Xtant Medical Holdings, Inc.

Greetings and welcome to Extant Medical's Q1 2023 Financial Results Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Matt Steinberg of Lazar Finn Partners. Please go ahead.

Thank you, Operator, and welcome to Extent Medical's first quarter 2023 financial results call. Joining me today is Sean Brown, President and Chief Executive Officer, and Scott Niels, Chief Financial Officer. Today's call is being webcast and will be posted on the company's website for playback. During the course of this call, management may make certain forward-looking statements regarding future events and the company's expected future performance. These forward-looking statements reflect XSEN's current perspective on existing trends and information and can be identified by such words as expect, plan, will, may, anticipate, believe, should, intends, and other words with similar meaning. Such forward-looking statements are not guarantees of future performance and involve risk and uncertainties including those noted in the risk factor section of the company's annual report on Form 10-K, followed with the SEC on March 7, 2023, and in subsequent SEC reports and press releases. Actual results may differ materially. The company's financial results press release and today's discussion include certain non-GAAP financial measures. These refer to the non-GAAP to GAAP reconciliations, which appear in the tables of our press release and are otherwise available on our website. Note that our form 8K, followed with our financial results press release, provides a detailed narrative that describes our use of such measures. For the benefit of those of you who may be listening to the replay, this call was held and recorded on Thursday, May 4th at approximately 9 a.m. Eastern Daylight Time. The company declines any obligation to update its forward-looking statements except as required by applicable law. Now I'd like to turn the call over to Sean Brown.

Thank you, Matt. And good morning, everyone. We're very proud of the significant progress made by Extent Medical in the first quarter. During the quarter, we achieved several milestones highlighted by solid revenue growth of 38%, which included strong organic growth of 29%, as well as 9% growth from the first sales generated by our recently acquired CoFlex and CoFix product lines. Importantly, all market channels of independent agents, OEM, DTH, and the ASC market saw significant growth, which demonstrates that the continued execution against our strategic growth pillars has us well positioned for long-term sustainable growth. As a reminder, our four key growth pillars are focused on one, new product introductions, two, distribution network expansion, three, adjacent market penetration, and four, targeted strategic acquisitions. Now I will share an overview of our first quarter business performance, starting with an update on the CoFlex acquisition and integration. As announced in March, our acquisition of CoFlex was our first since 2015. This transaction is highly complimentary to our spine offering, and it positions us to become cashflow positive in the near future. Moreover, it bolstered an already impressive non-acute care offering for our spinal fixation business with the addition of two new products. the CoFlex inner laminar stabilization device, and the CoFix supplemental fixation device. Notably, these new product lines bring transformative treatment options to a large and growing patient population. This deal was an immediate contributor to our top line as evidenced by the 55% year-over-year revenue growth to our spinal fixation business. Furthermore, it improved our margin profile and better positions us to achieve profitability in the near future. Integration of COFLEX has been progressing smoothly, and looking ahead, we plan to remain diligent in our approach to both tuck-in and transformational acquisitions as the year progresses. Demand for our biologic products was robust during the first quarter, enabling us to expand organically, where we saw 33% growth in our biologics products over the same period last year. We have a vital and robust product pipeline that we feel will support the strength of our business, and enable us to take market share in the 2.4 billion U.S. orthobiologics market. We are excited about the traction generated to date and look forward to the continued growth of these product lines. Turning to our distribution network, as part of the CoFlex transaction, we accelerated our footprint expansion with the addition of roughly 150 current new distributors and a significant number of new physicians and surgeons to our network. Unrelated to the acquisition, we secured 17 new distributors in the first quarter. on track with our goal of adding 10 plus distributors per quarter. Driven by our growth strategy, we will continue targeting expansion opportunities in regions of the country where we do not have large presence today. The third pillar, the adjacent market pillar of our growth strategy, continues to track well. This quarter, we achieved success in further penetrating the foot and ankle trauma and orthopedic implant markets. For the first quarter, we were able to take advantage of a few one-time OEM sales that will most likely not be recurring. However, that is the nature of OEM business, and we are glad to have the capacity to handle these new orders. This is an important part of our growth strategy as it allows us to quickly expand the total addressable market for our products. From an operational standpoint, our focus has been on ensuring we can manage costs and scale for profitability. Supported by our proactive efforts, we are realizing improvements and expanding our capacity while better managing our supply chain. We continue to manage our cost prudently as we regularly target areas to improve our operational efficiency. Likewise, as we are making strides towards the modernization of our production, optimization of our processes, and diversification and development of new product lines. Now, I'd like to provide an update on the board. Earlier today, we announced that John Beeson has been appointed to our board as an independent member. Mr. Beeson is a partner at the Jones Day Law Firm and regularly represents clients on complex, strategic, transactional, and corporate governance matters, and is advised on transactions with an aggregate value of over $225 billion. In addition to M&A, he also specializes in a multitude of other business development, corporate securities, and governance topics. We look forward to benefiting from John's unique insights, years of capital market experience, and leadership skills. Concurrently, we are announcing today that Michael Eggenberg and Matthew Rizzo, both from OrbiMed Advisors, have stepped down from the company's board. Since joining the board in 2018, Michael and Matthew and the team from OrbiMed have provided financial backing and guidance that has been instrumental in the turnaround of Extant. OrbiMed's exit from the board reflects OrbiMed's confidence in the strength of our business at this time. It also underscores the success of our management team and their belief that Extant is now poised to take the next step in our revolution. With the addition of John Beeson to the board, Extant now has a majority of independent directors, making Extant more attractive to long-term institutional and retail investors. On behalf of Extant, we thank Michael and Matthew for the years of service and contributions, as well as the OrbitMed organization for support throughout the past several years. As the year progresses, we plan to continue to look at expanding the board with additional independent members. In furtherance of this initiative, the EXTENT Board recently formed a new independent nominating and corporate governance committee, now chaired by John Beeson, to assist the board in identifying new independent directors to complement our existing board. Finally today, we introduced annual revenue guidance for 2023. We anticipate generating revenues in the range of $73 million to $75 million for the full year 2023, representing an annual growth of approximately $26 to 29% compared to 2022. We are doing this to provide greater clarity and transparency of our near-term growth projections while demonstrating the significant progress executing on our growth pillars. With the acquisition of CoFlex, improving margin profile, and the leadership of our experience management team and board, we are confident that all the pieces are in place to drive long-term sustainable growth. Now, I'd like to turn the call over to Scott who will discuss our first quarter of 2023 financial results.