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2nd Quarter 2025 Financial & Operating Results
On August 7, 2025, CytoSorbents (NASDAQ:CTSO) reported 2nd quarter 2025 financial and operating results which exceeded our expectations. The company generated revenues of $9.6 million, an increase of 9%, or 4% on a constant currency basis, compared to $8.8 million in the prior year period. This was primarily driven by 22% year-over-year and sequential sales growth in Germany.
Gross margin was 70.9% compared to 73.5% in the 2nd quarter of 2024. We expect gross margins to stabilize in the 71%-73% range throughout the rest of 2025. Long-term gross margins could increase to the mid-70% range as product volumes continue to grow over time as well as the commercialization of DrugSorb-ATR which carries higher margins.
Operating loss was ($3.5) million, which was essentially flat compared to the 2nd quarter of 2024. SG&A expenses were higher than average due to the rebuild of their accounting team, additional expenses related to the FDA appeals process, and additional costs associated with the Germany sales reorganization. We expect SG&A to drift slightly lower for the rest of 2025.
Net income was positive at $1.9 million or $0.03 per share. However, this was largely due to an unusually large foreign currency gain of $6.2 million. Adjusted net loss (which eliminates the currency gain and adds back stock compensation) was ($3.7) million, or a loss of ($0.06) per share. This was better than our expectation of a loss of ($0.07) per share.
Adjusted EBITDA loss was ($2.6) million compared to a loss of ($2.2) million in the 2nd quarter of 2024.
Liquidity and Capital Resources
As of June 30, 2025, the company had total cash of $11.7 million (including $10.2 million unrestricted and $1.5 million restricted cash) and total debt of $14.4 million. During the quarter, the company sold certain New Jersey NOLs and R&D tax credits, resulting in a net increase in cash of $1.7 million. Current assets were approximately $23.0 million and current liabilities were $9.8 million. Net working capital was positive at $13.2 million. Upon FDA approval of DrugSorb-ATR, the company will be able to access an additional $5.0 million from its lending facility if necessary.
We believe the company is fully funded to support its business model through the expected regulatory approval of DrugSorb-ATR and the subsequent commercial launch in late 2025 or early 2026.
Valuation and Estimates
Our 2025 revenue estimate is adjusted to $37.8 million, and our 2025 EPS estimate is an adjusted loss of ($0.20) based on better than expected EPS in the 2nd quarter of 2025. We believe 2026 revenues could exceed $41.0 million with the approval and commercialization of DrugSorb-ATR. Our 2026 GAAP EPS estimate is a loss of ($0.11) per share.
With ongoing cost controls and the maintenance of gross margins above 70%, we believe the core business of the company (i.e. the existing CytoSorb business) could reach near cash flow breakeven at some point in late 2025, which will free up cash for investment in the expected DrugSorb-ATR launch later this year and into 2026.
Beginning in 2025, the company began a significant reorganization of the direct sales team and strategy in Germany (its largest market for the CytoSorb device). This includes the rebalancing of territories and hospital accounts with the goal of restoring sales growth through deeper customer engagement, more effective market development, and improved sales representative productivity. The company is pleased with the initial progress of this reorganization and remains confident it will lead to stronger execution, improved performance, and more robust sales growth in the region.
Last year, the company implemented significant cost-cutting measures to reduce the cash burn, including major reductions in headcount, termination of non-core R&D programs, termination of the STAR-D trial to focus on STAR-T, and a third consecutive year of salary freezes for executive management, with management voluntarily reducing salaries in exchange for stock options in 2024. The benefit of these cost cuts on operating expenses have been apparent in the significant cash burn reduction for the past four quarters.
In addition, the company has worked diligently to optimize manufacturing efficiencies. The company had product gross margins of 71.1% in the 1st quarter of 2025 and 70.9% in the 2nd quarter and we expect product gross margins for the rest of 2025 to be in the low 70% range. In the long term, we expect gross margins to expand to the mid-high 70% range after full commercialization of DrugSorb-ATR in North American markets.
Based on these factors, we maintain our price target of $4.00 per share.
Regulatory Update on DrugSorb-ATR
On April 25, 2025, the FDA issued a denial letter regarding the company’s De Novo Request for DrugSorb-ATR authorization. The agency identified remaining deficiencies that must be addressed before the De Novo Request can be granted, and the device can be authorized for commercialization in the U.S. CytoSorbents met with the FDA subsequent to receiving the letter. The company believes these items can be most effectively and expeditiously resolved through the formal appeal process that enables direct interaction and engagement with FDA senior leadership and external experts.
In July 2025, the company conducted an in-person appeal hearing with the FDA for supervisory review (administrative appeal) under 21 CFR 10.75 for its De Novo Request for DrugSorb-ATR. The appeal hearing included FDA senior leadership and review team, company management, FDA regulatory counsel, and external cardiac surgery experts. The company continues to believe that the remaining deficiencies in its DeNovo application can be effectively resolved through this supervisory review process which is expected to be completed by the end of August 2025, and that a final regulatory decision can be achieved in 2025.
There are three potential outcomes from the final FDA regulatory decision:
1) The original decision is reversed, and the De Novo authorization is granted and the company can proceed with commercialization efforts.
2) The original decision is reversed, and the De Novo authorization is granted, but under certain conditions that will need to be satisfied, sometimes on a post market basis.
3) The original decision is upheld, and the De Novo authorization is denied.
The company states that it remains extremely committed to bringing DrugSorb-ATR to market as an important solution to address the serious, unmet medical need of preventing life-threatening bleeding in CABG patients treated with Brilinta. There are no effective therapies currently available in the U.S., resulting in tens of thousands of patients facing this risk every year. FDA granted DrugSorb-ATR two separate Breakthrough Device designations, one for Brilinta and one for the direct oral anticoagulants such as Eliquis and Xarelto because of its potential to solve this major problem.
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