SANUWAVE Health, Inc.

Today's call will be recorded and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Morgan Frank, Chairman and CEO of SanuWave. Please go ahead.

Thanks very much. So welcome everyone to SanuWave's fourth quarter and fiscal 2023 earnings call. Our form 10K was filed with the SEC last night. Our earnings release was issued this morning. And the updated presentation to go along with this call was made available on our website in the investor section. You can refer to that presentation during the call. Joining me on this call is Tony Reno, our CFO. And after the presentation, we will open the call up to question and answer. First, let me begin with the always scintillating forward-looking statements disclaimer. This call may contain forward-looking statements, such as statements relating to future financial results, production expectations and constraints, plans for future business development activities. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control. Description of these risks and uncertainties and other factors that could affect our financial results is included in our SEC filings. Actual results may differ materially from those projected in the forward-looking statements. The company undertakes no obligation to update any forward-looking statement. As a reminder, our discussion today will include non-GAAP numbers. Reconciliations between our GAAP and non-GAAP results can be found in our recently filed 10-K for 2023. Okay, so with that out of the way, Q4 was another busy and productive quarter for SanuWave, and we continue our progress from Q3 on business model development, management, and manufacturing. Q4 was the first quarter in which the company was not limited by production inventory constraints, and we now find ourselves with product on hand. This enabled 27% year-over-year earnings growth up against what had previously been the best quarter in the company's history. and 40% growth versus the third quarter. In Q4, the company emphasized strong price discipline and did not engage in year-end sales or promotions as had been common in prior years. As a result, and in spite of taking some pretty significant charges to cost of goods sold, our operating profitability and the positive adjusted EBITDA were achieved this quarter. Ultramist systems sold were up 44% from Q3, and another 19 were placed into the rent-to-own program that we discussed last quarter. This took total placements for the quarter up to 98 versus 55 from Q3, and total active systems to a somewhat ominous 666 at end of year. versus 581 at the end of Q3. This number would have been higher, but one of our customers adopting the RTO program had previously been renting systems from us, and so they were sort of a net wash on total active systems. Overall, Ultramist revenues rose 77% sequentially in Q3. Of the 79, I'm sorry, systems revenues rose 77% sequentially from Q3. Of the 79 systems sold in the quarter, 47% were sold to new customers, continuing our trend of expanding our user base. This higher system count and better pricing for applicators led to a 16% sequential growth in applicators revenue, which amounted to 51% of overall revenues in the quarter. Down a bit as an overall percentage from previous quarters, but this was predominantly because our systems revenue was up so much, so We're actually pretty pleased by that outcome. We're also pleased to view this largely recurring applicator sales as the core business of our company. This is really what we're focused on. And to our mind, it's a very simple equation. The number of active systems in the field times the number of applicators per case used per system per week times the price per case is applicator revenue. So those are the three variables that we really manage to. We're starting to do very well on growing the active system count, which was up 14% sequentially, and we've become much more disciplined on pricing. The one that really moves the needle is applicators used per active system, and this is going to be our big focus for 2024. In pursuit of this, we are seeking to both learn from and to teach our customers, sharing best practices and processes from our network, to help them identify and treat patients. We're also looking to focus our sales efforts in high usage environments and physician practices that see a lot of patients, a practice that's become possible as the alleviation of production constraints has given us the manufacturing capacity and the inventory to start engaging with much bigger customers from whom we were simply not in a position to take yes for an answer from previously. This makes us optimistic about 2024 as the breakout year for SanuWave, and we are gearing up accordingly. We brought three new salespeople on board in March, and we've been expanding our commercial ops and clinical training teams to support growth as we come to balance expansion against our goals of rapid, profitable growth. I'll now turn this over to Toni to walk you through the numbers.

Toni? Thank you, Morgan. Revenue for the three months ended December 31st, 2023, totaled $7 million, an increase of 27% as compared to $5.5 million for the same period of 2022. This growth is slightly higher than the previous guidance range of 20% to 24%. Revenue for fiscal year 2023 ended December 31st, totaled $20.4 million, an increase of 22%, as compared to 16.7 million for the same period of 2022. Growth margin as a percentage of revenue amounted to 69.1% for the three months ended December 31st, 2023 versus 78.1% for the same period last year. For fiscal year 2023, gross margin amounted to 17.4% versus 74.1% for fiscal year 2022, mainly driven by non-recurring inventory write-offs and some ramp-up expenses to support greater production. Operating expenses for the three months ended December 31st, 2023 operating income totaled $1 million, which is an improvement of $2.5 million compared to the same period last year, which aligns with our initiative to drive profitable growth and manage spend through 2023. Operating expenses for the three months ended December 31st, 2023 amounted to $3.8 million compared to $5.8 million for the three months ended December 31st, 2022. A decrease of 2 million, which we believe shows the effectiveness of our cost and expense management initiatives. Net loss for fiscal year 2023 ended December 31st, 2023 was 25.8 million compared to a net loss of 10.3 million for 2022. The increase in net loss was primarily due to continued non-cash losses from the change in fair value of our derivative liabilities, which contributes to volatility in net loss. Adjusted EBITDA for the three months ended December 31st, 2023 was 0.7 million versus negative 1.3 million for the same period last year. An improvement of $2 million. Adjusted EBITDA for fiscal year 2023 was negative $1.2 million versus negative $7.3 million for the same period last year. An improvement of $6.1 million indicating improved operational efficiencies. Fannie Mae continues to execute its financial strategy to improve operational profitability and manage operating expenses. Total current assets amount to 9.8 million as of December 31st, 2023, versus 6.6 million as of December 31st, 2022. Cash totaled 1.8 million as of December 31st, 2023. We thank you for your continued support of Sanyo Wave, and I'm now transferring the call back to Morgan. Morgan?