Sanuwave — Q2 FY2026 Earnings Summary

Financial Performance

• Q2 2026 revenue totaled $9.7 million, a 3% decrease from $10.1 million in Q2 2025.
• Gross margin was 76.2% in Q2 2026, down from 78.1% in Q2 2025.
• GAAP operating loss was $(0.3) million for Q2 2026, compared to operating income of $1.4 million in Q2 2025.
• Net loss for Q2 2026 was $0.7 million, versus net income of $0.6 million in Q2 2025.
• Adjusted EBITDA for Q2 2026 was $1.2 million, down from $3.2 million in Q2 2025.
• For the six months ended June 30, 2026, revenue was $19.4 million compared to $19.4 million in the same period of 2025.
• Operating loss for the six months ended June 30, 2026, was $(1.4) million, compared to operating income of $2.0 million in 2025.
• Net loss for the six months ended June 30, 2026, was $(2.1) million, compared to a net loss of $(5.6) million in 2025.
• Cash and cash equivalents were $9.4 million as of June 30, 2026, down from $12.0 million as of December 31, 2025.
• Total liabilities were $33.8 million as of June 30, 2026, compared to $35.7 million as of December 31, 2025.
• Secured term loan debt (current and non-current) totaled approximately $18.5 million as of June 30, 2026.
• Stock-based compensation expense was $1.6 million for Q2 2026 and $3.1 million for the six months ended June 30, 2026.

Guidance and Future Outlook

• Sanuwave is withdrawing its previously issued fiscal year 2026 guidance due to market conditions and Medicare reimbursement developments.
• The Company will not provide quarterly or annual guidance until there is greater clarity on reimbursement topics.
• Guidance reassessment is expected after CMS publishes its final rule, anticipated in the fourth quarter of 2026.

Business Segments and Product Lines

• Ultramist® applicator revenue increased 13% year-over-year to $7.3 million in Q2 2026.
• Applicator sales accounted for approximately 75% of total revenue in Q2 2026, exceeding the target range of 60-65%.
• 82 Ultramist® systems were sold in Q2 2026, down from 116 in Q2 2025 and 97 in Q1 2026.
• Q2 2026 applicator unit volumes increased 13% sequentially from Q1 and 27% year-over-year.
• The Company estimates that demand for systems remained robust when including estimated sales of used Ultramist systems.

Market and Competitive Landscape

• The advanced wound care market is described as challenging in 2026.
• System sales were negatively impacted by ongoing stress in the customer base from CMS reimbursement changes and recoupments around allografts.
• A significant market for used Ultramist systems has emerged, leading to lower than expected sales of new systems by the Company.
• CMS announced a proposed rule for 2027 reimbursement (97610) in July 2026 that the Company disagrees with regarding methodology and assumptions.
• The Company previously experienced a 14% increase in its proposed reimbursement rate in the HOPD setting shortly before the new proposal.

Risks and Challenges

• Risks include reductions, clawbacks, or recoupments of CMS reimbursement for skin substitutes, allografts, or other advanced wound care products.
• 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 may cannibalize sales of new systems.
• Regulatory, quality, and product-liability considerations exist regarding the Company's ability to qualify and support new users acquiring systems through the secondary market.
• Risks associated with regulatory oversight and the Company's ability to sustain applicator and consumable volumes are noted.

Management Commentary and Tone

• CEO Morgan Frank stated that 2026 has been a challenging period for the advanced wound care market.
• Management views the increase in applicator unit volumes as a strong sign of ongoing demand and confidence in the Ultramist system.
• Management acknowledges that system sales were negatively impacted by CMS reimbursement changes and the used system market.
• The Company plans to vigorously comment on the CMS proposed rule to ensure data reflects full practitioner costs and systemic benefits.
• Management expressed disagreement with the CMS methodology, process, and assumptions utilized in the proposed 2027 rule.

Other Key Points

• Q2 2026 revenue was slightly above the high end of the revised guidance provided on June 16, 2026.
• A business update conference call is scheduled for August 7, 2026, at 8:30 a.m. EST.
• The Company has a secured revolving credit facility with a balance of $655,000 as of June 30, 2026.
• Inventory increased to $7.1 million as of June 30, 2026, from $5.9 million as of December 31, 2025.
• Accounts receivable increased to $5.8 million as of June 30, 2026, from $5.4 million as of December 31, 2025.
• Net cash provided by operating activities was $0.8 million for the six months ended June 30, 2026.
• Net cash used in investing activities was $0.6 million for the six months ended June 30, 2026.
• Net cash used in financing activities was $(2.8) million for the six months ended June 30, 2026, primarily due to repayment of the secured term loan.
• Stock options were exercised generating $77,000 in proceeds during the six months ended June 30, 2026.
• The Company recognized a write-off of inventory of $69,000 for the six months ended June 30, 2026.