Journey Medical Corp

Previous wording

During the three-month period ended March 31, 2025, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2024 Form 10-K that are expected to materially affect the Company’s present or future financial statements.

Current wording

During the six-month period ended June 30, 2025, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2024 Form 10-K that are expected to materially affect the Company’s present or future financial statements.

Previous wording

Total net product revenues of $13.1 million for the first quarter of 2025 were consistent with $13.0 million of net product revenues for the first quarter of 2024. The first quarter of 2025 includes $2.0 million of incremental net product revenue related to the U.S. commercial launch of Emrosi™, offset by a decrease in Accutane, as a result of lower sales volume driven by recent market competition. Our Legacy products decreased by $0.4 million mainly due to continued generic competition for Targadox.

Current wording

Total net product revenues of $15.0 million for the second quarter of 2025 were consistent with $14.9 million of net product revenues for the second quarter of 2024. The second quarter of 2025 includes $2.8 million of incremental net product revenue related to the U.S. commercial launch of Emrosi™, offset by a decrease in Accutane, as a result of lower sales volume driven by recent market competition.

Previous wording

Gross-to-net sales accruals are primarily a function of product sales volume, mix of products sold, and contractual discounts or rebates. Our reserves for gross-to-net sales allowances were $15.5 million at March 31, 2025, compared to $9.9 million at March 31, 2024, an increase of $5.5 million. The increase is due to the coupon rebate allowance related to the launch and commercialization of Emrosi.

Current wording

Gross-to-net sales accruals are primarily a function of product sales volume, mix of products sold, and contractual discounts or rebates. Our reserves for gross-to-net sales allowances were $13.9 million at June 30, 2025, compared to $9.8 million at June 30, 2024, an increase of $4.1 million. The increase is due to the coupon rebate allowance related to the launch and commercialization of Emrosi.

Previous wording

Cost of goods sold - (excluding amortization of acquired intangible assets) decreased by $1.2 million, or 20%, to $4.8 million for the three-month period ended March 31, 2025, from $6.0 million for the three-month period ended March 31, 2024, due to lower overall product cost of goods related to product sales mix, driven mainly by the decrease in Accutane revenue.

Current wording

Cost of goods sold - (excluding amortization of acquired intangible assets) decreased by $0.8 million, or 14%, to $4.9 million for the three-month period ended June 30, 2025, from $5.7 million for the three-month period ended June 30, 2024, due to lower overall product cost of goods related to product sales mix, driven mainly by the decrease in Accutane revenue, which has a higher cost to Journey than Emrosi.

Previous wording

Research and development costs were nil in the first quarter of 2025, compared to $7.9 million in the first quarter of 2024. The first quarter of 2024 includes Emrosi pre-approval project expenses, milestones and fees.

Current wording

Research and development costs were nil in the second quarter of 2025, compared to $0.9 million in the second quarter of 2024. The second quarter of 2024 includes Emrosi pre-approval project expenses.

Previous wording

Selling, general and administrative expenses increased by $2.2 million, or 26%, to $10.6 million for the three-month period ended March 31, 2025, from $8.4 million for the three-month period ended March 31, 2024. The increase is primarily due to the incremental operational activities related to the launch and commercialization of Emrosi.

Current wording

Selling, general and administrative expenses increased by $1.6 million, or 15%, to $11.9 million for the three-month period ended June 30, 2025, from $10.3 million for the three-month period ended June 30, 2024. The increase is primarily due to the incremental operational activities related to the launch and commercialization of Emrosi.

Previous wording

Interest expense, net increased by $0.4 million, to $0.7 million for the three-month period ended March 31, 2025, from $0.3 million for the three-month period ended March 31, 2024. The increase is primarily attributable to a higher principal balance outstanding under the Credit Agreement with SWK (each as defined below) during the three-months ended March 31, 2025 of $25.0 million as compared to $15.0 million during the three-months ended March 31, 2024.

Current wording

Interest expense, net increased by $0.4 million, to $0.8 million for the three-month period ended June 30, 2025, from $0.4 million for the three-month period ended June 30, 2024. The increase is primarily attributable to a higher principal balance outstanding under the Credit Agreement with SWK (each as defined below) during the three months ended June 30, 2025 of $25.0 million as compared to an average of approximately $15.0 million during the three months ended June 30, 2024.

Previous wording

At March 31, 2025, we had $21.1 million in cash and cash equivalents as compared to $20.3 million of cash and cash equivalents at December 31, 2024, and working capital of $13.8 million at March 31, 2025, compared to $13.0 million at December 31, 2024.

Current wording

At June 30, 2025, we had $20.3 million in cash and cash equivalents as compared to $20.3 million of cash and cash equivalents at December 31, 2024, and working capital of $10.8 million at June 30, 2025, compared to $13.0 million at December 31, 2024.

Previous wording

We regularly evaluate market conditions, our liquidity profile, and financing alternatives, including out-licensing arrangements for our products, to enhance our capital structure. We may seek to raise capital through debt or equity financings, to expand our product portfolio, and for other strategic initiatives, which may include sales of securities under either our 2022 Shelf (as defined below) or a new registration statement. Additionally, as a result of recurring losses, primarily a result of the research and development costs associated with Emrosi, substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.

Current wording

We regularly evaluate market conditions, our liquidity profile, and financing alternatives, including out-licensing arrangements for our products, to enhance our capital structure. We may seek to raise capital through debt or equity financings, which may include sales of securities under either our 2022 Shelf (as defined below) or a new registration statement, to expand our product portfolio and/or for other strategic initiatives. Additionally, as a result of recurring losses, substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.

Previous wording

On December 27, 2023, we entered into a Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”). The Credit Agreement originally provided for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million. On the closing date, we drew $15.0 million. On June 26, 2024, we drew the remaining $5.0 million under the Credit Facility. Loans under the Credit Facility (the “Term Loans”) mature on December 27, 2027, and bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate (“SOFR”) (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly. Interest

Current wording

On December 27, 2023, we entered into a Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”). The Credit Agreement originally provided for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million. On the closing date, we drew $15.0 million. On June 26, 2024, we drew the remaining $5.0 million under the Credit Facility. Loans under the Credit Facility (the “Term Loans”) mature on December 27, 2027, and bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate (“SOFR”) (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly. Interest payments began in February 2024 and are paid quarterly. Beginning in February 2026, we are required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 7.5% of the principal amount of funded Term Loans.

Previous wording

On December 30, 2022, we filed a shelf registration statement on Form S-3 (File No. 333-269079) (the “2022 Shelf”), which was declared effective by the Securities and Exchange Commission on January 26, 2023. This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $150.0 million of our common stock, preferred stock, debt securities, warrants, and units. In connection with the 2022 Shelf, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) relating to shares of the Company’s common stock with B. Riley Securities, Inc. We may offer and sell up to 4,900,000 shares of our common stock, from time to time, under the Sales Agreement. During the three-months ended March 31, 2025, we issued and sold 834,722 shares of common stock under the 2022 Shelf, generating net proceeds of $4.1 million. At March 31, 2025, 1,752,265 shares remain available for issuance under the Sales Agreement.

Current wording

On December 30, 2022, we filed a shelf registration statement on Form S-3 (File No. 333-269079) (the “2022 Shelf”), which was declared effective by the Securities and Exchange Commission on January 26, 2023. This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $150.0 million of our common stock, preferred stock, debt securities, warrants, and units. In connection with the 2022 Shelf, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) relating to shares of the Company’s common stock with B. Riley Securities, Inc. We may offer and sell up to 4,900,000 shares of our common stock, from time to time, under the Sales Agreement. During the six-months ended June 30, 2025, we issued and sold 834,722 shares of common stock under the 2022 Shelf, generating net proceeds of $4.1 million. At June 30, 2025, 1,752,265 shares remain available for issuance under the Sales Agreement.

Previous wording

Cash Flows for the Three-Month Periods Ended March 31, 2025 and 2024

Current wording

Cash Flows for the Six-Month Periods Ended June 30, 2025 and 2024

Previous wording

Net cash flows used in operating activities for the three-month period ended March 31, 2025 decreased by $2.2 million, to $2.8 million, from net cash flows used by operating activities of $5.0 million for the three-month period ended March 31, 2024. The decrease was driven primarily by the decrease in our net loss period-to-period, offset by changes in net working capital compared to the first quarter of 2024 primarily attributable to an increase in accounts receivable related to the launch of Emrosi.

Current wording

Net cash flows used in operating activities for the six-month period ended June 30, 2025 decreased by $6.4 million, to $3.8 million, from net cash flows used in operating activities of $10.2 million for the six-month period ended June 30, 2024. The decrease was driven primarily by the decrease in our net loss period-to-period, offset by changes in net working capital.

Previous wording

Net cash flows provided by financing activities for the three-month period ended March 31, 2025 increased by $2.0 million, to $3.6 million, from $1.6 million of cash flows provided by financing activities for the three-month period ended March 31, 2024. The increase is driven primarily by the net proceeds from issuances of common stock under our ATM program.

Current wording

Net cash flows provided by financing activities for the six-month period ended June 30, 2025 decreased by $2.9 million, to $3.8 million, from $6.7 million of cash flows provided by financing activities for the six-month period ended June 30, 2024. The Company received proceeds from the issuance of common stock under the ATM program of $4.0 million, offset by $0.6 million in payments on installment notes to Sun Pharmaceuticals Industries, Inc. during the six months ended June 30, 2025. The Company received $5.0 million from the SWK Credit Facility and $1.5 million from the issuance of common stock under the ATM program during the six months ended June 30, 2024.