Sizing Up Sanara MedTech

The reality will not be all the time stunning, nor stunning phrases the reality.”― Lao Tzu, Tao Te Ching.

At this time, we shine the highlight on a small medical gadget concern referred to as Sanara MedTech Inc. (NASDAQ:SMTI). The shares have staged an enormous rebound because the finish of October. The inventory doesn’t have a lot of an institutional following regardless of a good sized market cap. Income development is spectacular, and the corporate appears heading in the direction of profitability in FY2024. An preliminary evaluation follows under.

Firm Overview:

Sanara MedTech is headquartered in Fort Price, Texas. This small medical know-how firm is targeted on creating and commercializing transformative applied sciences to enhance medical outcomes and scale back healthcare expenditures within the surgical, persistent wound and skincare markets. The corporate’s merchandise are offered in over 30 states and 1,000 services now. The inventory presently trades close to $37.00 a share and sports activities an approximate market capitalization of $300 million.

The corporate presents quite a lot of merchandise for surgical and wound care merchandise led by CellerateRx. It is a hydrolyzed collagen that’s utilized to a surgical wound and aids within the pure wound therapeutic course of. The corporate additionally not too long ago launched BIASURGE. It is a no-rinse irrigation answer that comprises an antimicrobial preservative efficient in opposition to a broad spectrum of pathogenic microorganisms. BIASURGE obtain FDA clearance in April of this 12 months. ALLOCYTE Plus, a human cells, tissues, and mobile and tissue-based merchandise equal additionally launched this summer time.

In August of this 12 months, the corporate accomplished a small acquisition that gave Sansar management of the manufacturing course of for each CellerateRx and HYCOL. That is anticipated to cut back prices and eradicate the small % of royalties Sanara was paying on each of those merchandise.

Third Quarter Outcomes:

The corporate posted its Q3 numbers on November thirteenth. Sanara MedTech delivered a GAAP loss per share of 13 cents. Revenues did rise almost 23% on a year-over-year foundation to $16 million. Nonetheless, that was almost $3 million mild of expectations. Sanara had a internet lack of $1.1 million, a slight enchancment from its internet lack of $1.5 million in the identical interval a 12 months in the past.

Sanara’s merchandise had been contracted or authorized to be offered in additional than 3,000 hospitals/ambulatory surgical procedure facilities on the finish of the third quarter. For the primary 9 months of this 12 months, Sanara noticed total gross sales of $47.3 million, representing a 55% improve from the identical interval a 12 months in the past.

Analyst Commentary & Steadiness Sheet:

I can discover just one analyst agency that gives protection on Sanara MedTech, and that’s Cantor Fitzgerald, who reiterated its Purchase score and $49 worth goal on the inventory three days after third quarter outcomes had been disclosed.

Simply over three % of the excellent float within the shares are presently held brief. There was no insider exercise on this fairness in simply over a 12 months now. Sanara MedTech ended the third quarter with simply over $6 million in money and marketable securities in opposition to simply over $9 million in internet long-term debt in line with the 10-Q filed for the quarter.

Verdict:

Sanara MedTech had a lack of 87 cents a share in FY2022 on almost $46 million value of income. The one analyst agency that has projections for Sanara MedTech sees losses falling to 64 cents a share in FY2023 on slightly below $64 million value of gross sales. They see the corporate having a revenue in FY2024 of 52 cents a share as revenues rise to only north of $85 million.

The corporate is delivering strong income development and appears like it’s transferring shortly in the direction of profitability. The challenges with recommending SMTI for funding embrace it has little protection on Wall Road so there actually is not a “consensus” estimate for earnings and gross sales development aside from Cantor’s. As well as, the corporate doesn’t even have an investor presentation I can discover, nor does administration present a gross sales breakdown by product. Extra importantly, the inventory has risen by 40% because the finish of October and now fetches 70 occasions Cantor’s estimate of FY2024 earnings.

Due to this fact, I’ve no advice round Sanara MedTech Inc. aside from to say it’s a development story value watching. After the corporate posts a few extra quarters of outcomes (and hopefully will get further analyst protection and supplies extra granular element on its enterprise), we’ll circle again on this small cap title.

Keep in mind that essentially the most stunning issues on this planet are essentially the most ineffective.”― John Ruskin.