Greetings and welcome to the Xtant Medical First Quarter 2022 Financial Results Conference Call. [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. Please go ahead.

Thank you, operator, and welcome to Xtant Medical’s first quarter 2022 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 website 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 website. 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 Thursday, May 5, at approximately 9:00 A.M. Eastern Daylight 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, everyone. After delivering annual revenue growth in 2021, I am pleased that we achieved year-over-year revenue growth during the first quarter of 2022 with total revenue increasing by 3%, and biologics revenue growing by an impressive 13%. I will provide more details shortly but the primary drivers for this growth were the combined contributions of the new products we introduced in 2021, along with a higher private label and original equipment manufacturer or OEM sales. Now, first, I’d like to provide some perspective on the macro environment before jumping into our business. The first quarter of 2022 saw continued oscillation in the resumption of spine and other elective surgical procedures. The year started with the spread of the Omicron variant, which led to a surge of COVID cases and hospitalizations, causing hospitals and other medical facilities to once again cancel or defer electric surgical procedures. As we transitioned into February, we saw a reversal of that trend with elective surgical procedures beginning to steadily climb and improve throughout the month and into March. Now in the second quarter, we continue to closely monitor hospital trends to identify potential areas of concern, while simultaneously focusing on the aspects of our business that we have control over, including those items related to our four key growth initiatives. Initiative number one, new product introductions; number two, distribution network expansion; three, adjacent market penetration; and four, strategic acquisitions that will leverage our growth platform. So, let’s starting out with our first initiative, new product introductions. Last year, we rolled out six new products and we’ve seen strong momentum building for each of those products. This momentum was led by our OsteoFactor product, which had its best revenue generating month-to-date in March. While we are focusing on maximizing the…

Thank you, Sean, and good morning everyone. Total revenue for the first quarter of 2022 was $13 million, compared to $12.5 million in the same quarter of the prior year. This 3% increase in revenue is attributed primarily to introductions of new products and greater private label and OEM sales. Gross margin for the first quarter of 2022 was 58.3% compared to 65% for the same period in 2021. This decrease was attributed to sell through product subject higher production costs, and favorable products sales mix and greater inventory reserve expense. We continue to expect higher product costs will adversely affect our gross margin in future periods. First quarter 2022 operating expenses were $9.4 million, compared to $8.1 million in the same period a year ago. As a percentage of total revenue, operating expenses were 72.5% compared to 64.6% in the same period a year ago. General and administrative expenses were $4 million for the three months ended March 31, 2022, compared to $3 million for the same period in 2021. This increase primarily attributable to increased expense related licenses and fees, additional bad debt expense, and cost-related enterprise resource planning system upgrades. Sales and marketing expenses were $5.2 million for three months ended March 31, 2022, compared to $4.9 million for the same period of 2021. This increase is due primarily to increased commissions expenses, due to higher revenues, greater salaries, and wages. Net loss in the first quarter of 2022 was $2.2 million or $0.03 per share, compared to a loss of $29,000 for $0.00 per share the comparable 2021 period. Adjusted EBITDA for the first quarter of 2022 was a loss of $0.9 million compared to adjusted EBITDA of $0.8 million for the same period in 2021. As of March 31, 2022, we had $16.8 million of cash and cash equivalents, $7.5 million of net accounts receivable, $17.3 million of inventory, and $3.5 million available under our revolving credit facility. Now I’ll turn the call back to Sean for closing remarks.

Thank you, Scott. As stated before, 2022 is off to a solid start. We have achieved 13% growth in our biologics revenue during the first quarter. We have made inroads within the $2.4 billion orthobiologics market. We are building a strong distribution footprint in order to maximize our sales coverage. We have developed a pipeline of new and exciting products, and we have taken advantage of the opportunities presented in our adjacent markets. With each successive month in the first quarter better than the previous, we are encouraged with a promising trend across our markets. There remains much work to be done, both commercially and operationally, but we look forward to addressing each challenge, as it is presented. In closing, I’d like to re emphasize our mission of honoring the gift of donation by allowing our patients to live as full and complete a life as possible. Our valuable employees live by these words each and every day in order to bring our solutions to patients in need. I personally like to thank them for their continued commitment to our mission. Thank you for joining us today and for your continued support. I will now turn it back over to the operator.

Thank you. This concludes our call. All parties may now disconnect.