Source: Nephros, Inc. 8/5/2020
Nephros, Inc. (Nasdaq:NEPH),
a commercial-stage company that develops and sells high performance
water purification products and pathogen detection systems to the
medical and commercial markets, today announced financial results for
the three months ended June 30, 2020.
Financial Highlights
Water Filtration Business Segment Highlights
- Net revenue was $1.6 million, down 32% compared with $2.3 million in 2019
- Net loss was $0.9 million, compared with $0.3 million in 2019
- Adjusted EBITDA was ($0.7 million), compared with breakeven in 2019
Consolidated Highlights
- Net revenue was $1.6 million, down 32% compared with $2.3 million in 2019
- Net loss was $1.7 million, compared with $0.9 million in 2019
- Adjusted EBITDA was ($1.4 million) compared with ($0.5 million) in 2019
“While
COVID-19 broke our streak of 15 quarters of year-over-year growth, we
remain optimistic about our growth prospects,” said Daron Evans,
President and CEO. “We have already seen some strengthening of the
market in early Q3, and we hope to see a return to revenue growth soon,
as the pandemic evolves from an all-hands-on-deck emergency to a ‘new
normal’ background issue.”
Mr. Evans continued,
“During the relatively slower second quarter, our team focused on
building new capabilities, including the acceleration and release of
our SequaPath™ product and our recently published study of
water in buildings affected by COVID-19-related shutdowns. In the near
future, we will also release DialyPath™, our real-time test for dialysis
clinics that will detect and quantify endotoxin-producing Gram-negative
bacteria.”
Consolidated Financial Performance for the Quarter Ended June 30, 2020
Net revenue for the quarter ended June 30, 2020 was $1.6 million, compared with $2.3 million in 2019, a decrease of 32%.
Net
loss for the quarter ended June 30, 2020 was $1.7 million, compared
with a net loss of $0.9 million in 2019 an increase of 76%.
Adjusted EBITDA for the quarter ended June 30, 2020 was ($1.4 million), compared with ($0.5 million) in 2019.
Cost
of goods sold for the quarter ended June 30, 2020 was $0.7 million,
compared with $0.9 million in 2019, a decrease of 28%. Gross margins for
the quarter ended June 30, 2020 were 57%, compared with 59% in 2019.
Management expects future gross margins to continue in the range of 55%
to 60%.
Research and development expenses for
the quarter ended June 30, 2020 were $0.84 million, compared with $0.80
million in 2019, an increase of 5%.
Depreciation
and amortization expenses for the quarter ended June 30, 2020 were
approximately $47,000, compared with approximately $48,000 in 2019, a
decrease of 2%.
Selling, general and
administrative expenses for the quarter ended June 30, 2020 were $1.6
million, compared with $1.4 million in 2019, an increase of 15%.
As of June 30, 2020, Nephros had cash and cash equivalents of $7.0 million.
Adjusted EBITDA Definition and Reconciliation to GAAP Financial Measures
Adjusted
EBITDA is calculated by taking net (loss) income 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 and amortization and non-cash compensation. The
following table presents a reconciliation of Adjusted EBITDA to net
(loss) income, the most directly comparable GAAP financial measure, for
the second quarter of the 2020 and 2019 fiscal years for both Nephros
(on a consolidated basis) and the Water Filtration Business Segment:
| 3 Months Ended Jun 30, |
Water Filtration Business Segment | 2020 | 2019 |
| | |
Net loss | (911) | (408) |
| | |
Adjustments: | | |
Depreciation of property and equipment | 6 | 8 |
Amortization of other assets | 45 | 44 |
Interest expense | 30 | 46 |
Noncash interest expense | - | - |
Interest income | (4) | - |
Change in fair value of contingent consideration | - | (9) |
Noncash compensation | 166 | 150 |
Other noncash items | 12 | 31 |
Nonrecurring: Biocon & Pathogen Detection | - | 150 |
Adjusted EBITDA | (656) | 12 |
| 3 Months Ended Jun 30, |
Consolidated Results | 2020 | 2019 |
| | |
Net loss | (1,657) | (942) |
| | |
Adjustments: | | |
Depreciation of property and equipment | 6 | 8 |
Amortization of other assets | 45 | 44 |
Interest expense | 30 | 46 |
Noncash interest expense | - | - |
Interest Income | (4) | - |
Change in fair value of contingent consideration | - | (9) |
Noncash compensation | 179 | 150 |
Other noncash items | 12 | 31 |
Nonrecurring: Biocon & Pathogen Detection | - | 150 |
Adjusted EBITDA | (1,389) | (522) |
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) income, the most directly comparable GAAP financial measure.
Nephros urges investors to review the reconciliation of Adjusted EBITDA
to net (loss) income and not to rely on any single financial measure to
evaluate the business.
Conference Call Today at 4:30 p.m. ET
Nephros
will host a conference call today at 4:30 PM Eastern Time, 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 August 12, 2020
at 1-877-344-7529or 1-412-317-0088for international callers and entering
replay access code: 10144283. 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
is a commercial-stagecompany that develops and markets high-performance
water purification products and pathogen detection systems for medical
and commercial markets.
Nephros ultrafilters
are used in hospitals, medical clinics, and commercial facilities to
retain bacteria and viruses from water, providing barriers that aid in
infection control for showers, sinks, and ice machines. Nephros
ultrafilters are also used in dialysis centers to aid in the removal of
endotoxins and other biological contaminants from water and bicarbonate
concentrate in hemodialysis machines.
Nephros pathogen detection systems, including thePluraPathand SequaPathsystems,
provide near-real time information on bacterial genera, waterborne
bacteria, and viruses to medical and water safety professionals. These
products integrate Nephros ultrafilters with DNA sequencing and
quantitative polymerase chain reaction (qPCR) technology.
Nephros
commercial filters, including AETHER™ brand filters, improve the taste
and odor of water, and reduce scale build-up in downstream equipment.
Nephros and AETHER products are used in the health care, food service,
hospitality, and convenience store markets.
For more information about Nephros, please visit its website at www.nephros.com.