Full Press Release Details
Announces Results for Quarter Ended June 30, 2021
Quarter Net Revenue of $2.3 Million; 44% Year-Over-Year Increase; Strategic Acquisition of GenArraytion, Inc.; HDF Product Submitted
to FDA for 510(k) Clearance
ORANGE, NJ, August 5, 2021 - Nephros, Inc. (Nasdaq: NEPH), a leading biotechnology company providing innovative filtration
and pathogen detection solutions to healthcare and commercial markets, today announced results for the three months ended June 30, 2021.
Filtration Business Segment Highlights*
| Net revenue increased 40% to $2.2 million | ||
| Net loss of $0.9 million, no change from 2020 | ||
| Adjusted EBITDA improved by 23% to ($0.5 million) |
| Net revenue increased by 44% to $2.3 million | ||
| Net loss improved by 35% to $1.1 million | ||
| Adjusted EBITDA improved by 46% to ($0.8 million) |
performance is relative to same period prior year (second quarter of 2020)
are pleased that net revenue growth in the second quarter was strong, with a 44% year-over-year increase on a consolidated basis. This
growth included solid performance from our water filtration business, as well as early success within our Pathogen Detection Systems
(PDS) segment," said Andy Astor, Chief Executive Officer of Nephros. "Our acquisition of GenArraytion, Inc. last month further
bolstered our position in the PCR testing marketplace, expanding our abilities to detect and mitigate the spread of infectious disease,
while empowering customers to conduct on-site water testing quickly and accurately."
Astor continued, "Our potential for long-term growth is additionally supported by the recent submission of an FDA 510(k) clearance
for our second-generation HDF Assist Module. We are now in discussion with the FDA and anticipate that the product may be cleared later
this year for a limited commercial launch in the dialysis clinic market."
Financial Performance for the Quarter Ended June 30, 2021
revenue for the quarter ended June 30, 2021 was $2.3 million, compared with $1.6 million in the corresponding period in 2020, an increase
loss for the quarter ended June 30, 2021 was $1.1 million, compared with a net loss of $1.7 million for the quarter ended June 30, 2020,
EBITDA for the quarter ended June 30, 2021 was ($0.8 million), compared with ($1.4 million) during the same period in 2020.
of goods sold for the quarter ended June 30, 2021 was $1.0 million, compared with $0.7 million for the quarter ended June 30, 2020, an
increase of 43%. Gross margins for the quarter ended June 30, 2021 were 56%, compared with 57% in the same period in 2020. Management
expects future gross margins to continue in the range of 55% to 60%.
and development expenses for the quarter ended June 30, 2021 were $0.5 million, compared with $0.8 million during the quarter ended June
and amortization expenses for the quarter ended June 30, 2021 were approximately $51,000, compared with approximately $47,000 for the
corresponding period 2020, an increase of 9%.
general and administrative expenses for the quarter ended June 30, 2021 were $1.9 million, compared with $1.6 million during the same
period in 2020, an increase of 19%.
of June 30, 2021, Nephros had cash and cash equivalents of $8.3 million.
EBITDA Definition and Reconciliation to GAAP Financial Measures
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 second quarter of the 2021 and 2020 fiscal years for
both Nephros (on a consolidated basis) and the Water Filtration Business Segment:
| 3 Months Ended Jun 30, | ||||||||
| Water Filtration Business Segment | 2021 | 2020 | ||||||
| Net loss | (884 | ) | (911 | ) | ||||
| Adjustments: | ||||||||
| Depreciation of property and equipment | 7 | 6 | ||||||
| Amortization of other assets | 48 | 45 | ||||||
| Interest expense | 11 | 30 | ||||||
| Interest income | (3 | ) | (4 | ) | ||||
| Stock based compensation | 269 | 166 | ||||||
| Other noncash items | 24 | 12 | ||||||
| Adjusted EBITDA | (528 | ) | (656 | ) |
| 3 Months Ended Jun 30, | ||||||||
| Consolidated Results | 2021 | 2020 | ||||||
| Net loss | (1,126 | ) | (1,657 | ) | ||||
| Adjustments: | ||||||||
| Depreciation of property and equipment | 8 | 6 | ||||||
| Amortization of other assets | 48 | 45 | ||||||
| Interest expense | 11 | 30 | ||||||
| Interest income | (3 | ) | (4 | ) | ||||
| Noncash compensation | 281 | 179 | ||||||
| Other noncash items | 24 | 12 | ||||||
| Adjusted EBITDA | (757 | ) | (1,389 | ) |
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.
Call Today at 4:30 p.m. ET
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.
may dial into the call as follows:
access: 1-844-808-7106
access: 1-412-317-5285
joining, please ask to be joined into the Nephros conference call.
replay of the call can be accessed until August 12, 2021 at 1-877-344-7529 or 1-412-317-0088
for international callers and entering replay access code: 10157406.
audio archive of the call will be available shortly after the call on the Nephros investor relations page at https://investors.nephros.com/events/.
Inc. is a leading biotechnology company focused on improving the human relationship with water. 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
more information about Nephros, please visit www.nephros.com.
release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements regarding
Nephros's expected benefits from its recent acquisition of GenArraytion, expected future growth in demand and the timing of such
growth, expected future revenue and gross margins, the timing of receiving 510(k) clearance for Nephros's second-generation HDF
Assist Module and the expected timing of commercially launching such product, if cleared, 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, 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 Nephros's
reports filed with the U.S. Securities and Exchange Commission. Nephros does not undertake any responsibility to update the forward-looking
statements in this release.
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
thousands, except share and per share amounts)
| June 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 8,278 | $ | 8,249 | ||||
| Accounts receivable, net | 1,382 | 1,364 | ||||||
| Inventory, net | 5,087 | 5,304 | ||||||
| Prepaid expenses and other current assets | 93 | 237 | ||||||
| Total current assets | 14,840 | 15,154 | ||||||
| Property and equipment, net | 303 | 295 | ||||||
| Operating right-use-of assets | 897 | 1,037 | ||||||
| Intangible assets, net | 485 | 506 | ||||||
| Goodwill | 759 | 759 | ||||||
| License and supply agreement, net | 603 | 670 | ||||||
| Other assets | 104 | 89 | ||||||
| Total assets | $ | 17,991 | $ | 18,509 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Secured revolving credit facility | - | $ | - | |||||
| Secured note, current portion | 238 | 229 | ||||||
| PPP loan, current portion | - | - | ||||||
| Accounts payable | 1,100 | 423 | ||||||
| Accrued expenses | 476 | 341 | ||||||
| Current portion of contingent consideration | - | - | ||||||
| Current portion lease liabilities | 356 | 332 | ||||||
| Total current liabilities | 2,170 | 1,325 | ||||||
| Secured note payable, long term portion | 232 | 364 | ||||||
| PPP loan, net of current portion | - | 482 | ||||||
| Financing obligation, net of current portion | 5 | 7 | ||||||
| Contingent consideration, net of current portion | - | - | ||||||
| Lease liabilities | 593 | 759 | ||||||
| Total liabilities | 3,000 | 2,937 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $.001 par value; 5,000,000 shares authorized at June 30, 2021 and December 31, 2020; no shares issued and outstanding and June 30, 2021 and December 31, 2020 | - | - | ||||||
| Common stock, $.001 par value; 40,000,000 shares authorized at June 30, 2021 and December 31, 2020; 10,087,811 and 9,873,006 shares issued and outstanding and June 30, 2021 and December 31, 2020, respectively | 10 | 10 | ||||||
| Additional paid-in capital | 145,378 | 144,296 | ||||||
| Accumulated other comprehensive income | 70 | 74 | ||||||
| Accumulated deficit | (133,521 | ) | (131,858 | ) | ||||
| Subtotal | 11,937 | 12,522 | ||||||
| Noncontrolling interest | 3,054 | 3,051 | ||||||
| Total stockholders' equity | 14,991 | 15,573 | ||||||
| Total liabilities and equity | $ | 17,991 | $ | 18,510 |
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
thousands, except share and per share amounts)
| Three Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Net revenues: | ||||||||
| Product revenues | $ | 2,196 | $ | 1,564 | ||||
| Royalty and other revenues | 70 | 13 | ||||||
| Total net revenues | 2,266 | 1,577 | ||||||
| Cost of goods sold | 991 | 682 | ||||||
| Gross margin | 1,275 | 895 | ||||||
| Gross margin % | 56 | % | 57 | % | ||||
| Operating expenses: | ||||||||
| Research and development | 487 | 836 | ||||||
| Depreciation and amortization | 51 | 47 | ||||||
| Selling, general and administrative | 1,854 | 1,610 | ||||||
| Change in fair value of contingent consideration | - | - | ||||||
| Total operating expenses | 2,392 | 2,493 | ||||||
| Loss from operations | (1,117 | ) | (1,598 | ) | ||||
| Interest expense | (11 | ) | (30 | ) | ||||
| Interest income | 3 | 4 | ||||||
| Other income (expense), net | (1 | ) | (33 | ) | ||||
| Loss before income taxes | (1,126 | ) | (1,657 | ) | ||||
| Income tax benefit | - | - | ||||||
| Net profit (loss) | (1,126 | ) | (1,657 | ) | ||||
| Less: Deemed dividend attributable to noncontrolling interest | (60 | ) | (60 | ) | ||||
| Net loss attributable to Nephros Inc | (1,186 | ) | (1,717 | ) | ||||
| Net loss per common share, basic and diluted | $ | (0.12 | ) | $ | (0.19 | ) | ||
| Weighted average common shares outstanding, basic and diluted | 9,943,026 | 8,986,134 | ||||||
| Comprehensive loss: | ||||||||
| Net Loss | (1,126 | ) | (1,657 | ) | ||||
| Other comprehensive income(loss), foreign currency translation adjustments | 2 | 1 | ||||||
| Comprehensive loss | (1,124 | ) | (1,656 | ) | ||||
| Comprehensive loss attirbutable to noncontrolling interest | (60 | ) | (60 | ) | ||||
| Total comprehensive loss attributable to Nephros Inc shareholders | $ | (1,184 | ) | $ | (1,716 | ) |