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NeuroMetrix, Inc. Reports 2004 Fourth Quarter Results; Fourth Quarter Revenues of $5.8 Million Increased 101% From Previous Year

January 27, 2005 - 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 fourth quarter financial results for the period ended December 31, 2004.

Total revenues for NeuroMetrix's fourth quarter were $5.8 million, 101% higher than the $2.9 million of revenues reported for the fourth quarter of 2003. Total gross margin percentage for the fourth quarter 2004 was 72.9% compared to 71.0% for the fourth quarter of 2003. Revenues for the three months ended December 31, 2004 were 88% derived from biosensor sales and 12% derived from diagnostic device sales with gross margin percentages of 73.3% and 70.2%, respectively. By comparison, revenues for the three months ended December 31, 2003 were 90% derived from biosensor sales and 10% derived from diagnostic device sales with gross margin percentages of 73.8% and 46.9%, respectively. Net loss for the quarter was $835,200 compared to $952,100 for the fourth quarter of 2003. Fourth quarter 2004 net loss includes non-cash stock-based compensation charges of $78,700 compared to $42,500 in the fourth quarter of 2003.

For the year ended December 31, 2004 total revenues were $17.9 million, a 95% increase over $9.2 million in total revenues for the year ended 2003. Total gross margin percentage for the year ended December 31, 2004 was 72.9% compared to 70.5% for the year ended December 31, 2003. Revenues for the year ended December 31, 2004 were 88% derived from biosensor sales and 12% derived from diagnostic device sales with gross margin percentages of 73.7% and 67.2%, respectively. By comparison, revenues for the year ended December 31, 2003 were 86% derived from biosensor sales and 14% derived from diagnostic device sales with gross margin percentages of 74.0% and 49.5%, respectively. For the year ended December 31, 2004, net loss was $4.3 million compared to a net loss of $3.7 million for the year ended December 31, 2003. The net loss for the year ended December 31, 2004 includes interest expense of $964,100 of which $637,800 was related to the early repayment of our secured line of credit with Lighthouse Capital Partners, compared to $136,300 of interest expense for the year ended December 31, 2003. Also included in the 2004 net loss is $1.0 million of non-cash stock-based compensation expense, compared to $96,400 in 2003.

Shai N. Gozani, M.D., Ph.D, NeuroMetrix's President and CEO said, "We believe that our performance in the fourth quarter and for the full year demonstrates our continued ability to grow and develop the point-of-service neuropathy diagnostic market. In the fourth quarter, a total of 109,025 biosensors were consumed by our expanding customer base. This represents 82.5% year-over-year growth. Furthermore, in the latter part of the quarter we successfully implemented a full market release of our sural nerve biosensor, which we expect will become a key component of our diabetes and low back pain product offerings."

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