XTNT - Earnings call transcript Q2 2024 | Xtant Medical Holdings, Inc.

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Operator

Welcome to the Xtant Medical Holdings, Inc.

Second Quarter 2024 Conference Call. [Operator Instructions] I would now like to turn the call over to your host, Brett Maas, IR.

You may begin, sir.

Brett Maas

Thank you, operator.

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

intends forward-looking call, During identified of performance. by other can expect, existing These and Xtant's as the management trends statements reflect future regarding plan, statements such anticipate, perspective may company's the words similar expected future this believe, with will, be make meaning. current course forward-looking and and events that should, certain words may, on information

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

and use company's available results our of who GAAP non-GAAP discussion filed be financial this today's press include press certain In to applicable its which a.m. the X by law. with to a narrative company Form release release any reconciliations, the are such that benefit The declines may recorded results of was appear forward-looking of obligation press required The call, update X financial to Note detailed the those to replay held call as approximately our at that measures. Please listening this statements, our our website. and and financial the August describes refer release on Eastern except X-K measures. provides non-GAAP on in otherwise Time.

Shawn, the call the turn to floor yours. is to Browne. Sean like I'd Now over

Sean Browne

to full revenue of are guidance pleased the are million, team. million to year and to growth prior of revenue represents With Xtant quarter the annual another approximately we growth to $XXX good strong total announce reaffirming Brett, full XX% to you, This compared XXXX. today. which year, range we our XX% morning, pace XX% over everyone. on achieve solidly I'm Thank $XXX year for

excluding From an for products the organic sales, growth acquired during and significant mostly perspective, the which sales to which cannibalization growth, planned compared previous second hardware no quarter days of Surgalign flat we the there our during year, were due prior comparable as OEM contributions from revenue was XXXX. revenue to X-spine QX define XXX

the As our continue to to supply digits. chain to introduce our XXXX double reach during products market, of organic expect abate we the second new challenges and accelerate half growth and we

of marking expenses In quarter, by to perspective, prior our for the second consecutive QX fifth From revenue quarter adjusted as reduced and adjusted to percentage our million a our a operating EBITDA positive the the EBITDA. compared basis points and of XXXX. gross profitability was period second XX compared margin quarter $X.X year expanded we

anticipate becoming we beyond. more is and production We Our scale. continue improvements efficient, in to in further adjusted EBITDA and XXXX QX

second As previous so calls, to strong quarter. the have to chain due this in year of be we supply we numerous challenging discussed expected first such have the I half -- issues pleased first are to we a expect

fastest-growing worked these of of some have We that through our products. most impacted have issues

Surgalign how pleased are The a of Additionally, our I in quarter part distributors from we cannibalization helping and aging rationale performing will expect on strategically This strategic quick third replace revenue hardware am when both have Xtant grown year. the the and the in the which deal. we want producing particularly are big and by Surgalign I lines. well was XXXX. an XX.X% XX uptick acquisitions top acquired provide us a product revenue specific behind intended of acquired operating closer own very our stem to to cells, last from to we profit. give update lines

our in and new growth within IT nanOss in role our Biologics future a significant products will business. The production new acquisition verticals addressing play

markets lines, go-to-market As the product those more I details target specifics, product develop about new strategy. give our and will we

continue Overall, related rationalize and pleased these we expenses lines. product are with our we acquisitions, integrating each in to progress of and

reminder, pillars like drive that key acquisitions. As with innovating built adjacent we with introductions; believe growth. pipeline four, are platform robust our and with new deep distribution long-term healthy, organization, new have network sustainable continually of a two, a penetration; new products. X will market expansion; One, three, product we Starting we products, strategic every

that our synthetics, Biologics only viable X of growth line the stem a of product company which bone factor. matrix enhance course from growth orthobiologics cells our the offers we X, offering turnaround, include helped During expanded which are categories and to complete orthobiologics, Moreover, we our DBM, profile. allograft,

released sixth quarter, surgical and a allografts category, care, advanced and already the second booking applications are new for sales. we membrane amniotic we During wound

but sold solution previously that producer. of well line company a our with we fantastic superior side profitably far repair surgical an This product a our currently can believe Xtant on the a line OEM that us, small product another distributed provide our as made grow Xtant-branded we as product focused products, as is for business.

Posterior and Hardware XXXX supply do year, the we soft profitable we second Also, of finishing to of much a produce the the relying year out side, half System than is of our by on plan in our we chain. this roll standards way Fiscal products we development year more from not self-sustainability. the the on Cortera Surgalign. own Fixation to rollout started others products control In that where are

process rollout, anticipate of We year. are will we the in be which QX by completing fully completed now this that of

network and on focuses expanding The next distribution access. contract pillar our

more to the more in offers approximately beds platform U.S. the cover all than XX% that of GPOs and XXX IDNs Our

into than of on distributor penetration increasing least our our distributors we In will but quarter. continuing the includes per years addition, to already number the at network agents have. plan XXX for we distribution In expand -- new look total focus distribution XX past, Today, by focused to distributors. we opportunistic more now primary be additions, distributors

sells stickier they the products, We have a of become a found distributor our lines as Xtant that Medical. that the more for distributor product

Now added past this we XX still that with new quarter. said, distributors

while with So we adding are high-potential getting also new distributors better distributors. bigger our penetration

our to third we adjacent to we different verticals with markets manufacturing, other eye potentially long markets. serve for term significant the Xtant have One places on turning beyond that a in Through in goal those and build spine the and our where learn Now specific can OEM impact. products verticals is serve of leveraging orthopedics. pillar, dynamics about an expanding

the and sports We have reconstructive orthopedic gained and within markets. foot ankle, trauma joint medicine, traction

surgical amniotic With care advanced chronic the our and markets. wound tissue products, addition can of the both now repair serve we

specifically, leveraging offering -- of agreements either scale. over our platform targeted for pillar we to we acquisitions with XXX additional us subscale final targeting companies. provide and our help targeting XXXX, are our growth XXX distributors Our focuses or IDN through or in are achieving our by selling on growth companies complete nationally, similar More that undercapitalized acquisitions products either

focus X greater is based regenerative particularly on biologics. Our or acquisition in characteristics, targets that We're give capabilities. first, us on companies looking capabilities, technologies at

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

Targets flow. margin that capacity. profitable biologics or can Businesses synergies. production can cost cash And the third, demand. Second, or long-term profitable become are through that our expand

that closer companies and we robust acquisitions unique allow criteria us We and We will company. that when achieving future network to strategic step strategic will believe our even believe believe Furthermore, distribution will take to sound, platform continues within acquire goals. the of owners or fit those one be win then time companies a we to targeted making part these Xtant our it long-term stringent win of entrepreneurs grow. purchased over are other as -- bigger fast-growing and allow of and to they potentially our

Moving will transformation an expanded be options our reliant production diverse larger margin own quarter transformative allow us and positive becoming will the us to population. line to treatment improve and believe are product on that a large of operating of Moreover, or supply during believe and additional forward, outside XXXX. cash our help we operationally with more self-reliance get actions self-sustaining fourth by profile, control. on focused Most patient that products our We should producer a growing Biologics. this we importantly, dramatically producing flow becoming controlling our chain less to these brings coupled

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

Scott Neils

XX.X% Gross excess was improved non-absorbed compared for the quarter of XX.X% and primarily The and which in to same and by everyone second mix. scale ] costs and to to period recently the increased inventory, attributable quarter to to XXXX. [ The period in on XXXX increase increase the sales offset was compared acquired partially Total charges greater primarily production call. was XXXX. product the the margin for $XX.X business. Thank the was revenue you, XX% morning and attributed Surgalign Biologics million of good is $XX.X same Sean, million from efficiency, for Hardware for obsolete sales for second XXXX

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

XXXX. of were expenses compensation percentage from points same revenue, stock-based expense total compensation. of additional to a expense expenses the growth, primarily to XX.X% from additional resulting period additional year related headcount operating revenue attributable were basis These ago. As to increases QX a additional in and Sequentially, XX.X% declined operating commission compared XXX

X attributable and and for professional compensation in stock-based for million fees hardware XXXX. compensation, million to $X.X $X XX, increase in and is ended same administrative increases expenses. the compared were the primarily months to expenses This June period software General expense, XXXX, service

the headcount. compensation for months ending and to to million additional Sales XX, is period and This with for due $XX.X increased primarily expenses commission million compared increase June $X.X X additional same to XXXX. in expenses marketing related were associated XXXX, sales expenses the higher

$X.X related to ending primarily for on product for from our additional the period an new and in million increased million Research due were XX, The the months is increase introduction. increase XXXX. focus expenses $X.X XXXX, development headcount same to X June

comparable from $X.X net $X.X or of period. loss in quarter in million second XXXX XXXX. QX $X.X the in of the of $X.X loss per second Net to million a per share a of of or Net loss $X.XX quarter share was XXXX sequential was XXXX million in the compared improvement $X.XX million

compared the million was for XXXX. Adjusted EBITDA in same $X.X for the second of XXXX million $X.X quarter period to

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

with additional into an $X to cash institutional pipe In a addition, flows. capital existing operating investor on an towards transition provide positive for entered working as X, million we August agreement we XXXX,

now for Operator, questions. open you line may the

Operator

our from BTIG. And Zimmerman Instructions] of first Ryan [Operator comes question

Ryan Zimmerman

Can you okay? me hear

Sean Browne

great. you hear are can I you Yes, today? How

Ryan Zimmerman

and around the this revenue the how on color Congrats Sean, with just then progress you a the It implants. balance little year? of like the spinal any lot the a in have the kind mix quarter appreciate seems there, follow-up to all I of start, quarter. helped over between out that just And playing orthobiologics and of hardware of this a color quarter. the But guidance. Maybe on see Surgalign

Sean Browne

Okay. sure. Yes,

real And from has a The is Surgalign the So product the is But is over that nice really a that's helper. think product I'll take the know replace. it's Surgalign so perspective. it to take I high-level older good us when as want some of line, mentioned, to specifics of hardware I helping from you which it something very this a yes, hardware. about -- -- don't a if our line, I And and Scott, add one of any it, we're X-spine color with each. perspective, high-level percentages been

we whole to something was wanted that that cannibalization build So in.

half to going things of as see so what's take And about happen this place. second year, will to in two you're think that the going we

second see will You're that I of our to this said, things be coming some of self-produced own year. like stuff the an half amnio, of out stem our going in increase cell are

All that of Biologic drive of help will sales. our more

to rolled have But portion of a concurrently, this. that's full, going product we be the line out in nice Cortera MIS really

the with but already We out be rolled portion will MIS the NASS. ] open during have [ us today,

of nice And see really so in the uptick the we'll hardware it to that feel start things. to side when fourth we quarter, a comes

Biologics also of that just balance I growth. strength prominent. start is, just of where nice think, that to think got overall, based our I course yes, the more on business of the time, we will over become think even But I a So

Ryan Zimmerman

little balance a to Okay, And just not traditionally, us you'll of the about guidance. It fourth take just nice year, seasonal the how we're fourth beat but make to that the guidance, think that. flowing that's third through quarter. versus want very quarter. like help then the a quarter I to up in clear much the obviously, for pacing And reiterating through by helpful. with guidance, you the very bit, of seems kind on get sure step

Sean Browne

Sure.

see especially you will do uptick within happening see, in but quarter, certainly what's we which good feel the an something wouldn't from typically the So about quarter, Stem really stocked overall, starting we got the that. second about is third we take that to quarter -- we business, business that's our just the fully finally where place with Cell ramp-up in early second

X haven't stocked probably in years. fully We been

so here than quarter. we that we longer also in in has we little and And off taken expected, -- expect really to the are see this a take starting start third, fourth to it the but

we So think that quarter strong. fourth third should do pacing, think be we quarter improved, the as about should be

Ryan Zimmerman

Okay.

sequentially quarter Just and third in want maybe quarter relative much grow. that to of fourth still quarter higher than of to to not third a second be clear kind but continuing as step-up

Sean Browne

Yes.

Ryan Zimmerman

looking just first helpful. at gross very me. last they've half just for steady of this the margins, Scott, for year. And Okay, then the held one Maybe

of about you cells think me where in-house. you those go, bring margins stem will to kind those as back Talk particularly

the pretty I assume amniotics, good add You carry both would margin.

to talk see about transitioning? kind where of just that me you So

Scott Neils

Sure.

Going we sort in fairly an the think back progression QX QX I with expectation as was -- we to a of in into leaning and occurring that uptick, stem started relatively QX, those QX out internally-produced uptick remain constant cell. that an would what significant really laid on is

the that that our back selling I would QX. a terms around remainder come cell and I of on our the we'll go would I think this look be stem at sourced think cells, stem of inventory back through one continue for in in change

will dramatic consistent we'll in in I QX, round some, think see but an expect although I gross see year. realize of uptick think fully XXXX. But QX think as of it to don't QX we'll and be in out QX the I margins So in do more as that I we

Operator

comes question of from next Capital. Craig-Hallum Knickerbocker Our Chase

Chase Knickerbocker

product can give the for wound good how opportunity being market. the an you those a your starting, agreements, us Xtant to or Maybe on as it's in particularly of that maybe the now, on Sean, side, you've you Congrats kind see update here. just progress dynamic amniotic launched distribution direct bigger OEM care,

just your of the updated kind there Xtant. But largest I'd thoughts for opportunity get to love what is get on your --

Sean Browne

us make Yes. in quite with No question we quite for will that. of about And agreements already it, on have be place, what The we frankly, we largest side. OEM the opportunity can't enough the do frankly. that

have tissue we issue is biggest amniotic the So sourcing the itself.

is job so quite more getting OEM opportunity. that's one, Because bit a there So in. of

million And it's doctors then it, us do we line And product product about this. see that who for line. interesting this X different already is only use like $X what's

it's a barrier. so protective And really used as

past. in And finding at than great force, we as our our distribution little And a really have commissions least or in a we little much of and we better further can I out afford bit the here, than own say, and to there. have past it gotten better we the sells we're much product, we margins here, bit much, should have that more have more sales so a network

may line us line, away we'll that know million surprise product we and making to be we're XX% product margins, are margins product right it a we what that line. say, see is. so making, this where But now a as will close And same XX% on $X

And it it's drop So margin OEM drop-through. nice side, on a contribution terrific through. has the a

margin the side, side. but gross much contribution the So maybe so not on definitely on

Chase Knickerbocker

doing trying production the speak placentas. while how it. it relationships. Got maybe there. Maybe talk those build you're to to a about source on And to what know takes I up more to you're side supply just

Sean Browne

from of had back a years had competitor this world. that our very, relatively Well, grown amnio that COO, in worked He very fast side. couple that Mark good the a Schallenberger, had come with new news is

that But that Mark out so necessarily that just some of has certainly aren't within and about we world. of through. there get reputation it's too more now relationships. are And It's there -- have just to Mark so more agreements guys signed, one reputations. other terrific And things the because getting has impeccable such those Mark, matters an coming

more of And able placenta through more we think that, donors get those so be to and will I in.

yes so most that's now literally -- right And is factor. limiting our so

Chase Knickerbocker

Scott then cell this we stem supply in that on sounds the his kind And of But a side, will think guys it's soon be to it. about answered of the after partially of going should kind sourced of launch Got answer. have how product. last you that It product? available like the phaseout

to that demand today? quick inventory addressing to VBM of talk then how get maybe the there constrained unlock potentially you all can demand today from you're But you just think that have supply meet and you

Sean Browne

to you would I'll jump to want and if color Scott, great. in, that be some add this,

yes, XXs, our things, absolutely today. we're will is own demand, high now source two that product in a manage margin again we the terrific the we to margin product be XX% product again, low versus as So able selling which, XX% that

So that is fantastic. absolutely

some terrific taking Now we the where what's also opportunities place on side. OEM see that's really

very don't we in to -- we're necessarily all We able want that their very, be so position. -- on were to of we anybody needs. meet this fully to be And bring can't

so roll that product have are line And speak, today, here. our that we X waiting up signed we patiently as new as we out are groups

take OEM of frankly, care our and then out the capabilities. we opportunities, we top we're now bit right there And there. projecting a are for that ourselves overstretch that But quite us But the not is, on can to we're quite volumes to first feed ones but they're to we're foremost, of of, -- going they're and going manage. ones we -- that's opportunity that's have

looking with efficient as opportunity our at expand get better are to we we more production, able we OEM be will that become So to and too. this

Chase Knickerbocker

that ramp how bit demand Is cetera? it is of to at away Or short? again, a take OEM et and opportunity? just fulfill little the start after quarters, it fairly your the to product, soon this to Is expect Got able of time of going up would you it. launch production? a be to couple And to chip then it

Sean Browne

now happily, question. both thing. the which a had as throughout And we -- bad stem as Scott we have good and a Great year, cells have is Yes. sell could much mentioned, we as

So we're to line, going for product our be good. own

now, our opportunities. to will focus those be right OEM initial start So fulfilling

course that we'll of the our And by think the come XXXX X ramp we really shape any or just, months, kind next of that, X QX so we're and terrific well. producing over as literally be in really -- actually again, when production the doing up of own products of

this that So saying bit to won't stem be gross our margins we going you're high hell guys. why see own a lot year, what stem because as this little because cell our products, not -- of won't us, be of from is margins may of be as much will won't and selling selling high was as products be Scott we selling be to but a cell our a we OEM of

is so because And a not commission there's really contribution that. the tied that, to nice margin again,

something, don't we And where get side, growth it we it side, the on overall so at the on that's side. our from least get profit will

Chase Knickerbocker

Yes.

hear organic probably would is that, point otherwise talking hiding be it that a number, makes on that then that here, the you're growth Ryan wanted more some looking growth another pretty put I number on you finer good seems cannibalization clear it just And briefly. hardware that sense. organic. on I pretty to the but lot at about it. Okay, touched

by. So maybe really can is encouraged working of and you're bucket kind to the just you really hardware what talk in

Sean Browne

Yes.

great example. -- So when here's a at you X look

sell to overall as you XX%. -- of at have systems XX% most our So from anywhere who XX% spine any sell X-spine much competitors their pedicle fixation, as them to was than revenue. when screw old will their The less business of of were look

it So a really, really, line. was really dated

more considerably our kind of that users screw quarter, impactful brought pedicle see we've had highest only past when then particular us we're it month amount we of you over had very a and climb. top of line, that line. that is the systems because a it in can product So starting that right from that, -- the that Cortera Surgalign June we've And revenue has away in that was and be throw of on in continues to product growth from to -- the this helped

we is then we this so to And and our to as business Fixation nice that growth part to MIS in profitably business feel the really our in contribute the or add September Spine going a September, to late way.

Chase Knickerbocker

last that we the year? just How is sustainable hear to in Got Scott. about from cash positive flows are exit to QX. for just it. breakeven? expectation then cash Maybe expectations flow one operating speak as there, the Great And for you thinking that on

Scott Neils

be that at flows I in would there I is expectation QX, expect don't sort simply would the but comp QX we that, to I that be say cash -- in of payout that would thereafter from the look case as a that because suspect operations.

Operator

[Operator over Instructions] As to no call I'll further there hosts. our throw questions, the back are

Sean Browne

you, half operator. quarter made XXXX. Great. of and in second Thank We progress the great first

the remainder on help believe big key drivers our QX. this less operating internal team. manufacturers' through a profitable alone the year, will X One, the is biologics. to We As of we there flow become company. own Xtant step supply build self-sustaining for other The cash This more chains. us development a produce own one our believe highly our are to for quarter we progress positive we'll we biologics, rely in get of

see we great for X continue growth opportunities costs. has worked then and businesses Xtant, Second of bought thing, growth. to three, growth formula opportunities to last through and the optimize we plan continue integration pillars We year. more to the these pillars. This to leverage drive the of And drive

honoring mission the our patients without our reiterate valuable to achievements donation and a and the of In possible. by employees, of not them, of possible. our dedication I complete success full our closing, would as I live appreciate as allowing gift want be to life

today us and Thank continued you your for joining support. for

Operator

attending. today's Thank That conference for concludes you call.

Xtant Medical (XTNT) 9 Aug 242024 Q2 Earnings call transcript