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.