DOCUMENT_AND_ENTITY_INFORMATIO
DOCUMENT AND ENTITY INFORMATION DOCUMENT AND ENTITY INFORMATION | 3 Months Ended | |
Mar. 31, 2014 | 13-May-14 | |
Entity [Abstract] | ' | ' |
Entity Registrant Name | 'K2M Group Holdings, Inc. | ' |
Entity Central Index Key | '0001499807 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 37,085,906 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $11,146 | $7,419 |
Accounts receivable, net | 33,226 | 32,824 |
Inventory, net | 43,925 | 39,223 |
Deferred income taxes | 6,736 | 8,824 |
Prepaid expenses and other current assets | 8,320 | 3,984 |
Total current assets | 103,353 | 92,274 |
Property and equipment, net | 3,233 | 2,978 |
Goodwill and intangible assets, net | 178,739 | 186,270 |
Other assets, net | 16,529 | 15,414 |
Total assets | 301,854 | 296,936 |
Current liabilities: | ' | ' |
Bank line of credit | 23,500 | 23,500 |
Accounts payable | 22,770 | 17,069 |
Accrued expenses | 8,118 | 8,760 |
Accrued payroll liabilities | 8,694 | 10,396 |
Total current liabilities | 63,082 | 59,725 |
Notes to stockholders | 34,351 | 19,650 |
Deferred income taxes | 11,996 | 14,084 |
Other liabilities | 174 | 211 |
Total liabilities | 109,603 | 93,670 |
Commitments and contingencies | ' | ' |
Stockholders’ equity: | ' | ' |
Common stock, $0.001 par value, 100,000,000 shares authorized; 22,421,509, 22,664,310 and 37,066,337 shares issued and outstanding at December 31, 2013, March 31, 2014, and Pro forma March 31, 2014, respectively | 23 | 22 |
Additional paid-in capital | 168,288 | 165,651 |
Accumulated other comprehensive loss | -1,006 | -920 |
Accumulated deficit | -85,315 | -70,568 |
Total stockholders’ equity | 81,990 | 94,185 |
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity | 301,854 | 296,936 |
Pro Forma [Member] | ' | ' |
Current assets: | ' | ' |
Cash and cash equivalents | 53,901 | ' |
Accounts receivable, net | 33,226 | ' |
Inventory, net | 43,925 | ' |
Deferred income taxes | 6,736 | ' |
Prepaid expenses and other current assets | 8,320 | ' |
Total current assets | 146,108 | ' |
Property and equipment, net | 3,233 | ' |
Goodwill and intangible assets, net | 178,739 | ' |
Other assets, net | 16,529 | ' |
Total assets | 344,609 | ' |
Current liabilities: | ' | ' |
Bank line of credit | 0 | ' |
Accounts payable | 22,770 | ' |
Accrued expenses | 8,118 | ' |
Accrued payroll liabilities | 8,694 | ' |
Total current liabilities | 39,582 | ' |
Notes to stockholders | 0 | ' |
Deferred income taxes | 11,996 | ' |
Other liabilities | 174 | ' |
Total liabilities | 51,752 | ' |
Commitments and contingencies | ' | ' |
Stockholders’ equity: | ' | ' |
Common stock, $0.001 par value, 100,000,000 shares authorized; 22,421,509, 22,664,310 and 37,066,337 shares issued and outstanding at December 31, 2013, March 31, 2014, and Pro forma March 31, 2014, respectively | 37 | ' |
Additional paid-in capital | 384,002 | ' |
Accumulated other comprehensive loss | -1,006 | ' |
Accumulated deficit | -90,176 | ' |
Total stockholders’ equity | 292,857 | ' |
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity | 344,609 | ' |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Current liabilities: | ' | ' |
Redeemable convertible preferred stock | 57,862 | 56,667 |
Series A Redeemable Convertible Preferred Stock [Member] | Pro Forma [Member] | ' | ' |
Current liabilities: | ' | ' |
Redeemable convertible preferred stock | 0 | ' |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Current liabilities: | ' | ' |
Redeemable convertible preferred stock | 52,399 | 52,414 |
Series B Redeemable Convertible Preferred Stock [Member] | Pro Forma [Member] | ' | ' |
Current liabilities: | ' | ' |
Redeemable convertible preferred stock | $0 | ' |
CONSOLIDATED_BALANCE_SHEETS_Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 22,664,310 | 22,421,509 |
Common stock, shares outstanding | 22,664,310 | 22,421,509 |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, par value per share | $0.00 | $0.00 |
Preferred stock, shares authorized | 7,300,000 | 7,300,000 |
Preferred stock, shares issued | 7,250,855 | 7,250,855 |
Preferred stock, shares outstanding | 7,250,855 | 7,250,855 |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, par value per share | $0.00 | $0.00 |
Preferred stock, shares authorized | 6,500,000 | 6,500,000 |
Preferred stock, shares issued | 6,301,290 | 6,301,290 |
Preferred stock, shares outstanding | 6,301,290 | 6,301,290 |
Pro Forma [Member] | ' | ' |
Common stock, par value per share | $0.00 | ' |
Common stock, shares authorized | 100,000,000 | ' |
Common stock, shares issued | 37,066,337 | ' |
Common stock, shares outstanding | 37,066,337 | ' |
Pro Forma [Member] | Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, par value per share | $0.00 | ' |
Preferred stock, shares authorized | 7,300,000 | ' |
Preferred stock, shares issued | 7,250,855 | ' |
Preferred stock, shares outstanding | 7,250,855 | ' |
Pro Forma [Member] | Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, par value per share | $0.00 | ' |
Preferred stock, shares authorized | 6,500,000 | ' |
Preferred stock, shares issued | 6,301,290 | ' |
Preferred stock, shares outstanding | 6,301,290 | ' |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue | $42,251 | $35,098 |
Cost of revenue | 14,414 | 10,720 |
Gross profit | 27,837 | 24,378 |
Operating expenses: | ' | ' |
Research, development and engineering | 3,197 | 3,197 |
Sales and marketing | 22,448 | 18,620 |
General and administrative | 15,890 | 14,300 |
Total operating expenses | 41,535 | 36,117 |
Loss from operations | -13,698 | -11,739 |
Other income (expense): | ' | ' |
Foreign currency transaction (loss) gain | 222 | -1,579 |
Interest expense | -1,247 | -474 |
Total other expense, net | -1,025 | -2,053 |
Loss before income tax (benefit) expense | -14,723 | -13,792 |
Income tax (benefit) expense | 24 | -2,913 |
Net loss | -14,747 | -10,879 |
Accretion or write-up of preferred stock | -1,180 | -13,115 |
Net loss attributable to stockholders | -15,927 | -23,994 |
Net loss per share attributable to common stockholders: | ' | ' |
Basic and diluted (in dollars per share) | ($0.71) | ($1.09) |
Weighted average shares outstanding: | ' | ' |
Basic and diluted (in shares) | 22,523 | 22,087 |
Pro Forma [Member] | ' | ' |
Other income (expense): | ' | ' |
Accretion or write-up of preferred stock | ($1,180) | ' |
Net loss per share attributable to common stockholders: | ' | ' |
Basic and diluted (in dollars per share) | ($0.37) | ' |
Weighted average shares outstanding: | ' | ' |
Basic and diluted (in shares) | 36,925 | ' |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net loss | ($14,747) | ($10,879) |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ' |
Foreign currency translation adjustment | -86 | 716 |
Other comprehensive income (loss) | -86 | 716 |
Comprehensive loss | ($14,833) | ($10,163) |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) (USD $) | Total | Series A and B Convertible Preferred Stock [Member] | Series A Redeemable Convertible Preferred Stock [Member] | Series B Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Deficit [Member] |
In Thousands, except Share data, unless otherwise specified | Series A and B Convertible Preferred Stock [Member] | Series A Redeemable Convertible Preferred Stock [Member] | Series B Redeemable Convertible Preferred Stock [Member] | ||||||||
Beginning Balance at Dec. 31, 2013 | $94,185 | ' | ' | ' | $22 | $165,651 | ' | ' | ' | ($920) | ($70,568) |
Beginning Balance (in shares) at Dec. 31, 2013 | 22,421,509 | ' | ' | ' | 22,421,509 | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net loss | -14,747 | ' | ' | ' | ' | ' | ' | ' | ' | ' | -14,747 |
Other comprehensive income | -86 | ' | ' | ' | ' | ' | ' | ' | ' | -86 | ' |
Stock-based compensation | 375 | ' | ' | ' | ' | 375 | ' | ' | ' | ' | ' |
Accretion of redeemable convertible preferred stock | ' | ' | -1,179 | 21 | ' | ' | ' | -1,179 | 21 | ' | ' |
Accretion of redeemable convertible preferred stock issuance costs | ' | -22 | ' | ' | ' | ' | -22 | ' | ' | ' | ' |
Sale of common stock pursuant to securities purchase and other agreements (in shares) | ' | ' | ' | ' | 121,111 | ' | ' | ' | ' | ' | ' |
Sale of common stock pursuant to securities purchase and other agreements | 2,308 | ' | ' | ' | 1 | 2,307 | ' | ' | ' | ' | ' |
Stock option modifications | 2,077 | ' | ' | ' | ' | 2,077 | ' | ' | ' | ' | ' |
Exercise of options (in shares) | 239 | ' | ' | ' | 121,690 | ' | ' | ' | ' | ' | ' |
Exercise of options | -942 | ' | ' | ' | ' | -942 | ' | ' | ' | ' | ' |
Ending Balance at Mar. 31, 2014 | $81,990 | ' | ' | ' | $23 | $168,288 | ' | ' | ' | ($1,006) | ($85,315) |
Ending Balance (in shares) at Mar. 31, 2014 | 22,664,310 | ' | ' | ' | 22,664,310 | ' | ' | ' | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Operating activities | ' | ' |
Net loss | ($14,747) | ($10,879) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 9,705 | 8,895 |
Provision for allowance for doubtful accounts | 137 | 95 |
Provision for inventory reserve | 721 | 721 |
Stock-based compensation | 375 | 491 |
Amortization of issuance and discount costs included in interest expense | 67 | 9 |
Deferred income taxes | 0 | -2,946 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -508 | -582 |
Inventory | -6,075 | -2,270 |
Prepaid expenses and other assets | -4,305 | 2 |
Accounts payable, accrued expenses, and accrued payroll liabilities | 5,447 | 2,497 |
Net cash used in operating activities | -9,183 | -3,967 |
Investing activities | ' | ' |
Purchase of surgical instruments | -2,058 | -1,344 |
Purchase of property and equipment | -658 | -96 |
Purchase of intangible assets | -18 | -17 |
Net cash used in investing activities | -2,734 | -1,457 |
Financing activities | ' | ' |
Borrowings on bank line of credit | 0 | 1,500 |
Proceeds from issuance of notes to stockholders | 14,634 | 0 |
Proceeds from issuance of Series B redeemable convertible preferred stock, net of issuance costs | 0 | 11,574 |
Proceeds from issuance of common stock | 2,308 | 0 |
Payment of public offering costs | -369 | 0 |
Payments to satisfy minimum tax withholding related to exercise of options | -942 | -339 |
Net cash provided by financing activities | 15,631 | 12,735 |
Effect of exchange rate changes on cash and cash equivalents | 13 | -36 |
Net increase in cash and cash equivalents | 3,727 | 7,275 |
Cash and cash equivalents at beginning of period | 7,419 | 7,011 |
Cash and cash equivalents at end of period | 11,146 | 14,286 |
Significant noncash financing activities | ' | ' |
Adjustment of preferred stock to fair value | 0 | 14,035 |
Deferred public offering costs | 2,291 | 0 |
Cash paid for: | ' | ' |
Interest | 255 | 250 |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Significant noncash financing activities | ' | ' |
Accretion of redeemable convertible preferred stock | 1,195 | 1,245 |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Significant noncash financing activities | ' | ' |
Accretion of redeemable convertible preferred stock | ($15) | ($2,165) |
GENERAL_AND_SUMMARY_OF_SIGNIFI
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
K2M Group Holdings, Inc. (the Company) was formed as a Delaware corporation on June 29, 2010. On July 2, 2010, K2M, Inc. (K2M), a company initially incorporated in 2004, entered into an Agreement and Plan of Merger (the Merger Agreement) with Altitude Group Holdings, Inc. (Altitude) and Altitude Merger Sub, Inc. (Merger Sub). Altitude was a newly formed corporation and an indirect wholly-owned subsidiary of Welsh, Carson, Anderson & Stowe XI, L.P. On August 12, 2010 (the Merger Date), upon the closing of the transactions under the Merger Agreement, Merger Sub merged with and into K2M with K2M being the surviving corporation of such merger (the Transaction or Merger) and Altitude was renamed K2M Group Holdings, Inc. | |
The Company is a global medical device company focused on designing, developing and commercializing innovative and proprietary complex spine technologies and techniques. The Company’s complex spine products are used by spine surgeons to treat some of the most difficult and challenging spinal pathologies, such as deformity (primarily scoliosis), trauma, and tumor. The Company has applied its product development expertise in innovating complex spine technologies and techniques to the design, development, and commercialization of an expanding number of proprietary minimally invasive surgery, or MIS products. The Company’s MIS products are designed to allow for less invasive access to the spine and faster patient recovery times as compared to traditional open access surgical approaches for both complex spine and degenerative spine pathologies. The Company has also leveraged these core competencies in the design, development and commercialization of an increasing number of products for patients suffering from degenerative spinal conditions. | |
Initial Public Offering | |
The Company completed an initial public offering (IPO) of its common stock in May 2014. See Note 15 - Subsequent Events, for disclosures related to the IPO and other related transactions. | |
Unaudited Interim Results | |
The accompanying condensed consolidated balance sheet as of March 31, 2014, the condensed consolidated statements of operations, condensed consolidated statements of comprehensive loss and condensed consolidated cash flows for the three months ended March 31, 2013 and 2014 and the condensed consolidated statements of changes in stockholders’ equity for the three months ended March 31, 2014 are unaudited. The unaudited interim financial statements have been prepared on the same basis of accounting as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations and cash flows for the periods presented. The results for the three months ended March 31, 2014 are not necessarily indicative of future results. All information as of March 31, 2014 and for the three month periods ending March 31, 2013 and 2014 within these notes to the consolidated financial statements is unaudited. | |
Reverse Stock Split Ratio | |
On April 21, 2014, the Board of Directors approved a reverse stock split of the Company’s common stock such that each 2.43 shares of issued common stock were reclassified into one share of common stock. All common stock share and per-share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split. | |
Pro Forma Presentation | |
The unaudited pro forma balance sheet presentation as of March 31, 2014 gives effect to the following items related to the IPO: (1) issuance of 8,825 shares of common stock at a price of $15 per share, net of deducted underwriting discounts and estimated offering costs; (2) the automatic conversion of all outstanding shares of the Series A redeemable convertible preferred stock (Series A Preferred), and the Series B redeemable convertible preferred stock (Series B Preferred), into 5,577 shares of common stock; (3) payment of cumulative dividends on the Series A Preferred and Series B Preferred of $17,642; (4) repayment of all outstanding indebtedness under our bank line of credit of $23,500 and (5) prepayment of notes to stockholders of $39,212 and accrued interest of $834. | |
The unaudited pro forma net loss per share is computed using the pro forma net loss divided by pro forma weighted average number of shares outstanding. Pro forma net loss excludes the accretion of preferred stock of $1,180, and interest expense related to our bank line of credit and notes to stockholders of $1,153. The pro forma weighted average number of shares outstanding assumes the following as if they had occurred at the beginning of the period: (1) the automatic conversion of all shares of the Series A Preferred and Series B Preferred into 5,577 shares of common stock; and (2) the issuance of 8,825 shares of common stock during the IPO. See Note 15 - Subsequent Events for further discussions of the IPO. | |
Principles of Consolidation | |
The accompanying consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries including K2M Holdings, Inc.; K2M Inc.; K2M UK Limited; and K2M Germany, GmbH. All intercompany balances and transactions have been eliminated in consolidation. | |
Use of Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Net Loss per Share | |
Basic net loss per common share is determined by dividing the net loss allocable to common stockholders by the weighted average number of common shares outstanding during the periods presented, without consideration of common stock equivalents. Diluted loss per share is computed by dividing the net loss allocable to common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants and the if-converted method is used to determine the dilutive effect of the Company’s Series A Preferred, and the Series B Preferred. The weighted average shares used to calculate both basic and diluted loss per share are the same because common stock equivalents were excluded in the calculation of diluted loss per share because their effect would be anti-dilutive. | |
Foreign Currency Translation and Other Comprehensive Loss | |
The account balances of foreign operations are translated into U.S. dollars using exchange rates for assets and liabilities at the balance sheet date and average prevailing exchange rates for the period for revenue and expense accounts. Adjustments resulting from translation are included in other comprehensive income (loss), which is the Company’s only component of accumulated comprehensive income (loss). | |
Remeasurement gains and losses from foreign currency transactions are included in the consolidated statements of operations in the period in which they occur. | |
Recent Accounting Pronouncements | |
The Company qualifies as an “emerging growth company” (EGC) pursuant to the provisions of the JOBS Act. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards (the EGC extension). Accordingly, so long as the Company continues to qualify as an EGC, it will not have to adopt or comply with new accounting standards until non-issuers are required to comply with such standards. | |
In February 2013, the FASB issued guidance requiring new disclosures on items reclassified from Accumulated Other Comprehensive Income (AOCI). Companies will be required to disclose, in a single location, amounts reclassified from each component of AOCI based on its source and the statement of operations line items affected by the reclassification. The Company’s only component of AOCI is from foreign currency translation adjustments. To the extent there are such reclassifications, we plan to present such disclosure in a note to the consolidated financial statements. For public entities that do not qualify for the EGC extension, the new guidance is effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2012. For EGCs including the Company and non-public issuers, the guidance is effective prospectively for annual reporting periods beginning after December 15, 2013. The Company does not anticipate that this disclosure requirement will have a material impact on its consolidated financial statements. | |
In March 2013, the FASB issued guidance clarifying the accounting for the release of cumulative translation adjustment into net income when a parent either sells part or all of its investment in a foreign entity or no longer holds a controlling interest in a subsidiary or group of asset that is a nonprofit or a business within a foreign entity. For public entities that do not qualify for the EGC extension, the new guidance is effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013. For EGCs including the Company and non-public issuers, the guidance is effective prospectively for the first annual period beginning after December 15, 2014, and interim and annual periods thereafter. Early adoption is permitted. The Company does not anticipate that this adoption will have a material impact on its financial position, results of operations or cash flows. | |
In July 2013, the FASB issued new guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. For public entities that do not qualify for the EGC extension, the guidance was effective for fiscal years and interim periods within those years, beginning after December 15, 2013 and may be applied retrospectively. EGCs including the Company and non-public issuers will be required to comply with the guidance on a prospective basis in the first quarter of 2015. Early adoption is permitted. Although adoption of this new guidance may impact how such items are classified on the Company’s balance sheets, such change is not expected to be material. There will be no changes in the presentations of the Company’s other financial statements. |
ACCOUNTS_RECEIVABLE
ACCOUNTS RECEIVABLE | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
ACCOUNTS RECEIVABLE | ' | ||||||||
ACCOUNTS RECEIVABLE | |||||||||
Receivables consist of the following: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Accounts receivable | $ | 35,271 | $ | 35,667 | |||||
Allowances | (2,447 | ) | (2,441 | ) | |||||
Accounts receivable, net | $ | 32,824 | $ | 33,226 | |||||
INVENTORY
INVENTORY | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
INVENTORY | ' | ||||||||
INVENTORY | |||||||||
The following table summarizes the Company’s inventory, net of allowances: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Finished goods | $ | 64,539 | $ | 67,557 | |||||
Inventory allowances | (25,316 | ) | (23,632 | ) | |||||
$ | 39,223 | $ | 43,925 | ||||||
Inventory includes surgical instruments available for sale with a carrying value of $5,285 and $6,023 at December 31, 2013 and March 31, 2014, respectively. |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended | ||||||||||||||
Mar. 31, 2014 | |||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | ||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | |||||||||||||||
Goodwill and intangible assets comprise the following: | |||||||||||||||
As of December 31, 2013 | |||||||||||||||
Estimated | Gross | Accumulated | Net | ||||||||||||
Useful Lives | Amortization | ||||||||||||||
Goodwill | — | $ | 121,814 | $ | — | $ | 121,814 | ||||||||
Indefinite-lived intangible assets: | |||||||||||||||
Trademarks | — | 12,900 | — | 12,900 | |||||||||||
In-process research and development | — | 1,500 | — | 1,500 | |||||||||||
Other | — | 296 | — | 296 | |||||||||||
Subtotal | 14,696 | — | 14,696 | ||||||||||||
Subject to amortization | |||||||||||||||
Developed technology | 4 - 6 years | 61,600 | (36,466 | ) | 25,134 | ||||||||||
Licensed technology | 4 - 6 years | 52,600 | (43,947 | ) | 8,653 | ||||||||||
Customer relationships | 4 - 7 years | 29,700 | (14,320 | ) | 15,380 | ||||||||||
Patents and other | 2 - 17 years | 1,313 | (720 | ) | 593 | ||||||||||
Subtotal | 145,213 | (95,453 | ) | 49,760 | |||||||||||
Total | $ | 281,723 | $ | (95,453 | ) | $ | 186,270 | ||||||||
As of March 31, 2014 | |||||||||||||||
Estimated | Gross | Accumulated | Net | ||||||||||||
Useful Lives | Amortization | ||||||||||||||
Goodwill | — | $ | 121,814 | $ | — | $ | 121,814 | ||||||||
Indefinite-lived intangible assets: | |||||||||||||||
Trademarks | — | 12,900 | — | 12,900 | |||||||||||
In-process research and development | — | 1,500 | — | 1,500 | |||||||||||
Other | — | 296 | — | 296 | |||||||||||
Subtotal | 14,696 | — | 14,696 | ||||||||||||
Subject to amortization | |||||||||||||||
Developed technology | 4 - 6 years | 61,600 | (39,602 | ) | 21,998 | ||||||||||
Licensed technology | 4 - 6 years | 52,600 | (47,216 | ) | 5,384 | ||||||||||
Customer relationships | 4 - 7 years | 29,700 | (15,380 | ) | 14,320 | ||||||||||
Patents and other | 2 - 17 years | 1,331 | (804 | ) | 527 | ||||||||||
Subtotal | 145,231 | (103,002 | ) | 42,229 | |||||||||||
Total | $ | 281,741 | $ | (103,002 | ) | $ | 178,739 | ||||||||
Amortization expense was $7,526 and $7,551 for the three months ended March 31, 2013 and 2014 respectively. | |||||||||||||||
As of March, 31, 2014, the expected amortization expense for the remainder of 2014 and the following five years and thereafter is as follows: | |||||||||||||||
As of March 31, 2014 | |||||||||||||||
2014 | $ | 15,170 | |||||||||||||
2015 | 10,136 | ||||||||||||||
2016 | 10,136 | ||||||||||||||
2017 | 6,522 | ||||||||||||||
2018 and thereafter | 265 | ||||||||||||||
Total | $ | 42,229 | |||||||||||||
OTHER_ASSETS
OTHER ASSETS | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
OTHER ASSETS | ' | ||||||||
OTHER ASSETS | |||||||||
Other assets comprise the following: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Surgical instruments, net | $ | 15,271 | $ | 16,408 | |||||
Other | 143 | 121 | |||||||
$ | 15,414 | $ | 16,529 | ||||||
Surgical instruments are stated net of accumulated amortization of $15,007 and $15,471 at December 31, 2013 and March 31, 2014, respectively. Amortization expense was $724 and $1,308 for the three months ended March 31, 2013 and 2014, respectively. |
ACCRUED_EXPENSES
ACCRUED EXPENSES | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
ACCRUED EXPENSES | ' | ||||||||
ACCRUED EXPENSES | |||||||||
Accrued expenses consist of the following: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Accrued commissions | $ | 2,837 | $ | 3,107 | |||||
Accrued royalties | 2,230 | 2,002 | |||||||
Accrued interest | — | 834 | |||||||
Stock option awards liability | 2,076 | — | |||||||
Other | 1,617 | 2,175 | |||||||
$ | 8,760 | $ | 8,118 | ||||||
DEBT
DEBT | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
DEBT | ' | ||||||||
DEBT | |||||||||
Debt consists of the following: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Bank line of credit | $ | 23,500 | $ | 23,500 | |||||
Notes to stockholders | 22,270 | 39,212 | |||||||
Total debt | 45,770 | 62,712 | |||||||
Less unamortized discounts | (2,620 | ) | (4,861 | ) | |||||
Debt, net of discounts | $ | 43,150 | $ | 57,851 | |||||
Bank Line of Credit | |||||||||
In 2012, K2M and K2M UK Limited executed the Secured Credit Facilities Credit Agreement (the Credit Agreement). Under the Credit Agreement, there are amounts available under the facility of $30,000, which consists of a revolving loan facility in an aggregate principal amount of up to $30,000, sub-facilities under the revolving loan facility for letters of credit in the aggregate availability amount of $1,000, a swingline sub-facility in the aggregate availability amount of $5,000, and a line of credit from the Export-Import Bank of the United States, or the Export Import Bank sub-facility in the aggregate availability amount of $10,000. | |||||||||
The Credit Agreement terminates on October 29, 2014, at which time the outstanding principal and unpaid interest are due. Interest is charged monthly at the prime rate plus 1%. Various fees, including commitment fees, equivalent to the product of 0.25% and the average unused portion of the revolving line of credit, annual administrative agent fees of $40, Export Import Bank line of credit fees, and letter of credit fees are due to the lenders over the term of the Credit Agreement. | |||||||||
Borrowings under the Credit Agreement are secured by a first priority lien in all the personal property assets of the Company, including intellectual property. The Credit Agreement contains various financial covenants and negative covenants with which the Company must maintain compliance. Additionally, as long as the Company maintains unrestricted cash at a specific lender’s bank, plus unused borrowing availability of at least $7,500, the Company may maintain a static loan balance and therefore, collections may be transferred to the Company’s operating cash account. There is an early termination fee of 1% to 2% of the aggregate amount of the credit facility, should the Company decide to terminate the Credit Agreement before October 29, 2014. | |||||||||
On April 30, 2014, the credit Agreement was amended to (1) allow for the repayment of the Company’s outstanding Shareholder Notes with the proceeds of the IPO, (2) replace the existing minimum consolidated adjusted EBITDA financial covenant with a maximum loss financial covenant which requires that consolidated net loss of K2M and K2M UK, Ltd., shall not exceed (i) $11,000 for the three-month period ended March 31, 2014 and (ii) $16,000 for the six-month period ending June 30, 2014 and (3) permit the Lenders to add additional financial covenants to the extent that the IPO, which was completed on May 13, 2014, was not consummated on or prior to June 30, 2014. The Company was in compliance with the maximum loss financial covenant as of March 31, 2014. | |||||||||
Borrowings under the revolving line of credit accrued interest at a rate of 4.25% at March 31, 2014. For three months ended March 31, 2013 and 2014, the Company recorded interest expense of $324 and $342, respectively, under the Credit Agreement including amounts of $81 and $92, respectively, related to the amortization of the loan issuance fees. As of March 31, 2014, unrestricted cash plus $4,142 of unused borrowing availability under the Credit Agreement was in excess of the $7,500 threshold that requires lockbox receipts to be applied against outstanding borrowings. | |||||||||
Notes to Stockholders | |||||||||
In 2014, the Company issued 121.111 shares of its common stock to certain stockholders at $19.05 per share for proceeds of $2,308. In addition, K2M Holdings, Inc. issued these stockholders notes with an aggregate principal amount of $16,942 and bearing interest at 10% for cash consideration of $14,634. Following issuance of these notes, total aggregate principal amount outstanding of all notes payable to stockholders was $39,212. Interest expense for the three months ended March 31, 2013 and 2014 was $142 and $901 respectively, and included accretion expense of $9 and $67 respectively. Accrued interest as of December 31, 2013 and March 31, 2014 was $0 and $834, respectively. | |||||||||
The Company used proceeds from its IPO to retire all principal and interest amounts outstanding under the Credit Agreement and Notes to Stockholders in May 2014. See Note 15 - Subsequent Events for disclosures related to the IPO and other related transactions. |
REDEEMABLE_CONVERTIBLE_PREFERR
REDEEMABLE CONVERTIBLE PREFERRED STOCK | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||
REDEEMABLE CONVERTIBLE PREFERRED STOCK | ' | ||||||||||||||||||||
REDEEMABLE CONVERTIBLE PREFERRED STOCK | |||||||||||||||||||||
Following is a rollforward of activity in the Series A Preferred and Series B Preferred accounts from December 31, 2013 to March 31, 2014. | |||||||||||||||||||||
Series A Preferred | Series B Preferred | ||||||||||||||||||||
Shares | Shares | ||||||||||||||||||||
Authorized | Outstanding | Amount | Authorized | Outstanding | Amount | ||||||||||||||||
Balance at December 31, 2013 | 7,300 | 7,251 | $ | 56,667 | 6,500 | 6,301 | $ | 52,414 | |||||||||||||
Accretion or write-up of preferred | — | — | 1,195 | — | — | (15 | ) | ||||||||||||||
stock | |||||||||||||||||||||
Balance at March 31, 2014 | 7,300 | 7,251 | $ | 57,862 | 6,500 | 6,301 | $ | 52,399 | |||||||||||||
Dividends. The holders of Series A Preferred and Series B Preferred are entitled to receive cumulative dividends at the annual rate of 10% of the Series A Accrued Value and 14% of the Series B Accrued Value (the original issue price plus accrued compounded dividends), respectively, in preference to any payment of dividends to holders of common stock. Dividends shall be payable when and if declared by the Board of Directors. To the extent there are dividends paid to holders of the common stock, holders of Series A Preferred or Series B Preferred would participate on an “if-converted” basis. There have been no dividends declared on the common stock. Cumulative, unpaid dividends for each respective series of preferred stock are as follows: | |||||||||||||||||||||
December 31, | March 31, | ||||||||||||||||||||
2013 | 2014 | ||||||||||||||||||||
Series A Preferred Stock | $ | 10,564 | $ | 11,503 | |||||||||||||||||
Series B Preferred Stock | 5,136 | 6,139 | |||||||||||||||||||
Total | $ | 15,700 | $ | 17,642 | |||||||||||||||||
Conversion. Series A Preferred and Series B Preferred are convertible into common stock at the option of the holder, at any time and without additional consideration. Such conversion is determined by dividing the original purchase price per share by the conversion price, subject to adjustment for certain events. The conversion price is initially the original purchase price per share. The Series A and B Preferred will be automatically converted into common stock either upon the vote of the majority of the applicable stockholders or upon the closing of a firm commitment underwritten public offering resulting in proceeds to the Company and/or the selling shareholders in excess of $100 million and the listing of the common stock on either the New York Stock Exchange, NASDAQ Global Market, or the NASDAQ Global Select Market. | |||||||||||||||||||||
The conversion price is subject to reduction for any shares of common stock issued or sold for consideration less than the conversion price in effect immediately prior to such issuance or sale. This includes the grant of any warrants, options, or other rights convertible or exchangeable for common stock for an exercise price less than the then-effective conversion price, with the exception of certain issues of stock as defined by the Company’s Certificate of Incorporation. | |||||||||||||||||||||
On May 13, 2014, the Company converted the Series A Preferred and Series B Preferred into 2,984 and 2,593 shares, respectively, of its common stock based on a 2.43:1 conversion ratio as a result of its IPO, respectively. On May 13, 2014, cumulative unpaid dividends of $18,547 were paid in cash to holders of the preferred stock. See Note 15 - Subsequent Events for disclosures related to the IPO and other related transactions. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||
STOCK-BASED COMPENSATION | ||||||||||||||
As of March 31, 2014, we had two stock-based compensation plans: The 2010 Equity Award Plan and The 2010 Independent Agent Plan (the Plans). The purpose of these plans is to provide incentive to employees, directors, and advisors of the Company. The Plans are administered by the Company's board of directors or its delegates. The number, type of equity incentive, exercise price, and vesting terms are determined in accordance with the terms of the Plans, as applicable. No stock options or other equity instruments were issued under the Plans in the three months ended March 31, 2014. | ||||||||||||||
As of March 31, 2014, there were 831 shares of common stock available for future grants under the Plans. Please refer to Note 15 - Subsequent Events for details of new employee benefit plans which were adopted in connection with the Company's IPO. | ||||||||||||||
The Company recognized the following stock-based compensation expense related to employees and non-employees as noted below: | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2013(1) | 2014(1) | |||||||||||||
Cost of revenue | $ | 36 | $ | 7 | ||||||||||
Research, development, and engineering | 25 | 21 | ||||||||||||
Sales and marketing | 187 | 197 | ||||||||||||
General and administrative | 243 | 150 | ||||||||||||
$ | 491 | $ | 375 | |||||||||||
Employees | $ | 484 | $ | 269 | ||||||||||
Non-employees | 7 | 106 | ||||||||||||
$ | 491 | $ | 375 | |||||||||||
-1 | Stock-based compensation included $85 and $0 related to stock option liability awards for the three months ended March 31, 2013 and 2014, respectively. | |||||||||||||
A summary of stock option plans activity during the three months ended March 31, 2014 is as follows: | ||||||||||||||
Shares | Weighted- | Weighted- | Aggregate | |||||||||||
Average | Average | Intrinsic | ||||||||||||
Exercise | Remaining | Value(1) | ||||||||||||
Price | Contractual | |||||||||||||
Term | ||||||||||||||
(years) | ||||||||||||||
Outstanding at December 31, 2013 | 4,179 | $ | 8.18 | 5.64 | $ | 31,434 | ||||||||
Granted | — | $ | — | |||||||||||
Exercised | (239 | ) | $ | 5.09 | ||||||||||
Expired | (3 | ) | $ | 4.33 | ||||||||||
Forfeited | (18 | ) | $ | 7.7 | ||||||||||
Outstanding at March 31, 2014(2) | 3,919 | $ | 8.37 | 5.71 | $ | 31,674 | ||||||||
Vested or expected to vest: | ||||||||||||||
At March 31, 2014(3) | 3,869 | $ | 8.32 | 5.65 | $ | 31,454 | ||||||||
Vested: | ||||||||||||||
At March 31, 2014 | 2,251 | $ | 7.5 | 4.4 | $ | 20,160 | ||||||||
(1) | Calculated using the estimated per-share fair market value of the Company’s common stock on December 31, 2013 and March 31, 2014, which was $15.70 and $16.45 per share, respectively. | |||||||||||||
(2) | The total includes $963 performance-based options at March 31, 2014. | |||||||||||||
(3) | Outstanding options, net of forfeiture rate. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | |
In the normal course of business, the Company enters into agreements to obtain the rights to certain intellectual property. These agreements may require an up-front payment, milestone payments, and/or royalties. Typically, the Company has certain rights to cancel these agreements with notice, without additional payments due other than the amount due at the time of cancellation. As of March 31, 2014, the aggregate amount of these future payments, assuming achievement of applicable milestones and non-cancellation, was $1,613 over a period not less than five years. Royalties ranging from 2% to 10% of net sales may be due on the sales of related products. Some of the agreements contain minimum annual royalty amounts. | |
In November 2011, the Company entered into an agreement to purchase certain proprietary technology which could require payments up to $13,350 should certain milestones be met, including milestones related to regulatory applications and approvals. As of December 31, 2011, $50 had been paid against this agreement which was due upon signing. During 2012, an additional payment of $50 was made upon the delivery of purchased assets. During 2013 and the three months ended March 31, 2014, the Company made no additional payments. Milestone payments of $500, $2,000 and $4,000 are due upon the achievement of net sales of related products of $10,000, $25,000 and $50,000, respectively. A royalty payment of 7% of net sales of related products may be due until such sales reaches $20,000. The product related to this agreement has not yet been commercialized. |
RELATED_PARTIES
RELATED PARTIES | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTIES | ' |
RELATED PARTIES | |
In connection with the Transaction, the Company and K2M entered into a management agreement with the major stockholder of the Company whereby the Company agreed to pay the major stockholder $75 per quarter for management services over a period of five years. The fee was increased to $125 per quarter effective with the quarter ended March 31, 2011 and increased to $263 per quarter effective with the quarter ended September 30, 2013. The Company records the quarterly payments in general and administrative expense in its consolidated statements of operations. The Company incurred $775 and $263 during the year ended December 31, 2013 and the three months ended March 31, 2014, respectively, under this agreement. The management agreement was terminated in May 2014 in conjunction with the Company's IPO. |
INCOME_TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ' |
INCOME TAXES | ' |
INCOME TAXES | |
The provision for income taxes for the three months ended March 31, 2013 and 2014 includes both domestic and foreign income taxes at applicable statutory rates adjusted for permanent differences and valuation allowance. For the three months ended March 31, 2013 the income tax benefit was $2,913, resulting in an effective tax rate of 21.1%. For the three months ended March 31, 2014, income tax expense was $24, resulting in an effective tax rate of (0.02)%. The effective tax rate differs from the statutory rate due to permanent differences, an increase to the valuation allowance and foreign tax rate differentials. |
NET_LOSS_PER_SHARE
NET LOSS PER SHARE | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
NET LOSS PER SHARE | ' | ||||||||
NET LOSS PER SHARE | |||||||||
The following table sets forth the computation of basic and diluted loss per share attributable to the Company’s common stockholders: | |||||||||
Three Months Ended March 31, | |||||||||
2013 | 2014 | ||||||||
Net loss per common share: | |||||||||
Net loss | $ | (10,879 | ) | $ | (14,747 | ) | |||
Less: accretion or write-up of Series A Preferred and Series B Preferred | (13,115 | ) | (1,180 | ) | |||||
Net loss attributable to common stockholders | $ | (23,994 | ) | $ | (15,927 | ) | |||
Basic and diluted loss per common share | |||||||||
Basic and diluted weighted average common shares outstanding | 22,087 | 22,523 | |||||||
Basic and diluted loss per common share | $ | (1.09 | ) | $ | (0.71 | ) | |||
Diluted loss per share for the three months ended March 31, 2013 and 2014 does not reflect the following weighted average potential common shares, as the effect would be antidilutive: | |||||||||
Three Months Ended March 31, | |||||||||
2013 | 2014 | ||||||||
Series A Preferred and Series B Preferred | 5,577 | 5,577 | |||||||
Stock options | 4,424 | 3,919 | |||||||
Restricted stock units | — | 576 | |||||||
SEGMENT_AND_GEOGRAPHICAL_CONCE
SEGMENT AND GEOGRAPHICAL CONCENTRATION | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
SEGMENT AND GEOGRAPHICAL CONCENTRATION | ' | ||||||||
SEGMENT AND GEOGRAPHICAL CONCENTRATION | |||||||||
Operating segments are defined as components of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company globally manages the business within one reporting segment. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. Products are sold principally in the United States. International revenue represented 29.6% of total revenue for the three months ended March 31, 2014; however, revenue earned in any individual foreign country is below 10% of the Company’s consolidated revenue. | |||||||||
The following table represents total revenue by geographic area, based on the location of the customer: | |||||||||
Three Months Ended March 31, | |||||||||
2013 | 2014 | ||||||||
United States | $ | 25,836 | $ | 29,765 | |||||
International | 9,262 | 12,486 | |||||||
Total | $ | 35,098 | $ | 42,251 | |||||
The Company classifies sales within the United States into three categories: complex spine pathologies, minimally invasive procedures and degenerative and other conditions. A significant portion of the Company’s international revenue is derived from the Company’s distributor partners who do not report their product usage by procedure category to the Company. These sales transactions are settled when the Company ships the product to the agent. This prevents the Company from providing a specific breakdown of our international sales among our procedure categories. The following table represents revenue by product category: | |||||||||
Three Months Ended March 31, | |||||||||
2013 | 2014 | ||||||||
Complex spine | $ | 9,306 | $ | 10,184 | |||||
Minimally invasive | 5,706 | 6,485 | |||||||
Degenerative | 10,824 | 13,096 | |||||||
25,836 | 29,765 | ||||||||
International | 9,262 | 12,486 | |||||||
Total | $ | 35,098 | $ | 42,251 | |||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | |
The Company has evaluated subsequent events through June 4, 2014, which is the date its Form 10-Q was filed with the Securities and Exchange Commission. With the exception of the items listed below, there are no subsequent events for disclosure. | |
Initial Public Offering | |
On May 13, 2014, the Company completed its IPO of 8,825 shares of common stock at a price of $15 per share. The IPO generated net proceeds of approximately $120 million, after deducting underwriting commissions of $9.3 million and expenses of approximately $3.6 million. These costs will be recorded against the proceeds received from the IPO. | |
The outstanding shares of the Series A Preferred and Series B Preferred were converted on a 2.43-to-one basis into shares of common stock concurrent with the closing of the IPO. All of the outstanding shares of Series A Preferred and Series B Preferred converted into 5,577 shares of common stock. Following the closing of the IPO, there were no shares of preferred stock outstanding. | |
In connection with the conversion of the preferred stock, the Company paid cumulative dividends of $11.9 million to holders of Series A Preferred and $6.6 million to holders of Series B Preferred. | |
On May 13, 2014, the Company paid approximately $23.5 million to repay all outstanding indebtedness under the Credit Agreement and $39.2 million to prepay all outstanding aggregate principal amount of notes to stockholders and accrued interest of $1.3 million. | |
Employee Benefit Plans | |
Effective May 7, 2014, the Company’s board of directors and stockholders adopted the K2M Group Holdings, Inc. 2014 Omnibus Incentive Plan (the Omnibus Incentive Plan) and the K2M Group Holdings, Inc. 2014 Employee Stock Purchase Plan (ESPP). No further incentive awards may be granted under the 2010 Equity Award Plan. | |
The Omnibus Incentive Plan | |
The Omnibus Incentive Plan was adopted to provide a means through which to attract and retain key personnel and to provide a means whereby the Company’s directors, officers, employees, consultants and advisors can acquire and maintain an equity interest in the Company. The Omnibus Incentive Plan will be administered by the Compensation Committee of the Company’s board of directors. | |
Under the plan, 1,650.289 shares of common stock have been reserved for issuance. Incentive awards under the plan may take the form of incentive or non-qualified stock options, stock appreciation rights, restricted shares and restricted stock units and other stock-based awards, subject to certain limitations. The committee may also designate any award as a “performance compensation award” intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code. | |
The ESPP | |
The ESPP was established to provide employees and participating affiliates with an opportunity to purchase the Company’s common stock. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. There are 411.523 shares of the Company’s common stock reserved for issuance under the ESPP. | |
Generally, all domestic employees are eligible to participate in the ESPP if they are employed by the Company or any participating affiliate, for at least 20 hours per week. Participants will be permitted to purchase shares of the Company’s common stock through payroll deductions of no less than 1% and no more than 10% of their eligible compensation. However, during the first offering period, which commenced on May 8, 2014 and ends on December 31, 2014, participants will be limited to contributions of 2% of eligible compensation. Subsequent offerings will start after the end date of the first offering period on a schedule established by the committee appointed by our board of directors to administer the ESPP. | |
Amounts deducted and accumulated by the participant will be used to purchase shares of the Company’s common stock at the end of each offering period. The purchase price of the shares will be equal to 85 percent of the lower of the fair value of the Company’s common stock on the first day of the offering period, or on the common stock purchase date at the end of each offering period. Participants may end their participation at any time during an offering period and will be paid their accrued contributions that have not yet been used to purchase shares of common stock. In addition, participation ends automatically upon termination of employment with the Company. | |
Modification of Restricted Stock Units (RSUs) issued in 2013 | |
On April 21, 2014, the Company’s board of directors modified the vesting terms of the 576.132 RSUs issued to certain members of senior management in May 2013 to add time-vesting criteria. The modified vesting terms provides that the RSUs will vest in two equal installments on May 15, 2015 and 2016, subject to continued employment through the applicable vesting dates. In addition, the RSUs will continue to vest on an accelerated basis upon death, disability, or a change in control. The company expects to recognize compensation expense of approximately $15 per share over the vesting period. | |
May 2014 Issuances of RSUs and Stock Options | |
Effective May 7, 2014, the Company’s board of directors approved the issuance of 188.888 restricted stock units and options to purchase 549.176 shares of our common stock at $15 per share to certain of the Company’s officers and employees under the Omnibus Incentive Plan. The restricted stock units will vest in three equal installments on the first, second and third anniversary of the grant date. Of the stock options issued 5.761 immediately vest; 183.058 vest on the first anniversary of the grant; 183.059 vest on the second anniversary of the grant date and 177.298 vest on the third anniversary of the grant date. |
GENERAL_AND_SUMMARY_OF_SIGNIFI1
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Principles of Consolidation | ' |
Principles of Consolidation | |
The accompanying consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries including K2M Holdings, Inc.; K2M Inc.; K2M UK Limited; and K2M Germany, GmbH. All intercompany balances and transactions have been eliminated in consolidation. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Net Loss per Share | ' |
Net Loss per Share | |
Basic net loss per common share is determined by dividing the net loss allocable to common stockholders by the weighted average number of common shares outstanding during the periods presented, without consideration of common stock equivalents. Diluted loss per share is computed by dividing the net loss allocable to common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants and the if-converted method is used to determine the dilutive effect of the Company’s Series A Preferred, and the Series B Preferred. The weighted average shares used to calculate both basic and diluted loss per share are the same because common stock equivalents were excluded in the calculation of diluted loss per share because their effect would be anti-dilutive. | |
Foreign Currency Translation and Other Comprehensive Loss | ' |
Foreign Currency Translation and Other Comprehensive Loss | |
The account balances of foreign operations are translated into U.S. dollars using exchange rates for assets and liabilities at the balance sheet date and average prevailing exchange rates for the period for revenue and expense accounts. Adjustments resulting from translation are included in other comprehensive income (loss), which is the Company’s only component of accumulated comprehensive income (loss). | |
Remeasurement gains and losses from foreign currency transactions are included in the consolidated statements of operations in the period in which they occur. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
The Company qualifies as an “emerging growth company” (EGC) pursuant to the provisions of the JOBS Act. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards (the EGC extension). Accordingly, so long as the Company continues to qualify as an EGC, it will not have to adopt or comply with new accounting standards until non-issuers are required to comply with such standards. | |
In February 2013, the FASB issued guidance requiring new disclosures on items reclassified from Accumulated Other Comprehensive Income (AOCI). Companies will be required to disclose, in a single location, amounts reclassified from each component of AOCI based on its source and the statement of operations line items affected by the reclassification. The Company’s only component of AOCI is from foreign currency translation adjustments. To the extent there are such reclassifications, we plan to present such disclosure in a note to the consolidated financial statements. For public entities that do not qualify for the EGC extension, the new guidance is effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2012. For EGCs including the Company and non-public issuers, the guidance is effective prospectively for annual reporting periods beginning after December 15, 2013. The Company does not anticipate that this disclosure requirement will have a material impact on its consolidated financial statements. | |
In March 2013, the FASB issued guidance clarifying the accounting for the release of cumulative translation adjustment into net income when a parent either sells part or all of its investment in a foreign entity or no longer holds a controlling interest in a subsidiary or group of asset that is a nonprofit or a business within a foreign entity. For public entities that do not qualify for the EGC extension, the new guidance is effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013. For EGCs including the Company and non-public issuers, the guidance is effective prospectively for the first annual period beginning after December 15, 2014, and interim and annual periods thereafter. Early adoption is permitted. The Company does not anticipate that this adoption will have a material impact on its financial position, results of operations or cash flows. | |
In July 2013, the FASB issued new guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. For public entities that do not qualify for the EGC extension, the guidance was effective for fiscal years and interim periods within those years, beginning after December 15, 2013 and may be applied retrospectively. EGCs including the Company and non-public issuers will be required to comply with the guidance on a prospective basis in the first quarter of 2015. Early adoption is permitted. Although adoption of this new guidance may impact how such items are classified on the Company’s balance sheets, such change is not expected to be material. There will be no changes in the presentations of the Company’s other financial statements. |
ACCOUNTS_RECEIVABLE_Tables
ACCOUNTS RECEIVABLE - (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
Schedule of Accounts Receivable | ' | ||||||||
Receivables consist of the following: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Accounts receivable | $ | 35,271 | $ | 35,667 | |||||
Allowances | (2,447 | ) | (2,441 | ) | |||||
Accounts receivable, net | $ | 32,824 | $ | 33,226 | |||||
INVENTORY_Tables
INVENTORY - (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of Current Inventory | ' | ||||||||
The following table summarizes the Company’s inventory, net of allowances: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Finished goods | $ | 64,539 | $ | 67,557 | |||||
Inventory allowances | (25,316 | ) | (23,632 | ) | |||||
$ | 39,223 | $ | 43,925 | ||||||
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS - (Tables) | 3 Months Ended | ||||||||||||||
Mar. 31, 2014 | |||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||
Schedule of Intangible Assets and Goodwill | ' | ||||||||||||||
Goodwill and intangible assets comprise the following: | |||||||||||||||
As of December 31, 2013 | |||||||||||||||
Estimated | Gross | Accumulated | Net | ||||||||||||
Useful Lives | Amortization | ||||||||||||||
Goodwill | — | $ | 121,814 | $ | — | $ | 121,814 | ||||||||
Indefinite-lived intangible assets: | |||||||||||||||
Trademarks | — | 12,900 | — | 12,900 | |||||||||||
In-process research and development | — | 1,500 | — | 1,500 | |||||||||||
Other | — | 296 | — | 296 | |||||||||||
Subtotal | 14,696 | — | 14,696 | ||||||||||||
Subject to amortization | |||||||||||||||
Developed technology | 4 - 6 years | 61,600 | (36,466 | ) | 25,134 | ||||||||||
Licensed technology | 4 - 6 years | 52,600 | (43,947 | ) | 8,653 | ||||||||||
Customer relationships | 4 - 7 years | 29,700 | (14,320 | ) | 15,380 | ||||||||||
Patents and other | 2 - 17 years | 1,313 | (720 | ) | 593 | ||||||||||
Subtotal | 145,213 | (95,453 | ) | 49,760 | |||||||||||
Total | $ | 281,723 | $ | (95,453 | ) | $ | 186,270 | ||||||||
As of March 31, 2014 | |||||||||||||||
Estimated | Gross | Accumulated | Net | ||||||||||||
Useful Lives | Amortization | ||||||||||||||
Goodwill | — | $ | 121,814 | $ | — | $ | 121,814 | ||||||||
Indefinite-lived intangible assets: | |||||||||||||||
Trademarks | — | 12,900 | — | 12,900 | |||||||||||
In-process research and development | — | 1,500 | — | 1,500 | |||||||||||
Other | — | 296 | — | 296 | |||||||||||
Subtotal | 14,696 | — | 14,696 | ||||||||||||
Subject to amortization | |||||||||||||||
Developed technology | 4 - 6 years | 61,600 | (39,602 | ) | 21,998 | ||||||||||
Licensed technology | 4 - 6 years | 52,600 | (47,216 | ) | 5,384 | ||||||||||
Customer relationships | 4 - 7 years | 29,700 | (15,380 | ) | 14,320 | ||||||||||
Patents and other | 2 - 17 years | 1,331 | (804 | ) | 527 | ||||||||||
Subtotal | 145,231 | (103,002 | ) | 42,229 | |||||||||||
Total | $ | 281,741 | $ | (103,002 | ) | $ | 178,739 | ||||||||
Schedule of Expected Amortization Expense | ' | ||||||||||||||
As of March, 31, 2014, the expected amortization expense for the remainder of 2014 and the following five years and thereafter is as follows: | |||||||||||||||
As of March 31, 2014 | |||||||||||||||
2014 | $ | 15,170 | |||||||||||||
2015 | 10,136 | ||||||||||||||
2016 | 10,136 | ||||||||||||||
2017 | 6,522 | ||||||||||||||
2018 and thereafter | 265 | ||||||||||||||
Total | $ | 42,229 | |||||||||||||
OTHER_ASSETS_Tables
OTHER ASSETS - (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Schedule of Other Assets | ' | ||||||||
Other assets comprise the following: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Surgical instruments, net | $ | 15,271 | $ | 16,408 | |||||
Other | 143 | 121 | |||||||
$ | 15,414 | $ | 16,529 | ||||||
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES - (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Schedule of Accrued Expenses | ' | ||||||||
Accrued expenses consist of the following: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Accrued commissions | $ | 2,837 | $ | 3,107 | |||||
Accrued royalties | 2,230 | 2,002 | |||||||
Accrued interest | — | 834 | |||||||
Stock option awards liability | 2,076 | — | |||||||
Other | 1,617 | 2,175 | |||||||
$ | 8,760 | $ | 8,118 | ||||||
DEBT_Tables
DEBT - (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Debt | ' | ||||||||
Debt consists of the following: | |||||||||
December 31, | March 31, | ||||||||
2013 | 2014 | ||||||||
Bank line of credit | $ | 23,500 | $ | 23,500 | |||||
Notes to stockholders | 22,270 | 39,212 | |||||||
Total debt | 45,770 | 62,712 | |||||||
Less unamortized discounts | (2,620 | ) | (4,861 | ) | |||||
Debt, net of discounts | $ | 43,150 | $ | 57,851 | |||||
REDEEMABLE_CONVERTIBLE_PREFERR1
REDEEMABLE CONVERTIBLE PREFERRED STOCK (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||
Schedule of Activity in Series A and B Convertible Preferred Stock | ' | ||||||||||||||||||||
Following is a rollforward of activity in the Series A Preferred and Series B Preferred accounts from December 31, 2013 to March 31, 2014. | |||||||||||||||||||||
Series A Preferred | Series B Preferred | ||||||||||||||||||||
Shares | Shares | ||||||||||||||||||||
Authorized | Outstanding | Amount | Authorized | Outstanding | Amount | ||||||||||||||||
Balance at December 31, 2013 | 7,300 | 7,251 | $ | 56,667 | 6,500 | 6,301 | $ | 52,414 | |||||||||||||
Accretion or write-up of preferred | — | — | 1,195 | — | — | (15 | ) | ||||||||||||||
stock | |||||||||||||||||||||
Balance at March 31, 2014 | 7,300 | 7,251 | $ | 57,862 | 6,500 | 6,301 | $ | 52,399 | |||||||||||||
Cumulative, unpaid dividends for each respective series of preferred stock are as follows: | |||||||||||||||||||||
December 31, | March 31, | ||||||||||||||||||||
2013 | 2014 | ||||||||||||||||||||
Series A Preferred Stock | $ | 10,564 | $ | 11,503 | |||||||||||||||||
Series B Preferred Stock | 5,136 | 6,139 | |||||||||||||||||||
Total | $ | 15,700 | $ | 17,642 | |||||||||||||||||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION - (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||
Schedule of stock-based compensation expense | ' | |||||||||||||
The Company recognized the following stock-based compensation expense related to employees and non-employees as noted below: | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2013(1) | 2014(1) | |||||||||||||
Cost of revenue | $ | 36 | $ | 7 | ||||||||||
Research, development, and engineering | 25 | 21 | ||||||||||||
Sales and marketing | 187 | 197 | ||||||||||||
General and administrative | 243 | 150 | ||||||||||||
$ | 491 | $ | 375 | |||||||||||
Employees | $ | 484 | $ | 269 | ||||||||||
Non-employees | 7 | 106 | ||||||||||||
$ | 491 | $ | 375 | |||||||||||
-1 | Stock-based compensation included $85 and $0 related to stock option liability awards for the three months ended March 31, 2013 and 2014, respectively. | |||||||||||||
Schedule of employee stock option plan activity | ' | |||||||||||||
A summary of stock option plans activity during the three months ended March 31, 2014 is as follows: | ||||||||||||||
Shares | Weighted- | Weighted- | Aggregate | |||||||||||
Average | Average | Intrinsic | ||||||||||||
Exercise | Remaining | Value(1) | ||||||||||||
Price | Contractual | |||||||||||||
Term | ||||||||||||||
(years) | ||||||||||||||
Outstanding at December 31, 2013 | 4,179 | $ | 8.18 | 5.64 | $ | 31,434 | ||||||||
Granted | — | $ | — | |||||||||||
Exercised | (239 | ) | $ | 5.09 | ||||||||||
Expired | (3 | ) | $ | 4.33 | ||||||||||
Forfeited | (18 | ) | $ | 7.7 | ||||||||||
Outstanding at March 31, 2014(2) | 3,919 | $ | 8.37 | 5.71 | $ | 31,674 | ||||||||
Vested or expected to vest: | ||||||||||||||
At March 31, 2014(3) | 3,869 | $ | 8.32 | 5.65 | $ | 31,454 | ||||||||
Vested: | ||||||||||||||
At March 31, 2014 | 2,251 | $ | 7.5 | 4.4 | $ | 20,160 | ||||||||
(1) | Calculated using the estimated per-share fair market value of the Company’s common stock on December 31, 2013 and March 31, 2014, which was $15.70 and $16.45 per share, respectively. | |||||||||||||
(2) | The total includes $963 performance-based options at March 31, 2014. | |||||||||||||
(3) | Outstanding options, net of forfeiture rate. |
NET_LOSS_PER_SHARE_Tables
NET LOSS PER SHARE - (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Schedule of Basic and Diluted Earnings Per Share | ' | ||||||||
The following table sets forth the computation of basic and diluted loss per share attributable to the Company’s common stockholders: | |||||||||
Three Months Ended March 31, | |||||||||
2013 | 2014 | ||||||||
Net loss per common share: | |||||||||
Net loss | $ | (10,879 | ) | $ | (14,747 | ) | |||
Less: accretion or write-up of Series A Preferred and Series B Preferred | (13,115 | ) | (1,180 | ) | |||||
Net loss attributable to common stockholders | $ | (23,994 | ) | $ | (15,927 | ) | |||
Basic and diluted loss per common share | |||||||||
Basic and diluted weighted average common shares outstanding | 22,087 | 22,523 | |||||||
Basic and diluted loss per common share | $ | (1.09 | ) | $ | (0.71 | ) | |||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | ||||||||
Diluted loss per share for the three months ended March 31, 2013 and 2014 does not reflect the following weighted average potential common shares, as the effect would be antidilutive: | |||||||||
Three Months Ended March 31, | |||||||||
2013 | 2014 | ||||||||
Series A Preferred and Series B Preferred | 5,577 | 5,577 | |||||||
Stock options | 4,424 | 3,919 | |||||||
Restricted stock units | — | 576 | |||||||
SEGMENT_AND_GEOGRAPHICAL_CONCE1
SEGMENT AND GEOGRAPHICAL CONCENTRATION - (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Schedule of Revenue by Geographic Area | ' | ||||||||
The following table represents total revenue by geographic area, based on the location of the customer: | |||||||||
Three Months Ended March 31, | |||||||||
2013 | 2014 | ||||||||
United States | $ | 25,836 | $ | 29,765 | |||||
International | 9,262 | 12,486 | |||||||
Total | $ | 35,098 | $ | 42,251 | |||||
Schedule of Revenue by Products | ' | ||||||||
The following table represents revenue by product category: | |||||||||
Three Months Ended March 31, | |||||||||
2013 | 2014 | ||||||||
Complex spine | $ | 9,306 | $ | 10,184 | |||||
Minimally invasive | 5,706 | 6,485 | |||||||
Degenerative | 10,824 | 13,096 | |||||||
25,836 | 29,765 | ||||||||
International | 9,262 | 12,486 | |||||||
Total | $ | 35,098 | $ | 42,251 | |||||
GENERAL_AND_SUMMARY_OF_SIGNIFI2
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Details) (USD $) | 3 Months Ended | 3 Months Ended | 0 Months Ended | ||||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | 7-May-14 | Apr. 21, 2014 | 13-May-14 | 13-May-14 | |
Common Stock [Member] | Pro Forma [Member] | Pro Forma [Member] | Pro Forma [Member] | Pro Forma [Member] | Pro Forma [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | ||||
Line of Credit [Member] | Common Stock [Member] | Common Stock [Member] | Series A Preferred Stock and Series B Preferred Stock [Member] | Rate | Rate | Common Stock [Member] | Common Stock [Member] | ||||||
Major Stockholder [Member] | IPO [Member] | IPO [Member] | |||||||||||
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reverse stock split ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.4115 | 0.4115 | ' | ' |
Stock issued during the period (in shares) | ' | ' | ' | 121.111 | ' | ' | ' | 8,825,000 | ' | ' | ' | ' | 8,825 |
Share Price | ' | ' | ' | $19.05 | ' | ' | $15 | ' | ' | ' | ' | ' | $15 |
Shares of common stock issued upon conversion of convertible preferred stock | ' | ' | ' | ' | ' | ' | 5,577 | ' | ' | ' | ' | 5,577 | ' |
Cumulative unpaid dividends, amount | ' | ' | ' | ' | ' | ' | ' | ' | $17,642,000 | ' | ' | ' | ' |
Repayments of Lines of Credit | ' | ' | ' | ' | 23,500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Payable and Accounts Payable, Related Parties | ' | ' | ' | ' | 39,212,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued Interest, Related Parties | ' | ' | ' | ' | 834 | ' | ' | ' | ' | ' | ' | ' | ' |
Accretion or write-up of preferred stock | 1,180,000 | 13,115,000 | ' | ' | 1,180,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Interest Expense | $1,247,000 | $474,000 | ' | ' | ' | $1,153,000 | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares issued | 22,664,310 | ' | 22,421,509 | ' | 37,066,337 | ' | ' | 8,825 | ' | ' | ' | ' | ' |
ACCOUNTS_RECEIVABLE_Details
ACCOUNTS RECEIVABLE - (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Receivables [Abstract] | ' | ' |
Accounts receivable | $35,667 | $35,271 |
Allowances | -2,441 | -2,447 |
Accounts receivable, net | $33,226 | $32,824 |
INVENTORY_Details
INVENTORY - (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory [Line Items] | ' | ' |
Finished goods | $67,557 | $64,539 |
Inventory allowances | -23,632 | -25,316 |
Inventory, net | 43,925 | 39,223 |
Surgical and Medical Instruments [Member] | ' | ' |
Inventory [Line Items] | ' | ' |
Inventory, net | $6,023 | $5,285 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS - (Details) (USD $) | 3 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 |
Developed Technology Rights [Member] | Developed Technology Rights [Member] | Licensed technology [Member] | Licensed technology [Member] | Customer Relationships [Member] | Customer Relationships [Member] | Patents and other [Member] | Patents and other [Member] | Trademarks [Member] | Trademarks [Member] | In-process research and development [Member] | In-process research and development [Member] | Other [Member] | Other [Member] | Minimum [Member] | Minimum [Member] | Minimum [Member] | Minimum [Member] | Minimum [Member] | Minimum [Member] | Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | Maximum [Member] | Maximum [Member] | Maximum [Member] | Maximum [Member] | Maximum [Member] | Maximum [Member] | ||||
Developed Technology Rights [Member] | Developed Technology Rights [Member] | Licensed technology [Member] | Licensed technology [Member] | Customer Relationships [Member] | Customer Relationships [Member] | Patents and other [Member] | Patents and other [Member] | Developed Technology Rights [Member] | Developed Technology Rights [Member] | Licensed technology [Member] | Licensed technology [Member] | Customer Relationships [Member] | Customer Relationships [Member] | Patents and other [Member] | Patents and other [Member] | ||||||||||||||||||
Schedule of Intangible Asset by Major Class [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated Useful Lives | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '4 years | '4 years | '4 years | '4 years | '4 years | '4 years | '2 years | '2 years | '6 years | '6 years | '6 years | '6 years | '7 years | '7 years | '17 years | '17 years |
Goodwill | $121,814 | ' | $121,814 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Indefinite-lived intangible assets | 14,696 | ' | 14,696 | ' | ' | ' | ' | ' | ' | ' | ' | 12,900 | 12,900 | 1,500 | 1,500 | 296 | 296 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Subject to amortization, Gross | 145,231 | ' | 145,213 | 61,600 | 61,600 | 52,600 | 52,600 | 29,700 | 29,700 | 1,331 | 1,313 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated Amortization | -103,002 | ' | -95,453 | -39,602 | -36,466 | -47,216 | -43,947 | -15,380 | -14,320 | -804 | -720 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Subject to amortization, Net | 42,229 | ' | 49,760 | 21,998 | 25,134 | 5,384 | 8,653 | 14,320 | 15,380 | 527 | 593 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible Assets, Gross | 281,741 | ' | 281,723 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible Assets, Net | 178,739 | ' | 186,270 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization expense | $7,551 | $7,526 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS Schedule of Expected Amortization Expense (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
2014 | $15,170 | ' |
2015 | 10,136 | ' |
2016 | 10,136 | ' |
2017 | 6,522 | ' |
2018 and thereafter | 265 | ' |
Subject to amortization, Net | $42,229 | $49,760 |
OTHER_ASSETS_Details
OTHER ASSETS - (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' | ' |
Surgical instruments, net | $16,408 | ' | $15,271 |
Other | 121 | ' | 143 |
Other assets, net | 16,529 | ' | 15,414 |
Surgical instruments accumulated amortization | 15,471 | ' | 15,007 |
Amortization expense | $1,308 | $724 | ' |
ACCRUED_EXPENSES_Details
ACCRUED EXPENSES - (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Payables and Accruals [Abstract] | ' | ' |
Accrued interest | $3,107 | $2,837 |
Accrued royalties | 2,002 | 2,230 |
Accrued interest | 834 | 0 |
Stock option awards liability | 0 | 2,076 |
Other | 2,175 | 1,617 |
Accrued expenses | $8,118 | $8,760 |
DEBT_Debt_Summary_Details
DEBT - Debt Summary (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Schedule of Long-term and Short-term Debt [Line Items] | ' | ' |
Bank line of credit | $23,500 | $23,500 |
Notes to stockholders | 34,351 | 19,650 |
Total debt | 62,712 | 45,770 |
Less unamortized discounts | -4,861 | -2,620 |
Debt, net of discounts | 57,851 | 43,150 |
Line of Credit [Member] | ' | ' |
Schedule of Long-term and Short-term Debt [Line Items] | ' | ' |
Bank line of credit | 23,500 | 23,500 |
Notes to Stockholders [Member] | ' | ' |
Schedule of Long-term and Short-term Debt [Line Items] | ' | ' |
Notes to stockholders | $39,212 | $22,270 |
DEBT_Bank_Line_of_Credit_Narra
DEBT - Bank Line of Credit Narrative (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 6 Months Ended | ||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Jun. 30, 2014 | |
Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Amended Credit Agreement 2012 [Member] | Prime Rate [Member] | Minimum [Member] | Maximum [Member] | Scenario, Forecast [Member] | |||
Line of Credit [Member] | Line of Credit [Member] | Line of Credit [Member] | Line of Credit [Member] | Line of Credit [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Amended Credit Agreement 2012 [Member] | |||
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Letter of Credit [Member] | Revolving Credit Facility, Swing Line Loan [Member] | Export-Import Bank [Member] | Line of Credit [Member] | Line of Credit [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | ||||
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | |||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amounts available under credit agreement | ' | ' | ' | ' | $30,000,000 | $1,000,000 | $5,000,000 | $10,000,000 | ' | ' | ' | ' | ' |
Basis spread on prime rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' |
Commitment fee, percentage of unused base | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Payment of loan issuance costs | ' | ' | ' | ' | 40,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum unused borrowing capacity | ' | ' | 4,142,000 | ' | ' | ' | ' | ' | ' | ' | 7,500,000 | ' | ' |
Early termination fee stated as a percentage of aggregate amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | 2.00% | ' |
Covenant terms, maximum consolidated net loss | ' | ' | ' | ' | ' | ' | ' | ' | 11,000 | ' | ' | ' | 16,000 |
Line of credit accrued interest rate | ' | ' | 4.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense | 1,247,000 | 474,000 | 342,000 | 324,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization of issuance and discount costs included in interest expense | ' | ' | $92,000 | $81,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DEBT_Notes_to_Stockholders_Det
DEBT - Notes to Stockholders (Details) (USD $) | 3 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Debt Instrument [Line Items] | ' | ' | ' |
Sale of common stock pursuant to securities purchase agreements | $2,308 | ' | ' |
Notes to stockholders | 34,351 | ' | 19,650 |
Proceeds from issuance of notes to stockholders | 14,634 | 0 | ' |
Interest expense | 1,247 | 474 | ' |
Accretion or write-up of preferred stock | 1,180 | 13,115 | ' |
Notes to Stockholders [Member] | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Notes to stockholders | 39,212 | ' | 22,270 |
Major Stockholder [Member] | Notes to Stockholders [Member] | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Notes to stockholders | 16,942 | ' | ' |
Stated interest rate | 10.00% | ' | ' |
Proceeds from issuance of notes to stockholders | 14,634 | ' | ' |
Amount outstanding of all note payable to stockholders | 39,212 | ' | ' |
Interest expense | 142 | 901 | ' |
Accretion or write-up of preferred stock | 9 | 67 | ' |
Accrued interest | 834 | ' | 0 |
Common Stock [Member] | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' |
Stock issued during the period (in shares) | 121 | ' | ' |
Share Price | $19.05 | ' | ' |
Sale of common stock pursuant to securities purchase agreements | $2,308 | ' | ' |
REDEEMABLE_CONVERTIBLE_PREFERR2
REDEEMABLE CONVERTIBLE PREFERRED STOCK - Rollforward of Convertible Preferred Stock (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Redeemable Convertible Preferred Stock [Roll Forward] | ' | ' |
Accretion or write-up of preferred stock | $1,180 | $13,115 |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Redeemable Convertible Preferred Stock [Roll Forward] | ' | ' |
Preferred stock, Shares Authorized, Beginning | 7,300,000 | ' |
Preferred Stock, Shares Outstanding, Beginning | 7,250,855 | ' |
Preferred Stock, Value, Beginning | 56,667 | ' |
Accretion or write-up of preferred stock | 1,195 | ' |
Preferred stock, Shares Authorized, Ending | 7,300,000 | ' |
Preferred Stock, Shares Outstanding, Ending | 7,250,855 | ' |
Preferred Stock, Value, Ending | 57,862 | ' |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Redeemable Convertible Preferred Stock [Roll Forward] | ' | ' |
Preferred stock, Shares Authorized, Beginning | 6,500,000 | ' |
Preferred Stock, Shares Outstanding, Beginning | 6,301,290 | ' |
Preferred Stock, Value, Beginning | 52,414 | ' |
Accretion or write-up of preferred stock | -15 | ' |
Preferred stock, Shares Authorized, Ending | 6,500,000 | ' |
Preferred Stock, Shares Outstanding, Ending | 6,301,290 | ' |
Preferred Stock, Value, Ending | $52,399 | ' |
REDEEMABLE_CONVERTIBLE_PREFERR3
REDEEMABLE CONVERTIBLE PREFERRED STOCK - Cumulative Unpaid Dividends (Details) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Class of Stock [Line Items] | ' | ' |
Cumulative unpaid dividends, amount | $17,642 | $15,700 |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Class of Stock [Line Items] | ' | ' |
Cumulative unpaid dividends, amount | 11,503 | 10,564 |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Class of Stock [Line Items] | ' | ' |
Cumulative unpaid dividends, amount | $6,139 | $5,136 |
REDEEMABLE_CONVERTIBLE_PREFERR4
REDEEMABLE CONVERTIBLE PREFERRED STOCK - Narrative (Details) (USD $) | 3 Months Ended | 0 Months Ended | |||||||
Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | 7-May-14 | Apr. 21, 2014 | 13-May-14 | 13-May-14 | 13-May-14 | 13-May-14 | |
Series A Redeemable Convertible Preferred Stock [Member] | Redeemable Convertible Preferred Stock [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Conversion of Series A Redeemable Convertible Preferred Stock [Member] | Conversion of Series B Redeemable Convertible Preferred Stock [Member] | ||
Rate | Rate | Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | Subsequent Event [Member] | Subsequent Event [Member] | ||||
Common Stock [Member] | Common Stock [Member] | ||||||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cumulative dividend, annual rate, percentage | ' | 10.00% | 14.00% | ' | ' | ' | ' | ' | ' |
Preferred stock, redemption terms, automatic conversion, proceeds from IPO and/or proceeds to selling shareholders in excess of threshold amount, threshold amount | $100,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of common stock issued upon conversion of convertible preferred stock | ' | ' | ' | ' | ' | ' | 5,577 | 2,984 | 2,593 |
Number of common shares issued in conversion | ' | ' | ' | 0.4115 | 0.4115 | ' | ' | ' | ' |
Payments of dividends | ' | ' | ' | ' | ' | $18,547,000 | ' | ' | ' |
STOCKBASED_COMPENSATION_Alloca
STOCK-BASED COMPENSATION - Allocation of Share-based Compensation (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | |
Allocated stock-based compensation expense | $375 | [1] | $491 |
Stock-based compensation for stock option liability awards | 0 | 85 | |
Cost of Sales [Member] | ' | ' | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | |
Allocated stock-based compensation expense | 7 | [1] | 36 |
Research and Development Expense [Member] | ' | ' | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | |
Allocated stock-based compensation expense | 21 | [1] | 25 |
Selling and Marketing Expense [Member] | ' | ' | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | |
Allocated stock-based compensation expense | 197 | [1] | 187 |
General and Administrative Expense [Member] | ' | ' | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | |
Allocated stock-based compensation expense | 150 | [1] | 243 |
Employee [Member] | ' | ' | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | |
Allocated stock-based compensation expense | 269 | [1] | 484 |
Nonemployee [Member] | ' | ' | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | |
Allocated stock-based compensation expense | $106 | [1] | $7 |
[1] | Stock-based compensation included $85 and $0 related to stock option liability awards for the three months ended March 31, 2013 and 2014, respectively. |
STOCKBASED_COMPENSATION_Summar
STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | ' | ||
Outstanding Beginning Balance, Shares | 4,179 | ' | ||
Granted, Shares | 0 | ' | ||
Exercised, Shares | -239 | ' | ||
Expired, Shares | -3 | ' | ||
Forfeited, Shares | -18 | ' | ||
Outstanding Ending Balance, Shares | 3,919 | [1] | 4,179 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ' | ' | ||
Beginning, Weighted-Average Exercise Price | $8.18 | ' | ||
Granted, Weighted-Average Exercise Price | $0 | ' | ||
Exercised, Weighted-Average Exercise Price | $5.09 | ' | ||
Expired, Weighted-Average Exercise Price | $4.33 | ' | ||
Forfeited, Weighted-Average Exercise Price | $7.70 | ' | ||
Ending, Weighted-Average Exercise Price | $8.37 | $8.18 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ' | ' | ||
Outstanding, Weighted- Average Remaining Contractual Term (years) | '5 years 8 months 16 days | '5 years 7 months 20 days | ||
Outstanding, Weighted- Average Remaining Contractual Term (years) | '5 years 8 months 16 days | '5 years 7 months 20 days | ||
Outstanding, Aggregate Intrinsic Value | $31,434 | [2] | ' | |
Outstanding, Aggregate Intrinsic Value | 31,674 | [2] | 31,434 | [2] |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract] | ' | ' | ||
Vested or expected to vest, shares | 3,869 | [3] | ' | |
Vested or expected to vest, Weighted-Average Exercise Price | $8.32 | ' | ||
Vested or expected to vest, Weighted-Average Remaining Contractual Term | '5 years 7 months 24 days | ' | ||
Vested or expected to vest, Aggregate Intrinsic Value | 31,454 | [2] | ' | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested [Abstract] | ' | ' | ||
Vested, shares | 2,251 | ' | ||
Vested, Weighted-Average Exercise Price | $7.50 | ' | ||
Vested, Weighted-Average Remaining Contractual Term | '4 years 4 months 24 days | ' | ||
Vested, Aggregate Intrinsic Value | $20,160 | [2] | ' | |
Fair value valuation, estimated fair market value of stock (in dollars per share) | $16.45 | $15.70 | ||
Performance Shares [Member] | ' | ' | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | ' | ||
Outstanding Ending Balance, Shares | 963 | ' | ||
[1] | The total includes $963 performance-based options at March 31, 2014. | |||
[2] | Calculated using the estimated per-share fair market value of the Company’s common stock on December 31, 2013 and March 31, 2014, which was $15.70 and $16.45 per share, respectively. | |||
[3] | Outstanding options, net of forfeiture rate. |
STOCKBASED_COMPENSATION_Narrat
STOCK-BASED COMPENSATION - Narrative (Details) | Mar. 31, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Shares of common stock available for grant | 831 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES - (Details) (USD $) | 3 Months Ended | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Nov. 30, 2011 | Dec. 31, 2011 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2011 | |
Licensed technology [Member] | Licensed technology [Member] | Licensed technology [Member] | In Process Research and Development [Member] | In Process Research and Development [Member] | In Process Research and Development [Member] | In Process Research and Development [Member] | In Process Research and Development [Member] | In Process Research and Development [Member] | In Process Research and Development [Member] | |||
Minimum [Member] | Maximum [Member] | Intellectual Property [Member] | Intellectual Property [Member] | Intellectual Property [Member] | Maximum [Member] | |||||||
Long-term Purchase Commitment [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other Commitment | ' | ' | $1,613,000 | ' | ' | ' | ' | ' | ' | ' | ' | $13,350,000 |
Minimum contractual term | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Future maximum royalty payments | ' | ' | ' | 2.00% | 10.00% | 7.00% | ' | ' | ' | ' | ' | ' |
Initial payment to acquire proprietary technology | 18,000 | 17,000 | ' | ' | ' | ' | 50,000 | 0 | 0 | 0 | 0 | ' |
Milestone payment one | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' | ' | ' | ' |
Milestone payment two | ' | ' | ' | ' | ' | 2,000,000 | ' | ' | ' | ' | ' | ' |
Milestone payment three | ' | ' | ' | ' | ' | 4,000,000 | ' | ' | ' | ' | ' | ' |
Milestone for milestone payment one | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' |
Milestone for milestone payment two | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' |
Milestone for milestone payment three | ' | ' | ' | ' | ' | 50,000,000 | ' | ' | ' | ' | ' | ' |
Milestone for ending royalty payments, cumulative sales | ' | ' | ' | ' | ' | $20,000,000 | ' | ' | ' | ' | ' | ' |
RELATED_PARTIES_Details
RELATED PARTIES - (Details) (USD $) | 12 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 30 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2010 | Dec. 31, 2010 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2013 |
Major Stockholder [Member] | Major Stockholder [Member] | Major Stockholder [Member] | Major Stockholder [Member] | Major Stockholder [Member] | ||
Related Party Transaction, Management Service Fee [Member] | Related Party Transaction, Management Service Fee [Member] | Related Party Transaction, Management Service Fee [Member] | Related Party Transaction, Management Service Fee [Member] | Related Party Transaction, Management Service Fee [Member] | ||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' |
Management service fee to major stockholder | ' | $75 | $263 | ' | ' | $125 |
Related Party Transaction, Expiration Period | '5 years | ' | ' | ' | ' | ' |
General and administrative | ' | ' | ' | $263 | $775 | ' |
INCOME_TAXES_Details
INCOME TAXES - (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Income Tax Disclosure [Abstract] | ' | ' |
Benefit from income taxes | ($24) | $2,913 |
Effective income tax rate, percent | -0.02% | 21.10% |
NET_LOSS_PER_SHARE_Details
NET LOSS PER SHARE - (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Earnings Per Share [Abstract] | ' | ' |
Net loss | ($14,747) | ($10,879) |
Less: accretion or write-up of Series A Preferred and Series B Preferred | -1,180 | -13,115 |
Net loss attributable to stockholders | ($15,927) | ($23,994) |
Basic and diluted (in shares) | 22,523 | 22,087 |
Basic and diluted (in dollars per share) | ($0.71) | ($1.09) |
NET_LOSS_PER_SHARE_Antidilutiv
NET LOSS PER SHARE - Antidilutive Shares (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Series A and B Convertible Preferred Stock [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 5,577 | 5,577 |
Stock options [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 3,919 | 4,424 |
Restricted Stock Units (RSUs) [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 576 | 0 |
SEGMENT_AND_GEOGRAPHICAL_CONCE2
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Revenues by Geographic Area (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Segment | ||
Segment Reporting Information [Line Items] | ' | ' |
Number of reportable segments | 1 | ' |
Revenue | $42,251 | $35,098 |
Sales Revenue, Net [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | 42,251 | 35,098 |
United States [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | 29,765 | 25,836 |
United States [Member] | Sales Revenue, Net [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | 29,765 | 25,836 |
International [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | 12,486 | 9,262 |
International [Member] | Sales Revenue, Net [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Revenue | $12,486 | $9,262 |
Geographic Concentration Risk [Member] | International [Member] | Sales Revenue, Net [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
International revenue as a percentage of total revenue | 29.60% | ' |
SEGMENT_AND_GEOGRAPHICAL_CONCE3
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Revenues by Product (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenue from External Customer [Line Items] | ' | ' |
Revenue | $42,251 | $35,098 |
United States [Member] | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Revenue | 29,765 | 25,836 |
United States [Member] | Complex Spine [Member] | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Revenue | 10,184 | 9,306 |
United States [Member] | Minimally Invasive [Member] | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Revenue | 6,485 | 5,706 |
United States [Member] | Degenerative [Member] | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Revenue | 13,096 | 10,824 |
International [Member] | ' | ' |
Revenue from External Customer [Line Items] | ' | ' |
Revenue | $12,486 | $9,262 |
SUBSEQUENT_EVENTS_Initial_Publ
SUBSEQUENT EVENTS - Initial Public Offering (Details) (USD $) | 3 Months Ended | 0 Months Ended | 0 Months Ended | |||||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | 13-May-14 | 13-May-14 | Mar. 31, 2014 | Dec. 31, 2013 | 13-May-14 | Mar. 31, 2014 | Dec. 31, 2013 | 13-May-14 | 13-May-14 | 13-May-14 | 13-May-14 | |
Common Stock [Member] | Common Stock [Member] | Series A Preferred Stock and Series B Preferred Stock [Member] | Series A Redeemable Convertible Preferred Stock [Member] | Series A Redeemable Convertible Preferred Stock [Member] | Series A Redeemable Convertible Preferred Stock [Member] | Series B Redeemable Convertible Preferred Stock [Member] | Series B Redeemable Convertible Preferred Stock [Member] | Series B Redeemable Convertible Preferred Stock [Member] | Notes to Stockholders [Member] | Line of Credit [Member] | IPO [Member] | |||
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Common Stock [Member] | ||||||||
Subsequent Event [Member] | ||||||||||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock issued during the period (in shares) | ' | ' | 121.111 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,825 |
Share price | ' | ' | $19.05 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $15 |
Proceeds from Issuance Initial Public Offering | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $120,000,000 |
Underwriting commissions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,300,000 |
Payment of public offering costs | 369,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,600,000 |
Preferred stock, shares issued upon conversion | ' | ' | ' | 2.43 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of common stock issued upon conversion of convertible preferred stock | ' | ' | ' | 5,577 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares outstanding | ' | ' | ' | ' | 0 | 7,250,855 | 7,250,855 | ' | 6,301,290 | 6,301,290 | ' | ' | ' | ' |
Cumulative dividends | ' | ' | ' | ' | ' | ' | ' | 11,900,000 | ' | ' | 6,600,000 | ' | ' | ' |
Payments on bank line of credit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 23,500,000 | ' |
Repayments of loans to stockholders | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 39,200,000 | ' | ' |
Accrued interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,300,000 | ' | ' |
SUBSEQUENT_EVENTS_Omnibus_Ince
SUBSEQUENT EVENTS - Omnibus Incentive Plan and Employee Stock Purchase Plan (Details) (Subsequent Event [Member]) | 0 Months Ended |
7-May-14 | |
Omnibus Incentive Plan [Member] | ' |
Subsequent Event [Line Items] | ' |
Number of shares authorized under the plan | 1,650.29 |
Employee Stock [Member] | ' |
Subsequent Event [Line Items] | ' |
Number of shares authorized under the plan | 411.523 |
Prerequisite for participation, minimum hours per week of employed | '20 hours |
Maximum employee contribution of eligible compensation | 2.00% |
Purchase price of common stock as a percentage of fair market value | 85.00% |
Minimum [Member] | Employee Stock [Member] | ' |
Subsequent Event [Line Items] | ' |
Maximum payroll deduction | 1.00% |
Maximum [Member] | Employee Stock [Member] | ' |
Subsequent Event [Line Items] | ' |
Maximum payroll deduction | 10.00% |
SUBSEQUENT_EVENTS_Modification
SUBSEQUENT EVENTS - Modification of Restricted Stock Units (“RSUsâ€) issued in 2013 and May 2014 Issuances of RSUs and Stock Options (Details) (USD $) | Mar. 31, 2014 | 7-May-14 | Apr. 21, 2014 | 7-May-14 | 7-May-14 | 7-May-14 | 7-May-14 | 7-May-14 | 7-May-14 | |
Omnibus Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Employee Stock Option [Member] | Immediately Vested [Member] | First Vesting Period - First Anniversary of Grant Date [Member] | Second Vesting Period - Second Anniversary of Grant Date [Member] | Third Vesting Period - Third Anniversary of Grant Date [Member] | |||
Subsequent Event [Member] | Subsequent Event [Member] | Omnibus Incentive Plan [Member] | Omnibus Incentive Plan [Member] | Employee Stock Option [Member] | Employee Stock Option [Member] | Employee Stock Option [Member] | Employee Stock Option [Member] | |||
Installment | Subsequent Event [Member] | Subsequent Event [Member] | Omnibus Incentive Plan [Member] | Omnibus Incentive Plan [Member] | Omnibus Incentive Plan [Member] | Omnibus Incentive Plan [Member] | ||||
Installment | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Number of restricted stock units that have modified vesting terms | ' | ' | 576.132 | ' | ' | ' | ' | ' | ' | |
Number of vesting periods for restricted stock units | ' | ' | 2 | 3 | ' | ' | ' | ' | ' | |
Share-based Compensation Per Share | ' | ' | $15 | ' | ' | ' | ' | ' | ' | |
Number of shares authorized under the plan | ' | 1,650.29 | ' | 188.888 | 549.176 | ' | ' | ' | ' | |
Stock option exercise price | ' | ' | ' | ' | $15 | ' | ' | ' | ' | |
Vested or expected to vest, shares | 3,869 | [1] | ' | ' | ' | ' | 5.761 | 183.058 | 183.059 | 177.298 |
[1] | Outstanding options, net of forfeiture rate. |