Full Press Release Details
Medical Reports Third Quarter 2017 Financial Results
restructuring efforts continue to gain traction towards profitability
Third Quarter 2017 Highlights
Mont., November 21, 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 September 30th,
2017. The Company reported Third Quarter 2017 revenue of approximately $19.8 million
and EBITDA of approximately $1.4 million for the period.
Consolidated third quarter 2017 revenue was approximately $19.8 million, compared
to revenue of approximately $23.1 million for the same period of 2016. The decrease in revenue is due to the
company's continued efforts to reduce underperforming sales channels and unprofitable distributor agreements resulting in a decrease
of fixation revenue offset by an increase in biologics revenue.
"As we transition the business,
our focus will be on profitable revenue growth", said Carl O' Connell, Chief Executive Officer of Xtant Medical. "We
continue to rationalize sales that are not profitable to the business and removing expenses that are not yielding returns. Although
our revenues were lower during the period, true operating leverage in the business is beginning to take shape. Once we have completed
our restructuring efforts, we will be well positioned to grow revenues and profitability."
Consolidated gross profit for the third quarter of 2017 was approximately $11.4 million or 57.5% of
revenues, compared to gross profit of approximately $16.0 million or 69.2% of revenues for the third quarter of 2016. The
decrease in gross profit is due to a shift in product mix to biologics which has a lower margin than fixation products. In
addition, inventory and surgical instruments reserves were increased $1.1 million in the third quarter of 2017 over the prior year
based on current estimates of missing or damaged parts, primarily on consignment. Gross margin was also impacted by a one-time
adjustment of $900,000 in inventory and surgical instrument reserves related to litigation with a distributor.
General and Administrative
In the third quarter of 2017, consolidated general and administrative expenses decreased to $3.3 million, compared to general and
administrative expenses of $3.8 million for the same period during the prior year. As a percentage of revenues, general and administrative
expenses were 16.8% during the period, compared to 16.3% for the same period of 2016. The reduction in expenses is primarily due
to lower personnel expense and occupancy costs of $1.9 million as a result of restructuring efforts, offset by an increase of $1.1
million in other administrative costs such as legal fees, insurance, bad debts, and finance costs. In addition, the Company
took a one time write-off of $400,000 related to litigation with a distributor.
and Marketing Expenses
Consolidated third quarter 2017 sales and marketing expenses decreased to $8.9 million, compared to
sales and marketing expenses of $11.2 million during the same period in 2016. For the quarter, sales and marketing as a
percentage of revenues decreased to 45.0% compared to 48.7% in the third quarter of 2016. Changes
made to the commission rate structure for sales distributors, a reduction of $1.6 million over the third quarter of 2016, coupled
with a reduction in sales and marketing personnel of $1.0 million, offset by an increase in other net marketing expenses of $300,000,
resulted in lower sales and marketing expense in the quarter.
One-time separation related expenses were $800,000 for the quarter ended September 30, 2017. The reduction in personnel related
to restructuring the Company for profitable operations, and is a key factor in the reduction of operating expenses for the third
quarter and year to date.
Third quarter 2017 consolidated net loss increased to ($8.5) million, compared to a net loss of ($4.9) million reported during
the year-ago period. Third quarter 2017 consolidated loss per share was ($0.47), compared to a loss per share of ($0.40) in the
third quarter of 2016.
The Company 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 third quarter of 2017 was approximately $1.4 million compared to $0.7 million for the same period during
2016 after the net income loss adjustment of $3.8 million in interest expense which increased 20.4%, $1.3 million in one-time total
litigation reserves, $1.1 million increase in other expenses, representing restructuring costs consisting primarily of legal and
professional fees, and the adjustment of $0.8 million of separation-related expenses related to the restructuring.
On November 20, 2017, the Company filed a Form 8-K disclosing a restatement of its financial statements included in the Form 10-Q
for the quarters ended March 31, 2017 and June 30, 2017. This restatement resulted in a decline in net income in the quarter
ended March 31, 2017 of $0.6 million related to accumulated depreciation of property and equipment.
and Outstanding Debt
At September 30, 2017, the Company had $2.1 million of cash and cash equivalents; $13.9 million of net accounts receivable and
$24.8 million of inventory plus approximately $2.1 million of funds available to draw down on its delayed draw term loan.
its accounts payable from $11.1 million at December 31, 2016, to $7.7 million as of September 30, 2017. Accrued liabilities of
$13.4 million at September 30th, rose from $9.0 million at December 31, 2016 primarily due to the accumulation of accrued
interest on long-term debt, the payment of which has been delayed as noted in recent amendments of the Company's long-term
The Company's long-term
debt agreement includes a minimum revenue covenant requiring the Company to achieve minimum revenue benchmarks on a calendar quarter
basis. A waiver was obtained from the lenders for not achieving the minimum revenue covenant for the third quarter ended September
30, 2017. The minimum revenue covenant is $27.5 million for the fourth quarter ended December 31, 2017. The Company does not anticipate
achieving this minimum revenue covenant and it is not assured the lenders will provide a waiver of this anticipated covenant violation
at this future date. The Company has classified this debt as a current liability in its September 30, 2017 balance sheet.
to be Held November 22, 2017
An accompanying listen-only conference call will be hosted by Carl O'Connell, Chief Executive Officer, and Laura Kendall, interim
Chief Financial Officer, to discuss the results. The call will be held at 9:00 AM ET, on November 22, 2017. Please refer to the
information below for conference call dial-in information and webcast registration.
date: November 22, 2017, 9:00 AM ET
Conference dial-in: 877-269-7756
International dial-in: 201-689-7817
Conference Call Name: Xtant Medical's Third Quarter 2017 Results Call
Webcast Registration: Click Here
Following 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 American: 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 American; 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