First quarter sales plunged and net losses soared for NeuroMetrix Inc. (NSDQ:NURO), with CEO Shai Gozani saying it may be "several quarters" before the company begins to see results from changes forced by a reimbursement rate cut.
The Waltham, Mass.-based firm said revenues were off 45.6 percent for the three months ended March 31, falling to $3.7 million from $6.8 million during the same period last year. Net losses were $4.7 million, or 20 cents per share, compared with $1.2 million, or 9 cents per share, during Q1 2009.
NeuroMetrix cited a decision by the Centers for Medicare and Medicaid Services to cut the reimbursement rate for procedures like the nerve conduction studies its NC-stat system performs for the top-line slide. The new CMS code, which the company spun as a possible long-term positive in releasing its fourth-quarter results, forced the company to make drastic changes to its business model. It might "take several quarters to see meaningful trends emerge" from the changes, Gozani said in prepared remarks.
First-quarter gross margins were down to 64.1 percent, compared with 71.6 percent during the year-ago period. Internal decisions also played a role, including a new, uniform pricing scheme for the disposable electrodes lowered their average selling price by 12 percent. NeuroMetrix also discontinued a consumables discount program it ran during the fourth quarter, a decision it said contributed to lower consumables sales. And customers used 5.5 percent fewer electrodes per procedure during the quarter, while the number of active accounts slipped 4.1 percent to about 4,300.
The news wasn’t all bad during Q1 2010, however, as new system placements rose 15 percent and the number of procedures performed rose 2.5 percent, compared with Q4 2009.
The company also has some dry powder to burn in its fight back to fiscal health. NeuroMetrix locked down a $7.5 million loan in March to fund day-to-day operations and pulled in $18.7 million last September in a private placement.