Xtant Medical (XTNT) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2023 was $20.2 million, a 32% increase from $15.3 million in Q2 2022, driven by independent agent sales and contributions from the Coflex and Cofix product lines [25] - Gross margin improved to 61.6% in Q2 2023 from 54.8% in Q2 2022, primarily due to the contribution of Coflex and Cofix products [26] - Adjusted EBITDA for Q2 2023 was $0.1 million, compared to an adjusted EBITDA loss of $0.4 million in Q2 2022 [29] - The company raised its full-year revenue growth guidance to approximately 29% to 33%, up from the previous range of 26% to 29% [23] Business Line Data and Key Metrics Changes - The fixation business saw a year-over-year growth of over 7%, with the Coflex business contributing an additional 14% to overall revenue [34] - The company reported strong demand for its OsteoFactor and OsteoVive Plus products, which have sustained strong demand since their launches [14] - The OEM business accounted for about 8.6% of overall revenue, with the Xtant brand making up 91% of total sales [37] Market Data and Key Metrics Changes - The distribution network expanded to over 450 total distributors, with a target to increase distributor revenue by at least 10% annually [15] - The company is successfully penetrating adjacent markets such as foot and ankle, trauma, and orthopedic implants, with positive trends in the ambulatory surgical center market [16] Company Strategy and Development Direction - The company is focused on four key growth pillars: new product introductions, distribution network expansion, adjacent market penetration, and strategic acquisitions [11] - The recent acquisition of Surgalign's biologics and spinal fixation businesses is expected to expand the company's footprint and will be reflected in future financial guidance [10] - The company aims to enhance operational discipline and improve production capacity to support growth initiatives [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the raised revenue guidance due to strong demand and growth across major product lines [57] - The company is optimistic about the reimbursement opportunities in the Medicare and Medicare Advantage markets, which could significantly enhance the Coflex business [35] - Management highlighted the importance of operational improvements and capacity expansions in fulfilling high order demand [56] Other Important Information - The company closed a private placement for gross proceeds of $15 million, which will be used for working capital and general corporate purposes [30] - The company is actively exploring tuck-in and transformational acquisitions that enhance capabilities, capacity, and cash flows [17] Q&A Session Summary Question: Coflex contribution and organic growth in hardware - Coflex contributed approximately 14% to overall revenue, with the fixation business showing a year-over-year growth of over 7% [34] Question: Impact of OEM orders and balancing between channels - The company is currently caught up with demand in the independent distributor channel, with OEM business accounting for about 8.6% of overall revenue [37] Question: Capacity expansion and growth rates - About one-third of the new clean room space is online, with the rest expected to be operational soon, supporting anticipated demand [44] Question: Success with Coflex distributors - The company is focusing on training the sales team and ensuring distributors understand the reimbursement story to grow wallet share [49] Question: Liabilities and revenue from Surgalign acquisition - The company will not assume any hollow revenue from Surgalign, focusing on base instrument business instead [52]