Sanara MedTech(SMTI) - 2025 Q2 - Quarterly Results

Executive Summary & Key Highlights Sanara MedTech reported strong net revenue growth for both the second quarter and first six months of 2025, primarily driven by its Sanara Surgical segment, with significant improvements in Adjusted EBITDA and a reduced net loss in Q2, despite THP segment losses Overall Financial Performance (Q2 & YTD 2025) Sanara MedTech reported strong net revenue growth for both the second quarter and first six months of 2025, primarily driven by its Sanara Surgical segment. The company also saw significant improvements in Adjusted EBITDA for both periods, and a reduced net loss in Q2, though the THP segment continued to incur losses Key Financial Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--------------- | :------------- | :------------- | :------------- | | Net Revenue | $25.8 million | $20.2 million | +28% | | Net Loss | $(2.0) million | $(3.5) million | -42.9% (Improvement) | | Adjusted EBITDA | $2.7 million | $0.6 million | +350% | | Sanara Surgical Net Income (Loss) | $0.5 million | $(2.2) million | N/A (Improvement) | | Sanara Surgical Segment Adjusted EBITDA | $4.7 million | $1.4 million | +235.7% | | THP Net Loss | $(2.5) million | $(1.3) million | +92.3% (Worsening) | | THP Segment Adjusted EBITDA | $(2.1) million | $(0.8) million | +162.5% (Worsening) | Key Financial Highlights (First Six Months 2025 vs. 2024) | Metric | YTD 2025 | YTD 2024 | Change (%) | | :--------------- | :------------- | :------------- | :------------- | | Net Revenue | $49.3 million | $38.7 million | +27% | | Net Loss | $(5.5) million | $(5.3) million | +3.8% (Worsening) | | Adjusted EBITDA | $3.3 million | $0.9 million | +266.7% | | Sanara Surgical Net Loss | $(0.1) million | $(2.7) million | -96.3% (Improvement) | | Sanara Surgical Segment Adjusted EBITDA | $7.4 million | $2.5 million | +196% | | THP Net Loss | $(5.4) million | $(2.6) million | +107.7% (Worsening) | | THP Segment Adjusted EBITDA | $(4.1) million | $(1.6) million | +156.3% (Worsening) | Management Commentary & Strategic Initiatives Management expressed satisfaction with the Sanara Surgical segment's impressive revenue growth, driven by commercial strategy execution and product demand. Concurrently, the company initiated a formal process to evaluate strategic alternatives for its Tissue Health Plus (THP) subsidiary to maximize shareholder value, despite launching a pilot program for THP and planning continued investment in the near term - Sanara Surgical segment delivered 28% year-over-year revenue growth in Q2 2025, fueled by sales of CellerateRX Surgical, BIASURGE, and bone fusion products. This performance was driven by expanding the distributor network, adding new healthcare facilities, and penetrating existing accounts[4] - The Sanara Surgical segment enhanced gross margins and realized significant operating expense leverage, generating $0.5 million of net income and $4.7 million of Segment Adjusted EBITDA in Q2 2025, with strong year-over-year improvements[4] - For the THP segment, a pilot program with a wound care provider group was launched in late June 2025. The company initiated a formal process to evaluate strategic alternatives for Tissue Health Plus, LLC, with the goal of maximizing shareholder value, engaging a strategic advisor. Cash investment in THP is projected to be between $5.5 million and $6.5 million in the second half of 2025[6] Second Quarter 2025 Financial Performance Net revenue for the second quarter of 2025 increased by 28% year-over-year, primarily driven by strong sales growth in both soft tissue repair products and bone fusion products Revenue Analysis (Q2 2025) Net revenue for the second quarter of 2025 increased by 28% year-over-year, primarily driven by strong sales growth in both soft tissue repair products and bone fusion products Q2 2025 Revenue Streams | Revenue Stream | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :---------------------- | :----------- | :----------- | :----------- | :--------- | | Soft tissue repair products | $22,661,457 | $17,641,318 | $5,020,139 | +28% | | Bone fusion products | $3,142,795 | $2,516,599 | $626,196 | +25% | | SaaS | $26,582 | $- | $26,582 | N/A | | Royalties | $- | $906 | $(906) | -100% | | Total Net Revenue | $25,830,834 | $20,158,823 | $5,672,011 | +28% | - The increase in soft tissue repair product sales was primarily due to increased demand for CellerateRX Surgical Activated Collagen and BIASURGE Advanced Surgical Solution, resulting from increased penetration of existing medical facilities, expansion into additional facilities, and development of the independent distribution network[8] Gross Profit and Margin (Q2 2025) Gross profit increased by 32% year-over-year in Q2 2025, with gross margin improving to 93% of net revenue, driven by higher sales of soft tissue repair products and reduced manufacturing costs Q2 2025 Gross Profit and Margin | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :----------- | :------------- | :------------- | :----------- | :--------- | | Gross Profit | $23.9 million | $18.2 million | $5.7 million | +32% | | Gross Margin | 93% | 90% | +3 pp | N/A | - The higher gross margin in Q2 2025 was attributed to increased sales of soft tissue repair products and lower manufacturing costs related to CellerateRX Surgical[9] Operating Expenses (Q2 2025) Operating expenses for Q2 2025 increased by 14% year-over-year, primarily due to higher selling, general and administrative (SG&A) expenses, particularly in direct sales and marketing and the THP segment, alongside increased research and development (R&D) investments Q2 2025 Operating Expenses | Expense Category | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :---------------------------- | :------------- | :------------- | :----------- | :--------- | | Total Operating Expenses | $23.9 million | $21.0 million | $2.9 million | +14% | | Selling, General and Administrative (SG&A) | $21.6 million | $19.0 million | $2.6 million | +14% | | Research and Development (R&D) | $1.3 million | $1.0 million | $0.3 million | +28% | - The increase in SG&A was primarily driven by a $1.5 million increase in direct sales and marketing expenses and $1.3 million of additional SG&A in the THP segment, partially offset by $0.2 million of lower costs in the Sanara Surgical segment[10] - The increase in R&D was due in part to the development of enhancements to the Sanara Surgical product portfolio[10] Operating Loss, Other Expense, and Net Loss (Q2 2025) The company significantly reduced its operating loss and net loss in Q2 2025 compared to the prior year, with the Sanara Surgical segment achieving net income. However, other expenses increased due to higher interest costs Q2 2025 Operating Loss, Other Expense, and Net Loss | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--------------- | :------------- | :------------- | :----------- | :--------- | | Operating Loss | $(31) thousand | $(2.9) million | $2.8 million | -98.9% (Improvement) | | Other Expense | $(2.0) million | $(0.6) million | $(1.4) million | +233.3% (Worsening) | | Net Loss | $(2.0) million | $(3.5) million | $1.5 million | -42.9% (Improvement) | | Sanara Surgical Net Income (Loss) | $0.5 million | $(2.2) million | $2.7 million | N/A (Improvement) | | THP Net Loss | $(2.5) million | $(1.3) million | $(1.2) million | +92.3% (Worsening) | - Other expense for Q2 2025 primarily included higher interest expense and fees related to the CRG Term Loan Agreement[11] Adjusted EBITDA (Q2 2025) Adjusted EBITDA for Q2 2025 saw substantial growth, driven by strong performance in the Sanara Surgical segment, while the THP segment continued to report negative Adjusted EBITDA Q2 2025 Adjusted EBITDA by Segment | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--------------- | :------------- | :------------- | :----------- | :--------- | | Adjusted EBITDA (Consolidated) | $2.7 million | $0.6 million | $2.1 million | +350% | | Sanara Surgical Segment Adjusted EBITDA | $4.7 million | $1.4 million | $3.3 million | +235.7% | | THP Segment Adjusted EBITDA | $(2.1) million | $(0.8) million | $(1.3) million | +162.5% (Worsening) | Cash Flow and Balance Sheet Snapshot (Q2 2025) The company generated positive cash flow from operating activities in Q2 2025, a significant improvement from the prior year. Cash balance increased, but long-term debt also rose, with available borrowing capacity noted Q2 2025 Cash Flow from Operating Activities | Metric | Q2 2025 | Q2 2024 | Change ($) | | :----------------------------------- | :------------- | :------------- | :----------- | | Cash flow from operating activities | $2.7 million provided | $1.4 million used | $4.1 million (Improvement) | Balance Sheet Snapshot (as of June 30, 2025) | Metric | June 30, 2025 | Dec 31, 2024 | Change ($) | | :--------------- | :------------- | :------------- | :----------- | | Cash | $17.0 million | $15.9 million | $1.1 million | | Long-term debt | $44.2 million | $30.7 million | $13.5 million | | Available borrowing capacity | $12.25 million | N/A | N/A | - The $12.25 million of available borrowing capacity must be borrowed prior to December 31, 2025, if at all[14] First Six Months 2025 Financial Performance Net revenue for the first six months of 2025 increased by 27% year-over-year, driven by strong sales growth in both soft tissue repair products and bone fusion products Revenue Analysis (YTD 2025) Net revenue for the first six months of 2025 increased by 27% year-over-year, driven by strong sales growth in both soft tissue repair products and bone fusion products YTD 2025 Revenue Streams | Revenue Stream | YTD 2025 | YTD 2024 | Change ($) | Change (%) | | :---------------------- | :----------- | :----------- | :----------- | :--------- | | Soft tissue repair products | $43,193,897 | $33,723,610 | $9,470,287 | +28% | | Bone fusion products | $6,044,451 | $4,970,945 | $1,073,506 | +22% | | SaaS | $26,582 | $- | $26,582 | N/A | | Royalties | $- | $906 | $(906) | -100% | | Total Net Revenue | $49,264,930 | $38,695,461 | $10,569,469 | +27% | Net Loss (YTD 2025) The company's consolidated net loss for the first six months of 2025 slightly increased year-over-year, primarily due to increased losses in the THP segment, despite improved performance in the Sanara Surgical segment YTD 2025 Net Loss by Segment | Metric | YTD 2025 | YTD 2024 | Change ($) | Change (%) | | :--------------- | :------------- | :------------- | :----------- | :--------- | | Net Loss (Consolidated) | $(5.5) million | $(5.3) million | $(0.2) million | +3.8% (Worsening) | | Sanara Surgical Net Loss | $(0.1) million | $(2.7) million | $2.6 million | -96.3% (Improvement) | | THP Net Loss | $(5.4) million | $(2.6) million | $(2.8) million | +107.7% (Worsening) | Adjusted EBITDA (YTD 2025) Adjusted EBITDA for the first six months of 2025 showed substantial improvement, driven by the Sanara Surgical segment, while the THP segment's negative Adjusted EBITDA widened YTD 2025 Adjusted EBITDA by Segment | Metric | YTD 2025 | YTD 2024 | Change ($) | Change (%) | | :--------------- | :------------- | :------------- | :----------- | :--------- | | Adjusted EBITDA (Consolidated) | $3.3 million | $0.9 million | $2.4 million | +266.7% | | Sanara Surgical Segment Adjusted EBITDA | $7.4 million | $2.5 million | $4.9 million | +196% | | THP Segment Adjusted EBITDA | $(4.1) million | $(1.6) million | $(2.5) million | +156.3% (Worsening) | Cash Flow from Operations (YTD 2025) The company generated positive cash flow from operating activities for the first six months of 2025, a significant improvement from cash used in the prior year period YTD 2025 Cash Flow from Operating Activities | Metric | YTD 2025 | YTD 2024 | | :----------------------------------- | :------------- | :------------- | | Net cash provided by (used in) operating activities | $0.7 million provided | $(3.0) million used | | Net cash used in investing activities | $(9.1) million used | $(0.1) million used | | Net cash provided by financing activities | $9.5 million provided | $4.1 million provided | | Net increase in cash | $1.1 million | $1.0 million | | Cash, end of period | $17.0 million | $6.2 million | - Significant investing activities in YTD 2025 included purchases of property and equipment ($3.48 million), investment in equity securities ($3.54 million), and the CarePICS acquisition ($2.12 million)[30] - Financing activities in YTD 2025 were primarily driven by loan proceeds, net of debt issuance costs, totaling $12.02 million[30] Company Information This section provides background on Sanara MedTech Inc., details of its Q2 2025 conference call, information regarding forward-looking statements, and investor relations contact details About Sanara MedTech Inc. Sanara MedTech Inc. is a medical technology company focused on developing and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the surgical, chronic wound, and skin markets. The company offers a diverse portfolio of surgical, wound, and skin products, primarily in North America, and maintains a pipeline of innovative product candidates - Sanara MedTech Inc. is a medical technology company focused on developing and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the surgical, chronic wound and skin markets[21] - The company markets and distributes surgical products including CellerateRX Surgical, FORTIFY TRG, FORTIFY FLOWABLE, ACTIGEN, ALLOCYTE Plus, BiFORM, TEXAGEN, and BIASURGE. Wound care products include BIAKŌS® Antimicrobial Skin and Wound Cleanser, Wound Gel, and Irrigation Solution[21] - Sanara's pipeline includes product candidates for mitigation of opportunistic pathogens and biofilm, wound re-epithelialization and closure, necrotic tissue debridement, and cell compatible substrates. The company actively seeks long-term strategic partnerships for products that improve outcomes at a lower overall cost[21] Conference Call Details Sanara MedTech hosted a conference call on August 13, 2025, to discuss its second quarter 2025 financial results, with options for live teleconference, replay, and webcast - A conference call was held on Wednesday, August 13, 2025, at 8:00 a.m. Eastern Time to discuss Q2 2025 results[19] - A telephonic replay was available through Wednesday, August 27, 2025, and a live webcast and online replay are available on the Company's Investor Relations website[19][20] Information about Forward-Looking Statements The press release contains forward-looking statements, which are subject to various risks, contingencies, and uncertainties that could cause actual results to differ materially. The company disclaims any obligation to revise these statements unless required by applicable securities laws - Statements in the press release that do not constitute historical facts are 'forward-looking statements' under the Private Securities Litigation Reform Act of 1995, identifiable by terms such as 'aims,' 'anticipates,' 'believes,' 'expect,' etc[22] - These statements involve risks and uncertainties, including those related to new product development and regulatory approval, executive team building, utilization of loan proceeds, product demand, market acceptance, economic conditions, competition, pricing, acquisitions, and other risks detailed in SEC filings[22] - All forward-looking statements are made as of their date, and the Company undertakes no obligation to revise them to reflect future circumstances or unanticipated events, except as required by applicable securities laws[23] Investor Relations Contact Contact information for investor relations inquiries is provided - Investor Relations Contact: Jack Powell or Mike Piccinino, CFA, ICR Healthcare, via email at IR@sanaramedtech.com[24] Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, and statements of cash flows, for Sanara MedTech Inc Consolidated Balance Sheets The consolidated balance sheets show an increase in total assets and total liabilities as of June 30, 2025, compared to December 31, 2024, primarily driven by higher long-term debt, while total shareholders' equity decreased Consolidated Balance Sheet Highlights | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Cash | $16,958,744 | $15,878,295 | | Total current assets | $33,669,456 | $33,305,988 | | Total long-term assets | $65,098,189 | $54,786,004 | | Total assets | $98,767,645 | $88,091,992 | | Total current liabilities | $14,875,844 | $15,290,071 | | Long-term debt | $44,216,662 | $30,689,290 | | Total long-term liabilities | $48,499,855 | $33,889,959 | | Total liabilities | $63,375,699 | $49,180,030 | | Total shareholders' equity | $35,391,946 | $38,911,962 | Consolidated Statements of Operations The consolidated statements of operations show improved net revenue and gross profit for both the three and six months ended June 30, 2025. Operating loss and net loss decreased significantly in Q2 2025, but the net loss for the six-month period slightly increased year-over-year Consolidated Statements of Operations Highlights | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----------------------------------- | :------------- | :------------- | :------------- | :------------- | | Net Revenue | $25,830,834 | $20,158,823 | $49,264,930 | $38,695,461 | | Gross profit | $23,893,552 | $18,150,137 | $45,492,681 | $34,796,729 | | Total operating expenses | $23,924,900 | $21,034,993 | $47,604,058 | $39,213,292 | | Operating loss | $(31,348) | $(2,884,856) | $(2,111,377) | $(4,416,563) | | Total other income (expense) | $(1,987,050) | $(644,346) | $(3,434,404) | $(911,682) | | Net loss | $(2,018,398) | $(3,529,202) | $(5,545,781) | $(5,328,245) | | Net loss attributable to Sanara MedTech shareholders | $(2,014,362) | $(3,504,014) | $(5,541,539) | $(5,268,198) | | Net loss per share, basic and diluted | $(0.23) | $(0.41) | $(0.64) | $(0.62) | Consolidated Statements of Cash Flows The consolidated statements of cash flows for the first six months of 2025 show a significant improvement in cash provided by operating activities, moving from a net cash used position in the prior year. However, cash used in investing activities increased substantially, while cash provided by financing activities also rose Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Metric | YTD 2025 | YTD 2024 | | :----------------------------------- | :------------- | :------------- | | Net cash provided by (used in) operating activities | $665,127 | $(3,006,300) | | Net cash used in investing activities | $(9,107,823) | $(124,580) | | Net cash provided by financing activities | $9,523,145 | $4,134,039 | | Net increase in cash | $1,080,449 | $1,003,159 | | Cash, end of period | $16,958,744 | $6,150,375 | - Significant investing activities in YTD 2025 included purchases of property and equipment ($3.48 million), investment in equity securities ($3.54 million), and the CarePICS acquisition ($2.12 million)[30] - Financing activities in YTD 2025 were primarily driven by loan proceeds, net of debt issuance costs, totaling $12.02 million[30] Non-GAAP Financial Measures This section explains Sanara MedTech's use of non-GAAP financial measures and provides detailed reconciliations to their most directly comparable GAAP financial measures Explanation of Non-GAAP Measures Sanara MedTech utilizes non-GAAP financial measures, Adjusted EBITDA and Segment Adjusted EBITDA, to provide investors with a clearer view of its core business operations and facilitate consistent comparisons across periods. These measures exclude specific non-cash or non-recurring items, but the company emphasizes they are not a substitute for GAAP measures and have inherent limitations - Adjusted EBITDA and Segment Adjusted EBITDA are non-GAAP financial measures used by management to assess and communicate the Company's financial performance, facilitating comparisons of core business operations across periods on a consistent basis[32][33] - Adjusted EBITDA is defined as net income (loss) excluding interest expense/income, income taxes, depreciation and amortization, non-cash share-based compensation, change in fair value of earnout liabilities, share of losses from equity method investments, executive separation costs, legal and diligence expenses related to acquisitions, and gains/losses on property disposal[32] - These non-GAAP measures are not in accordance with, nor an alternative for, GAAP, may differ from other companies' measures, and should not be considered in isolation. The company provides reconciliations to the most directly comparable GAAP financial measures[34] Reconciliation of Net Income (Loss) to Segment Adjusted EBITDA and Adjusted EBITDA The company provides detailed reconciliations of Net Income (Loss) to Adjusted EBITDA and Segment Adjusted EBITDA for the three months, six months, and trailing twelve months ended June 30, 2025 and 2024, outlining the specific adjustments made from GAAP figures Q2 2025 Reconciliation of Net Income (Loss) to Segment Adjusted EBITDA and Adjusted EBITDA | Metric | Sanara Surgical | THP | Total | | :----------------------------------- | :-------------- | :-------------- | :-------------- | | Net Income (Loss) | $507,280 | $(2,525,678) | $(2,018,398) | | Adjustments: | | | | | Interest expense | $1,791,568 | $- | $1,791,568 | | Depreciation and amortization | $681,525 | $432,706 | $1,114,231 | | Noncash share-based compensation | $1,278,871 | $26,394 | $1,305,265 | | Change in fair value of earnout liabilities | $- | $- | $- | | Share of losses from equity method investments | $195,482 | $- | $195,482 | | Executive separation costs | $260,275 | $- | $260,275 | | Acquisition costs | $4,826 | $11,591 | $16,417 | | Segment Adjusted EBITDA / Adjusted EBITDA | $4,719,827 | $(2,054,987) | $2,664,840 | | Net revenue | $25,804,252 | $26,582 | $25,830,834 | | Net Income (Loss) as a % of Net Revenue | 2.0% | (9501.5)% | (7.8)% | | Segment Adjusted EBITDA as a % of Net Revenue | 18.3% | (7730.7)% | 10.3% | YTD 2025 Reconciliation of Net Income (Loss) to Segment Adjusted EBITDA and Adjusted EBITDA | Metric | Sanara Surgical | THP | Total | | :----------------------------------- | :-------------- | :-------------- | :-------------- | | Net Loss | $(107,825) | $(5,437,956) | $(5,545,781) | | Adjustments: | | | | | Interest expense | $3,108,660 | $- | $3,108,660 | | Depreciation and amortization | $1,370,096 | $868,545 | $2,238,641 | | Noncash share-based compensation | $2,454,367 | $155,802 | $2,610,169 | | Change in fair value of earnout liabilities | $- | $- | $- | | Share of losses from equity method investments | $339,090 | $- | $339,090 | | (Gain) loss on disposal of property and equipment | $(10,932) | $1,258 | $(9,674) | | Interest income | $(3,672) | $- | $(3,672) | | Executive separation costs | $260,275 | $- | $260,275 | | Acquisition costs | $4,826 | $320,274 | $325,100 | | Segment Adjusted EBITDA / Adjusted EBITDA | $7,414,885 | $(4,092,077) | $3,322,808 | | Net revenue | $49,238,348 | $26,582 | $49,264,930 | | Net Loss as a % of Net Revenue | (0.2)% | (20457.3)% | (11.3)% | | Segment Adjusted EBITDA as a % of Net Revenue | 15.1% | (15394.2)% | 6.7% | Trailing Twelve Months Ended June 30, 2025 Reconciliation of Net Income (Loss) to Segment Adjusted EBITDA and Adjusted EBITDA | Metric | Sanara Surgical | THP | Total | | :----------------------------------- | :-------------- | :-------------- | :-------------- | | Net (Income) Loss | $646,391 | $(10,775,824) | $(10,129,433) | | Adjustments: | | | | | Interest expense | $5,325,373 | $- | $5,325,373 | | Depreciation and amortization | $2,759,016 | $2,191,922 | $4,950,938 | | Noncash share-based compensation | $4,623,438 | $207,847 | $4,831,285 | | Change in fair value of earnout liabilities | $- | $(1,859,000) | $(1,859,000) | | Share of losses from equity method investments | $429,097 | $- | $429,097 | | (Gain) loss on disposal of property and equipment | $(10,932) | $1,258 | $(9,674) | | Interest income | $(25,650) | $- | $(25,650) | | Executive separation costs | $319,960 | $- | $319,960 | | Acquisition costs | $(35,234) | $1,312,850 | $1,277,616 | | Segment Adjusted EBITDA / Adjusted EBITDA | $14,031,459 | $(8,920,947) | $5,110,512 | | Net revenue | $97,215,313 | $26,582 | $97,241,895 | | Net Income (Loss) as a % of Net Revenue | 0.7% | (40538.0)% | (10.4)% | | Segment Adjusted EBITDA as a % of Net Revenue | 14.4% | (33560.1)% | 5.3% |