Xtant Medical Holdings, Inc. Q1 FY2026 earnings call

Strategic Transactions

• Completed the Companion Spine divestiture of non-core COFLEX assets and Paradigm OUS businesses, receiving the final $10.7 million payment in Q1 2026 for a total purchase price of $21.4 million. Proceeds were used to reduce total indebtedness by $13.3 million ($10.4 million on the revolving line of credit, $2.8 million on the term loan), strengthening the balance sheet. The divestiture allows management to sharpen focus on the core high-margin biologics business.
• Secured an exclusive U.S. distribution license agreement with Dillon Technologies for Hemoblast Bellows hemostatic agent, entering the $2 billion global addressable hemostatic agent market. Hemoblast Bellows is differentiated as the only hemostat combining collagen, human-derived thrombin, and bovine-derived chondroitin sulfate, works across all bleeding severities, and requires no pre-use preparation.
• Added Dillon's 21-person sales team, complementing the company's 2026 plan to double regional sales representatives and expand the national accounts team to drive institutional adoption across large hospital systems and practice groups. The combined team will extend reach for both Hemoblast and Extant's full biologic portfolio.

Innovation and Commercial Milestones

• Launched Trivium Shaped, a pre-configured extension of the Trivium bone graft portfolio, designed to improve surgical workflow, handling, and placement consistency across a range of orthopedic applications. Trivium Shaped builds on the 2025 launch of the original Trivium sculptable format.
• Extant internally produces solutions for all five major orthopedic categories, plus amnio and collagen lines for surgical repair and wound care, giving the company a broad portfolio that positions it as a single-source partner for hospital regenerative medicine needs.

Q1 2026 Core Financial Performance

• Gross margin of 57.3% (vs 61.5% in Q1 2025), with the decrease driven by the end of Q code license revenue for amniotic membrane (terminated due to reimbursement changes at end-2025), partially offset by product mix improvements.
• Operating expenses totaled $14.9 million (vs $19.2 million in Q1 2025), with the decrease primarily from the divestiture of non-core assets. G&A was $6.3 million (vs $7.5 million Q1 2025), while sales and marketing was $5.8 million (corrected from the transcript typo of $18.2 million) vs $11.2 million Q1 2025. R&D was $435,000, flat year-over-year.
• Net loss of $3.1 million (2 cents per share) vs net income of $58,000 (breakeven per share) in Q1 2025. Adjusted EBITDA was a loss of $1.6 million vs positive $3 million in Q1 2025.
• End-of-period cash and cash equivalents: $12.2 million; total indebtedness: $12.2 million; revolving credit facility availability: $11.8 million, up from $3.8 million at end-2025 after debt repayment.

Extant Medical does not break out full formal segment financials with absolute revenue and contribution percentage in this call, but provides the following segment-level performance details: Core biologics (the company's focused growth segment) includes orthobiologics (OsteoFactor Pro, Trivium bone graft portfolio, demineralized bone matrix, cellular allografts, synthetics, structural allografts, growth factors), amniotic products, collagen products, and the newly added Hemoblast Bellows hemostatic agent. Amnio product revenue faced headwinds in Q1 2026 tied to weakness in the advanced wound care market, particularly on the OEM side of the business. Revenue from non-core COFLEX assets and Paradigm OUS businesses was divested to Companion Spine in December 2025, so it does not contribute to 2026 revenue. Q1 2026 total company revenue is $20.9 million, vs $32.9 million GAAP and $23.9 million pro forma (excluding divested non-core businesses) for Q1 2025.

• Full-year 2026 revenue guidance is raised from prior levels to a range of $101 million to $105 million, reflecting the addition of Hemoblast Bellows and ongoing growth in the base core biologics business.
• Full-year gross margin is expected to remain in the low 60% range. Q1 2026's lower gross margin was a temporary deviation driven by one-time excess/obsolete inventory expense and product mix, and margin is expected to rebound through the second half of 2026.
• Management expects accelerating core biologics growth for the remainder of 2026 and beyond, driven by the Dillon distribution agreement, new product introductions, and increased commercial investment in the sales force. Weakness in the amnio advanced wound care OEM segment is expected to improve and stabilize in the second half of 2026.

• Forward-looking statements are inherently uncertain, and actual results may differ materially from guidance due to risks and uncertainties disclosed in the company's Form 10-K and other SEC filings, which are not detailed further on this call.
• Amnio product revenue is exposed to reimbursement changes, which ended Q code license revenue for amniotic membrane at the end of 2025 and pressured Q1 2026 results.
• The advanced wound care market faced broad weakness in Q1 2026 that negatively impacted Extant's OEM amnio business, though this represents a small portion of the company's overall revenue.
• OEM segment revenue is inherently lumpy, leading to periodic quarterly softness even for core product lines.

Q: What capabilities and market access does the acquired Dillon sales force bring to Hemoblast and Extant's broader portfolio, and how will product coverage be structured? / A: Most of the Dillon sales team currently calls on general surgery, trauma, and recently cleared urology sites, areas Extant has not fully penetrated with its existing collagen and amnio product lines. Extant plans to expand Hemoblast into the large spine hemostatic market, which is the biggest addressable segment for the product. Initially, the Dillon team will only carry Extant's complementary amnio and collagen lines to avoid overextension, and will gain access to the full product portfolio after establishing traction with Hemoblast.

Q: What will be the incremental sales and marketing expense impact of adding the 21 Dillon sales reps? / A: The 21 reps are mostly seasoned. Including compensation, travel, and marketing costs, incremental sales and marketing expense will total roughly $2.5 million per quarter.

Q: What is Extant's current orthobiologic unit growth trajectory, and how does it compare to broader market trends? / A: Unit growth is driven by new product launches, particularly OsteoFactor Pro growth factor and the expanding Trivium product line. The only softness in Q1 2026 was in the stem cell OEM business, which has lumpy demand patterns. Extant expects broader growth to continue through the year, and amnio advanced wound care weakness will likely improve in the second half of 2026, aligned with broader industry trends.

Q: What initial physician feedback has Extant received on Hemoblast, and what is the growth opportunity for the new Trivium Shaped product? / A: Hemoblast is a high-performing product with broad indication coverage that outcompetes many existing offerings, but it was underpenetrated as a small offering from an unknown company. Extant plans to leverage its large existing independent agent network to expand adoption in the large spine hemostatic market. Trivium Shaped is an advanced upgrade to Extant's legacy workhorse bone graft products, offering improved handling, pre-shaped convenience, and better clinical performance that positions it for strong growth in the core orthobiologic portfolio.