Nuwellis, Inc.

Good day and thank you for standing by. Welcome to the New List, Inc. 3rd Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Matt Bexel. You may begin.

Thank you, operator. Thank you for joining today's conference call to discuss New Ellis' corporate developments and financial results for the third quarter ended September 30th, 2021. In addition to myself, with us today are Nestor Jaramillo, the company's CEO, and George Montague, the company's CFO. At 8 a.m. Eastern today, New Ellis released financial results for the quarter ended September 30th, 2021. If you have not received New Ellis' earnings release, please visit the investors page on the company's website. During this conference call, the company will be making forward-looking statements except for historical information mentioned during this conference call. Statements made by the management of New Ellis are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that are based on management's beliefs, assumptions, expectations, and information currently available to management. Those risks include but are not limited to risks associated with the possibility that the company may not grow revenue in future quarters, that the company may not be able to commercialize its products successfully, the possibility that it may be unable to raise the funds necessary for the company's anticipated operations, and the other risk factors described under the caption risk factors and elsewhere in the company's filings with the Securities Exchange Commission. The company believes that these forward-looking statements are reasonable as and when made, However, you should not place under reliance on forward-looking statements because they speak only as of the date when made. By providing this information, the company undertakes no obligation to update or revise any projections or forward-looking statements, whether because of new information, new developments, or other circumstances that might subsequently arise. You should review the cautionary statements and discussions of risk factors included in the company's press release issued today, the company's latest 10-K subsequent reports, as well as It's other filings with the Securities and Exchange Commission under the titles Risk Factors or Cautionary Statements Related to Forward-Looking Statements. For additional discussion of risk factors that could cause actual results to differ materially from management's current expectations, those discussions regarding risk factors as well as discussion of forward-looking statements in such sections are incorporated by reference in this call and are readily available to the company's website. With that, I would like to turn the call over to Nestor Jaramillo, New Orleans' CEO.

Thank you, Matt, and good morning, everyone. Welcome to New Orleans' third quarter 2021 earnings call. Following an extremely strong second quarter where we reported record revenue and a strong momentum across all three business segments, third quarter financial results proved challenging, primarily due to the surge of COVID-19 Delta variant hospitalizations impacting elective procedures. In the third quarter of 2021, we generated $1.9 million in total revenue, representing a decline of 3% compared to prior year period. Third quarter sales were negatively impacted on three fronts associated with the Delta variant. First, COVID prompted some hospitals to limit public access, either to decrease the risk of COVID transmission, or focused efforts on treating critically ill patients. This restricted our ability to meet with some customers. Second, due to reduced medical staff, some hospitals had to ration care and prioritize treatment of COVID patients, prompting the cancellation of elective procedures, including cardiac surgeries, which had a negative impact in our critical care segment. Moreover, some of the largest accounts are based in regions of the country most affected by the Delta variant, so we have felt the impact more than others, although other medical device companies have also reported the adverse impact of COVID on the third quarter performance. And thirdly, treatment protocols to treat critically ill COVID patients have evolved over the last year. Specifically, Fewer COVID patients are now being treated with fluid resuscitation as other treatment options, such as Remdesivir, rapidly improved patient symptoms. Despite the setback experience in the third quarter, on a year-to-date basis, we generated $6.3 million in total revenue, representing growth of 16% compared to the prior year period and 52% relatively to 2019. We believe our growth relative to 2019 pre-pandemic levels is a better representation of the soundness of our strategy as we have expanded and diversified meaningfully in pediatric and critical care markets. Similar to previous cycles where COVID cases dropped following spikes in geographic hotspots, we believe we will be able to execute our operating plan and accelerate revenue growth in our key markets when the healthcare environment begins to normalize, similar to what we achieved in the second quarter. Another matter affecting our business is that over time, revenue has become more concentrated as utilization rates at our largest accounts have grown faster than those across our broader customer base. We believe this illustrates the potential for the Aquadex therapy especially because these top accounts include most of the prestigious hospitals in the country. We have begun working to capitalize on this opportunity by increasing utilization at other accounts and ensuring that all active accounts continue to use and benefit from our therapy, ultimately leading to a larger customer base. Now, to demonstrate the strength of our business fundamentals, I will provide further details on each business segment, starting with the critical care. Critical care was once again our strongest and most durable business segment in the third quarter, with revenue more than doubling compared to the period last year. While revenue declined modestly on a sequential basis, we continue to see strong utilization from key accounts that rely heavily on the Aquadex system to treat non-COVID critically ill patients. Moving to our pediatric business, on a sequential basis, revenue declined materially compared to the second quarter of 2021 due to lower patient volumes in certain accounts Our belief that this is transitory is supported by the fact that we opened three new pediatric accounts during the third quarter, the most we have opened during any quarter in 2021. Moreover, we are encouraged that the pediatric accounts more affected during the third quarter has already bought consumables in the fourth quarter, suggesting perhaps an increase in patient census. We also continue to make progress on other pediatric initiatives, most notably the development of a pediatric dedicated device for infants and neonates under 20 kilograms. You will recall that our product development partner, Coronis Biomedical Technologies Corporation, was recently awarded a $1.7 million grant during the third quarter from the National Institute of Health to support this important development program. Turning now to our heart failure business, you may also recall that sales of the heart failure market declined sequentially from the fourth quarter of 2020 to the first quarter of this year due to COVID's impact on heart failure patients' behavior, overall procedure volumes, and our limited access to hospitals. That trend reversed in the second quarter due to more normalized patient behavior and increased access to hospitals as COVID infection rates declined. During the second quarter, users of the Aquadex system released additional clinical evidence demonstrating the therapeutic benefit of Aquadex therapy. However, Q3, the Delta variant caused a spike in COVID cases. prompting a sequential sales decline compared to Q2 of 2021. It should be noted that on the year-to-year basis, this quarter's heart failure sales remain higher than those in the third quarter of 2020. This concludes my business segments update, and looking forward, Although we were disappointed with the third quarter sales performance, we remain optimistic regarding the long-term potential of the Aquadex therapy. We believe that sales in 2022 will be impacted positively by the following three future growth catalysts. First, the Category 3 CPT code for the use of therapeutic ultrafiltration, which will become effective on January 1, 2022. This CPT code allows for reimbursement of ultrafiltration in an outpatient setting and payment for physicians. The category three does not impact the current payment to the hospitals for ultrafiltration when performed in an inpatient setting. The second catalyst, our national purchase agreement with Premier Incorporated, one of the nation's largest group purchasing organizations, which should improve access to affiliated hospitals. Specifically, New Welles and Premier partnered to create a new aquapheresis category, which allows Premier members to purchase the Aquadex SmartFlow consoles at a pre-negotiated price. Aquadex is the first and only therapy currently available in the newly established aquapheresis product category. and we are actively working with Premier affiliates to show how their own data demonstrates the improved therapeutic benefit and economic value provided by our therapy. Lastly, relating to our strategy of making ultrafiltration a viable therapy for outpatient care, during September, we received the CE mark certification for our 24-hour blood circuit set. This new device will help New Wellness expand access to ultrafiltration among patients who need less than 24 hours of Aquadex therapy. For the past two years, we have watched hospitals around the world experience tremendous capacity pressures, which has further emphasized the important role that the ambulatory setting can play a significant role in heart failure patient care. reducing healthcare costs, and improving patients' quality of life. We remain very excited about this opportunity as the ambulatory care setting is one of the fastest-growing segments in the healthcare industry, and we believe this unique offering positions us very well for the future. When you put it all together, the reassurance of COVID during the third quarter negatively affected sales performance, but it did not prevent us from executing on our growth strategy and serving our customers. I applaud our employees for their continued resilience in doing so through the pandemic. We expect once the healthcare environment begins to normalize, our strategy will yield a resumption of positive revenue growth as demonstrated from late 2019 through second quarter of 2021. Moving forward, we will continue to execute on our growth strategies by building additional supporting clinical evidence, establishing a firm foundation for appropriate reimbursement, expand commercial relationships, and launch differentiated products to ultimately drive sustainable growth. Now, I would like to turn the call over to George to discuss the financial statements.