DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 25, 2018 | |
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 | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 43,395,624 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 17,192 | $ 23,964 |
Accounts receivable, net | 51,257 | 50,474 |
Inventory, net | 77,394 | 71,424 |
Prepaid expenses and other current assets | 6,790 | 7,842 |
Total current assets | 152,633 | 153,704 |
Property, plant and equipment, net | 48,053 | 49,200 |
Surgical instruments, net | 27,776 | 26,250 |
Goodwill | 121,814 | 121,814 |
Intangible assets, net | 18,768 | 18,899 |
Other assets | 3,934 | 3,260 |
Total assets | 372,978 | 373,127 |
Current liabilities: | ||
Current maturities under capital lease obligation | 1,161 | 1,122 |
Accounts payable | 25,454 | 20,495 |
Accrued expenses | 18,794 | 22,233 |
Accrued payroll liabilities | 9,201 | 10,214 |
Total current liabilities | 54,610 | 54,064 |
Bank line of credit | 7,000 | 0 |
Convertible senior notes | 39,790 | 39,176 |
Capital lease obligation, net of current maturities | 33,514 | 33,812 |
Deferred income taxes, net | 3,360 | 3,360 |
Other liabilities | 342 | 316 |
Total liabilities | 138,616 | 130,728 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value, 750,000,000 shares authorized; 43,404,374 and 43,389,576 shares issued and 43,388,409 and 43,373,611 shares outstanding, respectively | 43 | 43 |
Additional paid-in capital | 492,602 | 491,012 |
Accumulated deficit | (260,619) | (249,221) |
Accumulated other comprehensive income | 2,647 | 876 |
Treasury stock, at cost, 15,965 and 15,965 shares, respectively | (311) | (311) |
Total stockholders’ equity | 234,362 | 242,399 |
Total liabilities and stockholders’ equity | $ 372,978 | $ 373,127 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value per share (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock, shares issued (in shares) | 43,404,374 | 43,389,576 |
Common stock, shares outstanding (in shares) | 43,388,409 | 43,373,611 |
Treasury stock, (in shares) | 15,965 | 15,965 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Revenue | $ 67,876 | $ 61,885 |
Cost of revenue | 24,419 | 21,479 |
Gross profit | 43,457 | 40,406 |
Operating expenses: | ||
Research and development | 5,660 | 5,250 |
Sales and marketing | 32,732 | 30,474 |
General and administrative | 15,082 | 13,754 |
Total operating expenses | 53,474 | 49,478 |
Loss from operations | (10,017) | (9,072) |
Other expense, net: | ||
Foreign currency transaction gain (loss) | 478 | (27) |
Interest expense | (1,782) | (1,732) |
Total other expense, net | (1,304) | (1,759) |
Loss before income taxes | (11,321) | (10,831) |
Income tax expense | 77 | 42 |
Net loss | $ (11,398) | $ (10,873) |
Basic and diluted (in dollars per share) | $ (0.26) | $ (0.26) |
Weighted average common shares outstanding: | ||
Basic and diluted (in shares) | 43,118,112 | 42,224,734 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (11,398) | $ (10,873) |
Other comprehensive income: | ||
Foreign currency translation adjustment | 1,771 | 363 |
Other comprehensive income | 1,771 | 363 |
Comprehensive loss | $ (9,627) | $ (10,510) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock |
Beginning Balance (in shares) at Dec. 31, 2017 | 43,373,611 | 43,389,576 | 15,965 | |||
Beginning Balance at Dec. 31, 2017 | $ 242,399 | $ 43 | $ 491,012 | $ (249,221) | $ 876 | $ (311) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (11,398) | (11,398) | ||||
Other comprehensive income | 1,771 | 1,771 | ||||
Stock-based compensation | $ 1,451 | 1,451 | ||||
Issuances and exercise of stock-based compensation benefit plans, net of income tax (in shares) | 14,798 | 14,798 | 0 | |||
Issuances and exercise of stock-based compensation benefit plans, net of income tax | $ 139 | $ 0 | 139 | $ 0 | ||
Ending Balance (in shares) at Mar. 31, 2018 | 43,388,409 | 43,404,374 | 15,965 | |||
Ending Balance at Mar. 31, 2018 | $ 234,362 | $ 43 | $ 492,602 | $ (260,619) | $ 2,647 | $ (311) |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities | ||
Net loss | $ (11,398) | $ (10,873) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 5,546 | 7,195 |
Provision for inventory reserves | 1,305 | 1,146 |
Stock-based compensation expense | 1,451 | 1,541 |
Accretion of discounts and amortization of issuance costs of convertible senior notes | 632 | 570 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (320) | 438 |
Inventory | (6,859) | (1,263) |
Prepaid expenses and other assets | 877 | (4,032) |
Accounts payable, accrued expenses, and accrued payroll liabilities | 227 | 431 |
Net cash used in operating activities | (8,539) | (4,847) |
Investing activities | ||
Purchases of surgical instruments | (4,479) | (3,157) |
Purchases of property, plant and equipment | (840) | (1,553) |
Changes in cash restricted for leasehold improvements | 0 | 61 |
Purchase of intangible assets | (17) | (23) |
Net cash used in investing activities | (5,336) | (4,672) |
Financing activities | ||
Borrowings on bank line of credit | 7,000 | 0 |
Payments under capital lease | (259) | (223) |
Issuances and exercise of stock-based compensation benefit plans, net of income tax | 139 | 2,744 |
Net cash provided by financing activities | 6,880 | 2,521 |
Effect of exchange rate changes on cash and cash equivalents | 223 | 67 |
Net change in cash and cash equivalents | (6,772) | (6,931) |
Cash and cash equivalents at beginning of period | 23,964 | 45,511 |
Cash and cash equivalents at end of period | 17,192 | 38,580 |
Significant non-cash investing activities | ||
Additions to property, plant and equipment | 150 | 750 |
Reductions to property, plant and equipment from earned grant incentives | 395 | 0 |
Cash paid for: | ||
Income taxes | 1 | 64 |
Interest | $ 1,087 | $ 1,090 |
GENERAL AND SUMMARY OF SIGNIFIC
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to “K2M,” “the Company,” “we,” “us” and “our,” refer to K2M Group Holdings, Inc. together with its consolidated subsidiaries. We are a global medical device provider of complex spine and minimally invasive solutions focused on achieving three-dimensional Total Body Balance. 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. Unaudited Interim Results The accompanying condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017 , the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2018 and 2017 , the condensed consolidated statement of changes in stockholders’ equity for the three months ended March 31, 2018 , and the condensed consolidated statements of cash flows for the three months ended March 31, 2018 and 2017 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis of accounting as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary to present fairly our financial position and results of operations and cash flows for the periods presented. The results for the three months ended March 31, 2018 are not necessarily indicative of future results. All information as of March 31, 2018 and for the three month periods ending March 31, 2018 and 2017 within these notes to the condensed consolidated financial statements is unaudited. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition We adopted ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”), with a date of initial adoption of January 1, 2018. In preparing for the adoption of the new standard, we reviewed our revenue generating activities, identified the performance obligations related to those activities, and determined the appropriate timing and measurement of revenue related to the performance obligations in accordance with the standard. We applied Topic 606 retrospectively to each period reported, however, based on the results of our evaluation, there were no changes to our historical condensed consolidated financial statements for the three months ended March 31, 2017 as a result of this adoption. For revenue recognition arrangements that we determine are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we will evaluate the goods or services promised within each contract related performance obligations, and assesses whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. In our direct markets, we make our products available to hospitals that purchase specific products for use in a surgery on a case by case basis. We recognize revenue upon the use of such products in the completion of a surgical procedure following a receipt of a delivered order confirming that such products have been used in such procedure. In certain instances, hospital customers may purchase our products in advance of a surgical procedure. Revenue from these transactions is recognized following the completion of our performance obligations associated with the transaction which are distinct under the contract which typically includes our shipment of the purchased products and transfer of control to the hospital customer at the point of delivery. International sales outside of our direct markets are contracted with international distributors, who then resell our products their hospital customers. We recognize revenue upon completion of our performance obligations which includes shipment of the product to the distributor, who accepts title and control at the point of shipment. For these transactions, control transfers to the customer at the point of shipment. We recognize revenue at the transaction price that reflects the net consideration to which we expect to be entitled in exchange for our surgical products. If the transaction price includes variable consideration such as a discount, rebate, right of return or other sales incentives that reduce the transaction price such variable consideration is estimated when revenue is recognized based on the expected value approach. If taxes should be collected from customers relating to product sales and remitted to governmental authorities, they will be excluded from revenue. We expense incremental costs of obtaining a contract when incurred if the expected amortization period of the asset that the Company would have recognized is one year or less. We have determined that our contracts are short-term in nature and therefore no contract costs have been capitalized. 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 due 2036 (the “Notes”). 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 March 31, 2018 and 2017 , shares of restricted stock are contingently issuable until their restrictions lapse and 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. Recently Adopted and Issued Accounting Pronouncements We adopted the following pronouncements in the first quarter of 2018: In August 2016, the Financial Accounting Standards Board (“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 investors 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. We adopted ASU 2016-15 effective January 1, 2018. The adoption did not have an impact on our financial position, results of operations or cash flows. 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. ASU 2016-18 indicates that 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 to ASU 2016-18 does not provide a definition of restricted cash or restricted cash equivalents. We adopted ASU 2016-18 effective January 1, 2018. The update did not have a material impact on our financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment, which no longer requires an entity to measure a goodwill impairment loss by comparing the implied fair value to the carrying value of a reporting unit’s goodwill. Instead, any goodwill impairment charge will be recognized as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. In addition, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This update does not affect the optional qualitative assessment of goodwill impairment. ASU 2017-04 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This guidance should be applied prospectively, with earlier application permitted for goodwill impairment tests with measurement dates after January 1, 2017. We adopted ASU 2017-04 effective January 1, 2018. The adoption did not have an impact on our financial position, results of operations or cash flows. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718), Scope of modification accounting, which provides guidance about which changes to the terms of a share-based payment award should be accounted for as a modification. Under ASU 2017-09, a change to an award should be accounted for as a modification unless the fair value of the modified award is the same as the original award, inputs to the valuation technique used to value the award does not change, the vesting conditions do not change, and the classification as an equity or liability instrument do not change. This guidance should be applied prospectively to an award modified on or after date of the adoption. We adopted ASU 2017-09 effective January 1, 2018. The adoption did not have an impact on our financial position, results of operations or cash flows. Accounting Pronouncements we will adopt at a later date: 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: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) 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. Public companies will be required to comply with the guidance in 2019, and interim periods within that year. Early adoption is permitted for all entities. We are presently evaluating the impact of this guidance. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“SAB” No. 118”), to state the income tax accounting implications of the Tax Cuts and Jobs Act (“New Tax Act”), which clarifies the measurement period time frame, changes in subsequent reporting periods and reporting requirements as a result of the New Tax Act of 2017. In accordance with SAB No. 118, a company must reflect the income tax effects of those aspects of the New Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the New Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the New Tax Act. SAB No. 118 provides a measurement period that should not extend beyond one year and it begins in the period that includes the enactment date which was December 22, 2017. We have not completed the accounting for the income tax effects of certain elements of the New Tax Act, which will become effective in future years. When additional guidance and regulations enable us to finalize certain tax positions, we will reflect the impact of this ASU 2018-05 on the tax provision and deferred tax calculation as of December 31, 2018. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE The following table summarizes accounts receivable, net of allowances: March 31, December 31, Accounts receivable $ 53,625 $ 52,820 Allowances (2,368 ) (2,346 ) Accounts receivable, net $ 51,257 $ 50,474 |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY The following table summarizes inventory, net of allowances: March 31, December 31, Finished goods $ 116,999 $ 109,342 Inventory allowances (39,605 ) (37,918 ) Inventory, net $ 77,394 $ 71,424 Inventory includes surgical instruments available for sale with a carrying value of $ 8,902 and $ 8,493 at March 31, 2018 and December 31, 2017 , respectively. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAIDS EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS The following table summarizes prepaid expenses and other current assets: March 31, December 31, Prepaid expenses $ 3,840 $ 3,419 Other 2,950 4,423 Total $ 6,790 $ 7,842 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT The following table summarizes property, plant and equipment: Estimated Useful Lives March 31, December 31, Buildings under capital lease 16 years $ 26,469 $ 26,469 Leasehold improvements, including property under capital lease 15 years 19,870 20,222 Equipment 3-5 years 4,612 4,290 Software 3 years 8,385 7,784 Computer equipment 3 years 1,198 1,165 Furniture and office equipment 5-7 years 3,828 3,823 Vehicles and other 3 years 668 878 Total 65,030 64,631 Less accumulated depreciation and amortization (16,977 ) (15,431 ) Property, plant and equipment, net $ 48,053 $ 49,200 Depreciation and amortization expense for property, plant and equipment was $ 1,525 and $ 1,361 for the three months ended March 31, 2018 and 2017 , respectively. Included in this total is amortization expense for buildings and leasehold improvements under capital lease of $ 416 for each of the three months ended March 31, 2018 and 2017 . Interest expense on the capital lease obligation was $ 564 and $ 580 for the three months ended March 31, 2018 and 2017 , respectively. |
SURGICAL INSTRUMENTS
SURGICAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
SURGICAL INSTRUMENTS | SURGICAL INSTRUMENTS The following table summarizes surgical instruments: March 31, December 31, Surgical instruments $ 76,803 $ 72,018 Less accumulated depreciation and allowances (49,027 ) (45,768 ) Surgical instruments, net $ 27,776 $ 26,250 Depreciation and allowance expense for surgical instruments was $ 3,259 and $ 2,516 for the three months ended March 31, 2018 and 2017 , respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Intangible assets, net comprise the following: March 31, 2018 Estimated Useful Lives Gross Accumulated Amortization Net Indefinite-lived intangible assets: Trademarks — $ 12,900 $ — $ 12,900 In-process research and development — 900 — 900 Other — 251 — 251 Subtotal 14,051 — 14,051 Subject to amortization Developed technology 4 - 6 years 62,000 (61,825 ) 175 Licensed technology 4 - 6 years 52,800 (52,610 ) 190 Customer relationships 4 - 7 years 29,700 (29,700 ) — Patents and other 2 - 17 years 6,078 (1,726 ) 4,352 Subtotal 150,578 (145,861 ) 4,717 Intangible assets, net $ 164,629 $ (145,861 ) $ 18,768 December 31, 2017 Estimated Useful Lives Gross Accumulated Amortization Net Indefinite-lived intangible assets: Trademarks — $ 12,900 $ — $ 12,900 In-process research and development — 900 — 900 Other — 242 — 242 Subtotal 14,042 — 14,042 Subject to amortization Developed technology 4 - 6 years 62,000 (61,808 ) 192 Licensed technology 4 - 6 years 52,800 (52,602 ) 198 Customer relationships 4 - 7 years 29,700 (29,700 ) — Patents and other 2 - 17 years 6,060 (1,593 ) 4,467 Subtotal 150,560 (145,703 ) 4,857 Intangible assets, net $ 164,602 $ (145,703 ) $ 18,899 Amortization expense of intangible assets was $ 158 and $ 2,373 for the three months ended March 31, 2018 and 2017 , respectively. As of March 31, 2018 , the expected amortization expense for the remainder of 2018 and the following four years and thereafter is as follows: March 31, 2018 2018 $ 471 2019 604 2020 575 2021 516 2022 516 Thereafter 2,035 Total $ 4,717 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses consist of the following: March 31, December 31, Accrued commissions $ 8,013 $ 9,495 Accrued royalties 2,830 3,489 Other 7,951 9,249 Total $ 18,794 $ 22,233 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT 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 October 6, 2017, we entered into an amendment to the credit agreement, which extended its maturity date from April 26, 2018 to April 26, 2019, among other changes. As amended, the credit facility consists of revolving credit facility 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 . As of March 31, 2018 , there was $ 7,000 outstanding and accrued interest at a rate of 5.50% under our revolving credit facility. 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 of 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 March 31, 2018 . We incurred interest expense of $ 19 and $ 0 related to the credit facility and amortization expense of loan issuance fees was $ 17 and $ 60 for the three months ended March 31, 2018 and 2017 , respectively. As of March 31, 2018 , we had $ 34,591 of unused borrowing capacity under the revolving credit facility, net of an issued but undrawn letter of credit for $ 6,000 , representing a security deposit on the corporate headquarters and operations facilities lease. Convertible Senior Notes In August 2016, we issued $ 50,000 aggregate principal amount of the Notes due August 15, 2036 unless earlier converted, redeemed or repurchased by us. 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. The Notes are governed by an indenture between the Company and The Bank of New York Mellon. The Notes are senior, unsecured obligations 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. Interest expense related to the Notes was $ 1,130 and $ 1,065 for the three months ended March 31, 2018 and 2017 , respectively. These amounts included accretion expense of the debt discounts of $ 614 and $ 550 for the three months ended March 31, 2018 and 2017 , respectively. As of March 31, 2018 , the fair value of the Notes was $ 45,447 . |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION As of March 31, 2018 , there was a total of 1,386,071 shares of common stock available for future grants under our stock purchase and equity award or incentive plans. The following table summarizes the stock-based compensation expense by financial statement line item and type of award: Three Months Ended March 31, 2018 2017 Cost of revenue $ 27 $ 45 Research and development 36 86 Sales and marketing 239 360 General and administrative 1,149 1,050 Total $ 1,451 $ 1,541 Three Months Ended March 31, 2018 2017 Stock options $ 716 $ 811 Restricted stock 580 349 Restricted stock units (“RSUs”) 84 260 Employee Stock Purchase Plan 71 121 Total $ 1,451 $ 1,541 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, 2017 3,165,387 $ 14.26 5.88 $ 15,567 Granted 2,913 20.72 Exercised (14,798 ) 9.34 Expired (2,058 ) 10.74 Forfeited (4,143 ) 18.12 Outstanding at March 31, 2018 3,147,301 $ 14.28 5.65 $ 17,698 Vested: At March 31, 2018 2,331,150 $ 12.35 4.62 $ 16,354 Expected to vest: At March 31, 2018 816,151 $ 19.80 1.64 $ 1,344 (1) Calculated using the fair market value per-share of our common stock as of March 31, 2018 and December 31, 2017 of $ 18.95 and $ 18.00 , respectively. A summary of restricted stock and RSU activity during the three months ended March 31, 2018 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, 2017 265,684 $ 19.46 2.03 46,247 $ 15.83 2.28 Vested — — — — Granted — — 1,206 20.72 Forfeited — — — — Non-vested at March 31, 2018 265,684 $ 19.46 1.85 47,453 $ 16.56 2.06 Vested or expected to vest: At March 31, 2018 265,684 $ 19.46 1.85 47,453 $ 16.56 2.06 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Intellectual Property In the normal course of business, we enter into agreements to obtain the rights to certain intellectual property. In addition to royalty payments based on the sale of the underlying product incorporating such intellectual property, these agreements may require an up-front payment and/or milestone payments under certain conditions such as when regulatory approval is received, cumulative sales milestones or subscriber levels are achieved and other events. 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. Royalties ranging from 2% to 10% of net sales may be due on the sale of related products under these agreements and some of the agreements contain minimum annual royalty amounts. As of March 31, 2018 , several of these agreements could require us to make additional payments should certain conditions be met in the future. Of these amounts, (i) up to $ 16,515 would be paid following the receipt of regulatory applications and approvals in the United States. (ii) up to $ 1,500 would be paid following attainment of certain subscriber levels as of July 2018, July 2019 and July 2020, and (iii) up to $ 300 would be paid based on completion of software development in 2018 related to our Balance ACS platform. 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, related to one of these agreements. A royalty payment of 7% of net sales of related products may be due until such sales reach $ 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, or other contingencies in the ordinary course of our business. 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. We expense fees incurred for legal services as incurred. |
RELATED PARTIES
RELATED PARTIES | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES In January 2017, pursuant to an underwritten public offering, our prior sponsor Welsh, Carson, Anderson & Stowe XI, L.P., and certain of its affiliates completed the sale of an additional 4,000,000 shares of our common stock. We incurred transaction fees of approximately $ 225 which are 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 | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The provision for income taxes includes both domestic and foreign minimum income taxes and changes in the valuation allowance. For the three months ended March 31, 2018 and 2017 , the income tax expense was $ 77 and $ 42 , respectively, resulting in an effective tax rate of (0.7)% and (0.4)% , respectively. The effective tax rate differs from the statutory rate due to minimum income taxes, permanent differences and changes in valuation allowances. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2018 | |
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: Three Months Ended March 31, 2018 2017 Net loss per common share: Net loss $ (11,398 ) $ (10,873 ) Basic and diluted loss per common share: Basic and diluted weighted average common shares outstanding 43,118,112 42,224,734 Basic and diluted loss per common share $ (0.26 ) $ (0.26 ) The following outstanding securities, using the treasury stock method, were excluded from the above computations of net loss per share because their impact would be antidilutive due to the net losses during the three months ended March 31, 2018 and 2017 : Three Months Ended March 31, 2018 2017 Stock options 3,147,301 3,414,478 Restricted stock 265,684 218,505 RSUs 47,453 84,373 As discussed in Note 9, we have $ 50,000 aggregate principal amount of Notes outstanding at March 31, 2018 and 2017 . 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 Notes is excluded from the calculation of diluted loss per share because the net loss for the three months ended March 31, 2018 and 2017 causes such securities to be antidilutive. The potential dilutive effect of these securities is shown in the table below: Three Months Ended March 31, 2018 2017 Conversion of Notes 2,799,580 2,746,680 |
SEGMENT AND GEOGRAPHICAL CONCEN
SEGMENT AND GEOGRAPHICAL CONCENTRATION | 3 Months Ended |
Mar. 31, 2018 | |
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 manage the business globally 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 26.5% of total revenue for the three months ended March 31, 2018 . Revenue earned in any individual foreign country was approximately 10% of our consolidated revenue. Our surgical sets are sold in three primary sales channels that include the Direct US, Direct international and distributor markets. One customer accounted for approximately 12.5% and 9.6% of total revenue for the three months ended March 31, 2018 and 2017 , respectively. The following table represents total revenue by geographic area, based on the location of the customer: Three Months Ended March 31, 2018 2017 United States $ 49,890 $ 46,207 International 17,986 15,678 Total $ 67,876 $ 61,885 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 the three product categories. These sales transactions are settled when we ship the product to the distributor. The following table represents domestic revenue by current procedure category: Three Months Ended March 31, 2018 2017 Complex spine $ 18,513 $ 17,136 Minimally invasive 8,375 7,872 Degenerative 23,002 21,199 49,890 46,207 International 17,986 15,678 Total $ 67,876 $ 61,885 |
SUBSEQUENT EVENT (Notes)
SUBSEQUENT EVENT (Notes) | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT On April 27, 2018, the Company and its existing distributor in Spain and Portugal executed an exclusive agency and services agreement to replace the existing distribution agreement between the parties. Pursuant to the agreement, we acquired the distributor’s spine customer contracts and relationships and its existing K2M product inventory and instrumentation in exchange for certain outstanding receivables due from the distributor. In addition, we will become responsible for and assume risk of billing, collections and inventory management for the entity's business related to our products. We continue to evaluate our accounting for the transaction and expect to recognize revenue earned in Spain and Portugal similar to our revenue recognition policies in other direct markets. |
GENERAL AND SUMMARY OF SIGNIF24
GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Revenue Recognition | Revenue Recognition We adopted ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”), with a date of initial adoption of January 1, 2018. In preparing for the adoption of the new standard, we reviewed our revenue generating activities, identified the performance obligations related to those activities, and determined the appropriate timing and measurement of revenue related to the performance obligations in accordance with the standard. We applied Topic 606 retrospectively to each period reported, however, based on the results of our evaluation, there were no changes to our historical condensed consolidated financial statements for the three months ended March 31, 2017 as a result of this adoption. For revenue recognition arrangements that we determine are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we will evaluate the goods or services promised within each contract related performance obligations, and assesses whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. In our direct markets, we make our products available to hospitals that purchase specific products for use in a surgery on a case by case basis. We recognize revenue upon the use of such products in the completion of a surgical procedure following a receipt of a delivered order confirming that such products have been used in such procedure. In certain instances, hospital customers may purchase our products in advance of a surgical procedure. Revenue from these transactions is recognized following the completion of our performance obligations associated with the transaction which are distinct under the contract which typically includes our shipment of the purchased products and transfer of control to the hospital customer at the point of delivery. International sales outside of our direct markets are contracted with international distributors, who then resell our products their hospital customers. We recognize revenue upon completion of our performance obligations which includes shipment of the product to the distributor, who accepts title and control at the point of shipment. For these transactions, control transfers to the customer at the point of shipment. We recognize revenue at the transaction price that reflects the net consideration to which we expect to be entitled in exchange for our surgical products. If the transaction price includes variable consideration such as a discount, rebate, right of return or other sales incentives that reduce the transaction price such variable consideration is estimated when revenue is recognized based on the expected value approach. If taxes should be collected from customers relating to product sales and remitted to governmental authorities, they will be excluded from revenue. We expense incremental costs of obtaining a contract when incurred if the expected amortization period of the asset that the Company would have recognized is one year or less. We have determined that our contracts are short-term in nature and therefore no contract costs have been capitalized. |
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 due 2036 (the “Notes”). 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 March 31, 2018 and 2017 , shares of restricted stock are contingently issuable until their restrictions lapse and have been excluded from the weighted average shares outstanding. |
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. |
Recent Accounting Pronouncements | Recently Adopted and Issued Accounting Pronouncements We adopted the following pronouncements in the first quarter of 2018: In August 2016, the Financial Accounting Standards Board (“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 investors 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. We adopted ASU 2016-15 effective January 1, 2018. The adoption did not have an impact on our financial position, results of operations or cash flows. 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. ASU 2016-18 indicates that 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 to ASU 2016-18 does not provide a definition of restricted cash or restricted cash equivalents. We adopted ASU 2016-18 effective January 1, 2018. The update did not have a material impact on our financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-04, Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment, which no longer requires an entity to measure a goodwill impairment loss by comparing the implied fair value to the carrying value of a reporting unit’s goodwill. Instead, any goodwill impairment charge will be recognized as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. In addition, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This update does not affect the optional qualitative assessment of goodwill impairment. ASU 2017-04 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This guidance should be applied prospectively, with earlier application permitted for goodwill impairment tests with measurement dates after January 1, 2017. We adopted ASU 2017-04 effective January 1, 2018. The adoption did not have an impact on our financial position, results of operations or cash flows. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718), Scope of modification accounting, which provides guidance about which changes to the terms of a share-based payment award should be accounted for as a modification. Under ASU 2017-09, a change to an award should be accounted for as a modification unless the fair value of the modified award is the same as the original award, inputs to the valuation technique used to value the award does not change, the vesting conditions do not change, and the classification as an equity or liability instrument do not change. This guidance should be applied prospectively to an award modified on or after date of the adoption. We adopted ASU 2017-09 effective January 1, 2018. The adoption did not have an impact on our financial position, results of operations or cash flows. Accounting Pronouncements we will adopt at a later date: 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: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) 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. Public companies will be required to comply with the guidance in 2019, and interim periods within that year. Early adoption is permitted for all entities. We are presently evaluating the impact of this guidance. In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“SAB” No. 118”), to state the income tax accounting implications of the Tax Cuts and Jobs Act (“New Tax Act”), which clarifies the measurement period time frame, changes in subsequent reporting periods and reporting requirements as a result of the New Tax Act of 2017. In accordance with SAB No. 118, a company must reflect the income tax effects of those aspects of the New Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the New Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the New Tax Act. SAB No. 118 provides a measurement period that should not extend beyond one year and it begins in the period that includes the enactment date which was December 22, 2017. We have not completed the accounting for the income tax effects of certain elements of the New Tax Act, which will become effective in future years. When additional guidance and regulations enable us to finalize certain tax positions, we will reflect the impact of this ASU 2018-05 on the tax provision and deferred tax calculation as of December 31, 2018. |
ACCOUNTS RECEIVABLE - (Tables)
ACCOUNTS RECEIVABLE - (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | The following table summarizes accounts receivable, net of allowances: March 31, December 31, Accounts receivable $ 53,625 $ 52,820 Allowances (2,368 ) (2,346 ) Accounts receivable, net $ 51,257 $ 50,474 |
INVENTORY - (Tables)
INVENTORY - (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Current Inventory | The following table summarizes inventory, net of allowances: March 31, December 31, Finished goods $ 116,999 $ 109,342 Inventory allowances (39,605 ) (37,918 ) Inventory, net $ 77,394 $ 71,424 |
PREPAID EXPENSES AND OTHER CU27
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of prepaid expenses and other current assets | The following table summarizes prepaid expenses and other current assets: March 31, December 31, Prepaid expenses $ 3,840 $ 3,419 Other 2,950 4,423 Total $ 6,790 $ 7,842 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | The following table summarizes property, plant and equipment: Estimated Useful Lives March 31, December 31, Buildings under capital lease 16 years $ 26,469 $ 26,469 Leasehold improvements, including property under capital lease 15 years 19,870 20,222 Equipment 3-5 years 4,612 4,290 Software 3 years 8,385 7,784 Computer equipment 3 years 1,198 1,165 Furniture and office equipment 5-7 years 3,828 3,823 Vehicles and other 3 years 668 878 Total 65,030 64,631 Less accumulated depreciation and amortization (16,977 ) (15,431 ) Property, plant and equipment, net $ 48,053 $ 49,200 |
SURGICAL INSTRUMENTS - (Tables)
SURGICAL INSTRUMENTS - (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Surgical Instruments | The following table summarizes surgical instruments: March 31, December 31, Surgical instruments $ 76,803 $ 72,018 Less accumulated depreciation and allowances (49,027 ) (45,768 ) Surgical instruments, net $ 27,776 $ 26,250 |
INTANGIBLE ASSETS - (Tables)
INTANGIBLE ASSETS - (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | Intangible assets, net comprise the following: March 31, 2018 Estimated Useful Lives Gross Accumulated Amortization Net Indefinite-lived intangible assets: Trademarks — $ 12,900 $ — $ 12,900 In-process research and development — 900 — 900 Other — 251 — 251 Subtotal 14,051 — 14,051 Subject to amortization Developed technology 4 - 6 years 62,000 (61,825 ) 175 Licensed technology 4 - 6 years 52,800 (52,610 ) 190 Customer relationships 4 - 7 years 29,700 (29,700 ) — Patents and other 2 - 17 years 6,078 (1,726 ) 4,352 Subtotal 150,578 (145,861 ) 4,717 Intangible assets, net $ 164,629 $ (145,861 ) $ 18,768 December 31, 2017 Estimated Useful Lives Gross Accumulated Amortization Net Indefinite-lived intangible assets: Trademarks — $ 12,900 $ — $ 12,900 In-process research and development — 900 — 900 Other — 242 — 242 Subtotal 14,042 — 14,042 Subject to amortization Developed technology 4 - 6 years 62,000 (61,808 ) 192 Licensed technology 4 - 6 years 52,800 (52,602 ) 198 Customer relationships 4 - 7 years 29,700 (29,700 ) — Patents and other 2 - 17 years 6,060 (1,593 ) 4,467 Subtotal 150,560 (145,703 ) 4,857 Intangible assets, net $ 164,602 $ (145,703 ) $ 18,899 |
Schedule of Expected Amortization Expense | As of March 31, 2018 , the expected amortization expense for the remainder of 2018 and the following four years and thereafter is as follows: March 31, 2018 2018 $ 471 2019 604 2020 575 2021 516 2022 516 Thereafter 2,035 Total $ 4,717 |
ACCRUED EXPENSES - (Tables)
ACCRUED EXPENSES - (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consist of the following: March 31, December 31, Accrued commissions $ 8,013 $ 9,495 Accrued royalties 2,830 3,489 Other 7,951 9,249 Total $ 18,794 $ 22,233 |
STOCK-BASED COMPENSATION - (Tab
STOCK-BASED COMPENSATION - (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 and type of award: Three Months Ended March 31, 2018 2017 Cost of revenue $ 27 $ 45 Research and development 36 86 Sales and marketing 239 360 General and administrative 1,149 1,050 Total $ 1,451 $ 1,541 Three Months Ended March 31, 2018 2017 Stock options $ 716 $ 811 Restricted stock 580 349 Restricted stock units (“RSUs”) 84 260 Employee Stock Purchase Plan 71 121 Total $ 1,451 $ 1,541 |
Schedule of employee stock option plan activity | 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, 2017 3,165,387 $ 14.26 5.88 $ 15,567 Granted 2,913 20.72 Exercised (14,798 ) 9.34 Expired (2,058 ) 10.74 Forfeited (4,143 ) 18.12 Outstanding at March 31, 2018 3,147,301 $ 14.28 5.65 $ 17,698 Vested: At March 31, 2018 2,331,150 $ 12.35 4.62 $ 16,354 Expected to vest: At March 31, 2018 816,151 $ 19.80 1.64 $ 1,344 (1) Calculated using the fair market value per-share of our common stock as of March 31, 2018 and December 31, 2017 of $ 18.95 and $ 18.00 , respectively. |
Schedule of restricted stock and RSU activity | A summary of restricted stock and RSU activity during the three months ended March 31, 2018 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, 2017 265,684 $ 19.46 2.03 46,247 $ 15.83 2.28 Vested — — — — Granted — — 1,206 20.72 Forfeited — — — — Non-vested at March 31, 2018 265,684 $ 19.46 1.85 47,453 $ 16.56 2.06 Vested or expected to vest: At March 31, 2018 265,684 $ 19.46 1.85 47,453 $ 16.56 2.06 |
NET LOSS PER SHARE - (Tables)
NET LOSS PER SHARE - (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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: Three Months Ended March 31, 2018 2017 Net loss per common share: Net loss $ (11,398 ) $ (10,873 ) Basic and diluted loss per common share: Basic and diluted weighted average common shares outstanding 43,118,112 42,224,734 Basic and diluted loss per common share $ (0.26 ) $ (0.26 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following outstanding securities, using the treasury stock method, were excluded from the above computations of net loss per share because their impact would be antidilutive due to the net losses during the three months ended March 31, 2018 and 2017 : Three Months Ended March 31, 2018 2017 Stock options 3,147,301 3,414,478 Restricted stock 265,684 218,505 RSUs 47,453 84,373 As discussed in Note 9, we have $ 50,000 aggregate principal amount of Notes outstanding at March 31, 2018 and 2017 . 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 Notes is excluded from the calculation of diluted loss per share because the net loss for the three months ended March 31, 2018 and 2017 causes such securities to be antidilutive. The potential dilutive effect of these securities is shown in the table below: Three Months Ended March 31, 2018 2017 Conversion of Notes 2,799,580 2,746,680 |
SEGMENT AND GEOGRAPHICAL CONC34
SEGMENT AND GEOGRAPHICAL CONCENTRATION - (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographic Area | The following table represents total revenue by geographic area, based on the location of the customer: Three Months Ended March 31, 2018 2017 United States $ 49,890 $ 46,207 International 17,986 15,678 Total $ 67,876 $ 61,885 |
Schedule of Revenue by Products | The following table represents domestic revenue by current procedure category: Three Months Ended March 31, 2018 2017 Complex spine $ 18,513 $ 17,136 Minimally invasive 8,375 7,872 Degenerative 23,002 21,199 49,890 46,207 International 17,986 15,678 Total $ 67,876 $ 61,885 |
ACCOUNTS RECEIVABLE - (Details)
ACCOUNTS RECEIVABLE - (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Accounts receivable | $ 53,625 | $ 52,820 |
Allowances | (2,368) | (2,346) |
Accounts receivable, net | $ 51,257 | $ 50,474 |
INVENTORY - (Details)
INVENTORY - (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Finished goods | $ 116,999 | $ 109,342 |
Inventory allowances | (39,605) | (37,918) |
Inventory, net | 77,394 | 71,424 |
Surgical and Medical Instruments | ||
Inventory [Line Items] | ||
Inventory, net | $ 8,902 | $ 8,493 |
PREPAID EXPENSES AND OTHER CU37
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 3,840 | $ 3,419 |
Other | 2,950 | 4,423 |
Total | $ 6,790 | $ 7,842 |
PROPERTY, PLANT AND EQUIPMENT38
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Total | $ 65,030 | $ 64,631 |
Less accumulated depreciation and amortization | (16,977) | (15,431) |
Property, plant and equipment, net | $ 48,053 | 49,200 |
Buildings under capital lease | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 16 years | |
Total | $ 26,469 | 26,469 |
Leasehold improvements, including property under capital lease | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 15 years | |
Total | $ 19,870 | 20,222 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 4,612 | 4,290 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Total | $ 8,385 | 7,784 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Total | $ 1,198 | 1,165 |
Furniture and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 3,828 | 3,823 |
Vehicles and other | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Total | $ 668 | $ 878 |
Minimum | Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Minimum | Furniture and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Maximum | Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Maximum | Furniture and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years |
PROPERTY, PLANT AND EQUIPMENT -
PROPERTY, PLANT AND EQUIPMENT - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 1,525 | $ 1,361 |
Amortization expense for capital lease | 416 | 0 |
Interest expense on capital leases | $ 564 | $ 580 |
SURGICAL INSTRUMENTS - (Details
SURGICAL INSTRUMENTS - (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Surgical instruments | $ 76,803 | $ 72,018 | |
Less accumulated depreciation and allowances | (49,027) | (45,768) | |
Surgical instruments, net | 27,776 | $ 26,250 | |
Depreciation and allowance expense | $ 3,259 | $ 2,516 |
INTANGIBLE ASSETS - (Details)
INTANGIBLE ASSETS - (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Schedule of Intangible Asset by Major Class [Line Items] | |||
Indefinite-lived intangible assets | $ 14,051 | $ 14,042 | |
Subject to amortization, Gross | 150,578 | 150,560 | |
Accumulated Amortization | (145,861) | (145,703) | |
Total | 4,717 | 4,857 | |
Intangible Assets, Gross | 164,629 | 164,602 | |
Intangible Assets, Net | 18,768 | 18,899 | |
Amortization expense | 158 | $ 2,373 | |
Developed technology | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Subject to amortization, Gross | 62,000 | 62,000 | |
Accumulated Amortization | (61,825) | (61,808) | |
Total | 175 | 192 | |
Licensed technology | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Subject to amortization, Gross | 52,800 | 52,800 | |
Accumulated Amortization | (52,610) | (52,602) | |
Total | 190 | 198 | |
Customer relationships | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Subject to amortization, Gross | 29,700 | 29,700 | |
Accumulated Amortization | (29,700) | (29,700) | |
Total | 0 | 0 | |
Patents and other | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Subject to amortization, Gross | 6,078 | 6,060 | |
Accumulated Amortization | (1,726) | (1,593) | |
Total | 4,352 | 4,467 | |
Trademarks | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Indefinite-lived intangible assets | 12,900 | 12,900 | |
In-process research and development | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Indefinite-lived intangible assets | 900 | 900 | |
Other | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Indefinite-lived intangible assets | $ 251 | $ 242 | |
Minimum | Developed technology | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 4 years | 4 years | |
Minimum | Licensed technology | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 4 years | 4 years | |
Minimum | Customer relationships | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 4 years | 4 years | |
Minimum | Patents and other | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 2 years | 2 years | |
Maximum | Developed technology | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 6 years | 6 years | |
Maximum | Licensed technology | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 6 years | 6 years | |
Maximum | Customer relationships | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 7 years | 7 years | |
Maximum | Patents and other | |||
Schedule of Intangible Asset by Major Class [Line Items] | |||
Estimated Useful Lives | 17 years | 17 years |
INTANGIBLE ASSETS Schedule of E
INTANGIBLE ASSETS Schedule of Expected Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,017 | $ 471 | |
2,018 | 604 | |
2,019 | 575 | |
2,020 | 516 | |
2,021 | 516 | |
Thereafter | 2,035 | |
Total | $ 4,717 | $ 4,857 |
ACCRUED EXPENSES - (Details)
ACCRUED EXPENSES - (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued commissions | $ 8,013 | $ 9,495 |
Accrued royalties | 2,830 | 3,489 |
Other | 7,951 | 9,249 |
Total | $ 18,794 | $ 22,233 |
DEBT (Details)
DEBT (Details) | 3 Months Ended | ||
Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Aug. 11, 2016USD ($) | |
Debt Instrument [Line Items] | |||
Borrowings on bank line of credit | $ 7,000,000 | $ 0 | |
Interest Expense | 1,782,000 | 1,732,000 | |
Letter of credit | 6,000,000 | ||
Convertible Senior Notes Due 2036 | |||
Debt Instrument [Line Items] | |||
Principal amounts of debt | $ 50,000,000 | ||
Interest rate (as a percent) | 4.125% | ||
Interest expense | 1,130,000 | 1,065,000 | |
Interest expense, non cash accretion of debt discount | 614,000 | 550,000 | |
Long-term debt | 45,447,000 | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Unused borrowing capacity | 34,591,000 | ||
Revolving Credit Facility | October 2015 Amendment | |||
Debt Instrument [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | 55,000,000 | ||
Revolving Credit Facility | Credit Agreement 2012 | |||
Debt Instrument [Line Items] | |||
Interest Expense | $ 19,000 | 0 | |
Revolving Credit Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Interest rate (as a percent) | 5.50% | ||
Revolving Credit Facility | Line of Credit | October 2015 Amendment | |||
Debt Instrument [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 10,000,000 | ||
Revolving Credit Facility | Line of Credit | Credit Agreement 2012 | |||
Debt Instrument [Line Items] | |||
Amortization of Debt Issuance Costs | 17,000 | $ 60,000 | |
Revolving Credit Facility, Swing Line Loan | Line of Credit | Amended Credit Agreement 2012 | |||
Debt Instrument [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000,000 | ||
Silicon Valley Bank And Comerica Bank | Revolving Credit Facility | Credit Agreement 2012 | |||
Debt Instrument [Line Items] | |||
Line Of Credit Facility, Covenant Terms, Minimum Quick Ratio | 1.20 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) | Mar. 31, 2018shares |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,386,071 |
STOCK-BASED COMPENSATION - Allo
STOCK-BASED COMPENSATION - Allocation of Share-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | $ 1,451 | $ 1,541 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 27 | 45 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 36 | 86 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 239 | 360 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 1,149 | 1,050 |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 716 | 811 |
Restricted stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 580 | 349 |
Restricted stock units (“RSUs”) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 84 | 260 |
Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | $ 71 | $ 121 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding Beginning Balance, Shares | 3,165,387 | ||
Granted, Shares | 2,913 | ||
Exercised, Shares | (14,798) | ||
Expired, Shares | (2,058) | ||
Forfeited, Shares | (4,143) | ||
Outstanding Ending Balance, Shares | 3,147,301 | 3,165,387 | |
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) | $ 14.26 | ||
Granted, Weighted-Average Exercise Price (in usd per share) | 20.72 | ||
Exercised, Weighted-Average Exercise Price (in usd per share) | 9.34 | ||
Expired, Weighted-Average Exercise Price (in usd per share) | 10.74 | ||
Forfeited, Weighted-Average Exercise Price (in usd per share) | 18.12 | ||
Ending, Weighted-Average Exercise Price (in usd per share) | $ 14.28 | $ 14.26 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||
Outstanding, Weighted- Average Remaining Contractual Term (years) | 5 years 7 months 24 days | 5 years 10 months 17 days | |
Outstanding, Aggregate Intrinsic Value | [1] | $ 15,567 | |
Outstanding, Aggregate Intrinsic Value | [1] | $ 17,698 | $ 15,567 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested [Abstract] | |||
Vested, shares | 2,331,150 | ||
Vested, Weighted-Average Exercise Price (in usd per share) | $ 12.35 | ||
Vested, Weighted-Average Remaining Contractual Term (years) | 4 years 7 months 13 days | ||
Vested, Aggregate Intrinsic Value | $ 16,354 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract] | |||
Vested or expected to vest, shares | 816,151 | ||
Vested or expected to vest, Weighted-Average Exercise Price (in usd per share) | $ 19.80 | ||
Vested or expected to vest, Weighted-Average Remaining Contractual Term (years) | 1 year 7 months 20 days | ||
Vested or expected to vest, Aggregate Intrinsic Value | [1] | $ 1,344 | |
Fair value valuation, estimated fair market value of stock (in dollars per share) | $ 18.95 | $ 18 | |
[1] | Calculated using the fair market value per-share of our common stock as of March 31, 2018 and December 31, 2017 of $18.95 and $18.00, respectively. |
STOCK-BASED COMPENSATION - RSU
STOCK-BASED COMPENSATION - RSU and restricted stock table (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Restricted stock | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding Beginning Balance, Shares | 265,684 | |
Vested (in shares) | 0 | |
Granted (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Outstanding Ending Balance, Shares | 265,684 | 265,684 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Beginning, Weighted-Average Exercise Price (in usd per share) | $ 19.46 | |
Vested, Weighted-Average Exercise Price (in usd per share) | 0 | |
Granted, Weighted-Average Exercise Price (in usd per share) | 0 | |
Forfeited, Weighted-Average Exercise Price (in usd per share) | 0 | |
Ending, Weighted-Average Exercise Price (in usd per share) | $ 19.46 | $ 19.46 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 1 year 10 months 6 days | 2 years 10 days |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested or Expected to Vest, Number | 265,684 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other Than Options, Vested and Expected to Vest, Outstanding, Weighted Average Grant Date Fair Value | $ 19.46 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other Than Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 1 year 10 months 6 days | |
Restricted Stock and Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding Beginning Balance, Shares | 46,247 | |
Vested (in shares) | 0 | |
Granted (in shares) | 1,206 | |
Forfeited (in shares) | 0 | |
Outstanding Ending Balance, Shares | 47,453 | 46,247 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Beginning, Weighted-Average Exercise Price (in usd per share) | $ 15.83 | |
Vested, Weighted-Average Exercise Price (in usd per share) | 0 | |
Granted, Weighted-Average Exercise Price (in usd per share) | 20.72 | |
Forfeited, Weighted-Average Exercise Price (in usd per share) | 0 | |
Ending, Weighted-Average Exercise Price (in usd per share) | $ 16.56 | $ 15.83 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Remaining Contractual Terms | 2 years 21 days | 2 years 3 months 10 days |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested or Expected to Vest, Number | 47,453 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other Than Options, Vested and Expected to Vest, Outstanding, Weighted Average Grant Date Fair Value | $ 16.56 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other Than Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 2 years 21 days |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Nov. 30, 2011 | Mar. 31, 2018 | |
Licensed technology | Minimum | ||
Long-term Purchase Commitment [Line Items] | ||
Future maximum royalty payments | 2.00% | |
Licensed technology | Maximum | ||
Long-term Purchase Commitment [Line Items] | ||
Future maximum royalty payments | 10.00% | |
Patents and other | ||
Long-term Purchase Commitment [Line Items] | ||
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 | |
Patents and other | Maximum | ||
Long-term Purchase Commitment [Line Items] | ||
Contingent additional payment | $ 16,515,000 | |
In-process research and development | ||
Long-term Purchase Commitment [Line Items] | ||
Future maximum royalty payments | 7.00% | |
Other Commitment, Purchase Obligation, Related Product Sales, Royalty Payment Threshold | $ 20,000,000 | |
Proprietary Technology Purchase Agreement, Payment Due Upon Subscriber Levels | ||
Long-term Purchase Commitment [Line Items] | ||
Contingent additional payment | $ 1,500,000 | |
Proprietary Technology Purchase Agreement, Payment Due Upon Completion Of Software Development | ||
Long-term Purchase Commitment [Line Items] | ||
Contingent additional payment | $ 0 |
RELATED PARTIES (Details)
RELATED PARTIES (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Jan. 30, 2017 | |
Related Party Transaction [Line Items] | ||||
Common stock, shares issued (in shares) | 43,404,374 | 43,389,576 | ||
WCAS | Related Party Transaction, Sale of Stock | ||||
Related Party Transaction [Line Items] | ||||
Common stock, shares issued (in shares) | 4,000,000 | |||
Underwriting commissions and transaction fees | $ 225 |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income tax (benefit) expense | $ 77 | $ 42 |
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent | (0.70%) | (0.40%) |
NET LOSS PER SHARE - (Details)
NET LOSS PER SHARE - (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (11,398) | $ (10,873) |
Basic and diluted weighted average common shares outstanding | 43,118,112 | 42,224,734 |
Basic and diluted loss per common share (in dollars per share) | $ (0.26) | $ (0.26) |
NET LOSS PER SHARE - Antidiluti
NET LOSS PER SHARE - Antidilutive Shares (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Aug. 11, 2016 | |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 3,147,301 | 3,414,478 | |
Restricted stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 265,684 | 218,505 | |
Restricted stock units (“RSUs”) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 47,453 | 84,373 | |
Convertible Senior Notes Due 2036 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Earnings Per Share (in shares) | 2,799,580 | 2,746,680 | |
Convertible Senior Notes Due 2036 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Principal amounts of debt | $ 50,000,000 |
SEGMENT AND GEOGRAPHICAL CONC54
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Narrative (Details) - Segment | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 1 | |
Sales Revenue, Net | Geographic Concentration Risk | International | ||
Segment Reporting Information [Line Items] | ||
International revenue as a percentage of total revenue | 26.50% | |
Sales Revenue, Net | Geographic Concentration Risk | United States | ||
Segment Reporting Information [Line Items] | ||
International revenue as a percentage of total revenue | 10.00% | |
One Customer | Sales Revenue, Net | Customer Concentration Risk | ||
Segment Reporting Information [Line Items] | ||
International revenue as a percentage of total revenue | 12.50% | 9.60% |
SEGMENT AND GEOGRAPHICAL CONC55
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Revenues by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 67,876 | $ 61,885 |
Sales Revenue, Net | ||
Segment Reporting Information [Line Items] | ||
Revenue | 67,876 | 61,885 |
United States | ||
Segment Reporting Information [Line Items] | ||
Revenue | 49,890 | 46,207 |
United States | Sales Revenue, Net | ||
Segment Reporting Information [Line Items] | ||
Revenue | 49,890 | 46,207 |
International | Sales Revenue, Net | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 17,986 | $ 15,678 |
SEGMENT AND GEOGRAPHICAL CONC56
SEGMENT AND GEOGRAPHICAL CONCENTRATION - Revenues by Product (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue from External Customer [Line Items] | ||
Revenue | $ 67,876 | $ 61,885 |
United States | ||
Revenue from External Customer [Line Items] | ||
Revenue | 49,890 | 46,207 |
United States | Complex spine | ||
Revenue from External Customer [Line Items] | ||
Revenue | 18,513 | 17,136 |
United States | Minimally invasive | ||
Revenue from External Customer [Line Items] | ||
Revenue | 8,375 | 7,872 |
United States | Degenerative | ||
Revenue from External Customer [Line Items] | ||
Revenue | 23,002 | 21,199 |
International | ||
Revenue from External Customer [Line Items] | ||
Revenue | $ 17,986 | $ 15,678 |