via NEWMEDIAWIRE -- Nephros, Inc. (Nasdaq:NEPH), a commercial-stage
company that develops and sells high performance water purification
products and pathogen detection systems to the medical and
commercial markets, today announced financial results for the three
months ended March 31, 2020.
Financial Highlights
Water Filtration Business Segment Highlights
- Net revenue was $2.5 million, up 43% compared with $1.8 million
in 2019
- Net loss was $0.6 million, compared with $0.8 million in
2019
- Adjusted EBITDA was ($0.4 million) compared with ($0.5 million)
in 2019
Consolidated Highlights
- Net revenue was $2.5 million, up 43% compared with $1.8 million
in 2019
- Net loss was $1.1 million, compared with $1.3 million in
2019
- Adjusted EBITDA was ($0.8 million), compared with ($0.9
million) in 2019
“We would like to take this opportunity to thank
all the health care workers supporting COVID-19 patients,” said
Daron Evans, President and CEO of Nephros. “We are always grateful
to be part of an infrastructure of people and equipment that
protects patients from waterborne pathogens, and in these
challenging times, our purpose is even more resolute. To that end,
we have accelerated our pathogen detection efforts to better
support our water treatment partners. As America transitions back
to work over the coming months, our partners will be working
tirelessly to help them ensure that under-used buildings are safe
to reoccupy.”
Consolidated Financial Performance for
the Quarter Ended March 31, 2020
Net revenue for the quarter ended March 31, 2020
was $2.5 million, compared with $1.8 million in 2019, an increase
of 43%.
Net loss for the quarter ended March 31, 2020
was $1.1 million, compared with a net loss of $1.3 million in 2019,
a 19% improvement.
Adjusted EBITDA for the quarter ended March 31,
2020 was ($0.8 million), compared with ($0.9 million) in 2019, a 7%
improvement.
Cost of goods sold for the quarter ended March
31, 2020 was $1.0 million, compared with $0.8 million in 2019, an
increase of 35%. Gross margins for the quarter ended March 31, 2020
were 59%, compared with 56% in 2019. Management expects future
gross margins to continue in the range of 55% to 60%.
Research and development expenses for the
quarter ended March 31, 2020 were $0.6 million, compared with $0.8
million in 2019, a decrease of 26%.
Depreciation and amortization expenses for the
quarter ended March 31, 2020 were approximately $46,000, compared
with approximately $50,000 in 2019, a decrease of 8%.
Selling, general and administrative expenses for
the quarter ended March 31, 2020 were $1.9 million, compared with
$1.5 million in 2019, an increase of 30%.
As of March 31, 2020, Nephros had cash and cash
equivalents of $9.0 million.
Adjusted EBITDA Definition and
Reconciliation to GAAP Financial Measures
Adjusted EBITDA is calculated by taking net
(loss) income 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) income,
the most directly comparable GAAP financial measure, for the first
quarter of the 2020 and 2019 fiscal years for both Nephros (on a
consolidated basis) and the Water Filtration Business Segment:
|
3 Months Ended Mar 31, |
|
Water
Filtration Business Segment |
2020 |
2019 |
|
|
|
|
|
Net loss |
(620) |
(778) |
|
|
|
|
|
Adjustments: |
|
|
|
Depreciation of property and equipment |
5 |
8 |
|
Amortization of other assets |
45 |
44 |
|
Interest expense |
43 |
46 |
|
Noncash interest expense |
- |
- |
|
Interest income |
(1) |
- |
|
Change in fair value of contingent consideration |
(42) |
(10) |
|
Noncash compensation |
190 |
158 |
|
Other noncash items |
11 |
35 |
|
Adjusted
EBITDA |
(369) |
(497) |
|
3 Months Ended Mar 31, |
Consolidated Results |
2020 |
2019 |
|
|
|
Net loss |
(1,098) |
(1,349) |
|
|
|
Adjustments: |
|
|
Depreciation of property and equipment |
5 |
8 |
Amortization of other assets |
45 |
44 |
Interest expense |
43 |
46 |
Noncash interest expense |
- |
- |
Interest Income |
(1) |
- |
Change in fair value of contingent consideration |
(42) |
(10) |
Noncash compensation |
222 |
158 |
Other noncash items |
11 |
35 |
Sub-Total |
(815) |
(1,068) |
Non-recurring pathogen detection product development |
- |
188 |
Adjusted
EBITDA |
(815) |
(880) |
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) income, the most
directly comparable GAAP financial measure. Nephros urges investors
to review the reconciliation of Adjusted EBITDA to net (loss)
income and not to rely on any single financial measure to evaluate
the business.
Conference Call Today at 4:30 p.m.
ET
Nephros will host a conference call today
at 4:30 PM Eastern Time, during which management will discuss
Nephros’s financial results and provide a general business
overview.
Participants may dial into the following number
to access the call: 1-888-220-8474. International callers may use
1-323-794-2588. Please ask to be joined into the Nephros conference
call. A replay of the call can be accessed until May 20, 2020 at
1-844-512-2921 or 1-412-317-6671 for international callers and
entering replay access code: 5796707. An audio archive of the call
will be available shortly after the call on the Nephros investor
relations page at https://investors.nephros.com/events/.
About Nephros
Nephros is a commercial-stage company that
develops and markets high performance water purification products
and pathogen detection systems for medical and commercial
markets.
Nephros ultrafilters are used in hospitals,
medical clinics, and commercial facilities to retain bacteria and
viruses from water, providing barriers that aid in infection
control for showers, sinks, and ice machines. Nephros ultrafilters
are also used in dialysis centers to aid in the removal of
endotoxins and other biological contaminants from water and
bicarbonate concentrate in hemodialysis machines.
Nephros pathogen detection systems, including
the PluraPath™ system, provide real-time data on waterborne
bacteria and virus content to medical and water quality
professionals. Our products integrate Nephros ultrafilters with
quantitative polymerase chain reaction (qPCR) technology to deliver
actionable water pathogen information within an hour.
Nephros commercial filters, including AETHER™
brand filters, improve the taste and odor of water, and reduce
scale build-up in downstream equipment. Nephros and AETHER™
products are used in the health care, food service, hospitality,
and convenience store markets.
For more information about Nephros, please visit
its website at www.nephros.com.
Forward-Looking Statements
This release contains forward-looking statements
that are subject to various risks and uncertainties. Such
statements include statements regarding the potential for further
growth and the expected growth in medical, commercial and
industrial filter sales, management’s expectations regarding future
gross margins, Nephros’s ability to respond to outbreaks in water
borne pathogens and other statements that are not historical facts,
including statements which 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 Covid-19,
uncertainty in clinical outcomes, potential delays in the
regulatory approval process, changes in business, economic and
competitive conditions, the availability of capital when needed,
dependence on third-party manufacturers and researchers, regulatory
reforms, uncertainties in litigation or investigative proceedings,
and the availability of financing. These and other risks and
uncertainties are detailed in our reports filed with the U.S.
Securities and Exchange Commission, including our Annual Report on
Form 10-K for the year ended December 31, 2019. Nephros does
not undertake any responsibility to update the forward-looking
statements in this release.
Contacts:
Investor RelationsKirin Smith,
PresidentPCG Advisory, Inc.(646)
863-6519ksmith@pcgadvisory.comwww.pcgadvisory.com
Media Relations:Bill
DouglassGotham Communications, LLC(646)
504-0890bill@gothamcomm.comwww.gothamcomm.com
Company:Andy Astor, COO &
CFONephros, Inc.(201) 345-0824andy@nephros.comwww.nephros.com
NEPHROS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share and per share
amounts) (Unaudited)
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
8,962 |
|
|
$ |
4,166 |
|
Accounts receivable, net |
|
|
1,597 |
|
|
|
1,045 |
|
Inventory, net |
|
|
3,649 |
|
|
|
2,562 |
|
Prepaid expenses and other current assets |
|
|
601 |
|
|
|
526 |
|
Total current assets |
|
|
14,809 |
|
|
|
8,299 |
|
Property and equipment,
net |
|
|
76 |
|
|
|
81 |
|
Lease right-of-use assets |
|
|
1,253 |
|
|
|
1,106 |
|
Intangible assets, net |
|
|
538 |
|
|
|
548 |
|
Goodwill |
|
|
759 |
|
|
|
759 |
|
License and supply agreement,
net |
|
|
770 |
|
|
|
804 |
|
Other assets |
|
|
89 |
|
|
|
32 |
|
TOTAL ASSETS |
|
$ |
18,294 |
|
|
$ |
11,629 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Secured revolving credit facility |
|
$ |
495 |
|
|
$ |
560 |
|
Current portion of secured note payable |
|
|
215 |
|
|
|
211 |
|
Accounts payable |
|
|
1,575 |
|
|
|
959 |
|
Accrued expenses |
|
|
308 |
|
|
|
136 |
|
Contingent consideration |
|
|
203 |
|
|
|
300 |
|
Current portion of lease liabilities |
|
|
312 |
|
|
|
262 |
|
Total current liabilities |
|
|
3,108 |
|
|
|
2,428 |
|
Secured note payable, net of
current portion |
|
|
553 |
|
|
|
613 |
|
Equipment financing, net of
current portion |
|
|
9 |
|
|
|
10 |
|
Lease liabilities, net of
current portion |
|
|
988 |
|
|
|
889 |
|
TOTAL LIABILITIES |
|
|
4,658 |
|
|
|
3,940 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
(Note 14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.001
par value; 5,000,000 shares authorized at March 31, 2020 and
December 31, 2019; no shares issued and outstanding at March 31,
2020 and December 31, 2019. |
|
|
- |
|
|
|
- |
|
Common stock, $.001 par
value; 40,000,000 shares authorized at March 31, 2020 and December
31, 2019; 9,016,550 and 8,058,850 shares issued and outstanding at
March 31, 2020 and December 31, 2019, respectively. |
|
|
9 |
|
|
|
8 |
|
Additional paid-in
capital |
|
|
138,953 |
|
|
|
131,934 |
|
Accumulated other
comprehensive income |
|
|
64 |
|
|
|
65 |
|
Accumulated
deficit |
|
|
(128,430 |
) |
|
|
(127,332 |
) |
Subtotal |
|
|
10,596 |
|
|
|
4,675 |
|
Noncontrolling
interest |
|
|
3,040 |
|
|
|
3,014 |
|
TOTAL STOCKHOLDERS’
EQUITY |
|
|
13,636 |
|
|
|
7,689 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
18,294 |
|
|
$ |
11,629 |
|
NEPHROS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS(In thousands, except
share and per share
amounts)(Unaudited)
|
|
Three Months EndedMarch 31, |
|
|
|
2020 |
|
|
2019 |
|
Net revenue: |
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
2,475 |
|
|
$ |
1,729 |
|
Royalty and other revenues |
|
|
54 |
|
|
|
40 |
|
Total net revenues |
|
|
2,529 |
|
|
|
1,769 |
|
Cost of goods sold |
|
|
1,038 |
|
|
|
771 |
|
Gross margin |
|
|
1,491 |
|
|
|
998 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
563 |
|
|
|
756 |
|
Depreciation and amortization |
|
|
46 |
|
|
|
50 |
|
Selling, general and administrative |
|
|
1,950 |
|
|
|
1,503 |
|
Change in fair value of contingent consideration |
|
|
(42 |
) |
|
|
(10 |
) |
Total operating expenses |
|
|
2,517 |
|
|
|
2,299 |
|
Loss from operations |
|
|
(1,026 |
) |
|
|
(1,301 |
) |
Other (expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(43 |
) |
|
|
(46 |
) |
Interest income |
|
|
1 |
|
|
|
- |
|
Other expense, net |
|
|
(30 |
) |
|
|
(2 |
) |
Net loss |
|
|
(1,098 |
) |
|
|
(1,349 |
) |
Less: Undeclared deemed
dividend attributable to noncontrolling interest |
|
|
(59 |
) |
|
|
(59 |
) |
Net loss attributable to
Nephros, Inc. shareholders |
|
|
(1,157 |
) |
|
|
(1,408 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common share,
basic and diluted |
|
$ |
(0.13 |
) |
|
$ |
(0.20 |
) |
Weighted avg. common shares
outstanding, basic and diluted |
|
|
8,590,230 |
|
|
|
7,129,665 |
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
Net loss |
|
|
(1,098 |
) |
|
|
(1,349 |
) |
Other comprehensive loss, foreign currency translation adjustments,
net of tax |
|
|
(1 |
) |
|
|
(3 |
) |
Comprehensive loss |
|
|
(1,099 |
) |
|
|
(1,352 |
) |
Comprehensive loss
attributable to noncontrolling interest |
|
|
(59 |
) |
|
|
(59 |
) |
Comprehensive loss
attributable to Nephros, Inc. shareholders |
|
$ |
(1,158 |
) |
|
$ |
(1,411 |
) |
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