Executive Summary

Q2 2025 was a transition quarter: revenue fell 38% year over year to $16.1M as the largest customer continued transitioning away, but sequential gross margin held at 16% and adjusted EBITDA improved versus Q1; management reiterated full-year guidance (revenue $65–$70M, gross margin 16–18%, adjusted EBITDA $(0.5)M–$0.5M) .
Cash flow from operations was positive $1.8M and cash/investments increased to $18.4M, providing liquidity while the company right-sizes operations and automates manufacturing to support margin stability .
Commercial momentum continued: new multi-year agreements (e.g., Innovative Renal Care) and broader contract coverage (80%+ of customers under long-term contracts) mitigate concentration risk and support forward growth .
Setup for potential catalysts in 2H25: ongoing negotiations for a long-term supply arrangement with DaVita and discussions with a very large global provider could impact Q4; West Coast expansion remains a $100M opportunity; competitor recall created near-term share capture opportunities .

What Went Well and What Went Wrong

What Went Well

Margin/EBITDA resilience in a down-revenue quarter: gross margin remained 16% (in line with guidance), and adjusted EBITDA improved sequentially to $(0.2)M from $(0.4)M in Q1, supported by cost reductions and automation investments .
Liquidity and cash generation: $1.8M cash flow from operations and $18.4M cash/investments at quarter-end provide runway during the customer transition .
Contract wins reduce concentration risk: new multi-year contracts (IRC, largest rural health system, South Florida inpatient provider, home-care provider) and 80%+ of customers under long-term agreements; management emphasized long-term supply focus. Quote: “Today, more than 80% of our customers are under long-term contracts.” .

What Went Wrong

Revenue compression from largest customer transition: net sales declined 38% YoY to $16.1M; gross profit declined 45% YoY to $2.5M; net income swung to a $(1.5)M loss (vs $0.3M profit in Q2’24) .
YoY margin pressure: gross margin dipped to 16% from 18% in Q2’24 as mix shifted away from the former largest customer base (though management noted that customer’s contribution was not margin-accretive historically) .
Sequential revenue decline: Q2 revenue of $16.1M fell from $18.9M in Q1; while EBITDA improved, the lower volume underscores the transition headwind .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025 Actual	Q2 2025 Consensus*
Revenue ($USD Millions)	$25.83	$18.91	$16.07	$16.33*
Basic EPS ($)	$0.01	$(0.04)	$(0.05)	$(0.05)*
Gross Margin (%)	18%	16%	16%	—
Net Income (Loss) ($USD Millions)	$0.34	$(1.52)	$(1.49)	—
Adjusted EBITDA ($USD Millions)	$1.41	$(0.44)	$(0.24)	$(0.76)*

Notes:

Q2 revenue down 38% YoY; Q2 gross margin flat QoQ; adjusted EBITDA improved sequentially .
*Consensus values retrieved from S&P Global.

KPIs and Balance Sheet

KPI	Q1 2025	Q2 2025
Cash, Cash Equivalents & Investments ($USD Millions)	$17.33	$18.42
Cash Flow from Operations ($USD Millions)	—	$1.80
Customers Under Long-Term Contracts	—	>80%

Segment breakdown: The company reports consolidated “Net Sales”; no separate segment disclosures in the Q2 materials .

Guidance Changes

Metric	Period	Previous Guidance (as of Q1 2025)	Current Guidance (Q2 2025)	Change
Net Sales	FY 2025	$65.0M–$70.0M	$65.0M–$70.0M	Maintained
Gross Margin	FY 2025	16%–18%	16%–18%	Maintained
Adjusted EBITDA	FY 2025	$(0.5)M–$0.5M	$(0.5)M–$0.5M	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Customer concentration and diversification	FY24 exit: strong growth; 2025 transition expected to remove ~$34M revenue; targeting new customers and long-term contracts . Q1’25: continued diversification; 80%+ contracts building; one-time $0.9M supply continuity payment from largest customer .	Concentration risk declined: DaVita from ~40–45% to ~10%; two other large customers ~10–12% each; 80%+ under long-term contracts .	Improving diversification
Manufacturing efficiency and margins	FY24: automation and manufacturing upgrades improved margin trajectory . Q1’25: gross margin 16% despite transition, continued automation .	Gross margin at 16% (flat QoQ) with rightsizing and new equipment; early signs of improvement intra-quarter .	Stable to improving
West Coast expansion	FY24 outlook signaled expansion efforts .	West represents ~$100M opportunity; lining up larger customers; updates expected later in year .	Pipeline building
Largest customer (DaVita) update	FY24: expected full transition by mid-2025; discussions ongoing . Q1’25: continued discussions; diversification underway .	Continuing purchases beyond June 30; negotiating long-term supply arrangement; possible impact to Q4 and beyond .	Potential near-term catalyst
Competitive/supply chain dynamics	—	Competitor voluntary recall of contaminated liquid products; Rockwell supplementing supply to support patient care .	Favorable market share opportunity
Product portfolio additions	FY24/Q1’25: introduced single-use bicarbonate cartridge; sees ~$100M market opportunity in disposables .	Portfolio expansion continues to support diversification and stickiness .	Expanding offerings

Management Commentary

“We successfully managed through the transition of our largest customer away from Rockwell Medical and now find ourselves at a steady state, which we believe positions us well for continued growth.” — Mark Strobeck, CEO .
“More than 80% of our customers are under long-term contracts… we are managing our expenses and manufacturing our products more cost effectively to improve gross margin and drive profitability on an Adjusted EBITDA basis.” — Mark Strobeck, CEO .
“We are working with DaVita now on putting in place a long-term supply arrangement… we feel optimistic that we will come out of those discussions with a long-term supply agreement… [which] could have a meaningful impact on fourth quarter financials.” — Mark Strobeck, CEO .
“We’ve right-sized the organization… invested in new equipment… increasing our efficiency… expecting to see better results from that in the future.” — Jesse Neri, CFO .

Q&A Highlights

DaVita negotiations: Active discussions toward a long-term supply arrangement; DaVita continues purchasing beyond the planned transition; potential positive impact as early as Q4 .
Western U.S. expansion: ~$100M market opportunity; aligning larger customers; more visibility expected later in 2025 .
Margin actions: Organization rightsized and automation investments helping sustain 16% GM despite lower volumes; management seeing early intra-quarter margin upticks .
Concentration risk mitigated: DaVita reduced from ~40–45% to ~10% of revenue; two other large customers ~10–12% each .
Competitive recall: A competitor’s contaminated liquid product recall led Rockwell to supplement supply to maintain patient care, creating potential share gains .

Estimates Context

Q2 2025 vs S&P Global consensus: revenue $16.07M vs $16.33M* (slight miss), EPS $(0.05) vs $(0.05)* (in line), adjusted EBITDA $(0.24)M vs $(0.76)M* (ahead vs our adjusted EBITDA actual; note S&P’s EBITDA consensus relates to EBITDA; company reports adjusted EBITDA) .
Forward implications: modest revenue variance and in-line EPS suggest estimates likely stable near term; any DaVita long-term agreement or West expansion wins could drive upward revenue revisions; continued gross margin stability may support EBITDA/EPS trajectory .

Results vs Consensus (Q2 2025)

Metric	Actual	Consensus*	Surprise
Revenue ($USD Millions)	$16.07	$16.33*	Slight miss
EPS (Primary) ($)	$(0.05)	$(0.05)*	In line
EBITDA ($USD Millions)	$(0.79) (EBITDA) / $(0.24) (Adj. EBITDA)	$(0.76)*	Slight miss vs EBITDA consensus; Adj. EBITDA ahead vs EBITDA consensus

Note: The company reports both EBITDA and adjusted EBITDA; S&P consensus shown is for EBITDA. *Consensus values retrieved from S&P Global.

Key Takeaways for Investors

The revenue trough appears near with margins stabilizing at 16%; sequential adjusted EBITDA improvement and positive operating cash flow indicate operational control during the transition .
Guidance reaffirmation (revenue $65–$70M, GM 16–18%, adj. EBITDA $(0.5)M–$0.5M) suggests confidence in contract pipeline and cost execution; watch for cadence of new wins translating to 2H revenue .
Concentration risk significantly reduced; 80%+ of customers now under term contracts, improving revenue predictability into 2026 .
Near-term catalysts: DaVita long-term supply agreement and potential deal with the world’s largest dialysis provider could uplift Q4 and de-risk 2026 trajectory .
West Coast expansion and new product additions (e.g., bicarbonate cartridge) broaden TAM and support medium-term growth optionality .
Competitive disruption (recall at a rival) creates share-capture opportunities; Rockwell’s quality/reliability positioning is a differentiator in mission-critical supplies .
Monitor margin trajectory as automation and mix effects flow through; incremental improvements would be a powerful lever for EBITDA given volume headwinds .

Citations:

Q2 2025 8-K and press release:
Q2 2025 earnings call transcript:
Other Q2 2025 relevant press releases: IRC partnership (7/8/25) ; earnings timing (7/17/25)
Q1 2025 8-K/press release:
Q4/FY 2024 press release:

S&P Global disclaimer: *Consensus/estimate values are retrieved from S&P Global.

ROCKWELL MEDICAL, INC. (RMTI)·Q2 2025 Earnings Summary