Full Press Release Details
Xtant Medical Reports Second Quarter 2017 Financial Results
Company Continues to Take Steps During Restructuring to Build
Mont., August 9, 2017 (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 quarter ended June 30th, 2017.
The Company reported Second Quarter 2017 revenue of approximately $21.4 million
and an EBITDA loss of approximately ($2.1) million for the period.
second quarter 2017 revenue was approximately $21.4 million, a slight decrease compared
to revenue of approximately $21.5 million for the same period of 2016. The slight decrease was due to an 20.5% increase
in biologic revenue offset by a 18.4% decrease in fixation revenue compared to second quarter 2016 revenue.
gross profit for the second quarter of 2017 was $13.5 million or 63.2% of revenues, compared to gross profit of $14.7 million or
68.5% of revenues for the first quarter of 2016. The decrease in gross margin was
primarily due to lower fixation revenue and lower fixation product margin compared to prior periods. In addition, the Company
recorded a charge of approximately $304,000 for excessive wear and tear on fixation instruments and $159,000 for discarded biologics
inventory about to expire.
Sales and Marketing Expenses
Consolidated second quarter 2017 sales
and marketing expenses increased to $11.1 million, compared to sales and marketing expenses of $10.4 million during the same period
in 2016. For the quarter, sales and marketing as a percentage of revenues increased to 52.0% compared to 48.6% in the second quarter
of 2016. The increase was primarily driven by increased commissions from revenue derived from distributors who have higher contracted
General and Administrative Expenses
quarter of 2017, consolidated general and administrative expenses increased to $4.5 million, compared to general and administrative
expenses of $3.9 million for the same period during the prior year. As a percentage of revenues, general and administrative expenses
were 21.1% during the period, compared to 18.2% for the same period of 2016. The increase was primarily due to increased
professional fees and a $214,000 charge for contributions to employee benefit plans. In addition, the Company incurred additional
insurance expense of $142,000 compared to the second quarter of 2016.
Second quarter 2017 consolidated net loss increased
to ($9.7) million, compared to a net loss of ($4.5) million reported during the year-ago period. Second quarter 2017 consolidated
loss per share was ($0.54), compared to a loss per share of ($0.37) in the second quarter of 2016. The second quarter 2017
net loss includes approximately $1.5 million included in Other Expense for professional fees incurred in connection with the Company's
potential restructuring and approximately $3.3 million of Interest Expense on the Company's debt instruments.
defines earnings before interest, taxes, depreciation and amortization ("EBITDA") as net income/loss from operations
before depreciation, amortization, impairment charges, non-recurring expenses and non-cash stock-based compensation. Consolidated
EBITDA for the second quarter of 2017 was a loss of approximately ($2.1) million compared to a gain of $253,000 for the same period
during 2016 due largely to the decrease in gross profit and increase in sales and marketing expenses noted above.
Cash on hand as of June 30, 2017,
was $1.7 million, as compared to $2.6 million as of December 31, 2016. Net working capital as of June 30, 2017, decreased to
$17.9 million, as compared to $21.6 million as of December 31, 2016.
to be Held August 10, 2017
listen-only conference call will be hosted by Carl O'Connell, Chief Executive Officer, and John Gandolfo, Chief Financial Officer,
to discuss the results. The call will be held at 10:00 AM ET, on August 10, 2017. Please refer to the information below for conference
call dial-in information and webcast registration.
date: August 10, 2017, 10:00 AM ET
Conference dial-in: 877-269-7756
International dial-in: 201-689-7817
Conference Call Name: Xtant Medical's Second 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."
Medical Holdings, Inc.
Medical Holdings, Inc. (NYSE MKT: 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.
Regarding Forward-looking Statements
contains certain disclosures that may be deemed forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that are subject to significant risks and uncertainties. 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 "continue,"
"efforts," "expects," "anticipates," "intends," "plans," "believes,"
"estimates," "projects," "forecasts," "strategy," "will," "goal," "target,"
"prospects," "potential," "optimistic," "confident," "likely," "probable"
or similar expressions or the negative thereof. Statements of historical fact also may be deemed to be forward-looking statements.
We caution that these 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 ability to comply with covenants in the Company's senior
credit facility and to make deferred interest payments; the ability to maintain sufficient liquidity to fund operations; the ability
to remain listed on the NYSE MKT; the ability to obtain financing on reasonable terms; the ability to increase revenue; the ability
to continue as a going concern; the ability to maintain sufficient liquidity to fund operations; the ability to achieve expected
results; the ability to remain competitive; government regulations; the ability to innovate and develop new products; the ability
to obtain donor cadavers for products; the ability to engage and retain qualified technical personnel and members of the Company's
management team; the availability of Company facilities; government and third-party coverage and reimbursement for Company products;
the ability to obtain regulatory approvals; the ability to successfully integrate recent and future business combinations or acquisitions;
the ability to use net operating loss carry-forwards to offset future taxable income; the ability to deduct all or a portion of
the interest payments on the notes for U.S. federal income tax purposes; the ability to service Company debt; product liability
claims and other litigation to which we may be subjected; product recalls and defects; timing and results of clinical studies;
the ability to obtain and protect Company intellectual property and proprietary rights; infringement and ownership of intellectual
property; the ability to remain accredited with the American Association of Tissue Banks; influence by Company management; the
ability to pay dividends; and the ability to issue preferred stock; and other factors.
factors are listed in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk
Factors." 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.
XTANT MEDICAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | ||||||||||||||||
| Orthopedic product sales | $ | 21,371,030 | $ | 21,311,322 | $ | 43,367,345 | $ | 42,119,357 | ||||||||
| Other revenue | 37,130 | 150,248 | 123,484 | 319,548 | ||||||||||||
| Total Revenue | 21,408,160 | 21,461,570 | 43,490,829 | 42,438,905 | ||||||||||||
| Cost of sales | 7,880,639 | 6,758,071 | 14,438,241 | 13,635,338 | ||||||||||||
| Gross Profit | 13,527,521 | 14,703,499 | 29,052,588 | 28,803,567 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | 4,526,543 | 3,899,280 | 8,654,811 | 7,383,992 | ||||||||||||
| Sales and marketing | 11,137,082 | 10,420,028 | 22,134,101 | 20,932,994 | ||||||||||||
| Research and development | 640,045 | 783,897 | 1,338,680 | 1,683,472 | ||||||||||||
| Depreciation and amortization | 1,469,603 | 1,216,696 | 2,750,568 | 2,425,030 | ||||||||||||
| Acquisition and integration related expenses | - | 450,755 | - | 752,528 | ||||||||||||
| Separation related expenses | 380,548 | - | 604,920 | - | ||||||||||||
| Non-cash consulting expense | 91,857 | 55,296 | 236,580 | 110,592 | ||||||||||||
| Total Operating Expenses | 18,245,678 | 16,825,952 | 35,719,660 | 33,288,608 | ||||||||||||
| Loss from Operations | (4,718,157 | ) | (2,122,453 | ) | (6,667,072 | ) | (4,485,041 | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest expense | (3,328,262 | ) | (2,984,186 | ) | (6,728,651 | ) | (5,811,361 | ) | ||||||||
| Change in warrant derivative liability | (13,798 | ) | 477,639 | 156,233 | 496,329 | |||||||||||
| Other income (expense) | (1,632,612 | ) | 166,425 | (1,620,268 | ) | (258,574 | ) | |||||||||
| Total Other Income (Expense) | (4,974,672 | ) | (2,340,122 | ) | (8,192,686 | ) | (5,573,606 | ) | ||||||||
| Net Loss from Operations | $ | (9,692,829 | ) | $ | (4,462,575 | ) | $ | (14,859,758 | ) | $ | (10,058,647 | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.54 | ) | $ | (0.37 | ) | $ | (0.82 | ) | $ | (0.84 | ) | ||||
| Dilutive | $ | (0.54 | ) | $ | (0.37 | ) | $ | (0.82 | ) | $ | (0.84 | ) | ||||
| Shares used in the computation: | ||||||||||||||||
| Basic | 18,092,603 | 12,101,356 | 18,012,959 | 11,999,478 | ||||||||||||
| Dilutive | 18,092,603 | 12,101,356 | 18,012,959 | 11,999,478 |
XTANT MEDICAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of | ||||||||
| June 30, | As of | |||||||
| 2017 | December 31, | |||||||
| (unaudited) | 2016 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 1,664,543 | $ | 2,578,267 | ||||
| Trade accounts receivable, net of allowance for doubtful accounts of $1,923,287 and $1,653,385, respectively | 15,847,142 | 18,991,872 | ||||||
| Current inventories, net | 24,932,155 | 26,266,457 | ||||||
| Prepaid and other current assets | 831,239 | 1,149,615 | ||||||
| Total current assets | 43,275,079 | 48,986,211 | ||||||
| Non-current inventories, net | 641,124 | 971,854 | ||||||
| Property and equipment, net | 14,037,043 | 15,840,730 | ||||||
| Goodwill | 41,534,626 | 41,534,626 | ||||||
| Intangible assets, net | 33,672,915 | 35,940,810 | ||||||
| Other assets | 1,133,331 | 827,374 | ||||||
| Total Assets | $ | 134,294,118 | $ | 144,101,605 | ||||
| LIABILITIES & STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 8,446,454 | $ | 10,471,944 | ||||
| Accounts payable - related party | 291,785 | 640,442 | ||||||
| Revolving line of credit | - | 10,448,283 | ||||||
| Accrued liabilities | 11,627,528 | 8,982,187 | ||||||
| Warrant derivative liability | 177,380 | 333,613 | ||||||
| Current portion of capital lease obligations | 302,064 | 244,847 | ||||||
| Total current liabilities | 20,845,211 | 31,121,316 | ||||||
| Long-term Liabilities: | ||||||||
| Capital lease obligation, less current portion | 747,000 | 832,152 | ||||||
| Long-term convertible debt, less issuance costs | 70,708,939 | 68,937,247 | ||||||
| Long-term debt, less issuance costs | 63,285,428 | 50,284,187 | ||||||
| Total Liabilities | 155,586,578 | 151,174,902 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' Deficit: | ||||||||
| Preferred stock, $0.000001 par value; 5,000,000 shares authorized; no shares issued and Outstanding | - | - | ||||||
| Common stock, $0.000001 par value; 95,000,000 shares authorized; 18,092,603 shares issued and outstanding as of June 30, 2017 and 17,249,315 shares issued and outstanding as of December 31, 2016 | 18 | 17 | ||||||
| Additional paid-in capital | 86,101,803 | 85,461,210 | ||||||
| Accumulated deficit | (107,394,281 | ) | (92,534,524 | ) | ||||
| Total Stockholders' Deficit | (21,292,460 | ) | (7,073,297 | ) | ||||
| Total Liabilities & Stockholders' Deficit | $ | 134,294,118 | $ | 144,101,605 |
XTANT MEDICAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
| Six Months Ended June 30, | ||||||||
| 2017 | 2016 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (14,859,758 | ) | $ | (10,058,647 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 4,029,851 | 3,649,361 | ||||||
| Non-cash interest | 6,211,365 | 2,541,890 | ||||||
| Loss on disposal of fixed assets | 878,251 | - | ||||||
| Non-cash consulting expense/stock option expense | 397,174 | 271,374 | ||||||
| Provision for losses on accounts receivable and inventory | 538,890 | 432,781 | ||||||
| Change in derivative warrant liability | (156,233 | ) | (496,329 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 2,544,399 | 207,934 | ||||||
| Inventories | 1,726,473 | (2,673,670 | ) | |||||
| Prepaid and other assets | 12,417 | (708,693 | ) | |||||
| Accounts payable | (2,374,147 | ) | 3,652,113 | |||||
| Accrued liabilities | 63,235 | (4,568,572 | ) | |||||
| Net cash used in operating activities | (988,083 | ) | (7,750,458 | ) | ||||
| Investing activities: | ||||||||
| Purchases of property and equipment and intangible assets | (836,517 | ) | (4,369,562 | ) | ||||
| Net cash used in investing activities | (836,517 | ) | (4,369,562 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from long-term debt | 11,387,094 | - | ||||||
| Payments on capital leases | (27,935 | ) | (49,428 | ) | ||||
| Proceeds from the issuance of Convertible Debt | - | 2,238,166 | ||||||
| Proceeds from Revolving Line of Credit | - | 5,480,671 | ||||||
| Payments on Revolving Line of Credit | (10,448,283 | ) | - | |||||
| Net proceeds from issuance of stock | - | 300,000 | ||||||
| Net cash provided by financing activities | 910,876 | 7,969,409 | ||||||
| Net change in cash and cash equivalents | (913,724 | ) | (4,150,611 | ) | ||||
| Cash and cash equivalents at beginning of period | 2,578,267 | 6,368,016 | ||||||
| Cash and cash equivalents at end of period | $ | 1,664,543 | $ | 2,217,405 |
MEDICAL HOLDINGS, INC.
of Consolidated EBITDA for the Periods Ended June 30, 2017 and 2016
| (Unaudited) | ||||||||||||||||
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net Loss | (9,692,829 | ) | (4,462,575 | ) | (14,859,758 | ) | (10,058,647 | ) | ||||||||
| Tax (Benefit) Provision | - | - | - | - | ||||||||||||
| Other (Income) Expense | 1,632,612 | (166,426 | ) | 1,620,268 | 258,574 | |||||||||||
| Change in warrant derivative liability | 13,798 | (477,639 | ) | (156,233 | ) | (496,329 | ) | |||||||||
| Interest expense | 3,328,262 | 2,984,186 | 6,728,651 | 5,811,361 | ||||||||||||
| Separation related expenses | 380,548 | - | 604,920 | - | ||||||||||||
| Acquisition and Integration related expenses | - | 450,756 | - | 752,529 | ||||||||||||
| Non-Cash Compensation | 91,857 | 55,296 | 236,580 | 110,592 | ||||||||||||
| Depreciation & Amortization | 2,168,104 | 1,869,375 | 4,239,441 | 3,649,361 | ||||||||||||
| EBITDA Gain (Loss) | (2,077,648 | ) | 252,973 | (1,586,131 | ) | 27,441 |