SMTI

• Strategic Shift Validation: Q1 2026 was the first full quarter after completing the company's strategic shift to a pure-play focus on the surgical market. Management reports that the quarter's strong results, which exceeded internal expectations, validate this new focus. The business delivered 19% YoY revenue growth, margin expansion, and achieved net profitability from continuing operations, despite Q1 being the company's historically seasonally slowest quarter and a 3-day weather-related production/shipping shutdown in January 2026. March 2026 posted the strongest monthly sales in company history (excluding October 2024, which had unusual one-time bulk sales from industry disruption caused by Hurricane Helene).

• Commercial Expansion: The company expanded its commercial footprint significantly over the past year. As of quarter-end: products are contracted or approved for sale in over 4,000 U.S. hospitals and ambulatory surgery centers; products were sold in over 1,400 U.S. facilities, up from over 1,300 in Q1 2025; distributor count increased to over 450 from 400 a year prior; the sales team grew to 43 total representatives, up from prior periods, and the company expects continued hiring through the end of 2026; and the company recorded solid YoY growth in active surgeon users, consistent with broader commercial expansion.

• Capital Allocation and Pipeline: Management's updated capital allocation strategy aligns with the pure-play surgical focus, prioritizing organic sales growth, judicious R&D investment, and expanding the product pipeline. Lead pipeline candidate OSTIC, a licensed synthetic injectable structural bioadhesive bone void filler, remains on track for a Q1 2027 market launch. Longer-term R&D initiatives are focused on product enhancements, next-generation products, and additional intellectual property to deepen the company's competitive moat. The company also notes it has no meaningful reimbursement risk as a 100% surgical-focused business, resulting in more predictable revenue and consistent strong margins.

• Financial Milestones: The company achieved the milestone of paying all debt service in cash during Q1 2026, moving away from the prior practice of combining cash and payment-in-kind for debt obligations. This is viewed as a reflection of improving free cash flow generation, even during the seasonally cash-heavy Q1 (when annual employee bonuses and commissions are paid).

• Second quarter 2026 net revenue guidance is set at a range of $28.5 million to $29.5 million, representing 10% to 14% YoY growth.
• Full year 2026 net revenue guidance is maintained at the previously announced range of $116 million to $121 million, representing 13% to 17% YoY growth. Management did not revise the guidance upward despite Q1 outperformance, noting that the Q1 outperformance and Q2 guidance range combine to hit the midpoint of the full-year guidance range.
• Annual R&D spending is expected to fall within industry standard levels of 5% to 7% of total annual net revenue, with quarterly R&D varying based on project timing.

The company is a pure-play surgical medtech focused on the surgical market, with all revenue generated from soft tissue repair products. Q1 2026 overall net revenue was $27.8 million, a 19% year-over-year increase (up $4.4 million from Q1 2025), driven entirely by higher sales of Celerate RX and BioSurge products. Gross profit totaled $25.9 million, a 20% YoY increase, contributing 93% of total net revenue as gross margin, up 100 basis points from the prior year. Operating expenses were $23.2 million, accounting for 83.6% of net revenue, with R&D expenses totaling $0.8 million, contributing 2.7% of net revenue (down from $0.9 million / 4.1% in Q1 2025). Operating income was $2.6 million, a $1.8 million YoY increase. Net income from continuing operations was $0.4 million, equal to 1.4% of total net revenue, turning to a profit from a $0.6 million net loss in Q1 2025.

• The company notes that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections, with details included in the company's most recent Form 10-K annual report.
• U.S. hospitals continue to face pressure from macroeconomic conditions that lead to ongoing assessments of operating room spend, which could potentially impact demand for the company's products.
• Revenue and results face seasonal volatility, with Q1 historically being the slowest sales quarter and Q1 typically requiring higher cash utilization for employee bonus and commission payments.

Q: What was the primary driver of Zenera MedTech's Q1 outperformance, specifically if it came from core Celerate RX/BioSurge execution, the new Vizient GPO contract, or contributions from newly hired sales representatives? / A: New sales representatives are still in training, so they have not yet meaningfully contributed to revenue. New sales reps typically require six months after training completion to impact results. The outperformance stemmed from three factors: the sharpened strategic focus on being a pure surgical play, which re-energized internal teams and the distributor network, early encouraging uptick from the newly executed Vizient GPO contract as the team completes facility-level training, and continued strong penetration growth of the core Celerate RX anchor product in both existing and new facilities.

Q: Why did management maintain the full-year 2026 guidance unchanged rather than raising it, given the stronger-than-expected Q1 performance, new tailwinds from the Vizient contract, and upcoming contributions from new sales reps? / A: Management entered 2026 with high confidence after a sales team reorg in early 2025 created a minor YoY headwind in the prior year's Q1. The Q1 2026 outperformance and the current 10-14% YoY growth guidance for Q2 combine to place the company at the midpoint of the existing full-year guidance range, so there was no need for an upward revision at this time.

Q: What specific initiatives is Zenera pursuing to deepen its competitive moat, as referenced in prepared remarks? / A: Management is focused on three core near-term priorities: expanding the body of clinical evidence supporting the company's core products, publishing and disseminating economic evidence demonstrating the value of Zenera's products for hospital budgets, and maintaining a competitive average selling price. The company is also investing in R&D for product enhancements and next-generation products, while building out additional intellectual property to protect its technology position.

Q: Are Zenera's products seeing any negative impact from macroeconomic pressures that are straining U.S. hospital budgets? / A: While hospitals are indeed continuing to evaluate their operating room spend more closely amid budget pressures, Zenera is well positioned to maintain demand thanks to its strong clinical and economic value evidence and competitive pricing. The company will continue expanding its evidence base to reinforce its value proposition for hospitals.