SANUWAVE Health Inc(SNWV) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Q2 FY2025 Financial Highlights Sanuwave reported record Q2 FY2025 revenues, with strong gross margin and Adjusted EBITDA growth, offset by lower GAAP operating income and net income Q2 FY2025 Financial Performance | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (%) | | :--------------------- | :-------------------- | :-------------------- | :--------- | | Revenue | $10.2 | $7.2 | 42% | | Gross Margin | 78.3% | 73.2% | +5.1 pp | | GAAP Operating Income | $1.9 | $2.0 | -5% | | Net Income | $1.1 | $6.6 | -83.3% | | Adjusted EBITDA | $3.4 | $1.5 | +126.7% | - Q2 2025 revenues of $10.2 million represent the highest Q2 quarterly revenues in Company history[2] - Q2 2025 GAAP Operating Income included equity compensation costs of $1.1 million, compared to $0 in Q2 2024[4][9] - Net income decrease in Q2 2025 was primarily due to a $5.3 million gain on extinguishment of debt in Q2 2024 that did not recur[9] CEO's Statement and Strategic Outlook CEO Morgan Frank highlighted strong Q2 and H1 2025 performance from UltraMIST sales and sales team rebuilding, anticipating breakout in Q4 2025 and 2026 - Achieved 51% revenue growth in the first six months of 2025 vs. the same period in 2024[8] - Sold 214 UltraMIST systems in the first six months of 2025, an 86% increase over the same period in 2024, surpassing full-year 2023 sales[8] - 116 UltraMist® systems were sold in Q2 2025, up from 72 in Q2 2024 and 98 in Q1 2025[9] - UltraMist® consumables revenue increased by 37% to $6.4 million in Q2 2025, representing 99% of Sanuwave's overall revenues[9] - Company achieved full national sales coverage as of mid-July, following Q1 and Q2 focused on building and reshaping sales and commercial operations teams[8][10] - Q3 2025 is expected to be a quarter of 'max construction' with new sales and marketing practices, including the launch of the first concerted marketing program, to set up for breakout performance in Q4 2025 and 2026[10] Financial Outlook and Guidance Sanuwave provided revenue guidance for Q3 2025 and reiterated its full-year 2025 revenue guidance, projecting continued strong growth Revenue Guidance | Period | Revenue Guidance (in millions) | | :------------- | :----------------------------- | | Q3 2025 | $12.0 - $12.7 | | Full Year 2025 | $48.0 - $50.0 | - Full year 2025 revenue guidance represents a 47-53% increase compared to full year 2024 revenue[11] Company Overview About Sanuwave Sanuwave Health, Inc. provides FDA-approved wound care products, specializing in patented, non-invasive medical systems for tissue repair and regeneration - Sanuwave focuses on patented, non-invasive, and biological response-activating medical systems for tissue repair and regeneration[14] - The company offers an end-to-end wound care portfolio of regenerative medicine products[15] - Sanuwave applies its energy transfer technologies in wound healing, orthopedic/spine, aesthetic/cosmetic, and cardiac/endovascular conditions[15] Non-GAAP Financial Measures Explanation and Rationale This section defines non-GAAP financial measures (EBITDA, Adjusted EBITDA) and their use by management for performance assessment and strategic decision-making - Non-GAAP financial measures (EBITDA and Adjusted EBITDA) supplement, but do not replace, U.S. GAAP measures[16] - Adjusted EBITDA is defined as Earnings before Interest, Taxes, Depreciation and Amortization, adjusted for the change in fair value of derivatives and any significant non-cash or infrequent charges[17] - Management uses these measures to evaluate historical and prospective financial performance, performance relative to competitors, and to make operational and strategic decisions[17] Limitations The company acknowledges that non-GAAP financial measures like EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for U.S. GAAP results - EBITDA and Adjusted EBITDA do not reflect every expenditure, future capital expenditure requirements, or contractual commitments[18][20] - These measures do not reflect all changes in working capital needs or interest expense/debt servicing amounts[20] Forward-Looking Statements Disclaimer This disclaimer emphasizes that forward-looking statements are not guarantees of future performance, involve inherent risks, and the company undertakes no obligation to update them - Forward-looking statements are not guarantees of future performance and involve risks and uncertainties beyond the Company's control[19] - Key risks include regulatory oversight, capital resource management, competition, and other factors detailed in SEC filings[19] - The Company undertakes no obligation to update any forward-looking statement, except as required by applicable law[21] Condensed Consolidated Statements of Comprehensive Income (Loss) Three and Six Months Ended June 30, 2025 and 2024 This section details Sanuwave's comprehensive income (loss) for Q2 and H1 2025 vs. 2024, highlighting revenue growth, gross margin, net income, and EPS changes Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $10,164 | $7,162 | $19,506 | $12,948 | | Cost of Revenues | $2,206 | $1,922 | $4,164 | $3,506 | | Gross Margin | $7,958 | $5,240 | $15,342 | $9,442 | | Gross Margin % | 78.3% | 73.2% | 78.7% | 72.9% | | Total Operating Expenses | $6,081 | $3,248 | $12,479 | $8,500 | | Operating Income | $1,877 | $1,992 | $2,863 | $942 | | Total Other Income (Expense) | $(822) | $4,569 | $(7,484) | $1,091 | | Net Income (Loss) | $1,055 | $6,561 | $(4,518) | $2,033 | | Basic EPS | $0.12 | $2.08 | $(0.54) | $0.65 | | Diluted EPS | $0.01 | $1.77 | $(0.54) | $0.55 | - Revenue increased by 42% for the three months and 50.6% for the six months ended June 30, 2025, compared to the prior year periods[31] - Net income for Q2 2025 was $1.1 million, a decrease from $6.6 million in Q2 2024, primarily due to a $5.3 million gain on extinguishment of debt in 2024 that did not recur[9][31] - Total operating expenses significantly increased for both the three and six months ended June 30, 2025, driven by higher general and administrative and selling and marketing costs[31] Non-GAAP Adjusted EBITDA Reconciliation Reconciliation Table This section reconciles Net Income (Loss) to EBITDA and Adjusted EBITDA for Q2 and H1 2025 vs. 2024, showing significant Adjusted EBITDA improvement after non-cash adjustments Non-GAAP Adjusted EBITDA Reconciliation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income (Loss) | $1,055 | $6,561 | $(4,621) | $2,033 | | Interest expense | $1,874 | $3,783 | $3,726 | $7,343 | | Depreciation and amortization | $299 | $262 | $573 | $480 | | EBITDA | $3,228 | $10,606 | $(322) | $9,856 | | Change in fair value of derivative liabilities | $(990) | $(3,717) | $3,911 | $(1,216) | | Stock-based compensation | $1,132 | $- | $2,116 | $- | | Gain on extinguishment of debt | $- | $(5,310) | $- | $(5,205) | | Adjusted EBITDA | $3,370 | $1,457 | $5,705 | $1,398 | - Adjusted EBITDA for Q2 2025 increased by 131% to $3.37 million from $1.46 million in Q2 2024[9][26] - Adjusted EBITDA for the six months ended June 30, 2025, increased by 308% to $5.71 million from $1.40 million in the prior year period[26] - Stock-based compensation was a significant non-GAAP adjustment in 2025, totaling $1.13 million for Q2 and $2.12 million for the six months, compared to $0 in 2024[26] Condensed Consolidated Balance Sheets As of June 30, 2025 and December 31, 2024 The balance sheets show increased total assets and liabilities as of June 30, 2025, driven by higher inventory, property, equipment, warrant liability, and senior secured debt Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $8,496 | $10,237 | | Total Current Assets | $20,168 | $18,397 | | Total Non-current Assets | $12,878 | $11,722 | | Total Assets | $33,046 | $30,119 | | Senior secured debt | $26,774 | $25,305 | | Warrant liability | $12,018 | $8,107 | | Total Current Liabilities | $46,501 | $42,345 | | Total Non-current Liabilities | $1,320 | $491 | | Total Liabilities | $47,821 | $42,836 | - Total assets increased by approximately $2.9 million, from $30.1 million at December 31, 2024, to $33.0 million at June 30, 2025[27] - Total liabilities increased by approximately $5.0 million, from $42.8 million at December 31, 2024, to $47.8 million at June 30, 2025[27] - Warrant liability significantly increased from $8.1 million to $12.0 million[27] Consolidated Statements of Stockholders' Deficit Three and Six Months Ended June 30, 2025 and 2024 The statements of stockholders' deficit show an increased total deficit from December 31, 2024, to June 30, 2025, primarily due to net loss and stock-based compensation Consolidated Statements of Stockholders' Deficit | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Common Stock (Par Value) | $9 | $9 | | Additional Paid-in Capital | $241,248 | $238,685 | | Accumulated Deficit | $(256,042) | $(251,421) | | Total Stockholders' Deficit | $(14,775) | $(12,717) | - Total Stockholders' Deficit increased from $(12.7) million at December 31, 2024, to $(14.8) million at June 30, 2025[30][35] - The accumulated deficit increased by $4.6 million during the six months ended June 30, 2025, reflecting the net loss for the period[30][35] - Stock-based compensation contributed $2.23 million to additional paid-in capital for the six months ended June 30, 2025[35] Consolidated Statements of Cash Flows Six Months Ended June 30, 2025 and 2024 The cash flow statements show a net decrease in cash for H1 2025 due to operating and investing activities, contrasting with a net increase in H1 2024 Consolidated Statements of Cash Flows | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net Cash Flows (Used in) Provided by Operating Activities | $(524) | $432 | | Net Cash Flows Used in Investing Activities | $(1,321) | $(206) | | Net Cash Flows Provided by Financing Activities | $104 | $316 | | Net Change in Cash During Period | $(1,741) | $663 | | Cash at End of Period | $8,496 | $2,460 | - Cash used in operating activities for the six months ended June 30, 2025, was $(524) thousand, a decrease from $432 thousand provided by operating activities in the prior year[37] - Investing activities used significantly more cash in 2025 ($1.32 million) compared to 2024 ($0.21 million), primarily due to increased purchase of property and equipment[37] - Cash at the end of the period decreased to $8.50 million from $10.24 million at the beginning of the period[37] Supplemental Cash Flow Information Supplemental cash flow information details non-cash investing and financing activities, including capitalized interest, shares granted for board fees, and right-of-use assets Supplemental Cash Flow Information | Non-Cash Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Cash paid for interest | $2,255 | $2,055 | | Capitalize interest into senior secured debt | $407 | $3,850 | | Shares granted in lieu of board of director fees | $77 | $- | | Right-of-use assets obtained in exchange for lease liabilities | $430 | $- | | Warrants issued in conjunction with convertible promissory notes | $- | $3,633 | - Capitalized interest into senior secured debt significantly decreased from $3.85 million in 2024 to $0.41 million in 2025[38] - The company granted $77 thousand in shares in lieu of board of director fees and obtained $430 thousand in right-of-use assets in exchange for lease liabilities in 2025[38]