Nuwellis Inc Stock

Good morning, and welcome to Nuwellis Earnings Conference Call for the Second Quarter ended June 30, 2026. [Operator Instructions] Participants on this call are advised that the audio of this conference call is being broadcast live over the Internet and is 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.

Thank you, operator. Thank you for joining today's conference call to discuss Nuwellis' corporate developments and financial results for the second quarter ended June 30, 2026. Joining me today are Mike McCormick, Nuwellis' newly appointed President and Executive -- Chief Executive Officer; and Carisa Schultz, Chief Financial Officer. Earlier today, Nuwellis released financial results for the second quarter of 2026. If you have not received the earnings release, please visit the Investor page on 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 our expectations or predictions of future events and marketing 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 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.

Thank you, Leah, and good morning, everyone. I am pleased to be joining you for my first earnings call as CEO of Nuwellis. I would like to begin by thanking John Erb for his leadership and for the work he has done to position the company for its next phase. John has transitioned his executive role. However, he still remains as Chairman of our Board.

Personally, having served on the Board since 2003 -- '23 and closely working with the company on its commercial strategy, I enter this role with a clear understanding of Nuwellis' strengths and where greater focus can create meaningful value. We have established a commercial therapy addressing an important clinical need, a growing installed base, strong relationships with leading institutions and a differentiated position in precision fluid management.

My mandate is to turn those strengths into a growing, scalable and financially disciplined business. We will do that by prioritizing three essential objectives. First, we intend to increase Aquadex utilization and recurrent circuit revenue by concentrating on accounts and clinical pathways where we can establish sustained use.

Second, we intend to build our position in pediatrics and expand our presence in adult critical care, two areas where we see the strongest combination of clinical relevance and commercial traction, as well as long-term growth opportunities. Third, we will endeavor to strategically broaden our cardiorenal platform through technologies and collaborations that complement the Aquadex, strengthen our existing customer relationships and have a clear path toward commercial value. We believe the second quarter results showed progress across all of these priorities.

An important commercial indicator of our continued expansion is the installed base. During the second quarter, we sold nine consoles, bringing the first half total to 24 compared with only five in the first half of 2025. Each of those placements expands the opportunity for recurrent circuit utilization. Our focus is now on helping all of those accounts translate the placements into sustained clinical use through training, protocol development and early identification of appropriate patients.

We will measure progress not only by the consoles placed but by the number of accounts achieving consistent utilization, the number of patients treated and recurring circuit revenue generated from the installed base. Pediatrics remain the clearest example of this strategy in action. During the quarter, we expanded our presence in a major South Carolina health care system. And we expanded into two new states with the first pediatric programs in their history. We opened in Michigan and also in Wisconsin.

We continue to strengthen the educational foundation supporting pediatric adoption. At the International Society for Heart and Lung Transplantation 46th Annual Meeting and Scientific Sessions, clinicians from the University of Iowa presented a case that highlighted the Aquadex use in managing recurrent fluid overload in a very complex pediatric cardiac patient. We also marked 5 years of support for the Pediatric Cardiac Critical Care Consortium, or PC4, a collaborative network focused on improving outcomes for critically ill pediatric cardiac patients.

From a product standpoint, we continue to enhance the Aquadex platform with software updates designed to improve workflow efficiency, support treatment precision and reduce barriers to therapy use. We also complement our -- we also completed a pre-submission meeting with the FDA regarding a proposed expansion of the Aquadex indication for patients from 20 kilograms and above, which it is today, to patients weighing five kilograms and above. This meeting provided greater clarity regarding the proposed regulatory pathway that includes bench testing, toxicology assessments and supporting pediatric clinical evidence.

We plan to submit the proposed label expansion to the FDA in the fourth quarter of this year. Together, these developments create a focused pediatric growth strategy, expand our commercial footprint, increase utilization within existing programs, improve products for smaller patients and pursuing a regulatory pathway that can meaningly -- meaningfully broaden the population that we serve. Critical care represents another significant opportunity for us.

We recently announced the strategic development initiatives to expand the capabilities of the Aquadex into broader extracorporeal therapy platform. These initiatives include higher flow capabilities designed to support new filtration technologies and expand the potential use of Aquadex in more complex critical care, high-pressure extracorporeal environments. We are also developing an enhanced user interface called SmartView.

That will make the Aquadex easier to use, improve clinical workflows and support greater utilization. Together, these development programs are intended to broaden the capabilities of Aquadex and to strengthen our position in critical care. During the quarter, more than 280 physicians attended a Critical Care Cardiac Education Summit that included hands-on training with the Aquadex. That created one of the largest concentrated physician training initiatives in the company's history. Our next step is to connect that growing clinical awareness with focused account development.

We see an opportunity with broader -- with our broader cardiorenal strategy to build from the same customer relationships in the area of clinical expertise. The acquisition of Rendiatech in the first quarter of 2026 added Clarity Prime, an automated kidney function monitoring system, to our development portfolio. During the quarter -- or the second quarter, our focus was on product development and technology integration and commercial planning.

Aquadex gives clinicians the ability to remove excess fluid with precision. Clarity Prime has the potential to provide earlier and more continuous insights, allowing changes in -- early detection of changes in kidney function. We expect this important Clarity Prime product to launch in 2027. Together, these technologies support stronger solutions to cardiorenal care in which clinicians can make better informed decisions about fluid balance and kidney function.

To further broaden our product offering and leverage our commercial infrastructure, we are evaluating complementary pediatric technologies, including pediatric urine output monitoring and pediatric non-invasive cardiac monitoring. Our approach will remain selective and capital efficient. We expect to only pursue technologies and collaborations that strengthen our position in pediatrics and critical care, complement the customer relationships we already have and create a clear clinical and commercial benefit.

During the quarter, we also received a notice of allowance from the United States Patent and Trademark Office for our dual lumen midline catheter technology. This intellectual property could support less invasive peripheral access for extracorporeal therapies and it strengthens the technology foundation surrounding our fluid management platform. That patent, in fact, issued in mid-July. Excuse me. Capital decline -- our capital discipline will remain central to the way that we operate.

We intend to concentrate resources around Aquadex utilization, the proposed pediatric label expansion, focused development of Clarity Prime and selected strategic opportunities that directly support our strategy. Nuwellis has an established commercial foundation, differentiated strength in pediatrics, a growing traction in critical care and a focused strategy to expand our role in cardiorenal care. While we do not provide formal financial guidance, our objectives remain clear: deliver consistent double-digit revenue growth, maintain strong gross margins, increase our installed base and recurring circuit utilization and advance our highest priority development programs to reduce and reduce cash utilization over time.

In addition, through June financing and subsequent to the end of the quarter financing events, we raised approximately $12.7 million in gross proceeds. That included $6 million in June that was a private placement. And subsequent to the end of the quarter, we raised an additional $3.4 million from a registered direct offering and $3.3 million from warrant exercises.

These actions strengthened our cash position and it simplifies our capitalization structure. With that, I am pleased to turn the call over to Carisa Schultz, who is our Chief Financial Officer, for a detailed review of our financial results. Carisa?

Thank you, Mike, and good morning. I will review our second quarter and year-to-date financial performance and balance sheet position. Revenue for the second quarter of 2026 was $1.97 million compared with approximately $1.7 million in the prior year quarter, representing an increase of 14%, while U.S. revenue increased 17%. Revenue for the first 6 months of 2026 was $4.37 million, an increase of 20% from the prior year, while U.S. revenue increased 24%. Lower OUS service and rental revenue moderated reported growth, while U.S. revenue growth outpaced total company growth.

During the quarter, the company sold nine U.S. consoles compared with three in the second quarter of 2025. The new console placements, including within pediatric programs, expanded the installed base and created additional opportunities for sustained Aquadex utilization. U.S. circuit average selling prices increased approximately 5% compared with the prior year quarter and console average selling prices increased approximately 3%.

These increases primarily reflect pricing adjustments implemented during the third quarter of 2025. Gross profit for the second quarter was approximately $1.5 million, resulting in a gross margin of 76% compared with 56% in the prior year quarter. The 20 percentage point 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 second quarter were approximately $4.7 million compared with approximately $3.9 million in the prior year quarter and approximately $6.3 million in the first quarter of 2026. The year-over-year increase primarily reflects investments supporting commercial expansion and product development initiatives. The sequential decrease reflects our continued effort to align expenses with the company's highest priority commercial and strategic programs.

Reported net loss for the second quarter was approximately $4.8 million compared with approximately $12.6 million in the prior year quarter. The second quarter result included approximately $1.7 million of warrant valuation expense associated with the June 2026 financing. Following the effective date of the company's most recent reverse stock split on July 2, 2026, the related warrants were reclassified from liability to equity in early July.

During June, the company completed a $6 million registered public offering. As of June 30, 2026, the company had no debt, and cash and cash equivalents were approximately $3.9 million. As Mike previously mentioned, subsequent to quarter end, we further strengthened our balance sheet. In July, we raised an additional $3.4 million in gross proceeds through a registered direct offering and received $3.3 million from the cash exercise of warrants in connection with the June 2026 financing.

As we move through the second half of the year, our financial priorities remain focused on increasing recurring circuit revenue, maintaining gross margin discipline, reducing cash utilization and directing capital towards 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.

Thank you, Carisa. Before opening the call to questions, I want to reinforce the strategic direction we have outlined today. Nuwellis has an established commercial foundation with a clear pathway to growth. We focus -- our focus is to increase the Aquadex installed base, utilization and recurrent circuit revenue within the account and clinical categories where we can establish sustained use.

We intend to continue building differentiated position in pediatrics through commercial expansion, product improvements, clinical evidence and proposed label expansion. We intend to grow our presence in adult critical care by connecting clinical education with focused account development and stronger pathways for Aquadex use. And we are expected to selectively advance Clarity Prime, our complementary technology that will broaden the relevance across fluid management and kidney function monitoring.

These priorities are designed to create a stronger recurring revenue base, expand the patients and clinicians that we serve as well as build more value in our cardiorenal platform. We will pursue them with a disciplined capital allocation and clear expectation of measurable progress. Operator, we would now like to open the call to any questions.

[Operator Instructions] At this time, we have no questions in the queue. I will now turn the call back to Mike McCormick for concluding remarks.

Thank you very much. We look forward to updating everyone on our progress and discussing our third quarter financial results on our next conference call that will be scheduled in November. Thank you again for joining us today.

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

Good morning, and welcome to Nuwellis Earnings Conference Call for the First Quarter ended March 31, 2026. [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 this 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.

Thank you, operator. Thank you for joining today's conference call to discuss Nuwellis' corporate developments and financial results for the first quarter ended March 31, 2026. In addition to myself, with us today are John Erb, Nuwellis' Chairman of the Board and CEO; and our CFO, Carisa Schultz.

At 8:00 a.m. Eastern Time today, Nuwellis released financial results for the first quarter 2026. If you have not received Nuwellis' earnings release, please visit the Investors page on 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 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 John.

Thank you, Leah, and good morning, everyone. I would like to begin by framing the quarter in the context of the work we completed over the past year. As we discussed on our last call, 2025 was a year of structural change and deliberate repositioning for Nuwellis. We made important decisions to simplify the business, improve operational discipline, concentrate resources and clarify our long-term strategy around the cardiorenal care continuum. The first quarter of 2026 represents the next step in that progression.

Q1 was the quarter Nuwellis began moving from strategic reset to strategic execution. During the quarter, we strengthened our leadership and capital foundation, delivered stronger financial results and completed a meaningful strategic acquisition and continue to validate pediatrics as a key growth category for the company. The important point is that these are not separate events. Together, they reflect a company moving with greater focus and discipline around the clinical and commercial opportunities where we believe Nuwellis can create the greatest value.

First, we continue to strengthen the foundation for execution. During the quarter, we appointed Carisa Schultz as Chief Financial Officer. Carisa brings deep public company health care finance experience and her leadership is already supporting greater rigor around forecasting, capital allocation and financial visibility.

We also completed approximately a $5 million private placement and warrant inducement transaction, adding capital to support operation as we continue executing against our strategy.

In addition, we strengthened the Board with the appointment of Martin Emerson and the reappointment of David McDonald. Their experience in medical technology, commercial, scaling and capital markets adds important perspective as we move into the next phase.

We also sharpened our market coverage and field leadership, including expansion into a new South Texas territory and the return of 3 highly experienced sales leaders. These additions bring deep Aquadex knowledge, established customer relationships and field experience that will support utilization growth in high-priority accounts. These actions strengthen the leadership, governance and position the company for a more consistent execution across our highest priority growth areas.

Second, we saw the stronger foundation begin to show up in our financial performance. Revenue for the first quarter increased 26% year-over-year, supported by a significant increase in console sales and continued growth in circuit sales.

Gross margin improved to 70.1%, reflecting the benefits of improved pricing, product mix and our transition to contract manufacturing at KDI. For us, the meaning behind the results is important. They demonstrate that the operating work we have been doing is beginning to translate into measurable commercial progress. We are seeing stronger execution, improved economics and continued increases in the number of patients treated with Aquadex therapy.

At the same time, we are continuing to take action to improve operating efficiency and extend our financial runway. We are developing a cash burn reduction plan designed to reduce monthly cash burn by approximately 50% by the fourth quarter of this year, while keeping resources aligned behind the areas of the business with the strongest commercial traction and strategic value. While we remain focused on disciplined capital allocation and careful expense management, Q1 results reinforce that our strategy is gaining traction where clinical adoption and utilization is strongest.

Third, Q1 marked a meaningful step forward in our broader cardiorenal platform strategy. In March, we completed the acquisition of Rendiatech, adding automated kidney function monitoring capabilities to our product development portfolio. This is an important strategic expansion because it complements our existing focus on precision fluid removal.

Aquadex helps clinicians remove excess fluid with precision. Rendiatech's technology adds potential for earlier insight into kidney function and fluid balance changes. Together, they support a broader vision of helping clinicians identify risk earlier, intervene more precisely and manage complex cardiorenal patients with better information.

We also appointed Dr. Stuart Goldstein as Director of Clinical Strategy. Dr. Goldstein is internationally recognized as an adult critical care nephrologist and a pioneer in pediatric nephrology with work that has helped define the modern understanding of acute kidney injury, fluid overload and continuous renal replacement therapy in critical ill patients. This expertise strengthens our clinical road map across pediatric and adult critical care where fluid overload, kidney function and timing of intervention are deeply connected.

Finally, pediatrics continues to validate itself as one of the clearest growth strategies for Nuwellis. Pediatrics now represents approximately 50% of total U.S. revenue, and our pediatric footprint expanded to 47 centers nationwide, including 6 of the top children's hospitals as ranked by U.S. News & World Report. This growth reflects increasing Aquadex utilization in leading pediatric centers and reinforces the clinical relevance of precision fluid removal in a high acuity patient population.

Importantly, our future pediatric innovation is being built into a category we already have meaningful adoption, established relationships and clinical credibility. During the quarter, we announced the issuance of a new U.S. patent supporting advanced safety design for pediatric extracorporeal therapy. This patent strengthens the intellectual property foundation behind Vivian, our pediatric CRRT system in development and supports our longer-term strategy to expand within a category where Nuwellis has already demonstrated market need.

Pediatrics is both a commercial growth area today and a long-term strategic opportunity for the company. It gives Nuwellis a clear area of differentiation, a strong clinical foothold and a focused path for future innovation. Taken together, the first quarter demonstrates meaningful progress against the strategy we outlined coming into 2026.

We strengthened the company's leadership, Board of Directors and Capital Foundation. We delivered stronger financial performance. We completed the Rendiatech acquisition and expanded our cardiorenal platform, and we continue to build on the pediatric momentum, both commercially and through future innovation. We are still early in this execution phase, and there is more work ahead, but we believe Q1 reflects a more focused, more disciplined and more strategically aligned Nuwellis.

With that, I will turn the call over to Carisa for a detailed review of our financial results.

Thank you, John, and good morning. I will review our first quarter financial performance and balance sheet position. Revenue for the first quarter of 2026 was $2.4 million compared to $1.9 million in the prior year quarter, representing a 26% increase year-over-year. The increase in sales was driven by stronger console and circuit performance.

During the quarter, the company sold 15 consoles, including upgrades from the former FlexFlow to the current SmartFlow systems, new consoles placed with pediatric accounts and new consoles placed with adult accounts. Circuit sales also increased 15%, reflecting continued growth in the number of patients treated with Aquadex therapy.

Gross margin for the first quarter of 2026 was 70.1%, a 14% increase compared to the prior year quarter. The gross margin improvement reflects improved pricing, product mix and the transition to contract manufacturing.

Operating expenses for the first quarter of 2026 were approximately $6 million compared to approximately $4.1 million in the prior year quarter. The increase was driven by higher sales headcount and compensation associated with increased sales activity.

Net loss attributable to common shareholders for the first quarter of 2026 was approximately $4.3 million. As of March 31, 2026, the company had no debt and cash and restricted cash equivalents of approximately $2.2 million.

As we move forward, our financial priorities remain focused on disciplined capital deployment, gross margin consistency, commercial execution and enhanced visibility into the drivers of utilization and account growth.

That concludes my prepared remarks, and I would like to turn the call back over to John for any remaining comments.

Thank you, Carisa. Before opening the call to questions, I want to reinforce the central message for the quarter. Q1 was an important step in translating the work of 2025 into 2026 execution. We are operating with a clear strategy, a stronger leadership and governance foundation, improved commercial focus and a broader view of the cardiorenal opportunity ahead of us.

Aquadex remains the foundation of the company. Our strategy is to grow from that foundation by deepening utilization in high-need customer categories, expanding our clinical relevance in pediatrics and critical care and building a broader platform around the management of complex cardiorenal patients. We appreciate the continued support of our shareholders, the focus of our team and the commitment of the clinicians and institutions using our technologies to support patients with fluid overload.

Operator, we would now like to open the call to questions.

[Operator Instructions] We'll take our first question from Nicholas Sherwood with Maxim Group.

My first question is looking at the new commercial coverage with the South Texas territory. Can you kind of talk about how your sales team is building out relationships in that territory? And outside of that territory, what other regions are you kind of targeting for expansion?

Sure. Well, we're excited about that new territory primarily because we have had a former top sales rep rejoin the company. [ Liby ] is the rep. She built the New York territory to be one of our largest territories. She and her family moved south a while ago, left the company, went to another company and saw what we were building at Nuwellis and wanted to come back, which, of course, we accepted with open arms.

So in doing that, we had a rep in the larger Texas, Oklahoma area that we were able to split the territory keep the rep that had built the northern part of Texas and allowed Liby, who operates out of Houston, take the southern part. So really positive from the standpoint that it wasn't just a new territory, it was bringing back a very experienced sales territory.

Beyond that, I think our growth area in the Northeast has consistently been the highest. If we look at New York and the Washington, Philadelphia area, where we've added some new large pediatric accounts like Children's Hospital of Philadelphia. It's been a focus and an important growth area for us. So the Northeast continues to be the strongest area. Also last year, we opened the Western territory with a new sales rep that has gotten off to a really good start, again, particularly in pediatrics in the Seattle area, where Seattle Children's is a large account for us. So those are kind of our focused areas.

Okay. Perfect. I really appreciate that detail. And then can you kind of just give me any more details you have on the integration with Rendiatech and how you've been able to present some of those offerings to your current customer base?

We actually have not introduced Rendiatech to the U.S. market yet. Rendiatech had 2 products, one, which they have marketed before they went bankrupt, both in the U.S. and internationally, that was a urine collection used in critical care. They had a product in development that took just from the critical care urine collection to actually monitoring kidney output. And that was really the target product that we saw great value in acquiring Rendiatech. So we have just completed that acquisition, brought the inventory that they had back into the U.S. from Israel, it was an Israeli company. And we are now in development on developing that more valuable product that was really the target of the acquisition. And that will not only in critical care, it's really important that they measure fluids in and fluids out.

One thing we do with Aquadex is obviously take fluid out, but they're also measuring urine output. They take urine samples, send it to the lab and get a lab report back that gives them, that identifies the health of the kidney, tells them what oxygen levels, calcium levels, potassium levels, things like that. What this new product that we will be developing from Rendiatech does that at the bedside. So they get an immediate reading of those analytes or electrolyte balances in the urine. So it's going to be highly differentiated from anything that's on the market today, and we will introduce that product to the U.S. market in 2027.

Okay. And how many Aquadex units were you able to sell in the first quarter?

15.

We have no further questions in the queue at this time. I'll turn the program back to John for some closing remarks.

Thank you. We are encouraged by the progress made in the first quarter and remain focused on the disciplined execution throughout 2026. Our priorities are clear, we will continue supporting Aquadex utilization in the areas where clinical adoption is strongest, advancing the integration of Rendiatech, strengthening our pediatric strategy and maintaining financial discipline as we build the company. We believe Nuwellis is better positioned today than it was a year ago, and we look forward to updating you on our progress in the quarters ahead. Thank you again for joining us today. Goodbye.

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

Hello, and welcome, everyone, joining today's Nuwellis Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to Leah McMullen, Director of Communications.

Thank you, operator. Thank you all for joining today's conference call to discuss Nuwellis' 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 Erb, Nuwellis' Chairman of the Board and CEO; and our newly appointed CFO, Carisa Schultz. At 8:00 a.m. Eastern Time today, Nuwellis released financial results for the fourth quarter and full year 2025.

If you have not received Nuwellis' 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 risks in the company's filings with the Securities and Exchange Commission, including the last -- the latest 10-K. With that, I would now like to turn the call over to John.

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 continuous -- continuation year for Nuwellis. 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 supported 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 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 we're the beneficiary of a National Institute of Health Grant to advance this program. The combination of strengthened IP of the platform and non-dilutive 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 selective 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 are further strengthened our financial leadership. Earlier this year, we welcomed Carisa Schultz as Chief Financial Officer.

Carisa 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 Carisa for a detailed review of our financial results.

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 of 2025 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 8 units sold compared to 3 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 catheter 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 $0.4 million 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 contributions following strategic rationalization and prior year SeaStar sales prior to that agreement termination. Heart Failure and Pediatrics grew 8% and 14% year-over-year, respectively, partially offset by a 19% decline in Critical Care.

Full year gross margin was 62%, 3 percentage [Technical Difficulty] 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 $0.3 million in executive severance expense.

From a liquidity standpoint, full year cash utilization was approximately $10.9 million. We extended the year -- 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 remain focused 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 Instructions] We are showing one question comes from the line of Anthony Vendetti with Maxim Group.

So I wanted to, John, just talk about -- you said you had some operational changes this year and a refocus of the business. Can you talk a little bit about where the sales force is and where your main focus is now versus where it was maybe a couple of years ago? And then also second part of the question is going to be on Rendiatech, if I'm pronouncing it correct, how the acquisition, how those products are going to be incorporated into your current product portfolio?

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 really we saw that impact in the second half of the year and really beginning to see much greater growth in the beginning of 2026.

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's really brought a stableness to our supply and product quality that we're very pleased with. We also look hard at expenses, looking at our cash burn and how could we reduce it.

Internationally, particularly in the European Union, we have lost money continually 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 2 or 3 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. The NIH grant that we received for pediatrics development of the renal replacement therapy device is very positive for us, and we continue to grow in the pediatrics area.

So I'd say that a bit of a refocus, not so much away from heart failure, but in addition to heart failure, really focusing on the pediatric nephrologists and the benefit that the Aquadex product was bringing to the pediatric marketplace. See what else? I think that covered your main question. The second part of your question regarding Rendiatech, the value there is in Critical Care.

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 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 Rendiatech has is a technology basically that helps measure that renal or urine output in the ICU.

What's exciting about that product is the opportunity that we're already working on is 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's -- that was really the primary reason we were interested in the Rendiatech acquisition is that very differentiated capability that it will bring to the ICU.

Okay. John, that's helpful. Maybe since it looked like fourth quarter sales was driven more by utilization within existing accounts versus new accounts. So Rendiatech -- 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 Rendiatech into all those accounts? And then where is your sales force 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?

Sure. Well, let me start with the second part of that question. And 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 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 improved or 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 really a big opportunity for the company. So that's a primary focus. Of course, we will continue to support our heart failure customers and patients and working closely in nephrology in the pediatric area as the products used.

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 Rendiatech acquisition as an opportunity to enhance utilization within those accounts.

[Operator Instructions] And at this time, there are no further questions in queue. I will now turn the meeting back to management for closing remarks.

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 Rendiatech 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 Rendiatech and plan to relaunch the Clarity product midyear. We also continue progressing development of Vivian, 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.

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

Good day, everyone, and welcome to today's Nuwellis Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, today's call will be recorded, and I will be standing by should you need any assistance.

It is now my pleasure to turn the conference over to Leah McMullen, Director of Communications. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining today's conference call to discuss Nuwellis' financial results for the third quarter ended September 30, 2025. With me on the call are John Erb, our Chairman of the Board and Chief Executive Officer; and Lynn Blake, who recently began consulting with us as our Interim Head of Finance.

Earlier today, we issued a press release that outlines our financial results for the quarter. If you haven't had the chance to review it, you can find it on the Investor page of our website.

Before we begin, I'd like to remind everyone that we'll be making forward-looking statements on today's call. These statements are protected under the Private Securities Litigation Reform Act of 1995 and are based on current assumptions and estimates. Actual results could differ materially from those described, and we encourage you to review the risk factors included in our filings with the Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statements. Please do not place undue reliance on these statements.

With that, I'll turn the call over to John Erb.

Thank you, Leah, and good morning, everyone. We entered the third quarter with renewed momentum and sharper execution. While Q2 is about stabilizing the business, Q3 was about progress, expanding adoption of Aquadex therapy and advancing our leadership in precision fluid management across the cardiorenal continuum. Nuwellis is helping hospitals manage fluids balance in patients whose heart and kidney functions are closely connected. Our growth is anchored in three areas: critical care, pediatrics and heart failure, including hospital-based outpatient therapy where our technology is driving real clinical and operational impact.

In critical care, hospitals are adopting Aquadex because it helps achieve more consistent outcomes and streamlines postoperative and ICU fluid management. That confidence translated into stronger performance this quarter with year-over-year growth in circuit sales across all customer categories. Heart failure and critical care also saw higher console sales.

The new 24-hour Aquadex circuit introduced in the U.S. this quarter was designed for hospital-based outpatient use, supporting same-day sessions and complementing our 72-hour inpatient option. Together, this choice in circuits gives hospitals flexibility to match therapy to the care setting while maintaining consistency for patients and providers.

We also introduced a new dual-lumen extended-length catheter, expanding access options and compatibility across care environments. These innovations make therapy simpler and more comfortable for patients and more scalable for hospitals.

In pediatrics, progress this quarter was transformative through our NIH-supported collaboration with Koronis Biomedical Technologies, we're accelerating the development of Vivien, our dedicated pediatric CRRT system for children weighing between 2.5 and 20 kilograms. A new U.S. patent allowance and recent notice of allowance for another Vivian patent further demonstrated our commitment to innovation in pediatric fluid management. Additionally, clinical data from the ULTRA-Peds registry being prepared for publication shows 92% survival in children treated with Aquadex.

In heart failure, we reached an important milestone with the first Aquadex therapy delivered in a hospital-based outpatient setting under the new CMS reimbursement code. An early proof point of how this care model can extend therapy beyond inpatient admission and create a more proactive, accessible approach to fluid management. Operationally, we advanced several important efforts, initiating the transition of manufacturing to KDI Precision Manufacturing, exiting our European operations to sharpen U.S. focus and continuing disciplined capital deployment through two successful capital raises this year.

As we look ahead, we're building on this foundation, advancing precision fluid management across the cardiorenal continuum with a focus on clinical value, scalability and growth. Q3 reflects real progress in growing momentum as Aquadex becomes an essential part of how hospitals manage fluid balance safely and effectively.

With that, I'll turn the call over to our Interim Head of Finance, Lynn Blake, to review our financial results in more detail.

Thank you, John, and good morning, everyone. Total revenue for the third quarter was $2.2 million, a 6% decrease from the third quarter of 2024, primarily due to onetime prior year SeaStar Medical QUELimmune sales of approximately $200,000 and a decrease of approximately $100,000 in international revenues associated with the wind-down of international operations in the current quarter, also lower console average selling prices. These impacts were partially offset by a 15% year-over-year increase in consumables utilization.

On a pro forma basis, revenue grew approximately 7% year-over-year after excluding the SeaStar Medical revenue in the prior year and the decrease in international revenue. Sequentially, revenue increased 29% from the second quarter, driven by a 23% increase in consumables utilization and a fourfold increase in U.S. console sales.

By customer category, heart failure and critical care were 41% and 15% ahead of the prior year, respectively, while pediatrics declined 7%, largely due to lower console sales. All customer categories experienced year-over-year growth in circuit sales with heart failure and critical care also benefiting from stronger console demand.

Gross margin for the quarter was 65.2% compared to 70% in Q3 of 2024. The gross margin rate decline was primarily due to under-absorption of fixed overhead from lower production volumes earlier in the year, which flow through cost of sales in the current quarter as that inventory was sold. We do expect to realize incremental cost efficiency from the KDI manufacturing transfer beginning next year, which should support margin expansion once the transition is fully optimized.

Selling, general and administrative expenses for the quarter were $3.5 million, compared to $2.7 million in the same period last year. The increase reflects increased payroll and compensation expense associated with rebuilding our U.S. sales force to historical headcount levels. Research and development expenses were $603,000 compared to $486,000 last year, driven by an increase in expenses associated with continued investment in sustained engineering and our quality systems.

As a result of these investments in growth-focused initiatives in our U.S. business, total operating expenses for the quarter were $4.1 million in total, a 30% increase year-over-year. Operating loss for the quarter was $2.7 million compared to an operating loss of $1.5 million in Q3 of 2024.

Net income attributable to common shareholders was $469,000 or $0.56 per share compared to $2.4 million or $73.23 per share in the prior year quarter. After giving effect to the company's reverse stock split, which became effective in July 2025.

We ended the quarter with $3.1 million in cash and cash equivalents and remain debt free. The $1.9 million net equity raise in Q3 through our at-the-market program combined with the $4 million net equity raise in June, provides flexibility to support continued execution of our U.S. revenue growth strategy and operating plan into 2026.

With that, I'll turn the call back to John for closing remarks.

Thanks, Lynn. As we look ahead, we're building a company at the center of cardiorenal care, one that unites technology evidence and access to deliver better outcomes for patients and hospitals alike. Our focus remains on three growth engines: critical care, pediatrics and hospital-based outpatient heart failure therapy. Together, these areas are defining a new standard for precision fluid management and positioning Nuwellis for a long-term sustainable growth.

Before we move into Q&A, I'd like to take a moment to recognize Rob Scott, who recently concluded his 12-year tenure here at Nuwellis. Rob's leadership and dedication as Chief Financial Officer, helped guide Nuwellis through significant transformation and growth. On behalf of the entire company, we thank him for his many contributions and wish him continued success in his new chapter.

With that, I'll turn the call over to the operator to open the line for questions.

[Operator Instructions] And it does appear that there are no questions at this time. I would now like to turn the call back to management for any additional or closing remarks.

Thank you. As we focus the company's efforts on delivering a strong fourth quarter, I'd like to thank all our Nuwellis employees, stockholders, physicians, nurses, patients and health care workers for your continued support. Thank you, and have a great day.

This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful afternoon.