Nephros, Inc. (NEPH) | Investment Case

1. Company Snapshot

1.a. Company Description

Nephros, Inc.develops and sells high performance water solutions to the medical and commercial markets in the United States.The company operates in three segments: Water Filtration, Pathogen Detection, and Renal Products.

It offers ultrafiltration products that are used in dialysis centers for the removal of biological contaminants from water and bicarbonate concentrate; and in hospitals for the prevention of infection from waterborne pathogens, such as legionella and pseudomonas, as well as in military and outdoor recreation, commercial, and other healthcare facilities.The company also develops and sells real-time water testing systems to provide actionable data on waterborne pathogens; and medical device products for patients with renal disease, including a 2nd generation hemodiafiltration system for the treatment of patients with end stage renal disease.In addition, it offers water filters that improve the taste and odor of water, as well as reduce biofilm, bacteria, and scale build-up in downstream equipment under the Nephros and AETHER brands for the food service, hospitality, convenience store, and health care markets.

The company was incorporated in 1997 and is headquartered in South Orange, New Jersey.

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1.b. Last Insights on NEPH

Nephros, Inc.'s recent performance was positively driven by robust growth, achieving its highest level of programmatic sales in company history. The company's Q3 2025 financial results revealed a 35% increase in net revenue, reaching $4.8 million, and marked its fourth consecutive quarter of profitability. Additionally, Nephros launched a new PFAS filter for point-of-use protection of potable water, targeting a wide range of chemical contaminants. This new product expansion demonstrates the company's commitment to innovation and growth.

1.c. Company Highlights

Last Price	5.65
Change Percentage	-2.33%
Open	5.82
Previous Close	5.79
Market Cap ( Millions)	60
Volume	28290
Year High	6.42
Year Low	1.39
M A 50	5.1
M A 200	3.48

FCF Yield	4.54%
Dividend Yield	0.00%
ROE	15.81%
Debt / Equity	11.53%
Net Debt / EBIDTA	-242.72%
Price To Book	5.99
Price Earnings Ratio	40.48
Price To FCF	22.01
Price To sales	3.34
EV / EBITDA	33.73

2. Nephros' Q3 2025 Earnings: A Strong Quarter with Promising Growth Prospects

Nephros reported a robust third quarter of 2025, with revenue reaching $4.8 million, a 35% increase over the same period in 2024, marking the company's fifth consecutive quarter of profitability. Gross margins remained stable at 61%, while earnings per share (EPS) came in at $0.03, beating estimates of $0.01. The company's filtration installation program drove growth, with a record number of active sites exceeding 1,650 as of September 30, 2025. Net income increased to $337,000, and adjusted EBITDA was positive $418,000.

Publication Date: Nov -26

                                    📋 Highlights
                                    Revenue Growth::
                                                Q3 2025 revenue reached $4.8 million, a 35% increase from 2024, with $14.1 million in 9M sales (37% YoY growth).
Active Filtration Sites::
                                                Over 1,650 active sites as of September 30, 2025, driven by the filtration installation program.
Profitability Metrics::
                                                Net income of $337K in Q3 and $1.1M in 9M, with adjusted EBITDA at $418K and $1.4M, respectively.
Gross Margin Stability::
                                                Consistent 61% Q3 and 63% 9M gross margins, despite R&D and SG&A expenses rising to $338K and $2.2M (30% increase).
PFAS Market Expansion::
                                                New PFAS filtration solution deployed, targeting municipalities, dialysis centers, and labs, with cash reserves of $5.2M and no debt.

                                

Operational Highlights and New Market Opportunities

The company's new PFAS filtration solution is now in the field, opening doors to new markets, including municipalities, dialysis centers, and labs. According to Robert Banks, Nephros will penetrate these markets directly and through distribution, evaluating if they have the right partners to address new customers. The company is excited about new opportunities and audiences, particularly with PFAS. Additionally, Nephros sees potential in new areas of deployment, including laboratories, manufacturing facilities, aviation environments, and government buildings.

Margin Profile and SG&A Investments

Judy Krandel explained that the company expects to maintain over 60% gross margins, with some fluctuation due to factors like price increases, inventory management, and business mix. The company is managing SG&A carefully while investing in valuable resources, like sales personnel, to drive growth. As Robert Banks stated, Nephros is weighing opportunities to add resources while maintaining fiscal discipline.

Valuation and Growth Prospects

With a P/E Ratio of 40.77 and an EV/EBITDA of 33.98, the market appears to be pricing in significant growth expectations. Analysts estimate next year's revenue growth at 12.3%. The company's return on equity (ROE) stands at 15.81%, indicating a relatively strong return on shareholders' equity. The current P/S Ratio is 3.36, which may be considered reasonable given the company's growth prospects.

Cash Position and Debt Profile

The company's cash balance grew to $5.2 million, and it remains debt-free, with a Net Debt / EBITDA ratio of -2.43, highlighting its solid financial position. This allows Nephros to invest in growth initiatives and expand its presence in new markets.

3. NewsRoom

Nephros, Inc. (NEPH) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

Nephros Announces Strong Third Quarter Financial Results; Achieving Highest Level of Programmatic Sales in Company History

Nov -06

Source: prismmediawire.com

Nephros Announces Strong Third Quarter Financial Results; Achieving Highest Level of Programmatic Sales in Company History

Nov -06

Source: globenewswire.com

�Nephros Schedules Third Quarter 2025 Financial Results Conference Call

Oct -30

Source: prismmediawire.com

Nephros Launches New PFAS Filter for Point-of-Use Protection of Potable Water

Oct -08

Source: prismmediawire.com

Nephros Launches New PFAS Filter for Point-of-Use Protection of Potable Water

Oct -08

Source: globenewswire.com

Nephros, Inc. (NEPH) Q2 2025 Earnings Call Transcript

Aug -08

Source: seekingalpha.com

�Nephros Announces Strong Second Quarter Financial Results

Aug -07

Source: prismmediawire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Water Filtration

Expected Growth: 10.2%

Growing demand for clean drinking water, increasing awareness of waterborne diseases, and advancements in water filtration technology drive the growth of Nephros' water filtration systems.

Other

Expected Growth: 10.2%

Growing demand for clean water, increasing adoption in medical and industrial applications, and expanding product offerings drive growth in Nephros' 'Other' segment, which includes water filtration products.

Royalty

Expected Growth: 10.2%

Increasing demand for clean water, growing adoption of water filtration systems in healthcare and industrial applications, and Nephros' proprietary technology are expected to drive royalty revenue growth.

7. Detailed Products

Ultrafiltration Products

Nephros' ultrafiltration products are designed to provide high-quality water purification for various industries, including medical, industrial, and commercial applications.

Dialysis Water Purification Systems

Nephros' dialysis water purification systems are designed to provide high-quality water for hemodialysis, peritoneal dialysis, and continuous renal replacement therapy.

Hydration Systems

Nephros' hydration systems are designed to provide clean drinking water for various applications, including military, outdoor, and emergency response situations.

Pathogen Detection Systems

Nephros' pathogen detection systems are designed to detect and identify waterborne pathogens, including bacteria, viruses, and parasites.

Water Filtration Systems

Nephros' water filtration systems are designed to provide clean drinking water for various applications, including residential, commercial, and industrial use.

8. Nephros, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Nephros, Inc. faces moderate threat from substitutes due to the availability of alternative water filtration systems.

Bargaining Power Of Customers

Nephros, Inc. has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Nephros, Inc. relies on a few key suppliers for its filtration systems, giving them moderate bargaining power.

Threat Of New Entrants

The water filtration industry is attractive, and new entrants may pose a significant threat to Nephros, Inc.'s market share.

Intensity Of Rivalry

The water filtration industry is highly competitive, with several established players, leading to a high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	18.01%
Debt Cost	3.95%
Equity Weight	81.99%
Equity Cost	10.12%
WACC	9.01%
Leverage	21.97%

11. Quality Control: Nephros, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Utah Medical Products

A-Score: 5.4/10

Value: 4.7

Growth: 3.0

Quality: 8.4

Yield: 4.0

Momentum: 3.5

Volatility: 9.0

1-Year Total Return ->

Pro-Dex

A-Score: 5.2/10

Value: 6.7

Growth: 6.0

Quality: 7.6

Yield: 0.0

Momentum: 9.0

Volatility: 1.7

1-Year Total Return ->

LeMaitre Vascular

A-Score: 4.8/10

Value: 1.2

Growth: 7.4

Quality: 7.0

Yield: 2.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

Warby Parker

A-Score: 4.5/10

Value: 3.3

Growth: 7.4

Quality: 4.1

Yield: 0.0

Momentum: 9.0

Volatility: 3.3

1-Year Total Return ->

Nephros

A-Score: 4.4/10

Value: 1.4

Growth: 6.3

Quality: 7.7

Yield: 0.0

Momentum: 10.0

Volatility: 1.0

1-Year Total Return ->

OraSure Technologies

A-Score: 3.4/10

Value: 7.1

Growth: 4.2

Quality: 5.0

Yield: 0.0

Momentum: 1.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

19.48%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.01%

Nephros, Inc. - US6406714005

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on NEPH

1.c. Company Highlights

Higher Growth

Strong Momentum

Fairly Valued

Earnings Miss

Revenues Miss

Average Growth

Average Yield

Earnings Beats

Weak Momentum

Stable Momentum

Revenues Beats

Expensive

Average Quality

Better Quality

2. Nephros' Q3 2025 Earnings: A Strong Quarter with Promising Growth Prospects

Operational Highlights and New Market Opportunities

Margin Profile and SG&A Investments

Valuation and Growth Prospects

Cash Position and Debt Profile

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Water Filtration

Expected Growth: 10.2%

Other

Expected Growth: 10.2%

Royalty

Expected Growth: 10.2%

7. Detailed Products

Ultrafiltration Products

Dialysis Water Purification Systems

Hydration Systems

Pathogen Detection Systems

Water Filtration Systems

8. Nephros, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Nephros, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.65$

Current Price

5.65$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA