Nephros (NEPH) Q3 2026 Earnings Call Transcript

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DATE

Thu, Nov. 5, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Robert Banks
• Chief Financial Officer - Judy Krandel

TAKEAWAYS

• Net Revenue -- $5.6 million for the third quarter, an increase of 18% driven by growth in product sales and significant expansion in emergency response revenue.
• Net Income -- $512,000 for the third quarter, an increase from $337,000 in the prior year period due to higher sales volume and operating leverage.
• Adjusted EBITDA -- $558,000 for the quarter, compared to $418,000 in the third quarter of 2025, reflecting improved operational efficiency.
• Core Programmatic Revenue -- grew 8% year over year during the quarter, representing recurring demand from customers who have integrated filtration products into their ongoing operations.
• Active Customer Sites -- reached a record 1,766 sites, with 31 new locations added during the third quarter.
• New Site Segmentation -- 64% of new sites added during the quarter were in the healthcare sector, while 17% came from commercial and industrial applications.
• Gross Margin -- 58% for the quarter, a decrease from 61% in the prior year period due to higher inventory shipping and handling costs and a shift in revenue mix toward lower-margin services.
• Nine-Month Revenue -- $16.9 million, an increase of 20% compared to the first nine months of the previous year.
• Nine-Month Core Programmatic Revenue -- increased 19% year over year, driven by strong reorder activity and an expanded installed base.
• Nine-Month Adjusted EBITDA -- $2.0 million, an increase from $1.4 million in the same period of 2025.
• Cash and Cash Equivalents -- $4.5 million as of Sept. 30, 2026, with the company remaining debt-free.
• Tariff Refund -- $600,000 recognized during the first nine months of the year, representing refunds for tariffs paid between April 2025 and Feb. 2026.
• SG&A Expenses -- $2.4 million for the quarter, an increase of 9% primarily due to higher professional fees and increased headcount.
• R&D Expenses -- $331,000 for the quarter, a decrease of 2% compared to the prior year period.
• Trailing 12-Month Revenue -- surpassed $21 million, as reported by management during the third-quarter call.
• Inventory -- $5.0 million as of Sept. 30, 2026, compared to $3.2 million at the end of 2025, reflecting higher stock levels to support growth.
• Accounts Receivable -- $3.6 million as of Sept. 30, 2026, an increase from $2.4 million as of Dec. 31, 2025, due to higher revenue volume.
• Cost of Goods Sold -- $2.3 million for the quarter, an increase of 26% year over year reflecting higher product and logistics costs.

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RISKS

• Judy Krandel stated, "margins have continued to experience pressure from increased product costs associated with foreign currency movements, tariffs, shipping expenses, and the rapid growth of commercial products and service revenue," noting that these factors currently yield lower margins than the core infection control business.

SUMMARY

Nephros, Inc. (NASDAQ:NEPH) reported increased net revenue and improved profitability during the third quarter as it expanded its core customer base. Management stated that the company is transitioning from a focus solely on filter sales to an integrated model encompassing products, service, and education. The company reported record active customer sites and indicated that healthcare remains the primary market while diversification into commercial and industrial applications continues. Management noted that the growth in core programmatic revenue provides a durable foundation for future recurring demand.

• Robert Banks stated, "Education allows us to engage customers and industry professionals around emerging water-quality challenges, share the expertise we have developed over many years, and build relationships well before a filtration decision is made."
• Management indicated that commercial sales often involve multiyear efforts through partners like Donastar, with enterprise-level deals typically requiring six months to one year to close.
• The company is identifying new applications for its filtration technology in emerging areas including PFAS, microplastics, and nanoplastics.
• Robert Banks noted that while healthcare remains the core focus, the technology is finding applications in light industrial settings and for ice machines to control taste and odor.
• Management indicated that geographic expansion efforts are specifically targeting higher market penetration in regions such as New York City and Puerto Rico.
• The Nephros Water Institute is being utilized as a commercial strategy tool to generate qualified leads and maintain customer engagement through the sales cycle.

INDUSTRY GLOSSARY

• Programmatic Revenue: Recurring revenue from customers who have integrated filters into their standard operations and purchase replacements on a regular schedule.
• Ultrafiltration: A water purification process using semi-permeable membranes to remove biological contaminants, bacteria, and viruses.
• PFAS: Per- and polyfluoroalkyl substances, synthetic chemicals that are persistent in the environment and subject to increasing water quality regulations.
• Adjusted EBITDA: A non-GAAP financial measure that represents net income excluding interest, taxes, depreciation, amortization, and non-cash items such as stock-based compensation.
• IEEPA: The International Emergency Economic Powers Act, under which the company received tariff refunds for previously paid expenses.
• Legionella: A waterborne bacteria that can cause serious respiratory illness, commonly targeted by the company's healthcare filtration products.

Full Conference Call Transcript

Operator: I'll now turn the call over to Kirin Smith. You may begin.

Kirin Smith: Thank you, everyone, and good afternoon. This is Kirin Smith with PCG Advisory. Thank you all for participating in Nephros' third quarter 2026 conference call. Before we begin, I would like to caution that comments made during this conference call made by management will contain forward-looking statements regarding the operations and future results of Nephros. I encourage you to review Nephros' filings with the Securities and Exchange Commission, including without limitation, the company's Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

Factors that may affect the company's results include, but are not limited to, Nephros' ability to successfully, timely, and cost-effectively market and sell its products and service offerings, the rate of adoption of its products and services by hospitals and other healthcare providers, the success of its commercialization efforts, and the effect of existing and new regulatory requirements on Nephros' business and other economic and competitive factors. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live call, today, November 6, 2026. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call, except as required by law.

I would now like to turn the call over to Nephros' President and Chief Executive Officer, Robert Banks. Robert, please go ahead.

Robert Banks: Thank you, Kirin, and good afternoon, everyone. The third quarter of 2026 was another strong quarter for Nephros, and more importantly, provides additional evidence of the durability of the growth we have been building over the last several years. We generated approximately $5.6 million in revenue, an increase of 18% over the third quarter of 2025. This followed the record $6 million we reported in the second quarter. I think that sequence is important. A record quarter is exciting. Following a record quarter with another quarter of strong double-digit year-over-year growth tells us much more about the underlying business.

For the first nine months of 2026, revenue reached approximately $16.9 million, an increase of 20% over the same period last year. Core programmatic revenue increased 19% over that nine-month period. Importantly, this is profitable revenue growth where net income and adjusted EBITDA increased respectively to approximately $500,000 and approximately $600,000. Our trailing 12-month revenue has now surpassed $21 million. When you look at those results together, I believe they demonstrate that Nephros is becoming a larger, stronger, and increasingly durable business. Our core programmatic business remains the foundation of that growth. Programmatic product revenue increased approximately 8% during the third quarter compared with last year.

That business is particularly important to us because it represents customers incorporating Nephros products into their operations and then purchasing replacement filters over time. Every new installation has the potential to contribute to future recurring demand. Emergency response also contributed meaningfully during the quarter. As we have discussed several times, emergency response will fluctuate depending on outbreaks, infrastructure issues, and other urgent water quality events. We don't build our long-term growth strategy around emergencies, but the ability to respond quickly when customers need us remains an important part of what differentiates Nephros. Service revenue also continued to grow.

We increasingly see customers looking to Nephros not only to provide filtration products, but to also help install them, replace them, and support the filtration component of the broader water management programs. That brings me to another encouraging indicator from the quarter, the continued expansion of our customer base. We ended Q3 with a record 1,766 active customer sites, having added approximately 31 in Q3 alone. Healthcare remains at the center of Nephros, representing 64% of new sites added during the quarter. But we are also seeing the technology find applications outside of our traditional healthcare business. Approximately 17% of new sites came from commercial and industrial customers, with the remainder representing government, military, hospitality, residential, retail, and other applications.

I believe that diversification is important. Our objective is to not move away from healthcare, because healthcare remains our largest market and an area we believe substantial opportunity remains. Instead, we are taking the technology, expertise, and reputation we have built in a demanding healthcare environment and identifying additional applications where water quality matters. We continue to monitor emerging industry standards, regulatory developments, and market intelligence to unmet needs and determine where Nephros technology can provide meaningful value. That approach has already helped us expand our product portfolio into applications involving sterile processing, PFAS, microplastics, and nanoplastics, as well as drinking water, commercial filtration, and other emerging water quality challenges.

At the same time, our strategy continues to evolve beyond products alone. We've talked previously about the three pillars we are building around Nephros: products, service, education. Products remains the foundation. Service makes these products easier for customers to adopt and maintain, and education is increasingly helping us create relationships earlier in the decision-making process. During the third quarter, the Nephros Water Institute continued a strong series of educational webinars addressing water quality issues relevant to healthcare professionals and other customers. We believe this is becoming an increasingly important part of our commercial strategy.

Education allows us to engage customers and industry professionals around emerging water quality challenges, share expertise we have accumulated over many years, and build relationships well before someone is ready to make a filtration decision. Our goal isn't simply to conduct webinars. The goal is to make Nephros a trusted resource for water quality information. When we educate the market effectively, we increase awareness of water safety challenges and potential solutions. That creates engagement, generates qualified opportunities, and helps support product and service adoption over time. We therefore expect to continue investing in education as a driver of market development and commercial growth. Before turning the call over to Judy, I also want to address profitability and margins.

Gross margin was approximately 58% in the third quarter compared with 61% in the prior year period. As we have discussed on previous calls, several factors continue to affect margins, including shipping and handling costs, tariffs, and changes in revenue mix. Service is a good example of the trade-off involved. Service currently carries a lower gross margin percentage than our traditional infection control product business, but it generates incremental gross profit dollars, supports product sales, and removes barriers to adoption, and can deepen customer relationships. We continue to evaluate the business based not simply on maximizing a quarterly gross margin percentage, but also on creating sustainable, profitable growth.

We remain focused on pricing, sourcing, freight, product mix, and operational efficiency, while continuing to invest where we believe these investments can create attractive long-term returns. Overall, I am very pleased with where we stand after nine months. Revenue is up 20%. Core programmatic revenue is up 19%. We increased our profitability. Our active customer sites have hit a record high level, which is very important because we've talked about that over and over again. Our service capabilities continue to expand. Our educational strategy is gaining momentum, and we continue to identify new applications for Nephros technology.

There is considerable work still ahead of us, but I believe we are entering the final quarter of 2026 from a position of strength. I want to thank the entire Nephros team for the tremendous amount of work behind these results, our customers and partners for their continued trust, and our shareholders for their support. With that, I will turn the call over to our CFO, Judy Krandel, for a closer look at the financial results.

Judy Krandel: Thank you, Robert. I will now provide a closer look at Nephros' financial performance for the third quarter and first nine months of 2026. Net revenue for the third quarter was approximately $5.6 million compared with approximately $4.8 million in the third quarter of 2025, an increase of 18%. The increase was driven primarily by growth in product revenue. Our core programmatic revenue increased approximately 8% compared with the prior year quarter. We also experienced significant growth in emergency response revenue and continued growth in service revenue. Cost of goods sold for the third quarter was approximately $2.3 million compared with approximately $1.8 million in the third quarter of 2025, an increase of 26%.

Gross margin for the third quarter was approximately 58% compared with 61% during the same period last year. This approximately 3 percentage point decrease was primarily attributable to higher inventory, shipping, and handling costs, including tariff expense, as well as continued growth in service revenue, which currently carries a lower gross margin than our product sales. Selling, general, and administrative expenses were approximately $2.4 million compared with $2.2 million in the third quarter of 2025, an increase of about 9%. The increase was primarily attributable to increased headcount and professional fees. Research and development expense was approximately $331,000 compared with $338,000 in the prior year period, a decrease of about 2%.

Depreciation and amortization expenses were approximately $29,000 compared with $34,000 in the third quarter of 2025. Consequently, net income for the third quarter was approximately $500,000 compared with $300,000 during the same period in 2025. Adjusted EBITDA was approximately $600,000 compared with $400,000 in the third quarter of 2025. Now, turning to our year-to-date results. Net revenue for the nine months ended September 30, 2026, was approximately $16.9 million compared with $14.1 million during the same period in 2025, an increase of 20%. Our core programmatic revenue increased approximately 19% over the first nine months of 2025, and this reflects continued reorder activity and expansion of our active customer base. Service revenue also experienced strong growth.

Gross margin for the first nine months of 2026 was approximately 61%, compared with about 63% for the same period in 2025. As we discussed during our second quarter call, our 2026 year-to-date gross margin benefited from approximately $600,000 of IEEPA tariff refunds that were recognized during the second quarter. At the same time, margins have continued to experience pressure from increased product costs associated with foreign currency movements, tariffs, shipping expenses, and the rapid growth of commercial products and service revenue, which currently carry lower margins than our traditional infection control business.

Selling, general, and administrative expenses for the first nine months of 2026 were approximately $7.4 million, compared with about $6.7 million in the prior year period, an increase of about 10%, primarily due to increased headcount and professional fees. Research and development expenses were approximately $1 million, compared with approximately $900,000 during the same period in 2025. Consequently, net income for the first nine months of 2026 increased to approximately $1.8 million, compared with about $1.1 million during the same period last year. Adjusted EBITDA for the nine-month period increased to approximately $2 million, compared with about $1.4 million in 2025.

As of September 30, 2026, Nephros had approximately $4.5 million in cash and cash equivalents and continued to remain debt-free. I will now like to turn the call back to Robert for closing remarks. Robert?

Robert Banks: Thank you, Judy. As we close today's prepared remarks, I want to leave investors with a few thoughts about what I believe the third quarter tells us about Nephros. First, the growth we are seeing is increasingly durable. We followed a record second quarter with another quarter of strong double-digit year-over-year growth, bringing revenue for the first nine months of 2026 to approximately $16.9 million, 20% above last year. Second, the foundation underneath that growth continues to expand. Core programmatic revenue is up 19% year to date. Our active customer base has reached a record 1,766 sites, and each new programmatic customer creates the potential for future replacement demand. Third, we are becoming a broader company.

Healthcare remains our core market, but our products are increasingly finding applications across commercial, industrial, and other markets. We're no longer thinking about Nephros as simply a company that manufactures and sells filters. We are building around three complementary capabilities: products, service, and education. Products solve the water quality problem. Service helps customers successfully deploy and maintain those solutions. Education helps customers understand the problem in the first place and establishes Nephros as a trusted resource. We believe those three capabilities working together can create a stronger customer relationship, greater recurring demand, and a more differentiated company. Finally, we remain focused on profitable growth.

We are proud of the strong margins we have and recognize the pressures that exist in the business today, and we're actively working on them. We are also continuing to invest in capabilities that we believe Nephros significantly larger over time. Our priorities remain straightforward: take exceptional care of our existing customers, continue expanding our installed base, grow programmatic and service revenue, strengthen our educational platform, improve underlying margins, introduce differentiated products, and continue finding new applications and markets for our technology. Our objective for the remainder of 2026 is simple: finish strong.

Most importantly, we want to enter 2027 with a large recurring revenue base, deeper customer relationship, and broader market opportunities and infrastructure necessary to support this stage of Nephros' growth. Thank you to our employees, customers, partners, and shareholders for your continued support. Operator, please open the line for questions.

Operator: Thank you. We will now begin the question and answer session. If you'd like to ask a question at this time, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, you can simply press star one again. We'll pause just for a moment to compile the roster. Our first question comes from Bobby Brooks with Northland Capital Markets. Your line is open.

Bobby Brooks: Hey, good afternoon, team. Thank you for taking my question. Robert, you mentioned how 17% of the new sites added for the programmatic business in the quarter were from commercial or industrial. I wanted to unpack that a little bit more. First, could you speak to how the sales cycle on this might differ from your traditional healthcare end markets, and what might Nephros be doing differently to target these accounts? Then I have a follow-up on that.

Robert Banks: Sure. Yes, 17% of new sites came from commercial and industrial customers. So, that's our traditional commercial market, scale, odor, taste control, and the sales cycle doesn't differ tremendously from the infection control filters that we sell or in the healthcare space. Except that what we sell is different, the competitors are different, and who we sell to typically is different. More often than not, we're working through partners when it comes to the commercial products. Partners that we've mentioned in the past are Donastar, for example, and they've gotten some really good traction as they've got a new renewed focus on where they're going and what they're selling to. They don't go site by site.

They typically sell at a franchise level or a larger level. What I've noticed is that they have a pretty slow adoption. Although it takes quite some time, maybe six months, maybe a year to actually close an enterprise-level deal, the adoption doesn't happen right away. It will happen several over period months, and we notice that revenue stream tends to trickle in and build up over time. So, I think what we're seeing today is more of efforts that have happened over the past year or two that are slowly gaining traction and getting those filters in place. I think that answers the question. If not, I can definitely add more to it, but don't want to over-answer.

Bobby Brooks: No, I think that does it. You're kind of speaking directly to commercial. Is that the same deal with industrial?

Robert Banks: Commercial or, what I would say, light industrial tends to be people with small manufacturing facilities, but the flow rates are typically pretty low. If it is a direct situation where we are not working through a partner, it is usually in conjunction with an infection control product, meaning they may want to control the taste, odor, and smell of an ice machine, so they will add one of these, a carbon filter in front. It is not usually a different sell or a different person or a different timeline, just more products of our portfolio that we are selling.

Increasingly, our sales managers across the regions are trying to incorporate our entire portfolio, and as well as our portfolio is getting larger and broader. We keep adding different capabilities such as PFAS and micro and nanoplastics, so that might be contributing also to the diversification and more commercial filters entering the marketplace.

Bobby Brooks: Got it. You kind of touched on it a little bit, but just so most of these sales into, or most of these new sites for industrial and commercial, they are not ordering the infection prevention devices.

Robert Banks: I would not characterize it that way. I would say that if the sale is from a direct sale, meaning Nephros sold it not through a partner, it is almost always sold with or in conjunction with infection prevention. If it is sold through a partner, they are selling usually at an enterprise or over multiple sites at one time level.

Bobby Brooks: Got it. Have you talked about the split between? Can you break down of the 17% cohort, how much of those were direct versus partner channel?

Robert Banks: No, I don't give that breakdown. It just was interesting to give a percentage of new customers. That's where that 17% number came out.

Bobby Brooks: Yeah, I can appreciate that. Then maybe just one more for me is, as we kind of start to think about 2027 and next year, is the growth strategy more of the same for you guys, or are there any kind of interesting new products that you're excited to launch, or just new strategies that you might be looking to implement? Just trying to get a sense of those drivers as we start to think about next year.

Robert Banks: Yeah. The strategies I mentioned today are new strategies. We don't launch one quarter and it's finished for the next quarter. They typically are multi-year efforts, as it takes a long time to build markets, recognition, customer bases. What is coming out of the strategies that we're executing today, especially when it comes to the education, is we're getting more feedback and hearing directly from industry professionals, professional organizations. What they're giving us is, "Hey, here's our challenge. Here's what we can't really solve very easily today." Which then in turn leads our R&D department to either apply what we've got already or come up with new ways to solve those problems. That's what drives our NPI pipeline.

But in every situation, I require a business case to show that if we do this, it's going to have a return that's attractive for Nephros, and it is indeed the best place to spend our next dollar. That's typically the cycle for getting the NPIs out. We have a robust pipeline. We always maintain a very robust pipeline, and it's not a matter of us finding out, trying to find something new to build. It's how do we make sure we're building the best product with the most chances of success to address the SAM or the serviceable market that we want to in this space. It's a good place to be.

Having more to do than we have time or resources to do allows me to pick the best things to do, and the team has done a great job of executing in that regard.

Bobby Brooks: For sure. And maybe just to squeeze one last one in is just, what am I In these customer conversations or from industry professionals, obviously, I am guessing like the PFAS stuff has came up and that is why you have rolled out a product there. What are the concerns or problems that they are facing that you are in the process of trying to tackle now?

Robert Banks: What is happening now and what I am seeing more is the concerns and questions we get are following news stories. When there is, in New York City, for example, large Legionella outbreaks, although it is in cooling towers and on tops of apartment buildings, it has generated so much more excitement and curiosity and a knowledge for, "Is this a problem I need to be concerned about in my building?" So, those are the problems a lot of people are hearing and passing on to us today.

And it is interesting that how little, although Legionella pneumophila has been around since 1976 as a named virus or bacteria, people still do not always understand how it is transmitted, who is susceptible, and what to do once you find it. What we have noticed is just education has been such a key component, being someone that can speak in plain knowledge. And I am not sure if you have been to many or any of these kind of talks before. Our talks are different. They actually give meaningful information that people can act on, they know what to do, and it is not specific to Nephros products in general.

And it is more of a holistic approach to solving some of these water quality issues. So, the problems that we are finding, things we are hearing in some of these trade shows, some of these organizations, are all things that we have products to address, whether it is sterile processing, or maybe it is emergency eyewash stations. There are tons of new applications that we are hearing about where people do not want bacteria, viruses, endotoxins in their water, and that makes the solution very well-suited for technologies in our portfolio.

Bobby Brooks: Well said. Appreciate the color. Congrats on the nice quarter.

Robert Banks: No problem. Thank you.

Operator: Your next question comes from Jeremy Pearlman with Maxim Group. Your line is open.

Jeremy Pearlman: Thank you. Good afternoon. Firstly, just while you were talking about the education initiative, how do you evaluate the ROI on that? Are there metrics you are keeping track of? I know you are definitely developing relationships with customers, but what percentage of those customers or potential customers actually transform into paying customers? Just what kind of metrics do you keep track of?

Robert Banks: That is a very interesting question. I have been actually having a bunch of back and forth dialogue with my director of education recently about that very topic. As we are looking at KPIs and how do we know what success looks like, and are we getting the return, and how much should we spend and grow, we are constantly looking at what are the metrics that show us what is happening. Some of the traditional ones you might imagine are maybe attendees to different webinars. We do keep attendance records, so we know what organizations people that attend are coming from.

Also, at trade shows, people will come up to the booth and say they attended one of the webinars, or when someone comes as a new opportunity, they say they heard about this solution from a webinar. There's all these intangibles, but as well as just noticing traffic and tracking who is getting to us from where. When we do get new customers, we often ask and track, "Where did you find us from?" "How did you get ahold of us?" Let's say if there's 37, maybe six of them came from a trade show, or maybe 10 came from just website leads, and maybe 20 came from a webinar where they heard about us, or a LinkedIn post.

If you're not following us on LinkedIn, there's a ton of great information where you can see where we're solving problems, who we're solving them with. You can see pictures of installations, the RSMs. It's a great way to just keep up to date on more of what we're sharing in industry. It's important to note because we can't release a press release talking about a particular customer solution. That's never yet year to date, or existence to date, been allowed by any of our customers. The education has generated such an amount of churn, and it's a two-way feedback.

The questions that get asked in these sessions also give us clues about where people's minds, challenges, and to the previous caller's question, where we need to focus our next solutions. I think it's been a fantastic way for us to put ourselves in the forefront when it comes to solving water challenges. The more difficult the problem is, the more likely they are to end up in Nephros' queue. It's been a good and profitable run, and we're looking forward to developing more quantifiable metrics as this department expands. We've got a lot of good ideas coming forward with it to expand in 2027.

Jeremy Pearlman: Okay, great. Then maybe if we're just going to shift to the programmatic sales. I know you mentioned that those have had growth year over year, but what percentage of customers of your customer base are currently contributing to the programmatic sales? I mean, how much runway do you think you have left to grow that?

Robert Banks: I think I understand your question. When it comes to the active customers, the 1,766 that I mentioned, what percent are programmatic?

Jeremy Pearlman: Yeah.

Robert Banks: 100%. In order for what we call an active customer to become an active customer, they have to have reordered in some period of time. That eliminates the emergency response customers who had an issue last Friday night at 4:44 P.M. and needed a solution in place by the next Saturday. They only ordered once. They do not become an active customer. It is a kind of a wonky metric how we calculate it, because we do not want to artificially inflate it, but it is just customers that are active with us. It also contributes to the way that we track those active customers.

If you were active and suddenly it is X period of time later and you have not reordered, that tells us that something has gone wrong and prompts a call, a follow-up, and usually will result in a sale because customer just did not remember to order or did not change their filter on time. That is a lesson we learned from five or six calls ago where we talked about not getting our fair share of recurring business or recurring revenue because customers just were not reordering on time. My key focus, basically starting Q1 last year, had been that programmatic business, and we are not letting it go.

Those 1,766 active customers are going to remain active customers as long as we keep doing our job. That is why we enjoy a pretty high retention rate and continue to grow, because customers move and change different places and continue to want to use us. That is one of the main drivers for this growth, is people telling a friend.

Jeremy Pearlman: Got it. Understood. Just last question. Is there a geographic concentration for your overall customer base? Are there certain regions in the U.S. where they're more concentrated? On the flip side, are there areas where you think you could expand into?

Robert Banks: Yeah. Good question. Yes, you can basically, if you pull up a heat map of where healthcare systems, networks, and facilities are located, patient care, that will mirror almost one for one where our customer base is located. We tend to be concentrated in areas where healthcare is concentrated. There are a couple areas where we are not. Sorry, you're hearing a pretty loud typing. There's a couple areas where we're not exactly getting our fair share, and we've deployed resources in those areas to kind of increase our penetration. That's where you'll see initiatives like the Puerto Rico initiative and the New York City initiative that I launched a few quarters ago.

For me, it's coming at it from a market penetration and segmentation perspective, understanding our targetable market and where we're getting customers and growing market share. That's a driver for where I think that there are opportunities that we may or may not be taking advantage of.

Jeremy Pearlman: Okay, great. Thank you for all that information. I'll hop back in with you.

Robert Banks: No problem. Thank you.

Operator: Again, if you would like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and enter the queue. With that, ladies and gentlemen, it seems we have no further questions, so I would like to turn the conference back over to Robert Banks for closing remarks.

Robert Banks: Thank you, Colby. Again, I cannot echo enough how much I am appreciative of the team for all their hard work. It has been a great quarter. Looking forward to finishing the year strong. Thank you guys for joining. We will talk to you again soon.

Operator: This concludes today's conference call. You may now disconnect.

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