NeuroMetrix, Inc. (NURO) Bundle
Understanding NeuroMetrix, Inc. (NURO) Revenue Streams
Understanding NeuroMetrix’s Revenue Streams
NeuroMetrix, Inc. generates revenue primarily from sales of its medical devices, specifically the DPNCheck and Quell products. For the nine months ended September 30, 2024, the company reported total revenues of $2,450,018, a decrease of 46.5% compared to $4,583,679 for the same period in 2023.
Breakdown of Primary Revenue Sources
- DPNCheck sales accounted for the majority of revenues, with significant contributions from the Medicare Advantage market.
- Quell sales provided a smaller offset to the revenue decline from DPNCheck.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate indicates a significant decline. In the third quarter of 2024, revenues were $587,314, down from $1,203,164 in the third quarter of 2023, representing a decrease of 51.2%.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution from DPNCheck was substantial, while Quell provided limited revenue support. The decline in DPNCheck sales was the primary reason for the overall revenue drop.
Analysis of Significant Changes in Revenue Streams
Key factors affecting revenue streams included:
- Adverse changes in CMS reimbursement policies affecting DPNCheck sales.
- International sales declines due to excess inventory issues at distribution partners.
| Period | Total Revenues | Revenue Change | DPNCheck Sales | Quell Sales |
|---|---|---|---|---|
| Q3 2024 | $587,314 | -51.2% | Majority | Minor |
| Q3 2023 | $1,203,164 | N/A | Majority | Minor |
| 9M 2024 | $2,450,018 | -46.5% | Majority | Minor |
| 9M 2023 | $4,583,679 | N/A | Majority | Minor |
The substantial decrease in revenue reflects a critical challenge for the company, necessitating strategic adjustments to restore growth.
A Deep Dive into NeuroMetrix, Inc. (NURO) Profitability
A Deep Dive into NeuroMetrix, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $1,320,893, reflecting a gross margin of 53.9%. This is a decline from the gross profit of $3,099,439 and a margin of 67.6% for the same period in 2023, indicating a decrease of 13.7% percentage points year-over-year.
Operating Profit: The loss from operations for the nine months ended September 30, 2024 was ($6,824,694), compared to ($5,294,422) for the same period in 2023.
Net Profit Margin: The net loss for the nine months ended September 30, 2024 was ($6,025,732), which translates to a net loss per share of ($3.10). This represents an increase in net loss compared to ($4,879,940) or ($4.86) per share for the same period in 2023.
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024 with the same period in 2023, total revenues decreased by 46.5%, from $4,583,679 to $2,450,018. The gross profit also declined significantly by 57.4%.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the company's gross margin of 53.9% is below the industry average of approximately 60% for companies in the medical devices sector. The net loss margin indicates significant challenges compared to an average profit margin of about 10-15% in the industry.
Analysis of Operational Efficiency
Operating Expenses: Total operating expenses for the nine months ended September 30, 2024 were $8,145,587, down from $8,393,861 in 2023, reflecting a decrease of 3.0%. Notably, research and development expenses decreased by 26.1%, from $2,045,588 to $1,510,223.
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Gross Profit | $1,320,893 | $3,099,439 | -57.4% |
| Gross Margin | 53.9% | 67.6% | -13.7% |
| Operating Profit (Loss) | ($6,824,694) | ($5,294,422) | -28.9% |
| Net Profit (Loss) | ($6,025,732) | ($4,879,940) | -23.5% |
| Net Loss per Share | ($3.10) | ($4.86) | -36.2% |
The operational efficiency is further illustrated by a decrease in the inventory turnover ratio, which fell to 0.8 in 2024 from 1.0 in 2023. This indicates slower sales relative to inventory levels, impacting profitability metrics adversely.
Debt vs. Equity: How NeuroMetrix, Inc. (NURO) Finances Its Growth
Debt vs. Equity: How NeuroMetrix, Inc. Finances Its Growth
As of September 30, 2024, NeuroMetrix, Inc. reported a net debt position of $13,624,729, which indicates that the company has no term debt or borrowings. The total liabilities were recorded at $1,209,871.
The company's equity structure reveals a total stockholders' equity of $15,979,149. As of the same date, the total assets amounted to $17,189,020. The debt-to-equity ratio stands at 0.08, which is significantly lower than the industry average of around 0.5 to 1.0.
Overview of Debt Levels
NeuroMetrix maintains a conservative approach towards debt. As of the latest reporting period, the company held no long-term or short-term debt. The absence of debt indicates a reliance on equity financing for its capital needs.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio of 0.08 is notably lower than the industry average, which typically ranges from 0.5 to 1.0 for similar companies. This conservative leverage indicates a low risk profile and a strong equity base to support operations.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
NeuroMetrix has not engaged in any recent debt issuances or refinancing activities. The company’s financial strategy appears to focus on maintaining liquidity through equity financing rather than incurring debt.
Balancing Debt Financing and Equity Funding
The company has utilized equity financing significantly in recent quarters. For instance, during the first quarter of 2024, NeuroMetrix issued 458,380 shares under its at-the-market program, raising net proceeds of $1,471,099. This strategy allows the company to fund operations without the burdens of debt repayment.
| Financial Metric | Amount |
|---|---|
| Net Debt Position | $13,624,729 |
| Total Liabilities | $1,209,871 |
| Total Stockholders' Equity | $15,979,149 |
| Total Assets | $17,189,020 |
| Debt-to-Equity Ratio | 0.08 |
| Recent Equity Issuance | 458,380 shares |
| Net Proceeds from Equity Issuance | $1,471,099 |
Assessing NeuroMetrix, Inc. (NURO) Liquidity
Assessing NeuroMetrix, Inc.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, NeuroMetrix reported a current ratio of 13.9, a decrease from 16.4 in December 2023. The quick ratio was not specifically disclosed, but can be inferred to be similarly strong given the significant cash reserves.
Working Capital Trends
Working capital decreased to $15,585,819 as of September 30, 2024, compared to $19,445,277 in December 2023. This reflects a declining trend in liquidity amidst reduced revenues.
| Item | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Cash, Cash Equivalents & Marketable Securities | $14,834,600 | $17,997,151 |
| Working Capital | $15,585,819 | $19,613,803 |
| Current Ratio | 13.9 | 16.8 |
| Net Debt Position | ($13,624,729) | ($16,664,027) |
| Days Sales Outstanding | 32.9 | 35.6 |
| Inventory Turnover | 0.8 | 1.2 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows from different activities were as follows:
- Operating Activities: Net cash used was ($5,238,316), an increase from ($4,634,367) in 2023.
- Investing Activities: Net cash provided was $2,954,190, up from $1,058,354 in 2023.
- Financing Activities: Net cash provided was $1,473,700, compared to $701,546 in 2023.
| Cash Flow Type | 2024 | 2023 |
|---|---|---|
| Operating Activities | ($5,238,316) | ($4,634,367) |
| Investing Activities | $2,954,190 | $1,058,354 |
| Financing Activities | $1,473,700 | $701,546 |
Potential Liquidity Concerns or Strengths
The company maintains a robust liquidity position with significant cash reserves of $14.8 million as of September 30, 2024. However, the decrease in working capital and revenues indicates potential liquidity concerns moving forward. The negative net debt position of ($13,624,729) suggests no reliance on external debt financing, which is a strength in liquidity management.
Is NeuroMetrix, Inc. (NURO) Overvalued or Undervalued?
Valuation Analysis
To determine whether NeuroMetrix, Inc. is overvalued or undervalued, we will analyze the key valuation ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated by dividing the current market price per share by the earnings per share (EPS). As of September 30, 2024, the net loss was ($6,025,732), resulting in a net loss per share of ($3.10). Therefore, the P/E ratio cannot be computed due to negative earnings.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated as the market price per share divided by the book value per share. As of September 30, 2024, the total stockholders’ equity was $15,979,149 with 2,033,306 shares outstanding. Thus, the book value per share is:
Book Value per Share = Total Stockholders' Equity / Total Shares Outstanding
Book Value per Share = $15,979,149 / 2,033,306 = $7.86
If the market price per share is $2.00, then:
P/B Ratio = Market Price per Share / Book Value per Share
P/B Ratio = $2.00 / $7.86 = 0.25
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio compares the enterprise value to earnings before interest, taxes, depreciation, and amortization. Given that there was a net loss, EBITDA is also negative, making this ratio indeterminate.
Stock Price Trends
The stock price has experienced volatility over the last 12 months:
- 12-Month High: $5.50
- 12-Month Low: $1.90
- Current Price: $2.00
Dividend Yield and Payout Ratios
NeuroMetrix, Inc. does not pay dividends, resulting in a dividend yield of 0%.
Analyst Consensus on Stock Valuation
Analysts currently have a consensus rating of Hold for the stock, with recent evaluations indicating mixed sentiments based on the financial performance and strategic reviews being conducted.
| Valuation Metric | 2024 Value |
|---|---|
| P/E Ratio | N/A (Negative Earnings) |
| P/B Ratio | 0.25 |
| EV/EBITDA Ratio | N/A (Negative EBITDA) |
| 12-Month High | $5.50 |
| 12-Month Low | $1.90 |
| Current Stock Price | $2.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing NeuroMetrix, Inc. (NURO)
Key Risks Facing NeuroMetrix, Inc.
The financial health of NeuroMetrix, Inc. (NURO) is influenced by a variety of internal and external risk factors that investors should consider.
Overview of Internal and External Risks
NeuroMetrix faces significant competition in the healthcare technology sector, particularly in the development of medical devices for diagnosing neuropathy and managing pain. As of September 30, 2024, the company's revenues decreased by 46.5% to $2,450,018 compared to $4,583,679 in the same period in 2023. This decline is largely attributed to reduced sales of its DPNCheck product, which accounted for the majority of its revenues.
Regulatory Changes
Regulatory changes, particularly those pertaining to Medicare Advantage reimbursement policies, have negatively impacted sales. The Centers for Medicare & Medicaid Services (CMS) implemented changes that began in 2023 and are set to phase in over three years, affecting patient screening volumes.
Operational Risks
The company reported a net loss of $6,025,732 for the nine months ended September 30, 2024, compared to $4,879,940 in the same period of 2023, reflecting an increase in operational strain. The operational challenges are compounded by a reduction in headcount, which resulted in severance costs of approximately $580,000.
Financial Risks
As of September 30, 2024, the company had cash, cash equivalents, and marketable securities totaling $14,834,600, a decrease from $17,637,675 in the previous year. The current ratio stood at 13.9, indicating a robust liquidity position; however, the net debt position was ($13,624,729), reflecting a negative net debt situation.
Strategic Risks
The ongoing strategic review of the company includes exploring options for asset acquisition, potential sales, and strategic mergers. However, there is no assurance that these strategies will yield positive outcomes, adding a layer of uncertainty regarding future financial performance.
Mitigation Strategies
To address these risks, the company has initiated a review of its marketing strategies and operational efficiencies. It is also exploring potential mergers or acquisitions as part of its strategic options.
| Risk Category | Details | Financial Impact |
|---|---|---|
| Competition | Increased competition in healthcare technology sector | Revenue decreased by 46.5% |
| Regulatory Changes | Changes in CMS reimbursement policies | Reduced patient screening volume |
| Operational Risks | Net loss of $6,025,732 for 2024 | Increased operational strain |
| Financial Risks | Current ratio of 13.9 | Negative net debt position of ($13,624,729) |
| Strategic Risks | Review of strategic options including mergers | Uncertain future financial performance |
Future Growth Prospects for NeuroMetrix, Inc. (NURO)
Future Growth Prospects for NeuroMetrix, Inc. (NURO)
Analysis of Key Growth Drivers
The company is focusing on multiple avenues for growth, including product innovations, market expansions, and strategic partnerships.
- Product Innovations: The emphasis is on enhancing the Quell and DPNCheck products. The company aims to improve these offerings to better meet customer needs.
- Market Expansions: Plans to increase market penetration in the international markets, particularly Japan, where sales are expected to rebound in 2025.
- Strategic Partnerships: Engaging with healthcare providers to bolster product adoption and streamline reimbursement processes.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, revenues were reported at $2,450,018, a decrease of 46.5% compared to $4,583,679 in the same period in 2023. The net loss was $6,025,732, with a net loss per share of $3.10.
Projected earnings growth is contingent on overcoming recent declines in DPNCheck sales, which have been adversely affected by changes in Medicare reimbursement policies. However, the company anticipates a recovery in sales as market conditions stabilize.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has initiated a strategic review process to explore options for maximizing shareholder value, which includes:
- Potential mergers or acquisitions to enhance product offerings and market reach.
- Revising marketing strategies to better align with customer needs and improve sales performance.
- Collaboration with healthcare providers to increase the utilization of its products.
Competitive Advantages that Position the Company for Growth
The company holds several competitive advantages, including:
- Strong Liquidity Position: As of September 30, 2024, cash and cash equivalents totaled $14,834,600, providing a strong buffer for operational needs.
- Innovative Product Line: The DPNCheck and Quell products are at the forefront of neurodiagnostic technology, catering to a growing market for chronic pain management and neuropathy diagnostics.
- High Current Ratio: With a current ratio of 13.9, the company is well-positioned to meet short-term obligations.
| Key Financial Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Cash and Cash Equivalents | $14,834,600 | $17,997,151 |
| Working Capital | $15,585,819 | $19,613,803 |
| Net Loss | $6,025,732 | $4,879,940 |
| Net Loss Per Share | $3.10 | $4.86 |
| Current Ratio | 13.9 | 16.8 |
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Updated on 16 Nov 2024
Resources:
- NeuroMetrix, Inc. (NURO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of NeuroMetrix, Inc. (NURO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View NeuroMetrix, Inc. (NURO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.