Investors that have been following SANUWAVE’s (OTC: SNWV) planned acquisition of Celularity’s UltraMIST® Ultrasound Healing Therapy have reason to celebrate. On Monday, SANUWAVE announced that the deal has been formally consummated, leaving only the value of the acquisition to make its way to SANUWAVE’s market-cap valuation.
Investors are confident that better days for the share price are near. That spirit is generated from a deal that immediately brings revenue-generating assets to SANUWAVE, including more than 900 customer accounts, a trained sales force that creates immediate opportunities to expand its own dermaPACE® device, and exclusive partnership rights for Celularity’s wound care biologic products. Moreover, the combined assets targeting the wound-care market position SANUWAVE as a leading provider of advanced wound care solutions that improve clinical outcomes across the continuum of care.
Two things should be imminent. First, investors can expect that SANUWAVE will be substantially stronger in revenue growth, product placement, and cash flow generation. Second, the company is now uniquely positioned to leverage a combined sales force and enhance cross-selling opportunities to capture revenue across the entire advanced wound care patient pathway from the initial stages of treatment to wound closure.
Focusing on valuation, the completed deal enhances what investors may have been missing. On its own, SANUWAVE Health, Inc. is a leading shockwave technology company targeting an estimated $10.8 billion market opportunity by developing and commercializing proprietary regenerative technology to treat tissue, musculoskeletal, and vascular structures. Despite its own dermaPACE® providing impressive treatment results, combining its potential with UltraMIST® adds to the overall patient treatment potential which can be a significant value creating event.
However, the biggest takeaway from the acquisition may be that SANUWAVE is now positioned as one of the few companies that can successfully treat patients in the chronic wound-care market from start to finish. At the same time, the enhanced treatment portfolio creates an effective all-in-one solution for patients while maximizing potential near-term revenues for the company.
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The Accretive Value Behind Celularity’s UltraMIST®
The addition of UltraMIST® may also put SANUWAVE in the best operating position in its history. Not only will SANUWAVE benefit from the combination of UltraMIST® and its other wound care biologic products, but Celularity also delivers a 25-person team of wound-care professionals and a customer base of nearly 900 registered accounts. It should also be noted that the effective combination of UltraMIST® with dermaPACE® has a very high potential to provide improved patient outcomes over the current standard of care.
The value behind Celularity’s UltraMIST® therapeutic device won’t go unnoticed for long. The device is already approved for use in the US for all acute and chronic wound indications. Plus, the system is proven to be effective by using a low frequency, non-contact ultrasound energy that works to remove bacteria and inflammatory cells, and promote healing. The technology is easy to administer in any type of clinical environment and is especially unique because, as the device never touches the wound surface, the treatment is entirely pain-free.
Most important to the near term revenue drive is that the device is already FDA approved for diabetic foot ulcers, pressure ulcers, venous leg ulcers, deep tissue pressure injuries, and surgical wounds. Those indications create a substantial addressable market that may attract patients not satisfied with the currently available treatment options.
Those market share increases may come from companies like 3M Company (NYSE: MMM) and Johnson & Johnson (NYSE: JNJ), who primarily treat symptoms or provide antiseptic dressings to cover the wounds. SANUWAVE is taking the opportunity further with complementary energy transfer devices proven to be effective and safe.
A Comprehensive Solution In A Huge Market
SANUWAVE is now working a product portfolio that can effectively address the entirety of the wound healing process. This is an enviable position within the wound care industry as few competitors can say they can provide the same comprehensive, start-to-finish treatment as SANUWAVE. Also contributing toward combined success, each of these treatments has clinically demonstrated improved responses over the current standard of care. Thus, the power of the two is expected to bring even better results.
Beyond the value from the Celularity asset purchase, the expected additional cash-flow to SANUWAVE will also help power the commercialization of dermaPACE®. Notably, the company recently highlighted that the need for additional capital expenditures is extremely low, with a free cash flow conversion of 95-98% from each new placement. This limited overhead will prove an instrumental advantage for SANUWAVE in the planned expansion of its platform to become the comprehensive standard of care for nearly any wound indication.
A Transformative Event For SANUWAVE
SANUWAVE’s benefits from the Celularity deal may be under-the-radar for now, but savvy investors understand the value created. More than just a potentially transformative event for the company, this acquisition adds to an infrastructure that can be immediately expanded while offering considerable potential for further near-term growth.
Also, the complementary nature of the two devices will widely broaden SANUWAVE’s treatable market and grant the company access to the over 900 clinicians using UltraMIST® and Celularity’s biologic products. An important side note – the combined portfolio of products requires no technological changes or updates to work with one another. That means that treating clinicians can immediately benefit from the combined power of dermaPACE® and UltraMIST®.
Now that the deal is completed, the back half of 2020 sets the stage for immediate growth that can expose a market-cap that appears to under-appreciate the future value of its pipeline. And with a conference call expected on Wednesday, investors may find out firsthand why at current trading levels, the attraction to SANUWAVE should be compelling.
Note: SANUWAVE will conduct an investor teleconference at 1:00 p.m. EDT on Wednesday, August 12, 2020. A separate press release will be issued providing the conference call information. More details regarding the acquisition and the future plans will be shared and detailed on the call.
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