SANUWAVE Health (OTC: SNWV) stock is consolidating ahead of an expected Q4 announcement of record-setting revenues. In fact, the 10-K filing in March is expected to report SNWV having its best year ever regarding revenues, acquisitions, and pipeline enhancement. Further, in what could fuel a rally, investors are expecting bullish guidance for the remainder of 2021, with the company possibly highlighting several assets that can each deliver exponential near and long-term value. Here's what to expect.
First, an update on its transformative acquisition of UltraMIST in 2020 will likely earn the lion's share of attention. Already, that asset has led to a record-setting Q3, an increase in analyst revenue projections, and the company's likelihood to post its best-ever operating results. Prior to the asset being purchased by SNWV, it delivered more than $15 million in revenues and produced $4 million in EBITDA to its former owner. There's more.
Also, in 2020, SNWV acquired exclusive worldwide rights to WoundShield®. This patch-based therapeutic device facilitates tissue regeneration and wound healing using ultrasound to increase local capillary perfusion and tissue oxygenation. To monetize this asset, SANUWAVE said it is seeking regulatory approval to market WoundShield® in Europe and the United States, with NanoVibronix keeping the sole right to manufacture the licensed products. The deal is a win-win.
For SANUWAVE, WoundShield® complements its dermaPACE® energy-based wound care treatment system. And beyond the device, the agreement can lead to SNWV tapping further into NanoVibronix's surface acoustic wave ultrasound technology expertise. NanoVibronix will benefit from leveraging the strength of SANUWAVE's commercial organization.
Though not widely discussed yet, WoundShield® immediately adds more firepower to a growing and respected energy-based treatment arsenal. The earnings call in March will likely provide more insight into why this deal can take advantage of substantial US and international opportunities. This device has not been calculated into analyst revenue models, which could be a catalyst to revise estimates.
Still, despite the additions, the 10-K highlight could be that despite massive disruptions to providers and patients created by COVID-19, SNWV still delivered record results.
Expectations Set Stage For Record-Setting 2021
Thus, investors may be right to position ahead of the coming financials. First, Lake Street Capital may be spot on in its forecast, suggesting all-time high revenues that contribute to an expected 2021 run-rate of at least $25 million. If SNWV guides to that level or higher, it could represent a more than 500% increase in revenues YoY.
Also, an increase to those levels could push the company close to EBITDA positive results, which would be a meaningful milestone. Further, with its new assets, including licensed products, SNWV can meet heightened demand with its best product-mix in its history. Moreover, the company expects to maintain high gross margins and continue to enjoy increases to its reimbursement allowance for its product portfolio.
Further, in addition to its revenue forecast of at least $25 million this year, Lake Street Capital set a price target at $0.34, representing a roughly 88% increase from its current $0.19 price. Moreover, if SNWV can deliver on that revenue number despite the massive market headwinds faced, investors would be right to respond enthusiastically.
For sure, strong guidance in its commentary would not be a "sell the news" event. Further, studies show that SNWV's addressable markets are growing. That's also bullish near and long term.
Market Expansion And Better Treatment Devices
An article published in BioSpace suggests that the global diabetic foot ulcer treatment market was valued at $5 billion (USD) in 2018. But, an expected CAGR of 7.5% from 2019 to 2027 has the market almost doubling to $9.6 billion by 2027. Those estimates, and even the current market, put SNWV in the right market, with the right products, at the right time.
Moreover, SANUWAVE may emerge as the best-in-class front-line treatment provider. Already, revenue growth suggests that its non-contact, quick, and painless treatment alternative is becoming a popular option for caregivers and a favorite for patients. UltraMIST® utilizes low-frequency ultrasound to provide a non-contact wound healing solution. When combined with dermaPACE®, also an energy-based treatment, the two show a unique ability to provide effective therapy to patients with chronic diabetic wounds and eliminate unwanted drug-induced side effects and pain caused by alternative treatment options. That's a critical factor to consider for treatment providers, patients, and payers.
In fact, with SNWV announcing in December that its reimbursement coverage rate is increasing, it's a sign that insurers are willing to pay more for a treatment now compared to a lifetime of redundant treatment with inferior products and devices.
Undoubtedly, investors are looking for confirmation that SANUWAVE's transformative 2020 acquisitions result in substantial revenue increases with a trajectory toward EBITDA positive results. Moreover, with the company's enhanced product lineup, combined with its experienced sales and reimbursement team, a reiteration of the company's goal to reach $100 million in sales by 2024 would add an exclamation point to its 10-K report.
Now, with less than 30 days until its year-end financials are due, investors may start to again nibble at shares at these undervalued levels. SANUWAVE may very well be an under-the-radar opportunity at this point, but with its growing arsenal of best-in-class treatments, that may not be the case much longer.
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