Full Press Release Details
MedTech Inc. Announces Second Quarter 2024 Results
WORTH, TX / GlobeNewswire / August 12, 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, "The second quarter of 2024 was Sanara's eleventh consecutive record revenue quarter.
Our surgical team continues to generate strong sales driven by the efficacy and value proposition of our products. All of our functional
areas including clinical, research and development, customer service, marketing, and finance continue to do an outstanding job supporting
our growth strategy. In addition to our financial success this quarter, we also took steps to strengthen our senior management team."
and Operational Highlights in the Second Quarter 2024
Based on a minimum of $50,000 of revenue in the trailing twelve-month period.
Adjusted EBITDA is a non-GAAP financial measure. See the discussion and the reconciliations at the end of this release for additional
Quarter 2024 Sales Analysis (Consolidated)
the second quarter of 2024, the Company continued to further penetrate existing accounts while also expanding into new territories, growing
the number of facilities where our products were sold to 800+ in Q2 2024 compared to 600+ in Q2 2023. For
the quarter ended June 30, 2024, Sanara generated net revenue of $20.2 million compared to net revenue of $15.8 million for the quarter
ended June 30, 2023, a 28% increase from the prior year period. The higher net revenue in the second 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, BIASURGE and TEXAGEN
Amniotic Membrane Allograft) as well as a result of increased market penetration, geographic expansion and the Company's
continuing strategy to expand its independent distribution network in both new and existing U.S. markets.
Analysis (Consolidated)
reported a net loss of $3.5 million for the quarter ended June 30, 2024, compared to a net loss of $1.9 million for the quarter ended
June 30, 2023. The higher net loss in 2024 was primarily due to increased SG&A costs related to direct sales and marketing expenses,
which increased $3.4 million compared to the prior year, $0.9 million of executive separation costs, $0.4 million of acquisition costs
and higher amortization expenses of $0.3 million related to our intangible assets acquired from Applied Nutritionals during the third
quarter of 2023. Our net loss in the second quarter of 2024 also included $0.6 million of interest expense due to our term loan with
CRG. These increased costs were partially offset by higher gross profit of $4.6 million and lower R&D expenses of $0.2 million.
Company generated Adjusted EBITDA of $0.6 million for the quarter ended June 30, 2024, compared to Adjusted EBITDA of ($0.3) million
for the quarter ended June 30, 2023.
Analysis (Segmented)
Surgical generated a net loss of $2.2 million for the quarter ended June 30, 2024, compared to net income of $0.1 million for the quarter
ended June 30, 2023. Tissue Health Plus ("THP") produced a net loss of $1.3 million for the quarter ended June 30, 2024,
compared to a net loss of $2.0 million for the quarter ended June 30, 2023.
Surgical generated Segment EBITDA* of $1.4 million for the quarter ended June 30, 2024, compared to Segment EBITDA* of $1.1 million for
the quarter ended June 30, 2023. THP produced Segment EBITDA* of ($0.8) million for the quarter ended June 30, 2024, compared to Segment
EBITDA* of ($1.4) million for the quarter ended June 30, 2023.
Segment EBITDA is a non-GAAP financial measure. See the discussion and the reconciliations at the end of this release for additional
will host a conference call on Tuesday, August 13, 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 984768. A telephonic replay of the conference call will be available through Tuesday, August
27, 2024, by dialing 877-481-4010 (international callers: 919-882-2331) and entering the replay passcode: 50973.
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.
MedTech Inc. is 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. The Company 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 ACTIGENTM 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,
and BIAK S Antimicrobial Skin and Wound Irrigation Solution. 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) | ||||||||
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 6,150,375 | $ | 5,147,216 | ||||
| Accounts receivable, net | 10,495,742 | 8,474,965 | ||||||
| Accounts receivable - related parties | 111,412 | 8,400 | ||||||
| Royalty receivable | - | 49,344 | ||||||
| Inventory, net | 3,564,659 | 4,717,533 | ||||||
| Prepaid and other assets | 489,240 | 608,411 | ||||||
| Total current assets | 20,811,428 | 19,005,869 | ||||||
| Long-term assets | ||||||||
| Intangible assets, net | 42,977,404 | 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 | 1,792,448 | 1,995,204 | ||||||
| Property and equipment, net | 1,116,266 | 1,257,956 | ||||||
| Total long-term assets | 52,572,177 | 54,865,280 | ||||||
| Total assets | $ | 73,383,605 | $ | 73,871,149 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 750,538 | $ | 1,924,082 | ||||
| Accounts payable - related parties | 145,487 | 77,805 | ||||||
| Accrued bonuses and commissions | 6,715,062 | 7,676,770 | ||||||
| Accrued royalties and expenses | 2,475,488 | 2,047,678 | ||||||
| Earnout liabilities - current | 1,085,549 | 1,100,000 | ||||||
| Current portion of debt | - | 580,357 | ||||||
| Operating lease liabilities - current | 393,663 | 361,185 | ||||||
| Total current liabilities | 11,565,787 | 13,767,877 | ||||||
| Long-term liabilities | ||||||||
| Long-term debt, net of current portion | 14,371,485 | 9,113,123 | ||||||
| Earnout liabilities - long-term | 2,654,001 | 2,723,001 | ||||||
| Operating lease liabilities - long-term | 1,512,584 | 1,737,445 | ||||||
| Other long-term liabilities | 1,877,753 | 1,941,686 | ||||||
| Total long-term liabilities | 20,415,823 | 15,515,255 | ||||||
| Total liabilities | 31,981,610 | 29,283,132 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity | ||||||||
| Common Stock: $0.001 par value, 20,000,000 shares authorized; 8,746,976 issued and outstanding as of June 30, 2024 and 8,535,239 issued and outstanding as of December 31, 2023 | 8,747 | 8,535 | ||||||
| Additional paid-in capital | 75,085,515 | 72,860,556 | ||||||
| Accumulated deficit | (33,387,960 | ) | (28,036,814 | ) | ||||
| Total Sanara MedTech shareholders' equity | 41,706,302 | 44,832,277 | ||||||
| Equity attributable to noncontrolling interest | (304,307 | ) | (244,260 | ) | ||||
| Total shareholders' equity | 41,401,995 | 44,588,017 | ||||||
| Total liabilities and shareholders' equity | $ | 73,383,605 | $ | 73,871,149 |
MEDTECH INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net Revenue | $ | 20,158,823 | $ | 15,753,164 | $ | 38,695,461 | $ | 31,275,081 | ||||||||
| Cost of goods sold | 2,008,686 | 2,187,516 | 3,898,732 | 4,313,175 | ||||||||||||
| Gross profit | 18,150,137 | 13,565,648 | 34,796,729 | 26,961,906 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | 18,957,608 | 13,811,476 | 35,149,867 | 26,780,545 | ||||||||||||
| Research and development | 985,651 | 1,177,128 | 1,931,949 | 2,494,452 | ||||||||||||
| Depreciation and amortization | 1,105,507 | 803,694 | 2,210,927 | 1,582,569 | ||||||||||||
| Change in fair value of earnout liabilities | (13,773 | ) | (360,470 | ) | (79,451 | ) | (813,157 | ) | ||||||||
| Total operating expenses | 21,034,993 | 15,431,828 | 39,213,292 | 30,044,409 | ||||||||||||
| Operating loss | (2,884,856 | ) | (1,866,180 | ) | (4,416,563 | ) | (3,082,503 | ) | ||||||||
| Other expense | ||||||||||||||||
| Interest expense | (644,346 | ) | - | (911,682 | ) | (6 | ) | |||||||||
| Total other expense | (644,346 | ) | - | (911,682 | ) | (6 | ) | |||||||||
| Net loss | (3,529,202 | ) | (1,866,180 | ) | (5,328,245 | ) | (3,082,509 | ) | ||||||||
| Less: Net loss attributable to noncontrolling interest | (25,188 | ) | (38,447 | ) | (60,047 | ) | (76,876 | ) | ||||||||
| Net loss attributable to Sanara MedTech shareholders | $ | (3,504,014 | ) | $ | (1,827,733 | ) | $ | (5,268,198 | ) | $ | (3,005,633 | ) | ||||
| Net loss per share of common stock, basic and diluted | $ | (0.41 | ) | $ | (0.22 | ) | $ | (0.62 | ) | $ | (0.37 | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | 8,468,835 | 8,226,271 | 8,444,101 | 8,200,173 |
MEDTECH INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS (UNAUDITED)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (5,328,245 | ) | $ | (3,082,509 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 2,210,927 | 1,582,569 | ||||||
| Credit loss expense | 155,930 | 86,000 | ||||||
| Inventory obsolescence | 259,577 | 69,990 | ||||||
| Share-based compensation | 2,214,931 | 1,724,637 | ||||||
| Noncash lease expense | 202,756 | 144,628 | ||||||
| Back-end fee | 52,500 | - | ||||||
| Paid-in-kind interest | 161,875 | - | ||||||
| Accretion of finance liabilities | 117,267 | - | ||||||
| Amortization and write-off of debt issuance costs | 100,883 | - | ||||||
| Change in fair value of earnout liabilities | (79,451 | ) | (813,157 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (2,127,363 | ) | (371,094 | ) | ||||
| Accounts receivable - related parties | (103,012 | ) | 77,886 | |||||
| Inventory, net | 893,297 | (941,854 | ) | |||||
| Prepaid and other assets | 119,172 | 618,877 | ||||||
| Accounts payable | (1,173,544 | ) | (376,521 | ) | ||||
| Accounts payable - related parties | 67,682 | 62,620 | ||||||
| Accrued royalties and expenses | 402,610 | (248,769 | ) | |||||
| Accrued bonuses and commissions | (961,709 | ) | (1,859,029 | ) | ||||
| Operating lease liabilities | (192,383 | ) | (135,436 | ) | ||||
| Net cash used in operating activities | (3,006,300 | ) | (3,461,162 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (124,580 | ) | (40,650 | ) | ||||
| Proceeds from disposal of property and equipment | - | 650 | ||||||
| Net cash used in investing activities | (124,580 | ) | (40,000 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Loan proceeds, net | 14,112,747 | - | ||||||
| Pay off line of credit | (9,750,000 | ) | - | |||||
| Equity offering net proceeds | - | 1,033,761 | ||||||
| Net settlement of equity-based awards | (72,708 | ) | (431,366 | ) | ||||
| Cash payment of finance and earnout liabilities | (156,000 | ) | - | |||||
| Net cash provided by financing activities | 4,134,039 | 602,395 | ||||||
| Net increase (decrease) in cash | 1,003,159 | (2,898,767 | ) | |||||
| Cash, beginning of period | 5,147,216 | 8,958,995 | ||||||
| Cash, end of period | $ | 6,150,375 | $ | 6,060,228 | ||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 549,227 | $ | 6 | ||||
| Supplemental noncash investing and financing activities: | ||||||||
| Right of use assets obtained in exchange for lease obligations | - | 1,369,164 |
MEDTECH INC. AND SUBSIDIARIES
FINANCIAL MEASURES (UNAUDITED)
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 and Segment 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 share-based compensation expense,
change in fair value of earnout liabilities, effects of noncontrolling interests, executive separation costs, legal
and diligence expenses related to acquisitions, and gains/losses on the disposal of property and
equipment, as each is applicable to the periods presented. Prior to the fiscal quarter ended June 30, 2024, the Company did not exclude
executive separation costs or legal and diligence expenses related to acquisitions in calculating Adjusted EBTIDA. However, after reevaluation,
the Company has determined that presenting Adjusted EBITDA without excluding such costs provides less valuable information about the