Rockwell Medical, Inc.

Medical. Joining me on today's conference call are Dr. 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-K, and are subsequent periodic reports filed with the FCC. 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 SEC. Rockwell Medical's annual report on Form 10-K for the year ended December 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 discussed on today's call can also be found in today's press release. Our 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 Investor section. Now I will turn the 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 2024 earnings conference call and webcast. 2024 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 million 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 $101.5 million. Our gross margin was 17%, and we were profitable on an adjusted EBITDA basis for the 12 months ended December 31st, 2024, for the first time in Rockwell's history. To 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 it will now completely transition to another supplier by June 30th of this year. This transition away from Rockwell will result in the loss of approximately $34 million 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 Avoqua asset acquisition. As part of that acquisition, we acquired Avoqua's Concentrates business, which included all contracts, intellectual property, 510K clearances, and assets primarily associated with and related to a vocalist concentrates business nationwide. This also included a fully automated manufacturing line. Effective December 31, 2024, we terminated our agreement with this third-party contract manufacturer in Minnesota, discontinued the 510Ks for Centrosol and Renosol, 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 million annually. We believe this transition and consolidation of SKUs was necessary to reduce costs, streamline operations, improve efficiencies, and further automate our manufacturing process. We 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 million and $70 million. Gross margin will be between 16% and 18%. 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. As it pertains to revenue, we expect that net sales in the first half of 2025 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 support a profitable growing business going forward. With that, I'll now turn the call over to Tim to provide you with more detail about our commercial strategy as we work to diversify our customer base and product portfolio in 2025 and beyond. Tim?

Thank 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. 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. Then 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 co-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. Our 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 settings. 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. First, we entered into a 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 million in net sales for the company in the first year with incremental annual price increases built in. Second, we executed a distribution agreement with Nipro Medical Corporation through which we will supply Nipro 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. Third, our international sales continue to grow. We currently sell our products in over 30 countries around the globe. During the fourth quarter of 2024, we announced that we expanded our distribution agreement with Nephro Group Dialysis Centers, the largest dialysis service provider in the Philippines. But in terms of the agreement, we became the exclusive supplier of all dry hemodialysis concentrate products to NEPRO. 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. We believe that single-use bicarbonate disposables represent an approximate $100 million market opportunity, which is one of the fastest-growing segments within the dialysis products market. I'm pleased to share with you 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 510 approved by the FDA. Our partner is responsible for maintaining all regulatory approvals required to market and sell these products throughout the US. We believe the addition of this product to our portfolio represents an exciting opportunity for us to diversify our offering and address a rapidly growing market segment. Additionally, this now offers us the ability to be more competitive when bidding for a full range of Concentrate's 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've 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. In order to achieve this, we plan to target additional customers that represent an estimated 14.5 million 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. It 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., along 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.