Milestone Scientific (MLSS) Q2 Earnings call transcript Aug 15, 2024

Milestone Scientific Inc. (NYSE American: MLSC), a leading developer of computer-controlled injection systems, reported impressive progress in the second quarter of 2024, showcasing a pivotal turning point for the company. The granting of Medicare Part B physician payment rate assignment for the CompuFlo Epidural system marked a significant achievement, underscoring the safety and value of the technology. This milestone, combined with strategic partnerships and global expansion, positions Milestone Scientific for continued growth and success.

Achieving a Major Milestone: Medicare Payment Rate Assignment

Milestone Scientific's strategic approach to securing Medicare reimbursement for its CompuFlo Epidural system has paid off with the grant of physician payment rate assignment across multiple jurisdictions, including Florida, Texas, New Jersey, and Pennsylvania. This achievement represents a major milestone for the company, with approximately 3 million epidural steroid injection procedures conducted annually in these jurisdictions, accounting for approximately one-third of the total procedures in the United States for chronic back pain treatment. With Medicare accounting for up to 40% of this practice volume, the potential addressable market for the company is estimated at approximately $250 million among Medicare patients alone. This validation of the CompuFlo system's clinical utility, safety, predictability, and efficacy sets the stage for increased penetration and adoption of the technology.

Strategic Partnership with Actual Biologics

Milestone Scientific's strategic partnership with Actual Biologics, a company with extensive experience and deep relationships within the pain management sector, is a testament to the company's disciplined commercial approach. This collaboration leverages Actual Biologics' established clinician relationships in key states, including New Jersey, Texas, and Florida, to accelerate the penetration and adoption of the CompuFlo Epidural System. By focusing on a specialized partner instead of a large distributor and building its own sales force, Milestone Scientific can more effectively expand the reach of its technology, driving growth and enhancing patient outcomes.

Global Expansion and Intellectual Property Protection

Milestone Scientific's global expansion strategy is gaining momentum with the recent approval from Brazil's National Health Surveillance Agency to market and sell the CompuFlo Epidural system in Brazil. This approval, covering the lumbar, thoracic, and cervical paretic junction of the spine, opens up a significant opportunity in the ninth largest economy globally. With over 200 million people and 21 million suffering from chronic back pain, Brazil presents a significant market for Milestone Scientific. The company's proactive efforts to establish relationships with leading medical institutions, hospitals, and commercial partners in Brazil position it well for a successful product launch. Additionally, the receipt of multiple notices of allowance for key patent applications in both the U.S. and Europe broadens the IP protection around Milestone's injection and drug delivery systems, further bolstering the company's competitive edge.

Financial Highlights and Future Outlook

Milestone Scientific's financial performance reflects its strategic efforts, with U.S. e-commerce sales increasing to $1.3 million in Q2 2024, compared to $1.2 million in the same period last year. This growth is attributed to the strategic decision to transition from previous distributors to an in-house sales platform, enabling more direct communication with customers and enhancing responsiveness to their needs. The shift has also led to a significant improvement in gross margins, which increased to 76.1% in Q2 2024, from 65% in the same quarter last year. Looking ahead, the company remains optimistic about the future of its Dental business, with a focus on scalable, high-margin operations designed to generate positive cash flow.

In conclusion, Milestone Scientific's achievements in the second quarter of 2024, including the grant of Medicare payment rate assignment, strategic partnerships, and global expansion, position the company for continued growth and success. The company's disciplined approach to reimbursement, commercial rollout, and strategic partnerships underscore its commitment to enhancing patient outcomes and driving value for shareholders. As Milestone Scientific navigates this pivotal period, it remains focused on executing its business plan and building on its momentum for a promising future.