SANUWAVE Health Reports Third Quarter 2019 Financial Results
SUWANEE, Ga., Nov. 15, 2019 (GLOBE NEWSWIRE) — SANUWAVE Health, Inc. (OTCQB: SNWV) reported financial results for the three and nine months ended September 30, 2019 with the SEC on Thursday, November 14, 2019. The Company will also host a conference call today, November 15, 2019, at 9:00 a.m. Eastern Time.
Highlights from the third quarter and last few weeks:
- Expect Q4 revenue to exceed $1million, due to the Brazil deal, Strong International orders, and domestic procedural revenue commencing.
- Placed 58 dermaPACE® Systems in the United States in total by the end of the third quarter and have achieved 70 placed by the end of October. On track to reach 85 by end of November and 110 by year end. We plan to place at least 300 in 2020.
- Presented abstracts, symposium, and posters at four conferences in third quarter; DFCon, SAWC, AAWC Sacramento and Wounds Canada. Our global partners also participated in three conferences.
- Over 200 patients treated and over 1,500 treatments performed.
- Over 200 clinicians certified to use and treat with dermaPACE System.
- Successful completion of Medical Device Single Audit Program (MDSAP) and Korean Ministry of Food and Drug Safety (MFDS).
- Attendance at Global Diabetic Foot Course (GDFC) in Muscat, Oman with our partners in the region, Taiba Healthcare and MenaCare.
- Signing of a term sheet for a Brazilian joint venture for the dermaPACE System with IDIC Group of São Paulo, Brazil. Fees for partnership are $600,000 with cash payments already occurring.
- Signing of a distribution partnership agreement with Ametus Group for the commercialization of the dermaPACE System.
“SANUWAVE’s focus during 2019 remains placing devices with qualified clinicians in fifteen target states. We have added some significant talent in 2019 with new employees joining us from very well established wound companies and medical backgrounds. The buzz around our device and product is growing through our expanded presence at tradeshows, addition of new hires, published articles, increased social media footprint, but most importantly through word of mouth from professionals to each other about how great and successful the device is in treating DFU’s. Third quarter was one of our busier quarters on record for activity and the team performed extremely well. We also began to refine our processes from learnings in the field. The refinement in implementation and support and sales cycles will help improve our efficiency and customer interactions as we move forward. Through these process improvements we are comfortable that we will achieve our placement goals for 2019. Added to this comfort is the recently announced agreement with Ametus Group to help support and accelerate our growth in 2019, 2020 and beyond. The playbook we are following is the same playbook used by many successful medical device companies. The fourth quarter will begin the revenue trends from all the hard work as we begin recognizing revenue from these placements. We are confident we will exceed one million dollars in revenue in the fourth quarter driven by Brazil, other international partners and dermaPACE procedural revenue. We are still working with our auditing firm to determine how much of the initial procedural revenue will be recognized in Q4, and we will discuss this more on the year end call,” stated Kevin Richardson, CEO.
SANUWAVE President, Shri Parikh added, “The 300 qualified customer leads from the past four wound care conferences and ongoing payments of reimbursement claims activity continue to validate the cost efficiency of SANUWAVE’s dermaPACE technology on the treatment of DFUs and the cost avoidance of amputation. Commercializing this only FDA cleared shockwave technology, with our new and growing sales and clinical professionals experienced in wound care together with clinicians that are deeply committed to driving positive change in today’s healthcare ecosystem is highly rewarding.”
Goals for 2019 and update on progress
- 110 dermaPACE system placements and 300 certified users
- 58 at end of Q3, 85 by end of November, and 110 by year end
- 200 certified users on track for over 300 by year end
- Finish with at least 10 million covered lives for insurance reimbursement
- Launch 2-3 domestic clinical studies. On track with 2 perfusion studies and dosage study under way
- Add 3-4 new countries. On track to exceed this goal.
- Add additional advisors to our scientific board. On track for additions in second half
- Add other key senior management positions. Continuous process with success to date.
This year sets the stage for SANUWAVE to shift from a clinical research company to a rapidly growing commercialization company. The process involves placing devices, training clinicians, gaining reimbursement, and supporting the infrastructure with more clinical research, published articles, and case studies. The method will allow SANUWAVE to achieve the goal of delivering a dermaPACE System anywhere and everywhere a DFU is treated. This allows SANUWAVE to accomplish the vision of providing a positive impact on life and the environment, one shock at a time.
We are well on our way of achieving our stated goals for 2019 which will allow for rapid revenue growth in 2020 and beyond. Our stated long term goal is to reach 2,000 placed devices and $100 million in Revenue in three to four years. To accomplish this long term goal, we establish yearly goals and objectives by which investors can measure managements performance. 2019 is on track to meet or exceed our objectives for the year. SANUWAVE will release their goals for 2020 in early 2020, but plan to have at least 300 devices placed during 2020 as part of those goals.
Third Quarter Financial Results
Revenues for the three months ended September 30, 2019 were $197,640, compared to $595,789 for the same period in 2018, a decrease of $398,149, or 67%. Revenue resulted primarily from sales in Europe and Asia/Pacific of our orthoPACE devices and related applicators. The decrease in revenue for 2019 was primarily due to a return of sales of devices and applicators as a result of the termination of distribution deal with Johnfk Medical Inc. (“FKS”), lower sales of refurbished applicators and lower upfront international distribution fees, as compared to the prior year. This is partially offset by device sales in Asia/Pacific. Although procedures occurred in the third quarter, we did not begin to bill and receive payments from vendors until the fourth quarter.
Operating expenses for the three months ended September 30, 2019 were $2,460,372, compared to $3,082,551 for the same period in 2018, a decrease of $622,179, or 20%. Research and development expenses decreased by $322,249. The decrease was due to a reclassification of employees and related costs from research and development to general and administrative in 2019 and lower stock based compensation expense as compared to the prior year. This is partially offset by an increase in contracting for temporary services and increased study expenses related to our dosage study in Poland. Selling and marketing expenses increased by $124,818. The increase was due to an increase in hiring of trainers and salespeople, increased travel expenses for placement and training related to the commercialization of dermaPACE and increased participation in domestic tradeshows. General and administrative expenses decreased by $441,377. The decrease was due to a decrease in stock based compensation expense related to options issued in 2018, lease expense related to pay-off of lease agreement for devices in 2018 and lower outside consultant costs. This is partially offset by an increase in salary, bonus and benefits related to new hires in 2019.
Net loss for the three months ended September 30, 2019 was $2,748,018, or ($0.01) per basic and diluted share, compared to a net loss of $825,142, or ($0.01) per basic and diluted share, for the same period in 2018, an increase in the net loss of $1,922,876, or 233%.
Cash and cash equivalents increased by $38,107 for the nine months ended September 30, 2019 and decreased by $657,873 for the nine months ended September 30, 2018. For the nine months ended September 30, 2019 and 2018, net cash used by operating activities was $4,684,611 and $2,271,566, respectively, primarily consisting of compensation costs, dermaPACE commercialization activities and general corporate operations. The increase of $2,413,045 in the use of cash for operating activities for the nine months ended September 30, 2019, as compared to the same period for 2018, was primarily due to the increased accrued operating and payroll related expenses and increased inventory and prepaid expenses in 2019. Net cash used by investing activities for the nine months ended September 30, 2019 and 2018, consisted of purchase of property and equipment of $28,990 and $32,171, respectively. Net cash provided by financing activities for the nine months ended September 30, 2019 was $4,738,556, which consisted of $1,378,142 from the exercise of warrants, $1,215,000 from the issuance of short term notes payable, $90,000 from increase in related party line of credit and $2,055,414 from advances from related parties. Net cash provided by financing activities for the nine months ended September 30, 2018 was $1,663,063, which consisted of $144,000 net from advances from related parties, $38,528 from exercise of warrants, $1,159,785 from the issuance of convertible promissory notes, $184,750 from issuance of short term notes payable and $136,000 net from increase in line of credit, related party.
The Company will also host a conference call on Friday, November 15, 2019, beginning at 9AM Eastern Time to discuss the third quarter financial results, provide a business update and answer questions.
Shareholders and other interested parties can participate in the conference call by dialing 844-602-0380 (U.S.) or 862-298-0970 (international) or via webcast at https://www.investornetwork.com/event/presentation/56798.
A replay of the conference call will be available beginning two hours after its completion through November 29, 2019, by dialing 877-481-4010 (U.S.) or 919-882-2331 and entering PIN #56798 and a replay of the webcast will be available at https://www.investornetwork.com/event/presentation/56798 until February 15, 2020.