Hello, and welcome, everyone, joining today's SANUWAVE Earnings Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to CEO, Morgan Frank. Please go ahead.

Thank you very much. Good morning, everyone. Welcome to the SANUWAVE Fourth Quarter and Year-end 2025 Earnings Call. Our Form 10-K was filed with the SEC last night, along with our earnings release, and our updated presentation was made available on our website in the Investors section. Please refer to that during the presentation. So joining me on the call is Peter Sorensen, our CFO. And after the presentation, we will open the call to Q&A. So let me begin with the always popular forward-looking statements and other disclosures. This call may contain forward-looking statements such as statements relating to future financial results, production expectations, plans for future business development opportunities and expectations regarding the impact of changes in tariff rates. 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. A 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 forward-looking statements. The company undertakes no obligation to update any forward-looking statements. Certain percentages discussed in this call are calculated in the underlying whole dollar amounts and therefore, may not recalculate from the rounded numbers used for disclosure purposes. 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 the period ended December 31, 2025. Okay. So that's prefaced. Let's dig into what was a good, slightly complicated quarter. Q4 was an all-time record for SANUWAVE with revenues of $13.4 million, up 30% versus the same quarter last year and adjusted EBITDA of $4.8 million, up from $3.7 million in the prior year…

Thank you, Morgan. We delivered a strong fourth quarter with revenue reaching a new all-time quarterly high and growing 30% year-over-year. This performance reflects continued execution of our commercial strategy and increase in demand for UltraMIST, particularly driven by higher consumables utilization and continued system placements. For the full year, revenue grew 35% to $44.1 million, supported by a 24% increase in consumables volume and a 67% increase in system sales. We also saw modest pricing strength in consumables, while system pricing reflected a higher mix of reseller-driven placements, which we view as an important lever to accelerate expansion of our installed base, as Morgan referenced. Gross margins expanded year-over-year to 77%, driven by pricing improvements in consumables and continued reductions in system cost of revenue, partially offset by mix and pricing dynamics on the system side. Before turning to the financials in more detail, I want to briefly address the restatement reflected in our Form 10-K. The restatement has been completed and primarily relates to previously unrecognized sales tax liabilities identified through a third-party Nexus study as well as an error in the allocation of revenue for certain extended warranty arrangements. From a quantitative standpoint, the revenue impact was not material, totaling approximately $300,000 across the first 3 quarters of 2025. The more significant impact was related to sales tax, resulting in approximately $1.6 million of additional general and administrative expense and $0.1 million of interest expense in 2024. In 2025, we recognized approximately $1.6 million of incremental general and administrative expenses and roughly $0.3 million of interest expense associated with these items. As we move into the first quarter, we may incur some additional sales tax-related expense as we complete remediation activities at the state and local level. We are actively working with third-party tax advisers to strengthen…

Thanks, Peter. Okay. So moving on to guidance, which I know has been sort of the bugbear of the space all earnings period. As we stated in our press release, we're guiding to $9.6 million to $10.3 million in Q1 revenues. This is up 3% to 10% from the prior year, largely suppressed as a result of this sort of stutter step of industry impact from CMS changes and the tide going out. We expect this to get better going forward as the new tide keeps coming in and are, as a result, providing a preliminary 2025 estimate range of 16% to 25% revenue growth for the year 2025 versus 2024. We're still in the early days of this new paradigm. And obviously, we're still collecting dots through which to draw meaningful lines. But we are already seeing a larger amount of inbound interest from customers and partners than at any time in the company's history. And the always useful kind of how big is the inbound resume pile indicator is currently well off the charts. So we'll keep that revenue estimate updated as the year goes on. After a quarter like this, especially and as ever, I want to express my gratitude to the SANUWAVE team for all the hard work and for the commitment and the trust like companies exist downstream with our culture, culture lies downstream with the people. And that's what lets you adapt and thrive in interesting times like these. So well done, folks, and thank you all. So with that, we will open it up for questions.

[Operator Instructions] We'll take our first question from Carl Byrnes with Northland.

You noted that you're seeing significant inbound interest and also a number of inbound resumes as well. But with respect to the former, can you speak a little bit in terms of your anticipation in terms of the selling cycle for those newbound interest? I know that they're going to fall in different buckets, but any sort of color you can give there would be great. And then I have a follow-up.

Yes. No, it's a good question. The -- I mean it seems like the industry has been -- I mean, January, particularly January and then to a great extent, February, there just seemed like there was a certain amount of kind of shock in the industry. I just think there were a fair few people who really didn't think that this price change was going to stick. And so you've had some concern around that. I think it has stretched selling cycle a little bit. The -- we're starting to see some of that break loose. Some of it also always -- it's always really a function of what channel -- to what channel are you selling. The smaller practitioners tend to buy more rapidly, like ramping up with hospitals, IDNs, larger chains tends to take longer. So I think we've definitely seen some stretch in the sales cycle, but it seems like perhaps that's starting to get better. It's a little early to say anything like too, too definitive.

Got it. That's helpful. And then can you provide sort of any feel for what we can expect in terms of even if it's a range for adjusted EBITDA for '26?

We really haven't provided that guidance at this point. And I think trying to do it off the cuff on the call seems unwise. So I think we've provided some sort of guideposts in the past where it looks like incremental revenue would probably drop by something on the order of 50% to the EBITDA line. So I think that's still a fairly good kind of rule of thumb.

[Operator Instructions] We will move next with Kyle Bauser with ROTH Capital.

Maybe just on guidance. So for Q1, 3% to 10% increase and then for the full year, 16% to 25%. I guess how should we think about the growth rate over the kind of balance of the year after Q1? I mean, the full year number in terms of growth is a decent amount above Q1. So when would we expect things to kind of flip and start trending towards or above that full year range to kind of get to that since the Q1 is below it.

Yes. I mean, well, so I mean, obviously, as you've intuited from those numbers, we're expecting the rest of the year to be on balance to be better than Q1. I think at this point, it's a little premature for us to start kind of trying to break it down by quarter. But I think the -- like many in the industry, I mean, it just seems like there's going to be -- I mean the back half of this year looks like it's going to be very promising. Exactly where this hockey stick is. I mean, hockey stick may be too aggressive a term. But where the inflection lies is sort of like we'll -- I think we'll have a lot better ability to speak to that when we report Q1. Like it just -- it feels like there's a lot going on like right at this moment. And so I just -- I think it's a little early for us to make that statement.

Yes. No, fair enough. And can you talk a little bit about kind of the latest commercial organization headcount numbers? You talked about resellers and distributors contributing 32%. What does the commercial organization look like? And then how many, I don't know, relationships or 1099 do you have associated with the non-W2?

Yes. So I think we're at 14 or 15 on internal sales force. Honestly, I'd have to check and see exactly who said yes, just some -- who said yes to some hiring. We might be a little above that. We're definitely -- we're pushing the internal sales force a little larger and starting to fill it out with things like sales managers and adding some more kind of key national account reps as well as folks to manage the resellers. We have not published a how many resellers are you working with number. It's certainly significantly more than we were in Q3. Part of the -- more so than the number of -- I think more so than the number of resellers is sort of the size of the resellers. And whereas we've been working with people who were smaller groups and had a few reps, like some of the groups that we've begun to work with have kind of 50, 60, 70 people under them. And that -- as you get that ramped up, like that adds a lot of potential, like exactly how long it takes these things to get. We've seen some promising early behavior from some of them. it's exactly what the cycle is to get these folks kind of ramped up, fully trained, firing on all cylinders and then for them to be able to work through the sales cycle within their own networks is still something we're mapping, like we're getting it figured out, but it's one of those kind of -- it's one of those sort of learn by doing things.

Yes. Okay. I appreciate that. And then you talked a little bit about the operating margin associated with those sales coming from resellers and distributors. How does that kind of like how does that compare with you selling internally with the direct sales force?

Yes. So obviously, when you're selling to someone at a wholesale price, right, that's going to affect ASPs. So the wholesale price for -- the whole sale price for a system or for a case of applicators will be lower than the retail price, right, because the resellers are making their money on the markup. The -- however, there are no further costs below the line, right? So what we used to do is sell through distributors at retail and then pay a commission rate on the sales. Like this is -- the new system is pretty closely equivalent to that. And obviously, because we're not carrying the sales force costs of the reseller, not paying for plane tickets and lunches or whatever. The net effect on the operating line is it's actually a higher fall-through margin. Does that make sense?

Okay. Got it. Yes. I mean is it a big effect? Or is it pretty similar at the end of the day?

I mean we really -- I don't want to get into quantifying it here.

Yes. Okay. Got it. And then just lastly, any updates on pipeline, how you're thinking about potentially adding in new products, et cetera?

Yes. I mean, as you probably noticed, you saw some uptick in R&D. We're definitely working on some stuff. I think we'll probably have more to say about that on the Q1 call. The -- from a kind of a sales pipeline standpoint, the pipeline is interesting right now. Like there are -- we've had a lot of inbound interest. There's really -- there's really an educational sale going on where it's kind of like, well, talk to me about this, like does it really work? How can we -- how would we build this newer practice flow? How would it work? Where is the benefit for our patients, like how our practitioners -- how hard is this for our practitioners to learn? And so we have like we have a huge top of the pipeline right now. It's just -- it's a little complicated -- it's made a little complicated by the fact that, obviously, certain sectors of the wound care space are having -- are still grappling with the kind of clawbacks and the CMS issues. Others, I mean, we're seeing a lot of interest out of wound centers, hospitals, surgical and postsurgical. We're actually exploring a couple of non-wound applications that are potentially interesting, but really, really early. So don't really -- I wouldn't try to hang my hat on that just yet.

We will move next with Ian Cassel with IFCM.

Yes. I just have a couple of questions. The first one, I mean, you sold 255 systems in Q4, which is just a huge number. Can you give us a sense of kind of where those systems were placed? Was it a couple of pigs in the python to use a phrase that you like to use? Or what really drove that number?

Yes. So obviously, like kind of complicated quarter, right? You sell -- we sell 255 systems. The actual active systems in the field rise by about 5%, right, so about 56 because we pulled 168 systems out due to things not going well with certain customers, certain customers' businesses. And so from that, I think you can kind of intuit like where things went from a channel standpoint. From an individual customer standpoint, like there wasn't really -- there wasn't really a pig in the python here, right? There wasn't like an order that drove it. It was -- there were a number -- I think there were an unusually large number of kind of midsized orders. Does that make sense?

Yes. No, that's helpful. Another question I had was in previous calls, you spoke about, I believe, setting up a new manufacturing line for the applicators that had the potential to increase gross margins a few hundred basis points. Is there an update on that?

Yes. So there are 2 updates on that. One, our existing manufacturer has very, very graciously managed to reduce their prices as well. So they've taken -- so we're now experiencing better pricing on applicators starting the beginning of Q1. We do this on a pool basis. So it's -- we basically -- we use a blended average of our inventory. So -- and we keep 6 to 9 months of applicators on hand. So it will take a while for this to -- it will trickle through gradually rather than be kind of a step function. With regard to the new line, there were some delays in qualifying the mold. It's just -- everybody is sort of looking at this and saying, wow, I've just never seen a mold this persnickety. But we seem to have it -- we seem to be on top of it, and I think we're making progress. I am hopeful to see that ramp. I'm hopeful to see that hit in the next -- I'm hopeful to see it start producing product in the next couple of months. But it's -- given the delays there, I'm just -- I'm hesitant to put too firm a stake in the ground right now and say this is the definitive timing.

[Operator Instructions] we will move next with Albert Hanser with Kestrel.

Nice job communicating a changing landscape and all the cross currents. So well done on this turnaround. My question is simple. And just as you kind of look to define yourself in a changing landscape and play offense by placing units, are there any kind of key industry events, trade shows, conferences that we should put in our calendar to either attend or kind of watch as you plant the flag and get out there more vocally with the customers?

Yes. Well, I mean, obviously, one of the -- and we'll be at a lot of shows. The sales force does like to get around. Obviously, one of the industry bigs is SAWC. That's kicking off in Charlotte, April 9. So if you're looking for something to do in the next couple of weeks, that's a great wound show.

We will move next with Ethan Star, private investor.

So the slide presentation noted that 168 UltraMIST systems were determined to be discontinued in the fourth quarter. I'm just wondering, aside from customers that shut down, what do you know about why these systems were discontinued?

My -- a lot of -- essentially, we pulled most of the -- so there are 2 ways that would have gone up in that bucket, right? The first is that a customer that we would have expected to order hadn't ordered for 6 months. Second is if we made a determination that the customer who owns those systems was no longer operating the business.

Okay. So generally, there -- but among those people who didn't order, I mean, they just stopped using them or you don't even know?

It's -- I mean maybe they -- it's difficult to say, right? I mean people don't call you up and tell you why. I suspect that in many -- there's always there's always a certain kind of low level of churn, kind of nothing like we've experienced in the last quarter or so. The -- I suspect it's financial distress for a lot of folks. Like the -- I mean, you put yourself in the position of you've done a large amount of sort of allografting and then you get a clawback 9 months later for 90% of it. How many of the -- how many folks had the cash on hand to handle that? Like that seems like it's been sort of the meteor that people have been getting hit with.

Okay. So this -- so Q4 is an unusually high number of discontinued systems for that reason, it sounds like.

Correct.

Okay. Would it be at all feasible to acquire -- try to acquire the discontinued UltraMIST systems, recondition them and sell them?

It's -- possibly. I don't want to -- given some things going on, I don't want to talk in too much specificity about that. But we've certainly had a similar thought.

Okay. That's helpful. Aside from the external factors mentioned in the press release, do customers tend to go through UltraMIST consumables at a fairly steady rate? Or do they increase? Do you see them increasing uses of consumables as they become more familiar with the UltraMIST system?

That sounds like one of those questions that's going to have a simple answer. But the reality is it depends a great deal on the customer type, right? So if you sell a system to a mobile wound care provider who handles long-term care facilities, they will generally ramp up almost immediately, right? They'll take it on their rounds, they'll start doing treatments. You go from 0 to 60, nothing flat. If you sell it into a podiatry office, it tends to be a slower ramp as they kind of build the -- as they do their marketing or kind of build a book of business that gets the product into more usage, like either sell it into a nursing home or an assisted living facility and you tend to get an early bolus as they run around and treat everyone who's got -- everyone in the facility who's got wounds. And then it sort of backs off to a steady state once you get the wounds in the facility more under control. And so hospitals have a tendency to sort of start using and then ramp up over time as kind of word gets around and people say, "Hey, this worked really well on our thing, you should try it on your thing." And so the answer to that question is really complicated.

And at this time, there are no further questions in queue. I will now turn the meeting back to Mr. Frank for closing comments.

Well, thank you, guys. I appreciate everyone being here first thing on a Friday morning, and we'll speak to you soon when we report Q1. Thanks again.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.