K2M posted 3Q17 revenue of US $62.7MM, +5.6% vs. 3Q16, and YTD revenue of $190.3MM, +8.8% vs. the prior year. ORTHOWORLD estimates for segment growth follow.
3Q17 | 3Q16 | $ Change | % Change | |
Spine | $60.5 | $57.4 | $3.1 | 5.4% |
Orthobiologics | $2.2 | $1.9 | $0.2 | 12.5% |
Total | $62.7 | $59.3 | $3.3 | 5.6% |
9Mo17 | 9Mo16 | $ Change | % Change | |
Spine | $183.8 | $169.3 | $14.5 | 8.6% |
Orthobiologics | $6.4 | $5.6 | $0.9 | 15.9% |
Total | $190.3 | $174.8 | $15.4 | 8.8% |
K2M packed a lot of activity into 3Q17, announcing a little bit of everything: products launched, products cleared, agreements and acquisitions. Revenue was driven by higher sales volume from new U.S. customers, partially offset by a decrease in sales to existing U.S. and U.K. customers and reduced revenue in Japan.
Slower-than-expected onboarding of U.S. distribution partners and the effects of the hurricanes also contributed to lower revenue growth, as did the overall softness in U.S. procedures that has been acknowledged by everyone selling spine in the U.S. For the year, the impact of weather is expected to be ~$2MM, most of which was handled in 3Q. The new distribution partners continue to come from larger players: JNJ, Medtronic, Stryker and Zimmer, and these are larger agents, thus it takes longer to get through contract negotiations, training, moving large amounts of inventory, gaining access into their hospitals, etc.
Regulatory clearances included 510(k) and CE Mark approval for the NILE proximal fixation system and FDA 510(k) for the YUKON OCT system. The EVEREST Minimally Invasive XTower instrumentation system launched.
K2M entered into a long-term exclusive agreement with Japan Medicalnext for distribution into Japan, and also entered a global compatibility and co-marketing agreement with Brainlab—more on the latter in a moment.
Two acquisitions occurred: one for exclusive license to a portfolio of 17 issued and pending patents for expandable interbody technology, and the other a purchase of the PALO ALTO cervical static corpectomy cage from Cardinal Spine. The patents will be developed with K2M’s 3D printing technologies, and PALO ALTO represents what is reportedly the only static corpectomy cage on the market to receive an FDA clearance for cervical application.
With Brainlab, K2M gains access to over 5,300 navigation systems already installed, worldwide. The two companies will collaborate on future K2M navigated systems that will be compatible with these 5,000+ systems.
“Think about that…anybody new coming to market with any of those types of technologies (navigation, robotics, imaging), and how long it takes one at a time, even ten at a time to get to an installed base of over 5,000 units. With that installed base, we now are able to…really go head to head with the other players in this space; the other primary player has been Medtronic. We think that it puts us in a very unique and important position going forward.”—Eric Major, President and CEO, K2M
Source: K2M, Inc.; ORTHOWORLD Inc. estimates
K2M posted 3Q17 revenue of US $62.7MM, +5.6% vs. 3Q16, and YTD revenue of $190.3MM, +8.8% vs. the prior year. ORTHOWORLD estimates for segment growth follow.
Q17
Q16
$ Change
% Change
Spine
$60.5 ...
K2M posted 3Q17 revenue of US $62.7MM, +5.6% vs. 3Q16, and YTD revenue of $190.3MM, +8.8% vs. the prior year. ORTHOWORLD estimates for segment growth follow.
3Q17 | 3Q16 | $ Change | % Change | |
Spine | $60.5 | $57.4 | $3.1 | 5.4% |
Orthobiologics | $2.2 | $1.9 | $0.2 | 12.5% |
Total | $62.7 | $59.3 | $3.3 | 5.6% |
9Mo17 | 9Mo16 | $ Change | % Change | |
Spine | $183.8 | $169.3 | $14.5 | 8.6% |
Orthobiologics | $6.4 | $5.6 | $0.9 | 15.9% |
Total | $190.3 | $174.8 | $15.4 | 8.8% |
K2M packed a lot of activity into 3Q17, announcing a little bit of everything: products launched, products cleared, agreements and acquisitions. Revenue was driven by higher sales volume from new U.S. customers, partially offset by a decrease in sales to existing U.S. and U.K. customers and reduced revenue in Japan.
Slower-than-expected onboarding of U.S. distribution partners and the effects of the hurricanes also contributed to lower revenue growth, as did the overall softness in U.S. procedures that has been acknowledged by everyone selling spine in the U.S. For the year, the impact of weather is expected to be ~$2MM, most of which was handled in 3Q. The new distribution partners continue to come from larger players: JNJ, Medtronic, Stryker and Zimmer, and these are larger agents, thus it takes longer to get through contract negotiations, training, moving large amounts of inventory, gaining access into their hospitals, etc.
Regulatory clearances included 510(k) and CE Mark approval for the NILE proximal fixation system and FDA 510(k) for the YUKON OCT system. The EVEREST Minimally Invasive XTower instrumentation system launched.
K2M entered into a long-term exclusive agreement with Japan Medicalnext for distribution into Japan, and also entered a global compatibility and co-marketing agreement with Brainlab—more on the latter in a moment.
Two acquisitions occurred: one for exclusive license to a portfolio of 17 issued and pending patents for expandable interbody technology, and the other a purchase of the PALO ALTO cervical static corpectomy cage from Cardinal Spine. The patents will be developed with K2M’s 3D printing technologies, and PALO ALTO represents what is reportedly the only static corpectomy cage on the market to receive an FDA clearance for cervical application.
With Brainlab, K2M gains access to over 5,300 navigation systems already installed, worldwide. The two companies will collaborate on future K2M navigated systems that will be compatible with these 5,000+ systems.
“Think about that…anybody new coming to market with any of those types of technologies (navigation, robotics, imaging), and how long it takes one at a time, even ten at a time to get to an installed base of over 5,000 units. With that installed base, we now are able to…really go head to head with the other players in this space; the other primary player has been Medtronic. We think that it puts us in a very unique and important position going forward.”—Eric Major, President and CEO, K2M
Source: K2M, Inc.; ORTHOWORLD Inc. estimates
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JV
Julie Vetalice is ORTHOWORLD's Editorial Assistant. She has covered the orthopedic industry for over 20 years, having joined the company in 1999.