GlobeNewswire Inc | Feb 24, 2021 07:00AM EST

February 24, 2021

BELGRADE, Mont., Feb. 24, 2021 (GLOBE NEWSWIRE) -- 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 fourth quarter and year ended December 31, 2020.

Fourth Quarter 2020 Financial Highlights:

-- Revenue for the fourth quarter of 2020 totaled $14.0 million, compared to $17.0 million for the prior-year period -- Operating expenses in the fourth quarter of 2020 totaled $8.7 million, compared to $11.7 million for the prior-year period -- Income from operations totaled $0.2 million, compared to an operating loss of $0.3 million for the prior-year period -- Net loss incurred in the fourth quarter of 2020 totaled $0.7 million, compared to a net loss of $1.6 million for the prior-year period -- Non-GAAP Adjusted EBITDA for the fourth quarter of 2020 totaled $1.1 million, compared to $1.2 million for the prior-year period

Highlighted by consecutive quarters of positive operating income in the second half of 2020, we are pleased with our progress despite the significant impact COVID-19 had on elective procedures in our largest markets, said Sean Browne, President and CEO. In response to the pandemic, we took aggressive steps to align our business with the changing market environment and reduce our costs. These actions, when combined with our successful 2020 debt restructuring and recently announced $20 million private placement, provide us with positive momentum as we enter 2021.

Fourth Quarter and Full Year 2020 Financial Results

Fourth quarter 2020 revenue was $14.0 million, compared to $17.0 million for the same period in 2019. Full year 2020 revenue was $53.3 million, compared to $64.7 million for 2019. The decline in revenue for both periods was largely attributed to the impact of COVID-19 and sudden drop in elective procedures that began in early March 2020. Elective procedures have recovered to some extent in the second half of 2020, partially offsetting this impact.

Gross profit for the fourth quarter of 2020 was 64.1%, compared to 67.3% for the same period in 2019 and was 64.5% for 2020, compared to 65.7% in 2019. These reductions in gross profit were primarily attributable to diminished economies of scale, partially offset by reduced depreciation expense.

Operating expenses for the fourth quarter of 2020 totaled $8.7 million, compared to $11.7 million for the fourth quarter of 2019, and were $35.1 million in 2020 compared to $44.8 million in 2019. These decreases were primarily the result of reduced sales commissions due to lower sales, and lower levels of salaries and wages, legal and consulting fees, executive recruiting fees, marketing-related costs and research and development expenses, in each case compared to the prior-year period.

Fourth quarter 2020 net loss totaled $0.7 million, or $0.01 per share, compared to the fourth quarter 2019 net loss of $1.6 million, or $0.12 per share. Net loss for 2020 was $7.0 million, or $0.25 per share, compared to $8.2 million, or $0.62 per share, in 2019.

Non-GAAP Adjusted EBITDA for the fourth quarter of 2020 totaled $1.1 million, compared to $1.2 million for the same period in 2019. Non-GAAP Adjusted EBITDA for 2020 totaled $3.9 million, compared to $3.9 million for 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, field action expenses and litigation reserves. A calculation and reconciliation of Adjusted EBITDA to net loss can be found in the attached financial tables.

Private Placement

As previously announced, on February 22, 2021, the Company entered into a securities purchase agreement with a single healthcare-focused institutional investor pursuant to which the Company agreed to issue 8,888,890 shares of common stock at a purchase price of $2.25 per share, and warrants to purchase up to 6,666,668 shares of our common stock at an exercise price of $2.25 per share, in a private placement. The closing of the private placement is expected to occur on February 24, 2021, subject to the satisfaction of customary closing conditions. The Company expects to receive net proceeds of approximately $18.4 million, after deducting fees and other estimated offering expenses, and expects to use the net proceeds for working capital and other general corporate purposes.

Conference Call

Xtant Medical will host a webcast and conference call to discuss the fourth quarter 2020 financial results on Wednesday, February 24, 2021 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.

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 Companys 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 Companys management believes that the presentation of these measures provides useful information to investors. These measures may assist investors in evaluating the Companys 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 intends, expects, anticipates, 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 Companys belief that it has positive momentum entering 2021 and its expectations regarding the timing of closing and use of net proceeds for its pending private placement. 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 associated with the private placement; the effect of the COVID-19 pandemic on the Companys business, operating results and financial condition; the Companys 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 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; 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 on favorable terms or at all; and other factors. Additional risk factors are contained in the Companys Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (SEC) on February 24, 2021 and subsequent SEC filings by the Company. Investors are encouraged to read the Companys 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 As of December 31, December 31, 2020 2019 ASSETS Current Assets: Cash and cash equivalents $ 2,341 $ 5,237 Trade accounts receivable, net of allowance forcredit losses of $653 and doubtful accounts of 6,880 10,124 $500, respectivelyInventories 21,408 16,101 Prepaid and other current assets 736 784 Total current assets 31,365 32,246 Property and equipment, net 4,347 4,695 Right-of -use asset, net 1,690 2,100 Goodwill 3,205 3,205 Intangible assets, net 457 515 Other assets 402 394 Total Assets $ 41,466 $ 43,155 LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities: Accounts payable $ 2,289 $ 2,188 Accrued liabilities 6,120 6,632 Current portion of lease liability 423 394 Finance lease obiligations 20 176 Current portion of long-term debt 16,797 - Total current liabilities 25,649 9,390 Long-term Liabilities: Lease liability, less current portion 1,303 1,726 Long-term debt, plus premium and less issuance - 76,244 costsTotal Liabilities 26,952 87,360 Stockholders' Equity (Deficit) Preferred stock, $0.000001 par value; 10,000,000shares authorized; no shares issued and - - outstandingCommon stock, $0.000001 par value; 300,000,000shares authorized; 77,573,680 shares issued andoutstanding as of December 31, 2020 and - - 75,000,000 shares authorized; 13,161,762 sharesissued and outstanding as of December 31, 2019Additional paid-in capital 244,850 179,061 Accumulated deficit (230,336 ) (223,266 )Total Stockholders? Equity (Deficit) 14,514 (44,205 ) Total Liabilities & Stockholders? Equity $ 41,466 $ 43,155 (Deficit)

XTANT MEDICAL HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited, in thousands, except number of shares and per share amounts) Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019 Revenue Orthopedic $ 13,981 $ 16,942 $ 53,188 $ 64,516 product salesOther revenue 34 22 149 166 Total revenue 14,015 16,964 53,337 64,682 Cost of sales 5,032 5,553 18,945 22,166 Gross profit 8,983 11,411 34,392 42,516 Gross profit % 64.1 % 67.3 % 64.5 % 65.7 % Operating expensesGeneral and 3,210 4,478 13,503 17,344 administrativeSales and 5,405 6,994 20,983 26,493 marketingResearch and 128 257 657 932 developmentTotaloperating 8,743 11,729 35,143 44,769 expenses Income (Loss)from 240 (318 ) (751 ) (2,253 )operations Other income (expense)Interest (718 ) (1,268 ) (5,976 ) (5,772 )expenseOther income - 11 - (98 )(expense)Total Other (718 ) (1,257 ) (5,976 ) (5,870 )ExpenseNet LossBefore (478 ) (1,575 ) (6,727 ) (8,123 )Provision forIncome Taxes Provision for income taxesCurrent and (229 ) (30 ) (296 ) (98 )deferredNet Loss $ (707 ) $ (1,605 ) $ (7,023 ) $ (8,221 ) Net loss per share:Basic $ (0.01 ) $ (0.12 ) $ (0.25 ) $ (0.62 )Dilutive $ (0.01 ) $ (0.12 ) $ (0.25 ) $ (0.62 ) Shares used inthe computation:Basic 74,508,626 13,161,762 28,499,847 13,163,931 Dilutive 74,508,626 13,161,762 28,499,847 13,163,931

XTANT MEDICAL HOLDINGS, INC.CALCULATION OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA(Unaudited, in thousands) Three Months Ended December Twelve Months Ended December 31, 31, 2020 2019 2020 2019 Net Loss $ (707 ) $ (1,605 ) $ (7,023 ) $ (8,221 ) Other expense 1 - 7 101 Depreciation and 718 807 2,079 3,145 amortizationInterest expense 421 1,268 5,976 5,772 Tax expense 229 30 296 98 Non-GAAP EBITDA 662 500 1,335 895 Non-GAAP EBITDA/ 4.7 % 2.9 % 2.5 % 1.4 %Total revenue NON-GAAP ADJUSTED EBITDA CALCULATIONProvision forlosses on accounts 11 60 307 514 receivableProvision forexcess and 55 (8 ) 485 509 obsolete inventoryNon-cash 358 259 1,084 515 compensationChange in warrantderivative - (11 ) (7 ) (2 )liabilitySeparation-related - - 698 - expensesField action - 253 - 560 expensesLitigation reserve - 119 5 919 Non-GAAP Adjusted $ 1,086 $ 1,172 $ 3,907 $ 3,910 EBITDA Non-GAAP AdjustedEBITDA/Total 7.7 % 6.9 % 7.3 % 6.0 %revenue

XTANT MEDICAL HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited, in thousands) Twelve Months Ended December 31, 2020 2019 Operating activities: Net loss $ (7,023 ) $ (8,221 )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization 2,079 3,143 Gain on disposal of fixed assets (369 ) (61 )Non-cash interest 5,963 5,726 Non-cash rent expense 16 20 Stock-based compensation 1,084 515 Provision for reserve on accounts receivable 307 513 Provision for excess and obsolete inventory 485 509 Changes in operating assets and liabilities: Accounts receivable 2,890 (647 )Inventories (5,792 ) 692 Prepaid and other assets 40 204 Accounts payable 101 (4,278 )Accrued liabilities (512 ) 1,472 Net cash used in operating activities (731 ) (413 ) Investing activities: Purchases of property and equipment (1,545 ) (879 )Proceeds from sale of fixed assets 241 335 Net cash used in investing activities (1,304 ) (544 ) Financing activities: Payments on financing leases (156 ) (455 )Payments on long-term debt (315 ) - Costs associated with debt restructuring (1,058 ) - Proceeds from issuance of common stock, net of 620 issuance costsProceeds from exercise of common stock warrants 48 Costs associated with Second Amended and Restated - (148 )Credit AgreementNet cash used in financing activities (861 ) (603 ) Net change in cash and cash equivalents (2,896 ) (1,560 )Cash and cash equivalents at beginning of period 5,237 6,797 Cash and cash equivalents at end of period $ 2,341 $ 5,237