11 key notes on K2M's 2014 financial report — Gross profit up 15.4%

Spinal Tech

K2M reported revenue growth in 2014.

Here are 11 key concepts from K2M's fourth quarter and full year 2014 financial report.

 

1. Revenue was up 15.7 percent in the fourth quarter and 18.5 percent in the full year, reaching $186.7 million in 2014.

 

2. Broken down, the different business lines in the United States reported revenue growth:

 

• Complex spine: 16.3 percent
• Minimally invasive: 12.3 percent
• Degenerative: 24.5 percent

 

3. International revenue was up 16.9 percent to $53.6 million last year. In the fourth quarter, however, international revenue was down 2.6 percent.

 

4. The FDA cleared K2M's CAPRI Corpectomy Cage System, which also received the CE Mark in the fourth quarter.

 

5. Gross profit increased in the fourth quarter 21.2 percent to $33.1 million.

 

6. Loss from operations in the fourth quarter was $8.6 million, down from $12.7 million in the previous year. Net loss attributable to common stock shareholders in the quarter was $11.1 million, down from $17.6 million last year.

 

7. Cash and cash equivalents were $11.4 million at the end of the fourth quarter, compared to $7.4 million in the previous year.

 

8. For the full year, gross profit was up 15.4 percent to $123.9 million. The gross margin decreased from 68.2 percent to 66.4 percent due to changes in product mix sold in the United States and a pricing decline in the United States as well as select international markets.

 

9. The operating expenses for the full year increased 12.8 percent to $171.8 million, due to increased sales and marketing expenses from hiring direct sales employees. The company also reported increased research and development expenses related to development activities.

 

10. K2M expects a $38 million to $34 million net loss in 2015, which is lower than in 2014.

 

11. Total expected revenues for 2015 are $214 million to $218 million, which would be a 15 percent to 17 percent growth.

 

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