Sign in

You're signed outSign in or to get full access.

SH

SANUWAVE Health, Inc. (SNWV)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered record revenue of $11.45M, up 22% y/y and +13% q/q, with gross margin 77.9%; operating income fell y/y on higher stock-based comp, while net income was boosted by non-cash derivative gains and a $5.0M patent sale .
  • Revenue modestly beat S&P Global consensus ($11.43M*) and EPS meaningfully exceeded consensus (Primary EPS $0.32* vs diluted EPS actual $0.46), aided by a $6.1M non-cash derivative gain and $5.0M IP payment .
  • Management guided Q4 2025 revenue to $13–$14M and narrowed full-year guidance to $44–$45M (reduced from $48–$50M in August and $44–$46M in October), citing near-term industry uncertainty followed by CMS final rule clarity on 97610 reimbursement .
  • Key catalyst: CMS finalized 2026 reimbursement for 97610 at levels materially unchanged vs 2025, removing uncertainty for providers and resellers and supporting pipeline momentum; management also refinanced debt to SOFR+350 with no prepayment penalties and alleviated going-concern doubt for 12 months .

What Went Well and What Went Wrong

What Went Well

  • Record system placements and consumables: 155 UltraMist systems sold (all-time quarterly record) and consumables revenue reached $6.8M (+26% y/y; +6% q/q), with UltraMist representing 99% of revenue .
  • Gross margin expansion y/y to 77.9% (from 75.5%), supported by pricing and cost actions; new four-cavity mold and process expected to lift applicator margins in 2H 2026 as scale builds .
  • Balance sheet and financing progress: Debt refinanced from ~19.5% to SOFR+350 (~7.63%), no prepayment penalties; company alleviated substantial doubt about going concern for at least 12 months .

What Went Wrong

  • Missed prior Q3 revenue guidance ($12.0–$12.7M) as industry uncertainty around skin substitutes/allografts reimbursement suppressed patient volumes and delayed purchases; actual revenue landed within October preliminary range ($11.4–$11.6M) .
  • Operating income declined y/y to $1.5M (from $2.0M), largely due to $1.4M in stock-based compensation introduced in 2025 and higher OpEx (headcount, marketing, legal, R&D) .
  • Gross margin slipped modestly q/q (78.3% → 77.9%) due to reseller wholesale pricing on systems, partially offset by higher applicator prices and cost reductions; Q3 headwinds included heightened audit concerns at providers .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$9.342 $10.164 $11.451
Gross Margin %79.0% 78.3% 77.9%
Operating Income ($USD Millions)$0.986 $1.877 $1.467
Net Income ($USD Millions)$(5.676) $1.055 $10.325
Adjusted EBITDA ($USD Millions)$2.326 $3.370 $3.462
Diluted EPS ($USD)$(0.66) $0.01 $0.46

Estimates vs Actuals

MetricQ3 2025 Consensus (S&P Global)# of EstimatesQ3 2025 ActualSurprise
Revenue ($USD Millions)$11.43*2*$11.451 +$0.02M
Primary EPS ($USD)$0.32*2*$0.46 (Diluted) +$0.14

Q4 2025 Outlook vs Consensus

MetricCompany GuidanceConsensus (S&P Global)# of Estimates
Revenue ($USD Millions)$13–$14 $13.35*2*
Primary EPS ($USD)N/A$0.17*2*

Values retrieved from S&P Global.*

Product Mix and KPIs

KPIQ1 2025Q2 2025Q3 2025
UltraMist Systems Sold (Units)98 116 155
UltraMist Consumables Revenue ($USD Millions)$5.8 $6.4 $6.8
UltraMist Revenue Mix (%)99% 99% 99%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 2025$12.0–$12.7 (Aug 8) Actual $11.451 (Nov 7) Miss
Revenue ($USD Millions)Q4 2025N/A$13–$14 (Nov 7) New
Full-Year Revenue ($USD Millions)FY 2025$48–$50 (Aug 8) $44–$46 (Oct 6 prelim) → $44–$45 (Nov 7) Lowered then narrowed
Gross Margin %FY 2025/2026Qualitative: stable with process improvements (Q2) Applicator margin lift expected as new process scales in back half of 2026 (Q3) Update
Reimbursement (CPT 97610)CY2026Proposed ~unchanged vs 2025Final ~unchanged, within $2–$4 of 2025 rates (Nov 3) Confirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
CMS/ReimbursementDomestic production; no tariff impact; building inventory; general confidence Preparing marketing; industry adoption thresholds CMS final rule: 97610 ~unchanged; uncertainty in skin subs froze demand; confidence improving Uncertainty → Clarity; constructive
Manufacturing/Applicators4-cavity mold on track for Q4 qualification New applicator design to add 350–400 bps margin; phased in 2026 Commercial production targeted Jan 2026 (possibly Dec), margin lift in 2H 2026 Execution progressing
Distribution/ResellersExpanding larger accounts; sales leadership changes National coverage; key account manager; elephant hunting Reseller model gaining inbound interest; deconfliction with direct; inventory turns target 8–12 weeks Building channel discipline
Debt/Balance SheetRefis under evaluation Attractive term sheets; refi in process Closed refi to SOFR+350; alleviated going-concern doubt Improved capital structure
Sales ForceHiring; territory build-out 12 territories; 13 reps; adding inside sales considered Headcount steady at 13; productivity highlights; potential measured adds Stable-to-expand
Hospitals/Key AccountsEarly engagementApproved vendor list progress; pipeline at large networks On approved vendor list for large hospital network; rental model being considered to bypass capex hurdles Growing traction
Customer ConcentrationNo outsized Q1 concentration One >5% in Q2 Two ~5% customers; one reseller slightly >5% Moderate concentration

Management Commentary

  • “Q3 was an all-time record revenue quarter… up 22%… and up 13% sequentially. We sold 155 Ultimate Systems… Applicator revenue was $6.8 million… Gross margins were healthy, 77.9%…” — Morgan Frank, CEO .
  • “We received a $5 million payment for the exercise of IP licensing… We refinanced our debt… to SOFR plus 350… Sanuwave has alleviated its substantial doubt to continuously concern for at least 12 months…” — Morgan Frank, CEO .
  • “Revenue… totaled $11.5 million… Gross margin… 77.9%… operating income $1.5 million… Net income… $10.3 million… Adjusted EBITDA… $3.5 million…” — Peter Sorensen, CFO .
  • “Final 2026 rates for 97610 are in line with the proposed rule… Changes for 2026 should be less than 1%… with many providers seeing a slight increase in reimbursement.” — Morgan Frank, CEO .

Q&A Highlights

  • Reseller channel and inventory: Management targets reseller inventory turns of 8–12 weeks to avoid channel stuffing; reseller share ~25% in Q3 versus ~36% in 2024, with deconfliction protocols to avoid channel overlap .
  • Sales capacity and productivity: Rep headcount 13 (12 territories + 2 key account managers); top reps achieved >$2M quarterly sales, with potential $4–$6M annual productivity in developed territories .
  • Hospitals and rental model: Added to approved vendor list of a large US hospital network; exploring rentals tied to usage minimums to bypass capital budget friction, highlighting consumables-driven economics .
  • Mobile wound care impact: 55% of UltraMist practitioners did not bill skin subs over the last four years; UltraMist may accelerate healing, potentially reducing skin sub usage; CMS changes could reshuffle providers and favor UltraMist adoption .
  • Market backdrop: Post-CMS rule clarity driving inbound interest from distributors and prospective salespeople; management views “chaos as a ladder” moment to gain share .

Estimates Context

  • Q3 2025: Revenue modest beat versus consensus ($11.45M actual vs $11.43M*), while EPS beat ($0.46 diluted vs $0.32* Primary EPS). EPS beat was influenced by a $6.1M non-cash derivative gain and a $5.0M patent sale booked in Q3, partially offsetting lower operating income y/y .
  • Q4 2025: Company guides $13–$14M, slightly above S&P Global consensus midpoint ($13.35M*). EPS consensus is $0.17*; company did not provide EPS guidance .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term stabilization: CMS 97610 reimbursement clarity materially de-risks 2026 and should unfreeze provider decision-making; expect pipeline conversion acceleration in Q4/Q1 .
  • Mix and margin: Reseller wholesale pricing can trim system gross margins, but pricing/cost discipline and upcoming applicator manufacturing improvements support margin resilience over time .
  • Quality of earnings: Q3 net income uplift was driven by non-cash derivative revaluation (+$6.1M) and a $5.0M patent payment; focus on Adjusted EBITDA trajectory ($3.46M) for core performance assessment .
  • Execution levers: Hospital network approvals and potential rentals expand addressable adoption; disciplined reseller management and deconfliction should improve channel throughput and visibility .
  • Guidance trajectory: FY25 revenue guidance lowered to $44–$45M after October prelims; Q4 guide implies another record quarter—watch for conversion of elevated sales funnel amid post-rule normalization .
  • Capital structure: Refinancing to SOFR+350 and elimination of going-concern doubt improve risk profile and flexibility to prepay from cash flow .
  • Trading setup: Modest top-line beat and strong EPS vs consensus (with notable non-GAAP factors) plus regulatory clarity are supportive; monitor Q4 revenue delivery vs guidance and early signs of margin lift from new applicator process .

Additional Source Documents

  • Q3 2025 Earnings 8-K and press release: full financial tables, guidance, non-GAAP reconciliations .
  • Q3 2025 Earnings Call Transcript: strategic commentary, financing updates, reseller strategy, hospital progress .
  • CMS 2026 Physician Fee Schedule update (97610): reimbursement materially unchanged vs 2025 .
  • Prior quarters for trend: Q2 2025 8-K and call; Q1 2025 8-K and call .