Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SANUWAVE Health Inc (SNWVD, Financial) reported its highest quarterly revenues in company history, with Q3 2024 revenue reaching $9.4 million, an 89% increase year-over-year.
- The company achieved a significant rise in gross margins to 75.5%, attributed to a successful transition to a new contract manufacturer and positive pricing impacts.
- SANUWAVE Health Inc (SNWVD) turned cash generative in Q3 2024, marking a positive shift in financial health.
- The company successfully completed a reverse stock split and warrant exchange, simplifying and stabilizing its capital structure.
- The sales of 124 systems in Q3 2024 marked a substantial increase from previous quarters, indicating strong market demand and successful customer engagement.
Negative Points
- The company reported a net loss of $20.7 million for Q3 2024, although this was an improvement from the previous year's loss.
- Forecasting revenue remains challenging due to the 'pigs and pythons' problem, with system sales being less predictable, especially with larger customers.
- Operating expenses increased by $1 million year-over-year, primarily due to higher selling expenses.
- International revenue growth appears sluggish compared to the strong performance in the U.S. market.
- The company identified material weaknesses in its internal control over financial reporting, which it is actively working to address.
Q & A Highlights
Q: Can you discuss the transition to new manufacturers for systems and disposables?
A: Morgan Frank, Chairman of the Board, explained that SANUWAVE successfully transitioned to two new contract manufacturers for their ultimate system, achieving a production cadence of 25 to 30 systems per week. For applicators, they are working on a redesign to improve production efficiency, aiming to have a second source operational by Q2 next year.
Q: How many systems sold this quarter were from the new, more profitable manufacturing?
A: Peter Sorensen, CFO, noted that only a few systems from the new manufacturers were included in Q3. The full impact on gross margins will be more evident in Q4 as they deplete older inventory.
Q: Can you elaborate on the customer profile for the 124 systems sold this quarter?
A: Morgan Frank stated that a significant portion of sales came from a few large customers, though they are cautious about revealing specific customer data. The company is seeing increased interest from larger, more sophisticated buyers.
Q: What is the outlook for operating expenses and sales force expansion?
A: Morgan Frank mentioned that the sales team has grown from three to nine, with plans to reach 11 soon. Despite headcount increases, operating expenses in Q4 are expected to remain flat compared to Q3, with modest growth anticipated in 2025.
Q: What is the status of the company's debt obligations and international revenue focus?
A: Morgan Frank confirmed that the company is no longer in default on any debt obligations. The focus remains on the U.S. market due to its significant opportunity, with international sales currently not a priority.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
