Nephros Announces Results for Quarter Ended September 30, 2023

SOUTH ORANGE, NJ – (NewMediaWire) – November 08, 2023 – Nephros, Inc. (Nasdaq: NEPH), a leading water technology company providing filtration solutions to the medical and commercial markets, today announced financial results for the third quarter ended September 30, 2023.

Financial Highlights*

●      Third-quarter net revenue of $3.7 million, an increase of 55%;

●      Third-quarter net loss from continuing operations of $0.2 million, compared to $1.3 million;

●      Third-quarter adjusted EBITDA positive $11,000, compared to negative $304,000;

●      Year-to-date positive net cash flow from operating activities of $1.1 million, compared to negative $3.0 million.

*Stated performance is compared to the same period in 2022

“We are very pleased with our third-quarter results,” said Robert Banks, President and Chief Executive Officer. “Nephros has delivered high levels of sustained growth over the past three quarters with gross margins up significantly from the same period last year. In addition, our cash flows from operating activities in 2023 have been consistently positive, totaling $1.1 million so far this year. We remain laser-focused on financial growth and offering an effective and reliable solution for our infection control and dialysis customers. Furthermore, our commercial business continues to mature under the efficient operating model in place with Donastar. Overall, I am very encouraged.”

Judy Krandel, Chief Financial Officer commented, “Year-to-date revenue growth was extremely strong this quarter, at 48% over the same period in 2022. Further, we believe our positive net cash flows are a good indicator of progress towards GAAP profitability, which we expect to achieve within the next few quarters.”

Financial Performance for the Quarter Ended September 30, 2023

Net revenue from continuing operations for the quarter ended September 30, 2023, was $3.7 million, compared with $2.4 million in the corresponding period in 2022, an increase of 55%.

Net loss from continuing operations for the quarter ended September 30, 2023, was $0.2 million, compared with $1.3 million during the same period in 2022. The decrease in net loss from continuing operations was driven by increased revenue and gross margins and decreased research and development costs due to the cessation of our HDF business.

Adjusted EBITDA from continuing operations for the quarter ended September 30, 2023, was $11,000, compared with ($0.3 million) during the same period in 2022.

Cost of goods sold for the quarters ended September 30, 2023 and September 30, 2022, was $1.5 million and $1.6 million, respectively. Gross margin for the quarter ended September 30, 2023 was 59%, compared with 32% during the same period in 2022.

Research and development expenses for the quarter ended September 30, 2023, were $0.2 million, compared with $0.3 million during the quarter ended September 30, 2022.

Depreciation and amortization expenses for the quarter ended September 30, 2023 were approximately $55,000, compared with approximately $48,000 for the corresponding period in 2022.

Selling, general and administrative expenses for the quarter ended September 30, 2023, were approximately $2.1 million compared with approximately $1.7 million for the corresponding period in 2022.

As of September 30, 2023, Nephros had cash and cash equivalents of $4.6 million.

Adjusted EBITDA Definition and Reconciliation to GAAP Financial Measures

Adjusted EBITDA from continuing operations is calculated by taking net loss from continuing operations 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, amortization, and non-cash compensation. The following table presents a reconciliation of Adjusted EBITDA from continuing operations to net loss from continuing operations, the most directly comparable GAAP financial measure, for the third quarter of the 2023 and 2022 fiscal years:

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