Xtant Medical Reports Third Quarter 2024 Financial Results

XTNT 11.12.2024

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Third Quarter Revenue Growth of 12%

Reaffirms Full Year 2024 Revenue Guidance of$116 Millionto$120 Million

Representing Growth of 27% to 31%

BELGRADE, MT/ ACCESSWIRE /November 12, 2024/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 third quarter endedSeptember 30, 2024.

Third Quarter 2024 Financial Highlights

  • Revenue of$27.9 million, up 12%, compared to the prior year quarter; year to date revenue of$85.8 million, up 36% compared to prior year period

  • Gross margin of 58.4% compared to 61.3% for the prior year quarter

  • Net loss of$5.0 millioncompared to net income of$9.2 millionin the prior year quarter which included a$11.0 millionbargain purchase gain related to the acquisition ofSurgalign Holdings

  • Adjusted EBITDA of$(196,000)compared to$440,000in the prior year quarter

Recent Business Highlights

  • Launched OsteoVive+, a moldable, viable bone matrix for use in a variety of grafting procedures

  • Launched Cortera Posterior Fixation System, a comprehensive solution designed to streamline thoracolumbar fixation surgeries

  • Signed a license agreement for Q-Codes and corresponding SimpliMax Dual Layer Amniotic Membrane, which provides for a minimum of$5.25 millionin licensing and royalty fees

  • Completed$5.0 millionprivate placement onAugust 9, 2024

Sean Browne, President and CEO ofXtant Medical, stated, "During the third quarter, we expanded our market opportunities with the launch of two new products, OsteoVive+ (stem cells) and Cortera Posterior Fixation System. Importantly, OsetoVive+ is produced internally to our high standards, giving us greater control over the supply chain and enabling a higher margin contribution on incremental sales, which we expect to accelerate in the fourth quarter."

Browne continued, "2024 is shaping up largely as we planned with revenue growth of 36% year-to-date. We are therefore reaffirming our full year revenue guidance of$116 millionto$120 million. The growth we expect in the fourth quarter will be driven by the strength of our products, continued strong operational execution and importantly, it will be entirely organic. The market opportunities in biologics are expansive, and we are striving to build a resilient and scalable business, which we believe will drive long-term growth and increase profitability for our stockholders."

Third Quarter 2024 Financial Results

Total revenue for the three months endedSeptember 30, 2024was$27.9 million, an increase of 12%, compared to$25.0 millionin the prior year quarter. The increase is primarily due to the contribution of additional sales resulting from the acquisition of theSurgalign Holdings'hardware and biologics business, which was partially offset by reduced surgical procedures using our products.

Gross margin for the third quarter of 2024 was 58.4%, compared to 61.3% for the prior year quarter. The decrease is primarily due to reduced production throughput, partially offset by additional scale.

Operating expenses for the third quarter of 2024 totaled$20.1 million, an increase of 7.3% compared to$18.7 millionfor the third quarter of 2023. The increase was primarily due to additional commission expense resulting from revenue growth, additional compensation expense related to additional headcount and additional stock-based compensation.

Net loss for the third quarter of 2024 was$5.0 million, or$(0.04)per share, compared to net income of$9.2 million, or$0.07per share in the prior year quarter. Net income for the third quarter of 2023 includes a bargain purchase gain of$11.0 millionrelated to the acquisition ofSurgalign Holdings'hardware and biologics business inAugust 2023.

Non-GAAP Adjusted EBITDA for the third quarter of 2024 was a loss of$196,000, compared to non-GAAP Adjusted EBITDA of$440,000for 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 tax/benefit, and as further adjusted to add back in or exclude, as applicable, separation related expenses, legal settlements, non-cash compensation, acquisition-related expenses, acquisition-related fair value adjustments, gain on bargain purchase and foreign currency exchange gains/losses. A calculation and reconciliation of Adjusted EBITDA to net loss can be found in the attached financial tables.

As ofSeptember 30, 2024, the Company had$6.6 millionof cash and cash equivalents compared to$5.7 millionas ofDecember 31, 2023.

2024 Financial Guidance

Xtant Medicalreaffirmed its full year 2024 revenue guidance of$116 millionto$120 million. Revenue guidance for 2024 represents annual growth of 27% to 31%.

Conference Call

Xtant Medicalwill host a webcast and conference call to discuss third quarter 2024 financial results at4:30 pm ETonTuesday, November 12, 2024.

To access the webcast, visithttps://www.webcaster4.com/Webcast/Page/3039/51623.

To access the conference call, dial 888-999-3182 within theU.S.or 848-280-6330 outside theU.S.Passcode:Xtant Medical Holdings.

A replay of the call will be available on the Investor section of the Company's website atwww.xtantmedical.com.

AboutXtant Medical Holdings, Inc.

Xtant Medical'smission of honoring the gift of donation so that our patients can live as full and complete a life as possible, is the driving force behind our company.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 TM and ® denote trademarks and registered trademarks ofXtant Medical Holdings, Inc.or its affiliates, registered as indicated inthe 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 withU.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," "guidance," 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 2024, expectations for the acceleration of incremental sales in the fourth quarter, the Company's ability to build a resilient and scalable business, the Company's anticipated long-term growth and increased profitability for stockholders. 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; the Company's ability to become operationally self-sustaining and less reliant on third-party manufacturers and suppliers; risks associated with its acquisitions and the integration of those businesses; anticipated shortages of stem cells which will adversely affect future revenues; the ability to implement successfully its future growth initiatives and risks associated therewith; possible future impairment charges to long-lived assets and goodwill and write-downs of excess inventory; the ability to remain competitive; the ability to innovate, develop and introduce new products and the success of those 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 labor and hospital staffing shortages on the Company's business, operating results and financial condition, especially when they affect key markets; 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 license certain of the Company's intellectual property on commercially reasonable terms and to maintain any such licenses; the ability to obtain and protect Company intellectual property and proprietary rights and operate without infringing the rights of others; risks associated with the Company's clinical trials; international risks; the ability to service Company debt, comply with its debt covenants and access additional indebtedness; the ability to maintain sufficient liquidity to fund its operations and obtain 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 endedDecember 31, 2023filed with theSecurities and Exchange Commission(SEC) onApril 1, 2024and subsequentSECfilings by the Company, including without limitation its most recent Quarterly Report on Form 10-Q for the quarterly period endedSeptember 30, 2024anticipated to be filed with theSEC. Investors are encouraged to read the Company's filings with theSEC, available atwww.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:

Brett MaasManaging Partner, Hayden IRbrett@haydenir.com(646) 536-7331

XTANT MEDICAL HOLDINGS, INC.Condensed Consolidated Balance Sheets(In thousands, except number of shares and par value)

September 30, 2024

December 31, 2023

ASSETS

Current Assets:

Cash and cash equivalents

$

6,596

$

5,715

Restricted cash

490

208

Trade accounts receivable, net of allowance forcredit losses and doubtful accounts of$1,038and$920,respectively

20,545

20,731

Inventories

41,886

36,885

Prepaid and other current assets

1,893

1,330

Total current assets

71,410

64,869

Property and equipment, net

10,284

8,692

Right-of -use asset, net

995

1,523

Goodwill

7,302

7,302

Intangible assets, net

8,788

10,085

Other assets

103

141

Total Assets

$

98,882

$

92,612

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$

8,298

$

7,054

Accrued liabilities

8,871

10,419

Current portion of lease liability

795

830

Current portion of finance lease obligations

68

65

Line of credit

12,887

4,622

Current portion of long-term debt

2,750

-

Total current liabilities

33,669

22,990

Long-term Liabilities:

Lease liability, less current portion

247

759

Finance lease obligations, less current portion

65

116

Long-term debt, plus premium and less issuance costs

19,138

17,167

Other liabilities

38

231

Total Liabilities

53,157

41,263

Commitments and Contingencies

-

-

Stockholders' Equity

Preferred stock,$0.000001par value; 10,000,000 shares authorized; no shares issued and outstanding

-

-

Common stock,$0.000001par value; 300,000,000 shares authorized; 138,680,874 shares issued and outstanding as ofSeptember 30, 2024and 130,180,031 shares issued and outstanding as ofDecember 31, 2023

-

-

Additional paid-in capital

301,966

294,330

Accumulated other comprehensive (loss) income

54

29

Accumulated deficit

(256,295

)

(243,010

)

Total Stockholders' Equity

45,725

51,349

Total Liabilities & Stockholders' Equity

$

98,882

$

92,612

XTANT MEDICAL HOLDINGS, INC.Condensed Consolidated Statements of Operations(Unaudited, in thousands, except number of shares and per share amounts)

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2024

2023

2024

2023

Revenue

$

27,937

$

25,019

$

85,754

$

63,195

Cost of sales

11,630

9,685

33,562

24,865

Gross Profit

16,307

15,334

52,192

38,330

Gross Profit %

58.4

%

61.3

%

60.9

%

60.7

%

Operating Expenses

General and administrative

7,493

7,144

22,991

16,983

Sales and marketing

11,890

11,085

37,530

26,855

Research and development

701

490

1,863

844

Total Operating Expenses

20,084

18,719

62,384

44,682

Loss from Operations

(3,777

)

(3,385

)

(10,192

)

(6,352

)

Other (Expense) Income

Interest expense

(1,199

)

(760

)

(3,026

)

(2,120

)

Interest income

-

48

-

133

Foreign currency exchange gain

27

-

106

-

Other expense

(13

)

-

(6

)

-

Bargain purchase gain

-

11,028

-

11,028

Total Other (Expense) Income

(1,185

)

10,316

(2,926

)

9,041

Net (Loss) Income from Operations Before Provision for Income Taxes

(4,962

)

6,931

(13,118

)

2,689

Provision for Income Taxes

Current and Deferred

(62

)

2,300

(166

)

2,274

Net (Loss) Income

$

(5,024

)

$

9,231

$

(13,284

)

$

4,963

Net (Loss) Income Per Share:

Basic

$

(0.04

)

$

0.07

$

(0.10

)

$

0.04

Dilutive

$

(0.04

)

$

0.07

$

(0.10

)

$

0.04

Shares used in the computation:

Basic

135,100,233

128,140,238

131,881,302

115,380,792

Dilutive

135,100,233

135,663,274

131,881,302

123,832,401

XTANT MEDICAL HOLDINGS, INC.Condensed Consolidated Statements of Cash Flows(Unaudited, in thousands)

Nine Months EndedSeptember 30,

2024

2023

Operating activities:

Net (loss) income

$

(13,284

)

$

4,963

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Depreciation and amortization

3,076

2,157

Gain on disposal of fixed assets

(182

)

(104

)

Non-cash interest

369

266

Non-cash rent

(18

)

5

Stock-based compensation

3,277

1,801

Provision for expected credit losses

330

316

Provision for excess and obsolete inventory

695

398

Release of valuation allowance

-

(2,394

)

Gain on bargain purchase

-

(11,028

)

Other

17

-

Changes in operating assets and liabilities, net of the effects of the acquisition:

Accounts receivable

(128

)

(7,047

)

Inventories

(5,657

)

(1,669

)

Prepaid and other assets

(503

)

69

Accounts payable

1,290

1,298

Accrued liabilities

(1,843

)

2,369

Net cash used in by operating activities

(12,561

)

(8,600

)

Investing activities:

Purchases of property and equipment

(3,441

)

(1,093

)

Proceeds from sale of fixed assets

278

70

Acquisition ofSurgalign SPV, Inc.

-

(17,000

)

Acquisition ofSurgalign Holding, Inc.'shardware and biologics business, net of cash acquired

-

(4,448

)

Net cash used in investing activities

(3,163

)

(22,471

)

Financing activities:

Payments on financing leases

(49

)

(46

)

Borrowings on line of credit

86,315

55,345

Repayments of line of credit

(78,050

)

(54,724

)

Proceeds from private placement, net of cash issuance costs

4,456

14,011

Proceeds from issuance of long-term debt, net of issuance costs

5,000

4,899

Payments on long term debt

(648

)

-

Proceeds from exercise of stock based compensation

13

-

Payment of taxes from withholding of common stock on vesting of restricted stock units

(110

)

(119

)

Net cash provided by financing activities

16,927

19,366

Effect of exchange rate changes on cash and cash equivalents and restricted cash

(40

)

(53

)

Net change in cash and cash equivalents and restricted cash

1,163

(11,758

)

Cash and cash equivalents and restricted cash at beginning of period

5,923

20,507

Cash and cash equivalents and restricted cash at end of period

$

7,086

$

8,749

Reconciliation of cash and restricted cash reported in the condensed consolidated balance sheets

Cash and cash equivalents

$

6,596

$

8,664

Restricted cash

490

85

Total cash and restricted cash reported in the condensed consolidated balance sheets

$

7,086

$

8,749

XTANT MEDICAL HOLDINGS, INC.Calculation of Non-GAAP Consolidated EBITDA and Adjusted EBITDA(Unaudited, in thousands)

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2024

2023

2024

2023

Net (Loss) Income

$

(5,024

)

$

9,231

$

(13,284

)

$

4,963

Depreciation and amortization

1,073

883

3,076

2,157

Interest expense

1,199

712

3,026

1,987

Tax expense (benefit)

62

(2,300

)

166

(2,274

)

Non-GAAP EBITDA

(2,690

)

8,526

(7,016

)

6,833

Non-GAAP EBITDA/Total revenue

-9.6

%

34.1

%

-8.2

%

10.8

%

NON-GAAP ADJUSTED EBITDA CALCULATION

Separation related expenses

464

-

490

(15

)

Legal settlements

-

140

-

140

Non-cash compensation

1,139

745

3,277

1,801

Acquisition-related expenses

-

1,023

338

1,326

Acquisition-related fair value adjustments

918

1,026

3,448

1,188

Gain on bargain purchase

-

(11,028

)

-

(11,028

)

Unrealized foreign currency translation (gain) loss

(27

)

8

(106

)

8

Non-GAAP Adjusted EBITDA

$

(196

)

$

440

$

431

$

253

SOURCE:Xtant Medical Holdings, Inc.

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