August 31, 2022 | 11:50 AM by Jay Kunstman |

Sanara MedTech (SMTI) – Will Growth acCELLERATE?

It’s been over a year since we’ve covered this small cap medtech, so with recent earnings out of the way coupled with solid share performance, I thought I would refresh the potential bull case. Senara MedTech (SMTI) is described as a provider of products and technologies for surgical and chronic wound care. The company’s solutions are offered in all types of care settings, from acute (hospitals) to post-acute (wound care clinics, physician offices, skilled nursing facilities, home health, and hospice).

Its suite of products include CellerateRX, a wound healing product that can be used across many different types of surgeries, from orthopedic to vascular to podiatry to cardiovascular. Other products include HYCOL Hydrolyzed Collagen, BIAKŌS Skin and Wound Cleanser, BIAKŌS Skin and Wound Gel, FORTIFY TRG Tissue Repair Graft, and FORTIFY FLOWABLE Extracellular Matrix.

As far as the total addressable market, the company has said that in the U.S., $28B+ is spent on the treatment of surgical and chronic wounds annually, driven by surgical wounds and diabetic ulcers. Narrowing down the market opportunity, there are approximately 8 million people who suffer from wounds annually in the U.S., and if SMTI’s average selling price for CellerateRX of $725 is applied, there is an annual revenue opportunity of $6B.

The company reported its Q2 results on August 15th in which total revenue came in at $9.7M, representing growth of 54.1%. It should be noted that while the company has a handful of different products, CellerateRx is the current focal point. At the end of Q1, the product was approved to be sold in 1,250 locations. This number jumped in Q2 to 1,580. CEO Zachary Fleming said on the conference call that they believe there are approximately 12,000 hospitals in ambulatory surgery centers in the United States for CellerateRX surgical could potentially be used.

Cantor Fitzgerald, in their post-earnings note, said they expect the company to continue to drive penetration in existing hospitals/ASCs and add new ones, driven by the company’s expanded and matured sales force. Speaking of the sales force, management indicated they now have a total of 35 field sales managers employed. This is an increase from Q1 where they had 31 and up from 26 a year ago.

Recent Acquisitions

On the conference call, Sanara announced that they completed their merger with Precision Healing, which designs the Precision Healing Imager to address gaps in wound care in which diagnostics of key tissue and biomolecular characteristics were not utilized. The company developed the imager and biomarker assay to provide real-time data for key wound characteristics that can guide clinical treatments for faster healing. Prior to this merger, Sanara already owned 25.7% of the company.

“We believe the data collected by the Precision Healing platform will help clinicians rapidly and accurately diagnose the root cause of the patient’s wound and develop tailored treatment protocols that can be adjusted as more information is gathered. The Precision Healing Imager 510(k) is being prepared for submission to the FDA and is expected to be filed early in Q4. As it relates to the complete WounDerm offering, we continue to advance discussions with our potential payer partners that could benefit from the use of our comprehensive offering.”

In addition, Cantor Fitzgerald would say that if cleared, Precision Healing’s technology will round out SMTI’s portfolio, allowing the company to provide a comprehensive platform to diagnose, treat, track, collect and analyze data on the healing progression of wounds across the continuum of care.

Sanara also recently announced that it closed on its acquisition of Scendia Biologics, a supplier of orthobiologic and soft tissue focused products used in a wide variety of surgical specialties. Prior to the acquisition, Scendia generated revenue in eight states at or above $50,000 per year, where Sanara did the same. Sanara believes that there’s an opportunity to expand Scendia sales into the additional 18 states where Sanara generated revenue above that level.

“Our ultimate goal is to expand the geographic footprint for all Sanara and Scendia’s products across all 50 states. Scendia’s unaudited full-year 2021 revenue was $8.3 million and unaudited trailing 12-months revenue was $11 million as of May 31, 2022. For the same trailing 12-months period, sales of Sanara products to Scendia were $1.5 million. I would also note that we had to expect the acquisition to be accretive to Sanara’s EPS in Q3 of 2022.”

Other Catalysts

Finally, Sanara is developing a dermatology technology platform based on affiliations with dermatologists to provide early and convenient wound care through Teledermatology within its WounDerm segment. Fortune Business Insights estimates the global Teledermatology market will grow from $14.3B in CY21 to $68.5B in 2028, representing a CAGR of approximately 25%. Accordingly, analysts are excited to see SMTI enter into this market, further differentiating the company from other wound care companies.

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