This article first appeared on GuruFocus .
Release Date: August 11, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Successfully integrated the Dillon sales team, expanding the commercial organization to over 25 reps and adding national accounts expertise.
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Launched Trivium Shaped, which is showing strong early sales traction and complements recent product launches like Collagen X and OsteoFactor Pro.
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The Dillon distribution agreement provides entry into a $1 billion hemostatic products market, with Hemoblast sales already contributing $1.5 million in Q2.
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Expanded product portfolio positions Xtant to address a combined TAM of approximately $7.5 billion across regenerative medicine, chronic wound care, and surgical repair.
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Expects significant sales synergies from cross-selling as the new specialty reps gain familiarity with the broader product line, driving accelerating biologics growth in Q3 and beyond.
Negative Points
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Total revenue declined to $23 million in Q2 2026 from $35.4 million in Q2 2025, with pro forma revenue also down due to headwinds in the amnio product line.
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Gross margin fell to 57.9% from 68.6% year-over-year, impacted by the cessation of Q-Code license revenue and increased excess inventory charges.
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Net loss of $9.4 million in Q2 2026, compared to net income of $3.6 million in the prior year, with adjusted EBITDA turning negative.
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Revenue guidance for full-year 2026 was reduced to $99-$103 million from $101-$105 million due to lower-than-expected biologics revenue and persistent amnio headwinds.
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The integration of new sales reps and transition of Hemoblast purchase orders to Xtant took longer than expected, limiting revenue recognition and contributing to soft Q2 sales.
Q & A Highlights
Q: Can you peel apart the layers of orthobiologics for us? What's underperforming relative to expectations when guidance was initially issued? A: Sean Brown (CEO) identified two key areas of softness: the older workhorse product lines like OsteoSelect and OsteoSponge, which declined more than expected, and the Amnio product line, which faced headwinds in the advanced wound care market. While the Amnio decline was somewhat anticipated, the company had expected to see "green shoots" of growth in that area, which have not yet materialized.
Q: Could you further talk about the cross-selling opportunities from the addition of the reps associated with Hemoblast? And what does your guidance assume for Hemoblast this year compared to expectations upon the acquisition? A: Sean Brown (CEO) explained that the new Hemoblast reps provide access to areas outside traditional orthobiologics, particularly with products like Collagen X and Amnio. They also have strong relationships in materials management, positioning Xtant as a one-stop shop for hospitals. Scott Niels (CFO) added that the company has not backed off its expectation of over $1 million per month in transactional volume on a gross basis, but has left a buffer in guidance to accommodate any orders that may continue to ship through Dillon during the transition.
Q: Regarding the Dillon sales force, exactly when in the quarter did they start or restart promoting products following training? And did you give them access to all of Xtant's products or just a limited few? A: Sean Brown (CEO) detailed the integration timeline: the deal closed on April 13, and the first few weeks were spent on payroll and HR integration. They quickly added Collagen X and Amnio products to the reps' bags, spending most of the quarter training them on those lines. After June, they were given the entire product portfolio and tasked with covering some of Xtant's lesser-covered independent agents. Brown noted the company took a "step back to sharpen the saw," which impacted Q2 sales momentum, but the commercial footprint has grown from a small team to over 25 reps and multiple national accounts personnel.
Q: What were the main drivers of the decline in total revenue for the second quarter of 2026? A: Scott Niels (CFO) reported total revenue of $23 million, down from $35.4 million in Q2 2025, or $24.8 million on a pro forma basis excluding divested businesses and non-recurring license revenue. The decline was primarily driven by headwinds in Amnio product revenue tied to the advanced wound care market, partially offset by approximately $1.5 million of Hemoblast sales and higher-than-anticipated hardware revenue from the Cortera Spinal Fixation System.
Q: Why was Hemoblast revenue recognition lower than expected in the second quarter? A: Scott Niels (CFO) explained that the $1.5 million of Hemoblast revenue was primarily recognized on a net basis because products were shipped directly from Dillon Technologies' facility under Dillon's customer agreements. The company had anticipated more transactions would be ordered from and shipped by Xtant, which would have increased reported revenue by approximately $600,000 to $700,000. Going forward, substantially all Hemoblast sales are expected to be processed through Xtant's own agreements and recognized on a gross basis.
Q: What caused the decrease in gross margin from 68.6% to 57.9%? A: Scott Niels (CFO) attributed the decrease primarily to the cessation of Q-Code license revenue from amniotic membrane agreements that terminated at the end of 2025, along with reduced production efficiencies and increased charges for excess and obsolete inventory. These were partially offset by improvements in production mix.
Q: What drove the increase in operating expenses for the second quarter? A: Scott Niels (CFO) noted operating expenses increased to $22.5 million from $19.7 million, primarily due to a $5 million exclusive fee paid to Dillon Technologies in connection with the distribution agreement, recorded as an operating expense. This was partially offset by lower G&A and sales and marketing expenses following the divestiture of non-core assets to Companion Spine in December 2025.
Q: Why is the company reducing its full-year revenue guidance? A: Sean Brown (CEO) stated that the guidance reduction to $99 million to $103 million (from $101 million to $105 million) reflects lower-than-expected Biologics revenue in Q2 and ongoing headwinds in the Amnio product line tied to the advanced wound care market, which are expected to persist through the back half of the year. Despite this, the company remains confident that its enhanced commercial presence and expanded portfolio will drive top-line growth.
Q: What is the status of the Trivium Shaped product launch? A: Sean Brown (CEO) reported strong early sales traction since the launch in May. Trivium Shaped, an extension of the Trivium bone graft portfolio, offers pre-shaped configurations like boats and strips that reduce preparation time and support predictable placement. This launch, along with Collagen X and OsteoFactor Pro, is a key driver of overall biologics growth.
Q: How does the company view its market opportunities with the expanded portfolio? A: Sean Brown (CEO) highlighted that innovations like Trivium Shaped, along with amnio and collagen product lines, position Xtant to move into adjacent high-value markets including chronic wound care and surgical repair, a combined TAM of approximately $6.5 billion. With the addition of Hemoblast Velos, the company gains access to an additional $1 billion TAM, making it a partner of choice in regenerative medicine.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
