Sanara MedTech’s Earnings Call Reveals Growth and Challenges

Sanara MedTech ((SMTI)) has held its Q1 earnings call. Read on for the main highlights of the call.

Sanara MedTech’s recent earnings call presented a mixed sentiment, highlighting strong revenue growth and improvements in gross margins and adjusted EBITDA, particularly in the Sanara Surgical segment. However, the company also faced challenges, including increased net loss, operating expenses, and higher debt obligations, which balanced the overall outlook.

Sanara Surgical Revenue Growth

Sanara Surgical reported a net revenue of $23.4 million, marking a 26% year-over-year growth. This impressive performance was primarily driven by a 28% increase in soft tissue repair product sales, showcasing the segment’s robust expansion.

Strong Performance in Product Sales

The company’s product sales were bolstered by the success of CellerateRX Surgical and BIASURGE products. Additionally, bone fusion products experienced an 18% increase in sales year-over-year, contributing to the overall strong performance.

Enhanced Gross Margins

Sanara MedTech achieved a gross profit increase of $5 million, reaching $21.6 million. The gross margin also improved by approximately 240 basis points, now standing at an impressive 92% of net revenue.

Adjusted EBITDA Improvement

The Sanara Surgical Segment saw its adjusted EBITDA rise by $1.5 million year-over-year, totaling $2.7 million. This improvement highlights the segment’s operational efficiency and financial health.

Expansion of Distributor Network

Sanara MedTech expanded its distributor network significantly, growing from over 250 partners in Q1 2024 to over 400 partners. This expansion enhances the company’s sales coverage and market reach.

Tissue Health Plus Technology Platform Release

A significant milestone was the release of the Tissue Health Plus technology platform, including the THP CoPilot app, on May 1st. This development marks a pivotal step in advancing wound care solutions.

Increased Net Loss

The company reported a net loss of $3.5 million for the first quarter, up from $1.8 million last year. The Tissue Health Plus segment experienced significant losses, contributing to the overall net loss.

Higher Operating Expenses

Operating expenses rose by $5.5 million, or 30%, largely due to a $5.2 million increase in selling, general, and administrative expenses. This rise in expenses reflects the company’s investment in growth and expansion.

Increased Debt Obligations

Sanara MedTech’s principal debt obligations increased to $42.8 million, up from $30.5 million as of December 31, 2024. This rise in debt highlights the financial challenges the company faces.

Increased Interest Expense

The company’s interest expenses rose significantly, with other expenses for the first quarter at $1.4 million, compared to $0.3 million last year. This increase is attributed to higher interest expenses related to the CRG Term Loan.

Forward-Looking Guidance

Sanara MedTech’s forward-looking guidance highlights continued growth in its Sanara Surgical segment, with a 26% increase in net revenue year-over-year. The company aims to expand its distributor network further and enhance its penetration in existing healthcare facilities. The Tissue Health Plus segment is set to launch its pilot program in the second quarter, focusing on a value-based wound care strategy. Despite financial challenges, the company holds $20.7 million in cash and maintains a borrowing capacity of $12.25 million.

In summary, Sanara MedTech’s earnings call reflects a strong performance in revenue growth and product sales, particularly in the Sanara Surgical segment. While the company faces financial challenges, including increased net loss and debt obligations, its strategic initiatives and forward-looking guidance suggest a focus on growth and expansion. The overall sentiment from the earnings call is balanced, with significant positive strides tempered by financial hurdles.