Rockwell Medical, Inc.

President, Chief Corporate Affairs Officer at Rockwell Medical. Heather, please go ahead.

Good morning and thank you for joining us for this update on Rockwell Medical. Joining me on today's conference call are Dr. Mark Strobeck, Rockwell Medical's President and Chief Executive Officer, and Jesse Neary, Rockwell Medical's Senior Vice President of Finance. Before we begin, I would like to remind you that this conference call will contain forward-looking statements about Rockwell Medical and 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-K and our subsequent periodic reports filed with the SEC. These statements are subject to risks and uncertainties that could cause actual results to differ. Please 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 FCC. Rockwell Medical's annual report on Form 10-K for the year ended December 31, 2023, will be filed today and will provide a full analysis of the company's business strategy, as well as the company's fourth quarter and full year 2023 results. Our Form 10-K and other reports filed with the SEC, along with today's press release, our updated investor presentation, and a replay of today's conference call and webcast can be found on Rockwell Medical's website under the Investors section. The reconciliations of non-GAAP measures we discussed can be found in today's press release on our website. Now I would like to turn the conference call over to Rockwell Medical's President and CEO, Dr. Mark Strobeck.

Thank you, Heather. Good morning and thank you for joining us today for Rockwell Medical's fourth quarter and full year 2023 results conference call and webcast. 2023 was a transformative year for Rockwell Medical. For the first time in our company's history for the fourth quarter, we achieved profitability on an adjusted EBITDA basis. This milestone doesn't come easily. It is the direct result of our team's deep commitment to expanding our customer base, improving efficiencies, streamlining processes, reducing expenses, and focusing on key business fundamentals. Additionally, we achieved record net sales, record net product sales, and record gross profit for the second year in a row. meeting or exceeding guidance that we issued at the beginning of 2023. And our gross margin continued to improve. Bottom line, we have significantly transformed Rockwell Medical's overall financial health. Before we delve into the details of our fourth quarter and full year 2023 results, it's important to remind everyone how far we've come over the last year and a half. When I joined Rockwell in the middle of 2022, The company's revenue was consistently stagnant, annually generating around $60 million. We were operating at a loss, generating a gross loss, were heavily levered, and were at risk for being delisted from the NASDAQ. During the third quarter of 2022, we evaluated our business and the potential for short and long-term value and determined that going forward, we would focus our efforts on growing our revenue generating business, pause further investment in capital intensive pharmaceutical development programs, and achieve profitability to put Rockwell in a stronger and more stable financial position. In turn, as a result of these efforts, we gave guidance that we expected to achieve profitability in 2024 and that once we achieve profitability and sustain cash flow from our revenue generating business, we would then consider investments in higher value longer term opportunities to develop a broader portfolio of products. Fast forward to today, we are successfully executing against that plan. We reported record net sales two years in a row, first generating over 70 million in net sales in 2022, and now over 80 million of net sales in 2023. We reported record gross profit for the second year in a row, generating over 4 million in 2022 and now approximately 9 million in 2023. We achieved profitability on an adjusted EBITDA basis in the fourth quarter of 2023 ahead of guidance. We completed two acquisitions, renegotiated a number of customer product and supply agreements, securing multi-year agreements with minimums. We expanded our geographic footprint, both domestically and internationally, and we significantly improved efficiencies in our manufacturing processes. These improvements are being realized through our improved gross margin, which was 10% in 2023, the highest in Rockwell's history, an increase from 6% in 2022, and a significant improvement from a gross loss of minus 4% in 2021. We are continuing to execute against the strategy that we put forth in the fourth quarter of 2022, and it continues to have a direct impact on our top and bottom line. We believe that this trajectory will continue in 2024 and beyond. We are working purposefully every day to fortify our market share and ensure our life-sustaining hemodialysis solutions continue to positively impact patients with end-stage kidney disease. At this time last year, we presented to you with our anticipated milestones for 2023. We plan to focus on commercially growing our business by expanding into new geographies. We plan to optimize agreements with existing customers and add new customers with long-term supply agreements with preferred economics. We expected to continue to focus on reducing our expenses and operating our business more efficiently. We plan to continue to find ways to enhance our financial condition and seek ways to further reduce our debt. And most critically, we believe that we would drive our business to achieve profitability and put the company in a stronger, more financially stable position. As evidenced by the results we issued this morning, I am pleased to share that we accomplished all of these corporate milestones for 2023, and we believe we have set the stage for continued growth in 2024 and beyond. During the fourth quarter of 2023, we generated record net sales of $22.1 million, which was comprised entirely of hemodialysis concentrates product sales. This represented a 15% increase in net sales and a 22% increase in net product sales over the same period in 2022. In 2023, we generated record net sales for the second year in a row of $83.6 million, a 15% increase year over year, of which net product sales was $79.8 million. The delta between net sales and net product sales was driven by recognition of the remaining deferred revenue related to the termination of the Baxter Distribution Agreement and recognition of deferred revenue related to the Wang Bang Agreement. In 2024, we project that net sales, which we anticipate will be comprised 100% of hemodialysis concentrates product sales will be between $84 million and $88 million, representing between 5% and 10% growth over net product sales in 2023. In 2025 and beyond, we continue to project that net sales will grow in the mid to high single digits. Rockwell Medical is also very focused on identifying, pursuing, and achieving growth through acquisition opportunities. This is evidenced by the reacquisition of our distribution rights from Baxter in 2022, which has supported our ability to right-size the pricing on our products, which were historically being sold at a loss, and negotiate multi-year agreements with minimums directly with our customers. This is also evidenced by our acquisition of the hemodialysis concentrates assets from Evoqua in July of 2023. which as we noted on our last call, we successfully integrated into Rockwell during the fourth quarter of 2023. The Evoqua acquisition expanded our footprint in the United States hemodialysis concentrates market by adding approximately 1,700 new purchasing facilities to our customer base. As a result, Rockwell now services approximately one-third of all purchasing facilities in the United States, including outpatient dialysis clinics and hospitals. Furthermore, Rockwell is now the leading supplier of liquid bicarbonate hemodialysis concentrates in the United States. In 2023, it is also important to note that we entered into an amended and restated products purchase agreement with our largest customer. Under the amended agreement, Rockwell is realizing a significant price increase for our hemodialysis concentrates products. The extended term goes through December 2024, and our largest customer has the right to extend this agreement for another year, which could take this agreement through December 2025 and would include another corresponding price increase. In addition, we continue to renegotiate our product purchase agreements and construct them in such a way that reflects the inherent benefit our products offer patients. Throughout 2023, we signed a number of customer agreements, which included significant price increases and long-term supply arrangements with purchasing minimum commitments. We believe these adjustments will continue to have a meaningful impact on Rockwell's top and bottom line. Our commercial team is actively selling our products across the United States and internationally as we continue to pursue our vision of becoming a leading global supplier of hemodialysis concentrates. Another key metric that's important for valuing our business is gross margin. Prior to my joining Rockwell, we were losing money on our hemodialysis concentrates products business. As I noted before, in 2021, gross loss was minus 4%. Today, we reported that our gross margin for the fourth quarter of 2023 was 13%. We project that gross margin will continue to improve as a result of better pricing and reduced expenses, the latter of which will be driven by improved efficiencies in our manufacturing and delivery of our products. In 2024, our gross margin is projected to be between 14 and 16%. We project gross margin will continue to improve by approximately 20% in 2025 and will reach 25% or higher in 2026 and beyond. Through purposeful execution of our strategy, we are unlocking the value of our improved processes and expanded automated manufacturing capabilities. Another key milestone for Rockwell was achieving profitability in the fourth quarter of 2023 on an adjusted EBITDA basis, the first time in our company's history and ahead of our previously issued guidance. We believe this is a clear indicator that our business has turned the corner. Independent of any unforeseen events, we expect Rockwell should continue to be profitable for the foreseeable future. Rockwell's vision is to become the leading global supplier of all hemodialysis concentrates. We continue to put Rockwell in a better position to drive growth and further improve our performance so we can serve more patients, clinics, and major medical centers around the world. As we look at 2024 and beyond, there are a number of factors that are favorably pointing in Rockwell's direction as we continue to focus on growing our business. Both Fresenius and DaVita reported that patient censuses are returning to pre-COVID levels, which in turn represents more dialysis treatments and therefore a growing need for our hemodialysis concentrates. Our commercial team is aggressively pursuing ways to expand our business within our existing customer base as well as to add new customers. We expect to have announcements soon on some new customer arrangements. We continue to look for ways to establish a more significant presence in the western portion of the United States. And finally, we are actively pursuing more acquisition opportunities that would be revenue generating and immediately accretive to our business. Over the next 12 months, in addition to the financial guidance we provided today, our other corporate objectives include continuing to optimize our business through improved processes and expanded automated manufacturing capabilities, enhancing our distribution capabilities through the modernization of our infrastructure and technology solutions, and completing additional business development opportunities to support our strategic objectives. With that, I will now turn the call over to Jesse to expand on our financial results for the reporting period. Jesse?