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 – 
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) | ||
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