SEC Form 10-Q filed by Journey Medical Corporation

5/13/26 4:33:32 PM ET

$DERM

Biotechnology: Pharmaceutical Preparations

Health Care

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Journey Medical Corp_March 31, 2026

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐	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: 001-41063

JOURNEY MEDICAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		47-1879539
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9237 E Via de Ventura Blvd., Suite 105, Scottsdale, AZ 85258

(Address of principal executive offices and zip code)

(480) 434-6670

(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
Common Stock, par value $0.0001 per share	DERM	NASDAQ Capital Market

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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	☐
Non-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 ☐ No ☒

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 May 12, 2026
Common Stock Class A, $0.0001 par value		6,000,000
Common Stock, $0.0001 par value		21,534,547

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JOURNEY MEDICAL CORPORATION

Quarterly Report on Form 10-Q

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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	24
Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26

SIGNATURES		27

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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)


		March 31,			December 31,
		2026			2025
ASSETS
Current assets
Cash and cash equivalents		$	27,219		$	24,090
Accounts receivable, net of reserves			24,992			29,783
Inventory			9,292			9,624
Prepaid expenses and other current assets			3,464			3,376
Total current assets			64,967			66,873

Intangible assets, net			26,479			27,605
Operating lease right-of-use asset, net			88			111
Total assets		$	91,534		$	94,589

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	8,202		$	8,851
Due to related party			472			455
Accrued expenses			26,102			27,567
Accrued interest			390			398
Income taxes payable			70			70
Term loan, short-term			2,500			—
Operating lease liability, short-term			94			101
Total current liabilities			37,830			37,442

Term loan, long-term, net of discount			22,873			25,277
Operating lease liability, long-term			—			18
Total liabilities			60,703			62,737

Commitments and contingencies (Note 13)

Stockholders’ equity
Common stock, $.0001 par value, 50,000,000 shares authorized, 21,333,946 and 21,144,655 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively			2			2
Common stock - Class A, $.0001 par value, 50,000,000 shares authorized, 6,000,000 shares issued and outstanding as of March 31, 2026 and December 31, 2025			1			1
Additional paid-in capital			131,516			130,307
Accumulated deficit			(100,688)			(98,458)
Total stockholders’ equity			30,831			31,852
Total liabilities and stockholders’ equity		$	91,534		$	94,589

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
		March 31,
		2026			2025
Revenue:
Product revenue, net		$	15,921		$	13,139
Other revenue			40			—
Total revenue			15,961			13,139

Operating expenses
Cost of goods sold – (excluding amortization of acquired intangible assets)			6,218			4,790
Amortization of acquired intangible assets			1,126			1,065
Research and development			—			39
Selling, general and administrative			10,109			10,569
Total operating expenses			17,453			16,463
Loss from operations			(1,492)			(3,324)

Other expense (income)
Interest income			(157)			(149)
Interest expense			892			891
Foreign exchange transaction losses			3			7
Total other expense			738			749
Loss before income taxes			(2,230)			(4,073)

Income tax expense			—			—
Net loss		$	(2,230)		$	(4,073)

Net loss per common share:
Basic and diluted		$	(0.08)		$	(0.18)
Weighted average number of common shares:
Basic and diluted			27,305,028			22,611,040

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)

Three-Month Period Ended March 31, 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	21,144,655	$	2	6,000,000	$	1	$	130,307	$	(98,458)	$	31,852
Share-based compensation	—		—	—		—		989		—		989
Exercise of stock options for cash	42,150		—	—		—		72		—		72
Issuance of common stock for vested restricted stock units	122,267		—	—		—		—		—		—
Issuance of common stock under ESPP	24,874		—	—		—		148		—		148
Net loss	—		—	—		—		—		(2,230)		(2,230)
Balance as of March 31, 2026	21,333,946	$	2	6,000,000	$	1	$	131,516	$	(100,688)	$	30,831

Three-Month Period Ended March 31, 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	16,153,610	$	1	6,000,000	$	1	$	107,094	$	(87,027)	$	20,069
Share-based compensation	—		—	—		—		1,323		—		1,323
Exercise of stock options for cash	40,043		—	—		—		75		—		75
Issuance of common stock for vested restricted stock units	50,421		—	—		—		—		—		—
Issuance of common stock under ESPP	25,641		—	—		—		99		—		99
Issuance of common stock, ATM offering, net of issuance costs of $125	834,722		—	—		—		4,048		—		4,048
Net loss	—		—	—		—		—		(4,073)		(4,073)
Balance as of March 31, 2025	17,104,437	$	1	6,000,000	$	1	$	112,639	$	(91,100)	$	21,541

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)


		Three-Month Periods Ended
		March 31,
		2026		2025
Cash flows from operating activities
Net loss		$	(2,230)	$	(4,073)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense			30		195
Amortization of debt discount			96		101
Amortization of acquired intangible assets			1,126		1,065
Amortization of operating lease right-of-use assets			23		21
Share-based compensation			989		1,323
Changes in operating assets and liabilities:
Accounts receivable			4,761		(7,989)
Inventory			332		1,935
Prepaid expenses and other current assets			(88)		817
Accounts payable			(649)		(1,646)
Due to related party			17		(129)
Accrued expenses			(1,465)		5,586
Accrued interest			(8)		(23)
Income tax payable			—		(1)
Lease liabilities			(25)		(14)
Net cash provided by (used in) operating activities			2,909		(2,832)

Cash flows from financing activities
Proceeds from the exercise of stock options			72		75
Proceeds from issuance of common stock, ATM offering, net of issuance costs			—		4,048
Issuance of common stock under ESPP			148		99
Payment of license installment note payable			—		(625)
Net cash provided by financing activities			220		3,597

Net change in cash			3,129		765
Cash at the beginning of the period			24,090		20,305
Cash at the end of the period		$	27,219	$	21,070

Supplemental disclosure of cash flow information:
Cash paid for interest		$	806	$	813
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 eight FDA-approved prescription drugs for dermatological conditions that are marketed in the U.S. The Company acquires 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 its field sales organization.

As of March 31, 2026 and December 31, 2025, the Company is a controlled subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”).

Liquidity and Capital Resources

At March 31, 2026, the Company had $27.2 million in cash and cash equivalents as compared to $24.1 million of cash and cash equivalents at December 31, 2025. At March 31, 2026, the Company had working capital of $27.1 million as compared to $29.4 million at December 31, 2025.

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 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal.

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 $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. The Company satisfied the $60.0 million revenue threshold as of December 31, 2025. Accordingly, principal payments under the Credit Facility will begin in February 2027.

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 $150.0 million of common stock, preferred stock, debt securities, warrants, and units. The 2026 Shelf replaces the Company’s previous registration statement on Form S-3 filed in December 2022.

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 one segment, which reflects products for the treatment of dermatological conditions. The dermatological segment derives revenues from the sale of branded and authorized generic prescription products that treat certain dermatological conditions. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer.

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:


		March 31,			December 31,
($’s in thousands)		2026			2025
Finished goods		$	6,830		$	7,389
Work-in-process			584			174
Raw materials			4,258			3,057
Inventory at cost			11,672			10,620
Inventory reserves			(2,380)			(996)
Total inventories		$	9,292		$	9,624

NOTE 5. INTANGIBLE ASSETS

The Company’s finite-lived intangible assets consist of acquired intangible assets. The Company’s intangible assets as of March 31, 2026 and December 31, 2025 are summarized as follows:


	Estimated
	Useful Lives			March 31,			December 31,
($’s in thousands)	(Years)			2026			2025
Intangible assets - product licenses		3-15		$	52,925		$	52,925
Accumulated amortization					(23,303)			(22,177)
Accumulated impairment loss					(3,143)			(3,143)
Total intangible assets				$	26,479		$	27,605

The Company’s amortization expense for the three-month periods ended March 31, 2026 and 2025 was $1.1 million and $1.1 million, respectively.

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In December 2025, the Company received FDA approval for the anti-itch product acquired in 2020. Prior to FDA approval, the anti-itch product had been presented as an intangible asset not yet placed in service totaling $3.9 million. The Company began amortizing the anti-itch intangible asset in January 2026.

Future amortization of the Company’s intangible assets is as follows:


For the years ended	Total Amortization
Remainder of 2026	$	2,906
December 31, 2027		3,338
December 31, 2028		3,159
December 31, 2029		3,159
December 31, 2030		3,159
Thereafter		10,758
Total	$	26,479

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 $10.0 million. In April 2024, the Company made a $3.0 million milestone payment to DRL, based on FDA acceptance of the Company’s new drug application (“NDA”) for Emrosi, and in December of 2024, the Company made a $15.0 million milestone payment to DRL, which was triggered by the November 1, 2024 FDA marketing approval of Emrosi. Upon the $15.0 million milestone payment, all assets related to Emrosi, including the NDA, regulatory documentation and intellectual property, transferred to the Company. Pursuant to the Emrosi Agreement, the Company may be required to make additional contingent regulatory and commercial milestone payments to DRL, totaling up to $150.0 million. Royalties ranging from ten percent to fourteen percent are payable on net sales of the product. Royalties are subject to a 50% reduction in the event that a generic competitor launches in an applicable country where the Company markets and sells the product.

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, 4%, and Zilxi® (minocycline) topical foam, 1.5%, for an upfront payment of $20.0 million and an additional $5.0 million payment on the one year anniversary of the closing (the “VYNE APA”). The VYNE APA also provides for contingent net sales milestone payments. In the first calendar year in which annual sales reach each of $100 million, $200 million, $300 million, $400 million and $500 million, a one-time payment of $10 million, $20 million, $30 million, $40 million and $50 million, respectively, will be paid in that year only, per product, totaling up to $450 million.

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 nine years of age or older. The Company paid an upfront fee of $12.5 million to Dermira. In addition, the Company is obligated to pay Dermira up to $144.0 million in the aggregate and are contingent upon the achievement of certain net sales milestones. The royalty structure for the Qbrexza APA is tiered with royalties for the first two years ranging from approximately 40% to 30%. Thereafter, royalties are approximately 12.0% to 19.0%. Royalty amounts are subject to certain reductions in the event there is a loss of exclusivity.

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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 $5.0 million. Three additional milestone payments totaling $17.0 million are contingent upon the achievement of certain net sales milestones. The Company is required to pay royalties in an amount equal to a low-double digit percentage of net sales. The term of the Accutane Agreement is ten years and renewable upon mutual agreement. Each party may terminate the Accutane Agreement for an uncured material breach by the other party or for certain bankruptcy or insolvency related events. The Company may also terminate the Accutane Agreement without cause upon 180 days written notice to DRL.

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 4% minocycline foam) and Zilxi (topical 1.5% minocycline foam) in mainland China, Taiwan, Hong Kong and Macau. The Company has agreed to supply the finished licensed products to Cutia for clinical and commercial use at an agreed price. Additionally, the Company will earn a royalty in the low single digit percentages on net sales of the licensed products by Cutia.

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 $1.0 million milestone payment to the Company. The $1.0 million milestone payment was recorded as a component of other revenue on the approval date of November 11, 2024. In August 2025, the Company began supplying Cutia with Amzeeq for Cutia’s commercial use.

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:


		March 31, 2026
($’s in thousands)		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents		$	27,219	$	—	$	—	$	27,219
Total		$	27,219	$	—	$	—	$	27,219


		December 31, 2025
($’s in thousands)		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents		$	24,090	$	—	$	—	$	24,090
Total		$	24,090	$	—	$	—	$	24,090

The Company did not carry any level 2 or level 3 assets or liabilities at March 31, 2026 or December 31, 2025. No transfers occurred between level 1, level 2, and level 3 instruments during the three-month periods ended March 31, 2026 and 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 March 31, 2026 and 2025, the Company recorded related party expenses to Fortress of approximately $12,536 and $11,703, respectively. The due to related party liability at March 31, 2026 and December 31, 2025 was $0.5 million and $0.5 million, respectively, and primarily relate to reimbursable expenses incurred by Fortress on behalf of the Company. The Company would have incurred these costs irrespective of the relationship with Fortress.

NOTE 9. ACCRUED EXPENSES

Accrued expenses consisted of the following:


		March 31,			December 31,
($’s in thousands)		2026			2025
Accrued coupons and rebates		$	14,770		$	16,547
Accrued compensation			4,383			5,589
Return reserve			2,508			2,177
Accrued royalties payable			1,863			1,805
Accrued inventory			869			—
Accrued marketing and market access			848			850
Accrued legal, accounting and tax			631			274
Other			230			325
Total accrued expenses		$	26,102		$	27,567

NOTE 10. OPERATING LEASE OBLIGATIONS

The Company leases 3,801 square feet of office space in Scottsdale, Arizona. In July 2024, the Company amended the lease to extend the lease term for an additional 25 months at an annual rate of approximately $0.1 million. The amended lease commenced on February 1, 2025 and expires on February 28, 2027.

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The Company recorded lease expense as follows:


	Three-Month Periods Ended
	March 31,
	2026			2025
Operating lease cost	$	25		$	25
Variable lease cost		1			1
Total lease cost	$	26		$	26

The following table summarizes quantitative information about the Company’s operating leases:


		Three-Month Periods Ended
		March 31,
		2026			2025
Cash paid for amounts included in the measurement of lease liabilities		$	26		$	17
Weighted-average remaining lease term - operating leases			0.9			1.9
Weighted-average discount rate - operating leases			7.35	%		7.35	%

As of March 31, 2026, future minimum lease payments under lease agreements associated with the Company’s operations were as follows:


($’s in thousands)
Remainder of 2026	$	79
2027		18
Total lease payments		97
Less: present value discount		(3)
Total operating lease liabilities	$	94

NOTE 11. DEBT

The Company’s debt obligations at March 31, 2026 and December 31, 2025 were as follows:


	March 31,		December 31,
($’s in thousands)	2026		2025
Short-term portion of principal balance	$	2,500	$	—
Long-term portion of principal balance		22,500		25,000
Principal balance	$	25,000	$	25,000
Plus: Exit fee		1,250		1,250
Less: Debt discount and fees		(877)		(973)
Net carry amount	$	25,373	$	25,277

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 $20.0 million. On the closing date of the facility, the Company drew $15.0 million. On June 26, 2024, the Company drew the remaining $5.0 million under the Credit Facility. On July 9, 2024, the Company entered into an amendment (the “First Amendment”) to the Credit Agreement with SWK. 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 the Company receiving approval on or before June 30, 2025. The Company received FDA approval for Emrosi on November 1, 2024 and the Company drew on the remaining $5.0 million on November 25, 2024.

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 5%) plus 7.75%. The interest rate resets quarterly.

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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 $70.0 million to $60.0 million. The Company satisfied the $60.0 million Revenue-Based Payment provision as of December 31, 2025. Accordingly, the interest-only period under the Credit Facility was extended by one year, with scheduled principal repayments commencing in February 2027 rather than February 2026. Thereafter, the Company will make quarterly principal payments equal to $2.5 million per quarter, or 10.0%, of the outstanding principal amount of the funded Term Loan, with any remaining principal balance due on the maturity date.

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 5% of the original principal amount of the Term Loans. Additionally, the Company paid an origination fee of $0.2 million on the closing date of the Credit Facility and incurred issuance costs of $0.2 million, both of which have been recorded as a debt discount. The Company is accreting the carrying value of the Term Loans to the original principal balance plus the exit fee over the term of the loan using the effective interest method. The amortization of the discount is accounted for as interest expense. The effective interest rate on the Term Loans as of March 31, 2026 was 14.09%. The fair value of the debt approximates its carrying value.

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 March 31, 2026, the Company was in compliance with the financial covenants under the Credit Facility.

As of March 31, 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			10,000
2028			16,250
Total			26,250
Debt discount			(877)
Total, net			25,373
Current portion			(2,500)
Term-loan (long-term)		$	22,873

NOTE 12. INTEREST EXPENSE AND FINANCING FEES

Interest expense and financing fees for the three-month periods ended March 31, 2026 and 2025 consisted of the following:


		Three-Month Periods Ended
		March 31,
		2026		2025
Cash interest expense		$	796	$	789
Amortization of debt discount			96		102
Total interest expense and financing fees		$	892	$	891

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.

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

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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 3,000,000 to 10,642,857. At March 31, 2026 there were 1,949,822 shares available for issuance under the Amended Plan.

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 ten years from the grant date. Options granted generally vest over a three or four-year period. Compensation cost for stock options is charged against operations on a straight-line basis over the vesting period. The Company estimates the fair value of stock options on the grant date by applying the Black-Scholes option pricing valuation model.

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 300,000 shares of common stock for future issuance under the 2023 ESPP. As of March 31, 2026, 136,090 shares were available for issuance under the 2023 ESPP.

The following table summarizes the components of share-based compensation expense in the consolidated statements of operations for the three-month periods ended March 31, 2026 and 2025:


		Three-Month Periods Ended March 31,
($’s in thousands)		2026			2025
Research and development		$	—		$	—
Selling, general and administrative			989			1,323
Total non-cash share-based compensation expense		$	989		$	1,323

Stock Options

The following table summarizes the Company’s stock option activities for the three-month period ended March 31, 2026:


										Weighted
				Weighted						average
		Number		average			Aggregate			remaining
		of		exercise			intrinsic			contractual
		Shares		price			value			life (years)
Outstanding options at December 31, 2025		1,509,544		$	3.50		$	6,359,288		6.21
Granted		—			—			—		—
Exercised		(42,150)			1.70			—		—
Forfeited		(30,150)			3.90			—		—
Expired		—			—			—		—
Outstanding options at March 31, 2026		1,437,244		$	3.54		$	2,408,253		5.94
Options vested and exercisable at March 31, 2026		941,225		$	2.74		$	2,093,111		4.73

For the three-month periods ended March 31, 2026 and 2025, approximately $0.2 million and $0.1 million, respectively, of stock option compensation expense was charged against operations. For the three-month period ended March 31, 2026, the Company issued 42,150 shares of common stock upon the exercise of outstanding stock options and received proceeds of $0.1 million. At March 31, 2026, the Company had unrecognized stock-based compensation expense related to all unvested options of $1.0 million, which the Company expects to recognize over a weighted-average period of approximately 1.3 years.

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 March 31, 2026. The intrinsic value of the Company’s stock options changes based on the closing price of the Company’s common stock.

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Restricted Stock Units

The following table summarizes the activity related to the Company’s RSUs for the three-month period ended March 31, 2026:



				Weighted
		Number of		average grant
		units		date Fair value
Unvested balance at December 31, 2025		1,848,140		$	5.03
Granted		10,000			8.10
Vested		(122,267)			6.17
Forfeited		(33,869)			4.41
Unvested balance at March 31, 2026		1,702,004		$	4.97

For the three-month periods ended March 31, 2026 and 2025, approximately $0.8 million and $1.2 million, respectively, of stock compensation expense related to RSUs was charged against operations. For the three-month periods ended March 31, 2026 and 2025 the Company issued 122,267 and 50,421 shares of common stock, respectively, upon vesting of RSUs amounting to $0.8 million and $0.2 million, respectively, in total aggregate fair market value, and $0.6 million and $0.3 million, respectively, in total intrinsic value. At March 31, 2026, 1,702,004 RSUs remained unvested and there was approximately $3.2 million of unrecognized compensation cost related to restricted stock which the Company expects to recognize over a weighted-average period of approximately 1.8 years.

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 100% of the payment for services and annual bonuses, respectively, in the form of RSUs. As of March 31, 2026, the executive participants deferred 523,817 shares of Journey Medical Inc. common stock upon the vesting of RSUs.

Employee Stock Purchase Plan

The 2023 ESPP provides that eligible employees may contribute up to 10% of their eligible earnings toward a semi-annual purchase of the Company’s common stock. The 2023 ESPP is qualified under Section 423 of the Internal Revenue Code. The employee’s purchase price is derived from a formula based on the closing price of the common stock on the first day of the offering period versus the closing price on the last date of purchase (or, if not a trading day, on the immediately preceding trading day). The offering period under the 2023 ESPP has a duration of six months, and the purchase price with respect to each offering period beginning on or after such date is, until otherwise amended, equal to 85% of the lesser of (i) the fair market value of the Company’s common stock at the commencement of the applicable six-month offering period or (ii) the fair market value of the Company’s common stock on the purchase date. The Company estimates the fair value of the common stock under the 2023 ESPP using a Black-Scholes valuation model. The fair value was estimated on the commencement date of the offering period beginning February 1, 2026 using the Black-Scholes option valuation model and the straight-line attribution approach with the following assumptions: risk-free interest rate (3.6%); expected term (0.5 years); expected volatility (57.5%); and an expected dividend yield (0%). The Company recorded $21,718 of stock-based compensation under the 2023 ESPP for the three-month period ended March 31, 2026. As of March 31, 2026, there was unrecognized stock-based compensation expense of $22,348 related to the current ESPP offering period, which ends July 31, 2026.

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NOTE 15. REVENUES FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Net Revenues

The Company has the following actively marketed products: Emrosi®, Qbrexza®, Amzeeq®, Zilxi®, Accutane®, 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 March 31,
($ in thousands)	2026		2025
Emrosi®	$	6,252	$	2,070
Qbrexza®		5,028		5,161
Accutane®		3,314		3,655
Foam franchise products (Amzeeq® & Zilxi®)		1,050		1,526
Other / legacy		277		727
Total product revenues	$	15,921	$	13,139

The Company recognized other revenue as follows:


	Three-Month Periods Ended March 31,
($ in thousands)	2026		2025
Royalties on sales of Amzeeq by Cutia	$	40	$	—
Total other revenue	$	40	$	—

Other revenue for the three-month period ended March 31, 2026 reflects sales-based royalties earned on the net sales of Amzeeq by Cutia.

Significant Customers

For the three-month periods ended March 31, 2026 and 2025 there were no customers that accounted for more than 10% of the Company’s total gross product revenue.

At March 31, 2026 and December 31, 2025, none of the Company’s customers accounted for more than 10% of its total accounts receivable balance.

NOTE 16. INCOME TAXES


		Three-Month Periods Ended
		March 31,
$ in thousands		2026			2025
Net income (loss) before income taxes		$	(2,230)		$	(4,073)
Provision (benefit) for income taxes			—			—
Effective tax rate			0.0	%		0.0	%

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 March 31, 2026.

As of March 31, 2026, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance.

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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.

The Company’s basic and diluted weighted-average number of common shares outstanding for the three-month periods ended March 31, 2026 and 2025 were as follows:


		Three-Month Periods Ended March 31,
		2026			2025
Basic and diluted			27,305,028			22,611,040
Potentially dilutive securities:
Unvested restricted stock units			1,702,004			2,279,540
Stock options			694,693			1,687,854
Total potentially dilutive securities			2,396,697			3,967,394

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-month periods ended March 31, 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-month periods ended March 31, 2026 and 2025.

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NOTE 18. SEGMENT INFORMATION

The Company’s reportable segment net loss for the three-month periods ending March 31, 2026 and 2025 consisted of the following:


	Three-Month Periods Ended March 31,
($ in thousands)	2026		2025
Revenue	$	15,961	$	13,139
Less: Segment expenses⁽¹⁾
Cost of goods sold – (excluding amortization of acquired intangible assets)		6,218		4,790
Research and development		—		39
Selling, general and administrative
Employee related		4,688		4,031
Sales, operations, outside services and consulting		2,162		3,078
Marketing related		944		1,057
Stock compensation		989		1,323
Legal and administrative		601		513
Product compliance expense		248		275
Office and administrative		279		226
Other		198		66
Other segment items⁽²⁾		1,864		1,814
Segment expenses		18,191		17,212
Segment loss from operations	$	(2,230)	$	(4,073)

Reconciliation to net loss:
Adjustments and reconciling items		—		—
Net loss	$	(2,230)	$	(4,073)

(1)	The significant expense amounts align with the expenses that the CODM is regularly provided with to assess performance and allocate resources.

(2)	Other segment items for the reportable segment include amortization of intangible assets, interest income (expense), foreign exchange transaction losses and income tax expense.

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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 eight 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 March 31, 2026 and 2025:

Comparison of the Three-Month Periods Ended March 31, 2026 and 2025


		Three-Month Periods Ended March 31,						Change
		2026			2025			$			%
Revenue:
Product revenue, net		$	15,921		$	13,139		$	2,782		21	%
Other revenue			40			—			40		100	%
Total revenue			15,961			13,139			2,822		21	%

Operating expenses
Cost of goods sold – (excluding amortization of acquired intangible assets)			6,218			4,790			1,428		30	%
Amortization of acquired intangible assets			1,126			1,065			61		6	%
Research and development			—			39			(39)		(100)	%
Selling, general and administrative			10,109			10,569			(460)		(4)	%
Total operating expenses			17,453			16,463			990		6	%
Loss from operations			(1,492)			(3,324)			1,832		(55)	%

Other expense (income)
Interest income			(157)			(149)			(8)		5	%
Interest expense			892			891			1		0	%
Foreign exchange transaction losses			3			7			(4)		(57)	%
Total other expense			738			749			(11)		(1)	%
Loss before income taxes			(2,230)			(4,073)			1,843		(45)	%

Income tax expense			—			—			—		0	%
Net loss		$	(2,230)		$	(4,073)		$	1,843		(45)	%

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Revenues

The following table reflects our net product revenue for the three-month periods ended March 31, 2026 and 2025:


		Three-Month Periods Ended
		March 31,						Change
($ in thousands)		2026			2025			$			%
Emrosi®		$	6,252		$	2,070		$	4,182		202	%
Qbrexza®			5,028			5,161			(133)		(3)	%
Accutane®			3,314			3,655			(341)		(9)	%
Foam franchise products (Amzeeq® & Zilxi®)			1,050			1,526			(476)		(31)	%
Other / legacy			277			727			(450)		(62)	%
Total net product revenue		$	15,921		$	13,139		$	2,782		21	%

Net product revenue increased $2.8 million, or 21.0%, to $15.9 million for the three-month period ended March 31, 2026 compared to the three-month period ended March 31, 2025. The increase is primarily driven by sales of Emrosi in the first quarter of 2026 of $6.3 million compared to $2.1 million in the first quarter of 2025. The Company launched Emrosi in the first quarter of 2025. This is partially offset by a decrease in Accutane of $0.3 million, the foam franchise products of $0.5 million, and our legacy products of $0.5 million due to continued competitive pressures.

Other Revenue


		Three-Month Periods Ended
		March 31,						Change
($ in thousands)		2026			2025			$			%
Royalties on sales of Amzeeq by Cutia		$	40		$	—		$	40		100	%
Total other revenue		$	40		$	—		$	40		100	%

Other revenue for the three-month period ended March 31, 2026 reflects sales-based royalties on Cutia’s net sales of Amzeeq, pursuant to the Cutia Agreement. In August 2025, we began supplying Cutia with finished licensed products 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 three-month periods ended March 31, 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			773			46,568			6,908			1,746			55,995
Checks/credits issued to third parties			(442)			(48,683)			(6,878)			(1,438)			(57,441)
Balance as of March 31, 2026		$	2,508		$	9,301		$	4,264		$	1,205		$	17,278


								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			(249)			27,415			5,431			1,410			34,007
Checks/credits issued to third parties			(274)			(20,497)			(5,708)			(1,382)			(27,861)
Balance as of March 31, 2025		$	2,601		$	8,668		$	3,440		$	761		$	15,470

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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 $17.3 million at March 31, 2026, compared to $18.7 million at December 31, 2025, a decrease of $1.4 million. The decrease is due primarily to the timing of sales throughout the first quarter of 2026 as well as coverage mix.

Cost of Goods Sold - (excluding amortization of acquired intangible assets)

Cost of goods sold - (excluding amortization of acquired intangible assets) increased by $1.4 million, or 30%, to $6.2 million for the three-month period ended March 31, 2026, from $4.8 million for the three-month period ended March 31, 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 royalties driven by the incremental net revenue recognized for Emrosi during the first quarter of 2026 as compared to the first quarter of 2025.

Amortization of acquired intangible assets

Amortization of acquired intangible assets increased less than $0.1 million, or 6%, to $1.1 million for the three-month period ended March 31, 2026, from $1.1 million for the three-month period ended March 31, 2025, driven by the start of amortization on the anti-itch 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 $0.5 million, or 4%, to $10.1 million for the three-month period ended March 31, 2026, from $10.6 million for the three-month period ended March 31, 2025. The decrease is primarily due to a reduction in Emrosi launch costs from the prior year quarter.

Liquidity and Capital Resources

At March 31, 2026, we had cash and cash equivalents on hand of approximately $27.2 million as compared to $24.1 million of cash and cash equivalents at December 31, 2025, and working capital of $27.1 million at March 31, 2026, compared to $29.4 million 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.

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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 March 31, 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.

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 Three -Month Periods Ended March 31, 2026 and 2025


	Three-Month Periods Ended March 31,					Increase
($’s in thousands)	2026		2025			(Decrease)
Net cash provided by (used in) operating activities	$	2,909	$	(2,832)		$	5,741
Net cash provided by investing activities		—		—			—
Net cash provided by financing activities		220		3,597			(3,377)
Net change in cash and cash equivalents	$	3,129	$	765		$	2,364

Operating Activities

Net cash flows provided by operating activities for the three-month period ended March 31, 2026 increased by $5.7 million, to $2.9 million, from net cash flows used in operating activities of $2.8 million for the three-month period ended March 31, 2025. The increase was driven primarily by the decrease in our net loss period-to-period as well as changes in net working capital, primarily related to net collections of accounts receivable.

Financing Activities

Net cash flows provided by financing activities for the three-month period ended March 31, 2026 decreased by $3.4 million, to $0.2 million, from $3.6 million of cash flows provided by financing activities for the three-month period ended March 31, 2025. The Company received proceeds from the exercise of stock options and the issuance of common stock under the employee stock purchase of $0.2 million during the three-month period ended March 31, 2026. The Company received proceeds from the issuance 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 three-month period ended March 31, 2025.

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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		$	6,202		$	2,417		$	2,746		$	1,039
Principal			25,000			—			10,000			15,000
Exit fee			1,250			—			—			1,250
Total		$	32,452		$	2,417		$	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.

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 March 31, 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 March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

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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 May 13, 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 May 13, 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 May 13, 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 May 13, 2026.***
101		The following financial information from the Company’s quarterly report on Form 10-Q for the period ended March 31, 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: May 13, 2026	By:	/s/ Claude Maraoui
	Claude Maraoui
	President and Chief Executive Officer
	(Principal Executive Officer)

Date: May 13, 2026	By:	/s/ Joseph Benesch
	Joseph Benesch
	Chief Financial Officer
	(Principal Financial Officer)

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Date	Price Target	Rating	Analyst
8/25/2025	$13.00	Buy	H.C. Wainwright
7/30/2025	$12.00	Buy	B. Riley Securities
8/22/2024	$9.00	Buy	Rodman & Renshaw
6/28/2024	$11.00	Buy	ROTH MKM
2/25/2022	$9.00	Overweight	Cantor Fitzgerald
12/16/2021	$15.00	Buy	Roth Capital
12/7/2021	$14.00	Buy	B. Riley Securities

SEC Form 10-Q filed by Journey Medical Corporation

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