Xtant Medical Announces Second Quarter 2020 Financial Results

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Xtant Medical Announces Second Quarter 2020 Financial Results


BELGRADE, Mont., Aug. 03, 2020 (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, 2020.

Second Quarter 2020 Financial Highlights:

  • Revenue for the second quarter of 2020 was $10.5 million, compared to $15.3 million for the prior-year period
  • Operating expenses in the second quarter of 2020 were $6.9 million, compared to $10.5 million for the prior-year period
  • Net loss incurred in the second quarter of 2020 was $2.5 million, compared to a net loss of $1.9 million for the prior-year period
  • Adjusted EBITDA for the second quarter of 2020 was $0.7 million, compared to $1.1 million for the prior-year period

"We are pleased with our second-quarter revenue performance primarily reflecting a rebound in spinal elective procedure volumes in June following sharp declines at the start of the COVID-19 pandemic," said Sean Browne, President and CEO. "Our early actions to reduce expenses enabled us to conserve cash and rightsize our cost structure during this uncertain environment. Going forward, we believe operating as a leaner organization and improving our overall efficiencies will allow us to live our mission of 'honoring the gift of donation, so our patients can live as full a life as possible.'"

COVID-19 Response Update

As previously announced, Xtant Medical identified four areas to maintain business continuity and emerge from the COVID-19 pandemic in a position of strength. We are committed to 1) Keeping our employees safe and healthy, (2) Conserving Cash, (3) Optimizing our production and thereby improving our inventory position, and (4) Improve our overall operational efficiency.

Second Quarter 2020 Financial Results

Total revenue for the three months ended June 30, 2020 was $10.5 million, which represents a decrease of 31.1% compared to $15.3 million in the same quarter of the prior year. The decrease in revenue is attributed primarily to the impact of COVID-19 and the sudden drop in elective procedures beginning in early March as result of the pandemic. Management anticipates that the current pandemic will impact revenue for the remainder of 2020.

Gross margin for the second quarter of 2020 was 62.2%, compared to 64.9% for the same period in 2019.

Operating expenses for the second quarter of 2020 were $6.9 million, compared to $10.5 million for the second quarter of 2019. The decrease was primarily due to a reduction in sales commissions, reduced salaries and wages, lower legal and consulting fees, reduced executive recruiting fees, and reduced legal settlement expenses, partially offset by additional stock-based compensation expense during the current year period.

Second quarter 2020 net loss was $2.5 million, or $0.19 per share, compared to second quarter 2019 net loss of $1.9 million, or $0.15 per share.

Adjusted EBITDA for the second quarter of 2020 was $0.7 million compared to $1.1 million for the same period in 2019. The Company defines Adjusted EBITDA as net income/loss from operations before depreciation, amortization and interest expense and provision for income taxes, 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, change in warrant derivative liability, separation related expenses, and litigation settlement reserves. A calculation and reconciliation of 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 2020 financial results on Monday, August 3, 2020 at 4:30 PM 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.

Cautionary Statement 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,” “going forward,” similar expressions or the negative thereof, and the use of future dates. Forward-looking statements in this release include the Company’s expectations that by operating as a leaner organization and improving its overall efficiencies it will be well-positioned to manage near-term challenges and that the current pandemic will impact revenue for the remainder of 2020. 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: risks and uncertainities surrounding the debt restructuring transactions, including without limitation, the Company’s ability to consummate the restructuring transactions and to do so on a timely basis and its ability to maintain the listing of its common stock on the NYSE American; effect of the COVID-19 pandemic on the Company’s business, operating results and financial condition; the Company’s future operating results and financial performance; the ability to increase or maintain revenue; the ability to remain competitive; the ability to innovate and develop new products; the effect of 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; 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 service Company debt, comply with its debt covenants and access additional indebtedness; the ability to obtain 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, 2019 filed with the Securities and Exchange Commission (SEC) on March 5, 2020 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, 2020 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 FINN
Ph: 212-867-1762
Email: dcarey@finnpartners.com

(In thousands, except number of shares and par value)  
    As of June 30, 2020   As of December 31, 2019  
Current Assets:          
Cash and cash equivalents   $ 3,019   $ 5,237  
Trade accounts receivable, net of allowance for credit losses of $728 and doubtful accounts of $500, respectively     7,583     10,124  
Inventories     19,888     16,101  
Prepaid and other current assets     899     784  
Total current assets     31,389     32,246  
Property and equipment, net     4,256     4,695  
Right-of-use asset, net     1,898     2,100  
Goodwill     3,205     3,205  
Intangible assets, net     486     515  
Other assets     432     394  
Total Assets   $ 41,666   $ 43,155  
Current Liabilities:          
Accounts payable   $ 3,072   $ 2,188  
Accrued liabilities     5,894     6,632  
Current portion of lease liability     408     394  
Current portion of financing lease obligations     101     176  
Total current liabilities     9,475     9,390  
Long-term Liabilities:          
Lease liability, less current portion     1,518     1,726  
Long-term debt, plus premium and less issuance costs     77,531     76,244  
Total Liabilities     88,524     87,360  
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; 75,000,000 shares authorized; 13,223,565 shares issued and outstanding as of June 30, 2020 and 13,161,762 shares issued and outstanding as of December 31, 2019     -     -  
Additional paid-in capital     181,412     179,061  
Accumulated deficit     (228,270)     (223,266)  
Total Stockholders’ Equity (Deficit)     (46,858)     (44,205)  
Total Liabilities & Stockholders’ Equity (Deficit)   $ 41,666   $ 43,155  

(Unaudited, in thousands, except number of shares and per share amounts)
    Three Months Ended June 30,
  Six Months Ended June 30,
      2020     2019     2020     2019
Orthopedic product sales   $ 10,493   $ 15,197   $ 25,227   $ 31,883
Other revenue     36     74     80     114
Total revenue     10,529     15,271     25,307     31,997
Cost of sales     3,979     5,365     9,144     11,278
Gross profit     6,550     9,906     16,163     20,719
Gross profit %     62.2%     64.9%     63.9%     64.8%
Operating expenses                
General and administrative     2,931     4,187     7,250     8,664
Sales and marketing     3,895     6,072     10,309     12,814
Research and development     111     210     353     472
Total operating expenses     6,937     10,469     17,912     21,950
Loss from operations     (387)     (563)     (1,749)     (1,231)
Other (expense) income                
Interest expense     (2,054)     (1,301)     (3,163)     (3,319)
Other (expense) income     -     (53)     -     (143)
Total Other (Expense)     (2,054)     (1,354)     (3,163)     (3,462)
Net Loss Before Provision for Income Taxes     (2,441)     (1,917)     (4,912)     (4,693)
Provision for income taxes                
Current and deferred     (23)     (22)     (45)     (45)
Net Loss   $ (2,464)   $ (1,939)   $ (4,957)   $ (4,738)
Net loss per share:                
Basic   $ (0.19)   $ (0.15)   $ (0.38)   $ (0.36)
Dilutive   $ (0.19)   $ (0.15)   $ (0.38)   $ (0.36)
Shares used in the computation:                
Basic     13,223,565     13,161,762     13,199,455     13,166,136
Dilutive     13,223,565     13,161,762     13,199,455     13,166,136

(Unaudited, in thousands)
  Six Months Ended June 30,
    2020     2019
Operating activities:      
Net loss $ (4,957)   $ (4,738)
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization   1,153     1,559
(Gain) loss on disposal of fixed assets   (118)     92
Non-cash interest   3,149     3,272
Non-cash rent expense   8     11
Stock-based compensation   489     161
Provision for reserve on accounts receivable   204     232
Provision for excess and obsolete inventory   377     518
Changes in operating assets and liabilities:      
Accounts receivable   2,290     1,403
Inventories   (4,164)     955
Prepaid and other assets   (153)     242
Accounts payable   884     (3,481)
Accrued liabilities   (738)     728
Net cash (used in) provided by operating activities   (1,576)     954
Investing activities:      
Purchases of property and equipment   (673)     (211)
Proceeds from sale of fixed assets   106     163
Net cash used in investing activities   (567)     (48)
Financing activities:      
Payments on financing leases   (75)     (277)
Costs associated with Second Amended and Restated Credit Agreement   -     (108)
Net cash used in financing activities   (75)     (385)
Net change in cash and cash equivalents   (2,218)     521
Cash and cash equivalents at beginning of period   5,237     6,797
Cash and cash equivalents at end of period $ 3,019   $ 7,318


(Unaudited, in thousands)
    Three Months Ended June 30,   Six Months Ended June 30,
     2020    2019    2020    2019
Net Loss   $ (2,464)   $ (1,939)   $ (4,957)   $ (4,738)
Other expense     1     56     6     131
Depreciation and amortization     468     783     1,153     1,559
Interest expense     2,054     1,301     3,163     3,319
Tax expense     23     22     45     45
Non-GAAP EBITDA     82     223     (590)     316
Non-GAAP EBITDA/Total revenue     0.8%     1.5%     -2.3%     1.0%
Provision for losses on accounts receivable     66     138     204     232
Provision for excess and obsolete inventory     346     365     377     518
Non-cash compensation     219     39     489     161
Change in warrant derivative liability     (1)     (3)     (7)     12
Separation-related expenses     -     (15)     749     (37)
Field action expenses     -     125     -     125
Litigation reserve     -     270     -     800
Non-GAAP Adjusted EBITDA   $ 712   $ 1,142   $ 1,222   $ 2,127
Non-GAAP Adjusted EBITDA/Total revenue     6.8%     7.5%     4.8%     6.6%


Xtant Medical Logo.jpg

Source: Xtant Medical, Inc.