Earnings call transcript Q2 2023

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Operator

Greetings. Welcome to the Sanara MedTech Inc.

Second Quarter 2023 Results and Business Update Conference Call. [Operator Instructions]. Please note that this conference is being recorded. the Investor to Relations. turn Nichols, host, now of Director will conference your over Callon I

You begin. may

Callon Nichols

Thank you, for Investor on and earnings to welcome website. June you highlight good our XXXX. Relations release morning, everyone. Sanara XX, posted I earnings page I'd yesterday MedTech's that afternoon, of conference would issued we've the call We the and ended to quarter our like like to deck today's

Form XX-Q supplemental this the and This as earnings XX, June a well page. on the of copy for XXXX, deck as available ended quarter release are

remarks We will reference this information in our today.

today's from Mike Zach McNeil, expect allow approximately Nixon, and Fleming, Officer Financial Executive to to last We Chairman; prepared comments Chief XX Officer; Q&A. Chief for Executive minutes Ron time

conference in call release Securities statements this include forward-looking Litigation press our our XXXX. the of deck in meaning the and within and Reform statements of Private supplemental Certain Act

uncertainties could our materially as our quarterly statements projected see the about annual more by forward-looking forward-looking statements, in factors and risks the vary Form on report in to recent involving supplemented risk results please report risk that most and set factors on from XX-Q. implied Form factors actual by forth For the most recent or information XX-K those cause

like turn Now I would to over to the Ron Nixon. call

Ron Nixon

representing and XX% increase everyone. you, generated prior-year In revenue, morning, in good net a Thank $XX.X from Callon, QX XXXX, million Sanara period. the

implementing which revenue will to record are year-over-year -- a another XXXX record for the rate, quarter Second did strategy. was increased outline our plan discuss the Zach quarter have growth Sanara, quarter of slower continue growth and we but company

million of in benefit compared We for one-time the income net non-cash tax XXXX. of in had QX. over million net income million prior-year primarily of before year income $X.X in to XXXX taxes the to realized Our $X.X higher due for A period. QX narrowed was a income a loss from net $XXX,XXX to $X.X loss year

Turning the which we Advanced continue to commercially is team to for This pipeline, product, developed to our was our Technologies, prepare mid-QX year. BIASURGE R&D of expected Solution. in Rochal launch commercialization by new of this product Surgical at

the for reactivate Board quarter sales of offering at We with ATM the common stock. offering. we agreement no a of determined to entered it utilize is if it appropriate. into when have In sales the were Fitzgerald ATM an first QX, Cantor XXXX, management paused end our immediate and we and the could potentially plans and of Stock

The assets we CellerateRX XXX(k) announced four to and wound Subsequent to our related the care wound certain collagen HYCOL. products, care and collagen-based cleared of the for products all of the rights for quarter, acquisition uses end ownership business. acquisitioning human including includes

team for was the We believe this a transaction has milestone company quite significant for the strategic time. been something working some on and was

Now Fleming details provide Zach will more on the quarter.

Zach Fleming

Ron. Thanks,

sales sell work to new surgical customer to into products, areas. penetrate continues farther existing team into expand additional Our non-CellerateRX geographic and our base,

states. And sold into over XX facilities. of XX, products over in surgery During XXXX, as the months were ended X,XXX contracted products XX, trailing in centers to June our XXX be or our June XXXX, hospitals ambulatory approved were sold across XX

ours between major the are of agreement our group priority be team is year. products increase facilities for a to we due approved QX. number an There in will these We penetrating significant get was signed where a purchasing organization to over sold and our This a jump new a significant to into of opportunity new be products this next the and that or was believe GPO. QX facilities our with facilities,

compared sales lower rates in rate a to growth historical QX had we our of mentioned, Ron As growth.

our was by late manager hiring XXXX. of Our sales in slower pace growth impacted sales

expenses and existing were did this sales regarding budget of hiring opportunities, a pace based efficient our reduced of our have hiring in the data While ensure effect part in potential and on slowdown the period. sales effort we to team our was we an analysis of on

continued sales. we previously, increased also At to and mentioned sales the negatively supply have of ALLOCYTE to year. recently pace plan XXXX, our of trained new outset impacted class the the issues our have through and and end a representatives hire of we the field As hired hiring continue

continue which our improved new greatly believe vetting well hires, have as We and serve we for program we process to us will training expand.

new impactful. doing have representatives fix have option most ALLOCYTE a identified our on territories, significant online expect that and to secured to field us the and that future. developed analysis and in source the supply near hires where distributors, are we and come In secondary sales be order Additionally, will we help determine sourcing metrics will constraints,

FORTIFY, is product products million products of products at our QX. sales of sales sales fusion soft were $X.X in $XX.X were TEXAGEN, Looking bone our sales products and very as and mix, tissue fusion bone growth of non-CellerateRX million, such encouraging. the The

on into to strategy Scendia to and sales making we Our we the continue sales strategy the intend of national growing focusing -- products. these is continue progress, integrate

As in of Ron mentioned, mid-QX we year. expect to commercially this launch BIASURGE

key We the ensure product partners facilities. runs, currently clinical is and manufacturing being to by a smooth scheduled and adoption launch have tested with

experienced excited lead now wound on is year, this are like provide strategy. to him the post-acute update we Sam care our team. market, in hired this to value-based Sam we Muppalla have care would to the on and wound post-acute an initiative. executive I Earlier brief a

continue InfuSystem, joint complement full this a to and validation strategy. detailed and will venture and With execute the we strategy we developed from initial Sam's products services received required the of our market. develop This have value-based leadership, partner, to strategy include existing

support to assets platform the the a developed the platform for strategy exploring technology value-based the to allow into have plan we and market. will Additionally, that quicker to taken the accelerators entry care while add

care products and With HYCOL, this end cleared care collagen-based acquisition patents acquisition, business. five Subsequent products of sellers' human uses; of collagen and we under discussed XXX(k) new Ron wound earlier, CellerateRX certain that completed all acquired our nine to the products, development; as to are four we products related currently three quarter, collagen the trademarks. assets the collagen-based wound and and for patents of for pending including the

The manufacturing the control reduce costs. and of which to process gives expected CellerateRX for us HYCOL, is acquisition

develop have Additionally, new products human for rights full we uses acquired now to collagen technology. this wound on care based

on the of value an Looking of annual million in $XXX,XXX at of impact, the the cash Total for closing; consisting the $X financial was the in at sellers. million, cash. of million; and transaction paid royalty we $X.XX eliminates paid agreed-upon stock to consideration and $XX.XX installments the with shares HYCOL equal acquisition common company's four CellerateRX

developed. also $XX as cash payments was in incentive to certain to up entitled products are a potential sellers receive future and through The funded earn-out loan closing that by are royalties million on at Cadence provided as The payments Bank. well

to Now our Mike I will to results. over financial discuss it turn

Mike McNeil

Zach. you, Thank

we increase For $XX.X XXXX, XX, period. XXXX, generated revenues the the over for compared of June same net revenues period million a ended to in net quarter million prior-year XX% of the $X.X

a the months the the $XX.X prior-year June revenues For million period. XXXX, to increase of over revenues in ended period compared six XX, for $XX.X XXXX, XX% net we same net million of generated

lesser of markets. as and increased ended sales acquisition, additional to of a of revenues. Net the products June revenues new were continued for respectively, included expansion, higher tissue and, penetration, Scendia XX in independent The extent, revenues and $X.X to soft repair a and net months both products expand XXXX primarily our million, strategy of a our and US result result three six existing as market increased bone $X million in the Scendia geographic fusion our network to revenues distribution due

for for ended million $XX.X in same million for XX expenses the $XX.X SG&A XXXX. million six months period ended expenses June for compared were quarter the the expenses $XX.X XX were period million to the June same SG&A SG&A in $XX.X compared XXXX. expenses SG&A to of of

sales XX in the and for three expenses $X.X million respectively, marketing increases million, prior SG&A ended six of due $X.X XXXX XX% related operations. respectively, months Scendia accounted expenses expenses, to SG&A primarily and the The $X.X or June for compared and costs, direct and to higher of were million respectively, to XX%, million approximately the $X.X and Our higher year. included which

months the were $X.X an million, commissions product attributable six sales. respectively, marketing primarily to and million of for a as direct $X.X June The sales of and expenses sales XX higher and in higher increase three ended result

June expansion $X.X the to months force $X.X ended expenses the as costs $X.X for The XXXX, and operational also sales compared XX, quarter million second increased million six R&D of were of million result XXXX. quarter second of included for support. a

and LFA included million costs skin were the currently for $X.X with date, our to assessing XX, months conditions. wound primarily higher to patient for R&D to six compared associated expenses projects expenses to ongoing The R&D also diagnostic products. ended were the costs Healing Precision licensed imager Year These related June expenses in XXXX $X.X XXXX. due and for million development

We tax of the had XXXX. a the a quarter income of million loss before $X.X quarter million tax income compared $X.X second to in before loss second for for

in June income $X.X loss million XXXX. months six period before to the income XX, for a had million same ended compared we For before of loss the tax $X.X tax a of

was result before in liabilities. fair to of than the current rate The of tax slower recorded in expenses as to in XXXX change loss at sales a due a income benefit operating addition lower value increasing

million $X.X for million net compared For second quarter the the of second $X.X to quarter, net a we of of XXXX. income had loss

months the net For $X.X loss in compared $X.X we had net same to XXXX. for million XX, period loss a June of ended six the a of million

in XXXX for realized income benefit in the As non-cash higher primarily tax a XXXX. net Ron due the one-time to mentioned, income company was QX

end hand cash was quarter Our million. $X.X the on of the at

back closing With that, turn for it Ron remarks. to I'll

Ron Nixon

Mike. Thanks,

We sales country quarter mentioned new finding have ALLOCYTE lower our Zach As additional approvals begun across to stockout, a which record hiring while rate a another managers solution and we did earlier. the we've had QX for in field XXXX. revenue experience sales penetrate growth discussed, the

and performance, grow force individual metrics field business looking These see that growth the at various managers' our significant well be us for core still for add and performance. we are as we constantly metrics also are BIASURGE our would territory to for sales product to and We new as as sales continue key We our performance, business. will line. expand account our opportunities determine

hired, manager with high-level proven very them meaningfully the believe this our and we -- again, company's I as provide them and level sales up Additionally, past, been we're contribute candidates looking in best quickly to with territory us performance. the positions provide practice for we regional sets and Once manager mean, will high experience medtech. financial once our to with training, we'll has the to hire in

and savings that for is a may believe acquisition the our And business to answering our any products impactful to future. will the forward we have. like lead to win our I'd closing, cost of we again strategic collagen company. That and you for In aid questions emphasize to products look related assets the ability new remarks, to concludes develop it

for we're questions. to open you. Operator, Thank the ready call

Operator

[Operator Instructions].

first coming Your Ross question with is Osborn Cantor Fitzgerald. from

Ross Osborn

congrats Hey, good and progress. morning, on everyone, the

million with is $X plan you about we So steady are posted another a I of inflect or off segment And around you expect sales. what quarter as to pretty Should starting growth so, there? business, should the mean, commercialization Scendia? we higher? that if think

Ron Nixon

Zach?

Zach Fleming

to we Yes, think those sure. we is adoption for products, continue steady it of get and

However, valuable. is doctor we each do see where quite

additional to surgeons the So adding we uses. keep

ordered is us right going that's a to for you ALLOCYTE forward. going and the be remember, back upside big As now,

Ross Osborn

on driving have within quarter further color Okay. you more facility year addition and And existing per accounts? just to date some sales thinking in date, maybe Got accounts adding it. penetration new about how then trended to can to spread

Zach Fleming

It repeat that? Can of you kind sorry. part was jumbled first of the up,

Ross Osborn

trended about and curious sales have just facility to we how quarter that date, on going I'm should date apologies. think year forward? per and Yes, to how

Zach Fleming

very Yes, it's steady.

each facilities nation, are of just additional different in We're look average because that's on said, in but you losing. If and across not products adding we're we what also growing additional we the the of specialties.

that. of the has will as we grown we to in to each So amount the facility sell and same-store continue sales, will, you do continue if sort grow

additional real things growth is additional X,XXX other to business, -- the boon expect last and about been the that the addition of see we and that's call, since has I mentioned One to the a our quarter, of in what facilities. from

had think I we approved. X,XXX

Now X,XXX approved. have we

-- already get facilities. and in want task, find to our that to And out go that's every people in so are -- then we deeper, product additional uses case. people And more each those in facilities, wider, additional find it's

Ross Osborn

there it. calls. and or Is Got you. We're then for any Thank has And of couple been this apologies one juggling a us, on last update Precision? addressed. if

Zach Fleming

first, us InfuSystem DME set way in kind than follow. selling to other the billing market. -- is helping are working been their are today, They we're closely to which They products we've for leading of working so Yes, the negative pressure with capabilities them. our as up

I well, off just build team talk to spot. to Their a without think that good sure them We to like feel sales is getting regularly moving organized, a forward very in and and a goes able they're be that's business infrastructure make typical hitch. really that

to you And was then imager, over in as to current jump for the our Precision, discussions resubmit. those with I if submitted our FDA. know, We're

the expect a the from to year, should we then excuse expect -- within next then We on no, sorry, November, resubmit of me. imager. months, by FDA that And have by two and the end decision

assay. flow forward, the we with LFA, then We're requirements around LFA in that approval. the learn to The communication moving That's that in lateral a the continue also, we're and And FDA. communication. is

Ross Osborn

on it. congrats results. Got Thank and again the you,

Zach Fleming

you. Thank

Operator

question next Cassel with Ian from MicroCap is Your Club. coming

Ian Cassel

Thank you. of mean, does take What group up congrats about if a more. can it size? organization. signing opportunity. I to you looks what like that talk can And takes about I wondering, on hospitals purchasing Yes, major group a that Zach, group maybe you how was up talk a up that? sign you sign like attack it was or it X,XXX it to

Zach Fleming

Yes, appreciate I question. the

a first of it's So off, kind groundswell.

then and studies approval know certain and from to of as that experience gain better use you doctors a you And past, product As by tell demand groundswell the usage. doctors, to There's in to the we've facilities. to gotten needs usage and so the member support grown get product, had other the of of one. greater the adoption, in the facility more research through course, level had we've one that happen

a up on a from the those into GPO into then, national the GPL, facilities basis. demand contract, contract wanted system and boil member there's and of they that to And once kind the then to

that once facility. situation it different happens, and -- And you front-of-the-line a puts approval, so then the each GPO got you in have you've for

still be network analysis are analysis connect with can we we value where to may of sales but those we go typically help have doctor research use it's their value opportunities. present us, facility And to There with level And formality some our that's us into those by so adoption, those committee representative committees. facility. then approvals, XXXX

of sales and And managers then from there, out our that within regional each sort territory facility. managers flower

use from doctor So the then gotten the products and and add guys that in follow approved. on our to XXXX initial start additional the people we've that

Ian Cassel

see Zach, I how And plan BIASURGE market launch and you. talk competitors from to Thank in it's marketplace? differentiated for any opportunity BIASURGE you that the can mid-QX. the about

Zach Fleming

washes That about complement of Sure. recognize. new set products that We're excited product. really burden. you medicated to reducing That's is outcomes product probably that help bacterial by that a

potential they their cocktail what historically in-house own in so the pharmacy. antimicrobial use would they And have typically that might make doctors done,

we of -- come out will companies a years, that's that few think use has In that other And saline rinse results. is a washes. consistency that have market had good of a non-cytotoxic we good it is leave-in. product, and our in that don't recent words, and are they And have to differentiation And provide to this a cells. these do types post

trying kill as you're wound. won't good you So to re-heal tissue the

that keeping science-y, area of force by of but course, and the from colonies. outcome it biofilm protects a complements just sort field to And like get --not that bacterial too biofilm, then, it's the having basically,

be eradicated can And wound the on this breaks that and so broken bacterial down lets and eventually. heal field down that colonies so force the

very that those infection. sense have wounds already but surgery, significant in as well that into a treating a that a may well think fits prophylactic We

a a or patient to used going they're high-risk to be on also if a So it used could way, knee do just revision hip prophylactically. a be that on

Ian Cassel

So of the of Is kind market that right this? think fully product the to is about category. way itself the aware

Zach Fleming

it's a as where a -- situation burgeoning and was started would Cellerate, it to I demand. there similar with a everybody what knew Yes, a is I the And say sort form we been think very did market. started couple which cocktail. And of quo, and have has have gone that typically to we there that status companies was out doctor's of some a need

in pricing, at have going a of of very as to where our evidence. coming interesting because think a interesting we're we're of sister because value proposition But lot has very time BIAKŌS, the the I our is And evidence well. product that course, of a

tough nicely very, really that space. in fit should a market product very be in think that So I competitor and

Ian Cassel

Thank you. sort the revenue and post-acute of is company, obviously, line back then of surgical side the business, the of care sides growth, strategy. value-based in two surgical the you wound And at in company. lot a SG&A When have the or wound revenue Maybe from growth the the mainly I'll last all the the a queue. the coming and you look a lot business. of question; all side And of is the of acute strategy the the care get

past know in goal if was I conversations, -- in is Ron, XX maybe could curious, I your this next to for were the of and I'm to or the that was earnings division here by at you get the thing kind year. monetized to least call, And of wondering what the last this end speak months hoping you that.

Ron Nixon

Yes.

largest extensive board, facilities. post on He when general. So the the a in wound acute one not side. companies value-based to has the related care only on of level market also has post-acute Sam the understanding, nursing on detail really And Sam he experience came Muppalla in led brought the and of skilled

is as look, visibility and And we contract be to a contracts? how to we strategy really those get should the the honed greater to going where what we've able where the to part be component does so have needed, much need into

we're moving a And in We've of on Those forward seeing critical LFA. to of value-based components our things the and imager delays so the strategy. got couple the that. are

until want beginning everything really wait have which our next to we to we believe goal. year. That's go, the we So of very fully should be ready by

Ian Cassel

Okay, thank you.

Operator

[Operator Instructions].

coming Okay, a question just the do We have from one moment. webcast.

for than a growth. more sequential Okay. and X% within number mentioned or quarter, to to take facility X% Thank go have that growing, and each that? about as is seen The you of to But are it these facility. question just complicated on deeper maybe trying you we sales color result Is you're this. efforts, this wider accurate now per it's direct that any

Zach Fleming

Yes, sure.

So sales growth isn't linear in any company.

So the do as well additional that about, as occasionally. to of your starting you in when deeper, to talked gain a to wider, And and we job thing add additional I and attack which competition loss and growth. is well per in there go that's grow, case, I think sales notoriety our products product done start you're normal is terms

competitors. is didn't also trained. in have they high out market. think of of the seem and just because our I we liked. there We in as to It evidence, these pose of don't level But to would the we out as a all competitors because much grow front are be people get these fast and we think point, of risk few we results, that up to great have

the There's end year, We outage. national had a little our of we bit had those only At two of people. director. of sales an last

hire be additional able to are. the these these in approvals those part growth this new little was the territories fill that capacity year bit two And and -- to got where limited. a people so We first to their hired are just hire opportunities have of

observing field good doing as on us We hiring a have and territories, our from we out mentioned well, top representatives. rides, and some that, then well, call, place, So getting And our those like those pace. that field, looks focused. that been hiring territories of vet so the super as are they're I people the the what involves in in highly increased improved now good into did very training, -- we've

look and territories of So And our gotten number our then at and potential population a then on based the with we've size. of couple already surgeries high-potential and the that that surgeons approvals in on that we have distributor. we well operations identified based area as market as number

areas that So there's hone deploy. in a we're bunch things on the of at looking to to top really

successful. put so done and And people place that we've to into be

So that my to would question. that answer be

Ron Nixon

to just Zach, add that. and Yes, to

is One of the data company very driven. things -- this

look throw that customers, We about hope analysis our mentioning at have was is of out the do a to just territories, bodies and business. Zach reused well. there a as the And of lot for strategy metrics the the they not potential, to this us

people are need we early those In of where see started there, go we put the potential impact. and the days to we out Sanara, to areas have to highest that

a that. was little it so understand easier to And

we that though, grow a the can all to strategic continue added create shareholders having Today, Sanara. not long need on, strategy high this for is build-a-business we efficiency these and be across have revenue to facilities This want country, because to this term strategy is we business. that we put because our a so very for income

Operator

Club. Okay question follow-up with Ian a your from is MicroCap next Cassel question

Ian Cassel

of sort also The acquisition you acquired is I'll that from you collagen know debt company, to again. but Ron, the asset impressive. the Cadence. what of ask the it bank but brings that it I way with the question already, answered

profitable or balance in you you're out cash. is going when just juggle company to term. the them that be -- I'm be to $X going And look future. just to growth you you're them the million prove the how profitability to at versus near a profitable in getting obviously, you company sheet And about showed a curious

Ron Nixon

we to are what do where look Yes, constantly on, close good perspective, how our is also question. getting we're as got be more able to a a and to but to earnings. guidance. we we're we cash that's And time going give from to that, are at we hope be Actually, give goes you in we that. know predictability provide we is to do actual better going a give once able we've visibility. ultimately more What And

very watch data obviously very, relates driven. everything as that, But we very closely. We're it to

on are proved tool short we're we that there. opportunities, its do that standpoint. that out we're an The that feel would us to interested We partners for find ATM We don't in for short we that have a today. But anything we for it's but potential it and where period we time. plans on that, worked purpose. immediate short So served acquisitive from of not are not have funding the comfortable out

we But well. earnings use revenue and want generate to and company to cash that for able as be inside flow expansion the

So comfortable going, where feel today. to very answer your we're feel specifically going of where a we we lot we do today. are We question, about very we're forecasting of and where good

Ian Cassel

the Maybe one I international products last on is for question have? while any you of opportunity have line, any you there that the

Ron Nixon

is a you way. a the We want What look just significant there's already what I we really market in if penetrate last done -- US don't We we large do years. we've in internationally. very at the believe three have, to the to want mean, opportunity over

percent And typically, up XX-plus me. growth XX-months what businesses. with It's of to on basis, a be able been you to build have on really basis trailing year And end You over infrastructure when you're to in even see a that? that's needing high quarterly to lot interesting rate. happens doing. growth growth support a what or a I year

international the different an infrastructure building an to an than is business. domestic infrastructure business support And for go building completely

will is to and appropriate large going to continue for have, products but a that up to really we at be that going we're we there So looking And go out pursue the we're the international the we always time. business domestically, know that the at market market. build

Ian Cassel

Thank you.

Operator

closing at no Nixon, end are back in to time, There this questions the I and for turn the to have reached Executive session. -- additional of the over we call would Ron question-and-answer now Chairman, remarks. queue

Ron Nixon

for appreciate lot well. on want good in everybody And I where call very in about future We've listening for today. us the joining Thank I as you, today. got to feel and to We report the thank everyone going. we're a

Operator

This at Thank you. conclude conference your disconnect and call, time. participation. Thank for you may this your you does today's lines

Sanara MedTech (SMTI) 15 Aug 232023 Q2 Earnings call transcript