Good day, everyone, and welcome to Nuwellis First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. Please note, this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Louisa Smith with Investor Relations.

Thank you, operator, and thank you for joining today's conference call to discuss Nuwellis' corporate developments and financial results for the first quarter ended March 31, 2025. In addition to myself, with us today on the call are John Erb, Nuwellis' Chairman of the Board and Interim CEO; and Rob Scott, Chief Financial Officer. At 8:00 a.m. Eastern Time today, Nuwellis released financial results for the first quarter of 2025. If you have not received Nuwellis' earnings release, please visit the Investors page on the company's website. During this conference call, the company will be making forward-looking statements. All forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward-looking statements. All forward-looking statements are based on our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon current available information, and the company assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to the cautionary statements and discussion of risk in the company's filings with the Securities and Exchange Commission, including the latest 10-K. With that, I would now like to turn the call over to John.

Thank you, Louisa, and good morning, everyone. Welcome to Nuwellis first quarter 2025 earnings conference call. Today, I'll walk through our first quarter results, highlight key areas of growth and operational progress and share how we are building a strong foundation for long-term success. Next, our Chief Financial Officer, Rob Scott, will provide a detailed commentary on our financial results before opening up the call for questions. We'll begin with an overview of the quarter. Nuwellis generated $1.9 million in revenue for the first quarter of 2025, representing a 3% increase year-over-year, supported by a 4% increase in consumables utilization and an increase in U.S. console sales, partially offset by a decrease in international sales. By customer category, we have had a strong quarter within pediatrics and heart failure, which saw 38% and 28% growth over the prior year, respectively, driven by an increase in consumable utilization. Within pediatrics, we opened two new accounts during the quarter. Each of these additions underscores our strategic focus on the pediatrics category, where clinicians increasingly use Aquadex as a general alternative in cases where continuous renal replacement therapy or CRRT is not feasible due to the lower blood volumes and delicate hemodynamic balances required in pediatric patients. Sales in the critical care category decreased by 25% compared to the prior year. This decrease can be attributed primarily to one of our largest customers that acquired excess inventory at the end of 2024. This is a one-time impact, and we expect critical care to stabilize in the coming quarter. We continue to see positive trends in account penetration; increasing clinical adoption, expanding reimbursement coverage, and enhanced physician advocacy continue to support a long-term growth strategy. We continue to strengthen the clinical foundation supporting Aquadex therapy. Toward that end, the Journal of the American College of Cardiology Heart Failure published in February of this year included a reanalysis of data from the AVOID-HF trial, a randomized clinical trial evaluating ultrafiltration versus intravenous diuretics in patients with heart failure. This study demonstrated a 60% reduction in heart failure events with ultrafiltration at 30 days compared to standard intravenous diuretic therapy and significantly fewer heart failure hospitalizations. In addition to these clinical trial findings, real-world data are also building. An observational analysis titled Outcomes and Community Hospitals study led by Dr. John Jefferies evaluated the use of Aquadex across two regional hospitals. The study showed a statistically significant reduction in 60-day heart failure readmission rates, volume loss, and weight reduction among patients treated with ultrafiltration, along with stable renal function and meaningful clinical benefit. These results reinforce the value of Aquadex in community-based care settings where effective fluid management can have a substantial impact on patient outcomes and hospital resources. Together, these findings strengthened the clinical case for Aquadex across a range of hospital environments. As I outlined on our fourth-quarter call, we have also seen important progress in reimbursement coverage that strengthens our commercial opportunities. Effective January 1, Aquadex was reassigned to a new outpatient reimbursement level by CMS, increasing the facility reimbursement fee for the therapy by nearly 4x to $1,639 per day. This adjustment increases the accessibility and financial viability of Aquadex in hospital-based outpatient settings, thereby enabling hospitals to provide improved fluid management outcomes relative to diuretics. The combination of improved reimbursement and our expanding clinical evidence base is paving the way to advance our outpatient strategy. These enhancements allow us to expand our reach and use cases while leveraging the same call point as our core inpatient business. Already, we see encouraging momentum in the outpatient setting, and expanded coverage makes Aquadex therapy more economically viable and accessible. We have built a growing pipeline of target outpatient facilities representing an addressable market opportunity of approximately $773 million that we anticipate will help drive significant future top-line growth. Finally, before I turn the call over to Rob, I'd like to detail Nuwellis' current exposure to tariffs. At this point, we manufacture our products in-house at our facilities in Minnesota with only a very small portion of our raw materials being sourced internationally. Our limited exposure to international components leaves us confident we will not materially be affected by current tariff policies. I'd now like to turn it over to Rob to detail our Q1 financial results.

Thank you, John, and good morning, everyone. Turning to the first quarter financial results. Revenue was $1.9 million, representing a 3% increase over the prior year period. This growth was driven by a 4% increase in consumables utilization and an increase in U.S. console sales, partially offset by a decrease in international sales. By customer category, pediatric and heart failure revenues increased 38% and 28%, respectively, compared to the first quarter of 2024, supported by growth in consumables utilization. Critical Care revenue declined 25% year-over-year primarily due to the driver John referenced earlier. Gross margin for the first quarter was 56% compared to 64.1% in the same period last year. The decline was mainly driven by unfavorable manufacturing variances, lower fixed overhead absorption tied to reduced production volumes and an inventory adjustment related to the FlexFlow console. Operating expenses continue to improve. Selling, general and administrative expenses were $3.6 million, a 22% reduction compared to $4.6 million in the first quarter of 2024. The improvement reflects lower head count and compensation-related expenses along with reduced professional services fees. Research and development expenses were $550,000 for the quarter compared to $1.3 million in the prior year period. This decrease was primarily due to lower head count and a reduction in R&D project spend. In total, operating expenses for the quarter were $4.1 million, a 31% improvement compared to the first quarter of 2024. Operating loss narrowed to $3.1 million compared to an operating loss of $4.7 million in the prior year quarter. Net loss attributable to common shareholders was $3 million or a loss of $0.69 per share compared to a net loss attributable to common shareholders of $3.8 million or a loss of $24.11 per share for the same period in 2024. At March 31, 2025, we ended the quarter with $2.6 million in cash and cash equivalents, and we continue to operate with no debt on the balance sheet. We remain focused on disciplined expense management and maintaining a strong financial position to support the continued expansion of our commercial initiatives. I'll now turn it back to John for additional remarks.

Thank you, Rob. We are excited to continue our progress into the year and capitalize on the positive momentum we've created in seeking to position Aquadex as a standard of care within fluid management. I would like to reiterate that Nuwellis is at a strategic inflection point. We are focusing on critical care, pediatrics, and outpatient heart failure. Critical care, primarily cardiac surgery represents approximately 40% of our current business. Approximately 80% of the patients weaned from a heart-lung machine experience acute kidney injury due to the low hematocrit levels of diluted red blood cell counts. Aquadex can protect the kidneys by safely increasing hematocrit levels as excess fluid is removed post cardiac surgery. Aquadex has been used in 47 children's hospitals in the U.S. and represents approximately 40% of our current business. Aquadex is a life-saving tool for pediatric nephrologists treating children with little to no kidney function. With the recent fourfold increase in outpatient reimbursement and our growing partnerships with nephrologists, we will expand into the $773 million outpatient market as our current hospital accounts complete the logistical challenges of finding space and nursing resources. Treating heart failure patients in the hospital outpatient clinic will reduce the economic burden to hospitals of extended hospital stays and the penalties associated with 30-day readmission rates. The availability of hospital outpatient clinics will benefit heart failure patients where the chronic condition of fluid overload can be effectively managed and therefore, avoid the acute distress that requires the patient to be hospitalized. We are also engaging with a large nephrology company to contract hospital nephrology services to provide Aquadex for fluid management in hospital outpatient clinics. We are also continuing patient enrollment in our REVERSE-HF clinical study, which directly compares Aquadex to IV loop diuretics in reducing time to first heart failure event within 30 days. We're nearing the halfway mark toward our enrollment goal of 372 patients. We are shifting our customer focus to cardiac surgeons and perfusionists in critical care to pediatric nephrologists in the pediatric category and to nephrologists supporting the hospital outpatient-based centers. We are diligently looking at ways to reduce our cash burn without jeopardizing our growth opportunities. I'm particularly pleased with our 31% reduction in operating expenses. Additionally, we have recently signed an agreement with KDI Precision Manufacturing, a well-known local contract manufacturing company to move manufacturing from our facility, which we believe can result in meaningful expense reductions over the next 12 months. We'll then look further at reducing additional operating expenses, including evaluating our future space requirements. We will continue to execute towards our inpatient and outpatient goals and will provide further details on our progress throughout the year. This concludes our prepared remarks. Operator, we would now like to open the call to questions.

Thank you. We will take our first question from Jonathan Aschoff with ROTH. Your line is now open.

Thanks. Thank you for going through the first quarter there. So if the pediatric revenue grew 38% year-on-year on flattish revenue, so the adult revenue must have dropped and was that entirely due to lower international sales? Or was there lower sales domestically as well?

If you're addressing the drop in critical care, that was primarily due to our largest customer building their inventory in the fourth quarter of last year. So they didn't purchase as much in the first quarter. They have now begun repurchasing in the second quarter. So we expect our critical care business volume to come back up to normal levels this quarter.

Okay. Does that happen all the time because I've noticed that there is a drop in the first quarter? So it seems quite a seasonal drop from the fourth and kind of bounces back in the second. So is this really just more of that seasonality?

I would say there's not a lot of seasonality in our business. I think this was specific to a recall we had in the fourth quarter where this high-volume account wanted to make sure they protected their patient volume with the product and purchased it in the fourth quarter. So I think there was an incident that drove that change, and I think things will level out in the future.

Thanks. So what has transpired at the relevant facility since the first of January? In other words, what does expanding the outpatient pipeline specifically mean for the outpatient application of Aquadex?

Right. We're working currently right now with four hospitals that are wanting to implement their outpatient clinic and what they are working on basically is identifying the location for it. A couple of them have actually identified their hospital dialysis unit as the location and now they're working on getting the nursing resources necessary to support that outpatient clinic. So there's a little bit of a logistical change for hospitals to implement the outpatient clinic, and we're helping them and working through that. So that's the activity that's going on. We really expect these hospitals to start treating patients this quarter and start seeing revenue growth. We'll see a bit in the second quarter. We expect it to start growing more rapidly in the third and fourth quarter.

Great and thank you. And lastly, can you help us better understand the Phase 3 trial enrollment with Aquadex? And the second part of that question is Vivian clinical trial start timeline.

We are continuing to enroll in the REVERSE-HF trial. After addressing the issues that arose during the fourth quarter recall, we intentionally slowed down enrollment. Although the physicians continued to bring in patients, the overall pace decreased slightly. Now that we have resolved those issues, we are prepared to ramp up our efforts to boost enrollment again. Currently, we are about halfway through and remain focused on that goal. Regarding the Vivian clinical trial, we still need to develop the device further before we can submit for an IDE clinical trial with the FDA. However, I don't expect that the clinical trial will actually commence until later this year or early next year.

That's very helpful. Thanks a lot, John.

Thank you. And we have no further questions at this time. I'll turn the program back over to John Erb for any additional or closing remarks.

Thank you. I'd like to thank all of our stakeholders, Nuwellis employees, shareholders, physicians, nurses, patients, and healthcare workers in the field for their ongoing support. So thank you and I hope you all have a great day.

Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful day.