Nephros Q4 Net Income Drops 67% as Gross Margin Falls to 58%
Nephros reported Q4 2025 net income declined to $0.1 million from $0.3 million on margin pressures, with gross margins falling to 58% from 64% due to Italian tariffs now at 10%. R&D spend surged 57% while cash rose to $5.4 million and active customer sites expanded to over 1,680.
1. Q4 2025 Financial Performance
Nephros reported net income of $0.1 million in Q4 2025, down from $0.3 million a year earlier, driven by gross margin compression to 58% from 64% and a 57% surge in R&D expenses due to increased headcount and bonuses.
2. Tariff Effects and Cost Pressures
A 15% tariff on Italian imports since April 2025, only cut to 10% in February 2026, weighed on manufacturing costs and contributed directly to lower margins and elevated expense levels.
3. Strategic Growth and Liquidity
Nephros launched filtration products for ice machines and drinking fountains, expanded active customer sites to over 1,680, and ended 2025 debt-free with $5.4 million in cash, up from $3.8 million a year earlier.