K2M Group Holdings, Inc. Reports Fourth Quarter U.S. Revenue Growth of 21% and Preliminary Fourth Quarter and Full Year 2016 ...
January 09 2017 - 5:30PM
K2M Group Holdings, Inc. (Nasdaq:KTWO) (the "Company" or "K2M"), a
global medical device company focused on designing, developing and
commercializing innovative and proprietary complex spine and
minimally invasive technologies and techniques, today reported
preliminary financial results for the fourth quarter and full year
ended December 31, 2016.
Fiscal Year 2016 Financial Summary:
- Full year 2016 revenue of $236.1 million to $236.6 million, up
approximately 9% to 10% year-over-year, or approximately 10% to 11%
on a constant currency basis
- The Company continues to expect full year 2016 net loss and
Adjusted EBITDA will be within the range of its previously provided
guidance
Fourth Quarter Revenue
Summary:
- Total Q4 revenue of $61.3 million to $61.8 million, up
approximately 13% to 14% year-over-year
- Domestic Q4 revenue of $47.4 million $47.7 million, up
approximately 21% year-over-year, comprised of:
- U.S. Complex Spine growth in excess of 17% year-over-year
- U.S. Minimally Invasive Surgery (MIS) growth in excess of 35%
year-over-year
- U.S. Degenerative growth of in excess of 18%
year-over-year
- International Q4 revenue of $13.9
million to $14.1 million, down approximately 6% to 7%
year-over-year, or 3% to 4% on a constant currency basis
“Our preliminary financial results for the fourth quarter of
2016 reflect total revenue growth of approximately 14% to 15%
year-over-year on a constant currency basis, driven by U.S. growth
of 21% year-over-year,” said President and Chief Executive Officer,
Eric Major. “We delivered approximately 17% growth in the U.S. in
calendar 2016 and we believe this strong performance reflects the
Company’s success in executing our strategic plan of introducing
innovative spine technologies and expanding our distribution
infrastructure. Our U.S. growth represents the clearest indication
of the continued appreciation from the spine surgeon community for
our differentiated product offerings. Outside the U.S., we
navigated challenging distributor disruptions in Australia and
Japan early in the year, and look forward to building on the
improving results in recent quarters as we return to expected
growth in these markets in 2017. Our strategy is unchanged;
we remain focused on increasing our market share in the spinal
surgery market by leading with innovation and expanding our
distribution footprint. We are confident in our ability to grow our
revenue in the mid-teens in 2017 with improved
profitability.” The financial estimates presented
above are preliminary and remain subject to management's final
review as well as audit by the Company's independent registered
accounting firm. The Company intends to report complete fourth
quarter and full-year 2016 financial results in late February or
early March. Details regarding the timing of the release of those
results, as well as details of a conference call and publicly
available webcast, will be announced in a subsequent press
release.
About K2M Group Holdings, Inc.
K2M Group Holdings, Inc. is a global medical device company
focused on designing, developing and commercializing innovative
complex spine and minimally invasive spine technologies and
techniques used by spine surgeons to treat some of the most
difficult and challenging spinal pathologies. K2M has leveraged
these core competencies to bring to market an increasing number of
products for patients suffering from degenerative spinal
conditions. These technologies and techniques, in combination with
a robust product pipeline, enable the Company in the global spinal
surgery market. Additional information is available online at
www.K2M.com.
Forward-Looking Statements
This press release contains forward-looking statements that
reflect current views with respect to, among other things,
operations and financial performance. Forward-looking
statements include all statements that are not historical facts
such as our statements about our expected financial results and
guidance and our expectations for future business prospects,
including with respect to our international distribution partners
such as those in Australia and Japan. In some cases, you can
identify these forward-looking statements by the use of words such
as "“outlook,” “guidance,” “believes,” “expects,” “potential,”
“continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,”
“intends,” “plans,” “estimates,” “anticipates” or the negative
version of these words or other comparable words. Such
forward-looking statements are subject to various risks and
uncertainties including, among other things: our ability to achieve
or sustain profitability; our ability to successfully demonstrate
the merits of our technologies; pricing pressure from our
competitors, hospitals and changes in third-party coverage and
reimbursement; competition and our ability to develop and
commercialize new products; aggregation of hospital purchasing from
collaboration and consolidation; hospitals and other healthcare
providers may be unable to obtain adequate coverage and
reimbursement for procedures performed using our products; the
safety and efficacy of our products is not yet supported by
long-term clinical data; our dependence on a limited number of
third-party suppliers; our ability to maintain and expand our
network of direct sales employees, independent sales agencies and
international distributors and their level of sales or distribution
activity with respect our products; the proliferation of
physician-owned distributorships; concentration of sales from a
limited number of spinal systems or products that incorporate these
technologies; loss of the services of key members of our senior
management, consultants or personnel; ability to enhance our
product offerings through our research and development efforts;
failure to properly manage our anticipated growth; acquisitions of
or investments in new or complementary businesses, products or
technologies; ability to train surgeons on the safe and appropriate
use of our products; requirements to maintain high levels of
inventory; impairment of our goodwill or intangible assets;
disruptions in our information technology systems; any disruption
or delays in operations at our facilities, including our new
headquarter facility; or an ability to ship a sufficient number of
our products to meet demand; ability to strengthen our brand;
fluctuations in insurance cost and availability; extensive
governmental regulation; in the United States and foreign
jurisdictions; failure to obtain or maintain regulatory approvals
and clearances; requirements for new 510(k) clearances, premarket
approvals or new or amended CE Certificates of Conformity; medical
device reporting regulations in the United States and foreign
jurisdictions; voluntary corrective actions by us or our
distribution or other business partners or agency enforcement
actions; a recall of our products; withdrawal or restrictions on
our products or the discovery of serious safety issues with our
products; possible enforcement action if we engage in improper
marketing or promotion of our products; the misuse or off-label use
of our products; delays or failures in any future clinical
trials; the results of clinical trials; procurement and use
of allograft bone tissue; environmental laws and regulations;
compliance by us or our sales representatives with FDA regulations
or fraud and abuse laws; U.S. legislative or regulatory healthcare
reforms; medical device tax provisions in the healthcare reform
laws; our need to generate significant sales to become profitable;
potential fluctuations in sales volumes and our results of
operations may fluctuate over the course of the year; uncertainty
in our future capital needs; failure to comply with restrictions in
our revolving credit facility; continuing worldwide economic
instability; our inability to protect our intellectual property
rights; our reliance on patent rights that we either license from
others or have obtained through assignments; our patent litigation;
the outcome of potential claims that we, our employees, our
independent sales agencies or our distributors have wrongfully used
or disclosed alleged trade secrets or are in breach of
non-competition or non-solicitation agreements with our
competitors; potential product liability lawsuits; operating risks
relating to our international operations; foreign currency
fluctuations; our ability to comply with the Foreign Corrupt
Practices Act and similar laws associated with our activities
outside the United States; possible conflicts of interest with our
large shareholders; increased costs and additional regulations and
requirements as a result of becoming a public company; our ability
to implement and maintain effective internal control over financial
reporting in the future; the potential impact of any future
acquisitions, mergers, dispositions, joint ventures, investments or
other strategic transactions we may make; and other risks and
uncertainties, including those described under the section entitled
“Risk Factors” in our most recent Annual Report on Form 10-K filed
with the SEC, as such factors may be updated from time to time in
our periodic filings with the SEC, which are accessible on the
SEC’s website at www.sec.gov. Accordingly, there are or will
be important factors that could cause actual outcomes or results to
differ materially from those indicated in these statements.
These factors should not be construed as exhaustive and should be
read in conjunction with the other cautionary statements that are
included in this release and our filings with the SEC.
We operate in a very competitive and challenging
environment. New risks and uncertainties emerge from time to
time, and it is not possible for us to predict all risks and
uncertainties that could have an impact on the forward-looking
statements contained in this release. We cannot assure you
that the results, events and circumstances reflected in the
forward-looking statements will be achieved or occur, and actual
results, events or circumstances could differ materially from those
described in the forward-looking statements.
The forward-looking statements made in this press release relate
only to events as of the date on which the statements are
made. We undertake no obligation to publicly update or review
any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as required
by law. We may not actually achieve the plans, intentions or
expectations disclosed in our forward-looking statements and you
should not place undue reliance on our forward-looking
statements.
Investor Contact:
Westwicke Partners on behalf of K2M Group Holdings, Inc.
Mike Piccinino, CFA
443-213-0500
K2M@westwicke.com
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