NeuroMetrix, Inc. Reports Total Revenues of $11.8 Million for the First Quarter 2006, 74% Growth over First Quarter 2005; GAAP Net Income of $147,000, Non-GAAP Adjusted Net Income of $885,000

Total revenues for the three months ended March 31, 2006, theCompany's first quarter, were $11.8 million, compared with $6.8million for the first quarter of 2005, representing an increase of74%. During the three month periods ended March 31, 2006 and March 31,2005, 87% and 88% of revenues, respectively, were derived frombiosensor sales and 13% and 12% of revenues, respectively, werederived from diagnostic device sales.

The gross margin percentage for the first quarter of 2006 was75.6% of revenues compared with 73.2% of revenues for the firstquarter of 2005. In the first quarter of 2006, the gross marginpercentage for biosensors was 74.9% of revenues compared with 73.3% ofrevenues in the first quarter of 2005. The gross margin percentage fordiagnostic devices was 80.3% of revenues for the first quarter of2006, compared with 73.0% of revenues for the first quarter of 2005.

Net income calculated in accordance with U.S. generally acceptedaccounting principles ("GAAP") for the first quarter of 2006 was$147,000 compared with a net loss of $(596,000) for the first quarterof 2005. Net income for the first quarter of 2006 and the net loss forthe first quarter of 2005 included stock-based compensation expense of$737,000 and $76,000, respectively. The large increase in stock-basedcompensation expense was due to the adoption of Statement of FinancialAccounting Standards No. 123R ("FAS 123R") in the first quarter of2006. Excluding stock-based compensation expense, non-GAAP adjustednet income for the first quarter of 2006 was $885,000 compared with anon-GAAP adjusted net loss of $(520,000) for the first quarter of2005.

Basic and diluted net income per share was $0.01 for the threemonths ended March 31, 2006, compared with a basic and diluted netloss per share of $(0.05) for the three months ended March 31, 2005.The basic and diluted net income (loss) per share for the three monthsended March 31, 2006 and March 31, 2005 included stock-basedcompensation expense of $737,000 and $76,000, respectively. Non-GAAPadjusted basic and diluted net income per share was $0.07 for thethree months ended March 31, 2006 compared with non-GAAP adjusted netloss per share of $(0.04) for the same period in 2005.

The following table contains a reconciliation of non-GAAP netincome (loss), adjusted to exclude stock-based compensation expense,to GAAP net income (loss) and non-GAAP basic and diluted net income(loss) per share, adjusted to exclude stock-based compensationexpense, to GAAP basic and diluted net income (loss) per share, duringthe first quarter of 2006 and 2005.
Three Months Ended
March 31,
2006 2005
---------- ----------
Net income (loss) reconciliation:

Net income (loss), as reported in accordance
with GAAP $ 147,338 $ (596,314)
Stock-based compensation expense 737,213 75,975
---------- ----------
Non-GAAP adjusted net income (loss) $ 884,551 $ (520,339)
========== ==========

Net income (loss) per common share
reconciliation:

Net income (loss) per common share, diluted,
as reported in accordance with GAAP $ 0.01 $ (0.05)
Stock-based compensation expense 0.06 0.01
---------- ----------
Non-GAAP adjusted net income (loss) per common
share, diluted $ 0.07 $ (0.04)
========== ==========

Cash and cash equivalents and short-term investments totaled $32.4million as of March 31, 2006, compared with $32.3 million as ofDecember 31, 2005.

Shai N. Gozani, M.D., Ph.D., NeuroMetrix's President & CEOcommented, "During the first quarter of 2006, we posted strong topline growth of 74% on a year over year basis due to continuingphysician demand for our NC-stat neuropathy diagnostic solution. Ourfinancial performance continued to be driven by growth in the primarycare market, where we experienced an increase of 128% in biosensorusage on a year-over-year basis in the first quarter of 2006. We alsoexperienced growth in the specialty care market, with an increase inbiosensor usage of 32% year over year in the first quarter of 2006. Weexpanded our overall active customer count to a total of 3,639physician practices and clinics, as of the end of the first quarter of2006, compared with 2,424 at the end of the first quarter of 2005.There was a total of 255,500 biosensors used by our customers duringthe first quarter of 2006, an increase of 86% over the 137,600biosensors used by our customers in the first quarter of 2005."

Dr. Gozani further commented: "In support of our long term goal oftop line growth, we are in the process of expanding our sales force toa total of 46 regional sales managers. The hiring process wasinitiated in the fourth quarter of 2005 and is essentially complete.Our operating expenses increased in the first quarter of 2006 as aresult of the expansion of our sales and marketing capabilities. Webelieve that the strengthening of our sales force will further advanceour goal of creating a new standard of care throughout themarketplace."

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 Monday, May 1, 2006 to discussthe Company's financial results for the three month period endingMarch 31, 2006. In addition, the Company may answer questionsconcerning business and financial developments and trends, and otherbusiness and financial matters affecting the Company. The conferencecall may be accessed in the United States by dialing 1-888-396-2356and using the confirmation code 49840293. Internationally, theconference call may be accessed by dialing 617-847-8709, and using thesame confirmation code. The webcast, along with the earnings pressrelease and accompanying condensed financial statements, will beaccessible from the Company's website at www.neurometrix.com under the"Investors" tab and a replay of the webcast will be available on theCompany's website for twelve months. A replay of the conference callwill be available starting two hours after the call by dialing1-888-286-8010, domestically and 1-617-801-6888, internationally. Theconfirmation code to access the replay is 35941457. The replay will beavailable for three months following the conference call.

Non-GAAP Information

In addition to disclosing results calculated in accordance withGAAP, the Company has also disclosed non-GAAP financial results thatexclude stock-based compensation expense calculated under therequirements of FAS 123R and under certain additional accountingpronouncements. Management believes that these non-GAAP financialresults provide useful information to investors regarding thefinancial performance of the Company and management believes that thisnon-GAAP financial information facilitates comparisons with historicalfinancial results. Management uses these non-GAAP financial resultsfor purposes of managing the business, planning, forecasting,determining compensation, for comparative purposes when assessingresults versus peer companies and for other purposes. Given theimportance of these non-GAAP financial results to the Company, theCompany has disclosed this information to investors to facilitate anassessment of financial performance on the same basis as that appliedby management. The Company feels that it is important for investors tounderstand the Company's financial results with and without the impactof the non-cash stock-based compensation expense resulting from thegrant of stock options and other equity awards.

Non-GAAP information should not be viewed as a substitute for GAAPinformation. Investors and other users of the Company's financialstatements should consider all information, including stock basedcompensation expense, when assessing the Company's financialperformance. A reconciliation of GAAP to non-GAAP financial resultshas been included in tabular form in this press release.

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 inover 3,600 physician's offices and clinics in the United States. TheCompany holds issued utility patents covering a number of importantaspects 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
-------------------------------
March 31, 2006 March 31, 2005
-------------- --------------
Revenues:
Diagnostic device $ 1,541,437 $ 812,400
Biosensor 10,281,838 5,977,364
------------- -------------

Total revenues 11,823,275 6,789,764

Cost of revenues 2,879,913 1,817,725
------------- -------------

Gross margin 8,943,362 4,972,039

Operating expenses:
Research and development (1) 1,258,608 904,204
Sales and marketing (1) 5,268,253 3,244,651
General and administrative (1) 2,555,249 1,594,040
------------- -------------

Total operating expenses 9,082,110 5,742,895

Loss from operations (138,748) (770,856)

Interest income 293,586 176,380
Interest expense - (1,838)
------------- -------------

Income (loss) before provision for
income taxes 154,838 (596,314)
Provision for income taxes 7,500 -
------------- -------------

Net income (loss) $ 147,338 $ (596,314)
---------------- -------------

Net income (loss) per common share:
Basic $ 0.01 $ (0.05)
Diluted $ 0.01 $ (0.05)

Weighted average shares used to
compute net income (loss) per
common share
Basic 12,414,479 12,043,103
Diluted 13,133,266 12,043,103


(1) Non-cash stock-based compensation
expense included in these amounts
is as follows:

Research and development $ 218,751 $ 19,880
Sales and marketing 190,908 36,269
General and administrative 327,554 19,826

------------- -------------
Total non-cash stock-based
compensation expense $ 737,213 $ 75,975
============= =============



NeuroMetrix, Inc.
Condensed Balance Sheets
(Unaudited)


March 31, December 31,
2006 2005
-------------- ----------------
Assets
Current assets:

Cash and cash equivalents $ 5,395,753 $ 8,170,037
Short-term held-to-maturity investments 26,971,891 24,081,946
Accounts receivable, net 5,576,502 4,543,339
Inventories, net 3,036,472 2,683,409
Prepaid expenses and other current
assets 691,290 614,169
Current portion of deferred costs 249,496 223,009
------------- -------------

Total current assets 41,921,404 40,315,909

Restricted cash 1,458,598 1,458,598
Fixed assets, net 935,832 875,551
Deferred costs 273,346 247,013
------------- -------------

Total assets $ 44,589,180 $ 42,897,071
============= =============

Liabilities and Stockholders' Equity
Current liabilities:

Accounts payable $ 1,438,050 $ 1,698,583
Accrued expenses 3,481,862 3,173,549
Current portion of deferred revenue 874,374 760,613
------------- -------------

Total current liabilities 5,794,286 5,632,745

Deferred revenue 987,342 885,354
Other long-term liabilities 116,364 130,909
------------- -------------

Total liabilities 6,897,992 6,649,008

Stockholders' equity
Common stock 1,246 1,238
Additional paid-in capital 94,426,347 93,212,368
Deferred compensation (343,823) (425,623)
Accumulated deficit (56,392,582) (56,539,920)
------------- -------------

Total stockholders' equity 37,691,188 36,248,063
------------- -------------

Total liabilities and stockholders'
equity $ 44,589,180 $ 42,897,071
============= =============