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Xtant Medical (XTNT) 9 Aug 24 2024 Q2 Earnings call transcript

AInvestSunday, Aug 11, 2024 12:14 am ET
2min read

In the recent earnings call for Xtant Medical Holdings, Inc., executives Sean Browne and Scott Neils provided a comprehensive update on the company's financial performance and strategic initiatives for the second quarter of 2024. The call highlighted a strong quarter with a 48% revenue growth, solidifying Xtant's position for achieving its full-year revenue guidance.

Financial Performance and Strategic Initiatives

The call began with Sean Browne, President and CEO, announcing a 48% revenue growth for the second quarter, which is on pace to reach the company's full-year revenue guidance of $116 million to $120 million. This growth is largely attributed to the successful integration of the Surgalign acquisition, which has significantly contributed to the company's growth in both hardware and biologics segments. The integration of Surgalign has not only led to the replacement of older Xtant hardware lines but also the strategic expansion into new product categories, such as amniotic membrane allografts for surgical applications and advanced wound care.

From a profitability perspective, Xtant has reported a fifth consecutive quarter of positive adjusted EBITDA, marking a significant milestone in the company's turnaround strategy. The company also expanded its gross margin by 50 basis points and reduced operating expenses as a percentage of revenue. The focus on operational efficiency and supply chain optimization is expected to further improve adjusted EBITDA in the coming quarters.

Strategic Acquisitions and Product Development

A major highlight of the call was the strategic acquisitions made by Xtant in the past year. The acquisition of Surgalign has not only helped the company replace specific aging hardware lines but also strategically positioned Xtant to expand its offering in the biologics space. The company is also on track to produce its own stem cells, which is expected to provide an uptick to both revenue and operating profit.

Moreover, the acquisition of nanOss IT and production has set the stage for future growth in new products addressing new verticals within the Biologics business. Xtant's strategic focus on product development and innovation has resulted in the release of a sixth new product category, amniotic membrane allografts for surgical applications and advanced wound care. This diversification into new product categories will further strengthen Xtant's position in the market and enhance its revenue growth.

Future Outlook and Challenges

Looking ahead, Xtant is focused on becoming operationally self-sustaining by controlling its supply chain and reducing reliance on external production. This self-reliance is expected to improve margins and enable Xtant to become a larger and more diverse producer of Biologics. The company also plans to roll out products produced to its own standards in the second half of 2024, which is anticipated to significantly contribute to the company's growth.

However, the call also highlighted challenges, particularly in terms of supply chain issues and the need to optimize the integration of the businesses acquired in 2023. The company is working to address these challenges and is confident in its ability to overcome them, given its strategic focus on operational efficiency and cost optimization.

Conclusion

In conclusion, Xtant Medical Holdings, Inc. has shown remarkable progress in the second quarter of 2024, with a strong financial performance and strategic initiatives aimed at driving long-term growth. The company's focus on product development, strategic acquisitions, and operational efficiency is expected to position it well for future success. Despite challenges, Xtant remains optimistic about its future, with a clear vision of becoming a self-sustaining company that honors the gift of donation and allows patients to live as full and complete a life as possible.

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