Rockwell Medical Achieves Profitability on an Adjusted EBITDA Basis in the Fourth Quarter 2023 and Record Net Sales, Gross Profit and Gross Margin for the Full-Year 2023
- Record net sales and gross profit in 2023, with net sales of $83.6 million and gross profit of $8.7 million.
- Profitability on an adjusted EBITDA basis achieved in Q4 2023 for the first time in the company's history.
- 2024 guidance projects net product sales between $84 million and $88 million, gross margin between 14% and 16%, and profitability on an adjusted EBITDA basis for the full year 2024.
- None.
Insights
The recent financial performance of Rockwell Medical, Inc. indicates a positive trajectory, with a notable 15% increase in net sales and an impressive 114% increase in gross profit year-over-year. This growth is particularly significant given the competitive nature of the healthcare industry, especially in the hemodialysis sector. The company's ability to achieve profitability on an adjusted EBITDA basis for the first time in its history suggests a strategic shift that has successfully enhanced operational efficiency.
From a financial analysis perspective, the reduction in net loss by 55% compared to the previous year and the projected guidance for 2024, which anticipates further sales growth and improved gross margins, are indicative of a company that is moving towards a more sustainable financial model. The emphasis on gross margin improvement, from 10% to a projected 14-16%, is a critical metric for investors as it reflects the company's ability to control costs relative to sales. This is particularly important in manufacturing where economies of scale and procurement strategies can significantly influence profitability.
However, the decline in cash and cash equivalents from $11.7 million to $10.9 million, coupled with the repayment of outstanding loans, indicates that liquidity management will be essential for the company's continued growth. The renegotiation of loan terms to secure a lower interest rate and extended maturity suggests proactive financial management, but stakeholders should monitor cash flow closely to ensure that the company can sustain its growth without over-leveraging.
The healthcare sector and specifically the dialysis market, is experiencing growth due to demographic trends such as an aging population and rising incidence of chronic kidney disease. Rockwell Medical's focus on expanding their geographic footprint and securing multi-year agreements with minimums aligns with the industry's move towards consolidation and long-term partnerships. Such strategic moves not only secure a stable revenue stream but also enhance bargaining power with suppliers and customers.
Rockwell's acquisitions and the expansion of its international business are significant as they enable the company to tap into new markets and diversify its revenue sources. The emphasis on securing a leading position as a supplier of liquid bicarbonate products in the U.S. demonstrates a targeted approach to capturing market share in a niche segment. This is likely to resonate well with investors looking for companies with a clear growth strategy in specialized markets.
The inclusion in the Russell Microcap Index is also noteworthy as it increases the company's visibility to potential investors and could result in increased stock liquidity. The projected net sales growth and gross margin improvements for the coming years suggest that Rockwell Medical is positioning itself to capitalize on market opportunities and improve its competitive stance.
Rockwell Medical's operational highlights, including the acquisition of hemodialysis concentrates assets and the expansion into international markets, demonstrate a strategic focus on core competencies within the dialysis sector. As a medical industry analyst, it's evident that the company's efforts to improve manufacturing efficiencies have paid off, as reflected in the significant increase in gross profit. This operational leverage is important in an industry where product quality and cost efficiency can be a differentiator.
The company's strategic focus on hemodialysis products, which are essential for end-stage kidney disease patients, aligns with the broader industry trend of personalized and value-based healthcare solutions. The ability to renegotiate customer product and supply agreements to secure better terms is a testament to the company's strengthening market position. Additionally, the expansion of the company's distribution network through agreements with Cardinal Health and Medline Industries could further enhance its market reach and operational scalability.
It's important to note that the dialysis market is heavily regulated and Rockwell Medical's success in navigating this landscape, as evidenced by their financial results, is a positive indicator of management's expertise. However, stakeholders should be aware of the potential regulatory changes that could impact the industry and Rockwell Medical's operations, such as reimbursement rates for dialysis treatment and product approval processes.
-
Reports record net sales for second year in a row, generating
$83.6 million 15% over 2022. Net sales for the fourth quarter of 2023 were$22.1 million 14% over the same period in 2022. -
Reports record net product sales for second year in a row, generating
$79.8 million 15% over 2022. Net product sales for the fourth quarter of 2023 were$22.1 million 22% over the same period in 2022. -
Reports record gross profit for the second year in a row, generating
$8.7 million 114% over 2022. - Achieves profitability on an adjusted EBITDA basis in the fourth quarter of 2023, the first time in the Company's history.
-
Issues 2024 guidance, projecting net product sales to be between
$84 million $88 million 14% and16% , and for the Company to be profitable on an adjusted EBITDA basis for the full-year 2024.
"2023 was a transformative year for Rockwell Medical, making it the second year in a row that we have provided guidance and met or exceeded that guidance. We significantly improved Rockwell Medical's financial health, generated the highest revenue and gross profit to-date for the Company, and successfully achieved profitability on an adjusted EBITDA basis in the fourth quarter of 2023, the first time in the Company's history," said Mark Strobeck, Ph.D., Rockwell Medical’s President and CEO. "Over the last 18 months, we have completed two acquisitions, renegotiated a number of customer product and supply agreements—securing multi-year agreements with minimums—expanded our geographic footprint both domestically and internationally, and significantly improved efficiencies in our manufacturing processes that are being realized through improved gross margin. Our focused strategy is having a direct impact on Rockwell Medical's top and bottom line, which we project will continue in 2024 and beyond. For us it's personal. Ensuring Rockwell Medical's long-term viability secures our ability to manufacture and distribute life-sustaining dialysis solutions which have a positive impact on the lives of hemodialysis patients with end-stage kidney disease."
FOURTH QUARTER AND FULL-YEAR 2023 FINANCIAL HIGHLIGHTS
-
Net sales for the three months ended December 31, 2023 were
$22.1 million 15% increase in net sales over the same period in 2022, and a22% increase in net product sales over the same period in 2022. Net sales for the twelve months ended December 31, 2023 were$83.6 million 15% increase over the same period in 2022. Net product sales for the twelve months ended December 31, 2023 were$79.8 million 15% increase over net products sales of$69.2 million -
Gross profit for the three months ended December 31, 2023 was
$2.9 million 23% increase over$2.3 million $8.7 million 113% increase over$4.1 million -
Gross margin for the three months ended December 31, 2023 was
13% , representing an increase from12% for the same period in 2022. Gross margin for the twelve months ended December 31, 2023 was10% , representing an increase from6% gross margin for the same period in 2022. -
Net loss for the three months ended December 31, 2023 was
$1.5 million 36% improvement over a net loss of$2.4 million $8.4 million 55% improvement over net loss of$18.7 million -
Adjusted EBITDA for the three months ended December 31, 2023 was
$0.5 million 192% improvement over( for the same period in 2022. Adjusted EBITDA was$0.6) million ( for the twelve months ended December 31, 2023, representing a$3.9) million 72% improvement over( for the same period in 2022.$13.8) million -
Cash and cash equivalents and investments available-for-sale at December 31, 2023 was
$10.9 million $11.7 million $0.8 million $1.5 million -
During the fourth quarter of 2023, Rockwell Medical lowered its outstanding debt from
$9.5 million $8.0 million
|
Three Months Ended
|
||||||
(In Millions, Except Per Share Amounts) |
2023 |
|
2022 |
||||
Net Sales |
$ |
22.1 |
|
|
$ |
19.3 |
|
|
|
|
|
||||
Gross Profit |
|
2.9 |
|
|
|
2.3 |
|
|
|
|
|
||||
Net Income (Loss) |
|
(1.5 |
) |
|
|
(2.4 |
) |
|
|
|
|
||||
Adjusted EBITDA* |
|
0.5 |
|
|
|
(0.6 |
) |
|
|
|
|
||||
Basic and Diluted Net Loss per Share ** |
$ |
(0.05 |
) |
|
$ |
(0.13 |
) |
Adjusted EPS * |
$ |
0.02 |
|
|
$ |
(0.03 |
) |
|
Twelve Months Ended December 31, |
|||||||||||||
(In Millions, Except Per Share Amounts) |
2024 (E) |
|
2023 |
|
2022 |
|
2021 |
|||||||
Net Sales |
$ |
84 - 88 |
|
$ |
83.6 |
|
|
$ |
72.8 |
|
|
$ |
61.9 |
|
|
|
|
|
|
|
|
|
|||||||
Gross Profit |
|
12 - 14 |
|
|
8.7 |
|
|
|
4.1 |
|
|
|
(2.4 |
) |
|
|
|
|
|
|
|
|
|||||||
Net Income (Loss) |
|
n/a |
|
|
(8.4 |
) |
|
|
(18.7 |
) |
|
|
(32.7 |
) |
|
|
|
|
|
|
|
|
|||||||
Adjusted EBITDA* |
0.0 - 0.5 |
|
|
(3.9 |
) |
|
|
(13.8 |
) |
|
|
(28.4 |
) |
|
|
|
|
|
|
|
|
|
|||||||
Basic and Diluted Net Loss per Share ** |
|
n/a |
|
$ |
(0.36 |
) |
|
$ |
(1.31 |
) |
|
$ |
(3.83 |
) |
Adjusted EPS * |
|
n/a |
|
$ |
(0.17 |
) |
|
$ |
(0.97 |
) |
|
$ |
(3.33 |
) |
* See reconciliation to GAAP financial measures in the tables below. |
||||||||||||||
** See Note 3 for more details related to Basic and Diluted Weighted Average Shares Outstanding in our 2023 Form 10-K. |
||||||||||||||
FOURTH QUARTER AND FULL-YEAR 2023 OPERATING HIGHLIGHTS
- In October 2023, Rockwell Medical named Jesse Neri as Senior Vice President, Finance. Mr. Neri has more than 20 years’ experience leading finance functions at both public and private companies.
- In October 2023, Rockwell Medical appointed Joan Lau, Ph.D. to the Company's Board of Directors. Dr. Lau has more than 20 years’ experience in executive leadership of R&D focused biopharma as an entrepreneur scientist, CEO, operator, investor, and board member of public and private biopharmaceutical companies.
- In September 2023, Rockwell Medical entered into an amended and restated products purchase agreement with its largest customer. Under the agreement, Rockwell Medical and the customer agreed to an increase in product pricing, effective September 1, 2023 and continuing until December 31, 2024, and a one-time payment to Rockwell Medical on or after December 1, 2023. The customer has the option to further extend the term through December 31, 2025. In the event of such an extension, product pricing will be increased for the extended term.
-
In July 2023, Rockwell Medical acquired the hemodialysis concentrates assets from Evoqua Water Technologies. By assuming responsibility for Evoqua’s concentrates customer contracts, Rockwell Medical has further expanded its footprint in
the United States and assumed a larger share of the growing hemodialysis concentrates market. Additionally, the Company is now the leading supplier of liquid bicarbonate products to dialysis centers inthe United States . - In June 2023, Rockwell Medical was added to the Russell Microcap Index.
-
In May 2023, Rockwell Medical expanded its international footprint for its hemodialysis concentrates products through several multi-year distribution and user agreements. New geographies include the
United Arab Emirates ,Chile ,St. Lucia ,Costa Rica , andGrenada . Rockwell has a large and growing international business and currently sells its hemodialysis concentrates products in over 30 countries throughoutNorth America ,South America ,Asia andAfrica . -
Throughout 2023, Rockwell Medical entered into several multi-year product purchase agreements with new and existing customers including Centers for Dialysis Care, Concerto Renal Services, Houston Methodist, Sanderling Renal Services, and the largest non-profit dialysis provider in the
U.S. Additionally, Rockwell established new non-exclusive distribution services agreements with Cardinal Health and Medline Industries for distribution of Rockwell's hemodialysis concentrates products throughoutthe United States .
GUIDANCE |
||
Rockwell projects its 2024 guidance as follows: |
||
|
2024 Guidance |
Expected Improvement (%) over 2023 |
Net (Product) Sales |
|
|
Gross Profit |
|
|
Gross Margin |
|
4 to 6 percentage point increase over |
Adjusted EBITDA |
|
|
Rockwell Medical projects net sales to grow in the mid-to-high single digits in 2025 and beyond. Rockwell Medical projects gross margin in 2025 to be approximately
CONFERENCE CALL AND WEBCAST DETAILS |
|
Date: |
Thursday, March 21, 2024 |
Time: |
8:00am ET |
Live Number: |
(888) 660-6347 // (International) 1 (929) 201-6594 |
Conference Call ID: |
4944610 |
Webcast and Replay: |
|
Speakers: |
|
|
|
Format: |
Discussion of fourth quarter and full-year 2023 financial and operational results followed by Q&A. |
NON-GAAP FINANCIAL MEASURES
To supplement Rockwell Medical’s unaudited condensed consolidated statements of operations and unaudited condensed consolidated balance sheets, which are prepared in conformity with generally accepted accounting principles in
Adjusted EBITDA is a key measure used by Rockwell Medical to understand and evaluate operating performance and trends, to prepare and approve its annual budget and to develop short- and long-term operating plans. The Company provides Adjusted EBITDA because it believes the metric is helpful in highlighting trends in its operating results because it excludes items that are not indicative of Rockwell Medical’s core operating performance. In particular, the Company believes that the exclusion of the items eliminated in calculating Adjusted EBITDA provides useful measures for period-to-period comparisons of Rockwell Medical’s business.
Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. Other companies, including companies in the same industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. There are a number of limitations related to the use of these non-GAAP financial measures rather than net loss, which is the most directly comparable financial measure calculated in accordance with GAAP. When evaluating the Company’s performance, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and other GAAP results. Adjusted EBITDA is our best proxy for cash burn.
ABOUT ROCKWELL MEDICAL
Rockwell Medical, Inc. (Nasdaq: RMTI) is a healthcare company that develops, manufactures, commercializes, and distributes a portfolio of hemodialysis products for dialysis providers worldwide. Rockwell Medical's mission is to provide dialysis clinics and the patients they serve with the highest quality products supported by the best customer service in the industry. Rockwell is focused on innovative, long-term growth strategies that enhance its products, its processes, and its people, enabling the Company to deliver exceptional value to the healthcare system and provide a positive impact on the lives of hemodialysis patients. Hemodialysis is the most common form of end-stage kidney disease treatment and is usually performed at freestanding outpatient dialysis centers, at hospital-based outpatient centers, at skilled nursing facilities, or in a patient’s home. Rockwell Medical's products are vital to vulnerable patients with end-stage kidney disease, and the Company is relentless in providing unmatched reliability and customer service. Rockwell Medical is the largest supplier of liquid bicarbonate concentrates and the second largest supplier of acid and dry bicarbonate concentrates for dialysis patients in
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute "forward-looking statements" within the meaning of the federal securities laws. Words such as, "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "could," "can," "would," "develop," "plan," "potential," "predict," "forecast," "project," "intend," "look forward to," "remain confident," “guidance,” or the negative of these terms, and similar expressions, or statements regarding intent, belief, or current expectations, are forward looking statements. These statements include (without limitation) statements regarding: the impact of our strategy on our top and bottom line: growth in the hemodialysis concentrates market; the growth of our business; guidance for net sales, gross profit, gross margin and adjusted EBITDA. While Rockwell Medical believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties (including, without limitation, those set forth in Rockwell Medical's SEC filings), many of which are beyond our control and subject to change. Actual results could be materially different. Risks and uncertainties include but are not limited to those risks more fully discussed in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2023, as such description may be amended or updated in any subsequent reports filed with the SEC. Rockwell Medical expressly disclaims any obligation to update our forward-looking statements, except as may be required by law.
ROCKWELL MEDICAL, INC. AND SUBSIDIARIES |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(Dollars In Thousands) |
|||||
|
|
|
|
||
|
December 31, |
|
December 31, |
||
|
2023 |
|
2022 |
||
| Cash, Cash Equivalents & Investments available-for-sale | $ |
10,935 |
$ |
21,492 |
|
| Total Assets | $ |
52,173 |
$ |
46,635 |
|
| Total Liabilities | $ |
30,882 |
$ |
32,529 |
|
| Total Stockholders’ Equity | $ |
21,291 |
$ |
14,106 |
|
| Common Stock Outstanding |
|
29,130,607 |
|
12,163,673 |
|
| Common stock and common stock equivalents* |
|
35,876,028 |
|
31,356,373 |
|
| *Common stock and common stock equivalents: | |||||
| Common stock |
|
29,130,607 |
|
12,163,673 |
|
| Common stock warrants (pre-funded) |
|
- |
|
6,300,000 |
|
| Common stock and pre-funded stock warrants |
|
29,130,607 |
|
18,463,673 |
|
| Preferred stock converted |
|
1,363,636 |
|
1,363,636 |
|
| Options to purchase common stock |
|
1,328,621 |
|
1,206,905 |
|
| Restricted stock awards |
|
891 |
|
891 |
|
| Restricted stock units |
|
258,885 |
|
125,000 |
|
| Common stock warrants |
|
3,793,388 |
|
10,196,268 |
|
| Total common stock and common stock equivalents |
|
35,876,028 |
|
31,356,373 |
|
ROCKWELL MEDICAL, INC. AND SUBSIDIARIES |
||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
(In Thousands, Except Shares and Per Share Amounts) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months
|
|
Three Months
|
|
Twelve Months
|
|
Twelve Months
|
||||||||
| Net Sales | $ |
22,093 |
|
$ |
19,313 |
|
$ |
83,612 |
|
$ |
72,810 |
|
||||
| Cost of Sales |
|
19,223 |
|
|
16,973 |
|
|
74,908 |
|
|
68,733 |
|
||||
| Gross Profit (Loss) |
|
2,870 |
|
|
2,340 |
|
|
8,704 |
|
|
4,077 |
|
||||
| Research and Product Development |
|
168 |
|
|
156 |
|
|
1,107 |
|
|
3,119 |
|
||||
| Selling and Marketing |
|
541 |
|
|
352 |
|
|
2,125 |
|
|
2,094 |
|
||||
| General and Administrative |
|
2,708 |
|
|
3,798 |
|
|
12,142 |
|
|
15,643 |
|
||||
| Operating Loss |
|
(547 |
) |
|
(1,966 |
) |
|
(6,670 |
) |
|
(16,780 |
) |
||||
| Other (Expense) Income | ||||||||||||||||
| Realized Gain on Investments |
|
101 |
|
|
- |
|
|
321 |
|
|
4 |
|
||||
| Interest Expense |
|
(1,108 |
) |
|
(439 |
) |
|
(2,301 |
) |
|
(1,936 |
) |
||||
| Interest Income |
|
42 |
|
|
45 |
|
|
211 |
|
|
35 |
|
||||
| Total Other Expense |
|
(965 |
) |
|
(394 |
) |
|
(1,769 |
) |
|
(1,897 |
) |
||||
| Net Loss | $ |
(1,512 |
) |
$ |
(2,360 |
) |
$ |
(8,439 |
) |
$ |
(18,678 |
) |
||||
| Basic and Diluted Net Loss per Share | $ |
(0.05 |
) |
$ |
(0.13 |
) |
$ |
(0.36 |
) |
$ |
(1.31 |
) |
||||
| Basic and Diluted Weighted Average Shares Outstanding |
|
28,652,164 |
|
|
18,463,673 |
|
|
23,322,915 |
|
|
14,304,512 |
|
||||
Reconciliation to GAAP Financial Measures |
||||||||||||||||||||
(In Thousands, Except Shares and Per Share Amounts) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||||
December 31 |
December 31 |
|||||||||||||||||||
| (in thousands) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
||||||||||
| Net Loss | $ |
(1,512 |
) |
$ |
(2,360 |
) |
$ |
(8,439 |
) |
$ |
(18,678 |
) |
$ |
(32,674 |
) |
|||||
| Income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|||||
| Interest expense |
|
1,108 |
|
|
439 |
|
|
2,301 |
|
|
1,936 |
|
|
2,360 |
|
|||||
| Depreciation and amortization |
|
554 |
|
|
152 |
|
|
1,445 |
|
|
572 |
|
|
664 |
|
|||||
| EBITDA |
|
150 |
|
|
(1,769 |
) |
|
(4,692 |
) |
|
(16,170 |
) |
|
(29,650 |
) |
|||||
| Severance costs |
|
165 |
|
|
968 |
|
|
942 |
|
|
2,040 |
|
|
331 |
|
|||||
| Stock-based compensation |
|
215 |
|
|
221 |
|
|
933 |
|
|
314 |
|
|
938 |
|
|||||
| Wanbang deferred revenue |
|
- |
|
|
- |
|
|
(2,197 |
) |
|
- |
|
||||||||
| Wanbang inventory reserve |
|
- |
|
|
- |
|
|
1,098 |
|
|
- |
|
||||||||
| Adjusted EBITDA | $ |
531 |
|
$ |
(580 |
) |
$ |
(3,917 |
) |
$ |
(13,816 |
) |
$ |
(28,381 |
) |
|||||
| Adjusted EPS | $ |
0.02 |
|
$ |
(0.03 |
) |
$ |
(0.17 |
) |
$ |
(0.97 |
) |
$ |
(3.33 |
) |
|||||
| Basic and Diluted Weighted Average Shares Outstanding |
|
28,652,164 |
|
|
18,463,673 |
|
|
23,322,915 |
|
|
14,304,512 |
|
|
8,526,186 |
|
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240321977041/en/
Heather R. Hunter
SVP, Chief Corporate Affairs Officer
(248) 432-1362
IR@RockwellMed.com
Source: Rockwell Medical, Inc.
FAQ
What were Rockwell Medical's net sales in 2023?
Did Rockwell Medical achieve profitability on an adjusted EBITDA basis in 2023?
What is Rockwell Medical's 2024 guidance for net product sales?
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What was the gross profit for Rockwell Medical in 2023?
