Full Press Release Details
Medical Announces Fourth Quarter and Full Year 2019 Financial Results
MT, March 5, 2020 - 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 fourth quarter and year
ended December 31, 2019.
Quarter 2019 Financial Highlights and Recent Announcements:
| Revenue for the fourth quarter of 2019 was $17.0 million, compared to $18.3 million for the same prior-year period. | ||
| Operating expenses in the fourth quarter of 2019 were $11.6 million, compared to $62.0 million for the same prior-year period. Excluding non-cash impairment charges, operating expenses were $13.8 million in the fourth quarter of 2018. | ||
| Net loss incurred in the fourth quarter of 2019 was $1.6 million, compared to a net loss of $56.7 million for the same prior-year period. Excluding non-cash impairment charges and inventory reserves, net loss in the fourth quarter of 2018 was $3.9 million. | ||
| Non-GAAP Adjusted EBITDA for the fourth quarter of 2019 was $1.2 million, compared to $1.7 million for the same prior-year period. |
Browne, President and CEO of Xtant Medical, said, "I am very pleased with the commitment and contributions made by
each of our team members. It is their commitment that allowed us to execute numerous strategic and operational
initiatives during the year and to fulfill our mission of Honoring the gift of donation, by helping our patients
live as full, and complete a life as possible.' I am looking forward to 2020 to see what the team can accomplish
as we roll out exciting new products that will update some current product lines and expand our product
offerings. We understand our future success is tied to our ability to expand the breadth and depth of our product offerings, and
these new products are a step in the right direction for our patients, surgeons, distribution network
partners, and the Company."
Quarter and Full Year 2019 Financial Results
2019 revenue was $17.0 million, compared to $18.3 million for the same period in 2018. Full-year 2019 revenue was $64.7 million,
compared to $72.2 million for 2018. Fourth-quarter 2019 revenues benefitted from sales growth from the Company's key biologics
customers, which was offset by discontinued distributor arrangements related to the Company's hardware business and lower
demand for certain hardware products.
profit for the fourth quarter of 2019 was 66.8%, compared to 39.7% for the same period in 2018 and was 65.7% for 2019, compared
to 60.2% in 2018. In the fourth quarter of 2018, the Company increased its inventory reserve by $4.6 million, primarily due to
excess inventory in the spinal implant product line. Excluding the inventory reserve adjustment, gross profit in 2018 would have
been 65.1% for the fourth quarter, and 67.1% for the full year.
expenses for the fourth quarter of 2019 were $11.6 million, compared to $62.0 million for the fourth quarter of 2018, and were
$44.8 million in 2019 compared to $103.6 million in 2018. In the fourth quarter of 2018, the Company incurred non-cash impairment
charges to goodwill and intangibles attributed to the X-spine acquisition totaling $48.1 million. Excluding the non-cash impairment
charge, operating expenses were $13.8 million in the fourth quarter of 2018 and $55.4 million in 2018. These decreases in operating
expenses were primarily attributable to lower sales commissions, reduced restructuring expenses, and a decrease in amortization
expense as a result of the impairment of intangible assets that occurred in the fourth quarter of 2018, which were partially offset
by higher general and administrative expenses.
2019 net loss was $1.6 million, or $0.12 per share, compared to the fourth quarter 2018 net loss of $56.7 million, or $4.31 per
share. Net loss for 2019 was $8.2 million, or $0.62 per share, compared to $70.1 million, or $5.97 per share, in 2018. Excluding
the non-cash impairment charges and the inventory reserve charges, the net loss was $3.9 million, or $0.30 per share, in the fourth
quarter of 2018, and $17.0 million, or $1.45 per share, in 2018.
Adjusted EBITDA for the fourth quarter of 2019 was $1.2 million compared to $1.7 million for the same period of 2018. Non-GAAP
Adjusted EBITDA for 2019 was $3.9 million, compared to $5.4 million for 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, impairment of goodwill and intangible assets, provision for losses on accounts receivable and inventory,
stock-based compensation, changes in warrant derivative liability, remediation expenses, separation-related expenses, litigation
reserves, facility consolidation costs, and restructuring expenses. A calculation and reconciliation of non-GAAP Adjusted EBITDA
to net loss and the other non-GAAP financial measures included in this release to their respective most comparable GAAP measures
can be found in the attached financial tables.
Medical will host a webcast and conference call to discuss the fourth quarter and full-year 2019 financial results on Thursday,
March 5, 2020, 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
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, net loss excluding
non-cash impairment charges and inventory reserve charges, operating expenses excluding non-cash impairment charges and gross
profit excluding inventory reserve adjustment. 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
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, 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 impact of certain current supply constraints; the effect of management changes and the ability to attract,
engage and retain qualified personnel; the ability to obtain and maintain regulatory approvals and comply with government regulations;
government and third-party coverage and reimbursement for Company products; the effect of product liability claims and other litigation
to which the Company may be subject; the effect of future 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; 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 filed with the SEC on November 7, 2019 and its Annual Report on Form 10-K for the year
ended December 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 December 31, 2019 | As of December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 5,237 | $ | 6,797 | ||||
| Trade accounts receivable, net of allowance for doubtful accounts of $500 and $2,140, respectively | 10,124 | 9,990 | ||||||
| Inventories | 16,101 | 17,301 | ||||||
| Prepaid and other current assets | 784 | 589 | ||||||
| Total current assets | 32,246 | 34,677 | ||||||
| Property and equipment, net | 4,695 | 7,174 | ||||||
| Right-of -use asset, net | 2,100 | - | ||||||
| Goodwill | 3,205 | 3,205 | ||||||
| Intangible assets, net | 515 | 573 | ||||||
| Other assets | 394 | 793 | ||||||
| Total Assets | $ | 43,155 | $ | 46,422 | ||||
| LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 2,188 | $ | 6,465 | ||||
| Accrued liabilities | 6,625 | 5,150 | ||||||
| Warrant derivative liability | 7 | 10 | ||||||
| Current portion of lease liability | 394 | - | ||||||
| Current portion of financing lease obligations | 176 | 426 | ||||||
| Total current liabilities | 9,390 | 12,051 | ||||||
| Long-term Liabilities: | ||||||||
| Lease liability, less current portion | 1,726 | - | ||||||
| Financing lease obligation, less current portion | - | 204 | ||||||
| Long-term debt, less issuance costs | 76,244 | 77,939 | ||||||
| Total Liabilities | 87,360 | 90,194 | ||||||
| Stockholders' Equity (Deficit) | ||||||||
| Preferred stock | - | - | ||||||
| Common stock | - | - | ||||||
| Additional paid-in capital | 179,061 | 171,273 | ||||||
| Accumulated deficit | (223,266 | ) | (215,045 | ) | ||||
| Total Stockholders' Equity (Deficit) | (44,205 | ) | (43,772 | ) | ||||
| Total Liabilities & Stockholders' Equity (Deficit) | $ | 43,155 | $ | 46,422 |
MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
in thousands, except number of shares and per share amounts)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | ||||||||||||||||
| Orthopedic product sales | $ | 16,942 | $ | 18,192 | $ | 64,516 | $ | 71,814 | ||||||||
| Other revenue | 22 | 70 | 166 | 389 | ||||||||||||
| Total revenue | 16,964 | 18,262 | 64,682 | 72,203 | ||||||||||||
| Cost of sales | 5,639 | 11,006 | 22,166 | 28,717 | ||||||||||||
| Gross profit | 11,325 | 7,256 | 42,516 | 43,486 | ||||||||||||
| Gross profit % | 66.8 | % | 39.7 | % | 65.7 | % | 60.2 | % | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 4,540 | 3,801 | 17,936 | 14,277 | ||||||||||||
| Sales and marketing | 6,832 | 7,139 | 25,843 | 31,464 | ||||||||||||
| Research and development | 257 | 523 | 932 | 1,702 | ||||||||||||
| Amortization | 14 | 859 | 58 | 3,437 | ||||||||||||
| Impairment of goodwill and intangible assets | - | 48,146 | - | 48,146 | ||||||||||||
| Restructuring expenses | - | 435 | - | 2,970 | ||||||||||||
| Separation related expenses | - | 1,078 | - | 1,568 | ||||||||||||
| Total operating expenses | 11,643 | 61,981 | 44,769 | 103,564 | ||||||||||||
| Loss from operations | (318 | ) | (54,725 | ) | (2,253 | ) | (60,078 | ) | ||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (1,268 | ) | (1,990 | ) | (5,772 | ) | (10,145 | ) | ||||||||
| Change in warrant derivative liability | 11 | 38 | 3 | 121 | ||||||||||||
| Other (expense) income | - | (14 | ) | (101 | ) | 3 | ||||||||||
| Total Other (Expense) Income | (1,257 | ) | (1,966 | ) | (5,870 | ) | (10,021 | ) | ||||||||
| Net Loss from Operations Before Provision for Income Taxes | (1,575 | ) | (56,691 | ) | (8,123 | ) | (70,099 | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Current and deferred | (30 | ) | - | (98 | ) | - | ||||||||||
| Net Loss from Operations | $ | (1,605 | ) | $ | (56,691 | ) | $ | (8,221 | ) | $ | (70,099 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.12 | ) | $ | (4.31 | ) | $ | (0.62 | ) | $ | (5.97 | ) | ||||
| Dilutive | $ | (0.12 | ) | $ | (4.31 | ) | $ | (0.62 | ) | $ | (5.97 | ) | ||||
| Shares used in the computation: | ||||||||||||||||
| Basic | 13,161,762 | 13,158,326 | 13,163,931 | 11,740,550 | ||||||||||||
| Dilutive | 13,161,762 | 13,158,326 | 13,163,931 | 11,740,550 |
MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Twelve Months Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (8,221 | ) | $ | (70,099 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 3,143 | 6,590 | ||||||
| Goodwill and intangible impairment | - | 48,146 | ||||||
| (Gain) loss on disposal of fixed assets | (61 | ) | 103 | |||||
| Non-cash interest | 5,726 | 9,848 | ||||||
| Non-cash rent expense | 20 | - | ||||||
| Stock-based compensation | 515 | 694 | ||||||
| Change in warrant derivative liability | (3 | ) | (121 | ) | ||||
| Provision for reserve on accounts receivable | 513 | 188 | ||||||
| Provision for excess and obsolete inventory | 509 | 4,932 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (647 | ) | 2,536 | |||||
| Inventories | 692 | 40 | ||||||
| Prepaid and other assets | 204 | 1,055 | ||||||
| Accounts payable | (4,278 | ) | (3,011 | ) | ||||
| Accrued liabilities | 1,475 | 311 | ||||||
| Net cash provided by (used in) operating activities | (413 | ) | 1,212 | |||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (879 | ) | (624 | ) | ||||
| Proceeds from sale of fixed assets | 335 | 257 | ||||||
| Net cash used in investing activities | (544 | ) | (367 | ) | ||||
| Financing activities: | ||||||||
| Payments on financing leases | (455 | ) | (359 | ) | ||||
| Costs associated with Second Amended and Restated Credit Agreement | (148 | ) | - | |||||
| Costs associated with private placement and convertible debt exchange | - | (3,356 | ) | |||||
| Proceeds from equity private placement | - | 6,810 | ||||||
| Proceeds from issuance of stock | - | 1 | ||||||
| Net cash provided by (used in) financing activities | (603 | ) | 3,096 | |||||
| Net change in cash and cash equivalents | (1,560 | ) | 3,941 | |||||
| Cash and cash equivalents at beginning of period | 6,797 | 2,856 | ||||||
| Cash and cash equivalents at end of period | $ | 5,237 | $ | 6,797 |
MEDICAL HOLDINGS, INC.