Journey Medical (DERM) grows Emrosi sales but flags going concern risk
Journey Medical Corporation reported improved operating results for the quarter ended June 30, 2026. Total revenue was $18.5 million, up from $15.0 million a year earlier, driven mainly by Emrosi sales of $8.1 million and new supply and royalty revenue from its Cutia agreement. Net product revenue for the first six months rose to $33.8 million from $28.1 million, while Qbrexza and legacy products declined due to coverage mix and generic competition.
Operating expenses were broadly flat year over year for the quarter, with selling, general and administrative costs declining as Emrosi launch spending eased. The company recorded a small net loss of $0.3 million for the quarter versus a $3.8 million loss in the prior-year quarter, and a $2.5 million loss for the first half versus $7.9 million previously.
Cash and cash equivalents were $25.6 million and working capital was $27.0 million at June 30, 2026. Journey has a $25.0 million term loan outstanding under its SWK Credit Facility and an effective $150.0 million universal shelf registration. Despite better results, the company states that recurring and historical losses raise substantial doubt about its ability to continue as a going concern over the next twelve months.
Positive
- Quarterly revenue grew 23% year over year to $18.5 million, with Emrosi contributing $8.1 million and total first-half product revenue rising to $33.8 million.
- Net loss narrowed sharply to $0.3 million for the quarter and $2.5 million for the first half, compared with $3.8 million and $7.9 million in the prior-year periods.
- Operating cash flow turned positive, generating $1.2 million in the first half of 2026 versus $3.8 million of cash use in the prior-year first half.
Negative
- Management discloses substantial doubt about the company’s ability to continue as a going concern for at least twelve months due to recurring and historical losses.
- Qbrexza and legacy product revenues declined year over year, reflecting coverage mix issues and continued generic competition in parts of the portfolio.
- The company remains leveraged with a $25.0 million term loan and projected cash interest of $5.0 million through 2028, creating ongoing fixed obligations.
Filing Explained
At June 30, Journey had 21,657,055 common shares outstanding; no ATM proceeds were reported, and $25.0 million debt begins scheduled principal payments in February 2027.
This Form 10-Q is the company’s unaudited quarterly report for the period ended
Common shares increased from 21,333,946 at March 31 to 21,657,055 at June 30, reflecting 50,994 option exercises and 272,115 restricted stock unit vestings during the quarter. Because issuing additional shares increases the total share count and reduces an existing holder’s percentage ownership absent offsetting changes, these issuances reduce existing holders’ percentage ownership.
The separate at-the-market arrangement permits gradual sales of up to 3,750,000 common shares, but the filing reports no ATM proceeds for the six months ended
The
Key Figures
Key Terms
going concern basis financial
at-the-market sales program financial
Revenue-Based Payment provision financial
emerging growth company regulatory
gross-to-net sales accruals financial
shelf registration statement regulatory
Earnings Snapshot
FAQ
How did Journey Medical (DERM) perform financially in Q2 2026?
What drove revenue growth for Journey Medical (DERM) in the first half of 2026?
What is Journey Medical’s (DERM) liquidity position as of June 30, 2026?
Does Journey Medical (DERM) face going concern risks?
How much debt does Journey Medical (DERM) have and on what terms?
What is the role of the Emrosi product in Journey Medical’s (DERM) results?
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission File Number:
JOURNEY MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices and zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |
☒ | Smaller Reporting Company | |||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Class of Common Stock | | Outstanding Shares as of August 11, 2026 |
Common Stock Class A, $0.0001 par value | ||
Common Stock, $0.0001 par value | |
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JOURNEY MEDICAL CORPORATION
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
PART I. | FINANCIAL INFORMATION | | |
Item 1. | Condensed Consolidated Financial Statements (unaudited) | | 1 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 18 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | | 27 |
Item 4. | Controls and Procedures | | 27 |
| | | |
PART II. | OTHER INFORMATION | | |
Item 1. | Legal Proceedings | | 28 |
Item 1A. | Risk Factors | | 28 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | | 28 |
Item 3. | Defaults Upon Senior Securities | | 28 |
Item 4. | Mine Safety Disclosures | | 28 |
Item 5. | Other Information | | 28 |
Item 6. | Exhibits | | 29 |
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| |
SIGNATURES | | 30 |
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(Dollars in thousands except for share and per share amounts)
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| | June 30, | | December 31, | ||
| | 2026 | | 2025 | ||
ASSETS |
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Current assets |
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Cash and cash equivalents |
| $ | |
| $ | |
Accounts receivable, net of reserves |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Intangible assets, net |
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Operating lease right-of-use asset, net |
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Total assets | | $ | | | $ | |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | |
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Current liabilities | |
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Accounts payable | | $ | | | $ | |
Due to related party | |
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Accrued expenses | |
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Accrued interest | | | | | | |
Income taxes payable | |
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Term loan, short-term | |
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Operating lease liability, short-term | |
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Total current liabilities | |
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Term loan, long-term, net of discount | | | | | | |
Operating lease liability, long-term | |
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Total liabilities | |
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Commitments and contingencies (Note 13) | |
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Stockholders’ equity | |
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Common stock, $ | |
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Common stock - Class A, $ | |
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Additional paid-in capital | |
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Accumulated deficit | |
| ( | |
| ( |
Total stockholders’ equity | |
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Total liabilities and stockholders’ equity | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Statements of Operations
(Dollars in thousands except for share and per share amounts)
| | | | | | | | | | | | |
| | Three-Month Periods Ended | | Six-Month Periods Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenue: | | | | | | | | | | | | |
Product revenue, net | | $ | | | $ | | | $ | | | $ | |
Other revenue | | | | | | — | | | | | | — |
Total revenue | | | | | | | | | | | | |
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Operating expenses | |
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Cost of goods sold – (excluding amortization of acquired intangible assets) | |
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Amortization of acquired intangible assets | | | | | | | | | | | | |
Research and development | |
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| — | |
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Selling, general and administrative | |
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Total operating expenses | |
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Income (loss) from operations | |
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| ( | |
| ( | |
| ( |
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Other expense (income) | |
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Interest income | |
| ( | |
| ( | |
| ( | |
| ( |
Interest expense | | | | | | | | | | | | |
Foreign exchange transaction losses | | | | | | | | | | | | |
Total other expense | |
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Loss before income taxes | | | ( | | | ( | | | ( | | | ( |
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Income tax expense | |
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Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Net loss per common share: | | | | | | | | | | | | |
Basic and diluted | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Weighted average number of common shares: | |
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Basic and diluted | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Dollars in thousands except for share and per share amounts)
Six-Month Period Ended June 30, 2026
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Total | |||||||
| | Common Stock | | Common Stock A | | Additional | | Accumulated | | Shareholders’ | |||||||||
| | Shares | | Amount | | Shares | | Amount | | Paid-in Capital | | Deficit | | Equity | |||||
Balance as of December 31, 2025 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | |
Share-based compensation | | — | |
| — |
| — | |
| — | |
| | |
| — | |
| |
Exercise of stock options for cash | | | |
| — | | — | |
| — | |
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| — | |
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Issuance of common stock for vested restricted stock units | | | |
| — |
| — | |
| — | |
| — | |
| — | |
| — |
Issuance of common stock under ESPP | | | | | — | | — | | | — | | | | | | — | | | |
Net loss | | — | | | — | | — | | | — | | | — | | | ( | | | ( |
Balance as of June 30, 2026 | | | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
Three-Month Period Ended June 30, 2026
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Total | |||||||
| | Common Stock | | Common Stock A | | Additional | | Accumulated | | Shareholders’ | |||||||||
| | Shares | | Amount | | Shares | | Amount | | Paid-in Capital | | Deficit | | Equity | |||||
Balance as of March 31, 2026 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | |
Share-based compensation | | — | | | — | | — | | | — | | | | | | — | | | |
Exercise of stock options for cash | | | | | — | | — | | | — | | | | | | — | | | |
Issuance of common stock for vested restricted stock units | | | | | — | | — | | | — | | | — | | | — | | | — |
Net loss | | — | | | — | | — | | | — | | | — | | | ( | | | ( |
Balance as of June 30, 2026 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | |
Six-Month Period Ended June 30, 2025
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Total | ||||||||
| | Common Stock | | Common Stock A | | Additional | | Accumulated | | Shareholders’ | |||||||||
| | Shares | | Amount | | Shares | | Amount | | Paid-in Capital | | Deficit | | Equity | |||||
Balance as of December 31, 2024 | | | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
Share-based compensation | | — | |
| — |
| — | |
| — | |
| | |
| — | |
| |
Exercise of stock options for cash | | | | | — | | — | | | — | | | | | | — | | | |
Issuance of common stock for vested restricted stock units | | | |
| — | | — | |
| — | |
| — | |
| — | |
| — |
Issuance of common stock under ESPP | | | | | — | | — | | | — | | | | | | — | | | |
Issuance of common stock, ATM offering, net of issuance costs of $ | | | | | — | | — | | | — | | | | | | — | | | |
Net loss | | — | |
| — |
| — | |
| — | |
| — | |
| ( | |
| ( |
Balance as of June 30, 2025 | | | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
Three-Month Period Ended June 30, 2025
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Total | |||
| | Common Stock | | Common Stock A | | Additional | | Accumulated | | Shareholders’ | |||||||||
| | Shares | | Amount | | Shares | | Amount | | Paid-in Capital | | Deficit | | Equity | |||||
Balance as of March 31, 2025 | | | | $ | | | | | $ | | | $ | | | $ | ( | | $ | |
Share-based compensation | | — | | | — | | — | | | — | | | | | | — | | | |
Exercise of stock options for cash | | | | | — | | — | | | — | | | | | | — | | | |
Issuance of common stock for vested restricted stock units | | | | | — | | — | | | — | | | — | | | — | | | — |
Net loss | | — | | | — | | — | | | — | | | — | | | ( | | | ( |
Balance as of June 30, 2025 | | | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
(Dollars in thousands except for share and per share amounts)
| | | | | | |
| | Six-Month Periods Ended | ||||
| | June 30, | ||||
| | 2026 | | 2025 | ||
Cash flows from operating activities | | | | | | |
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | |
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Bad debt expense (recovery) | |
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| ( |
Amortization of debt discount | |
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Amortization of acquired intangible assets | |
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Amortization of operating lease right-of-use assets | |
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Share-based compensation | |
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Changes in operating assets and liabilities: | |
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Accounts receivable | | | ( | | | ( |
Inventory | |
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Prepaid expenses and other current assets | |
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Accounts payable | |
| ( | |
| ( |
Due to related party | |
| ( | |
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Accrued expenses | |
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Accrued interest | | | | | | |
Income tax payable | |
| ( | |
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Lease liabilities | | | ( | | | ( |
Net cash provided by (used in) operating activities | |
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| ( |
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Cash flows from financing activities | |
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Proceeds from the exercise of stock options | |
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Proceeds from issuance of common stock, ATM offering, net of issuance costs | |
| — | |
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Proceeds from issuance of common stock under ESPP | | | | | | |
Payment of license installment note payable | | | — | | | ( |
Net cash provided by financing activities | |
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Net change in cash | |
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| ( |
Cash at the beginning of the period | |
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Cash at the end of the period | | $ | | | $ | |
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Supplemental disclosure of cash flow information: | | | | | | |
Cash paid for interest | | $ | | | $ | |
Cash paid for income taxes | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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JOURNEY MEDICAL CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1. ORGANIZATION AND PLAN OF BUSINESS OPERATIONS
Journey Medical Corporation (“Journey” or the “Company”) is a commercial-stage pharmaceutical company that primarily focuses on the selling and marketing of U.S. Food and Drug Administration (“FDA”) approved prescription pharmaceutical products for the treatment of dermatological conditions. The Company’s current product portfolio includes
As of June 30, 2026 and December 31, 2025, the Company is a controlled subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”).
Liquidity and Capital Resources
At June 30, 2026, the Company had $
The Company relies primarily on cash on hand generated from sales of its pharmaceutical products to customers to fund its core operations. In addition, the Company has relied on the proceeds from its term loan (“Credit Facility”) with SWK Funding LLC (“SWK”), and its at-the-market sales program to meet additional capital and liquidity needs, specifically to fund the research and development and commercialization of Emrosi.
In August 2025, the Company executed a new At Market Issuance Sales Agreement (the “2025 Sales Agreement”) with B. Riley Securities, Inc (“B. Riley”) and Lake Street Capital Markets, LLC (“Lake Street”) (each, an “Agent” and together, the “Agents”), replacing the previous December 30, 2022 At Market Issuance Sales Agreement with B. Riley (collectively with the 2025 Sales Agreement, the “ATM”). Pursuant to the terms of the 2025 Sales Agreement, the Company may offer and sell up to
On September 25, 2025, the Company entered into a Third Amendment to its Credit Agreement (the “Credit Agreement”) with SWK (the “Third Amendment”). The Third Amendment, among other things, extends the maturity date of the Company’s existing Credit Facility from December 27, 2027 to June 27, 2028. The Third Amendment also modifies the Revenue-Based Payment provision, as defined in the Credit Agreement, by lowering the applicable revenue threshold, measured on a trailing twelve-month basis, from $
On January 15, 2026, the Company filed a shelf registration statement on Form S-3 (File No. 333-292758) (the “2026 Shelf”), which was declared effective by the Securities and Exchange Commission on January 21, 2026. This shelf registration statement covers the offering, issuance and sale of up to an aggregate of $
The Company regularly evaluates market conditions, its liquidity profile, and financing alternatives, including out-licensing arrangements for its products, to enhance its capital structure. The Company may seek to raise capital through debt or equity financings to expand its product portfolio and for other strategic initiatives, which may include sales of securities under either the Company’s 2026 Shelf, or a new registration statement, or in an unregistered, exempt transaction.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. However, as a result of recurring and historical losses, substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.
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NOTE 2. BASIS OF PRESENTATION
Basis of Presentation and Principles of Consolidation
The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiary, JG Pharma, Inc. (“JG” or “JG Pharma”). All intercompany balances and transactions have been eliminated.
Emerging Growth Company
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s audited consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended, the Company meets the definition of an emerging growth company and elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they apply to private companies. The Company has previously adopted accounting standards using the effective dates applicable to non-emerging growth companies. Accordingly, the loss of emerging growth company status is not expected to result in any change to the timing of adoption of accounting standards and is not expected to have a material impact on the Company’s consolidated financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates made by management include provisions for coupons, chargebacks, wholesaler fees, specialty pharmacy discounts, managed care rebates, product returns, and other allowances customary to the pharmaceutical industry. Significant estimates made by management also include inventory realization, valuation of intangible assets, useful lives of amortizable intangible assets and share-based compensation. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in
The CODM assesses performance for the dermatological segment and allocates resources based on consolidated net loss. The CODM uses net loss to monitor budget vs. actual results, which are presented quarterly, as well as to evaluate performance and income generated in deciding how to reinvest profits. The accounting policies of the segment are the same as those described in Note 2 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). See Note 18 for segment information.
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NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are described in Note 2 of the Notes to the Consolidated Financial Statements included in the 2025 Form 10-K.
Recent Accounting Pronouncements
Adopted
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The guidance provides a practical expedient that can be elected to be applied to accounts receivable and contract assets, which would allow entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets when estimating expected credit losses for such assets. Entities are required to apply the guidance on a prospective basis. The Company adopted ASU 2025-05 on January 1, 2026. Upon adoption, the company elected to apply the practical expedient to its current trade receivables arising from contracts with customers. The adoption of ASU 2025-05 did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to improve the disclosures about specified categories of expenses including purchases of inventory, employee compensation, depreciation and amortization, included in certain expense captions presented in the consolidated statement of operations. This update will be effective for annual periods beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and disclosures.
NOTE 4. INVENTORY
The Company’s inventory consists of the following for the periods ended:
| | | | | | |
| | June 30, | | December 31, | ||
($’s in thousands) | | 2026 | | 2025 | ||
Finished goods | | $ | | | $ | |
Work-in-process | |
| — | |
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Raw materials | |
| | |
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Inventory at cost | | | | | | |
Inventory reserves | | | ( | | | ( |
Total inventories | | $ | | | $ | |
NOTE 5. INTANGIBLE ASSETS
The Company’s finite-lived intangible assets consist of acquired intangible assets. The Company’s intangible assets as of June 30, 2026 and December 31, 2025 are summarized as follows:
| | | | | | | | | |
| | Estimated | | | | | | | |
| | Useful Lives | | June 30, | | December 31, | |||
($’s in thousands) | | (Years) | | 2026 | | 2025 | |||
Intangible assets - product licenses | | | | $ | | | $ | | |
Accumulated amortization | | | | | | ( | | | ( |
Accumulated impairment loss |
| | |
| | ( |
| | ( |
Total intangible assets | | | | | $ | | | $ | |
The Company’s amortization expense for the three-month periods ended June 30, 2026 and 2025 was $
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In December 2025, the Company received FDA approval for Eurax®, formerly known as the anti-itch product, which was acquired in 2020. Prior to FDA approval, Eurax had been presented as an intangible asset not yet placed in service totaling $
Future amortization of the Company’s intangible assets is as follows:
| | | |
For the years ended | | Total Amortization | |
Remainder of 2026 | | $ | |
December 31, 2027 | | | |
December 31, 2028 | |
| |
December 31, 2029 | |
| |
December 31, 2030 | |
| |
Thereafter | |
| |
Total | | $ | |
NOTE 6. LICENSES ACQUIRED
Assets and Licenses Acquired:
Emrosi
On June 29, 2021, the Company entered a license, collaboration, and assignment agreement with Dr. Reddy’s Laboratories, Ltd. (“DRL”) to obtain the global rights for the development and commercialization of Emrosi (“Emrosi”), formerly known as DFD-29, a late-stage development modified release oral minocycline that is being evaluated for the treatment of inflammatory lesions of rosacea (the “Emrosi Agreement”). The Company acquired global rights to Emrosi, including in the U.S. and Europe, except that DRL has retained certain rights to the program in select markets, namely in Armenia, Azerbaijan, Belarus, Brazil, Georgia, India, Kazakhstan, Kyrgyzstan, Moldova, the People’s Republic of China, Russia, Taiwan, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. Pursuant to the Emrosi Agreement, the Company made an upfront payment of $
Amzeeq and Zilxi
In January 2022, the Company entered into an asset purchase agreement with VYNE Therapeutics, Inc. (“VYNE”) to acquire two FDA approved products, Amzeeq® (minocycline) topical foam,
Qbrexza
In March 2021, the Company executed an Asset Purchase Agreement (the “Qbrexza APA”) with Dermira, Inc., a subsidiary of Eli Lilly and Company (“Dermira”). Pursuant to the terms of the Qbrexza APA, the Company acquired the rights to Qbrexza® (glycopyrronium), a prescription cloth towelette to treat primary axillary hyperhidrosis in patients
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Accutane
In July 2020, the Company entered into an exclusive license and supply agreement for Accutane (the “Accutane Agreement”) with DRL. Pursuant to the Accutane Agreement, the Company paid $
Other License Agreements:
Cutia License Agreement
In January 2022, as a part of the Vyne APA, the Company assumed a license agreement with Cutia Therapeutics (HK) Limited (“Cutia”), a Hong Kong biopharmaceutical company with experience in developing pharmaceutical products in the greater China region (the “Cutia Agreement”). Pursuant to the agreement, Cutia was granted an exclusive license to obtain regulatory approval of and commercialize Amzeeq (topical
On November 11, 2024, Cutia received marketing approval for Amzeeq from the National Medical Products Administration (the “NMPA”) of the People’s Republic of China (the “PRC”). The approval triggered a $
NOTE 7. FAIR VALUE MEASUREMENTS
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities.
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Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
| | | | | | | | | | | | |
| | June 30, 2026 | ||||||||||
($’s in thousands) | | Level 1 | | Level 2 | | Level 3 | | Total | ||||
Assets | | | | | | | | | | | | |
Cash and cash equivalents | | $ | | | $ | — | | $ | — | | $ | |
Total | | $ | | | $ | — | | $ | — | | $ | |
| | | | | | | | | | | | |
| | December 31, 2025 | ||||||||||
($’s in thousands) | | Level 1 | | Level 2 | | Level 3 | | Total | ||||
Assets | | | | | | | | | | | | |
Cash and cash equivalents | | $ | | | $ | — | | $ | — | | $ | |
Total | | $ | | | $ | — | | $ | — | | $ | |
The Company did not carry any level 2 or level 3 assets or liabilities at June 30, 2026 or December 31, 2025.
NOTE 8. RELATED PARTY AGREEMENTS
Shared Services Agreement with Fortress
On November 12, 2021, the Company and Fortress entered into an arrangement to share the cost of certain employees (the “Shared Services Agreement”). Fortress’ Executive Chairman and Chief Executive Officer is the Executive Chairman of the Company. Under the terms of the Shared Services Agreement, the Company will reimburse Fortress for the salary and benefit costs associated with these employees based upon actual hours worked on Journey-related projects following the completion of the Company’s initial public offering, which occurred in November 2021. In addition, the Company reimburses Fortress for various payroll-related costs and selling, general and administrative costs incurred by Fortress for the benefit of the Company.
For the three-month periods ended June 30, 2026 and 2025, the Company recorded related party expenses to Fortress of approximately $
NOTE 9. ACCRUED EXPENSES
Accrued expenses consisted of the following:
| | | | | | |
| | June 30, | | December 31, | ||
($’s in thousands) | | 2026 | | 2025 | ||
Accrued coupons and rebates | | $ | | | $ | |
Accrued compensation | | | | | | |
Return reserve |
| | |
| | |
Accrued royalties payable | | | | | | |
Accrued inventory |
| | |
| | — |
Accrued marketing and market access | | | | | | |
Accrued legal, accounting and tax |
| | |
| | |
Other |
| | |
| | |
Total accrued expenses | | $ | | | $ | |
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NOTE 10. OPERATING LEASE OBLIGATIONS
The Company leases
The Company recorded lease expense as follows:
| | | | | | | | | | | | |
| | Three-Month Periods Ended | | Six-Month Periods Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Operating lease cost | | $ | | | $ | | | $ | | | $ | |
Variable lease cost | |
| | | | | | | | | | |
Total lease cost | | $ | | | $ | | | $ | | | $ | |
The following table summarizes quantitative information about the Company’s operating leases:
| | | | | | | | | | | | | |
| | Three-Month Periods Ended | | Six-Month Periods Ended | | ||||||||
| | June 30, | | June 30, | | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | | ||||
Cash paid for amounts included in the measurement of lease liabilities | | $ | | | $ | | | $ | | | $ | | |
Weighted-average remaining lease term - operating leases | |
| |
| |
| |
| | ||||
Weighted-average discount rate - operating leases | |
| | % |
| | % |
| | % |
| | % |
As of June 30, 2026, future minimum lease payments under lease agreements associated with the Company’s operations were as follows:
| | | |
($’s in thousands) | | | |
Remainder of 2026 | | $ | |
2027 | |
| |
Total lease payments | |
| |
Less: present value discount | |
| ( |
Total operating lease liabilities | | $ | |
NOTE 11. DEBT
The Company’s debt obligations at June 30, 2026 and December 31, 2025 were as follows:
| | | | | | |
| | June 30, | | December 31, | ||
($’s in thousands) | | 2026 | | 2025 | ||
Short-term portion of principal balance | | $ | | | $ | — |
Long-term portion of principal balance | | | | | | |
Principal balance | | $ | | | $ | |
Plus: Exit fee | |
| | |
| |
Less: Debt discount and fees | | | ( | | | ( |
Net carry amount | | $ | | | $ | |
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SWK Credit Facility
On December 27, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”) with SWK. The Credit Agreement provides for a term loan facility (the “Credit Facility”) in the original principal amount of up to $
Term loans under the Credit Facility (“Term Loans”) accrue interest, which is payable quarterly in arrears, and bear interest at a rate per annum equal to the three-month term SOFR (subject to a SOFR floor of
On September 25, 2025, the Company entered into the third amendment (“Third Amendment”). The Third Amendment, among other things, extends the maturity date of the Company’s existing Credit Facility from December 27, 2027 to June 27, 2028. The Third Amendment also modifies the Revenue-Based Payment provision, as defined in the Credit Agreement, by lowering the applicable revenue threshold, measured based on the twelve months ended December 31, 2025, from $
The Company may at any time prepay the outstanding principal balance of the Term Loans in whole or in part. Upon repayment in full of the Term Loans, the Company will pay an exit fee equal to
The Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all assets of the Company. As of June 30, 2026, the Company was in compliance with the financial covenants under the Credit Facility.
As of June 30, 2026, the contractual maturities of the long-term debt, including the payment of the exit fee, are as follows (dollars in thousands):
| | | |
Years ending December 31, | | Term Loan | |
Remainder of 2026 | | $ | — |
2027 | |
| |
2028 | |
| |
Total | |
| |
Debt discount | |
| ( |
Total, net | |
| |
Current portion | |
| ( |
Term-loan (long-term) | | $ | |
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NOTE 12. INTEREST EXPENSE AND FINANCING FEES
Interest expense and financing fees for the three and six-month periods ended June 30, 2026 and 2025 consisted of the following:
| | | | | | | | | | | | |
| | Three-Month Periods Ended | | Six-Month Periods Ended | ||||||||
| | June 30, | | June 30, | ||||||||
($’s in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Cash interest expense | | $ | | | $ | | | $ | | | $ | |
Amortization of debt discount | | | | | | | | | | | | |
Total interest expense and financing fees | | $ | | | $ | | | $ | | | $ | |
NOTE 13. COMMITMENTS AND CONTINGENCIES
License Agreements
The Company has undertaken to make contingent milestone payments to the licensors of its portfolio of drug products and candidates. In addition, the Company is required to pay royalties to such licensors based on a percentage of net sales of each drug candidate following regulatory marketing approval. For additional information on future milestone payments and royalties, see Note 6.
Vendor Dispute
The Company is involved in an ordinary course proceeding arising from a dispute with a former vendor over certain service-related charges. Due to the inherent uncertainties of matter, the Company is unable to predict the outcome of the matter at this time. Furthermore, the Company cannot reasonably estimate the possible loss or range of loss, if any, that may result from this matter. However, in the event of unexpected further developments, it is possible that the ultimate resolution of this matter, if unfavorable, may have a material impact on our business, financial condition, results of operations or liquidity.
NOTE 14. SHARE-BASED COMPENSATION
In 2015, the Company’s Board of Directors adopted, and stockholders approved, the Journey Medical 2015 Stock Plan (the “Plan”) authorizing the Company to grant shares of common stock to eligible employees, directors, and consultants in the form of restricted stock, restricted stock units (“RSUs”), stock options and other types of grants. The amount, terms, and exercisability provisions of grants are determined by the Board of Directors. At the Company’s 2024 Annual Meeting of Stockholders, held on June 24, 2024, the Company’s stockholders approved, among other matters, an amendment to the Plan (the “Amended Plan”) to increase the number of shares of Common Stock issuable under the Plan by
The Company grants stock options to employees, non-employees and Directors with exercise prices equal to the closing price of the underlying shares of the Company’s common stock on the Nasdaq Capital Market on the date that the options are granted. Options granted have a term of
In 2023, the Company’s Board of Directors adopted, and stockholders approved, the Journey Medical Corporation 2023 Employee Stock Purchase Plan (the “2023 ESPP”). The Company initially reserved
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The following table summarizes the components of share-based compensation expense in the consolidated statements of operations for the three and six-month periods ended June 30, 2026 and 2025:
| | | | | | | | | | | | |
| | Three-Month Periods Ended June 30, | | Six-Month Periods Ended June 30, | ||||||||
($’s in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Research and development | | $ | — | | $ | — | | $ | — | | $ | — |
Selling, general and administrative | |
| | |
| | |
| | |
| |
Total non-cash share-based compensation expense | | $ | | | $ | | | $ | | | $ | |
Stock Options
The following table summarizes the Company’s stock option activities for the six-month period ended June 30, 2026:
| | | | | | | | | | |
| | | | | | | | | Weighted | |
| | | | Weighted | | | | average | ||
| | Number | | average | | Aggregate | | remaining | ||
| | of | | exercise | | intrinsic | | contractual | ||
| | Shares | | price | | value | | life (years) | ||
Outstanding options at December 31, 2025 | | | | $ | | | $ | | | |
Granted | | | | | | | | — | | — |
Exercised | | ( | | | | | | — | | — |
Forfeited | | ( | | | | | | — | | — |
Expired | | ( | | | | | | — | | — |
Outstanding options at June 30, 2026 |
| | | $ | | | $ | |
| |
Options vested and exercisable at June 30, 2026 |
| | | $ | | | $ | |
| |
For the three-month periods ended June 30, 2026 and 2025, approximately $
The aggregate intrinsic value in the previous table reflects the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price of the options, multiplied by the number of in-the-money stock options) that would have been received by the option holders had all option holders exercised their options on June 30, 2026. The intrinsic value of the Company’s stock options changes based on the closing price of the Company’s common stock.
Restricted Stock Units
The following table summarizes the activity related to the Company’s RSUs for the six-month period ended June 30, 2026:
| | | | | |
| | | | | |
| | | | Weighted | |
| | Number of | | average grant | |
| | units | | date Fair value | |
Unvested balance at December 31, 2025 |
| | | $ | |
Granted |
| | |
| |
Vested | | ( | | | |
Forfeited | | ( | | | |
Unvested balance at June 30, 2026 | | | | $ | |
For the three-month periods ended June 30, 2026 and 2025, approximately $
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respectively, upon vesting of RSUs amounting to $
On July 9, 2024, the Board approved and adopted the Journey Medical Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), which is considered a non - qualified deferred compensation plan. As part of the Deferred Compensation Plan, the Company offers certain non - employee members of the Board (“Director Participants”) and select executive - level employees (the “Executive Participants”) the ability to defer up to
Employee Stock Purchase Plan
The 2023 ESPP provides that eligible employees may contribute up to
NOTE 15. REVENUES FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Net Revenues
The Company has the following actively marketed products: Emrosi®, Qbrexza®, Amzeeq®, Zilxi®, Accutane®, Eurax®, Exelderm®, Targadox®, and Luxamend®. All of the Company’s product revenues are recorded in the U.S.
Revenues by product are summarized as follows:
| | | | | | | | | | | | |
| | Three-Month Periods Ended June 30, | | Six-Month Periods Ended June 30, | ||||||||
($’s in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Emrosi® | | $ | | | $ | | | $ | | | $ | |
Qbrexza® | | | | | | | | | | | | |
Accutane® | |
| | |
| | |
| | |
| |
Foam franchise products (Amzeeq® & Zilxi®) | | | | | | | | | | | | |
Eurax® | | | | | | — | | | | | | — |
Other / legacy | | | | | | | | | | | | |
Total product revenues | | $ | | | $ | | | $ | | | $ | |
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The Company recognized other revenue as follows:
| | | | | | | | | | | | |
| | Three-Month Periods Ended June 30, | | Six-Month Periods Ended June 30, | ||||||||
($’s in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Cutia supply agreement | | $ | | | $ | — | | $ | | | $ | — |
Royalties on sales of Amzeeq by Cutia | | | | | | — | | | | | | — |
Total other revenue | | $ | | | $ | — | | $ | | | $ | — |
Other revenue for the three and six-month period ended June 30, 2026 reflects the supply of Amzeeq to Cutia as well as sales-based royalties earned on the net sales of Amzeeq by Cutia.
Significant Customers
For the three and six-month periods ended June 30, 2026 and 2025 there were
At June 30, 2026 and December 31, 2025,
NOTE 16. INCOME TAXES
| | | | | | | | | | | | | |
| | Three-Month Periods Ended | | Six-Month Periods Ended | | ||||||||
| | June 30, | | June 30, | | ||||||||
($’s in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | | ||||
Net income (loss) before income taxes | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Provision (benefit) for income taxes | |
| | |
| | |
| | |
| | |
Effective tax rate | |
| ( | % |
| ( | % |
| ( | % |
| ( | % |
The Company’s provision for income taxes for the three months ended June 30, 2026 was $
The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if management believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. Management has considered the Company’s history of book and tax income and losses incurred since inception, and the other positive and negative evidence, and has concluded that it is more likely than not that the Company will not realize the benefits of the net deferred tax assets as of June 30, 2026.
As of June 30, 2026, the Company had
NOTE 17. NET LOSS PER COMMON SHARE
The Company accounts for and discloses net earnings (loss) per share using the treasury stock method. Net earnings (loss) per share, or basic earnings (loss) per share, is computed by dividing net earnings (loss) by the weighted-average number of shares of common stock outstanding. Net earnings (loss) per share assuming dilutions, or diluted earnings (loss) per share, is computed by reflecting the potential dilution from the exercise of in-the-money stock options and the issuance of non-vested restricted stock units.
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The Company’s basic and diluted weighted-average number of common shares outstanding for the three and six-month periods ended June 30, 2026 and 2025 were as follows:
| | | | | | | | | | | | |
| | Three-Month Periods Ended June 30, | | Six-Month Periods Ended June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Basic and diluted |
| | | | | |
| | | | | |
Potentially dilutive securities: | | | | | | | | | | | | |
Unvested restricted stock units | | | | | | | | | | | | |
Stock options | | | | | | | | | | | | |
Total potentially dilutive securities | | | | | | |
| | | | | |
The Company’s potentially dilutive securities, including unvested restricted stock and options have been excluded from the computation of diluted loss per share for the three and six-month periods ended June 30, 2026, and 2025, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted income loss per share is the same for the three and six-month periods ended June 30, 2026 and 2025.
NOTE 18. SEGMENT INFORMATION
The Company’s reportable segment net loss for the three and six-month periods ending June 30, 2026 and 2025 consisted of the following:
| | | | | | | | | | | | |
| | Three-Month Periods Ended June 30, | | Six-Month Periods Ended June 30, | ||||||||
($’s in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenue | | $ | | | $ | | | $ | | | $ | |
Less: Segment expenses(1) | | | | |
| | | | | | | |
Cost of goods sold – (excluding amortization of acquired intangible assets) | | | | | | | | | | | | |
Research and development | |
| | |
| — | | | | | | |
Selling, general and administrative | | | | |
| | | | | | | |
Employee related | |
| | |
| | | | | | | |
Sales, operations, outside services and consulting | |
| | |
| | | | | | | |
Marketing related | |
| | |
| | | | | | | |
Stock compensation | |
| | |
| | | | | | | |
Legal and administrative | |
| | |
| | | | | | | |
Product compliance expense | |
| | |
| | | | | | | |
Office and administrative | |
| | |
| | | | | | | |
Other | |
| | |
| | | | | | | |
Other segment items(2) | |
| | |
| | | | | | | |
Segment expenses | |
| | |
| | | | | | | |
Segment loss from operations | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Reconciliation to net loss: | | | | |
| | | | | | | |
Adjustments and reconciling items | |
| — | |
| — | | | — | | | — |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| (1) | The significant expense amounts align with the expenses that the CODM is regularly provided with to assess performance and allocate resources. |
| (2) |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain matters discussed in this report may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. The words “anticipate,” “believe,” “estimate,” “may,” “expect,” “will,” “could,” “project,” “should,” “intend” and similar expressions are generally intended to identify forward-looking statements. Our actual results may differ materially from the results anticipated in or implied by these forward-looking statements due to a variety of factors, including, without limitation:
| ● | the fact that our products and product candidates are subject to time and cost intensive regulation and clinical testing and as a result, may never be successfully developed or commercialized; |
| ● | a substantial portion of our sales derive from products that may become subject to third-party generic competition because their period of exclusivity has ended or they are without patent protection, subjecting them to the potential introduction of new competitor products and/or an increase in market share of existing competitor products, either of which could have a significant adverse impact on our operating income; |
| ● | we operate in a heavily regulated industry, and we cannot predict the impact that any future legislation or administrative or executive action may have on our operations; |
| ● | our revenue is dependent mainly upon sales of our dermatology products and any setback relating to the sale of such products could impair our operating results; |
| ● | competition could limit our products’ commercial opportunity and profitability, including competition from manufacturers of generic versions of our products; |
| ● | the risk that our products do not achieve broad market acceptance, including by government and third-party payors; |
| ● | our reliance on third parties for several aspects of our operations; |
| ● | our dependence on our ability to identify, develop, and acquire or in-license products and integrate them into our operations, at which we may be unsuccessful; |
| ● | the dependence of the success of our business, including our ability to finance our company and generate additional revenue, on the successful commercialization of Emrosi® (Minocycline Hydrochloride Modified Release Capsules, 40 mg), formerly referred to as DFD-29 (“Emrosi”), and the successful development, regulatory approval and commercialization any future product candidates that we may develop, in-license or acquire; |
| ● | clinical drug development is very expensive, time consuming, and uncertain and our clinical trials may fail to adequately demonstrate the safety and efficacy of our current or any future product candidates; |
| ● | our competitors could develop and commercialize products similar or identical to ours; |
| ● | risks related to the protection of our intellectual property and our potential inability to maintain sufficient patent protection for our technology and products; |
| ● | our business and operations would suffer in the event of computer system failures, cyber-attacks, or deficiencies in our or our third parties’ cybersecurity; |
| ● | the effects of major public health issues, epidemics or pandemics on our product revenues and any future clinical trials; |
| ● | our potential need to raise additional capital; |
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| ● | the substantial doubt expressed about our ability to continue as a going concern; |
| ● | Fortress controls a voting majority of our common stock, which could be detrimental to our other shareholders; and |
| ● | the risks described under the section titled “Risk Factors” in Item 1A below and in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). |
The forward-looking statements contained in this report reflect our views and assumptions as of the effective date of this report. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. Except as required by law, we assume no responsibility for updating any forward-looking statements.
We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Overview
We are a commercial-stage pharmaceutical company founded in October 2014 that primarily focuses on the selling and marketing of U.S. Food and Drug Administration (“FDA”) approved prescription pharmaceutical products for the treatment of dermatological conditions. Our current portfolio includes nine FDA-approved prescription drugs for dermatological conditions that are marketed in the U.S. and a majority of our revenues derive from our branded, patent protected products. We are managed by experienced life science executives with a track record of creating value for their stakeholders and bringing novel medicines to the market, enabling patients to experience increased quality of life and physicians and other licensed medical professionals to provide better care for their patients. We acquire rights to products and product candidates by licensing or otherwise acquiring an ownership interest in, funding the research and development of, and eventually commercializing the products through our field sales organization. We are a controlled subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”).
Critical Accounting Policies and Uses of Estimates
Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. Applying these principles requires our judgment in determining the appropriateness of acceptable accounting principles and methods of application in diverse and complex economic activities. The preparation of the accompanying financial statements requires us to make estimates and judgments that affect the reported amounts of revenues, expenses, assets and liabilities, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
For a discussion of our critical accounting estimates, see the section of the 2025 Form 10-K titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Use of Estimates.” There were no material changes to our critical accounting estimates or accounting policies from December 31, 2025.
Accounting Pronouncements
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The guidance provides a practical expedient that can be elected to be applied to accounts receivable and contract assets, which would allow entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets when estimating expected credit losses for such assets. Entities are required to apply the guidance on a prospective basis. We adopted ASU 2025-05 on January 1, 2026. Upon adoption, we elected to apply the practical expedient to our current trade receivables arising from contracts with customers. The adoption of ASU 2025-05 did not have a material impact on our unaudited condensed consolidated financial statements.
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Emerging Growth Company and Smaller Reporting Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include presentation of only two years of audited financial statements in our annual reports on Form 10-K, an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation and less extensive disclosure about our executive compensation arrangements. We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. The Company expects to cease qualifying as an emerging growth company as of the end of its fiscal year ending December 31, 2026.
We are also a “smaller reporting company,” meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K, we have reduced disclosure obligations regarding executive compensation, and smaller reporting companies are permitted to delay adoption of certain recent accounting pronouncements discussed in Note 2 to our consolidated financial statements in this report on Form 10-Q.
Results of Operations
The following table summarizes our results of operations for the three-month periods ended June 30, 2026 and 2025:
Comparison of the Three-Month Periods Ended June 30, 2026 and 2025
| | | | | | | | | | | | |
| | Three-Month Periods Ended June 30, | | Change | | |||||||
($’s in thousands) | | 2026 | | 2025 | | $ | | % | | |||
Revenue: | | | | | | | | | | | | |
Product revenue, net |
| $ | 17,839 |
| $ | 15,009 | | $ | 2,830 | | 19 | % |
Other revenue | | | 671 | | | — | | | 671 | | 100 | % |
Total revenue | | | 18,510 | | | 15,009 | | | 3,501 | | 23 | % |
| | | | | | | | | | | | |
Operating expenses |
| | |
| | | | | | | | |
Cost of goods sold – (excluding amortization of acquired intangible assets) |
| | 6,143 |
| | 4,939 | | | 1,204 | | 24 | % |
Amortization of acquired intangible assets | | | 969 | | | 1,064 | | | (95) | | (9) | % |
Research and development |
| | 54 |
| | — | | | 54 | | 0 | % |
Selling, general and administrative |
| | 10,888 |
| | 11,882 | | | (994) | | (8) | % |
Total operating expenses |
| | 18,054 |
| | 17,885 | | | 169 | | 1 | % |
Income (loss) from operations |
| | 456 |
| | (2,876) | | | 3,332 | | (116) | % |
| | | | | | | | | | | | |
Other expense (income) |
| | |
| | | | | | | | |
Interest income |
| | (154) |
| | (138) | | | (16) | | 12 | % |
Interest expense | | | 906 | | | 937 | | | (31) | | (3) | % |
Foreign exchange transaction losses | | | 1 | | | 61 | | | (60) | | (98) | % |
Total other expense |
| | 753 |
| | 860 | | | (107) | | (12) | % |
Loss before income taxes | | | (297) | | | (3,736) | | | 3,439 | | (92) | % |
| | | | | | | | | | | | |
Income tax expense |
| | 15 |
| | 60 | | | (45) | | (75) | % |
Net loss | | $ | (312) | | $ | (3,796) | | $ | 3,484 | | (92) | % |
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Revenues
The following table reflects our net product revenue for the three-month periods ended June 30, 2026 and 2025:
| | | | | | | | | | | | |
| | Three-Month Periods Ended | | | | | |
| ||||
| | June 30, | | Change | | |||||||
($’s in thousands) | | 2026 | | 2025 | | $ | | % | | |||
Emrosi® | | $ | 8,074 | | $ | 2,795 | | $ | 5,279 | | 189 | % |
Qbrexza® | | | 5,114 | | | 6,949 | | | (1,835) | | (26) | % |
Accutane® | | | 3,358 | | | 3,395 | | | (37) | | (1) | % |
Foam franchise products (Amzeeq® & Zilxi®) | | | 941 | | | 1,135 | | | (194) | | (17) | % |
Eurax® | | | 120 | | | — | | | 120 | | 100 | % |
Other / legacy | | | 232 | | | 735 | | | (503) | | (68) | % |
Total net product revenue | | $ | 17,839 | | $ | 15,009 | | $ | 2,830 | | 19 | % |
Net product revenue increased $2.8 million, or 19.0%, to $17.8 million for the three-month period ended June 30, 2026 compared to the three-month period ended June 30, 2025. The increase is primarily driven by sales of Emrosi in the second quarter of 2026 of $8.1 million compared to $2.8 million in the second quarter of 2025. We launched Emrosi in the first quarter of 2025. This is partially offset by a decrease in Qbrexza of $1.8 million primarily due to coverage mix and a decrease in our legacy products of $0.5 million due to continued generic competition.
Other Revenue
| | | | | | | | | | | | |
| | Three-Month Periods Ended | | | | |||||||
| | June 30, | | Change | | |||||||
($’s in thousands) | | 2026 | | 2025 | | $ | | % | | |||
Cutia supply agreement | | $ | 635 | | $ | — | | $ | 635 | | 100 | % |
Royalties on sales of Amzeeq by Cutia | | | 36 |
| | — | | | 36 |
| 100 | % |
Total other revenue | | $ | 671 | | $ | — | | $ | 671 | | 100 | % |
Other revenue for the three-month period ended June 30, 2026 reflects payments to us for supplying Amzeeq to Cutia as well as sales-based royalties payable to us on Cutia’s net sales of Amzeeq, pursuant to the Cutia Agreement. In August 2025, we began supplying Cutia with Amzeeq for Cutia’s commercial use.
Gross-to-Net Sales Accruals
We record gross-to-net sales accruals for chargebacks, distributor service fees, prompt pay discounts, sales returns, coupons, managed care rebates, government rebates, and other allowances customary to the pharmaceutical industry.
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Gross-to-net sales accruals and the balance in the related allowance accounts for the three-month periods ended June 30, 2026 and 2025, were as follows:
| | | | | | | | | | | | | | | |
| | | | | | | | Managed | | | | | | | |
| | | | | | | | Care | | | | | | ||
($’s in thousands) | | Returns | | Coupons | | Rebates | | Other | | Total | |||||
Balance as of March 31, 2026 | | $ | 2,508 | | $ | 9,301 | | $ | 4,264 | | $ | 1,205 | | $ | 17,278 |
Current provision related to sales in the current period | | | 1,025 | | | 57,380 | | | 8,167 | | | 1,629 | | | 68,201 |
Checks/credits issued to third parties | | | (603) | | | (53,243) | | | (7,627) | | | (1,378) | | | (62,851) |
Balance as of June 30, 2026 | | $ | 2,930 | | $ | 13,438 | | $ | 4,804 | | $ | 1,456 | | $ | 22,628 |
| | | | | | | | | | | | | | | |
| | | | | | | | Managed | | | | | | | |
| | | | | | | | Care | | | | | | ||
($’s in thousands) | | Returns | | Coupons | | Rebates | | Other | | Total | |||||
Balance as of March 31, 2025 | | $ | 2,601 | | $ | 8,668 | | $ | 3,440 | | $ | 761 | | $ | 15,470 |
Current provision related to sales in the current period | | | 222 | | | 28,735 | | | 6,239 | | | 1,401 | | | 36,597 |
Checks/credits issued to third parties | | | (324) | | | (30,623) | | | (5,885) | | | (1,343) | | | (38,175) |
Balance as of June 30, 2025 | | $ | 2,499 | | $ | 6,780 | | $ | 3,794 | | $ | 819 | | $ | 13,892 |
Gross-to-net sales accruals are primarily a function of product sales volume, mix of products sold, and contractual discounts or rebates. Our reserves for gross-to-net sales allowances were $22.6 million at June 30, 2026, compared to $17.3 million at March 31, 2026, an increase of $5.3 million. The increase is due primarily to Emrosi coupon rebates related to the continued growth of the product and the timing of sales throughout the quarter.
Cost of Goods Sold - (excluding amortization of acquired intangible assets)
Cost of goods sold - (excluding amortization of acquired intangible assets) increased by $1.2 million, or 24%, to $6.1 million for the three-month period ended June 30, 2026, from $4.9 million for the three-month period ended June 30, 2025, driven primarily by the supply of Amzeeq to Cutia as well an increase in product royalties payable driven by the incremental net revenue recognized for Emrosi during the second quarter of 2026 as compared to the second quarter of 2025.
Amortization of acquired intangible assets
Amortization of acquired intangible assets decreased less than $0.1 million, or 9%, to $1.0 million for the three-month period ended June 30, 2026, from $1.1 million for the three-month period ended June 30, 2025, driven by the start of amortization on the Eurax acquired intangible asset during the first quarter of 2026, offset by the completion of amortization on the Accutane intangible asset during the first quarter of 2026.
Selling, General and Administrative
Selling, general and administrative expenses decreased by $1.0 million, or 8%, to $10.9 million for the three-month period ended June 30, 2026, from $11.9 million for the three-month period ended June 30, 2025. The decrease is primarily due to a reduction in Emrosi launch costs from the prior year quarter.
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Comparison of the Six-Month Periods Ended June 30, 2026 and 2025
| | | | | | | | | | | | |
| | Six-Month Periods Ended June 30, | | Change |
| |||||||
($’s in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Revenue: | | | | | | | | | | | | |
Product revenue, net | | $ | 33,760 | | $ | 28,148 | | $ | 5,612 | | 20 | % |
Other revenue | |
| 711 | |
| — | |
| 711 | | 100 | % |
Total revenue | |
| 34,471 | |
| 28,148 | |
| 6,323 | | 22 | % |
| | | | | | | | | | | | |
Operating expenses | |
| | |
| | |
| | | | |
Cost of goods sold – (excluding amortization of acquired intangible assets) | |
| 12,361 | |
| 9,729 | |
| 2,632 | | 27 | % |
Amortization of acquired intangible assets | |
| 2,095 | |
| 2,129 | |
| (34) | | (2) | % |
Research and development | |
| 54 | |
| 39 | |
| 15 | | 38 | % |
Selling, general and administrative | |
| 20,997 | |
| 22,451 | |
| (1,454) | | (6) | % |
Total operating expenses | |
| 35,507 | |
| 34,348 | |
| 1,159 | | 3 | % |
Loss from operations | |
| (1,036) | |
| (6,200) | |
| 5,164 | | (83) | % |
| | | | | | | | | | | | |
Other expense (income) | |
| | |
| | |
| | | | |
Interest income | |
| (311) | |
| (287) | |
| (24) | | 8 | % |
Interest expense | |
| 1,798 | |
| 1,828 | |
| (30) | | (2) | % |
Foreign exchange transaction losses | |
| 4 | |
| 68 | |
| (64) | | (94) | % |
Total other expense | |
| 1,491 | |
| 1,609 | |
| (118) | | (7) | % |
Loss before income taxes | |
| (2,527) | |
| (7,809) | |
| 5,282 | | (68) | % |
| | | | | | | | | | | | |
Income tax expense | |
| 15 | |
| 60 | |
| (45) | | (75) | % |
Net loss | | $ | (2,542) | | $ | (7,869) | | $ | 5,327 | | (68) | % |
Revenues
The following table reflects our net product revenue for the six-month periods ended June 30, 2026 and 2025:
| | | | | | | | | | | | |
| | Six-Month Periods Ended June 30, | | | Change |
| ||||||
($’s in thousands) | | 2026 | | 2025 | | | $ | | % |
| ||
Emrosi® | | $ | 14,326 | | $ | 4,865 | | $ | 9,461 |
| 194 | % |
Qbrexza® | |
| 10,142 | |
| 12,110 | | | (1,968) |
| (16) | % |
Accutane® | |
| 6,672 | |
| 7,050 | | | (378) |
| (5) | % |
Foam franchise products (Amzeeq® & Zilxi®) | |
| 1,991 | |
| 2,661 | | | (670) |
| (25) | % |
Eurax® | |
| 120 | |
| — | | | 120 |
| 100 | % |
Other / legacy | |
| 509 | |
| 1,462 | | | (953) |
| (65) | % |
Total net product revenue | | $ | 33,760 | | $ | 28,148 | | $ | 5,612 |
| 20 | % |
Net product revenue increased $5.6 million, or 20%, to $33.8 million for the six-month period ended June 30, 2026 compared to the six-month period ended June 30, 2025. The increase is primarily driven by sales of Emrosi of $14.3 million for the six months ended June 30, 2026 compared to $4.9 million for the six months ended June 30, 2025. We launched Emrosi in the first quarter of 2025. This is partially offset by a decrease in Qbrexza of $2.0 million primarily due to coverage mix and a decrease in our legacy products of $1.0 million due to continued generic competition.
Other Revenue
| | | | | | | | | | | | |
| | Six-Month Periods Ended June 30, | | | Change |
| ||||||
($’s in thousands) | | 2026 | | 2025 | | | $ | | % |
| ||
Cutia supply agreement | | $ | 635 | | $ | — | | $ | 635 |
| 100 | % |
Royalties on sales of Amzeeq by Cutia | |
| 76 | |
| — | | | 76 |
| 100 | % |
Total other revenue | | $ | 711 | | $ | — | | $ | 711 |
| 100 | % |
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Other revenue for the six-month period ended June 30, 2026 reflects payments to us for supplying Amzeeq to Cutia as well as sales-based royalties payable to us on Cutia’s net sales of Amzeeq, pursuant to the Cutia Agreement. In August 2025, we began supplying Cutia with Amzeeq for Cutia’s commercial use.
Gross-to-Net Sales Accruals
We record gross-to-net sales accruals for chargebacks, distributor service fees, prompt pay discounts, sales returns, coupons, managed care rebates, government rebates, and other allowances customary to the pharmaceutical industry.
Gross-to-net sales accruals and the balance in the related allowance accounts for the six-month periods ended June 30, 2026 and 2025, were as follows:
| | | | | | | | | | | | | | | |
| | | | | | | | Managed | | | | | | | |
| | | | | | | | Care | | | | | | | |
($’s in thousands) | | Returns | | Coupons | | Rebates | | Other | | Total | |||||
Balance as of December 31, 2025 | | $ | 2,177 | | $ | 11,416 | | $ | 4,234 | | $ | 897 | | $ | 18,724 |
Current provision related to sales in the current period | |
| 1,798 | |
| 103,948 | |
| 15,075 | |
| 3,375 | |
| 124,196 |
Checks/credits issued to third parties | |
| (1,045) | |
| (101,926) | |
| (14,505) | |
| (2,816) | |
| (120,292) |
Balance as of June 30, 2026 | | $ | 2,930 | | $ | 13,438 | | $ | 4,804 | | $ | 1,456 | | $ | 22,628 |
| | | | | | | | | | | | | | | |
| | | | | | | | Managed | | | | | | | |
| | | | | | | | Care | | | | | | | |
($’s in thousands) | | Returns | | Coupons | | Rebates | | Other | | Total | |||||
Balance as of December 31, 2024 | | $ | 3,124 | | $ | 1,750 | | $ | 3,717 | | $ | 733 | | $ | 9,324 |
Current provision related to sales in the current period | |
| (27) | |
| 56,150 | |
| 11,670 | |
| 2,811 | |
| 70,604 |
Checks/credits issued to third parties | |
| (598) | |
| (51,120) | |
| (11,593) | |
| (2,725) | |
| (66,036) |
Balance as of June 30, 2025 | | $ | 2,499 | | $ | 6,780 | | $ | 3,794 | | $ | 819 | | $ | 13,892 |
Gross-to-net sales accruals are primarily a function of product sales volume, mix of products sold, and contractual discounts or rebates. Our reserves for gross-to-net sales allowances were $22.6 million at June 30, 2026, compared to $18.7 million at December 31, 2025, an increase of $3.9 million. The increase is due primarily to Emrosi coupons related to the continued growth of the product and the timing of sales throughout the period.
Cost of Goods Sold - (excluding amortization of acquired intangible assets)
Cost of goods sold - (excluding amortization of acquired intangible assets) increased by $2.6 million, or 27%, to $12.4 million for the six-month period ended June 30, 2026, from $9.7 million for the six-month period ended June 30, 2025, driven primarily by a $1.3 million non-cash charge related to inventory acquired in the 2021 Qbrexza asset acquisition as well an increase in product royalties payable driven by the incremental net revenue recognized for Emrosi.
Amortization of acquired intangible assets
Amortization of acquired intangible assets decreased less than $0.1 million, or 2%, to $2.1 million for the six-month period ended June 30, 2026, from $2.1 million for the six-month period ended June 30, 2025, driven by the start of amortization on the Eurax acquired intangible asset during the first quarter of 2026, offset by the completion of amortization on the Accutane intangible asset during the first quarter of 2026.
Selling, General and Administrative
Selling, general and administrative expenses decreased by $1.5 million, or 6%, to $21.0 million for the six-month period ended June 30, 2026, from $22.5 million for the six-month period ended June 30, 2025. The decrease is primarily due to a reduction in Emrosi launch costs from the prior year period.
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Liquidity and Capital Resources
At June 30, 2026, we had cash and cash equivalents on hand of approximately $25.6 million as compared to $24.1 million of cash and cash equivalents at December 31, 2025, and working capital of $27.0 million at June 30, 2026, compared to $29.4 million of working capital at December 31, 2025.
We rely primarily on cash on hand generated from sales of our pharmaceutical products to customers to fund our core operations. In addition, we have relied on the proceeds from our term loan Credit Facility with SWK, and our at-the-market sales program to meet additional capital and liquidity needs.
We regularly evaluate market conditions, our liquidity profile, and financing alternatives, including out-licensing arrangements for our products, to enhance our capital structure. We may seek to raise capital through debt or equity financings, which may include sales of securities under either our 2026 Shelf (as defined below) or a new registration statement, to expand our product portfolio and/or for other strategic initiatives. Additionally, as a result of recurring losses, substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.
Sources of Liquidity
SWK Credit Facility
On December 27, 2023, we entered into the Credit Agreement with SWK. The Credit Agreement originally provided for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million. On the closing date, we drew $15.0 million. On June 26, 2024, we drew the remaining $5.0 million under the Credit Facility. Loans under the Credit Facility (the “Term Loans”) bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate (“SOFR”) (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly. Interest payments began in February 2024 and are paid quarterly.
On July 9, 2024, we entered into an amendment (the “First Amendment”) to the Credit Agreement. The First Amendment increased the original principal amount of the Credit Facility from $20.0 million to $25.0 million. The $5.0 million of additional principal added in the First Amendment was contractually required to be drawn upon FDA approval of Emrosi, subject to us receiving approval on or before June 30, 2025. The FDA approved Emrosi on November 1, 2024, and we subsequently drew the remaining $5.0 million.
On September 25, 2025, we entered into a Third Amendment to the Credit Agreement (the “Third Amendment”). The Third Amendment, among other things, extends the maturity date of the facility from December 27, 2027 to June 27, 2028. The Third Amendment also modifies the Revenue-Based Payment provision, as defined in the Credit Agreement, by lowering the applicable revenue threshold, measured on a trailing twelve-month basis, from $70.0 million to $60.0 million. Upon satisfaction of the revised revenue threshold, the interest-only period under the Credit Facility will be extended by one year, with scheduled principal repayments commencing in February 2027 rather than February 2026. We satisfied the $60.0 million revenue threshold as of December 31, 2025. Accordingly, principal payments under the Credit Facility will begin in February 2027.
The Credit Agreement also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all of our assets. As of June 30, 2026, we were in compliance with the financial covenants under the Credit Agreement.
At-the-Market Offering
On December 30, 2022, we filed a shelf registration statement on Form S-3 (File No. 333-269079) (the “2022 Shelf”), which was declared effective by the SEC on January 26, 2023. This shelf registration statement covered the offering, issuance and sale by us of up to an aggregate of $150.0 million of our common stock, preferred stock, debt securities, warrants, and units.
In August 2025, we executed a new At Market Issuance Sales Agreement (the “2025 Sales Agreement”) relating to shares of the Company’s common stock with B. Riley Securities, Inc (“B. Riley”) and Lake Street Capital Markets, LLC (“Lake Street”) (each, an “Agent” and together, the “Agents”), replacing the previous December 30, 2022 At Market Issuance Sales Agreement with B. Riley. In accordance with the terms of the 2025 Sales Agreement, we may offer and sell up to 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal.
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On January 15, 2026, we filed a shelf registration statement on Form S-3 (File No. 333-292758) (the “2026 Shelf”), which was declared effective by the SEC on January 21, 2026. This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $150.0 million of our common stock, preferred stock, debt securities, warrants, and units. The 2026 Shelf replaces the 2022 Shelf. Sales under the 2025 Sales Agreement since the effective date are under the 2026 Shelf.
Cash Flows for the Six -Month Periods Ended June 30, 2026 and 2025
| | | | | | | | | |
| | Six-Month Periods Ended June 30, | | Increase | |||||
($’s in thousands) | | 2026 | | 2025 | | (Decrease) | |||
Net cash provided by (used in) operating activities | | $ | 1,175 | | $ | (3,774) | | $ | 4,949 |
Net cash provided by investing activities | |
| — | |
| — | |
| — |
Net cash provided by financing activities | |
| 378 | |
| 3,762 | |
| (3,384) |
Net change in cash and cash equivalents | | $ | 1,553 | | $ | (12) | | $ | 1,565 |
Operating Activities
Net cash flows provided by operating activities for the six-month period ended June 30, 2026 increased by $4.9 million, to $1.2 million, from net cash flows used in operating activities of $3.8 million for the six-month period ended June 30, 2025. The increase was driven primarily by the decrease in our net loss period-to-period as well as changes in net working capital.
Financing Activities
Net cash flows provided by financing activities for the six-month period ended June 30, 2026 decreased by $3.4 million, to $0.4 million, from $3.8 million of cash flows provided by financing activities for the six-month period ended June 30, 2025. The Company received proceeds from the exercise of stock options and the issuance of common stock under the employee stock purchase plan of $0.4 million during the six-month period ended June 30, 2026. The Company received proceeds from the sale of common stock under the ATM program of $4.0 million, offset by a payment of $0.6 million for a license installment note payable, during the six-month period ended June 30, 2025.
Material Cash Requirements
In the normal course of business, we enter into contractual obligations that contain cash requirements of which the most significant currently include the following:
| ● | We are required to make regular payments under the SWK Credit Facility. Based on the amount currently outstanding under the SWK facility and current interest rates, and assuming we do not make further draws under the SWK facility, we expect to make the following payments: |
| | | | | | | | | | | | |
| | Payments by Period | ||||||||||
| | | | | Remainder of | | | | | | | |
| | Total | | 2026 | | 2027 | | 2028 | ||||
| | ($’s in thousands) | ||||||||||
Interest | | $ | 5,007 | | $ | 1,222 | | $ | 2,746 | | $ | 1,039 |
Principal | |
| 25,000 | |
| — | |
| 10,000 | |
| 15,000 |
Exit fee | |
| 1,250 | |
| — | |
| — | |
| 1,250 |
Total | | $ | 31,257 | | $ | 1,222 | | $ | 12,746 | | $ | 17,289 |
| ● | We are contractually obligated to pay certain milestone and sales-based royalty payments to the counterparties of our license and product acquisition agreements. Due to the contingent nature of these obligations, the amounts of these payments cannot be reasonably predicted. |
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness, as of June 30, 2026, of the design and operation of our disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
No change in internal control over financial reporting occurred during the most recent quarter with respect to our operations that materially affected, or is reasonable likely to materially affect, our internal controls over financial reporting.
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Part II. Other Information
Item 1. Legal Proceedings.
To our knowledge, there are no legal proceedings pending against us, other than routine actions, administrative proceedings, and other actions not deemed material, that are expected to have a material adverse effect on our financial condition, results of operations, or cash flows. In the ordinary course of business, however, the Company may be subject to both insured and uninsured litigation. Suits and claims may be brought against the Company by customers, suppliers, partners and/or third parties (including tort claims for personal injury arising from clinical trials of the Company’s product candidates and property damage) alleging deficiencies in performance, breach of contract, etc., and seeking resulting alleged damages.
Item 1A. Risk Factors.
We have disclosed under the heading “Risk Factors” in the 2025 Form 10-K a number of risks which may materially affect our business, financial condition or results of operations. You should carefully consider these Risk Factors and other information set forth elsewhere in this Quarterly Report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us may also materially adversely affect our business, financial condition and/or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the period covered by this report, we have not sold any equity securities in transactions that were not registered under the Securities Act, and neither we nor our affiliates have purchased any equity securities issued by us.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the three months ended June 30, 2026,
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Item 6. Exhibits
Exhibit No. | | Description |
3.1 | | Fourth Amended and Restated Certificate of Incorporation, filed as Exhibit 3.1 to Form 8-K, filed on June 26, 2025 and incorporated herein by reference. |
3.2 | | Amended and Restated Bylaws of Journey Medical Corporation, filed as Exhibit 3.2 to Form 10-K, filed on March 28, 2022 and incorporated herein by reference. |
4.1 | | Form of Common Stock Certificate, filed as Exhibit 4.1 to Form S-1, filed on October 22, 2021 and incorporated herein by reference. |
31.1 | Certification of Chief Executive Officer of Journey Medical Corporation pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 12, 2026.** | |
31.2 | Certification of Principal Financial Officer of Journey Medical Corporation pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 12, 2026.** | |
32.1 | Certification of Chief Executive Officer of Journey Medical Corporation pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 12, 2026.*** | |
32.2 | Certification of Principal Financial Officer of Journey Medical Corporation pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 12, 2026.*** | |
101 | The following financial information from the Company’s quarterly report on Form 10-Q for the period ended June 30, 2026, formatted in Inline Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statement of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements (filed herewith).** | |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).** |
** Filed herewith.
*** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Journey Medical Corporation | ||
(Registrant) | ||
Date: August 12, 2026 | By: | /s/ Claude Maraoui |
Claude Maraoui | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: August 12, 2026 | By: | /s/ Joseph Benesch |
Joseph Benesch | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
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