Q4 2024 Rockwell Medical Inc Earnings Call
Speaker Change: Good morning and welcome to Rockwell Medical's fourth quarter and full year 2024 results conference 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.
Speaker Change: Our Form 10-K, and other reports filed with the SEC along with today's press release, our Investor presentation, and a replay of today's conference call and webcast can be found on Rockwell Medical's website under the investors section.
Dr. Mark: Now I will turn the call over to Rockwell Medical's, President and CEO, Dr. Mark <unk>.
Speaker Change: Thank you Heather good morning, and thank you for joining us today for Rockwell Medical's fourth quarter and full year 2024 earnings conference call and webcast.
Dr. Mark: <unk> 24 was an important year for Rockwell medical.
Dr. Mark: We successfully accomplished the objectives, we set out to achieve two plus years ago to achieve over $100 million in net sales to improve our gross margin and to achieve profitability for full year on an adjusted EBITDA basis.
Dr. Mark: This morning, we announced that for the full year of 2024, we generated net sales of $101 $5 million. Our gross margin was 17% and we were profitable on an adjusted EBITDA basis for the 12 months ended December 31, 2024 for the first time in Rockwell's history.
Dr. Mark: To reiterate what I said in our last earnings call. The progress we have made over the past few years, coupled with the results. We announced this morning are a direct effect of our team's hard work and dedication.
Dr. Mark: We have been purposeful and focusing on growing our revenue generating business driving sustained profitability growing our cash position, reducing our debt and placing rockwell on a firmer stronger and more stable financial Foundation.
Dr. Mark: That solid foundation is critical to our ability to navigate what we expect to be a transition year for Rockwell in 2025.
Dr. Mark: As we noted on our last call our largest customer has begun transitioning its volume away from Rockwell.
Dr. Mark: Subsequently this customer indicated that will now completely transition to another supplier by June 30 of this year.
Dr. Mark: This transition away from Rockwell will result in the loss of approximately $34 million in revenue compared to 2024.
Dr. Mark: As a result, we are making the appropriate expense reductions to address this decline.
Dr. Mark: We are still in discussions with this customer about terms for a potential contract extension and future volume commitments to Rockwell.
Dr. Mark: While there can be no assurance that these discussions will yield a successful outcome. We are continuing to work closely with this customer to support its clinics and their patients.
Dr. Mark: One of the areas, where we have already reduced expenses is tied to the contract manufacturing agreement that we had in connection with the evoke by asset acquisition.
Dr. Mark: As part of that acquisition, we acquired evoke was concentrates business, which included all contracts intellectual property 500, 10-K clearances and assets primarily associated with an related to evoke was concentrates business nationwide.
Dr. Mark: This also included a fully automated manufacturing line.
Dr. Mark: At December 31, 2024, we terminated our agreement with this third party contract manufacturer in Minnesota discontinued the <unk> 10, Ks for Central solid arena, so transition those customers to Rockwell medical branded concentrates and are in the process of integrating the evoke the manufacturing line into our facilities.
Dr. Mark: Terminating disagreement reduces our fixed overhead costs by well over $2 million annually.
Dr. Mark: We believe this transition and consolidation of Skus was necessary to reduce cost streamline operations improve efficiencies and further automate our manufacturing process.
Dr. Mark: We are already a few months into 2025 and while we expect this year to be a year of transition for Rockwell. We remain focused on a few key objectives.
Dr. Mark: We continue to shift away from less profitable Custer customers and focus on more profitable growth opportunities. We plan to further diversify our customer base, we plan to further diversify our product portfolio and we continue to optimize our business.
Dr. Mark: For 2025, we project that net sales will be between $65 million $70 million gross margin will be between 16% and 18% and adjusted EBITDA will be between negative $500000 to a positive $500000.
Dr. Mark: While our topline revenue will be negatively impacted in the short term our goal remains to be profitable on an adjusted EBITDA basis for the full year of 2025.
Dr. Mark: As it pertains to revenue, we expect that net sales in the first half of 2025 will be slightly higher than in the second half given the timing of when our largest customer is expected to complete their transition from Rockwell.
Dr. Mark: And our continued effort to replace the lost top line revenue in 2025, we are working on and in active discussions with new business development opportunities, including partnerships acquisitions and distribution agreements.
Dr. Mark: We always knew that having a significant portion of our revenue with a single customer presented a risk to us and we've been working hard over the past few years to mitigate that risk.
Dr. Mark: Because of all the changes we've made over the last two plus years change in our largest customers supplier, while a setback it doesn't impact the strong foundation that we've built.
Dr. Mark: We have a number of exciting opportunities. We are working on that we believe will continue to support a profitable growing business going forward.
Dr. Mark: With that I'll now turn the call over to Tim to provide you with more detail about our commercial strategy as we work to diversify our customer base and product portfolio in 2025 and beyond Tim.
Tim: Thank you Mark and good morning, everyone.
Tim: Typical chief commercial officer here at Rockwell medical.
Tim: Over the past several years I've led Rockwell commercial organization that supported our vision to focus our commercial efforts on enhancing our revenue generating hemodialysis concentrates business.
Tim: Driving rockwell toward profitability.
Tim: When we reacquired our product distribution rights from Baxter in 2022 and terminated the exclusive distribution agreement with them.
Tim: Focused on two key areas, one transitioning all of those customers to Rockwell.
Tim: To ensure that our license staining products continued to get to the hospitals medical centers dialysis centers and health systems that serve dialysis patients and to growing our business by adding new customers and expanding into new geographies to access portions of the market that were previously unavailable to us under the Baxter arrangement.
Tim: Then in 2023, we acquired the dialysis concentrates assets from Ebola.
Tim: <unk> added a number of strategic elements to our organization, including.
Tim: Significant topline revenue and profitability as well as an expanded market presence and customer base.
Rockwell became known as the leading supplier of liquid bicarbonate concentrates.
Tim: And the second largest supplier of dialysis concentrates overall in the U S.
Tim: That same year, we also entered into a three year co promotion agreement with B Braun.
Tim: Through its B Braun became an independent nonexclusive representatives to generate new leads for us by promoting our asset concentrates along with their fully integrated portfolio of renal care products.
Tim: In 2024, we added a convenience back to our portfolio that has helped us expand our presence in the at home and acute care markets.
Tim: Our convenience that supports a patient centric movement to drive dialysis treatments into the whole the reduce the cost and complexity in dialysis all the while transforming the experience for patients.
Tim: We developed this innovation primarily in response to increased demand by one of the leading manufacturers of cutting edge dialysis equipment and supplies used in the acute at home settings. This market leader subsequently became a rockwell customer and they signed a long term product purchase agreement with us in the third quarter of last year.
Tim: Our convenience pack includes Q1 gallon premixed containers of either our liquid bicarbonate or liquid acid concentrate.
Tim: There are a few other notable customer wins from last year.
Tim: First we entered into a product purchase agreement with the world's leading provider of dialysis products and services.
The agreement will remain in effect for three years with the option to renew for two additional one year periods and.
Tim: That is expected to generate upwards of $10 million in net sales for the company in the first year with incremental annual price increases built up.
Tim: Second we executed a distribution agreement with <unk> Medical Corporation through which we will supply <unk> with our full range of concentrates and our dry acid concentrates mixture device.
Tim: Neutral has nonexclusive rights to distribute our products globally outside of the U S.
Tim: Third our international sales continue to grow.
Tim: We currently sell our products in over 30 countries around the globe during the fourth quarter of 2024, we announced that we expanded our distribution agreement with <unk> group dialysis centers, the largest dialysis service provider in the Philippines.
Under the terms of the agreement we became the exclusive supplier of all dry hemodialysis concentrate products to net grow.
Tim: As the dialysis market continues to shift towards single use by carbon at cartridge technology. There remains a growing need for suppliers to provide cartridges that are compatible with a range of dialysis machines. We believe that single use bicarbonate disposables represented approximate $100 million market opportunity, which is one of the fastest growing <unk>.
Tim: <unk> within the dialysis products market.
Tim: I'm pleased to share with you that last month, we entered into a distribution services agreement with a leading dialysis products manufacturer.
Distributed single use bicarbonate cartridge.
Arrangement will leverage rockwell's existing reliable commercial infrastructure and distribution network to bring a high quality bicarbonate cartridge option to our customers that dialysis centers hospital based outpatient centers and skilled nursing facilities.
Tim: Under the terms of the agreement the manufacturer will supply us with premium grade single use bicarbonate cartridges, which a five 10-K approved by the FDA.
Tim: Our partners are responsible for maintaining all regulatory approvals required to market and sell these products throughout the U S.
Tim: We believe the addition of this product to our portfolio represents an exciting opportunity for us to diversify our offering.
Tim: And address the rapidly growing market segment. Additionally, this now offers us the ability to be more competitive when bidding for a full range of concentrates business with new customers.
Tim: Since we announced our new business strategy late in 2022.
Tim: We have completed two acquisitions expanded our product portfolio.
Tim: <unk> sized our pricing.
Tim: Significantly improved our gross margin.
Tim: And achieved record net sales quarter over quarter and year over year.
Tim: We signed long term contracts with a range of customers, including some of the largest dialysis providers at home dialysis equipment manufacturers nursing home dialysis providers acute care facilities hospital systems medical device manufacturers and distributors.
Tim: In 2025, we plan to build on this momentum.
Tim: And grow our business by adding new customers and further diversifying our customer base.
Tim: In order to achieve this we plan to target additional customers that represented an estimated $14 5 million gallons with potential available business within our distribution footprint.
Tim: Customers want to work with Rockwell because we are dedicated to providing the highest quality products supported by the best customer service in the industry.
Tim: This continues to be a key differentiator for us.
Tim: Rockwell remains a leading supplier that has the scalability to manufacture and deliver to the more than 12000 individual purchasing facilities, including outpatient dialysis clinics and hospitals in the U S along with select international markets.
Tim: While 2025 will be a year of transition as Mark mentioned earlier.
Tim: I am excited about the tremendous progress that we've made and the opportunities that lie ahead for Rockwell.
Tim: Now I'll turn the call over to Jesse to review, our fourth quarter and full year 2024 financial results in further detail.
Jesse: Thank you Tim Good morning, everyone I will now review, our fourth quarter and full year 2024 financial results in greater detail.
Jesse: Net sales for the fourth quarter 2024 were $24 $7 million, representing a 12% increase over net sales of $22 1 million for the same period in 2023.
Jesse: Both periods consisted solely of concentrate product sales.
Jesse: Net sales for the full year, 2024, or $101 $5 million, representing a 21% increase over net sales of $83 6 million for the same period in 2023.
Jesse: Net product sales for the full year, 2024, or $101 4 million representing.
Jesse: Representing a 27% increase over net product sales in 2023.
Jesse: The increase was primarily driven by the addition of new customers through our <unk> asset acquisition.
Jesse: A special large order of premium priced products by our largest customer as well as additional sales and standard price increases with our existing customers.
Jesse: Net sales on non product revenue was not material in 2024.
Jesse: 2023, net product sales included $3 8 million of deferred license revenue revenue recognized as a result of terminating the Wan Bang and Baxter agreements.
Jesse: Gross profit for Q4, 2024 was $3 6 million, which represented a 27% increase over gross profit of $2 9 million for the same period in 2023.
Jesse: Gross profit for the full year 2024 was $17 5 million, which was more than double our gross profit of $8 7 million in 2023.
Jesse: The increase was due to improved gross margin associated with existing customers driven by price increases a large order.
Jesse: Our premium priced products by our largest customer.
Jesse: All of which partially was offset by gross profit in 2023 associated with the deferred license revenue recognized.
Jesse: In association with our termination of the Wang Bang at Baxter agreements.
Jesse: Gross margin for Q4 2024 was 15%.
Jesse: Representing an increase from 13% for Q4 2023.
Jesse: Gross margin for the full year 2024 was 17% representing an improvement over 10% gross margin for the same period in 2023.
Jesse: Gross margin in Q4, 2024 was impacted by a onetime expense of approximately $900000 associated with the transition from our third party contract manufacturing facility in Minnesota the.
Jesse: The agreement ended December 31, 2024, which will save Rockwell over $2 million annually and fixed overhead expenses.
Jesse: Net loss for the fourth quarter of 2024 with $800000, which represents a 50% improvement over a net loss of $1 5 million for the same period in 2023.
Jesse: Net loss for the full year 2024 with $500000, which.
Jesse: Rents of nearly $8 million improvement over a net loss of $8 4 million in 2023.
Jesse: Adjusted EBITDA for the fourth quarter of 2024 was $1 $4 million representing.
Jesse: Representing a 156% improvement over $500000 for the same period in 2023.
Jesse: Adjusted EBITDA was a positive $5 2 million for the full year 2024, representing a $9 million improvement over a negative adjusted EBITDA of $3 9 million in 2023.
Jesse: As we noted earlier we remain.
Jesse: Laser focused on achieving profitability again on an adjusted EBITDA basis for the full year 2025.
Jesse: At December 31, 2024, we had $8 $5 million remaining on our term loan with Novartis.
Jesse: As a reminder, in January of 2024, we amended our loan agreement, which included an interest rate reduction and extended the loan maturity date from March 2025 to January 2029, our payments will be interest only for 36 months.
Jesse: Cash cash equivalents and investments available for sale at December 31, 2024 was $21 $6 million.
Compared with $18 3 million at the end of September 2024, and $10 9 million at the end of 2023.
Jesse: Strengthening our cash position was a priority in 2024.
Jesse: We have increased our cash balance by more than $10 million since the end of last year by improving our margins renegotiating, our loan agreement and making prudent capital raises under our ATM.
Jesse: Seeing at $21 6 million of cash and investments we have put ourselves in position to manage changes in our business make targeted investments and continued automation and pursue business development opportunities that support our strategic objectives.
Mark: Now I'll turn the call back over to Mark.
Mark: Thank you Jessie operator, please open the phone lines for any questions.
Mark: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.
Speaker Change: Your first question comes from the line of Brandon Folkes from Rodman and Renshaw. Your line is open.
Brandon Folkes: Alright, Thanks for taking my questions and congratulations on all the progress.
Brandon Folkes: Maybe just starting with sort of the largest customer.
Brandon Folkes: Any color in terms, how much revenue that historical largest customer would generate in 2025 in terms of what's in your guidance in the 10-K it seems.
Brandon Folkes: So generated around $45 million. So if we kind of thinking of 45 less 34 million that you mentioned is that a good way to think about what's in there from your largest customer in 2025 and then.
Brandon Folkes: Carry on this if you don't mind, sorry to be long winded here, but.
Brandon Folkes: And I just wanted to confirm you noted the customer expects to transition all of its business away.
Brandon Folkes: Can you just provide some color on those discussions with our customer on sort of the go forward volumes, you mentioned and sort of where the anything going forward is contemplated in your guidance or is it just up to sort of the data I think it was July you mentioned that does sort of wind down.
Mark: Yeah, Brandon Thank you for the questions.
Brandon Folkes: To answer your first question.
Mark: Yes, that's that's.
Brandon Folkes: The right way to think about it.
Brandon Folkes: What we what we've described today is essentially the decline that we'll see in 2025, but as you properly noted.
Brandon Folkes: Through your review the K that.
Brandon Folkes: Approximately $45 million is.
Brandon Folkes: The total volume.
Brandon Folkes: That largest customer does purchase from us.
Brandon Folkes: <unk>.
Brandon Folkes: Yes, so I think thats the right way to think about it as far as your second question related to the discussions with the largest customer.
Brandon Folkes: As we've said previously the.
Brandon Folkes: The shift by that largest customer is essentially to diversify its supplier base it.
Brandon Folkes: It didn't come through any.
Brandon Folkes: <unk>.
Brandon Folkes: Issues that arose from their purchasing from us they are quite happy with us.
Brandon Folkes: Enjoy working with us feel like we make a high quality product and are able to successfully distributed to them.
Brandon Folkes: So we're still in discussions with them right now around.
Brandon Folkes: What the future of that relationship looks like and.
Brandon Folkes: The possibility of continuing to.
Brandon Folkes: Utilize us as a supplier none of what we are contemplating in those discussions is incorporated into our guidance.
Brandon Folkes: So anything that we are able to achieve as a result of those negotiations would go above and beyond the guidance that we provided today.
Speaker Change: Okay, great. Thanks, so much and one follow up if I may add you've obviously done a lot of positive things this year in terms of adding well.
Brandon Folkes: Sorry.
Brandon Folkes: This year than last year, but.
Speaker Change: Do you view 2025, as a transition year and a return to growth in 2026 with all those positive.
Brandon Folkes: Is this potentially a multiyear transition here and then.
Speaker Change: In line with that.
Speaker Change: You mentioned the expense reductions.
Speaker Change: How should we think about those dropping to the bottom line versus sort of.
Speaker Change: Reinvesting in the business you talked about sort of the expansion with just sort of how.
Speaker Change: <unk> of those savings to reinvest back into the business. That's it for me. Thank you.
Speaker Change: Yeah, no. Thank you again so.
Speaker Change: So let me address the first one and then maybe I'll have Jeff address the second question.
Speaker Change: So given.
Speaker Change: Sure.
Speaker Change: Given the fact that we've known about this transition.
Speaker Change: When the timing around this transition we've been well underway in preparing for that to occur.
Speaker Change: As we talked about this morning already conducting expense reductions to mirror essentially the decline in volume that is coming from the shift of this largest partner.
Speaker Change: Our description of 2025 as a transition year.
Speaker Change: Is it part of recognition to the fact that obviously there will be changes that are going on here.
Speaker Change: As that volume declines and as we continue to.
Speaker Change: Reduce our expenses to mirror that but we do not see that as being a long term or requiring a number of years to complete.
Speaker Change: It is our goal and objective to get back to growth here within this organization within 2025.
Speaker Change: And so that is our plan and as I said, we are very very active.
Speaker Change: In the marketplace not only.
Speaker Change: Tim and his team working to sign additional customers.
Speaker Change: To add additional volume.
Speaker Change: But similarly in the business development marketplace.
Speaker Change: Looking at different businesses, both within dialysis and outside of dialysis of which we can utilize our commercial organization our distribution organization.
Speaker Change: To amplify.
Speaker Change: US and get us back to the.
Speaker Change: To the road of growth I think the important thing that I would say here is the last two years have been incredibly successful for us in demonstrating that when we set out to do something as an organization that we are driven and have been able to achieve.
Speaker Change: What we set out to do.
Speaker Change: Though the situation with the largest customer is a temporary setback.
Speaker Change: We still fundamentally believe that we're going to continue to grow this organization and become a leading player in this space.
Speaker Change: As for the second part Jesse Yes.
Jesse: Yes so.
Jesse: I think there'll be like obviously, you see from our gross margin guidance. We do expect as revenue comes down that costs will come down commensurate I think the big activities that will fall to the bottom line is our overhead reductions so as mark mentioned on the call.
Jesse: We reduced some fixed overhead costs as cost with our local acquisition there'll be more of those in the future probably around the same amount of money.
Jesse: Going forward into 2020.
Speaker Change: Great. Thanks, very much and I appreciate you taking all my questions. Thanks Brandon.
Speaker Change: Your next question comes from the line of Ram Silva from H C. Wainwright. Your line is open.
Ram Silva: Thanks, very much for taking my questions. Just two very quick ones. Firstly can you comment on any factors that led to this large customer pivoting away from Rockwell that might extend to other customers. In other words are there any potential risk factors applicable to other customers and your customer.
Speaker Change: Base beyond this customer.
Ram Silva: And if.
Ram Silva: If possible enumerate on what strategies you might have in place to prevent any of this from happening and then secondly, with respect to the bicarbonate.
Ram Silva: Cartridge business.
Ram Silva: Can you just give us a sense of how you plan to grow that business over the course of 2025 specifically.
Ram Silva: And what expectations you have for how quickly the uptake of that product might proceed. Thank you great.
Ram Silva: Great.
Speaker Change: Thanks, Rob for those questions I'll take the first and then maybe I'll have Tim take the second.
Ram Silva: So as it relates to our largest customer.
Speaker Change: In our discussions recently with them.
Ram Silva: It has become clear that they had made this decision.
Speaker Change: Before I arrived here at Rockwell.
Speaker Change: Been unclear as to.
Speaker Change: Why they've made that decision other than the diversification of their of their supplier base.
Speaker Change: We respect that choice.
Speaker Change: Think if they had given.
Speaker Change: Given the choice to do it again today I don't think they would have made that choice given the progress that we've made at Rockwell.
Speaker Change: But that's.
Speaker Change: That is unfortunately, not the case.
Speaker Change: So.
Speaker Change: We are working as I said very closely with them in an effort to to continue to supply them our product and.
Speaker Change: And extend that arrangement and we hope to be able to to share something around that.
Speaker Change: In the coming months as far as our other customers.
Speaker Change: We do not have any issues related to manufacturing our products distributing our products.
Speaker Change: We continue to get cited for having a customer care division that provides a white glove service to our customers.
And the majority of our customer base has signed up to long term supply arrangements.
Speaker Change: And we believe we will continue to support them.
Speaker Change: It is.
Speaker Change: It's an unfortunate.
Speaker Change: Fortunately <unk>.
<unk> not one that.
Speaker Change: We had expected given how well we had been working with that customer but.
Speaker Change: We are.
Speaker Change: We've said in this call we are well prepared by the changes that we've made created a very strong foundational business that allows us now to to weather these situations.
Speaker Change: Two years ago had this happened it would've been game set match.
Speaker Change: Now, we're able to weather it and get ourselves well positioned to begin to start to grow again.
Speaker Change: As I said I feel confident we have a very strong relationship with that customer.
Speaker Change: And I'm I'm.
Speaker Change: I am hopeful for.
Speaker Change: US to continue to work with them going forward on the second piece, maybe I'll just turn it to Tim to talk about the bicarbonate cartridge.
Tim: Yes sure.
Around this product fills a gap in our portfolio.
Tim: Our customers wanted to use a single use bicarbonate disposable before we werent able to offer to them now we are so our strategy really is to go to our existing customer base and introduce the product.
Tim: Which we believe in 2025, we will.
Tim: I'll kind of kick start the program and get US some short term sales longer term there is some growth factor built in.
Tim: That particular market segment as customers switchover slowly to two more machines that are compatible with bicarbonate cartridges such as the one we're going to distribute so.
Tim: It's an important piece for the portfolio and again.
Tim: Addressing our customer base with the product.
Tim: Our existing customer base as our as our primary strategy.
Tim: Thank you.
Ron: Thanks, Ron.
Speaker Change: Your next question comes from the line of Anthony Vendetti from Maxim Group. Your line is open.
Anthony Vendetti: Thank you good morning.
Ron: So.
Ron: So maybe just touching a little bit more.
Speaker Change: On the guidance Mark I, just want to make sure I.
Ron: Understand this correctly, so even though.
Speaker Change: The customer has.
Speaker Change: Indicated that they're going to transition away.
Speaker Change: Completely by June 30 of this year.
Speaker Change: That's that's I guess, what they're saying and what you are saying is yes.
Speaker Change: Yes, but we're continuing to have discussions with them.
Speaker Change: About.
Speaker Change: Potentially.
Speaker Change: Future agreements.
Speaker Change: But not in your guidance right. So your guidance of $65 million to $70 million revenues for 2025 assumes they do transition completely away by 630, and if you were to.
Speaker Change: Sign additional agreements with them this year that would be.
Speaker Change: Would it be correct to <unk>.
Speaker Change: Assume that would be upside to the $65 million to $70 million in guidance and then I have a follow up.
Anthony Vendetti: Yes, good morning Anthony.
Anthony Vendetti: Yes, that's exactly right I think is.
Speaker Change: Folks know who have followed Rockwell certainly over the last two and a half years.
Speaker Change: Not only we read the first to initiate providing guidance to the street, but I think as folks know we've been very conservative in our estimates and what we've provided to the street.
Speaker Change: And have been Fortunately very successful in being able to meet those objectives.
Speaker Change: We've taken the same approach here.
Speaker Change: We've not assumed success in those discussions.
Speaker Change: We provided what we believe to be an achievable.
Speaker Change: Conservative set of guidance ranges.
We are going to pursue.
Speaker Change: And have pursued very aggressively and extension to our relationship with our largest customer and anything that we were able to successfully complete this year will all be upside on that guidance range.
Speaker Change: Okay, Great and then just just two.
Speaker Change: Just to follow up just on overall revenue guidance.
Speaker Change: It seems like Youre offsetting some of the potential loss.
With the Nip grow medical distribution agreement as well as.
Speaker Change: You touched on the on the call.
Speaker Change: Growth internationally.
Speaker Change: Can talk a little bit also.
Speaker Change: About the west coast expansion, how thats going and how that could.
Speaker Change: Also having a positive impact.
Speaker Change: On on sales and then just lastly on gross margin.
Speaker Change: Is it is the gross margin guidance.
Speaker Change: Based on the fact that.
Speaker Change: Youre going to have a lower sales figure then you concluded 20 core with and that the overall pricing remains.
Speaker Change: The same or is there any change in the competitive pricing landscape. Thank you.
Speaker Change: Sure.
Speaker Change: Yes, So let me let me address the first question. So you are right in the sense that.
Speaker Change: What youre seeing and part of that guidance is.
Speaker Change: Involves a certain amount of commercial activity.
Speaker Change: And really has baked into it some of the arrangements that Tim has talked about and one that we've also recently completed.
Speaker Change: Within our within our current estimated footprint.
Speaker Change: As Tim notes.
Speaker Change: Approximately $14 5 million gallons of available supply.
Speaker Change: That we are now targeting.
Speaker Change: To secure that business.
Speaker Change: There is.
Speaker Change: Similarly.
Speaker Change: Large.
Speaker Change: Number of gallons or millions of gallons I should say that are out in the west that are serviced essentially by a single supplier.
Speaker Change: We continue to expand our our own footprint in the west.
Speaker Change: I think we have.
<unk> significantly increased the size and number of customers that we now service to the west.
Speaker Change: We've.
Speaker Change: <unk> established now different distribution pilot programs in an effort to.
Speaker Change: Expand our ability to transport our materials out into the west.
Speaker Change: That's still an area that we see as a growth opportunity I think we've estimated that close to a $100 million.
Speaker Change: We are also trying to to actively explore.
Speaker Change: I think given some of the changes that we are transitioning through right now.
Speaker Change: <unk> it.
Speaker Change: Until we get a larger critical base of customers out there it probably doesn't make sense to establish a.
Speaker Change: A single facility, but I can imagine that if we are able to continue to increase our sales in the west that will likely require to have.
Speaker Change: A dedicated facility there to support those those customers.
Speaker Change: I think it's important to note and to your second question.
Speaker Change: Maybe I'll just finish one thought on your on your first question.
Speaker Change: The other piece here, which you've noted is that we continue to expand our business internationally.
Speaker Change: And that continues to be a.
Speaker Change: I think a very rich opportunity for us.
Speaker Change: And we service now 30 countries.
Speaker Change: There is more to be done there the.
Speaker Change: The advantage always for us in our international business is we don't we don't actually have to distribute the product the customer takes on the distribution piece.
Speaker Change: However, the price doesn't change so the good news for US is that that's an opportunity for additional margin.
Speaker Change: Which has been attractive for us. So we are continuing to look for ways in which to to expand further internationally.
Speaker Change: On the second part of your question.
Speaker Change: As we've noted in previous calls.
Speaker Change: Our largest customer did not produce much in the way of gross margin for us.
Speaker Change: As a supplier.
Speaker Change: So when we remove that custom.
Speaker Change: Customer essentially from the from the P&L. What you see is obviously a decline in the top line, but not much in the way of a significant change to the actual gross margin percentage.
Speaker Change: That again is a reflection of all the changes that we've made internally.
Speaker Change: To make our products more efficiently. It is also a reflection of the fact that we continue to.
Speaker Change: Adjust prices.
Speaker Change: Our products to reflect the value that they bring.
Speaker Change: In the dialysis community.
Speaker Change: So nothing has changed from that perspective, we still have.
Speaker Change: More we're going to do from both perspectives to continue to keep that number progressing forward.
Speaker Change: So that is our that is our intent and objective here through 'twenty five and going beyond.
Speaker Change: Okay. So just just I know it had a lot in there so.
Anthony Vendetti: That's great color, Marc so I appreciate that but on the gross margin than the overall corporate gross margin the reason that debt.
Anthony Vendetti: The guidance of 16% to 18% is not because there's any.
Anthony Vendetti: Concern or issue with pricing it's more.
Anthony Vendetti: The 25 revenue.
Anthony Vendetti: On a on a lower base in 'twenty four and there are certain fixed cost. So that's why the overall corporate gross margin.
Anthony Vendetti: Might be down from what it was at the beginning of 'twenty four.
It doesn't have to do with pricing it has to do with just the.
Anthony Vendetti: The pace of the revenue being lower expected to be lower than 25 is that correct.
Anthony Vendetti: Yes, that's right Anthony.
Anthony Vendetti: I mean, I will say, our our gross margin at the beginning of 2024, which was about 13%.
Anthony Vendetti: So we are still improving but but yes, we are spreading those fixed costs over a smaller base now.
Anthony Vendetti: Okay.
Anthony Vendetti: Okay, great. Thanks, very much I'll hop back into queue I appreciate it.
Anthony Vendetti: Thanks Anthony.
Speaker Change: And there are no further questions I will now turn the call back over to Dr. <unk>.
Speaker Change: Thank you all for joining us for an update on Rockwell Medical's achievements in 2024, and our outlook for 2025.
Speaker Change: 2025 will be a year of transition we remain committed to further diversifying our customer base and product portfolio and further optimizing our business. Our goal remains focused on maintaining and achieving profitability on an adjusted EBITDA basis for the full year of 2025, while we continue to identify and pursue business development opportunities that some.
Speaker Change: Toward our strategic objectives, we look forward to providing you with more updates on our next call.
Speaker Change: This concludes today's conference call and webcast you may now disconnect.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].