Rockwell Medical Inc.

03/26/2026 | Press release | Distributed by Public on 03/26/2026 05:01

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect our current plans, forecasts, estimates and beliefs and involve risks and uncertainties. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our actual results, outcomes and the timing of events could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the section titled "Forward-Looking Statements" and "Risk Factors." We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this Annual Report. Forward-looking statements are not historical facts, reflect our current views with respect to future events, and apply only as of the date made. We do not intend, and undertake no obligation, to update these forward-looking statements, except as required by law. Unless the context requires otherwise, references to "we," "our," "us," "the Company," "Rockwell," "Rockwell Medical," and other similar terms refer to Rockwell Medical, Inc., together with its consolidated subsidiaries.
Overview
Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide.
The Company is a supplier of liquid and dry, acid and bicarbonate concentrates for dialysis patients in the United States. Hemodialysis is the most common form of end-stage kidney disease treatment and is usually performed in freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or a patient's home. This represents a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients.
Rockwell's products are vital to vulnerable patients with end-stage kidney disease. We are an established leader in manufacturing and delivering high-quality hemodialysis concentrates and dialysates, along with certain ancillary products, to dialysis providers and distributors in the United States and abroad. Rockwell provides the hemodialysis community with products controlled by a Quality Management System regulated by the U.S. Food and Drug Administration ("FDA"). Rockwell is ISO 13485 Certified and adheres to current Good Manufacturing Practices ("cGMP") and Association for Advancement of Medical Instrumentation ("AAMI") standards. Rockwell manufactures hemodialysis concentrates at its facilities in Michigan and Texas, and manufactures its dry acid concentrate mixers at its facility in Iowa. The Company previously operated a manufacturing and warehouse facility in South Carolina, but the Company concluded manufacturing at that facility in the third quarter of 2025 as part of its ongoing efforts to streamline operations and improve efficiency.
Rockwell delivers the majority of its hemodialysis concentrates products and mixers to dialysis clinics throughout the United States and internationally, utilizing its own delivery trucks and third-party carriers. Rockwell has developed a core expertise in manufacturing and delivering hemodialysis concentrates, and has built a longstanding reputation for reliability, quality, and excellent customer service.
Our commercial organization supports the Company's vision to focus its efforts on driving Rockwell Medical towards sustainable profitability. Our commercial team is focused on expanding revenue within our current customer base and seeking to grow revenue through the addition of new accounts to increase Rockwell's overall market share within the hemodialysis concentrates sector. We focus on creating long-term partnerships with customers, securing appropriate pricing for our products, and delivering high-quality product to our customers for use with their patients.
We currently operate in one market segment, the hemodialysis market, which involves the manufacturing, sale and distribution of hemodialysis products to hemodialysis clinics, including dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process.
On September 18, 2023, Rockwell and DaVita, Inc. ("DaVita") entered into an Amended and Restated Products Purchase Agreement ("the Amended Agreement"), under which the Company supplies DaVita with certain dialysis concentrates. The term of the Amended Agreement was scheduled to expire on December 31, 2024. Prior to the expiration, the Company received written notice from DaVita that DaVita intended to extend the term of the Amended Agreement through December 31, 2025 (the "Extension Term"). Subsequently, DaVita indicated that it would completely transition to another supplier, subject to further discussions between Rockwell and DaVita. Product pricing was increased for the Extension Term. Additionally, DaVita agreed to quarterly, non-refundable payments totaling $2.0 million to ensure supply continuity for products purchased during the year ended December 31, 2025. These quarterly, non-refundable payments of $2.0 million were recorded as revenue during the year ended December 31, 2025. While DaVita did significantly reduce its product purchases from Rockwell, it did not completely transition its business to a different supplier. On December 31, 2025, the Company and DaVita entered into a second amendment (the "Second Amendment") to the Amended Agreement which extended the term of the Amended Agreement by one additional year to December 31, 2026 (the "Second Extension Term"). The Second Amendment also provides for a price increase on the products sold under the Amended Agreement for the Second Extension Term.
In 2024, Rockwell continued to upgrade its manufacturing equipment to streamline production and improve margins, renegotiated pricing with key suppliers, and entered into several multi-year customer purchase agreements.
In 2025, the Company continued to right-size the organization, including the closure of the Greer facility, to enhance operational efficiency and support long-term growth, while meeting customer demand. Throughout the year, Rockwell Medical signed several new long-term product purchasing agreements with university medical centers, kidney centers and hospital systems. One notable new product purchase agreement was with Innovative Renal Care, one of the largest dialysis service providers in the United States, which will remain in effect for three years with the option to extend for an additional one-year period. Rockwell Medical also worked to renew and expand existing product purchase agreements. One notable expansion was with the largest provider of dialysis in skilled nursing facilities in the United States. This product purchase agreement is in effect for three years with the option to renew for one additional year and includes supply and purchasing minimums. Additionally in 2025, the Company added new customers in the western portion of the United States. As a result, the western U.S. now accounts for more than 10% of the Company's customer clinic footprint.
Results of Operations
The following table summarizes our operating results for the periods presented below (dollars in thousands):
For the Year Ended December 31,
2025 % of Revenue 2024 % of Revenue % Change
Net Sales $ 69,258 $ 101,489 (31.8) %
Cost of Sales 57,563 83.1 % 84,005 82.8 % (31.5) %
Gross Profit 11,695 16.9 % 17,484 17.2 % (33.1) %
Research and Product Development - - % 19 - % (100.0) %
Selling and Marketing 2,354 3.4 % 2,749 2.7 % (14.4) %
General and Administrative 14,032 20.3 % 14,108 13.9 % (0.5) %
Operating (Loss) Income $ (4,691) (6.8) % $ 608 0.6 % (871.5) %
Net Sales
During the year ended December 31, 2025, our net sales were $69.3 million compared to net sales of $101.5 million during the year ended December 31, 2024. Product revenue for the year ended December 31, 2025 was $68.9 million compared to product revenue of $101.4 million for the year ended December 31, 2024. The decrease of $32.5 million was primarily due to a $34.6 million reduction in sales to DaVita, partially offset by an increase of $2.1 million from price increases to other existing customers and sales to new customers. DaVita represented 16% and 45% of net sales for the years ended December 31, 2025 and 2024, respectively.
Net sales of non-product revenue were $0.3 million for the year ended December 31, 2025 from the recognition of the remaining deferred license revenue associated with Sun Pharmaceutical Industries Ltd. ("Sun Pharma"), Jeil Pharmaceutical Co., Ltd. ("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan Pharma"). Net sales of non-product revenue were not material during the year ended December 31, 2024.
Cost of Sales and Gross Profit
Cost of sales during the year ended December 31, 2025 was $57.6 million, resulting in gross profit of $11.7 million, compared to cost of sales of $84.0 million and a gross profit of $17.5 million during the year ended December 31, 2024. Gross profit decreased by $5.8 million during the year ended December 31, 2025 compared to the year ended December 31, 2024 driven by (i) a $6.7 million decrease in product sales, which includes $1.8 million from a special large order of premium-priced product to DaVita during the year ended December 31, 2024 that did not repeat in 2025, (ii) an increase of $1.0 million in additional manufacturing costs and (iii) an increase of $0.4 million in severance expense, partially offset by a price adjustment of $2.0 million for DaVita purchases for the year ended December 31, 2025 and a $0.3 million decrease in facility transition costs.
Selling and Marketing Expense
Selling and marketing expenses were $2.4 million during the year ended December 31, 2025 compared with $2.7 million during the year ended December 31, 2024. The decrease of $0.4 million is due to $0.2 million of lower marketing costs and a $0.2 million decrease in employee compensation and recruiting expense.
General and Administrative Expense
General and administrative expenses were $14.0 million during the year ended December 31, 2025 compared with $14.1 million during the year ended December 31, 2024. The $0.1 million decrease was primarily due to increases of $0.5 million of stock-based compensation expense and $0.3 million of employee compensation, offset by decreases of $0.6 million of administrative expense and $0.3 million of professional fees.
Other Expense
Total other expense for the years ended December 31, 2025 and December 31, 2024was $0.6 million and $1.1 million, respectively, which was driven by interest expense of $1.1 million and $1.3 million, respectively, related to our debt facility (See Note 16 in the consolidated financial statements included in this Annual Report on Form 10-K), partially offset by $0.2 million and $0.1 million of interest income, respectively, as well as realized gains on available-for-sale of investments of $0.3 million and $0.1 million, respectively.
Liquidity and Capital Resources
Since inception, we have incurred significant net losses and have funded our operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships. On December 31, 2025, we had an accumulated deficit of approximately $403.0 million and stockholders' equity of $37.0 million. As of December 31, 2025, we had approximately $25.0 million of cash, cash equivalents and investments available-for-sale, and net working capital of $28.6 million. Net cash used in operating activities for the year ended December 31, 2025 was approximately $0.7 million.
The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to the ability to meet our revenue forecasts, as well as the costs associated with our manufacturing and transportation operations related to our concentrate business. We may elect to raise capital in the future through one or more of the following: (i) equity and/or debt raises through the equity and capital markets, though there can be no assurance that we will be able to secure additional capital or funding on acceptable terms, or if at all; and (ii) strategic transactions, including potential alliances and collaborations focused on markets outside the United States, as well as potential combinations (including by merger or acquisition) or other corporate transactions. In addition, any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita. Specifically, until DaVita holds less than 50% of its original investment in the Company's Convertible Series X Preferred Stock, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5.0 million or to refinance existing debt, unless DaVita consents.
We believe our ability to fund our activities in the long term will be highly dependent upon (i) our ability to execute on the growth strategy of our hemodialysis concentrates business and maintain sales with existing customers, (ii) our ability to achieve sustained profitability and (iii) our ability to identify, develop, in-license, or acquire new products in developing our product portfolio. All of these strategies are subject to significant risks and uncertainties such that there can be no assurance we will be successful in achieving them. If we are unsuccessful in executing our business plan and we are unable to raise the required capital, we may be forced to curtail all of our activities and, ultimately, cease operations. Even if we are able to raise sufficient capital, such financings may only be available on unattractive terms, or result in significant dilution of stockholders' interests and, in such event, the market price of our common stock may decline.
Management evaluated its going concern by reviewing the Company's operational plans, which include executing on the projected financial information, including price increases, acquisition of new customers, projected growth of margins and cost containment activities. Based on the currently available working capital and expectation of the ability of management to execute on the Company's operational plans noted above, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report. Additionally, the Company's plans may include raising capital, if needed, by using the $13.1 million remaining under our at-the-market facility ("ATM Facility"), which provides for the offer and sale of up to an aggregate of $25.0 million of shares of the Company's common stock through the sales agent, or other methods or forms of financings, subject to existing limitations. For further information on our ATM Facility, see Note 11 to our consolidated financial statements in this Annual Report on Form 10-K.
On January 2, 2024, we amended our Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP ("Innovatus") to include, among other things, an interest only period of 30 months, or up to 36 months if certain conditions are met, and to extend the maturity date to January 1, 2029. The Company is subject to certain covenants and cure provisions under the Loan Agreement. As of December 31, 2025, the Company is in compliance with all covenants. See Note 16 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
On July 4, 2025, the U.S. enacted P.L. 119-21, a U.S. federal statute passed by the 119th United States Congress that includes tax and spending policies (the "Act"), which contains a broad range of tax reform provisions affecting businesses,
including extending or reinstating certain provisions of the 2017 Tax Cuts and Jobs Act, tax relief measures, modifications of certain energy tax credits granted under the Inflation Reduction Act and limits on various tax deductions, among other key provisions. The Company evaluated the Act and concluded it will not have a material impact on its consolidated financial statements.
Global Economic Considerations
The global macroeconomic environment is uncertain and could be negatively affected by, among other things, changes in U.S. trade policies, including tariffs and other trade restrictions or the threat of such actions, instability in the global capital and credit markets, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Middle East conflicts and other political tensions, and the occurrence of natural disasters and public health crises. Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures. At this time, the Company is unable to quantify the potential effects of this economic instability on our future operations.
Rockwell has utilized a range of financing methods to fund its operations in the past; however, current conditions in the financial and credit markets may limit the availability of funding, refinancing, or increase the cost of funding. Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future.
Net Cash (Used In) Provided by Operating Activities
Net cash used in operating activities was $0.7 million for the year ended December 31, 2025 compared to net cash provided by operating activities of $4.2 million for the year ended December 31, 2024. The change in cash used in operating activities during the current period as compared to cash provided by operating activities in the prior period was primarily due to (i) an increase in net loss of approximately $4.8 million and (ii) an increase in cash used from non-cash adjustments, partially offset by (iii) a decrease in cash used by changes in current balance sheet accounts in the ordinary course of business of approximately $0.1 million, primarily due to decreases of $3.1 million from inventory and $0.8 million from accounts payable, partially offset by increases of $2.7 million from accounts receivable, net, $0.6 million from accrued and other liabilities and $0.4 million from deferred license revenue.
Net Cash Used In Investing Activities
Net cash used in investing activities was $8.5 million during the year ended December 31, 2025. The net cash used in investing activities was due to $24.2 million in purchases of our available-for-sale investments and $0.5 million for the purchase of equipment, partially offset by proceeds from the sale of our available-for-sale investments of $16.2 million.
Net cash used in investing activities was $4.9 million during the year ended December 31, 2024. The net cash used in investing activities was due to $5.9 million in purchases of our available-for-sale investments and $1.0 million for the purchase of equipment, offset by proceeds from the sale of our available-for-sale investments of $2.0 million.
Net Cash Provided By Financing Activities
Net cash provided by financing activities was $4.3 million during the year ended December 31, 2025. The net cash provided by financing activities was primarily due to the net proceeds from the issuance of common stock in connection with the ATM facility of $7.8 million, partially offset by $2.4 million of earn-out payments in connection with the Company's 2023 acquisition of certain customer relationships, equipment, and inventory from Evoqua Water Technologies LLC ("Evoqua") (the "Evoqua Asset Acquisition") during the year ended December 31, 2025.
Net cash provided by financing activities was $7.3 million during the year ended December 31, 2024. The net cash provided by financing activities was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $10.2 million, partially offset by the cash paid in connection with the Evoqua Asset Acquisition of $1.6 million during the year ended December 31, 2024.
Contractual Obligations and Other Commitments
We generally expect to satisfy our material cash requirements, including contractual obligations and commitments, with cash on hand and cash provided by operating activities. See Notes 13, 14, 15, and 16 to the consolidated financial statements included elsewhere in this Form 10-K for further details.
Critical Accounting Estimates and Judgments
Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. These accounting principles require us to make estimates, judgments and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, and contingencies. All significant estimates, judgments and assumptions are developed based on the best information available to us at the time made and are regularly reviewed and updated when necessary. Actual results could differ from these estimates. Changes in estimates are reflected in our financial statements in the period of change based upon on-going actual experience, trends, or subsequent realization depending on the nature and predictability of the estimates and contingencies.
Certain accounting estimates, including those concerning revenue recognition, impairments of long-lived assets, goodwill, and deferred consideration are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates. These are described below. For further information on our accounting policies, see Note 3 to our consolidated financial statements in this Annual Report on Form 10-K.
Revenue Recognition
The Company recognizes revenue under Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers.The core principle of the standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
•Step 1: Identify the contract with the customer
•Step 2: Identify the performance obligations in the contract
•Step 3: Determine the transaction price
•Step 4: Allocate the transaction price to the performance obligations in the contract
•Step 5: Recognize revenue when the company satisfies a performance obligation
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue.
Certain distributors deduct distribution service fees from amounts due to the Company. These fees, along with chargebacks arising from contracted pricing arrangements with certain end customers, are recorded as reductions of revenue. Chargebacks represent the difference between the distributor's acquisition cost and the lower contracted price offered to the end customer, and are estimated and recorded as a reduction of revenue at the time of the initial sale to the distributor.
Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer.
Impairment of Long-lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Impairment losses on long-lived assets, such as real estate and equipment and definite-lived intangible assets, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable. Impairment losses are then measured by comparing the fair value of assets to their carrying amounts. For the years ended December 31, 2025 and 2024, there were no impairments of long-lived assets.
Goodwill and Intangible Assets
Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. Intangible assets with indefinite useful lives are measured at their respective fair values as of the acquisition date. We do not amortize goodwill and intangible assets with indefinite useful lives.
We review goodwill and indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit or the indefinite-lived intangible assets below their carrying values.
Intangible assets with definite lives are amortized over their estimated useful lives. Intangible assets subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable.
Definite-lived intangible assets consist of our customer relationships intangible asset recorded in connection with the Evoqua Asset Acquisition, which is being amortized over 20 years.
New Accounting Pronouncements
New accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption. For further discussion on recent accounting pronouncements, please see Note 3 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
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