ADMA BIOLOGICS, INC. 10-Q

Item 2. 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 (this “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, 2024, filed on March 18, 2025 (the “2024 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 Form 10-Q. See “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from our current expectations. OVERVIEW Our Business ADMA Biologics, Inc. (the “Company,” “ADMA,” “we,” “us” or “our”) is a U.S. based, end-to-end commercial biopharmaceutical company dedicated to manufacturing, marketing and developing specialty biologics for the 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. Through our ADMA BioManufacturing business segment, we currently have three products with U.S. Food and Drug Administration (the “FDA”) approval, all of which are currently marketed and commercially available: (i) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an 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 in adults and adolescents, for which we received FDA approval in April 2019 and commenced first commercial sales in October 2019; (ii) BIVIGAM (Immune Globulin Intravenous, Human), an IVIG product indicated for the treatment of PI, and for which we received FDA approval in May 2019 and commenced commercial sales in August 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 seek to develop a pipeline of plasma-derived therapeutics, including a product based on our most recently approved patent application under U.S. Patent Nos. 10,259,865 and 11,084,870 related to methods of treatment and prevention of S. pneumonia infection for an immunoglobulin manufactured to contain standardized antibodies to numerous serotypes of S. pneumoniae . We have successfully completed production of a pilot-scale batch and are conducting animal studies for our S. pneumoniae hyperimmune globulin program, SG-001. 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, FL with a peak annual processing capability of up to 600,000 liters (the “Boca Facility”). 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 sufficient quantities of our immune globulin (“IG”) products. Through our ADMA BioCenters subsidiary, we currently operate ten source plasma collection facilities in the U.S., all of which hold FDA licenses. This business unit, which we refer to as our Plasma Collection Centers business segment, provides us with the blood plasma required 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. 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. 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 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” market. 22 Index From time to time, we may provide contract manufacturing services for certain third-party clients. We also provide laboratory contracting services to certain customers and may provide contract filling, labeling and packing services utilizing our FDA-approved in-house fill-finish capabilities. Trends and Developments For the year ended December 31, 2024, we achieved net income of $197.7 million, the first time in our history that we achieved net income on a GAAP basis, and we generated positive cash flow from operations of $118.7 million, the full details of which can be found in the 2024 10-K. Our improved operating results are primarily the result of the substantial revenue growth driven by the continued physician, patient and payer acceptance of ASCENIV. In April 2025, the FDA approved our Prior Approval Supplement (the “PAS”) for our innovative yield enhancement production process (the “Yield Enhancement”) benefiting both ASCENIV and BIVIGAM. This PAS approval amends the Biologic License Application (BLA) approvals for ASCENIV and BIVIGAM and is intended to be the process the Company will manufacture these products on a go-forward basis. The production methods approved in this PAS are expected to result in additional bulk drug yield from the same starting raw material source plasma volumes and the Company believes it should experience meaningful revenue and earnings accretion beginning as early as the second half of 2025 and accelerating further into 2026 and beyond. This innovative process has demonstrated an ability to increase ASCENIV and BIVIGAM production yields by approximately 20% from the same starting source plasma volume. In July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, which includes numerous changes to existing tax law including extending or making permanent certain business provisions initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. The OBBBA permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures, making these expenditures fully deductible in the period incurred. The OBBBA also permanently extends recognition of the accelerated bonus depreciation on qualifying assets in the period acquired. We expect these provisions to result in a reduction of current income tax liabilities and a corresponding reduction to income tax expense. While we are still evaluating these and other changes contained in the law, we do not expect these changes to have a material effect on our financial statements, including our effective tax rate. As discussed above in Note 14 − Subsequent Events, to our condensed consolidated financial statements included in this Form 10-Q, in July 2025, we acquired real estate in Boca Raton, FL for a total purchase price of $12.6 million, which included deposits aggregating $0.5 million made in May 2025. This real estate purchase is intended to allow the Company to expand its production operations and related activities as well as provide for certain redundancies for ambient and cold-chain storage of raw materials, work in process and finished goods inventory. Our Products ASCENIV 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 for ASCENIV. Under the Healthcare Common Procedure Coding System (“HCPCS”), the J-code (J1554) became effective in April 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. With our patented testing methods and assay, we are able to identify the high-titer or “hyperimmune” plasma that meets our internal and required specifications for ASCENIV. This type of high-titer plasma is typically found in less than 10% of the total donor collection samples we test. 23 Index ASCENIV is approved for the treatment of PIDD or PI, 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 and 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. In the future, we may elect to 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. Following FDA approval in April 2019, commercial sales of ASCENIV commenced in October of 2019 and in 2023 we commenced manufacturing ASCENIV at the 4,400 Liter production scale. This expansion has improved the product’s margin profile and increased plant production capacity as fewer batches are needed to support our revenue goals. ASCENIV’s prescriber and patient base continued to expand during 2024, which drove record utilization and pull-through for this product. These elevated demand trends have sustained into 2025, and we currently expect that this product’s rapid growth will continue throughout 2025 and beyond. In June 2025, we filed our supplemental Biologics License Application (“sBLA”) for the expansion of ASCENIV’s label to include the pediatric setting for patients who are two years and older and we anticipate potential FDA approval in the first half of 2026. BIVIGAM 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. 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 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. In May 2019, the FDA approved the PAS for the use of our IVIG manufacturing process, thereby enabling us to re-launch and commercialize this product in the United States. We resumed production of BIVIGAM during the fourth quarter of 2017 and commercial production is ongoing, using our FDA-approved IVIG manufacturing process under U.S. Department of Health and Human Services (“HHS”) License No. 2019. The commercial re-launch and first commercial sales for this product commenced in August 2019. In April 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. 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, manufacturing efficiencies and operating results. In December 2023, we announced that the FDA approved the expansion of BIVIGAM’s label in the United States to now include the pediatric setting for those two years of age and older. Nabi-HB Nabi-HB is a hyperimmune globulin that is rich in antibodies to the Hepatitis B virus. Nabi-HB is a purified human polyclonal antibody product collected from plasma donors who have been previously vaccinated with a Hepatitis B vaccine. Nabi-HB is indicated for the treatment of acute exposure to blood containing HBsAg, prenatal exposure of infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons and household exposure to persons with acute Hepatitis B virus infection in specific, listed settings. Hepatitis B is a potentially life-threatening liver infection caused by the Hepatitis B virus, which is a major global health problem. The Hepatitis B virus can cause chronic infection and places 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 in March 1999. 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 United States and we continue to manufacture Nabi-HB under HHS License No. 2019. 24 Index 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. GAAP”). 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. 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. 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 chargebacks deducted from gross revenues and estimates related to the Company’s effective tax rate. Some of the estimates and assumptions we are required 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 operations. For a description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements included in our 2024 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 Form 10-Q. Revenue Deductions for Rebates and Chargebacks 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. Effective Tax Rate Our provision for income taxes and the determination of our effective tax rate are subject to significant judgment and complexity. We estimate our income tax expense based on enacted tax laws and statutory tax rates in the jurisdictions in which we operate, as well as our interpretation of relevant tax regulations. The effective tax rate includes the impact of various estimates and judgments. Changes in these estimates or in tax laws could significantly affect our effective tax rate and results of operations. Due to the complexity of tax regulations and the potential for differing interpretations, it is reasonably possible that the ultimate resolution of these matters could result in material adjustments to our effective tax rate in future periods. 25 Index Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 The following table presents a summary of the changes in our results of operations for the three months ended June 30, 2025, compared to the three months ended June 30, 2024: (in thousands) Three Months Ended June 30, 2025 2024 Increase (Decrease) Revenues $ 121,984 $ 107,191 $ 14,793 Cost of product revenue 54,757 49,738 5,019 Gross profit 67,227 57,453 9,774 Research and development expenses 1,031 560 471 Plasma center operating expenses 1,152 942 210 Amortization of intangibles 32 142 (110 ) Selling, general and administrative expenses 22,214 16,608 5,606 Income from operations 42,798 39,201 3,597 Interest expense (1,834 ) (3,783 ) 1,949 Loss on extinguishment of debt (1,159 ) - (1,159 ) Other income, net 292 433 (141 ) Income before taxes 40,097 35,851 4,246 Provision for income taxes 5,878 3,789 2,089 Net income $ 34,219 $ 32,062 $ 2,157 Adjusted EBITDA * $ 50,769 $ 44,545 $ 6,224 * - See Non-GAAP Financial Measures appearing at the end of this discussion Revenues We recorded total revenues of $122.0 million for the three months ended June 30, 2025, as compared to $107.2 million for the three months ended June 30, 2024, an increase of $14.8 million, or approximately 14%. The increase is primarily related to increased sales volume of ASCENIV, as we experienced increased physician, payer and patient acceptance and utilization of this product. During the three months ended June 30, 2025, and as previously disclosed in our Form 10-Q for the three months ended March 31, 2025 that was filed with the Securities and Exchange Commission (the “SEC”) on May 7, 2025 (the "2025 1Q 10-Q"), we voluntarily withdrew three lots of BIVIGAM (such a withdrawal, hereinafter referred to as the “Voluntary Withdrawal”) as a precautionary measure. This resulted in a reduction in revenue of $0.2 million for credits issued to customers that were impacted by this Voluntary Withdrawal during the current period. This action was proactively initiated, and we believe this matter to be resolved. Excluding the $12.6 million adjustment we recorded in the second quarter of 2024 to decrease our accrual for U.S. Medicaid rebates (which had the effect of increasing 2024 revenues by $12.6 million), our second quarter 2025 revenue increased $27.4 million, or 29%, as compared to the second quarter of 2024. Cost of Product Revenue and Gross Profit Cost of product revenue was $54.8 million for the three months ended June 30, 2025, as compared to $49.7 million for the three months ended June 30, 2024. This increase is primarily attributable to volume-driven increases in product revenue costs related to the increased sales of our IG products of $10.9 million, partially offset by $5.9 million of lower product revenue costs related to the reduction in plasma and intermediates sales. For the three months ended June 30, 2025, we had gross profit of $67.2 million, as compared to $57.5 million for the same period of a year ago, which represents a gross margin in the second quarter of 2025 of 55.1%, as compared to 53.6%, or 47.4% excluding the $12.6 million adjustment recorded in the second quarter of 2024 to decrease our accrual for U.S. Medicaid rebates (which had the effect of increasing 2024 revenue by $12.6 million) in the second quarter of 2024. This improvement in gross margin is primarily driven by a significantly more favorable mix of higher margin IG sales in 2025 as compared to 2024. Research and Development Expenses Research and development (“R&D”) expenses totaled $1.0 million for the second quarter of 2025, as compared to $0.6 million for the second quarter of 2024. The increase is primarily due to expenses incurred during the second quarter related to our S. pneumoniae hyperimmune globulin program, SG-001. Plasma Center Operating Expenses Plasma Center Operating Expenses increased from $0.9 million for the three months ended June 30, 2024 to $1.2 million for the three months ended June 30, 2025. The increase is primarily due to higher employee-related costs. 26 Index Amortization of Intangibles Amortization expense mainly pertains to the amortization of internally developed software and was less than $0.1 million and $0.1 million for the three months ended June 30, 2025 and 2024 respectively. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses increased $5.6 million to $22.2 million for the three months ended June 30, 2025, as compared to $16.6 million, for the three months ended June 30, 2024. The increase is primarily driven by higher compensation-related costs due to increased headcount to support the growth of our business and manufacturing operations. In addition, higher stock-based compensation costs, insurance premium costs and higher professional fees contributed to this increase. Interest Expense Interest expense for the three months ended June 30, 2025 was $1.8 million, as compared to $3.8 million for the three months ended June 30, 2024, primarily driven by the decrease in debt balances due to principal repayments made in 2024 and 2025. Loss on Extinguishment of Debt As a result of the prepayment we made on our term loan in May 2025, we incurred a prepayment penalty in the amount of $0.5 million and recorded a partial write-down of unamortized debt discount of approximately $0.7 million, for a loss on this partial extinguishment of debt in the amount of $1.2 million. Other Income, Net Other income, net, for the three months ended June 30, 2025 was $0.3 million, as compared to $0.4 million for the three months ended June 30, 2024. Provision for Income Taxes The provision for income taxes of $5.9 million for the three months ended June 30, 2025 represented an effective tax rate of 14.7%, as compared to the provision of $3.8 million for the three months ended June 30, 2024, with an effective tax rate of 10.6%. As of June 30, 2024, the Company had a full valuation allowance for its net deferred tax assets, and the effective tax rate for the three months ended June 30, 2024 differed from the federal statutory tax rate of 21% primarily due to the recognition of deferred tax assets for the net operating losses. The Company released its valuation allowance in December 2024, and the effective tax rate for the three months ended June 30, 2025 differed from the federal statutory rate primarily due to the excess tax benefits on stock-based compensation. 27 Index Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 The following table presents a summary of the changes in our results of operations for the six months ended June 30, 2025, compared to the six months ended June 30, 2024: (in thousands) Six Months Ended June 30, 2025 2024 Increase (Decrease) Revenues $ 236,786 $ 189,066 $ 47,720 Cost of product revenue 108,463 92,505 15,958 Gross profit 128,323 96,561 31,762 Research and development expenses 1,858 1,010 848 Plasma center operating expenses 2,438 1,947 491 Amortization of intangibles 57 335 (278 ) Selling, general and administrative expenses 46,292 32,247 14,045 Income from operations 77,678 61,022 16,656 Interest expense (3,809 ) (7,552 ) 3,743 Loss on extinguishment of debt (1,159 ) - (1,159 ) Other income, net 836 782 54 Income before taxes 73,546 54,252 19,294 Provision for income taxes 12,424 4,384 8,040 Net income $ 61,122 $ 49,868 $ 11,254 Adjusted EBITDA * $ 98,706 $ 70,969 $ 27,737 * - See Non-GAAP Financial Measures appearing at the end of this discussion Revenues We recorded total revenues of $236.8 million for the six months ended June 30, 2025, as compared to $189.1 million for the six months ended June 30, 2024, an increase of $47.7 million, or approximately 25%. The increase is primarily related to increased sales volume of ASCENIV, as we experienced increased physician, payer and patient acceptance and utilization of this product. During the six months ended June 30, 2025, and as previously disclosed in the 2025 1Q 10-Q, we effected the Voluntary Withdrawal as a precautionary measure. This resulted in a reduction in revenue of $4.0 million for credits issued to customers that were impacted by this Voluntary Withdrawal during the current period. This action was proactively initiated, and we believe this matter to be resolved. Excluding the $12.6 million adjustment we recorded in the second quarter of 2024 to decrease our accrual for U.S. Medicaid rebates (which had the effect of increasing 2024 revenues by $12.6 million), our revenues for the six months ended June 30, 2025 increased $60.3 million, or 34%, as compared to the six months ended June 30, 2024. Cost of Product Revenue and Gross Profit Cost of product revenue was $108.5 million for the six months ended June 30, 2025, as compared to $92.5 million for the six months ended June 30, 2024. This increase is primarily attributable to volume-driven increases in product revenue costs related to the increased sales of our IG products of $23.9 million, partially offset by $8.0 million of lower product revenue costs related to the reduction in plasma and intermediates sales. For the six months ended June 30, 2025, we had gross profit of $128.3 million, as compared to $96.6 million for the same period of a year ago, which represents a gross margin in 2025 of 54.2%, as compared to 51.1%, or 47.6% when excluding the $12.6 million adjustment recorded in the second quarter of 2024 to decrease our accrual for U.S. Medicaid rebates (which had the effect of increasing 2024 revenue by $12.6 million) in the same period of 2024. This improvement in gross margin is primarily driven by a significantly more favorable mix of higher margin IG sales in 2025 as compared to 2024, along with the operational efficiencies achieved resulting in a reduction in other manufacturing costs. Research and Development Expenses Research and development (“R&D”) expenses totaled $1.9 million for the six months ended June 30, 2025, as compared to $1.0 million for the six months ended June 30, 2024. The increase is primarily due to expenses incurred in 2025 related to the ASCENIV pediatric study and our S. pneumoniae hyperimmune globulin program, SG-001. Plasma Center Operating Expenses Plasma Center Operating Expenses increased from $1.9 million for the six months ended June 30, 2024 to $2.4 million for the six months ended June 30, 2025. The increase is primarily due to an increase in employee-related costs of $0.5 million. 28 Index Amortization of Intangibles Amortization expense mainly pertains to the amortization of internally developed software and was $0.1 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses increased $14.0 million to $46.3 million for the six months ended June 30, 2025, as compared to $32.2 million, for the six months ended June 30, 2024. The increase is primarily driven by higher compensation-related costs due to increased headcount to support the growth of our business and manufacturing operations. In addition, higher stock-based compensation costs, insurance premium costs and higher professional fees contributed to this increase. Interest Expense Interest expense for the six months ended June 30, 2025 was $3.8 million, as compared to $7.6 million for the six months ended June 30, 2024, primarily driven by the decrease in debt balances due to principal repayments made in 2024 and 2025. Loss on Extinguishment of Debt As a result of the prepayment we made on our term loan in May 2025, we incurred a prepayment penalty in the amount of $0.5 million and recorded a partial write-down of unamortized debt discount of approximately $0.7 million, for a loss on this partial extinguishment of debt in the amount of $1.2 million. Other Income, Net Other income, net, was $0.8 million during the six months ended June 30, 2025 and 2024. Provision for Income Taxes The provision for income taxes of $12.4 million for the six months ended June 30, 2025, represented an effective tax rate of 16.9%, as compared to $4.4 million for the six months ended June 30, 2024, with an effective tax rate of 8.1%. As of June 30, 2024, the Company had a full valuation allowance for its net deferred tax assets, and the effective tax rate for the six months ended June 30, 2024 differed from the federal statutory tax rate of 21% primarily due to the recognition of deferred tax assets for the net operating losses. The Company released its valuation allowance in December 2024, and the effective tax rate for the six months ended June 30, 2025 differed from the federal statutory rate primarily due to the excess tax benefits on stock-based compensation. Non-GAAP Financial Measures Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA and Adjusted Net Income EBITDA, Adjusted EBITDA and Adjusted net income are important non-GAAP financial measures used by our management and Board to assess our operating performance. We use EBITDA, Adjusted EBITDA and Adjusted net income as key performance measures because we believe that they facilitate operating performance comparisons from period to period that exclude, in the case of Adjusted net income, items that are expected to be non-recurring, and in the case of EBITDA and Adjusted EBITDA, 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 one-time and non-recurring items. In addition, we believe that EBITDA, Adjusted EBITDA and Adjusted net income 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, Adjusted EBITDA and Adjusted net income to net income, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. 29 Index Because EBITDA, Adjusted EBITDA and Adjusted net income are measures not deemed to be in accordance with U.S. GAAP and are susceptible to varying calculations, our EBITDA, Adjusted EBITDA and Adjusted net income may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate EBITDA, Adjusted EBITDA and Adjusted net income 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, Adjusted EBITDA and Adjusted net income are not intended to represent cash flows for the periods presented, nor have they been presented as an alternative to operating income, net income 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. GAAP. The following table presents the reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024: Three Months ended June 30, Six Months ended June 30, 2025 2024 2025 2024 (In thousands, except share and per share data) Net income $ 34,219 $ 32,062 $ 61,122 $ 49,868 Depreciation 2,027 1,906 3,970 3,826 Amortization 32 142 57 335 Income taxes 5,878 3,789 12,424 4,384 Interest expense 1,834 3,783 3,809 7,552 EBITDA 43,990 41,682 81,382 65,965 Stock-based compensation 4,963 2,863 9,587 5,004 Customer credits related to the Voluntary Withdrawal 164 - 4,001 - Yield enhancement 493 - 1,395 - Loss on extinguishment of debt 1,159 - 1,159 - Non-recurring professional fees (pre-tax) (a) - - 1,182 - Adjusted EBITDA $ 50,769 $ 44,545 $ 98,706 $ 70,969 (a) Non-recurring professional fees represent incremental costs associated with a vendor change that we do not expect to incur in future periods. Adjusted EBITDA increased for the three and six months ended June 30, 2025, as compared to the same periods of a year ago, by $6.2 million and $27.7 million, respectively. The improvement is primarily due to the increased sales and gross profit in 2025. The following table presents the reconciliation of Net income to Adjusted net income for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, 2025 Six months ended June 30, 2025 (In thousands) Net income $ 34,219 $ 61,122 Stock-based compensation modifications (pre-tax) - 474 Customer credits related to the Voluntary Withdrawal (pre-tax) 164 4,001 Loss on extinguishment of debt (pre-tax) 1,159 1,159 Yield Enhancement (pre-tax) 493 1,395 Non-recurring professional fees (pre-tax) (a) - 1,182 Adjusted net income (b) $ 36,035 $ 69,333 (a) Non-recurring professional fees represent incremental costs associated with a vendor change that we do not expect to incur in future periods. (b) Excludes estimated tax effect of the add-backs of $0.3 and $1.4 million for the three and six months ended June 30, 2025, respectively. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2025, we had working capital of $324.6 million, primarily consisting of $191.5 million of inventory, cash and cash equivalents of $90.3 million and $109.7 million of accounts receivable, partially offset by current liabilities of $74.9 million, as compared to working capital at December 31, 2024 of $275.9 million, primarily consisting of $170.2 million of inventory, cash and cash equivalents of $103.1 million and accounts receivable of $50.0 million, partially offset by current liabilities of $55.5 million. Our material cash requirements are primarily comprised of: 30 Index The collection and procurement of raw material source plasma, which includes plasma donor fees and plasma center supplies, and other raw materials necessary to maintain and scale up our manufacturing operations; Employee compensation and benefits; Capital expenditures for equipment upgrades and capacity expansion at the Boca Facility and to maintain our plasma collection facilities; Interest on our debt; Marketing programs, medical education and continued commercialization efforts; The Boca Facility maintenance, improvements, repairs and supplies; Research and development activities; and Continuous improvements and updates to our IT infrastructure, laboratory equipment and assays, and facilities and engineering equipment. As discussed above in Note 14 − Subsequent Events, to our condensed consolidated financial statements included in this Form 10-Q, in July 2025, we acquired real estate in Boca Raton, FL for a total purchase price of $12.6 million, which included deposits aggregating $0.5 million made in May 2025. This property was purchased to add redundancies, expand operations and prepare for future growth opportunities. 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 and laboratory testing materials and single use disposables. We currently anticipate, based upon our projected revenue and expenditures, that our current cash, cash equivalents and accounts receivable, along with our projected future operating cash flow, will be sufficient to fund our operations, as currently conducted, through the first half of 2026 and beyond. Based on current operations and assuming continued market acceptance and utilization of our finished drug products, we do not anticipate the need to raise additional capital at this time. However, should the market for our products or political, economic or inflationary conditions change, we may need to seek additional capital which may not be available due to a variety of potential factors beyond our control (see “Risk Factors” appearing elsewhere in this report). ADMA continues to evaluate a variety of strategic alternatives, and the exploration of value-creating opportunities remains a top corporate priority. On December 18, 2023 (the “Ares Closing Date”), we and all of our subsidiaries entered into a senior secured credit facility (the “Ares Credit Agreement”) with Ares Capital Corporation and certain credit funds affiliated with Ares Capital Corporation (collectively, “Ares”). The Ares Credit Agreement provided for a total of $135.0 million in senior secured credit facilities (the “Ares Credit Facility”) consisting of (i) a term loan in the aggregate principal amount of $62.5 million and (ii) a revolving credit facility in the aggregate principal amount of $72.5 million (collectively, the “Ares Loans”), both of which were fully drawn on the Ares Closing Date. The Ares Credit Facility had a maturity date of December 20, 2027 (the “Ares Maturity Date”). On August 14, 2024, we repaid $30.0 million against the revolving credit facility and the outstanding balance on the revolving credit facility as of March 31, 2025 was $42.5 million. On December 19, 2024, we repaid $30.0 million against the term loan facility and the outstanding balance on the term loan facility as of March 31, 2025 was $32.5 million. On May 5, 2025, we borrowed $30.0 million under our revolving credit facility, which we used to concurrently repay an additional $30.0 million against the term loan facility on May 6, 2025, as a result of which, the Company recorded debt extinguishment losses of $1.2 million during the three and six months ended June 30, 2025. Following such transactions, and as of June 30, 2025, we had $72.5 million outstanding under our revolving credit facility and $2.5 million outstanding under our term loan facility. Borrowings under the term loan bore interest at the adjusted Term SOFR for a three‑month tenor in effect on the day that is two business days prior to the first day of the applicable calendar quarter plus 6.50% (the “Initial SOFR Term Loan Applicable Margin”). Borrowings under the revolving facility initially bore interest at the adjusted Term SOFR for a three‑month tenor in effect on the day that is two business days prior to the first day of the applicable calendar quarter plus 3.75% (the “SOFR Revolving Facility Applicable Margin”). As of June 30, 2025 and December 31, 2024, the interest rate on the term loan was approximately 10.81% and 10.85%, respectively, and the interest rate on the revolving facility was approximately 8.05% and 8.34%, respectively. 31 Index On the Ares Maturity Date, we would have been required to pay Ares the entire outstanding principal amount underlying the Ares Loans and any accrued and unpaid interest thereon. Prior to the Ares Maturity Date, there were no scheduled principal payments on the Ares Credit Facility, and we were required to make quarterly interest payments during the term of Ares Credit Facility. We were permitted to prepay the outstanding principal under the revolving facility, together with any accrued but unpaid interest on the prepaid principal amount, at any time and from time to time upon three business days’ prior written notice with no prepayment premium. However, in the event that we prepaid an amount under the revolving facility that was greater than 50% of the current $72.5 million outstanding balance, or $36,250,000, we would have still been required to pay an amount of interest on the revolving facility that would have been payable had $36,250,000 been outstanding, through the term of Ares Credit Facility. We were permitted to prepay the outstanding principal on the term loan, together with any accrued but unpaid interest on the prepaid principal amount, at any time and from time to time upon three business days’ prior written notice, subject to the payment to Ares of a prepayment premium equal to (i) 1.5% of the prepaid principal amount, if prepaid after the first anniversary of the Ares Closing Date and on or prior to the second anniversary of the Ares Closing Date, or (ii) 1.0% of the prepaid principal amount, if prepaid on or prior to the third anniversary of the Ares Closing Date. All of our obligations under the Ares Credit Agreement were 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 Ares Credit Agreement contained certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The negative covenants included certain financial covenants, including maximum total leverage ratios and a $15.0 million liquidity covenant, and also restricted or limited our ability and the ability of our subsidiaries to, among other things and subject to certain exceptions contained in the Ares Credit Agreement, incur new indebtedness; create liens on assets; 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 Ares Credit Agreement); 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 Ares Credit Agreement. As of June 30, 2025, we were in compliance with all of the covenants contained in the Ares Credit Agreement. Events of default on the Ares Loans included, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material contracts and events constituting a change of control. If there was an event of default, we would have incurred an increase in the rate of interest on the Ares Loans of 2% per annum. On August 5, 2025 (the “JPM Closing Date”), we and all of our subsidiaries entered into a Credit Agreement (the “JPM Credit Agreement”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (“JPMorgan”). The JPM Credit Agreement provides for $300 million of senior secured credit facilities, consisting of (a) a term loan in the aggregate principal amount of $75 million (the “JPM Term Loan Facility”) and (b) a revolving credit facility in the aggregate principal amount of $225 million (the “JPM Revolving Facility”). We may also request, subject to customary conditions, additional incremental revolving commitments or term loans in an aggregate principal amount not to exceed $100 million (together with the JPM Term Loan Facility and the JPM Revolving Facility, the “JPM Credit Facilities”). The JPM Term Loan Facility has a maturity date of August 5, 2028 (the “JPM Term Maturity Date”) and the JPM Revolving Facility has a maturity date of August 5, 2028 or any earlier date on which the commitments under the JPM Revolving Facility are reduced to zero or otherwise terminated pursuant to the terms of the JPM Credit Agreement (the “JPM Revolving Maturity Date”). On the JPM Closing Date, we used the proceeds of the JPM Credit Facilities to terminate and pay in full all of the outstanding obligations under the Ares Credit Facility, including the outstanding principal of all loans, all accrued and unpaid interest thereon, and any unpaid fees, charges, premiums (including prepayment premiums) and costs, and expenses related thereto. We may also use the proceeds of the JPM Credit Facilities to finance share repurchases and for working capital and general corporate purposes. 32 Index Interest on borrowings under the JPM Credit Facilities will accrue at an applicable rate equal to (i) an alternate base rate plus an applicable spread (each such borrowing, an “ABR Borrowing”) or (ii) Term SOFR plus an applicable spread (each such borrowing, a “Term Benchmark Borrowing”), in each case based on the lower of the applicable rates set forth in the JPM Credit Agreement, which are based on our total leverage ratio. These applicable spreads range from 150 basis points to 200 basis points over the alternate base rate and 250 basis points to 300 basis points over Term SOFR, in each case, as determined in accordance with the provisions of the JPM Credit Agreement. We have agreed to pay a commitment fee at specified rates set forth in the JPM Credit Agreement, which, based on our total leverage ratio, ranges from 30 basis points to 35 basis points on the daily amount of the undrawn portion of the aggregate commitments of the lenders under the JPM Revolving Facility. At our request, each borrowing initially shall be either an ABR Borrowing or a Term Benchmark Borrowing, and we may thereafter elect to convert any such borrowing to a different type. During the occurrence and continuance of an Event of Default (as defined in the JPM Credit Agreement), all borrowings shall accrue interest at a rate per annum equal to 2% plus the applicable rate. On the JPM Revolving Maturity Date, we will repay the unpaid principal amount outstanding under the JPM Revolving Facility. Under the JPM Term Loan Facility, we will make principal payments in accordance with and on the dates specified in the amortization schedule set forth in the JPM Credit Agreement, with the remaining unpaid principal amount to be paid in full on the JPM Term Maturity Date. We may prepay at any time and from time to time any borrowing in whole or in part, without premium or penalty (other than, if applicable, any break funding expenses), subject to customary notice requirements. All of our obligations under the JPM Credit Agreement are secured by a first-priority lien and security interest in substantially all of the tangible and intangible assets, including intellectual property and equity interests, of us and all of our subsidiaries. The JPM Credit Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The negative covenants include certain financial covenants, including a maximum total leverage ratio of 2.50 to 1.00 and a minimum fixed charge coverage ratio of 1.20 to 1.00. The negative covenants also restrict or limit our ability and the ability of our subsidiaries to, among other things and subject to certain exceptions contained in the JPM Credit Agreement, incur new indebtedness; create liens on assets; engage in certain fundamental corporate changes; make certain investments; dispose of certain assets; engage in sale and leaseback transactions or swap agreements; make certain Restricted Payments (as defined in the JPM Credit Agreement); engage in certain affiliate transactions; enter into any other agreements that have the impact of restricting our ability to make loan repayments under the JPM Credit Agreement; or amend certain material documents. Cash Flows The following table sets forth a summary of our cash flow for the periods indicated: Six Months Ended June 30, (in thousands) 2025 2024 Net cash provided by operating activities $ 1,464 $ 43,428 Net cash used in investing activities (7,247 ) (4,727 ) Net cash used in financing activities (7,079 ) (1,809 ) Net change in cash and cash equivalents (12,862 ) 36,892 Cash and cash equivalents - beginning of period 103,147 51,352 Cash and cash equivalents - end of period $ 90,285 $ 88,244 Net Cash Provided by Operating Activities Cash provided by operating activities for the six months ended June 30, 2025 was $1.5 million, a decrease of $42.0 million from the same period of a year ago, primarily due to the unfavorable impact of the timing of sales and due to inventory investments made in 2025 to support the Company’s manufacturing and distribution objectives, partially offset by higher net income and favorable impact of timing of payments. The following table illustrates the primary components of our cash flows from operations: 33 Index Six Months Ended June 30, (in thousands) 2025 2024 Net income $ 61,122 $ 49,868 Non-cash expenses, gains and losses 20,097 9,598 Changes in accounts receivable (59,726 ) (2,692 ) Changes in inventories (21,229 ) (6,904 ) Changes in accounts payable and accrued expenses 4,203 (6,603 ) Other (3,003 ) 161 Cash provided by operations $ 1,464 $ 43,428 Net Cash Used in Investing Activities Net cash used in investing activities for the six months ended June 30, 2025 and 2024 was $7.2 million and $4.7 million, respectively. The increase is primarily related to the roof replacement at the Boca Facility in the amount of $1.3 million, due to capital expenditures associated with the Yield Enhancement project. While as of June 30, 2025 we had no firm commitments for capital expenditures with the exception of the July 2025 purchase of the real estate in Boca Raton, FL, we expect our total capital expenditures will be between $18.0 million and $21.6 million for the remainder of fiscal 2025, mainly for additional upgrades to the Boca Facility manufacturing operations, related operational systems, and the purchase of the real estate in Boca Raton, FL, which was completed in July 2025. Of the total remaining 2025 capital expenditures, $13.0 million represents the acquisition cost and improvements of the new Boca Raton real estate. Net Cash Used in Financing Activities Net cash used in financing activities was $7.1 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively. The increase is primarily due to higher taxes paid in connection with shares that were withheld from RSUs that vested during the period, as a result of an increase in the value of our common stock as compared to 2024. Effect of Inflation Inflation impacted a number of facets of our business during the six months ended June 30, 2025 and 2024 at each 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, among other expenses. Based upon the macroeconomic environment, publicly available information and reports from the U.S. government, we expect this trend to continue in 2025 and potentially longer, which could have a significant impact on our future results of operations. In addition, some of our third-party inventory purchase agreements provide for scheduled price increases that are tied to various consumer price indexes, which have resulted in higher than historical percentage price increases and could result in higher source plasma and other raw material and supplies costs in 2025 and beyond. Also, in a higher inflationary environment, we may not be able to raise the prices of our products to maintain the rate of inflation, and this may affect our product margins. We are unable to predict when these external drivers of inflation will subside. Off-Balance Sheet Arrangements None. 34 Index Item 3. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risk as a result of changes in interest rates. Our senior credit facility with Ares required quarterly payments of interest based on the adjusted Term SOFR plus the applicable margin. Our new senior credit facility with JPMorgan requires quarterly payments of interest, in the case of an alternate base rate borrowing, and one-month or three-month payments of interest, in the case of a Term SOFR borrowing, in each case, plus the applicable rate. We currently do not utilize any derivative financial instruments, such as interest rate swaps or caps, to mitigate this risk. As of June 30, 2025, we had $75.0 million outstanding under our senior credit facility with Ares that was subject to a variable interest rate. As a result, the effect of a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate would have an approximate $0.8 million annualized negative impact on our earnings and cash flows. Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We designed our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission (SEC)’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures. Under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures as of June 30, 2025. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of June 30, 2025, were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosures. A control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. We do not expect that our disclosure controls and procedures or our internal control over financial reporting are able to prevent with certainty all errors and all fraud. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 35 Index PART II OTHER INFORMATION Item 1. Legal Proceedings. We may become subject to certain legal proceedings and claims arising in connection with the normal course of our business. In the opinion of management, there are currently no material pending legal proceedings that would have a material adverse effect on our consolidated financial position, results of operations or cash flows.