Sanuwave Health (NASDAQ:SNWV) reported fourth-quarter and full-year 2025 results that management described as a “good if slightly complicated quarter,” highlighted by record revenue, record system placements, and sharply higher full-year profitability. Executives also spent significant time discussing how recent CMS reimbursement changes for skin substitutes and allografts are disrupting parts of the wound-care market, influencing customer behavior, and affecting the company’s growth outlook early in 2026.
Record Q4 and full-year results
CEO Morgan Frank said the fourth quarter was an all-time record for the company, with revenue of $13.4 million, up 30% from the prior-year quarter, and adjusted EBITDA of $4.8 million, up from $3.7 million a year earlier. Adjusted EBITDA represented 36% of quarterly revenue, according to Frank.
System sales were a notable driver. The company sold 624 UltraMIST systems in 2025 compared with 374 in the prior year, and fourth-quarter sales reached 255 systems, which Frank said was the highest quarterly number in company history and exceeded the prior record set in the third quarter by 100 systems. During the Q&A, Frank said the Q4 system figure did not appear to be driven by a single large order, but rather “an unusually large number of kind of mid-sized orders.”
Operational changes and the shift in channel strategy
Management highlighted two operational items that affected Q4 results. The company sunset its dermaPACE and Profile product lines during the quarter, and it recorded charges related to sales and use taxes for certain customers. CFO Peter Sorensen said gross margin in Q4 fell year over year due to a $486,000 write-off of dermaPACE inventory tied to discontinuing that product line.
Frank also detailed a commercial shift toward resellers and stocking distributors. He said 32% of Q4 revenue came through outside resellers and distributors, up from 26% in the prior quarter, though still below the company’s 2024 full-year average of 36%. The company began wholesale pricing for these partners in Q3, and Frank said that mix shift will be visible in average selling price trends because reseller sales occur at wholesale prices rather than retail pricing with commissions.
Frank said the reseller model can provide operating leverage because the company does not carry the reseller salesforce expense. In response to analyst questions about margin impact, he said the approach is “a bit higher in terms of operating margin than our W2 sales,” though he declined to quantify the difference.
New “active systems” metric amid industry disruption
Frank said industry disruption and a growing reseller channel prompted a reassessment of how the company tracks its installed base. Because systems shipped to resellers may sit in channel inventory before reaching end users, “systems in the field” became less useful as a measure of utilization. Sanuwave introduced a new metric called “active systems,” defined as systems owned by customers who have ordered applicators within the last six months or within their expected ordering timeframe, with adjustments to remove systems tied to customers known to have shut down.
Using that method, the company ended Q4 with 1,292 active systems, up 56 systems, or about 5%, from the end of Q3 (which would have been 1,236 under the same methodology). Frank said the company removed 168 systems during Q4 as discontinued, which he said reflects the magnitude of challenges in the wound-care space. In response to an investor question, Frank said that discontinuations largely stemmed from customers not ordering within six months or the company determining a customer was no longer operating, and he suspected financial distress played a major role. He also said the company has considered whether it could acquire and recondition discontinued systems, but declined to discuss specifics.
CMS reimbursement changes pressure customers, but not UltraMIST coding
Frank devoted a substantial portion of his prepared remarks to explaining how CMS reimbursement changes for skin substitutes and allografts are affecting practitioners, including many who also purchase UltraMIST systems and consumables. He emphasized that the reimbursement changes do not pertain to UltraMIST or code 97610, which he said received “a small… couple of dollar bump” for 2026.
However, he said the broader market disruption is having indirect effects, including reduced customer counts and patient volumes at some accounts. Frank described a combination of reimbursement cuts, limitations on billing for wastage, and an aggressive audit environment. He said the company has seen “individual wound care providers get hit with nine-figure clawbacks” on skin substitutes, contributing to business closures and hesitancy even among compliant providers.
Despite that disruption, Frank argued the underlying patient need remains and described what he called early “green shoots,” including providers expanding into gaps left by others and the emergence of new mobile wound-care groups. He said these newer, small but growing practices have become an internal category the company refers to as “baby elephants.”
Financial details, restatement, and outlook
Sorensen said the company delivered “a strong fourth quarter,” noting that full-year revenue growth was supported by a 24% increase in consumables volume and a 67% increase in system sales. He said full-year gross margin expanded year over year to 77%, driven by pricing improvements in consumables and reductions in system cost of revenue, partially offset by mix and pricing dynamics in systems.
The CFO also addressed a restatement in the Form 10-K, which he said was primarily tied to previously unrecognized sales tax liabilities identified via a third-party Nexus study and an error in revenue allocation for certain extended warranty arrangements. He said the revenue impact was not material, totaling about $300,000 across the first three quarters of 2025. The larger impact related to sales tax: approximately $1.6 million of additional general and administrative expense and $0.1 million of interest expense in 2024, and about $1.6 million of incremental G&A expense plus roughly $0.3 million of interest expense in 2025. Sorensen said additional sales-tax-related expense is possible in Q1 as the company completes remediation activities.
For Q4, Sorensen reported operating income of $2.0 million, flat year over year; excluding the inventory write-off and $479,000 of sales tax expense, operating income would have been $3.0 million. Operating expenses rose to $8.0 million from $6.0 million, which he attributed to several factors including changes in director fee accruals and stock-based compensation, higher headcount-related payroll costs, and increased R&D non-personnel expenses reflecting investments in product development initiatives.
Net income for Q4 was $7.7 million compared with a net loss of $13.3 million in the prior-year quarter, driven primarily by a non-cash gain from changes in the fair value of derivative liabilities. Sorensen said the company recorded a $5.9 million gain in Q4 2025 versus a $13.8 million loss in Q4 2024. He added that with most warrants now exercised, exchanged, or expired, the company expects limited impact from those non-cash fair-value swings going forward. Sorensen also cited lower interest expense due to refinancing senior debt with JPMorgan at the end of Q3 2025.
On liquidity, Sorensen said current assets were $24.6 million as of December 31, 2025, compared with $18.4 million a year earlier, and cash and cash equivalents totaled $12.0 million at year-end.
Looking ahead, management guided to Q1 revenue of $9.6 million to $10.3 million, which Frank said would be up 3% to 10% year over year but “largely suppressed” by the lingering effects of industry disruption. He said the company expects conditions to improve as the year progresses, and provided a preliminary estimate of 16% to 25% revenue growth for the year. When asked about quarterly cadence, Frank said it was too early to break the year down by quarter but suggested the back half of the year “looks like it’s gonna be very promising.”
In Q&A, Frank also declined to provide adjusted EBITDA guidance for 2026, but reiterated a past “rule of thumb” that incremental revenue could flow through at roughly 50% to adjusted EBITDA. He said the company’s internal sales force was around 14 or 15 people, with efforts underway to add management, national account coverage, and reseller support, and noted the company is working with larger reseller organizations than in prior periods. The company said it plans to provide more on product development efforts—after an uptick in R&D spending—on its Q1 call.
About Sanuwave Health (NASDAQ:SNWV)
Sanuwave Health, Inc is a medical technology company specializing in the development and commercialization of non-invasive acoustic wave therapies designed to stimulate tissue regeneration and accelerate healing. The company’s proprietary Extracorporeal Pulse Activated Technology (EPAT) delivers focused acoustic pressure waves to injured or chronic wound sites, activating the body’s natural repair mechanisms. Sanuwave’s primary therapeutic areas include advanced wound care for diabetic and venous ulcers, as well as orthopedic and musculoskeletal conditions.
The company’s lead product, the dermaPACE® system, holds clearance from the U.S.
