Sanara MedTech(US:SMTI)2024-08-12 20:02Acquisition and Partnerships - Sanara MedTech acquired the intellectual property and rights to manufacture and sell CellerateRX Surgical for $15.25 million, which includes $9.75 million in cash and $3.0 million in stock[164]. - The Applied Purchase Agreement allows for an additional earnout of up to $10.0 million based on performance thresholds related to net sales of a collagen-based product under development[166]. - Sanara MedTech's acquisition of Precision Healing Inc. aims to improve diagnostic capabilities for wound and skin conditions[150]. - The company continues to expand its product pipeline, including regenerative and orthobiologic technologies from its acquisition of Scendia Biologics[151]. - The company entered into the Applied Purchase Agreement on August 1, 2023, acquiring assets for an initial purchase price of $15.25 million, including $9.75 million in cash and $3.0 million in common stock[204]. - The Applied Purchase Agreement includes potential additional payments of up to $10.0 million based on performance thresholds related to a collagen-based product under development[206]. Product Development and Launches - In December 2023, Sanara MedTech received 510(k) clearance from the U.S. FDA for the Precision Healing diagnostic imager, enhancing its product offerings in wound care[150]. - The company launched BIASURGE Advanced Surgical Solution in November 2023, aimed at improving wound irrigation with antimicrobial properties[152]. - Sanara MedTech's subsidiary, Tissue Health Plus, plans to offer a value-based wound care program targeting Medicare Advantage payers, with contracts expected to last three to five years[155]. - The THP programs are designed to reduce wound-related hospitalizations and improve patient quality of life through community and home-based care[161]. - The company plans to commercially launch the THP program during the second half of 2025[181]. Financial Performance - For the three months ended June 30, 2024, the company generated net revenue of $20.2 million, a 28% increase from $15.8 million in the same period of 2023[181]. - For the six months ended June 30, 2024, net revenue was $38.7 million, reflecting a 24% increase from $31.3 million in the prior year[181]. - Gross profit for the three months ended June 30, 2024, was $18.2 million, a 34% increase from $13.6 million in the same period of 2023[182]. - For the six months ended June 30, 2024, gross profit reached $34.8 million, a 29% increase from $27.0 million in the prior year[182]. - The net loss for the three months ended June 30, 2024, was $3.5 million, compared to a net loss of $1.9 million in 2023, and for the six months ended June 30, 2024, the net loss was $5.3 million, compared to $3.1 million in 2023[192]. Expenses and Costs - Selling, general and administrative (SG&A) expenses for the three months ended June 30, 2024, were $19.0 million, up from $13.8 million in the same period of 2023[185]. - SG&A expenses for the six months ended June 30, 2024, totaled $35.1 million, compared to $26.8 million in the same period of 2023[185]. - R&D expenses decreased to $1.0 million for the three months ended June 30, 2024, down from $1.2 million in the same period of 2023, and to $1.9 million for the six months ended June 30, 2024, down from $2.5 million in 2023[187]. - Depreciation and amortization expense rose to $1.1 million for the three months ended June 30, 2024, compared to $0.8 million in 2023, and to $2.2 million for the six months ended June 30, 2024, up from $1.6 million in 2023[188]. - SG&A expenses increased by approximately $3.4 million and $5.6 million for the three and six months ended June 30, 2024, primarily due to higher direct sales and marketing expenses[186]. Cash Flow and Financing - Cash on hand at June 30, 2024, was $6.2 million, an increase from $5.1 million at December 31, 2023[197]. - The company entered into a loan agreement with Cadence Bank for an aggregate principal amount of $12.0 million, with an advance of $9.75 million made on August 1, 2023[169]. - The company entered into a CRG Term Loan Agreement on April 17, 2024, providing for a senior secured term loan of up to $55.0 million, with an initial advance of $15.0 million[201]. - The Cadence Term Loan Agreement was terminated following the repayment of all outstanding amounts on April 17, 2024[201]. - For the six months ended June 30, 2024, net cash used in operating activities was $3.0 million, a decrease from $3.5 million for the same period in 2023, attributed to net revenue growth outpacing cash operating expenses[218]. - The company reported net cash provided by financing activities of $4.1 million for the six months ended June 30, 2024, compared to $0.6 million for the same period in 2023, primarily due to proceeds from the CRG Term Loan[220]. Market and Economic Conditions - Inflation and changing prices have not materially impacted historical results and are not expected to affect future results[228]. - Critical accounting estimates have not significantly changed since December 31, 2023, and are detailed in the Annual Report on Form 10-K for the year ended December 31, 2023[230].