Greetings, and welcome to the Xtant Medical Q3 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 Third Quarter 2022 Financial Results Call. Joining me today is Sean Browne, President and Chief Executive Officer; and Scott Niels, 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 and other words with similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors 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, November 3, at approximately 9 a.m. Eastern Daylight Time. The company disclaims 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. I am pleased to provide an update on our company's progress during the third quarter. There were several positive items that I'd like to touch on today. First, we achieved solid year-over-year revenue growth, driven by our biologics business, continuing our momentum from the first half of the year. Second, we enhanced our cash position and strengthened our Board. Third, we continued to execute on our key growth pillars, thereby positioning the company to create value for our leading spine brand. Lastly, I want to provide an update on our newly implemented ERP, on both the challenges of implementation and the benefits it will provide moving forward. Starting with our third quarter performance. Total revenue increased by 5% year-over-year, led by growth in our biologics products of 12% year-over-year. Throughout the quarter, the pace of sales increased, following a slow start, and we closed September on a positive note. We are pleased with our revenue growth against the backdrop of a challenging labor environment. Market demand, particularly for our biologics products remains strong. However, due to limited availability of production labor, we were operating below 70% capacity for most of Q3. This is not just a challenge at Xtant, but one that is impacting the entire tissue banking industry. We work with a number of tissue banks for some outsourced lower-volume products, and they too were having significant labor issues. To minimize this effect, we proactively increased recruiting and training efforts for our processing team. We believe our actions are starting to alleviate the supply chain issues so that we can keep up with demand and produce more product. While it typically takes about 6 months to get a new employee fully trained, we are confident that we will be operating at 100%…

Thank you, Sean, and good morning, everyone. Total revenue for the third quarter of 2022 was $14.5 million compared to $13.8 million in the same quarter in the prior year. This 5% increase in revenue was attributed primarily to introductions of new products. Gross margin for the third quarter of 2022 was 54.6% compared to 52.2% for the same period in 2021. The increase was primarily attributable to improved capacity utilization. Operating expenses for the third quarter of 2022 totaled $9.8 million compared to $8.6 million in the third quarter of 2021. As a percentage of total revenue, operating expenses were 68% compared to 63% in the same period a year ago. General and administrative expenses were $3.7 million for the 3 months ended September 30, 2022, compared to $3.1 million for the same period in 2021. This increase was primarily attributable to additional expenses related to product registrations and various employee compensation plans. Sales and marketing expenses were $5.9 million for the 3 months ended September 30, 2022, compared to $5.3 million in the same period in 2021. This increase was primarily attributable to additional independent agent sales commissions and incentives due to higher revenues versus comparable period 2021. Net loss for the third quarter of 2022 was $2.4 million or $0.03 per share compared to a loss of $1.8 million or $0.02 per share in the comparable 2021 period. Non-GAAP adjusted EBITDA for the third quarter of 2022 totaled a loss of $0.9 million compared to a non-GAAP adjusted EBITDA loss $0.6 million for the prior year period. As of September 30, 2022, we had $17.4 million of cash and cash equivalents, $9.8 million of net accounts receivable, $17 million of inventory and $7.3 million available under our credit facility. Now I'll turn the call back to Sean for closing remarks.

Thank you, Scott. We are pleased with the progress made in the third quarter by delivering 5% revenue growth driven by a 12% increase from our biologics products against a challenging market environment. We continue to make promising strides in our key growth pillars, highlighted by strong performance from our latest biologic product introductions and the significant contributions our new distributors have made to our business. The private financing solidified our balance sheet by strengthening our cash position, enabling us to advance our long-term strategy. Additionally, we are excited to welcome Stavros Vizirgianakis to our Board. With his expansive experience, he will be a significant contributor to our future success. In closing, Xtant's values are centered around the 3 Rs: Respect for the individual, responsiveness to our customers and responsibility to our shareholders. These values drive our mission, which is: Our duty is to honor the gift of donation, while our job is to build world-class products so that our patients can live as full and complete a life as possible. Thank you for joining us today and for your continued support. I will now turn it back over to the operator.