Q1 2024 Sanara MedTech Inc Earnings Call

Operator: Greetings. Welcome to the Sonara MedTech, Inc. first quarter results and business update conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If you wish to ask a question on today's call, please press star on your phone, followed by one. That's star one if you wish to ask a question. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Callan Nichols, Director of Investor Relations at Sanara MedTech. Callan, you may begin.

Greetings and welcome to the sonar, a med tech and first quarter results and business update conference call. At this time, all participants around listen only mode. A question and answer session will follow the formal presentation. If you wish to ask a question on todays call. Please press the star One please press star on your phone followed by <unk>.

Operator: That is star one if you wish to ask a question if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Operator: Please note. This conference is being recorded I will now turn the conference over to your host Collin Nichols director of Investor Relations at scenario Med Tech column you may begin.

Callan Nichols: Thank you and good morning everyone. I'd like to welcome you to Sanara MedTech's earnings conference call for the quarter ended March 31st, 2024. We issued our earnings release yesterday morning, and I would like to highlight that we have posted today's deck on the Investor Relations page of our website. This supplemental deck, as well as a copy of the earnings release, and the Form 10-Q for the quarter ended March 31st, 2024, are also available on this page. We will reference this information in our remarks today. With us today are Ron Nixon, our Executive Chairman and CEO, Mike McNeil, our Chief Financial Officer, and Seth Yawn, our President and Commercial Director.

Collin Nichols: Thank you and good morning, everyone I'd like to walk you need just in Aero Med Tech's earnings conference call for the quarter ended March 31 2024.

Callan Nichols: We issued our earnings release yesterday morning, and I would like to highlight that we have posted todays deck on the Investor Relations page of our website.

Callan Nichols: This supplemental deck as well as a copy of the earnings release.

Callan Nichols: And the Form 10-Q for the quarter ended March 31, 2024 are also available on this page.

Callan Nichols: We will reference this information our remarks today with.

Speaker Change: With us today, Iran, Nixon, our executive Chairman and CEO, Mike Mcniel, our Chief Financial Officer, and Seth you on our president of commercial.

Callan Nichols: Please note that certain statements in this conference call, in our press release, and in our supplemental deck 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 our most recent annual report on Form 10-K, as supplemented by the risk factors in our most recent quarterly report on Form 10-Q.

Callan Nichols: Please note that certain statements in this conference call and our press release and in our supplemental deck include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 for more information about the risks and uncertainties involved in forward looking statements and factors that could cause actual results.

Callan Nichols: To differ materially from those projected or implied by forward looking statements. Please see the risk factors set forth in our most recent annual report on Form 10-K as supplemented by the risk factors in our most recent quarterly report on Form 10-Q.

Callan Nichols: Also, this conference call, our earnings release, and supplemental deck reference certain non-GAAP measures. In that regard, I direct you to the reconciliation of these measures and the earnings materials that are available on our website. Now, I'd like to turn the call over to Ron.

Also this conference call our earnings release, and supplemental deck referenced certain non-GAAP measures in that regard I direct you to the reconciliation of these measures in the earnings materials that are available on our website now I'd like to turn the call over to Ron.

Ron Nixon: Thank you, Callen, and good morning everyone. As we mentioned in our press release yesterday, our former CEO, Zach Fleming, resigned on Friday. We're in the process of finalizing a separation agreement with Zach, and I've been appointed CEO by the company's Board of Directors. As a result of Zach's departure, the company will no longer be presenting the proposal for the election of a ninth director on our Board of Directors at the annual meeting of shareholders in June.

Ron: Thank you Alan and good morning, everyone.

Ron Nixon: As we mentioned in our press release yesterday, our former CEO exactly I mean resigned on Friday, we're in the process of finalizing a separation agreement was that and I've been appointed CEO by the company's board of directors as a result of Zacks departure, the company will no longer be presenting the proposal for the election of our ninth director are.

Speaker Change: The directors at the annual meeting of shareholders in June as many of you know I've been intimately involved with the leadership team in developing and executing scenario strategic vision since inception sooner in med Tech and I'm looking forward to working with the scenarios leadership team now.

Ron Nixon: As many of you know, I've been intimately involved with the leadership team in developing and executing Scenera's strategic vision since the inception of Scenera MedTech, and I'm looking forward to working with the Scenera leadership team now on a daily basis to continue that execution. Turning to our first quarter results, the first quarter of 2024 was the company's 10th consecutive record quarter. The company generated $18.5 million in revenue in

Ron Nixon: Now on a daily basis to continue that execution.

Ron Nixon: Turning to our first quarter results first quarter of 2024 was the company's 10th consecutive record quarter.

Ron Nixon: The company generated $18 5 million of revenue in Q1 over the course of 'twenty three 'twenty to 'twenty three we made significant advancements in data analytics sale sales force optimization and sales processes as I've told many of you before when you are in a high growth business, you need to be able to build infrastructure.

Ron Nixon: Over the course of 2023, we made significant advancements in data analytics, Salesforce optimization, and sales processes. As I've told many of you before, when you're in a high-growth business, you need to be able to build infrastructure, data analytics, and details around these processes in order to be able to improve to continue that growth. We believe that that's been implemented and that it will pay dividends going forward. These improvements and the momentum we've achieved in the fourth quarter helped us to exceed our forecast for the first quarter, and we believe that positions us to continue to build upon the success the teams achieved in previous periods. The three months ended March 31st, 2024, coming at a net loss of $1.8 million, while we generated positive adjusted EBITDA of $300,000 over the same period.

Ron Nixon: Data analytics and and details around these processes in order to be able to improve to continue that growth. We believe that that's been implemented and that will pay dividends going forward.

Ron Nixon: These improvements and the momentum we've achieved in the fourth quarter helped us to exceed our forecast for the first quarter and we believe position us to continue to build upon the success. The team has achieved in previous periods.

Ron Nixon: The three months ended March 31, 2024 company had a net loss of $1 8 million, while we generated positive adjusted EBITDA of 300000 over the same period.

Ron Nixon: I'd like to provide a brief update on our partnership with Infusys. We continue to invest in this partnership and are focused on three potential areas of opportunity. The first initiative for the partnership is to distribute Sonara's Advanced Wound Care products, including Biocosin, Hycol, as well as negative pressure wound therapy products, into long-term care, skilled nursing facilities, and wound centers.

Ron Nixon: Like to provide a brief update on our partnership with MTF system.

Ron Nixon: We continue to invest in this partnership and are focused on three potential areas of opportunity.

Ron Nixon: First initiative.

Ron Nixon:

Ron Nixon: For the partnership is to distribute scenarios advanced wound care products, including <unk> and high call as well as negative pressure wound therapy products into long term care skilled nursing facilities and one centers.

Ron Nixon: Building upon this strategic objective, we're also exploring emerging opportunities for MTSYS to distribute our advanced wound care products outside of this channel. We also believe that this partnership will play a key role in Tissue Health Plus, our value-based care strategy that you've heard about many times before, which is planned to include standardized wound prevention and treatment plans that utilize Sanara's wound care products.

Ron Nixon: Building upon this strategic objectives.

Ron Nixon: We're also exploring emerging emerging opportunities branches system to distribute to our advanced wound care products outside of this channel. We also believe that there is that our partnership will play a key role in tissue help plus our value based care strategy that you've heard about many times before which is planned to include standardized wound.

Ron Nixon: Pension and treatment plants had utilized scenarios wound care products as these opportunities continue to develop we will provide additional updates and as I mentioned in our last call. We're having discussions with potential partners participating in the execution of the tissue help plus strategy.

Ron Nixon: As these opportunities continue to develop, we will provide additional updates. And, as I mentioned in our last call, we're having discussions with potential partners participating in the execution of the Tissue Health Plus strategy. During the process, we're continuing to invest in the technology, capabilities, and infrastructure that we believe are required to commercialize this very well-designed strategy. But we do not anticipate that this will continue to be spent by us alone in 2024, and we hope to have our partnerships in place so that we can execute.

Ron Nixon: The process, we're continuing to invest in the technology capabilities and infrastructure that we believe are required to commercialize this very well designed strategy, but we do not anticipate that this will continue spending by us alone and 2024, and we hope to have a part.

Ron Nixon: Ships in place so that we can execute and these partners who are looking for not just financial partners. They are strategic partners.

Ron Nixon: And these partners we're looking for are not just financial partners; they are strategic partners. We're also continuing to focus on the expansion of the existing surgical product offering. Lastly, we made significant progress in the area of intellectual property and manufacturing processes for the Celerate product line itself. We think that this has been something we've talked about many times, and we believe that it's got a significant ability for us to be able to get more IP around the product as we continue to advance this through many of the different specialties.

Ron Nixon: We're also continuing focusing expansion of the existing surgical product offering lastly, we made significant progress in the area of intellectual property and manufacturing processes for celebrate product line itself.

Ron Nixon: Think that this has been something we've talked about for many times and we believe that it's got a it's got a significant ability for us to be able to get more.

Speaker Change: IP around the product as we continue to advance this through many of the different specialties like to now introduce you to Seth Yellin, our president of commercial.

Ron Nixon: I can now introduce you to Seth Young, our President of Commercial. Seth has been with the company since 2018, and over the years, he has been promoted multiple times to roles of increasing responsibility. In his current position as President of Commercial, he leads our national sales team and multiple internal teams, including marketing, customer support, national accounts, and business operations. He's been instrumental in building out our sales team and infrastructure at Sonara, and I look forward to working closely with him on the execution of our strategy. Seth, I'll now turn it over to you to discuss our surgical sales results in more detail.

Ron Nixon: That has been with the company since 2018 and over the years has been promoted multiple times to roles of increasing responsibility in its current position as president of commercial he leads our national sales team and multiple internal teams, including marketing customer support national accounts and business operations. He has been instrumental in building out our sales team.

Seth Young: And infrastructure scenario.

Ron Nixon: Looking forward to working closely with him on the execution of our strategy.

Ron Nixon: Now I'll turn it over to you to discuss our surgical sales results in more detail.

Seth Yawn: Thanks, Ron. In the first quarter of 2024, our products were sold in over 1,080 facilities across 34 states and the District of Columbia. We continue to focus on increasing the use of our products in new and existing territories, expanding usage into new specialties, and increasing our per facility sales. Our products were approved to be sold in more than 3,000 facilities as of March 31st, 2024. Subsequent to the end of the quarter, a new contract with a large GPO went into effect, which has had a significant impact on the number of facilities in which our products are approved to be sold.

Seth Young: Thanks, Ron and the first quarter of 2020 for our products were sold in over 1000, ADP facilities across 34 States and the district of Columbia, We continue to focus on increasing the use of our products in new and existing territories expanding usage into new specialties and increasing our current facility sales.

Seth Yawn: Our products were approved to be sold in more than 3000 facilities as of March 31, 2024 subsequent to the end of the quarter, our new contract with a large GPO went into effect, which has had a significant impact on the number of facilities in which our products are approved to be sold.

Seth Yawn: Sales of our soft tissue products grew from $12.9 million in the first quarter of 2023 to $16.1 million in the first quarter of 2024. Sales of bone fusion products decreased slightly from $2.6 million in the first quarter of 2023 to $2.5 billion in 2024. This was due to a slower-than-expected adoption of Allocite Plus, as well as a larger-than-normal order from a facility in Q1 of 2023 for Bioform, which subsequently returned to previous levels in subsequent quarters.

Seth Yawn: Sales of our soft tissue products grew from $12 9 million in the first quarter of 2023 to $16 1 million in the first quarter of 2024.

Seth Yawn: Sales of bone fusion products decreased slightly from $2 6 million in 2023 to two 5 billion in 2024.

Seth Yawn: This was due to a slower than expected adoption of Atlas eight plus as well as a larger than normal order from our facility in Q1 of 2023 of Biopharma, which subsequently returned to previous levels in subsequent quarters I will now turn it over to Mike Mcneil to discuss the details of our recent loan agreement with <unk> as well as our most recent financial results.

Mike McNeil: I will now turn it over to Mike McNeil to discuss the details of our recent loan agreement with CRG, as well as our most recent financial results. Mike. Thank you, Seth.

Mike McNeil: Mike.

Mike McNeil: Thank you, Seth. I'd like to discuss the new debt facility we recently announced with CRG. This transaction helped us strengthen our cash position and provided access to growth and acquisition capital in a way that was non-dilutive to equity holders. The facility allows for flexibility in the event of a transaction we believe would be accretive given the fact the company has the ability to draw additional capital beyond the initial $15 million at our option.

Mike McNeil: Thank you Seth I'd like to discuss the new debt facility, we recently announced with BRG. This transactions helped us strengthen our cash position or provide access to growth of acquisition capital in a way that was non dilutive to equity holders. The facility allows for flexibility in the event of a transaction that we believe would be accretive given the fact, the company has the ability to draw additional cash.

Mike McNeil: Capital beyond the initial $15 million at our option.

Mike McNeil: We are currently in discussions with the commercial bank for an additional $10 million revolver as permitted under the CRG facility, which could give us access to what we expect will be lower-cost capital for an immediate need. The term loan is structured as a senior secured loan with a five-year term and up to $55 million in aggregate potential proceeds.

Mike McNeil: We are currently in discussions with a commercial bank for an additional $10 million revolver as permitted under the C or G facility, which could give us access to what we expect will be lower cost capital for any immediate needs. The term loan is structured as a senior secured loan with a five year term and up to 55 million in aggregate potential proceeds and then in.

Mike McNeil: In addition to the $15 million drawn at close, we can draw up to an additional $40 million before June 30, 2025. I'll now go into more detail about our most recent financial results. For the three months ended March 31, 2024, Sanara generated net revenue of $18.5 million compared to $15.5 million for the first quarter of 2023, a 19 percent increase over the prior year period. The higher revenue in 2024 was due to increased sales of our soft tissue repair products, including Celerate RX, as a result of increased market penetration, geographic expansion, and our continuing strategy to expand our independent distribution network in both new and existing U.S. markets

Mike McNeil: In addition to the $15 million drawn at close we can draw up to an additional 40 million before June 32025.

Mike McNeil: SG&A expenses for the first quarter of 2024 were $16.2 million, compared to $13 million for the same period in 2023. The higher SG&A expenses in the first quarter of 2024 were primarily due to higher direct sales and marketing expenses, which accounted for approximately $2.2 million, or 69 percent of the increase compared to the prior year period. Higher direct sales and marketing expenses were primarily trivial to an increase in sales commissions of $1.6 million as a result of higher product sales and $0.6 million of increased costs as a result of Salesforce expansion and operational support.

Mike McNeil: I'll now go into more detail about our most recent financial results for the three months ended March 31 totaled 24 scenario generated net revenue of $18 5 million compared to $15 five for the first quarter of 2023% to 19% increase over the prior year period the.

Speaker Change: The higher revenue in 2024 was due to increased sales of our soft tissue repair products, including celebrate Rx as a result of increased market penetration geographic expansion and our continuing strategy to expand independent distribution network in both new and existing U S markets.

Mike McNeil: G&A expenses for the first quarter of 2024 were $16 2 million compared to 13 million for the same period in 2023 of the higher SG&A expenses in the first quarter of 'twenty four were primarily due to higher direct sales and marketing expenses, which accounted for approximately $2 2 million or 69% of the increase compared with the prior year period.

Mike McNeil: A higher direct sales and marketing expenses were primarily attributable to an increase in sales commissions of $1 6 million as a result of higher product sales and zero point $6 million of increased costs as a result of salesforce expansion and operational support.

Mike McNeil: R&D expenses for the three months ended March 31st were $0.9 million compared to $1.3 million for the same period in 2023. The lower R&D expenses in 2024 were primarily due to lower costs associated with the Precision Healing Diagnostic Imager and LFA. Sanara had a first quarter net loss of $1.8 million compared to a net loss of $1.2 million during the same period in 2023. The higher net loss in 2024 was due to higher SG&A costs and higher amortization of our acquired and tangible assets, partially offset by higher gross profit and lower R&D expenses. Our cash on hand at the end of the quarter was $2.8 million. With that, I'll turn it back to Ron for some closing remarks.

R&D spokesperson: R&D expenses for the three months ended March 31st were 0.9 million compared to $1 3 million for the same period in 2023, the lower R&D expenses and 24 were primarily due to lower costs associated with the precision healing diagnostic imager in LSA.

Ron Nixon: So there I had a first quarter net loss of $1 8 million compared to a net loss of $1 2 million. During the same period in 2023, the higher net loss in 2024 was due to higher SG&A costs and higher amortization of acquired intangible assets, partially offset by higher gross profit and lower R&D expenses.

Speaker Change: Our cash on hand at the end of the quarter was $2 8 million with that I'll turn it back to Rob for some closing remarks.

Ron Nixon: Thanks, Mike.

Ron Nixon: We're pleased with our progress in the first quarter, continued growth, and the results that we had in that first quarter. We obviously are striving to seek profitability. This is not a revenue play.

Ron Nixon: We're pleased with our progress in the first quarter continued.

Ron Nixon: Continued growth in results that we had in that first quarter. We're obviously you're striving to seek profitability. This is not a revenue play. This is applied to build a business and build it for the long term and we plan to do so.

Ron Nixon: This is a play to build a business and build it for the long term, and we plan to do so. Related to our surgical business, we've had multiple opportunities that we continue to review that complement our existing product offerings and continue to expand our products into other areas of specialty, as well as other hospitals. You know how many hospitals we're in today, and we want to continue to advance that across the U.S. This concludes our remarks, and we look forward to answering any questions you may have. Operator, we're ready to open the calls for questions.

Ron Nixon: Related to our surgical business, we've had multiple opportunities to continue to that we continue to review that complement our existing product offering.

Ron Nixon: Continued to expand our products into other areas of specialty as well as other hospitals. When you know how many hospital suite, where you're in today and we want to continue to advance that across the U S.

Ron Nixon: Includes our remarks, and we look forward to answering any questions. You may have operator, we're ready to open the calls for questions.

Operator: Thank you. We will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Operator: You May press Star two if you would like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star 1 on your phone at this time if you wish to ask a question. And please hold while we poll for questions. And once again, that will be star 1 on your phone if you wish to ask a question. We did have a question coming from Ian Castle from IFCM. Ian, your line is live.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star one on your phone at this time, if you wish to ask a question I'm. Please hold lively poll for questions.

Operator: And once again that will be a star one on your phone if you wish to ask a question.

Ian Castle: Yeah, Ron said one question I could jump back in the queue. My question was, you know, the recent CEO transition, you know, has that transition disrupted the sales momentum you've shown through Q1?

Ian: We did have a question come in from Ian Cassel from IFC I'm Ian Your line is live.

Ian Castle: Yeah, Ron said, one question and I can jump back in the queue, but my question was you know the the recent CEO transition you know how does that transition disrupted sales momentum you've shown through Q1.

Ron Nixon: Not at all. I would tell you, Ian, that the team is stronger than it's ever been. Seth Yohn has been driving this for a long period of time, and the sales team is, you know, we're sorry to see him go, but quite frankly, there's zero disruption.

Speaker Change: Not at all I would tell you and that the team is stronger than it's ever been.

Ron Nixon: <unk> has been driving this for a long period of time and the sales team is as you know is that we're sorry to see him go but quite frankly, they're zero disruption.

Ian Castle: Okay, maybe a follow-up question, maybe for Seth. I noticed that the bone fusion products have been kind of flat year over year. I was wondering if you could maybe speak to that since I believe the supply disruption kind of became debated in Q4.

Speaker Change: Okay, maybe a follow up question maybe for Seth.

Seth Yawn: Notice that the boat infusion products, they've been kind of flat year over year I was wondering if you could maybe speak to that since I believe the supply disruption kind of became abated in Q4.

Seth Yawn: Sure. You know, as I mentioned earlier, we did have a little bit of softening as we returned with Allysite Plus. And I do believe a lot of that is related to timing. As you can imagine, when you have an issue with inventory, that inventory then becomes an issue, and it's replaced at the facility level with something else. And so we had to start that cycle, that process again to get that product back in and re-engaged with our distributors as well. And that cycle, that process has taken a little bit longer than we had expected.

Seth Yawn: Sure you know as I mentioned earlier.

Seth Yawn: We did have a little bit of softening as we returned with Atlas a plus and I do believe a lot of that is related to timing as you can imagine when you have an issue with inventory and that.

Seth Yawn: Inventory, then becomes an issue and it's replaced at a facility level was something else and so we.

Seth Yawn: We had to start that cycle that process again to get that product back in and get re engaged with our distributors as well and that cycle that process has taken a little bit longer than we had expected.

Speaker Change: Thank you.

Seth Yawn: Okay.

Operator: Thank you. There were no other questions from the lines at this time. Once again, if you do have a question, please press star 1 on your phone. That's star 1 if you wish to ask a question today. Okay, we did have Ian Cassell come in with a follow-up. Ian, your line is live.

Seth Yawn: Thank you no other questions from the lines at this time once again, if you do have a question. Please press star one on your phone that star one if you wish to ask a question today.

Operator: Okay. We did have Ian Cassel come in with a follow up in your line of lives.

Ian Castle: When we think about Tissue Health Plus and partnering on that, is that, and I was trying to remember what you said, your prepared remarks, but is that something you expect, hopefully, to happen by the end of 24, being able to have some partnerships for that?

Ian Cassell: When when we think about the tissue health plus.

Ian Cassell: And partnering on that is that and I was trying to remember what you said your prepared remarks, but is that something that you expect hopefully to happen by the end of 'twenty for being able to have some partnerships for that.

Ron Nixon: Yes, it is what we anticipate. So, and what we have done is we have designed a really, a really thoroughly thought out strategy for how you approach value-based and wound care. And actually, no one has ever actually done this.

Speaker Change: Yes. It is what we anticipate so or in what we.

Speaker Change: Well, we have done is we we have designed it really I really thoroughly thought out.

Ron Nixon: Strategy for how you approach value based in wound care and actually no one has ever actually done. This so it is complicated because you've got you've got payers you've got providers.

Ron Nixon: So it is complicated because you've got payers, you've got providers, you've got products, you've got patients traveling through the continuum. You know, so there's the issue of where do you take care of these patients? Because they're in the home setting, they're in home care, they're in SNFs, they're in LTAC. And because of all the discussions we've had historically about how episodic care does not fit well with a wound, from just a timing standpoint, you typically focus on the primary comorbidity that gave rise to that wound.

Ron Nixon: You've got products, you've got patients traveling through the continuum you have you know so there's the issue of where do you where.

Ron Nixon: Where do you.

Ron Nixon: Take care of these patients because they are in a home setting their in home care there in snips, there and they are in L tax and because of all the discussions we've had historically about how episodic care does not fit well with our wound from just from a timing standpoint, you have.

Speaker Change: Typically the focus is on the primary comorbidity that gave rise to that one and so you really have to think through how do we catch this in its journey, how do we build up and build a platform that will allow for us to have continuous monitoring of that patient, but also have care coordination and navigation to be able to work through this so when you.

Ron Nixon: And so you really have to think through how do we catch this in its journey? How do we build a platform that will allow for us to have continuous monitoring of that patient but also have care coordination and navigation to be able to work through this? So when you think of all those steps, those are ideal partners that we would look for to participate with us, and that would be a financial partner as well as a partner that brings some value to our overall strength.

Ron Nixon: Think of all of those steps those are ideal partners that we would look forward to participate with us and that would be a financial partner as well as a partner that brings some value add to our overall strategy.

Ian Castle: Okay, and maybe a follow-up question. You're now CEO of the company. Do you view this as a temporary thing, or do you see yourself staying here permanently?

Speaker Change: Okay, and maybe a follow up you know you're now CEO of the company do you view this as a temporary thing or do you see yourself staying in here permanently.

Ron Nixon: You know, it was a temporary thing when I started and spent two and a half years in the seat. I'm actually in the seat every day, and there's not a day that goes by that I'm not talking to somebody from Sanara.

Ian Castle: You know it was a temporary thing when I started and spent two and a half years and the seat I'm actually in the seat every day and there's not a day. They go by but I'm not talking to somebody from scenario there really from my perspective, It's just a better line of communication for me to everyone and.

Ron Nixon: So really, from my perspective, it's just a better line of communication for me to everyone. And we're going just onward and upward, and I'm looking forward to the journey. And I have no plans to change out of this position anytime soon unless something unforeseeable happens. And so I'm trying to dodge as many cars as I can, etc.

Ron Nixon: We're gonna just onward, and upward and I'm looking forward to the journey and I have no plans to.

Ron Nixon: Change out of disposition anytime soon.

Ron Nixon: It is something unforeseeable happens and so I'm trying to Dodge as many cars as I can't exactly so something doesn't happen, but I'm looking forward to it. This is my passion. This was originally my concept of what we wanted to go do and build this business and I think we've done a remarkable job and it's.

Ron Nixon: So something didn't happen, but I'm looking forward to it. This is my passion. This was originally my concept of what we wanted to do and build this business. And I think we've done a remarkable job, and it's only because of one thing. It's not me. It's because we have people that are highly competent, that are passionate about what we do, and they're in our company. And I don't see anybody that doesn't have that passion continuing and going forward with the execution of our strategy.

Ron Nixon: Only from one thing it's not me, it's because we have people that are highly competent that are passionate about what we do and they are in our company and I don't see anybody that doesn't have that passion, continuing and going forward for the execution of our strategy.

Ian Castle: And maybe to that, maybe to that, yeah, you recently announced adding two more folks to the management team. Can you talk about, you know, why you brought them on board and recruited them? Absolutely. We have a great team.

Speaker Change: And maybe to that maybe to that yeah, you recently announced adding two more folks to the management team can you talk about why you brought them on board.

Ron Nixon: Absolutely. We have a great team to begin with, but what you have to do is you're going through these growths, and we're anticipating higher growth, so when you anticipate higher growth, you have to have more people in the seat, and we look at a lot of opportunities, so we felt like we needed a dedicated corporate development person that also has a strategic background, and so Tyler Palmer has joined us.

Ian Castle: Working with them absolutely we have a great team to begin with but what you have to do as you're going through these growth and we're anticipating higher growth. So when you anticipate higher growth do you have to have more people in the seats and we look at a lot of opportunity. So we felt like we needed a dedicated corporate development person that also has got us back.

Ron Nixon: Ground and so that's Tyler Palmer that joined US He's got a long standing experience and wound care and then we also need that operational focus with somebody that's also got financial strength to complement what we do and that Jake Waldrip and Jake and I have worked together for many years and he came out about what those busy.

Ron Nixon: He's got a long-standing experience in wound care and then we also need that operational focus with somebody that's also got financial strengths to complement what we do and that's Jake Waldrop and Jake and I have worked together for many years and he came out of the ortho business in the lower extremity ortho space and he understands it really well and he is a former chief financial officer that adapted real well to being a chief operating officer so we are delighted to have both of those in our camp but what we also don't talk about is just all the other new people that come on to support all of this in our sales effort the new trainees that come on board from the sales side that all are just remarkable and we're excited about coming on because we just keep getting more laser focused on what our needs are and with those needs we go identify the right kind of people and if you've got a good strategy in a growth company people that are high performers seek you out So I'm very positive about where we're going. And I feel very good about the depth of the team. And this is not stopping.

Ron Nixon: And the lower extremity ortho space and he understands it really well and he is a former chief financial officer that adapt did real well to being our chief operating officer. So we are delighted to have both of those in our camp away. What we also don't talk about is just all of the other new.

Ron Nixon: People that come on to support all of this in our sales effort the new trainees that come on board from the sales side that all are just remarkable and we're very excited about coming on because we just keep getting.

Ron Nixon: More laser focused on what our needs are.

Ron Nixon: And with those needs. We go identify the right kind of people and if you've got a good strategy and a growth company people that are high performers seek you out and so so I'm I'm very positive about where we're going and I feel very good about the depth of the team and this is not stopping will continue to advance the depth of the team.

Ron Nixon: We'll continue to advance the depth of the team in order to keep up with the infrastructure. As I've always said, companies go up. They've got to go sideways to build infrastructure and support so that they don't collapse. Then they go back up again. It's a journey, and it just continues to happen. And that's how you can build great companies.

Ron Nixon: In order to keep up always with the infrastructure as I've always said companies go up they've gotta go sideways to build infrastructure and support so that they don't collapse then they go back up again, it's a journey and it just continues to happen and that's how you can build rightness.

Ron Nixon: Okay. Thanks, Ron.

Speaker Change: Thank you Anne.

Operator: Thank you and once again if you do have a question today please press star 1 on your phone that's star 1 if you wish to ask a question today and while we wait for any other questions we did have a couple come in from the web and can you speak to the profitability in relation to the revenue increasing or indeed decreasing but the profitability taking a step back and then also can you share some color around the SG&A increase and how it appears to be increasing as fast or faster than the revenue quarter over quarter.

Speaker Change: Thank you and once again, if you do have a question today. Please press star one on your phone that star one if you wish to ask a question today and while we wait for any other questions. We did have a couple come in from the web and can you speak to the profit profitability in relation to the revenue increasing or indeed, decreasing but the prop.

Operator: Stability, taking a step back and then also can you share some color around the SG&A increase and how it appears to be increasing as fast or faster than the revenue quarter over quarter.

Ron Nixon: Yeah, so I will start by speaking to the lumpiness of how costs come in, and that depends on how we're hiring, and depending on how we are advancing sales. As you know, in our SG&A, a big variable in the SG&A is commissions paid. That correlates very well with more sales coming in, and Mike, I'll let you talk about that in just a second. As you think about the business, we are striving for profitability.

Speaker Change: Yeah. So I will start by speaking to the Lumpiness of how costs come in and that is depending on how we're hiring depending on how we are advancing sales as you know in our SG&A a big variable in the SG&A is commissions paid that that goes that core.

Ron Nixon: <unk> very well with more sales coming in and Mike I'll, Let you talk about it in just a second but.

Ron Nixon: We've achieved profitability, although in a minor way, that's not where we want our levels to be. But what we also have to balance is that when we see opportunities that we think are a really good opportunity for our shareholders long-term and building value, we want to be prudent and make sure that we've got adequate capital, that if we're going to take a bet on something that we believe will add significant value to us, we just need to make sure that we have a level of cash available to us to be able to do that, which means that we might forego some period of time for profitability, if we know it's going to be a multiple of that from the investment that we made. But operational efficiency, sales efficiency, and profitability are all top of mind. Mike, is there anything else you'd like to add to that? Yeah.

Ron Nixon: As you think about the business, we are striving for profitability.

Ron Nixon: Achieve profitability, although in a minor way, that's not where we want our levels to be but what we also have to balance is is that when we see opportunities that we think are a really good opportunity for our shareholders long term and building value. We don't want to we want to be prudent and make sure that we've got.

Ron Nixon: The debt, we've got adequate capital that if we're going to take a bet on something that we believe will add significant value to us we just need to make sure that the level of cash available to us to be able to do that which means that we might forego some period of time for profitability. If we know.

Mike McNeil: It's gonna be a multiple of that from the investment that we made but but operational efficiency sales efficiency.

Speaker Change: And profitability are all top of mind like is there anything else you'd like that yeah.

Mike McNeil: Yeah, thanks, Ron. I would just like to add, you know, 2023 included a couple of benefits to the P&L, such as a change in fair value of earn out liabilities. We had a big credit last year that we didn't have this year, and then also the amortization of our intangibles went up significantly. That really accounts for the higher net loss in 2024.

Mike McNeil: Yeah. Thanks, Rob I would just like to add you know 2023 included a couple of benefits to the P&L such as a change in fair value of earn out liabilities. We had a big credit last year. We didn't have this year and then also the amortization of our intangibles went up significantly that really accounts for the the the higher net loss in 2024.

Speaker Change: Thank you Mike.

Operator: Okay, there were no other questions in queue at this time. I would now like to hand the call back to Ron Nixon for closing remarks.

Speaker Change: Okay. There were no other questions in queue at this time I would now like to hand, the call back to Ron Nixon for closing remarks.

Ron Nixon: Okay. Thank you very much.

Ron Nixon: Okay, thank you very much. We thank all our shareholders for being on the call today. You know, besides the people in our firm, the shareholders matter a lot. We love the continued support that you have given us. And thank you very much for your support through this transition. As we said, we do not believe it will be disruptive at all, but many of you have called to talk about your confidence in our firm, and we thank you for that and greatly appreciate it. So thank you very much. We look forward to talking to our shareholders in the near future. Take care.

Speaker Change: We thank all our shareholders for being on the call today are Ed.

Ron Nixon: It is besides the people in our firm the shareholders matter a lot. We loved the continued support that you've given us and thank you very much for the support through this transition as we said we do not believe it will be disruptive at all but many of you have called to talk about your confidence with our firm and we think.

Ron Nixon: For that and greatly appreciate it. So thank you very much we look forward to talking to our shareholders in the near term take care.

Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Thank you. This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Operator: Okay.