CRMD released preliminary earnings for Q4, and on the surface, the numbers are fine: Q4 2025 unaudited net revenue of approximately $127 million, FY 2025 unaudited pro forma net revenue of approximately $400 million, expected Q4 adjusted EBITDA between $77–81 million, and unaudited cash and short-term investments of approximately $148 million.
The bad news is in the guidance.
Management is guiding 2026 revenue at $300–320 million, with DefenCath contributing $150–170 million—but most of that is front-loaded to Q1 and Q2. They expect DefenCath to fall to $100–140 million in 2027. Adjusted EBITDA guidance for 2026 came in at $100–125 million.
Here’s why that guidance is concerning. They just posted $77–81 million in adjusted EBITDA for Q4 and $72 million in Q3. Since the revenue dropoff hits in Q3 and Q4 of 2026, we should see roughly $150–160 million in adjusted EBITDA during the first half of the year. That means management is essentially signaling negative adjusted EBITDA for the second half of 2026.
I saw the TDAPA dropoff coming, but I miscalculated. You can check my previous bullish take on CRMD here.
Looking back at my numbers and digging deeper, my error stemmed from assuming every customer was paying more or less the same price—not that TDAPA reimbursement was significantly higher than other insurance.
Honestly, I still don’t have a solid grasp on biopharmaceuticals. My track record with them is worse than any other sector I invest in. I’ve generally steered clear, but they consistently score well with my investing methodologies, which keeps pulling me back in. In this case, I focused on valuation metrics like P/E and P/S and downplayed the risks associated with TDAPA expiration.
Lesson learned “Cheap stocks are cheap for a reason”. I thought I knew that lesson but its a lesson I had to learn again.
Drew
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Drew, thanks for posting. Many people shy away from talking about their losers but you did not and kudos to you for that. I am inferring that you sold, but I done think you explicitly said. I assume you’re out?
I knew Q4 was going to be pivotal and felt pretty good about that aspect. But the guidance was shocking as you say. I sold my shares as soon as I read the guidance number. Could be an overreaction on my part. But the guidance essentially kneecaps the growth and the cashflow as near as I could see and the company just doesn’t meet my portfolio requirements anymore.
Fortunately for me, one discipline that I did stick to in this investment which I don’t always do (because I get excited about a company) is I kept my stake small. It was the smallest of my portfolio positions (but I run a concentrated portfolio, per Saul) so it still hurt. But it could’ve been a lot worse if this were one of my bigger positions.
I sold out and bought another starter position in a totally different kind of company ONDS which if I have time, I’ll bring to the board.
Best of luck Drew and hang in there on this really rough day.
Thanks,
Rob
22 Likes
I also sold out. The growth is too lumpy, even Q4 was a sequential decline. And it seems their entire path to continuous growth is dependent on the Center for Medicare & Medicaid’s decisions, which is apparently so variable that they can’t even be confident if H2’s issues will be resolved in 2027.
@drew1618t I echo your sentiments about pharma and biotech. I’ve also had tough lessons in this sector.
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“DefenCath guidance for 2026 and 2027
- assumes the maintenance of its current outpatient dialysis utilization run-rate with existing customers, and
- excludes any potential upside from
- new outpatient dialysis customers,
- increased utilization due to anticipated Medicare Advantage contracting, or
- any change in reimbursement due to pending TDAPA legislation.”
(Emphasis via bullets is mine)
I’ve been watching them and I wonder if the above means they are guiding very conservatively. In any case it seems to me like all the bad news has been delivered at this point in terms of revenue and revenue projections. Of course, “limited downside” is not the same as “good odds of upside".
Aside from revenue, they still have Phase 3 results due soon; definitely potential downside if those don’t come in…but that’s veering into off-topic for this board, I imagine.
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