Xtant™ Medical Reports First Quarter 2016 Results


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'sLow 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  
 

            

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