*See footnote about the use of pro forma financial information

Second Quarter 2016 Highlights:

• Core recurring revenue (excluding OEM and other revenue) increased 5.6% to $20.9 million compared to core pro forma recurring revenue of $19.8 million in second quarter 2015 
  
• Gross profit increased to $14.7 million, compared to pro forma second quarter 2015 gross profit of $14.0 million 
  
• Gross margins improved to 68.5% compared to 64.9% for the second quarter of 2015 
  
• The Company reported an EBITDA gain of $332,973 for the second quarter 2016
  

BELGRADE, Mont., Aug. 01, 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 three months ended June 30th, 2016. The Company reported quarterly revenues of approximately $21.5 million and an EBITDA gain of approximately $332,973.

Revenue

Second quarter 2016 revenue was approximately $21.5 million compared to pro forma revenue of approximately $21.6 million for the same period during 2015. Core recurring revenue, which excludes other revenue and revenue associated with Original Equipment Manufacturer (OEM) customers, increased 5.6 % to $20.9 million.

Stated in 000's	2Q15*				2Q16
Revenue	$	21,622			$	21,462
OEM & Other Revenue	$	1,857			$	586
Core Revenue	$	19,765			$	20,876
Core Revenue Growth						5.60	%
*Pro Forma Results

Gross Profit

Gross profit for the second quarter of 2016 was $14.7 million or 68.5% of revenue, compared to pro forma gross profit of $14.0 million or 64.9% of revenues for the second quarter of 2015.

Sales and Marketing Expenses

Second quarter 2016 sales and marketing expenses increased to $10.4 million, as compared to pro forma sales and marketing expenses of $9.3 million during the same period in 2015. For the quarter, sales and marketing as a percentage of revenues increased to 48.6%, compared to 43.1% in the second quarter of 2015, on a pro forma basis.The increase was mainly due to the higher OEM revenue in the second quarter of 2015 which has no associated sales commissions. In addition, as part of its growth strategy, the Company increased its sales infrastructure to support the portfolio selling opportunity of the combined business.

General and Administrative Expenses

In the second quarter, general and administrative expenses decreased slightly to $3.9 million compared to pro forma general and administrative expenses of $4.0 million, for the same period last year. As a percentage of revenue, general and administrative expenses were 18.2% during the period as compared to pro forma 18.3% for the same period during 2015.

Net Income / Loss

Second quarter 2016 consolidated net loss remained flat at $4.5 million, compared to the pro forma year-ago period.

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 second quarter of 2016 was a gain of $332,973 compared to an EBITDA loss of $144,749 for the first quarter of this year.

Financial Liquidity

Cash on hand as of June 30, 2016, was $2.2 million, as compared to $6.4 million as of December 31, 2015. This figure excludes cash resources available to be drawn down by the Company through its accounts receivable facility with Silicon Valley Bank and its equity credit facility with Aspire Capital.

Outlook for Full Year 2016

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

2016 Guidance
	Full-Year 2016
Stated in 000's	Low				High
Revenue	$	87,000		-	$	90,000
EBITDA	$	2,300		-	$	3,300
Cash Debt Service	$	5,450		-	$	5,450
Non-GAAP Profitability**	$	(3,150	)	-	$	(2,150	)

**Non-GAAP profitability is defined as EBITDA less total cash based interest expense.

Conference Call to be Held August 2, 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 10:00 AM ET, on August 2, 2016. Please refer to the information below for conference call dial-in information and webcast registration.

Conference date: August 2, 2016, 10:00 AM ET
Conference dial-in: 877-269-7756 
International dial-in: 201-689-7817 
Conference Call Name: Xtant Medical's Second 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 June 30, 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 June 30, 2016, which will be filed with the Securities and Exchange Commission on or about August 8, 2016 and will include the Company's unaudited consolidated financial statements as of and for the quarters ended June 30, 2016 and June 30, 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.
	Condensed Consolidated Statements of Operations
	Unaudited Actual and Proforma Results
		For the Three Months Ended June 30,												For the Six Months Ended June 30,
		2016 Actual Unaudited						2015 Pro Forma						2016 Actual Unaudited						2015 Pro Forma
		Amount						Amount						Amount						Amount
	Orthopedic Product Sales	$		21,311,322				$		21,438,329				$		42,119,357				$		42,885,947
	Other			150,248						183,795						319,548						464,538
	Total Revenue			21,461,570						21,622,124						42,438,905						43,350,485
	Cost of sales			6,758,071						7,588,523						13,635,338						15,351,544
	Gross Profit			14,703,499						14,033,601						28,803,567						27,998,941
	Operating Expenses
	General and administrative			3,899,280						3,964,237						7,383,992						7,878,508
	Sales and marketing			10,420,028						9,321,087						20,932,994						18,894,329
	Research and development			783,897						784,455						1,683,472						1,826,359
	Depreciation and amortization			1,216,696						1,264,357						2,425,030						2,638,838
	Acquisition and Integration related expenses			450,756						0						752,529						0
	Non-cash consulting			55,296						74,073						110,592						140,869
	Total Operating Expenses			16,825,952						15,408,209						33,288,608						31,378,903
	Net Gain (Loss) from Operations			(2,122,453	)					(1,374,608	)					(4,485,041	)					(3,379,962	)
	Other Income (Expense)
	Interest expense			(2,984,186	)					(2,999,971	)					(5,811,361	)					(5,992,052	)
	Change in warrant derivative liability			477,639						(14,081	)					496,329						(476,289	)
	Non-cash consideration associated with stock purchase agreement			0						0						0						(558,185	)
	Other income (expense)			166,426						(115,858	)					(258,574	)					(104,021	)
	Total Other Income (Expense)			(2,340,121	)					(3,129,910	)					(5,573,606	)					(7,130,547	)
	Net Gain (Loss) from Operations Before Benefit (Provision) for Income Taxes			(4,462,575	)					(4,504,518	)					(10,058,647	)					(10,510,509	)
	Benefit (Provision) for Income Taxes
	Current			0						29,312						0						54,244
	Deferred			0						0						0						0
	Net Income (Loss)	$		(4,462,575	)			$		(4,533,830	)			$		(10,058,647	)			$		(10,564,753	)
	Net Income (loss) per share:
	Basic	$		(0.37	)			$		(0.64	)			$		(0.84	)			$		(1.53	)
	Dilutive	$		(0.37	)			$		(0.64	)			$		(0.84	)			$		(1.53	)
	Shares used in the computation:
	Basic			12,101,356						7,137,391						11,999,478						6,914,698
	Dilutive			12,101,356						7,137,391						11,999,478						6,914,698

 

	XTANT MEDICAL HOLDINGS, INC.
	Condensed Consolidated Statements of Operations
	Unaudited Actual Results
		For the Three Months Ended June 30,												For the Six Months Ended June 30,
		2016 Actual Unaudited						2015 Actual Unaudited						2016 Actual Unaudited						2015 Actual Unaudited
		Amount						Amount						Amount						Amount
	Orthopedic Product Sales	$		21,311,322				$		9,732,909				$		42,119,357				$		19,009,956
	Other			150,248						159,706						319,548						385,773
	Total Revenue			21,461,570						9,892,615						42,438,905						19,395,729
	Cost of sales			6,758,071						3,375,289						13,635,338						6,847,766
	Gross Profit			14,703,499						6,517,327						28,803,567						12,547,963
	Operating Expenses
	General and administrative			3,899,280						2,399,133						7,383,992						4,824,300
	Sales and marketing			10,420,028						5,035,577						20,932,994						9,749,249
	Research and development			783,897						291,171						1,683,472						724,732
	Depreciation and amortization			1,216,696						100,663						2,425,030						224,774
	Acquisition and Integration related expenses			450,756						0						752,529						0
	Non-cash consulting			55,296						74,074						110,592						140,869
	Total Operating Expenses			16,825,952						7,900,618						33,288,608						15,663,924
	Net Gain (Loss) from Operations			(2,122,453	)					(1,383,291	)					(4,485,041	)					(3,115,960	)
	Other Income (Expense)
	Interest expense			(2,984,186	)					(1,383,642	)					(5,811,361	)					(2,819,220	)
	Change in warrant derivative liability			477,639						(14,081	)					496,329						(476,289	)
	Non-cash consideration associated with stock purchase agreement			0						0						0						(558,185	)
	Other income (expense)			166,426						(114,963	)					(258,574	)					(103,126	)
	Total Other Income (Expense)			(2,340,121	)					(1,512,686	)					(5,573,606	)					(3,956,820	)
	Net Gain (Loss) from Operations Before Benefit (Provision) for Income Taxes			(4,462,575	)					(2,895,977	)					(10,058,647	)					(7,072,781	)
	Benefit (Provision) for Income Taxes
	Current			0						0						0						0
	Deferred			0						0						0						0
	Net Income (Loss)	$		(4,462,575	)			$		(2,895,977	)			$		(10,058,647	)			$		(7,072,781	)
	Net Income (loss) per share:
	Basic	$		(0.37	)			$		(0.41	)			$		(0.84	)			$		(1.02	)
	Dilutive	$		(0.37	)			$		(0.41	)			$		(0.84	)			$		(1.02	)
	Shares used in the computation:
	Basic			12,101,356						7,137,391						11,999,478						6,914,698
	Dilutive			12,101,356						7,137,391						11,999,478						6,914,698

 

	XTANT MEDICAL HOLDINGS, INC.
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Unaudited
		For the Six months ended June 30,
		2016					2015
	Operating activities:
	Net loss	$		(10,058,647	)		$		(7,072,781	)
	Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization			3,649,361					446,799
	Non-cash Interest			2,371,919					363,375
	Non-cash consideration associated with stock purchase agreement			0					558,164
	(Gain)/Loss on sale of fixed assets			0					(17,194	)
	Amortization of debt discount			169,971					848,773
	Non-cash consulting expense/stock option expense			271,374					444,395
	Provision for losses on accounts receivable and inventory			432,781					(19,394	)
	Change in derivative warrant liability			(496,329	)				476,289
	Changes in operating assets and liabilities:
	Accounts receivable			207,934					(1,076,784	)
	Inventories			(2,673,670	)				209,760
	Prepaid and other assets			(708,693	)				(352,704	)
	Accounts payable			3,652,111					742,767
	Accrued liabilities			(4,793,571	)				358,298
	Net cash used in operating activities			(7,975,458	)				(4,090,237	)
	Investing activities:
	Purchases of property and equipment and intangible assets			(5,336,784	)				(70,441	)
	Proceeds from sale of fixed assets			0					16,415
	Net cash used in investing activities			(5,336,784	)				(54,026	)
	Financing activities:
	Payments on capital leases			(49,428	)				(64,442	)
	Payment on Royalty Obligation			0					(325,230	)
	Payment on long term debt			0					(25,727	)
	Proceeds from the issuance of capital leases			967,221					0
	Proceeds from the issuance of Convertible Debt			2,238,166					0
	Proceeds from the Revolving Line of Credit			5,480,671					0
	Net proceeds from the issuance of stock			525,000					2,117,560
	Net cash provided by financing activities			9,161,630					1,702,161
	Net change in cash and cash equivalents			(4,150,611	)				(2,442,102	)
	Cash and cash equivalents at beginning of period			6,368,016					4,468,208
	Cash and cash equivalents at end of period	$		2,217,405			$		2,026,106

 

	XTANT MEDICAL HOLDINGS, INC.
	CONDENSED CONSOLIDATED BALANCE SHEETS
	As of June 30, 2016 (Unaudited) and As of December 31, 2015 (Audited)
		As of June 30,					As of Dec. 31,
		2016					2015
	ASSETS
	Current Assets:
	Cash and cash equivalents	$		2,217,405			$		6,368,016
	Trade accounts receivable, net of allowance for doubtful accounts of $3,032,246 and $2,579,634, respectively			14,724,671					15,385,218
	Inventories, net			25,510,143					22,684,716
	Prepaid and other current assets			1,279,019					601,697
	Total current assets			43,731,238					45,039,647
	Non-current inventories			1,475,988					1,607,915
	Property and equipment, net			15,618,117					11,816,629
	Goodwill			41,534,626					41,534,626
	Intangible assets, net			38,123,223					40,237,289
	Other assets			822,594					791,221
	Total Assets	$		141,305,786			$		141,027,327
	LIABILITIES & STOCKHOLDERS' (DEFICIT) EQUITY
	Current Liabilities:
	Accounts payable	$		12,787,119			$		9,386,531
	Accounts payable - related party			1,658,286					1,406,763
	Accrued liabilities			5,480,671					9,595,851
	Revolving Line of Credit			4,912,872
	Warrant derivative liability			554,022					1,050,351
	Current portion of capital lease obligations			203,595					35,139
	Total current liabilities			25,596,565					21,474,635
	Long-term Liabilities:
	Capital lease obligation, less current portion			757,137					7,800
	Long term convertible debt, less current portion			68,792,700					66,436,647
	Long-term debt, less current portion			46,655,722					44,231,718
	Total Liabilities			141,802,124					132,150,800
	Commitments and Contingencies
	Stockholders' Equity
	Preferred stock			-					-
	Common stock			11					11
	Additional paid-in capital			82,603,271					81,917,488
	Accumulated deficit			(83,099,620	)				(73,040,973	)
	Total Stockholders’ Equity (Deficit)			(496,338	)				8,876,527
	Total Liabilities & Stockholders’ Equity	$		141,305,786			$		141,027,327

 

	XTANT MEDICAL HOLDINGS, INC.
	Calculation of Consolidated EBITDA for the Three and Six Months Ended June 30, 2016
	and for the Pro Forma Three and Six Months Ended June 30, 2015
	Unaudited
		For the three months ended June 30,								For the six months ended June 30,
			2016				2015				2016				2015
	Loss from Operations		(2,122,453	)			(1,374,608	)			(4,485,041	)			(3,379,962	)
	Acquisition and Integration related expenses		450,756				0				752,529				0
	Non-Cash Compensation		135,296				214,368				271,374				444,353
	Depreciation & Amortization		1,869,375				2,109,123				3,649,361				4,166,847
	EBITDA Gain		332,973				948,883				188,223				1,231,238

Contact:
CG CAPITAL
877.889.1972
investorrelations@cg.capital
cg.capital

Xtant Medical Holdings, Inc.