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 March 31,
2024.
Ron 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.”
Strategic and Operational Highlights in
the First Quarter 2024
- In the first
quarter of 2024, the Company generated a record $18.5 million in
sales, representing a tenth consecutive record revenue quarter for
the Company.
- For the three
months ended March 31, 2024, the Company had a net loss of $1.8
million, compared to a net loss of $1.2 million for the three
months ended March 31, 2023. The Company generated Adjusted EBITDA*
of $0.3 million for the three months ended March 31, 2024, compared
to negative Adjusted EBITDA of $0.3 million for the three months
ended March 31, 2023.
- During the
trailing twelve-month period, the Company’s products were sold in
over 1,080 facilities across 34 states plus the District of
Columbia. The Company’s products were contracted or approved to be
sold in more than 3,000 hospitals/ambulatory surgery centers as of
March 31, 2024.
- The Company made
significant progress in the areas of intellectual property and the
manufacturing process for its CellerateRX® product.
- Subsequent to
the end of the quarter, the Company announced the appointments of
Jake Waldrop as Chief Operating Officer and Tyler Palmer as Chief
Corporate Development and Strategy Officer.
- Subsequent to
the end of the quarter, the Company announced that it has entered
into a $55.0 million non-dilutive term loan agreement with CRG
Servicing LLC, an affiliate of CRG LP, a healthcare focused
investment fund, to support the Company’s growth initiatives in
2024 and 2025. The Company received $15.0 million in gross proceeds
at closing and, subject to certain conditions, has the option to
draw up to $40.0 million in additional funds in two tranches before
June 30, 2025.
- Subsequent to
the end of the quarter, former CEO Zach Fleming delivered notice of
his resignation, effective May 10, 2024. Ron Nixon, Sanara’s
Chairman, who has been deeply involved in developing and executing
the Company’s strategic vision, has been appointed CEO by Sanara’s
Board of Directors.
First Quarter 2024 Sales
Analysis
In 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.
Earnings Analysis
Sanara 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 31, 2023.
* 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.
Use of Non-GAAP Financial
Measures
To 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.
The 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.
Conference Call
Sanara 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: 50526.
A 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.
About Sanara MedTech Inc.
With 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: BIAKŌS® Antimicrobial
Skin and Wound Cleanser, BIAKŌS® Antimicrobial Wound Gel, BIAKŌS®
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.
Information about Forward-Looking
Statements
The 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.
All 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 laws.
Investor Contact:
Callon Nichols, Director of Investor
Relations713-826-0524CNichols@sanaramedtech.com
SOURCE: Sanara MedTech Inc.
SANARA MEDTECH INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
|
(Unaudited) |
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2024 |
|
|
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 |
|
SANARA MEDTECH INC. AND
SUBSIDIARIESCONSOLIDATED 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 |
|
SANARA MEDTECH INC. AND
SUBSIDIARIESCONSOLIDATED 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 |
|
Reconciliation of GAAP to Non-GAAP
Financial Measures
Reconciliation 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 |
) |
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