CRMD revaluation

Investment Analysis Clubs Saul’s Investing Discussions
1

CRMD Investment Thesis

CRMD recently announced preliminary revenue results for Q3 with revenue up 114% quarter-over-quarter. This stellar performance prompted me to dive deeper and reassess my position size.

Q2 2025 Baseline Analysis

Q2 2025 results showed:

  • Revenue: $39.7M
  • Adjusted EBITDA: $22.4M
  • Diluted GAAP EPS: $0.29
  • Diluted non-GAAP EPS: $0.31 (difference primarily driven by stock-based compensation)
  • Weighted average diluted shares: 71.9M

At the current stock price of $11.70 (as of October 21, 2025), this translates to:

  • Run rate GAAP P/E: 10.1x
  • Run rate non-GAAP P/E: 9.4x

While these multiples appear attractive for a growth company, the weighted average share count doesn’t fully reflect the capital structure going forward.

Adjusted Share Count Analysis

The Q2 weighted average of 71.9M shares understates the true dilution because:

  1. June 30 Offering : 6.6M shares were issued on the last day of Q2, contributing only 1/91 days to the weighted average
  2. Melinta Acquisition : Closed September 2, 2025, with approximately 3.1-3.3M shares issued for the $40M equity component

Adjusted Q2 Share Count Calculation :

  • Q2 weighted average: 71.9M
  • Add back full impact of June 30 offering: +6.5M
  • Adjusted Q2 equivalent: 78.4M shares

Q3 Estimated Weighted Average :

  • Base shares (with June offering): 78.4M
  • Melinta shares (prorated for 1 month of Q3): +1.1M
  • Stock-based compensation and potential conversions: TBD
  • Estimated Q3 weighted average: ~80M shares

Using 80M shares, the Q2 run rate valuations adjust to:

  • Run rate GAAP P/E: 11.1x
  • Run rate non-GAAP P/E: 10.4x

Still relatively attractive for a high-growth company.

Q3 2025 Performance Projection (DefenCath Only)

With DefenCath revenue increasing from $39.7M (Q2) to $85M (Q3):

Revenue & Margins :

  • DefenCath Q3 revenue: $85M
  • Gross margin: 95%
  • Gross profit: $80.8M

Operating Expenses :

  • Historical quarterly OpEx: ~$18M
  • Conservative Q3 estimate: $20M

Net Income Projection :

  • DefenCath gross profit: $80.8M
  • Less operating expenses: -$20M
  • Estimated net income: $60.8M (vs. Q2’s $19.5M)
  • Growth: 212% QoQ

Earnings Per Share :

  • Net income: $60.8M
  • Diluted shares: 80M
  • EPS: $0.76
  • Run rate P/E: 3.9x (at $11.70 per share)
  • TTM P/S 4.77
  • Run rate P/S: 2.75

Note: This excludes any contribution from Melinta, which I’m conservatively modeling at breakeven given their -3.9% net margin in 2024, despite management’s claim of “sustained profitability.” I also assume a big discrpency between GAAP and non-GAAP for Q3 for 1 time costs associated with purchase of Melinta.

Melinta Synergies

Management has guided to $35-45M in annual synergies from the Melinta acquisition. I view this as achievable primarily through:

  1. Cross-selling opportunities : Melinta’s hospital sales force can promote DefenCath to its existing customer base
  2. Expanded market penetration : Increased sales capacity accelerates DefenCath adoption

Long-Term Growth Scenario (5-10 Year Outlook)

DefenCath Market Penetration :

  • Current trajectory suggests DefenCath could reach $300M+ per quarter by saturating the current large dialysis organization (LDO) contract
  • If CorMedix secures 1 additional LDO contract (likely given strong uptake metrics), quarterly DefenCath revenue could exceed $500M
  • Annual DefenCath revenue potential: $2 billion

Financial Model at Scale :

  • Revenue: $2.0B
  • Gross profit (95% margin): $1.9B
  • Operating expenses (assuming 10x staff increase): -$500M
  • Net income: $1.4B

Valuation at Maturity :

  • Net income: $1.4B
  • Conservative P/E multiple: 20x
  • Market capitalization: $28B

Per-Share Valuation :

  • Assuming full conversion of all dilutive securities: ~100M shares outstanding
  • Implied share price: $280

This represents potential upside of 24x from current levels, independent of contributions from CorMedix’s other pipeline products.

Investment Conclusion

With DefenCath revenue accelerating from $39.7M to $85M quarter-over-quarter, CorMedix is demonstrating impressive scalability. Even after adjusting for full dilution, the current valuation remains compelling:

  • Q3 estimated run rate P/E: 3.9x (DefenCath only)
  • Strong gross margins (95%) provide significant operating leverage
  • Multiple growth vectors: LDO expansion, Melinta synergies, pipeline products

I view CRMD as having 10x potential within 2-3 years and have increased my position to 10% of my portfolio.

Drew

33 Likes
2

Hi Drew,

Would you mind letting us know the assumptions that got you to $2B per year in revenue from just two LDO’s? I queried Perplexity.Ai and received a much lower estimate, but considering Defencath’s revenue in Q3 2025 is already $85M, I would be inclined more toward your figures than theirs. Further, the TPN indication (Total Parenteral Nutrition) that is currently in trial, will possibly add substantial additional revenue (TAM of TPN is currently ~5.4M infusions per year).

These are the variables that Perplexity uses in it’s estimate:

  • DefenCath’s list price is about $249.99 per 3 mL vial, which matches the typical dose per catheter lock/treatment.​

  • The U.S. has roughly 492,000 patients receiving in-center hemodialysis, but about 20%–25% of these use catheters for vascular access at any given time. For a “large dialysis organization” (LDO) like DaVita or Fresenius, which may each treat 60,000–100,000 patients, the proportion using catheters would be 12,000–25,000 patients.​

  • Each patient receives hemodialysis roughly three times a week (about 156 sessions/year), and each session typically requires a catheter lock.

Annual Revenue Scenario

Example Calculation for 10,000 Catheter Patients (LDO):

  • 156 sessions per year × $249.99/vial = $38,248 annual DefenCath revenue per patient.

  • 10,000 patients × $38,248 ≈ $382 million annual revenue.

Real-world estimates would be lower due to partial market share, non-daily use, and possible price concessions. However, even at 10–25% penetration or utilization, annual revenues at a single LDO could easily range from $38M–$95M. If both major LDOs adopted DefenCath widely, U.S. opportunity could scale to several hundred million dollars annually.​

Key Assumptions

  • 100% adherence and no vial wastage (conservative estimate: real revenues likely slightly less due to payer and operational factors).

  • Commercial price is not significantly discounted or rebated.

  • Population and session numbers reflect current US statistics for dialysis provision.

4 Likes
3

@twillo Good question. I started with Q4 2024 data and worked from there.

In Q4 2024, CRMD had total DefenCath revenue of $31.2M, with 87% ($27.1M) coming from a single customer. Based on conference call commentary, this customer is almost certainly U.S. Renal Care (the only dialysis customer mentioned by name and referred to as having ~80% penetration).

U.S. Renal Care is the 3rd largest dialysis provider in the U.S. I estimate they represent approximately 4% of the national dialysis market. Management has stated they’ve achieved roughly 80% penetration at U.S. Renal Care and that this represents near-maximum saturation for any customer.

If U.S. Renal Care (4% of market) generates $27.1M quarterly at 80% penetration:

$27.1M ÷ 4% = $677.5M per quarter

This implies a total addressable market of ~$2.7B annually at 80% penetration across all dialysis centers.

Conservative Adjustment

I don’t believe other dialysis organizations will achieve 80% penetration as quickly or consistently as U.S. Renal Care (likely an early adopter with strong relationship). So I applied a significant haircut and estimated:

$500M per quarter = $2B annually

Key Assumptions & Risks

Bearish considerations (could make my estimate too high):

  • U.S. Renal Care might actually represent >4% of the market, making my extrapolation too aggressive
  • Other dialysis organizations may never reach 80% penetration due to weaker relationships, competitive products, or slower adoption curves
  • Some of the sales to U.S. Renal Care in Q4 were them raising their inventory levels

Bullish considerations (could make my estimate too low):

  • This analysis excludes hospital sales entirely (DefenCath is also approved for hospital use)
  • No international revenue included

Bottom Line

My $2B target assumes DefenCath can eventually achieve ~60% average penetration across the broader dialysis market (vs. 80% at U.S. Renal Care).

Drew

11 Likes
4

The $2B estimated annual revenue (cost to the health care system) makes me wonder how the government might respond to mitigate the cost. It’s becoming increasingly clear that budget deficits are a big problem, and care for the aging is a big piece of that. The purpose of DefenCath is to reduce the frequency of Catheter Related bloodstream infections (CRBSIs). According to AI, there are approximately 72K CRBSIs every year, one in four of which are in dialysis patients, and each infection costs the health care system approximately $42k. That works out to about $756M per year. I don’t know how accurate that estimate is, but it’s clear that to some extent DefenCath helps to mitigate that cost.

Here is a slide in a recent CRMD presentation:

CRMD CRBSI
CRMD CRBSI1457×721 179 KB

7 Likes
5

CORMEDIX INC. RECEIVES INNOVATIVE TECHNOLOGY DESIGNATION FROM VIZIENT FOR DEFENCATH

Each year, healthcare experts serving on Vizient client-led councils review select products and technologies for their potential to enhance clinical care, patient safety, healthcare worker safety or to improve business operations of healthcare organizations. Innovative Technology designations are awarded to previously contracted products to signal healthcare providers the impact of these innovations on patient care and business models of healthcare organizations

4 Likes
6

Twillo,

This study produced by EntityRisk and supported by CorMedix, demonstrates that it saves the payer over 1500 per patient to use DefenCath vs Heparin when including Hospitalization and ICU costs.

This study used real world data infection rates and costs and compared them to the Phase 3 results of DefenCath. I’m a little skeptical of the study because its supported by CorMedix. This was presented May 2025 in Canada.

DefenCath reduces chance of an infection by 71% and 1 in 4 die from that infection. Even if costs savings are not big for insurance companies, its still a huge change in patient outcomes.

U.S. Renal Care and DefenCath are conducting a multi-year real world study to see what the actual infection rates are at for clinics all around the US. Because its one thing to see infection rates in a clinical study vs what’s happening in every clinic in America. Does the average technician have the same skills as the ones chosen for the study? The CEO says they play to do interim readout during 2025.

“Separately from that, we’ve been running our real-world evidence study with U.S. Renal Care. We expect to do an interim readout of that study probably in the fourth quarter.”

There is some risk on the CRMD investment if they provide little cost savings but I think its hard to argue that it shouldn’t be covered when it decreases your chance of getting an infection and dying by 71%.

Drew

14 Likes
7

Myron Kaplan, director of $CRMD puchased an additional 25k shares, bringing his holding up to ~201k shares.

4 Likes
8

were his shares purchased in the open market or were they previously made available at lower value?

5 Likes
9

Open market purchase by the Chairman of the Board.

7 Likes
10

As I understand it, all their revenue at this point comes from one drug. Defentech.

However, the reimbursement clock is not DefenCath’s only risk. Q/Q print volatility will remain, and customer concentration will amplify swings. For instance, in 2024, one customer (presumably an LDO) made up 86% of total revenue.

6 Likes
11

Flying,

It wasn’t an LDO, in the conference call that quarter they talked about not signing an LDO yet. Citing the 86% figure as evidence of customer concentration risk is misleading in this context. The company was still in its first year of commercial sales, and such concentration is typical during an initial rollout, especially when early revenue is driven by a single large contract. In fact, this was only the second quarter in which total sales exceeded $1 million and the second quarter selling to U.S. Renal Care. What matters more is the trajectory, by the most recent filing (soon to be outdated), their largest customer’s share of total revenue had already dropped from 86% to 59%. That decline, amid rising total revenue, shows early diversification as new customers are added and adoption broadens.

Their business model is going to have large changes in revenue growth as they add new customers because of how concentrated their customers are. The top two customers in this field have over 70% of the market. Which generates an opportunity here, because the revenue growth is so choppy. But if you follow the metrics and the conference calls where they talk of signing new customers it shows up a quarter or two later with a big change in revenue.

Drew

12 Likes
12

Thanks. You have done your research.

4 Likes
13

Can you expand on this reimbursement clock? I remember reading there is a deadline mid-2026. What % change in reimbursement are we talking about here?

14

I don’t know. Just that when the TDAPA is up, medicare reimbursements could go down.

15

From the Morgan Stanley Annual Global Healthcare Conference this is discussed.

So in the outpatient hemodialysis space, which is about 90% of the market opportunity where most people when they ask about reimbursement is what they’re asking about, there’s something called the TDAPA, Transitional Drug Add-on Payment Adjustment to the bundle. We’ve just finished our first year of TDAPA. We’re now into year 2.

Right now, the structure of TDAPA is really – and it’s only really for fee-for-service patients, is a 5-year payment system where the first 2 years are ASP-based pricing model, years 3, 4 and 5 are add-on payment to the bundle overall model, right, where that add-on payment gets split according to the proportion of dialysis treatments that each provider does in the market. There’s a couple of things that I think are notable there. One, the ESRD final rule will come out later this year that will give us a kind of sense for how FDA or how CMS is thinking about the time period with which they would calculate our post TDAPA add-on payment.

I think for us specifically, our TDAPA does not begin on Jan 1, right? So there’s no time sensitivity to do that calculation. I think we submitted comments and encourage CMS to delay that calculation into next year to capture the utilization from the LDO that just came on, right, in July and some later time periods. We do expect that there is some legislation that will be brought forward later this year, codifying TDAPA in law and making certain improvements. I mean legislation is always very speculative and – but we’ll see – we’ll keep an eye on that and see where that goes.

Its about 40-50% of the patient fall under this reimbursement rate. CMS does its calculations once a year. So the rerate is normally done with 2 years of data and would apply at the earliest in 2027.

Drew

4 Likes