Nuwellis (NUWE) Q4 2025 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Tuesday, March 10, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• Chairman of the Board and Chief Executive Officer — John L. Erb
• Chief Financial Officer — Carissa Schultz
• Vice President, Investor Relations — Leah McMullen

TAKEAWAYS

• Revenue -- $2.4 million for the quarter, up 4% year over year and 9% sequentially, with growth driven by U.S. console sales and higher average selling prices.
• U.S. Console Sales -- Increased 208% to eight units sold from three a year prior.
• Gross Margin -- 68.2% in the quarter, an improvement of 9.9 percentage points compared to the prior-year quarter.
• International Sales -- Up 59% year over year, primarily due to last-time purchases from distributors in exited markets.
• Critical Care Revenue -- Declined 24% year over year, offsetting part of international and U.S. gains.
• Operating Expenses (Quarter) -- $4.1 million, $400,000 higher than the prior-year quarter, reflecting professional services, recruiting, and targeted development initiatives.
• Operating Loss (Quarter) -- $2.4 million, unchanged from the prior-year quarter.
• Net Loss Attributable to Common Shareholders (Quarter) -- $2.4 million.
• Full-year Revenue -- $8.3 million, a 5% decrease, attributed to lower consumable utilization, lower console average selling prices, and international rationalization.
• Heart Failure and Pediatrics Growth -- 814% year over year, partially offset by a 19% decline in critical care.
• Gross Margin (Full Year) -- 62%, three percentage points higher than prior year.
• Operating Expenses (Full Year) -- $16.2 million, $400,000 lower than prior year, attributable to expense discipline and improved forecasting.
• Net Loss Attributable to Common Shareholders (Full Year) -- $17.5 million, including $6.4 million noncash warrant valuation expense and $300,000 executive severance.
• Cash Position -- $1.2 million at year-end; no outstanding debt.
• Financing Activities -- $7 million in net proceeds raised during the year to support operations.
• Sales Team -- 24 individuals at year-end, with headcount planned to remain steady through 2026.
• KDI Precision Manufacturing -- Transition of manufacturing partner was completed, intended to enhance reliability and structural margins.
• NIH Grant -- Received for pediatric device development, supporting ongoing innovation and strengthening intellectual property.
• Strategic Focus -- Shift toward cardiorenal patient populations and specialized pediatric applications, with exit from underperforming geographies, especially the European Union.
• Acquisition Activity -- Agreement to acquire RendiAtek and integration of RoentDeck, with Clarity product relaunch slated for midyear.
• REVERSE-HF Clinical Trial -- Terminated to avoid an additional $3 million in costs, with plans to publish results from completed data.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• John L. Erb said, "we have lost money, continuing year after year" in the European Union, prompting a full withdrawal from that geography.
• Schultz reported a net loss attributable to common shareholders of $17.5 million for the year and highlighted $10.9 million in annual cash utilization, indicating continued reliance on external financing.
• Critical care revenue declined 24% year over year in the quarter and 19% in the full year, signaling weaker performance in that key segment.
• The REVERSE-HF clinical trial was terminated due to budgeted expenses of $3 million without sufficiently near-term benefit, showing constrained capital allocation for clinical development.

SUMMARY

The quarter marked positive momentum in U.S. and international sales, but overall revenue for the year contracted as the company reprioritized markets and faced lower consumables usage. Strategic realignment included a complete manufacturing transition to KDI Precision Manufacturing, the exit from unprofitable European operations, and expense controls resulting in lower full-year operating costs. The acquisition of RendiAtek, integration of RoentDeck, and planned relaunch of the Clarity product signal a commitment to portfolio expansion aligned with a sharpened clinical focus on cardiorenal disease and pediatric applications. NIH grant support and new CFO leadership aim to bolster financial transparency, innovation, and margin consistency going forward.

• The salesforce size was restored to 24, with territory coverage intended to remain unchanged, underscoring a disciplined approach to expansion.
• Gross margin improved both quarterly and annually, moving to 68.2% and 62%, respectively, as a result of operational enhancements and pricing actions.
• The company's objective for 2026 is "to translate strategic clarity into more predictable commercial performance," with concentration in existing high-utilization accounts.
• Integration of RendiAtek is set to offer in-ICU, real-time kidney health monitoring, providing differentiation within the company’s core critical care segment.
• Discipline in capital and expense allocation remains central after annual net losses and terminated clinical trial spending, suggesting ongoing financial scrutiny is required.

INDUSTRY GLOSSARY

• Cardiorenal Continuum: A clinical area focused on the interrelated management of heart and kidney conditions requiring specialized therapies and devices.
• Critical Care: Hospital-based, intensive medical management for patients with severe, life-threatening conditions such as fluid overload post-cardiac surgery.
• Consumables Utilization: The rate at which disposable components of a medical device are used and replaced in clinical settings.

Full Conference Call Transcript

Leah McMullen: Thank you, Operator. And thank you all for joining today's conference call to discuss Nuwellis, Inc.'s corporate developments and financial results for the fourth quarter and full year as of December 31, 2025. In addition to myself, with us today are John L. Erb, Nuwellis, Inc.'s Chairman of the Board and CEO, and our newly appointed CFO, Carissa Schultz. At 8:00 a.m. Eastern Time today, Nuwellis, Inc. released financial results for the fourth quarter and full year 2025. If you have not received Nuwellis, Inc.'s earnings, please visit the investor page on the company's website. During the conference call, the company will be making forward-looking statements.

All forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends, as well as our estimated results or performance, are forward-looking statements. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon current available information, and the company assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements.

Please refer to the cautionary statements and discussion of risk in the company's filings with the Securities and Exchange Commission, including the latest 10-Ks. With that, I would now like to turn the call over to John.

John L. Erb: Thank you, Leah, and good morning, everyone. I would like to begin by stepping back from the quarter and reflecting on the year as a whole. 2025 was not a continuation year for Nuwellis, Inc. It was a year of structural change and deliberate repositioning. While full-year revenue declined 5% compared to 2024, the defining characteristic of 2025 was not top-line variability. It was the strengthening of the company's operating foundation and the clarification of our long-term strategy. Throughout the year, we made intentional decisions to simplify the business, improve operational discipline, and concentrate resources in areas where clinical adoption and economic value are most aligned. A central initiative was the transition of manufacturing to KDI Precision Manufacturing.

This was a significant operational undertaking requiring coordination across supply chain, quality systems, and production leadership. The objective was not short-term cost reduction. It was long-term reliability, scalable manufacturing alignment, and improved structural margin performance. As we move forward, this transition enhances operational predictability and strengthens our supply chain foundation. We also evaluated and refined our international commercial strategy. Portions of that business generated inconsistent returns and required disproportionate resources. During the year, we reduced exposure in certain markets and redirected focus towards geographies where clinical demand and commercial conversion are more predictable. That decision reflects discipline and prioritization.

Over the course of the year, we also maintained access to capital through financing transactions that support operational continuity during a period of transition. We ended the year with approximately $1.2 million in cash and no outstanding debt. Liquidity management and disciplined capital allocation remain central priorities as we execute our strategy. Beyond operational and financial refinements, 2025 marked a critical clarification of strategic positioning. Historically, Nuwellis, Inc. has been described as a fluid management company. Over the course of the year, we sharpened our focus around the cardiorenal continuum. Our technology serves patients whose cardiac and renal conditions are tightly interrelated and where precision volume management directly influences outcomes across both organ systems.

This alignment reflects where we see the strongest clinical traction and the most durable long-term opportunity. Growth in heart failure and pediatrics reinforces that our value proposition is most compelling within complex cardiorenal populations. Within this strategy, our pediatric program represents a meaningful extension of our platform. During the year, we expanded intellectual property supporting our pediatric device development and were the beneficiary of a National Institutes of Health grant to advance this program. The combination of strengthened IP protection and nondilutive NIH funding provides external validation of the clinical importance of this work and reinforces the long-term defensibility of our innovation within the cardiorenal continuum. Turning to the fourth quarter.

Revenue was $2.4 million, an increase of 4% compared to the prior-year quarter and 9% sequentially. U.S. console sales increased 208%, reflecting stronger activity within targeted accounts. Gross margin expanded to 68.2% in the quarter compared to 58.4% in the prior-year period. Full-year operating expenses were $400,000 lower than the prior year, reflecting tighter expense management, improved forecasting discipline, and more select commercial deployment. These results reinforce a core operating principle. Where clinical adoption is established, utilization expands. Our strategy is not broad-based expansion across all possible customer opportunities. It is disciplined concentration in accounts and patient populations where clinical pull and economic value are demonstrable.

Taken together, 2025 was a year of operational strengthening, portfolio alignment, disciplined capital management, and strategic clarity. The organization enters 2026 more focused, more disciplined, and structurally stronger than it was a year ago. As we begin 2026, we have further strengthened our financial leadership. Earlier this year, we welcomed Carissa Schultz as Chief Financial Officer. Carissa brings deep experience in medical technology, finance, and operational leadership. Her focus on forecasting precision, capital allocation discipline, and financial transparency supports the operating model we have refined over the past year. With that, I will turn the call over to Carissa for a detailed review of our results.

Carissa Schultz: Thank you, John, and good morning. I will begin with fourth quarter performance before turning to full-year results and our balance sheet position. Revenue for the fourth quarter was $2.4 million, representing a 4% increase compared to the prior-year quarter and a 9% increase sequentially. The year-over-year improvement was driven by a 208% increase in U.S. console sales, with eight units sold compared to three in the prior-year period, and an 11% circuit average selling price increase. International sales increased 59% year over year, largely as a result of last-time buys from distributors whose territories we were exiting. These gains were partially offset by a 24% decline in critical care revenue.

Sequentially, revenue growth was driven primarily by increased cath utilization, partially offset by lower console sales compared to the third quarter. Gross margin for the fourth quarter was 68.2%, an improvement of 9.9 percentage points compared to the prior-year quarter. Operating expenses for the quarter were $4.1 million, representing a $400,000 increase compared to the prior-year quarter. The year-over-year increase reflects higher professional services, recruiting activity, and targeted development initiatives. Operating loss for the fourth quarter was $2.4 million, flat with the prior-year quarter. Net loss attributable to common shareholders for the quarter was $2.4 million. Turning to full-year results. Revenue for 2025 was $8.3 million, a 5% decrease compared to the prior year.

The year-over-year decline reflects lower consumables utilization, lower U.S. console average selling prices, reduced international contribution following strategic rationalization, and prior-year SeaStar sales prior to that agreement's termination. Heart failure and pediatrics grew 814% year over year, respectively, partially offset by a 19% decline in critical care. Full-year gross margin was 62%, three percentage points higher than the prior year. Operating expenses for the full year were $16.2 million, slightly lower than the prior year, reflecting improved expense discipline and forecasting rigor. Net loss attributable to common shareholders for the full year was $17.5 million, which includes a $6.4 million noncash warrant valuation expense and approximately $300,000 in executive severance expense.

From a liquidity standpoint, full-year cash utilization was approximately $10.9 million. We ended the year with approximately $1.2 million in cash and no outstanding debt. During 2025, we raised approximately $7 million in net proceeds through financing activities, supporting operations during a period of structural transition. As we move into 2026, our financial priorities focus on gross margin consistency, disciplined expense management, enhanced visibility into commercial conversion, and prudent capital deployment. This concludes our prepared remarks. Operator, we would now like to open the call to questions.

Operator: Thank you. And if you would like to ask a question, please press 1 on your keypad. To leave the queue at any time, press 2. Once again, that is star and 1 to ask a question. And once again, that is star and 1 if you would like to join the queue. We are showing one question comes from the line of Anthony V. Vendetti with Maxim Group. Please go ahead. Your line is open.

Anthony V. Vendetti: Thank you. Yeah. So I wanted to, John, just talk about, you know, you said you had some operational changes this year and refocus of the business. Can you talk a little bit about, you know, where the salesforce and where your main focus is now versus where it was maybe a couple years ago? And then also, second part of the question is going to be on the Rendytek—if I am pronouncing it correctly—the acquisition, how those products are going to be incorporated into your current product portfolio.

John L. Erb: Thanks. Sure, Anthony. Well, let me start off and say that in 2025, we reinforced our direct sales team. We had declined at the beginning of the year by several account territories, and we brought some folks on board, both account managers and clinical specialists, to bring us back up to the budgeted amount, which we saw that impact in the second half of the year. We are really beginning to see much greater growth in 2026.

You know, at the beginning of the year this year, we were recovering from a product recall and from some quality issues that we really needed to redirect the business, and that was the primary reason we ended up going to contract manufacturing with KDI Precision Manufacturing. That has really brought stability to our supply and product quality that we are very pleased with. We also looked hard at expenses, looking at our cash burn and how we could reduce it. Internationally, particularly in the European Union, we have lost money, continuing year after year. We made the decision that we would exit the EU and basically successfully pulled out of that and reduced our cash burn.

We also looked hard at an expensive clinical trial that was in place with the REVERSE-HF clinical trial. It was budgeted to spend an additional $3 million to complete the trial, take a couple of years, and the benefit of a very successful trial was still going to be two or three years down the road. So, again, looking at cash management, we made the decision to terminate that trial. We are actively now working with the principal investigators with the data that was completed to put together a publication with some positive results. So a lot of activity around refocusing the business.

You know, the NIH grant that we received for pediatrics development of the renal replacement therapy devices is very positive for us. And we continue to grow in the pediatrics area. So I would say a bit of a refocus, not so much away from heart failure, but in addition to heart failure, really focusing on the pediatric nephrologist and the benefit that the Aquadex product was bringing to the pediatric marketplace. Let me see what else. I think that covered your main question. The second part of your question regarding Aurinia Tech, the value there is in critical care.

You know, as we remove fluid after a patient has come off of the heart-lung machine, very gently and very carefully, which is what the heart needs, what the kidneys need, you know, after extubation from the heart-lung machine, they also measure all the fluid off, and renal output or urine output is another critical measure. What Rendiatek has is a technology basically that helps measure that renal or urine output in the ICU. What is exciting about that product is the opportunity that we are already working on to enhance the capability of not just measuring flow and measuring quantity, but also measuring the analytes or electrolytes that are in the urine.

That is a key biomarker for kidney health, acute kidney injury. About 60% of patients in critical care that come off of the heart-lung machine do experience acute kidney injury. Rather than that urine being sent to the lab and waiting for lab results to come back to look at the potassium, sodium, oxygen level in the urine, they can get this bedside. So that was really the primary reason we were interested in the Rendiatek acquisition, that very differentiated capability that it will bring to the ICU.

Anthony V. Vendetti: Okay, John. That is helpful. Maybe since it looked like fourth quarter sales were driven more by utilization within existing accounts versus new accounts, so RendiA Tech—is the focus going to be to try to get more utilization out of the current accounts as we begin this year and try to get Rendia Tech into all those accounts? And then where is your salesforce or territory manager number currently, and is that expected to be constant for this year, or do you expect to add as you move through the year?

John L. Erb: Thanks. Sure. Well, let me start with the second part of that question. Right now, our total sales team is 24 individuals between account managers and clinical specialists. And that really brings it up to what was budgeted for a headcount in 2025, and I anticipate keeping it at that number through 2026. We have a lot of opportunity in existing accounts, and this is the first part of your question. We will focus on increased utilization. The sales team is primarily focused on critical care. We see critical care ICU—the cardiorenal issue in these patients that have gone through cardiac surgery—as a really big opportunity for the company. So that is a primary focus.

Of course, we will continue to support our heart failure customers and patients and work closely in nephrology in the pediatric area as the product sees. But I would say that the majority of the focus is to grow the critical care business in existing accounts. A lot of these accounts are already heart failure accounts that we are expanding into critical care, and we see the Rendiatek acquisition as an opportunity to enhance utilization within those accounts.

Anthony V. Vendetti: Okay. Thanks so much. That is very helpful. I will jump back in the queue.

Operator: Thank you. And once again, if you would like to ask a question, please press 1 on your keypad now. We will pause for another moment. And once more, that is star and 1 if you would like to join the queue. Thank you. And at this time, there are no further questions in queue. I will now turn the meeting back to management for closing remarks.

John L. Erb: Thank you. 2025 marked a necessary inflection point for the company. We made decisive adjustments to strengthen the operating model and clarify our strategic focus. As we enter 2026, we are doing so with renewed momentum, including the execution of our agreement to acquire Rendiatek and the planned expansion of our portfolio, the appointment of Ms. Schultz as our Chief Financial Officer, and additional capital to support operations. Entering this next phase, we are more disciplined, more deliberate, and aligned around the cardiorenal opportunity that will define our next phase of growth. The structural work completed in 2025 positions us to shift from refinement to execution in 2026.

Our objective in 2026 is to translate strategic clarity into more predictable commercial performance. We will continue executing with discipline, concentrating resources in cardiorenal populations where clinical adoption and utilization are strongest, and driving deeper penetration within active accounts. We are actively integrating our recent acquisition of RoentDeck and plan to relaunch the Clarity product midyear. We also continue progressing development of Vivien, our novel pediatric solution supported by the NIH grant funding. We will maintain financial rigor, strengthen margin consistency, and prioritize capital efficiency as we scale. We appreciate the continued support of our shareholders, the drive and focus of our team, and look forward to updating you on progress throughout the year. Thank you, and goodbye.

Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.