Nephros Reports 2018 Fourth Quarter and Full Year Financial Results and Provides Corporate Update Annual Product Revenues Up 54%

Reports 2018 Fourth Quarter and Full Year

Financial Results and Provides Corporate Update

Product Revenues Up 54%

ORANGE, NJ, March 12, 2019 /PR Newswire-FirstCall/ - Nephros, Inc. (OTCQB:NEPH), a commercial stage company that develops

and sells high performance liquid purification filters for both medical device and commercial markets, today announced financial

results for the three months and full year ended December 31, 2018.

Quarter Financial Highlights

2018 Financial Highlights

Year 2019 Financial Guidance

Evans, President and CEO of Nephros stated, "We are very pleased with our 2018 performance, including the continued momentum

in our Water Filtration business segment, which met our plan to grow at least 50% and which delivered positive Adjusted EBITDA

in the fourth quarter. In addition, at the end of 2018, we expanded our business with the acquisition of Biocon 1, LLC and its

Aether brand of water filtration systems. We expect this acquisition to accelerate our overall growth and to expedite our entry

into the food service, hospitality, and convenience store markets."

Infection Control Market

2018, revenue from the hospital infection control market grew approximately 57% from 2017, driven primarily by increased sales

through our strategic distribution partners. We continue to focus on water safety education and patient safety. We moved into

our new offices near the Newark airport to assist in launching our "same day" service - routinely shipping orders

to customers all over the country in their time of need.

appreciate the efforts our customers and strategic partners have undertaken over the last few years to increase awareness of waterborne

pathogens, and to develop proactive management strategies to reduce the risk of patient infection," said Shane Sullivan,

Vice President of Sales. "We have seen the whole industry increase the number of proactive measures taken to prevent infection

from waterborne pathogens. We are proud to provide a suite of products that complement other technologies in a multibarrier approach

to infection prevention."

/ Industrial Water Filter Market

the end of 2018, we acquired Biocon 1, LLC and Aether Water Systems, LLC (together, "Aether"). The Aether product

portfolio includes water filters that improve the taste and odor of water and reduce scale build-up in downstream equipment. Aether

products target the food service, hospitality, and convenience store markets.

expect the Aether acquisition to provide accretive growth and have an immediate positive impact on revenues. Additionally, we

expect Aether to expedite our entry into multiple large market segments. We believe that enabling Aether to fully leverage our

sales, marketing, engineering, and quality infrastructure will enable Aether's revenue to grow more quickly.

the additional scale and engineering acumen of Nephros, we believe we will be better able to pursue national accounts and expand

our manufacturing capabilities," said Greg Lucas, President of Aether. "For many years, our products have been performing

well in the market and we look forward to accelerating our commercial expansion."

from the dialysis water filter market grew by approximately 52% from 2017. Growth in our dialysis business was primarily driven

through placement on portable reverse osmosis ("RO") systems by our distribution partners. Going forward, we see continued

growth in supporting portable RO systems, as well as growing traction on clinic loop filtration with our ENDOPUR filters.

Renal Products, Inc.

September 2018, we raised $3 million into our Specialty Renal Products ("SRP") subsidiary to reignite our hemodiafiltration

("HDF") system program.

in 2019, we finalized the design update and initiated the manufacturing of our first production lot of the second-generation HDF

system. We believe we are on track to complete verification and validation testing, and to submit a 510(k) to the FDA for the

system update by the end of this year. Pending FDA clearance, we hope to provide patients and nephrologists with our updated HDF

device in early 2020.

EBITDA Definition and Reconciliation to GAAP Financial Measure

EBITDA is calculated by taking net (loss) income calculated in accordance with GAAP and excluding all interest-related expenses

and income, tax-related expenses and income, and other non-cash items, including depreciation and amortization and non-cash compensation.

The following tables present quarterly and annual Adjusted EBITDA calculations for the 2018 and 2017 fiscal years:

believe that Adjusted EBITDA provides useful information to management and investors regarding certain financial and business

trends relating to our 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 our consolidated financial statements.

In addition, it 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 closest comparable GAAP financial measure. We urge 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.

Performance for the Fourth Quarter and Year Ended December 31, 2018

revenues for the year ended December 31, 2018 were $5.7 million, compared with $3.8 million in 2017, an increase of 50%. Total

revenues for the fourth quarter of 2018 were $1.6 million, compared with $1.3 million in the fourth quarter of 2017, an increase

revenues for the year ended December 31, 2018 were $5.5 million, compared with $3.5 million in 2017, an increase of 54%. Product

revenues for the fourth quarter of 2018 were $1.6 million, compared with $1.2 million in the fourth quarter of 2017, an increase

of goods sold were $2.5 million for the year ended December 31, 2018, compared to $1.5 million in 2017, an increase of 64%. Gross

margins were 56% for the year ended December 31, 2018, compared to 60% in 2017. We consider this fluctuation to be in the normal

range of 55% to 60% gross margin for our business.

and development expenses were $1.5 million for the year ended December 31, 2018, compared to $1.0 million in 2017, an increase

of 54%, driven by our investment in the 2nd generation HDF products being developed in our SRP subsidiary.

and amortization expenses were approximately $163,000 and $218,000, respectively, for the years ended December 31, 2018 and 2017,

general and administrative expenses were $4.5 million and $3.3 million, respectively, for the years ended December 31, 2018 and

2017, a 37% increase.

of December 31, 2018, we had cash and cash equivalents of approximately $4.6 million.

will host our annual shareholder meeting on May 22, 2018 at 10:00am Eastern Daylight Time. The meeting will be held at our 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, known as ultrafilters.

Nephros ultrafilters are primarily used in hospitals and medical clinics for added protection in retaining bacteria (e.g., Legionella,

Pseudomonas), viruses, and endotoxins from water, providing barriers that assist in improving infection control in showers, sinks,

and ice machines. Additionally, Nephros 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.

more information about Nephros, please visit its website at www.nephros.com.

1, LLC and Aether Water Systems, LLC (together, "Aether") are wholly-owned subsidiaries of Nephros and manufacture

and market the AETHER brand of water filters. Aether filters improve the taste and odor of water and reduce biofilm, bacteria,

and scale build-up in downstream equipment. Aether products target the food service, hospitality, and convenience store markets.

more information about Aether, please visit its website at www.aetherfilters.com.

Specialty Renal Products

Renal Products, Inc. a subsidiary of Nephros, is focused on the development of medical device products for patients with renal

disease, including a hemodiafiltration system for the treatment of patients with ESRD.

release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements

regarding our expected revenue and financial performance in 2019, our potential for further growth and our expected growth in

medical, commercial and industrial filter sales, our sales and marketing plans and strategies for 2019, our 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,