Sanuwave Health Q4 2024 Earnings Report

Sanuwave Health EPS Results

• Actual EPS: -$7.03
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: -$12.19

Sanuwave Health Revenue Results

• Actual Revenue: $10.33 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Sanuwave Health Announcement Details

• Quarter: Q4 2024
• Date: 3/20/2025
• Time: After Market Closes
• Conference Call Date: Friday, March 21, 2025
• Conference Call Time: 8:30AM ET

Sanuwave Health (NASDAQ:SNWV), Inc. is a medical technology company specializing in the development and commercialization of non-invasive acoustic wave therapies designed to stimulate tissue regeneration and accelerate healing. The company’s proprietary Extracorporeal Pulse Activated Technology (EPAT) delivers focused acoustic pressure waves to injured or chronic wound sites, activating the body’s natural repair mechanisms. Sanuwave’s primary therapeutic areas include advanced wound care for diabetic and venous ulcers, as well as orthopedic and musculoskeletal conditions.

The company’s lead product, the dermaPACE® system, holds clearance from the U.S. Food and Drug Administration for treatment of chronic diabetic foot ulcers. This portable, hand-held device provides a convenient alternative to conventional wound-care methods by delivering precision acoustic pulses directly to the affected tissue, thereby promoting neovascularization and reducing healing times. Sanuwave also supplies disposable treatment cartridges and related consumables to healthcare providers, and has established distribution agreements in North America and select overseas markets to broaden patient access.

Headquartered in Alpharetta, Georgia, Sanuwave Health originated as Tissue Regeneration Systems, Inc. before adopting its current name to reflect an expanded focus on regenerative medicine technologies. Under the leadership of Chief Executive Officer Jeff Bean, the company continues to advance its clinical research programs, pursue regulatory clearances for additional indications, and explore strategic partnerships. Sanuwave’s ongoing mission is to deliver innovative, non-invasive therapeutic solutions that improve patient outcomes and reduce healthcare costs worldwide.

Sanuwave Health Q4 2024 Earnings Call Transcript

Key Takeaways

• SANUWAVE reported record Q4 revenue of $10.3 million, a 47% increase year-over-year, driven by 71% growth in system sales (135 units) and 68% growth in consumables.
• Gross margin expanded to 77.9% in Q4, and the company generated cash from operations for the second consecutive quarter, bolstering operating and adjusted EBITDA margins.
• A major cap-structure simplification completed in October 2024—including convertible note and warrant exchanges, a reverse split, a $10.3 million PIPE, and factoring paydown—enabled SANUWAVE’s March 2025 Nasdaq uplisting.
• Despite a GAAP net loss of $12.7 million in Q4 due to a $13.3 million derivative liability loss, adjusted EBITDA improved to $3.7 million, reflecting non-cash restructuring adjustments.
• For Q1 2025, management guides to $8.4 million–$9.0 million in revenue (45–55% growth) and initiates full-year 2025 revenue guidance of $48 million–$50 million (≈50% growth), citing a strong sales funnel and scalable operations.

Presentation

[Operator]

Good day, everyone, and welcome to today's Samuwave Earnings Call. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question and answer session. Please note today's conference is being recorded. I will be standing by if you should need any assistance.

[Operator]

It is now my pleasure to turn the conference over to Morgan Frank, Chairman and CEO of SANUWAVE.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Thank you, Margo. Good morning, everyone. Welcome to SANUWAVE's fourth quarter and full year twenty twenty four earnings call. Our Form 10 ks was filed with the SEC last night. Our earnings release was issued this morning, and our updated presentation was made available on the website in our Investors section.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

You can please refer to that during the presentation. Joining me on this call is Peter Sorensen, our CFO. And after the presentation, we'll open the call up to Q and A. So, let me begin with the obligatory, forward looking statements. This call may contain forward looking statements, such as statements relating to future financial results, production expectations and plans for future business development activities.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control. Description of these risks and uncertainties and other factors that could affect our financial results is included in our SEC filings, and actual results may differ materially from those projected in the forward looking statements. Company undertakes no obligation to update any forward looking statement. Okay. As a reminder today, our discussion will include non GAAP numbers.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Reconciliations between our GAAP and our non GAAP results can be found in our recently filed 10 ks for the year ended 12/31/2024. Okay. With that out of the way, let's get to good stuff. So last conference call, we spoke about pigs and pythons and how engaging with larger and more sophisticated customers who were capable of purchasing large boluses of products and having profound effects on our quarterly numbers was going to be one of the key characteristics of our revenue stream going forward. Q3, as I think many of you noticed, was definitely a peg quarter.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Q4 gives us a chance to look at what a non lumpy sort of non peg quarter looks like as we had no outsized orders in the quarter nor any customers exceeding 7% of sales. We are pleased to come in around the high end of our quarterly guidance and slightly above our guidance for the full year and have set yet another record revenue revenue and systems in the quarter. Breaking into eight figures at $10,300,000 was a meaningful milestone for the company, and it was the result of strong growth in both our systems and our consumables. We sold 135 ULTREMIST systems in the quarter, outpacing even the 124 PIG quarter from Q3 and far exceeding the 79 that we placed in Q4 of twenty twenty three. That's 71% growth in systems sold year over year.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

We ended 2024 with ten forty seven systems in the field, up from six forty seven at the end of twenty twenty three. Applicator sales in Q4 were $5,900,000 up 68% from Q4 twenty twenty three and up 11% sequentially from Q3. They constituted 58% of our overall revenue in the quarter, in line with our 55% to 65% target for consumable sales. And we're really excited to be performing on model there and with reasonable predictability. Benefits from scale, from new manufacturing agreements and from price discipline have resulted in increased gross margins that have reached 77.9% in the quarter.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

This extra margin and our focus on cost controls led to expansion in operating and adjusted EBITDA margins for the quarter, and the company was, for the second quarter in a row, cash generated from operations even after making its cash interest payments. So the last several months have really been a pivotal time for SANUWAVE. And what has come to be internally referred to as shocking off Friday at last October '18, represented a major step in simplifying our cap structure by exchanging our convertible notes and warrants, rationalizing our share price through a reverse split, strengthening our balance sheet with a $10,300,000 PIPE transaction. We paid off some of our noncompliant debt. We also paid down a $2,800,000 revenue factoring facility to zero by the end of Q4.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

This set the stage for the company to uplist NASDAQ, which occurred on March seven of this year and represents a major step toward our long cherished goal of becoming a company that can be valued for the quality of its business instead of the complexities of its cap structure. So now to walk you through some further financials and to help you assess this alleged quality of our business, I will hand you over to Peter Sorenson, our CFO.

[Peter Sorensen, CFO at Sanuwave Health]

Again achieving 10% sequential growth from last quarter's previous record as well as strong year over year growth of 47. In addition to top line expansion, we also saw continued improvement in gross margins both year over year and sequentially reinforcing the strength of our business model. We continue to execute on our goal of rapid profitable growth. With that, let's take a closer look at the numbers. Revenue for the three months ended 12/31/2024 totaled $10,300,000 an increase of 47% as compared to $7,000,000 for the same period of 2023.

[Peter Sorensen, CFO at Sanuwave Health]

This growth is in line with our previous guidance of 40% to 50%. Gross margin as a percentage of revenue amounted to 77.9% for the three months ended 12/31/2024 versus 69.1% for the same period last year. For the three months ended 12/31/2024, operating income totaled $2,500,000 which is an improvement of $1,500,000 compared to the same period last year, which aligns with our continued initiative to drive towards profitable growth and manage spend effectively. Operating expenses for the three months ended 12/31/2024 amounted to $5,500,000 compared to $3,800,000 for the same period last year, an increase of $1,700,000 This change was largely driven by an increase in non cash expense of stock comp of $1,500,000 as we granted stock options to our employees and Board of Directors for the first time in over six years. Net loss for the three months ended 12/31/2024 was $12,700,000 compared to net income of $18,200,000 for the same period in 2023.

[Peter Sorensen, CFO at Sanuwave Health]

The decrease in net income was primarily due to a change in the fair value of derivative liabilities, which was a $20,300,000 gain in 2023 versus a $13,300,000 loss in 2024. Most of the derivative tail wagging should be behind us in future quarters as part of the note and warrant exchange that Morgan alluded to that we completed in Q4 twenty twenty four. EBITDA for the three months ended 12/31/2024 was negative 9,700,000 However, adjusted EBITDA for the three months ended 12/31/2024 was a positive $3,700,000 versus $700,000 from the same period last year, an improvement of $3,000,000 year over year. I'd like to take a moment to walk through the bridge from EBITDA to adjusted EBITDA this quarter, particularly to highlight several non cash infrequent items related to cap table restructuring and cleanup activities completed in October 2024. First, consistent with our historical practice, we adjusted EBITDA for the noncash change in fair value of derivative liabilities, primarily related to the quarterly valuation of warrants.

[Peter Sorensen, CFO at Sanuwave Health]

This adjustment reflects the impact of warrants that were exchanged for common stock in October. Additionally, we adjusted for a non cash gain recognized from the conversion of principal and interest associated with our convertible notes, which were also exchanged for common stock. The gain resulted from our stock price being below the note conversion price at the time of exchange, 12 per share versus the $15 issuance price. We further adjusted EBITDA for legal settlement and severance expense totaling $156,000 during the fourth quarter. And finally, we adjusted EBITDA to exclude stock based compensation, which is a non cash expense.

[Peter Sorensen, CFO at Sanuwave Health]

This adjustment was partially offset by the release of certain historical accruals following our Board of Directors' decision to remove their previously accrued cash compensation. Going forward, the Board of Directors' compensation will be paid in stock options as opposed to cash. As previously discussed with our operating expenses, we are pleased to be able to grant stock options to our employees and Board of Directors in Q4 for the first time in over six years. A detailed reconciliation and further breakdown of adjusted EBITDA can be found in our recently filed 10 ks and accompanying press release. We remain focused on executing our financial strategy, driving operational profitability and maintaining disciplined management of operating expenses.

[Peter Sorensen, CFO at Sanuwave Health]

Total current assets amounted to $18,400,000 as of 12/31/2024 versus $9,800,000 as of 12/31/2023. Cash totaled $10,200,000 as of 12/31/2024. We appreciate the continued support of Staneway through this transformative past year and look forward to building on this momentum in 2025. With that, I'll turn the call back over to Morgan.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Thanks, Peter. So moving on to guidance. As you likely saw in our press release, we're guiding to 8,400,000.0 to $9,000,000 in revenue for Q1, which would represent 45% to 55% growth from Q1 of twenty twenty four. Q1 is always a somewhat seasonally slower period for medical device, including both systems and consumables as both budgets reset and, so do customer deductibles. We're expecting a slightly smaller drop on a percentage basis versus Q4 than the drop that occurred in Q1 of twenty twenty four as compared to Q4 of twenty twenty three.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

But alas, Q1 seasonality remains a fact for life and lifestyle. So for the year, we're initiating guidance of forty eight million to 50,000,000 in revenues, representing a 50% year on year growth rate plus or minus 3%. We feel good about our opportunity, about our sales funnel and about our sales and productions teams and their ability to generate and meet demand. I mean, it's sort of wild to me that it's already been twenty two months for me here as CEO. I guess time flies when you're having fun, and it really does seem like we're getting the good part here.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

I just want to reemphasize that none of this just happens. Companies exist downstream of their culture, and I could not be more proud or grateful to the team at SANUWAVE. And as ever, our highest reward for good work is more work. So we keep at it, and we look forward to speaking to you again soon about our further progress. And with that, let's open the call up to questions. Margo, if you could begin to queue them up.

[Operator]

Thank you very much. We'll take our first question from Chris Flam with Tall Pines Capital. Please go ahead.

[Christopher Plahm, Portfolio Manager at Tall Pines Capital, LLC]

Thanks guys. Great year. Noticed you hired a new Head of Sales I noticed you hired a new Head of Sales back in January. Can you walk us through what's changing versus last year and how it's going so far?

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Sure. Yes, good question. So we started 2024 with two salespeople. We ended the year with nine. And we will likely end Q3 also with about nine, but three of them will be different than the nine that we ended Q4 with.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Ultimately, sort of the change in strategy is reflective of kind of the our change in the perception of the best way to sell and market this product. Like we have moved to a deeper, more sort of consultative sale where we're going past sort of the easy economics of engaging with customers and trying to find ways to build long term partnerships where we are built where we're built into their treatment plans, their therapy plans, even their patient enrollment guidelines. And so this takes a different kind of sale. It tends to come more from the top down. We're starting to engage with, because we've discussed some substantially larger customers.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

And so, you know, we've we've changed the Salesforce and the the sale and the the head of sales as a way to reflect that. We're really excited about hiring Tim Wern. He is I I'm not sure if you're aware. He's the so Tim was the number two for our board member, Jeff Blizzard, when Jeff was the head of sales at Hobbyomed. And so these are sort of the two guys that took that company from $15,000,000 to $400,000,000 And so he came highly recommended, and we're really excited to get the band back together again with those two.

[Christopher Plahm, Portfolio Manager at Tall Pines Capital, LLC]

Great. Thanks.

[Operator]

And our next question comes from Carl Byrnes with Northland Capital Markets. Please go ahead.

[Carl Byrnes, Managing Director, Senior Research Analyst at Northland Capital Markets]

Thanks for the question and congratulations on the quarter and the progress. Thanks. Good morning to you as well. You noted in your prepared comments that no customer represented more than 7% of revenue. And I'm wondering with the 135 Ultramist placements or installs in the fourth quarter, how you might characterize them, these placements with respect to large multi order enterprise type accounts or small kind of one, two system order accounts.

[Carl Byrnes, Managing Director, Senior Research Analyst at Northland Capital Markets]

And the same with respect to your outlook for 2025. And this is obviously as you move to a larger customer focus. Thanks.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

So it's the answer to that question gets a little bit complex. We certainly sold a number of 1s and 2s in the quarter. We were excited to see a substantial number of new customers in the quarter. We're also excited to see some of our existing customers growing their businesses substantially. We had one significant sized customer in the quarter come back and order, I believe, almost 20 systems.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

The so, you know, it's gonna be a mix. And I think, you know, as we sort of think about planning for our base business, we're assuming sort of an ongoing pace of smaller sales of ongoing uptake from our existing customers, and we're sort of looking at the really big potential sales that might be out there as upside. It's still early for us in terms of getting the grips with exactly how some of these bigger customers are going to want to roll out, whether they to do things all at once, whether they want to do things on a more measured pace. And so I think it's difficult to give too much guidance about that. But what we are gearing up for internally is to be able to take yes for an answer in a situation like that, where we're trying to build our we're trying to build up our inventory of systems quite substantially.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

You know, we're currently manufacturing Ultramist systems at a pace of about 25 a week. You we're working we're working to be able to double that on 60, you know, on sixty days of notice. That's sort of the challenge I've given to the ops team is, you know, we need to if we need to double that, let's be able to do it in sixty days, and I think we're starting to get close to being ready to do that Or at least able able to do that is probably a better way to describe that.

[Carl Byrnes, Managing Director, Senior Research Analyst at Northland Capital Markets]

Great. Thanks. That's very helpful. And and, you know, with respect to larger customers, I mean, with with, essentially 20 plus placement orders, is there any way that you can manage that so there's not lumpy scenarios in any particular quarter?

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Well, I mean, I'm not I guess, I'm not entirely sure what you mean by manage it just from a standpoint of if somebody wants to put getting systems in the field is obviously our goal and systems in the field generate consumables. And so from our standpoint, we're always sort of excited to do that earlier and to get more patients under care. So I think it is going to continue to be like when we give guidance, I think we sort of like to talk about what we think the base rate of the business likely is. And this is what we plan to. You don't want to build your business on the assumption that there's going to be a pig for the python every quarter.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

But I think when they come, we want to be able to move at them quite rapidly.

[Carl Byrnes, Managing Director, Senior Research Analyst at Northland Capital Markets]

Got it. That totally makes sense. Thanks so much and congrats again.

[Operator]

Thanks. Thank you. And we'll next go to Ian Cassel with IFCM. Please go ahead.

[Ian Cassel, Founder/Cheif Investment Officer at IFCM]

Hi, Martin. Congrats on

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Hey, Ian. Good morning. Morning.

[Ian Cassel, Founder/Cheif Investment Officer at IFCM]

Thanks. I was wondering if you could provide some color on advancing additional confirmatory studies and also maybe perhaps new studies to potentially open up more use cases for Ultramist?

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Yes, sure. It's a good question. I guess we're looking at it a couple of ways. Obviously, with the company now on sort of calendar financial footing, it's great to be able to start to think about these things again. We've started some more concerted outreach with some of our KOLs, with some of the researchers who have done some studies in the past.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

I think we'll a couple of our customers have some very significant repositories data. And so I think a couple of, you know, at least one or two will likely have papers, posters at SAWC this year. One I know of that has an that actually has an interesting new application of the product. I don't want to get into too much detail and steal their thunder, but, we're excited about that. The as we go back and look, you know, but those those obviously would tend to be retrospective data analysis.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

I think as we go forward and say, okay, what prospective studies would we want to do going forward? There are a number that have been interesting to us, particularly several that were done in the past, showed really promising results, but that were simply underpowered. Like, we had we've had we had some study we had a study in up on our website. Like, we had a study in 2015 on the split thickness donor sites that result from skin grafts. And despite only having 27 people in the study, you know, it hit statistical significance on, you know, time to reepithelialization, time to time you know, first time to no drainage, and very nearly hit stat sig on wound recurrence at six weeks.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

And, you know, that's a big deal because, you know, these split thickness wounds are they're really painful, and they have a nasty tendency to come back. You know, the recurrence rate at six weeks under standard of care was forty five percent, and the recurrence rate at six weeks under ULTREMIST was eight percent. And so to only kind of hit a six p value there was I mean, it's disappointing, but I think it really was just a fun. I mean, if we can replicate that with a larger study size that is that's sufficiently powered, that seems like a really interesting application. And I think that there are a number of other places we could take that sort of idea.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Recurrence rates are a big cost. They're they're a big fear in things like diabetic foot ulcers. Like, there are lots of places where it stands to reason that we could have a useful effect on recurrence rates. I think getting into the clinic and trying to validate it could get pretty interesting. Stay tuned on that.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

I think over the next quarter or two, we should start to get some concrete plans in motion.

[Ian Cassel, Founder/Cheif Investment Officer at IFCM]

Great to hear. Thanks for the color.

[Operator]

Thank you. And at this time, we have no further questions. I'd like to turn the call back over to Morgan Frank for any final or closing remarks.

[Morgan Frank, Chairman & CEO at Sanuwave Health]

Well, thank you guys. I appreciate everyone attending this morning and have a great Friday.

[Operator]

Thank you. And ladies and gentlemen, that does conclude today's program. Thank you for your participation. You may disconnect at any time.

Participants

Executives

• Morgan Frank, Chairman & CEO
• Peter Sorensen, CFO

Analysts

• Christopher Plahm, Portfolio Manager at Tall Pines Capital, LLC
• Carl Byrnes, Managing Director, Senior Research Analyst at Northland Capital Markets
• Ian Cassel, Founder/Cheif Investment Officer at IFCM