Nephros Announces Fourth Quarter and Fiscal Year 2021 Financial Results

Rhea-AI Summary

Nephros reported a full-year net revenue of $10.4 million for 2021, reflecting a 22% year-over-year increase. The fourth quarter net revenue reached $2.8 million, up 18% from 2020. For 2022, the company reaffirmed its guidance of $13.0 million to $13.5 million, expecting a growth rate of 25% to 30%. However, the company incurred a net loss of $3.9 million for the year, though this is a 15% improvement from the previous year. The operating loss for the fourth quarter was ($1.0 million), a 37% increase year-over-year. Nephros had approximately $7.0 million in cash as of year-end.

Positive

• Full-year net revenue increased by 22% to $10.4 million.
• Fourth quarter net revenue of $2.8 million, an 18% rise.
• Reaffirmed 2022 revenue guidance of $13.0 million to $13.5 million (25-30% growth).
• Net loss decreased by 15% year-over-year.

Negative

• Fourth quarter operating loss of ($1.0 million), a 37% increase from the prior year.
• Sales and administrative expenses rose by 19% year-over-year.

Reports Full-Year Net Revenue of $10.4 Million, a 22% Year-Over-Year Increase and 
Fourth Quarter Net Revenue of $2.8 Million, an 18% Year-Over-Year Increase;
Reaffirms Fiscal Year 2022 Guidance of $13.0 Million to $13.5 Million in Annual Revenue

SOUTH ORANGE, NJ, Feb. 23, 2022 (GLOBE NEWSWIRE) -- via NewMediaWire --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 fiscal year ended December 31, 2021.

Financial Highlights
Fourth Quarter Ended December 31, 2021– Water FiltrationBusiness Segment

• Net revenue was $2.7 million, compared with $2.3 million in 2020, up 16%
• Operating loss was ($0.7 million), compared to ($0.3 million) in 2020
• Adjusted Operating Loss was ($64,000), compared with ($10,000) in 2020

Fourth Quarter Ended December 31, 2021 – Consolidated

• Net revenue was $2.8 million, compared with $2.3 million in 2020, up 18%
• Net loss was ($1.0 million), compared with ($0.8 million) in 2020, up 37%
• Adjusted EBITDA was ($0.4 million), compared with ($0.5 million) in 2020

Year-End 2021 – Water Filtration Business Segment

• Net revenue was $10.2 million, compared with $8.5 million in 2020, up 20%
• Operating loss was ($2.9 million), compared with a net loss of ($2.0 million) in 2020
• Adjusted Operating Loss was ($1.3 million) in 2021 and 2020

Year-end 2021 – Consolidated

• Net revenue was $10.4 million, compared with $8.6 million in 2020, up 22%
• Net loss was ($3.9 million), compared with ($4.5 million) in 2020, down 15%
• Adjusted EBITDA was ($2.6 million), compared with ($3.6 million) in 2020

“We are pleased to report that Nephros delivered four consecutive quarters of year-over-year growth averaging 19%, ending the year at a new revenue record for the company,” said Andy Astor, President and Chief Executive Officer of Nephros. “Looking forward to 2022, we believe our recent investments into a scalable sales and marketing infrastructure, along with the expected retreat of COVID-19 to endemic state, will bring our growth rates even higher, as evidenced by our recent revenue guidance of $13.0-13.5 million, or 25-30% growth.”

Financial Performance for the Fourth Quarter and Year Ended December 31, 2021
Net revenue for the year ended December 31, 2021 was $10.4 million, compared with $8.6 million in 2020, an increase of 22%. Net revenues for the fourth quarter of 2021 were $2.8 million, compared with $2.3 million in the fourth quarter of 2020, an increase of 18%.

Cost of goods sold for the year ended December 31, 2021 was $4.7 million, compared with $3.6 million in 2020, an increase of 28%. Cost of goods sold for the fourth quarter of 2021 was $1.3 million, compared with $1 million in the fourth quarter of 2020, an increase of 26%.

Gross margins for the year ended December 31, 2021 were 55%, compared with 57% in 2020. Gross margins for the fourth quarter of 2021 were 53%, compared with 56% in the fourth quarter of 2020.

Selling, general and administrative expenses for the year ended December 31, 2021 were $7.7 million, compared with $6.5 million in 2020, an increase of 19%. Selling, general and administrative expenses for the fourth quarter of 2021 were approximately $2 million compared with approximately $1.4 million in the fourth quarter of 2020, an increase of 44%.

Research and development expenses for the year ended December 31, 2021 were $2.2 million, compared with $2.8 million in 2020, a decrease of 21%. Research and development expenses for the fourth quarter of 2021 were $0.5 million, compared with $0.6 million in the fourth quarter of 2020, a decrease of 19%.

Depreciation and amortization expenses for the year ended December 31, 2021 were approximately $202,000, compared with approximately $192,000 in 2020, an increase of 5%. Depreciation and amortization expenses for the fourth quarter of 2021 were approximately $51,000, compared with approximately $50,000 in the fourth quarter of 2020, an increase of 2%.

Net loss for the year ended December 31, 2021 was ($3.9 million), compared with a net loss of ($4.5 million) in 2020, a 15% decrease in loss. Net loss for the fourth quarter of 2021 was approximately ($1 million), compared with a net loss of approximately ($0.8 million) in the fourth quarter of 2020, a 37% increase.

Adjusted EBITDA for the year ended December 31, 2021 was ($2.6 million), compared with ($3.6 million) in 2020, a 29% decrease. Adjusted EBITDA for the fourth quarter 2021 was approximately ($0.4 million), compared with approximately ($0.5 million) in the fourth quarter of 2020, a 11% decrease.

As of December 31, 2021, Nephros had cash and cash equivalents of approximately $7.0 million. 

Water Filtration Adjusted Operating Loss Definition and Reconciliation to GAAP Financial Measures
Water Filtration Adjusted Operating Loss is calculated by taking operating loss calculated in accordance with generally accepted accounting principles (“GAAP”) and excluding all non-recurring expenses and income, and non-cash items, including depreciation and amortization and non-cash compensation. The following table presents a reconciliation of Water Filtration Adjusted Operating Loss to operating loss, the most directly comparable GAAP financial measure for segment reporting, for the 2021 and 2020 fiscal years: 

Water Filtration
(unaudited)
2021	Three Month Period Ended				Annual
	3/31/21	6/30/21	9/30/21	12/31/21	Totals
Operating loss	$(634)	$(875)	$(755)	$(670)	$(2,934)
Adjustments:
Depreciation of property and equipment	7	7	7	16	37
Amortization of other assets	46	48	46	74	214
Non-cash stock-based compensation	265	269	257	422	1,213
Other non-cash items	5	24	90	94	213
Adjusted EBITDA	$(311)	$(527)	$(355)	$(64)	$(1,257)
2020	Three Month Period Ended				Annual
	3/31/20	6/30/20	9/30/20	12/31/20	Totals
Operating loss	$(548)	$(852)	$(311)	$(285)	$(1,996)
Adjustments:
Depreciation of property and equipment	5	6	7	7	25
Amortization of other assets	45	45	46	47	183
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	$(339)	$(623)	$(283)	$(10)	$(1,255)

Consolidated Adjusted EBITDA Definition and Reconciliation to GAAP Financial Measures
Consolidated Adjusted EBITDA is calculated by taking net loss calculated in accordance with generally accepted accounting principles (“GAAP”) and excluding all interest-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 Consolidated Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, for the 2021 and 2020 fiscal years:

	Consolidated (unaudited)
2021	Three Month Period Ended				Annual
Consolidated	3/31/2021	6/30/2021	9/30/2021	12/31/2021	Totals
Net loss	$             (537)	$          (1,126)	$          (1,163)	$          (1,041)	$           (3,867)
Adjustments:
Depreciation of property and equipment	7	8	7	16	38
Amortization of other assets	46	48	46	74	214
Interest expense	13	11	10	7	41
Interest income	(3)	(3)	(2)	(2)	(10)
Non-cash stock-based compensation	276	281	268	434	1,259
Other non-cash items	5	24	90	97	216
PPP Loan Forgiveness	(482)	-	-	-	(482)
Adjusted EBITDA	$          (675)	$           (757)	$             (744)	$           (415)	$        (2,591)

2020	Three Month Period Ended				Annual
Consolidated	3/31/2020	6/30/2020	9/30/2020	12/31/2020	Totals
Net loss	$        (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)

Nephros 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 financialmeasure. 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.

Conference Call Today at 4:30pm Eastern Time
Nephros will host a conference call today at 4:30pm ET, during which management will discuss Nephros’s financial results and provide a general business overview.

Participants 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 2, 2022 at 1 (877) 344-7529 or 1 (412) 317-0088 for international callers and entering replay access code: 8949087. 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/.

About Nephros
Nephros, Inc. is a company committed to improving the human relationship with water through leading, accessible technology. We provide innovative filtration and pathogen detection as part of an integrated approach to water safety that combines science, solutions, and support services. Nephros products serve the needs of customers within the healthcare and commercial markets, offering both proactive and emergency responses for water management. For more information about Nephros, please visit www.nephros.com.

Forward-Looking Statements
This release contains forward-looking statements that are subject to various risks and uncertainties. Such statements include statements regarding Nephros’s expected revenue for the quarter and year ended December 31, 2021, expected future revenue growth and the timing of such growth, and other statements that are not historical facts, including statements that 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. Nephros does not undertake any responsibility to update the forward-looking statements in this release.

Investor Relations Contacts:
Kirin Smith, President
PCG Advisory, Inc.
(646) 823-8656
ksmith@pcgadvisory.com

Andy Astor, CEO
Nephros, Inc.
(201) 345-0824
andy.astor@nephros.com

NEPHROS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
		December 31, 2021		December 31, 2020
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$6,973		$8,249
Accounts receivable, net		1,641		1,364
Inventory		4,795		5,304
Prepaid expenses and other current assets		225		237
Total current assets		13,634		15,154
Property and equipment, net		366		295
Operating right-use-of assets		730		1,037
Intangible assets, net		1,536		506
Goodwill		759		759
License and supply agreement, net		536		670
Other assets		89		89
Total assets		$17,650		$18,509
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Secured revolving credit facility		-		$-
Secured note, current portion		248		229
PPP loan, current portion		-		-
Accounts payable		1,334		423
Accrued expenses		444		341
Current portion of contingent consideration		-		-
Current portion lease liabilities		364		332
Total current liabilities		2,390		1,325
Secured note payable, long term portion		95		364
PPP loan, net of current portion		-		482
Financing obligation, net of current portion		4		7
Contingent consideration, net of current portion		-		-
Lease liabilities		412		759
Total liabilities		2,901		2,937
Commitments and Contingencies
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2021 and 2020; no shares issued and outstanding December 31, 2021 and 2020		-		-
Common stock, $.001 par value; 40,000,000 shares authorized at December 31, 2021 and 2020; 10,258,444 and 9,873,006 shares issued and outstanding and December 31, 2021 and 2020, respectively		10		10
Additional paid-in capital		147,346		144,296
Accumulated other comprehensive income		64		74
Accumulated deficit		(135,725)		(131,858)
Subtotal		11,695		12,522
Noncontrolling interest		3,054		3,051
Total stockholders' equity		14,749		15,573
Total liabilities and equity		$17,650		$18,510

NEPHROS, INC. AND SUBSIDIARIES
CONSOLIDATED OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share amounts)
		Year Ended December 31,
		2021		2020
		(unaudited)
Net revenues:
Product revenues		$10,204		$8,453
Royalty and other revenues		200		108
Total net revenues		10,404		8,561
Cost of goods sold		4,661		3,648
Gross margin		5,743		4,913
Gross margin %		55%		57%
Operating expenses:
Research and development		2,166		2,759
Depreciation and amortization		202		192
Selling, general and administrative		7,710		6,466
Change in fair value of contingent consideration		-		(229)
Total operating expenses		10,078		9,188
Loss from operations		(4,335)		(4,275)
Interest expense		(41)		(110)
Interest income		10		11
Other income (expense), net		499		(152)
Loss before income taxes		(3,867)		(4,526)
Income tax benefit		-		-
Net profit (loss)		(3,867)		(4,526)
Less: Deemed dividend attributable to noncontrolling interest		(240)		(240)
Net loss attributable to Nephros Inc		(4,107)		(4,766)
Net loss per common share, basic and diluted		$(0.41)		$(0.52)
Weighted average common shares outstanding, basic and diluted		10,017,830		9,078,549
Comprehensive loss:
Net Loss		(3,867)		(4,526)
Other comprehensive income(loss), foreign currency translation adjustments		(10)		9
Comprehensive loss		(3,877)		(4,517)
Comprehensive loss attirbutable to noncontrolling interest		(240)		(240)
Total comprehensive loss attributable to Nephros Inc shareholders		$(4,117)		$(4,757)

FAQ

What were Nephros' financial results for Q4 2021?

Nephros reported a Q4 2021 net revenue of $2.8 million, an 18% increase year-over-year.

What is the net revenue for the entire year of 2021 for NEPH?

For the full year 2021, Nephros reported a net revenue of $10.4 million, up 22% from 2020.

What is Nephros' revenue guidance for 2022?

Nephros reaffirmed its guidance for 2022, projecting revenue between $13.0 million and $13.5 million.

How much cash did Nephros have at the end of 2021?

As of December 31, 2021, Nephros had approximately $7.0 million in cash and cash equivalents.