Milestone Scientific Inc. (MLSS) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Milestone Scientific Second Quarter 2025 Financial Results and Business Update Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, David Waldman of Crescendo Communications. David, the floor is yours.

Thank you, Jenny. Good morning, and thank you all for joining Milestone Scientific's Second Quarter 2025 Financial Results Conference Call. On the call with us today are Neal Goldman, Chairman; Eric Hines, Chief Executive Officer; and Keisha Harcum, Vice President, Finance of Milestone Scientific. The company issued a press release yesterday afternoon containing second quarter 2025 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020. The company's management will now provide prepared remarks reviewing the financial and operational results for the second quarter ended June 30, 2025. Before we get started, we would like to remind everyone that during this conference call, we may make forward-looking statements regarding timing and financial impact of Milestone's ability to implement its business plan, expected revenues and future success. These statements involve a number of risks and uncertainties and are based on assumptions involving judgments with respect to future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond Milestone's control. Some of the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements are general economic conditions, failure to achieve expected revenue growth, changes in our operating expenses, adverse patent rulings, FDA or legal developments, competitive pressures, changes in customer market requirements and standards and the risk factors detailed from time to time in Milestone's periodic filings with the Securities and Exchange Commission, including, without limitation, Milestone's report on Form 10-K for the year ended December 31, 2024, and Milestone's report on Form 10-Q for the second quarter ended June 30, 2025. The forward-looking statements made during this call are based upon management's reasonable belief as of today's date, August 15, 2025. Milestone undertakes no obligation to revise or update publicly any forward-looking statements for any reason. With that, we'll now turn the call over to Neal Goldman, Chairman of the Board. Please go ahead, Neal.

Thank you, David. Good morning, everyone, and welcome to Milestone Scientific's Second Quarter 2025 Conference Call. Before we get into the results, I want to start with what I believe is one of the most important drivers of our future success, the recent addition to our leadership team. First, I'm pleased to introduce our newly appointed Chief Executive Officer, Eric Hines. Eric brings more than 25 years of leadership experience in scaling sales-driven enterprise software companies and serving customers across multiple industries, including health care. He has built efficient, high-performance teams and delivered consistent top line growth. At Ex Libris, a division of Clarivate, Eric led operations across the U.S., Canada and Latin America, substantially growing the business, ultimately generating over $100 million in revenue. Early in his career at NICE Systems, he managed a $90 million North American security business. Eric is a leader who knows how to execute at scale, and we're excited about the vision and energy he brings to Milestone. We also recently welcomed Jason Papes as Senior Vice President, Global Head of Sales and Marketing. Jason brings more than 30 years of experience in scaling commercial operations across health care and medical technology sectors. He's built national and international distribution network, driven strategic growth initiatives and led successful ventures to acquisition. His expertise spans orthopedics, neurology, pain management and digital imaging, making him a tremendous asset as we accelerate both our dental and medical businesses. On the governance side, Shanth Thiyagalingam has joined our Board of Directors. He brings in more than 20 years of global leadership in commercial scaling, reimbursement strategy and product innovation across medical device and pharmaceutical industries. Shanth's experience and track record will be invaluable to Milestone as we look to expand adoption of our CompuFlo Epidural and advance our commercial execution. I believe this new leadership team is built for acceleration with the talent, experience and commitment to take milestone to the next level. And with that, it is my pleasure to turn the call over to Eric.

Thank you, Neal, and good morning to everyone. When I joined Milestone Scientific, it was after conducting extensive due diligence, digging deep into the technology, the market opportunities and most importantly, the people. What I saw convinced me that this company is with tremendous untapped potential. We have world-class products and expanding base of loyal customers and now a leadership team and expanded Board with the experience and drive to unlock the next phase of growth. One of the most important recent developments and a critical foundation of our Medical segment was securing Medicare Part B payment rate assignment under CPT code 0777T in multiple jurisdictions, including New Jersey, Texas and Florida. This is a significant milestone not only because it opens a reimbursement pathway for millions of eligible procedures, but also because it validates the clinical value of our CompuFlo Epidural system in the eyes of payers and providers. We've already seen early traction with respect to clinics adopting our system. For example, during the quarter, the painless center in Tenafly, New Jersey, led by Dr. Chi-Shin Jason Chiu, a double board certified physician in pain management and anesthesiology, began using the CompuFlo Epidural system following a successful evaluation. This adoption broadens market awareness and reflects growing confidence among critical leaders in CompuFlo's ability to deliver safer and more effective epidural administration. Turning to Q2 results. Revenue grew 25% to $2.3 million, driven primarily by performance in our Dental segment, where international sales more than doubled. By transitioning to a leaner sales organization and selling through our online platform directly to dental clinics and DSOs, we've created a more direct line of communication with customers. This approach not only improves margins, but also strengthens relationships, resulting in greater customer engagement, higher satisfaction and more repeat orders. While domestic dental sales were relatively flat this quarter, we believe the combination of our direct sales model, targeted marketing initiatives and enhanced e-commerce platforms positions us well for growth in the U.S. market. With Jason leading global sales and marketing, we are in a strong position to aggressively grow both our dental and medical businesses. In dental, our focus is on accelerating penetration in existing markets, expanding internationally and capturing greater share in the U.S. through targeted marketing and direct engagement. In medical, we are building on the reimbursement foundation, focusing on our federal presence and pursuing new distribution partnerships, both domestically and internationally. In short, the foundation is here, the team is in place and the opportunities are significant. My focus now is disciplined execution, accelerating adoption and ensuring that Milestone delivers innovation, growth and long-term value for our shareholders. I'm genuinely excited for what lies ahead. Thanks, and please go ahead, Keisha.

Thank you, Eric. Consolidated revenue for the three months ended June 30, 2025, and 2024, was approximately $2.3 million, an increase of $470,000. E-commerce dental revenue for the three months ended June 30, 2025, and 2024, was approximately $1.3 million, respectively. For the three months ended June 30, 2025, and 2024, international revenue was approximately $1 million and $489,000, respectively, an increase of $511,000. For the three months ended June 30, 2025, and 2024, medical revenue was approximately $32,000 and $19,000, respectively, an increase of $13,000 compared to June 30, 2024. Consolidated gross profit for the three months ended June 30, 2025, was approximately $1.6 million, an increase of approximately $206,000 compared to approximately $1.4 million for the same period in 2024. Consolidated selling, general and administrative expenses for the three months ending June 30, 2025, and 2024 was approximately $3 million and $2.9 million, respectively. Consolidated research and development expense for the three months ending June 30, 2025, and 2024 was approximately $52,000 and $352,000, respectively. The loss from operation was approximately $1.5 million and $1.8 million for the three months ending June 30, 2025, and 2024. respectively, a decrease of approximately $296,000. The decrease is due to an increase in salaries and a reduction in selling and general administrative expenses. Consolidated revenue for the six months ended June 30, 2025, and 2024 was approximately $4.6 million, an increase of approximately $453,000. E-commerce and dental service revenue for the six months ended June 30, 2025, was approximately $2.6 million and $2.7 million, respectively, an increase of about $0.5 million. For the six months ended June 30, 2025, international revenue was approximately $1.9 million and $1.4 million, an increase of $500,000 compared to June 30, 2024. For the six months ended June 30, June 30, 2025, sales to China revenue was approximately $110,000 compared to June 30, 2024. For the six months ended June 30, 2025, medical revenue was approximately $83,000 and $26,000, respectively, an increase of $57,000 compared to June 30, 2024. Consolidated gross profit for the six months ended June 30, 2025, was approximately $3.3 million, an increase of approximately $178,000 compared to the $3.1 million for the same period in 2024. Consolidated selling, general and administrative expenses for the six months ended June 30, 2025 and 2024 was approximately $6.3 million and $5.9 million, respectively, an increase of approximately $384,000. Consolidated research and development expense for the six months ended June 30, 2025, were approximately $421,000 and $409,000. The loss from operations was approximately $3.5 million and $3.2 million for the six months ended June 30, 2025 and 2024, respectively, a decrease of approximately $237,000. Now I would like to turn your attention to liquidity and capital resources. We continue to carefully manage expenses and have maintained a solid balance sheet. Milestone had cash and cash equivalents of $1.3 million and working capital of approximately $3.9 million with no long-term debt. For the six months ended June 30, 2025, we had cash flows used in operating activities of $2.8 million and $0.4 million, respectively. At this point, I would like to turn the call back over to Eric.

Thank you, Keisha. There will be a quiz at the Q&A session. As I said earlier, I believe there's untapped potential here. We have the opportunity to accelerate adoption in both medical and dental, deepen our relationships with our customers and expand into entirely new geographies and verticals. Our path forward is about disciplined execution, focusing on revenue expansion while rationalizing expenses, turning our vision into tangible, sustainable growth. I'm energized by what we can accomplish together, and I'm confident that the next chapters for Milestone will be the most exciting and rewarding yet for our customers, partners, employees, and most importantly, our shareholders. I'd like to thank you all for joining the call today. And at this point, we would like to open the call up for questions. Jenny?

[Operator Instructions] Our first question is coming from Anthony Vendetti of the Maxim Group.

Eric, welcome aboard. I was wondering just if you could talk a little bit about the medical side since, obviously, most of the growth to this point and most of the revenues, the vast majority have been dental. And there's been this Medicare Part B coverage, which we hoped would drive adoption, but it's been -- it has been a very slow process on the medical side. Can you talk about how many facilities have adopted the CompuFlo system on the medical side? And then what specifically you intend to do to try to drive adoption at a much accelerated rate or get that moving in the right direction? I know you hired a new Head of Sales. So if you could talk about what you're going to do differently than what prior management has done on the medical side?

Good question, Anthony, and thank you for the question. The plan really, it's all about reimbursement, right? And I think that -- so to answer your question, we've got between 5 and 10 clinics that are actively using the product here in the U.S. market. I think in the past, we've been trying to boil the ocean and what we will do is get a little bit more focused. And it's all about the data. It's all about getting the doctors using the solution, collecting the data, submitting it to Medicare and so forth. And we really need a team that's focused on doing that. So the plan is to invest in some specialists that can really help us usher through some of these claims and different stuff through the clinics and collect data so that we are -- can confirm that the reimbursement will be at the right place so that doctors will want to use this solution. So the short-term plan is again to be a little bit more focused, not try to cover the entire U.S. or even all the states within the respective jurisdictions where we have approval, but more importantly, to spend our energy on a handful of clinics early, get the proper data collected, get it submitted and make sure that it's very clear that doctors will be reimbursed the way they want to be reimbursed.

I would just like to add that the hiring of Jason Papes as our Head of Sales is a key part of that plan. And he brings 30 years of experience in medical distribution and selling, and he has a team that he can work with and really help us succeed on the medical side.

Okay. So Jason is a key hire. And I know you've just recently joined, Eric, but have there been other hires either under Jason or other key hires, or if Jason has a team that he's identified, have those individuals been offered positions yet? And approximately how many other key people do you think you need to hire to implement what you just outlined?

Yes. So Jason brings along with him his prior distribution business of [ Schwarz ]. We're working through some of the details on that. So he's got a team of folks primarily focused in the Texas region. We obviously still have a relationship with Axial, and we still have a relationship with Shamrock that Jason and I are evaluating and looking into because there's quite a bit of coverage there. So the plan will be eventually to perhaps hire additional distribution, but our focus for CompuFlo will be primarily U.S.-based and primarily in a handful of states and probably the VA, where we've got some traction right now. But as far as additional new hires right at this moment, we need to evaluate the talent that we've got out in the marketplace right now, and we are doing that.

Okay. Any other -- maybe just high level, Eric, as you've evaluated the company in general, any other obvious changes or direction that you want to take the company that you've evaluated and noticed that needs to happen as soon as possible?

Yes. No, I mean what I found and I knew coming in after looking into this and being a patient of the STA, we have a one hell of a foundation that we've got here with the dental business, right? And so there's an opportunity here to continue to grow that business, hopefully more dramatically than we've done in the past. And at the same time, refocus our energy on the right way to bring CompuFlo to market, especially on the Medicare side of the equation. So I think the bit of an epiphany for me is there's quite a strong business here that will continue to support the investment that we need to make in CompuFlo to take it where it needs to go. But focus is very disciplined focused is crucial to having success in the medical field.

Okay. And then last question is international was what percent of revenues this quarter? And what drove the growth in international this quarter?

Keisha, the question was the percentage.

The percentage of international is 48%. The international growth was due to additional distributors, larger orders coming in, timing of when we're getting the orders out and doing a better job of reaching some of our distributors that had fell off previously for different reasons and just make it a headway to get everything out timely.

Yes. What I'll share is the international business is quite lumpy. When people -- when the folks internationally place orders, it's usually large orders for a group of customers. Whereas the online e-commerce business within the U.S. is kind of a steady business. So it probably won't be unusual even here moving forward to see some lumpiness in the international business where we might receive a very large order from Canada, for instance, right? So that's part of the reason maybe for a little bit of the exaggerated growth on the international side, although we're quite bullish on new countries being added and the impact that they will have.

Okay. Very helpful. Welcome aboard again and good luck. We concur that you have, we think, a market-changing product on the medical side and a great opportunity in front of you. So with that, I'll hop back in the queue.

Our next question is coming from Bruce Jackson of The Benchmark Company.

Eric and Jason, welcome aboard. I wanted to look at the international number a little bit more. What was the role of tariffs in the quarter? And was it -- was there any behavior where there was some international stocking to avoid the tariffs? Or are tariffs just really not a factor in your business? It sounds like you've had some new distributors come online, but I'm just trying to kind of gauge the lumpiness in this business given the market dynamics.

At this point, the tariffs haven't hurt us so much in getting our orders out for international. We have set up some other opportunities where we will be shipping directly from our warehouse in China to some of our international partners and distributors like that. So we have already gotten in front of the tariffs. We do have enough inventory here for the domestic sales. So that won't be affect into our inventory. And we already did an inventory buildup in 2024, preparing for the tariffs where we have enough inventory on hand that's not affected by the tariffs of bringing in the hand pieces from China at this point. So we don't think that in the near future, we will have an issue with the tariffs because we've already set up international shipping that we have already started and that for domestic, we do have enough inventory here on the Mainland where we are good and tariffs will not affect us at this point.

Okay. Great. And then turning over to the reimbursement side of it with the JMAC coverage and the private payers, is there anything in the funnel right now? And could we -- do you have anything near term in terms of adding either more JMAC or more private payers to the reimbursement? Or is the idea to just kind of go deeper in the regions that you've currently got reimbursement for?

So, Bruce, you nailed it. Yes. Right now, the thought and the focus will be on investing in the folks that are already using the CompuFlo, understanding how it's working for them, understanding how claims submission is going for them, hiring the appropriate people to help them through that process and making sure that we have a really clear understanding of reimbursement and solid before we start taking this out more broadly to the rest of the market. In the meantime, we will pick and choose for the different jurisdictions, some areas where we want to start developing the data as well with the support of our Board members, which are fantastic to help us through that process. I don't know if the folks on the phone know, but Shanth, one of our Board members, that's kind of his specialty. And so we plan on engaging him to help us move this through the different categories, but also to help us with some of the reimbursement plans.

Just as an aside, Shanth is running a private company called PainTEQ, and when he took it over, they were losing, I think, $1 million a month, and he's turned it profitable within two years and has grown sales dramatically. And I think he and Dr. Demesmin, who also is on our Board, who is a practicing surgeon, the two of them will help us significantly focus our medical business going forward.

There's really three pillars to reimbursement. One is the clinical aspect of it. The other is the business side of it and the other is the academic side of it. And over time, we will continue to invest in those three areas to help us sort of solidify the foundation for reimbursement so that we can do that across the other jurisdictions. But it needs to be programmatic. There needs to be a lot of data collected. There needs to be a lot of contact with these reimbursement claims. and we will have a much more disciplined program in place to make sure that we get the reimbursements that make the most sense.

Our next question is coming from Dr. Richard Durando of Dr. Richard Durando, DDS.

My question is very similar to most of the other questionnaires. The native reflection by clinicians as you've approached for sales how bullish are they on the technology? And I followed -- I've been an investor for a very long time, and I'm a dentist. I love the product. It's a great product. Is there a way to recruit these people to be cheerleaders and effective, you've got what, we have eight other jurisdictions where there's not much going on. Can you give me some color, some depth in those areas?

It's a good question. And one that we're thinking about every day. We do have an advisory group, and that's kind of how this all gets started. The challenge is trying to identify, is it 3? Is it 5? Is it 10? Is it 20? I think the number is smaller than larger. So I think that, again, starting to understand the pros and cons of the clinicians using the product to make sure that when we go out to the broader market that we have a very clear story. We know the right use cases and so forth is so vital. And I think we had a little bit of a shotgun approach. We were out shooting in a lot of different directions without collecting information and collecting insight. And so the next phase of growth will be collecting that insight, having a clear understanding of what doctors are liking, where it is -- where the best use cases are and then expanding from there. But I think until we really press down on the folks that are actually using it and collect a lot of really good insight, we would be -- we'd be not doing the right thing by taking this out to the broader market until we have a deep understanding of all of that insight. So the plan is not to just go push this out to other jurisdictions. The plan is to make it work in the jurisdictions where we've already started, primarily in New Jersey, quite honestly. And then once we have that established and we have good data and we have good reimbursement, then we will start taking it out to additional areas. I don't know if that helps.

So in the last three to five years, there was all these reports of people using it in certain clinical settings that seem to be more hospital-driven than individual clinics. And you get these very bullish reports about how much the clinician love the product. And so there wasn't enough data generated to approach the general anesthesiology field with something like, wow, this is really slick.

Well, I think to my earlier point, just maybe a little bit of a lack of focus, right? I think some started off maybe in labor and delivery, then we sort of start -- more recently, there's been personal injury and the focus needs to be -- and these are very different parts of the organization is on the pain management clinics. And so I think -- and a lot of it, again, it all has to do with reimbursement. So with personal injury, doctors are seeing very large payments from the insurers. But with the pain management, we yet have not collected enough data to make sure that the reimbursements are good for them. And so it's just a matter of really doing a lot more focused cases in pain management versus labor and delivery, personal injury, so forth and so on. So it's again, I don't know what was said in the past or not, but the technology is real. The technology is great. It's just we can't try to boil the ocean. We can't try to be every jurisdiction, every type of use case, there's cash check. There's lots of different components to this. So I think if we just focus not exclusively, but mostly exclusively on the pain management clinics with a handful of doctors, we will get to the right reimbursement code so we can roll this out more broadly.

And one last question. Have you had a failure, in other words, a wet tap in all the procedures that have been done. Has everything held up well so that you have this product that's rock solid in that particular vertical?

No wet taps to my knowledge.

Right. And I understand the problem, not necessarily the wet tap, but the short tap. You're not in the space, so the anesthetic is not as profound as it could be.

Yes. I guess if they don't get to the space. Yes, I'm not aware of any short taps either, but that's a good question for a person like Dr. Demesmin since he's probably done the most with the solution so far.

And our next question is coming from Elliot Sparrow, who is a private investor.

Welcome to the company, Eric, and Jason also. I'm looking forward to a new regime and some success. My question is, can you give us an update on the VA status and what is going on there first?

Great question. So it's top of mind for us as well. So we've already been in touch with our partner, Shamrock, on that opportunity. We've got a handful of VA visions that we're working with. The next step is for us to focus on, again, not boiling the ocean, but focusing on one vision where we think we can have an impact. And so winning one means more than likely winning several at some point. But again, each VA operates highly independently, believe it or not, and they're all unique and different, and they also work in conjunction and many times with some of the private hospitals. So the plan is to focus on a particular vision in the eastern part of the country and make some progress there, but we are actively engaged in that opportunity.

The one thing I will add is that the pricing has been set, and it's very favorable for us, both from the instrument and from the disposables. So once we start achieving success in the VA/DoD and Indian health reservations, we think that's going to be the real fast forward on the medical side. It's going to take some more work, but we're confident that the team can do it.

Okay. Sounds great. One other question. About a year ago, again, obviously, way before your time, we heard that we won Brazil and that we had all the groundwork laid and it was ready to roll. Here we are a year later. I haven't heard a peep about Brazil since. Is it dead issue? Or is this just another -- since you're here boiling the ocean.

I would say it still remains a long-term potential, but nothing is happening in the near term. We had an individual working on that. And now recently, I don't know if you've seen the tariffs that have been put on Brazil by the U.S. government. And so in the short term, I don't expect any news. But again, it's on the plate. Jason and Eric are focused on renewing that over time. And hopefully, we can have some success. I'm told there are more dentists in Brazil than there are in the U.S. despite this difference in population.

Yes. So, Elliot, sort of exactly -- these all respectively, are massive markets, whether it's Brazil, whether it's 13 jurisdictions, and what this new team will do is we will be precise. So we're going to be extremely focused on reimbursement for CompuFlo in a very small segment of the population before we try to roll this out to the rest of the world. Each geography is different. Each jurisdiction is different. And it's wonderful to talk about all these great opportunities, but it's different to execute within one of them. So we will be focused on execution. We will be focused on getting the right reimbursement amount, and we will do that with precision more so than waving our hands that there's this massive, huge opportunity, which there absolutely is, but we've got to do it in a very pragmatic and programmatic way in order to ensure that doctors are getting what they deserve. And I'll just say one more thing since you're a shareholder, I was a private shareholder before this since 2019. And one thing we will do here moving forward is we want to hear from you guys, right? You own the company. We own the company as shareholders. And if you've got any insights, if you've got any contacts, we're happy to listen. So I know that this will be a very transparent Board, a transparent leadership team, and we work for you.

Okay. Great. I love to hear it. And my biggest goal for this call was hearing a plan coming forward from you and you have it. I'm happy. Thank you.

Thank you very much. Well, we appear to have reached the end of our question-and-answer session. So I'll now hand back over to the management team for their closing remarks.

I just want to thank everyone for joining us on this call. I think with the addition of Eric and Jason and some other plans we have for the future, we will hopefully make this a successful company. We are going through a complete evaluation of where we should spend the money and where we can cut to make sure this company is successful. Thank you for your time, and I appreciate. Any questions, you could just reach Keisha or myself if you have any questions after the call. Thank you very much.

Thanks, everyone.

Thanks.

Thank you very much, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.