Full Press Release Details
MedTech Inc. Reports Third Quarter 2024 Results
WORTH, TX / GlobeNewswire / November 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, today reported its strategic, operational and financial results for the quarter ended September
third quarter of 2024 was Sanara's twelfth consecutive record net revenue quarter, which is a testament to the hard work and dedication
of our entire organization," stated Ron Nixon, Sanara's Executive Chairman and CEO. "Looking ahead, we remain focused
on continuing to execute our growth strategy and delivering exceptional value to both our customers and shareholders."
Quarter 2024 Strategic, Operational and Financial Highlights (Unaudited)
Quarter 2024 Revenue Analysis (Consolidated)
the third 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 900+ in Q3 2024 compared to 600+ in Q3 2023. For the quarter ended September
30, 2024, Sanara generated net revenue of $21.7 million compared to net revenue of $16.0 million for the quarter ended September 30,
2023, a 35% increase from the prior year period. The higher net revenue in the third quarter of 2024 was due to increased sales of soft
tissue repair products (CellerateRX Surgical Activated Collagen , BIASURGE , FORTIFY TRG
Tissue Repair Graft and FORTIFY FLOWABLE Extracellular Matrix), increased market penetration, and geographic expansion
and the Company's continuing strategy to expand its independent distribution network in both new and existing U.S. markets.
Quarter 2024 Earnings Analysis (Consolidated)
reported a net loss of $2.9 million for the quarter ended September 30, 2024, compared to a net loss of $1.1 million for the quarter
ended September 30, 2023. The higher net loss in 2024 was primarily due to increased SG&A costs related to the buildout of our Tissue
Health Plus ("THP") platform and infrastructure, which increased by approximately $1.2 million compared to the prior year
period. The increase in net loss for the period also included higher interest expense of $0.7 million as a result of our loan with
CRG Servicing LLC, and an increase in expense due to change in fair value of earnout liabilities of $0.8 million. These increased costs were partially offset by higher
Company generated Adjusted EBITDA* of $0.8 million for the quarter ended September 30, 2024, compared to Adjusted EBITDA* of $0.3 million
for the quarter ended September 30, 2023.
Adjusted EBITDA is a non-GAAP financial measure. See the discussion and the reconciliations at the end of this release for additional
Quarter 2024 Earnings Analysis (Segmented)
Surgical generated a net loss of $0.2 million for the quarter ended September 30, 2024, compared to net income of $0.6 million for the
quarter ended September 30, 2023. The higher Sanara Surgical net loss in 2024 was primarily due to increases in interest expense,
depreciation and amortization, and changes in fair value of earnout liabilities. THP generated a net loss of $2.7 million for the
quarter ended September 30, 2024, compared to a net loss of $1.7 million for the quarter ended September 30, 2023. The higher THP
net loss in 2024 was primarily due to higher SG&A costs related to the buildout of the THP platform and technology.
Surgical generated Segment EBITDA* of $2.6 million for the quarter ended September 30, 2024, compared to Segment EBITDA* of $1.4 million
for the quarter ended September 30, 2023. THP generated Segment EBITDA* of ($1.7) million for the quarter ended September 30, 2024, compared
to Segment EBITDA* of ($1.1) million for the quarter ended September 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 Wednesday, November 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 373459. A telephonic replay of the conference call will
be available through Wednesday, November 27, 2024, by dialing 877-481-4010 (international callers: 919-882-2331) and entering the replay
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," "intends,"
"may," "plans," "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 our business strategy and mission, 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 uncertainties associated with the development and process for obtaining regulatory approval
for new products, 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
Powell or Mike Piccinino, CFA
MEDTECH INC. AND SUBSIDIARIES
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 16,277,189 | $ | 5,147,216 | ||||
| Accounts receivable, net | 11,070,622 | 8,474,965 | ||||||
| Accounts receivable - related parties | 43,409 | 8,400 | ||||||
| Royalty receivable | - | 49,344 | ||||||
| Inventory, net | 3,008,349 | 4,717,533 | ||||||
| Convertible loan receivable | 1,079,411 | - | ||||||
| Prepaid and other assets | 429,428 | 608,411 | ||||||
| Total current assets | 31,908,408 | 19,005,869 | ||||||
| Long-term assets | ||||||||
| Intangible assets, net | 42,029,142 | 44,926,061 | ||||||
| Goodwill | 3,601,781 | 3,601,781 | ||||||
| Investment in equity securities | 8,321,412 | 3,084,278 | ||||||
| Right of use assets - operating leases | 1,688,963 | 1,995,204 | ||||||
| Property and equipment, net | 995,770 | 1,257,956 | ||||||
| Total long-term assets | 56,637,068 | 54,865,280 | ||||||
| Total assets | $ | 88,545,476 | $ | 73,871,149 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 1,301,362 | $ | 1,924,082 | ||||
| Accounts payable - related parties | 150,611 | 77,805 | ||||||
| Accrued bonuses and commissions | 8,256,801 | 7,676,770 | ||||||
| Accrued royalties and expenses | 2,285,374 | 2,047,678 | ||||||
| Earnout liabilities - current | 1,906,550 | 1,100,000 | ||||||
| Current portion of debt | - | 580,357 | ||||||
| Operating lease liabilities - current | 439,129 | 361,185 | ||||||
| Total current liabilities | 14,339,827 | 13,767,877 | ||||||
| Long-term liabilities | ||||||||
| Long-term debt, net of current portion | 30,076,715 | 9,113,123 | ||||||
| Earnout liabilities - long-term | 2,006,000 | 2,723,001 | ||||||
| Operating lease liabilities - long-term | 1,407,164 | 1,737,445 | ||||||
| Other long-term liabilities | 1,261,495 | 1,941,686 | ||||||
| Total long-term liabilities | 34,751,374 | 15,515,255 | ||||||
| Total liabilities | 49,091,201 | 29,283,132 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity | ||||||||
| Common Stock: $0.001 par value, 20,000,000 shares authorized; 8,743,174 issued and outstanding as of September 30, 2024 and 8,535,239 issued and outstanding as of December 31, 2023 | 8,743 | 8,535 | ||||||
| Additional paid-in capital | 76,021,528 | 72,860,556 | ||||||
| Accumulated deficit | (36,246,405 | ) | (28,036,814 | ) | ||||
| Total Sanara MedTech shareholders' equity | 39,783,866 | 44,832,277 | ||||||
| Equity attributable to noncontrolling interest | (329,591 | ) | (244,260 | ) | ||||
| Total shareholders' equity | 39,454,275 | 44,588,017 | ||||||
| Total liabilities and shareholders' equity | $ | 88,545,476 | $ | 73,871,149 |
MEDTECH INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net Revenue | $ | 21,671,599 | $ | 16,024,948 | $ | 60,367,060 | $ | 47,300,029 | ||||||||
| Cost of goods sold | 1,991,987 | 1,751,349 | 5,890,719 | 6,064,524 | ||||||||||||
| Gross profit | 19,679,612 | 14,273,599 | 54,476,341 | 41,235,505 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative expenses | 18,993,255 | 13,877,879 | 54,143,122 | 40,658,424 | ||||||||||||
| Research and development | 1,359,530 | 986,454 | 3,291,479 | 3,480,906 | ||||||||||||
| Depreciation and amortization | 1,103,854 | 997,674 | 3,314,781 | 2,580,243 | ||||||||||||
| Change in fair value of earnout liabilities | 147,000 | (681,753 | ) | 67,549 | (1,494,910 | ) | ||||||||||
| Total operating expenses | 21,603,639 | 15,180,254 | 60,816,931 | 45,224,663 | ||||||||||||
| Operating loss | (1,924,027 | ) | (906,655 | ) | (6,340,590 | ) | (3,989,158 | ) | ||||||||
| Other expense | ||||||||||||||||
| Interest expense | (927,577 | ) | (188,294 | ) | (1,839,259 | ) | (188,300 | ) | ||||||||
| Share of losses from equity method investment | (31,448 | ) | - | (31,448 | ) | - | ||||||||||
| Total other expense | (959,025 | ) | (188,294 | ) | (1,870,707 | ) | (188,300 | ) | ||||||||
| Net loss | (2,883,052 | ) | (1,094,949 | ) | (8,211,297 | ) | (4,177,458 | ) | ||||||||
| Less: Net loss attributable to noncontrolling interest | (25,284 | ) | (34,579 | ) | (85,331 | ) | (111,455 | ) | ||||||||
| Net loss attributable to Sanara MedTech shareholders | $ | (2,857,768 | ) | $ | (1,060,370 | ) | $ | (8,125,966 | ) | $ | (4,066,003 | ) | ||||
| Net loss per share of common stock, basic and diluted | $ | (0.34 | ) | $ | (0.13 | ) | $ | (0.96 | ) | $ | (0.49 | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | 8,517,381 | 8,332,341 | 8,468,394 | 8,244,503 |
MEDTECH INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS (UNAUDITED)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (8,211,297 | ) | $ | (4,177,458 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 3,314,781 | 2,580,243 | ||||||
| Credit loss expense | 230,930 | 214,061 | ||||||
| Inventory obsolescence | 356,261 | 222,691 | ||||||
| Share-based compensation | 3,240,362 | 2,582,163 | ||||||
| Noncash lease expense | 306,240 | 243,988 | ||||||
| Share of losses from equity method investment | 31,448 | - | ||||||
| Back-end fee | 219,689 | - | ||||||
| Paid-in-kind interest | 424,067 | - | ||||||
| Accretion of finance liabilities | 166,595 | 39,699 | ||||||
| Amortization and write-off of debt issuance costs | 150,219 | 2,055 | ||||||
| Change in fair value of earnout liabilities | 67,549 | (1,494,910 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (2,777,243 | ) | (794,344 | ) | ||||
| Accounts receivable - related parties | (35,009 | ) | 87,516 | |||||
| Inventory, net | 1,352,923 | (1,664,714 | ) | |||||
| Prepaid and other assets | 178,963 | 482,921 | ||||||
| Accounts payable | (622,719 | ) | 547,186 | |||||
| Accounts payable - related parties | 72,806 | 30,711 | ||||||
| Accrued royalties and expenses | 249,910 | 557,295 | ||||||
| Accrued bonuses and commissions | 580,031 | (1,673,629 | ) | |||||
| Operating lease liabilities | (252,337 | ) | (182,498 | ) | ||||
| Net cash used in operating activities | (955,831 | ) | (2,397,024 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (133,676 | ) | (210,970 | ) | ||||
| Proceeds from disposal of property and equipment | - | 650 | ||||||
| Investment in equity securities | (5,268,582 | ) | - | |||||
| Advancement on convertible loan receivable | (1,079,391 | ) | - | |||||
| Acquisitions, net of cash acquired | - | (9,942,750 | ) | |||||
| Net cash used in investing activities | (6,481,649 | ) | (10,153,070 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Loan proceeds, net | 29,339,260 | 9,688,341 | ||||||
| Pay off line of credit | (9,750,000 | ) | - | |||||
| Equity offering net proceeds (expenses) | (75,000 | ) | 1,033,761 | |||||
| Net settlement of equity-based awards | (87,807 | ) | (150,296 | ) | ||||
| Cash payment of finance and earnout liabilities | (859,000 | ) | (744,795 | ) | ||||
| Net cash provided by financing activities | 18,567,453 | 9,827,011 | ||||||
| Net increase (decrease) in cash | 11,129,973 | (2,723,083 | ) | |||||
| Cash, beginning of period | 5,147,216 | 8,958,995 | ||||||
| Cash, end of period | $ | 16,277,189 | $ | 6,235,912 | ||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 948,759 | $ | 146,546 | ||||
| Supplemental noncash investing and financing activities: | ||||||||
| Right of use assets obtained in exchange for lease obligations | - | 1,531,773 | ||||||
| Equity issued for acquisitions | - | 3,089,645 | ||||||
| Earnout and other liabilities generated by acquisitions | - | 3,759,642 |
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 income
(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, share of losses from equity method investment, 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. Segment EBITDA is calculated in the same manner as Adjusted EBITDA but is presented on a segment basis.
Company believes Adjusted EBITDA and Segment EBITDA are useful to investors because they facilitate 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 and Segment 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