Xtant Medical Announces Second Quarter Revenue Growth of 32%

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Xtant Medical Announces Second Quarter Revenue Growth of 32%


Raises 2023 Annual Revenue Guidance to $75 Million - $77 Million 

BELGRADE, Mont., Aug. 01, 2023 (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, 2023.

“In the second quarter, we achieved strong revenue growth on both a sequential and annual basis driven by our core biologics and fixation businesses,” said Sean Browne, President & CEO of Xtant Medical. “I am particularly pleased that we closed the quarter with positive adjusted EBITDA, which is ahead of our expectations. We are driving growth across all channels of our business, and with solid contributions from our newly acquired Coflex interlaminar stabilization device and the addition of new Coflex distributors, we are encouraged regarding our longer-term expansion opportunities. By leveraging and advancing our platform, we now expect to generate full year annual revenue growth of approximately 29% to 33%.”

Second Quarter 2023 Financial Results

Second quarter 2023 revenue grew 32%, representing organic growth of 14% plus an 18% increase from products added in the acquisition of the Coflex and CoFix lines, to $20.2 million, compared to $15.3 million for the same period in 2022. These revenue increases are attributed primarily to greater independent agent and private label sales, and sales from the acquired Coflex and CoFix product lines.

Gross margin for the second quarter of 2023 was 61.6%, compared to 54.8% for the same period in 2022. The increase was primarily attributable to the contribution of Coflex and CoFix products, partially offset by higher production costs.

Operating expenses for the second quarter of 2023 totaled $13.9 million, compared to $9.7 million for the second quarter of 2022. The increase was primarily due to additional independent agent sales commissions, higher employee compensation expenses and amortization of intangible assets associated with the Coflex and CoFix product lines.

Second quarter 2023 net loss totaled $2.2 million, or $0.02 per share, compared to the second quarter 2022 net loss of $1.7 million, or $0.02 per share.

Non-GAAP Adjusted EBITDA for the second quarter of 2023 was $0.1 million, compared to a Non-GAAP Adjusted EBITDA loss of $0.4 million for the prior-year period. 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 and acquisition-related expenses. A calculation and reconciliation of Adjusted EBITDA to net loss can be found in the attached financial tables.

2023 Financial Guidance

Xtant Medical raises its expectation for full year 2023 revenue to $75 million to $77 million, up from the Company’s prior guidance of $73 million to $75 million. The revised guidance range represents annual revenue growth of approximately 29% to 33% compared to full year 2022 revenue, and excludes any potential contributions from the Surgalign transaction, if and when that transaction closes.

Conference Call

Xtant Medical will host a webcast and conference call to discuss the second quarter 2023 financial results on Tuesday, August 1, 2023 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 and organic revenue growth. 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 financial guidance for 2023. 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; its ability to increase or maintain revenue; risks associated with its recent acquisition of the Coflex product line and its pending acquisition of certain assets and liabilities related to the domestic and international biologics and spinal fixation offerings of Surgalign Holdings, Inc.; possible future impairment charges to long-lived assets and goodwill and write-downs of excess inventory if revenues 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 COVID-19, labor 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 inflation, increased interest rates and other recessionary factors and supply chain disruptions; 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, 2022 filed with the Securities and Exchange Commission (SEC) on March 8, 2023 and subsequent SEC filings by the Company, including without limitation its most recent Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 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: david.carey@finnpartners.com

(In thousands, except number of shares and par value)
    As of June 30,
  As of December 31,
Current Assets:        
Cash and cash equivalents   $ 4,138     $ 20,298  
Restricted Cash     310       209  
Trade accounts receivable, net of allowance for credit losses and doubtful accounts of $740 and $515, respectively     13,744       10,853  
Inventories     20,364       17,285  
Prepaid and other current assets     1,015       673  
     Total current assets     39,571       49,318  
Property and equipment, net     6,875       5,785  
Right-of -use asset, net     1,155       1,380  
Goodwill     6,514       3,205  
Intangible assets, net     10,920       344  
Other assets     183       197  
     Total Assets   $ 65,218     $ 60,229  
Current Liabilities:        
Accounts payable   $ 4,444     $ 3,490  
Accrued liabilities     6,255       5,496  
Current portion of lease liability     488       458  
Current portion of finance lease obligations     63       62  
Line of credit     5,031       3,379  
Current portion of long-term debt     708       2,333  
     Total current liabilities     16,989       15,218  
Long-term Liabilities:        
Lease liability, less current portion     720       972  
Finance lease obligations, less current portion     149       181  
Long-term debt, plus premium and less issuance costs     16,401       9,687  
     Total Liabilities     34,259       26,058  
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; 108,897,048 shares issued and outstanding as of June 30, 2023 and 108,874,803 shares issued and outstanding as of December 31, 2022     -       -  
Additional paid-in capital     278,897       277,841  
Accumulated deficit     (247,938 )     (243,670 )
     Total Stockholders’ Equity     30,959       34,171  
     Total Liabilities & Stockholders’ Equity   $ 65,218     $ 60,229  

(Unaudited, in thousands, except number of shares and per share amounts)
    Three Months Ended
June 30,
  Six Months Ended
June 30,
      2023       2022       2023       2022  
Orthopedic product sales   $ 20,232     $ 15,277     $ 38,175     $ 28,227  
Other revenue     -       -       1       9  
Total Revenue     20,232       15,277       38,176       28,236  
Cost of sales     7,773       6,903       15,180       12,302  
Gross Profit     12,459       8,374       22,996       15,934  
Gross Profit %     61.6%       54.8%       60.2%       56.4%  
Operating Expenses                
General and administrative     4,954       3,797       9,839       7,766  
Sales and marketing     8,716       5,636       15,770       10,845  
Research and development     180       241       354       454  
Total Operating Expenses     13,850       9,674       25,963       19,065  
Loss from Operations     (1,391 )     (1,300 )     (2,967 )     (3,131 )
Other Expense                
Interest expense     (786 )     (397 )     (1,360 )     (757 )
Interest income     -       -       85       -  
Total Other Expense     (786 )     (397 )     (1,275 )     (757 )
     Net Loss from Operations Before Provision for Income Taxes     (2,177 )     (1,697 )     (4,242 )     (3,888 )
Provision for Income Taxes     (13 )     (13 )     (26 )     (35 )
     Net Loss   $ (2,190 )   $ (1,710 )   $ (4,268 )   $ (3,923 )
Net Loss Per Share:                
Basic   $ (0.02 )   $ (0.02 )   $ (0.04 )   $ (0.04 )
Dilutive   $ (0.02 )   $ (0.02 )   $ (0.04 )   $ (0.04 )
Shares used in the computation:                
Basic     108,897,048       87,313,701       108,895,327       87,252,521  
Dilutive     108,897,048       87,313,701       108,895,327       87,252,521  

(Unaudited, in thousands)
  Six Months Ended June 30,
    2023       2022  
Operating activities:      
Net loss $ (4,268 )   $ (3,923 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization   1,274       599  
Gain on disposal of fixed assets   (21 )     (84 )
Non-cash interest   189       116  
Non-cash rent expense   3       (1 )
Stock-based compensation   1,056       1,184  
Provision for reserve on accounts receivable   225       143  
Provision for excess and obsolete inventory   243       825  
Changes in operating assets and liabilities, net of the effects of the acquisition:      
Accounts receivable   (3,116 )     (1,589 )
Inventories   (1,733 )     659  
Prepaid and other assets   (330 )     465  
Accounts payable   954       428  
Accrued liabilities   758       189  
     Net cash used in by operating activities   (4,766 )     (989 )
Investing activities:      
Purchases of property and equipment   (870 )     (810 )
Proceeds from sale of fixed assets   55       165  
Acquisition of Surgalign SPV, Inc.   (17,000 )     -  
     Net cash used in investing activities   (17,815 )     (645 )
Financing activities:      
Payments on financing leases   (30 )     (22 )
Borrowings on line of credit   36,256       26,567  
Repayments of line of credit   (34,603 )     (26,451 )
Net proceeds from issuance of long-term debt, net of issuance costs   4,899       -  
     Net cash provided by financing activities   6,522       94  
Net change in cash and cash equivalents and restricted cash   (16,059 )     (1,540 )
Cash and cash equivalents and restricted cash at beginning of period   20,507       18,387  
Cash and cash equivalents and restricted cash at end of period $ 4,448     $ 16,847  
Reconciliation of cash and restricted cash reported in the condensed consolidated balance sheets      
Cash and cash equivalents $ 4,138     $ 16,495  
Restricted cash   310       352  
Total cash and restricted cash reported in the condensed consolidated balance sheets $ 4,448     $ 16,847  

(Unaudited, in thousands)
    Three Months Ended June 30,   Six Months Ended June 30,
      2023       2022       2023       2022  
Net Loss   $ (2,190 )   $ (1,710 )   $ (4,268 )   $ (3,923 )
Depreciation and amortization     800       317           599  
Interest expense     786       397       1,275       757  
Tax expense     13       13       26       35  
Non-GAAP EBITDA     (591 )     (983 )     (2,967 )     (2,532 )
Non-GAAP EBITDA/Total revenue     -2.9%       -6.4%       -7.8%       -9.0%  
Non-cash compensation     438       571       1,055       1,185  
Acquisition-related expenses     254       -       465       -  
Non-GAAP Adjusted EBITDA   $ 101     $ (412 )   $ (1,447 )   $ (1,347 )
Non-GAAP Adjusted EBITDA/Total revenue     0.5%       -2.7%       -3.8%       -4.8%  

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Source: Xtant Medical, Inc.