CorMedix - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered a clean beat versus Street: revenue $39.1mm vs consensus $36.0mm (+8.6%); diluted EPS $0.30 vs $0.245; EBITDA $20.25mm vs $15.0mm. Management also raised H1 net sales guidance to $62–$70mm and now expects the high end (~$70mm) from existing customers. Bold beat driven by outpatient dialysis adoption at U.S. Renal Care and ramping smaller operators. Values retrieved from S&P Global.
• Sequentially, revenue rose to $39.1mm from $31.2mm in Q4 2024 and $11.5mm in Q3 2024; gross margin stayed exceptionally high (>95%). Net income flipped positive YoY to $20.6mm (vs. -$14.5mm) with operating income of $20.1mm and cash from operations of $19.7mm.
• Guidance: H1 2025 net sales to existing customers raised from $50–$60mm to $62–$70mm (now targeting the high end) and implied Q2 net revenue of $23–$31mm (expected moderate sequential decline due to shipment timing and shelf-stock adjustment tied to ASP mechanics).
• Strategic catalysts for the stock: potential mid‑year implementation at a contracted large dialysis operator (LDO), inpatient penetration doubling in April (3% of shipments in Q1 to >6% in April), and Phase 3 TPN study initiation with first site screening patients; mix shift towards Medicare Advantage (~40% of claims) supports reimbursement durability.

What Went Well and What Went Wrong

What Went Well

• Strong commercial execution: “strong first quarter net sales of $39.1 million… Adjusted EBITDA… $23.6 million” with order trends driving H1 to the high end of guidance.
• Inpatient momentum: “inpatient hospital ordering accounted for more than 6% of shipments, up more than double from the first quarter” as the dedicated inpatient sales team became fully operational; VA facility orders shipped.
• Clinical and RWE progress: Phase 3 TPN study initiated (first site screening patients; orphan drug application submitted) and RWE study eclipsed 2,000 patients, midpoint expected in July, underpinning MA negotiations and long‑term reimbursement resiliency.

What Went Wrong

• Near‑term lumpiness and price mechanics: Q2 revenue expected to dip vs Q1 due to shipment timing at U.S. Renal Care and anticipated shelf‑stock adjustment as ASP resets; net price erosion expected beginning in Q2.
• Customer concentration risk: U.S. Renal Care accounted for ~78–80% of Q1 shipments/revenue, highlighting reliance on anchor accounts pending broader LDO rollout.
• OpEx inflation in support of growth: Operating expenses up ~9% YoY to $17.4mm; R&D up ~281% to $3.2mm as clinical programs ramp (positive strategically, but a margin headwind if revenue growth slows).

Transcript

Operator (participant)

Good day, and welcome to the CorMedix 4th Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Dan Ferry, LifeSci Advisors. Please go ahead.

Dan Ferry (Head of Investor Relations)

Good morning, and welcome to the CorMedix first quarter 2025 earnings conference call. Leading the call today is Joe Todisco, Chief Executive Officer of CorMedix. He's joined by Dr. Matt David, Executive Vice President and CFO. That's Zelda Kaufman, EVP and Chief Legal and Compliance Officer; Liz Hurlburt, EVP and Chief Clinical Strategy and Operations Officer; and Erin Mistry, EVP and Chief Commercial Officer. Before we begin, I would like to remind everyone that during the call, management may make what are known as forward-looking statements within the meaning set forth in the Private Securities Litigation Reform Act of 1995. These statements are statements other than statements of historical fact regarding management's expectations, beliefs, goals, and plans about the company's prospects and future financial position.

Actual results may differ materially from the estimates and projections on which these statements are based due to a variety of important factors, including the risks and uncertainties described in greater detail in CorMedix filings with the SEC, which are available free of charge at the SEC's website or upon request from CorMedix. CorMedix may not actually achieve the goals or plans described in these forward-looking statements, and investors should not place undue reliance on these statements. CorMedix does not intend to update these forward-looking statements except as required by law. During this call, the company will discuss certain non-GAAP measures of its performance. GAAP to non-GAAP financial reconciliations and supplemental financial information are provided in CorMedix's earnings release and the current report on Form 8K filed with the SEC. This information is available on the Investor Relations section of CorMedix's website.

At this time, it is now my pleasure to turn the call over to Joe Todisco, Chief Executive Officer of CorMedix. Joe, please go ahead.

Joe Todisco (CEO)

Thanks, Dan. Good morning, everyone, and thank you for joining us on this call. CorMedix continues to have solid momentum with the launch of DefenCath, highlighted by strong first-quarter net sales of $39.1 million, in line with our earlier pre-announced results. Adjusted EBITDA for the first quarter of $23.6 million was slightly above our earlier pre-announcement. We continue to see steady utilization growth with existing anchor customer U.S. Renal Care, IRC, and DCI, as well as new utilization with smaller outpatient dialysis operators and inpatient hospitals and health systems. For the month of April, as an example, inpatient hospital ordering accounted for more than 6% of shipments, up more than double from the first quarter.

In early April, we updated our net revenue guidance for DefenCath sales to existing customers for the first half of the year, and we guided to a range of $62 million-$70 million, which implied second quarter 2025 net revenue guidance of $23 million-$31 million based upon first-quarter results. I'm happy to say that based on order trends and inventory tracking, we're able to further narrow our guidance toward the upper end of that range and currently project net revenue of approximately $70 million from existing purchasing customers over the first half of the year. As we stated on our previous call, the moderate sequential decline in revenue anticipated between Q1 and Q2 of this year is largely due to the timing of shipments to U.S.

Renal Care, in which they purchased a few additional weeks of inventory in both the fourth quarter of 2024 and first quarter of 2025, respectively. We expect that beginning in the third quarter of this year for order volumes from U.S. Renal Care to normalize and more closely track patient utilization. To that extent, we do anticipate utilization growth in the back half of 2025 as new patients initiate therapy at existing customers and as we add new customers in both the inpatient and outpatient settings. A large variable for our potential full-year financial outlook is the timing and scale of uptake by our previously announced large dialysis operator customer. Over the last few weeks, we have seen increased levels of communication and planning-related activities with medical and operations staff at the customer, and to that extent, we are optimistic of achieving our target for a mid-year 2025 implementation start.

We intend to update investors once we have a more definitive timeline from the customer. Turning back to the inpatient market, our dedicated inpatient sales team is now fully staffed, trained, and operational in the field, and we are hopeful to increase penetration as we move throughout 2025. Our partnership with WSI for promotion to federal facilities is also fully operational, and we received and shipped our first orders to VA facilities in the first quarter. Focusing now on our clinical developments, we have begun our phase three clinical study for the reduction of central line-associated bloodstream infections, or CLABSIs, in adult patients receiving total parenteral nutrition, or TPN, through a central venous catheter. Site selection began in February, and I'm happy to report that our first site is operational and actively screening patients, and we expect our first patient to be dosed over the next few days.

As a reminder, this is a 12-month study in fewer than 150 patients, and we are targeting completion of the study and submission of a new drug application to FDA by the end of 2026 or beginning of 2027. We recently submitted to FDA an application for orphan drug status for this indication and are awaiting FDA's determination of eligibility. The company's goal for TPN is to obtain FDA approval for an expanded use of our taurolidine and heparin catheter lock solution in the late 2027 to early 2028 timeframe, and we estimate annual peak sales potential in this indication to be in the range of $150 million-$200 million, based off a total addressable market size of $500 million-$750 million. We will provide investors with updates on progress in this important area of unmet need as we move forward.

Our other clinical initiatives also continue to make solid progress. Excuse me. Our real-world evidence study that is being run in cooperation with our study partner, U.S. Renal Care, has eclipsed 2,000 patients and will hit its midpoint in July. Our hope with this study, in which we expect to evaluate patient outcomes over a 24-month period, is to generate real-world evidence around the impact of DefenCath utilization on the cost of patient care, infection rates, hospitalizations, mortality, and multiple other metrics such as lost chair time and CRBSI-related antibiotic use. Data from this study will be critical to our objective of making DefenCath a standard of care catheter lock in the outpatient hemodialysis setting.

In addition to our adult TPN and real-world evidence studies, our study of DefenCath in the pediatric hemodialysis population is on target to begin in the third quarter of this year, and our expanded access program for high-risk populations, including but not limited to pediatric TPN, peritoneal dialysis patients with refractory peritonitis, and neutropenic oncology patients utilizing a CVC, is now live. I would now like to turn the call over to Matt to discuss the company's first-quarter financial results and financial position. Matt.

Matt David (CFO)

Thanks, Joe, and good morning, everyone. I am pleased to be here today to provide an overview of our first quarter 2025 financial results, as well as an update on CorMedix's cash position. The company has filed its quarterly report on Form 10-Q for the quarter ended March 31, 2025. I urge you to read the information contained in the report for a more complete discussion of our financial results. With respect to our first quarter of 2025 financial results, our net revenue for the first quarter of 2025 amounted to $39.1 million. CorMedix achieved profitability for the first quarter as our net income was $20.6 million, or $0.32 per share, compared with a net loss of $14.5 million, or $0.25 per share, in the first quarter of 2024. The net income recognized in 2025 was driven by the gross profits associated with the net sales of DefenCath.

Operating expenses in the first quarter of 2025 increased approximately 9% to $17.4 million, compared with $15.9 million in the first quarter of 2024. R&D expense increased by approximately 281% to $3.2 million, from approximately $800,000 in the first quarter of 2024, driven by the increase in personnel and clinical trial services in support of our ongoing clinical programs. Selling and marketing expense decreased 29% to $4.5 million in the first quarter of 2025, compared with $6.3 million in the first quarter of 2024. G&A expense increased 11% to $9.7 million in the first quarter of 2025 versus $8.7 million in the first quarter of 2024. The decrease in selling and marketing expense is considered temporary and related to the timing of our prior internal sales force versus the ramping of costs related to our outsourced sales force. We expect those costs to be normalized for the second quarter.

The increase in G&A expense was primarily driven by non-cash charges for stock-based compensation. We recorded net cash provided by operations during the first quarter of 2025 of $19.7 million, compared with net cash used in operations of $17.3 million in the first quarter of 2024. The increase is driven by our net income for the period versus the net loss in the comparison period. The company has cash and cash equivalents of $77.5 million as of March 31, 2025. As described previously, we are guiding to 2025 cash operating expenses of approximately $72 million-$78 million. The increase over 2024 spending levels is expected to be largely driven by an increase in R&D spending on our clinical initiatives. I will now turn the call back over to Joe for closing rMArks. Joe.

Joe Todisco (CEO)

Thanks, Matt. CorMedix is working diligently on all fronts to increase our existing customer base as well as expand the use of DefenCath to new therapeutic indications. I appreciate everyone's continued support in CorMedix, and I'm happy to take questions.

Operator (participant)

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Gregory Renza from RBC Capital. Please go ahead.

Gregory Renza (Analyst)

Great. Thanks. Good morning, Joe and Matt. Congrats on the progress, and thanks for taking my questions. Joe, maybe just starting with the LDO partnership, it sounds like at the top you mentioned just some degree of optimism in the progress. Just curious if you could just provide how that has, how your perceptions and your engagement there has evolved since we've last spoken in the last quarter or so. What do you think the LDO wants to see just operationally and with respect to outcomes before perhaps opening up to that broader population? I know that's longer term, but just want to see how you're driving to support those goals.

Joe Todisco (CEO)

No, thanks, Greg. With regard to the size of the population, I'm not going to speak for on behalf of the LDO. They haven't given us any updated guidance in terms of number of patients. We're still working off of prior feedback, and that's what we're prepared for, but also have the ability to scale up quite quickly should we need to. As I said in the script, over the last few weeks, we've seen heightened levels of kind of preparatory activity, the types of things that would need to be done to initiate utilization. Certainly, nothing is ever set in stone with customers, and we're waiting for an implementation date. As I said, we're optimistic or cautiously optimistic as you want to take it, and we're ready to go as soon as they hopefully pull the trigger on a purchase order.

Gregory Renza (Analyst)

Got it. Maybe just on inventory control, obviously, this is a key priority for operators, and you've commented on some of that lumpiness. Maybe just some comments, Joe, on kind of the policy and macro volatility that many sectors are experiencing. How are you reacting to that? Is there anything that you think is unpredictable or could be that could affect some of the usual kind of lumpiness when it comes to selling into and providing DefenCath to the operators?

Joe Todisco (CEO)

Yeah. No, thanks, Greg. The macro level issues right now that are kind of going on, call it worldwide, whether it's tariff-related or other kind of supply chain constraints, aren't really an issue for us. Our lumpiness was entirely or largely caused by just a price incentive that a customer had to kind of move some inventory or take a little bit of inventory earlier, and they're working through that inventory now, which is why we encouraged investors to look at the first half of the year kind of as a lump sum period. From an inventory prep standpoint, we've got a significant amount of active pharmaceutical ingredient on hand for both heparin and taurolidine that should or will cover not only our current dMAnd run rate for more than a year, but also a good amount of scale-up should we need to support any increased customer dMAnd.

We've also got a good runway of finished dosage inventory manufactured. We have two finished dosage manufacturers that have been qualified by the FDA, so we have some flexibility there. Overall, inventory is really not a constraint for us or something that I would foresee causing any fluctuations in our earnings.

Gregory Renza (Analyst)

Got it. It makes sense. Congrats again. I'll hop back into the queue.

Joe Todisco (CEO)

Thanks, Greg.

Operator (participant)

Thank you. The next question comes from Rowena Ruiz from Leerink Partners. Please go ahead.

Rowena Ruiz (Analyst)

Hey, morning, everyone. A couple from me. First one, could you talk a bit more about the main drivers behind the Q1 revenue number, especially given the successful implementation? I was curious, did some of that strength come from U.S. Renal or some of the small and medium dialysis centers? What metrics are giving you more confidence to point to the top end of your first-half guidance?

Joe Todisco (CEO)

Thanks, Rowena. Look, I think we have a number in the queue, exactly what percentage our customers or our top customer accounts for. I do believe that U.S. Renal in the first quarter was still more than 80% of shipments. It is a large driver. They're currently our biggest anchor customer. We did see good growth in the first quarter, as I said, with smaller customers, with hospitals. On the inpatient side, I think first quarter overall was around 3% of shipments, but a little bit larger percentage of dollars. There is a little bit better pricing in the hospital inpatient segment at this point of time. When we talk about guidance and kind of our thoughts around it being at the top end of the range, we're doing a pretty good analysis now on inventory, certainly at U.S.

Renal Care, but a couple of the other customers have begun sharing inventory reports. We have a little bit of visibility now into what their weekly dispensing utilization is. We are basically making a projection of what they have on hand, what the rundown is going to be, and what we think new orders are going to be over the next couple of weeks.

Rowena Ruiz (Analyst)

Yep. Got it. One last follow-up for me. I was also curious, thinking about the outstanding LDO, any updates there on what you're thinking about or what they might want to see to get more comfortable or just implement more using DefenCath and enter a contract, etc.?

Joe Todisco (CEO)

Yeah. As I said to Greg, I'm not going to speak for them in terms of what they might or might not be looking at in terms of implementation or timing. I can only speak to the questions that we're being asked and what we're being asked to provide. Essentially, are all of the same things that we've provided to other customers as we've ramped up toward implementation. As I get more information, I'm certainly going to update investors. Right now, as I said, I'm comfortable and we're optimistic that we're on the timelines that we've communicated previously.

Rowena Ruiz (Analyst)

Got it. Thank you.

Operator (participant)

Thank you. The next question comes from Les Sulewski from Truist Securities. Please go ahead.

Les Sulewski (Analyst)

Good morning. Thank you for taking my questions, and then congrats on the progress, guys. Joe, perhaps maybe you can talk about U.S. Renal, start there. You expect the order rates to normalize. I guess maybe can you provide us a sense of what patient pool or what percent of their patient pool is on DefenCath? Are there additional cohorts that can be further implemented? In regards to other customers, have they notified you on when they will start taking in shipments? Just kind of your ability to foresee the utilization tracking. I know you kind of shared some insights into customers providing you some of that, but are you able to kind of differentiate what's utilization versus inventory buildup? I have a follow-up as well on reimbursement.

Joe Todisco (CEO)

All right. Thanks, Les. I'm going to try and go all through these. When we talk about U.S. Renal Care and kind of order rates normalizing, I think what you were really asking is kind of what's the runway for growth over the back part of the year. I think there's some runway for growth. I think we're probably a little bit more than 80% implemented within kind of the eligible patient population based on the criteria they set up. I do think there's still opportunity, and there's always new patients that come in and begin dialysis that meet the criteria. I'd say with the other kind of mid-sized customers, there's a little bit more runway, I'd say, for growth. We've obviously implemented more recently.

We're still kind of in the ramping phase, I think, with both IRC and DCI, as well as with a number of the smaller customers. On utilization tracking, I would say, at least with U.S. Renal Care, which, and I'll correct the number I gave before, I think for this quarter was 78% of shipments in the first quarter or of revenue in the first quarter. We do have pretty good visibility as to what is utilization versus what is inventory. That's the basis for which we've amended our guidance, and now we're guiding toward the upper end of our range.

Les Sulewski (Analyst)

Got it. Very helpful. On the reimbursement front, so now maybe kind of looking ahead, Medicare Advantage being a bigger share, can we kind of, I guess, assume there's a potential for a reimbursement negotiation with Medicare Advantage in the early phases of the TDAPA period, or is this more of a kind of a concrete decision that will coincide with end-of-TDAPA coverage?

Joe Todisco (CEO)

Look, I think our expectation is to enter into negotiations with MA plans while TDAPA is still in force. Whether that ends up impacting reimbursement in year three or year four, we do not know yet. I do not know that there is a lot of precedent for TDAPA launches entering into direct contracts with MA plans. That is something we are looking to engage in. Obviously, our real-world evidence study is a big piece of the data that we are hoping to utilize for those negotiations. What I could say now that is certainly promising when we look at our claims data, about 40% of our claims are currently MA plans, a large number of plans currently providing reimbursement. That is, from our view, all positive.

Les Sulewski (Analyst)

Great. Just maybe last one on that front, the 40%, what would you expect that to grow to or change to by the end of year TDAPA coverage? Thank you.

Joe Todisco (CEO)

I wouldn't expect it to grow past 50/50 because MA is about 50% of the Medicare-based ESRD population. Most of these patients are Medicare. It's about half fee-for-service traditional and half MA. That's about what I would expect. That's why I said I think it's pretty positive that about 40% of our claims are Medicare Advantage. That's combined with a little bit of commercial and probably some Medicaid as well.

Les Sulewski (Analyst)

Got it. Okay. That's helpful. Thank you.

Operator (participant)

Perfect. Thank you. A reminder to all the participants, if you wish to register for a question, you may press star, then one on your telephone keypad. Our next question comes from Serge Bellenger from Needham & Company. Please go ahead.

Serge Bellenger (Analyst)

Hi, good morning. Joe, I guess a couple of questions first on the inpatient segment. You've now been in that market for a year, I think since last April. Just curious how you think about the overall opportunity a year later and how much of the business it could represent relative to the outpatient segment. Secondly, are there any efforts to modify or improve the TDAPA reimbursement process at this point? Thanks.

Joe Todisco (CEO)

Thanks, Serge. I'll take the first question first. Yes, we did launch in the inpatient segment last year, but as we've talked about on prior calls, it's a really long ramp to get the product in front of the P&T Committee, get through the P&T Committee, build champions within these institutions. A lot of them are very academic-minded and want to see what's going on in other institutions. It has taken a long time to kind of build a little bit of critical mass there. Now we're starting to see some progress. Now we've got a dedicated inpatient team that is now three weeks, I think, in the field and fully operational. We do think we've got a good runway there and an opportunity to grow the business. What it could grow to as a percentage of our business is kind of hard to pin down.

Overall, if you look at in terms of the total market opportunity, the TAM, about 10% of the unit volume flows through inpatient. As we said in the past, we think there is a little bit more durable pricing, perhaps, on the inpatient side that could lead to a higher dollar value. I had mentioned that we essentially for April, we kind of doubled our rate of shipments. It was 3% of our shipments in the first quarter, inpatient about 6% so far leading into in the second quarter. As a percentage of our overall business, it will really depend upon the timing and scale of bringing on new customers. Specifically, if an LDO customer comes on and is driving higher volumes, inpatient will be a smaller percentage of the business, but that does not necessarily mean that it is not going to be material or meaningful as a growth driver.

It's hard to kind of pin down a number of what we expect it to be. It really depends on a lot of variables. Just kind of changing gears on TDAPA in terms of efforts to modify TDAPA, I'd say there's a few efforts that are currently ongoing. One of the things that we're keeping an eye on in July, the proposed rule for 2026 should come out from CMS. Stakeholders have submitted a large number of comments in terms of potential changes to TDAPA. I think we're hopeful to see something in that proposed rule for next year that we would view as an improvement for TDAPA, and we're keeping an eye on that.

Separately, there are some legislative initiatives that are going on with stakeholders working with members of the Hill to hopefully get a bill brought forward later this year that would codify TDAPA in law and also make improvements to TDAPA. Legislation is always an uphill fight, certainly in this Congress. There is a lot of, I'd say, momentum amongst stakeholders that want to see changes to TDAPA to make it either longer in duration, more sustainable over time, and perhaps better drive utilization of innovative therapies.

Serge Bellenger (Analyst)

Thanks.

Operator (participant)

Thank you. Now I'll turn the conference over to Dan Ferry for written questions from the audience.

Dan Ferry (Head of Investor Relations)

Thank you, Operator. Joe, we do have one written question from the audience here. Can you provide any feedback from providers or customers on their experience with DefenCath to date?

Joe Todisco (CEO)

Okay. That's a good question, Dan. I'm going to actually ask Liz to kind of touch on that from a medical standpoint in terms of what we've heard and seen from customers. Go ahead.

Elizabeth Masson-Hurlburt (EVP and Chief Clinical Strategy and Operations Officer)

Sure. I would say our customer feedback has been very positive overall. Our clinical implementation and excellence team works really closely with our customers to ensure a smooth transition to DefenCath. I think many have been surprised how easily DefenCath fits into their current workflow, and the clinicians overall have been pretty quick to adopt and introduce patients. I also think our reimbursement support services with Prospectus have been instrumental in supporting customers with the nuances of TDAPA and NTAP claims, taking that unknown factor out of the aspect. Overall, it's been really positive.

Dan Ferry (Head of Investor Relations)

Thanks, Les.

Joe Todisco (CEO)

All right. Thanks, Les.

Gregory Renza (Analyst)

Thanks, Les. Joe, with that said, I don't have any other further questions from the audience. With that said, Operator, you may close the call.

Operator (participant)

Perfect. Thank you.

Joe Todisco (CEO)

All right. Thank you, everybody.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.