Sanara MedTech Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 14, 2023

There are 9 speakers on the call.

Operator

Greetings, and welcome to the SolaraMedTech Incorporated Third Quarter 2023 Results and Business Update Call. At this time, all participants are on a listen only mode and a question and answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Callan Nichols.

Operator

Sir, you may begin.

Speaker 1

Thank you, and good morning, everyone. I'd like to welcome you to CineraMedTech's earnings conference call for the quarter ended September 30, 2023. We issued our earnings release yesterday afternoon, and I would like to highlight that we've posted today's deck on the Investor Relations page of our website. The supplemental deck as well as a copy of the earnings release and Form 10 Q for the quarter ended September 30, 2023 are available on this page. We will reference this information in our remarks today.

Speaker 1

We expect today's prepared comments from Ryan Nixon, Executive Chairman Zach Calameon, Chief Executive Officer and Mike McNeil, Chief Financial Officer, to last approximately 15 minutes to allow time for Q and A. 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 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 ks as supplemented by the risk factors in our most recent quarterly report on Form 10 Q. Also, this conference call, our earnings release Supplemental deck will reference 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.

Speaker 1

Now, I'd like to turn the call over to Ron.

Speaker 2

Thank you, Calvin, and good morning, everyone. In Q3 2023, Sinera generated $16,000,000 in net revenue, representing a 23% increase from the prior The Q3 of 2023 was the 8th record revenue quarter for Cinera and we continue to strengthen our sales infrastructure to support our growth strategy As well as focus on increasing our penetration in the hospitals where we have approvals and minimal revenue. I'd like to point out that by the end of the Q3 2023, we had generated more revenue than in all of 2022. Our loss before income Taxes narrowed from $3,200,000 to $1,100,000 year over year in Q3. We had a net loss of 1 dollars in Q3 compared to an adjusted EBITDA of negative $1,600,000 in Q3 2022.

Speaker 2

Mike will provide more details on our financial results in a few minutes. A key strategic milestone for the company in the Q3 was the acquisition of certain assets related to our Collagen Products business. The acquisition included all rights and ownership for human wound care uses For specific 510 cleared collagen based wound care products, including CELR8RX and HYCOL, this transaction has Had multiple financial and strategic benefits as you will hear about later. Turning to our product pipeline, subsequent to the end of the Q3, we had several key achievements. In early October, we realized our first sale of AlloCyte Plus advanced viable bone matrix.

Speaker 2

This product replaces our AlloCyte advanced cellular bone matrix product and is processed by a well established supplier with in house processing capabilities And affords us greater control of our product supply. Cinera has a sufficient supply to meet current demands and we believe measures are call. In addition to our first sale of AlloCyte Plus, the company also realized first sale of BioSurg advanced surgical solution in early November 2023. We believe both of these products are key in our growth initiatives. As you know, our ATM offering of common stock was paused at the end of Q1 and we did not currently have any plans to reactivate the ATM.

Speaker 2

Now Zach Fleming will provide more details on our business.

Speaker 3

Thanks, Ron. I'd like to start my remarks with a discussion of our accomplishments Over the past few years and how that has laid the groundwork for what we believe will be a very promising future for the company. In 2021, we acquired the assets Rochelle Industries and since that time we've achieved developing deep in house technical capabilities for research and development. Our efforts have proved successful with the launch of BioSurg and we currently have numerous other promising products at various stages of development. Over the past few years, we've executed on our strategy to expand our surgical bag, not only through the in house development of ViaSurg, But also through the acquisition of Syndia and a license agreement with Koch Biotech.

Speaker 3

We have also focused on expanding our approved locations And recently, we were approved by a national GPO leading to a 67% increase in hospital approvals Between March 31, 2023 to June 30, 2023, this has set the stage for what we believe will lead to growth in 2024. It will be driven by a focus on increasing CELR8 usage in additional specialties outside of ortho and spine in an expanded product portfolio with the additional of BioSurg, Multiple M and A opportunities and continued work by Rachelle to develop new products. With that overview, I would like to now discuss our most recent results. AlloCyte supply issues negatively impacted our sales in Q3, but we believe we have resolved the supply issue with our new supplier of AlloCyte Plus. It will take some time to reengage with potential customers who we had put on hold and these efforts have begun and we are currently focused on our sales team along with BioSurg.

Speaker 3

Concern over accelerated cost of facilities due to surgeons' significant use of the product negatively impacted growth in 4 territories. Resurgency had great value to, as they say, protect our work. However, procurement reduced our limited usage in a few of these instances. These territories as well as our business as a whole have been analyzed and appropriate adjustments have been made, including building stronger account relationships, Internal personnel adjustments, the identification of new selling 1099 partners and expanding our selling efforts to additional specialties. We have expanded our training to both our direct and indirect sales team regarding account management.

Speaker 3

In the trailing 12 month period, our products were sold in over 1,000 hospitals and ambulatory surgery centers across 32 states plus the District of Columbia. A 33rd state Missed our trailing 12 months revenue cutoff by less than $2,000 Our products were contracted or approved to be sold in over More than 3,000 hospitals and ambulatory surgery centers as of September 30, 2023, leveraging field intelligence and data analytics, We are looking at our data analytics, sorry, I got a little caught up there. Looking at our product sales mix, sales of soft tissue products were $13,600,000 and sales of bone fusion products were $2,300,000 in Q3. The 16% sales growth for bone fusion products for the quarter year over year is encouraging and we will continue to focus on continuing to build out these product lines. As Ron mentioned, we launched BioSurgent early November of this year at the American Association of Hip and Knee Surgeons Conference and our first sale was made shortly after that.

Speaker 3

We have ample supply of this product and are currently selling it through our distribution network. Initial feedback has been positive and though it will take time to add this product to our existing contracts, We believe there is a case for this product to be used in any surgery where our existing products are being used. Prior to launch, we were able to add BioSurg to 41 contracts. We will continue to build on these efforts as we market the product. In August 2023, as Ron discussed earlier, we completed the acquisition of certain assets related to our Collagen Products With this acquisition, we acquired specific 510 cleared collagen based wound care products, including CELR8Rx And high call, 9 patents and all of the sellers' patents pending for collagen products for human wound care uses and 5 trademarks.

Speaker 3

The acquisition gave us control of the manufacturing process for CELR8Rx and HyCall, which is expected to reduce costs. Additionally, we now have full rights to develop new collagen products for call. And new application formats. Looking at the financial impact, the transaction eliminates the royalty we paid on Celerate and HighCall to the sellers. The initial purchase for the acquisition was $15,250,000 Consisting of $9,750,000 in cash paid at closing, shares of the company's common stock and with an agreed upon value of $3,000,000 and 4 equal installments of $625,000 in cash.

Speaker 3

The sellers also are entitled to Received up to $10,000,000 in potential earn out payments as well as certain royalties and incentive payments on future products that are developed. The cash at closing was funded through a loan provided by Cadence Bank. Our gross margins increased in Q3 to 89% from 86% in Q2 2023. As a result of this acquisition and the elimination of the royalty we previously paid to the seller. I would now like to spend some time On the post acute value based strategy, which we have renamed Tissue Health Plus, as we have discussed before, we see significant opportunity to positively impact call.

Speaker 3

The post acute wound care market where costs are significantly increasing and a shortage of wound care experts paired with an aging population is materially impacting the quality of care and outcomes. We are planning to offer payers and other population risk bearing entities a first in kind integrated wound prevention and treatment program. We will bundle advanced products, technology and clinical delivery through value based contracts for this $35,000,000,000 plus market. We are exploring ways to accelerate the commercialization of this strategy or find appropriate partners to participate in the execution. Our spending year to date for Tissue Health Plus has been over $5,000,000 Now I will turn it over to Mike to discuss our financial results.

Speaker 4

Thank you, Zach. As Ron mentioned earlier, we generated revenues of $16,000,000 in Q3 compared to $13,000,000 during the Q3 of 2022, A 23% increase over prior year. For the 9 months ended September 30, we generated revenues of $47,300,000 compared to $30,500,000 during the same period In 2022, this represented a 55% increase over the prior year period. The higher revenues in 2023 were primarily due to increased sales of Soft tissue repair products and to a lesser extent bone fusion products is a result of our increased market penetration, geographic expansion, additional revenues as a result of the Syndi acquisition and our continuing strategy to expand our independent distribution network in both new and existing U. S.

Speaker 4

Markets. SG and A expenses for the Q3 were $13,900,000 compared to $12,100,000 during the Q3 of 2022. Year to date SG and A expenses through September 30 were $40,700,000 compared to $31,900,000 in 2022. The higher SG and A expenses in 2023 were primarily due to higher direct sales and marketing expenses, which accounted for approximately $6,800,000 or 77% of the Overall increase from prior year. The higher direct sales and marketing expenses in 2023 were primarily attributable to an increase in sales commissions The $5,900,000 is a result of our higher product sales.

Speaker 4

Year to date SG and A also included $800,000 of increased costs as a result of sales force management and operational support. R and D expenses for the quarter ended September 30, 2023 were $1,000,000 compared to $1,100,000 for the same period last year. Year to date R and D expenses were $3,500,000 compared to $2,300,000 for the same period in 2022. The higher R and D expenses in 2023 were primarily due to costs related to Precision Healing diagnostic imager and LFA. R and D expenses also included costs associated with ongoing development for Projects currently on our currently licensed products.

Speaker 4

We had a net loss we had a loss before income tax of 1,100,000 3rd quarter compared to $3,200,000 during the same period in 2022. Our year to date loss before income taxes through September 30 was $4,200,000 Compared to $9,800,000 in 2022, the lower loss before income taxes in 2023 was due to operating expenses increasing at a slower rate The net sales in addition to the benefit recorded as a result of the change in fair value of earn out liabilities. For the quarter ended September 30, we had a net loss of 1 point $1,000,000 compared to a net loss of $1,500,000 during the same period last year. For the 9 months ended September 30, we had a net loss of $4,200,000 compared to 3.9 during the same period last year. Our cash on hand at the end of the quarter was $6,200,000 a slight increase from $6,100,000 we had on hand at the end of the Q2.

Speaker 4

With that, I'll turn it back over to Ron for some closing remarks.

Speaker 2

Thanks, Mike. In summary, we are very, very proud of our continued record quarters as well as the introduction of another impactful proprietary product for surgery, named BioSurg. We will continue to work on executing our strategy to achieve improving growth rates and expect to be aided by ample supply of AlloCyte Plus. The key strategic acquisition of assets related to our Collagen business will improve our financial results by eliminating the royalty we pay as we continue to grow CELRIGHT in HyCall. This allows and this also allows us to develop new proprietary products based on these assets through Cinera's research That concludes our remarks, and we look forward to answering any questions you may have.

Speaker 2

Operator, we're ready to open the call for questions. Thank you.

Operator

Thank you, sir. Before we go to our phone lines, we've had a question sent in. Could you please add more color to the Celerate sales slowdown? And did I understand correctly that certain hospitals have capped Celerate purchases because surgeons were buying too much of it?

Speaker 3

Zack? I can take that. This is Zack. Yes. So we You're correct.

Speaker 3

There were a few hospitals where usage was outpacing what procurement preferred. And so they limited usage And that's where we've seen a little bit of a slowdown and we've responded by training up our sales representatives to make sure everybody's call. On the reasons that, that product should be used and that there's a initial evidence and additional evidence that can be provided to support the usage. And then as further, we wanted to we put people on to additional specialties, so you'd have a broader reach into the surgeon specialties opposed to being focused on maybe just a few specialties in the building and that helps to standardize the usage so that the hospitals Allow the continued usage.

Speaker 2

What I'd also like to say in addition to what Zach just said, Cinera has spent a lot of money on gathering the evidence, Clinical evidence on numerous studies, some of those of which have just recently come out to support what the value of our products XR in terms of the overall value proposition of lowering overall cost and improving outcomes. We see that data is being very We'll continue to do more studies to support that to just keep using evidence as our basis for why these products are so Tactile and surgery as opposed to just a preference by a surgeon.

Operator

Thank you. Ladies and gentlemen, at this time, we will be conducting our question and answer One moment please while we poll for questions. Thank you. Our first question is coming from Ross Osborne with Cantor Fitzgerald. Your line is live.

Speaker 5

Hey, guys. Congrats on the progress. Thanks for taking our questions. So starting off, and apologies for talking about

Speaker 3

a couple But would you

Speaker 5

provide some more color on the unique end market challenges you called out in your press release? Any foresight into those fading this year or early next?

Speaker 3

Did you say fading?

Speaker 2

Yes.

Speaker 3

Okay. Yes, we think We've achieved that. So in terms of those facilities where they were impacted, it was limited to just a few probably 4 markets. And it was an instance where the product was utilized beyond what procurement was comfortable, procurement pushed back on that spend and Very situational. And in those each of those instances, obviously, we've remedied that.

Speaker 3

And moving forward, we'll be able to pick up additional facilities to cover the Slight slowdown in those areas as well as regain those markets with additional effort, and that would include in servicing, making sure It's educated on the use of the product and of course additional surgeons as I mentioned a minute ago.

Speaker 5

Okay, got it. And then maybe turning to some of your recent product launches, how should we think about AlloCyte and Biosurgeons market opportunity in terms of annual dollars And adoption there realizing can be used in a variety of surgeries. But where do you think the low hanging fruit is? And how would you rate market awareness?

Speaker 3

I think the low hanging fruit is any patient where there's a risk for potential infection and that's Very broad. There's a lot of surgeries that there's a risk based on the patient's comorbidities, different Statuses of disease state, etcetera. And of course, all surgeries have some risk of a complication or infection. So what we're trying to do is place that Product in a prophylactic position where it could be used to prevent any of those types of infection events or complications. So you can imagine really every surgery could potentially be appropriate for that.

Speaker 3

And certainly, it's going to be focused on those patients where there's a risk factor And that would be where we would start. In terms of just the acceptability, I think that's a commonly used practice that In historical sense, they have used an antimicrobial wash of some type, usually one that's made in house by the pharmacy, But that's not very standardized and not consistent. So in recent years, there's been a few market entrants where they've come in and Offered a consistent manufactured wash like ViaSurg. Ours offers benefits that the others don't, Yes, such as it's a leave in rinse. It's also a product that has low cytotoxicity And it allows for leave in usage, means they don't have to wash it out with saline.

Speaker 3

So we think we have a market position there and of course an attractive value to the facility.

Speaker 2

And Ross, you may remember this from past data that we have provided. We have tested the biosurge based formula against numerous of our competitors and it outperformed them for biofilm kill As well as the kill of VRE, MRSA and other types of bad actors out there from the Microbes standpoint. And so therefore, we see significant market opportunity for this As Zach mentioned, and it will be a key core product for us as we move forward, we believe.

Speaker 5

Okay, great. Thank you for that. And then lastly, in terms of your aspirations to be a comprehensive loan company, is there any more color you can on the types of partners you're looking for that can add a value based component? And lastly, any update on Precision?

Speaker 2

Yes. So I didn't hear the very last part. I heard about what the profile of the partners that we would For the value based arrangement would be, but I didn't hear what you said after that.

Speaker 5

That's correct. And then just any update on Precision Imaging?

Speaker 2

Yes. Okay. So two things, I'll take that, Zach. Two things on that, Ross. 1, when you think about our overall value based Strategy, it involves everything through the post acute.

Speaker 2

So it go from the discharge at the hospital It would be down through the entire post acute, which would include the skilled nursing facilities, home health and then ultimately at home when they're not on a care plan a planned care. So what we would what we're looking at is who else could we team with that would really provide that level of service At the home and there's numerous home healthcare companies that we know exceedingly well that are interested in the value based play. We also know that this is a focus on skilled nursing facilities because as you know with the passing of legislation for Snip at home and other programs like that, everybody is looking to be able to pick up efficiencies and lower cost and improve outcomes. So there's going to be way more focus on that as we move forward with the value based arrangements being front More and more CMS dollars are being allocated to these value based arrangements. So we see fee for service shrinking We've CMS and numerous other payers have responded by saying we have got to get a value based strategy for these difficult Specialties like wound care where they are having very high increasing rates And not great outcomes for their patients.

Speaker 2

So people that would be in the snip, in the post acute Well, people that bring technology or other things or payers that understand the risk that they're taking Could even be a part of that as well as providers of the services themselves. So we've got a broad array of Potential partners and we've obviously been in discussions with numerous of these over the last year as we prepare. And then secondly on Precision Healing. Precision Healing on its on the lateral flow assay and on the imager, We're going to different pathway with that and it's a pathway that will achieve more from the standpoint of an FDA approval. And so we've taken our time and decided that let's get the better pathway that will achieve greater outcome and greater potential acceptance of the product.

Speaker 2

So that's what we're doing.

Speaker 5

Okay. Sounds great. Appreciate you addressing our questions.

Speaker 3

You bet.

Operator

Thank you. Our next question is coming from Ian Cassell with ISN. Your line is live.

Speaker 6

Maybe as a follow on to Ross' question, you mentioned in the presentation that you've spent about $5,000,000 on the Tissue Health Plus strategy Year to date, do you expect that number to increase, decrease as you start to commercialize that over the next 24 months?

Speaker 2

Yes. For Cinera itself, we don't expect that number to increase. We would expect that number to decrease over the next 12 to 24 months. And that would be by executing our strategy with the right kind of partners that would start to carry some of that load themselves. Okay.

Speaker 6

And maybe getting back to BioSurg, I know you just launched BioSurg back in well, just earlier this month. Can you give us some color on sort of the Just the early indications you're getting from the surgeons as you launched it.

Speaker 2

Yes. Zach, would you mind? Sure.

Speaker 3

Absolutely. Great indicator that we got 41 approvals before launch. So that was really encouraging to see that these hospitals as well as surgeons So like there was a need and there was demand and so we were able to get the approval. And then since launch the American Association of Hip and Knee Surgeons called AUKUS as we call it, Really great response. Just the booth was packed every day.

Speaker 3

There was a lot of questions. We had our scientists in the booth. We had our medical science team in the booth And a lot of interest in terms of just the ability for this product to have an impact on their surgeries. And That momentum has continued. We've seen a lot of uptake, a lot of surgeons.

Speaker 3

We've also seen a lot of distributors asking to Add that product into their bag and their product mix. So we're really excited about it.

Speaker 6

Thanks for that. And maybe When you think about when investors think about BioSurg, what is the kind of type of revenue per surgery on a product like that? I know Accelerates Several $100 per surgery or somewhere around there. How should we think about biosurge? Is that $30 a surgery, dollars 100 to $200 what range should we be thinking about?

Speaker 3

Yes. We have just started pricing on that in those first facilities and I'd tell you We're averaging somewhere around $200 a unit right now And that unit is 1 liter and that would be yet to be determined how many they use per surgery.

Speaker 6

Okay. Excellent. And

Speaker 3

that's a pretty modest sample, but I just would share that with you here early.

Speaker 6

Okay. Thank you. That's helpful. And maybe switching to AlloCyte, how would you kind of characterize the demand you're seeing now that you have supply again for that product? I mean, is it is the demand you're seeing kind of back to the levels you saw before the supply disruption?

Speaker 6

And maybe just give us an indication of that.

Speaker 3

Yes, the demand is there. It's just a little bit of a process to get back added to facilities. We did have to be Create the line extension AlloCyte Plus and that needs to be added to the contract. So that's really the biggest kind of stop gap of why we haven't I've gotten back completely where we were, but we are selling. We are seeing a lot of pickup to that product.

Speaker 3

So we're really pleased with that. Excellent. Thank you.

Speaker 2

You're welcome. Thank you, Ian.

Operator

Thank you. Our next question is coming from Stephen Reid with Tisch Investments. Your line is live.

Speaker 7

Hi, guys. I think I just want to follow on Ian and Ross' question. They hit most of them, but mine will be around Precision Healing on the imaging, what you've learned, if you've learned anything from the FDA and then what the process you see going forward on the lateral flow essay submission and approvals?

Speaker 3

Is Ron still there? Did I lose everybody? Hello?

Operator

It appears Mr. Nixon's line has gone down for a moment, but he is dialing back in as we speak.

Speaker 3

Okay. Well, if you want to repeat that real quick, Steven. I was thinking Ron was going to feel that, but if you'd repeat that, I'll answer.

Speaker 7

Yes, sure. Really around the Precision Healing, what you've learned so far from your submission, if you've received any feedback? And then going forward on the lateral flow assay or molecular assay, where you're at with that, what you've learned and What the process would be for you to go forward with that technology?

Speaker 3

Yes, we are working closely with the FDA on The multispectral imager, so we've gotten feedback on that and working for another submission and should have that feedback again shortly. So we're working with them to resubmit. LSA, we have not announced, so I'm going to withhold comments on that particular component.

Speaker 7

Okay. And have you received any feedback yet on going out looking for your appropriate partners For the Tissue Health Plus, is the imaging and diagnostics a critical piece of the process before you see that certainly materialize?

Speaker 2

Yes, we're I'll take that. This is Ron. The interest is high out there because everybody recognizes the potential From our perspective, we believe that the market is much greater than what is reported And the market because it's hard to capture the complete cost of wounds because of all the comorbidities that they've got. But with most of the people that have the payer data, they understand that the complications from wounds Related to diabetes, related to COPD, CHF, mobility with pressure ulcers, all types of things like That when you look at the all in costs, cost of amputation, cost of readmission back into the hospital, Cost of these complications that may be associated with diabetes, but not labeled as the wound. When you really look at all of those And you think about our prevention program and then better solutions for treating these and avoidance of these Having people go to the wrong location to get their rooms taken care of, meaning higher cost centers, all of that is going to be very appealing to the Audience that we're talking to.

Speaker 2

So at this time, we're not prepared to talk about who those partners are, but there are numerous partners out there that would be interested And joining us with the effort that we've put in over the last many years of building this platform.

Speaker 7

Thanks, Ron and Zach. I appreciate the update.

Speaker 2

You bet. Thanks. You're welcome.

Operator

Thank you. Our next question is coming from Neeraj Gupta with GCI Partners. Your line is open.

Speaker 8

Hi, good morning folks. A couple of questions, all related to BioSurg. Could you guys just speak more broadly on Biosurge? My understanding was that the product was applicable to virtually Any surgery involving sealing the wound cavity? Zach, Ron, could you guys just speak a little bit to just the broadness of the potential applicability for biosurgeons and products?

Speaker 2

Yes. I think let me clarify one thing. I'll let Zach answer, but it is to kill the bacteria in the wound bed, Not to seal anything, it's not a sealant. Right.

Speaker 5

Yes.

Speaker 2

But I'll let Zach answer the question about the opportunity.

Speaker 3

Yes, I think you're right, Niraj. I think you could imagine this product being used on any surgery. So if you are thinking about the OR, the OR is a sterile environment. However, microbes do get introduced inadvertently. And so they want to protect that surgical Margin, the area where they've been doing the work for, say an implant or any other type of surgery you might think about.

Speaker 3

And so they typically will wash that Area throughout the surgery, usually with saline and then they will close with a product like this, where its antimicrobial nature and cleanses or Sterilizes the field that they were working in and then that would reduce surgical site complication.

Speaker 8

Okay.

Speaker 2

We think that the Niraj, just to add to that. We think the data that we have Historically already gathered on this product doing a number of studies, one of which has not come out yet, but will be out shortly that was used in the post acute market. I think you'll see that the applicability to that is going to yield lots of results because All of the surgeons are always interested in making sure to minimize the potential from surgical site infection. And so we believe that they have released that study that was our retrospective study It is on the focus on reduction of surgical side infections, not related to BioSearch, but to Accelerate. And so it's a perfect complement to Celerate, but it also is standalone because of just the impact it's got On microbes in terms of its kill rate.

Speaker 2

So I think there's just significant opportunity to this product as we move forward.

Speaker 8

So I guess the thought then is initial strategy is to leverage your existing presence With CELERATE, as you've done with the 40 some odd locations, but as we think longer term, the strategy in terms of Marketing and surgeon penetration is much broader than what you would What your sell in today is for Celerate, is that fair?

Speaker 3

I think it is. Yes, I think We're learning about the product today in terms of who has the appeal for the product. And our impression is, yes, it could be broader than CELLERATE because it's Really for any surgery as opposed to those that maybe are just people who have trouble healing with, CELLARATE. CELLARATE has a massive market, obviously, because They don't aren't able to predict always which patients will have complications or challenges healing. So we've seen CELR8 be a tremendous grower because There's so many patients that are benefited from it.

Speaker 3

And we think that Biocerge is very similar in that respect that it's going to complement the healing, it's going to complement the outcomes of the patient. And so when you think about the doctors' trouble of trying to keep patients healed post surgery, both these products Serve a great purpose to do that. They allow that patient to have low microbes and then increase the biologic call. So it's a nice one two punch. You clean the area and then you complement the healing with CELLARATE.

Speaker 8

Thanks, Zach. So two quick ones related to that. So one on Biosurrage, you talked about Rough pricing parameters per liter, do you expect typical surgery would involve potentially more than 1 liter Of usage?

Speaker 3

Still learning, but yes, there are surgeries that will require more than 1 liter. And it's It's typically based on size, but certainly if you had a patient that was a revision surgery where there's already an infection, that could be a surgery where they could potentially use Some additional product than 1 liter.

Speaker 8

Okay. And then the final one was just thinking about bundling pricing and just Kind of maximizing the growth. Your tool bag is growing, but you've got like 2 outstanding products, Encelerate And BioSurg in terms of kind of the data about the efficacy and whatnot, Could you just speak to like how does it impact your ability to more broadly penetrate the combined product offering by having both to go to market with and how does that help reinforce the value proposition accelerate As you think about ultimately where we are in the life cycle of that product relative to where it can ultimately get to?

Speaker 3

Well, I think it just really starts more conversations because of the broad appeal. We saw this in the booth at hip and knee surgery conference. There's just a nice starting point either product and then you can end the conversation with the other product. And I think when you're able to broaden the conversation To meet the needs of the surgeon and the patient, I think that's a good thing. So having BioSurg, it really talks about the antimicrobial Action and reducing those microbes in a surgery, that then starts a conversation as in.

Speaker 3

Once you finish that, then you'd want to start to support the healing And that's where Accelerate would then enter the picture in the conversation. So I think it's really beneficial. And then of course for the hospitals, they really appreciate the sole sourcing of products Like this, so they don't have to go to multiple vendors in order to get these products. So it certainly helps with our strength in the hospital, In our staying power because they then say, scenarios of an approved vendor, we have great products, they support the cases well, etcetera, etcetera. And Puts us in more situations, more shots on goal.

Speaker 2

Yes. And to add to that, Neeraj, I believe that What we're demonstrating not only with Accelerate, but any of the new products that we've come out. We've said from the very beginning of Cinera that we're to provide advanced solutions that are proprietary for our surgeons, our hospitals, our Post acute market, everywhere we are, we want to provide unique solutions that are going to do 2 things. We've stayed the course on this from the very beginning, Improve outcomes at lower costs. And if we can continue to do that and we demonstrate that with multiple products, we believe that the brand scenario will actually We continue to expand where we get more and more confidence from whoever our customer is that they know what they're doing.

Speaker 2

They're backed by strong research. They've got a lot of capabilities to be able to come in and impact what we do to achieve those two goals of lowering cost and improving outcomes.

Operator

Thank you both.

Speaker 2

Thank you, Neeraj. You're welcome.

Operator

Thank you. Our next question is coming from Bill Brewster, who is an investor. Your line is live.

Speaker 3

Good morning, gentlemen. Thank you for your time.

Speaker 5

I wanted to ask a question just going through the commission structure How this business works from an SG and A perspective, should I be thinking that The commission like the real question that I have at the core of it is what kind of operating leverage are we going to get on the sales base You know, 3, 4, 5 years out. And I guess that the question that I keep coming up with is, how should I think about

Speaker 2

how the commissions are paid here? And are they recurring commissions?

Speaker 5

Or are these Are paid here and are they recurring commissions or are these commissions typically that are paid out and then Sort of decline over the lifecycle of a relationship with a hospital or a doctor?

Speaker 2

Yes. So Bill, we don't actually call. Any of the information on our commissions separated out from SG and A, but what I would just tell you is there are always going to be As we grow this business to think about the leverage of your SG and A expenses relative to the growth. So we As we see more growth, you will see more reduction and or what I would just say, improvement in efficiency from that. Yes.

Speaker 2

But you're as we expand, as Zach mentioned, we were just short of going into the 33rd state. As we continue to expand, you're still going to be having a similar construct where you got people that you're paying in the field. There's going to be a reward system for them achieving goals, which means commissions and that's just the way that that will be moving into perpetuity. But it doesn't mean we might not be able to gain some additional efficiencies, where we've also gained efficiencies is by doing things that accomplished our margins Continuing to go up. And so that helps us as well in our most as we just explained earlier in the call By buying in the royalty stream that we were paying out.

Speaker 2

So that's where we see how we're picking up our efficiencies.

Speaker 5

That makes sense to me. That was my question. So I appreciate your answer.

Speaker 2

Yes. Thank you, Bill. Appreciate it.

Operator

Thank you. As we currently have no further questions in queue at this time, I will hand it back to Mr. Nixon for his closing comments.

Speaker 2

Yes. Thank you very much. We appreciate everybody being on the call today. Thank you for all the very good questions that you've asked. We're enthused about where we're headed with the company.

Speaker 2

And as I think all of you know, we're in it for the long term. We want to really build this around our goal of lowering cost and improving outcomes. We want to reach every Possible ASC or hospital or any place that we can utilize our proprietary products And our services as it relates to our post acute. So thank you guys for all the support. We appreciate that.

Speaker 2

And that will be the end of our call. So thank you all again for being a shareholder of Cinera.

Operator

Thank you, ladies and gentlemen. This concludes today's conference and you may disconnect your lines at this time. And we thank you for your participation.

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Earnings Conference Call
Sanara MedTech Q3 2023
00:00 / 00:00
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