Nephros Reports Third Quarter 2017 Financial Results

 

Quarterly Revenue Up 93% Year-over-Year

RIVER EDGE, NJ -- (Marketwired) -- Nov 09, 2017 -- Nephros Inc.(OTCQB: NEPH) (the "Company"), a commercial stage medical device company that develops and sells high performance liquid purification ultrafilters and an on-line mid-dilution hemodiafiltration system for use with a hemodialysis (HD) machine for the treatment of patients with End Stage Renal Disease (ESRD), today announced financial results for the three months ended September 30, 2017.

"Our 93% year-over-year revenue growth in the third quarter suggests that our focus on an expanded product portfolio and strategic distribution partners is resonating well in the market," said Daron Evans, President and Chief Executive Officer of Nephros, Inc. "Our expanded strategy now enables us to compete successfully for large, multi-year filtration contracts. Also, sales of our newly launched HydraGuard™ and EndoPur™ products are beginning to ramp."

"We believe our water filtration business is still at the nascence of its growth potential as we expand market share in the medical space, and begin to leverage our platform into opportunities in food service and other commercial markets. We are also excited about our new design for a next-generation HDF system. Financially, we continue to project sustainable cash flow positive operations by around the end of 2017, and the non-dilutive NJEDA funding event announced earlier this week provides the cash resources we need for the foreseeable future," concluded Mr. Evans.

Financial Performance for the Quarter Ended September 30, 2017

Total net revenues for the three months ended September 30, 2017 were approximately $916,000, compared to approximately $475,000 for the three months ended September 30, 2016, an increase of approximately $441,000, or 93%. Total product revenues for the three months ended September 30, 2017 were approximately $841,000 compared to approximately $407,000 for the three months ended September 30, 2016, an increase of approximately $434,000, or 107%.

Cost of goods sold was approximately $384,000 for the three months ended September 30, 2017, compared to approximately $159,000 for the three months ended September 30, 2016, an increase of approximately $225,000, or 142%.

Research and development expenses were approximately $237,000 and $241,000 for the three months ended September 30, 2017 and September 30, 2016, respectively.

Selling, general and administrative expenses were approximately $753,000 for the three months ended September 30, 2017 compared to approximately $652,000 for the three months ended September 30, 2016.

As of September 30, 2017, Nephros had cash and cash equivalents of approximately $150,000. Nephros announced that it had been approved to receive $1.9 million in tax credit certificates from New Jersey Economic Development Authority (NJEDA) on November 6, 2017, which are expected be sold later in the current quarter for over $1.75 million in net proceeds.

About Nephros, Inc.
Nephros is a commercial stage medical device company that develops and sells high performance liquid purification filters, as well as a hemodiafiltration system for the treatment of patients with End Stage Renal Disease. Nephros filters or ultrafilters are used primarily in medical applications in various settings. These ultrafilters are used by dialysis centers for assisting in the added removal of biological contaminants from the water and bicarbonate concentrate supplied to hemodialysis machines and the patients. Additionally, Nephros ultrafilters are used in hospitals and medical clinics for added protection in retaining bacteria (i.e. Legionella, Pseudomonas), virus and endotoxin from water. These ultrafilters provide barriers that assist in improving infection control with showers, sinks, and ice machines.

For more information about Nephros, please visit the company's 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 expected growth in sales of the Company's products, including expected growth of our hospital filter products resulting from the recently-announced CMS requirements, the expected timing of shipping and product launch of the Company's HydraGuard, EndoPur™ and NanoGuard™ products, the Company's ability to meet future demand for its products, the Company's ability to obtain additional non-dilutive financing from the NJEDA tax credit program, the Company's ability to achieve positive cash flow from operations and the timing thereof, 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 uncertainty in clinical outcomes, potential delays in the regulatory approval process, changes in business, economic and competitive conditions, the availability of capital when needed, our 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 Nephros Inc.'s reports filed with the U.S. Securities and Exchange Commission, including with respect to Nephros, its Annual Report on Form 10-K for the year ended December 31, 2016. Nephros, Inc. does not undertake any responsibility to update the forward-looking statements in this release.

 


                                                                            
                        NEPHROS, INC. AND SUBSIDIARY                        
                                                                            
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                    (In thousands, except share amounts)                    
                                                                            
                                         (Unaudited)          (Audited)     
                                     September 30, 2017   December 31, 2016 
                                     ------------------  ------------------ 
               ASSETS                                                       
Current assets:                                                             
Cash                                 $              150  $              275 
Accounts receivable, net                            751                 388 
Investment in lease, net-current                                            
 portion                                             20                  27 
Inventory, net                                      581                 479 
Prepaid expenses and other current                                          
 assets                                             107                  95 
                                     ------------------  ------------------ 
Total current assets                              1,609               1,264 
Property and equipment, net                          49                  70 
Investment in lease, net-less                                               
 current portion                                     50                  61 
License and supply agreement, net                 1,105               1,262 
Other asset                                          11                  21 
                                     ------------------  ------------------ 
Total assets                         $            2,824  $            2,678 
                                     ==================  ================== 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
Current liabilities:                                                        
Secured revolving credit facility    $              563  $                - 
Accounts payable                                    436                 585 
Accrued expenses                                    343                 240 
Deferred revenue, current portion                    70                  70 
                                     ------------------  ------------------ 
Total current liabilities                         1,412                 895 
Unsecured long-term note payable,                                           
 net of debt issuance costs and debt                                        
 discount of $265 and $349,                                                 
 respectively                                       922                 838 
Long-term portion of deferred                                               
 revenue                                            225                 278 
                                     ------------------  ------------------ 
Total liabilities                                 2,559               2,011 
                                     ------------------  ------------------ 
                                                                            
Commitments and Contingencies (Note                                         
 14)                                                                        
                                                                            
Stockholders' equity:                                                       
Preferred stock, $.001 par value;                                           
 5,000,000 shares authorized at                                             
 September 30, 2017 and December 31,                                        
 2016; no shares issued and                                                 
 outstanding at September 30, 2017                                          
 and December 31, 2016                                -                   - 
Common stock, $.001 par value;                                              
 90,000,000 shares authorized at                                            
 September 30, 2017 and December 31,                                        
 2016; 54,160,547 and 49,782,797                                            
 shares issued and outstanding at                                           
 September 30, 2017 and December 31,                                        
 2016, respectively                                  54                  50 
Additional paid-in capital                      122,530             120,835 
Accumulated other comprehensive                                             
 income                                              76                  67 
Accumulated deficit                            (122,395)           (120,285)
                                     ------------------  ------------------ 
Total stockholders' equity                          265                 667 
                                     ------------------  ------------------ 
Total liabilities and stockholders'                                         
 equity                              $            2,824  $            2,678 
                                     ==================  ================== 
                                                                            
                                                                            
                         NEPHROS, INC. AND SUBSIDIARY                       
                                                                            
   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS   
             (In thousands, except share and per share amounts)             
                                 (Unaudited)                                
                                                                            
                            Three Months Ended         Nine Months Ended    
                               September 30,             September 30,      
                         ------------------------   ----------------------- 
                             2017         2016         2017         2016    
                         -----------  -----------  -----------  ----------- 
Net revenues:                                                               
Product revenues         $       841  $       407  $     2,316  $     1,405 
License, royalty and                                                        
 other revenues                   75           68          193          170 
                         -----------  -----------  -----------  ----------- 
Total net revenues               916          475        2,509        1,575 
Cost of goods sold               384          159        1,005          667 
                         -----------  -----------  -----------  ----------- 
Gross margin                     532          316        1,504          908 
                         -----------  -----------  -----------  ----------- 
Operating expenses:                                                         
  Research and                                                              
   development                   237          241          744          763 
  Depreciation and                                                          
   amortization                   60           60          178          171 
  Selling, general and                                                      
   administrative                753          652        2,405        2,234 
                         -----------  -----------  -----------  ----------- 
Total operating expenses       1,050          953        3,327        3,168 
                         -----------  -----------  -----------  ----------- 
Loss from operations            (518)        (637)      (1,823)      (2,260)
Interest expense                 (88)         (65)        (218)        (109)
Interest income                    1            1            3            4 
Other expense                    (27)          (5)         (60)         (12)
                         -----------  -----------  -----------  ----------- 
Net loss                        (632)        (706)      (2,098)      (2,377)
Other comprehensive                                                         
 income, foreign currency                                                   
 translation adjustments           1            1            9            1 
Total comprehensive loss $      (631) $      (705) $    (2,089) $    (2,376)
                         ===========  ===========  ===========  =========== 
  Net loss per common               )            )            )            )
   share, basic and                                                         
   diluted               $     (0.01  $     (0.01  $     (0.04  $     (0.05 
  Weighted average common                                                   
   shares outstanding,                                                      
   basic and diluted      54,142,791   48,783,097   52,473,518   48,501,810 
                                                                            

 

 

 


Contact:
Andrew Astor
Chief Financial Officer
Phone: 201-343-5202
Email: andy@nephros.com 


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