Rockwell Medical, Inc. (NASDAQ:RMTI) Q1 2023 Earnings Convention Name Could 15, 2023 8:00 AM ET
Firm Members
Heather Hunter – Senior Vice President and Chief Company Affairs Officer
Mark Strobeck – President and Chief Government Officer
Paul McGarry – Senior Vice President, Finance and Chief Accounting Officer
Convention Name Members
Brandon Folkes – Cantor Fitzgerald
Operator
Good morning and welcome to Rockwell Medical’s First Quarter 2023 Outcomes Convention Name and Webcast. Please observe this occasion is being recorded.
At the moment, I want to flip the decision over to Heather Hunter, Senior Vice President, Chief Company Affairs Officer at Rockwell Medical. Heather, please go forward.
Heather Hunter
Good morning and thanks for becoming a member of us for this replace on Rockwell Medical. Becoming a member of me on immediately’s convention name are Dr. Mark Strobeck, Rockwell Medical’s President and Chief Government Officer; and Paul McGarry, Rockwell Medical’s Senior Vice President, Finance and Chief Accounting Officer.
Earlier than we start, I want to remind you that this convention name will include forward-looking statements about Rockwell Medical inside the which means of the federal securities legal guidelines, together with, however not restricted to, the kinds of statements recognized as forward-looking in our annual report on Kind 10-Okay and our subsequent periodic experiences filed with the SEC.
These statements are topic to dangers and uncertainties that might trigger precise outcomes to vary. Please observe that these forward-looking statements replicate our opinions and expectations solely as of immediately. Besides as required by regulation, we particularly disclaim any obligation to replace or revise these forward-looking statements in mild of recent info or future occasions.
Elements that might trigger precise outcomes or outcomes to vary materially from these expressed in or implied by such forward-looking statements are mentioned in higher element in our periodic experiences filed with the SEC. Rockwell Medical’s quarterly report on Kind 10-Q for the three months ended March thirty first, 2023, was filed previous to this name and supplies a full evaluation of the corporate’s enterprise technique, in addition to the corporate’s first quarter 2023 outcomes.
Our Kind 10-Q and different experiences filed with the SEC, together with immediately’s press launch, our up to date investor presentation and a replay of immediately’s convention name and webcast will be discovered on Rockwell Medical’s web site underneath the Traders part.
Now, I want to flip the convention name over to Rockwell Medical’s President and CEO, Dr. Mark Strobeck.
Mark Strobeck
Thanks, Heather. Good morning and thanks for becoming a member of us immediately for Rockwell Medical’s first quarter 2023 outcomes convention name and webcast.
I’m happy to report that through the first quarter of 2023, we made important progress on the plan we introduced final yr to optimize Rockwell and our concentrates enterprise with the purpose to attain profitability in 2024.
Within the first quarter, Rockwell’s income continued to develop. Our gross revenue continued to enhance and our working bills continued to go down. Let me stroll you thru our outcomes. Rockwell achieved its highest quarterly income up to now within the first quarter of 2023. Our industrial workforce has been working diligently to execute on three key progress methods, which we imagine will allow us to proceed to attain industrial success.
First, the transition of the Baxter enterprise again to Rockwell and optimized buy preparations. Second, and for the primary time in a very long time, develop our concentrates enterprise in america and internationally. Third, and at last develop our geographic presence. We’re making progress on every of those industrial initiatives.
In late 2022, we introduced that we acquired the distribution rights again from Baxter to regain management of our hemodialysis concentrates enterprise in america and internationally. On January 1st of this yr, we assumed 100% management of this enterprise, which we now have been closely centered on transitioning and optimizing for Rockwell.
Step one on this transition was to make sure that we continued to produce Baxter clients based mostly on their current buy agreements. Our industrial workforce ready for this transition months upfront of this date has been speaking with clients alongside the best way and was properly ready to imagine the management of this enterprise in the beginning of the yr.
When you recall, most of the Baxter clients already had been ordering straight from Rockwell and had merchandise delivered by our subsidiary, Rockwell Transportation. Due to this fact, this transition in lots of cases has merely been about eradicating Baxter from the cost course of.
I’m happy to report that the transition has been a hit and we’re presently promoting and delivering product to clients by Rockwell’s platform. Our industrial workforce is now systematically working with every buyer to ascertain new agreements straight with Rockwell, with most well-liked economics. We’re making important progress on this effort and are already realizing the income advantages from these modifications. We anticipate we are going to notice extra within the second quarter of 2023 and past.
Along with the Baxter transition, we now have been centered on commercially rising our hemodialysis concentrates enterprise by including new clients as we work to attain profitability in 2024 and drive in direction of turning into the main international provider of hemodialysis concentrates.
Throughout the first quarter, we introduced that we signed two long-term provide agreements. The primary settlement is a 3 yr multi-million greenback product buy settlement with Concerto Renal Companies, the biggest supplier of dialysis in expert nursing amenities in america. And the second settlement is a 3 yr multi-million greenback provide settlement with the biggest non-profit dialysis supplier in america.
Every of those preparations embrace multi-year annual minimal buy commitments and has the potential to extend as our clients enterprise grows. Throughout the first quarter of 2023, we additionally established new non-exclusive agreements with two of the biggest distributors in america. The primary settlement was with Cardinal Well being, the second with Medline Industries.
They’re the primary of many distribution agreements that we anticipate establishing this yr. Geographic growth, each domestically and internationally can also be a serious focus for Rockwell. We proceed to take a look at value efficient methods to develop our distribution capabilities within the western portion of america. We’re making nice progress and are actually distributing our merchandise on a restricted foundation to California, Arizona and Utah. Nonetheless, we proceed to pursue a extra constant and concentrated method within the West that may enable us to promote and distribute our merchandise on to West Coast dialysis clinics.
Moreover, Rockwell has a big and rising worldwide enterprise and presently sells its hemodialysis focus merchandise in varied international locations all through North America, South America, Asia and Africa. Our worldwide enterprise accounts for about 10% of Rockwell’s income, produces favorable economics and diversifies our income base.
Subsequent to the primary quarter, we introduced an growth of our worldwide enterprise with an settlement to produce for the primary time the UAE. Our industrial workforce is working laborious to reinforce our efforts internationally as we glance to determine areas the place our merchandise would have a significant affect on sufferers.
One other key part of our technique is targeted on decreasing bills. We proceed to make modifications to our enterprise which have lowered bills throughout all purposeful areas. This contains selective discount in headcount, higher pricing on uncooked supplies, continued optimization of our distribution networks and lowered reliance on third-party carriers for delivering our merchandise.
We’re persevering with to look at route optimization methods in addition to automation in our manufacturing processes as further methods we are able to decrease the associated fee to fabricate our merchandise. These efforts translated into decrease working bills and a lowered internet loss for the quarter, which had been considerably improved from the fourth quarter of final yr.
Further progress alternatives, as we have spoken about beforehand, will come from enterprise improvement. Rockwell continues to look aggressively at alternatives for consolidation inside the concentrates area, in addition to alternatives so as to add new merchandise to our portfolio that make the most of our manufacturing experience and capabilities.
These alternatives must be accretive and according to our objectives to attain profitability. We hope to have the ability to say extra about these efforts on future calls. Earlier than I flip the decision over to Paul, I needed to give you a short replace on the worldwide improvement of TRIFERIC. As we have mentioned beforehand, Rockwell has a number of worldwide partnerships with firms trying to develop and commercialize TRIFERIC of their respective international locations.
As a reminder, these worldwide partnerships require no capital expenditure and little or no operational assets from Rockwell. Whereas they’ve the potential to generate close to and long-term income for the corporate, there will be no assurance that they’ll and we now have not factored this into our income forecast.
Subsequent to the primary quarter, we introduced that our companion in Turkey, Drogsan Prescription drugs, submitted a advertising authorization utility and GMP utility for TRIFERIC AVNU to the Turkish Medicines and Medical Units Company, for which Drogsan obtained precedence standing and a excessive precedence standing respectively.
Considering that Drogsan was granted an accelerated overview for TRIFERIC AVNU with the Turkish Regulatory Authority. We anticipate approval for TRIFERIC AVNU in Turkey in 2024. The choices we now have made and proceed to make are according to our technique going ahead to drive our enterprise to attain profitability in 2024 and to place the corporate in a stronger, extra steady monetary place. We’re properly on our means.
With that, I’ll flip the decision over to Paul to give you our monetary updates for the quarter. Paul?
Paul McGarry
Thanks, Mark. Income for the three months ended March thirty first, 2023 was $19.7 million. This represents a 22% enhance over the comparable interval in 2022 and a rise over the fourth quarter of 2022.
Gross revenue for the three months ended March thirty first, 2023 was $2.6 million in contrast with the gross lack of roughly 800,000 for a similar interval in 2022. Throughout the first quarter of 2023, we proceed to see to scale back our working bills by specializing in enhanced enterprise efficiency and extra environment friendly manufacturing processes.
For the three months ended March thirty first, 2023, working loss was $1.4 million in comparison with $6.6 million for a similar interval of 2022. For the three months ended March thirty first, 2023, Rockwell’s internet loss was $1.75 million or $0.10 per diluted widespread share, in contrast with the web lack of $7.2 million or $0.84 per share for a similar interval of 2022.
Rockwell’s money and money equivalents at March thirty first, 2023 was $16.8 million in comparison with $21.5 million at December thirty first, 2022. The discount in our money stability was largely pushed by charges related to the reacquisition of Rockwell’s distribution rights from Baxter one-time severance funds and charges related to terminating the provision settlement.
Total, we’re happy with our monetary efficiency within the first quarter of 2023 and reiterate our income steering of $78 million to $82 million and gross revenue steering of $7 million to $9 million. We stay centered on persevering with to place us for future progress as we drive in direction of profitability in 2024.
I’ll now flip the decision again over to Mark.
Mark Strobeck
Thanks, Paul. Operator, please open the cellphone traces for any questions.
Query-and-Reply Session
Operator
[Operator Instructions] And our first query comes from the road of Brandon Folkes from Cantor Fitzgerald. Your line is open.
Brandon Folkes
Hello. Thanks for taking my questions and congratulations on all of the progress. Perhaps only one from me. Are you able to simply assist us take into consideration the gross margin form of how you already know form of I assume how excessive might that gross margin get in a steady atmosphere? And what I imply by a steady atmosphere is form of as soon as you’ve got form of achieved all of the — all the things you are setting up. After which secondly, are you able to assist us simply take into consideration gross revenue for the remainder of the yr, simply given the robust ends in 1Q and the reiteration of steering? Thanks very a lot.
Mark Strobeck
Thanks, Brandon. So we’ve not issued steering because it pertains to gross margin. Nonetheless, I believe as you may see within the first quarter, the gross margin that we have generated is engaging for us and places us on a path in direction of profitability.
I can say that actually, you already know, our enterprise each within the US and out of doors the US, is admittedly centered on driving in direction of greater gross margins. And in some circumstances, you already know, we have been we have been lucky sufficient to have the ability to obtain that. However I believe it is, you already know, the place we’re this quarter is a, you already know, is a — is an effective form of goal for us as we proceed to drive to
improved gross margins.
So far as gross revenue goes, we had a really robust first quarter. From that perspective, we’re persevering with to work in direction of bettering that. And I believe it clearly clearly demonstrates the place we’re on path to attain the steering that we have given.
Brandon Folkes
Nice. Thanks very a lot.
Operator
[Operator Instructions] And there aren’t any additional questions right now. I’ll now flip the decision again over to Dr. Strobeck for some closing closing remarks.
Mark Strobeck
Thanks, everybody, for becoming a member of us on immediately’s name. Earlier than we conclude our name, I might prefer to take a second and say thanks to our unimaginable workforce at Rockwell Medical for accrediting us as a Nice Place to Work. Being licensed as a Nice Place to Work spotlights our tradition, our constructive worker expertise and the management behaviors confirmed to ship bettering income, worker retention and elevated innovation.
This recognition is a testomony to our staff unwavering dedication to our mission to offer dialysis clinics and the sufferers they serve with the very best high quality merchandise supported by one of the best customer support within the business. I am extremely pleased with what we now have achieved collectively and look ahead to sharing our progress on future calls as we collectively work to proceed to unlock the worth of Rockwell.
Operator
This concludes immediately’s convention name and webcast. You might now disconnect.
