Milestone Scientific (AMEX:MLSS) released second-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Summary
Milestone Scientific reported a 22% revenue increase for Q2 2026, reaching $2.8 million, driven by growth in both dental and medical segments.
CompuFlo's medical segment revenue grew by 231% year-over-year, with significant support from Medicare reimbursements and an expanding advisor program.
A strategic distribution agreement with Red One Medical aims to bring CompuFlo to major federal healthcare organizations, expanding its market reach.
Milestone Scientific achieved a significant third-party validation with a study showing a 91% reduction in complications using CompuFlo, enhancing its value proposition.
The company launched an AI-enabled digital engagement platform, Milo, to enhance customer interactions and support sales efforts.
Despite positive progress, the company expects a sequential revenue decline in Q3 due to non-recurring international orders and typical seasonal slowdowns.
Operating expenses decreased by 4.2%, and the company reaffirmed its 2026 revenue guidance of $9.8 million to $10.2 million, anticipating continued growth in the medical segment.
Management emphasized a strategic, methodical approach to market expansion and highlighted improvements in organizational structure and focus.
Full Transcript
OPERATOR
Greetings. Welcome to the Milestone Scientific Second Quarter 2026 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, James Carbonara with Hayden IR.
James Carbonara, Investor Relations (Hayden IR)
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.
Eric Hines, CEO
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 Medicare 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 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, 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 Aspen 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.
Aspen was also a strong showing commercially, generating more than 40 qualified leads, and it marked the launch of our No Wet Taps 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 Schilling and Kelly Ann Olto, 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 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 don't 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, and we'll provide more detail on these trajectories alongside our third quarter results in November. I'll now turn the call over to Kesha to review our financials.
Kesha
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 adoption and 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 on certain imported 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 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 1 point per share, compared to the net loss of 1.55. For the six months ending June 30, 2026 and 2025, total revenue was 5 million and 4.6 million, respectively, an increase of 447,000, or 9.8%. Gross profit for the six months ending June 30, 2026 was 3.5 million, or 69.4% of revenue, compared to 3.3 million, or 71% of revenue.
Operating expenses decreased by approximately 1.4 million, or 20%, to approximately 5.4 million for the six months ending June 30, 2026, compared to approximately 6.7 million for the six months ending June 30, 2025. Net loss. No, I'm sorry, the phone clicked. As of June 30, 2026, the company had cash and cash equivalents of 2.1 million and working capital of 3.7 million, and 466,000 in convertible outstanding debt. At this time, I'll turn it back over to Eric.
Eric Hines, CEO
All right, thanks, Kesha. So I want to first and foremost thank everyone who wished me my one-year anniversary date, which was August 1st of 2026. So thank you to those who have reached out to me. You know, what I can say about the company is we are 180 degrees different than when I joined the company. And I say that since we've added a lot of great employees and [are] doing a lot of great things and a lot of great programs that are in place. And I'll leave the group here with, first of all, thank you for being shareholders and thank you for being interested in Milestone, and thank you for your support.
But most of all, I think our best chapters are ahead of us. So thank you, and we'll turn the call over to questions at this point.
OPERATOR
Certainly. At this time we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
Your first question for today is from Bruce Jackson with Stonex.
Bruce Jackson, Analyst at Stonex
Hi, good morning. Thanks for taking my questions and congrats on the quarter. So I just wanted to clarify from the press release, how many MACs do you currently have that have the reimbursement in place, and then do you anticipate adding any more, and when?
Eric Hines, CEO
So we have 2 MACs, which cover 3 jurisdictions and 13 states. So those are Novitas and First Coast. And we will be adding more MACs along the way. We're currently working very closely with Palmetto. And then we'll move, to an extent, westward and start to collect CGS and WPS in Meridian. So we've got two currently with three jurisdictions and 13 states, representing about 30 to 35% of the population.
Bruce Jackson, Analyst at Stonex
Okay, great. And then I just want to be clear on the sales guide for the third quarter. So it's going to be down sequentially, but I'm just trying to kind of gauge how much it's going to be down from the second quarter.
Eric Hines, CEO
Right now we're projecting, and again, I would say in the range of 2.3 to 2.5 would be the range that I would provide.
Bruce Jackson, Analyst at Stonex
Okay, and then the last question I want to ask was in the press release, you mentioned a study where use of CompuFlo reduced composite complications, which I thought was pretty interesting. Can you kind of discuss a little bit why that is?
Eric Hines, CEO
Just because of the number of, I guess, sometimes pokes that they have to do. So, for instance, with the accuracy that we command with the CompuFlo, they can get much more precise as far as where they're doing the implant. And so a lot of times they'll have multiple sticks, if you will, that they have to go through with a traditional LOR syringe. And using CompuFlo within that study, they were able to reduce the missteps or the misplacement by significant amounts.
Bruce Jackson, Analyst at Stonex
Okay, great. That's it for me. Thank you.
Eric Hines, CEO
Thanks, Bruce.
OPERATOR
Your next question for today is from Tom McGovern with Maxim Group.
Tom McGovern, Analyst at Maxim Group
Hey, guys. Thank you for taking my question. Yeah, first question is on the Advisor program. So as of the last update in 1Q, you guys reported eight active physician partners and you had six pending. I'm just curious if you could give an update. I'm sorry if I missed it earlier in the prepared remarks, but just curious where that's at currently.
Eric Hines, CEO
Yeah, we've added a few more. I think we're up to maybe 10 or 11. We're not really actively adding more advisors at this point as we're looking to get focusing on the claim submission. The claim submission is really what drives the reimbursement. And now that we've completed that exercise to an extent with Novitas and First Coast, we're turning our jets to other MACs. So the Advisor program was really put in place to get people using the product to start submitting claims to get feedback and to get the Medicare reimbursement back in place.
Now we're moving into Palmetto and out west with a few of the other MACs that will start adding advisors out in those areas. So we're limited a little bit by the scale. We've only got a couple people working on the medical front right now. That's going to be changing here quite dramatically here in the next several weeks. But we're limited by the capacity of the staff.
Tom McGovern, Analyst at Maxim Group
Understood. I appreciate that color. Next question. Again, back in 1Q, you guys gave us some encouraging news with the digital marketing campaign. It has contributed to 20 to 30 leads per week. I was wondering if that run rate or that rate had sustained in 2Q and what your conversion rate on those leads from Q1 was.
Eric Hines, CEO
Yeah, so the campaign has continued to do extremely well, getting anywhere between 150 to 200 leads per month. Again, we're sort of at a capacity situation where that's why we launched Milo, which is going to be the AI bot that helps sort of prosecute some of those leads while they're on the phone and because we just don't have enough people to, frankly, follow up. And so the leads continue to grow to a point that we need to add people to handle them.
In fact, we're getting ready to bring on two additional people that all they will do is follow up on the leads because the campaigns have generated such demand that we need to find a better way to keep up with them. Milo is one of them and then resources are another. So as compared to Q1, the leads continue to be just as high, if not higher. And especially now that we've sort of added medical to that cadence. And so it's not just the dental leads, it's hundreds of medical leads, including the great showing that we had at ASPN, where I would argue that we were the most attended booth in the entire event.
So we're not short of leads.
Tom McGovern, Analyst at Maxim Group
Got it. And then final question for me is just on the redone medical distribution agreement, I'm just trying to understand a little bit about the structure. Are there any minimum purchase or stocking commitments through this agreement? And then if you're still working on sending out the first order, how does that contracting work between the VA and DoD? Is that all pre-approved or are you guys going to have to maybe negotiate separate contracts with each channel or with each sub-channel, rather?
Eric Hines, CEO
No, it'll be on the price schedule. It'll be on the FSS schedule, and we're still working through that. So we've got the agreement in place with Redwood One. There's no minimum commitments. I mean, I think you probably know that they're a very recognized national brand in the veteran space. So we're already targeting business just out of the gate. But again, we're still waiting for some of the details to be added to the FSS schedule and then once that's in place, everyone will buy off that schedule versus us having to go through negotiations with each of the individuals agencies.
Tom McGovern, Analyst at Maxim Group
Sure. And just for our understanding, you know, I understand that could be, you know, a little bit of a drawn out process as anything with the government. But just curious, you know, internally, what are you guys looking at in terms of a timeline to kind of work through that initial, you know, I guess like logistical or contracting push and transition to orders?
Eric Hines, CEO
Yeah, we expect our goal is to be taking orders in Q4.
Tom McGovern, Analyst at Maxim Group
I appreciate all that color. I'll hop out of here.
OPERATOR
Your next question for today is from John Korb, a private investor.
Eric Hines, CEO
Hey John, good morning.
John Korb, Private Investor
Good morning, Eric. Nice to be with you this morning. You said in your comments that this company is 180 degrees different than it was a year ago. Congratulations on your one year. Had you not said that, I certainly got that sense from reading the quarterly report that I just finished reading. It's without a doubt the most comprehensive and hopeful quarterly report I've ever read from Milestone. I really feel like we get some traction here with Milestone and your ability to grow this company is very hopeful for me.
I have one question regarding Red Medical and any distributor in the past, especially with the Vento distributors, would be signed up and that's all that be as a distributor, nothing happened. What does a distributor agreement, what do they do? Do they sell? Do they just facilitate? With any distributorship you have anywhere domestically or internationally, what agreement do you have with them from them?
Eric Hines, CEO
So we control the pricing with the distributors versus some other ways of going to market where they're allowed to discount up to a certain amount. So we want to make sure that we have cost control for, I guess, a starting point, and then they obviously get points on the sales. The distributors, the way that they'll work for us, for instance in Florida, is they will act not only as additional feet on the street, but they will also, they've got a lot of technical expertise.
So again, we're a little bit constrained from a resource perspective. So the distributors will act as our clinical specialists in some cases, they'll act as our salespeople in some cases, and then we will have some sort of hunters in Florida. And then we will also have sort of a strategic rep that will sort of manage that whole group. Right. So we'll have a strong medical technology salesperson who will work with the distributors, work with the hunting team, and sort of chase the business in, for instance, the state of Florida.
Then we will sort of rinse and repeat and do that in New Jersey, Pennsylvania and Texas here over the course of the next handful of months. So they really just serve as. We'll have multiple distributors in each state. We're not going to just hang our hat on one single distributor. We may have two or three different distributors covering the different parts of Florida, west, east and north Florida, for instance. And that gives us technical expertise, feet on the street, and then having a single point of contact or two that are actually Milestone employees that are overseeing that and being compensated for the efficacy of the distributorships as well as their own sales.
John Korb, Private Investor
Thank you so much, Eric. Thank you very much. And all the best going forward.
Eric Hines, CEO
Thanks, John.
OPERATOR
Once again, if you would like to ask a question, please press Star one. Once again, if you would like to ask a question, please press Star one. Your next question for today is from Gary Carroll, a private investor.
Eric Hines, CEO
Hey, Gary.
Gary Carroll, Private Investor
Top of the morning, boss. How you doing?
Eric Hines, CEO
I'm doing good.
Gary Carroll, Private Investor
I wish you quit getting me up so early for these calls, but I just want to say congratulations on where we are today versus where we are one year ago when you stepped into this mess. Sorry I missed your anniversary. I think I was too busy trying to recruit some reps for you. But at any rate, I think the report was fantastic. I think we're moving in the right direction. So I think some investors that have been here a long time, like myself, and I've gotten some feedback from other people saying, can you ask Eric to elaborate a little bit on where we are today versus where we are exactly two years ago at the ASPN meeting, by the way, when we first got Medicare approval and the previous regime, I don't want to mention his name because I might get sick, took that and did nothing. So we got reimbursement and we got no follow through. And there's a big difference happening now because obviously we. And you realize the importance that now that we have that we have to run with that code and start submitting. And I know we already are submitting cases into First Coast here in Florida, of course, which is my location at my interest.
So do we actually have a group or some, that group in Tampa? I think we had some guys in Tampa that really helped us submit, resubmit the cases that we needed to get Evelyn to be able to get us back to where we are today, that now we can run with the ball. So from your point of view, what's the difference? Because I know you've been here also during that time with Arjon. So where are we today in your mind, versus where we were then? Because I think a lot of people want to know.
We got it now we're going to get this done. And can you shed a little light on where you think we're, you know, the difference?
Eric Hines, CEO
Yes. I don't really know exactly what happened prior. I mean, I was a shareholder like all of us were back then, but I didn't pay too much attention, but I paid enough attention to understand that something didn't seem like it was going in the right direction. So I think the difference now is that we've sort of done it a little bit more systematic. So we've gone, I guess, a little bit. Sometimes they say you got to go slower to go faster. And, you know, I'm a big believer in that.
And so we've put things in place as far as reimbursement teams to help the medical offices to prosecute the claims. That's a big help. And we've, you know, now we're putting a team in the state of Florida which will be four or five people that are, you know, just solely going after the CompuFlo business and doing it sort of in a much more methodical way. So I think really, it's just, quite honestly, it's not spraying and praying and hoping and putting CompuFlo all over the map and all over the world, quite frankly, it's focus and it's focus and getting it right and getting the right systems and processes in place and then it's replicating it across the rest of the country. So, you know, I wouldn't anticipate that we're just going full force and adding and adding MACs until we get, you know, show that we've had a lot of success in Florida. We'll obviously move into the Novitas regions with Texas and Pennsylvania and New Jersey. But we're going to do it systematically. We're going to do it with the right programs in place to support the offices and the office managers. And so I think that's really just the.
It's kind of subtle, but it's going a little bit slower to make sure that we can accelerate once we get to a critical mass.
Gary Carroll, Private Investor
Along that line, Eric, are we going to have specific people trained to go into, for instance, you know, I'm down in southeast Florida and we're getting excited about getting this thing launched. Are we going to have a support person or people that will come in and train the office staff on how these claims have to be submitted? Because I think there has to be some justification, if I'm correct, on the doctor using the CompuFlo, for instance, in a very difficult cervical case, it's an elderly patient with a lot of arthritis.
There has to be something that goes along with that claim. Correct? There does. Right. I mean, it has to be coded properly, all the I's dotted and T's crossed. It's actually a really good idea. So I just wrote it down that, you know, providing some training. And we've got Evelyn and her entire group. She's with a new company called Omniair, which has many, many resources, and they spend their life in getting products approved and working through that process. So I jotted that down, but I think it makes a lot of sense because we're doing a little bit of that, but we probably need to do more.
Well, I think so, because if we have the reps going in and they're getting the account, the doc wants to use it, he's excited. We get it in, we get an order, we start using it. Well, if that rep has to stop then and take time to go train, you know, the office staff or the billing people, that's going to slow down the process of the sales process. So if we have that backup of somebody supporting us with what you just said, the billing and claims and training those people, first of all, they're going to get paid a lot quicker and they're going to submit it correctly, and we're going to get what we need.
As far as the tracking for these cases to be tracked, we're on the same page. I think that's what else. I have something else to ask you, but so now we have. We got a group in Tampa. Those guys that helped us are still submitting, correct? But we still got users, regular users that helped us get through that are still submitting cases. Yes, that's important. Right. We want to keep that. We got to keep it flowing. Hang on. That $500,000, on that $500,000 international order, was that a big dental order that came in, by the way?
Okay, so we're not really planning on that recurring for this quarter, as you just stated.
Eric Hines, CEO
Not at this point, no.
Gary Carroll, Private Investor
All right. Well, I know it's getting to be. It's going to be 9 o'clock here now. Listen, congratulations again. I think a lot of us, most of us are very excited at your progress. I think you're putting a good team together. Jason, Josh, they're working hard. Josh, doing a great job down in Florida. I think we might have somebody new down in Florida soon, according to what I'm hearing, which will be fantastic to get us rolling. You know, this is the biggest territory in the country, buddy, so if we can get this going, I think we're going to be in good shape.
Eric Hines, CEO
We appreciate your support, Gary.
Gary Carroll, Private Investor
All right, Val, thank you.
OPERATOR
Yes, we have reached the end of the question and answer session, and I will now turn the call over to Eric Hines for closing remarks.
Eric Hines, CEO
No, just once again, thanks, everybody. It was a good quarter. We plan on having more good quarters. That's the plan. And I can't thank you enough for your support along the way. And we will be in touch. Thank you. Have a good day.
OPERATOR
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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