First-Quarter Net Revenue of $3.7 Million;
Achieves Positive Cash Flow Months Earlier than Forecast
SOUTH ORANGE, NJ, May 10, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire – Nephros, Inc. (Nasdaq: NEPH), a leading water technology company providing filtration solutions to the medical and commercial markets, today announced financial results for the first quarter ended March 31, 2023.
Financial Highlights*
- Net revenue from continuing operations of $3.7 million, an increase of 71%
- Net loss from continuing operations of $0.3 million, compared to $1.6 million.
- Adjusted EBITDA from continuing operations of $0.1 million, compared to ($1.2 million)
*Stated performance is relative to same period prior year (first quarter of 2022)
“We are very pleased to report record net quarterly revenue and positive cash flow, both significant milestones for Nephros,” said Andy Astor, retiring President and Chief Executive Officer. “We are particularly pleased that cash flow turned positive several months earlier than our forecast for mid-2023. This was driven by multiple factors reflecting our past year's efforts, including reduced expenses, normalized gross margins, and strong revenue growth in both our core and emergency response businesses.”
"It is my pleasure to join the Nephros team at this auspicious time,” said Robert Banks, incoming President and Chief Executive Officer. “I am excited for the opportunity to build on the company’s recent achievements, particularly with respect to consistently high growth rates and long-term profitability.”
Financial Performance for the Quarter Ended March 31, 2023
Net revenue from continuing operations for the quarter ended March 31, 2023, was $3.7 million, compared to $2.2 million in the corresponding period in 2022, an increase of 71%.
Net loss from continuing operations for the quarter ended March 31, 2023, was $0.3 million, compared to $1.6 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.
Adjusted EBITDA from continuing operations for the quarter ended March 31, 2023, was $0.1 million, compared to ($1.2 million) during the same period in 2022.
Cost of goods sold for the quarter ended March 31, 2023 was $1.6 million, compared with $1.1 million for the quarter ended March 31, 2022, an increase of 43%. Gross margins for the quarter ended March 31, 2023 were 57%, compared with 49% during the same period in 2022. The increase of approximately 8%, reflecting a return to target gross margins of 55-60%, was driven by price increases implemented in 2022, reductions in shipping expenses, and improved management of inventory reserves.
Research and development expenses for the quarter ended March 31, 2023, were $0.2 million, compared with $0.4 million during the quarter ended March 31, 2022.
Depreciation and amortization expenses for the quarter ended March 31, 2023 were approximately $54,000, compared with approximately $51,000 for the corresponding period in 2022.
Selling, general and administrative expenses for the quarter ended March 31, 2023, were approximately $2.1 million compared with approximately $2.2 million for the corresponding period in 2022.
As of March 31, 2023, Nephros had cash and cash equivalents of $3.8 million, compared to $3.6 million as of December 31, 2022.
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, non-cash compensation, and inventory reserve. 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 first 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 income 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 income loss from continuing operations 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 ET, during which management will discuss Nephros’ 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.
An audio archive of the call will be available shortly after the call on the Nephros Investor Relations page.
Alternatively, a replay of the call may be accessed until May 17, 2023 at 1 (877) 344-7529 or
1 (412) 317-0088 for international callers and entering replay access code: 5851475.
About Nephros
Nephros is committed to improving the human relationship with water through leading, accessible technology. We provide innovative water filtration products and services, along with water-quality education, as part of an integrated approach to water safety. Nephros goods serve the needs of customers within the healthcare and commercial markets, offering both proactive and emergency solutions for water management.
For more information about Nephros, please visit 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 Nephros’ expected future revenue, gross margins, cash flows and expectations on achieving and maintaining 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, and regulatory reforms. These and other risks and uncertainties are detailed in Nephros’ reports filed with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2022, 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
Andy Astor, CEO
Nephros, Inc.
(201) 343-5202 x120
