tax positions	0
Cash held by foreign operations	2,035
Vilex
Operating Loss Carryforwards [Line Items]
Release of valuation allowance	1,124
Federal
Operating Loss Carryforwards [Line Items]
Loss carryforwards	86,807
State
Operating Loss Carryforwards [Line Items]
Loss carryforwards	$ 64,026

NET LOSS PER SHARE

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

NET LOSS PER SHARE

The following is a reconciliation of basic and diluted net loss per share attributable to common stockholders:


	Year Ended December 31,
	2019		2018		2017
Net loss from continuing operations	$	(12,685)	$	(12,025)	$	(8,932)
Net loss from discontinued operations	(1,046)		—		—
Net loss	(13,731)		(12,025)		(8,932)
Accretion of cumulative dividends of redeemable preferred stock to redemption value	—		—		(4,563)
Forfeiture of 50% of Series B Preferred Stock accumulated dividends	—		—		5965
Series A Preferred Stock preference payment in common stock	—		—		$	(16,000)
Net loss attributable to common stockholders - basic and diluted	$	(13,731)	$	(12,025)	$	(23,530)
Weighted average number of shares - basic and diluted	14,624,194		12,567,387		4,017,330
Net loss from continuing operations per share attributable to common stockholders - basic and diluted	$	(0.87)	$	(0.96)	$	(5.86)
Net loss from discontinued operations per share attributable to common stockholders - basic and diluted	(0.07)		—		—
Net loss per share attributable to common stockholders - basic and diluted	$	(0.94)	$	(0.96)	$	(5.86)

Our basic and diluted net loss per share is computed using the two-class method. The two-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock that includes non-forfeitable rights to dividends are considered participating securities. Series A and B preferred stock include rights to participate in dividends and distributions to common stockholders on an if-converted basis, and accordingly are also considered participating securities. During periods of undistributed losses however, no effect is given to our participating securities since they are not contractually obligated to share in the losses.

Because we have incurred a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share. The following contingently issuable and convertible equity shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for all periods presented (shares for the redeemable convertible preferred shares were determined based on the applicable conversation ratio of 1:1):


	Year Ended December 31,
	2019	2018	2017


Restricted stock	318,002	177,293	548,005
Stock options	70,628	112,094	176,959
Warrants	404	6,790	44,101
	389,034	296,177	769,065

ACCRUED COMPENSATION AND BENEFITS (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Compensation Related Costs [Abstract]
Accrued compensation and related costs	$ 1,573	$ 1,323
Accrued commissions	2,776	2,229
Total accrued compensation and benefits	$ 4,349	$ 3,552

BUSINESS COMBINATION (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the total consideration paid for Vilex and Orthex and allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date:


Description	Amount
Estimated fair value of total acquisition consideration	$	60,184
Assets
Cash	348
Accounts receivable-trade	2,088
Inventories	3,652
Prepaid expenses and other current assets	12
Property and equipment	7,540
Intangible assets	18,770

Operating lease right-of-use asset	323
Total assets	32,733
Liabilities
Accounts payable and accrued liabilities	563
Operating lease liabilities	323
Deferred tax liability	1,175
Other long-term liabilities	68
Total liabilities	2,129
Less: total net assets	30,604
Goodwill	$	29,580

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination

The fair value of identifiable intangible assets were based on valuations using a combination of the income and cost approach, inputs which would be considered Level 3 under the fair value hierarchy. The estimated fair value and useful life of identifiable intangible assets are as follows:


	Amount		Remaining Economic Useful Life
Trademarks / Names	$	4,610	Indefinite
Patents	9,980		15 years
Internally Developed Software	1,550		10 years
Customer Relationships	2,570		12 years
Non-competition Agreements	60		5 years
	$	18,770

Schedule of Indefinite-lived Intangible Assets Acquired as Part of Business Combination


	Amount		Remaining Economic Useful Life
Trademarks / Names	$	4,610	Indefinite
Patents	9,980		15 years
Internally Developed Software	1,550		10 years
Customer Relationships	2,570		12 years
Non-competition Agreements	60		5 years
	$	18,770

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the accounts of OrthoPediatrics Corp. and its wholly-owned subsidiaries, OrthoPediatrics US Distribution Corp., OrthoPediatrics EU Limited, OrthoPediatrics AUS PTY LTD, OrthoPediatrics NZ Limited, OP EU B.V., and OP Netherlands B.V., Vilex in Tennessee, Inc., and Orthex, LLC (collectively, the “Company,” “we,” “our” or “us”). All intercompany balances and transactions have been eliminated.

Following the acquisition of Vilex, we received Board approval to take the steps necessary to divest the non-core Vilex assets and the divestiture was completed on December 31, 2019. As a result, the results of Vilex have been classified as discontinued operations within the consolidated financial statements.

We have prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements have been prepared assuming our Company will continue as a going concern. We have experienced recurring losses from operations since our inception and had an accumulated deficit of $128,822 and $115,091 as of December 31, 2019 and 2018, respectively. In conjunction with the acquisition of Vilex and Orthex, the Company entered into a new $30,000 short-term loan facility with Squadron in addition to the existing $20,000 term loan facility and $15,000 revolving credit facility previously established. On December 31, 2019, the

Company paid the Term Note B in full using $25,000 received in exchange for the divestiture of the adult product offerings of Vilex and establishment of the Orthex license agreement and $5,000 from the available Squadron revolving loan. The maturity date for the remaining Squadron debt is January 31, 2023. Management continues to monitor cash flows and liquidity on a regular basis. We believe that our cash balance at December 31, 2019 and expected cash flows from operations for the next twelve months subsequent to the issuance of the consolidated financial statements, are sufficient to enable us to maintain current and essential planned operations for more than the next twelve months.

On October 12, 2017, we completed an initial public offering (“IPO”) of our common stock, in which we issued and sold 4.6 million shares of common stock at a public offering price of $13.00 per share for aggregate gross proceeds of $59,800. We received approximately $46,900 in net proceeds after deducting $4,200 of underwriting discounts and commissions, paying approximately $2,700 of offering costs and paying approximately $6,000 of Series B dividends. Upon the closing of the IPO, all of the outstanding shares of Series A and B redeemable convertible preferred stock and the Series A accrued dividends and the $16,000 cash preference payment automatically converted into shares of common stock at a 1:1 conversion ratio.

On December 11, 2018, we completed a follow-on offering of our common stock, in which we issued and sold 1.725 million shares of common stock at a public offering price of $27.00 per share for aggregate gross proceeds of $46,575. We received $43,423 in net proceeds after deducting $2,800 of underwriting discounts and commissions and paying $352 in offering costs.

On December 13, 2019, we completed a follow-on offering of our common stock, in which we issued and sold 1.755 million shares at a public offering price of $36.50 per share for aggregate gross proceeds of $64,076. We received $59,996 in net proceeds after deducting $3,845 of underwriting discounts and commissions and paying $235 in underwriting commissions and offering costs.

Use of Estimates

Preparation of our consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as of the date of the consolidated financial statements. By their nature, these judgments are subject to an inherent degree of uncertainty. We use historical experience and other assumptions as the basis for our judgments and estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in these estimates will be reflected in our consolidated financial statements.

Foreign Currency Transactions

We currently bill our international distributors in U.S. dollars, resulting in minimal foreign exchange transaction expense.

Beginning in the second quarter of 2017, we began selling direct within the United Kingdom, Ireland, Australia and New Zealand and billing using the local currency for each country. In September 2018, we began selling direct in Canada and in January 2019 we expanded to Belgium and the Netherlands. Additionally, in March 2019 we established a holding company and an operating company in the Netherlands that are expected to enhance our operations in Europe. The financial statements of our foreign subsidiaries are accounted for and have been translated into U.S. dollars using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. Foreign currency translation adjustments have been recorded as a separate component of the consolidated statements of comprehensive loss.

Fair Value of Financial Instruments

The accounting standards related to fair value measurements define fair value and provide a consistent framework for measuring fair value under the authoritative literature. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. This guidance only applies when other standards require or permit the fair value measurement of assets and liabilities. The guidance does not expand the use of fair value measurements. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels.

Level 1 – Quoted prices in active markets for identical assets or liabilities;

Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data; and

Level 3 – Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data.

We do not have any assets or liabilities that are measured on a recurring basis under the presented fair value hierarchy.

Revenue from Contracts with Customers

The Company adopted ASC 606, "Revenue From Contracts with Customers (ASC 606)", on January 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. The adoption of ASC 606 did not have any impact on the Company's consolidated historical financial statements. The reported results for 2019 and 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of "ASC 605, Revenue Recognition (ASC 605)." In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, and excludes any sales incentives or taxes collected from a customer which are subsequently remitted to government authorities.

Revenue Recognition – United States

Revenue in the United States is generated primarily from the sale of our implants and, to a much lesser extent, from the sale of our instruments. Sales in the United States are primarily to hospital accounts through independent sales agencies. We recognize revenue when our performance obligations under the terms of a contract with our customer are satisfied. This typically occurs when we transfer control of our products to the customers, generally upon implantation or when title passes upon shipment. The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase product for their own inventory, and revenue is recognized when the products are shipped and the title and risk of loss passes to the customer. Pricing for each customer is dictated by a unique pricing agreement, which does not generally include rebates or discounts. Sales to two of our independent sales agencies accounted for 12.3% and 12.2% of our revenue in 2019. Sales to two of our independent sales agencies accounted for 12.1% and 11.2% of our revenue in 2018, respectively. Sales to two of our independent sales agencies accounted for 10.1% and 10.1% of our revenue in 2017, respectively.

In conjunction with the sale of Vilex, we entered into an exclusive perpetual license agreement to permit the purchasers of Vilex the ability to sell products using the external fixation technology of Orthex, LLC to non-pediatric accounts. This license agreement was valued at $12,410 and recorded as deferred revenue on our December 31, 2019 balance sheet. This deferred revenue will be recognized on a proportional basis relative to the total expected Orthex sales subject to this license and distribution arrangement.

Revenue Recognition – International

Outside of the United States, we primarily sell our products through independent stocking distributors. Generally, the distributors are allowed to return products, and some are thinly capitalized. Based on our history of collections and returns from international customers, prior to 2019, we concluded that collectibility was not reasonably assured at the time of delivery for certain customers who had not evidenced a consistent pattern of timely payment. Accordingly, in the past we did not recognize international revenue and associated cost of revenue at the time title transfers for these customers for whom collectibility had not been deemed probable based on the customer’s history and ability to pay, but rather when cash had been received.

Following a review of our collection history, we deemed collectibility was probable for all international stocking distributors effective January 1, 2019. Based on a history of reliable collections, we have concluded that a contract exists and revenue should be recognized when we transfer control of our products to the customer, generally upon implantation or when title passes upon shipment.

In early 2017, we expanded operations and established legal entities in the United Kingdom, Australia and New Zealand and in Canada in September 2018. In January 2019 we expanded to Belgium and the Netherlands permitting us to sell under an agency model direct to local hospitals in these countries. Additionally, in March 2019 we established a holding company and an operating company in the Netherlands that are expected to enhance our operations in Europe . The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase products for their own inventory, and revenue is recognized when the products are shipped and the title and risk of loss passes to the customer. Pricing for each customer is dictated by a unique pricing agreement, which does not generally include rebates or discounts.

Cash

We maintain cash in bank deposit accounts which, at times, may exceed federally insured limits. To date, we have not experienced any loss in such accounts. We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents. The carrying amounts reported in the balance sheets for cash are valued at cost, which approximates fair value.

Restricted Cash

In conjunction with the sale of Vilex, $1,250 was placed into a separate escrow account. This cash is reported as restricted cash on the December 31, 2019 consolidated balance sheet. These funds will remain restricted until August 31, 2021 at which time, they will be released to the Company subject to no claims related to the purchase.

Accounts Receivable

Accounts receivable are uncollateralized customer obligations due under normal trade terms, generally requiring payment within 30 days from the invoice date. Account balances with invoices over 30 days past due are considered delinquent. No interest is charged on past due accounts. Payments of accounts receivable are applied to the specific invoices identified on the customer's remittance advice or, if unspecified, to the customer's account as an unapplied credit.

The carrying amount of accounts receivable is reduced by an allowance that reflects management's best estimate of the amounts that will not be collected, determined principally on the basis of historical experience, management's assessment of the collectability of specific customer accounts and the aging of the accounts receivable. All accounts or portions thereof deemed to be uncollectible or to require an excessive collection cost are written off to the allowance for doubtful accounts.

Inventories, net

Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in-first-out method. Inventories, which consist of implants and instruments held in our warehouse or with third-party independent sales agencies or distributors, are considered finished goods and are purchased from third parties.

We evaluate the carrying value of our inventories in relation to the estimated forecast of product demand, which takes into consideration the life cycle of the product. A significant decrease in demand could result in an increase in the amount of excess inventory on hand, which could lead to additional charges for excess and obsolete inventory.

The need to maintain substantial levels of inventory impacts our estimates for excess and obsolete inventory. Each of our implant systems are designed to include implantable products that come in different sizes and shapes to accommodate the surgeon’s needs. Typically, a small number of the set components are used in each surgical procedure. Certain components within each set may become obsolete before other components based on the usage patterns. We adjust inventory values, as needed, to reflect these usage patterns and life cycle.

In addition, we continue to introduce new products, which may require us to take additional charges for excess and obsolete inventory in the future.

Charges for excess and obsolete inventory are included in cost of revenue and were $604, $504 and $344 for the years ended December 31, 2019, 2018 and 2017, respectively.

Costs Related to the Initial Public Offering

At the time of the IPO, $1,840 of additional costs, primarily consisting of legal, accounting and other direct fees and costs related to the IPO incurred during 2017 and were initially deferred and capitalized and then reclassified to stockholders’ equity at the conclusion of our IPO on October 12, 2017. Additionally, $1,986 and $2,049 of additional non-cash expense related to the accelerated vesting of restricted stock was included in general and administrative expenses in 2018 and 2017, respectively.

Costs Related to the Follow-on Offerings

On December 11, 2018, we completed a follow-on offering of our common stock. Offering expenses of $352, primarily consisting of legal, accounting and other direct fees and costs related to the offering, were initially deferred and capitalized and then reclassified to stockholders' equity at the conclusion of our follow-on offering on December 11, 2018.

On December 13, 2019, we completed another offering of our common stock. Offering expenses of $235, primarily consisting of legal, accounting and other direct fees and costs related to the offering were recorded in stockholder's equity at the conclusion of our offering.

Property and Equipment, net

Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the assets. When assets are retired or otherwise disposed of, costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations for the period. Maintenance and repairs that prolong or extend the useful life are capitalized, whereas standard maintenance, replacements, and repair costs are expensed as incurred.

Instruments are hand-held devices, specifically designed for use with our implants and are used by surgeons during surgery. Instruments deployed within the United States, United Kingdom, Australia, New Zealand, Canada, Belgium and Netherlands are carried at cost less accumulated depreciation and are recorded in property and equipment, net on the consolidated balance sheets.

Sample inventory consists of our implants and instruments, and is maintained to market and promote our products. Sample inventory is carried at cost less accumulated depreciation.

Depreciable lives are generally as follows:


Building and building improvements			25 to 30 years
Furniture and fixtures			5 to 7 years
Computer equipment			3 to 5 years
Business software			3 years
Office and other equipment			5 to 7 years
Instruments			5 years
Sample inventory			2 years

Amortizable Intangible Assets, net

Amortizable intangible assets include fees necessary to secure various patents and licenses, and the value of internally developed software, customer relationships and non-competition agreements related to the acquisition of Orthex. Amortization is calculated on a straight-line basis over the estimated useful life of the patents and licenses. Amortization for patents and licenses commences at the time of patent approval, and for licenses upon market launch, respectively. Intangible assets are amortized over a 3 to 20 year period.

Amortizable intangible assets are assessed for impairment upon triggering events that indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by the associated asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying

amount exceeds the fair market value of the intangible assets. No impairment charges were recorded in any of the periods presented.

Goodwill and Other Intangible Assets

Our goodwill represents the excess of the cost over the fair value of net assets acquired. The determination of the value of goodwill and intangible assets arising from acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of net tangible and intangible assets acquired. Goodwill is not amortized and is assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstances warrant such a review. The goodwill is considered to be impaired if we determine that the carrying value of our one reporting unit exceeds its respective fair value. No impairment changes were recorded in the current year.

We have indefinite lived tradename assets that are reviewed for impairment by performing a quantitative analysis, which occurs annually in the fourth quarter or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by the associated asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. No impairment charges were recorded in any of the periods presented.

Shipping and Handling Costs

Shipping and handling costs that are billed to the customer are included in net revenue and were $599, $513 and $336, for the years ended December 31, 2019, 2018 and 2017, respectively. Shipping and handling costs that are not billed to the customer are included in sales and marketing expenses and were $2,788, $2,148 and $1,783, for the years ended December 31, 2019, 2018 and 2017, respectively.

Cost of Revenue

Cost of revenue consists primarily of products purchased from third-party suppliers, excess and obsolete inventory adjustments, inbound freight, and royalties. Our implants and instruments are manufactured to our specifications by third-party suppliers who meet our manufacturer qualifications standards. Our third-party manufacturers are required to meet Food and Drug Administration (the “FDA”), International Organization for Standardization and other country-specific quality standards. The majority of our implants and instruments are produced in the United States.

Sales and Marketing Expenses

Sales and marketing expenses primarily consist of commissions to our domestic and select international independent sales agencies and consignment distributors, as well as compensation, commissions, benefits and other related costs for personnel we employ. Commissions and bonuses are generally based on a percentage of sales. Our international independent stocking distributors purchase instrument sets and replenishment stock for resale, and we do not pay commissions or any other sales related costs for international sales to distributors.

Advertising Costs

Advertising costs consist primarily of print advertising, trade shows, and other related expenses. Advertising costs are expensed as incurred and are recorded as a component of sales and marketing expense. Advertising costs were $1,422, $978 and $1,128 for the years ended December 31, 2019, 2018 and 2017, respectively.

Research and Development Costs

Research and development costs are expensed as incurred. Our research and development expenses primarily consist of costs associated with engineering, product development, consulting services, outside prototyping services, outside research activities, materials, development and protection of our intellectual property portfolio, as well as other costs associated with development of our products. Research and development costs also include related personnel and consultants’ compensation expense.

Stock-Based Compensation

Prior to our IPO, we maintained an Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”) that provides for grants of options and restricted stock to employees, directors and associated third-party representatives of our company as determined by the Board of Directors. The 2007 Plan had authorized 1,585,000 shares for award.

Immediately prior to our IPO, we adopted our 2017 Incentive Award Plan (the “2017 Plan”) which replaced the 2007 Plan. The 2017 Plan provides for grants of options and restricted stock to officers, employees, consultants or directors of our Company. The 2017 Plan has authorized 1,789,647 shares for award.

Options holders, upon vesting, may purchase common stock at the exercise price, which is the estimated fair value of our common stock on the date of grant. Option grants generally vest immediately or over a three years period. No stock options were granted in any of the periods presented.

Restricted stock may not be transferred prior to the expiration of the restricted period. The restricted stock that has been granted under the 2007 Plan has restriction periods that generally last until the earlier of six years from the date of grant, or an initial public offering or change in control, as defined in the 2007 Plan. All restricted stock granted prior to May 2014 vested upon our IPO and the remaining grants under the 2007 Plan vested six months after the IPO. Generally under the 2017 plan, restricted stock vests over a three year period. We have elected to recognize the reversal of stock compensation expense when a restricted stock forfeiture occurs as opposed to estimating future forfeitures.

We record the fair value of restricted stock at the grant date. Stock-based compensation is recognized ratably over the requisite service period, which is generally the restriction period for restricted stock.

In determining the fair value of our common stock at the grant date for awards issued prior to our IPO, which is the basis for the fair value of stock based awards, we use the market approach, which is based on the assumption that the value of an asset is equal to the value of a substitute asset with the same characteristics. In using the market approach, we consider both the guideline public company method and the precedent transaction method. Given the absence of a public trading market for our common stock at that time, we exercise reasonable judgment and consider a number of objective and subjective factors to determine the best estimate of the fair value of our common stock, including: the preferences and dividends of our redeemable convertible preferred stock relative to those of our common stock; our operating results and financial conditions, including our level of available capital resources; equity market conditions affecting comparable public companies; general U.S. market conditions; and the lack of marketability of our common stock. Prior to our IPO, for restricted stock awards we applied a discount for lack of marketability to the fair value of common shares due to estimate the impact of valuing a minority interest in our Company as a closely held, non-public company with no liquid market for its shares.

OrthoPediatrics Foundation for Education and Research

The Company may periodically make contributions to the OrthoPediatrics Foundation for Education and Research (the "Foundation"). The Foundation was incorporated in 2018 exclusively for pediatric orthopedic research and education and qualifies under IRC 501(c)(3) as an exempt private foundation. The mission of the Foundation is to enhance the knowledge and experience, through education and research, of surgical trainees or practicing surgeons who are involved in helping children with orthopaedic disorders and injuries. The Foundation is a separate legal entity and is not a subsidiary of the Company; therefore, its results are not included in these consolidated financial statements. The Company contributed $0.5 million and $0.2 million to the Foundation during the years ended December 31, 2019 and 2018, respectively. These contributions were recorded in general and administrative expenses.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) includes foreign currency translation adjustments.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance.

We record uncertain tax positions on the bases of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the positions and (2) for those tax positions that do not meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

“Emerging Growth Company” Reporting Requirements

We qualify as an “emerging growth company” as defined in the JOBS Act. For as long as a company is deemed to be an emerging growth company, it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. Among other things, we are not required to provide an auditor attestation report on the assessment of the internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002.

Section 107 of the JOBS Act also provides that an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

In April 2017, the SEC adopted new rules that included an inflation-adjusted threshold in the definition of an emerging growth company. Under the new inflation-adjusted threshold, we would cease to be an emerging growth company on the last day of the fiscal year in which our annual gross revenues exceed $1.07 billion. This is an increase of $70 million from the previous $1 billion threshold.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 “Leases,” which increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted the standard on January 1, 2019.

The new standard requires lessees to recognize both the right-of-use assets and lease liabilities in the

balance sheet for most leases, whereas under previous GAAP only finance lease liabilities (previously referred to as capital leases) were recognized in the balance sheet. In addition, the definition of a lease has been revised which may result in changes to the classification of an arrangement as a lease. Under the new standard, an arrangement that conveys the right to control the use of an identified asset by obtaining substantially all of its economic benefits and directing how it is used is a lease, whereas the previous definition focuses on the ability to control the use of the asset or to obtain its output. Quantitative and qualitative disclosures related to the amount, timing and judgments of an entity’s accounting for leases and the related cash flows are expanded. Disclosure requirements apply to both lessees and lessors, whereas previous disclosures related only to lessees. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. Lessor accounting is also largely unchanged.

The new standard provides a number of transition practical expedients, which the Company has elected, including:

•a "package of three" expedients that must be taken together and allow entities to (1) not reassess whether existing contracts contain leases, (2) carryforward the existing lease classification, and (3) not reassess initial direct costs associated with existing leases, and

•an implementation expedient which allows the requirements of the standard in the period of adoption with no restatement of prior periods.

The adoption of the new standard on January 1, 2019 did not result in material right of use asset or lease obligation for operating leases recorded in the Company's consolidated balance sheets, primarily due to an insignificant number of lease contracts or other contracts that meet the standard for consideration as a lease under the definitions discussed above. The Company has limited operating leases for office equipment maintained at its headquarters, but does lease any real estate or office space.

In conjunction with the Company's acquisition of Vilex and Orthex on June 4, 2019, the Company acquired two leased facilities in Tennessee and Florida. The Company analyzed each lease agreement and recorded a right-of-use asset and liability of $77 for Orthex and $246 for Vilex, respectively, on its consolidated balance sheet as of the acquisition date. The Vilex balances were recorded to assets held for sale, and were removed concurrent with the sale of Vilex to Squadron on December 31, 2019. As of December 31, 2019, the Company's right-of-use asset and liabilities were $64 and $63, respectively, associated with Orthex.

In June 2016, the FASB issued ASU No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments". The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financials assets including trade receivables held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. The Company will adopt ASU 2016-16 effective January 1, 2023. The adoption of this guidance is not expected to have a significant impact on the Company's consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". This pronouncement eliminates Step 2 from the goodwill impairment test and requires an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Under this guidance, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. It is effective for reporting periods beginning after December 15, 2020, although earlier adoption is permitted. The Company is evaluating the effect of this pronouncement on its consolidated financial statements in future periods.

In December 2019, the FASB issued ASU No. 2019-12 "Income Taxes: Simplifying the Accounting for Income Taxes" intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside cost basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. The Company is currently assessing the impact of this standard on the consolidated financial position and results of operations.

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONSOn June 4, 2019, the Company acquired Vilex, a manufacturer of foot and ankle surgical implants. Since the Vilex products include adult offerings that are not core to the Company's pediatric business, the Company received Board approval to take the steps necessary to divest the non-core Vilex assets.

On December 31, 2019, the Company divested substantially all of the assets relating to Vilex's adult product offering to a wholly-owned subsidiary of Squadron Capital, LLC. in exchange for a $25,000 reduction in a term note owed to Squadron in connection with the initial acquisition along with certain ongoing intellectual property rights. Of the $25,000 purchase price, $12,410 was attributable to deferred revenue associated with the license of the Orthex intellectual property and the remaining $12,590 was applied to the Vilex assets and liabilities divested.

Assets and liabilities divested consisted of the following as of December 31, 2019:


Description	Amount
Cash	$	515
Accounts Receivable - trade, less allowance for doubtful accounts	928
Inventories, net	2,060
Prepaid expenses and other current assets	24
Property and equipment, net	6,246
Amortizable intangible assets	980
Goodwill	3,397
Other intangible assets	380
Operating lease right-of-use asset	216
Total assets divested	$	14,746

Accounts payable - trade	$	37
Accrued compensation and benefits	171
Operating lease liabilities	199
Deferred tax liability	1,175
Other current liabilities	13
Total liabilities divested	$	1,595
Net assets sold	$	13,151
Allocated purchase price	12,590
Loss on divestiture	$	(561)


Major classes of line items constituting loss of discontinued operations	2019
Net revenue	$	3,069
Cost of revenue	(286)
Sales and marketing	(692)
General and administrative	(2,103)
Other income (expense), net	(9)
Pretax net loss of discontinued operations	$	(21)
Income tax expense	(464)
Net loss on discontinued operations	$	(485)

The divestiture does not represent a strategic shift that will have a major effect on the Company's operations and financial statements. Goodwill was allocated to the assets and liabilities divested using the relative fair value method. The Company recognized a total net loss on discontinued operations of $1,046, net of taxes, in its consolidated statement of operations for the year ended December 31, 2019.

The net assets sold as part of the divestiture of Vilex on December 31, 2019 have changed from those previously reported as assets held for sale resulting from a change in asset allocation between Orthex and Vilex to revisions in the purchase price allocation and due to final terms of the sale agreement. This change did not have a material impact on results of operations from discontinued operations previously reported.

PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 34,327	$ 22,635
Less: accumulated depreciation	(12,978)	(9,867)
Total property and equipment, net	21,349	12,768
Depreciation expense	3,749	2,514	$ 2,159
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,645	1,435
Building and building improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,951	1,053
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,070	1,558
Office and other equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	751	614
Instruments
Property, Plant and Equipment [Line Items]
Property and equipment, gross	21,963	14,266
Sample inventory
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,213	1,859
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3,734	$ 1,850

SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, net (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Impairment of intangible assets, finite-lived	$ 0	$ 0	$ 0
Impairment of indefinitely-lived tradename assets	$ 0	$ 0	$ 0
Minimum
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	3 years
Maximum
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	20 years
Building and building improvements \| Minimum
Property, Plant and Equipment [Line Items]
Depreciable lives	25 years
Building and building improvements \| Maximum
Property, Plant and Equipment [Line Items]
Depreciable lives	30 years
Furniture and fixtures \| Minimum
Property, Plant and Equipment [Line Items]
Depreciable lives	5 years
Furniture and fixtures \| Maximum
Property, Plant and Equipment [Line Items]
Depreciable lives	7 years
Computer equipment \| Minimum
Property, Plant and Equipment [Line Items]
Depreciable lives	3 years
Computer equipment \| Maximum
Property, Plant and Equipment [Line Items]
Depreciable lives	5 years
Business software
Property, Plant and Equipment [Line Items]
Depreciable lives	3 years
Office and other equipment \| Minimum
Property, Plant and Equipment [Line Items]
Depreciable lives	5 years
Office and other equipment \| Maximum
Property, Plant and Equipment [Line Items]
Depreciable lives	7 years
Instruments
Property, Plant and Equipment [Line Items]
Depreciable lives	5 years
Sample inventory
Property, Plant and Equipment [Line Items]
Depreciable lives	2 years

DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

Assets and liabilities divested consisted of the following as of December 31, 2019:


Description	Amount
Cash	$	515
Accounts Receivable - trade, less allowance for doubtful accounts	928
Inventories, net	2,060
Prepaid expenses and other current assets	24
Property and equipment, net	6,246
Amortizable intangible assets	980
Goodwill	3,397
Other intangible assets	380
Operating lease right-of-use asset	216
Total assets divested	$	14,746

Accounts payable - trade	$	37
Accrued compensation and benefits	171
Operating lease liabilities	199
Deferred tax liability	1,175
Other current liabilities	13
Total liabilities divested	$	1,595
Net assets sold	$	13,151
Allocated purchase price	12,590
Loss on divestiture	$	(561)


Major classes of line items constituting loss of discontinued operations	2019
Net revenue	$	3,069
Cost of revenue	(286)
Sales and marketing	(692)
General and administrative	(2,103)
Other income (expense), net	(9)
Pretax net loss of discontinued operations	$	(21)
Income tax expense	(464)
Net loss on discontinued operations	$	(485)

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

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+ Details

GOODWILL AND INTANGIBLE ASSETS - Amortization Expense and Indefinite-lived Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of expense	$ 887	$ 378	$ 246
Indefinite-lived Intangible Assets [Line Items]
Other intangible assets	4,490	260
Trademarks
Indefinite-lived Intangible Assets [Line Items]
Other intangible assets	$ 4,490	$ 260

SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Property and Equipment, Depreciable Lives

Depreciable lives are generally as follows:


Building and building improvements			25 to 30 years
Furniture and fixtures			5 to 7 years
Computer equipment			3 to 5 years
Business software			3 years
Office and other equipment			5 to 7 years
Instruments			5 years
Sample inventory			2 years

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Total	Series A Redeemable Convertible Preferred Stock	Series B Redeemable Convertible Preferred Stock	Common Stock	Common Stock Series A Redeemable Convertible Preferred Stock	Additional Paid-in Capital	Additional Paid-in Capital Series A Redeemable Convertible Preferred Stock	Additional Paid-in Capital Series B Redeemable Convertible Preferred Stock	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Balance (shares) at Dec. 31, 2016		1,000,000	4,446,978
Balance at Dec. 31, 2016		$ 23,439	$ 47,864
Increase (Decrease) in Temporary Equity [Roll Forward]
Conversion of redeemable preferred shares to common stock upon IPO	$ 54,997	(16,000)	(39,000)	$ 1		$ 54,996
Accretion of redeemable preferred stock to redemption value	4,563	$ 1,500	$ 3,063
Conversion of redeemable preferred shares to common stock upon IPO (in shares)		(1,000,000)	(4,446,978)	3,649,475
Conversion of preferred stock dividends		$ (8,939)	$ (11,927)
Balance (shares) at Dec. 31, 2017		0	0
Balance at Dec. 31, 2017		$ 0	$ 0
Balance (in shares) at Dec. 31, 2016				2,421,599
Balance at Dec. 31, 2016	(65,309)			$ 1		12,824			$ (78,134)	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(8,932)								(8,932)
Accretion of redeemable preferred stock to redemption value	(4,563)					(4,563)
Restricted stock (in shares)				108,468
Restricted stock	3,478					3,478
Shares surrendered by employees to pay taxes on restricted stock (in shares)				(76,146)
Shares surrendered by employees to pay taxes on restricted stock	(990)					(990)
Conversion of redeemable preferred shares to common stock upon IPO (in shares)					687,616
Conversion of redeemable preferred shares to common stock upon IPO		$ 8,939	$ 5,965				$ 8,939	$ 5,965
Series A redeemable preferred stock liquidation preference payment (in shares)				1,230,769
Series A redeemable preferred stock liquidation preference payment	0					16,000			(16,000)
Issuance of common stock, net of issuance cost (in shares)				4,600,000
Issuance of common stock, net of issuance cost	53,775					53,775
Other comprehensive income (loss)	135									135
Balance (in shares) at Dec. 31, 2017				12,621,781
Balance at Dec. 31, 2017	47,495			$ 2		150,424			(103,066)	135
Increase (Decrease) in Temporary Equity [Roll Forward]
Accretion of redeemable preferred stock to redemption value	0
Balance (shares) at Dec. 31, 2018		0	0
Balance at Dec. 31, 2018		$ 0	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(12,025)								(12,025)
Restricted stock (in shares)				177,208
Restricted stock	3,186			$ 1		3,185
Issuance of common stock, net of issuance cost (in shares)				1,725,000
Issuance of common stock, net of issuance cost	$ 43,424			$ 1		43,423
Stock option exercise (in shares)	14,213			14,213
Stock option exercise	$ 410					410
Other comprehensive income (loss)	$ (758)									(758)
Balance (in shares) at Dec. 31, 2018	14,538,202			14,538,202
Balance at Dec. 31, 2018	$ 81,732			$ 4		197,442			(115,091)	(623)
Increase (Decrease) in Temporary Equity [Roll Forward]
Accretion of redeemable preferred stock to redemption value	0
Balance (shares) at Dec. 31, 2019		0	0
Balance at Dec. 31, 2019		$ 0	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(13,731)								(13,731)
Consideration for Vilex and Orthex Acquisition (in shares)				245,352
Consideration for Vilex and Orthex Acquisition	10,000					10,000
Restricted stock (in shares)				145,153
Restricted stock	2,603					2,603
Conversion of redeemable preferred shares to common stock upon IPO (in shares)				38,921
Conversion of redeemable preferred shares to common stock upon IPO	1,141					1,141
Issuance of common stock, net of issuance cost (in shares)				1,755,500
Issuance of common stock, net of issuance cost	$ 59,996					59,996
Stock option exercise (in shares)	38,920			145,153
Stock option exercise	$ 2,603					2,603
Other comprehensive income (loss)	$ 620									620
Balance (in shares) at Dec. 31, 2019	16,723,128			16,723,128
Balance at Dec. 31, 2019	$ 142,361			$ 4		$ 271,182			$ (128,822)	$ (3)

SIGNIFICANT ACCOUNTING POLICIES - Basis of Presentation (Details) - USD ($)					12 Months Ended
	Dec. 31, 2019	Dec. 13, 2019	Dec. 11, 2018	Oct. 12, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jun. 04, 2019
Class of Stock [Line Items]
Accumulated deficit	$ 128,822,000				$ 128,822,000	$ 115,091,000
Mortgage balance	26,191,000				26,191,000	21,274,000
Payment of preferred stock dividends					0	0	$ 5,965,000
Redeemable preferred stock dividends, cash preference payment					$ 0	$ 0	16,000,000
Conversion ratio (in shares)				1
Revolving Credit Facility
Class of Stock [Line Items]
Revolving credit facility							$ 15,000,000
Common Stock
Class of Stock [Line Items]
Issuance of common stock, net of issuance cost (in shares)					1,755,500	1,725,000	4,600,000
Common Stock \| IPO
Class of Stock [Line Items]
Issuance of common stock, net of issuance cost (in shares)				4,600,000
Public offering price (in dollars per share)				$ 13.00
Gross proceeds				$ 59,800,000
Net proceeds on sale of stock				46,900,000
Underwriting discounts and commissions				4,200,000
Offering costs				2,700,000
Common Stock \| Second Public Offering
Class of Stock [Line Items]
Public offering price (in dollars per share)		$ 36.50	$ 27.00
Gross proceeds		$ 64,076,000	$ 46,575,000
Net proceeds on sale of stock		59,996,000	43,423,000
Underwriting discounts and commissions		3,845,000	2,800,000
Offering costs		$ 235,000	$ 352,000
Issued and sold shares		1,755,000	1,725,000
Series A
Class of Stock [Line Items]
Redeemable preferred stock dividends, cash preference payment				16,000,000
Series B \| IPO
Class of Stock [Line Items]
Payment of preferred stock dividends				$ 6,000,000
Revolving credit facility with Squadron \| Revolving Credit Facility
Class of Stock [Line Items]
Mortgage balance	5,000,000				$ 5,000,000	$ 0
Note payable to Squadron
Class of Stock [Line Items]
Mortgage balance	19,891,000				$ 19,891,000	$ 19,856,000	$ 20,000,000
Loan Agreement \| Revolving credit facility with Squadron
Class of Stock [Line Items]
Term loan credit facililty								$ 30,000,000
Loan Agreement \| Revolving Credit Facility
Class of Stock [Line Items]
Revolving credit facility							15,000,000
Loan Agreement \| Note payable to Squadron
Class of Stock [Line Items]
Mortgage balance							$ 20,000,000
Term Note B \| Affiliated Entity \| Squadron
Class of Stock [Line Items]
Payment of revolving credit facility with affiliate	25,000,000
Revolving Loan \| Affiliated Entity \| Squadron \| Revolving credit facility with Squadron
Class of Stock [Line Items]
Payment of revolving credit facility with affiliate	$ 5,000,000

ACCRUED COMPENSATION AND BENEFITS (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Accrued Compensation and Benefits

Accrued compensation and benefits consisted of the following:


	December 31,
	2019		2018
Accrued compensation and related costs	$	1,573	$	1,323
Accrued commissions	2,776		2,229
Total accrued compensation and benefits	$	4,349	$	3,552

SIGNIFICANT ACCOUNTING POLICIES - Restricted Cash (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Restricted cash	$ 1,250	$ 0

RELATED PARTY TRANSACTIONS (Details) $ in Thousands	12 Months Ended
RELATED PARTY TRANSACTIONS (Details) $ in Thousands	Dec. 31, 2019 USD ($) supplier	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Related Party Transaction [Line Items]
Number of related party suppliers \| supplier	1
Disposed of by sale
Related Party Transaction [Line Items]
Divestiture purchase price	$ 25,000
Affiliated Entity \| FMI
Related Party Transaction [Line Items]
Payments to related party	$ 3,933	$ 4,026	$ 4,081

STRATEGIC ARRANGEMENTS (Details) - USD ($)			12 Months Ended
STRATEGIC ARRANGEMENTS (Details) - USD ($)	Aug. 02, 2017	Dec. 01, 2007	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Minimum annual royalty payment			$ 500,000
Cost of revenue			17,933,000	$ 14,879,000	$ 11,170,000
Deferred revenue			12,410,000	0
Royalty Agreement Terms \| CASE
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty agreement period	10 years	10 years
Minimum annual royalty payment			$ 10,000
Royalty agreement percentage			3.00%
Milestone payments for FDA approval to sell our products within the United States			$ 5,000
Milestone payment for general product launch			10,000
Royalty payable			39,000	36,000
Royalty \| Royalty Agreement Terms \| CASE
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Cost of revenue			$ 153,000	$ 145,000	$ 148,000

NET LOSS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders

The following is a reconciliation of basic and diluted net loss per share attributable to common stockholders:


	Year Ended December 31,
	2019		2018		2017
Net loss from continuing operations	$	(12,685)	$	(12,025)	$	(8,932)
Net loss from discontinued operations	(1,046)		—		—
Net loss	(13,731)		(12,025)		(8,932)
Accretion of cumulative dividends of redeemable preferred stock to redemption value	—		—		(4,563)
Forfeiture of 50% of Series B Preferred Stock accumulated dividends	—		—		5965
Series A Preferred Stock preference payment in common stock	—		—		$	(16,000)
Net loss attributable to common stockholders - basic and diluted	$	(13,731)	$	(12,025)	$	(23,530)
Weighted average number of shares - basic and diluted	14,624,194		12,567,387		4,017,330
Net loss from continuing operations per share attributable to common stockholders - basic and diluted	$	(0.87)	$	(0.96)	$	(5.86)
Net loss from discontinued operations per share attributable to common stockholders - basic and diluted	(0.07)		—		—
Net loss per share attributable to common stockholders - basic and diluted	$	(0.94)	$	(0.96)	$	(5.86)

Schedule of Antidilutive Shares Excluded from the Calculation of Diluted Net Loss Per Share

The following contingently issuable and convertible equity shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for all periods presented (shares for the redeemable convertible preferred shares were determined based on the applicable conversation ratio of 1:1):


	Year Ended December 31,
	2019	2018	2017


Restricted stock	318,002	177,293	548,005
Stock options	70,628	112,094	176,959
Warrants	404	6,790	44,101
	389,034	296,177	769,065

SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 04, 2019
Orthex
Business Acquisition [Line Items]
Right-of-use asset	$ 64	$ 77
Lease liability	$ 63	77
Vilex
Business Acquisition [Line Items]
Right-of-use asset		246
Lease liability		$ 246

DEBT AND CREDIT ARRANGEMENTS - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Long-term debt	$ 26,191	$ 21,274
Current portion of long-term debt with affiliate	124	118
Total long-term liabilities	26,067	21,156
Note payable to Squadron
Debt Instrument [Line Items]
Long-term debt	19,891	19,856	$ 20,000
Revolving credit facility with Squadron \| Revolving Credit Facility
Debt Instrument [Line Items]
Long-term debt	5,000	0
Mortgage payable to affiliate
Debt Instrument [Line Items]
Long-term debt	1,300	1,418
Current portion of long-term debt with affiliate	$ 124	$ 118

BUSINESS COMBINATION

7 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

BUSINESS COMBINATION

BUSINESS COMBINATIONOn June 4, 2019, the Company purchased all the issued and outstanding shares of stock of Vilex and units of membership interests in Orthex for $50,000 in cash, net of working capital adjustments, and 245,352 shares of common stock, $0.00025 par value per share, of the Company. The shares of common stock were valued at $40.76 per share, the volume weighted average trading price during the thirty day trading period ending on May 30, 2019. In addition, $3,000 was placed in an escrow account for a period of up to twenty months to cover certain indemnification obligations and to secure certain closing adjustments. The Company incurred $737 of acquisition-

related costs, that are included in general and administrative expenses on the consolidated statements of operations. The purchase price allocation set forth herein is preliminary, subject to certain tax matters related to the acquisition.


Description	Amount
Estimated fair value of total acquisition consideration	$	60,184
Assets
Cash	348
Accounts receivable-trade	2,088
Inventories	3,652
Prepaid expenses and other current assets	12
Property and equipment	7,540
Intangible assets	18,770

Operating lease right-of-use asset	323
Total assets	32,733
Liabilities
Accounts payable and accrued liabilities	563
Operating lease liabilities	323
Deferred tax liability	1,175
Other long-term liabilities	68
Total liabilities	2,129
Less: total net assets	30,604
Goodwill	$	29,580

Measurement period adjustments during fiscal year 2019 included $239 to accounts receivable - trade, $253 to inventory, $92 to working capital, $1,400 to deferred tax liability and $510 to intangible assets as a result of information identified as of the date of acquisition. These measurement period adjustments to the purchase price allocation increased goodwill by $586.


	Amount		Remaining Economic Useful Life
Trademarks / Names	$	4,610	Indefinite
Patents	9,980		15 years
Internally Developed Software	1,550		10 years
Customer Relationships	2,570		12 years
Non-competition Agreements	60		5 years
	$	18,770

BUSINESS SEGMENT (Tables)

12 Months Ended

Dec. 31, 2019

Segment Reporting [Abstract]

Schedule of Product Sales by Geographic Location

Product sales by source were as follows:


	Year Ended December 31,
Product sales by geographic location:	2019		2018		2017
U.S.	$	55,055	$	43,461	$	34,909
International	17,497		14,098		10,711
Total	$	72,552	$	57,559	$	45,620

Schedule of Product Sales by Category


	Year Ended December 31,
Product sales by category:	2019		2018		2017
Trauma and deformity	$	49,371	$	39,695	$	32,801
Scoliosis	21,485		16,662		11,585
Sports medicine/other	1,696		1,202		1,234
Total	$	72,552	$	57,559	$	45,620

INCOME TAXES - Reconciliation between the effective tax rate and the statutory tax rate (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Federal statutory rate	21.00%	21.00%	34.00%
State statutory rate, net of federal benefit	(0.70%)	0.90%	0.80%
Effect of foreign rates different from statutory	0.00%	0.20%	(0.20%)
Change in state rate	(1.30%)	(1.20%)	3.80%
Change in federal rate (34% to 21%)	0.00%	0.00%	(9.80%)
Nondeductible/nontaxable items	0.30%	4.90%	(122.20%)
Change in valuation allowance	(19.30%)	(25.80%)	93.60%
Income tax expense (benefit)	0.00%	0.00%	0.00%

DEBT AND CREDIT ARRANGEMENTS - Narrative (Details) - USD ($)			12 Months Ended
	Jun. 04, 2019	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Mortgage balance			$ 26,191,000	$ 21,274,000
Current principal due			124,000	118,000
Interest expense			3,538,000	2,255,000	$ 2,490,000
Note payable to Squadron
Debt Instrument [Line Items]
Mortgage balance		$ 20,000,000	19,891,000	19,856,000	20,000,000
Interest expense			4,229,000	2,255,000	2,490,000
Mortgage payable to affiliate
Debt Instrument [Line Items]
Mortgage balance			$ 1,300,000	1,418,000
Interest rate			5.00%
Monthly interest and principal installments			$ 16,000
Current principal due			$ 124,000	$ 118,000
Revolving Credit Facility
Debt Instrument [Line Items]
Revolving credit facility		$ 15,000,000			$ 15,000,000
Debt instrument, interest rate, effective percentage		10.00%			10.00%
Three month LIBOR \| Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		8.61%
Loan Agreement \| Revolving credit facility with Squadron
Debt Instrument [Line Items]
Term loan credit facililty	$ 30,000,000
Interest rate	10.00%
Loan Agreement \| Note payable to Squadron
Debt Instrument [Line Items]
Mortgage balance		$ 20,000,000			$ 20,000,000
Loan Agreement \| Revolving Credit Facility
Debt Instrument [Line Items]
Revolving credit facility		$ 15,000,000			$ 15,000,000
Loan Agreement \| Three month LIBOR \| Revolving credit facility with Squadron
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate	8.61%

GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

Changes in the carrying amount of goodwill in 2019 were as follows:


	Total
Goodwill at January 1, 2019	$	—
Vilex Companies acquisition	$	29,580
Divestiture of Vilex in Tennessee, Inc.	$	(3,397)
Goodwill at December 31, 2019	$	26,183

Schedule of the balances of amortizable intangible assets

As of December 31, 2019, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	17.4 years	$	9,287	$	(363)	$	8,924
Intellectual Property	10.7 years	4,020		(213)		3,807
License agreements	3.4 years	2,765		(1,012)		1,753
Total amortizable assets		$	16,072	$	(1,588)	$	14,484

As of December 31, 2018, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	10.7 years	$	127	$	(60)	$	67
License agreements	5.3 years	2,495		(641)		1,854
Total amortizable assets		$	2,622	$	(701)	1,921

Schedule of amortization expense of amortizable intangible assets

Future amortization expenses are expected as follows:


Year Ending December 31:
2020	$	1,224
2021	1,187
2022	1,147
2023	1,031
2024	1,027
Thereafter	8,868
	$	14,484

GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test.

The qualitative evaluation is an assessment of factors including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. The Company may elect to bypass the qualitative assessment for its one reporting unit and perform a quantitative test. The assumptions used in evaluating goodwill for impairment are subject to change and are tracked against historical results by management.

The quantitative test estimates the fair value of its one reporting unit using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty. Inputs used to fair value the Company's reporting unit are considered inputs of the fair value hierarchy. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could results in a significantly lower or higher fair value assessment. The key assumptions impacting the valuation included the following:

•The reporting unit's financial projections, which are based on management's assessment of regional and macroeconomic variables, industry trends and market opportunities, and the Company's strategic objectives and future growth plans.

•The projected terminal value for the reporting unit, which represents the present value of projected cash flows beyond the last period in the discounted cash flow analysis. The terminal value reflects the Company's assumptions related to long-term growth rates and profitability, which are based on several factors, including local and macroeconomic variables, market opportunities and future growth plans.

•The discount rate used to measure the present value of the projected future cash flows is set using a weighted-average cost of capital method that considers market and industry data as well as the Company's specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by the equity holders of the business enterprise.

The Company elected to perform a qualitative analysis for its reporting unit as of December 31, 2019. The Company determined, after performing the qualitative analysis that there was no evidence that it is more likely than not that the fair value of its reporting unit was less than the carrying amount, therefore, it was not necessary to perform a quantitative impairment test.

Changes in the carrying amount of goodwill in 2019 were as follows:


	Total
Goodwill at January 1, 2019	$	—
Vilex Companies acquisition	$	29,580
Divestiture of Vilex in Tennessee, Inc.	$	(3,397)
Goodwill at December 31, 2019	$	26,183

Intangible Assets

As of December 31, 2019, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	17.4 years	$	9,287	$	(363)	$	8,924
Intellectual Property	10.7 years	4,020		(213)		3,807
License agreements	3.4 years	2,765		(1,012)		1,753
Total amortizable assets		$	16,072	$	(1,588)	$	14,484

As of December 31, 2018, the balances of amortizable intangible assets were as follows:


	Weighted-Average Amortization Period	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Patents	10.7 years	$	127	$	(60)	$	67
License agreements	5.3 years	2,495		(641)		1,854
Total amortizable assets		$	2,622	$	(701)	1,921

Amortization expense was $887, $378 and $246 for the years ended December 31, 2019, 2018 and 2017, respectively. Future amortization expenses are expected as follows:


Year Ending December 31:
2020	$	1,224
2021	1,187
2022	1,147
2023	1,031
2024	1,027
Thereafter	8,868
	$	14,484

Licenses are tied to product launches and do not begin amortizing until the product is launched to the market. Anticipated market launch is in 2020 and 2021 for products for which we obtained licensing in 2019.

Trademarks are non-amortizing intangible assets which were $4,490 and $260 as of December 31, 2019 and 2018, respectively. On June 4, 2019, we acquired the Orthex trademark concurrently with the acquisition of the Vilex Companies, which was valued at $4,230 and recorded in Other Intangible assets, on the Consolidated Balance Sheets.

The Company tests intangible assets with indefinite lives for impairment annually on October 1^st in accordance with relevant authoritative guidance. Based upon the Company's analysis, no impairment chargers were recorded to its intangible assets.

SIGNIFICANT ACCOUNTING POLICIES - Inventories, net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Charges for obsolete inventory	$ 604	$ 504	$ 344

NET LOSS PER SHARE - Reconciliation of basic and diluted net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share [Abstract]
Net loss from continuing operations	$ (4,329)	$ (2,877)	$ (2,459)	$ (3,020)					$ (12,685)	$ (12,025)	$ (8,932)
Net loss from discontinued operations									(1,046)	0	0
Net loss	(5,429)	(2,664)	(2,618)	(3,020)	$ (2,468)	$ (1,865)	$ (2,692)	$ (5,000)	(13,731)	(12,025)	(8,932)
Accretion of cumulative dividends of redeemable preferred stock to redemption value									0	0	(4,563)
Other Preferred Stock Dividends and Adjustments									0	0	5,965
Series A Preferred Stock preference payment in common stock									0	0	(16,000)
Net loss attributable to common stockholders - basic and diluted	$ (5,429)	$ (2,664)	$ (2,618)	$ (3,020)	$ (2,468)	$ (1,865)	$ (2,692)	$ (5,000)	$ (13,731)	$ (12,025)	$ (23,530)
Weighted average number of shares - basic and diluted (in shares)									14,624,194	12,567,387	4,017,330
Net loss from continuing operations per share attributable to common stockholders - basic and diluted (in dollars per share)	$ (0.29)	$ (0.19)	$ (0.17)	$ (0.21)					$ (0.87)	$ (0.96)	$ (5.86)
Net loss from discontinued operations per share attributable to common stockholders - basic and diluted (in dollars per share)	(0.07)	(0.01)	0.01	0					(0.07)	0	0
Net loss per share attributable to common stockholders - basic and diluted (in dollars per share)	$ (0.36)	$ (0.20)	$ (0.16)	$ (0.21)	$ (0.19)	$ (0.15)	$ (0.21)	$ (0.41)	$ (0.94)	$ (0.96)	$ (5.86)

STOCKHOLDERS' EQUITY - Stock Options (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, granted (in shares)	0	0	0
Options
Exercised (in shares)	(38,920)	(14,213)
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, granted (in shares)	0	0	0
Options
Outstanding at period start (in shares)	70,628	112,094	176,959	248,201
Forfeited or expired (in shares)	(2,546)	(50,652)	(71,242)
Outstanding at period end (in shares)	112,094	176,959	248,201
Weighted-Average Exercise Price
Outstanding at period start, weighted-average exercise price (in dollars per share)	$ 30.32	$ 29.42	$ 23.81
Forfeited or expired, weighted-average exercise price (in dollars per share)	27.61	27.61	9.85
Exercised (in dollars per share)	29.30	29.85
Outstanding at period end, weighted-average exercise price (in dollars per share)	$ 30.97	$ 30.32	$ 29.42	$ 23.81
Weighted-Average Remaining Contractual Terms (in Years)
Weighted-Average Remaining Contractual Terms (in Years)	1 year 2 months 12 days	1 year 9 months 18 days	2 years	2 years 4 months 24 days
Vesting period (in years)	3 years
Stock-based compensation expense	$ 0	$ 0	$ 0