CorMedix Inc.

11/12/2026 | Press release | Distributed by Public on 11/12/2026 07:22

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and our audited 2025 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC"), on March 5, 2026.
Forward Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to risks and uncertainties. Forward-looking statements are often identified by the use of words such as, but not limited to, "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "forecast," "future," "intend," "likely," "may," "plan," "possible," "potential," "project," "seek," "should," "target," "will," "would," and similar expressions or variations intended to identify forward-looking statements. All statements, other than statements of historical facts, regarding management's expectations, beliefs, goals, plans or CorMedix's prospects should be considered forward-looking statements. Readers are cautioned that actual results may differ materially from projections or estimates due to a variety of important factors, and readers are directed to the Risk Factors identified in CorMedix's filings with the SEC, including its most recent Annual Report on Form 10-K, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from CorMedix. CorMedix may not actually achieve the goals or plans described in its forward-looking statements, and such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Investors should not place undue reliance on these statements. CorMedix assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Actual outcomes or results may differ from anticipated results, sometimes materially. Factors that could cause actual results to differ include, but are not limited to: the satisfaction or waiver of the conditions to the closing of the Acquisition, including the failure to obtain necessary regulatory approvals and the failure to obtain the requisite approval by Heron's stockholders, in a timely manner or at all; the possibility that the Acquisition does not close; the ultimate outcome of the acquisition of Heron; negative effects of the announcement or the consummation of the Acquisition on the market price of CorMedix's common stock; incurrence of significant transaction costs; unknown liabilities of Heron; the risk of stockholder litigation and regulatory actions related to the Acquisition or Heron's business; risks related to the financing of the transaction; the impact of the Acquisition on future strategic opportunities and decisions; uncertainties regarding the commercial success of CorMedix's and Heron's commercialized and pipeline products; the timing and the ultimate approval of any new drug applications by regulatory authorities; competitive developments; the ability of the combined company to achieve the identified synergies; the ability to integrate the Melinta business into CorMedix and realize the anticipated strategic benefits of the transaction within the expected time-frames or at all; the ability to integrate Heron's business into CorMedix and realize the anticipated strategic benefits of the transaction within the expected time-frames or at all; that such integration may be more difficult, time-consuming or costly than expected; that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers or suppliers) may be greater than expected following the public announcement, and closing, of the Acquisition; the retention of certain key employees; the expected benefits and success of CorMedix's and Heron's products and product candidates; potential litigation relating to the Acquisition that could be instituted against CorMedix or its directors; rating agency actions and CorMedix's ability to access short- and long-term debt markets on a timely and affordable basis; general economic conditions that are less favorable than expected; geopolitical developments and additional changes in international trade policies and relations, including tariffs; and the ability of our products and product candidates to compete effectively against current and future competitors.
Overview
CorMedix Inc. (collectively, with our wholly owned subsidiaries, referred to herein as "we," "us," "our" or the "Company") is a biopharmaceutical company focused on developing and commercializing therapeutic products for life-threatening diseases and conditions. Our results of operations are driven by the commercialization of DefenCath® in the United States and, following the acquisition of Melinta in August 2025 (the "merger"), a diversified portfolio of hospital- and clinic-focused infectious disease products. The financial results of Melinta have been included in our consolidated financial statements since the acquisition date, and, as a result, comparisons to prior periods may not be meaningful.
There have been no material changes to our business, strategy or key drivers of our results of operations from those described in our Annual Report on Form 10-K for the year ended December 31, 2025. Accordingly, this discussion should be read in conjunction with the information presented in the Form 10-K, including Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.
Our operating results continue to be influenced by a number of factors, including product adoption and utilization trends, pricing and reimbursement dynamics, including those applicable to DefenCath, and the ongoing integration and performance of the Melinta Portfolio. In addition, our results reflect the impact of our capital structure, including interest expense associated with our convertible senior notes, as well as investments in our commercial infrastructure and development activities.
We continue to focus on executing our commercial strategy, supporting product adoption across our portfolio, and advancing initiatives designed to optimize our operating model, improve efficiency within the broader organization, and support long-term growth. While our strategy and key drivers remain unchanged, our results may continue to be affected by the timing and pace of product adoption, reimbursement dynamics, and the execution of cost optimization initiatives.
Recent Developments
Acquisition of Heron Therapeutics and Loan Facility
On November 8, 2026, we entered into an asset purchase agreement (the "Agreement") with Heron Therapeutics, Inc. ("heron"), pursuant to which Heron has agreed to sell substantially all of its assets, other than certain excluded assets, to us, and we have agreed to acquire those assets and assume certain liabilities of Heron as set forth in the Agreement (the "Acquisition"). If consummated, the Acquisition would add four commercial-stage products to our portfolio: ZYNRELEF (bupivacaine and meloxicam) extended-release solution for postoperative pain; APONVIE (aprepitant) injectable emulsion for the prevention of postoperative nausea and vomiting; CINVANTI (aprepitant) injectable emulsion and SUSTOL (granisetron) extended-release injection for the prevention of chemotherapy-induced nausea and vomiting. Each is administered in hospitals, ambulatory surgical centers or infusion centers - the institutional settings of care where we have built our commercial infrastructure. The acquired assets would also include the assumption of Heron's rights under a multi-product Development and License Agreement.
Under the terms of the Agreement, we will pay upfront consideration at the closing of the Acquisition consisting of $145.0 million in cash, subject to certain adjustments for Heron's closing cash and net working capital, of which $2.0 million will be deposited into escrow at closing to secure post-closing adjustments (which may not exceed $10.0 million in either direction), and to issue 14,583,333 shares of CorMedix common stock. In addition to the upfront consideration, Heron will be eligible to receive, if and when payable on the terms set forth in the Agreement:
•Total earn-out payments of up to $55.0 million: $25.0 million if ZYNRELEF net sales equal or exceed $65.0 million for calendar year 2028, plus an additional $30.0 million if ZYNRELEF net sales equal or exceed $95.0 million for calendar year 2028, payable at our election in cash shares of CorMedix common stock or a combination thereof (provided that any portion that would cause the aggregate shares issued under the Agreement to exceed 19.9% of our common stock outstanding as of the closing will be paid in cash); and
•Royalties equal to 5% of the amount, if any, by which aggregate annual net sales of CINVANTI, SUSTOL and the products covered by Heron's multi-product Development and License Agreement which exceed $25 million in calendar year 2027, calendar year 2028 and calendar year 2029.
The Acquisition advances our strategy of expanding our portfolio with differentiated products used in institutional settings of care. Following our acquisition of Melinta Therapeutics in August 2025, we have assembled a commercial organization focused on hospitals, infusion centers, dialysis clinics and other institutional settings of care. The Heron portfolio is highly complementary to this footprint, sharing overlapping call points across hospital pharmacy and therapeutics committees, group purchasing organizations, integrated delivery networks and ambulatory surgical centers.
•Scale and diversification: Adds an established revenue base of approximately $150 million in September 30, 2026 trailing twelve-month net product revenue across acute care and oncology supportive care, further broadening our revenue mix.
•Commercial and operational leverage: Deploys Heron's products through our existing institutional commercial, market access, medical affairs and supply chain infrastructure.
•Growth from the acute care franchise: ZYNRELEF and APONVIE represent the fastest-growing products in the Heron portfolio and are positioned for continued expansion in the hospital and ambulatory surgical center settings.
•Expanded hematology/oncology presence: CINVANTI, SUSTOL and Heron's hematology/oncology program complement CorMedix's emerging position in the space with REZZAYO® (rezafungin for injection), which is currently indicated for treating candidemia and invasive candidiasis and in development for prophylaxis of invasive fungal disease in allogeneic stem cell transplant patients.
The closing of the Acquisition is subject to approval by Heron stockholders, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary closing conditions. The Acquisition is not subject to any financing contingency and is expected to close in the first quarter of 2027.
On November 8, 2026, concurrent with the signing of the Agreement, we entered into a senior secured loan agreement with BioPharma Credit PLC, as collateral agent, and each of BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP, which are funds managed by Pharmakon Advisors, LP, as lenders (the "Lenders"), providing for aggregate term loan commitments of up to $150.0 million (the "Loan Facility"). The Loan Facility consists of (i) a term loan in an aggregate principal amount of $75.0 million ("Tranche A"), the proceeds of which are intended to fund the Acquisition, and (ii) a term loan in an aggregate principal amount of up to $75.0 million ("Tranche B"), the proceeds of which may be used to fund certain acquisitions or in-licensing transactions involving commercial-stage pharmaceutical products. Tranche A is available through May 8, 2027, subject to consummation of the Acquisition and satisfaction of the applicable funding conditions. Tranche B may be funded before or after Tranche A and, if funded prior to Tranche A, requires a borrowing of between $50.0 million and $75.0 million prior to July 30, 2028, subject to satisfaction of the applicable funding conditions.
Borrowings under the Loan Facility mature on the fifth anniversary of the initial funding date, subject to an earlier springing maturity if, 90 days prior to the stated maturity date, our consolidated total gross leverage exceeds 3.0x and more than $25.0 million aggregate principal amount of our 4.00% convertible senior notes due 2030 remain outstanding. Borrowings under the Loan Facility bear interest at a rate equal to three-month Term SOFR, subject to a 3.50% floor, plus 5.75% per annum, with interest payable quarterly in arrears. Equal quarterly principal payments generally commence on the last day of the fiscal quarter ending on or immediately following the third anniversary of the initial funding date, with the remaining outstanding principal balance due at maturity. If specified REZZAYO revenue or consolidated total gross leverage thresholds are satisfied as of September 30, 2029, we may elect to defer commencement of scheduled principal amortization until the last day of the fiscal quarter ending on or immediately following the fourth anniversary of the initial funding date. We are also required to pay additional consideration equal to 1.5% of the principal amount of each term loan upon funding.
We may voluntarily prepay borrowings under the Loan Facility, in whole or in part, subject to certain minimum prepayment amounts and notice requirements. Certain prepayments made prior to the second anniversary of the applicable funding date are subject to a make-whole amount (other than as a result of the springing maturity), and certain prepayments are subject to a premium of 3.0% of the principal amount prepaid prior to the third anniversary of the applicable funding date, 2.0% on or after the third anniversary but prior to the fourth anniversary, and 1.0% thereafter. The Loan Facility also requires mandatory prepayment upon the occurrence of certain events, including a change in control and specified prepayments, repurchases or redemptions of the Company's 4.00% convertible senior notes due 2030, in each case subject to specified exceptions.
The obligations under the Loan Facility are guaranteed by substantially all of our direct and indirect wholly owned subsidiaries, other than certain excluded subsidiaries, and are secured on a first-priority basis by the equity interests of our subsidiaries and substantially all tangible and intangible personal property and real property of the Company and the guarantors, subject to certain exceptions and limitations. The Loan Facility contains customary affirmative and restrictive covenants, including restrictions on the incurrence of additional indebtedness, creation of liens, dispositions of assets, investments and acquisitions, dividends and other distributions, mergers and consolidations, and certain royalty arrangements and other financing arrangements, as well as customary representations and warranties and events of default. The Loan Facility does not contain financial maintenance covenants.
Additional information regarding the Agreement and Loan Facility is included in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 9, 2026.
Other Recent Developments
REZZAYO is currently approved for the treatment of candidemia and invasive candidiasis in adults. In October 2026, the Company announced that the U.S. Food and Drug Administration ("FDA") has accepted for filing the supplemental New Drug Application ("sNDA") seeking approval of REZZAYO® (rezafungin for injection) for the prophylaxis of invasive fungal disease. The sNDA was submitted by Mundipharma, the Company's global development partner, and the FDA has granted priority review with a Prescription Drug User Fee Act ("PDUFA") target action date in the first quarter of 2027. The sNDA is supported by the Phase III ReSPECT pivotal study, for which the Company announced positive topline results in April. ReSPECT evaluated the efficacy and safety of once weekly rezafungin (rezafungin acetate) compared with a standard antimicrobial regimen ("SAR") for the prophylaxis of invasive fungal diseases in adults undergoing allogeneic hematopoietic stem cell transplantation ("HSCT"). If REZZAYO is approved for this new indication, the Company is targeting to begin promotional efforts beginning in the second half of 2027.
On April 2, 2026, the U.S. government issued an executive order imposing new tariffs on certain imported goods, including APIs, excipients, and packaging materials commonly used in the pharmaceutical industry. The Company is currently assessing the impact of the tariffs, which may adversely affect our gross margins and operating results. We are currently in the process of onshoring the manufacture of a number of products into the U.S., which we believe will both drive lower manufacturing costs and mitigate certain incremental costs related to tariffs. However, there can be no assurance that we will be able to fully or substantially offset these incremental costs.
Results of Operations
Our results of operations are primarily driven by product sales across our portfolio, including contributions from the Melinta acquisition and continued momentum of DefenCath. Operating expenses reflect investments in commercialization, integration activities and personnel to support the expanded business. In addition, our results are impacted by our capital structure, including interest expense associated with our convertible senior notes. Period-to-period comparisons are affected by the inclusion of Melinta's results of operations beginning on August 29, 2025, in connection with the merger.
On July 1, 2026, DefenCath's Transitional Drug Add-on Payment Adjustment ("TDAPA") reimbursement transitioned into a post-TDAPA add-on adjustment of $2.37 per dialysis treatment, the calculation of which is determined by the Centers for Medicare & Medicaid Services ("CMS"). As a result of the methodology utilized by CMS to calculate the post-TDAPA add-on adjustment, the level of reimbursement provided to institutions treating dialysis patients significantly declined from previous levels. This decline in CMS reimbursement has resulted in a reduction to DefenCath's net pricing, resulting in lower net sales, for DefenCath in the second half of 2026 relative to historical periods.
On October 29, 2026, CMS issued their 2027 End Stage Renal Disease Prospective Payment System (ESRD PPS) final rule in which they established a new post-TDAPA add-on payment for DefenCath in the amount of $8.32 to take effect January 1, 2027. While this amount is significantly higher than the current add-on payment of $2.37, CMS finalized a new process for calculating add-on payments and will now reset the amount quarterly (instead of annually). We expect that the add-on adjustment will decrease in the second quarter of 2027, but currently estimate that the average rate for the full year 2027 will be at least two times the current $2.37 rate. To mitigate this pressure on DefenCath reimbursement and the anticipated impact on sales pricing, we continue to work to find new avenues to grow DefenCath beyond the fee-for-service ESRD patients that are TDAPA-reimbursed by Fee-for-Service Medicare.
Comparison of the Three and Nine Months Ended September 30, 2026 and 2025.
The following is a tabular presentation of our unaudited condensed consolidated operating results for the three and nine months ended September 30, 2026 and 2025 (in thousands):
For the Three Months Ended
September 30, 		% Increase/ (Decrease) For the Nine Months Ended
September 30, 		% Increase/ (Decrease)
2026 2025 2026 2025
Revenue and Grant Income:
Product sales, net $ 48,622 $ 101,547 (52) % $ 264,879 $ 180,365 47 %
Contract revenue 2,642 2,729 (3) % 10,690 2,729 292 %
Grant income 3,255 - 100 % 8,308 - 100 %
Total Revenue and Grant Income $ 54,519 $ 104,276 (48) % $ 283,877 $ 183,094 55 %
Cost of sales (exclusive of amortization of intangibles) 14,215 7,567 88 % 40,725 10,922 273 %
Amortization of intangibles 10,300 3,628 184 % 30,900 3,732 728 %
Gross profit $ 30,004 $ 93,081 (68) % $ 212,252 $ 168,440 26 %
Operating Expenses:
Research and development 7,036 5,098 38 % 20,932 10,733 95 %
Selling and marketing 11,683 11,186 4 % 36,662 22,044 66 %
General and administrative 17,904 25,451 (30) % 54,709 44,648 23 %
Total Operating Expenses 36,623 41,735 (12) % 112,303 77,425 45 %
Income From Operations $ (6,619) $ 51,346 (113) % $ 99,949 $ 91,015 10 %
Other (Expense) Income:
Unrealized gain on marketable equity security 1,182 3,091 (62) % 182 3,091 (94) %
Change in contingent consideration (11,543) (2,400) 381 % (22,394) (2,400) 833 %
Other non-operating income, net 532 539 (1) % 193 1,864 (90) %
Total Other (Expense) Income $ (9,829) $ 1,230 (899) % $ (22,019) $ 2,555 (962) %
Income before income taxes $ (16,448) $ 52,576 (131) % $ 77,930 $ 93,570 (17) %
Tax expense (1,726) (55,987) (97) % 28,063 (55,465) (151) %
Net Income $ (14,722) $ 108,563 (114) % $ 49,867 $ 149,035 (67) %
Revenue and grant income for the three months ended September 30, 2026 was $54.5 million as compared to $104.3 million for the same period in 2025, a decrease of $49.8 million or (48)%. Revenue for the nine months ended September 30, 2026 was $283.9 million as compared to $183.1 million for the same period in 2025, an increase of $100.8 million or 55%. The decrease for the three months ended September 30, 2026 was primarily due to the lower net sales price of DefenCath due to the CMS reimbursement dynamics with the post-TDAPA period that started for DefenCath on July 1, 2026. The increase for the nine months ended September 30, 2026 is due to higher demand of DefenCath along with the inclusion of the Melinta Portfolio in 2026.
For the three months ended September 30, 2026 and 2025, Product sales were $48.6 million and $101.5 million, respectively, representing a decrease of $52.9 million or 52%. For the nine months ended September 30, 2026 and 2025, Product sales were $264.9 million and $180.4 million, respectively, representing an increase of $84.5 million or 47%. The increase for the nine months ended September 30, 2026, was primarily due to sustained DefenCath demand, including with the onboarding of our large dialysis customer mid-last year, along with the addition of Melinta revenue. The decrease from the three months ended September 30, 2026 was primarily related to the lower net pricing of DefenCath associated with the transition to the post-TDAPA add-on adjustment for CMS reimbursement of dialysis treatments. Product sales during the periods consist primarily of sales of DefenCath and reflect the shipment of DefenCath to direct customers and specialty distributors, net of estimates for applicable variable consideration, which consists primarily of distribution service fees, prompt pay and other discounts, product returns, chargebacks, rebates and volume incentive rebates, shelf-stock adjustments and data fees, and includes a change in accounting estimate for certain Medicaid and returns' sales allowances of $5.0 million and $14.0 million during the three and nine months ended September 30, 2026, respectively. Revenue from
the Melinta Portfolio represents $31.4 million and $84.1 million of product sales in the three and nine months ended September 30, 2026.
Contract revenue reflects $2.6 million and $10.7 million for the three and nine months ended September 30, 2026, respectively, related to milestone, royalty, and inventory revenue under Melinta's licensing agreements. Contract revenue for the three and nine months ended September 30, 2025 was $2.7 million. The increase in the year to date period is due to the inclusion of Melinta late in the third quarter of 2025, while lower compared to the three months ended September 30, 2025 due to BARDA revenue being included in contract revenue in 2025 but included in Grant income in 2026.
Grant income reflects $3.3 million and $8.3 million, respectively, earned under the BARDA agreement for the three and nine months ended September 30, 2026. There was no comparative grant income in the three and nine months ended September 30, 2025 as BARDA revenue was recorded in contract revenue in 2025.
The following is a summary of our Total Revenue between the DefenCath sales and the contribution from the Melinta Portfolio (in thousands):
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2026 2025 2026 2025
Product Sales:
DefenCath $ 17,181 $ 88,766 $ 180,811 $ 167,584
Melinta Portfolio 31,441 12,781 84,068 12,781
Total Product Sales, net 48,622 101,547 264,879 180,365
Contract Revenue 2,642 2,729 10,690 2,729
Grant Income 3,255 - 8,308 -
Total Revenue and Grant Income 54,519 104,276 283,877 183,094
Cost of Sales for the three months ended September 30, 2026 was $14.2 million as compared to $7.6 million for the same period in 2025, an increase of $6.6 million, or 88%. Cost of sales for the nine months ended September 30, 2026 was $40.7 million compared to $10.9 million in 2025, an increase of $29.8 million, or 273%. Cost of revenues include direct and indirect costs related to the manufacturing and distribution of DefenCath and the Melinta Portfolio, including product cost, packaging services, freight, and an allocation of overhead costs that are primarily fixed such as salaries, benefits and insurance. The increase from 2025 to 2026 is primarily due to higher volume of DefenCath sales and the acquisition of Melinta in August 2025.
Amortization of Intangibles assets was $10.3 million and $3.6 million for the three months ended September 30, 2026 and September 30, 2025, an increase of $6.7 million, or 184%. Intangible asset amortization for the nine months ended September 30, 2026 was $30.9 million compared to $3.7 million in 2025, an increase of $27.2 million or 728%. The increase was due to the intangible assets acquired in connection with the acquisition of Melinta completed in the third quarter of 2025.
Research and Development Expense ("R&D") expense for the three months ended September 30, 2026 was $7.0 million, an increase of $1.9 million, or 38%, from $5.1 million for the same period in 2025. R&D expense for the nine months ended September 30, 2026 was $20.9 million compared to $10.7 million in 2025, an increase of $10.2 million or 95%. The increase was driven primarily by increased personnel and clinical trial services related to pediatric programs for certain Melinta Portfolio products, as well as increased activities supporting additional DefenCath indications.
Selling and Marketing Expense ("S&M") expense was $11.7 million for the three months ended September 30, 2026, an increase of $0.5 million, or 4%, from $11.2 million for the same period in 2025. S&M expense for the nine months ended September 30, 2026 was $36.7 million compared to $22.0 million, an increase of $14.7 million, or 66%. The increase was primarily due to higher personnel cost associated with the larger product portfolio and marketing programs resulting from our acquisition of Melinta. The increase was partially offset by the cost of operating two sales teams in the third quarter of 2025.
General and Administrative Expense ("G&A") expense for the three months ended September 30, 2026 was $17.9 million, a decrease of $7.6 million, or 30%, from $25.5 million for the same period in 2025. G&A expenses for the nine months ended September 30, 2026 was $54.7 million, an increase of $10.1 million, or 23% from the nine months ended
September 30, 2025 of $44.6 million. The increase was primarily attributable to higher costs associated with operating as a combined company following the merger, including increased facilities, personnel, patent-related costs, information technology infrastructure, and PDUFA program fees for our branded products. In addition, general and administrative expense increased due to higher branded prescription drug fees driven by growth in product sales. The increase was partially offset by merger related cost incurred in the three and nine months ended September 30, 2025 as a result of the Melinta acquisition.
Unrealized gain on marketable security represents the change in fair value for its marketable equity securities in Talphera, a publicly-traded biotechnology company. For the three months and nine months ended, September 30, 2026, we recognized $1.2 million and $0.2 million gain respectively related to the change in fair value of the Talphera stock. As the investment was purchased in the third quarter of 2025, the unrealized gain for both the three and nine months ended September 30, 2025 was $3.1 million.
Change in contingent consideration for the three and nine months ended September 30, 2026, we recognized a change in the fair value of contingent consideration of $11.5 million and $22.4 million, primarily driven by the changes in the present value of expected payments resulting from lower discount rates with the Company's revised forecast and discount accretion. As the merger closed in the third quarter of 2025, change in contingent consideration was $2.4 million for the three and nine months ended September 30, 2025.
Other non-operating income was $0.5 million of income for the three months ended September 30, 2026 consistent with the prior-year period. Other non-operating (expense) income for the nine months ended September 30, 2026 was $0.2 million of income compared to $1.9 million of income for the same period last year, a decrease of $1.7 million, or 90%. The change was primarily due to interest expense on our $150.0 million aggregate principal amount of convertible senior notes due 2030, which were issued during the third quarter of 2025, and partially offset by interest income on cash and short-term investments.
Tax expense (benefit) was $1.7 million for the three months ended September 30, 2026, compared to a $56.0 million tax benefit for the same period in the prior year. Tax expense for the nine months ended September 30, 2026 was $28.1 million compared to a $55.5 million tax benefit in the same period of 2025. The tax expense for the current period reflects estimated federal and state income taxes. In contrast, the prior year we had partially released a valuation allowance related to US Federal net operating losses.
Liquidity and Capital Resources
Sources of Liquidity
As of September 30, 2026, we had cash, cash equivalents and short-term investments of $355.2 million, excluding restricted cash of $1.0 million, compared to $148.5 million as of December 31, 2025, excluding restricted cash of $1.0 million. Our primary sources of liquidity continue to be cash generated from operations, cash on hand, and available capital raising capacity. As of September 30, 2026, $11.6 million of our common stock remained available for potential sale under our at-the-market issuance sales agreement, and $15.0 million remained available under our shelf registration statement.
In the third quarter of 2026, we entered into an arrangement with a customer pursuant to which the parties agreed to extend certain volume-based contractual rebate payments beyond existing payment terms. We agreed to sequester the cash required to settle the net obligations by issuing a letter of credit, for which the customer will be the beneficiary through the settlement of the liabilities. We intend to establish the letter of credit in the fourth quarter of 2026 totaling approximately $85 million. In connection with the letter of credit, we are required to maintain an equal amount of cash in a collateral account, which will be classified as "restricted cash" on the balance sheet. We do not expect the level of restricted cash will impact our ability to operate both in the normal course of business and as a going concern.
Net Cash Provided by Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2026 was $218.3 million, compared to $80.6 million for the nine months ended September 30, 2025. Cash flows from operating activities were primarily driven by net income, adjusted for non-cash items, and changes in working capital, including accounts receivable and accrued liabilities. The period-over-period change was primarily attributable to higher net income driven by product sales and working capital contributions.
Net Cash Provided by (Used in) Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2026 was $0.5 million, compared to $311.7 million used in investing activities for the nine months ended September 30, 2025. Investing activities during the period primarily consisted of proceeds from short-term investments converted into cash partially offset by capital expenditures to support the validation of new contract manufacturing organizations in connection with our initiatives to lower our products' costs of goods as well as to onshore the manufacture of our products, compared to the prior-year period, which included the purchase of Melinta.
Net Cash Provided by (Used in) Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2026 was $8.5 million, compared to $239.9 million in cash provided by financing activities in the nine months ended September 30, 2025. Financing activities during the current period primarily consisted of $17.5 million cash used under our stock repurchase program partially offset by $10.1 million of proceeds from sale of common stock from the at-the-market ("ATM") program, compared to the prior year period which included net proceeds generated from the proceeds from senior convertible notes, from our underwritten public offering of common stock and sale of our common stock in our ATM program.
Funding Requirements and Liquidity
We expect to continue to fund day-to-day operations from cash collections of accounts receivable, our cash on hand, cash equivalents and short-term investments. To support strategic initiatives, we may seek to sell additional equity or debt securities through one or more discrete transactions, but can provide no assurances that any such financing will be available on acceptable terms, or at all.
In connection with the acquisition of Heron, as noted in the Overview, we entered into a $150 million senior secured term loan facility with Pharmakon. Under the facility, CorMedix expects to draw $75 million at the closing of the Heron asset acquisition, and an additional $75 million tranche may be drawn at CorMedix's discretion through June 30, 2028 to support future business development opportunities. Borrowings under the facility bear interest at a floating rate based on three-month Term SOFR, subject to a 3.50% floor, plus 5.75% per annum, with scheduled principal payments commencing in the fiscal quarter ending on or immediately following the third anniversary of the initial funding date and a final maturity five years following the initial funding date, subject to certain acceleration provisions. The facility is secured by substantially all of the assets of CorMedix and certain of its subsidiaries and contains customary affirmative and negative covenants, events of default and prepayment provisions.
Our actual cash requirements may vary materially from those now planned due to a number of factors, including any material change in commercial operations pertaining to our Products or the focus and direction of our research and development programs, any acquisition or pursuit of development of new product candidates, competitive and technical advances, the costs of commercializing any of our product candidates, and costs of filing, prosecuting, defending and enforcing any patent claims and any other intellectual property rights.
We currently estimate that as of September 30, 2026, we have sufficient cash, cash equivalents and short-term investments to fund operations for at least twelve months from the issuance of these financial statements.
Contractual Obligations
There have been no material changes to our contractual obligations and commitments from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, with the exception of an additional commitment of $7.0 million for the purchase of the API for VABOMERE from the CMO in 2027.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis. We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly
uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors. In addition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.
● Litigation contingencies are assessed and judgments are made to determine if an unfavorable outcome is considered probable or reasonably possible, and when considered reasonably possible but not probable, the contingency is disclosed along with an estimate of the possible loss or range of loss. If a liability is possible or probable, but no reasonable estimation of loss can be made, we will disclose the nature of the contingency and state that such an estimate cannot be made. Such estimates and judgments are based on information obtained through the discovery process, court filings and follow on filings by the plaintiffs as well as the stage of litigation.
● We account for product revenue from the sale of our Products in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"), which entails our estimates and judgments primarily in determining the transaction price and more specifically as it relates to variable consideration associated with the contracts. Our customers are primarily located in the United States and consist primarily of outpatient service providers and to a lesser extent specialty wholesale distributors. Variable consideration pertaining to an allowance for product returns of short-dated or expired product requires estimation as our customers may have differing utilization, storage and distribution methods and we do not yet have significant historical trends specific to DefenCath. The Company's product return accrual takes into consideration estimates of product held by its customers, the distribution channel, the shelf life of the product held by customers, as well as when the product is eligible for return based on our returns goods policy. We have established the estimate for returns based on specific customer circumstances, industry best practices and management experiences, which will continuously be refined as new information is received. At September 30, 2026, we had $10.9 million in accrued returns allowance including the balance recorded for the Melinta Portfolio.
Variable consideration pertaining to accrued Medicaid rebates requires estimation as our customers may have differing utilization rates of Medicaid coverage, different utilization within states which may be in either the primary or secondary positions, as well as general fluctuations in patient populations over time. Based on the relatively short time since product launch of DefenCath and the inherent lag time in states' Medicaid processing, the utilization of information the Company has received is limited and, as such, there is a lack of significant historical trends for Medicaid utilization. The Company's accrual does take into consideration its customers' recent actual Medicaid utilization rates as well as anticipated Medicaid utilization rates. At September 30, 2026, the Company had $5.6 million in accrued Medicaid rebates, including the balance recorded for the Melinta Portfolio.
During the three months ended March 31, 2026 and three months ended September 30, 2026, the Company recorded a change in estimate related to variable consideration for Medicaid rebates and product returns. During the three months ended March 31, 2026 and September 30, 2026, the Company obtained new information regarding Medicaid utilization and updated its assumptions based on substantially completed historical claims data. Such estimates are subject to uncertainty due to the timing and completeness of claims processing. In addition, the Company updated its estimate of product returns as initial rate of return history for DefenCath recently became available, which was lower than previously estimated. For the three months ended September 30, 2026, the resulting changes in accounting estimates positively impacted net sales by $5.0 million and positively impacted income from continuing operations and net income by $4.5 million, net of taxes, and increased basic and diluted earnings by 0.06 and $0.06 per share, respectively. For the nine months ended September 30, 2026, the resulting changes in accounting estimates positively impacted net sales by $14.0 million, and positively impacted income from continuing operations and net income by $8.9 million, net of taxes, and increased basic and diluted earnings per share by $0.11 and $0.09 per share, respectively.
● We account for acquired businesses using the acquisition method of accounting under Business Combinations (Topic 805). With respect to business combinations, we determine the purchase price, including contingent consideration, and allocate the purchase price of acquired businesses to the tangible and intangible assets acquired and liabilities assumed, based on estimated fair values. The excess of the purchase price over the identifiable assets acquired and liabilities assumed is recorded as goodwill.
We engaged a third-party professional service provider to assist us in determining the fair values of the purchase consideration, assets acquired, and liabilities assumed. Such valuations require management to make significant estimates and assumptions, especially with respect to contingent liabilities associated with the purchase price and intangible assets,
such as developed product rights and in-process research and development programs. Critical estimates that we have used in valuing these elements include, but are not limited to, future expected cash flows using valuation techniques (i.e., Monte Carlo simulation models) and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable.
We record the different elements of contingent consideration resulting from a business combination at their respective fair values on the acquisition date. The purchase price of Melinta included contingent consideration related to certain tiered royalty payments based on future net sales, as well as to regulatory milestones associated with the acquired products. Over time, increases in fair value from the passage of time are accreted and recorded as non-cash interest expense in the consolidated statements of operations.
Changes to contingent consideration obligations, other than the passage of time, may result from adjustments related, but not limited, to changes in discount rates and the number of remaining periods to which the discount rate is applied, updates in the assumed achievement or timing of any regulatory milestone or changes in the probability of certain clinical events, changes in our forecasted sales of products acquired, and changes in the assumed probability associated with regulatory approval. At the end of each reporting period, we evaluate the need to remeasure the contingent consideration and, if appropriate, we revalue these obligations and record increases or decreases in their fair value in other (expense) income within the accompanying consolidated statements of operations.
Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, any change in the assumptions described above, could have a material impact on the amount we may be obligated to pay as well as the results of our condensed consolidated results of operations in any given reporting period.
The Company evaluates long-lived assets for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Certain acquired product-related intangible assets, including assets associated with the oritavancin product group (KIMYRSA and ORBACTIV), require significant management judgment regarding future net cash flows, including assumptions related to market demand, competitive dynamics, pricing, reimbursement, commercialization strategies and projected operating costs. Although management concluded that no impairment existed as of September 30, 2026, these estimates are inherently uncertain. It is reasonably possible that changes in facts and circumstances or revisions to key assumptions could materially affect projected cash flows and result in a material impairment charge in a future reporting period.
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