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Nephros Announces Results for Quarter Ended June 30, 2022

Nephros, Inc.
Nephros, Inc.


Second Quarter Net Revenue of $2.9 Million, a 27% Year-Over-Year Increase;
Active Customer Sites Climb 21% to New Record

SOUTH ORANGE, NJ, Aug. 10, 2022 (GLOBE NEWSWIRE) -- via NewMediaWire -- Nephros, Inc.(Nasdaq: NEPH), a leading water technology company providing filtration and pathogen detection solutions to the medical and commercial markets, today announced financial results for the second quarter ended June 30, 2022.

Financial Highlights
Water Filtration Business Segment Highlights*

  • Net revenue of $2.8 million, an increase of 30%

  • Net loss of $0.6 million, compared to $0.9 million

  • Adjusted EBITDA of ($0.2 million), compared with ($0.5 million)

Consolidated Highlights*

  • Net revenue of $2.9 million, an increase of 27%

  • Net loss of $1.1 million, compared to $1.1 million

  • Adjusted EBITDA of ($0.7 million), compared to ($0.8 million)

*Stated performance is relative to same period prior year (second quarter of 2021)

“We are pleased to report strong revenue growth, up 27% year-over-year, and 32% compared to the first quarter of 2022,” said Andy Astor, President and Chief Executive Officer. “Further, our Active Customer Sites (ACS) rose to a new high of 1,349, representing increases of 21% year-over-year and 6% from the first quarter of 2022. We believe ACS is an important leading indicator of future revenue growth.”

Mr. Astor continued, "While this quarter's results were improved, our results in the prior quarter made clear the need to re-evaluate our cost structure. During the quarter, we took several actions, including price increases to cover inflation and increased supply chain costs, headcount and professional services reductions, optimized production operations, and reduced product SKUs. Each of these actions was taken with intent to achieve positive cash flow by mid-2023.”

Consolidated Financial Performance for the Quarter Ended June 30, 2022
Net revenue for the quarter ended June 30, 2022 was $2.9 million, compared to $2.3 million in the corresponding period in 2021, an increase of 27%.

Net loss was $1.1 million for each of the quarters ended June 30, 2022 and 2021.

Adjusted EBITDA for the quarter ended June 30, 2022 was ($0.7 million), compared to ($0.8 million) during the same period in 2021.

Cost of goods sold for the quarter ended June 30, 2022 was $1.5 million, compared with $1.0 million for the quarter ended June 30, 2021, an increase of 54%. Gross margins for the quarter ended June 30, 2022 were 47%, compared with 56% in the same period in 2021.

Research and development expenses for the quarter ended June 30, 2022 were $0.4 million, compared with $0.5 million during the quarter ended June 30, 2021.

Depreciation and amortization expenses for the quarter ended June 30, 2022 were approximately $64,000, compared with approximately $51,000 for the corresponding period 2021.

Selling, general and administrative expenses for the quarter ended June 30, 2022 were $2.1 million, compared with $1.9 million during the same period in 2021, an increase of 12%.

As of June 30, 2022, Nephros had cash and cash equivalents of $4.2 million on a consolidated basis.

Adjusted EBITDA Definition and Reconciliation to GAAP Financial Measures
Adjusted EBITDA is calculated by taking net loss calculated in accordance with generally accepted accounting principles (“GAAP”) and excluding all interest-related expenses and income, tax-related expenses and income, non-recurring expenses and income, and non-cash items, including depreciation and amortization and non-cash compensation. The following table presents a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, for the second quarter of the 2022 and 2021 fiscal years for both Nephros (on a consolidated basis) and the Water Filtration Business Segment:

 

3 Months Ended Jun 30,

 

Water Filtration Business Segment

2022

2021

 

 

(in thousands)

 

Net loss

($573)

($863)

 

 

 

 

 

Adjustments:

 

 

 

Depreciation of property and equipment

36

7

 

Amortization of other assets

68

48

 

Interest expense

6

11

 

Interest income

(1)

(3)

 

Stock based compensation

240

269

 

Other noncash items

21

24

 

Adjusted EBITDA

($203)

($507)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Months Ended Jun 30,

 

Consolidated Results

2022

2021

 

 

(in thousands)

 

Net loss

($1,137)

($1,126)

 

 

 

 

 

Adjustments:

 

 

 

Depreciation of property and equipment

36

7

 

Amortization of other assets

68

48

 

Interest expense

6

11

 

Interest income

(1)

(3)

 

Stock based compensation

277

281

 

Other noncash items

21

24

 

Adjusted EBITDA

($730)

($758)

 

 

 

 

 


Nephros believes that Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to Nephros’s financial condition and results of operations. Management does not consider Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of Adjusted EBITDA is that it excludes significant expenses and income that are required by GAAP to be recognized in Nephros’s consolidated financial statements. In addition, Adjusted EBITDA is subject to inherent limitations as it reflects the exercise of judgments by management about which expenses and income are excluded or included in determining Adjusted EBITDA. In order to compensate for these limitations, management presents Adjusted EBITDA in connection with net loss, the most directly comparable GAAP financial measure. Nephros urges investors to review the reconciliation of Adjusted EBITDA to net loss and not to rely on any single financial measure to evaluate the business.

Conference Call Today at 4:30pm ET
Nephros will host a conference call today at 4:30pm Eastern Time, during which management will discuss Nephros’s financial results and provide a general business overview.

Participants may dial into the call as follows:
Domestic access: 1 (844) 808-7106
International access: 1 (412) 317-5285

Upon joining, please ask to be joined into the Nephros conference call.

A replay of the call can be accessed until August 17th, 2022 at 1 (877) 344-7529 or 1 (412) 317-0088 for international callers and entering replay access code: 6487830.

An audio archive of the call will be available shortly after the call on the Nephros Investor Relations page.

About Nephros
Nephros, Inc. is a company committed to improving the human relationship with water through leading, accessible technology. We provide innovative filtration and pathogen detection as part of an integrated approach to water safety that combines science, solutions, and support services. Nephros products serve the needs of customers within the healthcare and commercial markets, offering both proactive and emergency responses for water management.

For more information about Nephros, please visit nephros.com.

Forward-Looking Statements
This release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements regarding Nephros’s expected future revenue, its belief that Active Customer Sites are a leading indicator of revenue growth, expectations on achieving positive cash flow and the timing thereof and other future financial performance, and other statements that are not historical facts, including statements that 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 the impact of the ongoing COVID-19 pandemic, inflationary factors and general economic conditions, changes in business and competitive conditions, the availability of capital when needed, dependence on third-party manufacturers and researchers, regulatory reforms, and uncertainties in litigation or investigative proceedings. These and other risks and uncertainties are detailed in Nephros’s reports filed with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2021, which it may update in Part II, Item 1A – Risk Factors in its Quarterly Reports on Form 10-Q that it has filed or will file hereafter. Nephros does not undertake any responsibility to update the forward-looking statements in this release.

Investor Relations Contacts:
Kirin Smith, President
PCG Advisory, Inc.
(646) 823-8656
ksmith@pcgadvisory.com

Andy Astor, CEO
Nephros, Inc.
(201) 345-0824
andy.astor@nephros.com


NEPHROS, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In thousands, except share and per share amounts)

 

(Unaudited)

 

 

 

 

 

 

 

ASSETS

 

June 30, 2022

 

December 31, 2021

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$4,179

 

$6,973

 

Accounts receivable, net

 

2,128

 

1,641

 

Inventory

 

4,664

 

4,795

 

Prepaid expenses and other current assets

 

151

 

225

 

Total current assets

 

11,122

 

13,634

 

Property and equipment, net

 

450

 

366

 

Lease right-use-of assets

 

626

 

730

 

Intangible assets, net

 

1,460

 

1,536

 

Goodwill

 

759

 

759

 

License and supply agreement, net

 

469

 

536

 

Other assets

 

67

 

89

 

TOTAL ASSETS

 

$14,953

 

$17,650

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of secured note payable

 

210

 

248

 

Accounts payable

 

1,411

 

1,334

 

Accrued expenses

 

185

 

444

 

Current portion of lease liabilities

 

305

 

364

 

Total current liabilities

 

2,111

 

2,390

 

Secured note payable, long term portion

 

-

 

95

 

Equipment financing, net of current portion

 

3

 

4

 

Lease liabilities, net of current portion

 

358

 

412

 

TOTAL LIABILITIES

 

2,472

 

2,901

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

Preferred stock, $.001 par value; 5,000,000 shares authorized at June 30, 2022 and December 31, 2021; no shares issued and outstanding June 30, 2022 and December 31, 2021.

 

-

 

-

 

Common stock, $.001 par value; 40,000,000 shares authorized at June 30, 2022 and December 31, 2021; 10,318,818 and 10,258,444 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

10

 

10

 

Additional paid-in capital

 

148,040

 

147,346

 

Accumulated other comprehensive income

 

-

 

64

 

Accumulated deficit

 

(138,829)

 

(135,725)

 

Subtotal

 

9,221

 

11,695

 

Noncontrolling interest

 

3,260

 

3,054

 

TOTAL STOCKHOLDERS' EQUITY

 

12,481

 

14,749

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$14,953

 

$17,650

 

 

 

 

 

 

 



NEPHROS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

Three Months Ended June 30,

 

 

 

2022

 

2021

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$2,839

 

$2,196

 

Royalty and other revenues

 

45

 

70

 

Total net revenues

 

2,884

 

2,266

 

Cost of goods sold

 

1,523

 

991

 

Gross margin

 

1,361

 

1,275

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Research and development

 

431

 

487

 

Depreciation and amortization

 

64

 

51

 

Selling, general and administrative

 

2,070

 

1,854

 

Total operating expenses

 

2,565

 

2,392

 

Loss from operations

 

(1,204)

 

(1,117)

 

Other income (expense):

 

 

 

 

 

Interest expense

 

(6)

 

(11)

 

Interest income

 

1

 

3

 

Extinguishment of PPP Loan

 

-

 

-

 

Other income (expense), net

 

72

 

(1)

 

Total other income (expense):

 

67

 

(9)

 

Net loss

 

(1,137)

 

(1,126)

 

Less: Deemed dividend attributable to noncontrolling interest

 

(66)

 

(60)

 

Net loss attributable to Nephros Inc

 

(1,203)

 

(1,186)

 

 

 

 

 

 

 

Net loss per common share, basic and diluted

 

$(0.12)

 

$(0.12)

 

Weighted average common shares outstanding, basic and diluted

 

10,299,148

 

9,943,026

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

Net Loss

 

(1,137)

 

(1,126)

 

Other comprehensive income(loss), foreign currency translation adjustments, net of tax

 

-

 

2

 

Comprehensive loss

 

(1,137)

 

(1,124)

 

Comprehensive loss attirbutable to noncontrolling interest

 

(66)

 

(60)

 

Comprehensive loss attributable to Nephros, Inc. shareholders

 

$(1,203)

 

$(1,184)