Mr. Trent Northcutt reports

AURORA SPINE CORPORATION ANNOUNCES FIRST QUARTER FISCAL 2023 FINANCIAL RESULTS

Aurora Spine Corp. has released the financial results for its first quarter fiscal 2023 ended March 31, 2023. All figures are in U.S. dollars.

Financial and business highlights:

• Product mix -- sales of higher-margin Aurora Spine products made up 83 per cent of sales in Q1 2023 compared with 75 per cent of sales in Q1 2022, decreasing the cost of goods percentage to 11.9 per cent compared with 12.9 per cent in the previous comparable period.
• SiLO TFX -- initial surgeries using the SiLO TFX device occurred in March, 2023, with a larger release scheduled in Q3 2023. The SiLO TFX was introduced to over 20 surgeons/physicians and received favourable reviews with agreements to use in their practice.
• IRB study -- received institutional review board approval to commence the multicentre study for the DEXA-C cervical interbody system.
• Zip sales -- sales of the Zip line of implants remains strong at 40.2 per cent of sales in Q1 2023 compared with 33.7 per cent in Q1 2022.

Management commentary

Trent Northcutt, president and chief executive officer of Aurora Spine, stated: "First quarter was a transitional quarter for Aurora, where the industry had to manage certain reimbursement changes that affected our SI joint division. We also added new sales personnel during this time frame and started to establish new relationships to renew our sales strategy. We believe that these changes and investments will be beneficial to the company later this fiscal year and in the long term. Despite these short-term issues, the company has several key initiatives that were positive events, including the initial surgeries of our new SiLO TFX product, which were successfully implanted into patients. We are currently building inventory to ramp up for a full release of the products slated for the third quarter of 2023."

Mr. Northcutt continued: "Looking at our other product lines, Zip continued to act as a key contributor to the company's sales, as the product has recently received improved reimbursements, but its versatility is starting to gain momentum in the marketplace, as more professionals, including neuro, ortho and pain interventionalists, are recognizing the value the Zip line of products have to offer. We believe that the true vision and intent of this product is now coming to fruition. Regarding our DEXA technology, we are highly focused on getting more kits shipped. There is a delicate balance by making sure these kits are placed with appropriate doctors that understand what DEXA has to offer, but also aligning with the appropriate health care facilities. This has been a challenge, but it is a top priority of the sales team."

Mr. Northcutt concluded: "We are very pleased with the progress we are making at Aurora Spine. We have more work to accomplish, but we believe we've made the necessary changes to improve our sales reach. We believe we are embarking on the right pathway forward with many new products that are beneficial to the patient and practitioner. We remain optimist that 2023 can be another year of growth."

Chad Clouse, chief financial officer of Aurora Spine, added: "We are working diligently to maintain a lean structure and improve our collections process to lower our receivables over time. We remain prudent with our expenses while simultaneously making sure we invest appropriately in our multicentre studies and trainings for our portfolio of products."

Financial results

Total revenues for the first quarter of 2023 were $2.96-million, a decrease of 16.7 per cent when compared with $3.55-million in the same quarter one year ago. The decrease is due to 22-per-cent-lower sales of the SiLO allograft system in Q1 2023 compared with Q1 2022 due to the change in the reimbursement coding. SiLO allograft sales were lower by 49 per cent in Q1 2023 as compared with Q4 2022. In addition, the sales have decreased in the spine division and the company has initiated changes to the sales organization to address the issue.

Gross margin on total revenues were 52.2 per cent for the first quarter of 2023, compared with 53.5 per cent in Q1 of 2022.

Total operating expenses were $2,191,000 for the first quarter of 2023, compared with $2,288,000 in the first quarter of 2022. Operating expenses decreased during the first quarter primarily due to less general and administrative fees and marketing expenses.

EBITDAC (a non-GAAP (generally accepted accounting principles) figure, non-IFRS (international financial reporting standards) measure defined as earnings before interest, tax, depreciation, amortization and stock-based compensation) was $(380,000) for the first quarter of 2023, compared with $(150,000) in the first quarter of 2022.

Net loss was $(663,000) for the first quarter of 2023, compared with the first quarter of 2022 with a loss of $(387,000). Basic and diluted net (loss) income per share was (one cent) per share in the first quarter of 2023 and (one cent) per share for the first quarter of 2022.

Full financial statements can be found on SEDAR.

Selected quarterly information

The company's functional currency is the U.S. dollar. The functional currency of the company's U.S. subsidiary Aurora is the U.S. dollar.

Operating results for each quarter for the past two fiscal years are presented in the attached table.

Conference call details

Date and time: Wednesday, May 24, 2023, at 12 p.m. ET/9 a.m. PT

Call-in information: Interested parties can access the conference call by dialling 844-861-5497 or 412-317-5794.

Webcast: Interested parties can access the conference call via a live webcast, which is available in the investor relations section of the company's website.

Replay: A teleconference replay of the call will be available until May 8, 2023, at 877-344-7529 or 412-317-0088, replay access code 7462834. Additionally, a replay of the webcast will be available in the investor relations section of the company's website for 90 days.

About Aurora Spine Corp.

Aurora Spine is focused on bringing new solutions to the spinal and SI joint implant market through a series of innovative, minimally invasive, regenerative spinal implant technologies. Aurora's goal is to improve patients' quality of life by developing and distributing implants using its proprietary technologies to relieve back pain and preserve spinal bone structure and anatomy. The company's fully developed product portfolio primarily addresses the market need for minimally invasive spinal and SI joint surgical devices.

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