XTNT - Earnings call transcript Q4 2023 | Xtant Medical Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Xtant Medical Fourth Quarter and Full Year 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call 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 Fourth Quarter and Full Year 2023 Financial Results Call.

Joining me today is Sean Browne, President and Chief Executive Officer; and Scott Neils, Chief Financial Officer. webcast playback. be being company's on is for website call and posted will the Today's

which and course this reports and on describes company's the perspective be regarding results These During identified of releases. may statements on future believe, forward-looking make forward-looking and are uncertainties, provides appear words filed information financial press the materially. The events words measures. statements of our release results financial with with detailed and existing results forward-looking statements in not certain expect, press the by of press section other trends and involve and Xtant's press such those the Risk company's reflect SEC differ plan, Note similar to measures. such expected of to annual and including refer XX-K financial and X-K use non-GAAP certain with X, non-GAAP Form and that risks performance. the will, include noted in the narrative SEC call, today's should, website. GAAP future our XXXX, current intends Please management can may, a discussion release April our reconciliations, Actual report performance filed Form may as guarantees subsequent on our and available anticipate, our future Factors meaning. Such on release in company's otherwise are that

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

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

Sean Browne

establish good It a we you, morning year effort we Xtant a robust future was of for everyone. growth. believe Medical. for transformative platform in now culmination a was which turnaround what is to Matt, XXXX multiyear a and Thank

access XXXX revenue consecutive positive market -- we scalable has network of and record established, a a nationwide foundation X model have adjusted the the in exceptional generated created and last quarters. in with Now business resulted for distribution EBITDA EBITDA that

fourth seeing $XX.X XX% of we by growth ahead XXXX, returns million of our increase in We're achieving full of XX% of year-over-year. guidance range. the our generated of $XX.X million, coming positive of annual in business an than For quarter year XXXX with more our of revenue revenue revenue

organic GPO a of later. XXXX. In acquisitions XXXX from Our the growth over of organic fees, X%. was our was contributions XX% fiscal XXXX full summary, XXXX revenue This XXXX full Scott year reclassification quarter our of will as for growth transformative. fiscal adjusted fourth adjusted as for excludes year explain the was year and Full

XX%. As grew growth XX% with by previously mentioned, we of adjusted organic over

straight we revenues, of EBITDA. our record positive year with In addition X adjusted to quarters the finished

Secondly, we businesses. separate acquired X

platform greater with then Third, and operationally, an solid sustainable of our growth us basis dramatically Fourth, next product. time, we profile. revolver enhanced a help us availability how the the the significantly and enabling pillars, to of I'll us market. improved execution key to share position, stronger this in fund gives over take execute And our mix we that provide efficiencies At we operational improved our we of sheet confidence financial ended XXX through improved growth. By our step to clean overview even by greater driving through XX%. improved room points lastly, build growth with the capacity long-term balance year spine margins we our by capturing have orthobiologics of our an

like strategic acquisitions. one, of every growth market three, healthy X and and two, new organization, new penetration contract products. pillars focused are adjacent our -- introductions; reminder, access; pipeline are deep products, continually a expansion a innovating product with As robust four, distribution new on: key pillars Starting we metric with

product These product bone our of of expanded turnaround, products offering from we synthetics, our X profitability profile. higher-margin our matrix demineralized categories bone course which gaining we while comprise to the viable During in added legacy graft presence biologics helped X, enhance growth market. building orthobiologics the billion are with When and factor. our products, $X.X U.S. and in our also leverage allograft operating

revive This in number side, we acquisition, provides X capabilities. fast-growing acquisition, Through Additionally, number payer a a ambulatory added the we Through surgery missing component continue access in Coflex our market on to product markets. the opportunities. fixation have also the line. outpatient we acquisition pieces and a of but filled longer-term Surgalign not new the lines services of only exciting that centers hardware our to deepens

acquired addition, in we international business way dynamic is that leading a spine preservation systems. In motion the

before, contract about where will to fixation of were the now was has XX% acquisition X/X next offering, looking U.S. split bring We compared hardware. biologics to product expanding be which of our Surgalign those changed of access. to network X/X and we distribution XX% hardware some which and and is is systems of to market. Overall, biologics The domestic to the our comprised an dramatically pillar

in Our offers access approximately the U.S. of covers and platform every XX% more GPO all to major IDNs XXX than that beds

expanded than now the agents and Surgalign In independent by which includes growing XXX acquisitions. addition, our further was distribution network, more Coflex

hospitals, today strong product our outpatient selling has which across become company. ASCs, is national and clinics various us network helped vast a Our

markets. turning to pillar, third leveraging adjacent Now our

the diversify and within build in drive and these revenue capacity. beyond markets, ankle, our OEM other focused capitalizing we traction market. us continue sales, implant We've leveraging markets various our and to expanded remain segments by opportunities to our a core spine enabling orthopedic We on presence and trauma expand within to foot gained

achieving growth through inorganically pillar acquisitions. focuses final on Our targeted

of are We become enabling seeking the integrator to technologies.

either companies We that or today. are targeting subscale are undercapitalized

acquisition Coflex Surgalign on X based and is prior the have our acquisitions, we upon characteristics. As focus targets

First, capabilities.

at or greater capabilities that companies biologics. the particularly looking are regenerative We technologies us give in

in spine offering complete that Additionally, fixation Xtant's and offerings. help preservation the we'll look motion at businesses

biologics expand capacity. we Second, our longer-term demand. Capacity targets that production can

bigger, we space more going to So capacity and we're that. get do need to as more

and Third, that will believe making to are closer step profitable us margin become sound, long-term synergies. that Businesses take criteria X profitable that achieving We within cash or goals. strategic stringent targeted through our fit flows. acquisitions our or can cost

will which that Our will. believe fast-growing as distribution believe we of unique companies and the to network being we acquire company. Furthermore, a future they purchased the platform it are allow take went entrepreneurs and companies and the those over even win ability we ability of to grow, Xtant provide bigger robust when other then continues owners advantage time of part to will

equipped we demand to implementing both MidCap efforts to capacity. within our process initiatives, market. produce our is profitability, our market have million and positions pace value. increase us long-term part levels operational increased biologics significantly orthobiologics strategy and execute maximizing Moreover, improvement As to To both to have of growth dedicated of with more are Xtant now scale our of to increasingly to better achieve capital production to the meet revenue and the crucial of facility own strategy to credit expanding acquisition on $XX overall initiatives share XXXX, shareholder million. revolving well strong measures our long-term growth further in-house. deliveries. Furthermore, enabling of and are $X more to in product recent sales from committed capture the the nanOss pleased our we sustainable support we production Financial and fourth our efficiency, announced with access Surgical us and better RTI quarter operations greater driving in the from These fast

year the driven represents million range and $XXX Surgalign annual revenue is second business Finally, pulled of approximately revitalizing second and stem 'XX temporary we producing half strength of back not first in affected market fear and organic the supply quarter was million. the and the important This and XXXX Surgalign of range for as more contributions quarter established from guidance supply the in environment growth troubles XX% bankruptcy, of through our starting $XXX products XXXX our that full in second full to of of year XX% cell by even the went half getting so chain. More the from includes vendors to anticipate normalized XXXX XXXX to to 'XX. revenue in the addition specifically, growth eventual our transaction the by naturally that its business. of adversely in financial paid. Surgalign faster accelerate will our shortage We compared This of

XXXX. those in supply issues to expect quarter impacted of our product key Coflex of results and Some softness as and we the some half fourth to first such see Surgalign for areas continue

XXXX Moving self-sustainability. on is forward, focused

us and of on producing to be self-sustaining control. less are will positions supply coupled Our our We Moreover, transformative self-reliance the with profile, options larger reliant and brings margin a production Most patient growing to outside treatment products line importantly, positive population. goal on us more a well in should to we our own continue be a expanded dramatically biologics. our chain, producer where XXXX in that believe improve adjusted is our to allow EBITDA. diverse large our path an additional product progress

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

Scott Neils

$XX.X record and Thank million good to the XXXX. million for compared fourth for same quarter you, XXXX was of the Sean, in everyone. period $XX.X a morning, Total revenue

Surgalign product agent Cofix recently the annual primarily sales opportunistic hardware private independent product increase and attributed from is lines, XX% contributions biologics the and business. Coflex sales and greater Our acquired to sales, label from

we XXXX all GPO as incurred fees SG&A from classification offsets of expense. During the the as year reclassified revenue fourth full previous their quarter during to

greater and product same product year rates of offset period respectively. case was growth reported, downwardly organic partially quarter organic XX.X% same fourth points was approximately primarily organic reclassification XXXX. operating million total XXXX efficiencies totaling and our as quarter a As for X%, the million result, growth revenue by expenses fourth $XX for to XXXX X% fourth Gross quarter $XX.X mix the XX% quarter of each quarter impacted growth. The attributable in fourth costs. Fourth a ago. by in XXXX in totaled higher XXXX production X,XXX the XXXX period were were to XXX organic the basis compared margin over to and before With for compared increase the growth favorable

were acquisition-related $X for loss marketing XXXX. is in a of XXXX the EBITDA additional to compared expense expense, consulting $X.X compared and This As period. $XX.X million X lines XX, activities. Sales million the primarily and of a compensation per loss same of of share Net same higher to and for comparable XX% months General XXXX. million revenue, Cofix ended increase in to the $X.X is per to the of the was months same with loss XXXX. percentage and XXXX for assets December December or expenses professional attributable XXXX period intangible the fourth quarter ago. year acquisition-related net associated or expenses, in to commission $X.XX total of amortization period X administrative same This expenses $X.XX fees primarily fourth the Adjusted were compensation in million compared XX, associated with ended and million increase $X.X compared $X.X $X.X of XX% expenses compared for period was for and Coflex the product due legal an quarter service $X.X share to higher the for EBITDA million XXXX, a were million adjusted period additional for to XXXX the fees. operating million

$X.X XX, inventory. million net of and cash, we accounts had million receivable of $XX.X cash December restricted XXXX, of and million $XX.X cash, equivalents of As

revolving increased we our credit help line March, in availability you open our earlier, our may facility the to now growth. Operator, mentioned to fuel $XX questions. under for Sean future million As

Operator

first Our Instructions] questions [Operator of the with Zimmerman line Ryan come from BTIG.

Ryan Zimmerman

just beginning you you progress, But could. to I color a expand all you the of wanted appreciating more, are little Appreciate think the again, the of kind the about guidance, the contributions that play of you quarter. expand legacy comments the versus seasonality. maybe the breakdown Appreciate guys. drivers some if And into dynamics business of how little and for start the Sean the Scott, on contributions. bit on think your bit gave Congrats cell the come on on stem business can 'XX some on second 'XX. in a growth Surgalign on and from you what

Sean Browne

color any Okay. jump add it. in Scott, you I'll first, and let I'll to

in be one great we Surgalign So we the problems is business -- when right domestic about as all, from the contributions as the the as the mentioned, quarter. things well to shelf. business. off we're chain they of But fourth I supply Surgalign, of the were international of think Ryan, -- had basically both selling first the contributions having of

our chains it's start again, good getting inventories filling and So problem we we're catching and have up the have, supply is those -- there those growing. suppliers in demand to to which up is a and

So is, done for very Surgalign where brand-new you next has growth the in asked line -- which one see do instance, of when the think released from we a is like, called and They well. I Cortera, we about, off really coming product that questions taken year.

of frankly, on actually As that a short longer first we X more we quite the sets matter we did. of is gone We did fact, to we and than it. should product line were added have probably things

so we're be from some going of to half the nice coming And That second year that. Surgalign's really in from get the growth perspective. will

got the or be We've mean, out base production to be for I the on new area of will big product and some going biologics OEM side, of Another core -- specifically that we'll OEM a stuff. Amnio that's us the be the year. coming fiber this some other doing on then

see amount position just in a from position got demands. now fair where stem things meeting this. of actually ever start product we've And like we been perspective, going in that enough cell hand we You're the where a can where never to we've finally, are a a on

see in second cells. start to what the take production at half we this expect overall to So the own to well place in as our and off hardware going take both respect Surgalign year, our second see pickup things stem nice side. the production quarter, really with other see as we we'll with we'll biologics that's in to a then start OEM just as our of look to And from

Ryan Zimmerman

some struggling read-through helpful. there's what Wondering, the our able the companies you may very quarter. you about do business? these OEM fourth And a given And you if that struggling opportunistic That's to areas. couple of with on OEM of on environment just Scott, think the Okay. that there. I other that follow-ups. of in here a in think, to have alluded a are just capitalize that I the can companies be coverage orders, me here, I'm other side? you're of to then And curious some maybe couple Talk

Scott Neils

Yes.

I even on think half contribution also amnio. in production, there in OEM the stem particular or the necessarily we the in year, on the both see last on legacy opportunity won't a I of early there do new the way side. cell back year, of we did in a QX think but year QX of in is both products, and

expect look year. initial quieter So front the we forward to that but be do to of the we on part at that

Ryan Zimmerman

And get over And Okay. to come in think little XX% They've you those cells where expect online? been still to we as Very helpful. X in do hovering back the see. quarters, gross over Do past bit take a that margins have can the continue of but the level. then 'XX? stem kind really you margins gross nice you

Scott Neils

Yes.

also where driver will we source that from in stem a margins margin also that of then an the coming we bump of year. a improve should think But little course as that so for I and look the too hardware, way more product will up mix the gross the to as that margins mix And I internal with improvement. as be of really gross see and cells significant we'll add standpoint, margin, of the think our gross goes, trend throughout in those also well.

Operator

come questions from Knickerbocker of line Craig-Hallum. the Chase next Our with

Chase Knickerbocker

in percentage of it me a as a good in QX. financial of as QX to of GA for the Can elevated XXXX. trends it finish like you on Maybe a in walk Congrats bit how what percentage starting through looks here. sales, was the of sales kind Scott. and the of kind it ones couple on year been about way that just might think of of right kind through have a

Scott Neils

Yes.

drivers I think you're there's main X there, seeing Chase. probably

acquisition-related see The adjusted which out the or table. being -- in the first see expenses, you'll broken in EBITDA

then more ran compensation third, to we commissions. become back just be certain The forward. a is normalized should think for going up components little that going second of that And high piece I or

are that to but the as down, a X it. percentage those expect back come drivers main of I revenue, of So really

Chase Knickerbocker

it. I for dynamics. guidance, that something those the assumes those of kind appreciate looks Got mid-single-digit on gave perspective. comments should your it about think like I bit But maybe an should of range I XXXX X organic then from looking And quite an this of growth organic it as you a on building if Or kind rate in at slowing from business in the growth perspective? of something we're in conservatism organic range perspective an in XXXX? think mid-single-digit

Sean Browne

a is feel this right? fair upside. so significant would conservatism amount one, some -- there's there's a just As And unknowns, there's I very in we that, that yes, on jump but of because good

So It's of get on we can yes, side be conservative there's the some do just this. year. half We in that to the eventually, to think double to organic digit second the pieces things. of going

Chase Knickerbocker

I it. on you kind you trends It a bit that are like kind Q&A. there continue of year that Kind stem through some that of not of constrained to Got previous cell little of to inventory talked kind up And moment. kind guys the And kind pick the of want of just at suppliers? of as sounds the conversations did about and supply with as something the far you inventory goes your is your kind expect improve? in of when

Sean Browne

improved. last is it Literally week when

providing was the whom main we that this so of one for work that year. the in start and yes, started we could our with, started of donors they part which had suppliers new, beginning -- So with main supplier processing

with flush plan the donors inventory we we're high-yielding donors throughout with And of We some yes, this. very just to cleared. recently be those have and flush year -- now very had so been so

inventory now days can we we had of to the quarter, the literally within start last the that so And sell.

are of gin starting over course guys our the was up the of then, we So to had away walk had course, and few demand demand really from what to years. last we've that previously the

Chase Knickerbocker

but it seems moment. billed like expect the then down need think do? Do kind that mean get of kind second, much of that quite the to we at more pretty to kind gross supply of with of a is product I year-over-year, of market improvement kind you shortly? as do kind business, constraint in as meaningful of XXXX, you have relates think should of improvement it's of that year-over-year to And as chasing kind trend volume as you stem margins favorable of a kind some it you showing cell not still mix? there Or

Sean Browne

Yes.

of So selling here's This tight. helped big us what there. for out donors tell things our one demand there I'd why a still still of out, many the but initial guys at the that supplier on out is this who that of least is very right? is was it, actually you really providing product that's get enough get to struggling us So today are part are that the are of to part

still even, is margins we a line bit there get some donors much specifically, happen year, product the tighter is are margins the We in half line better. X gosh, because but year. it second when the of will to first better in last the this supplying half the think of position substantially just were part be never half about than a for for -- of little to we the product that XXXX. And supply first going we So be then in mind constraints. months ago,

Chase Knickerbocker

and kind the how of last talk you're product of reimbursement there? in Coflex to did kind about kind improve steps QX taking updates kind kind that And of the maybe update, of just of and

Sean Browne

Sure. Yes.

a focus that hard the business This just that pleased is on was really project. Again, that on. today. frankly, something focus reimbursement from and Surgalign's both much that so was towards thing this we're this the revival was we've to clinical This So the really side. it's going a quite put perspective, with complete one was where

have we done so And that.

plan we to in so new And least starting York win that at basically for New -- been plans coverage just like a great York. got able we're now excited regional what plan stabilize us some business and gives I'm about we've almost in really to coverage full the New

really covered, a So fourth having state is nice this in of largest union the milestone fully kind for us. the

it. business, that and going to to believe bottom we that now the we be we've So we're believe seen with that starting grow

for kind prospects about we're technology. so And the business, is because a especially of such excited great are where it really that

what I a to think just if great again, way call, Coflex everybody of therapeutically, product. you and clinically on just, preservation, for what I just a in does or rationally it this people motion it's of explain the does beauty

prospects. So its we're really about excited

Chase Knickerbocker

EBITDA, Got to to kind confidence adjusted it. one. improve started internal good making? mean, just tick kind sequential in EBITDA margin guys of speak margin, some in XXXX And last to investments even I that kind these adjusted Scott, of just despite of you up. continuing that improvement of your are

Scott Neils

Yes.

to gets think I comment, Sean's it initial our product relates back to offering. as it

all I addition we've of will improvements provide et the to in of to scrap in beyond. sequential yield made both those improvements the margin cetera, and think nice way improvements during course and XXXX gross all of reduction, things,

good we feel So about that. really

Operator

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

Sean Browne

In X with and quarters. acquired XXX progress very consecutive points, short, adjusted we have the We our by revenue basis achieved newly improved in almost with of X you, I'm pleased dramatically both Thank 'XX. in EBITDA assistance for operator. businesses. the over organic positive our margin doubled growth we Overall, strong resulting

our efforts biologics to our have demand products, Our and in allowed expanding the fixation distributor scalability. increasing enabling network meet and capacity us for

further maximizing We are goal our momentum to this enthusiastic shareholder overarching of about value. leveraging

reiterate with the taking more Xtant half Surgalign and have products. We I of products as year patients second gift solid for Without your employees. of life the our produced and live as complete today own donation have the success the for joining and of first our laid a half see by goods achievements we produced the the growth this of valuable our both XXXX want possible. full We in XX% be driven to internally acquired honoring improved vendor appreciate revenue in of year and guidance chain would mission management support. not of closing, full our over Thank growth continued dedication for supply for possible. you I velocity and to XX% of allowing by between increasing the us our of year. In them, as

Operator

Thank you. That All does parties the disconnect. conclude may rest call. your now our of day. Enjoy

Xtant Medical (XTNT) 1 Apr 242023 Q4 Earnings call transcript