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NeuroMetrix, Inc. Reports Third Quarter 2004 Financial Results

October 28, 2004 - Waltham, MA

NeuroMetrix, Inc. (NASDAQ: NURO), a medical device company focused on the design, development and sale of proprietary products used to diagnose neuropathies, announced today third quarter financial results for the period ended September 30, 2004.

Total revenues for NeuroMetrix's third quarter were $4.8 million, 86% higher than the $2.6 million of revenues reported for the third quarter of 2003. Total gross margin percentage for the third quarter 2004 was 73.2% compared to 70.7% for the third quarter of 2003. Revenues for the three months ended September 30, 2004 were 87% derived from biosensor sales and 13% derived from diagnostic device sales with gross margin percentages of 73.9% and 68.5%, respectively. By comparison, revenues for the three months ended September 30, 2003 were 86% derived from biosensor sales and 14% derived from diagnostic device sales with gross margin percentages of 73.5% and 52.2%, respectively. Net loss for the third quarter of 2004 was $1.4 million, compared to a net loss of $781,300 in the same period of 2003. The net loss for the third quarter of 2004 includes interest expense of $666,700 of which $637,800 (or the equivalent of approximately $.07 per share) was related to the early repayment of our secured line of credit with Lighthouse Capital Partners, compared to $28,800 of interest expense in the third quarter of 2003. Also included in 2004 net loss is $139,600 of non-cash stock-based compensation expense, compared to $24,400 in 2003.

For the nine months ended September 30, 2004 total revenues were $12.1 million, compared to $6.3 million in the same period last year. Total gross margin percentage for the nine months ended September 30, 2004 was 72.9% compared to 70.2% for the nine months ended September 30, 2003. Revenues for the nine months ended September 30, 2004 were 88% derived from biosensor sales and 12% derived from diagnostic device sales with gross margin percentages of 73.9% and 65.7%, respectively. By comparison, revenues for the nine months ended September 30, 2003 were 84% derived from biosensor sales and 16% derived from diagnostic device sales with gross margin percentages of 74.0% and 50.2%, respectively. For the nine months ended September 30, 2004, net loss was $3.4 million compared to $2.7 million in 2003. The net loss for the nine months ended September 30, 2004 includes interest expense of $960,400 of which $637,800 was related to the early repayment of our secured line of credit with Lighthouse Capital Partners, compared to $38,900 of interest expense for the nine months ended September 30, 2003. Also included in the 2004 net loss is $949,900 of non-cash stock-based compensation expense, compared to $53,900 in 2003.

Shai N. Gozani, M.D., Ph.D, NeuroMetrix's President and CEO said, "We are pleased with our third quarter financial results. During the quarter, we continued to grow our revenues, our gross margin, the number of active NC-stat System users and the number of disposable biosensors utilized by our customers. We also continued the expansion of our direct sales force and independent sales agent network. On the product development front, we received FDA 510(k) marketing clearance for our sural nerve biosensor. We expect this disposable biosensor to be a key component of our diabetes and low back pain product offerings."

Additional Highlights

Completion of our initial public offering of 3,000,000 shares of our common stock at $8.00 per share.

Sale of the full over-allotment option associated with our IPO for an additional 450,000 shares of common stock at $8.00 per share.
96,790 disposable biosensors utilized in the quarter - up 71.7% year-over-year
Expansion of our direct sales organization to 21 regional sales managers.
Repayment of outstanding balances on secured line of credit provided by Lighthouse Capital Partners.

Company to Host Live Conference Call and Webcast

The Company's management team will host a live conference call and webcast at 4:00 p.m. Eastern time on October 28, 2004 to discuss the Company's financial results for the third quarter ended September 30, 2004. In addition, the Company may answer one or more questions concerning business and financial developments and trends, and other business and financial matters affecting the Company, some of the responses to which may contain information that has not been previously disclosed. The conference call may be accessed in the United States by dialing 1-866-761-0748 and using the confirmation code 25471776. Internationally, the call may be accessed by dialing 1-617-614-2706, using the same confirmation code. The webcast, along with the earnings press release and accompanying financial and operating statistics, will be accessible from the Company's website at www.neurometrix.com under the "Investors" tab.

A replay of the webcast will be available approximately two hours after the conference call by dialing 1-888-286-8010, domestically and 1-617-801-6888, internationally. The confirmation code to access the replay is 537000195.

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