Sanara MedTech(SMTI) - 2024 Q2 - Quarterly Results

Sanara MedTech Inc. Announces Second Quarter 2024 Results Strategic and Operational Highlights Sanara MedTech achieved its eleventh consecutive record revenue quarter with $20.2 million in sales. Despite a net loss of $3.5 million, Adjusted EBITDA turned positive at $0.6 million. Key strategic moves included a new national GPO agreement expanding market access, significant growth in the distributor network, strengthening the senior management team with new appointments, and securing a $55.0 million non-dilutive term loan to fund future growth Q2 2024 Financial Snapshot | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Sales | $20.2 million | $15.8 million | | Net Loss | ($3.5 million) | ($1.9 million) | | Adjusted EBITDA* | $0.6 million | ($0.3 million) | - The company achieved its eleventh consecutive record revenue quarter[2] - Strategic operational achievements in Q2 2024 include[3] - Executed an agreement with a national GPO, increasing facility access by over 1,000 - Expanded the distributor network to over 300 distributors with more than 2,500 potential sellers - Products are now contracted or approved for sale in over 4,000 hospitals/ambulatory surgery centers - The company strengthened its management team by appointing Jake Waldrop as Chief Operating Officer and Tyler Palmer as Chief Corporate Development and Strategy Officer[4] - Secured a $55.0 million non-dilutive term loan agreement with CRG, receiving an initial $15.0 million to support growth initiatives[4] Financial Performance Analysis Sales Analysis (Consolidated) Consolidated net revenue for Q2 2024 increased by 28% to $20.2 million from $15.8 million in Q2 2023. This growth was driven by increased sales of soft tissue repair products, deeper penetration into existing accounts, and expansion into new U.S. markets through a larger independent distribution network Net Revenue Comparison (Q2 2024 vs. Q2 2023) | Period | Net Revenue | | :--- | :--- | | Q2 2024 | $20.2 million | | Q2 2023 | $15.8 million | - The number of facilities where the company's products were sold grew to over 800 in Q2 2024, compared to over 600 in Q2 2023[6] - Revenue growth was primarily due to increased sales of key soft tissue repair products, including CellerateRX Surgical, FORTIFY TRG, FORTIFY FLOWABLE, BIASURGE, and TEXAGEN[6] Earnings Analysis (Consolidated & Segmented) The company's consolidated net loss widened to $3.5 million in Q2 2024 from $1.9 million in the prior-year period, mainly due to a $3.4 million increase in SG&A, $0.9 million in executive separation costs, and $0.6 million in interest expense. However, consolidated Adjusted EBITDA improved to $0.6 million from a loss of $0.3 million. At the segment level, Sanara Surgical's profitability declined, while the Tissue Health Plus (THP) segment narrowed its net loss Consolidated Earnings Summary (Q2 2024 vs. Q2 2023) | Metric | 2024 (USD) | 2023 (USD) | Change | | :--- | :--- | :--- | :--- | | Net Loss | ($3,529,202) | ($1,866,180) | +89.1% | | Adjusted EBITDA | $592,181 | ($295,624) | +299.0% | - The higher net loss was primarily driven by[7] - Increased SG&A costs (+$3.4 million) - Executive separation costs ($0.9 million) - Acquisition costs ($0.4 million) - Interest expense from the new term loan ($0.6 million) Segment Performance (Q2 2024 vs. Q2 2023) | Segment | Metric | Q2 2024 (USD) | Q2 2023 (USD) | | :--- | :--- | :--- | :--- | | Sanara Surgical | Net Income/(Loss) | ($2,214,313) | $100,000 | | | Segment EBITDA | $1,393,959 | $1,100,000 | | Tissue Health Plus (THP) | Net Loss | ($1,314,889) | ($2,000,000) | | | Segment EBITDA | ($801,778) | ($1,400,000) | Financial Statements Consolidated Balance Sheets As of June 30, 2024, Sanara MedTech's total assets stood at $73.4 million, a slight decrease from $73.9 million at year-end 2023. Total liabilities increased to $32.0 million from $29.3 million, primarily due to a rise in long-term debt to $14.4 million. Cash on hand increased to $6.2 million, while total shareholders' equity decreased to $41.4 million Key Balance Sheet Items | Account | June 30, 2024 (USD) | Dec 31, 2023 (USD) | | :--- | :--- | :--- | | Cash | $6,150,375 | $5,147,216 | | Total Current Assets | $20,811,428 | $19,005,869 | | Total Assets | $73,383,605 | $73,871,149 | | Long-term debt, net | $14,371,485 | $9,113,123 | | Total Liabilities | $31,981,610 | $29,283,132 | | Total Shareholders' Equity | $41,401,995 | $44,588,017 | Consolidated Statements of Operations (Unaudited) For the second quarter ended June 30, 2024, the company reported a 28% increase in net revenue to $20.2 million and a 34% increase in gross profit to $18.2 million compared to the prior year. However, a significant rise in operating expenses to $21.0 million led to an operating loss of $2.9 million and a net loss of $3.5 million, or ($0.41) per share Statement of Operations Highlights (Three Months Ended June 30) | Metric | 2024 (USD) | 2023 (USD) | Change | | :--- | :--- | :--- | :--- | | Net Revenue | $20,158,823 | $15,753,164 | +28.0% | | Gross Profit | $18,150,137 | $13,565,648 | +33.8% | | Operating Expenses | $21,034,993 | $15,431,828 | +36.3% | | Operating Loss | ($2,884,856) | ($1,866,180) | +54.6% | | Net Loss | ($3,529,202) | ($1,866,180) | +89.1% | | Net Loss Per Share | ($0.41) | ($0.22) | +86.4% | Consolidated Statements of Cash Flows (Unaudited) For the first six months of 2024, net cash used in operating activities was $3.0 million, an improvement from $3.5 million used in the same period of 2023. Financing activities provided $4.1 million in cash, primarily from $14.1 million in net loan proceeds used in part to pay off a $9.8 million line of credit. This resulted in a net cash increase of $1.0 million, ending the period with $6.2 million in cash Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,006,300) | ($3,461,162) | | Net cash used in investing activities | ($124,580) | ($40,000) | | Net cash provided by financing activities | $4,134,039 | $602,395 | | Net increase (decrease) in cash | $1,003,159 | ($2,898,767) | | Cash, end of period | $6,150,375 | $6,060,228 | Non-GAAP Financial Measures Definition and Use of Non-GAAP Measures The company utilizes non-GAAP financial measures, specifically Adjusted EBITDA and Segment EBITDA, to supplement its GAAP reporting and provide a clearer view of its core operational performance. These measures exclude items such as interest, taxes, depreciation, amortization, share-based compensation, and changes in earnout liabilities. Beginning in Q2 2024, the calculation was updated to also exclude executive separation costs and acquisition-related expenses to better reflect ongoing operations, with prior periods recast for consistency - The company uses Adjusted EBITDA and Segment EBITDA to assess and communicate its financial performance, believing they facilitate comparisons of core business operations across periods[19][20] - Beginning in Q2 2024, the company updated its Adjusted EBITDA calculation to exclude executive separation costs and legal/diligence expenses related to acquisitions. Prior periods have been recast to conform to this new definition[19] - The company cautions that these non-GAAP measures are not a substitute for GAAP information and have limitations, but believes they are useful for investors when reviewed alongside corresponding GAAP measures[21] Reconciliation of Net Income (Loss) to EBITDA The company provided detailed reconciliations of its GAAP net loss to non-GAAP Adjusted EBITDA and Segment EBITDA. For the second quarter of 2024, a consolidated net loss of $3.5 million was reconciled to a positive Adjusted EBITDA of $0.6 million. This was driven by adjustments for items including $1.1 million in depreciation and amortization, $1.1 million in non-cash share-based compensation, and $0.9 million in executive separation costs Reconciliation of Net Loss to Adjusted EBITDA (Three Months Ended June 30) | Line Item | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | Net Loss | ($3,529,202) | ($1,866,180) | | Depreciation and amortization | $1,105,507 | $803,694 | | Noncash share-based compensation | $1,082,750 | $1,127,332 | | Executive separation costs | $904,780 | - | | Acquisition costs | $397,773 | - | | Other adjustments | $630,573 | ($360,470) | | Adjusted EBITDA | $592,181 | ($295,624) | Segment EBITDA (Three Months Ended June 30, 2024) | Segment | Net Income (Loss) (USD) | Segment EBITDA (USD) | | :--- | :--- | :--- | | Sanara Surgical | ($2,214,313) | $1,393,959 | | THP | ($1,314,889) | ($801,778) | Other Information Conference Call Sanara MedTech will host a conference call on Tuesday, August 13, 2024, at 9:00 a.m. Eastern Time to discuss its second-quarter results. The call will be accessible via a toll-free number and a live webcast, with a telephonic replay available until August 27, 2024 - A conference call is scheduled for Tuesday, August 13, 2024, at 9:00 a.m. Eastern Time[9] - A live webcast will be available on the Investor Relations section of the company's website, with a one-year online replay[10] About Sanara MedTech Inc. Sanara MedTech Inc. is a medical technology company that develops and commercializes technologies for the surgical, chronic wound, and skincare markets. The company's product portfolio is primarily sold in North America and includes advanced wound care and surgical tissue repair products. Sanara also offers virtual consultation services and is actively developing a pipeline of new product candidates - The company focuses on developing and commercializing technologies to improve clinical outcomes and reduce healthcare costs in the surgical, chronic wound, and skincare sectors[11] - Key products include CellerateRX Surgical, FORTIFY TRG, TEXAGEN Amniotic Membrane Allograft, and BIAKŌS Antimicrobial products[11] Forward-Looking Statements The press release includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements, which involve risks and uncertainties, relate to future events such as product development, commercialization, and business expansion. The company cautions that actual results may differ materially and undertakes no obligation to update these statements - The document contains forward-looking statements concerning matters like new product development, regulatory approval, and business expansion, which are subject to risks and uncertainties[12] - The company disclaims any obligation to update forward-looking statements to reflect future events or circumstances[13]