Sanara MedTech Inc. (SMTI)·Q3 2025 Earnings Summary

Executive Summary

• Surgical net revenue grew 22% year-over-year to $26.33M, driven by soft tissue repair products; gross margin expanded ~200 bps to 93% and operating income rose to $2.94M, marking a clear profitability inflection on continuing operations .
• EPS from continuing operations was $0.09, a significant beat versus Wall Street’s consensus of -$0.215; revenue was essentially in line versus $26.63M consensus (slight miss) as BiOSurge and CellerateRX continued to lead growth . Estimates marked with * are from S&P Global.
• Management ceased Tissue Health Plus (THP) operations to focus resources on the core surgical business; THP is classified as discontinued operations and carried a $26.5M noncash impairment in Q3, clarifying go-forward reporting and capital deployment .
• Near-term outlook: Q4 2025 revenue expected to grow high-single digits to low-teens year-over-year, excluding a $1.8M one-time benefit last year from Hurricane Helene’s saline shortage; tariffs not expected to materially impact 2025 .
• Strategic positives include operating leverage with flat sales headcount (~40 reps) and ~400 distributors; continued facility penetration (>1,400 facilities sold into vs >1,200 prior year) and clinical evidence expansion support durable growth .

What Went Well and What Went Wrong

What Went Well

• “Our surgical team delivered strong sales performance… net revenue growth of 22% YoY” with a 24% increase in soft tissue repair products (CellerateRX Surgical and BiOSurge) and expanded distributor relationships and facility penetration .
• Gross margin improved ~200 bps to 93% and adjusted EBITDA rose by $2.3M YoY to $4.9M, reflecting significant operating leverage on higher soft tissue sales mix .
• Management executed a strategic realignment, discontinuing THP to enhance operating efficiency and refocus capital on surgical, strengthening the medium-term margin trajectory and clarity of the story .

What Went Wrong

• Other expense increased to $2.1M (from $1.0M) on higher interest expense and equity method losses tied to the CRG term loan and investments, pressuring below-the-line profitability .
• Discontinued operations carried a $26.5M noncash impairment from THP and $31.25M net loss from discontinued ops, elevating GAAP losses despite continuing operations profitability .
• Q4 growth guide implies deceleration versus an exceptionally strong Q4 2024; excluding a $1.8M one-time tailwind, management guides high-single digits to low-teens YoY, signaling normalization in BiOSurge momentum post-Hurricane Helene .

Financial Results

Quarterly Summary (Continuing Operations unless noted)

Year-over-Year Comparison

Revenue vs Estimates (Q3 2025)

Values with * retrieved from S&P Global.

Segment Revenue Breakdown

EPS Detail (Continuing Operations)

KPIs and Operating Metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our surgical team delivered strong sales performance… net revenue growth of 22% YoY… fueled by a 24% increase in sales of our surgical soft tissue products, including CellerateRX Surgical and BIASURGE.” — Seth Yon, CEO .
• “This strategic realignment… allows us to enhance our operational efficiency and focus our resources on our core surgical business.” — Seth Yon on discontinuing THP .
• “Gross margin increased approximately 200 basis points to 93% of net revenue… Operating income… increased 278% to $2.9M.” — Elizabeth Taylor, CFO .
• “Over the trailing 12 months ended September 30, 2025, our surgical business has generated nearly $102 million of net revenue, representing growth of 31%.” — Seth Yon .
• “We’ve kept our headcount and sales flat with 40 reps and 400 distributors… you’re seeing the operating leverage on the EBITDA line.” — Elizabeth Taylor .

Q&A Highlights

• Penetration strategy: Management emphasized expanding beyond spine/orthopedics into plastics, general, vascular, supported by clinical and economic evidence; distributor onboarding and training are key to accelerating adoption .
• Operating leverage and cash redeployment: With THP discontinued, focus shifts to profitable growth in surgical; leverage expected in sales channel with flat rep count and broad distributor base .
• Growth cadence and margins: Q4 growth to normalize versus Q4’24’s one-time tailwind; trailing 12-month EBITDA rose from $6.6M to $16.4M YoY, demonstrating leverage; no formal margin targets/guidance provided .
• OpEx trend post-THP: While no forward guidance, supplemental disclosures isolate surgical historicals to aid modeling; tariffs not expected to be material .

Estimates Context

• Q3 2025 results vs consensus: Revenue was $26.33M vs $26.63M consensus (slight miss); EPS was $0.09 vs $(0.215) consensus (clear beat). Expect estimate revisions to raise EPS and maintain revenue near current trajectory given normalized comps and margin expansion from soft tissue mix. Values with * retrieved from S&P Global.

Values with * retrieved from S&P Global.

Key Takeaways for Investors

• The core surgical business is scaling efficiently: soft tissue products drove 22% YoY revenue growth, 93% gross margin, and a step-up in operating income, with clear operating leverage on a stable sales footprint .
• Strategic clarity post-THP: Discontinuation removes a capital drain and reporting complexity, refocusing cash and talent on the surgical portfolio and distributor-led expansion .
• Near-term comps matter: Expect Q4 growth to normalize vs last year’s $1.8M saline shortage tailwind; investors should focus on facility penetration and surgeon adoption metrics to gauge trajectory .
• Balance sheet watchlist: Long-term debt increased to $45.1M with $12.25M borrowing capacity available through year-end; monitor interest expense and any incremental draws .
• Pipeline credibility: OSTIC hit 2025 milestones; target U.S. launch Q1 2027 under breakthrough designation—a potential new growth vector for periarticular fractures .
• Street setup: Strong EPS beat vs negative consensus should support estimate revisions; revenue in-line suggests durable demand but emphasizes execution on penetration over pricing .
• Trading lens: Positive EPS surprise and margin expansion are stock-supportive; any updates on facility penetration, distributor productivity, and BiOSurge adoption could act as catalysts near-term .