NeuroMetrix, Inc. Reports Total Revenues of $9.1 Million for the First Quarter of 2008, Decrease of 23% from the First Quarter of 2007; Cash and Investment Position of $26.6 Million WALTHAM, Mass. (BUSINESS WIRE)

NeuroMetrix, Inc. Reports Total Revenues

of $9.1 Million for the First Quarter of 2008, Decrease of 23% from the First

Quarter of 2007; Cash and Investment Position of $26.6 Million

WALTHAM, Mass. (BUSINESS WIRE) May 6, 2008 NeuroMetrix, Inc.

(Nasdaq: NURO), a medical device company advancing patient care through the

development and marketing of innovative medical device products that aid

physicians in the diagnosis and treatment of diseases of the nervous system and

neurovascular disorders and that provide regional anesthesia and pain control,

announced today the financial results for the three-month period ended March 31,

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

Company s first quarter, were $9.1 million, compared with $11.8 million for the

first quarter of 2007, representing a decline of 23%. During the three-month periods ended March 31,

2008 and 2007, 88% and 87% of revenues, respectively, were derived from

biosensor sales, 8% and 11% of revenues, respectively, were derived from

diagnostic device sales and 4% and 2% of revenues, respectively, were derived

from DigiScope sales.

The gross margin percentage for the first quarter of 2008 was 72.6% of

revenues, compared with 73.7% of revenues for the first quarter of 2007. In the

first quarter of 2008, the gross margin percentage for biosensors decreased to

73.6% of revenues from 73.8% of revenues in the first quarter of 2007. The

gross margin percentage for diagnostic devices decreased to 72.3% of revenues

for the first quarter of 2008 from 82.0% of revenues for the first quarter of

2007 due to lower average selling prices and lower volumes. The gross margin percentage for the DigiScope

for the first quarter of 2008 was 50.2% compared with 18.2% in the first quarter

of 2007. The increase in gross margins

for the DigiScope resulted from the acquisition of EyeTel Imaging, Inc. in

In February 2008, there was a meeting of the American Medical

Association ( AMA ) CPT editorial panel and during this meeting a vote was

taken on the reimbursement coding for nerve conduction studies such as those

performed using the NC-stat System.

Following this meeting, the Company s market capitalization declined

substantially resulting in the Company s net book value exceeding market

capitalization as of March 31, 2008.

This was considered to be a triggering event for an assessment of the

carrying value of goodwill. The Company

concluded that goodwill was impaired and as a result, a non-cash impairment

charge of $5.8 million was recorded in operating expenses during the first

The GAAP net loss for the first quarter of 2008 was approximately $10.8

million, including the goodwill impairment charge of $5.8 million, compared

with a net loss of approximately $1.4 million for the first quarter of

2007. The net loss for the first quarter

of 2008 also includes a write-down of approximately $656,000 of our investment

in Cyberkinetics, which we have determined to be other than temporary in

Basic and diluted GAAP net loss per share was $(0.79) for the three months ended March

31, 2008, compared with basic and diluted net loss per share of $(0.11) for the three months ended March 31, 2007.

Cash and cash equivalents and short-term investments totaled $26.6

million as of March 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 first quarter of 2008 were down approximately

23% from the same period in 2007 and were down 9.9% sequentially from the

fourth quarter of 2007 due in large part to reimbursement issues experienced by

our customers and the termination of our independent sales agency relationships

during the second half of 2007. Average

biosensor usage per customer in the first quarter of 2008 remained

approximately flat with the fourth quarter of 2007. Our overall active customer

count remained stable at 5,575 physician practices and clinics as of the end of

the first quarter of 2008, which is a twelve-month look back at accounts

utilizing the NC-stat System. A total of

225,000 biosensors were used by our customers during the first quarter of 2008

compared with the 228,000 biosensors used by our customers in the fourth

Dr. Gozani further commented, As we previously announced, the AMA

CPT Editorial Panel considered reimbursement coding for nerve conduction

studies at its February 2008 meeting.

We had hoped that the AMA CPT Editorial Panel would have determined that

the existing Category I CPT codes were applicable to nerve conduction studies

performed using the NC-stat System or assigned a series of new Category I CPT

codes for such studies. Our view was

shared by professional medical societies representing over 100,000 physicians;

including the American Academy of Family Medicine (AAFP), the American

Association of Clinical Endocrinologists (AACE), the American College of

Rheumatology (ACR), and the American Society for Surgery of the Hand

(ASSH). To our disappointment, the only

vote that occurred at the meeting was a vote on a Category III code. However, if and until the AMA CPT Editorial

Panel publishes a new code set, which typically occurs in July or January each

year for Category III codes, there are no new CPT codes or changes to the

existing CPT codes for nerve conduction studies. In the event that a Category III CPT

code is published which describes nerve conduction studies performed with the

NC-stat System, it would likely result in limited Medicare reimbursement for

such studies. A Category III code could also adversely impact reimbursement by

other third party payers.

An important part of our business strategy going

forward is centered around our ADVANCE System, which is used to perform

traditional nerve conduction studies and invasive electromyography procedures.

We recently received FDA 510(k) clearance for ADVANCE and plan to launch

this product into certain markets, including neurologists, neurosurgeons, orthopedic surgeons,

and other specialists in the second quarter of 2008.

We also made progress with NAVIGATOR, our technology platform for

delivery of pharmacologic agents, such as anesthetics and corticosteroids, to

specific sites on peripheral nerves.

This product line is designed to allow physicians to deliver these

agents in close proximity to nerves ( perineurally ) by using the electrical

responsiveness of the nerve to guide the needle. There are multiple applications for this

including implementation of nerve blocks during regional anesthesia and

pain control, and in the treatment of focal neuropathies, such as carpal tunnel

syndrome. We hope to file 510(k) applications

with the FDA in the second half of 2008.

Our business continues to be adversely impacted by the current

reimbursement environment relating to nerve conduction studies performed using

the NC-stat System, and we expect that revenues will continue to decline during

2008. We believe that decisions by