ROCKWELL MEDICAL, INC. Q4 FY2024 earnings call

• 2024 was a significant year with net sales over $100M, improved gross margin, and first full-year adjusted EBITDA profitability.
• Largest customer is transitioning volume, expected to lose ~$34M revenue by June 30, 2025, and Rockwell is reducing expenses accordingly while negotiating contract extension.
• Terminated contract manufacturing agreement with third-party related to Evoqua asset acquisition, saving over $2M annually, and integrating Evoqua manufacturing line.
• 2025 focus includes shifting from less-profitable customers, diversifying customer base and product portfolio, and optimizing business.

For the full year 2024, Rockwell Medical generated net sales of $101.5 million. Net sales for the fourth quarter of 2024 were $24.7 million, representing a 12% increase over the same period in 2023. Full year 2024 net product sales were $101.4 million, a 27% increase from 2023. Gross profit for the full year 2024 was $17.5 million, more than double the 2023 figure. Gross margin for the full year 2024 was 17%, an improvement from 10% in 2023. The fourth quarter 2024 gross margin was 15%, up from 13% in 2023. The fourth quarter 2024 was impacted by a one-time expense of ~$900,000 related to contract manufacturing transition.

• Projected 2025 net sales: $65M - $70M.
• Projected 2025 gross margin: 16% - 18%.
• Projected 2025 adjusted EBITDA: -$500,000 to +$500,000.

• Largest customer is transitioning all business away by June 30, 2025, resulting in loss of ~$34M revenue.
• Uncertainty around negotiations with largest customer for potential contract extension and future volume commitments.

Q: Regarding the largest customer, how much revenue from them is in the 2025 guidance and details on discussions?

A: The guidance reflects the decline from the largest customer, with ~$45M historical revenue from them, and $34M loss expected. Discussions are ongoing with no inclusion in guidance, and any positive outcome would be upside.

Q: Risk factors for other customers and strategies to prevent issues? Also, growth plans for bicarbonate cartridge business?

A: No issues with other customers currently; strong customer care and long-term supply arrangements. For bicarbonate cartridge, strategy is to introduce to existing customer base, with kickstart in 2025 and growth as customers switch to compatible machines.

Q: Revenue guidance offset, West Coast expansion, and gross margin?

A: Guidance includes commercial activities and secured arrangements. West Coast expansion involves targeting available supply and distribution pilots. Gross margin guidance is due to lower sales base and continued price adjustments to reflect product value.