Xtant Medical (XTNT) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $27.9 million, a 12% increase from$ 25 million in Q3 2023, primarily driven by product sales from the Surgalign acquisition [31] - Adjusted EBITDA for Q3 2024 was a loss of $193,000, compared to a positive adjusted EBITDA of$ 458,000 in Q3 2023 [36] - Net loss for Q3 2024 was $5 million, or$ 0.04 per share, compared to net income of $9.2 million, or$ 0.07 per share, in the same period last year [35] Business Line Data and Key Metrics Changes - The company experienced delays in launching two new products, OsteoVive Plus and Cortera, which impacted sales [9] - Operating expenses for Q3 2024 were $20.1 million, up from$ 18.7 million in Q3 2023, but as a percentage of total revenue, they decreased to 71.9% from 74.8% [32] Market Data and Key Metrics Changes - The company noted a reduction in surgical procedures, which partially offset year-over-year growth [31] - The summer months of July and August saw a slowdown in procedures due to doctors' vacations, but a recovery was noted in September [38][39] Company Strategy and Development Direction - The company aims to become operationally self-sustaining by controlling its supply chain and reducing reliance on external manufacturers [29] - A licensing agreement in October with a significant player in the advanced wound care market is expected to generate a minimum of $3.75 million in 2025, with high margins due to low incremental costs [12] - The company is focused on increasing in-house manufacturing to improve profitability, with gross margins for in-house products expected to rise from mid-80% to low 90% [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year revenue guidance of$ 116 to $120 million, representing a growth of approximately 27% to 31% compared to 2023 [8] - The company anticipates a breakout fourth quarter, driven by the resolution of supply chain challenges and the successful launch of new products [23] - Management highlighted the importance of operational leverage and cost reduction as key to improving profitability [21] Other Important Information - The company has doubled its revenue from$ 58 million at the end of fiscal year 2022 to an expected $116 to$ 120 million by the end of 2024 [13] - The Surgalign acquisition has revitalized the company's hardware line, enhancing its product offerings in the spine market [14] Q&A Session Summary Question: Can you provide more color on the third quarter results and trends in the fourth quarter? - Management noted that the summer months were soft due to doctors' vacations, but a recovery was seen in September, with expectations for normalcy in Q4 [38][39] Question: What is the revenue mix between orthobiologics and spinal implants? - The expected split for 2024 is roughly 55% orthobiologics and 45% spinal implants, with orthobiologics anticipated to increase its share in future years [42] Question: What are the early considerations for 2025 guidance? - Management indicated expectations for revenue growth approaching double digits and improvements in gross margin and operating leverage [43] Question: What contribution do you expect from VBN in Q4 and 2025? - Minimal impact is expected from the distributor side in Q4, with a more significant contribution anticipated from the white label side [46] Question: How should profitability be modeled for next year? - Management expects improvements in both gross margins and operating leverage to contribute to profitability [48][49] Question: Can you elaborate on the licensing agreement mentioned? - The agreement includes a $1.5 million upfront payment and a minimum of$ 3.75 million in 2025, with potential for higher revenues depending on performance [52] Question: What is the confidence level in achieving revenue guidance? - Management expressed confidence in reaching the guidance range, supported by new product launches and recovery in sales [53]