Rockwell Medical Inc.

05/07/2026 | Press release | Distributed by Public on 05/07/2026 04:59

Quarterly Report for Quarter Ending 3/31/2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes in "Item 1. Condensed Consolidated Financial Statements". References in this report to "Rockwell," the "Company," "we," "our" and "us" are references to Rockwell Medical, Inc. and its subsidiaries.
Forward-Looking Statements
We make forward-looking statements in this report and may make such statements in future filings with the U.S. Securities and Exchange Commission ("SEC"). We may also make forward-looking statements in our press releases or other public or shareholder communications. Our forward-looking statements are subject to risks and uncertainties and include information about our current expectations and possible or assumed future results of our operations. When we use words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "could," "plan," "potential," "predict," "forecast," "project," "intend," "is focused on" or similar expressions, or make statements regarding our intent, belief, or current expectations, we are making forward-looking statements. Our forward looking statements also include, without limitation, statements about our liquidity and capital resources; our ability to continue as a going concern; the size of the hemodialysis concentrates market opportunity; our ability to successfully execute on our business strategy, including our commercial focus; our ability to raise additional capital; our ability to successfully implement certain cost containment and cost-cutting measures; our ability to achieve and maintain profitability and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.
While we believe our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which are based on information available to us on the date of this report or, if made elsewhere, as of the date made. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, the risks and uncertainties discussed in this report, "Item 1A - Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 and from time to time in our other reports filed with the SEC.
Other factors not currently anticipated may also materially and adversely affect our results of operations, cash flow and financial position. There can be no assurance future results will meet expectations. Forward-looking statements speak only as of the date of this report and we expressly disclaim any intent to update or alter any statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Overview
Rockwell is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide.
Rockwell is a supplier of liquid and dry, acid and bicarbonate concentrates for dialysis patients. Hemodialysis is the most common form of end-stage kidney disease treatment and is typically 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.
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. Rockwell currently serves approximately 300 customers, highlighted by all five of the leading dialysis providers in the United States, including Fresenius and DaVita. Rockwell's customer mix is diverse, with most customer sales concentrations under 10%. Dialysate concentrates accounted for 100% of our revenue for the quarter ended March 31, 2026, of which approximately 84% of our sales was to distributors and customers for use in the United States.
Our commercial organization supports the Company's vision to focus its efforts on driving Rockwell Medical toward 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.
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.
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.
Rockwell continues 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.
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. 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 $0.9 million was recorded as revenue during the three months ended March 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.
Results of Operations for the Three Months Ended March 31, 2026 and 2025
The following table summarizes our operating results for the periods presented below (dollars in thousands):
Three Months Ended March 31,
2026 % of Revenue 2025 % of Revenue % Change
Net Sales $ 17,336 $ 18,914 (8) %
Cost of Sales 14,439 83 % 15,872 84 % (9) %
Gross Profit 2,897 17 % 3,042 16 % (5) %
Selling and Marketing 567 3 % 711 4 % (20) %
General and Administrative 3,810 22 % 3,691 20 % 3 %
Operating Loss $ (1,480) (8) % $ (1,360) (8) % 9 %
Net Sales
During the three months ended March 31, 2026, net sales were $17.3 million compared to net sales of $18.9 million during the three months ended March 31, 2025. The decrease of $1.6 million was primarily due to a $3.9 million reduction in sales to DaVita, which included a $0.9 million price adjustment in 2025 that did not repeat in 2026, partially offset by an increase of $2.6 million from price increases to other existing customers and sales to new customers. Net sales of non-product revenue were $0.3 million for the three months ended March 31, 2025 from the recognition of the remaining deferred revenue associated with Triferic licenses. DaVita represented 7% and 27% of net sales for the three months ended March 31, 2026 and 2025, respectively.
Cost of Sales and Gross Profit
Cost of sales for the three months ended March 31, 2026 was $14.4 million, resulting in gross profit of $2.9 million for the three months ended March 31, 2026, compared to cost of sales of $15.9 million and a gross profit of $3.0 million for the three months ended March 31, 2025. The gross profit decrease of $0.1 million was primarily due to (i) a $0.9 million decline due to a price adjustment for DaVita purchases for the three months ended March 31, 2025 that did not repeat in 2026, (ii) a $0.9 million increase as a result of lower manufacturing costs due to a decrease in production headcount and overhead and (iii) a decrease of $0.1 million in gross profit related to the recognition of remaining deferred revenue associated with Triferic licenses in the three months ended March 31, 2025.
Selling and Marketing Expense
Selling and marketing expenses for the three months ended March 31, 2026 were $0.6 million compared to $0.7 million during the three months ended March 31, 2025. The decrease was due to $0.1 million of lower compensation expense as a result of lower headcount.
General and Administrative Expense
General and administrative expenses were $3.8 million for the three months ended March 31, 2026, compared to $3.7 million for the three months ended March 31, 2025. The increase of $0.1 million was driven by higher compensation expense.
Other Expense
Total other expense of $0.1 million and $0.2 million for the three months ended March 31, 2026 and 2025, respectively, was driven primarily by interest expense of $0.2 million in each period related to our debt facility (See Note 15 to the condensed consolidated financial statements included elsewhere in this Form 10-Q). The interest expense for the three months ended March 31, 2026 was partially offset by $0.1 million of realized gains on available-for-sale investments.
Liquidity and Capital Resources
As of March 31, 2026, we had approximately $23.9 million of cash, cash equivalents and investments available-for-sale, and net working capital of $27.1 million. Based on the currently available net working capital along with the expectation of management of its ability to execute on its operational plans as discussed below, 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 operational plans include raising capital, if needed, by using the $13.1 million remaining availability under its at-the-market ("ATM") facility or other methods or forms of financings, subject to existing limitations. Under the ATM, we have the ability to control the timing and floor price at which capital is raised.
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 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 debt raises through the equity and capital markets, though there can be no assurance 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.
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.
If the Company attempts to obtain additional debt or equity financing, the Company cannot assume such financing will be available on favorable terms, if at all. In addition, any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita. Specifically, until DaVita owns less than 50% of its investment, 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.
The Company is subject to certain covenants and cure provisions under its Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP. As of March 31, 2026, the Company was in compliance with all covenants. On January 2, 2024, the Loan Agreement was amended to include, among other things, an interest-only period for 30 months, or up to 36 months if certain conditions are met, and extend the maturity date to January 1, 2029 (See Note 15 to the accompanying condensed consolidated financial statements).
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. 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.
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 condensed consolidated financial statements.
Cash Used In Operating Activities
Net cash used in operating activities was $0.2 million for the three months ended March 31, 2026 compared to net cash used in operating activities of $3.5 million for the three months ended March 31, 2025. The decrease in cash used in operating activities during the current period as compared to the prior period was primarily due to a decrease in cash used in changes in current balance sheet accounts in the ordinary course of business of approximately $3.5 million, partially offset by increases in cash used from (i) net loss of approximately $0.1 million and (ii) non-cash adjustments of $0.1 million.
Cash Used In Investing Activities
Net cash used in investing activities was $0.1 million during the three months ended March 31, 2026. Net cash used in investing activities was immaterial for the three months ended March 31, 2025. Net cash used in investing activities during the three months ended March 31, 2026 and 2025 was primarily driven by (i) purchases of property and equipment, net of $0.4 million and $0.1 million, respectively, partially offset by (ii) net cash proceeds from purchases and sales of our available-for-sale investments during each period of $0.1 million.
Cash Used In Financing Activities
Net cash used in financing activities was $0.8 million during both of the three months ended March 31, 2026 and 2025. Net cash used in financing activities during the three months ended March 31, 2026 and 2025 was primarily due to (i) the cash paid in connection with the Evoqua Asset Acquisition deferred consideration obligation of $0.5 million and $0.4 million, respectively, (ii) $0.2 million of payments under the insurance financing note payable during each period and (iii) $0.1 million of payments on finance lease liabilities during each period.
Contractual Obligations and Other Commitments
Due to the contract-intensive nature of the Company's business, the Company has been and may in the future become involved in disputes or legal actions with its contract counterparties, which could have a negative impact on the Company's business, results of operations or financial condition. See Note 13 to the condensed consolidated financial statements included elsewhere in this Form 10-Q for additional disclosures. There have been no other material changes from the contractual
obligations and other commitments disclosed in Notes 13 and 14 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Critical Accounting Policies and Significant Judgments and Estimates
Our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recently issued and adopted accounting pronouncements:
We have evaluated all recently issued accounting pronouncements and believe such pronouncements do not have a material effect our financial statements. See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Rockwell Medical Inc. published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 11:00 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]