BELGRADE, Mont., Aug. 08, 2019 (GLOBE NEWSWIRE) -- Xtant Medical Holdings, Inc. (NYSE American: XTNT), a global medical technology company focused on surgical solutions for the treatment of spinal disorders, today reported financial and operating results for the second quarter ended June 30, 2019.

Second Quarter 2019 Financial Highlights:

• Revenue for the second quarter of 2019 was $15.3 million, compared to $18.7 million for the same prior year period
• Operating expenses in the second quarter of 2019 were $10.5 million, compared to $14.7 million for the same prior year period
• Net loss incurred in the second quarter of 2019 was $1.9 million, compared to a net loss of $5.0 million for the same prior year period
• Non-GAAP Adjusted EBITDA for the second quarter of 2019 was $1.2 million, compared to $0.8 million for the same prior year period

Greg Jensen, VP, Finance and CFO of Xtant Medical, said, “Our efforts to reduce expenses while further enhancing the operational effectiveness of our business resulted in improved cash flow, net loss and adjusted EBITDA during the second quarter, despite softer revenues. We are taking measures designed to stabilize and improve our revenue trajectory, and we plan to implement additional initiatives to support this critical goal during the second half of 2019 and into 2020. These initiatives include a commitment to developing new products, further development and expansion of marketing programs, and continued pursuit of operational improvements intended to assist us in our overall commercial performance.”

Second Quarter 2019 Financial Results

Second quarter 2019 revenue was $15.3 million, compared to $18.7 million for the same period in 2018. This decrease was due primarily to reduced demand for hardware products, which was due in part to effects from the December 2018 recall of the Calix Lumbar Spine Implant System, the termination of an advisory agreement with an entity that provided services to certain customers, and transition of independent sales agents.

Gross margin for the second quarter of 2019 was 64.9%, compared to 66.6% for the same period in 2018. The year-over-year decrease was attributed primarily to inventory reserving and manufacturing overhead absorption.

Operating expenses for the second quarter of 2019 were $10.5 million, compared to $14.7 million for the second quarter of 2018, a decrease of 29.0%. The decrease was primarily attributable to lower sales commissions and travel expenses, restructuring expenses incurred last year, and a decrease in amortization expense related to the impairment of intangible assets that occurred in the fourth quarter of 2018.

Second quarter 2019 net loss was $1.9 million, or $0.15 per share, compared to second quarter 2018 net loss of $5.0 million, or $0.38 per share.

Non-GAAP Adjusted EBITDA for the second quarter of 2019 was $1.2 million compared to $0.8 million for the same period of 2018. The Company defines Adjusted EBITDA as net income/loss from operations before depreciation, amortization and interest expense, and as further adjusted to add back in or exclude, as applicable, non-cash special charges, provision for losses on inventory and accounts receivable, non-cash compensation, changes in warrant derivative liability, field action expenses, separation related expenses, litigation reserves, and restructuring expenses. A calculation and reconciliation of non-GAAP Adjusted EBITDA to net loss can be found in the attached financial tables.

Conference Call

Xtant Medical will host a webcast and conference call to discuss the second quarter 2019 financial results on Thursday, August 8, 2019 at 9:00 AM ET. To access the webcast, Click Here. To access the conference call, dial 877-407-6184 within the U.S. or 201-389-0877 outside the U.S. A replay of the call will be available at www.xtantmedical.com, under “Investor Info.”

About Xtant Medical Holdings, Inc.

Xtant Medical Holdings, Inc. (www.xtantmedical.com) is a global medical technology company focused on the design, development, and commercialization of a comprehensive portfolio of orthobiologics and spinal implant systems to facilitate spinal fusion in complex spine, deformity and degenerative procedures. Xtant people are dedicated and talented, operating with the highest integrity to serve our customers.

The symbols ™ and ® denote trademarks and registered trademarks of Xtant Medical Holdings, Inc. or its affiliates, registered as indicated in the United States, and in other countries. All other trademarks and trade names referred to in this release are the property of their respective owners.

Non-GAAP Financial Measures

To supplement the Company’s consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures in this release, including Adjusted EBITDA. Reconciliations of the non-GAAP financial measures used in this release to the most comparable GAAP measures for the respective periods can be found in tables later in this release. The Company’s management believes that the presentation of these measures provides useful information to investors. These measures may assist investors in evaluating the Company’s operations, period over period. Management uses the non-GAAP measures in this release internally for evaluation of the performance of the business, including the allocation of resources. Investors should consider non-GAAP financial measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP.

Important Cautions Regarding Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as ‘‘expects,’’ ‘‘anticipates,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘believes,’’ ‘‘estimates,’’ “continue,” “future,” ‘‘will,’’ “potential” similar expressions or the negative thereof, and the use of future dates. The Company cautions that its forward-looking statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: the Company’s future operating results and financial performance; the ability to increase or maintain revenue, including the success of the Company’s initiatives to stabilize and increase revenues; the ability to remain competitive; the ability to innovate and develop new products; the effect of recent management changes and the ability to engage and retain qualified personnel; government and third-party coverage and reimbursement for Company products; the ability to obtain and maintain regulatory approvals and comply with government regulations; the effect of product liability claims and other litigation to which the Company may be subject; the effect of product recalls and defects, including the recall of the Company’s Calix Lumbar Spine Implant System; timing and results of clinical studies; the ability to obtain and protect Company intellectual property and proprietary rights and operate without infringing the rights of others; the ability to retain and recruit independent sales agents and the impact of the termination of a consulting agreement with an entity that had close relationships with several of customers; the ability to service Company debt and comply with debt covenants; the ability to raise additional financing and other factors. Additional risk factors are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (SEC) on April 1, 2019 and subsequent SEC filings by the Company, including without limitation its most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 anticipated to be filed with the SEC. Investors are encouraged to read the Company’s filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this cautionary statement.

Investor Relations Contact

David Carey
Lazar Partners Ltd.
Ph: 212-867-1762
Email: dcarey@lazarpartners.com

 

	XTANT MEDICAL HOLDINGS, INC.
	CONDENSED CONSOLIDATED BALANCE SHEETS
	(In thousands, except number of shares and par value)
			As of June 30, 2019				As of December 31, 2018
	ASSETS
	Current Assets:
	Cash and cash equivalents		$	7,318			$	6,797
	Trade accounts receivable, net of allowance for doubtful accounts of $1,223 and $2,140, respectively			8,565				9,990
	Inventories, net			15,828				17,301
	Prepaid and other current assets			592				589
	Total current assets			32,303				34,677
	Property and equipment, net			5,600				7,174
	Right-of -use asset, net			2,296				-
	Goodwill			3,205				3,205
	Intangible assets, net			544				573
	Other assets			549				793
	Total Assets		$	44,497			$	46,422
	LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
	Current Liabilities:
	Accounts payable		$	3,194			$	6,465
	Accrued liabilities			5,867				5,150
	Warrant derivative liability			21				10
	Current portion of lease liability			511				-
	Current portion of financing lease obligations			337				426
	Total current liabilities			9,930				12,051
	Long-term Liabilities:
	Lease liability, less current portion			1,796				-
	Financing lease obligation, less current portion			16				204
	Long-term debt, less issuance costs			73,831				77,939
	Total Liabilities			85,573				90,194
	Stockholders' Equity (Deficit)
	Preferred stock, $0.000001 par value; 10,000,000 shares authorized; no shares issued and outstanding			-				-
	Common stock, $0.000001 par value; 50,000,000 shares authorized; 13,161,762 shares issued and outstanding as of June 30, 2019 and 13,172,179 shares issued and outstanding as of December 31, 2018			-				-
	Additional paid-in capital			178,707				171,273
	Accumulated deficit			(219,783	)			(215,045	)
	Total Stockholders’ Equity (Deficit)			(41,076	)			(43,772	)
	Total Liabilities & Stockholders’ Equity (Deficit)		$	44,497			$	46,422

 

	XTANT MEDICAL HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except number of shares and per share amounts)
			Three Months Ended June 30,								Six Months Ended June 30,
				2019				2018				2019				2018
	Revenue
	Orthopedic product sales		$	15,197			$	18,653			$	31,883			$	36,483
	Other revenue			74				88				114				191
	Total revenue			15,271				18,741				31,997				36,674
	Cost of sales			5,365				6,266				11,278				11,968
	Gross profit			9,906				12,475				20,719				24,706
	Gross profit %			64.9	%			66.6	%			64.8	%			67.4	%
	Operating expenses
	General and administrative			4,041				3,498				8,359				6,885
	Sales and marketing			6,072				8,545				12,814				16,894
	Research and development			210				418				472				832
	Depreciation and amortization			146				1,041				305				2,045
	Restructuring expenses			-				1,234				-				1,968
	Total operating expenses			10,469				14,736				21,950				28,624
	Loss from operations			(563	)			(2,261	)			(1,231	)			(3,918	)
	Other (expense) income
	Interest expense			(1,301	)			(2,820	)			(3,319	)			(6,366	)
	Change in warrant derivative liability			4				79				(11	)			41
	Other (expense) income			(57	)			-				(132	)			(12	)
	Total Other (Expense) Income			(1,354	)			(2,741	)			(3,462	)			(6,337	)
	Net Loss from Operations Before Provision for Income Taxes			(1,917	)			(5,002	)			(4,693	)			(10,255	)
	Provision for income taxes
	Current and deferred			(22	)			-				(45	)			-
	Net Loss from Operations		$	(1,939	)		$	(5,002	)		$	(4,738	)		$	(10,255	)
	Net loss per share:
	Basic		$	(0.15	)		$	(0.38	)		$	(0.36	)		$	(1.00	)
	Dilutive		$	(0.15	)		$	(0.38	)		$	(0.36	)		$	(1.00	)
	Shares used in the computation:
	Basic			13,161,762				13,085,668				13,166,136				10,299,090
	Dilutive			13,161,762				13,085,668				13,166,136				10,299,090

 

	XTANT MEDICAL HOLDINGS, INC.
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	(Unaudited, in thousands)
		Six Months Ended June 30,
			2019				2018
	Operating activities:
	Net loss	$	(4,738	)		$	(10,255	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
	Depreciation and amortization		1,559				3,227
	Loss on disposal of fixed assets		92				205
	Non-cash interest		3,272				6,205
	Non-cash rent expense		11				-
	Non-cash stock option expense / change in derivative warrant liability		172				364
	Provision for losses on accounts receivable and inventory		750				83
	Changes in operating assets and liabilities:
	Accounts receivable		1,403				2,152
	Inventories		955				(388	)
	Prepaid and other assets		242				1,120
	Accounts payable		(3,481	)			(1,948	)
	Accrued liabilities		717				(421	)
	Net cash provided by operating activities		954				344
	Investing activities:
	Purchases of property and equipment and intangible assets		(211	)			(288	)
	Proceeds from sale of fixed assets		163				-
	Net cash used in investing activities		(48	)			(288	)
	Financing activities:
	Payments on financing leases		(277	)			(167	)
	Costs associated with either loan or equity transactions		(108	)			(3,507	)
	Proceeds from equity private placement		-				6,810
	Proceeds from issuance of stock		-				1
	Net cash (used in) provided by financing activities		(385	)			3,137
	Net change in cash and cash equivalents		521				3,193
	Cash and cash equivalents at beginning of period		6,797				2,856
	Cash and cash equivalents at end of period	$	7,318			$	6,049

 

  

 

	XTANT MEDICAL HOLDINGS, INC.
	CALCULATION OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA
	(Unaudited, in thousands)
			Three Months Ended June 30,								Six Months Ended June 30,
				2019				2018				2019				2018
	Net Loss		$	(1,939	)		$	(5,002	)		$	(4,738	)		$	(10,255	)
	Other expense			57				-				132				12
	Depreciation and amortization			783				1,700				1,559				3,289
	Interest expense			1,301				2,820				3,319				6,366
	Tax expense			22				-				45				-
	Non-GAAP EBITDA gain (loss)			224				(482	)			317				(588	)
	Non-GAAP EBITDA/Total revenue			1.5	%			-2.6	%			1.0	%			-1.6	%
	NON-GAAP ADJUSTED EBITDA CALCULATION
	Provision for losses on accounts receivable and inventory			503				29				750				(16	)
	Non-cash compensation			39				41				161				405
	Change in warrant derivative liability			(3	)			(79	)			12				(41	)
	Separation-related expenses			-				55				-				55
	Field action expenses			125				-				125				-
	Litigation reserve			270				-				800				-
	Restructuring expenses			-				1,235				-				1,968
	Non-GAAP Adjusted EBITDA gain (loss)		$	1,158			$	799			$	2,165			$	1,783
	Non-GAAP Adjusted EBITDA/Total revenue			7.6	%			4.3	%			6.8	%			4.9	%

 

Source: Xtant Medical, Inc.