Sanuwave Health, Inc. — Q3 FY2026 Earnings Summary

Financial Performance:

• Revenue for the three months ended September 30, 2026, totaled $8.6 million, a 24% decrease from $11.3 million in the same period of 2025.
• Gross margin was 77.3% for Q3 2026, compared to 77.6% in Q3 2025.
• GAAP operating loss was $1.1 million for Q3 2026, versus an operating income of $0.9 million in Q3 2025.
• Net loss for Q3 2026 was $1.4 million, compared to net income of $9.7 million in Q3 2025.
• Adjusted EBITDA for Q3 2026 was $0.7 million, down from $3.2 million in Q3 2025.
• Cash and cash equivalents were $6.6 million as of September 30, 2026, down from $11.9 million as of December 31, 2025, due to approximately $2.3 million paid for sales tax voluntary disclosure agreements.
• Total assets were $32.5 million as of September 30, 2026, compared to $37.3 million as of December 31, 2025.
• Total liabilities were $29.7 million as of September 30, 2026, compared to $35.7 million as of December 31, 2025.
• Stockholders' equity was $2.9 million as of September 30, 2026, compared to $1.6 million as of December 31, 2025.
• For the nine months ended September 30, 2026, revenue was $27.9 million, down from $30.7 million in the prior year period.
• For the nine months ended September 30, 2026, net loss was $3.5 million, compared to net income of $4.1 million in the prior year period.
• For the nine months ended September 30, 2026, Adjusted EBITDA was $3.0 million, down from $8.7 million in the prior year period.
• Cash used in operating activities for the nine months ended September 30, 2026, was $29,000, compared to cash provided by operating activities of $557,000 in the prior year period.

Business Segments and Product Lines:

• Ultramist® system sales were 40 units in Q3 2026, down from 155 units in Q3 2025 and 82 units in Q2 2026.
• Ultramist® applicator revenue increased by 2% to $6.9 million in Q3 2026, compared to $6.8 million in Q3 2025.
• The company continues to gain traction in hospitals and other users where cost savings from halting wound progression is the primary concern.

Market and Competitive Landscape:

• The CMS proposed rule to maintain skin substitute pricing at 2026 levels for 2027 caused mobile wound care practitioners, particularly those in rural home care, to exit operations, affecting customers.
• Proposed changes to the 97610 code prompted a "wait and see" approach across the market during the quarter.
• An ongoing market for used Ultramist® units contributed to the decline in new system sales.
• HOPD (hospital outpatient department) rates for 97610 increased by 14% for 2027.
• The Q1 status for the 97610 code was removed, allowing it to be billed simultaneously with other procedures rather than being packaged to zero.
• The CMS and American Medical Association RUC have signaled interest in reviewing the 97610 code structure regarding scaling factors for multiple, large, or difficult wounds.

Risks and Challenges:

• Anticipated reimbursement levels for skin substitutes, allografts, or other advanced wound care products could adversely affect customer behavior and capital budgets.
• Financial distress, closure, or liquidation of wound care practices may impact demand for the Company's systems.
• The emergence and growth of a secondary market for used Ultramist systems could cannibalize sales of new systems.
• Risks exist regarding the Company's ability to qualify, train, and support new users acquiring systems through the secondary market, including regulatory, quality, and product-liability considerations.
• The Company faces risks related to sustaining applicator and consumable volumes and converting system placements into recurring consumable revenue.
• Regulatory oversight risks and the Company's ability to maintain compliance with Nasdaq listing requirements are noted.
• The Company must manage its capital resources and competition.

Management Commentary and Tone:

• CEO Morgan Frank stated that Q3 was defined by the CMS proposed rule, which affected the company in multiple ways.
• Management identified a "silver lining" in the 14% increase in HOPD rates for 97610 and the removal of Q1 status from the code.
• Management indicated plans to engage with CMS and the AMA RUC regarding the structure of the 97610 code.
• Management views hospitals and users focused on cost savings from halting wound progression as a core opportunity going forward.

Other Key Points:

• A business update conference call was scheduled for November 11, 2026, at 8:30 a.m. EST.
• The net loss for Q3 2026 was primarily attributable to a $6.1 million non-cash gain on the change in fair value of derivative liabilities and a one-time $5.0 million gain on the sale of patents recognized in the prior-year period, neither of which recurred.
• Interest expense decreased by $1.5 million in the current-year period compared to the prior-year period.
• The Company paid approximately $2.3 million under sales tax voluntary disclosure agreements during the quarter.
• Stock-based compensation for the nine months ended September 30, 2026, was $4.6 million.
• The Company holds a secured revolving credit facility and a secured term loan with JPMorgan Chase Bank, N.A.