Executive Summary

Q2 revenue was $9.62M (+9% YoY; +4% cc), gross margin 70.9%, and operating loss ~$3.62M; net income was $1.95M ($0.03), driven by a $6.18M FX gain; adjusted net loss was $(3.66)M and adjusted EBITDA loss $(2.64)M .
Revenue beat consensus ($9.22M*) and EPS materially beat (consensus −$0.057* vs actual $0.03), aided by FX; underlying non‑GAAP results remained a loss (adjusted EPS −$0.05) (S&P Global).
Germany inflected with 22% YoY and sequential growth after a commercial reorg; distributor sales were among the company’s best ever (second to last year’s record Q2) .
Regulatory: the Aug 14 FDA supervisory review found no device safety issues but upheld the De Novo denial; FDA proposed a potential path to authorization, and the company is engaging while evaluating a further appeal to CDRH Director .
Management reiterated focus on gross margin improvement and cost control to drive the core business toward near breakeven exiting 2025; cash and restricted cash ended Q2 at $11.73M .

What Went Well and What Went Wrong

What Went Well

Germany returned to growth: 22% year-over-year and sequential sales growth as reorganization began to take hold; other direct territories saw continued strength .
Distributor channel among best ever (second only to last year’s record Q2), underscoring demand breadth beyond Germany .
Management reiterated a disciplined plan to manage the core business toward near breakeven exiting 2025, focusing on growth in high‑impact applications, gross margin improvement, and cost control .

What Went Wrong

Gross margin compressed YoY to 70.9% (from 73.5% in Q2’24), with CFO citing inventory write‑offs and timing; margin was roughly flat vs Q1 .
GAAP net income was primarily due to a $6.18M FX gain; adjusted net loss widened to $(3.66)M (vs $(2.76)M in Q2’24), and adjusted EBITDA loss increased to $(2.64)M (vs $(2.18)M) .
Regulatory setback post‑quarter: FDA appeal upheld the De Novo denial (no device safety issues) and requested additional information to support the label; company is engaging on FDA’s proposed path forward and evaluating a higher‑level appeal .

Financial Results

Core P&L and Cash Trend (USD)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$9.15	$8.73	$9.62
Gross Margin %	71%	71%	70.9%
Operating Loss ($M)	$(3.73)	$(3.89)	$(3.62)
Net Income (Loss) ($M)	$(7.57)	$(1.48)	$1.95
Diluted EPS ($)	$(0.14)	$(0.02)	$0.03
Adjusted Net Income (Loss) ($M)	$(1.74)	$(3.67)	$(3.66)
Adjusted EPS (Diluted) ($)	$(0.03)	$(0.06)	$(0.05)
Adjusted EBITDA ($M)	$(2.42)	$(2.70)	$(2.64)
Cash + Restricted Cash ($M)	$9.8	$13.11	$11.73

Notes and drivers:

YoY revenue +9% (cc +4%) vs Q2’24; gross margin down ~260 bps YoY; operating loss roughly flat YoY; GAAP net income benefited from $6.18M FX gain; adjusted losses widened YoY .
CFO cited inventory write‑offs and unique Q2 items (accounting team rebuild, regulatory legal, Germany restructuring, commercialization planning) within OpEx; lower R&D/royalties/stock comp partly offset .

Q2 2025 vs Prior Year/Quarter and vs Estimates

Metric	Q2 2024	Q1 2025	Q2 2025 Actual	Wall St. Consensus*
Revenue ($M)	$8.84	$8.73	$9.62	$9.22*
Diluted EPS ($)	$(0.08)	$(0.02)	$0.03	$(0.0567)*
Gross Margin %	73.5%	71%	70.9%	N/A

Management commentary on gross margin: consistent with Q1/2024 ranges; expects efficiency improvements and higher‑margin DrugSorb-ATR (if authorized) to support future margin expansion .
Consensus sources: S&P Global (3 estimates for revenue and EPS) (S&P Global).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance (Q2)	Change
Core business profitability	2025 exit	Manage core business toward near breakeven exiting 2025	Maintain target; focus on margin improvement and cost control	Maintained
DrugSorb‑ATR regulatory timing	2025	Expect FDA and Health Canada decisions in 2025	FDA Aug 14 appeal upheld denial but proposed path to authorization; company engaging; evaluating higher‑level appeal; still pursuing 2025 path	Revised context; process continues
DrugSorb‑ATR launch	Initial rollout (post‑approval)	Controlled/clinical‑site‑focused rollout first 3–6 months	“Purposeful rollout” starting with clinical accounts and early adopters; monitor access/reorder pacing	Clarified execution plan
Gross margin	2025	71% product GM baseline in 2024	Opportunity to improve with production ramp/efficiency; DrugSorb-ATR higher margin over time	Directional positive

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
Regulatory (DrugSorb‑ATR)	De Novo under review; decisions expected 2025; Health Canada MDL under advanced review	FDA appeal concluded Aug 14: no safety issues; denial upheld; FDA proposed path forward; evaluating further appeal to CDRH Director; Health Canada reconsideration queued post‑FDA	Mixed: pathway emerging despite denial
Germany sales execution	Germany flat in 2024; reorg expected to disrupt Q1 then improve 2H’25	+22% YoY and sequential growth in Q2; “work in progress,” changes expected to drive improved results	Improving
Gross margin	~71% baseline	70.9%; efficiency ramp and product mix (DrugSorb) seen as tailwinds longer term	Stable near term; potential upside
Sepsis positioning	Growing evidence base; “Right patient, time, dose” messaging	Highlighted new meta‑analysis and studies; global webinar planned; emphasizes early/intensive use	Increasing thought leadership
Cash & runway	$9.8M at YE; rights offering bolstered liquidity	$11.73M at Q2; burn influenced by unique items; debt facility has an additional $5M tranche conditional on FDA approval before 12/31	Stable; contingent liquidity lever

Management Commentary

“We are focused on driving growth in our key, high impact clinical applications, improving our gross margins, controlling costs and driving efficiencies to manage our core business to near breakeven as we exit 2025.” — Dr. Phillip Chan, CEO .
“Following our recent meeting with the FDA, we remain committed to working collaboratively with the agency to secure marketing authorization for DrugSorb‑ATR… We remain confident… and believe that the remaining issues can be expeditiously and successfully addressed.” — Dr. Chan .
“Gross margins have been in this range for a while… we’ve got opportunity to ramp production faster… [and] with DrugSorb approval, we expect that to be a higher margin product.” — Peter Mariani, CFO .
“I’d classify [launch] as purposeful rollout… focus on clinical accounts… first 3–6 months… evaluate access and reorder pace.” — Peter Mariani, CFO .
“In the appeal decision, the FDA found no issues with device safety but upheld its prior De Novo denial… [and] proposed a potential path forward for market authorization.” — Company statement .

Q&A Highlights

Regulatory confidence and path: Management emphasized the appeal allowed comprehensive presentation to FDA senior leadership and external cardiac surgery experts; awaiting/welcoming dialogue on FDA’s proposed path, while aligning Health Canada reconsideration timing post‑FDA .
Germany: Q2 reorg progress encouraging (+22% YoY and sequential); more work underway to improve salesforce efficiency/productivity .
U.S. rollout strategy: “Purposeful” and controlled at clinical accounts to validate access/reorder cadence in first 3–6 months .
Sepsis business impact: Sepsis/septic shock is a core ICU application; company aims to drive outcomes via education on early/intensive/right‑duration use, leveraging new evidence .
Gross margin outlook: Opportunity to lift margins via production efficiencies and higher‑margin DrugSorb‑ATR (if authorized) .

Estimates Context

Metric	Q2 2025 Actual	Wall St. Consensus*	# Estimates*	Surprise
Revenue ($M)	$9.62	$9.22*	3*	Beat
EPS (Primary, $)	$0.03	−$0.0567*	3*	Beat (material)

Context: GAAP EPS beat was aided by a $6.18M FX gain; adjusted net loss per diluted share was $(0.05) .
Guidance implications: Street may need to lift revenue near‑term on Germany/distributor strength while keeping non‑GAAP profit paths conservative pending margins and regulatory clarity .

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

Revenue and EPS beats vs consensus; GAAP profitability driven by FX; non‑GAAP losses widened YoY—focus on adjusted metrics for core earnings power (S&P Global).
Germany execution turning: +22% YoY and sequential growth post‑reorg is a key green shoot for 2H traction .
Gross margin near 71% with identified levers (throughput, efficiency, mix); DrugSorb‑ATR could be accretive if authorized .
Regulatory update is nuanced: FDA appeal upheld the denial but proposed a path; no safety issues cited—engagement underway and a higher‑level appeal is under evaluation .
Cash $11.73M at Q2; net cash burn included unique items; additional $5M debt tranche contingent on FDA approval by 12/31 offers optional liquidity if approvals land .
Trading setup: Near‑term stock moves likely tied to FDA process updates and Germany momentum; adjusted profitability remains the gating factor for multiple expansion .
Medium‑term: If DrugSorb wins a practicable U.S. label and launch executes (purposeful rollout), mix and scale could support margin expansion and progress toward breakeven exiting 2025 .

Additional Detail and Cross‑References

Q2 revenue growth drivers: “strong 22% year‑over‑year and sequential sales growth in Germany,” with strong other direct territories; distributor sales among best ever .
FX impact: Gain on foreign currency transactions of $6.18M in Q2 (vs $(0.54)M loss in Q2’24) explains the swing to GAAP net income; adjusted results strip FX and stock comp .
Cash movement: Cash + restricted cash declined from $13.11M (Q1) to $11.73M (Q2), including $1.7M NJEDA NOL/R&D credit proceeds; net burn reflected one‑time items .
Regulatory (Canada): Notice of Refusal in June; Level 1 Request for Reconsideration filed; sequencing Canada’s review after FDA process as agreed with Health Canada .

Segment/Breakdown: The company does not report formal operating segments; qualitative commentary highlights Germany vs other direct territories and distributor trends .

S&P Global estimates used for consensus benchmarking (values marked with *).

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