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Xtant Medical Holdings, Inc. (XTNT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered 18% YoY revenue growth to $32.9M, positive GAAP net income ($0.06M) and adjusted EBITDA of $3.0M; gross margin was 61.5% versus 62.1% LY, pressured by inventory disposal and E&O charges partially offset by vertical-integration cost benefits .
  • Guidance raised: FY 2025 revenue to $127–$131M (from $126–$130M), reflecting licensing revenue and biologics strength; management reiterated no need for additional capital under current plans .
  • Wall Street consensus (S&P Global) was exceeded: Q1 revenue beat by ~$1.7M and EPS turned positive versus a loss expected; this tightening cost discipline and licensing recognition surprised to the upside (see Estimates Context)*.
  • Strategic catalysts: completion of full vertical integration for biologics, launch of Trivium (DBM) and OsteoFactor Pro (growth factors), and termination of the restrictive OrbiMed investor rights agreement improving strategic flexibility .

What Went Well and What Went Wrong

What Went Well

  • Full vertical integration achieved; management called it “a major inflection point,” positioning Xtant as “the most diversified, vertically integrated biologics company,” supporting margins and supply reliability .
  • New product momentum: Trivium DBM launched; early surgeon/distributor feedback “highly encouraging,” expected to drive higher-margin mix; OsteoFactor Pro launch adds growth factor capability, completing coverage across five orthobiologic categories .
  • Licensing/OEM tailwinds: Q1 included $3.6M license revenue; SimpliMax Q-code licensing upfront $1.5M with ~$0.7M recognized in 2025; CMS LCD extension to Dec 31, 2025 opens additional H2 2025 royalty/cash potential .

What Went Wrong

  • Gross margin dipped vs prior year (61.5% vs 62.1%) due to inventory disposal and E&O provisions; hardware revenue declined 10% YoY amid ongoing product rationalization .
  • Cautious stance on royalty minimums given uncertainty around CMS LCD and broader government initiatives—management withheld from including additional minimum payments in guidance to avoid future pullback .
  • Working capital stretched by receivables build in Q1; management guided to tighter CFO in Q3 and healthier Q4 despite Q2 recovery, underscoring cadence risks as OEM/DSO mix normalizes .

Financial Results

Quarterly Comparison: Revenue, Margins, Net Income, EPS, Adjusted EBITDA

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$27.94 $31.50 $32.90
Gross Margin (%)58.4% 50.8% 61.5%
Net Income ($USD Millions)$(5.02) $(3.17) $0.06
GAAP Diluted EPS ($USD)$(0.04) $(0.02) $0.00
Adjusted EBITDA ($USD Millions)$(0.20) $0.44 $3.04

Q1 2025 Revenue Composition

CategoryQ1 2025
Product Revenue ($USD Millions)$29.28
License Revenue ($USD Millions)$3.62

Balance Sheet & Operating KPIs

KPIDec 31, 2024Mar 31, 2025
Cash & Cash Equivalents + Restricted Cash ($USD Millions)$6.28 $5.44
Trade Accounts Receivable, Net ($USD Millions)$20.66 $23.48
Inventories ($USD Millions)$38.63 $38.81
Cash from Operations ($USD Millions, quarterly)N/A$1.28

Notes: Adjusted EBITDA methodology excludes bargain purchase gain phasing since Q4 2024; prior periods recast .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY 2025$126–$130 $127–$131 Raised
Gross Margin (exit rate/target)FY 2025+4–5 pts YoY improvement target by Q4 2025 “On track for ~63% by year-end” Updated target
Sales & Marketing (as % revenue, trajectory)FY 2025Expect leverage improvement of 4–5 pts Q2+ S&M to normalize higher versus Q1 (no commission-free royalties); levels more consistent with Q4 2024 Clarified phasing
Cash Flow & Capital NeedsFY 2025Expect FCF in H2 2025; no additional capital needed CFO cadence: positive in Q2, tighter in Q3, stronger in Q4; no capital raise anticipated Maintained, with cadence detail

Earnings Call Themes & Trends

TopicQ3 2024 (Nov 2024)Q4 2024 (Mar 2025)Q1 2025 (May 2025)Trend
Vertical integration of biologicsTargeted; delays impacted throughput; plan to produce in-house for margin Cost cuts, integration progress; margin uplift expected 4–5 pts in 2025 Complete vertical integration; declared major inflection point Improving
Licensing/OEM & CMS LCDSigned Q-code license; $1.5M upfront; min $3.75M 2025; OEM channel expansion Guidance framed; noted OEM mix improves working capital LCD extended to 12/31/2025; ~$0.7M 2025 license rev recognized; cautious on royalty minimums Mixed/regulatory sensitive
Gross margin trajectory58.4% (Q3); hurt by delays 50.8% (Q4); inventory charge and throughput issues 61.5% (Q1); on track ~63% by YE Recovering
Hardware rationalizationCortera launch; expectation of pull-through Ongoing rationalization; optimize cash Hardware down ~10% YoY; sunset older systems; shift to Cortera Rationalizing
New product launchesOsteoVive+ (stem cells), Cortera pedicle Growth factor slated; multiple biologics in pipeline Trivium DBM launched; OsteoFactor Pro launched Accelerating
Supply chain/working capitalSummer procedure softness; throughput delays Inventory clean-up hit GM; WC efficiency focus Receivables to convert in Q2; OEM faster DSO improves WC Normalizing

Management Commentary

  • “We have reached a major inflection point, the full vertical integration of our previously outsourced biologics products… Xtant is now the most diversified, vertically integrated biologics company in the market.” — Sean Browne, CEO .
  • “We are increasing our full year 2025 guidance for total revenue in the range of $127 million to $131 million… we do not anticipate the need to raise additional capital at this time.” — Sean Browne, CEO .
  • “Gross margins… adversely affected by 400 bps from E&O and disposal charges… partially offset by 390 bps reductions in product costs associated with vertical integration.” — Scott Neils, CFO .
  • “We’re on track for gross margins of, say, 63% by the end of the year as we roll out new products and increase revenue.” — Scott Neils, CFO .

Q&A Highlights

  • Royalty/License assumptions: Guidance excludes additional royalty minimums given regulatory uncertainty; ~$0.7M of license revenue to be recognized in 2025 from SimpliGraft manufacturing license .
  • Biologics growth drivers: Amnio OEM deals benefited from LCD timing; VBM strength largely Xtant-branded; growth factor plan focuses first on retention of ~$6.5M existing business then expansion .
  • Margin and OpEx trajectory: S&M to normalize higher (no commission-free royalties); G&A steady; GM targeted ~63% by YE with in-house production and product mix shift .
  • Cash flow cadence: CFO expects positive CFO in Q2, tighter Q3, stronger CFO in Q4; steady revenue growth with high-single-digit sequential increases excluding royalties .

Estimates Context

  • Q1 2025 vs Consensus (S&P Global):

    • Revenue: Actual $32.90M vs Consensus $31.22M* → beat of ~$1.68M (5.4%)*.
    • Primary EPS: Actual $0.0066 vs Consensus $(0.01)* → positive surprise versus expected loss*.

  • Q4 2024 vs Consensus (S&P Global):

    • Revenue: Actual $31.51M vs Consensus $31.80M* → slight miss*.
    • Primary EPS: Actual $(0.0134) vs Consensus $(0.015)* → slightly better than expected loss*.

Values retrieved from S&P Global.*

MetricQ4 2024 Consensus*Q4 2024 ActualQ1 2025 Consensus*Q1 2025 Actual
Revenue ($USD Millions)31.8031.51 31.2232.90
Primary EPS ($USD)(0.015)(0.0134)(0.01)0.0066

Key Takeaways for Investors

  • Vertical integration and product launches (Trivium, OsteoFactor Pro) are shifting mix toward higher-margin orthobiologics, supporting a GM trajectory to ~63% by YE 2025 .
  • Licensing/OEM strategy provides high-margin, low-OpEx revenue streams; however, management conservatively excludes additional royalty minimums in guidance pending CMS LCD dynamics .
  • Hardware rationalization will continue to weigh on that segment near term; Cortera’s rollout aims to consolidate systems with better cash efficiency and pull-through biologics .
  • Working capital should improve as OEM sales grow (faster DSO) and consignment inventory declines; expect CFO recovery through the year (Q2 > Q3 < Q4 cadence) .
  • FY 2025 revenue guidance raised to $127–$131M; management reiterates no need to raise capital, a potential sentiment catalyst alongside consistent adjusted EBITDA improvement .
  • Near-term trading: focus on execution in OEM/licensing recognition, GM ramp via in-house production, and biologics adoption; any favorable LCD developments could unlock upside.
  • Medium-term thesis: diversified, vertically integrated biologics platform with improving margin structure and cash generation, supported by disciplined OpEx and broadened product portfolio .

Additional Q1 2025 Press Releases and Context

  • Secondary private sale of 73.1M OrbiMed-held shares to long-term investors led by Nantahala; termination of investor rights agreement enhances governance flexibility; preliminary Q1 revenue $32.8–$33.1M .
  • Trivium DBM launch highlights advanced processing (BacteRinse) and BMP retention, targeting superior clinical handling/performance .
  • OsteoFactor Pro launch expands Xtant to all five orthobiologic categories, reinforcing vertical integration and product breadth .

Citations: Press release and 8-K Q1 2025: .
Q1 2025 transcript: .
Q4 2024 8-K and transcript: .
Q3 2024 8-K and transcript: .
Other press releases: .