Q2 2024 Nephros Inc Earnings Call
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Speaker Change: Good day, and welcome to the Nephros, Inc. Second Quarter 2024 Financial Results Conference Call.
Speaker Change: All participants will be in listen-only mode.
Sujinian Assistants: Surgeoning assistants, please signal a conference specialist by pressing the star key followed by zero.
Sujinian Assistants: After today's presentation, there will be an opportunity to ask questions.
Sujinian Assistants: To ask a question, you may press star then 1 on your telephone keypad. And to withdraw your question, please press star then 2.
Operator: All participants will be in listen-only mode. Surgeons and assistants, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw your question, please press the star key then. Please note, today's event is being recorded. I'd now like to turn the conference over to Kirin Smith with Investor Relations. Please go ahead.
Sujinian Assistants: Please note, today's event is being recorded.
Sujinian Assistants: And now I'd like to turn the conference over to Kirin Smith with Investor Relations. Please go ahead.
Kirin Smith: Good afternoon, everyone, and welcome to NEPHROS's Q2 2024 Earnings Conference Call. This is Kirin Smith with PCG Advisory.
Kirin Smith: Good afternoon, everyone, and welcome to Nefros' Q2 2024 Earnings Conference Call. This is Kirin Smith with PCG Advisory.
Kirin Smith: Thank you all for participating in NEPHROS's second quarter 2024 conference call. Before we begin, I would like to remind you that this call will include forward-looking statements regarding the operations and future results of Nephros. For a discussion of these forward-looking statements, please review Nephros' SEC filings, including forms 10K and 10Q, which identify specific factors that make those actual results or events materially different from those described in the forward
Speaker Change: Thank you all for participating in NEPHROS's second quarter 2024 conference call.
Kirin Smith: Factors that may affect the company's results include, but are not limited to, Nephros' ability to successfully, timely, and cost-effectively market and sell its products and services; the rate of adoption of its products and services by hospitals and other health care providers; the success of its commercialization efforts; and the effect of existing and new regulatory requirements on Nephros' business and other economic and competitive factors. The contents of this conference call contain time-sensitive information but is accurate only as of the date of the life call today, August 8, 2024.
Speaker Change: Before we begin, I would like to remind you that this call will include forward-looking statements regarding the operations and future results of Nephros.
Speaker Change: For a discussion of these forward-looking statements, please review NEPROS' SEC filings, including Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
Speaker Change: Factors that may affect the company's results include, but are not limited to, Nephros's ability to successfully, timely, and cost-effectively market and sell its products and service offerings.
Speaker Change: The rate of adoption of its products and services by hospitals and other health care providers, the success of its commercialization efforts, and the effect of existing and new regulatory requirements on Nephros' business and other economic and competitive factors.
Speaker Change: The content of this conference call contains time-sensitive information that is accurate only as of the date of the live call, today, August 8, 2024.
Kirin Smith: Company, other takes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call, except as required by law. Now, I would like to turn the call over to Nephros' President and Chief Executive Officer, Robert Banks. Robert, please go ahead.
Speaker Change: The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call except as required by law.
Speaker Change: Now I would like to turn the call over to Nephros' President and Chief Executive Officer, Robert Banks. Robert, please go ahead.
Robert Banks: Thank you, Kirin. And good afternoon, everyone. We appreciate you joining us for our Q2 2024 earnings call. I want to start by expressing my gratitude to the entire Nephros team for their continued hard work and dedication. Today, we reported our 2024 second quarter results. As in the previous quarter, we began to break out the programmatic business and emergency response business in order to provide greater clarity on the help of the core business. Programmatic describes the sales of filters as part of an ongoing, long-term water management solution for the control of pathogens in water.
Robert Banks: Thank you, Kirin. And good afternoon, everyone. We appreciate you joining us for our Q2 2024 earnings call. I want to start by expressing my gratitude to the entire NEPHROS team for their continued hard work and dedication.
Speaker Change: Today, we reported our 2024 second quarter results.
Speaker Change: As in the previous quarter, we began to break out the programmatic business and emergency response business in order to provide greater clarity of the health of the core business.
Speaker Change: Programmatic describes the sales of filters as part of an ongoing long-term water management solution for the control of pathogens in water.
Speaker Change: While the emergency response business can fluctuate with large one-time orders, and that's just due to the nature of that business
Robert Banks: I'm proud to report that in the first half of 2024, we have achieved the highest number of active customer sites ever, with a 15% increase over last year, adding over 300 customers in the past 12 months.
Speaker Change: In Q2, we have managed the highest retention rate in the past six quarters.
Speaker Change: These reasons why I am very proud of all the NEPRS team for executing on such a high and consistent level.
Robert Banks: In the second quarter of 2024, we experienced a very positive increase in non-emergency response fitness of 8% compared to Q2 of last year. However, this solid growth was offset by a 92% year-over-year decline in our smaller emergency response business, resulting in an 8% decline overall in Q2 total revenue. We also just reported a 28% improvement in our net loss year-over-year as we continue to focus on cash flow generation and overall profitability. We believe that one contributor to the decline in the emergency response business is the reduced stringency of waterborne risk response and territories previously committed to both proactive filtration measures and robust corrective actions.
Speaker Change: In the second quarter of 2024, we experienced a very positive increase in non-emergency response business of 8% compared to Q2 of last year.
Speaker Change: This solid growth was offset by a 92% year-over-year decline in our smaller emergency response business, resulting in an 8% decline overall in Q2 total revenue.
Speaker Change: We also just reported a 28% year-over-year improvement in our net loss as we continue to focus on cash flow generation and overall profitability.
Speaker Change: We believe that one contributor to the decline in the emergency response business is the reduced stringency of waterborne risk response in territories previously committed to both proactive filtration measures and robust corrective actions.
Robert Banks: We continue to focus on key initiatives that drive long-term growth. One significant achievement is the expansion of our digital tools, including the filter tracking app, which is designed to enhance customer engagement and ensure consistent filter replacement. The speed of implementation has not yet met our expectations, as we continue to fine-tune the platform and online operability. Additionally, we are advancing our capabilities to address the growing concern around nano and microplastics and MPs, leveraging our unique position with the smallest pore size in the market, which is a key competitive differentiator and allows us to offer an excellent solution to the fire problem.
Speaker Change: We continue to focus on key initiatives that drive long-term growth.
Speaker Change: One significant achievement is the expansion of our digital tools, including the filter tracking app.
Speaker Change: which is designed to enhance customer engagement and ensure consistent filter replacements.
Speaker Change: The speed of implementation has not yet met our expectations as we continue to fine-tune the platform and online operability.
Speaker Change: Additionally, we are advancing our capabilities to address the growing concern around nano and microplastics.
Speaker Change: and NBs.
Speaker Change: Leveraging our unique position with the smallest pore size in the market, which is a key competitive strength and allows us to offer an excellent solution to this dire problem.
Robert Banks: We are seeking relationships with other entities and OEMs that may purchase and integrate our solution into their offerings, enabling them to make the claim of remediating an MP. Looking ahead, we are also strategically positioned to capitalize on growth opportunities in various sectors beyond hospitals to areas like dental practices, scale processing, and endoscopy processing, where we are seeing there is a clear growth opportunity. Are you excited about our overall value proposition and long-term growth costs?
Speaker Change: We are seeking relationships with other entities and OEMs that may purchase and integrate our solution to their offerings enabling them to make the claim of remediating NMPs.
Speaker Change: Looking ahead, we are also strategically positioning ourselves to capitalize on growth opportunities in various sectors beyond hospitals to areas like dental practices.
Speaker Change: Harold Processing and Discovery Processing where we are seeing there is clear growth of opportunity.
Speaker Change: I remain excited about our overall value proposition and long-term growth prospects while focusing on profitability and return on investment for our stakeholders.
Robert Banks: while focusing on profitability and return on investment for our stakeholders, as we help the world meet its critical water filtration demand. I will now turn the call over to our CFO, Judy Krandel, to discuss our financial performance in detail. Thank you.
Speaker Change: as we help the world meet its critical water filtration demands.
Judy Krandel: I will now turn the call over to our CFO , Judy Krandel, to discuss our financial performance in detail.
Judy Krandel: Thank you, Robert. I'm pleased to provide an overview of our financial performance for the second quarter of 2024. Our Q2-2024 net revenue was $3.25 million, down 8% compared to Q2-2023. As Robert alluded to, this decrease reflects the continued low contribution from emergency revenue. Excluding the emergency response revenue, sales increased 8%, due in part to the increasing success from our longer-term and newer sales personnel hired in 2023. Our gross margin remains strong at 59% flat year over year and a slight decrease from 62% in the first quarter of 2024.
Speaker Change: Judy?
Kirin Smith: and please provide an overview of our financial performance for the second quarter of 2024.
Judy Krandel: Our Q2 2024 net revenue was $3.25 million, down 8% compared to Q2 2023.
Judy Krandel: As Robert alluded to, this decrease reflects the continued low contribution from emergency revenue.
Judy Krandel: Excluding the emergency response revenue, sales increased 8% due in part to the increasing success from our longer term and newer sales personnel hired in 2023.
Speaker Change: Our growth margin remains strong at 59%.
Speaker Change: flat year-over-year and a slight decrease from 62% in the first quarter of 2024. The sequential decrease was due to increased shipping expenses and additional reserves primarily for slow-moving commercial products.
Speaker Change: Despite these challenges, our product growth margins before shipping and non-cash reserves stayed very healthy, indicating strong underlying product performance.
Speaker Change: We achieved a 33% improvement in our net loss of $289,000, down from the $433,000 lost in the second quarter of 2023.
Speaker Change: This is primarily due to reduced SG&A expenses, which declined by 13%, driven by lower stock compensation, bonus accruals, commissions, and professional fees.
Judy Krandel: Its vested EBITDA improved to a loss of $133,000 in the second quarter of 2024 from a loss of $183,000 in the prior year period. Moving on to the six month period, sales for the sixth month, ending June 30, 2024, declined by 6% from the prior year period. But again, excluding the emergency response revenue, sales increased by 10%.
Speaker Change: Adjusted EBITDA improved to a loss of $133,000 in the second quarter of 2024 from a loss of $183,000 in the prior year period.
Speaker Change: Moving on to the six-month period, sales for the six months ending June 30, 2024, declined by 6% from the prior year period, but again, excluding the emergency response revenue, sales increased by 10%.
Judy Krandel: Gross margins improved to 61% in the first half of 2024 from 58% in the prior year period. SC&A expenses decreased by 6% in the first half of 2024 versus the prior year period due to a decrease in bonus of the year, sales commission expense, stock compensation expense, and professional fees, offset part by an increase in salary expense, or net loss decreased 38% to $458,000 in the first half of 2024 from $739,000 in the prior year period.
Speaker Change: Gross margins improved to 61% in the first half of 2024 from 58% in the prior year period.
Speaker Change: At C&A expenses decreased by 6% in the first half of 2024 versus the prior year period due to a decrease in bonus accrual, sales commission expense, stock compensation expense, and professional fees. Offset and part by an increase in salary expense.
Speaker Change: or net loss decreased 38% to $458,000 in the first half of 2024 from $739,000 in the prior year period.
Judy Krandel: Our balance sheet remains strong, with a cash balance of approximately $3.1 million as of June 30, 2024. This is a decrease from $4.3 million at the end of last year, 2023, mainly due to increased inventory and accounts receivable and the payment of annual bonuses. Despite these changes, we continue to operate death-free, providing us with flexibility to invest in growth initiatives. As we look to the future, we are focused on maintaining financial discipline while investing strategically in areas that will drive long-term value. This includes optimizing our product pricing, improving operational efficiencies, and exploring strategic opportunities for expansion. I will now turn the call back to Robert for some concluding remarks. Robert?
Speaker Change: Our balance sheet remains strong with a cash balance of approximately $3.1 million as of June 30, 2024.
Speaker Change: This is a decrease from $4.3 million at the end of last year, 2023, mainly due to increased inventory and accounts receivable and the payment of annual bonuses.
Speaker Change: Despite these changes, we continue to operate debt-free, providing us with flexibility to invest in growth initiatives.
Speaker Change: As we look to the future, we are focused on maintaining financial discipline while investing strategically in areas that will drive long-term values. This includes optimizing our product pricing, including operational efficiencies, and exploring strategic opportunities for expansion.
Speaker Change: of a now trying to call back to Robert for some complete concluding remarks. Robert?
Robert Banks: As we move forward, Nephros is well positioned to continue to grow its trajectory by focusing on innovation, customer engagement, and strategic expansion. We remain committed to providing high-quality water filtration solutions that meet the needs of our evolving customers. I want to extend my gratitude to our investors, partners, and the entire Nephros team for their continued support and dedication. We look forward to sharing more updates on our progress in the coming quarters. This concludes our formal presentation. We will now open the floor to questions. Operator, please open the call for Q&A.
Robert Banks: Thank you, Judy.
Robert Banks: As we move forward, Nephros is well positioned to continue to grow its trajectory by focusing on innovation, customer engagement, and strategic expansion.
Robert Banks: We remain committed to providing high-quality water filtration solutions that meet the needs of our evolving customers.
Robert Banks: I want to extend my gratitude to our investors, partners, and the entire Nephros team for their continued support and dedication.
Speaker Change: We look forward to sharing more updates on our progress in the coming quarters.
Speaker Change: This concludes our formal presentation. We will now open the floor for questions.
Operator: Thank you. We will now begin the question and answer session. To ask a question, please press stars and one on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the key. If at any point your question has been addressed, you'd like to remove yourself from the conversation, please press star then too. Once again, ladies and gentlemen, that's Farwell's in the morning if you have a question. And today's first question comes from Tom McGovern with Maxim Group. Please go ahead.
Speaker Change: Operator, please open the call for Q&A.
Speaker Change: Thank you. We will now begin the question and answer session.
Speaker Change: To ask a question, please press star then 1 on your telephone keypad.
Speaker Change: If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys.
Speaker Change: If at any point your question has been addressed and you'd like to remove yourself from queue, please press star then 2.
Speaker Change: Once again, ladies and gentlemen, that's 1,001 if you have a question.
Speaker Change: And today's first question comes from Tom the government with maximum group who's gone head.
Tom McGovern: Hey guys, how's it going? So yeah, so first question: I just wanted to see if you guys could elaborate a little bit more on the reduced stringency for the waterborne risk response and certain territories. Just wondering, if there was a specific reason you guys did identify for that reduced stringency, and then maybe kind of a follow-up question on that is, you know, with the ash ray, five, one, four; believe it is the standard that came out.
Speaker Change: Hey guys, how's it going?
Speaker Change: I'm sorry, I'm sorry, I'm sorry.
Speaker Change: First question, I just wanted to see if you guys could elaborate a little bit more on the reduced stringency for the waterborne risk response in certain territories. Just wondering, you know, if there was a specific reason you guys could identify for that reduced stringency. And then maybe kind of a follow-up question on that is, you know, with the ASHRAE.
Speaker Change: 514, I believe it is the standard that came out, I think it was at the end of last year. Just kind of curious if you could give an update on that. I know you guys were doing a good job of trying to inform clients of that, but have you guys seen maybe a shift in clients that that guideline applies to in terms of reorder rate? Any color on that would be very helpful.
Speaker Change: Thanks.
Speaker Change: Yeah, thanks for the question and good to talk to you again Tom.
Speaker Change: So, on the first question, identifying any specific actions or things that may have happened, if I look specifically at Ohio and the Department of Health.
Speaker Change: The system was basically overwhelmed with a number of cases of emergencies and positive test responses.
Speaker Change: So the misentality changed that in order not to overwhelm the system. They changed that stance. They stopped testing so excessively and reverted back to a method of letting each of the vigilante handle the situation.
Robert Banks: Now, not to say that there is a lack of care and concern for the importance of patients, but coming out in the future in that same region, Ohio administrative Code rule number 371-207, it's a memorandum requiring testing, and in order for you to obtain a hospital license, you'll have to show that you tested over some period. So that starts on October 1 of this year, so we could see a return to some higher-level levels of emergency responses, and then other states and areas in the region following suit.
Speaker Change: Now, not to say that there is a lack in care of the importance of patience.
Speaker Change: But coming out in the future in that same region
Speaker Change: Ohio Administrative Code rule number 3701-2207. It's a Membranum requiring testing and in order for you to obtain a hospital license you'll have to show that you've tested over some period.
Speaker Change: So that starts in October 1 of this year. So we could see a return to some higher level of those emergency responses and then other states and areas in the region following suit.
Speaker Change: I'm seeing similar legislation in New Jersey as well.
Speaker Change: So, that I think is a big influence based on the second part of your question of the ASHRAE guidelines.
Speaker Change: and that's now requiring testing as well.
Speaker Change: I think that those two influences coming down the pipe could change that.
Speaker Change: But going forward, I cannot rely on emergency response as part of the forecast.
Speaker Change: since it is something in a more non-controllable state of business. So I hope that answers your question. Despite that emergency response, you'll see that that core is still strong, maintaining an average around that double-digit growth.
Speaker Change: for Dr. Ray, which is an impressive and the time that we have today. So, thanks for that question.
Tom McGovern: Gotcha, appreciate it, and then one more time, I can jump back in the queue. So this is just on the filter tractor, so obviously, rollout seems to be, you know, maybe not quite as rapid as you'd expect it as you guys are kind of working through some kings for maybe adding improvements to the platform. So just wondering if you'd give us an update on kind of how you're seeing this roll out. Last time we spoke, you said it was kind of a 12 month implementation timeline, which would kind of have it fully rolled out and integrated into the first quarter of 2017.
Speaker Change: got you appreciate it, and then one more time I can jump back in the queue. So this is just on the filtered tractor, so obviously we're all out seems to be maybe not quite as rapid as you guys are kind of working through some kings for maybe adding improvements to the platform.
Speaker Change: So just wondering if you'd give it up date on kind of how you're seeing this roll out last time we suppose you said it was kind of like a 12 month
Speaker Change: Implementation timeline which would kind of have it fully rolled out and integrated by the end of the first quarter in 25. Is that still the case you guys kind of that kind of possible delays cooked into that timeline or now do you expect it to maybe be pushed to the end of second quarter?
Speaker Change: and then just kind of a follow-up on that would just be, have you seen, you know, changes in reorder rates from the clients that kind of have the prototype of this, have you seen that it's been working any commentary you can have on kind of just initial success of the platform would be helpful as well.
Speaker Change: Now it's a great question and the filter tracker after we were talking about, we do have to come up with a better name than that, boring name.
Speaker Change: The app was having some issues that we knew they would have issues, the offline version of it. Many of these filters are located in parts of hospitals or patient care facilities that don't have good reception.
Speaker Change: So the scanning and that part of the tool had to be updated and revamped and then So that it works on most phones or all phones. It was working fine on some
Robert Banks: It was working fine on some, so those kinks and problems seem to have been worked out as of very recently. Places where we are using it are full-service accounts that were already kind of changing their filters on a regular basis. What kind of alluded to or the underlying problem your question is addressing is the reorder rate. These are people who have programmatic long-term water treatment plans using our filters but then, for whatever reason, are not changing the money.
Speaker Change: So, those kinks and problems seem to have been worked out as of very recently. Places where we are using it are full service accounts that were already kind of changing their filters on a regular basis.
Speaker Change: But kind of alluded to the underlying problem your question is addressing, is the reorder rig? These are people who have programmatic, long-term water treatment plans using our filters, but then, for whatever reason, are not changing them on a regular basis.
Robert Banks: They may not have the staff, they forget about the nurses as they don't complain, so they need a loan. There are a number of reasons why the filters aren't getting changed out on a regular basis, but I do believe that the low-hanging fruit is an easy problem that we'll be able to rectify once we get this filter tracker right after these digital online tools in place to better monitor and keep up with that business. Thanks for asking; that's a good question.
Speaker Change: Jeff.
Speaker Change: They may not have to stop. They forget about them. The nurses don't complain, so they leave alone.
Speaker Change: Hold a number of reasons why the filters aren't getting changed out on a regular basis, but I do believe that the low-hanging fruit easy problem that will be able to rectify once we get this filter tracker at other these digital online tools in place to better monitoring and keep up with that business.
Tom McGovern: Gotcha. I appreciate that. And just one last thing.
Speaker Change: Thanks for asking. That's a good question.
Tom McGovern: I know you guys commented on, you added, you know, 300 accounts, active accounts, recently over the past 12 months, was it, or possibly six months; I'll have to go back and check. But did you guys give us the total number of active accounts as of the end of the second quarter? I know that's a figure you used to give. I'm not sure if you're still playing that game.
Unnamed: [inaudible]
Speaker Change: Gotcha, I appreciate that. Just one last thing, I know you guys commented on, you added a
Speaker Change: There's 300 active accounts recently over the past 12 months, was it, or possibly six months, I'll have to go back and check. But did you guys give us the total number of active accounts as of the end of the second quarter? I know that's a figure you used to give. I'm not sure if you're still planning on doing that.
Speaker Change: Yes, for me, for the second, unless you have a picture, you'll find it in about three seconds.
Unnamed: Yeah, me, yeah
Speaker Change: Yeah, we...
Speaker Change: We will look up that number for you.
Speaker Change: and all the back-to-sites at the end of the year, 21,384.
Tom McGovern: All right, guys. Great. I appreciate you taking the time to answer my questions, and I'll hop back in queue.
Speaker Change: All right, guys, great. I appreciate you taking the time to answer my questions, and I'll hop back in queue. Appreciate it.
Operator: Thank you, and as our miners, if you'd like to ask a question, please press the star on the one at this time. We'll pause for just a moment through a symbol, Ralph.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: Thank you. Thank you. And as a reminder, if you'd like to ask a question, please press star then 1 at this time. We'll pause for just a moment to assemble our roster.
Operator: and Ms. McGovern's answer session. I'd like to turn the conference back over to the company at the end of March.
Speaker Change: Thank you for watching!
Speaker Change: and we see another question and answer session. I'd like to turn the conference back over to the company for the closing remarks.
Robert Banks: Thank you, and I appreciate everyone joining the call today, and we look forward to talking again in the future. Please have a great rest of your day and enjoy yourself.
Speaker Change: Thank you, and I appreciate everyone joining the call today, and we look forward to talking again in the future. Please have a great rest of your day and week.
Operator: Thank you for listening to this song. We thank you all for attending today's presentation. He made out of tonight's lines, and have a wonderful day.
Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
Robert Banks: Yeah, thanks for the question and good to talk to you again. So, on the first question, identifying any specific actions or things that may have happened. If I look specifically at Ohio and the Department of Health, their system was basically overwhelmed with a number of cases and urgencies and positive test responses. So, the misentality changed that, and we're not to overwhelm the system, they changed that stance, they stopped testing so excessively and reverted back to a method of letting each individual entity handle the situation.
Unnamed: We will look again in numbers. All those active sites at the end.
Robert Banks: Now, great question, and the filter tracker app we were talking about, and we did not have to come up with a better name than that boring name, because the app was having some issues, but we knew they would have issues. The offline version of it, many of these filters are located in parts of hospitals or patient care facilities that don't have good reception, so the scanning and that part of the tool had to be updated and revamped so that it works on most phones or all phones.
Unnamed: Photoactive sites at the end of the year 21,384.
Judy Krandel: This sequential decrease was due to increased shipping expenses and additional reserves primarily for slow-moving commercial products. Despite these challenges, our product growth margins before shipping and non-cast reserves stayed very healthy, indicating strong underlying product performance. We achieved a 33% improvement in our net loss of $289,000, down from the $433,000 loss in the second quarter of 2023. This is primarily due to lower SG&A expenses, which declined by 13%, driven by lower stock compensation, bonus accruals, commissions, and professional fees.
Robert Banks: I'm seeing similar legislation in New Jersey as well, so that I think is a big influence based on the second part of your question about the Ashbury guidelines, and that's now requiring testing as well. So I think that those two influences coming down the pipe will change that, but going far, I cannot rely on emergency response as part of the forecast since it is something in the more non-controllable state of business. So I'll answer your question. Despite that emergency response, you'll see that that core is still strong, thinking, and averages around that double digit growth trajectory, which is impressive at the time that we have today.
Robert Banks: While the emergency response business can fluctuate with large one-time orders, let's just say that's the nature of that thing. I'm proud to report that in the first half of 2024, we achieved the highest number of active customer sites ever, with a 15% increase over last year, adding over 300 customers in the past 12 months. In Q2, we managed the highest retention rate in the past six quarters. These are reasons why I am very proud of all the NEPHROS team for executing on such a high and consistent level.
Tom McGovern: Is that still the case? You guys kind of, was that kind of possible delay cooked into that timeline, or now do you expect it to maybe be pushed to the end of the second quarter? And then just kind of a follow-up on that would be, have you seen changes in reorder rates from the clients that kind of have the prototype of this, have you seen that it's been working? Any commentary you can have on kind of just the initial success of the platform would be helpful as well.
Tom McGovern: I think it was at the end of last year; just kind of curious if you have given up on that. I know you guys were doing the job of trying to inform clients of that, but have you guys seen, you know, maybe a shift in clients that the guideline applies to in terms of reorder ratio? Any color on that would be very helpful.