Sanuwave Health is a buy, this analyst says

Roth Capital Markets analyst Kyle Bauser reiterated a “Buy” rating and US$55.00 target price for Sanuwave Health (Sanuwave Health Stock Quote, Chart, News, Analysts, Financials NASDAQ:SNWV) in a Sept. 28 report, highlighting the company’s favourable refinancing of its debt facility and the completion of a broader restructuring effort that began in 2024.

Sanuwave is a medical technology company that develops and commercializes its UltraMIST system, a non-contact, low-frequency ultrasound therapy platform for treating complex wounds. Headquartered in the U.S., the company is focused on improving clinical outcomes in chronic and acute wound care settings.

On Sept. 26, Sanuwave announced it had refinanced its US$27.5-million debt facility with a new four-year US$23-million term loan and a two-year US$5-million revolving credit facility, both at SOFR plus 350 basis points, or roughly 7.7%, and with no prepayment penalties. By comparison, the old financing carried a rate of about 19.25%, combining cash and payment-in-kind interest. The total payoff of US$28.8-million was funded with US$24-million of new debt and US$4.8-million in cash.

“The update concludes a series of strategic financial actions aimed at strengthening and simplifying SNWV’s balance sheet and capital structure that began last year,” Bauser said. Those steps included a 1-for-375 reverse split, the conversion of more than US$43-million in notes and warrants into equity, warrant exercises by NH Expansion Credit Fund, a US$10.3-million PIPE financing, and the repayment of a US$6.3-million note to Celularity.

Bauser said the refinancing will reduce quarterly interest expense to roughly US$450,000 from about US$1.3-million previously. With outstanding debt now at US$24-million, he estimates Sanuwave’s quarter-end cash balance at about US$10.5-million. He maintained his forecast that the company will generate roughly US$15-million of Adjusted EBITDA in 2025, with margins supported by a maturing sales force and a new manufacturing process expected to be completed before year-end.

“We expect further profit margin expansion as the new sales force matures and the updated manufacturing process is completed by year-end,” he said. “The significantly lower interest expense payments result in an upward revision of our FY25 and FY26 EPS estimates from US$0.26 to US$0.42 and from US$0.86 to US$1.50, respectively.”

Bauser said that Sanuwave should do US$15.2-million in Adjusted EBITDA on revenue of US$47.1-million in fiscal 2025. He said those numbers will improve to US$21.0-million on revenue of US$63.7-million in fiscal 2026.

He added that the company remains a “compelling takeout candidate” for larger wound-care manufacturers seeking diversification away from the volatile skin-substitute market. His US$55 price target is based on applying a 34-times EV/Adjusted EBITDA multiple to 2025 results, adjusted for US$10.5-million in cash, US$24-million in debt and 9.2-million diluted shares outstanding.

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