K2M reported 3Q18 revenue of $71.4MM, +13.9% vs. 3Q17. With the company’s acquisition by Stryker now complete, there was no earnings press release or analyst call for the quarter.
However, K2M’s SEC 10-Q filing did note brisk business with new surgeons in the U.S., driven in part by products like YUKON Occipital-Cervico-Thoracic (OCT) spinal fixation and EVEREST systems, the OZARK anterior cervical plate and increased usage of CASCADIA interbody products. Offsets in the quarter were unfavorable price changes and decreased usage of the MESA deformity spinal system.
International revenue growth was driven by new set investments by distributors in South Africa and Japan, as well as increased surgical activity in Ireland. The transition to direct agent markets in Spain and Portugal also had a beneficial impact.
ORTHOWORLD estimates 3Q18 and YTD segment sales and growth on an as-reported basis as follows.
| 3Q18 | 3Q17 | $ Change | % Change |
| Spine | $68.9 | $60.5 | $8.4 | 13.9% |
| Orthobiologics | $2.5 | $2.2 | $0.3 | 14.6% |
| Total | $71.4 | $62.7 | $8.7 | 13.9% |
| YTD18 | YTD17 | $ Change | % Change |
| Spine | $205.5 | $183.8 | $21.6 | 11.8% |
| Orthobiologics | $7.4 | $6.4 | $0.9 | 14.3% |
| Total | $212.8 | $190.3 | $22.6 | 11.9% |
K2M’s revenue by geographic region is as follows.
| Geographic Region | 3Q18 | 3Q17 | $ Change | % Change |
| US | $52.49 | $48.5 | $4.0 | 8.3% |
| Ex-US | $18.87 | $14.2 | $4.7 | 33.1% |
| Total | $71.4 | $62.7 | $8.7 | 13.9% |
Net earnings for 3Q18 are as follows.
| 3Q18 | Amount ($MM) | % of Sales |
| Sales | $71.4 | |
| Cost of Sales | -$25.8 | 36.1% |
| Sales and Marketing | -$34.5 | 48.3% |
| Administrative | -$18.2 | 25.6% |
| R&D | -$5.7 | 7.9% |
| Other | -$3.0 | 4.3% |
| Net Earnings | -$15.8 | -22.2% |
Sources: K2M; ORTHOWORLD estimates. All revenue figures presented in USD $MM.
Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.
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