What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-12 · 78 added, 39 removed, 93 unchanged (56% of the section changed)

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our ability to continue as a going concern;

our ability to successfully negotiate a contract extension and/or future volume commitments by DaVita, our ability to successfully integrate acquisitions;

our ability to successfully negotiate a contract extension with and/or future volume commitments by DaVita;

our ability to successfully integrate acquisitions;

the size of the hemodialysis concentrates market opportunity;

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our ability to successfully implement certain cost containment and cost-cutting measures;

our ability to maintain profitability and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.

our ability to achieve profitability and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.

While we believe our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which are based on information available to us on the date of this report or, if made elsewhere, as of the date made.

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Rockwell's commercial organization supports the Company's vision to focus its efforts on enhancing its revenue-generating business and driving the Company towards sustainable profitability.

The Company concentrates its efforts on increasing the Company's market share, broadening its product portfolio, right-sizing the Company's product pricing, improving gross margins, and growing the business through organic and inorganic growth and other business development opportunities.

The Company concentrates its efforts on increasing its market share, broadening its product portfolio, right-sizing its product pricing, improving gross margins, and growing the Company's business through organic and inorganic growth and other business development opportunities.

We currently operate in one market segment, the hemodialysis market, which involves the manufacturing, sale and distribution of hemodialysis products to hemodialysis clinics, including dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process.

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However, DaVita subsequently indicated that it will completely transition to another supplier by mid-2025, subject to further discussions between Rockwell and DaVita.

DaVita has agreed to a one-time, non-refundable payment of $0.9 million to ensure supply continuity for products purchased during the three months ended March 31, 2025.

DaVita has agreed to quarterly, non-refundable payments totaling $1.3 million to ensure supply continuity for products purchased during the six months ended June 30, 2025.

These quarterly, non-refundable payments of $1.3 million were recorded as revenue during the six months ended June 30, 2025.

Discussions between Rockwell and DaVita are ongoing and include a potential contract extension and/or future volume commitments by DaVita to Rockwell.

There can be no assurance that these discussions will yield a successful outcome for Rockwell.

In the first quarter of 2025, the Company entered into a distribution services agreement with a leading manufacturer of medical equipment including hemodialysis machines, disposable products, and automated fluid balance systems.

Leveraging Rockwell's existing distribution network and transportation subsidiary, Rockwell Transportation, the Company is now able to distribute a single-use bicarbonate cartridge in two sizes, 720 grams and 900 grams, to its customers at dialysis centers, hospital-based outpatient centers, and skilled nursing facilities.

The bicarbonate cartridges are 510(k) approved by the U.S.

Food and Drug Administration and the manufacturing partner is responsible for maintaining all regulatory approvals required to market and sell the bicarbonate cartridges throughout the United States.

Results of Operations for the Three Months Ended March 31, 2025 and 2024

We continue to supply DaVita as of the filing date of this report.

In the second quarter of 2025, Rockwell entered into a product purchase agreement with Innovative Renal Care (IRC), one of the largest dialysis service providers in the United States.

Under the terms of the agreement, Rockwell will supply IRC with liquid and dry, acid and bicarbonate hemodialysis concentrates, as well as the Company's DAMX45 dry acid concentrate mix system, which is 510(k) approved to be used exclusively with Rockwell's CitraPure and Dri-Sate dry acid concentrate powders.

This multimillion-dollar agreement contains utilization commitments will remain in effect for three years, with the option to extend for an additional one-year period.

Results of Operations for the Three Months Ended June 30, 2025 and 2024

The following table summarizes our operating results for the periods presented below (dollars in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

2025 % of Revenue 2024 % of Revenue % Change

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Gross Profit 2,503 16 % 4,550 18 % (45) %

Selling and Marketing 572 4 % 586 2 % (2) %

General and Administrative 3,280 20 % 3,449 13 % (5) %

Operating (Loss) Income $ (1,349) (8) % $ 515 3 % (362) %

During the three months ended June 30, 2025, our net sales were $16.1 million compared to net sales of $25.8 million during the three months ended June 30, 2024.

The decrease of $9.7 million was primarily due to a $9.9 million reduction in sales to DaVita, partially offset by an increases of $0.2 million from price increases to other existing customers and sales to new customers.

For the three months ended June 30, 2025, DaVita represented 11% of net sales.

Non-Product revenue was not material for either period.

Cost of sales for the three months ended June 30, 2025 was $13.6 million, resulting in gross profit of $2.5 million for the three months ended June 30, 2025, compared to cost of sales of $21.3 million and a gross profit of $4.6 million for the three months ended June 30, 2024.

The gross profit decrease of $2.1 million was due to a decrease in product sales.

Gross profit from product sales includes $0.3 million due to a price adjustment for DaVita purchases for the three months ended June 30, 2025.

Selling and Marketing Expense

Selling and marketing expenses were $0.6 million for each of the three months ended June 30, 2025 and 2024.

General and Administrative Expense

General and administrative expenses were $3.3 million for the three months ended June 30, 2025, compared to $3.4 million for the three months ended June 30, 2024.

The decrease of $0.1 million was primarily driven by a $0.2 million decrease in administrative expense, partially offset by $0.1 million of increased compensation expense.

Other Expense

Total other expense of $0.1 million and $0.2 million for the three months ended June 30, 2025 and 2024, respectively, was driven primarily by interest expense of $0.2 million in each period related to our debt facility (See Note 15 to the condensed consolidated financial statements included elsewhere in this Form 10-Q).

The interest expense for the three months ended June 30, 2025 was partially offset by $0.1 million of interest income and realized gains on available-for-sale of investments of $0.1 million.

Results of Operations for the Six Months Ended June 30, 2025 and 2024

The following table summarizes our operating results for the periods presented below (dollars in thousands):

Six Months Ended June 30,

2025 % of Revenue 2024 % of Revenue % Change

Net Sales $ 34,985 $ 48,508 (28) %

Cost of Sales 29,440 84 % 40,894 84 % (28) %

Gross Profit 5,545 16 % 7,614 16 %

Research and Product Development — — % 18 — % (100) %

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Operating Loss $ (2,709) (8) % $ (809) (1) %

During the three months ended March 31, 2025, our net sales were $18.9 million compared to net sales of $22.7 million during the three months ended March 31, 2024.

Product revenue for the three months ended March 31, 2025 was $18.6 million compared to product revenue of $22.7 million for the three months ended March 31, 2024.

The decrease of $3.8 million was primarily due to a $5.9 million reduction in DaVita volume as a result of transitioning to a new supplier, partially offset by $0.9 million increase due to a price adjustment for DaVita purchases and $0.9 million in price increases to other existing customers.

Net sales of non-product revenue were $0.3 million for the three months ended March 31, 2025 from the recognition of the remaining deferred license revenue associated with Sun Pharmaceutical Industries Ltd.

During the six months ended June 30, 2025, our net sales were $35.0 million compared to net sales of $48.5 million during the six months ended June 30, 2024.

Product revenue for the six months ended June 30, 2025 was $34.7 million compared to product revenue of $48.5 million for the six months ended June 30, 2024.

The decrease of $13.5 million was primarily due to a $14.6 million reduction in DaVita sales as a result of transitioning to a new supplier, partially offset by an increase of $0.8 million from price increases to other existing customers and sales to new customers.

During the six months ended June 30, 2025, DaVita represented 20% of net sales.

Net sales of non-product revenue were $0.3 million for the six months ended June 30, 2025 from the recognition of the remaining deferred license revenue associated with Sun Pharmaceutical Industries Ltd.

("Sun Pharma"), Jeil Pharmaceutical Co., Ltd.

("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan Pharma").

Non-Product revenue was not material for the period ended March 31, 2024.

Cost of sales for the three months ended March 31, 2025 was $15.9 million, resulting in gross profit of $3.0 million for the three months ended March 31, 2025, compared to cost of sales of $19.6 million and a gross profit of $3.1 million for the three months ended March 31, 2024.

The gross profit decrease of $0.1 million was driven by a decrease of $0.2 million of gross profit on product sales.

Gross profit from product sales includes $0.9 million due to a price adjustment for DaVita purchases for the three months ended March 31, 2025.

Gross profit from non-product sales consists of $0.1 million associated with recognition of the remaining deferred license revenue associated with Sun Pharma, Jeil Pharma and Drogsan Pharma during the three months ended March 31, 2025.

Non-Product revenue was not material for either period.

Cost of sales for the six months ended June 30, 2025 was $29.4 million, resulting in gross profit of $5.5 million for the six months ended June 30, 2025, compared to cost of sales of $40.9 million and a gross profit of $7.6 million for the six months ended June 30, 2024.

The gross profit decrease of $2.1 million was due to a decrease in product sales.

Gross profit from product sales includes $1.3 million due to a price adjustment for DaVita purchases for the six months ended June 30, 2025.

Research and Product Development Expense

Research and product development expenses were immaterial for the each of three months ended March 31, 2025 and 2024 due to the decision to pause all research and development related to Triferic in 2023.

Research and product development expenses were immaterial for the each of six months ended June 30, 2025 and 2024 due to the decision to pause all research and development related to Triferic in 2023.

Selling and Marketing Expense

Selling and marketing expenses were $0.7 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively.

Selling and marketing expenses were $1.3 million and $1.2 million for the six months ended June 30, 2025 and 2024, respectively.

The increase of $0.1 million is primarily due to higher employee compensation expenses.

General and Administrative Expense

General and administrative expenses were $3.7 million for the three months ended March 31, 2025, compared with $3.8 million for the three months ended March 31, 2024.

The decrease of $0.1 million was primarily driven by $0.3 million a reduction in professional fees, $0.1 million decrease in administrative costs, partially offset by $0.3 million of increased compensation expense.

General and administrative expenses were $7.0 million for the six months ended June 30, 2025, compared with $7.2 million for the six months ended June 30, 2024.

The decrease of $0.2 million was primarily driven by decreases of (i) $0.3 million in professional fees and (ii) $0.3 million in administrative costs, partially offset by an increase of $0.4 million of compensation expense.

Other Expense

Total other expense of $0.2 million and $0.4 million for the three months ended March 31, 2025 and 2024, respectively, was driven primarily by interest expense of $0.3 million and $0.4 million, respectively, related to our debt facility (See Note 15 to the condensed consolidated financial statements included elsewhere in this Form 10-Q).

Total other expense of $0.3 million and $0.6 million for the six months ended June 30, 2025 and 2024, respectively, was driven primarily by interest expense of $0.5 million in each period related to our debt facility (See Note 15 to the condensed consolidated financial statements included elsewhere in this Form 10-Q).

The six months ended June 30, 2025 was partially offset by $0.1 million of interest income, as well as realized gains on available-for-sale of investments of $0.1 million.

Liquidity and Capital Resources

As of March 31, 2025, we had approximately $17.3 million of cash, cash equivalents and investments available-for-sale, and working capital of $21.8 million.

Based on the currently available working capital along with the expectation of management of its ability to execute on its operational plans as discussed below, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

As of June 30, 2025, we had approximately $18.4 million of cash, cash equivalents and investments available-for-sale, and net working capital of $20.7 million.

Based on the currently available net working capital along with the expectation of management of its ability to execute on its operational plans as discussed below, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

Additionally, the Company's operational plans include raising capital, if needed, by using the $21.1 million remaining availability under its at-the-market ("ATM") facility or other methods or forms of financings, subject to existing limitations.

Under the ATM, we have the ability to control the timing and price at which capital is raised.

Under the ATM, we have the ability to control the timing and floor price at which capital is raised.

The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to, the costs associated with our manufacturing and transportation operations related to our concentrate business.

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The Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus Life Sciences Lending Fund I, LP.

As of March 31, 2025, the Company is in compliance with all covenants.

The Loan Agreement includes a financial covenant that requires actual consolidated revenue from the sale and supply of hemodialysis products for the trailing six-month period (ended on the date when tested), to be not less than 80.0% of the projections for the same period beginning with the quarter ending September 30, 2024.

Because those projections were submitted prior to the loss of a substantial amount of business from DaVita, the Company did not satisfy this covenant in the second quarter of 2025.

The Company subsequently resolved the noncompliance by submitting an updated financial projection to Innovatus, which Innovatus accepted.

As of June 30, 2025, the Company was in compliance with all covenants, other than as described above.

On January 2, 2024, the Company's Loan Agreement was amended to include, among other things, an interest-only period for 30 months, or up to 36 months if certain conditions are met, and extend the maturity date to January 1, 2029 (See Note 15 to the accompanying condensed consolidated financial statements).

The global macroeconomic environment is uncertain, and could be negatively affected by, among other things, changes in U.S.

trade policies, including tariffs and other trade restrictions or the threat of such actions, instability in the global capital and credit markets, recent bank failures in the United States, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Middle East conflict and other political tensions, and the occurrence of natural disasters and public health crises.

trade policies, including tariffs and other trade restrictions or the threat of such actions, instability in the global

capital and credit markets, recent bank failures in the United States, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Middle East conflict and other political tensions, and the occurrence of natural disasters and public health crises.

Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures.

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Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future.

On July 4, 2025, the U.S.

119-21, a U.S.

federal statute passed by the 119th United States Congress that includes tax and spending policies (the “Act”), which contains a broad range of tax reform provisions affecting businesses, including extending or reinstating certain provisions of the 2017 Tax Cuts and Jobs Act, tax relief measures, modifications of certain energy tax credits granted under the Inflation Reduction Act and limits on various tax deductions, among other key provisions.

The Company is currently evaluating the full effects of the Act and does not anticipate the Act to have a material impact on its condensed consolidated financial statements.

As the Act was signed into law after the close of the second quarter, the impacts are not included in the Company’s operating results for the six months ended June 30, 2025.

Cash Used In Operating Activities

Net cash used in operating activities was $3.5 million for the three months ended March 31, 2025 compared to net cash used in operating activities of $2.4 million for the three months ended March 31, 2024.

The increase in cash used in operating activities during the current period as compared to cash used in operating activities in the prior period was primarily due to (i) a decrease in net loss of approximately $0.2 million and (ii) an increase in cash used in changes in current balance sheet accounts in the ordinary course of business of approximately $1.6 million.

Cash Used In Investing Activities

Net cash used in investing activities was immaterial during the three months ended March 31, 2025 compared to net cash used in investing activities of $0.1 million for the three months ended March 31, 2024.

Net cash used in investing activities during the three months ended March 31, 2025 was driven primarily by purchases of available-for-sale investments of $2.9 million and $0.1 million of cash paid for the purchase of equipment, offset by cash proceeds from sales of our available-for-sale investments of $3.0 million during the period.

Net cash used in investing activities during the three months ended March 31, 2024 was driven entirely by cash paid for the purchase of equipment.

Cash (Used In) Provided By Financing Activities

Net cash used in financing activities was $0.8 million during the three months ended March 31, 2025 compared to net cash provided by financing activities of $0.2 million for the three months ended March 31, 2024.

Net cash used in financing activities during the three months ended March 31, 2025 was primarily due to the cash paid in connection with the Evoqua Asset Acquisition deferred consideration obligation of $0.4 million, $0.2 million of payments under the insurance financing note payable and $0.1 million of payments on finance lease liabilities.

Net cash provided by financing activities for the three months ended March 31, 2024 was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $0.6 million, partially offset by $0.2 million of payments under the insurance financing note payable and $0.1 million of payments on finance lease liabilities.

Net cash used in operating activities was $1.6 million for the six months ended June 30, 2025 compared to net cash used in operating activities of $0.9 million for the six months ended June 30, 2024.

The increase in cash used in operating activities during the current period as compared to cash used in operating activities in the prior period was primarily due to (i) an increase in net loss of approximately $1.6 million, partially offset by (ii) a decrease in cash used in changes in current balance sheet accounts in the ordinary course of business of approximately $0.4 million and (iii) non-cash adjustments of $0.5 million.

Cash Provided By (Used In) Investing Activities

Net cash used in investing activities was $0.1 million during the six months ended June 30, 2025 compared to net cash provided by investing activities of $1.6 million for the six months ended June 30, 2024.

Net cash used in investing activities during the six months ended June 30, 2025 was driven by purchases of available-for-sale investments of $5.9 million and $0.2 million of cash paid for the purchase of equipment, partially offset by cash proceeds from sales of our available-for-sale investments of $6.0 million during the period.

Net cash provided by investing activities during the six months ended June 30, 2024 was driven primarily by sales of our available-for-sale investments of $2.0 million during the period, offset by cash paid for the purchase of equipment of $0.4 million.

Cash Provided By (Used In) Financing Activities

Net cash used in financing activities was $1.4 million during the six months ended June 30, 2025 compared to net cash provided by financing activities of $2.2 million for the six months ended June 30, 2024.

Net cash used in financing activities during the six months ended June 30, 2025 was primarily due to the cash paid in connection with the Evoqua Asset Acquisition deferred consideration obligation of $0.9 million, $0.3 million of payments on finance lease liabilities and $0.3 million of payments under the insurance financing note payable.

Net cash provided by financing activities for the six months ended June 30, 2024 was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $2.8 million.

Contractual Obligations and Other Commitments

Due to the contract-intensive nature of the Company's business, the Company has been and may in the future become involved in disputes or legal actions with its contract counterparties, which could have a negative impact on the Company's business, results of operations or financial condition.

See Note 13 to the condensed consolidated financial statements included elsewhere in this Form 10-Q for additional disclosures.

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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