Sanara MedTech Inc. Announces 2019 Results
FORT WORTH, TX / ACCESSWIRE / March 26, 2020 / Sanara MedTech Inc. Based in Fort Worth, Texas, Sanara MedTech Inc. (“Sanara” or the “Company”) (SMTI), a provider of surgical and chronic wound care products dedicated to improving patient outcomes, announced today its strategic, operational and financial results for the quarter and full-year ended December 31, 2019.
Ron Nixon, Sanara’s Executive Chairman stated, “Sanara’s fourth-quarter 2019 and full-year results reflect the continued execution of our strategic growth plan. During both Q4 2019 and the full year we saw record sales and a significant upward trend in our revenue as we continue our expansion plans in both the surgical wound and chronic wound care markets. We expect the investments in people, distribution, training, and new products to significantly benefit the Company’s growth and national market penetration.”
Strategic Highlights and Fourth Quarter 2019 Milestones
- Since the beginning of 2020, the COVID-19 virus has emerged as a threat to the global economy including Sanara Medtech. Beginning in the second half of March, the virus and the associated slowdown in surgical procedures started to have an impact on the Company’s business. With a significant percentage of Sanara’s revenue coming from elective surgeries that have been or will be postponed, management is expecting a further decline in revenue until such time that the elective surgery market returns to full capacity. To counter this, the Company is proactively taking significant steps to cut costs, manage cash-flow, and continue to generate revenue from both its wound care and surgical businesses until this situation has improved. The duration and severity of the impact from the COVID-19 virus is unclear, but management believes that surgical procedures currently being delayed that would utilize the company’s products will ultimately be performed.
- After the end of the quarter, The Catalyst Group, Inc., through its affiliates (collectively, “Catalyst”), converted its entire holdings of Sanara MedTech Inc.’s 30-month $1,500,000 convertible promissory note and Series F Convertible Preferred Stock into shares of Sanara Common Stock. The Company issued an aggregate of 2,452,731 shares of Common Stock in the conversions. After the conversions, Catalyst controls the voting of a total of 3,416,587 shares of Common Stock, which represents 56.7% of the 6,023,732 shares of Common Stock currently outstanding.
- On October 15, 2019, the Company closed a private placement offering of 1,204,820 newly issued shares of its common stock in a $10 million private placement offering. The purchasers in the offering consisted of related party entities to three members of the Company’s Board of Directors. The transaction was approved by all of the disinterested Directors of the Company. $2.2 million of the proceeds were used to retire indebtedness under the Company’s bank line of credit. The balance of the proceeds are being used to fund milestone payments under current and future product license agreements as well as operating expenditures, including clinical studies and continued expansion of the Company’s sales force.
- On October 1, 2019, Sanara executed a second license agreement with Rochal Industries, LLC (“Rochal”) whereby Sanara acquired an exclusive world-wide license to market, sell and further develop certain antimicrobial barrier film and skin protectant products for use in the human health care market utilizing Rochal patents and pending patent applications. Products covered by the license agreement are CuraShield™ Antimicrobial Barrier Film (CuraShield™ ABF) and CuraShield™ No Sting Skin Protectant.
Commentary on Future Products – Two New Impactful Products Planned to Launch in 2020
- The Company received FDA clearance for BIAKŌS™ ANTIMICROBIAL WOUND GEL in February 2020 and expects to launch the product this year to complement its BIAKŌS™ ANTIMICROBIAL SKIN & WOUND CLEANSER. Both products are effective against planktonic microbes as well as immature and mature biofilms. When used together, the cleanser can be used initially to clean a wound and disrupt biofilms (removing 99% in 10 minutes). The gel can then be applied and will remain in the wound for up to 72 hours, eliminating biofilms between normal dressing changes.
- The Company also expects to introduce CuraShield™ ABF in the latter part of 2020. CuraShield™ ABF is an FDA cleared, first in-class, antimicrobial spray-on wound dressing that kills microbes while protecting underlying tissue, helping to remediate damage and prevent further infection.
Full-Year 2019 Consolidated Financial Results – Sanara MedTech Inc. Continued Growth and Execution of Strategic Plan
- Revenues. For the year ended December 31, 2019, the Company generated revenues of $11,766,763 compared to revenues of $8,779,872 for the year ended December 31, 2018, or a 34% increase from the prior year. For the quarter ending December 31, 2019, the Company generated revenues of $3,353,096 compared to revenues of $2,909,282 for the quarter ending September 30, 2019. The higher revenues in 2019 were primarily due to 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.
- Selling, general and administrative expenses (“SG&A”). SG&A expenses for the year ended December 31, 2019, were $ 13,067,569 compared to SG&A expenses of $ 7,646,119 for the year ended December 31, 2018. SG&A expenses for the quarter ending December 31, 2019 were $ 4,418,383 compared to SG&A expenses of $3,315,757 for the quarter ending September 30, 2019. The higher SG&A expenses in 2019 were primarily due to increased payroll costs resulting from sales force expansion and operational support, along with higher sales commission expense as a result of higher product sales, and increased marketing costs related to promotional activities for new and existing product lines. Direct selling costs represented the vast majority of the increase in total SG&A costs as we more than doubled the size of our field sales organization from eight to eighteen in 2019.
The higher SG&A costs are consistent with the Company’s strategy of building out a larger sales force and independent distribution network. New sales representatives on average take six to twelve months to begin generating significant revenue. The Company expects SG&A expenses as a percentage of revenue to decline in the next two years as the expected revenue generated by its new sales force begins to offset the cost of expanding the sales force.
- Net income / loss. For the year ended December 31, 2019, the Company had a net loss of $2,814,088, compared to net income of $175,464 for the year ended December 31, 2018. For the quarter ending December 31, 2019, the Company had a net loss of $1,455,812 compared to a net loss of $843,233 for the quarter ending September 30, 2019.The net loss in 2019 was due to higher SG&A costs described above, which have been driven by the Company’s strategy to grow top-line revenue through significant investments in sales force expansion and related sales support infrastructure as well as other areas of administrative support. Because of required acquisition accounting rules, the financial statements for the year ended December 31, 2019 do not include revenues and expenses for the period January 1, 2019 through March 15, 2019 in which revenues were approximately $34,000 and expenses were approximately $348,000.
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 Powder to the surgical markets as well as the following products to the wound care market: BIAKŌS™ ANTIMICROBIAL SKIN & WOUND CLEANSER, HYCOL® HYDROLYZED COLLAGEN, and PULSAR II™ ADVANCED WOUND IRRIGATION (AWI)™ WOUND DEBRIDEMENT SYSTEM. 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 the press release that relate to the Company’s expectations with regard to the future impact on the Company’s results from new products in development and any other statements not constituting 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. Since this information may contain statements that involve risk and uncertainties and are subject to change at any time, the Company’s actual results may differ materially from expected results. This document may contain forward-looking statements concerning the Company’s operations, current and future performance and financial condition. These items involve risks, contingencies and uncertainties such as 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. The Company undertakes no obligation to revise any of these statements to reflect the future circumstances or the occurrence of unanticipated events.
Callon Nichols, Director of Investor Relations
SOURCE: Sanara MedTech Inc.