GlobeNewswire Inc | Nov 9, 2021 08:00AM EST

November 09, 2021

MINNEAPOLIS, Nov. 09, 2021 (GLOBE NEWSWIRE) -- Nuwellis, Inc. (Nasdaq: NUWE) announced today its results for the third quarter ended September 30, 2021, which included the following highlights:

-- Generated $1.9 million in total revenue, representing a decline of 3% compared to the prior-year period -- Generated $6.3 million in total revenue year-to-date through September 30, representing 16% growth compared to the prior-year period and a 52% increase above the comparable pre-pandemic period in 2019 -- Opened three new pediatric accounts in the third quarter, the largest quarterly addition in 2021 -- Announced R&D partnership withKoronis Biomedical Technologies Corporation (KBT) to design and develop a product for children under 20kg with limited kidney function, following a $1.7 million development grant from the National Institutes of Health -- Completed an all-common stock capital raise of $10.0 million gross proceeds, ending the quarter with $28.4 million in cash and no debt

Although the third quarter was a challenging environment due to COVID headwinds, we were able to continue adding new pediatric customers and drive increased utilization within our Critical Care business at key accounts, said Nestor Jaramillo, CEO of Nuwellis. Similar to previous cycles where COVID cases drop following spikes in geographic hot spots, we believe we will be able execute our operating plan and accelerate revenue growth in our key markets when the healthcare environment normalizes.

Third Quarter 2021 Financial ResultsRevenue for the third quarter of 2021 was $1.9 million, representing a decline of 3% compared to the prior-year period. This revenue decline was driven primarily by the cancellation of elective procedures and the change in protocol to minimize use of fluid resuscitation when treating critically ill COVID patients.

-- Critical Care revenue more than doubled compared to the prior-year period but declined sequentially due to COVID headwinds. The Company continues to see strong utilization from key accounts that rely heavily on the Aquadex System to treat non-COVID critically ill patients. -- Pediatric revenue declined compared to the prior-year period due to a more difficult hospital operating environment. The Company opened three new pediatric accounts in the third quarter, its largest quarterly addition in 2021, a strong sign of the interest to use the therapy among pediatric institutions. -- Heart Failure revenue increased compared to the prior year period but declined sequentially due a spike in COVID cases which negatively impacted patient behavior and access to hospitals.

Gross margin was 60.4% for the third quarter 2021, compared to 46.1% in the prior year period. The increase in gross margin was primarily due to favorable geographic and product mix.

Selling, general and administrative (SG&A) expenses for the third quarter of 2021 were $4.6 million, an increase of 9% compared to the prior-year period. The increase in SG&A was primarily due to our continued investment in sales and marketing activities, plus additional administrative costs. Research and development (R&D) expenses in the third quarter of 2021 were $1.7 million, an increase of 98% compared to the prior year period. The increase in R&D expenses was driven primarily by investments in new products, namely the new pediatric system, along with increased spending on clinical evidence, regulatory and reimbursement activity.

The net loss for the third quarter of 2021 was $5.3 million, compared to a net loss of $4.3 million in the prior year period reflecting the new investments made this year in product development and clinical evidence, as mentioned above.

Cash and cash equivalents were approximately $28.4 million as of September 30, 2021. During the third quarter of 2021, the Company completed an all-common stock capital raise of $10.0 million in gross proceeds.

Webcast and Conference Call InformationThe Company will host a conference call and webcast at 9:00 AM ET today to discuss its financial results and provide an update on the Companys performance. To access the live webcast, please visit http://ir.nuwellis.com. Alternatively, you may access the live conference call by dialing (877) 303-9826 (U.S.) or (224) 357-2194 (international) and using conference ID: 1436426. An audio archive of the webcast will be available following the call at http://ir.nuwellis.com.

AboutNuwellis

Nuwellis, Inc. (Nasdaq: NUWE) is a medical device company dedicated to transforming the lives of patients suffering from fluid overload through science, collaboration, and innovation. The Company is focused on developing, manufacturing and commercializing the Aquadex SmartFlow system for ultrafiltration therapy. Nuwellis is headquartered in Minneapolis, MN, with a wholly-owned subsidiary in Ireland.

About the Aquadex SmartFlow System The Aquadex SmartFlow system delivers clinically proven therapy using a simple, flexible and smart method of removing excess fluid from patients suffering from hypervolemia (fluid overload). The Aquadex SmartFlow system is indicated for temporary (up to 8 hours) or extended (longer than 8 hours in patients who require hospitalization) use in adult and pediatric patients weighing 20 kg or more whose fluid overload is unresponsive to medical management, including diuretics. All treatments must be administered by a health care provider, within an outpatient or inpatient clinical setting, under physician prescription, both having received training in extracorporeal therapies.

Forward-Looking StatementsCertain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding the new market opportunities and anticipated growth in 2021 and beyond. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this release, including, without limitation, those risk associated with our ability to execute on our commercialization strategy, the impact of the COVID-19 pandemic, the possibility that we may be unable to raise sufficient funds necessary for our anticipated operations, our post-market clinical data collection activities, benefits of our products to patients, our expectations with respect to product development and commercialization efforts, our ability to increase market and physician acceptance of our products, potentially competitive product offerings, intellectual property protection, our ability to integrate acquired businesses, our expectations regarding anticipated synergies with and benefits from acquired businesses, and other risks and uncertainties described in our filings with theSEC. Forward-looking statements speak only as of the date when made. Nuwellis does not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

FINANCIAL STATEMENTS

NUWELLIS, INC. AND SUBSIDIARYCondensed Consolidated Statements of Operations and Comprehensive Loss (unaudited, in thousands, except per share amounts)

Three months ended Nine months ended September 30, September 30, 2021 2020 2021 2020 Net sales $ 1,853 $ 1,904 $ 6,279 $ 5,397 Cost of goods sold 733 1,026 2,682 2,486 Gross profit 1,120 878 3,597 2,911 Operating expenses: Selling, general 4,645 4,264 14,945 13,034 and administrativeResearch and 1,726 871 3,847 2,620 developmentTotal operating 6,371 5,135 18,792 15,654 expensesLoss from (5,251 ) (4,257 ) (15,195) (12,743 ) operationsOther income (19 ) ? (22 ) ? (expense), netLoss before income (5,270 ) (4,257 ) (15,217 ) (12,743 ) taxesIncome tax expense (2 ) (3 ) (7 ) (7 ) Net loss $ (5,272 ) $ (4,260 ) $ (15,224 ) $ (12,750 ) Basic and diluted $ (0.75) $ (2.08 ) $ (2.72 ) $ (11.27 ) loss per share Weighted averageshares outstanding 7,098 2,049 5,624 1,287 ? basic and diluted Other comprehensive loss:Foreign currencytranslation $ ? $ (7 ) $ (3 ) $ (12 ) adjustmentsTotal comprehensive $ (5,272 ) $ (4,267 ) $ (15,227 ) $ (12,762 ) loss

NUWELLIS, INC. AND SUBSIDIARYCondensed Consolidated Balance Sheets(in thousands, except share and per share amounts)

September December 30, 2021 31, 2020ASSETS (unaudited) Current assets Cash and cash equivalents $ 28,431 $ 14,437 Accounts receivable 1,069 905 Inventories 2,805 2,957 Other current assets 420 237 Total current assets 32,725 18,536 Property, plant and equipment, net 1,265 1,200 Operating lease right-of-use asset 105 255 Other assets ? 21 TOTAL ASSETS $ 34,095 $ 20,012 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities Accounts payable $ 1,851 $ 1,097 Accrued compensation 1,771 2,192 Current portion of operating lease liability 108 206 Current portion of finance lease liability 27 24 Other current liabilities 38 66 Total current liabilities 3,795 3,585 Operating lease liability ? 55 Finance lease liability 33 54 Other Long-term liability 286 ? Total liabilities 4,114 3,694 Commitments and contingencies Stockholders? equity Series A junior participating preferred stock asof September 30, 2021 and December 31, 2020, par ? ? value $0.0001 per share; authorized 30,000shares, none outstandingSeries F convertible preferred stock as of bothSeptember 30, 2021 and December 31, 2020, par ? ? value $0.0001 per share; authorized 127 shares,issued and outstanding 127 sharesPreferred stock as of both September 30, 2021and December 31, 2020, par value ? ? $0.0001 per share; authorized 39,969,873 shares,none outstandingCommon stock as of September 30, 2021 andDecember 31, 2020, par value$0.0001 per share; authorized 100,000,000 1 ? shares, issued and outstanding10,537,606 and 2,736,060, respectivelyAdditional paid-in capital 278,552 249,663 Accumulated other comprehensive loss: Foreign currency translation adjustment (10 ) (7 ) Accumulated deficit (248,562 ) (233,338 ) Total stockholders? equity 29,981 16,318 TOTAL LIABILITIES AND STOCKHOLDERS? EQUITY $ 34,095 $ 20,012

NUWELLIS, INC. AND SUBSIDIARYCondensed Consolidated Statements of Cash Flows(unaudited, in thousands)

Nine months ended September 30, 2021 2020

Operating Activities: Net loss $ (15,224 ) $ (12,750 ) Adjustments to reconcile net loss to cash flows used in operating activities:Depreciation and amortization 383 253 Stock-based compensation expense, net 993 1,036 Loss on disposal of property and equipment ? 46 Changes in operating assets and liabilities: Accounts receivable (164 ) (249 ) Inventory (105 ) (1,371 ) Other current assets (183 ) (74 ) Other assets and liabilities 279 112 Accounts payable and accrued expenses 333 (166 ) Net cash used in operating activities (13,688 ) (13,163 ) Investing Activities: Purchases of property and equipment (191 ) (207 ) Net cash used in investing activities (191 ) (207 ) Financing Activities: Proceeds from public stock offerings, net 27,896 25,949 Proceeds from warrant exercises 1 4,115 Payments on finance lease liability (21 ) (14 ) Net cash provided by financing activities 27,876 30,050 Effect of exchange rate changes on cash (3 ) (12 ) Net increase in cash and cash equivalents 13,994 16,668 Cash and cash equivalents - beginning of period 14,437 1,279 Cash and cash equivalents - end of period $ 28,431 $ 17,947 Supplemental cash flow information Inventory transferred to property, plant and $ 257 $ 247 equipmentEquipment acquired through finance lease liability $ ? $ 98

INVESTOR CONTACTS:

George MontagueChief Financial Officer, Nuwellis, Inc. ir@nuwellis.com

Matt BacsoGilmartin Group Matt.Bacso@gilmartinir.com