Greetings and welcome to the Xtant Medical Fourth Quarter and Full-Year 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Matt Steinberg of FINN Partners. Thank you. Please go ahead.

Thank you, operator, and welcome to Xtant Medical's fourth quarter and full-year 2021 financial results call. Joining me today is Sean Browne, President and Chief Executive Officer; and Scott Neils, Interim Chief Financial Officer. Today's call is being webcast and will be posted on the company's Web site for playback. During the course of this call, management may make certain forward-looking statements regarding future events and the company's expected future performance. These forward-looking statements reflect Xtant's current perspective on existing trends and information, and can be identified by such words as expect, plan, will, may, anticipate, believe, should, intends, and other words with similar meaning. Such forward-looking statements are not guarantees of future performance and involve risk and uncertainties including those noted in the Risk Factor section of the company's annual report on Form 10-K filed with the SEC on March 8, 2022, and in subsequent SEC reports and press releases. Actual results may differ materially. The company's financial results press release, and today's discussion include certain non-GAAP financial measures. Please refer to the non-GAAP to GAAP reconciliations, which appear in the tables of our press release and are otherwise available on our Web site. Note that our Form 8-K, filed with our financial results press release, provides a detailed narrative that describes our use of such measures. For the benefit of those of you who may be listening to the replay, this call was held and recorded on Tuesday, March 8, at approximately 9:00 A.M. Eastern Standard Time. The company declines any obligation to update its forward-looking statements, except as required by applicable law. Now, I'd like to turn the call over to Sean Browne.

Thank you, Matt, and good morning to everyone listening. Xtant Medical withstood significant market challenges in 2021 to grow our annual revenue for the first time in six years, and for the first time since Bacterin acquired X-spine to form Xtant Medical. In 2021, we grew our overall business by 4%, led by our established biologics business, which grew by 8%. Our commercial team delivered to bring hospitals and physicians our innovative products so that patients receive the treatment they so desperately need. On today's call, I will first address our current market conditions and our performance in the fourth quarter and full-year, then provide an update on the progress of our growth strategy, and close with commentary on our operations. Okay, first, starting with the market environment. On a macro level, 2021 was an up-and-down year. In Q1, we got hit with the last wave of the COVID Alpha variant, in Q2 we swung back to mostly normal caseloads. And then in the third and fourth quarter we got hit with the Delta variant, followed by the Omicron variant, like everyone else did, while not as challenging as 2020, overall spine procedures by our internal metrics were still down by at least 10% compared to 2019. COVID restrictions had a profound impact on our business with spine and other surgery procedure volumes negatively impact in many of our key markets. This was due to cancellations and/or postponements of procedures as a result of increased hospitalizations, restrictions on elective procedures, and staffing shortages. Despite these headwinds, we achieved top line growth in 2021 primarily driven by our key growth initiatives, and have helped to diversify our revenue stream. Although the reduction in elective procedures and staffing issues continue to linger early in the first quarter of 2022, we are cautiously…

Thank you for that warm welcome, Sean, and good morning everyone. Total revenue for the fourth quarter 2021 was $14 million comparable with the same quarter of the prior year. For the year 2021, total revenue was $55.3 million compared to $53.3 million for 2020. Revenue benefited from additional private label and OEM orthobiologics sales, partially offset by reduced implant sales versus the prior year. Revenue in the second half of 2021 was impacted by lower sales from distributor sales channel due to lower elective procedures across our key markets because of COVID-19. Gross margin for the fourth quarter of 2021 was 55.1% compared to 64.1% for the same period in 2020. Gross margin for the full-year 2021 was 58.8% compared to 64.5% for the same period in 2020. The decrease in gross margin was attributed to increased underabsorption of labor and overhead, shift in the sales channel mix, and sell-through of products subject to greater production cost during prior periods. We expect higher product cost to continue in future periods. But otherwise expect gross margin to improve as the effect of COVID-19 on surgical procedures diminishes. Fourth quarter 2021 operating expenses were $9.6 million compared to $8.7 million in the same period a year ago. For the full-year 2021, operating expenses were $36.3 million compared to $35.1 million for 2020. As a percentage of revenue, operating expenses were 68.8% and 65.8% for the three and 12-month periods ended December 31, 2021 respectively compared to 62.4% and 65.9% for the three and 12-month periods ended December 31, 2020 respectively. General and administrative expenses were $4.1 million and $14.4 million for the three and 12-month periods ended December 31 2021, representing an increase of 29% and 7% respectively over the prior year periods. These increases were primarily due to additional stock-based…

Thank you, Scott. To recap achieving topline annual growth for the first time in six years is the beginning of what we believe will be the long-term trend for Xtant. We have a number of initiatives planned both commercially and operationally that would drive our path forward. Led by our four key growth pillars, we are well underway to building on this momentum over the long run. Although we continue to operate with the effects of COVID on elective producers across our markets that may impact our first quarter result, we look forward to easing restrictions and higher procedure volumes that will enable us to further ramp-up our sales and production. Our mission of honoring the gift of donation by allowing our patients to live as full, and complete a life as possible continues to guide us. With our strategy firmly in place, we look to execute on it in 2022 in order to advance our mission forward. That concludes our call. Thank you for joining us today, and for your continued support.

Ladies and gentlemen, thank you for your participation and interest in Xtant Medical. You may disconnect your lines, or log off the webcast at this time, and enjoy the rest of your day.