Nuwellis, Inc. Q3 FY2024 earnings call

• Nuwellis generated $2.4M revenue in Q3 2024, down 2% YOY but up 8% sequentially.
• Pediatric category saw 28% YOY revenue surge with 3 new pediatric accounts opened, including a large FL hospital network.
• Published a study in Current Problems in Cardiology showing Aquadex reduced 60-day hospital readmission rates for acutely decompensated heart failure patients in community hospitals.
• Gross margin was 70% in Q3 vs 57.3% in prior year quarter, driven by higher consumables manufacturing volumes and lower fixed overhead.
• SG&A expenses decreased 21% YOY to $2.7M, R&D expenses decreased to $486,000 from $1.1M YOY due to efficiency initiatives.

Nuwellis generated $2.4 million in revenue for the third quarter of 2024, a 2% decrease year-over-year but 8% sequential growth over Q2. The adult category saw lower patient volumes in summer months. The pediatric customer category experienced a 28% surge in revenue year-over-year, driven by three new pediatric accounts opened, including one of the largest hospital networks in Florida. Critical care and heart failure customer categories were down 25% and 36% respectively year-over-year due to lower consumables utilization and console sales in summer.

• Anticipate accelerated top-line growth from the increased outpatient reimbursement for Aquadex starting Jan 1, 2025.
• Reverse HF trial expected to finish enrollment by mid-2026 and have data analyzed and ready to submit by end-2026.
• Vivian project estimated to be ready to start in-human clinical study (IDE trial) by end-2025 with protocol already agreed with FDA.

• Material risks and uncertainties could cause actual results to differ from forward-looking statements, including risks related to market acceptance, competition, and regulatory changes. For example, the outcome of the Reverse HF trial is uncertain and could impact the adoption of Aquadex.

Q: Walk us through an economic comparison of outpatient use of Aquadex vs inpatient use for hospitals?

A: Hospitals incur loss on inpatient heart failure treatment as cost is ~$24k vs highest DRG ~$12k. Outpatient reimbursement is $1,639 per day, hospital can make $700/day from Aquadex circuit cost $900. Also, outpatient treatment avoids 30-day readmission penalties and associated risks for patients.

Q: When can we expect reverse HF trial data?

A: Current enrollment rate expects to finish enrollment by mid-2026, then 90-day follow-up, data analyzed and ready to submit by end-2026 for publication and submission to medical societies.

Q: How is the organization preparing for new reimbursement rates starting 01/01/25?

A: Identifying hospitals that used to do outpatient ultrafiltration, helping them set up order sets and ensuring coverage from CMS and private payers. No need to add field personnel immediately but will look into reimbursement expertise at headquarters.