ROCKWELL MEDICAL, INC.

Previous wording

We make forward-looking statements in this report and may make such statements in future filings with the U.S. Securities and Exchange Commission ("SEC"). We may also make forward-looking statements in our press releases or other public or shareholder communications. Our forward-looking statements are subject to risks and uncertainties and include information about our current expectations and possible or assumed future results of our operations. When we use words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “could,” “plan,” “potential,” “predict,” “forecast,” “project,” “intend,” “is focused on” or similar expressions, or make statements regarding our intent, belief, or current expectations, we are making forward-looking statements. Our forward looking statements also include, without limitation, statements about our liquidity and capital resources; our ability to continue as a going concern; our ability to successfully negotiate a contract extension and/or future volume commitments by DaVita, our ability to successfully integrate acquisitions; the size of the hemodialysis concentrates market opportunity; our ability to successfully execute on our business strategy; our ability to raise additional capital; our ability to successfully implement certain cost containment and cost-cutting measures; our ability to maintain profitability and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.

Current wording

We make forward-looking statements in this report and may make such statements in future filings with the U.S. Securities and Exchange Commission ("SEC"). We may also make forward-looking statements in our press releases or other public or shareholder communications. Our forward-looking statements are subject to risks and uncertainties and include information about our current expectations and possible or assumed future results of our operations. When we use words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “could,” “plan,” “potential,” “predict,” “forecast,” “project,” “intend,” “is focused on” or similar expressions, or make statements regarding our intent, belief, or current expectations, we are making forward-looking statements. Our forward looking statements also include, without limitation, statements about our liquidity and capital resources; our ability to continue as a going concern; our ability to successfully negotiate a contract extension with and/or future volume commitments by DaVita; our ability to successfully integrate acquisitions; the size of the hemodialysis concentrates market opportunity; our ability to successfully execute on our business strategy; our ability to raise additional capital; our ability to successfully implement certain cost containment and cost-cutting measures; our ability to achieve profitability and statements regarding our anticipated future financial condition, operating results, cash flows and business plans.

Previous wording

Rockwell's commercial organization supports the Company's vision to focus its efforts on enhancing its revenue-generating business and driving the Company towards sustainable profitability. The Company concentrates its efforts on increasing the Company's market share, broadening its product portfolio, right-sizing the Company's product pricing, improving gross margins, and growing the business through organic and inorganic growth and other business development opportunities.

Current wording

Rockwell's commercial organization supports the Company's vision to focus its efforts on enhancing its revenue-generating business and driving the Company towards sustainable profitability. The Company concentrates its efforts on increasing its market share, broadening its product portfolio, right-sizing its product pricing, improving gross margins, and growing the Company's business through organic and inorganic growth and other business development opportunities.

Previous wording

On September 18, 2023, Rockwell and DaVita, Inc. ("DaVita") entered into the Amended Agreement, which amended and restated the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates. Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023. The term of the Amended Agreement was scheduled to expire on December 31, 2024. Prior to the expiration, the Company received written notice from DaVita that DaVita intended to extend the term of the Amended Agreement through December 31, 2025 (the "Extension Term"). However, DaVita subsequently indicated that it will completely transition to another supplier by mid-2025, subject to further discussions between Rockwell and DaVita. DaVita has agreed to a one-time, non-refundable payment of $0.9 million to ensure supply continuity for products purchased during the three months ended March 31, 2025. Discussions between Rockwell and DaVita are ongoing and include a potential contract extension and/or future volume commitments by DaVita to Rockwell. There can be no assurance that these discussions will yield a successful outcome for Rockwell.

Current wording

On September 18, 2023, Rockwell and DaVita, Inc. ("DaVita") entered into the Amended Agreement, which amended and restated the Product Purchase Agreement, dated July 1, 2019, as amended, under which the Company supplies DaVita with certain dialysis concentrates. Under the Amended Agreement, the Company and DaVita agreed to an increase in product pricing, effective September 1, 2023. The term of the Amended Agreement was scheduled to expire on December 31, 2024. Prior to the expiration, the Company received written notice from DaVita that DaVita intended to extend the term of the Amended Agreement through December 31, 2025 (the "Extension Term"). However, DaVita subsequently indicated that it will completely transition to another supplier by mid-2025, subject to further discussions between Rockwell and DaVita. DaVita has agreed to quarterly, non-refundable payments totaling $1.3 million to ensure supply continuity for products purchased during the six months ended June 30, 2025. These quarterly, non-refundable payments of $1.3 million were recorded as revenue during the six months ended June 30, 2025. Discussions between Rockwell and DaVita are ongoing and include a potential contract extension and/or future volume commitments by DaVita to Rockwell. There can be no assurance that these discussions will yield a successful outcome for Rockwell. We continue to supply DaVita as of the filing date of this report.

Previous wording

General and administrative expenses were $3.7 million for the three months ended March 31, 2025, compared with $3.8 million for the three months ended March 31, 2024. The decrease of $0.1 million was primarily driven by $0.3 million a reduction in professional fees, $0.1 million decrease in administrative costs, partially offset by $0.3 million of increased compensation expense.

Current wording

General and administrative expenses were $3.3 million for the three months ended June 30, 2025, compared to $3.4 million for the three months ended June 30, 2024. The decrease of $0.1 million was primarily driven by a $0.2 million decrease in administrative expense, partially offset by $0.1 million of increased compensation expense.

Previous wording

Total other expense of $0.2 million and $0.4 million for the three months ended March 31, 2025 and 2024, respectively, was driven primarily by interest expense of $0.3 million and $0.4 million, respectively, related to our debt facility (See Note 15 to the condensed consolidated financial statements included elsewhere in this Form 10-Q).

Current wording

Total other expense of $0.1 million and $0.2 million for the three months ended June 30, 2025 and 2024, respectively, was driven primarily by interest expense of $0.2 million in each period related to our debt facility (See Note 15 to the condensed consolidated financial statements included elsewhere in this Form 10-Q). The interest expense for the three months ended June 30, 2025 was partially offset by $0.1 million of interest income and realized gains on available-for-sale of investments of $0.1 million.

Previous wording

During the three months ended March 31, 2025, our net sales were $18.9 million compared to net sales of $22.7 million during the three months ended March 31, 2024. Product revenue for the three months ended March 31, 2025 was $18.6 million compared to product revenue of $22.7 million for the three months ended March 31, 2024. The decrease of $3.8 million was primarily due to a $5.9 million reduction in DaVita volume as a result of transitioning to a new supplier, partially offset by $0.9 million increase due to a price adjustment for DaVita purchases and $0.9 million in price increases to other existing customers. Net sales of non-product revenue were $0.3 million for the three months ended March 31, 2025 from the recognition of the remaining deferred license revenue associated with Sun Pharmaceutical Industries Ltd. ("Sun Pharma"), Jeil Pharmaceutical Co., Ltd. ("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan Pharma"). Non-Product revenue was not material for the period ended March 31, 2024.

Current wording

During the six months ended June 30, 2025, our net sales were $35.0 million compared to net sales of $48.5 million during the six months ended June 30, 2024. Product revenue for the six months ended June 30, 2025 was $34.7 million compared to product revenue of $48.5 million for the six months ended June 30, 2024. The decrease of $13.5 million was primarily due to a $14.6 million reduction in DaVita sales as a result of transitioning to a new supplier, partially offset by an increase of $0.8 million from price increases to other existing customers and sales to new customers. During the six months ended June 30, 2025, DaVita represented 20% of net sales. Net sales of non-product revenue were $0.3 million for the six months ended June 30, 2025 from the recognition of the remaining deferred license revenue associated with Sun Pharmaceutical Industries Ltd. ("Sun Pharma"), Jeil Pharmaceutical Co., Ltd. ("Jeil Pharma") and Drogsan Pharmaceuticals ("Drogsan Pharma"). Non-Product revenue was not material for either period.

Previous wording

Cost of sales for the three months ended March 31, 2025 was $15.9 million, resulting in gross profit of $3.0 million for the three months ended March 31, 2025, compared to cost of sales of $19.6 million and a gross profit of $3.1 million for the three months ended March 31, 2024. The gross profit decrease of $0.1 million was driven by a decrease of $0.2 million of gross profit on product sales. Gross profit from product sales includes $0.9 million due to a price adjustment for DaVita purchases for the three months ended March 31, 2025. Gross profit from non-product sales consists of $0.1 million associated with recognition of the remaining deferred license revenue associated with Sun Pharma, Jeil Pharma and Drogsan Pharma during the three months ended March 31, 2025.

Current wording

Cost of sales for the six months ended June 30, 2025 was $29.4 million, resulting in gross profit of $5.5 million for the six months ended June 30, 2025, compared to cost of sales of $40.9 million and a gross profit of $7.6 million for the six months ended June 30, 2024. The gross profit decrease of $2.1 million was due to a decrease in product sales. Gross profit from product sales includes $1.3 million due to a price adjustment for DaVita purchases for the six months ended June 30, 2025. Gross profit from non-product sales consists of $0.1 million associated with recognition of the remaining deferred license revenue associated with Sun Pharma, Jeil Pharma and Drogsan Pharma during the six months ended June 30, 2025.

Previous wording

Research and product development expenses were immaterial for the each of three months ended March 31, 2025 and 2024 due to the decision to pause all research and development related to Triferic in 2023.

Current wording

Research and product development expenses were immaterial for the each of six months ended June 30, 2025 and 2024 due to the decision to pause all research and development related to Triferic in 2023.

Previous wording

Selling and marketing expenses were $0.7 million and $0.6 million for the three months ended March 31, 2025 and 2024, respectively. The increase of $0.1 million is primarily due to higher employee compensation expenses.

Current wording

Selling and marketing expenses were $1.3 million and $1.2 million for the six months ended June 30, 2025 and 2024, respectively. The increase of $0.1 million is primarily due to higher employee compensation expenses.

Previous wording

As of March 31, 2025, we had approximately $17.3 million of cash, cash equivalents and investments available-for-sale, and working capital of $21.8 million. Based on the currently available working capital along with the expectation of management of its ability to execute on its operational plans as discussed below, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

Current wording

As of June 30, 2025, we had approximately $18.4 million of cash, cash equivalents and investments available-for-sale, and net working capital of $20.7 million. Based on the currently available net working capital along with the expectation of management of its ability to execute on its operational plans as discussed below, management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months from the date of the filing of this report.

Previous wording

Additionally, the Company's operational plans include raising capital, if needed, by using the $21.1 million remaining availability under its at-the-market ("ATM") facility or other methods or forms of financings, subject to existing limitations. Under the ATM, we have the ability to control the timing and price at which capital is raised.

Current wording

Additionally, the Company's operational plans include raising capital, if needed, by using the $21.1 million remaining availability under its at-the-market ("ATM") facility or other methods or forms of financings, subject to existing limitations. Under the ATM, we have the ability to control the timing and floor price at which capital is raised.

Previous wording

If the Company attempts to obtain additional debt or equity financing, the Company cannot assume such financing will be available on favorable terms, if at all. In addition, any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita. Specifically, until DaVita owns less than 50% of its investment, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5 million or to refinance existing debt, unless DaVita consents.

Current wording

If the Company attempts to obtain additional debt or equity financing, the Company cannot assume such financing will be available on favorable terms, if at all. In addition, any debt financing is limited by the terms of our Securities Purchase Agreement with DaVita. Specifically, until DaVita owns less than 50% of its investment, the Company may only incur additional debt in the form of a purchase money loan, a working capital line of up to $5.0 million or to refinance existing debt, unless DaVita consents.

Previous wording

The Company is subject to certain covenants and cure provisions under its Loan Agreement with Innovatus Life Sciences Lending Fund I, LP. As of March 31, 2025, the Company is in compliance with all covenants. On January 2, 2024, the Company's Loan Agreement was amended to include, among other things, an interest-only period for 30 months, or up to 36 months if certain conditions are met, and extend the maturity date to January 1, 2029 (See Note 15 to the accompanying condensed consolidated financial statements).

Current wording

On January 2, 2024, the Company's Loan Agreement was amended to include, among other things, an interest-only period for 30 months, or up to 36 months if certain conditions are met, and extend the maturity date to January 1, 2029 (See Note 15 to the accompanying condensed consolidated financial statements).

Previous wording

The global macroeconomic environment is uncertain, and could be negatively affected by, among other things, changes in U.S. trade policies, including tariffs and other trade restrictions or the threat of such actions, instability in the global capital and credit markets, recent bank failures in the United States, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Middle East conflict and other political tensions, and the occurrence of natural disasters and public health crises. Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures. At this time, the Company is unable to quantify the potential effects of this economic instability on our future operations. Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future.

Current wording

capital and credit markets, recent bank failures in the United States, supply chain weaknesses, and instability in the geopolitical environment, including as a result of the Russian invasion of Ukraine, the Middle East conflict and other political tensions, and the occurrence of natural disasters and public health crises. Such challenges have caused, and may continue to cause, recession fears, rising interest rates, foreign exchange volatility and inflationary pressures. At this time, the Company is unable to quantify the potential effects of this economic instability on our future operations. Due to the rapidly evolving nature of the global situation, it is not possible to predict the extent to which these conditions could adversely affect the Company's liquidity and capital resources in the future.

Previous wording

Net cash used in operating activities was $3.5 million for the three months ended March 31, 2025 compared to net cash used in operating activities of $2.4 million for the three months ended March 31, 2024. The increase in cash used in operating activities during the current period as compared to cash used in operating activities in the prior period was primarily due to (i) a decrease in net loss of approximately $0.2 million and (ii) an increase in cash used in changes in current balance sheet accounts in the ordinary course of business of approximately $1.6 million.

Current wording

Net cash used in operating activities was $1.6 million for the six months ended June 30, 2025 compared to net cash used in operating activities of $0.9 million for the six months ended June 30, 2024. The increase in cash used in operating activities during the current period as compared to cash used in operating activities in the prior period was primarily due to (i) an increase in net loss of approximately $1.6 million, partially offset by (ii) a decrease in cash used in changes in current balance sheet accounts in the ordinary course of business of approximately $0.4 million and (iii) non-cash adjustments of $0.5 million.

Previous wording

Cash Used In Investing Activities

Current wording

Cash Provided By (Used In) Investing Activities

Previous wording

Net cash used in investing activities was immaterial during the three months ended March 31, 2025 compared to net cash used in investing activities of $0.1 million for the three months ended March 31, 2024. Net cash used in investing activities during the three months ended March 31, 2025 was driven primarily by purchases of available-for-sale investments of $2.9 million and $0.1 million of cash paid for the purchase of equipment, offset by cash proceeds from sales of our available-for-sale investments of $3.0 million during the period. Net cash used in investing activities during the three months ended March 31, 2024 was driven entirely by cash paid for the purchase of equipment.

Current wording

Net cash used in investing activities was $0.1 million during the six months ended June 30, 2025 compared to net cash provided by investing activities of $1.6 million for the six months ended June 30, 2024. Net cash used in investing activities during the six months ended June 30, 2025 was driven by purchases of available-for-sale investments of $5.9 million and $0.2 million of cash paid for the purchase of equipment, partially offset by cash proceeds from sales of our available-for-sale investments of $6.0 million during the period. Net cash provided by investing activities during the six months ended June 30, 2024 was driven primarily by sales of our available-for-sale investments of $2.0 million during the period, offset by cash paid for the purchase of equipment of $0.4 million.

Previous wording

Net cash used in financing activities was $0.8 million during the three months ended March 31, 2025 compared to net cash provided by financing activities of $0.2 million for the three months ended March 31, 2024. Net cash used in financing activities during the three months ended March 31, 2025 was primarily due to the cash paid in connection with the Evoqua Asset Acquisition deferred consideration obligation of $0.4 million, $0.2 million of payments under the insurance financing note payable and $0.1 million of payments on finance lease liabilities. Net cash provided by financing activities for the three months ended March 31, 2024 was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $0.6 million, partially offset by $0.2 million of payments under the insurance financing note payable and $0.1 million of payments on finance lease liabilities.

Current wording

Net cash used in financing activities was $1.4 million during the six months ended June 30, 2025 compared to net cash provided by financing activities of $2.2 million for the six months ended June 30, 2024. Net cash used in financing activities during the six months ended June 30, 2025 was primarily due to the cash paid in connection with the Evoqua Asset Acquisition deferred consideration obligation of $0.9 million, $0.3 million of payments on finance lease liabilities and $0.3 million of payments under the insurance financing note payable. Net cash provided by financing activities for the six months ended June 30, 2024 was primarily due to the gross proceeds from the issuance of common stock in connection with the ATM facility of $2.8 million.

Previous wording

See Note 13 to the condensed consolidated financial statements included elsewhere in this Form 10-Q for additional disclosures. There have been no other material changes from the contractual obligations and other commitments disclosed in Note 14 and 15 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

Due to the contract-intensive nature of the Company's business, the Company has been and may in the future become involved in disputes or legal actions with its contract counterparties, which could have a negative impact on the Company's business, results of operations or financial condition. See Note 13 to the condensed consolidated financial statements included elsewhere in this Form 10-Q for additional disclosures. There have been no other material changes from the contractual obligations and other commitments disclosed in Note 14 and 15 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.