Milestone Scientific, Inc. Common Stock 2026 Q2 Earnings Call

Thank you, operator. Before we begin, please note that today's call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our earnings release as well as our filings with the SEC, including our 2025 Form 10-K for a discussion of these risks. A replay of this call will be available shortly after its conclusion. With that, I'll turn the call over to our CEO, Eric Hines.

Thank you, James, and good morning, everybody, and thank you for joining our call today. Our second quarter results reflect continued execution of the strategy we laid out at the start of the year, disciplined cost management and focused investment in our highest growth opportunities. Total revenue for the second quarter was $2.8 million, an increase of 22% compared to the second quarter of 2025, bringing our first half revenue to $5 million up nearly 10% year-over-year. Our base business performed very well, contributing $2.4 million in the quarter, further supported by approximately $500,000 in upside from international orders. In the medical business, CompuFlo continued to build momentum with medical segment revenue growing 231% compared to the second quarter of last year.

While medical is still growing from a small base, there is real validation of the technology's value proposition, and we continue to scale the CompuFlo Advisor Program launched in February, adding physician advisors and expanding procedural use across additional Milestone Administrative Contractor jurisdictions and commercial payers. On the reimbursement front, our healthcare providers are actively submitting claims and have received favorable payment outcomes from Medicare in the Novitas and First Coast jurisdictions, as well as from commercial payers, which includes personal injury protection and workers' compensation plans. We currently have established $325 payments established under Novitas and First Coast fee schedules covering three regions and 13 states, and we're continuing to pursue the remaining MACs. Alongside our three distribution partners in these areas, we plan to begin launching direct sales efforts in each region starting immediately.

We also achieved an important milestone, third-party validation this quarter, following the publication of a peer-reviewed University of Texas Medical Branch study in Operative Neurosurgery, which associated CompuFlo-guided epidural access during spinal cord stimulator implantation with a 91% reduction in the odds of composite complications. The compelling evidence reinforces CompuFlo's differentiated value proposition and supports growing physician acceptance and expanded utilization across critical spinal and epidural procedures, including epidural steroid injections, spinal cord stimulator implantation, obstetric epidurals, thoracic and cervical epidurals, neuromodulation therapies, and surgical epidural anesthesia. CompuFlo has now been evaluated or utilized across more than 40 universities, academic medical centers, and teaching hospitals worldwide.

Subsequent to quarter end, we expanded the addressable market for CompuFlo with a strategic distribution agreement with Red One Medical, an established federal healthcare distributor to bring CompuFlo to the U.S. Department of Veterans Affairs, Department of Defense Health Agency, Indian Health Service, and other federal healthcare organizations, systems that collectively serve more than 18 million enrolled veterans and military beneficiaries. We believe this partnership gives us an efficient pathway into one of the largest and most strategically important healthcare markets in the country. On the dental side, we signed a new national distribution partner to expand our sales network and complement our e-commerce business, and we continue to build on our international footprint with a recent registration approval in Uzbekistan and additional registrations targeted in Japan, Mexico, Turkey, and India in the coming quarters.

We also launched the first phase of our AI strategy this quarter with the pilot debut of Milo, our AI-enabled digital engagement platform at the ASPN 2026 conference in Miami Beach. Milo is designed to answer product questions, provide educational information, support lead qualification, and connect healthcare professionals with our sales, clinical, and customer support teams, helping us engage prospective customers on their own time, which we believe unlocks a meaningful opportunity with small commercial teams. ASPN was also a strong showing commercially, generating more than 40 qualified leads, and it marked the launch of our #NoWetTaps campaign, building on the complication reduction data we're seeing with CompuFlo. In terms of governance, we strengthened our board of directors with Benedetta Casamento transitioning from chair to executive chair, and the addition of two new independent directors, Greg Shilling and Kelly Ann Ulto, who bring additional healthcare, technology, finance, and governance expertise.

Turning to our capital position, we continue to operate from the $2.51 million private placement we completed in April. We are not currently planning to raise additional capital and continue to evaluate incremental sources as our net operating loss carryforwards and R&D tax credits programs, and remain focused on funding the business through the disciplined execution that has meaningfully narrowed our losses over the past year. We are reaffirming our 2026 guidance of $9.8 million to $10.2 million in total revenue, representing double-digit growth for the year, with CompuFlo expected to grow at a faster rate than the overall business for the remainder of 2026. I do want to set expectations appropriately for the third quarter.

Our second quarter benefited from two large international orders that we do not expect to recur in the third quarter, and the third quarter is typically a seasonally slower period for us, given the summer months. Please keep that in mind as you model the quarter. That said, we expect our medical initiatives, including our expanding Medicare reimbursement footprint and the direct sales launch we are now making alongside our distribution partners to continue building and to contribute more meaningfully to the second half of the year. We will provide more detail on the trajectory alongside of our third-quarter results in November. I will now turn the call over to Keisha to review our financials.

Keisha? Thank you, Eric, and good morning, everyone.

For the three months ending June 30, 2026, total revenue was $2.8 million, compared to approximately $2.3 million for the same period in 2025, representing an increase of approximately $518,000 or 22%. The increase in total net sales was driven by the growth in the dental product sales and continued early stage of adoption of commercialization of the company's medical products. Gross profit for the three months ending June 30, 2026, was $1.9 million, compared to $1.6 million in the prior year period. Gross margin was 67.2% for the three months ending June 30, 2026, compared to 69.6% for the same period. The decrease in gross margin was primarily due to the product and customer mix and increased product costs, including tariffs imposed and certain import products and components.

These cost pressures were partially offset by higher levels of sales during the current period. Operating expenses decreased by approximately a half a million or 4.2% to approximately $3 million for the three months ending June 30, 2026, compared with approximately $3.1 million for the three months ending June 30, 2025. The decrease was primarily attributable to the lower quality and regulatory expenses, consulting, professional fees, research and development, rent, occupational costs, and other segments. Net loss was $1.1 million or negative one point per share, compared to the net loss of $1.55. For the six months ending June 30, 2026 and 2025, the total revenue was $5 million and $4.6 million respectively, to increase of $447,000 or 9.8%. Gross profit for the six months ending June 30, 2026, was $3.5 million, or 69.4% revenue, compared to $3.3 million or 71% of revenue.

Operating expenses decreases by approximately $1.4 million or 20% to approximately $5.4 million for the six months ending June 30, 2026, compared to the approximately $6.7 million for the six months ending June 30, 2025.

Net loss- Did we lose you, Keisha?