What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-09 · 334 added, 391 removed, 128 unchanged (85% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations, which refers to our historical results, should be read in conjunction with the other sections of this Quarterly

Report on Form 10-Q, including “Risk Factors” and our unaudited consolidated financial statements and the notes thereto appearing elsewhere herein, and in conjunction with the Management’s Discussion and Analysis of Financial Condition and

Results of Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 24, 2022 (the “2021 10-K”).

The various sections of this discussion contain a number of forward-looking statements, all of

which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout or referenced within this Quarterly Report on Form 10-Q.

See “Special Note Regarding Forward-Looking Statements.” Our

actual results may differ materially from our current expectations.

The following discussion of our financial condition and results of operations, which refers to our historical results, should be read in conjunction with the other sections of this Quarterly Report on

Form 10-Q, including “Risk Factors” and our unaudited consolidated financial statements and the notes thereto appearing elsewhere herein, and in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of

Operations set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 23, 2023 (the “2022 10-K”).

The various sections of this discussion contain a number of forward-looking statements, all of which are based on

our current expectations and could be affected by the uncertainties and risk factors described throughout or referenced within this Quarterly Report on Form 10-Q.

See “Special Note Regarding Forward-Looking Statements.” Our actual results may differ

materially from our current expectations.

ADMA Biologics, Inc.

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treatment of immunodeficient patients at risk for infection and others at risk for certain infectious diseases.

Our targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or

who may be immune-suppressed for medical reasons.

Our targeted patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disorder or who

may be immune-suppressed for medical reasons.

We currently have three products with U.S.

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(i) BIVIGAM (Immune Globulin Intravenous, Human), an

Intravenous Immune Globulin (“IVIG”) product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”), and for which we received FDA approval on May 9, 2019 and commenced

commercial sales in August 2019;

(ii) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an IVIG product indicated for the treatment of PI, for which we received FDA approval on April 1, 2019 and commenced first commercial sales in

October 2019;

Intravenous Immune Globulin (“IVIG”) product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”) or Inborn Errors of Immunity, and for which we received FDA approval on May

9, 2019 and commenced commercial sales in August 2019;

(ii) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an IVIG product indicated for the treatment of PI, for which we received FDA approval on April 1, 2019 and commenced first

commercial sales in October 2019;

and (iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing HBsAg and other listed exposures to Hepatitis B.

We may also seek to develop a pipeline of plasma-derived therapeutics, including but not limited to, a product based on our most recently approved patent application under U.S.

10,259,865 related to

methods of treatment and prevention of S.

We seek to develop a pipeline of

plasma-derived therapeutics, including but not limited to, a product based on our most recently approved patent application under U.S.

10,259,865 related to methods of treatment and prevention of S.

pneumonia infection for an immunoglobulin manufactured to contain standardized antibodies to numerous serotypes of S.

In May 2022, the United States Patent and Trademark Office issued U.S.

11,339,206 (the “‘206 Patent”).

The ‘206 Patent relates to methods of treating respiratory infections and expands ADMA’s estate of patents encompassing its proprietary immunotherapeutic compositions.

In particular, the ‘206 Patent

encompasses use of standardized, hyperimmune globulin for treating respiratory infections including those caused by respiratory syncytial virus (“RSV”), coronavirus, influenza virus, parainfluenza virus, and metapneumovirus.

Our products and

product candidates are intended to be used by physician specialists focused on caring for immune-compromised patients with or at risk for certain infectious diseases.

We manufacture these products at our FDA-licensed, plasma fractionation and purification facility located in Boca Raton, Florida with a peak annual source plasma processing capability of up to 600,000 liters (the

“Boca Facility”).

Our products and product candidates are intended to be used by

physician specialists focused on caring for immune-compromised patients with or at risk for certain infectious diseases.

Based on current production yields, our completed and ongoing supply chain enhancements and capacity expansion initiatives, we believe this facility has the potential to produce quantities of our immune globulin (“IG”) products

to generate approximately $250 million or more in annual revenue beginning in 2024 and approximately $300 million or more thereafter, as well as achieving profitability during the first quarter of 2024, as we ramp-up production over the next

several years.

Based on our current 2022 revenue growth year-to-date, we have increased our total annual revenue target to approximately $145 million for fiscal year 2022.

Through our ADMA BioCenters subsidiary, we currently operate seven FDA-licensed source plasma collection facilities in the U.S., with two additional collection facilities in operation and collecting plasma presently

under FDA licensing preparation and review and another facility under construction.

This business unit, which we refer to as our Plasma Collection Centers business segment, provides us with a portion of our blood plasma for the manufacture of our

products, and also allows us to sell certain quantities of source and hyperimmune plasma to third-party customers for further manufacturing.

As a part of our planned supply chain robustness initiative, we have opened four new plasma collection

centers during the past 12 months, and we now have ten plasma collection centers in various stages of approval and development, including nine that are operational and collecting plasma.

In addition, three of our FDA-approved plasma collection

centers also have approvals from the Korean Ministry of Food and Drug Safety (“MFDS”), as well as FDA approval to operate a Hepatitis B immunization program.

After giving effect to the progress we made in 2021 and thus far in 2022 with our plasma

collection network expansion, we believe we remain on track to achieve our goal of having ten plasma collection centers licensed by the FDA by the end of 2023.

A typical plasma collection center, such as those operated by ADMA BioCenters, can

collect approximately 30,000 to 50,000 liters of source plasma annually, which may be sold for different prices depending upon the type of plasma, quantity of purchase and market conditions at the time of sale.

Plasma collected from ADMA

BioCenters’ facilities that is not used to manufacture our products or product candidates is sold to third-party customers in the U.S.

representing annual revenues of $220 million or more in 2023, potentially more than $250 million in annual revenue in 2024 and potentially in excess of $300 million of annual revenue thereafter, as well as achieving profitability during the first

quarter of 2024.

At these revenue levels, we forecast achieving consolidated gross margins in the range of 40-50% and net income margins in the range of 20-30%.

These assumptions translate to potential annual gross profit and net income in the range

of $100-$150 million and $50-$100 million, respectively, during the 2024-2025 time period and beyond.

Through our ADMA BioCenters subsidiary, we currently operate ten source plasma collection facilities in the U.S.

This business unit, which we refer to as our Plasma Collection Centers business segment, provides us with

substantially all of our blood plasma for the manufacture of our products, and also allows us to sell certain quantities of source plasma and certain other plasma products to third-party customers for further manufacturing.

With respect to our

operational plasma collection centers, eight plasma collection centers currently hold FDA licenses, with the remaining plasma collection centers anticipated to receive FDA approvals throughout 2023.

In addition, three of our FDA-approved plasma

collection centers also have approvals from the Korean Ministry of Food and Drug Safety (“MFDS”), as well as FDA approval to operate a Hepatitis B immunization program.

After giving effect to the supply chain robustness initiatives undertaken in 2021

and 2022 as it pertains to our plasma collection network expansion, we remain on track to achieve our goal of having 10 FDA-licensed plasma collection centers by the end of 2023.

A typical plasma collection center, such as those operated by ADMA

BioCenters, can collect approximately 30,000 to 50,000 liters of source and hyperimmune plasma annually, which may be sold for different prices depending upon the type of plasma, quantity of purchase and market conditions at the time of sale.

collected from ADMA BioCenters’ facilities that is not used to manufacture our products is sold to third-party customers in the U.S.

and in other locations outside the U.S.

where we are approved under supply agreements or in the open “spot”

where we are approved under supply agreements or in the open “spot” market.

We sell plasma-derived intermediate fractions to certain customers, which are generated as part of our FDA-approved manufacturing process for IG and IVIG products.

In January 2020, we announced our entry into a

five-year manufacturing and supply agreement to produce and sell these intermediate by-products, which are used as the starting raw material to produce other plasma-derived biologics.

In addition, from time to time we provide contract

manufacturing and testing services for certain third-party clients.

We also provide laboratory contracting services to certain customers and anticipate providing contract filling, labeling and packaging services in light of the FDA approval of

our in-house fill-finish capabilities.

On June 6, 2017, we completed the acquisition of certain assets (the “Biotest Assets”) of the Therapy Business Unit (“BTBU”) of Biotest Pharmaceuticals Corporation (“BPC” and, together with Biotest AG, “Biotest”),

which included two FDA-licensed products, Nabi-HB and BIVIGAM, and the Boca Facility (the “Biotest Transaction”).

In January 2020, we announced our entry into a five-year

manufacturing and supply agreement to produce and sell these intermediate by-products, which are used as the starting raw material to produce other plasma-derived biologics.

In addition, from time to time we provide contract manufacturing and testing

services for certain third-party clients.

We also provide laboratory contracting services to certain customers and anticipate providing contract filling, labeling and packaging services in light of the FDA approval of our in-house fill-finish

capabilities.

BIVIGAM is a plasma-derived IVIG that contains a broad range of antibodies similar to those found in normal human plasma.

These antibodies are directed against bacteria and viruses, and

help to protect PI patients against serious infections.

These antibodies are directed against bacteria and viruses, and help

to protect PI patients against serious infections.

BIVIGAM is a purified, sterile, ready-to-use preparation of concentrated human Immunoglobulin G antibodies indicated for the treatment of PI, a group of genetic disorders.

This includes,

but is not limited to, the humoral immune defect in common variable immunodeficiency, X-linked agammaglobulinemia, congenital agammaglobulinemia, Wiskott-Aldrich syndrome and severe combined immunodeficiency.

These PIs are a group of genetic

This includes, but is not

limited to, the humoral immune defect in common variable immunodeficiency, X-linked agammaglobulinemia, congenital agammaglobulinemia, Wiskott-Aldrich syndrome and severe combined immunodeficiency.

These PIs are a group of genetic disorders.

Based on recent estimates, these disorders are no longer considered to be very rare, with as many as one in every 1,200 people in the United States having some form of PI.

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On April 28, 2021, we announced that the FDA granted approval for our expanded plasma pool production scale process, allowing for a 4,400-liter plasma pool for the manufacture of our BIVIGAM IVIG product.

increased IVIG plasma pool scale allows us to produce BIVIGAM at an expanded capacity, utilizing the same equipment, release testing assays and labor force, and has had a favorable impact on our gross margins and operating results.

ASCENIV is a plasma-derived IVIG that contains naturally occurring polyclonal antibodies, which are proteins that are used by the body’s immune system to neutralize microbes, such as bacteria and

viruses, and prevent against infection and disease.

This increased

IVIG plasma pool scale, which allows us to produce BIVIGAM at an expanded capacity utilizing the same equipment, release testing assays and labor force, has had a favorable impact on our gross margins and operating results.

ASCENIV is a plasma-derived IVIG that contains naturally occurring polyclonal antibodies, which are proteins that are used by the body’s immune system to neutralize microbes, such as bacteria and viruses, and prevent

against infection and disease.

We manufacture ASCENIV under HHS License No.

2019 using a process known as fractionation.

The Centers for Medicare and Medicaid Services (“CMS”) has issued a permanent, product-specific-J-code

Under the Healthcare Common Procedure Coding System (“HCPCS”), the J-code (J1554) became effective April 1, 2021.

As part of our proprietary manufacturing process for ASCENIV, we leverage our unique, patented plasma donor screening

methodology and tailored plasma pooling design, which blends normal source plasma and plasma from donors tested to have high levels of neutralizing antibody titers to respiratory syncytial virus (“RSV”) using our proprietary microneutralization

testing assay.

We are able to identify the high titer or “hyperimmune” plasma that meets our internal and required specifications for ASCENIV with our patented testing methods and assay.

This type of high titer plasma is typically found in less

than 10% of the total donor collection samples we test.

ASCENIV is approved for the treatment of Primary Immune Deficiency Disorder (“PIDD”), a class of inherited genetic disorders that causes a deficient or absent immune system in adults and adolescents

(12 to 17 years of age).

Our pivotal Phase 3 clinical trial in 59 PIDD patients met the primary endpoint of no Serious Bacterial Infections reported during 12 months of treatment.

Secondary efficacy endpoints further demonstrated the benefits of

ASCENIV in the low incidence of infection, therapeutic antibiotic use, days missed from work/school/daycare and unscheduled medical visits and hospitalizations.

We believe this clinical data together with the FDA approval for the treatment of

PIDD better positions ADMA to potentially further evaluate ASCENIV in immune-compromised patients infected with or at-risk for RSV infection or potentially other respiratory viral pathogens at an appropriate time.

Due to the COVID-19 pandemic,

our plans have been delayed.

In the future however, we may work with the FDA and the immunology and infectious disease community to design an appropriate clinical trial to evaluate the use of ASCENIV in this patient population.

Commercial sales

of ASCENIV commenced in October of 2019 and our commercial and medical education efforts are focused on the labeled indication of patients with PIDD.

The Centers for Medicare and Medicaid Services (“CMS”) has issued a permanent, product-specific-J-code for ASCENIV.

Healthcare Common Procedure Coding System (“HCPCS”), the J-code (J1554) became effective April 1, 2021.

As part of our proprietary manufacturing process for ASCENIV, we leverage our unique, patented plasma donor screening methodology and tailored

plasma pooling design, which blends normal source plasma and plasma from donors tested to have high levels of neutralizing antibody titers to Respiratory Syncytial Virus (“RSV”) using our proprietary microneutralization testing assay.

We are able to

identify the high titer or “hyperimmune” plasma that meets our internal and required specifications for ASCENIV with our patented testing methods and assay.

This type of high titer plasma is typically found in less than 10% of the total donor

collection samples we test.

ASCENIV is approved for the treatment of Primary Immune Deficiency Disorder (“PIDD”), a class of inherited genetic disorders that causes a deficient or absent immune system in adults and

adolescents (12 to 17 years of age).

Our pivotal Phase III clinical trial in 59 PIDD patients met the primary endpoint of no Serious Bacterial Infections (“SBI”) reported during 12 months of treatment.

Secondary efficacy endpoints further

demonstrated the benefits of ASCENIV in the low incidence of infection, therapeutic antibiotic use, days missed from work/school/daycare and unscheduled medical visits and hospitalizations.

We believe this clinical data together with the FDA

approval for the treatment of PIDD better positions ADMA to potentially further evaluate ASCENIV in immune-compromised patients infected with or at-risk for RSV infection or potentially other respiratory viral pathogens at an appropriate time.

to the COVID-19 pandemic, our plans have been delayed.

In the future however, we may work with the FDA and the immunology and infectious disease community to design an appropriate clinical trial to evaluate the use of ASCENIV in this patient

Commercial sales of ASCENIV commenced in October of 2019 and our commercial and medical education efforts are focused on the labeled indication of patients with PIDD.

ASCENIV’s prescriber and patient base continued to expand

during the fourth quarter of 2022, which drove record utilization and pull-through for the product.

These elevated demand trends have sustained into 2023, and ADMA currently expects that this product’s rapid growth will continue throughout 2023 and

The FDA granted approval for our expanded plasma pool production scale process, allowing for a 4,400-liter plasma pool for the manufacture of the ASCEINV IVIG product.

This increased IVIG

plasma pool scale, which allows us to produce ASCENIV at an expanded capacity utilizing the same equipment, release testing assays and labor force, is expected to have a favorable impact on our gross margins and operating results.

During the second

quarter of 2023, ADMA successfully commenced manufacturing of ASCENIV at the 4,400 Liter production scale for the first time in corporate history.

Nabi-HB is a hyperimmune globulin that is rich in antibodies to the Hepatitis B virus.

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It is a major global health problem.

It can cause chronic infection and puts people at

high risk of death from cirrhosis and liver cancer.

It can cause chronic infection and puts people at high

risk of death from cirrhosis and liver cancer.

Nabi-HB has a well-documented record of long-term safety and effectiveness since its initial market introduction.

The FDA approved Nabi-HB on March 24, 1999.

Production of Nabi-HB at the Boca

Facility has continued under our leadership since the third quarter of 2017.

Production of Nabi-HB at the Boca Facility

has continued under our leadership since the third quarter of 2017.

In early 2018, we received authorization from the FDA for the release of our first commercial batch of Nabi-HB for commercial distribution in the U.S.

and we continue to

manufacture Nabi-HB under HHS License No.

and we continue to manufacture

Nabi-HB under HHS License No.

POTENTIAL IMPACT OF COVID-19

We continue to monitor the ongoing developments related to the COVID-19 pandemic, including the emergence of the Delta, Omicron and BA.2 variants and other resistant strains of the coronavirus, and its impacts to our

commercial and manufacturing operations and plasma collection facilities, including collections of source plasma, procurement of raw materials and packaging materials, a portion of which are sourced internationally, and the testing of finished

drug product that is required prior to its availability for commercial sale.

product that is required prior to its availability for commercial sale.

A substantial portion of such testing has historically been performed by contract laboratories outside the United States.

Due to a combination of previous state and local “shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, we were

experiencing lower than normal donor collections at our FDA approved plasma collection centers.

We are also subject to delays in shipments of source plasma from our contracted third-party suppliers, as well as delays in deliveries for personal

protective equipment, reagents and other non-plasma raw materials and supplies used in the manufacture and distribution of our products.

In addition, we are subject to supply chain delays as a result of certain of our suppliers diverting

significant resources towards the rapid development and distribution of COVID-19 vaccines and, as a result, we have elected to carry more raw materials inventory than we have in the past.

The COVID-19 pandemic previously impacted, to a certain

degree, our customer engagement initiatives, whereby ADMA’s sales and medical affairs field personnel faced difficulties communicating directly with physicians and other healthcare professionals, as well as the cancellation or postponement of a

number of key scientific and medical meetings, further limiting our ability to communicate with potential customers.

The pandemic could also impact our ability to interact with the FDA or other regulatory authorities and may result in delays in the conduct of inspections or review of pending applications or submissions.

received several FDA approvals and two FDA inspections of the Boca Facility were completed during the year ended December 31, 2021, no assurances can be provided as to the timing for completion of any other regulatory submissions or applications

that may be impacted by restrictions related to COVID-19.

During the nine months ended September 30, 2022 and 2021, our revenue attributable to international customers was approximately 7% and 13%, respectively, of our total revenues.

As we seek to grow this aspect of our

business, we may also be subject to the impacts of the COVID-19 pandemic in locations outside the United States.

Notwithstanding the foregoing, the COVID-19 pandemic to date has not had a material impact on our financial condition or results of operations, and we do not believe that our production operations at the Boca

Facility, our contract fill/finishers or our plasma collection facilities have been significantly impacted by the COVID-19 pandemic.

As a result, we do not anticipate and have not experienced any material impairments with respect to any of our

long-lived assets, including our property and equipment, goodwill or intangible assets.

Although the COVID-19 pandemic has not, to date, materially adversely impacted our capital and financial resources, because we are unable to determine the ultimate severity or duration of the pandemic or its

long-term effects on, among other things, the global, national or local economies, the capital and credit markets or our workforce, customers or suppliers, at this time we are unable to predict whether COVID-19, or any known or future variant or

government order, will have a material adverse impact on our business, financial condition, liquidity and results of operations.

After the COVID-19 global pandemic has settled, we may continue to experience adverse impacts to our business as a

result of evolving macroeconomic factors, including general economic uncertainty, unemployment rates, inflationary pressures and any actual economic recession that has occurred or may occur in the future.

Due to a combination of previously mandated state and local “shelter-in-place” orders, as well as government stimulus packages, persisting social distancing measures and varying roll-outs of vaccinations by state, we

experienced at times lower than normal donor collections at our FDA approved plasma collection centers during 2021 and part of 2022.

From time to time during 2021 and 2022, we were also subject to delays in shipments of source plasma from our

contracted third-party suppliers, as well as delays in deliveries for personal protective equipment, reagents and other non-plasma raw materials and supplies used in the manufacture and distribution of our products.

In addition, we have been subject

to supply chain delays as a result of certain of our suppliers diverting significant resources towards the rapid development and distribution of COVID-19 vaccines and, as a result, we have elected to carry more raw materials inventory than we have in

The COVID-19 pandemic previously impacted, to a certain degree, our customer engagement initiatives, whereby ADMA’s sales and medical affairs field personnel faced difficulties communicating directly with physicians and other healthcare

professionals, as well as the cancellation or postponement of a number of key scientific and medical meetings, further limiting our ability to communicate with potential customers.

The pandemic could also impact our ability to interact with the FDA or other regulatory authorities and could result in delays in the conduct of inspections or review of pending applications or submissions.

have received FDA approvals for five of our plasma collection centers since January 1, 2022 and received several other FDA approvals while two FDA inspections of the Boca Facility were completed during the year ended December 31, 2021, no assurances

can be provided as to the timing for completion of any future regulatory submissions or applications that may be impacted by restrictions related to COVID-19.

During the three months ended March 31, 2023 and 2022, our revenue attributable to international customers was approximately 7% and 6%, respectively, of our total revenues.

As we seek to grow this aspect of our business,

we may also be subject to the impacts of the COVID-19 pandemic in locations outside the United States.

our contract fill/finishers or our plasma collection facilities have been significantly impacted by the COVID-19 pandemic.

As a result, we do not anticipate and have not experienced any material impairments with respect to any of our long-lived

assets, including our property and equipment, goodwill or intangible assets.

effects on, among other things, the global, national or local economies, the capital and credit markets or our workforce, customers or suppliers, at this time we are unable to predict whether COVID-19, or any known or future variant or government

order, will have a material adverse impact on our business, financial condition, liquidity and results of operations.

After the COVID-19 global pandemic has settled, we may continue to experience adverse impacts to our business as a result of

evolving macroeconomic factors, including general economic uncertainty, unemployment rates, inflationary pressures and any actual economic recession that has occurred or may occur in the future.

RESULTS OF OPERATIONS

Critical Accounting Policies and Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements, which have been prepared in accordance with Accounting

Principles Generally Accepted in the United States of America (“U.S.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets,

liabilities, revenues and expenses.

Generally Accepted in the United States of America (“U.S.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and

On an ongoing basis, we evaluate these estimates and assumptions, including those described below.

We base our estimates on our historical experience and on various other assumptions that we believe to be

reasonable under the circumstances.

We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results and experiences may

differ materially from these estimates.

Significant estimates include rebates and certain other deductions from gross revenues, impairment of long-lived assets, assumptions used in projecting future liquidity and capital requirements, assumptions

used in the fair value of awards granted under our equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for our deferred tax assets.

Actual results and experiences may differ materially from these estimates.

under our equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for our deferred tax assets.

Some of the estimates and assumptions we have to make under U.S.

GAAP require difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a result, actual results could differ

from those estimates.

Due to the estimation processes involved, the following summary of accounting estimates and their application are considered to be critical to understanding our business operations, financial condition and results of

For a description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements included in the 2021 10-K.

Estimates and assumptions used in projecting future liquidity and capital requirements are

described in Note 1 to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

GAAP require difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a result, actual results could differ from

those estimates.

a description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements included in the 2022 10-K.

Estimates and assumptions used in projecting future liquidity and capital requirements are described in Note 1 to the

condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Our gross product revenues are subject to a variety of deductions, which are estimated and recorded in the same period that the revenues are recognized.

These deductions primarily consist of rebates, distribution

fees, chargebacks and sales allowances.

These deductions represent estimates of the related obligations, some of which are contractual in nature and do not require extensive judgment to be exercised by management, while other estimates require

complex or subjective matters of knowledge and judgment when estimating the impact of these revenue deductions on net revenues for a reporting period.

These deductions primarily consist of rebates, distribution fees,

chargebacks and sales allowances.

subjective matters of knowledge and judgment when estimating the impact of these revenue deductions on net revenues for a reporting period.

Historically, adjustments to these estimates to reflect actual results or updated expectations have not been material to our overall business.

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Estimates that are most at risk for material adjustment are those associated with U.S.

Medicaid rebates because of the extensive time delay between the

recording of the accrual and its ultimate settlement, an interval that can generally take up to several years or more.

While our results of operations to date have not required any material adjustment due to this risk, the lag time between when

this obligation is initially recorded and ultimately settled could potentially materially impact our revenues and our results of operations in the future.

Medicaid rebates because of the extensive time delay between the recording

of the accrual and its ultimate settlement, an interval that can generally take up to several years or more.

While our results of operations to date have not required any material adjustment due to this risk, the delay between when this obligation is

initially recorded and ultimately settled could potentially materially impact our revenues and our results of operations in the future.

Stock-Based Compensation and Valuation of Warrants

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For the purpose of valuing stock options granted to our employees, directors and officers, we use the Black-Scholes option pricing model.

The Black-Scholes option valuation model

was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable.

The Company’s employee stock options have characteristics significantly different from those of traded

options, and changes in the underlying Black-Scholes assumptions can materially affect the fair value estimate.

The Black-Scholes option valuation model was

developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable.

The Company’s employee stock options have characteristics significantly different from those of traded options,

and changes in the underlying Black-Scholes assumptions can materially affect the fair value estimate.

To determine the risk-free interest rate, we utilize the U.S.

Treasury yield curve in effect at the time of the grant with a term

consistent with the expected term of our awards.

Treasury yield curve in effect at the time of the grant with a term consistent with

the expected term of our awards.

The expected term of the options granted is in accordance with U.S.

Securities and Exchange Commission (“SEC”) Staff Accounting Bulletins 107 and 110 and is based on the average between vesting

terms and contractual terms.

Securities and Exchange Commission (“SEC”) Staff Accounting Bulletins 107 and 110 and is based on the average between vesting terms and contractual

The expected dividend yield reflects our current and expected future policy for dividends on our Common Stock.

The expected stock price volatility for our stock options was calculated by examining the historical

volatility of our Common Stock since our Common Stock became publicly traded in the fourth quarter of 2013.

We will continue to analyze the expected stock price volatility and expected term assumptions and will adjust our Black-Scholes option

pricing assumptions as appropriate.

Any changes in the foregoing Black-Scholes assumptions, or if we were to elect to utilize an alternative method for valuing stock options granted to employees, directors and officers, could potentially impact

our stock-based compensation expense and our results of operations.

The expected stock price volatility for our stock options was calculated by examining the historical volatility of our Common Stock

since our Common Stock became publicly traded in the fourth quarter of 2013.

We will continue to analyze the expected stock price volatility and expected term assumptions and will adjust our Black-Scholes option pricing assumptions as appropriate.

our results of operations.

We also use the Black-Scholes option valuation model for the purpose of estimating the fair value of warrants we issue from time to time in connection with the issuance of notes payable.

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If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s carrying value is recoverable.

Any resulting impairment is

recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results.

For the nine months ended September 30, 2022 and 2021, we determined that there was no impairment of our long-lived

Examples of events or circumstances that may be indicative of impairment that would require the use of significant judgment by management include:

Any resulting impairment is recorded

as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results.

For the three months ended March 31, 2023 and 2022, we determined that there was no impairment of our long-lived assets.

events or circumstances that may be indicative of impairment that would require the use of significant judgment by management include:

A significant adverse change in legal factors or in the business climate that could affect the value of the asset.

Significant and continued cash flow losses.

A significant adverse change in the extent or manner in which an asset is used, such as a restriction imposed by the FDA or other regulatory authorities that could affect our ability to manufacture our products using a particular

An expectation of losses or reduced profits associated with an asset.

This could result, for example, from the introduction of a competitor’s product that impacts projected revenue growth, or a change in the acceptance of a product

by patients, physicians and payers that results in an inability to sustain projected product revenues.

This could result, for example, from the introduction of a competitor’s product that impacts projected revenue growth, or a change in the acceptance of a product by

patients, physicians and payers that results in an inability to sustain projected product revenues.

Goodwill is not amortized but is assessed for impairment on an annual basis or more frequently if impairment indicators exist.

The testing of goodwill for impairment requires us to determine whether or not the fair

value of the reporting unit associated with the goodwill is less than its carrying amount, including goodwill and other intangible assets.

An impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value,

with the impairment loss recognized not to exceed the total amount of goodwill allocated to that reporting unit.

In order to determine the fair value of the reporting unit, we utilize the fair value of the Company as a whole, as determined by its

market capitalization.

Determination of the fair value and carrying value of each reporting unit, relative to the fair value of the Company, requires management to employ certain estimates, assumptions and judgment, which we believe are

However, any changes to these estimates and assumptions could impact our determination of whether or not our goodwill is impaired.

We did not recognize any impairment charges related to goodwill for the nine months ended September 30,

2022 and 2021.

The testing of goodwill for impairment requires us to determine whether or not the fair value

of the reporting unit associated with the goodwill is less than its carrying amount, including goodwill and other intangible assets.

An impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value, with the

impairment loss recognized not to exceed the total amount of goodwill allocated to that reporting unit.

In order to determine the fair value of the reporting unit, we utilize the fair value of the Company as a whole, as determined by its market

capitalization.

any changes to these estimates and assumptions could impact our determination of whether or not our goodwill is impaired.

We did not recognize any impairment charges related to goodwill for the three months ended March 31, 2023 and 2022.

Deferred Tax Assets

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reflects our assessment of whether it is more likely than not that we will generate sufficient taxable income in the future to be able to utilize our deferred tax assets.

In determining whether a valuation allowance is warranted, we evaluate

factors such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies.

We consider all positive and negative evidence to estimate if sufficient future taxable income will be generated to realize

our deferred tax assets.

In determining whether a valuation allowance is warranted, we evaluate factors

such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies.

We consider all positive and negative evidence to estimate if sufficient future taxable income will be generated to realize our deferred

We consider cumulative losses in recent years to be a significant type of negative evidence.

Based on our history of losses, at this time we have not included future projected taxable income as a source of income to

recognize our deferred tax assets.

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

The following table presents a summary of the changes in our results of operations for the three months ended September 30, 2022, our third fiscal quarter, compared to the three months ended

September 30, 2021:

Three Months Ended September 30,

Increase (Decrease)

Cost of product revenue

Research and development expenses

Plasma center operating expenses

Amortization of intangibles

Selling, general and administrative expenses

Loss from operations

Interest expense

Other (expense) income, net

We recorded total revenues of $41.1 million during the three months ended September 30, 2022, as compared to $20.7 million during the three months ended September 30, 2021, an increase of $20.4 million, or

approximately 99%.

The increase is due to increased sales of immunoglobulin products, primarily ASCENIV and BIVIGAM, generated by our Boca Facility manufacturing operations in 2022 of $18.2 million, as we continue to experience increased

physician, payer and patient acceptance and utilization of ASCENIV and expand our customer base for BIVIGAM.

We also benefitted from an increase in sales of normal source plasma through ADMA BioCenters of $2.2 million.

Cost of Product Revenue and Gross Profit

Cost of product revenue was $31.4 million for the three months ended September 30, 2022, as compared to $20.3 million for the three months ended September 30, 2021.

This increase is primarily attributable to

increased product revenue costs related to the increased sales of our immunoglobulin products of $10.6 million and increased product revenue costs related to our ADMA BioCenters business segment in the amount of $2.0 million.

These increases were

partially offset by a decrease in unabsorbed manufacturing expenses of approximately $1.3 million in the third quarter of 2022 as compared to the same period of a year ago, due to higher production levels at the Boca Facility in 2022.

For the three months ended September 30, 2022, we had gross profit of $9.7 million, as compared to $0.4 million for the same period of a year ago.

This gross profit improvement of $9.3 million was primarily due to

the revenue increase discussed above and a more favorable mix of our higher margin products, notably ASCENIV, as well as the benefits we have begun to realize from our expanded production scale process, allowing for a 4,400-liter plasma pool for

the manufacture of our BIVIGAM IVIG product, which was approved by the FDA in the second quarter of 2021, as compared to our 2,200-liter plasma pool.

As a result, we achieved a gross margin of 23.5% in the third quarter of 2022 as compared to

1.9% in the third quarter of 2021.

Research and Development Expenses

Research and development (“R&D”) expenses totaled $1.0 million for the third quarter of 2022, as compared to $0.8 million for the third quarter of 2021.

The increase is primarily due to higher expenditures

related to the BIVIGAM post-marketing commitments we have with the FDA (see Note 10 to the consolidated financial statements).

Plasma Center Operating Expenses

During the third quarter of 2021, we had five plasma collection centers in operation.

During the third quarter of 2022, we had eight plasma collection centers in operation, with our ninth collection center opening at

the end of the third quarter of 2022.

As a result, for the three months ended September 30, 2022 we had increases in donor fees of $3.4 million, compensation and benefits of $1.5 million, softgoods and supplies of $1.1 million, donor testing

expenses of $0.9 million, depreciation of $0.3 million, advertising of $0.1 million, software maintenance expense of $0.1 million, professional services of $0.2 million, transportation costs of $0.1 million and rent of $0.1 million.

increases were largely offset by substantially increased plasma collections resulting in an additional $6.5 million of costs that were capitalized into inventory.

Amortization of Intangibles

Amortization expense pertains to the amortization of intangible assets acquired in the Biotest Transaction and was $0.2 million for the three months ended September 30, 2022 and 2021.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $12.9 million for the three months ended September 30, 2022, an increase of $2.2 million from the three months ended September 30, 2021.

reflects higher employee compensation and related expenses, including travel, relocation and recruiting, in the amount of $1.1 million due to increased headcount associated with the overall size and scope of the organization and the stepped-up

commercialization efforts for BIVIGAM and ASCENIV, increased insurance expense of $0.2 million, increased expenses for market intelligence and data fees of $0.7 million to support the BIVIGAM and ASCENIV commercialization efforts and $0.2 million

of increased marketing expenses.

Loss from Operations

Our operating loss was $9.3 million for the third quarter of 2022, as compared to $14.4 million for the third quarter of 2021.

The $5.1 million decrease in operating loss was mainly due to the improved gross profit

of $9.3 million, partially offset by the increases in plasma center operating expenses and SG&A.

Interest Expense

Interest expense for the three months ended September 30, 2022 was $5.6 million, as compared to $3.3 million for the three months ended September 30, 2021.

The increase is mainly due to approximately $53.8 million of

additional debt principal resulting from the refinancing of our senior credit facility on March 23, 2022 (see Note 7 to the consolidated financial statements and “Liquidity and Capital Resources”).

We expect our interest expense to continue to

increase during the remainder of 2022 and thereafter due to rising interest rates.

Our net loss was $14.9 million for the third quarter of 2022, as compared to $17.7 million for the third quarter of 2021.

The $2.8 million decrease in net loss was mainly due to the narrowed operating loss, partially

offset by the increase in interest expense.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

The following table presents a summary of the changes in our results of operations for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021:

Nine Months Ended September 30,

Based on our history of losses, at this time we have not included future projected taxable income as a source of income to recognize our

deferred tax assets.

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

The following table presents a summary of the changes in our results of operations for the three months ended March 31, 2023, our first fiscal quarter, compared to the three months ended March 31,

Three Months Ended March 31,

Increase (Decrease)

Cost of product revenue

Gross profit (loss)

Research and development expenses

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Loss on extinguishment of debt

Other expense, net

We recorded total revenues of $104.1 million during the nine months ended September 30, 2022, as compared to $54.6 million during the nine months ended September 30, 2021, an increase of $49.5 million, or

approximately 91%.

The increase is primarily due to increased sales of immunoglobulin products, mainly ASCENIV and BIVIGAM, generated by our Boca Facility manufacturing operations in 2022 of $46.3 million.

We also benefitted from increased sales

of normal source and hyperimmune plasma through ADMA BioCenters of $3.2 million.

Our consolidated revenues of $104.1 million for the first nine months of 2022 includes sales of normal source plasma through our ADMA BioCenters subsidiary of $8.7 million (see Note 11 to the consolidated financial

In 2023 and beyond, we expect that a substantial portion of the plasma collected at our plasma collection facilities will be utilized in our Boca Facility manufacturing operations.

Therefore, we do not anticipate significant revenues

from the sale of normal source plasma beginning in 2023.

Other income (expense), net

Adjusted EBITDA *

* - See Non-GAAP Financial Measures appearing at the end of this discussion

We recorded total revenues of $56.9 million during the three months ended March 31, 2023, as compared to $29.1 million during the three months ended March 31, 2022, an increase of $27.8 million, or approximately 96%.

increase is primarily related to increased sales of our immunoglobulin products, mainly ASCENIV and BIVIGAM, generated by our Boca Facility manufacturing operations in 2023 of $23.8 million, as we continue to experience increased physician, payer and

patient acceptance and utilization of ASCENIV and expand our customer base for BIVIGAM.

We also benefitted from a substantial increase in sales of normal source plasma through our Plasma Collection Centers business segment of $4.0 million.

During the first quarter of 2023, we fulfilled our entire commitment to supply normal source plasma to our third-party customer for fiscal 2023.

As a result, we do not expect to generate comparable revenues from our

Plasma Collection Centers during the remainder of 2023, as we anticipate using all of the plasma collected during that period to support our IVIG production operations.

Cost of Product Revenue and Gross Profit

Cost of product revenue was $83.0 million for the nine months ended September 30, 2022, as compared to $56.9 million for the nine months ended September 30, 2021.

This increase of $26.1 million is primarily

attributable to volume-related increases in product revenue costs related to the sale of our immunoglobulin products of $21.4 million and increased product revenue costs related to our ADMA BioCenters business segment in the amount of $3.3

In addition, we also experienced an increase in other manufacturing expenses of approximately $1.3 million in the first nine months of 2022 as compared to the same period of a year ago, which is indicative of certain inflationary

pressures being experienced by our industry for labor, materials, freight, fuel surcharges and third-party services.

Our gross profit of $21.1 million for the nine months ended September 30, 2022 represents an improvement over the same period of a year ago of $23.4 million and is mainly due to the higher sales volume, the improved

margins we are experiencing with BIVIGAM at the larger plasma pool production scale, and to the increased relative contribution of ASCENIV to our total revenues.

As a result, we achieved a gross margin of 20.3% for the first nine months of 2022,

as compared to a negative gross margin for the first nine months of 2021.

Cost of product revenue was $40.4 million for the three months ended March 31, 2023, as compared to $25.4 million for the three months ended March 31, 2022.

This increase is primarily attributable to volume-driven

increases in product revenue costs related to the increased sales of our immunoglobulin products of $15.2 million and increased sales of normal source plasma by our Plasma Collection Centers business segment in the amount of $3.0 million.

increases were partially offset by a decrease in other manufacturing expenses of approximately $3.3 million in the first quarter of 2023 as compared to the same period of a year ago, mainly due to a shorter routine shutdown of the Boca Facility in

2023 as compared to 2022.

For the three months ended March 31, 2023, we had gross profit of $16.5 million, as compared to $3.7 million for the same period of a year ago.

This gross profit improvement of approximately $12.9 million was primarily

due to the revenue increases and the reduction in other manufacturing costs discussed above as we elected to extend our otherwise-routine plant shutdown in the first quarter of 2022 in order to complete certain projects.

As a result, we achieved a

gross margin of 29.0% in the first quarter of 2023 as compared to 12.6% in the first quarter of 2022.

Research and Development Expenses

R&D expenses totaled $2.5 million for the nine months ended September 30, 2022, as compared to $2.9 million for the nine months ended September 30, 2021.

The decrease is primarily due to reduced compensation

costs, including stock-based compensation, of $0.6 million associated with R&D activities due to the resignation of our former Chief Medical and Scientific Officer in the second quarter of 2021, partially offset by $0.2 million of increased

expenses related to BIVIGAM clinical studies which are part of our FDA post-marketing commitments .

Research and development (“R&D”) expenses totaled $0.9 million for the first quarter of 2023, as compared to $0.6 million for the first quarter of 2022.

The increase is primarily due to higher expenditures related to

the BIVIGAM and ASCENIV post-marketing commitments we have with the FDA, which are required to be completed by June of 2023 (see Note 10 to the consolidated financial statements).

Plasma Center Operating Expenses

Subsequent to September 30, 2021, we opened four new plasma collection centers.

As a result, plasma center operating expenses increased by $4.6 million in the first nine months of 2022 as compared to the same period

of a year ago.

The increase is mainly comprised of higher donor fees in the amount $8.1 million and increased expenses associated with employee compensation and benefits of $4.0 million, softgoods and supplies of $2.5 million, donor testing

expenses of $1.9 million, depreciation expense of $0.8 million, software maintenance and professional services of $0.6 million, shipping and freight costs of $0.2 million, advertising expenses of $0.3 million, janitorial and utilities expense of

$0.2 million, travel expense of $0.2 million and rent of $0.3 million, partially offset by significantly increased donor collections which had the impact of reducing our operating expenses by approximately $15.0 million, as such expenses were

charged to inventory for future manufacturing or sales.

As we continue our planned expansion with the goal of having ten plasma collection centers licensed by the FDA by the end of 2023, we expect our plasma center operating expenses to continue

Plasma Center Operating Expenses decreased from $4.0 million in the first quarter of 2022 to $1.8 million in the first quarter of 2023.

As a result of our plasma center expansion initiatives, including three additional

plasma collection facilities that opened subsequent to March 31, 2022, we experienced a significant increase in the number of liters of plasma collected in the first quarter of 2023 as compared to the first quarter of 2022.

In addition, as a result

of changes in the market price of normal source plasma and the impact on the net realizable value of our plasma inventory, the amount of plasma center costs we capitalized into inventory increased by approximately $10.6 million in the first quarter

of 2023 as compared to the same period of a year ago.

This amount was largely offset by increases in donor fees of $3.4 million, compensation and benefits of $1.1 million, softgoods and supplies of $1.3 million, donor testing expenses of $1.1

million, depreciation of $0.3 million, temporary labor expenses of $0.3 million, software maintenance expense of $0.2 million, utilities and janitorial expense of $0.2 million, travel expenses of $0.1 million, transportation costs of $0.1 million,

advertising expense of $0.1 million, repairs and maintenance expense of $0.1 million and rent of $0.1 million.

Amortization of Intangibles

Amortization expense pertains to the amortization of intangible assets acquired in the Biotest Transaction and was $0.5 million for the nine months ended September 30, 2022 and 2021.

Amortization expense pertains to the amortization of intangible assets acquired in a 2017 acquisition transaction and was $0.2 million for the three months ended March 31, 2023 and 2022.

Selling, General and Administrative Expenses

SG&A expenses were $38.6 million for the nine months ended September 30, 2022, an increase of $7.4 million from the nine months ended September 30, 2021.

The increase reflects $1.4 million of professional fees

incurred in connection with the Morgan Stanley strategic alternatives process in 2022 with no comparable amount in 2021.

In addition, we had an increase in employee compensation and related expenses, including travel, relocation and recruiting,

in the amount of $4.8 million, $1.9 million of which is stock-based compensation, due to increased headcount, increased insurance expense of $1.0 million, and increases in marketing expense of $0.3 million, market intelligence and data fees of

$1.0 million and utilities of $0.2 million.

These costs were partially offset by the absence of the $0.8 million severance obligation recognized in 2021 in connection with the resignation of our former chief medical officer with no comparable

amount in fiscal 2022 as well as lower repairs and maintenance expense in 2022 of $0.4 million.

Selling, general and administrative (“SG&A”) expenses were $14.5 million for the three months ended March 31, 2023, an increase of $0.8 million from the three months ended March 31, 2022.

The increase reflects

increases in data services and market intelligence fees in support of the continued ASCENIV and BIVIGAM commercialization efforts in the amount of $0.7 million, other professional services of $0.6 million, insurance expense of $0.2 million, employee

recruiting of $0.2 million, software maintenance expense of $0.2 million, utilities and janitorial expense of $0.1 million, marketing expenses of $0.1 million and travel and entertainment costs of $0.1 million, partially offset by the non-recurring

professional fees incurred in connection with the Morgan Stanley strategic alternatives process during the first quarter of 2022 in the amount of $1.4 million.

Loss from Operations

Our operating loss was $33.3 million for the first nine months of 2022, as compared to $45.2 million for the first nine months of 2021.

The $11.9 million decrease in operating loss was mainly due to the improved

gross profit of $23.4 million, largely offset by the increases in plasma center operating expenses and SG&A.

Our operating loss was $0.8 million for the first quarter of 2023, as compared to $14.8 million for the first quarter of 2022.

The $14.0 million decrease in operating loss was mainly due to the improved gross profit of

$12.9 million and the reduction in Plasma Center Operating expenses of $2.2 million, partially offset by the increases in R&D and SG&A.

Interest Expense

The increase in interest expense of $3.8 million for the nine months ended September 30, 2022 as compared to the same period of a year ago was mainly due to the additional indebtedness and increase in amortization of

debt discount resulting from the refinancing of our senior credit facility on March 23, 2022 (see “Liquidity and Capital Resources”).

Because our new senior credit facility allows us to pay “in kind” a portion of our monthly interest obligation,

as well as the expected continued rise in global interest rates, we expect our principal debt balance, along with the associated interest expense, to increase each reporting period for the foreseeable future.

Interest expense for the three months ended March 31, 2023 was $6.1 million, as compared to $3.4 million for the three months ended March 31, 2022.

The increase is mainly due to approximately $55.7 million of additional

debt principal resulting from the refinancing of our senior credit facility on March 23, 2022 (see Note 7 to the consolidated financial statements and “Liquidity and Capital Resources”), including interest payments made “in kind” in the form of

additional indebtedness of approximately $4.0 million, as well as an increase in the stated interest rate on our senior debt from 10.75% in 2022 to 14.1% in 2023.

Other Income (Expense), Net

Other income, net, for the three months ended March 31, 2023 was $0.1 million, as compared to other expense, net, of $0.1 million for the three months ended March 31, 2022.

The increase is mainly due to an increase in

interest and other income of approximately $0.2 million in 2023, and to several non-recurring non-operational charges in 2022 of approximately $0.2 million.

Our net loss was $6.8 million for the first quarter of 2023, as compared to $25.0 million for the first quarter of 2022.

The $18.2 million decrease in net loss was mainly due to the narrowed operating loss of $14.0

million attributable to the increased revenues and gross profit and the loss on extinguishment of debt of $6.7 million we recorded in the first quarter of 2022 in connection with the refinancing of our senior credit facility, partially offset by the

increase in interest expense.

Non-GAAP Financial Measures

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA

EBITDA and Adjusted EBITDA are important non-GAAP financial measures used by our management and board of directors to assess our operating performance.

We use EBITDA and Adjusted EBITDA as key performance measures

because we believe that they facilitate operating performance comparisons from period to period that exclude potential differences driven by the impact of variations of non-cash items such as depreciation and amortization, as well as, in the case of

Adjusted EBITDA, stock-based compensation or certain non-recurring items.

In addition, we believe that EBITDA and Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies and other parties in evaluating

companies in our industry as a measure of financial performance and debt-service capabilities.

See below for a reconciliation of our EBITDA and Adjusted EBITDA to net income/loss, the most directly comparable financial measure calculated and

presented in accordance with U.S.

Because EBITDA and Adjusted EBITDA are measures not deemed to be in accordance with U.S.

GAAP and are susceptible to varying calculations, our EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures

of other companies, including companies in our industry, because other companies may calculate EBITDA and Adjusted EBITDA in a different manner than we calculate these measurements.

Although the Company uses Adjusted

EBITDA as one of several financial measures to assess its operating performance, its use is limited as it excludes certain significant operating expenses.

EBITDA and Adjusted EBITDA are not intended to represent cash flows for the periods

presented, nor have they been presented as an alternative to operating income/loss, net income/loss or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in

accordance with U.S.

The following table presents the reconciliation of net loss to EBITDA and Adjusted EBITDA for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Interest expense

Stock-based compensation

Loss on extinguishment of debt

In connection with the refinancing of our senior credit facility on March 23, 2022, we incurred a loss on the extinguishment of debt in the amount of $6.7 million as a result of the redemption premium we paid to

retire our previously existing credit facility in the amount of $2.0 million, and the write-off of unamortized debt discount of $4.7 million related to that facility.

Our net loss was $53.7 million for the nine months ended September 30, 2022, as compared to $55.0 million for the nine months ended September 30, 2021, as the $11.9 million decrease in loss from operations for the

period was largely offset by the loss on extinguishment of debt in 2022 of $6.7 million, with no comparable amount in 2021, and to the increase in interest expense resulting from our increased debt principal balance and rising interest rates.

Adjusted EBITDA

Adjusted EBITDA increased by $14.2 million for the three months ended March 31, 2023 as compared to the same period of a year ago.

The improvement is driven primarily by the lower net loss attributable to increased sales

and gross profit and, to a lesser extent, lower total operating expenses in 2023.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2022, we had working capital of $179.7 million, primarily consisting of $162.9 million of inventory, cash and cash equivalents of $34.9 million and accounts receivable of $20.9 million, partially

offset by current liabilities of $44.4 million, as compared to working capital of $178.4 million, primarily consisting of $124.7 million of inventory, cash and cash equivalents of $51.1 million and accounts receivable of $28.6 million, partially

offset by $30.4 million of current liabilities, as of December 31, 2021.

We have incurred an accumulated deficit of $465.8 million since inception, had negative cash flows from operations of $52.1 million and $78.9 million for the nine months

ended September 30, 2022 and 2021, respectively, and had negative cash flows from operations of $112.4 million and $102.0 million for the years ended December 31, 2021 and 2020, respectively.

We have funded our operations over the past few years

primarily from the sale of our equity and debt securities.

Our material cash requirements are primarily comprised of:

At March 31, 2023, we had working capital of $227.4 million, primarily consisting of $164.0 million of inventory, cash and cash equivalents of $69.2 million and $26.5 million of accounts receivable, partially offset by

current liabilities of $36.7 million, as compared to working capital at December 31, 2022 of $231.1 million, primarily consisting of $163.3 million of inventory, cash and cash equivalents of $86.5 million and accounts receivable of $15.5 million,

partially offset by current liabilities of $39.3 million.

We have incurred an accumulated deficit of $484.8 million since inception and had negative cash flows from operations of $14.7 million and $26.0 million for the three months ended March 31,

2023 and 2022, respectively, and $59.5 million and $112.4 million for the years ended December 31, 2022 and 2021, respectively.

We have funded our operations over the past few years primarily from the sale of our equity and debt securities.

material cash requirements are primarily comprised of:

The procurement of raw material plasma and other raw materials necessary to maintain and scale up our manufacturing operations;

Employee compensation and benefits;

Capital expenditures for the building of additional plasma collection facilities and for equipment upgrades and capacity expansion at the Boca Facility;

Capital expenditures to complete the buildout for and maintain our plasma collection facilities and for equipment upgrades and capacity expansion at the Boca Facility;

Plasma donor fees and plasma center supplies;

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Conducting required post-marketing clinical trials for our FDA-approved products.

In addition, our end-to-end production cycle time from procurement of raw materials to commercial release of finished product can take between seven and 12 months or potentially longer, requiring substantial inventories of raw material plasma

and other manufacturing materials and single use disposables.

other manufacturing materials and single use disposables.

We expect that we will not be able to generate a sufficient amount of product revenue to achieve profitability until the beginning of 2024.

We currently anticipate, based upon our projected revenue and expenditures,

that our current cash, cash equivalents and accounts receivable, including the available funds from the March 2022 refinancing of our senior credit facility as discussed below, along with the remaining amounts available under the distribution

agreement for the sale of our common stock also discussed below, will be sufficient to fund our operations, as currently conducted, into the first quarter of 2024, at which time we believe we will begin to generate positive cash flow from

We currently anticipate, based upon our projected revenue and expenditures, that

our current cash, cash equivalents and accounts receivable will be sufficient to fund our operations, as currently conducted, through the end of the second quarter of 2024, by which time we believe we will begin to generate positive cash flow from

This time frame may change based on several factors, including the success of our commercial efforts with respect to the sale of our products and the acceptability of our immune globulin products by physicians, patients or payers, and

whether or not the assumptions underlying our projected revenues and expenses are correct.

Depending on the cost of capital, we may decide to raise capital through public or private equity offerings or debt financings, or we may enter into a

corporate collaboration or licensing arrangement.

The sale of additional or equity debt securities, if convertible, could result in dilution to our stockholders and, in such event, the value and potential future market price of our common stock

If we are unable to raise additional capital if needed, including due to widespread liquidity constraints or significant market instability that could result from the COVID-19 pandemic, inflationary pressures or other factors beyond

our control, we may have to delay, curtail or eliminate some of our commercialization efforts or product development activities.

If we are unable to achieve positive cash flow by the beginning of 2024, we may need to raise additional capital and if such capital is not available due to

widespread liquidity constraints or significant market instability that could result from the COVID-19 pandemic, inflationary pressures or other factors beyond our control, we may have to delay, curtail or eliminate some of our commercialization

efforts or product development activities.

If we are unable to generate sufficient revenue to achieve positive cash flow by the beginning of 2024 and need to raise additional capital, we may decide to do so through public or private equity offerings

or debt financings, or we may enter into a corporate collaboration or licensing arrangement.

The sale of additional equity or debt securities, if convertible, could result in dilution to our stockholders and, in such event, the value and potential

future market price of our common stock may decline.

ADMA continues to evaluate a variety of strategic alternatives through its ongoing engagement with Morgan Stanley.

The Company will communicate material developments as required by the SEC.

The exploration of value-creating opportunities remains a top corporate priority for ADMA.

On March 23, 2022, (the “Hayfin Closing Date”) we and all of our subsidiaries entered into a Credit and Guaranty Agreement (the “Hayfin Credit Agreement”) with Hayfin Services LLP (“Hayfin”).

Hayfin Credit Agreement provides for a senior secured term loan facility in a principal amount of up to $175.0 million (the “Hayfin Credit Facility”), composed of (i) a term loan made on the Hayfin Closing Date in the principal amount of $150.0

million (the “Hayfin Closing Date Loan”), and (ii) a delayed draw term loan in the principal amount of $25.0 million (the “Hayfin Delayed Draw Loan” and, together with the Hayfin Closing Date Loan, the “Hayfin Loans”).

The obligation of the

lenders to make the Hayfin Delayed Draw Loan expires on March 22, 2023, and is subject to the satisfaction of certain conditions, including, but not limited to, our meeting certain 12-month revenue targets as set forth in the Hayfin Credit

The Hayfin Credit Facility has a maturity date of March 23, 2027 (the “Hayfin Maturity Date”), subject to acceleration pursuant to the Hayfin Credit Agreement, including upon an Event of Default (as defined in the Hayfin Credit

On the Hayfin Closing Date, we used $100.0 million of the Hayfin Closing Date Loan to terminate and pay in full all of the outstanding obligations under our previous senior credit facility with

Perceptive (see Note 7 to the Consolidated Financial Statements).

We also used $2.0 million of the Hayfin Closing Date Loan proceeds to pay a redemption premium to Perceptive and used approximately $1.0 million of the Hayfin Closing Date Loan

proceeds to pay certain fees and expenses incurred in connection with this transaction.

In addition, a $1.8 million upfront fee payable to Hayfin was paid “in kind” and was added to the outstanding principal balance in accordance with the terms

of the Hayfin Credit Agreement.

The remainder of the proceeds received or to be received from the Hayfin Loans will be used for working capital and other general corporate purposes.

Borrowings under the Hayfin Credit Agreement currently bear interest at the adjusted Term SOFR for either a one-month or three-month tenor, as elected by us, and subject to a floor of 1.25%, plus an

applicable margin of 9.5% (the “Applicable Margin”);

Credit Agreement provides for a senior secured term loan facility in a principal amount of up to $175.0 million (the “Hayfin Credit Facility”), composed of (i) a term loan made on the Hayfin Closing Date in the principal amount of $150.0 million (the

“Hayfin Closing Date Loan”), and (ii) a delayed draw term loan in the principal amount of $25.0 million (the “Hayfin Delayed Draw Loan” and, together with the Hayfin Closing Date Loan, the “Hayfin Loans”).

Pursuant to an amendment to the Hayfin

Credit Agreement dated May 1, 2023 (the “Hayfin Second Amendment”), the obligation of the lenders to make the Hayfin Delayed Draw Loan expires on December 31, 2023, and was subject to the satisfaction of certain conditions, including, but not limited

to, our meeting certain 12-month revenue targets as set forth in the Hayfin Credit Agreement which have been met.

The Hayfin Credit Facility has a maturity date of March 23, 2027 (the “Hayfin Maturity Date”), subject to acceleration pursuant to the

Hayfin Credit Agreement, including upon an Event of Default (as defined in the Hayfin Credit Agreement).

On the Hayfin Closing Date, we used $100.0 million of the Hayfin Closing Date Loan to terminate and pay in full all of the outstanding obligations under our previous senior credit facility with Perceptive

(see Note 7 to the Consolidated Financial Statements).

We also used $2.0 million of the Hayfin Closing Date Loan proceeds to pay a redemption premium to Perceptive and used approximately $1.0 million of the Hayfin Closing Date Loan proceeds to pay

certain fees and expenses incurred in connection with this transaction.

In addition, a $1.8 million upfront fee payable to Hayfin was paid “in kind” and was added to the outstanding principal balance in accordance with the terms of the Hayfin Credit

The remainder of the proceeds received or to be received from the Hayfin Loans are being used for working capital and other general corporate purposes.

After giving effect to the Hayfin Second Amendment, borrowings under the Hayfin Credit Agreement currently bear interest at the adjusted Term SOFR for either a one-month or three-month tenor, as elected

by us, and subject to a floor of 1.25%, plus an applicable margin of 8.5% (the “Applicable Margin”);

provided, however, that upon, and during the continuance of, an Event of Default, the Applicable Margin shall increase by an additional 3% per annum.

We will also pay “in kind” a portion of the

interest on the Hayfin Loans for each monthly or quarterly interest period in an amount equal to 2.5% per annum.

Such interest paid “in kind” will reduce our quarterly cash interest obligation by approximately $1.0 million and will be added to

the principal amount of the outstanding debt under the Hayfin Credit Facility.

As a result, our outstanding debt principal on the Hayfin Loans will increase each month as long as we elect to continue to pay a portion of our interest obligation

“in kind.” On the Hayfin Closing Date and as of September 30, 2022, the stated interest rate on the Hayfin Loans interest rate was 10.75% and approximately 12.1%, respectively.

On the last day of each calendar month or quarter during the term of

the Hayfin Credit Facility, we are required to pay accrued interest to Hayfin of approximately $1.1 million per month or $3.2 million per quarter, after giving effect to the “in kind” interest of 2.5% per annum, but without giving effect to the

Hayfin Delayed Draw Loan, which we have yet to draw upon.

Our interest obligations under the Hayfin credit agreement are subject to variable interest rates based on the Term SOFR in effect at the beginning of each monthly interest period.

With the global

rise in interest rates, we expect our interest rate and our monthly cash interest obligation to increase over the remainder of fiscal 2022 and into 2023 and beyond.

For example, our stated interest rate, which was 10.75% for the month of June

2022, increased to approximately 12.06% for the month of September and is expected to be approximately 13.34% for the month of November.

On the Hayfin Maturity Date, we will pay Hayfin the entire outstanding principal amount underlying the Hayfin Loans and any accrued and unpaid interest thereon, as well as an exit fee of 1.0% of the

outstanding principal amount being paid.

We will also pay “in kind” a portion of the interest on the Hayfin Loans for each monthly or quarterly interest period in an amount equal to 2.5% per annum.

Such interest paid “in kind” will reduce our quarterly cash interest obligation by

approximately $1.0 million and will be added to the principal amount of the outstanding debt under the Hayfin Credit Facility.

As a result, our outstanding debt principal on the Hayfin Loans will increase each month as long as we elect to continue to

pay a portion of our interest obligation “in kind.” On the Hayfin Closing Date and as of March 31, 2023, the stated interest rate on the Hayfin Loans was 10.75% and 14.4%, respectively.

On the last day of each calendar month or quarter during the

term of the Hayfin Credit Facility, we are required to pay accrued interest to Hayfin of approximately $1.5 million per month or approximately $4.4 million per quarter based on current interest rates, after giving effect to the “in kind” interest of

2.5% per annum, but without giving effect to the Hayfin Delayed Draw Loan, which we have yet to draw upon.

On the Hayfin Maturity Date, we will pay Hayfin the entire outstanding principal amount underlying the Hayfin Loans and any accrued and unpaid interest thereon, as well as an exit fee of 1.0% of the outstanding principal

amount being paid.

Prior to the Hayfin Maturity Date, there are no scheduled principal payments on the Hayfin Loans.

We may prepay outstanding principal on the Hayfin Loans at any time and from time to time upon five

business days’ prior written notice, subject to the payment to Hayfin of, (A) any accrued but unpaid interest on the prepaid principal amount plus (B) a prepayment fee in the amount equal to (i) 7.0% of the prepaid principal amount, if prepaid on

or prior to the first anniversary of the Hayfin Closing Date, (ii) 3.0% of the prepaid principal amount, if prepaid after the first anniversary of the Hayfin Closing Date and on or prior to the second anniversary of the Hayfin Closing Date, or

(iii) 1.0% of the prepaid principal amount, if prepaid after the second anniversary of the Hayfin Closing Date and on or prior to the third anniversary of the Hayfin Closing Date.

In addition, for any prepayments of principal, we are required to

pay the 1.0% exit fee for the amount of principal being paid.

We may prepay outstanding principal on the Hayfin Loans at any time and from time to time upon five business days’ prior written

notice, subject to the payment to Hayfin of, (A) any accrued but unpaid interest on the prepaid principal amount plus (B) a prepayment fee in the amount equal to (i) 7.0% of the prepaid principal amount, if prepaid on or prior to the first

anniversary of the Hayfin Second Amendment, (ii) 3.0% of the prepaid principal amount, if prepaid after the first anniversary of the Hayfin Second Amendment and on or prior to the second anniversary of the Hayfin Second Amendment, or (iii) 1.0% of

the prepaid principal amount, if prepaid after the second anniversary of the Hayfin Second Amendment and on or prior to the third anniversary of the Hayfin Second Amendment.

The Hayfin Second Amendment also provides for a 50% reduction to the

foregoing early prepayment fees if the Hayfin Loans are prepaid under certain circumstances as defined in the Hayfin Second Amendment.

In addition, for any prepayments of principal, we are required to pay the 1.0% exit fee for the amount of principal

All of our obligations under the Hayfin Credit Agreement are secured by a first-priority lien and security interest in substantially all of our tangible and intangible assets, including intellectual

property and all of the equity interests in our subsidiaries.

The Hayfin Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar

The Hayfin Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings.

The negative covenants restrict or limit our ability and the ability of our subsidiaries to, among other things and subject to certain exceptions contained in the Hayfin Credit Agreement, incur new indebtedness;

create liens on

engage in certain fundamental corporate changes, such as mergers or acquisitions, or changes to our or our subsidiaries’ business activities;

make certain Investments or Restricted Payments (each as defined in the Hayfin Credit

change our fiscal year;

create liens on assets;

certain fundamental corporate changes, such as mergers or acquisitions, or changes to our or our subsidiaries’ business activities;

make certain Investments or Restricted Payments (each as defined in the Hayfin Credit Agreement);

change our fiscal

pay dividends;

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engage in certain affiliate transactions;

or enter into, amend or terminate any other agreements that have the impact of restricting our ability to make loan

repayments under the Hayfin Credit Agreement.

or enter into, amend or terminate any other agreements that have the impact of restricting our ability to make loan repayments under the Hayfin Credit

In addition, we are required (i) at all times prior to the Maturity Date to maintain a minimum cash balance of $6.0 million;

and (ii) as of the last day of each fiscal quarter, report IVIG product and

related revenues for the trailing 12-month period that exceed the amounts set forth in the Hayfin Credit Agreement, which range from $75.0 million for the fiscal quarter ending June 30, 2022 to $250.0 million for the fiscal quarter ending

December 31, 2026 and each fiscal quarter thereafter.

As of September 30, 2022, we were in compliance with all of the financial covenants contained in the Hayfin Credit Agreement.

On October 25, 2021, we completed an underwritten public offering whereby we issued 57.5 million shares of our common stock and received gross proceeds of $57.5 million.

Net proceeds, after underwriting discounts and

expenses associated with the offering, were approximately $53.8 million, and were used (i) to advance the commercial sales of our FDA approved products through the procurement of raw materials for the manufacturing

of BIVIGAM and ASCENIV;

(ii) to expand our plasma collection facility network;

(iii) to scale up the manufacturing capacity of the Boca Facility and make continuous improvements in order to adhere to cGMP compliance;

(iv) to explore business

development opportunities;

and (v) for general corporate purposes and other capital expenditures.

On September 3, 2021, we entered into a distribution agreement with Raymond James & Associates, Inc., as agent (“Agent”), pursuant to which we may offer and sell, from time to

time, at our option, through or to the Agent, up to an aggregate of $50 million of shares of our common stock (the “Distribution Agreement”).

We currently intend to use any net proceeds from the sale of our common stock under the Distribution

Agreement for general corporate purposes, including procurement of source plasma and other raw materials, supply chain initiatives and production expenditures, funding expansion of plasma collection centers, working capital, capital

expenditures, expansion and resources for commercialization activities, and other potential research and development and business opportunities.

We currently have approximately $42.8 million of shares available to sell under the Distribution

and (ii) as of the last day of each fiscal quarter, report IVIG product and related revenues for the trailing

12-month period that exceed the amounts set forth in the Hayfin Credit Agreement, which range from $75.0 million for the fiscal quarter ending June 30, 2022 to $250.0 million for the fiscal quarter ending December 31, 2026 and each fiscal quarter

As of March 31, 2023, we were in compliance with all of the financial covenants contained in the Hayfin Credit Agreement.

On December 9, 2022, we completed an underwritten public offering whereby we issued 24,125,873 shares of our common stock.

Net proceeds after underwriting discounts and expenses associated with the offering were

approximately $64.6 million and are being used to accelerate commercialization and production activities, complete plasma center buildouts and obtain FDA approvals, to conclude post‑FDA marketing approval research and development projects, and for

working capital, capital expenditures and general corporate purposes.

On September 3, 2021, we entered into a distribution agreement with Raymond James & Associates, Inc., as agent (“Agent”), pursuant to which we may offer and sell, from time to time, at

our option, through or to the Agent, up to an aggregate of $50 million of shares of our common stock (the “Distribution Agreement”).

We currently intend to use any net proceeds from the sale of our common stock under the Distribution Agreement

for general corporate purposes, including procurement of source plasma and other raw materials, supply chain initiatives and production expenditures, funding expansion of plasma collection centers, working capital, capital expenditures, expansion

and resources for commercialization activities, and other potential research and development and business opportunities.

We currently have approximately $42.8 million of shares available to sell under the Distribution Agreement.

The following table sets forth a summary of our cash flows for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net change in cash and cash equivalents

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Net Cash Used in Operating Activities

Cash used in operations for the nine months ended September 30, 2022 was $52.1 million, a decrease of $26.8 million from the same period of a year ago, mainly due to reductions in accounts receivable and a lower net

loss after non-cash items.

The following table illustrates the primary components of our cash flows from operations:

Nine Months Ended September 30,

Cash used in operations for the three months ended March 31, 2023 was $14.7 million, a decrease of $11.3 million from the same period of a year ago, mainly due to a lower net loss after non-cash items.

The following

table illustrates the primary components of and changes to our cash flows from operations:

Three Months Ended March 31,

Non-cash expenses, gains and losses

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Net Cash Used in Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2022 and 2021 was $10.2 million and $9.8 million, respectively, consisting of capital expenditures for the construction and buildout of

new plasma collection centers and related equipment and capital expenditures at the Boca Facility.

We expect our total capital expenditures will be between $2.0 million and $4.0 million for the remainder of fiscal 2022, mainly for continued

plasma collection center expansion and additional upgrades to the Boca Facility manufacturing operations.

Net cash used in investing activities for the three months ended March 31, 2023 and 2022 was $1.9 million and $2.8 million, respectively, consisting of capital expenditures for the construction and buildout of new plasma

collection centers and related equipment and capital expenditures at the Boca Facility.

While we currently have no firm commitments for capital expenditures, we expect our total capital expenditures will be between $7.0 million and $9.0 million for

the remainder of fiscal 2023, mainly for additional upgrades to the Boca Facility manufacturing operations and related systems.

Net Cash Provided by Financing Activities

Cash provided by financing activities was $46.1 million for the nine months ended September 30, 2022 and mainly consisted of proceeds received from the Hayfin Credit Facility, net of payments to retire our previously

existing credit facility with Perceptive.

Cash provided by financing activities of $67.2 million for the nine months ended September 30, 2021 was mainly comprised of net proceeds received from the issuance of our common stock (see Note 8 to the

consolidated financial statements).

Cash used in financing activities was $0.7 million for the three months ended March 31, 2023, as compared to cash provided by financing activities was $47.3 million for the three months ended March 31, 2022 which mainly

consisted of proceeds received from the Hayfin Credit Facility, net of payments to retire our previously existing credit facility with Perceptive (see Note 7 to the Consolidated Financial Statements).

Effect of Inflation

Although inflation or changing prices did not have a significant impact on our revenues or net loss for the year ended December 31, 2020 or the first six months of 2021, inflation did impact a number of facets of our

business during the year ended December 31, 2021 and the first nine months of 2022 at both of our business segments.

We experienced price increases for, among other items, certain raw materials, consumable supplies, services for repairs and

maintenance of our facilities, utilities, shipping and freight charges, fuel surcharges and labor costs.

We expect this trend to continue at least into 2023 or longer, which could have a significant impact on our future results of operations.

addition, some of our plasma purchase agreements provide for annual price increases that are tied to various consumer price indices, which have resulted in higher than historical percentage price increases and has resulted in and is expected to

continue to result in higher source plasma and other raw material and supplies costs in the remainder of 2022 and future periods.

Inflation impacted a number of facets of our business during the three months ended March 31, 2023 and 2022 at both of our business segments.

We experienced price increases for, among other items, certain raw materials,

consumable supplies, services for repairs and maintenance of our facilities, utilities, shipping and freight charges, fuel surcharges and labor costs.

We expect this trend to continue through 2023 and potentially longer, which could have a

significant impact on our future results of operations.

In addition, some of our plasma purchase agreements provide for annual price increases that are tied to various consumer price indices, which have resulted in higher than historical percentage

price increases and has resulted in and is expected to continue to result in higher source plasma and other raw material and supplies costs in the remainder of 2023 and future periods.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis