Nephros (NASDAQ:NEPH) reported higher revenue and a second consecutive year of profitability as management emphasized expanding the company’s water filtration business beyond traditional patient-care settings and building recurring revenue through services and education initiatives.
Management outlines a three-pillar strategy
President and CEO Robert Banks said 2025 marked significant progress for the company, describing clean water as essential across healthcare, hospitality, food service, and everyday life. Banks said Nephros is advancing a strategy anchored around three pillars: products, services, and education.
For services, Banks said the company expanded installation and replacement capabilities in 2025 to provide customers with lifecycle support, including rapid delivery, professional installation, scheduled replacement programs, and ongoing technical support and training. He said the model is intended to reduce barriers to adoption and support recurring revenue through programmatic filter replacement.
Banks also introduced the company’s education efforts as its “newest” pillar, pointing to more than 1,000 people reached through webinars and additional site-based training sessions. He said Nephros launched the Nephros Water Institute to expand knowledge around waterborne pathogen mitigation, water safety programs, and compliance-driven filtration solutions, with the goal of establishing Nephros as a trusted authority while helping drive long-term demand.
Revenue grows 33% in 2025; profitability continues
Chief Financial Officer Judy Krandel reported fourth-quarter 2025 net revenue of $4.7 million, up 22% from the corresponding period in 2024. For the full year, net revenue rose 33% to $18.8 million from $14.2 million.
Krandel said the year-over-year increase was primarily driven by higher programmatic revenue, reflecting strong reorder activity and the addition of new active sites. She also cited solid growth in the company’s emergency response business and “significant growth” in service revenue.
Nephros posted net income of $1.2 million for 2025, compared with $0.1 million in 2024. Fourth-quarter net income was $0.1 million, down from $0.3 million in the prior-year quarter, which Krandel attributed mainly to lower gross margins and higher bonuses and sales commissions. Banks noted 2025 represented Nephros’ second consecutive year of profitability.
Adjusted EBITDA was positive $131,000 in the fourth quarter versus positive $481,000 a year earlier. For the full year, adjusted EBITDA was positive $1.6 million compared to positive $548,000 in 2024.
Margins pressured by tariffs; operating expenses rise
Gross margin was 62% for both the years ended December 31, 2025 and 2024. However, fourth-quarter gross margin declined to 58% from 64% in the fourth quarter of 2024. Krandel said margins were higher in the first half of 2025 but eroded in the second half primarily due to tariffs.
She said that since April 2025 the company has been subject to a 15% tariff on goods imported from Italy, which was reduced to 10% as of February 22, 2026. Krandel cautioned that U.S. tariff policy remains unpredictable, creating uncertainty about future margin impacts.
Operating expenses increased in 2025. Research and development expense rose to $1.3 million from $0.9 million, and fourth-quarter R&D expense increased to $0.4 million from $0.3 million, which Krandel said was primarily due to higher headcount and bonuses.
Selling, general, and administrative expense increased to $9.0 million from $7.7 million in 2024, driven by higher bonuses and sales commissions. Fourth-quarter SG&A was approximately $2.3 million compared with $1.9 million a year earlier, and Krandel said the quarter also included some one-time expenses tied to product development and market analysis.
Customer sites expand; programmatic revenue dominates mix
Krandel said active customer sites ended 2025 at “just over” 1,680, compared with “just over” 1,500 at the end of 2024. In the Q&A session, Banks specified active sites at 1,681 as of December 31, 2025. He attributed growth to customer retention efforts, outreach through conferences and trade shows, and referrals from existing customers.
Asked about the revenue mix, Krandel said the company does not provide exact figures but indicated that programmatic revenue represented 90%+ of the business in the fourth quarter and was similar for the full year. She characterized emergency response revenue as a high single-digit percentage, noting it was somewhat lower in the fourth quarter than for the full year.
Non-patient-care markets seen as multi-year opportunity
Banks said the company is making progress in non-patient-care applications but acknowledged the dynamic differs from hospital patient-care markets, where regulation and inspection regimes can drive action. Outside patient care, he said, the company must overcome the challenge of “selling against doing nothing,” reinforcing why education is central to the strategy.
He also pointed to perceived installation complexity as another barrier, saying Nephros’ services capability is intended to reduce friction for customers that may not want to manage cleaning and sanitization requirements associated with effective filtration programs.
In response to a question about early successes in newer markets, Banks described traction in settings with large populations and a strong incentive to manage health risk, including:
- Correctional facilities
- Schools and universities
- Aviation facilities, including situations where government stakeholders are concerned about water transmission risks
- Drinking fountains and bottle fillers, including efforts to restore fountains shut down since COVID
- Sterile processing facilities, where instruments and devices are rinsed with water that needs to be free of certain contaminants
- Eye wash stations and emergency showers, where stagnant water can allow bacterial growth
While Banks said these opportunities represent “lots of pockets” rather than one single market, he reiterated that Nephros is not entering these verticals “fresh” in 2026. He described expansion outside hospital patient care as a multi-year effort that he expects to grow into a larger portion of the business over time.
On the balance sheet, Krandel said Nephros ended 2025 with $5.4 million in cash, up from $3.8 million at year-end 2024, and reiterated the company remains debt-free. Net cash provided by operating activities was $1.6 million in 2025, compared with net cash used of approximately $0.5 million in 2024.
About Nephros (NASDAQ:NEPH)
Nephros, Inc is a development-stage company specializing in advanced water filtration and purification technologies for medical, laboratory, industrial and defense applications. The company’s core offering centers on proprietary hollow fiber ultrafilters designed to remove bacteria, viruses, endotoxins and particulates from water streams. These ultrafilters are used in hemodialysis systems to protect patient treatment, in pharmaceutical and laboratory environments to ensure water quality and in critical field-deployable units for military and emergency response.
The company’s product portfolio includes standalone filtration cartridges for point-of-use and point-of-entry installations in dialysis clinics and hospitals, as well as bench-top and portable water purification systems.
