Good morning and welcome to Rockwell Medical's first quarter 2025 results conference call and webcast. Please note that this event is being recorded. At this time, I would like to turn the conference call over to Heather Hunter, Senior Vice President, Chief Corporate Affairs Officer at Rockwell Medical. Heather, please go ahead.

Good morning and thank you for joining us for this update on Rockwell Medical. Joining me on today's conference call are Dr. Mark Strobeck, Rockwell Medical's President and Chief Executive Officer, and Jesse Neary, Rockwell Medical's Chief Financial Officer. Before we begin, I would like to remind you that this conference call will contain forward-looking statements about Rockwell Medical within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward-looking in our annual report on Form 10-K and our subsequent periodic reports filed with the SEC. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions and expectations only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our periodic reports filed with the FCC. Rocco Medical's quarterly report on Form 10Q for the three months ended March 31, 2025 was filed prior to this call and provides a full analysis of the company's business strategy as well as our first quarter 2025 results. The reconciliation of non-GAAP measures we discussed in today's call can also be found in today's press release. Our Form 10-Q and other reports filed with the SEC, along with today's press release, our updated investor presentation, and a replay of today's conference call and webcasts can be found on Rockwell Medical's website under the Investors section. Now I would like to turn the call over to Rockwell Medical's President and CEO, Dr. Mark Strobeck.

Thank you, Heather. Good morning and thank you for joining us today for Rockwell Medical's first quarter 2025 earnings conference call and webcast. As we discussed back in March, the first quarter was going to be a transition period for Rockwell. During the first quarter, we continued to diversify our customer base with some of the leading regional national and global hemodialysis providers and health systems we remain a preferred provider as a result of our continued reliability high quality products and customer-centric approach and have signed a number of new contracts during this period our business in the first quarter performed according to plan with revenue and gross profit in line with our expectations for the year in addition we continue to consolidate and further automate our manufacturing operations to reduce expenses and sustain our gross margin, which was also within our guidance range for the year. As for our largest customer, we continue to work with them to find ways to support their business going forward. Although we have not entered into a new agreement, we are still in active discussions with them about terms for potential contract extension. One area that we are closely monitoring is the recent cyber attack that occurred in our industry as you may know last month our largest customer announced a company-wide ransomware incident impacting certain elements of its network we were notified by our customer of this cyber attack and immediately disconnected all systems that were connected to their organization to prevent any potential impact of our own i.t infrastructure we are actively monitoring our network and have not experienced any direct implications to or impact on our systems to date. Another area that we are closely monitoring is tariffs. Rockwell Medical's hemodialysis concentrates are manufactured right here in America and have been since the company was founded nearly 30 years ago. Approximately 90% of our revenue comes from dialysis providers within the United States. 10% is generated ex-US, of which only one country is directly impacted by the recent U.S. tariff actions. This equates to a negligible amount of our total annualized revenue. Because we manufacture our products in the United States, we can manage our own supply chain and nimbly respond to real-world demand. While we do source a few supplies from outside the United States, we do not anticipate tariffs to impact our costs on those supplies. In the first quarter, we added a single-use bicarbonate cartridge technology to our portfolio of hemodialysis concentrates products. the addition of this bicarb cartridge to our portfolio represents an exciting opportunity for us to diversify our offering and address one of the fastest growing segments within the dialysis products market we officially launched this new product in february and are starting to see some traction with our customers we continue to be very active in pursuing business development opportunities we are seeking transactions that can further strengthen our position in the renal market and or provide access to new markets either through product acquisitions or international expansion these opportunities are intended to be revenue generating immediately accretive to our business we are encouraged in due diligence we are engaged in due diligence on a number of opportunities and are looking for just the right one that meets our growth targets and objectives we hope to have more to say on this in the coming quarters ROCKWELL remains a leading supplier that has the scalability to manufacture and deliver to the more than 12,000 individual purchasing facilities, including outpatient dialysis clinics and hospitals in the U.S., along with select international markets. We are reiterating our projected guidance for 2025, with net sales between 65 and 70 million, gross margin between 16% and 18%, and adjusted EBITDA between a negative $500,000 and a positive $500,000. Now I will turn the call over to Jesse to review our first quarter 2025 financial results in further detail. Jesse?

Thank you, Mark. Good morning, everyone. I will now review our first quarter 2025 financial results in greater detail. Net sales for the first quarter were $18.9 million representing a 17% decrease over net sales of $22.7 million for the same period in 2024. The decrease in net sales was driven by our largest customer transitioning to another supplier. This customer agreed to a one-time non-refundable payment of $900,000 to ensure continuity of supply for products purchased during the first quarter. Gross profit for Q1 of 2025 was $3 million, which was in line with gross profit for the same period in 2024. Gross margin for Q1 2025 was 16%, representing an increase from 14% for the same period in 2024. Net loss for Q1 2025 was $1.5 million, which represents an improvement over a net loss of $1.7 million for the same period in 2024. Adjusted EBITDA for Q1 2025 was a negative $400,000. Seasonal items associated with payroll tax and other public company related expenses historically incurred in Q1 drove our adjusted EBITDA to be slightly negative. Cash, cash equivalents, and investments available for sale at March 31st, 2025 with $17.3 million compared to $21.6 million at December 31st, 2025. The decrease was driven by timing of payments and collections and seasonal items historically incurred in the first quarter. Now I'll turn the call back over to Mark.

Thank you, Jesse. Operator, please open the phone line for any questions.

Certainly. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw any questions, please press star one again. Our first question comes from Ram Silvaraju from HC Wainwright. Please go ahead. Your line is open.

Hi. Thanks so much for taking my questions and congrats on the performance not so far in the quarter in line with your previously reported guidance. I was wondering if you could firstly give us some sense on the following two aspects. First, foremost, with regard to the negotiations that are ongoing with your largest historical customer, kind of give us a sense of, you know, some scenarios that could ultimately arise from those negotiations. In other words, would there be a scaled down contractual commitment by this customer? Could the customer still elect to diversify away from Rockwell entirely? Or would there conceivably be a situation in which the customer continued to order from Rockwell at levels comparable to those seen in the past? And then secondly, if you could give us a sense of, you know, any kind of directionality with regard to top line revenue cadence for the remainder of 2025. And if you have visibility at this point as to which of the remaining three quarters of the year are likely to be the weakest with respect to revenue? Thank you.

Yeah. Thank you, Ram. Let me address the first of your questions. So the discussions that we have ongoing right now with our largest customer are to continue to maintain some level of service to them for the future going forward. it will likely be at a much smaller scale than we have done previously. But I think from, you know, the way that we're looking at it is, you know, we have a good relationship with them. You know, we're a strong supplier of their organization. And so we're looking to put in place a longer term arrangement that will maintain some supply as well as provide them some supply for their safety stock that they have that we would be looking to replenish. So that's the extent of the relationship that we're currently negotiating with them. As it relates to revenue going forward, you know, I think it's tough to predict that in the sense of we're in the process right now of signing additional customers, bringing on new customers, and some of those are going to be incredibly meaningful. So we're really not in a position today to be able to provide that level of guidance. I think safe to say, you know, we feel really confident in the guidance that we've provided and feel good that there is a strong possibility that we will be able to improve that. Jesse, I don't know if you have anything further to say.

Mark, I think that's right. I mean, the way things are looking right now, I would say Q2 is probably going to be the low point for the year and then build from there. But to Mark's point, it's still a little bit early to say.

Okay. And then if you could comment on any emergent dynamics or anything in respect to the at-home dialysis market and the specific product offerings that you've brought. Thank you.

Yeah. You know, the at-home market, I would say, is continuing to progress as we've expected. It's, you know, from our vantage point today, it will certainly be a part of the, you know, the path to delivering treatment. It's not a large part today, but it's certainly one that continues to grow. Our product offering that we've put together for the at-home market is now beginning to start to, you know, we're starting to increase sales of that product. And we suspect that there will be more coming through the remainder of the year. The nice part for us about that product offering not only is it um you know significantly improves our patient is able to administer the dialysis treatment at home by using um you know product um types that are much more manageable for the patient um but it's also a much better higher margin product for us um and so you know we're looking to to see that um begin to grow here in the second half of the year great thank you very much thanks ron our next question comes from jeremy perlman from maxim group please go ahead your line is open good morning thank you for taking my questions first maybe if you could expand any more information on your international market expansion and on the west coast what you know we see the opportunities there and how's it progressing yeah so we continue to expand our business um you know what we call sort of international internationally um but it's primarily in latin america um that's a big opportunity for us and one that um you know we continue to see an opportunity for us to to provide products to you know those emerging um dialysis centers um and a lot of our growth continues to be within that within that region um again it's advantageous for us you know we don't we aren't responsible for the distribution of those products. That's taken on by the customer, and so that turns out to be a good piece of business for us. As far as, you know, expansion into the western portion of the United States, we still believe that that's a good opportunity. We still believe that based on our data, that is largely being supported by one manufacturer, and so we think there's an opportunity there. We're still trying to determine what's the best approach for us to take to enter into that West Coast market. We've developed now critical mass as it relates to customers out in the West. So, you know, with that in hand, you know, it likely makes more sense for us to contemplate establishing a facility out in the west um but we haven't made any final determinations yet on how to best do that but it's certainly an area that we think is a ripe opportunity for us to expand understood and then maybe if you could just help us i know the loss of the largest customer was a little bit of a step back and you're trying to mitigate that by taking on new customers how much of that revenue do you think you know you could take on is there are there enough in the smaller independent dialysis providers that you'd be able to you know pick up and and to cover most of that expense the the lost revenue how do you how are you looking at that we think there are we think there is um and it's in the areas you know likely that you've just discussed um and i would add to that you know within our own existing footprint today there's still a significant number of customers that exist um that don't currently purchase Rockwell products that could. So our commercial efforts are focused, A, to expand our customer base within our existing footprint, B, to expand our customer base internationally within Latin America primarily, and then third will be to continue to further penetrate into the West. We believe that there's an opportunity there that is large enough that That would allow us to replace a significant portion of the revenue that we've lost.

Okay, I understand.

And then just the last question. I think I just want to make sure. I think I heard this part of an answer to another question. The revenue guidance that you're reaffirming today, that's as your customer base stands now. And if any other customers you may sign on as the year goes on, that could just be potential outside. Or is there any customers that you assume or are you able to get into that guidance?

No. So this is based on our current customer base today, and so any new customer would add to So there would be potential upside there. Okay, great. Thank you for taking my question. Have a nice day. Absolutely. Thank you.

There are no further questions. This concludes today's conference call and webcast. You may now disconnect.