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    SNWV
    Earnings call· Jun 2026(Q2 FY26)

    SANUWAVE Health Q2 FY26 earnings call SNWV

    Aug 7, 2026 Source

    Executive summary

    SANUWAVE Health Q2 FY26 — Strong Consumables Growth Amidst Reimbursement Uncertainty and Used System Cannibalization

    SANUWAVE Health reported record-setting growth in its recurring applicator business, reflecting robust demand for its Ultramist product. However, overall revenue declined due to significant cannibalization from used system sales and a challenging market for capital equipment. The company withdrew its FY26 revenue guidance amidst uncertainty surrounding proposed CMS reimbursement changes for Ultramist, which could negatively impact future pricing, though it plans to actively participate in the comment period.

    Highlights

    4

    • Applicator unit volumes set a new all-time record, up 27% year-on-year.

    • Applicator revenues grew 13% year-over-year, surpassing the previous record.

    • CMS proposed a 14% increase in Ultramist reimbursement for 2027 in the hospital outpatient setting.

    • Final sales tax settlements came in below previously accrued amounts, resulting in a $0.9 million favorable swing.

    Concerns

    6

    • Total revenue decreased 3% year-over-year to $9.7 million.

    • Ultramist system revenue declined 34% year-over-year to $2.3 million due to cannibalization from used systems.

    • Operating results swung to a $0.3 million loss from a $1.4 million income in the prior year.

    • Net loss for the quarter was $0.7 million, compared to net income of $0.6 million in the prior year.

    • FY26 revenue guidance was withdrawn due to market conditions and CMS reimbursement uncertainty.

    • CMS proposed rule suggests Ultramist reimbursement could drop from $397 to $316 in 2027 for the physician fee schedule.

    Guidance & targets

    1
    CategoryTargetConfidence
    Fiscal Year 2026 Revenue
    Guidance withdrawn
    high materiality
    Low

    Operational metrics

    20
    Applicator unit volumes
    13%sequentially from Q1
    Q2 FY26

    Applicator unit volumes set a new all-time record for both unit volumes up 13% sequentially from our previous record in Q1 and 27% year-on-year.

    Applicator revenues
    8%sequentially from Q1
    Q2 FY26

    Applicator revenues of 8% sequentially from Q1 and surpassing the previous record from Q3 2025. These were 13% year over year.

    Used systems sales impact
    40 to 60
    Q2 FY26

    Our best guess is that used systems accounted for 40 to 60 system sales in the quarter.

    Active systems count
    1,411up 29 from 1,382 at Q1 end
    Q2 FY26

    Our count for active systems at the end of Q2 was 1,411, up 29 from the 1,382 at the end of Q1.

    Total revenue
    $9.7 milliondecrease of 3% versus $10.1 million in prior year quarter
    Q2 FY26

    Revenue for the second quarter came in at $9.7 million, a decrease of 3% versus 10.1 million in the prior year quarter.

    Ultramist system revenue
    $2.3 milliondeclined approximately 34% from $3.4 million
    Q2 FY26

    Lower Ultraman system revenue, which declined approximately 34% to $2.3 million from $3.4 million, reflecting weaker capital sales amid financial pressure across the industry and increased availability of new systems in the market.

    Consumables, parts and accessories revenue
    $7.3 millionincreased approximately 12% from $6.5 million
    Q2 FY26

    On a reported basis, our consumables, parts and accessories line, which is primarily applicators, but also includes parts and other miscellaneous items, increased approximately 12% to $7.3 million from $6.5 million.

    Gross margin percentage
    76.2%decrease of approximately 183 basis points year-over-year from 78.1%
    Q2 FY26

    Growth margin as a percentage of revenue for the three months ended June 30, 2026 with 76.2%, a decrease of approximately 183 basis points year-over-year from 78.1%.

    Operating loss
    $0.3 millionswing of approximately $1.7 million compared to operating income of $1.4 million in prior year
    Q2 FY26

    Operating loss for three months ended June 30th, 2026, totaled $0.3 million, a swing of approximately 1.7 million compared to operating income of $1.4 million in the same period last year.

    Operating expenses (OPX)
    $7.7 millionincrease of approximately $1.3 million from $6.4 million in prior year quarter
    Q2 FY26

    OPX for the quarter were $7.7 million compared to $6.4 million in the prior year quarter, an increase of approximately $1.3 million.

    Non-cash stock-based compensation
    $0.4 million
    Q2 FY26

    Approximately 0.4 of that $1.3 million increase, roughly a third, was non-cash stock-based compensation spread across G&A, sales and marketing, and R&D.

    Sales tax benefit
    $0.9 millionfavorable year-over-year swing
    Q2 FY26

    We were partially offset by an approximately $0.9 million favorable year-over-year swing in state and local sales tax, so the prior year sales tax charge gave way to a net benefit this quarter from the resolution of our VDAs at amounts below previously accrued balances.

    Net loss
    $0.7 millioncompared to net income of $0.6 million for the same period in 2025
    Q2 FY26

    Net loss for the three months ended June 30, 2026, was $0.7 million, compared to net income of $0.6 million for the same period in 2025.

    Interest expense
    $1.4 millionfell approximately year-over-year
    Q2 FY26

    Interest expense fell approximately $1.4 million year-over-year following our September 2025 refinancing with J.P. Morgan.

    EBITDA
    $0.1 million
    Q2 FY26

    EBITDA for the three months ended June 30th, 2026 was positive $0.1 million.

    Adjusted EBITDA
    $1.2 millioncompared to $3.2 million in the same period last year
    Q2 FY26

    Adjusted EBITDA was positive $1.2 million compared to $3.2 million in the same period last year.

    Cash and cash equivalents
    $9.4 million
    as of June 30, 2026

    Cash and cash equivalents totaled $9.4 million as of June 30th, 2026.

    Scheduled principal payments on term loan
    $2.9 million
    first half of FY26

    During the first half of the year, we made $2.9 million in scheduled principal payments on our term loan.

    Proposed Ultramist reimbursement (physician fee schedule)
    $316drop from $397 average
    2027

    If, and I really want to emphasize that this is still a proposed and not final rule. This rule were to go into effect, our read is that reimbursement for Ultramist would drop from its present $397 average to approximately $316 in 2027, with further reductions to follow in 2028.

    Proposed Ultramist reimbursement (hospital outpatient)
    14%increase
    2027

    We did get some positive news from the calendar year 2027 Hospital Outpatient Prospective Payment System proposed rule, released July 2nd, which proposes to increase reimbursement for Ultramist by 14% for 2027 when used in the hospital outpatient setting.

    Industry KPIs

    9
    MetricValueDetails
    System utilization—
    Pricing realized price$316USD
    Procedure volume growth27%%
    FCF conversion leverage guidanceIn compliance
    Installed base system placements1,411systems
    Segment franchise organic growth13%%
    Consumables recurring revenue mix$7.3 millionUSD
    Sales force commercial capacity build$0.2 millionUSD
    Indicated addressable patient population130,000amputations

    Risks & headwinds

    3
    Cannibalization from used Ultramist systemsQ2 FY26, ongoing

    Estimated 40-60 system sales impact in Q2 FY26, contributing to a 34% YoY decline in system revenue.

    Mitigation: Focus on recurring applicator business and expansion into new indications/settings.

    Proposed CMS reimbursement reduction for Ultramist (physician fee schedule)Starting 2027

    Potential drop from $397 average to approximately $316 in 2027 for code 97.610, with further reductions in 2028.

    Mitigation: Active participation in the CMS comment period (ends Sept 14th), seeking meetings with CMS, and presenting a strong case based on product value and systemic benefits.

    Difficult market for wound care providers due to prior CMS changesLast 12 months, ongoing

    Pricing drop for skin substitutes to $127 per square centimeter (a 95% haircut from a $14 billion space), leading to many practitioner bankruptcies or closures.

    Mitigation: Focus on consolidation in the space, leveraging Ultramist as an alternative, and expanding into new, sticky customer segments.

    What to watch in Q3 FY26

    3

    CMS final rule on Ultramist reimbursement

    First week of November 2026 (Q4 FY26)
    CurrentProposed drop from $397 to $316 for physician fee schedule; proposed 14% increase for hospital outpatient setting.
    TargetFinal reimbursement rates for 2027.

    Why it matters

    The final reimbursement rates will directly impact future revenue and profitability for Ultramist, a core product.

    the final rule will likely be announced in or around the first week of November.

    Q&A highlights

    3

    Can you provide a breakdown of your customer base between for-profit mobile wound care and hospital/non-profit settings?

    Morgan Frank explained that the customer models are often hybrid, making precise delineation difficult. Historically, mobile wound care has been a larger use case for Ultramist, but new groups like Keologics and hospital customers are slower to ramp up but offer more stable, long-term momentum.

    “One of the reasons that we have been sort of hesitant to provide that number with any real clarity. Is. is that it's sort of a fuzzier topic than one might expect at first pass. Like we just, we have a lot of customers whose models models are hybrid.”

    asked by Sean Westrope · answered by Morgan Frank

    2 min read6 chapters

    Detailed Narrative

    01

    Applicator Business Strength

    The company reported strong performance in its recurring applicator business, setting new all-time records for both unit volumes and revenues. Applicator unit volumes increased 13% sequentially from Q1 and 27% year-on-year, while applicator revenues grew 8% sequentially from Q1 and 13% year-over-year. This performance is seen as a positive indicator of customer confidence in the Ultramist product, especially given the difficult market conditions in wound care.

    02

    System Sales Headwinds

    Q2 saw a significant divergence from plan in system sales, which declined 34% year-over-year to $2.3 million. This was primarily attributed to an 'unprecedented🌐 market for used Ultramis devices,' which created profound cannibalization effects. Management estimates that used systems accounted for 40 to 60 system sales in the quarter, impacting new system placements. The active system count at the end of Q2 was 1,411, up 29 from Q1.

    03

    CMS Reimbursement Uncertainty

    The company highlighted significant uncertainty regarding CMS reimbursement. While a proposed rule for the Calendar Year 2027 Hospital Outpatient Prospective Payment System suggests a 14% increase for Ultramist in hospital outpatient settings, another proposed rule for the physician fee schedule indicates a potential drop in reimbursement for Ultramist (code 97.610) from $397 to approximately $316 in 2027, with further reductions in 2028. This follows previous drastic cuts to skin substitute reimbursement, which led to many wound care provider closures.

    04

    Advocacy for Ultramist Reimbursement

    SANUWAVE Health, along with Ultramist users, plans to actively participate in the CMS comment period, which runs through September 14th. The goal is to ensure that the data driving reimbursement decisions is accurate and complete, reflecting full practitioner costs and the systemic benefits of Ultramist treatment, particularly its role in preventing amputations and providing significant savings to the healthcare system. The final rule is expected around the first week of November.

    05

    Strategic Expansion and Diversification

    The company continues its longer-term push into new indications and care settings, including burn, hospital-acquired pressure injury, post-acute, hospital inpatient, hospital outpatient, pediatric, and long-term care facilities. This strategy aims to expand the product's reach and secure sticky, long-term customers with high usage rates, with groundwork laid over the past 9-12 months starting to yield results.

    06

    Financial Performance and Cost Management

    Overall revenue decreased 3% year-over-year to $9.7 million. The company reported an operating loss of $0.3 million and a net loss of $0.7 million, primarily due to lower gross margin from the shift to consumables and higher operating expenses. Operating expenses increased by $1.3 million, driven by investments in headcount, R&D, and commercial capabilities, partially offset by a $0.9 million favorable swing from sales tax resolutions. Adjusted EBITDA was $1.2 million, down from $3.2 million in the prior year.

    AI-generated summary of the company’s earnings call. Not investment advice.