Sanara MedTech Inc. Q2 FY2024 earnings call

Key Points - Record revenue for 11th consecutive quarter with $20.2 million in Q2 2024. - Net loss of $3.5 million but positive adjusted EBITDA of $600,000. - Surgical segment had $1.4 million segmented EBITDA in Q2 2024. - Signed contract with a national GPO adding over 1000 facilities. - Focus on expanding into trauma, vascular, and general surgery markets. - THP strategy with plans to invest $4-5 million in H2 2024 for 2025 commercial launch. - Operations team focused on centralizing ownership, IT roadmap, scaling customer service, and reorganizing supply chain.

In the second quarter of 2024, Sanara MedTech generated $20.2 million in revenue, its 11th consecutive record revenue quarter. The company had a net loss of $3.5 million and positive adjusted EBITDA of $600,000. The Surgical segment generated a $2.2 million net loss in Q2 2024 with segmented EBITDA of $1.4 million. Sales of soft tissue products grew from $13.2 million in Q2 2023 to $17.6 million in Q2 2024, while bone fusion products were flat at $2.5 million. The Tissue Health Plus segment had a negative segment EBITDA of $0.8 million in Q2 2024. Revenue contribution: Soft tissue products contributed significantly with growth, bone fusion was flat, and THP had negative EBITDA.

Guidance - Expect to invest an additional $4 million to $5 million in the second half of 2024 to build out the THP strategy in anticipation of a commercial launch in the second half of 2025. - Surgical segment expected to see continued improvement in operating results while executing on growth plan and market expansion. - Anticipate THP to cross profitability threshold once launched in 2025, with Surgical segment already having strong momentum and margins.

Risks - Uncertainties related to reimbursement in the chronic wound space which could impact the THP strategy. - Execution risks associated with the rollout of the THP strategy, including validating economic models and onboarding staff/network partners. - Market disruption and competition in the surgical and wound care markets that could affect growth and profitability.

Q: Ross Osborn asked about disruption in the chronic wound space and THP diagnostics, especially targeting home care.

A: Ron Nixon mentioned factoring in reimbursement disruption into THP strategy, and Sam Muppalla discussed making diagnostic devices scalable for multiple settings.

Q: Chris Plum asked about GPO deal impact and BIASURGE progress.

A: Seth Yon said GPO deal won't shift strategy and BIASURGE had soft launch in late 2023 with momentum.

Q: Ian Cassel asked about what's preventing Surgical from being more profitable.

A: Ronald Nixon said focus on building complete product portfolio and infrastructure for growth, aiming for fixed cost leverage in future to increase profitability.