Cytosorbents Corporation (CTSO) Earnings

Management highlights

### Organizational and Cost Improvements - The company has fundamentally restructured over the past 12 months, reducing total headcount by ~23% since September 2025, cutting operating expenses, and significantly lowering operating cash burn - Gross margin improved to 73% driven by manufacturing optimization, improved sourcing, production efficiencies, and disciplined cost management, with management expecting further margin expansion as volumes grow - Operating cash burn (excluding restructuring costs) fell to ~$200,000, a 38% improvement in adjusted EBITDA loss and 27% reduction in operating loss year-over-year ### Core Cytosorb Commercial Performance - Overall revenue was stable year-over-year, with growth in distributor networks and non-Germany direct sales offsetting declines in Germany post-restructuring - Geopolitical instability in the Middle East temporarily impacted regional sales in H1 2026, but physician interest remains strong and the region is expected to contribute to future growth - The streamlined German sales team is becoming increasingly productive; the company plans to add 3-5 new sales representatives by early 2027 to improve territory coverage and return the country to growth - Continued adoption of the new Purify platform and hot swap device technology, which expands platform capabilities by enabling more frequent device changes and supports earlier treatment for appropriate patients ### DrugSorb ATR Regulatory and Clinical Update - The STAR-T pivotal trial for ticagrelor (Brilinta) removal during cardiac surgery met all primary safety endpoints, with no device-related serious adverse events and balanced death rates between treatment and control arms - After adjusting for protocol deviations and imbalances in the CABG per-protocol population, the trial found a statistically significant 58% risk reduction in major bleeding, with a number needed to treat of 6 - Following FDA denial of the original de novo application and a successful appeal, the FDA confirmed no new clinical trial is required and agreed the device has no major safety issues, clearing the path for a resubmission with additional required data - The company will pursue parallel de novo submissions for DrugSorb ATR: one for ticagrelor removal and a separate submission for direct oral anticoagulant (DOAC, Eliquis/Xarelto) removal, which already has a separate FDA Breakthrough Device designation - Additional required data includes mechanistic data from a small experimental study and real-world evidence from existing European use; pre-submission meetings for both indications are scheduled for late August 2026, with new submissions to be filed as soon as data collection is complete ### HemaDefend BGA Strategic Update - HemaDefend BGA is a proprietary gravity-fed filter that removes anti-A/anti-B antibodies to create universal plasma and blood products, addressing a multi-billion dollar market opportunity in trauma, emergency care, military medicine, and industrial plasma processing - Development is complete, the product has been validated by multiple industry and government stakeholders, and the company has received formal FDA feedback on a clinical pathway following a pre-IDE submission - The program has already received $16 million in non-dilutive U.S. Department of Defense funding, and the company is pursuing additional non-dilutive government funding or a strategic partnership to advance clinical trials; it will not fund development internally from core operating cash flows at this time

Guidance

- Management maintains guidance to achieve operating cash flow breakeven in the second half of 2026 - The company expects sequential revenue growth from the existing streamlined German sales team in the second half of 2026, with contributions from new sales representatives to begin in mid-2027 - Pre-submission meetings with the FDA for both DrugSorb ATR indications will be held in late August 2026, with new de novo submissions to be filed as soon as required additional data is compiled

Segment performance

Cytosorbents reports total revenue of $9.6 million for Q2 2026, which was flat year-over-year and up 9% sequentially from Q1 2026. The core Cytosorb commercial segment is the only revenue-generating business segment, contributing 100% of total revenue. Within the core Cytosorb segment: distributor and strategic partner network revenue grew 16% year-over-year, direct sales outside of Germany grew 9% year-over-year, while Germany sales declined year-over-year following prior restructuring. Gross margin for the segment improved to 73% in Q2 2026, up from 71% in Q2 2025 and 69% in Q1 2026. DrugSorb ATR and HemaDefend BGA are pre-commercial segments that generated no revenue in the quarter.

Risks & headwinds

- The company's share price continues to reflect investor skepticism regarding management's ability to execute on strategic and clinical milestones - There is no guarantee that the additional data requested by the FDA will be sufficient to gain marketing approval for DrugSorb ATR for either indication, even with the aligned regulatory pathway - Germany sales remain challenged following restructuring, and expansion of the sales team may not deliver the expected revenue growth - Geopolitical instability in the Middle East may continue to negatively impact near-term sales growth in the region - The company has limited cash on hand ($5.9 million as of June 30, 2026) and is still burning operating cash, requiring it to achieve breakeven or secure additional financing in the near term - HemaDefend BGA clinical development is dependent on obtaining non-dilutive government funding or a strategic partner, with no guarantee that this funding or partnership will be secured

Analyst Q&A

• Q: Will a parallel de novo submission for DOAC indication significantly delay the overall DrugSorb ATR submission timeline compared to the original plan of a single submission? /

  A: Management intends for the two submissions to proceed in parallel, with no expected meaningful delay to the ticagrelor submission. The ticagrelor submission is already far along, with most materials prepared. The late August 2026 FDA pre-submission meeting for the DOAC indication will clarify the required data path, after which both submissions will advance on parallel tracks.

• Q: Can gross margin expand above the current 73% level in the second half of 2026? /

  A: Gross margin expansion is dependent on volume growth. The current 73% margin reflects operational efficiencies already achieved, so further volume growth will drive additional margin expansion from this base.

• Q: When will the new German sales representatives become revenue accretive, and will they be enough to return Germany to growth? /

  A: The existing streamlined German sales team is already showing improved productivity and is expected to deliver sequential revenue growth in the second half of 2026. New representatives will cover pre-existing customer territories that have lacked coverage, so they can become productive within 3-6 months of hiring, with meaningful contributions to growth expected by mid-2027. The variable-heavy compensation structure limits upfront cost and aligns pay with performance.

• Q: Has the FDA pre-agreed to the real-world evidence data sources, comparators, and statistical analysis for the resubmitted DrugSorb ATR application? /

  A: FDA has already issued public guidance for real-world evidence that the company is following. The company has identified high-fidelity internal data and adequate external control groups, and has designed a rigorous statistical analysis plan aligned with FDA expectations. While the FDA will not formally confirm acceptability until they review the submitted data, management has a clear roadmap aligned with regulatory requirements.

• Q: Will Cytosorbents self-fund the HemaDefend BGA clinical trial, or will development depend on outside funding/partnership? /

  A: The company's current focus is on the core Cytosorb and DrugSorb ATR programs, and does not plan to fund HemaDefend BGA development internally at this time. The program has already received $16 million in non-dilutive DoD funding, and management is pursuing additional government funding or a strategic partnership to advance clinical trials, with clear FDA guidance on the required clinical pathway already in hand.