Sanara MedTech Inc. Announces Third Quarter 2020 Results
FORT WORTH, TX / ACCESSWIRE / November 13, 2020 / Sanara MedTech Inc. Based in Fort Worth, Texas, Sanara MedTech Inc. ("Sanara" or the "Company") (NASDAQ:SMTI), a provider of wound and skin care products dedicated to improving patient outcomes, announced today its strategic, operational and financial results for the quarter and nine months ended September 30, 2020.
Ron Nixon, Sanara's Executive Chairman, stated, "In the third quarter, Sanara achieved greater product sales while taking steps to execute on our comprehensive wound and skin care strategy and set the foundation for our virtual consult offerings and future diagnostic capabilities. The Company performed well, ending the quarter with record sales for both the month of September and for the quarter. We, as a team, are looking forward to continuing to build on these results."
Third Quarter 2020 Strategic and Operational Highlights
- The Company announced an expansion of its comprehensive wound and skin care strategy. As part of the expansion, Sanara formed a wholly-owned subsidiary named United Wound and Skin Solutions LLC ("UWSS") to hold Sanara's investments and operations in wound and skin care virtual consult services.
- The Company, through its subsidiary UWSS, became a minority shareholder in Direct Dermatology Inc. ("DirectDerm") and received exclusive rights to utilize DirectDerm's technology in all acute and post-acute care settings such as skilled nursing facilities, home health, and wound clinics.
- The Company entered into an agreement for an investment in Woundyne Medical LLC ("Woundyne") which included exclusive world-wide rights to use Woundyne's software in all wound and skin care settings. Woundyne is developing a software system to combine the documentation functionality of wound care and dermatology electronic medical records (EMR) with a HIPAA-secure online platform for provider and caregiver collaboration.
- The Company closed on an exclusive affiliation with MGroup Integrated Physician Services, P.A. ("MGroup"). Pursuant to this arrangement, Sanara, through its subsidiary UWSS, agreed to provide certain management services to MGroup, and MGroup agreed to provide certain in-person and telehealth related clinical services to UWSS.
In connection with this affiliation, MGroup's founder and CEO, Chris Morrison, MD, joined UWSS to lead its telehealth efforts as President of Telehealth Services.
- Bob DeSutter was appointed to the Company's Board of Directors, effective October 12, 2020. Mr. DeSutter is a managing director in Piper Sandler healthcare investment banking. He has 27 years of healthcare investment banking experience at Piper Sandler and served as global group head from 2003 to 2018.
- The Company received approval to list its common stock on The Nasdaq Capital Market. Sanara's common stock began trading on The Nasdaq Capital Market effective at the opening of trading hours on November 2, 2020 under the ticker symbol "SMTI."
- The Company launched BIAKŌS™ Antimicrobial Wound Gel, an antimicrobial hydrogel wound dressing that can be used alone or in combination with BIAKŌS™ Antimicrobial Skin and Wound Cleanser. Based on laboratory studies, when used in conjunction, the products can work together to enhance effectiveness. The cleanser is applied initially to clean a wound and disrupts biofilm microbes (removing 99% in 10 minutes). The gel can then be applied and will remain in the wound for up to 72 hours helping to continue to disrupt biofilm microbes.
- Rochal Industries, LLC, the developer of the BIAKŌS™ product line, collaborated with the World Reference Center for Emerging Viruses and Arboviruses, at the University of Texas Medical Branch, Galveston, TX to further test BIAKŌS™ Antimicrobial Skin and Wound Cleanser's impact on Severe Acute Respiratory Syndrome Coronavirus 2 ("SARS-CoV-2"), the virus that causes Coronavirus Disease 2019 ("COVID-19").
Laboratory testing demonstrated that BIAKŌS™ Antimicrobial Skin and Wound Cleanser reduced SARS-CoV-2 viral loads during the application of the liquid cleanser and as a coating for up to four hours after application. Results using the liquid form of BIAKŌS™ showed a 98.4% reduction in viral load on a porcine skin explant after 30 seconds, and a 99.3% reduction after 10 minutes. During laboratory evaluation of the product as a coating on the skin (porcine skin explant), the virus was applied four hours after the application of the BIAKŌS™ Antimicrobial Skin and Wound Cleanser. An 86.5% reduction in viral load was observed 10 minutes after application of the virus and a 99.3% reduction in viral load was observed one hour after application of the virus.
- Subsequent to the end of the quarter, UWSS entered into agreements to purchase shares of Series A Convertible Preferred Stock (the "Series A Stock") of Precision Healing Inc. ("Precision") for an aggregate purchase price of $600,000. The Series A Stock is convertible into 150,000 shares of common stock of Precision and has a senior liquidity preference relative to the common shareholders. UWSS also agreed to invest an additional $600,000 in February 2021 for 150,000 additional shares of Series A Stock.
As part of this transaction, UWSS entered into an exclusive license agreement whereby UWSS obtained an exclusive, perpetual right to use certain Precision technology and diagnostic tools for virtual wound and skin care assessments in all professional healthcare settings in the United States.
Third Quarter 2020 Consolidated Financial Results
Revenues. The Company generated record high revenue of $4,306,324 for the three months ended September 30, 2020, compared to revenue of $2,909,282 for the three months ended September 30, 2019, representing a 48% increase in revenue from the comparable period in the prior year. During the third quarter of 2020, many restrictions on elective surgeries were eliminated or relaxed in the Company's primary markets which facilitated a return to pre-COVID pandemic sales levels. For the nine months ended September 30, 2020, revenue totaled $10,797,838, compared to revenue of $8,413,667 for the nine months ended September 30, 2019, yielding a 28% increase from the comparable period in the prior year. The higher revenue in 2020 has been primarily due to the strong rebound in third quarter 2020 sales and the continued execution of the Company's strategy to expand its sales force and independent distribution network in both new and existing U.S. markets.
Cost of goods sold. Cost of goods sold for the three months ended September 30, 2020, was $447,935, compared to costs of goods sold of $285,164 for the three months ended September 30, 2019. Cost of goods sold for the nine months ended September 30, 2020, was $1,126,798, compared to costs of goods sold of $909,333 for the nine months ended September 30, 2019. The increase over the prior year was primarily due to higher sales volume.
Selling, general and administrative expenses ("SG&A"). SG&A expenses for the three months ended September 30, 2020 were $5,083,424, as compared to $3,315,575 for the three months ended September 30, 2019. SG&A expenses for the nine months ended September 30, 2020, were $13,613,989, as compared to $8,649,186 for the nine months ended September 30, 2019. The higher SG&A expenses in 2020 were primarily due to increased payroll costs resulting from sales force expansion and operational support, higher sales commission expense as a result of higher product sales, and higher costs related to the expansion of the Company's comprehensive wound and skin care strategy including the development of electronic imagery and data sharing technology to support virtual consultation and diagnostics. Direct selling costs represented the majority of the increase in total SG&A costs as we increased the size of our field sales organization from fourteen in September 2019 to twenty in September of 2020.
The higher SG&A expenses are consistent with the Company's strategy of building out a larger sales force and independent distribution network and the expansion of our comprehensive wound and skin care strategy. New sales representatives generally take six to twelve months to begin generating significant revenue. The Company expects SG&A expenses to decline as a percentage of revenue in the next two years as revenue generated by new sales representatives begins to offset the cost of the sales force expansion.
Net income / loss. The Company had a net loss of $1,208,123 for the three months ended September 30, 2020, compared to net loss of $843,233 for the three months ended September 30, 2019. The Company had a net loss of $4,178,692 for the nine months ended September 30, 2020, compared to net loss of $1,358,276 for the nine months ended September 30, 2019. The increase in net loss was due to higher SG&A costs described above, which were driven by the Company's strategy to grow top-line revenue through significant investments in sales force expansion, operational support, and the expansion of our comprehensive wound and skin care strategy. The Company expects SG&A expenses to decline as a percentage of revenue in the next two years as the revenue generated by its new sales force begins to offset the sales force expansion expense.
About Sanara MedTech Inc.
With a focus on improving patient outcomes through evidence-based healing solutions, Sanara MedTech Inc. markets and distributes wound and skincare products to physicians, hospitals, clinics, and all post-acute care settings. We are constantly seeking long-term strategic partnerships with a focus on products that produce efficacious outcomes at a lower overall cost. Our products are primarily sold in the North American advanced wound care and surgical tissue repair markets. Sanara MedTech markets and distributes CellerateRX® Surgical Activated Collagen® to the surgical markets as well as the following products to the wound care market: BIAKŌS™ Antimicrobial Skin and Wound Cleanser, BIAKŌS™ Antimicrobial Wound Gel, HYCOL™ Hydrolyzed Collagen, and PULSAR II™ Advanced Wound Irrigation™ (AWI). In addition, Sanara is actively seeking to expand within its six focus areas of wound and skincare for the acute, post-acute, and surgical markets. The focus areas are debridement, biofilm removal, hydrolyzed collagen, advanced biologics, negative pressure wound therapy adjunct products, and the oxygen delivery system segment of the healthcare industry. For more information, visit SanaraMedTech.com.
Information about Forward-Looking Statements
The statements in this press release that do not constitute historical facts are "forward-looking statements," within the meaning of and subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These statements may be identified by terms such as "may," "will," "would," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negatives of these terms, variations of these terms or other similar expressions. These forward-looking statements include statements regarding the development of new products and expansion of the Company's business in telehealth and wound care, including, without limitation, the potential for BIAKŌS™ Antimicrobial Skin and Wound Cleanser to offer protection for individuals against the SARS-CoV-2 virus while helping to decrease the incidence of skin conditions arising from alcohol-based hand hygiene protocols. These items involve risks, contingencies and uncertainties such as the lack of clinical testing of the ability of BIAKŌS™ Antimicrobial Skin and Wound Cleanser to offer protection for individuals against the SARS-CoV-2 virus and the ability to replicate the results of non-clinical laboratory testing to date, the extent of product demand, market and customer acceptance, the effect of economic conditions, competition, pricing, the ability to consummate and integrate acquisitions, and other risks, contingencies and uncertainties detailed in the Company's SEC filings, which could cause the Company's actual operating results, performance or business plans or prospects to differ materially from those expressed in, or implied by these statements. All forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to revise any of these statements to reflect the future circumstances or the occurrence of unanticipated events, except as required by applicable securities laws.
Director of Investor Relations
SOURCE: Sanara MedTech Inc.
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