1) OrthoPediatrics $KIDS has yet to respond to our report. We think they can't do so without further implicating themselves in the Company's channel stuffing scheme. We believe management and the board of directors owe investors answers to the following 5 questions: 
2) Thus, on December 3, a lone sell side analyst came to $KIDS defense. He began by restating the Company's revenue recognition policy, which suggests that doing actual work on the Company's practices sits well above his pay grade.
3) The analyst glosses over the fact that $KIDS recognizes revenue on shipment, which occurs when (a) replacement product is shipped after surgery, but also (b) when excess product is shipped to distributors who have been induced by $KIDS to do so. We think $KIDS stuffs via (b).
4) The analyst also claims "KIDS did have around 10 direct reps in 2015 but transitioned these to independent agents in 2016." However, $KIDS reps forming distributors was not a one-time event; it's ongoing as recently as June 2020. We think this is hardly a difficult realization
5) The analyst concedes that "KIDS may compensate its distributors and reps with stock" yet $KIDS has never disclosed this practice, let alone explained how distributors receive stock (i.e. via inducements to order excess product from the Company). We find that extremely telling.
6/6) We stand by our original report and remain short $KIDS.
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