SANUWAVE Health, Inc. (OTCMKTS:SNWV) is riding the innovation train and catching up to major players within the medical industry.
With the clearance of its dermaPACE system which offers a novel way to treat some diabetic ailments, the firm has enjoyed positive attention from the market and this is only likely to get better in the future.
Take a look at the stock’s price movement in the past year:
SANUWAVE Health, Inc. was established in September 2009 and is headquartered in Suwanee, Georgia. The firm specializes in the use of shockwave technology through the use of high energy, noninvasive, acoustic shockwaves for medical application and other purposes. It also operates in the development and sale of noninvasive and biological response enabling equipment for the repair and regeneration of tissues, musculoskeletal as well as vascular structures.
Early in March 2018, the firm announced that the delivery of its first merchandise to the United States market of the firm’s dermaPACE® system happened within the first week of the month. Since it received clearance from the FDA for the commercialization of the dermaPACE system in treating Diabetic Foot Ulcers (DFU) in December 2017, the feedback from the public has been tremendously positive. Since that time, the firm has set up a solid product demand backlog. With financing from NFS in place, along with its partnership with Premier Shockwave, the firm has begun shipments. In the same vein, the company has remained consistent in supporting its international associates while still looking at other new international markets. The amount of interest which has been received from wound care specialists in the United States has far exceeded management expectations and interest levels have also increased, particularly from international markets since the clearance announcement on the FDA.
Chief Executive Officer of Sanuwave, Kevin A. Richardson II explained that management was pleased to have the begun recording sales of some of its dermaPACE systems within the U.S. market and bringing in revenue. More critically, the firm recognizes the system as its frontline tool for the wound care market, possibly transforming the current methods employed for treating chronic wounds.
This dermaPACE system delivers a completely new treatment method by transmitting energy from shock waves in a non-intrusive way. The treatment is made up of four to eight quick and non-intrusive ways within a two to ten-week timeframe. Along with this, consistent monitoring and a high standard of care are required for a while after. This form of treatment offers the lower patient adverse events compared with other methods and as a result, the system delivers an effective and safe method to treat patients who have been diagnosed with diabetic foot ulcers (DFU).
Besides the suffering and morbidity caused by the ailment, foot lesions which may occur in diabetic patients could have significant economic consequences as the treatments could lead to huge costs for both the patients and society as well. The high cost of treating patients with of diabetic foot ulcer along with the complications caused by the ailment is huge. According to research conducted, the total cost of treatment for DFU over a two year time period was roughly $28,000 back in 1995 and adjusting based on inflation and market rates, it was projected to be as high as $47,000 in 2009.
In 2016, the firm recorded revenues of $1.38 million, an increase of 43% from the revenues of the last year. Impressively, this is the highest revenue increase in a period which has seen a continued trend of increasing revenues for the last few years. With the recent FDA clearance, it is anticipated that in years to come, the firm will continue to increase and generate revenues from the sale of its new products.
However, the firm recorded a whopping 99% increase in its cost of sales, a far larger increase than previous years. A pointer that the firm may not have introduced adequate efficiency to its sales operations.
In the same period, operating expenses jumped by a mere 5%, With no additional income while there were increases in research & development costs as well as sales and administrative costs, operating loss for the year was recorded at $3.3 million, a drop from $4.5 million. Net loss for the year was $6.4million, the only additional expense being interest costs.
The statement of financial position reveals that the firm is very highly geared. On its books, its total debt is worth an estimated $7.9 million, with most of it being current. It also has a very low liquidity ratio of 0.11
SNWV is on the right track, especially with its proprietary dermaPACE system. However, there is a lot of work to be done to maximize revenues and turn its net losses into profits.
Disclosure: We have no position in SNWV and have not been compensated for this article.