Xtant Medical Increases Revolving Credit Facility to $17 Million with MidCap Financial

Rhea-AI Summary

Xtant Medical Holdings, Inc. amends credit agreement with MidCap Financial Trust, increasing commitment to $17.0 million and term loan by $10.0 million. Maturity dates extended to 2029, revenue requirements reset, EBITDA requirements removed, and interest rate margin reduced to 6.50%.

Insights

Financial Analyst

The amendment of Xtant Medical Holdings' credit agreement to expand its revolving credit facility from $8.0 million to $17.0 million and the addition of a $10.0 million tranche for potential acquisitions, signal a strategic move to bolster the company's financial flexibility. The extended maturity dates and the adjustment in financial covenants, such as the removal of minimum Adjusted EBITDA requirements, will likely ease the company's short-term liquidity pressures and provide a more favorable debt servicing scenario. The reduction in the interest rate on the term loan, albeit modest, will also contribute to lower financial costs over time.

From an investor's perspective, these amendments could be interpreted as a positive indicator of the company's relationship with its lender and its creditworthiness. However, investors should closely monitor the company's subsequent use of this increased financial leverage, particularly in terms of acquisitions, as these moves can have varying impacts on shareholder value depending on the strategic fit and execution of the acquired assets.

Market Research Analyst

The medical technology sector often requires significant capital investment for research, development and expansion. Xtant Medical's focus on surgical solutions for spinal disorders places it in a niche yet growing market segment. The company's decision to secure additional funding for inventory and working capital needs could indicate an anticipated increase in product demand or expansion into new markets.

Market trends show an increasing prevalence of spinal disorders due to aging populations and lifestyle factors, which could mean a larger addressable market for Xtant's products. The ability to acquire complementary businesses or technologies could further enhance its market position. However, the success of such strategies will depend on the company's ability to integrate acquisitions effectively and realize synergies.

Medical Device Industry Expert

Within the medical device industry, the terms of credit and the ability to secure funding are critical for maintaining the necessary levels of inventory and for pursuing strategic acquisitions. Xtant Medical's amended credit terms suggest a proactive approach to managing its capital structure in a way that supports its growth initiatives. The focus on spinal surgical solutions, a specialized area within medical devices, requires continuous innovation and potentially strategic partnerships or acquisitions to stay competitive.

Investors and stakeholders should consider the implications of these financial maneuvers on the company's ability to maintain its competitive edge, invest in product innovation and meet the evolving needs of the healthcare market. The removal of the minimum Adjusted EBITDA requirements may also suggest a period of investment and potential variability in profitability as the company pursues growth.

BELGRADE, Mont., March 07, 2024 (GLOBE NEWSWIRE) -- Xtant Medical Holdings, Inc. (NYSE American: XTNT), a global medical technology company focused on surgical solutions for the treatment of spinal disorders, today announced that the Company’s revolving credit agreement with MidCap Financial Trust (“MidCap”) was amended to increase the commitment from $8.0 million to $17.0 million. The Company’s term loan was also amended to provide for an additional $10.0 million tranche, to be made available for acquisitions at MidCap’s discretion. The maturity dates of Xtant’s revolving credit facility and term loan were extended to March 1, 2029 and minimum net product revenue requirements specified in the agreements were reset and minimum Adjusted EBITDA requirements were removed. Additionally, the applicable margin used to determine the per annum interest rate of the term loan was reduced from 7.00% to 6.50%.

“We are very pleased to increase our revolving credit facility with MidCap to support our fast pace of growth. As we execute on our four pillars of growth, we may require additional capital for inventory and other working capital needs,” said Sean Browne, President and CEO of Xtant Medical. “We appreciate MidCap’s support and flexibility to help us achieve our long-term goals.”

About Xtant Medical Holdings, Inc.

Xtant Medical Holdings, Inc. (www.xtantmedical.com) is a global medical technology company focused on the design, development, and commercialization of a comprehensive portfolio of orthobiologics and spinal implant systems to facilitate spinal fusion in complex spine, deformity and degenerative procedures. Xtant people are dedicated and talented, operating with the highest integrity to serve our customers.

The symbols ™ and ® denote trademarks and registered trademarks of Xtant Medical Holdings, Inc. or its affiliates, registered as indicated in the United States, and in other countries. All other trademarks and trade names referred to in this release are the property of their respective owners.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “intends,” ‘‘expects,’’ ‘‘anticipates,’’ ‘‘plans,’’ ‘‘believes,’’ ‘‘estimates,’’ “continue,” “future,” ‘‘will,’’ “potential,” similar expressions or the negative thereof, and the use of future dates. Forward-looking statements in this release include the Company’s expectations regarding execution on its growth initiatives and financial position. The Company cautions that its forward-looking statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: the Company’s future operating results and financial performance; its ability to increase or maintain revenue; risks associated with its recent acquisitions and the integration of those businesses; anticipated shortages of stem cells which will adversely affect future revenues; possible future impairment charges to long-lived assets and goodwill and write-downs of excess inventory; the ability to remain competitive; the ability to innovate, develop and introduce new products; the ability to engage and retain new and existing independent distributors and agents and qualified personnel and the Company’s dependence on key independent agents for a significant portion of its revenue; the effect of COVID-19, labor and hospital staffing shortages on the Company’s business, operating results and financial condition, especially when they affect key markets; the Company’s ability to implement successfully its future growth initiatives and risks associated therewith; the effect of inflation, increased interest rates and other recessionary factors and supply chain disruptions; the effect of product sales mix changes on the Company’s financial results; government and third-party coverage and reimbursement for Company products; the ability to obtain and maintain regulatory approvals and comply with government regulations; the effect of product liability claims and other litigation to which the Company may be subject; the effect of product recalls and defects; the ability to obtain and protect Company intellectual property and proprietary rights and operate without infringing the rights of others; risks associated with the Company’s clinical trials; international risks; the ability to service Company debt, comply with its debt covenants and access additional indebtedness; the ability to obtain additional financing on favorable terms or at all; and other factors. Additional risk factors are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (SEC) on March 8, 2023 and subsequent SEC filings by the Company, including without limitation its most recent Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 filed with the SEC on November 14, 2023. Investors are encouraged to read the Company’s filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this cautionary statement.

Investor Relations Contact

David Carey
FINN Partners
Ph: 212-867-1762
Email: david.carey@finnpartners.com

FAQ

What is the ticker symbol for Xtant Medical Holdings, Inc.?

The ticker symbol for Xtant Medical Holdings, Inc. is XTNT.

What was the commitment increase in Xtant Medical's credit agreement with MidCap Financial Trust?

The commitment was increased from $8.0 million to $17.0 million.

What was the amendment made to Xtant Medical's term loan?

An additional $10.0 million tranche was added to the term loan for acquisitions at MidCap's discretion.

What were the changes in Xtant Medical's credit agreement regarding maturity dates and requirements?

The maturity dates of the revolving credit facility and term loan were extended to March 1, 2029. Minimum net product revenue requirements were reset, and minimum Adjusted EBITDA requirements were removed.

What was the reduction in the interest rate margin for Xtant Medical's term loan?

The applicable margin used to determine the per annum interest rate of the term loan was reduced from 7.00% to 6.50%.