Nuwellis, Inc.

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FORWARD-LOOKING STATEMENTS

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This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include all statements that are not historical facts and include, without limitation, statements regarding our intent, belief or expectations with respect to our financial condition, results of operations, business strategy, plans and objectives of management, future operations and performance, and the markets in which we operate. Forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Factors that may cause such differences include, but are not limited to, those discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, and in our subsequent filings with the SEC. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

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Completed the asset acquisition of Rendiatech, Inc. on March 17, 2026, adding automated continuous kidney function monitoring technology to our cardiorenal platform.

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Continued execution of strategic realignment, including substantial payment of international exit obligations and full manufacturing transition to KDI Precision Manufacturing.

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The Company completed the asset acquisition of Rendiatech Ltd. on March 17, 2026. The transaction was accounted for as an asset acquisition under ASC 805-50. The purchase price was allocated to the individual assets acquired and liabilities assumed on a relative fair value basis, resulting in the recognition of inventory, non-compete agreements, and the immediate expensing of $552 thousand of in-process research and development (IPR&D) that had no alternative future use. There were no operations from the acquired Rendiatech assets between the acquisition date and March 31, 2026, and the transaction was not material to the Company’s results of operations or cash flows for the three months ended March 31, 2026. See Note 10 – Asset Acquisition for additional information regarding the transaction and the purchase price allocation.

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There were no new accounting pronouncements adopted during the three months ended March 31, 2026 that had a material effect on the Company’s condensed consolidated financial statements. For a discussion of accounting pronouncements recently adopted or issued, refer to Note 1 – Nature of Business and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

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(in thousands)

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On March 17, 2026, we completed the acquisition of Rendiatech Ltd., which utilized $125 thousand of net cash (after $24 thousand of cash acquired in the business) and the issuance of equity (150,000 shares of common stock and 30,000 stock options). Transaction costs associated with the acquisition were expensed in selling, general and administrative expenses.

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Our business strategy and ability to fund operations depend on growing the Aquadex business through expanded sales, product adoption, and cost control, as well as the successful integration of the Rendiatech technology. We expect to seek additional financing in the future, primarily through equity offerings or the existing At-The-Market program.

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Cash Flows

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We believe our existing capital resources will support operations through the end of the second quarter of 2026, but we will require additional capital to fund operations through the end of fiscal year 2026. See Note 1 – Going Concern for additional discussion.

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OVERVIEW

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About Nuwellis

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We are a medical technology company dedicated to transforming the lives of patients suffering from fluid overload through science, collaboration, and innovation. The Company is focused on commercializing the Aquadex SmartFlow system for ultrafiltration therapy. The Aquadex SmartFlow system is indicated for temporary (up to eight hours) or extended (longer than 8 hours in patients who require hospitalization) use in adult and pediatric patients weighing 20 kg or more whose fluid overload is unresponsive to medical management, including diuretics.

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In August 2016, we acquired the Aquadex Business from a subsidiary of Baxter, a global leader in the hospital products and dialysis markets. On May 23, 2017, we announced that we were changing our name from Sunshine Heart, Inc. to CHF Solutions, Inc. to more appropriately reflect the direction of our business. On April 27, 2021, the Company announced that it was changing its name from CHF Solutions, Inc. to Nuwellis, Inc. to reflect the expansion of its customer base from treating fluid imbalance resulting from congestive heart failure to also include critical care and pediatrics applications.

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Nasdaq Compliance

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On June 18, 2025, Nuwellis, Inc. (the “Company”) received a letter (the “Deficiency Notice”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) informing the Company that because the closing bid price for the Company’s Common Stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company was not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The Deficiency Notice also indicated that the Company was not eligible for any compliance period specified in Nasdaq Listing Rule 5810(c)(3)(A) because the Company effected a reverse stock split over the prior one-year period or has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one; accordingly, the Company was informed that its securities were subject to delisting from Nasdaq unless the Company timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”). As previously disclosed, the Company effected the 2024 Reverse Stock Split on June 27, 2024. The Company timely requested a hearing before the Panel, which was scheduled for August 12, 2025. At its annual meeting held on May 20, 2025, the Company’s stockholders approved a proposal allowing the board of directors of the Company to effect a reverse split in the range of 1-for-5 to 1-for-70. The Company’s board of directors authorized the 2025 Reverse Stock Split to regain compliance with the Minimum Bid Price Requirement. On July 22, 2025, the Company received formal notice from Nasdaq stating that it has resolved the previously disclosed bid price deficiency. As a result, the hearing previously scheduled with the Nasdaq Hearings Panel for August 12, 2025, was cancelled, and shares of the Company’s Common Stock continue to be listed and traded on the Nasdaq Capital Market under the ticker “NUWE.”

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Public Offering

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On June 10, 2025, the Company announced the closing of its public offering of 61,444 shares of its Common Stock, pre-funded warrants to purchase 335,381 shares of Common Stock (all pre-funded warrants were exercised on this date), in each case with accompanying Series A Warrants to purchase up to 1,190,480 shares of Common Stock, Series B Warrants to purchase up to 396,829 shares of Common Stock and Placement Warrants to purchase up to 11,903 shares of Common Stock with gross proceeds of approximately $5.0 million, which included the full exercise of the underwriter’s over-allotment option to purchase additional shares and warrants. The public offering price per share of Common Stock and accompanying warrants is $12.60 per share and accompanying warrants, and the public offering price per pre-funded warrant and accompanying warrants is $12.5958 per pre-funded warrant and accompanying warrants. Each pre-funded warrant has an exercise price of $0.0042 per pre-funded warrant and was immediately exercisable. The Series B Warrants have an exercise price of $12.60 and will be exercisable for a period of five years following the receipt of stockholder approval which was obtained on August 4, 2025, as required by the applicable rules and regulations of Nasdaq. The Series A Warrants contain a one-time reset of the exercise price in the event that the Company implemented the 2025 Reverse Stock Split equal to the greater of: (i) 20% of the combined public offering price per share of Common Stock and accompanying warrants in the offering and (ii) the lowest daily volume weighted average price for the five trading days immediately following the date of the implementation of the 2025 Reverse Stock Split. After the reverse stock split effectuated on July 3, 2025, the reset exercise price of the Series A warrants was set at $7.00 per share and there were no further contractual exercise price adjustments following the reverse split. The Series B Warrants include a zero cash exercise option allowing holders of a Series B Warrant the right to receive, without payment of any additional cash to the Company, an aggregate number of shares equal to the number of shares of Common Stock that would be issuable upon a cash exercise of such Series B Warrants.

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The Series A and B warrants offered in this financing were determined to be classified as a liability on the condensed consolidated balance sheet. An independent valuation of the warrants was performed and reviewed with management. The Series A warrants were valued using the Monte Carlo Simulation Model utilizing US Treasury Rates, Volatility rates, Common Stock price and assumptions around date and likelihood of a reverse split exercise price adjustment. The Series B warrants were valued using the Common Stock price given the zero-exercise price. The valuation at issuance was $10.6 million for the Series A warrants and $3.9 million for the Series B warrants, and on June 30, 2025, was $10.0 million for the Series A warrants and $3.7 million for the Series B warrants, representing a warrant liability decrease of $0.8 million from issuance. The $0.8 million warrant liability decrease from issuance has been reported on the condensed consolidated statement of operations as a “Change in fair value of warrant liability.” The total warrant valuation of $14.5 million exceeded the gross proceeds of $5.0 million. Accordingly, if the warrant valuation exceeds the gross proceeds, the difference will be recorded as “Day 1 interest.” You will find this difference, along with other issuance costs (discounts, legal, printing) reported on the condensed consolidated statement of operations as “Financing expense.”

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As a result of the above, the Company’s stockholders’ equity as of June 30, 2025, was below the Nasdaq Stockholders’ Equity Requirement. However, subsequently the liability associated with the Series A Warrants of $8.4 million was reclassified on July 14, 2025, as equity due to the exercise price being reset to the floor at $7.00 per share. The majority of the liability associated with the Series B Warrants has been removed as these were exercised into Common Stock. As of September 30, 2025, there were 6,268 Series B warrants still unexercised and the fair value of these warrants was $21,004.

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Contract with KDI

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On May 12, 2025, the Company announced it had finalized an agreement with KDI Precision Manufacturing to support the next phase of Nuwellis’ growth. The Company made a contractual payment of $240,000 on July 15, 2025 to initiate the conversion of the production process to KDI. This strategic relationship is expected to expand Nuwellis' manufacturing capabilities, streamline operations, and enhance the company's ability to deliver high-quality products to healthcare providers and patients. Under the agreement, KDI will assume assembly responsibilities for the Aquadex SmartFlow® Console, AquaFlexFlow® Blood Circuits, and dELC® Catheters. To ensure a seamless transition and protect product expertise, current Nuwellis assembly employees will be hired by KDI. Sales, customer service, product design, and post-market surveillance will continue to reside within Nuwellis. During the third quarter, manufacturing and calibration of Consoles were moved to the KDI facility. As of October 20, 2025, all circuit and catheter manufacturing personnel (6 employees) had transitioned to the KDI facility and were converted to KDI employees.

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Reverse Stock Split

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On June 19, 2025, the Board approved the 2025 Reverse Stock Split. On July 2, 2025, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to its Certificate of Incorporation (the “Certificate of Amendment”) to effect the 2025 Reverse Stock Split, which became effective as of 5:00 p.m. Eastern Time on July 3, 2025, and the Company’s Common Stock began trading on a split-adjusted basis when the market opened on July 7, 2025. When the 2025 Reverse Stock Split became effective, every forty-two shares of the Company’s issued and outstanding Common Stock (and such shares held in treasury) automatically converted into one share of Common Stock, without any change in the par value per share. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the conversion of the Company’s outstanding shares of preferred stock and exercise of all outstanding stock options, restricted stock units and warrants to purchase shares of Common Stock and the number of shares reserved for issuance pursuant to the Company’s equity incentive compensation plans. Any fraction of a share of Common Stock that was created as a result of the 2025 Reverse Stock Split was rounded down to the next whole share and the stockholder received cash equal to the market value of the fractional share, determined by multiplying such fraction by the closing sales price of the Company’s Common Stock as reported on Nasdaq on the last trading day before the 2025 Reverse Stock Split becomes effective. All share and per-share amounts have been retroactively adjusted to reflect the reverse stock splits for all periods presented.

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REVERSE-HF Clinical Trial

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On July 17, 2025, the Company announced the termination of its REVERSE-HF clinical trial, a randomized post-market trial evaluating ultrafiltration vs. IV loop diuretic therapy for fluid management in hospitalized heart failure patients. This decision reflects the Company’s strategic commitment to prioritize resources in areas demonstrating the greatest potential for patient impact and business growth—namely, outpatient heart failure, pediatric, and critical care. The Company anticipates it will save approximately $4.0M over the next 2.5 years by terminating the REVERSE-HF clinical trial.

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International Operations

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On August 7, 2025, the Company announced its decision to exit selected international operations in order to focus on the U.S. market—where the Company is seeing the strongest growth and clinical demand. This strategic realignment supports Nuwellis’ core business strategy: investing in the markets driving revenue growth. With expanding traction in U.S. cardiac surgery and pediatric programs, and a rising opportunity in the hospital-based outpatient space, the Company is streamlining to prioritize investment in markets where it can have the most immediate and long-term impact.

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Letter of Intent

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On August 19, 2025, the Company announced that it had entered into a non-binding letter of intent to acquire Rendiatech, Ltd., an Israeli-based medical device company specializing in real-time urine flow and acute kidney injury monitoring technologies. The proposed acquisition is expected to support the Company's strategy to expand its current technology platform beyond ultrafiltration by potentially adding continuous renal health monitoring technologies that provide clinicians with earlier insight into fluid status and kidney function. The parties are continuing discussion and due diligence.

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At The Market Offering Agreement

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On September 3, 2025, the Company entered into an At The Market Offering Agreement with Ladenburg Thalmann & Co. Inc. pursuant to which the Company may sell shares of the Company’s Common Stock, from time to time, at its option, through or to Ladenburg, as sales agent or principal. Sales of the Company’s Common Stock made pursuant to the Sales Agreement, were made under the Company’s Registration Statement on Form S-3 (File No. 333-280647) and the prospectus supplement filed on September 3, 2025 with the Securities and Exchange Commission, in sales deemed to be “at the market offerings” as defined in Rule 415 promulgated under the Securities Act, initially having an aggregate offering price of up to $4,650,000. Ladenburg will use its commercially reasonable efforts to sell the Common Stock from time to time, based upon the Company’s instructions (including any price, time, or size limits or other customary parameters or conditions the Company may impose). As of September 30, 2025, the Company had sold 447,288 of Common Shares for net proceeds of approximately $1.9 million. See Note 10 – Subsequent Event.

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The Company is not obligated to make any sales of Common Stock under the Sales Agreement, and the Company cannot provide any assurances that it will issue any shares pursuant to the Sales Agreement. The offering of Common Stock pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. The Company is obligated to pay Ladenburg an aggregate sales agent commission of up to 3.0% of the gross proceeds of the sale price for Common Stock sold under the Sales Agreement. The Company has also provided Ladenburg with customary indemnification rights and expense reimbursements for up to $50,000 of expenses in addition to ongoing diligence expenses. The representations, warranties and covenants contained in the Sales Agreement were made only for purposes of the Sales Agreement as of specific dates indicated therein, were solely for the benefit of Ladenburg and to allocate risk between the Company and Ladenburg, and as a result should not be relied on and may be subject to limitations agreed upon by the parties.

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Executive Transition

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The preparation of the condensed consolidated financial statements, in conformity with U.S. GAAP, requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Our estimates and assumptions, including those related to stock-based compensation, valuation of equity and debt securities, and income tax reserves are updated as appropriate, which in most cases is quarterly. We base our estimates on historical experience, valuations, or various assumptions that are believed to be reasonable under the circumstances. There have been no material changes to our critical accounting policies and estimates from the information provided in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

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Revenue Recognition: We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Accordingly, we recognize revenue when our customers obtain control of their products or services, in an amount that reflects the consideration that we expect to receive in exchange for those goods and services. See Note 2 – Revenue Recognition, included in Part I, Item 1 of this Quarterly Report on Form 10-Q, for additional disclosures.

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Accounting for Warrants: We have issued and may continue to issue warrants to purchase shares of common and convertible preferred stock through our public and private offerings. We account for such warrants in accordance with ASC 480 Distinguishing Liabilities from Equity, which identifies three categories of freestanding financial instruments that are required to be accounted for as a liability. If determined to be classified as a liability, we will initially measure the fair value of the warrants upon issuance and subsequently remeasure the fair value of the warrants at each balance sheet date. If determined to be classified as equity, the fair value of the warrants will be measured as of the grant date and will not be subject to remeasurement at each balance sheet date.

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The fair value of the warrant liability is estimated using a Monte Carlo simulation model using relevant inputs and assumptions based upon the terms of the warrants.

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Loss per Share: Basic loss per share is computed based on the net loss for each period divided by the weighted average number of common shares outstanding. See Note 3 – Stockholders’ Equity below for additional disclosures.

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Diluted earnings per share is computed based on the net loss allocable to Common Stockholders for each period divided by the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of Common Stock include shares underlying outstanding convertible preferred stock, warrants, stock options and other stock-based awards granted under stock-based compensation plans.

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Impairment of Long-Lived Assets: Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If the impairment tests indicate that the carrying value of the asset or asset group is greater than the expected undiscounted cash flows to be generated by such asset or asset group, further analysis is performed to determine the fair value of the asset or asset group. To the extent the fair value of the asset or asset group is less than its carrying value, an impairment loss is recognized equal to the amount the fair value of the asset or asset group is exceeded by its carrying amount. Assets to be disposed of are carried at the lower of their carrying value or fair value less costs to sell. Considerable management judgment is necessary to estimate the fair value of assets or asset groups, and accordingly, actual results could vary significantly from such estimates.

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The Company continues to report operating losses and negative cash flows from operations, both of which it considers to be indicators of potential impairment. Therefore, the Company evaluates its long-lived assets for potential impairment at each reporting period. The Company has concluded that its cash flows from the various long-lived assets are highly interrelated and, as a result, the Company consists of a single asset group. As the Company expects to continue incurring losses in the foreseeable future, the undiscounted cash flow step was bypassed, and the Company proceeded to measure fair value of the asset group. The Company has determined the fair value of the asset group associated with its loaner units by using expected cash flows estimating future discounted cash flows expected from the rental of these units. For recently acquired assets within the asset group, primarily equipment, the Company determined the fair value based on the replacement cost. There have been no impairment losses recognized for the three and nine month periods ended September 30, 2025 or the year ended December 31, 2024.

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Going Concern: Our consolidated financial statements have been prepared and presented on a basis assuming we continue as a going concern. During the years ended December 31, 2024, and 2023, and through September 30, 2025, we incurred losses from operations and net cash outflows from operating activities as disclosed in the consolidated statements of operations and cash flows, respectively. As of September 30, 2025, we had an accumulated deficit of $313.9 million, and we expect to incur losses for the foreseeable future. To date, we have been funded by equity financings, and although we believe that we will be able to successfully fund our operations into the future, there can be no assurance that we will be able to do so or that we will ever operate profitably. These factors raise substantial doubt about the Company’s ability to continue as a going concern through at least twelve months from the report date.

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We became a revenue-generating company after acquiring the Aquadex Business in August 2016. We expect to incur additional losses in the near-term as we grow the Aquadex Business, including investments in our sales and marketing capabilities, product development, purchasing inventory components, generating additional clinical evidence supporting the efficacy of the Aquadex System, and complying with the requirements related to being a U.S. public company. To become and remain profitable, we must succeed in expanding the adoption and market acceptance of the Aquadex System. This will require us to succeed in training personnel at hospitals and effectively and efficiently marketing and distributing the Aquadex System and related components. There can be no assurance that we will succeed in these activities, and we may never generate revenues sufficient to achieve profitability.

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During 2021 and through September 30, 2025, we closed on underwritten public and other equity offerings for aggregate net proceeds of approximately $55.9 million after deducting the underwriting discounts and commissions or placement agents’ fees and offering expenses, as applicable, and other costs associated with the offerings. See Note 4 –Stockholders’ Equity, to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. The Company will require additional funding to grow its business, which may not be available on terms favorable to the Company, or at all. The Company may receive those funds from the issuance of equity securities or other financing transactions. Should future capital raising be unsuccessful, the Company may not be able to continue as a going concern. No adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.

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Understanding the near-term need to raise capital, in 2024, the Company undertook steps to reduce its monthly cash burn rate by approximately 40%, balanced against its strategic growth initiatives, which provided more flexibility in anticipation of tougher capital market conditions for microcap companies like Nuwellis. These reductions included, but were not limited to, a reduction of the salaries for members of senior management, no merit increases to the base salaries of any named executive officer or employee in 2024 for performance provided during the fiscal year ended December 31, 2023, no cash bonuses to any named executive officer or employee in 2024 for performance provided during the fiscal year ended December 31, 2023, a reduction in Board of Director and committee fees, temporary suspension of the Company’s 401(k) match, travel reductions, and reductions to select professional services. The Board authorized the restoration of the Company 401(k) match effective October 1, 2024, and the restoration of Board and committee fees and executive salaries, effective November 1, 2024.

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We believe that our existing capital resources will be sufficient to support our operating plan into the first quarter of 2026; however, there can be no assurance that our capital resources will be sufficient through that time period. We will seek to raise additional capital to support our growth or other strategic initiatives through debt, equity, or a combination thereof. There can be no assurance the Company will be successful in raising additional capital.

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In December 2023, FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance is expected to improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information by requiring 1) consistent categories and greater disaggregation of information in the rate reconciliation and 2) income taxes paid disaggregated by jurisdiction. The guidance is effective on a prospective basis, although retrospective application and early adoption is permitted. The Company is evaluating its disclosure approach for ASU 2023-09 and anticipates adopting the standard for the annual period ending December 31, 2025.

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The Company has considered all recent accounting pronouncements issued and their potential effects on its consolidated financial statements. The Company's management believes that these recent pronouncements will not have a material effect on the Company's condensed consolidated financial statements.

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Revenue is generated mainly from the sale of disposable blood filters and catheters used in conjunction with the Aquadex System consoles. We sell primarily in the United States to hospitals and clinics through our direct salesforce. We sell outside of the United States to independent specialty distributors, who in turn sell to hospitals and clinics in their geographic regions. The decrease in sales in the current year period is primarily due to one-time prior year SeaStar Medical Quelimmune revenue of $0.2 million, a decrease in international operations of $0.1 million year-over-year, and lower console average selling price, partially offset by a 15% increase in circuit sales.

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Our costs and expenses were as follows: