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): August 5, 2021

 

 

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 August 5, 2021, Xtant Medical Holdings, Inc. (the “Company”) announced its financial results for the second quarter ended June 30, 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 and litigation 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.

 

 

Litigation settlement reserves. The Company excludes litigation 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 August 5, 2021 entitled “Xtant Medical Announces Second Quarter 2021 Financial Results” (furnished herewith)

 

 

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/ Greg Jensen
		Greg Jensen
		Vice President, Finance and Chief
		Financial Officer

 

Date: August 5, 2021

 

 

Exhibit 99.1

 

 

Xtant Medical Announces Second Quarter 2021 Financial Results

 

BELGRADE, MT, August 5, 2021 – 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, 2021.

 

Second Quarter 2021 Financial Highlights:

 

	●	Revenue for the second quarter of 2021 totaled $15.0 million, an increase of 42% over the prior-year period
	●	Gross margin in the second quarter of 2021 was 63.5%, compared to 62.2% for the prior-year period
	●	Loss from operations totaled $0.5 million compared to an operating loss of $0.4 million for the prior-year period
	●	Net loss incurred in the second quarter of 2021 totaled $0.7 million compared to a net loss of $2.5 million for the prior-year period
	●	Non-GAAP Adjusted EBITDA for the second quarter of 2021 totaled $0.9 million, compared to $0.3 million for the prior-year period
	●	Closed $20 million debt refinancing

 

“We are pleased with our second quarter performance reflecting solid revenue growth on a sequential and year-over-year basis driven by the elective spinal procedure market rebound,” said Sean Browne, President and CEO of Xtant Medical. “During the quarter, we enhanced our long-term prospects with the increase of both our sales force and distribution network. As business conditions continue to normalize, our commercial strategy is focused on creating more selling opportunities while scaling Xtant for growth. With a strong balance sheet and significant capital resources, we continue to invest in our future through the combination of new product introductions, penetration of underserved markets and further distribution network expansion.”

 

Second Quarter 2021 Financial Results

 

Second quarter 2021 revenue was $15.0 million, an increase of 42% compared to $10.5 million for the same quarter in 2020. The increase in revenue was largely attributed to easing of restrictions associated with the COVID-19 pandemic in our key markets, resulting in an increase in elective procedures.

 

Gross margin for the second quarter of 2021 was 63.5%, compared to 62.2% for the same period in 2020. The increase is primarily attributable to greater economies of scale.

 

Operating expenses for the second quarter of 2021 totaled $10.0 million compared to $6.9 million for the second quarter of 2020. The increase was primarily due to the result of increased sales commissions due to higher revenues, legal and stock-based compensation expense, and research and development expenses, partially offset by lower costs during the prior year period for ERP related expenses.

 

Second quarter 2021 net loss totaled $0.7 million, or $0.01 per share, compared to the second quarter 2020 net loss of $2.5 million, or $0.19 per share.

 

 

Non-GAAP Adjusted EBITDA for the second quarter of 2021 totaled $0.9 million, compared to $0.3 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, 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 2021 financial results on Thursday, August 5 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 its future through the combination of new product introductions, penetration of underserved markets and further distribution network expansion. 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; the ability to remain competitive; the ability to innovate and develop new products; the ability to engage and retain new and existing independent distributors and qualified personnel; the effect of the COVID-19 pandemic on the Company’s business, operating results and financial condition; the Company’s ability to implement successfully its future growth initiatives; 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, 2020 filed with the Securities and Exchange Commission (SEC) on February 24, 2021 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, 2021 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

 

 

XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

		As of June 30, 2021				As of December 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents		$	20,312			$	2,341
Restricted Cash			215				-
Trade accounts receivable, net of allowance for credit losses and doubtful accounts of $470 and $653, respectively			6,985				6,880
Inventories			21,093				21,408
Prepaid and other current assets			827				736
Total current assets			49,432				31,365
Property and equipment, net			4,869				4,347
Right-of -use asset, net			1,477				1,690
Goodwill			3,205				3,205
Intangible assets, net			428				457
Other assets			265				402
Total Assets		$	59,676			$	41,466
LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable		$	2,639			$	2,947
Accrued liabilities			5,728				5,462
Current portion of lease liability			441				423
Finance lease obiligations			30				20
Line of credit			4,077				-
			-				16,797
Total current liabilities			12,915				25,649
Long-term Liabilities:
Lease liability, less current portion			1,076				1,303
Finance lease obligations, less current portion			118				-
Long-term debt, plus premium and less issuance costs			11,683				-
Total Liabilities			25,792				26,952
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; 300,000,000 shares authorized; 86,707,286 shares issued and outstanding as of June 30, 2021 and 77,573,680 shares issued and outstanding as of December 31, 2020			-				-
Additional paid-in capital			264,981				244,850
Accumulated deficit			(231,097	)			(230,336	)
Total Stockholders’ Equity (Deficit)			33,884				14,514
Total Liabilities & Stockholders’ Equity (Deficit)		$	59,676			$	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 June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Revenue
Orthopedic product sales		$	14,942			$	10,493			$	27,451			$	25,227
Other revenue			33				36				66				80
Total revenue			14,975				10,529				27,517				25,307
Cost of sales			5,460				3,979				9,911				9,144
Gross profit			9,515				6,550				17,606				16,163
Gross profit %			63.5	%			62.2	%			64.0	%			63.9	%
Operating expenses
General and administrative			4,173				2,931				7,200				7,250
Sales and marketing			5,590				3,895				10,445				10,309
Research and development			243				111				458				353
Total operating expenses			10,006				6,937				18,103				17,912
Income (Loss) from operations			(491	)			(387	)			(497	)			(1,749	)
Other income
Interest expense			(199	)			(2,054	)			(201	)			(3,163	)
Total Other Expense			(199	)			(2,054	)			(201	)			(3,163	)
Net Loss Before Provision for Income Taxes			(690	)			(2,441	)			(698	)			(4,912	)
Provision for income taxes			(43	)			(23	)			(64	)			(45	)
Net Loss		$	(733	)		$	(2,464	)		$	(762	)		$	(4,957	)
Net loss per share:
Basic		$	(0.01	)		$	(0.19	)		$	(0.01	)		$	(0.38	)
Dilutive		$	(0.01	)		$	(0.19	)		$	(0.01	)		$	(0.38	)
Shares used in the computation:
Basic			86,707,286				13,223,565				83,993,159				13,199,455
Dilutive			86,707,286				13,223,565				83,993,159				13,199,455

 

 

XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

		Six Months Ended June 30,
		2021				2020
Operating activities:
Net loss		$	(762	)		$	(4,957	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			731				1,153
Gain on disposal of fixed assets			(108	)			(118	)
Non-cash interest			16				3,149
Non-cash rent expense			5				8
Stock-based compensation			921				489
Provision for reserve on accounts receivable			(143	)			204
Provision for excess and obsolete inventory			211				377
Changes in operating assets and liabilities:
Accounts receivable			38				2,290
Inventories			104				(4,164	)
Prepaid and other assets			(29	)			(153	)
Accounts payable			(308	)			1,067
Accrued liabilities			266				(921	)
Net cash provide by (used in) operating activities			942				(1,576	)
Investing activities:
Purchases of property and equipment			(1,079	)			(673	)
Proceeds from sale of fixed assets			125				106
Net cash used in investing activities			(954	)			(567	)
Financing activities:
Payments on financing leases			(34	)			(75	)
Costs associated with refinancing			(105	)			-
Payments on long-term debt			(411	)			-
Borrowings on line of credit			9,331
Repayments of line of credit			(9,009	)			-
Proceeds from private placement, net of cash issuance costs			18,426				-
Net cash used in financing activities			18,198				(75	)
Net change in cash and cash equivalents			18,186				(2,218	)
Cash and cash equivalents at beginning of period			2,341				5,237
Cash and cash equivalents at end of period		$	20,527			$	3,019
Reconciliation of cash and restricted cash reported in the condensed consolidated balance sheets
Cash and cash equivelants		$	20,312			$	3,019
Restricted cash			215				-
Total cash and restricted cash reported in the condensed consolidated balance sheets		$	20,527			$	3,019

 

 

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,
		2021				2020				2021				2020
Net Loss	$		(733	)		$	(2,464	)		$	(762	)		$	(4,957	)
Other expense			5				1				42				6
Depreciation and amortization			357				468				731				1,153
Interest expense			199				2,054				201				3,163
Tax expense			43				23				64				45
Non-GAAP EBITDA			(129	)			82				276				(590	)
Non-GAAP EBITDA/Total revenue			-0.9	%			0.8	%			1.0	%			-2.3	%
NON-GAAP ADJUSTED EBITDA CALCULATION
Non-cash compensation			465				219				921				489
Separation-related expenses			-				-				-				749
Litigation reserve			550				-				550				-
Non-GAAP Adjusted EBITDA	$		886			$	301			$	1,747			$	648
Non-GAAP Adjusted EBITDA/Total revenue			5.9	%			2.9	%			6.3	%			2.6	%