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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

 

 

Date of Report (Date of earliest event reported): March 8, 2022

 

 

 

XTANT MEDICAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   001-34951   20-5313323

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

664 Cruiser Lane

Belgrade, Montana

 

59714

(Address of principal executive offices)   (Zip Code)

 

(406) 388-0480

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common stock, par value $0.000001 per share   XTNT   NYSE American LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On March 8, 2022, Xtant Medical Holdings, Inc. (the “Company”) announced its financial results for the fourth quarter and year ended December 31, 2021. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information in Item 2.02 of this report (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly provided by specific reference in such a filing.

 

To supplement its consolidated financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures, such as non-GAAP adjusted EBITDA, which are included in the press release furnished as Exhibit 99.1 to this report. The Company’s non-GAAP adjusted EBITDA is calculated by adding back to net loss the charges for other expense, depreciation and amortization expense, interest expense, and tax expense and further adjusted by adding back in or excluding, as appropriate, non-cash compensation, separation related expenses, change in warrant derivative liability and legal settlement reserves.

 

The Company uses adjusted EBITDA and the other non-GAAP measures in making operating decisions because it believes these measures provide meaningful supplemental information regarding its core operational performance. Additionally, these measures give the Company a better understanding of how it should invest in sales and marketing and research and development activities and how it should allocate resources to both ongoing and prospective business initiatives. The Company also uses these measures to help make budgeting and spending decisions, for example, among sales and marketing expenses, general and administrative expenses, and research and development expenses. Additionally, the Company believes its use of non-GAAP adjusted EBITDA and other non-GAAP measures facilitates management’s internal comparisons to historical operating results by factoring out potential differences caused by charges not related to its regular, ongoing business, including, without limitation, non-cash charges and certain large and unpredictable charges.

 

As described above, the Company excludes the following items from its non-GAAP financial measures for the following reasons:

 

Non-cash compensation. The Company excludes non-cash compensation, which is a non-cash charge related to equity awards granted by the Company. Although non-cash compensation is a recurring charge to the Company’s operations, management has excluded it because it relies on valuations based on future events, such as the market price of the Company’s common stock, that are difficult to predict and are affected by market factors that are largely not within the control of the Company. Thus, management believes that excluding non-cash compensation facilitates comparisons of the Company’s operational performance in different periods, as well as with similarly determined non-GAAP financial measures of comparable companies.

 

Separation related expenses. The Company excludes separation related expenses from non-GAAP adjusted EBITDA primarily because such expenses are not reflective of the Company’s ongoing operating results and are not used by management to assess the core profitability of the Company’s business operations. The Company further believes that excluding this item from its non-GAAP results is useful to investors in that it allows for period-over-period comparability.

 

 

 

 

Change in warrant derivative liability. The Company excludes the change in fair market value of its warrants that are accounted for as liabilities from non-GAAP adjusted EBITDA primarily because it is a non-cash charge, it is not reflective of the Company’s ongoing operating results, and it is not used by management to assess the core profitability of the Company’s business operations. Because it is a non-cash expense, it does not impact the Company’s operational performance, liquidity, or ability to invest in sales and marketing, research and development, and fund acquisitions and capital expenditures. The Company further believes that excluding this item from its non-GAAP results is useful to investors in that it allows for period-over-period comparability.

 

Legal settlement reserves. The Company excludes legal settlement reserves from non-GAAP adjusted EBITDA primarily because such reserves are not reflective of the Company’s ongoing operating results and are not used by management to assess the core profitability of the Company’s business operations. The Company further believes that excluding this item from its non-GAAP results is useful to investors in that it allows for period-over-period comparability.

 

Non-GAAP adjusted EBITDA is reconciled to net loss, the most directly comparable GAAP measure, in the press release.

 

Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP measures and may be different from non-GAAP financial measures used by other companies. In addition, non-GAAP financial measures are not based on any comprehensive or standard set of accounting rules or principles. Accordingly, the calculation of the Company’s non-GAAP financial measures may differ from the definitions of other companies using the same or similar names, limiting, to some extent, the usefulness of such measures for comparison purposes. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s financial results as determined in accordance with GAAP. Non-GAAP financial measures should only be used to evaluate the Company’s financial results in conjunction with the corresponding GAAP measures. Accordingly, the Company qualifies its use of non-GAAP financial information in a statement when non-GAAP financial information is presented.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.   Description
99.1

 

 

Press Release of Xtant Medical Holdings, Inc. dated March 8, 2022 entitled “Xtant Medical Announces Fourth Quarter and Full Year 2021 Financial Results” (furnished herewith)

     
104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  XTANT MEDICAL HOLDINGS, INC.
     
  By: /s/ Scott Neils
    Scott Neils
    Interim Chief Financial Officer

 

Date: March 8, 2022

 

 

 

 

Exhibit 99.1 

 

 

Xtant Medical Announces Fourth Quarter and Full Year 2021 Financial Results

 

BELGRADE, MT, March 8, 2022 – 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 fourth quarter and year ended December 31, 2021.

 

“Xtant accomplished numerous objectives in 2021 focused on developing new products, expanding our distributor network and growing our adjacent market sales that have us excited about the future of the Company,” said Sean Browne, President and CEO of Xtant Medical. “Our Company achieved year-over-year revenue growth of 4%, and I am particularly pleased with the top-line performance of our biologics business, which grew 8% annually in a very difficult year. As part of our strategic plan, we launched four new products, and we are especially excited by the strong demand of our newly introduced OsteoFactor and OsteoVive Plus products. Guided by our mission of ‘honoring the gift of donation, so that our patients can live as full, and complete a life as possible,’ we are confident that our key growth initiatives will maximize the potential opportunities of our leading spine brand.”

 

Fourth Quarter and Full Year 2021 Financial Results

 

Fourth quarter 2021 revenue was $14.0 million, compared to $14.0 million for the same quarter in 2020. Full year 2021 revenue was $55.3 million, compared to $53.3 million for 2020. The increase in revenue was largely attributable to additional private label and original equipment manufacturer (OEM) orthobiologics sales.

 

Gross margin for the fourth quarter of 2021 was 55.1%, compared to 64.1% for the same period in 2020 and was 58.8% for 2021, compared to 64.5% in 2020. These decreases were primarily attributable to increased underabsorption of labor and overhead associated with initiatives to reduce inventory, a shift in product sales mix with a proportional increase in private label and OEM channel sales, and sell-through of product subject to higher production costs during prior periods.

 

Operating expenses for the fourth quarter of 2021 totaled $9.6 million, compared to $8.7 million for the fourth quarter of 2020, and were $36.3 million in 2021 compared to $35.1 million in 2020. These increases were primarily due to additional stock-based compensation expense, greater salaries and wage expenses and severance related expenses, which were partially offset by lower commissions resulting from a greater a mix of commission-free private label and OEM sales.

 

Fourth quarter 2021 net loss totaled $2.3 million, or $0.03 per share, compared to the fourth quarter 2020 net loss of $0.7 million, or $0.01 per share. Net loss for 2021 was $4.8 million, or $0.06 per share, compared to a net loss of $7.0 million, or $0.25 per share, for 2020.

 

Non-GAAP Adjusted EBITDA for the fourth quarter of 2021 totaled a loss of $0.5 million, compared to Non-GAAP Adjusted EBITDA of $1.0 million for the same period in 2020. Non-GAAP Adjusted EBITDA for 2021 totaled $0.7 million, compared to $3.1 million for 2020. 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 compensation, separation related expenses, change in warrant derivative liability and legal 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 fourth quarter and full year 2021 financial results on Tuesday, March 8, 2022 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.

 

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 “intends,” ‘‘expects,’’ ‘‘anticipates,’’ ‘‘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 continued investment in and the future success of its key growth initiatives and their impact on the Company’s future growth strategy, operating results and financial performance. 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; possible future impairment charges to long-lived assets and goodwill and write-downs of excess inventory if revenues continue to decrease; the ability to remain competitive; the ability to innovate, develop and introduce new products; the ability to engage and retain new and existing independent distributors and agents and qualified personnel and the Company’s dependence on key independent agents for a significant portion of its revenue; the effect of the COVID-19 pandemic and hospital staffing shortages on the Company’s business, operating results and financial condition, especially when they affect key markets; the Company’s ability to implement successfully its future growth initiatives and risks associated therewith; the effect of product sales mix changes on the Company’s financial results; 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; 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 on favorable terms or at all; and other factors. Additional risk factors are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (SEC) on March 8, 2022 and subsequent SEC filings by the Company. 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: david.carey@finnpartners.com

 

   

 

 

XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS 

(In thousands, except number of shares and par value) 

 

   As of   As of 
  

December 31,

2021

  

December 31,

2020

 
ASSETS          
Current Assets:          
Cash and cash equivalents  $18,243   $2,341 
Restricted cash   144    - 
Trade accounts receivable, net of allowance for credit losses of $552 and doubtful accounts of $653, respectively   7,154    6,880 
Inventories   17,945    21,408 
Prepaid and other current assets   844    736 
Total current assets   44,330    31,365 
           
Property and equipment, net   5,212    4,347 
Right-of-use asset, net   1,258    1,690 
Other assets   287    402 
Intangible assets, net   400    457 
Goodwill   3,205    3,205 
Total Assets  $54,692   $41,466 
           
LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT)          
Current Liabilities:          
Accounts payable  $2,615   $2,947 
Accrued liabilities   

4,349

    5,462 
Current portion of lease liability   462    423 
Finance lease obiligations   31    20 
Line of credit   3,620    - 
Current portion of long-term debt   -    16,797 
Total current liabilities   11,077    25,649 
Long-term Liabilities:          
Lease liability, less current portion   842    1,303 
Financing lease obligations, net   103    - 
Long-term debt, plus premium and less issuance costs   11,787    - 
Total Liabilities   23,809    26,952 
           
Stockholders’ Equity          
Preferred stock, $0.000001 par value; 10,000,000 shares authorized; no shares issued and outstanding   -    - 
Common stock, $0.000001 par value; 300,000,000 shares authorized; 87,068,980 shares issued and outstanding as of December 31, 2021 and 77,573,680 shares issued and outstanding as of December 31, 2020   -    - 
Additional paid-in capital   266,068    244,850 
Accumulated deficit   (235,185)   (230,336)
Total Stockholders’ Equity   30,883    14,514 
           
Total Liabilities & Stockholders’ Equity  $54,692   $41,466 

 

   

 

 

XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except number of shares and per share amounts)

 

   Three Months Ended
December 31,
   Twelve Months Ended
December 31,
 
   2021   2020   2021   2020 
Revenue                    
Orthopedic product sales  $13,953   $13,981   $55,146   $53,188 
Other revenue   17    34    117    149 
Total revenue   13,970    14,015    55,263    53,337 
                     
Cost of sales   6,276    5,032    22,773    18,945 
Gross profit   7,694    8,983    32,490    34,392 
                     
Gross profit %   55.1%   64.1%   58.8%   64.5%
                     
Operating expenses                    
General and administrative   4,142    3,210    14,449    13,503 
Sales and marketing   5,314    5,405    21,025    20,983 
Research and development   151    128    870    657 
Total operating expenses   9,607    8,743    36,344    35,143 
                     
Income (Loss) from operations   (1,913)   240    (3,854)   (751)
                     
Other Expense                    
Interest expense   (466)   (718)   (995)   (5,976)
Total Other Expense   (466)   (718)   (995)   (5,976)
Net Loss Before Provision for Income Taxes   (2,379)   (478)   (4,849)   (6,727)
                     
Provision for income taxes                    
Current and deferred   95    (229)   -    (296)
Net Loss  $(2,284)  $(707)  $(4,849)  $(7,023)
                     
Net loss per share:                    
Basic  $(0.03)  $(0.01)  $(0.06)  $(0.25)
Dilutive  $(0.03)  $(0.01)  $(0.06)  $(0.25)
                     
Shares used in the computation:                    
Basic   87,027,466    74,508,626    85,456,175    28,499,847 
Dilutive   87,027,466    74,508,626    85,456,175    28,499,847 

 

   

 

 

XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Unaudited, in thousands) 

 

  

Twelve Months Ended

December 31,

 
   2021   2020 
Operating activities:          
Net loss  $(4,849)  $(7,023)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:          
Depreciation and amortization   1,332    2,079 
Gain on disposal of fixed assets   (86))   (369)
Non-cash interest   147    5,963 
Non-cash rent expense   9    16 
Stock-based compensation   2,209    1,084 
Provision for reserve on accounts receivable   45    307 
Provision for excess and obsolete inventory   839    485 
           
Changes in operating assets and liabilities:          
Accounts receivable   (319)   2,890 
Inventories   2,624    (5,792)
Prepaid and other assets   (67)   40 
Accounts payable   (332)   101 
Accrued liabilities   (1,113)   (512)
Net cash provided by (used in) operating activities   439    (731)
           
Investing activities:          
Purchases of property and equipment   (2,115)   (1,545)
Proceeds from sale of fixed assets   225    241 
Net cash used in investing activities   (1,890)   (1,304)
           
Financing activities:          
Payment of taxes from withholding of common stock on vesting of restricted stock units   (201)   - 
Payments on financing leases   (50)   (156)
Payments on long-term debt   (411)   (315)
Borrowings on line of credit   36,361    - 
Repayments on line of credit   (36,492)   - 
Costs associated with debt restructuring  (136)   (1,058)
Proceeds from issuance of common stock, net of issuance costs   18,426    620 
Proceeds from exercise of common stock warrants   -    48 
Net cash used in financing activities   17,497    (861)
           
Net change in cash and cash equivalents and restricted cash   16,046    (2,896)
Cash and cash equivalents and restricted cash at beginning of year   2,341    5,237 
Cash and cash equivalents and restricted cash at end of year  $18,387   $2,341 
           
Reconciliation of cash and cash equivalents and restricted cash reported in the consolidated balance sheets          
Cash and cash equivalents  18,243   2,341 
Restricted cash   144    - 
Total cash and restricted cash reported in the consolidated balance sheets  $18,387   $2,341 

 

   

 

 

XTANT MEDICAL HOLDINGS, INC.

CALCULATION OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA 

(Unaudited, in thousands) 

 

   Three Months Ended
December 31,
   Twelve Months Ended
December 31,
 
   2021   2020   2021   2020 
                 
Net Loss  $(2,284)  $(707)  $(4,849)  $(7,023)
                     
Other expense   -    1    62    101 
Depreciation and amortization   291    528    1,332    3,145 
Interest expense   466    718    995    5,976 
Tax expense   (95)   229    -    296 
Non-GAAP EBITDA   (1,622)   769    (2,460)   2,495 
                     
Non-GAAP EBITDA/Total revenue   -11.6%   5.5%   -4.5%   4.7%
                     
NON-GAAP ADJUSTED EBITDA CALCULATION                    
Non-cash compensation   707    358    2,209    1,084 
Change in warrant derivative liability   -    -    -    (7)
Separation-related expenses   430    -    430    698 
Legal settlements   -    -    550    5 
Non-GAAP Adjusted EBITDA  $(485)  $1,127   $729   $4,275 
                     
Non-GAAP Adjusted EBITDA/Total revenue   -3.5%   8.0%   1.3%   8.0%