NASDAQ:RMTI Rockwell Medical Q4 2024 Earnings Report $1.17 -0.02 (-1.68%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$1.14 -0.03 (-2.39%) As of 04/25/2025 04:23 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Rockwell Medical EPS ResultsActual EPS-$0.02Consensus EPS $0.02Beat/MissMissed by -$0.04One Year Ago EPSN/ARockwell Medical Revenue ResultsActual Revenue$24.67 millionExpected Revenue$23.65 millionBeat/MissBeat by +$1.01 millionYoY Revenue GrowthN/ARockwell Medical Announcement DetailsQuarterQ4 2024Date3/20/2025TimeBefore Market OpensConference Call DateThursday, March 20, 2025Conference Call Time8:00AM ETUpcoming EarningsRockwell Medical's Q1 2025 earnings is scheduled for Monday, May 12, 2025, with a conference call scheduled at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfilePowered by Rockwell Medical Q4 2024 Earnings Call TranscriptProvided by QuartrMarch 20, 2025 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good morning, and welcome to Rockwell Medical's Fourth Quarter and Full Year twenty twenty four Results Conference Call and Webcast. Please note this event is being recorded. At this time, I would like to turn the conference call over to Heather Hunter, Senior Vice President, Chief Corporate Affairs Officer at Rockwell Medical. Heather, please go ahead. Speaker 100:00:19Good morning, and thank you for joining us for this update on Rockwell Medical. Joining me on today's conference call are Doctor. Mark Strobeck, Rockwell Medical's President and Chief Executive Officer Tim Cole, Rockwell Medical's Chief Commercial Officer and Jesse Neary, Rockwell Medical's Chief Financial Officer. Before we begin, I would like to remind you that this conference call will contain forward looking statements about Rockwell Medical within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward looking in our annual report on Form 10 ks and our subsequent periodic reports filed with the SEC. These statements are subject to risks and uncertainties that could cause actual results to differ. Speaker 100:01:01Please note that these forward looking statements reflect our opinions and expectations only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward looking statements are discussed in greater detail in our periodic reports filed with the SEC. Rockwell Medical's annual report on Form 10 ks for the year ended 12/31/2024, was filed prior to this call and provides a full analysis of the company's business strategy as well as the company's fourth quarter and full year 2024 financial and operational results. The reconciliation of non GAAP measures we discuss on today's call can also be found in today's press release. Speaker 100:01:51Our Form 10 K and other reports filed with the SEC, along with today's press release, our investor presentation and a replay of today's conference call and webcast can be found on Rockwell Medical's website under the Investors section. Now, I will turn the call over to Rockwell Medical's President and CEO, Doctor. Mark Strobeck. Speaker 200:02:10Thank you, Heather. Good morning, and thank you for joining us today for Rockwell Medical's fourth quarter and full year twenty twenty four earnings conference call and webcast. Twenty twenty four was an important year for Rockwell Medical. We successfully accomplished the objectives we set out to achieve two plus years ago to achieve over $100,000,000 in net sales, to improve our gross margin and to achieve profitability for a full year on an adjusted EBITDA basis. This morning, we announced that for the full year of 2024, we generated net sales of $101,500,000 Our gross margin was 17% and we were profitable on an adjusted EBITDA basis for the twelve months ended 12/31/2024 for the first time in Rockwell's history. Speaker 200:02:59To reiterate what I said on our last earnings call, the progress we have made over the past few years coupled with the results we announced this morning are a direct effect of our team's hard work and dedication. We have been purposeful in focusing on growing our revenue generating business, driving sustained profitability, growing our cash position, reducing our debt and placing Rockwell on a firmer, stronger and more stable financial foundation. That solid foundation is critical to our ability to navigate what we expect to be a transition year for Rockwell in 2025. As we noted on our last call, our largest customer has begun transitioning its volume away from Rockwell. Subsequently, this customer indicated that we'll now completely transition to another supplier by June thirty of this year. Speaker 200:03:52This transition away from Rockwell will result in the loss of approximately $34,000,000 in revenue compared to 2024. As a result, we are making the appropriate expense reductions to address this decline. We are still in discussions with this customer about terms for a potential contract extension and future volume commitments to Rockwell. While there can be no assurance that these discussions will yield a successful outcome, we are continuing to work closely with this customer to support its clinics and their patients. One of the areas where we have already reduced expenses is tied to the contract manufacturing agreement that we had in connection with the Evoqua asset acquisition. Speaker 200:04:35As part of that acquisition, we acquired Evoqua's Concentrates business, which included all contracts, intellectual property, five ten clearances and assets primarily associated with and related to Evoqua's Concentrate's business nationwide. This also included a fully automated manufacturing line. Effective 12/31/2024, we terminated our agreement with this third party contract manufacturer in Minnesota, discontinued the five ten for Centrosol and Rinasol, transitioned those customers to Rockwell Medical branded concentrates and are in the process of integrating the Evoqua manufacturing line into our facilities. Terminating this agreement reduces our fixed overhead costs by well over $2,000,000 annually. We believe this transition and consolidation of SKUs was necessary to reduce costs, streamline operations, improve efficiencies and further automate our manufacturing process. Speaker 200:05:36We are already a few months into 2025 and while we expect this year to be a year of transition for Rockwell, we remain focused on a few key objectives. We continue to shift away from less profitable customers and focus on more profitable growth opportunities. We plan to further diversify our customer base. We plan to further diversify our product portfolio and we continue to optimize our business. For 2025, we project that net sales will be between $65,000,000 and $70,000,000 gross margin will be between 1618% and adjusted EBITDA will be between negative $500,000 to a positive $500,000 While our top line revenue will be negatively impacted in the short term, our goal remains to be profitable on an adjusted EBITDA basis for the full year of 2025. Speaker 200:06:32As it pertains to revenue, we expect that net sales in the first half of twenty twenty five will be slightly higher than in the second half given the timing of when our largest customer is expected to complete their transition from Rockwell. In a continued effort to replace the lost top line revenue in 2025, we are working on and in active discussions with new business development opportunities including partnerships, acquisitions and distribution agreements. We always knew that having a significant portion of our revenue with a single customer presented a risk to us and we've been working hard over the past few years to mitigate that risk. Because of all the changes we have made over the last two plus years, the change in our largest customer's supplier, while a setback, doesn't impact the strong foundation that we've built. We have a number of exciting opportunities we are working on that we believe will continue to and product portfolio in 2025 and beyond. Speaker 200:07:31Tim? And product portfolio in 2025 and beyond. Tim? Speaker 300:07:39Thank you, Mark, and good morning, everyone. I'm Tim Cole, Chief Commercial Officer here at Rockwell Medical. Over the past several years, I've led Rockwell's commercial organization and supported our vision to focus our commercial efforts on enhancing our revenue generating hemodialysis concentrates business and driving Rockwell toward profitability. When we reacquired our product distribution rights from Baxter in 2022 and terminated the exclusive distribution agreement with them, we focused on two key areas. One, transitioning all of those customers to Rockwell to ensure that our life sustaining products continue to get to the hospitals, medical centers, dialysis centers and health systems that serve dialysis patients and two, growing our business by adding new customers and expanding into new geographies to access portions of the market that were previously unavailable to us under the Baxter arrangement. Speaker 300:08:34Then in 2023, we acquired the Dialysis Concentrates assets from Evoqua, which added a number of strategic elements to our organization including significant top line revenue and profitability as well as an expanded market presence and customer base. Rockwell became known as the leading supplier of liquid bicarbonate concentrates and the second largest supplier of dialysis concentrates overall in The U. S. That same year we also entered into a three year whole promotion agreement with Vibron, through which Vibron became an independent non exclusive representative to generate new leads for us by promoting our acid concentrates along with their fully integrated portfolio of renal care products. In 2024, we added a convenience pack to our portfolio that has helped us expand our presence in the at home and acute care markets. Speaker 300:09:25Our convenience pack supports a patient centric movement to drive dialysis treatments into the home to reduce the cost and complexity of dialysis, all the while transforming the experience for patients. We developed this innovation primarily in response to increased demand by one of the leading manufacturers of cutting edge dialysis equipment and supplies used in the acute and home setting. This market leader subsequently became a Rockwell customer and they signed a long term product purchase agreement with us in the third quarter of last year. Our convenience pack includes two one gallon premixed containers of either our liquid bicarbonate or liquid acid concentrate. There are a few other notable customer wins from last year. Speaker 300:10:06First, Speaker 200:10:07we entered into Speaker 300:10:08a product purchase agreement with the world's leading provider of dialysis products and services. The agreement will remain in effect for three years with the option to renew for two additional one year periods and is expected to generate upwards of $10,000,000 in net sales for the company in the first year with incremental annual price increases built in. Second, we executed a distribution agreement with nePRO Medical Corporation through which we will supply nePRO with our full range of concentrates and our dry acid concentrates mixer device. NePRO has non exclusive rights to distribute our products globally outside of The U. S. Speaker 300:10:45Third, our international sales continue to grow. We currently sell our products in over 30 countries around the globe. During the fourth quarter of twenty twenty four, we announced that we expanded our distribution agreement with Nephro Group Dialysis Centers, the largest dialysis service provider in The Philippines. Under the terms of the agreement, we became the exclusive supplier of all dry hemodialysis concentrate products to Nephro. As the dialysis market continues to shift towards single use bicarbonate cartridge technology, there remains a growing need for suppliers to provide cartridges that are compatible with a range of dialysis machines. Speaker 300:11:21We believe that single use bicarbonate disposables represent an approximate $100,000,000 market opportunity, which is one of the fastest growing segments within the dialysis Speaker 400:11:31products market. I'm pleased to share with Speaker 300:11:33you that last month we entered into a distribution services agreement with a leading dialysis products manufacturer to distribute a single use bicarbonate cartridge. This arrangement will leverage Rockwell's existing reliable commercial infrastructure and distribution network to bring a high quality bicarbonate cartridge option to our customers at dialysis centers, hospital based outpatient centers and skilled nursing facilities. Under the terms of the agreement, the manufacturer will supply us with premium grade single use bicarbonate cartridges, which are five ten approved by the FDA. Our partner is responsible for maintaining all regulatory approvals required to market and sell these products throughout The U. S. Speaker 300:12:13We believe the addition of this product to our portfolio represents an exciting opportunity for us to diversify our offering and address the rapidly growing market segment. Additionally, this now offers us the ability to be more competitive when bidding for a full range of concentrates business with new customers. Since we announced our new business strategy late in 2022, we have completed two acquisitions, expanded our product portfolio, right sized our pricing, significantly improved our gross margin and achieved record net sales quarter over quarter and year over year. We signed long term contracts with a range of customers including some of the largest dialysis providers, at home dialysis equipment manufacturers, nursing home dialysis providers, acute care facilities, hospital systems, medical device manufacturers and distributors. In 2025, we plan to build on this momentum and grow our business by adding new customers and further diversifying our customer base. Speaker 300:13:14In order to achieve this, we plan to target additional customers that represent an estimated 14,500,000 gallons of potential available business within our distribution footprint. Customers want to work with Rockwell because we are dedicated to providing the highest quality products supported by the best customer service in the industry. This continues to be a key differentiator for us. Rockwell remains 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 U. S. Speaker 300:13:49Along with select international markets. While 2025 will be a year of transition as Mark mentioned earlier, I'm excited about the tremendous progress that we've made and the opportunities that lie ahead for Rockwell. Now, I'll turn the call over to Jesse to review our fourth quarter and full year 2024 financial results in further detail. Jesse? Speaker 500:14:12Thank you, Tim. Good morning, everyone. I will now review our fourth quarter and full year 2024 financial results in greater detail. Net sales for the fourth quarter twenty twenty four were $24,700,000 representing a 12% increase over net sales of $22,100,000 for the same period in 2023. Both periods consisted solely of concentrate product sales. Speaker 500:14:39Net sales for the full year of 2024 were $101,500,000 representing a twenty one percent increase over net sales of $83,600,000 for the same period in 2023. Net product sales for the full year 2024 were $101,400,000 representing a 27% increase over net product sales in 2023. The increase was primarily driven by the addition of new customers through our Evoqua asset acquisition, a special large order of premium priced products by our largest customer, as well as additional sales and standard price increases with our existing customers. Net sales on non product revenue was not material in 2024. '20 '20 '3 net product sales included $3,800,000 of deferred license revenue recognized as a result of terminating the Wanbang and Baxter agreements. Speaker 500:15:38Gross profit for Q4 twenty twenty four was $3,600,000 which represented a 27% increase over gross profit of $2,900,000 for the same period in 2023. Gross profit for the full year 2024 was $17,500,000 which was more than double our gross profit of $8,700,000 in 2023. The increase was due to improved gross margin associated with existing customers, driven by price increases, a large order of premium priced products by our largest customer, all of which partially was offset by gross profit in 2023 associated with the deferred license revenue recognized, in association with our termination of the Wangbang and Baxter agreements. Gross margin for Q4 twenty twenty four was 15%, representing an increase from 13% for Q4 twenty twenty three. Gross margin for the full year 2024 was 17%, representing an improvement over 10% gross margin for the same period in 2023. Speaker 500:16:51Gross margin in Q4 twenty twenty four was impacted by a one time expense of approximately $900,000 associated with the transition from our third party contract manufacturing facility in Minnesota. The agreement ended 12/31/2024, will save Rockwell over $2,000,000 annually in fixed overhead expenses. Net loss for the fourth quarter of twenty twenty four was $800,000 which represents a 50% improvement over a net loss of $1,500,000 for the same period in 2023. Net loss for the full year 2024 was $500,000 which represents a nearly $8,000,000 improvement over a net loss of $8,400,000 in 2023. Adjusted EBITDA for the fourth quarter of twenty twenty four was $1,400,000 representing 156% improvement over $500,000 for the same period in 2023. Speaker 500:17:51Adjusted EBITDA was a positive $5,200,000 for the full year of 2024, representing a $9,000,000 improvement over a negative adjusted EBITDA of $3,900,000 in 2023. As we noted earlier, we remain laser focused on achieving profitability again on an adjusted EBITDA basis for the full year 2025. At 12/31/2024, we had $8,500,000 remaining on our term loan with Innovatus. As a reminder, in January of twenty twenty four, we amended our loan agreement, which included an interest rate reduction and extended the loan maturity date from March 2025 to January 2029. Our payments will be interest only for thirty six months. Speaker 500:18:38Cash, cash equivalents and investments available for sale at 12/31/2024, was $21,600,000 compared with $18,300,000 at the September 2024 and $10,900,000 at the end of twenty twenty three. Strengthening our cash position was a priority in 2024. We have increased our cash balance by more than $10,000,000 since the end of last year by improving our margins, renegotiating our loan agreement and making prig capital raises under our ATM. Seeing a $21,600,000 of cash and investments, we have put ourselves in a position to manage changes in our business, make targeted investments in continued automation and pursue business development opportunities that support our strategic objectives. Now I'll turn the call back over to Mark. Speaker 200:19:31Thank you, Jesse. Operator, please open the phone lines for any questions. Operator00:19:36Thank you. We will now begin the question and answer session. Your first question comes from the line of Brandon Folkes from Rodman and Renshaw. Your line is open. Speaker 500:19:55Hi. Thanks for taking my Speaker 600:19:55questions and congratulations on all the progress. Maybe just starting with sort of the largest customer. Any color in terms of how much revenue that historical largest customer would generate in 2025 in terms of what's in your guidance? In the 10 ks, it seems they generated around $45,000,000 So if we're kind of thinking of $45,000,000 less, $34,000,000 that you mentioned, is that a good way to think about what's in there from that largest customer in 2025? And then maybe I'll carry on this if you don't mind. Speaker 600:20:28Sorry to be long winded here. And I just want to confirm, you noted the customer expects to transition all of its business away. Can you just provide some color on those discussions with the customer on sort of the go forward volumes you mentioned and sort of whether anything going forward is contemplated in your guidance or is it just up to sort of the date you I think it was July you mentioned that those sort of wind down? Speaker 200:20:54Yes. Brandon, thank you for the questions. To answer your first question, yes, that's the right way to think about it. What we've described today is essentially the decline that we'll see in 2025. But as you properly noted through your review of the K that approximately $45,000,000 is the total volume that that largest customer does purchase from us. Speaker 200:21:27So, yes, I think that's the right way to think about it. As far as your second question related to the discussions with the largest customer, as we've said previously, the shift by that largest customer is essentially to diversify its supplier base. It didn't come through any issues that arose from their purchasing from us. They're quite happy with us. They enjoy working with us, feel like we make a high quality product and are able to successfully distribute it to them. Speaker 200:22:04So we're still in discussions with them right now around what the future of that relationship looks like and the possibility of continuing to utilize us as a supplier. None of what we are contemplating in those discussions is incorporated into our guidance. So, anything that we are able to achieve as a result of those negotiations would go above and beyond the guidance that we provided today. Speaker 600:22:34Great. Thanks very much. And one follow-up, if I may. You've obviously done a lot of positive things this year in terms of adding well, sorry, I beg your pardon, this year and last year. But do you view 2025 as a transition year and a return to growth in 2026 with all those positives? Speaker 600:22:51Or is this potentially a multiyear transition here? And then in line with that, you mentioned the expense reductions. How should we think about those dropping to the bottom line versus sort of reinvesting in the business? You talked about sort of the expansion West. Just sort of how much of those savings do you reinvest back into the business? Speaker 600:23:15That's it for me. Thank you. Speaker 200:23:17Yes. No, thank you again. So, let me address the first one and then maybe I'll have Jesse address the second question. So given the fact that we've known about this transition and the timing around this transition, we've been well underway in preparing for that to occur. As we talked about this morning, already conducting expense reductions to MiR essentially the decline in volume that's coming from the shift of this largest partner. Speaker 200:23:49Our description of 2025 as a transition year is in part a recognition of the fact that obviously there will be changes that are going on here as that volume declines and as we continue to reduce our expenses to mirror that. But we do not see that as being a long term or requiring a number of years to complete. It is our goal and objective to get back to growth here within this organization within 2025. And so that is our plan. And as I said, we are very, very active in the marketplace, not only Tim and his team working to sign additional customers to add additional volume, but similarly in the business development marketplace, looking at different businesses, both within dialysis and outside of dialysis, of which we can utilize our commercial organization, our distribution organization, to amplify us and get us back to the road of growth. Speaker 200:24:55I think the important thing that I would say here is the last two years have been incredibly successful for us in demonstrating that when we set out to do something as an organization that we are driven and have been able to achieve what we set out to do. Although the situation with the largest customer is a temporary setback, we still fundamentally believe that we are going to continue to grow this organization and become a leading player in this space. As for the second part, Jesse? Speaker 500:25:34Yes. So, I think there will be like obviously you see from our gross margin guidance, we do expect as revenue comes down that costs will come down commensurate. I think the big activities that will fall to the bottom line is our overhead reductions. So as Mark mentioned on the call, we reduced some fixed overhead costs with our local acquisition. There will be more of those in the future, probably around the same amount of money going forward into 2026. Speaker 600:26:07Great. Thanks very much and I appreciate you taking all my questions. Speaker 200:26:10Thanks Brandon. Operator00:26:12Your next question comes from the line of Ram Silvara from H. C. Wainwright. Your line is open. Speaker 700:26:19Thanks very much for taking my questions. Just two very quick ones. Firstly, can you comment on any factors that led to this large customer pivoting away from Rockwell that might extend to other customers? In other words, are there any potential risk factors applicable to other customers in your customer base beyond this customer? And if possible, enumerate on what strategies you might have in place to prevent any of this from happening? Speaker 700:26:49And then secondly, with respect to the bicarbonate cartridge business, Can you just give us a sense of how you plan to grow that business over the course of 2025 specifically? And what expectations you have for how quickly the uptake of that product might proceed? Thank you. Speaker 600:27:09Great. Thanks, Speaker 200:27:11Ram, for those questions. I'll take the first and maybe I'll have Tim take the second. So, as it relates to our largest customer, in our discussions recently with them, it has become clear that they had made this decision before I arrived here at Rockwell. They've been unclear as to why they've made that decision other than the diversification of their supplier base. We respect that choice. Speaker 200:27:46I think if they had given the choice to do it again today, I don't think they would have made that choice given the progress that we've made at Rockwell. But that's unfortunately not the case. So, we are working, as I said, very closely with them in an effort to continue to supply them our product and extend that arrangement. And we hope to be able to share something around that in the coming months. As far as our other customers, again, we do not have any issues related to manufacturing our products, distributing our products. Speaker 200:28:29We continue to get cited for having a customer care division that provides a white glove service to our customers. And the majority of our customer base is signed up to long term supply arrangements. And we believe we will continue to support them. Again, it's an unfortunate situation, not one that we had expected given how well we had been working with that customer. But, We've said in this call, we are well prepared by the changes that we've made, created a very strong foundational business that allows us now to weather these situations. Speaker 200:29:19Two years ago, had this happened, it would have been game set match. Now, we're able to weather it and get ourselves well positioned to begin to start to grow again. As I said, I feel confident we have a very strong relationship with that customer. And I'm hopeful for us to continue to work with them going forward. On the second piece, maybe I'll just turn it to Tim to talk about the bicarbonate cartridge. Speaker 300:29:51Yes, sure. Ram, this product fills a gap in our portfolio, where customers wanted to use a single use bicarbonate disposable before we weren't able to offer to them, now we are. So our strategy really is to go to our existing customer base and introduce the product, which we believe in 2025 will kind of kick start the program and get us some short term sales. Longer term, there's some growth factor built in to that particular market segment as customers switch over slowly to more machines that are compatible with bicarbonate cartridges such as the one we're going to distribute. So, that's an important piece for the portfolio and again, addressing our customer base with the product. Speaker 300:30:41Our existing customer base is our primary strategy. Speaker 600:30:47Thank you. Speaker 700:30:49Thanks, Tom. Operator00:30:51Your next question comes from the line of Anthony Vendetti from Maxim Group. Your line is open. Speaker 400:30:58Thank you. Good morning. So maybe just touching a little bit more on the guidance. Mark, I just want to make sure I understand this correctly. So even though the customer has indicated that they're going to transition away completely by June thirty of this year, That's I guess what they're saying. Speaker 400:31:26And what you're saying is yes, but we're continuing to have discussions with them about potentially future agreements, but not in your guidance, right? So your guidance of $65,000,000 to $70,000,000 in revenues for 2025 assumes they do transition completely away by 06/30. And if you were to sign additional agreements with them this year, that would be would it be correct to assume that would be upside to the $65,000,000 to $70,000,000 in guidance? And then I have a follow-up. Speaker 200:32:06Yes, good morning, Anthony. Yes, that's exactly right. I think folks know who have followed Rockwell certainly over the last two point five years, Not only were we the first to initiate providing guidance to The Street, but I think as folks know, we've been very conservative in our estimates and what we've provided to The Street, and have been fortunately very successful in being able to meet those objectives. We've taken the same approach here. We've not assumed success in those discussions. Speaker 200:32:42We've provided what we believe to be an achievable conservative set of guidance ranges. But we are going to pursue and have pursued very aggressively an extension to our relationship with our largest customer. And anything that we're able to successfully complete this year will all be upside on that guidance range. Speaker 400:33:07Okay, great. And then just to follow-up just on overall revenue guidance. It seems like you're offsetting some of the potential loss with the Nipro medical distribution agreement as well as you touched on the call growth internationally. Maybe, can talk a little bit also about the West Coast expansion, how that's going and how that could also have a positive impact on sales? And then just lastly on gross margin, is it is the gross margin guidance based on the fact that you're going to have a lower sales figure than you concluded '24 with and that the overall pricing remains the same or is there any change in the competitive pricing landscape? Speaker 400:34:08Thank you. Speaker 300:34:10Sure. Speaker 200:34:12Yes. So let me address the first question. So you're right in the sense that, what you're seeing in part of that guidance is involves a certain amount of commercial activity and really has baked into it some of the arrangements that Tim has talked about and ones that we've also recently completed. Within our current estimated footprint, as Tim notes, there's approximately 14,500,000 gallons of available sort of supply that we are now targeting to secure that business. There is a similarly large number of gallons or millions of gallons, I should say, that are out in the West that are serviced essentially by a single supplier. Speaker 200:35:09We continue to expand our own footprint in the West. I think we have significantly increased the size and number of customers that we now service to the West. We've established now different distribution pilot programs in an effort to to expand our ability to transport our materials out into the West. That's still an area that we see as a growth opportunity. I think we've estimated that close to $100,000,000 that we are also trying to actively explore. Speaker 200:35:49I think given some of the changes that we are transitioning through right now, until we get a larger critical base of customers out there, it probably doesn't make sense to establish a single facility. But I can imagine that if we are able to continue to increase our sales in the West, that it will likely require to have a dedicated facility there to support those customers. I think it's important to note and to your second question, well, maybe I'll just finish one thought on your first question. The other piece here, which you've noted is that we continue to expand our business internationally. And that continues to be a, I think, a very rich opportunity for us. Speaker 200:36:39And we service now 30 countries. I think there is more to be done there. The advantage always for us in our international business is we don't actually have to distribute the product. The customer takes on the distribution piece. However, the price doesn't change. Speaker 200:36:57So the good news for us is that that's an opportunity for additional margin, which has been attractive for us. So we are continuing to look for ways in which to expand further internationally. On the second part of your question, as we've noted in previous calls, our largest customer did not produce much in the way of gross margin for us Speaker 300:37:23as a supplier. Speaker 200:37:26So when we remove that customer essentially from the P and L, what you see is it's obviously a decline in the top line but not much in the way of a significant change to the actual gross margin percentage. That again is a reflection of all the changes that we've made internally to make our products more efficiently. It's also a reflection of the fact that we continue to adjust prices of our products to reflect the value that they bring in the dialysis community. So nothing has changed from that perspective. We still have more we're going to do from both perspectives to continue to keep that number progressing forward. Speaker 200:38:13So that is our intended objective here through 2025 and going beyond. Speaker 600:38:20Okay. So just I Speaker 300:38:21know I had Speaker 400:38:21a lot in there, so and that's great color, Mark, so I appreciate that. But on the gross margin and the overall corporate gross margin, the reason that it's the guidance of 16% to 18% is not because there's any concern or issue with pricing. It's more the 25% revenue guidance is on a lower base than '24 and there's certain fixed costs. So that's why the overall corporate gross margin might be down from what it was at the beginning of twenty four. It doesn't have to do with pricing, it has to do with just the base of the revenue being lower expected to be lower in 2025, is that correct? Speaker 500:39:09Yes, that's right, Anthony. I mean, I will say our gross margin at the beginning of 2024 was about 13%. So we are still improving, but yes, we are spreading those fixed costs over a smaller base now. Speaker 400:39:25Okay. Okay, great. Thanks very much. I'll hop back in the queue. Appreciate it. Speaker 200:39:30Thanks, Anthony. Operator00:39:32And there are no further questions. I will now turn the call back over to Doctor. Strobek. Speaker 200:39:38Thank you all for joining us for an update on Rockwell Medical's achievements in 2024 and our outlook for 2025. While 2025 will be a year of transition, we remain committed to further diversifying our customer base and product portfolio and further optimizing our business. Our goal remains focused on maintaining and achieving profitability on an adjusted EBITDA basis for the full year of 2025, while we continue to identify and pursue business development opportunities that support our strategic objectives. We look forward to providing you with more updates on our next call. Operator00:40:11This concludes today's conference call and webcast. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallRockwell Medical Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Annual report(10-K) Rockwell Medical Earnings HeadlinesRockwell Medical Investment Trust buys shares worth $94,017April 15, 2025 | investing.comRockwell Medical to Release First Quarter 2025 Results on Monday, May 12, 2025April 14, 2025 | gurufocus.com$2 Trillion Disappears Because of Fed's Secretive New Move$2 trillion has disappeared from the US government's books. The reason why is a new, secretive move being carried out by the Fed that has nothing to do with lowering or raising interest rates... but could soon have an enormous impact on your wealth.April 27, 2025 | Stansberry Research (Ad)Rockwell Medical to Release First Quarter 2025 Results on Monday, May 12, 2025 | RMTI Stock NewsApril 14, 2025 | gurufocus.comRockwell Medical to Release First Quarter 2025 Results on Monday, May 12, 2025April 14, 2025 | businesswire.comRockwell Medical stock target cut to $3 at H.C. WainwrightMarch 26, 2025 | investing.comSee More Rockwell Medical Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Rockwell Medical? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Rockwell Medical and other key companies, straight to your email. Email Address About Rockwell MedicalRockwell Medical (NASDAQ:RMTI), together with its subsidiaries, operates as a healthcare company that engages in the development, manufacture, commercialization, and distribution of various hemodialysis products for dialysis providers worldwide. The company offers Triferic Dialysate and Triferic AVNU which are indicated to maintain hemoglobin in adult undergoing hemodialysis. It also manufactures, sells, delivers, and distributes hemodialysis concentrates, such as CitraPure citric acid concentrate, Dri-Sate dry acid concentrate, RenalPure liquid acid concentrate, dry acid concentrate mixer, and RenalPure and SteriLyte powder bicarbonate concentrate; and ancillary products, including testing supplies, 5% acetic acid cleaning solution, 5% and 2% citric acid descaler, filtration salts, and other items used by hemodialysis providers. The company's hemodialysis concentrate products are used to sustain patient's life by removing toxins and balancing electrolytes in a dialysis patient's bloodstream. The company serves to hemodialysis clinics. 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There are 8 speakers on the call. Operator00:00:00Good morning, and welcome to Rockwell Medical's Fourth Quarter and Full Year twenty twenty four Results Conference Call and Webcast. Please note this event is being recorded. At this time, I would like to turn the conference call over to Heather Hunter, Senior Vice President, Chief Corporate Affairs Officer at Rockwell Medical. Heather, please go ahead. Speaker 100:00:19Good morning, and thank you for joining us for this update on Rockwell Medical. Joining me on today's conference call are Doctor. Mark Strobeck, Rockwell Medical's President and Chief Executive Officer Tim Cole, Rockwell Medical's Chief Commercial Officer and Jesse Neary, Rockwell Medical's Chief Financial Officer. Before we begin, I would like to remind you that this conference call will contain forward looking statements about Rockwell Medical within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward looking in our annual report on Form 10 ks and our subsequent periodic reports filed with the SEC. These statements are subject to risks and uncertainties that could cause actual results to differ. Speaker 100:01:01Please note that these forward looking statements reflect our opinions and expectations only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward looking statements are discussed in greater detail in our periodic reports filed with the SEC. Rockwell Medical's annual report on Form 10 ks for the year ended 12/31/2024, was filed prior to this call and provides a full analysis of the company's business strategy as well as the company's fourth quarter and full year 2024 financial and operational results. The reconciliation of non GAAP measures we discuss on today's call can also be found in today's press release. Speaker 100:01:51Our Form 10 K and other reports filed with the SEC, along with today's press release, our investor presentation and a replay of today's conference call and webcast can be found on Rockwell Medical's website under the Investors section. Now, I will turn the call over to Rockwell Medical's President and CEO, Doctor. Mark Strobeck. Speaker 200:02:10Thank you, Heather. Good morning, and thank you for joining us today for Rockwell Medical's fourth quarter and full year twenty twenty four earnings conference call and webcast. Twenty twenty four was an important year for Rockwell Medical. We successfully accomplished the objectives we set out to achieve two plus years ago to achieve over $100,000,000 in net sales, to improve our gross margin and to achieve profitability for a full year on an adjusted EBITDA basis. This morning, we announced that for the full year of 2024, we generated net sales of $101,500,000 Our gross margin was 17% and we were profitable on an adjusted EBITDA basis for the twelve months ended 12/31/2024 for the first time in Rockwell's history. Speaker 200:02:59To reiterate what I said on our last earnings call, the progress we have made over the past few years coupled with the results we announced this morning are a direct effect of our team's hard work and dedication. We have been purposeful in focusing on growing our revenue generating business, driving sustained profitability, growing our cash position, reducing our debt and placing Rockwell on a firmer, stronger and more stable financial foundation. That solid foundation is critical to our ability to navigate what we expect to be a transition year for Rockwell in 2025. As we noted on our last call, our largest customer has begun transitioning its volume away from Rockwell. Subsequently, this customer indicated that we'll now completely transition to another supplier by June thirty of this year. Speaker 200:03:52This transition away from Rockwell will result in the loss of approximately $34,000,000 in revenue compared to 2024. As a result, we are making the appropriate expense reductions to address this decline. We are still in discussions with this customer about terms for a potential contract extension and future volume commitments to Rockwell. While there can be no assurance that these discussions will yield a successful outcome, we are continuing to work closely with this customer to support its clinics and their patients. One of the areas where we have already reduced expenses is tied to the contract manufacturing agreement that we had in connection with the Evoqua asset acquisition. Speaker 200:04:35As part of that acquisition, we acquired Evoqua's Concentrates business, which included all contracts, intellectual property, five ten clearances and assets primarily associated with and related to Evoqua's Concentrate's business nationwide. This also included a fully automated manufacturing line. Effective 12/31/2024, we terminated our agreement with this third party contract manufacturer in Minnesota, discontinued the five ten for Centrosol and Rinasol, transitioned those customers to Rockwell Medical branded concentrates and are in the process of integrating the Evoqua manufacturing line into our facilities. Terminating this agreement reduces our fixed overhead costs by well over $2,000,000 annually. We believe this transition and consolidation of SKUs was necessary to reduce costs, streamline operations, improve efficiencies and further automate our manufacturing process. Speaker 200:05:36We are already a few months into 2025 and while we expect this year to be a year of transition for Rockwell, we remain focused on a few key objectives. We continue to shift away from less profitable customers and focus on more profitable growth opportunities. We plan to further diversify our customer base. We plan to further diversify our product portfolio and we continue to optimize our business. For 2025, we project that net sales will be between $65,000,000 and $70,000,000 gross margin will be between 1618% and adjusted EBITDA will be between negative $500,000 to a positive $500,000 While our top line revenue will be negatively impacted in the short term, our goal remains to be profitable on an adjusted EBITDA basis for the full year of 2025. Speaker 200:06:32As it pertains to revenue, we expect that net sales in the first half of twenty twenty five will be slightly higher than in the second half given the timing of when our largest customer is expected to complete their transition from Rockwell. In a continued effort to replace the lost top line revenue in 2025, we are working on and in active discussions with new business development opportunities including partnerships, acquisitions and distribution agreements. We always knew that having a significant portion of our revenue with a single customer presented a risk to us and we've been working hard over the past few years to mitigate that risk. Because of all the changes we have made over the last two plus years, the change in our largest customer's supplier, while a setback, doesn't impact the strong foundation that we've built. We have a number of exciting opportunities we are working on that we believe will continue to and product portfolio in 2025 and beyond. Speaker 200:07:31Tim? And product portfolio in 2025 and beyond. Tim? Speaker 300:07:39Thank you, Mark, and good morning, everyone. I'm Tim Cole, Chief Commercial Officer here at Rockwell Medical. Over the past several years, I've led Rockwell's commercial organization and supported our vision to focus our commercial efforts on enhancing our revenue generating hemodialysis concentrates business and driving Rockwell toward profitability. When we reacquired our product distribution rights from Baxter in 2022 and terminated the exclusive distribution agreement with them, we focused on two key areas. One, transitioning all of those customers to Rockwell to ensure that our life sustaining products continue to get to the hospitals, medical centers, dialysis centers and health systems that serve dialysis patients and two, growing our business by adding new customers and expanding into new geographies to access portions of the market that were previously unavailable to us under the Baxter arrangement. Speaker 300:08:34Then in 2023, we acquired the Dialysis Concentrates assets from Evoqua, which added a number of strategic elements to our organization including significant top line revenue and profitability as well as an expanded market presence and customer base. Rockwell became known as the leading supplier of liquid bicarbonate concentrates and the second largest supplier of dialysis concentrates overall in The U. S. That same year we also entered into a three year whole promotion agreement with Vibron, through which Vibron became an independent non exclusive representative to generate new leads for us by promoting our acid concentrates along with their fully integrated portfolio of renal care products. In 2024, we added a convenience pack to our portfolio that has helped us expand our presence in the at home and acute care markets. Speaker 300:09:25Our convenience pack supports a patient centric movement to drive dialysis treatments into the home to reduce the cost and complexity of dialysis, all the while transforming the experience for patients. We developed this innovation primarily in response to increased demand by one of the leading manufacturers of cutting edge dialysis equipment and supplies used in the acute and home setting. This market leader subsequently became a Rockwell customer and they signed a long term product purchase agreement with us in the third quarter of last year. Our convenience pack includes two one gallon premixed containers of either our liquid bicarbonate or liquid acid concentrate. There are a few other notable customer wins from last year. Speaker 300:10:06First, Speaker 200:10:07we entered into Speaker 300:10:08a product purchase agreement with the world's leading provider of dialysis products and services. The agreement will remain in effect for three years with the option to renew for two additional one year periods and is expected to generate upwards of $10,000,000 in net sales for the company in the first year with incremental annual price increases built in. Second, we executed a distribution agreement with nePRO Medical Corporation through which we will supply nePRO with our full range of concentrates and our dry acid concentrates mixer device. NePRO has non exclusive rights to distribute our products globally outside of The U. S. Speaker 300:10:45Third, our international sales continue to grow. We currently sell our products in over 30 countries around the globe. During the fourth quarter of twenty twenty four, we announced that we expanded our distribution agreement with Nephro Group Dialysis Centers, the largest dialysis service provider in The Philippines. Under the terms of the agreement, we became the exclusive supplier of all dry hemodialysis concentrate products to Nephro. As the dialysis market continues to shift towards single use bicarbonate cartridge technology, there remains a growing need for suppliers to provide cartridges that are compatible with a range of dialysis machines. Speaker 300:11:21We believe that single use bicarbonate disposables represent an approximate $100,000,000 market opportunity, which is one of the fastest growing segments within the dialysis Speaker 400:11:31products market. I'm pleased to share with Speaker 300:11:33you that last month we entered into a distribution services agreement with a leading dialysis products manufacturer to distribute a single use bicarbonate cartridge. This arrangement will leverage Rockwell's existing reliable commercial infrastructure and distribution network to bring a high quality bicarbonate cartridge option to our customers at dialysis centers, hospital based outpatient centers and skilled nursing facilities. Under the terms of the agreement, the manufacturer will supply us with premium grade single use bicarbonate cartridges, which are five ten approved by the FDA. Our partner is responsible for maintaining all regulatory approvals required to market and sell these products throughout The U. S. Speaker 300:12:13We believe the addition of this product to our portfolio represents an exciting opportunity for us to diversify our offering and address the rapidly growing market segment. Additionally, this now offers us the ability to be more competitive when bidding for a full range of concentrates business with new customers. Since we announced our new business strategy late in 2022, we have completed two acquisitions, expanded our product portfolio, right sized our pricing, significantly improved our gross margin and achieved record net sales quarter over quarter and year over year. We signed long term contracts with a range of customers including some of the largest dialysis providers, at home dialysis equipment manufacturers, nursing home dialysis providers, acute care facilities, hospital systems, medical device manufacturers and distributors. In 2025, we plan to build on this momentum and grow our business by adding new customers and further diversifying our customer base. Speaker 300:13:14In order to achieve this, we plan to target additional customers that represent an estimated 14,500,000 gallons of potential available business within our distribution footprint. Customers want to work with Rockwell because we are dedicated to providing the highest quality products supported by the best customer service in the industry. This continues to be a key differentiator for us. Rockwell remains 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 U. S. Speaker 300:13:49Along with select international markets. While 2025 will be a year of transition as Mark mentioned earlier, I'm excited about the tremendous progress that we've made and the opportunities that lie ahead for Rockwell. Now, I'll turn the call over to Jesse to review our fourth quarter and full year 2024 financial results in further detail. Jesse? Speaker 500:14:12Thank you, Tim. Good morning, everyone. I will now review our fourth quarter and full year 2024 financial results in greater detail. Net sales for the fourth quarter twenty twenty four were $24,700,000 representing a 12% increase over net sales of $22,100,000 for the same period in 2023. Both periods consisted solely of concentrate product sales. Speaker 500:14:39Net sales for the full year of 2024 were $101,500,000 representing a twenty one percent increase over net sales of $83,600,000 for the same period in 2023. Net product sales for the full year 2024 were $101,400,000 representing a 27% increase over net product sales in 2023. The increase was primarily driven by the addition of new customers through our Evoqua asset acquisition, a special large order of premium priced products by our largest customer, as well as additional sales and standard price increases with our existing customers. Net sales on non product revenue was not material in 2024. '20 '20 '3 net product sales included $3,800,000 of deferred license revenue recognized as a result of terminating the Wanbang and Baxter agreements. Speaker 500:15:38Gross profit for Q4 twenty twenty four was $3,600,000 which represented a 27% increase over gross profit of $2,900,000 for the same period in 2023. Gross profit for the full year 2024 was $17,500,000 which was more than double our gross profit of $8,700,000 in 2023. The increase was due to improved gross margin associated with existing customers, driven by price increases, a large order of premium priced products by our largest customer, all of which partially was offset by gross profit in 2023 associated with the deferred license revenue recognized, in association with our termination of the Wangbang and Baxter agreements. Gross margin for Q4 twenty twenty four was 15%, representing an increase from 13% for Q4 twenty twenty three. Gross margin for the full year 2024 was 17%, representing an improvement over 10% gross margin for the same period in 2023. Speaker 500:16:51Gross margin in Q4 twenty twenty four was impacted by a one time expense of approximately $900,000 associated with the transition from our third party contract manufacturing facility in Minnesota. The agreement ended 12/31/2024, will save Rockwell over $2,000,000 annually in fixed overhead expenses. Net loss for the fourth quarter of twenty twenty four was $800,000 which represents a 50% improvement over a net loss of $1,500,000 for the same period in 2023. Net loss for the full year 2024 was $500,000 which represents a nearly $8,000,000 improvement over a net loss of $8,400,000 in 2023. Adjusted EBITDA for the fourth quarter of twenty twenty four was $1,400,000 representing 156% improvement over $500,000 for the same period in 2023. Speaker 500:17:51Adjusted EBITDA was a positive $5,200,000 for the full year of 2024, representing a $9,000,000 improvement over a negative adjusted EBITDA of $3,900,000 in 2023. As we noted earlier, we remain laser focused on achieving profitability again on an adjusted EBITDA basis for the full year 2025. At 12/31/2024, we had $8,500,000 remaining on our term loan with Innovatus. As a reminder, in January of twenty twenty four, we amended our loan agreement, which included an interest rate reduction and extended the loan maturity date from March 2025 to January 2029. Our payments will be interest only for thirty six months. Speaker 500:18:38Cash, cash equivalents and investments available for sale at 12/31/2024, was $21,600,000 compared with $18,300,000 at the September 2024 and $10,900,000 at the end of twenty twenty three. Strengthening our cash position was a priority in 2024. We have increased our cash balance by more than $10,000,000 since the end of last year by improving our margins, renegotiating our loan agreement and making prig capital raises under our ATM. Seeing a $21,600,000 of cash and investments, we have put ourselves in a position to manage changes in our business, make targeted investments in continued automation and pursue business development opportunities that support our strategic objectives. Now I'll turn the call back over to Mark. Speaker 200:19:31Thank you, Jesse. Operator, please open the phone lines for any questions. Operator00:19:36Thank you. We will now begin the question and answer session. Your first question comes from the line of Brandon Folkes from Rodman and Renshaw. Your line is open. Speaker 500:19:55Hi. Thanks for taking my Speaker 600:19:55questions and congratulations on all the progress. Maybe just starting with sort of the largest customer. Any color in terms of how much revenue that historical largest customer would generate in 2025 in terms of what's in your guidance? In the 10 ks, it seems they generated around $45,000,000 So if we're kind of thinking of $45,000,000 less, $34,000,000 that you mentioned, is that a good way to think about what's in there from that largest customer in 2025? And then maybe I'll carry on this if you don't mind. Speaker 600:20:28Sorry to be long winded here. And I just want to confirm, you noted the customer expects to transition all of its business away. Can you just provide some color on those discussions with the customer on sort of the go forward volumes you mentioned and sort of whether anything going forward is contemplated in your guidance or is it just up to sort of the date you I think it was July you mentioned that those sort of wind down? Speaker 200:20:54Yes. Brandon, thank you for the questions. To answer your first question, yes, that's the right way to think about it. What we've described today is essentially the decline that we'll see in 2025. But as you properly noted through your review of the K that approximately $45,000,000 is the total volume that that largest customer does purchase from us. Speaker 200:21:27So, yes, I think that's the right way to think about it. As far as your second question related to the discussions with the largest customer, as we've said previously, the shift by that largest customer is essentially to diversify its supplier base. It didn't come through any issues that arose from their purchasing from us. They're quite happy with us. They enjoy working with us, feel like we make a high quality product and are able to successfully distribute it to them. Speaker 200:22:04So we're still in discussions with them right now around what the future of that relationship looks like and the possibility of continuing to utilize us as a supplier. None of what we are contemplating in those discussions is incorporated into our guidance. So, anything that we are able to achieve as a result of those negotiations would go above and beyond the guidance that we provided today. Speaker 600:22:34Great. Thanks very much. And one follow-up, if I may. You've obviously done a lot of positive things this year in terms of adding well, sorry, I beg your pardon, this year and last year. But do you view 2025 as a transition year and a return to growth in 2026 with all those positives? Speaker 600:22:51Or is this potentially a multiyear transition here? And then in line with that, you mentioned the expense reductions. How should we think about those dropping to the bottom line versus sort of reinvesting in the business? You talked about sort of the expansion West. Just sort of how much of those savings do you reinvest back into the business? Speaker 600:23:15That's it for me. Thank you. Speaker 200:23:17Yes. No, thank you again. So, let me address the first one and then maybe I'll have Jesse address the second question. So given the fact that we've known about this transition and the timing around this transition, we've been well underway in preparing for that to occur. As we talked about this morning, already conducting expense reductions to MiR essentially the decline in volume that's coming from the shift of this largest partner. Speaker 200:23:49Our description of 2025 as a transition year is in part a recognition of the fact that obviously there will be changes that are going on here as that volume declines and as we continue to reduce our expenses to mirror that. But we do not see that as being a long term or requiring a number of years to complete. It is our goal and objective to get back to growth here within this organization within 2025. And so that is our plan. And as I said, we are very, very active in the marketplace, not only Tim and his team working to sign additional customers to add additional volume, but similarly in the business development marketplace, looking at different businesses, both within dialysis and outside of dialysis, of which we can utilize our commercial organization, our distribution organization, to amplify us and get us back to the road of growth. Speaker 200:24:55I think the important thing that I would say here is the last two years have been incredibly successful for us in demonstrating that when we set out to do something as an organization that we are driven and have been able to achieve what we set out to do. Although the situation with the largest customer is a temporary setback, we still fundamentally believe that we are going to continue to grow this organization and become a leading player in this space. As for the second part, Jesse? Speaker 500:25:34Yes. So, I think there will be like obviously you see from our gross margin guidance, we do expect as revenue comes down that costs will come down commensurate. I think the big activities that will fall to the bottom line is our overhead reductions. So as Mark mentioned on the call, we reduced some fixed overhead costs with our local acquisition. There will be more of those in the future, probably around the same amount of money going forward into 2026. Speaker 600:26:07Great. Thanks very much and I appreciate you taking all my questions. Speaker 200:26:10Thanks Brandon. Operator00:26:12Your next question comes from the line of Ram Silvara from H. C. Wainwright. Your line is open. Speaker 700:26:19Thanks very much for taking my questions. Just two very quick ones. Firstly, can you comment on any factors that led to this large customer pivoting away from Rockwell that might extend to other customers? In other words, are there any potential risk factors applicable to other customers in your customer base beyond this customer? And if possible, enumerate on what strategies you might have in place to prevent any of this from happening? Speaker 700:26:49And then secondly, with respect to the bicarbonate cartridge business, Can you just give us a sense of how you plan to grow that business over the course of 2025 specifically? And what expectations you have for how quickly the uptake of that product might proceed? Thank you. Speaker 600:27:09Great. Thanks, Speaker 200:27:11Ram, for those questions. I'll take the first and maybe I'll have Tim take the second. So, as it relates to our largest customer, in our discussions recently with them, it has become clear that they had made this decision before I arrived here at Rockwell. They've been unclear as to why they've made that decision other than the diversification of their supplier base. We respect that choice. Speaker 200:27:46I think if they had given the choice to do it again today, I don't think they would have made that choice given the progress that we've made at Rockwell. But that's unfortunately not the case. So, we are working, as I said, very closely with them in an effort to continue to supply them our product and extend that arrangement. And we hope to be able to share something around that in the coming months. As far as our other customers, again, we do not have any issues related to manufacturing our products, distributing our products. Speaker 200:28:29We continue to get cited for having a customer care division that provides a white glove service to our customers. And the majority of our customer base is signed up to long term supply arrangements. And we believe we will continue to support them. Again, it's an unfortunate situation, not one that we had expected given how well we had been working with that customer. But, We've said in this call, we are well prepared by the changes that we've made, created a very strong foundational business that allows us now to weather these situations. Speaker 200:29:19Two years ago, had this happened, it would have been game set match. Now, we're able to weather it and get ourselves well positioned to begin to start to grow again. As I said, I feel confident we have a very strong relationship with that customer. And I'm hopeful for us to continue to work with them going forward. On the second piece, maybe I'll just turn it to Tim to talk about the bicarbonate cartridge. Speaker 300:29:51Yes, sure. Ram, this product fills a gap in our portfolio, where customers wanted to use a single use bicarbonate disposable before we weren't able to offer to them, now we are. So our strategy really is to go to our existing customer base and introduce the product, which we believe in 2025 will kind of kick start the program and get us some short term sales. Longer term, there's some growth factor built in to that particular market segment as customers switch over slowly to more machines that are compatible with bicarbonate cartridges such as the one we're going to distribute. So, that's an important piece for the portfolio and again, addressing our customer base with the product. Speaker 300:30:41Our existing customer base is our primary strategy. Speaker 600:30:47Thank you. Speaker 700:30:49Thanks, Tom. Operator00:30:51Your next question comes from the line of Anthony Vendetti from Maxim Group. Your line is open. Speaker 400:30:58Thank you. Good morning. So maybe just touching a little bit more on the guidance. Mark, I just want to make sure I understand this correctly. So even though the customer has indicated that they're going to transition away completely by June thirty of this year, That's I guess what they're saying. Speaker 400:31:26And what you're saying is yes, but we're continuing to have discussions with them about potentially future agreements, but not in your guidance, right? So your guidance of $65,000,000 to $70,000,000 in revenues for 2025 assumes they do transition completely away by 06/30. And if you were to sign additional agreements with them this year, that would be would it be correct to assume that would be upside to the $65,000,000 to $70,000,000 in guidance? And then I have a follow-up. Speaker 200:32:06Yes, good morning, Anthony. Yes, that's exactly right. I think folks know who have followed Rockwell certainly over the last two point five years, Not only were we the first to initiate providing guidance to The Street, but I think as folks know, we've been very conservative in our estimates and what we've provided to The Street, and have been fortunately very successful in being able to meet those objectives. We've taken the same approach here. We've not assumed success in those discussions. Speaker 200:32:42We've provided what we believe to be an achievable conservative set of guidance ranges. But we are going to pursue and have pursued very aggressively an extension to our relationship with our largest customer. And anything that we're able to successfully complete this year will all be upside on that guidance range. Speaker 400:33:07Okay, great. And then just to follow-up just on overall revenue guidance. It seems like you're offsetting some of the potential loss with the Nipro medical distribution agreement as well as you touched on the call growth internationally. Maybe, can talk a little bit also about the West Coast expansion, how that's going and how that could also have a positive impact on sales? And then just lastly on gross margin, is it is the gross margin guidance based on the fact that you're going to have a lower sales figure than you concluded '24 with and that the overall pricing remains the same or is there any change in the competitive pricing landscape? Speaker 400:34:08Thank you. Speaker 300:34:10Sure. Speaker 200:34:12Yes. So let me address the first question. So you're right in the sense that, what you're seeing in part of that guidance is involves a certain amount of commercial activity and really has baked into it some of the arrangements that Tim has talked about and ones that we've also recently completed. Within our current estimated footprint, as Tim notes, there's approximately 14,500,000 gallons of available sort of supply that we are now targeting to secure that business. There is a similarly large number of gallons or millions of gallons, I should say, that are out in the West that are serviced essentially by a single supplier. Speaker 200:35:09We continue to expand our own footprint in the West. I think we have significantly increased the size and number of customers that we now service to the West. We've established now different distribution pilot programs in an effort to to expand our ability to transport our materials out into the West. That's still an area that we see as a growth opportunity. I think we've estimated that close to $100,000,000 that we are also trying to actively explore. Speaker 200:35:49I think given some of the changes that we are transitioning through right now, until we get a larger critical base of customers out there, it probably doesn't make sense to establish a single facility. But I can imagine that if we are able to continue to increase our sales in the West, that it will likely require to have a dedicated facility there to support those customers. I think it's important to note and to your second question, well, maybe I'll just finish one thought on your first question. The other piece here, which you've noted is that we continue to expand our business internationally. And that continues to be a, I think, a very rich opportunity for us. Speaker 200:36:39And we service now 30 countries. I think there is more to be done there. The advantage always for us in our international business is we don't actually have to distribute the product. The customer takes on the distribution piece. However, the price doesn't change. Speaker 200:36:57So the good news for us is that that's an opportunity for additional margin, which has been attractive for us. So we are continuing to look for ways in which to expand further internationally. On the second part of your question, as we've noted in previous calls, our largest customer did not produce much in the way of gross margin for us Speaker 300:37:23as a supplier. Speaker 200:37:26So when we remove that customer essentially from the P and L, what you see is it's obviously a decline in the top line but not much in the way of a significant change to the actual gross margin percentage. That again is a reflection of all the changes that we've made internally to make our products more efficiently. It's also a reflection of the fact that we continue to adjust prices of our products to reflect the value that they bring in the dialysis community. So nothing has changed from that perspective. We still have more we're going to do from both perspectives to continue to keep that number progressing forward. Speaker 200:38:13So that is our intended objective here through 2025 and going beyond. Speaker 600:38:20Okay. So just I Speaker 300:38:21know I had Speaker 400:38:21a lot in there, so and that's great color, Mark, so I appreciate that. But on the gross margin and the overall corporate gross margin, the reason that it's the guidance of 16% to 18% is not because there's any concern or issue with pricing. It's more the 25% revenue guidance is on a lower base than '24 and there's certain fixed costs. So that's why the overall corporate gross margin might be down from what it was at the beginning of twenty four. It doesn't have to do with pricing, it has to do with just the base of the revenue being lower expected to be lower in 2025, is that correct? Speaker 500:39:09Yes, that's right, Anthony. I mean, I will say our gross margin at the beginning of 2024 was about 13%. So we are still improving, but yes, we are spreading those fixed costs over a smaller base now. Speaker 400:39:25Okay. Okay, great. Thanks very much. I'll hop back in the queue. Appreciate it. Speaker 200:39:30Thanks, Anthony. Operator00:39:32And there are no further questions. I will now turn the call back over to Doctor. Strobek. Speaker 200:39:38Thank you all for joining us for an update on Rockwell Medical's achievements in 2024 and our outlook for 2025. While 2025 will be a year of transition, we remain committed to further diversifying our customer base and product portfolio and further optimizing our business. Our goal remains focused on maintaining and achieving profitability on an adjusted EBITDA basis for the full year of 2025, while we continue to identify and pursue business development opportunities that support our strategic objectives. We look forward to providing you with more updates on our next call. Operator00:40:11This concludes today's conference call and webcast. You may now disconnect.Read morePowered by