Executive Summary

Q2 2025 delivered record second-quarter revenue of $10.16M (+42% YoY), gross margin of 78.3%, and Adjusted EBITDA of $3.37M; diluted EPS was $0.01, and operating income held at $1.88M despite $1.13M in stock comp .
Versus Wall Street consensus, revenue modestly beat ($10.16M vs $10.14M*) and EPS beat (GAAP diluted $0.01 vs -$0.09*); Adjusted EBITDA of $3.37M exceeded consensus EBITDA ($2.36M*) though definitions differ .
Management guided Q3 revenue to $12.0–$12.7M and reiterated FY2025 revenue of $48–$50M; Q3 is framed as a “tough comp” given a large order last year (“pig through a python”), with conservatism on big deals timing .
Catalysts: national sales coverage (12 territories), October launch of first concerted outbound marketing program, Q4 applicator redesign to expand capacity and reduce cost, and an in-process debt refinancing with term sheet selected, implying improved cost of capital .

What Went Well and What Went Wrong

What Went Well

Strong top-line and margin performance: revenue +42% YoY to $10.16M; gross margin expanded to 78.3% (vs 73.2% LY) .
Commercial execution: 116 UltraMIST systems sold (vs 72 LY; +61% YoY) and consumables revenue up 37% to $6.4M; consumables mix at ~63% and UltraMIST representing 99% of total revenue .
Management momentum and strategic posture: “If Q1 and Q2 were the quarters of ‘max disruption,’ Q3 is expected to be the quarter of ‘max construction’…aim to set us up for breakout performance in Q4 2025 and 2026.” — CEO Morgan Frank .

What Went Wrong

Operating expenses rose to $6.08M (vs $3.25M LY) with $1.13M stock-based comp and no repeat of a prior-year accrual release; operating income declined slightly YoY to $1.88M .
Net income fell YoY to $1.06M (vs $6.56M LY) due to non-recurring prior-year gains (notably $5.31M gain on extinguishment of debt) and smaller derivative liability mark-to-market .
Gross margin ticked down sequentially (78.3% vs 79.0% in Q1), driven by engineering costs to stand up a second source of applicator production, with benefits expected to phase in post-Q4 redesign .

Financial Results

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025 Actual	Q2 2025 Consensus*
Revenue ($USD Millions)	$7.162	$10.326	$9.342	$10.164	$10.140*
Gross Margin %	73.2%	77.9%	79.0%	78.3%	—
Operating Income ($USD Millions)	$1.992	$2.522	$0.986	$1.877	—
Net Income ($USD Millions)	$6.561	$(12.748)	$(5.676)	$1.055	—
EBITDA ($USD Millions)	$10.606	$(9.706)	$(3.550)	$3.228	$2.361*
Adjusted EBITDA ($USD Millions)	$1.457	$3.655	$2.326	$3.370	—

EPS comparison

EPS ($)	Q2 2024	Q1 2025	Q2 2025 Actual	Q2 2025 Consensus*
Diluted EPS	$1.77	$(0.66)	$0.01	$(0.09)*

KPI and mix

KPI	Q4 2024	Q1 2025	Q2 2025
UltraMIST systems sold (units)	135	98	116
Consumables revenue ($USD Millions)	$5.9	$5.8	$6.4
Consumables mix of revenue (%)	58%	62%	~63%
UltraMIST share of total revenue (%)	—	99%	99%
Gross margin (%)	77.9%	79.0%	78.3%

Notes: Company highlighted 12-month installed base growth to 1,261 systems and decreasing customer concentration (only one customer slightly >5%) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q2 2025	$10.0–$10.7M	N/A (quarter completed)	Delivered within guidance (actual $10.164M)
Revenue	Q3 2025	—	$12.0–$12.7M	New
Revenue	FY 2025	$48–$50M	$48–$50M reiterated	Maintained

Management framed Q3 conservatively (tough YoY comp due to a large prior-year order) and excluded potential “elephants” from guidance timing .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Sales force and national coverage	Built from 2 reps to 9 in 2024; moving to top-down consultative selling; targeted larger accounts	All 12 territories staffed; added national/key accounts manager; 13 reps; “max construction” in Q3	Improving
Marketing program	No formal outbound marketing program noted	First concerted outbound marketing campaign planned for October; focus on targeted segments and regional critical mass	Initiating
Applicator redesign/capacity	4-cavity mold started in January; commercial product expected Q4 2025	New manufacturable design in Q4; expected 350–400 bps margin lift on applicators; benefits phase in by early 2026	Positive margin outlook
Supply chain/tariffs	Domestic production; no material tariff impacts anticipated	Continued domestic sourcing; no material tariff/trade disruption expected	Stable
Debt refinancing	Exploring refi opportunities; aim to lower interest cost	Selected attractive term sheet; in-process closing; improved lender/terms expected	Improving cost of capital
Customer concentration/“elephant hunting”	Pipeline building; mix of small and larger orders; readiness to double system production on 60 days’ notice	Added key accounts “elephant hunter”; approved vendor list at a major hospital network; cautious forecasting of large deals	Building pipeline
IP monetization	IP assertion agreement with $2.5M option payment; potential back-end sharing	IP portfolio emphasized (~140 patents); reiteration of the assertion option structure and ongoing progress	Optionality maintained

Management Commentary

CEO tone: “Q3 is expected to be the quarter of ‘max construction’…aim to set us up for breakout performance in Q4 2025 and 2026.” .
Capacity and margin roadmap: “We suspect…we can pick up probably 350–400 basis points of additional margin on the applicators with the new design…should see that in early 2026.” — CEO/CFO .
Debt refinance: “We received several term sheets…chose one and are currently working to close it…significant improvement over what we have.” — CEO .
Commercial progress: “As of mid July…we have all 12 of our national sales territory staffed…added a full time national and key accounts manager…” — CEO .

Q&A Highlights

Margin trajectory: Applicator redesign expected to add 350–400 bps to applicator margins over time; blended cost basis means gradual flow-through, with benefits visible early 2026 .
Sales coverage and headcount: 13 reps in place; national/key accounts role established; potential incremental hires and emergence of regional management as scale grows .
Marketing and segment targeting: October campaign tailored by wound and customer type (mobile wound care, SNFs, nursing homes, hospitals, podiatry); drive regional critical mass and social proof .
Debt refinance: Attractive term sheet selected; closing process underway; details pending but lender/terms expected to be favorably viewed .
Large accounts: Added to approved vendor list at a major hospital chain; pipeline developing; variability in centralized vs distributed rollout models; cautious guidance on timing .

Estimates Context

Q2 2025 comparison to S&P Global consensus: Revenue $10.16M vs $10.14M* (beat); diluted EPS $0.01 vs -$0.09* (beat); EBITDA $3.23M vs $2.36M* (company EBITDA vs consensus definition)* .
Street setup for Q3 2025: Revenue ~$11.43M*, EPS ~$0.32*, EBITDA ~$3.85M*; Q4 2025 Street: Revenue ~$13.35M*, EPS ~$0.17*, EBITDA ~$4.13M* (limited coverage: two estimates) [GetEstimates Q3/Q4 2025]*.
Note: Company guidance for Q3 ($12.0–$12.7M) sits above Street revenue* and frames optionality from large deals conservatively .

Metric	Q2 2025 Actual	Q2 2025 Consensus*	Q3 2025 Consensus*
Revenue ($USD Millions)	$10.164	$10.140*	$11.43*
Diluted/Primary EPS ($)	$0.01	$(0.09)*	$0.32*
EBITDA ($USD Millions)	$3.228	$2.361*	$3.85*

Values marked with * retrieved from S&P Global. Consensus EBITDA may reflect differing definitions vs company-reported EBITDA/Adjusted EBITDA.

Key Takeaways for Investors

Q2 print was clean: revenue and EPS beats vs Street*, margin expansion YoY, and robust Adjusted EBITDA; the mix continues to favor consumables with high gross margins .
Near-term setup: Management’s Q3 revenue guide ($12.0–$12.7M) exceeds Street*, but acknowledges a tough comp; marketing program launch in October is a tactical driver into Q4 seasonality .
Medium-term margin lever: Applicator redesign and second-source capacity support sustained gross margin gains beginning Q4 2025, with full benefit phasing in early 2026 .
Sales motion scaling: Completed national coverage and added key accounts leadership; expect pipeline maturation and potential “elephants” as approved vendor pathways open .
Balance sheet/cost of capital: In-process debt refinancing could reduce interest burden and improve FCF conversion, with a press release likely to be a stock catalyst upon close .
Risk monitor: OpEx growth from stock comp and scaling commercial ops; non-GAAP vs GAAP volatility (derivative liabilities) may cause quarter-to-quarter noise .
Positioning: Record revenue cadence, durable consumables mix, expanding installed base, and marketing-led demand generation underpin the medium-term thesis.

Citations:
- Q2 2025 results, guidance, financials, margins, EBITDA, mix, balance sheet: **[1417663_0001628280-25-039115_ex-991snwvpressreleasex808.htm:2]** **[1417663_0001628280-25-039115_ex-991snwvpressreleasex808.htm:3]** **[1417663_0001628280-25-039115_ex-991snwvpressreleasex808.htm:4]** **[1417663_b285b30987af4441815149a580e14534_0]** **[1417663_b285b30987af4441815149a580e14534_1]** 
- Preliminary Q2 revenues (July): **[1417663_cf141331f0234a0281f1be9d4e659dd4_0]** 
- Q2 call commentary (sales, margins, debt, marketing, supply chain): **[1417663_2067086_1]** **[1417663_2067086_2]** **[1417663_2067086_3]** **[1417663_2067086_4]** **[1417663_2067086_5]** **[1417663_2067086_6]** **[1417663_2067086_7]**
- Q1 2025 press release and call (growth, margins, guidance, supply chain/tariffs): **[1417663_a4bb23e3f873474f972006827b6cbe8b_0]** **[1417663_a4bb23e3f873474f972006827b6cbe8b_1]** **[1417663_a4bb23e3f873474f972006827b6cbe8b_3]** **[1417663_SNWV_3427524_1]** **[1417663_SNWV_3427524_2]** **[1417663_SNWV_3427524_6]**
- Q4 2024 press release and call (records, mix, margin, operating leverage, strategy): **[1417663_eb63f4ca28ed4ee9a3155fe0d74e19f0_0]** **[1417663_eb63f4ca28ed4ee9a3155fe0d74e19f0_2]** **[1417663_eb63f4ca28ed4ee9a3155fe0d74e19f0_5]** **[1417663_SNWV_3421224_0]** **[1417663_SNWV_3421224_2]** **[1417663_SNWV_3421224_6]** **[1417663_SNWV_3421224_7]** **[1417663_SNWV_3421224_8]**

Values marked with * retrieved from S&P Global.

SANUWAVE Health, Inc. (SNWV)·Q2 2025 Earnings Summary