Xtant Medical Q1 2025 Earnings Report

Xtant Medical EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.02
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Xtant Medical Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $30.65 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Xtant Medical Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: After Market Closes
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 4:30PM ET

Xtant Medical (NYSEAMERICAN:XTNT) provides regenerative medicine products and medical devices for orthopedic and neurological surgeons. It offers OsteoSponge that provides a natural scaffold for cellular in-growth and exposes bone-forming proteins to the healing environment; OsteoSelect DBM Putty to mold into any shape and compressed into bony voids; OsteoSelect PLUS DBM Putty to deliver handling properties and ensure patient safety through validated terminal sterilization; 3Demin, a family of allografts that maximizes osteoconductivity and the osteoinductive potential of human bone; OsteoFactor, a processed allograft that contains retained growth factors found within the endosteum layer of allograft bone; OsteoVive Plus, a growth factor enriched cellular bone matrix; and nanOss family of products that provide osteoconductive nano-structured hydroxyapatite and an engineered extracellular matrix bioscaffold collagen carrier. It also processes and distributes sports allografts for anterior and posterior cruciate ligament repairs, anterior cruciate ligament reconstruction, and meniscal repair; milled spinal allografts for cortical bone milled to desired shapes and dimensions; and traditional allografts for orthopedics, neurology, podiatry, oral/maxillofacial, genitourinary, and plastic/reconstructive applications. In addition, it offers Certex spinal fixation, Spider cervical plating, Streamline OCT, CervAlign, Axle interspinous fusion, Xpress minimally invasive pedicle screw, Fortex pedicle screw, Axle-X interspinous fusion, Streamline MIS spinal fixation, Streamline TL spinal fixation systems, and Silex sacroiliac joint fusion systems. Further, it provides Calix for cervical and thoracolumbar applications, as well as Irix-C Cervical Integrated Fusion, Irix-A Lumbar Integrated Fusion, Fortilink, and Irix-A Lumbar integrated fusion systems; Coflex device for lumbar spinal stenosis; and CoFix implant for back and disc pain. The company is headquartered in Belgrade, Montana.

Xtant Medical Q1 2025 Earnings Call Transcript

Key Takeaways

• Xtant delivered 18% revenue growth in Q1 to $32.9 million, achieving strong adjusted EBITDA and positive net income.
• Termination of the restrictive investor rights agreement with OrbiMed and new major investment by Nantahala marks a new chapter for Xtant.
• Completion of full vertical integration for all major biologics product categories positions Xtant as the most diversified in-house biologics company.
• Launch of two innovative demineralized bone matrix products, Trivium and FiberX, is expected to drive growth and offset product rationalization.
• Raised full-year 2025 revenue guidance to $127 million–$131 million (8%–11% growth) and do not anticipate needing additional capital.

Presentation

[Operator]

Good afternoon, everyone, and welcome to the Xtant Medical First Quarter twenty twenty five Financial Results. Please note this conference is being recorded. I will now turn the conference over to your host, Brett Maas of Hayden Investor Relations. Brett, the floor is yours.

[Brett Maas, Managing Partner at Hayden IR]

Thank you, operator. Joining me today is Sean Brown, President and Chief Executive Officer and Scott Neals, Chief Financial Officer. Today's call is being webcast and will be posted on the company's website for playback. During the course of this call, management may make certain forward looking statements regarding future events and the company's expected future performance. These forward looking statements reflect Xtant's current perspective on existing trends and information that can be identified such words as expect, plan, will, may, anticipate, believe, should, intend and other words to a similar meaning.

[Brett Maas, Managing Partner at Hayden IR]

Such forward looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of the company's annual report on Form 10 ks filed with the SEC and in subsequent SEC reports and press releases. Actual results may differ materially. The company's financial results press release and today's discussion include certain non GAAP financial measures. Please refer to the non GAAP to GAAP reconciliations, which appear in our press release and are otherwise available on our website. Note that our Form eight ks filed with our financial results press release provides a detailed narrative that describes our use of such measures.

[Brett Maas, Managing Partner at Hayden IR]

For the brief I'm sorry. For the benefit of those who may be listening for the replay, this call was held and recorded on May 12 at approximately 04:30 p. M. Eastern Time. The company declines any obligation to update its forward looking statements except as required by applicable law.

[Brett Maas, Managing Partner at Hayden IR]

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

[Sean Browne, President, CEO & Director at Xtant Medical]

Thank you, Brett, and good afternoon, everyone. I'm pleased to share that Xtamp Medical delivered outstanding results for the first quarter of twenty twenty five. We achieved strong top and bottom line performance across every key financial metric. Starting with our top line revenue growth of 18%, reaching $32,900,000 in total revenue. This robust performance, coupled with our cost cutting efforts over the last six months, resulted in strong adjusted EBITDA and positive net income.

[Sean Browne, President, CEO & Director at Xtant Medical]

From a shareholder perspective, we reached a significant milestone with the termination of a very restrictive investor rights agreement with OrbiMed. This agreement has long been a constraint and its removal marks a new chapter for Xtant. We are encouraged by the continued investment in our business by our new major investor, Nantahala, and appreciate their belief in our current business strategy, which we believe will be beneficial to all shareholders in the long term. As some of you may notice, we filed a Form S-one Resale Registration Statement this afternoon, registering the resale of the shares sold by OriMed to a group of investors led by Nanta Hala, which we agreed to do to facilitate this transaction. Note that no new shares are being issued by Xtant pursuant to this registration.

[Sean Browne, President, CEO & Director at Xtant Medical]

Again, I want to emphasize that no new shares are being issued by Xtant pursuant to this registration. So, getting back to the business and from a strategic perspective, we have reached a major inflection point. The full vertical integration of our previously outsourced biologics products. This endeavor, which we have been driving towards for the last eighteen months, is now complete. All major biologics product categories sold by Xtant are now manufactured in house.

[Sean Browne, President, CEO & Director at Xtant Medical]

With this achievement, we believe Xtant is now the most diversified, vertically integrated biologics company in the market. In addition, we have rejuvenated our core demineralized bone offerings with the launch of two new innovative products, Trivium and FiberX. Trivium is a groundbreaking new DBM offering with three synergistic elements designed to deliver exceptional performance in structure, handling, and biological activity. These new DBM products alongside our three to men provide surgeons with a comprehensive range of bone grafting solutions. These new products launches are expected to help offset the impact of product rationalization following our Surgiline acquisition and drive renewed growth.

[Sean Browne, President, CEO & Director at Xtant Medical]

Another noteworthy development this quarter was the receipt of royalties tied to licensing our Simply Max Q code to a distributor in the chronic wound care space. Additionally, CMS has extended the local coverage determination for skin substitutes to 12/31/2025, which opens the door for additional royalty income and cash generation during the second half of twenty twenty five. However, we remain realistic given the ongoing changes to CMS policy and other governmental cost savings initiatives, which we factor into our guidance for the year. Lastly, to support our growing production needs, we added additional processing capacity this past month at our Belgrade facility. This addition will enable substantial future increases in our production capacity as needed.

[Sean Browne, President, CEO & Director at Xtant Medical]

Coupled with our R and D investments, we have a strong pipeline of new orthobiologics and biologics beyond spine positioning Xtant as a broader, more versatile, regenerative biologics company for the future. Looking ahead to 2025, in 2025 we remain focused on our path towards self sustainability, emphasizing profitability and cash generation. With new products launched, targeted growth opportunities and recent cost cutting initiatives, we are on a path to a sustainably cash flowing position. For fiscal year twenty twenty five, we anticipate mid double digit revenue growth in our Biologics product family, while hardware revenue is expected to remain flat to modestly down year over year. In hardware, we continue to rationalize our product lines to streamline our offerings and optimize cash management.

[Sean Browne, President, CEO & Director at Xtant Medical]

Today, we are increasing our full year 2025 guidance for total revenue in the range of $127,000,000 to $131,000,000 representing 8% to 11% growth. Combined with our targeted cost savings, we do not anticipate the need to raise additional capital at this time. With that, I will turn the call over to Scott for a more detailed review of our financial results.

[Scott Neils, Chief Financial Officer at Xtant Medical]

Thank you, Sean, and good afternoon, everyone. Total revenue for the first quarter of twenty twenty five was $32,900,000 compared to $27,900,000 for the same period in 2024. The 18% increase is attributed primarily to year over year growth in our biologics product family, exclusive of the impact of $3,600,000 of licensing revenue during the first quarter of twenty twenty five. This increase was partially offset by a 10% or $1,200,000 year over year decline in spinal implant sales. I'll note here that we received a $1,500,000 upfront payment during Q1 in connection with the manufacturing license agreement for our SimplyGraft product.

[Scott Neils, Chief Financial Officer at Xtant Medical]

This amount will be recognized over the course of the contract's two year term. We recognized approximately $100,000 during the quarter ended 03/31/2025, and anticipate recognizing a total of approximately $700,000 during 2025, which is reflected in our revised revenue guidance for 2025. Gross margin for the first quarter of twenty twenty five was 61.5% compared to 62.1% for the same period in 2024. An increase in charges related to the disposal of inventory and provision for excess and obsolete inventory adversely affected gross margin by 400 basis points in the first quarter of twenty twenty five compared to the same period in 2024. This effect was partially offset by reductions in product costs associated with the vertical integration of our biologics products, resulting in a three ninety basis point improvement in the first quarter of twenty twenty five compared to the same period in 2024.

[Scott Neils, Chief Financial Officer at Xtant Medical]

First quarter '20 '20 '5 operating expenses were $19,200,000 compared to twenty point eight million dollars in the same period a year ago. As a percentage of total revenue, operating expenses were 58.3% compared to 74.5% in the same period a year ago. General and administrative expenses were $7,500,000 for the three months ended 03/31/2025, compared to $7,800,000 for the same period in 2024. This decrease is primarily attributable to $400,000 of reductions in professional fees. Sales and marketing expenses were $11,200,000 for the three months ended 03/31/2025, compared to $12,500,000 for the same quarter last year.

[Scott Neils, Chief Financial Officer at Xtant Medical]

This decrease is primarily due to reduced commission expense of $800,000 resulting in a shift from sales mix and 700,000 in reduced compensation expense related to headcount, partially offset by additional professional fees of $400,000 Research and development expenses were $443,000 for the three months ended 03/31/2025, a decrease from $527,000 in the first quarter of twenty twenty four. Net income in the first quarter of twenty twenty five was $58,000 or $0.00 per share, compared to a net loss of $4,400,000 or $03 per share in the comparable 2024 period. Adjusted EBITDA for the first quarter of twenty twenty four or for the first quarter of twenty twenty five was $3,000,000 compared to an adjusted EBITDA loss of $1,000,000 for the same period in 2024. As we noted during last quarter's earnings call, beginning in the fourth quarter of twenty twenty four, we are no longer including the phasing of bargain purchase gain on our sell through of inventory acquired as part of our purchase of Surgery Line Holdings hardware and biologics business in our calculation of adjusted EBITDA. Prior periods have been recast to conform to the current calculation.

[Scott Neils, Chief Financial Officer at Xtant Medical]

The related effect on adjusted EBITDA was a reduction of $1,000,000 in the first quarter of twenty twenty four to arrive at the recast amount. As of 03/31/2025, we had $5,400,000 of cash, cash equivalents and restricted cash. Net accounts receivable was $23,500,000 Inventory was $38,800,000 and we had $5,700,000 available under revolving credit facilities as of the end of the quarter. Operator, you may now open the line for questions.

[Operator]

Thank you very much. We are now opening the floor for questions. Your first question is coming from Chase Knickerbocker of Craig Hallum. Chase, your line is live.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

Good afternoon, guys. Thanks for taking the questions.

[Sean Browne, President, CEO & Director at Xtant Medical]

Hey, Chase. How are

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

Sean. Just first from us. If we take a look at your guidance, can you let us know what you assume for incremental minimum payments, royalties, etcetera, from those two Amneal deals? What are you assuming for the rest of the year as far as those payments go?

[Sean Browne, President, CEO & Director at Xtant Medical]

Scott, I'm going throw that over to you. Scott, why you fill that one?

[Scott Neils, Chief Financial Officer at Xtant Medical]

Sure. I guess in the spirit of being conservative, we haven't included anything in way of additional minimums under the royalty agreement. And then we've assumed full manufacturing under the manufacturing license agreement for the remainder of 2025.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

And so does that mean that your guidance just assumes that revenue recognition from that upfront payment?

[Scott Neils, Chief Financial Officer at Xtant Medical]

The upfront payment, we had originally assumed based off of the original April LCD dates that we would be able to recognize that in full during Q1. However, with the extension of that, that's being spaced out over two years now. So we cut that number in half, that one point million to the tune about $700,000 flowing through during 2025.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

Got it. But with LCD getting pushed, there's no reason to not assume that those minimums will be realized this year?

[Sean Browne, President, CEO & Director at Xtant Medical]

We're trying to do here at least Well Yes. And this is also guidance from our Board is that we're very concerned about what may happen from a government perspective. So I guess we could put it out there and ask what we think will happen, but we're afraid that we're gonna have to pull that back then not long after that. So what we're trying to do is be as realistic as possible with respect to what those royalties may mean for us.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

Got it. And then just on the Biologics side of the business, can you walk us through the different drivers for growth in the quarter? What kind of what portion of growth was driven by VBM, Amneal, kind of legacy portfolio?

[Sean Browne, President, CEO & Director at Xtant Medical]

Sure. So the big drivers for us still are well, Amneal is a nice driver for us because of the fact that it went to April 13. So that was a big one because we do have a couple of OEM deals that are out there that we still work today. Also, VBM was also very good for us. That is one that will continue to grow over the course of the year.

[Sean Browne, President, CEO & Director at Xtant Medical]

That was primarily driven actually by Xtant product, not as much OEM, but we do see some growth in that that will hopefully not hopefully, that will offset some of the product rationalization that we're gonna continue to see on the hardware side. So, the idea of us carrying four different pedicle screw systems, we're just not gonna do that, right? So we're really working hard at trying to sunset a couple of those big, expensive, eating up type systems and push our customers over, our surgeons over to our new Cortera line, for instance. And so we see that there's going to be some bumps along the way, but from a net business and a net cash perspective we're going be at a better spot with really focusing on Corteira and maybe one other system. So that's essentially what's happening on the biologic side and the hardware side, I guess.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

And and how should we think about growth factor for the year here? I mean, is that going to be something where it's, you know, internal extant distribution? Will there be any white label there? And then, I mean, what's the kind of ramp to being fairly, full kind of production, full supply?

[Sean Browne, President, CEO & Director at Xtant Medical]

Sure. So our focus right now with the Growth Factor product is keep what we have, right? Because this is a very it's a beautiful product that we just created. And it's one that we are really excited about, and we are going be replacing it with a product that we used to buy from someone else. And so job one, let's make sure we don't lose any business.

[Sean Browne, President, CEO & Director at Xtant Medical]

But then job two, where do we have and our funnel looks really good moving forward. But again, we want to be cautious by, listen, we roughly $6,500,000 of growth factor business today that we want to make sure that we don't lose. And then let's grow from there. And so that's essentially what our plan is with growth factor.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

Got it. And just last for me, Scott. How should we be thinking about EBITDA and cash flow through the rest of the year? And what do you guys kind of assume from a working capital perspective? I've seen that kind of receivable increase in Q1 as far as when you'll kind of realize that in cash flow?

[Scott Neils, Chief Financial Officer at Xtant Medical]

Yes. The cash flow will come in Q2. I think we'll have cash flow from operations in Q2 will be a little tighter on cash flows from operations in Q3. And then I think we'll build to a healthy cash flow from operations in Q4. I think we'll see a fairly steady revenue growth during the remainder of the year.

[Scott Neils, Chief Financial Officer at Xtant Medical]

Actually, would expect that revenue during the course of Q2 exclusive of any royalty revenues coming in will probably be more in line with Q1 and then we'll probably continue to grow that at high single digits for the rest of the year quarter over quarter.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

Very helpful. Thanks, guys.

[Operator]

Thank you very much. And your next question is coming from Ryan Zimmerman of BTIG. Ryan, your line is live.

[Ryan Zimmerman, Managing Director & Medical Technology Analyst at BTIG]

Thank you. Good afternoon, Sean and Scott. Thanks for taking the question. Hey. So I think you guys are managing your expenses pretty well. I'm curious, Scott, your sales and marketing came in a little lighter than I think we expected. How do you foresee that?

[Ryan Zimmerman, Managing Director & Medical Technology Analyst at BTIG]

I mean, just in the context of what you just said on 2Q, kind of how do you foresee that kind of through the rest of the year? And just broadly, your commentary on expenses, think, would be helpful. And I think last quarter, you also said or at least we thought margins, gross margins coming around 62% to 63%. Just want to see if that still holds?

[Scott Neils, Chief Financial Officer at Xtant Medical]

Yes, maybe starting with expenses first. I think starting with sales and marketing since you led with that, I think we'll see that coming back up in Q2 and beyond just because we're not assuming any commission free royalty revenue coming in for the remainder of the year. So you'll see that at a level more comparable to Q4 of last year. And then looking at G and A, I think that'll run at an expense amount probably more consistent with Q3 of last year. So that'll be relatively steady for the remainder of the year.

[Scott Neils, Chief Financial Officer at Xtant Medical]

And then I do think we're on track for gross margins of say 63% by the end of the year as we roll out new products and increase revenue.

[Ryan Zimmerman, Managing Director & Medical Technology Analyst at BTIG]

That's helpful. Appreciating that you guys got the production in house now, I'm just wondering if number one, if there's any upside from margins as you kind of work through some of that in house production. Where do you see opportunity, I guess, given that you now are completely vertically integrated?

[Sean Browne, President, CEO & Director at Xtant Medical]

Scott, I'll jump in here first, and then I'll let you dive in there. So two big things that we're going to see margin improvement by bringing things in house. First and foremost, we're going to run through the inventory that we have of the product that we've purchased, especially on the growth factor side of things. Secondarily, also on Fibrex, because Fibrex is a product line that we've already we've been buying. But that is one now that we bring in house, again, is going to be substantially better margins.

[Sean Browne, President, CEO & Director at Xtant Medical]

So those are two big things that are going to take place. That's part of the reason why you'll start to see more of a ramp over the course of the year as our margins start to climb. Another big reason why you'll start to see our margin also begin to climb. So if you think about our DVM business today, DVM makes up still 60% of our biologics business. So the old OsteoSelect, OsteoSponge, three to min, and even when you think about the Fibrex that we were buying, those are product lines that we were essentially making and or selling in the low 50s to mid 50% range.

[Sean Browne, President, CEO & Director at Xtant Medical]

This new, like for instance, Trivium is one that is an absolutely wonderful product in a million ways. It's a product that also has a much higher price point. It brings almost all of the growth factors that can be brought together from the human tissue possible for a demineralized bone. As matter of fact, it's really an interesting story is the fact that when you do a CBM donor or a viable bone matrix donor, you'll have fallout. Certain donors won't clear whatever classifications or things that we need to do when we go through our testing of things.

[Sean Browne, President, CEO & Director at Xtant Medical]

And so what we were doing instead of discarding that tissue, we were actually finding a new way to repurpose it. And that's essentially what we got here. And so we were able to basically reprocess this tissue, sterilize it, bring all the wonderful elements of really a CBM donor along with other elements of the tissue that's donated and how we process it. And so it's a much, much higher priced product and it's very, very effective. So if we can even start shifting some of that 60% towards trivium, that too will also help improve our margins not only in 2025 but in 'twenty six and beyond.

[Sean Browne, President, CEO & Director at Xtant Medical]

Scott, is there more you want to add to that?

[Scott Neils, Chief Financial Officer at Xtant Medical]

Yes, the only thing I'll add to that is as we get into Q3 and Q4, we'll also have brought in house our distribution of legacy headquarter surgery line product. So we'll move out of our third party logistics provider and do that service internally, create an additional margin benefit.

[Ryan Zimmerman, Managing Director & Medical Technology Analyst at BTIG]

Thank you. Thank you.

[Operator]

Thank you very much. Well, we have reached the end of our question and answer session. I will now hand back over to Sean for any closing remarks.

[Sean Browne, President, CEO & Director at Xtant Medical]

Great. Thank you, operator. Xtant's mission is to honor the gift of donation so that our patients can live as full and complete a life as possible. I'd like to thank our hardworking Xtant team members who live by this mission daily. I would also like to thank the many donor families who, in their most difficult hour, decide to do the most selfless thing imaginable and allow their loved one's tissue to be used to help dramatically improve the lives of those in need.

[Sean Browne, President, CEO & Director at Xtant Medical]

And then lastly, I'd like to thank all of you listening who have invested in our mission and supported our vision over time. Thank you, and have a good day.

[Operator]

Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time, and have a wonderful rest of the day. We thank you for your participation.

Participants

Executives

• Sean Browne, President, CEO & Director
• Scott Neils, Chief Financial Officer

Analysts

• Brett Maas, Managing Partner at Hayden IR
• Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC
• Ryan Zimmerman, Managing Director & Medical Technology Analyst at BTIG