NEPH - Earnings call transcript Q4 2020

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Operator

Good afternoon. And welcome to the Nephros Incorporated Fourth Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. to conference like Smith, to now Relations. Investor would turn over the Kirin I ahead. go Please

Kirin Smith

call. everyone. afternoon, Thank in XXXX for Advisory. Kirin you participating conference year full Good Nephros’ is all This Smith with PCG

events Andy, the X, ahead. to March without made conference to Exchange like no Astor, Before we required and factors factors. products undertakes begin, operations of the this success the differ call this forward-looking which turn develop, company conference information its seek, that Nephros’ call, law. the timely, and as would hospitals obligation economic or call may limitation, The other date live go may and include, you cause CEO. its or by actual events like regulatory and contain with Factors and products of to, effect is Andy obtain would statements. regulatory reflect and services Commission, statements not that from by XXXX. circumstances competitive future by of only contains its update except will over Securities and now results affect regarding providers, existing new requirements, adoption Nephros. in Nephros’ revise the any the accurate today, efforts, and successfully, date business filings during after I to XX-K for or its healthcare its to on that The described commercialization please are of cost call, company’s of and to I of content management encourage Forms of the commercialize of to call results time-sensitive to to other conference statements service but and and those this rate specific caution as identify effectively the I that clearance including comments and the the the results materially the company’s offerings, of review forward-looking limited XX-Q, ability

Andy Astor

spend business Good minutes performance. afternoon our the at my to times, essential workers then Kirin. with our citizens our company's few who safe. country these a turn everyone. gratitude reviewing as our in to Thank like calls first, pandemic and of you, moving all But I'll express all of fellow I'd earnings my attention to financial to continue operations keep the

we a extend and point, employees service to you like of As all services are and where and business takes excellent into care also into and you thank to healthcare us continuing patients through XXXX. our Nephros’ I provide to would these XXXX to incredibly and that sincere to our and distributors an aware, And partners support difficult provide our health for keep workers products facilities, safe.

COVID-XX while three core pandemic will I growth, had segment, challenging averaging manifested the down losses results. our XXXX. primarily and water to revenue our onto net of XX%, the year Now, filtration driven sales candidly, business XXXX cash the water filtration increased. revenue XXXX, business burn was and After compared in XXXX a with consecutive in XX% begin were The ways. by quarters downturn and it itself Nephros XX in water

in of driven pattern, pathogens and which First this water disease. the a our been the business. industry-wide reduction an of by filtration outbreaks reduction being institutions primarily healthcare on have was response solutions COVID-XX to year. in business was This respond appears emergency business, to during we associated focused with The

by business the our consistently this Nephros markets are Accordingly, the of due and the I overall our Furthermore, past revenue hit. in prior were a for downturn QX existing reduction recurring in promising to from XXXX, revenue Water was hotel offset to the the new turned target the strongly one. significantly markets downturn to downturn the quarter our the and segment before were as was contributing -- the the maintaining to solution. the industries, contributor reduction of Filtration in is major And limiting access restricted and the restaurant however, pandemic, facilities very looking XXX%, from XXXX business did trends, accessibility stable final and believe grew I’m filtration customers the From our in customer sorry, segment year. and largely years base, trend COVID-XX. so second commercial pandemic The revenue XXXX, quarter-after-quarter-after-quarter. These profitable which levels negative as third new course core the to --

can pandemic do recedes previous and so core of we coming quarters, growth profitably. benefits high the few the As return over commercial in levels and business a to reap most opportunity, to four we And both invest continue years, segment marketing. the to the believe and in our will this sales this medical of significantly

expertise Program. and water development, and market including customer business joined services commercial, of roles of the markets. in plumbing, recently at quality brings Business. as after expert responsibility, Water marketing, He These focused and than of is leader and and of a Sigma Product demand. experience filtration for new awareness President generate products serving top Black and our solutions in brief of a Officer Technologies, be organization, Lean more certified of Six Marketing increasing for of service. Lobo, industry his Business and and School of years holds Bachelor will drive some Development to a introduce and for College Wes graduate Belt in Wes industrial Vice strategy, sales, general moment a and will of in heating Watts Marketing a One New the residential, Xylem Duke our to in Wes -- Executive Development priorities Engineering Chief Chemical our Lafayette I'll commercial Administration from primary area be introductory a Nephros comments. Master from Fuqua University Wes and Wes Science mid-February, XX a water

let pause Wes? and moment, to himself. now for Wes a would introduce I So like

Wes Lobo

It community. myself investor you, for and moment to is pleasure Thank Andy. be the a to you to me thank a here allowing introduce

Andy like kicked they would we now we our to not do off day-out. doing, year, and to in world bell I a a our done, nation’s debt future. and support and hopefully to continue how living have owe seen pandemic of will for to call. essential everyday continue Amazingly, normalcy look stricken and and workers, year, been forward distant day-in them are post-pandemic. heroes; our too First, a Over answer gratitude we've the what to return for over this past echo, this have continued We

water educate, I Andy had attributes the two, I've Nephros the quarters, of for on through for The passionate be water At the with pathogen pandemic. When industry detection; topic facilities became or to safety, industry, is serve the this monitor for things has work about have by privilege the The common COVID-XX partner on and is pathogens. airborne leading be the and people easy pathogens team, with to positions company two to obligation within your accelerated more science you. safety raised for and my to helping Nephros a waterborne. good. years. tell and a it founded of awareness a and purification opportunity the I have community did Nephros? XX growth am is humbled to communities waterborne help these early people. we Nephros’s and Nephros’s joined I'm advancing diverse clear; technology consecutive and story, prior well to why the to and Thank one, management a with to Nephros, pandemic and over to the water treat purpose. XX mission the passionate for opportunity as does honored help Through and the demonstrated and combination company by sense incredible discussions the to So this company of is two unlock given potential that be importantly, growth team doing dedicated was team,

Andy Astor

have Filtration the I Thank thing Water Business more side. the you. regarding excited to Wes. you, segment, One mentioned medical We're

brand PDS segment on proved business due very the in COVID-XX in in space, remain we first our I'll large XXXX, Filtration to turn our food the our revenues recognizing has quite frankly in were opportunities previously segment. attention sales Detection On and new the topics healthcare first true new my the small. space. than slowness Fundamentally, pursue segment. with single-minded community. of year optimistic was to second process development while the to service challenging the within business within the And Pathogen due major taken focus XXXX year market products relationships and of was also filtration related as names we longer Commercial much to these side, Systems, about expected, this mentioned commercial contracts continue or business,

XXXX, While materials. significant start, products, including during X optimistic manufacturing installation a we're the We of this implementation business. off Biosafety new to Level a remain three building an papers and very we automated significant initial marketing and development of laboratory, the slow committed of infrastructure, scientific about system, an release of resources

potentially waterborne part of enabling to pathogen pathogens, onsite and management healthcare of facilities sorry, vital be With practices, coli measurement facilities PDFs expect such detection I'm a We leveraging necessary, many legionella. is mitigate from pseudomonas waterborne to view our filtration legionella aim E. monitoring and point and proactive as and of others. healthcare the of and water them – as conduct outbreaks to potential

the XXXX, clearance segment, our HDF, early the expect in our business subsidiary majority be an development As see major that completed second majority well or we within we rental update have we conversations for growth begun focus like have -- in process. specialty significant of we Nephros’s are report of marketing HDF the of a briefly with and and product, a to to Hemodiafiltration pleased filtration, the organization, the XXXX as products, segment, which as owned regarding XXX(k) the in which give on generation FDA markets the rest the water I'll owned team. revenue PDS will second reopen half is new

near versus few now in fourth $X.X expect FDA highlights to in I'll in clearance, a to our XXXX. we announce We part reported submission XX% future. XX% million, XXXX, half acceptance few of of initiate second net and receive in the the dialysis quarter to a financial a and clinics decrease work provide to very which we performance. fourth a over will expected and take XXXX. increase of revenues Once quarter expect of QX quarter timelines of our we Nephros soft-launch, formal the third full-year identify

XX% net $X.X full the decrement, revenues For a million when year, million, $XX.X to compared were XXXX. in

by net were pleased underlying customers existing rate from earlier, We our is from note to year-over-year, down our quarter XX%. believe of the I'm XXXX alluded about at retention important bolstered strong installed base an customer recurring revenues that demand of to levels. revenues remained our as this I While fourth that business, strength sign of

three filtration were I detection As by filtration, business the business reminder, products, in of water all and we just a distinct of revenues business net generated recognize filtration $X.X the of income water $X.X described segments, with course, pathogen that and compared Net water segment. was million, loss in XXXX. segment million the renal

filtration Please in positive and the earlier. quarter XXXX. reduced revenue negative refer to the loss $X.X income $X.X its million, $X.X compared of release the For year for Adjusted compared increased EBITDA breakeven, fourth net today's EBITDA a the details approximately for or segment XXXX. in million reconciliation due in was the the million with press the was segment same This about compared full XXXX. loss. of I net GAAP water water to positive million quarter adjusted calculation $X.X filtration to discussed for in full EBITDA year, to more in loss $X.X Adjusted was water showed million filtration the to primarily

renal loss operating net Additional consolidated segments $X.X pathogen today's detection a for with quarter information their results XX-K. about can water the filtration, in on and was found the XXXX. be filing and million, Form compared in products On business million $X.X basis,

was XXXX. Margin year negative $X.X fourth $X.X in in almost XXXX. Cost once in loss revenues the compared was associated EBITDA to And full XXXX. $X.X million, percentages For were entirely XXXX. adjusted the compared million for was sold fourth with compared quarter million, with increased with Consolidated said, and XX% with million million for quarter $X.X for costs. year reduced loss was $X.X fourth expenses the million, our Depreciation $X.X in XXXX. the $X.X $XX,XXX year, was in million, or reduction $X.X And with $XX,XXX million $X.X in million with year, Gross R&D, compared XXXX. in XX% year, compared XXXX. quarter as again, both fourth XX% expenses compared quarter XXXX. to years, in XX% And, the and in SG&A the general negative sold million million, consolidated and for in were few the million we margins the million, goods Gross adjusted in was and with EBITDA other XXXX XX%, negative million in due full for positive $X.X expenses and the cover with the year for XX% almost expenses $X.X of XXXX. in net million Research $X.X million year, were goods SG&A the of fourth the were $X.X with amortization with Cost of $X.X in $X.X and quarter to the And available we margin compared for XXXX. XXXX. compared administrative $X.X expect in the gross $X.X depreciation compared will development, were range every or $X.X million were quarter I think compared XXXX last every R&D for in expenses in over have the and both Selling, XXXX in to quarter margins compared XXXX. -- the in million in were and with continue the gross amortization

essential balance offering $X.X to services end at about may once XXXX of which common care we in be our frontline of Nephros cash of fellow other providing all you proceeds. generated at stock again keep aware million $X.X of and closing, Our was cash as professionals thanks October safe. million want net that In completed and XXXX, the us a approximately to citizens health

will call Let And concludes now you Also, all subscribed remarks. you stakeholders well as look financial contact seeing to free to personally support again also questions. you for forward course, audience, be in are released questions so likelihood. alerts, And which me years. our our many This if also formal at with all conferences occasional details will the our through I to mention that homepage. may feel of questions, mailing of already publicly we list. several as to be of this these our do forward spring, I Operator, bottom please look of the of speaking always at me not virtually you're email shows website and investors emailed to soon. all our open andy@nephros.com. we'll thank other to the if from there for the at directly would your like answer take any. and presentation please I

session. comes [Operator now B will question-and-answer Wiesenberger question go ahead. Please Marc We the FBR. Instruction] Our from begin with first Riley

Marc Wiesenberger

you. get evolved your ground, you Can access what's how partners year the far? hospitals that you're afternoon. hearing is facilities healthcare into last and to from talk end to Good and about on Thank Yeah. and from of so distribution the XXXX their ability what

Andy Astor

we year that QX line. QX the thanks is what all, expect you. of I when comparison first line the the QX, vaccine that is from XXXX Marc, call… words, between increase steady other you're QX XX say I of widely -- the XXXX of slope I QX. would a would steady If XXXX. slope analogous -- see of good in most pretty the the think a It's But of XXXX for population steady slow project, from of comparison In to to had And distributed. QX is it's slope I reopening. a question. of then the to to would going this hear when second to of and see line half that to hearing the we're more QX, the And going partners our pretty that to I'm also of

Marc Wiesenberger

Understood.

Andy Astor

to quarter asked I it's on was If final and put a I about were closed. market it, ago the I if a you had say point would me, about XX% still would closed say, XX%

Marc Wiesenberger

warmer monitoring, activity testing months, least bounce you. levels and the at well more I maybe Thank to in facility refocus customers of Understood. that you of has response bode seeing in managers business? and which the back starting business usually that for higher with normalized seasonality and priorities know undertake their kind some could but least at are outbreak

Andy Astor

A little.

servicing But seeing it back course. to definitely slow, emergency some of appear is that and I are be them, that would We bounce but response does say events beginning.

Marc Wiesenberger

her schools the as even then return closures. in starting Governor in in water into Also, budget maybe in-person has of New to not it levels statewide expanding to other How drinking Wisconsin. opportunities potentially that York understood. traditionally schools, Nephros schools are put the you've recently should there more Okay, to Wisconsin filters districts report million proposal, had following Ohio, elevated Pennsylvania, water Legionella its markets across $XX think in we their in learning, served? And and Michigan, of about install

Andy Astor

I you. What service would XX% are treatment say an Thank strategic selling sells is indirect question. is through Great Nephros water our that company partners. professionals that the

And it we of really the best many partner that with is of making we that a those sure as of matter so, can.

systems expect multiple to of already is model but hire and distributors New that to product we've with a are our working up through Now, Nephros that school change expert partnered capabilities not not serviced is to we Jersey. sales force to rather really some the sales of relationships. people, who those support The and it go so have But locally partners, matter our sales fundamentally. including in XXX I with, would distributors

Marc Wiesenberger

the good with the news if Where commercial what's stand do update of we an hear And could give give negotiations, just and even much. the some have in me. for maybe there? to you expect going RFPs been takes on could on of you we Thank and one some maybe that last and very on some pipeline? on Understood, the

Andy Astor

do. give dealing tell this be said probably on except premature, helpful you give. We cannot they're They are I'd is and that I as And take their own opportunities. to opportunities we pace. Marc. talk the them, larger and were we in a they are difference a extremely you to And move mean guidance they give developing. optimistic at they at make point, will I about still And, those with remain specific I way. you, in large when are But remarks, about ago. by obviously, to that organizations, all developing it's will what close. my They when happy mostly prepared that as while, more months nine and still Thank

Marc Wiesenberger

very you Thank Great. much.

Andy Astor

My pleasure. you, Marc. Thank

Operator

Anthony me. from question go Excuse Maxim Please The is next Vendetti ahead. with Group.

Anthony Vendetti

opportunities Thanks. and you it have it. I even they increase, discussed Wes. a pipeline for same-store? Thanks But one words just know that Andy, on to do other hasn't say closed, though, though Andy aboard the a while, I'm or about sure quick it with that, been QSR pipeline welcome same and a is lot the the is started had expanded has that would the or COVID it follow-up hasn't to it has in and

Andy Astor

Anthony. conversation say a from are what These that. to one with they opportunities, you, additional having hear are large conversations a would we Good and increased. is And often large company have I organization within brings seeing

that just are think they it's the to of a fair when increasing. And I fall. So matter it's say opportunities

Anthony Vendetti

I it. – look at to then is with out think How Sure, half launch difficult you access, in this at we that is should hospitals as to know that the detection pathogen year? it? ago XX% how new XXXX more should and look do of this pushed the still second you just year difficult towards of you was on. we How obviously Understood. sure. a And mentioned,

Andy Astor

us July distribution until I pandemic XXXX the more the what at the to though I that likely December, year way And X the the associated the least Well, half year fundamentally to time changes. system XXXX at the mean was is look on it the way of that and think came by vaccines the peak even of think lot in out with is first I like the XXXX. about a I that than gets is November, – look

detection we coming would then, were some average, on that we're see but I'm when hopeful growing XXXX closer XX look of growth year-on-year. curves they I'm to XX% than hopeful do, that the QX be growth QX, back that more think and I like And – will curve. so, XXXX, pathogen part And XXX% that when quarters to

answer the say the to I in So you'll of year. long that see to acceleration start second think – slightly do that long half

Although, well. there in could be some birds the first half blue as

Anthony Vendetti

No, Okay. that color is helpful.

mentioned that you device. generation, second you lastly, system, Just the completed HDF then Hemodialtration

end be In terms or actual submission that on for that sooner? is XXX(k), could is XXXX of of that target of

Andy Astor

I'm do you XXXX, this target say when you mean sorry, approval? for on the

Anthony Vendetti

your Yes. is think, you timeframe, What do guess? best what's the

Andy Astor

the that accepts as Well, they we've package we And official filed about FDA timeline special talked it's – accept it's XX the we before, assuming the have review. days XX XXX(k) the it – – said is it, pathway. under once for if that

they there's XXX(k) -- be whatever if little the by and middle unless special even the would think of that, would even So I for if I don't year. time, it extra accept the approved it on a it takes think they pathway. a reason, time surprise

if would turns pathway of around XXX(k) No, this for is end then surprise Now, more FDA a longer. a me. be we traditional But take of year think it'll themselves. the

that. long before be I think it'll

Anthony Vendetti

Right.

Okay. Make sense.

route, would you'll soon, special find them give then respond it out guess. XX go this if normal So would it's I XXX(k) accepted, -- if days XXX(k), to And, not, which

Andy Astor

Correct.

Anthony Vendetti

-- …once to have XXX(k)? resubmit right, you you'd for regular

Andy Astor

for completed the testing that. required We would. we've But and documentation all

a paperwork exercise. So it's large but only a paperwork it's exercise,

it to the So in years. go not would or measured be weeks, we if it would -- be route, had months traditional

Anthony Vendetti

I'll much. queue. in hop very the Thanks back great. Okay,

Andy Astor

Okay. Thanks, Anthony.

Operator

next The is Linc [ph], investor. private go question Please Henry from a ahead.

Unidentified Analyst

How Andy. you? Hi are

Andy Astor

you. from hear Henry. good I'm to Nice

Unidentified Analyst

Wes, you’re from glad hear to board. on I'm there. Good hear Good. you. welcome to And

Wes Lobo

Thank you.

Unidentified Analyst

was have to going and testing projections? relative go how for are out they, I detection projections portion just do wondering, Anyway, to pathogen or, you the

Andy Astor

But I by with the on great. guidance were we would that, any right work I is that's we not And the mean I’m going now, technology of the and published say said the public we as of I Well, going on our we've the Henry. released, that -- as well a, and the products that that that as validation of -- construction it, sorry, businesses of development a way, level capital things relatively healthcare really getting and business low again, to the as at biosafety production it's as open These we've until are are hard and two by markets, levels. up project costs so ready that But that automated just facility. lab an to up. anxious all built do see the But open we revenue grow. the soon I'm specific to for markets

Unidentified Analyst

And you released the testing papers like that? analysis, is or it anything white

Andy Astor

We white four ago, have, so And Actually months SequaPath we as have. about academic We an in actually guess, well, produced I papers got five the other was paper. yes. works it a prepublication paper, or product. we've probably talking our

Unidentified Analyst

Right. Thank you.

Andy Astor

pleasure, Henry. My

Operator

Instructions] Please Investors. Joseph next ahead. [Operator [ph] JAS go from question Schuler is with The

Unidentified Analyst

Andy. Hi,

Andy Astor

Joe. Hey,

Unidentified Analyst

elaborate maybe us, give Hi. HDF, Yeah. kind a little could of you maybe more.

mention second completed did generation you've You a that product.

XXXX. pre-test You markets don't a or think heard all elaborate possibly also product with hoping half the to could I mentioned, proceeding if correctly, know, little paperwork, bit. in if and early got but you the I of that right, maybe I you FDA you're that second I

Andy Astor

is Well, is done. the answer paperwork received done. for product Joe FDA has right. it. exactly The short The got submission you The it is

We have a number. case

goal. next as it's FDA. -- have That to have course (k) more We over about in And specifics that from pathway as to with that's get whether or our say few submission special expect the – months, of the discussions and we a product over the more to approved, that it we'll are the soon we as them traditional. is, one XXX

Unidentified Analyst

best me have or when after -- Let approval market, product do proceed let's just the months, a FDA you get on mark not that, the that assuming in if marketable you'd it and happens hope your think with product and may a three you say?

Andy Astor

Well, out go roll number immediately a controlled it to them. in of dialysis we'd and clinics

soon but get be the FDA as on would the could it. clears -- it's officially, we as real-world that So, experience, market it

Unidentified Analyst

Thank Good. very you. much. Got you

Andy Astor

Joe. My to pleasure. hear Good from you,

Operator

you now session, for also concluded. This the today's presentation. concludes attending and conference question our Thank is and answer

may disconnect. You now

Nephros (NEPH) 2 Mar 212020 Q4 Earnings call transcript