XTNT - Earnings call transcript Q4 2024 | Xtant Medical Holdings, Inc.

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Operator

Good day, everyone, and welcome to the Xtant Medical Fourth Quarter and Year-end 2024 earnings. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Brett Maas with Hayden IR. Sir, the floor is yours.

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

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

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

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

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

Sean Browne

perspective, full inventory of into despite amounts we the as full I afternoon, a again year-over-year in million good XX% am quarter. is with achieved incorporated quarter to EBITDA $X.X record of to to our Scott quarter, million. And of This for $XXX,XXX fourth year, delivered and our the a and quarter-over-quarter consistent the first revenue, explain an comparison growth and business a the adjusted fourth [indiscernible] million year-over-year growth. pleased acquisition, Brett, will was Surgalign XX% later. you, $XX.X announce positive $XXX.X profitability Surgalign from related everyone. a accomplishment Thank revenue This which

million to was a continue challenge the to leaner and at In summary, look a we of self-sustaining opportunities offering. XXXX with year Xtant the to many able other Through to of a $X.X and and for XXXX, create penetrate thrilled have and in team, Surgalign on flows to first was challenging tied facility Xtant's to and XX%, approximately Since from A integration reductions since current closing reduced cost which $X operations was this cash than headcount able QX portion expenses over more of activities. the the acquisition-related operating of this have ambitious integrating integration Surgalign platforms XXXX. or the quarter to company. growing August savings we come we achieved leverage most were better fronts to of by our work, that the Operationally, million. time vertically I'm through out as the say through businesses prepared various of of the efficiency. generate of Greenville we and profitable first improve biologics

RTI our from the to products we of our recently XXXX. when facility Greenville our production acquired acquired facility. Surgical We nanOss of in we moved October the Recall, production Belgrade operations nanOss

operating will As to realize throughput to we and business, processes. efficiencies additional believe continue we vertically Biologics improve integrate we tied greater our

line. to where give to capital a to rationalize a top Belgrade, we good maintain the chosen From example required a redundant hardware lines. perspective, have due line is we continue and some hardware old up of revenue in to This bring efficient as will believe to as XXXX we as not there facility using is a our we main distribution operations. in logistics be into that third-party Furthermore more company savings own lines compared additional our

From the growth our while a gate. [indiscernible]. took out drivers of Biologics XX% main branded cell very for a offering has first OsteoVive the Plus, grew foremost, of for commercial as quarter, new Two business Hardware XX% Biologics our and for done perspective, were, stem which us the our well

Amnio The our second to Conversely, was driver was significant line. product X issues. tied drop-off our hardware new

supply Surgalign to EU a impacted quarter. acquisition. ] to sales First, our that prior continued previous that Surgalign that issues their had international through relines again [indiscernible] lines. strong [ rationalized comparison included business fight These to And very this year chain several discontinued our certainly, in

this a our drive about perspective, current integration revenue products be higher our biologics offering. these year. which product will of offering. less The profit, growth because of products care of lines will expand will we scheduled based Two excited ] anticipate will upgraded new development gross new our and launch to our release new primary own wound [ new complete are factor we From the product, vertical products be product should X targeted surgical the that it DBM

these currently our partners independent surgeons have of products Our agent time. quite for requested and all some them use

in purposes. business. serve This opportunities our we expect pick X a year, These to OEM up growth solid OEM

for to channel great grow a leverage us capacity to profitably. manufacturing is First

can foot current to Second, products, learn serve as we of which markets Xtant expanded more adjacent these with of markets. other that many and our surgical, for markets as such about it trauma, ankle, adjacent and serve care now these means offerings relevant a serves wound

Q This code our partner. of [ us licensing licensed upfront fee With for minimums that OEM for an an brought Amnion $X.X and as production a ] million of we product. backdrop, in ] layer single [ January XXXX, another

LCD these of as Coverage April skin most Local However, the with will not planned minimums takes substitute on effect XX. continue Determination for or

our Looking ahead self-sustainability. achieving XXXX pursuit are we to of continuing

to fiscal XXXX, cost-cutting our expect to Our Biologics direction and mid-double-digit flowing In modestly in our of profitability to stay revenue ahead growth down sustainable has forward business to year-over-year in revenue measures corporate return moving plan we We consistent to year cash growth. hardware. leverage prioritizing been revenue business.

to optimize a we our full will year look ] raise sustainably savings end rationalizing a at management our offering both by XXXX, continue perspective, that a From we guidance cash. cost perspective, XX% expect revenue [ additional cash of which of with be X% an $XXX range the million, capital. need year. From to to for together in the perspective $XXX project to From anticipated to to flowing lines is profitability our the we and goal our we not million is growth, which of hardware

will Scott review detailed of results. financial to a for I turn With over call more our that, the

Scott Neils

$XX.X growth for $X.X $X.X family, Thank you, morning, a The the the XXXX. impact of afternoon, offset in the implant good the or period of increase in exclusive for Sean, of million attributed everyone year-over-year million increase spinal same of million quarter our was fourth fourth $X.X in year-over-year sales. product XX% and quarter $XX.X partially revenue good is of licensing Biologics million during primarily XX% or or revenue reduction rather. was by million XXXX. This XX% compared to to XXXX Total

period was Gross in margin work the to XX.X% of Surgalign compared existence same quarter fourth inventory for the to we for XXXX with XXXX, of course which verify resulting our of XXXX. points a associated in of procedures the Throughout the acquisition period a the fourth by Biologics $X.X and charge, gross These quarter, completed XXX ago. the to a business. during were adversely inventory same Hardware year compared million Holdings, margin basis XX%

the compared of by XXXX Additionally, reduced points during to the and the Amnio fourth production affected gross margin throughput quarter cell basis in as was for XXXX and stem XXX was same period adversely optimized. yields

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

Sales points. revenue of expenses as in compared in the attributable General $X.X compared $X.X to months revenue, were ended $XX.X a plans to period reductions months XXXX, ago. for well the in million million to This totaling same is XX.X% were as operating $XX.X $X.X fees administrative as and million marketing As were $X.X decrease XXXX. $X period the XXXX to compared expenses by XX.X reductions XX, percentage for December X XX, and million XX.X% operating of various million. ended compensation and professional to December expenses million salaries the the and in for a Sequentially, XXXX, million This primarily is million primarily to compared for $X.X $X.X to expenses reductions X increase partially totaling last commission the declined higher by total related a same QX expenses year. declined year of quarter to wages percentage due offset same million. increased sales,

Hardware fourth share to quarter was at EBITDA on compared the [indiscernible] fourth current Adjusted of our The XXXX, quarter to of inventory $X.XX $X.X fourth development an loss arrive bargain $X.X periods $X.X quarter sell-through December a $X.XX the of same in ]. and XXXX to and quarter loss for fourth XXXX. for in a Holdings, comparable of business Beginning or EBITDA calculation per EBITDA on the recast the to phasing million and of months and XXXX net from XXXX the XXXX. conform Net we the of period our EBITDA reduction longer expenses no have purchase Surgalign Biologics was of X compared $XXX,XXX gain curation XX, are in the adjusted fourth the adjusted the the loss the share the $XXX,XXX XXXX, adjusted including in $XXX,XXX effect purchase of Research quarter XXXX increase of of related prior ended amount. was in been part of per for [ $XXX,XXX acquired our of to million million, as in an were period.

and for the of licensing related million increase financial sales Turning the trademarks. XXXX, million This and agent Surgalign $X.X Max Hardware year results. of business, attributable million now and $XXX.X full independent our compared to an from primarily additional XXXX our Simply was upfront acquisition to for increase sales $XX.X revenue is to Total XX%. our in higher associated product Biologics Holdings, revenue to

XX.X% and operating was XXXX. of to in to XXX revenue total expenses reduced for points were due total for XX.X% to basis were revenue or XX.X% $XX.X million XXX points mix basis XX.X% due this of throughput. to margin XXXX Gross were of million decrease, is XXXX in XXXX, additional or offset production compared to $XX.X product administrative XXXX. primarily which increase hardware additional were for million General expense, expense, for and year were compared expenses and in severance attributable and an partially December plans. software ended expense This stock-based to $XX.X by reductions increase million XX, compensation amortization compensation, various XXXX, $XX.X the compared

XX, due for This professional million XXXX, fees. service an Sales is $XX.X million Research increased Net increase related to primarily December an bargain $XX.X compared primarily her share to Marketing XXXX from income year. million the XXXX to sales the or gain $X.X compared additional were or $XXX,XXX related income This were $X.X that to our as of $XX.X purchase development expenses net loss with million from and increase Hardware higher due $XX.X in higher prior the XXXX share and million added XXXX. net $X.XX Surgalign, in per of increase $X.XX to acquisition Biologics acquisitions. expenses commission Note on for well and to XXXX. personnel year as for per included ended million expenses was business.

EBITDA loss of million loss compared for Adjusted XXXX a $X.X to $X.X of was for million XXXX. a

purchase included related no our arrive of in amount. of adjusted a effect in inventory adjusted and of gain Biologics bargain sell-through The was Holdings, previously in the reduction on calculation are $X.X to at as Hardware the phasing we XXXX purchase our noted, longer of EBITDA our Surgalign [indiscernible] million part EBITDA. recast of as on As of business the

we revolving as million, facilities had cash, receivable XXXX. XX, and December available of of end XXXX, $XX.X under $X.X million cash inventory million was million restricted Net $X.X [ and of the of cash. ] As $XX.X had accounts equivalents was we credit

Operator, you the line open now for may questions.

Operator

Instructions]. [Operator

Knickerbocker is Your from Chase Craig-Hallum. first question coming from

Chase Knickerbocker

majority of on internally there, think kind the the driven pull-through And on your quarter start Or launch. [indiscernible] about of distribution by developed sequential through on biologics. your product that we growth any there channel? is white If QX guess was label? here. Congrats VBM largely I just in the to

Sean Browne

Yes.

-- our December, So label, distributed like of of like middle finished the primarily of off products. we the bits literally the last white were finishing last the we off so

label bit saw was own our we little So white of on pickup mostly label. it on the -- the product, but a

Chase Knickerbocker

meaningful Or VBM a side? for kind pretty are standpoint that And the the mid-teens kind of from of expectations relationships that ramping those white as of that us you're you enter we year, a through of kind for a expanding that's kind 'XX? of to is of accounting ones? it way And how worked us and your on think for? portion is of for it about new in kind kind current Just ultimate growth label of walk there

Sean Browne

X was months ago, it white a labe. Well that going could big part mostly not be have of on to would the so, label chunks you I the told white but mostly, the on side. growth

right branded product. our Our Xtant funnels very, look good for very

So be going big going a split. our the today, to product what I VBM percents is of it's at I'd tell you year. that XX-XX look as part growth is about probably it this And to be a

Chase Knickerbocker

as Xtant brand? white label far As the in

Sean Browne

[indiscernible], yes.

Chase Knickerbocker

that when pretty have side, any material expectations then factor a to launched? we XX of And on on the to kind And growth contributor could is that XXth?

Sean Browne

Yes.

two to So that. things

quarter. finished be to is product the all, of first this So

our still have X pipeline we'll that months of be So the working we so product another we're excited or through. but done, current being about

And what some things. current of can looking at where with so we it. to is There's line, sell are there our there, couple are we -- limitations from product

So product we're lot line hoping now a that up being start we able more. this to can open

So should business also see take last gain that we a certainly basically, we've least year, second hope to half see the then it margin secondarily, line then of we to at and from got from And this pickup revenue sure we've that perspective. grow make as there. to the after we keep decline out the a

Chase Knickerbocker

write-offs? impacts were sorry in to it, And from inventory Scott, the QX I those but if margin missed gross exact what

Scott Neils

to basis or the XXX related in charge then cleanup And throughput our about inventory was XXX the it's the inventory actually inventory just points, Surgalign to one under XXX. basis was related points. The difference

Chase Knickerbocker

direct imagine, there we we any on gross sell is a can 'XX, would see -- starts to I And as through as improvement, bigger 'XX? for margins, about gross I some should VBM in mean, well. margin if channel you the give it. think Got thoughts sense color Any towards

Scott Neils

by impact the Right. And points of think We the introduction [indiscernible] we of up pick for XXXX other walk year we time as or get will XX.X%. we of see the I going finished we through some VBM I year on. the at full the the X new QX XXXX, of product as to be think X course and

Operator

Your next question is from Zimmerman coming from BTIG. Ryan

Unknown Analyst

for on Ryan. ] Avi [ is This

Sean Browne

[ ]. How Avi you? Hi, are

Unknown Analyst

you. thank Good,

assumptions speak and if to with high pacing some you start low what to I would to was guidance, Just 'XX get and the hoping the you ends could your of around guide? of

Sean Browne

want you you this? to Scott, me to do jump jump want in? Or on in

Scott Neils

the on color look we'll top said, set with Amnio really the in Sean. you of I what of free see for XXXX. QX, That to we Yes. an saw in, don't increase jump to in directionally we I'll dramatic here Maybe in see somewhat of from QX I to what QX. any that I to a impact it. side perspective the for transitioning only expect And as consistent line, think add from think want because sales licensing feel But on phasing is it, if seasonality stage to

turning the front. As move gross down OpEx, having we margin [indiscernible] into covered to OpEx with

think G&A pick maybe course X during the on I of side year. we point up the the

then I think significant in on that we of I the the is percentage year. X a during marketing, [indiscernible] it? that to things. you points of And flat up good of R&D picking some and up color, side pick X largely probably we're Does as stay revenue give to sales course leverage think

Unknown Analyst

XXXX for anything And that Yes, that's outperformance should mind? allow in in that we there is keep helpful. any would

Sean Browne

the ones in of LCD is Sure. Well, one way. big gets pushed if any the

LCD the side way Care up the set point, if Wound for diabetic only ulcers. you that to really it is and [indiscernible] think ulcers covers foot about Additionally,

And from so [ makes of as I XX% that's as that organogenesis about that gentleman when market. total ] well listen the them to mimetics

in So revenue pick least have up some certainly that licensing that OEM we at of realm. could that revenue or

There's the supply when been reliably I can ourselves. player we an that other make of sure side that we that We've to things, can we things them. too, one that products the of of wrong any that on for -- bring on want from OEM

things our is we to there's, we we've as got which rooms getting on number create some map working more so capacity demand. quite need of all matter available things produce speak, this frankly, really we're out. donors, So of as we to the that the produce we the within plant, It's think we of plenty having clean the a and can that

So I the to just line our feel about so outkick speak. don't making good of that sure matter -- side of coverage, a can it's thing, we we top this

Unknown Analyst

around Understood. spend guys in if require And any capital. that areas are other hand? going holding comments I additional you to on Curious your you potentially for if allow it that guidance had growth isn't any heard would back

Sean Browne

That's question. a great

-- back days, anything If basically. right? you, you had money, you buying in business [indiscernible] You buying keep enough I or just mean could tell the dot-com

certainly about build buy sustainable. So what question it. to is really this no a are to But way trying business, something yes, we is

And be to instance, like, things doing engine. is anything wouldn't that certain that a detrimental just that so there hardware great to end, would example. we our for are that It's growth

a product certain line. are doctors pedicle XX for we out have, an different there that screw line, pretty where might using have Pedicle that lines sets say old us, XX old are of, We screw say,

lines up have all buy XX only and brand we to though them new to those sets we we being new If buy sets XX ones, we have to if to say, wanted bring upgrade used. had even together,

of those of And things it, And have into so and dot-com, of put of money you where a all outstripped is stuff it's that there's your but be CapEx. you could we buying profitability on like hardware. one through lot you know a could -- before lot hardware -- yes, just

And to something that's we on. so keep just an eye want

Unknown Analyst

we Got I of for some the it. savings move just And should last start one cost was how quickly seeing me. then P&L? curious the into

Sean Browne

I'll over in a first you're to to that. Scott, immediately starting Well, of turn quarter, it let the already some you'll it to already you amount Scott, right I'll quarter. in tell I the we're you Great. you. significant here but see now, can see fourth add

Scott Neils

Right.

spend where motion put I extent that's to put needed wheels we've and right. in those. reductions We place think we the so, the in To the reduce headcount, exactly done on necessary. we

So those into XXXX. are locked [indiscernible] and heading

Operator

I to President Thank hand closing our Executive Chief for will back and concludes Sean go the you. Please Q&A That conference remarks. now session. Officer, Browne ahead.

Sean Browne

Thank you, operator.

First, then I'd team members of to excited hardworking to we're today. can dedication complete you Xtant donations our appreciate and And have Thank greatly self-sustaining live like your about as possible. to their support, thank gift of of our patients mission that and who you. all of thank our and honoring as thankfully, full our life We like really I'd joined us year XXXX. the

Operator

Thank you. today's this event. concludes Everyone,

you at may participation. wonderful this and a your time, have You disconnect day. for Thank

Xtant Medical (XTNT) 6 Mar 252024 Q4 Earnings call transcript