Full Press Release Details
Medical Announces First Quarter 2019 Financial Results
MT, May 15, 2019 - 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 first quarter ended March
Quarter 2019 Financial Highlights:
| Revenue for the first quarter of 2019 was $16.7 million, compared to $17.9 million for the same prior year period | ||
| Operating expenses in the first quarter of 2019 were $11.5 million, compared to $13.9 million for the same prior year period | ||
| Net loss incurred in the first quarter of 2019 was $2.8 million, compared to a net loss of $5.3 million for the same prior year period | ||
| Non-GAAP Adjusted EBITDA for the first quarter of 2019 was $1.0 million, compared to $1.2 million for the same prior year period |
Jensen, VP, Finance and Interim CFO of Xtant Medical, said, "The first quarter of 2019 was a period of significant progress
for Xtant, as we continue to position the company for renewed growth. Our solid execution resulted in a significant reduction
in the company's net loss and generated a positive year-over-year cash flow from operations, enabling us to invest further
in our operations. These investments include key personnel hires to expand our sales capabilities and continue to improve the
efficiency of our operations. Further boosted by OrbiMed's recent commitment for an additional $10 million in debt capital,
we have strengthened our capital structure, enhanced our financial flexibility and continued to build a strong foundation on which
to pursue our growth and value-creating objectives."
Quarter 2019 Financial Results
quarter 2019 revenue was $16.7 million, compared to $17.9 million for the same period in 2018. The decrease occurred primarily
due to lower sales in the spinal hardware implant product line.
margin for the first quarter of 2019 was 64.6%, compared to 68.2% for the same period in 2018. The year-over-year decrease was
attributed primarily to inventory reserves and manufacturing overhead absorption.
expenses for the first quarter of 2019 were $11.5 million, compared to $13.9 million for the first quarter of 2018. The decrease
was primarily attributable to lower sales commissions and travel expenses, as well as a decrease in amortization expense related
to the impairment of intangible assets that occurred in the fourth quarter of 2018.
quarter 2019 net loss was $2.8 million, or $0.21 per share, compared to first quarter 2018 net loss of $5.3 million, or $0.70
Adjusted EBITDA for the first quarter of 2019 was $1.0 million compared to $1.2 million for the same period of 2018. The Company
defines 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 inventory and accounts receivable,
non-cash compensation, change in warrant derivative liability, separation related expenses, litigation reserve, facility consolidation
costs and restructuring expenses. A calculation and reconciliation of non-GAAP Adjusted EBITDA to net loss can be found in the
attached financial tables.
Medical will host a webcast and conference call to discuss the first quarter 2019 financial results on Wednesday, May 15, 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."
Xtant Medical Holdings, Inc.
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.
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.
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.
Cautions Regarding Forward-looking Statements
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; 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 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 March 31, 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.
MEDICAL HOLDINGS, INC.
Consolidated Balance Sheets
thousands, except number of shares and par value)
| As of March 31, 2019 | As of December 31, 2018 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 7,097 | $ | 6,797 | ||||
| Trade accounts receivable, net of allowance for doubtful accounts of $2,161 and $2,140, respectively | 9,493 | 9,990 | ||||||
| Inventories, net | 16,526 | 17,301 | ||||||
| Prepaid and other current assets | 464 | 589 | ||||||
| Total current assets | 33,580 | 34,677 | ||||||
| Property and equipment, net | 6,382 | 7,174 | ||||||
| Right-of-use asset, net | 2,568 | - | ||||||
| Goodwill | 3,205 | 3,205 | ||||||
| Intangible assets, net | 558 | 573 | ||||||
| Other assets | 772 | 793 | ||||||
| Total Assets | $ | 47,065 | $ | 46,422 | ||||
| LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 6,036 | $ | 6,465 | ||||
| Accrued liabilities | 4,429 | 5,150 | ||||||
| Warrant derivative liability | 25 | 10 | ||||||
| Current portion of lease liability | 374 | - | ||||||
| Current portion of financing lease obligations | 388 | 426 | ||||||
| Total current liabilities | 11,252 | 12,051 | ||||||
| Long-term Liabilities: | ||||||||
| Lease liability | 2,194 | - | ||||||
| Financing lease obligation, less current portion | 138 | 204 | ||||||
| Long-term debt, less issuance costs | 72,657 | 77,939 | ||||||
| Total Liabilities | 86,241 | 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 March 31, 2019 and 13,172,179 shares issued and outstanding as of December 31, 2018 | - | - | ||||||
| Additional paid-in capital | 178,668 | 171,273 | ||||||
| Accumulated deficit | (217,844 | ) | (215,045 | ) | ||||
| Total Stockholders' Equity (Deficit) | (39,176 | ) | (43,772 | ) | ||||
| Total Liabilities & Stockholders' Equity (Deficit) | $ | 47,065 | $ | 46,422 |
MEDICAL HOLDINGS, INC.
Consolidated Statements of Operations
in thousands, except number of shares and per share amounts)
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenue | ||||||||
| Orthopedic product sales | $ | 16,686 | $ | 17,830 | ||||
| Other revenue | 40 | 104 | ||||||
| Total Revenue | 16,726 | 17,934 | ||||||
| Cost of sales | 5,913 | 5,702 | ||||||
| Gross Profit | 10,813 | 12,232 | ||||||
| Gross Profit % | 64.6 | % | 68.2 | % | ||||
| Operating Expenses | ||||||||
| General and administrative | 4,196 | 3,025 | ||||||
| Sales and marketing | 6,742 | 8,349 | ||||||
| Research and development | 262 | 414 | ||||||
| Depreciation and amortization | 159 | 1,004 | ||||||
| Restructuring expenses | - | 733 | ||||||
| Non-cash compensation expense | 122 | 364 | ||||||
| Total Operating Expenses | 11,481 | 13,889 | ||||||
| Loss from Operations | (668 | ) | (1,657 | ) | ||||
| Other (Expense) Income | ||||||||
| Interest expense | (2,018 | ) | (3,545 | ) | ||||
| Change in warrant derivative liability | (15 | ) | (38 | ) | ||||
| Other (expense) income | (75 | ) | (13 | ) | ||||
| Total Other (Expense) | (2,108 | ) | (3,596 | ) | ||||
| Provision for income taxes | ||||||||
| Current and deferred | (23 | ) | - | |||||
| Net Loss | $ | (2,799 | ) | $ | (5,253 | ) | ||
| Net loss per share: | ||||||||
| Basic | (0.21 | ) | (0.70 | ) | ||||
| Dilutive | $ | (0.21 | ) | $ | (0.70 | ) | ||
| Shares used in the computation: | ||||||||
| Basic | 13,170,721 | 7,481,550 | ||||||
| Dilutive | 13,170,721 | 7,481,550 |
MEDICAL HOLDINGS, INC.
Consolidated Statements of Cash Flows
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (2,799 | ) | $ | (5,253 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 776 | 1,586 | ||||||
| Loss/(gain) on disposal of fixed assets | 116 | (23 | ) | |||||
| Non-cash interest | 1,991 | 3,446 | ||||||
| Non-cash consulting expense/stock option expense | 122 | 364 | ||||||
| Provision for losses on accounts receivable and inventory | 247 | 39 | ||||||
| Change in derivative warrant liability | 15 | 38 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 403 | 2,290 | ||||||
| Inventories | 623 | (182 | ) | |||||
| Prepaid and other assets | 146 | 660 | ||||||
| Accounts payable | (429 | ) | (1,884 | ) | ||||
| Accrued liabilities | (721 | ) | (845 | ) | ||||
| Net cash provided by operating activities | 490 | 236 | ||||||
| Investing activities: | ||||||||
| Purchases of property and equipment and intangible assets | (137 | ) | (132 | ) | ||||
| Proceeds from sale of fixed assets | 51 | - | ||||||
| Net cash used in investing activities | (86 | ) | (132 | ) | ||||
| Financing activities: | ||||||||
| Payments on financing leases | (104 | ) | (79 | ) | ||||
| Expense associated with private placement and convertible debt conversion/exchange | - | (3,519 | ) | |||||
| Proceeds from issuance of stock | - | 6,810 | ||||||
| Net cash (used in) provided by financing activities | (104 | ) | 3,212 | |||||
| Net change in cash and cash equivalents | 300 | 3,316 | ||||||
| Cash and cash equivalents at beginning of period | 6,797 | 2,856 | ||||||
| Cash and cash equivalents at end of period | $ | 7,097 | $ | 6,172 |
MEDICAL HOLDINGS, INC.
OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Net Loss | $ | (2,799) | $ | (5,253 | ) | |||
| Other expense | 75 | 13 | ||||||
| Depreciation and amortization | 776 | 1,586 | ||||||
| Interest expense | 2,018 | 3,545 | ||||||
| Tax expense | 23 | - | ||||||
| Non-GAAP EBITDA gain (loss) | 93 | (109 | ) | |||||
| Non-GAAP EBITDA/Total revenue | 0.6 | % | -0.6 | % | ||||
| NON-GAAP ADJUSTED EBITDA CALCULATION | ||||||||
| Provision for losses on AR and inventory | 247 | 39 | ||||||
| Non-cash compensation | 122 | 364 | ||||||
| Change in warrant derivative liability | 15 | 38 | ||||||
| Litigation reserve | 530 | - | ||||||
| Dayton transition costs | - | 113 | ||||||
| Restructuring expenses | - | 733 | ||||||
| Non-GAAP Adjusted EBITDA gain (loss) | $ | 1,007 | $ | 1,178 | ||||
| Non-GAAP EBITDA/Total revenue | 6.0 | % | 6.6 | % |