Good morning, and welcome to the Nuwellis Fourth Quarter And Full Year 2022 Earnings Conference Call. All participants will be in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. Now I'd like to turn the call over to Ms. Vivian Cervantes, Investor Relations. Please go ahead.
Thank you, operator. Hi, everyone. Thank you for joining us on today's conference call to discuss Nuwellis' corporate developments and financial results for the fourth quarter and full year ended December 31, 2022. In addition to myself, with us today are Nestor Jaramillo, Nuwellis' President and CEO, and Lynn Blake, CFO. At 8:00 A.M. Eastern today, Nuwellis released financial results for the quarter and year ended December 31, 2022. If you have not received Nuwellis' earnings release please visit the investors page on the company's website. During this conference call, the company will be making forward-looking statements. All forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends, as well as our estimated results or performance, are forward-looking statements.
All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties and could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon current available information, and the company assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to the cautionary statements and discussion of risk in the company's filings with the SEC, including the latest 10-K and subsequent reports. With that, I now would like to turn the call over to Nestor.
Thank you, Vivian. Good morning, everyone. Welcome to Nuwellis fourth quarter 2022 earnings conference call. On today's call, I will provide an overview of our fourth quarter and full year performance and give an update on our strategic initiatives. Our Chief Financial Officer, Lynn Blake, will then provide detailed financial results before opening the call for questions, followed by my closing remarks. 2022 proved to be a year of growth for Nuwellis, with 42% year-over-year revenue growth in the fourth quarter, a revenue increase of 13% sequential, and an 8% revenue growth for the full year. Revenue growth in the quarter was led by our pediatric segment, which increased 92% year-over-year. This was followed by 47% growth in our heart failure segment and 24% growth in our critical care segment.
Our momentum continues to be fueled by the execution of two key growth strategies that we have mentioned in the past. First, our expansion in the field organization, especially with our Clinical Education Specialists or CESs. Our CESs played an important role supporting our account managers within the inpatient and outpatient facilities, and I will provide more detail later in the call. The second initiative that fueled our momentum in Q4 is the growing body of clinical evidence in the last seven months supporting the use of the Aquadex in all the three segments of our business. I'd now like to turn to the business update on our key strategic initiatives, starting with growing our clinical body of evidence. A key area for us and investment at Nuwellis is having a robust clinical evidence.
In doing so, we have more leverage to change practice guidelines towards making Aquadex the standard of care for fluid overload and further driving clinical adoption. We are pleased to be able to announce many new publications, poster presentations at medical conferences, and peer-reviewed data further reinforcing Nuwellis technology in cardiac surgery, heart failure, and pediatrics throughout 2022 and thus far in 2023. As previously mentioned, cardiac surgery, we had two peer-review publications. On August 31st, we announced the publication of a new peer review clinical data demonstrating 100% survival at 30 days following the use of ultrafiltration in high-risk postoperative coronary artery bypass grafting or CABG patients.
In January of this year, The Annals of Thoracic Surgery, the authors commented on a turnkey order set or hospital protocol for cardiac surgery-associated acute kidney injury that included a recommendation to use ultrafiltration for post-cardiac surgery patients that are unresponsive to diuretics. These recommendations validate our Aquadex therapy to improve outcomes post cardiac surgery and is supportive of our goal to leverage our body of clinical evidence to change practice guidelines for ultrafiltration. In the heart failure segment, we highlighted the multicenter controlled randomized clinical trial called AVOID-HF that was analyzed under the newly favored statistical analysis called win ratio. This new analysis, presented at the 2022 Heart Failure Society of America scientific meeting, showed the strong benefit of ultrafiltration over diuretics in reducing cardiovascular mortality and heart failure events at 30 and 90 days in fluid overload heart failure patients who are unresponsive to diuretics.
In addition, in the fourth quarter, we announced a peer-reviewed publication of a single-center, 10-year, real-world, retrospective study of 355 consecutive patients supporting lower heart failure hospitalizations and readmissions in a year after using the Aquadex. The data demonstrated 81% lower heart failure hospitalizations per year and a 48% decrease in rehospitalizations from the national average of 30 days. We are now actively leveraging this data to educate providers and facilities of the economic benefit and cost savings Nuwellis can provide with the use of the Aquadex system in both inpatient and outpatient settings, as well as the improved quality of life in patients. We also continue to make progress on our pivotal REVERSE-HF trial.
As a reminder, the primary effectiveness endpoint of REVERSE-HF will evaluate mortality and heart failure events within 30 and 90 days as a comparison between Aquadex therapy and intravenous loop diuretics. To date, we have activated nine clinical study sites, and we are on track to achieve our Q1 2023 milestone of 12 sites enrolled by the end of the first quarter. We expect to present the results of this study to the medical societies responsible for establishing medical guidelines. Further, in pediatrics, the fastest-growing segment of our business, we announced peer-reviewed data demonstrating 71% survival in kidney replacement therapy using Aquadex in low birth weight preterm neonates. Finally, completing our clinical program, I would like to extend my warm welcome to Dr. John Jefferies, our new Chief Medical Officer.
John Jefferies brings with him over two decades of cardiology and heart failure expertise, both adult and pediatric patients, we are excited to have him in our team as we continue to build our clinical body of evidence. Our second strategic initiative involves the targeted expansion of our commercial footprint to drive penetration. This includes both expansion of our commercial team and of installed base of active accounts. As of the end of Q4, we are pleased to be able to say that we have now filled all open sales leadership, account management, and clinical education positions. As previously noted, our clinical education specialists, or CESs, all of whom are trained nurses, directly partner with the patient's care team on the optimal use of our ultrafiltration system.
They facilitate not only successful patient outcomes but also support increased use of our therapy across multiple specialty units in a hospital, in addition to helping drive adoptions at new targeted facilities. The razor in our razor blade model increased more than 6x in the fourth quarter compared to the year-ago period and increased 44% in 2022 versus prior year, with focused expansion in key geographic locations and high-volume centers. We achieved record U.S. console sales in Q4 with 20 consoles sold. To date, we have established a strong foot in the East Coast and in the U.S. Turning now to our third strategic initiative of targeting outpatient clinics treating heart failure patients.
Through our research, we have found many real-world case studies that suggest the current standard of care for managing fluid overload in heart failure patients is extremely costly for both patients and hospitals due to higher costs of care and high hospital readmission rates. According to the data, it costs over $24,000 per patient per encounter to treat a heart failure patient hospitalized for average of eight days, in addition to the unreimbursed cost of hospital readmission within 30 days. As mentioned before, we now have the clinical evidence demonstrating that Aquadex reduces heart failure hospitalizations by 81% and lower heart failure readmission rates by over 50%, thereby decreasing both the total cost of care and unreimbursed cost of the hospitalizations.
Another major milestone of Nuwellis in 2022 was the assignment by the American Medical Association of a new dedicated category three CPT code for therapeutic ultrafiltration. We have been leveraging this code in our conversations to reactivate outpatient clinics who had previously been using Aquadex, later discontinued use due to the lack of reimbursement. We continue to believe that there is a line of sight toward our goal of achieving a category one CPT code in two to three years, which will allow Nuwellis to further leverage the benefit of Aquadex for providers and facilities alike. Turning now to our fourth strategic initiative, which is on the product development front, as well as the strategic partnerships. I will begin with an update on our recent announced exclusive U.S. licensing and distribution agreement for SeaStar Medical's Selective Cytopheretic Device or SCD for preventing pediatric acute kidney injury.
Clinical studies have demonstrated that SCD's potential to eliminate dialysis dependency, shorten ICU time, and restore the lives of critical ill pediatric patients. This agreement further reinforces our previously communicated decision to focus on the pediatric segment and also further expand our product portfolio enabling us to save more lives in this underserved patient population. SeaStar Medical expects the FDA to complete its review of a humanitarian device exemption or HDE for the use of its SCD in children in the first half of this year. We look forward to keeping you updated on the progress in the coming weeks and months. On the product development front, we are on track with progress on our pediatric continuous renal replacement therapy device and continue to anticipate IDE submission by early 2024.
Early feedback from physicians and pediatric nephrologists in particular, have been enthusiastic, noting how our technology uniquely addresses the unmet needs of this patient population and could potentially be a game changer in pediatric treatment. In conclusion, I want to reiterate how excited I am for the future of Nuwellis. Our goal of making Aquadex therapy the standard of care for restoring fluid balance remains intact. We believe we are approaching an inflection point towards reaching this goal. The work that we did in 2022 advanced us down this path, and I look forward to continue a strong execution in 2023 and beyond. Now, I would like to turn the call over to our Chief Financial Officer, Lynn Blake, to discuss our Q4 and full year 2022 results.
Thank you, Nestor, and good morning, everyone. Since joining Nuwellis last October, I continue to be increasingly excited about this company's future. Our Q4 revenue growth of 42% is a tribute to the success of our commercial team expansion, advancements in our clinical evidence development, and our tenacity in increasing market awareness of treatment options for patients with fluid overload. Turning to the Q4 financial results. Revenue for the fourth quarter was $2.3 million, representing 42% year-over-year growth and a 13% sequential increase from the third quarter of 2022. Our pediatrics product segment once again had the strongest growth in the quarter, with a 92% increase year-over-year. This was followed by 47% growth in our heart failure segment and 24% growth in critical care.
Gross margin for the quarter was 56.9% of sales, an increase of 250 basis points compared to gross margin of 54.4% in the prior year. This increase was primarily driven by increased sales volume in the quarter. Selling general and administrative expenses were $4.7 million in the fourth quarter. Compared to the fourth quarter of 2021, SG&A expenses increased by approximately $570,000 or 14%. Compared to the third quarter of 2022, SG&A expenses increased by approximately $413,000 or 10%, reflecting increased variable compensation expenses and professional fees in the fourth quarter. Fourth quarter research and development expense was $1.2 million, an increase of $70,000 or 6% relative to the fourth quarter of 2021.
Research and development costs increased $273,000 or 29%, all related to the planned development of our new pediatric dedicated device. Total operating expenses were $5.9 million in the quarter, an increase of approximately $640,000 compared to the fourth quarter of 2021. Total operating expenses for the full year were $21.9 million, a decrease of approximately $2.1 million or 9% year-over-year as we focused on conserving cash while at the same time funding our top strategic objectives. Our 2022 full year cash utilization decreased 15% year-over-year, reflecting continued expense vigilance.
The net loss in the fourth quarter was $1.9 million or a loss of $5 per share, compared to a net loss of $4.2 million or $41.09 per share for the same period in 2021. The current period net loss includes non-recurring other income of $2.6 million related to recognition and revaluation of the warrants issued in conjunction with our October financing. These loss per share amounts reflect the company's reverse stock split that was effective in December of 2022. Prior year earnings per share have been adjusted to reflect the impact of the reverse stock split as well. At December 31st, 2022, we had approximately 536,000 outstanding common shares.
On January fourth of this year, our stockholders approved a proposal allowing holders of the warrants issued in the October financing to exercise those warrants. To date, 99% of the warrants have now been exercised, substantially clearing our warrant overhangs and as a result, we currently have approximately 1.2 million shares of common stock outstanding. From a liquidity perspective, we ended the fourth quarter with $18.3 million in cash equivalents, and marketable securities, and we have no debt on the balance sheet. This concludes our prepared remarks. Operator, we would now like to open the call to questions.
Thank you. Begin the question and answer session. To ask a question, please press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble the roster. First question comes from Jeffrey Cohen, Ladenburg Thalmann. Please go ahead.
Hi, Nestor and Lynn. How are you?
How are you, Jeff?
Good morning, Jeff.
A few questions from Aaron. Firstly, can you talk about SeaStar's SCD for pediatric AKI? It sounds like their submission is in, and you would anticipate being able to commercialize their unit in 2023. Could you talk about timeline there, and could you talk about commercialization specific to your three channels?
Yes, Jeffrey Cohen, I'll be glad to answer that question. SeaStar Medical, they are applying for a humanitarian device extension. As you know, FDA can be unpredictable, but we expect that they will receive the HDE sometime in the first half of this year. The second part of your question was about the commercialization. We're gonna do that in a stage approach. We're gonna start with our key users of the FCD device, which happen to be many of them is our top users of Aquadex in PED APHERESIS. We see a very strong strategic fit there. We hope to be very successful once we can start commercializing the device.
Okay. Got it. Lynn, a financial question. You talked about 47% increase in, cardiac and 24 in critical care. What was the peds number?
Peds number was 92% for the fourth quarter year-over-year.
That's Q4 year-over-year. Okay. Got it.
Yeah.
Do you think you'll break that out next year or this year by segment?
You know, I think we'll continue to provide that color in our commentary. It's not official segment reporting from a financial standpoint, but that's how we think about our call points and our market size.
Got it.
Yes.
Okay. Okay. Got it. When you talk about the unit that you're working on, the pediatric sense, and you talk about IDE early 2024, what's left to do between now and submitting the IDE?
Well, two things. One, we need to complete the development, which is very far advanced. Also most important is test that the performance of the device from safety and efficacy, 100%. We wanna make sure that this product has the highest quality possible when we do the launch of this. We start the IDE study. The next step that we have, the immediate next step is our pre-submission to the FDA. This is basically a formality where we inform the FDA of what our plans are, and then we have a conversation directly with them to see what is their opinion about our plans.
Does the pre-sub meeting come earlier this year or later this year?
Early this year. We're very soon to do that pre-submission.
Got it. Lastly, Lynn, did you call out cash use, Q4 cash use?
I didn't call out the Q-four number, but it was in the range of $4 million, Jeff.
Got it. Okay. Perfect. That does it for us. Thanks for taking the questions.
Yeah. Thank you, Jeff.
Thank you. Next question will be from Anthony Vendetti of Maxim Group. Please go ahead.
Thank you. In terms of the console sales, how many were from new accounts versus existing accounts?
Mm-hmm. Good question, Anthony. We had about 60% were from existing accounts. The rest was in new accounts.
Okay, great. Obviously nice, really nice progress in the pediatric segment and, you know, the growth across the board. Can you talk about usage rates? I think you did give the. Did you give the % increase in the single-use consumable piece of that? If not, I may have missed it. If you can just repeat it.
Yeah, no, we did not give a breakdown of the consoles versus disposables. I hear what you're saying, Anthony. It is, it's something that we will be preparing for the future. I think it would be a good metric for you to understand our growth, especially as we increase the placement of consoles, which is our razor in our razor blade model.
Okay, great. I don't know if Dr. Jefferies is on, but, you know, I had spoken to him during my due diligence process. If he is on, can he speak to, you know, the benefits of Aquadex and then the ability to convince, you know, his peers in the benefits of using Aquadex, you know, in terms of increasing adoption?
Yes. He's not here with us right now, Anthony. Yes, that's one of the key roles that we have for him, is to be able to talk to his peers, as well as the medical societies that influence the guidelines.
Okay. Okay. You said, the expected timeline for the REVERSE-HF study. Can you just review that again?
Yes. We have our goal for this quarter, first quarter of 2023, is to have 12 sites activated. We are at nine right now. We have communicated in the past that we expect enrollment to be about two years, before we close the enrollment and start the statistical analysis.
Okay. The other three sites you expect by the end of March?
A precise number of sites? Yes, 12 sites.
Okay, great. About two years. Okay. Those are my questions. I'll hop back in the queue. Thanks.
Thank you.
Thank you. Again, if you have a question, please press star then one. Next question will be from Brooks O'Neil at Lake Street Capital Markets. Please go ahead.
Good morning, everyone. Really nice momentum in Q4. I'm just curious if you see any evidence of continuing momentum as we have entered into 2023.
Yes. In the past, we don't give guidelines, Brooks, as you know, but yeah, we're very confident that we're gonna have a good quarter in Q1.
I think the fact, you know, that Brooks, we've mentioned that we now have fully staffed and filled all key positions in the field. We have new RVP, critical CES positions starting the year, and we didn't start, you know, the quarter that way. It's a good start to the year from commercial team perspective as well.
Great. Great. you know, I just sit here in a little bit of amazement thinking about the reality that hospitals are penalized for readmissions, we know that CHF is one of the key areas in which readmissions are pretty common. just curious how you sense the customer base, doctors and hospitals view using Aquadex as a way to both provide superior care to patients and prevent readmissions. Is there any sense you have of growing awareness that this is a, you know, win-win-win situation for the hospital, for the doctors, for the patients, for everybody?
Right. Right. That's right, Brooks. We just finished our national sales meeting about two weeks ago. In that meeting, we did nothing but to train the sales organization on the economics of the cost of treating heart failure and the potential savings that we can provide hospitals and the healthcare system in terms of saving money due to the prevention of un-reimbursed readmissions within 30 days. In the past, we have not had the clinical evidence to prove and to show that indeed Aquadex can save, can reduce the number of hospitalizations and the readmission rate. Now that we have that information in the last seven months, now we can aggressively talk about what are the economics of the hospital. We have all that information because it's public information.
We know exactly the readmission rates by hospital, and we can provide an actual financial number showing the savings in number of dollars.
Pretty powerful. That's great. With a strong sales organization and all this information, I'm pretty excited about the outlook for you guys this year. Good luck.
Thank you.
I hope it plays out.
Thank you. We are as well, Brooks.
Thank you. This concludes the question and answer session. I'd like to turn the conference back over to Mr. Nestor Jaramillo for closing remarks.
Thank you, operator. I would like to conclude by thanking all of our stakeholders. Nuwellis' employees, stockholders, physicians, nurses, patients, and the healthcare workers in the field. Without your support, we would not been able to achieve key advances in transforming the lives of patients suffering from fluid overload. Thank you for your participation and support. Have a nice day.
Call is now concluded. Thank you for attending today's presentation. You may now disconnect.