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Sean Browne has been untangling poorly structured and integrated acquisitions since entering the orthopedic market.
The CEO of Xtant Medical has numerous established brands rolled into his company. Bacterin acquired X-Spine in 2015 and rebranded as Xtant Medical. Under Mr. Browne’s leadership, Xtant has purchased assets from the bankrupt Surgalign, which includes products from past names like Pioneer Surgical Technology, Paradigm Spine and RTI Surgical. Most recently, Xtant acquired the nanOss production operations from RTI Surgical to bring manufacturing in-house.
When Mr. Browne was hired by Xtant in 2019, the orthobiologics and spine company had $64.5 million in revenue, down from $82.6 million in 2017. COVID-19 allowed the company to pause and reorganize. By reengaging the team, making smart hires, securing funding, optimizing business processes and acquiring products and distribution channels, Mr. Browne has seemingly stopped the revenue bleeding and positioned the company for a new stage of growth.
Xtant grew 5% in 2022, ending the year with $58 million in revenue. The company projects 2023 revenue to be $88 million to $91 million, growth of 52% to 57% over 2022.
We spoke with Mr. Browne about the company’s strategy, which includes new product flow, expanding its distribution network, leveraging adjacent markets and engaging in strategic M&A activity.
Let’s start with the acquisitions from Surgalign. How have those shaped the company’s product portfolio and distribution channels?
Mr. Browne: Most of our portfolio is focused on products that do well in ambulatory surgery centers and outpatient clinics. Our SI fusion and interspinous fusion products are two examples. The acquisition of Coflex was a perfect match.
Coflex is the only interlaminar stabilization product that allows the spine to have a full range of motion. We’re addressing laminectomies and most single-level fusions — that’s a huge market opportunity for a clinically outstanding product. The challenge that we have with Coflex is that it’s a postmarket approval product that requires reimbursement.
We knew we would have to pick up the reimbursement story when we purchased the technology from Surgalign. Luckily, we’ve received Medicare reimbursement, and we’re getting Medicare Advantage reimbursement. Coflex is covered by a little more than a dozen private plans and we’re working to expand that number.
On the commercial side, the Surgalign acquisitions took us from 300 to more than 650 distributors. We now cover over 90% of the hospital beds in America through contracts. As we add technologies and grow, we’ll get greater penetration with those distributors. We filled in holes that we had within our IDN contracts, specifically in the Midwest. Additionally, the Surgalign assets were the old Pioneer product lines, which are outstanding. The purchase beefed up our hardware portfolio and gave our biologics products access to a slew of new customers.
In thinking about the future of your product portfolio, do you plan to keep the same biologics and hardware mix?
Mr. Browne: We’re about two-thirds biologics and one-third hardware. We will continue to emphasize biologics because it’s who we are and what we do. But we will find market-buster devices like Coflex, technologies that distributors want to carry because no other company has anything like it. As a smaller hardware company, we need to show what makes us unique and adds value for distributors, surgeons and patients.
Your R&D pipeline is heavily focused on orthobiologics. What excites you about those technologies?
Mr. Browne: I’m excited to raise the level of what we’re making. We primarily operate in the demineralized bone matrix space, which is on the lower end of biologics. Higher-end biologics, like our new cortical bone fiber and amnio products, are fascinating. Our new Chief Operations Officer Mark Schallenberger heads R&D, and I wish I had hired him three years ago.
How is the integration of your new distributors going?
Mr. Browne: Kevin Brandt, our Chief Commercial Officer, held the same position at RTI, so we just acquired his old team. He has been a fantastic help with the integration on the sales and commercial side.
The biggest thing that we must do is reengage customers who backed off when Surgalign was in flux. Our job is to reengage with those surgeons and distributors and let them know that we’re a bigger, better and profitable company.
What trends are you personally watching in the spine space?
Mr. Browne: I love that procedures are leaving the hospital. That is big for where we sit in the market.
The number of products that spine surgeons can choose to use is quite unique in healthcare. The more prominent surgical trends of stabilization and standardization are starting to take hold in spine. We deal with managed care organizations with our Coflex product, and these organizations are becoming more important and more of a concern to spine companies as we think about the profitability of procedures. I’m watching to see what happens on the managed care side.
Can we expect another acquisition next week?
Mr. Browne: If you’re a small company that’s looking for a great platform to grow, we can be your exit ramp. We’re talking to companies and inserting our name.
Sean Browne has been untangling poorly structured and integrated acquisitions since entering the orthopedic market.
The CEO of Xtant Medical has numerous established brands rolled into his company. Bacterin acquired X-Spine in 2015 and rebranded as Xtant Medical. Under Mr. Browne’s leadership, Xtant has purchased assets from the bankrupt...
Sean Browne has been untangling poorly structured and integrated acquisitions since entering the orthopedic market.
The CEO of Xtant Medical has numerous established brands rolled into his company. Bacterin acquired X-Spine in 2015 and rebranded as Xtant Medical. Under Mr. Browne’s leadership, Xtant has purchased assets from the bankrupt Surgalign, which includes products from past names like Pioneer Surgical Technology, Paradigm Spine and RTI Surgical. Most recently, Xtant acquired the nanOss production operations from RTI Surgical to bring manufacturing in-house.
When Mr. Browne was hired by Xtant in 2019, the orthobiologics and spine company had $64.5 million in revenue, down from $82.6 million in 2017. COVID-19 allowed the company to pause and reorganize. By reengaging the team, making smart hires, securing funding, optimizing business processes and acquiring products and distribution channels, Mr. Browne has seemingly stopped the revenue bleeding and positioned the company for a new stage of growth.
Xtant grew 5% in 2022, ending the year with $58 million in revenue. The company projects 2023 revenue to be $88 million to $91 million, growth of 52% to 57% over 2022.
We spoke with Mr. Browne about the company’s strategy, which includes new product flow, expanding its distribution network, leveraging adjacent markets and engaging in strategic M&A activity.
Let’s start with the acquisitions from Surgalign. How have those shaped the company’s product portfolio and distribution channels?
Mr. Browne: Most of our portfolio is focused on products that do well in ambulatory surgery centers and outpatient clinics. Our SI fusion and interspinous fusion products are two examples. The acquisition of Coflex was a perfect match.
Coflex is the only interlaminar stabilization product that allows the spine to have a full range of motion. We’re addressing laminectomies and most single-level fusions — that’s a huge market opportunity for a clinically outstanding product. The challenge that we have with Coflex is that it’s a postmarket approval product that requires reimbursement.
We knew we would have to pick up the reimbursement story when we purchased the technology from Surgalign. Luckily, we’ve received Medicare reimbursement, and we’re getting Medicare Advantage reimbursement. Coflex is covered by a little more than a dozen private plans and we’re working to expand that number.
On the commercial side, the Surgalign acquisitions took us from 300 to more than 650 distributors. We now cover over 90% of the hospital beds in America through contracts. As we add technologies and grow, we’ll get greater penetration with those distributors. We filled in holes that we had within our IDN contracts, specifically in the Midwest. Additionally, the Surgalign assets were the old Pioneer product lines, which are outstanding. The purchase beefed up our hardware portfolio and gave our biologics products access to a slew of new customers.
In thinking about the future of your product portfolio, do you plan to keep the same biologics and hardware mix?
Mr. Browne: We’re about two-thirds biologics and one-third hardware. We will continue to emphasize biologics because it’s who we are and what we do. But we will find market-buster devices like Coflex, technologies that distributors want to carry because no other company has anything like it. As a smaller hardware company, we need to show what makes us unique and adds value for distributors, surgeons and patients.
Your R&D pipeline is heavily focused on orthobiologics. What excites you about those technologies?
Mr. Browne: I’m excited to raise the level of what we’re making. We primarily operate in the demineralized bone matrix space, which is on the lower end of biologics. Higher-end biologics, like our new cortical bone fiber and amnio products, are fascinating. Our new Chief Operations Officer Mark Schallenberger heads R&D, and I wish I had hired him three years ago.
How is the integration of your new distributors going?
Mr. Browne: Kevin Brandt, our Chief Commercial Officer, held the same position at RTI, so we just acquired his old team. He has been a fantastic help with the integration on the sales and commercial side.
The biggest thing that we must do is reengage customers who backed off when Surgalign was in flux. Our job is to reengage with those surgeons and distributors and let them know that we’re a bigger, better and profitable company.
What trends are you personally watching in the spine space?
Mr. Browne: I love that procedures are leaving the hospital. That is big for where we sit in the market.
The number of products that spine surgeons can choose to use is quite unique in healthcare. The more prominent surgical trends of stabilization and standardization are starting to take hold in spine. We deal with managed care organizations with our Coflex product, and these organizations are becoming more important and more of a concern to spine companies as we think about the profitability of procedures. I’m watching to see what happens on the managed care side.
Can we expect another acquisition next week?
Mr. Browne: If you’re a small company that’s looking for a great platform to grow, we can be your exit ramp. We’re talking to companies and inserting our name.
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Carolyn LaWell is ORTHOWORLD's Chief Content Officer. She joined ORTHOWORLD in 2012 to oversee its editorial and industry education. She previously served in editor roles at B2B magazines and newspapers.
