Third Quarter 2023 Strategic and Operational Highlights (Unaudited)
- The Company generated net revenue of
$16.0 million for the three months endedSeptember 30, 2023 , an eighth consecutive record sales quarter. - The Company’s loss before income taxes for the three months ended
September 30, 2023 was$1.1 million compared to a loss before income taxes of$3.2 million for the three months endedSeptember 30, 2022 . For the three months endedSeptember 30, 2023 , the Company had a net loss of$1.1 million , compared to a net loss of$1.5 million for the three months endedSeptember 30, 2022 . The Company generated Adjusted EBITDA* of$0.3 million for the three months endedSeptember 30, 2023 compared to negative Adjusted EBITDA of$1.6 million for the three months endedSeptember 30, 2022 . - During the trailing twelve-month period, the Company’s products were sold in over 1,000 facilities across 32 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 ofSeptember 30, 2023 . - On
August 2, 2023 , the Company announced the acquisition of certain assets related to its collagen products business. The assets acquired included, among others:- All rights and ownership (for human wound care uses) for certain 510(k) cleared collagen-based wound care products, including CellerateRX and HYCOL.
- All patents, patents pending, trademarks and regulatory approvals related to collagen human wound care products owned by the sellers. This includes nine patents and all of the sellers’ patents pending for collagen products for human wound care uses and five trademarks.
- All rights and ownership (for human wound care uses) for certain 510(k) cleared collagen-based wound care products, including CellerateRX and HYCOL.
- The Company hired twelve new sales representatives in the nine months ended
September 30, 2023 . These representatives are expected to help the Company increase facility penetration and reach additional specialties. The Company also continues to build out its corporate infrastructure to support future growth. - Subsequent to the end of the quarter, the Company completed its first sale of ALLOCYTE Plus, a human cell and tissue-based product. First sales of Allocyte Plus occurred in early
October 2023 . This product is processed by an alternative supplier with in-house processing capabilities affording greater control of product supply. - Subsequent to the end of the quarter, the Company launched BIASURGE. Prior to launch, BIASURGE was added to 41 existing facility contracts. First sales of BIASURGE occurred in early
November 2023 . The Company believes this product could be used in any surgery where Sanara products are currently used.
Sales Analysis
CellerateRX revenues continued to grow, however the rate of quarter-over-quarter growth slowed due to unique in-market challenges. The Company is leveraging field intelligence and data analytics to implement appropriate adjustments to sales force deployment and facility penetration. For the three months ended
Earnings Analysis
The Company had a loss before income taxes of
* 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 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
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
With a focus on improving patient outcomes through evidence-based healing solutions,
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 potential benefits created by the acquisition of certain assets related to the Company’s collagen products business, the anticipated impact of such acquisition on the Company’s business and future financial and operating results, the Company’s ability to develop and commercialize the new collagen-based products currently under development, including the manufacturing, distribution, marketing and sale of such products, the Company’s ability to maintain or replace the manufacturing and distribution process of the sellers in the acquisition, including relationships with vendors, 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 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
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:
713-826-0524
CNichols@sanaramedtech.com
SOURCE:
CONSOLIDATED BALANCE SHEETS
(Unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 6,235,912 | $ | 8,958,995 | ||||
Accounts receivable, net | 7,436,295 | 6,805,761 | ||||||
Accounts receivable – related party | 11,032 | 98,548 | ||||||
Royalty receivable | 49,344 | 99,594 | ||||||
Inventory, net | 5,021,030 | 3,549,000 | ||||||
Prepaid and other assets | 621,690 | 1,104,611 | ||||||
Total current assets | 19,375,303 | 20,616,509 | ||||||
Long-term assets | ||||||||
Property and equipment, net | 1,327,056 | 1,416,436 | ||||||
Right of use assets – operating leases | 2,094,188 | 806,402 | ||||||
3,601,781 | 3,601,781 | |||||||
Intangible assets, net | 45,991,466 | 31,509,980 | ||||||
Investment in equity securities | 3,084,278 | 3,084,278 | ||||||
Total long-term assets | 56,098,769 | 40,418,877 | ||||||
Total assets | $ | 75,474,072 | $ | 61,035,386 | ||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,939,887 | $ | 1,392,701 | ||||
Accounts payable – related parties | 64,747 | 34,036 | ||||||
Accrued royalties and expenses | 3,583,439 | 2,144,475 | ||||||
Accrued bonuses and commissions | 6,084,654 | 7,758,284 | ||||||
Earnout liabilities – current | 1,000,000 | 1,162,880 | ||||||
Operating lease liabilities – current | 322,206 | 313,933 | ||||||
Current portion of debt | 232,143 | - | ||||||
Total current liabilities | 13,227,076 | 12,806,309 | ||||||
Long-term liabilities | ||||||||
Earnout liabilities – long-term | 4,871,986 | 6,003,811 | ||||||
Operating lease liabilities – long-term | 1,846,293 | 505,291 | ||||||
Long-term debt, net of current portion | 9,458,254 | - | ||||||
Other long-term liabilities | 1,972,673 | - | ||||||
Total long-term liabilities | 18,149,206 | 6,509,102 | ||||||
Total liabilities | 31,376,282 | 19,315,411 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity | ||||||||
Common Stock: | 8,540 | 8,300 | ||||||
Additional paid-in capital | 72,107,881 | 65,213,987 | ||||||
Accumulated deficit | (27,799,621 | ) | (23,394,757 | ) | ||||
Total | 44,316,800 | 41,827,530 | ||||||
Equity attributable to noncontrolling interest | (219,010 | ) | (107,555 | ) | ||||
Total shareholders’ equity | 44,097,790 | 41,719,975 | ||||||
Total liabilities and shareholders’ equity | $ | 75,474,072 | $ | 61,035,386 |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Revenue | $ | 16,024,948 | $ | 13,044,571 | $ | 47,300,029 | $ | 30,526,572 | ||||||||
Cost of goods sold | 1,751,349 | 2,228,561 | 6,064,524 | 3,991,728 | ||||||||||||
Gross profit | 14,273,599 | 10,816,010 | 41,235,505 | 26,534,844 | ||||||||||||
Operating expenses | ||||||||||||||||
Selling, general and administrative expenses | 13,877,879 | 12,062,195 | 40,658,424 | 31,865,958 | ||||||||||||
Research and development | 986,454 | 1,061,387 | 3,480,906 | 2,333,024 | ||||||||||||
Depreciation and amortization | 997,674 | 814,881 | 2,580,243 | 1,556,752 | ||||||||||||
Change in fair value of earnout liabilities | (681,753 | ) | 109,689 | (1,494,910 | ) | 173,116 | ||||||||||
Total operating expenses | 15,180,254 | 14,048,152 | 45,224,663 | 35,928,850 | ||||||||||||
Operating loss | (906,655 | ) | (3,232,142 | ) | (3,989,158 | ) | (9,394,006 | ) | ||||||||
Other expense | ||||||||||||||||
Interest expense and other | (188,294 | ) | - | (188,300 | ) | - | ||||||||||
Share of losses from equity method investment | - | - | - | (379,633 | ) | |||||||||||
Total other expense | (188,294 | ) | - | (188,300 | ) | (379,633 | ) | |||||||||
Loss before income taxes | (1,094,949 | ) | (3,232,142 | ) | (4,177,458 | ) | (9,773,639 | ) | ||||||||
Income tax benefit | - | 1,702,890 | - | 5,844,796 | ||||||||||||
Net loss | (1,094,949 | ) | (1,529,252 | ) | (4,177,458 | ) | (3,928,843 | ) | ||||||||
Less: Net loss attributable to noncontrolling interest | (34,579 | ) | (58,792 | ) | (111,455 | ) | (98,485 | ) | ||||||||
Net loss attributable to | $ | (1,060,370 | ) | $ | (1,470,460 | ) | $ | (4,066,003 | ) | $ | (3,830,358 | ) | ||||
Net loss per share of common stock, basic and diluted | $ | (0.13 | ) | $ | (0.18 | ) | $ | (0.49 | ) | $ | (0.49 | ) | ||||
Weighted average number of common shares outstanding, basic and diluted | 8,332,341 | 8,107,261 | 8,244,503 | 7,836,882 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (4,177,458 | ) | $ | (3,928,843 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 2,580,243 | 1,556,752 | ||||||
Loss on disposal of property and equipment | - | 2,876 | ||||||
Bad debt expense | 214,061 | 220,000 | ||||||
Inventory obsolescence | 222,691 | 289,406 | ||||||
Share-based compensation | 2,582,163 | 1,971,537 | ||||||
Noncash lease expense | 243,988 | 189,409 | ||||||
Loss on equity method investment | - | 379,633 | ||||||
Benefit from deferred income taxes | - | (5,844,796 | ) | |||||
Accretion of finance liabilities | 39,699 | - | ||||||
Amortization of debt issuance costs | 2,055 | - | ||||||
Change in fair value of earnout liabilities | (1,494,910 | ) | 173,116 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (794,344 | ) | (754,934 | ) | ||||
Accounts receivable – related party | 87,516 | 10,920 | ||||||
Inventory, net | (1,664,714 | ) | (451,838 | ) | ||||
Prepaid and other assets | 482,921 | (69,490 | ) | |||||
Accounts payable | 547,186 | (800,788 | ) | |||||
Accounts payable – related parties | 30,711 | (126,812 | ) | |||||
Accrued royalties and expenses | 557,295 | 947,130 | ||||||
Accrued bonuses and commissions | (1,673,629 | ) | 1,516,858 | |||||
Operating lease liabilities | (182,498 | ) | (189,990 | ) | ||||
Net cash used in operating activities | (2,397,024 | ) | (4,909,854 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (210,970 | ) | (93,651 | ) | ||||
Proceeds from disposal of property and equipment | 650 | 894 | ||||||
Purchases of intangible assets | - | (600,000 | ) | |||||
Investment in equity securities | - | (250,000 | ) | |||||
Acquisitions, net of cash acquired | (9,942,750 | ) | (2,191,919 | ) | ||||
Net cash used in investing activities | (10,153,070 | ) | (3,134,676 | ) | ||||
Cash flows from financing activities: | ||||||||
Loan proceeds, net | 9,688,341 | - | ||||||
Equity offering net proceeds | 1,033,761 | - | ||||||
Net settlement of equity-based awards | (150,296 | ) | (102,931 | ) | ||||
Cash payment of finance and earnout liabilities | (744,795 | ) | - | |||||
Distribution to noncontrolling interest member | - | (220,000 | ) | |||||
Net cash provided by (used in) financing activities | 9,827,011 | (322,931 | ) | |||||
Net decrease in cash | (2,723,083 | ) | (8,367,461 | ) | ||||
Cash, beginning of period | 8,958,995 | 18,652,841 | ||||||
Cash, end of period | $ | 6,235,912 | $ | 10,285,380 | ||||
Cash paid during the period for: | ||||||||
Interest | $ | 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 | 15,738,518 | ||||||
Earnout and other liabilities generated by acquisitions | 3,759,642 | 6,882,151 | ||||||
Investment in equity securities converted in asset acquisition | - | 1,803,440 |
Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of Net Loss to Adjusted EBITDA (Unaudited) | Three Months Ended | |||||||
2023 | ||||||||
Net Loss | $ | (1,094,949 | ) | $ | (1,529,252 | ) | ||
Adjustments | ||||||||
Interest expense – Term Loan | 146,540 | - | ||||||
Debt issuance costs amortization | 2,055 | - | ||||||
Accretion of finance liabilities | 39,699 | - | ||||||
Income tax benefit | - | (1,702,890 | ) | |||||
Depreciation and amortization | 997,674 | 814,881 | ||||||
Noncash share-based compensation expense | 857,526 | 683,202 | ||||||
Change in fair value of earnout liabilities | (681,753 | ) | 109,689 | |||||
Loss on disposal of property and equipment | - | 376 | ||||||
Adjusted EBITDA | $ | 266,792 | $ | (1,623,994 | ) |
Source:
2023 GlobeNewswire, Inc., source