Exhibit 99.1

 

Xtant Medical Announces Fourth Quarter and Full Year 2020 Financial Results

 

BELGRADE, MT, February 24, 2021 – Xtant Medical Holdings, Inc. (NYSE American: XTNT), a global medical technology company focused on surgical solutions for the treatment of spinal disorders, today reported financial and operating results for the fourth quarter and year ended December 31, 2020.

 

Fourth Quarter 2020 Financial Highlights:

 

  Revenue for the fourth quarter of 2020 totaled $14.0 million, compared to $17.0 million for the prior-year period
  Operating expenses in the fourth quarter of 2020 totaled $8.7 million, compared to $11.7 million for the prior-year period
  Income from operations totaled $0.2 million, compared to an operating loss of $0.3 million for the prior-year period
  Net loss incurred in the fourth quarter of 2020 totaled $0.7 million, compared to a net loss of $1.6 million for the prior-year period
  Non-GAAP Adjusted EBITDA for the fourth quarter of 2020 totaled $1.1 million, compared to $1.2 million for the prior-year period

 

“Highlighted by consecutive quarters of positive operating income in the second half of 2020, we are pleased with our progress despite the significant impact COVID-19 had on elective procedures in our largest markets,” said Sean Browne, President and CEO. “In response to the pandemic, we took aggressive steps to align our business with the changing market environment and reduce our costs. These actions, when combined with our successful 2020 debt restructuring and recently announced $20 million private placement, provide us with positive momentum as we enter 2021.”

 

Fourth Quarter and Full Year 2020 Financial Results

 

Fourth quarter 2020 revenue was $14.0 million, compared to $17.0 million for the same period in 2019. Full year 2020 revenue was $53.3 million, compared to $64.7 million for 2019. The decline in revenue for both periods was largely attributed to the impact of COVID-19 and sudden drop in elective procedures that began in early March 2020. Elective procedures have recovered to some extent in the second half of 2020, partially offsetting this impact.

 

Gross profit for the fourth quarter of 2020 was 64.1%, compared to 67.3% for the same period in 2019 and was 64.5% for 2020, compared to 65.7% in 2019. These reductions in gross profit were primarily attributable to diminished economies of scale, partially offset by reduced depreciation expense.

 

Operating expenses for the fourth quarter of 2020 totaled $8.7 million, compared to $11.7 million for the fourth quarter of 2019, and were $35.1 million in 2020 compared to $44.8 million in 2019. These decreases were primarily the result of reduced sales commissions due to lower sales, and lower levels of salaries and wages, legal and consulting fees, executive recruiting fees, marketing-related costs and research and development expenses, in each case compared to the prior-year period.

 

 
 

 

Fourth quarter 2020 net loss totaled $0.7 million, or $0.01 per share, compared to the fourth quarter 2019 net loss of $1.6 million, or $0.12 per share. Net loss for 2020 was $7.0 million, or $0.25 per share, compared to $8.2 million, or $0.62 per share, in 2019.

 

Non-GAAP Adjusted EBITDA for the fourth quarter of 2020 totaled $1.1 million, compared to $1.2 million for the same period in 2019. Non-GAAP Adjusted EBITDA for 2020 totaled $3.9 million, compared to $3.9 million for 2019. The Company defines Adjusted EBITDA as net income/loss from operations before depreciation, amortization and interest expense and provision for income taxes, and as further adjusted to add back in or exclude, as applicable, non-cash special charges, provision for losses on inventory and accounts receivable, non-cash compensation, change in warrant derivative liability, separation related expenses, field action expenses and litigation reserves. A calculation and reconciliation of Adjusted EBITDA to net loss can be found in the attached financial tables.

 

Private Placement

 

As previously announced, on February 22, 2021, the Company entered into a securities purchase agreement with a single healthcare-focused institutional investor pursuant to which the Company agreed to issue 8,888,890 shares of common stock at a purchase price of $2.25 per share, and warrants to purchase up to 6,666,668 shares of our common stock at an exercise price of $2.25 per share, in a private placement. The closing of the private placement is expected to occur on February 24, 2021, subject to the satisfaction of customary closing conditions. The Company expects to receive net proceeds of approximately $18.4 million, after deducting fees and other estimated offering expenses, and expects to use the net proceeds for working capital and other general corporate purposes.

 

Conference Call

 

Xtant Medical will host a webcast and conference call to discuss the fourth quarter 2020 financial results on Wednesday, February 24, 2021 at 9:00 AM ET. To access the webcast, Click Here. To access the conference call, dial 877-407-6184 within the U.S. or 201-389-0877 outside the U.S. A replay of the call will be available at www.xtantmedical.com, under “Investor Info.”

 

About Xtant Medical Holdings, Inc.

 

Xtant Medical Holdings, Inc. (www.xtantmedical.com) is a global medical technology company focused on the design, development, and commercialization of a comprehensive portfolio of orthobiologics and spinal implant systems to facilitate spinal fusion in complex spine, deformity and degenerative procedures. Xtant people are dedicated and talented, operating with the highest integrity to serve our customers.

 

The symbols ™ and ® denote trademarks and registered trademarks of Xtant Medical Holdings, Inc. or its affiliates, registered as indicated in the United States, and in other countries. All other trademarks and trade names referred to in this release are the property of their respective owners.

 

Non-GAAP Financial Measures

 

To supplement the Company’s consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures in this release, including Adjusted EBITDA. Reconciliations of the non-GAAP financial measures used in this release to the most comparable GAAP measures for the respective periods can be found in tables later in this release. The Company’s management believes that the presentation of these measures provides useful information to investors. These measures may assist investors in evaluating the Company’s operations, period over period. Management uses the non-GAAP measures in this release internally for evaluation of the performance of the business, including the allocation of resources. Investors should consider non-GAAP financial measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP.

 

 
 

 

Cautionary Statement Regarding Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “intends,” ‘‘expects,’’ ‘‘anticipates,’’ ‘‘plans,’’ ‘‘believes,’’ ‘‘estimates,’’ “continue,” “future,” ‘‘will,’’ “potential,” “going forward,” similar expressions or the negative thereof, and the use of future dates. Forward-looking statements in this release include the Company’s belief that it has positive momentum entering 2021 and its expectations regarding the timing of closing and use of net proceeds for its pending private placement. The Company cautions that its forward-looking statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: risks associated with the private placement; the effect of the COVID-19 pandemic on the Company’s business, operating results and financial condition; the Company’s future operating results and financial performance; the ability to increase or maintain revenue; the ability to remain competitive; the ability to innovate and develop new products; the ability to engage and retain qualified personnel; government and third-party coverage and reimbursement for Company products; the ability to obtain and maintain regulatory approvals and comply with government regulations; the effect of product liability claims and other litigation to which the Company may be subject; the effect of product recalls and defects; the ability to obtain and protect Company intellectual property and proprietary rights and operate without infringing the rights of others; the ability to service Company debt, comply with its debt covenants and access additional indebtedness; the ability to obtain additional financing on favorable terms or at all; and other factors. Additional risk factors are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (SEC) on February 24, 2021 and subsequent SEC filings by the Company. Investors are encouraged to read the Company’s filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this cautionary statement.

 

Investor Relations Contact

 

David Carey

Lazar FINN

Ph: 212-867-1762

Email: dcarey@finnpartners.com

 

 
 

 

XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except number of shares and par value)

 

   As of
December 31, 2020
   As of
December 31, 2019
 
         
ASSETS          
Current Assets:          
Cash and cash equivalents  $2,341   $5,237 
Trade accounts receivable, net of allowance for credit losses of $653 and doubtful accounts of $500, respectively   6,880    10,124 
Inventories   21,408    16,101 
Prepaid and other current assets   736    784 
Total current assets   31,365    32,246 
           
Property and equipment, net   4,347    4,695 
Right-of -use asset, net   1,690    2,100 
Goodwill   3,205    3,205 
Intangible assets, net   457    515 
Other assets   402    394 
Total Assets  $41,466   $43,155 
           
LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT)          
Current Liabilities:          
Accounts payable  $2,289   $2,188 
Accrued liabilities   6,120    6,632 
Current portion of lease liability   423    394 
Finance lease obiligations   20    176 
Current portion of long-term debt   16,797    - 
Total current liabilities   25,649    9,390 
Long-term Liabilities:          
Lease liability, less current portion   1,303    1,726 
Long-term debt, plus premium and less issuance costs   -    76,244 
Total Liabilities   26,952    87,360 
           
Stockholders’ Equity (Deficit)          
Preferred stock, $0.000001 par value; 10,000,000 shares authorized; no shares issued and outstanding   -    - 
Common stock, $0.000001 par value; 300,000,000 shares authorized; 77,573,680 shares issued and outstanding as of December 31, 2020 and 75,000,000 shares authorized; 13,161,762 shares issued and outstanding as of December 31, 2019   -    - 
Additional paid-in capital   244,850    179,061 
Accumulated deficit   (230,336)   (223,266)
Total Stockholders’ Equity (Deficit)   14,514    (44,205)
           
Total Liabilities & Stockholders’ Equity (Deficit)  $41,466   $43,155 

 

 
 

 

XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except number of shares and per share amounts)

 

 

Three Months Ended

December 31,

  

Twelve Months Ended

December 31,

 
    2020    2019    2020    2019 
Revenue                    
Orthopedic product sales  $13,981   $16,942   $53,188   $64,516 
Other revenue   34    22    149    166 
Total revenue   14,015    16,964    53,337    64,682 
                     
Cost of sales   5,032    5,553    18,945    22,166 
Gross profit   8,983    11,411    34,392    42,516 
                     
Gross profit %   64.1%   67.3%   64.5%   65.7%
                     
Operating expenses                    
General and administrative   3,210    4,478    13,503    17,344 
Sales and marketing   5,405    6,994    20,983    26,493 
Research and development   128    257    657    932 
Total operating expenses   8,743    11,729    35,143    44,769 
                     
Income (Loss) from operations   240    (318)   (751)   (2,253)
                     
Other income (expense)                    
Interest expense   (718)   (1,268)   (5,976)   (5,772)
Other income (expense)   -    11    -    (98)
Total Other Expense   (718)   (1,257)   (5,976)   (5,870)
Net Loss Before Provision for Income Taxes   (478)   (1,575)   (6,727)   (8,123)
                     
Provision for income taxes                    
Current and deferred   (229)   (30)   (296)   (98)
Net Loss  $(707)  $(1,605)  $(7,023)  $(8,221)
                     
Net loss per share:                    
Basic  $(0.01)  $(0.12)  $(0.25)  $(0.62)
Dilutive  $(0.01)  $(0.12)  $(0.25)  $(0.62)
                     
Shares used in the computation:                    
Basic   74,508,626    13,161,762    28,499,847    13,163,931 
Dilutive   74,508,626    13,161,762    28,499,847    13,163,931 

 

 
 

 

XTANT MEDICAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

Twelve Months Ended

December 31,

 
   2020   2019 
Operating activities:          
Net loss  $(7,023)  $(8,221)
Adjustments to reconcile net loss to net cash provided by operating activities:          
Depreciation and amortization   2,079    3,143 
Gain on disposal of fixed assets   (369)   (61)
Non-cash interest   5,963    5,726 
Non-cash rent expense   16    20 
Stock-based compensation   1,084    515 
Provision for reserve on accounts receivable   307    513 
Provision for excess and obsolete inventory   485    509 
           
Changes in operating assets and liabilities:          
Accounts receivable   2,890    (647)
Inventories   (5,792)   692 
Prepaid and other assets   40    204 
Accounts payable   101    (4,278)
Accrued liabilities   (512)   1,472 
Net cash used in operating activities   (731)   (413)
           
Investing activities:          
Purchases of property and equipment   (1,545)   (879)
Proceeds from sale of fixed assets   241    335 
Net cash used in investing activities   (1,304)   (544)
           
Financing activities:          
Payments on financing leases   (156)   (455)
Payments on long-term debt   (315)   - 
Costs associated with debt restructuring   (1,058)   - 
Proceeds from issuance of common stock, net of issuance costs   620      
Proceeds from exercise of common stock warrants   48      
Costs associated with Second Amended and Restated Credit Agreement   -    (148)
Net cash used in financing activities   (861)   (603)
           
Net change in cash and cash equivalents   (2,896)   (1,560)
Cash and cash equivalents at beginning of period   5,237    6,797 
Cash and cash equivalents at end of period  $2,341   $5,237 

 

 
 

 

XTANT MEDICAL HOLDINGS, INC.

CALCULATION OF NON-GAAP CONSOLIDATED EBITDA AND ADJUSTED EBITDA

(Unaudited, in thousands)

 

   Three Months Ended December 31,   Twelve Months Ended December 31, 
   2020   2019   2020   2019 
                 
Net Loss  $(707)  $(1,605)  $(7,023)  $(8,221)
                     
Other expense   1    -    7    101 
Depreciation and amortization   718    807    2,079    3,145 
Interest expense   421    1,268    5,976    5,772 
Tax expense   229    30    296    98 
Non-GAAP EBITDA   662    500    1,335    895 
                     
Non-GAAP EBITDA/Total revenue   4.7%   2.9%   2.5%   1.4%
                     
NON-GAAP ADJUSTED EBITDA CALCULATION                    
Provision for losses on accounts receivable   11    60    307    514 
Provision for excess and obsolete inventory   55    (8)   485    509 
Non-cash compensation   358    259    1,084    515 
Change in warrant derivative liability   -    (11)   (7)   (2)
Separation-related expenses   -    -    698    - 
Field action expenses   -    253    -    560 
Litigation reserve   -    119    5    919 
Non-GAAP Adjusted EBITDA  $1,086   $1,172   $3,907   $3,910 
                     
Non-GAAP Adjusted EBITDA/Total revenue   7.7%   6.9%   7.3%   6.0%

 

 

 

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