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Nuwellis, Inc. (NUWE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $1.90M, up 3% year-over-year but below the S&P Global consensus of $2.50M; gross margin compressed to 56.0% on unfavorable manufacturing variances and a FlexFlow inventory adjustment, while operating expenses fell 31% YoY, improving operating loss to $3.06M . Revenue missed consensus; EPS materially beat an ultra-thin one-analyst consensus, reflecting share structure changes and low estimate coverage .
  • Pediatric and Heart Failure categories grew 38% and 28% YoY, respectively, offset by a 25% decline in Critical Care due to a one-time inventory build at a large customer in Q4 2024; consumables utilization increased 4% YoY .
  • CMS increased outpatient reimbursement nearly fourfold to $1,639/day effective Jan 1, 2025; management is executing an outpatient strategy with 4 hospitals moving through logistics and expects initial patient treatments in Q2 and acceleration in H2 2025 .
  • Cost actions continue: SG&A down 22% YoY; R&D down 59% YoY; manufacturing outsourcing to KDI is expected to reduce costs further over the next 12 months and preserve expertise via employee transitions .
  • Strategic and clinical catalysts include JACC Heart Failure reanalysis showing a 60% reduction in heart failure events vs diuretics and expanded pediatric adoption (now 47 centers), reinforcing Aquadex’s clinical case and supporting outpatient adoption .

What Went Well and What Went Wrong

What Went Well

  • Pediatric and Heart Failure categories posted strong YoY gains: Pediatrics +38% and Heart Failure +28%, driven by higher consumables utilization and new accounts; “We are encouraged by the strategic progress…well-positioned to expand adoption across both inpatient and outpatient environments in 2025.” — John Erb .
  • Expense discipline: Total OpEx fell 31% YoY to $4.1M; SG&A down 22% YoY; R&D down 59% YoY; operating loss narrowed to $3.06M vs $4.75M prior year .
  • Reimbursement tailwind: CMS reassigned Aquadex to a higher outpatient reimbursement level ($1,639/day), increasing accessibility and financial viability in hospital outpatient settings .

What Went Wrong

  • Revenue below consensus and gross margin compression: GM fell to 56.0% from 64.1% YoY due to manufacturing variances, lower overhead absorption, and FlexFlow inventory adjustment; revenue declined sequentially from Q4 .
  • Critical Care weakness (-25% YoY) tied to one-time inventory build by a key customer in Q4 2024; management expects stabilization in Q2 .
  • International sales softness offset U.S. console gains; end-of-quarter cash decreased to $2.56M (from $5.10M at 12/31/24), and operating cash burn was $2.54M in Q1 .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1.86 $2.32 $1.90
Gross Margin (%)64.1% 58.4% 56.0%
Operating Expenses ($USD Millions)$5.94 $3.74 $4.13
Operating Income (Loss) ($USD Millions)$(4.75) $(2.39) $(3.06)
Net Loss Attributable to Common Shareholders ($USD Millions)$(3.79) $(1.47) $(3.01)
Basic & Diluted EPS ($)$(24.11) $(0.44) $(0.69)
Cash & Cash Equivalents ($USD Millions, period-end)$1.40 $5.10 $2.56

Segment/Category KPIs

KPIQ3 2024Q4 2024Q1 2025
Pediatrics Revenue YoY Growth (%)+28% −20% +38%
Heart Failure Revenue YoY Growth (%)−36% −36% +28%
Critical Care Revenue YoY Growth (%)−25% +35% −25%
Consumables Utilization YoY Change (%)n/a+21% +4%
Console Units Sold (Units)11 3 n/a

Operating KPIs

KPIQ1 2024Q4 2024Q1 2025
Gross Profit ($USD Millions)$1.19 $1.36 $1.07
SG&A ($USD Millions)$4.61 $2.91 $3.58
R&D ($USD Millions)$1.33 $0.83 $0.55
Net Cash Used in Operating Activities ($USD Millions)$(2.86) n/a$(2.54)

Estimates vs. Actuals

MetricQ4 2024Q1 2025
Revenue Actual ($USD Millions)$2.32 $1.90
Revenue Consensus Mean ($USD Millions)$2.46*$2.50*
Primary EPS Actual ($)$(0.44) $(0.69)
Primary EPS Consensus Mean ($)$(18.06)*$(18.90)*
# of EPS Estimates2*1*
# of Revenue Estimates2*1*

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

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025n/aNo formal guidance providedMaintained (no guidance)
Gross MarginFY 2025n/aNo formal guidance providedMaintained (no guidance)
OpExFY 2025n/aContinued cost discipline; outsourcing to KDI expected to reduce costs over next 12 months Qualitative reduction
Outpatient Adoption2025n/a4 hospitals working through logistics; initial treatments expected in Q2 with acceleration in Q3–Q4 Initiated execution
Cash/DebtQ1 2025n/aCash $2.56M; debt-free Status unchanged

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Outpatient reimbursement/strategyCMS to raise outpatient rate to $1,639/day; preparing accounts and payer coverage Reimbursement effective Jan 1; early traction expected; outpatient market entry emphasized Pipeline of 4 hospitals configuring outpatient clinics; first treatments expected Q2; acceleration in H2 Strengthening execution
Clinical evidence (JACC; real-world data)Community hospitals study showed fewer 60-day HF readmissions; significant volume/weight loss with stable renal function JACC reanalysis: 60% reduction in HF events at 30 days vs diuretics; evidence supports broader adoption Reiterated JACC reanalysis and real-world data to support outpatient/inpatient expansion Reinforced evidence
Category performancePediatrics +28% YoY; critical care −25%; heart failure −36% Critical Care +35% YoY; pediatrics −20%; heart failure −36% Pediatrics +38% YoY; heart failure +28%; critical care −25% (one-time inventory build impact) Mix shifting to peds/HF
Supply chain/tariffsn/an/aLimited tariff exposure; minimal international components; in-house manufacturing Minnesota Low risk
Manufacturing/operationsn/aQ4 recall cost ~$150k; margin aided by consumables volume Outsourcing assembly to KDI to reduce costs; transition of assembly employees Cost optimization
R&D programs (REVERSE-HF; Vivian)REVERSE-HF ~ one-third enrolled; Vivian IDE targeted end-2025 REVERSE-HF enrollment ongoing; Vivian timing uncertain REVERSE-HF ~ halfway; Vivian IDE later 2025/early 2026 Steady progress
International/U.S. mixn/aIntl softness offset by higher consumables Intl decline offset by U.S. console sales Mixed; U.S. stronger

Management Commentary

  • “With higher reimbursement rates now in effect and a growing base of clinical support, we believe we are well-positioned to expand adoption across both inpatient and outpatient environments in 2025.” — John Erb .
  • “Gross margin…decline was mainly driven by unfavorable manufacturing variances, lower fixed overhead absorption tied to reduced production volumes and an inventory adjustment related to the FlexFlow console.” — Rob Scott .
  • “We have built a growing pipeline of target outpatient facilities…approximately $773 million addressable market…to help drive significant future top line growth.” — John Erb .
  • “We are diligently looking at ways to reduce our cash burn…recently signed an agreement with KDI Precision Manufacturing…to move manufacturing from our facility, which we believe can result in meaningful expense reductions over the next 12 months.” — John Erb .

Q&A Highlights

  • Critical Care decline in Q1 tied to a single high-volume customer’s Q4 inventory build; repurchasing began in Q2, with normalization expected near-term .
  • Outpatient pipeline specifics: 4 hospitals identifying locations (often dialysis units) and securing nursing resources; patient treatments expected to begin in Q2, with growth in Q3–Q4 .
  • Trial timelines: REVERSE-HF roughly halfway enrolled; Vivian clinical trial expected later 2025/early 2026 post device development and IDE submission .
  • EPS and profitability dynamics: Management emphasized expense control and cost optimization, including manufacturing outsourcing, to support margin stabilization and cash burn reduction .

Estimates Context

  • Revenue missed S&P Global consensus: Actual $1.90M vs $2.50M consensus; EPS beat: Actual $(0.69) vs $(18.90) consensus; both Q1 2025 consensus values based on one estimate, limiting reliability (single-analyst coverage) .
  • Q4 2024 actual revenue $2.32M vs $2.46M consensus; EPS $(0.44) vs $(18.06) consensus (two estimates) .
  • Implications: Street models likely to reduce near-term revenue trajectories given Q1 miss and Critical Care timing, while expense discipline and outpatient reimbursement support medium-term margin improvement as outpatient clinics come online.
  • S&P Global data: Revenue Consensus Mean and Primary EPS Consensus Mean figures marked with an asterisk above were retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term revenue headwinds from Critical Care inventory dynamics and international softness drove a revenue miss, but category mix is improving (Pediatrics/HF strength) and consumables grew 4% YoY, indicating underlying adoption .
  • Gross margin compression to 56.0% reflects fixable manufacturing factors and inventory adjustment; watch for margin recovery as KDI outsourcing ramps and production volumes normalize .
  • Outpatient reimbursement at $1,639/day is a tangible catalyst; first outpatient treatments expected in Q2 and accelerating in H2, positioning for improved utilization and more profitable care settings .
  • Expense discipline continues to be a lever: 31% OpEx reduction YoY, SG&A down 22%, R&D down 59%; supports a path to narrowing losses even with modest top-line growth .
  • Clinical momentum (JACC reanalysis; real-world community data) strengthens Aquadex’s case vs diuretics, aiding hospital adoption and outpatient program justification .
  • Liquidity/shares: $2.56M cash at Q1-end; debt-free; monitor forthcoming capital actions (e.g., June offerings) and outpatient ramp to bridge cash burn ($2.54M used in ops in Q1) .
  • Trading setup: Near-term narrative hinges on outpatient adoption milestones and margin stabilization; positive updates on clinic launches and KDI cost savings are likely upside catalysts, while any delays in outpatient ramp or continued Critical Care softness would pressure the stock .