Rockwell Medical, Inc. Q2 FY2025 earnings call

• Core objectives for 2025 include securing base business with long-term contracts, rightsizing organization, and filling revenue gap.
• Improved cash position, consistent gross margin, and cash flow positive from operations.
• Significant opportunities with new and existing customers; if successful, could be transformational.
• Over 80% of customers now under long-term contracts.
• Entered new product purchase agreements with Innovative Renal Care, largest rural health system in the U.S., and others.
• Continuing to supply largest customer past transition date and in active discussions for new contract.

Net sales for the second quarter of 2025 were $16.1 million, a 38% decrease from $25.8 million in the same period of 2024. Net sales for the 6 months ended June 30, 2025, were $35 million, a 28% decrease from $48.5 million in the same period of 2024. Gross profit for the second quarter was $2.5 million, a 45% decrease from $4.6 million in the same period of 2024. Gross profit for the 6 months ended June 30 was $5.5 million, a 27% decrease from $7.6 million in the same period of 2024. Gross margin for the second quarter of 2025 was 16%, consistent with the first quarter and a slight decrease from 18% in the same period of 2024. Gross margin for the 6 months ended June 30, 2025, was 16%, consistent with the same period of 2024. Adjusted EBITDA for Q2 2025 was a negative $200,000, an improvement from negative $400,000 in Q1 2025 and a contrast to positive $1.4 million in Q2 2024. Adjusted EBITDA for the 6 months ended June 30, 2025, was negative $700,000 compared to positive $900,000 in the same period of 2024. Cash, cash equivalents and investments available for sale at June 30, 2025, were $18.4 million, an increase from $17.3 million at the end of Q1.

• Reiterated 2025 guidance: net sales $65 million to $70 million, gross margin 16% to 18%, adjusted EBITDA negative $500,000 to positive $500,000.

• Concentration risk from largest customer, but efforts made to diversify with long-term contracts.
• Competitor recall of contaminated product affecting supply chain and negotiations with customers.

Q: Expansion plans in the Western United States?

A: West is a significant opportunity with approx $100 million potential; focus on lining up larger customers, more visibility later in the year.

Q: Negotiations with largest customer?

A: Active discussions for long-term agreement with DaVita, optimistic about outcome, and working with other large suppliers with potential impact on fourth quarter financials.

Q: Capital allocation and revenue predictability?

A: Primary focus on capital equipment for efficiency; long-term agreements create reliable revenue stream to get back to steady growth with reproducible revenue.

Q: Gross margins stability?

A: Rightsized organization with staff reductions, invested in new equipment for efficiency, and gross margin ticked up in recent month.

Q: Concentration risk mitigation?

A: Diversified customers by adding new ones and other efforts, now over 80% under long-term contracts to avoid past concentration risk.

Q: Competitor recall impact?

A: Working with competitor to supplement supply and ensuring continuous supply of liquid products for patient care.