Transformational Acquisition Positions for Significant Growth in Fourth Quarter 2020 and Beyond

SUWANEE, GA, Nov. 17, 2020 (GLOBE NEWSWIRE) — via NewMediaWire — SANUWAVE Health, Inc. (OTCQB: SNWV), focused on the development and commercialization of a robust and innovative advanced wound care product portfolio for the repair and regeneration of skin and vascular structures, announced today financial results from the three months ended September 30, 2020.

Highlights of the Third Quarter and Recent Weeks

  • Achieved record revenue of approximately $2.0 million in the third quarter of 2020;
  • Closed the acquisition of UltraMIST® and the license to market BIOVANCE® and Interfyl® from Celularity;
  • Received regulatory approval from COFEPRIS and formed Joint Venture to market and distribute dermaPACE® to treat chronic wounds in Mexico and received ANVISA approval to market dermaPACE to treat chronic wounds in Brazil;
  • Participated in series of key medical meetings to enhance clinician awareness of dermaPACE and UltraMIST before audiences of leading wound care specialists;
  • Received reimbursement coverage for BIOVANCE from largest Medicare/Medicaid Administrator; and
  • Significantly strengthened patent portfolio.

Management Commentary
“The third quarter was transformational for SANUWAVE as we added UltraMist, BIOVANCE and Interfyl to our portfolio to create a market-leading provider of advanced wound care solutions that improves clinical outcomes across the continuum of care.  The combination of our two powerful wound care offerings was evidenced in our record revenue in the third quarter 2020; is expected to increase product revenue by approximately 50% in the fourth quarter; and should further accelerate our growth throughout 2021,” stated Kevin A. Richardson, II, Chairman and Chief Executive Officer of SANUWAVE Health.  “We are particularly pleased to have surpassed our integration timelines by three months and now have a cohesive team that is fully aligned and focused on achieving our goals to drive revenue and bring our suite of advanced wound care products to patients in need.”

“Since closing the transaction in late August, we are off to a strong start and are pleased with the traction we are gaining in the market.  We continue to invest in having a strong presence at key medical conferences where we support the use dermaPACE and UltraMist before an audience of leading wound care clinicians.   In addition, we are now using data driven tools to pinpoint areas with the strongest addressable markets for our wound care solutions and are increasing our footprint in those geographies, where we are beginning to see the results of those initiatives.

“We expanded our geographic reach in Latin America with regulatory approvals for dermaPACE to treat chronic wounds in Mexico and Brazil.  Overall, international growth is expected to be strong with plans for nearly ten device placements in the fourth quarter. These placements should provide long-term recurring revenue as our partners gain traction through education and promotion of the clinical benefits of our advanced wound healing products in their respective regions,” concluded Mr. Richardson.

Third Quarter Financial Results

Revenues for the three months ended September 30, 2020 were $1,966,896, compared to $197,640 for the same period in 2019, an increase of $1,769,256, or 895%, which was primarily due to the acquisition of Celularity assets and licensing fees and international distribution fees, as compared to the prior year.

Cost of revenues for the three months ended September 30, 2020 were $548,406 compared to $122,923 for the same period in 2019. Gross profit as a percentage of revenues was 72% for the three months ended September 30, 2020, compared to 38% for the same period in 2019, primarily due to sales of UltraMist, BIOVANCE and Interfyl, which have a 60% gross profit and an increase in high-margin dermaPACE treatment fees.

Operating expenses for the three months ended September 30, 2020 were $7.2 million, compared to $2.5 million for the same period in 2019, an increase of $4.7 million, or 192%.

Research and development expenses for the three months ended September 30, 2020 were $432,155, compared to $299,903 for the same period in 2019, an increase of $132,252, or 44%, largely due to higher salary and related costs due to increased headcount as a result of the Celularity asset acquisition and Profile repackaging project in 2020.

Selling and marketing expenses for the three months ended September 30, 2020 were $1,373,475, compared to $335,472 for the same period in 2019, an increase of $1,038,003, or 309%, due to higher salary and related costs due to increased headcount as a result of the Celularity asset acquisition, higher commissions and higher costs for tradeshows.

General and administrative expenses for the three months ended September 30, 2020 were $5,054,508, as compared to $1,802,659 for the same period in 2019, an increase of $3,251,849, or 180%, due to increase in legal and consulting fees related to acquisition and increased operating costs such as utilities, rent, and IT services as a result of the acquisition.

Depreciation and amortization for the three months ended September 30, 2020 was $327,120, compared to $22,338 for the same period in 2019, an increase of $304,782 or 1,364%, due to goodwill recorded as a part of the acquisition and higher depreciation related to increase in fixed assets as a result of acquisition and leased dermaPACE devices.

Net loss for the three months ended September 30, 2020 was $6,181,9156, or ($0.02) per basic and diluted share, compared to a net loss of $2,748,018, or ($0.01) per basic and diluted share, for the same period in 2019, an increase in the net loss of $3,433,897, or 125%.

As of September 30, 2020, SANUWAVE Health had cash and cash equivalents of $5.4 million. Net cash provided by financing activities for the nine months ended September 30, 2020 was $35,615,857, which primarily consisted of $23,623,194 from private placement offerings, $13,346,547 from senior promissory notes, $2,450,000 proceeds from purchase of preferred stock, $1,100,000 from convertible notes, and $614,335 from SBA Loans. These proceeds were partially offset by debt payments of $5,457,663 and principal payments on financing leases of $114,806.

About SANUWAVE Health, Inc.

SANUWAVE Health, Inc. (OTCQB:SNWV) (www.SANUWAVE.com) is focused on the research, development, and commercialization of its patented noninvasive and biological response activating medical systems for the repair and regeneration of skin, musculoskeletal tissue, and vascular structures.  Through its recent acquisition of Celularity’s UltraMIST® assets, SANUWAVE now combines two highly complementary and market-cleared energy transfer technologies and two human tissue biologic products, which creates a platform of scale with an end-to-end product offering in the advanced wound care market.

SANUWAVE’s portfolio of regenerative medicine products and product candidates activate tissue regeneration biological signaling and angiogenic responses, producing new vascularization and microcirculatory improvement combined with tissue growth which helps restore the body’s normal healing processes. SANUWAVE applies and researches its patented energy transfer technologies in wound healing, orthopedic/spine, plastic/cosmetic and cardiac/endovascular conditions.

For additional information about the Company, visit www. www sanuwave.com.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for future business development activities and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control. Actual results may differ materially from those projected in the forward-looking statements. Among the key risks, assumptions and factors that may affect operating results, performance and financial condition are risks associated with the regulatory approval and marketing of the Company’s product candidates and products, unproven pre-clinical and clinical development activities, regulatory oversight, the Company’s ability to manage its capital resource issues, competition, and the other factors discussed in detail in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

Contact:

SANUWAVE Health, Inc.
Kevin Richardson II
Chairman and Chief Executive Officer
978-922-2447
investorrelations@sanuwave.com

Anne Marie Fields
Managing Director
Rx Communications Group
afields@rxir.com

-Tables to Follow-

SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 September 30,  December 31,
2020 2019
ASSETS  (Unaudited)  
CURRENT ASSETS    
Cash and cash equivalents  $                    5,391,591  $                    1,760,455
Accounts receivable, net of allowance for doubtful accounts                        1,395,815                             75,543
Inventory                        2,539,475                           542,955
Prepaid expenses and other current assets                           627,751                           125,405
TOTAL CURRENT ASSETS                        9,954,632                        2,504,358
   
PROPERTY AND EQUIPMENT, net                           979,673                           512,042
RIGHT OF USE ASSETS, net                           442,197                           323,661
OTHER INTANGIBLE ASSETS, net                      14,198,799                                    –
GOODWILL                        7,259,795                                    –
OTHER ASSETS                             31,010                             41,931
TOTAL ASSETS  $                  32,866,106  $                    3,381,992
   
LIABILITIES    
CURRENT LIABILITIES    
Accounts payable  $                    2,322,192  $                    1,439,413
Accrued expenses                        1,603,543                        1,111,109
Accrued employee compensation                        2,544,768                        1,452,910
Warrant liability                        6,440,249                                    –
Note payable                        4,000,000                                    –
Convertible promissory notes, related parties                        1,596,254                                    –
SBA loans                           321,821                                    –
Accrued interest                           382,926                                    –
Operating lease liability                           251,372                           173,270
Finance lease liability                           187,416                           121,634
Contract liabilities                             65,037                             66,577
Notes payable, related parties, net                                    –                        5,372,743
Accrued interest, related parties                                    –                        1,859,977
Short term notes payable                                    –                           587,233
Line of credit, related parties                                    –                           212,388
Advances from related parties                                    –                             18,098
TOTAL CURRENT LIABILITIES                      19,715,578                      12,415,352
NON-CURRENT LIABILITIES
Promissory note payable, net of debt issuance costs                      12,007,526
SBA loans                           142,514
Finance lease liability                           284,588                           271,240
Operating lease liability                           222,815                           185,777
Contract liabilities                             45,519                           573,224
TOTAL NON-CURRENT LIABILITIES                      12,702,962                        1,030,241
TOTAL LIABILITIES                      32,418,540                      13,445,593
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ DEFICIT
PREFERRED STOCK, par value $0.001, 5,000,000
shares authorized; 6,175 and 293 shares designated Series A and                                    –                                    –
Series B, respectively
COMMON STOCK, par value $0.001, 600,000,000 (Note 18) shares authorized;
302,119,428 and 293,780,400 issued and outstanding in 2020 and
2019, respectively                           466,095                           293,781
ADDITIONAL PAID-IN CAPITAL                    143,086,771                    115,457,808
ACCUMULATED DEFICIT                  (143,043,935)                  (125,752,956)
ACCUMULATED OTHER COMPREHENSIVE LOSS                           (61,365)                           (62,234)
TOTAL STOCKHOLDERS’ DEFICIT                           447,566                    (10,063,601)
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT  $                  32,866,106  $                    3,381,992
SANUWAVE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
   Three Months Ended  Three Months Ended  Nine Months Ended  Nine Months Ended
   September 30,  September 30,  September 30,  September 30,
2020 2019 2020 2019
REVENUES
Product  $                       1,321,248  $                          158,855  $                       1,465,147  $                          444,087
License fees                              629,447                                16,250                              639,447                              189,307
Other revenue                                16,201                                22,535                                94,194                                59,185
TOTAL REVENUES                           1,966,896                              197,640                           2,198,788                              692,579
COST OF REVENUES
Product                              533,629                                91,179                              637,369                              334,749
Other                                14,777                                31,744                                26,261                                67,908
TOTAL COST OF REVENUES                              548,406                              122,923                              663,630                              402,657
GROSS MARGIN                           1,418,490                                74,717                           1,535,158                              289,922
OPERATING EXPENSES
Research and development                              432,155                              299,903                              983,816                              867,825
Selling and marketing                           1,373,475                              335,472                           2,414,476                              901,031
General and administrative                           5,054,508                           1,802,659                           9,529,218                           4,746,519
Depreciation and amortization                              327,120                                22,338                              491,891                                40,150
TOTAL OPERATING EXPENSES                           7,187,258                           2,460,372                         13,419,401                           6,555,525
OPERATING LOSS                         (5,768,768)                         (2,385,655)                       (11,884,243)                         (6,265,603)
OTHER INCOME (EXPENSE)
Gain on warrant valuation adjustment                              865,916                                       –                              865,916                              227,669
Loss on extinguishment of debt                            (503,234)                            (503,234)
Interest expense                            (690,659)                            (182,001)                            (831,348)                         (1,120,440)
Interest expense, related party                              (61,334)                            (175,522)                            (431,070)                            (508,193)
Loss on foreign currency exchange                              (23,836)                                (4,840)                              (32,103)                              (13,199)
TOTAL OTHER INCOME (EXPENSE), NET                            (413,147)                            (362,363)                            (931,839)                         (1,414,163)
NET LOSS                         (6,181,915)                         (2,748,018)                       (12,816,082)                         (7,679,766)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustments                                       –                              (14,061)                                       –                                13,152
TOTAL COMPREHENSIVE LOSS  $                     (6,181,915)  $                     (2,762,079)  $                   (12,816,082)  $                     (7,666,614)
LOSS PER SHARE:
Net loss – basic and diluted  $                              (0.02)  $                              (0.01)  $                              (0.03)  $                              (0.04)
Weighted average shares outstanding – basic and diluted                       302,119,428                       211,423,362                       448,811,314                       181,088,995

SOURCE: Globe Newswire, 17th November 2020

Suzanna Everard

Author Suzanna Everard

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