What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-07 · 64 added, 33 removed, 98 unchanged (50% of the section changed)

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This represents a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients.

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.

Rockwell currently serves approximately 300 customers, highlighted by all five of the leading dialysis providers in the United States, including Fresenius and DaVita.

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 and other ancillary products used in the dialysis process.

Rockwell currently serves approximately 300 customers, highlighted by all five of the leading dialysis providers in the United States, including Fresenius Medical Care North America ("Fresenius") and DaVita Inc.

Rockwell's customer mix is diverse, with most customer sales concentrations under 10%.

Dialysate concentrates accounted for 100% of our revenue for the quarter ended March 31, 2026, of which approximately 84% of our sales was to distributors and customers for use in the United States.

Dialysate concentrates and other ancillary products accounted for 100% of our revenue for the six months ended June 30, 2026, of which approximately 85% of our sales was to distributors and customers for use in the United States.

Our commercial organization supports the Company's vision to focus its efforts on driving Rockwell Medical toward sustainable profitability.

Our commercial team is focused on expanding revenue within our current customer base and seeking to grow revenue through the addition of new accounts to increase Rockwell's overall market share within the hemodialysis concentrates sector.

We focus on creating long-term partnerships with customers, securing appropriate pricing for our products, and delivering high-quality product to our customers for use with their patients.

We focus on creating long-term partnerships with customers, securing appropriate pricing for our products,

and delivering high-quality product to our customers for use with their patients.

Rockwell's products are vital to vulnerable patients with end-stage kidney disease.

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Rockwell continues to upgrade its manufacturing equipment to streamline production and improve margins, renegotiated pricing with key suppliers, and entered into several multi-year customer purchase agreements.

On September 18, 2023, Rockwell and DaVita, Inc.

("DaVita") entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), under which the Company supplies DaVita with certain dialysis concentrates.

On September 18, 2023, Rockwell and DaVita entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), under which the Company supplies DaVita with certain dialysis concentrates.

The term of the Amended Agreement was scheduled to expire on December 31, 2024.

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Additionally, DaVita agreed to quarterly, non-refundable payments totaling $1.3 million to ensure supply continuity for products purchased during the year ended December 31, 2025.

These quarterly, non-refundable payments of $ 0.9 million was recorded as revenue during the three months ended March 31, 2025.

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

While DaVita did significantly reduce its product purchases from Rockwell, it did not completely transition its business to a different supplier.

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The Second Amendment also provides for a price increase on the products sold under the Amended Agreement for the Second Extension Term.

Results of Operations for the Three Months Ended March 31, 2026 and 2025

Reverse Stock Split

On July 1, 2026, we effected a one-for-ten reverse stock split of our common stock to regain compliance with the Nasdaq Capital Market's $1.00 minimum bid price requirement.

All share and per-share amounts in this report have been retrospectively adjusted to reflect the split for all periods presented.

See Note 17 to the condensed consolidated financial statements.

Results of Operations for the Three Months Ended June 30, 2026 and 2025

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,

2026 % of Revenue 2025 % of Revenue % Change

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Gross Profit 3,243 18 % 2,503 16 % 30 %

Research and Product Development 40 — % — — % — %

Selling and Marketing 577 3 % 572 4 % 1 %

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Operating Loss $ (1,061) (6) % $ (1,349) (8) % (21) %

During the three months ended March 31, 2026, net sales were $17.3 million compared to net sales of $18.9 million during the three months ended March 31, 2025.

The decrease of $1.6 million was primarily due to a $3.9 million reduction in sales to DaVita, which included a $0.9 million price adjustment in 2025 that did not repeat in 2026, partially offset by an increase of $2.6 million from price increases to other existing customers and sales to new 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 revenue associated with Triferic licenses.

DaVita represented 7% and 27% of net sales for the three months ended March 31, 2026 and 2025, respectively.

During the three months ended June 30, 2026, net sales were $17.8 million compared to net sales of $16.1 million during the three months ended June 30, 2025.

The increase of $1.7 million was primarily driven by $1.3 million of sales to new customers in the Western United States as well as additional sales and price increases to existing customers.

Non-Product revenue was not material for either period.

DaVita represented 8% and 11% of net sales for the three months ended June 30, 2026 and 2025, respectively.

Cost of Sales and Gross Profit

Cost of sales for the three months ended March 31, 2026 was $14.4 million, resulting in gross profit of $2.9 million for the three months ended March 31, 2026, compared to cost of sales of $15.9 million and a gross profit of $3.0 million for the three months ended March 31, 2025.

The gross profit decrease of $0.1 million was primarily due to (i) a $0.9 million decline due to a price adjustment for DaVita purchases for the three months ended March 31, 2025 that did not repeat in 2026, (ii) a $0.9 million increase as a result of lower manufacturing costs due to a decrease in production headcount and overhead and (iii) a decrease of $0.1 million in gross profit related to the recognition of remaining deferred revenue associated with Triferic licenses in the three months ended March 31, 2025.

Cost of sales for the three months ended June 30, 2026 was $14.5 million, resulting in gross profit of $3.2 million for the three months ended June 30, 2026, compared to cost of sales of $13.6 million and a gross profit of $2.5 million for the three months ended June 30, 2025.

The gross profit increase of $0.7 million was primarily due to (i) a $0.6 million increase as a result of lower manufacturing costs due to a decrease in production headcount and overhead, (ii) a $0.3 million increase from higher volume, and (iii) $0.1 million from severance expense in the three months ended June 30, 2025 related to the closure of the Company's Greer, South Carolina manufacturing facility, partially offset by a $0.3 million decline due to a price adjustment for DaVita purchases for the three months ended June 30, 2025 that did not repeat in 2026

Selling and Marketing Expense

Selling and marketing expenses for the three months ended March 31, 2026 were $0.6 million compared to $0.7 million during the three months ended March 31, 2025.

The decrease was due to $0.1 million of lower compensation expense as a result of lower headcount.

Selling and marketing expenses for the three months ended June 30, 2026 were $0.6 million compared to $0.6 million during the three months ended June 30, 2025.

General and Administrative Expense

General and administrative expenses were $3.8 million for the three months ended March 31, 2026, compared to $3.7 million for the three months ended March 31, 2025.

The increase of $0.1 million was driven by higher compensation expense.

General and administrative expenses were $3.7 million for the three months ended June 30, 2026, compared to $3.3 million for the three months ended June 30, 2025.

The increase of $0.4 million was driven by higher administrative costs, professional fees and compensation expense.

Other Expense

Total other expense of $0.1 million and $0.2 million for the three months ended March 31, 2026 and 2025, 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 March 31, 2026 was partially offset by $0.1 million of realized gains on available-for-sale investments.

Total other expense of $0.1 million and $0.1 million for the three months ended June 30, 2026 and 2025, respectively, was comprised primarily of 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, 2026 was partially offset by $0.1 million of realized gains on available-for-sale investments.

Results of Operations for the Six Months Ended June 30, 2026 and 2025

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

Six Months Ended June 30,

2026 % of Revenue 2025 % of Revenue % Change

Net Sales $ 35,116 $ 34,985 — %

Cost of Sales 28,976 83 % 29,440 84 % (2) %

Gross Profit 6,140 17 % 5,545 16 % 11 %

Research and Product Development 40 — % — — % — %

Selling and Marketing 1,144 3 % 1,283 4 % (11) %

General and Administrative 7,497 21 % 6,971 20 % 8 %

Operating Loss $ (2,541) (7) % $ (2,709) (8) % (6) %

During the six months ended June 30, 2026, net sales were $35.1 million compared to net sales of $35.0 million during the six months ended June 30, 2025.

The increase of $0.1 million was primarily due to (i) an increase of $2.7 million from new customers in the Western United States, as well as (ii) $2.1 million from increased sales and price increases to existing customers and sales to new customers, partially offset by a $4.3 million reduction in sales to DaVita, which included a $1.3 million price adjustment in 2025 that did not repeat in 2026.

Net sales of non-product revenue was $0.3 million for the six months ended June 30, 2025 from the recognition of the remaining deferred revenue associated with Triferic licenses.

DaVita represented 7% and 20% of net sales for the six months ended June 30, 2026 and 2025, respectively.

Cost of Sales and Gross Profit

Cost of sales for the six months ended June 30, 2026 was $29.0 million, resulting in gross profit of $6.1 million for the six months ended June 30, 2026, compared to cost of sales of $29.4 million and a gross profit of $5.5 million for the six months ended June 30, 2025.

The gross profit increase of $0.6 million was primarily due to (i) a $1.6 million increase as a result of lower manufacturing costs due to a decrease in production headcount and overhead, (ii) $0.2 million from higher volumes, and (iii) $0.2 million of severance expense during the six months ended June 30, 2025, partially offset by (i) a $1.3 million decline due to a price adjustment for DaVita purchases for the six months ended June 30, 2025 that did not repeat in 2026 and (ii) a decrease of 0.1 million in gross profit related to the recognition of remaining deferred revenue associated with Triferic licenses in the six months ended June 30, 2025.

Selling and Marketing Expense

Selling and marketing expenses for the six months ended June 30, 2026 were $1.1 million compared to $1.3 million during the six months ended June 30, 2025.

The decrease was due primarily to $0.1 million of lower compensation expense as a result of lower headcount.

General and Administrative Expense

General and administrative expenses were $7.5 million for the six months ended June 30, 2026, compared to $7.0 million for the six months ended June 30, 2025.

The increase of $0.5 million was driven by $0.3 million of higher compensation expense and $0.2 million of asset disposal costs related to the closure of the Greer facility.

Other Expense

Total other expense of $0.2 million and $0.3 million for the six months ended June 30, 2026 and 2025, respectively, was driven primarily by interest expense of $0.4 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 six months ended June 30, 2026 was partially offset by $0.3 million of realized gains on available-for-sale investments.

Liquidity and Capital Resources

As of March 31, 2026, we had approximately $23.9 million of cash, cash equivalents and investments available-for-sale, and net working capital of $27.1 million.

As of June 30, 2026, we had approximately $24.8 million of cash, cash equivalents and investments available-for-sale, and net working capital of $25.2 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.

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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 March 31, 2026, the Company was in compliance with all covenants.

As of June 30, 2026, 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).

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

Cash Used In Operating Activities

Net cash used in operating activities was $0.2 million for the three months ended March 31, 2026 compared to net cash used in operating activities of $3.5 million for the three months ended March 31, 2025.

The decrease in cash used in operating activities during the current period as compared to the prior period was primarily due to a decrease in cash used in changes in current balance sheet accounts in the ordinary course of business of approximately $3.5 million, partially offset by increases in cash used from (i) net loss of approximately $0.1 million and (ii) non-cash adjustments of $0.1 million.

Cash Provided By (Used In) Operating Activities

Net cash provided by operating activities was $1.9 million for the six months ended June 30, 2026 compared to net cash used in operating activities of $1.6 million for the six months ended June 30, 2025.

The increase in cash provided by operating activities during the current period as compared to the prior period was primarily due to a decrease in cash used in changes in current balance sheet accounts in the ordinary course of business of approximately $3.7 million and a decrease in net loss of approximately $0.2 million, partially offset by a decrease in non-cash adjustments of approximately $0.4 million.

Cash Used In Investing Activities

Net cash used in investing activities was $0.1 million during the three months ended March 31, 2026.

Net cash used in investing activities was immaterial for the three months ended March 31, 2025.

Net cash used in investing activities during the three months ended March 31, 2026 and 2025 was primarily driven by (i) purchases of property and equipment, net of $0.4 million and $0.1 million, respectively, partially offset by (ii) net cash proceeds from purchases and sales of our available-for-sale investments during each period of $0.1 million.

Net cash used in investing activities was $0.6 million during the six months ended June 30, 2026.

Net cash used in investing activities was $0.1 million for the six months ended June 30, 2025.

Net cash used in investing activities during the six months ended June 30, 2026 and 2025 was primarily driven by (i) purchases of property and equipment, net of $1.0 million and $0.2 million, respectively, partially offset by (ii) net cash proceeds from purchases and sales of our available-for-sale investments of $0.3 million and $0.1 million, respectively.

Cash Used In Financing Activities

Net cash used in financing activities was $0.8 million during both of the three months ended March 31, 2026 and 2025.

Net cash used in financing activities during the three months ended March 31, 2026 and 2025 was primarily due to (i) the cash paid in connection with the Evoqua Asset Acquisition deferred consideration obligation of $0.5 million and $0.4 million, respectively, (ii) $0.2 million of payments under the insurance financing note payable during each period and (iii) $0.1 million of payments on finance lease liabilities during each period.

Net cash used in financing activities was $1.5 million during the six months ended June 30, 2026.

Net cash used in financing activities was $1.4 million for the six months ended June 30, 2025.

Net cash used in financing activities during the six months ended June 30, 2026 and 2025 was primarily due to (i) the cash paid in connection with the Evoqua Asset Acquisition deferred consideration obligation of $1.0 million and $0.9 million, respectively, (ii) $0.3 million of payments under the insurance financing note payable during each period and (iii) $0.2 million and $0.3 million of payments on finance lease liabilities, respectively.

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 Notes 13 and 14 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no other material changes from the contractual obligations and other commitments disclosed in Notes 13 and 14 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

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