Earnings call transcript Q2 2023

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Operator

Greetings.

You're welcome Xtant Medical's Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

to Partners. conference like Steinberg to now FINN of would turn over the Matt I ahead. go Please

Matt Steinberg

Thank you, welcome results operator and call. XXXX second financial quarter to Xtant Medical's

and President Joining Chief Sean today Chief Browne, meme Executive Officer. is Officer; Scott Neils, Financial and

and being company's be posted Today's website webcasted on playback. for call will is the

and call, future expected performance. During this make forward-looking company's management the course statements the certain may of regarding future events

on as existing identified These plan, trends information, forward-looking current statements believe, be words reflect and other similar anticipate, by may, perspective such and words expect, Xtant's will, can intend, meaning. and should, with

Such forward-looking on in the March Xth, statements in and involve SEC of results Form company's are those risk SEC uncertainties, on may reports materially. differ the on future with the performance risks noted not subsequent press filed and including and XXXX, releases. annual guarantees section Actual factors report and XX-K

discussion Please website. GAAP our detailed describes The appear release press and our results results' non-GAAP of our our otherwise today's release and to filed X-K Form a non-GAAP that certain financial release the press our are measures. narrative company's available press use reconciliations, such the of measures. provides to tables on include financial Note that in financial with which refer

company who For at law. Xst, approximately replay, you benefit any held the by except applicable of to to on those Daylight as obligation forward-looking Tuesday, August statements X:XX The may the and Time. listening be declines of update this required Eastern recorded call its was AM

over to Browne. like Sean I'd the call to Now, turn

Sean Browne

that mission year-over-year, by biologics highlight. notable, number of the gift of we life key growth complete pleased business donation today's On I'd with we our long-term Thank a delivered following live honoring on make full and guided key possible. are patients like of morning continues can revenue you, as are that four to Matt everyone. good businesses growth Xtant by core our our driven there and company our fixation Most so updates a initiatives, to progress as call, strategy. that of And the and our XX%

highlight underscoring strategy. I'd with was expectations, this performance of execution quarter we adjusted of the internal achieved efforts closed and EBITDA. am milestone incredible continued than of made faster second thrilled with ahead our that thank our also for This team I our them possible schedule. the their that the

opportunity Last to Friday, businesses. international the Xtant that we announced with fixation expand contract to and new distributors. and this are footprint bidder was and say, for Needless domestic spinal winning our we at Surgalign's thrilled biologics

steps today The next update when we on any you our guidance. on working we are We close status we and excludes are that guidance plan providing transaction this if closing. of financial will transaction, impact update to and this financial and

out performance, first adjacent are on; breaking In of acquisition. product a reminder three, growth penetration; strategic this expansion; one, our provide to I four and key introductions; they focused want distribution quarter's four, network two, and market new pillars,

pleased solid to biologics our generate are for We products. continue we demand that

business, our channels positive we growth and from interlaminar are driving newly Coflex seeing device. of our We across all contributions acquired are stabilizer

It to that growth. reviving properly integration aggressively was this are business, progress business that note to smoothly. in we previously this business The It's transition important continues to Coflex decline. which take to will time

highly We product. profitable are way well our this on to restoring

strong launches. initial products since demand Organically, product and their OsteoVive have our sustained OsteoFactor Plus

us acquisitions the that opportunistic we product position addresses orthobiologics entire portfolio to launches and forward market remain market, moving current share. Our greater take on billion future and $X.X will

XX the XX each increase revenue least at plan Now, annually. combined well-positioned our of stated new distributors us turning network. addition has our distributor distributors, to new distribution XX% our quarter The to by our Coflex against of with

at stands now network distribution Our than more total. XXX

expansion new in targeting Going the opportunities markets we will across underserved continue US. forward,

Our ankle, and markets. trauma, performing market orthopedic and is we adjacent implant foot and the well penetrate further strategy

delivered sales front, recently the on capacity. expanded several we with OEM our On

and We promising the with success continues also trends fixation our saw from business. the nicely to center market, surgical supports ambulatory which grow

to an important strategy. ASC as part our market continue of We expansion growth view our

ahead, Looking in to and both diligent remain we the transformational as year our acquisitions tuck-in progresses. approach

will the all deals, focus cash primary we our Our hit on we three assets be With that and three capacity the bring capabilities, Surgalign feel both flows. have and on Cs; Cs. Coflex

process have been to efficiencies. In made and quarters, initiatives production our of goal. share increase that achieving focus pleased in strides recent key we significant improvement to this designed successfully the has capacity I'm operations implement our to

with noted come earlier, past have from Belgrade to capacity us those having our all markets, enabled at As our our gains I capacity labor two full quarters orders increased adjacent the fulfill OEM plant. for

growth XX% the Last year, by having was of less capacity labor our most hampered than year. for

the thrilled needless in drive have to So, we to say, our help people are place mission. to us

of time for up plant. companies. clear to and these discipline room XX% our one new One, concept budget. that goal a on roughly is in what additions Earlier significantly fronts. clean organization project operational great getting entire having organization under completed of to very main two most focusing important that on and Two, on makes happy opened we focus is plant the focused was in This organizational kind in of space on July, the I'm critical important our say

of to our the for around management And broken years processes. the turning that back as business in come. thrive is team prospering business growing a had now we what Today, a started, to at building operational company we will of have the fix of this many kind and will be that looking cornerstone challenge discipline

supply managing were even our than year Consequently, ago. much at and we a better chain processes we are today

are is our scale. life-changing selling capable given of delivering products a of result, we the greater the a done. As said, on robust work not products demand and That

explore initiatives. We various capacity our to our continue increase support to to strategies growth

to growth today's XX% approximately press XX% potential XX% contributions These revenue to if it include our in from the year-over-year. when not and raised previous expectations XXXX do to our range from annual Finally, XX%, Surgalign closes. transaction full release, up range of we year

underscore of confidence this the XXXX Our growth six strong achieving revenue our results goal. for months in first annual

like Now, the who our turn results. will quarter discuss Scott, financial XXXX to call to over I'd second

Scott Neils

Sean to XXXX robust you, the $XX.X morning good revenue from million Cofix annual and the increase product for the of attributed lines. XX% $XX.X acquired This to compared everyone. and million Total period was XXXX. sales quarter for Coflex and primarily agent second Thank recently same contributions is greater independent in

the Gross products, higher partially quarter production the costs. to by was XX.X% and of and was for in primarily The of Coflex to offset Cofix XXXX. attributable XX.X% XXXX increase margin compared period the same for second contribution

were period operating to Second a expenses compared ago. in quarter million XXXX million $X.X $XX.X the year same

same in XX% percentage As a of expenses revenue, were period XX% ago. compared year a operating total to the

is expenses in the and million increase General XXXX. $X The the million same related administrative attributable June XXXX, additional for X the for months were acquisition. to expenses period ended to to $X.X compared primarily XX, Coflex

$X.X Coflex months and commissions increased million to acquisition. period for compared higher the three Sales XXXX, from June and salaries the $X.X revenues and sales increase due same from for were XXth, marketing wages to in million ended is This additional expenses primarily XXXX.

$X.X million was EBITDA $X.X adjusted for $X.X period. of of an loss same the in loss XXXX the net or or compared XXXX second $X.XX of compared EBITDA comparable million per period million the quarter of to quarter Adjusted in $X.XX million in Net a the was per for to share loss share second XXXX XXXX. $X.X

of XXth, million cash; of $XX.X and inventory; June net $XX.X available revolving $X.X of cash million million As equivalents, XXXX, we accounts of credit under receivable; million cash, had and facility. restricted $X

from private Xtant capital quarter, credited closed use other with end proceeds and for investors working of Subsequent The $XX a net the general expects to to million. private corporate gross the placement purposes. proceeds for of placement company the the

now line open for questions. may you Operator, the

Operator

this Thank question-and-answer we you. session. Instructions] [Operator conducting be At a time, will

Knickerbocker line with question. comes with question Please Capital first Craig-Hallum proceed the our your from Group. And Chase of

Chase Knickerbocker

Good and Sean Scott. on another morning good quarter here. Congrats

Sean Browne

Hey How you? Great. are Chase.

Chase Knickerbocker

drive around there? guess little driving model. you there? in What contribution organic here I've Hey hardware, in improvements got And of Sean, I just in it the I kind And the do be to thanks. strength continue? seeing you back particularly there, by expect are was any start to a bit dynamics onion may trying hardware. What's what Coflex you XX% approximately? want rough legacy my in to reimbursement the And story growth numbers peeling

Sean Browne

little. little unpack by that a I'll So,

things especially you So, really we're look fixation first, first where given the overall, is, been. business at that when about have where we thrilled

quarter good base at overall just when us. was when prior business, prior that year-over-year So, very we on revenue, in at like was a which -- fixation of a business, was It the least another on it X%, business, nice year, Coflex XX% the you over look year throw very the variance, our net-net. year-over-year, fixation for

think you that about that this look story. a is reimbursement overall at is the one reimbursement actually you is Coflex Coflex and and a as something When about story, business, this when

so for markets. getting And Medicare alone us could more than are focused our two Those and Advantage this Medicare just us. very, make huge we're opportunities that on guys that extraordinary for the a very winner

end, the possible. that and much sales at going focused team market something, that's So, after really as -- we least from as have our guys new our

of that point. along really And that so pickups that we're kind the about very alone But of bullish mind way. never kind even just get that very, what starting we any commercial is our

of you were kind So, I the hope answered for there. I looking questions

Chase Knickerbocker

was in what do Or of should of and decision that how orthobiologics, between channels? make the those of guess, demand In now? distributor how sense. And Are distributor the independent I orders between kind OEM that about makes fully all up channel? kind two we independent caught those supporting impact strike you that Yes, orders? of shipping a to how balance No. channel you think OEM you in those also kind

Sean Browne

Yes. is year not we a Happily, were which where we're up, ago. caught

we planned that with both about now, excited mentioned, actually capacity labor the So, had. the we're as we in and really access expansion

OEM now, right is of about look revenue. overall business the about our X.X% you when So,

you anything, always So, your promote want again, like own to brand.

about So, do, that continues we what now, right thing. fact XX% that we that's a right? always keep so be want to Xtant our good of And brand the to going,

say like same one about higher an thing I from perspective. will looks nets our is OEM it operating the out margins, Certainly, business the income

it's at So, when look it. margins it you help -- doesn't gross the

bottom very However, a still it's line perspective, business. from nice a

yes, -- so those have we And those make between businesses. not big we're to decisions had so

when up talk one is just instance, for with lines, on our product the high a we some that. we are can about whole there is demand, of and Putty Putty. things OEM OEM demand mean that facility I fill

However, donor. a that's not use an optimal of

going And so out that that of controlling is we want to go to the we're make how door. sure much

that one is of one organization the And is most think you most or and you has so me, same to this only but that it's go for the business, also most the our mission, thing again, goal our which not our shareholders is mission-driven and -- back if the congruent least at about have.

producing So, that if thing the doing right honoring doing going by be possible best and the gift, products. we're thing donor, to right the we're we're the and

And really It's so certainly, one a that's product outstanding. Putty our like XXX(k) it. product. We is

products. a think for there's donor uses higher that better end we However, of use

And enjoy. be And that if we're Putty so on part, on But OEM we'll always kind much keep it of an any something too our not there's making the anything most on will put sure we business that. is control we eye side. of for the making that

Chase Knickerbocker

guess, of staying those much are I had hear Got to that of you Capacity there. good that it. then How now? kind it's already? built, maybe is And is up XX%. rooms And staffed online said it clean expansion,

why coming half, orthobiologics is OEM be that rate channel the And to that's then in me going would to half increase in that kind met is relative through pretty see second that if or of independent line the half, talk quickly not to growth on as capacity well? first demand increased second

Sean Browne

Yes.

question. that Okay. unpack break or that. Good I'll down

we're rooms because is. First -- that ramping the some of still training up the all but of has to foremost, some clean not the of place, are it take online

the got But we two-thirds enough it's more coming demand need about to that have a with we still, that. than So, that third still another There's right we've would of what it's now. is it in. respect

distributor. not that's And never talking demand, about we what what mind right? cross-selling immediate take We're our line Coflex place will in even Surgalign with the distributors do our

expect we rest the up and that running of the in month. So, be will next that here

be demand manage have the to that we to should comes able that. So, the from capacity

looking think we raised million then to believe we moving hope have to really how $XX $XX $XX reason question your And we business our would strong to and from and I look we I million that -- that million, that to of about do biologics million guidance right is get is the increase at our we an So, part see will now. to $XX forward. that's why

Chase Knickerbocker

that the your months Coflex, with acquisition, that period in wallet Six Thanks. is particular, you quickly any had on, essentially? of through success those share those since how you you time there, it. wallet kind months enough of Got biologics, you've obviously, of kind the know can six to of selling distributors after brought Coflex talk then of now share kind were that since a acquire growing grow kind distributors

Sean Browne

really Actually, -- we in since it's you got March. if remember, that

it's we're four at July. So, really now, so months

group. organizational the organizational getting goes to back and number we're And indication, first this So, this is, priority a it one, first again, good two that three, thing with focus. and discipline,

XX in we it, were of team out. first We we all, need the were sure make when open we that that have two there five people stepped which got sales inherited, to territories that,

And spots. to really different fill we so seven

on And foremost. and team first so getting the right that, sales

making I there full that significant I understand one are distributors fairly distributors the that at the say, reimbursement the side all. value if there would opportunity, the really didn't guess Coflex is our story Coflex understand Second, sure was proposition. on

catch it can. catch us And was so

the And will traction. of disciplined very that where we're things some very, so say we're more best to that's in focusing starting in how because that one get and the we're that, opportunities I lie of on

what and get foremost, guys plenty in frankly, both in to so go, how do first the they want is introducing those quite our business them start get about we where of with, to And then we opportunity we base that of I focused get we've way our work make of more to of have going then get biologics out start need that, on then them. as grow do opportunities. how And front we products an they to sure Xtant we'll with and the more really because got that, fixation more and other we thinking

are distributors I them months really frankly, a to to few to from But first first away those able being Coflex thing with still quite cross-sell that. there. We're start to want probably because, get

I or deadline I am Any there's here. a more get off. -- I turned didn't questions hope

Chase Knickerbocker

for second, Sean. cut now. got I out a think it there I you back

Sean Browne

good. Okay,

Chase Knickerbocker

And last there just that if Surgalign, for I sneak in. On substantial revenue what of were you're you then there should if liabilities be hollow at deal Surgalign? And any is that revenue what assuming does there? of you're more me could amount would one kind close? one be with the We was acquiring thinking Surgalign kind assets the -- of of revenue those that amount the substantial

Sean Browne

Yes.

So, we're all. hollow to having with -- we at have do nothing

going So base get the we're is business. all instrument to everything from

be will after. I closes. Holy then to Now, that the off closing, holding actually, all Xth overall, on will, the hopefully, on I'm deal, and questions That of closes so jinx then Surgalign I -- if on we're August, we want don't you also that until the the sprinkles the should anyway judge say, Water, soon

really call very it respect I'd mean answering even do point having that time we'll with what be our at material, will at potentially certainly that that what also is and to acquisition. is changing in mean will that time that a guidance start and on us based for like because And that to

if, I settle to So, in to in hold that a front were hate dust go of that, I to let may the off get because all if something on skew. fact,

Chase Knickerbocker

congrats on and again Thanks fair. totally Yes, good quarter. the

Sean Browne

it. Appreciate Chase. Thanks

Operator

the to And back more Browne. I'll Sean have at over questions. this we time, no turn call

Sean Browne

Thank you, operator.

key closing, like a I'd few reiterate points. Before to

the key growth four revenue of demonstrates XX% returns First, our second pillars. growth encouraging quarter of year-over-year our

diligent fundraising positive of And financially in adjusted balance EBITDA us a latest biologics than that with results our did our planned. has we infusion achieved of products. are fixation the fulfilling we increasing our Two, as by high approach capacity, Three, really the faster of originally right sheet we through the now. demand our we these earlier cash month illustrated quarter and we order strong thereby second a strong through achieved

we illustrates other in further to million our leaning exploring million guidance strategy. five, And forward, confidence $XX roll-up $XX our annual bolt-on Four, are business the and increase our and revenue to strategically, of acquisitions.

and With building to we product broader the strong goal value. lines, our look momentum across and major our demand growth this of maximizing forward upon shareholder

for of you life us the and allowing support. for live today We mission by by our a continued donation patients for and dedication. your as as possible, of gift honoring only to employees. Finally, complete made Thank and possible our valuable full thank them it's work joining our their

Operator

Thank our you. All That concludes parties may call. disconnect. now

Xtant Medical (XTNT) 1 Aug 232023 Q2 Earnings call transcript