On this page of StockholderLetter.com we present the latest annual shareholder letter from Xtant Medical Holdings, Inc. — ticker symbol XTNT. Reading current and past XTNT letters to shareholders can bring important insights into the investment thesis.
XTANT MEDICAL HOLDINGS, INC.
2023 ANNUAL REPORT
FORM 10-K

664 Cruiser Lane
Belgrade, Montana 59714
(406) 388-0480

Transformation to Self-Sustainability:
2023 was a transformative year for Xtant Medical. It was the culmination of a multi-year turnaround effort
in which we established what we believe is now a robust platform for future growth. With the foundation
of exceptional market access and a nationwide distribution network, we have created a scalable business
model that resulted in record revenue in 2023 of $91.3 million. From a profitability perspective, Xtant
generated positive adjusted EBITDA for the last three quarters of 2023.
Additionally, Xtant acquired three separate businesses, which have helped provide us with a more robust
product offering, significantly more IDN agreements, and more than double the number of independent
agents carrying our products.
In summary, 2023 was a transformative year:
x
x
x
x
x
We grew revenue by over 55%, with organic growth of 17%*.
We acquired three separate businesses.
Operationally, we improved our clean room capacity by over 50%.
We dramatically improved our gross margins by 540 basis points through improved operational
efficiencies and an improved mix of products.
We finished the year with three straight quarters of positive adjusted EBITDA.
Growth Pillars:
In 2020, we established our long-term plans to build a healthy, sustainable business, and they revolved
around four pillars for growth:
1)
2)
3)
4)
New product introductions
Expand contract access and broader distribution reach
Take advantage of adjacent market opportunities
Strategic acquisitions
Starting with new products. Like every healthy, robust organization, we continually innovate with a deep
pipeline of new products. During our turnaround, we expanded our biologics product offering from two
product categories to five. These new products consist of viable bone matrix, growth factor, and synthetics.
When added with our legacy demineralized bone graft and allograft products, we become the only major
supplier that offers all orthobiologics in the $2.4 billion U.S. orthobiologics market. Additionally, on the
hardware side, we have several exciting new opportunities acquired through our Surgalign and Coflex
acquisitions.
Our second pillar of growth is expanding access to IDNs, and our distribution reach through more
independent agents carrying our products. We have come a long way since 2020. At that time, we had
roughly 350 IDN agreements and about 250 independent agents. Today, we have over 450 IDN
agreements and over 650 independent agents leveraging our agreements and selling Xtant products.
Turning to our third pillar of leveraging adjacent markets, we continue to build a presence in other markets
to drive private label sales, enabling us to diversify and expand our revenue opportunities beyond our core
spine market. We have gained traction within the foot and ankle, trauma, and orthopedic implant markets,
and we remain focused on capitalizing within these various markets by leveraging our expanded capacity.
Our final pillar focuses on achieving growth inorganically through targeted acquisitions. We are seeking to
become an integrator of enabling technologies.
We are targeting companies that are either
undercapitalized or are sub-scale today. As we have with the prior Coflex and Surgalign acquisitions, our
focus on acquisition targets is based upon three key characteristics:
x
x
x
First   Capabilities: Businesses that help complete Xtant   s offering, particularly in regenerative
biologics and filling gaps in our spine fixation or motion preservation offering.
Second - Capacity: Targets that can expand our longer-term biologics production demand.
Third - Cash Flows: Businesses that are profitable today or can become profitable through cost or
margin synergies.
We believe that making sound, targeted, and strategic acquisitions that fit within our stringent criteria will
take us one step closer to achieving our long-term goals. We believe our unique platform and robust
distribution network will provide future companies that we acquire the ability to take advantage of being
part of a fast-growing company that we believe will allow the entrepreneurs and other owners of those
companies the ability to win when they are purchased and then win even bigger over time as Xtant
continues to grow.
2024, the Year of Self-Sustainability:
After we announced our fourth quarter 2023 results, we established an initial full-year 2024 revenue range
of $112 million to $116 million. Then, after our first quarter of 2024, we moved up our guidance from
$116 million to $120 million. This guidance range represents annual revenue growth of 27% to 32%
compared to 2023. We anticipate that our growth will accelerate, starting in the second quarter of 2024
and even more so in the second half of 2024. This is driven by a stabilized supply environment in our stem
cell business that was adversely affected by the temporary market shortage in the second half of 2023 and
the first quarter of 2024 and re-vitalizing the Surgalign supply chain. More specifically, as Surgalign went
through its financial troubles and eventual bankruptcy, important vendors naturally pulled back from
producing products for fear of not getting paid. Some of those supply issues impacted our fourth quarter
2023 results, and as we noted in our last earnings call, we saw and expect to continue to see some softness
in key product areas such as Coflex and Cervalign for the first half of 2024.
Moving forward, 2024 is focused on self-sustainability. Our goal is to be self-sustaining in our supply chain
and to be less reliant on production outside our control. We believe this self-reliance will allow us to be a
larger and more diverse producer of biologics. Moreover, producing our own products should dramatically
improve our margin profile, coupled with an expanded product line that brings additional transformative
treatment options to a large and growing patient population. Most importantly, our progress in 2023
positions us well on a path to becoming operating cash flow positive, which we expect for the fourth quarter
of 2024.
Summary:
Overall, I'm very pleased with the progress we have achieved in 2023. In short, we transformed the
business. For 2024, we have laid out a compelling revenue growth guidance range of between 27% - 32%
over 2023, with anticipated ever-increasing momentum as the year progresses. Driven by our desire to be
   Self-Sustaining,    Xtant has taken over the supply chain for internally produced products and improved
vendor management of the acquired Surgalign products.
In closing, I want to reiterate our mission: "honoring the gift of donation by allowing our patients to live as
full and complete a life as possible." I appreciate the dedication of our valuable employees. Without them,
our success and achievements would not be possible.
Thank you for your continued support.
Sean E. Browne
President and Chief Executive Officer

This metric is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the
most comparable GAAP measure can be found in the Investor section of our corporate website at
www.xtantmedical.com.
 • shareholder letter icon 6/10/2024 Letter Continued (Full PDF)
 • stockholder letter icon 6/7/2023 XTNT Stockholder Letter
 • stockholder letter icon More "Medical Instruments & Supplies" Category Stockholder Letters
 • Benford's Law Stocks icon XTNT Benford's Law Stock Score = 89


XTNT Shareholder/Stockholder Letter Transcript:

XTANT MEDICAL HOLDINGS, INC.
2023 ANNUAL REPORT
FORM 10-K







664 Cruiser Lane
Belgrade, Montana 59714
(406) 388-0480

Transformation to Self-Sustainability:
2023 was a transformative year for Xtant Medical. It was the culmination of a multi-year turnaround effort
in which we established what we believe is now a robust platform for future growth. With the foundation
of exceptional market access and a nationwide distribution network, we have created a scalable business
model that resulted in record revenue in 2023 of $91.3 million. From a profitability perspective, Xtant
generated positive adjusted EBITDA for the last three quarters of 2023.
Additionally, Xtant acquired three separate businesses, which have helped provide us with a more robust
product offering, significantly more IDN agreements, and more than double the number of independent
agents carrying our products.
In summary, 2023 was a transformative year:
x
x
x
x
x
We grew revenue by over 55%, with organic growth of 17%*.
We acquired three separate businesses.
Operationally, we improved our clean room capacity by over 50%.
We dramatically improved our gross margins by 540 basis points through improved operational
efficiencies and an improved mix of products.
We finished the year with three straight quarters of positive adjusted EBITDA.
Growth Pillars:
In 2020, we established our long-term plans to build a healthy, sustainable business, and they revolved
around four pillars for growth:
1)
2)
3)
4)
New product introductions
Expand contract access and broader distribution reach
Take advantage of adjacent market opportunities
Strategic acquisitions
Starting with new products. Like every healthy, robust organization, we continually innovate with a deep
pipeline of new products. During our turnaround, we expanded our biologics product offering from two
product categories to five. These new products consist of viable bone matrix, growth factor, and synthetics.
When added with our legacy demineralized bone graft and allograft products, we become the only major
supplier that offers all orthobiologics in the $2.4 billion U.S. orthobiologics market. Additionally, on the
hardware side, we have several exciting new opportunities acquired through our Surgalign and Coflex
acquisitions.
Our second pillar of growth is expanding access to IDNs, and our distribution reach through more
independent agents carrying our products. We have come a long way since 2020. At that time, we had
roughly 350 IDN agreements and about 250 independent agents. Today, we have over 450 IDN
agreements and over 650 independent agents leveraging our agreements and selling Xtant products.
Turning to our third pillar of leveraging adjacent markets, we continue to build a presence in other markets
to drive private label sales, enabling us to diversify and expand our revenue opportunities beyond our core

spine market. We have gained traction within the foot and ankle, trauma, and orthopedic implant markets,
and we remain focused on capitalizing within these various markets by leveraging our expanded capacity.
Our final pillar focuses on achieving growth inorganically through targeted acquisitions. We are seeking to
become an integrator of enabling technologies.
We are targeting companies that are either
undercapitalized or are sub-scale today. As we have with the prior Coflex and Surgalign acquisitions, our
focus on acquisition targets is based upon three key characteristics:
x
x
x
First   Capabilities: Businesses that help complete Xtant   s offering, particularly in regenerative
biologics and filling gaps in our spine fixation or motion preservation offering.
Second - Capacity: Targets that can expand our longer-term biologics production demand.
Third - Cash Flows: Businesses that are profitable today or can become profitable through cost or
margin synergies.
We believe that making sound, targeted, and strategic acquisitions that fit within our stringent criteria will
take us one step closer to achieving our long-term goals. We believe our unique platform and robust
distribution network will provide future companies that we acquire the ability to take advantage of being
part of a fast-growing company that we believe will allow the entrepreneurs and other owners of those
companies the ability to win when they are purchased and then win even bigger over time as Xtant
continues to grow.
2024, the Year of Self-Sustainability:
After we announced our fourth quarter 2023 results, we established an initial full-year 2024 revenue range
of $112 million to $116 million. Then, after our first quarter of 2024, we moved up our guidance from
$116 million to $120 million. This guidance range represents annual revenue growth of 27% to 32%
compared to 2023. We anticipate that our growth will accelerate, starting in the second quarter of 2024
and even more so in the second half of 2024. This is driven by a stabilized supply environment in our stem
cell business that was adversely affected by the temporary market shortage in the second half of 2023 and
the first quarter of 2024 and re-vitalizing the Surgalign supply chain. More specifically, as Surgalign went
through its financial troubles and eventual bankruptcy, important vendors naturally pulled back from
producing products for fear of not getting paid. Some of those supply issues impacted our fourth quarter
2023 results, and as we noted in our last earnings call, we saw and expect to continue to see some softness
in key product areas such as Coflex and Cervalign for the first half of 2024.
Moving forward, 2024 is focused on self-sustainability. Our goal is to be self-sustaining in our supply chain
and to be less reliant on production outside our control. We believe this self-reliance will allow us to be a
larger and more diverse producer of biologics. Moreover, producing our own products should dramatically
improve our margin profile, coupled with an expanded product line that brings additional transformative
treatment options to a large and growing patient population. Most importantly, our progress in 2023
positions us well on a path to becoming operating cash flow positive, which we expect for the fourth quarter
of 2024.
Summary:
Overall, I'm very pleased with the progress we have achieved in 2023. In short, we transformed the
business. For 2024, we have laid out a compelling revenue growth guidance range of between 27% - 32%
over 2023, with anticipated ever-increasing momentum as the year progresses. Driven by our desire to be
   Self-Sustaining,    Xtant has taken over the supply chain for internally produced products and improved
vendor management of the acquired Surgalign products.

In closing, I want to reiterate our mission: "honoring the gift of donation by allowing our patients to live as
full and complete a life as possible." I appreciate the dedication of our valuable employees. Without them,
our success and achievements would not be possible.
Thank you for your continued support.
Sean E. Browne
President and Chief Executive Officer

This metric is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the
most comparable GAAP measure can be found in the Investor section of our corporate website at
www.xtantmedical.com.



shareholder letter icon 6/10/2024 Letter Continued (Full PDF)
 

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