BioStem Technologies Q4 2024 Earnings Report

BioStem Technologies EPS Results

• Actual EPS: $0.17
• Consensus EPS: $1.25
• Beat/Miss: Missed by -$1.08
• One Year Ago EPS: N/A

BioStem Technologies Revenue Results

• Actual Revenue: $72.53 million
• Expected Revenue: $101.20 million
• Beat/Miss: Missed by -$28.67 million
• YoY Revenue Growth: N/A

BioStem Technologies Announcement Details

• Quarter: Q4 2024
• Date: 5/12/2025
• Time: After Market Closes
• Conference Call Date: N/A
• Conference Call Time: N/A

BioStem Technologies (OTCMKTS:BSEM), a life sciences corporation, focuses on discovering, developing, and producing pharmaceutical and regenerative medicine products and services. It develops various biologic stem cell based alternative products, as a treatment for ailments, such as joint pain, tendon and ligament injuries, neurodegenerative, and autoimmune diseases. The company is also engages in the repackaging and distribution of active pharmaceutical ingredients and other pharmaceutical compounding supplies; and develops and markets nutraceutical products under the Dr. Dave's Best and Nesvik Organics brands, as well as other non-proprietary products in the United States and internationally. The company sells products through e-commerce platforms. BioStem Technologies, Inc. was incorporated in 2006 and is based in Pompano Beach, Florida.

BioStem Technologies Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day, everyone, and welcome to the BioStem Technologies Fourth Quarter and Full Year twenty twenty four Conference Call. Just a reminder that today's call is being recorded. At this time, I would like to hand things over to Mr. Adam Holtzworth. Please go ahead.

[Adam Holdsworth, Founder at HOLDSWORTH]

Good afternoon, everyone, and thank you for joining our conference call to discuss BioSum's fourth quarter and full year twenty twenty four financial results and corporate highlights. Leading the call today will be Jason Motasevskiy, the company's Founder and Chief Executive Officer and Mike Fortunato, the company's Chief Financial Officer. Before we begin, I'd like to remind everyone that our remarks today may contain forward looking statements based on the current expectations of management, which involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated. These risks are described in the company's filings with the over the counter market. You are cautioned not to place undue reliance on any forward looking statements, which speak only as of the date made and may change at any time.

[Adam Holdsworth, Founder at HOLDSWORTH]

While we may update or revise these statements from time to time, the company undertakes no commitment to do so unless required by applicable securities laws. This call also includes references to certain financial measures that are not calculated in accordance with Generally Accepted Accounting Principles or GAAP. We generally refer to these as non GAAP financial measures. Reconciliations of these non GAAP financial measures to the most comparable GAAP measures are available in the company's earnings press release on the Investor Relations section of BioSentence website. With that, I'm now pleased to turn the call over to Jason Manishevsky.

[Adam Holdsworth, Founder at HOLDSWORTH]

Jason?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Thank you, Adam, and thank you all for joining us today. Before we begin today's call, I want to turn the call over to Mike to address the delay in our Form 10 and the challenges we've encountered related to revenue recognition under ASC six zero six. We believe that these are the remaining issues associated with allowing our Form 10 to become effective.

[Michael Fortunato, Chief Financial Officer at Biostem]

Thanks, Jason. The accounting complexity surrounding our distribution agreement with Venture has required a significant amount of dialogue with our auditors and the SEC, particularly around the treatment of bona fide service fees paid to Venture. We believe there are three potential outcomes for our financial reporting going forward, depending on the final resolution. One, a gross revenue model with adjustments to the timing of revenue recognition based on sell through to end user physicians two, a hybrid net model where a portion of the bona fide service fees are treated as pass throughs and remain in sales and marketing expense and three, a fully net model where all of the bona fide service fees are netted against revenue, which could materially impact reported revenue. We would not expect any material change in net income, adjusted EBITDA or EPS as a result of these discussions or the SEC review process.

[Michael Fortunato, Chief Financial Officer at Biostem]

We are working diligently with our legal and accounting advisers to resolve this matter and we remain confident in our underlying business fundamentals. We appreciate your patience as we complete this important step to ensure our Form 10 is both accurate and aligned with all applicable guidance. I'll turn the call back over to Jason.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Thanks, Mike. I'm proud to report a milestone quarter and year for BioSem Technologies. For Q4 twenty twenty four, consistent with our current accounting policies, we achieved revenue of $102,900,000 a significant increase from $11,500,000 in the same quarter of 2023. For the full year, revenue reached $301,800,000 reflecting robust market demand, successful nationwide launches and strategic execution across our portfolio. Our strong gross margin of 95% underscores our focus on operational efficiency and scalability, particularly during the significant product launch such as that of Vendahe AC.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

We delivered positive GAAP net income of $15,500,000 this quarter and $37,900,000 for the year with adjusted EBITDA of $11,100,000 for Q4 and $39,400,000 for the year. These outstanding results were driven by strong adoption of our proprietary BioRetain technology powering Amnurep2 and Vendahe AC. I want to specifically recognize our partner, Ventra Medical, their instrumental role in accelerating our growth and commercial success. Looking ahead, our nationwide CMS approved pricing for Vendahe AC positions us competitively for 2025. We continue to invest strategically in clinical validation efforts to substantiate the clinical superiority of our products, which we believe will continue to drive market penetration and payer coverage.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Our first randomized clinical trials are underway in diabetic foot ulcers and venous leg ulcers with initial data expected by mid-twenty twenty five. In the policy landscape, we've actively engaged with CMS, congressional leaders and industry stakeholders to advocate for fair reimbursement frameworks that balance patient access to the most innovative technologies and responsible utilization. We were pleased that this past Friday CMS announced a second delay in the implementation of the local coverage determination policy. It has now been delayed until 01/01/2026. We remain confident that through continued dialogue with all stakeholders, the final resolution will be a positive outcome for patients, providers, payers and the overall industry.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

On our uplifting strategy, we are working toward addressing the remaining SEC comments and finalizing necessary documentation. Our NASDAQ listing approval is contingent only on the effective Form 10, which we anticipate soon. Uplifting to NASDAQ remains a pivotal milestone, broadening our access to institutional investors and enhancing our long term shareholder value. I'll now turn the call over to Mike Fortunato for a more detailed financial review.

[Michael Fortunato, Chief Financial Officer at Biostem]

Thank you, Jason, and good afternoon, everyone. We appreciate you joining us today, I will now present BioSim's fourth quarter twenty twenty four and year end financial results, which were a record achievement for the company. As I discussed earlier,

[Michael Fortunato, Chief Financial Officer at Biostem]

these results are unaudited and reported consistent with our current accounting policy and are subject to change, which

[Michael Fortunato, Chief Financial Officer at Biostem]

could be material based on our resolution of SEC comments and final closing of our year end audit. For the fourth quarter twenty twenty four, net revenue was $102,900,000 compared to $11,500,000 for the same period in 2023, reflecting an increase of $91,300,000 year over year. This increase was driven primarily by the nationwide launch of Endahi AC and continued market demand for ImmuneRev two. Gross profit for the fourth quarter was $99,300,000 or 97% of net revenue compared to $10,900,000 or 95% of net revenue for the same period in 2023, reflecting an increase of $88,400,000 This improvement was largely due to nationwide launch of Endot AHC and continued demand for IndioWrap II. Operating expenses for the fourth quarter of twenty twenty four were CAD 90,900,000.0 compared to 11,200,000.0 for the fourth quarter of twenty twenty three, an increase of CAD 79,700,000.0.

[Michael Fortunato, Chief Financial Officer at Biostem]

The increase in operating expenses is primarily due to increased headcount, higher bona fide service fees driven by an increase in sales through our partner, Ventra Medical, expenses associated with the launch of Endati AC and increases in share based compensation. We are also pleased to report that we achieved our fourth consecutive quarter of positive GAAP net income. Net income for the fourth quarter was $15,500,000 or $0.94 per share with adjusted EBITDA of 11,100,000.0 Turning now to full year results. Net revenue for 2024 was CAD301.8 million compared to CAD16.7 million for the same period 2023, an increase of CAD285.1 million. This increase was driven primarily by the nationwide launch of Endahi AC and continued market demand for Amneal Wrap II.

[Michael Fortunato, Chief Financial Officer at Biostem]

Gross profit for the twelve month period was $288,100,000 or 95% of net revenue compared to 15.4 or 92% of net revenue for the same period last year, an increase of 272,700,000 This growth is primarily attributable to new sales volumes for the launch of EndiA AC and the continued growth of AmnioRev2. Operating expenses for the twelve months twenty twenty four were $256,900,000 compared to twenty three point two million dollars for the same period last year, an increase of $233,700,000 The increase is primarily due to higher costs related to scaling our operations, including workforce expansion, higher bona fide service fees driven by an increase in sales through our partner, Venture Medical and increases in share based compensation. Net income for fiscal twenty twenty four was $31,900,000 or $1.95 per share with an adjusted EBITDA of $39,400,000 In addition, our cash balances increased from $14,600,000 from the previous quarter to $22,800,000 in the fourth quarter, an increase of $8,200,000 During the fourth quarter of twenty twenty four, we completed a detailed deferred tax study including a Section three eighty two analysis and confirmed that there were no limitations existing in our ability to use prior accumulated net operating loss carryforwards.

[Michael Fortunato, Chief Financial Officer at Biostem]

As a result, we utilized 100% of our federal and Florida net operating loss carryforwards, totaling approximately $54,700,000 The utilization of these loss carryforwards fully offset our income tax expense in the amount of $5,800,000 recognized through September 30 and resulted in an additional income tax benefit of $7,100,000 for the fourth quarter of twenty twenty four. The full year income tax benefit as a result of fully utilizing our net operating loss carry forwards was $1,300,000 As we look ahead to 2025, we are confident that these strong fourth quarter results combined with the successful execution of our strategic initiatives position BioStent for sustained growth and success. We remain focused on driving expansion, increasing profitability and maximizing value for our shareholders. I'll now turn the call back over to Jason for an update on operational highlights.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Thank you, Mike. As we close this record breaking year, I want to briefly highlight four key pillars driving BioSim's continued success and what we are really excited about in 2025. First, our strong financial performance has positioned us exceptionally well. Additionally, our increased cash position has further strengthened our balance sheet, providing a solid financial foundation to support our ongoing strategic initiatives and future growth. Our cash balance has increased to $22,800,000 at the end of Q4, up from $14,600,000 in the previous quarter, reflecting an improvement of $8,200,000 Second, our nationwide launch of BENDAHLEA AC alongside the continued market strength of Amnurep2 represents a critical milestone in our commercial strategy.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

The CMS national pricing approval effective from Q4 has significantly expanded patient access across The U. S, further accelerating our growth trajectory in the chronic wound care market. We are strategically focused on transitioning more customers to Vendahi AC for enhanced brand continuity within the Vendahi product family, while simultaneously reducing our SG and A expenses by eliminating licensing fees associated with AmnioRaf2, which we believe will ultimately improve our bottom line. Third, our commitment to clinical excellence remains strong. We are currently conducting three randomized controlled clinical trials.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Our first trial evaluating our BioRetain amnion chorion allograft for diabetic foot ulcers has enrolled seventy five percent of the patients to date with enrollment to complete in the coming months. Our second trial assessing amnion allograft for diabetic foot ulcers began enrollment in January and has enrolled over thirty percent of the patients to date. Our third trial recently IRB approved in enrolling patients focuses on the non healing venous leg ulcers. Thirty seven sites comprising of large institutions, academia and clinical research sites are currently participating in these studies with several more in process. These trials are progressing as planned with early data readouts expected by mid to late twenty twenty five and final results anticipated in early twenty twenty six.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Fourth, we remain actively engaged with CMS, Congress and industry stakeholders regarding CMS' local coverage determination policy through Project Epic. Efficiency provides improved care. Project Epic proposes a national framework designed to bring standardized regulatory and reimbursement regulation, improved patient access and sustainable innovation to wound care. It seeks precision of restrictive LCDs, stabilization through temporary payment freezes anchored to Q4 twenty twenty four ASP and the eventual introduction of a national coverage determination and evidence based reimbursement model that recognizes the benefits of superior products driving improved patient outcomes. Notably, recent analysis published in the peer reviewed Journal of Wound Care indicates that the proposed restrictive LCD could inadvertently increase Medicare trust fund expenditures significantly.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Restricting treatments to an arbitrary number of applications over a fixed period could lead to higher rates of treatment failure, increased hospitalizations, amputations, emergency visits and overall healthcare resource use ultimately increasing Medicare expenditures by potentially hundreds of millions of dollars annually. Project EPIC provides a thoughtful alternative aimed at balancing cost containment, clinical flexibility and optimized patient outcomes. Since publicly introducing Project EPIC, we have received overwhelming positive feedback from industry peers, policymakers, health care providers and patient advocacy groups, all recognizing the potential of this balanced approach to improve patient access and accelerate innovation in wound care. There are two additional matters that I would like to provide further clarity on. First, I want to address our announcement last November of the signing of a letter of intent to acquire commercial stage products and development technologies from Progenicare Global.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Following due diligence, we decided to pause the acquisition process. And as a lender, we are continuing to follow their progress. Moving forward, we remain actively engaged in evaluating opportunities for acquisitions, joint ventures or other agreements that we will expand our product portfolio and our market penetration. Secondly, I want to address the FDA warning letter we received dated 01/17/2025 related to FDA September twenty twenty three inspection of our manufacturing facility in Pompano Beach, Florida. The warning letter cited observations concerning four injectable based products, namely OraPro, Probiscus, NeoFil and RIIO.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

After inspection, but before the warning letter, we had already ceased manufacturing and distribution of these four products as of late February twenty twenty four, which represented less than a quarter of 1% of our 2024 net revenue. In the warning letter, FDA explained that the agency determined these products did not qualify for regulations solely under Section three sixty one of the Public Health Service Act as tissue products, but were instead subject to regulation as a biological product. In response to the warning letter, we submitted a comprehensive written response to the FDA on 02/10/2025 outlining our plan for addressing all identified concerns. We reiterated our decision to discontinue the manufacturing and distribution of the four products and detailed corrective actions, enhancements to our quality management systems and compliance measures aligning with FDA regulations for our current tissue product portfolio. More importantly, our current products have received written confirmation from the tissue reference group at the FDA that they meet Section three sixty one criteria confirming the regulatory pathway for the current portfolio is considered a tissue product, while the observations cited in the warning letter, on the other hand, were issued under the regulations applicable to the manufacturing of drugs and biologic products.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

The warning letter citations are therefore not directly relevant to the products that we currently manufacture and distribute. However, we recognize that there are some similarities between the processing regulations for tissue products and manufacturing regulations for drug and biological products and our corrective actions are designed to address these commonalities and opportunities for improvement. We continue to provide regular updates to the FDA on our progress and remain fully committed to maintaining the highest standards of product quality, safety and regulatory compliance. On public company front, our pathway to uplisting to NASDAQ is clear and defined and progressing. We are actively addressing the SEC comments and finalizing the amended Form 10 filings required for NASDAQ listing.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

We believe achieving this milestone will significantly enhance BioSim's visibility, credibility and access to broader institutional investment, creating long term shareholder value. Looking ahead to 2025, we are confident that the strategic initiatives we have established will sustain our strong momentum. We expect continued financial growth, further clinical validation, expanded payer coverage and ongoing market penetration of our core products, Amnoref II and VENDAHA AC. We are also actively exploring opportunities to expand our Advanced Wound Care portfolio and to launch our platform technology into complementary market sectors. I want to express my gratitude to our exceptional team at BioStim as well as our trusted partner, Venture Medical, our shareholders and all our stakeholders who contribute daily to our vision of improving outcomes in patients with chronic wounds.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

With that, operator, please open the line for questions.

[Operator]

We'll take our first question today from Swayampakula Ramakanth with H. C. Wainwright.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Good afternoon. This is RK from H. C. Wainwright. How are you folks doing this afternoon?

[Michael Fortunato, Chief Financial Officer at Biostem]

Good.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Hey, RK. How's it going?

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Good. Good. So couple of quick questions. So the the first one, you know, regarding trying to get the resolution on the on the bonafide service payments that we need to do to venture. You know,

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

what

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

you know, what what sort of payments are these? And then, you know, and how how much is it going to impact, your reported, you know, revenue lines. And and how how I I know it's not easy to figure out with the regulatory bodies, but in general, you know, what is your expectation in terms of timing for that placement?

[Michael Fortunato, Chief Financial Officer at Biostem]

Jason, do want me to take that?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Yep. Go for it, Mike.

[Michael Fortunato, Chief Financial Officer at Biostem]

Sure. Sure. So so thanks for the question. Yeah. This you know, the basic issue here is the payments we make to to Venture Medical classified currently as sales and marketing expense and OpEx.

[Michael Fortunato, Chief Financial Officer at Biostem]

The question that the SEC is asking is around, whenever you make payments to a customer, the question becomes, is that a discount or is it for bona fide services or some distinct services they're providing? You know, with the way we've accounted for it, we believe they're distinct services. It's a sales and marketing engine for us, and getting our goods to the end user customers. And and so they're just going we have there's a it's highly technical. It's taking longer than I'd like, but we've just submitted a response back to the SEC staff, I want to say a couple days ago.

[Michael Fortunato, Chief Financial Officer at Biostem]

So I'm looking forward to hearing from them. So at the end of the day, it's really geography on the income statement. The question essentially the bona fide service fees you see in the sales and marketing expense, I think we actually have them separately classified. Those would move. If the SEC says, look, you got to do this on a net revenue basis, essentially it would go against revenue.

[Michael Fortunato, Chief Financial Officer at Biostem]

So revenue would come down by that amount, but also sales and marketing would come down. So when we talk about you know, net income, EBITDA, etcetera, not being affected, that's what we're talking about, moving those costs up against revenue.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Okay. So it's either going to hit the gross margin or the operating margin? So that

[Michael Fortunato, Chief Financial Officer at Biostem]

It'll hit the gross margin in a sense that revenue would be decreased by the amount of the bona fide service fees. Yeah. So it's not ideal, but the, you know, the net income, the EBITDA would be be the same stuff, roughly.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Okay. Okay. I got And and then in in terms of the timing, do you have any idea?

[Michael Fortunato, Chief Financial Officer at Biostem]

We don't. I mean, I I'd love to be able to tell you tell you all. It's Yeah. Something I've been working on very hard, obviously. You know, I think we're kind of at the back end call of the SEC at this point, but we've kind of put forth our final best argument for why we believe it's correct the way it currently is.

[Michael Fortunato, Chief Financial Officer at Biostem]

We're just waiting to hear back from them. I can tell you that, you know, we're the Nasdaq application has been submitted. There's a couple there were a couple of comments that we had that we cleared with them. And once this is we're clear with the SEC one way or the other, then we should be good to go. I I just don't have timing for you.

[Michael Fortunato, Chief Financial Officer at Biostem]

I apologize.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

No issues. And then on the on the FDA letter itself, on the on the inspection letter and and and the clarifications that you have right now, Because you are not really commercializing those products anymore, so is that relevant at all in the sense, are there any of these processes that that that you're you're doing right now for your other product that could be impacted by that same letter? Or, you know, since you're not doing any any production, so that letter is basically means nothing.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Yeah. Okay. I'll I'll take that one. You know, we we just wanted to get it out and and make sure everyone understood exactly what you just said that that when the FDA came and did the inspection, site inspection, we already were working towards discontinuing those products and their focus on those flowable injectable based products are separate and distinct than our existing product line that we're commercializing today. So but we just wanted to make sure everyone understood that there really is no impact to the manufacturing operation of our facility based on this warning letter and that they were solely focused on those four injectable products and looking at it in the lens of a three fifty one or BLA or, drug and biologic product versus how we manufacture products today, which is good tissue practices, via and towards AATB accredited, practices.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Great. So you ended the, the fourth quarter with a hundred and $8,000,000. So, even though that you you you exited the year at 300 and odd million for the year. So can we analyze, you know, the the fourth quarter number for the for 2025? Or do you think, you know, you know, how sustainable, you know, is that in in general?

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

And if if there is expectation for growth, what sort of expectation, you know, what's the push and pull on that annualization number, basically?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Do you want to speak to that?

[Michael Fortunato, Chief Financial Officer at Biostem]

Yes, sure. Sure. I can speak to the revenue. So just to be clear, the product is still selling, there's still volume, there's still there's a lot of demand. The question then becomes, are we if we have to restate the revenue number, then it'd probably be better to model on EBITDA versus revenue at this point only because what would change would be the revenue number would come down by the same amount that sales and marketing or bonus and service fee would be coming down.

[Michael Fortunato, Chief Financial Officer at Biostem]

So the economics are exactly the same. It's just the placement of the cost on the income statement. So I don't know if that helps you or not. That's the way I kind of think about it. At the end of the day, it it it's a question of does it go against or have any of these

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

That's not the question at all I'm asking. I'm just talking about the expectations for 2025. Since since you, you know let's let's assume everything is, you know, is as is, like, what what you're just reporting. So you reported, like, hundred and 4,000,000 or so for the Right. The fourth quarter.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

So can we analyze it, you know, and and expect, you know, somewhere north of 400 for 2025? Or what's that push and pull on that?

[Michael Fortunato, Chief Financial Officer at Biostem]

Yeah.

[Michael Fortunato, Chief Financial Officer at Biostem]

I mean, unfortunately, we don't like to I mean, I'm not in a position to give guidance around that. I mean, Jason, don't know if you if you wanna give any more color on it, but, know, without

[Michael Fortunato, Chief Financial Officer at Biostem]

giving

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

guidance Think I think, you know, obviously, you know, having the LCD pushed to implementation Jan Jan one of twenty twenty six, I think I think that sets us up to continue our progress through 2025. And we also mentioned that we are looking to have some data for our first DFU trial later this year as well. And like Mike said, currently, we don't extend guidance around where we're going. But I think we're in a good position throughout 2025 to continue our progress.

[Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.]

Okay, perfect. Thank you. Thank you very much for taking all my questions.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Thanks, RK.

[Operator]

The next question is Erik Voss, Mission Vertical.

[Erik Voss, General Partner at Mission Vertical LLC]

Hey guys, can you hear me?

[Michael Fortunato, Chief Financial Officer at Biostem]

Yes. We can. Yes.

[Erik Voss, General Partner at Mission Vertical LLC]

Great. First of all, congratulations on a great year and a spectacular quarter. That was quite impressive. I'm wondering, just to start off again, just to reiterate, can you verify your earnings and EBITDA don't change in any of these scenarios that you're contemplating changing the top line to?

[Michael Fortunato, Chief Financial Officer at Biostem]

Yes, yes. I can take that, Jason. I mean, I think there could potentially be a small change if we go net sorry, if we say gross, there could be a small change in the revenue respect to because currently, we're essentially recognizing revenue we sell to Venture Medical. The question would become, you know, from the SEC would be, well, look, you know, if the end user cost if the end user is your customer, should you should you essentially recognize revenue when that stuff is sold through. I can tell you that the turnover is very fast.

[Michael Fortunato, Chief Financial Officer at Biostem]

That number, if there is a decrease in revenue, would not be material. So I think it could change slightly. We're not talking magnitudes of tons of money. We're just talking probably two weeks' worth of inventory or two weeks' worth of sales potentially.

[Erik Voss, General Partner at Mission Vertical LLC]

But what you said is earnings don't change. Earnings are going to earnings you guys report of the earnings?

[Michael Fortunato, Chief Financial Officer at Biostem]

Yes. I mean, earnings would change only but to the extent we I don't think they materially change, think is what we said. So basically, they could change a little bit, but I don't think they're going materially change.

[Erik Voss, General Partner at Mission Vertical LLC]

Perfect. Okay. Can you help us with taxes then going forward? So that $0.94 was on zero taxes or even a benefit. What should the effective tax rate be, Mike?

[Michael Fortunato, Chief Financial Officer at Biostem]

Yes. We're estimating around 24% tax rate at this point.

[Erik Voss, General Partner at Mission Vertical LLC]

Okay. The tax rate

[Erik Voss, General Partner at Mission Vertical LLC]

in this quarter was zero?

[Michael Fortunato, Chief Financial Officer at Biostem]

Essentially, was I think we had a benefit. So it was like minus 2% or something like that because we had a little bit of an excess benefit that came through. So basically, the NOLs are all gone. We essentially used them all up for '24 earnings. Going forward, we're looking at ways to potentially reduce taxes obviously and make sure we're squared away there.

[Michael Fortunato, Chief Financial Officer at Biostem]

So we actually just engaged new tax advisors to help us in that regard.

[Erik Voss, General Partner at Mission Vertical LLC]

Okay, perfect. Maybe going after the outlook for 2025 in a little bit different way, Jason, can you kind of comment or give us a sense for how distribution looks right now versus mid year? I know that you guys were kind of focused on the West Coast and we're moving to the East Coast. But if you could talk maybe about penetration across the nation, penetration with podiatrists and if and when you're in hospitals, would love to just get a sense for what inning you think this distribution story is in right now, Jason?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Yes. Mean, I think right now, like you mentioned, Eric, we initiated with Venture Medical and we have a more higher concentration specifically on the West Coast and then also specifically in what we call the Mobile Wound Care segment, looking at long term care, skilled nursing, physician office and smaller podiatry groups. And so now as we kind of cascaded through 2024 and into early twenty twenty five, and frankly, now with this LCD overhang kind of pushed back till the beginning of 2026, I think there's an opportunity just to really start looking at some larger organizations more on the East Coast, East Of The Mississippi. And we are in constant dialogue with the venture team on how do we penetrate that the geography of Northeast and Southeast regions. And then also to how do we expand our access to some of the groups that are in there, I'll call it more hometown geography out on the West Coast and looking at some of the larger mobile wound care providers, etcetera.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Mobile wound care is an expansive it's had a lot of expansion over the last few years. It's definitely the largest revenue generator, in regards to the pie of where our end physicians are located. And then, you know, kind of looking at where where our organization, seeks new opportunities is definitely, you know, getting into, the hospital hospital segment and also the ambulatory surgery center segment and hospital outpatient segment. And then last but not least, the VA and federal segment. So I think there's a lot of greenfield for us compared to our competitors, where I think there's a lot of opportunity that we have to tap into areas where, yes, there would be head to head competition, but at the same time, a lot of opportunity for us to really articulate our story about our BioRetain products and the product differentiation there.

[Erik Voss, General Partner at Mission Vertical LLC]

Yes. That's fantastic. That's my final question.

[Erik Voss, General Partner at Mission Vertical LLC]

Thanks a lot, guys. Congratulations again.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Thanks, Eric. Thanks.

[Michael Fortunato, Chief Financial Officer at Biostem]

Thanks.

[Operator]

We'll go to Mitchell Sachs, Grand Slam.

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

Hey, guys. Two questions. One is, if we look at your revenue where you go with kind of the worst case scenario with the SEC saying the costs are going be removed from revenue, what does your gross margin look like then on a percentage basis?

[Michael Fortunato, Chief Financial Officer at Biostem]

Yes. Thanks for the question. Let me just look at something here really quick. I had something prepared for that. Let me think the easiest way to do this would be if you think about the revenue, roughly 78%, say 72% to 78% of that's going to go into come out of sales and marketing and into gross margin into the the gross margin line.

[Michael Fortunato, Chief Financial Officer at Biostem]

Let me let me see if I have something here on that. I don't think I have it off the top of my head, but I can definitely if you wanted to connect with me offline, I can definitely about that. Let me see here. Hang on one second.

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

Sure.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Yeah. Maybe the easier way to answer your question, Mitchell, is to look at, like Mike just said, we would just be moving up bona fide services SG and A and netting it against top line revenue in a worst case scenario, and then ultimately then calculating gross margin from there.

[Michael Fortunato, Chief Financial Officer at Biostem]

Yes. I'm sorry, don't have the number off the top of my head, but we can definitely to Jason's point, you just simply take the sales and the bona fide service fee out of the OpEx and jam it into as an offset to revenue and then rerun it.

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

Okay. And then my second question comes with respect to the revenue that was generated in the fourth quarter. And I know you're not giving guidance. When I think about that just sort of more simplistically, is there any seasonality or anything that occurred in the quarter that skewed revenues to that quarter that would not be reappearing in future quarters? I don't know how to think about it like one time stocking kind of stuff?

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

Or is that is it just sort of a normal course of business for the fourth quarter? And is there any seasonality?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Yes. I mean, we get this question quite a bit actually. Sadly, any sort of chronic wound doesn't have a season to it. I think we continue to push the venture teams continue to push on getting product commercialized. I think maybe some uncertainty around the market in regards to where things go.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

If you guys don't know, the original LCD implementation date was February. And I don't does that push providers to look at the use of skin substitutes prior to that date and make sure patients are getting treated with the appropriate products before they come off the ability to have them, may or may not address why there's was there why was there broader adoption of the product. But we do continue to kind of grow our customer base. And kind of to my answer back to Eric, I think there's areas in which we didn't have tapped into at the beginning or middle of last year where we started to get in access into later in the half of the year more geographically on the East Coast versus the West Coast.

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

Okay. So with respect to like with your customers, is there any kind of stocking or is stuff just ordered as needed? In other words, like how does that flow?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Yeah. It kinda, as Mike mentioned earlier, you know, a lot of the material is is flowed through. We don't have a situation where Venture takes possession and holds inventory for long periods of time. So a lot of the material is sold through at a very rapid pace through to the end customer, which would be the physician.

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

Okay.

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

And again, so in that situation then if we think about sales, what occurred in the

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

fourth quarter, hopefully, you would be able to build on that in 2025. That would be your goal?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

That is correct.

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

Okay.

[Mitchell Sacks, CIO at Grand Slam Asset Management LLC]

That's good for me. Thank you.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Thank you.

[Operator]

And we'll move to Dick Hebner, GVC.

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

Hey, Jason. Congratulations on a really good quarter and year. I have a question as it relates to the percent of revenues that stem from Medicare currently. Do you have information on that?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Yeah. I mean, majority of our revenue is predicated on Medicare reimbursement reimbursement at this time.

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

Okay. And Jason, I've read that a couple of the approved items for treatment for the lower extremity wounds currently are under $200 What is the cost per patient for treatment utilizing your products?

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Most of the prices that can be found in the marketplace are subject to ASP price reporting. And so Vendai as well Vendai AC as well as MRAP two both have, published ASPs that you can go on CMS' website and find them.

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

K. I find it interesting. You know, my mother, four years ago, Medicare picked up the expense for 30 bariatric chamber treatments to heal a wound at the cost of about $75,000, where the infections were antibiotic resistant and could not it wasn't being healed.

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

And I just find it amazing that they wouldn't

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

look to expend several thousand dollars versus and that bariatric chamber would ran eighteen hours a day and was fully booked for

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

for nine months. I mean, it

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

was pretty amazing process to go through, but Medicare picked up all of the expense of that.

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

It just seems to me, given cost efficient

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

alternatives, that they wouldn't be willing to take more extreme measures than, you know, a couple hundred dollar expenditures that seem to be working currently in the market or not working that well in the market.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Yeah. I mean, I I think it's an interesting, point. Doctor Tuttlebuck actually just drafted and you can look at, online in Journal of Wound Care. They did an analysis of actually, what is the cost, especially in the skin substitute space, the cost to Medicare and the cost of the Medicare trust fund, for the use of these products. And it was actually a fascinating, discovery that even moving these products up to, where they are today from an ASP price reporting perspective actually saved the Medicare trust fund dollars.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Why? Because, ultimately patients aren't having amputations, patients aren't getting sepsis, which will drive a significant amount of cost to the system if these patients ultimately get, you know, brought back into the hospital system, and frankly, wounds and amputations have to be treated. There is a really bad statistic around the mortality rate of patients that ultimately end up losing a limb, and it's very high in a very short period of time. And hopefully, our goal is with utilizing technology that we have the ability to actually save those patients, save their limbs, and and, frankly, hopefully, save their lives.

[Richard Huebner, Senior Managing Partner at GVC Capital LLC]

Well, I can't I can't believe that the government wouldn't wouldn't consider it because I don't think they give full consideration either, but seems like to me that they might give consideration to the fact that, hey. It does increase the mortality and therefore remove all those patients from being on Medicare to we ship that to the state and Medicaid cost because ninety percent of the people there live last 50 on average fifteen months of their life there. Hey, we can shift the cost from Medicare to Medicaid if we continue with treatments that result in the applications and higher mortality rates. Anyway, a political commentary we don't need to get into. But thanks for your time.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

No problem. Thanks.

[Operator]

And everyone, that was our final question for today. I'd like to hand the call back to Mr. Jason Matodzewski for any additional or closing remarks.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

All right. Well, first and foremost, I want to thank everybody for joining the call. As we close out this call, I want to take a moment to reflect on how far we've come and where we're going. Twenty twenty four was a transformative year for BioStem, one defined by record financial performance, commercial execution, clinical progress and strategic clarity. We launched new products, expanded our national footprint, advanced our trials and brought forward a policy vision for the future of wound care.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

What excites me most about 2025 is the momentum we're carrying into it. With a clear strategy, a powerful platform in BioRetain and a passionate team committed to improving the lives of patients. We're focused on execution, advancing our clinical data, expanding payer access, launching new initiatives and completing our uplisting to NASDAQ. But of all, we remain committed to delivering value to our patients, our providers and to you, our shareholders. Thank you for your continued trust and support, and we look forward to keeping you updated throughout the rest of this year.

[Jason Matuszewski, Co-Founder, CEO & Director at Biostem]

Thank you all.

[Operator]

And once again, and gentlemen, that does conclude our conference. We would like to thank you all for your participation today. You may now disconnect.

Participants

Analysts

• Adam Holdsworth, Founder at HOLDSWORTH
• Jason Matuszewski, Co-Founder, CEO & Director at Biostem
• Michael Fortunato, Chief Financial Officer at Biostem
• Swayampakula Ramakanth, Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.
• Erik Voss, General Partner at Mission Vertical LLC
• Mitchell Sacks, CIO at Grand Slam Asset Management LLC
• Richard Huebner, Senior Managing Partner at GVC Capital LLC