Retractable Technologies Reports $10.5 Million Net Loss in Q1 2025 Amid Rising Costs

Retractable Technologies, Inc. reported a significant decline in financial performance for the first quarter of 2025, with a net loss of $10.5 million compared to a net income of $429,384 in the same period of 2024. The company's revenue increased to $8.3 million, up from $7.6 million year-over-year, primarily driven by a rise in domestic sales, which accounted for 89.6% of total revenues. However, the increase in sales was overshadowed by a 50.3% rise in the cost of manufactured products, largely due to increased tariffs and costs associated with ramping up domestic production.

The company's balance sheet showed a decrease in total assets to $149.3 million as of March 31, 2025, down from $160.7 million at the end of 2024. Current assets also fell significantly, primarily due to a decrease in cash and cash equivalents, which dropped to $3.4 million from $4.2 million. The decline in retained earnings was notable, falling to $16.1 million from $26.7 million, reflecting the impact of the substantial net loss during the quarter.

Operationally, Retractable Technologies has been adapting to changing market conditions, including the imposition of tariffs on imported goods from China, which affected 62.7% of its product sourcing in the first quarter of 2025. The company has initiated a strategic shift towards increasing domestic manufacturing capabilities, which has led to a workforce reduction of approximately 7% in April 2025, aimed at saving an estimated $1.6 million in annual costs. The company is also investing in equipment adaptations to produce certain products domestically, which is expected to mitigate future tariff impacts.

Despite the challenges, the company reported an increase in unit sales of 18.9% for the quarter, although this did not translate into proportional revenue growth due to a decrease in average selling prices. The company’s engagement metrics indicate a strong domestic market presence, with domestic unit sales increasing by 17.2%. However, international sales remained flat, reflecting a shift in product mix that affected average selling prices.

Looking ahead, Retractable Technologies anticipates continued challenges from tariffs and rising production costs, which may impact profitability. The company is focused on enhancing its domestic production capabilities to reduce reliance on imports and mitigate tariff-related expenses. Management remains cautious about future revenue growth, particularly in light of changing market dynamics and customer inventory levels. The company is also evaluating its liquidity position, with expectations of a decline in liquidity over the next few years due to increased operational costs associated with domestic manufacturing initiatives.