GlobeNewswire Inc | Nov 12, 2021 07:00AM EST

November 12, 2021

BELGRADE, Mont., Nov. 12, 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 third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights:

-- Revenue for the third quarter of 2021 totaled $13.8 million, compared to $14.0 million for the prior-year period -- Loss from operations totaled $1.4 million compared to operating income of $0.8 million for the prior-year period -- Net loss incurred in the third quarter of 2021 totaled $1.8 million compared to a net loss of $1.4 million for the prior-year period -- Non-GAAP Adjusted EBITDA for the third quarter of 2021 totaled a loss of $0.5 million, compared to Non-GAAP Adjusted EBITDA of $1.5 million for the prior-year period

While we have made significant investments that have Xtant well-positioned for long-term growth, the impact from the delta variant of COVID-19 created near-term pressures on elective spinal procedures across our key markets, said Sean Browne, President and CEO of Xtant Medical. In spite of these challenges, we continued to grow our distribution network, expand into adjacent markets and introduce exciting, new products to market, all of which are important pillars of our growth strategy. Our unyielding focus on bringing innovative biologics products to patients in need allows us to fulfill our mission of honoring the gift of donation.

Third Quarter 2021 Financial Results

Third quarter 2021 revenue was $13.8 million, compared to $14.0 million for the same quarter in 2020. The decrease in revenue was largely attributable to reductions in elective procedures in key markets due to the impact of COVID-19.

Gross margin for the third quarter of 2021 was 52.2%, compared to 66.0% for the same period in 2020. The decrease was primarily attributable to a shift in product sales mix with an increase in original equipment manufacturer (OEM) channel sales and a reduction in independent agent channel sales, a temporary reduction in manufacturing overhead absorption, and an increase in the write-down of excess and obsolete inventory.

Operating expenses for the third quarter of 2021 totaled $8.6 million, compared to $8.5 million for the third quarter of 2020. The increase was primarily due to greater salaries and wage expenses and marketing and travel expenses, partially offset by reduced employee compensation expense and lower commissions resulting from a greater a mix of commission-free private label and OEM sales.

Third quarter 2021 net loss totaled $1.8 million, or $0.02 per share, compared to the third quarter 2020 net loss of $1.4 million, or $0.10 per share.

Non-GAAP Adjusted EBITDA for the third quarter of 2021 totaled a loss of $0.5 million, compared to Non-GAAP Adjusted EBITDA of $1.5 million for the prior-year period. 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 compensation, 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 third quarter 2021 financial results on Friday, November 12, 2021 at 9:00 AM ET. To access the webcast, Click Here. To access the conference call, dial 866-682-6100 within the U.S. or 862-298-0702 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 continued investment in its growth initiatives and their impact on the Companys future growth strategy, operating results and financial performance. 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: the Companys future operating results and financial performance; the ability to increase or maintain revenue; possible future impairment charges to long-lived assets and goodwill and write-downs of excess inventory if revenues continue to decrease; the ability to remain competitive; the ability to innovate, develop and introduce new products; the ability to engage and retain new and existing independent distributors and agents and qualified personnel and the Companys dependence on key independent agents for a significant portion of its revenue; the effect of the COVID-19 pandemic and hospital staffing shortages on the Companys business, operating results and financial condition, especially when they affect key markets; the Companys ability to implement successfully its future growth initiatives and risks associated therewith; the effect of product sales mix changes on the Companys financial results; 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, including without limitation its most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 anticipated to be filed with the SEC. 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: david.carey@finnpartners.com

XTANT MEDICAL HOLDINGS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except number of shares and par value) As of As of September December 31, 30, 2020 2021 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 18,175 $ 2,341 Restricted Cash 439 - Trade accounts receivable, net of allowance forcredit losses and doubtful accounts of $576 and 6,321 6,880 $653, respectivelyInventories 19,708 21,408 Prepaid and other current assets 945 736 Total current assets 45,588 31,365 Property and equipment, net 4,971 4,347 Right-of -use asset, net 1,369 1,690 Goodwill 3,205 3,205 Intangible assets, net 414 457 Other assets 244 402 Total Assets $ 55,791 $ 41,466 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 2,355 $ 2,947 Accrued liabilities 4,079 5,462 Current portion of lease liability 451 423 Finance lease obligations 31 20 Line of credit 3,488 - Current portion of long-term debt - 16,797 Total current liabilities 10,404 25,649 Long-term Liabilities: Lease liability, less current portion 961 1,303 Finance lease obligations, less current portion 111 - Long-term debt, plus premium and less issuance 11,678 - costsTotal Liabilities 23,154 26,952 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; 86,796,175 shares issued andoutstanding as of September 30, 2021 and - - 77,573,680 shares issued and outstanding as ofDecember 31, 2020Additional paid-in capital 265,539 244,850 Accumulated deficit (232,902 ) (230,336 )Total Stockholders? Equity 32,637 14,514 Total Liabilities & Stockholders? Equity $ 55,791 $ 41,466

XTANT MEDICAL HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited, in thousands, except number of shares and per share amounts)

Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Revenue Orthopedic $ 13,743 $ 13,980 $ 41,193 $ 39,207 product salesOther revenue 34 36 100 115 Total revenue 13,777 14,016 41,293 39,322 Cost of sales 6,586 4,768 16,498 13,913 Gross profit 7,191 9,248 24,795 25,409 Gross profit % 52.2 % 66.0 % 60.0 % 64.6 % Operating expensesGeneral and 3,107 3,042 10,307 10,293 administrativeSales and 5,267 5,270 15,712 15,578 marketingResearch and 262 176 719 529 developmentTotaloperating 8,636 8,488 26,738 26,400 expenses (Loss) Incomefrom (1,445 ) 760 (1,943 ) (991 )operations Other income Interest (329 ) (2,097 ) (529 ) (5,258 )expenseTotal Other (329 ) (2,097 ) (529 ) (5,258 )Expense Net LossBefore (1,774 ) (1,337 ) (2,472 ) (6,249 )Provision forIncome Taxes Provision for (30 ) (23 ) (94 ) (68 )income taxes Net Loss $ (1,804 ) $ (1,360 ) $ (2,566 ) $ (6,317 ) Net loss per share:Basic $ (0.02 ) $ (0.10 ) $ (0.03 ) $ (0.48 )Dilutive $ (0.02 ) $ (0.10 ) $ (0.03 ) $ (0.48 ) Shares used inthe computation:Basic 86,763,210 13,231,823 84,926,656 13,210,386 Dilutive 86,763,210 13,231,823 84,926,656 13,210,386

XTANT MEDICAL HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited, in thousands) Nine Months Ended September 30, 2021 2020 Operating activities: Net loss $ (2,566 ) $ (6,317 )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization 1,041 1,658 Gain on disposal of fixed assets (164 ) (307 )Non-cash interest 38 5,245 Non-cash rent expense 8 12 Stock-based compensation 1,501 726 Provision for reserve on accounts receivable (25 ) 296 Provision for excess and obsolete inventory 572 429 Changes in operating assets and liabilities: Accounts receivable 584 2,463 Inventories 1,128 (4,999 )Prepaid and other assets (126 ) (890 )Accounts payable (592 ) 626 Accrued liabilities (1,383 ) (589 )Net cash provide by (used in) operating 16 (1,647 )activitiesInvesting activities: Purchases of property and equipment (1,489 ) (907 )Proceeds from sale of fixed assets 194 173 Net cash used in investing activities (1,295 ) (734 )Financing activities: Payment of taxes from withholding of common (23 ) - stock on vesting of restricted stock unitsPayments on financing leases (42 ) (115 )Costs associated with refinancing (136 ) - Payments on long-term debt (411 ) - Borrowings on line of credit 22,767 Repayments of line of credit (23,029 ) - Proceeds from private placement, net of cash 18,426 - issuance costsNet cash used in financing activities 17,552 (115 ) Net change in cash and cash equivalents 16,273 (2,496 )Cash and cash equivalents at beginning of 2,341 5,237 periodCash and cash equivalents at end of period $ 18,614 $ 2,741 Reconciliation of cash and restricted cashreported in the condensed consolidated balance sheetsCash and cash equivalents $ 18,175 $ 2,741 Restricted cash 439 - Total cash and restricted cash reported in the $ 18,614 $ 2,741 condensed consolidated balance sheets

XTANT MEDICAL HOLDINGS, INC.CALCULATION OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA(Unaudited, in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Net Loss $ (1,804 ) $ (1,360 ) $ (2,566 ) $ (6,317 ) Other expense 21 (1 ) 62 5 Depreciation and 310 504 1,041 1,658 amortizationInterest expense 329 2,097 529 5,258 Tax expense 30 23 94 68 Non-GAAP EBITDA (1,114 ) 1,263 (840 ) 672 Non-GAAP EBITDA/ -8.1 % 9.0 % -2.0 % 1.7 %Total revenue NON-GAAP ADJUSTED EBITDA CALCULATIONNon-cash 580 237 1,501 726 compensationSeparation-related - (50 ) - 699 expensesChange in warrantderivative - - - (7 )liabilityLitigation reserve - 5 550 5 Non-GAAP Adjusted $ (534 ) $ 1,455 $ 1,211 $ 2,095 EBITDA Non-GAAP AdjustedEBITDA/Total -3.9 % 10.4 % 2.9 % 5.3 %revenue