Orthofix Medical Inc. Stock Compensation Disclosure

18. Share-based compensation

At December 31, 2025, and 2024, the Company had stock option, award, and stock purchase plans.

Merger with SeaSpine

Pursuant to the Merger Agreement, the equity awards of SeaSpine (including stock options and restricted stock units) outstanding as of immediately prior to the closing of the Merger were converted into equity awards denominated in shares of Orthofix common stock. The Company issued options to purchase 1.9 million shares of Orthofix common stock and 0.5 million shares of time-based vesting restricted stock in connection with the conversion of such awards. The estimated fair value of the portion of the SeaSpine equity awards for which the required service period had been completed at the time of the closing of the Merger was treated as purchase consideration. The remaining estimated fair value is recorded as compensation expense over the remainder of the service period associated with the awards.

In addition, as part of the Merger, the Board determined to treat the transaction as a "Change in Control" under applicable agreements and equity plans. Thus, in January 2023, all outstanding and previously granted performance-based and market-based restricted stock units became time-based restricted stock units with the performance goals deemed achieved at the target level of 100%.

2012 Long Term Incentive Plan

The Board adopted the Amended and Restated 2012 Long-Term Incentive Plan (the "2012 LTIP") on April 23, 2018, which was subsequently approved by shareholder ratification. The 2012 LTIP provides for the grant of options to purchase shares of the Company’s common stock, stock awards (including restricted stock, unrestricted stock, and stock units), stock appreciation rights, performance-based awards, and other equity-based awards. All of the Company’s employees and the employees of the Company’s subsidiaries and affiliates are eligible and may receive awards under the 2012 LTIP. In addition, the Company’s non-employee

directors, consultants, and advisors who perform services for the Company and its subsidiaries and affiliates may receive awards under the 2012 LTIP. Awards granted under the 2012 LTIP expire no later than ten years after the date of grant. At December 31, 2025, the Company reserves a total of 16.3 million shares of common stock for issuance pursuant to the 2012 LTIP, subject to certain adjustments set forth in the 2012 LTIP. At December 31, 2025, there were 2.4 million options outstanding under the 2012 LTIP, of which 1.4 million were exercisable. In addition, there were 2.2 million restricted stock units outstanding, some of which contain performance-based vesting conditions, under the 2012 LTIP as of December 31, 2025.

SeaSpine 2015 Plan

Pursuant to the Merger Agreement, the Company assumed awards outstanding under the SeaSpine Holdings Corporation Amended and Restated 2015 Incentive Award Plan Award Plan (the "SeaSpine 2015 Plan"). The SeaSpine 2015 Plan provides for the grant of options to purchase shares of the Company’s common stock, stock awards (including restricted stock, unrestricted stock, and stock units), stock appreciation rights, performance-based awards and other equity-based awards. All of the Company’s employees and the employees of the Company’s subsidiaries and affiliates are eligible and may receive awards under the SeaSpine 2015 Plan. In addition, the Company’s non-employee directors, consultants, and advisors who perform services for the Company and its subsidiaries and affiliates may receive awards under the SeaSpine 2015 Plan. At December 31, 2025, the Company reserves a total of 3.0 million shares of common stock for issuance pursuant to the SeaSpine 2015 Plan, subject to certain adjustments set forth in the SeaSpine 2015 Plan. At December 31, 2025, there were 0.7 million options outstanding under the SeaSpine 2015 Plan, of which 0.4 million were exercisable. In addition, there were 0.5 million restricted stock units outstanding, some of which contain performance-based vesting conditions, under the SeaSpine 2015 Plan as of December 31, 2025.

Inducement Plans

As an inducement to accept employment, the Company has periodically granted inducement awards to new employees and has also assumed inducement awards that were granted by SeaSpine prior to the Merger. During 2025, there were no inducement awards granted. Under all inducement plans, as of December 31, 2025, there were 1.5 million options outstanding, of which 0.6 million were exercisable, and 1.0 million unvested restricted stock units outstanding, some of which contain performance-based vesting conditions.

Stock Purchase Plan

The Second Amended and Restated Stock Purchase Plan, as Amended (the "Stock Purchase Plan") provides for the issuance of shares of the Company’s common stock to eligible employees and directors of the Company and its subsidiaries that elect to participate in the plan and acquire shares of common stock through payroll deductions (including executive officers).

During each purchase period, eligible employees may designate between 1% and 25% of their compensation to be deducted for the purchase of common stock under the plan (or such other percentage in order to comply with regulations applicable to employees domiciled in or resident of a member state of the European Union). For eligible directors, the designated percentage will be applied to an amount equal to his or her director compensation paid in cash for the current plan period. The purchase price of the shares under the plan is equal to 85% of the fair market value on the first day of the plan period or, if lower, on the last day of the plan period.

Due to the compensatory nature of such plan, the Company records the related share-based compensation expense in the consolidated statement of operations. Compensation expense is estimated using the Black-Scholes valuation model, with such value recognized as expense over the plan period. As of December 31, 2025, the aggregate number of shares reserved for issuance under the Stock Purchase Plan is 4.9 million. As of December 31, 2025, a total of 3.8 million shares had been issued pursuant to the Stock Purchase Plan.

Share-Based Compensation Expense

Share-based compensation expense is recorded in the same line of the consolidated statements of operations as the employee’s cash compensation. The following tables present the detail of share-based compensation expense by line item in the consolidated statements of income as well as by award type, for the years ended December 31, 2025, 2024, and 2023:

The income tax benefit related to this expense was $5.5 million, $5.8 million, and $5.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Stock Options

The expected term of the options granted is estimated based on a number of factors, including the vesting and expiration terms of the award, historical employee exercise behavior for both options that are currently outstanding and options that have been exercised or are expired, and an employee’s average length of service. Expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is determined based upon a constant U.S. Treasury security rate with a contractual life that approximates the expected term of the option.

Certain of the Company's outstanding stock options contain market-based vesting conditions. The fair value of market-based stock options is determined at the date of the grant using the Monte Carlo valuation methodology. The Monte Carlo methodology incorporates into the valuation the possibility that the market condition may not be satisfied. Such value is recognized over the three-year service period, net of actual forfeitures.

As of December 31, 2025, the unamortized compensation expense relating to options granted and expected to be recognized was $5.3 million. This amount is expected to be recognized through March 2029 over a weighted average period of approximately 1.0 years. The total intrinsic value of options exercised for each of the years ended December 31, 2025, 2024, and 2023 was less than $0.1 million, respectively. For the year ended December 31, 2025, the Company received $0.4 million cash from stock option exercises, and realized less than $0.1 million in tax benefit for the tax deductions from stock option exercises. The aggregate intrinsic value of options outstanding and options exercisable as of December 31, 2025, is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices lower than $15.16, the closing price of the Company’s stock on December 31, 2025. The aggregate intrinsic value of options outstanding was $3.0 million as of December 31, 2025. The aggregate intrinsic value of options exercisable was $0.9 million as of that date.

Time-based Restricted Stock Awards and Stock Units

Compensation expense for time-based restricted stock awards and stock units, which represents the fair value of the stock measured at the market price at the date of grant, is recognized on a straight-line basis over the vesting period, which is typically three to four years, net of actual forfeitures.

The aggregate fair value of time-based restricted stock awards and stock units that vested during the years ended December 31, 2025, 2024, and 2023, was $12.4 million, $13.3 million, and $17.2 million, respectively. Unamortized compensation expense related to time-based restricted stock awards and stock units amounted to $15.3 million at December 31, 2025. This amount is expected to be recognized through December 2028 over a weighted average period of approximately 1.5 years. The aggregate intrinsic value of time-based restricted stock awards and stock units outstanding was $30.1 million as of December 31, 2025.

Performance-based and Market-based Restricted Stock Units

Certain of the Company's outstanding restricted stock units contain performance-based vested conditions or market-based vesting conditions. As previously discussed, in January 2023 all then outstanding performance-based and market-based restricted stock units became time-based restricted stock units with the performance goals deemed achieved at the target level of 100% upon completion of the Merger based on the Board of Directors' determination to treat the transaction as a "Change in Control" under applicable agreements and equity plans.

The fair value of performance-based restricted stock units is calculated based upon the closing stock price at the date of grant. Such value is recognized as expense over the requisite service period beginning in the period in which they are deemed probable to vest, net of actual forfeitures. Vesting probability is assessed based upon forecasted financial metrics or applicable milestones associated with the applicable grant.

The fair value of market-based restricted stock units is determined at the date of the grant using the Monte Carlo valuation methodology, with any discounts for post-vesting restrictions estimated using the Chaffe Model. The Monte Carlo methodology incorporates into the valuation the possibility that the market condition may not be satisfied. Such value is recognized on a straight-line basis over the vesting period, net of actual forfeitures.

The fair value of performance-based and/or market-based restricted stock units that vested and settled during each of the years ended December 31, 2025, 2024, and 2023, totaled less than $0.1 million, respectively. Unamortized compensation expense for performance-based and/or market-based restricted stock units totaled $16.3 million at December 31, 2025, and is expected to be recognized over a weighted average period of approximately 1.5 years. The aggregate intrinsic value of performance-based restricted stock units outstanding was $25.0 million as of December 31, 2025.