Executive Summary

Q2 2025 revenue fell to $1.73M due to an industry-wide sterilization delay, compressing gross margin to 55.5% and widening operating loss to $(2.91)M; net loss attributable to common shareholders ballooned to $(12.55)M primarily on financing expense and warrant liability impacts .
Strategic actions: focused U.S. realignment (exiting international operations), outsourcing manufacturing to KDI Precision Manufacturing, and an LOI to acquire Rendiatech to add real‑time renal monitoring—aimed at broadening the fluid management platform and accelerating path to cash flow positive .
Outpatient heart failure is emerging as a core growth vector: first successful hospital-based outpatient Aquadex treatments and favorable CMS reimbursement at $1,639/day from January 1, 2025 underpin program expansion .
Stock reaction catalysts: resolution of the sterilization backlog, execution of the U.S.-only focus, outpatient program uptake, and clarity on financing/warrant liability dynamics and LOI closing expectations .

What Went Well and What Went Wrong

What Went Well

Pediatric traction and footprint expanded: 47 pediatric centers now use Aquadex, reflecting durable demand in this cohort .
Outpatient milestone achieved: first hospital-based outpatient treatments completed, creating a scalable care pathway with improved economics (CMS facility fee ~$1,639/day) .
Strategic realignment momentum: decision to exit international operations to prioritize faster-growing U.S. cardiac surgery and pediatric programs; new U.S. patent further strengthens IP portfolio; CEO appointment provides leadership continuity. “We’re entering the second half of the year with clear priorities... to drive long-term growth” — John Erb, CEO .

What Went Wrong

Temporary supply chain headwind: an industry-wide sterilization delay caused product backorders, driving revenue down YoY and under‑absorption of fixed overhead, compressing gross margin to 55.5% (vs 67.2% LY) .
Profitability pressure: operating loss widened to $(2.91)M; net loss surged to $(12.55)M, driven largely by $10.55M financing expense and the fair value impact of warrant liabilities .
Execution noise: earnings release postponed to complete valuations/audit procedures; underscores near‑term accounting/valuation complexity around capital structure and warrants .

Financial Results

P&L and Margins vs prior periods

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$2.322	$1.904	$1.725
Gross Margin %	58.4%	56.0%	55.5%
Operating Loss ($USD Millions)	$(2.387)	$(3.060)	$(2.906)
Net Loss to Common Shareholders ($USD Millions)	$(1.468)	$(3.013)	$(12.552)
Diluted EPS ($USD)	$(0.44)	$(0.69)	$(60.99)

OpEx detail

Metric	Q4 2024	Q1 2025	Q2 2025
SG&A ($USD Millions)	$2.911	$3.577	$3.189
R&D ($USD Millions)	$0.831	$0.550	$0.675
Total Operating Expenses ($USD Millions)	$3.742	$4.127	$3.864

YoY comparison to Q2 2024

Metric	Q2 2024	Q2 2025	YoY Change
Revenue ($USD Millions)	$2.194	$1.725	$(0.469)M, down ~21%
Gross Margin %	67.2%	55.5%	down ~1,170 bps
Operating Loss ($USD Millions)	$(2.320)	$(2.906)	$(0.586)M worse
Net Loss to Common ($USD Millions)	$(7.725)	$(12.552)	$(4.827)M worse
Diluted EPS ($USD)	$(791.82)	$(60.99)	share count dynamics; headline EPS less negative vs LY

Balance sheet KPIs

Metric	Q4 2024	Q1 2025	Q2 2025
Cash and Equivalents ($USD Millions)	$5.095	$2.557	$4.450
Accounts Receivable ($USD Millions)	$1.727	$1.540	$1.193
Inventories, net ($USD Millions)	$1.718	$1.752	$2.028
Warrant Liabilities ($USD Millions)	$0.468	$0.426	$14.074

Notes:

Q2 funding: $5.0M gross capital raise completed; company remained debt‑free at quarter end .
Financing expense in Q2 totaled $10.553M; change in FV of warrant liabilities was $0.900M income, but overall liability level rose materially by quarter end .

Guidance Changes

Nuwellis did not issue formal quantitative guidance (revenue, EPS, margins, OpEx, tax) for Q2 2025. Management outlined strategic priorities and operating focus.

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	None disclosed	None disclosed	Maintained (no formal guidance)
Margins	FY 2025	None disclosed	None disclosed	Maintained (no formal guidance)
Strategic Focus	H2 2025	Mixed U.S./Intl.	Exit international ops; focus U.S. cardiac surgery, pediatrics, outpatient HF	Raised strategic focus on U.S.
Manufacturing	H2 2025	In‑house	Outsource manufacturing to KDI Precision Manufacturing	Operational shift
Portfolio Expansion	H2 2025/FY 2026	Ultrafiltration only	LOI to acquire Rendiatech (renal monitoring) pending due diligence; target 4Q25 close	Potential expansion

Earnings Call Themes & Trends

No transcript was available for Q2 2025; themes below are drawn from Q4 and Q1 prepared remarks and Q2 press materials.

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Outpatient HF economics & adoption	CMS increased outpatient fee to ~$1,639/day effective Jan 1, 2025; pipeline building	First hospital‑based outpatient Aquadex treatments completed; program development support ongoing	Accelerating
Pediatric & Critical Care traction	Pediatric revenue +38% YoY in Q1; Critical Care revenue +35% YoY in Q4; consumables utilization growth (21% Q4; 4% Q1)	47 pediatric centers now adopted Aquadex; pediatric remains key driver	Expanding
Supply chain/sterilization	No prior sterilization-specific issue highlighted	Industry‑wide sterilization delay led to backorders and revenue disruption; margin impact via under‑absorption	Temporary headwind (resolving)
Manufacturing strategy	N/A	Outsourcing manufacturing to KDI Precision Manufacturing	Structural change
International focus	Mixed U.S./International historically	Exiting international operations to prioritize U.S. market growth	U.S. pivot
Portfolio/technology roadmap	JACC HF data (60% reduction vs IV diuretics) supported evidence	LOI to add renal monitoring (Clarity RMS/Prime); new U.S. patent issued	Broadening platform
Clinical programs	REVERSE‑HF enrollment ongoing historically	REVERSE‑HF trial terminated; ~$4.0M savings over ~2.5 years; focus on outpatient HF	Resource redeployment

Management Commentary

“While we faced a temporary headwind this quarter due to a vendor issue, our response demonstrated the strength of our operational discipline and our commitment to patients. We’re entering the second half of the year with clear priorities… to drive long‑term growth.” — John Erb, CEO .
“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, Interim CEO (Q1) .
“This move allows us to fully align our operations where the fastest growth is happening… doubling down on the U.S. market.” — John Erb, CEO (International exit) .
“We have embarked on a transformational growth strategy… Rendiatech’s technologies align with our deliberate focus on comprehensive fluid management.” — John Erb, CEO (LOI) .

Q&A Highlights

No Q2 2025 earnings call transcript was available in the document set; therefore, specific Q&A themes and guidance clarifications cannot be verified at this time [ListDocuments: earnings-call-transcript, none found].

Estimates Context

Wall Street consensus via S&P Global for Q2 2025 EPS: Unavailable*.
Wall Street consensus via S&P Global for Q2 2025 Revenue: Unavailable*.
Actual Q2 2025 Revenue reported: $1.725M .
Values retrieved from S&P Global.*

Where estimates may need to adjust:

Near‑term models should reflect sterilization‑related backorder impacts in Q2 and a rebound trajectory into H2 as fulfillment normalizes; margin profile depends on manufacturing outsourcing ramp and fixed cost absorption .
Balance sheet and P&L modeling must incorporate warrant liability dynamics and financing expense to capture potential volatility in reported net loss .

Key Takeaways for Investors

Temporary supply chain shock, not demand erosion: Pediatric and cardiac surgery demand remains intact; expect recovery as sterilization backlog clears .
U.S. focus should improve commercial efficiency: Exiting international operations and outsourcing manufacturing aim to lower complexity and enhance gross margin over time .
Outpatient HF is the structural growth vector: First treatments completed and favorable reimbursement support a scalable care model with improved unit economics .
Capital structure sensitivities matter: Warrant liabilities and financing expense materially affected Q2 net loss; monitor subsequent quarters for liability remeasurement impacts and dilution pathways .
Platform expansion optionality: LOI to acquire Rendiatech could add continuous renal monitoring, expanding call points and strengthening value proposition if closed on schedule (target 4Q25) .
Near‑term trading lens: Shares likely react to signs of supply normalization, evidence of outpatient account wins, and clarity on LOI progress; any margin stabilization from KDI outsourcing would be a positive catalyst .
Medium‑term thesis: A focused U.S. strategy with outpatient HF and pediatric leadership plus broader monitoring capabilities could drive recurring consumable usage and higher quality revenue mix, contingent on execution and funding discipline .

Nuwellis, Inc. (NUWE)·Q2 2025 Earnings Summary