SANUWAVE Announces Q2 2023 Financial Results

Rhea-AI Summary

SANUWAVE Health, Inc. announces its 2nd quarter 2023 results, reporting a 20% increase in revenue compared to the same period last year. UltraMist® systems sold in Q2 2023 increased to 49 from 28 in Q1. Gross margin as a percentage of revenue increased to 74%. Operating income improved by $4.0 million. Net loss for Q2 2023 was $7.3 million, primarily due to non-cash losses on derivative liabilities. The company anticipates Q3 2023 revenue growth of 15-25%.

Positive

• SANUWAVE reported a 20% increase in revenue for Q2 2023 compared to the same period last year.
• UltraMist® systems sold in Q2 2023 increased to 49 from 28 in Q1.
• Gross margin as a percentage of revenue increased to 74% for Q2 2023.
• Operating income improved by $4.0 million for Q2 2023.
• The company anticipates Q3 2023 revenue growth of 15-25%.

Negative

• Net loss for Q2 2023 was $7.3 million, primarily due to non-cash losses on derivative liabilities.

EDEN PRAIRIE, MN, Aug. 11, 2023 (GLOBE NEWSWIRE) -- SANUWAVE Health, Inc. (the “Company” or “SANUWAVE”) (OTCQB: SNWV), a leading provider of next-generation FDA-approved wound care products, today announced its 2nd quarter 2023 results.

For the three months ended June 30, 2023:

• Revenue for the three months ended June 30, 2023 totaled $4.7 million, an increase of 20%, as compared to $3.9 million for the same period of 2022. This growth falls within the previously provided guidance range of 15-25% for Q2 2023. Revenue for the six months ended June 30, 2023 totaled $8.5 million, an increase of 19%, as compared to $7.1 million for the same period of 2022.
• 49 UltraMist® systems were sold in Q2 2023, up from 28 in Q1 of this year.
• UltraMist® consumables revenue increased 25% to $2.8 million, versus $2.2 million for the same quarter last year on a 14% increase in treatments.   Revenue growth outpaced treatments due to higher average sale prices.
• UltraMist® consumables revenue was 59% of overall revenue for Q2, up from 56% in the prior year period. This was primarily driven by a larger installed base, improved pricing, and higher usage rates.
• Gross margin as a percentage of revenue increased to 74% for the three months ended June 30, 2023, vs 72% for the same period last year, primarily driven by stronger pricing initiatives.
• For the three months ended June 30, 2023, operating income totaled $0.9 million, which is an improvement of $4.0 million compared to the same period in 2022. This number benefited from a $1.25 million one-time reversal of accrued expenses and was partially offset by a $224 thousand non-cash stock compensation issuance.
• Net loss for the three months ended June 30, 2023 was $7.3 million, compared to a net income of $1.6 million for the same period in 2022. The increase in net loss for the three months ended June 30, 2023 was primarily due to continued non-cash losses on the fair value of derivative liabilities.
• The Company anticipates third quarter 2023 revenue growth will fall within a range of 15-25% as compared to the third quarter of 2022.

Recent Highlights from Q2 2023:

• Appointment of Morgan Frank as Chief Executive Officer in May.
• Appointment of Andrew Walko as President and to head manufacturing in July.
• Signing of Distribution Agreement with Pacific Medical, Inc. bringing its sales force of over 215 representatives covering 7 western states to the UltraMist line of directed energy wound care products.
• In July 2023, the Company issued Asset-Backed Secured Promissory Notes for which it received total proceeds of approximately $3.0 million.
• SANUWAVE showcased its innovative non-invasive, regenerative medicine solutions for the treatment of chronic wounds at the Leaders in Wound Healing Conference in New Orleans, Louisiana, the Symposium on Advanced Wound Care Spring in National Harbor, Maryland, and the EWMA 2023 Symposium in Milan, Italy.
• Leading plastic surgeon, Dr. Johnson presented on UltraMist at the Serena Foundation Leadership in Wound Conference.

“We are pleased to have generated significant revenue growth in Q2 despite ongoing capacity constraints,” said CEO Morgan Frank. “It has been a challenging time at SANUWAVE, but as these results are beginning to show, our drive toward cost cutting, process optimization, and margin expansion is beginning to gain traction as we move toward our near-term goals of growth acceleration and operating profitability. In the coming quarters, we aim to continue and build upon this trend as we break the production and supply chain logjams that have prevented us from realizing the potential of the UltraMist system.”

Guidance

The Company continued to have constrained inventory supply during Q2 2023 and anticipates this will improve in Q3, but remain a significant factor. The Company anticipates Q3 2023 revenue growth of approximately 15% to 25% year over year. SANUWAVE its constrained inventory supply will improve materially and enable an acceleration of revenue growth in Q4 2023.

As previously announced, a business update will occur via conference call on August 11, 2023.  Materials for the conference call at 8:30 a.m. EDT are included on the Company’s website, www.sanuwave.com/investors.

Telephone access is available by dialing the following numbers:

Conference ID: 13740603

Telephone access to the call will be available by dialing the following numbers:

Participant Listening: 1-877-407-0784 or 1-201-689-8560

OR click the Call me™ link for instant telephone access to the event.

https://callme.viavid.com/viavid/?callme=true&passcode=13732361&h=true&info=company&r=true&B=6

A replay will be made available through August 25, 2023:

Replay Dial-In: 1-844-512-2921 or 1-412-317-6671

Access ID: 13740603

About SANUWAVE

SANUWAVE Health is focused on the research, development, and commercialization of its patented, non-invasive and biological response-activating medical systems for the repair and regeneration of skin, musculoskeletal tissue, and vascular structures.

SANUWAVE’s end-to-end wound care portfolio of regenerative medicine products and product candidates help restore the body’s normal healing processes. SANUWAVE applies and researches its patented energy transfer technologies in wound healing, orthopedic/spine, aesthetic/cosmetic, and cardiac/endovascular conditions.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future financial results, production expectations and constraints, and plans for future business development activities and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. 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. Actual results may differ materially from those projected in the forward-looking statements. Among the key risks, assumptions and factors that may affect operating results, performance and financial condition are risks associated with the regulatory approval and marketing of the Company’s product candidates and products, unproven pre-clinical and clinical development activities, regulatory oversight, the Company’s ability to manage its capital resource issues, competition, and the other factors discussed in detail in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

CONTACT:
Investors@Sanuwave.com

PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
		SANUWAVE HEALTH, INC. AND SUBSIDIARIES
		CONDENSED CONSOLIDATED BALANCE SHEETS
		(UNAUDITED)
		(In thousands, except share data)
					June 30, 2023				December 31, 2022
ASSETS
Current Assets:
	Cash				$	332			$	1,153
	Restricted Cash					850				-
	Accounts receivable, net of allowance of $1,214 and $1,037, respectively					2,818				4,029
	Inventory					900				868
	Prepaid expenses and other current assets					1,201				570
Total Current Assets						6,101				6,620
	Property, equipment and other, net					1,050				856
	Intangible assets, net					4,786				5,137
	Goodwill					7,260				7,260
Total Non-current Assets						13,096				13,253
Total Assets					$	19,197			$	19,873
LIABILITIES
Current Liabilities:
	Senior secured debt, in default				$	16,123			$	14,416
	Convertible promissory notes payable					17,712				16,713
	Convertible promissory notes payable, related parties					8,346				7,409
	Bridge notes advance					1,476				-
	Accounts payable					4,859				4,400
	Accrued expenses					6,351				8,512
	Factoring liabilities					1,213				2,130
	Warrant liability					14,410				1,416
	Accrued interest					6,174				4,052
	Accrued interest, related parties					1,438				788
	Current portion of contract liabilities					67				60
	Other					1,108				291
Total Current Liabilities						79,277				60,187
Non-current Liabilities
	Lease liabilities					515				438
	Contract liabilities					215				230
	Deferred tax liability					28				28
Total Non-currrent Liabilities						758				696
Total Liabilities					$	80,035			$	60,883
Commitments and Contingencies (Footnote 13)
STOCKHOLDERS' DEFICIT
Preferred Stock, par value $0.001, 5,000,000 shares authorized;
	6,175 shares Series A, 293 shares Series B, 90 shares Series C and 8 shares Series D				$	-			$	-
	no shares issued and outstanding at June 30, 2023 and December 31, 2022
Common Stock, par value $0.001, 2,500,000,000 shares authorized; 561,637,651 and 548,737,651
	issued and outstanding at June 30, 2023 December 31, 2022, respectively					562				549
Additional paid-in capital						153,264				152,750
Accumulated deficit						(214,584	)			(194,242	)
Accumulated other comprehensive loss						(80	)			(67	)
Total Stockholders' Deficit						(60,838	)			(41,010	)
Total Liabilities and Stockholders' Deficit					$	19,197			$	19,873
The accompanying notes to condensed consolidated financial statement are an integral part of these financial statements.

SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(UNAUDITED)
(In thousands, except share data)
				Three Months Ended June 30,								Six Months Ended June 30,
					2023				2022				2023				2022
Revenue				$	4,675			$	3,882			$	8,450			$	7,077
Cost of Revenues					1,202				1,096				2,464				1,986
Gross Margin					3,473				2,786				5,986				5,091
Operating Expenses:
	General and administrative				1,238				3,781				3,997				5,986
	Selling and marketing				978				1,672				2,390				3,387
	Research and development				139				171				270				337
	Depreciation and amortization				187				210				376				386
Total Operating Expenses					2,542				5,834				7,033				10,096
Operating Income/(Loss)					931				(3,048	)			(1,047	)			(5,005	)
Other Income (Expense):
	Interest expense				(3,706	)			(2,903	)			(7,218	)			(6,040	)
	Interest expense, related party				(675	)			(56	)			(1,441	)			(112	)
	Change in fair value of derivative liabilities				(3,821	)			7,861				(10,618	)			11,343
	Loss on issuance of debt				-				-				-				(3,434	)
	Loss on extinguishment of debt				-				(211	)			-				(211	)
	Other (expense) income				9				1				(18	)			2
Total Other (Expense)/Inocme					(8,193	)			4,692				(19,295	)			1,548
Net (Loss)/Income before Income Taxes					(7,262	)			1,644				(20,342	)			(3,457	)
Provision for Income Taxes					-				-				-				-
Net (Loss)/Income					(7,262	)			1,644				(20,342	)			(3,457	)
Other Comprehensive Loss
	Foreign currency translation adjustments				(9	)			-				(13	)			-
Total Comprehensive (Loss)/Income				$	(7,271	)		$	1,644			$	(20,355	)		$	(3,457	)
(Loss) income per Share:
	Basic			$	(0.01	)		$	-			$	(0.04	)		$	(0.01	)
	Diluted			$	(0.01	)		$	-			$	(0.04	)		$	(0.01	)
Weighted average shares outstanding
	Basic				582,328,811				538,560,051				579,178,811				532,589,825
	Diluted				582,328,811				871,984,091				579,178,811				532,589,825
The accompanying notes to condensed consolidated financial
statements are an integral part of these financial statements.

	SANUWAVE HEALTH, INC. AND SUBSIDIARIES
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
	(UNAUDITED)
	(In thousands, except share data)
Three Months Ended June 30, 2023
				Common Stock
				Number of												Accumulated
				Shares												Other
				Issued and					Additional Paid-			Accumulated				Comprehensive
				Outstanding		Par Value			in Capital			Deficit				Loss				Total
Balances as of March 31, 2023				555,637,651		$	556		$	153,046		$	(207,322	)		$	(71	)		$	(53,791	)
	Shares issued for services			6,000,000			6			218			-								224
	Net loss			-			-	-		-			(7,262	)	-		-				(7,262	)
	Foreign currency translation adjustment			-			-			-			-				(9	)			(9	)
Balances as of June 30, 2023				561,637,651		$	562		$	153,264		$	(214,584	)		$	(80	)		$	(60,838	)
Three Months Ended June 30, 2022
				Common Stock
				Number of												Accumulated
				Shares												Other
				Issued and					Additional Paid-			Accumulated				Comprehensive
				Outstanding		Par Value			in Capital			Deficit				Loss				Total
Balances as of March 31, 2022				517,195,705		$	517		$	150,533		$	(189,050	)		$	(67	)		$	(38,067	)
	Shares issued for services			12,097,500			12			876			-				-				888
	Net Income			-			-	-		-			1,644		-		-				1,644
	Foreign currency translation adjustment			-			-			-			-								-
Balances as of June 30, 2022				529,293,205		$	529		$	151,409		$	(187,406	)		$	(67	)		$	(35,535	)
	The accompanying notes to condensed consolidated financial
	statements are an integral part of these financial statements.

	SANUWAVE HEALTH, INC. AND SUBSIDIARIES
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
	(UNAUDITED)
	(In thousands, except share data)
Six Months Ended June 30, 2023
			Common Stock
			Number of												Accumulated
			Shares												Other
			Issued and					Additional Paid-			Accumulated				Comprehensive
			Outstanding		Par Value			in Capital			Deficit				Loss				Total
Balances as of December 31, 2022			548,737,651		$	549		$	152,750		$	(194,242	)		$	(67	)		$	(41,010	)
	Shares issued for services		12,900,000			13			514			-				-				527
	Net loss		-			-			-			(20,342	)			-				(20,342	)
	Foreign currency translation adjustment		-			-			-			-				(13	)			(13	)
Balances as of June 30, 2023			561,637,651		$	562		$	153,264		$	(214,584	)		$	(80	)		$	(60,838	)
Six Months Ended June 30, 2022
			Common Stock
			Number of												Accumulated
			Shares												Other
			Issued and					Additional Paid-			Accumulated				Comprehensive
			Outstanding		Par Value			in Capital			Deficit				Loss				Total
Balances as of December 31, 2021			481,619,621		$	482		$	144,582		$	(183,949	)		$	(73	)		$	(38,958	)
	Cashless warrant exercise		14,000,000			14			2,152			-				-				2,166
	Warrant exercise		909,091			1			99			-				-				100
	Shares issued in conjunction with Note Payable		20,666,993			20			3,700			-				-				3,720
	Shsares issued for services		12,097,500			12			876			-				-				888
	Net loss		-			-			-			(3,457	)			-				(3,457	)
	Foreign currency translation adjustment		-			-			-			-				6				6
Balances as of June 30, 2022			529,293,205		$	529		$	151,409		$	(187,406	)		$	(67	)		$	(35,535	)
	The accompanying notes to condensed consolidated financial
	statements are an integral part of these financial statements.

	SANUWAVE HEALTH, INC. AND SUBSIDIARIES
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	(UNAUDITED)
	(In thousands)
				Six Months Ended June 30,
					2023				2022
Cash Flows - Operating Acivities:
Net loss				$	(20,342	)		$	(3,457	)
Adjustments to reconcile net loss to net cash used by operating activities
	Depreciation and amortization				515				446
	Bad debt expense				313				52
	Shares issued for services				224				888
	Change in fair value of derivative liabilities				10,618				(11,343	)
	Loss on extinguishment of debt				-				211
	Loss on issuance of debt				-				3,434
	Amortization of debt issuance costs and original issue discount				3,955				1,304
	Accrued interest				3,606				1,327
	Changes in operating assets and liabilities
	Accounts receivable - trade				898				733
	Inventory				(31	)			115
	Prepaid expenses and other assets				(336	)			(27	)
	Accounts payable				718				(486	)
	Accrued expenses				(1,337	)			1,710
	Contract liabilties				(16	)			(108	)
Net Cash Used in Operating Activities					(1,215	)			(5,201	)
Cash Flows - Investing Activities
	Proceeds from sale of property and equipment				-				948
	Purchase of property and equipment				(169	)			-
Net Cash Flows (Used in)/Provided by Investing Activities					(169	)			948
Cash Flows - Financing Activities
	Proceeds from senior promissory notes				-				2,940
	Proceeds from convertible promissory notes payable				1,202				-
	Proceeds from bridge notes advance				1,476				2,130
	Payments to factoring agent, net				(1,167	)			55
	Proceeds from warrant exercises				-				100
	Payments of principal on finance leases				(85	)			(121	)
Net Cash Flows Provided by Financing Activities					1,426				5,104
Effect of Exchange Rates on Cash					(13	)			14
Net Change in Cash and Restricted Cash During Period					29				865
Cash and Restricted Cash at Beginning of Period					1,153				619
Cash and Restricted Cash at End of Period				$	1,182			$	1,484
Supplemental Information:
	Cash paid for interest			$	908			$	2,045
Non-cash Investing and Financing Activities:
	Warrants issued in conjunction with senior secured promissory note payable and convertible promissory notes payable			$	570			$	2,654
	Common shares issued for advisory shares				302				-
	Embedded conversion feature on convertible promissory notess payable				157
	Reclassification of warrant liability due to cashless warrant exercise				-				2,167
	Common shares issued in conjunction with senior secured promissory note payable				-				3,720
	The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements.

FAQ

What were SANUWAVE's Q2 2023 revenue results?

SANUWAVE reported a 20% increase in revenue for Q2 2023 compared to the same period last year, with total revenue of $4.7 million.

How many UltraMist® systems were sold in Q2 2023?

SANUWAVE sold 49 UltraMist® systems in Q2 2023, up from 28 in Q1.

What was the gross margin as a percentage of revenue for Q2 2023?

The gross margin as a percentage of revenue increased to 74% for Q2 2023.

What was the operating income for Q2 2023?

The operating income for Q2 2023 was $0.9 million, an improvement of $4.0 million compared to the same period last year.

What was the net loss for Q2 2023?

The net loss for Q2 2023 was $7.3 million, primarily due to non-cash losses on derivative liabilities.

What is SANUWAVE's revenue growth forecast for Q3 2023?

SANUWAVE anticipates Q3 2023 revenue growth of 15-25% compared to the same period last year.