Xtant Medical (XTNT) Q2 2026 Earnings Call Transcript

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DATE

Tuesday, Aug. 11, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer - Sean Browne
• Chief Financial Officer - Scott Neils
• Investor Relations - Kevin Gardner

TAKEAWAYS

• Total Revenue -- $23 million, representing a decline from $35.4 million due to the sale of noncore assets and the termination of high-margin license revenue at the end of 2025.
• Pro Forma Revenue -- $23 million, compared to $24.8 million for the second quarter of 2025 on a pro forma basis, reflecting headwinds in the amniotic product line.
• HEMOBLAST Revenue -- $1.5 million, recognized primarily on a net basis during the quarter as customers remained on Dilon customer agreements rather than transitioning to the company's contracts.
• Full Year 2026 Guidance -- $99 million to $103 million, reduced from the previous range of $101 million to $105 million due to lower second quarter biologics sales and advanced wound care market pressures.
• Gross Margin -- 57.9%, a decrease from 68.6% in the prior-year period primarily resulting from the cessation of Q-Code license revenue and reduced production efficiencies.
• Operating Expenses -- $22.5 million, an increase from $19.7 million driven by a $5 million exclusivity fee paid to Dilon Technologies.
• Net Loss -- $9.4 million, or $0.07 per basic and diluted share, compared to net income of $3.6 million in the year-ago quarter.
• Adjusted EBITDA -- Loss of $2.7 million, compared to positive adjusted EBITDA of $6.9 million in the second quarter of 2025.
• Cash and Liquidity -- $9.9 million in cash and cash equivalents and $0.7 million in revolving credit facility availability as of June 30, 2026.
• Total Indebtedness -- $23 million, representing a reduction from $25.4 million as of Dec. 31, 2025.
• Sales Force Expansion -- 17 sales professionals and two regional managers were added from Dilon Technologies and integrated into the company's commercial organization.
• Commercial Footprint -- Over 25 reps and three national accounts managers, an increase from four regional vice presidents in the prior year.
• HEMOBLAST Transactional Volume -- Over $1 million per month on a gross basis, which management expects as customers transition to the company's purchase orders.
• Hemostatic Market Opportunity -- $1 billion global addressable market for hemostatic products like HEMOBLAST Bellows.
• Adjacent Market TAM -- $6.5 billion for chronic wound care and surgical repair, which the company is targeting with its expanded biologics and amniotic product lines.
• Sales and Marketing Expenses -- $10.4 million, including a $1.2 million increase in compensation expense related to higher headcount.
• G&A Expenses -- $6.4 million, a decrease from $7.5 million resulting from the divestiture of noncore assets to Companion Spine.
• R&D Expenses -- $695,000, an increase from $566,000 in the prior-year period.
• Independent Agent Network -- 650 total agreements, with management focusing on increasing productivity among approximately 400 transactional agents.
• Inventory Charges -- Increased charges for excess and obsolete inventory contributed to the year-over-year gross margin decline.

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RISKS

• Browne stated, "one of the big areas has been like our old line like our OsteoSelect, OsteoSponge, 3Demin product lines... and so those have been down more than we expected," noting unanticipated softness in legacy biologics categories.
• Browne stated, "ongoing headwinds related to our amnio product line directly tied to the advanced wound care market that are expected to persist through the back half of the year," acknowledging sustained pressure on amniotic membrane revenue.

SUMMARY

Management for Xtant Medical Holdings, Inc. (NYSEMKT:XTNT) reported that second quarter results were impacted by the integration of the Dilon Technologies sales force and the transition of the HEMOBLAST Bellows product line to company-specific contracts. The company is pivoting toward a gross revenue recognition model for its hemostasis products while addressing competitive and reimbursement challenges in its amniotic membrane business. Strategic focus remains on leveraging the expanded commercial organization to drive adoption of the recently launched Trivium Shaped allograft and expanding into adjacent surgical markets.

• CEO Browne noted that the training and integration of new sales reps "consumed a significant amount of our time and resources and played a role in our soft Q2 sales."
• CFO Neils reported that approximately $600,000 to $700,000 in additional reported revenue was missed during the quarter because certain transactions were ordered through Dilon rather than directly through the company.
• Management reported that the specialty reps from Dilon share "very few overlapping call points" with the legacy commercial organization, providing a foundation for cross-selling biologics into non-orthopedic areas.
• CEO Browne stated the company is "uniquely positioned to be a partner of choice" for hospitals by offering a broad regenerative medicine portfolio and in-house manufacturing.
• The company transitioned purchase orders for HEMOBLAST to its own system after the end of the second quarter, which management expects will support gross revenue recognition moving forward.
• Management indicated that the Cortera Spinal Fixation System drove higher-than-anticipated hardware revenue, partially offsetting the softness seen in the biologics segment.

INDUSTRY GLOSSARY

• HEMOBLAST Bellows: A hemostatic technology used for managing bleeding following surgical procedures.
• Trivium Shaped: A pre-shaped demineralized bone matrix allograft available in boats and strips for surgical bone grafting.
• Q-Code: Specific coding used by the Centers for Medicare & Medicaid Services for reimbursement of medical supplies and services.
• DBM: Demineralized bone matrix, a bone graft substitute that provides a natural structural support for cellular growth.
• Amnio: Tissue derived from the amniotic membrane used in regenerative medicine for wound care and surgical applications.
• Allograft: Human bone or tissue transplanted from one individual to another.
• Cortera: A spinal fixation system used in orthopedic and neurological surgeries.
• Hemostasis: The physiological process that stops bleeding at the site of a surgical incision or injury.

Full Conference Call Transcript

Operator: Good morning, everyone, and welcome to the Xtant Medical Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to your host, Kevin Gardner of LifeSci Advisors. Please go ahead.

Kevin Gardner: Thank you, operator, and welcome to Xtant Medical's Second Quarter 2026 Financial Results Call. Joining me today are Sean Browne, President and Chief Executive Officer; and Scott Neils, 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 Xtant'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 Factors section of the company's annual report on 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 8-Ks that we filed 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 of this call, it was held and recorded on August 11, 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 Browne, CEO. Sean?

Sean Browne: Thank you, Kevin, and good morning, everyone. Thank you for joining our second quarter update call. As has been our practice, I will 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. Okay. During the second quarter, we achieved meaningful progress across several aspects of our business. We integrated the new Dilon sales reps into our own commercial organization, and we addressed a significant unmet need among surgeons with the launch of Trivium Shaped.

While our reported revenue continues to face challenging year-over-year comps due to the sale of certain assets and businesses to Companion Spine last year as well as the cessation of certain license revenue due to changes in reimbursements that took effect January 1, we are building a solid, resilient foundation that we believe will support sustained, predictable and profitable growth in the future. Now turning to the Dilon Technologies distribution agreement that we announced in April. Recall that through this agreement, we acquired exclusive U.S. distribution rights to Dilon'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 $1 billion global addressable market for hemostatic products. As part of that agreement, we hired Dilon's U.S. team of 17 salespeople and 2 of their regional managers that have been integrated into our own commercial organization and are being trained on our entire portfolio. This is in addition to our own investments that we have been making in our commercial organization, including, as we stated previously, doubling the number of regional sales reps in the field.

In 2026, we've been adding significant resources to our marketing and national accounts teams, and these professionals have had an immediate impact driving institutional adoption of our portfolio at scale across hospital systems and large practice groups. Now as a side note, the training and integration of these new reps consumed a significant amount of our time and resources and played a role in our soft Q2 sales. However, I'm more than excited than ever about Xtant's future with a significantly larger commercial team.

Now as for HEMOBLAST, HEMOBLAST orders during the quarter were in line with our expectations, but our recognition of this revenue from sales is lower than we expected since we didn't transition purchase orders for HEMOBLAST to Xtant until after the end of the second quarter, and our transition of certain customers to Xtant contracts remains ongoing. Accordingly, we are unable to fully recognize the revenue on orders submitted to Dilon during the quarter. As we look out into the remainder of the year, we see significant sales synergies as our legacy commercial organization and the new specialty reps share very few overlapping call points in the field.

As the specialty reps continue to get comfortable selling our other product lines, we anticipate that this will translate into accelerating biologics growth in Q3 and beyond. But at this point, while we are very pleased with the speed with which they are coming up the learning curve, we see significant untapped potential that we expect to penetrate once these additional sales resources are fully deployed. We view the newly integrated sales force as a foundational part of our future commercial strategy. Now turning to Trivium Shaped. We are seeing strong early sales traction since the product's launch in May, joining CollagenX and OsteoFactor Pro as recent product launches that are key drivers to our overall biologics growth.

Trivium Shaped is an extension of our Trvium bone graft portfolio available 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 Shaped builds on the Trivium sculptable format, which we launched in 2025 by offering surgeons ready-to-use graft forms, including boats and strips that are designed to improve consistency and handling in the operating room. Surgeons tell us that these pre-shape formats reduce preparation time and support more predictable placement, and that feedback is translating directly into the sales momentum we are seeing since launch.

Innovations such as Trivium Shaped, a demineralized bone matrix, together with our amnio and collagen product lines also position us to move into adjacent high-value markets, including chronic wound care and surgical repair, a combined TAM of approximately $6.5 billion. Now with the addition of hemostatic biologic, we gained access to an additional $1 billion of TAM, and we are uniquely positioned to be a partner of choice that can address a very broad range of surgeon and hospital needs in regenerative medicine. We believe that breadth of our portfolio, together with the quality control that comes with in-house manufacturing sets us apart from nearly everyone else in the field.

Now from a guidance perspective, reflecting lower-than-expected biologics revenue in the second quarter as well as the ongoing headwinds related to our amnio product line directly tied to the advanced wound care market that are expected to persist through the back half of the year, we are today modestly reducing our full year revenue guidance to a range of $99 million to $103 million, and that was from $101 million to $105 million previously. Notwithstanding this change, however, we continue to believe that our enhanced commercial presence and expanded product portfolio position us well to drive top line growth throughout 2026 and beyond.

With that, I'll turn the call over to Scott for a more detailed review of our financial results. Scott?

Scott Neils: Thank you, Sean, and good morning, everyone. Total revenue for the second quarter of 2026 was $23 million compared to $35.4 million for the second quarter of 2025 or $24.8 million for the second quarter of 2025 on a pro forma basis, excluding the revenue from the noncore products and businesses that we sold to Companion Spine and nonrecurring license revenue. 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.xtantmedical.com.

With respect to the Q2 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 biologics revenue compared to the pro forma 2025 period, although this was partially offset by approximately $1.5 million of HEMOBLAST sales as well as higher-than-anticipated hardware revenue in the current year period, driven by sales of our Cortera Spinal Fixation System. Our second quarter revenue was also impacted by the time our legacy sales team spent getting up to speed on HEMOBLAST Bellows during the quarter, which created a modest additional headwind that we expect to abate in the second half of the year.

Staying on the topic of HEMOBLAST, the $1.5 million of revenue that we recognized in the second quarter was accounted for primarily on a net basis as it was shipped directly to customer sites from the Dilon Technologies facility under Dilon's customer agreements. We previously anticipated that significantly more of these transactions would be ordered from and shipped by Xtant, which would have increased reported revenue by approximately $600,000 to $700,000. Going forward, we believe that substantially all HEMOBLAST Bellows sales will be processed through our own customer agreements and distribution network and will therefore be recognized on a gross basis.

As Sean mentioned a moment ago, new product introduction and the new measured investments we've made in our field sales force on both the regional and national basis should drive accelerating biologics growth on a sequential basis for the remainder of 2026 and beyond. Gross margin for the second quarter of 2026 was 57.9% compared to 68.6% 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, together with reduced production efficiencies and increased charges for excess obsolete inventory, partially offset by improvements in production mix.

Second quarter 2026 operating expenses were $22.5 million compared to $19.7 million for the second quarter of 2025. The increase was primarily due to a $5 million exclusivity fee paid to Dilon Technologies in connection with our distribution agreement, which is recorded as an operating expense partially offset by lower general and administrative and sales and marketing expenses following the sale of our noncore Coflex and CoFix assets and international hardware businesses to Companion Spine in December 2025. General and administrative expenses were $6.4 million for the 3 months ended June 30, 2026, compared to $7.5 million for the same period in 2025.

The decrease was driven primarily by the divestiture of assets and businesses to Companion Spine in December of last year. Sales and marketing expenses were $10.4 million for the 3 months ended June 30, 2026, compared to $11.6 million for the same quarter last year. Approximately $2.4 million of the decrease resulted from the Companion Spine divestitures. The remaining change reflects $1.2 million of increased compensation expense related to headcount, a $0.3 million increase in independent agent commissions resulting from revenue mix and a $0.3 million increase in travel-related expenses, partially offset by a $0.9 million reduction in consulting fees.

Research and development expenses were $695,000 for the 3 months ended June 30, 2026, an increase from $566,000 in the second quarter of 2025. Net loss for the second quarter of 2026 was $9.4 million or $0.07 per basic and diluted share compared to net income of $3.6 million for the second quarter of 2025 or $0.03 per basic share and $0.02 per diluted share. Adjusted EBITDA for the second quarter of 2026 was a loss of $2.7 million compared to positive adjusted EBITDA of approximately $6.9 million for the second quarter of 2025.

As of June 30, 2026, we had $9.9 million of cash and cash equivalents, total indebtedness of $23 million and availability under revolving credit facility of $0.7 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 31, 2025. That concludes the financial overview. Operator, you may now open the line for questions.

Operator: [Operator Instructions] Your first question is coming from Chase Knickerbocker with Craig-Hallum.

Unknown Analyst: This is Jake on for Chase. Starting off, I'm just wondering, can you peel apart the layers of orthobiologics for us, please? What's kind of underperforming relative to expectations that you guys had earlier in the year when guidance was initially issued?

Sean Browne: Scott, I'll start this and then if you want to add any color to it. I'd say there's a couple of key areas. One of the big areas has been like our old line like our OsteoSelect, OsteoSponge, 3Demin product lines, which have been the workhorses of our product line, and they're older product lines. And so those have been down more than we expected. The other area too that's been down, of course, has been the Amnio side, which we mentioned, which has been due and was somewhat expected. We did think that they would start to see green shoots of growth in that world in the Amnio world.

But those would be the key areas that I would say that we have seen much more softness than we originally expected. Scott, I don't know if you want to add anything to that.

Scott Neils: No, I think you covered it with those two, Sean.

Unknown Analyst: And then maybe just for my follow-up, turning to HEMOBLAST. Could you further talk about the cross-selling opportunities that are presenting themselves from the addition of the reps associated with HEMOBLAST? And then what does your guidance assume for HEMOBLAST from this year? And how does that compare to your expectations upon the acquisition?

Sean Browne: Okay. So I'll start off with where do we see the synergies of these guys. First and foremost, so this is a group that when you look at the hemostasis business, they're in areas that we're typically not in. However, there are products -- we have products that fit perfectly within what they do, specifically our CollagenX products as well as our Amnio products. And so at a minimum, we've got these guys now carrying these products into these other areas that are not -- that are really non-orthobiologics in their normal space. Now Additionally, our current HEMOBLAST guys do have some business within the spine world.

The spine world actually turns out to be a very, very good market for the hemostasis world. And so we do have some new independent agents that have been tied into that. However, one of the big things that we see with this group is that they are going to help us extend our reach not only with what we can do in way of managing our current independent agent network, which even though we've doubled the size of our sales force, the core Xtant group went from 4 guys last year to we have roughly 8 people selling it on our core side.

We now have 17 more people actually having it in their bag and carrying and managing some of our smaller, if not even guys that aren't doing that much business with our independent agent network. So we see this as a great extension for us because the other piece of this, too, is that they have really great relationships within the -- not only in these areas outside the hospital or outside of where we normally go, but they also have a pretty strong relationship within the materials management world, which again is certainly something that we've not had in years past.

And so when you have a portfolio, a biologics portfolio as broad as ours is, we want to make sure that the hospital knows that we're not just a spine company that we can actually touch several other areas within a hospital. And so this group is really a nice little addition to us as we start to get our name out and make sure that at least as hospitals go we become a much bigger player, at least especially as you start looking at as contracts start coming up and other things like that, we become somebody that they look to as potentially that one-stop shop. So that's how I would answer that.

As for the HEMOBLAST guidance, what I'd like to do on that is maybe -- Scott, I think what I'd like to do is just kick the can a little bit or kick the ball on the -- and maybe I'll let you comment on that, Scott, if that doesn't make sense. But I'd rather -- I feel a lot better knowing that we had a lot more of that product going through our own Xtant POs versus the Dilon.

And again, a lot of this is just the transition of these large, large hospital systems, hospital systems that, quite frankly, before we got in with HEMOBLAST/Dilon, we weren't in, places like Cleveland Clinic and Mass General and a number of really, really big institutions. So these are reahemus to get into. And so we're just thrilled that we're getting some business, and we're hoping to pull through other contracts that go along with that. Scott, I'll let you add any color to that.

Scott Neils: I think what I'd add to that is we haven't backed off of our expectation around transactional volume, which would be over $1 million per month on a gross basis. But I think what you're getting at, Sean, is the extent to which we're able to fully recognize that really depends on the extent to which we're able to ship all that. So we've made considerable progress towards that end, but we've left a little bit of a buffer to accommodate anything that would continue to ship out of Dilon during the course of Q3.

Operator: Your next question is coming from Naz Rahman with Maxim Group.

Nazibur Rahman: I just have a couple. Now regarding the Dilon sales force and just your overall sales force, exactly when in the quarter did they start or restart promoting products following training? And also, I know you've talked a little bit about expanding their bag. But in terms of their additional products in the bag, did you give them access to, I guess, all of Xtant prior products outside of HEMOBLAST? Or was it just a limited few products, like you said, CollagenX and Amnio? Or are you going to like roll that out to the sales force over time?

Sean Browne: Yes. Great question because that timing is important. So we closed the deal on April, I guess, it was 13 is the official announcement of the date. So right as the quarter got going. So in the first couple of weeks, it was literally just the integration of these guys into our payroll system, our human resources elements, all those things. And then we quickly put in their bag our CollagenX and our Amnio products. And those do take some time to understand and explain how they can fit into the different worlds. Like for instance, we've got a really nice business within the OB/GYN world. How does an Amnio product fit into that, right? And it does.

It's got a really nice place in it. And so we spent a good part of the first, let's say -- actually, almost the entirety of the quarter, just getting them up and comfortable with those 2 product lines. Then at the flip of the -- after -- really after June, we then started giving them the entire bag. And so they are now, as we speak, coming up to speed on all of our orthobiologics. And at the same time, we're now starting to give to them this group of 17, some of our lesser covered independent agents that are part of our world today. We have some 650 agreements, right?

However, we do a lot of business with the top 200 to, say, 250, that leaves another 400 that are out there that are transactional at best. And so part of what we want to do is actually start getting touches to those other guys. And so that's what the 17 is now being tasked with. And so they're also, at the same time, getting comfortable with our orthobiologics product lines. So it's a work in progress.

And as you can see, just as I lay out for you, you can see where organizationally, we, in some respects, took a step back to sharpen the saw, so to speak, where you're saying, okay, these 17 people are really, really going to help us as we move forward. However, it's going to take some time to train. And so we lost a little bit of our sales momentum that was going into the second quarter because we were spending time working with these guys on a regional basis and also getting the word out about HEMOBLAST. So yes, so there was -- there has been a fair amount of time and energy devoted to bring this group up.

But I think in the long run, this is going to be a huge win for the business overall. And so if you think about, again, our commercial footprint from a year ago to where we are today, it's almost like night and day. I think we have 4 regional Vice Presidents, a national accounts guy and whatever, just a very small commercial footprint a year ago. Today, that number is over 25 reps and a couple of regional managers, and we got 3 and soon to have 4 national accounts people. So our foot is fully on the accelerator when it comes to our commercial presence.

And I think you'll start to see that here in the second half start to take hold.

Operator: There appear to be no further questions in queue. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

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