Greetings, and welcome to the Xtant Medical's Q3 2020 Financial Results. 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 your host.

Thank you, Operator, and welcome to Xtant Medical's third quarter 2020 financial results call. Joining me today is Sean Browne, President and Chief Executive Officer; and Greg Jensen, Vice President, Finance and 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 that 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 5, 2020, and is supplemented by the company's subsequent SEC filings including the most recent quarterly report on Form 10-Q. 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 Thursday, October 29 at approximately 9 a.m. Eastern Daylight 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, David, and good morning to everyone listening. In light of the COVID-19 pandemic and under challenging and unique conditions, Xtant had a strong third quarter, achieving solid revenue growth compared to the second quarter of this year, although understandably still down compared to the third quarter of last year. We are pleased to have generated revenues of $14 million, and an increase of 33% compared to the second quarter of 2020, primarily reflecting a rebound in domestic spinal elective procedure volumes. We are now at approximately 90% of revenues from a year ago, which is a major accomplishment considering that a majority of spinal procedures were on hold early last quarter. Going forward, we do anticipate that the pandemic will continue to impact revenue for the remainder of 2020, and at a minimum, into early 2021. However, based on current market conditions, we expect fourth quarter revenue to remain at approximately 90% of prior year sales levels consistent with current overall market trends. Taking a step back in anticipation of the evolving market situation, we took an aggressive approach in restructuring our business back in March and April. These actions allowed us to align our business with current COVID environment, while optimizing the cost structure of our business. These moves enabled us to further realize our mission of honoring the gift of donation by allowing our patience to live as full life as possible. In so doing, we took the following measures; one, focused on reengineering our bioproduction processes to produce our products more efficiently and cost-effectively, two, initiated extensive cost reductions, conserved cash, and three, rebuilt inventory levels to catch up on production shortfalls prior to COVID. The actions we implemented allowed us to hit the reset button, and determine what was mission-critical and eliminate everything else.…

Thank you, Sean, and good morning everyone. Total revenue for the three months ended September 30, 2020 was $14 million, representing a decrease of 10.9% compared to $15.7 million in the same quarter of the prior year. This decline in revenue was due primarily to the impact of the COVID-19 pandemic that began in March of this year. However, elective procedures have recovered to some extent as evident by third quarter 2020 revenue, representing close to 90% of third quarter 2019 revenue. As Sean mentioned earlier, sales increased 33% or 3.5 million compared to second quarter 2020 sales. Gross margin for the third quarter of 2020 was 66% compared to 66.2% for the same period in 2019. Gross margin for the first nine months of 2020 was 64.6% compared to 65.2% for the first nine months of 2019. These decreases were primarily attributed to diminished economies of scale, partially offset by reduced depreciation expense. Third quarter 2020 operating expenses were $8.5 million compared to $11.1 million in the same period a year ago. For the first nine months of 2020, operating expenses were $26.4 million compared to $33.1 million for the same period in 2019. As a percentage of total revenue, operating expenses were 60.5% and 67.1% for the three to nine month period ended September 30, 2020 respectively compared to 70.7% and 69.2% for the three and nine months ended September 30, 2019 respectively. The decreases in operating expenses are evident that our cost containment initiatives have been effective to preserve cash and align our business with the current market environment. General and administrative expenses decreased by $1.2 million to $3 million for the third quarter of 2020 compared to the same period in 2019, and decreased by $2.6 million to $10.3 million for the first nine months of…

Thanks, Greg. We are pleased with the third quarter revenue performance which trended positively throughout the quarter, supported by the rebound in domestic spinal elective procedure volumes. Our decisive actions earlier this year to preserve cash while investing in product and system enhancements have us well-positioned to drive growth and expand our distribution network as a stronger and leaner organization. From a financial perspective, by completing our debt restructuring and regaining compliance with NYSE American coupled with our proposed rights offering, we have increased future access to the capital markets to invest in our growth initiatives. We believe this is an exciting time for Xtant as our recent initiatives enable us to deliver on our mission, drive better patient care, and return value to our shareholders. Thank you for joining us today and your continued support.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. End of Q&A: