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What changed in Nuwellis, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Nuwellis, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+349 added−381 removedSource: 10-K (2025-03-11) vs 10-K (2024-03-11)

Top changes in Nuwellis, Inc.'s 2024 10-K

349 paragraphs added · 381 removed · 228 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

103 edited+30 added−59 removed62 unchanged
Biggest changeThe study found ultrafiltration to be safe with regard to renal function despite the cohort in this study being sicker than those studied in other clinical trials, and that Ultrafiltration can be a safe and effective strategy for decongestion in clinical practice wherein the benefits outweigh the potential risks of kidney dysfunction requiring hemodialysis and major bleeding events. 85 Additionally, another 2022 peer-reviewed publication advocates for early clinical application of ultrafiltration in diuretic resistant patients. 86 Jain et al. pooled data from seven randomized controlled trials of ultrafiltration with a total of 771 patients and concluded that extracorporeal ultrafiltration is associated with more efficient fluid and sodium removal compared with medical therapy, hence leading to a reduction in readmission rates and a potential salutary impact on financial burden associated with the care of heart failure patients. 87 Compared to diuretics, ultrafiltration provided predictable, adjustable, and more efficient fluid removal – without clinically adverse impacts on renal function, demonstrating a 14% cost reduction at 90-days achieved due to reduced readmissions. 88 84 Watson R, et al.
Biggest changePatient treatment was guided with the continuous hematocrit monitoring function built within the Aquadex System, supporting safe and effective fluid removal in critically ill pediatric patients. 78 In December 2022, a third-party, single-center, real-world retrospective study of 335 consecutive patients treated with the Aquadex FlexFlow ® System, “ Ten Year Real World Experience with Ultrafiltration for the Management of Acute Decompensated Heart Failure, ” compared previous randomized controlled clinical trials with ultrafiltration and demonstrated that ultrafiltration compares favorably in reducing heart failure rehospitalizations (2.14 hospitalizations per year before Aquadex versus 0.4 hospitalizations per year one year after Aquadex), renal function response, and weight/volume loss. 75 The study found ultrafiltration to be safe with regard to renal function despite the cohort in this study being sicker than those studied in other clinical trials, and that Ultrafiltration can be a safe and effective strategy for decongestion in clinical practice wherein the benefits outweigh the potential risks of kidney dysfunction requiring hemodialysis and major bleeding events. 79 In February 2022, a third party retrospectively reviewed and concluded, “The Use of Ultrafiltration as a fluid management strategy for High-Risk Coronary Artery Bypass Grafting,” that ultrafiltration is a safe and effective modality to manage fluid balance in a patient population with relatively high Society of Thoracic Surgery (“STS”) scores, but a prospective multicenter study would be warranted in this patient cohort. 76 Additionally, another peer-reviewed publication advocates for early clinical application of ultrafiltration in diuretic resistant patients 80 and a cost analysis demonstrated that compared to diuretics, ultrafiltration resulted in a total cost savings of 14.4% at 90 days due to reduced readmissions. 81 Jain et al. pooled data from seven randomized controlled trials of ultrafiltration with a total of 771 patients and concluded that extracorporeal ultrafiltration is associated with more efficient fluid and sodium removal compared with medical therapy, hence leading to a reduction in readmission rates and a potential salutary impact on financial burden associated with the care of heart failure patients. 82 Wobbe et al pooled data from eight randomized controlled trials enrolling 801 participants and studied the effectiveness of ultrafiltration compared to diuretics, demonstrating ultrafiltration increases fluid removal (difference in means 1372.5 mL; p p p = 0.022) and rehospitalization for heart failure (OR 0.54; p = 0.003) suggesting ultrafiltration is a safe and effective treatment option for volume-overloaded heart failure. 83 12 Table of Contents One 2019 peer-reviewed paper reported on a multicenter, retrospective case series of children who received kidney replacement therapy (“KRT”) with an ultrafiltration device. 84 Patients were grouped according to weight and primary disease state (e.g. kidney, cardiac or other) and received one of three treatment modalities.
In addition, the FDA may require a company to conduct post-market studies or order it to establish and maintain a system for tracking its products through the chain of distribution to the patient level. 18 Table of Contents Failure to comply with applicable regulatory requirements, including those applicable to the conduct of clinical trials, can result in enforcement action by the FDA, which may lead to any of the following sanctions: • warning letters or untitled letters; • fines, injunctions and civil penalties; • product recall or seizure; • unanticipated expenditures; • delays in clearing or refusal to clear products; • withdrawal or suspension of FDA clearance; • orders for physician notification or device repair, replacement or refund; • operating restrictions, partial suspension or total shutdown of production or clinical trials; or • criminal prosecution.
In addition, the FDA may require a company to conduct post-market studies or order it to establish and maintain a system for tracking its products through the chain of distribution to the patient level. 19 Table of Contents Failure to comply with applicable regulatory requirements, including those applicable to the conduct of clinical trials, can result in enforcement action by the FDA, which may lead to any of the following sanctions: • warning letters or untitled letters; • fines, injunctions and civil penalties; • product recall or seizure; • unanticipated expenditures; • delays in clearing or refusal to clear products; • withdrawal or suspension of FDA clearance; • orders for physician notification or device repair, replacement or refund; • operating restrictions, partial suspension or total shutdown of production or clinical trials; or • criminal prosecution.
Continued focus on driving positive coverage policies for various targeted payers will be an ongoing strategy for the Company. Outside the United States, the Aquadex System is sold by independent specialty distributors who in turn sell to hospitals and clinics in their geographic regions.
Continued focus on driving positive coverage policies for various targeted private payers will be an ongoing strategy for the Company. Outside the United States, the Aquadex System is sold by independent specialty distributors who in turn sell to hospitals and clinics in their geographic regions.
Item 1. Business Overview We are a medical technology company dedicated to transforming the lives of patients suffering from fluid overload through science, collaboration, and innovative technology. The company is focused on developing, manufacturing, and commercializing medical devices used in ultrafiltration therapy, including the Aquadex FlexFlow® and the Aquadex SmartFlow® systems (collectively the “Aquadex System”).
Item 1. Business Overview We are a commercial-stage medical technology company dedicated to transforming the lives of patients suffering from fluid overload through science, collaboration, and innovative technology. The company is focused on developing, manufacturing, and commercializing medical devices used in ultrafiltration therapy, including the Aquadex FlexFlow® and the Aquadex SmartFlow® systems (collectively the “Aquadex System”).
One protocol analysis showed that ultrafiltration had higher net fluid loss and weight reduction compared to intravenous diuretics, and there were no significant differences in long-term outcomes. 97 An additional sub-study analysis on urinary biomarkers showed that although further worsening creatinine levels were reported, decongestion and renal function recovery at 60 days were superior in patients with increased tubular injury markers. 98 The data suggests that the benefits of decongestion may outweigh modest or transient increases in serum creatinine during ultrafiltration.
One protocol analysis showed that ultrafiltration had higher net fluid loss and weight reduction compared to intravenous diuretics, and there were no significant differences in long-term outcomes. 90 An additional sub-study analysis on urinary biomarkers showed that although further worsening creatinine levels were reported, decongestion and renal function recovery at 60 days were superior in patients with increased tubular injury markers. 91 The data suggests that the benefits of decongestion may outweigh modest or transient increases in serum creatinine during ultrafiltration.
These reports are also available on the SEC’s website, www.sec.gov. The information on, or that may be accessed through, any websites noted herein is not incorporated by reference into and should not be considered a part of this Annual Report on Form 10-K. We are a “smaller reporting company” under federal securities laws.
These reports are also available on the SEC’s website, www.sec.gov. The information on, or that may be accessed through, any websites noted herein is not incorporated by reference into and should not be considered a part of this Annual Report on Form 10-K. 21 Table of Contents We are a “smaller reporting company” under federal securities laws.
In addition, we need to distinguish the Aquadex System from the indirect competition of other devices that can also be used to conduct ultrafiltration. Third-Party Reimbursement In the United States, our products are purchased primarily by customers such as hospitals or other healthcare providers. Customers bill various third-party payers for covered services provided to patients.
In addition, we need to distinguish the Aquadex System from the indirect competition of other devices that can also be used to conduct ultrafiltration. 17 Table of Contents Third-Party Reimbursement In the United States, our products are purchased primarily by customers such as hospitals or other healthcare providers. Customers bill various third-party payers for covered services provided to patients.
As long as we remain a smaller reporting company and non-accelerated filer, we are exempt from the attestation requirement in the assessment of our internal control over financial reporting by our independent auditors pursuant to section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) but are required to make our own internal assessment of the effectiveness of our internal controls over financial reporting. 20 Table of Contents
As long as we remain a smaller reporting company and non-accelerated filer, we are exempt from the attestation requirement in the assessment of our internal control over financial reporting by our independent auditors pursuant to section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) but are required to make our own internal assessment of the effectiveness of our internal controls over financial reporting.
At this time, we are not a party to any legal proceedings that relate to patents or intellectual property rights or any other subject matter. 16 Table of Contents Competition Competition from medical device companies and medical device divisions of healthcare companies, pharmaceutical companies and gene- and cell-based therapies is intense and expected to increase.
At this time, we are not a party to any legal proceedings that relate to patents or intellectual property rights or any other subject matter. Competition Competition from medical device companies and medical device divisions of healthcare companies, pharmaceutical companies and gene- and cell-based therapies is intense and expected to increase.
The Aquadex System has been shown to have no clinically significant impact on electrolyte balance, blood pressure or heart rate. 38, 39 Unlike other forms of ultrafiltration, which typically require administration specifically by a nephrologist, the Aquadex System may be prescribed by any physician and administered by a healthcare provider, both of whom have received training in extracorporeal therapies.
The Aquadex System has been shown to have no clinically significant impact on electrolyte balance, blood pressure or heart rate. 31 32 Unlike other forms of ultrafiltration, which typically require administration specifically by a nephrologist, the Aquadex System may be prescribed by any physician and administered by a healthcare provider, both of whom have received training in extracorporeal therapies.
Components of the Aquadex System The Aquadex System consists of: • A console, a piece of capital equipment containing electromechanical pumps, an LCD screen and stand; • A one-time disposable blood circuit set, an integrated collection of tubing, filter, sensors, and connectors that contain and deliver the blood from and back to the patient; and • A disposable catheter, a small, dual-lumen, extended length catheter designed to access the peripheral venous system of the patient and to simultaneously withdraw blood and return filtered blood to the patient.
Components of the Aquadex System The Aquadex System consists of: • A console, a piece of capital equipment containing electromechanical pumps, an LCD screen and stand; • A one-time disposable blood circuit set, an integrated collection of tubing, filter, sensors, and connectors that contain and deliver the blood from and back to the patient; and • A disposable catheter, a small, dual-lumen, extended-length catheter designed to access the peripheral venous system of the patient and to simultaneously withdraw blood and return filtered blood to the patient. 33 Watson R, et al.
Unless an exemption applies, each medical device we intend to commercially distribute in the U.S. will require 510(k) clearance. 17 Table of Contents 510(k) Clearance. To obtain 510(k) clearance for a medical device, an applicant must submit a premarket notification to the FDA demonstrating that the device is “substantially equivalent” to a predicate device legally marketed in the United States.
Unless an exemption applies, each medical device we intend to commercially distribute in the U.S. will require 510(k) clearance. 510(k) Clearance. To obtain 510(k) clearance for a medical device, an applicant must submit a premarket notification to the FDA demonstrating that the device is “substantially equivalent” to a predicate device legally marketed in the United States.
One hospital cost analysis demonstrated a total cost savings of $3,975, or 14.4%, per patient when using ultrafiltration as compared to diuretic therapy over 90 days. 37 The Aquadex System The Aquadex System is designed and clinically proven to simply, safely, and precisely remove excess fluid (primarily excess salt and water) from patients suffering from fluid overload who have failed diuretic therapy.
One hospital cost analysis demonstrated a total cost savings of $3,975 per patient when using ultrafiltration as compared to diuretic therapy over 90 days. 30 The Aquadex System The Aquadex System is designed and clinically proven to simply, safely, and precisely remove excess fluid (primarily excess salt and water) from patients suffering from fluid overload who have failed diuretic therapy.
We then realigned our salesforce to further focus on the acute needs of fluid overloaded patients in the critical care setting.
Additionally, we realigned our salesforce to further focus on the acute needs of fluid overloaded patients in the critical care setting.
To remove the excess fluid, patients suffering from heart failure may receive ultrafiltration therapy in two settings: (i) inpatient care: provided to a patient admitted to a hospital, extended care facility, nursing home or other longer-term care facility; and (ii) outpatient care: provided to a patient who is not admitted to a facility, but receives treatment at a doctor’s office, clinic, or hospital outpatient department.
To remove the excess fluid, patients suffering from heart failure may receive ultrafiltration therapy in two settings: (i) inpatient care: provided to a patient admitted to a hospital, extended care facility, nursing home or other longer-term care facility; and (ii) outpatient care: provided to a patient who is not admitted to a facility, but receives treatment at a doctor’s office, clinic, or hospital outpatient department. 44 Shah, K, et al.
In totality, AVOID-HF recapitulated the results of both UNLOAD and CARRESS while providing evidence that had AVOID-HF been followed to completion, it is our belief that the trial would likely have met its primary endpoint of improved outcome in acute decompensated heart failure patients.
In totality, AVOID-HF recapitulated the results of both UNLOAD and CARRESS while providing evidence that had AVOID-HF been followed to completion, it is our belief that the trial would likely have met its primary endpoint of improved outcome in acute decompensated heart failure patients. 89 Costanzo MR, et al.
In September 2016, we announced a strategic refocus of our strategy that included halting all clinical evaluations of the C-Pulse System related technology to fully focus our resources on our recently acquired Aquadex Business.
In August 2016, we acquired the Aquadex Business from a subsidiary of Baxter. In September 2016, we announced a strategic refocus of our strategy that included halting all clinical evaluations of the C-Pulse System related technology to fully focus our resources on our recently acquired Aquadex Business.
Pediatrics : Ultrafiltration is used by physicians to treat fluid overload in various conditions in pediatric patients, including heart failure, cardiac surgery, 92 ECMO therapy 93 , solid organ transplantation, 94 and kidney replacement therapy for neonatal patients. In February 2020, the Company received FDA 510(k) clearance for the Aquadex System to include pediatric patients who weigh 20kg or more.
Pediatrics : Ultrafiltration is used by physicians to treat fluid overload in various conditions in pediatric patients, including heart failure, cardiac surgery, 86 ECMO therapy, 87 solid organ transplantation, 88 and kidney replacement therapy for neonatal patients. In February 2020, the Company received FDA 510(k) clearance for the Aquadex System to include pediatric patients who weigh 20kg or more.
Thus, a change in creatinine should not dissuade the use of ultrafiltration. Disparate results between UNLOAD and CARRESS led to initiation of the AVOID-HF trial by Baxter. AVOID-HF was designed to prospectively address the question of patient outcomes when treated with ultrafiltration versus intravenous diuretics for acute decompensated heart failure.
Thus, we believe that a change in creatinine should not dissuade the use of ultrafiltration. Disparate results between UNLOAD and CARRESS led to initiation of the AVOID-HF trial, designed to prospectively address the question of patient outcomes when treated with ultrafiltration versus intravenous diuretics for acute decompensated heart failure (HF), was initiated by Baxter International, Inc.
Our CE certificate for Aquadex SmartFlow® System is under MDD/93/42 EEC and is valid through May 26, 2024, which allows us to sell the Aquadex SmartFlow® System into the EU and satisfy future distribution demand.
Our CE certificate for Aquadex SmartFlow® System is under MDD/93/42 EEC and was valid through May 26, 2024, which allowed us to sell the Aquadex SmartFlow® System into the EU and satisfy the distribution demand.
These patients typically have very few other treatment options given the large extracorporeal blood volume required by standard dialysis machines the need for blood priming of the dialysis circuit and the use of large catheters. By comparison, the Aquadex extracorporeal blood volume is only 35 ml.. 72 Iribane A, et al.
These patients typically have very few other treatment options given the large extracorporeal blood volume required by standard dialysis machines the need for blood priming of the dialysis circuit and the use of large catheters. By comparison, the Aquadex extracorporeal blood volume is only 35 ml.
Trial design assumptions indicated that 810 patients would need to be randomized to achieve adequate statistical power. However, the study was terminated by Baxter at 224 patients, apparently for business reasons unrelated to patient outcomes or device safety.
(“Baxter”) in 2016. 92 Trial design assumptions indicated that 810 patients would need to be randomized to achieve adequate statistical power. However, the study was terminated by Baxter at 224 patients, for business reasons unrelated to patient outcomes or device safety.
Ultrafiltration has been a well-documented technique in the treatment of fluid overload in heart failure patients for over 20 years. 35 Ultrafiltration is a safe and effective therapy to treat fluid overload and congestion by removing the overload of fluid and congestion by removing extra fluid and salt. 36 With ultrafiltration, medical practitioners can specify and control the amount of fluid to be extracted at a safe, predictable, and effective rate.
Ultrafiltration has been a well-documented technique in the treatment of fluid overload in heart failure patients for over 20 years. 28 We believe that ultrafiltration is a safe and effective therapy to treat fluid overload and congestion by removing the overload of fluid and congestion by removing extra fluid and salt. 29 With ultrafiltration, medical practitioners can specify and control the amount of fluid to be extracted at a safe, predictable, and effective rate.
Technologies that help reduce readmissions, such as the Aquadex System, can help hospitals mitigate these penalties. 61 The Company believes the total U.S. heart failure market is approximately $1 billion 62 and that roughly 30% of its revenue is derived from the treatment of heart failures patients.
Technologies that help reduce readmissions, such as the Aquadex System, can help hospitals mitigate these penalties. 54 The Company believes the total U.S. heart failure market is approximately $1 billion 55 and that roughly 20% of its revenue is derived from the treatment of heart failures patients.
The use of ultrafiltration therapy in subgroups of patients, such as heart failure and post-cardiac surgery, has demonstrated clinical benefits in treating fluid overload signs and symptoms. In addition to the clinical benefits of ultrafiltration, the therapy provides economic advantages.
The use of ultrafiltration therapy in subgroups of patients, such as heart failure and post-cardiac surgery, has demonstrated clinical benefits in treating fluid overload signs and symptoms. In addition to the clinical benefits of ultrafiltration, we believe the data suggests that the therapy provides economic advantages.
With the FDA 510(k) clearance of the Aquadex SmartFlow® system for patients weighing over 20kg, we are also targeting pediatric hospitals. Our largest customer represented 13.9% of our 2023 annual revenue. The loss of this customer would have a material adverse effect on our revenue.
With the FDA 510(k) clearance of the Aquadex SmartFlow® system for patients weighing over 20kg, we are also targeting pediatric hospitals. Our largest customer represented 14.4% of our 2024 annual revenue. The loss of this customer would have a material adverse effect on our revenue.
Results of CARRESS have been criticized on several limitations including the methodology and protocol, particularly that trial results were impacted by centers unfamiliar with the use of ultrafiltration therapy, that more than one third of the ultrafiltration group received diuretics instead of ultrafiltration, ultrafiltration rates were fixed rather than utilizing adjusted ultrafiltration rates according to patient characteristics whereas diuretic doses were titrated based on urine output, and that the diuretic regimen employed was not representative of standard-of-care. 96 In addition, subsequent analyses of the CARRESS study cohort have been published since the original study results.
We believe that the trial results were impacted by centers unfamiliar with the use of ultrafiltration therapy, that more than one third of the ultrafiltration group received diuretics instead of ultrafiltration, ultrafiltration rates were fixed rather than utilizing adjusted ultrafiltration rates according to patient characteristics whereas diuretic doses were titrated based on urine output, and that the diuretic regimen employed was not representative of standard-of-care. 86 In addition, subsequent analyses of the CARRESS study cohort have been published since the original study results.
On January 1, 2022, the American Medical Association granted a new and dedicated Category III Current Procedural Terminology (CPT) code, 0692T, for Therapeutic Ultrafiltration. Healthcare providers can utilize this code when using Aquadex to deliver ultrafiltration to adult and pediatric patients weighing more than 20kg.
On January 1, 2022, a new and dedicated Category III Current Procedural Terminology (CPT) code, 0692T, became effective for Therapeutic Ultrafiltration. Healthcare providers can utilize this code when using Aquadex to deliver ultrafiltration to adult and pediatric patients weighing more than 20kg.
In one pediatric study, a 3% increase in mortality was observed for every 1% increase in fluid overload, and children who are more than 20% fluid overloaded have an odds ratio for mortality of 8.5 compared to children who are less than 20% fluid overloaded. 81, 82 The Company believes that the total U.S. pediatric market for fluid overload is approximately $130 million 83 and that roughly 30% of its revenue is derived from the treatment of pediatric patients.
In one pediatric study, a 3% increase in mortality was observed for every 1% increase in fluid overload, and children who are more than 20% fluid overloaded have an odds ratio for mortality of 8.5 compared to children who are less than 20% fluid overloaded. 68 69 The Company believes that the total U.S. pediatric market for fluid overload is approximately $130 million. 70 In 2024, the Company derived approximately 40% of its revenue from the treatment of pediatric patients.
The five-year mortality rate for heart failure, regardless of heart function, is approximately 75% across all phenotypes. 50 Approximately 6.7 million Americans over 20 years of age have heart failure, and the prevalence is expected to rise to 8.5 million Americans by 2030. 51 Based on the Atherosclerosis Risk in Communities Study from 2005 to 2013, conducted by the National Heart, Lung and Blood Institute, there are an estimated 960,000 new heart failure cases annually. 52 Annual hospitalizations for heart failure exceed one million in both the United States and Europe, and more than 90% are due to symptoms and signs of fluid overload. 53 In addition, approximately 68% of patients are discharged with sub-optimal results. 54 As such, there are over 600,000 heart failure patients in the United States who might benefit from new technologies to treat fluid overload.
The five-year mortality rate for heart failure, regardless of heart function, is approximately 75% across all phenotypes. 44 Approximately 6.7 million Americans over 20 years of age have heart failure, and the prevalence is expected to rise to 8.5 million Americans by 2030. 45 Based on the Atherosclerosis Risk in Communities Study from 2005 to 2013, conducted by the National Heart, Lung and Blood Institute, there are an estimated 960,000 new heart failure cases annually. 46 Annual hospitalizations for heart failure exceed one million in both the United States and Europe, and more than 90% are due to symptoms and signs of fluid overload. 47 In addition, approximately 68% of the patients are discharged with sub-optimal results.
The Aquadex FlexFlow system was granted FDA 510(k) clearance for commercial use on June 3, 2002. On February 4, 2020, we received 510(k) clearance of the Aquadex SmartFlow® system for use in adult and pediatric patients weighing 20 kg or more whose fluid overload is unresponsive to medical management.
On February 4, 2020, we received 510(k) clearance of the Aquadex SmartFlow® system for use in adult and pediatric patients weighing 20 kg or more whose fluid overload is unresponsive to medical management.
Food and Drug Administration (“FDA”) to support its use in the applications identified immediately above. The Company believes the total U.S. critical care failure market is approximately $900 million 76 and that approximately 40% of its revenue is derived from the treatment of critical care patients.
Food and Drug Administration (“FDA”) to support its use in the applications identified immediately above. The Company believes the total U.S. critical care failure market is approximately $900 million. 65 In 2024, the Company derived approximately 40% of its revenue from the treatment of critical care patients. 54 McIlvennan C et al.
Clinical Experience Several large-scale, multi-center, randomized, controlled trials have evaluated the use of ultrafiltration using the Aquadex System on patients with acute decompensated heart failure compared to standard-of-care treatment with intravenous diuretics.
Clinical Experience Several large-scale, multi-center, randomized, controlled trials have evaluated the use of ultrafiltration using the Aquadex System on patients with acute decompensated heart failure compared to standard-of-care treatment with intravenous diuretics. These trials followed early-stage studies which primarily focused on safety of ultrafiltration treatment with the Aquadex System.
As of February 10, 2024, there are 91 patients enrolled in this RCT. The primary effectiveness endpoint is the time to first HF Event within 30 days, as a comparison between Aquadex therapy and IV Loop Diuretics.
As of February 28, 2025, there are 155 patients enrolled in REVERSE-HF. The primary effectiveness endpoint is the time to first HF Event within 30 days, as a comparison between Aquadex therapy and IV Loop Diuretics.
As of May 26, 2021, companies that have devices on the market with CE Mark under MDD 93/42/EEC or AIMDD 90/385/EEC must meet the transitional provisions of the new MDR.
The new MDR went into effect on May 26, 2021, and the new CE Mark product must comply with new MDR or AIMDD 90/385/EEC after this date. As of May 26, 2021, companies that have devices on the market with CE Mark under MDD 93/42/EEC or AIMDD 90/385/EEC must meet the transitional provisions of the new MDR.
With this clearance, we expanded our commercialization efforts to include promotion to physicians and hospitals who treat this pediatric population, and we are investing in the development of new clinical evidence around use of ultrafiltration in pediatric patients, including the ULTRA-Peds pediatrics registry, a multi-center, single-arm study.
With this clearance, we expanded our commercialization efforts to include promotion to physicians and hospitals who treat this pediatric population, and we are invested in the development of new clinical evidence around use of ultrafiltration in pediatric patients, including the ULTRA-Peds pediatrics registry that concluded in 2023.
As we expand our commercialization efforts in the pediatric market, we are developing a CRRT console to address the unmet and specific needs of pediatric patients who do not have functioning kidneys and need kidney replacement therapy for survival.
Product Development Activities As we expand our commercialization efforts in the pediatric market, we are developing a CRRT device, branded Vivian, to address the unmet and specific needs of pediatric patients weighing 2.5kg and above who do not have functioning kidneys and who need kidney replacement therapy for survival.
Chronic diuretic use has been associated with increased long-term mortality and hospitalizations in a wide spectrum of chronic systolic and diastolic HF patients. 20 Increasing concern exists that diuretics, particularly at high doses, may be deleterious in the inpatient setting.
Chronic diuretic use has been associated with increased long-term mortality and hospitalizations in a wide spectrum of chronic systolic and diastolic HF patients. 16 We believe that diuretics, particularly at high doses, may be deleterious to patients.
Diuretics have a variable dose response rate and studies have shown nearly 70% of heart failure patients treated with diuretics have a suboptimal response. 21, 22 Additionally, between 10-40% of heart failure and cardiac surgery patients are refractory to diuretics, 23 with diuretic resistance associated with a higher risk of in-hospital worsening of heart failure, increase mortality after discharge, and a 3-fold increase in rehospitalization rates. 24 In addition, patients with heart failure and cardiorenal syndrome have diminished response to loop diuretics, making these agents less effective at relieving congestion. 25 Also, long term use of diuretics has been associated with kidney damage. 26 Approximately 40% of heart failure patients have poor diuretic response. 27 This poor response is possibly due to noncompliance or high intake of salt, poor drug absorption, insufficient kidney response to drug, and reduced diuretic secretion. 28 Despite treatment with loop diuretics, patients are frequently hospitalized and treated for recurrent symptoms and signs of fluid overload.
Additionally, between 10-40% of heart failure patients are refractory to diuretics, 17 with diuretic resistance associated with a higher risk of in-hospital worsening of heart failure, increase mortality after discharge, and a 3-fold increase in rehospitalization rates. 18 In addition, patients with heart failure and cardiorenal syndrome have diminished response to loop diuretics, making these agents less effective at relieving congestion. 19 Also, long-term use of diuretics has been associated with kidney damage. 20 One study found that approximately 40% of heart failure patients have poor diuretic response. 21 This poor response is possibly due to noncompliance or high intake of salt, poor drug absorption, insufficient kidney response to drug, and reduced diuretic secretion. 22 Despite treatment with loop diuretics, patients are frequently hospitalized and treated for recurrent symptoms and signs of fluid overload. 7 Ronco C, Costanzo MR, Bellomo R, et al.
J Am Coll Cardiol . 2017;69(19):2428-2445. 25 Kamath SA. Int J of Nephrol . 2011: 1-6. 26 Felker MG & Mentz RJ. J Am Coll Cardiol . 2012;59(24):2145-53. 27 Testani JM. Circ Heart Fail . 2016 Jan;9(1):e002370. 28 Hoorn EJ & Ellison DH. Am J Kidney Dis . 2017;69(1):136-142. 29 Gheorghiade M, et al.
Circ Heart Fail . 2016; 9(1): e002370. 18 Costanzo MR, et al. J Am Coll Cardiol . 2017;69(19):2428-2445. 19 Kamath SA. Int J of Nephrol . 2011: 1-6. 20 Felker MG & Mentz RJ. J Am Coll Cardiol . 2012;59(24):2145-53. 21 Testani JM. Circ Heart Fail . 2016 Jan;9(1):e002370. 22 Hoorn EJ & Ellison DH.
Hospitals in the United States also face potential penalties for heart failure readmissions. As part of the Patient Protection and Affordable Care Act of 2012, as amended (the “Affordable Care Act”), Medicare instituted the Hospital Readmissions Reduction Program, which penalizes hospitals with high 30-day readmission rates for heart failure and other common diseases and procedures.
As part of the Patient Protection and Affordable Care Act of 2012, as amended (the “Affordable Care Act”), Medicare instituted the Hospital Readmissions Reduction Program, which penalizes hospitals with high 30-day readmission rates for heart failure and other common diseases and procedures. This penalty can be as high as 3% of reimbursement for all Medicare admissions.
The determination as to whether new 510(k) is needed is initially left to the manufacturer; however, the FDA may review this determination to evaluate the regulatory status of the modified product at any time and may require the manufacturer to cease marketing the modified device until 510(k) clearance is received.
The determination as to whether new 510(k) is needed is initially left to the manufacturer; however, the FDA may review this determination to evaluate the regulatory status of the modified product at any time and may require the manufacturer to cease marketing the modified device until 510(k) clearance is received. 18 Table of Contents The Aquadex FlexFlow system was granted FDA 510(k) clearance for commercial use on June 3, 2002.
Nature Rev Nephrol. 2020; 1-14. 2 Koratala A et al. Cardiorenal Med. 2022;12(4):141-154. 3 Vaara ST et al. Crit Care .2012; 16: 1-11. 4 Koratala A et al Cardiorenal Med. 2022;12(4):141-154 5 Stein, A, et. al. Critical Care, 2012:16:R99. 6 Iribarne A, et al. Ann Thorac Surg. 2014; 98(4): 1274-80. 7 Ronco C, Costanzo MR, Bellomo R, et al.
Nature Rev Nephrol. 2020; 1-14. 2 Koratala A et al. Cardiorenal Med. 2022;12(4):141-154. 3 Vaara ST et al. Crit Care .2012; 16: 1-11. 4 Koratala A et al Cardiorenal Med. 2022;12(4):141-154 5 Stein, A, et. al. Critical Care, 2012:16:R99. 6 Iribarne A, et al.
The Notified Body issues a certificate of conformity following successful completion of a conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the essential requirements. This certificate entitles the manufacturer to affix the CE Mark to its medical devices after having prepared and signed a related EC Declaration of Conformity.
The Notified Body issues a certificate of conformity following successful completion of a conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the essential requirements.
The protocol for REVERSE-HF permits an interim data analysis once enrollment reaches 80% of its targeted enrollment, and the Company hopes to complete analysis of the primary endpoint and to publish the results in the second half of 2025.
The protocol for REVERSE-HF permits an interim data analysis once enrollment reaches 80% of its targeted enrollment, and the Company hopes to complete analysis of the primary endpoint and to publish the results in the second half of 2026. 71 Starr et al. Epidemiology and Outcomes of Children with AKI or ESKD treated with Aquadex.
Among more than 50,000 patients enrolled in the Acute Decompensated Heart Failure National Registry (“ADHERE”) study, only 33% lost ≥ 2.27 kg (5 lbs.), and 16% gained weight during hospitalization. 29 Nearly one-half of hospitalized patients with heart failure are discharged with residual fluid excess after receiving conventional diuretic therapies. 30 Additionally, one study found that 24% of such patients were readmitted to the hospital within 30 days of their discharge, and up to 42-50% were readmitted at 90 days and 6 months respectively. 31, 32 Regardless of diuretic strategy, 42% of acutely decompensated heart failure subjects in the DOSE (Diuretic Optimization Strategies Evaluation) trial reached the composite endpoint of death, rehospitalization, or emergency department visit at 60 days. 33 There is an association of chronic loop diuretic therapy and greater resource utilization at hospitals. 34 Therefore, an alternative therapy to help stabilize or improve patient care is needed. 14 Costanzo MR, et al.
Am J Kidney Dis . 2017;69(1):136-142. 5 Table of Contents Nearly one-half of hospitalized patients with heart failure are discharged with residual fluid excess after receiving conventional diuretic therapies. 23 Additionally, one study found that 24% of such patients were readmitted to the hospital within 30 days of their discharge, and up to 42-50% were readmitted at 90 days and 6 months respectively. 24 25 Regardless of diuretic strategy, 42% of acutely decompensated heart failure subjects in the DOSE (Diuretic Optimization Strategies Evaluation) trial reached the composite endpoint of death, rehospitalization, or emergency department visit at 60 days. 26 We believe that there is an association of chronic loop diuretic therapy and greater resource utilization at hospitals. 27 Therefore, an alternative therapy to help stabilize or improve patient care is needed.
Rev Cardiovasc Med . 2003;4: Suppl 7:S21-30. 57 Costanzo MR, et al. J Am Coll Cardiol . 2017 May 16;69(19):2428-2445. 58 Sax D, et al. J Card Fail. 2022: 28(10): 1545-59. 59 Voigt J, et al. Clin Cardiol . 2014;37(5): 312–321. 60 Heidenreich PA, et al. Circ Heart Fail . 2013;6(3):606-619. 61 McIlvennan C et al.
Nat Rev Dis Primers . 2020; 6(16):1-15. 49 Fonarow et al. Rev Cardiovasc Med . 2003;4: Suppl 7:S21-30. 450 Costanzo MR, et al. J Am Coll Cardiol . 2017 May 16;69(19):2428-2445. 51 Sax D, et al. J Card Fail. 2022: 28(10): 1545-59. 52 Voigt J, et al. Clin Cardiol . 2014;37(5): 312-321. 53 Heidenreich PA, et al.
According to a nationwide study of over 140,000 patients suffering from acute decompensated heart failure, over 38% of patients discharged were still symptomatic and about half of the patients were discharged with less than five pounds lost. 56 This clinical evidence from the ADHERE registry shows patients are discharged too early, while still showing evidence of fluid overload. 7 Table of Contents As a result of not fully having their fluid imbalance properly addressed prior to discharge from the hospital, patients are frequently being readmitted, with 30-day readmissions of 24% and 6-month readmissions of 44%, while 80% of patients are admitted directly to the emergency department as the first point of care. 57, 58 Heart failure often requires inpatient treatment, and it carries a huge economic burden in the United States, costing the nation an estimated $60.2 billion each year, with hospital costs accounting for 62% of the economic burden. 59 As the population ages, healthcare expenditures are expected to increase substantially. 60 Therefore, therapies aimed at treating congestion and fluid overload are essential from a patient care and healthcare economics perspective.
As a result of not fully having their fluid imbalance properly addressed prior to discharge from the hospital, patients are frequently being readmitted, with one study showing 30-day readmissions of 24% and 6-month readmissions of 44%. 50 51 Heart failure often requires inpatient treatment, and it carries a huge economic burden in the United States, costing the nation an estimated $60.2 billion each year, with hospital costs accounting for 62% of the economic burden. 52 As the population ages, healthcare expenditures are expected to increase substantially. 53 Therefore, therapies aimed at treating congestion and fluid overload are essential from a patient care and healthcare economics perspective.
Fluid Overload Fluid overload, also known as hypervolemia, is a condition in which there is too much fluid in the blood, vital organs, and interstitial space, and generally refers to the expansion of the extracellular fluid volume.
Costanzo has declined any equity ownership in the Company, although she has accepted cash remuneration for her Board and Committee participation. Fluid Overload Fluid overload, also known as hypervolemia, is a condition in which there is too much fluid in the blood, vital organs, and interstitial space, and generally refers to the expansion of the extracellular fluid volume.
In January 2023, we began designing an IDE clinical study for the Company’s dedicated pediatric device currently under development. The design was reviewed with FDA in May 2023 and the study is anticipated to begin enrollment in 2024.
Two-thirds of procedures lasted for the intended duration, and very few patients could not tolerate the Aquadex ® procedure. 71, 72 In January 2023, we began designing an IDE clinical study for the Company’s dedicated pediatric device currently under development. The design was reviewed with FDA in May 2023 and the study is anticipated to begin enrollment in 2026.
This new circuit will help us expand access to ultrafiltration among patients who need no more than 24 hours of therapeutic ultrafiltration in the inpatient setting. Additionally, this circuit can provide a more economical solution for hospitals to treat patients in the outpatient/ambulatory setting, where therapy can be delivered for up to 8 hours.
Additionally, this circuit can provide a more economical solution for hospitals to treat patients in the outpatient/ambulatory setting, where therapy can be delivered for up to 8 hours.
See – Product Development Activities below. Growing Clinical Evidence In December 2021, we launched the REVERSE-HF prospective, multicenter, randomized controlled trial (RCT) to evaluate ultrafiltration compared to IV diuretics in patients with heart failure. This RCT is currently being conducted at sixteen clinical sites nationwide, and patient enrollment began in June 2022.
In December 2021, we launched the REVERSE-HF prospective, multicenter, randomized controlled trial (RCT) to evaluate ultrafiltration compared to IV diuretics in patients with heart failure (HF). Seventeen clinical sites nationwide have been activated to enroll patients in this RCT and fourteen sites have contributed to patient enrollment, which began in June 2022.
Research and development costs also include expenses related to our clinical research. In 2021 we initiated a product development project designed to enhance the functionality of the hematocrit sensor that is part of the Aquadex console. In 2021, we also initiated a product development project to develop a pediatric continuous renal replacement therapy device.
We will make such design changes as needed based on proactive and reactive mechanisms. Research and development costs also include expenses related to our clinical research. In 2021 we initiated a product development project designed to enhance the functionality of the hematocrit sensor that is part of the Aquadex console.
Critical Care : After we launched a marketing campaign focused on the benefits of the Aquadex System in treating patients suffering from fluid overload following cardiac surgery procedures, such as CABG surgery, valve repairs and replacements procedures, VAD implants and other cardiac surgical procedures.
With our “FDA 510(k) clearance for use in pediatric patients weighing 20kg or more, we have expanded our commercialization efforts to treatments for pediatric patients. 13 Table of Contents Critical Care : We have launched a marketing campaign focused on the benefits of the Aquadex System in treating patients suffering from fluid overload following cardiac surgery procedures, such as CABG surgery, valve repairs and replacements procedures, VAD implants and other cardiac surgical procedures.
While incidence data is not readily available, it is estimated that there are approximately 10,000 to 14,000 pediatric patients with heart failure 77 and approximately 18,000 receiving cardiac surgery, ECMO therapy, and solid organ transplantation. 78, 79, 80 Fluid overload drives pediatric morbidity and mortality risk in critically ill patients.
Similar to adult patients, these conditions and procedures may lead to fluid overload. While incidence data is not readily available, it is estimated that there are approximately 10,000 to 14,000 pediatric patients with heart failure. 67 Fluid overload drives pediatric morbidity and mortality risk in critically ill patients.
According to the National Center for Health Sciences, over 7.3 million cardiovascular operations are performed each year in the United States, including an estimated 340,000 coronary-artery bypass grafting (“CABG”) procedures, 63 180,000 valve procedures, 64 and 3,000 VAD implants. 65 Cardiac surgery is associated with a degree of fluid overload due to cardiopulmonary bypass. 66 Intravenous fluid therapy is an integral treatment for patients undergoing surgery and in critical care units. 67 Fluid overload in post-cardiac surgery can readily occur because surgery can affect the pumping actions of the heart, leading to postoperative hemodynamic instability. 68 The condition often remains symptomless for several days until clinical symptoms become apparent, when treatment is almost always too late and ineffective. 69 The potential complications (e.g., renal failure, stroke, infection, arrhythmias, or prolonged intubation) are reported to be associated with high mortality, particularly when renal replacement therapy is required. 70 Major complications after cardiac operations are associated with an increased risk for operative death, longer hospital length of stay, and higher rates of discharge to a location other than home. 71 56 Fonarow et al.
According to the National Center for Health Sciences, over 7.3 million cardiovascular operations are performed each year in the United States, including an estimated 340,000 coronary-artery bypass grafting (“CABG”) procedures, 56 Cardiac surgery is associated with a degree of fluid overload due to cardiopulmonary bypass. 57 Intravenous fluid therapy is an integral treatment for patients undergoing surgery and in critical care units. 58 Fluid overload in post-cardiac surgery can readily occur because surgery can affect the pumping actions of the heart, leading to postoperative hemodynamic instability. 59 The condition often remains symptomless for several days until clinical symptoms become apparent, when treatment is almost always too late and ineffective. 60 Major complications after cardiac operations are associated with an increased risk for operative death, longer hospital length of stay, and higher rates of discharge to a location other than home. 61 As many as 80% of cardiac surgery patients may have stage 1 or greater cardiac-surgery-associated acute kidney injury (CSA-AKI). 62 In the recent publication A Turnkey Order Set for Prevention of CSA-AKI the new CSA-AKI Guidelines suggest the avoidance of other nephrotoxic agents including loop diuretics. 62 Hospital readmissions are a common problem in cardiac surgery and remain high.
We are currently focusing our commercial activities in three primary clinical areas where fluid overload is prevalent: heart failure, critical care, and pediatrics. Heart Failure Heart disease is the leading cause of death in the United States and other developed countries. In fact, approximately 50% of patients who develop heart failure die within five years of diagnosis.
Heart Failure Heart disease is the leading cause of death in the United States and other developed countries. In fact, approximately 50% of patients who develop heart failure die within five years of diagnosis.
Adv Clin Exp Med . 2021;30(7):737-746. 97 Grodin JL, et al. Eur J of Heart Fail . 2018;20(7):1148-1156. 98 Rao VS, et al. Circ Heart Fail . 2019;12 (6):e005552. 99 Urban S, et al. Adv Clin Exp Med . 2021;30(7):737-746. 100 Beckles D. et al. J of Card Surg.
J Am Coll Cardiol . 2007; 49(6):675-683 86 Urban S, et al. Adv Clin Exp Med . 2021;30(7):737-746. 90 Grodin JL, et al. Eur J of Heart Fail . 2018;20(7):1148-1156. 91 Rao VS, et al. Circ Heart Fail . 2019;12 (6):e005552. 92 Costanzo MR, et al.
Volume overload was among the top three most prevalent causes for first readmission within 30 days and beyond 30 days. 72 It is estimated that 13.5% of post cardiac surgery patients are readmitted due to fluid overload within 30 days of discharge, which equates to an estimated 70,000 fluid overload-related readmissions for CABG, valve, and VAD procedures per year in the United States. 73 Positive research has been recently published demonstrating the value of ultrafiltration in high-risk coronary artery bypass grafting surgery. 74 It is also encouraging to see ultrafiltration being recommended for cardiac surgery patients who are unresponsive to diuretics in a recently published turnkey order set proposed by the Enhanced Recovery After Surgery (“ERAS”) Society consensus guidelines. 75 The Company believes it can expand use cases for the Aquadex System, without any additional clinical trial or other labeling changes at the U.S.
Positive research has been recently published demonstrating the value of ultrafiltration in high-risk coronary artery bypass grafting surgery. 64 It is also encouraging to see ultrafiltration being recommended for cardiac surgery patients who are unresponsive to diuretics in a recently published turnkey order set proposed by the Enhanced Recovery After Surgery (“ERAS”) Society consensus guidelines. 62 The Company believes it can expand use cases for the Aquadex System, without any additional clinical trial or other labeling changes at the U.S.
Individuals may also suffer from temporary fluid overload following certain surgical procedures, such as cardiac surgery, although fluid overload is the leading cause of death for critically ill patients in the ICU within 90 days of admission. 3 The diagnosis of fluid overload can be made through a variety of tests/exams such as a physical exam (weight, presence of pulmonary rales, and edema), blood chemistry, natriuretic peptides, liver enzymes, hemoglobin and hematocrit, blood volume analysis, and/or bioimpedance analysis. 4 Fluid overload has a significant association with the combined events of death, infection, bleeding, arrhythmia, and pulmonary edema 5 and is a leading cause of hospital readmissions with patients suffering from heart failure and patients following cardiac surgery. 6 The condition of fluid overload is often observed in patients with heart failure and secondary oliguric states, 7 although in pediatric patients, fluid overload is associated with significant increases in mortality. 8, 9 Congestion or fluid overload, the hallmark of decompensated heart failure or HF, is the primary reason for hospitalization in 90% of these patients. 10, 11 For this reason, diuretics have been the cornerstone of heart failure treatment for more than 50 years. 12 Over the past 20 years, approaches to treatment have changed dramatically. 13 1 Murugan R et al.
Individuals may also suffer from temporary fluid overload following certain surgical procedures, such as cardiac surgery. 3 The diagnosis of fluid overload can be made through a variety of tests/exams such as a physical exam (weight, presence of pulmonary rales, and edema), blood chemistry, natriuretic peptides, liver enzymes, hemoglobin and hematocrit, blood volume analysis, and/or bioimpedance analysis. 4 Fluid overload has a significant association with the combined events of death, infection, bleeding, arrhythmia, and pulmonary edema 5 and is a leading cause of hospital readmissions with patients suffering from heart failure and patients following cardiac surgery. 6 1 Murugan R et al.
Circ . 2015; 131(20): 1796-1803. 62 See Appendix to Company Investor Presentation filed with the SEC on Form 8-K/A, dated January 9, 2024. 63 https://idataresearch.com/new-study-shows-approximately-340000-cabg-procedures-per-year-in-the-united-states/. 64 https://idataresearch.com/over-182000-heart-valve-replacements-per-year-in-the-united-states/. 65 Grand View Research. Market Research Report. 2015; 978-1-68038-603-5. 66 Kruger A et al. J Cardiovasc Dev Dis . 2023;10(6);263-78. 67 Bowdish ME, et al.
Circ . 2015; 131(20): 1796-1803. 55 See Appendix to Company Investor Presentation filed with the SEC on Form 8-K/A, dated January 9, 2024. 56 https://idataresearch.com/new-study-shows-approximately-340000-cabg-procedures-per-year-in-the-united-states/. 57 Kruger A et al. J Cardiovasc Dev Dis . 2023;10(6);263-78. 58 Bowdish ME, et al. Ann Thorac Surg . 2021;111(6):1770-1780. 59 Xu J, et al. Medicine . 2015.94(33):e1360. 60 Xu J, et al.
In addition, through 90 days of follow-up, the ultrafiltration group experienced fewer re-hospitalizations and unscheduled medical visits for heart failure, while renal function assessed by serum creatinine level was not significantly different between the groups.
In addition, through 90 days of follow-up, the ultrafiltration group experienced significantly fewer re-hospitalizations and unscheduled medical visits for heart failure, while renal function assessed by serum creatinine level was not significantly different between the groups. 89 The CARRESS trial studied 188 randomized acute decompensated heart failure patients over the course of 96 hours and found no difference in weight loss and an increase in creatinine level relative to the control group treated with intravenous diuretics.
No significant differences were observed in creatinine level between the groups during treatment and up to 90 days following treatment.
In addition, pre-specified secondary endpoints demonstrated significant reductions in heart failure rehospitalizations and days in the hospital and cardiovascular events at 30 days. No significant differences were observed in creatinine level between the groups during treatment and up to 90 days following treatment.
The rights granted to us under the patent license agreement will automatically revert to Baxter in the event we cease operation of the Aquadex Business or we file for, have filed against us, or otherwise undertake any bankruptcy, reorganization, insolvency, moratorium, or other similar proceeding. We estimate that the patents licensed from Baxter will expire by mid-2026.
In connection with our acquisition of the Aquadex Business, we entered into a patent license agreement with Baxter for patents used in connection with the Aquadex System to make, have made, use, sell, offer for sale and import the Aquadex System in the “field of use.” 16 Table of Contents The rights granted to us under the patent license agreement will automatically revert to Baxter in the event we cease operation of the Aquadex Business or we file for, have filed against us, or otherwise undertake any bankruptcy, reorganization, insolvency, moratorium, or other similar proceeding.
Clinical Transplantation , 2024; 38:e15221. 15 Table of Contents Manufacturers and Suppliers We manufacture the Aquadex System at our 23,000 square foot facility in Eden Prairie, Minnesota. We have manufactured the Aquadex SmartFlow® console and blood circuits since its development in 2019. We purchase parts and components for the Aquadex System from third-party manufacturers and suppliers.
We have manufactured the Aquadex SmartFlow® console and blood circuits since its development in 2019. We purchase parts and components for the Aquadex System from third-party manufacturers and suppliers.
We currently have distribution relationships in Austria, Belarus, Brazil, Colombia, Czech Republic, Germany, Greece, Hong Kong, India, Indonesia, Israel, Italy, Panama, Romania, Singapore, Slovak Republic, Spain, Switzerland, Thailand, United Arab Emirates and the United Kingdom. We intend to continue to establish distribution partners in additional countries outside of the United States.
We currently have distribution relationships in Austria, Belarus, Brazil, Colombia, Czech Republic, Germany, Greece, Hong Kong, India, Indonesia, Israel, Italy, Panama, Romania, Singapore, Slovak Republic, Spain, Switzerland, Thailand, United Arab Emirates and the United Kingdom. We received CE Mark Certification for our 24-Hour Blood Circuit Set in January 2022 to be used with the Aquadex SmartFlow® system.
Given the strategic refocus away from the C-Pulse System and toward the Aquadex System, we have chosen to limit the maintenance of issued C-Pulse System related patents to those innovations that are of high value. Further, we have elected to emphasize important jurisdictions rather than maintain protection in multiple countries.
Given the strategic refocus away from the C-Pulse System and toward the Aquadex System, we have chosen to limit the maintenance of issued C-Pulse System related patents to those innovations that are of high value. In addition, we have four pending patent applications in the United States unrelated to our dedicated pediatric device in development.
Also, from time to time, there are numerous legislative, regulatory and other proposals both at the federal and state levels that may impact payment rates for our system. It remains uncertain whether there will be any future changes that will be proposed or finalized and what effect, if any, such legislation or regulations would have on our business.
It remains uncertain whether there will be any future changes that will be proposed or finalized and what effect, if any, such legislation or regulations would have on our business.
Clin J Am Soc Nephrol . 2019;14(10):1432-1440. 91 Menon S, et al.
Heart Fail Rev . 2016. 83 Wobbe et al. Heart Fail Rev . 2021; 26:577–585. 84 Menon S, et al. Clin J Am Soc Nephrol . 2019;14(10):1432-1440.
J Am Coll Cardiol . 1993; 21(2):424-431. 36 Kazory A, et al. Cardiorenal Med . 2023;13(1)1-8. 37 Costanza MR, et. al. Value Health . 2018; 21 (Suppl 1):S167. 38 SAFE Trial: Jaski BE, et al. J Card Fail. 2003; 9(3): 227-231. 39 RAPID Trial: Bart BA, et al.
Value Health . 2018; 21 (Suppl 1):S167. 31 SAFE Trial: Jaski BE, et al. J Card Fail. 2003; 9(3): 227-231. 32 RAPID Trial: Bart BA, et al.
We are investing in additional clinical evidence supporting the use of ultrafiltration in patients with decompensated heart failure including a multicenter, randomized controlled trial, the REVERSE-HF study, comparing ultrafiltration and IV diuretics. 92 Elliott MJ. Ann Thorac Surg . 1993;56:1518-22. fluid overload 93 Selewski DT, et al. Crit Care Med . 2012; 40(9): 2694-2699. 94 Riley AA.
We are investing in additional clinical evidence supporting the use of ultrafiltration in patients with decompensated heart failure including a multicenter, randomized controlled trial, the REVERSE-HF study, comparing ultrafiltration and IV diuretics.
These trials followed early-stage studies which primarily focused on safety of ultrafiltration treatment with the Aquadex System. 95 https://www.ncbi.nlm.nih.gov/pubmed/23833312 13 Table of Contents The UNLOAD trial enrolled 200 patients and showed that average weight and fluid loss were greater in the ultrafiltration group 48 hours following randomization. No differences were noted in symptoms of dyspnea between the groups.
The UNLOAD trial enrolled 200 patients and showed that average weight and fluid loss were greater in the ultrafiltration group 48 hours following randomization. 89 No differences were noted in symptoms of dyspnea between the groups.
Research and Development Research and Development costs include activities related to development, design, and testing improvements to the Aquadex System and potential related products. The Aquadex system software may require periodic modifications for feature additions and performance improvements. We will make such design changes as needed based on proactive and reactive mechanisms.
JACC: Heart Failure . 2016;4(2):95-105. 15 Table of Contents Research and Development Research and Development costs include activities related to development, design, and testing improvements to the Aquadex System and potential related products. The Aquadex system software may require periodic modifications for feature additions and performance improvements.
It is estimated that approximately 11,000 newborn babies require neonatal kidney replacement therapy each year in the United States. Funded in part by a $1.7 million grant from the National Institute of Health, the Company completed preliminary engineering testing for its dedicated pediatric system in the fourth quarter of 2023.
Approximately 10,300 children suffer from AKI, of these, over 1800 are neonates. 85 Funded in part by a $1.7 million grant from the National Institute of Health, the Company completed preliminary engineering testing for its dedicated pediatric system in the fourth quarter of 2023.
While the agency responsible for administering the Medicare program, the Centers for Medicare and Medicaid Services, has not issued a favorable national coverage determination under its Investigational Device Exemption Studies Program for ultrafiltration using the Aquadex System, a number of private insurers have approved reimbursement for use of the products included in the Aquadex System for specific indications and points of service.
While the agency responsible for administering the Medicare program, the Centers for Medicare and Medicaid Services, has not issued a formal national coverage determination for ultrafiltration using the Aquadex System, there is established CMS reimbursement in absence of the policy.
On top of that, there is a 30-day readmission penalty for which the hospitals absorb another cost but do not get reimbursed with some data suggesting such penalties can cost a hospital up to $15.2 million annually. 17, 18, 19 Treatments for Fluid Overload Diuretics Treatment for fluid overload has traditionally been achieved through use of oral or loop diuretics which may be accompanied by use of other categories of medications, such as angiotensin-converting enzyme (ACE) inhibitors, sodium-glucose co-transporter 2 (SGLT-2) inhibitors, Aldosterone receptor antagonists (MRAs), beta-blockers, and inotropic drugs.
Each year there are over 1 million heart failure hospitalizations in the United States, and 90% of those hospitalizations are due to symptoms of fluid overload. 14 These patients are hospitalized on average for 8 days at a cost of approximately $24,000, as to which reimbursement does not cover the full cost. 15 Treatments for Fluid Overload Diuretics Treatment for fluid overload has traditionally been achieved through use of oral or loop diuretics which may be accompanied by use of other categories of medications, such as angiotensin-converting enzyme (ACE) inhibitors, sodium-glucose co-transporter 2 (SGLT-2) inhibitors, Aldosterone receptor antagonists (MRAs), beta-blockers, and inotropic drugs.
In addition, as of January 30, 2024, 16 issued patents are assigned to Nuwellis in the United States and in foreign jurisdictions related to our technology, the C-Pulse® Heart Assist System (the “C-Pulse System”) for treatment of Class III and ambulatory Class IV heart failure. We estimate that most of our currently issued U.S. patents will expire by 2026.
A number of Nuwellis issued patents in the United States are directed to the C-Pulse® Heart Assist System (the “C-Pulse System”) for treatment of Class III and ambulatory Class IV heart failure of which the last expiring issued U.S. patent has a term to 2026.
Despite being underpowered, the results of AVOID-HF indicated distinct trends toward reduced time to heart failure events within 90 days, favoring the ultrafiltration group over diuretics. In addition, pre-specified secondary endpoints demonstrated significant reductions in heart failure rehospitalizations and days in the hospital and cardiovascular events at 30 days.
Despite being underpowered, the results of AVOID-HF indicated distinct trends toward a greater amount of time free of heart failure events within 90 days, favoring the ultrafiltration group over diuretics with 62 days to first event for ultrafiltration patients and 34 days to first event for diuretic patients.
BMC Nephrology . 2018; 19:268-80. 12 Table of Contents Heart Failure Out-Patients : Further, we intend to expand the use of the Aquadex System with heart failure patients in the outpatient setting, such as an infusion clinic or hospital outpatient department (e.g., observation unit).
Heart Failure Out-Patients : Further, we intend to expand the use of the Aquadex System with heart failure patients in the outpatient setting, such as an infusion clinic or hospital outpatient department (e.g., observation unit). On January 1, 2022, the American Medical Association granted a new and dedicated Category III Current Procedural Terminology (CPT) code, 0692T, for Therapeutic Ultrafiltration.
In addition, the new CPT code provides additional reimbursement for therapeutic ultrafiltration administered in the outpatient setting and will facilitate the migration of the therapy to this setting for a subset of the patient population due to hospital economic and patient quality of life benefits.
In addition, on January 1, 2025, the CPT code was associated with a level II Ambulatory Payment Code (APC) code that provides higher reimbursement for therapeutic ultrafiltration administered in the outpatient setting per day and will facilitate the migration of the therapy to this setting for a subset of the patient population, which may relieve some of the growing pressure on hospital systems and improve hospital economics and patient quality of life.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

69 edited+39 added−25 removed182 unchanged
Biggest changeOur independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of SOX until the date we are no longer a “smaller reporting company” as defined by applicable SEC rules.
Biggest changeOur independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of SOX until the date we are no longer a “smaller reporting company” as defined by applicable SEC rules. 25 Table of Contents Our management’s evaluation of the effectiveness of our internal controls over financial reporting as of December 31, 2024, concluded that our controls were not effective, due to material weaknesses resulting from insufficient headcount to fully ensure adequate segregation of duties relating to the accounting and financial reporting function and the information technology function.
Other 7 pending patent applications involve an extracorporeal blood filtration machine that includes flexible source line connection, open vs. closed loop fluid collection controls, a self-emptying bag, improved density measurement techniques, algorithm to ensure reliable auto clamp safety engagement, a blood leak detector that can detect hemolyzed blood, and mechanical cartridge design to ease manufacturing assembly and user setup.
Other pending patent applications involve an extracorporeal blood filtration machine that includes flexible source line connection, open vs. closed loop fluid collection controls, a self-emptying bag, improved density measurement techniques, algorithm to ensure reliable auto clamp safety engagement, a blood leak detector that can detect hemolyzed blood, and mechanical cartridge design to ease manufacturing assembly and user setup.
If our common stock were to trade on the over-the-counter market, selling our common stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity with respect to our securities; a determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; a reduced amount of news and analyst coverage for our Company; and a decreased ability to issue additional securities or obtain additional financing in the future.
If our Common Stock were to trade on the over-the-counter market, selling our Common Stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and we could face significant material adverse consequences, including: a limited availability of market quotations for our securities; reduced liquidity with respect to our securities; a determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; a reduced amount of news and analyst coverage for us; and a decreased ability to issue additional securities or obtain additional financing in the future.
We would be required review our definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets.
We would be required to review our definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets.
We could use the shares that are available for future issuance in dilutive equity financing transactions, or to oppose a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management, including transactions that are favored by a majority of the stockholders or in which the stockholders might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner. 32 Table of Contents A more active, liquid trading market for our common stock may not develop, and the price of our common stock may fluctuate significantly.
We could use the shares that are available for future issuance in dilutive equity financing transactions, or to oppose a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management, including transactions that are favored by a majority of the stockholders or in which the stockholders might otherwise receive a premium for their shares over then-current market prices or benefit in some other manner. 39 Table of Contents A more active, liquid trading market for our common stock may not develop, and the price of our common stock may fluctuate significantly.
Although we take measures to protect sensitive information from unauthorized access or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance, or other disruptions.
Although we take measures to protect sensitive information from cyberattacks and other unauthorized access or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance, or other disruptions.
We face four primary risks relative to protecting this critical information, including: loss of access risk; inappropriate disclosure risk; inappropriate modification risk; and the risk of our being unable to adequately monitor our controls over the first three risks. 29 Table of Contents The secure processing, storage, maintenance, and transmission of this critical information is vital to our operations and business strategy.
We face four primary risks relative to protecting this critical information, including: loss of access risk; inappropriate disclosure risk; inappropriate modification risk; and the risk of our being unable to adequately monitor our controls over the first three risks. 35 Table of Contents The secure processing, storage, maintenance, and transmission of this critical information is vital to our operations and business strategy.
On August 5, 2016, upon closing of our acquisition of the Aquadex Business, we entered into a patent license agreement with Baxter pursuant to which we obtained, for no additional consideration, a world-wide license to 49 exclusively licensed and 9 non-exclusively licensed patents used in connection with the Aquadex System to make, have made, use, sell, offer for sale and import, the Aquadex System in the “field of use” as defined in the license.
On August 5, 2016, upon closing of our acquisition of the Aquadex Business, we entered into a patent license agreement with Baxter pursuant to which we obtained, for no additional consideration, a world-wide license which at the time, included 49 exclusively licensed and 9 non-exclusively licensed patents used in connection with the Aquadex System to make, have made, use, sell, offer for sale and import, the Aquadex System in the “field of use” as defined in the license.
If additional capital is not available, we will have to delay, reduce, or cease operations. We believe that we have sufficient capital to fund our operations through May 31, 2024. We will need to raise additional capital to fund our operations through the end of fiscal year 2024.
If additional capital is not available, we will have to delay, reduce, or cease operations. We believe that we have sufficient capital to fund our operations through May 31, 2025. We will need to raise additional capital to fund our operations through the end of fiscal year 2025.
If we are unsuccessful in defending ourselves against these types of claims, we may be required to do one or more of the following: 28 Table of Contents • halt use of our Aquadex System; • attempt to obtain a license to sell or use the relevant technology or substitute technology, which license may not be available on reasonable terms or at all; or • redesign our system.
If we are unsuccessful in defending ourselves against these types of claims, we may be required to do one or more of the following: • halt use of our Aquadex System; • attempt to obtain a license to sell or use the relevant technology or substitute technology, which license may not be available on reasonable terms or at all; or • redesign our system.
As a result, prior or future changes in ownership could put limitations on the availability of our NOL carryforwards. In addition, our ability to utilize the current NOL carryforwards might be further limited by future issuances of our common stock. 33 Table of Contents We do not intend to pay cash dividends on our common stock in the foreseeable future.
As a result, prior or future changes in ownership could put limitations on the availability of our NOL carryforwards. In addition, our ability to utilize the current NOL carryforwards might be further limited by future issuances of our common stock. We do not intend to pay cash dividends on our common stock in the foreseeable future.
Any of the above could have a material adverse effect on our business, financial condition and results of operations. 25 Table of Contents We cannot assure you that our products will be safe or that there will not be serious injuries or product malfunctions.
Any of the above could have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that our products will be safe or that there will not be serious injuries or product malfunctions.
In some circumstances, such adverse events could also cause delays in new product approvals. We may be held liable if any product we develop or commercialize causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing, sale or consumer use.
In some circumstances, such adverse events could also cause delays in new product approvals. 28 Table of Contents We may be held liable if any product we develop or commercialize causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing, sale or consumer use.
There can be no assurance that we will succeed in these activities, and we may never generate revenues sufficient to achieve profitability. If we do achieve profitability, we may not be able to sustain it. We will need to raise additional capital to fund our operations through the end of fiscal year 2024.
There can be no assurance that we will succeed in these activities, and we may never generate revenues sufficient to achieve profitability. If we do achieve profitability, we may not be able to sustain it. 24 Table of Contents We will need to raise additional capital to fund our operations through the end of fiscal year 2025.
Subject to limitations on liquidity that may prevent or delay additional hirings, the Company is planning to take steps to remediate these material weaknesses as soon as possible.
Subject to limitations on liquidity that may prevent or delay additional hirings, the Company is taking steps to remediate these material weaknesses as soon as possible.
In addition, regulations in individual countries or regions may restrict our ability to sell our products. Most countries, including the countries in the EU, require approval or registration to import and/or sell our products in the country. 24 Table of Contents The EU MDR was published in May 2017.
In addition, regulations in individual countries or regions may restrict our ability to sell our products. Most countries, including the countries in the EU, require approval or registration to import and/or sell our products in the country. The EU MDR was published in May 2017.
In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has a period of 180 calendar days from December 7, 2023, or until June 4, 2024, to regain compliance with the Minimum Bid Price Requirement.
In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), we were granted a period of 180 calendar days from December 7, 2023, or until June 4, 2024, to regain compliance with the Minimum Bid Price Requirement.
Our ten largest customers represented 50.4% and 50.4% of our revenues in the twelve months ended December 31, 2023, and 2022, respectively, with our largest customer representing 13.9% and 12.5%, respectively, of our revenues during such periods. Customer ordering patterns may vary significantly from quarter.
Our ten largest customers represented 49.4% and 50.4% of our revenues in the twelve months ended December 31, 2024, and 2023, respectively, with our largest customer representing 14.4% and 13.9%, respectively, of our revenues during such periods. Customer ordering patterns may vary significantly from quarter.
If it is determined that any of the relationships we may have with physicians violate the Stark law or similar statutes, we could become subject to civil and criminal penalties.
If it is determined that any of the relationships we may have with physicians violate the Stark law or similar statutes, we could become subject to civil and criminal penalties. The imposition of any such penalties could harm our business.
Our board of directors has previously approved, pursuant to this authority, the issuance of preferred stock, and we have 127 shares of Series F Convertible Preferred Stock outstanding and 11,950 shares of Series J Convertible Preferred Stock outstanding as of December 31, 2023.
Our board of directors has previously approved, pursuant to this authority, the issuance of preferred stock, and we have 127 shares of Series F Convertible Preferred Stock outstanding and 102 shares of Series J Convertible Preferred Stock outstanding as of December 31, 2024.
On December 7, 2023, we received a Notice informing us that because the closing bid price for our common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, we were not in compliance with the Minimum Bid Price Rule for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2).
On December 7, 2023, we received a notice from Nasdaq (the “Notice”) informing us that because the closing bid price for our Common Stock was below $1.00 for 30 consecutive trading days, we were not in compliance with the minimum bid price requirement for continued listing on Nasdaq, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
In addition, we believe that, if our common stock is delisted, our stockholders would likely find it more difficult to obtain accurate quotations as to the price of the common stock and it may be more difficult for stockholders to buy or sell our common stock at competitive market prices, or at all. 30 Table of Contents If our common stock is delisted, our common stock would likely then trade only in the over-the-counter market.
In addition, we believe that, if our Common Stock is delisted, our stockholders would likely find it more difficult to obtain accurate quotations as to the price of the Common Stock and it may be more difficult for stockholders to buy or sell our Common Stock at competitive market prices, or at all.
As of December 31, 2023, there were 127 shares of Series F Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series F Convertible Preferred Stock”) outstanding, convertible into 125,857 shares of common stock.
As of December 31, 2024, there were 127 shares of Series F Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series F Convertible Preferred Stock”) outstanding, convertible into 68,961 shares of common stock.
Investors should consider the specific risk factors discussed below, together with the “Cautionary Note Regarding Forward-Looking Statements” and the other information contained in this Annual Report on Form 10-K and the other documents that we will file from time to time with the SEC.
Investors should consider the specific risk factors discussed below, together with the “Cautionary Note Regarding Forward-Looking Statements” and the other information contained in this Annual Report on Form 10-K and the other documents that we will file from time to time with the SEC. Summary of Risk Factors Our business is subject to a number of risks.
The rights granted to us under the patent license agreement will automatically revert to Baxter in the event we cease operation of the Aquadex Business or we file for, or have filed against us, or otherwise undertake any bankruptcy, reorganization, insolvency, moratorium, or other similar proceeding. We estimate that the patents licensed from Baxter will expire by mid-2026.
The rights granted to us under the patent license agreement will automatically revert to Baxter in the event we cease operation of the Aquadex Business or we file for, or have filed against us, or otherwise undertake any bankruptcy, reorganization, insolvency, moratorium, or other similar proceeding.
We believe the Company may have experienced additional ownership changes under Section 382 of the Internal Revenue Code in the current and earlier years further limiting the NOL carryforwards that may be utilized. We have not yet completed a formal Section 382 analysis.
The company does not have any foreign tax loss carryovers. 40 Table of Contents We believe the Company may have experienced additional ownership changes under Section 382 of the Internal Revenue Code in the current and earlier years further limiting the NOL carryforwards that may be utilized. We have not yet completed a formal Section 382 analysis.
We have a large number of authorized but unissued shares of stock, which could negatively impact a potential investor if they purchased our common stock. On December 9, 2022, we effected a 1-for-100 reverse split of our outstanding common stock.
We have a large number of authorized but unissued shares of stock, which could negatively impact a potential investor if they purchased our common stock. On June 27, 2024, we effected a 1-for-35 reverse split of our outstanding common stock.
Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage and other consequences. Any investigations, actions or sanctions could adversely affect our business, operating results and financial condition.
Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage and other consequences.
As of December 31, 2023, we had U.S. net operating loss (“NOL”) carryforwards of approximately $212.2 million for U.S. federal income tax purposes. Approximately $119.7 million of NOL carryforwards will expire from 2024 through 2037. Pursuant to the Tax Cuts and Jobs Act of 2017, the NOL carryforwards generated in 2018 through 2023 totaling approximately $92.5 million do not expire.
As of December 31, 2024, we had U.S. net operating loss (“NOL”) carryforwards of approximately $220.2 million for U.S. federal income tax purposes. Approximately $119.2 million of NOL carryforwards will expire from 2025 through 2038. Pursuant to the Tax Cuts and Jobs Act of 2017, the NOL carryforwards generated in 2019 through 2024 totaling approximately $101.0 million do not expire.
The expiration of state NOL carryforwards will vary by jurisdiction. In addition, future utilization of NOL carryforwards in the U.S. may be subject to certain limitations under Section 382 of the Internal Revenue Code. The company does not have any foreign tax loss carryovers.
The expiration of state NOL carryforwards will vary by jurisdiction. In addition, future utilization of NOL carryforwards in the U.S. may be subject to certain limitations under Section 382 of the Internal Revenue Code.
Our tax advisors are working directly with the German tax authorities to determine the value of our exposure. 21 Table of Contents It is possible that we could face VAT audits in the future and that our liability for these taxes could exceed our estimates if non-U.S. tax authorities assert that we are obligated to collect additional tax amounts from our customers and remit those taxes to those authorities.
It is possible that we could face VAT audits in the future and that our liability for these taxes could exceed our estimates if non-U.S. tax authorities assert that we are obligated to collect additional tax amounts from our customers and remit those taxes to those authorities.
We are subject, directly or indirectly, to United States federal and state healthcare fraud and abuse and false claims laws and regulations. Prosecutions under such laws have increased in recent years and we may become subject to such litigation. If we are unable to, or have not fully complied with such laws, we could face substantial penalties.
We are subject, directly or indirectly, to United States federal and state healthcare fraud and abuse and false claims laws and regulations. Prosecutions under such laws have increased in recent years and we may become subject to such litigation.
Risks Related to Our Common Stock Nasdaq may delist our common stock from its exchange which could limit your ability to make transactions in our securities and subject us to additional trading restrictions.
Risks Related to Our Common Stock Nasdaq may delist our common stock from its exchange which could limit your ability to make transactions in our securities and subject us to additional trading restrictions. Our common stock is listed on the Nasdaq Capital Market under the symbol “NUWE”.
All share amounts and warrant or option exercise prices contained in this report reflect that adjustment. Additionally, in 2020, the SEC approved a Nasdaq rule change to expedite delisting of securities of companies that have had one or more reverse stock splits with a cumulative ratio of one for 250 or more shares over the prior two-year period.
Additionally, in 2020, the SEC approved a Nasdaq rule change to expedite delisting of securities of companies that have had one or more reverse stock splits with a cumulative ratio of one for 250 or more shares over the prior two-year period.
As a result of supplying our business customers in the European Union, we are subject to the Value Added Tax, or VAT, which is typically applied to all goods and services purchased and sold throughout Europe. In 2023, we discovered that our VAT returns from 2017 to 2021 were overdue for filing in Germany.
As a result of supplying our business customers in the European Union, we are subject to the Value Added Tax, or VAT, which is typically applied to all goods and services purchased and sold throughout Europe.
As of December 31, 2023, we have outstanding warrants to purchase an aggregate of approximately 2,963,192 shares of our common stock, and options to purchase an aggregate of approximately 110,916 shares of our common stock, which, if exercised, may further increase the number of shares of our common stock outstanding and the number of shares eligible for resale in the public market.
As of December 31, 2024, we have outstanding warrants to purchase an aggregate of approximately 5,303,254 shares of our common stock, and options to purchase an aggregate of approximately 3,873 shares of our common stock, which, if exercised, may further increase the number of shares of our common stock outstanding and the number of shares eligible for resale in the public market.
As of December 31, 2023 our Certificate of Incorporation provides for 100,000,000 shares of authorized common stock and 40,000,000 shares of authorized preferred stock, 30,000 of which are designated Series A Junior Participating Preferred Stock, 18,000 of which are designated Series F Convertible Preferred Stock, 600,000 of which are designated Series J Convertible Redeemable Preferred Stock and we have 5,682,461 shares of common stock outstanding, 3,495,757 shares reserved for issuance upon the conversion, exercise or vesting of outstanding preferred stock, warrants and options, 66,917 Series J Convertible Preferred Stock issuable upon the exercise of 133,834 warrants issued in the October 2023 Offering, and 41,871 shares of common stock reserved for future grant under the Company’s equity incentive plans.
As of December 31, 2024 our Certificate of Incorporation provides for 100,000,000 shares of authorized common stock and 40,000,000 shares of authorized preferred stock, 30,000 of which are designated Series A Junior Participating Preferred Stock, 18,000 of which are designated Series F Convertible Preferred Stock, 600,000 of which are designated Series J Convertible Redeemable Preferred Stock and we have 4,373,968 shares of common stock outstanding, 5,398,003 shares reserved for issuance upon the conversion, exercise or vesting of outstanding preferred stock, warrants and options, 23,762 Series J Convertible Preferred Stock issuable upon the exercise of 1,920 warrants issued in the October 2023 Offering, and 42,175 shares of common stock reserved for future grant under the Company’s equity incentive plans.
We have incurred net losses since our inception, including net losses of $20.2 million as of December 31, 2023. As of December 31, 2023, our accumulated deficit was $287.6 million.
We have incurred net losses since our inception, including net losses of $11.2 million as of December 31, 2024. As of December 31, 2024, our accumulated deficit was $298.8 million.
Significant additional governmental regulation could subject us to unanticipated delays which would adversely affect our sales. Our business strategy depends in part on our ability to expand the use of the Aquadex System in the market as quickly as possible. To achieve expanded market use of the Aquadex System, we may develop additional enhancements to the system or its components.
Our business strategy depends in part on our ability to expand the use of the Aquadex System in the market as quickly as possible. To achieve expanded market use of the Aquadex System, we may develop additional enhancements to the system or its components.
We are in the process of entering into MDR certification contract with our Notify Body which will allow Nuwellis to market Aquadex SmartFlow® through Dec 31 st , 2028. Nuwellis intends to complete MDR certification and CE Mark under MDR prior to the extension deadline of Dec 31 st , 2028.
We are in the process of entering into MDR certification contract with our Notify Body which will allow Nuwellis to market Aquadex SmartFlow® through December 31, 2028.
The imposition of any such penalties could harm our business. 26 Table of Contents The FCA prohibits persons from knowingly filing, or causing to be filed, a false claim to, or the knowing use of false statements to obtain payment from the federal government.
The FCA prohibits persons from knowingly filing, or causing to be filed, a false claim to, or the knowing use of false statements to obtain payment from the federal government.
If we acquire other businesses, products or technologies, we could incur additional impairment charges and will be subject to risks that could hurt our business. We may pursue acquisitions to obtain complementary businesses, products or technologies.
Any investigations, actions or sanctions could adversely affect our business, operating results and financial condition. 32 Table of Contents If we acquire other businesses, products or technologies, we could incur additional impairment charges and will be subject to risks that could hurt our business. We may pursue acquisitions to obtain complementary businesses, products or technologies.
In the year ended December 31, 2017, we recognized impairment charges of $4.0 million related to goodwill and intangibles assets from our acquisition of the Aquadex Business.
In the year ended December 31, 2017, we recognized impairment charges of $4.0 million related to goodwill and intangibles assets from our acquisition of the Aquadex Business. If we were required to recognize impairment charges related to future acquisitions, those charges could decrease our future earnings or increase our future losses.
We may face significant risks associated with international operations, which could have a material adverse effect on our business, financial condition and results of operations. We market our products globally.
The recall was conducted with the knowledge of the U.S. Food and Drug Administration which has characterized the Class of the recall as Class 1. We may face significant risks associated with international operations, which could have a material adverse effect on our business, financial condition and results of operations. We market our products globally.
Any one or more of these factors associated with international operations could increase our costs, reduce our revenues, or disrupt our operations, which could have a material adverse effect on our business, financial condition, and results of operations.
Nuwellis intends to complete MDR certification and CE Mark under MDR prior to the extension deadline of December 31, 2028. 29 Table of Contents Any one or more of these factors associated with international operations could increase our costs, reduce our revenues, or disrupt our operations, which could have a material adverse effect on our business, financial condition, and results of operations.
We cannot assure you that our products will prove to be safe or that there will not be serious injuries or product malfunctions, which could trigger recalls, class action lawsuits and other events that could cause us to incur significant expenses, limit our ability to market our products and generate revenues from such products or cause us reputational harm.
We cannot assure you that our products will prove to be safe or that there will not be serious injuries or product malfunctions, which could trigger recalls, class action lawsuits and other events that could cause us to incur significant expenses, limit our ability to market our products and generate revenues from such products or cause us reputational harm. 30 Table of Contents Under the FDC Act, we are required to submit medical device reports, or MDRs, to the FDA to report device-related deaths, serious injuries and malfunctions of medically approved products that could result in death or serious injury if they were to recur.
Additional laws and regulations, or changes to existing laws and regulations that are applicable to our business may be enacted or promulgated, and the interpretation, application or enforcement of the existing laws and regulations may change.
Additional laws and regulations, or changes to existing laws and regulations that are applicable to our business may be enacted or promulgated, and the interpretation, application or enforcement of the existing laws and regulations may change. In that regard, the Trump administration’s legislative and regulatory agendas, as they relate to the healthcare and medical device industries, remain uncertain.
As of December 31, 2023, we have warrants to purchase 2,963,192 shares of common stock outstanding, with exercise prices ranging from $3.30 to $189,000 with a weighted-average exercise price of $30.86.
As of December 31, 2024, we have warrants to purchase 5,303,254 shares of common stock outstanding, with exercise prices ranging from $1.72 to $148,000 with a weighted-average exercise price of $5.65.
Our success depends in part on our ability to obtain and maintain protection in the United States and other countries of the intellectual property relating to or incorporated into our Aquadex System and related components.
Risks Related to Our Intellectual Property We may not be able to protect our intellectual property rights effectively, which could have an adverse effect on our business, financial condition or results of operations Our success depends in part on our ability to obtain and maintain protection in the United States and other countries of the intellectual property relating to or incorporated into our Aquadex System and related components.
Our ability to compete effectively depends upon our ability to demonstrate the advantages of ultrafiltration as compared to diuretics, a pharmacological treatment that is currently the standard of care. In addition, we need to distinguish Aquadex System from the indirect competition of other devices that can also be used to conduct ultrafiltration.
Our ability to compete effectively depends upon our ability to demonstrate the advantages of ultrafiltration as compared to diuretics, a pharmacological treatment that is currently the standard of care.
Depending on their nature, such enhancements may be subject to review by the FDA and regulatory authorities outside of the United States under the applicable regulations.
Depending on their nature, such enhancements may be subject to review by the FDA and regulatory authorities outside of the United States under the applicable regulations. Any regulatory delay in our ability to implement enhancements to the Aquadex System or its components could have an adverse effect on our potential sales.
The forecasts of demand we use to determine order quantities and lead times for components purchased from outside suppliers may be incorrect.
We depend on our suppliers to provide us with materials in a timely manner that meet our quality, quantity and cost requirements. The forecasts of demand we use to determine order quantities and lead times for components purchased from outside suppliers may be incorrect.
To the extent that our employees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
To the extent that our employees, consultants or contractors use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. 34 Table of Contents Our products could infringe patent rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages or limit our ability to commercialize our products.
Legislative proposals can substantially change the way health care is financed by both governmental and private insurers and may negatively impact payment rates for our system. We cannot predict the nature of any future laws, regulations, interpretations, applications or enforcements or the specific effects any of these might have on our business.
Legislative proposals can substantially change the way health care is financed by both governmental and private insurers and may negatively impact payment rates for our system.
We have no long-term contracts with the majority of our third-party suppliers that guarantee volume or the continuation of payment terms. We depend on our suppliers to provide us with materials in a timely manner that meet our quality, quantity and cost requirements.
We will rely on third-party suppliers, including single-source suppliers, to provide us with certain components of the Aquadex System. We have no long-term contracts with the majority of our third-party suppliers that guarantee volume or the continuation of payment terms.
Our board of directors has authority, without further stockholder approval, to issue additional shares of preferred stock with such rights, preferences and privileges as our board may determine. These rights, preferences and privileges may include dividend rights, conversion rights, voting rights and liquidation rights that may be greater than the rights of our common stock.
These rights, preferences and privileges may include dividend rights, conversion rights, voting rights and liquidation rights that may be greater than the rights of our common stock.
The rights of holders of our capital stock will be subject to, and could be adversely affected by, the rights of holders of our outstanding preferred stock and stock that may be issued in the future.
The rights of holders of our capital stock will be subject to, and could be adversely affected by, the rights of holders of our outstanding preferred stock and stock that may be issued in the future. 38 Table of Contents Our board of directors has authority, without further stockholder approval, to issue additional shares of preferred stock with such rights, preferences and privileges as our board may determine.
Changes in patent laws or their interpretation in the United States and other countries could also diminish the value of our intellectual property or narrow the scope of our patent protection.
Even if issued, existing or future patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to obtain commercial benefits from them. Changes in patent laws or their interpretation in the United States and other countries could also diminish the value of our intellectual property or narrow the scope of our patent protection.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or be more volatile.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
We face significant uncertainty in the industry due to government healthcare reform. The Affordable Care Act, as well as other healthcare reform may have a significant impact on our business. The Affordable Care Act is extremely complex, and, as a result, additional legislation is likely to be considered and enacted over time.
The Affordable Care Act is extremely complex, and, as a result, additional legislation is likely to be considered and enacted over time.
Our operations are directly, or indirectly through customers, subject to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the Stark law and federal False Claims Act (the “FCA”). These laws may impact, among other things, our sales, marketing and education programs.
If we are unable to, or have not fully complied with such laws, we could face substantial penalties. 31 Table of Contents Our operations are directly, or indirectly through customers, subject to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the Stark law and federal False Claims Act (the “FCA”).
If we experience difficulties with our manufacturing operations, we may experience delays in providing products and services to our customers, and our business could be harmed.
If we experience difficulties with our manufacturing operations, we may experience delays in providing products and services to our customers, and our business could be harmed. 26 Table of Contents We depend upon third-party suppliers, including single-source suppliers, making us vulnerable to supply problems and price fluctuations.
As of December 31, 2023, there were 11,950 shares of Series J Convertible Preferred Stock (as defined below) outstanding, convertible into 295,792 shares of common stock and 66,917 Series J Convertible Preferred Stock issuable upon the exercise of 133,834 warrants issued in the October 2023 Offering (as defined below). 31 Table of Contents If any security holder determines to sell a substantial number of shares into the market at any given time, there may not be sufficient demand in the market to purchase the shares without a decline in the market price for our common stock.
If any security holder determines to sell a substantial number of shares into the market at any given time, there may not be sufficient demand in the market to purchase the shares without a decline in the market price for our common stock.
We have filed 10 patent applications related to our dedicated pediatric device in development. These resulted in 2 issued patents, 1 abandoned application, and 7 pending patent applications. The first issued patent involves a mechanical design for the therapy bags to allow easy load/unload by the user.
These resulted in four (4) issued patents, 1 abandoned application, and five (5) pending patent applications. The first issued patent involves a mechanical design for the therapy bags to allow easy load/unload by the user. The second issued patent involves transport mode operation on battery power, enabling patient mobility.
If applicable in the future, these rules may restrict the ability of brokers-dealers to sell our common stock and may affect the ability of investors to sell their shares, until our common stock no longer is considered a penny stock. On December 9, 2022, we effected a 1-for-100 reverse stock split of our outstanding common stock.
If applicable in the future, these rules may restrict the ability of brokers-dealers to sell our Common Stock and may affect the ability of investors to sell their shares, until our Common Stock no longer is considered a penny stock. 37 Table of Contents We continue to actively monitor our performance with respect to the listing standards and will consider available options to resolve any deficiency and maintain compliance with the Nasdaq rules.
Any regulatory delay in our ability to implement enhancements to the Aquadex System or its components could have an adverse effect on our potential sales. 23 Table of Contents Health care laws in the United States and other countries are subject to ongoing changes, including changes to the amount of reimbursement for hospital services.
Health care laws in the United States and other countries are subject to ongoing changes, including changes to the amount of reimbursement for hospital services.
Our pending and future patent applications may not issue as patents or, if issued, may not issue in a form that will provide us any financial return. Even if issued, existing or future patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to obtain commercial benefits from them.
In addition, given the strategic refocus away from the C-Pulse System and towards the Aquadex System, we have chosen to limit the maintenance of issued C-Pulse System patents. Our pending and future patent applications may not issue as patents or, if issued, may not issue in a form that will provide us any financial return.
Under the FDC Act, we are required to submit medical device reports, or MDRs, to the FDA to report device-related deaths, serious injuries and malfunctions of medically approved products that could result in death or serious injury if they were to recur.
Further, we are required under applicable law to report any circumstances relating to our medically approved products that could result in deaths or serious injuries.
Our ability to remain listed on the Nasdaq Capital Market may be negatively impacted by this new Nasdaq rule. We continue to actively monitor our performance with respect to the listing standards and will consider available options to resolve any deficiency and maintain compliance with the Nasdaq rules.
Our ability to remain listed on Nasdaq may be negatively impacted by this Nasdaq rule.
Removed
While we do not believe our current exposure is material, we are unable to calculate any interest or penalties that may be assessed.
Added
The principal factors and uncertainties include, among others: • We have limited history of operations and limited experience in sales and marketing, and we might be unsuccessful in increasing our sales and cannot assure you that we will ever generate substantial revenue or be profitable. • We have incurred operating losses since our inception and anticipate that we will continue to incur operating losses in the near-term.
Removed
Our management’s evaluation of the effectiveness of our internal controls over financial reporting as of December 31, 2023, concluded that our controls were not effective, due to material weaknesses resulting from insufficient headcount to fully ensure adequate segregation of duties relating to the accounting and financial reporting function and the information technology function.
Added
To date, we have been funded by equity financings, and although we believe that we will be able to successfully fund our operations, there can be no assurance that we will be able to do so or that we will ever operate profitably. • We will need to raise additional capital to fund our operations beyond May 31, 2025.
Removed
We depend upon third-party suppliers, including single-source suppliers, making us vulnerable to supply problems and price fluctuations. 22 Table of Contents We will rely on third-party suppliers, including single-source suppliers, to provide us with certain components of the Aquadex System.
Added
If additional capital is not available, we will have to delay, reduce or cease operations.
Removed
The COVID-19 pandemic and other public health threats or outbreaks of communicable diseases could have a material adverse effect on our operations and overall financial performance. Several hospitals in the U.S. included the Aquadex System in their treatment protocol for fluid management of COVID-19, especially when dialysis equipment and staff are limited.
Added
These factors raise substantial doubt about the Company’s ability to continue as a going concern through the next twelve months. • If we do not comply with certain tax regulations, including VAT, and similar regulations, we may be subject to additional taxes, customs duties, interest, and penalties in material amounts, which could materially harm our financial condition and operating results. • We have previously identified a material weakness in connection with our internal control over financial reporting which, if not remediated, could adversely affect our business, reputation and stock price. • Our near-term prospects are highly dependent on revenues from a single product, the Aquadex System.
Removed
However, we also experienced changes to our sales practices due to restrictions on hospital access and believe that such restrictions negatively affected revenue in other areas. In addition, the disruption created by COVID-19 created significant uncertainty about our ability to access the capital markets in future periods.
Added
We face significant challenges in expanding market acceptance of the Aquadex System, which could adversely affect our potential sales. 22 Table of Contents • Nasdaq may delist our common stock from its exchange which could limit your ability to make transactions in our securities and subject us to additional trading restrictions. • Sales of a substantial number of shares of our common stock by our stockholders in the public market could cause our stock price to fall. • We depend on a limited number of customers, the loss of which, or failure of which to order our products in a particular period, could cause our revenues to decline. • We have limited commercial manufacturing experience and could experience difficulty in producing commercial volumes of the Aquadex System and related components or may need to depend on third parties for manufacturing. • We depend upon third-party suppliers, including single source suppliers, making us vulnerable to supply problems and price fluctuations. • If we cannot develop adequate distribution, customer service and technical support networks, then we may not be able to market and distribute the Aquadex System effectively and our sales will suffer. • We compete against many companies, some of which have longer operating histories, more established products and greater resources than we do, which may prevent us from achieving further market penetration or improving operating results. • Significant additional governmental regulation could subject us to unanticipated delays which would adversely affect our sales. • Product defects, resulting in lawsuits for product liability, could harm our business, results of operations and financial condition. • We may face significant risks associated with international operations, which could have a material adverse effect on our business, financial condition and results of operations. • If we are not able to maintain sufficient quality controls, then the approval or clearance of our products by the European Union, the FDA or other relevant authorities could be withdrawn, delayed or denied and our sales will suffer. • If we fail to comply with federal and state laws regarding off-label use of our products, we could face substantial civil and criminal penalties and our business, financial condition, results of operations, and prospects could be adversely affected. • If we violate any provisions of the Federal Food, Drug, and Cosmetic Act or any other statutes or regulations, then we could be subject to enforcement actions by the FDA or other governmental agencies. • We cannot assure you that our products will be safe or that there will not be serious injuries or product malfunctions.
Removed
The ongoing impact of the COVID-19 outbreak on our operational and financial performance has diminished, but we may still experience downstream effects that will depend on certain future developments, including the ongoing impact on our customers, hospital capital budget constraints, nursing staff shortages, hospital access restrictions imposed on our field employees, and effects on our vendors, all of which remain uncertain and cannot be predicted.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−1 removed8 unchanged
Biggest changeIn addition, we have a set of Company-wide policies and procedures concerning cybersecurity matters, which include an employee handbook as well as other policies that directly or indirectly relate to cybersecurity, such as policies related to incident response, confidential information and the use of internet, social media, email and wireless.
Biggest changeIn addition, we have a set of Company-wide policies and procedures concerning cybersecurity matters, which include an employee handbook as well as other policies that directly or indirectly relate to cybersecurity, such as policies related to incident response, confidential information and the use of internet, social media, email and wireless. 42 Table of Contents Our Director of Operations is responsible for developing and implementing our information security program and reporting on cybersecurity matters to the board of directors.
As of 2023 the Audit Committee performs an annual review of the Company’s cybersecurity program, which includes discussion of management’s actions to identify and detect threats, as well as planned actions in the event of a response or recovery situation.
As of 2024 the Audit Committee performs an annual review of the Company’s cybersecurity program, which includes discussion of management’s actions to identify and detect threats, as well as planned actions in the event of a response or recovery situation.
These risks include, among other things: operational risks, intellectual property theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws. We have a cross-departmental approach to addressing cybersecurity risk, including input from employees [from our information technology department], our senior vice president of operations and engineering, and our board of directors.
These risks include, among other things: operational risks, intellectual property theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws. We have a cross-departmental approach to addressing cybersecurity risk, including input from employees from our information technology department, and our board of directors.
IT department assigns position specific security level encryption to manage information security We have continued to expand investments in IT security, including software programs and policies mentioned above. We regularly test defenses by performing simulations and drills at both a technical level (including through penetration tests) and by reviewing our operational policies and procedures with third-party experts.
We have continued to expand investments in IT security, including software programs and policies mentioned above. We regularly test defenses by performing simulations and drills at both a technical level (including through penetration tests) and by reviewing our operational policies and procedures with third-party experts.
Nuwellis leverages 3 rd party IT service provider and specifically their cybersecurity team’s expertise. All employees are required to complete cybersecurity training as part of on-boarding process and on-going training both online and in-person.
Nuwellis leverages 3rd party IT service provider and specifically their cybersecurity team’s expertise. All employees are required to complete cybersecurity training as part of on-boarding process and on-going training both online and in-person. IT department assigns position specific security level encryption to manage information security.
Removed
These policies go through an internal review process and are approved by our senior vice president of operations and engineering. 34 Table of Contents Our Senior Vice President of Operations and Engineering is responsible for developing and implementing our information security program and reporting on cybersecurity matters to the board of directors.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeWe believe that our current facilities are suitable and adequate to meet our current needs, and that suitable additional or substitute space will be available as needed to accommodate expansion of our operations.
Biggest changeWe believe that our current facilities are suitable and adequate to meet our current needs, and that suitable additional or substitute space will be available as needed to accommodate expansion of our operations. 43 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−0 removed5 unchanged
Biggest changeExcept as previously disclosed on our Current Report on Form 8-K dated June 19, 2023, respecting the issuance of a warrant to Davita Inc. to purchase up to an aggregate of 1,289,081 shares of common stock of the Company at an exercise price of $3.2996 per share, there have been no sales of unregistered securities during the year ended December 31, 2023.
Biggest change(“Ladenburg”) to purchase an aggregate of 14,501 shares of common stock of the Company, and (iii) Current Report on Form 8-K dated November 7, 2024, respecting the issuance of warrants to certain investors to purchase up to an aggregate of 3,665,034 shares of common stock of the Company at an exercise price of $1.94 share and warrants to Ladenburg to purchase an aggregate of 54,976 shares of common stock of the Company at an exercise price of 3.465 per share, there have been no sales of unregistered securities during the year ended December 31, 2024.
Stockholders of Record. As of March 1, 2024, we had 6,801,443 shares of common stock issued and outstanding, and there were 3 holders of record of our common stock. A substantially greater number of stockholders may be “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions. Dividends.
Stockholders of Record. As of March 7, 2025, we had 4,373,968 shares of common stock issued and outstanding, and 1 holder of record of our common stock. A substantially greater number of stockholders may be “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions. Dividends.
Added
Except as previously disclosed on our (i) Current Report on Form 8-K dated July 25, 2024, respecting the issuance of warrants to certain purchasers to purchase up to an aggregate of 938,680 shares of common stock of the Company at an exercise price of $3.99 per share, (ii) Current Report on Form 8-K dated August 26, 2024, respecting the issuance of warrants to certain purchasers to purchase up to an aggregate of 483,351 shares of common stock of the Company at an exercise price of $1.72 per share and warrants to Ladenburg Thalmann & Co.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

48 edited+51 added−68 removed28 unchanged
Biggest changeThe Company also registered under the Registration Statement (as defined below) an additional 362,933 shares of Series J Convertible Preferred Stock that will be issued, if and when the Company’s board of directors declares such dividends, as paid in-kind dividends and the shares of the Company’s common stock issuable upon conversion of the Series J Convertible Preferred Stock issued as PIK dividends.
Biggest changeThe Company also registered an additional 362,933 shares of Series J Convertible Preferred Stock that will be issued, if and when the Company’s Board of Directors declares such dividends, as paid in-kind dividends (the “PIK Dividend Shares”) and the shares of the Company’s common stock issuable upon conversion of the Series J Preferred Stock issued as PIK dividends (the “PIK Conversion Shares”). 50 Table of Contents The Units, the shares of Series J Preferred Stock, the October 2023 Warrants, the PIK Dividend Shares, the PIK Conversion Shares as well as the shares of Series J Convertible Preferred Stock issuable upon exercise of the October 2023 Warrants and the shares of the Company’s common stock, par value $0.0001 per share, issuable upon conversion of the Series J Convertible Preferred Stock, were offered and sold by the Company pursuant to an effective registration statement on Form S-1.
No adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern. We believe that our existing capital resources will be sufficient to support our operating plan through May 31, 2024; however, there can be no assurance of this.
No adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern. We believe that our existing capital resources will be sufficient to support our operating plan through May 31, 2025; however, there can be no assurance of this.
The public offering price of $15.00 per Unit reflects the issuance of the Series J Convertible Preferred Stock with an original issue discount of 40%.
The public offering price of $15.00 per Unit reflects the issuance of the Series J Preferred Stock with an original issue discount of 40%.
The net cash used in each of these periods primarily reflects the net loss for those periods, offset in part by stock-based compensation, depreciation and amortization, and the effects of changes in operating assets and liabilities, including working capital, as well as the net impact of non-cash financing expense and change in the fair value of the warrant liability and warrant financing expense for the current year period.
The net cash used in each of these periods primarily reflects the net loss for those periods, offset in part by stock-based compensation, depreciation and amortization, and the effects of changes in operating assets and liabilities, including working capital, as well as the net impact of non-cash financing expense and change in the fair value of the warrant liability and warrant financing expense.
The Series J Convertible Preferred Stock will be reflected as mezzanine equity and accreted to reflect its redemption value as of each reporting date. The accretion will be reflected as a deemed dividend adjustment to arrive at net loss attributed to common stockholders for earnings per share calculations.
The Series J Preferred Stock is classified as mezzanine equity and accreted to reflect its redemption value as of each reporting date. The accretion will be reflected as a deemed dividend adjustment to arrive at net loss attributed to common stockholders for earnings per share calculations.
Overview We are a medical device company dedicated to transforming the lives of patients suffering from fluid overload through science, collaboration, and innovative technology. The company is focused on developing, manufacturing, and commercializing medical devices used in ultrafiltration therapy, including the Aquadex System.
Overview We are a commercial-stage medical technology company dedicated to transforming the lives of patients suffering from fluid overload through science, collaboration, and innovative technology. The company is focused on developing, manufacturing, and commercializing medical devices used in ultrafiltration therapy, including the Aquadex System.
During 2021 and through December 31, 2023, we closed on underwritten public and other equity offerings for aggregate net proceeds of approximately $40.9 million after deducting the underwriting discounts and commissions or placement agents’ fees and offering expenses, as applicable, and other costs associated with the offerings.
During 2021 and through December 31, 2024, we closed on underwritten public and other equity offerings for aggregate net proceeds of approximately $49.9 million after deducting the underwriting discounts and commissions or placement agents’ fees and offering expenses, as applicable, and other costs associated with the offerings.
These factors raise substantial doubt about the Company’s ability to continue as a going concern through at least twelve months from the report date. We became a revenue generating company after acquiring the Aquadex Business in August 2016.
These factors raise substantial doubt about the Company’s ability to continue as a going concern through at least twelve months from the report date. 47 Table of Contents We became a revenue generating company after acquiring the Aquadex Business in August 2016.
As of December 31, 2023, and 2022, cash, cash equivalents, and marketable securities were $3.8 million and $18.3 million, respectively. Our business strategy and ability to fund our operations in the future depends in part on our ability to grow the Aquadex Business by expanding our salesforce, selling our products to hospitals and other healthcare facilities, and controlling costs.
As of December 31, 2024 and 2023, cash, cash equivalents, and marketable securities were $5.1 million and $3.8 million, respectively. Our business strategy and ability to fund our operations in the future depends in part on our ability to grow the Aquadex Business by expanding our salesforce, selling our products to hospitals and other healthcare facilities, and controlling costs.
There are no new accounting pronouncements not yet adopted that we believe will have a material impact on the consolidated financial statements of the Company. 40 Table of Contents FINANCIAL OVERVIEW We are a medical technology company focused on commercializing the Aquadex System for ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy.
There are no new accounting pronouncements adopted that we believe will have a material impact on the consolidated financial statements of the Company. FINANCIAL OVERVIEW We are a medical technology company focused on commercializing the Aquadex System for ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy.
In addition, we do not intend to list the Series J Convertible Preferred Stock or the Warrants on The Nasdaq Capital Market or any other national securities exchange or any other nationally recognized trading system. 37 Table of Contents The gross proceeds to the Company from the October 2023 Offering were $2.25 million.
In addition, we do not intend to list the Series J Preferred Stock or the October 2023 Warrants on The Nasdaq Capital Market or any other national securities exchange or any other nationally recognized trading system. The gross proceeds to the Company from the October 2023 Offering were $2.25 million.
Our estimates and assumptions, including those related to stock-based compensation, valuation of equity instruments, inventory and accounts receivable reserves, potential impairment of long-lived assets and income tax reserves are updated as appropriate, which in most cases is quarterly. We base our estimates on historical experience, valuations, or various assumptions that are believed to be reasonable under the circumstances.
Our estimates and assumptions, including those related to valuation of equity instruments, potential impairment of long-lived assets and income tax reserves are updated as appropriate, which in most cases is quarterly. We base our estimates on historical experience, valuations, or various assumptions that are believed to be reasonable under the circumstances.
The warrants will be reflected as a liability and re-measured at fair value as of each reporting date with fair value changes being recorded as non-operating income or expense. The warrants were valued on day 1 and exceeded the gross proceeds of the offering. This resulted in a day 1 financing expense of $2.7 million.
The October 2023 Warrants are recorded as a liability and re-measured at fair value as of each reporting date with fair value changes being recorded as non-operating income or expense. The October 2023 Warrants were valued on day 1 and exceeded the gross proceeds of the offering. This resulted in a day 1 financing expense of $2.7 million.
In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has a period of 180 calendar days from December 7, 2023, or until June 4, 2024, to regain compliance with the Minimum Bid Price Requirement.
In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), we were granted a period of 180 calendar days from December 7, 2023, or until June 4, 2024, to regain compliance with the Minimum Bid Price Requirement.
Recent Developments Public Offerings On October 12, 2023, the Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Lake Street Capital Markets, LLC and Maxim Group LLC, pursuant to which the Company issued and sold, in a best efforts registered public offering by the Company (the “October 2023 Offering”), 150,000 units, with each Unit consisting of (A) one share of the Company’s Series J Convertible Redeemable Preferred Stock, par value $0.0001 per share, and (B) one warrant to purchase one-half of one (0.50) share of Series J Convertible Preferred Stock, at a price to the public of $15.00 per Unit, less placement agent fees and commissions.
On October 12, 2023, Nuwellis, Inc. entered into a placement agency agreement with Lake Street Capital Markets, LLC and Maxim Group LLC, pursuant to which the Company issued and sold, in a best efforts registered public offering by the Company (the “October 2023 Offering”), 150,000 units (each, a “Unit”), with each Unit consisting of (A) one share of the Company’s Series J Convertible Redeemable Preferred Stock (“Series J Preferred Stock”), par value $0.0001 per share, and (B) one warrant to purchase one-half of one (0.50) share of Series J Preferred Stock, at a price to the public of $15.00 per Unit, less placement agent fees and commissions (the “October 2023 Warrants”).
Since then, our activities have consisted mainly of expanding our sales and marketing efforts, as well as continued development of clinical evidence and new product development efforts. As of December 31, 2023, we had an accumulated deficit of $287.6 million, and we expect to incur losses for the foreseeable future.
Since then, our activities have consisted mainly of expanding our sales and marketing efforts, as well as continued development of clinical evidence and new product development efforts. As of December 31, 2024, we had an accumulated deficit of $298.8 million, and we expect to incur losses for the foreseeable future.
Nasdaq Notice On December 7, 2023, we received the Notice from the Staff of Nasdaq informing us that because the closing bid price for our common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, we were not in compliance with the Minimum Bid Price Requirement for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2).
Nasdaq Notice On December 7, 2023, we received a notice from Nasdaq (the “Notice”) informing us that because the closing bid price for our Common Stock was below $1.00 for 30 consecutive trading days, we were not in compliance with the minimum bid price requirement for continued listing on Nasdaq, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
Income Tax Expense (in thousands) Year Ended December 31, 2023 Year Ended December 31, 2022 Increase (Decrease) % Change Income tax expense $ 8 $ 9 $ (1 ) (11.1 %) We have not recognized any income tax benefit in our statement of operations related to our U.S. operating losses, as all tax benefits are fully reserved.
Income Tax Expense (in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Increase (Decrease) % Change Income tax expense $ 5 $ 8 $ (3 ) (37.5 )% We have not recognized any income tax benefit in our statement of operations related to our U.S. operating losses, as all tax benefits are fully reserved.
Results of Operations Net Sales (in thousands) Year Ended December 31, 2023 Year Ended December 31, 2022 Increase (Decrease) % Change $ 8,864 $ 8,543 $ 321 3.8 % Revenue is generated mainly from the sale of disposable blood filters and catheters used in conjunction with the Aquadex System consoles.
Results of Operations Net Sales (in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Increase (Decrease) % Change $ 8,740 $ 8,864 $ (124 ) (1.4 )% Revenue is generated mainly from the sale of disposable blood filters and catheters used in conjunction with the Aquadex System consoles.
On October 17, 2023, the Company also entered into a warrant agency agreement with the Company’s transfer agent, Equiniti Trust Company, LLC, who will act as warrant agent for the Company, setting forth the terms and conditions of the Warrants sold in the October 2023 Offering.
The closing of the Offering contemplated by the placement agency agreement occurred on October 17, 2023. On October 17, 2023, the Company also entered into a warrant agency agreement with the Company’s transfer agent, Equiniti Trust Company, LLC, who acts as warrant agent for the Company, setting forth the terms and conditions of the October 2023 Warrants.
As of March 1, 2024 our Certification of Incorporation provides for 100,000,000 shares of authorized common stock and 40,000,000 shares of authorized preferred stock, 30,000 of which are designated Series A Junior Participating Preferred Stock, 18,000 of which are designated Series F Convertible Preferred Stock, and 600,000 of which are designated Series J Convertible Preferred Stock, and we have 6,801,443 shares of common stock outstanding, 2,376,920 shares reserved for issuance upon the conversion, exercise or vesting of outstanding preferred stock, warrants and options, and 1,459,336 shares of common stock reserved for future grant under the Company’s equity incentive plans.
As of March 7, 2025 our Certification of Incorporation provides for 100,000,000 shares of authorized common stock and 40,000,000 shares of authorized preferred stock, 30,000 of which are designated Series A Junior Participating Preferred Stock, 18,000 of which are designated Series F Convertible Preferred Stock, and 600,000 of which are designated Series J Convertible Preferred Stock, and we have 4,373,968 shares of common stock outstanding, 5,398,003 shares reserved for issuance upon the conversion, exercise or vesting of outstanding preferred stock, warrants and options, and 42,175 shares of common stock reserved for future grant under the Company’s equity incentive plans.
Cash Flows from Investing Activities Net cash provided by investing activities was $0.3 million and $14.7 million in 2023 and 2022, respectively. The cash provided in investing activities represented the proceeds from the sale of marketable securities and cash used in investing activities was primarily for the purchase of marketable securities.
Cash Flows from Investing Activities Net cash used in investing activities was $60,000 in 2024. Net cash provided by investing activities was $0.3 million in 2023. The cash used in investing activities in 2024 was for the purchase of property and equipment. The cash provided by investing activities in 2023 represented the proceeds from the sale of marketable securities.
We generate minimal amounts of income tax expense in connection with activities incurred by our Irish subsidiary. 41 Table of Contents Liquidity and Capital Resources Sources of Liquidity We have funded our operations primarily through cash on hand and a series of equity and debt issuances.
We generate minimal amounts of income tax expense in connection with activities incurred by our Irish subsidiary. Liquidity and Capital Resources Sources of Liquidity We have funded our operations primarily through cash on hand and a series of equity and debt issuances. On June 26, 2024, we effected a 1-for-35 reverse split of our outstanding common stock.
We will need to seek additional financing in the future, which, to date, has been through offerings of our equity. Cash Flows from Operating Activities Net cash used in operating activities was $17.9 million and $15.1 million in 2023 and 2022, respectively.
We will need to seek additional financing in the future, which, to date, has been through offerings of our equity. We believe that we have sufficient capital to fund our operations through May 31, 2025. Cash Flows from Operating Activities Net cash used in operating activities was $9.6 million and $17.9 million in 2024 and 2023, respectively.
On December 9, 2022, we effected a 1-for-100 reverse split of our outstanding common stock. This reverse stock split did not change the par value of our common stock or the number of common or preferred shares authorized by our Certificate of Incorporation.
This reverse stock split did not change the par value of our common stock or the number of common or preferred shares authorized by our Certificate of Incorporation.
Contractual Obligations and Commitments The following table summarizes our contractual obligations as of December 31, 2023, which represent material expected or contractually committed future obligations: (in thousands) Payments Due by Period Less than 1 year 1-3 years 3-5 years More than 5 years Total Operating Lease $ 257 $ 536 $ 69 $ - $ 862 Financing Leases - - - - - Total $ 257 $ 536 $ 69 $ - $ 862 We lease a 23,000 square foot facility located in Eden Prairie, Minnesota for office and manufacturing space under a non-cancelable operating lease that expires in March 2027.
The cash provided from financing activities in the prior year was the result of proceeds received from the Company’s underwritten public offerings of equity securities and the Company’s participation in an “At-the-Market Program” resulting in additional proceeds. 53 Table of Contents Contractual Obligations and Commitments The following table summarizes our contractual obligations as of December 31, 2024, which represent material expected or contractually committed future obligations: (in thousands) Payments Due by Period Less than 1 year 1-3 years 3-5 years More than 5 years Total Operating Lease $ 264 $ 318 $ - $ - $ 582 Financing Leases - - - - - Total $ 264 $ 318 $ - $ - $ 582 We lease a 23,000 square foot facility located in Eden Prairie, Minnesota for office and manufacturing space under a non-cancelable operating lease that expires in March 2027.
Accounting for Warrants We have issued and may continue to issue warrants to purchase shares of common and convertible preferred stock through our public and private offerings. We account for such warrants in accordance with ASC 480 Distinguishing Liabilities from Equity, which identifies three categories of freestanding financial instruments that are required to be accounted for as a liability.
We account for such warrants in accordance with ASC 480 Distinguishing Liabilities from Equity, which identifies three categories of freestanding financial instruments that are required to be accounted for as a liability.
Costs and Expenses Our costs and expenses were as follows: (in thousands) Year Ended December 31, 2023 Year Ended December 31, 2022 Increase (Decrease) % Change Cost of goods sold $ 3,881 $ 3,788 $ 93 2.5 % Selling, general and administrative $ 17,191 $ 17,584 $ (393 ) (2.2 %) Research and development $ 5,422 $ 4,342 $ 1,080 24.9 % Cost of Goods Sold The increase in costs of goods sold for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to lower fixed overhead absorption because of lower manufacturing volumes.
Costs and Expenses Our costs and expenses were as follows: (in thousands) Year Ended December 31, 2024 Year Ended December 31, 2023 Increase (Decrease) % Change Cost of goods sold $ 3,064 $ 3,881 $ (817 ) (21.1 )% Selling, general and administrative $ 13,455 $ 17,191 $ (3,736 ) (21.7 )% Research and development $ 3,209 $ 5,422 $ (2,213 ) (40.8 )% Cost of Goods Sold The decrease in costs of goods sold, for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to higher manufacturing volumes of circuits in the current year and lower fixed overhead manufacturing expenses.
Information regarding new accounting pronouncements, when applicable, is included in Note 1 to the consolidated financial statements included in this Annual Report on Form 10-K.
The Company is currently evaluating the impact these rules will have on its consolidated financial statements and related disclosures. 48 Table of Contents Information regarding new accounting pronouncements, when applicable, is included in Note 1 to the consolidated financial statements included in this Annual Report on Form 10-K.
Each Warrant has an exercise price of $7.50 per one-half of one (0.5) share of Series J Convertible Preferred Stock, is immediately exercisable and will expire three (3) years from the date of issuance. There is no established trading market for the Series J Convertible Preferred Stock or the Warrants and we do not expect a market to develop.
Each October 2023 Warrant has an exercise price of $262.50 per one-half of one (0.5) share of Series J Convertible Preferred Stock, was immediately exercisable and will expire three (3) years from the date of issuance.
However, management is subject to Section 404(a) of the Sarbanes-Oxley Act of 2002 and is required to report annually on effectiveness of our internal control over financial reporting.
However, management is subject to Section 404(a) of the Sarbanes-Oxley Act of 2002 and is required to report annually on effectiveness of our internal control over financial reporting. RECENT ACCOUNTING PRONOUNCEMENTS In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures .
There is no established trading market for the Series J Convertible Preferred Stock or the Warrants and we do not expect a market to develop. In addition, we do not intend to list the Series J Convertible Preferred Stock or the Warrants on The Nasdaq Capital Market or any other national securities exchange or any other nationally recognized trading system.
There is no established trading market for the Series J Convertible Preferred Stock or the October 2023 Warrants and we do not expect a market to develop.
As the Company expects to continue incurring losses in the foreseeable future, the undiscounted cash flow step was therefore bypassed, and the Company proceeded to measure fair value of the asset group. The Company has determined the fair value of the asset group using its market capitalization determined with level 1 fair value inputs.
The Company has concluded that its cash flows from the various long-lived assets are highly interrelated and, as a result, the Company consists of a single asset group. As the Company expects to continue incurring losses in the foreseeable future, the undiscounted cash flow step was therefore bypassed, and the Company proceeded to measure fair value of the asset group.
The gross proceeds to the Company from the October 17, 2023, Offering were $2.25 million. Net proceeds were approximately $1.5 million after deducting placement agent fees and commissions and Offering expenses payable by the Company. The Company used the net proceeds from the Offering for working capital and for general corporate purposes.
After deducting placement agent fees and other offering expenses payable by the Company, net proceeds were approximately $1.5 million. The Company used the net proceeds from the offering for working capital and for general corporate purposes. On August 23, 2024, the Company entered into a placement agency agreement with Ladenburg Thalmann & Co. Inc.
There have been no impairment losses recognized for the years ended December 31, 2023, or December 31, 2022. Going Concern Our Consolidated financial statements have been prepared and presented on a basis assuming we continue as a going concern.
Going Concern Our consolidated financial statements have been prepared and presented on a basis assuming we continue as a going concern. During the years ended December 31, 2024 and 2023, we incurred losses from operations and net cash outflows from operating activities as disclosed in the consolidated statements of operations and cash flows, respectively.
I n March 2023, the Company filed a Prospectus Supplement to its Registration Statement on Form S-3 with the SEC in connection with a proposed At-the-Market Securities offering (the “At-the-Market Program”). During 2023, the Company issued 657,333 shares of common stock under the At-the-Market Program for gross proceeds of approximately $2.3 million.
All common stock share amounts reflected herein have been adjusted to give effect to the June 2024 reverse stock split. I n March 2023, the Company filed a Prospectus Supplement to its Registration Statement on Form S-3 with the SEC in connection with a proposed At-the-Market Securities offering (the “At-the-Market Program”).
Loss per Share Basic loss per share is computed based on the net loss for each period divided by the weighted average number of common shares outstanding.
Loss per Share Basic loss per share is computed based on the net loss for each period divided by the weighted average number of common shares outstanding. For the year ended December 31, 2024, a net gain of $541,000 was included as a deemed dividend from the Series J Convertible Preferred Stock.
Assets to be disposed of are carried at the lower of their carrying value or fair value less costs to sell.
Assets to be disposed of are carried at the lower of their carrying value or fair value less costs to sell. Considerable management judgment is necessary to estimate the fair value of assets or asset groups, and accordingly, actual results could vary significantly from such estimates.
In a concurrent private placement, we agreed to issue to the investors in the registered direct offering warrants to purchase up to 1,387 shares of the Company’s common stock. See Note 4 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
See Note 2 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. 46 Table of Contents Accounting for Warrants We have issued and may continue to issue warrants to purchase shares of common and convertible preferred stock through our public and private offerings.
In a concurrent private placement, we agreed to issue to the investors in the registered direct offering warrants to purchase up to 600 shares of the Company’s common stock. The warrants were exercisable immediately and will expire five and a half years from the date of issuance.
In addition, in a concurrent private placement, the Company issued the investors warrants to purchase up to 938,680 shares of common stock. The warrants have an exercise price of $3.99 per share, will be exercisable immediately following the date of issuance and have a term of five years from the date of issuance.
Sales during the twelve months ended December 31, 2023, increased over the prior year due to higher circuit sales, service-related revenue, and International sales partially offset by a decrease in console sales.
Sales during the twelve months ended December 31, 2024 are 1.4% below sales from the prior year, which is attributable to a decrease in console sales and International sales partially offset by a 7% increase in circuit sales and a one-time increase in SeaStar Medical Quelimmune sales.
Net proceeds totaled approximately $2.1 million after deducting the underwriting discounts and commissions and other costs associated with the offering.
During 2023, the Company issued 18,781 shares of common stock under the At-the-Market Program for gross proceeds of approximately $2.3 million. Net proceeds totaled approximately $2.1 million after deducting the underwriting discounts and commissions and other costs associated with the offering. The Company terminated its At-the-Market Program in July of 2024.
The lease contains provisions for annual inflationary adjustments. Rent expense is being recorded on a straight-line basis over the term of the lease.
The lease contains provisions for annual inflationary adjustments. Rent expense is being recorded on a straight-line basis over the term of the lease. The Company also entered into two finance leases in 2020 for computer hardware and audio-visual equipment with monthly payments of approximately $2,400 due through August 2023.
During the years ended December 31, 2023, and 2022, we incurred losses from operations and net cash outflows from operating activities as disclosed in the consolidated statements of operations and cash flows, respectively. As of December 31, 2023, we had an accumulated deficit of $287.6 million and we expect to incur losses for the foreseeable future.
As of December 31, 2024, we had an accumulated deficit of $298.8 million and we expect to incur losses for the foreseeable future.
Selling, General and Administrative The decrease in selling, general and administrative expense primarily reflects decreased headcount and compensation related expenses during the year. Research and Development The increase in R&D expense over the prior year was primarily driven by spending related to ongoing development of our pediatric continuous renal replacement therapy device.
Research and Development The decrease in R&D expense versus the prior year was primarily driven by reduced consulting fees and compensation-related expenses.
Therefore, the Company evaluates its long-lived assets for potential impairment at each reporting period. The Company has concluded that its cash flows from the various long-lived assets are highly interrelated and, as a result, the Company consists of a single asset group.
The Company continues to report operating losses and negative cash flows from operations, both of which it considers to be indicators of potential impairment. Therefore, the Company evaluates its long-lived assets for potential impairment at each reporting period.
In a concurrent private placement, we agreed to issue to the investors in the registered direct offering warrants to purchase up to 855 shares of the Company’s common stock. The warrants were exercisable immediately and expire five and a half years from the date of issuance.
In a concurrent private placement the Company also agreed to sell and issue to the Purchasers, warrants to purchase up to 483,351 shares of the Company’s common stock The common warrants have an exercise price of $1.72 per share, were immediately exercisable and expire on the fifth anniversary on the effective date of the registration statement to be filed for the purpose of registering the shares of the Company’s common stock underlying the common warrants.
Cash Flows from Financing Activities Net cash provided by financing activities was $3.7 million and $9.4 million in 2023 and 2022, respectively. The cash provided from financing activities in both years was the result of proceeds received from the Company’s underwritten public offerings of equity securities. In 2023, the Company also participated in an “At-the-Market Program” resulting in additional proceeds.
Cash Flows from Financing Activities Net cash provided by financing activities was $11.0 million and $3.7 million in 2024 and 2023, respectively.
Removed
Prior to July 2016, we were focused on developing the C-Pulse System for treatment of Class III and ambulatory Class IV heart failure. In August 2016, we acquired the Aquadex Business from a subsidiary of Baxter, a global leader in the hospital products and dialysis markets.
Added
Recent Developments Executive Transition On February 23, 2025, Nestor Jaramillo, Jr., the President and Chief Executive Officer of the Company, retired from the Company and John Erb was appointed as the Company’s interim President and Chief Executive Officer. In connection with the appointment of John Erb as interim President and Chief Executive Officer of the Company, the Company and Mr.
Removed
In September 2016, we announced a strategic refocus of our strategy that included halting all clinical evaluations of the C-Pulse System related technology to fully focus our resources on our recently acquired Aquadex Business.
Added
Erb entered into an employment letter agreement concerning Mr. Erb’s services which provides that Mr. Erb will receive an annual salary of $300,000.
Removed
On May 23, 2017, we announced that we were changing our name from Sunshine Heart, Inc. to CHF Solutions, Inc. to more appropriately reflect the direction of our business.
Added
Subsequently, on May 23, 2024, we received a letter from the Listing Qualifications Staff (the “Staff”) informing the Company that it was not in compliance with the minimum stockholders’ equity requirement for continued listing on Nasdaq, under Listing Rule 5550(b)(1) (the “Stockholder’s Equity Requirement”), because the Company’s stockholders’ equity of $885,000, as reported in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2024, was below the required minimum of $2.5 million, and because, as of May 23, 2024, the Company did not meet the alternative compliance standards, relating to the market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years.
Removed
On April 27, 2021, the Company announced that it was changing its name from CHF Solutions, Inc. to Nuwellis, Inc. to reflect the expansion of its customer base from treating fluid imbalance resulting from congestive heart failure to also include critical care and pediatrics applications.
Added
As a result, on June 5, 2024, we received a letter from Nasdaq indicating the Company’s continued non-compliance with Nasdaq Marketplace Rule 5550(a)(2) (the “Letter”). The Letter further informed the Company that the Common Stock would be delisted from Nasdaq unless the Company appeals the Staff's delisting determination by requesting a hearing before the Nasdaq Hearings Panel (the “Panel”).
Removed
Impact of COVID-19 Pandemic During the years ended December 31, 2021 and 2020, we were subject to challenging social and economic conditions created as a result of the outbreak of the novel strain of coronavirus, SARS-CoV-2.
Added
The Company's requested a hearing to request additional time to meet the Stockholder Equity Requirement which stayed any further delisting action by the Staff pending the ultimate outcome of the hearing.
Removed
The resulting impact of the COVID-19 pandemic created disruptions in our operations resulting from rapid and evolving changes implemented to keep our customers, their patients, and our employees safe.
Added
The Common Stock will remain listed and eligible for trading on Nasdaq at least pending the ultimate conclusion of the hearing process. 45 Table of Contents On June 27, 2024, we effected a 1-for-35 reverse stock split of our outstanding Common Stock.
Removed
These changes included restrictions on hospital access imposed on our field employees by customers dealing in the front lines of COVID-19 and managing the spread of the virus, changes to employees work practices by requiring employees to work remotely and increased protocols to ensure the safety of those employees that remained on site.
Added
Additionally, in 2020, the SEC approved a Nasdaq rule change to expedite delisting of securities of companies that have had one or more reverse stock splits with a cumulative ratio of one for 250 or more shares over the prior two-year period.
Removed
The ongoing impact of the COVID-19 outbreak on our operational and financial performance has diminished, but we may still experience downstream effects that will depend on certain future developments, including the ongoing impact on our customers, hospital capital budget constraints, nursing staff shortages, hospital access restrictions imposed on our field employees, and effects on our vendors, all of which remain uncertain and cannot be predicted. 36 Table of Contents We may experience curtailed customer demand or constrained supply that could materially adversely impact our business, results of operations and overall financial performance in future periods.
Added
Under the new rules, if a company falls out of compliance with the $1.00 minimum bid price after completing reverse stock splits over the immediately preceding two years that cumulatively result in a ratio one for 250 shares, the company will not be able to avail itself of any compliance periods and Nasdaq will instead require the issuance of a Staff delisting determination, which is appealable to a hearings panel.
Removed
Specifically, we may experience negative impacts from changes in how we conduct business due to the COVID-19 pandemic, including but not limited to restrictions on travel and in-person meetings, production delays, warehouses and staffing disruptions and shortages, decreases or delays in customer demand and spending, difficulties or changes to our sales process and customer support.
Added
Our ability to remain listed on Nasdaq may be negatively impacted by this Nasdaq rule.
Removed
Several hospitals in the U.S. initially included the Aquadex System into their treatment protocol for fluid management of COVID-19, especially when dialysis equipment and staff were limited, but treatment regimens subsequently evolved so that the need to restore fluid balance became less prevalent.
Added
On July 18, 2024, the Company received a letter from the Staff informing the Company that it had regained compliance with the Minimum Bid Price Requirement, but that because it was still non-compliant with the Stockholder’s Equity Requirement the hearing would continue as scheduled as to the matter of the Stockholder’s Equity Requirement.
Removed
However, we also experienced changes to our sales practices due to restrictions on hospital access and believe that revenue in other areas was negatively impacted by these restrictions. In addition, the disruption created by COVID-19 created significant uncertainty about our ability to access the capital markets in future periods.
Added
On July 23, 2024, the Company addressed the Panel and presented its plan of compliance for the Stockholder’s Equity Requirement to the Panel and on August 8, 2024, the Company was notified by Nasdaq that the Panel had granted the Company’s request for continued listing, subject to, among other things, the Company’s filing of its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, evidencing compliance with the Stockholder’s Equity Requirement.
Removed
As of the filing date of this Form 10-K, the extent to which COVID-19 may continue to impact our financial condition or results of operations or guidance is uncertain and cannot be reasonably estimated but could be material and last for an extended period of time.
Added
On November 12, 2024, we filed our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 evidencing compliance with the Stockholder’s Equity Requirement. On December 17, 2024 we received a letter from the Staff indicating that the Company regained compliance with the Stockholder’s Equity Requirement, as required by the Panel.
Removed
The effect of the COVID-19 pandemic may not be fully reflected in our results of operations and overall financial performance until future periods. See Part 1, Item 1A “Risk Factors” in this Annual Report on Form 10-K.
Added
The letter also indicated that pursuant to Nasdaq Listing Rule 5815(d)(4)(B), the Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of the letter.
Removed
The Units, the shares of Series J Convertible Preferred Stock, the Warrants, the PIK Dividend Shares, the PIK Conversion Shares as well as the shares of Series J Convertible Preferred Stock issuable upon exercise of the Warrants and the shares of the Company’s common stock, par value $0.0001 per share, issuable upon conversion of the Series J Convertible Preferred Stock, were offered and sold by the Company pursuant to an effective registration statement on Form S-1, as amended (File No. 333-274610), which was initially filed with the SEC on September 21, 2023, as amended on September 29, 2023, and declared effective by the SEC on September 29, 2023 with an additional registration statement on Form S-1 filed on October 6, 2023 pursuant to Rule 462(c).
Added
If, within that one-year monitoring period, the Staff finds the Company out of compliance with the Stockholder’s Equity Requirement, the Company will not be permitted to provide the Staff with a plan of compliance with respect to the deficiency and the Staff will not be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the Company be afforded an applicable cure or compliance period; instead, the Staff will issue a delisting letter and the Company will have the opportunity to request a new hearing, where the Company’s securities may be at that time subject to delisting.
Removed
A final prospectus relating to the Offering was filed with the SEC on October 13, 2023. The closing of the October 2023 Offering contemplated by the Placement Agency Agreement occurred on October 17, 2023.
Added
We continue to actively monitor our performance with respect to the listing standards and will consider available options to resolve any deficiency and maintain compliance with the Nasdaq rules.
Removed
If at any time before June 4, 2024, the closing bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive trading days (which number days may be extended by Nasdaq), Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement, and the matter would be resolved.
Added
There can be no assurance that we will be able to maintain compliance or, if we fall out of compliance, regain compliance with any deficiency, or if we implement an option that regains our compliance, maintain compliance thereafter.

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