Cytosorbents Q3 2025 Earnings Call: Contradictions Emerge on Germany Restructuring, Sales Growth, and Regulatory Hurdles

Date of Call: November 13, 2025

Financials Results

• Revenue: $9.5M, up 10% YOY (4% constant currency) vs $8.6M in Q3 2024
• EPS: Net loss $3.2M, $(0.05) per share, compared to net loss $2.8M, $(0.05) prior year; adjusted net loss $0.04 per share vs $0.08 prior year
• Gross Margin: ≈70%, compared to 61% in Q3 2024

Guidance:

• File new de novo for DrugSorb-ATR in Q1 2026; anticipate mid-2026 regulatory decision after a ~150-day review and potential expedited review.
• Expect cash-flow breakeven beginning Q1 2026.
• Implementing ~10% workforce reduction and other cost reductions; expect a restructuring charge up to $900,000.
• Amended loan: $2.5M immediate funding and interest-only extension to Dec 31, 2026; additional $2.5M and extension to Jun 30, 2027 contingent on FDA approval.

Business Commentary:

* Revenue Performance and Growth: - CytoSorbents reported revenue of $9.5 million for Q3 2025, up 10% from the previous year, with a 4% increase on a constant currency basis. - The growth was led by record sales in distributor territories and strong results in other direct markets, partially offset by a decline in the direct German market.

• Core Product Sales and Geographic Distribution:
• Trailing 12-month core product sales reached a record $37 million as of September 30, 2025.
• Distributor and partner sales grew 14% to $15.6 million, while direct sales outside Germany rose approximately 24% to $8.8 million. Germany, however, declined modestly by 3% to $12.6 million.

• Regulatory Timeline and DrugSorb-ATR:
• CytoSorbents filed a formal pre-submission meeting request with the FDA on November 7, 2025, anticipating a pre-submission meeting in late 2025 or early 2026 to confirm FDA requirements for the new de novo application.

• The company expects to file a new de novo submission in Q1 2026, with a regulatory decision anticipated in mid-2026.

• Cost Reduction and Balance Sheet Strengthening:

• CytoSorbents implemented a strategic workforce and cost reduction program, including a 10% workforce reduction, aiming to achieve cash flow breakeven beginning in Q1 2026.
• The company amended its loan and security agreement with Avenue Partners, providing immediate funding of $2.5 million and extending the interest-only period to December 31, 2026, further strengthening its balance sheet.

Sentiment Analysis:

Overall Tone: Positive

• Management reported 'revenue was $9.5 million, up 10%' and 'gross margin for the quarter was 70% (vs 61% prior year)', highlighted structural improvements and a credit amendment, and stated 'we expect cash flow breakeven beginning Q1 2026' and an anticipated mid-2026 regulatory decision for DrugSorb-ATR.

Q&A:

• Question from Brian Lantier (Zacks Small-Cap Research): Can you clarify where you see gross margin in Q4 and 2026 — is 70% normalized?
  Response: Management views the ~70% margin as a successful current level and expects further improvement as plant efficiencies, higher volumes and DrugSorb commercialization drive margin expansion.

• Question from Brian Lantier (Zacks Small-Cap Research): Have you shared internal or external milestones/guideposts to track progress on the German sales force restructuring?
  Response: Too early for public milestones; management is tracking rep performance and efficiency metrics and expects those improvements to translate into restored growth in Germany in future quarters.

• Question from Brian Lantier (Zacks Small-Cap Research): Can you differentiate the pre-submission package to the FDA versus the full de novo application you plan to submit in 2026?
  Response: The pre-submission is to align with FDA, obtain feedback on remaining open items and incorporate FDA guidance; the full de novo will include the finalized analyses and new real-world data per that feedback.

• Question from Brian Lantier (Zacks Small-Cap Research): Any feedback from the World Sepsis Day webcast?
  Response: The webcast received excellent international response and strong engagement; management said this supports sales messaging that CytoSorb has broad benefits in sepsis beyond cytokine removal.

Contradiction Point 1

German Sales Force Restructuring Progress

It involves differing perspectives on the progress and expected outcomes of the German sales force restructuring, which could impact revenue and growth expectations for that region.

Have you shared any internal or external milestones or indicators to monitor progress and assess the effectiveness of the German sales force restructuring? - Brian Lantier (Zacks Small-Cap Research)

2025Q3: It's still a work in progress, but we are seeing improvements in rep performance and efficiency. We believe it will translate into improvements in sales and returning Germany back to growth in future quarters. - Phillip Chan(CEO)

How do you assess the potential for renewed growth acceleration in Germany? - Michael Sarcone (Jefferies)

2025Q1: Q4 will be key to determining the success of our restructuring efforts in Germany. We expect growth in Germany in Q4. - Phillip Chan(CEO)

Contradiction Point 2

Sales and Revenue Growth Expectations

It involves changes in financial forecasts, specifically regarding sales growth expectations, which are critical indicators for investors.

Can you clarify the gross margin for Q4 and 2026? Has it normalized at 70%? - Brian Lantier (Zacks Small-Cap Research)

2025Q3: Sales outside Germany grew by 48% year-over-year to $14.7 million. This represents a record first quarter for Cytosorbents outside Germany. - Peter Mariani(CFO)

What were the key drivers of growth in sales outside Germany and through distributors, and why didn’t Germany experience similar growth? - Xun Lee (H.C. Wainwright)

2024Q4: Sales outside Germany grew by 105% year-over-year to $19.3 million. - Peter Mariani(CFO)

Contradiction Point 3

Regulatory Progress and FDA Appeal

It involves differing statements about the status and expectations related to the regulatory approval process for DrugSorb ATR, impacting potential revenue streams and investor expectations.

Can you differentiate between the pre-submission package and the full application you plan to submit in 2026? - Brian Lantier (Zacks Small-Cap Research)

2025Q3: The pre-submission package is designed to align with FDA, ensuring we understand their concerns and guidance. We'll incorporate FDA feedback into our final de novo submission. The pre-submission meeting is scheduled for late 2025 or early 2026. - Phillip Chan(CEO)

Can you provide details on regulatory denials and your confidence in achieving approval? - Michael Anthony Sarcone (Jefferies LLC, Research Division)

2025Q2: The appeals process was beneficial for laying out DrugSorb ATR's impact on reducing perioperative bleeding. Support from external cardiac surgery experts added credibility. Waiting for FDA's response, and Health Canada will consider FDA's perspective before making their final decision in appeal. - Phillip Chan(CEO)

Contradiction Point 4

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

Where do you expect gross margins to be in Q4 and 2026, and has it normalized around the 70% level? - Brian Lantier (Zacks Small-Cap Research)

2025Q3: We're pleased with the 70% level, but we have opportunities to continue to see improvement. Some efficiencies have come into the plant, and we're seeing consistency there. - Peter Mariani(CFO)

Will Blackwell's Q4 revenue be additive, and what is the expected exit rate for gross margins? - Stacy Rasgon (Bernstein Research)

2024Q4: We expect gross margins for Q3 to be around 75%. Our full-year guidance for 2025 remains in the mid-70s. - Peter Mariani(CFO)

Contradiction Point 5

FDA De Novo Submission Timeline and Strategy

It concerns the timeline and strategic approach to the FDA de novo submission, which is crucial for the company's growth and expansion plans.

Can you differentiate between the pre-submission package you'll submit to the FDA and the full application you plan to submit in 2026? - Brian Lantier (Zacks Small-Cap Research)

2025Q3: The pre-submission package is designed to align with FDA, ensuring we understand their concerns and guidance. We'll incorporate FDA feedback into our final de novo submission. The pre-submission meeting is scheduled for late 2025 or early 2026. - Phillip Chan(CEO)

Can you clarify your confidence in FDA appeal approval? Can you outline the consequences if the FDA appeal is denied? - Michael Sarcone (Jefferies)

2025Q1: We feel strongly about the strength of our submission, with compelling data from the STAR-T trial and positive real-world results. The appeal process is our most expedited path to resolve issues. Despite any potential appeals, we can still pursue a new de novo submission without needing further trials. - Makis Deliargyris(CMO)