Nephros(NEPH) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2024, net revenue was $3.25 million, down 8% compared to Q2 2023, primarily due to low contributions from emergency response revenue [9][10] - Gross margin remained strong at 59%, flat year-over-year, but decreased from 62% in Q1 2024 due to increased shipping expenses and reserves for slow-moving products [10] - Net loss improved by 33% to$ 289,000 in Q2 2024 from a loss of $433,000 in Q2 2023, attributed to reduced SG&A expenses [10][11] - For the first half of 2024, net loss decreased 38% to$ 458,000 from $739,000 in the prior year [11] Business Line Data and Key Metrics Changes - Non-emergency response business increased by 8% year-over-year in Q2 2024, while emergency response business saw a 92% decline [6][9] - Excluding emergency response revenue, sales increased by 10% in the first half of 2024 [10] Market Data and Key Metrics Changes - The company achieved the highest number of active customer sites ever, with a 15% increase over the previous year, totaling 1,384 active accounts by the end of Q2 2024 [6][19] Company Strategy and Development Direction - The company is focusing on long-term growth initiatives, including the expansion of digital tools like the filter tracking app to enhance customer engagement [7][8] - Nephros is strategically positioning itself to capitalize on growth opportunities in sectors beyond hospitals, such as dental practices and endoscopy processing [8] Management's Comments on Operating Environment and Future Outlook - Management noted a decline in emergency response business due to reduced stringency in waterborne risk response, but anticipates potential recovery with upcoming regulatory changes [7][15] - The company remains committed to innovation and customer engagement while focusing on profitability and return on investment [12] Other Important Information - The balance sheet remains strong with a cash balance of approximately$ 3.1 million as of June 30, 2024, despite a decrease from $4.3 million at the end of 2023 [11] Q&A Session Summary Question: Can you elaborate on the reduced stringency for waterborne risk response? - Management identified that the Ohio Department of Health reduced testing due to system overload, which may lead to a return to higher emergency responses with upcoming regulatory changes [14][15] Question: Update on the filter tracker rollout? - The rollout faced initial issues but recent updates have improved functionality. Management believes the tracker will help increase reorder rates for filters [17][18] Question: Total number of active accounts at the end of Q2? - The total number of active accounts as of the end of Q2 2024 was 1,384 [19]