Nephros Q2 2024 Update - $NEPH

Quick update after Q2 2024

Aug 13, 2024

*Disclosure: I own shares in NEPH. I am not a professional. Please do your own due diligence.

Price: $1.92

MC: 20 million

EV: 18.7 million

1 year performance: +25%

NEPH reported last week and held a call. Results were behind my expectations and the stock was down 6-7%.

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*all numbers in USD unless stated otherwise

Quarter Recap

Revenue of 3.2 million vs 3.5 million last year.
SG&A down to 1.9 million vs 2.2 million last year.
- Due to accruals, stock-based comp, commissions and professional fees.
EBITDA of -133k vs 183k last year

Call Notes

Emergency sales were down 92% and programmatic sales were up 8%. This led to the drop of revenue.
Q2 has had the highest retention rate of the last 6 quarters.
The filter tracking app is behind their initial plans. They are working through the bugs.
- Once the app is launched, I would expect some more growth in the programmatic sales.
Total number of active accounts at 1,384.

Valuation

I have them at about 1.3x EV/Rev. Given how much of the top line is emergency sales, it’s hard to get any visibility on the top line.

Closing Thoughts

NEPH is an interesting company here. We can tease out the mix of programmatic sales vs emergency sales, but I think it would help to get more precise numbers from management. I am mindful of the cash position given that they are not consistently generating cash and may need to invest in working capital to grow the business. I do like the business and it’s opportunities.

I have taken some chips off the table, but still have a half position.

Thanks for reading.

Dean

* long NEPH

Petty Cash