K2M reported a 15.5 percent revenue increase in the third quarter of 2015.
Here are eight key notes on the company's financial report:
1. K2M's revenue reached $55 million, up 15.5 percent over the same period last year. Domestic revenue increased 14.8 percent to $39.5 million and international revenue was up 17.5 percent to $15.6 million.
2. Revenue from the United States lines includes:
• Complex spine growth 15 percent year-over-year
• Minimally invasive spine surgery growth 40.8 percent year-over-year
• Degenerative growth 4.6 percent year-over-year
3. Sales volume growth from new surgeon customers in the United States drove the revenue growth. Other driving factors include existing surgeon customers upgrading to newer product offering and growth in international distribution markets, most notably Denmark, Saudi Arabia, Japan and South Africa.
4. K2M's third quarter gross profit increased 19.5 percent, reaching $37.6 million compared to the same period last year. A decrease in expenses associated with customer instrumentation and a reduction in the medical device excise tax due to prior period recoveries drove the growth.
5. The company reported loss from operations at $10 million, down from $12.9 million reported last year. This includes intangible amortization of $2.5 million for the third quarter. Net loss attributable to common stockholders for the third quarter was $10.2 million, or $0.25 per diluted share.
6. Cash and cash equivalents for the third quarter was $43.7 million, compared to $11.4 million in the fourth quarter of 2014. The company reported no outstanding debt and working capital was $115.3 million.
7. K2M expects full year total revenue at $218 million to $220 million, which would be a 17 percent to 18 percent year-over-year growth. This is up from the previous guidance, which was a 15 percent to 17 percent growth.
8. K2M expects fully year net loss to reach $39.5 million to $40.5 million, down from $59.6 million in 2014. Adjusted EBITDA is expected at negative $2 million to $0.
During the third quarter, the company received a 510(k) for the PYRENEES Mono Cervical Plate System and launched the EVEREST Deformity Spinal System in the United States. The company recently received FDA clearance and CE mark for CASCADIA AN and TL Interbody Systems with the Lamellar Titanium Technology, a new proprietary technology with three-dimensional printing.
"We continue to gain market share in the global spine market — posting 17 percent revenue growth on a constant currency basis — and we continue to enhance our foundation for growth by leveraging our development pipeline into new and innovative technology introductions and expanding our distribution capabilities around the world," said CEO Eric Major. "We were very pleased with our performance during the 2015 deformity season, both in terms of strong sales of our portfolio of innovative complex spine products and in terms of continued positive feedback from the spine surgeon community regarding K2M's six differentiated new product introductions in 2015. We look forward to continued strength in our financial results over the balance of fiscal 2015 as we continue to execute against our strategic growth objectives."