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
[email protected]
Anne Marie Fields
Managing Director
Rx Communications Group
[email protected]
-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 | ||||||