Release Date: November 12, 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 solid 12% growth for the third quarter and 36% growth year-to-date.
- The company reaffirmed its full-year revenue guidance of $116 to $120 million, representing a 27% to 31% increase compared to 2023.
- Xtant Medical Holdings Inc (XTNT) successfully launched two new products, Osteovive Plus and Cortera, which are expected to drive future growth.
- The company signed a licensing agreement in October, providing a minimum of $3.75 million in royalty revenues for 2025.
- Xtant Medical Holdings Inc (XTNT) is focused on bringing manufacturing in-house, which is expected to significantly improve gross margins from mid-40s to low-90s percent.
Negative Points
- Sales were softer than expected due to delays in the launch of new products and supplier issues.
- Gross margin decreased to 58.4% in Q3 2024 from 61.3% in the same period in 2023, primarily due to reduced throughput.
- Operating expenses increased to $20.1 million in Q3 2024 from $18.7 million in the same period a year ago.
- The company reported a net loss of $5 million in Q3 2024 compared to a net income of $9.2 million in Q3 2023.
- There was a noted softness in the procedure environment during the summer months, attributed to doctors taking vacations.
Q & A Highlights
Q: Can you provide more color on the softness in the procedure environment during the third quarter and what trends you've been seeing in the fourth quarter so far?
A: Sean Brown, CEO: The softness was primarily due to doctors taking vacations during the summer months, which is typical for hardware-focused doctors. This was the first summer since COVID where we saw a return to normal seasonality. However, we observed a bounce back in September, and the fourth quarter is returning to normal trends.
Q: Can you speak to the revenue mix this quarter between biologics and spinal implants, and what changes do you expect as you transition to in-house manufacturing?
A: Scott Neals, CFO: For 2024, the revenue mix is roughly 55% biologics and 45% spinal implants. As we move forward, we expect biologics to increase its share of overall revenue due to in-house manufacturing.
Q: What are your early considerations for 2025 guidance?
A: Scott Neals, CFO: We will provide formal guidance in March with Q4 earnings. However, we anticipate revenue growth approaching double digits, 3 to 4 points of gross margin improvement, and continued improvement in operating leverage.
Q: What contribution do you expect from VBN in Q4 and 2025, and will it be more on the white label or distributor side?
A: Scott Neals, CFO: In Q4, we expect minimal impact on the distributor side, with more contribution from the white label side. In 2025, we anticipate significant growth in both areas, especially as we work through existing inventories.
Q: How are you thinking about profitability next year, and where should we model leverage?
A: Sean Brown, CEO: We expect improvements in both gross margins and operating leverage, driven by higher-margin product sales and continued expense management. Scott Neals, CFO: We anticipate 3 to 4 points of gross margin improvement and ongoing operating leverage gains throughout 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
