Xtant Medical Holdings, Inc.

the business included in the sale generate annual revenue to extend of approximately $23.5 million. As previously mentioned, these products 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 in 2026 and beyond. In the meantime, until this transaction closes, we continue to support those products in the field, and we will benefit from the associated hardware revenue for an additional few months. So now, turning now to our third quarter, I'm pleased to report that we delivered strong financial and operating results. Scott will cover the financials and details in a moment, but I'd like to begin by touching on a few highlights. First, our total revenue for the quarter was $33.3 million, which represents a growth of more than 90% versus the third quarter of 2024. Notably, our third quarter 2025 revenue includes $5.5 million of licensing revenue pursuant to the license agreement for Q codes and the SimplyMax dual-layer amniotic membrane that we announced in the third quarter of last year. As we indicated in Q1, CMS has extended the local coverage determination for skin substitutes to December 31, 2025. Our biologics product family, which is our core business, grew 4% over the third quarter of last year This was below our long-term expectation for growth in the biologics product family. However, it's important to take a step back and recall that our focus over the past several quarters has been on prioritizing self-sustainability, particularly positive cash flows. As part of our long-term growth strategy, as a broader part of our long-term growth strategy, the strategic initiatives that we have implemented are sharpened focus on higher margin biologics, our emphasis on in-house manufacturing to improve quality and control costs, and our more disciplined approach to operating expenses were all implemented with self-sustainability in mind. With those goals now achieved, we are turning our focus back to driving top-line growth in our orthobiologics business. We continue to invest in R&D to bring innovation to surgeons and their patients. At the same time, we have started making investments in our commercial team to maximize the reach of our broad portfolio of orthobiologic solutions. From a new product launch perspective, since our last quarterly update, we also continue to innovate to bring new orthobiologic solutions to surgeons and their patients. Earlier this month, we announced the commercial launch of CollagenX, our bovine collagen-particular product for surgical wound closure that is designed to promote healing, prevent dehiscence, and help mitigate concerns related to surgical site infections. Collagen complements our existing Orthobiologics product line as it represents a potential addition to every case type that our portfolio currently addresses, as well as procedures performed in other surgical disciplines. This is the latest example of our commitment to innovation as we work to meet the diverse needs of our surgeons and patients. As a reminder, we now offer and internally produce solutions across all five major orthobiologic categories, demineralized bone matrix, cellular allografts, synthetics, structural allografts, and now growth factors. Additionally, with our amino and collagen product lines, we are well-positioned to grow in the surgical repair and wound care markets. This positions us as the partner of choice in the field of regenerative medicine a position that has been further solidified by the very positive feedback that we have received from surgeons on these recent innovations. Now, turning to 2025 revenue guidance, recall that last quarter reflecting the heightened levels of licensing revenue from the previously noted QCO and amniotic membrane agreements that we are experiencing, we increased our full year 2025 revenue guidance to a range of $131 to $135 million, which represents growth of approximately 11% to 15% over 2024 revenue. With the sale of our non-core COFLEX and COFIX spinal implant assets and OUS business to companion spine now anticipated to close closer to the end of the year, we are reiterating our 2025 revenue guidance at this time. We anticipate providing initial 2026 revenue guidance concurrent with our Q4 results in March of next year. With that, I will turn the call over to Scott for a more detailed review of our financial results.

Thank you, Sean, and good morning, everyone. Total revenue for the third quarter of 2025 was $33.3 million, compared to $27.9 million for the same period in 2024. The 19% increase is attributed primarily to $5.5 million of licensing revenue during the third quarter of 2025 that Sean alluded to earlier, as well as $576,000 of additional biologics revenue, partially offset by a 6% or $736,000 year-over-year decline in hardware product revenue. Gross margin for the third quarter of 2025 was 66.1%. compared to 58.4% for the same period in 2024. The increase is primarily attributable to favorable sales mix and greater scale. Third quarter 2025 operating expenses were $19.5 million, compared to $20.1 million in the same period a year ago. The reduction in operating expenses is primarily attributable to reduced compensation and commission expenses, which were partially offset by an increase in professional fees related to sales and marketing. General and administrative expenses were $7.1 million for the three months ended September 30, 2025, compared to $7.5 million for the same period in 2024. The decrease is primarily attributable to half a million dollars of reduced stock-based compensation expense and half a million dollars of reduced retention and severance expense, partially offset by a half million dollar increase in bonus expense. Sales and marketing expenses were $11.7 million for the three months ended September 30, 2025, compared to $11.9 million for the same quarter last year. The decrease is primarily due to a reduced commission expense of $.7 million resulting from revenue mix, partially offset by $1 million of additional consulting fees during the current year period. Research and development expenses were $634,000 for the three months ended September 30, 2025, a decrease from $701,000 in the third quarter of 2024. Net income in the third quarter of 2025 was $1.3 million, or one cent per share on a fully diluted basis, compared to a net loss of $5 million, or cents per share, in the comparable 2024 period. Adjusted EBITDA for the third quarter of 2025 was $4.5 million, compared to an adjusted EBITDA loss of approximately $1 million for the same period in 2024. As a reminder, beginning in the fourth quarter of 2024, we no longer include the exclusion of the phasing of the bargain purchase gain on our sell-through of inventory acquired as part of our purchase of Surgiline Holdings Hardware and Biologics business in our calculation of adjusted EBITDA. Prior periods have been recast conformed to the current calculation. The related effect on adjusted EBITDA was a reduction of $773,000 in the third quarter of 2024 to arrive at the recast amount. As of September 30th, 2025, we had $10.6 million of cash, cash equivalents, and restricted cash. Net accounts receivable was $25.6 million. Inventory was $40.7 million. and we had $5.7 million available under revolving credit facilities as of the end of the quarter. As a reminder, our cash balance as of the end of the third quarter does not take into account the anticipated remaining proceeds from the pending sale of certain assets to Companion Spine that we anticipate closing by year end that Sean discussed earlier. Operator, you may now open the line for questions.

Thank you very much. We are now opening the floor for questions. If you would like to ask a question, please press star 1 on your phone keypad now. Confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it might be necessary to pick up your handset before you press the keys. Please wait a moment whilst we poll for questions. Thank you. Thank you very much. Our first question is coming from Ryan Zimmerman of BTIG. Ryan, your line is live.

Thank you, and good morning, everyone. So, appreciate, you know, commentary and everything. Maybe I wanted to start, Sean, you know, you talked about making some investments in the commercial organization. It would be good just to, you know, know, do you want to get more feet on the street? I mean, is this refilling the pipeline. Maybe talk to us a little about kind of, you know, a little more color on kind of what that means. And then my second question, I'll just ask it up front, is, you know, there's a lot of moving parts as we go into next year. I know you're not guiding the 26th, but maybe any early thoughts, you know, broad strokes around kind of, you know, where you think the orthobiologics business can grow, you know, when we strip out some of the other pieces that, you know, may be in flux. Thanks for taking the question.

Sure. Okay, I'll start out with the profitability question. Well, not the profitability question, the sales question, which got to profitability. So last year, really in the second half of the year, we started making decisions on how do we conserve cash because we knew that we were going to have a lot of revenue coming in from the Q codes. We knew that we were going to have actually a very good year just operationally. So in the fourth quarter of last year, we dramatically cut back the business overall. You can see it in our op-ex expense with the idea of being profitable. As part of that, we reduced a fair number of our commercial, not necessarily overly highly performing assets. And so over the course of the last really quarter, we've now been replacing a lot of those spots in areas that make more sense. And so just to give you the scale to which we're doing, so we had roughly four reps that were selling the Extant branded products. Today, we've upped that and by the end of the year, we'll be at eight. So we'll double that. And then again, in 2026, we expect to add probably four more. So this is a fixable problem, not a problem, but a fixable opportunity for us. And so I feel really good about where we're going and even what I'm seeing from just having those new assets out in the field already. So it is something that was somewhat predicted or predictable when we made those decisions last year and in the beginning of this year. To give you some guidance with respect to 2026, as you mentioned, we are not going to be giving full guidance until really the year completes because there's a lot going on, a lot of good things. And so if I were to give you some general guidance, we do expect still to be in the low double digits with respect to our overall orthobiologics growth. And then as for the hardware, we're still working through some things right now. But I would still say that really that's what we can expect to see in 2026.

That's very helpful. And, you know, even just the broad strokes, I think, give us a sense of what you can do. And then, you know, look, NASA's coming up, what, next week or this week, I should say.

This Friday, yeah, Friday through Sunday.

Yeah, this Friday. So anything you want to highlight for people, you know, for NAS or anything, you know, that you'd say is worth checking out at the booth?

Yeah, thanks for asking. Thanks for the setup. Yes, three things. First of all, our growth factor product, brand new. It's outstanding. We're replacing another growth factor product we were selling previously that someone else was making for us. This is our own product. We feel really good about it. We've done a great job of keeping the business that we once had, and we're now starting to grow. So that's absolutely something people should check out. Second of all, we've now created a new advanced DBM called Trivium, which is really a terrific product that we would encourage our surgeons and distributors to look at. Not only is the growth factor count and just basically the overall characterization of the product outstanding, but the handling is even better. And then the third thing is what we just rolled out, this collagen X product, which literally can be used in almost every procedure and even procedures outside spine. So those would be three big things that we're feeling really, really good about. And just the fact that the entire portfolio of our product line are now things that we make, we have a hand in, we control the supply chain, but also just in general, we just think we make really great products. So please stop by and We'd love to give you a rundown of our really exciting portfolio. Thanks, Sean. Thank you, Ryan.

Thank you very much. Our next question is coming from Chase Knickerbocker of Craig Hallam. Chase, your line is live.

Good morning. Thanks for taking the questions. Sean, maybe just to start, if you could just help me kind of dive a little bit deeper into that 3% year-over-year growth in orthobiologics. just as far as, you know, what supported growth in the quarter on a year-over-year basis, what detracted from it on a kind of product-specific kind of basis, if we can riff on that for a second.

Sure, absolutely. So the – actually, it was 4% growth year-over-year, which we had for our – And, again, the areas that we're still continuing to grow very nicely continue to be our stem cell business. Again, the growth sector business is basically we're holding serve in that, which is good because, again, we released a brand-new product line. The amnio product line continues to be a nice product line, product growth area for us. And we realize there's going to be some changes with respect to the wound care world, but some of and a good chunk of some of the growth that we've also seen is in the surgical side, which shouldn't change. And so those would be a couple of the areas that I would say that really helped. What hurt us this past quarter was maybe some of our old line demineralized bone products. And that's why the addition of things like Fibrex and Trivium, these higher end, much, much better, much higher products. not only from a handling perspective, but from a production perspective and from, again, a growth factor characterization side of things. They're just outstanding products. And so we really hope and we really see that those things will be helping offset maybe some of the slide that's been taking place from those old, still very good product lines. But, you know, you realize that osteoselect products, uh, osteo sponge and freedom. Then I think I was just like started, Oh no, I was just fun. Started in what? 2008 osteo select started in 2010. And I think three of them, it was 2013, 2013. So these are some of the products that, that we're now finding, um, upgrades to, uh, that we've just believed that we've really, you know, knocked it out of the park with, with some of the new things. And they're just starting to get traction, those new products. Uh, and so matter of fact, for our, If you look at the Trivium product, it had one of its best months yet just recently. So we're really, really excited about where that's going to take us.

Just maybe on the kind of legacy DBM side, was it mainly kind of white label or direct channel?

Definitely more direct channel. Yeah, definitely more direct channel. So as I mentioned, when we pulled those resources out of the field or at least eliminated them and really kind of reshuffling them now, And it hurt us. I'm not going to lie. It's something that – but we knew what we were going into. Those were, again, probably suboptimized assets when we did it. That's part of the reason why we pulled it out and said, all right, profitability is the most important thing we're going to do right now. We feel we can hold serve for most of what we have for our business. And with the growing orthobiologic portfolio, we really feel like, okay, we might come across some rocky waters, which we have. And so now over the course of really the summer, we started adding back those resources in more strategically important areas. And then, as I mentioned, we're going to continue to add more in 2026.

Got it. And then maybe just on the amnio side, you know, the changes that were announced in the final PFS, maybe just any thoughts as far as how it impacts your business as we take an eye into 2026. And then just last one from me, Sean, as I think about collagen X, probably a bigger market for similar products than people realize. Just kind of speak to your plans for that, even outside of spine products. as far as how do you plan to distribute that product into what is a fairly large market for those particulates?

Yeah. So let's start with AMIA. So we manufacture AMIA. Most of the people who sell the AMIA repair products today are not manufacturers. As a matter of fact, they need a fairly high-priced in order to be able to make real money. We, on the other side, are the very low end of the value creation. So when you think about what it costs for us to make something, it's quite low. And so when the price went to $127 per square centimeter, it's a very good, it's actually a very good price for us as somebody who can actually serve the wound care, or I should say the acute care market. If you recall and if you see what's happened in that world, This reimbursement opened the door for real movement from the out-of-hospital or the acute care or the non-acute world into the acute or at least the outpatient clinics tied to the hospitals. We feel that we can do really well with the hospital contracts we have. There are many distributors out there today who don't have the kind of hospital contracting we do, and they need it. And so we think that there's an opportunity there. So we'll see what happens. I mean, this is something that we're just getting our arms around right now, speaking to various people, making sure our contracting is tight. But we, again, have a very, very robust contract portfolio. And so it is something we're trying to leverage as we speak. So that's the MES side. Secondarily, when you think about the collagen-based products, one of the things that we acquired through the Surgiline acquisition program was a product called Nanos. And the basis of Nanos was an even more interesting product called E-Matrix. And that E-Matrix was a collagen-based product that had extraordinary clinical data behind it. Actually, as the product was originally created, it was created as a wound care product. Matter of fact, it was going through its own PMA. And the company essentially was running out of money and said, okay, let's create something that we can start generating money from. And then they created Nanos. which was taking E-Matrix and then putting in hydroxyapatite with it. And so it became a product that was ultimately purchased by one of the predecessor companies, Asurgilite. And so we acquired E-Matrix, which in itself was its own collagen-based product. So we see that as a really terrific platform for us moving forward because there's a number of other areas we think that we can touch with it. So there's more to follow on that, but it's a platform technology that we're really, really excited, and we've got some FDA work that we need to do, but we're really pretty pumped about where that's leading. So hopefully that answers your question there, Chase.

Yeah, thanks, Sean. Appreciate the questions, guys.

Thank you very much. Well, we appear to have reached the end of our question and answer session. And therefore, we have reached the end of the conference. So thank you very much. This does conclude today's conference, and you may disconnect your phone lines at this time. We thank you for your participation.