Nuwellis (NUWE) Q3 Earnings call transcript Nov 11, 2024

In its third quarter 2024 earnings call, Nuwellis reported a 2% decrease in revenue year-over-year, but a sequential growth of 8%, demonstrating resilience in the face of challenges in certain segments. The company's focus on expanding its presence in the pediatric segment, particularly in community hospitals, has shown remarkable success with a surge in revenue of 28% compared to the same quarter in the previous year.

Clinical Evidence Bolsters Nuwellis' Strategy

A significant highlight of the call was the presentation of a study published in Current Problems in Cardiology, which demonstrated the effectiveness of Nuwellis' Aquadex ultrafiltration therapy in reducing 60-day hospital readmission rates for patients with acutely compensated heart failure. Dr. John Jefferies, the study's senior author, emphasized the broader applicability and effectiveness of the therapy in a community hospital setting. This real-world data is crucial for Nuwellis as it positions Aquadex as a viable solution for non-academic centers, bolstering its strategy to increase awareness and become the standard of care.

Financial Highlights and Strategic Initiatives

Nuwellis reported a gross margin of 70% for the third quarter, a significant improvement from the 57.3% in the prior year. This was driven by higher manufacturing volumes of consumables and lower fixed overhead manufacturing expenses. The company also saw a decrease of 21% in selling, general and administrative expenses due to efficiency initiatives. These financial improvements are crucial as Nuwellis continues to invest in research and development, with a third quarter research and development expense of $486,000, down from $1.1 million in the prior year period.

Looking Ahead: Pediatric Growth and REVERSE-HF Trial

Nuwellis is optimistic about its future, with plans to continue driving market penetration of its differentiated Aquadex ultrafiltration therapy. The company's strategic focus on building a body of clinical evidence to make this therapy standard of care is progressing, with the ongoing REVERSE-HF trial. Enrollment in the study is expected to finish by mid-2026, with data analysis and submission to follow. Additionally, Nuwellis is preparing for the reassignment of the Aquadex ultrafiltration code to the outpatient reimbursement level, effective January 1, 2025, which is expected to accelerate top-line growth.

Conclusion

Nuwellis' third quarter earnings call underscored the company's strategic initiatives, clinical evidence, and financial improvements. The company's focus on the pediatric segment, particularly in community hospitals, is yielding positive results, while challenges in certain segments, such as critical care and heart failure, are being addressed. With the upcoming reimbursement increase and the ongoing REVERSE-HF trial, Nuwellis is well-positioned for future growth and transformation in the field of fluid removal therapies.