SeeThruEquity Issues Update on Nephros, Inc. (OTCQB: NEPH)

NEW YORK, NY / ACCESSWIRE / April 6, 2016 / SeeThruEquity, a leading independent equity research and corporate access firm focused on smallcap and microcap public companies, today announced it has issued an update note on Nephros, Inc. (OTCQB: NEPH).

The report is available here: NEPH April 2016 Update Note. SeeThruEquity is an approved equity research contributor on Thomson First Call, Capital IQ, FactSet, and Zack’s. The report will be available on these platforms. The firm also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.

Based in River Edge, NJ, Nephros, Inc. (OTCQB: NEPH “Nephros”) is a commercial stage medical device company, with innovative filtration products targeting large market opportunities including hospital infection control and advanced renal care. Nephros was founded by two healthcare professionals associated with Columbia University Medical Center / New York Presbyterian Hospital to develop a hemodiafiltration (HDF) device as an alternative to hemodialysis. Nephros has developed proprietary technology to accomplish this goal, and in addition to commercializing an HDF System, Nephros has also developed advanced filtration devices for a variety of applications where ultrapure filtration is of potential value. We see several potential catalysts ahead for Nephros in 2016E driven by new products, expanded distribution and the potential to reach a key milestone of cash flow breakeven.

Highlights from the note are as follows:

2015 ends on a positive note

Nephros ended 2015 with positive 4Q15 results. Revenues grew over 40% YoY to reach $0.51mn, versus $0.34mn in the year ago period. For the year, revenues grew by 11% despite a pause in in 3Q15 due to customer concerns about an FDA warning letter (which has since been resolved following a successful on-premise audit in February). Indeed FY15 revenues reached $1.94mn, versus $1.75mn in FY14. FY15 EPS came in at ($0.09), versus our estimate of ($0.08) and FY14 EPS of ($0.31), while Nephros ended the year with cash on hand of $1.2mn and no debt.

Strong Ultrafilter sales in shift to product-focused strategy

Nephros management continued to report strength in Ultrafilter product sales in 4Q15, which we view as a key figure to watch in order to gage the continuing health of the company’s go-to-market strategy. The company reported Ultrafilter product sales growth of over 90% YoY in 2015, driven primarily by sales into hospitals for infection control. Ultrafilter sales into the dialysis space, a key strategic area, grew by 40%. Overall product revenues grew to $1.79mn versus $0.91mn in 2014, in line with the company’s strategy to focus on product sales. This growth was offset by declines in license and royalty revenue from $0.83mn to $0.15mn.

New Products to drive results in 2016; targeting cash flow

Nephros management guided for 1Q16 revenues to exceed $0.55mn, which would represent mid-single digit sequential growth from the December quarter. Importantly, the company restated its prior goal of targeting cash flow generation by the end of 2016. If achieved, we would view this as a major accomplishment by the company. In addition to continued penetration of existing products, we also see several new product catalysts for 2016. Nephros already began shipping fiber membranes to new partner Biocon 1, LLC for commercial use in the company’s advanced AETHER® filtration products in the food service industry. Nephros also announced that it launched the SSUmini, an FDA 510(k) cleared, economical solution for hemodialysis quality water. The company is hopeful that it will receive FDA clearance for two additional products, the S100 point of use microfilter, and the EndoPur™ endotoxin filter cartridge for hemodialysis water quality, in time to launch by the end of 2Q16.

Maintain price target of $1.65

We are leaving our price target for Nephros unchanged at this time at $1.65. We view Nephros as an attractive high risk / high reward investment opportunity in the medical instruments industry with several potential catalysts in 2016E stemming from new products, new market penetration, and guidance for reaching cash flow breakeven during 2016.

Please review important disclosures at www.seethruequity.com.

About Nephros, Inc.

Nephros is a commercial stage medical device company that develops and sells high performance liquid purification filters, as well as a hemodiafiltration system for the treatment of patients with end stage kidney disease. Its filters, which it calls ultrafilters, are primarily used in dialysis centers and hospitals for the removal of biological contaminants from water, bicarbonate concentrate and/or blood.

Nephros was founded in 1997 by healthcare professionals affiliated with Columbia University Medical Center/New York-Presbyterian Hospital to develop and commercialize a hemodiafiltration system, an alternative method to hemodialysis. Since its founding, the company has extended its filtration technologies to meet the demand for liquid purification in other areas, in particular water purification.

For more information about Nephros and its products, please visit the company’s website at www.nephros.com.

About SeeThruEquity

SeeThruEquity is an equity research and corporate access firm focused on companies with less than $1 billion in market capitalization. The research is not paid for and is unbiased. The company does not conduct any investment banking or commission based business. SeeThruEquity is approved to contribute its research to Thomson One Analytics (First Call), Capital IQ, FactSet, Zacks, and distribute its research to its database of opt-in investors. The company also contributes its estimates to Thomson Estimates, the leading estimates platform on Wall Street.

For more information visit www.seethruequity.com.

Contact:

Ajay Tandon
SeeThruEquity
info@seethruequity.com

SOURCE: SeeThruEquity

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