Sanara MedTech Inc.
Under the Symbol:
Sanara MedTech Inc. Announces Third Quarter 2019 Results
Thursday, November 14, 2019 9:30 AM
FORT WORTH, TX / ACCESSWIRE / November 14, 2019 / Sanara MedTech Inc.
Based in Fort Worth, Texas, Sanara MedTech Inc. ("Sanara" or the "Company") (OTCQB:SMTI), a provider of surgical and chronic wound care products dedicated to improving patient outcomes, announced today its strategic, operational and financial results for the quarter and nine-months ended September 30, 2019.
Ron Nixon, Sanara's Executive Chairman stated, "Sanara's third quarter 2019 results reflect management's continued focus on the execution of our strategy to expand the Company's sales force in both new and existing U.S. markets as well as our new product introductions to the wound care market. We expect our expanded distribution, training, and new products to drive revenue growth as we lay the groundwork for our national market penetration."
Third Quarter 2019 Strategic and Operational Highlights
- Began distribution and patient use of BIAKŌS™ Antimicrobial Skin and Wound Cleanser (BIAKŌS™ Cleanser) for the wound care market. BIAKŌS Cleanser is intended for mechanical removal of debris, dirt, foreign materials, and microorganisms from wounds including stage I-IV pressure ulcers, diabetic foot ulcers, post-surgical wounds, first and second-degree burns as well as grafted and donor sites. BIAKŌS Cleanser is effective in killing planktonic microbes and immature and mature bacterial biofilms such as MRSA and Pseudomonas aeruginosa, and fungal biofilms such as Candida albicans. In addition, BIAKŌS Cleanser safety studies show that it is non-cytotoxic, non-irritating, and non-sensitizing to healthy skin and assists in the normal wound healing process. Sanara has seen strong interest from providers in certain targeted sectors of the post-acute care market due to this product's antimicrobial action which helps to eliminate biofilm microbes and progress wounds to the next phase of wound healing.
- Announced the election of Dr. Kenneth Thorpe and Ms. Ann Beal Salamone to Sanara's Board of Directors. Kenneth E. Thorpe, Ph.D., is the Robert W. Woodruff Professor and Chair of the Department of Health Policy & Management in the Rollins School of Public Health of Emory University, Atlanta, Georgia. Ann Beal Salamone is a member of the National Academy of Engineering and The Academy of Medicine, Engineering & Science of Texas (TAMEST) as well as a co-founder of Rochal Industries, LLC.
- Subsequent to the end of the quarter, Sanara announced the execution of an exclusive worldwide licensing agreement with Rochal Industries, LLC, to market, sell, distribute, and further develop two new impactful products: BIAKŌS™ Antimicrobial Barrier Film and CuraShield™ No Sting Skin Protectant. BIAKŌS™ Antimicrobial Barrier Film is a first-in-class, antimicrobial spray-on wound dressing that kills microbes while protecting the underlying tissue, helping to remediate damage and prevent further infection. CuraShield™ No Sting Skin Protectant is a unique, spray-on bandage designed to protect against incontinence-related dermatitis, colostomy-related dermatitis, and medical adhesive-related skin injuries. Both products are FDA cleared and are expected to launch in the second quarter of 2020.
Sanara sees a significant market opportunity with these products for any patients suffering from incontinence-related dermatitis, colostomy-related dermatitis, and medical adhesive-related skin injuries. The Company believes that these products will lead to significantly reduced nursing costs and time spent applying barrier film dressings such as zinc ointment. Additionally, the company sees a significant advantage when comparing BIAKŌS™ Antimicrobial Barrier Film to competitors due to their lack of an antimicrobial action.
- Subsequent to the end of the quarter, the Sanara announced that it closed a private placement offering of 1,204,820 shares of its common stock at a price of $8.30 per share. The $10 million of cash proceeds of the offering are expected to be used to fund milestone payments under current and future product license agreements, repayment of indebtedness under Sanara's revolving bank line of credit, and operating expenditures, including clinical studies and continued expansion of Sanara's sales force.
- Sanara has more than doubled the number of regional sales managers and independent sales representatives working with its Acute Care/Surgical Division while materially increasing the number of regional sales managers in its Wound Care Division. Both divisions expect that it will take their sales teams six to nine months to gain facility approval and acceptance when entering a new care setting.
Commentary on Future Products - Strong Pipeline with Multiple Products at Various Stages of Commercialization.
- Sanara continues to work with its licensing and development partner, Rochal Industries, LLC ("Rochal"), on a number of impactful new medical device designs with plans to bring them to market in the coming years. In 2020, the Company expects to introduce a gel to complement its BIAKŌS™ Antimicrobial Skin and Wound Cleanser. Both products are effective against planktonic microbes as well and immature and mature bacterial and fungal biofilms.
- In addition to the BIAKŌS™ gel, Sanara is also working with Rochal to develop a debrider, a flowable scaffold that can be used to fill tunneling or undermining wounds, an oxygen transport device for use in hypoxic wounds, and a liquid bandage to treat skin tears and other similar wounds and skin conditions.
Third Quarter 2019 Consolidated Financial Results - Sanara MedTech Inc. Generating Strong Growth and Continuing Execution of Strategic Plan
- Revenues. The Company generated revenues of $2,909,282 for the three months ended September 30, 2019, compared to revenues of $2,222,519 for the three months ended September 30, 2018, representing a 31% increase in revenues. For the nine months ended September 30, 2019, revenues totaled $8,413,667, compared to revenues of $6,446,396 for the nine months ended September 30, 2018, or a 31% increase from prior year. The higher revenues in the quarter were primarily due to the continued expansion of the Company's sales force and independent distribution network in both new and existing U.S. markets.
Sanara is still in the early stages of introducing the BIAKŌS™ family of products to the post-acute care market and expects revenue generation from these devices to increase as a percentage of total sales in the future. The Company is currently pursuing corporate wound care formulary adoption and pull-through in the facilities where its products are already approved for use. Furthermore, Sanara is in negotiations with a number of additional national distribution companies to carry its products. As part of these expansion efforts into new locations, the Wound Care Division is currently running several trials to demonstrate the benefits of BIAKŌS™ products.
- Selling, General, and Administrative Expenses ("SG&A"). SG&A expenses for the three months ended September 30, 2019, were $3,315,575, as compared to SG&A expenses of $1,975,716 for the three months ended September 30, 2018. SG&A expenses for the nine months ended September 30, 2019, were $8,649,186, as compared to SG&A expenses of $5,678,377 for the nine months ended September 30, 2018. The higher SG&A expenses in 2019 were primarily due to higher payroll costs resulting from sales force expansion and related sales support infrastructure, higher sales commission expense as a result of higher product sales, and increased marketing costs related to promotional activities for new and existing product lines. Selling expenses (payroll and benefits, distributor commissions, and marketing) contributed to 92% of the increase in total SG&A costs while general and administrative expenses contributed to 8% of the total increase. Of the total increase in marketing expenses (which were 17% of the total SG&A increase), 28% of the increase was due to greater trade show expenses, 37% was due to an increase in promotional and branding expenses, and 19% was due to expenses related to outside advisors.
The expansion of SG&A costs is consistent with the Company's strategy of building out a larger sales force and independent distribution network. New sales reps generally take six to nine months on average to begin generating revenue. The Company expects SG&A expenses to decline as a percentage of revenue in the next two years as the revenue generated by its new sales force and products begins to offset the cost of expanding the sales force.
- Operating Income / Loss. The operating loss for the three months ended September 30, 2019 was $797,219, compared to operating income of $27,568 during the corresponding quarter of 2018. The operating loss for the nine months ended September 30, 2019 was $1,277,496, compared to operating income of $125,256 during the first nine months of 2018. The operating loss in 2019 was due to the higher SG&A costs resulting from the Company's strategy to grow top-line revenue through significant investments in sales force expansion and related sales support infrastructure. As described above, there is typically a six to nine month lag period between approaching a new facility and the generation of revenue. Due to required accounting treatment resulting from the Company's acquisition in March 2019 of the remaining 50% of its Cellerate, LLC subsidiary, operating income during the nine-month period ending September 30, 2019 does not include revenues of approximately $34,000 and expenses of approximately $348,000 related to the Company's operations during the period from January 1 to March 15.
- Net Income / Loss. The Company had a net loss of $843,233 for the three months ended September 30, 2019, compared to net income of $51,203 for the three months ended September 30, 2018. For the nine months ended September 30, 2019, the Company had a net loss of $1,358,276, compared to net income of $88,585 for the nine months ended September 30, 2018. The net loss was due to higher SG&A costs described above, based on the Company's strategy to grow top-line revenue through significant investments in sales force expansion and related sales support infrastructure. Due to required accounting treatment resulting from the Company's acquisition in March 2019 of the remaining 50% of its Cellerate, LLC subsidiary, net income during the nine-month period ending September 30, 2019 does not include revenues of approximately $34,000 and expenses of approximately $348,000 related to the Company's operations during the period from January 1 to March 15.
About Sanara MedTech Inc.
With a focus on improving patient outcomes through evidence-based healing solutions, Sanara MedTech Inc. markets and distributes wound and skincare products to physicians, hospitals, clinics, and all post-acute care settings. We are constantly seeking long-term strategic partnerships with a focus on products that produce efficacious outcomes at a lower overall cost. Our products are primarily sold in the North American advanced wound care and surgical tissue repair markets. Sanara MedTech markets and distributes CellerateRX® Surgical Activated Collagen® to the surgical markets as well as the following products to the wound care market: BIAKŌS™ Antimicrobial Skin and Wound Cleanser, HYCOL™ Hydrolyzed Collagen, and PULSAR II™ Advanced Wound Irrigation™ (AWI). In addition, Sanara is actively seeking to expand within its six focus areas of wound and skincare for the acute, post-acute, and surgical markets. The focus areas are debridement, biofilm removal, hydrolyzed collagen, advanced biologics, negative pressure wound therapy adjunct products, and the oxygen delivery system segment of the healthcare industry. For more information, visit SanaraMedTech.com.
Information about Forward-Looking Statements
The statements in the press release that relate to the Company's expectations with regard to the future impact on the Company's results from new products in development and any other statements not constituting 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. Since this information may contain statements that involve risk and uncertainties and are subject to change at any time, the Company's actual results may differ materially from expected results. This document may contain forward-looking statements concerning the Company's operations, current and future performance and financial condition. These items involve risks, contingencies and uncertainties such as product demand, market and customer acceptance, the effect of economic conditions, competition, pricing, 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. The Company undertakes no obligation to revise any of these statements to reflect the future circumstances or the occurrence of unanticipated events.
Callon Nichols, Director of Investor Relations
SOURCE: Sanara MedTech Inc.