Good day, and welcome to the Sanara MedTech Second Quarter of 2025 Earnings Conference Call. Please note that this conference call is being recorded, and a replay will be available on the Investor Relations page of the company's website shortly. The company issued its earnings release earlier today. Before we begin, I would like to remind everyone that certain statements on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For more information about the risks and uncertainties involving forward-looking statements and factors that could cause actual results to differ materially from those projected or implied by forward-looking statements, please see the risk factors set forth in the company's most recent annual report on Form 10-K as supplemented by the risk factors in the company's most recent quarterly reports on Form 10-Q. This call will also include references to certain non-GAAP measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings release available on the Investor Relations portion of our website. Today's call will be hosted by Ron Nixon, Executive Chairman and Chief Executive Officer; and feature additional remarks from Seth Yon, President and Chief Commercial Officer; Sam Muppalla, President and Chief Executive Officer of Tissue Health Plus; and Elizabeth Taylor, Chief Financial Officer. I would now like to turn the call over to Mr. Nixon. Sir, please go ahead.

Thanks, operator, and welcome everyone to our second quarter of 2025 earnings call. Let me outline the agenda for today's call. I'll begin by discussing our financial and operational highlights from the second quarter, followed by a discussion of our strategic priorities and key areas of focus for the balance of 2025. Seth will update you on the primary drivers of growth in our Sanara Surgical segment and the progress made with respect to our commercial strategy. Sam will share an update on the recent progress made in our THP segment. Lastly, Elizabeth will review our quarterly financial results in further detail before we open the call for questions. With that, let's begin with a review of our second quarter financial highlights. Our surgical team delivered net revenue of $25.8 million in the second quarter, representing 28% growth year-over-year. This impressive performance is a testament to our commercial team's pace of execution on our growth strategy as well as the strong demand we're seeing for our products in the market. Our net revenue growth was driven primarily by sales of our soft tissue products, which increased 28% year-over-year to $22.7 million. Specifically, sales of both our CellerateRx Surgical and BIASURGE products fueled our performance. We also saw significant contributions from sales of our bone fusion products, which increased 25% year-over-year to $3.1 million, driven by growth across most of the products in the portfolio. In addition to achieving strong sales growth in our Sanara Surgical segment, we enhanced our gross margins and realized significant operating leverage as well. This enabled us to deliver notable improvements in the profitability profile of the Surgical segment on a year-over-year basis. Specifically, we generated approximately $500,000 of net income in the second quarter of 2025, an improvement of $2.7 million. We also generated $4.7 million of segment adjusted EBITDA, an increase of $3.3 million or 239%. Our Surgical performance helped to offset continued investment in our THP segment and positioned us to drive significant year-over-year improvements in our profitability profile on a consolidated basis, including a 43% improvement in our net loss and a 350% improvement in our adjusted EBITDA. Lastly, we were pleased to generate $2.7 million of cash flow from operating activities during the second quarter. Turning to our operational highlights in the second quarter. First and foremost, our surgical team delivered strong performance across all key metrics of the commercial strategy, as Seth will discuss further. In addition to our commercial team's progress, we made strides in our initiative to expand the portfolio of clinical evidence related to our two primary products, CellerateRx and BIASURGE. During the second quarter, four new clinical manuscripts focused on the use of our products were submitted to key academic journals for review. Expanding our portfolio of clinical evidence is an important component of our strategy to educate the market on the benefits and value that we believe our products bring to the treatment of surgical wounds. We look forward to discussing the results and findings presented in these clinical manuscripts once they are published. We also continue to advance our new product initiatives. As a reminder, in January 2025, we acquired the exclusive U.S. marketing, sales and distribution rights to two products for their use in managing periarticular fractures caused by a traumatic incident. These two products are: OsStic, a structural mechanically enhanced bioadhesive bone void filler and an adjunctive fixation technology. When acquiring the rights to these products from their developer, Biomimetic Innovations Limited or BMI, we structured the agreement with key product development, clinical and regulatory milestones. I'm pleased to report that BMI achieved two of these key development milestones during the second quarter. Based on this progress, we remain on track to launch OsStic during the first quarter of 2027, as we stated previously. Our commercial team is excited by the prospect of commercializing OsStic to address the more than 100,000 periarticular fractures that occur in the United States each year. Last in our THP segment, we initiated our pilot program with a wound care provider group during the second quarter as anticipated. We also completed the acquisition of CarePICS, which is an important part of our THP technology platform and continue to engage with both payers and potential financial partners. I'd now like to provide some thoughts on our priorities for the balance of the year, beginning with our THP segment. As Sam will discuss in greater detail, we made significant progress on our THP-related initiatives during the first half of 2025. In parallel, we have actively managed our expenses in this segment to deliver against our stated expectations. For example, on our most recent earnings call in early May, we shared that we anticipated cash investment in our THP segment of $7.5 million to $8.5 million during the first half of the year in addition to the $3.65 million paid in connection with our acquisition of CarePICS. We ultimately came in at the low end of the range with an actual THP-related cash investment of $7.5 million for the first half of 2025 in addition to the $3.65 million paid in connection with our acquisition of CarePICS. Looking ahead, we're mindful of the existing level of cash used to support our THP-related initiatives. I want to be clear that actively managing expenses by reducing the level of cash investment in our THP segment in the second half of the year 2025 to preserve capital is absolutely a priority for our organization. Specifically, we expect our level of cash investment in this segment during the second half of 2025 to be between $5.5 million and $6.5 million. In parallel, we're working to evaluate and pursue the best path forward for THP for the benefit of our company and its shareholders. As we announced in our earnings press release this morning, we have initiated a formal process to evaluate strategic alternatives for THP. We have also engaged a strategic adviser to assist in conducting this process. The intention of this process is to explore a full range of strategic alternatives with the ultimate objective of maximizing shareholder value as well as to identify like-minded partners to support the future growth of this business. Importantly, the company does not anticipate making material cash investments in THP after year-end. While we're limited in our ability to communicate while this process is underway, we look forward to sharing future updates when appropriate. Stepping back, our Surgical segment performance in recent quarters has enabled us to achieve significant commercial scale with net revenues of $97.2 million and segment adjusted EBITDA of $14 million for the trailing 12 months ended June 30, 2025. We're off to a strong start in the first half of 2025 with 27% growth in net revenue over the first half of last year, combined with significant improvements in the profitability profile of Sanara Surgical. Our Surgical segment reported a net loss of $108,000 during the first half of 2025. And we generated $7.4 million of segment adjusted EBITDA, an increase of $4.9 million or 193% year-over-year. Lastly, on a consolidated basis, we generated approximately $700,000 of cash flow from operations over the first six months of 2025 compared to cash used from operations of $3 million over the same period in 2024. In the second half of 2025, we are focused on executing the strategies outlined for each of our business segments with the goal of delivering value to all of our stakeholders as we work to address significant unmet clinical needs in the health care industry. We're committed to preserving capital as we position Sanara MedTech to deliver strong, sustainable growth and long-term value creation. I'll now turn it over to Seth to discuss the commercial execution in our Sanara Surgical segment.

Thanks, Ron. I'd like to update you on the progress made by our commercial team with respect to three key initiatives that have been central to our recent performance and future growth. As a reminder, these are the three initiatives: one, developing our relationships with independent distributors; two, selling into new health care facilities; and three, penetrating the existing health care facilities we serve. Beginning with the first of the three commercial initiatives, our team has made strong progress in expanding our distributor network by identifying, engaging and contracting with quality distribution partners. At quarter end, we had agreements in place with more than 400 distributors compared to more than 300 this time last year. Given this significant expansion in our distribution network, our emphasis has increasingly shifted to onboarding our recently contracted distributors and training their reps. Building relationships selectively with high-quality distributors and pursuing a strategic approach to targeting, training and partnering with their reps is one of the key ways our commercial team is positioning Sanara Surgical for strong, sustainable long-term growth. Turning to our second commercial initiative. We continue to add new health care facility customers. Specifically, we expanded our customer base to include more than 1,400 health care facilities for the trailing 12 months ended June 30, 2025, compared to more than 1,100 facilities in the prior year period. Our traction on this front continues to benefit from our strategy to leverage the local relationships of the distributor reps that we partner with as well as the significant progress we have made in expanding the number of facilities that our products are approved or contracted with to include more than 4,000 across the U.S. With respect to our third commercial initiative, we increased our penetration of the existing health care facilities we serve by growing the number of surgeons using our products within these facilities. As I mentioned on our last earnings call, this represents one of the largest untapped areas of growth for our organization as the existing hospitals we serve remain vastly underpenetrated. I'm pleased to report that we are experiencing strong growth in our surgeon user base in the second quarter on a year-over-year basis. As a part of this effort, we continue to see success in adding new surgeon users outside of our traditional specialties of spine and orthopedics, including adoption of Sanara Surgical products by plastics, general and vascular surgeons. To be clear, our rapid pace of progress in expanding our surgeon user base would not be possible if surgeons did not appreciate the compelling clinical benefits of our key products. Our product's ability to facilitate improved outcomes for high-risk patients represents one of the primary contributors to the strong sustainable revenue growth and significant commercial scale that our Sanara Surgical team has achieved in recent years. Lastly, with respect to BIASURGE, our advanced surgical solution used for wound irrigation, we continue to be pleased with the rapid growth we have experienced in this product during the second year of its commercialization. As I've mentioned in the past, virtually all of our surgeons we serve use some form of wash, often a traditional saline solution to cleanse and prepare the surgical wound bed. With this in mind, we continue to see success in introducing BIASURGE to our existing customers and their facilities as a product that is complementary to the procedures in which CellerateRx is used. In tandem, our team remains focused on securing more approvals for BIASURGE at the existing facilities we serve in order to facilitate its long-term growth. In summary, we believe our track record of strong sales performance and commercial execution demonstrates that we are pursuing the appropriate commercial strategy to capitalize on what we consider to be the vast underpenetrated market opportunity that remains ahead of us. I'll now turn it over to Sam to provide an update on Tissue Health Plus.

Thanks, Seth. We are excited to discuss our pace of progress, both during this past quarter and in recent weeks. As a reminder, during the initial months of the second quarter, we completed the acquisition of CarePICS and its technology stack, which forms the foundation of our THP technology platform. We also announced the availability of our THP technology platform, which included the THP Copilot mobile app designed to standardize wound care and reduce administrative burden for wound care clinicians across all care settings. On the heels of these accomplishments, at the end of the second quarter, we began our pilot program as planned with a provider group that delivers chronic wound care and serves six states. Our pilot began at one of the provider's locations. There, the provider's clinical and administrative teams are using THP Copilot integrated with the EMR to perform home-based wound care. As a reminder, THP Copilot consists of a mobile app designed for use by clinicians, which integrates both our Software as a Medical Device and Clinical Decision Support systems. These tools aid clinicians' ability to deliver precise and personalized wound care while not replacing their professional judgment. Supported functionality includes aggregating patient and appointment context from the EMR, encounter preview and preparation, patient and wound assessment with imaging, intervention and protocol guidance, follow-up care guidance for orders including DME, reimbursement guardrails and coding optimization, and progress notes assistance, integration with the EMR to post-encounter details. The goal of this pilot program is to help us further validate and optimize our THP technology platform while gaining real experience in its use with the provider in a real-world clinical setting. The provider has begun conducting the first patient encounters as part of this pilot program, and we have been pleased with the initial performance of our THP technology platform to date. We believe our THP technology platform's end-to-end platform architecture and functionality are performing as designed, delivering a groundbreaking experience and bringing our vision to life. This pilot program is already providing us with information to refine our THP technology platform and its implementation. As anticipated, we have obtained valuable insights related to the nuances of EMR integration, standard of care customization, user experience enhancements and reimbursement adjustments. Concurrently, the client is taking us to hospital systems and home health agencies. This has further clarified our collaboration network functionality. Furthermore, we have enhanced our implementation playbook in response to insights gained from this pilot experience. In general, we are very encouraged by the providers' reception to THP Copilot. In addition to this progress related to our wound care pilot program, our team also continues to raise the awareness of our THP offering in the provider market. Most recently, in July, we showcased our THP approach at the American Board of Scientific Medicine's Annual Scientific Meeting. In addition, the THP executive team and the Advisory Board were highlighted as speakers and panelists at the 2025 Advanced Wound Care Summit in Boston. As a participant on the conference's executive panel, our Chief Scientific Officer, Dr. Ira Herman and fellow panelists discussed how innovations like AI, telemedicine and wearable technologies are reshaping the delivery of care. Through these and other initiatives, we continue to build a strong pipeline of interested providers. Looking ahead, we are preparing to expand the scope of our pilot program to include additional practitioners and locations in September, marking an important milestone for the THP team. In addition to these efforts, we continue to focus on launching a pilot program with a payer during the fourth quarter of this year. To that end, we are in active discussions with a multistate Medicare Advantage payer. We plan to leverage this payer pilot to establish a payer pricing and complete the build of our payer platform.

Thanks, Sam. Given that Ron covered our revenue results for the quarter, I'll begin with gross profit. Note that all percentage changes referenced throughout my remarks are compared to the prior year period. Second quarter gross profit increased $5.7 million or 32% to $23.9 million. Gross margin increased approximately 250 basis points to 93% of net revenue, driven primarily by increased sales of soft tissue repair products and lower manufacturing costs related to CellerateRx Surgical. Second quarter operating expenses increased $2.9 million or 14% to $23.9 million. The change in operating expenses was largely driven by a $2.6 million or 14% increase in selling, general and administrative expenses and to a lesser extent, an approximately $300,000 or 28% increase in research and development expenses. The $2.6 million increase in SG&A was driven primarily by $1.5 million of higher direct sales and marketing spend in our Sanara Surgical segment, partially offset by approximately $200,000 of lower costs in this segment and $1.3 million of additional SG&A in our Tissue Health Plus segment. As a reminder, the Tissue Health Plus segment SG&A expenses are primarily related to the build-out of certain aspects of the THP platform and infrastructure, which accelerated beginning in mid-2024. The approximately $300,000 increase in R&D was due in part to the development of enhancements to the surgical product portfolio. Operating loss in the second quarter was $31,000 compared to a loss of $2.9 million last year. Note that our Surgical segment generated operating income of $2.5 million in the second quarter of 2025, an increase of $4.1 million year-over-year. Other expenses for the second quarter were $2 million compared to approximately $600,000 of expense last year. The increase in other expense was primarily due to higher interest expense and fees related to our CRG term loan. Net loss for the second quarter was $2 million or $0.23 per diluted share compared to a net loss of $3.5 million or $0.42 per diluted share last year. By segment, as Ron mentioned, we were pleased to generate approximately $500,000 of net income in our Surgical segment compared to a net loss of $2.2 million last year. Our Tissue Health Plus segment generated a net loss of $2.5 million compared to a net loss of $1.3 million last year. Adjusted EBITDA for the second quarter of 2025 was $2.7 million, an increase of $2.1 million or 350% year-over-year. Sanara Surgical generated segment adjusted EBITDA of $4.7 million compared to $1.4 million last year. And Tissue Health Plus generated segment adjusted EBITDA loss of $2.1 million compared to a segment adjusted EBITDA loss of approximately $800,000 last year. Turning to the balance sheet. As of June 30, 2025, we had $17 million of cash, $44.2 million of long-term debt and $12.25 million of available borrowing capacity through December 31, 2025. This compares to $15.9 million of cash, $30.7 million of long-term debt and $24.5 million of available borrowing capacity as of December 31, 2024. Lastly, a few considerations to bear in mind for the remainder of the year. Our net revenue performance in the second quarter modestly exceeded our expectations, and we're encouraged by our momentum through the first half of the year. Our focus remains on driving strong net revenue growth in 2025, fueled by our Sanara Surgical business. We also continue to anticipate strong profitability in our Sanara Surgical segment for the full year. As Ron mentioned, during the second quarter, BMI completed two product development milestones under our exclusive license and distribution agreement. In connection with the terms of this agreement, on July 1, 2025, Sanara paid BMI EUR 2 million related to the completion of these milestones in exchange for 4,116 additional shares of BMI, bringing Sanara's total ownership of BMI's outstanding equity to approximately 9.7% as of July 1, 2025. Between our current cash position, the anticipated cash flow from our Sanara Surgical segment this year and the available borrowing capacity on our existing facility, we're confident that we have sufficient financial resources to support our key growth initiatives. Lastly, as we noted on our last earnings call, we do not anticipate a material impact from tariffs on our results of operations in 2025. On behalf of the leadership team, I'd like to thank our colleagues across Sanara MedTech for their contributions to our performance and progress as an organization. Thank you as well to our shareholders and customers for their support and everyone on today's call for their interest in Sanara MedTech. With that, operator, you may now open the call for questions.

Our first question will come from Ross Osborn with Cantor Fitzgerald.

This is Matthew Park, on for Ross today. I guess, first on the distributors, can you walk us through how long it typically takes for a new partner to become productive in the field? And how should we think about the contribution curve from recently signed partners versus more established relationships?

Seth, do you want to take that?

Sure, Matthew. Yes, it really depends on a couple of things. What's the starting point in that market that they're in? Do we have already approvals in that market? And that's always our goal, certainly, is to enter into an agreement with a talented distributor network or group that already has some traction based upon the approvals that already exist. And so that learning curve is relatively short. We do that by placing an RSM in that market as well to really be the driver in education alongside of our clinical team to all things that that distributor would need alongside of their surgeon. So it's those two things that really let us ramp and do that quickly. But that timing can vary depending on the market, based upon the approvals and the opportunities that exist there. But that can range anywhere from days to certainly months depending on the work that needs to be done to get up to speed.

Got it. That's helpful. And then maybe one for Elizabeth. As you guys evaluate strategic alternatives for THP and continue to emphasize growth in surgical and bone fusion, how should we think about the cadence of OpEx as we move forward into '26? Specifically, are there any areas within G&A or R&D where you see opportunities for leverage or any one-time costs we should be thinking about?

Sure. Thanks for the question, Matt. We have guided that THP for the second half. Investment will be between $5.5 million and $6.5 million, and we do have additional OsStic milestones. We are not positive when those will hit, but the total amount of the milestones is EUR 2 million that we still will hopefully achieve, unclear as to the exact timing of that. And we have seen in the first half a bit of operating leverage. So that's been a really positive thing, and we don't comment any more on future.

Matthew also, this is Ron. We constantly are working on our key products for new innovation around our key products. And so that's an ongoing basis of our daily routine for our R&D.

Our next question is coming from Yi Chen with H.C. Wainwright.

This is Eduardo, on for Yi. Question on the specific surgical segment and the product growth that you're observing. Excited to see that the bone fusion products are gaining some increased traction. I'm curious about Cellerate, if you could add some color on specific growth for each of those products: Cellerate, Fortify and specifically, BIASURGE.

Seth?

Yes, happy to take that one too. The soft tissue category as a whole has obviously been a great growth driver for us. And the backbone of that space is truly Cellerate and BIASURGE as kind of our one-two punch, Cellerate being the largest producer in that category and BIASURGE quickly becoming the second largest producer. Really encouraged by how those continue to grow steadily, and we think we've got a lot of green space with both of those two products into the future.

Got it. That's helpful. Regarding the initiatives you mentioned, I didn't catch the specific number of new surgeons being added and the increase in penetration at existing facilities. Can you provide more details on those figures? Additionally, what feedback have you received from clinicians that is driving product adoption and increasing utilization at each facility?

Yes. As we talked about in the call itself, it's really coming down to three core areas for us, and it's quality distributors under contract and getting them trained and up to speed and confident in our technologies. Then we expand by gaining access into facilities, whether that's contracted or new. And then how do we start to widen there? And I think everybody on this call recognizes over the course of the last few years, what we've built as our core business is around ortho and spine. That is still our core business. But what it's done is really given us a great foundation inside of those facilities for us to then start with our RSM and distributors to work in partnership to start seeking other specialties where there's great need for these technologies as well. And some of those areas that we've penetrated or started to penetrate are now into that access surgeon space, plastics, general and vascular as well, and they're doing that in partnership at a great clip.

Okay. And I guess one final one on strategic thinking about THP. I guess just what's the big driver there, looking for strategic alternatives instead of developing internally? What the main decision points or data points you guys are looking at for that decision-making process?

Yes, Eduardo, this is Ron. We have made a significant investment in THP, and we believe that now is a suitable time to seek out other strategic partners who can help take the product further with their capital, in addition to what we have already invested. When we mention exploring our strategic alternatives, we mean a variety of options, not just a potential sale of the business. We are focused on finding strategic partners because, as we have discussed in earlier calls, it is essential to have patient engagement, providers, payers, and product companies involved. All of these can be valuable partners for us.

Okay. Since there are no further questions at this time, we will conclude today's conference. Thank you for your participation, and have a wonderful day.