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Xtant Medical Holdings, Inc. Reports Third Quarter 2015 Results

Third Quarter 2015 Consolidated Pro Forma Highlights:

  • Consolidated pro forma revenue increased 6.5% to $20.9 million from $19.6 million in the third quarter of 2014.

  • Excluding OEM revenue, third quarter 2015 consolidated pro forma revenue increased 13.8% to $20.2 million from $17.7 million in the third quarter of 2014.

  • Consolidated pro forma biologics revenue increased 15.5% to $9.8 million from $8.5 million in the third quarter of 2014.

  • Consolidated pro forma fixation revenue, excluding OEM revenue, increased 12.3% to $10.4 million from $9.3 million in the third quarter of 2014.

  • Pro forma gross profit for the period was 65.5%, which was at the high end of Company guidance of 64% to 66%.

BELGRADE, Mont., Nov. 11, 2015 (GLOBE NEWSWIRE) -- Xtant Medical Holdings, Inc. (NYSE MKT:XTNT), a leader in the development of class-leading regenerative medicine products and medical devices, today reported consolidated actual and consolidated pro forma financial results for the third quarter of 2015 and for the nine-months ended September 30, 2015. As previously announced, the Company completed its acquisition of X-spine Systems, Inc. on July 31, 2015. The consolidated pro forma results are presented as if the Company's current subsidiaries were combined for all periods presented below.

Consolidated Pro Forma Third Quarter 2015 Results

Revenue
Consolidated pro forma revenue for the third quarter 2015 was approximately $20.9 million, an increase of 6.5% compared to approximately $19.6 million for the same period of 2014. During the third quarter of 2015 and 2014, the Company generated approximately $745,000 and $1.9 million, respectively, of Original Equipment Manufacturer ("OEM") sales from a large orthopedic device manufacturer. Excluding those sales, third quarter 2015 consolidated pro forma revenue increased approximately 13.8% compared to the same period last year.

Consolidated Pro Forma Third Quarter 2015 Summary of Revenue
(Stated in $'000's)
3Q15 3Q14 Growth %
Biologics $9,761 $ 8,454 15.5%
Fixation (excluding OEM) $10,396 $ 9,256 12.3%
Consolidated Pro Forma Revenue (excluding OEM) $ 20,157 $17,710 13.8%
OEM $745 $1,909 -61%
Consolidated Pro Forma Revenue $20,902 $19,619 6.5%


For the nine-months ended September 30, 2015, consolidated pro forma revenue was approximately $64.4 million, an increase of $6.3 million or 10.8% compared to $58.1 million reported for the same period of 2014. Excluding OEM revenue, revenue increased 15.0% compared to the same period last year.

Gross Profit and Gross Margin
Consolidated pro forma gross profit for the third quarter of 2015 was approximately $13.7 million or 65.5% of revenue compared to $13.2 million or 67.3% of revenue reported for the same period of 2014. Gross margin was at the high end of company guidance of 64% to 66%.

For the nine-months ended September 30, 2015, consolidated pro forma gross margin was 65.7% compared to 65.8% in the prior year.

Loss from Operations
Consolidated pro forma loss from operations for the third quarter of 2015 was approximately $3.5 million compared to a loss of approximately $1.4 million for the same period of 2014. The loss for the period also includes approximately $610,000 of non-recurring general and administrative expenses and a non-cash impairment charge of $234,000 on net carrying value of pre-acquisition intangible assets.

For the nine-months ended September 30, 2015, on a consolidated pro forma basis, the Company's loss from operations was approximately $7.1 million compared to $3.3 million for the same period of 2014.

Net Loss
On a consolidated pro forma basis, the company had a net loss of approximately $5.4 million and $16.1 million for the three months and nine months ended September 30, 2015, respectively, as compared to approximately $2.8 million and $11.3 million, respectively, for the same periods of 2014.

EBITDA
The Company defines earnings before interest, taxes, depreciation and amortization ("EBITDA") as net income/(loss) from operations before depreciation, amortization, impairment charges and non-cash stock based compensation. On a pro forma combined basis, third quarter 2015 EBITDA loss was approximately $915,000. Excluding the non-recurring increase in general and administrative expenses referenced above, third quarter 2015 combined EBITDA loss was approximately
$305,000.

Financial Resources and Liquidity
As of September 30, 2015, the Company reported cash and cash equivalents of approximately $8.0 million. On September 4, 2015, the company sold 140,053 shares of restricted common stock to certain members of the Company's board of directors in a private placement transaction at $3.68 per share, which was the closing price on that date. Total proceeds were approximately $516,000.

The Company believes its cash resources are sufficient to execute its strategy through December 31, 2016.

2015 and 2016 Company Guidance
The Company reiterates its 2015 revenue guidance to be within the range of $43 to $46 million for the second half of 2015 and second half 2015 EBITDA guidance to be in the range of $2.0 to $2.5 million, excluding one-time, non-recurring expenses. The Company also reiterates its 2016 revenue guidance of approximately $100 million to $105 million and EBITDA guidance of approximately $7.0 to $9.0 million.

Actual Results for the Three Months ended September 30, 2015
The actual operating results of Xtant Medical Holdings, Inc presented below and to be reported in the Company's Quarterly Report on Form 10-Q include three months of operating results for Bacterin International, Inc. and two months of operating results for X-spine Systems, Inc.

In connection with the acquisition of X-spine, the Company recorded approximately $3.9 million of acquisition and integration related expenses during the third quarter of 2015. Additional integration related expenses are expected during the fourth quarter of 2015 and first half of 2016.

The Company also reported a one-time gain on the extinguishment of debt of approximately $2.3 million associated with the refinancing and restructuring of the Company’s senior secured term loan with an affiliate of Orbimed Advisors as part of the acquisition financing.

Conference Call
The company will also hold a conference hosted by Dan Goldberger, Chief Executive Officer, and John Gandolfo, Chief Financial Officer, to discuss the results. The call will be held at 10:00 AM ET, on November 12, 2015. Please refer to the information below for conference call dial-in information and webcast registration.

Conference date: November 12, 2015, 10:00 AM ET
Conference dial-in: 877-269-7756
International dial-in: 201-689-7817
Conference Call Name: Xtant Medical Holdings, Inc. Third Quarter 2015 Results Call
Webcast Registration: Click Here

Following the live call, a replay will be available on the Company's website, www.xtantmedical.com, under "Investor Info".

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About Xtant Medical Holdings

Xtant Medical Holdings, Inc. (NYSE MKT:XTNT) develops, manufactures and markets regenerative medicine products and medical devices for domestic and international markets. Xtant products serve the specialized needs of orthopedic and neurological surgeons, including orthobiologics for the promotion of bone healing, implants and instrumentation for the treatment of spinal disease, tissue grafts for the treatment of orthopedic disorders, and biologics to promote healing following cranial, and foot and ankle surgeries. With core competencies in both biologic and non-biologic surgical technologies, Xtant can leverage its resources to successfully compete in global neurological and orthopedic surgery markets. For further information, please visit www.xtantmedical.com.

Important Cautions Regarding Forward-looking Statements

This press release contains certain disclosures that may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "continue," "efforts," "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "strategy," "will," "goal," "target," "prospects," "potential," "optimistic," "confident," "likely," "probable" or similar expressions or the negative thereof. Statements of historical fact also may be deemed to be forward-looking statements. We caution that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: the Company's ability to successfully integrate the acquisition of X-spine; the ability of the Company's sales force to achieve expected results; the Company's ability to meet its existing and anticipated contractual obligations, including financial covenant and other obligations contained in the Company's secured lending facility; the Company's ability to manage cash flow; the Company's ability to develop, market, sell and distribute desirable applications, products and services and to protect its intellectual property; the ability of the Company's customers to pay and the timeliness of such payments; the Company's ability to obtain financing as and when needed; changes in consumer demands and preferences; the Company's ability to attract and retain management and employees with appropriate skills and expertise; the impact of changes in market, legal and regulatory conditions and in the applicable business environment, including actions of competitors; and other factors. Additional risk factors are listed in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors." The Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

Pro forma, projected and estimated numbers used in this press release are used only for illustrative purposes and are not forecasts and may not reflect actual results.

This press release contains supplemental measures of performance, such as EBITDA, that are not required by, or presented in accordance with, generally accepted accounting principles in the United States ("GAAP"). Such measures should not be considered as replacements of GAAP. Further information with respect to and reconciliations of such measures to the nearest GAAP measure can be found at the end of this press release.

The unaudited pro forma financial information contained in this press release is included for informational purposes only and does not purport to reflect actual results of operations or the financial position that would have occurred has Xtant and X-spine operated on a combined basis during the periods presented. The unaudited pro forma financial information
should not be relied upon as being indicative of our financial condition or results of operations had the X-spine transaction occurred on the date assumed nor as a projection of our results of operations or financial position for any future period or date. The unaudited pro forma financial information should be read in conjunction with the historical financial statements and related notes of Xtant and X-spine.


XTANT MEDICAL HOLDINGS, INC.
Consolidated Pro Forma Statements of Operations
For the Three Months Ended Sept 30, For the Nine Months Ended Sept 30,
2015 2014 2015 2014
Amount Amount Amount Amount
Revenue
Orthopedic Product Sales$ 20,577,473 $ 19,397,951 $ 63,612,869 $ 57,559,393
Other 323,819 221,360 788,356 576,150
Total Revenue 20,901,292 19,619,310 64,401,225 58,135,543
Cost of sales 7,208,696 6,424,019 22,106,441 19,863,624
Gross Profit 13,692,596 13,195,291 42,294,784 38,271,918
Operating Expenses
General and administrative 4,532,981 3,708,414 12,984,500 10,668,313
Sales and marketing 9,832,446 8,380,884 28,940,264 24,076,681
Research and development 987,433 919,343 2,813,792 2,541,092
Depreciation and amortization 1,562,220 1,524,351 4,201,058 4,175,222
Acquisition and Integration related expenses - - - -
Gain from the Extinguishment of Debt - - - -
Impairment of Assets 233,748 - 233,748 -
Non-cash consulting 50,000 39,697 190,869 81,924
Total Operating Expenses 17,198,829 14,572,689 49,364,232 41,543,232
Loss from Operations (3,506,232) (1,377,398) (7,069,448) (3,271,313)
Other Income (Expense)
Interest expense (2,153,985) (2,946,198) (8,146,038) (8,656,977)
Change in warrant derivative liability 397,366 1,653,425 (78,923) 1,038,190
Non-cash consideration associated with stock purchase agreement - - (558,185) -
Other income (expense) (83,097) (70,344) (186,223) (253,289)
Total Other Income (Expense) (1,839,716) (1,363,117) (8,969,368) (7,872,076)
Net Loss from Operations Before (Provision) Benefit for Income Taxes (5,345,948) (2,740,515) (16,038,817) (11,143,389)
Benefit (Provision) for Income Taxes
Current 11,143 29,312 22,286 106,782
Deferred - - - -
Net Loss$ (5,357,091) $ (2,769,827) $ (16,061,103) $ (11,250,171)
EBITDA$ (914,778) $ 986,825 $ 277,437 $ 3,450,381
See notes that are attached to the consolidated financial statements that are contained in the Company's 10K and 10Q's.

XTANT MEDICAL HOLDINGS, INC.
Consolidated Statements of Operations
For the Three Months Ended Sept 30, For the Nine Months Ended Sept 30,
2015 2014 2015 2014
Amount Amount Amount Amount
Revenue
Orthopedic Product Sales$ 17,421,397 $ 8,246,325 $ 36,431,354 $ 25,712,586
Other 271,623 207,179 657,396 537,821
Total Revenue 17,693,020 8,453,504 37,088,749 26,250,407
Cost of sales 6,035,673 3,017,734 12,883,439 9,718,952
Gross Profit 11,657,347 5,435,770 24,205,310 16,531,455
Operating Expenses
General and administrative 3,980,804 2,282,386 8,805,104 6,664,982
Sales and marketing 8,430,303 3,927,028 18,179,552 12,387,459
Research and development 794,464 378,252 1,519,196 955,111
Depreciation and amortization 1,541,220 58,763 1,765,994 216,343
Acquisition and Integration related expenses 3,856,519 - 3,856,519 -
Gain from the Extinguishment of Debt (2,345,019) - (2,345,019) -
Impairment of Assets 233,748 - 233,748 -
Non-cash consulting 50,000 39,697 190,869 81,924
Total Operating Expenses 16,542,040 6,686,126 32,205,964 20,305,819
Loss from Operations (4,884,693) (1,250,356) (8,000,654) (3,774,364)
Other Income (Expense)
Interest expense (2,111,721) (1,498,508) (4,930,941) (4,216,109)
Change in warrant derivative liability 397,366 1,653,425 (78,923) 1,038,190
Non-cash consideration associated with stock purchase agreement - - (558,185) -
Other income (expense) (89,926) (70,344) (193,052) (253,289)
Total Other Income (Expense) (1,804,281) 84,573 (5,761,101) (3,431,208)
Net Loss from Operations Before (Provision) Benefit for Income Taxes (6,688,974) (1,165,783) (13,761,754) (7,205,572)
Benefit (Provision) for Income Taxes
Current - - - -
Deferred - - - -
Net Loss$ (6,688,974) $ (1,165,783) $ (13,761,754) $ (7,205,572)
Net loss per share:
Basic$ (0.64) $ (0.35) $ (1.70) $ (1.26)
Dilutive$ (0.64) $ (0.35) $ (1.70) $ (1.26)
Shares used in the computation:
Basic 10,432,622 6,233,751 8,100,226 5,711,452
Dilutive 10,432,622 6,233,751 8,100,226 5,711,452
See notes that are attached to the consolidated financial statements that are contained in the Company's 10K and 10Q's.

XTANT MEDICAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
As of As of
Sept 30, December 31,
2015 2014
ASSETS
Current Assets:
Cash and cash equivalents$ 7,970,433 $ 4,468,208
Trade accounts receivable, net of allowance for doubtful accounts of $1,392,989 and $1,309,859, respectively 13,318,450 4,427,081
Inventories, net 22,042,508 9,558,648
Prepaid and other current assets 1,039,561 654,140
Total current assets 44,370,953 19,108,077
Non-current inventories 1,681,138 1,934,258
Goodwill 23,997,218 0
Property and equipment, net 11,433,064 4,654,527
Intangible assets, net 42,223,856 655,490
Other assets 2,520,464 1,598,539
Total Assets$ 126,226,693 $ 27,950,891
LIABILITIES & STOCKHOLDERS' (DEFICIT) EQUITY
Current Liabilities:
Accounts payable$ 7,485,220 $ 3,876,760
Accounts payable - related party 1,035,447 250,629
Accrued liabilities 6,716,897 1,921,301
Warrant derivative liability 1,399,294 1,320,371
Current portion of capital lease obligations 47,246 61,970
Current portion of royalty liability 0 1,000,750
Current portion of long-term debt 53,172 50,671
Total current liabilities 16,737,277 8,482,452
Long-term Liabilities:
Capital lease obligation, less current portion 18,962 11,808
Long term royalty liability, less current portion 0 6,361,216
Long term convertible debt, less current portion 68,000,000 0
Long-term debt, less current portion 44,301,474 20,870,330
Total Liabilities 129,057,714 35,725,806
Commitments and Contingencies
Stockholders' (Deficit) Equity
Preferred stock, $0.000001 par value; 5,000,000 shares authorized; no shares issued and Outstanding - -
Common stock, $0.000001 par value; 95,000,000 shares authorized; 11,886,107 shares issued and outstanding as of September 30, 2015 and 6,679,646 shares issued and outstanding as of December 31, 2014 11 7
Additional paid-in capital 81,798,160 63,091,620
Accumulated deficit (84,629,192) (70,866,542)
Total Stockholders’ Deficit (2,831,021) (7,774,915)
Total Liabilities & Stockholders’ Deficit$ 126,226,693 $ 27,950,891
See notes that are attached to the consolidated financial statements that are contained in the Company's 10K and 10Q's.

XTANT MEDICAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended
2015 2014
Operating activities:
Net loss$ (13,761,754)$ (7,205,572)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 2,403,934 498,343
Non-cash interest 1,665,172 387,294
Gain from the Extinguishment of Debt (2,345,019) 0
Non-cash consideration associated with stock purchase agreement 558,185 0
Loss on sale of fixed assets 11,377 33,373
Impairment of Assets 233,748 0
Amortization of debt discount 707,281 1,207,859
Non-cash consulting expense/stock option expense 881,681 938,785
Provision for losses on accounts receivable and inventory 731,067 601,190
Change in derivative warrant liability 78,923 (1,038,190)
Changes in operating assets and liabilities:
Accounts receivable (2,304,620) 346,151
Inventories 537,819 (350,198)
Prepaid and other assets (325,976) 22,109
Accounts payable 776,214 884,436
Accrued liabilities 1,124,888 (1,495,107)
Net cash used in operating activities (9,027,080) (5,169,527)
Investing activities:
Acquisition of X-spine Systems Inc. net of cash received (73,033,049) 0
Purchases of property and equipment and intangible assets (444,312) (190,601)
Proceeds from sale of fixed assets 102,587 10,149
Net cash used in investing activities (73,374,774) (180,452)
Financing activities:
Net proceeds from the issuance of convertible debt 66,322,366 0
Payment on royalty obligation (542,905) 0
Net proceeds from equity private placement 516,380 0
Payments on capital leases (78,490) 0
Net proceeds from issuance of long term debt 17,479,159 4,000,000
Payment on long term debt (38,668) (492,695)
Proceeds from the issuance of capital leases 70,921 (126,686)
Net proceeds from the issuance of stock 2,117,498 5,876,299
Net cash provided by financing activities 85,846,261 5,383,604
Net change in cash and cash equivalents 3,444,407 3,906,939
Cash and cash equivalents at beginning of period 4,526,026 3,046,340
Cash and cash equivalents at end of period$ 7,970,433 $ 6,953,279
See notes that are attached to the consolidated financial statements that are contained in the Company's 10K and 10Q's.


XTANT MEDICAL HOLDINGS, INC.
Calculation of Pro Forma EBITDA
For the three months endedFor the nine months ended
Sept 30,Sept 30,
2015 2014 2015 2014
Loss from Operations (3,506,232) (1,377,398) (7,069,448) (3,271,313)
Impairment of Assets 233,748 233,748
Non-Cash Compensation 186,882 258,372 631,234 951,972
Depreciation & Amortization 2,170,824 2,105,850 6,481,903 5,769,722
EBITDA (914,778) 986,824 277,437 3,450,381





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Source:Xtant Medical Holdings, Inc.