NeuroMetrix, Inc. Reports Total Revenues of $10.1 Million for the Fourth Quarter of 2007, a Decrease of 29% from the Fourth Quarter of 2006; Net Loss of $2.1 Million Incurred in the Fourth Quarter of 2007

Business Wire, Feb 12, 2008

WALTHAM, Mass. -- NeuroMetrix, Inc. (Nasdaq: NURO), a medical device company advancing patient care through the development and marketing of innovative medical device products that aid physicians in the diagnosis and treatment of diseases of the nervous system and neurovascular disorders and provide regional anesthesia and pain control, announced today the financial results for the three-month and twelve-month periods ended December 31, 2007. Total revenues for the three months ended December 31, 2007, the Company's fourth quarter, were $10.1 million, compared with $14.2 million for the fourth quarter of 2006, representing a decline of 29%. During the three-month periods ended December 31, 2007 and 2006, 89% and 87% of revenues, respectively, were derived from biosensor sales, 8% and 13% of revenues, respectively, were derived from diagnostic device sales and 3% and 0% of revenues, respectively, were derived from DigiScope sales. Sales and marketing efforts for the DigiScope, a product used for the detection of retinal abnormalities including diabetic retinopathy, were launched in early 2007.

Total revenues for the twelve months ended December 31, 2007 were $44.6 million, compared with $55.2 million for the twelve months ended December 31, 2006, representing a decline of 19%. During the twelve months ended December 31, 2007 and 2006, 88% and 86% of revenues, respectively, were derived from biosensor sales, 10% and 14% of revenues, respectively, were derived from diagnostic device sales and 2% and 0% of revenues, respectively, were derived from DigiScope sales.

The gross margin percentage for the fourth quarter of 2007 was 71.8% of revenues, compared with 74.9% of revenues for the fourth quarter of 2006. In the fourth quarter of 2007, the gross margin percentage for biosensors was 73.1% of revenues, compared with 73.7% of revenues in the fourth quarter of 2006, due to lower sales volumes. The gross margin percentage for diagnostic devices was 70.6% of revenues for the fourth quarter of 2007, compared with 82.9% of revenues for the fourth quarter of 2006, due to lower average selling prices and lower volumes. Overall gross margins in the fourth quarter of 2007 were also adversely impacted by the gross margins on the DigiScope, which were 30.7%. We acquired substantially all of the assets of EyeTel Imaging, Inc., including all rights to the DigiScope, on December 26, 2007 for 1,050,295 shares of NeuroMetrix common stock, $175,000 in cash and the assumption of certain specified liabilities of less than $1.0 million. Prior to the acquisition, we had been selling the DigiScope in the primary diabetes care market under a sales and marketing license agreement with EyeTel. As a result of the acquisition, we expect that the gross margin on DigiScope revenues will increase in future quarters.

The gross margin percentage for the twelve months ended December 31, 2007 was 73.0% of revenues, compared with 75.5% of revenues for the twelve months ended December 31, 2006. For the twelve months ended December 31, 2007, the gross margin percentage for biosensors was 73.6% of revenues, compared with 74.4% of revenues for the same period in 2006, due to lower sales volumes. The gross margin percentage for diagnostic devices was 78.5% of revenues for the twelve months ended December 31, 2007, compared with 82.5% of revenues for the same period in 2006, due to lower average selling prices and lower sales volumes. Overall gross margins for the twelve months ended December 31, 2007 were also adversely impacted by the gross margins on the DigiScope, which were 24.2%.

The net loss for the fourth quarter of 2007 was approximately $2.1 million, compared with net income of approximately $1.0 million for the fourth quarter of 2006, including stock-based compensation expense of $764,000 and $653,000 for the fourth quarter of 2007 and 2006, respectively.

For the twelve months ended December 31, 2007, our general and administrative expenses increased approximately $3.0 million compared with the same period in 2006 as a result of professional services relating to the government investigations previously disclosed by the Company and also relating to reimbursement matters. These expenses were partially offset by the reversal of approximately $1.7 million in sales tax liability.

The net loss for the twelve month period ended December 31, 2007 was approximately $8.4 million, compared with net income of approximately $4.3 million for the same period in 2006, including stock-based compensation expense of approximately $3.1 million and approximately $2.7 million for the twelve months ended December 31, 2007 and 2006, respectively.

Basic and diluted net loss per share was $(0.17) for the three months ended December 31, 2007, compared with basic and diluted net income per share of $0.08 for the three months ended December 31, 2006.

Basic and diluted net loss per share was $(0.66) for the twelve months ended December 31, 2007, compared with basic and diluted net income per share of $0.34 and $0.33, respectively, for the twelve months ended December 31, 2006.