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Xtant Medical Announces Third Quarter 2019 Financial Results

BELGRADE, Mont., Nov. 07, 2019 (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 third quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights and Recent Announcements:

  • Revenue for the third quarter of 2019 was $15.7 million, compared to $17.3 million for the same prior year period

  • Operating expenses in the third quarter of 2019 were $11.2 million, compared to $13.0 million for the same prior year period

  • Net loss incurred in the third quarter of 2019 was $1.9 million, compared to a net loss of $3.2 million for the same prior year period

  • Non-GAAP Adjusted EBITDA for the third quarter of 2019 was $0.6 million, compared to $1.8 million for the same prior year period

  • Board of Directors appoints Sean Browne President and Chief Executive Officer effective October 7, 2019 and a member of the Board effective October 30, 2019

Sean Browne, President and CEO of Xtant Medical, said, “After my first month with Xtant, I am excited about the Company, our unique products and dedicated employees. I am pleased with our efforts and results over the past three quarters enhancing the operational effectiveness of our business. We remain committed to continuing to develop and release new products, expand our marketing programs, and pursue operational improvements intended to assist us in our overall commercial performance.”

Third Quarter 2019 Financial Results

Third quarter 2019 revenue was $15.7 million, compared to $17.3 million for the same period in 2018. This decrease was due primarily to reduced demand for hardware products, which was attributable in part to the termination of an advisory agreement with an entity that provided services to certain customers, and the continued transition of independent sales agents.

Gross margin for the third quarter of 2019 was 66.6%, which was comparable to the same period in 2018.

Operating expenses for the third quarter of 2019 were $11.2 million, compared to $13.0 million for the third quarter of 2018, a decrease of 13.7%. The decrease was primarily attributable to lower sales commissions and travel expenses, restructuring expenses incurred during the year-ago period, and a decrease in amortization expense related to the impairment of intangible assets that occurred in the fourth quarter of 2018, which were partially offset by higher general and administrative expenses.

Third quarter 2019 net loss was $1.9 million, or $0.14 per share, compared to third quarter 2018 net loss of $3.2 million, or $0.24 per share.

Non-GAAP Adjusted EBITDA for the third quarter of 2019 was $0.6 million compared to $1.8 million for the same period of 2018. The Company defines non-GAAP Adjusted EBITDA as net income/loss from operations before depreciation, amortization and interest expense, and as further adjusted to add back in or exclude, as applicable, non-cash special charges, provision for losses on accounts receivable and inventory, non-cash compensation, changes in warrant derivative liability, field action expenses, separation related expenses, litigation reserves, and restructuring expenses. A calculation and reconciliation of non-GAAP 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 third quarter 2019 financial results on Thursday, November 7, 2019 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.

Important Cautions 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 ‘‘expects,’’ ‘‘anticipates,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘believes,’’ ‘‘estimates,’’ “continue,” “future,” ‘‘will,’’ “potential” similar expressions or the negative thereof, and the use of future dates. 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, including the success of the Company’s initiatives to stabilize and increase revenues; the ability to remain competitive; the ability to innovate and develop new products; the effect of recent management changes and the ability to engage and retain qualified personnel; 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; timing and results of clinical studies; the ability to obtain and protect Company intellectual property and proprietary rights and operate without infringing the rights of others; the ability to retain and recruit independent sales agents and the impact of the termination of a consulting agreement with an entity that had close relationships with several of customers; the ability to service Company debt and comply with debt covenants; the ability to raise additional financing and other factors. Additional risk factors are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (SEC) on April 1, 2019 and subsequent SEC filings by the Company, including without limitation its most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 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 Partners
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 September
30, 2019

As of December
31, 2018

ASSETS

Current Assets:

Cash and cash equivalents

$

5,749

$

6,797

Trade accounts receivable, net of allowance for doubtful accounts of $1,375 and $2,140, respectively

9,121

9,990

Inventories

16,025

17,301

Prepaid and other current assets

714

589

Total current assets

31,609

34,677

Property and equipment, net

5,068

7,174

Right-of -use asset, net

2,198

-

Goodwill

3,205

3,205

Intangible assets, net

529

573

Other assets

428

793

Total Assets

$

43,037

$

46,422

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:

Accounts payable

$

2,249

$

6,465

Accrued liabilities

6,196

5,150

Warrant derivative liability

17

10

Current portion of lease liability

387

-

Current portion of financing lease obligations

229

426

Total current liabilities

9,078

12,051

Long-term Liabilities:

Lease liability, less current portion

1,827

-

Financing lease obligation, less current portion

6

204

Long-term debt, less issuance costs

74,985

77,939

Total Liabilities

85,896

90,194

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; 50,000,000 shares authorized; 13,161,762 shares issued and outstanding as of September 30, 2019 and 13,172,179 shares issued and outstanding as of December 31, 2018

-

-

Additional paid-in capital

178,802

171,273

Accumulated deficit

(221,661

)

(215,045

)

Total Stockholders’ Equity (Deficit)

(42,859

)

(43,772

)

Total Liabilities & Stockholders’ Equity (Deficit)

$

43,037

$

46,422



XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except number of shares and per share amounts)

Three Months Ended September30,

Nine Months Ended September 30,

2019

2018

2019

2018

Revenue

Orthopedic product sales

$

15,691

$

17,139

$

47,574

$

53,622

Other revenue

30

127

144

319

Total revenue

15,721

17,266

47,718

53,941

Cost of sales

5,249

5,743

16,527

17,711

Gross profit

10,472

11,523

31,191

36,230

Gross profit %

66.6

%

66.7

%

65.4

%

67.2

%

Operating expenses

General and administrative

4,155

3,121

12,513

10,006

Sales and marketing

6,682

7,847

19,496

24,742

Research and development

203

347

675

1,179

Depreciation and amortization

137

1,029

442

3,074

Restructuring expenses

-

614

-

2,582

Total operating expenses

11,177

12,958

33,126

41,583

Loss from operations

(705

)

(1,435

)

(1,935

)

(5,353

)

Other (expense) income

Interest expense

(1,185

)

(1,790

)

(4,504

)

(8,156

)

Change in warrant derivative liability

4

42

(8

)

83

Other (expense) income

30

30

(101

)

18

Total Other (Expense) Income

(1,151

)

(1,718

)

(4,613

)

(8,055

)

Net Loss from Operations Before Provision for Income Taxes

(1,856

)

(3,153

)

(6,548

)

(13,408

)

Provision for income taxes

Current and deferred

(23

)

-

(68

)

-

Net Loss from Operations

$

(1,879

)

$

(3,153

)

$

(6,616

)

$

(13,408

)

Net loss per share:

Basic

$

(0.14

)

$

(0.24

)

$

(0.50

)

$

(1.19

)

Dilutive

$

(0.14

)

$

(0.24

)

$

(0.50

)

$

(1.19

)

Shares used in the computation:

Basic

13,161,762

13,158,326

13,164,694

11,262,642

Dilutive

13,161,762

13,158,326

13,164,694

11,262,642


XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Nine Months Ended September 30,

2019

2018

Operating activities:

Net loss

$

(6,616

)

$

(13,408

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

2,338

4,943

Gain on disposal of fixed assets

(27

)

(15

)

Non-cash interest

4,467

7,853

Non-cash rent expense

16

-

Non-cash stock option expense / change in derivative warrant liability

263

502

Provision for losses on accounts receivable and inventory

970

298

Changes in operating assets and liabilities:

Accounts receivable

417

2,842

Inventories

760

(508

)

Prepaid and other assets

240

1,138

Accounts payable

(4,216

)

(3,557

)

Accrued liabilities

1,046

(867

)

Net cash provided by operating activities

(342

)

(779

)

Investing activities:

Purchases of property and equipment and intangible assets

(403

)

(308

)

Proceeds from sale of fixed assets

241

251

Net cash used in investing activities

(162

)

(57

)

Financing activities:

Payments on financing leases

(395

)

(260

)

Costs associated with either loan or equity transactions

(149

)

-

Costs associated with private placement and convertible debt exchange

-

(3,507

)

Proceeds from equity private placement

-

6,810

Proceeds from issuance of stock

-

1

Net cash (used in) provided by financing activities

(544

)

3,044

Net change in cash and cash equivalents

(1,048

)

2,208

Cash and cash equivalents at beginning of period

6,797

2,856

Cash and cash equivalents at end of period

$

5,749

$

5,064


XTANT MEDICAL HOLDINGS, INC.

CALCULATION OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA

(Unaudited, in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Net Loss

$

(1,879

)

$

(3,153

)

$

(6,616

)

$

(13,408

)

Other expense

(30

)

(30

)

101

(18

)

Depreciation and amortization

779

1,655

2,338

4,943

Interest expense

1,185

1,790

4,504

8,156

Tax expense

23

-

68

-

Non-GAAP EBITDA

78

262

395

(327

)

Non-GAAP EBITDA/Total revenue

0.5

%

1.5

%

0.8

%

-0.6

%

NON-GAAP ADJUSTED EBITDA CALCULATION

Provision for losses on accounts receivable and inventory

220

312

970

296

Non-cash compensation

95

41

256

585

Change in warrant derivative liability

(4

)

(42

)

8

(83

)

Separation-related expenses

-

566

-

2,535

Field action expenses

182

-

307

-

Litigation reserve

-

-

800

-

Restructuring expenses

-

614

-

2,582

Non-GAAP Adjusted EBITDA

$

571

$

1,753

$

2,736

$

5,588

Non-GAAP Adjusted EBITDA/Total revenue

3.6

%

10.2

%

5.7

%

10.4

%