Sanara MedTech(US:SMTI)2024-11-12 21:02Acquisition and Partnerships - Sanara MedTech acquired the intellectual property and rights to manufacture and sell CellerateRX Surgical for $15.25 million, including $9.75 million in cash and $3.0 million in stock[197]. - The company has established a 50/50 joint venture, SI Healthcare Technologies, to enhance its wound care solutions and improve patient outcomes[180]. - The company invested $5.0 million to acquire approximately 6.64% of ChemoMouthpiece, LLC, a company developing oral cryotherapy products for cancer patients[202]. - An Exclusive Distribution Agreement was established, appointing SI Technologies as the sole U.S. distributor of CMp's Standard Chemo Regiment Kits for five years[203]. - The Applied Asset Purchase was completed on August 1, 2023, for an initial aggregate purchase price of $15.25 million, including $9.75 million in cash and 73,809 shares valued at $3.0 million[245]. Product Development and Launches - The company launched BIASURGE Advanced Surgical Solution in November 2023, an antimicrobial solution for wound irrigation[182]. - Sanara MedTech's merger with Precision Healing Inc. has led to the development of a diagnostic imager and lateral flow assay for wound assessment, with FDA clearance received in December 2023[178]. - The company plans to commercially launch the THP program in mid-2025, as it has not yet been launched[216]. Financial Performance - For the three months ended September 30, 2024, the company generated net revenue of $21.7 million, a 35% increase from $16.0 million in the same period of 2023[216]. - For the nine months ended September 30, 2024, net revenue reached $60.4 million, reflecting a 28% increase from $47.3 million in the prior year[216]. - Gross profit for the three months ended September 30, 2024, was $19.7 million, a 38% increase from $14.3 million in the same period of 2023[217]. - Gross profit for the nine months ended September 30, 2024, was $54.5 million, up 32% from $41.2 million in the prior year[217]. - Net loss for Q3 2024 was $2.9 million, compared to a net loss of $1.1 million in Q3 2023, with a nine-month net loss of $8.2 million versus $4.2 million in the prior year[229]. Expenses and Costs - SG&A expenses for Q3 2024 were $19.0 million, up from $13.9 million in Q3 2023, with a nine-month total of $54.1 million compared to $40.7 million in the prior year[219]. - R&D expenses for Q3 2024 increased to $1.4 million from $1.0 million in Q3 2023, while nine-month R&D expenses decreased to $3.3 million from $3.5 million[221]. - Higher SG&A expenses were attributed to THP platform buildout, increasing by approximately $1.2 million for Q3 and $1.3 million for the nine months compared to the prior year[220]. - Direct sales and marketing expenses contributed approximately $3.7 million and $9.3 million to the SG&A increases for Q3 and nine months, respectively[220]. - Acquisition costs included $0.4 million in Q3 2024 and $1.0 million in the nine months ended September 30, 2024, related to prospective investments[220]. Cash Flow and Financing - Cash on hand at September 30, 2024, was $16.3 million, significantly higher than $5.1 million at December 31, 2023[235]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $1.0 million, a decrease from $2.4 million for the same period in 2023, due to revenue growth outpacing cash operating expenses[260]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was $18.6 million, compared to $9.8 million for the same period in 2023, primarily due to proceeds from the CRG Term Loan[262]. - The company entered into a Term Loan Agreement providing for a senior secured term loan of up to $55.0 million, with the first borrowing of $15.0 million used to repay an existing loan[201]. - The CRG Term Loan Agreement allows for a senior secured term loan of up to $55.0 million, with a portion of the proceeds used to repay the Cadence Term Loan[253]. Strategic Initiatives - Sanara MedTech's THP segment aims to offer a value-based wound care program targeting Medicare Advantage payers, with contracts expected to last three to five years[185]. - The THP program is designed to reduce wound-related hospitalizations and improve patient quality of life through community and home-based care[184]. - The company plans to leverage technology, including AI and machine learning, to enhance its THP technology platform for better patient care[187]. - Sanara MedTech's reportable segments have changed to include Sanara Surgical and THP, reflecting the importance of value-based care in its strategy[190]. - The company expects to invest between $5.0 million and $10.0 million in the THP strategy during the fourth quarter of 2025, with a commercial launch expected in mid-2025[243]. Accounting and Compliance - Inflation and changing prices have not materially impacted historical results and are not expected to affect future operations[271]. - 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[272].