LEESBURG, Va., March 03, 2016 (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 and minimally invasive technologies and techniques, today reported financial results for the fiscal year and fourth quarter ended December 31, 2015.
“2015 marked another year of strong revenue performance and significant product innovation for K2M,” said President and Chief Executive Officer, Eric Major. “We achieved 17% revenue growth on a constant currency basis and we obtained 510(k) clearances for eight strategically or commercially significant products and product line extensions. This was an important year for our Complex Spine business in particular, as defined by the new product releases of our MESA® 2 Deformity Spinal System for Adolescent Idiopathic Scoliosis patients, our EVEREST® Deformity Spinal System for adult deformity patients, our NILE™ Alternative Fixation System and our CAPRI™ Corpectomy Cage System.”
Mr. Major continued, “Looking forward, our significant product innovation in 2015 will drive the strong revenue growth we expect in fiscal year 2016, which is reflected in our full-year revenue guidance of 14% to 16% growth on an as reported basis. Importantly, we are also focused on improving the profitability of our Company—evidenced by our improved EBITDA performance in fiscal year 2015—and we remain committed to generating GAAP net income during fiscal year 2017.”
Fiscal Year 2015 Financial Results
Total revenue for fiscal year 2015 increased $29.3 million, or 15.7%, to $216.0 million, compared to $186.7 million in fiscal year 2014. Total revenue increased 16.9% year-over-year on a constant currency basis. The increase was primarily driven by $22.2 million in greater sales volume in the United States due to continued expansion of the Company’s customer base and new product introductions representing revenue of $11.2 million in the United States, and $5.2 million in growth in the Company’s international distributor markets.
Revenue in the United States increased $22.2 million, or 16.7% year-over-year, to $155.3 million, and international revenue increased $7.2 million, or 13.4% year-over-year, to $60.7 million. Fiscal year 2015 international revenue increased 17.7% year-over-year on a constant-currency basis.
By procedure category, U.S. revenue in the Company’s Complex Spine, MIS and degenerative categories represented 40.8%, 15.2% and 44.0% of U.S. revenue, respectively, for the twelve months ended December 31, 2015.
Gross profit for fiscal year 2015 increased 16.4% to $144.2 million, compared to $123.9 million for fiscal year 2014. Gross margin increased to 66.8% from 66.4% last year, due to decreased expenses associated with our custom instruments and a reduction in our medical device excise tax due to expected prior period recoveries.
Operating expenses for fiscal year 2015 increased $8.7 million, or 5.0%, to $180.5 million, compared to $171.8 million for fiscal year 2014. The increase in operating expenses was driven primarily by increased sales and marketing expenses due to the hiring of direct sales employees and an increase in R&D expenses related to development activities in the product pipeline, offset partially by lower amortization expense on intangible assets.
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.
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