Full Press Release Details
Medical Announces Second Quarter 2020 Financial Results
MT, August 3, 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 second quarter
ended June 30, 2020.
Quarter 2020 Financial Highlights:
| Revenue for the second quarter of 2020 was $10.5 million, compared to $15.3 million for the prior-year period | |
| Operating expenses in the second quarter of 2020 were $6.9 million, compared to $10.5 million for the prior-year period | |
| Net loss incurred in the second quarter of 2020 was $2.5 million, compared to a net loss of $1.9 million for the prior-year period | |
| Adjusted EBITDA for the second quarter of 2020 was $0.7 million, compared to $1.1 million for the prior-year period |
are pleased with our second-quarter revenue performance primarily reflecting a rebound in spinal elective procedure volumes in
June following sharp declines at the start of the COVID-19 pandemic," said Sean Browne, President and CEO. "Our early
actions to reduce expenses enabled us to conserve cash and rightsize our cost structure during this uncertain environment. Going
forward, we believe operating as a leaner organization and improving our overall efficiencies will allow us to live our mission
of honoring the gift of donation, so our patients can live as full a life as possible.'"
previously announced, Xtant Medical identified four areas to maintain business continuity and emerge from the COVID-19 pandemic
in a position of strength. We are committed to 1) Keeping our employees safe and healthy, (2) Conserving Cash, (3) Optimizing
our production and thereby improving our inventory position, and (4) Improve our overall operational efficiency.
Quarter 2020 Financial Results
revenue for the three months ended June 30, 2020 was $10.5 million, which represents a decrease of 31.1% compared to $15.3 million
in the same quarter of the prior year. The decrease in revenue is attributed primarily to the impact of COVID-19 and the sudden
drop in elective procedures beginning in early March as result of the pandemic. Management anticipates that the current pandemic
will impact revenue for the remainder of 2020.
margin for the second quarter of 2020 was 62.2%, compared to 64.9% for the same period in 2019.
expenses for the second quarter of 2020 were $6.9 million, compared to $10.5 million for the second quarter of 2019. The decrease
was primarily due to a reduction in sales commissions, reduced salaries and wages, lower legal and consulting fees, reduced executive
recruiting fees, and reduced legal settlement expenses, partially offset by additional stock-based compensation expense during
the current year period.
quarter 2020 net loss was $2.5 million, or $0.19 per share, compared to second quarter 2019 net loss of $1.9 million, or $0.15
EBITDA for the second quarter of 2020 was $0.7 million compared to $1.1 million for the same period in 2019. The Company defines
Adjusted EBITDA as net income/loss from operations before depreciation, amortization and interest expense and provision for income
taxes, 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, and litigation
settlement reserves. A calculation and reconciliation of Adjusted EBITDA to net loss can be found in the attached financial tables.
Medical will host a webcast and conference call to discuss the second quarter 2020 financial results on Monday, August 3, 2020
at 4:30 PM 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.
Statement 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," "going forward," similar expressions
or the negative thereof, and the use of future dates. Forward-looking statements in this release include the Company's expectations
that by operating as a leaner organization and improving its overall efficiencies it will be well-positioned to manage near-term
challenges and that the current pandemic will impact revenue for the remainder of 2020. 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: risks and uncertainities surrounding the debt restructuring transactions, including
without limitation, the Company's ability to consummate the restructuring transactions and to do so on a timely basis
and its ability to maintain the listing of its common stock on the NYSE American; effect of the COVID-19 pandemic on the Company's
business, operating results and financial condition; 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 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, comply with its debt covenants
and access additional indebtedness; the ability to obtain 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, 2019 filed with the Securities and
Exchange Commission (SEC) on March 5, 2020 and subsequent SEC filings by the Company, including without limitation its most recent
Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 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
MEDICAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
thousands, except number of shares and par value)
| As of June 30, 2020 | As of December 31, 2019 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 3,019 | $ | 5,237 | ||||
| Trade accounts receivable, net of allowance for credit losses of $728 and doubtful accounts of $500, respectively | 7,583 | 10,124 | ||||||
| Inventories | 19,888 | 16,101 | ||||||
| Prepaid and other current assets | 899 | 784 | ||||||
| Total current assets | 31,389 | 32,246 | ||||||
| Property and equipment, net | 4,256 | 4,695 | ||||||
| Right-of -use asset, net | 1,898 | 2,100 | ||||||
| Goodwill | 3,205 | 3,205 | ||||||
| Intangible assets, net | 486 | 515 | ||||||
| Other assets | 432 | 394 | ||||||
| Total Assets | $ | 41,666 | $ | 43,155 | ||||
| LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 3,072 | $ | 2,188 | ||||
| Accrued liabilities | 5,894 | 6,632 | ||||||
| Current portion of lease liability | 408 | 394 | ||||||
| Current portion of financing lease obligations | 101 | 176 | ||||||
| Total current liabilities | 9,475 | 9,390 | ||||||
| Long-term Liabilities: | ||||||||
| Lease liability, less current portion | 1,518 | 1,726 | ||||||
| Long-term debt, plus premium and less issuance costs | 77,531 | 76,244 | ||||||
| Total Liabilities | 88,524 | 87,360 | ||||||
| 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; 75,000,000 shares authorized; 13,223,565 shares issued and outstanding as of June 30, 2020 and 13,161,762 shares issued and outstanding as of December 31, 2019 | - | - | ||||||
| Additional paid-in capital | 181,412 | 179,061 | ||||||
| Accumulated deficit | (228,270 | ) | (223,266 | ) | ||||
| Total Stockholders' Equity (Deficit) | (46,858 | ) | (44,205 | ) | ||||
| Total Liabilities & Stockholders' Equity (Deficit) | $ | 41,666 | $ | 43,155 |
MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
in thousands, except number of shares and per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue | ||||||||||||||||
| Orthopedic product sales | $ | 10,493 | $ | 15,197 | $ | 25,227 | $ | 31,883 | ||||||||
| Other revenue | 36 | 74 | 80 | 114 | ||||||||||||
| Total revenue | 10,529 | 15,271 | 25,307 | 31,997 | ||||||||||||
| Cost of sales | 3,979 | 5,365 | 9,144 | 11,278 | ||||||||||||
| Gross profit | 6,550 | 9,906 | 16,163 | 20,719 | ||||||||||||
| Gross profit % | 62.2 | % | 64.9 | % | 63.9 | % | 64.8 | % | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 2,931 | 4,187 | 7,250 | 8,664 | ||||||||||||
| Sales and marketing | 3,895 | 6,072 | 10,309 | 12,814 | ||||||||||||
| Research and development | 111 | 210 | 353 | 472 | ||||||||||||
| Total operating expenses | 6,937 | 10,469 | 17,912 | 21,950 | ||||||||||||
| Loss from operations | (387 | ) | (563 | ) | (1,749 | ) | (1,231 | ) | ||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (2,054 | ) | (1,301 | ) | (3,163 | ) | (3,319 | ) | ||||||||
| Other (expense) income | - | (53 | ) | - | (143 | ) | ||||||||||
| Total Other (Expense) | (2,054 | ) | (1,354 | ) | (3,163 | ) | (3,462 | ) | ||||||||
| Net Loss Before Provision for Income Taxes | (2,441 | ) | (1,917 | ) | (4,912 | ) | (4,693 | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Current and deferred | (23 | ) | (22 | ) | (45 | ) | (45 | ) | ||||||||
| Net Loss | $ | (2,464 | ) | $ | (1,939 | ) | $ | (4,957 | ) | $ | (4,738 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.19 | ) | $ | (0.15 | ) | $ | (0.38 | ) | $ | (0.36 | ) | ||||
| Dilutive | $ | (0.19 | ) | $ | (0.15 | ) | $ | (0.38 | ) | $ | (0.36 | ) | ||||
| Shares used in the computation: | ||||||||||||||||
| Basic | 13,223,565 | 13,161,762 | 13,199,455 | 13,166,136 | ||||||||||||
| Dilutive | 13,223,565 | 13,161,762 | 13,199,455 | 13,166,136 |
MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | ||||||||
| 2020 | 2019 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (4,957 | ) | $ | (4,738 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 1,153 | 1,559 | ||||||
| (Gain) loss on disposal of fixed assets | (118 | ) | 92 | |||||
| Non-cash interest | 3,149 | 3,272 | ||||||
| Non-cash rent expense | 8 | 11 | ||||||
| Stock-based compensation | 489 | 161 | ||||||
| Provision for reserve on accounts receivable | 204 | 232 | ||||||
| Provision for excess and obsolete inventory | 377 | 518 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 2,290 | 1,403 | ||||||
| Inventories | (4,164 | ) | 955 | |||||
| Prepaid and other assets | (153 | ) | 242 | |||||
| Accounts payable | 884 | (3,481 | ) | |||||
| Accrued liabilities | (738 | ) | 728 | |||||
| Net cash (used in) provided by operating activities | (1,576 | ) | 954 | |||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (673 | ) | (211 | ) | ||||
| Proceeds from sale of fixed assets | 106 | 163 | ||||||
| Net cash used in investing activities | (567 | ) | (48 | ) | ||||
| Financing activities: | ||||||||
| Payments on financing leases | (75 | ) | (277 | ) | ||||
| Costs associated with Second Amended and Restated Credit Agreement | - | (108 | ) | |||||
| Net cash used in financing activities | (75 | ) | (385 | ) | ||||
| Net change in cash and cash equivalents | (2,218 | ) | 521 | |||||
| Cash and cash equivalents at beginning of period | 5,237 | 6,797 | ||||||
| Cash and cash equivalents at end of period | $ | 3,019 | $ | 7,318 |
MEDICAL HOLDINGS, INC.
OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net Loss | $ | (2,464 | ) | $ | (1,939 | ) | $ | (4,957 | ) | $ | (4,738 | ) | ||||
| Other expense | 1 | 56 | 6 | 131 | ||||||||||||
| Depreciation and amortization | 468 | 783 | 1,153 | 1,559 | ||||||||||||
| Interest expense | 2,054 | 1,301 | 3,163 | 3,319 | ||||||||||||
| Tax expense | 23 | 22 | 45 | 45 | ||||||||||||
| Non-GAAP EBITDA | 82 | 223 | (590 | ) | 316 | |||||||||||
| Non-GAAP EBITDA/Total revenue | 0.8 | % | 1.5 | % | -2.3 | % | 1.0 | % | ||||||||
| NON-GAAP ADJUSTED EBITDA CALCULATION | ||||||||||||||||
| Provision for losses on accounts receivable | 66 | 138 | 204 | 232 | ||||||||||||
| Provision for excess and obsolete inventory | 346 | 365 | 377 | 518 | ||||||||||||
| Non-cash compensation | 219 | 39 | 489 | 161 | ||||||||||||
| Change in warrant derivative liability | (1 | ) | (3 | ) | (7 | ) | 12 | |||||||||
| Separation-related expenses | - | (15 | ) | 749 | (37 | ) | ||||||||||
| Field action expenses | - | 125 | - | 125 | ||||||||||||
| Litigation reserve | - | 270 | - | 800 | ||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 712 | $ | 1,142 | $ | 1,222 | $ | 2,127 | ||||||||
| Non-GAAP Adjusted EBITDA/Total revenue | 6.8 | % | 7.5 | % | 4.8 | % | 6.6 | % |