Milestone Scientific Inc. (AMEX: MLSS) delivered stronger-than-expected financial results for the second quarter of 2026, reporting total revenue of $2.841 million, which represents a 22.3% year-over-year increase from $2.323 million in the same period last year. The top-line performance surpassed analyst consensus estimates of $2.700 million by 5.22%, signaling robust execution in both its core dental business and emerging medical segment.

The company’s medical division emerged as a primary growth driver, with CompuFlo revenue expanding by 231% year-over-year. This surge was fueled by increased physician adoption, progress on Medicare reimbursement across three regions covering 13 states, and the first successful paid workers’ compensation claim. Concurrently, the base dental business contributed $2.4 million in quarterly revenue, supplemented by approximately $500,000 in upside from international orders.

On the bottom line, Milestone Scientific posted a net loss of $(0.01) per share for the quarter, down from $(0.02) per share in the prior year period. This result aligned with analyst estimates and reflects a 50% contraction in per-share losses, indicative of improved operational efficiency and cost management. For the six months ended June 30, 2026, total revenue reached $5.0 million, a 9.8% increase from $4.6 million in the same period of 2025.

Operational and Strategic Developments

Beyond financial metrics, Milestone Scientific advanced several strategic initiatives during the quarter:

• Federal Distribution Agreement: The company entered into a strategic distribution agreement with Red One Medical to expand CompuFlo access across U.S. Department of Veterans Affairs, Department of Defense, and other federal healthcare organizations serving over 18 million beneficiaries. Management expects to begin taking orders under this agreement in Q4 2026.
• Clinical Validation: A peer-reviewed study published in Operative Neurosurgery associated CompuFlo-guided epidural access with a 91% reduction in the odds of composite complications during spinal cord stimulator implantation.
• AI Integration: Milestone launched the pilot phase of Milo, an AI-enabled digital engagement platform designed to support lead qualification and connect healthcare professionals with sales and clinical teams. Digital marketing campaigns generated 150-200 leads per month, prompting the need for additional staff to handle follow-ups.
• Board Expansion: Benedetta I. Casamento transitioned from Chair to Executive Chair, while Greg Shilling and Kelly Ann Ulto were appointed as new independent directors to add healthcare technology and finance expertise.

Financial Performance Details

Gross profit for the three months ended June 30, 2026, stood at $1.9 million, resulting in a gross margin of 67.2%, compared to 69.6% in the prior year period. The margin compression was primarily attributed to product and customer mix shifts, as well as increased product costs including tariffs on imported components. Operating expenses decreased by 4.2% to approximately $3.0 million, driven by lower quality, regulatory, and research and development costs, partially offset by increases in stock-based compensation and marketing expenses.

As of June 30, 2026, the company held cash and cash equivalents of $2.1 million and working capital of $3.7 million. Convertible debt outstanding was $466,000.

What the Numbers Show

The divergence between revenue growth and gross margin contraction highlights a transitional phase in Milestone Scientific’s unit economics. While top-line revenue expanded by 22.3%, gross margins declined by 2.4 percentage points due to tariff impacts and product mix. However, operating expenses fell by 4.2%, demonstrating that cost discipline is effectively offsetting some margin pressure. The 231% surge in medical segment revenue suggests that the higher-margin medical products are beginning to scale, which could improve overall profitability mix as adoption accelerates in H2 2026.

Outlook

Management reaffirmed its 2026 full-year revenue guidance of $9.8 million to $10.2 million, representing double-digit growth. This outlook aligns with the analyst estimate of $9.910 million. The company expects CompuFlo revenue to grow at a faster rate than the overall business for the remainder of the year. Management noted that Q2 revenue benefited from two large international orders that are not expected to recur in Q3, which is typically a seasonally slower period. Consequently, the company projects Q3 revenue to be in the range of $2.3 million to $2.5 million. The company continues to target cash flow breakeven in early 2027.

Milestone Scientific Inc. (NYSE: MLSS) announced on Aug. 04, 2026, that it has entered into a strategic distribution agreement with Red One Medical to expand commercial access for its CompuFlo Epidural System within US federal healthcare networks. The partnership aims to penetrate markets serving more than 18 million enrolled Veterans and military beneficiaries by leveraging Red One Medical’s established government contracting infrastructure. This collaboration provides Milestone Scientific with an efficient pathway for product evaluations and potential long-term revenue growth in the anesthesia and interventional pain sectors.

Under the terms of the agreement, Red One Medical will market, distribute, and support Milestone Scientific’s CompuFlo Epidural System and proprietary disposable products through its federal healthcare sales organization. The deal is designed to facilitate access to VA medical centers, military treatment facilities, and other eligible federal healthcare organizations across the United States. Milestone Scientific believes these federal systems represent an attractive long-term commercial opportunity for innovative technologies used in clinical procedures.

The partnership targets two primary federal healthcare systems: the Veterans Health Administration and the Military Health System. The Veterans Health Administration operates the nation’s largest integrated healthcare system, providing care through 170 VA medical centers and approximately 1,200 outpatient sites to more than 9 million enrolled Veterans. The Military Health System provides healthcare services to approximately 9.5 million beneficiaries, including active-duty and reserve service members, military retirees, and their families.

Eric Hines, Chief Executive Officer of Milestone Scientific, stated that federal healthcare systems represent one of the largest and most strategically important healthcare markets in the United States. He noted that Red One Medical’s experienced federal sales organization and customer relationships position the company well to introduce CompuFlo to clinicians throughout the Department of Veterans Affairs, Department of Defense, and other federal healthcare systems. John Campbell, Executive Vice President of Sales at Red One Medical, added that the partnership reflects a shared commitment to advancing care for those who have served the country.

What the Numbers Show

The strategic significance of this partnership lies in the scale of the addressable market. By combining access to the Veterans Health Administration and the Military Health System, Milestone Scientific targets a combined beneficiary pool exceeding 18 million individuals. This represents a substantial expansion from typical private-sector distribution channels, offering a diversified base for product adoption. However, the agreement does not guarantee contract awards, product evaluations, purchase orders, or adoption by any federal agency or healthcare facility. Product purchasing decisions remain subject to applicable federal procurement requirements, individual facility needs, clinical review, product availability, and funding.

The CompuFlo Epidural System is a computer-controlled injection system that uses Milestone Scientific’s patented Dynamic Pressure Sensing technology to provide objective, continuous, real-time pressure information at the needle tip. Designed to assist trained healthcare professionals during epidural needle placement, the system has received 510(k) clearance from the U.S. Food and Drug Administration. Published peer-reviewed studies have evaluated the use of continuous real-time pressure sensing for epidural-space identification across multiple clinical settings, reporting successful identification rates.