Xtant Medical Holdings, Inc.

Good morning, everyone, and welcome to the Extant Medical second quarter 2025 financial results. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. If anyone should require operator assistance during this conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Kevin Gardner of LifeSci Advisors. The floor is yours.

Thank you, Operator, and welcome to Extant Medical's second quarter 2025 financial results call. Joining me today are 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 XStand'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 meanings. 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 the Form 10-K filed with the SEC 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-GAAP to GAAP reconciliations, which appear in our press release and are otherwise available on our website. Note that our Form 8K filed 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 a replay, this call was held and recorded on August 12th at approximately 8.30 a.m. Eastern 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 Extant Medical's President and CEO, Sean Brown.

Thank you, Kevin, and good morning, everyone. I will cover a few of our second quarter financial and operational highlights in a moment, but I would like to begin this morning with a recap of our recent announcement that we entered into an agreement to sell certain non-core COFLEX interlaminar stabilization implant assets and OUS entities of Paradigm Spine to Companion Spine, a French-American company fully dedicated to posterior dynamic stabilization and motion preservation. Companion Spine is a portfolio company of the Vescoliosi Brothers, a family-owned investment firm specializing in the neuromuscular cell space. The proceeds of the transaction are expected to total approximately $19.2 million, consisting of $11 million in cash and $8.2 million in short-term seller financing in the form of an unsecured promissory note to be issued by Companion Spine to Extant. The promissory note will mature on December 31, 2025. upon closing the transaction we anticipate to occur during the third quarter of 2025, we intend to use the proceeds to reduce long-term debt and provide additional cash liquidity. The sale of these non-core assets will allow us to focus resource on driving growth in our biologics platform. Given the performance of the business and the proceeds of this transaction, we do not expect to require additional capital to fund operations. Now, let's turn to Q2 2025 highlights. I'm pleased to report that we delivered strong financial and operating results. Scott will cover the financials in detail in a moment, but I'd like to begin by touching on a few highlights. First, our total revenue for the quarter was $35.4 million, which represents growth nearly 18% versus the second quarter of 2024. Notably, our second quarter, twenty, twenty five revenue includes nearly five million in licensing revenue pursuant to the license agreement for Q codes and the simply Max dual layer amniotic membrane that we announced in the third quarter of last year. As we indicated last quarter, CMS has extended the local coverage determination for skin substitutes to December 31, 2025, which opens the door for additional royalty income and cash generation during the second half of 2025. Biologics also turned another solid quarter, growing more than 20% over the second quarter of 2024. demonstrating that our sharpened focus on this core part of our business, including recent product launches, is having the anticipated positive effect on our results. Building on our first quarter results, we again achieved a positive adjusted EBITDA, net income, and cash flow from operations for the second quarter, reflecting both our strong top line performance and greater contribution from higher margin biologics, as well as our ongoing focus on prudent expense management and driving operating leverage in our business. As for new product launches, the second quarter was also particularly active for us in terms of new biologic product introductions. Recall that during the first quarter, we achieved a significant milestone by becoming the first fully vertically integrated biologics company to manufacture all of our products in-house. This gives us control over our supply chain, ensuring the highest product quality while also driving improved gross margins and at the same time delivering an enhanced customer experience. In May, we announced the commercial launch of OsteoFactor Pro, a naturally occurring cocktail of allogenic growth factors engineered to improve bone healing and support surgical success across orthopedic and spine procedures. OsteoFactor Pro is an off-the-shelf, ready-to-use solution that is designed to integrate seamlessly with synthetic, allograft, or autograft scaffolds and provide surgeons with exceptional versatility and biologic performance to support a wide range of bone regeneration approaches. Notably, the launch of this growth factor product, Extant now offers solutions across all five major orthobiologic categories including demineralized bone matrix, cellular allografts, synthetics, structural allografts, and now growth factors. Also during the second quarter, we took a major step forward in bone grafting technology with the launch of Trivium, a premium demineralized bone matrix with three synergistic elements designed to deliver exceptional performance in structure, handling, and biological activity. This advanced composition creates an ideal environment for healing and regeneration, Early feedback from surgeons has been encouraging, and since DBM comprises greater than 60% of our biologics business, this favorable reception demonstrates the success execution of our go-forward strategy. OsteoFactor Pro and Trivium are just two examples where we develop next-generation biologics products in-house, allowing us to capture higher revenue and margins while in parallel delivering superior patient outcomes. Okay, on to revenue guidance. As we indicated last quarter, 2025 is all about advancing towards self-sustainability, emphasizing our organic revenue growth, profitability, and cash generation. With new products launched, targeted growth opportunities, recent cost-cutting initiatives, and the planned sale of certain non-core assets, we are on a path to restoring the business to a sustainably profitable and cash-generating position as reflected in our second quarter results. We are experiencing heightened levels of licensing revenue from the previously noted Q-code and amniotic membrane agreements, which have enhanced our revenue performance to date, and we anticipate should continue to do so through at least the remainder of this year. Reflecting these licensing contributions, as well as our current outlook for product revenue, we are raising our full year 2025 revenue guidance to a range of $131 million to $135 million, which represents growth for approximately 11% to 15% over the company's 2024 revenue. This compares to prior revenue guidance of $127 million to $131 million, representing 8% to 11% growth. Note that this updated outlook does not take into account the pending sale of our non-core COFLEX and OUS businesses to Companions Buy. We intend to revisit this full-year outlook after closing that transaction. While the decision to close that transaction and the timing thereof is not solely at our discretion, we anticipate a closing during the third quarter of 2025. For help with modeling in the interim, however, you can assume that the business being sold to Companions Bind are currently generating an annual revenue run rate for Extant of approximately $23.5 million. Beyond the revenue effect, note that these businesses were modestly unprofitable on a standalone basis, so the effect of the sale on our margins and bottom line metrics is anticipated to be neutral to slightly positive. With that, I will turn the call over to Scott for a more detailed review of our financial results.