Q1 2026 BioStem Technologies Inc Earnings Call

May 14, 2026

Operator: Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the BioStem Technologies Q1 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you, and I would now like to turn the conference over to Hannah Jeffrey, Investor Relations. You may begin.

Operator: Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the BioStem Technologies Q1 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you, and I would now like to turn the conference over to Hannah Jeffrey, Investor Relations. You may begin.

Speaker #2: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad.

Speaker #2: If you would like to withdraw your question, press star 1 again. Thank you. And I would now like to turn the conference over to Hannah Jeffrey, Investor Relations.

Speaker #2: You may begin. Good afternoon, everyone, and thank you for joining our conference call to discuss BIOSTEM's Q3, Q1, 2026 financial results and corporate highlights.

Hannah Jeffrey: Good afternoon, everyone, thank you for joining our conference call to discuss BioStem's Q1 2026 financial results and corporate highlights. Leading the call today will be Jason Matuszewski, the company's Chairman and Chief Executive Officer, Barry Hassett, the company's Chief Commercial Officer, and Brandon Poe, the company's Chief Financial Officer. Before we begin, I'd like to remind everyone that our remarks may contain forward-looking statements based on management's current expectations. These involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated. These risks are described in our filings with OTC Markets. You are cautioned not to place undue reliance on forward-looking statements which speak only as of the date made. The company undertakes no obligation to update them unless required by law. Finally, this call also includes references to non-GAAP financial measures.

Speaker #2: Leading the call today will be Jason Matuszewski, the company's chairman and chief executive officer, Barry Hassett, the company's chief commercial officer, and Brandon Po, the company's chief financial officer.

Speaker #2: Before we begin, I'd like to remind everyone that our remarks may contain forward-looking statements based on management's current expectations. These involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated.

Speaker #2: These risks are described in our filings with OTC Markets. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date made.

Speaker #2: The company undertakes no obligation to update them unless required by law. Finally, this call also includes references to non-GAAP financial measures. A reconciliation to comparable GAAP measures and related information can be found in our earnings press release, posted on the Investor Relations section of BioStem's website.

Hannah Jeffrey: A reconciliation to comparable GAAP measures and related information can be found in our earnings press release posted on the investor relations section of BioStem's website. With that, I'd now like to turn the call over to Jason.

Speaker #2: With that, I'd now like to turn the call over to Jason.

Speaker #3: Thank you, Hannah, and good afternoon, everyone. The first quarter of 2026 marked a transformational period for BioStem. With the acquisition we completed in late January, we have repositioned the company from a physician office-focused business to a hospital-focused business.

Jason Matuszewski: Thank you, Hannah, and good afternoon, everyone. The Q1 2026 marked a transformational period for BioStem. With the acquisition we completed in late January, we have repositioned the company from a physician office-focused business to a hospital-focused business. Now, with a scalable technology platform backed by a diversified commercial infrastructure that will drive adoption in the hospital setting across a multitude of surgical specialties. This transaction added a new portfolio of perinatal tissue allografts, an experienced sales organization, and a large base of hospital customers, along with major GPO contracts. Together, these additions have significantly expanded our addressable market and increased our exposure to the commercially insured patient populations. As a result, our strategic focus is now centered on the hospital channel, where we believe we can drive broader adoption and long-term growth.

Speaker #3: Now, with a scalable technology platform backed by a diversified commercial infrastructure, that will drive adoption in the hospital setting across a multitude of surgical specialties.

Speaker #3: This transaction added a new portfolio of perinatal tissue allografts, an experienced sales organization, and a large base of hospital customers, along with major GPO contracts.

Speaker #3: Together, these additions have significantly expanded our addressable market and increased our exposure to the commercially insured patient population. As a result, our strategic focus is now centered on the hospital channel, where we believe we can drive broader adoption and long-term growth.

Speaker #3: While this represents a shift from our 2025 operating model, we believe the core strengths of our business, including our proprietary technologies, clinical data, clinical champions, and commercialization approach, position us well to succeed in this setting.

Jason Matuszewski: While this represents a shift from our 2025 operating model, we believe the core strengths of our business, including our proprietary technologies, clinical data, clinical champions, and commercialization approach, position us well to succeed in this setting. Before I dive deeper into the quarter, I want to briefly highlight progress on our capital market strategy. Following the completion of our 2024 and 2025 audits, we have confidentially submitted our Form 10 to the SEC, an important step toward our goal of uplisting to Nasdaq. We believe this will raise visibility of the company, increase our ability to attract top talent, enhance our access to institutional capital, and improve trading liquidity over time. This is a top priority for the company, and we are excited to share further updates in the future.

Speaker #3: Before I dive deeper into the quarter, I want to briefly highlight progress on our capital market strategy. Following the completion of our 2024 and 2025 audits, we have confidentially submitted our Form 10 to the SEC, an important step toward our goal of uplifting to NASDAQ.

Speaker #3: We believe this will raise visibility of the company and increase our ability to track top talent and enhance our access to institutional capital and improve trading liquidity over time.

Speaker #3: This is a top priority for the company and we are excited to share further updates in the future. Now, on the business front, our focus is centered on four key initiatives that we believe will maximize long-term value creation.

Jason Matuszewski: Now, on the business front, our focus is centered on four key initiatives that we believe will maximize long-term value creation. First, integrating the acquired products and sales force into our organization while continuing to build out our commercial infrastructure. Second, driving adoption across the hospital channel. Third, advancing our product roadmap with a 510(k) clearance. Fourth, executing the technology transfer of the Neox and Clarix products. In the Q1, we are encouraged by the progress we have made across each of these initiatives. Starting with integration, our top priority coming out of the 21 January acquisition was to ensure continuity of the acquired business while expanding an already robust commercial organization to drive future growth. We are pleased to report minimal disruption during the transition, as demonstrated by our ability to maintain stable sales performance for the hospital business.

Speaker #3: First, integrating the acquired products in Salesforce into our organization while continuing to build out our commercial infrastructure. Second, driving adoption across the hospital channel.

Speaker #3: Third, advancing our product roadmap with a 510(k) clearance. And fourth, executing the technology transfer of the Neox and Claryx products. In the first quarter, we are encouraged by the progress we have made across each of these initiatives.

Speaker #3: Starting with integration, our top priority coming out of the January 21st acquisition was to ensure continuity of the acquired business while expanding an already robust commercial organization to drive future growth.

Speaker #3: We are pleased to report minimal disruption during the transition, as demonstrated by our ability to maintain stable sales performance for the hospital business. Hospital-based revenue was $5.4 million in the quarter, equivalent to $5.4 million revenue performance of the Neox and Claryx products, during the same 70-day period in Q1 of 2025.

Jason Matuszewski: Hospital-based revenue was $5.4 million in the quarter, equivalent to $5.4 million revenue performance of the Neox and Clarix products during the same 70-day period in Q1 of 2025. Given the scale and complexity of this transaction, we view this as an important validation of the underlying business and the execution of our integration plan. The transition service agreement with BioTissue has supported our sales, operations, and administrative functions seamlessly, and we are making great progress internalizing these functions to be operational in H2 of 2026. The most important driver of this stability has been the retention of the commercial organization. We successfully retained the acquired sales team with limited turnover, preserving critical customer relationships and surgical business expertise. At the same time, we have initiated efforts to expand our sales force.

Speaker #3: Given the scale and complexity of this transaction, we view this as an important validation of the underlying business and the execution of our integration plan.

Speaker #3: The transition service agreement with BioTissue has supported our sales operations and administrative functions seamlessly and we are making great progress internalizing these functions to be operational in the second half of 2026.

Speaker #3: The most important driver of this stability has been the retention of the commercial organization. We successfully retained the acquired sales team with limited turnover, preserving critical customer relationships and surgical business expertise.

Speaker #3: At the same time, we have initiated efforts to expand our sales force. Since the acquisition closed, we have nearly doubled the size of the direct sales team and added independent sales agents in key territories.

Jason Matuszewski: Since the acquisition closed, we have nearly doubled the size of the direct sales team and added independent sales agents in key territories. We remain on track to continue scaling teams through the year. We believe this expanded footprint positions us to increase utilization across our existing account base as well as drive new customer acquisition over time. This team will focus on key hospital call points across the country. Given our progress, we expect to reach 40 direct representatives by the year-end, along with continued strategic expansion of our network of independent sales agents. The new reps are completing our structured training and education programs. We are confident this training, coupled with their relevant industry experience, will expedite their ramp to full productivity in 2027.

Speaker #3: We remain on track to continue scaling teams through the year and we believe this expanded footprint positions us to increase utilization across our existing account base as well as drive new customer acquisition over time.

Speaker #3: This team will focus on key hospital call points across the country. Given our progress, we expect to reach 40 direct representatives by the year-end, along with continued strategic expansion of our network of independent sales agents.

Speaker #3: The new reps are completing our structured training and education programs and we are confident this training coupled with their relevant industry experience will expedite their ramp to full productivity in 2027.

Speaker #3: From a supply standpoint, our manufacturing and supply agreement with BioTissue extends for up to 36 months post-close of the acquisition, providing continuity and flexibility as we execute on our integration plan.

Jason Matuszewski: From a supply standpoint, our manufacturing and supply agreement with BioTissue extends for up to 36 months post-close of the acquisition, providing continuity and flexibility as we execute on our integration plan. Importantly, this agreement has ensured uninterrupted product availability with no customer-facing or supply disruptions during that transition period. While the supply agreement provides a long-term supply backstop, our objective is to complete a technology transfer and bring manufacturing of the Neox and Clarix products in-house, targeting approximately 12 months post-close. This transition represents a clear and measurable opportunity for gross margin expansion. By eliminating the cost plus markup under our current manufacturing agreement, we will gain roughly seven and a half points of margin improvement. Beyond that, we expect additional upside from internal efficiencies over time.

Speaker #3: Importantly, this agreement has ensured uninterrupted product availability, with no customer-facing or supply disruptions during that transition period. While the supply agreement provides a long-term supply backstop, our objective is to complete a technology transfer and bring manufacturing of the Neox and Claryx products in-house targeting approximately 12 months post-close.

Speaker #3: This transition represents a clear and measurable opportunity for gross margin expansion. By eliminating the cost-plus markup under our current manufacturing agreement, we will gain roughly $7.5 points of margin improvement.

Speaker #3: Beyond that, we expect additional upside from internal efficiencies over time. The combination of these positive factors should more than offset the 7% royalty on Neox and Claryx products to be manufactured internally post the technology transfer.

Jason Matuszewski: The combination of these positive factors should more than offset the 7% royalty on Neox and Clarix products to be manufactured internally post the technology transfer. Importantly, we have already demonstrated the ability to manufacture similar products at scale, with VENDAJE delivering gross margins of approximately 85%, which provides a strong benchmark for where these products can trend. While we expect an initial step-up in margins upon completing the transfer, further improvements will be realized as we optimize yields and scale production. We remain on track to complete the technology transfer in H1 2027. At scale, this margin expansion is expected to meaningfully improve our path to profitability and drive operating leverage across the business. With that, I'll turn the call over to Barry to discuss our commercial strategy in more detail.

Speaker #3: Importantly, we have already demonstrated the ability to manufacture similar products at scale with Vendahi delivering gross margins of approximately 85%, which provides a strong benchmark for where these products can trend.

Speaker #3: While we expect an initial step-up in margins upon completing the transfer, further improvements will be realized as we optimize yields and scale production.

Speaker #3: We remain on track to complete the technology transfer in the first half of 2027. At scale, this margin expansion is expected to meaningfully improve our path to profitability and drive operating leverage across the business.

Speaker #3: With that, I'll turn the call over to Barry to discuss our commercial strategy in more detail.

Speaker #4: Thanks, Jason. Our commercial strategy is centered on driving adoption across the hospital channel, where we believe we have a differentiated opportunity to grow utilization of our full product portfolio.

Barry Hassett: Thanks, Jason. Our commercial strategy is centered on driving adoption across the hospital channel, where we believe we have a differentiated opportunity to grow utilization of our full product portfolio. Neox, Clarix, and VENDAJE are positioned as a solution across a broad range of surgical and wound applications, including orthopedics, women's health, spine, urology, and colorectal procedures, and chronic wound care, a billion-dollar market opportunity. During Q1, our focus was on establishing the foundation to scale this opportunity. From a commercial infrastructure perspective, we have significantly expanded the sales organization. We now have a 35-person direct sales team, up from 18 at the time of the acquisition, and a network of more than 30 independent sales agents. The team will focus on key hospital call points nationwide where we are establishing BioStem's presence.

Speaker #4: Neox, Claryx, and Vendahi are positioned as a solution across a broad range of surgical and wound applications, including orthopedics, women's health, spine, urology, and colorectal procedures, and chronic wound care.

Speaker #4: Billion market opportunity. During the first quarter, our focus was on establishing the foundation to scale this opportunity. From a commercial infrastructure perspective, we have significantly expanded the sales organization.

Speaker #4: We now have a 35-person direct sales team, up from 18 at the time of the acquisition, and a network of more than 30 independent sales agents.

Speaker #4: The team will focus on key hospital call points nationwide where we are establishing BIOSTEM's presence. Over the course of the year, we expect to scale the sales organization to at least 40 direct representatives, supplemented by additional independent agents, to expand geographic reach and deepen penetration across the hospital channel.

Barry Hassett: Over the course of the year, we expect to scale the sales organization to at least 40 direct representatives, supplemented by additional independent agents to expand geographic reach and deepen penetration across the hospital channel. One of the cornerstones of our commercialization strategy is expanding access to customers through GPO contracts. GPO contracts represent validation from trusted value assessment committees that hospitals rely on to improve their purchasing power. These provide favorable access to hospital systems nationally as well as to a large number of non-facility settings. I am pleased to report that all major GPO agreements from the acquired business have been successfully reassigned to BioStem with no disruption, preserving immediate access to contracted hospital systems. With that access in place, we are now expanding our portfolio within those accounts by adding the VENDAJE brand across our GPO agreements.

Speaker #4: One of the cornerstones of our commercialization strategy is expanding access to customers through GPO contracts. GPO contracts represent validation from trusted, value assessment committees that hospitals rely on to improve their purchasing power.

Speaker #4: These provide favorable access to hospital systems nationally, as well as to a large number of non-facility settings. I am pleased to report that all major GPO agreements from the acquired business have been successfully reassigned to BIOSTEM with no disruption, preserving immediate access to contracted hospital systems.

Speaker #4: With that access in place, we are now expanding our portfolio within those accounts by adding the Vendahi brand across our GPO agreements. This allows our sales team to drive incremental revenue within existing customers without the need for new contracting, which we believe is a significant advantage in accelerating adoption of Vendahi products.

Barry Hassett: This allows our sales team to drive incremental revenue within existing customers without the need for new contracting, which we believe is a significant advantage in accelerating adoption of VENDAJE products. In Q2, we will further leverage this opportunity by equipping our hospital sales team with the expanded VENDAJE product portfolio. This creates a more comprehensive offering for surgeons and additional opportunities to sell against leading competitors. In addition, our relationships with the hospital systems, specifically with surgeons, are beginning to create referral pathways into outpatient and office-based settings, which we expect will support broader adoption over time as well. With GPO contracts in hand and the most comprehensive portfolio of perinatal tissue allografts on the market, we believe that our expanded commercial sales team is primed to succeed and drive growth in the hospital setting.

Speaker #4: In the second quarter, we will further leverage this opportunity by equipping our hospital sales team with the expanded Vendahi product portfolio. This creates a more comprehensive offering for surgeons and additional opportunities to sell against leading competitors.

Speaker #4: In addition, our relationships with the hospital systems, specifically with surgeons, are beginning to create referral pathways into outpatient and office-based settings, which we expect will support broader adoption over time as well.

Speaker #4: With GPO contracts in hand and the most comprehensive portfolio of perinatal tissue allografts on the market, we believe that our expanded commercial sales team is primed to succeed and drive growth in the hospital setting.

Speaker #4: Beyond commercial infrastructure, we are focused on supporting adoption through education, surgeon engagement, and clinical evidence as core components of our commercial strategy. During the quarter, we expanded our presence at key industry conferences, educational panels, and hands-on training events, working alongside leading key opinion leaders to increase awareness of our products and their clinical benefits across multiple specialties.

Barry Hassett: Beyond commercial infrastructure, we are focused on supporting adoption through education, surgeon engagement, and clinical evidence as core components of our commercial strategy. During the quarter, we expanded our presence at key industry conferences, educational panels, and hands-on training events, working alongside leading key opinion leaders to increase awareness of our products and their clinical benefits across multiple specialties. We have established a robust calendar of educational programs for the remainder of the year and expect to continue scaling these efforts. These initiatives are strengthening clinical understanding of our differentiated portfolio, reinforcing clinical confidence in our products, and creating additional opportunities to expand utilization across both existing and new accounts. At the same time, we continue to build our clinical evidence database.

Speaker #4: We have established a robust calendar of educational programs for the remainder of the year and expect to continue scaling these efforts. These initiatives are strengthening clinical understanding of our differentiated portfolio, reinforcing clinical confidence in our products, and creating additional opportunities to expand utilization across both existing and new accounts.

Speaker #4: At the same time, we continue to build our clinical evidence database. Our bio-retained DFU and VLU programs including the Level 1 randomized controlled trial results published in late 2025 represent meaningful differentiators as we educate clinicians on the benefits of our products.

Barry Hassett: Our BioRetain DFU and VLU programs, including the level 1 randomized controlled trial results published in late 2025, represent meaningful differentiators as we educate clinicians on the benefits of our products. We were one of a handful of companies that invested in producing that level of evidence to support our technologies. In the coming months, we expect to publish further analysis of the DFU trial and complete the VLU study and publish those results later in the year. This adds to more than 90 publications supporting the clinical use of Neox and Clarix in wound care and surgery, and more than 400 that demonstrate the benefits of the CryoTek, SteriTek, and BioRetain technologies in a variety of applications.

Barry Hassett: Our BioRetain DFU and VLU programs, including the level one randomized controlled trial results published in late 2025, represent meaningful differentiators as we educate clinicians on the benefits of our products. We were one of a handful of companies that invested in producing that level of evidence to support our technologies. In the coming months, we expect to publish further analysis of the DFU trial and complete the VLU study and publish those results later in the year. This adds to more than 90 publications supporting the clinical use of Neox and Clarix in wound care and surgery, and more than 400 that demonstrate the benefits of the CryoTek, SteriTek, and BioRetain technologies in a variety of applications.

Speaker #4: We were one of a handful of companies that invested in producing that level of evidence to support our technologies. In the coming months, we expect to publish further analysis of the DFU trial and complete the VLU study, and publish those results later in the year.

Speaker #4: This adds to more than 90 publications supporting the clinical use of Neox and Claryx in wound care and surgery, and more than 400 that demonstrate the benefits of the CryoTech, StereoTech, and Bio-Retained technologies in a variety of applications.

Speaker #4: As the reimbursement environment evolves, we believe clinical evidence will play an increasingly important role in product selection and we are well positioned to leverage our data to support both adoption and expanded payer coverage.

Barry Hassett: As the reimbursement environment evolves, we believe clinical evidence will play an increasingly important role in product selection, and we are well-positioned to leverage our data to support both adoption and expanded payer coverage. In regard to advancing our product roadmap, we anticipate clearance of our first 510(k) product in the near future to be followed by its launch in the latter half of the year. This is another milestone that will again differentiate our portfolio from competitors, further establishing BioStem as the premier provider of perinatal allografts and partner of choice for facilities and clinicians. Overall, with a scaled commercial organization, GPO access, and an expanded product portfolio, we believe we are well-positioned to drive increasing utilization and growth in the hospital setting. With that, I'll turn the call over to Brandon to walk through our financial results.

Speaker #4: In regard to advancing our product roadmap, we anticipate clearance of our first 510(k) product in the near future to be followed by its launch in the latter half of the year.

Speaker #4: This is another milestone that will again differentiate our portfolio from competitors, further establishing BIOSTEM as the premier provider of perinatal allografts and partner of choice for facilities and clinicians.

Speaker #4: Overall, with a scaled commercial organization, GPO access, and an expanded product portfolio, we believe we are well positioned to drive increasing utilization and growth in the hospital setting.

Speaker #4: With that, I'll turn the call over to Brandon to walk through our financial results.

Speaker #1: Thanks, Barry. To start, I want to get some context around the seasonality we expect in our quarterly revenues now that the vast majority of our sales will be generated in the hospital business.

Brandon Poe: Thanks, Barry. To start, I want to give some context around the seasonality we expect in our quarterly revenues now that the vast majority of our sales will be generated in the hospital business. Historically, the Q1 has been the softest quarter of the year for the hospital business since many patients are starting over with fresh deductibles, resulting in the deferral of elective surgical procedures into the H2 of the year. We anticipate that the shift of revenue into the H2 could be even more pronounced in 2026 because, as Jason and Barry noted, we are significantly growing our sales force, and we expect these new hires to deliver revenue growth in the latter part of 2026 and into 2027 as they become fully ramped.

Speaker #1: Historically, the first quarter has been the softest quarter of the year for the hospital business since many patients are starting over with fresh deductibles resulting in the deferral of elective surgical procedures into the second half of the year.

Speaker #1: We anticipate that the shift of revenue into the second half could be even more pronounced in 2026 because as Jason and Barry noted, we are significantly growing our sales force and we expect these new hires to deliver revenue growth in the latter part of 2026 and into 2027 as they become fully ramped.

Speaker #1: In addition, we owned the hospital business for only 70 of the 90 days in the first quarter which sets up a favorable sequential comparison for Q2.

Brandon Poe: In addition, we owned the hospital business for only 70 of the 90 days in Q1, which sets up a favorable sequential comparison for Q2. In the physician office market, CMS reimbursement changes continue to cause disruption, but we do see potential opportunity in this space in future quarters as this market uncertainty gets resolved. Overall, our early success and positive integration of the acquisition have given us confidence that we can deliver meaningful growth in the hospital business as we execute on our initiatives and ramp our sales force. With that background, I will turn to our Q1 results. In the quarter, our revenue totaled $6.1 million compared to $10.1 million in the prior quarter and above our prior guidance of $5 to $6 million.

Speaker #1: In the physician office market, CMS reimbursement changes continue to cause disruption but we do see potential opportunity in this space in future quarters as this market uncertainty gets resolved.

Speaker #1: Overall, our early success and positive integration of the acquisition have given us confidence that we can deliver meaningful growth in the hospital business as we execute on our initiatives and ramp our sales force.

Speaker #1: With that background, I will turn to our first quarter results. In the quarter, our revenue totaled $6.1 million compared to $10.1 million in the prior quarter and above our prior guidance of five to six million dollars.

Speaker #1: Revenue was largely driven by sales of the Neox and Claryx products in the hospital market. Importantly, we delivered revenue consistent with the performance of the acquired assets when compared to the prior year, adjusted for the January '21 close date.

Brandon Poe: Revenue was largely driven by sales of the Neox and Clarix products in the hospital market. Importantly, we delivered revenue consistent with the performance of the acquired assets when compared to the prior year, adjusted for the 21 January close date. Hospital revenue was $5.4 million, and physician office revenue was $772,000 in the quarter. As we have discussed, we are focusing our strategy and resources on delivering growth in the hospital market. We will continue to support inbound demand from our distributors who are focused on the physician office and mobile sites of care, but we do not anticipate that business being a significant growth driver for the company in 2026. Gross profit for Q1 was $3.8 million, representing gross margin of 61% compared to $9.8 million and 97% in the prior period.

Speaker #1: Hospital revenue was $5.4 million in physician office revenue with $772,000 in the quarter. As we have discussed, we are focusing our strategy and resources on delivering growth in the hospital market.

Speaker #1: We will continue to support inbound demand from our distributors who are focused on the physician office and mobile sites of care but we do not anticipate that business being a significant growth driver for the company in 2026.

Speaker #1: Gross profit for the first quarter was $3.8 million, representing a gross margin of 61%, compared to $9.8 million and 97% in the prior period. The sequential decrease in gross margin was a result of the product shift to the Neox and Claryx products covered under the manufacturing supply agreement, and is expected to decline slightly during the year as we work through the pre-existing inventory, which we purchased shortly after the close of the acquisition at a discount from the supply agreement list pricing.

Brandon Poe: The sequential decrease in gross margin was a result of the product shift to the Neox and Clarix products covered under the manufacturing supply agreement and is expected to decline slightly during the year as we work through the preexisting inventory, which we purchased shortly after the close of the acquisition at a discount from the supply agreement list pricing. After the technology transfer is completed, which is targeted for H1 2027, we expect margins will significantly increase, as Jason described earlier on this call. Operating expenses for Q1 totaled $12.6 million compared to $17.3 million in the prior period.

Speaker #1: After the technology transfer is completed, which is targeted for the first half of 2027, we expect margins will significantly increase as Jason described earlier on this call.

Speaker #1: Operating expenses for the first quarter totaled $12.6 million compared to $17.3 million in the prior period. The sequential decrease was primarily driven by the bad debt expense recorded in the fourth quarter of 2025, partly offset by the addition of the acquired workforce in the first quarter and one-time expenses related to the acquisition and our uplisted process.

Brandon Poe: The sequential decrease was primarily driven by the bad debt expense recorded in Q4 2025, partly offset by the addition of the acquired workforce in Q1 and one-time expenses related to the acquisition and our uplisting process. Operating expenses are expected to continue to ramp as we expand the sales force and commercial infrastructure during the year. Moving to the balance sheet, our cash and cash equivalents balance was $13.7 million as of 31 March 2026, compared to $29.5 million as of 31 December 2025, with the sequential decline primarily due to the $15 million upfront purchase price paid for the acquisition.

Speaker #1: Operating expenses are expected to continue to ramp as we expand the sales force and commercial infrastructure during the year. Moving to the balance sheet, our cash and cash equivalents balance was $13.7 million as of March 31, 2026 compared to $29.5 million as of December 31, 2025 with the sequential decline primarily due to the $15 million upfront purchase price paid for the acquisition.

Speaker #1: I also wanted to mention that, in late April, we entered into an agreement with GMA to resolve all claims related to two aggregate outstanding principal amounts of $3 million and accrued interest of $2.3 million.

Brandon Poe: I also wanted to mention that in late April, we entered into an agreement with GMA to resolve all claims related to two existing promissory notes that had an aggregate outstanding principal amount of $3 million and accrued interest of $2.3 million. As part of the agreement, we made a cash payment to GMA in the amount of $3.5 million, and we issued a secured promissory note in the principal amount of $1 million, bearing interest at a 0.5% per month for the first 6 months and 0.75% per month thereafter until maturity with a 1-year term. If we repay the full $1 million principal on or before 31 December 2026, no interest will be due. Now turning to our outlook.

Speaker #1: As part of the agreement, we made a cash payment to GMA in the amount of $3.5 million and we issued a secured promissory note in the principal amount of $1 million bearing interest at a half percent per month for the first six months and three quarters of a percent per month thereafter until maturity with a one-year term.

Speaker #1: If we repay the full $1 million principal on or before December 31, 2026, no interest will be due. Now turning to our outlook. We are initiating revenue guidance for full year 2026 and we expect full year revenue to be in the range of $25 to $29 million.

Brandon Poe: We are initiating revenue guidance for full year 2026, and we expect full year revenue to be in the range of $25 to 29 million. We believe our guidance appropriately reflects the opportunities ahead while also accounting for the operational transition currently underway across the business, including the significant market disruption in the physician office market and the transformative nature of our acquisition. As we continue integrating our expanded commercial organization and scaling our hospital-focused strategy, we believe there is room for growth throughout the year. The Q2 will represent our first full quarter with the combined business, and we expect sequential growth in the quarter, with the H2 of 2026 setting up an opportunity for further sequential improvement.

Speaker #1: We believe our guidance appropriately reflects the opportunities ahead, while also accounting for the operational transition currently underway across the business, including the significant market disruption in the physician office market and the transformative nature of our acquisition.

Speaker #1: As we continue integrating our expanded commercial organization and scaling our hospital-focused strategy, we believe there is room for growth throughout the year. The second quarter will represent our first full quarter with a combined business.

Speaker #1: And we expect sequential growth in the quarter with the second half of 2026 setting up an opportunity for further sequential improvement. In the hospital business, growth is expected to be driven by sales repetitions and productivity ramping deeper utilization of our GPO contract base, and the introduction of our bio-retained dry products to our hospital sales team.

Brandon Poe: In the hospital business, growth is expected to be driven by sales rep additions and productivity ramping, deeper utilization of our GPO contract base, the introduction of our BioRetain Dry products to our hospital sales team. We view the Q1 as the trough for the physician office market, with stabilization in H2 2026 and sequential revenue improvement to follow. I will turn the call back to Jason for closing remarks.

Speaker #1: We view the first quarter as the trough for the physician office market with stabilization in the second half of 2026 and sequential revenue improvement to follow.

Speaker #1: I will turn the call back to Jason for closing remarks.

Speaker #2: Thanks, Brandon. As we look ahead, BioStem is a fundamentally different company than it was just a few months ago. With the acquisition we completed in January, we have repositioned the business toward the hospital channel and added a scaled commercial infrastructure, and expanded our access to commercially insured patient populations.

Jason Matuszewski: Thanks, Brandon. As we look ahead, BioStem is a fundamentally different company than it was just a few months ago. With the acquisition we completed in January, we have repositioned the business toward the hospital channel, added a scale commercial infrastructure, and expanded our access to commercially insured patient populations. This transformation is particularly important in the current environment. While the physician office and mobile wound care markets continue to experience disruption, we are increasingly focused on the hospital setting, where product selection is driven by clinical evidence, contracting access, and supply reliability. These are areas where we believe BioStem is well-positioned to compete and win. From here, our priorities are clear. We are focused on driving utilization across our existing hospital accounts, expanding the reach and productivity of our sales organization, and increasing penetration of our full product portfolio through our GPO relationships.

Speaker #2: This transformation is particularly important in the current environment. While the physician office and mobile wound care markets continue experiencing disruption, we are increasingly focused on the hospital setting where product selection, as driven by clinical evidence, contracting access, and supply reliability.

Speaker #2: These are areas where we believe BIOSTEM is well positioned to compete and win. From here, our priorities are clear. We are focused on driving utilization across our existing hospital accounts and expanding the reach and productivity of our sales organization and increasing penetration of our full product portfolio through our GPO relationships.

Speaker #2: At the same time, we are innovating our product pipeline and executing on the planned technology transfer, which represents a meaningful and visible opportunity to expand gross margins and improve the long-term profitability of the business.

Jason Matuszewski: At the same time, we are innovating our product pipeline and executing on the planned technology transfer, which represents a meaningful and visible opportunity to expand gross margins and improve the long-term profitability of the business. We expect 2026 to be a year of execution and sequential improvement, with the foundation we are building today setting up a stronger, more scalable business in 2027 and beyond. We believe BioStem now has the commercial platform, product portfolio, and margin profile to compete more effectively in a changing market and to create long-term value for our shareholders. With that, operator, please open the line for questions.

Speaker #2: We expect 2026 to be a year of execution and sequential improvement with the foundation we are building today setting up a stronger, more scalable business in 2027 and beyond.

Speaker #2: We believe BIOSTEM now has the commercial platform, product portfolio, and margin profile to compete more effectively in a changing market and to create long-term value for our shareholders.

Speaker #2: With that, operator, please open the line for questions.

Speaker #3: Thank you. And we'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Operator: Thank you. We'll now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one to join the queue. Our first question comes from the line of Swayampakula Ramakanth with H.C. Wainwright. Your line is open.

Speaker #3: If you would like to withdraw your question, simply press star one again. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker #3: To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one to join the queue.

Speaker #3: And our first question comes from the line. Your line is open.

Speaker #4: Thank you. Good afternoon, Jason and team. Really appreciate taking my questions. Can you hear me good? Okay. Good. Good. It's just trying to understand the two businesses between the hospital and the physician.

Swayampakula Ramakanth: Thank you. Good afternoon, Jason and team. Really appreciate taking my questions. Can you hear me good?

Brandon Poe: We can.

Swayampakula Ramakanth: Okay, good. Good. Just trying to understand the two businesses, you know, between the hospital and the physician. I understand, you know, your comments on trying to focus more on the hospital side of things, rather than the physician pieces. What needs to happen within that sector, you know, for you to gain some traction? It's not that you don't have traction, it's just that the way the market, the sector is.

Speaker #4: I understand your comments on trying to focus more on the hospital side of things. Rather than the physician pieces, what needs to happen within that sector for you to gain some traction?

Speaker #4: It's not that you don't have traction. It's just that the way the markets, the sector is, and also regarding the clinical evidence that you have had so far, how do you plan to process that into is that going to be just only a 5, 10K, or could you or is it too early to think about resources being spent on trying to build up a portfolio of evidence for a BLA?

Swayampakula Ramakanth: You know, regarding the clinical evidence that you had so far, you know, how do you plan to process that? Is that going to be just only a 510(k) or, you know, is it too early to think about resources being spent on trying to build up a portfolio of evidence for a BLA?

Jason Matuszewski: Sure. RK, thanks again for asking the question. I'll flip it over to Barry in regards to kind of where we are positioning ourselves in regards to the physician office versus hospital. I guess maybe one clarifying point there, you said, get back to things or expanding sales. Was that in regard to the physician office, market or the hospital market?

Speaker #2: Sure. RK, thanks again for asking the question. I'll flip it over to Barry in regards to kind of where we are positioning ourselves in regards to the physician office versus hospital.

Speaker #2: I guess maybe one clarifying point there: you said, 'get back to things,' or 'expanding sales.' Was that in regard to the physician office market or the hospital market?

Swayampakula Ramakanth: The hospital market. I think, you know, yeah, sorry, I've been like running between calls. I think I heard it properly saying that, you know, you're certainly spending a lot of energy in the hospital business at this point. Just trying to understand how you plan to work through some of the disruptions in the physician's office right now.

Speaker #4: The hospital market. I think in your sorry, I've been running between calls. I think I heard it properly saying that you're certainly spending a lot of energy in the hospital business at this point.

Speaker #4: But just trying to understand how you plan to work through some of the disruptions in the physician's office right now.

Speaker #6: Yeah. Okay. Thank you, RK. Yeah. With regard to the physician office, we believe that those disruptions are just going to take some time to work through.

Barry Hassett: Yeah. Okay. Thank you, RK. Yeah, with regard to the physician office, you know, we believe that those disruptions are just going to take some time to work through. There, you know, there are two key things going on there, with regards to the change in payment from CMS, as well as there's still pretty aggressive auditing and potential clawbacks going on in that environment that frankly have made clinicians hesitant to treat patients in that setting. We are waiting for that to settle down. We're still partnered with Venture. We're actively selling in that space. In addition to that, we do expect to see some shift in patient treatment from that setting back into the hospital outpatient setting.

Speaker #6: There are two key things going on there. With regards to the change in payment from CMS, as well as there's still pretty aggressive auditing and potential clawbacks going on in that environment that, frankly, have made clinicians hesitant to treat patients in that setting.

Speaker #6: So, we are waiting for that to settle down. We're still partnered with Venture. They're actively selling in that space. And then, in addition to that, we do expect to see some shift in patient treatment from that setting back into the hospital outpatient setting.

Barry Hassett: I think what has gotten lost in some of the messaging overall within the industry is that the reimbursement and payment situation has actually improved in the hospital setting. With our GPO agreements and already being available in that setting, we believe we're well-positioned to take advantage of some of that flow back into the hospital outpatient setting.

Speaker #6: I think what has gotten lost in some of the messaging overall within the industry is that the reimbursement and payment situation has actually improved in the hospital setting.

Speaker #6: So with our GPO agreements and already being available in that setting, we believe we're well positioned to take advantage of some of that flow back into the hospital outpatient setting.

Swayampakula Ramakanth: Okay.

Speaker #4: Okay.

Jason Matuszewski: RK, I'll address the product roadmap and some of the regulatory-.

Speaker #2: RK, I'll address the product roadmap and some of the regulatory strategies that we're looking into. So obviously, right now, the majority of our products, frankly, all of our products are considered 361 HCTPs.

Jason Matuszewski: RK, I'll address the product roadmap and some of the regulatory-.

Swayampakula Ramakanth: Yeah

Swayampakula Ramakanth: Yeah.

Jason Matuszewski: strategies that we're-

Jason Matuszewski: Strategies that we're-

Swayampakula Ramakanth: Correct

Swayampakula Ramakanth: Correct.

Jason Matuszewski: we're looking into. Obviously right now, majority of our products, frankly, all of our products are considered 361 HCT/Ps. We are evaluating a multitude of regulatory pathways in which we can upregulate those products.

Jason Matuszewski: We're looking into. Obviously right now, majority of our products, frankly, all of our products are considered 361 HCT/Ps. We are evaluating a multitude of regulatory pathways in which we can upregulate those products.

Speaker #2: We are evaluating a multitude of regulatory pathways in which we can upregulate those products whether it be the 5, 10K pathway or a BLA pathway.

Jason Matuszewski: the 510(k) pathway or a BLA pathway. You know, as an organization in some of our long-term strategies, we are looking at how do we upregulate away from the framework and move toward that device specific device framework or the BLA framework. One thing of note is more recently, CMS and FDA announced a recent announcement around a pathway to get coverage along with a 510(k) designation is an area of interest for us as we look at, you know, that regulatory strategy.

Jason Matuszewski: The 510(k) pathway or a BLA pathway. You know, as an organization in some of our long-term strategies, we are looking at how do we upregulate away from the framework and move toward that device specific device framework or the BLA framework. One thing of note is more recently, CMS and FDA announced a recent announcement around a pathway to get coverage along with a 510(k) designation is an area of interest for us as we look at, you know, that regulatory strategy.

Speaker #2: And as an organization, and with some of our long-term strategies, we are looking at how we upregulate away from the framework and move toward that price-specific device framework or the BLA framework.

Speaker #2: One thing of note is, more recently, CMS and FDA announced a recent announcement around a pathway to get coverage along with an F510K designation as a scenario of interest for us as we look at that regulatory strategy.

Speaker #4: Okay. No, that's great. Now, regarding your guidance, which you presented today, of 25 to 29 million, which based on what has happened during the first quarter implies you need to get somewhere between 19 and 23 million for the next over the next three quarters, so how should we think about quarter to quarter growth and I'm not asking for specific numbers, but what I'm trying to find out is what are the pushes and pulls on that number such as hospital salesforce ramp-up?

Swayampakula Ramakanth: Okay. No, that's great. Now regarding your guidance, which you presented today, of $25 to 29 million, which, you know, based on what has happened during Q1 implies you need to get somewhere between $19 and 23 million, you know, over the next 3 quarters. How should we think about, you know, quarter to quarter growth? I'm not asking for specific numbers, but what I'm trying to find out is like, what are the pushes and pulls on that number, such as like hospital sales force ramp up, the GPO contract reassignment that's happening, you know, what's the timing on that? Also, how are you thinking about either pricing or new product launches within the hospital environment?

Swayampakula Ramakanth: Okay. No, that's great. Now regarding your guidance, which you presented today, of $25 to 29 million, which, you know, based on what has happened during Q1 implies you need to get somewhere between $19 and 23 million, you know, over the next Q3. How should we think about, you know, quarter-to-quarter growth? I'm not asking for specific numbers, but what I'm trying to find out is like, what are the pushes and pulls on that number, such as like hospital sales force ramp up, the GPO contract reassignment that's happening, you know, what's the timing on that? Also, how are you thinking about either pricing or new product launches within the hospital environment?

Speaker #4: The GPO contracts reassignment that's happening? What's the timing on that? And also how are you thinking about either pricing or new product launches within the hospital environment?

Barry Hassett: Do you wanna touch on the drivers for the year a little bit? Yeah, I can touch on that. So again, with regard to the drivers for the year, I think Well, there are a few things. First of all, the hospital business is quite seasonal. Historically, you will see sequential growth quarter to quarter. We see nothing that indicates that we wouldn't see that same phenomenon this year. The reason for that is many of these procedures are elective, and you see a slowdown in volume at the beginning of the year because patients have restarted their deductibles and often wait until later in the year, when they're either achieved or at least closed the gap on their deductibles.

Speaker #5: Do you want to touch on the drivers for the year a little bit?

Speaker #6: Yeah. I can touch on that. So again, with regard to the drivers for the year, I think there well, there are a few things.

Speaker #6: First of all, the hospital business is quite seasonal. And historically, you will see sequential growth quarter to quarter. And we see nothing that indicates that we wouldn't see that same phenomenon this year.

Speaker #6: And the reason for that is many of these procedures are elective. And you see a slowdown in volume at the beginning of the year because patients have restarted their deductibles and often wait until later in the year when they're either achieved or at least close the gap on their deductibles.

Speaker #6: So we were actively—we continue to be actively—integrating the hospital business into BioStem. There was minimal disruption in the first quarter. But again, as everything settles down, as we build up our own internal infrastructure to support the business, we expect that to provide additional momentum in the business as well.

Barry Hassett: You know, we continue to be actively integrating the hospital business into BioStem. There was, you know, minimal disruption in Q1. Again, as everything settles down, as we build up our own internal infrastructure to support the business, we expect that to provide additional momentum in the business as well. The new hires, you know, take some time to ramp up from a productivity perspective, but we're actively training them and supporting them to make sure they achieve productivity as quickly as possible as well.

Speaker #6: The new hires take some time to ramp up from a productivity perspective. But we're actively training them and supporting them to make sure they achieve productivity as quickly as possible as well.

Speaker #6: So, given historic trends, given the investment that we're making in the business, we've launched—as I mentioned earlier in the call—a very comprehensive medical education program.

Brandon Poe: Given historic trends, given the investment that we're making in the business, we've launched, as I mentioned, you know, earlier in the call, a very comprehensive medical education program, and we're actively out there at society meetings. We do expect that all of those efforts will drive sequential growth over the course of the year. RK, I'll add to a little bit what Barry said around, you know, flowing what he said into the numbers a little bit. You know, the $25 to 29 million, you know, we think, you know, really reflects sort of the transition and integration we've got in acquired assets this year in the hospital market, you know, the physician office market disruptions.

Speaker #6: And we're actively out there in society meetings we do expect to that all of those efforts will drive sequential growth over the course of the year.

Speaker #5: And RK, I'll add to a little bit what Barry said around flowing what he said into the numbers a little bit. But the 25 to 29 million we think is really reflects sort of the transition and integration we've got to the acquired assets this year.

Speaker #5: And the hospital market, the physician office market disruptions. But as you think about that, with the things Barry just said, our expectations are that we'll see sequential growth, really, through the year.

Barry Hassett: As you think about that, you know, with the things Barry Hassett just said, you know, our expectations are that we'll see sequential growth really through the year. Q2 better than Q1, Q3 better than Q2, et cetera. When you think about flowing that out, that's how we're thinking about the numbers.

Speaker #5: So Q2 better than Q1, Q3 better than Q2, etc. So when you think about flowing that out, that's how we're thinking about the numbers.

Speaker #4: Great. And then I know you made some remarks about the tech transfer. For as you progress towards that, what are the are there any milestones that you can talk about?

Swayampakula Ramakanth: Great. Then, you know, I know you made some remarks about the tech transfer. You know, as you progress towards that, you know, what are the, you know, are there any milestones that you can talk about? Also, once you get there, what sort of gross margin are you, would you consider as optimum, when that completes, say, especially in 2027? If there is a chance where if you slip up, what sort of a cost plus markup will you have to bear?

Speaker #4: And also, once you get there, what sort of gross margin are you would you consider as optimum when that completes, say, and especially in 2027?

Speaker #4: And if there is a chance where if you slip up, what sort of a cost-plus markup will you have to bear?

Jason Matuszewski: I can take, you know, as far as what are the milestones. So really the major milestone here is that the arrangement that we established with BioTissue on the acquisition is that we were going to utilize their CDMO services or contract manufacturing services for the first 12 months. That's kind of where our head's at, our guidepost of where we want to be to do that cutover and that transition. That's what we've been internally working with BioTissue to drive to. I can kind of flip it over to Brandon in regards to margin improvement and what our thoughts are there.

Speaker #2: I can take as far as what are the milestones. So really, the major milestone here is that the arrangement that we established with BioTissue on the acquisition is that we were going to utilize their CDMO services or contract manufacturing services for the first 12 months.

Speaker #2: And so that's kind of where our heads at our guidepost of where we want to be to do that cutover and that transition. And so that's what we've been internally working with BioTissue to drive to.

Speaker #2: I can kind of flip it over to Brandon in regards to margin improvement and what our thoughts are there.

Speaker #5: Yeah, RK, a couple of questions you had in there. Our Q1 margin was 61%. I think what you'll see through the rest of the year is maybe something a little bit below that in the next couple of quarters, simply because we did an early buy of existing inventory at a bit of a discount.

Brandon Poe: Yeah. Okay. A couple questions you had in there. You know, our Q1 margin was 61%. I think what you'll see through the rest of the year is maybe something a little bit below that in the next couple of quarters, simply because we did an early buy of existing inventory at a bit of a discount, and that's helping us as we're sort of working our way through that inventory on the gross margin side. As you work into, you know, next year, and again, we've said kind of H1 2027, we anticipate bringing the manufacturing in-house for the tech transfer. You know, I feel comfortable, you know, saying that margins can certainly be well above 60%.

Speaker #5: And that's helping us as we're sort of working our way through that inventory and the gross margin side. As you work into next year, and again, we've said kind of first half of '27, we anticipate bringing the manufacturing in-house through the tech transfer.

Speaker #5: I feel comfortable saying that margins can certainly be well above 60%. We've, as Jason noted on the call, we've done 85% in the business we have today.

Brandon Poe: You know, as Jason noted on the call, we've done 85% in the business we have today. We know the products well that are being manufactured. You know, we're paying a markup today, and I think, you know, with our know-how, with the volume and the scale and other things, we think we can push that up. You know, you know, we've said, you know, 20% to 85%, that's probably on the higher end of where we'll get to. You know, I think we've got a path certainly well above the 60% that we're seeing today. You asked a question about a penalty. You know, there isn't really I'm not sure if I'm answering your question. Tell me if I'm not.

Speaker #5: We know the products well that are being manufactured. We're paying a markup today, and I think with our know-how, with the volume and the scale and other things, we think we can push that up.

Speaker #5: We've said 20, 85%, that's probably on the higher end of where we would get to. But I think we've got a path certainly well above the 60% that we're seeing today.

Speaker #5: You asked a question about a penalty. There isn't really a I'm not sure if I'm answering your question. Tell me if I'm not. The markup that we have today is I think we said before is about 23%.

Brandon Poe: The markup that we have today is, I think we said before, is about 23%. You know, we would just keep that markup if we decided to stick with the BioTissue manufacturing supply agreement for the full 3 years. We would continue to pay that markup on the products that they're delivering. There isn't really a penalty per se. If we get beyond the 3 years, you know, that's something we'd have to talk about and contemplate, but our real goal is to move it in-house as quickly as possible and targeting the H1 of next year.

Brandon Poe: The markup that we have today is, I think we said before, is about 23%. You know, we would just keep that markup if we decided to stick with the BioTissue manufacturing supply agreement for the full three years. We would continue to pay that markup on the products that they're delivering. There isn't really a penalty per se. If we get beyond the three years, you know, that's something we'd have to talk about and contemplate, but our real goal is to move it in-house as quickly as possible and targeting the H1 of next year.

Speaker #5: We would just keep that markup if we decided to stick with the BioTissue manufacturing supply agreement for the full three years. We would continue to pay that markup on the products that they're delivering.

Speaker #5: So there isn't really a penalty per se. If we get beyond the three years, that's something we'd have to talk about and contemplate. But our real goal is to move it in-house as quickly as possible and targeting the first half of next year.

Swayampakula Ramakanth: Perfect. No, thank you very much. you did answer my question, Brandon.

Speaker #4: Perfect. No, thank you very much. You did answer my question, Brandon. Really appreciate your time.

Barry Hassett: Okay. Great.

Barry Hassett: Your time.

Barry Hassett: Okay. Great.

Barry Hassett: I really appreciate your time.

Speaker #5: Thank you.

Jason Matuszewski: Thank you.

Jason Matuszewski: Thanks, RK.

Speaker #2: Thanks, RK.

Operator: Our next question comes from the line of Mike Matson with Needham & Company. Your line is open.

Speaker #1: Our next question comes from the line of Mike Matson with Needham & Company. Your line is open.

Speaker #4: Yeah. Thanks. So I guess I'll start by following up on the gross margin line of questioning there. So the I just want to make sure I heard you correctly on the so this transition, when you bring it in-house, in about a year, you said that you would gain about 7.5%, but then there's a royalty or something that's about the same amount.

Mike Matson: Yeah, thanks. I'll start by following up on the gross margin line of questioning there. I just want to make sure I heard you correctly on this transition, when you bring it in-house in about 1 year, you said that you would gain about 7.5%, but then there's like a royalty or something that's about the same amount. Did I hear that correctly? That's kind of a wash, at least at the starting point. I know you might be able to become more efficient, as you were mentioning.

Mike Matson: Yeah, thanks. I'll start by following up on the gross margin line of questioning there. I just want to make sure I heard you correctly on this transition, when you bring it in-house in about one year, you said that you would gain about 7.5%, but then there's like a royalty or something that's about the same amount. Did I hear that correctly? That's kind of a wash, at least at the starting point. I know you might be able to become more efficient, as you were mentioning.

Speaker #4: Did I hear that correctly? So that's kind of a wash, at least at the starting point. I know you might be able to become more efficient as you were mentioning.

Speaker #4: But.

Speaker #5: Yeah, Mike, this is Brandon. Yeah, thanks for the question. Yeah, that's right. There are really three things at play here, two positive. One negative, at least in the short term.

Brandon Poe: Mike. This is Brandon. Thanks for the question. That's right. There are really 3 things at play here. 2 positive, 1 negative, at least in the short term. The 2 positive are the 1 you described, right, the loss of markup on the products, the 23% markup, which has about a 7 to 8 point benefit on gross margin. You're right, the offset, the negative offset is the 7% royalty that we would pay, and that's up to $15 million. It could be as little as $13 million, but it's up to $15 million. Eventually that goes away over time. The 3rd piece, which is the upside, is what you said, right? The efficiencies, right? We know these products well. You know, we've made similar products internally.

Brandon Poe: Mike. This is Brandon. Thanks for the question. That's right. There are really three things at play here. 2 positive, 1 negative, at least in the short term. The two positive are the 1 you described, right, the loss of markup on the products, the 23% markup, which has about a 7 to 8 point benefit on gross margin. You're right, the offset, the negative offset is the 7% royalty that we would pay, and that's up to $15 million. It could be as little as $13 million, but it's up to $15 million. Eventually that goes away over time. The 3rd piece, which is the upside, is what you said, right? The efficiencies, right? We know these products well. You know, we've made similar products internally.

Speaker #5: The two positive are the one you described, right? We lose the markup on the products, the 23% markup, which has about a 7 to 8-point benefit on gross margin.

Speaker #5: You're right. The negative offset is the 7% royalty that we would pay. And that's up to 15 million dollars. It could be as little as 13 million, but it's up to 15 million dollars.

Speaker #5: So, eventually, that goes away over time. And then the third piece, which is the upside, is what you said, right? It's the efficiencies, right?

Speaker #5: We know these products well. We've made similar products internally we think there's opportunity for us to improve the margin. Just through efficiencies. And so that's sort of the missing piece there that certainly could give us some, we think, significant upside.

Brandon Poe: You know, we think there's opportunity for us to improve the margin, just through efficiencies. That's sort of the missing piece there that certainly could give us some we think significant upside.

Speaker #4: Okay. Got it. And then just a couple on the sales the direct sales force. So where you're hiring the reps from, are they do they have wound care experience?

Mike Matson: Okay, got it. Just a couple on the sales, the direct sales force. Where are you hiring the reps from? Do they have wound care experience? Do they have other skin substitute experience? Just productivity, what do you think of? I mean, I know it's maybe you don't even have a good feel for it because you haven't really been selling in the hospital before, you know, what are you thinking for revenue per rep, kind of when they do hit full productivity? On an annual basis, sorry, to be clear.

Speaker #4: Do they have other skin substitute experience? And then just productivity, what do you think a I mean, I know it's maybe you don't even have a good feel for it because you haven't really been selling in the hospital.

Speaker #4: But what are you thinking for revenue per rep kind of when they do hit full productivity? I mean, annual basis, sorry, to be clear.

Barry Hassett: Yeah, I can take that question. You know, we're hiring, I would say, a variety of talent. Everybody that has come on board has experience selling in the hospital setting and in the OR. There are a number of the people that have skin substitute experience, but I think more importantly, they have surgical experience. They've got relationships in the various specialties that we're selling into. That's sort of the profile of the rep that we're looking at bringing on board.

Speaker #3: Yeah, I can take that question. So, we're hiring, I would say, a variety of talent. Everybody that has come on board has experience selling in the hospital setting and in the OR.

Speaker #3: There are some there are a number of the people that have skin substitute experience, but I think more importantly, they have surgical experience. And they've got relationships in the various specialties that we're selling into.

Speaker #3: So that's sort of the profile of the rep that we're looking at bringing on board. With regard to productivity, we really expect that in many cases, it's going to be kind of in that 6 to 12-month timeframe to where they're contributions begin to become meaningful.

Barry Hassett: With regard to productivity, you know, we really expect that, in many cases it's going to be, you know, kind of in that 6 to 12 month timeframe to where their contributions, begin to become meaningful. If for no other reason than, in many of the places that we're hiring, there was an existing business already. You know, they have to generate clinical interest and then go through the VAC approval processes in the hospital environment in order to get product on the shelf. You know, with the major GPO agreements that we have in place, that's sort of that first hurdle to access and they're, you know, very importantly over that hurdle to begin with.

Speaker #3: If for no other reason than in many of these many of the places that we're hiring, there wasn't existing business already. So they have to generate clinical interest.

Speaker #3: And then go through the back approval processes in the hospital environment in order to in order to get product on the shelf. Importantly, with the major GPO agreements that we have in place, that's sort of that first hurdle to access.

Speaker #3: And they're very importantly over that hurdle to begin with.

Speaker #4: Okay. Great. Thank you.

Mike Matson: Okay, great. Thank you.

Speaker #3: Yeah.

Barry Hassett: Yep.

Operator: As a reminder to star one to ask a question. Our next question comes from the line of Bruce Jackson with StoneX. Your line is open.

Speaker #1: And as a reminder to star one to ask a question. And our next question comes from the line of Bruce Jackson with Stonex. Your line is open.

Operator: As a reminder to star one to ask a question. Our next question comes from the line of Bruce Jackson with StoneX. Your line is open.

Bruce Jackson: Hi, good afternoon. Just a follow-up question on the regulatory status and potentially upregulating the status of some of your products through a 510(k) or BLA process. When do you think you're going to be done evaluating this? Do you have to talk to the FDA first and then, you know, when might we have some clarity on what that, what the timing might look like on that process?

Speaker #6: Hi, good afternoon. Just a follow-up question on the regulatory status, and potentially upregulating the status of some of your products through a 510(k) or BLA process.

Speaker #6: So when do you think you're going to be done evaluating this? And do you have to talk to the FDA first and then when might we have some clarity on what that what the timing might look like on that process?

Jason Matuszewski: Hey, Bruce. Thanks for the question. Currently we don't have timing on kind of that process. We have been working with the BioTissue team, but the BioTissue team is the one champion driving that process and that timeline and that submission. We currently do not have line of sight for that.

Speaker #2: Hey, Bruce. Thanks for the question. So currently, we don't have timing on kind of that process. We have been working with the BioTissue team, but the BioTissue team is the one champion driving that process and that timeline and that submission.

Speaker #2: And so we currently do not have line of sight for that.

Speaker #4: Okay.

Bruce Jackson: Okay. That's fine.

Jason Matuszewski: Although we do anticipate.

Speaker #2: Although we do anticipate, yeah. Yeah. Although we do anticipate somewhere in the back half of this year.

Bruce Jackson: I just curious.

Jason Matuszewski: Yeah. Yeah, although we do anticipate somewhere in the back half of this year.

Bruce Jackson: I just curious.

Speaker #6: Okay. Great. That's it for me. Thank you.

Bruce Jackson: Okay, great. That's it for me. Thank you.

Speaker #1: And our next question comes from the line of investor Howard Gosbrand. Your line is open.

Operator: Our next question comes from the line of investor Howard Gosbrand. Your line is open.

Operator: Our next question comes from the line of investor Howard Gostfrand. Your line is open.

Speaker #7: Thank you. Jason and team, thank you for all that information. Jason, you mentioned in your remarks that there was a Form 10 confidentially filed.

Howard Gosbrand: Thank you. Jason and team, thank you for all that information. Jason, you mentioned in your remarks that there was a Form 10 confidentially filed. From what I understand, a Form 10 typically is approved 60 days, if not sooner. Are you able to share when that was filed?

Howard Gostfrand: Thank you. Jason and team, thank you for all that information. Jason, you mentioned in your remarks that there was a Form 10 confidentially filed. From what I understand, a Form 10 typically is approved 60 days, if not sooner. Are you able to share when that was filed?

Speaker #7: And from what I understand, a Form 10 typically is approved 60 days, if not sooner. Are you able to share when that was filed?

Jason Matuszewski: Brandon, would you like to take that question?

Speaker #2: Brandon, would you like to take that question?

Brandon Poe: Sure, yeah. Yeah, yeah, thanks for the question, Howard. Yeah, we filed the middle of April. We are expecting our first round of comments any day back from the SEC. In terms of your comment around 60 days, we'll have to see how the comments come out. We haven't put a timeline on it yet, but we are moving forward and progressing with our planned up-list process.

Speaker #5: Sure. Yeah. Yeah. Yeah. Thanks for the question, Howard. Yeah. We filed in the middle of April. So we are expecting our first round of comments any day back from the SEC.

Speaker #5: And then in terms of your comment around 60 days, we'll have to see how the comments come out. So we haven't put a timeline on it yet, but we are moving forward and progressing with our planned uplift process.

Speaker #4: Okay. So to confirm that Form 10 is really the final hurdle for not only BioSTEM, but any company that would want to uplift. Is that correct?

Howard Gosbrand: To confirm, that Form 10 is really the final hurdle for not only BioStem, but any company that would want to up-list. Is that correct?

Howard Gostfrand: To confirm, that Form 10 is really the final hurdle for not only BioStem, but any company that would want to up-list. Is that correct?

Brandon Poe: That's correct. To register the shares. That would register the shares, then there's an up-list process after that, but that's a big stepping stone. That's right, Howard.

Speaker #5: That's correct. The registered shares, that would register the shares, and then there's an uplift process after that. But that's a big stepping stone. That's right, Howard.

Speaker #4: Okay. Thank you very much. That's good.

Howard Gosbrand: Okay. Thank you very much. That's good.

Howard Gostfrand: Okay. Thank you very much. That's good.

Speaker #1: And ladies and gentlemen, that concludes our question and answer session as well as today's call. We thank you for your participation, and you may now disconnect.

Operator: Ladies and gentlemen, that concludes our question and answer session, as well as today's call. We thank you for your participation, and you may now disconnect.