SANUWAVE Health Inc

Sanuwave Health is positioned to capitalize on a changing landscape in the wound care space following recent CMS guidance updates. The company offers a proven product, the 'UltraMist' non-contact ultrasound device, which aids in the treatment of open wounds. With the recent clarity on reimbursement rates and a successful debt refinancing, Sanuwave is set to benefit from the limitations placed on traditional skin graft procedures that have historically been associated with Medicare fraud. The CEO's openness to potential acquisition adds an additional layer of opportunity for investors.

Despite facing substantial losses due to disruptions in the wound-care market and a guidance cut, I remain optimistic about Sanuwave's Ultramist system. The system is evidence-based and well-positioned for mid-term expansion, which should yield attractive economics for its machine and consumables model. The recent challenges have created a buying opportunity, leading us to add to our position in late June.

Sanuwave sells the UltraMist device, which operates on a razor and blades business model for treating diabetic foot ulcers and other wounds. Despite a slight growth hiccup in Q3 due to building out their sales organization, the company is expected to resume growth. There are few profitable medtech companies growing faster than 30%, and Sanuwave's CEO, who also runs a healthcare hedge fund, ensures practical capital allocation. The company successfully refinanced its debt, saving several million dollars annually, and trades at around 18x forward EBIT, which is reasonable for a high-quality business with significant growth potential.

Sanuwave Health, Inc. (SNWV) continues on with the theme of rapid growth and an imminent Nasdaq uplisting. For the first half of the year, Sanuwave has grown revenue 51%. Even more impressive, this growth was achieved without a national sales presence. Following the first half of the year, the company now has a national sales force along with a key account manager focused on pursuing large accounts that have several hundred locations across the country. Management reaffirmed guidance for the year, which appears to be on the conservative side as it doesn’t include the potential for any new large accounts. Additionally, management indicated that they have been pursuing options to refinance their debt and have received several options with very attractive terms, removing the fear of a potential equity offering.