RIVER EDGE, N.J., March 22, 2012 /PRNewswire/ -- Nephros, Inc. (OTC Bulletin Board: NEPH), a medical device company developing and marketing filtration products for therapeutic applications, infection control, and water purification, announced today financial results for the three months and full year ended December 31, 2011.
- Completed $3.2 million financing
- Increased ultrafiltration product revenues to approximately $618,000, an increase of 24% from prior year period
- Signed licensing agreement with Bellco S.r.l. for mid-dilution dialysis product and received initial euro 500,000 payment
- Received FDA 510k clearance to market additional ultrafiltration products in U.S.
- Received clearance to market ultrafiltration products in Canada
- Filed new 510k application for our hemodiafiltration system
- Engaged Joseph Cervia, M.D. as strategic consultant
- Engaged DHR international to recruit permanent CEO
"2011 was a pivotal year for Nephros in which we were active in monetizing value for shareholders and solidifying a platform for commercial momentum of our ultrafiltration products while continuing our efforts to obtain marketing clearance for our hemodiafiltration system in the U.S.," said Dr. Paul Mieyal, acting CEO of Nephros. "The licensing transaction with Bellco has provided near-term funding to support the commercialization of our ultrafiltration products, and we are excited to leverage the talents and experience of Shane Sullivan and Joseph Cervia toward an expanding sales and marketing effort that we expect to yield tangible revenue results."
Financial Performance for the Year Ended December 31, 2011
Revenues for the twelve months ended December 31, 2011 were approximately $2,214,000 compared to approximately $2,938,000 in the corresponding period of 2010, a decrease of approximately 25%. Revenues from sales of our MD filters in our Target European Market were reduced by approximately $749,000 due to no unit sales during the second half of 2011 as a result of the licensing agreement with Bellco. Licensing revenue of $365,000 was realized in 2011 which partially offset the reduced MD product revenue. Sales of DSU products increased by approximately $117,000, or 24%, to $618,000 compared to the corresponding period of 2010. The fixed licensing fees earned under the agreement are being amortized as revenue over the three and one-half years ending December 31, 2014. The Company's net loss was approximately $2,360,000 or $0.27 per basic and diluted loss per common share for the twelve months ended December 31, 2011 compared with approximately $1,933,000 or $0.93 per basic and diluted loss per common share for the corresponding period of 2010. Loss from operations for the twelve months ended December 31, 2011 was approximately $2,310,000 compared to approximately $1,889,000 in the corresponding period of 2010. The $421,000 increase in operating loss resulted from a decrease of approximately $254,000 in gross profit due to decreased revenue and a $200,000 provision for inventory charged to cost of goods sold. The $200,000 provision for inventory is a non-recurring, non-cash expense reflected in cost of goods sold which reduced the 2011 gross profit. The increase in operating loss was further impacted by: an increase in research and development expenses of approximately $89,000; an increase in selling, general and administrative expenses of approximately $116,000; all of which was partially offset by a reduction in depreciation expense of approximately $38,000.
As of December 31, 2011, Nephros had cash and cash equivalents of approximately $1,669,000. As previously announced, Nephros received a cash payment of euro 750,000 from Bellco S.r.l. on January 16, 2012 under the licensing agreement which became effective July 1, 2011.
Financial Performance for the Fourth Quarter Ended December 31, 2011
For the quarter ended December 31, 2011, Nephros recognized net product revenues of approximately $489,000 compared with approximately $517,000 in the corresponding period of 2010, a decrease of $28,000 or 5%. The $28,000 decrease in net product revenues is primarily due to a decrease from sales of our MD filters in our Target European Market of approximately $271,000 in the three months ended December 31, 2011 compared to the same period in 2010 however, this decrease was partially offset by additional licensing revenue of $178,000 and approximately $17,000 of increased billings related to our contract with the Office of Naval Research and increased revenue of approximately $81,000 in sales of our DSU products for the three months ended December 31, 2011. The license agreement with Bellco began in July 2011 and provides for a fixed amount of revenue through December 2014.
Operating expenses for the three months ended December 31, 2011 were approximately $798,000 compared with approximately $751,000 in the corresponding period of 2010.