Sanara MedTech Inc. Q3 FY2024 earnings call

• Third quarter 2024 saw 35% year-over-year net revenue growth, 12th consecutive record revenue quarter, and improved adjusted EBITDA.
• Since Q2, reported financial performance metrics of Surgical division and Tissue Health Plus as separate business segments. Surgical segment had net loss in Q3 2024 but segmented EBITDA.
• Plan to continue investing in THP technology platform and infrastructure for mid-2025 commercial launch. Invested $5M in ChemoMouthpiece LLC in September, with exclusive U.S. distribution agreement.
• Surgical business: Products sold in over 1,200 hospitals across 34 states in trailing 12 months, over 900 facilities in Q3 2024 vs. over 600 in Q3 2023; soft tissue sales grew from $13.6M in Q3 2023 to $18.9M in Q3 2024; bone fusion sales grew from $2.3M in Q3 2023 to $2.8M in Q3 2024.
• Tissue Health Plus: Focused on enhancing execution capacity and building platform for scaled delivery; state-of-the-art wound assessment software on track for first half 2025 release; compiled pilot partners list; collaborated with value-based care consulting firm; launched introductory website; recruited clinical advisory board.

During the third quarter of 2024, Sanara MedTech generated $21.7 million in net revenue, a 35% year-over-year increase. Adjusted EBITDA was $800,000 in Q3 2024 vs. $300,000 in Q3 2023. The Surgical segment had a $200,000 net loss in Q3 2024 and a $2.9 million year-to-date net loss, but generated $2.6 million segmented EBITDA in Q3 and $5.1 million year-to-date. Tissue Health Plus is planned for commercial launch in mid-2025. In September, Sanara invested $5 million in ChemoMouthpiece LLC, with an exclusive U.S. distribution agreement through a JV with InfuSystem. Revenue contribution: Net revenue for Q3 2024 was $21.7M, with Surgical and THP segments having their own financial performance metrics.

• Expect continued improvement in operating results for Surgical segment while executing growth plan and market expansion.
• Anticipate mid-2025 commercial launch for THP.
• Plan to continue investing in THP technology platform and infrastructure.

Q: Walk us through the rationale for the investment in ChemoMouthpiece and how it fits into broader strategy?

A: Sanara's strategy is wound and skin care. ChemoMouthpiece directly impacts a skin condition in the chemotherapy/oncology space (oral mucositis), fitting the overall strategy as it's a unique de novo product for a horrific skin condition in that space.

Q: Feedback on THP pilot program with podiatry group?

A: On target to do pilot program, early previews have been well received.

Q: OpEx for balance of year and 2025 as THP launches?

A: Planning is in place, expect continued growth in adjusted EBITDA, no surprises expected at this moment.

Q: Update on work with Tufts relating to 18 peptides?

A: Technical team at Rochal is working on radiation dermatitis related to the 18 peptides, which is a significant skin condition, moving forward quickly.

Q: Types of partners for THP and conversation progress?

A: Looking for financial and execution partners; execution partners filled, looking for strategics with execution track record in healthcare space.

Q: Expectations regarding ChemoMouthpiece's contribution to top and bottom line?

A: Not prepared to give specific contribution at this time, but see it as a big opportunity.

Q: Characteristics looking for in potential M&A target for Surgical?

A: Will be disclosed when closed.