Xtant Medical Holdings, Inc.

Good morning, everyone, and thank you, and welcome to the Extant Medical First Quarter 2026 Financial Results. At this time, all participants are in a listen-only mode. The floor will be open for questions and comments following the presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Kevin Gardner of LifeSci Advisors.

Thank you, Operator, and welcome to Extant Medical's first quarter 2026 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 XTAN'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 meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. including those noted in the risk factor 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 the Form 8Ks that we file with our financial results press releases provide detailed narratives that describe 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 May 13, 2026, 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 Sean Brown, CEO. Sean?

Thank you, Kevin, and good morning, everyone. Thank you for joining our first quarter update call. As has been our practice, I'll begin with a few prepared remarks about our operations, and then Scott will provide a deeper dive into the financials. We will then open the call to your questions. Since our last quarterly update, Extant Medical has achieved multiple significant milestones that position us for sustained growth. We strengthened our balance sheet with proceeds from the companion spine transaction, secured transformational license agreement with Dillon Technologies that moves us into the multi-billion dollar hemostatic agent market, and advanced our innovation track record with the commercial launch of Trivium Shaped. With that as a backdrop, we are raising our full year, 2026 revenue guidance to 101 million to 105 million. First, I'd like to begin this morning with a recap of the Dillon Technologies Distribution Agreement that we announced in April. Through this agreement, we acquired exclusive U.S. distribution rights to Dillon's Hemoblast Bellows product for high-performance hemostasis following certain surgical procedures. This agreement adds a highly complementary hemostatic technology to our portfolio and gives us entry into an estimated $2 billion global addressable market for hemostatic products. Hemoblasts are highly differentiated as the only hemostat containing collagen, human-derived thrombin, and bovine-derived chondroitin sulfate, which provides cohesion between the wound and surrounding tissue. It is indicated across a range of bleeding types, minimal, mild, and moderate, and requires no preparation prior to use. The addition of Hemoblast Bellows, together with our recent product launches, further broaden and differentiate our biologics portfolio, positioning us to better address the needs of surgeons and patients alike. As part of the agreement, we have hired Dylan's team of 21 sales professional. This is an addition to our own investments that we've been making in our commercial organization, including doubling the number of regional sales reps in the field in 2026. We still plan to add significant resources to our national accounts team, which will expand our ability to drive institutional adoption and scale across hospital systems and large practice groups. Together, this combined team will further extend the reach of not only Hemoblast Fellows, but our entire line of biologic solutions. There is significant opportunity to leverage each team's call points and drive our entire portfolio to its full commercial potential. To reflect the addition of Hemoblasts along with the growth of our base business, we are raising our full-year revenue guidance to be in the range of $101 million to $105 million. Moving over to our Companion Spine transaction, we were pleased to announce that in March that we received the final $10.7 million from the Companion Spine related to its purchase of our non-core COFLEX assets and Paradigm OUS businesses in December 2025. The total purchase price for the two divestitures was $21.4 million. The transactions have now been finalized. As mentioned previously, we use those proceeds to reduce our borrowings and strengthen our cash position. We reduced total indebtedness by $13.3 million in the first quarter of 2026, including a $10.4 million reduction in amounts outstanding under the company's revolving line of credit and a $2.8 million reduction in our term loan balance. More strategically, this transaction allows us to further sharpen our focus on our core high-margin biologics business, which is where our competitive differentiation and where our future growth lies. In terms of innovation, just a few weeks ago, we announced the commercial launch of Trivium Shaped, an extension of our Trivium Bone graph portfolio that comes in pre-shaped configurations designed to support handling, preparation, and placement across a range of surgical applications. Trivium is a composite allograft that combines cortical fibers, cancellous bone, and demineralized bone matrix into a single connected graft matrix. Trivium shape builds on the success of the Trivium sculptable format, which we launched in April 2025 by offering surgeons ready-to-use graft forms, including boats and strips, designed to enhance consistency and handling in the operating room. The introduction of the pre-shaped configurations represents a significant advancement in graft convenience and clinical utility, allowing surgeons to optimize surgical workflow while maintaining the exceptional performance characteristics of the Trivium platform. As we've noted previously, we internally produce solutions across all five major orthopedic categories, demineralized bone matrix, cellular allografts, synthetics, structural allografts, and growth factors. This is a key point of differentiation for us relative to our peers. Additionally, with our amnio and collagen product lines, we're also well positioned to grow in the surgical repair and wound care markets. Now with the addition of a hemostatic biologic, we're giving hospital systems a single partner who can meet most of their needs. This breath position is as a partner of choice in regenerative medicine, a position that has been further reinforced by the positive feedback we continue to receive from surgeons on these recent innovations. Building on these milestones, Accent Medical delivered solid first quarter results with revenue of $20.9 million. Strong prior year bolstered by royalties from our amnio business and proceeds from the CoFlex paradigm divestiture enabled us to significantly strengthen our balance sheet by reducing debt and strategically investing in our commercial enterprise. Now with recent and planned addition to our sales organization and an expanded product portfolio, we are well positioned to drive top line growth throughout 2026 and beyond. With that, I will turn the call over to Scott for a more detailed review of our financial results. Scott?

Thank you, Sean, and good morning, everyone. Total revenue for the first quarter of 2026 was $20.9 million compared to $32.9 million for the first quarter of 2025, or $23.9 million for the first quarter of 2025 on a pro forma basis excluding the revenue from the non-core products and businesses that we sold the companion spine and licensed revenue not repeating in 2026. Note that a reconciliation of actual to pro forma revenue results for each quarter of 2025 can be found on the company's website at www.extantmedical.com. With respect to the comparison on a pro forma basis, headwinds related to our amnio product revenue directly tied to the advanced wound care market were the main driver for the decline in 2026 revenue compared to the pro forma 2025 period. As Sean mentioned a moment ago, the Dillon Technologies License Agreement, together with contributions from new product introductions and the measured investments that we're making in our field sales force on both a regional and national basis, should drive accelerating biologics growth for the remainder of 2026 and beyond. Gross margin for the first quarter of 2026 was 57.3%. compared to 61.5% for the same period in 2025. The decrease is primarily attributable to the cessation of Q code license revenue from our amniotic membrane agreements that terminated at the end of 2025 due to changes in the reimbursement environment, partly offset by improvements in product mix. First quarter 2026 operating expenses were $14.9 million compared to $19.2 million for the first quarter of 2025. The decrease was primarily due to our sale of non-core coflex and cofix assets and international hardware business to Companion Spine in December 2025. General and administrative expenses were $6.3 million for the three months ended March 31, 2026, compared to $7.5 million for the same period in 2025. The decrease was primarily due to the divestiture of assets and businesses to Companion Spine in December of last year. Sales and marketing expenses were $18.2 million for the three months ended March 31, 2026, compared to $11.2 million for the same quarter last year. Approximately $2.5 million of the decrease resulted from the companion spying divestitures. The remaining decrease was primarily due to lower independent agent commissions of $0.4 million and $0.6 million in decrease in professional fees. Research and development expenses were $435,000 for the three months ended March 31st, 2026, essentially flat with $443,000 in the first quarter of 2025. Net loss for the first quarter of 2026 was $3.1 million or two cents per basic and diluted share compared to net income of $58,000 for the first quarter of 2025 or breakeven per share. Adjusted EBITDA for the fourth quarter of 2025 was lost $1.6 million compared to positive adjusted EBITDA of approximately $3 million for the same period in 2025. As of March 31st, 2026, we had $12.2 million of cash and cash equivalents, total indebtedness of $12.2 million, and availability under revolving credit facility of $11.8 million. This compares to $17.3 million of cash and cash equivalents, total indebtedness of $25.4 million, and availability under a revolving credit facility of $3.8 million as of December 31st, 2025. The reduction in total indebtedness was primarily due to a term loan payment of $2.8 million from some of the February 2026 proceeds from the companion spine transaction and and net repayments of $10.4 million on the revolving credit facility from cash and cash equivalents. The resulting increase in our availability under a revolving credit agreement from $3.8 million as of December 31, 2025 to $11.8 million as of March 31, 2026 is due to an effort to reduce interest expense by minimizing the outstanding balance on a revolving credit facility. That concludes the financial overview of Operator may now open the line for questions.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Your first question for today is from Chase Knickerbocker with Craig Hallam.

Good morning. Thanks for taking the questions. Maybe first, guys, just on Hemoblast, can you maybe just kind of give us an overview on kind of the relationships and capabilities this new sales force will be bringing over. You know, hemostatic agents have, you know, a couple of different use cases, obviously, from a specialty perspective. Maybe just speak to kind of where the volume has been, you know, in 2025. And then, you know, your opportunities for growth, which obviously will largely be spine focused, but just kind of where you see that going in 26 and beyond.

Yeah, great, great question. You know, one of the things about what made this a nice meet, or I guess you could say a really good opportunity for us is that today the Hemoblast, which is a very small business starting out of the gate, but most of their businesses in general surgery, And so for us, the idea that we could bring them into the spine world where it is the largest market within that hemostatic market. So it's something that we saw this as a real opportunity. Plus, from their end, their reach into other call points within the hospital where, for instance, our collagen products and our amnio products could be used more readily, as well as the rest of our portfolio. And so their call point generally has been general surgery, trauma. They've also done some really nice work in some other areas. For instance, they just got clearance. I say they now can go into urology. And so that's another opportunity for us that we normally wouldn't have had. But it is an area that, quite frankly, our collagen and our amnioproducts can be used. So we're really excited about their focus and what they do. And the idea that we could actually bring them into the spine world is opening up all kinds of opportunities for us.

And so will the expectation kind of be, Sean, that they'll kind of have access to the entire bag? Or how do you kind of expect to kind of segment things? And then just secondly, Scott, maybe just talk about kind of how you expect this to impact expenses, maybe with a little bit of a greater kind of detail. You know, largely sales and marketing line, I would imagine a couple million a quarter, but just kind of give us some thoughts there. Thanks.

Yeah, to give you a sense, out of the gates, what we're trying to do is first and foremost, make sure they continue to hit their Hemoblast number. That is a commitment we made to the Dillon organization. So we want to make sure that they stay focused, A, in hitting the number that they're supposed to hit. But then also, B, what we're initially going to do is give them those product lines that like our collagen product line, like our Amnio product line, that are nice complementary products to what they do already. And then eventually they'll get the entire bag as they become more comfortable. And we are living up to, or not living up to, but just making sure that we're doing first things first. And so initially giving them just the Amnio collagen lines, and then ultimately they will have our full bag. But that's going to be a little bit down the path here.

And then, Sean, I'll jump in on the expense impact. I think the way to think about this is, you know, as we mentioned, we're bringing on 21 employees. These, for the most part, are generally seasoned reps. So when you think about the compensation associated with such an individual, and then you would add to that travel and marketing expense to the tune of $1.5 million annually per you're probably looking at at least $2.5 million quarterly in way of additional sales and marketing expense.

Your next question for today is from Ryan Zimmerman with BTIG.

Hi, Sean, Scott. This is Izzy on for Ryan. Thank you for taking the question. Hi, Izzy. How are you? Doing well. Thank you. I was hoping you guys could spend some time talking about what you're seeing in the orthobiologic segment. I'm mostly curious about where your underlying unit growth is and how that's tracking relative to the broader market.

Yeah. Where I would say that our broader you know, where the unit growth is coming, is coming again from these new products that we've introduced. So when you think about like our OsteoFactor Pro, which is a growth factor product, that's done very, very well, as has our Trivium product lines are all really starting to take off just like we expected they would. And if we've seen any little bit of like a little bit of weakness that we, well, and it has a little bit more to do with kind of how some of this is also OEM based and OEM is kind of a lumpy way in which we see our business going. It's been the stem cell side. So it's still a really great product. It's still one of our largest product lines, but that's an area that we've done a fair amount in the OEM world. And as I mentioned, we're seeing It was soft in the first quarter. And so that's one, though, that we expect throughout the year that will do very well. But our growth has really been driving by our advanced biologic sales, so including collagen. And we expect that the AMEO businesses, both in the surgical and in the advanced wound care side, should start to see some pickup again in the second half of this year. I think you're seeing it with other companies that are out there today that had some really difficult first quarter numbers in the advanced wound care side. Happily, that's not a lot of what we do. It is something, though, that is an OEM base for us. So we do expect that, though, to hopefully settle and be better in the second half of this year.

Got it, that's helpful. And then Scott, I was hoping you could spend some time just walking through the gross margin cadence for the remainder of the year. I believe last quarter you were expecting it to be somewhere in the low 60s. So we could talk about if that's still the right range and what we could see for 2Q through 4Q. Thanks for taking the question.

Yeah, low 60s is still the way to look at it. We deviated a little bit from that here in Q1. just for some additional excess and obsolete expense, and then a little bit for product mix. But we expect that to bounce back in Q3 through Q4.

Your next question for today is from Naz Rahman with Maxim Group.

Good morning, everyone. Congrats on the progress and thanks for taking my questions. I only have two. The first one is, I understand you only had Hemoblast for a little while in your bag. Could you give some comments or color on what kind of feedback you receive from physicians or institutes regarding the product? And my second question is on Trivium, the Trivium shape. Could you kind of talk about the opportunity there and how utilization maybe a little different from your prior Trivium product and what the growth potential there is? Thanks.

Sure. Starting off with Hemoglass. So first of all, Hemoglass is a terrific product. When you compare it to all the other hemostatic agents that are out there today, it really goes across the entire hemostatic because certain product lines are very good in certain cases. This is one that has broad global use as well as just, again, it basically sells itself because of the way the product performs. So it's an outstanding product. So with that, it's one that, quite frankly, because they're a really small and unknown company and the companies that they compete against are the J&Js, the Baxters, the Bards, it's not really well known. So the idea that we can then put it into our 500-plus independent agents' hands In the spine side, as well as in other orthopedic cases, we think that this thing could have a lot of run for us, certainly in where we are. Where we see a really great opportunity is that their reach into other parts of the hospital with these 21 salespeople are areas that we haven't touched and that we really feel good about where our other products can start playing. So that's really on the hemostatic side. Now, when we think about tritium molded, What you're looking at is that if you think about what we do, there's three main product lines that we have in our base BVM offering. It's really our Osteo Select, our Osteo Sponge, and it's our Three to Men. So the Osteo Select and Three to Men, those have been two of our three. Those three were the main workhorses for our business. What we've done with our trivium, both the base trivium and the trivium shake, is really giving a better solution or a higher end or more advanced solution to what that osteoselect, which is basically a 510K putty. We've now really upgraded that to what you look at in what we do with trivium. And then the trivium shake, is really something that would be an answer to what we do with our three-to-min product line. So, again, a more advanced and better product, or at least a product that performs better and one that, quite frankly, we're really, really excited about because for all the reasons, the handling to the, you know, all the pieces that's made this a really terrific product line for us writ large. So hopefully that answers your question.

It does. Thanks for the call, Eric.

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