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CST: 21/11/2019 13:07:46   

Xtant Medical Announces Third Quarter 2019 Financial Results

14 Days ago

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 %
                 

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