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K2M Group Holdings, Inc. (KTWO) saw its loss narrow to $7.91 million, or $0.19 a share for the quarter ended Sep. 30, 2016. In the previous year period, the company reported a loss of $10.22 million, or $0.25 a share.
Revenue during the quarter grew 7.82 percent to $59.31 million from $55.01 million in the previous year period. Gross margin for the quarter contracted 129 basis points over the previous year period to 67.10 percent. Operating margin for the quarter stood at negative 10.28 percent as compared to a negative 18.20 percent for the previous year period.
Operating loss for the quarter was $6.10 million, compared with an operating loss of $10.01 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $2.84 million compared with $1.07 million in the prior year period. At the same time, adjusted EBITDA margin improved 285 basis points in the quarter to 4.80 percent from 1.95 percent in the last year period.
"Our third quarter sales growth of 16.5% in the U.S. was consistent with both our near-term expectations, and our long-term objective of revenue growth in the mid-to-high teens," said president and chief executive officer, Eric Major.
For fiscal year 2016, K2M GROUP HOLDINGS projects revenue to be in the range of $233.50 million to $235 million for financial year 2016. The company expects net loss to be in the range of $43 million to $39 million.
Operating cash flow remains negative
K2M Group Holdings, Inc. has spent $14.99 million cash to meet operating activities during the nine month period as against cash outgo of $13.19 million in the last year period.
The company has spent $22.45 million cash to meet investing activities during the nine month period as against cash outgo of $9.56 million in the last year period.
Cash flow from financing activities was $48.84 million for the nine month period, down 11.73 percent or $6.49 million, when compared with the last year period.
Cash and cash equivalents stood at $46.12 million as on Sep. 30, 2016, up 5.59 percent or $2.44 million from $43.68 million on Sep. 30, 2015.
Working capital increases marginally
K2M Group Holdings, Inc. has recorded an increase in the working capital over the last year. It stood at $120.94 million as at Sep. 30, 2016, up 4.90 percent or $5.64 million from $115.30 million on Sep. 30, 2015. Current ratio was at 3.91 as on Sep. 30, 2016, up from 3.64 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 148 days for the quarter from 278 days for the last year period. Days sales outstanding went down to 66 days for the quarter compared with 70 days for the same period last year.
Days inventory outstanding has decreased to 157 days for the quarter compared with 309 days for the previous year period. At the same time, days payable outstanding went down to 75 days for the quarter from 100 for the same period last year.
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