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Sanara MedTech Inc. (SMTI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 net revenue grew 28% year-over-year to $25.83M; gross margin expanded to 93%, and consolidated Adjusted EBITDA increased to $2.66M, with Sanara Surgical generating $4.72M Segment Adjusted EBITDA .
  • EPS of -$0.23 beat consensus of -$0.44; revenue of $25.83M beat consensus of $25.15M; consolidated net loss improved to -$2.02M from -$3.53M in Q2 2024 *.
  • Management initiated a formal process to evaluate strategic alternatives for Tissue Health Plus (THP) and guided H2 2025 THP cash investment to $5.5–$6.5M, with no material cash investments in THP anticipated after year-end .
  • Operating cash flow turned positive ($2.7M in Q2) and Sanara Surgical delivered net income of $0.51M, highlighting commercial execution and margin leverage as near-term stock catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • Strong top-line and margin execution: net revenue +28% YoY to $25.83M; gross margin to 93% on mix and lower CellerateRX Surgical manufacturing costs .
    • Sanara Surgical profitability: $0.51M net income and $4.72M Segment Adjusted EBITDA; distribution network expanded (>400 distributors) and facilities sold into TTM grew to >1,400 .
    • Positive cash generation: $2.7M operating cash flow in Q2; CFO confidence in liquidity (cash $17.0M, LT debt $44.2M, $12.25M available borrowing capacity through 12/31/2025) .

    Key quote: “We generated approximately $500,000 of net income and $4,700,000 of Segment Adjusted EBITDA in the second quarter of 2025” — Ron Nixon .

  • What Went Wrong

    • THP drag on profitability: THP net loss of -$2.53M and Segment Adjusted EBITDA of -$2.05M; added $1.3M SG&A in THP, contributing to consolidated other expense (+$2.0M) on higher term loan interest .
    • Higher interest burden: other expense rose to -$1.99M (vs. -$0.64M) tied to CRG term loan; diluted EPS remained negative at -$0.23 .
    • Elevated operating expenses: total OpEx +14% YoY to $23.92M; SG&A +$2.6M and R&D +$0.3M as Surgical portfolio enhancements advanced .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD)$20,158,823 $23,434,096 $25,830,834
Gross Profit ($USD)$18,150,137 $21,599,129 $23,893,552
Gross Margin (%)90% 92% 93%
Operating Loss ($USD)$(2,884,856) $(2,080,029) $(31,348)
Net Loss ($USD)$(3,529,202) $(3,527,383) $(2,018,398)
Diluted EPS ($USD)$(0.41) $(0.41) $(0.23)
Cash from Operations ($USD)N/A$(1,998,884) $2,700,000

Segment performance and non-GAAP:

MetricQ2 2024Q1 2025Q2 2025
Sanara Surgical Net Income (Loss) ($USD)$(2,214,313) $(615,105) $507,280
THP Net Loss ($USD)$(1,314,889) $(2,912,278) $(2,525,678)
Adjusted EBITDA (Consolidated) ($USD)$592,181 $657,969 $2,664,840
Segment Adjusted EBITDA – Surgical ($USD)$1,393,959 $2,695,058 $4,719,827
Segment Adjusted EBITDA – THP ($USD)$(801,778) $(2,037,089) $(2,054,987)

Product revenue breakdown:

CategoryQ2 2024Q1 2025Q2 2025
Soft Tissue Repair Products ($USD)$17,641,318 $20,532,440 $22,661,457
Bone Fusion Products ($USD)$2,516,599 $2,901,656 $3,142,795
SaaS ($USD)$0 N/A$26,582
Royalties ($USD)$906 N/A$0
Total Net Revenue ($USD)$20,158,823 $23,434,096 $25,830,834

Consensus vs Actual (S&P Global):

MetricQ2 2024Q1 2025Q2 2025
Revenue – Consensus ($USD)$19,100,000*$23,475,000*$25,150,000*
Revenue – Actual ($USD)$20,158,823 $23,434,096 $25,830,834
Primary EPS – Consensus ($USD)$(0.21)*$(0.505)*$(0.44)*
Primary EPS – Actual ($USD)$(0.41) $(0.41) $(0.23)

Note: Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
THP Cash Investment ($USD)H1 2025$7.5M–$8.5M Actual: $7.5M Met low end
THP Cash Investment ($USD)H2 2025N/A$5.5M–$6.5M New guidance (lower spend)
THP Cash Investment Post Year-End2026 onwardN/A“Do not anticipate making material cash investments in THP after year-end” New framework
Surgical Segment ProfitabilityFY 2025“Expect improvements” “Anticipate strong profitability in Surgical for full year” Tone raised
Tariffs ImpactFY 2025Minimal impact expected No material impact expected Maintained
Available Borrowing CapacityThrough 12/31/2025$12.25M remaining under CRG facility $12.25M available; must borrow by 12/31/2025 Maintained
BMI Milestone Payment07/01/2025N/A€2,000,000 payment; ownership ~9.7% New milestone achieved

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Distributor network expansion>350 partners by year-end 2024; plan to onboard/train reps >400 agreements; focus on onboarding and training Improving
Facility penetration & surgeon adoptionSold in >1,300 facilities; low penetration; expand surgeons across specialties Sold in >1,400 facilities TTM; growing surgeon base incl. plastics, general, vascular Improving
THP pilot & platformQ2 launch plan; CoPilot released; provider implementation Pilot begun; first patient encounters; EMR integration learnings; expand sites in Sept Initial validation progressing
Payer engagementTarget payer pilot in H2 2025 Active discussions with multi-state MA payer; target Q4 pilot Advancing
Gross marginImproved on CellerateRX costs; caution on further leverage 93% GM; driven by soft tissue mix and lower manufacturing costs Maintained high levels
Tariffs/MacroMinimal impact expected; US manufacturing footprint No material impact expected in 2025 Maintained
Regulatory/new products (OsStic/ARC)FDA breakthrough designation; target Q1 2027 U.S. launch BMI achieved 2 development milestones; €2.0M payment; timeline intact On track

Management Commentary

  • “Our surgical team delivered net revenue of $25,800,000 in the second quarter, representing 28% growth year over year… we generated approximately $500,000 of net income… and $4,700,000 of segment adjusted EBITDA” — Ron Nixon .
  • “We have initiated a formal process to evaluate strategic alternatives for our subsidiary Tissue Health Plus, LLC… we expect our level of cash investment in this segment during the [second half] to be between $5,500,000 and $6,500,000” — Ron Nixon .
  • “Gross margin increased approximately [250] basis points to 93% of net revenue, driven primarily by increased sales of soft tissue repair products and lower manufacturing costs related to CellerateRX Surgical” — Elizabeth Taylor .
  • “Between our current cash position, the anticipated cash flow from our [Surgical] segment this year, and the available borrowing capacity… we’re confident that we have sufficient financial resources to support our key growth initiatives” — Elizabeth Taylor .

Q&A Highlights

  • Distributor productivity ramp: onboarding effectiveness depends on existing approvals and market starting point; ramp can be “days to months” with local RSM and clinical support .
  • OpEx cadence and leverage: H2 THP cash investment guided to $5.5–$6.5M; remaining €2.0M milestones for BMI subject to timing; some operating leverage observed .
  • Product growth: Soft tissue is backbone; CellerateRX is largest contributor; BIASURGE rapidly becoming second largest; significant “green space” remains .
  • THP strategic alternatives: pursuing partners across patient engagement, providers, payers, and product companies; aim to complement prior investment with external capital .

Estimates Context

  • Q2 2025 results beat Wall Street: revenue $25.83M vs $25.15M consensus; EPS -$0.23 vs -$0.44 consensus — both better than expected. Estimate figures from S&P Global; see table above.*
  • Q1 2025 was roughly in line on revenue ($23.43M vs $23.48M) and better on EPS (-$0.41 vs -$0.505). Estimates retrieved from S&P Global.*

Key Takeaways for Investors

  • Surgical engine is scaling: high-90s gross margins and Segment Adjusted EBITDA growth validate commercial strategy; distributor onboarding and surgeon adoption are core drivers .
  • THP is strategically reframed: near-term cash burn reduced with H2 cap at $5.5–$6.5M and strategic alternatives underway; limited material cash investment after year-end reduces overhang .
  • Liquidity intact despite higher interest costs: positive operating cash flow and $12.25M remaining borrowing capacity underpin growth investments and milestones .
  • New product optionality: BMI milestones and 2027 OsStic/ARC timeline provide medium-term innovation catalysts without near-term P&L contribution .
  • Near-term trading lens: revenue/EBITDA beats and THP de-risking can support sentiment; watch updates on THP strategic process and continued Surgical margin performance .
  • Estimate revisions: expect upward adjustments to revenue and EPS trajectories given consistent beats and improving consolidated loss profile; Surgical profitability commentary strengthens FY 2025 outlook .
  • Risk checks: interest expense from CRG facility, THP execution risk during pilot scaling, and ongoing SG&A investment to onboard distributors remain watch items .
All non-GAAP figures (Adjusted EBITDA, Segment Adjusted EBITDA) are defined and reconciled by the company **[714256_0001493152-25-011878_ex99-1.htm:9]** **[714256_0001493152-25-011878_ex99-1.htm:10]**.