Rockwell Medical (RMTI) 14 Nov 232023 Q3 Earnings call transcript

Good morning, and welcome to Rockwell Medical's Third Quarter 2023 Results Call and Webcast. Please note, 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. limited in our Rockwell remind President new not SEC. Executive our with Finance.Before statements Senior I on like Medical's XX-K Neri, meaning and we and annual about periodic Rockwell conference including would Medical's this Rockwell Vice to Strobeck, and the statements contain reports Officer; Chief Jesse the of within begin, call the Mark will that forward-looking you President federal report types Medical laws, identified subsequent filed securities of but to, as forward-looking Form of to These only statements expectations statements are could and subject these our differ.Please reflect risks as to of actual note forward-looking that cause results today. and that opinions uncertainties to new revise light Except statements in or forward-looking information update or as law, any required by of these events. we future specifically obligation disclaim company's Factors materially differ the such greater outcomes filed on periodic that from three business implied prior results a quarter statements months filed reports those XX, detail are cause was and XXXX, call as this results. could by to analysis or report or the XX-Q well the as in of Medical's quarterly discussed our XXXX the full forward-looking for strategy in ended company's September to actual Form third provides in SEC.Rockwell expressed with

President can turn Mark or Medical's to webcast XX-Q would like Form and I presentation investor updated call and under the and release found along Strobeck. and CEO, conference the conference over a Medical's press call website Our other of section.Now today's reports SEC, filed on the to Dr. Rockwell with Investors replay today's Rockwell with be

results Rockwell quarter continue objectives to last thank webcast. we Good joining and strategic you Heather. pleased this us priorities make to XXXX today morning, we Medical's for call for on year. progress the that am I Thank all outlined and report and third conference time you,

top-line our revenue, by enhancing our and focused all delever reducing efforts our expenses hemodialysis profitability, our on achieving business. keenly concentrates margins, enhancing to are gross driving business Our continuing while

enhancements made strengthen Board we organization experience which review further in and detail. addition, our further updates our and will base.Let's we these elevate to each team our management of Directors, In of believe

of third including of sales of XXXX, which sales $XX.X $XX.X quarter the generated the generated million, million, the of concentrates to-date company. we net were product highest sales During for both

acquisition EBITDA, our completed year, acquisition we elements purchasing to important acquiring from just customer assets market over strategic of in revenue approximately number to acquisition approximately which second a in million accretive adding X,XXX Rockwell, million concentrates to in this is Additionally, facilities our presence annual This immediately and the base. $XX our under adds in Evoqua concentrates Water hemodialysis a Technologies. $X business.Additionally, our new including expands by the

the X/X approximately States, dialysis services now Rockwell including facilities purchasing result, a in and clinics outpatient As United all of hospitals.

In fully when addition, at manufacture currently we fully manufacture we products automated manufacturing process, which a lower have added than a can our cost today. products unlocked,

States.To successfully these to Lastly, bicarbonate by United team into into Rockwell's an these this integration both concentrates the supplier integrate Rockwell leading transition now result business platform. of of Evoqua in liquid and assembled acquiring as a from assets hemodialysis Rockwell we assets, Rockwell, the representatives is led

Evoqua's agreement in was on completed concentrates October customers. of into directly Evoqua's pleased into and entered and Rockwell's Rockwell supply accepting that the to we and assets base and integration report orders the XX-day support business we Evoqua that transition to successfully onboarded the X, customer to integrated system.I began am Evoqua's as Additionally, a customers behalf ensure there disruption with on from patients and served, our no services they and clinics to service transition

our ended important In expenses agreement, reducing transition the thereby associated with milestone services fees the this going addition, forward.

the unleash overall of better to benefit exploring value costs margins. but manufacturing Now reduce customers serve, gross acquisition, to the best not this to we our our patients to only we drive and are how

We quarter, which will with a significant long-term and say on signed have to of minimum continue more third Rockwell's we believe on to purchasing during about and agreements, included that customer number price a increases addition, these impact supply will we future bottom-line. plans calls.In arrangements meaningful commitments have the top

with another products, a realize December restated X.The First, payment products an we extended a for event on right the one-time of for will XXXX. through Rockwell our year, December amended extension, to or will goes such extended which the price XXXX into largest has this customer concentrates this take customer. also entered increase through amended extend our product increased an term. agreement, be our including and could agreement with December purchase the agreement the and Under for after largest term In agreement hemodialysis pricing

not commitment we a and X In amount met, for the be addition, will these will purchase event In the purchasing receive forecasted. to are the forecasts forecasted month Rockwell forecasts least compensated amounts. at

We with agreements we States.In are the customers. existing and work our to new secure with provide addition, long-term customer several other clinics products continue help our to to throughout their largest excited to continue United to product purchase

dry Illinois and is California, first Colorado, Sanderling to terms of Sanderling's and supplier preferred Rockwell focusing Utah. underserved hemodialysis agreement, acid will communities. located patients services of The in-center the on and concentrates and Tennessee, Services, renal in Renal and provider this Under full-service a bicarbonate liquid Nevada, Oklahoma, facilities telemedicine of be rural the throughout

generate This with potential second concentrate over the supply the Rockwell provide hemodialysis concentrates agreement concentrate third concentrates agreement and on purchase outpatient dollars course purchasing millions minimum provider announced in to and In Sanderling preference the to to non-profit mixer quarter our sales Ohio. addition to also accessories, commitment with site. the for in of largest Sanderling contract.A the has Centers of mix Care, net Dialysis and during for we dialysis independent support was Sanderling's acid dry includes will products Rockwell supplying with conveniently acid

a which is is preferred Ohio serving supplier dry Medical of over concentrates agreement footprint and the concentrates to CDC and be X-year hemodialysis and dollar $X of liquid and bicarbonate commitments, this bicarbonate of long-term, Illinois, includes of throughout skilled agreement, Dialyze million supply part generate Rockwell and Rockwell in a Houston We New the acid Dialyze the Direct, supplier we Methodist, and nursing Indiana, As Houston throughout in dialysis and minimum located leading medical distribution center Ohio.Third to its nearly and with XX be acid products signed to setting. Kentucky, of York, Jersey, a purchase greater and Medical facility net includes includes will expand accessories Under will with minimum also this provider New its purchasing purchase hemodialysis Maryland, Direct leading purchasing area. which terms services community related commitments, Medical purchasing multi-million agreement.Lastly supply the agreement, this preferred Pennsylvania. hospitals dry will expect that Rockwell product liquid academic annually the sales X commitments. and facilities

As we stated purchase products, they construct value of provide inherent previously, product such to the we to our these agreements reflect patients. continue that

with the of as Our delivery commercial our United of successful and becoming team of the improve associated our our margins expense is through products. continue global internationally actively gross leading to selling the vision our concentrates.We manufacturing execution of we continue reduction hemodialysis supplier products States pursue to across and

roles During production small another powder facilities Rockwell. redundant our of into and workforce two of quarter that completed of we the dry third eliminated XXXX, reduction some within our consolidated

additional will began this our that our costs delivery route and reduce In path continue manufacturing process. further quarters, the our delivering going consolidated we with to ways finding addition, we value In expenses products. reducing costs unlock a the schedules, manufacturing to looking newly of fully customers.We our be of our to the associated acquired coming optimization down associated are automated program further with aggressively products to

on goal gross have our achieving continue initiative business and in we adding of Considering leaders, adjusted we to margins we at will changes automate look our business. the made, facilities, acquisition hemodialysis other increasing will of on manufacturing great to drive Evoqua's the the manufacturing an our gross concentrates expect strategic strategic is components XXXX.One quarter and north basis operators by Rockwell Additionally, EBITDA including an fourth to that the our higher of industry our to annual with XX% concentrates will we further assets be which of expect thinkers the sales, product margins basis. enhance the process of of of profitable all our our

are have to that pleased done We we announce just that.

of biopharmaceutical Rockwell's in operational than amount First, Rockwell's expertise. led has of we member named Directors. She biotech a of her M&A career, public scaled companies. board development, throughout and number and an XX and of and has as of Joan possessing entrepreneur more a Board significant private experience Joan Lau Dr. companies operator, business scientist, investor to of years October. appointed was Joan CEO, Board founded,

developing malignancies.Previously, Sciences, finance biopharmaceutical he at finance and President of hematological organization. serve valuable Senior improve aspects patients Rockwell join board serve our Prior $XX of to experience company member goal to of Jesse patients public at annual Medical was its and to Senior of as therapeutics of to lives continue was XX grow more as I'm and Neri functions who head achieve private revenue with than excited to a Finance both dialysis customer Vice of all Jesse her the at shareholder Hemavant Jesse of Rockwell increasing Rockwell experience we with blood a oversees of disorders leading be Life as have position Finance Rockwell, to has and value.Also, new of years incredibly of clinical-stage Zyla the joining public Vice pharmaceutical public base products they Sciences, the portfolio to the companies. clinics needs President million. company and Finance Additionally, to company will our a Rockwell's

senior its the including Jesse finance strategic of organization, member of was and reporting, a team, aspects controllership, for audit, planning. As all SEC management responsible

expertise healthcare experience growth.Now with expansion financial turn you within operating While our Rockwell financial to acquisition for to objectives. call launches, growth strategic multiple extensive valuable along as third in Medical provide May our pivotal acquisitions, organizations Jesse to generating, oriented XXXX.Jesse's contemplate approvals, Assertio the our avenues a over leading infrastructure Zyla's be Jesse results advancing ability our commercial while product financing, role to by Jesse's ability regulatory continue and Therapeutics we of of in will with the and enhance will to and quarter. meet finance will businesses strengthening at Zyla, played product various revenue our I

the for profit profit of for the ended quarter XXXX increase million, of a and third Good XX% and both our increased provide $XX.X sales which distribution highest same everyone. offset for 'XX in for on increase over over and increase for as period XX, the period by update million, of XXXX. sales $X.X million, recognition X% well XXX% now review margin XX% of a XX% Net results quarter revenue Net XXXX generated The the guidance.Net to Thank over partially for costs September you, and $X.X third sales period company. primarily acquisition million period positions of the debt related Mark. a same primarily cash over business financial was million, the 'XX. deferred of sales product Inventory sales a months the third deferred the Reserve. of to a Triferic an to to-date the lower same the our increase represented quarter of associated Gross XXXX. $X.X the second recognition Evoqua were 'XX Gross was asset XXXX was to the with XXXX.Gross margin quarter will the agreement, X% XXXX $XX.X agreement. our represents by the XXXX of the X% compared of were in same and $XX.X which concentrates I concentrates including X morning, by quarter in revenue the were in represents gross third increase our quarter which the you a quarter XXXX driven second and million, in Wanbang net due from an for increase in the sales year-over-year third our of with as Wanbang

which improve of $X.XX efforts loss continue our anticipate million per XXXX same reflects gross the per was share severance close net as loss an for XXXX. third or includes in and The million of positively operating continued the net operating business period track of $X.X to of improvement continue $X.XX quarter second in $X one-time employ compared in the loss $X.X our compares same million $X.X XXXX.Operating of loss cost period was for XXXX strategies containment million share quarter XXXX. to margin of we for restructuring.Rockwell's Rockwell's for the with of expenses quarter third We will the out XXXX for million, or that it part $XXX,XXX. to $X.X to and loss This as the

acquisition. X anticipate months for a basis million September in in loss XX, on guidance receivable, primarily accounts share XXXX. EBITDA the 'XX.Cash, loan driven XX, or equivalent XXXX. the decrease We June loss $XX.X receivables million fourth million million payments investments $XX.X to $X.XX these same period of $X.X in be $XX.X at with of fourth September related XX, in and adjusted share in sale cash The expects for at quarter the the primarily outstanding $X net long-term For was company net XXXX, was to the million to quarter by and asset Rockwell per the compared on XXXX an of and Rockwell's collection our was per ended principal the in available increase our its reiterates of XXXX. cash or $X Evoqua profitable $X.XX million compared

began As million our principal guidance. of outstanding further we the $X end debt to XXXX this quarter, the third end approach $X.X we projects by mentioned, our of making outstanding to company year.As which we to debt payments The reiterate its debt million. decreased in decrease our year, the the on

to increase represents $XX million over to $XX We XXXX million, XX% expect sales which between be a XXXX. net for and XX%

be XXX% an for we expect profitable be which XX% million between adjusted to in We XXXX. represents increase on million, a fourth XXXX. over EBITDA And and gross of XXXX to expect the basis profit to $X quarter $XX

and Mark. back guidance will we call XXXX call.I future on for to an outlook over expectations, As our quarter fourth turn intend provide conference during the to now

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

[Operator is Maxim Instructions] of from line the Your Group. Anthony, with Anthony your line Vendetti first question open. comes

do that mentioned, fully you So facilities? capital required you Mark, automating to you is facilities without acquired gross other to that necessary fully that? on that looking could margins you're or other XX% that of automated is your goal the to from much get to automate your fully your And Evoqua, How facilities. plus do

for thank question. the Anthony, you

of our of to to believe, that current all that So need on We right that in we're process facilities you the be automate now. achieve able based projections, of don't fully margins gross in still to time. evaluating make our fully our we that. we'll to facilities we'll than period over we evaluating likely margins But and that automate drive those transitions begin To higher mentioned. a are likely the process of gross

great. follow-up. Okay, a And just as

the the leading So of all being that concentrates X/X congrats hemodialysis after the Evoqua. acquisition of on for provider county in all of

of looks about look think West or Rockwell. you to the of continue the for the areas terms geography, to opportunity -- the large of a I part it Coast? expansion western U.S, one plans As expand, one like the talk you of in Can for your

Yes.

the activities our of Evoqua in So expand commercial access through presence to the team. that portion We've to looking States. are which western United and opportunity acquisition our a aggressively does to begun large already continue the we of be the

more here now meaningfully I we fundamental to Rockwell. west than access customers So us that, we've ever at to we're historically going have in more But there. a the presence to think to for do establish more have had

the But that's more whether of looking in a may an facility way, going think seek to we really, there. are permanent address whether to I out think establishing to that's effective position market we're have opportunity that's exist our us cost acquiring so there, own And west, that a facility and I considering the that now, sort for a on there.

the as What lastly, bit over international but talk percent of United you then what's States, sort And And revenues? focus is your years? now just about know it couple opportunity the primarily little opportunity? can is a international. next the in I Okay. of the a

Yes.

majority are right maintain effective some supply now, and times us. for much struggle our States, markets players opportunity that, revenue. of to around it's hemodialysis a largely international being by there internationally just smaller that XX% at big is distribution. the in The So United concentrates addressed think like overall We of

So United usually we distribute for distribution very manufacturing, with States business to product, It's cost is the being an think our organizations us, that carried work not that. by us, for to expand expertise, given but the a able to opportunity there's only effective customer. as the outside

establish the So we're international expand our to to pipeline, are number looking I has relationships looking that commercial know with. are currently aggressively. we And in a potential team that partnerships of which

next the comes Dipesh, of Our question open. from is line Dipesh Patel your Wainwright. H.C. line with

update. on for This the Congrats Dipesh is Selvaraju. on Ram guys

Could on or and you number agreements you agreements see that several of examples purchase a evolving managing you product challenges how good of ones? any some provide 'XX? might 'XX these agreements. perhaps new the noted obtaining through current might around You sense see And

Thank you question. the Dipesh, for

to products supplier here continue the is products in in independent products our United States. forcing by effort independent with focus, to concentrates. We're other get these of bundling this we expertise. So our not is buy this And be thereby our and mean, an the other to I to largest hemodialysis hemodialysis our customers concentrates

with then add continue to to see only around to organizations our up relationships as to our the to market opportunities So customer U.S. but the current service fact, the distribution its new opens year that not own after, by multiple really capabilities are next course for effective and that continue capabilities to expand customer a of continue to supplier these and that those base, has the find products.We well. handle that over looking their customers cost needs entire year existing

are very establish to are providers we still providers organizations in there dialysis within the are that still marketplace, number with the If working product of large you look with. customer although and United and we top purchase arrangements the a at the clinics working dialysis States,

raised, allows our think of to the with United States. in the we that large really and as expand opportunity So dialysis get a us offers us customers then opportunity.And presence X great to an Anthony X west providers largest the to those

and an this as provide business going beyond that. see sort our like doing to look to quarter around conference we of greater to focused very fourth on what So mentioned, to much we're Jesse revenue details is and continue opportunity But grow continue our XXXX add call. a team and at commercial

to color. north And related the great. on kind are gross your basis. target the appreciate elaborate on goal annual Okay, XX% if of an How that of looking I can achieve of then you margin being final to you question I guess soon stated that? goal,

Yes.

So I think it's couple -- things. say a of think I I'd

been turned to place everyone the business, realize executing profit.So come I generate continues to where in that from a did has team loss concentrates of point organization. gross think contextual consider profit, I business a through Rockwell generated be gross for shortly gross generating has after not into on a a that but It around looking that folks only in gross where to it's itself, I profitable now put think place from profit. this element that really in the to we're that management meaningful, maximize to the and now a business the the Rockwell. this we're important we've joined now business need an important this transition we strategy And not

gross the we can. that, as do quickly margin to to is to goal XX% possibly get Our is as

you that, achieve We was can haven't Jesse see quarter, as this in suggested. gross when looking as margin given but our guidance we're as X%, to to

year XXXX. expect believe positively trend remainder positively through continue will that to in the we that We continue trend to of to and the that

be everybody So when visibility to fourth give during we'll quarter that again, call. greater think conference will I our achieved as to able be

like Mark. the back would to now over call I to turn

calls. today's Overall, in future Thank future sharing Rockwell make you with we we position performance our forward We the us the everyone on and joining on financial on to growth. focused we for for of in progress are our pleased look continuing XXXX progress call. remain to to continue business

gentlemen, that joining. today's all call. for Ladies and you Thank concludes

now may You disconnect.