Nephros(US:NEPH)2023-03-09 03:28Financial Data and Key Metrics Changes - The fourth quarter gross margins were reported at 59%, an increase from 54% in 2021 [23] - The net consolidated loss for Q4 2022 was $0.7 million, consistent with Q4 2021, while the annual net consolidated loss increased to $4.3 million from $2.8 million in 2021 [8] - Consolidated adjusted EBITDA for Q4 was negative $0.5 million compared to negative $0.1 million in 2021, and for the year, it was negative $2.4 million compared to negative $1.6 million in 2021 [8] - Cash used in operating activities decreased to $202,000 in Q4 2022 from $336,000 in Q4 2021 [24] Business Line Data and Key Metrics Changes - Fourth quarter net revenue was $2.6 million, a 6% decrease year-over-year, while full-year revenue was $10 million, a 2% decrease from the previous year [22] - Consolidated research and development expenses for Q4 were $0.4 million, up from $0.3 million in 2021, but for the year, they decreased to $1.3 million from $1.5 million in 2021 [9] Market Data and Key Metrics Changes - The company established a strategic partnership with Donastar Enterprises as the exclusive master distributor for its commercial filters in the food & beverage and hospitality markets [6] - The company anticipates further cost savings due to the planned cessation of operations by its majority-owned subsidiary, Specialty Renal Products (SRP) [21] Company Strategy and Development Direction - The company is focused on achieving cash flow breakeven by mid-2023 while targeting significant revenue growth [4] - Actions taken to achieve these goals include restructuring the sales organization, doubling the sales team, and relaunching the commercial filtration business [20] - The company aims to return to target gross margins of 55% to 60% through price increases and operational efficiencies [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about internal trends and the potential for growth despite challenges in the dialysis market and funding difficulties [30][31] - The company is prioritizing cash burn management and revenue growth, with a focus on expanding its sales capabilities [42] Other Important Information - The company’s cash balance as of December 31, 2022, was $3.6 million, which is believed to be sufficient for the foreseeable future [24] - The SRP board has decided to wind down operations and liquidate remaining assets, with Nephros re-evaluating future opportunities for HDF [7] Q&A Session Summary Question: What is the status of the Donastar Enterprises agreement? - The agreement allows Donastar to bring their own pipeline and manage existing customer relationships, benefiting both parties [27] Question: How many active customer sites does the company have? - The company did not disclose specific numbers but emphasized the importance of the Donastar relationship in expanding its market reach [30] Question: What are the growth drivers going forward? - The company has doubled its sales force to better respond to market opportunities and is focused on growing its revenue [53] Question: What is the company's stance on the SRP operations and funding? - Management expressed disappointment over the inability to secure funding for SRP, leading to its shutdown, but emphasized the need to focus on profitability [31][39] Question: How is the R&D budget being allocated? - The R&D budget is modest and primarily focused on product development and technology updates, with a significant portion being cut due to the cessation of SRP [71]