Nephros, Inc.

What they do

Nephros develops and markets point-of-use water filtration products, with a core focus on medical-grade water filtration. Its medical portfolio has two product lines: infection control (0.1-micron microfilters and 0.005-micron ultrafilters that retain bacteria, viruses, and endotoxins) and dialysis water (ultrafilters for water and bicarbonate concentrate used in dialysis treatment). The commercial line improves taste and odor, reduces biofilm, scale, cysts, particulates and lead, and includes a newly released solution validated for reduction of Total PFAS. Products are sold into healthcare as well as manufacturing, laboratories, aviation, and federal facilities.

Revenue drivers

• Programmatic revenue — Recurring filter procurement by clinical, treatment, and operational customers on a replacement schedule; management called it the foundation of the business and said core programmatic revenue grew 27% year over year in Q2 2026.
• Emergency response revenue — Rapid deployment of filtration in response to acute water-quality events such as outbreaks, contamination, or system disruptions; predominantly infection control filtration, generally non-recurring, though deployments may lead to routine purchasing.
• Medical filtration lines — Infection control (microfilters and ultrafilters) and dialysis water (ultrafilters), all FDA 510(k)-cleared Class II devices, sold primarily into healthcare settings.
• Commercial filtration and services — Commercial water filters for taste, odor, biofilm, scale, cysts, particulates, lead, and Total PFAS; the company also cited service revenue that nearly tripled year over year in Q2 2026, tied to installation, replacement, and water management support.

Recent performance

Net revenue for the quarter ended June 30, 2026 was a record $6.0 million, up 36% from $4.4 million in the second quarter of 2025. Net income was $1.2 million versus $0.2 million a year earlier, including the benefit of a one-time tariff refund of approximately $0.6 million. Cost of goods sold rose 23% to $2.0 million, and gross margin improved to 67% from 63%, primarily due to recognition of the IEEPA tariff refund. Core programmatic revenue grew 27% year over year, and adjusted EBITDA was $1.3 million versus $0.4 million. For full-year 2025, revenue was $18.8 million with net income of $1.2 million.

Strategy

Management is focused on expanding the recurring programmatic base, which provides replacement demand and long-term customer relationships, and on growing service offerings for installation, replacement, and water management support. Recent product launches target microplastics, nanoplastics, PFAS, sterile processing, drinking fountains, and bottle fillers to widen the addressable market. The company is also raising its investor visibility, citing a second Virtual Investor Event, participation in the Maxim Health, Wellness & Longevity Conference, and inclusion in the Russell Microcap Index. Management described the investments of the past several years as positioning Nephros for sustainable growth.

Risks

• Emergency revenue is non-recurring — Emergency response revenue is generally non-recurring, so demand tied to outbreaks or contamination events may not repeat in subsequent periods.
• Tariff and trade exposure — The company paid IEEPA tariffs from February 2025, booked a roughly $647,000 refund receivable that has not yet been collected, and said the tariff environment remains rapidly changing after the February 2026 Supreme Court ruling and new tariffs under other laws.
• Foreign exchange and input costs — The Q2 2026 gross margin benefit from the tariff refund was offset by increased costs from weakening of the U.S. dollar against the Euro and other higher costs.
• Small scale and limited resources — With $6.0 million of quarterly revenue, $15.8 million of total assets, and $4.7 million of cash at June 30, 2026, Nephros is a smaller reporting company with limited resources relative to larger filtration competitors.

Outlook

CEO Robert Banks said that entering the second half of 2026, Nephros is stronger than at any point in its history, citing a growing recurring revenue base, expanding commercial opportunities, differentiated technology, and an increasingly comprehensive service platform. He said the company remains mindful of the broader economic environment but believes past investments position it to deliver sustainable growth. No specific revenue or earnings guidance figures were provided in the excerpts.