March 01, 2018

ALACHUA, Fla.–(BUSINESS WIRE)–RTI Surgical, Inc. (Nasdaq:RTIX), a global surgical implant company, reported operating results for the fourth quarter and full year of 2017.

“We are pleased to have delivered on our 2017 commitments through four consecutive quarters and produced organic growth in every core product category,” said Camille Farhat, chief executive officer. “As I approach my first anniversary at the Company, I believe we have made significant progress. We have assembled a world class management team and began implementation of our strategic transformation. We successfully divested the cardiothoracic closure business to initiate the reduction in complexity and implemented programs to drive operational excellence and margin enhancement, while reorienting the organization around key customer segments. We are making the necessary investments to accelerate the growth of our spine franchise, most notably, the acquisition of Zyga Technology announced at the start of 2018.”

Farhat added, “While our initial progress is gratifying, we are still in the midst of our transformation with considerable work ahead of us. Moving forward, we are focused on executing our strategic initiatives to create a dynamic company focused on its core capabilities with consistent, predictable earnings and cash flow and growing spine focused operations.”

Fourth Quarter 2017

RTI’s worldwide revenues for the fourth quarter of 2017 were $70.8 million, a slight decline from the prior year quarter revenues of $71.3 million. Fourth quarter revenues were driven by stable performance in most product lines with growth in OEM, which were offset by a $2.8 million reduction from the sale of substantially all the assets of the cardiothoracic closure business completed in August 2017. Gross profit for the fourth quarter of 2017 was $36.3 million, or 51.2% of revenues, compared to $28.1 million, or 39.4% of revenues in the fourth quarter of 2016.

During the fourth quarter of 2017, RTI incurred substantial non-recurring pre-tax charges to support the ongoing strategic transformation of the business and to optimize the tax benefit of the related actions. The company incurred $1.6 million in severance and restructuring charges primarily in support of initiatives to reduce the complexity of its organizational structure; $2.8 million in executive transition costs primarily for non-cash executive inducement awards and stock-based compensation expenses; $3.7 million related to asset impairment and abandonments of certain long-term assets as part of efforts to reduce complexity and improve operational excellence; and $0.6 million in expenses related to the January 2018 acquisition of Zyga Technologies to support the acceleration of growth. During the fourth quarter of 2016, the company incurred $6.2 million of non-recurring pre-tax charges primarily driven by $5.4 million asset impairment and abandonment charges in our German facility.

Net loss applicable to common shares was $8.6 million loss, or $0.14 per fully diluted common share in the fourth quarter of 2017, compared to a net loss applicable to common shares of $11.8 million, or $0.20 per fully diluted common share in the fourth quarter of 2016. As outlined in the reconciliation tables that follow, excluding the impact of the various non-recurring charges and the impact of the Tax Cuts and Jobs Act in the fourth quarter of 2017, adjusted net income applicable to common shares was $1.6 million, or $0.03 per fully diluted common share in the fourth quarter of 2017.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)¹, for the fourth quarter of 2017 was $9.4 million, or 13% of revenues compared with $6.1 million, or 9% of revenues for the fourth quarter of 2016. The increase in Adjusted EBITDA is primarily driven by the reduction in operating expenses through the efforts to reduce complexity and increase operational excellence implemented during 2017.

Full Year 2017

Worldwide revenues were $279.6 million for the full year 2017, an increase of 2.5 percent compared to revenues of $272.9 for the full year 2016. Growth across all product categories were offset by a $3.0 million reduction from the sale of substantially all of the assets of the cardiothoracic closure business in August 2017 and a reduction in other revenues. Gross profit for the full year 2017 was $142.5 million, or 51.0% of revenues compared to $132.3 million, or 48.5% of revenues in 2016.

During the year, the company recorded non-recurring pre-tax charges including: $12.2 of severance and restructuring charges; $2.8 million of executive transition expenses, $3.7 million of asset impairment and abandonment expenses; and $0.6 million in expenses related to the January 2018 acquisition of Zyga Technologies. During 2016 the Company incurred $26.6 million of pre-tax non-recurring charges.

During the third quarter of 2017, RTI completed the sale of substantially all the assets related to its cardiothoracic closure business for total consideration of $54 million, plus an additional $6 million in contingent cash consideration. In conjunction with the sale of the cardiothoracic closure business, the company recognized a gain of $34.1 million, or $18.2 million after tax.

Net income applicable to common shares was $2.5 million, or $0.04 per fully diluted common share for the full year 2017, compared to net loss applicable to common shares of $17.9 million, or $0.31 per fully diluted common share for the full year 2016. As outlined in the reconciliation tables that follow, excluding the after-tax impact of the non-recurring charges and the impact of the cardiothoracic closure sale gain, adjusted net income applicable to common shares was $3.1 million, or $0.05 per fully diluted common share in 2017.

Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) for the full year 2017 was $32.3 million, or 12% of revenues compared with $29.8 million, or 11% of revenues in 2016.

Fiscal 2018 Outlook

Based on its recent financial results and current business outlook, the Company is reiterating financial guidance for 2018, originally issued on January 5, 2018:

• The Company expects full year revenues in the range of $280 million and $290 million.
• The Company expects full year EBITDA to be in the range of $32 million to $38 million.

The Company noted the following assumptions are included in its guidance:

• Relatively stable market conditions and regulatory environment;
• Positive revenue contribution from the acquisition of Zyga Technology – announced January 4^th, 2018;
• Ongoing positive impact of efforts to reduce complexity and implement operational excellence; and
• Continued marketing of map3® cellular allogeneic bone graft and minimal negative revenue impact related to recent FDA warning letter.

Farhat noted, “We believe 2018 will be a year of focused execution, which will include finalizing the remaining portfolio decisions to further reduce the complexity of our structure. We are also deploying lean manufacturing across additional manufacturing sites to continue the drive for operational excellence, while strengthening our R&D discipline and beginning to rebuild our innovation pipeline. In addition, we will opportunistically explore acquisition possibilities to further accelerate our growth trajectory.”

Conference Call

RTI will host a conference call and audio webcast at 9:00 a.m. ET today. The conference call can be accessed by dialing (877) 383-7419 (U.S.) or (760) 666-3754 (International). The webcast can be accessed through the investor section of RTI’s website at www.rtix.com. A replay of the conference call will be available on RTI’s website for one month following the call.

About RTI Surgical, Inc.

RTI Surgical is a leading global surgical implant company providing surgeons with safe biologic, metal and synthetic implants. Committed to delivering a higher standard, RTI’s implants are used in sports medicine, general surgery, spine, orthopedic, trauma and cardiothoracic procedures and are distributed in nearly 50 countries. RTI has four manufacturing facilities throughout the U.S. and Europe. RTI is accredited in the U.S. by the American Association of Tissue Banks and is a member of AdvaMed. For more information, please visit www.rtix.com.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, our management’s beliefs and certain assumptions made by our management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, except for historical information, any statements made in this communication about anticipated financial results, growth rates, new product introductions, future operational improvements and results or regulatory actions or approvals or changes to agreements with distributors also are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties, including the risks described in public filings with the U.S. Securities and Exchange Commission (SEC). Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Copies of the company’s SEC filings may be obtained by contacting the company or the SEC or by visiting RTI’s website at www.rtix.com or the SEC’s website at www.sec.gov.

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CARLSBAD, Calif., Feb. 28, 2018 (GLOBE NEWSWIRE) — SeaSpine Holdings Corporation (NASDAQ:SPNE), a global medical technology company focused on surgical solutions for the treatment of spinal disorders, announced today financial results for the three-months and full-year ended December 31, 2017 and provided guidance for 2018.

Summary Fourth Quarter 2017 Financial Results and Recent Accomplishments

• Revenue of $34.0 million, an increase of 4.5% year-over-year
• U.S. revenue of $31.2 million, an increase of 4.8% year-over-year
  º  U.S. Orthobiologics revenue of $16.6 million, an increase of 10.1% year-over-year
  º  U.S. Spinal Implants revenue of $14.6 million, essentially unchanged year-over-year
• International revenue of $2.8 million, an increase of approximately 1% year-over-year
• Limited commercial launch of OsteoStrand™ and OsteoStrand Plus Demineralized Bone Fibers and OsteoBallast™ Demineralized Bone Matrix in Resorbable Mesh
• Launch of an expanded Ventura™ NanoMetalene® posterior interbody device portfolio with sagittally oriented lordosis options to accommodate a larger range of posterior procedures and a wider variety of patient anatomies

“Our 2017 results are marked by several accomplishments underpinned by our commitment to delivering improved procedural spine solutions and clinical value through our expanding and innovative product portfolio,” said Keith Valentine, President and Chief Executive Officer. “As we enter 2018, we are well positioned to continue upgrading our global distribution footprint while we execute on our strategy and deliver accelerated revenue growth and expanded gross margins.”

Fourth Quarter 2017 Financial Results
Revenue for the fourth quarter of 2017 totaled $34.0 million, an increase of 4.5% compared to the same period of the prior year. U.S. revenue was $31.2 million, a 4.8% increase compared to the same period of the prior year due to strong volume growth in the U.S. Orthobiologics franchise that was driven by new distribution.

Orthobiologics revenue totaled $18.1 million, an 8.8% increase compared to the fourth quarter of 2016. The increase in orthobiologics revenue was primarily driven by growth in U.S. sales across multiple product lines generated by recently added distributors.

Spinal implants revenue totaled $15.9 million, essentially unchanged compared to the same period of the prior year. Spinal implant sales in the U.S. also was essentially flat compared to the prior year, as continued low single-digit price declines and decreased usage of the Company’s legacy systems were mostly offset by revenue growth from recently launched products.

Gross margin for the fourth quarter of 2017 was 63.3%, compared to 58.6% for the same period in 2016. The increase in gross margin was mainly driven by lower raw material and manufacturing costs for orthobiologics products manufactured at the Company’s Irvine, California facility and lower provisions for excess and obsolete inventory in the fourth quarter of 2017.

Operating expenses for the fourth quarter of 2017 totaled $29.2 million, compared to $28.6 million for the same period of the prior year. The $0.6 million increase was driven primarily by higher commission expense and marketing costs, partially offset by a $1.5 million non-cash gain recorded in the fourth quarter of 2017 related to the release of a foreign capital tax liability based on the passage of the statute of limitations and lower consulting expenses.

Net loss for the fourth quarter of 2017 was $7.5 million, compared to a net loss of $9.8 million for the fourth quarter of 2016.

Cash and cash equivalents at December 31, 2017 totaled $10.8 million, and the Company had no amounts outstanding under its $30.0 million credit facility.

2017 Financial Results
Revenue for the year ended December 31, 2017 totaled $131.8 million, an increase of 2.3% compared to the prior year. U.S. revenue was $118.4 million, a 1.4% increase compared to the prior year. Orthobiologics revenue totaled $69.1 million, a 4.4% increase compared to the prior year. Spinal implant revenue totaled $62.7 million, essentially unchanged compared to the prior year.

Gross margin for 2017 was 60.7%, compared to 56.9% for 2016. The increase in gross margin was mainly driven by lower raw material and manufacturing costs for orthobiologics products manufactured at the Company’s Irvine, California facility, and by lower provisions for excess and obsolete inventory in 2017.

Operating expenses for 2017 totaled $112.7 million, compared to $116.8 million for 2016.  The $4.1 million decrease was driven primarily by lower intangible asset amortization expense, the absence of a $0.9 million instrument impairment charge recorded in 2016, and a decrease in general and administrative expenses, all of which were partially offset by higher selling commissions and increased investment in marketing and product development in 2017.  The decrease in general and administrative expenses was driven primarily by lower consulting and legal expenses, the $1.5 million non-cash gain related to the release of a foreign capital tax liability, a $0.9 million non-cash gain recorded in 2017 related to a decrease in the fair value of contingent consideration liabilities related to the NLT acquisition, and lower facility and related operating costs resulting from the shutdown of the Company’s Vista, California facility in late 2016.

Net loss for 2017 was $32.1 million, compared to a net loss of $43.2 million for 2016.

2018 Financial Outlook
SeaSpine continues to expect full-year 2018 revenue to be in the range of $135 million to $139 million, reflecting growth of 2.5% to 5.5% over full-year 2017 revenue.

Webcast and Conference Call Information
The Company’s management team will host a conference call beginning today at 1:30pm PT/4:30pm ET to discuss the financial results and recent business developments. Individuals interested in listening to the conference call may do so by dialing (877) 418-4766 for domestic callers or (614) 385-1253 for international callers, using Conference ID: 7067009.  To listen to a live webcast, please visit the Investors section of the SeaSpine website at: www.seaspine.com.

About SeaSpine
SeaSpine (www.seaspine.com) is a global medical technology company focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. SeaSpine has a comprehensive portfolio of orthobiologics and spinal implants solutions to meet the varying combinations of products that neurosurgeons and orthopedic spine surgeons need to perform fusion procedures on the lumbar, thoracic and cervical spine. SeaSpine’s orthobiologics products consist of a broad range of advanced and traditional bone graft substitutes that are designed to improve bone fusion rates following a wide range of orthopedic surgeries, including spine, hip, and extremities procedures. SeaSpine’s spinal implants portfolio consists of an extensive line of products to facilitate spinal fusion in minimally invasive surgery (MIS), complex spine, deformity and degenerative procedures. Expertise in both orthobiologic sciences and spinal implants product development allows SeaSpine to offer its surgeon customers a differentiated portfolio and a complete solution to meet their fusion requirements. SeaSpine currently markets its products in the United States and in over 30 countries worldwide.

Forward-Looking Statements
SeaSpine cautions you that statements included in this news release that are not a description of historical facts are forward-looking statements that are based on the Company’s current expectations and assumptions. Such forward-looking statements include, but are not limited to, statements relating to: the Company delivering improved procedural spine solutions and clinical value through an expanded and innovative product portfolio; the Company’s position to continue to upgrade its global distribution footprint; and the Company’s expectations for full-year 2018 revenue, as well as to deliver accelerated revenue growth and expanded gross margins.  Among the factors that could cause or contribute to material differences between the Company’s actual results and the expectations indicated by the forward-looking statements are risks and uncertainties that include, but are not limited to: surgeons’ willingness to continue to use the Company’s existing products and to adopt its newly launched products, including the risk that the Company’s products do not demonstrate adequate safety or efficacy, independently or relative to competitive products, to support expected levels of demand or pricing; the ability of newly launched products to perform as designed and intended and to meet the needs of surgeons and patients, including as a result of the lack of clinical validation of products in limited commercial (or “alpha”) launch; the Company’s ability to attract new, high-quality distributors, whether as a result of inability to reach agreement on financial or other contractual terms or otherwise, disruption to the Company’s existing distribution network as new distributors are added, and the ability of new distributors to generate growth or offset disruption to existing distributors; continued pricing pressure, whether as a result of consolidation in hospital systems, competitors or others, as well as exclusion from major healthcare systems, whether as a result of unwillingness to provide required pricing or otherwise; the risk of supply shortages and the associated, potentially long-term disruption to product sales, including as a result of the Company’s dependence on a limited number of third-party suppliers for components and raw materials, or otherwise; unexpected expense and delay, including as a result of developing and supporting the launch of new products, the fact that newly launched products may require substantial additional development activities, which could introduce further expense and delay, or as a result of obtaining regulatory clearances; the Company’s ability to continue to invest in medical education and training, product development, and/or sales and marketing initiatives at levels sufficient to drive future revenue growth, including as a result of its inability to obtain funding on a timely basis on acceptable terms, or at all; general economic and business conditions in the markets in which the Company does business, both in the U.S. and abroad; and other risks and uncertainties more fully described in the Company’s news releases and periodic filings with the Securities and Exchange Commission. The Company’s public filings with the Securities and Exchange Commission are available at www.sec.gov.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date when made. SeaSpine does not intend to revise or update any forward-looking statement set forth in this news release to reflect events or circumstances arising after the date hereof, except as may be required by law.

Investor Relations Contact
Lynn Pieper Lewis
(415) 937-5402
ir@seaspine.com

LEESBURG, Va., Feb. 28, 2018 (GLOBE NEWSWIRE) — K2M Group Holdings, Inc. (Nasdaq:KTWO) (the “Company” or “K2M”), a global leader of complex spine and minimally invasive solutions focused on achieving three-dimensional Total Body Balance™, today reported financial results for its fourth quarter and fiscal year ended December 31, 2017.

Fiscal Year 2017 Financial Summary:

• Total fiscal year 2017 revenue of $258.0 million, up 9% year-over-year on both a reported basis and on a constant currency basis.
• Domestic fiscal year 2017 revenue of $197.3 million, up 9% year-over-year, comprised of:
  • U.S. Complex Spine growth of 8% year-over-year
  • U.S. Minimally Invasive Surgery (MIS) growth of 16% year-over-year
  • U.S. Degenerative growth of 8% year-over-year
• International fiscal year 2017 revenue of $60.7 million, up 9% year-over-year, or 10% on a constant currency basis.
• Net loss of $37.1 million for fiscal year 2017, compared to a net loss of $41.7 million in prior year.
• Adjusted EBITDA loss of $0.7 million for fiscal year 2017, compared to Adjusted EBITDA of $1.4 million in the prior year.

Fourth Quarter 2017 Financial Summary:

• Total fourth quarter revenue of $67.8 million, up 10% year-over-year on a reported basis and 9% on a constant currency basis.
• Domestic fourth quarter revenue of $51.9 million, up 9% year-over-year, comprised of:
  • U.S. Complex Spine growth of 12% year-over-year
  • U.S. Minimally Invasive Surgery (MIS) growth of 11% year-over-year
  • U.S. Degenerative growth of 6% year-over-year
• International fourth quarter revenue of $15.9 million, up 13% year-over-year, and 10% on a constant currency basis.
• Net loss of $8.7 million for the fourth quarter, compared to a net loss of $12.5 million in the comparable quarter last year.
• Adjusted EBITDA loss of $1.9 million for the fourth quarter, compared to Adjusted EBITDA loss of $28,000 in the comparable quarter last year.

Fourth Quarter Product Introductions and Strategic Highlights:

• On October 4, 2017, the Company announced that President and Chief Executive Officer Eric Major had been elected Chairman of the Company’s Board of Directors, effective immediately. Major succeeded Dan Pelak, who assumed the role of Independent Lead Director after serving as Chairman since 2010.
• On October 23, 2017, the Company announced that it has acquired from Cardinal Spine, a privately held medical device company, the PALO ALTO^® Cervical Static Corpectomy Cage System. PALO ALTO, a cervical vertebral body replacement device, is the first and only static corpectomy cage in the world to receive a cervical 510(k) clearance from the FDA. In addition to PALO ALTO, K2M has also acquired the associated intellectual property and product inventory.
• On October 25, 2017, the Company announced a global compatibility and co-marketing agreement with Brainlab. The two companies will collaborate in the commercial release of future navigated K2M spinal systems, which would be compatible with Brainlab spinal navigation systems.
• On November 30, 2017, the Company announced the completion of 300 surgical cases using the RHINE™ Cervical Disc System*. The RHINE Cervical Disc System* is an artificial disc replacement that features a one-piece compressible polymer core design with dome-shaped, plasma-coated endplates and a central-split keel.
• On December 20, 2017, the Company announced that it received a CE Mark for its CAPRI® Cervical 3D Expandable Corpectomy Cage System* featuring Lamellar 3D Titanium Technology™ and the successful completion of its first surgical case.  * These products are intended for export and not sold or offered for sale in the United States.

“Our financial results for calendar year 2017 reflect total revenue growth of approximately 9% year-over-year, above the high-end of our guidance range,” said Chairman, President, and Chief Executive Officer, Eric Major. “We delivered approximately 9% growth in the United States in 2017—well above-market growth rates—driven by solid execution against our strategic goal of increasing market share by introducing new and innovative spinal implant solutions and expanding our distribution footprint. We have supplemented this organic growth activity with exciting product introductions in both the complex spine and degenerative categories.  Looking out to 2018, we are excited about the opportunity of our first-of-its-kind MOJAVE™ PL 3D Expandable Interbody System featuring Lamellar 3D Titanium Technology and our YUKON™ OCT Spinal System that can be used with the PALO ALTO Cervical Static Corpectomy Cage System, the first and only static corpectomy cage in the world to receive a cervical 510(k) clearance. We also announced an important strategic collaboration with Brainlab, one of the world’s leading imaging and navigation companies, that we believe will represent additional implant sales opportunities in the second half of 2018.  Our Brainlab collaboration will complement our recent launches of the BACS^® platform and the EVEREST^®Minimally Invasive XT Spinal System.”

Mr. Major continued, “We remain confident in our ability to drive above-market growth in the U.S., fueled by our continued focus on leading the spine market by introducing new and innovative spinal implant solutions to help surgeons care for patients around the world who suffer from debilitating spinal pathologies. We have introduced our 2018 guidance expectations for revenue growth of 9% to 10% with improved profitability.”

Fourth Quarter 2017 Financial Results

Total revenue for the fourth quarter of 2017 increased $6.0 million, or 9.7%, to $67.8 million, compared to $61.8 million for the fourth quarter of 2016. Total revenue increased 9% year-over-year on a constant currency basis. The increase in revenue was primarily driven by higher sales volume from domestic new surgeon users and newer product offerings, and increased set investments by our distribution partners in Australia and Denmark.

Revenue in the United States increased $4.2 million, or 8.8% year-over-year, to $51.9 million, and international revenue increased $1.8 million, or 12.9% year-over-year, to $15.9 million. Fourth quarter 2017 international revenue increased 10% year-over-year on a constant currency basis. Foreign currency exchange positively impacted fourth quarter international revenue by $0.4 million, representing approximately 73 basis points of 2017 international growth year-over-year.

The following table represents domestic revenue by procedure category.

By procedure category, U.S. revenue in the Company’s complex spine, MIS and degenerative categories represented 38.6%, 17.2% and 44.2% of U.S. revenue, respectively, for the three months ended December 31, 2017.

Gross profit for the fourth quarter of 2017 increased 13.6% to $43.6 million, compared to $38.4 million for the fourth quarter of 2016.  Gross margin was 64.3% for the fourth quarter of 2017, compared to 62.1% for the prior year period. Gross profit includes amortization expense on investments in surgical instruments of $3.6 million, or 5.3% of sales, for the three months ended December 31, 2017, compared to $3.6 million, or 5.8% of sales, for the comparable period last year.

Operating expenses for the fourth quarter of 2017 increased $4.7 million, or 9.9%, to $52.5 million, compared to $47.7 million for the fourth quarter of 2016. The increase in operating expenses was driven primarily by a $4.9 million increase in sales and marketing expenses, compared to the comparable period last year.  The Company increased the number of domestic sales agencies who represent our products in the United States by nine agencies to a total of 109 independent sales agencies, an increase of 9% sequentially.  In addition, the Company’s U.S. and non-U.S. direct sales employees remained flat at 158 employees, despite active management of this group.

Loss from operations for the fourth quarter of 2017 decreased $0.5 million to $8.9 million compared to a loss from operations of $9.4 million for the comparable period last year. Loss from operations included intangible amortization of $0.2 million for the three months ended December 31, 2017, compared to $2.6 million for the comparable period last year.  The Company recorded approximately $1.4 million in non-recurring accruals primarily reflecting legal and administrative expenses updated in 2018 and inventory adjustments.

Total other expenses for the fourth quarter of 2017 decreased $1.6 million to $1.5 million, compared to $3.1 million last year. The decrease in other expense, net, was primarily attributable to a unrealized gain of $0.3 million from foreign currency remeasurement on intercompany payable balances, compared to unrealized loss of $1.3 million in the comparable period last year.

Net loss for the fourth quarter of 2017 was $8.7 million, or $0.20 per diluted share, compared to a loss of $12.5 million, or $0.30 per diluted share, for the fourth quarter of 2016.

Fiscal Year 2017 Financial Results

For the fiscal year 2017, total revenue increased $21.4 million, or 9.0%, to $258.0 million, compared to $236.6 million for the fiscal year 2016. Total revenue increased 9.1% year-over-year on a constant currency basis. U.S. revenue increased $16.2 million, or 9.0%, to $197.3 million, compared to $181.1 million last year. International revenue increased $5.2 million, or 9.3%, to $60.7 million, compared to $55.6 million last year. International revenue increased 9.7% year-over-year on a constant currency basis.

The following table represents domestic revenue by procedure category:

Sales in our complex spine, MIS and degenerative categories represented 39.3%, 16.9% and 43.9% of U.S. revenue, respectively, for the fiscal year 2017.

As of December 31, 2017, we had cash and cash equivalents of $24.0 million as compared to $45.5 million as of December 31, 2016. We had working capital of $99.6 million as of December 31, 2017 as compared to $115.9 million as of December 31, 2016.

At December 31, 2017, outstanding long-term indebtedness included the carrying value of the Convertible Senior Notes of $39.2 million and the capital lease obligation of $33.8 million. The Company had unused capacity on its revolving credit facility of $49.0 million and no borrowings outstanding as of December 31, 2017.

2018 Outlook

The Company is providing fiscal year 2018 revenue guidance expectations of:

• Total revenue on an as reported basis in the range of $280.0 million to $284.0 million, representing growth of 9% to 10% year-over-year, compared to total revenue of $258.0 million in fiscal year 2017.
  • The Company expects growth in its U.S. business of approximately 10% to 11% year-over-year in 2018.
  • The Company expects growth in its International business of approximately 5% to 7% year-over-year in 2018.
  • Assuming current currency rates remain similar for the rest of the year, the Company expects currency to have a positive impact on total revenue in 2018 of approximately $2 million.

The Company is providing fiscal year 2018 guidance expectations for net loss and Adjusted EBITDA. The Company expects:

• Total net loss of $34.0 million to $30.0 million, compared to net loss of $37.1 million in fiscal year 2017.
• Adjusted EBITDA benefit in the range of $4.0 million to $8.0 million, compared to Adjusted EBITDA loss of $740,000 in fiscal year 2017.

Conference Call

Management will host a conference call at 5:00 p.m. Eastern Time on February 28th to discuss the results of the fourth quarter and fiscal year 2017, and to host a question and answer session. Those who would like to participate may dial 844-579-6824 (734-385-2616 for international callers) and provide access code 3754359 approximately 10 minutes prior to the start of the call. A live webcast of the call will also be provided on the investor relations section of the Company’s website at http://Investors.K2M.com/.

For those unable to participate, a replay of the call will be available for two weeks at 855-859-2056 (404-537-3406 for international callers); access code 3754359. The webcast will be archived on the investor relations section of the Company’s website.

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