Sanara MedTech (SMTI) Q4 2025 Earnings Transcript

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DATE

Tuesday, March 24, 2026 at 8 a.m. ET

CALL PARTICIPANTS

- Chief Executive Officer — Seth Yon

- Chief Financial Officer — Elizabeth Taylor

Full Conference Call Transcript

Seth Yon: Thanks, operator, and welcome, everyone, to our fourth quarter and full year 2025 earnings call. Let me outline the agenda for today's call. I'll begin by reviewing several key financial accomplishments for the full year 2025. I'll then discuss our fourth quarter net revenue performance as well as our commercial execution across the three key initiatives, our commercial strategy. After this, I'll provide an update on a few other select areas of operational progress in the quarter. Elizabeth will cover our fourth quarter financial results in further detail and review our full year net revenue guidance for 2026, which we reaffirmed in our earnings release today.

I'll then conclude our remarks with some thoughts on our positioning as we enter 2026, our strategic priorities for the year and our outlook before we open the call for questions. With that said, let's get started. Looking back at our financial performance for the full year 2025, I'd like to highlight several key accomplishments to demonstrate the significant progress we've made as an organization. First, we exceeded $100 million of net revenue for the first time in our company's history. Specifically, we generated $103.1 million of net revenue for the full year 2025, representing growth of 19% year-over-year.

Importantly, we accomplished this impressive performance while maintaining the size of our field sales team with 40 representatives at the end of 2025. Our field sales headcount at the end of 2025 was essentially unchanged compared to the end of 2024, 2023 and 2022. Our performance demonstrates the strength of our hybrid commercial model, which includes both field sales reps and a growing network of independent distributor partners. Together, they raise awareness of our products and educate prospective surgeon customers on their benefits and clinical applications. Second, we drove significant improvements in our profitability profile on a year-over-year basis.

Specifically, we expanded our gross margins by approximately 200 basis points to 93% for the full year 2025 and demonstrated notable operating leverage. We ultimately achieved a $1.5 million or 80% reduction in net loss from continuing operations and a $7.9 million or 86% improvement in adjusted EBITDA, resulting in $17 million for the full year 2025. Third, this performance, coupled with improvements in our working capital management, ultimately enabled us to generate $6.8 million of cash provided by operations for the full year 2025. This compares to $24,000 of cash used in operations for the full year 2024.

In short, our financial results in 2025 reflect the fundamental strength of our surgical business and support our recent strategic decision to focus our resources and capabilities on the surgical market. Turning to an overview of our fourth quarter net revenue performance. Our team delivered solid commercial execution in the fourth quarter, generating net revenue of $27.5 million, representing growth of 5% year-over-year. Our net revenue growth was largely driven by sales of soft tissue products with modest contributions from sales of our bone fusion products as well. As a reminder, our net revenue in the fourth quarter 2024 benefited from approximately $1.8 million of BIASURGE sales due to the industry disruption caused by Hurricane Helene.

Excluding the $1.8 million of BIASURGE sales related to this dynamic, our net revenue in the fourth quarter of 2025 increased 13% year-over-year. Importantly, our fourth quarter net revenue performance came in at the high end of both the preliminary range that we provided in our press release on January 23, 2026, as well as the expectations we shared on our third quarter's earnings call in November 2025. With these results as our backdrop, I'll now share on our commercial execution. In 2025, our team continued to drive momentum across the three key initiatives of our commercial strategy, which represents important drivers of our growth.

As a reminder, these three initiatives are: one, strengthening our relationships with independent distributors; two, selling into new health care facilities; and three, expanding the existing health care facilities we serve. I'll now share updates on our progress across each of these initiatives, beginning with our relationship development with independent distributors. In 2025, we significantly grew our network of distributor partners. Specifically, we ended 2025 with over 450 contracted distributors compared to over 350 at the end of 2024. Given the significant progress we've made in expanding the size of our distributor network, our team has also focused increasingly on optimizing our distributor relationships.

We are doing this by onboarding newly contracted distributors, training their sales representatives and partnering with them to educate prospective surgeon customers about the clinical benefits of our products. Our partnership approach to engaging and working with our distributor remains our core component of our commercial philosophy. We believe it's one of the items that differentiates Sanara in the market and provides important advantages for our organization going forward. Turning to our second commercial initiative, adding new facility customers. We continue to leverage our network of distributor partners to begin selling into new health care facilities where our products have been contracted or approved.

I'm pleased to report that we achieved our stated target, which we initially provided on our first quarter earnings call in May 2025 of selling into over 1,450 health care facilities by the end of 2025. This compares to over 1,300 facilities in 2024. We continue to see significant runway to add new health care facility customers to our base over the coming years as our products were contracted or approved for sale in over 4,000 facilities at year-end. With respect to the third initiative I mentioned, penetrating our existing facility customers, we continue to drive adoption of our products by adding new surgeon users within the health care facilities we currently serve.

In both the fourth quarter and full year 2025, we realized strong year-over-year growth in the size of our surgeon customer base. We continue to add new surgeon users ranging across a variety of specialties, including our traditional focus of spine and orthopedics as well as general, plastic and vascular surgery. Despite our progress in 2025, our surgeon penetration within the over 1,450 health care facilities we serve remains relatively low. With that in mind, we believe that the opportunity to go deeper within these existing facilities remains perhaps our largest untapped opportunity for future growth.

In summary, our progress across each of the key commercial initiatives leaves us well positioned as we enter 2026 with multiple levers to drive continued growth in the surgical market. In addition to our commercial execution, the broader Sanara team made significant progress during the fourth quarter with respect to multiple areas of our strategy. I'd like to take a minute to highlight several important operational accomplishments. During the quarter, we continued to wind down the operations of Tissue Health Plus or the THP segment following our decision to cease operations, which we discussed in detail on our third quarter 2025 earnings call.

I'm pleased to report that the THP wind-down process was substantially complete at the end of 2025, consistent with our previously stated expectations. From a financial perspective, total cash use related to THP over the second half of 2025 was $5.3 million, below the $5.5 million to $6.5 million range we shared on our second quarter earnings call in August 2025. As a reminder, the operations of THP, which were previously reported as the THP segment are classified as discontinued operations for the three months and full years ending December 31, 2025, and 2024. And importantly, we continue to anticipate no material cash spend related to THP going forward.

With this in mind, we are entering into 2026 as a leaner, pure-play surgical company focused on continuing to bring innovative products to the operating room setting. In the fourth quarter, we also continued to support the future growth of our BIASURGE product by expanding into health care facility approvals. Most notably, we secured an innovative technology contract from Vizient. For those unfamiliar, Vizient is the largest group purchasing organization in the U.S. with an extensive client base of health care facility customers. Through Vizient's innovative technology program, Vizient works with councils led by hospital experts from its client base. These councils are tasked with evaluating products and assessing their potential to bring innovation to health care delivery.

Following evaluation, our BIASURGE product was awarded an Innovative Technology contract as it was deemed to offer unique qualities and a potential benefit over other products available in the market today. As a reminder, BIASURGE is a no-rinse irrigation solution that enables surgeons to cleanse wound bed more efficiently than with saline alone. It also provides broad-spectrum antimicrobial effectiveness, helping to reduce the risk of surgical site infections. Beginning January 1, 2026, BIASURGE is now available to Vizient's network of health care facility customers. We believe this contract provides approximately 1,800 health care facilities with access to BIASURGE at contracted pricing and prenegotiated terms.

All in all, it represents a significant opportunity to further expand BIASURGE customer base in 2026 in the coming years. In addition to these efforts, we continue to support our surgical product portfolio by expanding and enhancing our body of clinical evidence. Our products were featured in multiple peer-reviewed studies published during the first quarter. I'll take a moment to highlight two of them. A comparative peer-reviewed in vitro study featuring BIASURGE was published in the Journal of Arthroplasty. It evaluated the effectiveness of 9 commercially available irrigation solutions, including BIASURGE.

Specifically, it assessed their ability to prevent the formation of biofilm on orthopedic implant materials by two common types of bacteria that are notorious for causing severe antibiotic-resistant infections in surgical wounds. The researchers also evaluated the cytotoxicity of each irrigation solution to ensure the patient's safety. In this study, BIASURGE exhibited high antimicrobial efficacy and low cytotoxicity. It is identified as one of the two irrigation solutions that were most effective in preventing biofilm formation among the 9 products tested. Our ALLOCYTE Plus product was also featured in a long-term clinical study published in the Journal of Spine and Neurosurgery. This study evaluated the outcomes of lumbar spinal fusion that used ALLOCYTE Plus as a stand-alone graft substitute.

Ten patients were followed for 24 to 36 months, demonstrated successful solid bone healing within 6 months of receiving the operation. No adverse events, including complication, graft failures or revision surgeries were reported during the follow-up period. Importantly, these patients also demonstrated sustained improvements in both neurological and clinical outcomes as well. The study's findings support our position that ALLOCYTE Plus provides a safe, biologically active alternative to using traditional autogenous iliac crest bone grafts, which tend to be associated with the complications in donor site morbidity. Our R&D team also remains focused on expanding our IP portfolio to protect and advance our existing products.

As a reminder, in 2024, we submitted 11 provisional patent applications covering innovations in proprietary antimicrobial and hydrolyzed collagen technologies, including novel formulations, treatment applications and key component advancements. Over the course of 2025, our team converted these 11 provisional patent applications into nonprovisional filings, a major step forward in the progress towards securing approval while also submitting the corresponding U.S. and PCT applications for international protection. In addition to this progress, we submitted an additional three provisional patent applications that protect specific components and compositional aspects of our CellerateRX Surgical product. We look forward to continuing to expand the breadth of IP protection as well as our future product development efforts related to our surgical products.

Lastly, we continue to make progress in our efforts to expand our portfolio through our partnership with Biomimetic Innovations, or BMI, with the goal of bringing OsStic to the U.S. commercial market. As a reminder, during the first 9 months of 2025, BMI achieved all of the key product development, clinical, regulatory and medical education milestones outlined under our agreement. Based on our continued progress in the fourth quarter of 2025 and the initial months of 2026, I'm pleased to report that we remain on track to introduce the OsStic synthetic injectable bone bio-adhesive to the U.S. market in the first quarter of 2027.

Given its status as an FDA-designated breakthrough device, we believe OsStic will be the first synthetic injectable bone bio-adhesive available in the U.S. once it receives regulatory approval. In preclinical mechanical testing, OsStic demonstrated bonding to bone that was 40x stronger than traditional calcium phosphate bone cement. We expect OsStic to represent a new anchor product for our bone fusion portfolio and look forward to bringing this innovative technology to support the more than 100,000 periarticular fractures that occur in the U.S. each year. In summary, 2025 was a significant transition year for Sanara MedTech.

Perhaps most notably, Sanara transitioned to new leadership in both CEO and CFO roles to guide the next phase of our growth and development as an organization. As a company, we navigated the strategic realignment of our business to focus solely on the opportunities in the surgical market going forward. And in tandem, our team successfully executed our strategy in the surgical market, driving significant commercial, financial and operational progress across all major fronts. Our progress this past year is a credit to the remarkable team of individuals who work at Sanara MedTech.

It also reflects our team's commitment to advancing the treatment of surgical wounds for the benefit of all the constituents in the health care industry, including patients, surgeons and health care systems. With that said, I'll turn it over to Elizabeth to cover our fourth quarter 2025 financial results in greater detail and review our ful