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Nephros Reports Third Quarter 2017 Financial Results

Nephros Reports Third Quarter 2017 Financial Results

Quarterly Revenue Up 93% Year-over-Year

RIVER EDGE, NJ, November 9, 2017 /PR Newswire-FirstCall/ — Nephros, Inc. (OTCQB: NEPH) (the “Company”), a commercial stage medical device company that develops and sells high performance liquid purification ultrafilters and an on-line mid-dilution hemodiafiltration system for use with a hemodialysis (HD) machine for the treatment of patients with End Stage Renal Disease (ESRD), today announced financial results for the three months ended September 30, 2017.

“Our 93% year-over-year revenue growth in the third quarter suggests that our focus on an expanded product portfolio and strategic distribution partners is resonating well in the market,” said Daron Evans, President and Chief Executive Officer of Nephros, Inc. “Our expanded strategy now enables us to compete successfully for large, multi-year filtration contracts. Also, sales of our newly launched HydraGuardTM and EndoPurTM products are beginning to ramp.”

“We believe our water filtration business is still at the nascence of its growth potential as we expand market share in the medical space, and begin to leverage our platform into opportunities in food service and other commercial markets. We are also excited about our new design for a next-generation HDF system. Financially, we continue to project sustainable cash flow positive operations by around the end of 2017, and the non-dilutive NJEDA funding event announced earlier this week provides the cash resources we need for the foreseeable future,” concluded Mr. Evans.

Financial Performance for the Quarter Ended September 30, 2017

Total net revenues for the three months ended September 30, 2017 were approximately $916,000, compared to approximately $475,000 for the three months ended September 30, 2016, an increase of approximately $441,000, or 93%. Total product revenues for the three months ended September 30, 2017 were approximately $841,000 compared to approximately $407,000 for the three months ended September 30, 2016, an increase of approximately $434,000, or 107%.

Cost of goods sold was approximately $384,000 for the three months ended September 30, 2017, compared to approximately $159,000 for the three months ended September 30, 2016, an increase of approximately $225,000, or 142%.

Research and development expenses were approximately $237,000 and $241,000 for the three months ended September 30, 2017 and September 30, 2016, respectively.

Selling, general and administrative expenses were approximately $753,000 for the three months ended September 30, 2017 compared to approximately $652,000 for the three months ended September 30, 2016.

As of September 30, 2017, Nephros had cash and cash equivalents of approximately $150,000. Nephros announced that it had been approved to receive $1.9 million in tax credit certificates from New Jersey Economic Development Authority (NJEDA) on November 6, 2017, which are expected be sold later in the current quarter for over $1.75 million in net proceeds.

About Nephros, Inc.

Nephros is a commercial stage medical device company that develops and sells high performance liquid purification filters, as well as a hemodiafiltration system for the treatment of patients with End Stage Renal Disease. Nephros filters or ultrafilters are used primarily in medical applications in various settings. These ultrafilters are used by dialysis centers for assisting in the added removal of biological contaminants from the water and bicarbonate concentrate supplied to hemodialysis machines and the patients. Additionally, Nephros ultrafilters are used in hospitals and medical clinics for added protection in retaining bacteria (i.e. Legionella, Pseudomonas), virus and endotoxin from water. These ultrafilters provide barriers that assist in improving infection control with showers, sinks, and ice machines.

For more information about Nephros, please visit the company’s website at www.nephros.com.

Forward-Looking Statements

This release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements regarding the expected growth in sales of the Company’s products, including expected growth of our hospital filter products resulting from the recently-announced CMS requirements, the expected timing of shipping and product launch of the Company’s HydraGuard, EndoPurTM and NanoGuardTM products, the Company’s ability to meet future demand for its products, the Company’s ability to obtain additional non-dilutive financing from the NJEDA tax credit program, the Company’s ability to achieve positive cash flow from operations and the timing thereof, and other statements that are not historical facts, including statements which may be accompanied by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words.  Actual results could differ materially from those described in these forward-looking statements due to certain factors, including uncertainty in clinical outcomes, potential delays in the regulatory approval process, changes in business, economic and competitive conditions, the availability of capital when needed, our dependence on third party manufacturers and researchers, regulatory reforms, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Nephros Inc.’s reports filed with the U.S. Securities and Exchange Commission, including with respect to Nephros, its Annual Report on Form 10-K for the year ended December 31, 2016.  Nephros, Inc. does not undertake any responsibility to update the forward-looking statements in this release.

 

Contact:

Andrew Astor, Chief Financial Officer

Phone: 201-343-5202

Email: [email protected]

 

NEPHROS, INC. AND SUBSIDIARY

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 

  (Unaudited)     (Audited)  
  September 30, 2017     December 31, 2016  
ASSETS
Current assets:
Cash $ 150 $ 275
Accounts receivable, net 751 388
Investment in lease, net-current portion 20 27
Inventory, net 581 479
Prepaid expenses and other current assets 107 95
Total current assets 1,609 1,264
Property and equipment, net 49 70
Investment in lease, net-less current portion 50 61
License and supply agreement, net 1,105 1,262
Other asset 11 21
Total assets $ 2,824 $ 2,678
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Secured revolving credit facility $ 563 $
Accounts payable 436 585
Accrued expenses 343 240
Deferred revenue, current portion 70 70
Total current liabilities 1,412 895
Unsecured long-term note payable, net of debt issuance costs and debt discount of $265 and $349, respectively 922 838
Long-term portion of deferred revenue 225 278
Total liabilities 2,559 2,011
Commitments and Contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $.001 par value; 5,000,000 shares authorized at September 30, 2017 and December 31, 2016; no shares issued and outstanding at September 30, 2017 and December 31, 2016
Common stock, $.001 par value; 90,000,000 shares authorized at September 30, 2017 and December 31, 2016; 54,160,547 and 49,782,797 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 54 50
Additional paid-in capital 122,530 120,835
Accumulated other comprehensive income 76 67
Accumulated deficit (122,395 ) (120,285 )
Total stockholders’ equity 265 667
Total liabilities and stockholders’ equity $ 2,824 $ 2,678

 

NEPHROS, INC. AND SUBSIDIARY

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

  2017     2016     2017     2016  
Net revenues:
Product revenues $ 841 $ 407 $ 2,316 $ 1,405
License, royalty and other revenues 75 68 193 170
Total net revenues 916 475 2,509 1,575
Cost of goods sold 384 159 1,005 667
Gross margin 532 316 1,504 908
Operating expenses:
Research and development 237 241 744 763
Depreciation and amortization 60 60 178 171
Selling, general and administrative   753 652 2,405 2,234
Total operating expenses 1,050 953 3,327 3,168
Loss from operations (518 ) (637 ) (1,823 ) (2,260 )
Interest expense (88 ) (65 ) (218 ) (109 )
Interest income 1 1 3 4
Other expense (27 ) (5 ) (60 ) (12 )
Net loss (632 ) (706 ) (2,098 ) (2,377 )
Other comprehensive income, foreign currency translation adjustments 1 1 9 1
Total comprehensive loss $ (631 )  $ (705 )  $ (2,089 )  $ (2,376 )
Net loss per common share, basic and diluted $ (0.01 ) $ (0.01 ) $ (0.04 ) $ (0.05) )
Weighted average common shares outstanding, basic and diluted 54,142,791 48,783,097 52,473,518 48,501,810