Nephros Announces Fourth Quarter and Fiscal Year 2023 Financial Results
- 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.
- None.
Insights
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.
Full-Year Net Revenue of
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
Fourth Quarter Ended December 31, 2023
- Net revenue from continuing operations was
$3.3 million , compared to$2.6 million in the fourth quarter of 2022, up27% - 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
fourth quarter of 2022, an improvement of89%
Year-End 2023
- Net revenue from continuing operations was
$14.2 million , compared with$10.0 million in 2022,
up43% - 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 of97%
“2023 was an exciting year for Nephros. With freshly streamlined operations and a refocus on filtration, we grew sales
“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
Net revenue from continuing operations for the year ended December 31, 2023 was
Cost of goods sold for the year ended December 31, 2023 was
Gross margin for the year ended December 31, 2023 was
Selling, general and administrative expenses for the year ended December 31, 2023 were
Research and development expenses for the year ended December 31, 2023 were
Depreciation and amortization expenses for the year ended December 31, 2023 were approximately
Net loss from continuing operations for the year ended December 31, 2023 was (
Adjusted EBITDA loss from continuing operations for the year ended December 31, 2023 was (
As of December 31, 2023, Nephros had cash and cash equivalents of approximately
Adjusted EBITDA Definition and Reconciliation to GAAP Financial Measures
Adjusted EBITDA loss from continuing operations is calculated by taking net loss from continuing operations 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, amortization, non-cash inventory impairments, and write-offs, and non-cash compensation. The following table presents a reconciliation of Adjusted EBITDA loss from continuing operations to net loss from continuing operations, the most directly comparable GAAP financial measure, for the fourth quarter of the 2023 and 2022 fiscal years:
| (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
Nephros will host a conference call today at 4:30pm ET, during which management will discuss Nephros’ financial results and provide a general business overview.
Participants may dial into the call as follows:
Domestic access: 1 (844) 808-7106
International access: 1 (412) 317-5285
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
1 (412) 317-0088 for international callers and entering replay access code: 3916556.
About Nephros
Nephros is committed to improving the human relationship with water through leading, accessible technology. We provide innovative water filtration products and services, along with water-quality education, as part of an integrated approach to water safety. Nephros goods serve the needs of customers within healthcare and commercial markets, offering both proactive and emergency solutions for water management.
For more information about Nephros, please visit 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’ expected revenue and cash flows for the quarter and year ended December 31, 2023, expected future revenue growth and the timing of such growth, the effect of new regulations on future revenue growth, Nephros’ ability to appropriately manage product inventory , 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 Nephros’ ability to further develop its sales organization and realize increased revenues, inflationary factors and other economic and competitive conditions, the availability of capital when needed, dependence on third-party manufacturers and researchers, and regulatory reforms. These and other risks and uncertainties are detailed in Nephros’ reports filed with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2023, which is expected to be filed on or before March 31, 2024. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this release, and Nephros does not undertake any responsibility to update any forward-looking statements that it makes, except as may be required by law.
Investor Relations Contacts:
Kirin Smith, President
PCG Advisory, Inc.
(646) 823-8656
ksmith@pcgadvisory.com
Robert Banks, CEO
Nephros, Inc.
(201) 343-5202 x110
robert.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 | ) | ||
FAQ
What was Nephros' net revenue for the full year 2023?
How much did Nephros' net revenue increase by in 2023 compared to 2022?
What was the percentage improvement in adjusted EBITDA from continuing operations in 2023 compared to 2022?
What were the key drivers of Nephros' growth in 2023?
How did Nephros improve delivery efficiency in 2023?
What operational improvements did Nephros make in 2023?
