Company Overview
Milestone Scientific Inc. is a pioneering biomedical technology company that has developed revolutionary, computer-controlled injection technologies and solutions for the medical and dental markets. The company's proprietary DPS Dynamic Pressure Sensing technology platform has enabled the creation of innovative devices that redefine the standard of care for injection techniques, delivering precise, efficient, and virtually painless experiences for patients. Milestone Scientific patents, designs, develops and commercializes innovative diagnostic and therapeutic injection technologies and devices for medical and dental use. The company maintains a portfolio of over 245 U.S. and foreign patents related to its drug delivery technologies.
History and Development
Milestone Scientific was incorporated in the State of Delaware in August 1989, with the goal of developing a proprietary, revolutionary, computer-controlled anesthetic delivery device to meet the needs of various subcutaneous drug delivery injections and fluid aspiration. The company's DPS Dynamic Pressure Sensing Technology System serves as the foundation for its technology platform, advancing the development of next-generation devices. Milestone Scientific's dental device, utilizing The Wand, a single-use disposable handpiece, is marketed under the trademarks CompuDent and STA Single Tooth Anesthesia System. These dental devices are currently sold in the United States, Canada, and over 41 other countries, suitable for all dental procedures requiring local anesthetic. In 2017, Milestone Scientific expanded its focus to the medical market, receiving FDA clearance for its CompuFlo Epidural Computer Controlled Anesthesia System. This development marked a significant transition for the company from a research and development organization to a commercially focused medical device company. In 2023, Milestone Scientific made a strategic decision to terminate its remaining U.S. distributor for dental products and launch its own e-commerce platform for direct sales to customers in the United States. While this transition led to some disruptions in international sales during the second quarter of 2024 due to issues with freight forwarders, the company successfully resolved these logistics challenges by the third quarter.
Financials
Milestone Scientific's financial performance has been marked by both challenges and progress. For the nine months ended September 30, 2024, the company reported revenue of $6.6 million, a decrease from $7.6 million in the same period of the prior year. This decline was primarily attributable to lower international dental sales, which were impacted by logistical challenges in the second quarter of 2024. However, the company's domestic e-commerce platform continued to deliver strong results, with revenue increasing 11.4% year-over-year during the nine-month period.
Gross profit for the first nine months of 2024 was $4.9 million, or 74% of revenue, compared to $5.3 million, or 70% of revenue, in the same period of 2023. The improvement in gross margin was driven by the higher-margin e-commerce sales. Operating losses for the nine-month period were $4.7 million, down from $5.1 million in the prior-year period, largely due to the company's receipt of $2 million in net proceeds from the sale of New Jersey net operating losses.
For the most recent quarter (Q3 2024), Milestone Scientific reported revenue of $2,513,805, representing a 22% increase year-over-year. This growth was primarily driven by strong performance in the dental division, particularly in international dental sales, which increased 57% as logistic challenges from the prior quarter were resolved. The company's net income for Q3 2024 was -$1,461,171, with operating cash flow (OCF) of -$973,914 and free cash flow (FCF) of -$967,318.
In terms of geographic performance, for Q3 2024, US e-commerce and dental service revenue was $1.2 million, while international revenue was $1.3 million, up $0.5 million from the prior year quarter. The company did not record any revenue from China in Q3 2024 or Q3 2023.
Liquidity
Milestone Scientific's liquidity position remains strong, with $4.8 million in cash and cash equivalents and $6.9 million in working capital as of September 30, 2024. The company has no long-term debt, providing it with the financial flexibility to navigate its growth strategies. The debt-to-equity ratio stands at 0.04316176564262968, indicating a low level of financial leverage. As of September 30, 2024, the company reported a current ratio of 2.847 and a quick ratio of 1.859, both indicating a healthy short-term liquidity position.
Medical Division Progress
The company's medical division, centered around the CompuFlo Epidural System, has been a key area of focus and progress. In 2024, Milestone Scientific achieved a significant milestone by securing Medicare Part B physician payment rate assignments for the CompuFlo system in several key regions, including Texas, Florida, and New Jersey. This development has significantly expanded the addressable market and financial accessibility of the company's innovative technology.
Building on this reimbursement success, Milestone Scientific has been actively engaging with pain management clinics across the United States, conducting pilot programs to showcase the clinical benefits of the CompuFlo system. The company has reported a growing sales pipeline, with respected providers such as Hudson Specialty Care and iHeal Pain Center adopting the CompuFlo system and integrating it into their practices.
The CompuFlo Epidural System received 510(k) clearance from the FDA in 2017 for epidural injections in the lumbar region, and expanded clearance to the thoracic and cervical thoracic junction regions in 2023. Milestone has also obtained CE Mark approval, allowing the CompuFlo system to be marketed and sold in most European countries.
For the three months ended September 30, 2024, the medical segment generated net sales of $47,000, a significant increase from $6,000 in the prior year period. Gross profit for the medical business was $44,000, up $57,000 year-over-year. Selling, general and administrative expenses decreased by $280,000 to $398,000, while R&D costs declined by $46,000 to $2,000.
Over the nine month period, the medical segment recorded net sales of $74,000, up from $10,000 in the same timeframe of 2023. Gross profit was $66,000, down $159,000 compared to the prior year. Selling, general and administrative expenses for the medical business decreased by $822,000 to $1.44 million, and R&D costs declined by $67,000 to $3,000.
International Expansion
Internationally, Milestone Scientific has also made strides, securing regulatory approval from Brazil's health agency to market the CompuFlo Epidural System within the country. As the ninth-largest economy globally, Brazil represents a significant growth opportunity for the company, particularly given the country's large population experiencing chronic back pain and the limited availability of advanced epidural technology.
Dental Segment Performance
Milestone Scientific's dental segment is centered around its proprietary, computer-controlled anesthetic delivery device, the STA Single Tooth Anesthesia System. This device, marketed under the CompuDent and STA trademarks, has been used to administer over 92 million safe, effective, and comfortable injections since its introduction in 2007. The STA system utilizes Milestone's patented DPS Dynamic Pressure Sensing technology to regulate the flow rate and monitor pressure from the needle tip, providing healthcare practitioners with benefits that cannot be achieved with traditional manual syringes.
For the three months ended September 30, 2024, the dental segment generated net sales of $2.47 million, an increase of $413,000 compared to the same period in 2023. Gross profit for the dental segment was $1.79 million, up $276,000 year-over-year, reflecting higher international sales. Selling, general and administrative expenses for the dental business decreased by $78,000 to $857,000, while R&D expenses increased by $108,000 to $230,000 as the company entered the final stage of developing the next generation STA system.
For the nine months ended September 30, 2024, the dental segment recorded net sales of $6.54 million, down $1.01 million from the prior year period. This decrease was primarily due to lower international sales, partly offset by growth in the company's e-commerce platform which launched in January 2023 and now accounts for 53% of dental segment revenue. Gross profit for the nine month period was $4.86 million, a decrease of $518,000 compared to the same timeframe in 2023. Selling, general and administrative expenses for the dental business declined by $523,000 to $2.70 million, while R&D costs increased by $183,000 to $638,000.
Strategic Priorities and Leadership Transition
Despite the challenges faced in the first nine months of 2024, Milestone Scientific remains focused on executing its strategic priorities. The company is committed to advancing its reimbursement initiatives, strengthening its commercial infrastructure, and deepening market penetration for both its dental and medical product lines.
As Milestone Scientific navigates this transitional period, with the upcoming retirement of CEO Arjan Haverhals, the company has taken steps to ensure a smooth leadership transition. Haverhals will continue to serve on the Board of Directors and provide consulting services to support the company's ongoing success.
Future Outlook
While Milestone Scientific did not provide specific revenue or earnings guidance for the upcoming quarter or full year, the company expressed confidence in its ability to drive further adoption of CompuFlo in both the U.S. and international markets. The recent Medicare reimbursement coverage and partnerships with leading pain management clinics are seen as key drivers for future growth.
For the dental division, the company expects continued growth from its e-commerce transition and targeted marketing campaigns. The focus remains on advancing reimbursement initiatives, strengthening commercial infrastructure, and deepening market penetration for its CompuFlo Epidural System.
Conclusion
In conclusion, Milestone Scientific's innovative technologies, strong liquidity position, and promising growth prospects in the medical and dental markets position the company for continued success. By capitalizing on the Medicare reimbursement achievements for its CompuFlo Epidural System and driving increased adoption of its proprietary injection solutions, Milestone Scientific is poised to redefine the standard of care in pain management and revolutionize the delivery of painless, precise injections.