Repro Med Systems, Inc. dba KORU Medical Systems (NASDAQ:
KRMD) ("KORU Medical" or the "Company"), a leading medical
technology company focused on the development, manufacturing, and
commercialization of innovative and easy-to-use specialty infusion
solutions that improve quality of life for patients, today reported
financial results for the first quarter ended March 31, 2022.
Highlights:
- Year-over-year net sales growth of 15% to $6.2 million, marking
the second consecutive quarter of double-digit growth
- Received 4th FDA clearance in 5 months, a 510(k) clearance for
use of the FreedomEdge® infusion pump to deliver EMPAVELI® and
Aspaveli®, a prescription medicine used to treat adults with a rare
disease called paroxysmal nocturnal hemoglobinuria (PNH)
- Expanded novel therapies pipeline in new drug categories,
including a Phase II clinical trial, and expanded an innovation
development agreement with a large SCIg customer
- Signed distribution agreement in Germany, with an increased
focus on international markets
- Announced Brian Case, 20+ year experienced R&D veteran, as
Chief Technology Officer
"I am extremely proud of our team in delivering strong first
quarter results as we continue to execute our strategic growth plan
to become a broader drug delivery provider. A rebounding U.S.
immunoglobulin market is encouraging, and we are successfully
driving a dual focus on increasing revenues in our core
subcutaneous Ig business through expanded label indications and a
growing prefill market, while expanding the Freedom platform into
new drug areas," said Linda Tharby, KORU Medical's President and
CEO. "We also continue to build the team's capability with the
hiring of Brian Case as our Chief Technology Officer, a proven
experienced leader. I am very excited for the future of the company
as we drive long-term growth, create value for customers and
shareholders, and increasingly progress our strategic plan."
2022 First Quarter Financial Results
Three Months Ended March
31,
Change from Prior Year
2022
2021
$
%
Net Sales
Domestic Core
$
4,993,536
$
4,412,417
$
581,119
$
13.2%
International Core
894,942
978,906
(83,964)
(8.6%)
Novel Therapies
355,852
39,628
316,224
798.0%
Total
$
6,244,330
$
5,430,951
$
813,379
$
15.0%
Net sales for the first quarter of 2022 were $6.2 million,
compared to $5.4 million in the prior year period, a 15% increase.
Domestic core was up 13.2% due to growth in pumps and consumables
driven by an overall increase in the subcutaneous immunoglobulin
market, as well as our key growth initiatives, including prefills
and label expansions. Novel Therapies sales were $0.4 million for
the quarter, including recognition of initial non-recurring
engineering service ("NRE") revenues from a pre-commercialization
innovation development agreement with a large subcutaneous
immunoglobulin (SCIg) customer, which is expected to continue to
generate revenue through 2022. International core was down by 8.6%
year-over-year, due to quarterly buying pattern changes of a few
smaller customers.
Gross profit increased by $0.4 million, or 12.1%, in the first
quarter of 2022, while gross margin decreased by 150 basis points
to 58.0%. The decline in gross margin was largely due to higher NRE
revenues from the innovation effort described above. Also
contributing to lower margins was higher manufacturing costs in our
core business from increasing raw material and labor costs,
partially offset by increased price and mix.
Total operating expenses for the first quarter of 2022 were $6.7
million, compared to $5.4 million for the same period in 2021. The
increase in operating expenses is due to strategic investments in
research and development, new hires to support business development
and commercialization, and quality and regulatory.
Net loss for the first quarter of 2022 was $2.5 million, or
$(0.06) per diluted share, compared to a net loss of $1.3 million,
or ($0.03) per diluted share for the same period of 2021. Net loss
included a tax benefit of $0.6 million for the first quarter of
2022. On a non-GAAP basis, adjusted diluted earnings per share was
($0.05) compared to $0.00 in the same period of 2021.
Assumptions and Outlook for Full Year 2022
KORU Medical's outlook for full year 2022 reflects numerous
assumptions that could affect its business, based on the
information management has as of this date, which includes
assumptions regarding the continued recovery from the COVID-19
pandemic related to new SCIg patient starts, plasma supply,
clinical trial activity, labor and supply price increases, and
supply chain impacts. Management will discuss its outlook and
several of its assumptions on its first quarter 2022 earnings
call.
For full year 2022, KORU Medical reaffirms expectations that the
SCIg market will recover to a high single digit rate. Assuming this
market growth holds, the Company expects full year 2022 revenue to
be in the range of $26.5 to $27.0 million (previously $26.0 to
$27.0 million).
The Company reiterates its guidance to exit the year at a 60%
gross margin run rate. Additionally, Q1 2022 supply chain
disruption impacts, which are not expected to recur, have resulted
in unfavorable manufacturing variances, which will be recognized in
the second quarter of 2022.
The Company has no further updates to prior guidance.
Conference Call and Webcast Details
The Company will host a live conference call and webcast to
discuss these results and provide a corporate update on Wednesday,
May 4, 2022, at 4:30 PM ET.
To participate in the call, please dial (877) 407-0784
(domestic) or (201) 689-8560 (international) and provide conference
ID 13728821. The live webcast will be available on the Events &
Presentations page of the Investors section of KORU Medical's
website.
Non-GAAP Measures
This press release includes the non-GAAP financial measures
"Adjusted EBITDA" and "Adjusted Diluted EPS" that are not in
accordance with, nor an alternate to, generally accepted accounting
principles and may be different from non-GAAP measures used by
other companies. These non-GAAP measures are not based on any
comprehensive set of accounting rules or principles. Non-GAAP
financial measures should not be considered a substitute for, or
superior to, measures of financial performance prepared in
accordance with GAAP. They are limited in value because they
exclude charges that have a material effect on KORU Medical's
reported results and, therefore, should not be relied upon as the
sole financial measures to evaluate the Company's financial
results. Non-GAAP financial measures are meant to supplement, and
to be viewed in conjunction with, GAAP financial results.
Reconciliations of the Company's non-GAAP measures are included at
the end of this press release.
About KORU Medical Systems
KORU Medical Systems develops, manufactures, and commercializes
innovative and easy-to-use specialty infusion solutions that
improve quality of life for patients around the world. The FREEDOM
Syringe Infusion System currently includes the FREEDOM60® and
FreedomEdge® Syringe Infusion Drivers, Precision Flow Rate Tubing™
and HIgH-Flo Subcutaneous Safety Needle Sets™. These devices are
used for infusions administered in the home and alternate care
settings. For more information, please visit
www.korumedical.com.
Forward-looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve risks and uncertainties. All statements that are not
historical fact are forward-looking statements, including, but not
limited to, expected financial outlook and operating performance
for fiscal 2022, and expected market growth. Forward-looking
statements discuss the Company's current expectations and
projections relating to its financial position, results of
operations, plans, objectives, future performance and business.
Forward-looking statements can be identified by words such as
"outlook", "expect", "plan", "believe" and "will". Actual results
may differ materially from the results predicted and reported
results should not be considered as an indication of future
performance. The potential risks and uncertainties that could cause
actual results to differ from the results predicted include, among
others, uncertainties associated with the shift to increased
healthcare delivery in the home, new patient diagnoses, customer
ordering patterns, COVID-19, innovation and competition, labor and
supply price increases, and those risks and uncertainties included
under the captions "Risk Factors" in our Annual Report on Form 10-K
for the year ended December 31, 2021, which is on file with the SEC
and is available on our website at www.korumedical.com/investors
and on the SEC website at www.sec.gov. All information provided in
this release and in the attachments is as of May 4, 2022. Undue
reliance should not be placed on the forward-looking statements in
this press release, which are based on information available to us
on the date hereof. We undertake no duty to update this information
unless required by law.
REPRO MED SYSTEMS,
INC.
BALANCE SHEETS
(UNAUDITED)
March 31,
December 31,
2022
2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
22,577,247
$
25,334,889
Accounts receivable less allowance for
doubtful accounts of $24,271 for March 31, 2022 and December 31,
2021
3,145,397
3,592,886
Inventory
6,017,737
6,106,338
Other Receivables
680,075
718,220
Prepaid expenses
1,510,851
1,568,821
TOTAL CURRENT ASSETS
33,931,307
37,321,154
Property and equipment, net
1,763,269
1,106,445
Intangible assets, net of accumulated
amortization of $278,897 and $263,729 at March 31, 2022 and
December 31, 2021, respectively
795,339
808,813
Operating lease right-of-use assets
4,309,282
95,553
Deferred income tax assets, net
2,538,853
1,941,254
Other assets
89,587
19,812
TOTAL ASSETS
$
43,427,637
$
41,293,031
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable
$
1,267,980
$
1,227,533
Accrued expenses
2,171,724
2,709,704
Note Payable
255,614
508,583
Other Liabilities
115,625
90,000
Accrued payroll and related taxes
506,315
160,603
Operating lease liability – current
395,359
95,553
TOTAL CURRENT LIABILITIES
4,712,617
4,791,976
Operating lease liability, net of current
portion
3,913,923
—
TOTAL LIABILITIES
8,626,540
4,791,976
Commitments and contingencies (Refer to
Note 3)
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, 75,000,000
shares authorized, 48,121,289 and 48,044,162 shares issued;
44,700,787 and 44,623,660 shares outstanding at March 31, 2022, and
December 31, 2021, respectively
481,212
480,441
Additional paid-in capital
41,611,030
40,774,245
Treasury stock, 3,420,502 shares at March
31, 2022 and December 31, 2021, respectively, at cost
(3,843,562
)
(3,843,562
)
Retained deficit
(3,447,583
)
(910,069
)
TOTAL STOCKHOLDERS' EQUITY
34,801,097
36,501,055
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
43,427,637
$
41,293,031
REPRO MED SYSTEMS,
INC.
STATEMENTS OF
OPERATIONS
(UNAUDITED)
For the Three Months
Ended
March 31,
2022
2021
NET SALES
$
6,244,330
$
5,430,951
Cost of goods sold
2,622,025
2,199,097
Gross Profit
3,622,305
3,231,854
OPERATING EXPENSES
Selling, general and administrative
5,491,213
4,992,829
Research and development
1,148,355
336,841
Depreciation and amortization
109,252
115,473
Total Operating Expenses
6,748,820
5,445,143
Net Operating Loss
(3,126,515
)
(2,213,289
)
Non-Operating Expense
Loss on currency exchange
(7,135
)
(15,717
)
Gain on disposal of fixed asset
—
736
Interest (Expense)/Income, net
(1,463
)
9,771
TOTAL OTHER EXPENSE
(8,598
)
(5,210
)
LOSS BEFORE INCOME TAXES
(3,135,113
)
(2,218,499
)
Income Tax Benefit
597,599
942,361
NET LOSS
$
(2,537,514
)
$
(1,276,138
)
NET LOSS PER SHARE
Basic
$
(0.06
)
$
(0.03
)
Diluted
$
(0.06
)
$
(0.03
)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic
44,667,977
43,960,936
Diluted
44,667,977
43,960,936
REPRO MED SYSTEMS,
INC.
STATEMENTS OF CASH
FLOWS
(UNAUDITED)
For the Three Months
Ended
March 31,
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss
$
(2,537,514
)
$
(1,276,138
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
837,556
734,184
Depreciation and amortization
109,252
115,473
Deferred income taxes
(597,599
)
(943,211
)
Gain on disposal of fixed assets
—
(736
)
Changes in operating assets and
liabilities:
Decrease/(Increase) in accounts
receivable
447,489
(988,387
)
Decrease in other receivables
38,145
—
Decrease/(Increase) in inventory
88,601
(1,229,052
)
(Increase)/Decrease in prepaid expenses
and other assets
(11,805
)
117,455
Increase in accounts payable
40,447
1,290,603
Increase in accrued payroll and related
taxes
345,712
428,769
Decrease in accrued expenses
(537,981
)
(854,613
)
Increase in other liabilities
25,625
—
NET CASH USED IN OPERATING ACTIVITIES
(1,752,072
)
(2,605,653
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
(750,908
)
(95,477
)
Proceeds from disposal of property and
equipment
—
9,065
Purchases of intangible assets
(1,694
)
(15,792
)
NET CASH USED IN INVESTING ACTIVITIES
(752,602
)
(102,204
)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on indebtedness
(252,968
)
—
Proceeds from issuance of equity
—
1,230,000
Common stock issuance as settlement for
litigation
—
938,094
Payments on finance lease liability
—
(803
)
NET CASH (USED IN)/PROVIDED BY FINANCING
ACTIVITIES
(252,968
)
2,167,291
NET DECREASE IN CASH AND CASH
EQUIVALENTS
(2,757,642
)
(540,566
)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
25,334,889
27,315,286
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
22,577,247
$
26,774,720
Supplemental Information
Cash paid during the periods for:
Interest
$
4,425
$
28
Income Taxes
$
—
$
850
Schedule of Non-Cash Operating, Investing
and Financing Activities:
Issuance of common stock as
compensation
$
142,500
$
56,250
Issuance of common stock as settlement for
litigation
$
—
$
938,094
REPRO MED SYSTEMS,
INC.
SUPPLEMENTAL
INFORMATION
(UNAUDITED)
Three Months Ended
Reconciliation of Reported Diluted EPS
to
March 31,
Non-GAAP Adjusted Diluted EPS:
2022
2021
Reported Diluted Earnings Per
Share
$
(0.06
)
$
(0.03
)
Reorganization Charges
0.01
0.02
Manufacturing Initiative Expenses
—
—
Reorganization Stock-based Compensation
Expense
—
0.01
Tax (Expense) adjustment
—
—
Non-GAAP Adjusted Diluted Earnings Per
Share
$
(0.05
)
$
0.00
Three Months Ended
Reconciliation of GAAP Net Loss
March 31,
to Non-GAAP Adjusted EBITDA:
2022
2021
GAAP Net Loss
$
(2,537,514
)
$
(1,276,138
)
Tax Benefit
(597,599
)
(942,361
)
Depreciation/Amortization
109,252
115,473
Interest Income, Net
1,463
(9,771)
Reorganization Charges
295,000
969,274
Manufacturing Initiative Expenses
38,005
51,723
Stock-based Compensation Expense
837,556
734,184
Non-GAAP Adjusted EBITDA
$
(1,853,837
)
$
(357,616)
Reorganization Charges. We have excluded the effect of
reorganization charges in calculating our non-GAAP measures. In
2021 we incurred significant expenses in connection with the
departure and replacement of our chief executive officer and the
recruiting of two new board members, which we would not have
otherwise incurred in periods presented as part of our continuing
operations. In 2022 we incurred further severance expense related
to the reorganization of the leadership team, which we would not
have otherwise incurred in periods presented as part of continuing
operations.
Manufacturing Initiative Expenses. We have excluded the effect
of expenses related to creating manufacturing efficiencies, in
calculating our non-GAAP measures. We incurred expenses in
connection with these initiatives which we would not have otherwise
incurred in periods presented as part of our continuing operations.
We expect to incur related expenses for the next nine to fifteen
months.
Stock-based Compensation Expense. We have excluded the effect of
stock-based compensation expense in calculating our non-GAAP
measures. We record non-cash compensation expense related to grants
of options for executives, employees and consultants, and grants of
restricted shares to our board of directors. Depending upon the
size, timing and the terms of the grants, the non-cash compensation
expense may vary significantly but will recur in future periods.
Adjusted EBITDA for the three months ended March 31, 2021 included
stock-based compensation expense of $0.4 million related to the
departure and replacement of our chief executive officer. This
expense is included in Reorganization Stock-based Compensation
Expense in calculating Adjusted Diluted EPS.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220504006084/en/
Investor Contact: Greg Chodaczek
347-620-7010 investor@korumedical.com
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