Milestone Scientific (MLSS) Q3 2026 Earnings Call Transcript

DATE

Fri, Nov. 13, 2026

CALL PARTICIPANTS

• Hayden IR - James Carbonara
• Chief Executive Officer - Eric Hines
• Keisha Harcum

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TAKEAWAYS

• Total Revenue -- $2.2 million, representing a 5.9% decline from $2.4 million in the prior year period, primarily due to lower dental product sales.
• Medical Segment Revenue -- 136% growth year over year, reflecting increased clinical adoption of the CompuFlo system.
• Gross Margin -- 72.3%, an improvement of 280 basis points from 69.5% in the third quarter of 2025, driven by lower product costs.
• Operating Expenses -- $2.4 million, a 15.3% reduction compared to $2.8 million in the prior year period, resulting from lower salary, compensation, and professional fees.
• Net Loss -- $748,000, or $0.01 per share, compared to a net loss of $1.2 million in the third quarter of 2025.
• Annual Savings -- $400,000 in additional cost reductions identified, which management expects will support reaching profitability by the fourth quarter of 2026.
• Full-Year 2026 Guidance -- $9.8 million to $10.2 million, which would represent double-digit growth for the fiscal year.
• Profitability Threshold -- $2.6 million to $2.7 million in quarterly revenue, the level management identified as the inflection point for operating leverage.
• Commercial Leads -- Over 500 U.S. leads in the medical segment, supported by five dedicated sales professionals and 15 sales consultants.
• Cash Position -- $1.3 million as of Sept. 30, 2026, with working capital of $3.5 million and zero outstanding debt.
• Director Loan Conversion -- Outstanding debt was eliminated during the quarter by converting director loans into equity.
• Contractual Obligation Costs -- $91,000 for the first nine months of 2026, reduced from $351,000 in the prior year period following an optimization of existing agreements.
• U.S. Epidural Market -- 11 million annual procedures, representing a portion of the global market that exceeds 30 million annual procedures.
• Medical Revenue Mix -- 85% of third-quarter medical revenue was derived from new equipment sales, with a four to six month lag expected before recurring disposable revenue scales.
• CompuFlo Revenue Potential -- $90,000 to $100,000 in potential annual revenue per unit if utilized for 50 cases per month.

SUMMARY

Milestone Scientific Inc. (NYSEMKT:MLSS) reported third-quarter results for 2026 focused on expanding the medical segment and streamlining the company cost structure. Management reaffirmed full-year revenue guidance and identified additional annual savings while indicating an expectation to approach or achieve profitability in the fourth quarter of 2026. This outlook is supported by clinical adoption of the CompuFlo system within national orthopedic and pain management networks. Strategic efforts during the quarter included growing the U.S. commercial pipeline and securing international regulatory approvals in Turkey, with further expansion planned for early 2027.

• Hines noted that the company is transitioning to a "new chapter" where operating leverage is expected to drive profitability as revenue grows.
• Management expects gross margins to stabilize between 69% and 70% in future quarters as the sales mix of equipment and disposables fluctuates.
• The company secured regulatory approval in Turkey and expects to receive approvals in Mexico and India by the end of the first quarter of 2027.
• The CompuFlo Advisor Program added Dr. Sudhir Rao of Pain and Spine Specialists, an organization with 22 locations across four states.
• Clinical use of CompuFlo was initiated at Rothman Orthopaedics, a national institution with 34 locations that performs approximately 3,000 interlaminar Medicare procedures annually.
• Hines stated, "We need to be selective about the practices we choose or the hospital systems that we go after, so that we can maintain them and also encourage them to continue using."

INDUSTRY GLOSSARY

• CompuFlo: A computer-controlled system for drug delivery and fluid aspiration used in medical and dental procedures.
• STA Single Tooth Anesthesia System: A dental system used for localized anesthesia delivery.
• MAC: Medicare Administrative Contractor.
• Interlaminar: A medical procedure involving the space between two laminae of the vertebrae.
• Intrathecal: A route of administration for drugs via an injection into the spinal canal.

Full Conference Call Transcript

Operator: Good day, everyone, and welcome to Milestone Scientific Inc. Q3 2026 Financial Results and Business Update Conference Call. At this time, all participants are placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star one on your phone to enter the question queue at any time, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, James Carbonara with Hayden IR. Sir, the floor is yours.

Moderator: 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 press 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: Thank you, James, and good Morning, everybody, and thank you for joining our call today. Our third quarter results reflect continued execution of our commercial strategy and disciplined cost management. Total revenue was $2.2 million as expected, a modest sequential decline following the two large international orders that benefited our second quarter. Medical segment revenue grew 136% year-over-year. Gross margin improved 280 basis points to 72.3%, and operating expenses declined 15.3%. Net loss narrowed to $748,000 from $1.2 million a year ago. Just as importantly, our team identified approximately $400,000 in additional annual savings, which we believe supports our expectation to approach or achieve profitability in the fourth quarter of 2026. I'm just going to reiterate that one more time.

Our expectation to approach or achieve profitability in the fourth quarter of 2026. In our medical business, our priority is converting growing interest in CompuFlo into sustained clinical adoption and recurring disposable revenue. We are gaining traction with major healthcare organizations, highlighted by the initiation of clinical use at Rothman Orthopaedics, a nationally recognized orthopedic institution with 34 locations. During the quarter, we also added Pain and Spine Specialists, spanning 22 locations across four states, and its Medical Director, Dr. Sudhir Rao, to our CompuFlo Advisor Program. To support that adoption, we are expanding our commercial infrastructure.

We now have more than 500 U.S. commercial leads, supported by five dedicated medical sales professionals, approximately 15 sales consultants, and three distribution partners, and Red One Medical, who provides access to federal healthcare customers, including the VA and the Department of Defense. The medical business opportunity is significant. There are an estimated 30 million+ epidural procedures annually worldwide, including more than 11 million in the U.S. For illustrative purposes, just 2% penetration of the U.S. market at an assumed selling price of $150 per procedure would represent approximately $33 million in potential annual disposable revenue. That is not a revenue projection, but it shows the size of the market.

Beyond epidurals, we recently submitted a provisional patent application for a new use of CompuFlo in intrathecal pump refills, and internationally, we are pursuing go-to-market and licensing initiatives with a few large medical technology organizations. Our dental business remains an important foundation for growth. Online product demonstrations more than doubled compared with the same period last year, reflecting stronger customer engagement. We are also accelerating our market expansion strategy through discussions with four major dental distribution channels that collectively serve thousands, if not tens of thousands, of dental offices, positioning us to reach previously untapped markets and drive broader adoption.

We also strengthened our balance sheet by converting our outstanding director loans to equity, leaving us debt-free as of September 30th. In addition, we evaluated and optimized our contractual obligations under an existing agreement, which lowered the related expense to approximately $91,000 for the first nine months of 2026 from $351,000 in the prior year period, and it is a source of additional annual savings I mentioned at the start of the call. Looking ahead, we are reaffirming our 2026 outlook of a range of $9.8 million-$10.2 million, representing double-digit growth, and we continue to expect significant growth in CompuFlo sales. We believe we are approaching an important inflection point.

Based on our current visibility, we expect to approach profitability or be profitable in the fourth quarter of 2026. For 2027, we expect considerably lower costs than this year, and we expect to deliver additional profitable quarters, although results may vary from quarter to quarter depending on revenue levels. With our lower expense base, we believe quarterly revenue of approximately $2.6 million-$2.7 million puts us near the threshold where incremental revenue begins to flow meaningfully to the bottom line. That operating leverage, combined with growing medical adoption and recurring disposable revenue, creates what we believe is a path to sustained profitability and long-term value for our shareholders.

With that, I am going to turn the call over to Keisha to review our third quarter financial results. Keisha?

Keisha Harcum: Thank you, Eric, and good morning, everyone. Total revenue for the third quarter was $2.2 million compared to $2.4 million in the same period last year, a decrease of $140,000 or 5.9%. The year-over-year decline was primarily driven by lower dental product sales, partially offset by the growth in the medical sales and higher dental repair income. Gross profit was $1.6 million, consistent with the prior year period. Gross margin improved to 72.3% compared to 69.5% for last year, primarily reflecting lower product costs. Operating expense decreased by 15.3% to $2.4 million compared to $2.8 million in the third quarter of 2025.

This reduction was primarily driven by lower salary, compensation, stock-based compensation, professional fees, contract-related expenses, partially offset by higher marketing, regulatory, warehousing, and travel expense. Operating loss was $746,000, an improvement compared to the operating losses of $1.1 million for the prior year. This improvement was driven by a robust gross margin and our ongoing efforts to managing operating expense. Net loss for the quarter was $748,000, $-0.01 per share compared to the net loss of $1.2 million. Turning to our balance sheet, as of September 30th, we had $1.3 million in cash and cash equivalents, working capital of $3.5 million, and no outstanding debt. With that, I'll turn it back over to the operator for questions.

Operator: Certainly. Everyone, at this time, conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing a question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. And once again, if you have any questions or comments, please press star one on your phone. Your first question is coming from Bruce Jackson from StoneX. Your line is live.

Bruce Jackson: Hi, good morning. Just wanted to start with the gross margins that ticked up nicely here sequentially. Is this something that is sustainable going forward, and how should we be thinking about that particular line item?

Eric Hines: Hey, Bruce. Thanks for your question. We actually talked with Keisha about that this morning. I would expect that we will fall back into the 70% range. It's a blended rate, of course, between the equipment and the disposables. We have some quarters where we have larger equipment sales, specifically when we're selling into China, large orders into China. So, I would expect that the proper representation of the gross margin is in the 69%-70% range moving forward, although there might be some occasional fluctuations to the positive there.

Bruce Jackson: Okay. Are there any seasonal trends in your business? I mean, you've got a lot of potential contracts lined up here, and fourth quarter can generally be strong for capital equipment sales. Is that what you're seeing right now this year?

Eric Hines: Yeah, there's a little bit of seasonality just from the dental business. There's a lot of people that are, especially in Europe and so forth, on vacations in the summertime frame. For the fourth quarter, generally, it's a strong quarter, as you mentioned. Q1's generally strong. Q2 can slow down a little bit in Q3, but for the most part, Q4 is a strong quarter.

Bruce Jackson: Okay. Great. That's it for me. Thank you.

Eric Hines: Thanks, Bruce.

Operator: Thank you. Your next question is coming from Steve Higgins. Your line is live.

Speaker 5: Hey, Eric Hines. Man, it has been a while. How are you doing?

Eric Hines: I am doing great. You?

Speaker 5: I am doing good. I just had a question on the dental side. I know about two quarters ago, there was mention that three or four pretty big countries, including India and Japan, and I think Mexico was one other, but we were about 80% along the path to approval and had not heard any updates on that. Can you update us on that, and are we expecting that within the next year, or where are we on that?

Eric Hines: No, that's a great question, Steve, and for sure. We have received, as of last week, approval in Turkey. Turkey is a very substantial, large country. We're expecting orders if we've not already received one. I believe I actually have already received an order from Turkey. Turkey is now official, and we'll probably press release that at some point, I guess. Mexico is expected. It's a process. These things, unfortunately, are a bit of a process. Mexico, we're expecting the tail end of Q1. We've been in touch with our partner down there. I spoke with them, believe it or not, last week, and we're making our way through that. India also expected in Q1.

Those were the three that I think I mentioned. Japan, I think we're holding off for just a little bit. We've got approvals in 41 countries and a handful of countries where we're not selling as much as I'd like us to sell. We have more than enough real estate to go after, and right now, we're holding off on Japan until further notice, but Vietnam is also on the horizon. I would say Vietnam, India, and Mexico in Q1, and Turkey is complete.

Speaker 5: Thank you.

Eric Hines: Yes, sir. Thanks, Steve.

Operator: Thank you. Your next question is coming from John Korb. Your line is live.

John: Good morning, Eric. Nice to be on the call with you today again. I have a couple of general comments. I want you to know, first of all, that when you send out a press release, I read them every time with anticipation, and often I reread them. You use words that I've never seen in a press release from Milestone, like profitability, scalable. That's, to me, the crux of this whole thing. When I read one of your press releases and get a good feeling about it's just very rewarding for me as a long-term shareholder. Let me cite something that you wrote in the September 29th release that struck me.

You said, "We believe the opportunity ahead is not simply to place more devices, but to establish CompuFlo as a repeat-use technology embedded in everyday clinical practice." That's it. I think that's been the stumbling block of Milestone for years, that, at least in the dental business, the devices were placed and not used, or used very limited way. When I read that, I said, "Well, we got a guy at Milestone who's really focused and knows how to approach the growth for Milestone Scientific." I'm really grateful for your focus and all you're doing so far.

Eric Hines: No, I appreciate it, and you're spot on, right? If you look at, we have this conversation internally, and we're looking at it very closely, because there's a balance between bringing on new clinics and a balance with getting them to continue to use the product. We're looking at resources and customer success. We've obviously got the billing team that helps these doctors chase the Medicare folks. At some point, every CompuFlo unit, if it's used properly, generates about $90,000-$100,000 per year if it's being used at 50 cases per month, which is not a ton for some of these facilities. So, we're trying to strike a balance between bringing on new customers.

I'm talking a little bit about 2027, right? Because we'll approach 25 to 50 CompuFlo purchasers by the end of the year, more than likely. And then we need to decide, is it more about educating and training and continue to reach out and touch our existing customers as much as it is to go after additional new sites, right? I mean, so we're thinking about that very carefully, because at the end of the day, having 25 units that are being used out in the field translates to about $2.5 million in revenue, right? And so, we will have that many users out there. We need to make sure that they continue to use and are successfully the product.

So, you're spot on.

John: Okay, that's great. One more question. When you place these devices with, let's say, Rothman and Pain and Spine Specialists, how is that going? I mean, is it painfully slow? Is it better than you expected? Are there stumbling blocks you didn't expect, or is it just the way you envisioned?

Eric Hines: Another thoughtful question. So, the answer is, it depends a little bit. So, some embrace it very quickly and use it very successfully. Others have a little bit of learning curve and comfortability of using the product. So, it really depends on the practice. But I would say that one of the areas that we need to spend a little bit more time and energy is, again, back to the earlier comment, is making sure that we continue to reach out and touch and provide training and so forth, whether it's videos or not.

One of the slight constraints, if there is one, is just having resources out in the field trained to be going back into the offices routinely to make sure that everything's working properly, that they feel comfortable, and providing tips and so forth. One of the things we'll be focusing on a little bit more is the education part and the maintenance of these units that are out in the field. Because at the end of the day, the units are very We have plenty of them, but we need the ones that are out in the field to be used as much as they possibly can.

So, we need to be selective about the practices we choose or the hospital systems that we go after, so that we can maintain them and also encourage them to continue using. So, I think what we'll do is have a little bit more of a strategic focus on some of the larger practices that you're seeing. For instance, Rothman Institute, they do 3,000 interlaminar Medicare procedures per year. You do the math there, and if they were to use it for all the procedures, it is about $450,000 a year.

I think if we focus a little bit more on some of the large pain consortia and hospital systems, while we continue to go after the additional MACs that we need, that will be striking the right balance and also focusing some time and energy on education and continuous training.

John: Great. Thank you so much, Eric, and continued good work. I look forward to good things from you and Milestone. I am very appreciative as a shareholder.

Eric Hines: Thank you, John.

Operator: Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Your next question is coming from Anthony Vendetti from Maxim Group. Your line is live.

Anthony Vendetti: Thank you. I just wanted to focus on the medical side. I think you said you have five dedicated medical sales people. Did you say 500 leads that are out there right now on the medical side?

Eric Hines: We do, yeah.

Anthony Vendetti: Okay. And right now, I guess around $100,000 is from medical sales in this quarter. How much of that is recurring disposable revenue versus new sales?

Eric Hines: I would say right now it's skewed toward new sales, probably 85%. I mean, a lot of these folks, the process for getting the contract in place and then getting these folks trained and then having them start doing cases with some on-site training, and then beyond that, to start submitting cases to Medicare for reimbursement, you're looking at a four-to-six-month time window, right? When we announce a new organization like Dr. Rao, which was a couple, maybe 30 days or 40 days ago, his team literally was going through training the last two weeks. It's not a two-week training, but it's people on-site doing cases with the doctors.

You have a lag of about 30 days between when they sign the agreements, then you have between two weeks to four weeks for some training, and then you have the office staff submitting to Medicare, which can be another few weeks because they are not always right on top of the real-time Medicare cases, and then you wait for reimbursement, right? Given that this is so new and given that these people are sort of waiting to see what they get back, and for the most part, they are getting back the full $325, there is about a four-to-six-month lag between new sales and recurring revenue.

Right now, we have been focused mostly on new sales and bringing doctors on board, and I do not think that the recurring will really start to be a significant portion of the revenue probably until mid-Q1 of next year and Q2. Does that answer your question, Anthony?

Anthony Vendetti: Yeah. No, that is Yeah, yeah. No, absolutely. Very helpful. Then, I know right now the focus is mostly on pain management, and maybe that market is more difficult to quantify. But when you said epidural procedures, were you talking total epidural procedures, including OB/GYN, or were you speaking specifically of a particular epidural market when you said 30 million epidurals, 11 million in 30 million globally, 11 million U.S.?

Eric Hines: Yeah, I believe that is the total number, which includes all the different markets for that. But the number is so massive that any small little proportion of any piece of it, whether it be pain or L&D or intrathecal pump refills, encapsulates a massive market. We plan on very much so, and we are talking to some different, very large strategic partners about labor and delivery, because we think that is a home run, quite honestly, for CompuFlo. Little bit more of a complex sale. That is why we have pivoted a little bit to pain, where it is a little bit more fragmented and faster turnaround.

But labor and delivery can be a massive market for the company, as can intrathecal pump refills, which are about 400,000 pump refills every year. So, I believe the number, the 30 million and 11 million respectively, are the comprehensive epidural procedures globally.

Anthony Vendetti: Okay, great. Thank you so much. I'll hop back into queue. Appreciate it.

Operator: Thank you. That concludes our Q&A session. I'll now hand the conference back to Eric Hines for closing remarks. Please go ahead.

Eric Hines: Folks that joined the call, I appreciate you doing that and appreciate your support. For those of you that are shareholders, I'm assuming it's most everybody, I can't thank you enough for being a shareholder. This is a new chapter for the company. We are now at a place where the operating leverage for the company throws any incremental revenue to the bottom line. I think as you've seen by the comments I made in prior calls, I said we were going to hope to approach cash flow breakeven sometime in 2027.

Well, if things hold true and we pull off profitability in Q4, which we're going to do everything we can to do that, I think that the future is very bright here. Like I said, thank you for your patience, thank you for your support, and welcome to the new chapter of Milestone. Have a great day, guys.

Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

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