Nuwellis (NUWE) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• Director of Communications - Leah McMullen
• President and Chief Executive Officer - Michael McCormick
• Chief Financial Officer - Carisa Schultz

TAKEAWAYS

• Revenue -- $2.2 million for the third quarter, which was unchanged from the prior year period due to the fulfillment of $400,000 in accumulated backorders in the third quarter of 2025.
• Sequential Revenue -- 12% growth compared to the second quarter of 2026, reflecting underlying business momentum.
• Nine-Month Revenue -- $6.6 million for the first nine months of 2026, a 13% increase driven by U.S. circuit and console sales.
• Gross Margin -- 70% in the third quarter, an expansion of 430 basis points driven by higher average selling prices and the transition to contract manufacturing.
• Operating Expenses -- $3.6 million, a 13% year-over-year decline reflecting reductions in administrative costs and lower sales-related compensation.
• Operating Loss -- $2.1 million, representing a 24% improvement from a loss of $2.7 million in the prior year quarter.
• Net Loss -- $2 million, compared to net income of $0.5 million last year, which included a noncash gain from warrant liability fair value changes.
• Aquadex Console Sales -- 32 units sold during the first nine months of 2026, an 88% increase from 17 units sold during the same period in 2025.
• Quarterly Console Sales -- eight Aquadex consoles were sold in the third quarter, compared with 12 units sold in the prior year period.
• Pediatric Net Sales -- 20% growth in the third quarter and 26% year-to-date growth, as the segment continues to drive company performance.
• Cash and Equivalents -- $8.3 million as of Sept. 30, 2026, providing a projected cash runway through the second quarter of 2027.
• Capital Raising -- $3.4 million in gross proceeds from a direct offering in July, $3.3 million from warrant exercises, and $1.4 million in net proceeds from the at-the-market program.
• Backorder Fulfillment Impact -- 20% growth in underlying performance when excluding the $400,000 in unusual backorder benefits received in the prior year quarter.
• ULTRA-Peds Registry Results -- 87% survival rate for the treatment course among 91 pediatric patients evaluated, with 62% of participants weighing less than 10 kilograms.
• Procedure Success -- 86.5% of Aquadex procedures in the ULTRA-Peds Registry were completed without interruption.
• FDA Submission -- On Nov. 5, the company submitted a 510(k) application to expand the Aquadex SmartFlow indication to patients weighing as low as five kilograms.
• Distribution Agreements -- The company entered a co-promotion agreement for the AtriAmp rhythm monitoring device and secured exclusive U.S. distribution rights for the Zorro-Flow urine collection system.
• Product Pipeline -- Next-generation SmartView user interface is expected to launch in the first quarter of 2027, followed by Pressure IQ in the first half of 2027.
• Operating Efficiency -- Total operating expenses declined from $4.7 million in the second quarter of 2026 to $3.6 million in the third quarter.
• Market Engagement -- Management participated in four medical conferences in October, including Kidney Week, to drive new account acquisition and Aquadex utilization.

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RISKS

• McCormick warned that the second half of 2026 faces more difficult year-over-year comparisons due to the fulfillment of $400,000 in accumulated backorders during the third quarter of 2025.

SUMMARY

Nuwellis, Inc. (NASDAQ:NUWE) reported a strategic emphasis on expanding its pediatric indication and adult critical care offerings while improving gross margins and reducing operating losses. Management stated that the company achieved an 88% increase in nine-month console sales and is leveraging new distribution partnerships to broaden its cardiorenal platform with minimal capital expenditure. The company recently submitted a 510(k) application to the FDA to lower the minimum weight indication for its Aquadex system, aiming to reach a significantly broader pediatric population. Financial results for the quarter highlighted a 70% gross margin and a strengthened balance sheet that provides a cash runway through the second quarter of 2027.

• On Nov. 5, the company filed a 510(k) application seeking to expand the Aquadex SmartFlow indication to patients weighing from five kilograms and above.
• The company entered into a co-promotion agreement with Atrility Medical for the AtriAmp postoperative cardiac rhythm monitoring device, which is currently being marketed by the existing sales force.
• Management secured exclusive U.S. distribution rights for the pediatric Zorro-Flow external urine collection system, with a planned launch in the first quarter of 2027.
• CEO McCormick stated, "87% of those patients survived their Aquadex treatment course, and 86.5% of those procedures were completed without interruption," citing data from the ULTRA-Peds Registry.
• The Aquadex SmartView user interface and the Pressure IQ operating expansion are both scheduled for launches during the first half of 2027.
• The transition to a contract manufacturing model contributed to the gross margin expansion to 70% during the third quarter.

INDUSTRY GLOSSARY

• Aquadex: A medical device system used for ultrafiltration therapy to treat fluid overload.
• Ultrafiltration: A medical process that removes excess fluid from the blood, often used when patients are unresponsive to diuretics.
• 510(k): A premarket submission made to the FDA to demonstrate that a device is safe and effective by being substantially equivalent to a legally marketed device.
• ULTRA-Peds Registry: A multicenter clinical study evaluating the use of the Aquadex system in infants and children.
• Cardiorenal: Relating to both the heart and the kidneys.
• AtriAmp: A postoperative monitoring device used to detect cardiac rhythms in patients after heart surgery.
• Zorro-Flow: An external urine collection system specifically designed for pediatric patients.
• SmartView: A next-generation user interface currently under development for the Aquadex platform.
• Pressure IQ: A technology expansion for Aquadex designed to broaden the system's operating capabilities across different patient conditions.
• Clarity Prime: An automated kidney function monitoring technology acquired by Nuwellis.

Full Conference Call Transcript

Operator: Good morning, and welcome to Nuwellis Third Quarter 2026 Financial Results and Business Update Conference Call. [Operator Instructions] Participants on this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A replay of the call will be available approximately 1 hour after the end of the call. I would now like to turn the conference over to Leah McMullen, Director of Communications. Please go ahead.

Leah McMullen: Thank you, operator. Thank you for joining today's conference call to discuss Nuwellis' corporate developments and financial results for the third quarter of 2026. Joining me today are Mike McCormick, Nuwellis' President and Chief Executive Officer; and Carisa Schultz, Chief Financial Officer. Earlier today, Nuwellis released its third quarter 2026 financial results. If you have not received the earnings release, please visit the Investors page of the company's website. During this 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 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 any undue reliance on these statements. Please refer to the cautionary statements and discussion of risks in the company's filings with the Securities and Exchange Commission, including the latest 10-K.

With that, I would now like to turn the call over to Mike McCormick, Nuwellis' CEO.

Michael McCormick: Thank you, Leah, and good morning, everyone. On our last conference call, I outlined 3 priorities for Nuwellis. First, to increase Aquadex utilization and recurring circuit revenue; second, to build on our strong position in pediatrics and expand our presence in adult critical care; and third, to strategically broaden our cardiorenal platform through technologies and collaborations that complement the Aquadex and leverage our existing customer relationships. From a financial standpoint, we made meaningful progress in the quarter, improving our operating performance. The third quarter gross margin expanded 430 basis points, while operating expenses declined 13% year-over-year, resulting in a 24% improvement in operating loss.

These results reflect our continued focus on disciplined spending, improved operating efficiency and directing resources toward the highest priority growth initiatives. This expansion -- the expansion of our installed base remains one of our most important indicators of our commercial progress. During the first 9 months of 2026, we sold 32 Aquadex consoles. That's an 88% increase compared with 17 consoles during the same period last year. In the third quarter, we sold 8 consoles compared to 12 in the prior year quarter. Every console added to our installed base expands the opportunity for recurring circuit revenue, and our teams remain focused on increasing utilization across our existing hospital customers. We had a strong first half of 2026.

And while the second half of the year faces more challenging comparisons against a strong half -- second half in 2025, we remain encouraged by the underlying momentum of our business. The third quarter comparison was particularly challenging because last year, we benefited from approximately $400,000 in accumulated back orders that were fulfilled during the quarter. Excluding that unusual benefit, the underlying performance grew at 20%, and it continues to demonstrate positive momentum going forward. As we have said over the course of the last 2 quarters, pediatric remains our growth driver. Pediatric net sales increased 20% in the third quarter and 26% year-to-date compared with other periods. We also achieved 2 important milestones in our pediatric strategy.

First, the results of the ULTRA-Peds Registry. That is a multicenter study. It was titled Kidney Support in Infants and Children Using Aquadex: Findings from the ULTRA-Peds Registry, and it was accepted for publication in a leading peer-reviewed journal, the Pediatric Nephrology. This is an important scientific publication for Nuwellis. The study evaluated 91 pediatric patients treated with Aquadex across 7 children's hospitals with 62% of the patients weighing less than 10 kilograms. Importantly, 87% of those patients survived their Aquadex treatment course, and 86.5% of those procedures were completed without interruption. Beyond these clinical findings, the publication played a really important role in our regulatory strategy.

The ULTRA-Peds data served as a cornerstone to our pre-submission meeting with the FDA, allowing us to use peer-reviewed scientific clinical journals as well as real-world evidence to support our proposed expansion of the Aquadex pediatric indication. Following these discussions, on November 5, we submitted to the FDA a 510(k) application to expand the Aquadex SmartFlow system indication from patients weighing 20 kilograms and above to patients weighing as low as 5 kilograms and above. If cleared, this expanded indication would allow us to serve a significantly broader pediatric population, increase access for existing customers and create opportunities for adoption at additional children's hospitals. Our third priority is focused on broadening the product offering for our cardiorenal platform.

On our last call, I mentioned that we were evaluating some complementary pediatric technologies that could leverage our commercial infrastructure. I am pleased to say that we have delivered on that commitment with 2 agreements to add to our existing portfolio. In August, we entered into a co-promotion and distribution agreement with Atrility Medical for its AtriAmp postoperative cardiac rhythm monitoring device. AtriAmp is a natural fit for our pediatric and critical care sales force, which already calls on cardiac surgery and critical care teams who care for these patients. We're off to a strong start.

Within the short time since signing the agreement, our teams have already completed multiple sales and service calls together, and customer response has been very encouraging. We have a growing pipeline of accounts that are actively in process, which positions us well for growth as we move into 2027. I'm also pleased to announce that earlier this week, we secured exclusive U.S. distribution rights for the pediatric Zorro-Flow external urine collection system. Accurate urine output measurement is central to fluid management in critically ill children, and Zorro-Flow complements our clinical workflows around the Aquadex therapy. We expect to launch this product in the first quarter of 2027.

Together, these agreements expand our product portfolio without significant capital required and leverage our existing commercial team and customer relationships. Turning to our internal development programs. We continue to make strong progress on several initiatives designed to expand the capabilities of our Aquadex platform. Aquadex SmartView, our next-generation user interface, is currently under development with an expected launch in the first quarter of 2027. SmartView is designed to improve the user experience and provide a foundation for future enhancements to the Aquadex system. We are also making strong progress on the Aquadex Pressure IQ, which is being developed to expand operating capabilities of Aquadex across additional patient conditions and clinical settings.

We expect the Pressure IQ to launch in the first half of 2027. In addition, development of Clarity Prime, our automated kidney function monitoring technology acquired through Rendiatech, continues to advance. We believe this unique technology has the potential application beyond kidney function monitoring, and we are evaluating opportunities to incorporate its capability into other products and clinical applications. Together, these programs reflect our continued commitment to innovation, expanding the clinical utility of Aquadex and creating additional long-term opportunities for our technology platform. In October, we participated in 4 medical conferences, spanning pediatrics, critical care, heart failure and heart failure. Most notable of those 4 conferences is the American Society of Nephrology's Kidney Week.

Fluid overload is a common challenge across all 3 markets, and these meetings let our team engage directly with clinicians treating these patients. Our focus is to turn that engagement into new accounts and increase Aquadex utilization. Finally, capital discipline remains central to how we operate. As I mentioned, we reduced operating expenses both year-over-year and sequentially, and our gross margin expanded to 70% in the quarter, reflecting higher average selling prices and continued benefits of our contract manufacturing model. We strengthened our balance sheet during the quarter, and we ended the period with $8.3 million in cash and cash equivalents, providing runway through the second quarter of 2027.

With that, I will turn the call over to Carisa Schultz, our Chief Financial Officer, to review our financial results.

Carisa Schultz: Thank you, Mike, and good morning. I will review our third quarter and year-to-date financial performance and balance sheet position. Revenue for the third quarter of 2026 was $2.2 million, unchanged from the prior year quarter. As Mike mentioned, the prior year quarter was a challenging comparison period as it included approximately $0.4 million in back order fulfillment. Sequentially, third quarter revenue increased approximately 12% from the second quarter of 2026. Revenue for the first 9 months of 2026 was $6.6 million, an increase of 13% from the prior year, driven by growth in U.S. circuit and console sales.

Pediatric net sales increased 20% in the third quarter and 26% for the first 9 months compared with the prior year period. In the first 9 months of 2026, we sold 32 consoles compared with 17 in the prior year period, an 88% increase. During the quarter, the company sold 8 Aquadex consoles compared with 12 in the third quarter of 2025. Gross profit for the third quarter of 2026 was approximately $1.5 million, resulting in a gross margin of 70% compared with 65% in the prior year quarter. The expanded margin improvement was driven by higher circuit and console average selling prices, favorable product mix and the benefits of our transition to contract manufacturing.

Operating expenses for the third quarter were approximately $3.6 million compared with approximately $4.1 million in the prior year quarter and approximately $4.7 million in the second quarter of 2026. The year-over-year decrease primarily reflects reductions in administrative costs and lower sales-related compensation. The sequential decrease reflects our continued efforts to align expenses with the company's highest priority commercial and strategic programs. The combination of gross margin expansion and disciplined expense management resulted in a 24% year-over-year improvement in operating loss from approximately $2.7 million to $2.1 million. We remain focused on reducing operating expenses and cash utilization while continuing to invest in commercial and development programs that offer the greatest potential for long-term growth.

Reported net loss for the third quarter was approximately $2 million compared with net income of approximately $0.5 million in the prior year quarter. The prior year result included a significant noncash gain associated with changes in the fair value of warrant liabilities. Turning to the balance sheet. As of September 30, 2026, the company had cash and cash equivalents of approximately $8.3 million with runway through the second quarter of next year. During the third quarter, we raised $3.4 million in gross proceeds through a registered direct offering in July and concurrently received $3.3 million in gross proceeds from the cash exercise of warrants.

We also received $1.4 million in net proceeds from common shares sold under our at-the-market program. Looking ahead, our financial priorities remain unchanged, increasing recurring circuit revenue, reducing cash utilization and directing capital toward the commercial and development programs with the greatest potential to create value. That concludes my prepared remarks. I will now turn the call back to Mike.

Michael McCormick: Thank you, Carisa. Before opening the call to questions, I want to take a second and just summarize where Nuwellis stands year-to-date. We have grown by double digits, nearly doubled our unit console sales and significantly expanded our gross margin while reducing operating expenses and strengthening our balance sheet. In pediatrics, we have strengthened our clinical foundation with the ULTRA-Peds peer-reviewed publication, and we built on that evidence by submitting our 510(k) seeking expanded indications for the Aquadex to patients weighing as little as 5 kilograms. We are also advancing product development pipeline with SmartView and Pressure IQ that are expected to launch in 2027 while continuing to develop Clarity Prime and exploring additional applications for that technology.

And we broadened our commercial portfolio with agreements with Atrility Medical and Zorro-Flow, adding complementary products that leverage our existing sales force and customer relationships in a capital-efficient way. We believe this progress positions Nuwellis for sustained growth and long-term value creation for patients, customers and shareholders. We remain focused on disciplined execution and delivering measurable progress against each of these priorities. Operator, we'd now like to open the call to any questions.

Operator: [Operator Instructions] And at this time, we show no questions in queue. I will now turn the call back to Mike for some concluding remarks.

Michael McCormick: Thank you. We appreciate everybody's participation today and updating you on the third quarter results. We look forward to continue to update you on our progress and discussing the fourth quarter financial results at our next conference call early next year. Thank you again for joining us today.

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

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