SANUWAVE Health, Inc. Q4 FY2025 earnings call

CEO Morgan Frank started by noting Q4 was all-time record for Sanyo Wave. Discussed the impact of CMS reimbursement changes on the wound care space, including reduction in reimbursement price for skin substitutes, new policy on billing only what's applied, and aggressive audits on practitioners. Mentioned internal discussions about the industry upheaval and green shoots emerging, with some customers pulling back while others expanding. Engaged with resellers with deep wound care expertise, strong customer relationships as a strategy to expand in the market. CFO Peter Sorensen talked about strong Q4 performance with revenue reaching new all-time quarterly high, growth driven by Ultramis demand. Gross margins expanded year-over-year, but impacted by PACE inventory write-off. Addressed restatement in Form 10-K related to sales tax liabilities and revenue allocation error. Talked about operating expenses increase due to various factors and net income improvement driven by change in fair value derivative liabilities and lower interest expense.

Q4 2025 revenues were $13.4 million, up 30% vs same quarter 2024. Adjusted EBITDA was $4.8 million, up from $3.7 million in prior year, comprising 36% of revenues. Yearly revenues were $44.1 million, up 35% vs 2024. Full year adjusted EBITDA rose to 13.6 million, up 89% vs 2024. Sold 624 Ultramis systems in 2025 vs 374 in 2024. Q4 sold 255 systems, highest in company history. Sunsetted Dermapace and Profile product lines in Q4, which led to charges in Q4. Q4 32% of revenues came through outside resellers and distributors, up from 26% in prior quarter but below 2024 full-year average of 36%. Active system count at end of Q4 was 1,292, up 56 systems or about 5% from end of Q3. Took 168 systems out of count as discontinued during Q4.

Guiding to $9.6 to $10.3 million in Q1 revenues, up 3 to 10% from prior year. Providing preliminary 2026 estimate range of 16 to 25% revenue growth vs 2024. Still early to break down full year growth by quarter, but back half of 2026 looks promising.

CMS reimbursement changes have put pressure on the wound care space, including reduction in reimbursement price, new policy on billing, and aggressive audits. This has led to impact on customer count and patient count within customers, affecting growth rate. Also, potential inventory and channel issues with resellers and distributors.

Q: Carl Burns asked about selling cycle for new inbound interests and adjusted EBITDA guidance for 2026.

A: Morgan Frank said selling cycle has stretched with industry shock, smaller practitioners buy more rapidly, larger chains take longer, and they haven't provided adjusted EBITDA guidance for 2026 yet but mentioned incremental revenue likely drops 50% to EBITDA line.

Q: Kyle Bowser asked about growth rate balance of year after Q1 and commercial organization headcount.

A: Morgan Frank said rest of year looks better but early to break down by quarter, and internal Salesforce is around 14 or 15, with more resellers working and larger reseller groups.

Q: Ian Castle asked about update on new manufacturing line for applicators.

A: Morgan Frank said existing manufacturer reduced prices starting Q1, and there were delays in qualifying mold for new line but making progress.

Q: Albert Hanser asked about key industry events.

A: Morgan Frank mentioned SAWC kicking off in Charlotte April 9th.

Q: Ethan Starr asked about discontinued systems and consumables usage.

A: Morgan Frank said many discontinued systems due to financial distress of customers, and consumables usage depends on customer type like mobile wound providers ramp up immediately, podiatry offices slower, etc.