Executive Summary / Key Takeaways

• Milestone Scientific leverages its proprietary Dynamic Pressure Sensing (DPS) technology across profitable dental and high-potential medical segments, aiming to establish new standards of care in injection procedures.
• The U.S. dental business has successfully transitioned to a direct e-commerce model, driving improved gross margins (74.5% in Q1 2024) and generating positive operating income ($179k in Q1 2025), providing a stable financial base.
• The medical segment, centered on the CompuFlo Epidural System, achieved a critical milestone with Medicare Part B physician payment rate assignment in key regions (NJ, TX, FL, etc.) in Q2/Q3 2024, significantly enhancing commercialization prospects.
• Despite ongoing operating losses ($2.0M in Q1 2025) and a going concern note, management's plans to increase revenue, decrease costs, and recent related-party financing ($800k in April 2025) are intended to provide sufficient liquidity for the next twelve months.
• Key factors for investors to monitor include the pace of CompuFlo adoption following reimbursement gains, expansion into additional Medicare jurisdictions, international market penetration, and the company's ability to achieve overall profitability.

Milestone Scientific Inc. (MLSS) is a biomedical technology company focused on redefining injection procedures through its proprietary computer-controlled systems. Operating in both the dental and medical fields, the company's core strategy revolves around its Dynamic Pressure Sensing (DPS) technology, designed to provide painless, precise, and efficient drug delivery and fluid aspiration. This technological foundation positions MLSS as an innovator in a market dominated by larger, more diversified players like Dentsply Sirona , Henry Schein , and Becton Dickinson , who often offer broader portfolios but may lack MLSS's specialized precision capabilities.

The company's journey began in 1989, initially focusing on dental applications with its Wand/STA system. Over time, Milestone expanded into the medical sector with CompuMed and later the CompuFlo Epidural System, receiving key regulatory clearances like the FDA 510(k) in 2017 for epidural use. A significant strategic pivot occurred recently in the U.S. dental market, moving away from traditional distributors like Henry Schein to a direct-to-customer e-commerce model launched in January 2023. This shift was a deliberate response to market dynamics, aiming to capture better margins and build direct customer relationships.

Technological Differentiation: The Power of DPS

At the heart of Milestone Scientific's offering is its DPS technology. This system provides real-time pressure feedback from the needle tip, allowing clinicians to navigate tissue resistance and verify location with objective visual and audible cues. This contrasts with traditional manual injection techniques that rely solely on tactile feel.

The tangible benefits of DPS are significant. In dental procedures, it enables virtually painless injections, reducing patient anxiety and improving satisfaction. In medical applications, particularly with the CompuFlo Epidural System, DPS is designed to enhance safety and predictability. It helps identify the epidural space precisely, potentially reducing the risk of dural puncture and other complications. For procedures like spinal cord stimulator implantation, clinicians report that CompuFlo helps minimize risks such as intraoperative cerebral fluid leakage and nerve root trauma, and has even decreased operative time by around 20 minutes per procedure. While specific, overall quantifiable improvements in success rates or complication reductions across all procedures are not detailed, the stated benefits highlight the technology's potential to improve clinical outcomes and efficiency.

For investors, the DPS technology represents a key competitive moat. It differentiates MLSS's products from more conventional injection methods offered by larger competitors. This technological edge supports a business model focused on high-margin, recurring revenue from disposable handpieces and consumables used with the instruments. While R&D on a next-generation STA instrument has been delayed, the company continues to hold extensive intellectual property, including patents for potential future applications like peripheral nerve block.

Segment Performance and Strategic Execution

Milestone Scientific operates through two reportable segments: Dental and Medical. The Dental segment has historically been the primary revenue driver and currently serves as the company's profitable engine. The strategic shift to a direct U.S. e-commerce model has been instrumental in this. In the three months ended March 31, 2025, the Dental segment generated $2.18 million in revenue and a gross profit of $1.60 million, resulting in operating income of $179,357. While revenue and operating income were slightly lower compared to the same period in 2024 ($2.24 million revenue, $1.67 million gross profit, $625,510 operating income), the direct model has notably improved gross margins, reaching 74.5% in Q1 2024 and 76.1% in Q2 2024, demonstrating the financial benefits of cutting out intermediaries. The company has successfully added large group practices to its direct customer base, validating the scalability of this approach. International dental sales, while experiencing some fluctuations, are expected to see renewed focus and improvement.

The Medical segment, featuring the CompuFlo Epidural System, represents the company's primary growth opportunity. This segment generated $51,250 in revenue and a gross profit of $51,161 in the three months ended March 31, 2025, a significant increase from $7,420 in revenue and $2,974 gross profit in Q1 2024. Despite an operating loss of $(421,249) in Q1 2025 (an improvement from $(491,428) in Q1 2024), the revenue growth signals early traction. The strategic focus here is on driving adoption through securing reimbursement and targeted commercialization. A major breakthrough occurred in Q2/Q3 2024 with the achievement of Medicare Part B physician payment rate assignment for CompuFlo in several key JMAC regions, including New Jersey, Texas, and Florida. These regions alone represent a substantial market opportunity, with an estimated 3 million epidural steroid injection procedures annually and a $250 million market opportunity among Medicare patients for these procedures.

The company is leveraging this reimbursement success through a strategic partnership with Axial Biologics, utilizing their established relationships in pain management clinics within these key JMAC regions for a focused commercial rollout. Pilot programs are underway with numerous clinics, aiming to convert trials into full adoption. International expansion for CompuFlo is also progressing, with regulatory approval in Brazil (a large market with an estimated 4-5 million annual epidural procedures) obtained in Q2 2024 and a distribution agreement in Spain secured in late 2023.

Financial Health and Outlook

On a consolidated basis, Milestone Scientific reported revenue of $2.23 million for the three months ended March 31, 2025, a slight decrease from $2.25 million in the same period of 2024. The consolidated gross profit was $1.65 million (74% margin), down from $1.68 million (75% margin) in Q1 2024. Total operating expenses increased to $3.65 million from $3.14 million, driven by higher selling, general, and administrative costs (professional fees, warehousing, travel) and increased research and development expenses (related to the next-gen STA before the delay decision). This resulted in a consolidated loss from operations of $2.00 million, compared to $1.47 million in Q1 2024.

As of March 31, 2025, the company had cash and cash equivalents of $2.25 million and working capital of $4.2 million. Cash used in operating activities improved slightly to $1.01 million in Q1 2025 from $1.22 million in Q1 2024.

The company has a history of operating losses, totaling $130.05 million since inception, which raises substantial doubt about its ability to continue as a going concern. However, management believes that existing cash, coupled with plans to increase revenue, decrease costs (including delaying certain R&D), and the $800,000 in related-party financing received in April 2025, will be sufficient to fund operations for the next twelve months. The company's continued operations ultimately depend on achieving profitability or raising additional capital.

Management's outlook is focused on driving revenue growth and reducing operating expenses to achieve positive cash flow. They anticipate continued growth in the dental segment from the direct model and international markets. The primary growth catalyst is expected to be the medical segment, contingent on the pace of CompuFlo adoption following reimbursement successes and expansion into additional markets.

Competitive Landscape and Positioning

Milestone Scientific operates in markets with established, large competitors. In dental, companies like Dentsply Sirona (XRAY) and Henry Schein (HSIC) offer broad product lines and extensive distribution networks. MLSS differentiates itself with its STA system's precision technology, aiming to capture market share through superior patient comfort and procedural control, supported by its direct sales model and targeted marketing. While MLSS's scale is significantly smaller, impacting manufacturing costs and distribution reach compared to these giants, its focus on a differentiated technology and direct customer relationships in the U.S. dental market allows it to achieve competitive gross margins.

In the medical segment, particularly for epidural procedures, MLSS competes with traditional manual techniques and potentially other advanced injection systems offered by companies like Becton Dickinson (BDX). MLSS's CompuFlo Epidural System, with its DPS technology and recent CPT code and Medicare payment assignments, offers a distinct value proposition centered on enhanced safety, predictability, and efficiency. This technological advantage and the progress in securing reimbursement are critical for competing against established practices and larger players. While competitors benefit from scale, existing hospital relationships, and broader product portfolios, MLSS is strategically targeting pain management clinics and specific procedures (like SCS implantation) where the benefits of its precision technology are particularly compelling and can drive adoption, especially now that reimbursement pathways are opening. The strategic partnership with Axial Biologics is a key move to leverage specialized sales expertise against the broader distribution networks of larger competitors.

Conclusion

Milestone Scientific is at a pivotal juncture, leveraging the stability and profitability of its dental business to fund the commercialization push for its high-potential medical technology. The CompuFlo Epidural System, underpinned by the company's differentiated DPS technology, has achieved a critical milestone with Medicare payment rate assignments, significantly improving its market access and growth prospects. While the company faces ongoing financial challenges and operates in competitive markets dominated by larger players, its focused strategy on technological precision, direct customer engagement in dental, and targeted reimbursement and commercialization efforts in medical offer a clear path for potential value creation. Investors should closely monitor the company's execution on its medical segment rollout, the expansion of reimbursement coverage, and its progress towards achieving overall profitability as key indicators of the investment thesis unfolding.