Executive Summary

Q1 2025 delivered healthy top-line growth: revenue rose 26% year over year to $23.4M with gross margin expanding ~200 bps to 92%, while net loss widened on higher SG&A and interest expense; Adjusted EBITDA improved to $0.7M .
Results versus S&P Global consensus: revenue was essentially in line ($23.43M vs $23.48M*) and EPS beat (−$0.41 vs −$0.505*)—helped by stronger gross margin—though higher interest expense remained a headwind .
Sanara Surgical execution remained strong (soft tissue +28% YoY; Segment Adj. EBITDA +$1.5M YoY to $2.7M) as distributor coverage and facility penetration expanded; THP advanced with “CoPilot” platform release and first provider pilot slated for late Q2 .
Guidance/tone: management narrowed 1H’25 THP cash investment to $7.5–$8.5M (ex-CarePICS), reiterated planned Q2 THP pilot, and expects continued profitability improvement in Sanara Surgical in 2025; tariffs not expected to be a 2025 headwind .
Potential stock catalysts: on-time THP pilot launch and validation metrics, sustained gross margin at ~92%, continued Surgical segment profitability gains, and updates on OsStic regulatory path and commercial readiness .

What Went Well and What Went Wrong

What Went Well
- Sanara Surgical growth and mix: soft tissue repair sales +28% YoY to $20.5M; total revenue +26% YoY to $23.4M .
- Margin execution: gross margin improved to 92% (from 90% YoY), driven by lower manufacturing cost for CellerateRX Surgical and higher soft tissue mix .
- Commercial footprint: distributor partners expanded to 400+ (vs 350 YE’24; 250+ a year ago); products sold in 1,300+ facilities over last 12 months, with emphasis on deeper surgeon penetration .
- Management quote: “Our Sanara Surgical segment revenue performance reflects impressive execution… developing our network of distributor partners, adding new healthcare facility customers, and increasing our penetration of existing facility customers.” (Ron Nixon, CEO) .
What Went Wrong
- Loss widened: net loss increased to $3.5M (vs $1.8M YoY) on higher interest expense and THP build-out; other expense ($1.4M) included higher CRG loan costs .
- Opex intensity: SG&A rose 32% YoY (+$5.2M) with THP ramp and corporate build-out; R&D up 18% YoY .
- Segment drag: THP Segment Adjusted EBITDA loss widened to ($2.0M) from ($0.9M) YoY; management is seeking financial partners to co-fund execution .

Financial Results

Headline results vs prior periods

Metric	Q1 2024	Q4 2024	Q1 2025
Net Revenue ($M)	$18.54	$26.31	$23.43
Gross Margin %	90%	91%	92%
Operating Income (Loss) ($M)	$(1.53)	$(0.37)	$(2.08)
Net Income (Loss) ($M)	$(1.80)	$(1.70)	$(3.53)
Diluted EPS ($)	$(0.21)	$(0.18)	$(0.41)
Adjusted EBITDA ($M)	$0.31	$0.95	$0.66

Q1 2025 actuals vs S&P Global consensus

Metric	Actual	Consensus*	Surprise
Revenue ($M)	$23.43	$23.48*	Miss by $0.04M (−0.2%)*
Diluted EPS ($)	$(0.41)	$(0.505)*	Beat by $0.095*

Values retrieved from S&P Global.*

Product mix (YoY)

Revenue Streams	Q1 2024 ($)	Q1 2025 ($)	YoY %
Soft tissue repair products	$16,082,292	$20,532,440	28%
Bone fusion products	$2,454,346	$2,901,656	18%
Total Net Revenue	$18,536,638	$23,434,096	26%

Selected KPIs and balance sheet

KPI	Q4 2024	Q1 2025
Distributor partners	>350	>400
Facilities (sold in across TTM)	>1,300	>1,300
Cash and Equivalents ($M)	$15.88	$20.69
Principal Debt Obligations ($M)	$30.5	$42.8
Available Borrowing Capacity ($M)	$24.5	$12.25

Notes: Non-GAAP Adjusted EBITDA and Segment Adjusted EBITDA are reconciled in company materials .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
THP cash investment (ex-CarePICS)	1H 2025	$7.5–$10.0M (Q4 call)	$7.5–$8.5M; implies Q2 $4–$5M	Lowered/narrowed
THP provider pilot timing	Q2 2025	Planned Q2 2025	On track; first pilot later in Q2; CoPilot released May 1	Maintained
Sanara Surgical profitability	FY 2025	Expect improvement	Expect improvement	Maintained
Tariff impact	FY 2025	N/A	No material impact expected (BIASURGE is exception to US manufacturing)	New disclosure

Earnings Call Themes & Trends

Topic	Q3 2024 (prior-2)	Q4 2024 (prior-1)	Q1 2025 (current)	Trend
Technology/THP	Building platform; mid-2025 launch targeted	THP investment plan communicated	THP CoPilot released May 1; provider pilot later Q2	Execution progressing toward pilots
Supply chain effects	—	BIASURGE +~$1.8M demand from Hurricane Helene-related IV/saline shortages	No specific carryover cited	Normalizing
Tariffs/Macro	—	—	Minimal tariff exposure; products (except BIASURGE) US-made	Constructive
Product performance	Soft tissue growth; record revenue streak	Soft tissue strength; gross margin +160 bps	Soft tissue +28% YoY; total +26% YoY; GM 92%	Consistent strength
Regulatory	—	OsStic FDA Breakthrough; 1Q’27 U.S. intro expectation	BMI agreement reiterated	Advancing toward clearance
R&D/IP	—	11 provisional patents in 2024	Continued clinical manuscript plans in 2025	Positive momentum
Commercial coverage	300+ distributors; 2,900+ potential sellers	>350 distributors; >1,300 facilities	400+ distributors; >1,300 facilities	Expanding coverage/penetration

Management Commentary

Strategic focus (CEO): “Over the balance of 2025, we remain focused on driving revenue growth and improving profitability in our Sanara Surgical segment… and continued to develop our value-based wound care program, Tissue Health Plus.”
Commercial execution (CEO): “Our Sanara Surgical segment revenue performance reflects impressive execution… developing our network of distributor partners, adding new healthcare facility customers, and increasing our penetration of existing facility customers.”
THP status (THP lead): “The THP technology platform release included THP CoPilot… designed to standardize wound care and reduce the administrative burden… On track to launch our first pilot program… later during the second quarter.”
Financial tone (CFO): “We continue to expect improvements in our Sanara Surgical segment profitability in 2025… THP cash investment in 1H’25 of ~$7.5–$8.5M… With existing cash, expected cash generation in Surgical, and available borrowings, we believe we have requisite capital.”

Q&A Highlights

Penetration strategy: Growth driven by expanding distributor network coupled with regional managers/territory managers; focus on onboarding/training distributor reps to activate more sellers per partner .
Reorder/retention: While not disclosing rates, management emphasized “stickiness”—surgeons expand use after successful cases with CellerateRX and BIASURGE .
Gross margin cadence: Gains reflect lower CellerateRX manufacturing costs; management suggests modeling margins consistent with current levels given limited further leverage expected .
THP pilot success metrics: Will measure clinician adherence to protocols, reduction in post-encounter admin time, documentation quality; operational metrics (productivity, billing capture, inventory waste); adoption and satisfaction (usage %, NPS) .
Tariffs: Minimal exposure—most products manufactured in the U.S.; no material 2025 impact anticipated .

Estimates Context

Q1 2025: Revenue $23.43M vs $23.48M consensus* (in line); EPS −$0.41 vs −$0.505 consensus* (beat). Prior quarters also exceeded revenue consensus—Q4 2024 ($26.31M vs $25.80M*) and Q3 2024 ($21.67M vs $20.70M*)—with Q4 aided by one-time BIASURGE demand from hurricane-related supply constraints . Values retrieved from S&P Global.*
Estimate implications: Surgical momentum and sustained gross margin likely support modest upward EPS revisions, while THP investment and interest expense temper near-term profitability; watch for Q2 pilot outcomes to influence 2H estimates.

Key Takeaways for Investors

Surgical engine healthy: soft tissue mix, distributor onboarding, and facility penetration continue to drive double‑digit growth with improving Segment Adj. EBITDA .
Margins resilient: 92% gross margin underscores CellerateRX cost tailwinds and product mix; management does not foresee substantial incremental leverage beyond current levels .
Profit path balanced by funding costs: Higher interest expense on CRG term loan is a visible headwind; Surgical profitability improvement is expected in 2025 .
THP is the swing factor: narrowed 1H’25 spend, Q2 pilot timing and success metrics are near-term proof points for scaling; external financing partners under evaluation .
One-offs fading: Q4’s ~$1.8M BIASURGE uplift from hurricane-related shortages is not structural; focus shifts to core Surgical run‑rate and THP execution .
Regulatory pipeline: OsStic with FDA Breakthrough supports medium‑term portfolio expansion (target 1Q’27 U.S. intro), leveraging existing call points .
Watchlist: Q2 THP pilot metrics, distributor rep activation rates, gross margin sustainability, debt/borrowing cadence, and any update on external THP funding.

References:

Q1 2025 press release/8‑K and financials: .
Q1 2025 earnings call transcript: .
Prior quarters for trend: Q4 2024 PR/transcript ; Q3 2024 PR/transcript .
Other relevant Q1 2025 PRs: BMI/OsStic agreement and timeline .

Values retrieved from S&P Global where marked with * in the tables.

Sanara MedTech Inc. (SMTI)·Q1 2025 Earnings Summary