Xtant Medical (XTNT) posted 3Q17 revenue of US $19.8MM, -14.3% vs. 3Q16, with YTD revenue of $63.3MM, -3.4% vs. the prior year.
ORTHOWORLD estimates segment revenue and as-reported growth as follows.
3Q17 | 3Q16 | $ Change | % Change | |
Spine | $7.1 | $11.3 | -$4.2 | -41.9% |
Orthobiologics | $12.7 | $11.8 | $0.9 | 16.8% |
Total | $19.8 | $23.1 | -$3.3 | -14.3% |
9Mo17 | 9Mo16 | $ Change | % Change | |
Spine | $28.1 | $33.8 | -$5.7 | -19.2% |
Orthobiologics | $35.2 | $31.7 | $3.5 | 14.4% |
Total | $63.3 | $65.5 | -$2.3 | -3.4% |
XTNT leadership has engaged restructuring officers to help the company into the next phase of its business. The company’s revenue growth has decreased sequentially since posting nearly 11% YoY growth in 3Q16; however, per CEO Carl O’Connell, “Once we have completed our restructuring efforts, we will be well-positioned to grow revenues and profitability.”
In 3Q17, two percent of the YoY growth decrease was tagged to one less selling day in 3Q17 vs. ’16. An increase in 3Q17 biologic product revenue was more than offset by a decrease in spinal fixation hardware sales. Overall, the revenue decline was attributed to the strategy to reduce unprofitable sales channel agreements (particularly in fixation), cease certain reseller distribution channels that had deep discounting activities and exit the private labeling of a pedicle screw system for a few select customers—because it wasn’t profitable. Also, distribution partners in the U.K. and Australia purchased additional fixation systems to expand business in 3Q16, so there was a tougher comp.
Within the quarter, XTNT closed its Dayton, Ohio hardware distribution facility and shifted all operations to Montana. After expenses, it’s expected that this move will yield annualized cost savings of over $2MM.
Orthobiologic products held a larger share of revenues in 3Q17 vs. 3Q16, and are expected to continue to outpace fixation as a share of sales. Specifically, the 3Q16 split was Biologics 51%/Fixation 49%; in 3Q17 it was 64%/36%. OsteoVive sales alone grew from under $0.1MM in 3Q16 to $0.66MM in 3Q17, and 3Demin Fiber revenue increased by 16% YoY.
Orthobiologic sales should be buoyed by XTNT’s entry into the bone graft sub market though a new private label distribution agreement with curasan, to distribute Matriform synthetic scaffolds in North America. Fixation should also get a boost from 60+ new hospital contracts for hardware signed during 3Q17.
Source: Xtant Medical; ORTHOWORLD Inc. estimates
Xtant Medical (XTNT) posted 3Q17 revenue of US $19.8MM, -14.3% vs. 3Q16, with YTD revenue of $63.3MM, -3.4% vs. the prior year.
ORTHOWORLD estimates segment revenue and as-reported growth as follows.
Q17
Q16
$ Change
% Change
...
Xtant Medical (XTNT) posted 3Q17 revenue of US $19.8MM, -14.3% vs. 3Q16, with YTD revenue of $63.3MM, -3.4% vs. the prior year.
ORTHOWORLD estimates segment revenue and as-reported growth as follows.
3Q17 | 3Q16 | $ Change | % Change | |
Spine | $7.1 | $11.3 | -$4.2 | -41.9% |
Orthobiologics | $12.7 | $11.8 | $0.9 | 16.8% |
Total | $19.8 | $23.1 | -$3.3 | -14.3% |
9Mo17 | 9Mo16 | $ Change | % Change | |
Spine | $28.1 | $33.8 | -$5.7 | -19.2% |
Orthobiologics | $35.2 | $31.7 | $3.5 | 14.4% |
Total | $63.3 | $65.5 | -$2.3 | -3.4% |
XTNT leadership has engaged restructuring officers to help the company into the next phase of its business. The company’s revenue growth has decreased sequentially since posting nearly 11% YoY growth in 3Q16; however, per CEO Carl O’Connell, “Once we have completed our restructuring efforts, we will be well-positioned to grow revenues and profitability.”
In 3Q17, two percent of the YoY growth decrease was tagged to one less selling day in 3Q17 vs. ’16. An increase in 3Q17 biologic product revenue was more than offset by a decrease in spinal fixation hardware sales. Overall, the revenue decline was attributed to the strategy to reduce unprofitable sales channel agreements (particularly in fixation), cease certain reseller distribution channels that had deep discounting activities and exit the private labeling of a pedicle screw system for a few select customers—because it wasn’t profitable. Also, distribution partners in the U.K. and Australia purchased additional fixation systems to expand business in 3Q16, so there was a tougher comp.
Within the quarter, XTNT closed its Dayton, Ohio hardware distribution facility and shifted all operations to Montana. After expenses, it’s expected that this move will yield annualized cost savings of over $2MM.
Orthobiologic products held a larger share of revenues in 3Q17 vs. 3Q16, and are expected to continue to outpace fixation as a share of sales. Specifically, the 3Q16 split was Biologics 51%/Fixation 49%; in 3Q17 it was 64%/36%. OsteoVive sales alone grew from under $0.1MM in 3Q16 to $0.66MM in 3Q17, and 3Demin Fiber revenue increased by 16% YoY.
Orthobiologic sales should be buoyed by XTNT’s entry into the bone graft sub market though a new private label distribution agreement with curasan, to distribute Matriform synthetic scaffolds in North America. Fixation should also get a boost from 60+ new hospital contracts for hardware signed during 3Q17.
Source: Xtant Medical; ORTHOWORLD Inc. estimates
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JV
Julie Vetalice is ORTHOWORLD's Editorial Assistant. She has covered the orthopedic industry for over 20 years, having joined the company in 1999.