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RM

ROCKWELL MEDICAL, INC. (RMTI)·Q3 2025 Earnings Summary

Executive Summary

  • Net sales $15.93M, down 44% year over year (Q3 2024: $28.32M) and roughly flat sequentially; gross margin was 14% (18% excluding restructuring), and adjusted EBITDA turned positive at $0.05M, consistent with management’s full-year profitability trajectory .
  • 2025 guidance was maintained: net sales $65–$70M, gross margin 16%–18%, adjusted EBITDA -$0.5M to $0.5M .
  • Customer concentration reduced further; the formerly largest customer represented 12% of Q3 net sales, with contract discussions expected to resolve in Q4, creating a near-term catalyst for visibility and potentially for estimate revisions .
  • Cash, cash equivalents, and investments rose to $23.7M (from $18.4M in Q2), supported by ATM activity; management highlighted active BD/M&A pipeline and potential West Coast presence to support growth in 2026 .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA profitability achieved in Q3 ($0.05M), with CEO noting “we were profitable on an adjusted EBITDA basis for the third quarter,” reinforcing progress toward sustainable profitability .
  • Contracting momentum: new multi-year agreements across university medical centers, kidney centers, hospital systems, including a single dialysis center in Southern Florida (~$1M annualized potential), and an expanded agreement with the largest skilled-nursing dialysis provider (includes bicarbonate cartridge) .
  • Margin stabilization despite transition: adjusted gross margin of 18% excluding restructuring, supported by cost actions and product mix initiatives (e.g., bicarbonate disposables) .

What Went Wrong

  • Material top-line decline: net sales -44% YoY to $15.93M, driven by the ongoing transition of the largest customer; gross profit -64% YoY to $2.27M; gross margin down to 14% (from 22% YoY) .
  • GAAP profitability pressured: net loss was -$1.75M; EBITDA was -$1.04M despite positive adjusted EBITDA, highlighting reliance on non-GAAP exclusion of restructuring/severance and facility closure costs .
  • Sequential margin dip: gross margin slipped to 14% from 16% in Q2 as restructuring ran through the P&L, though management expects further OpEx relief in Q4 from facility consolidation .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Net Sales ($USD Millions)$28.316 $18.914 $16.071 $15.927
Gross Profit ($USD Millions)$6.239 $3.042 $2.503 $2.272
Gross Margin (%)22% 16% 16% 14%
Adjusted Gross Margin (%)———18%
Net Income (Loss) ($USD Millions)$1.664 -$1.515 -$1.492 -$1.753
Diluted EPS ($USD)$0.04 -$0.06 -$0.05 -$0.05
EBITDA ($USD Millions)$2.477 -$0.823 -$0.787 -$1.042
Adjusted EBITDA ($USD Millions)$2.798 -$0.439 -$0.241 $0.050
Cash & Equivalents ($USD Millions)—$17.331 $18.422 $23.707

Comparison vs Wall Street consensus (S&P Global):

MetricQ3 2025 ActualQ3 2025 Consensus# of Estimates
Revenue ($USD)$15.927M $16.241M*2*
Diluted EPS ($USD)-$0.05 -$0.045*2*
EBITDA ($USD)-$1.042M -$0.628M*—

Values with asterisks retrieved from S&P Global.

KPIs and operating drivers:

KPIQ3 2024Q1 2025Q2 2025Q3 2025
Customers under long-term contracts (%)—>80% >80% >80%
Formerly largest customer % of net sales——~10–12% (management) 12%
Adjusted gross margin (%)———18%
ATM-driven cash increase (QoQ, $USD M)——+$1.1M +$5.3M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD)FY 2025$65.0M–$70.0M $65.0M–$70.0M Maintained
Gross Margin (%)FY 202516%–18% 16%–18% Maintained
Adjusted EBITDA ($USD)FY 2025-$0.5M to $0.5M -$0.5M to $0.5M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Largest customer transitionActive discussions; smaller-scale ongoing supply; ransomware incident monitored, minimal impact to RMTI DaVita expected to purchase through year; negotiating LT supply Continued supply through year; 12% of Q3 sales; expect resolution in Q4 Stabilizing; near-term decision catalyst
Gross margin / cost actionsAutomation and consolidation to sustain margins (16%) 16% GM; right-sizing operations; new equipment efficiency 14% GM; 18% adjusted; labor efficiencies prioritized; facility closure savings in Q4 Mixed near term; improving adjusted margin trajectory
Bicarbonate disposables (cartridge)Product added; expected higher-margin growth Ongoing opportunity; supplementing competitor recall First large customer accessing cartridge; expected broader adoption Positive adoption ramp
West Coast expansionEvaluating facility as customer mass builds ~$100M market opportunity; lining up larger customers Building critical mass; contemplating West facility in 2026 Strategic buildout
Home dialysisNoted product fit; higher margins —Single-digit % of business; expected growth to 10–15% market in near term Growing niche
Tariffs / supply chainMinimal impact; US manufacture; agile supply chain —Reliability emphasized; redundancy and uninterrupted supply Neutral to positive
Regulatory / competitor recall—Competitor Class 1 recall; RMTI supplementing supply Recall cited as reason transition delayed; supports RMTI quality/reliability narrative Supports RMTI positioning

Management Commentary

  • “We were profitable on an adjusted EBITDA basis for the third quarter… The trajectory we are seeing gives us confidence in our ability to achieve sustainable profitability” — CEO .
  • “We continue to fundamentally strengthen our contract portfolio with over 80% of our customers operating under long-term agreements” — CEO .
  • “Gross margin was 14%; excluding restructuring costs, gross margin was 18% in Q3” — CFO .
  • “Our pipeline has the potential to be transformational... breadth and quality of these opportunities reinforce our optimism about 2026 and beyond” — CEO .
  • “Cash increased to $23.7 million… driven by ATM issuance, partially offset by Evoqua asset acquisition” — CFO .

Q&A Highlights

  • Largest customer timeline: management expects contract discussions to resolve in Q4, providing clarity on 2026 revenue visibility .
  • 2026 outlook: full-year guidance typically provided early in the year; expect visibility with Q4 results; active BD/M&A using strengthened cash balance .
  • Margin levers: near-term focus on labor efficiencies; longer-term on materials and distribution; facility consolidation to lower OpEx in Q4 .
  • West Coast strategy: building critical mass; contemplating small facility to support growth in 2026 .
  • Home dialysis: currently single-digit % of business; anticipated market at 10–15%; higher-margin product configuration gaining traction .

Estimates Context

  • Revenue missed consensus by ~$0.31M (actual $15.93M vs consensus $16.24M*), while EPS was slightly below consensus (-$0.05 vs -$0.045*); EBITDA was weaker than consensus (-$1.04M vs -$0.63M*) amid restructuring and closure costs . Values with asterisks retrieved from S&P Global.
  • Coverage remains thin (2 estimates for EPS and revenue*), increasing the potential for estimate volatility as contract resolution and bicarbonate disposables adoption update in Q4–Q1. Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Adjusted EBITDA turned positive with adjusted gross margin at 18%, signaling cost actions are gaining traction despite GAAP headwinds from restructuring and facility closure .
  • Guidance held firm (net sales $65–$70M; GM 16%–18%; adj EBITDA -$0.5M to $0.5M), underscoring stability in base business amid customer transition .
  • Near-term catalyst: resolution of formerly largest customer contract expected in Q4; outcome will inform 2026 trajectory and may drive estimate revisions .
  • Growth drivers: multi-year contracts (>80% under LT agreements), bicarbonate cartridge adoption (higher margin), and potential West Coast facility to support geographic expansion .
  • Cash strengthened to $23.7M, enabling BD/M&A and infrastructure investment; watch for announcements on customer acquisitions and asset additions .
  • Risk-monitoring: sequential margin compression (14% reported), competitive/regulatory dynamics (competitor recall) and execution on cost efficiencies; adjusted metrics indicate improving underlying run-rate .
  • Trading lens: stock likely sensitive to Q4 contract resolution, adjusted EBITDA sustainability, and evidence of cartridge uptake; narrative is shifting toward margin recapture and diversified customer base .