Full Press Release Details
Medical Announces Third Quarter 2019 Financial Results
MT, November 7, 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 third quarter
ended September 30, 2019.
Quarter 2019 Financial Highlights and Recent Announcements:
| Revenue for the third quarter of 2019 was $15.7 million, compared to $17.3 million for the same prior year period | ||
| Operating expenses in the third quarter of 2019 were $11.2 million, compared to $13.0 million for the same prior year period | ||
| Net loss incurred in the third quarter of 2019 was $1.9 million, compared to a net loss of $3.2 million for the same prior year period | ||
| Non-GAAP Adjusted EBITDA for the third quarter of 2019 was $0.6 million, compared to $1.8 million for the same prior year period | ||
| Board of Directors appoints Sean Browne President and Chief Executive Officer effective October 7, 2019 and a member of the Board effective October 30, 2019 |
Browne, President and CEO of Xtant Medical, said, "After my first month with Xtant, I am excited about the Company, our
unique products and dedicated employees. I am pleased with our efforts and results over the past three quarters enhancing the
operational effectiveness of our business. We remain committed to continuing to develop and release new products, expand our marketing
programs, and pursue operational improvements intended to assist us in our overall commercial performance."
Quarter 2019 Financial Results
quarter 2019 revenue was $15.7 million, compared to $17.3 million for the same period in 2018. This decrease was due primarily
to reduced demand for hardware products, which was attributable in part to the termination of an advisory agreement with an entity
that provided services to certain customers, and the continued transition of independent sales agents.
margin for the third quarter of 2019 was 66.6%, which was comparable to the same period in 2018.
expenses for the third quarter of 2019 were $11.2 million, compared to $13.0 million for the third quarter of 2018, a decrease
of 13.7%. The decrease was primarily attributable to lower sales commissions and travel expenses, restructuring expenses incurred
during the year-ago period, and a decrease in amortization expense related to the impairment of intangible assets that occurred
in the fourth quarter of 2018, which were partially offset by higher general and administrative expenses.
quarter 2019 net loss was $1.9 million, or $0.14 per share, compared to third quarter 2018 net loss of $3.2 million, or $0.24
Adjusted EBITDA for the third quarter of 2019 was $0.6 million compared to $1.8 million for the same period of 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, non-cash special charges, provision for losses on accounts receivable
and inventory, non-cash compensation, changes in warrant derivative liability, field action expenses, separation related expenses,
litigation reserves, 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 third quarter 2019 financial results on Thursday, November 7, 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, 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 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 retain and recruit independent
sales agents and the impact of the termination of a consulting agreement with an entity that had close relationships with several
of customers; 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 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 September 30, 2019 | As of December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 5,749 | $ | 6,797 | ||||
| Trade accounts receivable, net of allowance for doubtful accounts of $1,375 and $2,140, respectively | 9,121 | 9,990 | ||||||
| Inventories | 16,025 | 17,301 | ||||||
| Prepaid and other current assets | 714 | 589 | ||||||
| Total current assets | 31,609 | 34,677 | ||||||
| Property and equipment, net | 5,068 | 7,174 | ||||||
| Right-of -use asset, net | 2,198 | - | ||||||
| Goodwill | 3,205 | 3,205 | ||||||
| Intangible assets, net | 529 | 573 | ||||||
| Other assets | 428 | 793 | ||||||
| Total Assets | $ | 43,037 | $ | 46,422 | ||||
| LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 2,249 | $ | 6,465 | ||||
| Accrued liabilities | 6,196 | 5,150 | ||||||
| Warrant derivative liability | 17 | 10 | ||||||
| Current portion of lease liability | 387 | - | ||||||
| Current portion of financing lease obligations | 229 | 426 | ||||||
| Total current liabilities | 9,078 | 12,051 | ||||||
| Long-term Liabilities: | ||||||||
| Lease liability, less current portion | 1,827 | - | ||||||
| Financing lease obligation, less current portion | 6 | 204 | ||||||
| Long-term debt, less issuance costs | 74,985 | 77,939 | ||||||
| Total Liabilities | 85,896 | 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 September 30, 2019 and 13,172,179 shares issued and outstanding as of December 31, 2018 | - | - | ||||||
| Additional paid-in capital | 178,802 | 171,273 | ||||||
| Accumulated deficit | (221,661 | ) | (215,045 | ) | ||||
| Total Stockholders' Equity (Deficit) | (42,859 | ) | (43,772 | ) | ||||
| Total Liabilities & Stockholders' Equity (Deficit) | $ | 43,037 | $ | 46,422 |
MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
in thousands, except number of shares and per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | ||||||||||||||||
| Orthopedic product sales | $ | 15,691 | $ | 17,139 | $ | 47,574 | $ | 53,622 | ||||||||
| Other revenue | 30 | 127 | 144 | 319 | ||||||||||||
| Total revenue | 15,721 | 17,266 | 47,718 | 53,941 | ||||||||||||
| Cost of sales | 5,249 | 5,743 | 16,527 | 17,711 | ||||||||||||
| Gross profit | 10,472 | 11,523 | 31,191 | 36,230 | ||||||||||||
| Gross profit % | 66.6 | % | 66.7 | % | 65.4 | % | 67.2 | % | ||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 4,155 | 3,121 | 12,513 | 10,006 | ||||||||||||
| Sales and marketing | 6,682 | 7,847 | 19,496 | 24,742 | ||||||||||||
| Research and development | 203 | 347 | 675 | 1,179 | ||||||||||||
| Depreciation and amortization | 137 | 1,029 | 442 | 3,074 | ||||||||||||
| Restructuring expenses | - | 614 | - | 2,582 | ||||||||||||
| Total operating expenses | 11,177 | 12,958 | 33,126 | 41,583 | ||||||||||||
| Loss from operations | (705 | ) | (1,435 | ) | (1,935 | ) | (5,353 | ) | ||||||||
| Other (expense) income | ||||||||||||||||
| Interest expense | (1,185 | ) | (1,790 | ) | (4,504 | ) | (8,156 | ) | ||||||||
| Change in warrant derivative liability | 4 | 42 | (8 | ) | 83 | |||||||||||
| Other (expense) income | 30 | 30 | (101 | ) | 18 | |||||||||||
| Total Other (Expense) Income | (1,151 | ) | (1,718 | ) | (4,613 | ) | (8,055 | ) | ||||||||
| Net Loss from Operations Before Provision for Income Taxes | (1,856 | ) | (3,153 | ) | (6,548 | ) | (13,408 | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Current and deferred | (23 | ) | - | (68 | ) | - | ||||||||||
| Net Loss from Operations | $ | (1,879 | ) | $ | (3,153 | ) | $ | (6,616 | ) | $ | (13,408 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.14 | ) | $ | (0.24 | ) | $ | (0.50 | ) | $ | (1.19 | ) | ||||
| Dilutive | $ | (0.14 | ) | $ | (0.24 | ) | $ | (0.50 | ) | $ | (1.19 | ) | ||||
| Shares used in the computation: | ||||||||||||||||
| Basic | 13,161,762 | 13,158,326 | 13,164,694 | 11,262,642 | ||||||||||||
| Dilutive | 13,161,762 | 13,158,326 | 13,164,694 | 11,262,642 |
MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | ||||||||
| 2019 | 2018 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (6,616 | ) | $ | (13,408 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 2,338 | 4,943 | ||||||
| Gain on disposal of fixed assets | (27 | ) | (15 | ) | ||||
| Non-cash interest | 4,467 | 7,853 | ||||||
| Non-cash rent expense | 16 | - | ||||||
| Non-cash stock option expense / change in derivative warrant liability | 263 | 502 | ||||||
| Provision for losses on accounts receivable and inventory | 970 | 298 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 417 | 2,842 | ||||||
| Inventories | 760 | (508 | ) | |||||
| Prepaid and other assets | 240 | 1,138 | ||||||
| Accounts payable | (4,216 | ) | (3,557 | ) | ||||
| Accrued liabilities | 1,046 | (867 | ) | |||||
| Net cash provided by operating activities | (342 | ) | (779 | ) | ||||
| Investing activities: | ||||||||
| Purchases of property and equipment and intangible assets | (403 | ) | (308 | ) | ||||
| Proceeds from sale of fixed assets | 241 | 251 | ||||||
| Net cash used in investing activities | (162 | ) | (57 | ) | ||||
| Financing activities: | ||||||||
| Payments on financing leases | (395 | ) | (260 | ) | ||||
| Costs associated with either loan or equity transactions | (149 | ) | - | |||||
| Costs associated with private placement and convertible debt exchange | - | (3,507 | ) | |||||
| Proceeds from equity private placement | - | 6,810 | ||||||
| Proceeds from issuance of stock | - | 1 | ||||||
| Net cash (used in) provided by financing activities | (544 | ) | 3,044 | |||||
| Net change in cash and cash equivalents | (1,048 | ) | 2,208 | |||||
| Cash and cash equivalents at beginning of period | 6,797 | 2,856 | ||||||
| Cash and cash equivalents at end of period | $ | 5,749 | $ | 5,064 |
MEDICAL HOLDINGS, INC.
OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net Loss | $ | (1,879 | ) | $ | (3,153 | ) | $ | (6,616 | ) | $ | (13,408 | ) | ||||
| Other expense | (30 | ) | (30 | ) | 101 | (18 | ) | |||||||||
| Depreciation and amortization | 779 | 1,655 | 2,338 | 4,943 | ||||||||||||
| Interest expense | 1,185 | 1,790 | 4,504 | 8,156 | ||||||||||||
| Tax expense | 23 | - | 68 | - | ||||||||||||
| Non-GAAP EBITDA | 78 | 262 | 395 | (327 | ) | |||||||||||
| Non-GAAP EBITDA/Total revenue | 0.5 | % | 1.5 | % | 0.8 | % | -0.6 | % | ||||||||
| NON-GAAP ADJUSTED EBITDA CALCULATION | ||||||||||||||||
| Provision for losses on accounts receivable and inventory | 220 | 312 | 970 | 296 | ||||||||||||
| Non-cash compensation | 95 | 41 | 256 | 585 | ||||||||||||
| Change in warrant derivative liability | (4 | ) | (42 | ) | 8 | (83 | ) | |||||||||
| Separation-related expenses | - | 566 | - | 2,535 | ||||||||||||
| Field action expenses | 182 | - | 307 | - | ||||||||||||
| Litigation reserve | - | - | 800 | - | ||||||||||||
| Restructuring expenses | - | 614 | - | 2,582 | ||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 571 | $ | 1,753 | $ | 2,736 | $ | 5,588 | ||||||||
| Non-GAAP Adjusted EBITDA/Total revenue | 3.6 | % | 10.2 | % | 5.7 | % | 10.4 | % |