XTNT - Earnings call 3 2023 | Xtant Medical Holdings, Inc.

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Operator

Greetings, and welcome to the Xtant Medical Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

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

Matt Steinberg

Thank you, operator, and welcome to Xtant Medical's third quarter 2023 financial results call.

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

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

similar intends forward-looking call, During identified forward-looking Actual of performance. then and by other can expect, existing with Factors filed These report Such SEC subsequent may in and Xtant's as including the management statements meaning. trends annual of are statements press reflect future regarding plan, XX-K statements and materially. such anticipate, perspective may differ Risk company's future the words involve expected future those the this reports believe, and not with SEC performance section will, the results uncertainties, company's be make current Form guarantees on course on forward-looking and and the events and should, certain risks releases. March words may, and on on information XXXX, noted X,

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

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

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

Sean Browne

value-creating evolution everyone. In has and good featured years, recent you, morning, Xtant Matt, Medical's acquisitions. important Thank

debt. refinanced have We

achieve have These and spine our and sustainable markets. operating the long-term done take new share growing and to the of cost orthobiologics large critical leadership. have added have additional U.S. company financings, we poised and and have lowered growth We basis, key initiatives we

The financial quarter Xtant our further increase the the quarterly strong was which delivered includes effect business, our results. starting million, organic in growth record as we complicated to to year-over-year. third actions our demonstrated growth revenue take are by contributions of quarter XX% Notably, driven were Our growth an in from reemphasize $XX XX% acquisitions. of want we strong acquisitions. of when our of digesting organic X in recent I process bolstered very by core and

So continued team's I'm focus our with particularly Xtant business. core on thrilled

bottom giving clicking quarter future EBITDA. Our second revenue and us line operations cylinders, our growth adjusted are our on confidence we of all more regarding efficiently is business our consecutive run recorded our driving as Altogether, prospects.

During the and acquisition perfect all-cash transaction. Fixation Surgalign's offerings, complement motion their Xtant's part as quarter, Biologics and the We business preservation portfolio. business, Spinal of expanding is completed million $X in of for with with spinal third primarily Surgalign's business fusion a an our believe we

So commercial ahead distributors. new far, a has us we of rapidly helping our with integration of the acquisition great contracts fit have completed is the It footprint and expand that commercial been schedule.

operations and continued there on opportunities. we remain capitalizing room is upside on streamlining We believe as synergistic for significant focused

Turning been are pillars our in to products demand key and The want has and product for focused a penetration; distribution introductions; want force driving orthobiologics quarter's U.S. on: of new success our billion the robust sustained three, detailed -- expansion; two, remind Plus strategic the launch I first X that a to discussion our growth listeners since their performance, market. One, acquisitions. more network the I $X.X with initial market adjacent OsteoFactor four, OsteoVive

to in patients Our reflecting newly expanded this addresses comprehensive increasingly market, portfolio commitment product need. our

and us share. acquisitions future remain opportunistic to take on product we market Looking launches greater position that ahead,

network our distribution to expansion turning pillar. Now

a for network, successful we've contract agreements. new Surgalign's total of and With IDN of distributor and portfolio roughly XXX integration over the agreements added GPO XX

we up XXX Additionally, picked distributors. new

the distribution of it adding we our have distributors be a now than makes and agents independent XXX greater opportunistic In sense. national where penetration network. network, in creating new So with more we'll will a current work in ahead, quarters we network on getting

markets, translated For ankle to our third trauma make the pillar sales. implant in markets, orthopedic OEM our and penetrating of expanded increased Notably, these leveraging in foot we capacity adjacent continue particularly and inroads and markets. has into

Finally, our growth M&A. through on achieving focuses fourth pillar

both transformational tuck-in acquisitions and forward. Our a approach going remains priority to

Cs, targets capacity acquisition cash X and We based on continue to flows. capabilities, focus on our

target higher-end with needs the a our immediate and motion long-term biologics. stem hardware terms In focus we of capabilities, regenerative preservation on businesses of cells, amnion,

increasing in envision meets In capacity our capacity, terms production that the years ahead. we biologics of the demand

profitable In of become cash are profitable can products. Xtant's by or that flows, terms we producing businesses seek

now [indiscernible] milestones Surgalign have goals. met significant deals us our acquisition our criteria, NanOss key are for in and that marking long-term achieving

due to a cell the guidelines the Aziyo, has growth to caused screening requirements. proactively patient be donor in impact released the While This entire had infection for off addressing a long-term tuberculosis significant ViBone, stem a safety. American market. or Association the AATB's largest updated then, a but we line, by believe efforts AATB and only of of Since these important contract stem ensure Surgalign's on Tissue We Banks, concerns appreciate acquisition cell driver products. was pulled Surgalign will not visualize market Surgalign, product the manufacturer impacts their

has since affected adversely been revenues. limited donor will impact fourth stem shortage that stem adversely availability current We this cell and However, has quarter cell anticipate recall, this our business.

second XXXX. and by tirelessly is working quarter constraints mitigate will are anticipate this issue external are temporary optimistic We a that supply these normalize we this of and to the that

As EBITDA, overall These dedicated production achieve process and initiatives products been on and can implementation greater the positive improvement deliver our meet to part scale. actions adjusted capacity a and of a result, sell have strategy efforts boosted successfully as expansion. crucial efficiency. demand both of And we operational have to our and

source equipped outside vendors. to the produce important more begin these better reviving of NanOss to product even of RTI line. control the With of products recently orthobiologics from this acquisition full own to us are operation Surgical, of products from and announced NanOss process Having growing enables our versus having the production we

XXXX to our we annual Finally, the to growth reflects range million million, period of $XX revenue up million $XX XX% to long have approximately from a $XX updated a of to Overall, acquisitions revised the year-ago we strength the to organic $XX This from million. previous guidance The XX% full time. Surgalign now in annual range the range business. in of from revenue come includes way raised short newly of contributions year period. guidance addition our

continues with our well, strategically excited rise forward, continued are performing talent products, exceptionally we potential, Xtant and it is about and execution. business is back Our and up. which have moving to solid our we growth to operations

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

Scott Neils

attributable for you, compared and record million Thank to from a agent Cofix $XX.X primarily was in from robust $XX inventory, production Surgalign in partially and greater costs. Total period and same efficiencies, a was the product good greater Gross product XX.X%, and compared the third Biologics charges for private contributed XXXX. morning, acquired sales by sales was of in Hardware revenue Sean, XX.X% same Coflex business. opportunistic product the to the and primarily recently to everyone. million, product decrease for increase contributions production XX% obsolete This favorable offset sales, to XXXX period of margin XXXX excess for The mix for quarter the higher the independent and label XXXX. quarter increase and third annual lines,

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

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

intangible compared expenses increase to months to million compensation is XX, in primarily attributable and $X.X and acquisition-related additional with third Cofix share XXXX period. the the of commission compared expense, ended $X.XX professional General of of for quarter primarily were increase net ended Coflex and product share This Net service $X.X for consulting period the acquisition-related XXXX. loss for XXXX lines the expenses million marketing million same $X.X compensation activities. $XX.X million for of the or the was administrative associated to million assets in same expense XXXX. to higher higher to a the million XX, XXXX, comparable months X legal fees. and per additional period $X.XX were and This amortization $X.X X is Sales XXXX, in income September expenses, fees compared due with September and $X.X per associated or

in XXXX loss the Adjusted adjusted EBITDA of the million same quarter an for XXXX. to was for $X.X third period of million compared $X.X EBITDA

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

company for now the the for for use expects and corporate private placement proceeds third the other of closed During net a Operator, $XX capital open The with gross private investors proceeds quarter, may you questions. million. the purposes. from accredited working placement general line Xtant to

Operator

[Operator Our question first Craig-Hallum. Knickerbocker comes from with Chase Instructions]

Chase Knickerbocker

Congrats the nice on quarter progress and here. the

Can housekeeping be one them. would orthobiologics start. have in growth helpful quick to we organic hardware And quarter? you get of then kind of the and a Just revenue rates breakdown separate if

Sean Browne

Scott, I'll throw that over you. to

Scott Neils

one me second Give Chase. Sure.

implant orthobiologics I million, rather... $XX.X compared $X.X -- revenue revenue about had $X.X we of the revenue think or quarter, $X.X to million, overall, for million of

Chase Knickerbocker

organic organic then orthobiologics I hardware about products if also what and expectations? was well growth And within that kind because growth of think of Great. kind drivers mean, ahead there, drove within our an of again, we really from perspective

Sean Browne

Scott, in I'll well, it throw me you to want back on dive as that. you unless to

Scott Neils

Yes.

new the OsteoVive was of those Plus and that the on same then saw on past products the past challenges think standpoint the our And of growth from factor, implant those quarters, in offerings, I then growth seen OEM chain orthobiologics the the side, in the driven we've been side, quarters products spite the supply label as private as some well. really front. it in product on and have also ASC-related we

a perspective relates So as past it story as the families. to same it's product quarters from both growth really

Sean Browne

which the X that's SI Silex, the product Axle big product of Interspinous And fusion of and there. drivers the device are then

Chase Knickerbocker

revenue kind it. maybe margin revenue from have have a kind Is think inorganic this as that as revenue what for And far you there inorganic color, as incremental guys. Helpful you specifically? then drive incremental EBITDA as of you the margin can Yes. from what EBITDA drive looking of as that as model? just kind think flowing we you that Got on investors about to guys far into an you're of target

Scott Neils

part take think number We there. to as get of synergies a had us I envisioned time that will of the transaction. some

margin take to will I those EBITDA However, about ultimately working time towards future. an XX%. near of don't the We've will talked case in the think be get that there.

ramp with be a So there will associated climb. that

Chase Knickerbocker

the middle through of those make accretive as kind learnings successful look you've these the here? very as we've Got that about trained deals for integrations to one. what's more still in organization integrations the muscles in do of it. I X successful Maybe lines, you're your how along last had and we -- How much know feel consistently you these future? an

Sean Browne

I'll Scott, this. jump Yes. on

of from neglect. I in betting each were think businesses that When these HOLO. was Surgalign you all tough frankly, about on overall, of really were quite about businesses, shape, them think

these if so ones that And were being you they fed, not businesses will. were

saw value mind believe can a we've happen, so that focus things business, the Surgalign the brought lines is businesses. given those we're case, were we investment, we and if just right that's right saw core And because and the that We always on never businesses cases, biologics like as the of for I just even in lines and business that away some kind Coflex little and they still good something great like of we hardware bit over. product us, liked. we the saw NanOss which product the

right? big very with frankly, do. what so very, that taking look bigger what been one. the biggest we one, commercial integration the are just -- which the our I've that's is one That's pleased what that's has like, the -- the to funnels place, impact quite That's

that things is product making first, think say sure do that a do and of So small to on we focusing think people making sure well, to the really do to I what right that things when of only reviving which in do. it the I got we not comes need place I that execution things the would they we first on those

that make that So on you I working become would things these those that's tell the are to -- sure successful. that we're

Chase Knickerbocker

those a and of is NanOss, U.S. at for area in products. it. on It's point. outside. nice the maybe It's kind potential you really Could synthetic Got what market, guys. In growth to both mentioned greenfield kind that, And [indiscernible] discuss today, get NextGen might look and large part a this into you also, their deal, this fairly of pretty you of and to you trying fruit of assume to sell like? Do go kind NanOss to surgeons. I distributors synthetic many some And potentially to start a then them market second with see them of switch your right? the

Sean Browne

first Yes. that economics first, question And here, that -- of hasn't challenges business of the been of the has to for answer or hope part great. right? NanOss But part the the one is yes, last the the had that's that

buying by product a so been market challenge commission. does again, -- product it that a that And the RTI because and it's of high bit it's just down within from had little going a a line bit of require

margins compete. you in able if have so it's to don't high And be there, to hard

all right? those it's that's have synthetic -- facility, us owning hands, -- it's X most the buying world. of So one there very in the we the good that in that product. by we It's a products years So inventory, of are economics actually, studied our of think essentially out of all

So great product. the got a, economics we've get we We think we a think right. can

it the RTI next first variations. which question, So was hopefully b, really They we of had an some think about should we to how growth. different into generation. answering lead do worked then feel But your getting on a couple that

comes world. as We when really we've as things biologics we've guys of that last some of the got those over -- just variations best really, well the a are the on brought strong evaluating R&D the year, -- it going to some

is [ can his a and guys Mark Shellenberger say, do. something at a take going ] so And look to and chance to there give better it I'm we

so look yes, so And at that's next that's NanOss, when the generation, we the offing. within

Chase Knickerbocker

where the sorry make so last the want there? an I'm what today, just the here, you're all we of to kind of guys, And Got incremental update points. of progress rates approval to time prior hit kind overall, sure Maybe sits but trended? of coverage. authorization take Coflex on on business, Helpful. driving much it. have kind with kind one How I

Sean Browne

Thanks Good. asking. for Good. Good.

we a So these great saw probably are this out is have were asset of example as we of a value that had thought businesses that I said, -- of. a neglected. we great get that lot And all X could

X had when we probably it, got is territories, of business, were So this open. good this bought XX a it and example, which we

months, And the we open. had we guys. more So of was half country that lost X then in X

been really reviving And thing. this so has our job now

is So started commercial even people and we territories got in place, territories our filled, into side. the are moving we territories, the on reimbursement putting them where stronger in

in those Upstate So guy had or people New we essentially in places, X Michigan, all right? Pennsylvania general of putting getting places in like York in and have that one people, areas and states, place. So right covering now we people the New in York, our

it. a new a -- more to high even surgeon ago from get a expected. It's this year time but I'm our that, or we little margin. strong. when business, think that relatively a our up still you at And business it's contribution we're to -- overall It of kind higher Surgalign the a had relatively really, really are the getting our small. XX% business, element so for But when up revenue, has taking look has it with really excited It's the is sign-ons though funnels is look us to XX% overall high of about certainly you traction that that when

EBITDA climbs pickup. that we're to more positive of see as more, going a So up

Chase Knickerbocker

far for what kind mean last the about right? few the Got as just maybe asset the individual that that most of SKUs as a asset I Surgalign products far hit as it. And with you're [indiscernible] excited highlights then purchase, There's me. over as quite just came purchase.

Sean Browne

throes A Cortera that. sure. number a is that system with the had Sure, of was a couple they line which pedicle helping new rolling of surgeon of product things. screw advisers were out, in that a

slowed stopped. down, got when for of so momentum that And that some them

is And that. doing reinvigorating so we've really been what

And see already. happen we're starting to so that

European Cortera that line product on lines couple side. the actually that of There are a So outstanding. is other

I is to cervical DCI the that a diligence basically for it's and implant, product. I'd again, of -- we our them due of this a One It's cervical fantastic dynamic saw a was this like that terrific great mean, which say part Coflex area. product,

doing that's well. something also were today, called that's in doing in we HPS Europe, that's There's Europe system. very So product another which aware really of well it's the

preservation motion of fantastic. just both that systems these Again, are are

that lot that gems some of weren't product first us got invest buy thing over about didn't hardware, think what going lines actually was the couple for Surgalign, had the great the when are said, "Listen, course invest It X-spine, to will do here you just a we from that something and America. a just those time in in take other about going if dictates there's that. they that in of to were to But if time. do of we So of -- better us, gotten we I because one I anything bring we

been X-spine are that's like Fusion Axle some have product. as the or to interspinous product as that's line, to frankly, didn't process it. the what our product, SI Xtant products our Silex old These device, So our now they well completely the And offerings able quite we reinvigorated have. do

some them And so sell. that we they products now give can

they what us. it nice to actually So offer offer and we is what a can melding can of

so us. they're bringing excited and really to very what And we're about that

Operator

with next Ryan BTIG. Our from Zimmerman question comes

Unknown Analyst

Ryan. [ This on for Izzy is ]

Just...

Sean Browne

Ryan, Wow. your higher a -- Izzy lot voice has there. gotten

Okay.

Unknown Analyst

little bit. Just a

your to wanted recent your on portfolio. in activity comments up product about I the M&A follow So

portfolio? Are over, product say, or you that general look about for Do near are sufficient? how So term? the going to it's of targets medium you you thinking guys additional the size think

Sean Browne

question. Yes. Great

we really M&A a a focused have there's sitting little been we speak. robust number we say have of opportunities pipeline. on there we out as what will great yes, that have. But are I bit digesting very more a So

have some of areas We specific need.

If you can offering instance, our for which to capabilities. we biologics from a I always perspective, line, our for our things we looked Certainly, -- side. ways our other within looking that can mean we greatly improve. increase the there's be expandable needs at like, hardware areas, are doing there's hardware in

our products, we things mean capabilities and cells. Xtant So makes factor DBM growth allograft products. things what like like We source by stem today, source we

opportunities find means, can we where doing by So expand be that. going all to capabilities, we're to our

can That's time really see to our We going going within important get greater also we to any capacity be after. be we're biologics really, chasing production. to also what

I So X cash call it of the capabilities, flows. Cs and capacity

as so seek are of the look out And those there's at we there. happily, that deals. a And lot we things deals

that And are it part valuations is but these lot other quite a under to starting companies capital then that the that down, the of these some come constrained obligations. of think both fact do I are frankly, of to debt waiver think are I starting finally

and as So companies that as to take getting companies of those we potential a our hopefully our companies can I in not think coming they are strong exit, then especially for that stock substantial show going more hopefully be are of there's only like as that position, can way, how it and opportunities more having goes in that way to up but financial well. a are win win they an more

Unknown Analyst

quarter the helpful. really on again. That's Congrats Great.

Operator

Mr. turn this over back At Browne the to Sean floor like would closing for I to comments. time,

Sean Browne

proud the have that years. in strides very Thank of operator. tremendous we made Overall, we an you, organization as Great. recent are

And quarters, adjusted revenue believe this raising quarterly growth progress by beginning for record the delivering accomplishments our towards executing just and guidance Our the long-term positive demonstrate what we are consecutive on We further is of these that sustainable are X we making. working revenue strategic X each our pillars. EBITDA we of that successfully are demonstrates growth.

scale. increasing order biologics approach and our products our Through our we of our diligent and distribution of filling the higher and network, capacity achieving fixation are demand

our In building but newly our maximizing this our broader for donation a Thank on and for shareholder mission thank continued gift to live upon are valuable like by is closing, I'd momentum them that our reiterate their delivering We employees. possible today of work allowing patients continued to this just not us as and of our by honoring demand full you as realizing value. dedication. also made look organically, forward acquired your the of We We and for goal and businesses. to complete life joining support. for only possible

Operator

you. That our parties today. a concludes Thank may disconnect, and now have call All day. great

Xtant Medical (XTNT) 9 Nov 232023 Q3 Earnings call transcript