BioStem Technologies Q2 Earnings Call Highlights

Key Points

• Second-quarter revenue rose to $7.9 million from $6.1 million in the first quarter, driven by hospital revenue growth to $6.7 million and increased physician-office sales. BioStem raised the low end of its 2026 revenue outlook to $26 million-$29 million.
• BioStem is shifting toward a hospital-focused model, expanding its sales force, GPO access and adoption of its Neox, Clarix and VENDAJE products. The company also completed its Nasdaq uplisting, which management expects to improve visibility and capital-market access.
• The company reported a $9 million GAAP net loss and ended the quarter with $7 million in cash after $5.5 million of operating cash use. Management plans to move Neox and Clarix manufacturing in-house in the first half of 2027, potentially adding 15-20 percentage points to gross margins, while evaluating financing options for a $10 million contingent payment.

BioStem Technologies OTCMKTS: BSEM reported second-quarter revenue of $7.9 million as the company continued its transition to a predominantly hospital-focused commercial model. Revenue increased from $6.1 million in the first quarter, supported by higher hospital sales, expanded commercial coverage and a full quarter of contribution from its acquired business.

Hospital revenue rose sequentially to $6.7 million from $5.4 million in the first quarter, while physician office revenue increased to $1.1 million from $772,000. Chief Executive Officer Jason Matuszewski said the second quarter was the company’s first full quarter operating primarily as a hospital-focused business.

“During the quarter, we increased hospital revenue sequentially to $6.7 million, completed the implementation of BioStem's own customer relationship management system, and continued building the commercial organization needed to support our growth strategy,” Matuszewski said.

After the quarter ended, BioStem completed its uplisting to the Nasdaq Capital Market, with its common stock beginning trading on Nasdaq on Aug. 7. Matuszewski said the listing expands the company’s visibility and access to capital markets while supporting talent recruitment and retention.

Commercial Expansion and Hospital Strategy

BioStem is concentrating its commercial resources on hospital adoption of its Neox, Clarix and VENDAJE product lines. Chief Commercial Officer Barry Hassett said the products serve surgical and wound-care applications including urology, orthopedics, spine, women’s health, foot and ankle, colorectal surgery, and acute and chronic wound care. The company estimates these applications represent a $26 billion addressable market.

The company is seeking to add surgeons and hospital accounts while increasing utilization among existing users. Hassett said BioStem remains on track to have more than 40 W-2 sales representatives and more than 30 independent sales agents by year-end. At the time of the call, the company had 30 direct representatives and five regional directors.

BioStem has group purchasing organization agreements that provide access to member facilities representing more than 70% of U.S. hospital beds, according to Hassett. The company is working to add the VENDAJE line to applicable GPO contracts.

The company also introduced its BioRetain dry products to the hospital sales organization during the quarter. It completed the first phase of a customer relationship management platform integrated with its enterprise resource planning system, bringing sales logistics, operational support, invoicing and collections in-house after operating under a transition services agreement with BioTissue.

Hassett said the company received eight U.S. design patents during the quarter related to fenestrated human placental allograft designs. He also said BioStem expects to launch its first 510(k)-cleared product later in 2026.

Clinical Programs and Manufacturing Transfer

BioStem expects to publish additional results from its diabetic foot ulcer, or DFU, study in coming months. The company also expects top-line published data from its venous leg ulcer, or VLU, study in the second half of 2026. Hassett told an analyst that the company remains on target to publish the VLU data late in the year.

The company is preparing to transfer manufacturing of the Neox and Clarix product lines to its own facilities during the first half of 2027. Matuszewski said the products can be made in BioStem’s existing facility with minimal capital expenditures.

Management expects the manufacturing transfer to improve operating leverage, gross margin and profitability after it is completed. Product continuity is expected to be maintained through the company’s manufacturing and supply agreement with BioTissue during the transition.

Chief Financial Officer Brandon Poe said current gross margin of 61% reflects the hospital business’s use of BioTissue as an outsourced supplier. In response to an analyst question, Poe said the company could potentially add 15 to 20 percentage points of margin after production moves in-house, though he said management’s expectations are higher over time.

Second-Quarter Results and Outlook

Gross profit was $4.8 million in the second quarter, compared with $3.8 million in the first quarter, while gross margin remained 61%. Poe said the company expects modest gross-margin pressure in the second half as it works through preexisting Neox and Clarix inventory acquired at pricing below the supply agreement rate.

Operating expenses totaled $13.2 million, up from $12.6 million in the first quarter, primarily reflecting investments in the commercial organization and supporting infrastructure. BioStem reported a GAAP net loss of $9 million, or $0.52 per share, compared with net income of $10,000, or $0.00 per share, in the second quarter of 2025. Adjusted EBITDA loss was $4.6 million, compared with adjusted EBITDA income of $2.5 million a year earlier.

Cash and cash equivalents were $7 million as of June 30, down from $13.7 million at March 31. Operating cash use was $5.5 million during the quarter, and the company completed a $2.5 million institutional financing.

During the question-and-answer session, Poe said the company was working through options to meet a $10 million contingent consideration payment related to a milestone. He said BioStem had obtained an extension from BioTissue and was evaluating financing alternatives, including non-dilutive options, to support its growth plans.

BioStem raised the lower end of its full-year 2026 revenue outlook, now forecasting revenue of $26 million to $29 million, compared with prior guidance of $25 million to $29 million. The company expects sequential hospital revenue growth through the year as sales representative productivity improves, GPO utilization expands and elective surgical procedures seasonally increase in the second half.

Management expects physician office revenue to account for roughly 10% to 15% of the business going forward, with hospital sales representing approximately 85% to 90%. While physician office results were stronger than expected in the quarter, the company said it continues to anticipate only a gradual recovery in that market during the second half of 2026.

About BioStem Technologies (OTCMKTS:BSEM)

BioStem Technologies, Inc, 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.

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