Sanuwave Q4 2025 Earnings Call - Record Quarter Despite CMS Audit Shock, Pivot to Resellers

Operator: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero and a member of our team will be happy to help you.

Operator: Hello and 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. To register to ask a question at any time, please press star one on your telephone keypad. Please note this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to CEO Morgan Frank. Please go ahead.

Morgan Frank, Chief Executive Officer, Sanuwave: Thank you very much. Morning, everyone. Welcome to the Sanuwave fourth quarter and year-end 2025 earnings call. Our Form 10-K was filed with the SEC last night, along with our earnings release, and our updated presentation was made available on our website in the investors section. Please refer to that during the presentation. Joining me 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 always popular 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 development opportunities, and expectations regarding the impact of changes in tariff rates.

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. Description of these risks and uncertainties and other factors that could affect our financial results is included in our SEC filings. Actual results may differ materially from those projected in forward-looking statements. The company undertakes no obligation to update any forward-looking statements. Certain percentages discussed in this call are calculated from the underlying whole dollar amounts and therefore may not recalculate from the rounded numbers used for disclosure purposes. As a reminder, our discussion today will include non-GAAP numbers. Reconciliations between our GAAP and non-GAAP results can be found in our recently filed 10-K for the period ended December 31, 2025. Okay, thus prefaced, let’s dig into what was a good if slightly complicated quarter.

Q4 was an all-time record for Sanuwave, with revenues of $13.4 million, up 30% versus the same quarter last year, and adjusted EBITDA of $4.8 million, up from $3.7 million in the prior year and comprising 36% of revenues. Revs for the year were $44.1 million, up 35% versus 2024, and full year adjusted EBITDA rose to $13.6 million, up 89% versus $7.2 million the year before. We sold 624 UltraMIST systems in the year as compared to 374 in the prior year, and the 255 number in Q4 was by far the highest number in company history, beating our prior record, which was in Q3 by 100 systems.

We sunset the dermaPACE and Profile product lines in Q4, and this, along with taking a reserve for sales and use taxes to certain customers, resulted in some charges in Q4 that increased cost of goods sold and OpEx, which Peter will walk you through in a bit. Okay, that was 2025. Let’s address the pachyderm in the parlor, which is, what about 2026? Obviously the changes in CMS reimbursement for skin subs and for allografts have had some pretty wide-ranging effects, and I’m sure many of you have heard a number of the other companies in this space speak to that, seen the changes in estimates and the results they’ve announced.

As we’ve discussed in the past, none of those changes to reimbursement pertain to UltraMIST or to the 97610 code, which got a small, like a couple of dollar bump up from 2026. No company is an island, and anything that affects the practitioners in this space affects everyone. There seems to be a fair bit of confusion about exactly how this winds up impacting SANUWAVE. Let me see if I can provide a little clarity here. The reduction in reimbursement price for skin substitutes to around $127 a square centimeter was a 90%-95% price cut in an approximately $15 billion category. Adding to that, the new CMS policy of you can only bill what you apply, wastage is not covered, just put even more pressure on the modality.

As I’m sure you can imagine, very few wounds are perfectly rectangular. Piled on top of this, CMS adopted a very aggressive stance on audits for practitioners using skin substitutes, seeking out improper billing, overuse, or use of products that were priced beyond what they deemed to have been medical necessity. A lot of the practitioners that use these products are also our customers. UltraMIST is a useful treatment in conjunction with allografts. Long and short of this is it put a lot of very intense pressure on the space. We’ve seen individual wound care providers get hit with nine-figure clawbacks on skin substitutes. Yes, really nine figures. As these pressures intensified, you know, it took a fair few companies out of the space altogether.

It left even those who were doing business, you know, and who were doing everything right in fear of kind of ongoing audit and revenue loss, even if only from an insufficiency of documentation, you know, rather than a misuse of anything or any sort of misbehavior. This has affected both our overall customer count and the patient count within a number of our customers. We saw this in Q4. We’ve seen it in Q1. This has affected our growth rate. Like this is the tide going out that we kind of discussed in the press release. I mean, internally, we’ve been discussing it as living in a fish pond where someone’s grenade fishing. Honestly, I think a lot of the industry underestimated how sharp this shock would be and how deep these audits would go.

I mean, this obviously leads to sort of the question of, so what’s the tide coming in? You know, that tide is this, right? The patients didn’t go away, right? The wounds didn’t go away. Sort of life after the grenade is finding a way. As many of the other wound companies have said, it looks like Q1 is sort of a shock bottom. From our own personal experience, you know, kind of in amongst the upheaval, there’s starting to be some real green shoots. Some of the customers, well, where some of the customers are pulling back, you know, we’ve seen others expanding to fill the spaces that the others left. Like a significant number of mobile wound providers dissolved, but we’re now seeing a number of new ones reform.

This has added, you know, a new customer category to kind of our internal taxonomy, which we’re describing as the baby elephants. Like we’re seeing these new groups coalesce kind of often out of providers from multiple former groups. You know, we’re working with them to get them their first UltraMIST systems, build MIST treatment into their patient treatment plans, you know, into their practice flow. Like many of them are starting small, like they’re kind of like three to five practitioners, but have eyes on, you know, to quote one of them, adding a zero to that by year end, you know, hence the sort of baby elephant descriptor. With the period of high-priced skin subs behind us, many of them feel a lot safer about 2026 billing than they did in 2025.

Like the sort of industry disruption that we’ve seen has created what looks to be a really significant jump ball. You know, as you said, the patients and the wounds are still with us and there is a land grab going on to see who gets to serve them. Land grabs are speed moves and the best way to, you know, adapt to this opportunity is to expand rapidly. We have engaged with a number of resellers to kind of add to our feet on the street count and go get after, you know, this current opportunity. You know, what does that look like? The partners we’ve chosen have deep wound care expertise. They have the strong customer relationships.

They’re very much the sort of folks that we have long been interested in working with, but who were really, you know, who were too focused on the skin substitutes space, you know, to really be interested in partnering. We’ve been highly selective. We’re working only with those who we see as being strong long-term partners who have excellent customer service culture and a real sort of presence purchasing sales strategy. Our goal is to gear up here, move very quickly and engage with the newly available white space in this industry. Nothing does that like adding feet to the street. Most of these partners are acting as resellers or stocking distributors.

You know, you will see that in the ASP figures as we sell products to them at a wholesale price rather than paying, you know, rather than paying them a commission and selling at retail. Like this actually works out well for Sanuwave. You know, these sales don’t carry any sales force costs for us. They actually wind up being a bit higher in terms of operating margin than our W2 sales. You know, obviously these sorts of systems always create this potential for inventory and channel issues. That’s something we’ve been really heavily focused on keeping manageable. We’re trying to keep channel inventory down into the range of kind of 8-10 weeks. That should decline as resellers ramp up with their selling effectiveness.

We’ll aim to drive that lower through kind of smaller frequent re-ups, particularly as we get our ERP systems better synced with the resellers. 32% of revenues in Q4 came through outside resellers and distributors. That was up from 26% in the prior quarter, but still a little below the 2024 full year average of 36%. You know, it’s just worth noting back in 2024, those were all commission driven distributors, not resellers. You know, the wholesale pricing, which began in Q3, is new. One of the effects of this channel shift to stocking distributors and resellers is that, you know, it causes the units in the field number that we have been providing to kind of lose resolution, right? Like, that number is how many systems have been shipped to people out in the field.

when you ship a system to a reseller and they have not yet resold it to an end customer, now it’s kind of sitting on their shelf, right? It’s no longer really a good metric for determining usage rates. In combination with the disruption to our customer base that’s been going on, you know, during the last sort of quarter and a half, this seemed like a good time to have, like, a hard first principles rethink on really how we think about that number, you know, and to clean it up. The number we’ve arrived at, we’re calling active systems. This is defined as systems owned by customers who have ordered applicators within the last six months or within their expected ordering timeframe. There are some customers who, for whatever reason, like to make bulk orders sort of annually.

We ran through this and culled all the customers we know to have shut down, and we removed them and their systems from the count, even if they had ordered within the last six months, as that just seemed like good housekeeping and the most accurate way to look at the data. This resulted in an active system count of 1,292 for the end of Q4. You know, this really doesn’t map that well to the systems in the field figure, which we’ve used in recent quarters. To give you some perspective, using this methodology in Q3 of 2025 would have resulted in 1,236 active systems. The active system count for end of Q4 was up 56 systems or about 5% from the end of Q3.

We took 168 systems out of that number during Q4 as discontinued, which gives you a sense of kind of the magnitude of the challenges in the wound care space right now. All in all, like, you know, here we are. A lot of tide’s gone out. A new tide is coming in. Ultimately, the idea of wound care moving to, you know, both evidence and cost-effectiveness based standards looks like a good thing for SANUWAVE, right? UltraMIST is a great product with real efficacy, clinical data and value for money from a payer standpoint. Healing wounds is a lot less expensive than living with them. Despite, or, I mean, honestly, maybe because of the current disruption, you know, this market is bending in a direction that looks extremely favorable to us in sort of the medium and long term.

With that, I’ll turn you over to Peter Sorensen, our CFO, who can walk you through the financials in some detail.

Peter Sorensen, Chief Financial Officer, Sanuwave: Thank you, Morgan. We delivered a strong fourth quarter with revenue reaching a new all-time quarterly high and growing 30% year over year. This performance reflects continued execution of our commercial strategy and increase in demand for UltraMIST, particularly driven by higher consumables utilization and continued system placements. For the full year, revenue grew 35% to $44.1 million, supported by a 24% increase in consumables volume and a 67% increase in system sales. We also saw modest pricing strength in consumables, while system pricing reflected a higher mix of reseller-driven placements, which we view as an important lever to accelerate expansion of our installed base, as Morgan referenced. Gross margins expanded year over year to 77%, driven by pricing improvements in consumables and continued reductions in system cost of revenue, partially offset by mix and pricing dynamics on the system side.

Before turning to the financials in more detail, I want to briefly address the restatement reflected in our Form 10-K. The restatement has been completed and primarily relates to previously unrecognized sales tax liabilities identified through a third-party Nexus study, as well as an error in the allocation of revenue for certain extended warranty arrangements. From a quantitative standpoint, the revenue impact was not material, totaling approximately $300,000 across the first three quarters of 2025. The more significant impact was related to sales tax, resulting in approximately $1.6 million of additional general and administrative expense and $0.1 million of interest expense in 2024. In 2025, we recognized approximately $1.6 million of incremental general and administrative expenses and roughly $0.3 million of interest expense associated with these items.

As we move into the first quarter, we may incur some additional sales tax related expense as we complete remediation activities at the state and local level. We are actively working with third-party tax advisors to strengthen our processes and controls and ensure full compliance going forward. As we look ahead, our focus remains on driving sustainable, profitable growth. We’ll continue to invest in key strategic priorities and expanding our active system base. With that, let’s take a closer look at the financial results for the quarter. Revenue for the three months ended December 31, 2025 totaled $13.4 million, an increase of 30% as compared to $10.3 million for the same period of 2024. This growth was in line with our guidance for the quarter of $13 million-$14 million.

Gross margin as a percentage of revenue for the three months ended December 31, 2025 came in at 74.7%, a decrease of 320 basis points year-over-year, driven by a $486,000 write-off of dermaPACE inventory associated with the sunsetting of that product line. Absent this change, gross margin would have been 78.3%, which would have been an increase of 40 basis points year-over-year. For the three months ended December 31, 2025, operating income totaled $2 million, which is flat compared to the same period last year. Excluding the previously mentioned inventory write-off as well as a sales tax expense of $479,000, operating income would have been $3 million.

Operating expenses for the three months ended December 31, 2025 amounted to $8 million compared to $6 million for the same period last year, an increase of $2 million. The change in operating expenses was driven by several key factors. First, the reversal of director’s fees accruals and the shift from cash to stock-based compensation resulted in a net $1 million impact, with $943,000 reducing expense in 2024 on the accrual reversal and $103,000 increase in expense in 2025 from the stock-based comp. Payroll and related headcount expenses were $358,000 higher in 2025 compared to 2024 due to increased headcount. R&D non-personnel expenses increased by $483,000, reflecting investments in ongoing product development initiatives.

Despite these expense increases, we remain focused on disciplined cost management and expect operating leverage to improve as revenue scales in the coming quarters. Net income for the three months ended December 31, 2025 was $7.7 million compared to a net loss of $13.3 million for the same period in 2024, an increase of $21 million. The increase in net income was primarily driven by the change in fair value derivative liabilities, which resulted in a non-cash gain of $5.9 million in Q4 2025 versus a $13.8 million dollar loss in Q4 2024, representing a $19.7 million dollar year-over-year variance. With the majority of our warrants now exercised, exchanged, or expired, we should see limited impact of the non-cash swing in the fair value of derivative liabilities going forward.

We also had lower interest expense of $2.1 million in Q4 2025, primarily due to lower interest expense on our senior debt that was refinanced at the end of Q3 2025 with JP Morgan. EBITDA for the three months ended December 31, 2025 was $8.7 million. Adjusted EBITDA was $4.8 million versus $3.7 million for the same period last year, an improvement of $1.1 million year-over-year. Total current assets amounted to $24.6 million as of December 31, 2025 versus $18.4 million as of December 31, 2024. Cash and cash equivalents totaled $12 million as of December 31, 2025. We’re grateful for the continued trust and support of our stakeholders.

Q4 2025 was a strong finish to the year for Sanuwave, and we’re pleased with the progress we’ve made across our business. As we move into 2026, we remain focused on executing with discipline, driving sustainable growth, and building solid foundation for long-term value creation. With that, I’ll turn the call back over to Morgan.

Morgan Frank, Chief Executive Officer, Sanuwave: Thanks, Peter. Okay, moving on to guidance, which I know has been sort of the bugbear of the space all earnings period. As we stated in our press release, we’re guiding to $9.6 million-$10.3 million in Q1 revenues. This is up 3%-10% from the prior year, largely suppressed as a result of this sort of stutter step of industry impact from CMS changes and, you know, the tide going out. We expect this to get better going forward as the new tide keeps coming in and are, as a result, providing a preliminary 2025 estimate range of 16%-25% revenue growth, for the year 2025 versus 2024. You know, we’re still in the early days of this new paradigm, and obviously we’re still collecting dots through which to draw meaningful lines.

We are already seeing a larger amount of inbound interest from customers and partners than at any time in the company’s history. The always useful kind of how big is the inbound resume pile indicator is currently well off the charts. You know, we’ll keep that revenue estimate updated as the year goes on. You know, after a quarter like this especially, and as ever, you know, I want to express my gratitude to the Sanuwave team for all the hard work and for the commitment and the trust. Like, companies exist downstream of their culture, and culture lies downstream of the people. You know, that’s what lets you adapt and thrive in, you know, interesting times like these. Well done, folks, and, you know, thank you all. With that, we will open it up for questions.

Operator: Thank you. If you would like to ask a question, please press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. I will pause for a moment to allow everyone a chance to join the queue. I will take our first question from Carl Byrnes with Northland. Please go ahead. Your line is open.

Carl Byrnes, Analyst, Northland: Thanks for the questions. You noted that you’re seeing significant inbound interest and also a number of inbound resumes as well. With respect to the former, can you speak a little bit in terms of your anticipation in terms of the selling cycle for those inbound interests? I know that they’re gonna fall in different buckets, but you know, any sort of color you can give there would be great. Then I have a follow-up.

Morgan Frank, Chief Executive Officer, Sanuwave: Yeah. No, it’s a good question. I mean, it seems like the industry has been. I mean, January, like, particularly January and then to a great extent February, there just seemed like there was a certain amount of kinda shock in the industry. Like, I just think there were a fair few people who really didn’t think that this price change was going to stick. You know, you’ve had some concern around that. I think it has stretched selling cycle a little bit. You know, we’re starting to see some of that break loose. Some of it also always, you know, it’s always really a function of what channel, you know, to what channel are you selling?

You know, smaller practitioners tend to buy more rapidly, like ramping up with hospitals, you know, IDNs, larger chains, you know, tends to take longer. You know, I think we’ve definitely seen some stretch in the sales cycle, but it seems like perhaps that’s starting to get better. It’s a little early to say anything like too definitive.

Carl Byrnes, Analyst, Northland: Got it. That’s helpful. You know, can you provide sort of any feel for what we can expect in terms of even if it’s a range for adjusted EBITDA for 2026? Thanks.

Morgan Frank, Chief Executive Officer, Sanuwave: We really haven’t provided that guidance at this point, and I think trying to do it off the cuff on the call seems unwise. You know, I think, you know, we’ve provided some sort of guideposts in the past where, you know, it looks like incremental revenue would probably drop, you know, something on the order of 50% to the, you know, to the EBITDA line. I think that’s still a fairly good kind of rule of thumb.

Carl Byrnes, Analyst, Northland: Great. Got it. Thanks so much.

Operator: Thank you. Once again, that is star and one on your telephone keypad if you would like to join the queue. We will move next with Kyle Bowser with Roth Capital. Please go ahead. Your line is open.

Kyle Bowser, Analyst, Roth Capital: Great. Thanks for all the updates and for taking my questions. Maybe just on guidance. For Q1, 3%-10% increase, and then for the full year, 16%-25%. I guess how should we think about, you know, the growth rate, over the kind of balance of the year after Q1? I mean, the full year number in terms of growth is, you know, a decent amount above Q1. When would we expect things to kind of flip and, you know, start trending, you know, towards or above that full year range to kind of get to that since the Q1 is below it?

Morgan Frank, Chief Executive Officer, Sanuwave: I mean, obviously, as you’ve intuited from those numbers, we’re expecting the rest of the year to be, you know, on balance to be better than Q1. I think, you know, at this point, it’s a little premature for us to start kind of trying to break it down by quarter. You know, I think like many in the industry, I mean, it just seems like the back half of this year looks like it’s gonna be very promising. Exactly where this hockey stick is, I mean, hockey stick may be too aggressive a term, you know. Where the inflection lies is sort of like I think we’ll have a lot better ability to speak to that when we report Q1.

Like, it just, it feels like there’s a lot going on, like, right at this moment. I just, I think it’s a little early for us to make that statement.

Kyle Bowser, Analyst, Roth Capital: Yeah. No, that’s fair enough. And can you talk a little bit about the kind of the latest commercial organization headcount numbers? You talked about resellers and distributors contributing, you know, 32%. What does the commercial organization look like? How many, I don’t know, relationships or 1099s do you have, you know, associated with the-

Morgan Frank, Chief Executive Officer, Sanuwave: Mm-hmm

Kyle Bowser, Analyst, Roth Capital: With the non-W2?

Morgan Frank, Chief Executive Officer, Sanuwave: Yeah. I think we’re at, you know, 14 or 15 on internal sales force. Honestly, I’d have to check and see exactly who said yes to some hiring. We might be a little above that. We’re definitely pushing the internal sales force a little larger, you know, and starting to fill it out with, you know, with things like sales managers and adding some more kind of, you know, key national account reps, you know, as well as folks to manage the resellers. We’ve not published a how many resellers are you working with number. It’s, you know, certainly significantly more than we were in Q3.

You know, more so than the number of, I think more so than the number of resellers is sort of the size of the resellers. Whereas, you know, we’ve been working with people who were, you know, smaller groups and had, you know, a few reps, like some of the groups that we’ve begun to work with have, you know, kind of 50, 60, 70 people under them. That, you know, as you get that ramped up, like that adds a lot of potential. Like exactly how long it takes these things to get. You know, we’ve seen some promising early behavior from some of them.

It’s, you know, exactly what the cycle is to get these folks kind of ramped up, fully trained, you know, firing on all cylinders, and then, you know, for them to be able to work through the sales cycle within their own networks is still something we’re mapping. Like we’re getting it, you know, we’re getting it figured out, but it’s, you know, it’s one of those kind of It’s one of those sort of learn by doing things.

Kyle Bowser, Analyst, Roth Capital: Yep. Okay. I appreciate that. Can you talk a little bit about, you know, the operating margin associated with those sales coming from resellers and distributors? How does that kind of, like how does that compare with, you know, you selling, you know, internally with the direct sales force?

Morgan Frank, Chief Executive Officer, Sanuwave: Yeah. You know, obviously when you’re selling to someone at a wholesale price, right? That’s you know, that’s going to affect ASP. The wholesale price for a system or for a case of applicators will be lower than the retail price, right? ’Cause the resellers are making their money on the markup. However, there are no further costs below the line, right? What we used to do is sell through distributors at retail and then pay a commission rate on the sales. Like this is.

The new system is pretty closely equivalent to that. Obviously, because we’re not carrying the sales force costs of the reseller, you know, and not paying for, you know, plane tickets and, you know, lunches or whatever, the net effect on the, you know, on the operating line is actually a higher flow-through margin. Does that make sense?

Kyle Bowser, Analyst, Roth Capital: Okay. Got it. Yeah. I mean, is it a big effect or is it pretty similar?

Morgan Frank, Chief Executive Officer, Sanuwave: Well.

Kyle Bowser, Analyst, Roth Capital: At the end of the day?

Morgan Frank, Chief Executive Officer, Sanuwave: I mean, I don’t wanna get into quantifying it here.

Kyle Bowser, Analyst, Roth Capital: Yeah. Okay. Got it. And then just lastly, any updates on, pipeline, you know, how you’re thinking about potentially adding in, new products, et cetera? Thank you.

Morgan Frank, Chief Executive Officer, Sanuwave: Yeah. I mean, as you probably noticed, you know, you saw some uptick in R&D. We’re definitely working on some stuff. I think we’ll probably have more to say about that on the Q1 call. You know, from a kind of a sales pipeline standpoint, the pipeline’s interesting right now. Like, we’ve had a lot of inbound interest. There’s, you know, it’s really an educational sale going on, where it’s kind of like, well, you know, talk to me about this. Like, does it really work? How can we, you know, how would we build this into our practice flow? You know, how would it work? Where’s the benefit for our patients?

Like, can our practitioners, you know, how hard is this for our practitioners to learn? You know, we have, like, we have a huge top of the pipeline right now. You know, it’s just made a little complicated by the fact that obviously certain sectors of the wound care space are, you know, still grappling with the kind of clawbacks and CMS issues. Others, I mean, we’re seeing a lot of interest out of, you know, wound centers, hospitals, surgical and post-surgical. We’re actually exploring a couple of, you know, non-wound applications that are potentially interesting but, you know, really early. I don’t really...

I wouldn’t try to hang my hat on that just yet.

Kyle Bowser, Analyst, Roth Capital: Okay. Yeah. Appreciate that, and thanks for taking my questions. I’ll jump back in queue.

Morgan Frank, Chief Executive Officer, Sanuwave: Thanks, Phil.

Operator: Thank you. We will move next with Ian Cassel with IFCM. Please go ahead. Your line is open.

Ian Cassel, Analyst, IFCM: Yeah. I just have a couple questions. The first one, I mean, you sold 255 systems in Q4, which is just a huge number. Can you give us a sense of kind of where those systems were placed? Was it a couple pigs in the python, to use a phrase that you like to use, or, you know, what really drove that number?

Morgan Frank, Chief Executive Officer, Sanuwave: Yeah. You know, obviously, like, kind of complicated, right? We sell 255 systems. You know, the actual active systems in the field rise by, you know, about 5%, right? About 56, ’cause we pulled 168 systems out due to, you know, things not going well with certain customers, you know, certain customers’ businesses. You know, from that, I think you can kind of intuit, like, where things went from a channel standpoint. You know, from a, you know, individual customer standpoint, like, there wasn’t really a pig in the python here, right? There wasn’t, like, an order that drove it. It was, you know, there were a number.

I think there were an unusually large number of kind of, you know, mid-sized orders. Does that make sense?

Ian Cassel, Analyst, IFCM: Yeah. No, that’s helpful. Another question I had was, excuse me, in previous calls you spoke about, I believe, setting up a new manufacturing line for the applicators and that had the potential to increase gross margins a few hundred basis points. Is there an update on that?

Morgan Frank, Chief Executive Officer, Sanuwave: Mm-hmm. Yeah. There are two updates on that. You know, one, our existing manufacturer has very, very graciously managed to reduce their prices as well. You know, they’re experiencing better pricing on applicators, you know, starting the beginning of Q1. You know, we do this on a pooled basis. You know, we basically use a blended average of our inventory, and we keep, you know, six to nine months of applicators on hand. It’ll take a while for this to, you know, trickle through gradually rather than, you know, be kind of a step function. You know, with regard to the new line, there were some delays in qualifying the mold. It’s just, I

Everybody is sort of looking at this and saying, "Wow, I’ve just never seen a mold this persnickety." We seem to have it, we seem to be on top of it, and I think we’re making progress. I’m hopeful to see that start producing product in the next couple of months. It’s, given the delays there, I’m hesitant to put too firm a stake in the ground right now and say, you know, this is the definitive timing.

Ian Cassel, Analyst, IFCM: Okay. No, thank you.

Operator: Thank you. We will move next with Albert Hanser with Kestrel. Please go ahead. Your line is open.

Albert Hanser, Analyst, Kestrel: Hi, Morgan. Nice job communicating, you know, a changing landscape and all the crosscurrents. So well done on this turnaround. My question is simple. Just as you kind of look to define yourself in a changing landscape and play offense by placing units, are there any kind of key industry events, trade shows, conferences that we should put in our calendar to either attend or kind of watch as you plant the flag and get out there more vocally with customers?

Morgan Frank, Chief Executive Officer, Sanuwave: Yeah. Well, I mean, obviously we’ll be at a lot of shows. You know, the sales force does like to get around. Obviously one of the industry bigs is SAWC. That’s kicking off in Charlotte, April ninth. If you’re looking for something to do in the next couple of weeks, that’s a great wound show.

Albert Hanser, Analyst, Kestrel: All right. Thank you.

Operator: Thank you. We will move next with Ethan Starr, Private Investor. Please go ahead. Your line is open.

Ethan Starr, Private Investor: Good morning. The slide presentation noted that 168 UltraMIST systems were determined to be discontinued in the fourth quarter. I’m just wondering, aside from customers who shut down, what do you know about why these systems were discontinued?

Morgan Frank, Chief Executive Officer, Sanuwave: There are two ways they would have wound up in that bucket, right? The first is that a customer that we would have expected to order hadn’t ordered for six months. Second is, if we made a determination that the customer who owned those systems was no longer operating their business.

Ethan Starr, Private Investor: Among those people who didn’t order, I mean, just they just stopped using them or you don’t even know?

Morgan Frank, Chief Executive Officer, Sanuwave: It’s, you know, I mean, it’s difficult to say, right? I mean, people don’t call you up and tell you why.

Ethan Starr, Private Investor: Sure.

Morgan Frank, Chief Executive Officer, Sanuwave: I suspect that in many cases, you know, there’s always a certain like, you know, there’s always a certain kind of low level of churn, kind of nothing like we’ve experienced in the last quarter or so. I suspect that it’s, yeah, I suspect it’s financial distress for a lot of folks. I mean, you know, put yourself in the position of, you know, you’ve done a large amount of, you know, sort of allografting, and then you get a clawback nine months later for 90% of it. You know, how many folks had the cash on hand to handle that? Like, that seems like it’s been sort of the, you know, the meteor that people have been getting hit with.

Ethan Starr, Private Investor: Q4 is an unusually high number of discontinued systems for that reason, it sounds like.

Morgan Frank, Chief Executive Officer, Sanuwave: Correct.

Ethan Starr, Private Investor: Okay. Would it be at all feasible to try to acquire the discontinued UltraMIST systems, recondition them and sell them?

Morgan Frank, Chief Executive Officer, Sanuwave: It’s, you know, possibly. I don’t wanna, given some things going on, I don’t wanna talk in too much specificity about that, but, we’ve certainly had a similar thought.

Ethan Starr, Private Investor: Okay, that’s helpful. Aside from the external factors mentioned in the press release, do customers tend to go through UltraMIST consumables at a fairly steady rate, or do they increase? Do you see them increasing uses of consumables as they become more familiar with the UltraMIST system?

Morgan Frank, Chief Executive Officer, Sanuwave: That sounds like one of those questions that’s gonna have a simple answer, but the reality is it depends a great deal on the customer type, right? So, you know, if you sell a system to a mobile wound care provider who handles long-term care facilities, they will generally ramp up almost immediately, right? They’ll take it on their rounds. They’ll start doing treatments. You know, you go from, you know, zero to sixty, nothing flat. If you sell it into a, you know, podiatry office, it tends to be a slower ramp as they do their marketing or kind of build a book of business that gets the product into more usage.

Like you just sell it into a nursing home or an assisted living facility, and you tend to get an early bolus as they run around and treat everyone who’s got, you know, everyone on, you know, in the facility who’s got wounds. It sort of backs off to a steady state, you know, once you get the wounds in the facility more under control. You know, hospitals have a tendency to sort of start using and then ramp up over time as kind of word gets around and people say, "Hey, you know, this worked really well on our thing. You should try it on your thing." The answer to that question is really complicated.

Ethan Starr, Private Investor: Okay. That’s fair. I appreciate the answer, and thank you very much.

Morgan Frank, Chief Executive Officer, Sanuwave: All right. Thanks.

Operator: Thank you. At this time, there are no further questions in queue. I will now turn the meeting back to Mr. Frank for closing comments.

Morgan Frank, Chief Executive Officer, Sanuwave: Well, thank you, guys. I appreciate everyone being here first thing on a Friday morning, and we’ll speak to you soon when we report Q1. Thanks again.

Operator: Thank you. This brings us to the end of today’s meeting. We appreciate your time and participation. You may now disconnect.