Sanara MedTech Inc.

Good day and welcome to the Sonara MedTech second quarter of 2025 earnings conference call. Please note that this conference call is being recorded and a replay will be available on the investor relations page of the company's website shortly. The company issued its earnings release earlier today. Before we begin, I would like to remind everyone that certain statements on today's call include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For more information about the risks and uncertainties involving forward looking statements and factors that could cause actual results to differ materially from those projected or implied by forward looking statements, please see the risk factors set forth in the company's most recent annual report on Form 10-K as supplemented by the risk factors in the company's most recent quarterly reports on Form 10-Q. This call will also include references to certain non-GAAP measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings release available on the Investor Relations portion of our website. Today's call will be hosted by Ron Nixon, Executive Chairman and Chief Executive Officer, and feature additional remarks from Seth Yon, President and Chief Commercial Officer, Sam Mapala, President and Chief Executive Officer of Tissue Health Plus, and Elizabeth Taylor, Chief Financial Officer. I would now like to turn the call over to Mr. Nixon. Sir, please go ahead.

Thanks, Operator, and welcome everyone to our second quarter of 2025 earnings call. Let me outline the agenda for today's call. I'll begin by discussing our financial and operational highlights from the second quarter, followed by a discussion of our strategic priorities and key areas of focus for the balance of 2025. Seth will update you on the primary drivers of growth in our Senera Surgical segment and the progress made with respect to our commercial strategy. Sam will share an update on the recent progress made in our THP segment. Lastly, Elizabeth will review our quarterly financial results in further detail before we open the call for questions. With that, let's begin with a review of our second quarter financial highlights. Our surgical team delivered net revenue of $25.8 million in the second quarter, representing 28% growth year-over-year. This impressive performance is a testament to our commercial team's pace of execution on our growth strategy, as well as the strong demand we're seeing for our products in the market. Our net revenue growth was driven primarily by sales of our soft tissue products, which increased 28% year-over-year to $22.7 million. Specifically, sales of both our Celerate RX surgical and BioSearch products fueled our performance. We also saw significant contributions from sales of our bone fusion products, which increased 25% year-over-year to $3.1 million, driven by growth across most of the products in the portfolio. In addition to achieving strong sales growth in our Senera surgical segment, we enhanced our gross margins and realized significant operating leverage as well. This enabled us to deliver notable improvements in the profitability profile of the surgical segment on a year-over-year basis. Specifically, we generated approximately $500,000 of net income in the second quarter of 2025, an improvement of $2.7 million. We also generated $4.7 million of segment-adjusted EBITDA, an increase of $3.3 million, or 239%. Our surgical performance helped to offset continued investment in our THP segment and positioned us to drive significant year-over-year improvements in our profitability profile on a consolidated basis, including a 43% improvement in our net loss and 350% improvement in our adjusted EBITDA. Lastly, we were pleased to generate $2.7 million of cash flow from operating activities during the second quarter. Turning to our operational highlights in the second quarter, first and foremost, our surgical team delivered strong performance across all key metrics of the commercial strategy, as Seth will discuss further. In addition to our commercial team's progress, we made strides in our initiative to expand the portfolio of clinical evidence related to our two primary products, CellRate RX, and BioSurge. During the second quarter, four new clinical manuscripts focused on the use of our products were submitted to key academic journals for review. Expanding our portfolio of clinical evidence is an important component of our strategy to educate the market on the benefits and value that we believe our products bring to the treatment of surgical wounds. We look forward to discussing the results and findings presented in these clinical manuscripts once they are published. We also continue to advance our new product initiatives. As a reminder, in January 2025, we acquired the exclusive U.S. marketing, sales, and distribution rights to two products for their use in managing periarticular fractures caused by a traumatic incident. These two products are Hostic, a structural mechanically enhanced bioadhesive bone void filler, and Adjunctive Fixation Technology. When acquiring the rights to these products from their developer, Biomimetic Innovations Limited, or BMI, we structured the agreement with key product development clinical and regulatory milestones. I'm pleased to report that BMI achieved two of these key development milestones during the second quarter. Based on this progress, we remain on track to launch OSTIC during the first quarter of 2027, as we stated previously. Our commercial team is excited by the prospect of commercializing OSTIC to address the more than 100,000 periarticular fractures that occur in the United States each year. Last in our THP segment, we initiated our pilot program with a wound care provider group during the second quarter as anticipated. We also completed the acquisition of CarePix, which is an important part of our THP technology platform, and continue to engage with both payers and potential financial partners. I'd now like to provide some thoughts on our priorities for the balance of the year beginning with our THP segment. As Sam will discuss in greater detail, we've made significant progress on our THP-related initiatives during the first half of 2025. In parallel, we have actively managed our expenses in this segment to deliver against our stated expectations. For example, on our most recent earnings call in early May, we shared that we anticipated cash investment in our THP segment of $7.5 million to $8.5 million during the first half of the year, in addition to the $3.65 million paid in connection with our acquisition of CarePix. We ultimately came in at the low end of the range with an actual THP-related cash investment of $7.5 million for the first half of 2025, in addition to the $3.65 million paid in connection with our acquisition of Care Picks. Looking ahead, we're mindful of the existing level of cash used to support our THP-related initiatives. I want to be clear that actively managing expenses by reducing the level of cash investment in our THP segment in the second half of the year 2025 to preserve capital is absolutely a priority for our organization. Specifically, we expect our level of cash investment in this segment during the second half of 2025 to be between $5.5 million and $6.5 million. In parallel, we're working to evaluate and pursue the best path forward for THP for the benefit of our company and its shareholders. As we announced in our earnings press release this morning, we have initiated a formal process to evaluate strategic alternatives for THP. We've also engaged a strategic advisor to assist in conducting this process. The intention of this process is to explore a full range of strategic alternatives with the ultimate objective of maximizing shareholder value and as well as to identify like-minded partners to support the future growth of this business. Importantly, the company does not anticipate making material cash investments in THP after year-end. While we're limited in our ability to communicate while this process is underway, we look forward to sharing future updates when appropriate. Stepping back, Our surgical segment performance in recent quarters has enabled us to achieve significant commercial scale with net revenues of $97.2 million and segment adjusted EBITDA of $14 million for the trailing 12 months ended June 30th, 2025. We're off to a strong start in the first half of 2025 with 27% growth in net revenue over the first half of last year. combined with significant improvements in the profitability profile of Senera Surgical. Our surgical segment reported a net loss of $108,000 during the first half of 2025, and we generated $7.4 million of segment-adjusted EBITDA, an increase of $4.9 million, or 193% year-over-year. Lastly, on a consolidated basis, we generated approximately $700,000 of cash flow from operations over the first six months of 2025 compared to cash used from operations of $3 million over the same period in 2024. In the second half of 2025, we are focused on executing the strategies outlined for each of our business segments with the goal of delivering value to all of our stakeholders and as we work to address significant unmet clinical needs in the healthcare industry. We're committed to preserving capital as we position Scenera MedTech to deliver strong, sustainable growth and long-term value creation. I'll now turn it over to Seth to discuss the commercial execution in our Scenera Surgical segment.

Thanks, Ron. I'd like to update you on the progress made by our commercial team with respect to three key initiatives that have been central to our recent performance and future growth. As a reminder, these are the three initiatives. One, developing our relationships with independent distributors. Two, selling into new healthcare facilities. And three, penetrating the existing healthcare facilities we serve. Beginning with the first of the three commercial initiatives, our team has made strong progress in expanding our distributor network by identifying, engaging, and contracting with quality distribution partners. At quarter end, we had agreements in place with more than 400 distributors compared to more than 300 this time last year. Given this significant expansion under distribution network, our emphasis has increasingly shifted to onboarding our recently contracted distributors and training their reps. Building relationships selectively with high-quality distributors and pursuing a strategic approach to targeting, training, and partnering with their reps is one of the key ways our commercial team is positioning Senaro Surgical for strong, sustainable long-term growth. Turning to our second commercial initiative, we continue to add new healthcare facility customers. Specifically, we expanded our customer base to include more than 1,400 healthcare facilities for the trailing 12 months ended June 30, 2025, compared to more than 1,100 facilities in the prior year period. Our traction on this front continues to benefit from our strategy to leverage the local relationships of the distributor reps that we partner with. as well as the significant progress we have made in expanding the number of facilities that our products are approved or contracted with to include more than 4,000 across the U.S. With respect to our third commercial initiative, we increased our penetration of the existing healthcare facilities we serve by growing the number of surgeons using our products within these facilities. As I mentioned on our last earnings call, this represents one of the largest untapped areas of growth for our organizations. as the existing hospitals we serve remain vastly under-penetrated. I'm pleased to report that we are experiencing strong growth in our surgeon user base in the second quarter on a year-over-year basis. As a part of this effort, we continue to see success in adding new surgeon users outside of our traditional specialties of spine and orthopedics, including adoption of Sonera surgical products by plastics, general, and vascular surgeons. To be clear, A rapid pace of progress in expanding our surgeon user base would not be possible if surgeons did not appreciate the compelling clinical benefits of our key products. Our product's ability to facilitate improved outcomes for high-risk patients represents one of the primary contributors to the strong, sustainable revenue growth and significant commercial scale that our Sonera Surgical team has achieved in recent years. Lastly, with respect to BioSurge, our advanced surgical solution used for wound irrigation, we continue to be pleased with the rapid growth we have experienced in this product during the second year of its commercialization. As I've mentioned in the past, virtually all of our surgeons we serve use some form of wash, often a traditional saline solution, to cleanse and prepare the surgical wound bed. With this in mind, we continue to see success in introducing BioSurge to our existing customers and their facilities as a product that is complementary to the procedures in which Celerate RX is used. In tandem, our team remains focused on securing more approvals for BioSurge at the existing facilities we serve in order to facilitate its long-term growth. In summary, We believe our track record of strong sales performance and commercial execution demonstrates that we are pursuing the appropriate commercial strategy to capitalize on what we consider to be the vast under-penetrated market opportunity that remains ahead of us. I'll now turn it over to Sam to provide an update on Tissue Health Plus.