Executive Summary / Key Takeaways

• Transformative Financial Health: SANUWAVE has significantly de-risked its balance sheet through a comprehensive debt refinancing, reducing its principal debt from approximately $27.5 million to $24 million and lowering interest rates from 19.5% to about 7.63%. This, coupled with a $5 million patent sale, has alleviated prior "going concern" doubts.
• Record-Breaking Revenue Momentum: The company achieved all-time record revenues in Q3 2025 of $11.5 million, marking a 22% year-over-year increase and 13% sequential growth. This strong performance is driven by increasing UltraMIST system placements and robust consumable sales, with full-year 2025 revenue guidance set at $44 million to $45 million, representing 35-39% growth over 2024.
• Differentiated Technology Driving Outcomes: SANUWAVE's UltraMIST system, utilizing non-thermal, low-frequency ultrasound, offers clinically proven benefits such as reducing wound area and pain, controlling inflammation, increasing perfusion, and breaking down biofilm. This non-contact therapy provides superior outcomes at a potentially lower cost than traditional wound care, positioning it favorably in a market increasingly demanding evidence-based medicine.
• Strategic Market Opportunity: Recent CMS reimbursement changes for skin substitutes have unsettled the wound care market, but UltraMIST's reimbursement (CPT code 97610) remains stable. This shift creates a "profound opportunity" for SANUWAVE to gain market share as providers seek alternative, effective, and financially attractive wound care solutions.
• Operational and Sales Force Evolution: Under new leadership, SANUWAVE has rebuilt its sales force, expanded national coverage, and is implementing a more consultative sales strategy focused on larger accounts and long-term partnerships. Investments in manufacturing capacity and a new applicator design are set to further enhance margins and meet anticipated demand.

A Regenerative Resurgence: SANUWAVE's Strategic Ascent in Wound Care

SANUWAVE Health, Inc. (NASDAQ:SNWV), founded in 2004, is carving out a significant niche in the regenerative medicine landscape. The company specializes in noninvasive ultrasound and shockwave technologies designed to promote tissue repair and regeneration, particularly for acute and chronic wounds, musculoskeletal, and vascular structures. Its flagship product, the UltraMIST system, delivers low-frequency, non-thermal ultrasound via a fluid mist, offering a non-contact and pain-free approach to wound healing. This core technology, alongside its PACE systems for various applications, forms the bedrock of SANUWAVE's strategy to address a substantial and growing wound care market, estimated to be worth $45 billion in the United States alone.

The company's journey has been marked by a significant transformation, moving from historical financial challenges, including recurring net losses and substantial debt, to a period of revitalized growth and financial stability. A pivotal moment, internally dubbed "shocking off Friday" in October 2024, saw a comprehensive restructuring of its capital structure. This included a reverse stock split, the exchange of convertible notes and warrants, and a $10.3 million PIPE transaction, culminating in an uplisting to NASDAQ in March 2025. This strategic overhaul has positioned SANUWAVE to be valued for its business quality rather than the complexities of its past capital structure.

Technological Edge: UltraMIST's Quantifiable Healing Power

At the heart of SANUWAVE's investment thesis lies its differentiated UltraMIST technology. This system utilizes low-frequency ultrasound delivered through a non-contact saline mist to the wound site. The tangible benefits of UltraMIST are clinically validated and offer compelling advantages over traditional wound care. Studies have shown that UltraMIST therapy:

• Reduces wound area and pain: Patients have reported an 80% reduction in VAS pain score over four weeks compared to a 20% reduction with standard care.
• Accelerates wound closure: Wound closure increased to 41% with UltraMIST versus 14.3% with standard care.
• Controls inflammation and reduces bacteria: The acoustic wave therapy actively controls inflammation and reduces bacteria in the wound bed, including breaking down biofilm, which is crucial for preventing infection.
• Increases perfusion and promotes angiogenesis: It enhances blood flow through vasodilation and stimulates the formation of new blood vessels, delivering essential oxygen and nutrients to the tissue for healing.

This non-invasive, non-thermal approach is applicable across a wide range of acute and chronic wounds, including venous leg ulcers, diabetic foot ulcers, deep tissue pressure injuries, and surgical wounds. The ability of UltraMIST to "jump-start the cellular healing process by eliminating barriers to healing" translates directly into superior patient outcomes, reduced complications, and significantly lower costs for hospitals and insurers. Management emphasizes that this therapy can transform "the most expensive patients into the most profitable patients" by altering the financial risk/reward for healthcare providers.

SANUWAVE is not resting on its laurels. The company is actively engaged in R&D, including the qualification of a new four-cavity mold for applicators and a more manufacturable applicator process. This initiative, expected to commence commercial production by January 2026, aims to ensure ample capacity and reduce consumables production costs, ultimately driving an additional 350-400 basis points of applicator margin as it scales in the latter half of 2026. This focus on continuous improvement in both efficacy and cost efficiency strengthens SANUWAVE's competitive moat and enhances its long-term growth strategy.

Competitive Dynamics and Strategic Positioning

SANUWAVE operates within a competitive medical device industry, vying with larger, diversified players like Smith & Nephew (SNN), Zimmer Biomet (ZBH), Stryker Corporation (SYK), and Johnson & Johnson (JNJ). These established competitors possess extensive global distribution networks and broader product portfolios. However, SANUWAVE differentiates itself through its specialized focus on noninvasive shockwave and ultrasound technology, offering a targeted approach to regenerative medicine.

While larger rivals may benefit from greater scale and integration with advanced surgical tools, SANUWAVE's UltraMIST system offers a unique value proposition in its non-contact, pain-free application and clinically proven ability to accelerate healing and reduce recurrence rates. For instance, a past study on split-thickness donor sites showed UltraMIST reducing recurrence rates at six weeks to 8% compared to 45% under standard care, a significant outcome despite the study being underpowered. This highlights the potential for superior patient outcomes in specific applications.

The company's strategic response to this competitive landscape involves a multi-pronged approach. SANUWAVE is actively expanding its direct sales force, which now includes 12 national territories and two full-time national key account managers, a significant increase from just two representatives at the beginning of 2024. This team is focused on a "deeper, more consultative sale" to build long-term partnerships with larger customers, including hospital networks. The company has successfully been added to the approved vendor list of one of the largest hospital networks in the U.S., opening access to approximately 150 hospitals and 2,200 facilities.

Furthermore, SANUWAVE is strategically engaging with resellers and distributors, with sales through these channels increasing to 25% in Q3 2025. The company employs a "deconflicting structure" to ensure direct sales and distributor channels do not overlap, optimizing market penetration. This blended approach allows SANUWAVE to efficiently target both large enterprise accounts and fragmented smaller customers, such as nursing homes and mobile wound care providers. The company is also exploring a rental model for its systems to overcome capital approval hurdles in hospitals, which could significantly accelerate adoption in high-use environments.

Financial Performance and Liquidity: A Turnaround Story

SANUWAVE's financial trajectory reflects a compelling turnaround. For the three months ended September 30, 2025, the company reported record revenues of $11.5 million, a 22% increase over the $9.4 million in Q3 2024. Year-to-date, revenue for the nine months ended September 30, 2025, reached $30.96 million, up 39% from $22.31 million in the same period of 2024. This growth was primarily driven by a 25% increase in UltraMIST system sales and a 23% increase in disposable applicator sales in Q3 2025 compared to the prior year.

Gross margins have also shown significant improvement, reaching 77.9% in Q3 2025, up from 75.5% in Q3 2024. This expansion is attributed to improved pricing strategies for UltraMIST systems and applicators, as well as reduced system production costs. While operating income for Q3 2025 was $1.5 million, a slight decrease from $2.0 million in Q3 2024 due to increased non-cash stock-based compensation, the nine-month operating income improved by $1.4 million to $4.3 million, underscoring enhanced operational efficiency.

A major highlight of Q3 2025 was the significant improvement in net income, which swung to a positive $10.3 million from a net loss of $20.7 million in Q3 2024. This dramatic shift was largely driven by a $6.1 million non-cash gain from the change in fair value of derivative liabilities and a $5.2 million gain from a patent purchase agreement. Adjusted EBITDA for Q3 2025 was $3.5 million, an improvement from $2.1 million in the prior year.

Liquidity has also seen a substantial boost. SANUWAVE successfully refinanced its outstanding debt in Q3 2025, securing a new credit agreement with JPMorgan Chase Bank, N.A. (JPM). This refinancing reduced the company's principal debt obligations from approximately $27.5 million (closer to $29 million with closing costs) to $24 million and lowered the interest rate from 19.5% to SOFR plus 350 basis points, currently around 7.63%. The new facility, comprising a $23 million secured term loan and a $5 million secured revolving credit facility, contains no prepayment penalties, enabling the company to pay down debt from cash flow.

As of September 30, 2025, cash and cash equivalents stood at $9.6 million, and the company was in compliance with all debt covenants. Management has confidently stated that the "substantial doubt to continuous concern" has been alleviated for at least the next 12 months.

Outlook and Guidance: Capitalizing on Market Shifts

SANUWAVE's management is optimistic about its future trajectory, providing robust guidance for the upcoming periods. For Q4 2025, the company forecasts revenues between $13 million and $14 million, which would represent another all-time high and a 26% to 36% year-over-year increase. This positive outlook is underpinned by a significant shift in the wound care market. Recent CMS reimbursement changes for skin substitutes, finalized on October 31, 2025, have created considerable uncertainty for many providers. However, UltraMIST's reimbursement (CPT code 97610) remains essentially unchanged for 2026.

Morgan Frank, CEO and Chairman, noted that while the market was "unsettled" in Q3 with practitioners adopting a "wait-and-see attitude," the newfound certainty is expected to lead to rapid adaptation and new opportunities. He described a "flurry of calls" from distributors and partners, indicating the market is "starting to crack back open again." This environment, where the "attractiveness of UltraMIST seems to have increased a great deal," is seen as a "profound opportunity" for SANUWAVE to improve its marketing and sales positions.

For the full year 2025, SANUWAVE has guided to revenues of $44 million to $45 million, representing a 35-39% increase over 2024. This guidance reflects a strategic focus on expanding market penetration, which currently stands at an estimated 1%. The company is building up its inventory of UltraMIST systems, manufacturing at a pace of about 25 units per week with the capability to double that on 60 days' notice, ensuring readiness for large orders.

Risks and Challenges

Despite the positive momentum, SANUWAVE faces several risks. The company has identified material weaknesses in its internal controls over key accounting and IT processes, as well as a lack of expertise in applying U.S. GAAP to complex transactions. Management is actively addressing these issues through enhanced controls, new hires, and software deployment, but remediation will require significant time and resources.

Furthermore, SANUWAVE relies on single suppliers for most of its product component materials, posing a risk of production disruption. The company also completed an IRC Section 382 analysis in Q2 2025, which indicated that $44.2 million of its Net Operating Loss (NOL) tax attributes would expire before becoming available due to ownership shifts. While the recent CMS changes present an opportunity, any future shifts in reimbursement policies could still impact the broader wound care market and indirectly affect SANUWAVE's operating environment. The company is also cautious about inventory management with stocking distributors to avoid overstocking the channel.

Conclusion

SANUWAVE Health, Inc. stands at a compelling inflection point, having successfully executed a remarkable financial and operational turnaround. The company's core investment thesis is rooted in its highly differentiated UltraMIST technology, which offers clinically proven, superior outcomes in wound care at a competitive cost. This technological leadership, coupled with a strengthened balance sheet, reduced debt burden, and a professionalized sales organization, positions SANUWAVE for accelerated growth.

The recent market disruption caused by CMS reimbursement changes for skin substitutes, while initially unsettling, has created a strategic opening for UltraMIST. As providers adapt to the new reality, SANUWAVE's stable reimbursement and compelling value proposition are likely to drive increased adoption. With ambitious revenue guidance for Q4 2025 and the full year, supported by an expanding sales funnel and enhanced manufacturing capabilities, SANUWAVE is poised to capitalize on this opportunity. Investors should recognize the company's transition from a complex past to a future defined by regenerative innovation and disciplined execution, with its technological edge serving as a powerful catalyst for sustained market penetration and financial expansion.