SANUWAVE Announces Q2 2023 Financial Results

EDEN PRAIRIE, MN - (NewMediaWire) - August 11, 2023 - 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.