Q2 2026 SANUWAVE Health Inc Earnings Call Transcript
Key Points
- Applicator sales set a new all-time record in Q2 2026, with unit volumes up 27% year-over-year and revenues up 13% year-over-year, indicating strong recurring demand.
- The company's recurring applicator business, which is the core of its model, grew 13% year-over-year, partially offsetting weakness in system sales.
- CMS proposed a 14% increase in reimbursement for UltraMIST in the hospital outpatient setting for 2027, which could benefit a growing customer segment.
- The company finalized Voluntary Disclosure Agreements with several states, with settlements coming in below previously accrued amounts, leading to a net benefit in the quarter.
- Interest expense fell by approximately $1.4 million year-over-year following the September 2025 refinancing with JPMorgan, improving below-the-line results.
- The company remains in compliance with all covenants under its JPMorgan credit agreement and maintains a sound liquidity position with $9.4 million in cash.
- The company is seeing early success in expanding into new indications like burns, hospital-acquired pressure injuries, and long-term care, which are expected to be sticky, high-usage customers.
- The company received significant support from users and academics for its comment period on the CMS proposed rule, indicating strong product loyalty and advocacy.
- Adjusted EBITDA remained positive at $1.2 million for the quarter, despite the challenging environment.
- The company is optimistic about the long-term potential of UltraMIST, citing its role in preventing amputations and saving systemic costs, which supports its value proposition.
- Total revenue decreased 3% year-over-year to $9.7 million, driven by a 34% decline in system sales due to financial pressure in the industry.
- The market for used UltraMIST devices, created by customer closures, had a profound cannibalization effect on new system sales, with an estimated 40-60 used systems sold in the quarter.
- CMS proposed a reduction in reimbursement for UltraMIST under the Physician Fee Schedule, potentially dropping from $397 to $316 in 2027, with further cuts in 2028, creating significant uncertainty.
- The company withdrew its fiscal year 2026 revenue guidance due to market conditions and reimbursement uncertainty, and will not provide guidance until after the final CMS rule is announced.
- Operating loss for the quarter was $0.3 million, a swing of $1.7 million from operating income of $1.4 million in the prior year, due to lower gross margin and higher operating expenses.
- Gross margin declined 183 basis points year-over-year to 76.2%, driven by a mix shift toward lower-margin consumables and reseller pricing.
- Operating expenses increased by $1.3 million year-over-year, including higher personnel costs, legal fees, bad debt expense, and R&D investment, with about a third of the increase from non-cash stock-based compensation.
- The company faces ongoing financial pressure in its customer base, with many wound care providers going bankrupt or closing due to CMS changes in skin substitute reimbursement, impacting system sales.
- Net loss for the quarter was $0.7 million, compared to net income of $0.6 million in the prior year, reflecting the challenging operating environment.
- The company's active system count growth was modest, with only 29 new systems added in Q2, and the count may be understated due to the used market, indicating slower capital adoption.
Hello, welcome everyone joining today's Sanuwave earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. (Operator Instructions)
It is now my pleasure to turn the meeting over to Morgan Frank, Chairman and CEO of Sanuwave. Please go ahead.
Thank you, Leslie. Welcome to Sanuwave second quarter 2026 earnings call. Our Form 10-Q was filed with the SEC last night, along with our earnings release, and our updated presentation was made available on our website in the investor section. Please refer to that during the presentation. Joining on the call is Peter Sorensen, our CFO, and after the presentation, we will open the call to Q&A. Let me begin with the forward-looking statements and other disclosures. This call may contain forward-looking statements such as statements relating to future financial results, production expectations, plans for future business
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