Xtant Medical Holdings, Inc.

2024 conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host, Brett Moss, IR. You may begin, sir.

Thank you, Operator. Joining me today is Sean Brown, President and Chief Executive Officer, and Scott Neals, 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 XDAN's current perspective on existing trends and information that 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 risks and uncertainties, including those noted in the risk factors section of the company's annual report on Form 10-K filed with the SEC on April 1, 2024, and in subsequent SEC reports and press releases. Actual results may differ materially. The company's financial results press release in today's discussion includes certain non-GAAP financial measures. Please refer to the non-GAAP to GAAP reconciliations which appear in 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 the use of such measures. For the benefit of those who may be listening to the replay of this call, this call was held and recorded on August 9th at approximately 9 a.m. Eastern Time. Coming to clients, any obligation updated for lending statements except as required by its applicable law. Now I'd like to turn the call over to Sean Brown. Sean, the floor is yours.

Thank you, Brett, and good morning, everyone. I'm pleased to announce another strong quarter for the Extant team. With 48% growth over the prior year, we are solidly on pace to achieve our full year revenue guidance of $116 to $120 million, which we are reaffirming today. This range represents total annual revenue growth of approximately 27% to 31% compared to the full year 2023. From an organic growth perspective, which we define as revenue growth excluding contributions from products acquired during the previous 365 days for which there were no comparable sales, second quarter revenue was flat compared to the prior year, mostly due to the planned surge line cannibalization of our ex-spine hardware and significant OEM sales during Q2 2023. As our supply chain challenges abate and we introduce new products to the market, we continue to expect our organic growth to accelerate during the second half of 2024 and reach double digits. From a profitability perspective, adjusted EBITDA for the second quarter was $0.5 million, and marking our fifth consecutive quarter of positive adjusted EBITDA. In the second quarter, we expanded our gross margin by 50 basis points compared to the prior year period and reduced our operating expenses as a percentage of revenue compared to Q1 2024. Our production is becoming more efficient, and we continue to scale. We anticipate further improvements in adjusted EBITDA in Q3 2024 and beyond. As I have discussed in previous calls, we expected the first half of this year to be challenging due to numerous supply chain issues, so we are pleased to have such a strong second quarter. We have worked through most of these issues that have impacted some of our fastest growing products. Additionally, we are closer to producing our own stem cells, which we expect will provide an uptick to both revenue and operating profit. I want to give a quick update on our acquisitions from last year. The acquired Surgiline product lines are performing very well and strategically helping us replace specific aging XStand hardware lines. This cannibalization was intended and a big part of the strategic rationale behind the deal. I am particularly pleased by how the top 20 distributors have grown 16.5% in revenue from when we acquired Surgiline in the third quarter of 2023. The Nanos IP and production acquisition will play a significant role in our future growth in new products, addressing new verticals within our biologics business. As we develop those new product lines, I will give more details about the product specifics, target markets, and our go-to-market strategy. Overall, we are pleased with our progress in integrating each of these acquisitions, and we continue to rationalize related expenses and product lines. As a reminder, we have built our platform with four key pillars that we believe will drive sustainable long-term growth. One, new product introductions. Two, distribution network expansion. Three, adjacent market penetration. And four, strategic acquisitions. Starting with new products, like every healthy, robust organization, we are continually innovating with deep pipeline of new products. During the course of our turnaround, we expanded our biologics product offering from two categories to five, which helped enhance our growth profile. Moreover, we are the only orthobiologics company that offers a complete line of orthobiologics, which include allograft, DBM, synthetics, viable bone matrix stem cells, and growth factor. During the second quarter, we released a sixth new category, amniotic membrane allografts for surgical applications and advanced wound care, and we are already booking sales. AgStamp previously sold a distributed product that another company made that focused on the surgical repair side of our business. This is currently a small product line for us, but with our far superior products, we believe we can profitably grow our extant branded product line as well as provide a fantastic solution as an OEM producer. Fiscal year 2024 is our year of self-sustainability. In the second half of this year, we plan to roll out products that we produce to our own standards in a much more profitable way than relying on products from others where we do not control the supply chain. Also, on the hardware side, we are finishing the development and soft rollout of the Cortera posterior fixation system started by SurgeLine. We are now in the process of completing that rollout, which we anticipate will be fully completed by Q4 of this year. The next pillar focuses on expanding our distribution network and contract access. Our platform offers to more than 450 IDNs and GPOs that cover approximately 90% of all the beds in the U.S. In addition, our distribution network now includes more than 650 distributors. In years past, we focused on continuing to expand the total number of distributors by at least 10 new agents per quarter. Today, we plan to look for opportunistic distribution additions, but our primary focus will be increasing penetration into the distributors we already have. we have found that the more product lines that distributors sells of our products, the stickier they become as a distributor for Extant Medical. Now with that said, we still added 15 new distributors this past quarter. So we are getting better penetration with our bigger distributors while also adding new high potential distributors. Now turning to our third pillar, Leveraging adjacent markets, one goal for Extant in the long term is to build products that serve other verticals beyond spine and orthopedics. Through our OEM manufacturing, we serve different verticals and learn about the dynamics of those specific markets with an eye on potentially expanding in places where we can have a significant impact. We have gained traction within the sports medicine, foot and ankle, trauma, and reconstructive joint orthopedic markets. With the addition of our amniotic tissue products, we can now serve both the surgical repair and advanced chronic wound care markets. Our final pillar focuses on achieving growth through targeted acquisitions. By leveraging our growth platform of over 450 IDN agreements and 650 distributors selling our products nationally, we are targeting either undercapitalized or subscale companies. More specifically, similar to our acquisitions in 2023, we are targeting companies that either help complete our offering, or provide us with additional scale. Our focus on acquisition targets is based on three characteristics. First, capabilities. We're looking at companies or technologies that give us greater capabilities, particularly in regenerative biologics. Additionally, we look at businesses that help complete extant spine fixation and motion preservation offerings. Second, capacity. Targets that can expand our long-term biologics production demand. And then third, cash flow, businesses that are profitable or can become profitable through cost or margin synergies. We believe that making sound, targeted, and strategic acquisitions that fit within our strategic or stringent criteria will take us one step closer to achieving our long-term goals. We believe our unique platform and robust distribution network will allow future companies we acquire to be part of a fast-growing company. Furthermore, we believe it will allow the entrepreneurs and other owners of those companies to win when they are purchased and then potentially win even bigger over time as Extant continues to grow. Moving forward, we are focused on becoming operationally self-sustaining by controlling our supply chain and becoming less reliant on production outside our control. We believe this self-reliance will allow us to be a larger and more diverse producer of biologics. Moreover, producing our own products should dramatically improve our margin profile, coupled with an expanded product line that brings additional transformative treatment options to a large and growing patient population. Most importantly, we believe these actions will help us get to positive operating cash flow during the fourth quarter of 2024. Now, I'd like to turn the call over to Scott, who will discuss our first quarter of 2024 financial results.