Earnings call transcript: SANUWAVE Q2 2025 sees stock surge with revenue growth

SANUWAVE Health Inc. reported strong financial results for the second quarter of 2025, with a notable 42% increase in revenue compared to the same period last year. The company’s stock surged by 12.24% in premarket trading, reflecting positive investor sentiment. With a market capitalization of $337.92 million and impressive revenue growth of 61.5% over the last twelve months, SANUWAVE’s strategic efforts in expanding its market presence and product innovation have contributed to its impressive performance. According to InvestingPro, the company maintains a "GOOD" overall Financial Health score of 2.85, despite operating with moderate debt levels.

Key Takeaways

• Revenue increased by 42% year-over-year to $10.2 million.
• Gross margin improved to 78.3% from 73.2% last year.
• Stock price increased by 12.24% in premarket trading.
• SANUWAVE plans to launch a new applicator design in Q4 2025.
• The sales team expanded to cover 12 national territories.

Company Performance

SANUWAVE’s performance in Q2 2025 demonstrates a strong growth trajectory, driven by increased sales of its Ultramist systems. The company sold 116 units in the quarter, marking a 61% increase year-over-year. This growth is supported by a strategic expansion of its sales team and a focus on penetrating multiple healthcare sectors, including wound care and podiatry. InvestingPro data reveals the company has achieved an extraordinary 438.36% return over the past year, though investors should note its current ratio of 0.4 suggests potential liquidity challenges. Get access to 7 more exclusive InvestingPro Tips and comprehensive analysis with a subscription.

Financial Highlights

• Revenue: $10.2 million, up 42% year-over-year.
• Gross Margin: 78.3%, an increase from 73.2% last year.
• Net Income: $1.1 million, down from $6.6 million due to non-recurring items.
• Adjusted EBITDA: $3.4 million, up from $1.5 million year-over-year.
• Cash Balance: $8.5 million as of June 30, 2025.

Market Reaction

SANUWAVE’s stock experienced a significant increase of 12.24% in premarket trading, reaching $38.3. This rise reflects investor confidence in the company’s growth prospects and strategic initiatives. The stock’s performance is noteworthy, trading just 0.86% below its 52-week high of $39.83. Analysts maintain a Strong Buy recommendation with a price target of $49, according to InvestingPro’s latest data. For deeper insights into SANUWAVE’s valuation and growth potential, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Looking ahead, SANUWAVE has provided revenue guidance for Q3 2025 in the range of $12 million to $12.7 million. The company remains focused on developing its commercial infrastructure and enhancing its sales team. The launch of a new applicator design, expected in Q4 2025, is anticipated to improve margins and further drive growth.

Executive Commentary

CEO Morgan Frank highlighted the company’s strategic changes, stating, "Q1 and Q2 were sort of max disruption as we’ve made some very significant changes to our sales leadership, sales force, our commercial ops, and our commercial strategy." He also noted the potential for margin improvements with the new applicator design, saying, "We suspect we can pick up probably 350-400 basis points of additional margin on the applicators with the new design."

Risks and Challenges

• Supply Chain Disruptions: Any delays in the production of the new applicator design could impact margins.
• Market Competition: Increased competition in the wound care sector could pressure pricing and market share.
• Economic Conditions: Broader economic challenges may affect healthcare spending and investment.

SANUWAVE’s strategic initiatives and robust financial performance in Q2 2025 position it well for continued growth. The company’s focus on innovation and market expansion is expected to drive future success, despite the potential risks and challenges in the healthcare sector.

Full transcript - SANUWAVE Health Inc (SNWV) Q2 2025:

Conference Operator: Day, everyone, and welcome to the SANUWAVE Q2 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 this call may be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Morgan Frank, Chairman and CEO of SANUWAVE.

Please go ahead.

Morgan Frank, Chairman and CEO, SANUWAVE: Thank you very much. Good morning, and welcome to SANUWAVE’s Second Quarter twenty twenty five Earnings Call. Our Form 10 Q was filed with the SEC last night and our earnings release issued this morning, along with our updated presentation, which was made available on our website in the Investors section. It’s useful to refer to this during the presentation. It really does provide some useful information, I promise.

So joining me on the call this morning is Peter Sorensen, our CFO. And after the presentation, we will open the call up to Q and A. We’ll begin with everybody’s favorite forward looking statements and other disclosures. This call may contain forward looking statements, such as statements referring to our future financial results, production expectations, plans for future business development activities. 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.

A description of these risks and uncertainties and other factors that could affect our financial results is included in our SEC filings. Actual results may differ materially from those projected in the forward looking statements. The company undertakes no obligation to update any forward looking statement. Certain percentages discussed in this call are calculated from the underlying whole dollar amounts and therefore may not recalculate from the rounded numbers used for disclosure purposes. As a reminder, our discussion today will include non GAAP numbers.

Reconciliations between our GAAP and non GAAP results can be found in our recently filed 10 Q for the period ended 06/30/2025. All right. So, now that we are absolved of any potential sins of prognostication, let’s get to the good bits. Q2 was another strong performance for SANUWAVE, up 42% year on year on the top line and bringing us to 51% year on year for the first six months of 2025. We sold 116 Ultramist systems in Q2, a 61% increase versus a year ago and an 18% increase from Q1.

This took us to twelve sixty one systems in the field, four seventy three or 38% of which have been sold in the last twelve months. Applicator revenue was $6,400,000 in the quarter, 63% of our overall revenues, and like last quarter, was toward the high end of our 55% to 65% target range. Grew 37% from the same quarter last year and a bit over 10% sequentially from last quarter. Our tone of business and customer adoption remains good, and customer concentration dropped slightly in the quarter with only one quarter exceeding with only one customer exceeding 5% of revenues and that customer just barely doing so. Gross margins remained strong at 78.3%, up five ten basis points from a year ago, though down slightly from Q1, predominantly as a result of the engineering costs associated with standing up our second source of applicator production.

We remain on track to commence commercial production of this new, more manufacturable applicator design in Q4 of this year and continue to believe that the four cavity molds and removal of UV Cure adhesive steps will both provide us with ample applicator capacity for the foreseeable future and reduce our consumables production costs. As our production is all domestic, we continue to anticipate no material effects from tariffs or trade disruption. So, I mean, all in all, it’s been a really productive 2025, and, the companies will be starting to chew up ground. You know, we’ve described q one and q two as sort of the period of mass of mass disruption as we’ve made some very significant changes to our sales leadership, sales force, our commercial ops, and our commercial strategy. Internally, we’ve been using the metaphor of taking apart the airplane and putting it back together while flying it really fast.

And the team has more than risen to the challenge. As of mid July, for the first time in my tenure as CEO, we have all 12 of our national sales territory staffed and have added a full time national and key accounts manager to focus on our big accounts. You know, this is really a long way to have come from the two reps we had at the 2024. And even from the nine we had at year end. You know, we filled out the commercial operations team as well and brought in new leadership there also from AudioMed.

And, the energy, the all hands sales and commercial ops meeting that we had a couple weeks ago was as striking as it was positive. Like, their moods and expectations are high, and if Q1 and Q2 were sort of max disruption, q three is really shaping up to be the quarter of maximum construction. As we really step up our internal systems, our lead and sales management, dashboard, and reimbursement support, and as we prepare for our first ever concerted outbound marketing campaign, which we hope to launch in October. We’re seeing some very promising increases in inbound inquiry in a couple of markets. We seem to have crossed a sort of adoption threshold.

It appears that once you get enough practitioners using Ultramist and that they’ve seen others use the product, seeing the results, seeing the opportunity, we get a profound spike in interest. And in light of this, we are going to focus on expanding this awareness, finding the key users to provide social proof and credibility, and really helping the market understand that there’s a better way to handle complex wounds. It seems that familiarity here breeds acceptance and adoption. So we really look forward to getting out and spreading the word. We’re going to be at SAWC in September, so come and see us if you’re there.

Obviously, all this sort of max construction is in service of setting up sort of max production. And based on what I saw at the sales meeting, you know, we now have a team that’s really committed to getting SANUWAVE firing on all cylinders. I think we’re all pretty excited about seeing what happens when we do. So with that, I will turn you over to Peter Sorensen, our CFO, who can walk you through the rest of our financials.

Peter Sorensen, CFO, SANUWAVE: Thank you, Morgan. The second quarter was a strong one for SANUWAVE, with revenue reaching a new Q2 record and growing 42% year over year. This performance reflects continued momentum in our commercial strategy and growing demand for ULTREMIST. We also delivered meaningful year over year improvement in gross margins, which underscores the operating leverage inherent in our model and our disciplined approach to cost management. Overall, we remain focused on driving sustainable, profitable growth.

Let’s now take a closer look at the financials for the quarter. Revenue for the three months ended 06/30/2025, totaled $10,200,000 an increase of 42% as compared to $7,200,000 for the same period of 2024. This growth was within our previous guidance of 40% to 50%. Gross margin as a percentage of revenue amounted to 78.3% for the three months ended 06/30/2025, versus 73.2% for the same period last year. This represents an increase of about five ten basis points, which can be attributed to reduced costs on system production and a strategic focus on pricing for Ultramist systems and applicators.

For the three months ended 06/30/2025, operating income totaled $1,900,000 which is slightly down by $100,000 compared to the same period last year. Operating expenses for the three months ended 06/30/2025 amounted to $6,100,000 compared to $3,200,000 for the same period last year, an increase of $2,900,000 However, this change was largely driven by an increase in non cash stock based compensation expense of $1,100,000 versus Q2 twenty twenty four, in which there was no stock comp expense, as well as there was a release of a historical accrual in Q2 twenty twenty four of $579,000 which reduced our reported GAAP operating expenses by that amount that did not recur this quarter. Net income for the three months ended 06/30/2025, was $1,100,000 compared to net income of $6,600,000 for the same period in 2024, a decrease of $5,500,000 The decrease in net income was primarily driven by lower non cash and infrequent items in Q2 twenty twenty five as compared to Q2 twenty twenty four. As a reminder, we recognized a one time non cash gain of $5,300,000 related to the payoff of legacy debt in the prior year quarter, which did not recur this quarter. Additionally, the change in fair value of derivative liabilities resulted in a non cash gain of $1,000,000 in Q2 twenty twenty five versus a $3,700,000 gain in Q2 twenty twenty four, representing a $2,700,000 year over year variance.

These impacts were partially offset by lower interest expense in Q2 twenty twenty five, primarily due to the conversion of our outstanding notes into common stock in Q4 twenty twenty four as part of the note and warrant exchange. EBITDA for the three months ended 06/30/2025, was $3,200,000 Adjusted EBITDA was $3,400,000 versus $1,500,000 for the same period last year, an improvement of $1,900,000 year over year. Total current assets amounted to $20,200,000 as of 06/30/2025, versus $18,400,000 as of 12/31/2024. Cash totaled $8,500,000 as of 06/30/2025. We appreciate the continued support and confidence of our stakeholders.

Q2 twenty twenty five represents another solid step forward for SANUWAVE, and we’re encouraged by the progress we’ve made. As we look ahead to the second half of the year, we remain focused on disciplined execution and advancing our strategic growth initiatives. With that, I’ll turn the call back over to Morgan.

Morgan Frank, Chairman and CEO, SANUWAVE: Thanks, Peter. So moving on to guidance. As we stated in our press release, we’re guiding to 12,000,000 to $12,700,000 in Q3 revenues. Obviously, Q3 is a tough comp for us. It’s up against the pig through a python quarter last year in which we had one really large sale sort of tip the scales and drive a surge to an 89% year on year growth rate.

Pigs seem to be somewhat difficult animals to forecast. And while we’re certainly out looking for them and see a fair bit of potential, we’re not including any of that in the guidance above. We’re really still in the learning phase on how to time forecasting with these bigger customers and how they ramp up when they do say yes. I think we’d rather on the side of conservatism. But our annual guidance remains unchanged.

As ever, I want to thank the SANUWAVE team for all of the hard work and the commitment and the trust. Companies exist downstream of their cultures, and this one only exists because of ours. As we have thoroughly outgrown our existing headquarters, especially the warehouse and shipping facilities, we’re moving to our new office space, about a mile away at the end of next week. And, I’m sure the team will desperately miss the old carpets, but we’ll manage as always to adapt and overcome. So thanks, everyone.

And with that, I will open it up to the operator for questions.

Conference Operator: Your line is open.

Morgan Frank, Chairman and CEO, SANUWAVE: Kyle, good morning.

Kyle, Analyst: For all the updates and great progress here. Maybe I’ll start on margin. So glad to hear the enhanced production process for the applicators still on track for Q4. Can you give us a sense as to how this might impact gross margin? I mean, you’ve generated some nice scale.

It seems like the business is poised for some pretty nice operating leverage, especially given commercial infrastructure is in place. This production process is nearing completion. So just kind of trying to get a sense of how much drops to the bottom line at this point for incremental sales from an EBITDA standpoint as well.

Morgan Frank, Chairman and CEO, SANUWAVE: Sure. Obviously, purpose in creating the new applicator design is both to increase the capacity to produce applicators and to get the costs down a bit. We suspect, and Peter, correct me if I’m wrong here, but we suspect we can pick up probably three fifty, 400 basis points of additional margin on the applicators with the new design. Does that be Yeah. Right way to

Peter Sorensen, CFO, SANUWAVE: take We’ll take some time to get to that as well, too, just because we’ve got try to hold about six months of inventory on our applicators, so we need to bleed off our existing, costs on our current applicators before we start really seeing that impact, but we should see that in early twenty twenty six.

Morgan Frank, Chairman and CEO, SANUWAVE: Yeah. So it should be it should be sort of a steady fade in, right, because we’re not we’re using a kind of a blended cost as our cost basis. It’ll it’ll it’ll it’ll flow through gradually, but will flow through.

Kyle, Analyst: K. Appreciate that. And, 13 reps, sounds like that’s a pretty good number. Do you envision needing to build that out, or you you feel pretty good about kinda covering the map at this point?

Morgan Frank, Chairman and CEO, SANUWAVE: I think we are at this point, there’s a certain amount of, you know, let’s get everybody really up, trained, and firing. I think we made a lot of we made a lot of progress there at the at the two day sort of all hands and teach in. Really feels like a qualitatively strong group now and folks who are doing a lot to help each other and kind of share best practices. You know, will we potentially add a few more people? Yeah.

I think that it’s certainly something we’re looking at. Are there some sector specific folks who make sense? Do we want to stir? I mean, now getting to a size where we have to start thinking about, do we need regional managers? What is the next step?

Obviously, breaking up The US into 12 regions still means you’ve got some pretty big territories.

Albert Hanser, Analyst, Kestrel: And

Morgan Frank, Chairman and CEO, SANUWAVE: so, ultimately, yeah, we’re looking at it. We don’t have any I wouldn’t be surprised if we acquire a few more reps over the rest of the year. But I think at this point, we’re pretty much we’re pretty much where we need to be to have real national coverage.

Kyle, Analyst: Got it. And, glad to hear that you’re working internally as well on kind of a marketing program. I think you mentioned you you plan to bring that live in October. As you kind of map out the opportunity in The U. S.

Across wound care centers and physician offices and skilled nursing facilities and assisted living facilities, I guess, where are you spending most of your time in focus or the patient types or conditions that Ultramist really resonates with that kind of tailored this marketing program towards?

Morgan Frank, Chairman and CEO, SANUWAVE: So to a great extent, one of the things we’re focusing on in the marketing program is moving more to a kind of, you know, a market of one marketing stance where, we can actually target a bunch of these things individually, create specific plans for specific wound types, for specific patient types, for specific user types. And so a lot of it is going to be starting to really both differentiate and target the offerings so that we can engage with mobile wound care, with nursing homes, with skilled nursing facilities, with increasingly, I think we’ve probably been neglecting hospitals a bit. We’re starting to engage there bit with more focus. I think there’s also, obviously, you have a lot of opportunity in podiatry, in wound care centers. And so, I think it really becomes a question of tailoring the offering such that tailoring the offering to both the wound and the customer type, beginning to show people this is really how you can use this product, and then getting over the hump of people saying, wound care is not a high trust environment, right?

Like, are, you know, when you walk in with a shiny new thing and say, you know, this the best new wound care since moldy bread, you’re met with an understandable amount of skepticism. I think getting to key folks, getting to high enough usage rates in markets that everyone says, oh, I’ve heard of this thing. I’ve seen people use it. I hear they’re getting great results. I should go take a look, really matters.

And so some of it is going to be pushing for very specific regional critical mass.

Kyle, Analyst: Appreciate that. And and maybe just lastly, any any update on the senior secured debt that’s coming new? Thanks so much.

Morgan Frank, Chairman and CEO, SANUWAVE: There we go. We had an internal bet on how long we could go on this call without somebody asking that. So, yes, I guess it’s probably fitting we give something an update. I think as we’ve sort of long discussed, were looking at the refinancing of our debt as sort of a cost of capital equation, right? And so, we were looking at, do we want to do this as debt?

Do we want to do this as equity? Like, what’s what’s the choice? And so we ran an internal process to look at what our debt options were. And we received several term sheets that we thought were very attractive, and we chose one and are currently in the process of working to close it. So I can’t really get into too much more detail right now.

Like, I can’t name a counterparty, but I think people will be favorably inclined towards both the lender and the terms. It’s a significant improvement over what we have.

Kyle, Analyst: It’s excellent. I appreciate the all the color here. We’ll keep an eye out for that. I’ll jump back in queue.

Morgan Frank, Chairman and CEO, SANUWAVE: Thanks,

Conference Operator: We’ll take our next question from Chris Plum with Tall Pipes Capital. Your line is open.

Chris Plum, Analyst, Tall Pipes Capital: Good morning, guys.

Morgan Frank, Chairman and CEO, SANUWAVE: Chris, good morning. How are you?

Chris Plum, Analyst, Tall Pipes Capital: Pretty good. Great start to the year. Actually, the last gentleman took my first question on the debt. But I was curious also on how you look at the elephant hunting now with the new team you have in place. I know you said you have a national account manager.

Can you maybe talk a little bit about who do you have that maybe you’ve sold systems to that have a big runway with a couple 100 locations and maybe the pipeline for for maybe new large elephant hunting?

Morgan Frank, Chairman and CEO, SANUWAVE: Yeah. I mean bots? Sure. I mean, obviously, for, you know, for competitive reasons, we wanna be a little bit careful about, you know, naming naming folks. But there are, you know, there are a number of key initiatives that, you know, we’ve gotten pretty interested in.

We were recently added to the approved vendor list on one of the largest hospital chains and networks in The US. And so, that’s become an interesting hunting ground for us. We’re looking at a number of folks who have considerably larger footprints, like people who have several 100 locations. And I think it’s sort of early days. Right?

I mean, we hired our new key accounts rep in July. So, you know, I mean, he’s been here almost a month now. So, yeah, we’re gonna start expecting things any day now. But it’s, you know, it’s always it’s always a little bit difficult to guess exactly how these guys are gonna perform. Right?

The, you know, big big customers like this tend to be more careful. They’re also structured differently. Right? Some of them are kind of tipping point accounts where, you know, there’s one there’s one sort of national decision maker, and if they say yes, you sort of go on a large number of units. Others are sort of a, we’ll approve this, and now you have a hunting license but have to go get each one individually.

So they seem to get And they seem to get easier the more you get on board. Right? There’s sort of As you penetrate a network like that, there’s kind of like a sort of a flip over point where the question changes from why should I use this thing to hey, why aren’t you using this thing yet? Don’t you see what the rest of your peers are doing? And so we’re building some real momentum there, but it’s obviously we’re kind of a month in, so it’s just a little early to be making much in the way of really concrete prognostication.

Great. Thanks, guys. Thanks, Chris.

Conference Operator: It appears we have no further questions in the queue. I’ll turn the program back to the speakers.

Morgan Frank, Chairman and CEO, SANUWAVE: I think we might have one more question.

Conference Operator: We do have a question now from Albert Hanser from Kestrel. Your line is open.

Albert Hanser, Analyst, Kestrel: Hi, nice job. Fun to see the execution. In all the momentum and good news, sometimes I think the IP aspect gets overlooked. And I noticed on your website in the deck, which I hadn’t seen before in the broader deck, now have a slide on the IP and 140 patents. Can you just talk more about the value of those patents and where they lie and just give us a broader landscape of kind of the foundation under which you’re building the company?

Morgan Frank, Chairman and CEO, SANUWAVE: Well, you couldn’t come up with an easier question. Okay. I mean, fundamentally, yes, SANUWAVE is sitting on a large patent portfolio that includes a lot of things to do with both Shockwave and with ultrasound. Obviously, we view some of them as sort of core protection of our ability to operate. It’s something we’re also looking to extend as we begin looking at new things we can do with the Ultramist platform.

Obviously, we have in the past monetized some of these patents. We have the one relationship with Fast Your Wave LLC to potentially utilize some of our Shockwave patents around some vascular conditions. I can’t really speak to that any further in sort of concrete specifics beyond what we have out in the public market, which is that they paid us $2,500,000 last year to basically buy an option that would allow them to pay sort of a mid single digit millions fee to then go out and assert some patents on which there would be share on a the back end with any sort of collection. We are always sort of looking at the patent portfolio and saying, what else can we do with this? We get interest from time to time from folks about licensing or acquiring patents.

But I don’t know that I can really say anything else that’s concrete on that topic at this time.

Conference Operator: Thank

Albert Hanser, Analyst, Kestrel: you.

Conference Operator: I’m showing we have no further questions over the phone at this time.

Morgan Frank, Chairman and CEO, SANUWAVE: Great. Well, thank you, everyone, for joining us this morning, and we look forward to speaking to you next quarter.

Conference Operator: This concludes today’s program. Thank you for your participation, and you may disconnect at any time.

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