Sanuwave Health (NASDAQ:SNWV) reported a 24% decline in third-quarter revenue as sales of its UltraMIST systems fell amid wound-care industry closures, competition from used equipment and uncertainty over Medicare reimbursement.
Revenue fell to $8.6 million from $11.3 million a year earlier, while the company posted a net loss of $1.4 million, compared with net income of $9.7 million in the prior-year quarter. Chief Financial Officer Peter Sorensen said recurring applicator revenue grew, partly offsetting the decline in equipment sales.
Chairman and Chief Executive Officer Morgan Frank said the quarter was shaped by a July proposal from the Centers for Medicare & Medicaid Services that left 2027 reimbursement for skin substitutes unchanged and sought a reduction in payment for the 97610 procedure code used for UltraMIST treatments.
Although Sanuwave does not sell skin substitutes, Frank said some of its customers use them. He said the absence of an anticipated reimbursement increase contributed to wound-care businesses closing or reducing operations, while some prospective UltraMIST buyers adopted a wait-and-see approach.
System sales fall as used equipment reaches market
UltraMIST system revenue fell approximately 73% year over year to $1.2 million, with unit volume down 74%, Sorensen said. The company sold 40 systems in the third quarter, compared with 82 in the second quarter.
Frank said used systems from customers that had closed were competing with new equipment sales. He expects used systems to remain a factor in the fourth quarter but said it was difficult to predict whether the market would absorb them by the start of next year.
The company added 60 customers during the quarter, and the number placing orders was about 2% higher than in the second quarter, Frank said. He said customer closures, reductions in practitioner counts and purchases of used equipment had made the company’s traditional active-systems measure less reliable, so Sanuwave was not reporting it.
Applicator revenue rose approximately 2% from a year earlier, supported by a 15% increase in unit volume, Sorensen said. An 11% decline in average selling price, driven by a higher mix of reseller sales, partly offset that growth. Frank said applicator revenue fell approximately 4% from the second quarter but remained the company’s second-highest quarterly total.
Reimbursement changes bring mixed outlook
CMS ultimately implemented the physician fee schedule change with minor adjustments, Frank said. Based on the published payment factors, Sanuwave estimates the 2027 physician fee schedule payment for code 97610 will be $314.54, down from $397.81 in 2026.
Frank said the hospital outpatient rate will rise approximately 14% to $235.04 in 2027 from $204.98. A separate change will also allow the code to be billed alongside other procedures on the same claim, rather than being packaged and paid at zero in those circumstances. He said more than half of hospital outpatient treatments billed under 97610 were packaged and paid at zero in 2025.
Frank said the American Medical Association’s Relative Value Scale Update Committee had asked CMS to delay the changes pending a review. CMS did not delay them, but said it would welcome additional information if a new review occurs, including data about wound size, depth, quantity and location, and same-day billing restrictions.
Sanuwave hopes to work with the committee and CMS on a code structure that accounts for factors such as wound size and the number of wounds, Frank said. The company’s goal is to seek changes in the proposed rule for 2028, expected in July 2027.
Hospital focus and financial position
Frank said Sanuwave began shifting more of its sales effort toward hospitals and other facilities last year, including inpatient care for pressure injuries. Hospital sales cycles can take around 12 months from a standing start, he said, but the company has already reached evaluation and sales stages with a number of health systems.
Asked whether hospitals would account for a significant portion of 2027 revenue, Frank said existing customers in other settings could continue to contribute substantially to applicator sales. Hospitals and similar facilities could, however, represent a significant share of new system placements, he said.
Third-quarter gross margin was 77.3%, down from 77.6% a year earlier. Operating loss was $1.1 million, compared with operating income of $0.9 million. Adjusted EBITDA, a non-GAAP measure, was positive $0.7 million, down from $3.2 million.
Sorensen noted that the prior-year net income included a $6.1 million noncash gain from changes in the fair value of derivative liabilities and a one-time $5 million gain from patent sales.
Cash and cash equivalents totaled $6.6 million at September 30. Sanuwave paid approximately $2.3 million in the third quarter under state sales-tax voluntary disclosure agreements, bringing year-to-date payments under the agreements to about $2.7 million, Sorensen said.
The company was not in compliance with a fixed-charge coverage ratio under its JPMorgan credit agreement at quarter-end. Sorensen said lenders waived the default through an amendment and waiver on October 28, and that Sanuwave continues to monitor compliance.
About Sanuwave Health (NASDAQ:SNWV)
SANUWAVE Health, Inc. is a medical technology company focused on regenerative medicine and advanced wound-care solutions. The company develops and commercializes noninvasive devices that use extracorporeal shock wave technology to stimulate biological responses in damaged or difficult-to-heal tissue. Its principal product is the dermaPACE system, which is designed to deliver acoustic shock waves to wound areas, including chronic diabetic foot ulcers. SANUWAVE has also pursued additional applications for its platform in areas such as orthopedic and soft-tissue healing, although the availability and regulatory status of specific products may vary by geography.
