Sanara MedTech Inc. Q1 FY2025 earnings call

• Ron Nixon discussed first quarter financial and operational highlights, including Sanara Surgical's net revenue growth and gross margin enhancement. - Seth Yon discussed commercial execution for Sanara Surgical, including expanding distributor relationships (over 400 distributor partners at end of first quarter), adding new healthcare facilities (over 1,300 facilities in last 12 months), and increasing penetration of existing facilities. - Sam Muppalla provided update on Tissue Health Plus, including the availability of the first release of THP's technology platform on May 1st, details of THP CoPilot, and progress towards launching the first pilot program in the second quarter. - Elizabeth Taylor reviewed quarterly financial results, including gross profit increase, operating expenses change, operating loss, net loss, and segment-adjusted EBITDA details.

Sanara Surgical Segment: Net revenue of $23.4 million in the first quarter, representing 26% year-over-year growth. Driven primarily by sales of soft tissue repair products, which increased 28% year-over-year to $20.5 million, including strong growth in CellerateRX Surgical and BIASURGE. Bone fusion products also saw a 18% year-over-year increase to $2.9 million. Tissue Health Plus Segment: Continues to invest in the development of a value-based Wound Care strategy, preparing to launch a pilot program with a Wound Care Provider later in the second quarter, and in active discussions with potential financial partners.

• Sanara Surgical Segment expects net revenue growth in 2025. - Tissue Health Plus Segment expects cash investment in the first half of 2025 to be approximately $7.5 million to $8.5 million, compared to prior expectation of $7.5 million to $10 million (excluding CarePICS acquisition). - Goal to sell into more than 1,450 healthcare facilities by the end of 2025.

Q: Just a little bit more color on your rates of penetration and understanding, and vision for improving penetration at existing facilities and strategy there.

A: Seth Yon said it's a coupled approach between RSMs, territory managers, and distributor expansion. Distributor expansion has jumped significantly over the last 18 months to get access into new accounts and penetrate existing accounts deeper and further.

Q: Is there any kind of signal on reorder rates?

A: Seth Yon said their business tends to stick on the seller rate side and buyer surge alike. Once surgeons gain comfort with products, they start with high-risk cases and continue to use and expand across more procedures as they perform successfully.

Q: Starting off with gross margin, can you help us frame how we should think about gross margin cadence for the remainder of 2025 and any areas for further leverage as volume scales?

A: Ron Nixon said when they bought the technology last year, there was advantage on the manufacturing side, but can't see a lot more leverage on the gross margin side going forward.

Q: Given that you remain on track for a pilot program launch in the second quarter, can you help walk us through what success will look like in this initial phase, whether that's clinical outcomes, patient volume, or economic validation, and how quickly you anticipate scaling beyond the first site?

A: Sam Muppalla said success of the pilot will be measured in three sets of metrics: clinician-facing metrics (protocol and formula adherence, decreasing post-encounter time, completion of documentation), operating side metrics (increasing staff productivity, increasing capture in billing services per visit, decreasing inventory costs and wastage), and adoption metrics (percentage of clinicians using THP co-pilot, user satisfaction surveys).