Nephros(NEPH) - 2025 Q2 - Quarterly Results

Executive Summary & Financial Highlights Q2 2025 Highlights Nephros achieved third consecutive quarter of profitability in Q2 2025, with net revenue up 36% year-over-year Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change (%) | | :------------------- | :------ | :------ | :--------- | | Net Revenue | $4.4M | $3.3M | 36% | | Net Income (Loss) | $237K | ($289K) | N/A | | Adjusted EBITDA | $355K | ($133K) | N/A | - Achieved third consecutive quarter of profitability[3] - Programmatic sales reached an all-time high, supported by a new installation and replacement program driving reliable reorder volume[3] - Dialysis water segment delivered its second-highest performance on record, securing the largest dialysis filtration purchase order in company history[3] YTD June 30, 2025 Highlights Nephros showed significant YTD growth, with net revenue up 37% and a shift to positive net income YTD June 30, 2025 Key Financial Metrics | Metric | YTD 2025 | YTD 2024 | Change (%) | | :------------------- | :------- | :------- | :--------- | | Net Revenue | $9.3M | $6.8M | 37% |\ | Net Income (Loss) | $795K | ($458K) | N/A |\ | Adjusted EBITDA | $1.0M | ($228K) | N/A | CEO Commentary CEO highlighted disciplined execution and innovation driving growth in programmatic business and active sites - Results reflect disciplined execution, operational excellence, and consistent investment in growth-driving innovation[3] - Trailing 12-month revenue grew from $13.8 million to $16.7 million over the past two years[3] - Active-site counts reached all-time highs across infection control, dialysis water, and commercial segments[3] Detailed Financial Performance Three Months Ended June 30, 2025 Nephros reported significant Q2 revenue growth and improved profitability, driven by programmatic sales Net Revenue Q2 2025 Net and Programmatic Revenue | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--------- | :------ | :------ | :--------- | | Net Revenue | $4.4M | $3.3M | 36% | | Programmatic Revenue | N/A | N/A | 31% | - Core programmatic revenue grew by 31% year-over-year, reflecting strong reorders and new active sites[6] Cost of Goods Sold & Gross Margin Q2 2025 Cost of Goods Sold and Gross Margin | Metric | Q2 2025 | Q2 2024 | Change (%) | | :---------------- | :------ | :------ | :--------- | | Cost of Goods Sold | $1.6M | $1.3M | 21% | | Gross Margin | 63% | 59% | +4 ppts | - Increase in gross margin primarily driven by a reduction in shipping costs and inventory reserve adjustments[7] Operating Expenses Q2 2025 Operating Expenses | Expense Category | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :------ | :------ | :--------- | | Selling, General & Admin | $2.2M | $1.9M | 13% | | Research & Development | $0.3M | $0.3M | 0% | | Depreciation & Amortization | $35K | $34K | 3% | - Increase in SG&A due to higher sales commissions from increased revenue, higher employee bonus accruals, and increased stock-based compensation[8] Net Income & Adjusted EBITDA Q2 2025 Net Income and Adjusted EBITDA | Metric | Q2 2025 | Q2 2024 | | :---------------- | :------ | :------ | | Net Income (Loss) | $0.2M | ($0.3M) | | Adjusted EBITDA | $0.4M | ($0.1M) | - Achieved net income for the third consecutive quarter, a significant improvement from a net loss in the prior year[9] Six Months Ended June 30, 2025 Nephros sustained strong YTD performance, with substantial revenue growth and a shift to profitability Net Revenue YTD June 30, 2025 Net and Programmatic Revenue | Metric | YTD 2025 | YTD 2024 | Change (%) | | :--------- | :------- | :------- | :--------- | | Net Revenue | $9.3M | $6.8M | 37% | | Programmatic Revenue | N/A | N/A | 27% | - Core programmatic revenue grew by 27% year-over-year, driven by strong reorders and new active sites[11] Cost of Goods Sold & Gross Margin YTD June 30, 2025 Cost of Goods Sold and Gross Margin | Metric | YTD 2025 | YTD 2024 | Change (%) | | :---------------- | :------- | :------- | :--------- | | Cost of Goods Sold | $3.3M | $2.7M | 25% | | Gross Margin | 64% | 61% | +3 ppts | - Increase in gross margin primarily driven by lower product costs from a more favorable product mix and a reduction in inventory reserve adjustments[12] Operating Expenses YTD June 30, 2025 Operating Expenses | Expense Category | YTD 2025 | YTD 2024 | Change (%) | | :----------------------- | :------- | :------- | :--------- | | Selling, General & Admin | $4.5M | $4.1M | 9% | | Research & Development | $0.6M | $0.5M | 20% | | Depreciation & Amortization | $74K | $67K | 10% | - Increase in SG&A primarily driven by higher sales commission expense, increased employee bonus accruals, and higher stock-based compensation expense[12] Net Income & Adjusted EBITDA YTD June 30, 2025 Net Income and Adjusted EBITDA | Metric | YTD 2025 | YTD 2024 | | :---------------- | :------- | :------- | | Net Income (Loss) | $0.8M | ($0.5M) | | Adjusted EBITDA | $1.0M | ($0.2M) | Cash and Cash Equivalents Cash and Cash Equivalents | Metric | June 30, 2025 | Dec 31, 2024 | | :---------------------- | :------------ | :----------- | | Cash and Cash Equivalents | $5.1M | $3.8M | - Company remains debt-free as of June 30, 2025[15] Non-GAAP Financial Measures Reconciliation Adjusted EBITDA Definition Adjusted EBITDA is a non-GAAP measure used to assess financial trends, excluding non-cash and non-recurring items - Adjusted EBITDA is calculated by excluding interest, tax, non-recurring expenses/income, and non-cash items (depreciation, amortization, non-cash inventory write-offs, non-cash compensation) from GAAP net income (loss)[16] - Management presents Adjusted EBITDA in connection with net income (loss) and urges investors not to rely on it in isolation due to its inherent limitations[20] Adjusted EBITDA Reconciliation (Three Months) Reconciliation of Q2 net income (loss) to Adjusted EBITDA, detailing various adjustments Adjusted EBITDA Reconciliation (Three Months) | (in $ thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | 237 | (289) | | Adjustments: | | | | Depreciation of property and equipment | 13 | 11 | | Amortization of other assets | 20 | 24 | | Interest expense | 1 | - | | Interest income | (31) | (21) | | Income taxes | 9 | - | | Non-cash stock-based compensation | 71 | 35 | | Non-cash inventory impairments | 35 | 107 | | Adjusted EBITDA Income (loss) | 355 | (133) | Adjusted EBITDA Reconciliation (Six Months) Reconciliation of YTD net income (loss) to Adjusted EBITDA, detailing various adjustments Adjusted EBITDA Reconciliation (Six Months) | (in $ thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net Income (loss) | 795 | (458) | | Adjustments: | | | | Depreciation of property and equipment | 30 | 22 | | Amortization of other assets | 43 | 47 | | Interest expense | 1 | 1 | | Interest income | (44) | (46) | | Income taxes | 9 | - | | Non-cash stock-based compensation | 147 | 26 | | Non-cash inventory impairments | 41 | 180 | | Adjusted EBITDA Income (loss) | 1,022 | (228) | Company Information Conference Call Information Nephros hosted a conference call to discuss financial results and business overview, with replay options - Conference call held on August 7, 2025, at 4:30 PM ET[21] - Audio archive available on Nephros Investor Relations page; replay accessible until August 15, 2025[22] About Nephros Nephros, Inc. is a water technology company offering filtration products and education for healthcare and commercial markets - Committed to improving the human relationship with water through leading, accessible technology[23] - Offers innovative water filtration products and services, and water-quality education[23] - Serves healthcare and commercial markets with proactive and emergency water management solutions[23] Forward-Looking Statements This section outlines risks and uncertainties that could cause actual results to differ from forward-looking statements - Statements regarding future revenue growth, product reorders, operational activities, and ability to realize net income are subject to risks[25] - Actual results could differ due to factors like sales organization development, emergency response sales, U.S. tariffs, inflation, competition, capital availability, dependence on third parties, and regulatory reforms[25] - Investors are cautioned not to place undue reliance on forward-looking statements, and the company does not undertake to update them except as required by law[25] Investor Relations Contacts Contact information for investor relations inquiries, including PCG Advisory and Nephros representatives - Kirin Smith, President of PCG Advisory, Inc., and Robert Banks, CEO of Nephros, Inc., are listed as investor relations contacts[26] Consolidated Financial Statements (Unaudited) Balance Sheets Unaudited balance sheets show increased assets and equity, with a healthy cash position and no debt Consolidated Balance Sheet Highlights | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $5,074 | $3,760 | | Total current assets | $9,578 | $8,298 | | TOTAL ASSETS | $12,243 | $11,210 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Total current liabilities | $1,772 | $1,562 | | TOTAL LIABILITIES | $2,644 | $2,625 | | TOTAL STOCKHOLDERS' EQUITY | $9,599 | $8,585 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12,243 | $11,210 | - Cash and cash equivalents increased by $1.314 million from December 31, 2024, to June 30, 2025[28] - Accumulated deficit decreased from ($144,332) thousand to ($143,537) thousand, reflecting improved profitability[30] Statements of Operations Unaudited statements highlight significant revenue growth and a shift to net income for both periods Statements of Operations (Three Months) | (in thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total net revenues | $4,419 | $3,252 | $9,296 | $6,774 | | Cost of goods sold | $1,624 | $1,340 | $3,347 | $2,675 | | Gross margin | $2,795 | $1,912 | $5,949 | $4,099 | | Total operating expenses | $2,547 | $2,229 | $5,135 | $4,616 | | Operating income (loss) | $248 | ($317) | $814 | ($517) | | Net income (loss) | $237 | ($289) | $795 | ($458) | | Net income (loss) per common share, basic | $0.02 | ($0.03) | $0.07 | ($0.04) | - Product revenues were the primary driver of total net revenues, showing strong growth in both periods[32] - Gross margin improved from 59% to 63% for the quarter and from 61% to 64% for the six-month period[7][12]