Neurometrix reports financial results for the third quarter of 2009

NeuroMetrix, Inc. (Nasdaq: NURO), a health care company transforming patient care through neurotechnology, today announced its third quarter financial results.

Total revenues for the quarter were $6.3 million, compared with $7.1 million for the third quarter of 2008. Revenues in the quarter were comprised of 11% medical equipment sales and 89% consumables sales in comparison with 6% and 94%, respectively, for the third quarter of 2008. Medical equipment sales consist of nerve conduction testing devices (ADVANCE™ and NC-stat®) and related modules, and service agreement revenues. Consumables sales include single use nerve-specific electrodes, EMG needles, and other accessories. Gross margin in the quarter was 71.1% of total revenues compared with 70.6% for the third quarter of 2008. Net loss for the quarter was $9.3 million ($0.57 per share) and included a charge of $7.4 million for the revaluation of warrants that were issued in the September financing to fair value as of September 30, 2009. In comparison, net loss for the third quarter of 2008 was $7.9 million ($0.57 per share) and included a $0.2 million investment impairment charge and a $5.5 million loss from discontinued operations.

For the nine months ended September 30, 2009 total revenues were $19.9 million compared with $23.9 million for the comparable period in 2008. Revenues for the nine months were comprised of 11% medical equipment sales and 89% consumables sales in comparison with 7% and 93%, respectively, for the nine months ended September 30, 2008. Gross margin for the nine months was 71.4% of total revenues compared with 72.0% for the nine month period in 2008. Net loss for the nine month period ended September 30, 2009 was $12.3 million ($0.84 per share) and included the charge of $7.4 million for the revaluation of warrants. In comparison, net loss for the comparable period in 2008 was $23.6 million ($1.72 per share) and included a $2.2 million investment impairment charge and a $7.0 million loss from discontinued operations.

Cash and investments totaled $32.0 million as of September 30, 2009.

Highlights included:

• Equity financing which raised $17.3 million, net of expenses, through the sale of 8.8 million common shares plus warrants to purchase common shares. A warrant liability of $14.5 million was recorded at the financing date and revalued to $21.9 million at September 30, 2009. Subsequently the warrants were modified and the warrant liability was reclassified into stockholders equity.
• Further expansion into the United Kingdom market with a $300,000 order of ADVANCE Systems, including consumables, by the Company’s orthopedic distributor.
• Reduction in consumables revenue to $5.6 million from $6.1 million in Q2 2009 reflecting seasonality and a decline in customer inventory replenishment likely due to overall economic conditions and health care uncertainty.
• FDA 510(k) clearance for the ASCEND Stimulator. Additional 510(k) submissions to expand intended use in support of commercial launch are planned for 2010.
• Chief Financial Officer added to management team.
• On October 30, the Physician Fee Schedule for 2010 was published by the Centers for Medicare and Medicaid Services (“CMS”) and included a new category I CPT code for nerve conduction studies performed with preconfigured electrode arrays such as are utilized with the NC-stat device.

“During the third quarter we made important progress in strengthening our balance sheet, improving management depth, expanding our international business, and advancing ASCEND toward commercialization” said Shai N. Gozani, M.D., Ph.D., NeuroMetrix President & CEO. “Further, we were pleased that the recently published Medicare Physician Fee Schedule for 2010 included a CPT code for nerve conduction studies performed with the NC-stat device.”