NEPHROS INC Q3 FY2023 earnings call

• Strengthened distribution channels and cultivated deeper relationships with partners, leading to increased sales within existing sites and larger sales per transaction.
• Focused on converting emergency response customers to ongoing programmatic relations to create recurring long-term business.
• Maintained inventory resiliency, a key differentiator in the infection control space, ensuring product availability when customers need them.
• Impact of ASHRAE 514 standard positively affecting demand for products.
• Active customer sites (ACS) increased 7% over the same period last year and 3% quarter-over-quarter in the third quarter.

In the third quarter, Nephros reported net revenue of $3.7 million, a 55% increase over the corresponding period in 2022. Year-to-date revenues for the first nine months of 2023 were up 48%. Net loss from continuing operations for the quarter was $0.2 million compared to $1.3 million in the same period last year. Adjusted EBITDA in the quarter was positive $11,000 compared with negative $0.3 million during the same period in 2022. Gross margins in the quarter were 59% compared with 32% in 2022. Net cash provided by operating activities was $548,000 in the quarter and $1.1 million for the nine months ended September 30, 2023. The cash balance on September 30, 2023 increased to $4.6 million and the company remains debt-free.

• Remain laser focused on financial growth and offering compelling value proposition for infection control and dialysis customers.
• Confident in continuing to gain market share due to inventory resiliency and high-quality solutions with unmatched customer service.
• Expect growth trends from ASHRAE 514 standard to continue into the future.

• Supply chain shortages are common in the infection control space, though Nephros has insulated itself with inventory resiliency to address potential challenges.

Q: Refresh on inventory resilience, supply constraints in infection control, and relationship with Donastar.

A: Andy Astor explained that Nephros keeps excess inventory on purpose to meet emergency demand as supply chain takes half a year from order to receipt. Robert Banks mentioned not focusing on competitors' supply issues and provided an update on the Donastar relationship, noting they are working to mature the commercial side and expecting continued growth into 2024