SANUWAVE Announces Record Quarterly Revenues: Q3 FY2024 Financial Results
Q3 2024 revenues were $9.4 million, up 89% from Q3 2023. This was an all-time quarterly record for the Company.
Q3 2024 gross margin was 75.5%, vs 71.5% in Q3 2023
GAAP Operating Income was $2.0 million
Company provides guidance for revenue growth of 40-50% for Q4 2024 versus Q4 2023
EDEN PRAIRIE, Minn., Nov. 08, 2024 (GLOBE NEWSWIRE) -- SANUWAVE Health, Inc. (the "Company" or "SANUWAVE") (OTCQB:SNWV), a leading provider of next-generation FDA-approved wound care products, is pleased to provide its financial results for the three months ended September 30, 2024.
Q3 2024 ended September 30, 2024
Revenue for the three months ended September 30, 2024, totaled $9.4 million, an increase of 89%, as compared to $5.0 million for the same period of 2023. This growth is greater than the previously provided guidance for a 65, 75% increase.
124 UltraMist® systems were sold in Q3 2024 up from 55 in Q3 2023 and from 72 in Q2 2024.
UltraMist® consumables revenue increased by 75% to $5.4 million (58% of revenues) in Q3 2024, versus $3.1 million for the same quarter last year. UltraMIST systems and consumables remained the primary revenue growth driver and continued to represent over 97% of SANUWAVE's overall revenues in Q3 2024.
Gross margin as a percentage of revenue amounted to 75.5% for the three months ended September 30, 2024, versus 71.5% for the same period last year.
For the three months ended September 30, 2024, operating income totaled $2.0 million, an increase of $2.5 million compared to Q3 2023 as a result of the Company's continued efforts to drive profitable growth and manage expenses.
Net loss for the third quarter of 2024 was $20.7 million, driven predominantly by the change in the fair value of derivative liabilities. This compares to a net loss of $23.7 million in the third quarter of 2023. Net loss year to date was $18.6 million versus a net loss of $44.0 million in the nine months ended September 30, 2023.
Adjusted EBITDA [1] for the three months ended September 30, 2024, was $2.1 million versus Adjusted EBITDA of $(0.3) million for the same period last year, an improvement of $2.4 million. Year to date Adjusted EBITDA was $3.5 million versus a loss of $1.8 million in the prior year period.
"The third quarter showed acceleration in revenue growth rate from the first half of the year with growth of 89% year on year (and 31% sequentially) leading the company to a growth rate of 68% for the first nine months of 2024 as compared to the same period in 2023," said Morgan Frank, CEO. "Obviously, we're very pleased with these results, especially to have achieved operating income and Adjusted EBITDA positivity again this quarter and, for the first time, became cash generative from operations even after cash interest expense. We have begun to gain traction with some larger customers and our sales funnel remains the most promising it has ever been. As we look to the fourth quarter, we will seek to build on this progress as we continue to hire additional sales and commercial staff. We expect to experience a bit of a ‘pigs through a python' scenario for us over the coming months and quarters, as large orders move the needle on revenues in significant and variable fashion, but we anticipate finishing 2024 strongly as a breakout year for SANUWAVE."
Financial Outlook
The Company forecasts Q4 2024 revenue of $9.7 to $10.5 million (40-50% increase from Q4 2023) and therefore for revenues for 2024 as a whole to be in excess of $32 million (an increase of 57% vs full year 2023). The Company forecasts Q4 gross margin as a percentage of revenue to remain in the mid-70s.
Subsequent to quarter end, the Company effected a 1-for-375 reverse stock split on October 18, 2024, completed its note and warrant exchange, and raised $10.3 million in a private placement, simplifying the Company's capital structure and leaving it with approximately 8.5 million shares outstanding. Details of this transaction can be found on the SANUWAVE website https://sanuwave.com/investors/press-release-details?newsId=OxzYFl0t620enXp1VyUG or in its filings with the SEC.
As previously announced, a business update will occur via conference call on November 8, 2024 at 8:30 a.m. EST. Materials for the conference call are included on the Company's website at http://www.sanuwave.com/investors
Telephone access to the call will be available by dialing the following numbers:
Toll Free: 1-800-267-6316Toll/International: 1-203-518-9783Conference ID: SANUWAVE
OR click the link for instant telephone access to the event.
https://viavid.webcasts.com/starthere.jsp?ei=1692398&tp_key=e3cff43c54
A replay will be made available through November 29, 2024:Toll-Free: 1-844-512-2921Toll/International: 1-412-317-6671Replay Access ID: 11157276
[1] This is a non-GAAP financial measure. Refer to "Non-GAAP Financial Measures" and the reconciliations in this release for further information.
About SANUWAVESANUWAVE 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 helps 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.
Non-GAAP Financial MeasuresThis press release includes certain financial measures that are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). These financial measures are considered "non-GAAP financial measures" and are intended to supplement, and should not be considered as superior to, or a replacement for, financial measures presented in accordance with U.S. GAAP.
The Company uses Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA to assess its operating performance. Adjusted EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization adjusted for the change in fair value of derivatives and any significant non-cash or infrequent charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss) as a measure of financial performance or any other performance measure derived in accordance with U.S. GAAP, and they should not be construed as an inference that the Company's future results will be unaffected by unusual or infrequent items. These non-GAAP financial measures are presented in a consistent manner for each period, unless otherwise disclosed. The Company uses these measures for the purpose of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to U.S. GAAP measures, allows them to see the Company's results through the eyes of management, and to better understand its historical and future financial performance. These non-GAAP financial measures are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other U.S. GAAP measures.
EBITDA and Adjusted EBITDA have their limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of the Company's results as reported under U.S. GAAP. Some of these limitations are that EBITDA and Adjusted EBITDA:
• Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.• Do not reflect all changes in our working capital needs.• Do not reflect interest expense, or the amount necessary to service our outstanding debt.
As presented in the U.S. GAAP to Non-GAAP Reconciliations section below, the Company's non-GAAP financial measures exclude the impact of certain charges that contribute to our net income (loss).
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 plans for future business development activities. 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 regulatory oversight, the Company's ability to manage its capital resources, 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.
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SELECTED FINANCIAL DATAFOR THE QUARTERS ENDED SEPTEMBER 30, 2024 AND 2023
(in thousands)
2024
2023
Revenue
$
9,360
$
4,953
Cost of Revenues
2,293
1,412
Gross Margin
7,067
3,541
Gross Margin %
75.5
%
71.5
%
Total operating expenses
5,114
4,072
Operating Income (Loss)
$
1,953
$
(531
)
Total other expense
(22,610
)
(23,169
)
Net Income (Loss)
$
(20,657
)
$
(23,700
)
NON-GAAP ADJUSTED EBITDA
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands)
2024
2023
2024
2023
Net Income/(Loss)
$
(20,657
)
$
(23,700
)
$
(18,624
)
$
(44,042
)
Non-GAAP Adjustments:
Interest expense
3,661
3,845
11,004
12,504
Depreciation and amortization
256
266
736
780
EBITDA
(16,740
)
(19,589
)
(6,884
)
(30,758
)
Non-GAAP Adjustments for Adjusted EBITDA:
Change in fair value of derivative liabilities
18,849
19,325
17,633
29,943
Other non-cash or non-recurring charges:
Gain on extinguishment of debt
-
-
(5,205
)
-
Severance agreement and legal settlement
-
-
585
-
Release of historical accrued expenses
-
-
(579
)
(1,250
)
Shares for services
-
-
-
224
License and option agreement
-
-
(2,500
)
-
Prepaid legal fees expensed from termination of Merger Agreement
-
-
457
-
Adjusted EBITDA
$
2,109
$
(264
)
$
3,507
$
(1,841
)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, 2024
December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalent
$
3,259
$
1,797
Accounts receivable, net of allowance of $1,056 and $1,237, respectively
2,836
3,314
Inventory
3,431
2,951
Prepaid expenses and other current assets
378
1,722
Total Current Assets
9,904
9,784
Non-Current Assets:
Property, equipment and other, net
774
938
Intangible assets, net
3,906
4,434
Goodwill
7,260
7,260
Total Non-current Assets
11,940
12,632
Total Assets
$
21,844
$
22,416
LIABILITIES
Current Liabilities:
Senior secured debt, in default
$
24,426
$
18,278
Convertible promissory notes payable
4,817
5,404
Convertible promissory notes payable, related parties
2,838
1,705
Asset-backed secured promissory notes payable
—
3,117
Asset-backed secured promissory notes, related parties
—
1,458
Promissory note payable, related party
500
-
Accounts payable
4,137
5,705
Accrued expenses
5,241
5,999
Factoring liabilities
1,938
1,490
Warrant liability
35,509
14,447
Accrued interest
643
5,444
Accrued interest, related parties
952
669
Current portion of contract liabilities
137
92
Other
375
