Xtant Medical Holdings, Inc.

Greetings, and welcome to the Exit Medical Second Quarter 2023 Financial Results Conference Call. At this time, all participants are on 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 call is being recorded. I would now like to turn the conference over to Matt Steinberg of FinPartners. Please go ahead.

Thank you, Operator, and welcome to XSET Medical's second 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 XTEN's current perspective on existing trends and information and can be identified by such words as expect, plan, will, may, anticipate, believe, should, intend, and other words with similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the risk factors section on the company's annual report on Form 10-K filed 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. please refer to the non-gap-to-gap 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 Tuesday, August 1st, 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. On today's call, there are a number of key company updates that I'd like to highlight. Most notable, we delivered revenue growth of 32% year-over-year, driven by our core biologics and fixation businesses, Guided by our mission of honoring the gift of donations so that our patients can live as full and complete a life as possible, and following our four key growth initiatives, we are pleased with the progress that Xnet continues to make on our long-term business strategy. I'd also highlight that we closed the second quarter with adjusted EBITDA. This milestone was achieved faster than our internal expectations, underscoring the continued execution of our strategy. I am thrilled with the performance of our team, and thank them for their incredible efforts that made this possible ahead of schedule. Last Friday, we announced that Extend was the winning bidder for Surge Alliance domestic and international biologics and spinal fixation businesses. Needless to say, we are thrilled at this opportunity to expand our footprint with new contracts and distributors. We are working on next steps and will update you on status and closing. The financial guidance that we are providing today excludes any impact of this transaction If and when we close this transaction, we plan to update our financial guidance. In breaking out this quarter's performance, I want to first provide a reminder of our four key growth pillars, and they're focused on one, new product introductions, two, distribution network expansion, three, adjacent market penetration, and four, strategic acquisitions. We are pleased that we continue to generate solid demand for our Biologics products. We are driving growth across all channels of our business, and we are seeing positive contributions from our newly acquired COFLEX interlaminar stabilization device. The integration of the COFLEX business continues to progress smoothly. It's important to note that we are aggressively reviving this business, which was previously in decline. It will take time to properly transition this business to growth, but we are well on our way to restoring this highly profitable product. Organically, our OsteoFactor and OsteoVive Plus products have sustained strong demand since their initial product launches. Our current portfolio addresses the entire $2.4 billion U.S. orthobiologics market, and we will remain opportunistic moving forward on future product launches and acquisitions that position us to take greater market share. Now, turning to our distribution network, The addition of our new COFLEX distributors combined with our 24 new distributors against the stated plan of 10 each quarter has us well positioned to increase our distributor revenue by at least 10% annually. Our distribution network now stands at more than 450 total. Going forward, we will continue targeting new expansion opportunities in underserved markets across the U.S. Our adjacent market strategy is performing well, and we further penetrate the foot and ankle, trauma, and orthopedic implant markets. On the OEM front, we delivered on several sales with our recently expanded capacity. We also saw success from the ambulatory surgical center market, which continues to grow nicely and supports the promising trends with our fixation business. We continue to view our ASC market expansion as an important part of our growth strategy. Looking ahead, we will remain diligent in our approach to both tuck-in and transformational acquisitions as the year progresses. Our primary focus will be on the assets that bring the three Cs, capabilities, capacity, and cash flows. With both our COFLEX and surge line deals, we feel we have hit on all three Cs. In recent quarters, the focus of our operations has been to successfully implement key process improvement initiatives designed to increase our production capacity and efficiencies. I'm pleased to share that we have made significant strides in achieving this goal. As I noted earlier, our increased capacity enabled us to fulfill OEM orders with our adjacent markets. All those gains for the past two quarters have come from having full labor capacity at our Belgrade plant. Last year, our growth was hampered by having less than 60% labor capacity for most of the year. So needless to say, we are thrilled to have the people in place to help us drive our mission. Earlier in July, I'm happy to say we opened up roughly 50% of new clean room space in our plant. This project was important to our organization on two fronts. One, the entire organization focused on getting these critical plant additions completed on time and significantly under budget. Two, organizational focus and having a very clear concept of what is most important and focusing on that one main goal is the kind of operational discipline that makes for great companies. And looking back at what our management team started, we had the challenge of turning around a business that we had to fix many broken processes. Today, as the business is now growing and prospering, building in this kind of operational discipline will be the cornerstone of a company that will thrive for years to come. Consequently, we are much better at managing our supply chain and processes today than we were even a year ago. As a result, we are capable of selling and delivering products on a greater scale. That said, given the robust demand of our life-changing products, the work is not done. We continue to explore various strategies to increase our capacity to support our growth initiatives. Finally, in today's press release, we raised our 2023 full-year annual revenue growth range to approximately 29% to 33%, up from our previous range of 26% to 29% year over year. These expectations do not include potential contributions from the surge line transaction if and when it closes. Our strong revenue results for the first six months of 2023 underscore our confidence in achieving this annual growth goal. Now, I'd like to turn the call over to Scott, who will discuss our second quarter 2023 financial results.