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K2M Reports 2014 Revenue Growth Of 18.5% Fourth Quarter And Full Year 2014 Financial Results; Fourth Quarter Complex Spine Growth Of 20.5% Year-Over-Year

Published: Mar 19, 2015

LEESBURG, Va., March 18, 2015 (GLOBE NEWSWIRE) -- 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 technologies, techniques and minimally invasive procedures, today reported financial results for the fourth quarter and fiscal year ended December 31, 2014.

Fourth Quarter Highlights:

  • Total revenue of $49.3 million, up 15.7% year-over-year. Total revenue increased 16.2% year-over-year on a constant currency basis.
  • Domestic revenue of $35.7 million, up 24.6% year-over-year
    • U.S. Complex Spine growth of 20.5% year-over-year
    • U.S. Minimally Invasive Surgery (MIS) growth of 24.1% year-over-year
    • U.S. Degenerative growth 28.4% year-over-year
  • International revenue of $13.6 million, down 2.6% year-over-year. International revenue declined 1.1% year-over-year on a constant currency basis.
  • Announced 510(k) clearance by the U.S. Food and Drug Administration (FDA) and CE Mark for CAPRI™ Corpectomy Cage System in November 2014.

Fiscal Year Revenue Highlights:

  • Total revenue of $186.7 million, up 18.5% year-over-year. Total revenue increased 18.1% year-over-year on a constant currency basis.
  • Domestic revenue of $133.1 million, up 19.1% year-over-year
    • U.S. Complex Spine growth of 16.3% year-over-year
    • U.S. Minimally Invasive growth of 12.3% year-over-year
    • U.S. Degenerative growth 24.5% year-over-year
  • International revenue of $53.6 million, up 16.9% year-over-year. International revenue growth increased 15.7% year-over-year on a constant currency basis.

Highlights Subsequent to Fiscal Year-End:

  • Announced 510(k) clearance from the FDA for the MESA® 2 Deformity Spinal System, the Company's next generation pedicle screw system designed to address the most complex spinal pathologies, on January 21, 2015.
  • Announced the closing of a follow-on offering on February 6, 2015 of 6,951,738 shares of common stock at a price of $18.75 per share, consisting of 2,044,990 shares sold by the Company and 4,906,748 shares sold by certain selling stockholders, including 906,748 shares sold by such selling stockholders pursuant to the underwriters' option to purchase additional shares.

"Our financial results for the fourth quarter of 2014 reflect growth of 16.2% year-over-year fueled primarily by strong growth in each of our procedure categories in the United States," said President and Chief Executive Officer, Eric Major. "Specifically, revenue increased 20.5% year-over-year in U.S. Complex Spine, 24.1% in U.S. MIS, and 28.4% in U.S. Degenerative. These results represent a continuation of our strong performance in fiscal year 2014-our first as a public company and a year in which we executed on our goal of increasing market penetration and on expansion of our innovative products. We remain focused on increasing our share of the approximately $2.6 billion global complex spine and minimally invasive surgery markets and on driving shareholder value growth going forward."

Fourth Quarter Financial Results

Revenue for the fourth quarter ended December 31, 2014 increased $6.7 million, or 15.7%, to $49.3 million, compared to $42.6 million in the same period of the prior year. Total revenue increased 16.2% year-over-year on a constant currency basis in the fourth quarter. The increase was attributable to procedure growth from new customers in our degenerative, complex spine and MIS products in the U.S.

Geographically, revenue in the United States increased $7.1 million, or 24.6% year-over-year, to $35.7 million, and our international revenue decreased $0.4 million, or 2.6% compared to the same period in the prior year, to $13.6 million. Foreign currency exchange impacted fourth quarter revenue by approximately $220,000, representing approximately 150 basis points of growth year-over-year.

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