Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nuwellis Inc (NUWE, Financial) reported a 6% year-over-year increase in revenue for Q2 2024, reaching $2.2 million.
- The company saw a 30% increase in heart failure and critical care consumables utilization, indicating broader use of Aquadex therapy.
- Gross margin improved significantly to 67.2% from 55.3% in the prior-year quarter, driven by higher manufacturing volumes and lower fixed overhead expenses.
- Selling, general, and administrative expenses decreased by approximately 31%, reflecting efficiency initiatives enacted in the second half of 2023.
- Nuwellis Inc (NUWE) announced the first commercial sale of QUELIMMUNE to Cincinnati Children's Hospital, marking a significant milestone in penetrating the pediatric market.
Negative Points
- Pediatric revenue declined by 10% in the quarter, primarily due to a decrease in consumables utilization driven by a lower census of children born with kidney disease.
- Net loss attributable to common shareholders increased to $7.7 million, compared to $4.8 million in the same period in 2023.
- The company ended the quarter with only $1 million in cash and cash equivalents, raising concerns about liquidity.
- The pilot program with DaVita has seen slower-than-anticipated progress, requiring more intense interaction with hospitals.
- The rollout of QUELIMMUNE is constrained by the need for IRB approvals at each hospital, making it difficult to provide guidance on future sales.
Q & A Highlights
Highlights of Nuwellis Inc (NUWE) Q2 2024 Earnings Call
Q: Can you help us on the R&D trend guidance, that drop? Is that reflective of what's going on going forward? Or is that going to pop back up a little?
A: Robert Scott, CFO: We anticipate the spend to continue maybe consistent with where it is in Q2. However, we will be continuing development of Vivian, our pediatric continuous renal replacement device. We anticipate ramping up software development soon, which may increase R&D expenditures in the near future.
Q: Can you talk about your pediatric percent of revenue, the growth with that, and how things might be going on with that Florida pediatric hospital?
A: Nestor Jaramillo, CEO: Our pediatric business represents about 30% of total revenue. This quarter, we saw an increase in console sales due to new accounts but a decrease in census, meaning fewer babies born with kidney disease. The Florida pediatric hospital is part of our expansion efforts.
Q: Did you speak to any sort of guidance you might have for QUELIMMUNE given that it's started and being used with patients already?
A: Nestor Jaramillo, CEO: It's hard to give guidance on QUELIMMUNE due to the HDE requirements, which necessitate IRB approvals from each hospital. So far, only one hospital has completed the process and issued a purchase order.
Q: Did you give any update on the progress with the trial with DaVita?
A: Nestor Jaramillo, CEO: The pilot with DaVita has been slower than anticipated due to the need for more intense interaction with hospitals. This is a new process for DaVita, us, and the hospitals, requiring amendments to contracts and new protocols.
Q: Can you speak to any traction that you're getting with that 50-hospital network relevant to Aquadex?
A: Nestor Jaramillo, CEO: We're getting good traction in that network. The hospital administration is familiar with Nuwellis, and using Aquadex in pediatric hospitals is expected to be positive.
Q: Can you talk to how many pediatric accounts were added this quarter and what your current total is at?
A: Robert Scott, CFO: We opened one pediatric account this quarter, bringing the total to 41 accounts using Aquadex for pediatric patients.
Q: Is the REVERSE-HF trial still on track to complete site enrollment by the end of '24 and patient enrollment by the end of 3Q '25?
A: Nestor Jaramillo, CEO: Yes, we believe we are on track. We have seen a slowdown in enrollment due to the summer months but are over a third of the way through the required patient enrollment.
Q: Can you talk about the SeaStar partnership and how it works financially for Nuwellis?
A: Nestor Jaramillo, CEO: SeaStar is responsible for obtaining IRB approvals and running the registry. We handle training, value analysis committee processes, purchase orders, product delivery, and clinical support. We are conducting a controlled limited launch targeting five hospitals initially.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
