SANUWAVE first quarter revenues decrease 5% to $238,540

SANUWAVE Health, Inc. (OTCBB: SNWV) today reported financial results for the three months ended March 31, 2012 and provided a business update.

Christopher M. Cashman, President and CEO of SANUWAVE, said, "As recently announced, we have been granted conditional approval by the U.S. Food and Drug Administration (FDA) of our Investigational Device Exemption (IDE) Supplement for an additional clinical trial utilizing our dermaPACE® device in the treatment of diabetic foot ulcers. We believe the clinical trial could be completed and submitted in support of a Premarket Approval (PMA) application for dermaPACE in as early as 20 months from trial initiation, assuming such data to be collected meets the agreed upon statistical and clinical plan of success. The Company has already identified clinical study sites and is in the process of qualifying them for participation. Patient enrollment is expected to begin once Institutional Review Board (IRB) approvals and appropriate funding to conduct the study are in place, which is forecasted to occur as early as the third quarter of this year."

Mr. Cashman continued, "We continue to make every effort to lower our cash burn to the maximum extent to which we do not affect the value of the business, our ability to raise funds or pursue strategic options, or our capability to start up and conduct our next dermaPACE study to treat diabetic foot ulcers. As previously announced, we have retained the services of Canaccord Genuity Inc., a leading investment bank, to help us explore capital fund raising and/or strategic options for SANUWAVE to fund the Company so we can start this clinical work."

"The FDA's conditional approval of the IDE Supplement is a highly positive development in the approval process of dermaPACE for the U.S. market. The planned trial provides a scientifically robust, yet potentially more expeditious pathway to validation of dermaPACE's safety and efficacy and subsequent FDA approval. Our focus remains the same, which is to achieve FDA approval as soon as possible in order to make dermaPACE available to the millions of U.S. patients who suffer from debilitating, recalcitrant diabetic foot ulcers," concluded Mr. Cashman.

Financial highlights for the 2012 first quarter include (all comparisons are with the 2011 first quarter):

  • Gross profit increased by $8,313, or 5%, to $166,768. Gross profit as a percentage of revenues increased to 70%, up from 63%.
  • Total operating expenses decreased by $291,174, or 13%. The Company will recognize the full extent of cost saving measures implemented in Q1-2012, including headcount reductions and expense savings, in Q2-2012 and thereafter.
  • Net loss for the quarter decreased by $348,011, or 16%, to $1,835,315 from $2,183,326.

Revenues for the three months ended March 31, 2012 were $238,540, compared with $251,753 for the same period in 2011. The decrease of $13,213, or 5%, is attributable to lower sales of devices to the Company's European distributors which was partially offset by increased sales of higher margin refurbishment applicators.

Cost of revenues for the three months ended March 31, 2012 was $71,772, compared with $93,298 for the same period in 2011. Gross profit as a percentage of revenues was 70% for the three months ended March 31, 2012, compared with 63% for the same period in 2011. The increase in gross profit as a percentage of revenues was due to increased sales of higher margin applicators and wound kits in 2012 due to more devices being in service in 2012 as compared to 2011.

Research and development expenses for the three months ended March 31, 2012 were $603,797, compared with $749,299 for the same period in 2011, a decrease of $145,502, or 19%, due to lower expenses related to clinical results analysis in 2012. Consulting expenses related to clinical results analysis were higher in 2011 as the Company prepared to submit to the FDA the dermaPACE PMA for treating diabetic foot ulcers in June 2011.

General and administrative expenses for the three months ended March 31, 2012 were $1,237,540, compared with $1,382,185 for the same period in 2011, a decrease of $144,645, or 10%. General and administrative expenses included non-cash stock-based compensation of $262,176 and $152,448 for the three months ended March 31, 2012 and 2011, respectively. The increase in stock-based compensation was due to the November 2011 granting of employee stock options and the March 2012 granting of stock options to members of the Company's medical advisory board. Excluding non-cash stock-based compensation, general and administrative expenses were $975,364 for the three months ended March 31, 2012, compared with $1,229,737 for the same period in 2011, a decrease of $254,373, or 21%. The decrease is mainly due to decreased investor relations expenses and decreased legal costs for patent defense activities.

The net loss for the three months ended March 31, 2012 was $1,835,315, or ($0.09) per share, compared with a net loss of $2,183,326, or ($0.14) per share, for the three months ended March 31, 2011, a reduction of $348,011, or 16%.

As of March 31, 2012, the Company had cash and cash equivalents of $2,421,809, compared with $3,909,383 as of December 31, 2011, a decrease of $1,487,574. For the three months ended March 31, 2012, net cash used by operating activities was $1,490,445, primarily consisting of compensation costs, research and development activities and general corporate operations. In addition, the net cash used by operating activities for the three months ended March 31, 2012 included payments to reduce current payables and accrued expenses which totaled $168,326.

Source:

SANUWAVE Health, Inc.

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