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 | |||||