New Ellis (NUWE) Q3 2025: Consumables Utilization Jumps 15% as U.S. Focus Sharpens
New Ellis delivered a sequential rebound in Q3, fueled by a 23% rise in consumables utilization and a sharp pivot to U.S. operations. Strategic exits from Europe and new product launches in critical care and outpatient heart failure therapy signal a tighter focus on scalable, high-margin segments. Margin pressure from earlier low production lingers, but manufacturing transition and R&D momentum position New Ellis for margin recovery and long-term growth in precision fluid management.
Summary
- U.S. Market Realignment: Exiting Europe and refocusing on U.S. core segments accelerates adoption and operational discipline.
- Consumables Surge: Higher utilization and new circuit launches drive recurring revenue and clinical traction.
- Margin Rebound Setup: Manufacturing transfer and cost actions set stage for margin improvement from 2026.
Performance Analysis
New Ellis posted a sequential revenue increase of 29% over Q2, reversing last quarter’s stabilization phase and marking a tangible shift toward growth. The revenue decline of 6% year-over-year was largely the result of one-time prior year Seastar Medical Quell Immune sales and the deliberate wind-down of international operations, rather than core U.S. business weakness. Consumables utilization—a recurring revenue driver representing disposable components used per therapy session—rose 15% year-over-year, and was the primary offset to lower hardware prices and international sales.
Gross margin contracted to 65.2% from 70% a year ago, pressured by underabsorption of fixed overhead from earlier low production. Operating expenses climbed 30% year-over-year, reflecting a rebuilt U.S. sales force and increased R&D spend on pediatric and quality initiatives. Operating loss widened to $2.7 million, but cash position remained stable at $3.1 million, bolstered by two equity raises. The company remains debt-free, providing flexibility for continued investment in U.S. growth engines.
- Recurring Revenue Mix: Consumables growth outpaced hardware, supporting a more predictable margin profile.
- Segment Divergence: Heart failure and critical care segments grew 41% and 15% respectively, while pediatrics lagged on lower console sales.
- Margin Drag: Overhead absorption issues and higher SG&A costs weighed on profitability, but are expected to ease with volume recovery and manufacturing transition.
Overall, the quarter marked a transition from stabilization to targeted growth, with operational and financial discipline supporting a sharper U.S. focus and improved recurring revenue fundamentals.
Executive Commentary
"Q3 was about progress, expanding adoption of Aquadex therapy, and advancing our leadership in precision fluid management across the cardiorenal continuum. Our growth is anchored in three areas, critical care, pediatrics, and heart failure, including hospital-based outpatient therapy, where our technology is driving real clinical and operational impact."
John Erb, Chairman and Chief Executive Officer
"Total revenue for the third quarter was $2.2 million, a 6% decrease from the third quarter of 2024, primarily due to one-time prior year Seastar Medical Quell Immune sales... These impacts were partially offset by a 15% year-over-year increase in consumables utilization."
Lynn Blake, Interim Head of Finance
Strategic Positioning
1. U.S. Market Focus and International Exit
New Ellis exited its European operations this quarter, sharpening its focus on the U.S. market where regulatory clarity, reimbursement, and hospital adoption are strongest. This realignment enables tighter capital deployment and accelerates commercialization in segments with proven demand, especially heart failure and critical care.
2. Recurring Revenue Through Consumables and Circuit Innovation
Consumables utilization is now the key revenue engine, with a 15% year-over-year increase signaling both higher therapy adoption and improved customer retention. The launch of the new 24-hour Aquadex circuit for outpatient use and a dual-lumen extended-length catheter expands the therapy’s reach, offering hospitals flexibility and patients improved comfort.
3. Pediatric Pipeline and R&D Investment
Pediatric innovation remains a long-term differentiator. The NIH-backed Vivian pediatric CRRT system, aimed at children 2.5 to 20 kg, advanced with new patent allowances and promising clinical data (92% survival in Aquadex-treated children). R&D spend rose to $603,000, reflecting continued investment in pipeline and quality systems to support future growth.
4. Manufacturing Optimization for Margin Recovery
The transition to KDI technology precision manufacturing is underway, expected to drive cost efficiencies and margin expansion starting in 2026. Gross margin headwinds from underabsorption are temporary, with management signaling improved scalability as volume recovers.
5. Capital Structure and Cash Flexibility
Two equity raises in 2025 strengthened the balance sheet, leaving New Ellis debt-free and positioned to fund U.S. growth initiatives through 2026. This capital discipline is critical as the company invests in sales force expansion and R&D while managing margin recovery.
Key Considerations
This quarter’s results highlight a strategic inflection point as New Ellis pivots from stabilization to targeted U.S. growth, leveraging its core strengths in consumables, clinical innovation, and operational discipline.
Key Considerations:
- Recurring Revenue Foundation: Consumables utilization growth underpins a shift to higher-margin, repeatable revenue streams.
- Segment Leadership: Heart failure and critical care are now the primary growth drivers, with outpatient therapy adoption gaining early traction via new CMS reimbursement.
- Pediatric Differentiation: Vivian pediatric system and new patents reinforce long-term pipeline value, though near-term revenue contribution remains limited.
- Margin Recovery Path: Manufacturing transition and volume normalization are essential to restore margins above the current 65% level.
- Capital Allocation Discipline: Cash position and lack of debt provide strategic flexibility to weather ongoing R&D and operating investments.
Risks
Margin recovery is contingent on successful manufacturing transition and sustained volume growth, with underabsorption and rising SG&A costs posing near-term headwinds. Pediatrics, while promising, remains a nascent contributor and could face regulatory or adoption delays. Execution risk is elevated as the company rebuilds its sales force and pivots to U.S.-centric growth, with competitive and reimbursement dynamics requiring close monitoring.
Forward Outlook
For Q4 2025, New Ellis management signaled:
- Continued focus on U.S. revenue growth and hospital adoption in critical care and heart failure
- Manufacturing transition progress, with cost efficiencies to materialize in 2026
For full-year 2025, management maintained a disciplined approach to capital deployment, supported by:
- Cash runway into 2026 and ongoing R&D investment in pediatric and quality systems
Management highlighted that clinical momentum in outpatient heart failure and critical care will anchor growth, while margin improvement depends on manufacturing scale and cost actions in the coming year.
- Outpatient therapy adoption is an early proof point for broader reimbursement-driven growth
- Manufacturing and operational discipline will be critical to restoring margin trajectory
Takeaways
New Ellis is executing a decisive U.S. pivot, with consumables-led growth and outpatient therapy adoption offsetting international and hardware headwinds. Margin pressures are temporary, with manufacturing transition and cost actions expected to underpin recovery. R&D investment in pediatric innovation provides a differentiated long-term pipeline, but near-term growth will depend on U.S. segment execution and operational discipline.
- Consumables and Outpatient Growth: Recurring revenue gains and new circuit launches are reshaping the business toward higher predictability and margin potential.
- Margin Recovery Hinges on Execution: Manufacturing transition and sales force rebuild are the two critical levers for restoring profitability in 2026.
- Watch Pediatric Pipeline and Segment Mix: Vivian’s clinical and regulatory progress, and the mix of heart failure versus critical care, will determine future upside and risk.
Conclusion
New Ellis’s Q3 marks a strategic inflection, with U.S. focus, consumables momentum, and capital discipline setting up for a margin rebound and sustainable growth. Execution on manufacturing and commercialization will determine whether the company can fully capture the value of its differentiated platform in 2026 and beyond.
Industry Read-Through
New Ellis’s pivot to recurring consumables revenue and U.S. market focus reflects a broader medtech trend: companies are prioritizing scalable, high-margin segments and divesting lower-return international operations. Hospitals’ demand for flexible, cost-effective fluid management solutions is growing, especially as outpatient reimbursement models expand. Pediatric pipeline investment and real-world clinical data (92% survival) signal an industry-wide push for differentiated, evidence-based innovation, but also highlight the long regulatory and adoption cycles for novel devices. Margin recovery via manufacturing optimization is a key read-through for smaller device firms navigating post-pandemic supply chain and cost volatility.