Greetings and welcome to the Xtant Medical Fourth Quarter and Full Year 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 fourth quarter and full year 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 7, 2023, 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 Tuesday, March 7, at approximately 9 a.m. Eastern Standard 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. I'm excited to share with you today the significant progress made by Xtant Medical in recent months. We achieved several major milestones centered around our four key growth initiatives that strengthened our long term business prospects. Notably, we announced last week the acquisition of the Coflex product line from Surgicaline. This is Xtant's first acquisition since 2015 and is critical to our success as it not only adds scale to our business, but also enhances our margin profile. I'll discuss this acquisition more shortly. But first, turning to our fourth quarter performance. We closed 2022 on a positive note, generating fourth quarter revenue growth of nearly 10%, driven by continued strength of our biologics business which continued to realize robust demand led by our new products. Biologics grew by 14% in Q4 and 12% year-over-year. Legacy hardware sales declined by 16% for the year, but only down 7% for the fourth quarter showing that our new focus on the ASC markets are starting to make an impact. One of our biggest challenges in the biologics segment for our business throughout fiscal year 2022 was our ability to produce enough product to keep up with demand. More pointedly, we had to walk away from a significant amount of business in fiscal year '22 because we did not have enough labor to build a product we needed. In order to meet this demand, one of the most impactful things we have done was hiring Mark Schallenberger to be our Chief Operations Officer. Mark is an industry veteran that brings a ton of experience to our company. Additionally, we focused on ramping up our production workforce. We started this process earlier in 2022, but given the length of onboarding time to recruit and train our processing team, there has been…

Thank you, Sean, and good morning everyone. Total revenue for the fourth quarter of 2022 is $15.3 million compared to $14 million for the fourth quarter of 2021. For the full year 2022 total revenue was $58 million compared to $55.3 million for 2021, an increase of 5%. This is attributed primarily to revenue from new products introduced during 2021. Gross margin for the fourth quarter in 2022 was 54.4%, compared to 55.1% for the same period in 2021. Gross margin for the full year 2022 was 55.4%, compared to 58.8% for the same period in 2021. These decreases are primarily due to higher production cost with increased charges for excess and obsolete inventory also contributing to the full year decline. Fourth quarter 2022 operating expenses were $10 million, compared to $9.6 million in the same period a year ago. For the full year 2022, operating expenses were $38.9 million compared to $36.3 million for 2021. As a percentage of total revenue, operating expenses were 65.7% and 67.1% for the 3 and 12 month periods ended December 31, 2022, respectively, compared to 68.8% and 65.8% for the 3 and 12 month periods ended December 31, 2021, respectively. General and administrative expenses were $4 million and $15.5 million for the 3 and 12 months ended December 31, 2022, representing a decrease of 4% and an increase of 7%, respectively, over the prior year periods. The decrease for the quarterly comparison resulted from reduced severance expense, while the increase for the annual comparison is primarily attributable to additional expenses related to various compensation plans, product registrations and costs related to ERP system upgrades partially offset by legal settlement expenses during the prior year. Sales and marketing expenses were $5.8 million and $22.5 million for the 3 and 12 months ended. December 31,…

Thank you, Scott. In closing, we exited 2022 on a positive note with solid revenue growth supported by strong demand for our leading spine products and started 2023 on an exciting note with the acquisition of the Coflex product line. Adding Coflex provides us with the assets, talent and network we need to add scale and grow profitably. Our enterprise is now 25% larger and we are on a path to achieve profitability in the near term. Looking forward, we plan to continue to be active in acquiring other businesses that align with our strategy, but will remain diligent in our approach. Finally, later this afternoon, I will be presenting at the Canaccord Musculoskeletal Conference at 06:30 PM Eastern Time or 03:30 PM Pacific Time. A live webcast to my presentation will be available on the Investor Relations section of our website at www.xtantmedical.com. We hope many of you can tune in. Thank you for joining us today and for your continued support. I will now turn it back over to the operator.

Thank you. That concludes our call. All parties may now disconnect. End of Q&A: