Full Press Release Details
Reports 2019 Fourth Quarter and Full Year Financial Results
Quarter Net Revenue up 96%; Annual Net Revenue up 82%
2020 Revenue Guidance at $14.5 to $15.5 Million
ORANGE, NJ, February 27, 2020 - Nephros, Inc. (Nasdaq:NEPH), a commercial stage company that develops and sells high performance
water purification products and pathogen detection systems to the medical and commercial markets, today announced financial results
for the fourth quarter and full year ended December 31, 2019.
Quarter Ended December 31, 2019 - Water Filtration Business Segment
| Net revenue was $3.2 million, compared with $1.6 million in 2018, up 96% | ||
| Net income was $135,000, compared with a net (loss) of ($147,000) in 2018 | ||
| Adjusted EBITDA was $648,000, compared with $136,000 in 2018, up 376% |
Quarter Ended December 31, 2019 - Consolidated
| Net revenue was $3.2 million, compared with $1.6 million in 2018, up 96% | ||
| Net (loss) was ($144,000), compared with ($664,000) in 2018, improved 78% | ||
| Adjusted EBITDA was $376,000, compared with ($256,000) in 2018 |
2019 - Water Filtration Business Segment
| Net revenue was $10.3 million, compared with $5.7 million in 2018, up 82% | ||
| Net (loss) was ($1.6 million), compared with ($2.4 million), improved 32% | ||
| Adjusted EBITDA was $281,000, compared with ($861,000) in 2018 |
| Net revenue was $10.3 million, compared with $5.7 million in 2018, up 82% | ||
| Net (loss) was ($3.2 million), compared with ($3.3 million) in 2018, improved 4% | ||
| Adjusted EBITDA was ($1.2 million), compared with ($1.8 million) in 2018, improved 30% |
"We are pleased the 2019's
results continued the Company's consistent multi-year growth trajectory and steady improvement of the bottom line,"
said Daron Evans, President and Chief Executive Officer of Nephros. "As we look forward into 2020, we are well capitalized
and believe we are well positioned to maintain the momentum we have generated," "We expect to grow revenues between
40% and 50%, with additional revenue growth possible depending on the timing and growth trajectory of our pathogen detection system
products. We look forward to building on our foundation of engineering and customer service excellence into an exciting 2020."
Performance for the Fourth Quarter and Year Ended December 31, 2019
revenue for the year ended December 31, 2019 was $10.3 million, compared with $5.7 million in 2018, an increase of 82%. Net revenues
for the fourth quarter of 2019 were $3.2 million, compared with $1.6 million in the fourth quarter of 2018, an increase of 96%.
of goods sold for the year ended December 31, 2019 was $4.3 million, compared with $2.5 million in 2018, an increase of 71%. Cost
of goods sold for the fourth quarter of 2019 was $1.3 million, compared with $0.7 million in the fourth quarter of 2018, an increase
margins for the year ended December 31, 2019 were 59%, compared with 56% in 2018. Gross margins for the fourth quarter of 2019
were 60%, compared with 59% in the fourth quarter of 2018.
and development expenses for the year ended December 31, 2019 were $3.1 million, compared with $1.5 million in 2018, an increase
of 101%. Research and development expenses for the fourth quarter of 2019 were $0.8 million, compared with $0.5 million in the
fourth quarter of 2018, an increase of 40%.
and amortization expenses for the year ended December 31, 2019 were approximately $186,000, compared with approximately $163,000
in 2018, an increase of 14%. Depreciation and amortization expenses for the fourth quarter of 2019 were approximately $44,000,
compared with approximately $40,000 in the fourth quarter of 2018, an increase of 10%.
general and administrative expenses for the year ended December 31, 2019 were $6.1 million, compared with $4.5 million in 2018,
an increase of 35%. Selling, general and administrative expenses for the fourth quarter of 2019 were $1.4 million, compared with
$1.1 million in 2018, an increase of 30%.
(loss) for the year ended December 31, 2019 was ($3.2 million), compared with a net (loss) of ($3.3 million) in 2018, a 4% reduction
in loss. Net (loss) for the fourth quarter of 2019 was approximately ($143,000), compared with a net (loss) of approximately ($664,000)
in the fourth quarter of 2018, a 78% reduction.
EBITDA for the year ended December 31, 2019 was ($1.2 million), compared with ($1.8 million) in 2018, a 30% reduction. Adjusted
EBITDA for the fourth quarter 2019 was approximately $377,000, compared with approximately ($256,000) in the fourth quarter of
As of December 31, 2019, Nephros had cash
and cash equivalents of approximately $4.2 million. In January 2020, Nephros completed a Common Stock offering which generated
approximately $6.7 million of net cash proceeds.
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 income (loss), the most directly comparable GAAP financial measure, for the 2019 and 2018 fiscal years
for both Nephros on a consolidated basis and the Water Filtration Business Segment:
| 2019 | Three Month Period Ended | Annual | ||||||||||||||||||
| Water Filtration Business Segment | 03/31/19 | 06/30/19 | 09/30/19 | 12/31/19 | Totals | |||||||||||||||
| Net (loss) income | (904 | ) | (532 | ) | (346 | ) | 135 | (1,647 | ) | |||||||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation of property and equipment | 8 | 8 | 4 | 4 | 24 | |||||||||||||||
| Amortization of other assets | 44 | 44 | 44 | 44 | 176 | |||||||||||||||
| Interest expense | 46 | 46 | 48 | 55 | 195 | |||||||||||||||
| Interest income | - | - | - | - | - | |||||||||||||||
| Change in FV of contingent consideration | (10 | ) | (9 | ) | (94 | ) | (43 | ) | (156 | ) | ||||||||||
| Non-cash stock-based compensation | 158 | 147 | 348 | 665 | 1,318 | |||||||||||||||
| Income tax benefit | - | - | - | (225 | ) | (225 | ) | |||||||||||||
| Other non-cash items | 35 | 31 | 29 | 13 | 108 | |||||||||||||||
| Non-Recurring Adjustments | ||||||||||||||||||||
| Aether acquisition | 78 | - | - | - | 78 | |||||||||||||||
| Pathogen detection development | 110 | 150 | 150 | - | 410 | |||||||||||||||
| Adjusted EBITDA | (435 | ) | (115 | ) | 183 | 648 | 281 |
| 2018 | Three Month Period Ended | Annual | ||||||||||||||||||
| Water Filtration Business Segment | 03/31/18 | 06/30/18 | 09/30/18 | 12/31/18 | Totals | |||||||||||||||
| Net loss | (1,319 | ) | (578 | ) | (246 | ) | (272 | ) | (2,415 | ) | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation of property and equipment | 7 | 7 | 7 | 7 | 29 | |||||||||||||||
| Amortization of other assets | 34 | 33 | 35 | 33 | 134 | |||||||||||||||
| Loss on extinguishment of debt | 199 | - | - | - | 199 | |||||||||||||||
| Interest expense | 51 | 28 | 32 | 27 | 138 | |||||||||||||||
| Noncash interest expense | 34 | - | - | - | 34 | |||||||||||||||
| Interest income | (1 | ) | (1 | ) | (1 | ) | (1 | ) | (4 | ) | ||||||||||
| Income tax benefit | - | - | - | (93 | ) | (93 | ) | |||||||||||||
| Noncash compensation | 242 | 226 | 120 | 397 | 985 | |||||||||||||||
| Other noncash items | 67 | (7 | ) | 35 | 38 | 133 | ||||||||||||||
| Adjusted EBITDA | (686 | ) | (292 | ) | (18 | ) | 136 | (861 | ) |
| 2019 | Three Month Period Ended | Annual | ||||||||||||||||||
| Consolidated | 03/31/19 | 06/30/19 | 09/30/19 | 12/31/19 | Totals | |||||||||||||||
| Net (loss) income | (1,349 | ) | (942 | ) | (744 | ) | (144 | ) | (3,179 | ) | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation of property and equipment | 8 | 8 | 4 | 4 | 24 | |||||||||||||||
| Amortization of other assets | 44 | 44 | 44 | 44 | 176 | |||||||||||||||
| Interest expense | 46 | 46 | 48 | 55 | 195 | |||||||||||||||
| Interest income | - | - | - | - | - | |||||||||||||||
| Change in FV of contingent consideration | (10 | ) | (9 | ) | (94 | ) | (43 | ) | (156 | ) | ||||||||||
| Non-cash stock-based compensation | 158 | 150 | 354 | 670 | 1,332 | |||||||||||||||
| Income tax benefit | - | - | - | (225 | ) | (225 | ) | |||||||||||||
| Other non-cash items | 35 | 31 | 29 | 15 | 110 | |||||||||||||||
| Non-Recurring Adjustments | ||||||||||||||||||||
| Aether acquisition | 78 | - | - | - | 78 | |||||||||||||||
| Pathogen detection development | 110 | 150 | 150 | - | 410 | |||||||||||||||
| Adjusted EBITDA | (880 | ) | (522 | ) | (209 | ) | 376 | (1,235 | ) |
| 2018 | Three Month Period Ended | Annual | ||||||||||||||||||
| Consolidated | 03/31/18 | 06/30/18 | 09/30/18 | 12/31/18 | Totals | |||||||||||||||
| Net loss | (1,429 | ) | (682 | ) | (550 | ) | (664 | ) | (3,325 | ) | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation of property and equipment | 7 | 7 | 7 | 7 | 29 | |||||||||||||||
| Amortization of other assets | 34 | 33 | 34 | 33 | 134 | |||||||||||||||
| Loss on extinguishment of debt | 199 | - | - | - | 199 | |||||||||||||||
| Interest expense | 51 | 28 | 32 | 27 | 138 | |||||||||||||||
| Noncash interest expense | 34 | - | - | - | 34 | |||||||||||||||
| Interest income | (1 | ) | (1 | ) | (1 | ) | (1 | ) | (4 | ) | ||||||||||
| Income tax benefit | - | - | - | (93 | ) | (93 | ) | |||||||||||||
| Noncash compensation | 242 | 226 | 120 | 397 | 985 | |||||||||||||||
| Other noncash items | 67 | (7 | ) | 35 | 38 | 133 | ||||||||||||||
| Adjusted EBITDA | (796 | ) | (396 | ) | (323 | ) | (256 | ) | (1,771 | ) |
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 4:30pm Eastern Time
will host a conference call today at 4:30 PM ET, during which management will discuss Nephros's financial results and provide
a general business overview.
may dial into the following number to access the call: 1-866-652-5200. International
callers may use +1-412-317-6060. Please ask to be joined into the Nephros conference
call. A replay of the call can be accessed until March 5, 2020 at 1-877-344-7529
or +1-412-317-0088 for international callers and entering replay access code: 10139589.
An audio archive of the call will be available shortly after the call on the Nephros investor
relations page at https://www.nephros.com/investor-relations/.
is a commercial stage company that develops and sells high performance water purification products and pathogen detection systems
to the medical and commercial markets. Nephros ultrafilters and pathogen detection systems are used in hospitals and medical clinics
to assess and reduce the infection risks from waterborne pathogens (e.g., Legionella, Pseudomonas) in showers, sinks, and ice
machines. Additionally, Nephros ultrafilters are used by dialysis centers for assisting in the added removal of endotoxins and
other biological contaminants from the water and bicarbonate concentrate supplied to hemodialysis machines and patients.
filters, including AETHER brand filters, improve the taste and odor of water and reduce biofilm, bacteria, and scale build-up
in downstream equipment. Nephros and AETHER products are used in the health care, food service, hospitality, and convenience
more information about Nephros, please visit its website at www.nephros.com.
release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements
regarding expected revenue and financial performance in 2020, the potential for further growth and the expected growth in medical,
commercial and industrial filter sales, the expected future revenue growth of a new waterborne pathogen detection system, Nephros's
sales and marketing plans and strategies, management's expectations regarding future gross margins, Nephros'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, 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 our reports filed with the U.S. Securities and Exchange Commission, including our Annual
Report on Form 10-K for the year ended December 31, 2018. Nephros does not undertake any responsibility to update the forward-looking
statements in this release.
INC. AND SUBSIDIARIES
thousands, except share and per share amounts)
| December 31, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 4,166 | $ | 4,581 | ||||
| Accounts receivable, net | 1,045 | 1,359 | ||||||
| Inventory, net | 2,562 | 1,864 | ||||||
| Prepaid expenses and other current assets | 526 | 369 | ||||||
| Total current assets | 8,299 | 8,173 | ||||||
| Property and equipment, net | 81 | 91 | ||||||
| Operating lease right-of-use assets | 1,106 | - | ||||||
| Intangible assets, net | 548 | 590 | ||||||
| Goodwill | 759 | 748 | ||||||
| License and supply agreement, net | 804 | 938 | ||||||
| Other assets | 32 | 18 | ||||||
| TOTAL ASSETS | $ | 11,629 | $ | 10,558 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Secured revolving credit facility | $ | 560 | $ | 991 | ||||
| Current portion of secured note payable | 211 | 195 | ||||||
| Accounts payable | 959 | 836 | ||||||
| Accrued expenses | 136 | 396 | ||||||
| Current portion of contingent consideration | 300 | 236 | ||||||
| Current portion of operating lease liabilities | 262 | - | ||||||
| Total current liabilities | 2,428 | 2,654 | ||||||
| Secured note payable, net of current portion | 613 | 843 | ||||||
| Equipment financing, net of current portion | 10 | - | ||||||
| Contingent consideration, net of current portion | - | 263 | ||||||
| Operating lease liabilities, net of current portion | 889 | - | ||||||
| TOTAL LIABILITIES | 3,940 | 3,760 | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 20) | ||||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2019 and 2018; no shares issued and outstanding at December 31, 2019 and 2018. | - | - | ||||||
| Common stock, $.001 par value; 40,000,000 and 10,000,000 shares authorized at December 31, 2019 and 2018, respectively; 8,058,850 and 7,134,719 shares issued and outstanding at December 31, 2019 and 2018, respectively. | 8 | 7 | ||||||
| Additional paid-in capital | 131,934 | 127,873 | ||||||
| Accumulated other comprehensive income | 65 | 71 | ||||||
| Accumulated deficit | (127,332 | ) | (124,153 | ) | ||||
| Subtotal | 4,675 | 3,798 | ||||||
| Noncontrolling interest | 3,014 | 3,000 | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 7,689 | 6,798 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 11,629 | $ | 10,558 |
INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS