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…

Thanks, Ron. I'd like to update you on the progress made by our commercial team with respect to 3 key initiatives that have been central to our recent performance and future growth. As a reminder, these are the 3 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 3 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…

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 6 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, 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…

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 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, 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 expense for the second quarter was $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…

[Operator Instructions] 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 being 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 2 things that really let us ramp and do that quickly. But that timing can vary depending on market based upon the approvals and the opportunities that exist there. But that can range in 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 onetime 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.

[Operator Instructions] 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 2 products into the future.

Got it. That's helpful. And regarding the kind of initiatives, you guys mentioned you were adding -- I don't know if I missed the specific number, adding new surgeons and increasing penetration in existing facilities. Do you have any more details on the specific figures there? And kind of any feedback you've been getting from clinicians that's making the products stick and growing utilization in each of your facilities?

Yes. As we talked about in the call itself, it's really coming down to 3 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. If you -- we've made a significant investment into THP, and we have taken it to the point that we think it's a good time for us to look at other strategic partners that could take the product from where it is today with their capital to complement what we've already done with our capital, and so just to continue to further expand that. So when we say that we're looking at our strategic alternatives, that is many things. That is not just a sale of the business or whatever. It's to really find strategic partners because in many of the calls previously, we've talked about kind of the core is you got to have your patient engagement, you've got to have providers, you've got to have payers and you've got to have product companies. So all those are good potential partners for us.

[Operator Instructions] Okay. As we are currently seeing no remaining questions at this time, this will conclude today's conference. We thank you for your participation, and hope you have a wonderful day.