What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-14 · 57 added, 60 removed, 111 unchanged (51% of the section changed)

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Rockwell is ISO 13485 Certified and adheres to current Good Manufacturing Practices ("cGMP") and Association for Advancement of Medical Instrumentation ("AAMI") standards.

Rockwell manufactures hemodialysis concentrates at its three facilities in Michigan, South Carolina, and Texas, and manufactures its dry acid concentrate mixers at its facility in Iowa.

Rockwell manufactures hemodialysis concentrates at its facilities in Michigan and Texas, and manufactures its dry acid concentrate mixers at its facility in Iowa.

The Company previously operated a manufacturing facility in South Carolina, but the Company concluded manufacturing at that facility in the third quarter of 2025 as part of its ongoing efforts to streamline operations and improve efficiency.

Rockwell delivers the majority of its hemodialysis concentrates products and mixers to dialysis clinics throughout the United States and internationally utilizing its own delivery trucks and third-party carriers.

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Prior to the expiration, the Company received written notice from DaVita that DaVita intended to extend the term of the Amended Agreement through December 31, 2025 (the "Extension Term").

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 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.

However, DaVita subsequently indicated that it will completely transition to another supplier, subject to further discussions betw een Rockwell and DaVita.

DaVita has agreed to quarterly, non-refundable payments totaling $ 1.7 million to ensure supply continuity for products purchased during the nine months ended September 30, 2025.

These quarterly, non-refundable payments of $ 1.7 million were recorded as revenue during the nine months ended September 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.

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

We continue to supply DaVita as of the filing date of this report, but at significantly reduced levels from 2024.

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.

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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

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

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

Three Months Ended June 30,

Three Months Ended September 30,

2025 % of Revenue 2024 % of Revenue % Change

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Operating (Loss) Income $ (1,584) (10) % $ 1,936 6 % (182) %

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.

During the three months ended September 30, 2025, net sales were $15.9 million compared to net sales of $28.3 million during the three months ended September 30, 2024.

The decrease of $12.4 million was primarily due to a $13.0 million reduction in sales to DaVita, partially offset by an increases of $0.6 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.

The three months ended September 30, 2024 included $4.5 million from a special large order of premium-priced product to DaVita.

DaVita represented 12% and 52% of net sales for the three months ended September 30, 2025 and 2024, respectively.

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.

Cost of sales for the three months ended September 30, 2025 was $13.7 million, resulting in gross profit of $2.3 million for the three months ended September 30, 2025, compared to cost of sales of $22.1 million and a gross profit of $6.2 million for the three months ended September 30, 2024.

The gross profit decrease of $3.9 million was primarily due to (i) $3.2 million a decrease in product sales, which includes $1.5 million from a special large order of premium-priced product to DaVita during the three months ended September 30, 2024 that did not repeat during the 2025 period, (ii) and increase of $0.2 million in severance expense and $0.3 million of other costs related to the closure of the Greer manufacturing facility and (iii) an increase of $0.6 million in additional manufacturing costs, partially offset by a price adjustment of $0.4 million for DaVita purchases for the three months ended September 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.

Selling and marketing expenses for the three months ended September 30, 2025 were $0.5 million compared to $0.7 million during the three months ended September 30, 2024.

The decrease was primarily due to lower compensation expense.

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.

General and administrative expenses were $3.3 million for the three months ended September 30, 2025, compared to $3.6 million for the three months ended September 30, 2024.

The decrease of $0.3 million was primarily driven by a $0.2 million decrease in administrative costs and a $0.1 million decrease in professional fees.

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

Total other expense of $0.2 million and $0.3 million for the three months ended September 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 September 30, 2025 was partially offset by $0.1 million of interest income and realized gains on available-for-sale investments of $0.1 million.

Results of Operations for the Nine Months Ended September 30, 2025 and 2024

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

Six Months Ended June 30,

Nine Months Ended September 30,

2025 % of Revenue 2024 % of Revenue % Change

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General and Administrative 10,296 20 % 10,802 14 % (5) %

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

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.

Operating (Loss) Income $ (4,293) (9) % $ 1,127 2 %

During the nine months ended September 30, 2025, net sales were $50.9 million compared to net sales of $76.8 million during the nine months ended September 30, 2024.

Product revenue for the nine months ended September 30, 2025 was $50.6 million compared to product revenue of $76.8 million for the nine months ended September 30, 2024.

The decrease of $25.9 million was primarily due to a $27.9 million reduction in DaVita sales as a result of DaVita transitioning to a new supplier, partially offset by an increase of $2.0 million from price increases to other existing customers and sales to new customers.

The three months ended September 30, 2024 included $5.4 million from a special large order of premium-priced product to DaVita.

DaVita represented 17% and 47% of net sales during the nine months ended September 30, 2025 and 2024, respectively.

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

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

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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.

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 six months ended June 30, 2025.

Cost of sales for the nine months ended September 30, 2025 was $43.1 million, resulting in gross profit of $7.8 million for the nine months ended September 30, 2025, compared to cost of sales of $63.0 million and a gross profit of $13.9 million for the nine months ended September 30, 2024.

The gross profit decrease of $6.1 million was primarily due to (i) a $5.5 million decrease in product sales, which includes $1.6 million from a special large order of premium-priced product to DaVita during the nine months ended September 30, 2024 that did not repeat during the 2025 period, (ii) an increase of $0.4 million in severance expense and $0.4 million of other costs related to the closure of the Greer manufacturing facility and (iii) an increase of $1.6 million in manufacturing costs, partially offset by a price adjustment of $1.7 million for DaVita purchases for the nine months ended September 30, 2025.

Research and Product Development Expense

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.

Research and product development expenses were immaterial for the each of nine months ended September 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 $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.

Selling and marketing expenses were $1.8 million and $1.9 million for the nine months ended September 30, 2025 and 2024, respectively.

The decrease of $0.1 million is primarily due to lower employee compensation expenses.

General and Administrative 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.

General and administrative expenses were $10.3 million for the nine months ended September 30, 2025, compared to $10.8 million for the nine months ended September 30, 2024.

The decrease of $0.5 million was primarily driven by decreases of (i) $0.5 million in administrative costs and (ii) $0.4 million in professional fees, partially offset by an increase of $0.4 million of stock-based compensation expense.

Other Expense

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.

Total other expense of $0.5 million and $0.9 million for the nine months ended September 30, 2025 and 2024, respectively, was driven primarily by interest expense of $0.7 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 nine months ended September 30, 2025 was partially offset by $0.2 million of interest income, as well as realized gains on available-for-sale investments of $0.2 million.

Liquidity and Capital Resources

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.

As of September 30, 2025, we had approximately $23.7 million of cash, cash equivalents and investments available-for-sale, and net working capital of $27.9 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 $13.1 million remaining availability under its at-the-market ("ATM") facility or other methods or forms of financings, subject to existing limitations.

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Specifically, until DaVita owns less than 50% of its investment, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5.0 million or to refinance existing debt, unless DaVita consents.

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

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 Company is subject to certain covenants and cure provisions under its Loan and Security Agreement (the "Loan Agreement") with Innovatus Life Sciences Lending Fund I, LP.

As of September 30, 2025, the Company was in compliance with all covenants.

On January 2, 2024, the 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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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 $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.

The Company evaluated the Act and concluded it will not have a material impact on its condensed consolidated financial statements.

Cash (Used In) Provided By Operating Activities

Net cash used in operating activities was $3.0 million for the nine months ended September 30, 2025 compared to net cash provided by operating activities of $3.3 million for the nine months ended September 30, 2024.

The change in cash used in operating activities during the current period as compared to cash provided by operating activities in the prior period was primarily due to increases in (i) net loss of approximately $5.0 million and (ii) cash used in changes in current balance sheet accounts in the ordinary course of business of approximately $1.5 million, partially offset by (iii) non-cash adjustments of $0.3 million.

Cash Used In Investing Activities

Net cash used in investing activities was $4.4 million during the nine months ended September 30, 2025 compared to net cash used in investing activities of $4.5 million for the nine months ended September 30, 2024.

Net cash used in investing activities during the nine months ended September 30, 2025 and 2024 was primarily driven by net cash payments from purchases and sales of our available-for-sale investments during each period of $4.0 million and $3.9 million, respectively.

Cash Provided By Financing Activities

Net cash provided by financing activities was $5.3 million during the nine months ended September 30, 2025 compared to net cash provided by financing activities of $4.6 million for the nine months ended September 30, 2024.

Net cash provided by financing activities during the nine months ended September 30, 2025 was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $7.8 million, as defined and described in Note 11 to the condensed consolidated financial statements, partially offset by the cash paid in connection with the Evoqua Asset Acquisition of $1.6 million, as defined and described in Note 5 to the condensed consolidated financial statements.

Net cash provided by financing activities for the nine months ended September 30, 2024 was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $6.4 million, partially offset by the cash paid in connection with the Evoqua Asset Acquisition of $1.0 million.

Contractual Obligations and Other Commitments

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

There have been no other material changes from the contractual obligations and other commitments disclosed in Note 14 and 15 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no other material changes from the contractual obligations and other commitments disclosed in Notes 14 and 15 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Critical Accounting Policies and Significant Judgments and Estimates

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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