DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 28, 2017 | Jun. 30, 2016 | |
Entity [Abstract] | |||
Entity Registrant Name | K2M Group Holdings, Inc. | ||
Entity Central Index Key | 1,499,807 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 42,464,916 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 418 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 45,511 | $ 34,646 |
Accounts receivable, net | 46,430 | 38,773 |
Inventory, net | 61,897 | 62,002 |
Prepaid expenses and other current assets | 6,147 | 19,820 |
Total current assets | 159,985 | 155,241 |
Property, plant and equipment, net | 50,714 | 38,318 |
Goodwill | 121,814 | 121,814 |
Intangible assets, net | 22,758 | 33,123 |
Other assets, net | 28,254 | 26,016 |
Total assets | 383,525 | 374,512 |
Current liabilities: | ||
Current maturities under capital lease obligation | 973 | 284 |
Accounts payable | 15,367 | 22,483 |
Accrued expenses | 15,673 | 13,559 |
Accrued payroll liabilities | 12,068 | 11,507 |
Total current liabilities | 44,081 | 47,833 |
Convertible senior notes | 36,894 | 0 |
Capital lease obligation, net of current maturities | 34,933 | 34,140 |
Deferred income taxes, net | 5,017 | 5,042 |
Other liabilities | 1,032 | 835 |
Total liabilities | 121,957 | 87,850 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value, 750,000,000 shares authorized; 42,282,741 and 41,337,692 shares issued and 42,274,130 and 41,337,692 shares outstanding, respectively | 42 | 41 |
Additional paid-in capital | 474,512 | 454,153 |
Accumulated deficit | (211,081) | (169,421) |
Accumulated other comprehensive (loss) income | (1,771) | 1,889 |
Treasury stock, at cost, 8,611 and 0 shares, respectively | (134) | 0 |
Total stockholders’ equity | 261,568 | 286,662 |
Total liabilities and stockholders’ equity | $ 383,525 | $ 374,512 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value per share (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 42,282,741 | 41,337,692 |
Common stock, shares outstanding | 42,274,130 | 41,337,692 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Revenue | $ 236,634 | $ 216,007 | $ 186,672 |
Cost of revenue | 82,178 | 71,791 | 62,800 |
Gross profit | 154,456 | 144,216 | 123,872 |
Operating expenses: | |||
Research and development | 21,547 | 19,868 | 16,302 |
Sales and marketing | 111,376 | 105,635 | 95,323 |
General and administrative | 56,264 | 54,983 | 60,216 |
Total operating expenses | 189,187 | 180,486 | 171,841 |
Loss from operations | (34,731) | (36,270) | (47,969) |
Other expense, net: | |||
Foreign currency transaction loss | (2,430) | (1,813) | (4,752) |
Discount on prepayment of notes to stockholders | 0 | 0 | (4,825) |
Interest expense | (4,425) | (941) | (2,205) |
Total other expense, net | (6,855) | (2,754) | (11,782) |
Loss before income taxes | (41,586) | (39,024) | (59,751) |
Income tax expense (benefit) | 74 | 192 | (114) |
Net loss | (41,660) | (39,216) | (59,637) |
Accretion and adjustment of preferred stock to fair value | 0 | ||
Accretion and adjustment of preferred stock to fair value | 0 | 0 | 6,879 |
Net loss attributable to common stockholders | $ (41,660) | $ (39,216) | $ (52,758) |
Net loss per share attributable to common stockholders: | |||
Basic and diluted (in dollars per share) | $ (1) | $ (0.97) | $ (1.65) |
Weighted average common shares outstanding: | |||
Basic and diluted (in shares) | 41,729,013 | 40,237,848 | 31,887,246 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (41,660) | $ (39,216) | $ (59,637) |
Other comprehensive loss (income): | |||
Foreign currency translation adjustment | (3,660) | 62 | 2,747 |
Other comprehensive (loss) income | (3,660) | 62 | 2,747 |
Comprehensive loss | $ (45,320) | $ (39,154) | $ (56,890) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Treasury Stock [Member] | IPO [Member] | IPO [Member]Common Stock [Member] | IPO [Member]Additional Paid-in Capital [Member] |
Beginning Balance (in shares) at Dec. 31, 2013 | 22,421,509 | ||||||||
Beginning Balance at Dec. 31, 2013 | $ 94,185 | $ 22 | $ 165,651 | $ (70,568) | $ (920) | $ 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (59,637) | (59,637) | |||||||
Other comprehensive income (loss) | 2,747 | 2,747 | |||||||
Stock-based compensation | 5,807 | 5,807 | |||||||
Accretion of Series A and B redeemable convertible preferred stock | (1,158) | (1,158) | |||||||
Accretion of Series A and B redeemable convertible preferred stock issuance costs | (22) | (22) | |||||||
Issuances of common stock pursuant to securities purchase and other agreements (in shares) | 121,111 | 8,825,000 | |||||||
Issuances of common stock pursuant to securities purchase and other agreements | 2,307 | 2,307 | $ 118,870 | $ 8 | $ 118,862 | ||||
Adjustment of preferred stock to fair value prior to conversion | 8,059 | 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 | |||||||
Issuance and exercise of stock-based compensation benefit plans, net of income tax (in shares) | 421,462 | ||||||||
Issuance and exercise of stock-based compensation benefit plans, net of income tax | 1,563 | $ 1 | 1,562 | ||||||
Ending Balance (in shares) at Dec. 31, 2014 | 37,366,098 | ||||||||
Ending Balance at Dec. 31, 2014 | 258,454 | $ 37 | 386,795 | (130,205) | 1,827 | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (39,216) | (39,216) | |||||||
Other comprehensive income (loss) | 62 | 62 | |||||||
Stock-based compensation | 11,188 | 11,188 | |||||||
Issuances of common stock pursuant to securities purchase and other agreements (in shares) | 2,907,490 | ||||||||
Issuances of common stock pursuant to securities purchase and other agreements | 54,157 | $ 3 | 54,154 | ||||||
Issuance and exercise of stock-based compensation benefit plans, net of income tax (in shares) | 1,064,104 | ||||||||
Issuance and exercise of stock-based compensation benefit plans, net of income tax | $ 2,017 | $ 1 | 2,016 | ||||||
Ending Balance (in shares) at Dec. 31, 2015 | 41,337,692 | 41,337,692 | |||||||
Ending Balance at Dec. 31, 2015 | $ 286,662 | $ 41 | 454,153 | (169,421) | 1,889 | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (41,660) | (41,660) | |||||||
Other comprehensive income (loss) | (3,660) | (3,660) | |||||||
Stock-based compensation | 6,956 | 6,956 | |||||||
Convertible senior notes equity conversion option | 11,666 | 11,666 | |||||||
Debt issuance costs allocated to equity and other | $ (640) | (640) | |||||||
Issuance and exercise of stock-based compensation benefit plans, net of income tax (in shares) | 411,785 | 945,049 | |||||||
Issuance and exercise of stock-based compensation benefit plans, net of income tax | $ 2,244 | $ 1 | 2,377 | (134) | |||||
Ending Balance (in shares) at Dec. 31, 2016 | 42,274,130 | 42,282,741 | |||||||
Ending Balance at Dec. 31, 2016 | $ 261,568 | $ 42 | $ 474,512 | $ (211,081) | $ (1,771) | $ (134) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | |||
Net loss | $ (41,660) | $ (39,216) | $ (59,637) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 29,212 | 24,940 | 33,324 |
Provision for inventory reserve | 5,572 | 1,680 | 583 |
Provision for allowance for doubtful accounts | 68 | 319 | 469 |
Stock-based compensation | 6,956 | 11,188 | 5,807 |
Amortization of issuance and discount costs included in interest expense | 0 | 0 | 4,928 |
Accretion of discounts and amortization of issuance costs of convertible senior notes | 1,604 | 0 | 0 |
Deferred income taxes | (33) | 0 | (218) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (9,381) | (5,082) | (2,860) |
Inventory | (3,439) | (8,766) | (13,660) |
Prepaid expenses and other assets | (10,256) | (9,738) | (8,450) |
Accounts payable, accrued expenses, and accrued payroll liabilities | 8,059 | 6,365 | 9,552 |
Net cash used in operating activities | (13,298) | (18,310) | (30,162) |
Investing activities | |||
Purchase of surgical instruments | (12,275) | (10,905) | (12,848) |
Purchase of property, plant and equipment | (17,439) | (2,787) | (2,905) |
Changes in cash restricted for leasehold improvements | 6,608 | 0 | (6,667) |
Purchase of intangible assets | (1,307) | (588) | (118) |
Net cash used in investing activities | (24,413) | (14,280) | (22,538) |
Financing activities | |||
Borrowings on bank line of credit | 19,500 | 25,000 | 0 |
Payments on bank line of credit | (19,500) | (25,000) | (23,500) |
Proceeds from issuance of convertible senior notes, net of issuance costs | 47,108 | 0 | 0 |
Proceeds from issuances of notes to stockholders | 0 | 0 | 14,634 |
Prepayment of notes to stockholders | 0 | 0 | (39,212) |
Payment of dividends on Series A and Series B redeemable convertible preferred stock | 0 | 0 | (18,547) |
Proceeds from issuances of common stock, net of issuance costs | 0 | 54,209 | 121,898 |
Principal payments under capital lease | (219) | 0 | 0 |
Issuances and exercise of stock-based compensation benefit plans, net of income tax | 2,244 | 2,017 | 1,563 |
Net cash provided by financing activities | 49,133 | 56,226 | 56,836 |
Effect of exchange rate changes on cash and cash equivalents | (557) | (401) | (144) |
Net increase in cash and cash equivalents | 10,865 | 23,235 | 3,992 |
Cash and cash equivalents at beginning of period | 34,646 | 11,411 | 7,419 |
Cash and cash equivalents at end of period | 45,511 | 34,646 | 11,411 |
Significant non-cash investing and financing activities | |||
Buildings under capital lease | 0 | 26,469 | 0 |
Leasehold improvements, including property under capital lease | 171 | 6,884 | 0 |
Capital lease obligation | 1,708 | 33,938 | 0 |
Accretion of convertible senior notes | 807 | 0 | 0 |
Adjustment of preferred stock to fair value | 0 | 0 | (8,059) |
Common stock offering costs | 0 | 52 | 0 |
Cash paid for: | |||
Income taxes | 159 | 126 | 132 |
Interest | 382 | 428 | 6,690 |
Series A Redeemable Convertible Preferred Stock [Member] | |||
Significant non-cash investing and financing activities | |||
Accretion of Series A and B redeemable convertible preferred stock | $ 0 | $ 0 | $ 1,180 |
GENERAL AND SUMMARY OF SIGNIFIC
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In the Annual Report on Form 10-K, unless the context otherwise requires, reference to “K2M,” “the Company,” “we,” “us,” and “our,” refer to K2M Group Holdings, Inc. together with its subsidiaries. Description of Business K2M Group Holdings, Inc. was formed as a Delaware corporation on June 29, 2010. On July 2, 2010, K2M, Inc., 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., (“WCAS”). On August 12, 2010, upon the closing of the transactions under the Merger Agreement, Merger Sub merged with and into K2M, Inc. with K2M, Inc. being the surviving corporation of such merger (the “Merger”) and Altitude was renamed K2M Group Holdings, Inc. We are a global medical device provider of complex spine and minimally invasive solutions focused on achieving three-dimensional Total Body Balance TM . Since our inception, we have designed, developed and commercialized innovative complex spine and minimally invasive spine technologies and techniques used by spine surgeons to treat some of the most complicated spinal pathologies. K2M has leveraged these core competencies into Balance ACS™, a platform of products, services, and research to help surgeons achieve three-dimensional spinal balance across the axial, coronal and sagittal planes, with the goal of supporting the full continuum of care to facilitate quality patient outcomes. The Balance ACS platform, in combination with our technologies, techniques and leadership in the 3D-printing of spinal devices, enable us to compete favorably in the global spinal surgery market. Issuances of Common Stock and Use of Proceeds On May 13, 2014, we 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 $ 118,862 , 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. Proceeds from the IPO were used 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, we paid approximately $ 23,500 to repay all outstanding indebtedness under our Bank Line of Credit and $ 40,495 to prepay all outstanding aggregate principal and accrued interest of notes to stockholders. In connection with the prepayment, we expensed $ 4,825 representing the acceleration of the issuance discounts on the notes to stockholders. On June 10, 2014, the underwriters purchased an additional 1,000,000 shares of common stock offered by selling stockholders at a price of $ 15.00 per share before underwriting discounts. We did not receive any proceeds from the sale of these shares. In February and July 2015, we completed additional public offerings of our common stock in which we sold 2,907,490 shares for proceeds of approximately $ 54,100 after deducting the underwriting discount and offering expenses. We used the proceeds from these offerings for working capital and general corporate purposes including the expansion of our global distribution network and the purchase of inventory to support sales efforts. These offerings were also used to facilitate the orderly distribution of shares by selling stockholders and to increase the public float of our shares. During this period, selling stockholders sold 9,219,248 shares of common stock. We did not receive any proceeds from shares of common stock sold by the selling stockholders. Principles of Consolidation The accompanying consolidated financial statements include our accounts and all of our wholly-owned subsidiaries. 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 revenue 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 our stock option grants. The if-converted method is used to determine the dilutive effect of the convertible senior notes, and the Series A Preferred and Series B Preferred until their conversion into common stock in May 2014. 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. Although included in our outstanding shares total as of December 31, 2016 and 2015 , shares of restricted stock contingently issuable until their restrictions lapse have been excluded from the weighted average shares outstanding. Foreign Currency Translation and Other Comprehensive Loss Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our reporting currency is the U.S. dollar, which is also the functional currency of our domestic entities, while the functional currency of our foreign subsidiaries are the British Pound, Euro and Swiss Franc. Assets and liabilities denominated in foreign currencies are translated at the rate of exchange on the balance sheet date. Revenues and expenses are translated using the average exchange rate for the period. Net gains and losses resulting from the translation of foreign financial statements are recorded in other comprehensive income (loss). Net foreign currency gains or losses resulting from transactions in currencies other than the functional currencies are included in other expense, net on the consolidated statements of operations. Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Restricted Cash We classify cash as restricted when cash is unavailable for withdrawal or usage. Restrictions may include legally restricted deposits, contract bids or other contractual requirements, or our statements of intention with regard to particular deposits. Accounts Receivable Accounts receivable are reported in the consolidated balance sheets at outstanding amounts, less the allowance for doubtful accounts. We perform ongoing credit evaluations of certain customers and generally extend credit without requiring collateral. We periodically assesses the collectability of accounts receivable considering factors such as the specific evaluation of collectability, historical collection experience and economic conditions in individual markets and record an allowance for doubtful accounts for the estimated uncollectible amount as appropriate. Inventory Inventory consists primarily of finished goods and surgical instruments available for sale and is stated at the lower of cost or market using a weighted-average cost method. We review our inventory on a periodic basis for excess, obsolete, and impaired inventory and record a reserve for the identified items. Property, Plant and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation and amortization. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to the consolidated statements of operations. Repairs and maintenance costs are expensed as incurred. Buildings under capital lease are recorded at the lower of the present value of the minimum lease payments under the lease agreement or the fair market value of the underlying assets under lease on the lease commencement date. Depreciation and amortization of property, plant and equipment is recorded using the straight-line method over the estimated useful lives of the respective assets or the lease term for buildings under capital lease. Amortization of leasehold improvements is recorded over the shorter of the life of the improvement or the remaining term of the lease using the straight-line method. Goodwill and Other Intangible Assets Goodwill represents the excess of the consideration transferred over the estimated fair value of assets acquired and liabilities assumed in connection with the Merger. Goodwill is not amortized but evaluated annually or more frequently for impairment if impairment indicators exist. Such indicators include, but are not limited to (i) a significant adverse change in the business climate or environment, (ii) unanticipated competition, or (iii) adverse action or assessment by a regulator. Our annual impairment measurement date is November 1. We first assess qualitative factors before performing a quantitative assessment of the reporting unit. The qualitative assessment considers events and circumstances such as macroeconomic conditions, industry and market conditions, cost factors and overall financial performance, as well as company and specific reporting unit specifications. If after performing this assessment, we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we are required to perform a quantitative test. Our evaluation of goodwill completed during the years ended December 31, 2016 , 2015 , and 2014 resulted in no impairment loss and we have concluded that the Company allocates resources and operates with one reporting unit. Our indefinite-lived intangible assets include trademarks and purchased in-process research and development projects, which originated from the Merger and were measured at their respective estimated fair values as of the acquisition date. We also used a qualitative assessment for our indefinite lived intangible asset impairment testing. Our evaluation of indefinite-lived intangible assets completed during the years ended December 31, 2016 , 2015 and 2014 resulted in no impairment losses. Definite-lived intangible assets include licensed technology, developed technology, and customer relationships are amortized over estimated useful lives, which range from four to seven years. Patents and other are amortized over estimated useful lives which range from two to seventeen years. We recorded no impairment loss during the years ended December 31, 2016 , 2015 and 2014 . Impairment of Long-Lived Assets Long-lived assets, such as property, plant and equipment including the capital lease for our corporate headquarters and operations facilities and other definite lived intangible assets are reviewed for impairment whenever circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset may not be recoverable if it exceeds the sum of undiscounted cash flows expected to be generated by the asset. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds its estimated fair value. Considerable management judgment is necessary to estimate undiscounted future cash flows. Accordingly, actual results could differ from such estimates. Our evaluation of indicators for impairment or disposal of long-lived-assets indicates that no events have been identified that caused an evaluation of the recoverability of the long-lived assets. Other Assets Other long-term assets consist mainly of surgical instruments used primarily in the domestic and direct international distribution channels to implant our products. Surgical instruments are stated at cost less accumulated amortization. We amortize these instruments to cost of revenues over their estimated useful life. We provide surgical instruments to our customers for use to implant our products during a surgical procedure. Following completion of the procedure, the instruments are returned to us upon which we will sanitize the instrument and provide it to another customer. Fair Value Measurements Fair value is defined in the fair value measurement accounting guidance as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or exit price. Assets and liabilities subject to fair value measurements are required to be disclosed within a specified fair value hierarchy. The fair value hierarchy ranks the quality and reliability of inputs or assumptions used in the determination of fair value and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following categories based on the lowest level input used that is significant to a particular fair value measurement: Level 1 – Defined as observable inputs such as unadjusted quoted prices in active markets for identical assets. Level 2 – Defined as observable inputs other than Level 1 prices, such as quoted prices for similar assets, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Our cash and cash equivalents and convertible senior notes are subject to fair value measurements. In accordance with the hierarchy, the inputs used in measuring the fair value of the cash equivalents are considered to be Level 1 and convertible senior notes are considered to be Level 2. We apply the fair value measurement accounting guidance to non-financial assets upon the acquisition of businesses or in conjunction with the measurement of an impairment loss of a long-lived asset, goodwill or other intangible asset under the accounting guidance for impairments. Financial Instruments and Concentration of Credit Risk We consider the recorded costs of certain financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, to approximate their fair value because of relatively short maturities at December 31, 2016 and 2015 . The fair value of convertible senior notes was determined using comparable market data for similar debt instruments. Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. We maintain our cash balances with credit worthy financial institutions in the United States, and the balances may exceed, at times, the amount insured by the Federal Deposit Insurance Corporation. No single customer represented more than 10% of revenue for any period presented. Revenue Recognition Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or service has been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenue in our direct markets is generated by making its products available to hospitals that purchase specific products for use in surgery on a case-by-case basis. Revenue from sales generated by use of products is recognized upon receipt of a delivered order confirming that our products have been used in a surgical procedure or following shipment and transfer of title to a hospital that purchases products in advance of a surgery. International sales outside of our direct markets are transacted with independent distributors, who then resell the products to their hospital customers. We recognize revenue upon shipment of our products to the international distributors, who accept title at point of shipment. Shipping and Handling Costs Shipping and handling costs are charged to sales and marketing expense in the consolidated statements of operations and amounted to $ 4,689 , $ 4,199 and $ 3,403 for the years ended December 31, 2016 , 2015 and 2014 , respectively. Advertising Costs Advertising costs are charged to sales and marketing expense as incurred in the consolidated statements of operations and amounted to $ 187 , $ 290 and $ 269 for the years ended December 31, 2016 , 2015 and 2014 , respectively. Research and Development We expense our research and development as incurred. Stock-Based Compensation We award stock-based compensation primarily in the form of stock options, restricted stock and RSUs. For stock options awarded, stock-based compensation is based on the fair value of such awards granted to employees using a Black-Scholes-Merton option pricing model and is expensed on a straight-line basis over the awards' vesting period, less awards expected to be forfeited using estimated forfeiture rates. For stock options awarded that include performance and market conditions, stock-based compensation is based on the fair value of such awards granted to employees using a Monte Carlo Simulation model and expensed beginning when the performance condition is met over the service period. No such options were awarded to employees subsequent to 2011. For restricted stock and restricted stock units (“RSUs”) awarded, stock-based compensation is based on the fair value using the closing market share price of our common stock on the date of award and is expensed on a straight-line basis over the awards vesting period. We also recognize stock-based compensation for participation in our 2014 Employee Stock Purchase Plan (“ESPP”). The ESPP provides for a look-back option feature that gives an option to the participant to purchase our common stock at a discount to the market price for such stock. Our costs are recognized over the offering period based on the fair value of the option granted to participants as determined using a Black-Scholes-Merton option pricing model and the number of shares expected to be purchased at the end of the offering period. Income Taxes We account for income taxes using the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable (receivable) for the period and the change during the period in deferred tax assets and liabilities. As prescribed by the accounting guidance, we use a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of the tax benefits, as determined on a cumulative probability basis, that are more-likely-than-not to be realized upon ultimate settlement in the financial statements. We recognize interest and penalties related to income tax matters in income tax expense (benefit). Redeemable Convertible Preferred Stock Through their conversion in May 2014, we used the effective interest method to accrete the differences between the carrying value and the estimated redemption value of our preferred stock, such that the carrying value approximated the redemption value on the earliest possible redemption date. Loss Contingencies Evaluation of loss contingencies require significant judgment to estimate the amount and timing of recording a potential loss accrual in our consolidated financial statements. Such contingencies include, but are not limited to, product liability, intellectual property, litigation, regulatory proceedings; and other legal matters that arise from time to time in the ordinary course of business. We regularly assess uncertainty to determine the degree of probability and range of possible loss that will ultimately be resolved when one or more future events occur or fail to occur. We disclose information regarding each material claim where the likelihood of a loss contingency is probable, or reasonably possible and accrue for the loss when a reasonable estimate can be made. Based on such evaluation management believes that there are no claims or pending actions threatened against us, that are expected to have a material adverse effect on our financial position for the period ended December 31, 2016 . |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE The following table summarizes the accounts receivables, net of allowances: December 31, 2016 2015 Accounts receivable $ 48,664 $ 41,210 Allowances (2,234 ) (2,437 ) Accounts receivable, net $ 46,430 $ 38,773 The following table summarizes a rollforward of the accounts receivable allowances for the years ended December 31, 2016 , 2015 and 2014 : December 31, 2016 2015 2014 Beginning $ (2,437 ) $ (2,494 ) $ (2,447 ) Additions — (235 ) (436 ) Write-offs 203 292 389 Ending $ (2,234 ) $ (2,437 ) $ (2,494 ) |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY The following table summarizes inventory, net of allowances: December 31, 2016 2015 Finished goods $ 96,619 $ 90,226 Inventory allowances (34,722 ) (28,224 ) Inventory, net $ 61,897 $ 62,002 Inventory includes surgical instruments available for sale with a carrying value of $ 9,874 and $ 8,946 at December 31, 2016 and 2015 , respectively. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Notes) | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS The following table summarizes prepaid expenses and other current assets: December 31, 2016 2015 Restricted cash $ 61 $ 6,669 Landlord incentives for leasehold improvements — 6,454 Prepaid expenses 2,666 2,408 Other 3,420 4,289 Total $ 6,147 $ 19,820 Restricted cash represents funds designated for tenant improvements related to the new headquarters and operations facilities. Landlord incentives for leasehold improvements represents incentives provided by the landlord of our new headquarters and operations facilities under the capital lease agreement, which commenced in October 2015. Such incentives were received during 2016 from our landlord upon the completion of actual improvements. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT The following table summarizes property, plant and equipment: Estimated December 31, Useful Lives 2016 2015 Buildings under capital lease 16 years $ 26,469 $ 26,469 Leasehold improvements, including property under capital lease 15 years 20,051 9,717 Equipment 3-5 years 3,817 3,054 Software 3 years 4,989 4,231 Computer equipment 3 years 1,070 1,493 Furniture and office equipment 5-7 years 3,696 1,050 Vehicles and other 3 years 832 795 Total 60,924 46,809 Less accumulated depreciation and amortization (10,210 ) (8,491 ) Property, plant and equipment, net $ 50,714 $ 38,318 As of December 31, 2016 and 2015 , we had leasehold improvements of approximately $ 19,053 and $ 8,242 , respectively for our new headquarters and operations facilities which were completed and placed in service in May 2016, following our occupancy of the new premises. Depreciation and amortization expense was $ 5,107 , $ 2,297 and $ 1,626 for the years ended December 31, 2016 , 2015 and 2014 , respectively. Included in this total is amortization expense for buildings and leasehold improvements under capital lease, for which occupancy commenced in October 2015, of $ 1,663 , $ 346 and $ 0 for the years ended December 31, 2016 , 2015 and 2014 , respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS The following table summarizes intangible assets: As of December 31, 2016 Estimated Useful Lives Gross Accumulated Amortization Net Indefinite-lived intangible assets: Trademarks — $ 12,900 $ — $ 12,900 In-process research and development — 900 — 900 Other — 220 — 220 Subtotal 14,020 — 14,020 Subject to amortization Developed technology 4 - 6 years 62,000 (58,026 ) 3,974 Licensed technology 4 - 6 years 52,600 (52,475 ) 125 Customer relationships 4 - 7 years 29,700 (27,048 ) 2,652 Patents and other 2 - 17 years 3,302 (1,315 ) 1,987 Subtotal 147,602 (138,864 ) 8,738 Total $ 161,622 $ (138,864 ) $ 22,758 As of December 31, 2015 Estimated Gross Accumulated Net Indefinite-lived intangible assets: Trademarks — $ 12,900 $ — $ 12,900 In-process research and development — 900 — 900 Other — 266 — 266 Subtotal 14,066 — 14,066 Subject to amortization Developed technology 4 - 6 years 62,000 (52,243 ) 9,757 Licensed technology 4 - 6 years 52,600 (52,325 ) 275 Customer relationships 4 - 7 years 29,700 (22,805 ) 6,895 Patents and other 2 - 17 years 3,245 (1,115 ) 2,130 Subtotal 147,545 (128,488 ) 19,057 Total $ 161,611 $ (128,488 ) $ 33,123 Amortization expense was $ 10,377 , $ 10,305 and $ 22,946 for the years ended December 31, 2016 , 2015 and 2014 , respectively. As of December 31, 2016 , the expected amortization expense for each of the next five years and thereafter is as follows: 2017 $ 6,772 2018 276 2019 258 2020 233 2021 1,199 Thereafter — Total $ 8,738 |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER ASSETS | OTHER ASSETS The following table summarizes other assets: December 31, 2016 2015 Surgical instruments, net $ 24,810 $ 23,945 Restricted cash 2,262 1,298 Other 1,182 773 Total $ 28,254 $ 26,016 Surgical instruments are stated net of accumulated amortization and allowances of $ 34,191 and $ 26,609 at December 31, 2016 and 2015 , respectively. Amortization expense was $ 10,049 , $ 9,015 and $ 6,494 for the years ended December 31, 2016 , 2015 and 2014 , respectively. Restricted cash balances represent deposits made on pending bids or contracts with customers. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES The following table summarizes accrued expenses: December 31, 2016 2015 Accrued commissions $ 6,607 $ 5,336 Accrued royalties 3,495 2,704 Other 5,571 5,519 Total $ 15,673 $ 13,559 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Convertible Senior Notes On August 11, 2016, we issued $ 50,000 aggregate principal amount of convertible senior notes (the “Notes”). The Notes pay interest at an annual rate of 4.125% , payable semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2017, and mature on August 15, 2036, unless earlier converted, redeemed or repurchased by us. We received net proceeds from the sale of the Notes of $ 47,091 , after deducting underwriting discounts and commissions and offering expenses of $ 2,909 . The Notes are governed by an indenture (the “Indenture”) between the Company and the Bank of New York Mellon. The Notes are senior, unsecured obligations of the Company and are equal in right of payment with our existing and future senior, unsecured indebtedness, senior in right of payment to our existing and future indebtedness that is expressly subordinated to the Notes, and effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness. The Notes are structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. Noteholders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2016, if the last reported sale price per share of our common stock for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter exceeds 130% of the conversion price on such trading day; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $ 1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on our common stock; (4) if we call the Notes for redemption; and (5) at any time from, and including, February 15, 2036 until the close of business on the second scheduled trading day immediately before the maturity date. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of $ 1,000 our common stock, at our election, based on the applicable conversion rate. The initial conversion rate is 45.7603 shares per $ 1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 21.85 per share, and is subject to adjustment. If a “make-whole fundamental change” occurs on or before August 15, 2021, then we will in certain circumstances increase the conversion rate for a specified period of time. The Notes are redeemable, in whole or in part, at our option at any time, and from time to time, on or after August 15, 2021, at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any. If a “fundamental change” occurs prior to the stated maturity date, then noteholders may require us to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any. The Indenture contains customary terms and covenants and events of default with respect to the Notes. Pursuant to ASC 470, Debt, we have bifurcated the debt and equity components of the Notes. The separation was performed by determining the fair value of a similar debt instrument without the associated equity component. That amount was then deducted from the initial gross proceeds of the Notes to arrive at a residual amount which was allocated to the conversion feature that is classified as equity. The difference between the principal amount of the Notes and estimated fair value of the liability component without the embedded equity component (representing the fair value of the embedded equity component) is recorded as a debt discount and an increase to additional paid in capital on the issuance date of the Notes. The initial fair value of the indebtedness and the embedded conversion option was $ 38,334 and $ 11,666 , respectively. The embedded conversion option was recorded in stockholders’ equity and as debt discount, to be subsequently accreted to interest expense over the term of the Notes. The initial purchaser discounts and commissions and offering expenses totaled $ 2,909 and were allocated between the liability and the equity component in proportion to the allocation of proceeds and accounted for as debt issuance costs and equity issuance costs, respectively. As a result, $ 2,228 attributable to the indebtedness was recorded as a reduction to the carrying value of the Notes, and will be amortized as interest expense over the term of Notes, and $ 680 attributable to the equity component was recorded a reduction to additional paid-in-capital in stockholders’ equity. For the year ended December 31, 2016, we recognized $ 1,604 of interest expense related to the Notes, of which $ 796 was accrued and will be paid in cash and $ 807 was non-cash accretion of the debt discounts recorded. The Notes have been classified as long-term debt on our consolidated balance sheet. As of December 31, 2016 , the fair value of the Notes was $ 39,949 . Revolving Credit Facility We maintain a senior secured credit facilities credit agreement (as amended from time to time) with Silicon Valley Bank and Comerica Bank as Lenders, which is secured primarily by the assets of our operating subsidiaries in the United States and United Kingdom. On August 8, 2016, we entered into an amendment to the credit agreement, which extended its maturity date to April 26, 2018. As amended, the credit facility consists of a revolving credit facility (“Bank Line of Credit”) of $ 55,000 with a sub-facility for letters of credit in the aggregate availability amount of $ 10,000 and a swingline sub-facility in the aggregate availability amount of $ 5,000 . In addition, the agreement was amended to permit us to make certain cash distributions for interest and other payments due under the Notes, distribute up to $ 4,000 in aggregate for interest payments on the Notes and up to $ 1,500 in aggregate for cash payments in connection with any conversions of the Notes. The revolving credit facility contains various financial covenants and negative covenants with which we must maintain compliance, including a consolidated adjusted quick ratio for K2M, Inc., K2M UK Limited and select subsidiaries not less than 1.20 : 1.00 as of the last day of any month, restrictive covenants which limits our ability to pay dividends on common stock and make certain investments, and the provision of certain financial reporting and company information as required. We were in compliance with all the financial and other covenants of the credit facility at December 31, 2016 . On August 31, 2016, we used a portion of the proceeds from the Notes offering to prepay all $ 19,500 aggregate principal amounts outstanding under the Bank Line of Credit. As of December 31, 2016 and 2015 , we had no outstanding borrowings on the revolving credit facility. For the years ended December 31, 2016 , 2015 and 2014 , we recorded interest expense of $ 263 , $ 22 and $ 373 , respectively, under the credit agreement and amounts of $ 201 , $ 318 and $ 338 , respectively, related to the amortization of the loan issuance fees. Our average interest rate on borrowings under the Bank Line of Credit was 4.25% . As of December 31, 2016 , we had $ 46,715 of unused borrowing capacity under the revolving credit facility which is net of an issued but undrawn letter of credit for $ 6,000 representing a security deposit on the corporate headquarters and operations facilities lease. Capital Lease On December 11, 2014, we entered into a Deed of Lease (the “Lease Agreement”) with respect to our new corporate headquarters and operations facilities to be located in two adjacent buildings in Leesburg, Virginia (the “Buildings”) for an initial term of 186 calendar months beginning on March 15, 2016, the lease commencement date, which is approximately five months following our control of the Buildings to commence the construction of our leasehold improvements referred to as the lease commencement date. From December 2014 until October 2015, the Buildings were under construction. In October 2015, we gained access and control of the Buildings to commence the construction of our leasehold improvements. In May 2016, we began to conduct our operations from the Buildings. Under the accounting guidance, we are required to account for the Lease Agreement as a capital lease. The related capital lease obligation is amortized over 191 calendar months beginning in October 2015 under the effective interest method. Under the terms of the Lease Agreement, from the lease commencement date, we are required to (subject to an initial abatement described below) pay an annual base rent of approximately $ 3,201 , which will increase by 2.50% per year (without regard to the initial abatement) commencing upon the first anniversary of the lease commencement date. We have the option to renew the lease for three additional terms of five years each at the then-current market rate. We bear the cost for real estate taxes, utilities, maintenance, repairs and insurance. In October 2016, monthly cash rent payments commenced. Under the terms of the Lease Agreement, the landlord also provided a tenant improvement allowance to us of $ 6,454 for the construction of leasehold improvements, which were reflected within prepaid expenses and other current assets as of December 31, 2015. In addition, the Lease Agreement required us to provide a security deposit in the form of an uncollaterized letter of a credit in the amount of $ 6,000 , which letter of credit may be reduced from time to time upon the satisfaction of certain conditions as set forth in the Lease Agreement. Interest expense on the capital lease obligation was $ 2,290 , $ 480 and $ 0 for the years ended December 31, 2016 , 2015 and 2014 , respectively. Operating Leases As of December 31, 2016 , we lease space for our offices located in the United Kingdom, Italy and Germany. The following table summarizes our future minimum lease payments under a non-cancelable capital lease and operating leases agreements, including payments for costs directly associated with the facility leases: Capital Lease Operating Leases Year ending December 31: 2017 $ 3,268 $ 568 2018 3,350 534 2019 3,434 377 2020 3,519 351 2021 3,607 311 Thereafter 40,265 9 Total minimum lease payments 57,443 $ 2,150 Less: interest (21,537 ) Capital lease obligations 35,906 Less current portion (973 ) Long-term capital lease obligations $ 34,933 |
PREFERRED STOCK
PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
PREFERRED STOCK | PREFERRED STOCK Preferred Stock As of December 31, 2016 and 2015 , we had 100,000,000 authorized shares of preferred stock of which no shares were issued or outstanding. Redeemable Convertible Preferred Stock On May 13, 2014, we converted all 7,250,885 and 6,301,290 outstanding shares of Series Series A and Series B Preferred into 2,983,902 and 2,593,114 shares, respectively, of our common stock concurrent with the IPO. In addition, we paid cumulative cash dividends of $ 18,547 to holders of the preferred stock. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION We have a number of stock-based compensation plans including an ESPP. The purpose of these plans is to provide incentives to employees, directors, agents and our advisors and these Plans as determined and administered by the compensation committee of our 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 respective plan, as applicable. Depending on the particular plan, incentive or other awards may take the form of incentive or non-qualified stock options, stock appreciation rights, shares of restricted stock, RSUs or other stock-based awards, subject to certain limitations. Under certain of these plans, 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. As of December 31, 2016 , there was a total of 1,960,679 shares of common stock available for future grants under the plans. The following table summarizes the stock-based compensation expense by financial statement line item, employees and non-employees and type of award: Year Ended December 31, 2016 2015 2014 Cost of revenue $ 168 $ 705 $ 424 Research and development 532 844 439 Sales and marketing 1,581 4,045 2,146 General and administrative 4,675 5,594 2,798 $ 6,956 $ 11,188 $ 5,807 Year Ended December 31, 2016 2015 2014 Stock options $ 2,985 $ 5,116 $ 2,107 Restricted stock 1,052 313 — Restricted stock units 2,527 5,460 3,620 ESPP 392 299 80 Total $ 6,956 $ 11,188 $ 5,807 Stock Options The following table summarizes stock option plans activity: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (1) Outstanding at December 31, 2015 (2) 3,682,019 $ 11.51 5.98 $ 31,586 Granted 470,353 14.45 Exercised (411,785 ) 6.62 Expired (5,771 ) 5.73 Forfeited (49,691 ) 10.42 Outstanding at December 31, 2016 (2) 3,685,125 $ 12.45 6.05 $ 29,142 Vested: At December 31, 2016 1,743,949 $ 11.73 5.76 $ 11,205 Vested or expected to vest: At December 31, 2016 (2) (3) 3,417,641 $ 12.62 6.14 $ 26,501 (1) Calculated using the fair market value per share of our common stock as of December 31, 2016 and 2015 of $ 20.04 and $ 19.74 , respectively. (2) The total includes 980,671 and 994,768 performance-based options at December 31, 2016 and 2015 , respectively. (3) Outstanding options, net of forfeiture rate. The total fair value of employee stock options that vested was approximately $ 3,062 , $ 1,791 and $ 1,386 during the years ended December 31, 2016 , 2015 and 2014 , respectively. The weighted-average fair value per share of options granted by us was $ 5.08 , $ 8.73 and $ 5.54 during the years ended December 31, 2016 , 2015 and 2014 , respectively. The fair value was determined by applying the Black-Scholes-Merton option pricing model, utilizing the following weighted-average assumptions: Year Ended December 31, 2016 2015 2014 Expected dividend yield — % — % — % Expected volatility 34.16-36.54 36.31-41.33% 35.19-37.47% Risk-free interest rate 1.20-1.64 1.42-2.18% 1.79-2.18% Expected average life of options 6-7 years 7 years 6-7 years A discussion of management’s methodology for developing each of the assumptions used in the valuation model follows: • Dividend Yield – We have never declared or paid dividends and has no plans to do so in the foreseeable future. • Risk-Free Interest Rate – This is the U.S. Treasury rate for the week of each option grant during the year that has a term that most closely resembles the expected life of the option. • Expected Life of the Option Term – This is the period of time that the options granted are expected to remain unexercised. For options granted during the years ended December 31, 2016 , 2015 and 2014 , we derived the expected life of the option based on the average midpoint between vesting and the contractual term, as we have little exercise history. • Expected Volatility – Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. We use an estimated volatility based on the volatility of a number of similarly situated public companies, along with other factors deemed relevant by management. As of December 31, 2016 and 2015 , there was approximately $ 4,170 and $ 5,030 , respectively of total unrecognized compensation expense less estimated forfeitures, related to nonvested employee stock options under our stock-based compensation plans. As of December 31, 2016 and 2015 , this expense is expected to be recognized over a weighted-average period of 1.98 and 1.92 years, respectively. The expected forfeiture rate is the estimated percentage of options granted that is expected to be forfeited or canceled on an annual basis before becoming fully vested. We estimate the forfeiture rate based on past turnover data, with further consideration given to the class of employees to whom the options were granted. The forfeiture rate used during the years ended December 31, 2016 , 2015 and 2014 , was 3.1% , 3.1% and 3.1% . Certain stock options granted by us subsequent to the Merger through 2011 cannot be exercised until certain performance conditions are met. Such options are subject to both a four -year time-based vesting schedule, and vesting upon the satisfaction of performance and market-based criteria, based on WCAS's internal rate of return on their investment in the Company as measured following their sale of at least 75% of their total holdings in K2M. As of December 31, 2016, there were 978,614 options that had time vested but were still subject to the performance vesting condition. On February 1, 2017, following the cumulative sale of at least 75% of their investment in K2M, WCAS informed us that rate of return performance criteria underlying these awards had been met and such options had become vested and were exercisable. The intrinsic value of options exercised during the years ended December 31, 2016 , 2015 and 2014 approximated $ 2,301 , $ 11,643 and $ 5,191 , respectively. Restricted Stock and Restricted Stock Units In April 2014, our 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 provided that the RSUs will vest in two equal installments on May 21, 2015 and 2016, subject to continued employment through the applicable vesting dates. We recognized stock-based compensation expense of $ 1,507 , $ 4,503 and $ 3,004 for the years ended December 31, 2016 , 2015 and 2014 , respectively, related to these awards. Restricted stock and RSUs awarded after April 2014 have a three -year vesting schedule and vest in one-third increments over the three -year period. For the years ended December 31, 2016 , 2015 and 2014 , restricted stock and RSUs issued had a grant date fair value equal to the closing price of the our common stock on the grant date. The weighted average grant date fair values of restricted stock and RSUs granted to employees during the years ended December 31, 2016 , 2015 and 2014 is as follows: Year Ended December 31, 2016 2015 2014 Weighted-average grant date fair value per share - restricted stock $ 14.38 $ 23.46 $ — Weighted-average grant date fair value per share or unit - RSUs $ 16.05 $ — $ 15.06 A summary of restricted stock and RSU activity during the year ended December 31, 2016 is as follows: Restricted Stock Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Weighted-Average Remaining Term (years) Number of Shares Weighted-Average Grant Date Fair Value Weighted-Average Remaining Term (years) Non-vested at December 31, 2015 79,940 $ 23.46 2.50 414,001 $ 15.42 0.68 Vested (26,652 ) $ 23.46 — (351,032 ) $ 15.50 — Granted 165,217 $ 14.38 — 16,488 $ 16.05 — Non-vested at December 31, 2016 218,505 $ 16.59 2.35 79,457 $ 15.22 0.81 Vested: At December 31, 2016 — $ — — — $ — — Vested or expected to vest: At December 31, 2016 218,505 $ 16.59 2.35 79,457 $ 15.22 0.81 Employee Stock-Purchase Plan The ESPP was established to provide employees and participating affiliates with an opportunity to purchase our common stock. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. As of December 31, 2016 and 2015 , 255,262 and 333,753 shares were available for issuance under the ESPP. Generally, all domestic employees are eligible to participate in the ESPP if they are employed by us or any participating affiliate, for at least 20 hours per week. Participants are permitted to purchase our shares of common stock through payroll deductions of no less than 1% and no more than 10% of their eligible compensation. Amounts deducted and accumulated by the participant are used to purchase shares of our common stock at the end of each offering period. The purchase price of the shares will be equal to 85% of the lower of the fair value of our 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. We issued 78,491 , 50,586 and 27,184 shares of common stock to ESPP participants for proceeds of $ 1,047 , $ 871 and $ 346 during the years ended December 31, 2016 , 2015 and 2014 , respectively. |
DEFINED CONTRIBUTION PLAN
DEFINED CONTRIBUTION PLAN | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
DEFINED CONTRIBUTION PLAN | DEFINED CONTRIBUTION PLAN We have a 401(k) plan which is a defined contribution plan (the “Contribution Plan”) covering substantially all employees meeting certain eligibility requirements. Participants may elect to contribute a specified portion of their compensation to the Contribution Plan on a tax-deferred basis. We make non-discretionary matches based on the participant's contribution using a predetermined basis as defined in the Contribution Plan. Additionally, we may also elect to make discretionary contributions. We made contributions to the Contribution Plan of $ 1,855 , $ 1,677 and $ 1,458 for the years ended December 31, 2016 , 2015 and 2014 , respectively, all of which were non-discretionary. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES In the normal course of business, we enter into agreements to obtain the rights to certain intellectual property. These agreements may require an up-front payment, milestone payments and/or royalties. Typically, we have certain rights to cancel these agreements, with notice, without additional payments due other than the amount due at the time of cancellation. As of December 31, 2016 , the aggregate amount of these future payments, assuming achievement of applicable milestones and non-cancellation, was $ 1,563 over a period of 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, we entered into an agreement to purchase certain proprietary technology which could require us to make additional aggregate payments of up to $ 13,350 should certain milestones be met, related to regulatory applications and approvals in the event we seek such in the United States. Cumulative payments under the agreement totaled $ 1,350 through December 31, 2016 . 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 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. We are not aware of any pending or threatened legal proceeding against us that we expect would have a material adverse effect on our business, operating results or financial condition. However, we are a party in multiple legal actions involving claimants seeking various remedies, including monetary damages, and none of the outcomes are certain or entirely within our control. Incentive grants In connection with the relocation to our new headquarters and operations facilities, we received proceeds of $ 790 of unrestricted cash incentives in 2015 from several local and state government originators. Pursuant to the grant agreements, we or the Landlord were required to make certain investments in the Buildings and we are required to increase our workforce in Leesburg, Virginia by 96 full-time employees no later than by December 31, 2017. As a result of these commitments, these proceeds have been reflected as a long-term liability within other liabilities on the accompanying balance sheets until such conditions are met. |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES We incurred general and administrative expenses of $ 372 for the year ended December 31, 2014 related to a management agreement with our major stockholder, which was terminated in May 2014 following our IPO. On November 14, 2016, pursuant to an underwritten public offering, WCAS and certain of its affiliates completed the sale of 4,500,000 shares of our common stock. We incurred underwriting commissions and transaction fees of approximately $ 338 which are relected as general and administrative expenses for the three and twelve months ended December 31, 2016 . We did not receive any proceeds from the sale of these shares. On January 30, 2017, pursuant to an underwritten public offering, WCAS and certain of its affiliates completed the sale of an additional 4,000,000 shares of our common stock. We incurred underwriting commissions and transaction fees of approximately $ 225 which will be reflected as general and administrative expenses for the three months ended March 31, 2017. We did not receive any proceeds from the sale of these shares. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The following table summarizes the loss before income tax expense (benefit): Year Ended December 31, 2016 2015 2014 United States $ (29,885 ) $ (28,830 ) $ (45,392 ) Foreign (11,701 ) (10,194 ) (14,359 ) Total $ (41,586 ) $ (39,024 ) $ (59,751 ) The income taxes expense (benefit) is as follows: Year Ended December 31, 2016 2015 2014 Current: Federal $ — $ — $ — State 106 166 105 Foreign (8 ) 26 — Deferred: Federal (6,572 ) (10,179 ) (16,636 ) State (772 ) (963 ) (975 ) Foreign (1,273 ) (536 ) (3,042 ) Change in valuation allowance 8,593 11,678 20,434 Income taxes expense (benefit) $ 74 $ 192 $ (114 ) The following table summarizes net deferred liability which consists of the following: December 31, 2016 2015 Net operating loss (“NOL”) carryforwards $ 38,234 $ 32,104 Capital lease obligations 13,600 12,991 Income tax credits 3,030 2,450 Inventory 8,080 6,570 Stock-based compensation 4,668 5,117 Intellectual property agreements 3,123 3,198 Other deferred temporary differences 3,055 2,988 Deferred tax assets 73,790 65,418 Valuation allowance (55,223 ) (46,630 ) Total deferred tax assets, net of valuation allowance 18,567 18,788 Capital lease assets (11,949 ) (12,677 ) Intangible assets (7,472 ) (11,153 ) Discount on convertible notes (4,163 ) — Deferred tax liability (23,584 ) (23,830 ) Net deferred tax liability $ (5,017 ) $ (5,042 ) Approximately $ 7,981 of the NOL carryforward of $ 38,234 for the year ended December 31, 2016 , is related to operations outside the United States and will begin to expire in 2019. The remaining NOL starts to expire in 2030. Tax credit carryforwards of $ 3,030 begin to expire in 2027. Under Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), certain significant changes in ownership may restrict the future utilization of our tax loss carry forwards and tax credit carry forwards. The following table summarizes a reconciliation of the U.S. statutory federal income tax rate to our effective tax rate, as a percentage of loss before income tax (expense) benefit for the years ended December 31, 2016 , 2015 and 2014 : Year Ended December 31, 2016 2015 2014 Federal tax at statutory rates 34.0 % 34.0 % 34.0 % State taxes, net of federal benefit 2.1 1.9 2.3 Tax credits 1.4 1.2 0.6 Permanent difference (0.6 ) (0.9 ) 1.7 Foreign income taxes (2.9 ) (2.2 ) (2.0 ) Change in valuation allowance (30.7 ) (29.9 ) (34.2 ) Tax rate adjustment and other (3.5 ) (4.5 ) (2.2 ) Income tax (expense) benefit (0.2 )% (0.5 )% 0.2 % The effective tax rate differs from the statutory rate due to minimum income taxes, permanent differences and changes in valuation allowances. The provision for income taxes for the years ended December 31, 2016 , 2015 and 2014 includes both domestic and foreign minimum income taxes and changes in the valuation allowance. The following reflects a rollforward of the deferred tax asset valuation allowance for the years ended December 31, 2016 , 2015 and 2014 : Year Ended December 31, 2016 2015 2014 Beginning $ (46,630 ) $ (34,952 ) $ (14,518 ) Increase to allowance (8,593 ) (11,678 ) (20,434 ) Ending $ (55,223 ) $ (46,630 ) $ (34,952 ) We are subject to income taxes in the United States and certain foreign jurisdictions. Significant judgment is required in determining the consolidated provision for income taxes and recording the related deferred tax assets and liabilities. In the ordinary course of business, there are transactions and calculations where the ultimate tax determination is uncertain. As of December 31, 2016 and 2015 , we did not have uncertain tax positions. Our tax returns are not currently under examination by the Internal Revenue Service or other taxing authorities. We are subject to income tax examinations for our U.S. federal tax returns and foreign examinations for years 2013 and subsequent; and U.S., state and local returns for years 2012 and subsequent. Although we believe that the estimates and assumptions supporting its tax positions are reasonable, the final determination of tax audits and any related litigation could be materially different from that which is reflected in historical income tax provisions and recorded assets and liabilities. Based on the results of an audit or litigation, there could be a material effect on our benefit from income taxes, net loss or cash flows in the period or periods for which that determination is made. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
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 our common stockholders: Year Ended December 31, 2016 2015 2014 Net loss per common share: Net loss $ (41,660 ) $ (39,216 ) $ (59,637 ) Less: accretion and adjustment of Series A Preferred and Series B Preferred — — 6,879 Net loss attributable to common stockholders $ (41,660 ) $ (39,216 ) $ (52,758 ) Basic and diluted loss per common share Basic and diluted weighted average common shares outstanding 41,729,013 40,237,848 31,887,246 Basic and diluted loss per common share $ (1.00 ) $ (0.97 ) $ (1.65 ) Diluted loss per share for the years ended December 31, 2016 , 2015 and 2014 does not reflect the following weighted average potential common shares, as the effect would be antidilutive: Year Ended December 31, 2016 2015 2014 Stock options 3,685,125 3,682,019 4,277,229 RSUs 79,457 414,001 765,023 Restricted stock 218,505 79,940 — As discussed in Note 9, we issued $ 50,000 aggregate principal amount of Notes in August 2016. The Notes may be settled, at our election, in cash, shares of our common stock or combination of cash and shares of our common stock. For purposes of calculating the maximum dilutive impact, it is presumed that the Notes will be settled in common stock with the resulting potential common shares included in diluted earnings per share if the effect is more dilutive. The effect of the conversion of the Notes is excluded from the calculation of diluted loss per share because the net loss for the year ended December 31, 2016 causes such securities to be antidilutive. The potential dilutive effect of these securities is shown in the table below: Year Ended 2016 2015 2014 Conversion of Notes 2,768,657 — — |
SEGMENT AND GEOGRAPHICAL CONCEN
SEGMENT AND GEOGRAPHICAL CONCENTRATION | 12 Months Ended |
Dec. 31, 2016 | |
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. We globally manage 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 23.5% of total revenue for the year ended December 31, 2016 ; however, revenue earned in any individual foreign country is below 10% of our consolidated revenue. The following table represents total revenue by geographic area, based on the location of the customer: Year Ended December 31, 2016 2015 2014 United States $ 181,078 $ 155,291 $ 133,110 International 55,556 60,716 53,562 Total $ 236,634 $ 216,007 $ 186,672 We classify sales within the United States into three categories: complex spine pathologies, minimally invasive procedures and degenerative and other conditions. A significant portion of our international revenue is derived from our 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 its three product categories. These sales transactions are settled when we ship the product to the customer. Year Ended December 31, 2016 2015 2014 Complex spine $ 71,915 $ 63,398 $ 54,030 Minimally invasive 28,711 23,633 18,194 Degenerative 80,452 68,260 60,886 181,078 155,291 133,110 International 55,556 60,716 53,562 Total $ 236,634 $ 216,007 $ 186,672 The following table represents long-lived assets (1) by geographic area: December 31, 2016 2015 United States $ 72,742 $ 57,958 International 2,782 4,305 Total $ 75,524 $ 62,263 (1) Long-lived assets include property, plant and equipment including the capital lease for our corporate headquarters and operations facilities and surgical instruments in U.S. |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following tables summarize the unaudited quarterly statements of operations for 2016 and 2015 . The tables include all necessary adjustments, consisting only of normal recurring adjustments necessary in the opinion of management for a fair statement of the results for interim periods. Quarter Ended December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 Revenue $ 61,791 $ 59,310 $ 59,227 $ 56,306 Gross profit 38,360 39,798 39,596 36,702 Loss from operations (9,363 ) (6,097 ) (9,342 ) (9,929 ) Net loss (12,467 ) (7,910 ) (11,098 ) (10,185 ) Net loss per common share (0.30 ) (0.19 ) (0.27 ) (0.25 ) Quarter Ended December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 Revenue $ 54,220 $ 55,009 $ 56,354 $ 50,424 Gross profit 35,936 37,619 37,734 32,927 Loss from operations (7,579 ) (10,010 ) (8,636 ) (10,045 ) Net loss (8,494 ) (10,215 ) (6,222 ) (14,285 ) Net loss per common share (0.21 ) (0.25 ) (0.16 ) (0.37 ) |
GENERAL AND SUMMARY OF SIGNIF26
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include our accounts and all of our wholly-owned subsidiaries. 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 revenue 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 our stock option grants. The if-converted method is used to determine the dilutive effect of the convertible senior notes, and the Series A Preferred and Series B Preferred until their conversion into common stock in May 2014. 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 Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our reporting currency is the U.S. dollar, which is also the functional currency of our domestic entities, while the functional currency of our foreign subsidiaries are the British Pound, Euro and Swiss Franc. Assets and liabilities denominated in foreign currencies are translated at the rate of exchange on the balance sheet date. Revenues and expenses are translated using the average exchange rate for the period. Net gains and losses resulting from the translation of foreign financial statements are recorded in other comprehensive income (loss). Net foreign currency gains or losses resulting from transactions in currencies other than the functional currencies are included in other expense, net on the consolidated statements of operations. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. |
Restricted Cash | Restricted Cash We classify cash as restricted when cash is unavailable for withdrawal or usage. Restrictions may include legally restricted deposits, contract bids or other contractual requirements, or our statements of intention with regard to particular deposits. |
Accounts Receivable | Accounts Receivable Accounts receivable are reported in the consolidated balance sheets at outstanding amounts, less the allowance for doubtful accounts. We perform ongoing credit evaluations of certain customers and generally extend credit without requiring collateral. We periodically assesses the collectability of accounts receivable considering factors such as the specific evaluation of collectability, historical collection experience and economic conditions in individual markets and record an allowance for doubtful accounts for the estimated uncollectible amount as appropriate. |
Inventory | Inventory Inventory consists primarily of finished goods and surgical instruments available for sale and is stated at the lower of cost or market using a weighted-average cost method. We review our inventory on a periodic basis for excess, obsolete, and impaired inventory and record a reserve for the identified items. |
Property and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation and amortization. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to the consolidated statements of operations. Repairs and maintenance costs are expensed as incurred. Buildings under capital lease are recorded at the lower of the present value of the minimum lease payments under the lease agreement or the fair market value of the underlying assets under lease on the lease commencement date. Depreciation and amortization of property, plant and equipment is recorded using the straight-line method over the estimated useful lives of the respective assets or the lease term for buildings under capital lease. Amortization of leasehold improvements is recorded over the shorter of the life of the improvement or the remaining term of the lease using the straight-line method. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of the consideration transferred over the estimated fair value of assets acquired and liabilities assumed in connection with the Merger. Goodwill is not amortized but evaluated annually or more frequently for impairment if impairment indicators exist. Such indicators include, but are not limited to (i) a significant adverse change in the business climate or environment, (ii) unanticipated competition, or (iii) adverse action or assessment by a regulator. Our annual impairment measurement date is November 1. We first assess qualitative factors before performing a quantitative assessment of the reporting unit. The qualitative assessment considers events and circumstances such as macroeconomic conditions, industry and market conditions, cost factors and overall financial performance, as well as company and specific reporting unit specifications. If after performing this assessment, we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we are required to perform a quantitative test. Our evaluation of goodwill completed during the years ended December 31, 2016 , 2015 , and 2014 resulted in no impairment loss and we have concluded that the Company allocates resources and operates with one reporting unit. Our indefinite-lived intangible assets include trademarks and purchased in-process research and development projects, which originated from the Merger and were measured at their respective estimated fair values as of the acquisition date. We also used a qualitative assessment for our indefinite lived intangible asset impairment testing. Our evaluation of indefinite-lived intangible assets completed during the years ended December 31, 2016 , 2015 and 2014 resulted in no impairment losses. Definite-lived intangible assets include licensed technology, developed technology, and customer relationships are amortized over estimated useful lives, which range from four to seven years. Patents and other are amortized over estimated useful lives which range from two to seventeen years. We recorded no impairment loss during the years ended December 31, 2016 , 2015 and 2014 |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, such as property, plant and equipment including the capital lease for our corporate headquarters and operations facilities and other definite lived intangible assets are reviewed for impairment whenever circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset may not be recoverable if it exceeds the sum of undiscounted cash flows expected to be generated by the asset. If an asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds its estimated fair value. Considerable management judgment is necessary to estimate undiscounted future cash flows. Accordingly, actual results could differ from such estimates. Our evaluation of indicators for impairment or disposal of long-lived-assets indicates that no events have been identified that caused an evaluation of the recoverability of the long-lived assets. |
Other Assets | Other Assets Other long-term assets consist mainly of surgical instruments used primarily in the domestic and direct international distribution channels to implant our products. Surgical instruments are stated at cost less accumulated amortization. We amortize these instruments to cost of revenues over their estimated useful life. We provide surgical instruments to our customers for use to implant our products during a surgical procedure. Following completion of the procedure, the instruments are returned to us upon which we will sanitize the instrument and provide it to another customer. |
Fair Value Measurements | Fair Value Measurements Fair value is defined in the fair value measurement accounting guidance as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or exit price. Assets and liabilities subject to fair value measurements are required to be disclosed within a specified fair value hierarchy. The fair value hierarchy ranks the quality and reliability of inputs or assumptions used in the determination of fair value and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following categories based on the lowest level input used that is significant to a particular fair value measurement: Level 1 – Defined as observable inputs such as unadjusted quoted prices in active markets for identical assets. Level 2 – Defined as observable inputs other than Level 1 prices, such as quoted prices for similar assets, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Our cash and cash equivalents and convertible senior notes are subject to fair value measurements. In accordance with the hierarchy, the inputs used in measuring the fair value of the cash equivalents are considered to be Level 1 and convertible senior notes are considered to be Level 2. We apply the fair value measurement accounting guidance to non-financial assets upon the acquisition of businesses or in conjunction with the measurement of an impairment loss of a long-lived asset, goodwill or other intangible asset under the accounting guidance for impairments. |
Financial Instruments | Financial Instruments and Concentration of Credit Risk We consider the recorded costs of certain financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, to approximate their fair value because of relatively short maturities at December 31, 2016 and 2015 . |
Concentration of Credit Risk | Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. We maintain our cash balances with credit worthy financial institutions in the United States, and the balances may exceed, at times, the amount insured by the Federal Deposit Insurance Corporation. No single customer represented more than 10% of revenue for any period presented. |
Revenue Recognition | Revenue Recognition Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or service has been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured. Revenue in our direct markets is generated by making its products available to hospitals that purchase specific products for use in surgery on a case-by-case basis. Revenue from sales generated by use of products is recognized upon receipt of a delivered order confirming that our products have been used in a surgical procedure or following shipment and transfer of title to a hospital that purchases products in advance of a surgery. International sales outside of our direct markets are transacted with independent distributors, who then resell the products to their hospital customers. We recognize revenue upon shipment of our products to the international distributors, who accept title at point of shipment. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are charged to sales and marketing expense in the consolidated statements of operations |
Advertising Costs | Advertising Costs Advertising costs are charged to sales and marketing expense as incurred in the consolidated statements of operations |
Research, Development, and Engineering | Research and Development We expense our research and development as incurred. |
Stock-Based Compensation | Stock-Based Compensation We award stock-based compensation primarily in the form of stock options, restricted stock and RSUs. For stock options awarded, stock-based compensation is based on the fair value of such awards granted to employees using a Black-Scholes-Merton option pricing model and is expensed on a straight-line basis over the awards' vesting period, less awards expected to be forfeited using estimated forfeiture rates. For stock options awarded that include performance and market conditions, stock-based compensation is based on the fair value of such awards granted to employees using a Monte Carlo Simulation model and expensed beginning when the performance condition is met over the service period. No such options were awarded to employees subsequent to 2011. For restricted stock and restricted stock units (“RSUs”) awarded, stock-based compensation is based on the fair value using the closing market share price of our common stock on the date of award and is expensed on a straight-line basis over the awards vesting period. We also recognize stock-based compensation for participation in our 2014 Employee Stock Purchase Plan (“ESPP”). The ESPP provides for a look-back option feature that gives an option to the participant to purchase our common stock at a discount to the market price for such stock. Our costs are recognized over the offering period based on the fair value of the option granted to participants as determined using a Black-Scholes-Merton option pricing model and the number of shares expected to be purchased at the end of the offering period. |
Income Taxes | Income Taxes We account for income taxes using the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Valuation allowances are established when necessary to reduce net deferred tax assets to the amount expected to be realized. Income tax expense (benefit) is the tax payable (receivable) for the period and the change during the period in deferred tax assets and liabilities. As prescribed by the accounting guidance, we use a more-likely-than-not recognition threshold based on the technical merits of the tax position taken. Tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of the tax benefits, as determined on a cumulative probability basis, that are more-likely-than-not to be realized upon ultimate settlement in the financial statements. We recognize interest and penalties related to income tax matters in income tax expense (benefit). |
Redeemable Convertible Preferred Stock | Redeemable Convertible Preferred Stock Through their conversion in May 2014, we used the effective interest method to accrete the differences between the carrying value and the estimated redemption value of our preferred stock, such that the carrying value approximated the redemption value on the earliest possible redemption date. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements We qualify as an “emerging growth company” (“EGC”) pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012 and have 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 we continue to qualify as an EGC, we will not have to adopt or comply with new accounting standards until non-issuers are required to comply with such standards. Revenue Recognition Between May 2014 and December 31, 2016 , the Financial Accounting Standards Board, or FASB issued several updates related to revenue recognition for which we are still evaluating the impact: In May 2014, ASU 2014-09, Revenue from Contracts with Customers (Topic 606): was first to amend the existing accounting standards for revenue recognition. The amendment is 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. In March 2016, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), was issued to address principal versus agent considerations, reporting revenue gross versus net in the new revenue recognition standard. The guidance clarifies how an entity should evaluate the unit of accounting to determine whether it is a specified good or service and how it should apply the control principle to certain types of arrangements. In April 2016, ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , was issued and included final amendments to clarify the guidance on identifying performance obligations and accounting for licenses of intellectual property (“IP”). The amendment allows entities to disregard goods or services that are immaterial in the context of a contract, assess whether the performance obligation is separately identifiable and whether the shipping and handling activities are a promised service in a contract. This guidance also clarifies how an entity should evaluate the nature of its promise in granting an IP license and when a promised good or service is distinct within the context of a contract. In May 2016, ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, was issued and clarifies that for a contract to be considered completed the entity should evaluate the collectability threshold or probability of collecting revenue. It provides that the fair value of noncash consideration such as equity should be measured at contract inception when determining the transaction price and any subsequent changes must be recorded as a gain or loss, not as revenue. In addition, the entity has the option to make an accounting policy election to exclude from the transaction price certain types of taxes such as sales tax, value-added tax and excise tax in lieu of evaluating such taxes they collect in all jurisdictions to determine whether a tax is levied to the entity or the customer. In December 2016, ASU 2016-20, Revenue from Contracts with Customers (Topic 606): Technical Corrections and Improvements , was issued to make minor corrections or minor improvements to the codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. It affects narrow aspects of the revenue from contracts with customers’ guidance, including its scope, disclosure of remaining and prior-period performance obligation, contract modifications, contract asset vs receivables, refund liability and advertising costs. The guidance included in these updates will be effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted for reporting periods beginning after December 15, 2016. All other entities, such as EGCs that have elected the EGC extension, including us, and non-public entities will be required to comply with the guidance for annual reporting periods beginning after December 15, 2018. The guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of the initial application. We are currently assessing the impact of this guidance Other Accounting Pronouncements In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. For public entities other than EGCs that have elected the EGC extension, the guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. For all other entities, EGCs that have elected the EGC extension, including us, and non-public entities will be required to comply with the guidance for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this guidance should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are presently evaluating the impact of this guidance. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The revised guidance must be applied on a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. For public companies other than EGCs that have elected the EGC extension, including us, and non-public entities will be required to comply with the guidance in 2019, and interim periods within that year. EGC’s that have elected the EGC exemption, like us, or non-public companies will be required to comply with this guidance beginning in 2020 and interim periods in 2021. Early adoption is permitted for all entities. We are presently evaluating the impact of this guidance. In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments, which addresses the accounting for embedded derivatives related to debt contracts. The update clarifies that determining whether the economic characteristics of a put or call are clearly and closely related to its debt host requires only an assessment of the four-step decision sequence. It also indicates that entities are not required to separately assess whether the contingency itself is clearly and closely related. For public entities the guidance will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. All other entities, such as EGCs that have elected the EGC extension, including us, and non-public entities will be required to comply with the guidance for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. The guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of the initial application. Early adoption is permitted in any annual or interim period for which financial statements have not been issued or made available for issuance. We are currently assessing the impact of this guidance. In March 2016, the FASB issued ASU No. 2016-09, Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which is intended to improve employee share-based payment accounting for companies that issue share-based awards to their employees. This guidance simplifies the accounting for share-based payment transactions, including consequences of income tax award, classification as either equity or liability, treatment of forfeitures, and classification on statement of cash flows. The recognition, measurement and reporting for share-based payments will be affected by this new guidance. For public entities other than EGCs that have elected the EGC extension, the guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. All other entities, such as EGCs that have elected the EGC extension, including us, and non-public entities will be required to comply with the guidance for fiscal years beginning after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018. Early adoption is permitted in any annual or interim period for which financial statements have not been issued or made available for issuance, but all of the guidance must be adopted in the same period. We are currently evaluating the impact of this guidance. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees, and beneficial interests obtained in a financial asset securitization. It also provides clarifications related to separately identifiable cash-flows and application of the predominance principle based on evaluating the source and nature of the underlying cash flows when determining whether it is a financing, investing, operating or a combination of cash flow classifications. For public entities the guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. All other entities, such as EGCs that have elected the EGC extension, including us, and non-public entities will be required to comply with the guidance for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted in any annual or interim period for which financial statements have not been issued or made available for issuance, but all of the guidance must be adopted in the same period. We are currently assessing the impact of this guidance. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. These amounts should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This amendment does not provide a definition of restricted cash or restricted cash equivalents. For public entities the guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. All other entities, such as EGCs that have elected the EGC extension, including us, and non-public entities will be required to comply with the guidance for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted in any annual or interim period for which financial statements have not been issued or made available for issuance, but all of the guidance must be adopted in the same period. We are currently assessing the impact of this guidance. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, by eliminating the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. However, the loss recognized should not exceed the total amount of goodwill. For public entities the guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. All other entities, such as EGCs that have elected the EGC extension, including us, and non-public entities will be required to comply with the guidance for fiscal years beginning after December 15, 2020. Early adoption is permitted in any annual or interim period after January 1, 2017. An entity should apply the amendments in this Update on a prospective basis. We are currently assessing the impact of this guidance. |
ACCOUNTS RECEIVABLE - (Tables)
ACCOUNTS RECEIVABLE - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | The following table summarizes the accounts receivables, net of allowances: December 31, 2016 2015 Accounts receivable $ 48,664 $ 41,210 Allowances (2,234 ) (2,437 ) Accounts receivable, net $ 46,430 $ 38,773 The following table summarizes a rollforward of the accounts receivable allowances for the years ended December 31, 2016 , 2015 and 2014 : December 31, 2016 2015 2014 Beginning $ (2,437 ) $ (2,494 ) $ (2,447 ) Additions — (235 ) (436 ) Write-offs 203 292 389 Ending $ (2,234 ) $ (2,437 ) $ (2,494 ) |
INVENTORY - (Tables)
INVENTORY - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Current Inventory | The following table summarizes inventory, net of allowances: December 31, 2016 2015 Finished goods $ 96,619 $ 90,226 Inventory allowances (34,722 ) (28,224 ) Inventory, net $ 61,897 $ 62,002 |
PREPAID EXPENSES AND OTHER CU29
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets [Table Text Block] | The following table summarizes prepaid expenses and other current assets: December 31, 2016 2015 Restricted cash $ 61 $ 6,669 Landlord incentives for leasehold improvements — 6,454 Prepaid expenses 2,666 2,408 Other 3,420 4,289 Total $ 6,147 $ 19,820 |
PROPERTY, PLANT AND EQUIPMENT -
PROPERTY, PLANT AND EQUIPMENT - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | The following table summarizes property, plant and equipment: Estimated December 31, Useful Lives 2016 2015 Buildings under capital lease 16 years $ 26,469 $ 26,469 Leasehold improvements, including property under capital lease 15 years 20,051 9,717 Equipment 3-5 years 3,817 3,054 Software 3 years 4,989 4,231 Computer equipment 3 years 1,070 1,493 Furniture and office equipment 5-7 years 3,696 1,050 Vehicles and other 3 years 832 795 Total 60,924 46,809 Less accumulated depreciation and amortization (10,210 ) (8,491 ) Property, plant and equipment, net $ 50,714 $ 38,318 |
INTANGIBLE ASSETS - (Tables)
INTANGIBLE ASSETS - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | The following table summarizes intangible assets: As of December 31, 2016 Estimated Useful Lives Gross Accumulated Amortization Net Indefinite-lived intangible assets: Trademarks — $ 12,900 $ — $ 12,900 In-process research and development — 900 — 900 Other — 220 — 220 Subtotal 14,020 — 14,020 Subject to amortization Developed technology 4 - 6 years 62,000 (58,026 ) 3,974 Licensed technology 4 - 6 years 52,600 (52,475 ) 125 Customer relationships 4 - 7 years 29,700 (27,048 ) 2,652 Patents and other 2 - 17 years 3,302 (1,315 ) 1,987 Subtotal 147,602 (138,864 ) 8,738 Total $ 161,622 $ (138,864 ) $ 22,758 As of December 31, 2015 Estimated Gross Accumulated Net Indefinite-lived intangible assets: Trademarks — $ 12,900 $ — $ 12,900 In-process research and development — 900 — 900 Other — 266 — 266 Subtotal 14,066 — 14,066 Subject to amortization Developed technology 4 - 6 years 62,000 (52,243 ) 9,757 Licensed technology 4 - 6 years 52,600 (52,325 ) 275 Customer relationships 4 - 7 years 29,700 (22,805 ) 6,895 Patents and other 2 - 17 years 3,245 (1,115 ) 2,130 Subtotal 147,545 (128,488 ) 19,057 Total $ 161,611 $ (128,488 ) $ 33,123 |
Schedule of Expected Amortization Expense | As of December 31, 2016 , the expected amortization expense for each of the next five years and thereafter is as follows: 2017 $ 6,772 2018 276 2019 258 2020 233 2021 1,199 Thereafter — Total $ 8,738 |
OTHER ASSETS - (Tables)
OTHER ASSETS - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | The following table summarizes other assets: December 31, 2016 2015 Surgical instruments, net $ 24,810 $ 23,945 Restricted cash 2,262 1,298 Other 1,182 773 Total $ 28,254 $ 26,016 |
ACCRUED EXPENSES - (Tables)
ACCRUED EXPENSES - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | The following table summarizes accrued expenses: December 31, 2016 2015 Accrued commissions $ 6,607 $ 5,336 Accrued royalties 3,495 2,704 Other 5,571 5,519 Total $ 15,673 $ 13,559 |
DEBT - (Tables)
DEBT - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | The following table summarizes our future minimum lease payments under a non-cancelable capital lease and operating leases agreements, including payments for costs directly associated with the facility leases: Capital Lease Operating Leases Year ending December 31: 2017 $ 3,268 $ 568 2018 3,350 534 2019 3,434 377 2020 3,519 351 2021 3,607 311 Thereafter 40,265 9 Total minimum lease payments 57,443 $ 2,150 Less: interest (21,537 ) Capital lease obligations 35,906 Less current portion (973 ) Long-term capital lease obligations $ 34,933 |
Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block] | The following table summarizes our future minimum lease payments under a non-cancelable capital lease and operating leases agreements, including payments for costs directly associated with the facility leases: Capital Lease Operating Leases Year ending December 31: 2017 $ 3,268 $ 568 2018 3,350 534 2019 3,434 377 2020 3,519 351 2021 3,607 311 Thereafter 40,265 9 Total minimum lease payments 57,443 $ 2,150 Less: interest (21,537 ) Capital lease obligations 35,906 Less current portion (973 ) Long-term capital lease obligations $ 34,933 |
STOCK-BASED COMPENSATION - (Tab
STOCK-BASED COMPENSATION - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock-based compensation expense | The following table summarizes the stock-based compensation expense by financial statement line item, employees and non-employees and type of award: Year Ended December 31, 2016 2015 2014 Cost of revenue $ 168 $ 705 $ 424 Research and development 532 844 439 Sales and marketing 1,581 4,045 2,146 General and administrative 4,675 5,594 2,798 $ 6,956 $ 11,188 $ 5,807 Year Ended December 31, 2016 2015 2014 Stock options $ 2,985 $ 5,116 $ 2,107 Restricted stock 1,052 313 — Restricted stock units 2,527 5,460 3,620 ESPP 392 299 80 Total $ 6,956 $ 11,188 $ 5,807 |
Schedule of employee stock option plan activity | Stock Options The following table summarizes stock option plans activity: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (1) Outstanding at December 31, 2015 (2) 3,682,019 $ 11.51 5.98 $ 31,586 Granted 470,353 14.45 Exercised (411,785 ) 6.62 Expired (5,771 ) 5.73 Forfeited (49,691 ) 10.42 Outstanding at December 31, 2016 (2) 3,685,125 $ 12.45 6.05 $ 29,142 Vested: At December 31, 2016 1,743,949 $ 11.73 5.76 $ 11,205 Vested or expected to vest: At December 31, 2016 (2) (3) 3,417,641 $ 12.62 6.14 $ 26,501 (1) Calculated using the fair market value per share of our common stock as of December 31, 2016 and 2015 of $ 20.04 and $ 19.74 , respectively. (2) The total includes 980,671 and 994,768 performance-based options at December 31, 2016 and 2015 , respectively. (3) Outstanding options, net of forfeiture rate. |
Schedule of stock option valuation assumptions | The fair value was determined by applying the Black-Scholes-Merton option pricing model, utilizing the following weighted-average assumptions: Year Ended December 31, 2016 2015 2014 Expected dividend yield — % — % — % Expected volatility 34.16-36.54 36.31-41.33% 35.19-37.47% Risk-free interest rate 1.20-1.64 1.42-2.18% 1.79-2.18% Expected average life of options 6-7 years 7 years 6-7 years |
Schedule of Restricted Stock Units Activity | The weighted average grant date fair values of restricted stock and RSUs granted to employees during the years ended December 31, 2016 , 2015 and 2014 is as follows: Year Ended December 31, 2016 2015 2014 Weighted-average grant date fair value per share - restricted stock $ 14.38 $ 23.46 $ — Weighted-average grant date fair value per share or unit - RSUs $ 16.05 $ — $ 15.06 A summary of restricted stock and RSU activity during the year ended December 31, 2016 is as follows: Restricted Stock Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Weighted-Average Remaining Term (years) Number of Shares Weighted-Average Grant Date Fair Value Weighted-Average Remaining Term (years) Non-vested at December 31, 2015 79,940 $ 23.46 2.50 414,001 $ 15.42 0.68 Vested (26,652 ) $ 23.46 — (351,032 ) $ 15.50 — Granted 165,217 $ 14.38 — 16,488 $ 16.05 — Non-vested at December 31, 2016 218,505 $ 16.59 2.35 79,457 $ 15.22 0.81 Vested: At December 31, 2016 — $ — — — $ — — Vested or expected to vest: At December 31, 2016 218,505 $ 16.59 2.35 79,457 $ 15.22 0.81 |
INCOME TAXES - (Tables)
INCOME TAXES - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Summary of the loss before benefit from income taxes | The following table summarizes the loss before income tax expense (benefit): Year Ended December 31, 2016 2015 2014 United States $ (29,885 ) $ (28,830 ) $ (45,392 ) Foreign (11,701 ) (10,194 ) (14,359 ) Total $ (41,586 ) $ (39,024 ) $ (59,751 ) |
Summary of benefit from income taxes | The income taxes expense (benefit) is as follows: Year Ended December 31, 2016 2015 2014 Current: Federal $ — $ — $ — State 106 166 105 Foreign (8 ) 26 — Deferred: Federal (6,572 ) (10,179 ) (16,636 ) State (772 ) (963 ) (975 ) Foreign (1,273 ) (536 ) (3,042 ) Change in valuation allowance 8,593 11,678 20,434 Income taxes expense (benefit) $ 74 $ 192 $ (114 ) |
Summary of deferred tax liabilities | The following table summarizes net deferred liability which consists of the following: December 31, 2016 2015 Net operating loss (“NOL”) carryforwards $ 38,234 $ 32,104 Capital lease obligations 13,600 12,991 Income tax credits 3,030 2,450 Inventory 8,080 6,570 Stock-based compensation 4,668 5,117 Intellectual property agreements 3,123 3,198 Other deferred temporary differences 3,055 2,988 Deferred tax assets 73,790 65,418 Valuation allowance (55,223 ) (46,630 ) Total deferred tax assets, net of valuation allowance 18,567 18,788 Capital lease assets (11,949 ) (12,677 ) Intangible assets (7,472 ) (11,153 ) Discount on convertible notes (4,163 ) — Deferred tax liability (23,584 ) (23,830 ) Net deferred tax liability $ (5,017 ) $ (5,042 ) |
Summary of reconciliation for effective tax rate | The following table summarizes a reconciliation of the U.S. statutory federal income tax rate to our effective tax rate, as a percentage of loss before income tax (expense) benefit for the years ended December 31, 2016 , 2015 and 2014 : Year Ended December 31, 2016 2015 2014 Federal tax at statutory rates 34.0 % 34.0 % 34.0 % State taxes, net of federal benefit 2.1 1.9 2.3 Tax credits 1.4 1.2 0.6 Permanent difference (0.6 ) (0.9 ) 1.7 Foreign income taxes (2.9 ) (2.2 ) (2.0 ) Change in valuation allowance (30.7 ) (29.9 ) (34.2 ) Tax rate adjustment and other (3.5 ) (4.5 ) (2.2 ) Income tax (expense) benefit (0.2 )% (0.5 )% 0.2 % |
Summary of deferred tax asset valuation allowance | The following reflects a rollforward of the deferred tax asset valuation allowance for the years ended December 31, 2016 , 2015 and 2014 : Year Ended December 31, 2016 2015 2014 Beginning $ (46,630 ) $ (34,952 ) $ (14,518 ) Increase to allowance (8,593 ) (11,678 ) (20,434 ) Ending $ (55,223 ) $ (46,630 ) $ (34,952 ) |
NET LOSS PER SHARE - (Tables)
NET LOSS PER SHARE - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 our common stockholders: Year Ended December 31, 2016 2015 2014 Net loss per common share: Net loss $ (41,660 ) $ (39,216 ) $ (59,637 ) Less: accretion and adjustment of Series A Preferred and Series B Preferred — — 6,879 Net loss attributable to common stockholders $ (41,660 ) $ (39,216 ) $ (52,758 ) Basic and diluted loss per common share Basic and diluted weighted average common shares outstanding 41,729,013 40,237,848 31,887,246 Basic and diluted loss per common share $ (1.00 ) $ (0.97 ) $ (1.65 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Diluted loss per share for the years ended December 31, 2016 , 2015 and 2014 does not reflect the following weighted average potential common shares, as the effect would be antidilutive: Year Ended December 31, 2016 2015 2014 Stock options 3,685,125 3,682,019 4,277,229 RSUs 79,457 414,001 765,023 Restricted stock 218,505 79,940 — The potential dilutive effect of these securities is shown in the table below: Year Ended 2016 2015 2014 Conversion of Notes 2,768,657 — — |
SEGMENT AND GEOGRAPHICAL CONC38
SEGMENT AND GEOGRAPHICAL CONCENTRATION - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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: Year Ended December 31, 2016 2015 2014 United States $ 181,078 $ 155,291 $ 133,110 International 55,556 60,716 53,562 Total $ 236,634 $ 216,007 $ 186,672 |
Schedule of Revenue by Products | Year Ended December 31, 2016 2015 2014 Complex spine $ 71,915 $ 63,398 $ 54,030 Minimally invasive 28,711 23,633 18,194 Degenerative 80,452 68,260 60,886 181,078 155,291 133,110 International 55,556 60,716 53,562 Total $ 236,634 $ 216,007 $ 186,672 |
Schedule of Long-lived Assets by Geographic Areas | The following table represents long-lived assets (1) by geographic area: December 31, 2016 2015 United States $ 72,742 $ 57,958 International 2,782 4,305 Total $ 75,524 $ 62,263 (1) Long-lived assets include property, plant and equipment including the capital lease for our corporate headquarters and operations facilities and surgical instruments in U.S. |
QUARTERLY FINANCIAL DATA (UNA39
QUARTERLY FINANCIAL DATA (UNAUDITED) - (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Data | The following tables summarize the unaudited quarterly statements of operations for 2016 and 2015 . The tables include all necessary adjustments, consisting only of normal recurring adjustments necessary in the opinion of management for a fair statement of the results for interim periods. Quarter Ended December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 Revenue $ 61,791 $ 59,310 $ 59,227 $ 56,306 Gross profit 38,360 39,798 39,596 36,702 Loss from operations (9,363 ) (6,097 ) (9,342 ) (9,929 ) Net loss (12,467 ) (7,910 ) (11,098 ) (10,185 ) Net loss per common share (0.30 ) (0.19 ) (0.27 ) (0.25 ) Quarter Ended December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 Revenue $ 54,220 $ 55,009 $ 56,354 $ 50,424 Gross profit 35,936 37,619 37,734 32,927 Loss from operations (7,579 ) (10,010 ) (8,636 ) (10,045 ) Net loss (8,494 ) (10,215 ) (6,222 ) (14,285 ) Net loss per common share (0.21 ) (0.25 ) (0.16 ) (0.37 ) |
GENERAL AND SUMMARY OF SIGNIF40
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reverse Stock Split, Pro Forma Presentation, and Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 10, 2014 | May 13, 2014 | Jul. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Class of Stock [Line Items] | ||||||
Stock issued during the period (in shares) | 8,825,000 | 2,907,490 | ||||
Preferred Stock, Shares Outstanding (in shares) | 0 | 0 | 0 | |||
Repayments of Lines of Credit | $ 23,500 | $ 19,500 | $ 25,000 | $ 23,500 | ||
Repayments of Related Party Debt | 0 | 0 | 39,212 | |||
Related Party Discount on Prepayment of Debt | 4,825 | 0 | 0 | 4,825 | ||
Proceeds from issuances of common stock, net of issuance costs | $ 0 | $ 54,209 | $ 121,898 | |||
Notes to Stockholders [Member] | ||||||
Class of Stock [Line Items] | ||||||
Repayments of Related Party Debt | $ 40,495 | |||||
Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Convertible Preferred Stock, Shares Issued upon Conversion (in shares) | 2.43 | |||||
Shares of common stock issued upon conversion of convertible preferred stock (in shares) | 5,577,016 | |||||
Series A Redeemable Convertible Preferred Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Temporary Equity, Cumulative Dividends | $ 11,932 | |||||
Series B Redeemable Convertible Preferred Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Temporary Equity, Cumulative Dividends | $ 6,615 | |||||
IPO [Member] | Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Share Price (in usd per share) | $ 15 | $ 15 | ||||
Proceeds from Issuance Initial Public Offering | $ 118,862 | |||||
Payments for Commissions | 9,266 | |||||
Payments of Stock Issuance Costs | $ 4,283 | |||||
Underwriters [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock Issued During Period, Shares, Issued for Services | 1,000,000 | |||||
Proceeds from issuances of common stock, net of issuance costs | $ 54,100 | |||||
Investor [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock Issued During Period, Shares, Issued for Services | 9,219,248 |
GENERAL AND SUMMARY OF SIGNIF41
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Intangible Assets (Details) | 12 Months Ended | ||
Dec. 31, 2016USD ($)reporting_unit | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Significant Accounting Policies [Line Items] | |||
Goodwill impairment loss | $ 0 | $ 0 | $ 0 |
Number of reporting units | reporting_unit | 1 | ||
Indefinite-lived intangible assets impairment loss | $ 0 | 0 | 0 |
Finite-lived intangible assets impairment loss | $ 0 | $ 0 | $ 0 |
Licensed Technology, Developed Technology, and Customer Relationships [Member] | Minimum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Finite-lived intangible assets, estimated useful lives | 4 years | ||
Licensed Technology, Developed Technology, and Customer Relationships [Member] | Maximum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Finite-lived intangible assets, estimated useful lives | 7 years | ||
Patents and Other [Member] | Minimum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Finite-lived intangible assets, estimated useful lives | 2 years | 2 years | |
Patents and Other [Member] | Maximum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Finite-lived intangible assets, estimated useful lives | 17 years | 17 years |
GENERAL AND SUMMARY OF SIGNIF42
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shipping and Handling Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | |||
Shipping and Handling Costs | $ 4,689 | $ 4,199 | $ 3,403 |
GENERAL AND SUMMARY OF SIGNIF43
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | |||
Advertising Expense | $ 187 | $ 290 | $ 269 |
ACCOUNTS RECEIVABLE - (Details)
ACCOUNTS RECEIVABLE - (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Accounts receivable | $ 48,664 | $ 41,210 |
Allowances | (2,234) | (2,437) |
Accounts receivable, net | $ 46,430 | $ 38,773 |
ACCOUNTS RECEIVABLE - Allowance
ACCOUNTS RECEIVABLE - Allowances (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Beginning | $ (2,437) | $ (2,494) | $ (2,447) |
Additions | 0 | (235) | (436) |
Write-offs | 203 | 292 | 389 |
Ending | $ (2,234) | $ (2,437) | $ (2,494) |
INVENTORY - (Details)
INVENTORY - (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory [Line Items] | ||
Finished goods | $ 96,619 | $ 90,226 |
Inventory allowances | (34,722) | (28,224) |
Inventory, net | 61,897 | 62,002 |
Surgical and Medical Instruments [Member] | ||
Inventory [Line Items] | ||
Inventory, net | $ 9,874 | $ 8,946 |
PREPAID EXPENSES AND OTHER CU47
PREPAID EXPENSES AND OTHER CURRENT ASSETS - Schedule of Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Restricted cash | $ 61 | $ 6,669 |
Landlord incentives for leasehold improvements | 0 | 6,454 |
Prepaid expenses | 2,666 | 2,408 |
Other | 3,420 | 4,289 |
Total | 6,147 | 19,820 |
Property and equipment, gross | $ 60,924 | $ 46,809 |
PROPERTY, PLANT AND EQUIPMENT48
PROPERTY, PLANT AND EQUIPMENT - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 60,924 | $ 46,809 |
Less accumulated depreciation and amortization | (10,210) | (8,491) |
Property, plant and equipment, net | $ 50,714 | 38,318 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 16 years | |
Property and equipment, gross | $ 26,469 | 26,469 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 15 years | |
Property and equipment, gross | $ 20,051 | 9,717 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3,817 | 3,054 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Property and equipment, gross | $ 4,989 | 4,231 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Property and equipment, gross | $ 1,070 | 1,493 |
Furniture and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3,696 | 1,050 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Property and equipment, gross | $ 832 | $ 795 |
Minimum [Member] | Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Minimum [Member] | Furniture and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Maximum [Member] | Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Maximum [Member] | Furniture and office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years |
PROPERTY, PLANT AND EQUIPMENT49
PROPERTY, PLANT AND EQUIPMENT - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 5,107,000 | $ 2,297,000 | $ 1,626,000 |
Amortization expense | 1,663,000 | 346,000 | $ 0 |
Construction in Progress | |||
Property, Plant and Equipment [Line Items] | |||
Leasehold Improvements | $ 19,053,000 | $ 8,242,000 |
INTANGIBLE ASSETS - (Details)
INTANGIBLE ASSETS - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Schedule of Intangible Asset by Major Class [Line Items] | |||
Indefinite-lived intangible assets | $ 14,020 | $ 14,066 | |
Subject to amortization, Gross | 147,602 | 147,545 | |
Accumulated Amortization | (138,864) | (128,488) | |
Total | 8,738 | 19,057 | |
Intangible Assets, Gross | 161,622 | 161,611 | |
Intangible Assets, Net (Excluding Goodwill) | 22,758 | 33,123 | |
Amortization expense | 10,377 | 10,305 | $ 22,946 |
Developed Technology Rights [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Subject to amortization, Gross | 62,000 | 62,000 | |
Accumulated Amortization | (58,026) | (52,243) | |
Total | 3,974 | 9,757 | |
Licensed technology [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Subject to amortization, Gross | 52,600 | 52,600 | |
Accumulated Amortization | (52,475) | (52,325) | |
Total | 125 | 275 | |
Customer Relationships [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Subject to amortization, Gross | 29,700 | 29,700 | |
Accumulated Amortization | (27,048) | (22,805) | |
Total | 2,652 | 6,895 | |
Patents and Other [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Subject to amortization, Gross | 3,302 | 3,245 | |
Accumulated Amortization | (1,315) | (1,115) | |
Total | 1,987 | 2,130 | |
Trademarks [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Indefinite-lived intangible assets | 12,900 | 12,900 | |
In-process research and development [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Indefinite-lived intangible assets | 900 | 900 | |
Other [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Indefinite-lived intangible assets | $ 220 | $ 266 | |
Minimum [Member] | Developed Technology Rights [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 4 years | 4 years | |
Minimum [Member] | Licensed technology [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 4 years | 4 years | |
Minimum [Member] | Customer Relationships [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 4 years | 4 years | |
Minimum [Member] | Patents and Other [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 2 years | 2 years | |
Maximum [Member] | Developed Technology Rights [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 6 years | 6 years | |
Maximum [Member] | Licensed technology [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 6 years | 6 years | |
Maximum [Member] | Customer Relationships [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 7 years | 7 years | |
Maximum [Member] | Patents and Other [Member] | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 17 years | 17 years |
INTANGIBLE ASSETS - Schedule of
INTANGIBLE ASSETS - Schedule of Expected Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,017 | $ 6,772 | |
2,018 | 276 | |
2,019 | 258 | |
2,020 | 233 | |
2,021 | 1,199 | |
Thereafter | 0 | |
Total | $ 8,738 | $ 19,057 |
OTHER ASSETS - (Details)
OTHER ASSETS - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Surgical instruments, net | $ 24,810 | $ 23,945 | |
Restricted cash | 2,262 | 1,298 | |
Other | 1,182 | 773 | |
Total | 28,254 | 26,016 | |
Surgical instruments accumulated amortization | 34,191 | 26,609 | |
Amortization expense | $ 10,049 | $ 9,015 | $ 6,494 |
ACCRUED EXPENSES - (Details)
ACCRUED EXPENSES - (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Accrued commissions | $ 6,607 | $ 5,336 |
Accrued royalties | 3,495 | 2,704 |
Other | 5,571 | 5,519 |
Total | $ 15,673 | $ 13,559 |
DEBT - Convertible Senior Notes
DEBT - Convertible Senior Notes Narrative (Details) | Aug. 11, 2016USD ($)trading_day$ / shares | May 13, 2014USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Debt Instrument [Line Items] | |||||
Interest expense | $ 4,425,000 | $ 941,000 | $ 2,205,000 | ||
Accretion of preferred stock to fair value | 0 | 0 | (6,879,000) | ||
Related Party Discount on Prepayment of Debt | $ 4,825,000 | 0 | $ 0 | $ 4,825,000 | |
Convertible Notes Payable [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt issued | $ 50,000,000 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 4.125% | ||||
Proceeds from Convertible Debt | $ 47,091,000 | ||||
Debt Issuance Cost | $ 2,909,000 | ||||
Threshold Trading Days | trading_day | 20 | ||||
Threshold Consecutive Trading Days | 30 days | ||||
Threshold Percentage of Stock Price Trigger | 130.00% | ||||
Measurement Period | 5 days | ||||
Maximum Percentage of Trading Price Trigger | 98.00% | ||||
Conversion Ratio (in shares per $1,000 principal amount of Notes) | 45.7603 | ||||
Conversion Price | $ / shares | $ 21.85 | ||||
Long-term Debt, Fair Value | $ 38,334,000 | 39,949,000 | |||
Debt Instrument, Convertible, Beneficial Conversion Feature | $ 11,666,000 | ||||
Interest expense | 1,604,000 | ||||
Accrued interest | 796,000 | ||||
Accretion of preferred stock to fair value | 807,000 | ||||
Long-term Debt [Member] | Accounting Standards Update 2015-03 [Member] | Convertible Notes Payable [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Issuance Cost | (2,228,000) | ||||
Additional Paid-in Capital [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs allocated to equity | $ 680,000 |
DEBT - Revolving Credit Facilit
DEBT - Revolving Credit Facility Narrative (Details) | May 13, 2014USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Debt Instrument [Line Items] | ||||
Repayments of Lines of Credit | $ 23,500,000 | $ 19,500,000 | $ 25,000,000 | $ 23,500,000 |
Interest expense | 4,425,000 | 941,000 | 2,205,000 | |
Letters of Credit Outstanding, Amount | 6,000,000 | |||
Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term line of credit outstanding | $ 0 | 0 | ||
Long-term Debt, Weighted Average Interest Rate | 4.25% | |||
Revolving Credit Facility [Member] | October 2015 Amendment [Member] | ||||
Debt Instrument [Line Items] | ||||
Revolving credit facility, maximum borrowing capacity | $ 55,000,000 | |||
Amounts available under credit agreement | 10,000,000 | |||
Revolving Credit Facility [Member] | Amended Credit Agreement 2012 [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Unused Borrowing Capacity, Amount | 46,715,000 | |||
Revolving Credit Facility [Member] | Amended Credit Agreement 2012 [Member] | Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of Credit Facility, Maximum Amount of Distributions for Interest Payments | 4,000,000 | |||
Line of Credit Facility, Maximum Amount of Distributions for Cash Payments | 1,500,000 | |||
Revolving Credit Facility [Member] | Credit Agreement 2012 [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense | $ 263,000 | 22,000 | 373,000 | |
Revolving Credit Facility [Member] | Credit Agreement 2012 [Member] | Silicon Valley Bank and Comerica Bank [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, covenant, minimum required quick ratio | 1.20 | |||
Revolving Credit Facility [Member] | Credit Agreement 2012 [Member] | Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Amortization of issuance and discount costs included in interest expense | $ 201,000 | $ 318,000 | $ 338,000 | |
Revolving Credit Facility, Swing Line Loan [Member] | Amended Credit Agreement 2012 [Member] | Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Amounts available under credit agreement | $ 5,000,000 |
DEBT - Operating and Capital Le
DEBT - Operating and Capital Lease (Details) | Dec. 11, 2014USD ($)termbuilding | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Schedule of Long-term and Short-term Debt [Line Items] | ||||
Landlord incentives for leasehold improvements | $ 0 | $ 6,454,000 | ||
Capital Lease, Security Deposit, Letter of Credit Pledged | 6,000,000 | |||
Capital Leases, Income Statement, Interest Expense | $ 2,290,000 | $ 480,000 | $ 0 | |
Building [Member] | VIRGINIA | Headquarter Facilities [Member] | ||||
Schedule of Long-term and Short-term Debt [Line Items] | ||||
Number of buildings leased | building | 2 | |||
Lessee Leasing Arrangements, Operating Leases, Term of Contract | 186 months | 191 months | ||
Lessee Leasing Arrangements, Operating Leases, Term After Completion of Building Improvements that Lease Begins | 5 months | |||
Payments for Rent | $ 3,201,000 | |||
Lessee Leasing Arrangement, Operating Leases, Rent Increase, Percent | 2.50% | |||
Number of optional additional terms | term | 3 | |||
Term (in years) | 5 years |
DEBT - Schedule of Operating an
DEBT - Schedule of Operating and Capital Lease (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2,017 | $ 3,268 | |
2,018 | 3,350 | |
2,019 | 3,434 | |
2,020 | 3,519 | |
2,021 | 3,607 | |
Thereafter | 40,265 | |
Total minimum lease payments | 57,443 | |
Less: interest | (21,537) | |
Capital lease obligations | 35,906 | |
Less current portion | (973) | $ (284) |
Long-term capital lease obligations | 34,933 | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2,017 | 568 | |
2,018 | 534 | |
2,019 | 377 | |
2,020 | 351 | |
2,021 | 311 | |
Thereafter | 9 | |
Total minimum lease payments | $ 2,150 |
PREFERRED STOCK - Narrative (De
PREFERRED STOCK - Narrative (Details) - USD ($) $ in Thousands | May 13, 2014 | May 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 |
Class of Stock [Line Items] | ||||
Preferred Stock, Shares Authorized (in shares) | 100,000,000 | 100,000,000 | ||
Preferred Stock, Shares Outstanding (in shares) | 0 | 0 | 0 | |
Preferred stock issued (in shares) | 0 | 0 | ||
Series A Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Preferred Stock, Shares Outstanding (in shares) | 7,250,885 | |||
Series B Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Preferred Stock, Shares Outstanding (in shares) | 6,301,290 | |||
Common Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Shares of common stock issued upon conversion of convertible preferred stock (in shares) | 5,577,016 | |||
Redeemable Convertible Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Payments of dividends | $ 18,547 | |||
Conversion of Series A Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Shares of common stock issued upon conversion of convertible preferred stock (in shares) | 2,983,902 | |||
Conversion of Series B Redeemable Convertible Preferred Stock [Member] | Common Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Shares of common stock issued upon conversion of convertible preferred stock (in shares) | 2,593,114 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) | 12 Months Ended | ||||
Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Feb. 01, 2017 | Apr. 21, 2014Installmentshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | shares | 1,960,679 | ||||
Fair value of employee stock options | $ 3,062,000 | $ 1,791,000 | $ 1,386,000 | ||
Weighted average grand date fair value (in usd per share) | $ / shares | $ 5.08 | $ 8.73 | $ 5.54 | ||
Share-based compensation, forfeiture rate | 3.10% | 3.10% | 3.10% | ||
Intrinsic value of options exercised | $ 2,301,000 | $ 11,643,000 | $ 5,191,000 | ||
Allocated stock-based compensation expense | $ 6,956,000 | $ 11,188,000 | $ 5,807,000 | ||
Number of shares available under employee stock purchase plan (in shares) | shares | 255,262 | 333,753 | |||
Employee Stock Purchase Plan, Prerequisite for Participation, Minimum Hours Per Week of Employed | 20 hours | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Purchase Price of Common Stock, Percent | 85.00% | ||||
Stock Issued during period under employee stock purchase plans (in shares) | shares | 78,491 | 50,586 | 27,184 | ||
Stock Issued During Period, Value, Employee Stock Purchase Plan | $ 1,047,000 | $ 871,000 | $ 346 | ||
Minimum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Employee Stock Purchase Plan, Common Stock Purchase, Payroll Deduction, Percentage | 1.00% | ||||
Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Employee Stock Purchase Plan, Common Stock Purchase, Payroll Deduction, Percentage | 10.00% | ||||
Equity Award Plan for 2010 [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options, vesting period (years) | 4 years | ||||
Employee Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense | $ 4,170,000 | $ 5,030,000 | |||
Unrecognized compensation expense weighted average period for recognition | 1 year 11 months 23 days | 1 year 11 months 1 day | |||
Minimum percentage of outstanding shares sold needed for shares to become exercisable (as a percent) | 75.00% | ||||
Allocated stock-based compensation expense | $ 2,985,000 | $ 5,116,000 | 2,107,000 | ||
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Modification, Modified Number | shares | 576,132 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Installments | Installment | 2 | ||||
Allocated stock-based compensation expense | 2,527,000 | 5,460,000 | 3,620,000 | ||
Restricted Stock Units (RSUs) [Member] | Omnibus Incentive Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Allocated stock-based compensation expense | $ 1,507,000 | $ 4,503,000 | $ 3,004 | ||
Restricted Stock and Restricted Stock Units [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation, vesting percentage of the option | 33.00% | ||||
Officer [Member] | Restricted Stock and Restricted Stock Units [Member] | Omnibus Incentive Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options, vesting period (years) | 3 years | ||||
Still Subject to Performance Vesting Condition [Member] | Employee Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares with time vested | shares | 978,614 | ||||
Subsequent Event [Member] | Employee Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Minimum percentage of outstanding shares sold needed for shares to become exercisable (as a percent) | 75.00% |
STOCK-BASED COMPENSATION - Allo
STOCK-BASED COMPENSATION - Allocation of Share-based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | $ 6,956 | $ 11,188 | $ 5,807 |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | 2,985 | 5,116 | 2,107 |
Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | 1,052 | 313 | 0 |
Restricted Stock Units (RSUs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | 2,527 | 5,460 | 3,620 |
Employee Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | 392 | 299 | 80 |
Cost of Sales [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | 168 | 705 | 424 |
Research and Development Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | 532 | 844 | 439 |
Selling and Marketing Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | 1,581 | 4,045 | 2,146 |
General and Administrative Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Allocated stock-based compensation expense | $ 4,675 | $ 5,594 | $ 2,798 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding Beginning Balance (in shares) | 3,682,019 | |
Granted (in shares) | 470,353 | |
Exercised (in shares) | (411,785) | |
Expired (in shares) | (5,771) | |
Forfeited (in shares) | (49,691) | |
Outstanding Ending Balance (in shares) | 3,685,125 | 3,682,019 |
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) | $ 11.51 | |
Granted, Weighted-Average Exercise Price (in usd per share) | 14.45 | |
Exercised, Weighted-Average Exercise Price (in usd per share) | 6.62 | |
Expired, Weighted-Average Exercise Price (in usd per share) | 5.73 | |
Forfeited, Weighted-Average Exercise Price (in usd per share) | 10.42 | |
Ending, Weighted-Average Exercise Price (in usd per share) | $ 12.45 | $ 11.51 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Outstanding, Weighted- Average Remaining Contractual Term (years) | 6 years 18 days | 5 years 11 months 23 days |
Outstanding, Aggregate Intrinsic Value | $ 31,586 | |
Outstanding, Aggregate Intrinsic Value | $ 29,142 | $ 31,586 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested [Abstract] | ||
Vested (in shares) | 1,743,949 | |
Vested, Weighted-Average Exercise Price (in usd per share) | $ 11.73 | |
Vested, Weighted-Average Remaining Contractual Term (years) | 5 years 9 months 3 days | |
Vested, Aggregate Intrinsic Value | $ 11,205 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract] | ||
Vested or expected to vest (in shares) | 3,417,641 | |
Vested or expected to vest, Weighted-Average Exercise Price (in usd per share) | $ 12.62 | |
Vested or expected to vest, Weighted-Average Remaining Contractual Term (years) | 6 years 1 month 20 days | |
Vested or expected to vest, Aggregate Intrinsic Value | $ 26,501 | |
Fair value valuation, estimated fair market value of stock (in usd per share) | $ 20.04 | $ 19.74 |
Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding Beginning Balance (in shares) | 994,768 | |
Outstanding Ending Balance (in shares) | 980,671 | 994,768 |
STOCK-BASED COMPENSATION - Weig
STOCK-BASED COMPENSATION - Weighted-Average Assumptions (Details) - Employee Stock Option [Member] | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected average life of options | 7 years | ||
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 34.16% | 36.31% | 35.19% |
Risk-free interest rate | 1.20% | 1.42% | 1.79% |
Expected average life of options | 6 years | 6 years | |
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 36.54% | 41.33% | 37.47% |
Risk-free interest rate | 1.64% | 2.18% | 2.18% |
Expected average life of options | 7 years | 7 years |
STOCK-BASED COMPENSATION - Su63
STOCK-BASED COMPENSATION - Summary of Restricted Stock Unit Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Outstanding, Beginning Balance (in shares) | 79,940 | ||
Vested (in shares) | (26,652) | ||
Granted (in shares) | 165,217 | ||
Outstanding, Ending Balance (in shares) | 218,505 | 79,940 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding, Beginning Balance (in dollars per share) | $ 23.46 | ||
Granted (in dollars per share) | 14.38 | $ 23.46 | $ 0 |
Vested (in dollars per share) | 23.46 | ||
Outstanding, Ending Balance (in dollars per share) | $ 16.59 | $ 23.46 | |
Weighted-Average Remaining Term (years) | 2 years 4 months 6 days | 2 years 6 months | |
Vested, Number of Shares (in shares) | 0 | ||
Vested, Weighted Average Exercise Price (in dollars per share) | $ 0 | ||
Vested, Weighted Average Remaining Contractual Term (years) | 0 years | ||
Vested or expected to vest, Number of Shares (in shares) | 218,505 | ||
Vested or expected to vest, Weighted Average Exercise Price (in dollars per share) | $ 16.59 | ||
Vested or expected to vest, Weighted-Average Remaining Contractual Term (years) | 2 years 4 months 6 days | ||
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] | |||
Outstanding, Beginning Balance (in shares) | 414,001 | ||
Vested (in shares) | (351,032) | ||
Granted (in shares) | 16,488 | ||
Outstanding, Ending Balance (in shares) | 79,457 | 414,001 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Outstanding, Beginning Balance (in dollars per share) | $ 15.42 | ||
Granted (in dollars per share) | 16.05 | $ 0 | $ 15.06 |
Vested (in dollars per share) | 15.50 | ||
Outstanding, Ending Balance (in dollars per share) | $ 15.22 | $ 15.42 | |
Weighted-Average Remaining Term (years) | 9 months 21 days | 8 months 4 days | |
Vested, Number of Shares (in shares) | 0 | ||
Vested, Weighted Average Exercise Price (in dollars per share) | $ 0 | ||
Vested, Weighted Average Remaining Contractual Term (years) | 0 years | ||
Vested or expected to vest, Number of Shares (in shares) | 79,457 | ||
Vested or expected to vest, Weighted Average Exercise Price (in dollars per share) | $ 15.22 | ||
Vested or expected to vest, Weighted-Average Remaining Contractual Term (years) | 9 months 21 days |
DEFINED CONTRIBUTION PLAN - (De
DEFINED CONTRIBUTION PLAN - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |||
Contributions paid to the defined contribution plan | $ 1,855 | $ 1,677 | $ 1,458 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - (Details) | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2011USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)Position | Dec. 31, 2014USD ($) | |
Long-term Purchase Commitment [Line Items] | ||||
Initial payment to acquire proprietary technology | $ 1,307,000 | $ 588,000 | $ 118,000 | |
Revenue from Grants | $ 790,000 | |||
Grant, Terms and Conditions, Required Increase in Workforce by Specified Date | Position | 96 | |||
Licensed technology [Member] | ||||
Long-term Purchase Commitment [Line Items] | ||||
Other commitment | $ 1,563,000 | |||
Minimum contractual term | 5 years | |||
Licensed technology [Member] | Minimum [Member] | ||||
Long-term Purchase Commitment [Line Items] | ||||
Future maximum royalty payments | 2.00% | |||
Licensed technology [Member] | Maximum [Member] | ||||
Long-term Purchase Commitment [Line Items] | ||||
Future maximum royalty payments | 10.00% | |||
In-process research and development [Member] | ||||
Long-term Purchase Commitment [Line Items] | ||||
Future maximum royalty payments | 7.00% | |||
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 | |||
In-process research and development [Member] | Maximum [Member] | ||||
Long-term Purchase Commitment [Line Items] | ||||
Other commitment | $ 13,350,000 | |||
Initial payment to acquire proprietary technology | $ 1,350,000 |
RELATED PARTIES - (Details)
RELATED PARTIES - (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Jan. 30, 2017 | Nov. 14, 2016 | |
Related Party Transaction [Line Items] | ||||||
Common stock, shares issued | 42,282,741 | 42,282,741 | 41,337,692 | |||
Major Stockholder [Member] | Related Party Transaction, Management Service Fee [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
General and administrative | $ 372 | |||||
WCAS [Member] | Related Party Transaction, Sale of Stock [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
General and administrative | $ 338 | $ 338 | ||||
Common stock, shares issued | 4,500,000 | |||||
Subsequent Event [Member] | WCAS [Member] | Related Party Transaction, Sale of Stock [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
General and administrative | $ 225 | |||||
Common stock, shares issued | 4,000,000 |
INCOME TAXES - Summary of Loss
INCOME TAXES - Summary of Loss Before Benefit from Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (29,885) | $ (28,830) | $ (45,392) |
Foreign | (11,701) | (10,194) | (14,359) |
Loss before income taxes | $ (41,586) | $ (39,024) | $ (59,751) |
INCOME TAXES - Benefit from Inc
INCOME TAXES - Benefit from Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 106 | 166 | 105 |
Foreign | (8) | 26 | 0 |
Deferred: | |||
Federal | (6,572) | (10,179) | (16,636) |
State | (772) | (963) | (975) |
Foreign | (1,273) | (536) | (3,042) |
Change in valuation allowance | 8,593 | 11,678 | 20,434 |
Income taxes expense (benefit) | $ 74 | $ 192 | $ (114) |
INCOME TAXES - Schedule of net
INCOME TAXES - Schedule of net deferred liability (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Components of Deferred Tax Assets and Liabilities [Abstract] | ||||
Net operating loss (“NOL”) carryforwards | $ 38,234 | $ 32,104 | ||
Capital lease obligations | 13,600 | 12,991 | ||
Income tax credits | 3,030 | 2,450 | ||
Inventory | 8,080 | 6,570 | ||
Stock-based compensation | 4,668 | 5,117 | ||
Intellectual property agreements | 3,123 | 3,198 | ||
Other deferred temporary differences | 3,055 | 2,988 | ||
Deferred tax assets | 73,790 | 65,418 | ||
Valuation allowance | (55,223) | (46,630) | $ (34,952) | $ (14,518) |
Total deferred tax assets, net of valuation allowance | 18,567 | 18,788 | ||
Capital lease assets | (11,949) | (12,677) | ||
Intangible assets | (7,472) | (11,153) | ||
Discount on convertible notes | (4,163) | 0 | ||
Deferred tax liability | (23,584) | (23,830) | ||
Net deferred tax liability | $ (5,017) | $ (5,042) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Operating Loss Carryforwards [Line Items] | ||
Net operating loss (NOL) carryforwards | $ 38,234,000 | $ 32,104,000 |
Net operating carryforwards subject to expire | 3,030,000 | |
Unrecognized Tax Benefits | 0 | $ 0 |
Foreign Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating carryforwards not subject to expire | $ 7,981,000 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the U.S. statutory federal income tax rate to the Company’s effective tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Federal tax at statutory rates | 34.00% | 34.00% | 34.00% |
State taxes, net of federal benefit | 2.10% | 1.90% | 2.30% |
Tax credits | 1.40% | 1.20% | 0.60% |
Permanent difference | (0.60%) | (0.90%) | 1.70% |
Foreign income taxes | (2.90%) | (2.20%) | (2.00%) |
Change in valuation allowance | (30.70%) | (29.90%) | (34.20%) |
Tax rate adjustment and other | (3.50%) | (4.50%) | (2.20%) |
Income tax (expense) benefit | (0.20%) | (0.50%) | 0.20% |
INCOME TAXES - Rollforward of
INCOME TAXES - Rollforward of deferred tax asset valuation allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred Tax Asset Valuation Allowance [Roll Forward] | |||
Beginning | $ (46,630) | $ (34,952) | $ (14,518) |
Increase to allowance | (8,593) | (11,678) | (20,434) |
Ending | $ (55,223) | $ (46,630) | $ (34,952) |
NET LOSS PER SHARE - (Details)
NET LOSS PER SHARE - (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net loss per common share: | |||||||||||
Net loss | $ (12,467) | $ (7,910) | $ (11,098) | $ (10,185) | $ (8,494) | $ (10,215) | $ (6,222) | $ (14,285) | $ (41,660) | $ (39,216) | $ (59,637) |
Less: accretion and adjustment of Series A Preferred and Series B Preferred | 0 | 0 | 6,879 | ||||||||
Net loss attributable to common stockholders | $ (41,660) | $ (39,216) | $ (52,758) | ||||||||
Basic and diluted loss per common share | |||||||||||
Basic and diluted (in shares) | 41,729,013 | 40,237,848 | 31,887,246 | ||||||||
Basic and diluted (in dollars per share) | $ (0.30) | $ (0.19) | $ (0.27) | $ (0.25) | $ (0.21) | $ (0.25) | $ (0.16) | $ (0.37) | $ (1) | $ (0.97) | $ (1.65) |
NET LOSS PER SHARE - Antidiluti
NET LOSS PER SHARE - Antidilutive Shares (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 11, 2016 | |
Stock options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 3,685,125 | 3,682,019 | 4,277,229 | |
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) | 79,457 | 414,001 | 765,023 | |
Restricted Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 218,505 | 79,940 | 0 | |
Convertible Debt Securities [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 2,768,657 | 0 | 0 | |
Convertible Notes Payable [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Debt issued | $ 50,000,000 |
SEGMENT AND GEOGRAPHICAL CONC75
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Narrative (Details) | 12 Months Ended |
Dec. 31, 2016Segmentcategory | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | Segment | 1 |
Number of sales categories | category | 3 |
Geographic Concentration Risk [Member] | Sales Revenue, Net [Member] | International [Member] | |
Segment Reporting Information [Line Items] | |
International revenue as a percentage of total revenue | 23.50% |
Geographic Concentration Risk [Member] | Sales Revenue, Net [Member] | United States [Member] | |
Segment Reporting Information [Line Items] | |
International revenue as a percentage of total revenue | 10.00% |
SEGMENT AND GEOGRAPHICAL CONC76
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Revenues by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 61,791 | $ 59,310 | $ 59,227 | $ 56,306 | $ 54,220 | $ 55,009 | $ 56,354 | $ 50,424 | $ 236,634 | $ 216,007 | $ 186,672 |
United States [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 181,078 | 155,291 | 133,110 | ||||||||
International [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 55,556 | 60,716 | 53,562 | ||||||||
Sales Revenue, Net [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 236,634 | 216,007 | 186,672 | ||||||||
Sales Revenue, Net [Member] | United States [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 181,078 | 155,291 | 133,110 | ||||||||
Sales Revenue, Net [Member] | International [Member] | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 55,556 | $ 60,716 | $ 53,562 |
SEGMENT AND GEOGRAPHICAL CONC77
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Revenues by Product (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue from External Customer [Line Items] | |||||||||||
Revenue | $ 61,791 | $ 59,310 | $ 59,227 | $ 56,306 | $ 54,220 | $ 55,009 | $ 56,354 | $ 50,424 | $ 236,634 | $ 216,007 | $ 186,672 |
United States [Member] | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Revenue | 181,078 | 155,291 | 133,110 | ||||||||
United States [Member] | Complex Spine [Member] | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Revenue | 71,915 | 63,398 | 54,030 | ||||||||
United States [Member] | Minimally Invasive [Member] | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Revenue | 28,711 | 23,633 | 18,194 | ||||||||
United States [Member] | Degenerative [Member] | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Revenue | 80,452 | 68,260 | 60,886 | ||||||||
International [Member] | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Revenue | $ 55,556 | $ 60,716 | $ 53,562 |
SEGMENT AND GEOGRAPHICAL CONC78
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Long-Lived Assets by Geographic Area (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 75,524 | $ 62,263 |
United States [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | 72,742 | 57,958 |
International [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 2,782 | $ 4,305 |
QUARTERLY FINANCIAL DATA (UNA79
QUARTERLY FINANCIAL DATA (UNAUDITED) - (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Selected Quarterly Financial Information [Abstract] | |||||||||||
Revenue | $ 61,791 | $ 59,310 | $ 59,227 | $ 56,306 | $ 54,220 | $ 55,009 | $ 56,354 | $ 50,424 | $ 236,634 | $ 216,007 | $ 186,672 |
Gross profit | 38,360 | 39,798 | 39,596 | 36,702 | 35,936 | 37,619 | 37,734 | 32,927 | 154,456 | 144,216 | 123,872 |
Loss from operations | (9,363) | (6,097) | (9,342) | (9,929) | (7,579) | (10,010) | (8,636) | (10,045) | (34,731) | (36,270) | (47,969) |
Net loss | $ (12,467) | $ (7,910) | $ (11,098) | $ (10,185) | $ (8,494) | $ (10,215) | $ (6,222) | $ (14,285) | $ (41,660) | $ (39,216) | $ (59,637) |
Net loss per common share (in dollars per share) | $ (0.30) | $ (0.19) | $ (0.27) | $ (0.25) | $ (0.21) | $ (0.25) | $ (0.16) | $ (0.37) | $ (1) | $ (0.97) | $ (1.65) |