K2M expects to report a 6 percent increase in third quarter revenue, totaling $62.7 million, lower than expected.
"Our preliminary third quarter revenue performance was driven by slower than planned acceleration of new distribution in the U.S., disruption of account activity and canceled procedures related to the hurricanes in Texas, Florida and to a lesser extent, Puerto Rico, in early September," said CEO Eric Major. "Third quarter deformity trends were strong in July and August and we experienced strong headwinds in September. U.S. sales growth in our degenerative procedures category contributed to be fueled by our new product introductions including our industry-leading 3D-printed portfolio, offset partially by modestly weaker procedure volumes as compared to last year."
Here is the breakdown of expected revenue from each U.S. line:
• Complex spine: 3 percent growth
• Degenerative: 5 percent growth
• Minimally invasive: 14 percent growth
The international revenue was also up 6 percent in the third quarter, reaching $14.2 million. The company updated its 2017 guidance to reflect a softer sales performance in the third quarter and during the first nine months of the year. The company estimated around $2 million negative impact in revenue from the hurricanes.
Previous projections estimated 11 percent to 14 percent revenue growth for 2017 and mid-teen growth in the U.S. K2M now expects 8 percent to 9 percent year-over-year revenue growth reaching $255 million to $257 million. The new projections place U.S. growth at 8 percent to 9 percent for the full year. However, Mr. Major is still optimistic.
"We remain confident in our ability to drive above-market growth in the U.S., fueled by our focus on introducing new and innovative spinal implant solutions to help surgeons care for patients around the world who suffer from debilitating spinal pathologies," he said.