Full Press Release Details
Reports 2017 Fourth Quarter and Full Year
Financial Results and Provides Corporate Update
Revenues Up 65% and Cash Flow from Operations Approaches Breakeven
ORANGE, NJ, February 26, 2018 /PR Newswire-FirstCall/ - Nephros, Inc. (OTCQB:NEPH), a commercial stage medical device company
that develops and sells high performance liquid purification ultrafilters and an on-line mid-dilution hemodiafiltration (HDF)
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 and full year ended December 31, 2017.
was a transformational year for us," said Daron Evans, President and CEO of Nephros. "The strategic shifts we initiated
in early 2015 have translated into material changes in our product offerings, our relationships with strategic partners and customers,
and ultimately in our financial performance. We believe we are still in the early phase of our growth curve, and have been energized
by the performance of our products in the market. As our products are placed in more medical facilities, it becomes easier for
our strategic distribution partners to further expand our footprint. In 2018, we will continue to focus on, and to grow, our core
medical device water filter business, while taking advantage of revenue and value enhancing opportunities when available in other
parts of our business."
finished the year with over $3.8 million in revenue and over $2 million in cash, the strongest operating position in the company's
history," said Andy Astor, Chief Financial Officer. "Our progress in 2017 continued to validate our growth strategy
and we were pleased to approach cash flow neutral in the fourth quarter. For 2018, we project quarter-over-quarter revenue growth
to average 10-12%, and we project 2018 revenues to exceed $6 million."
Infection Control Filter Market
2017, revenue from the hospital infection control market grew approximately 90% versus 2016, driven by the launch of new products
and increased sales through our strategic distribution partners. In 2018, we will continue to focus on increasing our installed
base of hospital customers by supporting our strategic distribution partners. We also plan to enhance our emergency support capabilities
for legionella outbreaks, when every hour is critical. We will be launching a marketing effort through our strategic distributors
to promote our "same-day" delivery capabilities, made possible by a larger in-house logistics team and warehouse space
in our new headquarters near the Newark, New Jersey airport.
appreciate the efforts of our strategic partners in our collective quest to protect patients from legionella, pseudomonas, and
other water borne pathogens," said Shane Sullivan, Director of North American Sales. "We are extremely excited to
be able to respond to outbreaks across the country in hours, saving invaluable time for the infection control teams on the ground
trying to protect patient health."
from the dialysis water filter market grew by approximately 50% in 2017 versus 2016. As we continue the launch of our EndoPurTM
Endotoxin filter product line, which is targeted at large dialysis clinic reverse osmosis systems, and our work with equipment
manufacturers to standardize on Nephros ultrafilters, we expect an acceleration of growth in 2018.
/ Industrial Water Filter Market
2017, we focused on continuing to perform pilot tests in multiple areas of potential interest, driven primarily by our strategic
distribution partners. We also launched our Lead Filter System. We will be using performance data from these pilot tests to target
certain niche markets where we believe our products may add substantial value, and to continue our opportunistic exploration of
additional ways to leverage our product portfolio outside of medical device markets.
a year of patient treatments at a Vanderbilt University dialysis clinic using our first-generation HDF system, the program was
concluded in January 2018. Nephros will work with Vanderbilt to publish data from the program.
that we have run commercial pilot programs with our first-generation HDF system in multiple dialysis clinics across the country,
we better understand the value proposition required to meet the needs of the current clinical and economic ESRD treatment paradigm.
Our new, second-generation system incorporates new features that could enable us to better manufacture at scale, reduce the per
treatment cost of performing HDF, and better align with current work flow practices. We have already initiated development efforts
on the updated device, and will be forming a new subsidiary, Specialty Renal Products, Inc., to drive the development of our second-generation
have learned a great deal over the last two years from patients and dialysis care teams," said Monet Carnahan, Director
of Dialysis Products. "We have incorporated their feedback into the updated design and look forward to providing patients
and caregivers the option of hemodiafiltration treatments with a more user-friendly, cost-efficient system."
Performance for the Year Ended December 31, 2017
revenues for the fourth quarter of 2017 were approximately $1,301,000, compared with approximately $745,000 in the fourth quarter
of 2016, an increase of 75%. Total revenues for the year ended December 31, 2017, were approximately $3,809,000, compared with
approximately $2,320,000 for the year ended December 31, 2017, an increase of 65%.
of goods sold was approximately $1,517,000 for the year ended December 31, 2017, compared to approximately $1,026,000 for the
year ended December 31, 2016, an increase of 48%. Gross margins were 60% for the year ended December 31, 2017, compared to 56%
for the year ended December 31, 2016.
and development expenses were approximately $1,002,000 and $1,079,000, respectively, for the years ended December 31, 2017 and
2016, a 7% decrease. Depreciation and amortization expenses were approximately $218,000 and $230,000, respectively, for the years
ended December 31, 2017 and 2016, a 5% decrease. Selling, general and administrative expenses were approximately $3,298,000 and
$2,854,000, respectively, for the years ended December 31, 2017 and 2016, a 16% increase.
cash used in operating activities in the fourth quarter 2017 was approximately $38,000, including approximately $65,000 of cash
paid for interest on outstanding notes. As of December 31, 2017, Nephros had cash and cash equivalents of approximately $2,194,000.
will host an annual shareholder meeting on May 23, 2018 at 9:00am. The meeting will be held at the company's headquarters
facility at 380 Lackawanna Place, South Orange, New Jersey 07079.
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. 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. Additionally, these ultrafilters are used by
dialysis centers for assisting in the removal of biological contaminants from the water and bicarbonate concentrate supplied to
hemodialysis machines and the patients.
more information about Nephros, please visit the company's website at www.nephros.com.
release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements
regarding the Company's expected revenue and financial performance in 2018, the Company's potential for further growth
and its expected growth in medical, commercial and industrial filter sales, its sales and marketing plans and strategies for 2018,
the Company's ability to respond to outbreaks in water borne pathogens, anticipated investment in the development of a second-generation
HDF system 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, 2017. Nephros, Inc.
does not undertake any responsibility to update the forward-looking statements in this release.
Thousands, Except Share and Per Share Amounts)
| December 31, 2017 | December 31, 2016 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 2,194 | $ | 275 | ||||
| Accounts receivable, net | 836 | 388 | ||||||
| Investment in lease, net-current portion | 20 | 27 | ||||||
| Inventory, net | 674 | 479 | ||||||
| Prepaid expenses and other current assets | 85 | 95 | ||||||
| Total current assets | 3,809 | 1,264 | ||||||
| Property and equipment, net | 52 | 70 | ||||||
| Investment in lease, net-less current portion | 39 | 61 | ||||||
| License and supply agreement, net | 1,072 | 1,262 | ||||||
| Other asset | 11 | 21 | ||||||
| Total assets | $ | 4,983 | $ | 2,678 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Secured revolving credit facility | $ | 711 | $ | - | ||||
| Accounts payable | 872 | 585 | ||||||
| Accrued expenses | 218 | 240 | ||||||
| Deferred revenue, current portion | 70 | 70 | ||||||
| Total current liabilities | 1,871 | 895 | ||||||
| Unsecured long-term note payable, net of debt issuance costs and debt discount of $233 and $349, respectively | 954 | 838 | ||||||
| Long-term portion of deferred revenue | 208 | 278 | ||||||
| Total liabilities | 3,033 | 2,011 | ||||||
| Commitments and Contingencies (Note 13) | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2017 and 2016; no shares issued and outstanding at December 31, 2017 and 2016. | - | - | ||||||
| Common stock, $.001 par value; 90,000,000 shares authorized at December 31, 2017 and 2016; 55,293,267 and 49,782,797 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively. | 55 | 50 | ||||||
| Additional paid-in capital | 122,924 | 120,835 | ||||||
| Accumulated other comprehensive income | 77 | 67 | ||||||
| Accumulated deficit | (121,106 | ) | (120,285 | ) | ||||
| Total stockholders' equity | 1,950 | 667 | ||||||
| Total liabilities and stockholders' equity | $ | 4,983 | $ | 2,678 |
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Thousands, Except Share and Per Share Amounts)
| Years Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Net revenue: | ||||||||
| Product revenues | $ | 3,544 | $ | 2,093 | ||||
| License, royalty and other revenues | 265 | 227 | ||||||
| Total net revenues | 3,809 | 2,320 | ||||||
| Cost of goods sold | 1,517 | 1,026 | ||||||
| Gross margin | 2,292 | 1,294 | ||||||
| Operating expenses: | ||||||||
| Research and development | 1,002 | 1,079 | ||||||
| Depreciation and amortization | 218 | 230 | ||||||
| Selling, general and administrative | 3,298 | 2,854 | ||||||
| Total operating expenses | 4,518 | 4,163 | ||||||
| Loss from operations | (2,226 | ) | (2,869 | ) | ||||
| Interest expense | (302 | ) | (172 | ) | ||||
| Interest income | 4 | 5 | ||||||
| Other income (expense), net | (74 | ) | 4 | |||||
| Loss before income taxes | (2,598 | ) | (3,032 | ) | ||||
| Income tax benefit | 1,789 | - | ||||||
| Net loss | (809 | ) | (3,032 | ) | ||||
| Other comprehensive income (loss), foreign currency translation adjustments, net of tax | 10 | (4 | ) | |||||
| Total comprehensive loss | $ | (799 | ) | $ | (3,036 | ) | ||
| Net loss per common share, basic and diluted | $ | (0.02 | ) | $ | (0.06 | ) | ||
| Weighted average common shares outstanding, basic and diluted | 52,935,728 | 48,583,165 |