Full Press Release Details
Fourth Quarter and Year End 2017 Financial Results
Mont., April 2, 2018 (GLOBE NEWSWIRE) -- Xtant Medical Holdings, Inc. (NYSE American:XTNT), a leader in the development
of regenerative medicine products and medical devices, today reported its financial results for the period ended December 31st,
represented a significant year for the Company as we completed transformational restructuring activities that were necessary for
the future growth of Xtant Medical," said Carl O'Connell, Chief Executive Officer, "Our team has worked with focused
effort towards repositioning Xtant for operational excellence. We made improvements to our sales structure and channel for long-term
success, and continue to stay keenly focused on differentiating our sales approach by adding talent in key markets. I am pleased
with the work we have achieved, and look forward to leading this Company through this next era of profitable performance."
fourth quarter 2017 revenue was approximately $19.3 million, compared to consolidated revenue of approximately $24.5 million for
the same period during 2016.
consolidated revenue for 2017 was approximately $82.6 million, compared to consolidated revenue of approximately $90.0 million
in 2016. While the Company achieved above-market growth in biologics revenue, the decline in total revenue was due to decreased
hardware sales. This was due in part to an aging hardware product line and the termination of some stocking reseller agreements
and independent distributor agreements with poor contribution margins, thus allowing the company to focus on more profitable sales
channels moving forward.
gross profit for the fourth quarter of 2017 was approximately $10.3 million or 53.2% of revenues, compared to gross profit of
approximately $17.5 million or 71.6% of revenues for the fourth quarter of 2016. The shift in gross margin as a percentage of
revenue is primarily due to a total charge of $2.5 million, or 12.7% of revenues, related to additional reserves for estimated
excess inventory and inventory on consignment that may be missing and not returned, as well as impairment charges for estimated
missing and damaged consigned surgical instruments. The remaining shift in gross margin compared to the prior year is due to a
change in sales mix to biologics which has a lower margin than fixation products.
year, consolidated gross profit was approximately $50.1 million, compared with 2016 consolidated gross profit of approximately
$62.3 million. Gross margin for the year was 60.6%, compared to 2016 gross margin of 69.2%. The impact of increased inventory
reserves and surgical instrument impairment, as noted above, was a decline in gross profit of $4.0 million for the full year of
2017. In addition, a reserve of $0.9 million was recorded in 2017 for additional inventory reserves and surgical instrument impairment
related to litigation with a distributor. The impact of these additional reserves reduced gross margin by 6.0% for the year. The
remaining reduction in gross profit is primarily due to a shift in the sales mix towards biologics which have a lower gross margin
than fixation products.
and Administrative Expenses
In the fourth quarter, consolidated
general and administrative expenses decreased to approximately $3.3 million as compared to approximately $4.5 million reported
for the same period of 2016. As a percentage of revenues, general and administrative expenses were 17.2% during the fourth quarter
of 2017 as compared to 18.6% for the same period during 2016. The expense reduction in the fourth quarter is a result of cost
containment, primarily attributable to reduction in personnel cost and rental facilities, as part of the Company-wide initiatives
in 2017 to improve profitability.
2017 consolidated general and administrative expenses decreased to approximately $15.2 million as compared with approximately
$15.8 million reported during the prior year. As a percentage of revenues, general and administrative expenses decreased to 18.5%
in 2017 as compared to 19.1% for 2016. This reduction in the general and administrative expense structure is due to personnel
costs and occupancy expenses offset by a net receivable reserve of $414,174 in 2017 related to litigation with a distributor.
and Marketing Expenses
quarter 2017 consolidated sales and marketing expenses decreased to approximately $9.5 million, as compared to approximately $11.9
million during the same period in 2016. For the fourth quarter, sales and marketing as a percentage of revenues was 49.0% compared
to 48.8% of revenue in 2016.
year, consolidated sales and marketing expenses declined 8.0% to approximately $40.5 million for 2017, as compared to 2016 of
approximately $44.1 million. As a percentage of revenues, sales and marketing expenses were 49.0% compared to 48.9% reported for
marketing expense fluctuates with the level of revenue as commissions expense is the main component of this expense category.
fourth quarter, the Company evaluated its acquired intangible assets and recorded an impairment of $17.6 million.
costs were incurred by the Company in 2017 related to the recapitalization of the Company and performance improvement measures.
Restructuring costs were $1.9 million in the fourth quarter and $4.7 million for the year ended December 31, 2017.
the fourth quarter, the Company incurred $0.5 million in separation related expenses related to reduction in personnel, primarily
related to the wind down of its Miamisburg, Ohio facility. For the year ended December 31, 2017, the Company incurred $1.9 million
in separation costs related to this winddown effort and other reductions in personnel related to its initiatives to reduce costs
and improve profitability.
13, 2018, the Company implemented a 1:12 reverse stock split. All per share information noted below and in the attached financial
tables has been adjusted for this reverse stock split.
quarter 2017 consolidated net loss was approximately $28.4 million, compared to fourth quarter consolidated net loss of approximately
$4.5 million in 2016. Fourth quarter 2017 consolidated loss per share was $18.76 compared to fourth quarter 2016 consolidated
loss per share of $3.76. The increase in the net loss was impacted by a total of $22.0 million in additional expense related to
impairment charges, restructuring costs, severance related expenses, additional interest expense, and other non-recurring expenses.
In addition, the Company recorded additional inventory reserves of $1.9 million in the fourth quarter related to excess inventory
and consigned inventory which may not be recoverable.
full-year 2017, the Company had a net loss of approximately $52.4 million compared to a net loss of approximately $19.5 million
for 2016. Net loss per share for 2017 was $34.76 per share compared to a net loss per share of $18.46 for 2016. The increase in
net loss was impacted by $29.4 million of net additional expense related to asset impairment charges, restructuring costs, additional
interest expense, litigation reserves, and other one-time costs. In addition, in 2017, the Company recorded $2.4 million in additional
inventory reserves related to excess inventory and consigned inventory which may not be recoverable.
defines adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") as net income/loss
from operations before depreciation, amortization, impairment charges, non-recurring expenses and non-cash stock-based compensation.
Adjusted EBITDA for the fourth quarter of 2017 was approximately ($1.1) million compared to approximately $0.7 million in the
fourth quarter of 2016.
2017 Adjusted EBITDA was approximately ($1.9) million compared to 2016 of approximately $1.6 million.
Adjusted EBITDA for the fourth quarter and year ended December 31, 2017, is the result of lower sales revenue, and the impact
of inventory reserves taken in the fourth quarter of $1.9 million and $2.7 million for the full year 2017.
Liquidity and Capitalization
announced, the Company completed a reverse stock split of 1:12 on February 14, 2018 in addition to a conversion of its convertible
debt into equity, and a private placement of common stock, which net of expense, increased the Company's liquidity by $4.8
million. In addition, the Company's credit facility has been amended and the Company contemplates a stockholder rights offering
in the near future. Further information on these events can be found in the Company's Form 8K s filed on February
13 and February 15, 2018, and its S-1 Registration Statement filed on February 7, 2018.
As a result of the restructuring
transactions noted above, the Company believes that its December 31, 2017 cash on hand, accounts receivable of approximately $15.6
million, along with proceeds of the private placement, anticipated net operating cash receipts and availability under its credit
facility are sufficient to meet anticipated cash requirements through March 31, 2019.
Call to be Held April 3rd, 2018
listen-only conference call will be hosted by Carl O'Connell, Chief Executive Officer, to discuss the results. The call will be
held at 9:00 AM ET, on April 3, 2018. Please refer to the information below for conference call dial-in information and webcast
date: April 3, 2018, 9:00 AM ET
Conference dial-in: 877-269-7756
International dial-in: 201-689-7817
Conference Call Name: Xtant Medical's Fourth Quarter 2017 Results Call
Webcast Registration: Click Here
the live call, a replay will be available on the Company's website, www.xtantmedical.com, under "Investor Info."
Xtant Medical Holdings, Inc.
Holdings, Inc. (NYSE American: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.
Cautions Regarding Forward-looking Statements