SANUWAVE's Acquisition Of Celularity's UltraMIST(R) Brings Exceptional Value, But It's The Reimbursement Team That Can Deliver Exponential Growth
Miami Beach, Florida--(Newsfile Corp. - September 8, 2020) - It's hard to argue that SANUWAVE Health, Inc.'s (OTCQB: SNWV) acquisition of Celularity's UltraMIST® Ultrasound Healing Therapy is not a transformational event for the company. It is.
The asset acquisition immediately brings more than $15 million in accretive revenues and roughly $4 million of EBITDA to the company's yearly run-rate. The company also secured premium licensing terms for two important biologics, Biovance and Interfyl, to complete a deal that creates a comprehensive wound-care treatment platform that can effectively treat patients from discovery to closure.
But, beyond the products gained through the deal, two crucial elements are not getting the attention deserved. First, these Celularity assets come with a trained sales force of roughly 100 people with expertise in the market. Second, and perhaps the most underappreciated gem in the deal, is that these assets come represented by a trained reimbursement team that understands how to get these products covered by insurers and available to patients and providers.
Look at it this way - if the acquired assets provide the cash flow, consider the reimbursement team as the printing press behind that action. And this team has proven a consistent ability to keep those presses running.
Understanding The Value Of SANUWAVE's Reimbursement Team
For savvy investors, the value of SANUWAVE's trained, knowledgeable, and persuasive reimbursement team is a known value-driver. For those that don't grasp the magnitude of their importance, management is on the road to explain how and why these specialists can translate a potentially best-in-class treatment platform into a revenue-generating juggernaut. That may be one of the reasons that CEO Kevin Richardson II believes that SANUWAVE can reach a $100 million revenue run rate in roughly three years.
And he will likely devote significant attention toward the people that can make that milestone happen - his reimbursement team. At the end of the day, that team may be the most attractive and valuable feature of the asset acquisition.
From the start, this newly associated reimbursement team brings the company the leverage and experience to expand service and treatment coverage to its patients and providers despite facing increasing pressure from public and private payers and the federal government. Specifically, this skilled team can address issues in the Patient Protection and Affordable Care Act that perpetuate a perception that companies must lower the costs of therapies to decrease the cost burden on patients. That is not always the case- especially when services are justified and offer a superior alternative to the standard of care treatment.
Their success is further exemplified through an effective ability to overcome reimbursement and market access challenges by effectively presenting the SANUWAVE value in advancing the healthcare landscape to treat chronic wound conditions. That strategy, backed by treatment results, allows the team to overcome the industry's reimbursement complexities and position the platform to be recognized for the value it brings to patients.
The excellent news going forward is that their success can gain momentum. More specifically, the in-house team shows a consistent ability to earn high reimbursement levels by justifying the value of treatment to the state-run healthcare exchanges that play a significant role in a drug's or treatment market access. These agencies hold tremendous power, literally controlling the ability to select or deny payer and health plan participation. Thus, the decision-makers at these state-run exchanges have a profound positive and/or negative effect on a treatment's ability to reach the desired patient market. The SANUWAVE team, as evidenced in recent company updates, is up to the challenge of winning the favor from these decision-makers.
Thus, despite SANUWAVE discussing the value of adding an experienced reimbursement team to its value-creation arsenal at the LD Micro conference last week, some of that message may be worthy of far more attention and detail. The company's planned roadshows in September may do just that.
And with the speed at which its team is earning reimbursement inclusion, its strategy to develop and work closely with Accountable Care Organizations (ACO) may continue to create compelling value and revenue-generating opportunities. Those looking specifically at the reimbursement team's value believe that the group will contribute to quick and profitable market penetration and provide reimbursement and patient access to treatment from a combined UltraMIST® and dermaPACE® platform.
That reality can provide tremendous recurring value to SANUWAVE.
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Already A Running Start
The baseline for SANUWAVE starts high, with expectations for the bar to be raised even higher. First, combining UltraMIST® and SANUWAVE's flagship device, dermaPACE®, extensively broaden its addressable wound-care treatment indications. Secondly, after factoring in historical revenues from UltraMIST®, the company moves from a roughly $1 million revenue-generating company in 2019 to an expected $16M company, or higher, over the next fiscal year. Assuming history can repeat itself, that growth represents a roughly 1500% gain in revenues.
And that growth may be quite reasonable to achieve. After all, SANUWAVE can take advantage of another built-in value driver from the deal- substantial cross-selling opportunities that will target more than 1000 existing customer accounts...with only 15 that overlap. That detail opens the door to vast new sales opportunities through a team that can enjoy their own windfall through commission-based sales incentives.
Critical to all the discussion and projections is that SANUWAVE is already positioned to capitalize on expanding an FDA-approved wound care portfolio that can treat numerous indications in the US and overseas. In the US, treatment indications for its FDA-approved devices include treating diabetic foot ulcers, pressure ulcers, venous leg ulcers, and deep-tissue pressure injuries.
More importantly, combining UltraMIST® with dermaPACE® creates a comprehensive, powerful, and global wound-care solution, and SANUWAVE has sufficient resources to expedite its portfolio's commercialization. That combination can produce a breakout period for the company.
Why Choose The Enhanced SANUWAVE Platform?
Remember, too, SANUWAVE is already a market competitor. UltraMIST® made them stronger. Its proprietary dermaPACE® System is intended to repair and regenerate skin, musculoskeletal tissue, and vascular structures. It uses a proprietary form of high-energy, focused shockwave technology that promotes healing by activating biologic and angiogenic responses.
As noted, UltraMIST® makes dermaPACE® better by significantly expanding SANUWAVE's addressable market by providing treatment options that can be used at different phases of the healing process. UltraMIST® utilizes a low-frequency, non-contact ultrasound energy delivered through a fluid mist that cleanses a wound and promotes healing.
Like dermaPACE®, UltraMIST® is also FDA-approved to treat various wound indications, including diabetic foot ulcers, pressure ulcers, and venous leg ulcers. The popular advantage that differentiates the device from the competition is that its action mechanism never initiates contact with the wound. Thus, the treatment is, for all intents and purposes, pain-free. That action compares exceptionally well to alternatives such as scraping or scaling a wound with a cleaning solution.
Comparably, UltraMIST® shows its ability to achieve the same cleansing effect during a pain-free process. Not only is the choice a no-brainer for patients, but the combined platform creates a new revenue stream for clinicians who will benefit from more frequent patient visits and treatment compliance.
By the way, forgetting to include two important and value-adding biologics, BIOVANCE, and Interfyl, to the equation is a mistake. BIOVANCE is a human amniotic membrane allograft. It primarily serves as an intact extracellular matrix containing vital cells and proteins that work to activate the wound's healing processes. Interfyl is a human connective tissue matrix that replaces damaged integumental soft tissue and supplements insufficient connective tissues. Consisting of natural and biochemical extracellular matrix components, the treatment can provide structural support to a wound while retaining elasticity.
As expected, both BIOVANCE and Interfyl have been tested in tandem with treatments using dermaPACE® and UltraMIST®, with those results contributing to treatment success. Thus, the answer to why patients would prefer the SANUWAVE treatment platform is simple- after combining the sum of the parts, SANUWAVE's therapeutic platform can deliver best-in-class treatment results quickly and virtually pain-free. Ultimately, its treatment capabilities are likely to earn praise as one of the most respected and robust platforms in the industry.
Value Is Already Here And Getting Better
The excellent news for SANUWAVE and its investors is that the value is immediately accretive. This acquisition is not comparable to a drug-development deal that takes years to show its impact. New revenues began in August.
Now, with the trained sales and reimbursement team in action targeting more than 985 new customer accounts and exchange agencies, the growth during the next few quarters can be exponential. At the end of the day, they are selling a best-in-class treatment option, one that offers patients a wound-care treatment from discovery to closure.
What can't be lost in this entire sequence of events is that SANUWAVE has been transformed. Two months ago, they were on the precipice of bringing patients a treatment opportunity that can save lives, limbs, and families by delivering the best possible care to those struggling with debilitating chronic ailments.
Today, they are making that happen.
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