SANUWAVE Announces Q2 2023 Financial Results

About this update from Sanuwave Health, Inc.

EDEN PRAIRIE, MN , Aug. 11, 2023 (GLOBE NEWSWIRE) -- SANUWAVE Health, Inc. (the “Company” or “SANUWAVE”) (OTCQB: SNWV), a leading provider of next-generation FDA-approved wound care products, today announced its 2nd quarter 2023 results. For the three months ended June 30, 2023 : Revenue for the three months ended June 30, 2023 totaled $4.7 million , an increase of 20%, as compared to $3.9 million for the same period of 2022. This growth falls within the previously provided guidance range of 15-25% for Q2 2023. Revenue for the six months ended June 30, 2023 totaled $8.5 million , an increase of 19%, as compared to $7.1 million for the same period of 2022. 49 UltraMist® systems were sold in Q2 2023, up from 28 in Q1 of this year. UltraMist® consumables revenue increased 25% to $2.8 million , versus $2.2 million for the same quarter last year on a 14% increase in treatments. Revenue growth outpaced treatments due to higher average sale prices. UltraMist® consumables revenue was 59% of overall revenue for Q2, up from 56% in the prior year period. This was primarily driven by a larger installed base, improved pricing, and higher usage rates. Gross margin as a percentage of revenue increased to 74% for the three months ended June 30, 2023 , vs 72% for the same period last year, primarily driven by stronger pricing initiatives. For the three months ended June 30, 2023 , operating income totaled $0.9 million , which is an improvement of $4.0 million compared to the same period in 2022. This number benefited from a $1.25 million one-time reversal of accrued expenses and was partially offset by a $224 thousand non-cash stock compensation issuance. Net loss for the three months ended June 30, 2023 was $7.3 million , compared to a net income of $1.6 million for the same period in 2022. The increase in net loss for the three months ended June 30, 2023 was primarily due to continued non-cash losses on the fair value of derivative liabilities. The Company anticipates third quarter 2023 revenue growth will fall within a range of 15-25% as compared to the third quarter of 2022. Recent Highlights from Q2 2023: Appointment of Morgan Frank as Chief Executive Officer in May. Appointment of Andrew Walko as President and to head manufacturing in July. Signing of Distribution Agreement with Pacific Medical, Inc. bringing its sales force of over 215 representatives covering 7 western states to the UltraMist line of directed energy wound care products. In July 2023 , the Company issued Asset-Backed Secured Promissory Notes for which it received total proceeds of approximately $3.0 million . SANUWAVE showcased its innovative non-invasive, regenerative medicine solutions for the treatment of chronic wounds at the Leaders in Wound Healing Conference in New Orleans, Louisiana , the Symposium on Advanced Wound Care Spring in National Harbor , Maryland , and the EWMA 2023 Symposium in Milan, Italy . Leading plastic surgeon, Dr. Johnson presented on UltraMist at the Serena Foundation Leadership in Wound Conference . “We are pleased to have generated significant revenue growth in Q2 despite ongoing capacity constraints,” said CEO Morgan Frank . “It has been a challenging time at SANUWAVE , but as these results are beginning to show, our drive toward cost cutting, process optimization, and margin expansion is beginning to gain traction as we move toward our near-term goals of growth acceleration and operating profitability. In the coming quarters, we aim to continue and build upon this trend as we break the production and supply chain logjams that have prevented us from realizing the potential of the UltraMist system.” Guidance The Company continued to have constrained inventory supply during Q2 2023 and anticipates this will improve in Q3, but remain a significant factor. The Company anticipates Q3 2023 revenue growth of approximately 15% to 25% year over year. SANUWAVE its constrained inventory supply will improve materially and enable an acceleration of revenue growth in Q4 2023. As previously announced, a business update will occur via conference call on August 11, 2023 . Materials for the conference call at 8:30 a.m. EDT are included on the Company’s website, www.sanuwave.com/investors . Telephone access is available by dialing the following numbers: Conference ID: 13740603 Telephone access to the call will be available by dialing the following numbers: Participant Listening: 1-877-407-0784 or 1-201-689-8560 OR click the Call me™ link for instant telephone access to the event. https://callme.viavid.com/viavid/?callme=true&passcode=13732361&h=true&info=company&r=true&B=6 A replay will be made available through August 25, 2023 : Replay Dial-In : 1-844-512-2921 or 1-412-317-6671 Access ID: 13740603 About SANUWAVE SANUWAVE 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 help 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. 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 constraints, and plans for future business development activities and are thus prospective. 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 the regulatory approval and marketing of the Company’s product candidates and products, unproven pre-clinical and clinical development activities, regulatory oversight, the Company’s ability to manage its capital resource issues, 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. CONTACT: [email protected] PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) June 30, 2023 December 31, 2022 ASSETS Current Assets: Cash $ 332 $ 1,153 Restricted Cash 850 - Accounts receivable, net of allowance of $1,214 and $1,037 , respectively 2,818 4,029 Inventory 900 868 Prepaid expenses and other current assets 1,201 570 Total Current Assets 6,101 6,620 Property, equipment and other, net 1,050 856 Intangible assets, net 4,786 5,137 Goodwill 7,260 7,260 Total Non-current Assets 13,096 13,253 Total Assets $ 19,197 $ 19,873 LIABILITIES Current Liabilities: Senior secured debt, in default $ 16,123 $ 14,416 Convertible promissory notes payable 17,712 16,713 Convertible promissory notes payable, related parties 8,346 7,409 Bridge notes advance 1,476 - Accounts payable 4,859 4,400 Accrued expenses 6,351 8,512 Factoring liabilities 1,213 2,130 Warrant liability 14,410 1,416 Accrued interest 6,174 4,052 Accrued interest, related parties 1,438 788 Current portion of contract liabilities 67 60 Other 1,108 291 Total Current Liabilities 79,277 60,187 Non-current Liabilities Lease liabilities 515 438 Contract liabilities 215 230 Deferred tax liability 28 28 Total Non-currrent Liabilities 758 696 Total Liabilities $ 80,035 $ 60,883 Commitments and Contingencies (Footnote 13) STOCKHOLDERS' DEFICIT Preferred Stock, par value $0.001 , 5,000,000 shares authorized; 6,175 shares Series A, 293 shares Series B, 90 shares Series C and 8 shares Series D $ - $ - no shares issued and outstanding at June 30, 2023 and December 31, 2022 Common Stock, par value $0.001 , 2,500,000,000 shares authorized; 561,637,651 and 548,737,651 issued and outstanding at June 30, 2023 December 31, 2022 , respectively 562 549 Additional paid-in capital 153,264 152,750 Accumulated deficit (214,584 ) (194,242 ) Accumulated other comprehensive loss (80 ) (67 ) Total Stockholders' Deficit (60,838 ) (41,010 ) Total Liabilities and Stockholders' Deficit $ 19,197 $ 19,873 The accompanying notes to condensed consolidated financial statement are an integral part of these financial statements. SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (UNAUDITED) (In thousands, except share data) Three Months Ended June 30 , Six Months Ended June 30 , 2023 2022 2023 2022 Revenue $ 4,675 $ 3,882 $ 8,450 $ 7,077 Cost of Revenues 1,202 1,096 2,464 1,986 Gross Margin 3,473 2,786 5,986 5,091 Operating Expenses: General and administrative 1,238 3,781 3,997 5,986 Selling and marketing 978 1,672 2,390 3,387 Research and development 139 171 270 337 Depreciation and amortization 187 210 376 386 Total Operating Expenses 2,542 5,834 7,033 10,096 Operating Income/(Loss) 931 (3,048 ) (1,047 ) (5,005 ) Other Income (Expense): Interest expense (3,706 ) (2,903 ) (7,218 ) (6,040 ) Interest expense, related party (675 ) (56 ) (1,441 ) (112 ) Change in fair value of derivative liabilities (3,821 ) 7,861 (10,618 ) 11,343 Loss on issuance of debt - - - (3,434 ) Loss on extinguishment of debt - (211 ) - (211 ) Other (expense) income 9 1 (18 ) 2 Total Other (Expense)/Inocme (8,193 ) 4,692 (19,295 ) 1,548 Net (Loss)/Income before Income Taxes (7,262 ) 1,644 (20,342 ) (3,457 ) Provision for Income Taxes - - - - Net (Loss)/Income (7,262 ) 1,644 (20,342 ) (3,457 ) Other Comprehensive Loss Foreign currency translation adjustments (9 ) - (13 ) - Total Comprehensive (Loss)/Income $ (7,271 ) $ 1,644 $ (20,355 ) $ (3,457 ) (Loss) income per Share: Basic $ (0.01 ) $ - $ (0.04 ) $ (0.01 ) Diluted $ (0.01 ) $ - $ (0.04 ) $ (0.01 ) Weighted average shares outstanding Basic 582,328,811 538,560,051 579,178,811 532,589,825 Diluted 582,328,811 871,984,091 579,178,811 532,589,825 The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (UNAUDITED) (In thousands, except share data) Three Months Ended June 30, 2023 Common Stock Number of Accumulated Shares Other Issued and Additional Paid- Accumulated Comprehensive Outstanding Par Value in Capital Deficit Loss Total Balances as of March 31, 2023 555,637,651 $ 556 $ 153,046 $ (207,322 ) $ (71 ) $ (53,791 ) Shares issued for services 6,000,000 6 218 - 224 Net loss - - - - (7,262 ) - - (7,262 ) Foreign currency translation adjustment - - - - (9 ) (9 ) Balances as of June 30, 2023 561,637,651 $ 562 $ 153,264 $ (214,584 ) $ (80 ) $ (60,838 ) Three Months Ended June 30, 2022 Common Stock Number of Accumulated Shares Other Issued and Additional Paid- Accumulated Comprehensive Outstanding Par Value in Capital Deficit Loss Total Balances as of March 31, 2022 517,195,705 $ 517 $ 150,533 $ (189,050 ) $ (67 ) $ (38,067 ) Shares issued for services 12,097,500 12 876 - - 888 Net Income - - - - 1,644 - - 1,644 Foreign currency translation adjustment - - - - - Balances as of June 30, 2022 529,293,205 $ 529 $ 151,409 $ (187,406 ) $ (67 ) $ (35,535 ) The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (UNAUDITED) (In thousands, except share data) Six Months Ended June 30, 2023 Common Stock Number of Accumulated Shares Other Issued and Additional Paid- Accumulated Comprehensive Outstanding Par Value in Capital Deficit Loss Total Balances as of December 31, 2022 548,737,651 $ 549 $ 152,750 $ (194,242 ) $ (67 ) $ (41,010 ) Shares issued for services 12,900,000 13 514 - - 527 Net loss - - - (20,342 ) - (20,342 ) Foreign currency translation adjustment - - - - (13 ) (13 ) Balances as of June 30, 2023 561,637,651 $ 562 $ 153,264 $ (214,584 ) $ (80 ) $ (60,838 ) Six Months Ended June 30, 2022 Common Stock Number of Accumulated Shares Other Issued and Additional Paid- Accumulated Comprehensive Outstanding Par Value in Capital Deficit Loss Total Balances as of December 31, 2021 481,619,621 $ 482 $ 144,582 $ (183,949 ) $ (73 ) $ (38,958 ) Cashless warrant exercise 14,000,000 14 2,152 - - 2,166 Warrant exercise 909,091 1 99 - - 100 Shares issued in conjunction with Note Payable 20,666,993 20 3,700 - - 3,720 Shsares issued for services 12,097,500 12 876 - - 888 Net loss - - - (3,457 ) - (3,457 ) Foreign currency translation adjustment - - - - 6 6 Balances as of June 30, 2022 529,293,205 $ 529 $ 151,409 $ (187,406 ) $ (67 ) $ (35,535 ) The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. SANUWAVE HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Six Months Ended June 30 , 2023 2022 Cash Flows - Operating Acivities: Net loss $ (20,342 ) $ (3,457 ) Adjustments to reconcile net loss to net cash used by operating activities Depreciation and amortization 515 446 Bad debt expense 313 52 Shares issued for services 224 888 Change in fair value of derivative liabilities 10,618 (11,343 ) Loss on extinguishment of debt - 211 Loss on issuance of debt - 3,434 Amortization of debt issuance costs and original issue discount 3,955 1,304 Accrued interest 3,606 1,327 Changes in operating assets and liabilities Accounts receivable - trade 898 733 Inventory (31 ) 115 Prepaid expenses and other assets (336 ) (27 ) Accounts payable 718 (486 ) Accrued expenses (1,337 ) 1,710 Contract liabilties (16 ) (108 ) Net Cash Used in Operating Activities (1,215 ) (5,201 ) Cash Flows - Investing Activities Proceeds from sale of property and equipment - 948 Purchase of property and equipment (169 ) - Net Cash Flows (Used in)/Provided by Investing Activities (169 ) 948 Cash Flows - Financing Activities Proceeds from senior promissory notes - 2,940 Proceeds from convertible promissory notes payable 1,202 - Proceeds from bridge notes advance 1,476 2,130 Payments to factoring agent, net (1,167 ) 55 Proceeds from warrant exercises - 100 Payments of principal on finance leases (85 ) (121 ) Net Cash Flows Provided by Financing Activities 1,426 5,104 Effect of Exchange Rates on Cash (13 ) 14 Net Change in Cash and Restricted Cash During Period 29 865 Cash and Restricted Cash at Beginning of Period 1,153 619 Cash and Restricted Cash at End of Period $ 1,182 $ 1,484 Supplemental Information: Cash paid for interest $ 908 $ 2,045 Non-cash Investing and Financing Activities: Warrants issued in conjunction with senior secured promissory note payable and convertible promissory notes payable $ 570 $ 2,654 Common shares issued for advisory shares 302 - Embedded conversion feature on convertible promissory notess payable 157 Reclassification of warrant liability due to cashless warrant exercise - 2,167 Common shares issued in conjunction with senior secured promissory note payable - 3,720 The accompanying notes to condensed consolidated financial statements are an integral part of these financial statements. Source: SANUWAVE Health, Inc.

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