See footnote about the use of pro forma financial information

First Quarter 2016 Highlights:

• Core recurring revenue (excluding OEM and other revenue) increased 6.8% to $20.5 million compared to core pro forma recurring revenue of $19.2 million in first quarter 2015
• Gross profit increased slightly to $14.1 million compared to pro forma first quarter 2015 gross profit of $14.0 million
• Gross margins improved to 67.2%, compared to pro forma 64.3% in the first quarter of 2015
• The Company reported an EBITDA loss of approximately $145,000 for the first quarter of 2016

BELGRADE, Mont., May 04, 2016 (GLOBE NEWSWIRE) -- Xtant™ Medical Holdings, Inc. (NYSE MKT:XTNT), a leader in the development of regenerative medical devices, today reported its financial results for the period ended March 31st, 2016. The Company reported quarterly revenues of approximately $21.0 million and an EBITDA loss of approximately $145,000.

Revenue

First quarter 2016 revenue was approximately $21.0 million, a decrease of 3% compared to pro forma revenue of approximately $21.7 million for the same period during 2015. Core recurring revenue, which excludes other revenue and revenue associated with an Original Equipment Manufacturer (OEM) customer, increased 6.8% to $20.5 million.

Stated in 000's	1Q15*				1Q16
Revenue	$	21,729			$	20,977
OEM & Other Revenue	$	2,575			$	523
Core Revenue	$	19,154			$	20,454
Core Revenue Growth						6.8	%
*Pro Forma Results

Gross Profit

Gross profit for the first quarter of 2016 was $14.1 million or 67.2% of revenues, compared to pro forma gross profit of $14.0 million or 64.3% of revenues for the first quarter of 2015.

Sales and Marketing Expenses

First quarter 2016 sales and marketing expenses increased to $10.5 million, as compared to pro forma sales and marketing expenses of $9.6 million during the same period in 2015. For the quarter, sales and marketing as a percentage of revenues increased to 50.1%, compared to 44.1% in the first quarter of 2015, on a pro forma basis. The increase was mainly due to the higher OEM revenue in the first quarter of 2015 and the Company's planned and strategic expansion of its sales force and increased sales commissions to independent agents. In addition, the Company increased its sales infrastructure to support the portfolio selling opportunity of the newly combined business.

General and Administrative Expenses

In the first quarter, general and administrative expenses decreased to $3.5 million as compared to pro forma general and administrative expenses of $3.9 million reported for the same period last year. As a percentage of revenues, general and administrative expenses were 16.6% during the period as compared to pro forma 18.0% for the same period during 2015.

Net Income / Loss

First quarter 2016 consolidated net loss narrowed to $5.6 million, which compares to the pro forma year-ago period net loss of $6.0 million.

EBITDA

The Company defines earnings before interest, taxes, depreciation and amortization ("EBITDA") as net income/loss from operations before depreciation, amortization, impairment charges, non-recurring expenses and non-cash stock-based compensation. Consolidated EBITDA for the first quarter of 2016 was a loss of $144,749 compared to a pro forma gain of $282,355 for the same period during 2015 due to higher sales and marketing expenses.

Financial Liquidity

Cash on hand as of March 31, 2016, was $4.7 million, as compared to $6.4 million as of December 31, 2015.

Outlook for Full Year 2016

The Company also reiterated its full year 2016 revenue guidance based on the following:

2016 Guidance
	Full-Year 2016
Stated in 000's	Low				High
Revenue	$	94,000		–	$	99,000
EBITDA	$	4,300		–	$	6,300
Cash Debt Service	$	5,100		–	$	5,100
Non-GAAP Profitability	$	(800	)	–	$	1,200

Conference Call to be Held May 5, 2016

An accompanying conference call will be hosted by Dan Goldberger, Chief Executive Officer, and John Gandolfo, Chief Financial Officer, to discuss the results. The call will be held at 9:00 AM ET, on May 5, 2016. Please refer to the information below for conference call dial-in information and webcast registration.

Conference date: May 5, 2016, 9:00 AM ET
Conference dial-in: 877-269-7756
International dial-in: 201-689-7817
Conference Call Name: Xtant Medical's First Quarter 2016 Results Call
Webcast Registration: Click Here

Following the live call, a replay will be available on the Company's website, www.xtantmedical.com, under "Investor Info."

Use of Pro Forma Financial Information

On July 31, 2015, Bacterin International Holdings, Inc. acquired all of the issued and outstanding stock of X-Spine Systems, Inc. and the combined company was renamed Xtant Medical Holdings, Inc. Except for the financial results for the three months ended March 31, 2016, the results presented are on a pro forma basis as if the two companies were combined for the periods shown. Certain pro forma adjustments have been made to reflect the impact of the purchase transaction, primarily consisting of amortization of intangible assets with determinable lives and interest expense on long-term debt. In addition, certain historical expenses, such as warrant expense and interest expense associated with debt that was immediately repaid, were eliminated from these pro forma results. The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the fiscal reporting period indicated nor is it indicative of future operating results. The pro forma information does not include any adjustment for potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition.

Additional information regarding the business combination and its impact on the Company’s financial position will be set forth in the Company’s Form 10-Q for the quarter ended March 31, 2016, which will be filed with the Securities and Exchange Commission on or about May 10, 2016 and will include the Company’s audited consolidated financial statements as of and for the quarters ended March 31, 2016 and March 31, 2015.

About Xtant™ Medical Holdings, Inc.

Xtant Medical Holdings, Inc. (NYSE MKT:XTNT) develops, manufactures and markets class-leading regenerative medicine products and medical devices for domestic and international markets. Xtant products serve the specialized needs of orthopedic and neurological surgeons, including orthobiologics for the promotion of bone healing, implants and instrumentation for the treatment of spinal disease, tissue grafts for the treatment of orthopedic disorders, and biologics to promote healing following cranial, and foot and ankle surgeries. With core competencies in both biologic and non-biologic surgical technologies, Xtant can leverage its resources to successfully compete in global neurological and orthopedic surgery markets. For further information, please visit www.xtantmedical.com.

Important Cautions Regarding Forward-looking Statements

This press release contains certain disclosures that may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. 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 "continue," "efforts," "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "strategy," "will," "goal," "target," "prospects," "potential," "optimistic," "confident," "likely," "probable" or similar expressions or the negative thereof.

Statements of historical fact also may be deemed to be forward-looking statements. We caution that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: our ability to integrate the acquisition of X-spine Systems, Inc. and any other business combinations or acquisitions successfully; our ability to remain listed on the NYSE MKT; our ability to obtain financing on reasonable terms; our ability to increase revenue; our ability to comply with the covenants in our credit facility; our ability to maintain sufficient liquidity to fund our operations; the ability of our sales force to achieve expected results; our ability to remain competitive; government regulations; our ability to innovate and develop new products; our ability to obtain donor cadavers for our products; our ability to engage and retain qualified technical personnel and members of our management team; the availability of our facilities; government and third-party coverage and reimbursement for our products; our ability to obtain regulatory approvals; our ability to successfully integrate recent and future business combinations or acquisitions; our ability to use our net operating loss carry-forwards to offset future taxable income; our ability to deduct all or a portion of the interest payments on the notes for U.S. federal income tax purposes; our ability to service our debt; product liability claims and other litigation to which we may be subjected; product recalls and defects; timing and results of clinical studies; our ability to obtain and protect our intellectual property and proprietary rights; infringement and ownership of intellectual property; our ability to remain accredited with the American Association of Tissue Banks; influence by our management; our ability to pay dividends; our ability to issue preferred stock; and other factors.

Additional risk factors are listed in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors." You should carefully consider the trends, risks and uncertainties described in this document, the Form 10-K and other reports filed with or furnished to the SEC before making any investment decision with respect to our securities. If any of these trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline, and you could lose all or part of your investment. 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 us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

	XTANT MEDICAL HOLDINGS, INC.
	Consolidated Statement of Operations for the Three Months Ended March 31, 2016
	Pro Forma Statement of Operations for the Three Months Ended March 31, 2015
	Unaudited
		For the Three Months Ended Mar 31,
		2016						2015
		Amount						Amount
	Orthopedic Product Sales	$		20,808,035				$		21,447,618
	Other			169,300						280,743
	Total Revenue			20,977,335						21,728,361
	Cost of sales			6,877,267						7,763,021
	Gross Profit			14,100,068						13,965,340
	Operating Expenses
	General and administrative			3,484,712						3,914,271
	Sales and marketing			10,512,966						9,573,242
	Research and development			899,575						1,041,904
	Depreciation and amortization			1,208,334						1,374,481
	Acquisition and Integration related expenses			301,773						0
	Non-cash consulting			55,296						66,796
	Total Operating Expenses			16,462,656						15,970,694
	Net Gain (Loss) from Operations			(2,362,588	)					(2,005,354	)
	Other Income (Expense)
	Interest expense			(2,827,174	)					(2,992,081	)
	Change in warrant derivative liability			18,690						(462,208	)
	Non-cash consideration associated with stock purchase agreement			0						(558,185	)
	Other income (expense)			(425,000	)					11,837
	Total Other Income (Expense)			(3,233,484	)					(4,000,637	)
	Net Gain (Loss) from Operations Before Benefit (Provision) for Income Taxes			(5,596,072	)					(6,005,991	)
	Benefit (Provision) for Income Taxes
	Current			0						(24,932	)
	Deferred			0						0
	Net Income (Loss)	$		(5,596,072	)			$		(6,030,923	)
	EBITDA Gain (Loss)	$		(144,749	)			$		282,355
	Net Income (loss) per share:
	Basic		$	(0.47	)				$	(0.90	)
	Dilutive		$	(0.47	)				$	(0.90	)
	Shares used in the computation:
	Basic			11,897,601						6,689,530
	Dilutive			11,897,601						6,689,530

 

	XTANT MEDICAL HOLDINGS, INC.
	Condensed Consolidated Statements of Operations
	Unaudited
		For the Three Months Ended Mar 31,
		2016						2015
		Amount						Amount
	Orthopedic Product Sales	$		20,808,035				$		9,277,047
	Other			169,300						226,067
	Total Revenue			20,977,335						9,503,114
	Cost of sales			6,877,267						3,472,477
	Gross Profit			14,100,068						6,030,637
	Operating Expenses
	General and administrative			3,484,712						2,425,167
	Sales and marketing			10,512,966						4,713,672
	Research and development			899,575						433,561
	Depreciation and amortization			1,208,334						124,111
	Acquisition and Integration related expenses			301,773						0
	Non-cash consulting			55,296						66,796
	Total Operating Expenses			16,462,656						7,763,307
	Net Gain (Loss) from Operations			(2,362,588	)					(1,732,670	)
	Other Income (Expense)
	Interest expense			(2,827,174	)					(1,435,578	)
	Change in warrant derivative liability			18,690						(462,208	)
	Non-cash consideration associated with stock purchase agreement			0						(558,185	)
	Other income (expense)			(425,000	)					11,837
	Total Other Income (Expense)			(3,233,484	)					(2,444,134	)
	Net Gain (Loss) from Operations Before Benefit (Provision) for Income Taxes			(5,596,072	)					(4,176,804	)
	Benefit (Provision) for Income Taxes
	Current			0						0
	Deferred			0						0
	Net Income (Loss)	$		(5,596,072	)			$		(4,176,804	)
	Net Income (loss) per share:
	Basic		$	(0.47	)				$	(0.62	)
	Dilutive		$	(0.47	)				$	(0.62	)
	Shares used in the computation:
	Basic			11,897,601						6,689,530
	Dilutive			11,897,601						6,689,530

 

	XTANT MEDICAL HOLDINGS, INC.
	CONDENSED CONSOLIDATED BALANCE SHEETS
	As of March 31, 2016 (Unaudited) and As of December 31, 2015 (Audited)
		As of March 31,					As of Dec. 31,
		2016					2015
	ASSETS
	Current Assets:
	Cash and cash equivalents	$		4,668,355			$		6,368,016
	Trade accounts receivable, net of allowance for doubtful accounts of $2,713,074 and $2,579,634, respectively			14,923,488					15,385,218
	Inventories, net			24,203,782					22,684,716
	Prepaid and other current assets			858,400					601,697
	Total current assets			44,654,025					45,039,647
	Non-current inventories			1,439,254					1,607,915
	Property and equipment, net			13,773,495					11,816,629
	Goodwill			41,534,626					41,534,626
	Intangible assets, net			39,219,422					40,237,289
	Other assets			770,297					791,221
	Total Assets	$		141,391,119			$		141,027,327
	LIABILITIES & STOCKHOLDERS' (DEFICIT) EQUITY
	Current Liabilities:
	Accounts payable	$		12,389,147			$		9,386,531
	Accounts payable - related party			2,138,842					1,406,763
	Accrued liabilities			9,993,541					9,595,851
	Warrant derivative liability			1,031,661					1,050,351
	Current portion of capital lease obligations			30,150					35,139
	Total current liabilities			25,583,341					21,474,635
	Long-term Liabilities:
	Capital lease obligation, less current portion			4,804					7,800
	Long term convertible debt, less current portion			66,507,709					66,436,647
	Long-term debt, less current portion			45,934,028					44,231,718
	Total Liabilities			138,029,882					132,150,800
	Commitments and Contingencies
	Stockholders' Equity
	Preferred stock			-					-
	Common stock			11					11
	Additional paid-in capital			81,998,270					81,917,488
	Accumulated deficit			(78,637,044	)				(73,040,973	)
	Total Stockholders’ Equity			3,361,237					8,876,527
	Total Liabilities & Stockholders’ Equity	$		141,391,119			$		141,027,327

 

	XTANT MEDICAL HOLDINGS, INC.
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Unaudited
		For the Three months ended March 31,
		2016					2015
	Operating activities:
	Net loss	$		(5,596,072	)		$		(4,176,804	)
	Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization			1,779,986					235,124
	Non-cash Interest			2,822,980					135,002
	Non-cash consideration associated with stock purchase agreement			0					558,185
	(Gain)/Loss on sale of fixed assets			0					(16,415	)
	Amortization of debt discount			0					424,387
	Non-cash consulting expense/stock option expense			136,079					229,984
	Provision for losses on accounts receivable and inventory			(72,313	)				(209,891	)
	Change in derivative warrant liability			(18,690	)				462,208
	Changes in operating assets and liabilities:
	Accounts receivable			328,290					(993,821	)
	Inventories			(1,144,652	)				147,747
	Prepaid and other assets			(235,779	)				(152,026	)
	Accounts payable			3,734,694					610,718
	Accrued liabilities			(707,214	)				667,326
	Net cash used in operating activities			1,027,309					(2,078,276	)
	Investing activities:
	Purchases of property and equipment and intangible assets			(2,718,985	)				(48,768	)
	Proceeds from sale of fixed assets			0					16,415
	Net cash used in investing activities			(2,718,985	)				(32,353	)
	Financing activities:
	Payments on capital leases			(7,985	)				(36,335	)
	Payment on long term debt			0					(171,687	)
	Net proceeds from the issuance of stock			0					750,000
	Net cash provided by financing activities			(7,985	)				541,978
	Net change in cash and cash equivalents			(1,699,661	)				(1,568,651	)
	Cash and cash equivalents at beginning of period			6,368,016					4,468,208
	Cash and cash equivalents at end of period	$		4,668,355			$		2,899,557

 

	XTANT MEDICAL HOLDINGS, INC.
	Calculation of Consolidated EBITDA for the Three Months Ended March 31, 2016
	and for the Pro Forma Three Months Ended March 31, 2015
	Unaudited
		For the three months ended Mar 31,
			2016			2015
	Loss from Operations		(2,362,588	)		(2,005,354	)
	Acquisition and Integration related expenses		301,773			0
	Non-Cash Compensation		136,079			229,984
	Depreciation & Amortization		1,779,987			2,057,725
	EBITDA Gain (Loss)		(144,749	)		282,355

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Xtant Medical Holdings, Inc.