Nephros, Inc., a water technology company providing filtration solutions to medical and commercial markets, reported financial results for the fourth quarter and fiscal year ended December 31, 2025. The company achieved record annual revenue of $18.8 million, representing a 33% increase from the previous year's $14.2 million. Fourth-quarter revenue reached $4.7 million, up 22% from $3.9 million in the same period of 2024.
For the full year, Nephros reported net income of $1.2 million, compared with $74,000 in 2024, marking the company's second consecutive year of positive net income. Adjusted EBITDA for the year was $1.6 million, a significant increase from $548,000 in 2024. Fourth-quarter net income was $62,000, compared with $349,000 during the same period in 2024, while adjusted EBITDA for the quarter was $131,000 versus $481,000 in the prior year period.
President and CEO Robert Banks described 2025 as transformational for Nephros, attributing the company's performance to execution of a strategy built around three growth pillars: Products, Service, and Education. The company's differentiated product portfolio drove meaningful revenue gains through expanded reorder rates, additional sales associates, and growth beyond traditional healthcare applications. Nephros also extended its long-term supply agreement with key partner Medica, ensuring continuity of supply and supporting sustained multi-year growth.
The company advanced its service offering through expansion of installation and replacement capabilities led by Alfred Vargas, Director of Service. This development has reduced barriers to adoption, strengthened customer relationships, and increased opportunities for recurring revenue. Additionally, Nephros launched the Nephros Water Institute, led by Brianne McGuire, Director of Business Development, establishing the company as an authority in waterborne pathogen mitigation and facility water safety. The Institute expands engagement with customers and industry stakeholders while supporting long-term demand for filtration, service, and compliance-driven solutions.
Financial performance details reveal that cost of goods sold for the year was $7.2 million, a 32% increase from $5.4 million in 2024. Gross margin remained at 62% for both years, though fourth-quarter gross margin was 58% compared with 64% in the same period of 2024. The company noted that margins eroded during the second half of fiscal 2025 primarily due to tariffs, with Nephros subject to a 15% tariff on goods imported from Italy since April 2025, reduced to 10% as of February 22, 2026. U.S. tariff policy remains unpredictable, creating uncertainty around potential future margin impacts.
Selling, general and administrative expenses increased 17% to $9 million for the year, primarily due to higher bonuses and sales commissions. Research and development expenses grew to $1.3 million from $0.9 million in 2024, reflecting increased headcount and bonuses. As of December 31, 2025, Nephros had cash and cash equivalents of approximately $5.4 million, compared to $3.8 million as of December 31, 2024, and remains debt free.
The company's financial results demonstrate the effectiveness of its integrated product, service, and education strategy in strengthening competitive position and providing a foundation for continued growth. For more information about Nephros, please visit https://nephros.com. The latest news and updates relating to the company are available at https://tinyurl.com/nephnewsroom.
Nephros will host a conference call to discuss financial results and provide a business overview. An audio archive of the call will be available on the Nephros Investor Relations page shortly after the call concludes.
