What changed in this filing

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Item 1A. Risk Factors

2025-03-20 compared with 2024-03-21 · 121 added, 159 removed, 268 unchanged (51% of the section changed)

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Therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face.

Moreover, some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past, and instead reflect our beliefs and opinions as to the factors, events or contingencies that could materially and adversely affect us in the future.

RISK FACTOR SUMMARY

• We have limited capital resources and will likely need additional funding to operate and expand our business.

If we are unable to raise additional capital on attractive terms, or at all, we may be unable to grow our operations.

• Our A&R Loan Agreement with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.

• The loss of our largest customer will negatively impact our revenue, and we may not be able to replace that lost revenue with new business.

• Our A&R Loan Agreement (as defined below) with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.

The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.

• Our existing capital resources may not be adequate to finance our operating cash requirements beyond the length of time that we have estimated and additional capital that we may need to operate or expand our business may not be available.

• Our agreement with our largest customer in our concentrates business is set to expire on December 31, 2024 and our inability to negotiate a new agreement would have a material and adverse effect on our financial condition and results of operations.

• Market dynamics in our concentrates business that have resulted in lower volumes could lead to the implementation of cost-saving measures that would have a material and adverse effect on our business.

• We may fail to realize the anticipated benefits of the Evoqua Acquisition, including an improved financial position, and those benefits may take longer to realize than expected.

• We have limited capital resources and will likely need additional funding to operate and expand our business.

If we are unable to raise additional capital on attractive terms, or at all, we may be unable to grow our operations.

• We face competition in the concentrates market and have large competitors with substantial resources.

• Our business is highly regulated, resulting in additional expense and risk of noncompliance that can materially and adversely affect our business, results of operations, financial position and cash flows.

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RISKS RELATED TO OUR FINANCIAL POSITION

We have limited capital resources and will likely need additional funding to operate and expand our business .

If we are unable to raise additional capital on attractive terms, or at all, we may be unable to sustain our operations.

We have limited capital resources, a cumulative deficit of approximately $397.2 million since inception and we may incur further losses.

As of December 31, 2023, we had approximately $10.9 million of cash, cash equivalents and investments available-for-sale, and working capital of $12.1 million.

Net cash used in operating activities for the year ended December 31, 2023 was approximately $9.4 million.

In March 2020, we entered into a Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP, ("Innovatus") to make certain term loans to the Company in the aggregate principal amount of up to $35 million.

Net draw down proceeds at closing were approximately $21 million, net of estimated fees and expenses.

As of December 31, 2023, $8 million remains drawn under the Loan Agreement.

While we expect to have sufficient capital through 12 months from the date of this filing, there is uncertainty beyond that period.

Our ability to fund our planned activities will be dependent upon our ability to restructure our contracts with some of our customers, raise additional capital, control our costs and maintain or increase our gross margin on sales.

These factors are subject to significant risks and uncertainties and there can be no assurance that we will be successful in raising additional capital, controlling costs and restructuring our customer relationships.

If we are unable to achieve one or all of these objectives, we may be forced to implement further cost-saving measures that could have a negative impact on our activities.

If we are unable to increase our revenues and decrease our expenses or raise any required capital, we may be forced to curtail our activities and, ultimately, cease operations.

In addition, our day-to-day operations depend in part on the amount of credit our suppliers will extend to us.

If we are unable to maintain a favorable financial position, that credit may be curtailed, which could significantly impact our operations.

Even if we are able to raise sufficient capital, such financings may only be available on unattractive terms, or result in significant dilution of stockholders’ interests and, in such event, the market price of our common stock may decline.

The loss of our largest customer will negatively impact our revenue, and we may not be able to replace that lost revenue with new business.

In the fall of 2024, we were notified by our largest customer that it would be moving a substantial portion (and possibly all) of its business to another concentrates supplier in 2025.

We expect this customer to complete this transition no later than mid-2025, and there can be no expectation there will be continued sales to this customer beyond this point.

We believe that this will result in the loss of almost half of our sales volume and $34 million in revenue compared to 2024.

While we are currently endeavoring to increase our sales to other customers and expand our product portfolio to fill this gap, there can be no assurance that we will be successful in doing so.

Failure to replace this lost business will likely result in a substantial decrease in our revenue and a decrease in our profit.

In addition, we will need to restructure our operations to reduce our overhead in the short term, which could impact our ability to expand our business in the longer term should we be able to attract enough business to replace the revenue gap left by the loss.

Our A&R Loan Agreement with Innovatus contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay the outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation.

The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.

In March 2020, we entered into the Loan Agreement with Innovatus to make certain term loans to the Company in the aggregate principal amount of up to $35 million.

Net draw down proceeds at closing were approximately $21 million, net of estimated fees and expenses.

On January 2, 2024, we amended and restated the Loan Agreement (the “A&R Loan Agreement”) to provide for the continuation of term loans initially borrowed under the Loan Agreement, in an aggregate outstanding principal amount of $8.0 million as of the effective date and $8.5 million as of December 31, 2024 .

Pursuant to the A&R Loan Agreement, we have pledged substantially all of our assets and the assets of our subsidiary, Rockwell Transportation, Inc., and have agreed that we may not sell or assign rights to our patents and other intellectual property without the prior consent of Innovatus.

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Our ability to comply with these covenants may be adversely affected by events beyond our control.

For example, on November 10, 2022, we entered into the Second Amendment to Loan Agreement under which we (i) prepaid an aggregate principal amount of $5.0 million in outstanding term loans in one installment on November 14, 2022;

(ii) agreed to make interest-only payments until September 2023 (at which time we resumed scheduled debt payments) in consideration for certain modifications to the financial covenants under the Loan Agreement.

The A&R Loan Agreement provides for us to make interest-only payments for thirty months, or up to thirty-six months if certain conditions are met.

The loan will mature on January 1, 2029, unless earlier repaid.

For example, on November 10, 2022, we entered into the Second Amendment to Loan Agreement under which we:

(i) prepaid an aggregate principal amount

of $5.0 million in outstanding term loans in one installment on November 14, 2022;

and (ii) agreed to make interest-only payments until September 2023 (at which time we resumed scheduled debt payments) in consideration for certain modifications to the financial covenants under the Loan Agreement.

The A&R Loan Agreement requires that we make interest-only payments for thirty months, or up to thirty-six months if certain conditions are met.

Those conditions were satisfied in 2024, and the Company may make interest only payments for thirty-six months.

The loan will mature on January 1, 2029, unless repaid earlier.

The A&R 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 85.0% of the projections for the same period and, beginning with the quarter ending September 30, 2024, 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.

The A&R Loan Agreement also includes a liquidity covenant that requires that us to maintain minimum liquidity of the greater of (x) our three-month cash burn or (y) the sum of $1.5 million and the aggregate amount of capital lease payments required to be made during the succeeding 12 months (or during a continuing event of default, the aggregate amount of capital lease payments required to be made during the entire term of such capital leases).

Because those projections were submitted prior to our becoming aware of DaVita’s intention to completely transition its business to another supplier by mid-2025, we may not be able to satisfy this covenant if we are unable to acquire enough new business to increase our revenue or cure a breach by submitting revised projections in accordance with the A&R Loan Agreement.

Our inability to satisfy this financial covenant or cure any breach would constitute an event of default.

The A&R Loan Agreement also includes a liquidity covenant that requires us to maintain minimum liquidity of the greater of (x) our three-month cash burn or (y) the sum of $1.5 million and the aggregate amount of capital lease payments required to be made during the succeeding 12 months (or during a continuing event of default, the aggregate amount of capital lease payments required to be made during the entire term of such capital leases).

Although we are currently in compliance with all reporting and financial covenants, there can be no assurance that we will be able to continue to maintain compliance in the future.

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The occurrence of any of these events could cause a significant adverse impact on our business and financial condition.

We have limited capital resources and will likely need additional funding to operate and expand our business .

If we are unable to raise additional capital on attractive terms, or at all, we may be unable to sustain our operations.

We have limited capital resources, a cumulative deficit of approximately $397.7 million since inception and we may incur further losses.

As of December 31, 2024, we had approximately $21.6 million of cash, cash equivalents and investments available-for-sale, and working capital of $22.9 million.

Net cash provided by operating activities for the year ended December 31, 2024 was approximately $4.2 million.

While we expect to have sufficient capital through 12 months from the date of this filing, there is uncertainty beyond that period.

Our ability to fund our planned activities will be dependent upon our ability to acquire new customers, execute on business development plans, raise additional capital, control our costs and maintain or increase our gross margin on sales.

If we are unable to achieve one or all of these objectives, we may be forced to implement further cost-saving measures that could have a negative impact on our activities.

If we are unable to increase our revenues and decrease our expenses or raise any required capital, we may be forced to curtail our activities and, ultimately, cease operations.

In addition, our day-to-day operations depend in part on the amount of credit our suppliers will extend to us.

If we are unable to maintain a favorable financial position, that credit may be curtailed, which could significantly impact our operations.

Our existing capital resources may not be adequate to finance our operating cash requirements for the length of time that we have estimated and additional capital that we may need to operate or expand our business may not be available.

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These factors include, but are not limited to:

• the extension of the contract with our largest customer in our concentrates business;

• our ability to enter into new contracts and negotiate favorable terms with our customers;

• our ability to enter into new contracts and negotiate favorable terms with current and future customers;

• our ability to increase our prices to keep up with inflation;

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Our revenue growth and profitability projections are based on various assumptions that may not come to fruition.

Our revenue growth and profitability projections are subject to many assumptions regarding our future operations, including that we are successful in expanding to new territories, that we successfully develop and launch new product offerings, that we are able to increase our prices to keep up with inflation, and that we do not experience significant disruptions to the manufacturing or distribution of our products, among other assumptions.

Our revenue growth and profitability projections are subject to many assumptions regarding our future operations, including that we are successful in expanding to new territories, that we successfully license and launch new product offerings, that we are able to add new profitable business, increase our prices to keep up with inflation, and that we do not experience significant disruptions to the manufacturing or distribution of our products, among other assumptions.

If we are unsuccessful in one or more of those efforts, we may not be able to achieve our projected growth and profitability.

RISKS RELATED TO OUR BUSINESS

Our agreement with our largest customer in our concentrates business is set to expire on December 31, 2024 and our inability to negotiate a new agreement would have a material and adverse effect on our financial condition and results of operations.

Our Amended and Restated Products Purchase Agreement (the “Products Purchase Agreement”) with DaVita is set to expire on December 31, 2024.

The Products Purchase Agreement is a fixed price agreement.

In September 2023, we amended the original Products Purchase Agreement with DaVita to raise our prices in light of inflationary pressures and to remove certain provisions.

The Products Purchase Agreement may be extended by DaVita for one year in its sole discretion.

When the Products Purchase Agreement is again up for renewal, we may be unable to reach an agreement with DaVita on new terms that make economic sense for us.

In that case, we would not expect to enter into a new agreement.

This would result in the loss of approximately one-half of our current volume of concentrates products and would have a material and adverse effect on our financial condition and results of operations and would likely lead to the implementation of cost saving measures that would negatively impact our activities.

We face competition in the concentrates market and have large competitors with substantial resources.

The primary competitors in the market for our concentrates products are Fresenius, a large, diversified healthcare company headquartered in Germany with global operations, and Nipro, a large medical equipment manufacturing company headquartered in Japan with U.S.

operations, each of which has financial, technical, manufacturing, marketing, research and management resources substantially greater than ours.

We may not be able to successfully compete with these companies.

Both companies have historically used product bundling and low pricing for concentrates as a competitive strategy to capture market share for their broader renal product portfolios.

We may be at a disadvantage in competing against these strategies to sell concentrates products since we do not have a broader renal product portfolio to use as leverage when negotiating contracts.

Furthermore, Fresenius is vertically integrated and is the largest provider of dialysis services in the United States, treating approximately 37% of all U.S.

in-center hemodialysis patients through its clinics.

Fresenius has routinely acquired our customers, and it may acquire more of our customers in the future.

In addition to Fresenius, Nipro may be seeking to increase its market share of the domestic concentrates market, which, if successful, could have an impact upon our market share and profitability.

In addition, certain national medical products distributors have recently expanded their logistical capabilities to reach the outpatient dialysis space, which may also have an impact on the competitive landscape.

A few customers account for a substantial portion of the end user sales of our concentrate products.

The loss of any of these customers could materially and adversely affect our business, results of operations, financial position and cash flows.

Sales of our medical device products are highly concentrated among a few customers.

As noted above, one customer accounted for nearly half of our sales in each of the last three years and for a substantial number of the clinics we serve, and that customer notified us in the fall of 2024 that it would be moving a substantial portion of its business to another concentrates supplier.

We had experienced further concentration with regard to that customer through the Evoqua Acquisition.

We have other large customers, both domestic and international, that account for a significant remaining portion of our remaining business.

The loss of any of these significant customers could materially and adversely affect our business, results of operations, financial position and cash flows.

Market dynamics in our concentrates business have resulted in fluctuating volumes that could lead to the implementation of cost-saving measures that would have a material and adverse effect on our business.

Volumes have fluctuated in our concentrates business, due to the reduction in patient census caused by COVID-19 and cost saving measures by our customers, including switching to single use bicarbonate canisters.

If these volumes decrease substantially, we may be forced to consolidate our operations and curtail our activities to lower our fixed costs.

Volumes have fluctuated in our concentrates business due to the reduction in patient census and cost saving measures by our customers, including switching to single-use bicarbonate canisters.

If these volumes decrease substantially, we may be forced to further consolidate our operations and curtail our activities to lower our fixed costs.

While our fixed costs would be reduced by such actions, we may not be able to realize the full amount of that reduction if our variable costs (such as transportation) increase and we are unable to pass along those increases to our customers.

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Such a consolidation could have a material and adverse effect on our business, financial condition and results of operations.

We may fail to realize the anticipated benefits of the Evoqua Acquisition, including an improved financial position, and those benefits may take longer to realize than expected.

On July 10, 2023, we completed our acquisition of the hemodialysis concentrates assets (the “Evoqua Acquisition”) from Evoqua.

Our synergistic goals with regard to the acquisition include an improved financial position, expanded geographic footprint, customer base and product offerings, and increased manufacturing capacity.

While we have completed the integration of Evoqua’s former assets, there can be no assurance that we will be able to operate Evoqua’s former product line profitably.

In addition, many of the former Evoqua customers that we inherited as a result of the Evoqua Acquisition are not subject to contractual purchasing commitments and may discontinue their business with us as a result of the transition of ownership.

Following the Evoqua Acquisition, the number of our customers is significantly larger than prior to the Evoqua Acquisition.

The Company's future success depends, in part, upon our ability to manage this expanded business, which will pose substantial challenges for our management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity.

The dedication of management resources to this portion of our business could detract attention from our current day-to-day operations.

Because we have limited financial resources, by investing in the Evoqua Acquisition, we may forgo or delay pursuit of other future opportunities that may have proven to have greater commercial potential.

Also, we now possess certain liabilities and obligations, including contractual liabilities and obligations, that were assumed by us upon closing of the Evoqua Acquisition.

Further, it is possible that undisclosed, contingent, or other liabilities, problems or obligations may arise in the future of which we were previously unaware.

These disclosed and undisclosed liabilities could have an adverse effect on our business, financial condition and results of operations.

These factors, including the failure of the expanded business to perform as expected, could decrease or delay the expected accretive effect of the Evoqua Acquisition, negatively affect our stock price, result in impairment of our intangible assets, and harm our financial condition, results of operations or business prospects.

As a result, it cannot be assured that the Evoqua Acquisition will result in the full realization of the benefits anticipated from the Evoqua Acquisition or in the anticipated time frames or at all.

We depend on a third party to manufacture products for the business that was the subject of the Evoqua Acquisition.

If this organization is unable or unwilling to manufacture our newly acquired concentrates products, or if the organization fails to comply with applicable regulations or otherwise fails to meet our requirements, our business will be harmed.

We rely on a contract manufacturing organization ("CMO") to manufacture the concentrates products that were the subject of the Evoqua Acquisition.

If that CMO is unable to manufacture those products in sufficient quantities and on a consistent basis, or if it becomes unwilling to produce the products for us, we may not be able to fulfill our contractual requirements or sell those products while we look for an alternative.

We currently have a single-source supplier, and our supply contract expires at the end of 2024.

If we were to experience a supply disruption, it could take an extended period of time to take over the manufacturing ourselves.

The manufacturing facilities and processes used by our CMO must be approved by the FDA before the products manufactured by such CMO can be sold.

After approval, our CMO must meet certain ongoing regulatory requirements for product testing and stability of commercially marketed products.

We do not control the manufacturing processes of our CMO and depend on it to comply with current good manufacturing practices (“cGMP”) and obtain and maintain regulatory approval.

If approval for a CMO is not received or ongoing testing does not continue to meet approved standards and approval is withdrawn, the CMO’s production would be delayed or suspended, which could adversely affect our business.

If that was to happen, we may be forced to find another capable CMO or take over production ourselves.

Any such circumstance could significantly hamper our ability to supply our customers in a timely manner, which may have a material adverse effect on our financial condition and results of operations.

We have been and may continue to be materially and adversely affected by increases in raw material, labor and transportation costs and may be unable to recover certain costs due to provisions in our largest customer contract and other fixed price contracts and we may lose other customers due to price sensitivity.

A significant portion of our costs relates to chemicals and other raw materials and transportation, which such costs are out of our control, and we may not be able to recover a portion of such costs due to provisions in the Products Purchase Agreement with DaVita and other fixed price contracts.

The costs of chemicals and other raw materials are subject to price volatility based on supply and demand and are highly influenced by the overall level of economic activity in the United States and abroad.

If our customers move back to entering into long-term bundled product contracts with suppliers, our business could suffer.

The hemodialysis business experiences market cycles of customers seeking bundled and unbundled product offerings.

Several of our competitors offer broad renal product portfolios and utilize a bundling approach when contracting with dialysis providers and hospitals.

While the dialysis customer base currently seems to be moving away from restrictive bundled contracts, which has improved market access for Rockwell, there have been cycles in the past in which purchasing bundled products was in favor.

We do not currently have a full renal product portfolio to leverage as a comprehensive or bundled offering to providers, as we do not sell dialysis machines, certain dialysis machine-related disposables, nor certain pharmaceutical products used as part of dialysis treatments.

If the current cycle shifts toward providers preferring longer-term agreements across a wide range of dialysis-related products, our business could suffer due to lost sales.

We have been, and may continue to be, materially and adversely affected by increases in raw material, labor and transportation costs and may be unable to recover certain costs due to provisions in our contracts that limit price increases, and we may lose other customers due to price sensitivity.

A significant portion of our costs relate to chemicals and other raw materials and transportation, which are out of our control, and we may not be able to recover a portion of such costs due to provisions in our agreements with our customers that cap price increases.

The costs of chemicals and other raw materials are subject to price volatility based on supply and demand (including any volume discounts based on our manufacturing needs) and are highly influenced by the overall level of economic activity in the United States and abroad,which may be affected by changes in U.S.

trade policies, including tariffs and other trade restrictions or the threat of such actions.

In addition, labor costs have been steadily rising, and our manufacturing process is labor intensive, which increases our costs to produce our products.

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In the past year, raw materials costs have increased significantly, due to short supply and excess demand.

In addition, in many areas, we have a single source of raw materials, which makes us particularly sensitive to cost increases.

In addition, in some areas, we have a single source of raw materials, which makes us particularly sensitive to cost increases.

Transportation also comprises a significant portion of our costs.

We have been adversely affected by a general shortage in commercial truckers in the United States and significant increases in labor and fuel costs.

In the past, we have been adversely affected by a general shortage in commercial truckers in the United States and significant increases in labor and fuel costs.

In addition, there has, in the past, been a nationwide shortage of diesel fuel in the United States, which we use to run our delivery trucks.

Such a shortage, has and in the future may result in an increase in the cost of diesel fuel or lack of availability of diesel fuel and we would need to find another way to deliver our products to clinics.

Such a shortage has, and in the future may again result in, an increase in the cost of diesel fuel or lack of availability of diesel fuel and we would need to find another way to deliver our products to clinics.

If we are unable to do so, we could be in breach of our contracts.

In addition, any increase in the use of third-party freight would significantly increase our costs, which we may not be able to pass on to our customers.

Our Product Purchase Agreement with DaVita provides for a fixed price to DaVita, with limited increases from year to year that must be agreed to by the parties, regardless of the increases in raw materials costs and transportation costs.

As a result, we have in the past been unable to fully recover our costs for the products we sell to DaVita (including transportation costs).

Continued rising costs and declining volumes have had and could continue to have a negative impact on our business.

We expect that if we continue to be subject to the limitations in the Products Purchase Agreement and other fixed price contracts, the increasing costs and decreasing volumes may continue to negatively impact our profit margins and materially and adversely affect our financial position.

Some of our customers buy products from us on a purchase order basis or pursuant to contracts that allow for price increases at least once per year.

We expect that if we continue to be subject to the limitations on price increases in our contracts, increasing costs and decreasing volumes may continue to negatively impact our profit margins and materially and adversely affect our financial position.

A portion of our customers do not have contracts with us and buy products strictly on a purchase order basis.

Others are under contract, but the agreements may not contain purchasing minimums.

In addition, if we do have contracts with our customers, some allow for price increases only once per year.

In situations where we are able to increase prices to keep up with our costs, we may lose customers if such customers are unwilling to pay higher prices.

That would result in lost revenue for the Company and may negatively impact our financial position and results of operations.

A few customers account for a substantial portion of the end user sales of our concentrate products.

The loss of any of these customers could materially and adversely affect our business, results of operations, financial position and cash flows.

Sales of our medical device products are highly concentrated among a few customers.

One customer accounted for nearly half of our sales in each of the last three years and for a substantial number of the clinics we serve.

Due to the composition of Evoqua’s customer portfolio, we experienced further concentration with regard to that customer and an additional customer through the Evoqua Acquisition.

The loss of any of these significant customers could materially and adversely affect our business, results of operations, financial position and cash flows.

Unfavorable weather, economic conditions or supply shortages could materially and adversely affect our business, financial condition or results of operations.

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In addition, weather-related events may jeopardize our ability to deliver our products as required by our contracts.

For example, in 2023, winter storms led to delays in our operations, particularly in the transportation division as equipment froze and roads became impassible.

A weak or declining United States or global economy could also strain our suppliers, possibly resulting in supply disruption.

A weak or declining United States or global economy, or changes in U.S.

trade policies, including tariffs and other trade restrictions or the threat of such actions, could also strain our suppliers, possibly resulting in supply disruption.

In addition, due to macro-economic conditions in the global economy (including inflation), there have been shortages in raw materials, parts and fuel that we need to run our business.

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Diesel fuel has also been in short supply in the United States at times and our delivery trucks run on diesel.

While we have been able to minimize the impact of these disruptions to date, there can be no assurance that will continue.

While we have been able to minimize the impact of these disruptions to date, there can be no assurance that we will continue being able to do so.

Any of the foregoing could harm our business, and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

We face competition in the concentrates market and have a large competitor with substantial resources.

The primary competitor in the market for our concentrates products is Fresenius, a large, diversified company which has financial, technical, manufacturing, marketing, research and management resources substantially greater than ours.

We may not be able to successfully compete with Fresenius.

Fresenius has historically used product bundling and low pricing as a competitive strategy to capture market share of concentrates products.

We may be at a disadvantage in competing against these strategies to sell concentrates products.

Furthermore, Fresenius is vertically integrated and is the largest provider of dialysis services in the United States, treating approximately 37% of all U.S.

in-center hemodialysis patients through its clinics.

Fresenius has routinely acquired our customers, and it may acquire more of our customers in the future.

In addition to Fresenius, we are aware of other large manufacturers potentially looking to increase their market share of the domestic concentrates market, which, if successful, could have an impact upon our profitability.

Our production and other processes are largely manual, which introduces risk of error and may result in rising production costs.

The production of our hemodialysis concentrates products is largely manual and involves considerable unskilled labor.

Our production and other processes are somewhat manual, which introduces risk of error and may result in rising production costs.

The production of our hemodialysis concentrates products is somewhat manual and involves considerable unskilled labor.

The manual nature of production can introduce the risk of error.

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Many of our products are “made to order,” which can further increase production costs as we have to frequently change production runs.

Unless we are able to automate our production processes, our costs may continue to increase and we may be unable to recover those rising costs or may lose customers altogether, which could negatively impact on our financial position.

Unless we are able to further automate our production processes, our costs may continue to increase and we may be unable to recover those rising costs or may lose customers altogether, which could negatively impact on our financial position.

Our business depends on government funding of health care, and changes could impact our ability to be paid in full for our products, increase prices or cause consolidation in the dialysis provider market.

Medicare and Medicaid fund the majority of dialysis costs in the United States.

Many dialysis providers receive most of their funding from the government and are supplemented by payments from private health care insurers.

Many dialysis providers receive most of their funding from the U.S.

government and are supplemented by payments from private health care insurers.

These providers depend on Medicare and Medicaid funding to be viable businesses.

Changes to health insurance and reimbursement by Congress may have a negative impact on Medicare and Medicaid funding and on reimbursement protocols.

Changes to health insurance and reimbursement by Congress or the executive branch may have a negative impact on Medicare and Medicaid funding and on reimbursement protocols.

If Medicare and Medicaid funding were to materially decrease, dialysis providers would be severely impacted, increasing our risk of not being paid in full.

An increase in our exposure to uncollectible accounts could have a material adverse effect on our business, results of operations, financial position and cash flows.

Since 2011, CMS has continued to modify reimbursement policies for dialysis under the end-stage renal disease ("ESRD") prospective payment system generally falling short of covering the increasing cost of dialysis care resulting in economic pressure of dialysis providers.

We anticipate that dialysis providers will continue to seek ways to reduce their costs

per treatment due to these reimbursement policies, which could reduce our sales and profitability and have a material adverse effect on our business, results of operations, financial position and cash flows.

Since 2011, Centers for Medicare & Medicaid Services ("CMS") has continued to modify reimbursement policies for dialysis under the end-stage renal disease ("ESRD") prospective payment system, with reimbursements generally falling short of covering the increasing cost of dialysis care, resulting in economic pressure on dialysis providers.

We anticipate that dialysis providers will continue to seek ways to reduce their costs per treatment due to these reimbursement policies, which could reduce our sales and profitability and have a material adverse effect on our business, results of operations, financial position and cash flows.

Federal and state healthcare reform measures could be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, or change the methods used by Medicare and Medicaid to reimburse providers, including the “bundled” payment model.

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Even if we are able to enter into business development arrangements, they could have a negative impact on our business and our profitability.

In addition to the Evoqua Acquisition, we may seek to make further acquisitions or enter into business development arrangements in our concentrates business to expand our customer base or geographic footprint.

We may seek to make further acquisitions or enter into business development arrangements in our concentrates business to expand our customer base or geographic footprint.

In addition, as part of our business strategy, we may seek to acquire or in-license products or product candidates that we believe are a complementary fit with our business, as well as other product or product candidates that we believe have substantial development potential.

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If the results of any new product initiative are materially worse than expected, it could have a material adverse effect on our business, results of operations, financial position and cash flows.

Our international partnerships for Triferic involve risks that may materially impact those international relationships or our business generally.

We have international partnerships for Triferic that require us to supply the drug product to be marketed and sold in foreign countries.

We may not be able to obtain the raw materials or packaging components we need to supply our international partners, or the price of such materials or components may rise significantly, for a variety of reasons, including but not limited to a business interruption, increased costs of raw materials, a failure of a supplier to comply with cGMP standards, which could result in quality or product failures, adulteration, contamination and/or recall and other factors beyond our control.

If we are unable to obtain our raw materials and packaging components and are not able to establish alternative supply sources, or if the prices for such items increase substantially, our CMOs may not be able to produce the desired quantities of our drug products for our international partners and our relationships may be materially adversely affected.

In addition, the third parties that we depend on to manufacture Triferic for our international partners may be unable or unwilling to manufacture our drug products, which could also harm our relationships with those partners.

For Triferic (dialysate) and Triferic AVNU, we have a single-source finished goods supplier and do not have a long-term supply contract.

If we were to experience a supply disruption, it could take an extended period of time to find and qualify an alternate supplier.

The manufacturing facilities and processes used by our CMOs must be approved by the FDA and foreign regulators, where applicable, before the drug products manufactured by such CMOs can be sold.

After approval, CMOs must meet certain ongoing regulatory requirements for product testing and stability of commercially marketed products.

We do not control the manufacturing processes of our CMOs and depend on them to comply with cGMP, and obtain and maintain regulatory

Finally, we may be subject to additional risks due to Triferic being approved and marketed outside of the United States, including:

• increased cost or resource requirements associated with measures required to support the registration and/or sale of the product or products, such as labeling changes, product changes, testing, provision of documents or production requirements;

• unexpected changes in the safety profile;

• reduced protection for intellectual property rights;

• additional risk of litigation;

• unexpected changes in tariffs, trade barriers and regulatory requirements;

• economic weakness, including inflation, or political instability in particular foreign economies and markets;

• compliance with anti-corruption laws, including the Foreign Corrupt Practices Act (the “FCPA”);

• foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country;

• business interruptions resulting from disease outbreaks, including pandemics, geopolitical actions, including war and terrorism, or natural disasters, including earthquakes, typhoons, floods and fires.

If we do not successfully manage these risks, our prospects related to marketing Triferic outside the United States by our international partners could suffer.

We have in-licensed rights to certain patents that cover Triferic.

If we fail to remain in compliance with these license agreements, we could forfeit the rights to these patents, which could negatively impact our partners' ability to commercialize our products and result in our noncompliance with those partnership agreements.

If we fail to remain in compliance with these license agreements, we could forfeit the rights to these patents, which could result in our noncompliance with those partnership agreements.

We have acquired rights to certain patents under license agreements, including from an affiliate of Dr.

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If this was to happen, the licensor could terminate the license agreement in certain circumstances, causing us to forfeit our rights to the licensed patents.

This could cause us to lose the ability to sell certain products, including Triferic and Triferic AVNU, and could potentially subject us to expensive and protracted litigation.

Such an event would also result in our failure to comply with our distribution agreements with our international partners.

This could potentially subject us to expensive and protracted litigation.

Any of these occurrences could significantly harm our results of operations.

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Such cyber-security breaches may compromise our system infrastructure or lead to data leakage, either internally or at our contractors or consultants.

The risk of a security breach or disruption, particularly through cyber-attacks, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

From time to time, we are subject to phishing attempts.

In the fourth quarter of 2023, we discovered a business email compromise caused by phishing.

We do not believe that it had a material adverse effect on our business.

We implemented remedial measures promptly following this incident;

however, we cannot guarantee that those remedial measures will prevent additional related, as well as unrelated, incidents.

Cybersecurity incidents, including phishing attacks and attempts to misappropriate or compromise confidential or proprietary information or sabotage enterprise IT systems, are becoming increasingly frequent and more sophisticated.

Cybersecurity incidents increasingly involve the use of artificial intelligence and machine learning to launch more automated, targeted, and coordinated attacks on targets.

The information and data processed and stored in our technology systems, and those of our strategic partners, contract research organizations, contract manufacturers, suppliers, distributors or other third parties for which we depend to operate our business, may be vulnerable to loss, damage, denial-of-service, unauthorized access or misappropriation.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, including protected health information or personal data of employees or former employees, we could be subject to legal claims or proceedings, liability under laws and regulations governing the protection of health and other personally identifiable information and related regulatory penalties.

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Our future success depends on our ability to retain executives and key employees and to attract, retain and motivate qualified personnel in the future.

We are highly dependent on the operations, product development, clinical and business development expertise of the principal members of our management, operations and clinical team.

We have hired executive-level employees who are leading Company initiatives, including its operational initiatives.

We are highly dependent on the operations, sales, product development, and business development expertise of the principal members of our management, operations and sales team.

We have hired executive-level employees who are leading our development and operational initiatives.

Although we have entered into employment agreements with our executives and key employees, each of them may terminate their employment with us at any time.

We do not maintain “key person” insurance for any of our executives or other employees.

Recruiting and retaining qualified manufacturing, sales and marketing, scientific, and clinical personnel is critical to our success.

Recruiting and retaining qualified manufacturing, sales and marketing, and functional personnel is critical to our success.

The loss of the services of our executive officers or other key employees could seriously harm our ability to successfully implement our business strategy.

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Our business is highly regulated.

The testing, manufacture, sale and delivery of the products we manufacture directly or through third party CMOs are subject to extensive regulation by the FDA and by other federal, state and foreign authorities, including, with respect to our transportation operations, the U.S.

Department of Transportation.

Before medical devices, such as our concentrate products, can be commercially marketed in the United States, the FDA must give either premarket approval or 510(k) clearance.

The testing, manufacture, distribution, sale and delivery of the products we manufacture directly, or that are manufactured by or for our distribution partners, are subject to extensive regulation by the U.S.

Food and Drug Administration ("FDA") and by other federal, state and foreign authorities, including, with respect to our transportation operations, the U.S.

Department of Transportation ("DOT").

Before medical devices, such as our concentrate products or the bicarbonate cartridge we distribute, can be commercially marketed in the United States, the FDA must give either premarket approval or 510(k) clearance.

After a product is approved, regulatory authorities may impose significant restrictions on a product’s indicated uses or marketing or requirements for potentially costly post-marketing studies.

In addition, manufacturers and their facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current cGMP and applicable state laws.

As such, we and our CMOs are subject to continual review and periodic inspections to assess compliance with cGMP and state laws.

For example, in 2023, the FDA conducted a routine GMP inspection of one of our manufacturing facilities and issued Form FDA-483 report with one observation.

such, we and our distribution partners are subject to continual review and periodic inspections to assess compliance with cGMP and state laws.

For example, in 2024, the FDA conducted a routine cGMP inspection of one of our manufacturing facilities and issued observations.

The Company performed corrective actions and resolved the issue.

While the finding was not serious, management time and effort was expended for the correction.

While the finding was not serious, management expended time and effort on the correction.

Accordingly, we and our partners must continue to expend time, money and effort in all areas to achieve and maintain regulatory compliance.

We are also required to report certain adverse reactions and production problems, if any, to applicable regulatory authorities.

If non-compliant inventory is sold or if a regulatory agency determines that we are not compliant with any applicable regulatory requirements, we may be subject to warnings from, or enforcement action by, state and federal government authorities, which may include penalties, fines, injunctions, recall or seizure of products, suspension of production, denial of future regulatory approvals, withdrawal or suspension of existing regulatory approvals, operating restrictions, injunctions and

criminal prosecution.

If regulatory sanctions are applied, the value of our Company and our operating results could be materially and adversely affected.

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Our failure to comply with applicable regulations could also result in product liability litigation against us.

In addition, our failure to comply with applicable regulations with respect to our concentrates products could constitute a breach of our Products Purchase Agreement, providing DaVita with various remedies that would be material and adverse to us.

In addition, our failure to comply with applicable regulations with respect to our concentrates products could constitute a breach of our Amended and Restated Products Purchase Agreement with DaVita (the “Amended Agreement”), providing DaVita with various remedies that would be material and adverse to us.

Moreover, changes in applicable regulatory requirements could significantly increase the costs of our operations, which we may not be able to recover under our fixed price contracts.

Our business operations may subject us to numerous commercial disputes, claims, lawsuits and/or investigations.

Operating in the medical device and pharmaceutical industries involves numerous commercial relationships, complex contractual arrangements, uncertain intellectual property rights, potential product liability and other aspects that create heightened risks of disputes, claims, lawsuits and investigations.

Operating in the medical device industry involves numerous commercial relationships, complex contractual arrangements, uncertain intellectual property rights, potential product liability and other aspects that create heightened risks of disputes, claims, lawsuits and investigations.

In particular, we may face claims related to the safety of our products, intellectual property matters, employment matters, tax matters, commercial disputes, competition, sales and marketing practices, environmental matters, personal injury, insurance coverage and acquisition or divestiture‑related matters.

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In addition, prior to its discontinuation, we marketed and sold Triferic in the United States for four years and prior to that, engaged in clinical trials to support the submission of the NDA for approval.

Our international partners continue to market and sell Triferic in foreign countries.

If patients experience side effects from the use of our hemodialysis concentrates or from Triferic and the statutes of limitation and repose have not expired, such side effects may result in litigation against us by private litigants.

If patients experience side effects from the use of our hemodialysis concentrates or experienced side effects from Triferic and the statutes of limitation and repose have not expired, such side effects may result in litigation against us by private litigants.

Although we maintain product liability insurance, we cannot be sure that such insurance would be sufficient to protect us against liabilities associated with any of these events in view of our expanding business or otherwise, or that such insurance will remain available at economical levels.

We may have significant legal expenses that are not covered by insurance.

In addition, our reputation could be damaged by such sanctions or product liability litigation and that could harm our business reputation and marketing ability.

In addition, our reputation could be damaged by such sanctions or product liability litigation and that could harm our business

reputation and marketing ability.

Any such sanctions or litigation could also hurt our ability to retain product liability insurance or make such insurance more expensive.

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If a third party believes that one of our products infringes on the third party’s patent, it may sue us even if we have received our own patent protection for the technology.

If we infringe the rights of a third party, we could be prevented from manufacturing and selling products, forced to pay damages, compelled to license technology from the party claiming infringement and lose the opportunity to license our technology to others and collect royalty payments, any of which could have a material adverse effect

on our business.

If we are prevented from selling any of our concentrate or ancillary products due to a patent infringement or if our ability to sell any of our concentrate or ancillary products due to a patent infringement is materially and adversely affected, DaVita may be entitled to terminate our Products Purchase Agreement.

As is common in the medical device, biotechnology and pharmaceutical industry, we engage the services of consultants to assist us in the development of our products.

As is common in the medical device industry, we engage the services of consultants to assist us in the development of our products.

Many of these consultants were previously employed at, may have previously been or are currently providing consulting services to, other biotechnology or pharmaceutical companies, including our competitors or potential competitors.

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• the entry into, or termination of, key agreements, including key commercial partner agreements;

• the loss of key customers;

• changes in the structure of healthcare payment systems;

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Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises, political crises, geopolitical events, such as the crisis in Ukraine and the Middle East, or other macroeconomic conditions, which could have a material and adverse effect on our results of operations and financial condition.

The global economy, including credit and financial markets, has experienced extreme volatility and disruptions, including, among other things, diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates, and uncertainty about economic stability.

The Federal Reserve has raised interest rates multiple times in response to concerns about inflation and it may raise them again.

Higher interest rates, coupled with reduced government spending and volatility in financial markets, may increase economic uncertainty and affect consumer spending.

Similarly, the ongoing military conflict between Russia and Ukraine and the conflict in the Middle East have created extreme volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain.

Similarly, the ongoing military conflict between Russia and

Ukraine and the conflict in the Middle East have created extreme volatility in the global capital markets and may have further global economic consequences, including disruptions of the global supply chain.

Any such volatility and disruptions may adversely affect our business or the third parties on whom we rely.

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We have experienced and may in the future experience disruptions as a result of such macroeconomic conditions and the occurrence of natural disasters and public health crises, including delays or difficulties in manufacturing sufficient quantities of materials.

If we fail to maintain inventory or deliver product as a result of such delays or difficulties, we could breach the requirement in our Products Purchase Agreement with DaVita to maintain safety stock and maintain transportation and other services, which would allow DaVita to exercise various remedies under such agreement.

If we fail to maintain inventory or deliver product as a result of such delays or difficulties, we could breach our agreements.

In addition, tariffs imposed on goods coming into the U.S., or tariffs imposed by other countries on goods coming into those countries, could adversely impact our ability to import the products we sell, or ability to sell our products internationally.

Any one or a combination of these events could have a material and adverse effect on our results of operations and financial condition.

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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-K

Item 1A. Risk Factors