K2M Reports 1Q18 Revenue

K2M posted 1Q18 revenue of US $67.9MM, +9.6% vs. 1Q17.

ORTHOWORLD estimates for segment growth follow.

Growth in 1Q18 primarily derived from higher sales volume in U.S. new surgeon users and newer products, as well as increased set investments by distribution partners in Latin America. Factors offsetting growth include price reductions, decreases in existing customer utilization, decreases in legacy product sales, etc.

Within 1Q, the company commenced full launch of the next-generation YUKON™ OCT posterior fixation system, designed to support restoration of cervical sagittal balance in the occipito-cervico-thoracic regions.

K2M increased its full-year guidance from a range of $280MM-$284MM to $283MM-$287MM following partnership with a distributor in Portugal and Spain. After close of 1Q, the company entered an exclusive agency and services agreement overriding one currently in place with Medcomtech, also extending the partnership to 2024. K2M acquired Medcomtech’s spine customer contracts and relationships as well as existing K2M inventory in exchange for outstanding receivables.

Medcomtech will change from stocking to a commission-based independent sales agency. K2M will assume billing and inventory management, while Medcomtech will handle sales and market development. As of May 2018, revenue that K2M generates in the region will reflect supplier relationships at the hospital level, not wholesale.

Finally, we extend best wishes to Lane Major, who has advanced from Chief Strategy Officer to Chief Operating Officer. Congratulations!

Sources: K2M; ORTHOWORLD estimates