Nephros Reports First Profitable Quarter, Positive Adjusted EBITDA in Q3 2024

Nephros, Inc. (Nasdaq: NEPH), a leading water technology company, has reported its first profitable quarter and positive adjusted EBITDA for the third quarter of 2024. This marks a significant turning point for the company in its pursuit of operational excellence and financial stability.

For the quarter ended September 30, 2024, Nephros reported net revenue of $3.5 million, representing an 8% increase over Q2 2024 but a 6% decrease compared to Q3 2023. Despite the year-over-year revenue decline, the company achieved net income of $0.2 million, compared to a net loss of $0.2 million in the same period last year. Adjusted EBITDA for Q3 2024 was $295,000, a substantial improvement from $11,000 in Q3 2023.

Robert Banks, President and CEO of Nephros, expressed excitement about the company's first profitable quarter, stating that it represents a major milestone. He noted that while most sales regions showed solid growth and steady performance with existing customers, the South Central region continued to underperform, leading to some reorganization.

The company's improved financial performance can be attributed to several factors, including better terms with its largest supplier, resulting in improved gross margins of 61% compared to 59% in the previous year. Additionally, Nephros has maintained a strong focus on expense management and operational efficiency, with selling, general, and administrative expenses decreasing from $2.1 million in Q3 2023 to $1.7 million in Q3 2024.

Looking ahead, Nephros is preparing to launch digital support for filter installation and is ramping up its service capabilities to foster installation commissions and complement filter sales. These efforts are aimed at offsetting customer non-compliance with filter changeout schedules and mitigating the reduction in programmatic reorders.

While the company's cash position has decreased from $4.3 million at the end of 2023 to $2.5 million as of September 30, 2024, the achievement of profitability in Q3 2024 suggests a potential turning point in Nephros' financial trajectory. The company's ability to maintain this positive momentum will be crucial for its long-term success in the water filtration technology market.

This financial turnaround demonstrates Nephros' resilience and adaptability in a challenging market environment. As the company continues to focus on operational excellence and innovation in water filtration technology, investors and industry observers will be watching closely to see if this positive trend can be sustained in the coming quarters.