Full Press Release Details
Reports 2020 Fourth Quarter and Full Year Financial Results
Quarter Net Revenue $2.3 Million, Up 10% Sequentially Over Third Quarter
Full Year Revenue $8.6 million, Down 17% Against Prior Year
ORANGE, NJ, March 1, 2021 - Nephros, Inc. (Nasdaq:NEPH), a leading water technology company providing filtration and pathogen
detection solutions to the medical and commercial markets, today announced financial results for the fourth quarter and full year
ended December 31, 2020.
Quarter Ended December 31, 2020 - Water Filtration Business Segment
| Net revenue was $2.3 million, compared with $3.2 million in 2019, down 26% | ||
| Net loss was ($298,000), compared with net income of $234,000 in 2019 | ||
| Adjusted EBITDA was ($11,000), compared with $747,000 in 2019 |
Quarter Ended December 31, 2020 - Consolidated
| Net revenue was $2.3 million, compared with $3.2 million in 2019, down 26% | ||
| Net loss was ($759,000), compared with ($144,000) million in 2019 | ||
| Adjusted EBITDA was ($466,000), compared with $374,000 in 2019 |
2020 - Water Filtration Business Segment
| Net revenue was $8.5 million, compared with $10.3 million in 2019, down 17% | ||
| Net loss was ($2.2 million), compared with ($1.1 million) in 2019 | ||
| Adjusted EBITDA was ($1.4 million), compared with $464,000 in 2019 |
| Net revenue was $8.6 million, compared with $10.3 million in 2019, down 17% | ||
| Net loss was ($4.5 million), compared with ($3.2 million) in 2019 | ||
| Adjusted EBITDA was ($3.6 million), compared with ($1.2 million) in 2019 |
2020 was a challenging year overall, we were pleased to deliver consecutive quarter over quarter growth in the second half,"
said Andy Astor, Chief Executive Officer of Nephros. "The two hardest hit segments of our business were new customer acquisitions
and emergency response, offset by stable recurring revenue from our existing customer base, limiting our overall downturn for
the year to 17%. As COVID-19 immunity increases over the coming weeks and months, we are optimistic that our business will return
to pre-pandemic growth levels in the latter half of this year."
Performance for the Fourth Quarter and Year Ended December 31, 2020
revenue for the year ended December 31, 2020 was $8.6 million, compared with $10.3 million in 2019, a decrease of 17%. Net revenues
for the fourth quarter of 2020 were $2.3 million, compared with $3.2 million in the fourth quarter of 2019, a decrease of 26%.
of goods sold for the year ended December 31, 2020 was $3.6 million, compared with $4.3 million in 2019, a decrease of 14%. Cost
of goods sold for the fourth quarter of 2020 was $1.0 million, compared with $1.3 million in the fourth quarter of 2019, a decrease
margins for the year ended December 31, 2020 were 57%, compared with 59% in 2019. Gross margins for the fourth quarter of 2020
were 56%, compared with 60% in the fourth quarter of 2019.
and development expenses for the year ended December 31, 2020 were $2.8 million, compared with $3.1 million in 2019, a decrease
of 11%. Research and development expenses for the fourth quarter of 2020 were $0.6 million, compared with $0.8 million in the
fourth quarter of 2019, a decrease of 20%.
and amortization expenses for the year ended December 31, 2020 were approximately $192,000, compared with approximately $186,000
in 2019, an increase of 3%. Depreciation and amortization expenses for the fourth quarter of 2020 were approximately $50,000,
compared with approximately $44,000 in the fourth quarter of 2019, an increase of 14%.
general and administrative expenses for the year ended December 31, 2020 were $6.5 million, compared with $6.1 million in 2019,
an increase of 6%. Selling, general and administrative expenses in each of the fourth quarters of 2020 and 2019 were $1.4 million.
loss for the year ended December 31, 2020 was ($4.5 million), compared with a net loss of ($3.2 million) in 2019, a 42% increase
in loss. Net loss for the fourth quarter of 2020 was approximately ($759,000), compared with a net loss of approximately ($144,000)
in the fourth quarter of 2019, a 427% increase in loss.
EBITDA for the year ended December 31, 2020 was ($3.6 million), compared with ($1.2 million) in 2019, a 193% increase in loss.
Adjusted EBITDA for the fourth quarter of 2020 was approximately ($466,000), compared with approximately $374,000 in the fourth
of December 31, 2020, Nephros had cash and cash equivalents of approximately $8.2 million.
EBITDA Definition and Reconciliation to GAAP Financial Measures
EBITDA is calculated by taking net loss 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, the most directly comparable GAAP financial measure, for the 2020 and 2019 fiscal years for both
Nephros on a consolidated basis and the Water Filtration Business Segment:
| 2020 | Three Month Period Ended | Annual | ||||||||||||||||||
| Water Filtration Business Segment | 03/31/20 | 06/30/20 | 09/30/20 | 12/31/20 | Totals | |||||||||||||||
| Net (loss) income | (620 | ) | (911 | ) | (394 | ) | (298 | ) | (2,223 | ) | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation of property and equipment | 5 | 6 | 7 | 7 | 25 | |||||||||||||||
| Amortization of other assets | 45 | 45 | 46 | 47 | 183 | |||||||||||||||
| Interest expense | 43 | 30 | 22 | 15 | 110 | |||||||||||||||
| Interest income | (1 | ) | (4 | ) | (3 | ) | (3 | ) | (11 | ) | ||||||||||
| Change in FV of contingent consideration | (42 | ) | - | (187 | ) | - | (229 | ) | ||||||||||||
| Non-cash stock-based compensation | 190 | 166 | 160 | 200 | 716 | |||||||||||||||
| Other non-cash items | 11 | 12 | 2 | 21 | 46 | |||||||||||||||
| Adjusted EBITDA | (369 | ) | (656 | ) | (347 | ) | (11 | ) | (1,383 | ) |
| 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 | (778 | ) | (346 | ) | (167 | ) | 234 | (1,057 | ) | |||||||||||
| 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 | |||||||||||||||
| Change in FV of contingent consideration | (10 | ) | (9 | ) | (94 | ) | (43 | ) | (156 | ) | ||||||||||
| Income tax benefit | - | - | - | (225 | ) | (225 | ) | |||||||||||||
| Noncash compensation | 158 | 150 | 348 | 665 | 1,321 | |||||||||||||||
| Other noncash items | 35 | 31 | 29 | 13 | 108 | |||||||||||||||
| Nonrecurring: Aether Acquisition | 78 | - | - | - | 78 | |||||||||||||||
| Adjusted EBITDA | (419 | ) | (76 | ) | 212 | 747 | 464 |
| 2020 | Three Month Period Ended | Annual | ||||||||||||||||||
| Consolidated | 03/31/20 | 06/30/20 | 09/30/20 | 12/31/20 | Totals | |||||||||||||||
| Net (loss) income | (1,098 | ) | (1,657 | ) | (1,012 | ) | (759 | ) | (4,526 | ) | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation of property and equipment | 5 | 6 | 7 | 7 | 25 | |||||||||||||||
| Amortization of other assets | 45 | 45 | 46 | 47 | 183 | |||||||||||||||
| Interest expense | 43 | 30 | 22 | 15 | 110 | |||||||||||||||
| Interest income | (1 | ) | (4 | ) | (3 | ) | (3 | ) | (11 | ) | ||||||||||
| Change in FV of contingent consideration | (42 | ) | - | (187 | ) | - | (229 | ) | ||||||||||||
| Non-cash stock-based compensation | 222 | 179 | 172 | 206 | 779 | |||||||||||||||
| Other non-cash items | 11 | 12 | 2 | 21 | 46 | |||||||||||||||
| Adjusted EBITDA | (815 | ) | (1,389 | ) | (953 | ) | (466 | ) | (3,623 | ) |
| 2019 | Three Month Period Ended | Annual | ||||||||||||||||||
| Consolidated | 03/31/19 | 06/30/19 | 09/30/19 | 12/31/19 | Totals | |||||||||||||||
| Net loss | (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 | |||||||||||||||
| Change in FV of contingent consideration | (10 | ) | (9 | ) | (94 | ) | (43 | ) | (156 | ) | ||||||||||
| Income tax benefit | - | - | - | (225 | ) | (225 | ) | |||||||||||||
| Noncash compensation | 158 | 150 | 354 | 670 | 1,332 | |||||||||||||||
| Other noncash items | 35 | 31 | 29 | 13 | 108 | |||||||||||||||
| Nonrecurring: Aether Acquisition & Pathogen Detection | 188 | 150 | 150 | - | 488 | |||||||||||||||
| Adjusted EBITDA | (880 | ) | (522 | ) | (209 | ) | 374 | (1,237 | ) |
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, the most directly comparable GAAP financial
measure. Nephros urges investors to review the reconciliation of Adjusted EBITDA to net loss 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: 1-844-808-7106. International callers may use 1-412-317-5285. Please ask
to be joined into the Nephros conference call. A replay of the call can be accessed until March 8, 2021 at 1-877-344-7529 or 1-412-317-0088
for international callers and entering replay access code: 10151848. An audio archive of the call will be available shortly after
the call on the Nephros investor relations page at https://investors.nephros.com/events/.
is a leading water technology company in medical and commercial water purification and pathogen detection, headquartered in the
USA. Our diverse team of passionate employees are dedicated to advancing point-of-use water safety through education, product
solutions, and emergency outbreak response management.
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 expected future growth and the timing of such growth 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 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, including our Annual Report on Form 10-K for
the year ended December 31, 2020. Nephros does not undertake any responsibility to update the forward-looking statements in this
INC. AND SUBSIDIARIES
thousands, except share and per share amounts)
| December 31, 2020 | December 31, 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 8,249 | $ | 4,166 | ||||
| Accounts receivable, net | 1,364 | 1,045 | ||||||
| Inventory, net | 5,304 | 2,562 | ||||||
| Prepaid expenses and other current assets | 237 | 526 | ||||||
| Total current assets | 15,154 | 8,299 | ||||||
| Property and equipment, net | 295 | 81 | ||||||
| Lease right-of-use assets | 1,037 | 1,106 | ||||||
| Intangible assets, net | 506 | 548 | ||||||
| Goodwill | 759 | 759 | ||||||
| License and supply agreement, net | 670 | 804 | ||||||
| Other assets | 89 | 32 | ||||||
| TOTAL ASSETS | $ | 18,510 | $ | 11,629 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Secured revolving credit facility | $ | - | $ | 560 | ||||
| Current portion of secured note payable | 229 | 211 | ||||||
| Accounts payable | 423 | 959 | ||||||
| Accrued expenses | 341 | 136 | ||||||
| Current portion of contingent consideration | - | 300 | ||||||
| Current portion of lease liabilities | 332 | 262 | ||||||
| Total current liabilities | 1,325 | 2,428 | ||||||
| Secured note payable, net of current portion | 364 | 613 | ||||||
| PPP loan | 482 | - | ||||||
| Equipment financing, net of current portion | 7 | 10 | ||||||
| Lease liabilities, net of current portion | 759 | 889 | ||||||
| TOTAL LIABILITIES | 2,937 | 3,940 | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 19) | ||||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2020 and 2019; no shares issued and outstanding at December 31, 2020 and 2019 | - | - | ||||||
| Common stock, $.001 par value; 40,000,000 shares authorized at December 31, 2020 and 2019; 9,873,006 and 8,058,850 shares issued and outstanding at December 31, 2020 and 2019, respectively | 10 | 8 | ||||||
| Additional paid-in capital | 144,296 | 131,934 | ||||||
| Accumulated other comprehensive income | 74 | 65 | ||||||
| Accumulated deficit | (131,858 | ) | (127,332 | ) | ||||
| Subtotal | 12,522 | 4,675 | ||||||
| Noncontrolling interest | 3,051 | 3,014 | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 15,573 | 7,689 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 18,510 | $ | 11,629 |
INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
thousands, except share and per share amounts)
| Years Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Net revenue: | ||||||||
| Product revenues | $ | 8,453 | $ | 10,182 | ||||
| Royalty and other revenues | 108 | 152 | ||||||
| Total net revenues | 8,561 | 10,334 | ||||||
| Cost of goods sold | 3,648 | 4,250 | ||||||
| Gross margin | 4,913 | 6,084 | ||||||
| Operating expenses: | ||||||||
| Research and development | 2,759 | 3,090 | ||||||
| Depreciation and amortization | 192 | 186 | ||||||
| Selling, general and administrative | 6,466 | 6,119 | ||||||
| Change in fair value of contingent consideration | (229 | ) | (156 | ) | ||||
| Total operating expenses | 9,188 | 9,239 | ||||||
| Loss from operations | (4,275 | ) | (3,155 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | (110 | ) | (195 | ) | ||||
| Interest income | 11 | - | ||||||
| Other expense, net | (152 | ) | (54 | ) | ||||
| Loss before income taxes | (4,526 | ) | (3,404 | ) | ||||
| Income tax benefit | - | 225 | ||||||
| Net loss | (4,526 | ) | (3,179 | ) | ||||
| Less: Undeclared deemed dividend attributable to noncontrolling interest | (240 | ) | (241 | ) | ||||
| Net loss attributable to Nephros, Inc. shareholders | $ | (4,766 | ) | $ | (3,420 | ) | ||
| Net loss per common share, basic and diluted | $ | (0.52 | ) | $ | (0.45 | ) | ||
| Weighted average common shares outstanding, basic and diluted | 9,078,549 | 7,542,299 | ||||||
| Comprehensive loss: | ||||||||
| Net loss | $ | (4,526 | ) | $ | (3,179 | ) | ||
| Other comprehensive gain (loss), foreign currency translation adjustments, net of tax | 9 | (6 | ) | |||||
| Comprehensive loss | (4,517 | ) | (3,185 | ) | ||||
| Comprehensive loss attributable to noncontrolling interest | (240 | ) | (241 | ) | ||||
| Comprehensive loss attributable to Nephros, Inc. shareholders | $ | (4,757 | ) | $ | (3,426 | ) |