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.
Second 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
"We 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.'"
COVID-19 Response Update
As 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.
Second Quarter 2020 Financial Results
Total 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.
Gross margin for the second quarter of 2020 was 62.2%, compared
to 64.9% for the same period in 2019.
Operating 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.
Second 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 per share.
Adjusted 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.
Conference Call
Xtant 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.”
About Xtant Medical Holdings, Inc.
Xtant 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.
The 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.
Non-GAAP Financial Measures
To 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.
Cautionary Statement Regarding Forward-looking
Statements
This 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 statement.
Investor Relations Contact
David CareyLazar FINNPh: 212-867-1762Email:
dcarey@finnpartners.com
XTANT
MEDICAL HOLDINGS, INC. |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
(In 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 |
|
|
|
|
|
|
|
XTANT
MEDICAL HOLDINGS, INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited, 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 |
|
|
|
|
|
|
|
|
|
XTANT
MEDICAL HOLDINGS, INC. |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited, in
thousands) |
|
|
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 |
|
|
|
|
XTANT
MEDICAL HOLDINGS, INC. |
CALCULATION
OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA |
(Unaudited, in
thousands) |
|
|
|
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% |
|
|
|
|
|
|
|
|
|
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