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What changed in ROCKWELL MEDICAL, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ROCKWELL MEDICAL, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+318 added−328 removedSource: 10-K (2025-03-20) vs 10-K (2024-03-21)

Top changes in ROCKWELL MEDICAL, INC.'s 2024 10-K

318 paragraphs added · 328 removed · 213 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

75 edited+32 added−35 removed88 unchanged
Biggest changeAs of December 31, 2023, we owned or had the rights to 6 issued patents (4 U.S. and 2 foreign) and 1 pending foreign application. Patents and patent applications owned or licensed by us include claims to FPC in both dialysate and IV 16 Table of Contents compositions, formulations and methods of making and parenteral nutritional compositions including Triferic.
Biggest changeMost such applications have resulted in registration of such trademarks and service marks. 16 Table of Contents As of December 31, 2024 we owned or had the rights to, 4 iss ued U.S. patents.
In addition, the FDA can issue warning letters or untitled letters, impose injunctions, suspend regulatory clearance or approvals, ban certain medical devices, detain or seize adulterated or misbranded medical devices, order repair, replacement or refund of these devices, and require notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health.
In addition, the FDA can issue warning letters, impose injunctions, suspend regulatory clearance or approvals, ban certain medical devices, detain or seize adulterated or misbranded medical devices, order repair, replacement or refund of these devices, and require notification of health professionals and others with regard to medical devices that present unreasonable risks of substantial harm to the public health.
The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. Manufacturers are subject to periodic scheduled or unscheduled inspections by the FDA. A failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of products.
The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. Manufacturers are also subject to periodic scheduled inspections by the FDA. A failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of products.
Our quality program activities also include qualification and ongoing assessments of suppliers of raw materials, packaging components and finished goods, and quality management reviews designed to inform management of key issues that may affect the quality of products, assess the effectiveness of our quality systems, and identify areas for improvement.
Our quality program activities also include qualification and ongoing assessments of suppliers of raw materials, packaging components, services and finished goods, and quality management reviews designed to inform management of key issues that may affect the quality of products, assess the effectiveness of our quality systems, and identify areas for improvement.
These include: • establishment registration and device listing with the FDA; • the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; • labeling regulations, unique device identification requirements and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses; • advertising and promotion requirements; • Restrictions on sale, distribution or use of a device; • PMA annual reporting requirements; • PMA approval or clearance of a 510(k) for certain product modifications; • medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act that may present a risk to health; • recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; • an order of repair, replacement or refund; • device tracking requirements; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These may include, as applicable: • establishment registration and device listing with the FDA; • the FDA’s QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; • labeling regulations, unique device identification requirements and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label uses; • advertising and promotion requirements; • Restrictions on sale, distribution or use of a device; • PMA annual reporting requirements; • PMA approval or clearance of a 510(k) for certain product modifications; • medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; • medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act that may present a risk to health; 14 Table of Contents • recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; • an order of repair, replacement or refund; • device tracking requirements; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
CENTRISOL ® , CitraPure ® , Dri-Sate ® , RenalPure ® , RENASOL ® , SteriLyte ® , and Triferic ® are registered trademarks of Rockwell. This Annual Report on Form 10-K contains references to our trademarks and trademarks belonging to other entities.
CENTRISOL ® , CitraPure ® , Dri-Sate ® , RenalPure ® , RENASOL ® , SteriLyte ® , and Triferic ® are registered trademarks of Rockwell Medical. This Annual Report on Form 10-K contains references to our trademarks and trademarks belonging to other entities.
We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company. BUSINESS OVERVIEW Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide. Rockwell is a revenue-generating business.
We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other company. BUSINESS OVERVIEW Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide.
In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2024 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time.
In particular, please read our definitive proxy statement, which will be filed with the SEC in connection with our 2025 annual meeting of stockholders, our quarterly reports on Form 10-Q and any current reports on Form 8-K that we may file from time to time.
Pursuant to the Charak MSA, the parties entered into three additional agreements described below related to the license of certain soluble ferric pyrophosphate (“SFP”) intellectual property owned by Charak, as well as the Employment Agreement (defined below). The Charak MSA provided for a payment of $1,000,000 to Dr.
Pursuant to the Charak MSA, the parties entered into three additional agreements described below related to the license of certain soluble ferric pyrophosphate (“SFP”) intellectual property owned by Charak, as well as an employment agreement. The Charak MSA provided for a payment of $1,000,000 to Dr.
CENTRISOL and RENALSOL Hemodialysis Concentrates Our CENTRISOL hemodialysis concentrates consist of acid and bicarbonate formulations suitable for 45X dilution three-stream hemodialysis devices. Our RENASOL acid and bicarbonate concentrates are compatible with 36X dilution devices. CENTRISOL and RENASOL liquid acids are packaged in 55-gallon drums or in one-gallon jugs (sold in cases of four).
CENTRISOL and RENASOL Hemodialysis Concentrates CENTRISOL hemodialysis concentrates consist of acid and bicarbonate formulations suitable for 45X dilution three-stream hemodialysis devices. RENASOL acid and bicarbonate concentrates are compatible with 36X dilution devices. CENTRISOL and RENASOL liquid acids are packaged in 55-gallon drums or in one-gallon jugs (sold in cases of four).
In addition, the Company is required to pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid patent claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid patent claim, on a country-by-country basis.
In addition, the Company 10 Table of Contents is required to pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid patent claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid patent claim, on a country-by-country basis.
The Company shall also pay to Charak a percentage of 10 Table of Contents any sublicense income received during the term of the TPN Agreement, which amount shall not be less than a minimum royalty on net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.
The Company shall also pay to Charak a percentage of any sublicense income received during the term of the TPN Agreement, which amount shall not be less than a minimum royalty on net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis.
PMA supplements often require submission of the same type of information as an initial PMA, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA and may or may not require as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change.
PMA supplements often require submission of the same 13 Table of Contents type of information as an initial PMA, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA and may or may not require as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change.
The Food and Drug Administration Modernization Act of 1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure.
The Food and Drug Administration Modernization Act of 1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a 12 Table of Contents predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure.
The inflation rebate provision will require drug manufacturers to pay a rebate to the federal government if the price for a drug or biologic under Medicare Part B and Part D increases faster than the rate of inflation. Notwithstanding these provisions, the IRA’s impact on commercialization and competition remains largely uncertain.
The inflation rebate provision requires drug manufacturers to pay a rebate to the federal government if the price for a drug or biologic under Medicare Part B and Part D increases faster than the rate of inflation. Notwithstanding these provisions, the IRA’s impact on commercialization and competition remains largely uncertain.
United States Foreign Description Issued Expiration Pending Issued Expiration Pending Triferic (IV and Dialysate) 3 2027 - 2036 — 2 2028 - 2034 1 Triferic (TPN) 1 2030 — — — Total 4 — 2 1 See Item 1A “Risk Factors” for a discussion of certain risks related to our intellectual property.
United States Foreign Description Issued Expiration Pending Issued Expiration Pending Triferic (IV and Dialysate) 3 2027 - 2036 — — — Triferic (TPN) 1 2030 — — — Total 4 — — — See Item 1A “Risk Factors” for a discussion of certain risks related to our intellectual property.
We have established an organizational structure and quality system procedures to ensure our device products are 8 Table of Contents designed and produced to meet product quality requirements and FDA guidelines. The Grapevine, Texas facility is certified to ISO 13485:2016. Dialysis products are manufactured and tested using validated equipment and defined process controls to ensure rigorous conformance to specifications.
We have established an organizational structure and quality system procedures to ensure our device products are designed and produced to meet both product quality requirements and FDA requirements. The Grapevine, Texas facility is certified to ISO 13485:2016. Dialysis products are manufactured and tested using validated equipment and defined process 9 Table of Contents controls to ensure rigorous conformance to specifications.
RenalPure Bicarbonate Concentrate RenalPure bicarbonate is a dry powder mixed on-site at the clinic and is packaged in bulk and individual treatment sizes. SteriLyte Bicarbonate Concentrate SteriLyte bicarbonate is a liquid packaged in cases of four one-gallon jugs (sold in cases of four) and is used mainly in acute care settings.
RenalPure Bicarbonate Concentrate Rockwell Medical's RenalPure bicarbonate concentrate is a dry powder mixed on-site at the clinic and is packaged in bulk and individual treatment sizes. SteriLyte Bicarbonate Concentrate Rockwell Medical's SteriLyte bicarbonate is a liquid packaged in one-gallon jugs (sold in cases of two and four) and is mainly used in acute care settings.
Human Capital As of December 31, 2023, we had 237 employees, substantially all of whom are full time employees. Our arrangements with our employees are not governed by any collective bargaining agreement. Our employees are employed on an “at‑will” basis. Our key human capital management objectives are to identify, recruit, integrate, retain and motivate our new and existing employees.
Human Capital As of December 31, 2024, we had 244 employees, substantially all of whom are full time employees. Our arrangements with our employees are not governed by any collective bargaining agreement. Our employees are employed on an “at‑will” basis. Our key human capital management objectives are to identify, recruit, integrate, retain and motivate our new and existing employees.
A predicate device is a legally- 11 Table of Contents marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process.
A predicate device is a legally-marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process.
PATENTS, TRADEMARKS AND TRADE SECRETS We have several trademarks and service marks used on our products and in our advertising and promotion of our products, and we have applied for registration of such marks in the United States and several foreign countries. Most such applications have resulted in registration of such trademarks and service marks.
PATENTS, TRADEMARKS AND TRADE SECRETS We have several trademarks and service marks used on our products and in our advertising and promotion of our products, and we have applied for registration of such marks in the United States and foreign countries.
For the first time, CMS will be able to directly negotiate prescription drug prices and to cap out-of-pocket costs. Each year, CMS will select and negotiate a preset number of high-spend drugs and biologics that are covered under Medicare Part B and Part D that do not have generic or biosimilar competition. These price negotiations began in 2023.
For the first time, CMS will be able to directly negotiate prescription drug prices and to cap out-of-pocket costs. Each year, CMS will select and negotiate a preset number of high-spend drugs and biologics that are covered under Medicare Part B and Part D that do not have generic or biosimilar competition.
GOVERNMENT REGULATION We are regulated by the FDA under the Federal Food, Drug and Cosmetic Act (the "FD&C Act"), as well as by other federal, state and local agencies. We hold several FDA product approvals including medical devices.
GOVERNMENT REGULATION We are regulated by the FDA under the Federal Food, Drug and Cosmetic Act (the "FD&C Act"), as well as by other federal, state and local agencies. We hold several FDA product clearances for medical devices.
Additionally, manufacturers are subject to unannounced inspections by the FDA to determine compliance with the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
Additionally, manufacturers are subject to unannounced or unscheduled inspections by the FDA to determine compliance with the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, handling, storage, and distribution of finished devices intended for human use.
Other restrictions under applicable federal and state healthcare laws and regulations may include the following: 15 Table of Contents • the federal Physician Self-Referral Law, which prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and prohibits the entity from presenting or causing to be presented claims to Medicare for those referred services; • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, where one purpose is to induce either the referral of an individual for, or the purchase order or recommendation of, any item or services for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs.
Other restrictions under applicable federal and state healthcare laws and regulations may include the following: • the federal Physician Self-Referral Law, which prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and prohibits the entity from presenting or causing to be presented claims to Medicare for those referred services; 15 Table of Contents • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, to induce, or in return for, either the referral of an individual, or the purchase or recommendation of an item or service for which payment may be made under any federal healthcare program, such as the Medicare and Medicaid programs.
Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment to Rockwell on or after December 1, 2023. The term of the Amended Agreement will expire on December 31, 2024.
Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment of $0.4 million to Rockwell on or after December 1, 2023. The term of the Amended Agreement was scheduled to expire on December 31, 2024.
Competition: In the United States, our principal competitor for concentrate products is Fresenius Medical Care NA (“Fresenius”), a vertically integrated manufacturer and marketer of dialysis devices, drugs and supplies and operator of dialysis clinics, which has substantially greater financial, technical, manufacturing, marketing, and research and development resources than we do.
Competition: In the United States, our principal competitors for concentrate products are Fresenius and Nipro. Fresenius is a vertically integrated manufacturer and marketer of dialysis devices, drugs and supplies and operator of dialysis clinics, which has substantially greater financial, technical, manufacturing, marketing, and research and development resources than we do.
DaVita and Nipro Medical Corporation are important to our business, financial condition and results of operations. The loss of any significant accounts could have a material adverse effect on our business, financial condition and results of operations. See Item 1A “Risk Factors” for a discussion of certain risks related to our key customers.
The loss of any significant accounts could have a material adverse effect on our business, financial condition and results of operations. See Item 1A “Risk Factors” for a discussion of certain risks related to our key customers and a discussion of certain risks related to our foreign sales.
Hemodialysis concentrates represent a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients. Rockwell is one of only two suppliers that has the manufacturing scalability and transportation infrastructure to service the more than 12,000 individual purchasing facilities (including outpatient dialysis clinics and hospitals) in the United States along with select international markets.
Hemodialysis concentrates represent a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients. Rockwell is a leading supplier that has the scalability to manufacture and deliver to the more than 12,000 individual purchasing facilities (including outpatient dialysis clinics and hospitals) in the United States along with select international markets.
Today, Rockwell is the leading supplier of liquid bicarbonate concentrates and the second largest supplier of acid and dry bicarbonate concentrates for dialysis patients in the United States. According to an independent research report that Rockwell commissioned from L.E.K.
Market Opportunity: Rockwell is the leading supplier of liquid bicarbonate concentrates and the second largest supplier of acid and dry bicarbonate concentrates for dialysis patients in the United States. Based on an independent research report that the Company commissioned from L.E.K.
Distribution and Delivery Operations: The majority of our domestic dialysis concentrate products are delivered through our subsidiary, Rockwell Transportation, Inc., which operates a fleet of trucks used to deliver products to our customers. Rockwell distribution and delivery operated under the Distribution Agreement on behalf of Baxter for domestic business.
Distribution and Delivery Operations: The majority of our domestic dialysis concentrate products are delivered through our subsidiary, Rockwell Transportation, Inc., which operates a fleet of trucks used to deliver products to our customers.
The IDE must be approved in advance by the FDA for a specified number of patients, unless the product candidate is deemed a non-significant risk device and is eligible for more abbreviated IDE requirements.
The IDE must be approved in advance by the FDA for a specified number of patients, unless the product candidate is deemed a non-significant risk device and is eligible for more abbreviated IDE requirements. Clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and appropriate IRBs at the clinical trial sites.
Dialysate concentrates accounted for approximately 97 .2 % of our revenue for the year ended December 31, 2023, of which approximately 91.5% was to distributors and customers for use in the United States.
Dialysate concentrates accounted for 100% of our revenue for the year ended December 31, 2024, of which approximately 90.9% was to distributors and customers for use in the United States.
Additionally, Rockwell is now able to independently price its products, eliminate costs associated with manufacturing covenants, improve manufacturing efficiencies and realize the full benefits from those improvements, and develop, in-license, or acquire new products to develop a broader kidney care products portfolio. This is expected to improve Rockwell's overall profitability and set the Company on a positive growth trajectory.
Additionally, Rockwell was able to independently price its products, eliminate costs associated with manufacturing covenants, improve manufacturing efficiencies and realize the full benefits from those improvements, and develop, in-license, or acquire new products to develop a broader kidney care products portfolio.
On September 18, 2023, Rockwell and our long-time partner, DaVita, a leading provider of kidney care, entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), which amends and restates the Product Purchase Agreement, dated July 1, 2019, as amended, 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"), which amended and restated the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates.
The FDA may also initiate action for civil penalties and/or criminal prosecution of such violations. There are also certain requirements of state, local, and foreign governments that we must comply with in the manufacturing and marketing of our products.
The FDA may also initiate action for civil penalties and/or criminal prosecution of such violations. There are also certain requirements of state, local, and foreign governments that we must comply with in the manufacturing and marketing of our products. We maintain customer complaint files, record lot numbers of products, and conduct periodic audits to assure compliance with applicable regulations.
Consulting LLC in 2022, the hemodialysis concentrates market in the United States is anticipated to grow to approximately $500 million by 2026, up from $380 million in 2022. This is driven primarily by an increasing number of patients suffering from end-stage kidney disease.
Consulting LLC in 2022, the hemodialysis concentrates market in the U.S. is projected to grow to approximately $560 million by 2028, up from $450 million in 2024. This is driven primarily by an increasing number of patients suffering from end-stage kidney disease.
If it is not, the agency will refuse to file the PMA. If it is, the FDA will accept the application for filing and begin the review. The FDA, by statute and by regulation, has 180 days to review a filed PMA, although the review of an application more often occurs over a significantly longer period of time.
The FDA, by statute and by regulation, has 180 days to review a filed PMA, although the review of an application more often occurs over a significantly longer period of time.
Dri-Sate is packaged as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer in 25-gallon cases. RenalPure Liquid Acid Concentrate Our RenalPure Liquid Concentrate is an acetic acid-based product and is packaged in 55-gallon drums and in one-gallon jugs (sold in cases of four).
Each case of Dri-Sate dry product produces 25 gallons of RenalPure liquid acetic acid concentrate. RenalPure Acid Concentrate Rockwell Medical's RenalPure concentrate is an acetic acid-based product. RenalPure is packaged as a liquid acid concentrate in 55-gallon drums and in one-gallon jugs (sold in cases of two and four).
Additionally, in July 2023, the Company purchased customer relationships, equipment and inventory from Evoqua Water Technologies related to manufacturing and sale of hemodialysis concentrates products, all of which are manufactured under a cGMP contract manufacturing agreement with a third-party organization in Minnesota.
Additionally, through its asset acquisition of customer relationships, equipment and inventory related to the manufacturing and sale of hemodialysis concentrates products from Evoqua Water Technologies in July 2023, the Company manufactured hemodialysis concentrates under a contract manufacturing agreement ("CMA") with a third-party contract manufacturing organization ("CMO") in Minnesota until the CMA expired on December 31, 2024.
A PMA must be supported by extensive data, including, but not limited to, technical information, preclinical data, clinical trial data, manufacturing data, and labeling, to demonstrate to the FDA’s satisfaction the safety and efficacy of the device for its intended use. 12 Table of Contents Following receipt of a PMA, the FDA conducts an administrative review to determine whether the application is sufficiently complete to permit a substantive review.
A PMA must be supported by extensive data, including, but not limited to, technical information, preclinical data, clinical trial data, manufacturing data, and labeling, to demonstrate to the FDA’s satisfaction the safety and efficacy of the device for its intended use.
Subject to the terms and conditions of the Purchase Agreement, at the closing of the transaction (the “Closing”), the Company purchased customer relationships, equipment and inventory from Evoqua, which were related to manufacturing and selling of hemodialysis concentrates products, all of which are manufactured under a contract manufacturing agreement with a third-party organization .
As part of the Purchase Agreement, the Company purchased customer relationships, equipment and inventory from Evoqua, which were related to the manufacturing and sale of hemodialysis concentrates products, all of which were manufactured under a CMA with a third-party CMO.
In addition to using concentrate products during every in-center treatment, a dialysis provider also uses other products such as blood tubing, fistula needles, dialyzers, drugs, specialized component kits, dressings, cleaning agents, filtration salts, and other supplies, some of which we sell. CitraPure Citric Acid Concentrate Our CitraPure Concentrate is citric acid-based and 100% acetate-free.
The patient’s physician chooses the proper concentrations required for each patient based on such patient’s needs. 6 Table of Contents In addition to using concentrate products during every in-center treatment, a dialysis provider also uses other products, such as blood tubing, fistula needles, dialyzers, drugs, specialized component kits, dressings, cleaning agents, filtration salts, and other supplies, some of which we sell.
OUR STRATEGY Rockwell Medical is focused on innovative, long-term growth strategies that enhance its products, its processes, and its people, enabling the Company to deliver exceptional value to the healthcare system and provide a positive impact on the lives of hemodialysis patients. Rockwell is focused on growing the Company's revenue-generating business, which currently includes its portfolio of hemodialysis concentrates products.
OUR STRATEGY Rockwell Medical is focused on innovative, long-term growth strategies that deliver exceptional value to the healthcare system and provide a positive impact on the lives of hemodialysis patients.
We have included our website in this Annual Report on Form 10-K solely as an inactive textual reference, and content from or that can be accessed through our website is not part of, or incorporated by reference into, this Annual Report on Form 10-K.
We have included our website in this Annual Report on Form 10-K solely as an inactive textual reference, and content from or that can be accessed through our website is not part of, or incorporated by reference into, this Annual Report on Form 10-K. 4 Table of Contents SIGNIFICANT 2024 HIGHLIGHTS Rockwell Medical's key developments from 2024 include: • In January 2024, we amended and restated our loan and security agreement (the "Amendment") with Innovatus.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to General Controls, which require compliance with the applicable portions of the FDA’s Quality System Regulation ("QSR"), facility registration and product listing, reporting of adverse events and malfunctions, and appropriate, truthful and non-misleading labeling and promotional materials.
Device Classification Under the FD&C Act, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with respect to safety and effectiveness. 11 Table of Contents Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be reasonably assured by adherence to General Controls, which require compliance with the applicable portions of the FDA’s Quality System Regulation ("QSR"), facility registration and product listing, reporting of adverse events and malfunctions, and appropriate, truthful and non-misleading labeling and promotional materials.
Products Purchase Agreement with DaVita On September 18, 2023, Rockwell and our long-time partner, DaVita, a leading provider of kidney care, entered into the Amended Agreement. Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment of $0.4 million to Rockwell on or after December 1, 2023.
Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment of $0.4 million to Rockwell on or after December 1, 2023. The term of the Amended Agreement was scheduled to expire on December 31, 2024.
Due to its limited market adoption, unfavorable reimbursement, and absence of interest from other companies to license or acquire Triferic despite Rockwell's significant effort to partner the program, the Company discontinued its New Drug Applications ("NDAs") for Triferic and Triferic AVNU in the United States in the fourth quarter of 2022.
The NDAs for Triferic and its approved presentations were not discontinued for safety reasons, but instead were discontinued due to its limited market adoption, unfavorable reimbursement, and the absence of interest from other companies to license or acquire Triferic despite Rockwell's significant effort to partner the program.
In 2022, Rockwell undertook a strategic review of Triferic's viability in the United States. Triferic was launched into a very competitive marketplace with well-entrenched products and a lack of consensus regarding unmet medical needs for dialysis patients with anemia.
Triferic, which was indicated to maintain hemoglobin in patients undergoing hemodialysis, was launched into a very competitive marketplace with well-entrenched products and a lack of consensus regarding unmet medical needs for dialysis patients with anemia.
Clinics using our Dry Acid Concentrate products realize numerous advantages, including lower cost per treatment, reduced storage space requirements, reduced number of deliveries and more flexibility in scheduling deliveries, while enabling us to reduce distribution and warehousing costs.
Clinics using our dry acid concentrate products realize numerous advantages, including lower cost per treatment, reduced storage space requirements, reduced number of deliveries and more flexibility in scheduling deliveries, while enabling us to reduce distribution and warehousing costs. 7 Table of Contents Ancillary Products We offer essential ancillary products to select customers including 5% acetic acid cleaner, citric acid descaler, water softener salt pellets, and other supplies used by hemodialysis providers.
Our Products: Most hemodialysis patients receive dialysis treatment three times per week, or approximately 156 times per year. Most patients who have their dialysis treatment performed at a free-standing clinic have significant and irreversible loss of kidney function. These are commonly referred to as “chronic” dialysis patients.
Most patients who have their dialysis treatment performed at a free-standing clinic have significant and irreversible loss of kidney function. These are commonly referred to as “chronic” dialysis patients. Patients who undergo dialysis in hospitals for temporary loss of kidney function are typically referred to as “acute” dialysis patients.
In addition to laws and regulations in the United States, we are subject to a variety of laws and regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our product candidates.
We place special emphasis on customer training and advise all customers that device operation should be undertaken only by qualified personnel. In addition to laws and regulations in the United States, we are subject to a variety of laws and regulations in other jurisdictions governing, among other things, any commercial sales and distribution of our product candidates.
Customers: We currently operate in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process. DaVita, accounted for 47% of our concentrate sales in 2023 and 46% of our concentrate sales in 2022.
Customers: 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's customer mix is diverse, with most customer sales concentrations under 10%.
Hemodialysis is the most common form of end-stage kidney disease treatment and is usually performed at freestanding outpatient dialysis centers, at hospital-based outpatient centers, at skilled nursing facilities, or in a patient’s home. Our hemodialysis concentrates products are used to sustain a patient's life by removing toxins and balancing electrolytes in a dialysis patient’s bloodstream.
The Company is a leading supplier of liquid and dry, acid and bicarbonate concentrates for dialysis patients in the United States. Hemodialysis is the most common form of end-stage kidney disease treatment and is usually performed in freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or a patient’s home.
MATERIAL AGREEMENTS Distribution Agreement with Baxter Pursuant to the Exclusive Distribution Agreement dated October 2, 2014 (as amended, the “Distribution Agreement”), Baxter was our exclusive agent for commercializing our hemodialysis concentrate and ancillary products in the United States to clinics other than DaVita and various foreign countries for an initial term of 10 years ending October 2, 2024.
In the fourth quarter of 2022, we reacquired the distribution rights to our hemodialysis concentrates products from Baxter Healthcare Corporation ("Baxter") and terminated the exclusive distribution agreement dated October 2, 2014 (as amended, the “Distribution Agreement”) through which Baxter was our exclusive agent for commercializing our hemodialysis concentrate and ancillary products in the U.S. to clinics other than DaVita and various foreign countries.
Rockwell's products are vital to vulnerable patients with end-stage kidney disease. We are an established leader in manufacturing and delivering high-quality hemodialysis concentrates and dialysates, along with certain ancillary products, to dialysis providers and distributors in the United States and abroad.
We are an established leader in manufacturing and delivering high-quality hemodialysis concentrates and dialysates, along with certain ancillary products, to dialysis providers and distributors in the United States and abroad. All of our concentrate products are manufactured according to the Association for the Advancement of Medical Instrumentation ("AAMI") guidelines and cGMP regulations.
CitraPure is packaged as a liquid acid concentrate in 55-gallon drums and one-gallon jugs sold in cases of four, and as a dry powder acid concentrate for use with our Dry Acid Concentrate Mixer in 25-gallon cases. Dri-Sate Dry Acid Concentrate Our Dri-Sate Concentrate is an acetic acid-based product.
CitraPure Citric Acid Concentrate Rockwell Medical's CitraPure c oncentrate is citric acid-based and 100% acetate-free. CitraPure is packaged as a liquid acid concentrate in 55-gallon drums and one-gallon jugs sold in cases of four. CitraPure is also packaged as a dry powder acid concentrate to be used exclusively with Rockwell Medical's Dry Acid Concentrate Mixer.
A key element of our dialysis business strategy going forward is to improve the strength of our concentrates business. We believe we can achieve this by growing our business through the addition of new customers, expanding our territory coverage, increasing the efficiency by which Rockwell produces its products, and pricing our products appropriately to drive profitability.
We believe we can achieve this by growing our business through the addition of new customers, expanding our territory coverage, increasing the efficiency by which we produce our products, and pricing our products appropriately to drive profitability. Our Products: Most hemodialysis patients receive dialysis treatment three times per week, or approximately 156 times per year.
All of our concentrate products are manufactured according to Association for the Advancement of Medical Instrumentation ("AAMI") guidelines and cGMP regulations. Our concentrate products are diluted with purified water on-site at the clinic in the dialysis machine, creating dialysate, which works to clean the patient’s blood.
Our concentrate products are diluted with purified water on-site at the clinic in the dialysis machine, creating dialysate, which works to clean the patient’s blood. A key element of our dialysis business strategy going forward is to improve the strength of our concentrates business.
Braun as an independent, non-exclusive representative to promote the Company's hemodialysis concentrates products to dialysis providers in the United States with a focus on the west coast. All terms of the sale of any Rockwell product, including price, delivery schedule, and terms and conditions, are set by Rockwell at the Company's sole discretion.
Braun"), a leader in renal therapies, including innovative, high-quality products for hemodialysis. As part of the agreement, Rockwell designates B. Braun as an independent, non-exclusive representative to promote the Company's hemodialysis concentrates products to dialysis providers in the United States with a focus on the west coast.
Rockwell manufactures hemodialysis concentrates under current Good Manufacturing Practices ("cGMP") regulations at its three facilities in Michigan, Texas, and South Carolina totaling approximately 175,000 square feet, and manufactures dry acid concentrate mixers at its facility in Iowa.
This represents a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients. Rockwell manufactures hemodialysis concentrates under current Good Manufacturing Practices ("cGMP") regulations at its three facilities in Michigan, South Carolina, and Texas and manufactures dry acid concentrate mixers at its facility in Iowa.
The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States. Our total international sales, including sales made through domestic distributors for resale outside the United States, aggregated 9% and 9% of our overall sales in 2023 and 2022, respectively.
Our total international sales, including sales made through domestic distributors for resale outside the United States, aggregated 9% of our overall sales in both 2024 and 2023. Our major customers are important to our business, financial condition and results of operations.
We are committed to a safe workplace for our employees and have implemented health and safety management processes into our operations. In response to the COVID-19 pandemic, we continue to follow the CDC protocol for safe return-to-work for affected employees and remain steadfast in our efforts to keep employees healthy and protected.
We are committed to a safe workplace for our employees and have implemented health and safety management processes into our operations.
Hemodialysis is the most common form of end-stage kidney disease treatment and is usually performed at freestanding outpatient dialysis centers, at hospital-based outpatient centers, at skilled nursing facilities, or in a patient’s home. This represents a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients.
OUR BUSINESS Rockwell's mission is to provide dialysis clinics and the patients they serve with the highest quality products supported by the best customer service in the industry. Hemodialysis is the most common form of end-stage kidney disease treatment and is typically performed in freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or a patient’s home.
We have allowed several Charak-licensed and Company-owned patents and applications that are not material to our business to lapse.
Patents owned or licensed by us include claims to ferric pyrophosphate citrate ("FPC") in both dialysate and IV compositions, formulations and methods of making and parenteral nutritional compositions, including Triferic. We have allowed several Charak-licensed and Company-owned patents and applications that are not material to our business to lapse.
We also supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim. Nipro Medical Corporation is the primary distributor of our dialysis concentrates in certain countries in Latin America that were not covered under the Distribution Agreement.
We supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim. The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States.
In each setting, a dialysis machine 5 Table of Contents dilutes concentrated solution, such as Rockwell’s concentrate products, with purified water. The resulting solution is called dialysate. Dialysate is pumped through an artificial kidney or filter (called a dialyzer) while the patient’s blood is pumped through a semi-permeable membrane inside the dialyzer in the opposite direction the dialysate is flowing.
Dialysate is pumped through an artificial kidney or filter (called a dialyzer) while the patient’s blood is pumped through a semi-permeable membrane inside the dialyzer in the opposite direction the dialysate is flowing. The dialysate can exchange bicarbonate, sodium, calcium, magnesium and potassium into the patient’s blood, while removing fluid and waste.
Patients who undergo dialysis in hospitals for temporary loss of kidney function are typically referred to as “acute” dialysis patients. The small percentage of chronic dialysis patients who receive their treatment at home are referred to as “home” dialysis patients.
The small percentage of chronic dialysis patients who receive their treatment at home are referred to as “home” dialysis patients. In each setting, a dialysis machine dilutes concentrated solution, such as Rockwell’s concentrate products, with purified water. The resulting solution is called dialysate.
Following the reacquisition of these rights, Rockwell is now able to sell its hemodialysis concentrates products directly to dialysis clinics throughout the United States and around the world.
Under the Distribution Agreement, Rockwell manufactured all hemodialysis concentrates products and provided customer service and order delivery to 5 Table of Contents nearly all U.S. customers. Following the reacquisition of these rights, we sold, and continue to sell, our hemodialysis concentrates products directly to dialysis clinics throughout the U.S. and around the world.
The dialysate can exchange bicarbonate, sodium, calcium, magnesium and potassium into the patient’s blood, while removing fluid and waste. Dialysate generally contains dextrose, sodium chloride, calcium, potassium, magnesium, sodium bicarbonate, and citric acid or acetic acid. The patient’s physician chooses the proper concentrations required for each patient based on such patient’s needs.
Dialysate generally contains dextrose, sodium chloride, calcium, potassium, magnesium, sodium bicarbonate, and citric acid or acetic acid.
All orders are directed to, and processed by, Rockwell. B. Braun receives a fee for any sales generated by its promotional efforts. On July 10, 2023, the Company executed and consummated the transactions contemplated by an Asset Purchase Agreement (the “Purchase Agreement”) with Evoqua Water Technologies LLC ("Evoqua") (the "Evoqua Acquisition").
For the reacquisition of our distribution rights, we were required to pay Baxter a fee which was paid in two equal installments on January 1, 2023 and April 1, 2023. In July 2023, the Company executed and consummated the transactions contemplated by an Asset Purchase Agreement (the “Purchase Agreement”) with Evoqua Water Technologies LLC ("Evoqua") (the “Evoqua Asset Acquisition”).
The term of the Amended Agreement will expire on December 31, 2024. DaVita will have the right, in its sole discretion upon written notice to the Company given no later than September 30, 2024, to further extend the term through December 31, 2025. In the event of such an extension, product pricing will be increased for the extended term.
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"). Product pricing was increased for the Extension Term.
CENTRISOL and RENASOL bicarbonate concentrates are packaged as liquid in one-gallon jugs (sold in cases of four) or as dry powder in bulk and individual treatment sizes. Dry Acid Concentrate Mixer Our Dry Acid Concentrate Mixer is designed for our CitraPure and Dri-Sate Dry Acid products and enables the clinic to mix acid concentrate on-site.
Dry Acid Concentrate Mixer Rockwell Medical's Dry Acid Concentrate Mixer is designed and 510(k) approved exclusively for Rockwell Medical's CitraPure and Dri-Sate dry acid products and enables the clinic to mix acid concentrate on-site.
On September 18, 2023, we entered into the Amended Agreement with DaVita under which the Company supplies DaVita with certain dialysis concentrates. See "Material Agreements" below for more information on the Amended Agreement. No other customers accounted for more than 10% of our sales in any of the last three years.
MATERIAL AGREEMENTS Products Purchase Agreement with DaVita On September 18, 2023, Rockwell and DaVita entered into the Amended Agreement, which amended and restated the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates.
DaVita will have the right, in its sole discretion upon written notice to the Company given no later than September 30, 2024, to further extend the term through December 31, 2025. In the event of such an extension, product pricing will be increased for the extended term.
Prior to the expiration, the Company received written notice from DaVita, notifying the Company that DaVita intended to extend the term of the Amended Agreement through December 31, 2025 (the "Extension Term"). Product pricing was increased for the Extension Term.
Removed
The Company is the largest supplier of liquid bicarbonate concentrates and the second largest supplier of acid and dry bicarbonate concentrates for dialysis patients in the United States.
Added
Since the CMA's expiration, the Company only manufactures Rockwell Medical hemodialysis concentrates through its own facilities. Prior to the expiration of the CMA, the Company transitioned customer relationships acquired through the Purchase Agreement (as defined below) over to Rockwell Medical's hemodialysis concentrates products.
Removed
SIGNIFICANT 2023 HIGHLIGHTS Rockwell Medical's key developments from 2023 include: • In February 2023, we signed a three-year, multi-million-dollar supply agreement with the largest non-profit dialysis provider in the United States. 4 Table of Contents • In February 2023, we signed a three-year, multi-million-dollar product purchase agreement with Concerto Renal Services. • In February 2023, we were named a 'Great Place to Work'. • In May 2023, we expanded our geographic footprint to sell our hemodialysis concentrates products into the United Arab Emirates. • In June 2023, we were added to the Russell Microcap ® Index. • In June 2023, we entered into a three-year co-promotion services agreement with B.
Added
Under the terms of the Amendment, Rockwell Medical reduced the interest rate on, and extended the loan maturity date for, the term loans from March 2025 to January 2029. The Amendment provided an option for the Company to make interest-only payments for 30 months, or up to 36 months if certain conditions were met.
Removed
Braun Medical Inc. • In July 2023, we acquired the hemodialysis concentrates business from Evoqua Water Technologies. • In September 2023, we entered into an amended and restated products purchase agreement with DaVita, Inc.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe 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. 17 Table of Contents • 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. • 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. • Our business operations may subject us to numerous commercial disputes, claims, lawsuits and/or investigations. • Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises, cybercrime, 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.
Biggest changeIf 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. • Our business operations may subject us to numerous commercial disputes, claims, lawsuits and/or investigations. • Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises, cybercrime, 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 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).
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).
Since inception, we have not paid any cash dividend on our common stock and do not anticipate paying such dividends in the foreseeable future.
We do not anticipate paying dividends in the foreseeable future. Since inception, we have not paid any cash dividend on our common stock and do not anticipate paying such dividends in the foreseeable future.
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. 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.
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.
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. If we are unable to do so, we could be in breach of our contracts.
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.
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 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 political and economic stability.
These provisions, among other things: • establish a staggered Board divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; • authorize our Board to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to our existing common stock; • disallow our stockholders to fill vacancies on our board; 29 Table of Contents • establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted upon by stockholders at our annual stockholder meetings; • permit our Board to establish the number of directors between three and fifteen; • provide that stockholders can remove directors only for cause and only upon the approval of not less than a majority of all outstanding shares of our voting stock; • require the approval of not less than a majority of all outstanding shares of our voting stock to amend our bylaws and specific provisions of our certificate of incorporation; and • limit the jurisdictions in which certain stockholder litigation may be brought.
These provisions, among other things: • establish a staggered Board divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; • authorize our Board to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to our existing common stock; • disallow our stockholders to fill vacancies on our board; • establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted upon by stockholders at our annual stockholder meetings; • permit our Board to establish the number of directors between three and fifteen; • provide that stockholders can remove directors only for cause and only upon the approval of not less than a majority of all outstanding shares of our voting stock; • require the approval of not less than a majority of all outstanding shares of our voting stock to amend our bylaws and specific provisions of our certificate of incorporation; and • limit the jurisdictions in which certain stockholder litigation may be brought.
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.
The market price of our common stock has fluctuated and is likely to be subject to further wide fluctuations in response to numerous factors, many of which are beyond our control, such as those in this “Risk Factors” section and others including: • the reporting of sales, operating results and cash resources; • announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts, commercial relationships or capital commitments; • the entry into, or termination of, key agreements, including key commercial partner agreements; • changes in the structure of healthcare payment systems; • the loss of key employees; • changes in estimates or recommendations by securities analysts, if any, who cover our common stock; • issues in manufacturing our products; 27 Table of Contents • the initiation of, material developments in, or conclusion of litigation to enforce or defend any of our intellectual property rights or defend against the intellectual property rights of others; and • the introduction of technological innovations or new therapies that compete with our products.
The market price of our common stock has fluctuated and is likely to be subject to further wide fluctuations in response to numerous factors, many of which are beyond our control, such as those in this “Risk Factors” section and others including: • the reporting of sales, operating results and cash resources; • announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts, commercial relationships or capital commitments; • 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; • the loss of key employees; • changes in estimates or recommendations by securities analysts, if any, who cover our common stock; • issues in manufacturing our products; • the initiation of, material developments in, or conclusion of litigation to enforce or defend any of our intellectual property rights or defend against the intellectual property rights of others; and • the introduction of technological innovations or new therapies that compete with our products.
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 25 Table of Contents criminal prosecution.
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 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.
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 Amended Agreement.
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.
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, and functional personnel is critical to our success.
While we have been able to minimize the impact of these disruptions to date, there can be no assurance that will continue. 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.
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.
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 26 Table of Contents on our business.
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.
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.
For example, on November 10, 2022, we entered into the Second Amendment to Loan Agreement under which we: (i) prepaid an aggregate principal amount 18 Table of Contents 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.
We anticipate that dialysis providers will continue to seek ways to reduce their costs 22 Table of Contents 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.
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.
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. 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.
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 any such event, our business, results of operations, financial position and cash flows could be materially adversely affected. 24 Table of Contents Our future success depends on our ability to retain executives and key employees and to attract, retain and motivate qualified personnel in the future.
In any such event, our business, results of operations, financial position and cash flows could be materially adversely affected. Our future success depends on our ability to retain executives and key employees and to attract, retain and motivate qualified personnel in the future.
This may result in increased purchasing leverage for providers across all dialysis product categories and increased pricing pressure on all suppliers to the industry. Our medical device products are life sustaining and any failure to supply them to our customers and resulting scrutiny related to such circumstances could negatively impact our reputation and stock price.
This may result in increased purchasing leverage for providers across all dialysis product categories and increased pricing pressure on all suppliers to the industry. 22 Table of Contents Our medical device products are life sustaining and any failure to supply them to our customers and resulting scrutiny related to such circumstances could negatively impact our reputation and stock price.
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.
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.
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.
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.
Even if we are able to enter into business development arrangements, they could have a negative impact on our business and our profitability. 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.
Many dialysis providers receive most of their funding from the 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.
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 or the executive branch may have a negative impact on Medicare and Medicaid funding and on reimbursement protocols.
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.
In addition, our reputation could be damaged by such sanctions or product liability litigation and that could harm our business 25 Table of Contents 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.
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.
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.
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.
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.
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.
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.
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.
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 good manufacturing practices ("cGMP") and applicable state laws. As 24 Table of Contents such, we and our distribution partners are subject to continual review and periodic inspections to assess compliance with cGMP and state laws.
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 increase our prices to keep up with inflation; • whether we experience significant input costs for, or disruptions to, the manufacturing or distribution of our products; • whether we expand into new territories; and • whether we develop and launch new product offerings.
These factors include, but are not limited to: 19 Table of Contents • 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; • whether we experience significant input costs for, or disruptions to, the manufacturing or distribution of our products; • whether we expand into new territories; and • whether we develop and launch new product offerings.
If we fail to remain in compliance with the terms of these license agreements, including due diligence obligations relating to our efforts to develop and commercialize licensed products in certain markets, we could be found to be in breach of these license agreements.
These in-licensed patents, if granted, cover Triferic AVNU and have other claims that could cover Triferic. If we fail to remain in compliance with the terms of these license agreements, including due diligence obligations relating to our efforts to develop and commercialize licensed products in certain markets, we could be found to be in breach of these license agreements.
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.
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.
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. The Company performed corrective actions and resolved the issue. While the finding was not serious, management time and effort was expended for the correction.
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 expended time and effort on the correction.
The loss of any of these customers could materially and adversely affect our business, results of operations, financial position and cash flows. 21 Table of Contents Sales of our medical device products are highly concentrated among a few customers.
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.
If our common stock were delisted by Nasdaq, we could face significant material adverse consequences, including: • a limited availability of market quotations for our common stock; • reduced liquidity with respect to our common stock; • a determination that our shares are “penny stock,” which will require brokers trading in our shares to adhere to more stringent shares, and which may limit demand for our common stock among certain investors; • a limited amount of news and analyst coverage for our company; and • a decreased ability to issue additional securities or obtain additional financing in the future.
While we have been in compliance with the minimum closing bid price requirement since that time, there can be no assurance that we will be able to maintain compliance with the minimum bid price requirement going forward. 27 Table of Contents If our common stock were delisted by Nasdaq, we could face significant material adverse consequences, including: • a limited availability of market quotations for our common stock; • reduced liquidity with respect to our common stock; • a determination that our shares are “penny stock,” which will require brokers trading in our shares to adhere to more stringent shares, and which may limit demand for our common stock among certain investors; • a limited amount of news and analyst coverage for our company; and • a decreased ability to issue additional securities or obtain additional financing in the future.
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.
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. We have acquired rights to certain patents under license agreements, including from an affiliate of Dr.
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. Ajay Gupta, our former Chief Scientific Officer.
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.
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").
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.
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.
In addition, a consolidation or restructuring of our business could lead to significant one-time costs related to exiting operations. Such a consolidation could have a material and adverse effect on our business, financial condition and results of operations.
In addition, a consolidation or restructuring of our business could lead to significant one-time costs related to exiting operations. Such a consolidation could have a material and adverse effect on our business, financial condition and results of operations. If our customers move back to entering into long-term bundled product contracts with suppliers, our business could suffer.
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.
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.
Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
This may make us more vulnerable to takeovers that are completed without the approval of our Board and/or without giving us the ability to prohibit or delay such takeovers as effectively. 29 Table of Contents Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
If our operations require substantial cash resources in the future in excess of our liquid resources on hand and if our cash flows are not sufficient to support financing through unsecured indebtedness, we may not be able to obtain debt financing and our capital financing options may become limited. 19 Table of Contents Regardless of whether we seek to raise additional working capital through the sale of equity securities or the incurrence of indebtedness, if we do not have sufficient funds available to run our concentrates business and pursue business opportunities, our business, results of operations, financial position and cash flows could be materially adversely affected.
Regardless of whether we seek to raise additional working capital through the sale of equity securities or the incurrence of indebtedness, if we do not have sufficient funds available to run our concentrates business and pursue business opportunities, our business, results of operations, financial position and cash flows could be materially adversely affected.
The production of our hemodialysis concentrates products is largely manual and involves considerable unskilled labor. The manual nature of production can introduce the risk of error. In addition, manual processes involving high amounts of labor can result in significant production costs.
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.
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 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.
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.
Similarly, the ongoing military conflict between Russia and 28 Table of Contents 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.
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.
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.
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.
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 potentially subject us to expensive and protracted litigation. Any of these occurrences could significantly harm our results of operations.
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.
RISK FACTOR SUMMARY • 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.
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.
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. 23 Table of Contents 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.
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 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.
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. 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.
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.
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. We have in-licensed rights to certain patents that cover Triferic.
In addition, as of December 31, 2023, there were 361,531 shares issuable upon the exercise of then-outstanding and exercisable stock options, 967,090 shares issuable upon the exercise of then-outstanding stock options that were not yet exercisable, and 3,793,000 shares issuable upon the exercise of then-outstanding and exercisable warrants.
In addition, as of December 31, 2024, there were 695,749 shares issuable upon the exercise of then-outstanding and exercisable stock options, 1,190,498 shares issuable upon the exercise of then-outstanding stock options that were not yet exercisable, and 3,984,484 shares issuable upon the exercise of then-outstanding and exercisable warrants.
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.
The loss of any of these significant customers could materially and adversely affect our business, results of operations, financial position and cash flows. 20 Table of Contents 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.
If we are unsuccessful in one or more of those efforts, we may not be able to achieve our projected growth and profitability.
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 We face competition in the concentrates market and have large competitors with substantial resources.
The inability to use our NOLs to reduce federal taxable income could result in increased future tax liability to us and reduce the cash that would otherwise be available to our business. 28 Table of Contents We do not anticipate paying dividends in the foreseeable future.
We may experience an ownership change in the future as a result of future changes in our stock ownership. The inability to use our NOLs to reduce federal taxable income could result in increased future tax liability to us and reduce the cash that would otherwise be available to our business.
The A&R Loan Agreement also contains negative covenants that, among other things, restrict our ability to: • incur additional indebtedness; • grant liens; • make distributions, including dividends; • enter into a merger or consolidation; • alter the business of the Company; or • sell all or a portion of the Company’s property, business or assets. 18 Table of Contents These terms of the A&R Loan Agreement could prevent us from taking certain actions without the consent of our lenders, which may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders, placing us at a competitive disadvantage compared to our competitors who have less leverage and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting.
These terms of the A&R Loan Agreement could prevent us from taking certain actions without the consent of our lenders, which may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our stockholders, placing us at a competitive disadvantage compared to our competitors who have less leverage and who therefore may be able to take advantage of opportunities that our leverage prevents us from exploiting.
We cannot predict, and no assurances can be given as to, the outcome or timing of any matters relating to actions by activist stockholders or the ultimate impact on our business, results of operations, financial position and cash flows.
We cannot predict, and no assurances can be given as to, the outcome or timing of any matters relating to actions by activist stockholders or the ultimate impact on our business, results of operations, financial position and cash flows. 26 Table of Contents RISKS RELATED TO OUR COMMON STOCK The market price of our common stock has fluctuated in the past, and is likely to continue to be volatile, which could subject us to litigation.
Therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face. RISK FACTOR SUMMARY • We have limited capital resources and will likely need additional funding to operate and expand our business.
Therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face.
These costs have tended to rise from year to year and are likely to continue to rise in the future. 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, labor costs have been steadily rising, and our manufacturing process is labor intensive, which increases our costs to produce our products. These costs have tended to rise from year to year and are likely to continue to rise in the future. In the past year, raw materials costs have increased significantly, due to short supply and excess demand.
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.
In addition, weather-related events may jeopardize our ability to deliver our products as required by our contracts. 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.
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.
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.
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. 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.
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.
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. In addition, labor costs have been steadily rising and our manufacturing process is labor intensive, which increases our costs to produce our products.
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.
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.
That would result in lost revenue for the Company and may negatively impact our financial position and results of operations. 21 Table of Contents Unfavorable weather, economic conditions or supply shortages could materially and adversely affect our business, financial condition or results of operations.
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.
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.
The occurrence of any of these events could cause a significant adverse impact on our business, prospects and share price.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Removed
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.
Added
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.
Removed
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.
Added
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. 17 Table of Contents • We have limited capital resources and will likely need additional funding to operate and expand our business.
Removed
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.
Added
RISKS RELATED TO OUR FINANCIAL POSITION 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.
Removed
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+19 added−3 removed1 unchanged
Biggest changeThe Audit Committee, which is composed solely of independent directors, has been designated by our Board to oversee cybersecurity risks. The Audit Committee and the Board receive updates on cybersecurity and information technology matters and related risk exposures from our Chief Corporate Affairs Officer, as well as our other executive officers.
Biggest changeThe Audit Committee and the Board receive updates on cybersecurity and IT matters and related risk exposures from the Company's Chief Corporate Affairs Officer and other members of Management on cybersecurity risks on at least a semi-annual basis.
To this end, we have implemented processes designed to assess, identify, and manage risks from potential unauthorized occurrences on or through our information technology systems that may result in adverse effects on the confidentiality, integrity, and availability of these systems and the data residing therein.
To this end, we have implemented processes designed to assess, identify, and manage risks from potential unauthorized occurrences on or through our IT systems that may result in adverse effects on the confidentiality, integrity, and availability of these systems and the data residing therein.
In the last fiscal year, we have not identified any risks from known cyberse curity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
In the last fiscal year, the Company has not identified any risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
Our Chief Corporate Affairs Officer, who reports directly to the Chief Executive Officer, and our IT Consultant, who has three decades of experience managing and leading cybersecurity oversight, together with our other executive officers, are responsible for assessing and managing cybersecurity risks.
Our Chief Corporate Affairs Officer, who reports directly to the Chief Executive Officer, and our Director of Technology and Information Systems, who has three decades of experience managing and leading cybersecurity oversight, together with our other executive officers, are responsible for assessing and managing cybersecurity risks.
These processes are managed and monitored by an outside information technology vendor in cooperation with our information technology consultant, under the supervision of our Chief Corporate Affairs Officer, and include mechanisms, controls, technologies, systems, and other processes designed to prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the data and maintain a stable and secure information technology environment.
These processes are managed and monitored by our Director of Technology and Information Systems and supported by our outsourced IT managed services provider, under the supervision of our Chief Corporate Affairs Officer, and include mechanisms, controls, technologies, systems, and other processes designed to prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the data and maintain a stable and secure information technology environment.
The Company’s executive officers each hold undergraduate and graduate degrees in their respective fields and have extensive experiencing managing risks at the Company and at similar companies, including risks arising from cybersecurity threats.
Each member of Management holds undergraduate and graduate degrees in their respective fields and have extensive experience managing risks at the Company and at similar companies, including risks arising from cybersecurity threats.
For more information regarding cybersecurity risks that we face and potential impacts on our business related thereto, see the risk factor titled, “Our business and operations would suffer in the event of a security breach, system failure, invasion, corruption, destruction or interruption of our or our business partners’ critical information technology systems or infrastructure.” The Company's Board of Directors, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks.
For more information regarding cybersecurity risks that we face and potential impacts on our business related thereto, see the risk factor titled, “Our business and operations would suffer in the event of a security breach, system failure, invasion, corruption, destruction or interruption of our or our business partners’ critical information technology systems or infrastructure.”
The secure maintenance of this information and our information technology systems is important to our operations and business strategy.
In the ordinary course of our business, we collect, use, store, and transmit digitally confidential, sensitive, proprietary, and personal information. The secure maintenance of this information and our information technology ("IT") systems is important to our operations and business strategy.
The Company's cybersecurity policies and processes are integrated into the Company's enterprise risk management program and are informed by recognized frameworks established by the National Institute of Standards and Technology, and other applicable industry standards. In the ordinary course of our business, we collect, use, store, and transmit digitally confidential, sensitive, proprietary, and personal information.
The Company's cybersecurity policies, standards, processes, and practices are fully integrated into the Company's ERM program and are informed by recognized frameworks established by the National Institute of Standards and Technology ("NIST"); and other applicable industry standards.
Item 1C. Cybersecurity. We believe we maintain an information technology and security program appropriate for a company our size, taking into account our operations and risks. The Company recognizes the critical importance of maintaining the trust and confidence of our investors, employees, customers and vendors.
Item 1C. Cybersecurity. The Company's management (the "Management") and the Company's board of directors (the "Board") recognize the critical importance of maintaining the trust and confidence of our investors, employees, customers, partners, and vendors.
Removed
For example, we conduct ongoing monitoring of critical systems for any compromised or potentially compromised accounts. We conduct regular trainings on cyber and information security, along with phishing simulations, among other topics. We conduct security audits 30 Table of Contents and ongoing risk assessments, including due diligence on our key technology vendors, and other contractors and suppliers.
Added
The Board is actively involved in the oversight of the Company's risk management program, and cybersecurity represents an important component of the Company's overall approach to enterprise risk management ("ERM").
Removed
In addition, we consult with our outside information technology vendor and our information technology consultant on a regular basis to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment.
Added
In general, the Company seeks to address cybersecurity risks through a comprehensive, cross-functional approach that is focused on preserving the confidentiality, security, and availability of the information that the Company collects and stores by identifying, preventing, mitigating, and remediating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
Removed
The Board also receives updates from the Company's management on cybersecurity risks on at least an annual basis.
Added
For more information regarding cybersecurity risks that we face and potential impacts on our business related thereto, see the risk factor titled, “Our business and operations would suffer in the event of a security breach, system failure, invasion, corruption, destruction or interruption of our or our business partners’ critical information technology systems or infrastructure.” 30 Table of Contents Risk Management and Strategy Rockwell Medical believes that the Company maintains an IT and security program appropriate for a company its size, taking into account its operations and risks.
Added
As one of the critical elements of the Company's overall ERM approach, the Company's cybersecurity program is focused on the following key areas: Governance The Board's oversight of cybersecurity risk management is supported by the Audit Committee of the Board (the "Audit Committee"), which regularly interacts with the Company's Chief Corporate Affairs Officer.
Added
The Board, as a whole and at the Audit Committee level, has oversight for the most significant risks facing the Company and for the Company's processes to identify, prioritize, assess, manage, and mitigate those risks. The Audit Committee, which is composed solely of independent directors, has been designated by the Company's Board to oversee cybersecurity risks.
Added
Collaborative Approach The Company has implemented a comprehensive, cross-functional approach to identifying, preventing, and mitigating cybersecurity threats and incidents, while also implementing controls and processes that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by Management in a timely manner.
Added
Information Security The Company implements organizational, administrative, and technical measures based on commercially reasonable procedures using industry standard information security measures prescribed for use by NIST, the Sarbanes-Oxley Act, and other generally recognized industry standards, in each case, designed to safeguard the confidentiality, integrity, and availability of our infrastructure and data and the resiliency of our operations.
Added
Additionally, we perform information security maturity assessments and penetration testing quarterly for our IT infrastructure, and conduct vulnerability scans across key assets, core infrastructure, and endpoints to identify potential vulnerabilities and potential cybersecurity events. We assess and prioritize the remediation of vulnerabilities and other cybersecurity risks identified through these activities, using a risk-based approach.
Added
Technical Safeguards The Company deploys technical safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.
Added
Incident Response and Recovery Planning The Company has established and maintains a comprehensive cybersecurity incident response plan ("IRP") which establishes a framework designed to enable us to respond to cybersecurity incidents in a consistent, timely, and effective manner.
Added
Our IRP outlines procedures for identifying, reporting, investigating, assessing, and responding to cybersecurity incidents, including incident response team formation, roles and responsibilities by department, and communication and escalation protocols.
Added
Depending on the severity of the cybersecurity incident, the Company's IRP contemplates escalation to Management and the Audit Committee and/or the full Board, as well as periodic briefings on developments related to the incident response. We review and update our IRP annually and have conducted training of key team members regarding the IRP.
Added
Third-Party Risk Management The Company maintains a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users of the Company’s systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems.
Added
Education, Awareness and Training The Company provides regular, mandatory cybersecurity training as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to communicate the Company’s evolving information security policies, standards, processes and practices.
Added
We conduct continuous automated phishing simulation campaigns which can trigger additional training for personnel on how to recognize social engineering attempts (e.g., phishing, smishing, vishing, etc.). We 31 Table of Contents track performance on phishing exercises to help us monitor the awareness of our employees and inform future training priorities.
Added
Risk and Readiness Assessments The Company engages in the periodic assessment and testing of the Company’s policies, standards, processes and practices that are designed to address cybersecurity threats and incidents.
Added
These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning.
Added
The Company regularly engages third parties to perform assessments on our cybersecurity measures, including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness.
Added
The results of such assessments, audits and reviews are reported to the Audit Committee and the Board, and the Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments, audits and reviews. Insurance We maintain information security risk insurance coverage to mitigate potential losses in the event of a business disruption.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease two other manufacturing facilities, a 51,000 square foot facility in Grapevine, Texas under a lease expiring in December 2025, and a 57,000 square foot facility in Greer, South Carolina under a lease expiring in February 2026. In addition, Rockwell occupied 4,100 square feet of office space in Hackensack, New Jersey expiring on October 31, 2024.
Biggest changeAs a result of this modification, the operating lease right of use asset and lease liabilities increased by $1.5 million. We also lease two other manufacturing facilities, a 51,000 square foot facility in Grapevine, Texas under a lease expiring in December 2025 and a 57,000 square foot facility in Greer, South Carolina under a lease expiring in February 2026.
We believe that our existing leased properties are adequate and suitable for the conduct of our business and that our capital resources are sufficient to purchase, lease or construct any additional facilities required to meet our expected long-term growth needs.
We use the office space in Wixom, Michigan as our principal administrative office. We believe that our existing leased properties are adequate and suitable for the conduct of our business and that our capital resources are sufficient to purchase, lease or construct any additional facilities required to meet our expected long-term growth needs.
This lease is currently under a sublease expiring on October 31, 2024. We use each of our facilities to manufacture and warehouse our products. All such facilities and their contents are covered under various insurance policies which management believes provide adequate coverage. We use the office space in Wixom, Michigan as our principal administrative office.
In addition, Rockwell occupied 4,100 square feet of office space in Hackensack, New Jersey. This lease was subleased on December 15, 2021 and expired on October 31, 2024. We use each of our facilities to manufacture and warehouse our products. All such facilities and their contents are covered under various insurance policies which management believes provide adequate coverage.
Item 2. Properties. We lease a 51,000 square foot facility and a 17,500 square foot facility in Wixom, Michigan under a lease expiring in August 2024.
Item 2. Properties. We lease a 51,000 square foot facility and a 17,500 square foot facility in Wixom, Michigan under a lease expiring in August 2027. During the year ended December 31, 2024, the lease for the Wixom facilities was extended by three years to August 2027, which was accounted for as a lease modification.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures. Not applicable. 31 Table of Contents PART II
Biggest changeMine Safety Disclosures. Not applicable. 32 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on The Nasdaq Capital Market under the trading symbol “RMTI”. Holders As of February 29, 2024, there wer e 37 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on The Nasdaq Capital Market under the trading symbol “RMTI”. Holders As of February 28, 2025, there wer e 45 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther Expense Total other expense for the years ended December 31, 2023 and December 31, 2022 was $1.8 million and $1.9 million, respectively, which was primarily related to interest expense incurred on our debt facility of $2.3 million and $1.9 million for the years ended December 31, 2023 and December 31, 2022, respectively.
Biggest changeOther Expense Total other expense for the years ended December 31, 2024 and December 31, 2023 was $1.1 million and $1.8 million, respectively, which was driven by interest expense of $1.3 million and $2.3 million for the years ended December 31, 2024 and December 31, 2023, respectively, related to our debt facility (See Note 17 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information on our debt facility), partially offset by $0.1 million and $0.2 million of interest income, respectively, as well as realized gains on available-for-sale of investments of $0.1 million and $0.3 million, respectively.
We may elect to raise capital in the future through one or more of the following: (i) equity and debt raises through the equity and capital markets, though there can be no assurance that we will be able to secure additional capital or funding on acceptable terms, or if at all; and (ii) strategic transactions, including potential alliances and collaborations focused on markets outside the United States, as well as potential combinations (including by merger or acquisition) or other corporate transactions.
We may elect to raise capital in the future through one or more of the following: (i) equity and/or debt raises through the equity and capital markets, though there can be no assurance that we will be able to secure additional capital or funding on acceptable terms, or if at all; and (ii) strategic transactions, including potential alliances and collaborations focused on markets outside the United States, as well as potential combinations (including by merger or acquisition) or other corporate transactions.
Cash Used in Investing Activities Net cash used in investing activities was $3.0 million during the year ended December 31, 2023 .
Net cash used in investing activities was $3.0 million during the year ended December 31, 2023.
Cash Provided by Financing Activities Net cash provided by financing activities was $11.3 million during the year ended December 31, 2023.
Net cash provided by financing activities was $11.3 million during the year ended December 31, 2023.
Intangible assets subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Definite-lived intangible assets consist of our customer relationships intangible asset recorded in connection with the Evoqua Acquisition, which is being amortized over 20 years.
Intangible assets subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Definite-lived intangible assets consist of our customer relationships intangible asset recorded in connection with the Evoqua Asset Acquisition, which is being amortized over 20 years.
The net cash provided by financing activities was primarily due to the net proceeds from issuance of equity securities of $14.9 million, primarily comprised of gross proceeds from the issuance of common stock of $13.8 million in connection with Armistice's exercise of the Prior Warrant, offset by payments on the Company's debt, short term note payable, and financing leases which aggregated $3.5 million during the year ended December 31, 2023 .
The net cash provided by financing activities was primarily due to the net proceeds from issuance of equity securities of $14.9 million, primarily comprised of gross proceeds from the issuance of common stock of $13.8 million in connection with Armistice's exercise of the Prior Warrant, offset by payments on the Company's debt, short term note payable, and finance leases which aggregated $3.5 million during the year ended December 31, 2023 .
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. Rockwell has developed a core expertise in manufacturing and delivering hemodialysis concentrates, and has built a longstanding reputation for reliability, quality, and excellent customer service.
The Company 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. Rockwell has developed a core expertise in manufacturing and delivering hemodialysis concentrates, and has built a longstanding reputation for reliability, quality, and excellent customer service.
The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.
The core principle of the standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.
Impairment losses are then measured by comparing the fair value of assets to their carrying amounts. For the years ended December 31, 2023 and 2022, there were no impairments of long-lived assets. Goodwill and Intangible Assets Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired.
Impairment losses are then measured by comparing the fair value of assets to their carrying amounts. For the years ended December 31, 2024 and 2023, there were no impairments of long-lived assets. Goodwill and Intangible Assets Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired.
Rockwell provides the hemodialysis community with products controlled by a Quality Management System regulated by the U.S. Food and Drug Administration ("FDA"). Rockwell is ISO 13485 Certified and adheres to current Good Manufacturing Practices ("cGMP") and Association for Advancement of Medical Instrumentation ("AAMI") standards.
Rockwell provides the hemodialysis community with products controlled by a Quality Management System regulated by the U.S. Food and Drug Administration ("FDA"). Rockwell is ISO 13485 Certified and adheres to current Good 33 Table of Contents Manufacturing Practices ("cGMP") and the Association for Advancement of Medical Instrumentation ("AAMI") standards.
Contractual Obligations and Other Commitments We generally expect to satisfy our material cash requirements, including contractual obligations and commitments, with cash on hand and cash provided by operating activities. See Notes 14, 15, 16, and 17 to the consolidated financial statements included elsewhere in this Form 10-K for additional disclosures.
Contractual Obligations and Other Commitments We generally expect to satisfy our material cash requirements, including contractual obligations and commitments, with cash on hand and cash provided by operating activities. See Notes 14, 15, 16, and 17 to the consolidated financial statements included elsewhere in this Form 10-K for further details.
On August 7, 2023, Rockwell was informed by Wanbang, the Company’s commercialization partner in China for Triferic, that the main efficacy results of Wanbang’s clinical trial for Triferic (dialysate) compared with placebo were not obtained and Wanbang will not will not bring the product forward to registration.
On August 7, 2023, Rockwell was informed by Wanbang Biopharmaceuticals Co., Ltd. (“Wanbang”), the Company’s commercialization partner in China for Triferic, that the main efficacy results of Wanbang’s clinical trial for Triferic (dialysate) compared with placebo were not obtained and Wanbang will not bring the product forward to registration.
The net cash used was primarily due to the $12.4 million of cash paid in connection with the Evoqua acquisition, $5.7 million in purchases of our available-for-sale investments and $0.3 million for the purchase of equipment, offset by proceeds from the sale of our available-for-sale investments of $15.3 million .
The net cash used was primarily due to the $12.4 million of cash paid in connection with the Evoqua Asset Acquisition, $5.7 million in purchases 37 Table of Contents of our available-for-sale investments and $0.3 million for the purchase of equipment, offset by proceeds from the sale of our available-for-sale investments of $15.3 million .
Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures. At this time, we are unable to quantify the potential effects of this economic instability on our future operations.
Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures. At this time, the Company is unable to quantify the potential effects of this economic instability on our future operations.
(“Armistice”) exercised its warrant to purchase 9,900,990 shares of common stock with an exercise price of $1.39 per share (the "Prior Warrant") and the Company received gross proceeds of approximately $13.8 million (See Note 12 to the consolidated financial statements included elsewhere in this Form 10-K). 34 Table of Contents On July 10, 2023, the Company completed the Evoqua Acquisition.
(“Armistice”) exercised its warrant to purchase 9,900,990 shares of common stock with an exercise price of $1.39 per share (the "Prior Warrant") and the Company received gross proceeds of approximately $13.8 million. See Note 12 to the consolidated financial statements included elsewhere in this Form 10-K for further details. On July 10, 2023, the Company completed the Evoqua Asset Acquisition.
As a result, the remaining $2.1 million of deferred license revenue was recorded into revenue, and the related portion of long-term inventory of $1.1 million was reserved for. On September 18, 2023, Rockwell and our long-time partner, DaVita, Inc.
As a result, the remaining $2.1 million of deferred license revenue was recorded into revenue, and the related portion of long-term inventory of $1.1 million was reserved. On September 18, 2023, Rockwell and DaVita, Inc.
Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment to Rockwell on or after December 1, 2023. The term of the Amended Agreement will expire on December 31, 2024.
Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023 and a one-time payment of $0.4 million to Rockwell on or after December 1, 2023. The term of the Amended Agreement was scheduled to expire on December 31, 2024.
For all existing distribution and license agreements, the distribution and license agreement is not a distinct performance obligation from the underlying product sales.
For all existing distribution and license agreements, the distribution and license agreement is not a distinct 38 Table of Contents performance obligation from the underlying product sales.
The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to the costs associated with our manufacturing and transportation operations related to our concentrate business.
The actual amount of cash that we will need to execute our business strategy is subject to many factors, including, but not limited to the ability to meet our revenue forecasts, including those from DaVita, as well as the costs associated with our manufacturing and transportation operations related to our concentrate business.
We believe our ability to fund our activities in the long term will be highly dependent upon (i) our ability to execute on the growth strategy of our hemodialysis concentrates business, (ii) our ability to achieve profitability, and (iii) our ability to identify, develop, in-license, or acquire new products in developing our renal care product portfolio.
We believe our ability to fund our activities in the long term will be highly dependent upon (i) our ability to execute on the growth strategy of our hemodialysis concentrates business and maintain sales with existing customers, (ii) our ability to achieve sustained profitability, including successfully reducing expenses to account for the lost DaVita business, and (iii) our ability to identify, develop, in-license, or acquire new products in developing our renal care product portfolio.
("DaVita"), a leading provider of kidney care, entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), which amends and restates the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates.
(“DaVita”) entered into an Amended and Restated Products Purchase Agreement (the "Amended Agreement"), which amended and restated the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates.
Cost of Sales and Gross Profit Cost of sales during the year ended December 31, 2023 was $74.9 million, resulting in gross profit of $8.7 million, compared to cost of sales of $68.7 million and a gross profit of $4.1 million during the year ended December 31, 2022.
Cost of Sales and Gross Profit Cost of sales during the year ended December 31, 2024 was $84.0 million, resulting in gross profit of $17.5 million, compared to cost of sales of $74.9 million and a gross profit of $8.7 million during the year ended December 31, 2023.
Net cash used in investing activities was $2.4 million during the year ended December 31, 2022. The net cash used was primarily due to the purchase of investments available-for-sale of $21.3 million , offset by $19.2 million sale of our available-for-sale investments and $0.3 million for the purchase of equipment.
Cash Used In Investing Activities Net cash used in investing activities was $4.9 million during the year ended December 31, 2024 . The net cash used was due to $5.9 million in purchases of our available-for-sale investments and $1.0 million for the purchase of equipment, offset by proceeds from the sale of our available-for-sale investments of $2.0 million .
For further discussion on recent accounting pronouncements, please see Note 3, “ New Accounting Pronouncements ,” to our consolidated financial statements included in this Annual Report on Form 10‑K for additional information.
See Note 3 to our consolidated financial statements included in this Annual Report on Form 10‑K for additional information.
Global Economic Considerations The global macroeconomic environment is uncertain, and could be negatively affected by, among other things, increased U.S. trade tariffs and trade disputes with other countries, instability in the global capital and credit markets, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Israel-Hamas conflict and other political tensions, and the occurrence of natural disasters and public health crises.
Global Economic Considerations 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.
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 19 for further detail).
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. The Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus.
Certain accounting estimates, including those concerning revenue recognition, allowance for doubtful accounts, inventory reserves, share based compensation, impairments of long‑lived assets, and accounting for income taxes, are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters 36 Table of Contents and their application requires the most difficult and complex judgments and estimates.
Certain accounting estimates, including those concerning revenue recognition, impairments of long‑lived assets, and deferred consideration are considered to be critical in evaluating and understanding our financial results because they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates. These are described below.
Subject to the terms and conditions of the Purchase Agreement, at the Closing, the Company purchased customer relationships, equipment and inventory from Evoqua, which were related to manufacturing and selling of hemodialysis concentrates products, all of which are manufactured under a contract manufacturing agreement with a third-party organization.
Subject to the terms and conditions of the Purchase Agreement, at the closing of the transaction (the “Closing”), the Company purchased customer relationships, equipment and inventory from Evoqua, which were related to the manufacturing agreement ("CMA") with a third-party contract manufacturing organization ("CMO") located in Minnesota.
Results of Operations The following table summarizes our operating results for the periods presented below (dollars in thousands): For the Year Ended December 31, 2023 % of Revenue 2022 % of Revenue % Change Net Sales $ 83,612 $ 72,810 14.8 % Cost of Sales 74,908 89.6 % 68,733 94.4 % 9.0 % Gross Profit 8,704 10.4 % 4,077 5.6 % 113.5% Research and Product Development 1,107 1.3 % 3,119 4.3 % (64.5) % Selling and Marketing 2,125 2.5 % 2,094 2.9 % 1.5 % General and Administrative 12,142 14.5 % 15,644 21.5 % (22.4) % Operating Loss $ (6,670) (8.0) % $ (16,780) (23.0) % (60.3) % Net Sales During the year ended December 31, 2023, our net sales were $83.6 million compared to net sales of $72.8 million during the year ended December 31, 2022 .
Results of Operations The following table summarizes our operating results for the periods presented below (dollars in thousands): For the Year Ended December 31, 2024 % of Revenue 2023 % of Revenue % Change Net Sales $ 101,489 $ 83,612 21.4 % Cost of Sales 84,005 82.8 % 74,908 89.6 % 12.1 % Gross Profit 17,484 17.2 % 8,704 10.4 % 100.9 % Research and Product Development 19 — % 1,107 1.3 % (98.3) % Selling and Marketing 2,749 2.7 % 2,125 2.5 % 29.4 % General and Administrative 14,108 13.9 % 12,142 14.5 % 16.2 % Operating Income (Loss) $ 608 0.6 % $ (6,670) (8.0) % (109.1) % Net Sales During the year ended December 31, 2024, our net sales were $101.5 million compared to net sales of $83.6 million during the year ended December 31, 2023.
In addition, any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita. 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 million or to refinance existing debt, unless DaVita consents.
Specifically, until DaVita holds less than 50% of its original investment in the Company's Convertible Series X Preferred Stock, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5 million or to refinance existing debt, unless DaVita consents.
Due to the 35 Table of Contents rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future. Cash Used in Operating Activities Net cash used in operating activities was $9.4 million for the year ended December 31, 2023.
Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future.
Total consideration was $17.4 million, comprising a cash payment at Closing of $12.4 million (inclusive of transaction costs) and two $2.5 million 32 Table of Contents deferred payments, the first to be paid on the first anniversary and the second to be paid on the second anniversary of the Closing. See Note 4 for further detail.
Total consideration was $17.4 million, comprising a cash payment at Closing of $12.4 million (inclusive of transaction costs) and two $2.5 million deferred payments.
Total consideration was $17.4 million, comprising a cash payment at Closing of $12.4 million (inclusive of transaction costs) and two $2.5 million deferred payments, the first to be paid on the first anniversary and the second to be paid on the second anniversary of the Closing. See Note 4 to the consolidated financial statements for further detail.
Total consideration was $17.4 million, comprising a cash payment at Closing of $12.4 million (inclusive of transaction costs) and two $2.5 million deferred payments.
Net cash used in operating activities was $16.9 million for the year ended December 31, 2022.
Cash Provided By (Used In) Operating Activities Net cash provided by operating activities was $4.2 million for the year ended December 31, 2024 compared to net cash used in operating activities of $9.4 million for the year ended December 31, 2023.
At December 31, 2023, we had an accumulated deficit of approximately $397.2 million and stockholders’ equity of $21.3 million. 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.
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. On July 10, 2023, Armistice Capital Master Fund Ltd.
Research and Product Development Expense Research and product development expenses were $1.1 million for the year ended December 31, 2023 compared with $3.1 million during the year ended December 31, 2022.
Approximately 37% of research and development expenses for the year ended December 31, 2023 were comprised of severance costs. Selling and Marketing Expense Selling and marketing expenses were $2.7 million during the year ended December 31, 2024 compared with $2.1 million during the year ended December 31, 2023.
See Note 17 to the consolidated financial statements for more information on our debt facility. Liquidity and Capital Resources Since inception, we have incurred significant net losses and have funded our operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships.
Liquidity and Capital Resources Since inception, we have incurred significant net losses and have funded our operations primarily through revenue from commercial products, proceeds from the issuance of debt and equity securities and payments from partnerships. On December 31, 2024, we had an accumulated deficit of approximately $397.7 million and stockholders’ equity of $32.6 million.
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.
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. 36 Table of Contents Management evaluated its going concern by reviewing the Company's operational plans, which include executing on the projected financial information, including price increases, acquisition of new customers, projected growth of margins and cost containment activities.
Conversely, when regulatory approval already exists or is probable, revenue is recognized at the point in time that the estimated product sales under the agreement occur. Accounts Receivable Accounts receivable are stated at invoice amounts.
Conversely, when regulatory approval already exists or is probable, revenue is recognized at the point in time that the estimated product sales under the agreement occur. Impairment of Long-lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.
On July 10, 2023, the Company executed and consummated the transactions contemplated by the Evoqua Acquisition.
On July 10, 2023, the Company executed and consummated the transactions contemplated by an Asset Purchase Agreement (the "Purchase Agreement") with Evoqua Water Technologies LLC ("Evoqua") (the “Evoqua Asset Acquisition”).
Hemodialysis is the most common form of end-stage kidney disease treatment and is typically performed at freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or in a patient’s home. This represents a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients.
The Company is a leading supplier of liquid and dry, acid and bicarbonate concentrates for dialysis patients in the United States. Hemodialysis is the most common form of end-stage kidney disease treatment and is typically performed in freestanding outpatient dialysis centers, hospital-based outpatient centers, skilled nursing facilities, or a patient’s home.
General and Administrative Expense General and administrative expenses were $12.1 million during the year ended December 31, 2023 compared with $15.6 million during the year ended December 31, 2022.
The increase of $0.6 million is primarily due to higher employee compensation expenses. 35 Table of Contents General and Administrative Expense General and administrative expenses were $14.1 million during the year ended December 31, 2024 compared with $12.1 million during the year ended December 31, 2023.
Unless otherwise discussed, we believe that the impact of 38 Table of Contents recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.
Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption. For further discussion on recent accounting pronouncements, please see Note 3 to our consolidated financial statements included in this Annual Report on Form 10‑K for additional information.
The decrease of $2.0 million is due to a reduction in wages and project costs resulting from the decision to pause all research related to our FPC for Home Infusion program. Approximately 37% of research and development expenses for the year ended December 31, 2023 were comprised of severance costs.
Research and Product Development Expense Research and product development expenses were $19,000 for the year ended December 31, 2024 compared with $1.1 million during the year ended December 31, 2023. The decrease of $1.1 million is due to the decision to pause all research and development related to Triferic in 2023.
Net cash provided by financing activities was $16.2 million during the year ended December 31, 2022. The net cash provided by financing activities was primarily due to net proceeds from issuance of equity securities of $29.8 million offset by payments on the Company's debt and short term note payable of $13.2 million .
The net cash provided by financing activities was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $10.2 million, partially offset by the cash paid in connection with the Evoqua Asset Acquisition of $1.6 million during the year ended December 31, 2024 .
Upon expiration or termination of the Amended Agreement, and upon request by DaVita, the Company has agreed to provide transition services to DaVita during a transition period. Additionally, during the year ended December 31, 2023, Rockwell entered into several long-term product purchase agreements, which include supply and purchasing commitments from certain parties.
The Fresenius Agreement will remain in effect for three years with the option to renew for two additional one-year periods. Additionally, during the year ended December 31, 2024, Rockwell Medical entered into several other multi-year product purchase agreements, which include supply and purchasing commitments from certain parties.
As of December 31, 2023, the Company is in compliance with all covenants (See Note 17 to the consolidated financial statements included elsewhere in this Form 10-K for more information on our debt facility).
The Company satisfied those conditions and will now make interest-only payments for the full 36 months. See Note 17 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information.
DaVita will have the right, in its sole discretion upon written notice to the Company given no later than September 30, 2024, to further extend the term through December 31, 2025. In the event of such an extension, product pricing will be increased for the extended term.
Prior to the expiration, the Company received written notice from DaVita, notifying the Company that DaVita intended to extend the term of the Amended Agreement through December 31, 2025 (the "Extension Term"). Product pricing was increased for the Extension Term.
Additionally, the Company's plans include raising capital, if needed, by using the $11 million remaining on its ATM facility or other methods or forms of financings, subject to existing limitations.
Additionally, the Company's plans may include raising capital, if needed, by using the $21.1 million remaining under our Sales Agreement, dated April 8, 2022, with Cantor Fitzgerald & Co. acting as sales agent (as amended, the “ATM facility”), which provides for the offer and sale of up to an aggregate of $25.0 million of shares of the Company's common stock through the sales agent, or other methods or forms of financings, subject to existing limitations.
Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Overview Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide. Rockwell is a revenue-generating business and the second largest supplier of liquid and powder acid and bicarbonate concentrates for dialysis patients in the United States.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Removed
Rockwell manufactures hemodialysis concentrates at its facilities in Michigan, South Carolina, and Texas totaling approximately 175,000 square feet, and manufactures its dry acid concentrate mixers at its facility in Iowa. In addition, the Company manufactures the former Evoqua product line in Minnesota under a contract manufacturing agreement with a contract manufacturing organization.
Added
The following discussion contains forward-looking statements that reflect our current plans, forecasts, estimates and beliefs and involve risks and uncertainties. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our actual results, outcomes and the timing of events could differ materially from those discussed in the forward-looking statements.
Removed
(See Note 4 of the accompanying consolidated financial statements for further detail). On February 12, 2024, the Company entered into an amendment to its contract manufacturing agreement to extend the term to December 31, 2024.
Added
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in the section titled “Forward-Looking Statements” and “Risk Factors.” We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this Annual Report.
Removed
The Company plans to transfer the manufacturing of the former Evoqua product line to one of its own manufacturing facilities by the end of 2024, which the Company believes will reduce production costs for these products.
Added
Forward-looking statements are not historical facts, reflect our current views with respect to future events, and apply only as of the date made. We do not intend, and undertake no obligation, to update these forward-looking statements, except as required by law.
Removed
In addition, DaVita is required to provide the Company with nine-month purchasing forecasts and a commitment to purchase at least the forecasted amounts. In the event that DaVita does not meet its forecasts, it is required to pay the Company for the amount forecasted, purchase additional product, or the Company may terminate the Amended Agreement.
Added
Unless the context requires otherwise, references to “we,” “our,” “us,” “the Company,” "Rockwell," “Rockwell Medical,” and other similar terms refer to Rockwell Medical, Inc., together with its consolidated subsidiaries. Overview Rockwell Medical is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide.
Removed
These agreements include the largest non-profit dialysis provider in the United States; Concerto Renal Services, the largest provider of dialysis in skilled nursing facilities in the United States; Sanderling Renal Services, Inc., a full-service provider of in-center, home dialysis and renal telemedicine services focusing on patients in rural and underserved communities across the United States; Centers for Dialysis Care, the largest non-profit, independent outpatient dialysis provider in Northeast Ohio; Houston Methodist, a leading health system and academic medical center; Dialyze Direct, a leading provider of home dialysis services in the skilled nursing facility setting; and Outset Medical (Nasdaq:OM), a medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis with its Tablo ® Hemodialysis System, which is FDA-cleared for use from the hospital to the home.
Added
This represents a large market opportunity for which we believe Rockwell's products are well-positioned to meet the needs of patients. Rockwell manufactures hemodialysis concentrates at its facilities in Michigan, South Carolina, and Texas.
Removed
Net sales of hemodialysis concentrates to dialysis providers and distributors in the 33 Table of Contents United States and abroad were $81.3 million for the year ended December 31, 2023 comp ared to $71.7 million f or the year ended December 31, 2022.
Added
On July 12, 2024, the Company and Evoqua executed an amendment to the Purchase Agreement (the "First Amendment"), which stipulated that the first deferred payment would be partially offset by $0.3 million to reimburse the Company for certain expenses incurred following the close of the Evoqua Asset Acquisition and split the first deferred payment into four quarterly installments to be paid through April 2025.
Removed
Net sales of Triferic (dialysate) were $2.3 million and $1.2 million for the years ended December 31, 2023 and 2022, respectively. The increase in net sales of Triferic (dialysate) was due to Wanbang's decision to not bring the product forward to registration.
Added
The First Amendment also split the second deferred payment into four quarterly installments to be paid from July 2025 through April 2026. See Note 4 to our consolidated financial statments included in this Annual Report on Form 10-K for additional information.
Removed
The increase of $10.8 million in net sales is primarily due to the restructuring of our products purchase agreement with DaVita, the reacquired rights to commercialize and distribute our products, the asset acquisition of Evoqua, onboarding of new customers and increased pricing to other customers.
Added
The CMA with the CMO expired on December 31, 2024 after which the Company will only manufacture Rockwell Medical hemodialysis concentrates through its own facilities. Prior to the expiration of the CMA, the Company transitioned customer relationships acquired through the Purchase Agreement over to Rockwell Medical's hemodialysis concentrates products.
Removed
During 2022, the Company made a strategic decision to discontinue its NDAs for Triferic and Triferic AVNU in the United States.
Added
DaVita subsequently indicated that it will completely transition to another supplier by mid-2025, subject to further discussions between Rockwell and DaVita, which are ongoing. We believe that this will result in the loss of almost half of our sales volume and $34 million in revenue compared to 2024.
Removed
Gross profit increased by $4.6 million during the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to the restructuring of our supply contract with DaVita in 2022, lower distribution costs, onboarding of new customers, increased pricing to other customers and net impact of recording the remaining deferred license revenue associated with Wanbang and the associated inventory reserve as described above.
Added
On January 2, 2024, the Company's Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”) 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.
Removed
Selling and Marketing Expense Selling and marketing expenses were $2.1 million during the year ended December 31, 2023 compared with $2.1 million during the year ended December 31, 2022. We continue to evaluate marketing spend and focus on target opportunities for greater return on investments.
Added
On August 21, 2024, the Company entered into a distribution agreement with Nipro Medical Corporation ("Nipro"), a subsidiary of Nipro Corporation Japan and a leader in the global healthcare and medical device industry, under which Rockwell Medical supplies Nipro with the Company's liquid and dry acid and bicarbonate hemodialysis concentrates, as well as its dry acid concentrates mixer, for which Nipro has the right to distribute the Company's products globally, excluding the United States.
Removed
The $3.5 million decrease was driven primarily by a reduction in wages and incentive compensation of $0.9 million, legal costs of $0.9 million, insurance costs of $0.9 million, and FDA fees relating to approved products of $0.9 million.
Added
The Nipro Agreement will remain in effect for two years with the option to extend the agreement for an additional one-year period. Nipro is the primary distributor of our dialysis concentrates in certain countries in Latin America.
Removed
On July 10, 2023, Armistice Capital Master Fund Ltd.
Added
On December 16, 2024, the Company entered into a product purchase agreement (the "Fresenius Agreement") with Fresenius Medical Care NA (“Fresenius”), the world's leading provider of dialysis products and services, under which the Company supplies Fresenius with the Company's liquid bicarbonate hemodialysis concentrates product, SteriLyte.
Removed
During the year ended December 31, 2023, the Company continued to experience inflationary pressures in its dialysis concentrates business, which has resulted in operating losses associated with this business line.
Added
These agreements were with, but not limited to: HydroCare, a leading provider of state-of-the-art dialysis water systems to healthcare facilities globally; Nephro Group Dialysis Centers, the largest dialysis provider in the Philippines; one of the largest health systems in the Mountain West region of the United States; BioNuclear, a distributor of Rockwell's hemodialysis concentrates products within 34 Table of Contents the Dominican Republic; and Atlantic Medical International, Bermuda's leading supplier of medical products and equipment for the acute and continuing care markets.
Removed
As a result of these inflationary pressures, and in light of the fact that the Company's concentrates business operated at a loss in 2022, the Company sought to renegotiate certain terms of its supply contracts with the Company’s two largest customers in an effort to allow the Company to stabilize its concentrates business.

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