Why K2M Group Holdings Inc. Sank Today
K2M Group Holdings (NASDAQ: KTWO) is down 18.6% at 1:07 p.m. EDT after the company released disappointing preliminary revenue for the third quarter, with revenue up just 6% year over year. The medical-device company also lowered guidance for 2017.
In the second quarter, revenue was up 10.9% year over year, so the 6% seen in the third quarter is a substantial slowdown. K2M's president and CEO Eric Major blamed the shortfall on a pair of issues: "slower than planned acceleration of new distribution in the U.S." and "disruption of account activity and canceled procedures related to the hurricanes in Texas, Florida and, to a lesser extent, Puerto Rico, in early September."
Working backwards, hurricanes are certainly out of the company's control, and it isn't surprising that the recent storms would cause procedures to be canceled. Of course, those patients' spines aren't going to get better on their own, so storms should cause revenue to be delayed rather than lost altogether. K2M estimates that the three hurricanes will lower revenue by about $2 million for the year.
Source: Fool.com
