Sanara MedTech Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Sanara Surgical: Strong sales growth driven by soft tissue and bone fusion products. Gross margin enhanced and operating leverage realized. Commercial initiatives include expanding distributor network to over 400, adding new healthcare facilities to over 1,400, increasing surgeon penetration (including non-traditional specialties like plastics, general, and vascular), and BIASURGE showing rapid growth.
• THP Segment: Completed acquisition of CarePICS, launched THP Copilot mobile app, initiated pilot program with a provider group serving 6 states, showcased at industry events, and preparing to expand the pilot and launch a payer pilot.
• Other: BMI completed 2 product development milestones, Sanara paid EUR 2 million to BMI for these milestones, and confidence in financial resources to support growth initiatives with $17 million cash, $44.2 million long-term debt, and $12.25 million available borrowing capacity as of June 30, 2025.

Segment Performance

• Sanara Surgical: Net revenue in Q2 2025 was $25.8 million, representing 28% year-over-year growth. Soft tissue products contributed $22.7 million (+28% Y/Y) with CellerateRx Surgical and BIASURGE driving growth. Bone fusion products saw $3.1 million (+25% Y/Y) growth. The segment generated approximately $500,000 of net income in Q2 2025, an improvement of $2.7 million, and $4.7 million of segment adjusted EBITDA, an increase of $3.3 million (239%). Trailing 12 months ended June 30, 2025: net revenue was $97.2 million with segment adjusted EBITDA of $14 million.
• THP Segment: Continued investment, with Q2 2025 net loss of $2.5 million (vs $1.3 million Y/Y) and segment adjusted EBITDA loss of $2.1 million (vs $800k Y/Y).

Guidance

• Surgical segment expected to drive strong net revenue growth in 2025, with strong profitability anticipated for the full year.
• THP segment cash investment in the second half of 2025 expected to be between $5.5 million and $6.5 million.
• Initiated formal process to evaluate strategic alternatives for THP, with the company not anticipating material cash investments in THP after year-end.

Risks

• Uncertainties associated with the strategic alternatives process for THP, as the company evaluates various options to maximize shareholder value.
• General risks related to forward-looking statements and potential external factors impacting operational results.

Question and Answer

Q: How long for a new partner distributor to become productive in the field?

A: Depends on market approvals; can range from days to months, with an RSM and clinical team aiding in education and ramp-up.

Q: Cadence of OpEx for THP and surgical as we move into '26?

A: THP investment in the second half of 2025 is expected to be between $5.5 million and $6.5 million; ongoing R&D for surgical product innovation is an ongoing basis.

Q: Growth details for Cellerate, Fortify, and BIASURGE?

A: Soft tissue category growth led by Cellerate and BIASURGE, with steady growth expected for both products.

Q: Strategic thinking for THP and decision-making for strategic alternatives?

A: Looking for strategic partners to complement the investment in THP and expand the business, evaluating various options to maximize shareholder value.