Tuesday, August 23, 2016

News: Xtant™ Medical Reports Second Quarter 2016 Results

Second Quarter 2016 Highlights
  • Core recurring revenue (excluding OEM and other revenue) increased 5.6% to $20.9 million compared to core pro forma recurring revenue of$19.8 million in second quarter 2015 

  • Gross profit increased to $14.7 million, compared to pro forma second quarter 2015 gross profit of $14.0 million 

  • Gross margins improved to 68.5% compared to 64.9% for the second quarter of 2015 

  • The Company reported an EBITDA gain of $332,973 for the second quarter 2016

ELGRADE, Mont.Aug. 01, 2016 (GLOBE NEWSWIRE) -- Xtant™ Medical Holdings, Inc. (NYSE MKT:XTNT), a leader in the development of regenerative medical devices, today reported its financial results for the three months ended June 30th, 2016. The Company reported quarterly revenues of approximately $21.5 million and an EBITDA gain of approximately $332,973.

Revenue
Second quarter 2016 revenue was approximately $21.5 million compared to pro forma revenue of approximately $21.6 million for the same period during 2015. Core recurring revenue, which excludes other revenue and revenue associated with Original Equipment Manufacturer (OEM) customers, increased 5.6 % to $20.9 million.
Stated in 000's2Q15*
 2Q16
      
Revenue$  21,622  $  21,462 
OEM & Other Revenue  $  1,857  $  586 
Core Revenue$  19,765  $  20,876 
Core Revenue Growth  5.60%
   
*Pro Forma Results

Gross Profit
Gross profit for the second quarter of 2016 was $14.7 million or 68.5% of revenue, compared to pro forma gross profit of$14.0 million or 64.9% of revenues for the second quarter of 2015.
Sales and Marketing Expenses
Second quarter 2016 sales and marketing expenses increased to $10.4 million, as compared to pro forma sales and marketing expenses of $9.3 million during the same period in 2015. For the quarter, sales and marketing as a percentage of revenues increased to 48.6%, compared to 43.1% in the second quarter of 2015, on a pro forma basis.The increase was mainly due to the higher OEM revenue in the second quarter of 2015 which has no associated sales commissions. In addition, as part of its growth strategy, the Company increased its sales infrastructure to support the portfolio selling opportunity of the combined business.
General and Administrative Expenses
In the second quarter, general and administrative expenses decreased slightly to $3.9 million compared to pro forma general and administrative expenses of $4.0 million, for the same period last year. As a percentage of revenue, general and administrative expenses were 18.2% during the period as compared to pro forma 18.3% for the same period during 2015.
Net Income / Loss
Second quarter 2016 consolidated net loss remained flat at $4.5 million, compared to the pro forma year-ago period.
EBITDA
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 second quarter of 2016 was a gain of $332,973 compared to an EBITDA loss of $144,749 for the first quarter of this year.
Financial Liquidity
Cash on hand as of June 30, 2016, was $2.2 million, as compared to $6.4 million as of December 31, 2015. This figure excludes cash resources available to be drawn down by the Company through its accounts receivable facility with Silicon Valley Bank and its equity credit facility with Aspire Capital.
Outlook for Full Year 2016
The Company decreased its full year 2016 revenue guidance based on the following:

**Non-GAAP profitability is defined as EBITDA less total cash based interest expense.
Conference Call to be Held August 2, 2016
An accompanying conference call will be hosted by Dan Goldberger, 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 2, 2016. Please refer to the information below for conference call dial-in information and webcast registration.
Conference date: August 2, 201610:00 AM ET 
Conference dial-in: 877-269-7756 
International dial-in: 201-689-7817 
Conference Call Name: Xtant Medical's Second Quarter 2016 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."
*Use of Pro Forma Financial Information
On July 31, 2015Bacterin International Holdings, Inc. acquired all of the issued and outstanding stock of X-Spine Systems, Inc. and the combined company was renamed Xtant Medical Holdings, Inc. Except for the financial results for the three months ended June 30, 2016, the results presented are on a pro forma basis as if the two companies were combined for the periods shown. Certain pro forma adjustments have been made to reflect the impact of the purchase transaction, primarily consisting of amortization of intangible assets with determinable lives and interest expense on long-term debt. In addition, certain historical expenses, such as warrant expense and interest expense associated with debt that was immediately repaid, were eliminated from these pro-forma results. The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the fiscal reporting period indicated nor is it indicative of future operating results. The pro forma information does not include any adjustment for potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition.
Additional information regarding the business combination and its impact on the Company's financial position will be set forth in the Company's Form 10-Q for the quarter ended June 30, 2016, which will be filed with the Securities and Exchange Commission on or about August 8, 2016 and will include the Company's unaudited consolidated financial statements as of and for the quarters ended June 30, 2016 and June 30, 2015.
About Xtant™ Medical Holdings, Inc.
Xtant 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.
Important Cautions Regarding Forward-looking Statements
This press release 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: our ability to integrate the acquisition of X-spine Systems, Inc. and any other business combinations or acquisitions successfully; our ability to remain listed on the NYSE MKT; our ability to obtain financing on reasonable terms; our ability to increase revenue; our ability to comply with the covenants in our credit facility; our ability to maintain sufficient liquidity to fund our operations; the ability of our sales force to achieve expected results; our ability to remain competitive; government regulations; our ability to innovate and develop new products; our ability to obtain donor cadavers for our products; our ability to engage and retain qualified technical personnel and members of our management team; the availability of our facilities; government and third-party coverage and reimbursement for our products; our ability to obtain regulatory approvals; our ability to successfully integrate recent and future business combinations or acquisitions; our ability to use our net operating loss carry-forwards to offset future taxable income; our ability to deduct all or a portion of the interest payments on the notes for U.S. federal income tax purposes; our ability to service our debt; product liability claims and other litigation to which we may be subjected; product recalls and defects; timing and results of clinical studies; our ability to obtain and protect our intellectual property and proprietary rights; infringement and ownership of intellectual property; our ability to remain accredited with the American Association of Tissue Banks; influence by our management; our ability to pay dividends; our ability to issue preferred stock; and other factors.
Additional risk 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." You should carefully consider the trends, risks and uncertainties described in this document, the Form 10-K and other reports filed with or furnished to the SEC before making any investment decision with respect to our securities. If any of these trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline, and you could lose all or part of your investment. 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 us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.
More information can be found at Investor Xtantmedical
XTANT MEDICAL HOLDINGS, INC.
 Condensed Consolidated Statements of Operations
 Unaudited Actual and Proforma Results
         
  For the Three Months Ended June 30,  For the Six Months Ended June 30, 
  2016 Actual Unaudited  2015 Pro Forma  2016 Actual Unaudited  2015 Pro Forma 
             
  Amount  Amount  Amount  Amount 
 Orthopedic Product Sales$ 21,311,322   $ 21,438,329   $ 42,119,357   $ 42,885,947  
 Other  150,248     183,795     319,548     464,538  
 Total Revenue  21,461,570     21,622,124     42,438,905     43,350,485  
                 
 Cost of sales  6,758,071     7,588,523     13,635,338     15,351,544  
                 
 Gross Profit  14,703,499     14,033,601     28,803,567     27,998,941  
                 
 Operating Expenses               
 General and administrative  3,899,280     3,964,237     7,383,992     7,878,508  
 Sales and marketing  10,420,028     9,321,087     20,932,994     18,894,329  
 Research and development  783,897     784,455     1,683,472     1,826,359  
 Depreciation and amortization  1,216,696     1,264,357     2,425,030     2,638,838  
 Acquisition and Integration related expenses  450,756     0     752,529     0  
 Non-cash consulting  55,296     74,073     110,592     140,869  
 Total Operating Expenses  16,825,952     15,408,209     33,288,608     31,378,903  
                 
 Net Gain (Loss) from Operations  (2,122,453)    (1,374,608)    (4,485,041)    (3,379,962) 
                 
 Other Income (Expense)               
 Interest expense  (2,984,186)    (2,999,971)    (5,811,361)    (5,992,052) 
 Change in warrant derivative liability  477,639     (14,081)    496,329     (476,289) 
 Non-cash consideration associated with stock purchase agreement  0     0     0     (558,185) 
 Other income (expense)  166,426     (115,858)    (258,574)    (104,021) 
                 
 Total Other Income (Expense)  (2,340,121)    (3,129,910)    (5,573,606)    (7,130,547) 
                 
 Net Gain (Loss) from Operations Before Benefit (Provision) for Income Taxes    (4,462,575)    (4,504,518)    (10,058,647)    (10,510,509) 
                 
 Benefit (Provision) for Income Taxes               
 Current  0     29,312     0     54,244  
 Deferred  0     0     0     0  
                 
 Net Income (Loss)$ (4,462,575)  $ (4,533,830)  $ (10,058,647)  $ (10,564,753) 
                 
 Net Income (loss) per share:         
 Basic$ (0.37)  $ (0.64)  $ (0.84)  $ (1.53) 
 Dilutive$ (0.37)  $ (0.64)  $ (0.84)  $ (1.53) 
                 
 Shares used in the computation:         
 Basic  12,101,356     7,137,391     11,999,478     6,914,698  
 Dilutive  12,101,356     7,137,391     11,999,478     6,914,698

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