ADMA BIOLOGICS, INC.

Previous wording

Through our ADMA BioManufacturing business segment, we currently have three products with U.S. Food and Drug Administration (the “FDA”) approval, all of which are currently marketed and commercially available: (i) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an Intravenous Immune Globulin (“IVIG”) product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”) or Inborn Errors of immunity in adults and adolescents, for which we received FDA approval on April 1, 2019 and commenced first commercial sales in October 2019; (ii) BIVIGAM (Immune Globulin Intravenous, Human), an IVIG product indicated for the treatment of PI, and for which we received FDA approval on May 9, 2019 and commenced commercial sales in August 2019; and (iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing HBsAg and other listed exposures to Hepatitis B. We seek to develop a pipeline of plasma-derived therapeutics, including a product based on our most recently approved patent application under U.S. Patent No. 10,259,865 related to methods of treatment and prevention of S. pneumonia infection for an immunoglobulin manufactured to contain standardized antibodies to numerous serotypes of S. pneumoniae. Our products and product candidates are intended to be used by physician specialists focused on caring for immune-compromised patients with or at risk for certain infectious diseases.

Current wording

Through our ADMA BioManufacturing business segment, we currently have three products with U.S. Food and Drug Administration (the “FDA”) approval, all of which are currently marketed and commercially available: (i) ASCENIV (Immune Globulin Intravenous, Human – slra 10% Liquid), an Intravenous Immune Globulin (“IVIG”) product indicated for the treatment of Primary Humoral Immunodeficiency (“PI”), also known as Primary Immunodeficiency Disease (“PIDD”) or Inborn Errors of immunity in adults and adolescents, for which we received FDA approval on April 1, 2019 and commenced first commercial sales in October 2019; (ii) BIVIGAM (Immune Globulin Intravenous, Human), an IVIG product indicated for the treatment of PI, and for which we received FDA approval on May 9, 2019 and commenced commercial sales in August 2019; and (iii) Nabi-HB (Hepatitis B Immune Globulin, Human), which is indicated for the treatment of acute exposure to blood containing HBsAg and other listed exposures to Hepatitis B. We seek to develop a pipeline of plasma-derived therapeutics, including a product based on our most recently approved patent application under U.S. Patent Nos. 10,259,865 and 11,084,870 related to methods of treatment and prevention of S. pneumonia infection for an immunoglobulin manufactured to contain standardized antibodies to numerous serotypes of S. pneumoniae. We have successfully completed production of a pilot-scale batch and are conducting animal studies for our S. pneumoniae hyperimmune globulin program, SG-001. Our products and product candidates are intended to be used by physician specialists focused on caring for immune-compromised patients with or at risk for certain infectious diseases.

Previous wording

We manufacture these products at our FDA-licensed, plasma fractionation and purification facility located in Boca Raton, Florida with a peak annual processing capability of up to 600,000 liters (the “Boca Facility”). Based on current production yields, our completed and ongoing supply chain enhancements and capacity expansion initiatives, we believe this facility has the potential to produce sufficient quantities of our immune globulin (“IG”) products representing annual revenues of approximately $330 million in 2024 and potentially $380 million in 2025. At these revenue levels, we forecast achieving consolidated gross margins in the range of 40-50% and net income margins in the range of 20-30%. These assumptions translate to potential fiscal year 2024 and 2025 net income of $65 million and $115 million or more and adjusted EBITDA of $90 million and $140 million or more, respectively.

Current wording

We manufacture these products at our FDA-licensed, plasma fractionation and purification facility located in Boca Raton, Florida with a peak annual processing capability of up to 600,000 liters (the “Boca Facility”). Based on current production yields, our completed and ongoing supply chain enhancements and capacity expansion initiatives, we believe this facility has the potential to produce sufficient quantities of our immune globulin (“IG”) products representing projected annual revenues greater than $490 million in 2025 and $605 million in 2026. These revenue targets translate to potential fiscal year 2025 and 2026 Adjusted Net Income exceeding $175 million and $235 million, respectively, and Adjusted EBITDA exceeding $225 million and $305 million, respectively. The foregoing financial targets do not account for the potential FDA approval of our innovative yield enhancement production process described below.

Previous wording

We sell plasma-derived intermediate fractions to certain customers, which are generated as part of our FDA-approved manufacturing process for IG and IVIG products, through a five-year manufacturing and supply agreement we entered into in January 2020. These intermediate by-products are used as the starting raw material to produce other plasma-derived biologics. In addition, from time to time we provide contract manufacturing services for certain third-party clients. We also provide laboratory contracting services to certain customers and anticipate providing contract filling, labeling and packing services utilizing our FDA-approved in-house fill-finish capabilities.

Current wording

From time to time we may provide contract manufacturing services for certain third-party clients. We also provide laboratory contracting services to certain customers and may provide contract filling, labeling and packing services utilizing our FDA-approved in-house fill-finish capabilities.

Previous wording

Year Ended December 31, 2022 Compared to December 31, 2021

Current wording

For the year ended December 31, 2024 we achieved net income of $197.7 million, the first time in our history that we achieved net income on a GAAP basis, and generated positive cash flow from operations of $118.7 million. Our improved operating results are primarily the result of the substantial revenue growth and continued physician, patient and payer acceptance of ASCENIV.

Previous wording

ASCENIV is approved for the treatment of PIDD or PI, a class of inherited genetic disorders that causes a deficient or absent immune system in adults and adolescents (12 to 17 years of age). Our pivotal Phase 3 clinical trial in 59 PIDD patients met the primary endpoint of no Serious Bacterial Infections (“SBI”) reported during 12 months of treatment. Secondary efficacy endpoints further demonstrated the benefits of ASCENIV in the low incidence of infection, therapeutic antibiotic use, days missed from work, school and daycare and unscheduled medical visits and hospitalizations. We believe this clinical data together with the FDA approval for the treatment of PIDD better positions ADMA to potentially further evaluate ASCENIV in immune-compromised patients infected with or at-risk for RSV infection or potentially other respiratory viral pathogens at an appropriate time. Due to the COVID-19 pandemic, our plans have been delayed. In the future however, we may elect to work with the FDA and the immunology and infectious disease community to design an appropriate clinical trial to evaluate the use of ASCENIV in this patient population. Following FDA approval in April 2019, commercial sales of ASCENIV commenced in October of 2019 and in 2023 ADMA commenced manufacturing ASCENIV at the 4,400 Liter production scale for the first time in the Company’s history. We expect that this expansion should meaningfully improve the product’s margin profile and increase plant production capacity as fewer batches will be needed to support our revenue goals. ASCENIV’s prescriber and patient base continued to expand during 2023, which drove record utilization and pull-through for this product. These elevated demand trends have sustained into 2024, and ADMA currently expects that this product’s rapid growth will continue throughout 2024 and beyond.

Current wording

ASCENIV is approved for the treatment of PIDD or PI, a class of inherited genetic disorders that causes a deficient or absent immune system in adults and adolescents (12 to 17 years of age). Our pivotal Phase 3 clinical trial in 59 PIDD patients met the primary endpoint of no Serious Bacterial Infections (“SBI”) reported during 12 months of treatment. Secondary efficacy endpoints further demonstrated the benefits of ASCENIV in the low incidence of infection, therapeutic antibiotic use, days missed from work, school and daycare and unscheduled medical visits and hospitalizations. We believe this clinical data together with the FDA approval for the treatment of PIDD better positions ADMA to potentially further evaluate ASCENIV in immune-compromised patients infected with or at-risk for RSV infection or potentially other respiratory viral pathogens at an appropriate time. Due to the COVID-19 pandemic, our plans have been delayed. In the future however, we may elect to work with the FDA and the immunology and infectious disease community to design an appropriate clinical trial to evaluate the use of ASCENIV in this patient population. Following FDA approval in April 2019, commercial sales of ASCENIV commenced in October of 2019 and in 2023 we commenced manufacturing ASCENIV at the 4,400 Liter production scale. This expansion has improved the product’s margin profile and increased plant production capacity as fewer batches are needed to support our revenue goals. ASCENIV’s prescriber and patient base continued to expand during 2024, which drove record utilization and pull-through for this product. These elevated demand trends have sustained into 2025, and ADMA currently expects that this product’s rapid growth will continue throughout 2025 and beyond.

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with Accounting Principles Generally Accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate these estimates and assumptions, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates. Significant estimates include rebates and certain other deductions from gross revenues, impairment of long-lived assets, valuation of inventory, assumptions used in projecting future liquidity and capital requirements, assumptions used in the fair value of awards granted under our equity incentive plans and warrants issued in connection with the issuance of notes payable and the valuation allowance for our deferred tax assets.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate these estimates and assumptions, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

Previous wording

Some of the estimates and assumptions we have to make under U.S. GAAP require difficult, subjective or complex judgments about matters that are inherently uncertain and, as a result, actual results could differ from those estimates. Due to the estimation processes involved, the following summary of accounting estimates and their application are considered to be critical to understanding our business operations, financial condition and results of operations. For a description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. Estimates and assumptions used in projecting future liquidity and capital requirements are described in Note 1 to the Consolidated Financial Statements.

Current wording

Some of the estimates and assumptions we have to make under U.S. GAAP require very difficult, subjective and/or complex judgments about matters that are inherently uncertain and, as a result, we have identified those as critical accounting estimates, which are considered critical to an understanding of our historical financial condition and results of operations and are reasonably likely to have a material impact on our future results of operations and financial condition. Critical accounting estimates include rebates and potentially certain other deductions from gross revenues, assumptions used in the fair value of awards granted under our equity incentive plans and estimates related to the valuation allowance for our deferred tax assets. For a description of our significant accounting policies, see Note 2 to the Consolidated Financial Statements.

Previous wording

Historically, adjustments to these estimates to reflect actual results or updated expectations have not been material to our overall business. While we have some historical sales and rebate experience from our two primary immunoglobulin products, ASCENIV and BIVIGAM, since their FDA approvals in 2019, it is not extensive. If any of our ratios, factors, assessments, experiences or judgments are not indicative or accurate estimates of our future experience, our results could be materially affected. Estimates that are most at risk for material adjustment are those associated with U.S. Medicaid rebates because of the extensive time delay between the recording of the accrual and its ultimate settlement, an interval that can generally take up to several years or more. These estimates may change from time to time based on changes in utilization, payor and channel mixes. While our results of operations to date have not required any material adjustment due to this risk, the delay between when this obligation is initially recorded and ultimately settled could potentially materially impact our revenues and our results of operations in the future.

Current wording

Prior to 2024, adjustments to these estimates to reflect actual results or updated expectations have not been material to our overall business. While we have some historical sales and rebate experience from our two primary immunoglobulin products, ASCENIV and BIVIGAM, since their FDA approvals in 2019, our historical experience is not extensive. If any of our ratios, factors, assessments, experiences or judgments are not indicative or accurate estimates of our future experience, our results could be materially affected. Estimates that are most at risk for material adjustment are those associated with U.S. Medicaid rebates because of the extensive time delay between the recording of the accrual and its ultimate settlement, an interval that can generally take up to several years or more. These estimates may change from time to time based on changes in utilization, payer and channel mixes. During 2024, we engaged a third-party specialist to assist in the evaluation of our accrual for U.S. Medicaid rebates related to the sale of our immunoglobulin products. As a result of this evaluation, we recognized a reduction in this accrual and a corresponding increase to net revenues of $12.6 million during the year ended December 31, 2024 (see Note 2 to the Consolidated Financial Statements). We considered several qualitative factors when evaluating our rebate accrual, such as the absence of a statutory limitation on the rebate amounts drug manufacturers pay to state Medicaid programs and general uncertainty that pharmaceutical manufacturers have historically seen with government payors often submitting lagged claims many periods after the initial dispensing of a product to an end patient. There was additional new information that arose during June 2024 that suggested our liabilities for certain payor claims were successfully resolved, which resulted in the $12.6 million adjustment to the accrual for U.S. Medicaid rebates in June 2024. Additional changes in estimate assumptions surrounding U.S. Medicaid and other rebate obligations could materially impact our revenues and our results of operations in the future.

Previous wording

All equity-based payments, including grants of stock options and Restricted Stock Units (“RSUs”), are recognized at their estimated fair value at the date of grant, and compensation expense is recognized on a straight-line basis over the grantee’s requisite vesting period. For the purpose of valuing stock options granted to our employees, directors and officers, we use the Black-Scholes option pricing model. The Black-Scholes option pricing model was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the underlying Black-Scholes assumptions can materially affect the fair value estimate. To determine the risk-free interest rate, we utilize the U.S. Treasury yield curve in effect at the time of the grant with a term consistent with the expected term of our awards. The expected term of the options granted is in accordance with SEC Staff Accounting Bulletins 107 and 110 and is based on the average between vesting terms and contractual terms. The expected dividend yield reflects our current and expected future policy for dividends on our Common Stock. The expected stock price volatility for our stock options was calculated by examining the historical volatility of our Common Stock since our Common Stock became publicly traded in the fourth quarter of 2013. We will continue to analyze the expected stock price volatility and expected term assumptions and will adjust our Black-Scholes option pricing assumptions as appropriate. Any changes in the foregoing Black-Scholes assumptions, or an election by us to utilize an alternative method for valuing stock options granted to employees, directors and officers, could potentially impact our stock-based compensation expense and our results of operations.

Current wording

All equity-based payments, including grants of stock options and restricted stock units (“RSUs”), are recognized at their estimated fair value at the date of grant, and compensation expense is recognized on a straight-line basis over the grantee’s requisite vesting period. For the purpose of valuing stock options granted to our employees, directors and executive officers, we use the Black-Scholes option pricing model. We also use the Black-Scholes model when determining additional compensation cost resulting from the modification to previously issued option grants. The Black-Scholes option pricing model was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the underlying Black-Scholes assumptions can materially affect the fair value estimate. To determine the risk-free interest rate, we utilize the U.S. Treasury yield curve in effect at the time of the grant with a term consistent with the term of our awards. The expected term of the options granted is in accordance with U.S. Securities and Exchange Commission (“SEC”) Staff Accounting Bulletins 107 and 110 and is based on the average between vesting terms and contractual terms. The expected dividend yield reflects our current and expected future policy for dividends on our common stock. The expected stock price volatility for our stock options was calculated by examining the historical volatility of our common stock since our common stock became publicly traded. We will continue to analyze the expected stock price volatility and expected term assumptions and will adjust our Black-Scholes option pricing assumptions as appropriate. Any changes in the foregoing Black-Scholes assumptions, or our election to utilize an alternative method for valuing stock options granted to employees, directors and executive officers, could potentially impact our stock-based compensation expense and our results of operations.

Previous wording

We have historically maintained a full valuation allowance against all of our net deferred tax assets, and as a result have recorded no income tax benefit in the accompanying consolidated financial statements. This valuation allowance reflects our assessment of whether it is more likely than not that we will generate sufficient taxable income in the future to be able to utilize our deferred tax assets. In determining whether a valuation allowance is warranted, we evaluate factors such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies. We consider all positive and negative evidence to estimate if sufficient future taxable income will be generated to realize our deferred tax assets. We consider cumulative losses in recent years to be a significant type of negative evidence, and based on our history of losses, at this time we have not included future projected taxable income as a source of income to recognize our deferred tax assets.

Current wording

Prior to December 31, 2024, we maintained a full valuation allowance against all of our net deferred tax assets, and as a result we have historically not recorded an income tax benefit in the accompanying consolidated financial statements despite continued losses through December 31, 2023. This valuation allowance reflected our assessment of whether it is more likely than not that we would generate sufficient taxable income in the future to be able to utilize our deferred tax assets. In determining whether a valuation allowance is warranted, we evaluate factors such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies. We consider all positive and negative evidence to estimate if sufficient future taxable income will be generated to realize our deferred tax assets, and we considered cumulative losses in recent years to be a significant type of negative evidence. As of December 31, 2024, we determined that it is more-likely-than-not that our federal and state deferred tax assets will be realized. As a result, we recorded a release of the valuation allowance associated with these deferred tax assets, which was due in part to achieving three years of cumulative taxable income and projected taxable income that is more than sufficient to realize our federal and state deferred tax assets, and we recorded a deferred income tax benefit in the amount of $84.3 million for the year ended December 31, 2024 (see Note 11 to the consolidated financial statements).

Previous wording

Research and development (“R&D”) expenses totaled $3.3 million for the year ended December 31, 2023, as compared to $3.6 million for the year ended December 31, 2022. The decrease is primarily due to lower expenditures attributable to a third-party service provider in connection with an R&D project that was completed in early 2023.

Current wording

R&D expenses totaled $3.3 million for the year ended December 31, 2023, as compared to $3.6 million for the year ended December 31, 2022. The decrease is primarily due to lower expenditures attributable to a third-party service provider in connection with an R&D project that was completed in early 2023.

Previous wording

For the year ended December 31, 2023, we had operating income of $21.6 million, as compared to an operating loss of $39.4 million for the year ended December 31, 2022. The $61.0 million improvement in operating results was mainly due to the improved gross profit of $53.7 million and the lower total operating expenses of $7.3 million.

Current wording

For the year ended December 31, 2023, we had operating income of $21.6 million, as compared to an operating loss of $39.4 million for the year ended December 31, 2022. The $61.0 million improvement in operating results was mainly due to the improved gross profit of $53.7 million, largely driven by the year-over-year revenue growth and shift in revenue mix toward higher margin IVIG products, and the lower total operating expenses of $7.3 million.

Previous wording

Interest expense for the year ended December 31, 2023 was $25.0 million, as compared to $19.3 million for the year ended December 31, 2022. The increase is mainly due to approximately $51.8 million of additional debt principal resulting from the refinancing of our senior credit facility on March 23, 2022, additional debt principal resulting from interest payments made “in kind” in the form of additional indebtedness of approximately $6.8 million, as well as an increase in the stated interest rate on our senior debt from 10.75% in 2022 to as high as 14.4% at certain points in fiscal 2023 as a result increases in the Secured Overnight Financing Rate (“SOFR”). We expect our interest expense to decrease in 2024 as a result of the refinancing transaction we completed in December of 2023 (see “Liquidity and Capital Resources”), which resulted in a lower debt principal balance and a reduction in the interest rate.

Current wording

Interest expense for the year ended December 31, 2023 was $25.0 million, as compared to $19.3 million for the year ended December 31, 2022. The increase is mainly due to approximately $51.8 million of additional debt principal resulting from the refinancing of our senior credit facility on March 23, 2022, additional debt principal resulting from interest payments made “in kind” in the form of additional indebtedness of approximately $6.8 million, as well as an increase in the stated interest rate on our senior debt from 10.75% in 2022 to as high as 14.4% at certain points in fiscal 2023 as a result of increases in the Secured Overnight Financing Rate (“SOFR”). We expect our interest expense to decrease in 2024 as a result of the refinancing transaction we completed in December of 2023 (see “Liquidity and Capital Resources”), which resulted in a lower debt principal balance and a reduction in the interest rate.

Previous wording

Adjusted EBITDA increased by $67.9 million for the year ended December 31, 2023 as compared to the same period of a year ago. The improvement is driven primarily by an increase in operating income in 2023 of $61.0 million. Adjusted EBITDA improved by $22.0 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, mainly due to the decreasing in operating loss in 2022 of $19.0 million.

Current wording

Adjusted EBITDA improved by $122.3 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, mainly due to the substantial increase in operating income in 2024 of $117.4 million. Adjusted EBITDA increased by $67.9 million for the year ended December 31, 2023 as compared to the same period of a year ago. The improvement is driven primarily by an increase in operating income in 2023 of $61.0 million.

Previous wording

The following table presents the reconciliation of Net loss to Adjusted net income (loss) for the years ended December 31, 2023, 2022 and 2021:

Current wording

The following table presents the reconciliation of Net income (loss) to Adjusted net income (loss) for the years ended December 31, 2024, 2023 and 2022:

Previous wording

At December 31, 2023, we had working capital of $207.2 million, primarily consisting of $172.9 million of inventory, cash and cash equivalents of $51.4 million and $27.4 million of accounts receivable, partially offset by current liabilities of $49.8 million, as compared to working capital at December 31, 2022 of $231.1 million, primarily consisting of $163.3 million of inventory, cash and cash equivalents of $86.5 million and accounts receivable of $15.5 million, partially offset by current liabilities of $39.3 million. We have incurred an accumulated deficit of $506.3 million since inception and although we had positive cash flow from operations of $8.8 million for the year ended December 31, 2023, we had negative cash flows from operations of $59.5 million and $112.4 million for the years ended December 31, 2022 and 2021, respectively. We have funded our operations over the past few years primarily from the sale of our equity securities and debt financings. Our material cash requirements are primarily comprised of:

Current wording

At December 31, 2024, we had working capital of $275.9 million, primarily consisting of $170.2 million of inventory, cash and cash equivalents of $103.1 million and $50.0 million of accounts receivable, partially offset by current liabilities of $55.5 million, as compared to working capital at December 31, 2023 of $207.2 million, primarily consisting of $172.9 million of inventory, cash and cash equivalents of $51.4 million and accounts receivable of $27.4 million, partially offset by current liabilities of $49.8 million. Although we have incurred an accumulated deficit of $308.6 million since inception, we had positive cash flow from operations for the years ended December 31, 2024 and 2023 of $118.7 million and $8.8 million for the years ended December 31, 2024 and 2023, respectively. Prior to fiscal 2024, we funded our operations over the previous few years primarily from the sale of our equity securities and debt financings. Our material cash requirements are primarily comprised of:

Previous wording

In addition, our end-to-end production cycle time from procurement of raw materials to commercial release of finished product can take between seven and 12 months or potentially longer, requiring substantial inventories of raw material plasma and other manufacturing and laboratory testing materials and single use disposables.

Current wording

As we continue to onboard new staff and expand production at the Boca Facility, we may also decide to use cash on hand, in whole or in part, to purchase additional real estate to add redundancies, expand operations and prepare for future growth opportunities. In addition, our end-to-end production cycle time from procurement of raw materials to commercial release of finished product can take between seven and 12 months or potentially longer, requiring substantial inventories of raw material plasma and other manufacturing and laboratory testing materials and single use disposables.

Previous wording

For the year ended December 31, 2023 we had a net loss of loss of $28.2 million and achieved adjusted net income of $0.7 million which, as further described under “Non-GAAP Financial Measures”, excludes charges related to the refinancing of our senior debt of $26.2 million and an IT systems disruption of $2.7 million, as well as positive cash flow from operations, both for the first time in our history. However, at present we cannot be certain that we will be able to continue to generate a sufficient amount of product revenue to achieve profitability on an ongoing basis. We currently anticipate, based upon our projected revenue and expenditures, that our current cash, cash equivalents and accounts receivable, along with our projected future operating cash flow, will be sufficient to fund our operations, as currently conducted, through the end of the first quarter of fiscal 2025. However, our current outlook with respect to cash flows and profitability may change based upon several factors, including the success of our commercial efforts with respect to the sale of our products and the continued acceptability of our immune globulin products by physicians, patients or payers, and whether or not the assumptions underlying our projected revenues and expenses are correct. If we are unable to maintain positive cash flow throughout fiscal 2024, we may need to raise additional capital and if such capital is not available due to widespread liquidity constraints or significant market instability that could result from international or global conflicts, economic uncertainty, COVID-19 or other pandemics, inflationary pressures or other factors beyond our control, we may have to delay, curtail or eliminate some of our commercialization efforts or product development activities. If we are unable to generate sufficient revenue to maintain positive cash flow throughout fiscal 2024 and need to raise additional capital, we may decide to do so through public or private equity offerings or debt financings, or we may enter into a corporate collaboration or licensing arrangement. The sale of additional equity securities or debt financings, if convertible, could result in dilution to our stockholders and, in such event, the value and potential future market price of our common stock may decline.

Current wording

For the year ended December 31, 2024, we had pre-tax income and GAAP net income of $125.7 million and $197.7 million, respectively. We currently anticipate, based upon our projected revenue and expenditures, that our current cash, cash equivalents and accounts receivable, along with our projected future operating cash flow, will be sufficient to fund our operations, as currently conducted, through the end of the first quarter of fiscal 2026. However, our current outlook with respect to cash flows and profitability may change based upon several factors, including the continued success of our commercial efforts with respect to the sale of our products and the continued acceptability of our immune globulin products by physicians, patients or payers, and whether or not the assumptions underlying our projected revenues and expenses are correct. If we are unable to maintain positive cash flow throughout fiscal 2025, we may choose to raise additional capital. If we are unable to generate sufficient revenue to maintain positive cash flow throughout fiscal 2025 and elect to raise additional capital, we may decide to do so through public or private equity offerings or debt financings, or we may enter into a corporate collaboration or licensing arrangement. The sale of additional equity securities or debt financings, if convertible, could result in dilution to our stockholders and, in such event, the value and potential future market price of our common stock may decline.

Previous wording

On December 18, 2023 (the “Ares Closing Date”), we and all of our subsidiaries entered into a new senior secured credit facility (the “Ares Credit Agreement”) with Ares Capital Corporation and certain credit funds affiliated with Ares Capital Corporation (collectively, “Ares”). The Ares Credit Agreement provides for a total of $135.0 million in senior secured credit facilities (the “Ares Credit Facility”) consisting of (i) a term loan in the aggregate principal amount of $62.5 million and (ii) a revolving credit facility in the aggregate principal amount of $72.5 million (collectively, the “Ares Loans”), both of which were fully drawn on the Ares Closing Date. The Ares Credit Facility has a maturity date of December 20, 2027 (the “Ares Maturity Date”). On the Ares Closing Date, we used the proceeds from the Ares Loans, along with a portion of our existing cash on hand, to terminate and pay in full all of the outstanding obligations under our previous senior credit facility (the “Hayfin Credit Facility”) with Hayfin Services LLP (“Hayfin”) including the outstanding principal in the amount of $158.6 million, a prepayment penalty in the amount $11.1 million, an exit fee of $1.6 million, all accrued and unpaid interest outstanding on the Hayfin Credit Facility as of the Ares Closing date, as well as certain fees and expenses related thereto. In connection with the payoff and termination of the Hayfin Credit Facility, we also wrote off $15.0 million of unamortized debt discount related to the Hayfin Credit Facility. As a result of this transaction, we recorded a loss on the extinguishment of the Hayfin Credit Facility in the amount of $26.2 million, which is mainly comprised of the write-off of unamortized debt discount and the prepayment penalty.

Current wording

On December 18, 2023 (the “Ares Closing Date”), we and all of our subsidiaries entered into a senior secured credit facility (the “Ares Credit Agreement”) with Ares Capital Corporation and certain credit funds affiliated with Ares Capital Corporation (collectively, “Ares”). The Ares Credit Agreement provided for a total of $135.0 million in senior secured credit facilities (the “Ares Credit Facility”) consisting of (i) a term loan in the aggregate principal amount of $62.5 million and (ii) a revolving credit facility in the aggregate principal amount of $72.5 million (collectively, the “Ares Loans”), both of which were fully drawn on the Ares Closing Date. The Ares Credit Facility has a maturity date of December 20, 2027 (the “Ares Maturity Date”). On the Ares Closing Date, we used the proceeds from the Ares Loans, along with a portion of our existing cash on hand, to terminate and pay in full all of the outstanding obligations under our previous senior credit facility (the “Hayfin Credit Facility”) with Hayfin Services LLP (“Hayfin”) including the outstanding principal in the amount of $158.6 million, a prepayment penalty in the amount $11.1 million, an exit fee of $1.6 million, all accrued and unpaid interest outstanding on the Hayfin Credit Facility as of the Ares Closing date, as well as certain fees and expenses related thereto. In connection with the payoff and termination of the Hayfin Credit Facility, we also wrote off $15.0 million of unamortized debt discount related to the Hayfin Credit Facility. As a result of this transaction, we recorded a loss on the extinguishment of the Hayfin Credit Facility in the amount of $26.2 million in the year ended December 31, 2023, which is mainly comprised of the write-off of unamortized debt discount and the prepayment penalty.

Previous wording

Borrowings under the term loan initially bear interest at the adjusted Term SOFR for a three‑month tenor in effect on the day that is two business days prior to the first day of the applicable calendar quarter plus 6.50% (the “Initial SOFR Term Loan Applicable Margin”). Borrowings under the revolving facility initially bear interest at the adjusted Term SOFR for a three‑month tenor in effect on the day that is two business days prior to the first day of the applicable calendar quarterplus3.75% (the “SOFR Revolving Facility Applicable Margin”). On the Ares Closing Date, the interest rate on the term loan was approximately 11.9% and the interest rate on the revolving facility was approximately 9.1%, representing a weighted-average interest rate of approximately 10.4%. Prior to the Ares Closing Date, the interest rate on the Hayfin Credit Facility was approximately 13.9%.

Current wording

Borrowings under the term loan bear interest at the adjusted Term SOFR for a three‑month tenor in effect on the day that is two business days prior to the first day of the applicable calendar quarter plus 6.50% (the “Initial SOFR Term Loan Applicable Margin”). Borrowings under the revolving facility bear interest at the adjusted Term SOFR for a three‑month tenor in effect on the day that is two business days prior to the first day of the applicable calendar quarter plus 3.75% (the “SOFR Revolving Facility Applicable Margin”). On the Ares Closing Date, the interest rate on the term loan was approximately 11.9% and the interest rate on the revolving facility was approximately 9.1%, representing a weighted-average interest rate of approximately 10.4%. As of December 31, 2024, the interest rate on the term loan was approximately 10.9% and the interest rate on the revolving facility was approximately 8.3%, representing a weighted-average interest rate of approximately 9.4%.

Previous wording

On the Ares Maturity Date, we are required to pay Ares the entire outstanding principal amount underlying the Ares Loans and any accrued and unpaid interest thereon. Prior to the Ares Maturity Date, there are no scheduled principal payments on the Ares Credit Facility, and we are required to make quarterly interest payments during the term of Ares Credit Facility of approximately $3.7 million. We may prepay the outstanding principal under the revolving facility, together with any accrued but unpaid interest on the prepaid principal amount, at any time and from time to time upon three business days’ prior written notice with no prepayment premium. However, in the event that we prepay an amount under the revolving facility that is greater than 50% of the current $72.5 million outstanding balance, we will still be required to pay interest on 50% of this balance, or $36.3 million, through the term of Ares Credit Facility. We may prepay the outstanding principal on the term loan, together with any accrued but unpaid interest on the prepaid principal amount, at any time and from time to time upon three business days’ prior written notice, subject to the payment to Ares of a prepayment premium equal to (i) the present value as of such date of all remaining required interest payments on the principal amount being repaid plus 1.5% of the prepaid principal amount, if prepaid on or prior to the first anniversary of the Ares Closing Date, (ii) 1.5% of the prepaid principal amount, if prepaid after the first anniversary of the Ares Closing Date and on or prior to the second anniversary of the Ares Closing Date, or (iii) 1.0% of the prepaid principal amount, if prepaid on or prior to the third anniversary of the Ares Closing Date.

Current wording

On the Ares Maturity Date, we are required to pay Ares the entire outstanding principal amount underlying the Ares Loans and any accrued and unpaid interest thereon. Prior to the Ares Maturity Date, there are no scheduled principal payments on the Ares Credit Facility, and we are required to make quarterly interest payments during the term of Ares Credit Facility of approximately $1.8 million. We may prepay the outstanding principal under the revolving facility, together with any accrued but unpaid interest on the prepaid principal amount, at any time and from time to time upon three business days’ prior written notice with no prepayment premium. However, in the event that we pay down an aggregate amount under the revolving facility that is greater than 50% of revolving facility commitment of $72.5 million, we will still be required to pay interest on 50% of this amount, or $36.3 million, through the term of Ares Credit Facility. We may prepay the outstanding principal on the term loan, together with any accrued but unpaid interest on the prepaid principal amount, at any time and from time to time upon three business days’ prior written notice, subject to the payment to Ares of a prepayment premium equal to (i) the present value as of such date of all remaining required interest payments on the principal amount being repaid plus 1.5% of the prepaid principal amount, if prepaid on or prior to the first anniversary of the Ares Closing Date, (ii) 1.5% of the prepaid principal amount, if prepaid after the first anniversary of the Ares Closing Date and on or prior to the second anniversary of the Ares Closing Date, or (iii) 1.0% of the prepaid principal amount, if prepaid on or prior to the third anniversary of the Ares Closing Date.

Previous wording

In connection with the closing of the Ares Credit Facility, we incurred fees and expenses related to the transaction of approximately $2.7 million, including a $1.7 million original issue discount payable to Ares, all of which was deducted from the Ares loan proceeds. In addition, we are also required to pay Ares an exit fee of $1.7 million upon the earlier of any prepayment date or the Ares Maturity Date, and this amount has been accrued as a separate liability in our consolidated balance sheet as of December 31, 2023. As a result, we recognized an aggregate debt discount of $4.4 million as of the Ares Closing Date, and the weighted-average effective interest rate on the Ares Loans as of December 31, 2023 was 11.39%.

Current wording

In connection with the closing of the Ares Credit Facility, we incurred fees and expenses related to the transaction of approximately $2.7 million, including a $1.7 million original issue discount payable to Ares, all of which was deducted from the Ares loan proceeds. In addition, we are also required to pay Ares an exit fee of $1.7 million upon the earlier of any prepayment date or the Ares Maturity Date, and this obligation has been accrued as a separate liability in our consolidated balance sheet as of December 31, 2024 and 2023 in the amount of $1.3 million and $1.7 million, respectively. As a result, we recognized an aggregate debt discount of $4.4 million as of the Ares Closing Date, and the weighted-average effective interest rate on the Ares Loans as of December 31, 2024 and 2023 was 10.81% and 11.39%, respectively. In connection with the prepayment of the term loan on December 19, 2024, we also paid a pro rata portion of the exit fee in the amount of $0.4 million.

Previous wording

On March 23, 2022 (the “Hayfin Closing Date”), we and all of our subsidiaries entered into the Hayfin Credit Agreement with Hayfin. The Hayfin Credit Agreement, as amended, provided for a senior secured term loan facility in a principal amount of up to $175.0 million (the “Hayfin Credit Facility”), composed of (i) a term loan made on the Hayfin Closing Date in the principal amount of $150.0 million (the “Hayfin Closing Date Loan”), and (ii) a delayed draw term loan in the principal amount of $25.0 million (the “Hayfin Delayed Draw Loan” and, together with the Hayfin Closing Date Loan, the “Hayfin Loans”). The Hayfin Delayed Draw Loan was not drawn prior to the Hayfin Closing Date. The Hayfin Credit Facility had a maturity date of March 23, 2027 (the “Hayfin Maturity Date”), subject to acceleration pursuant to the Hayfin Credit Agreement, including upon an Event of Default (as defined in the Hayfin Credit Agreement).

Current wording

On March 23, 2022 (the “Hayfin Closing Date”), we and all of our subsidiaries entered into the Hayfin Credit Agreement with Hayfin. The Hayfin Credit Agreement, as amended, provided for a senior secured term loan facility in a principal amount of up to $175.0 million, composed of (i) a term loan made on the Hayfin Closing Date in the principal amount of $150.0 million (the “Hayfin Closing Date Loan”), and (ii) a delayed draw term loan in the principal amount of $25.0 million (the “Hayfin Delayed Draw Loan” and, together with the Hayfin Closing Date Loan, the “Hayfin Loans”). The Hayfin Delayed Draw Loan was not drawn prior to our termination of the Hayfin Credit Agreement. The Hayfin Credit Facility had a maturity date of March 23, 2027 (the “Hayfin Maturity Date”), subject to acceleration pursuant to the Hayfin Credit Agreement, including upon an Event of Default (as defined in the Hayfin Credit Agreement).

Previous wording

Cash provided by operations for the year ended December 31, 2023 was $8.8 million, as compared to cash used in operations of $59.5 million for the same period of a year ago. This improvement was mainly due to the improvement in our operating results, driven by higher revenues and gross margins, and a lower increase in inventories. Cash used in operations for the year ended December 31, 2022 of $59.5 million represents a decrease of $52.9 million from the same period of a year ago, mainly due to the improvement in our operating results after giving effect to non-cash items, driven by higher revenues and gross margins, and reductions in accounts receivable related to the timing of shipments and collections from customers. The following table illustrates the primary components of our cash flows from operations:

Current wording

Cash provided by operations for the year ended December 31, 2024 was $118.7 million, as compared to $8.8 million for the year ended December 31, 2023. The increase is mainly due to substantially higher net income. The improvement in cash flow from operations in 2023 as compared to the year ended December 31, 2022 was mainly due to the improvement in our operating results, driven by higher revenues and gross margins, and a lower increase in inventories. The following table illustrates the primary components of our cash flows from operations:

Previous wording

Cash used in investing activities for the year ended December 31, 2023 was $5.0 million, which was primarily comprised of capital expenditures of $3.0 million for equipment purchases and facilities upgrades at the Boca Facility, and $1.8 million to complete the buildout of our plasma collection facilities. Net cash used in investing activities for the year ended December 31, 2022 was $13.9 million, which consisted of $8.7 million for the construction and buildout of several new plasma collection facilities and $5.2 million for equipment purchases and upgrades to the Boca Facility. Net cash used in investing activities for the year ended December 31, 2021 was $13.5 million, which consisted of $8.6 million for the construction and buildout of new plasma collection facilities and $4.9 million of capital expenditures at the Boca Facility, which included equipment purchases and continued implementation of our in-house fill/finish capabilities. While we do not have any firm commitments for material capital expenditures in 2024, we expect our total capital expenditures will be between $8.0 million and $12.0 million for fiscal 2024.

Current wording

Cash used in investing activities for the year ended December 31, 2024 was $8.6 million and is mainly comprised of equipment purchases and other capital expenditures at the Boca Facility. Cash used in investing activities for the year ended December 31, 2023 was $5.0 million, which was primarily comprised of capital expenditures of $3.0 million for equipment purchases and facilities upgrades at the Boca Facility, and $1.8 million to complete the buildout of our plasma collection facilities. Net cash used in investing activities for the year ended December 31, 2022 was $13.9 million, which consisted of $8.7 million for the construction and buildout of several new plasma collection facilities and $5.2 million for equipment purchases and upgrades to the Boca Facility. While we do not have any firm commitments for material capital expenditures in 2025, we expect our total capital expenditures will be between $12.0 million and $18.0 million for fiscal 2025.

Previous wording

Net cash used in financing activities for the year ended December 31, 2023 was $39.0 million, as we reduced our outstanding debt principal by $23.6 million with the refinancing of our senior debt on December 18, 2023 and paid approximately $12.7 million to exit the Hayfin Credit Facility. Net cash provided by financing activities for the year ended December 31, 2022 was $108.9 million, as we received approximately $47.0 in net proceeds from the refinancing of our senior credit facility in March of 2022 and $64.6 million in net proceeds from the December 9, 2022 public offering of our common stock. Cash provided by financing activities during the year ended December 31, 2021 was $121.0 million, which is mainly comprised of the net proceeds of $67.3 million from the sale of our common stock through several sale agreements and $53.8 million from the October 2021 underwritten public offering.

Current wording

Net cash used in financing activities for the year ended December 31, 2024 was $58.3 million and was primarily composed of an aggregate of $60.0 million of debt principal payments during the year. Net cash used in financing activities for the year ended December 31, 2023 was $39.0 million, as we reduced our outstanding debt principal by $23.6 million with the refinancing of our senior debt on December 18, 2023 and paid approximately $12.7 million to exit the Hayfin Credit Facility. Net cash provided by financing activities for the year ended December 31, 2022 was $108.9 million, as we received approximately $47.0 in net proceeds from the refinancing of our senior credit facility in March of 2022 and $64.6 million in net proceeds from the December 9, 2022 public offering of our common stock.

Previous wording

Inflation impacted a number of facets of our business during the years ended December 31, 2023, 2022 and 2021 at each of our business segments. We experienced price increases for, among other items, certain raw materials, consumable supplies, services for repairs and maintenance of our facilities, utilities, shipping and freight charges, fuel surcharges and labor costs, among other expenses. Based upon the macroeconomic environment, publicly available information and reports form the U.S. government, we expect this trend to continue in 2024 and potentially longer, which could potentially have a significant impact on our future results of operations. In addition, some of our third-party inventory purchase agreements provide for annual price increases that are tied to various consumer price indices, which have resulted in higher than historical percentage price increases and has resulted in and could continue to result in higher source plasma and other raw material and supplies costs in 2024 and beyond. Also, in a higher inflationary environment, we may not be able to raise the prices of our products to keep up with the rate of inflation. We are unable to predict when these external drivers of inflation will subside.

Current wording

Inflation impacted a number of facets of our business during the years ended December 31, 2024, 2023 and 2022 at each of our business segments. Disruptions in the global economy have impeded global supply chains, resulted in longer lead times and delays in procuring certain raw materials, and resulted in inflationary cost increases in certain raw materials, labor and transportation. We also experienced price increases for, among other items, consumable supplies, services for repairs and maintenance of our facilities, utilities, shipping and freight charges, fuel surcharges and labor costs, among other expenses. Based upon the macroeconomic environment, publicly available information and reports from the U.S. government, we expect this trend to subside somewhat in 2025, however we cannot predict the extent to which future domestic and global economic conditions including, but not limited to, supply chain constraints or geopolitical conditions, including the continuing conflicts in Europe and in the Middle East and surrounding areas, could have a significant impact on our future results of operations. In addition, some of our third-party inventory purchase agreements provide for scheduled price increases that are tied to various consumer price indices, which have resulted in higher than historical percentage price increases and could result in higher source plasma and other raw material and supplies costs in 2025 and beyond. Also, in a higher inflationary environment, we may not be able to raise the prices of our products to keep up with the rate of inflation.