Good afternoon, ladies and gentlemen, and welcome to the Cytosorbents Fourth Quarter and 2025 Full Year Earnings Conference Call. This call is being recorded on Wednesday, March 25, 2026. I would now like to turn the conference over to Pete Mariani, Chief Financial Officer. Please go ahead.

Thank you, Vincent, and good afternoon, everyone. Welcome to CytoSorbents' Fourth Quarter and Full Year 2025 Conference Call. Joining me today is Dr. Phillip Chan, our Chief Executive Officer. Before I turn the call over to Phil, I'd like to remind listeners that during the call, management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions. Therefore, the company claims protection under the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today. The forward-looking statements we make may reflect our views and estimates as of today, March 25, 2026, and we assume no obligation to update these projections in the future as market conditions change. We encourage investors to review the risks discussed in our annual report on Form 10-K filed with the SEC on March 31, 2025, and as updated on risks reported in our quarterly reports on Form 10-Q and in press releases and other communications to shareholders issued from time to time. During today's call, we will have an overview presentation covering the operating and financial highlights for the fourth quarter and full year 2025. Following the presentation, we will open the lines to analysts for questions. And now I'll turn the call over to Phil. Phil?

Thanks, Pete. Before we start, I want to mention our regulatory disclaimer regarding both CytoSorb and DrugSorb-ATR. Cytosorbents is centered on a unique blood purification system aimed at eliminating toxins and harmful substances from the bloodstream in critically ill patients. Our business is supported by a high-margin recurring revenue model with disposable cartridges driving ongoing usage, and we have a wide and expanding clinical presence with over 300,000 treatments administered globally across 70 countries. Furthermore, our DrugSorb-ATR program offers a significant opportunity in our pipeline, potentially allowing us to enter the U.S. market and greatly expand our available opportunities. Together, these factors provide us with a solid foundation and considerable potential for growth. As noted in the press release, 2025 has been a transitional year for the company, during which we made noteworthy advancements in four key areas. We emphasized driving sales growth, particularly outside of Germany, while also taking necessary steps to ensure Germany's long-term success. At the same time, we have been building and utilizing a growing body of clinical evidence to encourage broader adoption. We have also moved DrugSorb-ATR through the FDA regulatory process and bolstered our financial position while aligning our cost structure to aim for cash flow break-even. Although the year had its challenges, we believe these initiatives have set us up for success as we move into 2026. Regarding our sales performance, total sales revenue for 2025 increased by 4% to $37.1 million, marking record sales for our core products. This growth was mainly driven by robust performance in international markets, where direct sales outside of Germany rose 13% to $8.6 million and distributor sales climbed 11.4% to $16.5 million. Collectively, these sales channels represented approximately 68% of total revenue, reflecting the increasing diversification of our business. However, this success was partially tempered by a 10% decline in Germany to $11.8 million, attributed to the short-term effects of our restructuring efforts. On the profitability front, we have maintained strong gross margins, reaching 71% for the entire year and 74% in the fourth quarter, boosted by manufacturing efficiencies. In Germany, we have focused on developing a more scalable and execution-oriented commercial organization. We've strengthened leadership and accountability, established more structured sales planning and performance tracking, refined customer targeting, enhanced training and development for the sales team, and optimized resource allocation. Concurrently, we've simplified our messaging around a core clinical approach that emphasizes treating the right patient at the right time with the appropriate dosage. Encouragingly, we are already witnessing early improvements in the first quarter of 2026 from our German team, including heightened engagement and activity in the sales pipeline, and we anticipate gradual and sustained improvement throughout the year. Now, shifting to PuriFi, which is a crucial strategic initiative designed to increase access and utilization. PuriFi is a standalone hemoperfusion pump allowing CytoSorb therapy to be administered without relying on existing dialysis infrastructure. We have placed over 100 units globally to date, enabling earlier interventions, especially for patients not yet requiring continuous renal replacement therapy or dialysis, while also expanding access in areas with limited dialysis resources. Over time, we expect PuriFi to promote increased disposable usage, improve adherence to optimal treatment protocols, and strengthen our installed base. HotSwap is a recently launched innovation aimed at streamlining and accelerating cartridge exchanges. It addresses significant workflow challenges in the ICU by facilitating quicker and safer device changes, minimizing blood loss during exchanges, and supporting more frequent cartridge changes, which could enhance efficacy. Clinician and nurse feedback has been very positive, especially following our recent conference, ISICEM. We view this as a practical innovation that improves usability, supports better patient outcomes, and ultimately drives adoption. Now, let's discuss how we are using new clinical data to foster adoption and sales growth. Clinical evidence remains a vital factor for adoption. We are observing a steady stream of peer-reviewed publications, growing real-world validation, and increasing applications in critical care settings. In Sepsis and Septic Shock, a multinational survey of over 400 physicians showed that more than 75% are adopting blood purification with CytoSorb as one of the most widely used treatments today. Multiple studies indicate that CytoSorb is linked to significant reductions in inflammatory markers, decreased vasopressor requirements, improved organ function, and early signs of enhanced survival rates. Importantly, the treatment strategy is crucial, and we are focused on assisting clinicians in applying the therapy more effectively using the framework of treating the right patient at the right time with the right dose. We believe this is key to achieving consistent outcomes and, ultimately, driving utilization and growth. At ISICEM, one of the foremost global critical care conferences, we experienced strong scientific engagement and favorable clinician feedback regarding both CytoSorb and our new innovations. You can view some photos our team captured from our booth and the symposium here. This highlights our increasingly vital role in the clinical discussions surrounding critical care. Now, let's discuss obtaining marketing approval and entering the U.S. market with DrugSorb-ATR. As previously mentioned, DrugSorb-ATR addresses a pressing and significant unmet need. Patients on blood thinners like ticagrelor, who require urgent CABG surgery, face either a high risk of bleeding or delays that may increase mortality risk. DrugSorb-ATR facilitates rapid intraoperative drug removal, potentially enhancing both safety and outcomes. We estimate an initial market potential exceeding $300 million, growing to over $1 billion over time as broader indications are established. In 2025, we achieved significant progress with the FDA. While our initial De Novo submission was denied, the subsequent appeal yielded two critical insights: there were no safety concerns related to the device, and it was agreed that a new submission could center solely on the remaining issues. Following that, we held a formal pre-submission meeting in January and are actively collaborating with the FDA to finalize the requirements. We believe this positions us for a more streamlined and focused resubmission, with timing guidance to be provided once the requirements are clearly defined. Furthermore, the STAR-T randomized controlled trial has now been published in a leading journal, JTCVS, the top cardiothoracic journal in the U.S. The main takeaway is that DrugSorb-ATR was found to be safe and reduces bleeding severity in high-risk CABG patients. This is an essential milestone that bolsters the clinical case for potential market approval. Concurrently, real-world data from the STAR Registry continues to accumulate, revealing low rates of severe bleeding, minimal reoperations, and no safety concerns linked to the device. Importantly, these outcomes are being observed even in high-risk real-world scenarios, reinforcing the reliability of the data. Meanwhile, clinical adoption in Europe is steadily growing, and antithrombotic removal is increasingly becoming standard practice in leading medical centers. With that, I'll hand it over to Pete to delve deeper into the financials. Pete?

Thank you, Phil, and good afternoon, everyone. Today, I'll be reviewing the full year and fourth quarter 2025 financial performance and important updates that continue to strengthen our business and our outlook for 2026. Starting with our full year 2025 financial performance. Full year 2025 revenue was $37.1 million, up 4% compared to a year ago and flat on a constant currency basis. This growth was led by double-digit growth in two of our teams, including a 13% increase in direct international sales outside of Germany to $8.6 million, an 11.4% increase in distributor sales to $16.5 million. And together, these teams account for approximately 68% of our business. This was offset by the 10% reduction in Germany sales to $11.8 million, reflecting the near-term impact of our proactive restructuring of the German sales operation and the implementation of strategies that we expect to drive more consistent and scalable growth in the future. As Phil noted, we are encouraged by the early signs of improvement in these initiatives and expect incremental improvements across the year. Gross margin was 71% for the year compared to 70% for 2024. Total operating expenses for the year were relatively flat at $41.2 million and included $2.5 million lower R&D spend as a result of lower clinical and other project spends, offset by $1.9 million increase in SG&A, primarily related to higher corporate spend in early '25 as well as spend related to the regulatory and commercial activities for DrugSorb-ATR in the U.S., also offset by lower noncash stock compensation and royalty costs. Operating expenses also included a $500,000 restructuring charge taken in Q4 related to our workforce and cost reduction program. Operating loss for 2025 improved by 10% to $14.7 million compared to $16.5 million in 2024, reflecting higher revenue and improved gross margin. Adjusted net loss was $14.2 million or $0.23 per share compared to an adjusted net loss of $12.7 million or $0.23 per share in 2024. And adjusted EBITDA loss for 2025 improved by 9% to $10.5 million. Now turning to Q4 revenue. For Q4 '25, revenue was $9.2 million, an increase of 1% year-over-year and down 8% on a constant currency basis compared to a year ago. Gross margin for Q4 '25 improved to 74%, up from 71% in Q4 of '24 and reflecting improved operating efficiencies, which resulted in a $1.3 million sequential increase in inventory levels. Although higher inventory levels added to our cash burn in the quarter, the combination of improved operating efficiencies and higher inventory levels is allowing us to further reduce our anticipated production spend in 2026. Operating expenses were $11.4 million for the quarter compared to $10.1 million a year ago. The increase was led by a $500,000 restructuring charge taken in Q4 as a result of our workforce and cost reduction program, as well as increased costs related to the DrugSorb application-related expenses and other administrative costs unique to the quarter. The restructuring charge includes approximately $400,000 of cash-based severance-related charges and $100,000 of other noncash charges. Operating loss in Q4 was $4.6 million compared to $3.7 million in the prior year, and net loss improved to $5.5 million for the quarter or $0.09 per share compared to a net loss of $7.6 million or $0.14 per share in the prior year. Adjusted net loss for the quarter was $4.3 million or $0.07 per share compared to an adjusted net loss of $1.7 million or $0.03 per share in the prior year. This prior-year amount includes a net income tax benefit accrual of $1.7 million, which we recorded in Q4 of '24 from the sale of our net operating loss and R&D credits. Adjusted EBITDA loss for the quarter was $3.2 million compared to an adjusted EBITDA loss of $2.4 million in the prior year. Our total cash, cash equivalents and restricted cash was $7.8 million on December 31 compared to $9.1 million at the end of September. The net increase of $1.3 million includes new debt proceeds received in November of $2.5 million, offset by net operating cash burn in the quarter of $3.8 million. However, this operating burn includes an increase in net working capital of approximately $1.9 million in Q4, including a $1.5 million increase in inventory and accounts receivable and a $400,000 increase in net other assets and liabilities. The impact of our workforce and cost reduction program has allowed us to lower our cash burn, and we continue to adjust and reduce our operating and production costs as we begin 2026. As a result, we expect operating cash burn to continue to decrease as these working capital dynamics normalize over the first half of the year and now expect to be operating cash flow breakeven in the second half of 2026. And we are pleased with the operating and structural improvements that we are making across the company to drive improved execution at the top line and provide more rigorous ROI focus on our spending. We believe these improvements set us up nicely to continue driving growth across our core business, allow us to achieve cash flow breakeven in the second half of 2026, and continue to support our application for U.S. market approval of DrugSorb-ATR. And now I'll turn the call back over to Phil.

Thanks, Pete. In closing, we are exiting 2025 with a growing and increasingly diversified core business, strengthening clinical evidence supporting adoption, and early signs of a turnaround in Germany with a path forward for DrugSorb-ATR. At the same time, we have lowered our cost structure, strengthened our balance sheet, and established a realistic path to cash flow breakeven in 2026. Looking ahead, our priorities continue to be to drive consistent revenue growth, to execute the Germany turnaround, to advance DrugSorb-ATR towards FDA market authorization, and to achieve cash flow breakeven. We believe these steps position us to create meaningful long-term value. Now with that, we thank you for your attention, and we'll now open the line for questions. Operator?

Your first question comes from Michael Sarcone with Jefferies.

Just to start, again, on the FDA regulatory process and the submissions. Could you just help us think about how you're thinking of the timelines over the next few months? And what are kind of the guideposts we should be looking out for?

Yes, Michael. Mike, thanks for the question. I think where we are right now is that we continue to be in interactive discussions with the FDA. And as I mentioned in my comments, we're trying to ensure that we're on the same page with FDA before we actually submit. We believe this will streamline the process and ensure that we're addressing FDA's concerns where necessary. So I think that we're currently in that process. And when we have some better visibility on the completion of those discussions, we'll let our shareholders know.

Got it. Just to follow up, how confident are you that you will align with the FDA regarding the concerns that need to be addressed? What is the risk of not reaching a consensus with the FDA?

Yes. I mean, I think that after the appeal decision last year that we had worked with FDA to try to define a regulatory path forward. And we believe that, that is still the regulatory path that we're going to be pursuing, but there are additional details around that, that we are working to define with FDA just to ensure that we're on the same page. So again, when we have some better visibility and clarity on finalizing those discussions, we'll let everyone know.

Got it. Okay. And then maybe just last one for me. It sounded like you're starting to see some early signs of improvement in the German markets. Maybe you can give us a little more color there on what you're seeing and how things are trending so far through the first quarter.

Yes. I think that one of the key things that we tried to enact last year was, one, kind of a leadership change overall in the organization and a realignment of folks under that new reporting structure. Second thing is a much more proactive approach towards developing the market, relying less on opportunistic sales and really focused on methodical sales development that we believe will result in a much more predictable forward momentum in sales and visibility in sales. So we have a very strong program in place right now. It's taken a little longer than we had hoped to get off the ground, but I think that's the nature of the beast. But I think what we're very encouraged by is that the team has really pitched in here, embraced the things that we want to change, and I think they're seeing the benefits of that.

Next question comes from the line of Tom Kerr with Zacks SCR.

I have a quick follow-up on the last question about Germany. In the previous quarter, you used a baseball analogy to describe being in the middle innings of the work being done and the results. Are we now in the later innings of that process?

Yes, we believe we are. A lot of the organizational structure is already in place, and we expect to see gradual improvement over time. However, it won't happen all at once since there is still a significant amount of work to do. A crucial element of this restructuring was to ensure proper implementation and execution. The strategy and plan are now established, and our current focus is on executing that. Q1 was a strong performance by the team.

All right. So the eighth inning. Okay. On the gross margin question, you said improved production spend in 2026, getting more efficient there. But does that mean the gross margins can improve from the solid 74%? Or do we look at 2026 as another just a 74%, 75% gross margin year?

We've been operating in the low 70% range, around 70%, 71%. We're pleased with our strong performance in Q4 and aim to maintain this above 71%, hopefully reaching 72% or 74% consistently. That's our target for the near term. There are certainly opportunities to exceed those figures, but that will depend on several factors, including increased volumes. We're in a good position, and the team has performed well. However, I would expect us to stay in that low 70% range for a while until we prove otherwise.

Got it. Can you provide more details on the PuriFi pump strategy? Specifically, is there a viable revenue model associated with it? Will this serve as a separate significant product revenue source, or how should we approach it?

Well, I think how we look at that business is very similar to the printer cartridge business, right, where you subsidize the cost of the machine in exchange for disposable revenue in the future. And the disposables here are CytoSorb outside of the United States and VetResQ inside the United States. And so right now, we're not looking at material contributions of the pump because we have many different ways that we're financing that pump through rentals, through subsidies and other things, through outright sales. But longer term, we expect that to begin to translate, particularly as we grow that blood purification infrastructure, particularly in distributor countries where they don't have that capability but want that capability. And we expect that to drive unit volume increases in our disposables like CytoSorb going forward. So it's an investment strategy for the company at the current moment with hopefully a much larger payout in the future.

Your next question comes from Sean Lee with H.C. Wainwright.

My first one is on the pathway to breakeven. So with your commitment to get to operating breakeven by the second half of the year, beyond the head count reduction so far, what exactly has to happen before you guys can get there?

We implemented head count reductions in the fourth quarter, along with other cost-saving measures that will take effect into the first quarter. Some of these changes won't happen instantly. In the first quarter, we had certain commitments we couldn't easily exit, but we're still able to continue lowering expenses. This provides an incremental benefit for us. As we began the year, I mentioned that our inventory and production efficiencies were both elevated. When factoring these into our model, it indicates that we can consider a reduced production level in the first half of the year, which will support cash flow efficiencies and facilitate the sale of inventory, converting it into cash. We will also manage working capital during this period. I believe we are on the right track, although it may take a bit longer than we initially anticipated, but I am confident we will reach a favorable position.

Great. That's very helpful. My last question is on the DrugSorb-ATR resubmission. So considering that this is the second go around with the FDA, what, I guess, derisking steps are you already taking with this new submission process such that we're much more likely to be getting a positive outcome this time?

Yes, we share your perspective, Sean. This is our second attempt, and while this approach was suggested by the FDA, we want to avoid another denial. Therefore, we are proceeding cautiously to ensure we are fully aligned with the FDA and to avoid any surprises. We are currently engaged in ongoing discussions with the FDA to ensure that when we do submit, we will have all the necessary elements for a favorable decision. We appreciate our shareholders' patience throughout this process. We had previously mentioned aiming for a submission by the end of March, but we believe it is more prudent to take the time needed to increase certainty in the process to prevent any unforeseen issues like we encountered last year. This is our current stance. As I mentioned to Mike earlier, we will keep everyone updated as we gain more clarity on the timeline.

There are no further questions. Please continue.

Okay. Great. Well, we thank everyone for their participation today, and thanks for joining us. If you have any additional questions, please contact us at [email protected], and we look forward to the next update. Have a good evening, everybody. Good night.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.