SANUWAVE Health, Inc. (SNWV)

Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this report, and together with our audited consolidated financial statements, related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as of and for the year ended December 31, 2025, included in our Annual Report on Form 10-K, filed with the SEC on March 26, 2026 (the “2025 Annual Report”).

Executive Summary

Revenue for the three months ended June 30, 2026 totaled $9.7 million, a decrease of approximately 3% compared to $10.1 million for the same period in 2025. Revenue for the six months ended June 30, 2026 totaled $19.4 million, approximately flat compared to $19.4 million for the same period in 2025.

Net loss for the three months ended June 30, 2026 was $0.7 million, compared to net income of $0.6 million for the same period in 2025. The change from net income to a net loss was primarily attributable to an operating loss of $0.3 million in the current-year period, compared to operating income of $1.4 million in the prior-year period, reflecting higher operating expenses during the current-year period, including increased headcount costs, stock-based compensation, and research and development that outpaced a modestly lower gross margin on reduced revenue. Total other expense, net improved to $0.4 million from $0.9 million, as significantly lower interest expense more than offset the non-recurrence of a $1.0 million gain from the change in fair value of derivative liabilities recognized in the prior-year period.

Net loss for the six months ended June 30, 2026 was $2.1 million, compared to a net loss of $5.6 million for the same period in 2025. The reduction in net loss was driven principally by items below operating income, including the non-recurrence of a $3.9 million loss from the change in fair value of derivative liabilities recognized in the prior-year period and a $2.8 million decrease in interest expense following our September 2025 debt refinancing. These improvements were partially offset by a decline in operating results: our operating loss for the six months ended June 30, 2026 was $1.4 million, compared to operating income of $2.0 million for the same period in 2025. The decline in operating results for the six months ended June 30, 2026 was primarily driven by higher operating expenses, including increased research and development, selling and marketing, and general and administrative spending, together with a slight decline in gross margin.

Non-GAAP Financial Measures

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we present certain financial measures that facilitate management's review of the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) (“U.S. GAAP”). These financial measures are considered "non-GAAP financial measures" and are intended to supplement, and should not be considered as superior to, or a replacement for, financial measures presented in accordance with U.S. GAAP.

The Company uses Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA to assess its operating performance. Adjusted EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization adjusted for the change in fair value of derivatives and any significant non-cash or non-recurring infrequent charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net loss as a measure of financial performance or any other performance measure derived in accordance with U.S. GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. These non-GAAP financial measures are presented in a consistent manner for each period, unless otherwise disclosed. The Company uses these measures for the purpose of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to U.S. GAAP measures, allows them to see the Company’s results through the eyes of management, and to better understand its historical and future financial performance. These non-GAAP financial measures are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other U.S. GAAP measures.

24

Table of Contents

EBITDA and Adjusted EBITDA have their limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are that EBITDA and Adjusted EBITDA:

•Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.

•Do not reflect all changes in our working capital needs.

•Do not reflect interest expense, or the amount necessary to service our outstanding debt.

As presented in the U.S. GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measure excludes the impact of certain charges that contribute to our net (loss) income.

1 Depreciation and amortization excludes amortization of right-of-use (ROU) leases. Prior period amounts have been retroactively revised to conform to this presentation. This change had no effect on previously reported GAAP results.

2 The charges represent a non-recurring state and local sales tax expense related to the restatement of prior period financial statements.

25

Table of Contents

Results of Operations

Revenue

Revenues for the three months ended June 30, 2026 were $9.7 million, compared to $10.1 million for the same period of 2025, a decrease of $0.3 million, or 3%. The decrease was primarily driven by a decline in UltraMIST® system revenue, which decreased to $2.3 million from $3.4 million, or approximately 34%, partially offset by growth in consumables revenue, which increased to $7.3 million from $6.5 million, or approximately 12%. The decrease in UltraMIST® system revenue for the three months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 29% decline in unit volume, reflecting weaker capital sales due to financial pressures in the industry as well as increased availability of used UltraMIST® systems in the market. UltraMIST® system revenue was also impacted by a 9% decrease in average selling price, primarily due to a higher reseller mix. The increase in consumables revenue for the three months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 27% increase in unit volume, reflecting strong consumable utilization across our active installed base. This consumable growth was partially offset by a 11% decrease in average selling price due to a higher mix of reseller sales.

Revenues for the six months ended June 30, 2026 were $19.4 million, approximately flat compared to $19.4 million for the same period of 2025. Consumables revenue increased to $14.0 million from $12.5 million, or approximately 11%, substantially offset by a decline in UltraMIST® system revenue to $5.2 million from $6.6 million, or approximately 22%. The decrease in UltraMIST® system revenue for the six months ended June 30, 2026 compared to the same period in 2025, was primarily driven by a 16% decline in unit volume, reflecting weaker capital sales due to financial pressures in the industry as well as increased availability of used UltraMIST® systems in the market. UltraMIST® system revenue was also impacted by an 8% decrease in average selling price, primarily due to a higher reseller mix. The increase in consumables revenue for the six months ended June 30, 2026, compared to the same period in 2025, was primarily driven by a 24% increase in unit volume, reflecting strong consumable utilization across our active installed base. This consumable growth was partially offset by an 8% decrease in average selling price due to a higher mix of reseller sales.

Cost of Revenues

Cost of revenues for the three months ended June 30, 2026 was $2.3 million, compared to $2.2 million for the same period of 2025. Gross margin as a percentage of revenues was 76% for the three months ended June 30, 2026, compared to 78% for the same period in 2025. The decline in gross margin percentage was primarily driven by a shift in revenue mix toward consumables sales and away from higher-margin system sales, lower average sales prices due to a higher reseller mix, and

26

Table of Contents

an increase in personnel costs within cost of

[Excerpt truncated for page length; source filing is linked above.]

Item 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations provides information management believes to be relevant to understanding the financial condition and results of operations of the Company. The discussion focuses on our financial results of operations for the years ended December 31, 2025 and 2024. You should read this discussion and analysis in conjunction with our consolidated financial statements and related notes thereto for the years ended December 31, 2025, and 2024, which are presented within Part II, Item 8. "Financial Statements and Supplementary Data" in this Annual Report on Form 10-K. This discussion has been updated to reflect the restatement of our previously issued financial statements for the quarters ended March 31, June 30, September 30, 2025, and the year ended 2024. All amounts and discussions herein are based on the restated financial information. Refer to Note 2 to the consolidated financial statements for further details regarding the nature and impact of the restatement. Amounts reported in thousands within this annual report are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in thousands due to rounding.

Executive Summary

We realized significant revenue growth during the year ended December 31, 2025, with a 35% growth in revenue to $44.1 million for the year ended December 31, 2025, as compared to $32.6 million in 2024. Gross margins also increased to 77% from 75% in 2024. As the Company continues to focus on profitable growth, we have also increased our operating income by 29% to $4.9 million for the year ended December 31, 2025, compared to $3.8 million for the year ended December 31, 2024.

Net income for the year ended December 31, 2025, was $11.8 million, or $1.38 per basic share and $0.41 per diluted share, compared to a net loss of $33.1 million, or $7.41 per basic and diluted share, for the year ended December 31, 2024, an increase of $44.9 million, which was largely driven by a non-cash change in the fair value of derivatives and improved operational performance. We believe these improvements set the stage for additional growth as we head into 2026.

Non-GAAP Financial Measures

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we present certain financial measures that facilitate management’s review of the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) (“U.S. GAAP”). These financial measures are considered “non-GAAP financial measures” and are intended to supplement, and should not be considered as superior to, or a replacement for, financial measures presented in accordance with U.S. GAAP.

The Company uses Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA to assess its operating performance. Adjusted EBITDA is Earnings before Interest, Taxes, Depreciation and Amortization adjusted for the change in fair value of derivatives and any significant non-cash or non-recurring infrequent charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss) as a measure of financial performance or any other performance measure derived in accordance with U.S. GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. These non-GAAP financial measures are presented in a consistent manner for each period, unless otherwise disclosed. The Company uses these measures for the purpose of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Company to make operational and strategic decisions. The Company believes that providing this information to investors, in addition to U.S. GAAP measures, allows them to see the Company’s results through the eyes of management, and to better understand its historical and future financial performance. These non-GAAP financial measures are also frequently used by analysts, investors, and other interested parties to evaluate companies in our industry, when considered alongside other U.S. GAAP measures.

EBITDA and Adjusted EBITDA have their limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are that EBITDA and Adjusted EBITDA:

•Do not reflect every expenditure, future requirements for capital expenditures or contractual commitments.

•Do not reflect all changes in our working capital needs.

31

Table of Contents

•Do not reflect interest expense, or the amount necessary to service our outstanding debt.

As presented in the GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measures exclude the impact of certain charges that contribute to our net income (loss).

1 The charges represent a non-recurring state and local sales tax expense related to the restatement of prior period financial statements.

2 The charges represent the net amount of proceeds received of $0.4 million and inventory written down of $0.5 million, as part of the Company's sale and disposal of the PACE product line.

32

Table of Contents

Results of Operations

The following table sets forth our consolidated statement of operations:

Revenue

Revenues for the year ended December 31, 2025 were $44.1 million, compared to $32.6 million for 2024, an increase of $11.4 million or 35%. The increase in revenue was primarily driven by higher sales volumes of UltraMIST® consumables and systems. The quantity of UltraMIST® consumables sold increased 24%, and UltraMIST® systems sold increased by 67% in 2025 compared to 2024.

Pricing trends also contributed to year-over-year performance. The average selling price of UltraMIST® consumables increased 3% in 2025 compared to 2024. In contrast, the average selling price of UltraMIST® systems declined by 3%, primarily due to a higher proportion of sales through resellers. UltraMIST® systems sold through resellers comprised 34% of system sales in 2025 compared to no reseller system sales in 2024. Expanding reseller sales supports faster placement of systems into customer facilities and contributes to growth in our active system base.

Cost of Revenue

Cost of revenues for the year ended December 31, 2025 were $10.1 million, compared to $8.1 million for 2024. Gross profit as a percentage of revenues was 77% for the year ended December 31, 2025, compared to 75% for the same period in 2024. This increase in gross margin was largely driven by increased pricing on our UltraMIST® consumables and reductions in system cost of revenue, partially offset by a decrease in UltraMIST® system pricing, largely resulting from a higher reseller mix. The average gross profit of systems sold increased 0.1% in 2025 compared to 2024.

General and Administrative

General and administrative expenses for the year ended December 31, 2025 were $19.4 million as compared to $12.9 million for 2024, an increase of $6.5 million, or 50%. The increase in 2025 as compared to 2024 was primarily due to increased headcount expenses of $2.7 million, non-cash charges for stock-based compensation totaling $2.4 million, software expenses of $0.4 million, audit and tax professional expenses of $0.2 million, and public company costs of $0.2 million.

33

Table of Contents

Selling and Marketing

Selling and marketing expenses for the year ended December 31, 2025 were $7.4 million as compared to $6.3 million for 2024, an increase of $1.1 million, or 17%. The year-over-year increase in sales and marketing expenses in 2025, was primarily driven by increased headcount expenses of $1.9 million, non-cash charges for stock-based compensation totaling $0.8 million, and consulting expenses of $0.5 million, partially offset by a decrease in outside commission expense of $1.9 million as our focus shifted toward a higher mix of resellers versus distributors.

Research and Development

Research and development expenses for the year ended December 31, 2025 were $1.4 million, compared to $0.7 million for 2024. The increase in research and development costs in 2025 as compared to 2024, was largely driven by research and development (R&D) project expenses totaling $0.2 million, consulting expenses of $0.2 million, and patent legal fees of $0.2 million.

Other Income (Expense), net

Other income (expense), net consists of the following:

Total other income for the year ended December 31, 2025 was $7.0 million, as compared to an expense of $36.9 million for 2024, an increase of $43.9 million. The increase was primarily driven by the

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]