SANUWAVE Health Inc

OTC:SNWV

Earnings Call Transcript 2018-Q3

[Operator]

Greetings, and welcome to SANUWAVE Health's Incorporated Third Quarter Financial Results and Business Update. [Operator Instructions].

I would now like to turn the conference over to your host Kevin Richardson, CEO.

[Kevin Richardson, CEO]

Thank you. Good morning. We appreciate your interest in SANUWAVE and in today's call. SANUWAVE will provide an update of our most recent activities. If you would like to be added to the company's distribution list please call SANUWAVE at 770-419-7525 or go to the Investor Relations section of our website at www.sanuwave.com.

Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of SANUWAVE. We encourage you to review the Company's filings with the Securities and Exchange Commission, including without limitation our Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 15, 2018. SANUWAVE undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

All right. So we last updated you in August on our Q2 2018 progress. Today we'll provide a brief update on third quarter 2018 and a number of initiatives we are undertaking to ensure our success as we rollout dermaPACE in the U.S. and internationally. Our goal as we have stated is to have a device anywhere in U.S. the DFU, and then to drive device usage with the growth in the number of treatable indications and our ability to combine with other treatment modalities.

This introduction may sound like I'm repeating myself but that's because I'm. I plan to repeat a lot of what we have said in the past nine months because it is that laser focused by our experienced team that will lead us to achieving our goal of a device everywhere in the U.S. for the U.S. DFU is treated. Also we want to note we have not filed our 10Q as we are working on rev rec 606 with regards to the FKS transaction which occurred in Q2 2018. Once we get clarity and comfort around the exactly how this revenues to be recognized under this new accounting policy the 10Q will be filed and we will host a call to discuss the financials and have an open Q&A session with management. Today we will not be taking Q&A at the end of the call.

Just to be clear FKS paid us an exclusive fee in cash in the second quarter. In the second quarter we recognize ratably over five months which was the term of the contract and just last week the JV was incorporated. Business with FKS is moving along ahead of plan at this point in time, how we recognize that exclusivity fee according to rev rec 606 is what's holding up the filing of the 10Q. Q3 results will show SANUWAVE is making great strides to have this vision become a reality that we've established five goals for 2018 along with our priorities to support these goals which will allow us to show continued strong growth through 2018 and more importantly lay the groundwork to retrieve market penetration and massive top line growth in 2019 and beyond. Let me spend a second to review each of the goals, initial revenue in the U.S. expand senior management in the U.S. wound market and [indiscernible] international markets begin support of clinical work and expand our Board of Directors and Science Advisory Board. At this point in time all five of these goals have been met and will be achieved. Looking at the third quarter achievements it is clear we are executing on the business plan as you know now we generated revenue from sales to premier earlier in the year. Premier has begun to penetrate their vertical markets Indian Health [ph] and the Veterans Administration, VA, but it's important to note we also treated our first U.S. patients which are not tied to Premier during the quarter.

The program was established to place devices with key opinion leaders, KOLs and allow them to begin treating patients prior to our reimbursement tracking codes kicking in January 1, 2019. We've had great success with this program to-date and look forward to rolling it out further as we finish 2018.

With regard to Premier shock wave and the channels they represent Q3 was significant and that they began to launch their web based marketing campaign to VA in Indian Health Physicians [ph]. This launch also includes implements of HIPAA compliant web portal for physicians, back offices to complete reimbursement process. This will also be shared with SANUWAVE in 2019. They make close to 20 in service calls where they use the device in the proper setting. All this activity along with the numerous trade shows has led to them placing devices for use in the fourth quarter at IHS tribal hospitals, military treatment facilities and achieving medical board approvals for rollout in the western U.S. in 2019. The pace of activity is picking up and the installs in training are currently strong for the remainder of the year. Internationally after announcing we entered into a total of 15 now 17 countries this year we began following our method to drive revenue in those regions. It starts with identifying the KOLs in the region, allow them to perform case studies, showcase the case studies at an industry trade show and then target high need either by volume or severity of wound markets and then start selling. During this past quarter through October we have presented our studies at industry trade shows now in Malaysia, Philippines, Singapore, Australia, Canada, South Korea, Italy and the highlight being the SAWC and Desert Foot Conferences here in the U.S. This has been followed by diligent follow up with the leads generated at those events and then turning them into training and sales opportunities.

In Europe the team presented at the PISA Conference, PISA is the who's who of wound care industry in Europe where the highlight new and up and coming technologies. We were the feature of the show and from this we anticipate orders in Italy to be up dramatically in 2019. In Asia we received our JV certification in Singapore November 7th which now allow us for the real fun to begin with FKS. We had our newest Science Advisor Dr. Perry Mayer who we discussed last quarter present at the Wounds Malaysia Conference to a room of 200 practitioners. Orders and shipping have begun in that region and based on current budgeting we expect them to exceed our expectations in 2019. The largest market will be Malaysia, Indonesia, Taiwan and the Philippines. They are also starting two clinical studies that we're very excited about. Dr. Hong [ph] is world renowned microvascular surgeon who specializes in very difficult reattachments, it's really pretty amazing stuff that he can do. He's going to see the how dermaPACE can effect such surgeries. Dr. Koe [ph] who is working in Taiwan will be working on perfusion studies and we are also looking forward to Dr. Hans' perfusion study coming out of South Korea with the 100 patients showing how our device improves perfusion in patients. We also anticipate 1 or 2 more countries and/or regions to come on before the end of the year. As we've said before it takes about 12 to 24 months to identify the right partner, 6 to 12 months to bring in the revenue. Luckily the process was started a few years ago and now we are benefiting from the pipeline of fruit growing in these initiatives.

On our goals for the year we are executing on what we said we needed to do what we said we will deliver but the truth is most investors in the SANUWAVE want to know about the U.S. market, that's where the $1 billion opportunity exists. We introduced you to Shri last quarter, Shri will provide a much more detail about the U.S. market on our next conference call in the near future but the quick preview is the buzz from the conference has been overwhelming and the number of wound clinics and hospitals wanting to work with us in our device is higher than we would have expected.

Shri will go into detail on the next call regarding clinical, reimbursement and sales. Needless to say we've already identified KOLs for initial placements they have begun using the device and will begin working reimbursement starting in January when our tracking code go into effect We have a great expectations for success in 2019 and beyond and Shri will be leading the charge to achieve the goal of having a dermaPACE device placed wherever DFU is treated in the U.S. Lastly I want to thank our shareholders and investors who have helped us get to where we are today. If anyone has any questions at this point in time please reach out to us and we'll try to answer as best we can. Also we encourage those in the area to stop by, meet the team and see what we're working on and where the company is headed. Thank you and with that the call will be concluded.

[Operator]

Thank You may disconnect your lines at this time and thank you for your participation.