Xtant Medical (XTNT) 4 May 232023 Q1 Earnings call transcript

Greetings.

You're welcome Xtant Medical's Q1 2023 financial results call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Matt Steinberg of Lazar FINN Partners. ahead. go Please

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

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

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

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

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

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

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

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

in progress the We're everyone. and made Thank very good morning, quarter. you, by Medical Xtant first of significant the proud Matt,

included of growth generated product by highlighted revenue growth several lines. Cofix strong well growth XX% our from quarter, by as sales the XX%, we achieved acquired recently and first X% as milestones Coflex organic the During of solid which

against our of positioned sustainable market which us has that strategic ASC execution well channels saw OEM, growth DTH, for all demonstrates Importantly, the independent growth, significant continued pillars market agents, long-term and the growth.

growth on network expansion; three, pillars two, a strategic our As are key acquisitions. new product introductions; four, one, four focused penetration; targeted adjacent and market reminder, distribution

will and the our overview performance, update acquisition an Coflex I first-quarter starting with integration. on an Now share business

acquisition supplemental positive in announced positions our highly in it Coflex products, transaction the bolstered was with near our Moreover, to new care for already two addition device spinal future. March, offering it to XXXX. an Interlaminar non-acute fixation of the our impressive offering first the Coflex fixation of become device. As the Cofix is since Stabilization spine our flow cash us complementary and and This business

lines top our Notably, population. positions near XX% to us revenue to treatment a the these line, an patient This new growing was business. spinal margin our profitability and Furthermore, it to growth large future. achieve fixation by immediate product improved our deal year-over-year as and options contributor in evidenced bring transformative profile the to better

of tuck-in progresses. in Coflex And plan acquisitions progressing to progressively both looking diligent we has remain to transformational the as smoothly. ahead, our and Integration -- been approach year

quarter, first the us in where products saw same growth during we enabling XX% the robust was year. biologics last products expand biologic over our period to for Demand organically, our

billion and we and share vital enable support that strength a have pipeline our orthobiologics of to US feel market. $X.X the will product in the We robust market business take us

growth to generated product We date continued look these forward and to of the are lines. excited about the traction

the the targeting track on country expansion by where we distributors of our regions and XX current do acquisition, new growth XX quarter. distribution Driven per Coflex of distributors roughly we in first our our to network, Unrelated continue a we with strategy, the have our of of transaction, of larger Turning our new adding the expansion presence secured goal physicians today. network. quarter we number surgeons distributors XXX significant as will and footprint accelerated new with to opportunities addition part not plus to in

The market third growth pillar, the adjacent track pillar to of strategy our continues well.

further orthopedic the penetrating implant foot ankle success quarter, This and trauma and market. achieved we in

For to sales take most onetime quarter, advantage recurring. able not OEM first were of the few we likely will a be that

is market products. business, is us our are that part handle nature it and allows strategy total new However, the glad have orders. of to to expand of these the the growth for OEM to we our as capacity addressable important This quickly an

and while efforts, operational improvements can costs an been has our for focus by our are our and standpoint, manage we proactive managing on capacity better we From ensuring Supported our chain. expanding realizing scale profitability. supply

our manage operational of product are our and target modernization prudently we we efficiency the making and likewise, to to our continue as our development as of towards processes, optimization new strides production, lines. areas regularly diversification We of cost improve

partner as a on an Beeson Now today, Mr. to independent Board. member. has update that I'd like as Beeson the Earlier an to appointed been provide we Jonn Board our announced at regularly matters. the law Day clients on governance over with aggregate it advised transactional an corporate of value billion. strategic Jones $XXX and and on transactions represents complex is firm And

years Matthew to the specializes company's and Concurrently, Advisors development, skills. have from we that today of other capital multitude M&A, a also corporate he down securities, Rizzo, are forward market We benefiting and OrbiMed and experience, Jonn's Eggenberg unique topics. both business from announcing In in to of Board. stepped look leadership Michael insights, governance addition from

our reflects that have and financial and in instrumental team Since exit provided of from XXXX, OrbiMed's Michael belief success at Xtant. turnaround is Matthew joining the the Board and the the guidance management the now strength take this team backing in has been underscores OrbiMed in the Board of the OrbiMed's to that confidence our from the next evolution. poised step and our Xtant of time. business It also in

and service organization as to Xtant as for throughout retail for of the Michael majority contributions long-term making attractive Matthew thank the of Xtant several Board, years directors With behalf OrbiMed the Xtant, we years. the of addition investors. support to past has institutional Jonn well now of independent Beeson more the a and On and

the independent directors As and In further by we chaired now members. governance plan look [indiscernible] to progresses, recently our complement and corporate nominating committee with year Jonn in Board Board a identifying new expanding continue assist Board. Xtant independent independent initiative, additional Beeson formed the Board new to to the to the existing

Finally, XX% today, we to generating million of guidance an $XX We XXXX. full XXXX. million representing for year XXXX, for anticipate XX% revenues introduced annual the growth compared revenue of approximately to annual range to in $XX

doing progress growth our executing provide We transparency the of to significant while clarity pillars. and demonstrating are near-term on this projections greater growth our

profile our that of sustainable board, are and With we management to experienced the long-term leadership drive acquisition confident and of are Coflex, improving team the margin pieces all the place growth. more in

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

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

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

expenses the period $X.X First same million in Quarter were year percentage compared period XXXX compared in a ago. expenses the a XX% million to were XX% same operating revenue, ago. year a of And $XX.X to operating total

Coflex planning were for ended to employee in expenses and three XXXX. XXXX, related and the is expense expenses increase months offset costs General year. to million to same system enterprise additional primarily compared in resource administrative $X.X attributable by $X compensation acquisition, related last XX, the our March period million This upgrades to partially

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

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

cash of million inventory, facility. available Operator, million for of XXXX, questions. As you million credit of revolving of the may now equivalents, our March cash XX, million under we accounts $XX.X $XX.X receivable, and $X line and net $X.X had open

[Operator Instructions].

from comes today question Capital Group. Knickerbocker first of Chase Our Craig-Hallum

Good morning, quarter taking Thanks nice a the for guys. questions congrats really and here. on

Thanks, Chase.

play? growth a Was modeling this Is it with at business Coflex Yeah, segment contribution, be should physicians? hardware. dynamics an volume there. we yeah, organically least excluding implanting recovery in XX% quarter nice procedure so forward? the organic grew flat itself, go the future on first, decline outperformance in How quarters? at a just starting my so organic were it there model, We What on on modeled

that. talk about take I when let's Chase, happened this the how and think what it performed. all, hardware past Scott, first about of I'll quarter,

think of offering at really and I world that. to hardware that think that really a is towards I've outpatient we I have, really We markets. One going other there's within a as play the couple our mentioned after here. has for meetings, focus have terrific in things happen changed ASC

and how think in think two demographics way, towards or more was, it as is going about a you these where a are is ago, positioned switching it's better when so I world we're much the business the or over more And where definitely compared that to of year years procedures especially today there. about

I be think modeling So something it, or that drag thinking to how it about at a don't it how on as least you're moving and is us. believe going modeling I be about forward is to

shored to that Now going to same up that least we're it's stretch. business. in at of biologics see we've But think what was the declining a do not I was our private going growth necessarily that kind something be

now now to have more about. with Coflex, And we talk even

out out hospital really -- a that of offering And for so patient surgeon. we have nice of

of biologics, versus in how No, great Yeah, then the quarter then much pieces, understand really sense. makes How the organic it on a DTH to and was there, growth ortho Maybe the moving XX% there distributor? that much revenue number, me help much contribution? see. larger OEM but

Yeah.

part of fact back distributor force independent as for very a was inventory I I'm all a mentioned, our, lot that really And was how our big the overall with that, [indiscernible] segments have pleased to driving it of right A now. but did. big comes yeah, it we So agents. everything so And grew.

so one. we've to start So There there opportunities. but were But then able been to of the are actually two, not several, -- several for OEM that were guys very we waiting couple that. could ones, these revive serving big product, that's a

orders again, that the as a But were that I that, again, that of so substantial. in OEM. were nature business one-time comments, couple of was -- we mentioned was it's And there deals that my a

ASC are areas but today. to when us. especially small, selling driver and this DTH out yeah, going for those and pillars, So grew. still relatively network, more was, helps in our so about not the the agents four segments again, all quarter where we're expanding. we your product there back distribution expansion think of speaking, independent the distributors our having Again,

is so that growth And agent today. part independent of a big the

supply then quarter would environment of growth think Coflex to It continue coming of into typical revenue or well. With the and sequentially about with improving organic additional which how you of like that a down biologics, we're $X with bucks pretty should your in , thinking I Yeah, into kind contribution, guide. with additional quarter and that an that perform million full seems guess so organic there how QX I indicate business XX% some leading should off that? comes bit an about a seasonality

of with as out couple as a a look Yeah, it And quarter, caution on things. I at of -- want we this ways. know in I so is also to come this really couple I great would

the regulatory of the things overall, has this over complete four great. Coflex, digesting, that like gone But has still, dangling business years within things this implementation. the is in a First is -- down. implementation a and that all, quality business gone few a It's of almost last we're we're process side.

and it ultimately And so grow. revive then job now our is to

hand, not as be contribution Coflex least on may the the side So maybe one the from at great.

think we well I as when Secondarily, just still the as, you capacity constraints. seasonality fear about things of know, about

number, broader still our to about year year. million, $XX growth XX% over XX% to that's think I when million so $XX the a And

still -- heady pretty to it's numbers last the business. years. frankly, been low- those are over some few mid-digits Quite for So some

in do need this product you then agree that sure positioned what as to team to Yeah, For 'XX. be or a to there. steps on do grower you Coflex, take? what to guess year sure be make modest to I growth need maybe it's return a do stabilized to

you to first got you took in product just Surgalign, the all, around was spun they that a that that Coflex line, OEM surge they out spun at They place the going folks, out business. lot when right? frankly, Sure, things There about got HOLO. the bought RTI, all know, business, And fairness think line in of quite lost. even

first And the our taking it so from already things perspective, place This is giving is is right now. focus. product the first, our which just primary

And this the we're that thing. putting and good lot outpatient those reimbursement make is really has something that a over really attention focus seaside more in reimbursement got time pipe, of sense, that into is So areas in quite frankly, which putting actually the pretty of

sure And making then need. and the steps focus the is frankly, tackling the of that's And and needs coverage giving that tight. sales element side. get and We from story reimbursement so beginning really our simple of marketing the really growing. quite we And that jobs are blocking

really about of way So we've all of into how think this it grown to knew get really basic start around is done two, reviving you focus when three-stage in of line a thing, or opportunities. It's it, the multitude product getting and a and around I things that kind of tap to then what be all it's part again; growing we put digest acquisition; how way and start growing and right? it up those to three has

of that people to it old this is we incumbent in It lot because and make be used relationships fantastic a product, past. upon a have those revive will sure the us

we've our so that organization but do to and there's make as got sure think tight And real opportunity, we move a is our that I story path. down

acquisition the distribution on mean reviving bag initial in expanding products? versa, your I certainly into placing distributors network, came over help disturbing your placing the distributors core you your of indication should as products your biologics cross that vice in maybe core Coflex some I and product. Coflex mean, with that And the core know, or the in any

things two this. Yes, when answer I

is, that bit little say, XXX on. we of more capacity queue a will. of a current part biologics distributors, of the being should agents woods the we of getting if that it of distributors into just you I we just we first actually I have difficult to came brought other The would are That's -- that say our are sell our or able challenges, Coflex them now just out because

I'll make to those of take So sure care guys first.

care things So first first, take of those guys.

means XXX But opportunity in by and distributors plus have don't we of our that all core Coflex, of plenty group of plenty inventory have there.

So a to surgeons to and is to over going think time distributors use this amount actually carrying of that those get place fair I opportunity it. their there's getting take

where have we think And our so to more be substantially I in look leaning that I are things as at you would we going forward our start to expand work as to tell to the look I about we distributors which biologics. we those and as past, working as capacity capacity, begin on new we've the more where that quarter, try those that can third talked with into we're see the points

some additional see, focus constraints to we constraints? Or offerings coming us Yeah, some of certainly capabilities it of, through we the said, biologics? is opportunity. within I've gotten on acquisition biologics for know here, you a ortho you, it for on next could acquisition lot capacity one marketplace, tuck-in product an what related what's but an adding one sale. Sean, Walk board or Scott. for priority? at got thinking if we've small Last exciting production those is there's As just barely off you're and you're look the Coflex capacity I the address

Yeah.

nothing full timing, well, there's have other on lot you're to the we So -- And pieces all a right? I of of that, to a always it . funnel but hitting new down opportunities, think both evaluation, comes

things where couldn't we quite possible absolutely like we just And can quite to accretive from or product fairly revenue an to that at focus it are as the have that. the be and quickly. want be forgotten what deals organization, perspective lines given not integration frankly with and your were I organization, that an think means find Coflex, those from that earnings similar from, bigger we'll forgotten, frankly, implementation a take and

love love, we'll deals, love, wherever seek and love, those those So possible.

transformational. our When opportunities you talk potentially more some business, a about little expanding capacity bring into those biologics, that size the us are some of other also see again, speakers, I those

And that matter so pieces along things and finding with on the right value that absolutely, just right the fit and It's is are of, are all that. the what also those finding the again, go docket. a

without prioritization that comes got it, it's and I right, forward. the of being cagey, matter too really So a deal

all sense. it Then one it, were makes up Gross nicely. last for margins you, Scott. Got

up Coflex year of you business does say, here of gross a through Where month couple from the again the a full one kind should Just of let's end with nicely benefit, be over steady quarters perspective? margin quarter. the a next, of the out entire

we saw think mid-XX. about I coming in

we I our front. margin start we'll to think through to gross think progress way make the on the XXs, mid-XXs into the the I year, as low-

guys, Helpful. Nice thanks, All taking thanks. questions. right, again, the quarter for

Chase. Great. Thanks,

today question Canaccord. from Rose next comes of Kyle Our

Hey, are Kyle? Kyle. you, How

Good morning, everyone.

in you for me. about questions up opening One, talked Coflex quick non-acute two Just sector.

and to I'll for the need just distributors you that can now cadence you have you how any biologics? you. second for now, could different touched then lined wondering think product the remind question questions, Thank Just ask that in new market? you you us of about type earlier on up that longer-term, in it And the changes

Sure.

Okay.

just repeat us moving in me surgery we're outpatient So about your and Is how the that really ambulatory how Coflex then are question, / and market the forward Kyle? market? we how helps Coflex center question, thinking thinking let that -- how about

Yeah. [multiple call overall And different then points. the just speakers] strategy

Yeah.

are So market -- really the when experienced that really about robust what the we're fusions. XXX,XXX Coflex it's you think fact laminectomies after and plus it's going a and overall and plus those single-level XX,XXX

what a those most of offer that procedures great And not have is really of so moving product to hospital. many, if we outside are the

a this preserves is outcome look fact that the not alternatives. product, opportunity we at only Coflex so clinical superior that's and it that all And a as great superior

full interlaminar wouldn't are which all you who's laminectomy, our fusion to if get you some you need, you that a stays gives why a things a hopefully, So and laminectomy again off motion, Coflex of get somebody gives with the for about device, you time. range quite

your But number that, next if fair in be fact in have you to solution. away to to start is fusion you The been the right future, a of as to yourself if a that years you've go fusions back going giving that, able with challenge having is level know, and fusion to done.

and from our opportunity. great where it, go a it at we so how it's we And positioned this look can when side, is after I and think

actually in center reimbursement ambulatory surgery up the really Additionally, the nicely. world gone has

some the So a is procedure, any and And such infusion type laminectomy, who clinically, this very a other to you great, this quite if profitable is will. as great, wants arguably, quite when any patient, has surgeon to off stave compare a procedures you solution of very, frankly it time. for for great

how That's how And we're kind so that's at looking we're it. positioned. of

the of side, And things. our so new products, you respect on then what rolling to out two biologic certainly pipeline look at with we're when

of is door. the get we've supply challenge the the OsteoVive We it can't cannot with of of it. our out our We Plus. of had enough side things One on make enough that a

fair grow. of So that a that's amount line a room has to left product still

OsteoVive factor well still very which focused it's OsteoFactor And can't growth which it. our sell very, well. Plus OsteoFactor, of product, again so is enough again, going we we're as And on factor as

you want additions, don't there and when really out any out to you're to products, rolling working take if are steam got something be that's And careful again, well. you of

additions, We Plus some the have OsteoVive instance, will side. for

out several our opportunity as them matter release these a products giving distributors up. there's want getting actually that will also much again, and we're decide queued far can. as It's to the make to -- as these other and we are of to of We because we surgeons with of sure all grow products when have they

But the our come yeah, So the that's are that's right is. there's of but the focus course now, -- next few pipeline that's and certainly over where if years, where more today. to within we

you. Thank

call additional the questions this no to turn remarks. to at Browne Sean I'd for are time. There like back closing

you. Thank Great.

form off to for great product highlighted recently operations, our to products in are biologics we a pillars We growth, from our our contributions strong this as continue the acquired Cofix growth upward revenues on and a demand robust trajectory led and are the efficient With of leading business. we Coflex organic and initial by scale in beginning strategic poised materialize to start continued XXXX, by lines. building

to the a for honoring thank live Moreover, our mission by employees. confidence our of solutions would life finally, business is and bringing of like the by the you as I further And initiation guidance joining us in made continued your their then and dedication continued patients as our for support. need. patients to strategy. full in and possible XXXX life-changing to donation our Thank illustrates for our allowing today success for possible them only valuable annual our complete revenue of to gift of

conference. today's concludes This

you may your thank and this your You time lines disconnect for at participation.