NeuroMetrix, Inc. Reports Total Revenues of $7.2 Million for the Fourth Quarter of 2008 WALTHAM, Mass. (BUSINESS WIRE)

NeuroMetrix, Inc. Reports Total Revenues of $7.2 Million for the

Fourth Quarter of 2008

WALTHAM, Mass. (BUSINESS WIRE) February 10, 2009 NeuroMetrix, Inc.

(Nasdaq: NURO), a science-based medical device company advancing patient care

through the development and commercialization of innovative products that aid

physicians in the assessment, treatment, and repair of peripheral nerve and

spinal cord injuries and disorders, and that provide regional anesthesia and

pain control, announced

today its financial results for the three- and twelve-month periods ended December 31,

Total revenues for the three months ended December 31, 2008, the

Company s fourth quarter, were $7.2 million, compared with $9.8 million for the

fourth quarter of 2007, representing a decline of 27%. During the three-month periods ended December 31,

2008 and 2007, 86% and 92% of revenues, respectively, were derived from

consumables sales, 14% and 8% of revenues, respectively, were derived from

medical equipment sales. The Company ceased selling and servicing its DigiScope

product as of the end of October 2008 and as a result has recast its

financial statements for both years to include the DigiScope sales and expenses

as discontinued operations. Medical

equipment sales include sales of ADVANCE

devices and related modules and NC-stat

devices and related modules. Consumables sales include sales of nerve specific

electrodes, UNIVERSAL electrodes, and

Total revenues for the twelve months ended December 31, 2008 were

$31.1 million, compared with $43.7 million for the twelve months ended December 31,

2007, representing a decline of 29%.

During the twelve-month periods ended December 31, 2008 and December 31,

2007, 91% and 90% of revenues, respectively were derived from consumable sales,

9% and 10% of revenues, respectively, were derived from medical equipment

The costs of revenues as a percentage of total revenues for the fourth

quarter of 2008 were 32.2%, compared with 27.1% for the fourth quarter of 2007.

In the fourth quarter of 2008, the costs of revenues as a percentage of total

revenues increased primarily due to greater discounting. The increased

discounting which resulted in lower average selling prices is, in part, related

to ADVANCE transition pricing for customers who are specialist physicians with

peripheral nerve expertise.

The costs of revenues as a percentage of total revenues for the twelve

months ended December 31, 2008 was 29.0%, compared with 26.0% for the

twelve months ended December 31, 2007. For the twelve months ended December 31,

2008, the costs of revenues as a percentage of total revenues increased due to

greater discounting resulting in lower average selling prices as discussed

The net loss for the fourth quarter of 2008 was approximately $4.1

million, including a charge of $3.7 million resulting from the Company s

previously announced settlement with the U.S. Department of Justice (the DOJ )

and the Office of the Inspector General of the U.S. Department of Health and Human

Services (the OIG ), a write-down of $274,000 of the Company s investment in

Neurotechnology Systems Inc., a gain of $352,000 on discontinued

operations resulting from the sale of the Company s former DigiScope business,

and a gain of $131,000 resulting from the dissolution of the Company s joint

venture and collaboration agreement with Cyberkinetics Neurotechnology Systems, Inc.

compared with a net loss of approximately $2.1 million for the fourth quarter

The net loss for the twelve month period ended December 31, 2008

was $27.7 million, including a loss of $6.6 million from discontinued

operations, a goodwill impairment charge of $5.8 million relating to the

DigiScope business, a charge of $3.7 million resulting from the Company s

previously announced settlement with the DOJ and OIG, and write-down of $2.5

million of the Company s investment in Cyberkinetics, compared with a net loss

of $8.4 million for the twelve month period ended December 31, 2007.

Basic and diluted net loss per share was $(0.30) for the three months ended December 31, 2008 compared with basic and diluted net loss per share of $(0.17) for the three months ended December 31, 2007. Basic and diluted net loss per share was $(2.02) for the twelve months ended December 31, 2008, compared with basic and diluted net loss per share of $(0.66) for the twelve months ended December 31, 2007.

Cash and cash equivalents and short-term investments totaled $19.8

million as of December 31, 2008 compared with $29.7 million as of December 31,

Shai N. Gozani, M.D., Ph.D., NeuroMetrix s President & CEO

commented, Our revenues in the fourth quarter of 2008 were down approximately

27% from the same period in 2007 primarily due to the continued uncertainty

surrounding reimbursement for the NC-stat System and the 40% reduction in our

direct sales force in the second quarter of 2008. During the last quarter, our active customer

count, which is a twelve-month look back at accounts utilizing our

neurodiagnostic instruments, decreased by 140 to 5,189 physician practices and

clinics as of the end of the fourth quarter of 2008 from the third quarter of

2008. The average consumables usage per active

customer also decreased during the fourth quarter of 2008 from the prior

added, We recently commented

on reports that the American Medical Association (AMA) CPT Editorial Panel will

establish a Category I CPT code for nerve conduction studies performed

with pre-configured electrode arrays, such as are utilized by our NC-stat

System. We are encouraged by this direction and believe that this CPT code,

when issued, could streamline the process for obtaining reimbursement for nerve

conduction studies performed using the NC-stat System. The amount

of reimbursement from Medicare that physicians will receive under this CPT code

remains to be determined. Further,

medically appropriate indications for this code may be defined through local

and national Medicare medical policies.

In this respect, we are encouraged that multiple Medicare fiscal

intermediaries have previously determined that the nerve conduction studies

performed with the NC-stat System are covered services. We expect that the operational

characteristics of the NC-stat business will change when physicians begin

utilizing the new code in 2010, but look forward to the associated challenges

and opportunity to stabilize and eventually return the NC-stat business to

We are now actively marketing the ADVANCE System into the neurology,

physical medicine and rehabilitation (PM&R), neurosurgery, orthopedic and

hand surgery, and pain medicine markets through

our direct sales organization.

As of the end of the fourth quarter of 2008, 6% of our active customers

were using ADVANCE. We are encouraged by

market reaction and have gained important insight into certain product

enhancements that we believe could accelerate adoption.

further stated, We recently announced the acquisition of certain technological and intellectual

property assets from Cyberkinetics Neurotechnology Systems, Inc. This acquisition includes all rights and

regulatory filings for the Andara Oscillating Field Stimulator (OFS ), which

is a novel investigational device for the treatment of acute spinal cord

injury. In connection with the