Xtant Medical (XTNT) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company's unaudited financial statements for Q2 2021 show increased cash and equity from a private placement, revenue growth, and a narrowed net loss due to debt restructuring and new credit facilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $20,312 | $2,341 | | Total current assets | $49,432 | $31,365 | | Total Assets | $59,676 | $41,466 | | Liabilities & Equity | | | | Total current liabilities | $12,915 | $25,649 | | Long-term debt, less issuance costs | $11,683 | $0 | | Total Liabilities | $25,792 | $26,952 | | Total Stockholders' Equity | $33,884 | $14,514 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $14,975 | $10,529 | $27,517 | $25,307 | | Gross Profit | $9,515 | $6,550 | $17,606 | $16,163 | | Loss from Operations | ($491) | ($387) | ($497) | ($1,749) | | Net Loss | ($733) | ($2,464) | ($762) | ($4,957) | | Net loss per share (Basic & Diluted) | ($0.01) | ($0.19) | ($0.01) | ($0.38) | - In February 2021, the company completed a private placement, issuing 8,888,890 shares of common stock and warrants, which resulted in net cash proceeds of approximately $18.4 million[31] - On May 6, 2021, the company entered into new credit agreements for a $12 million term loan and an $8 million revolving credit facility, using the proceeds to repay all outstanding debt under its previous credit agreement with OrbiMed[51][52][53] - In July 2021, the company settled a patent infringement claim for a one-time payment of $550,000, accrued as a special charge in general and administrative expenses for the second quarter[64] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2021 financial performance, noting a 42.2% revenue increase, improved liquidity from a private placement and new debt, and outlines growth initiatives, projecting sufficient cash through August 2022 Results of Operations Q2 2021 revenue grew 42.2% to $15.0 million, driven by pandemic recovery, with gross profit margin improving to 63.5%, while operating expenses rose due to a legal settlement, and interest expense significantly decreased Revenue Comparison (in millions) | Period | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $15.0 | $10.5 | +42.2% | | Six Months Ended June 30 | $27.5 | $25.3 | +8.7% | - Gross profit as a percentage of revenue increased to 63.5% for the three months ended June 30, 2021, from 62.2% in the prior-year period, primarily due to greater economies of scale[87] - General and administrative expenses for the three months ended June 30, 2021, increased by $1.2 million, primarily due to $0.6 million in legal settlement expenses and $0.2 million in additional stock-based compensation[88] - Interest expense for the six months ended June 30, 2021, was $0.2 million, a significant decrease from $3.2 million in the same period of 2020, resulting from the October 2020 debt restructuring[92] Liquidity and Capital Resources Working capital significantly increased to $36.5 million by June 2021 due to an $18.4 million private placement and new credit facilities, with operating cash flow turning positive at $0.9 million for the first half of 2021 Working Capital Summary (in thousands) | Component | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total current assets | $49,432 | $31,365 | | Total current liabilities | $12,915 | $25,649 | | Total working capital | $36,517 | $5,716 | - Net cash provided by financing activities was $18.2 million for the first six months of 2021, primarily from the $18.4 million in net proceeds from the February 2021 private placement[95] - On May 6, 2021, the company entered into new credit agreements with MidCap Financial Trust, establishing a $12.0 million term loan and an $8.0 million revolving credit facility, which mature on May 1, 2026[96][97][98] - The company's key growth initiatives for 2021 are: (1) introducing new products, (2) expanding its distribution network, (3) penetrating adjacent markets, and (4) leveraging its growth platform with technology and strategic acquisitions[80] - The company believes its cash and cash equivalents of $20.5 million as of June 30, 2021, along with available credit, will be sufficient to meet anticipated cash requirements through at least August 2022[104] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide information regarding quantitative and qualitative disclosures about market risk[111] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during Q2 2021 - Based on an evaluation as of June 30, 2021, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[113] - No changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[114] PART II. OTHER INFORMATION Legal Proceedings The company faces various legal claims in the ordinary course of business, with details on a recent settlement available in Note 11 of the financial statements - The company is subject to potential liabilities from various claims and legal actions that arise in the ordinary course of business; for details on pending legal proceedings, refer to Note 11 in the condensed consolidated financial statements[115] Risk Factors As a smaller reporting company, the company is not required to provide risk factor disclosures in its Form 10-Q - The company is a smaller reporting company and is not required to provide information regarding risk factors in its Form 10-Q[116] Unregistered Sales of Equity Securities and Use of Proceeds This section is not applicable for the current reporting period Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, and CEO/CFO certifications