DOCUMENT_AND_ENTITY_INFORMATIO
DOCUMENT AND ENTITY INFORMATION DOCUMENT AND ENTITY INFORMATION | 9 Months Ended | |
Sep. 30, 2014 | Oct. 23, 2014 | |
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 | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 37,138,499 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $23,185 | $7,419 |
Accounts receivable, net | 32,920 | 32,824 |
Inventory, net | 53,624 | 39,223 |
Deferred income taxes | 3,301 | 8,824 |
Prepaid expenses and other current assets | 5,976 | 3,984 |
Total current assets | 119,006 | 92,274 |
Property and equipment, net | 3,279 | 2,978 |
Goodwill and intangible assets, net | 166,156 | 186,270 |
Other assets, net | 21,597 | 15,414 |
Total assets | 310,038 | 296,936 |
Current liabilities: | ' | ' |
Bank line of credit | 0 | 23,500 |
Accounts payable | 15,465 | 17,069 |
Accrued expenses | 9,495 | 8,760 |
Accrued payroll liabilities | 12,058 | 10,396 |
Total current liabilities | 37,018 | 59,725 |
Notes to stockholders | 0 | 19,650 |
Deferred income taxes | 8,561 | 14,084 |
Other liabilities | 123 | 211 |
Total liabilities | 45,702 | 93,670 |
Commitments and contingencies | ' | ' |
Stockholders’ equity: | ' | ' |
Common stock, $0.001 par value, 100,000,000 and 750,000,000 shares authorized at December 31, 2013 and September 30, 2014, respectively. 22,421,509 and 37,138,499 shares issued and outstanding at December 31, 2013 and September 30, 2014, respectively | 37 | 22 |
Additional paid-in capital | 382,977 | 165,651 |
Accumulated other comprehensive loss | 460 | -920 |
Accumulated deficit | -119,138 | -70,568 |
Total stockholders’ equity | 264,336 | 94,185 |
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity | 310,038 | 296,936 |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Current liabilities: | ' | ' |
Redeemable convertible preferred stock | 0 | 56,667 |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Current liabilities: | ' | ' |
Redeemable convertible preferred stock | $0 | $52,414 |
CONSOLIDATED_BALANCE_SHEETS_Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Common stock, par value per share (in usd per share) | $0.00 | $0.00 |
Common stock, shares authorized | 750,000,000 | 100,000,000 |
Common stock, shares issued | 37,138,499 | 22,421,509 |
Common stock, shares outstanding | 37,138,499 | 22,421,509 |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, par value per share (in usd per share) | ' | $0.00 |
Preferred stock, par value per share (in usd per share) | $0.00 | ' |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Preferred stock, par value per share (in usd per share) | ' | $0.00 |
Preferred stock, par value per share (in usd per share) | $0.00 | ' |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenue | $47,624 | $39,776 | $137,363 | $114,975 |
Cost of revenue | 16,135 | 11,782 | 46,583 | 34,892 |
Gross profit | 31,489 | 27,994 | 90,780 | 80,083 |
Operating expenses: | ' | ' | ' | ' |
Research, development and engineering | 4,872 | 3,048 | 11,854 | 9,327 |
Sales and marketing | 25,016 | 19,566 | 71,185 | 58,840 |
General and administrative | 14,507 | 14,939 | 47,158 | 44,170 |
Total operating expenses | 44,395 | 37,553 | 130,197 | 112,337 |
Loss from operations | -12,906 | -9,559 | -39,417 | -32,254 |
Other income (expense): | ' | ' | ' | ' |
Foreign currency transaction gain (loss) | -3,081 | 2,134 | -2,131 | 724 |
Discount on prepayment of notes to stockholders | 0 | 0 | -4,825 | 0 |
Interest expense | -116 | -721 | -2,115 | -1,878 |
Total other income (expense), net | -3,197 | 1,413 | -9,071 | -1,154 |
Loss before income tax (benefit) expense | -16,103 | -8,146 | -48,488 | -33,408 |
Income tax (benefit) expense | 37 | -1,968 | 82 | -7,467 |
Net loss | -16,140 | -6,178 | -48,570 | -25,941 |
Accretion and adjustment of preferred stock to fair value | ' | -129 | ' | -13,814 |
Accretion and adjustment of preferred stock to fair value | 0 | ' | 6,879 | ' |
Net loss attributable to stockholders | ($16,140) | ($6,307) | ($41,691) | ($39,755) |
Net loss per share attributable to common stockholders: | ' | ' | ' | ' |
Basic and diluted (in dollars per share) | ($0.43) | ($0.28) | ($1.39) | ($1.79) |
Weighted average shares outstanding: | ' | ' | ' | ' |
Basic and diluted (in shares) | 37,127,155 | 22,289,216 | 30,084,010 | 22,195,935 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net loss | ($16,140) | ($6,178) | ($48,570) | ($25,941) |
Other comprehensive income (loss): | ' | ' | ' | ' |
Foreign currency translation adjustment | -1,650 | -930 | -1,380 | -332 |
Other comprehensive income (loss) | -1,650 | -930 | -1,380 | -332 |
Comprehensive loss | ($17,790) | ($7,108) | ($49,950) | ($26,273) |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) (USD $) | Total | Series A and B Convertible Preferred Stock [Member] | Common Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Security Purchases and Other [Member] | Security Purchases and Other [Member] | Security Purchases and Other [Member] | IPO [Member] | IPO [Member] | IPO [Member] |
In Thousands, except Share data, unless otherwise specified | USD ($) | USD ($) | USD ($) | Redeemable Convertible Preferred Stock [Member] | USD ($) | Series A and B Convertible Preferred Stock [Member] | USD ($) | USD ($) | USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||
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 | -48,570 | ' | ' | ' | ' | ' | ' | -48,570 | ' | ' | ' | ' | ' | ' |
Other comprehensive loss | 1,380 | ' | ' | ' | ' | ' | -1,380 | ' | ' | ' | ' | ' | ' | ' |
Stock-based compensation | 3,830 | ' | ' | ' | 3,830 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accretion of Series A and B redeemable convertible preferred stock | ' | -1,158 | ' | ' | ' | -1,158 | ' | ' | ' | ' | ' | ' | ' | ' |
Accretion of Series A and B redeemable convertible preferred stock issuances costs | ' | -22 | ' | ' | ' | -22 | ' | ' | ' | ' | ' | ' | ' | ' |
Issuances of common stock (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 121,111 | ' | ' | 8,825,000 | ' |
Issuances of common stock | ' | ' | ' | ' | ' | ' | ' | ' | 2,308 | 1 | 2,307 | 118,870 | 8 | 118,862 |
Adjustment of preferred stock to fair value prior to conversion | 8,059 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued in conversion of Series A and B redeemable convertible preferred stock (in shares) | ' | ' | ' | 5,577,016 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued in conversion of Series A and B redeemable convertible preferred stock | 83,656 | ' | 6 | ' | 83,650 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock option modifications | 2,077 | ' | ' | ' | 2,077 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise of options (in shares) | 312,020 | ' | 193,863 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise of options | -279 | ' | ' | ' | -279 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending Balance at Sep. 30, 2014 | $264,336 | ' | $37 | ' | $382,977 | ' | $460 | ($119,138) | ' | ' | ' | ' | ' | ' |
Ending Balance (in shares) at Sep. 30, 2014 | 37,138,499 | ' | 37,138,499 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Operating activities | ' | ' |
Net loss | ($48,570) | ($25,941) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 27,339 | 27,248 |
Provision for allowance for doubtful accounts | 351 | 71 |
Provision for inventory reserve | 1,368 | 1,034 |
Stock-based compensation | 3,830 | 1,737 |
Amortization of issuance and discount costs included in interest expense | 4,928 | 61 |
Deferred income taxes | 0 | -7,565 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -283 | -4,065 |
Inventory | -17,190 | -11,534 |
Prepaid expenses and other assets | -4,472 | -138 |
Accounts payable, accrued expenses, and accrued payroll liabilities | 4,175 | 7,106 |
Net cash used in operating activities | -28,524 | -11,986 |
Investing activities | ' | ' |
Purchase of surgical instruments | -9,111 | -7,889 |
Purchase of property and equipment | -1,507 | -753 |
Purchase of intangible assets | -20 | -166 |
Net cash used in investing activities | -10,638 | -8,808 |
Financing activities | ' | ' |
Proceeds from issuances of common stock, net of issuance costs | 121,898 | 1,445 |
Proceeds from issuance of Series B redeemable convertible preferred stock, net of issuance costs | 0 | 11,574 |
Proceeds from issuance of notes to stockholders | 14,634 | 9,866 |
Prepayment of notes to stockholders | -39,212 | 0 |
Borrowings on bank line of credit | 0 | 1,500 |
Payments on bank line of credit | -23,500 | 0 |
Payment of dividends on Series A and Series B redeemable convertible preferred stock | -18,547 | 0 |
Proceeds from the exercise of options, net of payments to satisfy minimum tax withholdings | -279 | -685 |
Net cash provided by financing activities | 54,994 | 23,700 |
Effect of exchange rate changes on cash and cash equivalents | -66 | 11 |
Net increase in cash and cash equivalents | 15,766 | 2,917 |
Cash and cash equivalents at beginning of period | 7,419 | 7,011 |
Cash and cash equivalents at end of period | 23,185 | 9,928 |
Significant noncash financing activities | ' | ' |
Adjustment of preferred stock to fair value | -8,059 | 9,958 |
Deferred public offering costs | 720 | 0 |
Cash paid for: | ' | ' |
Income taxes | 36 | 92 |
Interest | 1,736 | 1,217 |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' |
Significant noncash financing activities | ' | ' |
Accretion of redeemable convertible preferred stock | 1,195 | 3,856 |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' |
Significant noncash financing activities | ' | ' |
Accretion of redeemable convertible preferred stock | ($15) | $0 |
GENERAL_AND_SUMMARY_OF_SIGNIFI
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 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 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. | |
Reverse Stock Split and Initial Public Offering | |
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. | |
On May 13, 2014, the Company completed an initial public offering (IPO) of 8,825,000 shares of common stock at a price of $15 per share. The IPO generated net proceeds of $118,826, after deducting underwriting commissions of $9,266 and expenses of approximately $4,283. The underwriting commissions and offering costs were reflected as a reduction to the IPO proceeds received in additional paid-in capital. | |
Concurrent with the closing of the IPO, the outstanding shares of the Series A redeemable convertible preferred stock (Series A Preferred) and Series B redeemable convertible preferred stock (Series B Preferred) were converted on a 2.43 -to-1 basis into 5,577,016 shares of common stock. Following the closing of the IPO, there were no shares of preferred stock outstanding. | |
The Company used proceeds from the IPO to pay cumulative dividends of approximately $11,932 to holders of Series A Preferred and $6,615 to holders of Series B Preferred following the conversion of the preferred stock. In addition, the Company paid approximately $23,500 to repay all outstanding indebtedness under its line of credit and $40,495 to prepay all outstanding aggregate principal and accrued interest of notes to stockholders. | |
Unaudited Interim Results | |
The accompanying condensed consolidated balance sheets as of September 30, 2014, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2013 and 2014, the condensed consolidated statements of changes in stockholders' equity as of September 30, 2014, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2013 and 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 and nine months ended September 30, 2014 are not necessarily indicative of future results. All information as of September 30, 2014 and for the three and nine month periods ending September 30, 2013 and 2014 within these notes to the consolidated financial statements is unaudited. | |
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 (US GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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 subsidiaries 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 and has elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act which permits EGCs to defer compliance with new or revised accounting standards (the EGC extension) until non-issuers are required to comply with such standards. 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 Financial Accounting Standards Board (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 that have elected the EGC extension, 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 assets 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 that have elected the EGC extension 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 that have elected the EGC extension, 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 sheet, such change is not expected to be material. There will be no changes in the presentations of the Company’s other financial statements. | |
In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. For public entities other than EGCs that have elected the EGC extension, the guidance will be effective for annual reporting periods beginning after December 15, 2016. EGCs that have elected the EGC extension, including the Company, and non-public entities will be required to comply with the guidance for annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of the initial application. The Company is evaluating the impact of these amendments and the transition alternatives on its consolidated financial statements. |
ACCOUNTS_RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
ACCOUNTS RECEIVABLE | ' | ||||||||
ACCOUNTS RECEIVABLE | |||||||||
Receivables consist of the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Accounts receivable | $ | 35,271 | $ | 35,508 | |||||
Allowances | (2,447 | ) | (2,588 | ) | |||||
Accounts receivable, net | $ | 32,824 | $ | 32,920 | |||||
INVENTORY
INVENTORY | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
INVENTORY | ' | ||||||||
INVENTORY | |||||||||
The following table summarizes the Company’s inventory, net of allowances: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Finished goods | $ | 64,539 | $ | 79,376 | |||||
Inventory allowances | (25,316 | ) | (25,752 | ) | |||||
Inventory, net | $ | 39,223 | $ | 53,624 | |||||
Inventory includes surgical instruments available for sale with a carrying value of $5,285 and $8,339 at December 31, 2013 and September 30, 2014, respectively. |
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended | ||||||||||||||
Sep. 30, 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 September 30, 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 | (45,019 | ) | 16,581 | ||||||||||
Licensed technology | 4 - 6 years | 52,600 | (52,138 | ) | 462 | ||||||||||
Customer relationships | 4 - 7 years | 29,700 | (17,502 | ) | 12,198 | ||||||||||
Patents and other | 2 - 17 years | 1,326 | (921 | ) | 405 | ||||||||||
Subtotal | 145,226 | (115,580 | ) | 29,646 | |||||||||||
Total | $ | 281,736 | $ | (115,580 | ) | $ | 166,156 | ||||||||
Amortization expense was $7,597 and $5,038 for the three months ended September 30, 2013 and 2014, respectively, and $22,649 and $20,130 for the nine months ended September 30, 2013 and 2014, respectively. | |||||||||||||||
As of September 30, 2014, the expected amortization expense for the remainder of 2014 and the following four years and thereafter is as follows: | |||||||||||||||
30-Sep-14 | |||||||||||||||
2014 | $ | 2,554 | |||||||||||||
2015 | 10,150 | ||||||||||||||
2016 | 10,138 | ||||||||||||||
2017 | 6,523 | ||||||||||||||
2018 and thereafter | 281 | ||||||||||||||
Total | $ | 29,646 | |||||||||||||
OTHER_ASSETS
OTHER ASSETS | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
OTHER ASSETS | ' | ||||||||
OTHER ASSETS | |||||||||
Other assets comprises the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Surgical instruments, net | $ | 15,271 | $ | 21,477 | |||||
Other | 143 | 120 | |||||||
Total | $ | 15,414 | $ | 21,597 | |||||
Surgical instruments are stated net of accumulated amortization of $15,007 and $17,214 at December 31, 2013 and September 30, 2014, respectively. Amortization expense was $1,021 and $1,726 for the three months ended September 30, 2013 and 2014, respectively, and $2,592 and $4,498 for the nine months ended September 30, 2013 and 2014, respectively. |
ACCRUED_EXPENSES
ACCRUED EXPENSES | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
ACCRUED EXPENSES | ' | ||||||||
ACCRUED EXPENSES | |||||||||
Accrued expenses consist of the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Accrued commissions | $ | 2,837 | $ | 4,005 | |||||
Accrued royalties | 2,230 | 2,359 | |||||||
Stock option awards liability | 2,076 | — | |||||||
Other | 1,617 | 3,131 | |||||||
Total | $ | 8,760 | $ | 9,495 | |||||
DEBT
DEBT | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
DEBT | ' | ||||||||
DEBT | |||||||||
Debt consists of the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Bank line of credit | $ | 23,500 | $ | — | |||||
Notes to stockholders | 22,270 | — | |||||||
Total debt | 45,770 | — | |||||||
Less unamortized discounts | (2,620 | ) | — | ||||||
Debt, net of discounts | $ | 43,150 | $ | — | |||||
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. | |||||||||
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. | |||||||||
Borrowings under the revolving line of credit accrued interest at a rate of 4.25% at September 30, 2014. For the nine months ended September 30, 2013 and 2014, the Company incurred interest expense of $950 and $652, respectively, including amounts of $206 and $279, respectively, related to the amortization of the loan issuance fees. | |||||||||
On May 13, 2014, the Company repaid all $23,500 outstanding under the bank line of credit and accrued interest of $38 using proceeds of the IPO. On October 21, 2014, the Company and its lenders amended the Credit Agreement. Please refer to Note 15, Subsequent Events. | |||||||||
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 for cash consideration of $14,634. These notes bear interest at 10%. Following issuance of these notes, total aggregate principal amount outstanding of all notes payable to stockholders was $39,212. | |||||||||
On May 13, 2014, the Company pre-paid all $39,212 principal outstanding under the notes to stockholders and accrued interest of $1,283 using proceeds of the IPO. In connection with the prepayment, the Company recorded $4,825 representing the acceleration of the issuance discounts on the notes to stockholders. Interest expense for the nine months ended September 30, 2013 and 2014 was $889 and $1,324, respectively, and included amortization expense of $61 and $103, respectively. |
REDEEMABLE_CONVERTIBLE_PREFERR
REDEEMABLE CONVERTIBLE PREFERRED STOCK | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||
REDEEMABLE CONVERTIBLE PREFERRED STOCK | ' | ||||||||||||||||||||
REDEEMABLE CONVERTIBLE PREFERRED STOCK | |||||||||||||||||||||
The following is a rollforward of activity in the Series A Preferred and Series B Preferred accounts from December 31, 2013 to September 30, 2014. | |||||||||||||||||||||
Series A Preferred | Series B Preferred | ||||||||||||||||||||
Shares | Shares | ||||||||||||||||||||
Authorized | Outstanding | Amount | Authorized | Outstanding | Amount | ||||||||||||||||
Balance at December 31, 2013 | 7,300,000 | 7,250,885 | $ | 56,667 | 6,500,000 | 6,301,291 | $ | 52,414 | |||||||||||||
Payment of dividend | — | (11,932 | ) | (6,615 | ) | ||||||||||||||||
Accretion of preferred stock to fair value | — | — | 1,195 | — | — | (15 | ) | ||||||||||||||
Adjustment of preferred stock to fair value prior to conversion | — | — | (1,170 | ) | — | — | (6,889 | ) | |||||||||||||
Conversion to common stock | (7,300,000 | ) | (7,250,885 | ) | (44,760 | ) | (6,500,000 | ) | (6,301,291 | ) | (38,895 | ) | |||||||||
Balance at September 30, 2014 | — | — | $ | — | — | — | $ | — | |||||||||||||
On May 13, 2014, the Company converted the Series A Preferred and Series B Preferred into 2,983,902 and 2,593,114 shares, respectively, of its common stock based on a 2.43:1 conversion ratio as a result of its IPO. In addition, cumulative unpaid dividends of $18,547 were paid in cash to holders of the preferred stock. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||
STOCK-BASED COMPENSATION | ' | ||||||||||||||||
STOCK-BASED COMPENSATION | |||||||||||||||||
As of September 30, 2014, the Company has four stock-based compensation plans: The 2014 Employee Omnibus Incentive Plan (Omnibus Incentive Plan), the 2014 Employee Stock Purchase Plan (ESPP), the 2010 Equity Award Plan and the 2010 Independent Agent Plan, collectively, “the Plans”. The purpose of the Plans is to provide incentives to employees, directors, agents 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 or share purchase price, and vesting terms are determined in accordance with the Plans, as applicable. The Omnibus Incentive Plan and ESPP were adopted by the Company’s board of directors on May 7, 2014. At that time, 1,650,289 and 411,523 shares were reserved for issuance under the Omnibus Incentive Plan and ESPP, respectively. Following the adoption of these 2014 plans, 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 is administered by the Compensation Committee of the Company’s board of directors. 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 (RSUs) 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. | |||||||||||||||||
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 are 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. The Company recognized approximately $50 and $80 of stock-based compensation expense on the ESPP for the three and nine months ended September 30, 2014. | |||||||||||||||||
The Company recognized the following stock-based compensation expense related to employees and non-employees which is inclusive of the amounts detailed below: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 (1) | 2014 (1) | 2013 (1) | 2014 (1) | ||||||||||||||
Cost of revenue | $ | 72 | $ | 156 | $ | 222 | $ | 267 | |||||||||
Research, development, and engineering | 24 | 156 | 70 | 299 | |||||||||||||
Sales and marketing | 211 | 749 | 593 | 1,382 | |||||||||||||
General and administrative | 269 | 1,010 | 852 | 1,882 | |||||||||||||
$ | 576 | $ | 2,071 | $ | 1,737 | $ | 3,830 | ||||||||||
Employees | $ | 526 | $ | 2,047 | $ | 1,667 | $ | 3,785 | |||||||||
Non-employees | 50 | 24 | 70 | 45 | |||||||||||||
Total | $ | 576 | $ | 2,071 | $ | 1,737 | $ | 3,830 | |||||||||
-1 | Stock-based compensation included $169 and $0 related to stock option liability awards for the three months ended September 30, 2013 and 2014, respectively, compared to $545 and $0 for the nine months ended September 30, 2013 and 2014, respectively. | ||||||||||||||||
A summary of stock option plans activity during the nine months ended September 30, 2014 is as follows: | |||||||||||||||||
Shares | Weighted- | Weighted- | Aggregate | ||||||||||||||
Average | Average | Intrinsic | |||||||||||||||
Exercise | Remaining | Value (1) | |||||||||||||||
Price | Contractual | ||||||||||||||||
Term | |||||||||||||||||
(years) | |||||||||||||||||
Outstanding at December 31, 2013 | 4,179,119 | $ | 8.18 | 5.64 | $ | 31,434 | |||||||||||
Granted | 684,937 | 15.01 | |||||||||||||||
Exercised | (312,020 | ) | 6.16 | ||||||||||||||
Expired | (31,888 | ) | 4.41 | ||||||||||||||
Forfeited | (43,533 | ) | 7.14 | ||||||||||||||
Outstanding at September 30, 2014(2) | 4,476,615 | $ | 9.4 | 5.96 | $ | 22,800 | |||||||||||
Vested or expected to vest: | |||||||||||||||||
At September 30, 2014(3) | 4,421,693 | $ | 9.39 | 5.98 | $ | 22,653 | |||||||||||
Vested: | |||||||||||||||||
At September 30, 2014 | 2,478,103 | $ | 7.82 | 4.49 | $ | 16,374 | |||||||||||
-1 | Calculated using the estimated fair market value per-share of the Company’s common stock as on December 31, 2013 and actual per share fair market value at September 30, 2014, which was $15.70 and $14.43, respectively. | ||||||||||||||||
-2 | The total includes 993,934 performance-based options at September 30, 2014. | ||||||||||||||||
-3 | Outstanding options, net of forfeiture rate. | ||||||||||||||||
A summary of RSU activity for the nine months ended September 30, 2014 is as follows: | |||||||||||||||||
Unvested RSUs | |||||||||||||||||
Shares | |||||||||||||||||
Outstanding at December 31, 2013 | 576,132 | ||||||||||||||||
Granted | 188,891 | ||||||||||||||||
Vested | — | ||||||||||||||||
Forfeited | — | ||||||||||||||||
Unvested at September 30, 2014 | 765,023 | ||||||||||||||||
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 21, 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 stock-based compensation expense of approximately $15.61 per share or $8,993 over the vesting period. The Company recognized stock-based compensation expense of $1,088 and $1,916 for the three and nine months ended September 30, 2014 related to these awards. | |||||||||||||||||
Effective May 7, 2014, the Company’s board of directors approved the issuance of 188,891 RSUs to certain of the Company’s officers. The RSUs will vest in three equal installments on the first, second and third anniversary of the grant date. The Company expects to recognize stock-based compensation expense of approximately $2,833 over the vesting period of the RSU. Stock-based compensation expense related to these awards recognized in the three and nine months ended September 30, 2014 was $238 and $378, respectively. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 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 September 30, 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 it to make additional aggregate payments of up to $13,350 should certain milestones be met, including milestones related to regulatory applications and approvals. Cumulative payments under this agreement totaled $100 through September 30, 2014. In addition, 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. | |
The medical device industry is characterized by frequent claims and litigation, including claims regarding patent and other | |
intellectual property rights as well as improper hiring practices. The Company is not aware of any pending or threatened legal proceeding against it that the Company expects would have a material adverse effect on its business, operating results or financial condition. However, the Company is a party in multiple legal actions involving claimants seeking various remedies, including monetary damages, and none of the outcomes are certain or entirely within the Company's control. |
RELATED_PARTIES
RELATED PARTIES | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTIES | ' |
RELATED PARTIES | |
In connection with the Merger, the Company and K2M entered into a management agreement with the major stockholder of the Company. Under the terms of the agreement, as amended, the Company incurred fees to the stockholder of $263 and $0 for the three months ended September 30, 2013 and 2014, respectively and $513 and $373 for the nine months ended September 30, 2013 and 2014, respectively. The Company records such costs in general and administrative expense in its consolidated statements of operations. The management agreement was terminated in May 2014 following the Company's IPO. | |
In connection with the IPO, certain stockholders of the Company granted the underwriters an option to purchase from such selling shareholders additional shares of common stock at the public offering price, less underwriting discounts. On June 10, 2014, the underwriters exercised this option and purchased 1,000,000 shares of common stock from selling shareholders at a price of $15 per share before underwriting discounts. The Company received no proceeds from the sale of these shares. |
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
INCOME TAXES | ' |
INCOME TAXES | |
The provision for income taxes for the three and nine months ended September 30, 2013 and 2014 includes both domestic and foreign income taxes at applicable statutory rates adjusted for permanent differences and valuation allowances. For the three months ended September 30, 2013 and 2014, the income tax (benefit) expense was $(1,968) and $37, resulting in an effective tax rate of 24.2% and (0.2)%, respectively. For the nine months ended September 30, 2013 and 2014, income tax (benefit) expense was $(7,467) and $82, resulting in an effective tax rate of 22.4% and (0.2)%, respectively. 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 | 9 Months Ended | ||||||||||||||||
Sep. 30, 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||||
Net loss per common share: | |||||||||||||||||
Net loss | $ | (6,178 | ) | $ | (16,140 | ) | $ | (25,941 | ) | $ | (48,570 | ) | |||||
Less: accretion and adjustment of Series A Preferred and Series B Preferred | (129 | ) | — | (13,814 | ) | 6,879 | |||||||||||
Net loss attributable to common stockholders | $ | (6,307 | ) | $ | (16,140 | ) | $ | (39,755 | ) | $ | (41,691 | ) | |||||
Basic and diluted loss per common share | |||||||||||||||||
Basic and diluted weighted average common shares outstanding | 22,289,216 | 37,127,155 | 22,195,935 | 30,084,010 | |||||||||||||
Basic and diluted loss per common share | $ | (0.28 | ) | $ | (0.43 | ) | $ | (1.79 | ) | $ | (1.39 | ) | |||||
Diluted loss per share for the three and nine months ended September 30, 2013 and 2014 does not reflect the following weighted average potential common shares, as the effect would be antidilutive: | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||||
Series A Preferred and Series B Preferred | 5,576,955 | — | 5,576,955 | — | |||||||||||||
Stock options | 4,247,737 | 4,476,615 | 4,247,737 | 4,476,615 | |||||||||||||
Restricted stock units | 576,131 | 765,023 | 576,132 | 765,023 | |||||||||||||
SEGMENT_AND_GEOGRAPHICAL_CONCE
SEGMENT AND GEOGRAPHICAL CONCENTRATION | 9 Months Ended | ||||||||||||||||
Sep. 30, 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 27.8% and 29.1% of total revenue for the three and nine months ended September 30, 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||||
United States | $ | 27,491 | $ | 34,385 | $ | 83,091 | $ | 97,371 | |||||||||
International | 12,285 | 13,239 | 31,884 | 39,992 | |||||||||||||
Total | $ | 39,776 | $ | 47,624 | $ | 114,975 | $ | 137,363 | |||||||||
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 at the surgeon or hospital level, which prevents us from providing a specific breakdown for our international revenue among our three product categories. These sales transactions are settled when the Company ships the product to the agent. | |||||||||||||||||
The following table represents domestic revenue by procedure category. To further align its procedure categorizations, beginning in the second quarter of 2014, the Company began to report MIS sales attributable to complex spine procedures, which were historically reported in the minimally invasive category, within the complex spine category. Accordingly, the complex spine category presented below includes MIS sales attributable to complex spine procedures of $1,355 for the three months ended September 30, 2013 and $4,114 and $3,865 for the nine months ended September 30, 2013 and 2014, respectively, which was historically reported in the minimally invasive category. | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||||
Complex spine | $ | 11,330 | $ | 14,585 | $ | 35,111 | $ | 40,375 | |||||||||
Minimally invasive | 4,946 | 5,258 | 13,945 | 15,138 | |||||||||||||
Degenerative | 11,215 | 14,542 | 34,035 | 41,858 | |||||||||||||
27,491 | 34,385 | 83,091 | 97,371 | ||||||||||||||
International | 12,285 | 13,239 | 31,884 | 39,992 | |||||||||||||
Total | $ | 39,776 | $ | 47,624 | $ | 114,975 | $ | 137,363 | |||||||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | |
On October 21, 2014, subsidiaries of the Company entered into an amendment (the “Fourth Amendment”) to the Company’s senior secured credit facilities credit agreement, dated as of October 29, 2012 (as amended from time to time), by and among K2M Holdings, Inc. as the guarantor (“Guarantor”), K2M, Inc. and K2M UK Limited as the borrower (“Borrower”), and Silicon Valley Bank and Comerica Bank as lenders. The Fourth Amendment, among other things, extends the maturity date of the revolving credit facility to October 2015, increases the total revolving commitments from $30,000 to $40,000 and increases the letter of credit sub-facility from $1,000 to $10,000. In addition, the Fourth Amendment removes the sub-facility provided by the Export-Import Bank of the United States, which had been a party to the prior loan agreements. | |
ABR loans under the revolving credit facility bear interest at a rate per annum equal to ABR, plus 0.75%. LIBOR loans under the revolving credit facility bear interest at a rate per annum equal to the greater of (i) LIBOR, plus 2.50% or (ii) 3.75%. The total obligations under the amended credit facility cannot exceed (i) the lesser of the total revolving commitment of $40,000 or (ii) the borrowing base, which is calculated as (x) 85%of accounts receivable so long as certain of those accounts receivable do not exceed, in the aggregate, 50% of the borrowing base plus (y) 35% of the value of the eligible inventory provided that the contribution of the value of the eligible inventory not exceed the less of 40% of the borrowing base or $10,000. Borrowings under the revolving credit facility remain secured by a first priority lien on all of the Borrower’s personal property assets, including intellectual property. | |
The existing financial covenants were deleted in their entirety and replaced with a quick ratio financial covenant, calculated as the ratio of (i) the sum of all unrestricted cash and cash equivalents, accounts or accounts receivable and inventory (to the extent not in excess of 50% of the foregoing) to (ii) the consolidated liabilities plus outstanding letters of credit minus deferred revenue, which cannot exceed 1.20:1.00 on the last day of any month. | |
The revolving credit facility also continues to contain other restrictive covenants with which the Guarantor and/or Borrower must comply, including restrictive covenants which limit the ability to pay dividends on common stock and make certain investments. Basket sizes and thresholds applicable to the negative covenants have also been added and/or modified. Certain additional modifications to the revolving credit facility are consistent with the Company becoming a public company in April 2014. |
GENERAL_AND_SUMMARY_OF_SIGNIFI1
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Policies) | 9 Months Ended |
Sep. 30, 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 (US GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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 subsidiaries 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 and has elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act which permits EGCs to defer compliance with new or revised accounting standards (the EGC extension) until non-issuers are required to comply with such standards. 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 Financial Accounting Standards Board (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 that have elected the EGC extension, 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 assets 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 that have elected the EGC extension 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 that have elected the EGC extension, 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 sheet, such change is not expected to be material. There will be no changes in the presentations of the Company’s other financial statements. | |
In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. For public entities other than EGCs that have elected the EGC extension, the guidance will be effective for annual reporting periods beginning after December 15, 2016. EGCs that have elected the EGC extension, including the Company, and non-public entities will be required to comply with the guidance for annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of the initial application. The Company is evaluating the impact of these amendments and the transition alternatives on its consolidated financial statements. |
ACCOUNTS_RECEIVABLE_Tables
ACCOUNTS RECEIVABLE - (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Receivables [Abstract] | ' | ||||||||
Schedule of Accounts Receivable | ' | ||||||||
Receivables consist of the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Accounts receivable | $ | 35,271 | $ | 35,508 | |||||
Allowances | (2,447 | ) | (2,588 | ) | |||||
Accounts receivable, net | $ | 32,824 | $ | 32,920 | |||||
INVENTORY_Tables
INVENTORY - (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of Current Inventory | ' | ||||||||
The following table summarizes the Company’s inventory, net of allowances: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Finished goods | $ | 64,539 | $ | 79,376 | |||||
Inventory allowances | (25,316 | ) | (25,752 | ) | |||||
Inventory, net | $ | 39,223 | $ | 53,624 | |||||
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS - (Tables) | 9 Months Ended | ||||||||||||||
Sep. 30, 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 September 30, 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 | (45,019 | ) | 16,581 | ||||||||||
Licensed technology | 4 - 6 years | 52,600 | (52,138 | ) | 462 | ||||||||||
Customer relationships | 4 - 7 years | 29,700 | (17,502 | ) | 12,198 | ||||||||||
Patents and other | 2 - 17 years | 1,326 | (921 | ) | 405 | ||||||||||
Subtotal | 145,226 | (115,580 | ) | 29,646 | |||||||||||
Total | $ | 281,736 | $ | (115,580 | ) | $ | 166,156 | ||||||||
Schedule of Expected Amortization Expense | ' | ||||||||||||||
As of September 30, 2014, the expected amortization expense for the remainder of 2014 and the following four years and thereafter is as follows: | |||||||||||||||
30-Sep-14 | |||||||||||||||
2014 | $ | 2,554 | |||||||||||||
2015 | 10,150 | ||||||||||||||
2016 | 10,138 | ||||||||||||||
2017 | 6,523 | ||||||||||||||
2018 and thereafter | 281 | ||||||||||||||
Total | $ | 29,646 | |||||||||||||
OTHER_ASSETS_Tables
OTHER ASSETS - (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ||||||||
Schedule of Other Assets | ' | ||||||||
Other assets comprises the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Surgical instruments, net | $ | 15,271 | $ | 21,477 | |||||
Other | 143 | 120 | |||||||
Total | $ | 15,414 | $ | 21,597 | |||||
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES - (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Schedule of Accrued Expenses | ' | ||||||||
Accrued expenses consist of the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Accrued commissions | $ | 2,837 | $ | 4,005 | |||||
Accrued royalties | 2,230 | 2,359 | |||||||
Stock option awards liability | 2,076 | — | |||||||
Other | 1,617 | 3,131 | |||||||
Total | $ | 8,760 | $ | 9,495 | |||||
DEBT_Tables
DEBT - (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Debt | ' | ||||||||
Debt consists of the following: | |||||||||
December 31, | September 30, | ||||||||
2013 | 2014 | ||||||||
Bank line of credit | $ | 23,500 | $ | — | |||||
Notes to stockholders | 22,270 | — | |||||||
Total debt | 45,770 | — | |||||||
Less unamortized discounts | (2,620 | ) | — | ||||||
Debt, net of discounts | $ | 43,150 | $ | — | |||||
REDEEMABLE_CONVERTIBLE_PREFERR1
REDEEMABLE CONVERTIBLE PREFERRED STOCK (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Equity [Abstract] | ' | ||||||||||||||||||||
Schedule of Activity in Series A and B Convertible Preferred Stock | ' | ||||||||||||||||||||
The following is a rollforward of activity in the Series A Preferred and Series B Preferred accounts from December 31, 2013 to September 30, 2014. | |||||||||||||||||||||
Series A Preferred | Series B Preferred | ||||||||||||||||||||
Shares | Shares | ||||||||||||||||||||
Authorized | Outstanding | Amount | Authorized | Outstanding | Amount | ||||||||||||||||
Balance at December 31, 2013 | 7,300,000 | 7,250,885 | $ | 56,667 | 6,500,000 | 6,301,291 | $ | 52,414 | |||||||||||||
Payment of dividend | — | (11,932 | ) | (6,615 | ) | ||||||||||||||||
Accretion of preferred stock to fair value | — | — | 1,195 | — | — | (15 | ) | ||||||||||||||
Adjustment of preferred stock to fair value prior to conversion | — | — | (1,170 | ) | — | — | (6,889 | ) | |||||||||||||
Conversion to common stock | (7,300,000 | ) | (7,250,885 | ) | (44,760 | ) | (6,500,000 | ) | (6,301,291 | ) | (38,895 | ) | |||||||||
Balance at September 30, 2014 | — | — | $ | — | — | — | $ | — | |||||||||||||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION - (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 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 which is inclusive of the amounts detailed below: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 (1) | 2014 (1) | 2013 (1) | 2014 (1) | ||||||||||||||
Cost of revenue | $ | 72 | $ | 156 | $ | 222 | $ | 267 | |||||||||
Research, development, and engineering | 24 | 156 | 70 | 299 | |||||||||||||
Sales and marketing | 211 | 749 | 593 | 1,382 | |||||||||||||
General and administrative | 269 | 1,010 | 852 | 1,882 | |||||||||||||
$ | 576 | $ | 2,071 | $ | 1,737 | $ | 3,830 | ||||||||||
Employees | $ | 526 | $ | 2,047 | $ | 1,667 | $ | 3,785 | |||||||||
Non-employees | 50 | 24 | 70 | 45 | |||||||||||||
Total | $ | 576 | $ | 2,071 | $ | 1,737 | $ | 3,830 | |||||||||
-1 | Stock-based compensation included $169 and $0 related to stock option liability awards for the three months ended September 30, 2013 and 2014, respectively, compared to $545 and $0 for the nine months ended September 30, 2013 and 2014, respectively. | ||||||||||||||||
Schedule of employee stock option plan activity | ' | ||||||||||||||||
A summary of stock option plans activity during the nine months ended September 30, 2014 is as follows: | |||||||||||||||||
Shares | Weighted- | Weighted- | Aggregate | ||||||||||||||
Average | Average | Intrinsic | |||||||||||||||
Exercise | Remaining | Value (1) | |||||||||||||||
Price | Contractual | ||||||||||||||||
Term | |||||||||||||||||
(years) | |||||||||||||||||
Outstanding at December 31, 2013 | 4,179,119 | $ | 8.18 | 5.64 | $ | 31,434 | |||||||||||
Granted | 684,937 | 15.01 | |||||||||||||||
Exercised | (312,020 | ) | 6.16 | ||||||||||||||
Expired | (31,888 | ) | 4.41 | ||||||||||||||
Forfeited | (43,533 | ) | 7.14 | ||||||||||||||
Outstanding at September 30, 2014(2) | 4,476,615 | $ | 9.4 | 5.96 | $ | 22,800 | |||||||||||
Vested or expected to vest: | |||||||||||||||||
At September 30, 2014(3) | 4,421,693 | $ | 9.39 | 5.98 | $ | 22,653 | |||||||||||
Vested: | |||||||||||||||||
At September 30, 2014 | 2,478,103 | $ | 7.82 | 4.49 | $ | 16,374 | |||||||||||
-1 | Calculated using the estimated fair market value per-share of the Company’s common stock as on December 31, 2013 and actual per share fair market value at September 30, 2014, which was $15.70 and $14.43, respectively. | ||||||||||||||||
-2 | The total includes 993,934 performance-based options at September 30, 2014. | ||||||||||||||||
-3 | Outstanding options, net of forfeiture rate. | ||||||||||||||||
Schedule of Restricted Stock Units Activity | ' | ||||||||||||||||
A summary of RSU activity for the nine months ended September 30, 2014 is as follows: | |||||||||||||||||
Unvested RSUs | |||||||||||||||||
Shares | |||||||||||||||||
Outstanding at December 31, 2013 | 576,132 | ||||||||||||||||
Granted | 188,891 | ||||||||||||||||
Vested | — | ||||||||||||||||
Forfeited | — | ||||||||||||||||
Unvested at September 30, 2014 | 765,023 | ||||||||||||||||
NET_LOSS_PER_SHARE_Tables
NET LOSS PER SHARE - (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||||
Net loss per common share: | |||||||||||||||||
Net loss | $ | (6,178 | ) | $ | (16,140 | ) | $ | (25,941 | ) | $ | (48,570 | ) | |||||
Less: accretion and adjustment of Series A Preferred and Series B Preferred | (129 | ) | — | (13,814 | ) | 6,879 | |||||||||||
Net loss attributable to common stockholders | $ | (6,307 | ) | $ | (16,140 | ) | $ | (39,755 | ) | $ | (41,691 | ) | |||||
Basic and diluted loss per common share | |||||||||||||||||
Basic and diluted weighted average common shares outstanding | 22,289,216 | 37,127,155 | 22,195,935 | 30,084,010 | |||||||||||||
Basic and diluted loss per common share | $ | (0.28 | ) | $ | (0.43 | ) | $ | (1.79 | ) | $ | (1.39 | ) | |||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | ||||||||||||||||
Diluted loss per share for the three and nine months ended September 30, 2013 and 2014 does not reflect the following weighted average potential common shares, as the effect would be antidilutive: | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||||
Series A Preferred and Series B Preferred | 5,576,955 | — | 5,576,955 | — | |||||||||||||
Stock options | 4,247,737 | 4,476,615 | 4,247,737 | 4,476,615 | |||||||||||||
Restricted stock units | 576,131 | 765,023 | 576,132 | 765,023 | |||||||||||||
SEGMENT_AND_GEOGRAPHICAL_CONCE1
SEGMENT AND GEOGRAPHICAL CONCENTRATION - (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||||
United States | $ | 27,491 | $ | 34,385 | $ | 83,091 | $ | 97,371 | |||||||||
International | 12,285 | 13,239 | 31,884 | 39,992 | |||||||||||||
Total | $ | 39,776 | $ | 47,624 | $ | 114,975 | $ | 137,363 | |||||||||
Schedule of Revenue by Products | ' | ||||||||||||||||
The following table represents domestic revenue by procedure category. To further align its procedure categorizations, beginning in the second quarter of 2014, the Company began to report MIS sales attributable to complex spine procedures, which were historically reported in the minimally invasive category, within the complex spine category. Accordingly, the complex spine category presented below includes MIS sales attributable to complex spine procedures of $1,355 for the three months ended September 30, 2013 and $4,114 and $3,865 for the nine months ended September 30, 2013 and 2014, respectively, which was historically reported in the minimally invasive category. | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2013 | 2014 | 2013 | 2014 | ||||||||||||||
Complex spine | $ | 11,330 | $ | 14,585 | $ | 35,111 | $ | 40,375 | |||||||||
Minimally invasive | 4,946 | 5,258 | 13,945 | 15,138 | |||||||||||||
Degenerative | 11,215 | 14,542 | 34,035 | 41,858 | |||||||||||||
27,491 | 34,385 | 83,091 | 97,371 | ||||||||||||||
International | 12,285 | 13,239 | 31,884 | 39,992 | |||||||||||||
Total | $ | 39,776 | $ | 47,624 | $ | 114,975 | $ | 137,363 | |||||||||
GENERAL_AND_SUMMARY_OF_SIGNIFI2
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Details) (USD $) | 0 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | 13-May-14 | Apr. 21, 2014 | Sep. 30, 2014 | Sep. 30, 2013 |
Rate | ||||
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Reverse stock split ratio | ' | 0.411522634 | ' | ' |
Stock issued during the period (in shares) | 8,825,000 | ' | ' | ' |
Repayments of Lines of Credit | ' | ' | $23,500 | $0 |
Repayments of Related Party Debt | ' | ' | 39,212 | 0 |
Notes Payable, Other Payables [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Repayments of Related Party Debt | 40,495 | ' | ' | ' |
Pro Forma [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Repayments of Lines of Credit | 23,500 | ' | ' | ' |
Common Stock [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Stock issued during the period (in shares) | ' | ' | 121,111 | ' |
Share Price (in usd per share) | ' | ' | $19.05 | ' |
Convertible Preferred Stock, Shares Issued upon Conversion | 2.43 | ' | ' | ' |
Shares of common stock issued upon conversion of convertible preferred stock | 5,577,016 | ' | ' | ' |
Common Stock [Member] | IPO [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Share Price (in usd per share) | 15 | ' | ' | ' |
Proceeds from Issuance Initial Public Offering | 118,826 | ' | ' | ' |
Payments for Commissions | 9,266 | ' | ' | ' |
Payments of Stock Issuance Costs | 4,283 | ' | ' | ' |
Series A Redeemable Convertible Preferred Stock [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Shares of common stock issued upon conversion of convertible preferred stock | ' | ' | -7,250,885 | ' |
Temporary Equity, Cumulative Dividends | 11,932 | ' | ' | ' |
Series B Redeemable Convertible Preferred Stock [Member] | ' | ' | ' | ' |
Significant Accounting Policies [Line Items] | ' | ' | ' | ' |
Shares of common stock issued upon conversion of convertible preferred stock | ' | ' | -6,301,291 | ' |
Temporary Equity, Cumulative Dividends | 6,615 | ' | ' | ' |
ACCOUNTS_RECEIVABLE_Details
ACCOUNTS RECEIVABLE - (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Receivables [Abstract] | ' | ' |
Accounts receivable | $35,508 | $35,271 |
Allowances | -2,588 | -2,447 |
Accounts receivable, net | $32,920 | $32,824 |
INVENTORY_Details
INVENTORY - (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory [Line Items] | ' | ' |
Finished goods | $79,376 | $64,539 |
Inventory allowances | -25,752 | -25,316 |
Inventory, net | 53,624 | 39,223 |
Surgical and Medical Instruments [Member] | ' | ' |
Inventory [Line Items] | ' | ' |
Inventory, net | $8,339 | $5,285 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS - (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 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 | ' | $121,814 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Indefinite-lived intangible assets | 14,696 | ' | 14,696 | ' | 14,696 | ' | ' | ' | ' | ' | ' | ' | ' | 12,900 | 12,900 | 1,500 | 1,500 | 296 | 296 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Subject to amortization, Gross | 145,226 | ' | 145,226 | ' | 145,213 | 61,600 | 61,600 | 52,600 | 52,600 | 29,700 | 29,700 | 1,326 | 1,313 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated Amortization | -115,580 | ' | -115,580 | ' | -95,453 | -45,019 | -36,466 | -52,138 | -43,947 | -17,502 | -14,320 | -921 | -720 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | 29,646 | ' | 29,646 | ' | 49,760 | 16,581 | 25,134 | 462 | 8,653 | 12,198 | 15,380 | 405 | 593 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible Assets, Gross | 281,736 | ' | 281,736 | ' | 281,723 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible Assets, Net | 166,156 | ' | 166,156 | ' | 186,270 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization expense | $5,038 | $7,597 | $20,130 | $22,649 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS Schedule of Expected Amortization Expense (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
2014 | $2,554 | ' |
2015 | 10,150 | ' |
2016 | 10,138 | ' |
2017 | 6,523 | ' |
2018 and thereafter | 281 | ' |
Total | $29,646 | $49,760 |
OTHER_ASSETS_Details
OTHER ASSETS - (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ' | ' | ' | ' | ' |
Surgical instruments, net | $21,477 | ' | $21,477 | ' | $15,271 |
Other | 120 | ' | 120 | ' | 143 |
Total | 21,597 | ' | 21,597 | ' | 15,414 |
Surgical instruments accumulated amortization | 17,214 | ' | 17,214 | ' | 15,007 |
Amortization expense | $1,726 | $1,021 | $4,498 | $2,592 | ' |
ACCRUED_EXPENSES_Details
ACCRUED EXPENSES - (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Payables and Accruals [Abstract] | ' | ' |
Accrued commissions | $4,005 | $2,837 |
Accrued royalties | 2,359 | 2,230 |
Stock option awards liability | 0 | 2,076 |
Other | 3,131 | 1,617 |
Total | $9,495 | $8,760 |
DEBT_Debt_Summary_Details
DEBT - Debt Summary (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Schedule of Long-term and Short-term Debt [Line Items] | ' | ' |
Bank line of credit | $0 | $23,500 |
Notes to stockholders | 0 | 19,650 |
Total debt | 0 | 45,770 |
Less unamortized discounts | 0 | -2,620 |
Debt, net of discounts | 0 | 43,150 |
Line of Credit [Member] | ' | ' |
Schedule of Long-term and Short-term Debt [Line Items] | ' | ' |
Bank line of credit | 0 | 23,500 |
Notes to Stockholders [Member] | ' | ' |
Schedule of Long-term and Short-term Debt [Line Items] | ' | ' |
Notes to stockholders | $0 | $22,270 |
DEBT_Bank_Line_of_Credit_Narra
DEBT - Bank Line of Credit Narrative (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | 13-May-14 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | |
Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | Credit Agreement 2012 [Member] | |||||
Revolving Credit Facility [Member] | Revolving Credit Facility [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] | |||||
Minimum [Member] | ||||||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amounts available under credit agreement | ' | ' | ' | ' | ' | ' | ' | $30,000,000 | ' | $1,000,000 | $5,000,000 | $10,000,000 |
Minimum unused borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | 7,500,000 | ' | ' | ' |
Line of credit accrued interest rate | ' | ' | ' | ' | ' | 4.25% | ' | ' | ' | ' | ' | ' |
Interest expense | 116,000 | 721,000 | 2,115,000 | 1,878,000 | ' | 652,000 | 950,000 | ' | ' | ' | ' | ' |
Amortization of issuance and discount costs included in interest expense | ' | ' | ' | ' | ' | 279,000 | 206,000 | ' | ' | ' | ' | ' |
Repayments of Lines of Credit | ' | ' | 23,500,000 | 0 | 23,500,000 | ' | ' | ' | ' | ' | ' | ' |
Interest Payable | ' | ' | ' | ' | $38,000 | ' | ' | ' | ' | ' | ' | ' |
DEBT_Notes_to_Stockholders_Det
DEBT - Notes to Stockholders (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | 13-May-14 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' |
Stock issued during the period (in shares) | 8,825,000 | ' | ' | ' | ' | ' |
Notes to stockholders | ' | $0 | ' | $0 | ' | $19,650 |
Proceeds from issuance of notes to stockholders | ' | ' | ' | 14,634 | 9,866 | ' |
Related Party Discount on Prepayment of Debt | 4,825 | 0 | 0 | 4,825 | 0 | ' |
Interest expense | ' | 116 | 721 | 2,115 | 1,878 | ' |
Accretion of preferred stock to fair value | ' | ' | 129 | ' | 13,814 | ' |
Notes to Stockholders [Member] | ' | ' | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' |
Notes to stockholders | ' | 0 | ' | 0 | ' | 22,270 |
Notes to Stockholders [Member] | Major Stockholder [Member] | ' | ' | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' |
Notes to stockholders | ' | 16,942 | ' | 16,942 | ' | ' |
Proceeds from issuance of notes to stockholders | ' | ' | ' | 14,634 | ' | ' |
Stated interest rate | ' | 10.00% | ' | 10.00% | ' | ' |
Amount outstanding of all note payable to stockholders | 39,212 | ' | ' | ' | ' | ' |
Accrued interest | 1,283 | ' | ' | ' | ' | ' |
Interest expense | ' | ' | ' | 1,324 | 889 | ' |
Accretion of preferred stock to fair value | ' | ' | ' | 103 | 61 | ' |
Common Stock [Member] | ' | ' | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' |
Stock issued during the period (in shares) | ' | ' | ' | 121,111 | ' | ' |
Share Price (in usd per share) | ' | $19.05 | ' | $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 | 9 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Redeemable Convertible Preferred Stock [Roll Forward] | ' | ' | ' |
Accretion of preferred stock to fair value | ($129) | ' | ($13,814) |
Conversion to common stock, Value | ' | 83,656 | ' |
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 | ' | 7,250,885 | ' |
Preferred Stock, Value, Beginning | ' | 56,667 | ' |
Payment of dividend | ' | -11,932 | ' |
Accretion of preferred stock to fair value | ' | 1,195 | ' |
Adjustment of preferred stock to fair value prior to conversion | ' | -1,170 | ' |
Conversion to common stock, Shares Authorized | ' | -7,300,000 | ' |
Conversion to common stock, Shares Outstanding | ' | -7,250,885 | ' |
Conversion to common stock, Value | ' | -44,760 | ' |
Preferred stock, Shares Authorized, Ending | ' | 0 | ' |
Preferred Stock, Shares Outstanding, Ending | ' | 0 | ' |
Preferred Stock, Value, Ending | ' | 0 | ' |
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 | ' | 6,301,291 | ' |
Preferred Stock, Value, Beginning | ' | 52,414 | ' |
Payment of dividend | ' | -6,615 | ' |
Accretion of preferred stock to fair value | ' | -15 | ' |
Adjustment of preferred stock to fair value prior to conversion | ' | -6,889 | ' |
Conversion to common stock, Shares Authorized | ' | -6,500,000 | ' |
Conversion to common stock, Shares Outstanding | ' | -6,301,291 | ' |
Conversion to common stock, Value | ' | -38,895 | ' |
Preferred stock, Shares Authorized, Ending | ' | 0 | ' |
Preferred Stock, Shares Outstanding, Ending | ' | 0 | ' |
Preferred Stock, Value, Ending | ' | $0 | ' |
REDEEMABLE_CONVERTIBLE_PREFERR3
REDEEMABLE CONVERTIBLE PREFERRED STOCK - Narrative (Details) (USD $) | 9 Months Ended | 0 Months Ended | ||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | 13-May-14 | 13-May-14 | 13-May-14 | 13-May-14 |
Common Stock [Member] | Redeemable Convertible Preferred Stock [Member] | Conversion of Series A Redeemable Convertible Preferred Stock [Member] | Conversion of Series B Redeemable Convertible Preferred Stock [Member] | |||
Common Stock [Member] | Common Stock [Member] | |||||
Class of Stock [Line Items] | ' | ' | ' | ' | ' | ' |
Shares of common stock issued upon conversion of convertible preferred stock | ' | ' | 5,577,016 | ' | 2,983,902 | 2,593,114 |
Convertible Preferred Stock, Shares Issued upon Conversion | ' | ' | 2.43 | ' | ' | ' |
Payments of dividends | $18,547 | $0 | ' | $18,547 | ' | ' |
STOCKBASED_COMPENSATION_Alloca
STOCK-BASED COMPENSATION - Allocation of Share-based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ||||
Allocated stock-based compensation expense | $2,071 | [1] | $576 | [1] | $3,830 | [1] | $1,737 | [1] |
Stock-based compensation for stock option liability awards | 0 | 169 | 0 | 545 | ||||
Cost of Revenue [Member] | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ||||
Allocated stock-based compensation expense | 156 | [1] | 72 | [1] | 267 | [1] | 222 | [1] |
Research and Development Expense [Member] | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ||||
Allocated stock-based compensation expense | 156 | [1] | 24 | [1] | 299 | [1] | 70 | [1] |
Selling and Marketing Expense [Member] | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ||||
Allocated stock-based compensation expense | 749 | [1] | 211 | [1] | 1,382 | [1] | 593 | [1] |
General and Administrative Expense [Member] | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ||||
Allocated stock-based compensation expense | 1,010 | [1] | 269 | [1] | 1,882 | [1] | 852 | [1] |
Employee [Member] | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ||||
Allocated stock-based compensation expense | 2,047 | [1] | 526 | [1] | 3,785 | [1] | 1,667 | [1] |
Nonemployee [Member] | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ||||
Allocated stock-based compensation expense | $24 | [1] | $50 | [1] | $45 | [1] | $70 | [1] |
[1] | Stock-based compensation included $169 and $0 related to stock option liability awards for the three months ended September 30, 2013 and 2014, respectively, compared to $545 and $0 for the nine months ended September 30, 2013 and 2014, respectively. |
STOCKBASED_COMPENSATION_Summar
STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) (USD $) | 9 Months Ended | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | ' | ||
Outstanding Beginning Balance, Shares | 4,179,119 | ' | ||
Granted, Shares | 684,937 | ' | ||
Exercised, Shares | -312,020 | ' | ||
Expired, Shares | -31,888 | ' | ||
Forfeited, Shares | -43,533 | ' | ||
Outstanding Ending Balance, Shares | 4,476,615 | [1] | 4,179,119 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ' | ' | ||
Beginning, Weighted-Average Exercise Price (in usd per share) | $8.18 | ' | ||
Granted, Weighted-Average Exercise Price (in usd per share) | $15.01 | ' | ||
Exercised, Weighted-Average Exercise Price (in usd per share) | $6.16 | ' | ||
Expired, Weighted-Average Exercise Price (in usd per share) | $4.41 | ' | ||
Forfeited, Weighted-Average Exercise Price (in usd per share) | $7.14 | ' | ||
Ending, Weighted-Average Exercise Price (in usd per share) | $9.40 | $8.18 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ' | ' | ||
Outstanding, Weighted- Average Remaining Contractual Term (years) | '5 years 11 months 16 days | '5 years 7 months 20 days | ||
Outstanding, Weighted- Average Remaining Contractual Term (years) | '5 years 11 months 16 days | '5 years 7 months 20 days | ||
Outstanding, Aggregate Intrinsic Value | $31,434 | [2] | ' | |
Outstanding, Aggregate Intrinsic Value | 22,800 | [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 | 4,421,693 | [3] | ' | |
Vested or expected to vest, Weighted-Average Exercise Price (in usd per share) | $9.39 | ' | ||
Vested or expected to vest, Weighted-Average Remaining Contractual Term | '5 years 11 months 23 days | ' | ||
Vested or expected to vest, Aggregate Intrinsic Value | 22,653 | [2] | ' | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested [Abstract] | ' | ' | ||
Vested, shares | 2,478,103 | ' | ||
Vested, Weighted-Average Exercise Price (in usd per share) | $7.82 | ' | ||
Vested, Weighted-Average Remaining Contractual Term | '4 years 5 months 26 days | ' | ||
Vested, Aggregate Intrinsic Value | $16,374 | [2] | ' | |
Fair value valuation, estimated fair market value of stock (in dollars per share) | $14.43 | $15.70 | ||
Performance Shares [Member] | ' | ' | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ' | ' | ||
Outstanding Ending Balance, Shares | 993,934 | ' | ||
[1] | The total includes 993,934 performance-based options at September 30, 2014. | |||
[2] | Calculated using the estimated fair market value per-share of the Company’s common stock as on December 31, 2013 and actual per share fair market value at September 30, 2014, which was $15.70 and $14.43, respectively. | |||
[3] | Outstanding options, net of forfeiture rate. |
STOCKBASED_COMPENSATION_Schedu
STOCK-BASED COMPENSATION - Schedule of Restricted Stock and Restricted Stock Units Activity (Details) (Restricted Stock Units (RSUs) [Member]) | 9 Months Ended |
Sep. 30, 2014 | |
Restricted Stock Units (RSUs) [Member] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ' |
Beginning Outstanding Shares | 576,132 |
Granted Shares | 188,891 |
Vested Shares | 0 |
Forfeited Shares | 0 |
Ending Outstanding Shares | 765,023 |
STOCKBASED_COMPENSATION_Narrat
STOCK-BASED COMPENSATION - Narrative (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||||||||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Apr. 21, 2014 | 7-May-14 | Sep. 30, 2014 | Sep. 30, 2014 | 7-May-14 | 7-May-14 | 7-May-14 | Sep. 30, 2014 | Sep. 30, 2014 | 7-May-14 | 7-May-14 | ||||
plan | plan | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Omnibus Incentive Plan [Member] | Omnibus Incentive Plan [Member] | Omnibus Incentive Plan [Member] | Omnibus Incentive Plan [Member] | Omnibus Incentive Plan [Member] | Employee Stock [Member] | Employee Stock [Member] | Employee Stock [Member] | Employee Stock [Member] | Employee Stock [Member] | |||||||
Installment | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Employee Stock Option [Member] | Minimum [Member] | Maximum [Member] | |||||||||||||||
Installment | Immediately Vested [Member] | ||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Number of Stock Plans | 4 | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | ' | ' | ' | ' | ' | ' | ' | 1,650,289 | ' | ' | 188,891 | ' | 411,523 | ' | ' | ' | ' | ||||
Employee Stock Purchase Plan, Prerequisite for Participation, Minimum Hours Per Week of Employed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '20 hours | ' | ' | ' | ' | ||||
Employee Stock Purchase Plan, Common Stock Purchase, Payroll Deduction, Percentage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | 10.00% | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Employee Subscription Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8500.00% | ' | ' | ' | ' | ||||
Allocated stock-based compensation expense | $2,071 | [1] | $576 | [1] | $3,830 | [1] | $1,737 | [1] | $1,088 | $1,916 | ' | ' | $238 | $378 | ' | ' | ' | $50 | $80 | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Modification, Modified Number | ' | ' | ' | ' | ' | ' | 576,132 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Installments | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ||||
Allocated Share-based Compensation Expense, Amount Per Unit | ' | ' | ' | ' | ' | $15.61 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | ' | ' | ' | ' | $8,993 | $8,993 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Vested or expected to vest, shares | 4,421,693 | [2] | ' | 4,421,693 | [2] | ' | ' | ' | ' | ' | ' | ' | ' | 2,833,000 | ' | ' | ' | ' | ' | ||
[1] | Stock-based compensation included $169 and $0 related to stock option liability awards for the three months ended September 30, 2013 and 2014, respectively, compared to $545 and $0 for the nine months ended September 30, 2013 and 2014, respectively. | ||||||||||||||||||||
[2] | Outstanding options, net of forfeiture rate. |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES - (Details) (USD $) | 9 Months Ended | 1 Months Ended | 9 Months Ended | |||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Nov. 30, 2011 | Sep. 30, 2014 | 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] | |||
Minimum [Member] | Maximum [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 | 20,000 | 166,000 | ' | ' | ' | ' | 100,000 | ' |
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 $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Jun. 10, 2014 | Jun. 10, 2014 |
Major Stockholder [Member] | Major Stockholder [Member] | Major Stockholder [Member] | Major Stockholder [Member] | Underwriters [Member] | Underwriters [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] | ' | ' | ' | ' | ' | ' |
General and administrative | $0 | $263 | $373 | $513 | ' | ' |
Stock Issued During Period, Shares, Issued for Services | ' | ' | ' | ' | 1,000,000 | ' |
Stock Issued During Period, Value, Issued for Services (in usd per share) | ' | ' | ' | ' | ' | $15 |
INCOME_TAXES_Details
INCOME TAXES - (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Income tax (benefit) expense | $37 | ($1,968) | $82 | ($7,467) |
Effective income tax rate, percent | -0.20% | 24.20% | -0.20% | 22.40% |
NET_LOSS_PER_SHARE_Details
NET LOSS PER SHARE - (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Net loss | ($16,140) | ($6,178) | ($48,570) | ($25,941) |
Less: accretion and adjustment of Series A Preferred and Series B Preferred | ' | -129 | ' | -13,814 |
Less: accretion and adjustment of Series A Preferred and Series B Preferred | 0 | ' | 6,879 | ' |
Net loss attributable to stockholders | ($16,140) | ($6,307) | ($41,691) | ($39,755) |
Basic and diluted weighted average common shares outstanding | 37,127,155 | 22,289,216 | 30,084,010 | 22,195,935 |
Basic and diluted loss per common share (in dollars per share) | ($0.43) | ($0.28) | ($1.39) | ($1.79) |
NET_LOSS_PER_SHARE_Antidilutiv
NET LOSS PER SHARE - Antidilutive Shares (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 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) | 0 | 5,576,955 | 0 | 5,576,955 |
Stock options [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 4,476,615 | 4,247,737 | 4,476,615 | 4,247,737 |
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) | 765,023 | 576,131 | 765,023 | 576,132 |
SEGMENT_AND_GEOGRAPHICAL_CONCE2
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Narrative (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment | ||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Number of reportable segments | ' | ' | 1 | ' |
Revenue | $47,624 | $39,776 | $137,363 | $114,975 |
International [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 13,239 | 12,285 | 39,992 | 31,884 |
United States [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 34,385 | 27,491 | 97,371 | 83,091 |
Sales Revenue, Net [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 47,624 | 39,776 | 137,363 | 114,975 |
Sales Revenue, Net [Member] | International [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 13,239 | 12,285 | 39,992 | 31,884 |
Sales Revenue, Net [Member] | United States [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 34,385 | 27,491 | 97,371 | 83,091 |
Sales Revenue, Net [Member] | Geographic Concentration Risk [Member] | International [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
International revenue as a percentage of total revenue | 27.80% | ' | 29.10% | ' |
Complex Spine Attributable to Minimally Invasive Surgery [Member] | United States [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | ' | $1,355 | $3,865 | $4,114 |
SEGMENT_AND_GEOGRAPHICAL_CONCE3
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Revenues by Geographic Area (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | $47,624 | $39,776 | $137,363 | $114,975 |
Sales Revenue, Net [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 47,624 | 39,776 | 137,363 | 114,975 |
United States [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 34,385 | 27,491 | 97,371 | 83,091 |
United States [Member] | Sales Revenue, Net [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 34,385 | 27,491 | 97,371 | 83,091 |
International [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | 13,239 | 12,285 | 39,992 | 31,884 |
International [Member] | Sales Revenue, Net [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenue | $13,239 | $12,285 | $39,992 | $31,884 |
SEGMENT_AND_GEOGRAPHICAL_CONCE4
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Revenues by Product (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenue from External Customer [Line Items] | ' | ' | ' | ' |
Revenue | $47,624 | $39,776 | $137,363 | $114,975 |
United States [Member] | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' |
Revenue | 34,385 | 27,491 | 97,371 | 83,091 |
United States [Member] | Complex Spine [Member] | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' |
Revenue | 14,585 | 11,330 | 40,375 | 35,111 |
United States [Member] | Minimally Invasive [Member] | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' |
Revenue | 5,258 | 4,946 | 15,138 | 13,945 |
United States [Member] | Degenerative [Member] | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' |
Revenue | 14,542 | 11,215 | 41,858 | 34,035 |
International [Member] | ' | ' | ' | ' |
Revenue from External Customer [Line Items] | ' | ' | ' | ' |
Revenue | $13,239 | $12,285 | $39,992 | $31,884 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (Credit Agreement 2012 [Member], USD $) | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Oct. 21, 2014 | Oct. 21, 2014 | Oct. 21, 2014 | Oct. 21, 2014 | Oct. 21, 2014 |
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Letter of Credit [Member] | Letter of Credit [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |
Silicon Valley Bank and Comerica Bank [Member] | Silicon Valley Bank and Comerica Bank [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Letter of Credit [Member] | |||
Silicon Valley Bank and Comerica Bank [Member] | Silicon Valley Bank and Comerica Bank [Member] | Silicon Valley Bank and Comerica Bank [Member] | Silicon Valley Bank and Comerica Bank [Member] | Silicon Valley Bank and Comerica Bank [Member] | |||||
Alternative Base Rate [Member] | London Interbank Offered Rate (LIBOR) [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||
Minimum [Member] | Maximum [Member] | ||||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amounts available under credit agreement | $30,000,000 | $30,000,000 | $1,000,000 | $1,000,000 | $40,000,000 | ' | ' | ' | $10,000,000 |
Debt Instrument, Basis Spread on Variable Rate | ' | ' | ' | ' | ' | 0.75% | 2.50% | 3.75% | ' |
Borrowing base calculated as a percentage of accounts receivable, percentage | ' | ' | ' | ' | 85.00% | ' | ' | ' | ' |
Borrowing base limitation calculation , percentage of borrowing case plus percentage of value of eligible inventory, percentage of borrowing base | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' |
Borrowing base limitation calculation , percentage of borrowing case plus percentage of value of eligible inventory, percentage of eligible inventory | ' | ' | ' | ' | 35.00% | ' | ' | ' | ' |
Borrowing base limitation calculation threshold, threshold percentage of borrowing rate | ' | ' | ' | ' | 40.00% | ' | ' | ' | ' |
Borrowing base limitation calculation threshold, threshold amount | ' | ' | ' | ' | $10,000,000 | ' | ' | ' | ' |
Debt Instrument, Covenant, Quick Ratio, Maximum Inventory as a Percentage of Accounts Receivable, Percentage | ' | ' | ' | ' | 0.5 | ' | ' | ' | ' |
Debt Instrument, covenant, minimum required quick ratio | ' | ' | ' | ' | 1.2 | ' | ' | ' | ' |