NeuroMetrix, Inc. Reports Third Quarter 2005 Results; Total Revenues of $9.1 Million, 89% growth over Third Quarter 2004

Total revenues for the three months ended September 30, 2005, theCompany's third quarter, were $9.1 million, compared with $4.8 millionfor the third quarter of 2004, representing an increase of 89%. Totalrevenues for the nine months ended September 30, 2005 were $24.0million, compared with $12.1 million for the same period in 2004,representing an increase of 97%. During the three month periods endedSeptember 30, 2005 and September 30, 2004, 88% and 87% of revenues,respectively, were derived from biosensor sales and 12% and 13% ofrevenues, respectively, were derived from diagnostic device sales.During the nine month periods ended September 30, 2005 and September30, 2004, 88% of revenues were derived from biosensor sales in eachperiod and 12% of revenues were derived from diagnostic device salesin each period.

The gross margin percentage for the third quarter of 2005 was74.6% of revenues compared with 73.2% of revenues for the thirdquarter of 2004. In the third quarter of 2005, the gross marginpercentage for biosensors was 74.5% of revenues compared with 73.9% inthe third quarter of 2004. The gross margin percentage for diagnosticdevices was 75.2% of revenues for the third quarter of 2005, comparedwith 68.5% of revenues in the third quarter of 2004.

The gross margin percentage for the nine months ended September30, 2005 was 74.0% of revenues compared with 72.9% of revenues for thenine months ended September 30, 2004. For the nine months endedSeptember 30, 2005, the gross margin percentage for biosensors was74.1% of revenues compared with 73.9% for the same period in 2004. Thegross margin percentage for diagnostic devices was 73.8% of revenuesfor the nine months ended September 30, 2005, compared with 65.7% forthe same period in 2004.

Income from operations for the third quarter of 2005 was $551,000,compared to a loss from operations of $(758,000) in the same period of2004. Net income for the third quarter of 2005 was $769,000 comparedwith a net loss of $(1,373,000) in the third quarter of 2004. The lossfrom operations for the nine months ended September 30, 2005 was$(445,000) compared with a loss from operations of $(2,559,000) forthe same period in 2004. Net income for the nine months endedSeptember 30, 2005 was $133,000 compared with a net loss of$(3,449,000) for the nine months ended September 30, 2004.

Basic and diluted net income per share was $0.06 for the threemonths ended September 30, 2005 compared with a basic and diluted netloss per share of $(0.18) for the three months ended September 30,2004. The basic and diluted net income per share for the nine monthperiod ended September 30, 2005 was $0.01 compared with a basic anddiluted net loss per share of $(3.46) for the nine months endedSeptember 30, 2004. The net loss attributable to common stockholdersfor the three and nine months ended September 30, 2004 includedcharges relating to the Company's preferred stock of $191,000 and $9.2million, respectively. All outstanding shares of preferred stock wereconverted to common stock in connection with the Company's initialpublic offering in July 2004.

Cash and cash equivalents, short-term investments and long-terminvestments totaled $30.8 million as of September 30, 2005, comparedwith $30.0 million as of December 31, 2004.

Shai N. Gozani, M.D., Ph.D., NeuroMetrix's President & CEOcommented, "During the third quarter of 2005, we posted strong topline growth of 89% on a year over year basis due to the continuingcustomer demand for our NC-stat neuropathy diagnostic solution. Ourfinancial performance continued to be driven by growth in the primarycare physician market, where we experienced an increase of 149% inbiosensor usage on a year-over-year basis in the third quarter of2005. We also experienced strong growth in the specialty care marketwith 40% year over year growth in the third quarter of 2005. Weexpanded our overall active customer count to a total of 2,969 as ofthe end of the third quarter of 2005. A total of 187,900 biosensorswere utilized by our customers during the third quarter of 2005, anincrease of 94% over the 96,800 biosensors utilized in the thirdquarter of 2004."

Dr. Gozani further commented: "In support of our long term goal oftop line growth, we expect to increase our direct sales force byapproximately 10-15 additional regional sales managers with the hiringprocess planned for the first quarter of 2006. We expect our operatingexpenses to increase as a result of this expansion of the sales forceand as a result of expenses associated with Sarbanes Oxley 404.However, we believe that the strengthening of our sales force willfurther advance our goal of creating a new standard of care throughoutthe marketplace."

Company to Host Live Conference Call and Webcast

The Company's management team will host a live conference call andwebcast at 10:00 a.m. Eastern time on October 27, 2005 to discuss theCompany's financial results for the three month and nine month periodsending September 30, 2005. In addition, the Company may answerquestions concerning business and financial developments and trends,and other business and financial matters affecting the Company.

The conference call may be accessed in the United States bydialing 1-800-659-1966 and using the confirmation code 20016042.Internationally, the conference call may be accessed by dialing1-617-614-2711, and using the same confirmation code. The webcast,along with the earnings press release and accompanying condensedfinancial statements, will be accessible from the Company's website atwww.neurometrix.com under the "Investors" tab and a replay of thewebcast will be available on the Company's website for twelve months.A replay of the conference call will be available starting two hoursafter the call by dialing 1-888-286-8010, domestically and1-617-801-6888, internationally. The confirmation code to access thereplay is 65021577.

About NeuroMetrix

NeuroMetrix is a medical device company establishing a newstandard of care through the design, development and sale ofproprietary products used to diagnose neuropathies. Neuropathies arediseases of the peripheral nerves and parts of the spine thatfrequently are caused by or associated with diabetes, low back and legpain and carpal tunnel syndrome, as well as other clinical disorders.These clinical indications affect millions of patients in the UnitedStates. The NC-stat System, the Company's neuropathy diagnosticsystem, has been on the market since May 1999 and is presently used innearly 3,000 physician's offices, clinics and other health carefacilities in the United States. The Company holds issued utilitypatents covering a number of important aspects of the NC-stat System.

The statements contained in this press release includeforward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended, including, without limitation,statements regarding the Company's or its management's expectations,hopes, beliefs, intentions or strategies regarding the future. Thewords "believe," "may," "will," "estimate," "continue," "anticipate,""intend," "expect," "plan" and similar expressions may identifyforward-looking statements, but the absence of these words does notmean that a statement is not forward-looking. The forward-lookingstatements contained in this press release are based on the Company'scurrent expectations and beliefs concerning future developments andtheir potential effects on it. There can be no assurance that futuredevelopments affecting the Company will be those that the Company hasanticipated. These forward-looking statements involve a number ofrisks, uncertainties (some of which are beyond the Company's control)or other assumptions that may cause actual results or performance tobe materially different from those expressed or implied by theseforward-looking statements. These risks and uncertainties include, butare not limited to, risks associated with: dependence on the NC- statSystem and its components; the Company's ability to increase itscustomer base and expand the market for its products; the ability tomanage growth; obtaining necessary regulatory approvals; reliance onthird party manufacturers and suppliers; reimbursement by third partypayors to the Company's customers for procedures performed using theNC-stat System; compliance with applicable quality control andmanufacturing standards; retaining key management or scientificpersonnel; delays in the development of new products or to plannedimprovements to the Company's products; effectiveness of the Company'sproducts compared to other medical device products; protection of theCompany's intellectual property and other proprietary rights;conflicts with the intellectual property of third parties; productliability lawsuits that may be brought against the Company; dependenceupon computer and communication infrastructure utilized by theCompany's products; the Company's capital and financing needs; and anyfailure of the Company to successfully integrate acquired businesses.These factors are discussed in more detail in the Company's filingswith the Securities and Exchange Commission. Should one or more ofthese risks or uncertainties materialize, or should any of theCompany's assumptions prove incorrect, actual results may vary inmaterial respects from those projected in these forward-lookingstatements. The Company undertakes no obligation to update or reviseany forward-looking statements, whether as a result of newinformation, future events or otherwise, except as may be requiredunder applicable securities laws.
NeuroMetrix, Inc
Condensed Statement of Operations
(Unaudited)
----------------------------------------------------------------------


Three Months Ended Nine Months Ended
----------------------- -------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2005 2004 2005 2004

Revenues:
Diagnostic device $1,133,378 $ 614,565 $ 2,906,291 $ 1,502,482
Biosensor 7,976,058 4,204,753 21,060,415 10,643,118
----------- ---------- ------------ -----------
Total revenues 9,109,436 4,819,318 23,966,706 12,145,600

Cost of revenues 2,317,841 1,290,243 6,225,630 3,287,873
----------- ---------- ------------ -----------
Gross margin 6,791,595 3,529,075 17,741,076 8,857,727

Operating expenses:
Research and
development 929,905 942,913 2,863,179 2,434,792
Sales and
marketing 3,489,091 2,037,840 10,228,241 5,634,389
General and
administrative 1,821,878 1,306,172 5,094,398 3,347,124
----------- ---------- ------------ -----------
Total operating
expenses 6,240,874 4,286,925 18,185,818 11,416,305

Income (loss)
from operations 550,721 (757,850) (444,742) (2,558,578)

Interest income 218,544 51,629 579,591 70,166
Interest expense -- (666,674) (2,042) (960,404)

----------- ---------- ------------ -----------
Net income (loss) 769,265 (1,372,895) 132,807 (3,448,816)

Accretion of
redeemable
convertible
preferred stock -- (190,874) -- (1,386,301)

Deemed dividend on
redeemable
convertible
preferred stock -- -- -- (787,885)

Beneficial
conversion feature
associated with
redeemable
convertible
preferred stock -- -- -- (7,050,771)
----------- ---------- ------------ -----------

Net income (loss)
attributable to
common stockholders 769,265 (1,563,769) 132,807 (12,673,773)

Net income (loss) per
common share:
Basic $ 0.06 $ (0.18) $ 0.01 $ (3.46)
Diluted $ 0.06 $ (0.18) $ 0.01 $ (3.46)

Weighted average
shares used to
compute basic and
diluted net income
(loss) per common
share:
Basic 12,187,835 8,819,558 12,105,992 3,660,515
Diluted 13,103,158 8,819,558 12,880,666 3,660,515



NeuroMetrix, Inc.
Condensed Balance Sheets
(Unaudited)

September 30, December 31,
2005 2004
------------- ------------

Assets
Current assets:

Cash and cash equivalents $ 3,303,619 $ 1,936,241
Short-term investments 27,519,760 18,574,593
Accounts receivable, net 4,160,668 3,126,565
Inventory 2,123,043 1,284,261
Prepaid expenses and other current assets 519,074 672,970
Current portion of deferred costs 195,723 140,719
------------ ------------

Total current assets 37,821,887 25,735,349

Restricted cash 1,458,600 1,897,200
Long-term investments - 9,497,158
Fixed assets, net 789,676 679,359
Deferred costs 212,631 143,462
------------ ------------

Total assets $ 40,282,794 $37,952,528
============ ============

Liabilities and Stockholders' Equity
Current liabilities:

Accounts payable $ 1,268,054 $ 899,291
Accrued expenses 2,719,771 1,936,626
Current portion of deferred revenue 645,316 399,468
------------ ------------

Total current liabilities 4,633,141 3,235,385

Deferred revenue 756,948 471,734
Other long-term liabilities 145,455 189,091
------------ ------------

Total liabilities 5,535,544 3,896,210

Stockholders' equity
Common stock 1,221 1,203
Additional paid-in capital 92,584,941 92,278,379
Deferred compensation (493,541) (745,086)
Accumulated deficit (57,345,371) (57,478,178)
------------ ------------

Total stockholders' equity 34,747,250 34,056,318
------------ ------------

Total liabilities and stockholders'
equity $40,282,794 $37,952,528
============ ============