Operator:
Good afternoon, ladies and gentlemen, and welcome to the Cytosorbents Fourth Quarter and 2025 Full Year Earnings Conference Call. [Operator Instructions] This call is being recorded on Wednesday, March 25, 2026. I would now like to turn the conference over to Pete Mariani, Chief Financial Officer. Please go ahead.

Peter Mariani:
Thank you, Vincent, and good afternoon, everyone. Welcome to CytoSorbents' Fourth Quarter and Full Year 2025 Conference Call. Joining me today is Dr. Phillip Chan, our Chief Executive Officer. Before I turn the call over to Phil, I'd like to remind listeners that during the call, management's prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements in response to your questions. Therefore, the company claims protection under the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today. The forward-looking statements we make may reflect our views and estimates as of today, March 25, 2026, and we assume no obligation to update these protections -- or projections in the future as market conditions change. We encourage investors to review the risks discussed in our annual report on Form 10-K filed with the SEC on March 31, 2025, and as updated on risks reported in our quarterly reports on Form 10-Q and in press releases and other communications to shareholders issued from time to time. During today's call, we will have an overview presentation covering the operating and financial highlights for the fourth quarter and full year 2025. Following the presentation, we will open the lines to analysts for questions. And now I'll turn the call over to Phil. Phil?

Phillip Chan:
Thanks, Pete. Before we begin, I'd like to point out our regulatory disclaimer on both CytoSorb and DrugSorb-ATR. Cytosorbents is built around a differentiated blood purification platform designed to remove toxins and harmful substances from the bloodstream in critically ill patients. Our business is anchored by a high-margin recurring revenue model where our disposable cartridges drive ongoing utilization and by a broad and growing clinical footprint with more than 300,000 treatments delivered globally across 70 countries. In addition, our DrugSorb-ATR program represents a significant pipeline opportunity with the potential to open the U.S. market and meaningfully expand our addressable opportunity. Taken together, this gives us both a strong foundation and meaningful upside. As I mentioned in the press release, 2025 was a transitional year for the company, during which we made measurable progress across four key priorities. We focused on driving sales growth, particularly outside of Germany, while taking the necessary steps to reposition Germany for long-term success. At the same time, we continue to build and leverage a growing body of clinical evidence to support broader adoption. We also advanced DrugSorb-ATR through the FDA regulatory process and strengthened our balance sheet while aligning our cost structure to support a path to cash flow breakeven. While the year was not without its challenges, we believe these actions have positioned us well heading into 2026. Turning to sales performance. Full year 2025 sales revenues increased 4% to $37.1 million, representing record core product sales. This growth was driven primarily by strong performance in our international markets, where direct sales outside of Germany increased 13% to $8.6 million and distributor sales grew 11.4% to $16.5 million. Together, these channels accounted for approximately 68% of total revenue, highlighting the increasing diversification of our business. This strength was partially offset by a 10% decline in Germany to $11.8 million, reflecting the near-term impact of our restructuring efforts. On the profitability side, we continue to see strong gross margins, reaching 71% for the full year and 74% in the fourth quarter, driven by manufacturing efficiencies. In Germany, our focus has been on building a more scalable and execution-driven commercial organization. We have strengthened leadership and accountability, implemented more structured sales planning and performance tracking, improved customer targeting and key account focus, enhanced training and development of the sales team and optimize the allocation of resources. At the same time, we are simplifying our message around a core clinical framework of treating the right patient at the right time with the right dose. Encouragingly, we are already seeing early signs of improvement in the first quarter of 2026 from our team in Germany, including increased engagement and pipeline activity, and we expect gradual and sustained improvement over the course of the year. Now turning to PuriFi. PuriFi is an important strategic initiative aimed at expanding access and utilization. It is a stand-alone hemoperfusion pump that allows CytoSorb therapy to be delivered without reliance on existing dialysis infrastructure. To date, we have placed more than 100 units globally. This system enables earlier intervention, particularly in patients who are not yet requiring continuous renal replacement therapy or dialysis and expands access in regions with limited dialysis infrastructure. Over time, we expect PuriFi to drive incremental disposable usage, improve adherence to optimal treatment protocols and strengthen our installed base. HotSwap is a newly launched innovation designed to simplify and accelerate cartridge exchanges. It addresses a real workflow challenge in the ICU by enabling faster and safer device changes, minimizing blood loss during exchanges and supporting more frequent cartridge changes, which may improve efficacy. Feedback from clinicians and nurses has been very strong, particularly following ISICEM, our conference last week. We see this as a practical innovation that enhances usability, supports better outcomes and ultimately drives adoption. Now turning to how we're leveraging new clinical data to drive adoption and sales growth. Clinical evidence continues to be a major driver of adoption. We're seeing a steady flow of peer-reviewed publications, increasing real-world validation and broadening applications across critical care. In Sepsis and Septic Shock, a multinational survey of more than 400 physicians, showed that over 75% are adopting blood purification with CytoSorb as one of the most commonly used modalities today. Across multiple studies, CytoSorb has been associated with significant reductions in inflammatory markers, reduced vasopressor requirements, improved organ function and signals towards improved survival. Importantly, treatment strategy matters, and our focus is on helping clinicians apply therapy more effectively using the framework of right patient at the right time with the right dose. We believe this is the key to driving consistent outcomes and ultimately, utilization and growth. At ISICEM or the International Symposium of Intensive Care and Emergency Medicine, one of the leading global critical care conferences in the world, we saw strong scientific engagement, high clinician interest and very positive feedback on both CytoSorb and our new innovations. You can see just some of the pictures that we -- our team took from our booth and from our symposium here on this page. This reinforces that we are increasingly becoming part of the clinical conversation in critical care. Now turning to obtaining marketing approval and opening the U.S. market for DrugSorb-ATR. As we've discussed in the past, DrugSorb-ATR addresses a clear and urgent unmet need. Patients on blood thinners such as ticagrelor or Brilinta who require urgent CABG surgery face either a high risk of bleeding or delays that can increase mortality. DrugSorb-ATR enables rapid intraoperative drug removal, which has the potential to improve both safety and outcomes. We estimate an initial market opportunity of more than $300 million, expanding to over $1 billion over time as indications broaden. In 2025, we made important progress with the FDA. While our initial De Novo submission was denied, the appeal outcome provided two critical positives. One, there were no concerns regarding device safety; and two, there was alignment that a new submission can focus only on the remaining open items. Following this, we held a formal pre-submission meeting in January of this year and are actively working with FDA to finalize the requirements. We believe this positions us for a more streamlined and targeted resubmission, and we'll provide timing guidance once those requirements are fully defined. Meanwhile, the STAR-T randomized controlled trial has now been published in a leading journal. In fact, the JTCVS is the leading cardiothoracic journal in the United States. The key takeaway is that DrugSorb-ATR was safe and reduces the severity of bleeding in high-risk CABG patients. This represents an important milestone supporting the clinical case for potential market authorization. In parallel, real-world data from the STAR Registry continues to build. Across studies, we are seeing low rates of severe bleeding, minimal need for reoperations and no device-related safety concerns. Importantly, these outcomes are being observed even in high-risk real-world settings, reinforcing the external validity of the data. At the same time, clinical adoption in Europe continues to expand and antithrombotic removal is increasingly becoming standard practice in leading centers. With that, let me turn it over to Pete to go over the financials in more depth. Pete?

Peter Mariani:
Thank you, Phil, and good afternoon, everyone. Today, I'll be reviewing the full year and fourth quarter 2025 financial performance and important updates that continue to strengthen our business and our outlook for 2026. Starting with our full year 2025 financial performance. Full year 2025 revenue was $37.1 million, up 4% compared to a year ago and flat on a constant currency basis. This growth was led by double-digit growth in two of our teams, including a 13% increase in direct international sales outside of Germany to $8.6 million, an 11.4% increase in distributor sales to $16.5 million. And together, these teams account for approximately 68% of our business. This was offset by the 10% reduction in Germany sales to $11.8 million, reflecting the near-term impact of our proactive restructuring of the German sales operation and the implementation of strategies that we -- are expected to drive more consistent and scalable growth in the future. As Phil noted, we are encouraged by the early signs of improvement in these initiatives and expect incremental improvements across the year. Gross margin was 71% for the year compared to 70% for 2024. Total operating expenses for the year were relatively flat at $41.2 million and included $2.5 million lower R&D spend as a result of lower clinical and other project spends, offset by $1.9 million increase in SG&A, primarily related to higher corporate spend in early '25 as well as spend related to the regulatory and commercial activities for DrugSorb-ATR in the U.S., also offset by lower noncash stock comp and royalty costs. Operating expenses also included a $500,000 restructuring charge taken in Q4 related to our workforce and cost reduction program. Operating loss for 2025 improved by 10% to $14.7 million compared to $16.5 million in 2024, reflecting higher revenue and improved gross margin. Adjusted net loss was $14.2 million or $0.23 per share compared to an adjusted net loss of $12.7 million or 23% share (sic) [ $0.23 per share ] in 2024. And adjusted EBITDA loss for 2025 improved by 9% to $10.5 million. Now turning to Q4 revenue. For Q4 '25, revenue was $9.2 million, an increase of 1% year-over-year and down 8% on a constant currency basis compared to a year ago. Gross margin for Q4 '25 improved to 74%, up from 71% in Q4 of '24 and reflecting improved operating efficiencies, which resulted in a $1.3 million sequential increase in inventory levels. Although higher inventory levels added to our cash burn in the quarter, the combination of improved operating efficiencies and higher inventory levels is allowing us to further reduce our anticipated production spend in 2026. Operating expenses were $11.4 million for the quarter compared to $10.1 million a year ago. The increase was led by a $500,000 restructuring charge taken in Q4 as a result of our workforce and cost reduction program as well as an increased cost related to the DrugSorb application-related expenses and other administrative costs unique to the quarter. The restructuring charge includes approximately $400,000 of cash-based severance-related charges and $100,000 of other noncash charges. Operating loss in Q4 was $4.6 million compared to $3.7 million in the prior year, and net loss improved to $5.5 million for the quarter or $0.09 per share compared to a net loss of $7.6 million or $0.14 per share in the prior year. Adjusted net loss for the quarter was $4.3 million or $0.07 per share compared to an adjusted net loss of $1.7 million or $0.03 per share in the prior year. And this prior-year amount includes a net income tax benefit accrual of $1.7 million, which we recorded in Q4 of '24 from the sale of our net operating loss and R&D credits. Adjusted EBITDA loss for the quarter was $3.2 million compared to an adjusted EBITDA loss of $2.4 million in the prior year. Our total cash, cash equivalents and restricted cash was $7.8 million on December 31 compared to $9.1 million at the end of September. The net increase of $1.3 million includes new debt proceeds received in November of $2.5 million, offset by net operating cash burn in the quarter of $3.8 million. However, this operating burn includes an increase in net working capital of approximately $1.9 million in Q4, including a $1.5 million increase in inventory and accounts receivable and a $400,000 increase in net other assets and liabilities. The impact of our workforce and cost reduction program has allowed us to lower our cash burn, and we continue to adjust and reduce our operating and production costs as we begin 2026. As a result, we expect operating cash burn to continue to decrease as these working capital dynamics normalize over the first half of the year and now expect to be operating cash flow breakeven in the second half of 2026. And we are pleased with the operating and structural improvements that are making -- that we are making across the company to drive improved execution at the top line and provide more rigorous ROI focus on our spend. We believe these improvements set us up nicely to continue driving growth across our core business, allow us to achieve cash flow breakeven in the second half of 2026 and continue to support our application for U.S. market approval of DrugSorb-ATR. And now I'll turn the call back over to Phil.

Phillip Chan:
Thanks, Pete. In closing, we are exiting 2025 with a growing and increasingly diversified core business, strengthening clinical evidence supporting adoption and early signs of a turnaround in Germany with a path forward for DrugSorb-ATR. At the same time, we have lowered our cost structure, strengthened our balance sheet and established a realistic path to cash flow breakeven in 2026. Looking ahead, our priorities continue to be to drive consistent revenue growth, to execute the Germany turnaround, to advance DrugSorb-ATR towards FDA market authorization and to achieve cash flow breakeven. We believe these steps position us to create meaningful long-term value. Now with that, we thank you for your attention, and we'll now open the line for questions. Operator?

Operator:
[Operator Instructions] Your first question comes from Michael Sarcone with Jefferies.

Michael Sarcone:
Just to start, again, on the FDA regulatory process and the submissions. Could you just help us think about how you're thinking of the time lines over the next few months? And what are kind of the guideposts we should be looking out for?

Phillip Chan:
Yes, Michael. Mike, thanks for the question. I think where we are right now is that we continue to be in interactive discussions with the FDA. And as I mentioned in my comments, we're trying to ensure that we're on the same page with FDA before we actually submit. We believe this will streamline the process and ensure that we're addressing FDA's concerns where necessary. So I think that we're currently in that process. And when we have some better visibility on the completion of those discussions, we'll let our shareholders know.

Michael Sarcone:
Got it. And just a follow-up there. I mean, I guess, how confident are you that you'll be able to get on the same page with the FDA around the concerns that need to be addressed? What's the risk where -- or what's the risk of you and the FDA not really coming to a consensus agreement there?

Phillip Chan:
Yes. I mean, I think that after the appeal decision last year that we had worked with FDA to try to define a regulatory path forward. And we believe that, that is still the regulatory path that we're going to be pursuing, but there are additional details around that, that we are working to define with FDA just to ensure that we're on the same page. So again, when we have some better visibility and clarity on finalizing those discussions, we'll let everyone know.

Michael Sarcone:
Got it. Okay. And then maybe just last one for me. It sounded like you're starting to see some early signs of improvement in the German markets. Maybe you can give us a little more color there on what you're seeing and how things are trending so far through the first quarter.

Phillip Chan:
Yes. I think that one of the key things that we tried to enact last year was, one, kind of a leadership change overall in the organization and a realignment of folks under that new reporting structure. Second thing is a much more proactive approach towards developing the market, relying less on opportunistic sales and really focused on methodical sales development that we believe will result in a much more predictable and -- predictable forward momentum in sales and visibility in sales. So we have a very strong program in place right now. It's taken a little longer than we had hoped to get off the ground, but I think that's the nature of the beast. But I think what we're very encouraged by is that the team has really pitched in here, embraced the things that we want to change, and I think they're seeing the benefits of that.

Operator:
Next question comes from the line of Tom Kerr with Zacks SCR.

Thomas Kerr:
A couple -- one really quick follow-up on that last Germany question. Last quarter, we gave -- or you guys gave a baseball analogy, you were in the middle innings of getting all that work done and showing results. Are we in the later innings of that now?

Phillip Chan:
Yes, we believe we are. I think that a lot of that organizational structure is in place right now such that we expect to see incremental improvement over time. Now it's not going to happen suddenly as there's still a lot of work to do. But I think a key issue in setting -- in putting this restructuring in place was to get it all implemented and executed upon, right? So that strategy and that plan is in place, and it's now about executing on that, and that's what we're focused on doing right now. And Q1 was a very nice show by the team.

Thomas Kerr:
All right. So the eighth inning. Okay. On the gross margin question, you said improved production spend in 2026, getting more efficient there. But does that mean the gross margins can improve from the solid 74%? Or do we look at 2026 as another just a 74%, 75% gross margin year?

Peter Mariani:
Well, we've been running low 70s, 70%, 71%. So we're going to be happy -- we had a great quarter in Q4. we'll be happy keeping it in the -- getting above 71%, 72%, 74% here consistently. That's what we're looking for. And so that's where we want to stay in the near term. Do we have opportunities to continue to go above that? Of course, we do. But that's going to be relevant on a couple of things, including increased volumes. So I think we're well positioned. The team has done a nice job. But I would think about it in that low 70% range for a while until we actually demonstrate something better than that.

Thomas Kerr:
Got it. And can you give a little more color on the PuriFi pump strategy? Or more in terms of -- is there a real revenue model there? Does that become a separate material product revenue source? Or how do we look at that?

Phillip Chan:
Well, I think as how we look at that business is very similar to the printer cartridge business, right, where you subsidize the cost of the machine in exchange for disposable revenue in the future. And the disposables here are CytoSorb outside of the United States and VetResQ inside the United States. And so right now, we're not looking at material contributions of the pump because we have many different ways that we're financing that pump through rentals, through subsidies and other things, through outright sales. But longer term, we expect that to begin to translate, particularly as we grow that blood purification infrastructure, particularly in distributor countries where they don't have that capability but want that capability. And we expect that to drive unit volume increases in our disposables like CytoSorb going forward. So it's an investment strategy for the company at the current moment with hopefully a much larger payout in the future.

Operator:
Your next question comes from Sean Lee with H.C. Wainwright.

Xun Lee:
My first one is on the pathway to breakeven. So with your commitment to get to operating breakeven by the second half of the year, beyond the head count reduction so far, what exactly has to happen before you guys can get there?

Peter Mariani:
Well, there's -- we put the head count reductions in place in Q4. We took other cost reduction initiatives in Q4 that will play out through the first quarter. Some of that stuff you don't turn off on a dime, right? So there's -- we're seeing reductions in those spend, like, for instance, Q1, we had some commitments that we would not have gotten out of, but we've got the ability to continue to reduce spend. And so this is an incremental piece for us. We've -- as we started the year, and I talked a little bit about our inventory levels being higher and our production efficiencies being higher, that -- when you put those in the model, it says you can really think about a lower production level in the first half of the year that continues to drive cash flow efficiencies and allow the inventory to get sold and turn into cash in the first half of the year and continue to manage the working capital through that time frame. So I think we're on a good path to get there. It -- take a little bit longer than what we initially thought, but I think we're going to be in a good place.

Xun Lee:
Great. That's very helpful. My last question is on the DrugSorb-ATR resubmission. So considering that this is the second go around with the FDA, what, I guess, derisking steps are you already taking with this new submission process such that we're much more likely to be getting a positive outcome this time?

Phillip Chan:
Yes. I think that we think about it very much the same way, Sean. We know that this is our second time out. We've actually -- this was a path suggested by FDA, but we obviously don't want another denial, right? And so we've been very cautious and conservative to make sure that we are well aligned with FDA that there are no surprises. And I think this is a bit of the ongoing discussions that we're having with FDA right now where we want to make sure that when we do submit, that we have everything that we need for FDA to make that decision in a positive way. So I think we appreciate our shareholders' patience with the process. We know we had talked about trying to submit at the end of March. But I think that we think it's more prudent, rather than to rush it, to try to drive more certainty in the process so that we don't get surprised like we were last year. So that's kind of where we are at the moment. And as I mentioned to Mike earlier, we will absolutely update folks as we get better clarity on the timing of this process.

Operator:
There are no further questions. Please continue.

Phillip Chan:
Okay. Great. Well, we thank everyone for their participation today, and thanks for joining us. If you have any additional questions, please contact us at ir@cytosorbents.com, and we look forward to the next update. Have a good evening, everybody. Good night.

Operator:
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.