Release Date: May 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xtant Medical Holdings Inc (XTNT, Financial) reported a significant 55% growth in revenue over the prior year, indicating strong sales performance.
- The company successfully raised its revenue guidance for 2024 from $112 million to $116 million to a new range of $116 million to $120 million, reflecting confidence in continued growth.
- Xtant Medical Holdings Inc (XTNT) has effectively integrated the Surgalign assets, reversing a previous decline and contributing positively to the company's portfolio.
- The company has expanded its product offerings, including the introduction of new amniotic membrane allografts, enhancing its competitive position in the market.
- Xtant Medical Holdings Inc (XTNT) has strengthened its financial position by increasing its long-term debt capacity with MidCap Financial, providing more capital to execute its strategy.
Negative Points
- The company experienced significant supply chain challenges that impacted its ability to meet demand, particularly in its stem cell business.
- Operating expenses increased significantly in the first quarter of 2024 compared to the same period in 2023, rising from $12.1 million to $20.8 million, which could impact profitability if not managed effectively.
- Xtant Medical Holdings Inc (XTNT) reported a net loss of $4.4 million in the first quarter of 2024, indicating ongoing financial challenges.
Other Key Points
The cannibalization of older X-spine hardware products by newer Surgalign products, although part of a strategic upgrade, initially dampens the core organic growth rate. However, management warned that this may eventually be a good thing overall because we keep the customer versus losing them to someone else's technology.
Q & A Highlights
Q: Can you discuss the factors driving the increase in your revenue guidance?
A: Sean Brown, President and CEO of Xtant Medical, explained that the increase in revenue guidance is due to better-than-expected performance in Q1 and optimism about upcoming quarters, particularly with new product rollouts like the amniotic products and the integration of Surgalign products.
Q: What are your expectations for seasonal revenue pacing throughout the year?
A: Sean Brown noted that Q2 typically sees a pickup in business, with Q3 usually flattening. However, he anticipates more acceleration in Q3 and Q4 due to new product lines being released, which are expected to drive growth.
Q: How sustainable are the margin gains seen this quarter?
A: Scott Neils, CMO of Xtant Medical, mentioned that gross margins in Q2 and Q3 are expected to be consistent with Q1. Significant improvement in gross margins is anticipated in Q4, driven by sales in the stem cell segment.
Q: Could you elaborate on the impact of the amniotic products on your revenue, particularly in terms of OEM versus distribution channels?
A: Sean Brown highlighted that while the amniotic products were initially intended primarily for OEM, unexpected distributor interest could lead to additional revenue streams. He emphasized the significant OEM opportunities, especially in surgical and wound care applications.
Q: What has been the financial impact of supply chain issues on your orthobiologics from the stem cell side?
A: Sean Brown detailed that stem cell sales dropped significantly due to supply shortages but are recovering. He is optimistic about the future, especially with the potential to produce their own line, which could be more profitable and offer a better product.
Q: How do you see the distribution capabilities adapting to include amniotic products, which are somewhat outside the core spine focus?
A: Sean Brown explained that while the amniotic products were developed with an OEM focus, many distributors already operate in relevant markets, which could facilitate easier adoption and integration into their existing sales processes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
