A revaluation of warrants and a change in reimbursement policy helped produce fourth-quarter profits and hope for future top-line growth for NeuroMetrix Inc. (NSDQ:NURO).
The Waltham, Mass.-based nerve conduction testing equipment maker posted net income of $363,231 for the three months ended Dec. 31, 2009, or 2 cents per share, compared with a net loss of $4.1 million, or 30 cents per share, during the fourth quarter of 2008. NeuroMetrix cited a $2.2 million revaluation of warrants for the swing into the black, connected with a financing move it made last September. The company won commitments from institutional investors to buy about $18.7 million worth of its stock — 8,816,521 shares and warrants to purchase up to 8,375,695 additional shares — in a private placement for $2.12 per share. Absent the revaluation, the company posted losses from operations of $1.9 million.
Top-line results for the quarter were less satisfactory. NeuroMetrix posted revenues of $6.2 million, down 13.3 percent compared with $7.2 million during Q4 2008.
For the full year, the company reported net losses of $11.9 million, or 71 cents per share, on revenues of $26.1 million, compared with net losses of $27.7 million, or $2.02 per share, on revenues of $31.1 million during 2008.
But the company’s outlook got a boost from a fourth-quarter move by the Centers for Medicare and Medicaid Services to publish a new reimbursement code covering nerve conduction studies performed with devices like NeuroMetrix’s flagship NC-stat system. The code “may streamline Medicare reimbursement for medically appropriate nerve conduction studies performed using the NC-stat System, and could also be a positive influence on reimbursement by commercial insurers,” according to a company press release.
President and CEO Shai Gozani said the new code should benefit NeuroMetrix over the long term, but because it’s lower than prior codes, over the short term it will mean changes to the company’s business model and “downward pressure on revenues and margins.”
That said, NeuroMetrix took steps to increase the number of doctors using its equipment and consumables. It reorganized its North American sales force into two groups, one focused on primary care, internal medicine, endocrinology and rheumatology practices and the other concentrated on neurology, physical medicine and rehabilitation and orthopedics practices.
Gozani said a range of factors, including reimbursement changes, lower patient visit rates and the healthcare reform debate, “make 2010 a difficult year to predict.” NeuroMetrix did not provide guidance for the first quarter or 2010.