Thank you Tenva for your work on SNVW, it is an interesting story.
Robert posted a question in your first piece that I also wonder about, and it seems to me is still unanswered. In Q2 there were ~1200 UltraMIST systems in the field, but applicator revenue was only $6.4 million. That implies ~$59/day/machine of consumable revenue. How can it possibly be so low? Even if they discount the applicator $100 unit price all the way to $50, they're still only selling barely more than 1 applicator per system per day.
On your question, I believe you have used 90 days rather than 64 days which accounts for weekends. Assuming a hypothetical average of 1200 systems in the field for the quarter, this lands us at $83 per system per day on average rather than $59.
This makes sense given that some facilities which purchase UltraMIST don't necessarily need to do a procedure every day whilst others may do some more often.
The key thesis driver for me is the growth/distribution runway for Sanuwave to get UltraMIST through many more doors. Sanuwave’s product is currently only in 700 doors out of an estimated 70,000+ potential doors with about 1,261 units in service out of a potential 117,000+ units. Therefore I don't really care about this run-rate average of 1 procedure per system per day so long as we can maintain it as UltraMIST penetrates more of these doors. In this case, revenues will continue to inflect substantially as this distribution unfolds across the U.S.
It's also important to remember how early-stage brand awareness is at the moment. 38% of Sanuwaves 1,261 systems were only sold in the last 12 months. I.e. it is very very early days.
The company has also disclosed that they are targetting 55-65% of their revenues to come from consumables and they've achieved this so far.
On Robert's original question I responded in some detail and will attach what I wrote back then below:
"Thanks for the kind words and for the question Robert.
In Q4, Applicator sales were $5.9M and Systems sales were $4.4M.
We also know that in reality the company still does some discounting, so it is a false premise to assume zero discounting.
We can play out that exercise but I believe it is somewhat misleading due to the vast array of different client use cases for UltraMIST.
For example, if you consider the UltraMIST usage patterns of a single physician's office versus a post acute facility:
In the skilled nursing home with a theoretical 80 beds there is little reason the nurses couldn't do 2-3 procedures per hour, or at least be very high ticket users of UltraMIST.
On the other hand, a single physicians' office will clearly have a lot less usage and may be lucky to achieve 1 procedure per day.
Most of Sanuwave's early UltraMIST customers haven't been these larger scale clients (yet, we've still seen very impressive growth).
However, as we've heard on the most recent earnings calls, the company is now focussing on and dealing a lot more with these prospective higher volume customers such that they land these more 'consultative sales.'
I'm not too concerned with the lack of average usage on a per day basis due to the massive amount of post-acute care facilities that exist in the U.S which remain completely untapped.
As Sanuwave continues to land more and more of these larger clients, we should start to see applicator sales tick up in an asymmetric fashion when comparing YoY results and it's something I will be continuing to monitor as the thesis pans out.
I did indeed use 90 days. I was thinking these devices get used in hospitals and nursing homes, so expected 7 days/week use. Is that too aggressive?
If reimbursement is ~$400, an applicator is ~$100, then provider has $300 of margin before staff costs. At less than 1 application per day, 5 d/w, it is going to take a long time to recover the $35k purchase cost of the machine.
Another key point is Sanuwave's production capacity.
In March 2025, Sanuwave only had production capacity of 10,500 applicators per week. This maths implies that replacement capacity is little over 1 applicator per system per day. 10,500 / 7 = capacity to produce 1500 applicators per day. 1500 / 1261 current systems = capacity to replace ~1.19 applicators per system per day before the company reaches a point of growing too quickly for it to be able to handle its capacity constraints, thus depleting inventories.
However, the company expects production capacity to have grown to 24,000 applicators per week by December 2025. 24,000 / 7 = capacity to produce 3,429 applicators per day. As this point, the company will be in a much stronger position to handle increased adoption per system and I believe the October marketing program is timed to align well with this impending increase in production capacity.
$6.4M in applicator sales in Q2 at $100 a pop = 64,000 applicators, or ~6 weeks of their 10,500 capacity, so it seems they were running at about 50% capacity in Q2.
Do you have any insight into possible discounting of the applicators?
It really depends on the particular facility providing it. Some physician offices would tend not to use it as much as mobile wound care providers and wound care facilities for example. The company hasn't disclosed the % breakdown of the current doors that UltraMIST is in so it's hard to answer this question accurately. Given the company commented it is building momentum around selling into larger hospital chains - I am deducing this is not yet the case and therefore would lean closer to 5 days than 7 at this early stage on average.
I believe the economics are highly attractive re payback. With average reimbursement of $420, a provider can generate the value of the system cost in terms of its top line after 85 applications.
After accounting for payment to Sanuwave, it is breaking even after 109 sessions (320*109 = ~$35K).
There's no additional staff costs to applying UltraMIST that otherwise wouldn't already be incurred by the facility so I'm not sure this is the best way to look at it.
For bigger customers it would take 3-5 months to achieve full payback (depending on avg. use per system per day) with extremely attractive economics thereafter for each application that essentially falls straight to the bottom line after the payment to Sanuwave.
I'd also reiterate the point made on the last earnings call that the company is now pursuing accounts with several hundred locations across the U.S. Even landing 1-2 of these larger accounts could see an instant step-change increase in Sanuwave's systems in the field by 1.5-2x and generate an incremental $20-30M in revenues, with 50% of that trickling down to EBIT.
Thank you Tenva for your work on SNVW, it is an interesting story.
Robert posted a question in your first piece that I also wonder about, and it seems to me is still unanswered. In Q2 there were ~1200 UltraMIST systems in the field, but applicator revenue was only $6.4 million. That implies ~$59/day/machine of consumable revenue. How can it possibly be so low? Even if they discount the applicator $100 unit price all the way to $50, they're still only selling barely more than 1 applicator per system per day.
Hi Whirly,
Thanks for your comments and no problem!
On your question, I believe you have used 90 days rather than 64 days which accounts for weekends. Assuming a hypothetical average of 1200 systems in the field for the quarter, this lands us at $83 per system per day on average rather than $59.
This makes sense given that some facilities which purchase UltraMIST don't necessarily need to do a procedure every day whilst others may do some more often.
The key thesis driver for me is the growth/distribution runway for Sanuwave to get UltraMIST through many more doors. Sanuwave’s product is currently only in 700 doors out of an estimated 70,000+ potential doors with about 1,261 units in service out of a potential 117,000+ units. Therefore I don't really care about this run-rate average of 1 procedure per system per day so long as we can maintain it as UltraMIST penetrates more of these doors. In this case, revenues will continue to inflect substantially as this distribution unfolds across the U.S.
It's also important to remember how early-stage brand awareness is at the moment. 38% of Sanuwaves 1,261 systems were only sold in the last 12 months. I.e. it is very very early days.
The company has also disclosed that they are targetting 55-65% of their revenues to come from consumables and they've achieved this so far.
On Robert's original question I responded in some detail and will attach what I wrote back then below:
"Thanks for the kind words and for the question Robert.
In Q4, Applicator sales were $5.9M and Systems sales were $4.4M.
We also know that in reality the company still does some discounting, so it is a false premise to assume zero discounting.
We can play out that exercise but I believe it is somewhat misleading due to the vast array of different client use cases for UltraMIST.
For example, if you consider the UltraMIST usage patterns of a single physician's office versus a post acute facility:
In the skilled nursing home with a theoretical 80 beds there is little reason the nurses couldn't do 2-3 procedures per hour, or at least be very high ticket users of UltraMIST.
On the other hand, a single physicians' office will clearly have a lot less usage and may be lucky to achieve 1 procedure per day.
Most of Sanuwave's early UltraMIST customers haven't been these larger scale clients (yet, we've still seen very impressive growth).
However, as we've heard on the most recent earnings calls, the company is now focussing on and dealing a lot more with these prospective higher volume customers such that they land these more 'consultative sales.'
I'm not too concerned with the lack of average usage on a per day basis due to the massive amount of post-acute care facilities that exist in the U.S which remain completely untapped.
As Sanuwave continues to land more and more of these larger clients, we should start to see applicator sales tick up in an asymmetric fashion when comparing YoY results and it's something I will be continuing to monitor as the thesis pans out.
Really appreciate the question!"
Thanks!
I did indeed use 90 days. I was thinking these devices get used in hospitals and nursing homes, so expected 7 days/week use. Is that too aggressive?
If reimbursement is ~$400, an applicator is ~$100, then provider has $300 of margin before staff costs. At less than 1 application per day, 5 d/w, it is going to take a long time to recover the $35k purchase cost of the machine.
Another key point is Sanuwave's production capacity.
In March 2025, Sanuwave only had production capacity of 10,500 applicators per week. This maths implies that replacement capacity is little over 1 applicator per system per day. 10,500 / 7 = capacity to produce 1500 applicators per day. 1500 / 1261 current systems = capacity to replace ~1.19 applicators per system per day before the company reaches a point of growing too quickly for it to be able to handle its capacity constraints, thus depleting inventories.
However, the company expects production capacity to have grown to 24,000 applicators per week by December 2025. 24,000 / 7 = capacity to produce 3,429 applicators per day. As this point, the company will be in a much stronger position to handle increased adoption per system and I believe the October marketing program is timed to align well with this impending increase in production capacity.
Thanks for that added detail.
$6.4M in applicator sales in Q2 at $100 a pop = 64,000 applicators, or ~6 weeks of their 10,500 capacity, so it seems they were running at about 50% capacity in Q2.
Do you have any insight into possible discounting of the applicators?
Yes Morgan has said they engage in discounting multiple times on different earnings calls and presentations
It really depends on the particular facility providing it. Some physician offices would tend not to use it as much as mobile wound care providers and wound care facilities for example. The company hasn't disclosed the % breakdown of the current doors that UltraMIST is in so it's hard to answer this question accurately. Given the company commented it is building momentum around selling into larger hospital chains - I am deducing this is not yet the case and therefore would lean closer to 5 days than 7 at this early stage on average.
I believe the economics are highly attractive re payback. With average reimbursement of $420, a provider can generate the value of the system cost in terms of its top line after 85 applications.
After accounting for payment to Sanuwave, it is breaking even after 109 sessions (320*109 = ~$35K).
There's no additional staff costs to applying UltraMIST that otherwise wouldn't already be incurred by the facility so I'm not sure this is the best way to look at it.
For bigger customers it would take 3-5 months to achieve full payback (depending on avg. use per system per day) with extremely attractive economics thereafter for each application that essentially falls straight to the bottom line after the payment to Sanuwave.
I'd also reiterate the point made on the last earnings call that the company is now pursuing accounts with several hundred locations across the U.S. Even landing 1-2 of these larger accounts could see an instant step-change increase in Sanuwave's systems in the field by 1.5-2x and generate an incremental $20-30M in revenues, with 50% of that trickling down to EBIT.
Thanks for the great read. Really appreciate the summary, but also the valuation part.
No problem Niels!