Rockwell Medical Amends Loan and Security Agreement with Innovatus Life Sciences Lending Fund
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Insights
Rockwell Medical's amendment of its loan and security agreement with Innovatus Life Sciences Lending Fund I, LP represents a strategic financial maneuver that effectively restructures the company's debt obligations. The extension of the loan maturity date from March 2025 to January 2029, coupled with the reduction in interest rate, alleviates immediate financial pressure by deferring principal payments. This move is indicative of the company's proactive approach to managing its capital structure, which may be viewed favorably by investors as it suggests a lower risk of near-term liquidity issues.
The issuance of a warrant for 191,096 shares at an exercise price of $1.83 per share introduces potential future dilution for current shareholders, but it also reflects a cost of capital that may be considered reasonable in the context of the improved loan terms. The extended interest-only payment period provides Rockwell Medical with the opportunity to allocate resources toward operational growth and achieving profitability, which is critical for long-term shareholder value creation.
From a market perspective, the restructuring of Rockwell Medical's debt signals a commitment to improving financial health, which could enhance investor confidence. The healthcare sector and specifically the dialysis market, is characterized by high capital expenditures and a need for continuous investment in innovation. By securing more favorable loan terms, Rockwell Medical is positioning itself to better navigate the competitive landscape.
The company's preliminary projected financial results for the fourth quarter and full year 2023 will be scrutinized by the market for signs of operational efficiency and growth. The ability to defer principal payments and reduce the need for additional operating capital could be a significant factor in the company's ability to invest in key strategic areas such as product development and market expansion.
In the realm of healthcare, particularly for companies like Rockwell Medical that supply hemodialysis products, financial stability is crucial for sustained research and development (R&D) as well as for maintaining supply chain integrity. The amended loan terms may indirectly benefit the healthcare sector by ensuring that Rockwell Medical can continue to supply dialysis providers without the strain of heavy debt repayments in the short term.
Furthermore, the interest-only payment structure for an extended period allows the company to potentially allocate more funds towards R&D, which is essential for innovation in hemodialysis treatment. This could lead to improved patient outcomes and potentially capture a larger market share if new or improved products are successfully brought to market.
Defers principal payments of
Rockwell Medical provides preliminary projected fourth quarter and full-year 2023 financial results
Rockwell Medical and its wholly owned subsidiary, Rockwell Transportation, Inc., initially entered into a loan and security agreement with Innovatus on March 16, 2020 under which Innovatus agreed to make certain term loans to the Company, of which the Company drew down approximately
Under the terms of the third amended and restated loan and security agreement (the "Amendment"), Rockwell Medical reduced the interest rate on, and extended the loan maturity date for, the Term Loans from March 2025 to January 2029. The Company will make interest-only payments for thirty months, or up to thirty-six months if certain conditions are met. In connection with the execution of the Amendment, the Company issued to Innovatus a warrant to purchase 191,096 shares of the Company's common stock with an exercise price of
"Over the past 18 months, we significantly reduced the leverage on our business," said Mark Strobeck, Ph.D., President and CEO of Rockwell Medical. "As we work towards sustained profitability and positive cash flow, we continue to seek ways to enhance our financial stability and our cash balance. Based on the amortization schedule under the loan and security agreement prior to the Amendment, we would have been required to pay off
For more details about the Amendment, please reference the Current Report on Form 8-K filed by the Company on January 8, 2024.
Rockwell Medical Preliminary Fourth Quarter and Full-Year 2023 Projected Results
Rockwell Medical projects net sales in the fourth quarter of 2023 to be between
Rockwell Medical is narrowing its full-year 2023 guidance and projects net sales for the twelve months ended December 31, 2023 to be between
The fourth quarter 2023 and full-year 2023 net sales, gross profit and adjusted EBITDA and December 31, 2023 cash balance included in this release are preliminary and are therefore subject to adjustment. The preliminary results are based on management’s initial analysis of operations for the quarter and year ended December 31, 2023. The Company expects to report fourth quarter and full-year 2023 financial and operational results in March 2024.
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
(In Millions) |
Low |
|
High |
|
Low |
|
High |
||||||||
Net Sales |
$ |
21.3 |
|
|
$ |
22.3 |
|
|
$ |
82.8 |
|
|
$ |
83.8 |
|
|
|
|
|
|
|
|
|
||||||||
Gross Profit |
|
1.6 |
|
|
|
2.6 |
|
|
|
7.4 |
|
|
|
8.4 |
|
|
|
|
|
|
|
|
|
||||||||
Net Loss |
|
(2.2 |
) |
|
|
(1.2 |
) |
|
|
(9.1 |
) |
|
|
(8.1 |
) |
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA* |
|
(0.9 |
) |
|
|
0.1 |
|
|
|
(5.5 |
) |
|
|
(4.5 |
) |
* See reconciliation to GAAP financial measures in the tables below. |
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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 typically performed at freestanding outpatient dialysis centers, hospital-based outpatient centers, 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 second largest supplier of acid and 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," “are determined,” “are on track,” “has the vision,” "work to," "drive towards," “focused on,” or the negative of these terms, and similar expressions, or statements regarding intent, belief, or current expectations, are forward looking statements. These statements include, but are not limited to, Rockwell Medical’s expectations regarding its reduced need for additional operating capital and enhanced cash balance, the Company’s ability to achieve profitability and positive cash flow, Rockwell Medical’s expectations and projections regarding its future operating results and financial performance, and the Company’s vision of becoming the leading global provider of hemodialysis concentrates. 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, 2022, as such description may be amended or updated in any future reports we file with the SEC. Rockwell Medical expressly disclaims any obligation to update our forward-looking statements, except as may be required by law.
Financial Tables Follow
| Reconciliation to GAAP Financial Measures | ||||||||||||||||
| Estimated Adjusted EBITDA | ||||||||||||||||
| Three Months Ended | 12 Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2023 | |||||||||||||||
| (in millions) | Low | High | Low | High | ||||||||||||
| Net Loss | $ |
(2.2 |
) |
$ |
(1.2 |
) |
$ |
(9.1 |
) |
$ |
(8.1 |
) |
||||
| Income taxes |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
| Interest expense, net |
|
0.3 |
|
|
0.3 |
|
|
1.2 |
|
|
1.2 |
|
||||
| Depreciation and amortization |
|
0.8 |
|
|
0.8 |
|
|
1.8 |
|
|
1.8 |
|
||||
| EBITDA |
|
(1.1 |
) |
|
(0.1 |
) |
|
(6.1 |
) |
|
(5.1 |
) |
||||
| One time severance costs |
|
- |
|
|
- |
|
|
0.8 |
|
|
0.8 |
|
||||
| Stock-based compensation |
|
0.2 |
|
|
0.2 |
|
|
0.9 |
|
|
0.9 |
|
||||
| Wanbang deferred revenue |
|
- |
|
|
- |
|
|
(2.2 |
) |
|
(2.2 |
) |
||||
| Wanbang inventory reserve |
|
- |
|
|
- |
|
|
1.1 |
|
|
1.1 |
|
||||
| Adjusted EBITDA | $ |
(0.9 |
) |
$ |
0.1 |
|
$ |
(5.5 |
) |
$ |
(4.5 |
) |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240108150334/en/
Heather R. Hunter
SVP, Chief Corporate Affairs Officer
(248) 432-1362
IR@RockwellMed.com
Source: Rockwell Medical, Inc.
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