Good morning, everyone. Very excited to be back at LD Micro. I believe it's been two years since we were last here. Very excited to be here to give you a number of updates on the company and what we're looking at in 2026. Let's get into it. Our mission is to create and deliver the most advanced wound care healing technologies in the world in the relentless pursuit of healing. For those of you who don't know us, here's a little bit of a company snapshot. Ticker BSEM, market cap around $86 million, about 25 million shares fully outstanding. Recently, we announced our first quarter earnings, I believe it was last Thursday, where we highlighted $6.1 million in revenue, 61% margin, and cash and cash equivalents of $13.7 million.
Also noteworthy was that we gave our first guidance, full year guidance on the call, at a range of $25 million-$29 million. Since the last quarter of 2025, there have been a number of key corporate developments for the company. Most notably was our acquisition of the BioTissue Surgical assets. This is a transaction that closed January 21st. And we've been through the process of integrating them. Also in addition to that, the progression and pathway to uplisting, a lot of questions we've been getting over the last year is, "How is it going with our uplisting to Nasdaq?" We're pleased to announce that we completed the 2024 and 2025 KPMG audit, and we've confidentially filed our Form 10 to uplist to Nasdaq.
For those of you who might been following us, we had a Form 10 out last year, but we decided to pull it voluntarily in order to make an upgrade to a Big Four auditor. That audit was completed on time, and once that was complete, we went ahead and we filed the Form 10. That is in process with the SEC. We've had, you know, very good conversations with them, given the fact that we got so far along in the process last year. We'll continue to keep folks updated on that. Also, we are pleased to announce that we received our first analyst coverage by [RK] Ramakanth at H.C. Wainwright. He launched on May sixth.
He also, for those of you who get correspondence from Wainwright, they put out a note after our earnings call with a price target of $7 in their own financial model. Strengthening of the balance sheet, we retired outstanding debt with GMA, all debt is now current. We resolved those two promissory notes, leaving only a $1 million note that is current and non-interest-bearing till the end of the year. Expanded the leadership team. We've been doing this for over a year, but our most recent appointee is Katherine Gorrell as our General Counsel and Chief Legal and Compliance Officer. The need for perinatal allografts, for those of you who aren't familiar with perinatal allografts, regenerative medicine promotes faster healing and reduced complications versus standard of care.
We have a number of products that utilize perinatal allografts, and from a patient impact perspective, this significantly reduces the number of limb amputations and hospitalizations annually. The economic impact is quite significant. Infections and complications due to standard of care costs the health system about $30 billion each year. This is a sort of an interesting slide in terms of our addressable TAM post the BioTissue acquisition. The U.S. TAM for chronic wound care is about $15 billion, but with the acquisition of the BioTissue Surgical assets, this brings in also orthopedics, urology, spine, women's health, and foot and ankle. It grows the TAM from $15 billion to $23 billion.
We'll talk more about the BioTissue acquisition, but again, with the addition of the BioTissue assets, including CryoTek and SteriTek, we have three industry-leading technologies. Six different perinatal-derived allograft brands, industry-leading IP portfolio. That's 68 U.S. issued patents and 81 pending. Again, with the BioTissue acquisition, we have a 510(k) approval in the pipeline that we expect in 26. Also transformative with the BioTissue acquisition was our first bringing in of a national sales force. Those of you who followed us in the past know that we distribute through Venture Medical for the physician office product. With the addition of BioTissue, we brought in 25 direct reps. That has grown to 35 reps, our first national sales team.
Again, larger addressable market, unparalleled technical data, world-class manufacturing. We'll get into a little bit of that, how we're bringing in the tech transfer from BioTissue in a bit. This is a snapshot of the product portfolio. The Clarix family and the Neox family were part of the BioTissue acquisition. VENDAJE and VENDAJE AC are our legacy products in the physician office segment. There's a number of these different products that we are using, it's of significant growth with this acquisition. To give you a little bit of background on the BioTissue acquisition itself, we ended up paying consideration to BioTissue of $15 million upfront, $10 million for the 510(k) approval and a royalty moving forward after the tech transfer.
The acquisition came in price at about 0.8 x revenue. BioTissue in 2025 did about $29 million in revenue and $5 million of EBITDA, very accretive. With the BioTissue acquisition, our payer mix is significantly diversified. In the physician office segment, you may be aware that most, almost all of our revenues came from Medicare reimbursement. With the acquisition of the BioTissue assets, we have about a 90% commercial payer mix, so it really diversifies the risk away from what goes on with CMS and Medicare. Obviously, there's been a lot, a lot of different developments over the last year with CMS. Commercial growth levers. There's a lot of greenfield in terms of our direct sales team. The blue states that you see are where we are.
The sort of more faded-out states are the places that we intend to go. Again, we want to expand the direct sales team to 40+ by year-end, drive adoption to peer-to-peer selling, increase payer coverage and payer access, and execute our product roadmap. You may be aware that we have completed a DFU study in anticipation of some of the LCDs and other things that were coming up with CMS. CMS ultimately rescinded that LCD in preference of a 127 per sq cm. However, the study results were quite strong with superior outcomes there. Most interesting here is the, in a competitive study, the BR-AC arm required 2.7 fewer applications and 9.1 less treatment days for closure compared to the market leader, which is MIMEDX EPIFIX.
A little about our manufacturing. We are based in Pompano Beach, Florida. It's a state-of-the-art integrated manufacturing facility. It's about 6,100 sq ft. We're running right now at about 20%-30% capacity, so we do have a lot of room to grow. Again, on the BioTissue side, we will be bringing in the BioTissue product family in-house. The part of the agreement was we would be able to initiate a tech transfer of those assets and the manufacturing of those assets as early as January of 2027, which we are very much hoping to do so. We feel that once we bring in those manufacturing, our gross margin will increase significantly. Right now, it's in the mid-50s.
I think we can achieve a low 70s growth gross margin once we bring those in-house, and that, again, that can be as early as January of 2027. A little bit about the management team. Some new faces, some other faces. We've brought in a number of folks from BioTissue on the sales side and on the management side, even at the board level. It's been a really smooth integration with those folks. We really feel that we're well-positioned to position the company for great growth versus management for cash, which was really BioTissue was trying to do. They were really looking to sell these assets last year as they looked to do an IPO for their ocular franchise and get those off the books. Financial outlook for 2026.
Again, we continue to invest in growth in our surgical revenue base. Again, very accretive acquisition. The assets generated $29 million in 2025, and they are, again, largely unaffected by CMS price changes. The transition period for wound business will continue in the first half of 2026 as the market digests CMS payment changes. Remember, we went from an ASP + 6% environment to a flat $127 a square environment. I think what you've seen and what you might see from analyst coverage is that there'll be a number in the physician office space. There'll be a number of players exiting that space who simply can't produce at $127. We can make it work at $127. An efficient manufacturing process will continue to deliver healthy growth margins.
Again, gross margins. I sort of touched on the fact that once we bring in the Neox, Clarix lines in-house, we'll enjoy a significant, even 20 basis point, gross margin appreciation. A track record of delivering positive adjusted EBITDA and cash flow, and again, we have a strong position on the cash side as of March 31st, 2026. On the up-list, I touched on that a little bit earlier, but again, we've completed those audits. We're in discussions with the SEC to become effective. We confidentially filed the Form 10. I think I met with Andy Hall this morning about our Nasdaq application, so it was really good to see him here. Moving forward in 2026, this is the 2026 roadmap.
These are a number of different catalysts that I think you guys should look out for as we go, excuse me, as we go through 2026. Check's the first one on our successful integration of BioTissue. Again, we continue to have a sales expansion to go to 40+ reps by year-end, add independent sales coverage in open territories, those gray states that were on the map. Launch new products. We can add BioRetain to the GPO agreements that BioTissue has. The great thing about these GPO agreements is these are three-year locked-in contracts, we were able to bring them all effectively. It gives us a lot of stability. We can also add the BioRetain products to the GPO. We're very excited to get that product in those sales folks' bag.
Again, we launched the 510(k) for Catalyze, we're waiting on that approval. We'll make a $10 million payment, but to have a 510(k) designation for one of our products would be very strong. We expect that approval to come from the FDA in the second half of this year, but we're not exactly sure when. We'll continue on the clinical evidence side. You know, we made a big investment in that last year at 127. It's very important to show clinical efficacy, and, you know, we made the steps and made the investment to show that efficacy in 2026. That evidence will be the definitive DFU analysis, our top-line value or venous leg ulcer data, and use data for evidence-based selling. Of course, the uplist to Nasdaq I spoke to before.
On the financial side, continue to deliver revenue growth in 26, prepare for that important tech transfer of Neox and Clarix to our facility in-house, and continue to improve operating margins across the year. I wanted to sort of wrap through it quickly, if anybody had any questions. We put out a lot of data in our first quarter earnings call and had a number of questions, so I wanna leave that open to you if you did have any questions. Yeah.
Could you walk us through the monthly hospital revenue and new GPO account activations since the BioTissue acquisition closed? I'm curious to see if there's new rep producing there.
I think when we closed the BioTissue acquisition, we brought over around 95% of the reps that were currently the direct reps. I think we had, at that point, we had three key GPO contracts. That was obviously very important for us to have those reassigned to BioStem, and we were successful in doing that. I think that if you look at our first quarter numbers, you can see how important the BioTissue side of the business is to us. It was 80% of our revenue. That is obviously, you know, that's obviously extremely important to us. I think that we've had really good success with the GPOs that we've had, managing them and having success with the sales folks and, again, continuing to grow that sales force.
There are a lot of in advanced wound care, there's a lot of talent out on the street as MIMEDX and Orgo start to cut their sales force. For us bringing in new salespeople, there's a lot of opportunity to bring in those folks that can be productive on day one.
For monthly hospital revenue?
I gotta take a look at that, it's Again, what I would say on the BioTissue side, it is because it's a commercial payer business, it is seasonal. I think we've tracked pretty well in the first part of the year, but in the surgical space, what you'll see it ramp up as people make their deductibles, and then they'll go forward with some of these procedures that they're looking at. We do expect it to build. There is more seasonality in the surgical space so much than the physician office space 'cause it's a less acute, it's, you know, it's less acute wound care.
Thank you.
Yes.
I mean, you mentioned what a kind of deal you got on the BioTissue business which makes everybody nervous because why does something sell cheap that looks so good, right? Can you talk to that? Is it just a very competitive arena, that's why you were able to get such a good price? Is there something else, is the uncertainty in the market just holding prices down right now?
No. I mean, for what BioTissue does, there's really not that much uncertainty. I mean, I think there is uncertainty in the physician office space, and you've seen that. On the BioTissue, I just, you know, this is a deal that they marketed for about one year, and I just didn't think that they had a good fit within any other type buyer. They were anxious to get these assets off their book. They have capital markets plans for their ocular franchise. You know, at 0.8 x revenue, I mean, I think it's a great deal. We try and compare it a little bit to the Acera- Solventum deal that occurred towards the end of the third quarter of last year.
Acera is a company very much like BioTissue, although they do have 510(k) approval for their product. Solventum ended up paying 9 x revenue for Acera. This is an $80 million company that wasn't even at break even, as opposed to BioTissue that was $5 million of EBITDA. That's a $725 million deal that they did. I think versus that transaction, we look quite attractive. Really the bottom line is they didn't have another, there wasn't a real stalking horse for it. They just didn't have anybody else that was a real good fit for them, and so.
Can you talk to the competitive environment, how many reasonably sized competitors are in that market, and how this price competition would be gonna be an issue now that you're dealing with commercial payers?
That would be a better question for our Chief Commercial Officer, Barry Hassett. What I can say is that again, we've had very good experience since we've taken on these GPO contracts and we're trying to get more of these as we move forward. Again, having the 510(k) designation would bring some competition, for example, in from the Acelity side of the business. Again, it's something that we really wanna have to have that pathway as well. Yeah.
What is the plan for funding the next 18 months, including the $10 million on our house?
Yeah. Very good question. I mean, we're looking sort of at all alternatives. You know, it's very important for us to uplist to Nasdaq in terms of getting more visibility for the stock and ultimately bringing significant institutional interest into the cap table. That's a very important stepping stone for us, and I think that that'll certainly help us get there. We've had a very good year of promoting the company through NDRs, through bank-sponsored NDRs and also conferences. In the last year, we've presented at the Goldman Sachs Healthcare Conference in Miami. In June, we presented at Morgan Stanley Healthcare Conference. In September, we presented at the Cowen Healthcare Conference in Boston. On March 1st, we'll be presenting at Truist on June 16th.
You know, basically what to read into that is that I think we've drawn significant interest not only from their analysts, but from some of their bankers that would like to get us in front of, some very large institutions. The gating factor for that has always been, is the fact that we're on OTC and we need to get uplisted.
If you do plan to do an equity event, what's a price you wouldn't go below?
I can't really speak to that, what that would be, right? I mean, it's, you know, being on OTC with a basically 100% retail and friends and family shareholder base, it makes it sort of difficult to price a transaction like that. We, you know, we have 6,200 round lot shareholders and decent trading volume, but, that's something that ultimately we're gonna leave up to the bankers.
You have to raise money.
What's that?
You have to raise money.
We would like to raise money, for sure.
What's the timeline?
Again, we've filed confidentially. You know, there's a 30-day comment period that the SEC will, that the SEC takes her first comments. We're coming really to the end of that period. We expect some feedback from them, which would give us a really good idea in terms of the amount of comments that we get. Our application is not much different than it was last year when we basically got to the end of that process. The only difference is, as you know, we've added in the BioTissue assets. we'll see how they treat that and, you know, see how that progresses. you know, I think we're already at the end of the longest 30-day response period.
Would it raise, though, be in conjunction with the uplist, or would it be afterwards?
We would consider either. That's again, not something that , you know, I think we've got a really good group of bankers and we're listening to their advice. It might be in conjunction, it might be before, or it might be just after. Those are things that we all really have to consider. What I can say is that we've done a really good job of marketing the company to appropriate long-only institutional investors, not only through these conferences, but through NDRs at some of the banks that I spoke earlier about.
We have missed it. Is there a ballpark of how much you would like to raise?
I mean, we ultimately, we would like to have a significant portion of the cap table be institutional. How we get there is another question, right? I mean, it'd be great to have 40% institutional ownership in the cap table. If you work that backward on $80 million market cap, I mean, that can give you an idea of what we're looking at. Cash needs are one thing, and again, another thing is having that institutional ownership that we're looking for.
What happens if you guys can't successfully raise?
If we can't successfully raise?
Yeah.
We're really not looking at that so much. I mean, I think that we've had very good experience. It's not a, I don't think, question of if, it's the question is the price is gonna be right. Again, I mean, having the BioTissue acquisition has been really terrific in the sense that this is an EBITDA-producing asset. I think that we'll ultimately be successful at that.