Nephros Announces Fourth Quarter and Fiscal Year 2023 Financial Results
Nephros, Inc. reports strong financial results for the fourth quarter and fiscal year ended December 31, 2023, with net revenue reaching $14.2 million for the year. The company saw a 43% increase in net revenue compared to the previous year, along with significant improvements in adjusted EBITDA. Nephros attributes its success to streamlined operations, a focus on filtration solutions, and strategic partnerships.
Positive
Nephros reported a 43% increase in net revenue for the fiscal year 2023 compared to 2022.
Adjusted EBITDA from continuing operations improved by 97% in 2023 compared to 2022.
The company's growth was driven by streamlined operations, a focus on filtration solutions, and new partnerships.
Nephros expanded its salesforce and warehouse space to support growing sales and improve delivery efficiency.
The reported increase in net revenue by 43% for the year-end and 27% for the fourth quarter is a strong indicator of Nephros's growth trajectory. This growth is particularly notable given the competitive landscape of the water filtration market. The company's ability to leverage regulatory changes and expand its salesforce has evidently translated into significant sales increases. However, the reported net loss figures, despite being reduced from the previous year, suggest that the company is still in a phase of strategic investment, with operational improvements potentially leading to future profitability.
The improvements in Adjusted EBITDA, showing an 89% and 97% increase for the respective periods, indicate a positive trend towards operational efficiency. This metric, often used to evaluate a company's financial performance without the need to factor in financing decisions, accounting decisions or tax environments, suggests that the underlying business operations are becoming more profitable. Investors typically look for consistent improvements in EBITDA as a sign that the company is on a path to sustainable growth.
The emphasis on Nephros's operational improvements, such as the opening of new warehouse space and the extension of supplier production agreements, is critical for supporting sales growth and ensuring supply chain resilience. These enhancements are likely to have a positive impact on customer satisfaction and retention by improving delivery efficiency. In the context of the broader industry, companies that can effectively manage inventory and supply chain challenges are better positioned to capitalize on market opportunities and mitigate risks associated with product availability.
Furthermore, the strategic focus on infection control water filters aligns with the increasing demand for healthcare solutions that address infection risks. The reference to ASHRAE 514 suggests that Nephros is aligning its product offerings with industry standards and regulatory guidance, which is crucial for adoption in healthcare settings. This strategic alignment with market needs and regulatory requirements is likely to support continued revenue growth and market penetration.
The operational improvements mentioned, such as the new warehouse space and the extended supplier agreement, reflect a proactive approach to supply chain management. These initiatives are essential for a company experiencing rapid sales growth, as they help to mitigate risks associated with inventory management and product availability. Efficient supply chain management is a critical component of a company's ability to scale operations and meet increasing demand.
By focusing on supply chain optimization, Nephros is likely to see reduced costs and improved margins over time. The warehouse expansion is particularly relevant, as it addresses the challenge of significant inventory expansion, which is a common issue for growing companies. The ability to maintain an uninterrupted source of product through extended supplier agreements is also a strategic advantage, as it reduces the risk of stockouts and production delays that could otherwise impede sales momentum and customer satisfaction.
03/07/2024 - 04:15 PM
Full-Year Net Revenue of $14.2 Million and Fourth-Quarter Net Revenue of $3.3 Million
SOUTH ORANGE, NJ, March 07, 2024 (GLOBE NEWSWIRE) -- via NewMediaWire – Nephros, Inc. (Nasdaq: NEPH), a leading water technology company providing filtration solutions to the medical and commercial markets, today announced financial results for the fourth quarter and fiscal year ended December 31, 2023.
Financial Highlights
Net revenue from continuing operations was $3.3 million , compared to $2.6 million in the fourth quarter of 2022, up 27% Net loss from continuing operations was ($0.7 million ), approximately equal to the same period in 2022 Adjusted EBITDA from continuing operations was ($0.1 million ), compared to ($0.5 million ) in the 89% Year-End 2023
Net revenue from continuing operations was $14.2 million , compared with $10.0 million in 2022, 43% Net loss from continuing operations was ($1.6 million ), compared with ($4.3 million ) in 2022 Adjusted EBITDA from continuing operations was ($0.1 million ), compared with ($2.4 million ) in 2022, an improvement of 97% “2023 was an exciting year for Nephros. With freshly streamlined operations and a refocus on filtration, we grew sales 43% for the full year,” said Robert Banks, President and Chief Executive Officer. “Additionally, new water management guidance, such as ASHRAE 514, has enabled our expanded salesforce to propel Nephros solutions to the front of the line within healthcare facilities. We believe our infection control water filters are well-positioned to fulfill the latest directive recommendations and serve broadened customer needs.
“In my view, our ability to leverage the current regulatory landscape has been a significant driver of growth, as well as our active engagement of new partners and strengthening of existing relationships,” remarked Mr. Banks. “Further, we have enacted a series of deliberate and transformative operational improvements to our supply chain management and consolidated expansion of our corporate footprint. Among these improvements was the opening of our new warehouse space in the fourth quarter, which has enabled us to increase delivery efficiency while supporting growing sales and solving the challenge of significant inventory expansion. Another enhancement was the extension of our supplier production agreement, which helps ensure an uninterrupted source of product.”
Mr. Banks continued, “I am very excited about the momentum we have built and am buoyed by the tailwinds created as a result of more stringent water safety standards along with heightened awareness of microbiological proliferation. I look forward to sharing future products, tools and key partnerships as they develop.”
Financial Performance for the Fourth Quarter and Year Ended December 31, 2023 $14 million , compared with $10 million in 2022, an increase of 43% . Net revenue for the fourth quarter of 2023 was $3.3 million , compared with $2.6 million in the fourth quarter of 2022, an increase of 27% .
Cost of goods sold for the year ended December 31, 2023 was $5.8 million , compared with $5.2 million in 2022, an increase of 11% . Cost of goods sold for the fourth quarter of 2023 was $1.2 million , compared with $1 million in the fourth quarter of 2022, an increase of 18% .
Gross margin for the year ended December 31, 2023 was 59% , compared with 47% in 2022. Gross margin for the fourth quarter of 2023 was 62% , compared with 59% in the fourth quarter of 2022.
Selling, general and administrative expenses for the year ended December 31, 2023 were $8.9 million , compared with $7.6 million in 2022, an increase of 17% . Selling, general and administrative expenses for the fourth quarter of 2023 were approximately $2.4 million , compared with $1.8 million in 2022, an increase of 35% .
Research and development expenses for the year ended December 31, 2023 were $0.9 million , compared with $1.3 million in 2022 a decrease of 30% . Research and development expenses for the fourth quarter of 2023 were $0.2 million , compared with $0.4 million in the fourth quarter of 2022, a decrease of 42% .
Depreciation and amortization expenses for the year ended December 31, 2023 were approximately $214,000 , compared with approximately $218,000 in 2022, a decrease of 2% . Depreciation and amortization expenses for the fourth quarter of 2023 were approximately $51,000 , compared with approximately $56,000 in the fourth quarter of 2022, a decrease of 9% .
Net loss from continuing operations for the year ended December 31, 2023 was ($1.6 million ), compared with a net loss of ($4.3 million ) in 2022, a 63% decrease in loss. Net loss from continuing operations for the fourth quarter of 2023 and 2022 was approximately ($0.7 million ) respectively.
Adjusted EBITDA loss from continuing operations for the year ended December 31, 2023 was ($0.1 million ), compared with ($2.4 million ) in 2022. Adjusted EBITDA loss from continuing operations for the fourth quarter 2023 was approximately ($0.1 million ), compared with approximately ($0.5 million ) in the fourth quarter of 2022.
As of December 31, 2023, Nephros had cash and cash equivalents of approximately $4.3 million , compared to $3.6 million as of December 31, 2022, and remains debt free.
Adjusted EBITDA Definition and Reconciliation to GAAP Financial Measures
(unaudited) 2023 Three Month Period Ended Annual 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Totals Net loss from continuing operations (306 ) (433 ) (182 ) (654 ) (1,575 ) Adjustments: Depreciation of property and equipment 10 10 9 10 39 Amortization of other assets 44 44 46 41 175 Interest expense 1 - - 1 2 Interest income (12 ) (13 ) (11 ) (28 ) (64 ) Non-cash stock-based compensation 319 194 149 390 1,052 Non-cash inventory impairments 91 15 - 189 295 Adjusted EBITDA loss from continuing operations 147 (183 ) 11 (51 ) (76 ) (unaudited) 2022 Three Month Period Ended Annual 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Totals Net loss from continuing operations (1,561 ) (747 ) (1,250 ) (719 ) (4,277 ) Adjustments: Depreciation of property and equipment 8 20 12 12 52 Amortization of other assets 47 41 44 44 176 Interest expense 7 6 4 3 20 Interest income (2 ) (1 ) (4 ) (7 ) (14 ) Non-cash stock-based compensation 254 258 225 207 944 Non-cash inventory impairments 49 59 665 773 Other non-cash items - (38 ) - - (38 ) Adjusted EBITDA loss from continuing operations (1,198 ) (402 ) (304 ) (460 ) (2,364 )
Nephros believes that Adjusted EBITDA loss from continuing operations provides useful information to management and investors regarding certain financial and business trends relating to Nephros’ financial condition and results of operations. Management does not consider Adjusted EBITDA loss from continuing operations in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of Adjusted EBITDA loss from continuing operations is that it excludes significant expenses and income that are required by GAAP to be recognized in Nephros’ financial statements. In addition, Adjusted EBITDA loss from continuing operations 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 loss from continuing operations. To compensate for these limitations, management presents Adjusted EBITDA loss from continuing operations in connection with net loss from continuing operations, the most directly comparable GAAP financial measure. Nephros urges investors to review the reconciliation of Adjusted EBITDA loss from continuing operations to net loss from continuing operations and not to rely on any single financial measure to evaluate the business.
Conference Call Today at 4:30pm Eastern Time
Participants may dial into the call as follows:
Upon joining, please ask to be joined into the Nephros conference call.
An audio archive of the call will be available shortly after the call on the Nephros Investor Relations page .
Alternatively, a replay of the call may be accessed until March 14th, 2024 at 1 (877) 344-7529 or
About Nephros
For more information about Nephros, please visit nephros.com .
Forward-Looking Statements
Investor Relations Contacts: ksmith@pcgadvisory.com
Robert Banks, CEOrobert.banks@nephros.com
NEPHROS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) ASSETS December 31, 2023 December 31, 2022 Current assets: Cash and cash equivalents $ 4,307 $ 3,634 Accounts receivable, net 1,496 1,286 Inventory 2,470 3,153 Prepaid expenses and other current assets 132 188 Total current assets 8,405 8,261 Property and equipment, net 152 116 Lease right-use-of assets 1,807 984 Intangible assets, net 381 423 Goodwill 759 759 License and supply agreement, net 271 402 Other assets 86 54 TOTAL ASSETS $ 11,861 $ 10,999 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of secured note payable $ - $ 71 Accounts payable 873 740 Accrued expenses 794 285 Current portion of lease liabilities 446 316 Total current liabilities 2,113 1,412 Equipment financing, net of current portion - 1 Lease liabilities, net of current portion 1,390 705 TOTAL LIABILITIES 3,503 2,118 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2023 and 2022; no shares issued and outstanding at December 31, 2023 and 2022 - - Common stock, $.001 par value; 40,000,000 shares authorized at December 31, 2023 and 2022; 10,543,675 and 10,297,429 shares issued and outstanding at December 31, 2023 and 2022, respectively 10 10 Additional paid-in capital 152,754 148,413 Accumulated deficit (144,406 ) (142,831 ) Subtotal 8,358 5,592 Noncontrolling interest - 3,289 TOTAL STOCKHOLDERS' EQUITY 8,358 8,881 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,861 $ 10,999
NEPHROS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share and per share amounts) (Unaudited) Twelve Months Ended December 31, 2023 2022 Net revenue: Product revenues $ 14,110 $ 9,929 Royalty and other revenues 128 46 Total net revenues 14,238 9,975 Cost of goods sold 5,833 5,244 Gross margin 8,405 4,731 Operating expenses: Selling, general and administrative 8,911 7,593 Research and development 873 1,255 Depreciation and amortization 214 218 Total operating expenses 9,998 9,066 Operating loss from continuing operations (1,593 ) (4,335 ) Other (expense) income: Interest expense (2 ) (20 ) Interest income 64 14 Other (expense) net (44 ) 64 Total other expense: 18 58 Loss from continuing operations (1,575 ) (4,277 ) Net loss from discontinued operations - (2,829 ) Net loss (1,575 ) (7,106 ) Less: Undeclared deemed dividend attributable to noncontrolling interest - (276 ) Net loss attributable to Nephros Inc. shareholders $ (1,575 ) $ (7,382 ) Net loss per common share, basic and diluted from continuing operations $ (0.15 ) $ (0.42 ) Net loss per common share, basic and diluted from discontinued operations - (0.28 ) Net loss per common share, basic and diluted $ (0.15 ) $ (0.70 ) Net loss per common share, basic and diluted, attributable to continuing noncontrolling interest - (0.03 ) Net loss per common share, basic and diluted, attributable to Nephros, Inc, shareholders $ (0.15 ) $ (0.73 ) Weighted average common shares outstanding, basic and diluted 10,386,018 10,297,134 Comprehensive loss: Net loss $ (1,575 ) $ (7,106 ) Other comprehensive loss, foreign currency translation adjustments, net of tax - (14 ) Comprehensive loss (1,575 ) (7,120 ) Comprehensive loss attributable to continuing noncontrolling interest - (276 ) Comprehensive loss attributable to Nephros, Inc. shareholders $ (1,575 ) $ (7,396 )
What was Nephros' net revenue for the full year 2023?
Nephros reported a net revenue of $14.2 million for the fiscal year 2023.
How much did Nephros' net revenue increase by in 2023 compared to 2022?
Nephros' net revenue increased by 43% in 2023 compared to 2022.
What was the percentage improvement in adjusted EBITDA from continuing operations in 2023 compared to 2022?
Adjusted EBITDA from continuing operations improved by 97% in 2023 compared to 2022.
What were the key drivers of Nephros' growth in 2023?
Nephros' growth in 2023 was driven by streamlined operations, a focus on filtration solutions, and new partnerships.
How did Nephros improve delivery efficiency in 2023?
Nephros expanded its warehouse space in the fourth quarter of 2023 to increase delivery efficiency.
What operational improvements did Nephros make in 2023?
Nephros made deliberate and transformative operational improvements to its supply chain management and expanded its corporate footprint in 2023.
