Common use of Preliminary Purchase Price Allocation Clause in Contracts

Preliminary Purchase Price Allocation. Refer to the table below for the preliminary calculation of estimated value of the acquisition consideration: (in thousands, except per share amounts) NOTE Amount (Rounded) Cash consideration: Cash consideration paid to Vilex and Orthex stockholders pursuant to the equity interest purchase agreement $ 40,210 Share consideration: OrthoPediatrics common shares issued 245,352 Volume weighted average share price of OrthoPediatrics for the 30 days ending on May 30, 2019 $ 40.76 Estimated value of OrthoPediatrics common shares issued to Vilex and Orthex equity holders pursuant to the equity interest purchase agreement 10,000 Estimated payment of Vilex Companies transaction related costs 261 Fund escrow and payment of related agent fees (ii) 3,001 Working capital adjustment 275 Preliminary fair value of estimated total acquisition consideration $ 60,276 (i) Per the equity interest purchase agreement, the Company was required to pay each person to whom either or both of the Vilex Companies owes funded indebtedness as of closing. (ii) Per the equity interest purchase agreement, $3,000 was deposited into escrow for a period of up to twenty months to cover certain indemnification obligations of the Vilex Companies and to secure certain closing adjustments. The preliminary estimated acquisition consideration as shown in the table above is allocated to the tangible and intangible assets acquired and liabilities assumed of the Vilex Companies based on their preliminary estimated fair values. The following table sets forth a preliminary allocation of the acquisition consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the Vilex Companies using the Vilex Companies' unaudited combined balance sheet as of June 4, 2019, with the excess recorded to goodwill: Preliminary fair value of estimated total acquisition consideration $ 60,276 Cash and cash equivalents 348 Trade receivables 1,849 Inventory 3,905 Prepaid expenses and other current assets 12 Property and equipment 7,541 Intangible assets 18,260 Operating lease right-of-lease asset 323 Total assets 32,238 Accounts payable and accrued liabilities 564 Operating lease liabilities 323 Other long-term liabilities 68 Total liabilities 955 Less: net assets 31,283 Goodwill $ 28,993 Refer to the items below for a reconciliation of the adjustments reflected in the unaudited pro forma condensed combined statements of operations: (a) General and administrative operating expenses have been adjusted as follows: Represents the removal of $20 and $48 of amortization expense on the historical Vilex Companies' intangible assets offset by $38 and $92 of amortization expense on the newly acquired intangible assets for the period ended June 4, 2019 and year ended December 31, 2018, respectively. The newly acquired intangible assets consist of trademarks/names, patents, internally developed software, customer relationships and non-competition agreements and are amortized on estimated useful lives ranging from 5 to 15 years. The trademarks/names have an indefinite life. Additional expenses of $37 and $89 were recorded related to the operating lease right-of-use asset amortization recorded as rent expense for the period ended June 4, 2019 and the year ended December 31, 2018, respectively. One-time transaction costs of $385 incurred by the Vilex Companies and $589 incurred by the Company related to the acquisition of the Vilex Companies were removed in the six months ended June 30, 2019. No transaction costs were incurred or adjusted during the year ended December 31, 2018. (b) Historial interest expense has been adjusted as follows: Represents the increased interest expense for the six months ended June 30, 2019 and the year ended December 31, 2018 of approximately $1,361 and $2,971, respectively. For these unaudited pro forma condensed combined financial statements, the Company assumes the Term Loan A and B has a weighted average interest rate of 10.94%. Based on the principal amounts of Term Loan B assumed to be issued, a 1/8% increase (decrease) in the annual interest rates on the debt assumed to be issued would cause the net earnings to (decrease) increase for the six months ended June 30, 2019 by ($32) and $32, respectively, and for the year ended December 31, 2018 by ($63) and $63, respectively. Represents the elimination of interest expense on the existing Vilex Companies loans which were paid in full with the acquisition proceeds, decreasing interest expense by $135 and $265 for the six months ended June 30, 2019 and the year ended December 31, 2018, respectively. (c) The pro forma basic and diluted earnings per share calculations are based on the basic and diluted weighted average shares of the Company plus shares issued as part of the acquisition. The pro forma basic and diluted weighted average shares outstanding are a combination of historical weighted average shares of the Company's common stock and the share impact of the acquisition.

Preliminary Purchase Price Allocation. Refer to the table below for the preliminary calculation of estimated value of the acquisition consideration: (in thousands, except per share amounts) NOTE Amount (Rounded) Cash consideration: Cash consideration paid to Vilex and Orthex stockholders pursuant to the equity interest purchase agreement $ 40,210 Share consideration: OrthoPediatrics common shares issued 245,352 Volume weighted average share price of OrthoPediatrics for the 30 days ending on May 30, 2019 $ 40.76 Estimated value of OrthoPediatrics common shares issued to Vilex and Orthex equity holders pursuant to the equity interest purchase agreement 10,000 Estimated payment of Vilex Companies transaction related costs 261 Fund escrow and payment of related agent fees (ii) 3,001 Working capital adjustment 275 Preliminary fair value of estimated total acquisition consideration $ 60,276 (i) Per the equity interest purchase agreement, the Company was required to pay each person to whom either or both of the Vilex Companies owes funded indebtedness as of closing. (ii) Per the equity interest purchase agreement, $3,000 was deposited into escrow for a period of up to twenty months to cover certain indemnification obligations of the Vilex Companies and to secure certain closing adjustments. The preliminary estimated acquisition consideration as shown in the table above is allocated to the tangible and intangible assets acquired and liabilities assumed of the Vilex Companies based on their preliminary estimated fair values. The following table sets forth a preliminary allocation of the acquisition consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the Vilex Companies using the Vilex Companies' unaudited combined balance sheet as of June 4, 2019, with the excess recorded to goodwill: Preliminary fair value of estimated total acquisition consideration $ 60,276 Cash and cash equivalents 348 Trade receivables 1,849 Inventory Accounts receivable - trade 2,088 Inventories 3,905 Prepaid expenses and other current assets 12 Property and equipment 7,541 Intangible assets 18,260 Operating lease right-of-lease asset 323 Total assets 32,238 32,477 Accounts payable and accrued liabilities 564 Operating lease liabilities 323 Deferred tax liability 2,575 Other long-term liabilities 68 Total liabilities 955 3,530 Less: total net assets 31,283 28,947 Goodwill $ 28,993 31,329 Refer to the items below for a reconciliation of the adjustments reflected in the unaudited pro forma condensed combined statements of operations: (a) General and administrative operating expenses have been adjusted as follows: Represents the removal of $20 and $48 of amortization expense on the historical Vilex Companies' intangible assets offset by $38 69 and $92 of amortization expense on the newly acquired intangible assets for the period ended June 4September 30, 2019 and year ended December 31, 2018, respectively. The newly acquired intangible assets consist of trademarks/names, patents, internally developed software, customer relationships and non-competition agreements and are amortized on estimated useful lives ranging from 5 to 15 years. The trademarks/names have an indefinite life. Additional expenses of $37 67 and $89 were recorded related to the operating lease right-of-use asset amortization recorded as rent expense for the period ended June 4September 30, 2019 and the year ended December 31, 2018, respectively. One-time transaction costs of $385 incurred by the Vilex Companies and $589 737 incurred by the Company related to the acquisition of the Vilex Companies were removed in the six nine months ended June September 30, 2019. No transaction costs were incurred or adjusted during the year ended December 31, 2018. (b) Historial Historical interest expense has been adjusted as follows: Represents the increased interest expense for the six nine months ended June September 30, 2019 and the year ended December 31, 2018 of approximately $1,361 1,929 and $2,971, respectively. For these unaudited pro forma condensed combined financial statements, the Company assumes the Term Loan A and B has a weighted average interest rate of 10.94%. Based on the principal amounts of Term Loan B assumed to be issued, a 1/8% increase (decrease) in the annual interest rates on the debt assumed to be issued would cause the net earnings to (decrease) increase for the six nine months ended June September 30, 2019 by ($3248) and $3248, respectively, and for the year ended December 31, 2018 by ($63) and $63, respectively. Represents the elimination of interest expense on the existing Vilex Companies loans which were paid in full with the acquisition proceeds, decreasing interest expense by $135 and $265 for the six nine months ended June September 30, 2019 and the year ended December 31, 2018, respectively. (c) The pro forma basic and diluted earnings per share calculations are based on the basic and diluted weighted average shares of the Company plus shares issued as part of the acquisition. The pro forma basic and diluted weighted average shares outstanding are a combination of historical weighted average shares of the Company's common stock and the share impact of the acquisition.

Preliminary Purchase Price Allocation. Refer to the table below for the preliminary calculation of estimated value of the acquisition consideration: (in thousands, except per share amounts) NOTE Amount (Rounded) Cash consideration: Cash consideration paid to Vilex and Orthex stockholders pursuant to the equity interest purchase agreement $ 40,210 Share consideration: OrthoPediatrics common shares issued 245,352 Volume weighted average share price of OrthoPediatrics for the 30 days ending on May 30, 2019 $ 40.76 Estimated value of OrthoPediatrics common shares issued to Vilex and Orthex equity holders pursuant to the equity interest purchase agreement 10,000 Estimated payment of Vilex Companies transaction related costs 261 Fund escrow and payment of related agent fees (ii) 3,001 Working capital adjustment 275 183 Preliminary fair value of estimated total acquisition consideration $ 60,27660,184 (i) Per the equity interest purchase agreement, the Company was required to pay each person to whom either or both of the Vilex Companies owes funded indebtedness as of closing. (ii) Per the equity interest purchase agreement, $3,000 was deposited into escrow for a period of up to twenty months to cover certain indemnification obligations of the Vilex Companies and to secure certain closing adjustments. The preliminary estimated acquisition consideration as shown in the table above is allocated to the tangible and intangible assets acquired and liabilities assumed of the Vilex Companies based on their preliminary estimated fair values. The following table sets forth a preliminary allocation of the acquisition consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the Vilex Companies using the Vilex Companies' unaudited combined balance sheet as of June 4, 2019, with the excess recorded to goodwill: Preliminary fair value of estimated total acquisition consideration $ 60,276 60,184 Cash and cash equivalents 348 Trade receivables 1,849 Inventory 3,905 Accounts receivable - trade 2,088 Inventories 3,652 Prepaid expenses and other current assets 12 Property and equipment 7,541 7,540 Intangible assets 18,260 18,770 Operating lease right-of-lease asset 323 Total assets 32,238 32,733 Accounts payable and accrued liabilities 564 563 Operating lease liabilities 323 Deferred tax liability 1,175 Other long-term liabilities 68 Total liabilities 955 2,129 Less: total net assets 31,283 30,604 Goodwill $ 28,993 29,580 Refer to the items below for a reconciliation of the adjustments reflected in the unaudited pro forma condensed combined statements of operations: (a) General and administrative operating expenses have been adjusted as follows: Represents the removal of $20 and $48 of amortization expense on the historical Vilex Companies' intangible assets offset by $38 873 and $92 873 of amortization expense on the newly acquired intangible assets for the period ended June 4, 2019 and year years ended December 31, 2019 and 2018, respectively. The newly acquired intangible assets consist of trademarks/names, patents, internally developed software, customer relationships and non-competition agreements and are amortized on estimated useful lives ranging from 5 to 15 years. The trademarks/names have an indefinite life. Additional expenses of $37 89 and $89 were recorded related to the operating lease right-of-use asset amortization recorded as rent expense for the period ended June 4, 2019 and the year years ended December 31, 2019 and 2018, respectively. One-time transaction costs of $385 incurred by the Vilex Companies and $589 737 incurred by the Company related to the acquisition of the Vilex Companies were removed in the six months year ended June 30December 31, 2019. No transaction costs were incurred or adjusted during the year ended December 31, 2018. (b) Historial Historical interest expense has been adjusted as follows: Represents the increased interest expense for the six months ended June 30, 2019 and the year years ended December 31, 2019 and 2018 of approximately $1,361 1,588 and $2,971, respectively. For these unaudited pro forma condensed combined financial statements, the Company assumes the Term Loan A and B has a weighted average interest rate of 10.94%. Based on the principal amounts of Term Loan B assumed to be issued, a 1/8% increase (decrease) in the annual interest rates on the debt assumed to be issued would cause the net earnings to (decrease) increase for the six months ended June 30, 2019 by ($32) and $32, respectively, and for the year years ended December 31, 2019 and 2018 by ($63) and $63, respectively. Represents the elimination of interest expense on the existing Vilex Companies loans which were paid in full with the acquisition proceeds, decreasing interest expense by $135 and $265 for the six months ended June 30, 2019 and the year years ended December 31, 2019 and 2018, respectively. (c) The pro forma basic and diluted earnings per share calculations are based on the basic and diluted weighted average shares of the Company plus shares issued as part of the acquisition. The pro forma basic and diluted weighted average shares outstanding are a combination of historical weighted average shares of the Company's common stock and the share impact of the acquisition. The 103,518 incremental shares in the year ended December 31, 2019 gives effect to the 245,352 shares issued as consideration for the purchase of the Vilex Companies as if they had been issued on January 1, 2019 as opposed to June 4, 2019.