Xtant Medical (XTNT) 8-K Xtant™ Medical Reports Record $22.3 Million Revenue and 14.1% Growth for the Fourth Quarter2015

 

Xtant™ Medical Reports Record $22.3 Million Revenue and 14.1% Growth for the Fourth Quarter2015

See footnote about the use of pro forma financialinformation

Fourth Quarter2015Highlights:

ŠConsolidated total revenue increased 14.1% to a record $22.3 million compared to pro forma fourth quarter 2014 revenue of $19.5million

ŠConsolidatedgrossprofitincreased14.9%to$14.9millioncomparedtoproformafourth quarter 2014 gross profit of $13.0million

ŠConsolidatedgrossmarginsimprovedto67.0%,comparedto66.5%reportedinthefourth quarter of2014

ŠConsolidated net income for the quarter improved to $11.6 million compared to apro formanetlossof$5.0millioninthefourthquarterof2014

ŠConsolidatedearningspershareimprovedto$0.97comparedtoproformalosspershare of$0.35inthefourthquarterof2014

Full-Year2015Highlights:

ŠProformatotalrevenueincreased11.4%to$86.5millioncomparedtoproforma2014 revenue of $77.7million

ŠProformagrossprofitincreased10.5%to$56.6millioncomparedtoproforma2014 gross profit of $51.2million

ŠProformagrossmarginsfortheyearwere65.4%,whichwereslightlylowerthanthepreviousyear

ŠProformanetlossfortheyearimprovedto$5.8millioncomparedtoproformanetlossof $15.6 million in2014

BELGRADE, Mont., March 15, 2016 (GLOBE NEWSWIRE) -- Xtant™ Medical Holdings, Inc. (NYSE:XTNT),a leader in the development of regenerative medicine products and medical devices, today reported its financial results for the period ended December 31st, 2015. On a pro forma basis, the Company reported annualrevenuesofapproximately$86.5millionandanetlossfortheyearofapproximately$5.8million.

Revenue

Consolidated fourth quarter 2015 revenue was approximately $22.3 million, an increase of 14.1% compared to pro forma revenue of approximately $19.5 million for the same period during2014.

Pro forma revenue for the full year 2015 was approximately $86.5 million, compared to pro forma 2014 revenue of approximately $77.7 million, representing an increase of 11.4% over the prior year. Excluding revenue associated with an Original Equipment Manufacturer (OEM) customer, pro forma full year 2015 revenue increased 14.8% to $81.4million.

Stated in000's

	FY'14		FY'15
ProFormaRevenue	$	77,651	$	86,518
Growth				11.4	%
Pro FormaOEMRevenue	$	6,751	$	5,81,425
Pro Forma Revenue Excluding OEM	$	70,900	$	81,425
Growth				14.8	%

GrossProfit

Consolidated gross profit for the fourth quarter of 2015 was $14.9 million or 67.0% of revenues, compared toproformagrossprofitof$13.0millionor66.5%ofrevenuesforthefourthquarterof2014.

For the year, pro forma gross profit was approximately $56.6 million, compared with pro forma 2014 gross profit of $51.2 million. Pro forma gross margin for the year was 65.4%, slightly lower than 2014 pro forma gross margin of66.0%

Sales andMarketingExpenses

Consolidated fourth quarter 2015 sales and marketing expenses increased to $10.6 million, as compared to pro forma sales and marketing expenses of $9.3 million during the same period in 2014. For the quarter, sales and marketing as a percentage of revenues increased slightly to 47.6%, compared to 47.4% in the fourth quarter of 2014, on a pro formabasis.

Pro forma 2015 sales and marketing expenses increased to $39.3 million, as compared to pro forma 2014 sales and marketing expenses of $33.3 million. As a percentage of revenues, sales and marketing expenses increased to 45.5% compared to 42.9% reported for the full year 2014. The increase was mainly due to the Company’s planned and strategic expansion of its salesforce, combined with its acquisition of X- spine during the third quarter of2015.

GeneralandAdministrativeExpenses

In the fourth quarter, consolidated general and administrative expenses increased to $4.2 million as compared to pro forma general and administrative expenses of $3.3 million reported for the same period last year. As a percentage of revenues, general and administrative expenses were 18.9% during the period as compared to 16.7% for the same period during 2014. The increase in general and administrative expenses was primarily attributable to increased headcount for the X-spinesubsidiary.

Pro forma 2015 general and administrative expenses increased to $16.6 million as compared with $13.9 million reported for the same pro forma period last year. As a percentage of revenues, general and administrative expenses were 19.2% as compared to 17.9% for2014.

NetIncome/Loss

The fourth quarter 2015 consolidated net income was $11.6 million, compared to the pro forma year-ago period net loss of $5.0 million. The increase was primarily due to a one-time recording of a deferred tax benefit of $17.5 million. Consolidated earnings per share improved to $0.97 compared to pro forma loss per share of $0.35 in the fourth quarter of2014.

For the full-year 2015, the Company had a pro forma net loss of $5.8 million compared to a pro forma net loss of $15.6 million for 2014. Pro forma net loss per share for the full-year 2015 was $0.65 a share compared to pro forma net loss per share of $1.11 for2014.

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 fourth quarter of 2015 was a loss of $350,000 compared to a pro forma gain of $403,000 for the same period during 2014. The unfavorable change in EBITDA was due to higher sales and marketing and general and administrative expenses.

Full year 2015 pro forma EBITDA was a loss of $33,000 compared to a pro forma gain of $3.9 million in the prioryear.

FinancialLiquidity

Cash on hand as of December 31, 2015, was $6.4 million, as compared to $4.5 million as of December 31, 2014. Net working capital as of December 31, 2015 increased $13.3 million to $23.9 million, as compared to $10.6 million as of December 31,2014.

OutlookforFull Year2016

The Company also provided full year 2016 revenue guidance based on thefollowing:

Stated in 000's	2014		2015			2016 Guidance
Pro Forma Revenue	$	77,651	$	86,518			$94,000  -$99,000
Growth				11.4	%		8.7% -14.4%
Pro Forma Revenue	$	6,751	$	5,093			$250-$500
Pro Forma Revenue Excluding  OEM	$	70,900	$	81,425			$93,750  -$98,500
Growth				14.8	%		15.1% -21.0%
EBITDA	$	3,854	$	(33	)		$4,300 -$6,300

ConferenceCallto beHeld March16,2016

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 March 16, 2016.Pleaserefertotheinformationbelowforconferencecalldial-ininformationandwebcastregistration.

ConferenceDate:March 16, 2016, 10:00 AMET

ConferenceDial-in:877-269-7756

InternationalDial-in:201-689-7817

ConferenceCall Name:Xtant Medical’s Fourth Quarter 2015 ResultsCall

Webcast Registration:ClickHere

Following the live call, a replay will be available on the Company’s website,www.xtantmedical.com, under “InvestorInfo.”

Useof Pro Forma Financial Information

On July 31, 2015, Bacterin 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 financialresultsforthethreemonthsendedDecember31,2015,theresultspresentedareonaproforma 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 theacquisition.

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-K for the fiscal year ended December 31, 2015, which will be filed with the Securities and Exchange Commission on or about March 30, 2016 and will include the Company’s audited consolidated financial statements as of and for the years ended December 31, 2015 and December 31,2014.

AboutXtant™ Medical Holdings,Inc.

Xtant Medical Holdings, Inc. (NYSE:XTNT) develops, manufactures and markets class-leadingregenerativemedicine 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 visitwww.xtantmedical.com.

Important Cautions RegardingForward-lookingStatements

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: the Company’s ability to successfully integrate the acquisition of X-spine; the ability of the Company’s sales force to achieve expected results; the Company’s ability to meet its existing and anticipated contractual obligations, including financial covenant and other obligations contained in the Company’s secured lending facility; the Company’s ability to manage cash flow; the Company’s ability to develop, market, sell and distribute desirable applications, products and services and to protect its intellectual property; the ability of the Company’s customers to pay and the timeliness of such payments; the Company’s ability to obtain financing as and when needed; changes in consumer demands and preferences; the Company’s ability to attract and retain management and employees with appropriate skills and expertise; the impact of changes in market, legal and regulatory conditions and in the applicable business environment, including actions of competitors; and otherfactors.

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.” 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 bylaw.

XTANT MEDICAL HOLDINGS,INC.

Consolidated Statement of Operations for the Three Months Ended December 31, 2015(unaudited)

ProFormaStatementofOperationsfortheThreeMonthsEndedDecember31,2014andtheTwelveMonthsEnded December 31, 2014 and 2015(unaudited)

	For the Three Months Ended Dec 31,						For the Twelve Months Ended Dec 31,
	2015			2014			2015			2014
Orthopedic Product Sales	$	21,771,750		$	19,260,663		$	85,235,170		$	76,820,056
Other		494,072			254,850			1,282,429			831,000
Total Revenue		22,265,822			19,515,513			86,517,599			77,651,056
Cost of sales		7,353,446			6,539,582			29,913,686			26,403,206
Gross Profit		14,912,376			12,975,932			56,603,913			51,247,850
Operating Expenses
General and administrative		4,201,394			3,254,106			16,612,883			13,922,419
Sales and marketing		10,607,475			9,251,548			39,334,250			33,328,229
Research and development		1,027,166			1,042,376			3,840,958			3,583,468
Depreciation and amortization		2,019,258			1,139,334			6,220,316			4,607,467
Acquisition and Integration related expenses		1,079,236			0			4,935,755			0
Gain from the Extinguishment of Debt		0			0			(2,345,019	)		0
Impairment of Assets		0			912,549			233,748			912,549
Non-cash consulting		55,296			53,150			246,165			135,075
Total Operating Expenses		18,989,824			15,653,063			69,079,056			56,489,206
Net Gain (Loss) from Operations		(4,077,448	)		(2,677,132	)		(12,475,142	)		(5,241,356	)
Other Income (Expense)
Interest expense		(2,802,807	)		(2,971,628	)		(10,948,845	)		(11,628,605	)
Change in warrant derivative liability		348,943			697,863			270,020			1,736,053
Non-cash consideration associated with stock purchase agreement		0			0			(558,185	)		0
Other income (expense)		582,123			(65,548	)		395,006			(318,836	)
Total Other Income (Expense)		(1,871,740	)		(2,339,313	)		(10,842,004	)		(10,211,388	)
Net Gain (Loss) from Operations Before (Provision) Benefit for Income Taxes		(5,949,188	)		(5,016,445	)		(23,317,146	)		(15,452,744	)
Benefit (Provision) for Income Taxes
Current		0			(5,554	)		(65,387	)		(112,337	)
Deferred		17,537,408			0			17,537,408			0
Net Income (Loss)	$	11,588,220		$	(5,021,999	)	$	(5,845,125	)	$	(15,565,081	)
EBITDA Gain (Loss)	$	(349,767	)	$	403,224		$	(33,306	)	$	3,853,606
Net Income (loss) per share:
Basic	$	0.97		($	0.35	)	($	0.65	)	($	1.11	)
Dilutive	$	0.97		($	0.35	)	($	0.65	)	($	1.11	)
Shares used in the computation:
Basic		11,890,104			6,677,146			9,055,483			5,954,195
Dilutive		11,890,104			6,677,146			9,055,483			5,954,195

XTANT MEDICAL HOLDINGS,INC.

Consolidated Statements ofOperations

	For the Three Months Ended Dec 31,						For the Twelve Months Ended Dec 31,
	2015			2014			2015			2014
	(unaudited)			(unaudited)			(unaduited)
Orthopedic Product Sales	$	21,771,750		$	8,856,574		$	58,194,249		$	34,569,160
Other		494,072			224,831			1,151,468			762,652
Total Revenue		22,265,822			9,081,406			59,345,717			35,331,812
Cost of sales		7,353,446			3,315,362			20,262,728			13,034,314
Gross Profit		14,912,376			5,766,044			39,082,989			22,297,498
Operating Expenses
General and administrative		4,201,394			2,221,990			12,993,307			8,886,972
Sales and marketing		10,607,475			487,907			28,731,184			16,912,865
Research and development		1,027,166			4,525,407			2,546,362			1,443,018
Depreciation and amortization		2,019,258			55,404			3,819,588			271,748
Acquisition and Integration related expenses		1,079,236			0			4,935,755			0
Gain from the Extinguishment of Debt		0			0			(2,345,019	)		0
Impairment of Assets		0			912,549			233,748			912,549
Non-cash consulting		55,296			53,150			246,165			135,075
Total Operating Expenses		18,989,824			8,256,408			51,161,091			28,562,227
Net Gain (Loss) from Operations		(4,077,448	)		(2,490,364	)		(12,078,101	)		(6,264,729	)
Other Income (Expense)
Interest expense		(2,802,807	)		(1,444,248	)		(7,733,748	)		(5,660,357	)
Change in warrant derivative liability		348,943			697,863			270,020			1,736,053
Non-cash consideration associated with stock purchase agreement		0			—			(558,185	)		0
Other income (expense)		582,123			(65,548	)		388,176			(318,836	)
Total Other Income (Expense)		(1,871,740	)		(811,933	)		(7,633,737	)		(4,243,140	)
Net Gain (Loss) from Operations Before (Provision) Benefit for Income Taxes		(5,949,188	)		(3,302,297	)		(19,711,838	)		(10,507,869	)
Benefit (Provision) for Income Taxes
Current		0			0			0			0
Deferred		17,537,408			0			17,537,408			0
Net Income (Loss)	$	11,588,220		$	(3,302,297	)	$	(2,174,430	)	$	(10,507,869	)
Net Income (loss) per share:
Basic	$	0.97		($	0.35	)	($	0.24	)	($	1.76	)
Dilutive	$	0.97		($	0.35	)	($	0.24	)	($	1.76	)
Shares used in the computation:
Basic		11,890,104			6,677,146			9,055,483			5,954,195
Dilutive		11,890,104			6,677,146			9,055,483			5,954,195

XTANTMEDICALHOLDINGS,INC.

CONSOLIDATED BALANCESHEETS

	As of December 31,
	2015			2014
	(unaduited)
ASSETS
Current Assets:
Cash and cash equivalents	$	6,368,016		$	4,468,208
Trade accounts receivable, net of allowance for doubtful accounts of $2,579,634 and $1,392,989, respectively		15,385,218			4,427,081
Inventories, net		22,684,716			9,558,648
Prepaid and other current assets		985,471			654,140
Total current assets		45,423,421			19,108,077
Non-current inventories		1,607,915			1,934,258
Goodwill		41,534,626			0
Property and equipment, net		11,816,629			4,654,527
Intangible assets, net		40,237,289			655,490
Other assets		2,439,558			1,598,539
Total Assets	$	143,059,438		$	27,950,891
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	9,386,531		$	3,876,760
Accounts payable - related party		1,406,763			250,629
Accrued liabilities		9,595,851			1,921,301
Warrant derivative liability		1,050,351			1,320,371
Current portion of capital lease obligations		35,139			61,970
Current portion of royalty liability		0			1,000,750
Current portion of long-term debt		0			50,671
Total current liabilities		21,474,635			8,482,452
Long-term Liabilities:
Capital lease obligation, less current portion		7,800			11,808
Long term royalty liability, less current portion		0			6,361,216
Long term convertible debt, less current portion		68,000,000			0
Long-term debt, less current portion		44,700,476			20,870,330
Total Liabilities		134,182,911			35,725,806
Commitments and Contingencies
Stockholders' Equity (Deficit)
Preferred stock		—			—
Common stock		11			7
Additional paid-in capital		81,917,488			63,091,620
Accumulated deficit		(73,040,972	)		(70,866,542	)
Total Stockholders’ Equity (Deficit)		8,876,527			(7,774,915	)
Total Liabilities & Stockholders’ Equity	$	143,059,438		$	27,950,891

XTANT MEDICAL HOLDINGS,INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

	For the Twelve Months Ended Dec 31,
	2015			2014
Operating activities:
Net Income (Loss)	$	(2,174,430	)	$	(10,507,869	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,889,272			952,320
Purchase accounting valuation allowance		(17,537,408	)		0
Non-cash interest		4,107,225			814,374
Gain from the Extinguishment of Debt		(2,345,019	)		0
Non-cash consideration associated with stock purchase agreement		558,185			0
(Gain)/Loss on sale of fixed assets		(596,883	)		25,269
Impairment of Assets		956,395			912,549
Amortization of debt discount		707,281			1,632,245
Non-cash consulting expense/stock option expense		836,741			935,316
Provision for losses on accounts receivable and inventory		700,234			647,765
Change in derivative warrant liability		(270,020	)		(1,736,053	)
Changes in operating assets and liabilities:
Accounts receivable		(5,512,429	)		283,624
Inventories		(545,713	)		(17,392	)
Prepaid and other assets		(1,044,962	)		(455,048	)
Accounts payable		644,149			715,706
Accrued liabilities		7,527,514			(1,526,865	)
Net cash used in operating activities		(9,099,868	)		(7,324,059	)
Investing activities:
Acquisition of X-spine Systems, Inc.		(72,975,200	)		0
Purchases of property and equipment and intangible assets		(2,263,033	)		(299,978	)
Proceeds from sale of fixed assets		1,667,195			1,626
Net cash used in investing activities		(73,571,038	)		(298,352	)
Financing activities:
Net proceeds from the issuance of long term and convertible debt		83,897,361			4,000,000
Payment on royalty obligation		(542,905	)		0
Net proceeds from equity private placement		515,395			0
Payments on capital leases		(101,760	)		(171,957	)
Payment on long term debt		(1,325,814	)		(653,397	)
Net proceeds from the issuance of stock		2,128,437			5,869,633
Net cash provided by financing activities		84,570,714			9,044,279
Net change in cash and cash equivalents		1,899,808			1,421,868
Cash and cash equivalents at beginning of period		4,468,208			3,046,340
Cash and cash equivalents at end of period	$	6,368,016		$	4,468,208

XTANT MEDICAL HOLDINGS,INC.

CalculationofConsolidatedEBITDAfortheThreeMonthsEndedDecember31,2015(unaudited)

AndofProFormaEBITDAfortheThreeMonthsEndedDec.31,2014andTwelveMonthsEndedDec.31,2014and2015(unaudited)

	For the Three Months Ended Dec 31,						For the Three Months Ended Dec 31,
	2015			2014			2015			2014
Net Gain (Loss) from Operations	($	4,077,448	)	($	2,677,132	)	($	12,475,142	)	($	5,241,356	)
Impairment of Assets		0			912,549			233,748			912,549
Acquisition and Integration related expenses		1,079,236			0			4,935,755			0
Gain from the Extinguishment of Debt		0			0			(2,345,019	)		0
Non-Cash Compensation		163,124			(16,657	)		794,358			935,316
Depreciation & Amortization		2,485,321			2,184,464			8,822,994			7,247,097
EBITDA Gain (Loss)	($	349,767	)	$	403,224		($	33,306	)	$	3,853,606