Nephros(NEPH) - 2025 Q1 - Quarterly Results

Executive Summary & Financial Highlights Overview of Q1 2025 Results Nephros reported a strong Q1 2025 with record quarterly net revenue of $4.9 million, representing a 38% increase year-over-year. The company achieved a net income of $558,000, a significant turnaround from a net loss in the prior year, and an improved gross margin of 65% | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Revenue | $4.9 million | $3.5 million | +38% | | Net Income | $558,000 | ($169,000) | Turnaround from loss | | Adjusted EBITDA | $667,000 | ($95,000) | Turnaround from loss | | Gross Margin | 65% | 62% | +3 percentage points | CEO Commentary and Business Outlook CEO Robert Banks highlighted record quarterly net revenue driven by robust growth in both core programmatic and emergency response businesses, reflecting improved reorder rates and product value. While emergency business saw a peak, the company will focus on its core programmatic business. Nephros is well-positioned with long-term customers and strong margins, planning new product launches and capability advancements despite macro-economic uncertainties from tariff activity - Record quarterly net revenue of $4.9M, characterized by robust growth and all-time highs in both core programmatic business and emergency response business[3] - Achieved a record high of 1,600 active sites in Q1, indicating growing market adoption and operational momentum[3] - Company plans to continue innovation with a pipeline of new product launches and capability advancements to reinforce its market standing[3] Detailed Financial Performance Analysis Revenue and Gross Margin Net revenue increased by 38% to $4.9 million in Q1 2025, with core programmatic revenue growing 23% year-over-year. Gross margin improved to 65% from 62% in the prior year, primarily due to a price increase, a more favorable product mix, and lower inventory reserves and write-offs | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Revenue | $4.9 million | $3.5 million | +38% | | Core Programmatic Revenue Growth | - | - | +23% | | Gross Margin | 65% | 62% | +3 percentage points | - Increase in programmatic sales reflects strong reorders, a number of new active sites, and pre-ordering ahead of a small price increase implemented in February 2025[4] - Gross margin increase was primarily driven by a price increase, a more favorable product mix, and lower inventory reserves and write-offs compared to the prior period[8] Operating Expenses Operating expenses saw increases across categories. Selling, general and administrative expenses rose 5% to $2.3 million due to higher sales commissions and stock compensation. Research and development expenses increased 39% to $0.3 million, driven by higher headcount | Expense Category | Q1 2025 | Q1 2024 | Change (YoY) | | :--------------- | :------ | :------ | :----------- | | Cost of Goods Sold | $1.7 million | $1.3 million | +29% | | SG&A Expenses | $2.3 million | $2.1 million | +5% | | R&D Expenses | $0.3 million | $0.2 million | +39% | | Depreciation & Amortization | $39,000 | $33,000 | +18.2% | - Selling, general and administrative expenses increased due to higher sales commissions resulting from increased revenue and stock compensation expense[9] - Research and development expenses increased due to higher headcount[9] Net Income and Cash Position Nephros achieved a net income of $0.6 million in Q1 2025, a significant improvement from a net loss of $0.2 million in Q1 2024, marking the second quarterly net income in the company's history. The company maintained a strong cash position, ending the quarter with $4.1 million in cash and cash equivalents and remaining debt-free | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net Income (Loss) | $0.6 million | ($0.2 million) | Turnaround from loss | | Cash and Cash Equivalents (as of period end) | $4.1 million | $3.8 million (Dec 31, 2024) | +$0.3 million (QoQ) | - Q1 2025 marks the second quarterly net income in the Company's history[10] - Nephros remains debt-free as of March 31, 2025[11] Non-GAAP Financial Measures Adjusted EBITDA Definition and Reconciliation Adjusted EBITDA for Q1 2025 was approximately $0.7 million, a substantial improvement from a loss of $0.1 million in Q1 2024. The company defines Adjusted EBITDA by excluding interest, tax, non-recurring expenses, and non-cash items from GAAP net income (loss), providing a detailed reconciliation table | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :----- | :--------------------- | :--------------------- | | Net (loss) income | $558 | ($169) | | Adjustments: | | | | Depreciation of property and equipment | $17 | $11 | | Amortization of other assets | $23 | $23 | | Interest expense | - | $1 | | Interest income | ($13) | ($25) | | Non-cash stock-based compensation | $76 | ($9) | | Non-cash inventory impairments | $6 | $73 | | Adjusted EBITDA Income (loss) | $667 | ($95) | - Adjusted EBITDA is calculated by taking net income (loss) and excluding all interest-related expenses and income, tax-related expenses and income, non-recurring expenses and income, and non-cash items[12] Management's Perspective on Adjusted EBITDA Management views Adjusted EBITDA as a useful tool for investors and management to understand financial and business trends, but emphasizes it should not be considered in isolation or as an alternative to GAAP measures due to its exclusion of significant expenses and income - Nephros believes Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends[16] - Management does not consider Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP[16] - Investors are urged to review the reconciliation of Adjusted EBITDA to net income (loss) and not to rely on any single financial measure to evaluate the business[16] Corporate Information Conference Call Details Nephros hosted a conference call on May 8, 2025, at 4:30 PM ET to discuss financial results and provide a general business overview. Details for live access and replay options were provided - Nephros hosted a conference call on May 8, 2025, at 4:30 PM ET to discuss financial results and provide a general business overview[17] - An audio archive of the call is available shortly after the call on the Nephros Investor Relations page, with a replay accessible until May 15th, 2025[19] About Nephros Nephros, Inc. is a water technology company committed to improving the human relationship with water through leading, accessible technology. They provide innovative water filtration products and services, along with water-quality education, serving healthcare and commercial markets with both proactive and emergency solutions for water management - Nephros is a leading water technology company providing innovative water filtration products and services[20] - Serves the needs of customers within healthcare and commercial markets, offering both proactive and emergency solutions for water management[20] Forward-Looking Statements The release contains forward-looking statements regarding future revenue growth, new product offerings, and competitive advantages, which are subject to various risks and uncertainties. These risks include sales organization development, emergency response sales variability, U.S. tariffs, inflationary factors, economic and competitive conditions, capital availability, dependence on third-party manufacturers, and regulatory reforms - Statements regarding Nephros' expected future revenue growth, timing of growth, effect of new regulations, and anticipated impact of new product offerings are forward-looking[23] - Actual results could differ materially due to factors such as Nephros' ability to develop its sales organization, variability of emergency response sales, U.S. tariffs, inflation, economic conditions, and regulatory reforms[23] - Nephros does not undertake any responsibility to update any forward-looking statements, except as may be required by law[23] Investor Relations Contacts Contact information for investor relations is provided, including Kirin Smith, President of PCG Advisory, Inc., and Robert Banks, CEO of Nephros, Inc - Investor Relations contacts include Kirin Smith, President of PCG Advisory, Inc., and Robert Banks, CEO of Nephros, Inc[24] Unaudited Financial Statements Balance Sheets The unaudited balance sheet as of March 31, 2025, shows total assets of $11.778 million, an increase from $11.210 million at December 31, 2024. Total liabilities decreased slightly, while total stockholders' equity increased, reflecting improved financial health | Balance Sheet Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $4,081 | $3,760 | | Total current assets | $8,992 | $8,298 | | TOTAL ASSETS | $11,778 | $11,210 | | Total current liabilities | $1,518 | $1,562 | | TOTAL LIABILITIES | $2,487 | $2,625 | | TOTAL STOCKHOLDERS' EQUITY | $9,291 | $8,585 | Statements of Operations The unaudited statements of operations for the three months ended March 31, 2025, show total net revenues of $4.877 million, up from $3.522 million in the prior year. This led to a net income of $0.558 million, a significant turnaround from a net loss of $0.169 million in Q1 2024, resulting in basic and diluted EPS of $0.05 | Income Statement Item | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :-------------------- | :--------------------- | :--------------------- | | Product revenues | $4,706 | $3,506 | | Royalty and other revenues | $171 | $16 | | Total net revenues | $4,877 | $3,522 | | Cost of goods sold | $1,723 | $1,335 | | Gross margin | $3,154 | $2,187 | | Total operating expenses | $2,588 | $2,387 | | Operating income (loss) | $566 | ($200) | | Net income (loss) | $558 | ($169) | | Net income (loss) per common share, basic | $0.05 | ($0.02) | | Net income (loss) per common share, diluted | $0.05 | ($0.02) |