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    Sanara Medtech Inc (SMTI)

    Q4 2023 Earnings Summary

    Reported on Jan 22, 2025 (After Market Close)
    Pre-Earnings Price$36.75Last close (Mar 26, 2024)
    Post-Earnings Price$35.95Open (Mar 27, 2024)
    Price Change
    $-0.80(-2.18%)

    What went well

    • BIASURGE has been very well received in the market, with the company adding 51 new centers in the fourth quarter of 2023 and actively selling to them. Doctors find BIASURGE to be a significant addition, especially when used alongside CellerateRX and bone biologics, enhancing wound preparation and closure. This complementarity is expected to drive further adoption and revenue growth.
    • Despite maintaining the same number of sales representatives (39) throughout 2023, the company achieved a 42% increase in revenue growth, demonstrating improved efficiency and effectiveness in their sales operations. Leveraging data analytics has allowed Sanara to optimize sales performance and achieve profitability per representative more quickly.
    • There is significant growth potential for CellerateRX as the company plans to expand into new medical specialties and facilities. While currently selling in over 1,000 facilities, Sanara has approvals to sell into more than 3,000 facilities, indicating a substantial opportunity to increase market penetration and drive revenue growth.

    What went wrong

    • Supply chain issues with ALLOCYTE Plus led to delays in regaining market share, and some customers have moved on to other products.
    • The sales force headcount remained flat at 39 throughout 2023, with reclassifications and terminations, which may indicate challenges in scaling sales operations.
    • There is uncertainty surrounding the Tissue Health Plus strategy, including potential dilution of ownership and the need for significant additional funding, which could impact future financial performance.

    Q&A Summary

    1. Cellerate Growth & Expansion
      Q: Can you provide more color on Cellerate's organic growth from existing 1,000 hospitals and plans to close the gap with the 2,000 approvals?
      A: The company aims to expand Cellerate's usage in existing hospitals by targeting new specialties like plastics and vascular surgery. They've done well in ortho, spine, and foot and ankle, and see significant opportunities to grow deeper within current accounts. To access the additional 2,000 approved hospitals, they plan to engage additional partners and use data analytics to prioritize high-potential facilities.

    2. BIASURGE Sales Progress
      Q: How many centers did you sell BIASURGE in during Q4, and any feedback you could share?
      A: They added 51 centers in the fourth quarter and are actively selling BIASURGE to them. Feedback has been very positive, with surgeons finding it a valuable addition to cases where they already use Cellerate and bone biologics. BIASURGE helps prepare surgical sites by removing contaminants before applying products like Cellerate to close the wound.

    3. ALLOCYTE Sales Ramp-Up
      Q: What's the status of ALLOCYTE's return to normal run rate after the supply issues?
      A: After supply delays in September and October, they adjusted based on available sizes. They've obtained new approvals for ALLOCYTE Plus and are re-engaging facilities and surgeons. The fourth quarter was about regaining footing, and they are now moving forward confidently, with the product starting to progress nicely.

    4. Tissue Health Plus Spin-Out
      Q: What's the stage of talks regarding spinning out Tissue Health Plus, and its cash impact?
      A: They are seeking value-added partners to help fund and implement the Tissue Health Plus strategy. They aim to accomplish this in 2024 and begin commercialization in 2025. The expectation is that it will be a cash flow generator long-term, and they do not anticipate significant cash outflows from Sanara, as their prior investments would be their contribution to the partnership .

    5. Sales Force Efficiency
      Q: Could you clarify the sales force growth throughout the year?
      A: Despite maintaining a flat headcount of 39 sales reps, they achieved a 42% increase in revenue growth. They made reclassifications, promotions, and terminations to optimize the team. Utilizing data analytics has improved efficiency and speed to profitability per rep. They continue to adjust the team to maximize performance.

    6. Cellerate's Acquisition of 18 Peptides
      Q: What do you hope to improve with Cellerate from acquiring the 18 peptides?
      A: The acquisition aims to increase their intellectual property around collagen peptides and expand CellerateRX into new specialties. They plan to strengthen the platform and develop unique collagen peptides for specific needs. Some peptides have applications outside the surgical arena, and they may seek marketing partners for those. The main reason is to secure technological advantage through enhanced IP.

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