Full Press Release Details
MedTech Inc. Announces First Quarter 2024 Results
WORTH, TX / GlobeNewswire / May 13, 2024 / Sanara MedTech Inc. Based in Fort Worth, Texas, Sanara MedTech Inc. ("Sanara,"
the "Company," "we," "our" or "us") (NASDAQ: SMTI), a medical technology company focused
on developing and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the
surgical, chronic wound and skincare markets, announced today its strategic, operational and financial results for the quarter ended
Nixon, Sanara's CEO, stated, "Over the course of 2023, we made significant advancements in data analytics, sales force optimization,
and our sales processes. These improvements and the momentum we achieved in the fourth quarter of 2023 helped us exceed our internal
forecast for the first quarter, and, we believe, position us to continue to build upon the success the team has achieved in previous
periods. In the first quarter of 2024, Sanara continued to execute on its strategic and operational plans and realized its tenth consecutive
record revenue quarter. Subsequent to the end of the quarter, the Company's former CEO resigned and the Company took steps to strengthen
its cash resources as well as add to the executive team."
and Operational Highlights in the First Quarter 2024
Quarter 2024 Sales Analysis
the first quarter of 2024, Sanara focused on increasing the use of its products in new and existing territories, expanding usage in new
specialty areas, and increasing per facility sales. For the quarter ended March 31, 2024, Sanara generated net revenue of $18.5 million
compared to net revenue of $15.5 million for the quarter ended March 31, 2023, a 19% increase from the prior year period. The higher
net revenue in the first quarter of 2024 was due to increased sales of soft tissue repair products (CellerateRX Surgical Activated
Collagen , FORTIFY TRG Tissue Repair Graft, FORTIFY FLOWABLE Extracellular Matrix, and TEXAGEN Amniotic Membrane Allograft)
as a result of increased market penetration, geographic expansion and the Company's continuing strategy to expand independent distribution
network in both new and existing U.S. markets.
reported a net loss of $1.8 million for the quarter ended March 31, 2024, compared to a net loss of $1.2 million for the quarter ended
March 31, 2023. The higher loss in 2024 was primarily due to increased SG&A costs related to direct sales and marketing expenses
and amortization expenses due to amortization of our acquired intangible assets related to our Applied Nutritionals asset acquisition.
These increased costs were partially offset by higher gross profit and lower R&D expenses. The Company generated Adjusted EBITDA
of $0.3 million for the quarter ended March 31, 2024, compared to negative Adjusted EBITDA of $0.3 million for the quarter ended March
Adjusted EBITDA is a non-GAAP financial measure. See the discussion below under the heading "Use of Non-GAAP Financial Measures"
and the reconciliations at the end of this release for additional information.
of Non-GAAP Financial Measures
supplement the Company's financial information presented in accordance with generally accepted accounting principles in the United
States ("GAAP"), we present certain non-GAAP financial measures in this press release and on the related teleconference call,
including Adjusted EBITDA. The Company's management uses these non-GAAP financial measures, both internally and externally, to
assess and communicate the financial performance of the Company. The Company defines Adjusted EBITDA as net loss excluding interest expense/income,
provision/benefit for income taxes, depreciation and amortization, non-cash stock compensation expense, change in fair value of earnout
liabilities, effects of noncontrolling interests, and gains/losses on the disposal of property and equipment. The Company's believes
Adjusted EBITDA is useful to investors because it facilitates comparisons of its core business operations across periods on a consistent
basis. Accordingly, the Company adjusts for certain items, such as change in fair value of earnout liabilities, when calculating Adjusted
EBITDA because the Company believes that such items are not related to the Company's core business operations.
Company's non-GAAP financial measures are not in accordance with, nor an alternative for, measures conforming to GAAP and may be
different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles. The Company continues to provide all information required by GAAP, but it believes
that evaluating its ongoing operating results may not be as useful if an investor or other user is limited to reviewing only GAAP financial
measures. The Company does not, nor does it suggest that investors should, consider these non-GAAP financial measures in isolation from,
or as a substitute for, financial information prepared in accordance with GAAP. Material limitations associated with the use of such
measures include that they do not reflect all costs included in operating expenses and may not be comparable with similarly named financial
measures of other companies. Furthermore, these non-GAAP financial measures are based on subjective determinations of management regarding
the nature and classification of events and circumstances. The Company presents these non-GAAP financial measures to provide investors
with information to evaluate the Company's operating results in a manner similar to how management evaluates business performance.
To compensate for any limitations in such non-GAAP financial measures, management believes that it is useful in understanding and analyzing
the results of the business to review both GAAP information and the related non-GAAP financial measures. Whenever the Company uses a
non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial
measure. Investors are encouraged to review and consider these reconciliations.
will host a conference call on Tuesday, May 14, 2024, at 9:00 a.m. Eastern Time. The toll-free number to call for this teleconference
is 888-506-0062 (international callers: 973-528-0011) and the access code is 253700. A telephonic replay of the conference call will
be available through Tuesday, May 28, 2024, by dialing 877-481-4010 (international callers: 919-882-2331) and entering the replay passcode:
live webcast of Sanara's conference call will be available under the Investor Relations section of the Company's website,
www.SanaraMedTech.com. A one-year online replay will be available after the conclusion of the live broadcast.
a focus on improving patient outcomes through evidence-based healing solutions, Sanara MedTech Inc. markets, distributes and develops
surgical, wound and skincare products for use by physicians and clinicians in hospitals, clinics and all post-acute care settings and
offers wound care and dermatology virtual consultation services via telemedicine. Sanara's products are primarily sold in the North
American advanced wound care and surgical tissue repair markets. Sanara markets and distributes CellerateRX Surgical Activated Collagen ,
FORTIFY TRG Tissue Repair Graft and FORTIFY FLOWABLE Extracellular Matrix as well as a portfolio of advanced biologic products
focusing on ACTIGEN Verified Inductive Bone Matrix, ALLOCYTE Plus Advanced Viable Bone Matrix, BiFORM Bioactive Moldable
Matrix, TEXAGEN Amniotic Membrane Allograft, and BIASURGE Advanced Surgical Solution to the surgical market. In addition, the
following products are sold in the wound care market: BIAK S Antimicrobial Skin and Wound Cleanser, BIAK S Antimicrobial
Wound Gel, BIAK S Antimicrobial Skin and Wound Irrigation Solution and HYCOL Hydrolyzed Collagen. Sanara's pipeline
also contains potentially transformative product candidates for mitigation of opportunistic pathogens and biofilm, wound re-epithelialization
and closure, necrotic tissue debridement and cell compatible substrates. The Company believes it has the ability to drive its pipeline
from concept to preclinical and clinical development while meeting quality and regulatory requirements. Sanara is constantly seeking
long-term strategic partnerships with a focus on products that improve outcomes at a lower overall cost.
about Forward-Looking Statements
statements in this press release that do not constitute historical facts are "forward-looking statements," within the meaning
of and subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These statements may be identified
by terms such as "aims," "anticipates," "believes," contemplates," "continue,"
"could," "estimates," "expect," "forecast," "guidance," "intend,"
"may," "plan," "possible," "potential," "predicts," "preliminary,"
"projects," "seeks," "should," "targets," "will" or "would,"
or the negatives of these terms, variations of these terms or other similar expressions. These forward-looking statements include, among
others, statements regarding the development of new products, the timing of commercialization of our products, the regulatory approval
process and expansion of the Company's business in telehealth and wound care. These items involve risks, contingencies and uncertainties
such as our ability to build out our executive team, our ability to identify and effectively utilize the net proceeds of the term loan
to support the Company's growth initiatives, the extent of product demand, market and customer acceptance, the effect of economic
conditions, competition, pricing, uncertainties associated with the development and process for obtaining regulatory approval for new
products, the ability to consummate and integrate acquisitions, and other risks, contingencies and uncertainties detailed in the Company's
SEC filings, which could cause the Company's actual operating results, performance or business plans or prospects to differ materially
from those expressed in, or implied by these statements.
forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to revise any of
these statements to reflect the future circumstances or the occurrence of unanticipated events, except as required by applicable securities
Nichols, Director of Investor Relations
MEDTECH INC. AND SUBSIDIARIES
| (Unaudited) | ||||||||
| March 31, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 2,828,234 | $ | 5,147,216 | ||||
| Accounts receivable, net | 9,194,799 | 8,474,965 | ||||||
| Accounts receivable - related parties | 23,002 | 8,400 | ||||||
| Royalty receivable | - | 49,344 | ||||||
| Inventory, net | 4,229,150 | 4,717,533 | ||||||
| Prepaid and other assets | 911,594 | 608,411 | ||||||
| Total current assets | 17,186,779 | 19,005,869 | ||||||
| Long-term assets | ||||||||
| Intangible assets, net | 43,953,610 | 44,926,061 | ||||||
| Goodwill | 3,601,781 | 3,601,781 | ||||||
| Investment in equity securities | 3,084,278 | 3,084,278 | ||||||
| Right of use assets - operating leases | 1,894,687 | 1,995,204 | ||||||
| Property and equipment, net | 1,190,805 | 1,257,956 | ||||||
| Total long-term assets | 53,725,161 | 54,865,280 | ||||||
| Total assets | $ | 70,911,940 | $ | 73,871,149 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 1,191,816 | $ | 1,924,082 | ||||
| Accounts payable - related parties | 87,116 | 77,805 | ||||||
| Accrued bonuses and commissions | 6,893,381 | 7,676,770 | ||||||
| Accrued royalties and expenses | 2,288,428 | 2,047,678 | ||||||
| Earnout liabilities - current | 979,488 | 1,100,000 | ||||||
| Current portion of debt | 928,571 | 580,357 | ||||||
| Operating lease liabilities - current | 377,273 | 361,185 | ||||||
| Total current liabilities | 12,746,073 | 13,767,877 | ||||||
| Long-term liabilities | ||||||||
| Long-term debt, net of current portion | 8,767,991 | 9,113,123 | ||||||
| Earnout liabilities - long-term | 2,777,835 | 2,723,001 | ||||||
| Operating lease liabilities - long-term | 1,626,130 | 1,737,445 | ||||||
| Other long-term liabilities | 1,982,345 | 1,941,686 | ||||||
| Total long-term liabilities | 15,154,301 | 15,515,255 | ||||||
| Total liabilities | 27,900,374 | 29,283,132 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity | ||||||||
| Common Stock: $0.001 par value, 20,000,000 shares authorized; 8,622,739 issued and outstanding as of March 31, 2024 and 8,535,239 issued and outstanding as of December 31, 2023 | 8,623 | 8,535 | ||||||
| Additional paid-in capital | 73,180,208 | 72,860,556 | ||||||
| Accumulated deficit | (29,898,146 | ) | (28,036,814 | ) | ||||
| Total Sanara MedTech shareholders' equity | 43,290,685 | 44,832,277 | ||||||
| Equity attributable to noncontrolling interest | (279,119 | ) | (244,260 | ) | ||||
| Total shareholders' equity | 43,011,566 | 44,588,017 | ||||||
| Total liabilities and shareholders' equity | $ | 70,911,940 | $ | 73,871,149 |
MEDTECH INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net Revenue | $ | 18,536,638 | $ | 15,521,917 | ||||
| Cost of goods sold | 1,890,046 | 2,125,659 | ||||||
| Gross profit | 16,646,592 | 13,396,258 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | 16,192,259 | 12,969,069 | ||||||
| Research and development | 946,298 | 1,317,324 | ||||||
| Depreciation and amortization | 1,105,420 | 778,875 | ||||||
| Change in fair value of earnout liabilities | (65,678 | ) | (452,687 | ) | ||||
| Total operating expenses | 18,178,299 | 14,612,581 | ||||||
| Operating loss | (1,531,707 | ) | (1,216,323 | ) | ||||
| Other expense | ||||||||
| Interest expense and other | (267,336 | ) | (6 | ) | ||||
| Total other expense | (267,336 | ) | (6 | ) | ||||
| Net loss | (1,799,043 | ) | (1,216,329 | ) | ||||
| Less: Net loss attributable to noncontrolling interest | (34,859 | ) | (38,429 | ) | ||||
| Net loss attributable to Sanara MedTech shareholders | $ | (1,764,184 | ) | $ | (1,177,900 | ) | ||
| Net loss per share of common stock, basic and diluted | $ | (0.21 | ) | $ | (0.14 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 8,419,528 | 8,173,784 |
MEDTECH INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,799,043 | ) | $ | (1,216,329 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1,105,420 | 778,875 | ||||||
| Bad debt expense | 65,000 | 36,000 | ||||||
| Inventory obsolescence | 95,235 | 30,511 | ||||||
| Share-based compensation | 803,386 | 597,305 | ||||||
| Noncash lease expense | 100,517 | 76,545 | ||||||
| Accretion of finance liabilities | 58,834 | - | ||||||
| Amortization of debt issuance costs | 3,083 | - | ||||||
| Change in fair value of earnout liabilities | (65,678 | ) | (452,687 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (735,490 | ) | 352,102 | |||||
| Accounts receivable - related parties | (14,602 | ) | 74,602 | |||||
| Inventory, net | 393,148 | 86,785 | ||||||
| Prepaid and other assets | (303,182 | ) | (361,719 | ) | ||||
| Accounts payable | (732,266 | ) | 405,360 | |||||
| Accounts payable - related parties | 9,311 | (10,747 | ) | |||||
| Accrued royalties and expenses | 300,574 | (112,774 | ) | |||||
| Accrued bonuses and commissions | (783,390 | ) | (1,949,325 | ) | ||||
| Operating lease liabilities | (95,227 | ) | (75,817 | ) | ||||
| Net cash used in operating activities | (1,594,370 | ) | (1,741,313 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (65,818 | ) | (27,705 | ) | ||||
| Proceeds from disposal of property and equipment | - | 650 | ||||||
| Net cash used in investing activities | (65,818 | ) | (27,055 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Equity offering net proceeds | - | 751,752 | ||||||
| Net settlement of equity-based awards | (580,794 | ) | (655,942 | ) | ||||
| Cash payment of finance and earnout liabilities | (78,000 | ) | - | |||||
| Net cash provided by (used in) financing activities | (658,794 | ) | 95,810 | |||||
| Net decrease in cash | (2,318,982 | ) | (1,672,558 | ) | ||||
| Cash, beginning of period | 5,147,216 | 8,958,995 | ||||||
| Cash, end of period | $ | 2,828,234 | $ | 7,286,437 | ||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 205,591 | $ | 6 | ||||
| Supplemental noncash investing and financing activities: | ||||||||
| Equity offering accrued proceeds | - | 282,010 | ||||||
| Right of use assets obtained in exchange for lease obligations | - | 1,369,164 |
of GAAP to Non-GAAP Financial Measures
of Net Loss to Adjusted EBITDA (Unaudited):
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net Loss | $ | (1,764,184 | ) | $ | (1,177,900 | ) | ||
| Adjustments | ||||||||
| Interest expense and other | 267,336 | 6 | ||||||
| Depreciation and amortization | 1,105,420 | 778,875 | ||||||
| Noncash share-based compensation | 803,386 | 597,305 | ||||||
| Change in fair value of earnout liabilities | (65,678 | ) | (452,687 | ) | ||||
| Noncontrolling interest | (34,859 | ) | (38,429 | ) | ||||
| Adjusted EBITDA | $ | 311,421 | $ | (292,830 | ) |