NeuroMetrix, Inc. Reports Total Revenues of $9.1 Million for the First Quarter of 2008, Decrease of 23% from the First Quarter of 2007; Cash and Investment Position of $26.6 Million

Business Wire, May 6, 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 that provide regional anesthesia and pain control, announced today the financial results for the three-month period ended March 31, 2008.

Total revenues for the three months ended March 31, 2008, the Company's first quarter, were $9.1 million, compared with $11.8 million for the first quarter of 2007, representing a decline of 23%. During the three-month periods ended March 31, 2008 and 2007, 88% and 87% of revenues, respectively, were derived from biosensor sales, 8% and 11% of revenues, respectively, were derived from diagnostic device sales and 4% and 2% of revenues, respectively, were derived from DigiScope sales.

The gross margin percentage for the first quarter of 2008 was 72.6% of revenues, compared with 73.7% of revenues for the first quarter of 2007. In the first quarter of 2008, the gross margin percentage for biosensors decreased to 73.6% of revenues from 73.8% of revenues in the first quarter of 2007. The gross margin percentage for diagnostic devices decreased to 72.3% of revenues for the first quarter of 2008 from 82.0% of revenues for the first quarter of 2007 due to lower average selling prices and lower volumes. The gross margin percentage for the DigiScope for the first quarter of 2008 was 50.2% compared with 18.2% in the first quarter of 2007. The increase in gross margins for the DigiScope resulted from the acquisition of EyeTel Imaging, Inc. in December 2007.

In February 2008, there was a meeting of the American Medical Association ("AMA") CPT editorial panel and during this meeting a vote was taken on the reimbursement coding for nerve conduction studies such as those performed using the NC-stat System. Following this meeting, the Company's market capitalization declined substantially resulting in the Company's net book value exceeding market capitalization as of March 31, 2008. This was considered to be a triggering event for an assessment of the carrying value of goodwill. The Company concluded that goodwill was impaired and as a result, a non-cash impairment charge of $5.8 million was recorded in operating expenses during the first quarter of 2008.

The GAAP net loss for the first quarter of 2008 was approximately $10.8 million, including the goodwill impairment charge of $5.8 million, compared with a net loss of approximately $1.4 million for the first quarter of 2007. The net loss for the first quarter of 2008 also includes a write-down of approximately $656,000 of our investment in Cyberkinetics, which we have determined to be other than temporary in nature.

Basic and diluted GAAP net loss per share was $(0.79) for the three months ended March 31, 2008, compared with basic and diluted net loss per share of $(0.11) for the three months ended March 31, 2007.

Cash and cash equivalents and short-term investments totaled $26.6 million as of March 31, 2008 compared with $29.7 million as of December 31, 2007.

Shai N. Gozani, M.D., Ph.D., NeuroMetrix's President & CEO commented, "Our revenues in the first quarter of 2008 were down approximately 23% from the same period in 2007 and were down 9.9% sequentially from the fourth quarter of 2007 due in large part to reimbursement issues experienced by our customers and the termination of our independent sales agency relationships during the second half of 2007. Average biosensor usage per customer in the first quarter of 2008 remained approximately flat with the fourth quarter of 2007. Our overall active customer count remained stable at 5,575 physician practices and clinics as of the end of the first quarter of 2008, which is a twelve-month look back at accounts utilizing the NC-stat System. A total of 225,000 biosensors were used by our customers during the first quarter of 2008 compared with the 228,000 biosensors used by our customers in the fourth quarter of 2007."

Dr. Gozani further commented, "As we previously announced, the AMA CPT Editorial Panel considered reimbursement coding for nerve conduction studies at its February 2008 meeting. We had hoped that the AMA CPT Editorial Panel would have determined that the existing Category I CPT codes were applicable to nerve conduction studies performed using the NC-stat System or assigned a series of new Category I CPT codes for such studies. Our view was shared by professional medical societies representing over 100,000 physicians; including the American Academy of Family Medicine (AAFP), the American Association of Clinical Endocrinologists (AACE), the American College of Rheumatology (ACR), and the American Society for Surgery of the Hand (ASSH). To our disappointment, the only vote that occurred at the meeting was a vote on a Category III code. However, if and until the AMA CPT Editorial Panel publishes a new code set, which typically occurs in July or January each year for Category III codes, there are no new CPT codes or changes to the existing CPT codes for nerve conduction studies. In the event that a Category III CPT code is published which describes nerve conduction studies performed with the NC-stat System, it would likely result in limited Medicare reimbursement for such studies. A Category III code could also adversely impact reimbursement by other third party payers."