Sanara MedTech Inc. (SMTI)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following discussion and analysis of the financial condition and results of operations of Sanara MedTech Inc. (together with its wholly
owned or majority-owned subsidiaries on a consolidated basis, the “Company,” “Sanara MedTech,” “Sanara,”
“our,” “us,” or “we”) should be read in conjunction with the “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” section and audited consolidated financial statements and related
notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 and with the unaudited consolidated financial
statements and related notes thereto presented in this Quarterly Report on Form 10-Q.

CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This
Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Forward-looking
statements generally relate to future events or our future financial or operating performance, including topics such as new products
under development. In some cases, you can identify forward-looking statements because they contain words such as “aims,”
“anticipates,” “believes,” “contemplates,” “continue,” “could,” “estimates,”
“expects,” “forecast,” “guidance,” “intends,” “may,” “plans,”
“possible,” “potential,” “predicts,” “preliminary,” “projects,” “seeks,”
“should,” “target,” “will” or “would” or the negative of these words, variations of these
words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Such forward-looking statements
are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially
from those anticipated in such statements, including, without limitation, the following:

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For
a more detailed discussion of these and other factors that may affect our business and that could cause the actual results to differ
materially from those anticipated in forward-looking statements, see “Risk Factors” in Part I, Item 1A. of our Annual Report
on Form 10-K for the year ended December 31, 2025, and Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report
on Form 10-Q. Forward-looking statements speak only as of the date on which they are made, and we do not assume any obligation to update
these forward-looking statements, except to the extent required by applicable securities laws.

OVERVIEW

We
are a medical technology company focused on developing and commercializing transformative technologies to improve clinical outcomes and
reduce healthcare expenditures in the surgical market. Our products are designed to achieve our goal of providing better clinical outcomes
at a lower overall cost for healthcare systems. We strive to be one of the most innovative and comprehensive providers of effective surgical
solutions and are continually seeking to expand our offerings for patients requiring surgical treatments in the United States.

We
primarily market and sell soft tissue repair and bone fusion products for use in the operating room or other sterile environments. Our
soft tissue repair products include, among other products, our lead product, CellerateRX Surgical Powder (“CellerateRX Surgical”),
a hydrolyzed collagen that aids in the management of surgical wounds, BIASURGE Advanced Surgical Solution (“BIASURGE”), a
sterile no-rinse, advanced surgical solution used for wound irrigation and TEXAGEN Amniotic Membrane Allograft (“TEXAGEN”),
a multi-layer amniotic membrane allograft used as an anatomical barrier with robust handling that can be sutured for securement if needed.
Our bone fusion products include, among other products, BiFORM Bioactive Moldable Matrix (“BiFORM”), an osteoconductive,
bioactive, porous implant that allows for bony ingrowth across the graft site, ACTIGEN Verified Inductive Bone Matrix (“ACTIGEN”),
a naturally derived, differentiated allograft matrix with robust handling properties, and ALLOCYTE Plus Advanced Viable Bone Matrix (“ALLOCYTE
Plus”), a human allograft cellular bone matrix containing bone-derived progenitor cells and conformable bone fibers.

We
also utilize an in-house research and development team, Rochal Technologies. We are advancing a strong pipeline of next-generation products
that supports and extends our surgical strategy of “Prepare, Promote and Protect.”

Summary
of Our Key Products and Development Programs

We
market and distribute surgical products to surgeons at hospitals and surgical centers. Our products are primarily sold in the U.S. surgical
tissue repair market. We believe that we have the ability to drive our product pipeline from concept to preclinical and clinical development
while meeting quality and regulatory requirements.

CellerateRX
Surgical

CellerateRX
Surgical is a Type I bovine hydrolyzed collagen indicated for the management of surgical, traumatic, and partial and full-thickness wounds
as well as first- and second-degree burns. It is manufactured with a proprietary process. CellerateRX Surgical is sterilized, packaged
and designed specifically for use in the operating room. CellerateRX Surgical is primarily purchased by hospitals and ambulatory surgical
centers for use by surgeons to treat surgical wounds, including those associated with orthopedic, spine and trauma procedures. Additional
surgical wounds that often benefit from the use of CellerateRX Surgical include general, vascular, plastic/reconstructive, cardiovascular,
gynecologic, and urologic related procedures.

CellerateRX
Surgical is used in operative cases where patients might have trouble healing normally due to underlying health complications. There
is always a risk of complication with surgical wounds. This is especially true in patients with certain comorbidities, including obesity,
diabetes and hypertension. These complications can include surgical wound infections, dehiscence (where an incision opens after primary
closure) and necrosis. Surgical wound complications have become increasingly problematic due to the high rates of surgical patient comorbidities
and the financial strain on insurance payors as well as hospitals that suffer exorbitant costs for readmission of these patients within
90 days of surgery. Surgeons use CellerateRX Surgical to complement the body’s normal healing process. By supporting the body to
heal normally without complications, improved patient outcomes are achieved, thereby reducing downstream costs related to complications
(such as re-operation, longer hospitalization, re-admittance, extended rehabilitative care and other additional treatments).

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BIASURGE

BIASURGE
is a 510(k) cleared sterile no-rinse, advanced surgical solution used for wound irrigation. It contains an antimicrobial preservative
effective against a broad spectrum of pathogenic microorganisms in the solution. BIASURGE is indicated for use in the mechanical cleansing
and removal of debris, including microorganisms, from surgical wounds. In both in vitro testing of implant materials and ex
vivo testing of dermal materials, BIASURGE was proved to eliminate biofilm-producing microbes and prevent them from attaching to
the implant materials.

Other
Products

TEXAGEN
is a multi-layer amniotic membrane allograft used as an anatomical barrier with robust handling that can be sutured for securement if
needed.

BiFORM
is an osteoconductive, bioactive, porous implant that allows for bony ingrowth across the graft site. It can be hydrated and used as
a strip or molded into a putty to fill a bone defect.

ACTIGEN
is a naturally derived, differentiated allograft matrix with robust handling properties.

ALLOCYTE
Plus is a human allograft cellular bone matrix containing bone-derived progenitor cells and conformable bone fibers. These viable cellular
allografts are ready to use upon thawing and have fibrous handling properties.

FORTIFY
TRG Tissue Repair Graft (“FORTIFY TRG”) is a freeze-dried, multi-layer small intestinal submucosa extracellular matrix sheet.
The graft is 510(k) cleared for implantation to reinforce soft tissue, is terminally sterilized, has a thin profile, is available in
multiple sizes, and can be cut to size to accommodate the patient’s anatomy. FORTIFY TRG is provided sterile and can be hydrated
with autologous blood fluid.

Our
product portfolio includes other products that have an insignificant impact on our revenue at this time.

Shift
in Strategy and Discontinuance of Value-Based Wound Care Program

Our
company’s main source of revenue has consistently been from soft tissue repair and bone fusion products for the surgical market.
Additionally, we generate a smaller portion of revenue from products sold in the post-acute setting. To further support our surgical
business, particularly in wound care, we launched a value-based wound care services initiative designed to enhance outcomes while complementing
our offerings in both surgical and post-acute markets. This post-acute strategy, which we referred to as Tissue Health Plus (“THP”),
was focused on providing value-based wound care services. Through THP, we planned to offer a first of its kind value-based wound care
program to payers and risk-bearing entities. This program was designed to enable payers to divest wound care spend risk, reduce wound
related hospitalizations and improve patient quality of life. To further develop our value-based wound care strategy, we executed an
investment and acquisition strategy to build telehealth services and acquire technologies to support the THP platform.

Since
the second quarter of 2024, we managed our business on the basis of two operating and reportable segme

[Excerpt truncated for page length; source filing is linked above.]

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following discussion and analysis contains forward-looking statements about future revenues, operating results, plans and expectations.
Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties
and our results could differ materially from the results anticipated by our forward-looking statements as a result of many known or unknown
factors, including, but not limited to, those factors discussed in Part I, Item 1A. Risk Factors. Also, please read the “Cautionary
Statement Regarding Forward-Looking Statements” set forth at the beginning of this Annual Report on Form 10-K.

In
addition, the following discussion should be read in conjunction with Part I of this Annual Report on Form 10-K as well as our Consolidated
Financial Statements and the related Notes to Consolidated Financial Statements contained elsewhere in this Annual Report on Form 10-K.

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OVERVIEW

We
are a medical technology company focused on developing and commercializing transformative technologies to improve clinical outcomes and
reduce healthcare expenditures in the surgical market. Our products are designed to achieve our goal of providing better clinical outcomes
at a lower overall cost for healthcare systems. We strive to be one of the most innovative and comprehensive providers of effective surgical solutions
and are continually seeking to expand our offerings for patients requiring surgical treatments in the United States.

We
primarily market and sell soft tissue repair and bone fusion products for use in the operating room or other sterile environments. Our
soft tissue repair products include, among other products, our lead product, CellerateRX Surgical Powder (“CellerateRX Surgical”),
a hydrolyzed collagen that aids in the management of surgical wounds, and BIASURGE Advanced Surgical Solution (“BIASURGE”),
a sterile no-rinse, advanced surgical solution used for wound irrigation. Our bone fusion products include, among other products, BiFORM
Bioactive Moldable Matrix (“BiFORM”), an osteoconductive, bioactive, porous implant that allows for bony ingrowth across
the graft site, and ALLOCYTE Plus Advanced Viable Bone Matrix (“ALLOCYTE Plus”), a human allograft cellular bone matrix containing
bone-derived progenitor cells and conformable bone fibers.

We
also utilize an in-house research and development team, Rochal Technologies. We are advancing a strong pipeline of next-generation products
that supports and extends our surgical strategy of “Prepare, Promote and Protect.”

Shift
in Strategy and Discontinuance of Value-Based Wound Care Program

Our
company’s main source of revenue has consistently been from soft tissue repair and bone fusion products for the surgical
market. Additionally, we generate a smaller portion of revenue from products sold in the post-acute setting. To further support this
segment, particularly in wound care, we launched a value-based wound care services initiative designed to enhance outcomes while
complementing our offerings in both surgical and post-acute markets. This post-acute strategy, which we referred to as Tissue Health
Plus (“THP”), was focused on providing value-based wound care services. Through THP, we planned to offer a first of its
kind value-based wound care program to payers and risk-bearing entities. This program was designed to enable payers to divest wound
care spend risk, reduce wound related hospitalizations and improve patient quality of life. To further develop our value-based wound
care strategy, we executed an investment and acquisition strategy to build telehealth services and acquire technologies to support
the THP platform.

Since
the second quarter of 2024, we managed our business on the basis of two operating and reportable segments: the Sanara Surgical segment
and the THP segment.

Our
intention in incubating THP was coupled with a goal to find an outside partner to buy or invest in the platform. Starting in 2024,
we held several meetings and did significant outreach to find potential funding for THP. This effort included meetings with venture
capital firms, strategic buyers, provider service companies, insurance companies and private equity firms. During the third quarter
of 2025, following authorization from our Board of Directors, management initiated a review of strategic options for THP and
formally engaged an investment bank to search for potential investors or purchasers. By mid-September 2025, we concluded that these
efforts were unlikely to succeed within the timeline allocated by the Board of Directors and ended our engagement with the
investment bank. Persistent losses related to THP and a lack of any firm commitments from potential investors led management and our
Board of Directors to decide to discontinue THP’s operations in mid-September 2025 and shift our focus exclusively on products
and technologies for use in the surgical market.

As
a result of this decision, THP met the accounting requirements to be classified under discontinued operations as of September 30, 2025.
In accordance with generally accepted accounting principles in the United States (“GAAP”), the operations of THP are presented
as discontinued operations in our Consolidated Balance Sheets and Consolidated Statements of Operations and, as such, have been excluded
from continuing operations for all periods presented. As a result of the disposal of THP, we now have a single reportable
segment. This determination is in accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting.

Certain
prior period amounts have been reclassified to conform to the current year presentation.

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Summary
of Our Key Products and Development Programs

We
market and distribute surgical products to surgeons at hospitals and surgical centers. Our products are primarily sold in the U.S. surgical
tissue repair market. We believe that we have the ability to drive our product pipeline from concept to preclinical and clinical development
while meeting quality and regulatory requirements.

CellerateRX
Surgical

CellerateRX
Surgical is a Type I bovine hydrolyzed collagen indicated for the management of surgical, traumatic, and partial and full-thickness wounds
as well as first- and second-degree burns. It is manufactured with a proprietary process. CellerateRX Surgical is sterilized, packaged
and designed specifically for use in the operating room. CellerateRX Surgical is primarily purchased by hospitals and ambulatory surgical
centers for use by surgeons to treat surgical wounds, including those associated with orthopedic, spine and trauma procedures. Additional
surgical wounds that often benefit from the use of CellerateRX Surgical include general, vascular, plastic/reconstructive, cardiovascular,
gynecologic, and urologic related procedures.

CellerateRX
Surgical is used in operative cases where patients might have trouble healing normally due to underlying health complications. There
is always a risk of complication with surgical wounds. This is especially true in patients with certain comorbidities, including obesity,
diabetes and hypertension. These complications can include surgical wound infections, dehiscence (where an incision opens after primary
closure) and necrosis. Surgeons use CellerateRX Surgical to complement the body’s normal healing process. By supporting the body
to heal normally without complications, improved patient outcomes are achieved, thereby reducing downstream costs related to complications
(such as re-operation, longer hospitalization, re-admittance, extended rehabilitative care and other additional treatments). Surgical
wound complications have become increasingly problematic due to the high rates of surgical patient comorbidities and the financial strain
on insurance payors as well as hospitals that suffer exorbitant costs for readmission of these patients within 90 days of surgery.

BIASURGE

BIASURGE
is a 510(k) cleared sterile no-rinse, advanced surgical solution used for wound irrigation. It contains an antimicrobial preservative
effective against a broad spectrum of pathogenic microorganisms in the solution. BIASURGE is indicated for use in the mechanical cleansing
and removal of debris, including microorganisms, from surgical wounds.

Other
Products

TEXAGEN
Amniotic Membrane Allograft is a multi-layer amniotic membrane allograft used as an anatomical barrier with robust handling that can
be sutured for securement if needed.

BiFORM
is an osteoconductive, bioactive, porous implant that allows for bony ingrowth across the graft site. It can be hydrated and used as
a strip or molded into a putty to fill a bone defect.

ACTIGEN
Verified Inductive Bone Matrix is a naturally derived, differentiated allograft matrix with robust handling properties.

ALLOCYTE
Plus is a human allograft cellular bone matrix containing bone-derived progenitor cells and conformable bone fibers. These viable cellular
allografts are ready to use upon thawing and have fibrous handling properties.

FORTIFY
TRG Tissue Repair Graft (“FORTIFY TRG”) is a freeze-dried, multi-layer small intestinal submucosa extracellular matrix sheet.
The graft is 510(k) cleared for implantation to reinforce soft tissue, is terminally sterilized, has a thin profile, is available in
multiple sizes, and can be cut to size to accommodate the patient’s anatomy. FORTIFY TRG is provided sterile and can be hydrated
with autologous blood fluid.

Our
product portfolio includes other products that have an insignificant impact on our revenue at this time.

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Tufts
University License Agreement

On
December 20, 2023, we signed an exclusive license agreement with Tufts University (“Tufts”) to develop and commercialize
patented technology covering 18 unique collagen peptides. As part of this agreement, we formed a new subsidiary, Sanara Collagen Peptides,
LLC (“SCP”), and issued 10% of SCP’s outstanding units to Tufts. SCP has exclusive rights to develop and commercialize
new products based on the licensed patents and patents pending. SCP will pay royalties to Tufts based on net sales of licensed products
and technologies. Under the exclusive license agreement, royalties will be calculated at a rate of 1.5% or 3%, depending on the type
of product or technology developed. SCP will pay Tufts a minimum annual royalty of $50,000 on January 1 of the year following the first
anniversary of the first commercial sale of the licensed products or technologies. SCP will pay Tufts a $100,000 minimum annual royalty
on January 1 of each subsequent year during the royalty term specified in the exclusive license agreement. There have been no material
accounting impacts and no royalties paid related to this arrangement as of December 31, 2025.

In
connection with the shift in strategy discussed above, we are in the process of terminating the exclusive license agreement with
Tufts and dissolving SCP in order to focus on developing and commercializing our surgical product portfolio.

RECENT
DEVELOPMENTS

CRG
Term Loan Amendment and Third Borrowing

On
April 17, 2024, we, as borrower, entered into a Term Loan Agreement (the “CRG Term Loan Agreement”) with the subsidiary guarantors
party thereto from time to time (collectively, the “Guarantors”), CRG Servicing LLC as administrative agent and collateral
agent (the “Agent”) and the lenders party thereto from time to time, providing for a senior secured term loan of up to $55.0
million (the “CRG Term Loan”). In April 2024, our first borrowing (the “First Borrowing”) under the CRG Term
Loan of $15.0 million was used to repay our then-existing loan with Cadence Bank (the “Cadence Term Loan”) and to pay fees
and expenses related to the CRG Term Loan Agreement. In September 2024, we borrowed an additional $15.5 million under the CRG Term Loan
(the

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]