Nephros, Inc.

Good day, and welcome to the NEFOS Inc. Fourth Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. For today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Kieran Please go ahead.

Good afternoon, everyone. Thank you all for participating in NEFROS's fourth quarter and fiscal year 2024 conference call. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of NEFROS. I encourage you to review NEFROS's filings with the Securities and Exchange Commission, including without limitation the company's forms 10-K and 10-Q, identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Factors that may affect the company's results include but are not limited to Nefros' ability to successfully, timely, and cost-effectively market and sell its product service offerings, the rate of adoption of its products and services by hospitals and other healthcare providers, the success of its commercialization efforts, and the effect of existing and new regulatory requirements on NEPHRO's business and other economic and competitive factors. The content of this conference call contains time-sensitive information that is accurate only as of the date of the call, today, March 6, 2025. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call, except as required by law. I would now like to turn the call over to Nefros' President and Chief Executive Officer, Robert Banks. Robert, please go ahead. Thank you, Karen, and good afternoon, everyone. I am very pleased to welcome you to the call. Today, we reported the fourth quarter and full year results for 2024. Nefros finished Q4 24 on a high note, demonstrating solid growth in our core business and achieving key strategic milestones. While our annual revenue results were approximately flat compared to 2023, we showed consistent growth throughout the year, especially as our core programmatic revenue steadily increased. NETFLIX demonstrated the ability to adapt, innovate, and expand, putting it on a trajectory toward even greater success. One of the biggest challenges we faced in 2024 was a significant decline in our emergency response business in the first half of the year. Historically, emergency response sales have comprised a notable portion of our total revenue. In Q1 and Q2, those contributions dropped to single digits. However, we successfully navigated this headwind in the second half of 2024, culminating in a 19% year-over-year growth in total sales during the fourth quarter. Beyond stabilizing our revenue stream, Netflix has taken important steps in expanding our product lineup and diversifying our market reach. One of our most notable developments has been the launch of our 20-inch HydroCard UltraFilter, designed to support higher-volume water applications. This product opens new opportunities for us in steel processing, laboratories, and manufacturing, areas where stringent water quality regulations demand the highest level of filtration. The release of ANSI AAMI ST-108 standard in late 2023 has further reinforced our competitive advantage. This standard outlines strict guidance for water quality in cell processing, and we believe the HydroGard Ultra Filter is uniquely positioned to meet and exceed those requirements. Its intriguing ability to remove essential as a solution for hospitals and healthcare facilities that prioritize compliance and patient safety. Even with the revenue hurdles we faced earlier in the year, we achieved profitability for the first time in Q3, a major milestone that underscores our commitment to operational excellence and financial discipline. We added nearly 600 new customer sites, which contributed almost 2 million in sales and accounted for more than 13% of our annual revenue. These accounts provide a solid foundation for growth in 2025 and beyond. Moving ahead, we remain committed to expanding into new markets, leveraging regulatory challenges, and strengthening our financial performance. The foundation we built in 2024 has set us up for a transformational 25 and beyond. I'm incredibly proud of our team's dedication and resilience. I thank the entire Nethrose team for their hard work and commitment. Now, let me turn it over to our CFO, Judy Crandall, to go over the financials. Judy?

Thanks, Robert. I will now provide a closer look at Nethrose's financial performance in the fourth quarter and full year of 2024. We reported fourth quarter net revenue of $3.9 million, a 19% increase over the corresponding period in 2023, reflecting strong growth in our programmatic business, offset by a decline in our emergency response business. For the full year of 2024, net revenue remained steady at $14.2 million, reflecting 9% growth in our programmatic business, offset by a decline in our emergency response business. Active customer sites continue to grow, and we're just over 1,500 as of December 31, 2024, as compared to just under 1,300 as of December 31, 2023. Close margins in the quarter also increased to 64%, compared with 62% in the fourth quarter of 2023, an improvement of two percentage points. For the full year 24, gross margins increased to 62% versus 59% for 2023, a three percentage point improvement from the prior year. The improvement in gross margins in 2024 relates primarily to more favorable terms with our largest supplier. Research and development expenses in the quarter were $252,000 compared to $208,000 for the same quarter in 2023. For the full year 2024, research and development expenses were $906,000 versus $873,000 in the prior year. R&D expenses were higher in 2024 due to an increase in headcount. Sales general and administrative expenses in the quarter were $1.9 million compared to $2.4 million for the corresponding period in 2023, a decrease of 22% due to a decline in bonuses, commissions, and stock compensation expense. For the full year of 24, SG&A expenses were $7.7 million versus $8.9 million in the prior year. The decrease was primarily due to a decrease in bonuses, commissions, and professional fees. We are pleased to report positive net income for the quarter of $349,000, compared to a net loss of $654,000 in the same period last year. For the full year 2024, we had net income of $74,000 versus a net loss of $1.6 million for 2023. Adjusted EBITDA in the quarter was positive $466,000 compared to a loss of $51,000 during the same period in the prior year. For the full year 2024, adjusted EBITDA was positive $533,000 versus a loss of $76,000 in 2023. Net cash provided by operating activities was $1.3 million in the fourth quarter of 24 versus net cash used of $200,000 in the prior year period, an improvement of $1.5 million. Net cash provided in the fourth quarter of 2024 reflects primarily a positive net income a decrease in inventory, an increase in accounts payable, and accrued expenses. Net cash used in the fourth quarter of 2023 reflects primarily an increase in inventory. Net cash used in operations for the full year 2024 was $492,000 versus net cash provided by operations of $827,000 for the full year 2023. a decrease of $1.3 million. Net cash used in 2024 reflects primarily an increase in inventory and accounts receivable and a decrease in accounts payable and accrued expenses. Net cash provided by operations in 2023 was primarily due to a decline in inventory and an increase in accrued expenses. Our cash balance on December 31, 2024 was $3.8 million, compared to $2.5 million as of September 30, 2024, and $4.3 million as of December 31, 2023. NEFROS continues to be debt-free. Please refer to today's press release for more details about the calculation of adjusted EBITDA and its reconciliation to GAAP net income or loss. Additional information about our results can be found in our filing on Form 10-K, which we will file soon. I will now turn the call back to Robert for some closing remarks. Robert, please go ahead.