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NEPH Nephros

Filed: 1 Mar 21, 4:20pm

 

Exhibit 99.1

 

 

Nephros Reports 2020 Fourth Quarter and Full Year Financial Results

 

Fourth Quarter Net Revenue $2.3 Million, Up 10% Sequentially Over Third Quarter
Full Year Revenue $8.6 million, Down 17% Against Prior Year

 

SOUTH ORANGE, NJ, March 1, 2021 – 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 full year ended December 31, 2020.

 

Financial Highlights

 

Fourth Quarter Ended December 31, 2020 – Water Filtration Business Segment

 

Net revenue was $2.3 million, compared with $3.2 million in 2019, down 26%
Net loss was ($298,000), compared with net income of $234,000 in 2019
Adjusted EBITDA was ($11,000), compared with $747,000 in 2019

 

Fourth Quarter Ended December 31, 2020 – Consolidated

 

Net revenue was $2.3 million, compared with $3.2 million in 2019, down 26%
Net loss was ($759,000), compared with ($144,000) million in 2019
Adjusted EBITDA was ($466,000), compared with $374,000 in 2019

 

Year-End 2020 – Water Filtration Business Segment

 

Net revenue was $8.5 million, compared with $10.3 million in 2019, down 17%
Net loss was ($2.2 million), compared with ($1.1 million) in 2019
Adjusted EBITDA was ($1.4 million), compared with $464,000 in 2019

 

Year-end 2020 – Consolidated

 

Net revenue was $8.6 million, compared with $10.3 million in 2019, down 17%
Net loss was ($4.5 million), compared with ($3.2 million) in 2019
Adjusted EBITDA was ($3.6 million), compared with ($1.2 million) in 2019

 

“While 2020 was a challenging year overall, we were pleased to deliver consecutive quarter over quarter growth in the second half,” said Andy Astor, Chief Executive Officer of Nephros. “The two hardest hit segments of our business were new customer acquisitions and emergency response, offset by stable recurring revenue from our existing customer base, limiting our overall downturn for the year to 17%. As COVID-19 immunity increases over the coming weeks and months, we are optimistic that our business will return to pre-pandemic growth levels in the latter half of this year.”

 

 

   
 

 

 

Financial Performance for the Fourth Quarter and Year Ended December 31, 2020

 

Net revenue for the year ended December 31, 2020 was $8.6 million, compared with $10.3 million in 2019, a decrease of 17%. Net revenues for the fourth quarter of 2020 were $2.3 million, compared with $3.2 million in the fourth quarter of 2019, a decrease of 26%.

 

Cost of goods sold for the year ended December 31, 2020 was $3.6 million, compared with $4.3 million in 2019, a decrease of 14%. Cost of goods sold for the fourth quarter of 2020 was $1.0 million, compared with $1.3 million in the fourth quarter of 2019, a decrease of 18%.

 

Gross margins for the year ended December 31, 2020 were 57%, compared with 59% in 2019. Gross margins for the fourth quarter of 2020 were 56%, compared with 60% in the fourth quarter of 2019.

 

Research and development expenses for the year ended December 31, 2020 were $2.8 million, compared with $3.1 million in 2019, a decrease of 11%. Research and development expenses for the fourth quarter of 2020 were $0.6 million, compared with $0.8 million in the fourth quarter of 2019, a decrease of 20%.

 

Depreciation and amortization expenses for the year ended December 31, 2020 were approximately $192,000, compared with approximately $186,000 in 2019, an increase of 3%. Depreciation and amortization expenses for the fourth quarter of 2020 were approximately $50,000, compared with approximately $44,000 in the fourth quarter of 2019, an increase of 14%.

 

Selling, general and administrative expenses for the year ended December 31, 2020 were $6.5 million, compared with $6.1 million in 2019, an increase of 6%. Selling, general and administrative expenses in each of the fourth quarters of 2020 and 2019 were $1.4 million.

 

Net loss for the year ended December 31, 2020 was ($4.5 million), compared with a net loss of ($3.2 million) in 2019, a 42% increase in loss. Net loss for the fourth quarter of 2020 was approximately ($759,000), compared with a net loss of approximately ($144,000) in the fourth quarter of 2019, a 427% increase in loss.

 

Adjusted EBITDA for the year ended December 31, 2020 was ($3.6 million), compared with ($1.2 million) in 2019, a 193% increase in loss. Adjusted EBITDA for the fourth quarter of 2020 was approximately ($466,000), compared with approximately $374,000 in the fourth quarter of 2019.

 

As of December 31, 2020, Nephros had cash and cash equivalents of approximately $8.2 million.

 

 

   
 

 

 

Adjusted EBITDA Definition and Reconciliation to GAAP Financial Measures

 

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, 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, the most directly comparable GAAP financial measure, for the 2020 and 2019 fiscal years for both Nephros on a consolidated basis and the Water Filtration Business Segment:

 

2020 Three Month Period Ended  Annual 
Water Filtration Business Segment 03/31/20  06/30/20  09/30/20  12/31/20  Totals 
                
Net (loss) income  (620)  (911)  (394)  (298)  (2,223)
                     
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  190   166   160   200   716 
Other non-cash items  11   12   2   21   46 
Adjusted EBITDA  (369)  (656)  (347)  (11)  (1,383)

 

2019 Three Month Period Ended  Annual 
Water Filtration Business Segment 03/31/19  06/30/19  09/30/19  12/31/19  Totals 
                
Net loss  (778)  (346)  (167)  234   (1,057)
                     
Adjustments:                    
Depreciation of property and equipment  8   8   4   4   24 
Amortization of other assets  44   44   44   44   176 
Interest expense  46   46   48   55   195 
Change in FV of contingent consideration  (10)  (9)  (94)  (43)  (156)
Income tax benefit  -   -   -   (225)  (225)
Noncash compensation  158   150   348   665   1,321 
Other noncash items  35   31   29   13   108 
Nonrecurring: Aether Acquisition  78   -   -   -   78 
                     
Adjusted EBITDA  (419)  (76)  212   747   464 

 

 

   
 

 

 

2020 Three Month Period Ended  Annual 
Consolidated 03/31/20  06/30/20  09/30/20  12/31/20  Totals 
                
Net (loss) income  (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)

 

2019 Three Month Period Ended  Annual 
Consolidated 03/31/19  06/30/19  09/30/19  12/31/19  Totals 
                
Net loss  (1,349)  (942)  (744)  (144)  (3,179)
                     
Adjustments:                    
Depreciation of property and equipment  8   8   4   4   24 
Amortization of other assets  44   44   44   44   176 
Interest expense  46   46   48   55   195 
Change in FV of contingent consideration  (10)  (9)  (94)  (43)  (156)
Income tax benefit  -   -   -   (225)  (225)
Noncash compensation  158   150   354   670   1,332 
Other noncash items  35   31   29   13   108 
Nonrecurring: Aether Acquisition & Pathogen Detection  188   150   150   -   488 
                     
Adjusted EBITDA  (880)  (522)  (209)  374   (1,237)

 

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 financial measure. 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 4:30 PM 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 8, 2021 at 1-877-344-7529 or 1-412-317-0088 for international callers and entering replay access code: 10151848. 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 leading water technology company in medical and commercial water purification and pathogen detection, headquartered in the USA. Our diverse team of passionate employees are dedicated to advancing point-of-use water safety through education, product solutions, and emergency outbreak response 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 expected future growth and the timing of such growth and other statements that are not historical facts, including statements which 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, including our Annual Report on Form 10-K for the year ended December 31, 2020. 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) 863-6519

ksmith@pcgadvisory.com

www.pcgadvisory.com

 

Andy Astor, CEO

Nephros, Inc.

(201) 345-0824

andy@nephros.com

www.nephros.com

 

 

   
 

 

 

 

NEPHROS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

 

  December 31, 2020  December 31, 2019 
ASSETS        
Current assets:        
Cash and cash equivalents $8,249  $4,166 
Accounts receivable, net  1,364   1,045 
Inventory, net  5,304   2,562 
Prepaid expenses and other current assets  237   526 
Total current assets  15,154   8,299 
Property and equipment, net  295   81 
Lease right-of-use assets  1,037   1,106 
Intangible assets, net  506   548 
Goodwill  759   759 
License and supply agreement, net  670   804 
Other assets  89   32 
TOTAL ASSETS $18,510  $11,629 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Secured revolving credit facility $-  $560 
Current portion of secured note payable  229   211 
Accounts payable  423   959 
Accrued expenses  341   136 
Current portion of contingent consideration  -   300 
Current portion of lease liabilities  332   262 
Total current liabilities  1,325   2,428 
Secured note payable, net of current portion  364   613 
PPP loan  482   - 
Equipment financing, net of current portion  7   10 
Lease liabilities, net of current portion  759   889 
TOTAL LIABILITIES  2,937   3,940 
         
COMMITMENTS AND CONTINGENCIES (Note 19)        
         
STOCKHOLDERS’ EQUITY:        
         
Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2020 and 2019; no shares issued and outstanding at December 31, 2020 and 2019  -   - 
Common stock, $.001 par value; 40,000,000 shares authorized at December 31, 2020 and 2019; 9,873,006 and 8,058,850 shares issued and outstanding at December 31, 2020 and 2019, respectively  10   8 
Additional paid-in capital  144,296   131,934 
Accumulated other comprehensive income  74   65 
Accumulated deficit  (131,858)  (127,332)
Subtotal  12,522   4,675 
Noncontrolling interest  3,051   3,014 
TOTAL STOCKHOLDERS’ EQUITY  15,573   7,689 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $18,510  $11,629 

 

 

   
 

 

 

NEPHROS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

 

  Years Ended December 31, 
  2020  2019 
Net revenue:        
Product revenues $8,453  $10,182 
Royalty and other revenues  108   152 
Total net revenues  8,561   10,334 
         
Cost of goods sold  3,648   4,250 
Gross margin  4,913   6,084 
Operating expenses:        
Research and development  2,759   3,090 
Depreciation and amortization  192   186 
Selling, general and administrative  6,466   6,119 
Change in fair value of contingent consideration  (229)  (156)
Total operating expenses  9,188   9,239 
Loss from operations  (4,275)  (3,155)
Other income (expense):        
Interest expense  (110)  (195)
Interest income  11   - 
Other expense, net  (152)  (54)
Loss before income taxes  (4,526)  (3,404)
Income tax benefit  -   225 
Net loss  (4,526)  (3,179)
Less: Undeclared deemed dividend attributable to noncontrolling interest  (240)  (241)
Net loss attributable to Nephros, Inc. shareholders $(4,766) $(3,420)
         
Net loss per common share, basic and diluted $(0.52) $(0.45)
Weighted average common shares outstanding, basic and diluted  9,078,549   7,542,299 
         
Comprehensive loss:        
Net loss $(4,526) $(3,179)
Other comprehensive gain (loss), foreign currency translation adjustments, net of tax  9   (6)
Comprehensive loss  (4,517)  (3,185)
Comprehensive loss attributable to noncontrolling interest  (240)  (241)
Comprehensive loss attributable to Nephros, Inc. shareholders $(4,757) $(3,426)