Earnings call transcript: Rockwell Medical Q2 2025 sees EPS beat, revenue miss

Rockwell Medical Inc. (NASDAQ:RMTI) reported its second-quarter earnings for 2025, showing a mixed financial performance. The company’s earnings per share (EPS) surpassed expectations, registering a smaller-than-expected loss of $0.01 per share against a forecasted loss of $0.05. However, revenue fell short of projections, coming in at $16.1 million compared to the anticipated $16.33 million. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation, though it shows high volatility with a beta of 1.63. Despite the EPS beat, the market reacted negatively, with Rockwell Medical’s stock declining 3.35% in pre-market trading.

Key Takeaways

• EPS loss of $0.01 beat the forecasted loss of $0.05, an 80% surprise.
• Revenue of $16.1 million missed expectations by 1.41%.
• Stock declined 3.35% in pre-market trading following the earnings announcement.
• Company continues to focus on hemodialysis products and manufacturing efficiency.
• Guidance for 2025 remains at $65-70 million in net sales.

Company Performance

Rockwell Medical’s Q2 2025 results reflect a challenging period as the company navigates a transition year. Net sales decreased by 38% compared to the same quarter last year, totaling $16.1 million. The company also reported a net loss of $1.5 million for the quarter. InvestingPro data reveals strong fundamentals with a current ratio of 2.95, indicating robust liquidity. Despite these declines, Rockwell Medical maintained a consistent gross margin of 16% and improved its cash position to $18.4 million from $17.3 million in the previous quarter. InvestingPro subscribers have access to 10 additional key insights about RMTI’s financial health and growth prospects.

Financial Highlights

• Revenue: $16.1 million, a 38% decrease year-over-year.
• EPS: Loss of $0.01, compared to a forecasted loss of $0.05.
• Gross margin: 16%, unchanged from the previous year.
• Cash position: $18.4 million, up from $17.3 million in Q1 2025.

Earnings vs. Forecast

Rockwell Medical’s EPS loss of $0.01 significantly beat the forecasted loss of $0.05, representing an 80% surprise. However, the revenue fell short of expectations by 1.41%, which likely contributed to the negative market reaction.

Market Reaction

Following the earnings release, Rockwell Medical’s stock experienced a decline of 3.35% in pre-market trading. This drop contrasts with the previous day’s closing price of $1.045. The stock’s movement reflects investor concerns over the revenue miss and the company’s ongoing transition.

Outlook & Guidance

For the full year 2025, Rockwell Medical maintains its guidance for net sales between $65 million and $70 million, with a gross margin of 16-18%. The company anticipates adjusted EBITDA to range from a loss of $500,000 to a gain of $500,000. InvestingPro analysis shows the company holds more cash than debt on its balance sheet, with analysts expecting profitability this year. Key strategic initiatives include expanding manufacturing automation and securing long-term supply contracts with major dialysis providers. For detailed analysis of RMTI’s growth trajectory and peer comparison, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Dr. Mark Strobeck emphasized the company’s transition phase, stating, "We are past the midpoint of what we recognize as a transition year for Rockwell Medical." He added, "Our number one objective is to create a reliable and reproducible business that is consistently performing and generating positive cash flow and profitability."

Risks and Challenges

• Revenue decline: A significant year-over-year decrease poses a risk to future growth.
• Market competition: Increased competition in the hemodialysis market could pressure margins.
• Customer concentration: Despite progress, reliance on a few large customers remains a concern.
• Supply chain disruptions: Potential disruptions could impact manufacturing and delivery.
• Economic conditions: Broader economic challenges may affect healthcare spending.

Q&A

During the earnings call, analysts inquired about Rockwell Medical’s expansion efforts in the Western U.S. and ongoing negotiations with major customers like DaVita and Fresenius. Management highlighted its focus on diversifying its customer base and improving manufacturing efficiency as part of its long-term growth strategy.

Full transcript - Rockwell Medical Inc (RMTI) Q2 2025:

Conference Operator: Good morning, and welcome to Rockwell Medical’s Second Quarter twenty twenty five Results Conference Call and Webcast. Please note this event is being recorded. At this time, I would like to turn the conference call over to Heather Hunter, Senior Vice President, Chief Corporate Affairs Officer at Rockwell Medical. Heather, please go ahead.

Heather Hunter, Senior Vice President, Chief Corporate Affairs Officer, Rockwell Medical: Good morning, and thank you for joining us for this update on Rockwell Medical. Joining me on today’s conference call are Doctor. Mark Srobeck, Rockwell Medical’s President and Chief Executive Officer and Jessie Neary, Rockwell Medical’s Chief Financial Officer. Before we begin, I would like to remind you that this conference call will contain forward looking statements about Rockwell Medical within the meaning of the federal securities laws, including, but not limited to, the types of statements identified as forward looking in our annual report on Form 10 ks and our subsequent periodic reports filed with the SEC. These statements are subject to risks and uncertainties that could cause actual results to differ.

Please note that these forward looking statements reflect our opinions and expectations only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward looking statements are discussed in greater detail in our periodic reports filed with the SEC. Rockwell Medical’s quarterly report on Form 10 Q for the three months ended 06/30/2025, was filed prior to this call and provides a full analysis of the company’s business strategy as well as the company’s second quarter twenty twenty five results. The reconciliation of non GAAP measures we discuss on today’s call can also be found in today’s press release.

Our Form 10 Q and other reports filed with the SEC, along with today’s press release and a replay of today’s conference call and webcast can be found on Rockwell Medical’s website under the Investors section. Now I would like to turn the conference call over to Rockwell Medical’s President and CEO, Doctor. Mark Strobeck.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Thank you, Heather. Good morning and thank you for joining us today for Rockwell Medical’s second quarter twenty twenty five earnings conference call and webcast. We are past the midpoint of what we recognize as a transition year for Rockwell Medical. Our core objectives for 2025 have been to secure our base business with long term contracts, right size our organization while meeting the demand of our customers and fill the revenue gap in the wake of our largest customer moving to another supplier. We believe that we are successfully managing through this transition.

For the second quarter, we improved our cash position. Our gross margin was consistent with quarter one and in line with guidance. We were only slightly negative on an adjusted EBITDA basis and were cash flow positive from operations. We continue to work on a number of significant opportunities with new and existing customers that if successful could be transformational for Rockwell. We find ourselves in the back half of the year in a steady state and are well positioned for continued growth.

Our long standing reputation for high quality products, a reliable supply chain and a customer centric approach continue to differentiate us in the hemodialysis concentrates marketplace. We remain a leading supplier that has the scalability to manufacture and deliver to the more than 12,000 individual purchasing facilities including outpatient dialysis clinics and hospitals in The U. S. Along with select international markets. Additionally, we remain the leading manufacturer and supplier of liquid bicarbonate products in The United States, which continues to hold strategic value for us.

Year to date, we have signed several contracts with new customers and have renewed contracts with existing customers. Today, more than 80 of our customers are under long term contracts, which is in stark contrast to where we were just a few years ago. This stickiness is important for Rockwell as it demonstrates stability and predictability in our business and offers strong growth opportunities in the coming years. During the second quarter, we entered into a new product purchase agreement with Innovative Renal Care, formerly American Renal Associates, one of the largest dialysis service providers in The U. S.

Under the terms of the agreement, we are supplying IRC with liquid and dry acid and bicarbonate hemodialysis concentrates as well as our dry acid concentrate mix system, which is five ten approved only to be used with our dry acid concentrate powders. This represents a multimillion dollar purchase agreement with utilization commitments and will remain in effect for three years with the option to an extend an additional one year period. Other customer wins include a product purchase agreement with the largest rural health system in The U. S. With a two year agreement with minimums that has the option to renew for an additional twelve month period two additional twelve month periods.

We have also contracted with the largest provider of inpatient dialysis in South Florida and a provider of specialized home care services to ill, disabled and vulnerable individuals in their home and places of residence. Both of these agreements are multi year long term contracts with purchase minimums and renewal options. As for our largest customer, we are continuing to supply them well past their June 30 transition date and are working with them to find additional ways to support their business going forward. We are still in active discussions about terms for a new contract. To remain on the conservative side, we are reiterating our guidance for 2025 as follows: net sales will be $65,000,000 and $70,000,000 gross margin will be between 1618% and adjusted EBITDA will be between negative $500,000 and positive 500,000 I will now turn the call over to Jesse to review our second quarter twenty twenty five financial results in further detail.

Jesse? Thank you, Mark.

Jesse Neary, Chief Financial Officer, Rockwell Medical: Good morning, everyone. I will now review our second quarter twenty twenty five financial results in greater detail. Net sales for the second quarter were $16,100,000 representing a 38% decrease over net sales of $25,800,000 for the same period in 2024. The decrease in net sales was driven by our largest customer transitioning to another supplier. Net sales for the six months ended 06/30/2025, were $35,000,000 which represents 28% decrease over net sales of $48,500,000 for the same period in 2024.

Gross profit for the second quarter was $2,500,000 which represents a 45% decrease over 4,600,000 for the same period in 2024. Gross profit for the six months ended June 30 was $5,500,000 which represents a 27% decrease over $7,600,000 for the same period in 2024. Gross margin for the 2025 was 16%, which was consistent with the 2025 and represents a slight decrease from 18% for the same period in 2024. Gross margin for the six months ended 06/30/2025 was 16%, which is also consistent with the same period in 2024. Net loss for the 2025 was $1,500,000 which was consistent with the 2025 and represents a decrease from net income of $300,000 for the same period in 2024.

Net loss for the six months ended 06/30/2025, was $3,000,000 compared to a net loss of $1,400,000 for the same period in 2024. Adjusted EBITDA for Q2 twenty twenty five was a negative 200,000 which represents an improvement over adjusted EBITDA of negative $400,000 in 2025 and compared to a positive adjusted EBITDA of $1,400,000 for Q2 twenty twenty four. Adjusted EBITDA for the six months ended 06/30/2025, was a negative $700,000 compared with a positive adjusted EBITDA of $900,000 for the same period in 2024. Cash, cash equivalents and investments available for sale at 06/30/2025 was $18,400,000 an increase from $17,300,000 at the end of Q1. The increase in cash was driven by $1,800,000 in cash flow from operations.

Now I’ll turn the call back over to Mark.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Thank you, Jesse. Operator, please open the phone lines for any questions. Thank

Conference Operator: Our first question comes from Ram Selvaraju from H. C. Wainwright. Please go ahead. Your line is open.

Ram Selvaraju, Analyst, H.C. Wainwright: Thanks very much for taking my questions. I just wanted to ask about your expansion plans in the Western United States and if you can provide us with any additional granularity regarding how those initiatives are proceeding and when we might see additional customer acquisition in those territories?

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Yes. Thanks Ram for the question. So we continue to believe the West is a significant opportunity for Rockwell as there is only one provider of concentrates within that marketplace and we believe represents an approximate $100,000,000 opportunity. Our focus right now has been not only in sort of working through this transition period, but also lining up larger customers for that expansion. I think we’ll be able to give greater visibility towards that as we get later into the year and some of the discussions that we have ongoing now with DaVita, Fresenius and others begins to play out.

But it is still our intent and it’s still our belief that that does represent a large opportunity for us and we should be able to give more clarity at that point.

Ram Selvaraju, Analyst, H.C. Wainwright: The second question I wanted to ask pertains to the negotiations you continue to have with your largest customer. I was wondering if you could give us some sense of what the open questions or key parameters are around potentially reaching a new deal with this customer. If this might ultimately take the form of a long term agreement like the ones you have in place with the majority of your other customers now. And if by the time we get to the end of those negotiations, such an agreement might be reached in time to have a meaningful upside impact on your 2025 revenue guidance? Thank you.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: So our discussions continue in earnest with DaVita. As I think everyone knows, DaVita had alerted us at the beginning of the year that they were going to begin to transition away with a goal to move away from Rockwell by the middle of the year. DaVita continues to be a purchaser of products from Rockwell beyond that point. It is clear that that will continue through the remainder of the year. We are working with DaVita now on putting in place a long term supply arrangement.

Rockwell is not in the business of single small projects of supply in an effort to fill gaps or to supplement other suppliers. We are in the business of putting in place long term supply arrangements. That message has been communicated, and we feel optimistic that we will come out of those discussions with a long term supply agreement. That I think will certainly ideally impact financials towards the end of the year, but will certainly impact our financials going forward. I think it’s also fair to say that we are working with two other incredibly large suppliers, one being the largest dialysis provider in the world on a supply arrangement that if completed would have a meaningful impact on fourth quarter financials.

So we’ve got a number of I think really great opportunities and that is a result of the fact that Rockwell continues despite the changes in the marketplace to be a reliable consistent supplier of products with that are safe, that are of the highest quality and the marketplace knows that.

Ram Selvaraju, Analyst, H.C. Wainwright: And just two other very quick things. Firstly, with respect to the available cash on hand, can you give us a sense of how you’re thinking about prioritization with respect to allocation of capital? In particular, how you look at the partitioning of capital allocation between debt pay down, debt repayment and investment into new customer acquisition activities? And also, if you can give us a sense of given the shift towards ensuring that you have long term relationships and long term agreements in place with your key customers, how that might translate into greater predictability of revenue in 2026? Thank you.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Yes. So as far as capital allocation, right now the primary focus is the use of that capital in continuing to invest in capital equipment that allows us to further automate our manufacturing processes and reduce the cost of manufacturing our products. That is exclusively where our resources are being focused, all in an effort to be able to make our products more efficiently. We’ve obviously modeled out the next five years and certainly believe we’ve got enough resources and based on the performance of the business to have cash sufficient to satisfy our debt obligation and our lenders certainly firmly believes that as well. So but as far as allocation right now, it’s primarily in capital equipment and customer, new customer acquisition.

As far as your second question, the number one objective for this organization is to create a reliable and reproducible business that is consistently performing and generating positive cash flow and profitability. All of the arrangements that we’ve established with our customers, which is a change in direction as we’ve mentioned previously from not but a couple of years ago is to continue to create that reliable revenue source and that reliable performance of our business. Had we not had the change in our largest customer, I think we were well on our way to doing that. And I think you can look historically over the last two point five, three years and seen a very consistently reliable growing revenue base. With this change, it has certainly altered that for the period.

We have now gone through that transition. We’ve restabilized the base and are now positioned for further growth to, I would say, get back to growing at a steady and consistent level, but with a highly reliable and reproducible revenue stream.

Jesse Neary, Chief Financial Officer, Rockwell Medical: Thank you.

Conference Operator: Our next question comes from Jeremy Perlman from Maxim Group. Please go ahead. Your line is open.

Jeremy Perlman, Analyst, Maxim Group: Thank you. Good morning. Just the first question related to gross margins. You were able to keep them relatively flat quarter over quarter even though revenue declines? Maybe just talk a little bit about what the actions you’re taking, what’s going behind that to keep these gross margins at stability.

Jesse Neary, Chief Financial Officer, Rockwell Medical: Thanks, Jeremy. So we’ve right sized the organization really at the beginning of towards the end of q one and the beginning of of q two. We’ve had some some staff reductions as it relates to operations, you know, to to further decline, you know, in in line with essentially our our new our new revenue base. We’ve also invested in some some new equipment, which is increased our efficiency, which is also helping, and we we’re expecting to see more results better results from that in the future.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Yes. And I might also add to Jesse’s comments. As we’ve said previously, the gross margin and profit we were making on our largest customer was not a significant piece driving our overall business, Right? That has proven itself out by the fact that revenue has been reduced as a result of them moving away, and it hasn’t ultimately significantly affected our gross margin. So I think that’s consistent with what Jesse has said, this is another factor here.

I think looking forward, I think we are in an incredibly good position, and we’ve already begun to see even this month a tick up in our gross margin and gross profit. And I think that’s as a result of the changes that Jesse just outlined that we are making. So I think we’re well positioned as we go through the second half of the year to be able to maximize that even further.

Jeremy Perlman, Analyst, Maxim Group: Okay. Understood. Great. And maybe also, I know, you know, prior to when you had the the largest customer on board fully, there was a high customer concentration risk that has has how much has that been mitigated now that, you know, that that contract technically ended at the middle of this year? Or is there still some concentration risk?

Are there still some major customers that make up the bulk of the revenue, or has that really been, you know, spread out?

Jesse Neary, Chief Financial Officer, Rockwell Medical: I’ll say it’s it’s it’s been spread out. So, back back in this time last year, David represented about, 40 or 45% of our revenue base. Now they’re down to 10. Percent. The other we have two other larger large customers, but they’re both around, I would say, 10% to 12% of our revenue.

So that concentration risk has gone way down.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Yeah. And I I think to follow on from that, I mean, we we knew when we started this about three years ago that, you know, one of the major risks within this business was so much of our business was concentrated with a single customer. You know, we’ve worked continuously to diversify that by adding new customers, by completing the acquisition of Metivators, by doing a number of other things to try to to try to dilute that. The work that we completed in an effort to do that, I think, is what creates the base that allows us to go through that transition of losing our largest customer, right, while still being able to maintain a sizable business. Had that occurred three years ago, I don’t think we would be sitting in this position.

So all of the work that we’ve done has been essentially to address that, right? The fact that we continue to exist and continue to be able to grow this business in a meaningful way, think speaks to all of the things that we’ve done. But as Jesse points out, we are not going to find ourselves in that position again going forward.

Jeremy Perlman, Analyst, Maxim Group: Okay. Great. And then just last question. You know, in in the April, one of your competitors have a voluntary recall of contaminated product. Have you been able to I mean, I I know to, you know, utilize that to any advantage when you’re negotiating with customers since then?

I mean, it’s been four months now.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Yes. It’s a great question. Yes. Unfortunately, the organization that our largest customer shifted towards did have a significant issue in the manufacturing of their liquid products. As you pointed out, there was a significant recall of all of their liquid products.

Unfortunately, there was contamination associated with the products that led to not only serious health consequences to patients, but apparently according to what we learned in the Federal Register actually unfortunately killed the patient. So we are obviously working quite closely with them to supplement their supply as well as working with our largest customer to make sure that there is continuous supply of liquid both acid and bicarbonate products in an effort to maintain patient care and the ability of patients to continue to access dialysis treatments.

Jeremy Perlman, Analyst, Maxim Group: Okay. Great.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Thank you

Jeremy Perlman, Analyst, Maxim Group: so much for taking my questions. Have a nice day.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Thanks, Jeremy.

Conference Operator: We hope there are no further questions. I’ll turn the call back over to Doctor. Strobeck.

Dr. Mark Strobeck, President and Chief Executive Officer, Rockwell Medical: Thank you for joining us today for an update on Rockwell Medical. We look forward to providing you with more updates next quarter.

Conference Operator: This concludes today’s call. You may now disconnect.

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