Sanara MedTech Inc.

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance, including topics such as our value-based wound and skincare services and Tissue Health Plus (“THP”) platforms. In some cases, you can identify forward-looking statements because they contain words such as “aims,” “anticipates,” “believes,” “contemplates,” “continue,” “could,” “estimates,” “expects,” “forecast,” “guidance,” “intends,” “may,” “plans,” “possible,” “potential,” “predicts,” “preliminary,” “projects,” “seeks,” “should,” “target,” “will” or “would” or the negative of these words, variations of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following:

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or our future financial or operating performance, including topics such as our value-based wound and skin services and Tissue Health Plus (“THP”) platforms. In some cases, you can identify forward-looking statements because they contain words such as “aims,” “anticipates,” “believes,” “contemplates,” “continue,” “could,” “estimates,” “expects,” “forecast,” “guidance,” “intends,” “may,” “plans,” “possible,” “potential,” “predicts,” “preliminary,” “projects,” “seeks,” “should,” “target,” “will” or “would” or the negative of these words, variations of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following:

Previous wording

We are a medical technology company focused on developing and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the surgical, chronic wound and skincare markets. Our products, services and technologies are designed to achieve our goal of providing better clinical outcomes at a lower overall cost for patients regardless of where they receive care. Through our two operating segments, Sanara Surgical and THP, we strive to be one of the most innovative and comprehensive providers of effective surgical, wound and skincare solutions and are continually seeking to expand our offerings for patients requiring treatments across the entire continuum of care in the United States.

Current wording

We are a medical technology company focused on developing and commercializing transformative technologies to improve clinical outcomes and reduce healthcare expenditures in the surgical, chronic wound and skin markets. Our products, services and technologies are designed to achieve our goal of providing better clinical outcomes at a lower overall cost for patients regardless of where they receive care. Through our two operating segments, Sanara Surgical and THP, we strive to be one of the most innovative and comprehensive providers of effective surgical, wound and skin solutions and are continually seeking to expand our offerings for patients requiring treatments across the entire continuum of care in the United States.

Previous wording

Historically, we managed our business on the basis of one operating and reportable segment. During the second quarter of 2024, we changed our reportable segments to reflect a change in the manner in which the business is managed. Based on the growing importance of the value-based wound care program to our future outlook and how our chief operating decision maker (“CODM”), the Chief Executive Officer, reviews operating results and makes decisions about resource allocation, we have two reportable segments: Sanara Surgical and THP.

Current wording

Historically, we managed our business on the basis of one operating and reportable segment. During the second quarter of 2024, we changed our reportable segments to reflect a change in the way the business is managed. Based on the growing importance of the value-based wound care program to our future outlook and how our chief operating decision maker (“CODM”), the Chief Executive Officer, reviews operating results and makes decisions about resource allocation, we have two reportable segments: Sanara Surgical and THP.

Previous wording

Our Sanara Surgical segment primarily markets and sells soft tissue repair and bone fusion products for use in the operating room or other sterile environments. Sanara Surgical’s soft tissue repair products include, among other products, our lead product, CellerateRX Surgical Activated Collagen (“CellerateRX Surgical”), a hydrolyzed collagen that supports a local environment for surgical sites to aid in the natural wound healing process, and BIASURGE Advanced Surgical Solution (“BIASURGE”), a sterile no-rinse, advanced surgical solution used for wound irrigation. Sanara Surgical’s bone fusion products include, among other products, BiFORM Bioactive Moldable Matrix (“BiFORM”), an osteoconductive, bioactive, porous implant that allows for bony ingrowth across the graft site, and ALLOCYTE Plus Advanced Viable Bone Matrix (“ALLOCYTE Plus”), a human allograft cellular bone matrix containing bone-derived progenitor cells and conformable bone fibers.

Current wording

Our Sanara Surgical segment primarily markets and sells soft tissue repair and bone fusion products for use in the operating room or other sterile environments. Sanara Surgical’s soft tissue repair products include, among other products, our lead product, CellerateRX Surgical Activated Collagen (“CellerateRX Surgical”), a hydrolyzed collagen that aids in the management of surgical wounds, and BIASURGE Advanced Surgical Solution (“BIASURGE”), a sterile no-rinse, advanced surgical solution used for wound irrigation. Sanara Surgical’s bone fusion products include, among other products, BiFORM Bioactive Moldable Matrix (“BiFORM”), an osteoconductive, bioactive, porous implant that allows for bony ingrowth across the graft site, and ALLOCYTE Plus Advanced Viable Bone Matrix (“ALLOCYTE Plus”), a human allograft cellular bone matrix containing bone-derived progenitor cells and conformable bone fibers.

Previous wording

Our Sanara Surgical segment markets and distributes surgical, wound and skincare products to physicians, hospitals, clinics, and post-acute care settings. Our products are primarily sold in the U.S. surgical tissue repair and advanced wound care markets. We believe that we have the ability to drive our product pipeline from concept to preclinical and clinical development while meeting quality and regulatory requirements. We are constantly seeking long-term strategic partnerships with a focus on products that improve outcomes at a lower overall cost.

Current wording

Our Sanara Surgical segment markets and distributes surgical, wound and skin products to physicians, hospitals, clinics, and post-acute care settings. Our products are primarily sold in the U.S. surgical tissue repair and advanced wound care markets. We believe that we have the ability to drive our product pipeline from concept to preclinical and clinical development while meeting quality and regulatory requirements. We are constantly seeking long-term strategic partnerships with a focus on products that improve outcomes at a lower overall cost.

Previous wording

CellerateRX Surgical is a medical hydrolysate of Type I bovine collagen indicated for the management of surgical, traumatic, and partial and full-thickness wounds as well as first- and second-degree burns. It is manufactured with a proprietary process. CellerateRX Surgical powder is sterilized, packaged and designed specifically for use in the operating room or other sterile environment. CellerateRX Surgical products are primarily purchased by hospitals and ambulatory surgical centers for use by surgeons on surgical wounds. The majority of CellerateRX Surgical products are used for a variety of surgical wounds, including those associated with orthopedic, spine, trauma and oncologic procedures. Additional surgical wounds that may benefit from the use of CellerateRX Surgical include cardiovascular, gynecologic, urologic, vascular and plastic/reconstructive related procedures.

Current wording

CellerateRX Surgical is a Type I bovine hydrolyzed collagen indicated for the management of surgical, traumatic, and partial and full-thickness wounds as well as first- and second-degree burns. It is manufactured with a proprietary process. CellerateRX Surgical powder is sterilized, packaged and designed specifically for use in the operating room. CellerateRX Surgical products are primarily purchased by hospitals and ambulatory surgical centers for use by surgeons to treat surgical wounds. The majority of CellerateRX Surgical products are used for a variety of surgical wounds, including those associated with orthopedic, spine, and trauma procedures. Additional surgical wounds that often benefit from the use of CellerateRX Surgical include general, vascular, plastic/reconstructive, cardiovascular, gynecologic, and urologic related procedures.

Previous wording

In June 2020, we formed a subsidiary, United Wound and Skin Solutions, LLC (formerly known as “WounDerm”), to hold certain investments and operations in wound and skincare virtual consult services. In 2024, United Wound and Skin Solutions, LLC was renamed to Tissue Health Plus, LLC. THP is continuing its current mission to simplify skin health, starting with value-based wound care through a refined business plan. Through THP, we plan to offer a first of its kind value-based wound care program to payers and risk-bearing entities such as accountable care organizations and value-based primary care companies. THP services are not expected to directly involve telemedicine or virtual consult services, and such services are no longer a primary focus of THP.

Current wording

In June 2020, we formed a subsidiary, United Wound and Skin Solutions, LLC (formerly known as “WounDerm”), to hold certain investments and operations in wound and skin virtual consult services. In 2024, United Wound and Skin Solutions, LLC was renamed to Tissue Health Plus, LLC. THP is continuing its current mission to simplify skin health, starting with value-based wound care through a refined business plan. Through THP, we plan to offer a first of its kind value-based wound care program to payers and risk-bearing entities such as accountable care organizations and value-based primary care companies. We launched the first THP pilot program with a wound care provider group during the second quarter of 2025.

Previous wording

On April 17, 2024 (the “Closing Date”), we, as borrower, entered into a Term Loan Agreement (the “CRG Term Loan Agreement”) with the subsidiary guarantors party thereto from time to time (collectively, the “Guarantors”), CRG Servicing LLC as administrative agent and collateral agent (the “Agent”), and the lenders party thereto from time to time, providing for a senior secured term loan of up to $55.0 million (the “CRG Term Loan”). In April 2024, our first borrowing (the “First Borrowing”) under the CRG Term Loan of $15.0 million was used to repay our then-existing loan with Cadence Bank (the “Cadence Term Loan”) and to pay fees and expenses related to the CRG Term Loan Agreement. In September 2024, we borrowed an additional $15.5 million under the CRG Term Loan (the “Second Borrowing”), a portion of the proceeds of which were used for the investment in ChemoMouthpiece, LLC (“CMp”) described below. On March 19, 2025, we and the Guarantors entered into the First Amendment to Term Loan Agreement with the Agent and the lenders party thereto from time to time (the “CRG Amendment”) to, among other things (i) entitle us to up to two additional borrowings following the Second Borrowing under the CRG Term Loan, which must occur on or prior to December 31, 2025, if at all, and (ii) remove the requirement that any borrowing be in whole multiples of $5.0 million. On March 31, 2025, we borrowed an additional $12.25 million under the CRG Term Loan Agreement (the “Third Borrowing”). The First Borrowing, the Second Borrowing and the Third Borrowing each have a maturity date of May 30, 2029 (the “Maturity Date”), unless earlier prepaid. Pursuant to the CRG Term Loan Agreement, prior to December 31, 2025 and, subject to the satisfaction of certain conditions, we have the right to draw down a fourth borrowing of up to $12.25 million. We intend to use the proceeds from the Third Borrowing for permitted acquisition opportunities and for general working capital and corporate purposes.

Current wording

On April 17, 2024 (the “Closing Date”), we, as borrower, entered into a Term Loan Agreement (the “CRG Term Loan Agreement”) with the subsidiary guarantors party thereto from time to time (collectively, the “Guarantors”), CRG Servicing LLC as administrative agent and collateral agent (the “Agent”), and the lenders party thereto from time to time, providing for a senior secured term loan of up to $55.0 million (the “CRG Term Loan”). In April 2024, our first borrowing (the “First Borrowing”) under the CRG Term Loan of $15.0 million was used to repay our then-existing loan with Cadence Bank (the “Cadence Term Loan”) and to pay fees and expenses related to the CRG Term Loan Agreement. In September 2024, we borrowed an additional $15.5 million under the CRG Term Loan (the “Second Borrowing”), a portion of the proceeds of which were used for the investment in ChemoMouthpiece, LLC (“CMp”). On March 19, 2025, we and the Guarantors entered into the First Amendment to Term Loan Agreement with the Agent and the lenders party thereto from time to time (the “CRG Amendment”) to, among other things (i) entitle us to up to two additional borrowings following the Second Borrowing under the CRG Term Loan, which must occur on or prior to December 31, 2025, if at all, and (ii) remove the requirement that any borrowing be in whole multiples of $5.0 million. On March 31, 2025, we borrowed an additional $12.25 million under the CRG Term Loan Agreement (the “Third Borrowing”). The First Borrowing, the Second Borrowing and the Third Borrowing each have a maturity date of May 30, 2029 (the “Maturity Date”), unless earlier prepaid. Pursuant to the CRG Term Loan Agreement, prior to December 31, 2025 and, subject to the satisfaction of certain conditions, we have the right to draw down a fourth borrowing of up to $12.25 million. The Company used a portion of the proceeds from the Third Borrowing for permitted acquisition opportunities, such as the CarePICS Acquisition (defined below) in April 2025, and for general working capital and corporate purposes.

Previous wording

In connection with the BMI License Agreement, on January 16, 2025, we entered into a Share Subscription and Shareholders’ Agreement (the “Subscription Agreement”), pursuant to which we made an initial cash investment in BMI totaling approximately €3.0 million. Upon our initial cash investment of €3.0 million and the conversion of our previously disclosed €1.0 million convertible loan to BMI, we were issued 8,230 ordinary shares of BMI, constituting approximately 6.67% of the outstanding equity of BMI as of January 16, 2025. Pursuant to the Subscription Agreement, we also agreed to contribute an additional €4.0 million to BMI through a series of capital contributions in exchange for 8,230 additional ordinary shares of BMI upon the achievement of certain development, clinical, and regulatory milestones which are expected to occur at various points during 2025 and 2026. For more information regarding the BMI License Agreement and BMI Subscription Agreement, see the*“Liquidity and Capital Resources*” section below.

Current wording

In connection with the BMI License Agreement, on January 16, 2025, we entered into a Share Subscription and Shareholders’ Agreement (the “Subscription Agreement”), pursuant to which we made an initial cash investment in BMI totaling approximately €3.0 million. Upon our initial cash investment of €3.0 million and the conversion of our previously disclosed €1.0 million convertible loan to BMI, we were issued 8,230 ordinary shares of BMI, constituting approximately 6.67% of the outstanding equity of BMI as of January 16, 2025. Pursuant to the Subscription Agreement, we also agreed to contribute an additional €4.0 million to BMI through a series of capital contributions in exchange for 8,230 additional ordinary shares of BMI upon the achievement of certain development, clinical, and regulatory milestones expected to occur at various points during 2025 and 2026. As of June 30, 2025, BMI had achieved two of such milestones, and upon settlement, we paid BMI $2.4 million (€2.0 million) on July 1, 2025 in exchange for 4,116 additional ordinary shares of BMI, bringing our total ownership of BMI’s outstanding equity to approximately 9.678% as of July 1, 2025. For more information regarding the BMI License Agreement and BMI Subscription Agreement, see the “Liquidity and Capital Resources” section below.

Previous wording

On April 1, 2025 (the “CarePICS Closing Date”), we entered into a Unit Purchase Agreement (the “Purchase Agreement”), with THP, our wholly owned subsidiary (the “Purchaser”), CarePICS, LLC (“CarePICS”), the holders of CarePICS’s outstanding units (each, a “Seller” and collectively, the “Sellers”) and Paul Schubert, in his capacity as the representative of the Sellers, pursuant to which the Purchaser purchased all of the issued and outstanding equity interests of CarePICS (the “Units”) from the Sellers (the “Acquisition”). On the CarePICS Closing Date, the parties to the Purchase Agreement completed the Acquisition and CarePICS became an indirect wholly owned subsidiary of the Company. Pursuant to the Purchase Agreement, the aggregate purchase price for the Acquisition was $2.0 million, which included transaction expenses and other related administrative expenses of the Sellers. On the CarePICS Closing Date, the Company also paid $1.65 million to satisfy certain existing indebtedness of CarePICS. The Purchase Agreement also provides that the Sellers are entitled to receive potential earnout payments. For more information regarding the Acquisition, see the “Liquidity and Capital Resources” section below.

Current wording

On April 1, 2025 (the “CarePICS Closing Date”), we entered into a Unit Purchase Agreement (the “CarePICS Purchase Agreement”), with THP, our wholly owned subsidiary (the “Purchaser”), CarePICS, LLC (“CarePICS”), the holders of CarePICS’s outstanding units (each, a “Seller” and collectively, the “Sellers”) and Paul Schubert, in his capacity as the representative of the Sellers, pursuant to which the Purchaser purchased all of the issued and outstanding equity interests of CarePICS (the “Units”) from the Sellers (the “CarePICS Acquisition”). On the CarePICS Closing Date, the parties to the CarePICS Purchase Agreement completed the CarePICS Acquisition, and CarePICS became an indirect wholly owned subsidiary of the Company. Pursuant to the CarePICS Purchase Agreement, the cash consideration for the CarePICS Acquisition was $2.0 million, which included transaction expenses of the Sellers. On the CarePICS Closing Date, we also paid $1.65 million to satisfy certain existing indebtedness of CarePICS, which was assumed by us at the closing of the acquisition. The CarePICS Purchase Agreement also provides that the Sellers are entitled to receive potential earnout payments. For more information regarding the CarePICS Acquisition, see the “Liquidity and Capital Resources” section below.

Previous wording

Revenue streams from product sales are summarized below for the three months ended March 31, 2025 and 2024.

Current wording

Revenue streams from product sales, software as a service (“SaaS”) and royalties for the three and six months ended June 30, 2025 and 2024 are summarized below.

Previous wording

(1) For the three months ended March 31, 2025 other expense included interest expense, share of losses from equity method investments offset by interest income and gain on disposal of property and equipment. For the three months ended March 31, 2024, other expense included interest expense.

Current wording

(1) For the three months ended June 30, 2025, other expense included interest expense and share of losses from equity method investments. For the three months ended June 30, 2024, other expense included interest expense. For the six months ended June 30, 2025, other expense included interest expense and share of losses from equity method investments, offset by interest income and gain on disposal of property and equipment. For the six months ended June 30, 2024, other expense included interest expense.

Previous wording

Net Revenue. For the three months ended March 31, 2025, we generated net revenue of $23.4 million compared to net revenue of $18.5 million for the three months ended March 31, 2024, a 26% increase over the prior year. The higher net revenue in the three months ended March 31, 2025 was primarily due to increased sales of soft tissue repair products, including CellerateRX Surgical and BIASURGE, and certain bone fusion products as a result of our increased market penetration, geographic expansion and our continuing strategy to expand our independent distribution network in both new and existing U.S. markets.

Current wording

Net Revenue. For the three months ended June 30, 2025, we generated net revenue of $25.8 million compared to net revenue of $20.2 million for the three months ended June 30, 2024, a 28% increase over the prior year period. For the six months ended June 30, 2025, we generated net revenue of $49.3 million compared to net revenue of $38.7 million for the six months ended June 30, 2024, a 27% increase over the prior year period. The higher net revenue in the three and six months ended June 30, 2025 was primarily due to increased sales of soft tissue repair products, including CellerateRX Surgical and BIASURGE, and certain bone fusion products as a result of our increased market penetration, geographic expansion and our continuing strategy to expand our independent distribution network in both new and existing U.S. markets.

Previous wording

***Cost of Goods Sold.***Cost of goods sold for the three months ended March 31, 2025 was $1.8 million compared to cost of goods sold of $1.9 million for the three months ended March 31, 2024. The higher gross margins realized in the three months ended March 31, 2025 were due to increased sales of soft tissue repair products and lower manufacturing costs related to CellerateRX Surgical.

Current wording

***Cost of Goods Sold.***Cost of goods sold for the three months ended June 30, 2025 was $1.9 million compared to cost of goods sold of $2.0 million for the three months ended June 30, 2024. Cost of goods sold for the six months ended June 30, 2025 was $3.8 million compared to cost of goods sold of $3.9 million for the six months ended June 30, 2024. The higher gross margins realized in the three and six months ended June 30, 2025 were due to increased sales of soft tissue repair products and lower manufacturing costs related to CellerateRX Surgical.

Previous wording

Gross Profit. On a consolidated basis, we generated gross profit of $21.6 million for the three months ended March 31, 2025 compared to gross profit of $16.6 million for the three months ended March 31, 2024, a 30% increase over the prior year period. The higher gross profit in the three months ended March 31, 2025 was primarily due to increased sales of soft tissue repair products, particularly CellerateRX Surgical and BIASURGE, as a result of our increased market penetration and geographic expansion, and our continuing strategy to expand our independent distribution network in both new and existing U.S. markets.

Current wording

Gross Profit. On a consolidated basis, we generated gross profit of $23.9 million for the three months ended June 30, 2025 compared to gross profit of $18.2 million for the three months ended June 30, 2024, a 32% increase over the prior year period. We generated gross profit of $45.5 million for the six months ended June 30, 2025 compared to gross profit of $34.8 million for the six months ended June 30, 2024, a 31% increase over the prior year period. The higher gross profit in the three and six months ended June 30, 2025 was primarily due to increased sales of soft tissue repair products, particularly CellerateRX Surgical and BIASURGE, as a result of our increased market penetration and geographic expansion, and our continuing strategy to expand our independent distribution network in both new and existing U.S. markets.

Previous wording

Selling, general and administrative. SG&A for the three months ended March 31, 2025 was $21.4 million compared to SG&A of $16.2 million for the three months ended March 31, 2024. The higher SG&A in the three months ended March 31, 2025 was primarily due to increased direct sales and marketing expenses, which accounted for approximately $2.4 million of the increase compared to the prior year period, approximately $1.7 million of additional SG&A in our THP segment and approximately $0.7 million related to the buildout of our corporate infrastructure in the three months ended March 31, 2025.

Current wording

Selling, general and administrative. SG&A for the three months ended June 30, 2025 was $21.6 million compared to SG&A of $19.0 million for the three months ended June 30, 2024. SG&A for the six months ended June 30, 2025 was $43.0 million compared to SG&A of $35.1 million for the six months ended June 30, 2024. The higher SG&A in the three months ended June 30, 2025 was primarily due to increased direct sales and marketing expenses, which accounted for approximately $1.5 million of the increase, offset by $0.2 million of lower costs in our Sanara Surgical segment, and approximately $1.3 million of additional SG&A in our THP segment, compared to the prior year period. The higher SG&A in the six months ended June 30, 2025 was primarily due to increased direct sales and marketing expenses, which accounted for approximately $3.7 million of the increase, approximately $3.1 million of additional SG&A in our THP segment, and approximately $0.7 million related to the buildout of our corporate infrastructure, compared to the prior year period.

Previous wording

Research and development. R&D for the three months ended March 31, 2025 was $1.1 million compared to R&D of $0.9 million for the three months ended March 31, 2024. Beginning in the first quarter of 2025, we began capitalizing certain development costs related to the buildout of our THP technology platform. During the three months ended March 31, 2025, we capitalized approximately $1.7 million of such development costs as property, plant and equipment.

Current wording

Research and development. R&D for the three months ended June 30, 2025 was $1.3 million compared to R&D of $1.0 million for the three months ended June 30, 2024. R&D for the six months ended June 30, 2025 was $2.4 million compared to R&D of $1.9 million for the six months ended June 30, 2024. Beginning in the first quarter of 2025, we began capitalizing certain development costs related to the buildout of our THP technology platform. During the three and six months ended June 30, 2025, we capitalized approximately $1.7 million and $3.4 million, respectively, of such development costs as property, plant and equipment.

Previous wording

Depreciation and amortization. Depreciation and amortization for the three months ended March 31, 2025 was $1.1 million compared to depreciation and amortization of $1.1 million for the three months ended March 31, 2024.

Current wording

Depreciation and amortization. Depreciation and amortization for the three months ended June 30, 2025 was $1.1 million compared to depreciation and amortization of $1.1 million for the three months ended June 30, 2024. Depreciation and amortization for the six months ended June 30, 2025 was $2.2 million compared to depreciation and amortization of $2.2 million for the six months ended June 30, 2024.

Previous wording

Change in fair value of earnout liabilities. Change in fair value of earnout liabilities was zero for the three months ended March 31, 2025 compared to a benefit of $0.1 million for the three months ended March 31, 2024. The benefit recognized in the three months ended March 31, 2024 was due to a decrease in the estimated fair value of earnout liabilities associated with the Precision Healing merger.

Current wording

Change in fair value of earnout liabilities. Change in fair value of earnout liabilities was zero for the three months ended June 30, 2025 compared to a benefit of $13,773 for the three months ended June 30, 2024. Change in fair value of earnout liabilities was zero for the six months ended June 30, 2025 compared to a benefit of $79,451 for the six months ended June 30, 2024. The benefit recognized in the three and six months ended June 30, 2024 was due to a decrease in the estimated fair value of earnout liabilities associated with the Precision Healing merger.

Previous wording

Other expense. Other expense for the three months ended March 31, 2025 was $1.4 million compared to $0.3 million for the three months ended March 31, 2024. Other expense for the three months ended March 31, 2025 primarily included higher interest expense and fees related to the CRG Term Loan.

Current wording

Other expense. Other expense for the three months ended June 30, 2025 was $2.0 million compared to $0.6 million for the three months ended June 30, 2024. Other expense for the three months ended June 30, 2025 primarily included higher interest expense and fees related to the CRG Term Loan. Other expense for the six months ended June 30, 2025 was $3.4 million compared to $0.9 million for the six months ended June 30, 2024. Other expense for the six months ended June 30, 2025 primarily included higher interest expense and fees related to the CRG Term Loan.

Previous wording

Net loss. For the three months ended March 31, 2025, we had a net loss of $3.5 million, compared to a net loss of $1.8 million for the three months ended March 31, 2024. Our net loss included $2.9 million and $1.4 million related to our THP segment for the three months ended March 31, 2025 and 2024, respectively. The higher net loss in 2025 was primarily due to higher costs related to the buildout of our THP platform and infrastructure and increased interest expense related to the CRG Term Loan, partially offset by higher gross profit.

Current wording

Net loss. For the three months ended June 30, 2025, we had a net loss of $2.0 million, compared to a net loss of $3.5 million for the three months ended June 30, 2024. Our net loss included $2.5 million and $1.3 million related to our THP segment for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, we had a net loss of $5.5 million, compared to a net loss of $5.3 million for the six months ended June 30, 2024. Our net loss included $5.4 million and $2.6 million related to our THP segment for the six months ended June 30, 2025 and 2024, respectively. The higher net loss for the six months ended June 30, 2025 was primarily due to higher costs related to the buildout of our THP platform and infrastructure and increased interest expense related to the CRG Term Loan, partially offset by higher gross profit.

Previous wording

Segment Adjusted EBITDA. Segment Adjusted EBITDA is the primary profitability measure used by the CODM for purposes of assessing financial performance and resource allocation. We define Segment Adjusted EBITDA for the reportable segments as net income (loss) excluding interest expense/income, provision/benefit for income taxes, depreciation and amortization, non-cash share-based compensation expense, change in fair value of earnout liabilities, share of losses from equity method investments, executive separation costs, legal and diligence expenses related to acquisitions, and gains/losses on the disposal of property and equipment, as each are applicable to the periods presented. We have historically presented this profitability measure as Segment EBITDA and, starting with the fourth quarter ended December 31, 2024, are presenting it as Segment Adjusted EBITDA. The definition and methodology for calculating this measure has remained unchanged. Segment Adjusted EBITDA is a non-GAAP measure and should be considered in addition to, not as a substitute for, net income (loss), cash flow and other measures of financial performance reported in accordance with GAAP.

Current wording

Segment Adjusted EBITDA. Segment Adjusted EBITDA is the primary profitability measure used by the CODM for purposes of assessing financial performance and resource allocation. We define Segment Adjusted EBITDA for the reportable segments as net income (loss) excluding interest expense/income, provision/benefit for income taxes, depreciation and amortization, non-cash share-based compensation expense, change in fair value of earnout liabilities, share of losses from equity method investments, executive separation costs, legal and diligence expenses related to acquisitions, and gains/losses on the disposal of property and equipment, as each are applicable to the periods presented. Segment Adjusted EBITDA is a non-GAAP measure and should be considered in addition to, not as a substitute for, net income (loss), cash flow and other measures of financial performance reported in accordance with GAAP.

Previous wording

The following table provides a reconciliation of net loss to Segment Adjusted EBITDA for our business segments for the periods indicated below:

Current wording

The following table provides a reconciliation of net income (loss) to Segment Adjusted EBITDA for our business segments for the periods indicated below:

Previous wording

For the three months ended March 31, 2025, our Segment Adjusted EBITDA was $0.7 million compared to $0.3 million for the three months ended March 31, 2024. Our Segment Adjusted EBITDA included $(2.0) million and $(0.9) million related to our THP segment for the three months ended March 31, 2025 and 2024, respectively. The higher Segment Adjusted EBITDA in 2025 was primarily due to higher interest expense, noncash share-based compensation and acquisition costs related to the buildout of our THP platform and infrastructure offset by higher net revenue and gross profit related to the Sanara Surgical segment as discussed above.

Current wording

For the three months ended June 30, 2025, our Segment Adjusted EBITDA was $2.7 million compared to $0.6 million for the three months ended June 30, 2024. Our Segment Adjusted EBITDA included $(2.1) million and $(0.8) million related to our THP segment for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, our Segment Adjusted EBITDA was $3.3 million compared to $0.9 million for the six months ended June 30, 2024. Our Segment Adjusted EBITDA included $(4.1) million and $(1.6) million related to our THP segment for the six months ended June 30, 2025 and 2024, respectively. The higher Segment Adjusted EBITDA in 2025 was primarily due to higher net revenue and gross profit related to the Sanara Surgical segment as discussed above, partially offset by higher costs related to the buildout of our THP platform.

Previous wording

Cash on hand at March 31, 2025 was $20.7 million, compared to $15.9 million at December 31, 2024. Historically, we have financed our operations primarily from borrowings under our credit facilities and the sale of equity securities. We expect to continue our investment in the THP strategy in preparation for the planned launch of our first pilot program with a wound care provider group during the second quarter of 2025. In addition to $3.65 million paid in connection with the acquisition of CarePICS, we expect our cash investment during the first half of 2025 to be approximately $7.5 million to $8.5 million, compared to our prior expectation of $7.5 million to $10.0 million. Our THP cash investment during the second quarter of 2025 is expected to be between $4.0 to $5.0 million. We are pursuing financial partners to invest in the execution of this strategy.

Current wording

Cash on hand at June 30, 2025 was approximately $17.0 million, compared to $15.9 million at December 31, 2024. Historically, we have financed our operations primarily from borrowings under our credit facilities and the sale of equity securities. We expect to continue our investment in the THP strategy and project our cash investment during the second half of 2025 to be between $5.5 and $6.5 million. We do not anticipate making material cash investments in THP after year-end.

Previous wording

We expect our future needs for cash to include the funding of our additional investment in THP, potential acquisitions, further development of our products, services and technologies pipeline, clinical studies, repayment of debt as it becomes due and for general corporate purposes. If we seek to consummate acquisitions in the future, we expect to finance such acquisitions with the proceeds from equity or debt issuances. Based on our current plan of operations, we believe our cash on hand, when combined with expected cash flows from operations and available proceeds from the CRG Term Loan discussed herein, will be sufficient to fund our growth strategy and to meet our anticipated operating expenses and capital expenditures for at least the next 12 months. As of March 31, 2025, there was $12.25 million available for future borrowing under the CRG Term Loan.

Current wording

If we seek to consummate acquisitions in the future, we expect to finance such acquisitions with cash on hand and/or the proceeds from equity or debt issuances. Based on our current plan of operations, we believe our cash on hand, when combined with expected cash flows from operations and available proceeds from the CRG Term Loan discussed herein, will be sufficient to fund organic growth and to meet our anticipated operating expenses, BMI milestone payments and capital expenditures for at least the next 12 months. As of June 30, 2025, there was $12.25 million available for future borrowing under the CRG Term Loan.

Previous wording

On August 1, 2023, we entered into an asset purchase agreement (the “Applied Purchase Agreement”) by and among the Company, Sanara MedTech Applied Technologies, LLC (“SMAT”), The Hymed Group Corporation, Applied and Dr. George D. Petito (the “Owner”), pursuant to which SMAT acquired certain assets of the Sellers and the Owner, including, among others, the Sellers’ and Owner’s inventory, intellectual property, manufacturing and related equipment, goodwill, rights and claims, other than certain excluded assets (the “Applied Purchased Assets”) and assumed certain Assumed Liabilities (as defined in the Applied Purchase Agreement) upon the terms and subject to the conditions set forth in the Applied Purchase Agreement. The transaction closed on August 1, 2023. The Applied Purchased Assets were purchased for an initial aggregate purchase price of $15.25 million, consisting of (i) $9.75 million in cash (the “Cash Closing Consideration”), (ii) 73,809 shares of our common stock, with an agreed upon value of $3.0 million (the “Stock Closing Consideration”) and (iii) $2.5 million in cash, to be paid in four equal installments on each of the four anniversaries following the Closing (the “Installment Payments”). The first Installment Payment of $625,000 was made in August 2024 and the second Installment Payment of $625,000 is expected to be paid in August 2025.

Current wording

On August 1, 2023, we entered into an asset purchase agreement (the “Applied Purchase Agreement”) by and among the Company, Sanara MedTech Applied Technologies, LLC (“SMAT”), The Hymed Group Corporation and Applied Nutritionals, LLC (together with The Hymed Group Corporation, the “Applied Sellers”), and Dr. George D. Petito (the “Owner”), pursuant to which SMAT acquired certain assets of the Applied Sellers and the Owner, including, among others, the Applied Sellers’ and Owner’s inventory, intellectual property, manufacturing and related equipment, goodwill, rights and claims, other than certain excluded assets (the “Applied Purchased Assets”) and assumed certain Assumed Liabilities (as defined in the Applied Purchase Agreement) upon the terms and subject to the conditions set forth in the Applied Purchase Agreement. The transaction closed on August 1, 2023. The Applied Purchased Assets were purchased for an initial aggregate purchase price of $15.25 million, consisting of (i) $9.75 million in cash (the “Cash Closing Consideration”), (ii) 73,809 shares of our common stock, with an agreed upon value of $3.0 million (the “Stock Closing Consideration”) and (iii) $2.5 million in cash, to be paid in four equal installments on each of the four anniversaries following the Closing (the “Installment Payments”). The first Installment Payment of $625,000 was made in August 2024 and the second Installment Payment of $625,000 was paid in August 2025.

Previous wording

In addition to the Cash Closing Consideration, Stock Closing Consideration and Installment Payments, the Applied Purchase Agreement provides that the Sellers are entitled to receive up to an additional $10.0 million (the “Applied Earnout”), which is payable to the Sellers in cash, upon the achievement of certain performance thresholds relating to SMAT’s collections from net sales of a collagen-based product currently under development. Upon expiration of the seventh anniversary of the Closing, to the extent the Sellers have not earned the entirety of the Applied Earnout, SMAT shall pay the Sellers a pro-rata amount of the Applied Earnout based on collections from net sales of the product, with such amount to be due credited against any Applied Earnout payments already made by SMAT (the “True-Up Payment”). The Applied Earnout, minus the True-Up Payment and any Applied Earnout payments already made by SMAT, may be earned at any point in the future, including after the True-Up Payment is made.

Current wording

In addition to the Cash Closing Consideration, Stock Closing Consideration and Installment Payments, the Applied Purchase Agreement provides that the Applied Sellers are entitled to receive up to an additional $10.0 million (the “Applied Earnout”), which is payable to the Applied Sellers in cash, upon the achievement of certain performance thresholds relating to SMAT’s collections from net sales of a collagen-based product currently under development. Upon expiration of the seventh anniversary of the Closing, to the extent the Applied Sellers have not earned the entirety of the Applied Earnout, SMAT shall pay the Applied Sellers a pro-rata amount of the Applied Earnout based on collections from net sales of the product, with such amount to be due credited against any Applied Earnout payments already made by SMAT (the “True-Up Payment”). The Applied Earnout, minus the True-Up Payment and any Applied Earnout payments already made by SMAT, may be earned at any point in the future, including after the True-Up Payment is made.

Previous wording

On April 17, 2024, we entered into the CRG Term Loan Agreement by and among us, as borrower, the Guarantors, the Agent and the lenders party thereto from time to time, providing for a senior secured term loan of up to $55.0 million. On the Closing Date, the First Borrowing of $15.0 million was made to repay the Cadence Term Loan and to pay certain fees and expenses related to the CRG Loan Agreement. The remaining proceeds of $4.5 million were distributed to us. As a result, the Cadence Term Loan agreement was terminated and all outstanding amounts under the Cadence Term Loan were repaid in full and all security interest and other liens granted to or held by Cadence were terminated and released.

Current wording

On April 17, 2024, we entered into the CRG Term Loan Agreement by and among us, as borrower, the Guarantors, the Agent and the lenders party thereto from time to time, providing for a senior secured term loan of up to $55.0 million. On the Closing Date, the First Borrowing of $15.0 million was made to repay the Cadence Term Loan and to pay certain fees and expenses related to the CRG Loan Agreement. The remaining proceeds of $4.5 million were distributed to us. As a result, the Cadence Term Loan agreement was terminated and all outstanding amounts under the Cadence Term Loan were repaid in full and all security interest and other liens granted to or held by Cadence Bank were terminated and released.

Previous wording

On September 4, 2024, pursuant to our option under the CRG Term Loan Agreement, we borrowed an additional $15.5 million under the CRG Term Loan Agreement. We used $5.0 million of the proceeds of the Second Borrowing for the investment in CMp (discussed in more detail below). Prior to the CRG Amendment, pursuant to the CRG Term Loan Agreement, we were entitled to one additional borrowing, which was required to occur on or prior to June 30, 2025 and be at least $5.0 million or a multiple of $5.0 million. On March 19, 2025, we entered into the CRG Amendment, which amended the CRG Term Loan Agreement to, among other things, (i) entitle us to two additional borrowings following the Second Borrowing, which borrowings must occur on or prior to December 31, 2025, if at all, and (ii) remove the requirement that any borrowing be in whole multiples of $5.0 million. Any additional borrowings under the CRG Term Loan will be subject to the satisfaction of certain conditions, including the Agent having received certain fees.

Current wording

On September 4, 2024, we borrowed an additional $15.5 million under the CRG Term Loan Agreement. We used $5.0 million of the proceeds of the Second Borrowing for the investment in CMp. Prior to the CRG Amendment, pursuant to the CRG Term Loan Agreement, we were entitled to one additional borrowing, which was required to occur on or prior to June 30, 2025 and be at least $5.0 million or a multiple of $5.0 million. On March 19, 2025, we entered into the CRG Amendment, which amended the CRG Term Loan Agreement to, among other things, (i) entitle us to two additional borrowings following the Second Borrowing, which borrowings must occur on or prior to December 31, 2025, if at all, and (ii) remove the requirement that any borrowing be in whole multiples of $5.0 million. The total available borrowing amount under the facility and the related interest rate and fees were not modified. Any additional borrowings under the CRG Term Loan will be subject to the satisfaction of certain conditions, including the Agent having received certain fees.

Previous wording

On March 31, 2025, we borrowed an additional $12.25 million under the CRG Term Loan Agreement. The First Borrowing, the Second Borrowing and the Third Borrowing each have a maturity date of March 30, 2029, unless earlier prepaid. Pursuant to the CRG Term Loan Agreement, prior to December 31, 2025 and subject to the satisfaction of certain conditions, we have the right to draw down a fourth borrowing of up to $12.25 million. We intend to use the proceeds from the Third Borrowing for permitted acquisition opportunities and for general working capital and corporate purposes.

Current wording

On March 31, 2025, we borrowed an additional $12.25 million under the CRG Term Loan Agreement. The First Borrowing, the Second Borrowing and the Third Borrowing each have a maturity date of March 30, 2029, unless earlier prepaid. Pursuant to the CRG Term Loan Agreement, prior to December 31, 2025 and subject to the satisfaction of certain conditions, we have the right to draw down a fourth borrowing of up to $12.25 million. We used a portion of the proceeds from the Third Borrowing for permitted acquisition opportunities, such as the CarePICS Acquisition in April 2025, and for general working capital and corporate purposes.

Previous wording

Subject to certain exceptions, we are required to make mandatory prepayments of the CRG Term Loan with the proceeds of certain assets sales and in the event of a change of control of the Company. In addition, we may make a voluntary prepayment of the CRG Term Loan, in whole or in part, at any time. All mandatory and voluntary prepayments of the CRG Term Loan are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs on or prior to the date that is one year following the applicable borrowing (the “Borrowing Date”), an amount equal to 10.0% of the aggregate outstanding principal amount of the Loan being prepaid and (ii) if prepayment occurs one year after the applicable Borrowing Date and on or prior to two years following the applicable Borrowing Date, an amount equal to 5.0% of the aggregate outstanding principal amount of the CRG Term Loan being prepaid. No prepayment premium is due on any principal prepaid if prepayment occurs two years or more after the applicable Borrowing Date.

Current wording

Subject to certain exceptions, we are required to make mandatory prepayments of the CRG Term Loan with the proceeds of certain assets sales and in the event of a change of control of the Company. In addition, we may make voluntary prepayments of the CRG Term Loan, in whole or in part, at any time. All mandatory and voluntary prepayments of the CRG Term Loan are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs on or prior to the date that is one year following the applicable borrowing (the “Borrowing Date”), an amount equal to 10.0% of the aggregate outstanding principal amount of the Loan being prepaid and (ii) if prepayment occurs one year after the applicable Borrowing Date and on or prior to two years following the applicable Borrowing Date, an amount equal to 5.0% of the aggregate outstanding principal amount of the CRG Term Loan being prepaid. No prepayment premium is due on any principal prepaid if prepayment occurs two years or more after the applicable Borrowing Date.

Previous wording

Certain of our current and future subsidiaries, including the Guarantors, are guaranteeing our obligations under the CRG Term Loan Agreement. As security for our obligations under the CRG Term Loan Agreement, on the Closing Date, we and the Guarantors entered into a security agreement with the Agent pursuant to which we and the Guarantors granted to the Agent, as collateral agent for the lenders, a lien on substantially all of our and the Guarantors’ assets, including intellectual property (subject to certain exceptions).

Current wording

Certain of our current and future subsidiaries, including the Guarantors, guarantee our obligations under the CRG Term Loan Agreement. As security for our obligations under the CRG Term Loan Agreement, on the Closing Date, we and the Guarantors entered into a security agreement with the Agent pursuant to which we and the Guarantors granted to the Agent, as collateral agent for the lenders, a lien on substantially all of our and the Guarantors’ assets, including intellectual property (subject to certain exceptions).

Previous wording

The BMI License Agreement requires that we pay BMI royalties of three percent of OsStic net sales (as defined in the BMI License Agreement). Pursuant to the BMI License Agreement, we and BMI agreed to negotiate the applicable percentage of net sales for ARC at a future date. The BMI License Agreement also requires that we pay BMI annual minimum royalty payments of $100,000, $200,000, and $300,000 for the first, second and third years, respectively, following the receipt of first regulatory approval for the marketing and sale of a product (as defined in the agreement).

Current wording

The BMI License Agreement requires that we pay BMI royalties of 3% of OsStic net sales (as defined in the BMI License Agreement). Pursuant to the BMI License Agreement, we and BMI agreed to negotiate the applicable percentage of net sales for ARC at a future date. The BMI License Agreement also requires that we pay BMI annual minimum royalty payments of $100,000, $200,000, and $300,000 for the first, second and third years, respectively, following the receipt of first regulatory approval for the marketing and sale of a product (as defined in the agreement). No royalties have been paid under this agreement as of June 30, 2025.

Previous wording

In connection with the BMI License Agreement, on January 16, 2025, we entered into a Share Subscription and Shareholders’ Agreement (the “Subscription Agreement”), by and among the Company, The Russell Revocable Living Trust, BMI and the existing shareholders of BMI, pursuant to which we made an initial cash investment in BMI totaling approximately €3.0 million. The initial cash investment of €3.0 million and our previously announced convertible loan to BMI of €1.0 million were converted into 8,230 ordinary shares of BMI, constituting approximately 6.67% of the outstanding equity of BMI as of January 16, 2025. Pursuant to the Subscription Agreement, we also agreed to contribute an additional €4.0 million to BMI through a series of capital contributions in exchange for 8,230 additional ordinary shares of BMI upon the achievement of certain development, clinical, and regulatory milestones which are expected to occur at various points during 2025 and 2026.

Current wording

In connection with the BMI License Agreement, on January 16, 2025, we entered into the Subscription Agreement, by and among the Company, The Russell Revocable Living Trust, BMI and the existing shareholders of BMI, pursuant to which we made an initial cash investment in BMI totaling approximately €3.0 million. The initial cash investment of €3.0 million and our previously announced convertible loan to BMI of €1.0 million were converted into 8,230 ordinary shares of BMI, constituting approximately 6.67% of the outstanding equity of BMI as of January 16, 2025. Pursuant to the Subscription Agreement, we also agreed to contribute an additional €4.0 million to BMI through a series of capital contributions in exchange for 8,230 additional ordinary shares of BMI upon the achievement of certain development, clinical, and regulatory milestones expected to occur at various points during 2025 and 2026. As of June 30, 2025, BMI had achieved two of such milestones, and upon settlement, the Company paid BMI $2.4 million (€2.0 million) on July 1, 2025 in exchange for 4,116 additional ordinary shares of BMI, bringing our total ownership of BMI’s outstanding equity to approximately 9.678% as of July 1, 2025.

Previous wording

On the CarePICS Closing Date, we entered into the Purchase Agreement with the Purchaser, CarePICS, the Sellers and Paul Schubert, in his capacity as the representative of the Sellers, pursuant to which the Purchaser purchased all of the Units from the Sellers. On the CarePICS Closing Date, the parties to the Purchase Agreement completed the Acquisition and CarePICS became an indirect wholly owned subsidiary of the Company. Pursuant to the Purchase Agreement, the aggregate purchase price for the Acquisition was $2.0 million, which included transaction expenses and other related administrative expenses of the Sellers. On the CarePICS Closing Date, the Company also paid $1.65 million to satisfy certain existing indebtedness of CarePICS.

Current wording

On the CarePICS Closing Date, we entered into the CarePICS Purchase Agreement with the Purchaser, CarePICS, the Sellers and Paul Schubert, in his capacity as the representative of the Sellers, pursuant to which the Purchaser purchased all of the Units from the Sellers. On the CarePICS Closing Date, the parties to the CarePICS Purchase Agreement completed the CarePICS Acquisition and CarePICS became an indirect wholly owned subsidiary of the Company. Pursuant to the CarePICS Purchase Agreement, cash consideration for the CarePICS Acquisition was $2.0 million, which included transaction expenses of the Sellers. On the CarePICS Closing Date, the Company also paid $1.65 million to satisfy certain existing indebtedness of CarePICS, which was assumed by us at the closing of the acquisition.

Previous wording

Pursuant to the Purchase Agreement, for each of (A) the period beginning on the CarePICS Closing Date and ending on March 31, 2026 (the “First Earnout Period”) and (B) the period beginning on April 1, 2026 and ending on March 31, 2027 (the “Second Earnout Period”), each Seller is entitled to such Seller’s pro rata share of a value equal to (i) $2,000,000minus (ii) any funding provided by the Purchaser or its affiliates to the SaaS P&L (as defined in the Purchase Agreement) during the First Earnout Period in excess of $110,000 per month,minus (iii) any shortfall in the projected SaaS P&L EBITDA (as defined in the Purchase Agreement) for the applicable earnout period,plus (iv) seventy five percent of any SaaS P&L EBITDA generated in excess of the projected SaaS P&L EBITDA for the First Earnout Period and the Second Earnout Period, as applicable.

Current wording

Pursuant to the CarePICS Purchase Agreement, for each of (A) the period beginning on the CarePICS Closing Date and ending on March 31, 2026 (the “First Earnout Period”) and (B) the period beginning on April 1, 2026 and ending on March 31, 2027 (the “Second Earnout Period”), each Seller is entitled to such Seller’s pro rata share of a value equal to (i) $2,000,000minus (ii) any funding provided by the Purchaser or its affiliates to the SaaS P&L (as defined in the CarePICS Purchase Agreement) during the First Earnout Period in excess of $110,000 per month,minus (iii) any shortfall in the projected SaaS P&L EBITDA (as defined in the CarePICS Purchase Agreement) for the applicable earnout period,plus (iv) 75% of any SaaS P&L EBITDA generated in excess of the projected SaaS P&L EBITDA for the First Earnout Period and the Second Earnout Period, as applicable.

Previous wording

Each earnout payment, if any, is due within 90 days following the First Earnout Period and Second Earnout Period, as applicable, and is payable in cash or, at the Purchaser’s election, is payable to Sellers who qualify as “accredited investors” (as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended) in the Purchaser’s Class A-2 Units, with the value of the Class A-2 Units to be determined by an industry recognizable third-party valuation.

Current wording

Each earnout payment, if any, is due within 90 days following the First Earnout Period and Second Earnout Period, as applicable, and is payable in cash or, at the Purchaser’s election, is payable to Sellers who qualify as “accredited investors” (as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended) in a combination of 30% cash and 70% of the Purchaser’s Class A-2 Units, with the value of the Class A-2 Units to be determined by an industry recognizable third-party valuation firm. Pursuant to the CarePICS Purchase Agreement, the aggregate value of the amounts paid for the First and Second Earnout Periods will not exceed $10,000,000.

Previous wording

In addition, for a period ending 10 years following the CarePICS Closing Date (the “Purchaser Value Earnout Period”), each Seller is entitled to receive annual earnout payments based on the census of patient volume for the previous year and be based upon a rate of $5.00 enablement value per patient per year (the “Purchaser Value Earnouts”). Each earnout payment, if any, is due between 30 and 90 days following the end of each fiscal year during the Purchaser Value Earnout Period, and is payable in cash or, at the Purchaser’s election, is payable to Sellers who qualify as accredited investors in the Purchaser’s Class B Units, with the value of the Class B Units to be determined by an industry recognizable third-party valuation. Pursuant to the Purchase Agreement, the aggregate value of the Purchaser Value Earnouts will not exceed $10,000,000.

Current wording

In addition, for a period ending 10 years following the CarePICS Closing Date (the “Purchaser Value Earnout Period”), each Seller is entitled to receive annual earnout payments based on the census of patient volume for the previous year and be based upon a rate of $5.00 enablement value per patient per year (the “Purchaser Value Earnouts”). Each earnout payment, if any, is due 90 days following the end of each fiscal year during the Purchaser Value Earnout Period, and is payable in cash or, at the Purchaser’s election, is payable to Sellers who qualify as accredited investors in a combination of 30% cash and 70% of the Purchaser’s Class B Units, with the value of the Class B Units to be determined by an industry recognizable third-party valuation firm. Pursuant to the CarePICS Purchase Agreement, the aggregate value of the Purchaser Value Earnouts will not exceed $10,000,000.

Previous wording

For the three months ended March 31, 2025, net cash used in investing activities was $5.2 million compared to $0.1 million used in investing activities during the three months ended March 31, 2024. Cash used in investing activities during the three months ended March 31, 2025 primarily included $3.5 million for our minority investment in BMI and $1.7 million related to the capitalization of certain costs related to the buildout of our THP technology platform.

Current wording

For the six months ended June 30, 2025, net cash used in investing activities was $9.1 million compared to $0.1 million used in investing activities during the six months ended June 30, 2024. Cash used in investing activities during the six months ended June 30, 2025 primarily included $2.1 million related to the CarePICS Acquisition, $3.5 million for our minority investment in BMI and $3.4 million related to the capitalization of certain costs related to the buildout of our THP technology platform.