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01/11 07:56
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several challenges: a 6% revenue decline, reduced gross margins, increased operating expenses, and a higher operating loss. Despite some positive aspects like sequential revenue growth and a focus on U.S. market expansion, the termination of international operations and dependency on the U.S. market pose risks. The cash position is limited, and manufacturing transition risks exist. With no new partnerships or positive shareholder return plans discussed, the overall sentiment is negative, likely leading to a -2% to -8% stock price movement.
Total Revenue $2.2 million, a 6% decrease from the third quarter of 2024, primarily due to onetime prior year SeaStar Medical QUELimmune sales of approximately $200,000 and a decrease of approximately $100,000 in international revenues associated with the wind-down of international operations in the current quarter, also lower console average selling prices. These impacts were partially offset by a 15% year-over-year increase in consumables utilization.
Pro Forma Revenue Revenue grew approximately 7% year-over-year after excluding the SeaStar Medical revenue in the prior year and the decrease in international revenue.
Sequential Revenue Growth Revenue increased 29% from the second quarter, driven by a 23% increase in consumables utilization and a fourfold increase in U.S. console sales.
Customer Category Performance Heart failure and critical care were 41% and 15% ahead of the prior year, respectively, while pediatrics declined 7%, largely due to lower console sales. All customer categories experienced year-over-year growth in circuit sales with heart failure and critical care also benefiting from stronger console demand.
Gross Margin 65.2% compared to 70% in Q3 of 2024. The gross margin rate decline was primarily due to under-absorption of fixed overhead from lower production volumes earlier in the year, which flow through cost of sales in the current quarter as that inventory was sold.
Selling, General and Administrative Expenses $3.5 million, compared to $2.7 million in the same period last year. The increase reflects increased payroll and compensation expense associated with rebuilding our U.S. sales force to historical headcount levels.
Research and Development Expenses $603,000 compared to $486,000 last year, driven by an increase in expenses associated with continued investment in sustained engineering and our quality systems.
Total Operating Expenses $4.1 million in total, a 30% increase year-over-year. This increase is attributed to investments in growth-focused initiatives in the U.S. business.
Operating Loss $2.7 million compared to an operating loss of $1.5 million in Q3 of 2024.
Net Income Attributable to Common Shareholders $469,000 or $0.56 per share compared to $2.4 million or $73.23 per share in the prior year quarter. This reflects the effect of the company's reverse stock split effective in July 2025.
Cash and Cash Equivalents $3.1 million at the end of the quarter, with the company remaining debt free. The $1.9 million net equity raise in Q3 combined with the $4 million net equity raise in June provides flexibility to support continued execution of the U.S. revenue growth strategy and operating plan into 2026.
Aquadex therapy: Expanded adoption and advanced leadership in precision fluid management across the cardiorenal continuum. New 24-hour Aquadex circuit introduced for hospital-based outpatient use, complementing the 72-hour inpatient option.
Dual-lumen extended-length catheter: Introduced to expand access options and compatibility across care environments, making therapy simpler and more scalable.
Vivien pediatric CRRT system: Accelerated development through NIH-supported collaboration, targeting children weighing 2.5 to 20 kilograms. New U.S. patent allowance and clinical data showing 92% survival in children treated with Aquadex.
Heart failure therapy: First Aquadex therapy delivered in a hospital-based outpatient setting under the new CMS reimbursement code, extending therapy beyond inpatient admission.
Manufacturing transition: Initiated transition to KDI Precision Manufacturing to improve cost efficiency.
European operations: Exited European operations to focus on the U.S. market.
Capital raises: Completed two successful capital raises in 2025, providing flexibility for U.S. growth strategy.
Focus on U.S. market: Sharpened focus on U.S. operations by exiting European operations and rebuilding U.S. sales force.
Precision fluid management: Positioning the company as a leader in cardiorenal care with a focus on critical care, pediatrics, and outpatient heart failure therapy.
Revenue Decline: Total revenue for Q3 2025 decreased by 6% compared to Q3 2024, primarily due to the absence of prior year SeaStar Medical QUELimmune sales and a decrease in international revenues.
Gross Margin Decline: Gross margin dropped to 65.2% from 70% in Q3 2024, driven by under-absorption of fixed overhead from lower production volumes earlier in the year.
Increased Operating Expenses: Operating expenses rose by 30% year-over-year, driven by higher payroll, compensation expenses, and investments in engineering and quality systems.
Operating Loss: Operating loss increased to $2.7 million in Q3 2025 from $1.5 million in Q3 2024, reflecting higher operating expenses and lower gross margins.
International Operations Wind-Down: The company is exiting European operations, which contributed to a decrease in international revenues and may limit global market opportunities.
Dependence on U.S. Market: The focus on the U.S. market following the exit from European operations increases reliance on a single geographic region for revenue.
Manufacturing Transition Risks: The transition of manufacturing to KDI Precision Manufacturing may pose risks related to operational disruptions or delays in achieving cost efficiencies.
Decline in Pediatric Segment: Pediatrics revenue declined by 7% year-over-year, primarily due to lower console sales, which could impact growth in this segment.
Cash Position: The company ended Q3 2025 with $3.1 million in cash and cash equivalents, which may limit flexibility for future investments or operations.
Revenue Growth: The company expects incremental cost efficiency from the KDI manufacturing transfer beginning next year, which should support margin expansion once the transition is fully optimized.
Focus Areas for Growth: Nuwellis is focusing on three growth engines: critical care, pediatrics, and hospital-based outpatient heart failure therapy, aiming to define a new standard for precision fluid management and position the company for long-term sustainable growth.
Operational Strategy: The company plans to continue disciplined capital deployment and leverage the $1.9 million net equity raise in Q3 and the $4 million net equity raise in June to support its U.S. revenue growth strategy and operating plan into 2026.
The selected topic was not discussed during the call.
The earnings call reveals several challenges: a 6% revenue decline, reduced gross margins, increased operating expenses, and a higher operating loss. Despite some positive aspects like sequential revenue growth and a focus on U.S. market expansion, the termination of international operations and dependency on the U.S. market pose risks. The cash position is limited, and manufacturing transition risks exist. With no new partnerships or positive shareholder return plans discussed, the overall sentiment is negative, likely leading to a -2% to -8% stock price movement.
The earnings call presents a mixed picture. While there is growth in pediatrics and improved reimbursement for heart failure, the overall financial performance is concerning. Revenue declined by 21% due to a product back order, and margins fell significantly. The termination of the REVERSE-HF trial and increased net losses further add to the negative sentiment. Despite the resolution of the sterilization issue and potential in pediatrics, the financial challenges and operational risks outweigh the positives, leading to a negative outlook for the stock.
The earnings call reveals mixed signals. While there are positive developments like increased reimbursement rates and outpatient market entry, there are concerns about declining international sales, margin reduction, and customer dependency risks. The Q&A section highlighted some unresolved issues, such as the lack of clarity on revenue drops and vague timelines for clinical trials. Despite financial improvements in operating loss and expenses, the absence of a share repurchase program and manufacturing challenges temper expectations. Overall, these factors suggest a neutral impact on the stock price over the next two weeks.
The earnings call presents mixed signals. Positive factors include new account wins, outpatient market entry, increased reimbursement rates, and operating loss improvements. However, these are offset by declining international sales, customer dependency risks, reduced gross margins, and lack of clear guidance in the Q&A. The absence of a share repurchase program and a decrease in cash position further contribute to a neutral outlook. Given these factors, the stock is likely to remain stable within a -2% to 2% range over the next two weeks.
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