KORU Medical Systems, Inc. (NASDAQ: KRMD) (“KORU Medical” or
the “Company”), a leading medical technology company focused on
development, manufacturing, and commercialization of innovative and
patient-centric large volume subcutaneous infusion solutions, today
reported financial results for the third quarter ended September
30, 2024, and raised full year 2024 revenue, gross margin, and
year-end cash guidance.
Recent Highlights
- Third quarter 2024 net revenues of $8.2 million, a 17% increase
over the prior year period
- Core business (U.S. and International) growth of 11% and novel
therapies growth of 276% over the prior year period
- Gross profit of $5.2 million, a 19% increase over the prior
year period, and gross margin of 63%, a 140-basis point improvement
over the prior year period
- Ending cash balance of $8.8 million and year-to-date cash burn
of $2.7 million, a 60% improvement over the prior year period
- Presented data at Partnership Opportunities in Drug Delivery
(PODD) Conference demonstrating 97% nursing preference for KORU’s
FreedomEdge® system over manual push for subcutaneous
oncology infusion clinic administration
- Raising full year 2024 net revenue guidance to $32.75 - $33.25
million, representing growth of 15% - 17% over the prior year;
raising full year gross margin guidance to 62% - 63%, representing
an improvement of 340 - 440 basis points over the prior year; and
raising full year ending cash balance guidance to greater than $8.8
million
“We are pleased to deliver another quarter of strong results
representing solid execution by the team across all of our
businesses and operations,” said Linda Tharby, KORU Medical’s
President and CEO. “Revenue of $8.2 million represents the third
consecutive quarter of double-digit growth, while improving our
gross margin and driving improved operating leverage. We see
strength in our recurring chronic subcutaneous immunoglobulin
(SCIg) patient base, and we continue to further drive
collaborations in our novel therapies business as more drugs move
to subcutaneous administration. We are excited by the progress we
continue to make in executing against our long-term strategies and
growth objectives which has enabled us to raise guidance for our
2024 revenue, gross margin, and year-end cash-balance.”
2024 Third Quarter Financial Results
Three Months Ended September
30,
Change from Prior Year
% of Net Revenues
2024
2023
$
%
2024
2023
Net Revenues
Domestic Core
$
6,447,469
$
5,773,863
$
673,606
11.7%
78.8%
82.4%
International Core
1,121,196
1,066,567
54,629
5.1%
13.7%
15.2%
Total Core
7,568,665
6,840,430
728,235
10.6%
92.5%
97.7%
Novel Therapies
611,312
162,768
448,544
275.6%
7.5%
2.3%
Total
$
8,179,977
$
7,003,198
$
1,176,778
16.8%
100%
100%
Total net revenues for the third quarter of 2024 were $8.2
million, an increase of $1.2 million, or 16.8% over the prior year
period. Domestic core revenues were $6.4 million, an increase of
11.7% over the prior year period, primarily due to higher
consumable and pump volumes driven by new patients starts and
market share gains. International core revenues were $1.1 million,
an increase of 5.1% over the prior year period, primarily due to
higher consumable volumes driven largely by increased Ig supply,
increased penetration within certain approved indications, and
geographic expansion. Partially offsetting the growth were lower
orders from a distribution partner that expedited $0.3 million
orders in the second quarter of 2024 related to the BSI regulatory
review which has since been successfully appealed. Novel Therapies
revenues for the third quarter of 2024 were $0.6 million, an
increase of 275.6% over the prior year period, primarily driven by
clinical trial orders and progress on NRE milestones completed for
multiple collaboration agreements.
Gross profit for the third quarter of 2024 was $5.2 million, an
increase of $0.8 million, or 19%, over the prior year period. Gross
margin in the third quarter of 2024 was 63.4%, an increase of 140
basis points, compared to 62.0% in the prior year period. The
increase in gross margin was primarily driven by a favorable sales
mix of clinical trial orders, improved NRE mix of more profitable
services, and increased average selling prices when compared to the
prior year period.
Total operating expenses for the third quarter of 2024 were $6.9
million, an increase of $0.8 million, or 12.3%, over the prior year
period primarily driven by compensation related to new hires, bonus
accruals, and severance for the elimination of the CTO role.
Net loss for the third quarter of 2024 was $1.6 million, or
($0.03) per diluted share, compared to a net loss of $1.4 million,
or ($0.03) per diluted share, for the prior year period, primarily
driven by an increase in operating expenses of $0.8 million, and a
prior year tax benefit of $0.2 million offset by an increase in
gross profit of $0.8 million. Adjusted EBITDA for the third quarter
of 2024 was ($0.4) million, or ($0.01) per diluted share, compared
to adjusted EBITDA of ($0.9) million, or ($0.02) per diluted share,
for the for the prior year period. A reconciliation of adjusted
EBITDA and adjusted diluted EPS is provided at the end of this
press release.
Cash and cash equivalents were $8.8 million as of September 30,
2024, reflecting cash usage of $1.7 million in the third quarter of
2024.
2024 Guidance
- Raising full year 2024 net revenue guidance to $32.75 - $33.25,
representing growth of 15% - 17%; increased from previously issued
guidance of $32.0 - $32.5 million, or 12% - 14%
- Raising full year 2024 gross margin guidance to 62% - 63%;
increased from previously issued guidance of 61% - 62%
- Raising guidance of 2024 year-end cash balance to greater than
$8.8 million increased from previously issued guidance of greater
than $8.0 million year-end cash balance
- Reiterating cash flow breakeven in the fourth quarter of 2024
and cash flow positive for full year 2025
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,
November 13, 2024, at 4:30 PM ET.
To participate in the call, please dial (877) 407-0784
(domestic) or (201) 689-8560 (international). The live webcast will
be available on the IR Calendar on the News/Events page of the
Investors section of KORU Medical’s website.
Non-GAAP Measures
This press release includes the non-GAAP financial measures
“adjusted diluted EPS” and “adjusted EBITDA” 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 develops, manufactures, and commercializes
innovative and patient-centric large volume subcutaneous infusion
solutions that improve quality of life for patients around the
world. The FREEDOM Syringe Infusion System (“the FREEDOM System”)
currently includes the FREEDOM60® and FreedomEdge® Syringe Infusion
Drivers, Precision Flow Rate Tubing™ and HIgH-Flo Subcutaneous
Safety Needle Sets™. The Freedom System, which received its first
FDA clearance in 1994, is used for self-administration in the home
by the patient and/or delivery in an ambulatory infusion center by
a healthcare professional. Through its Novel Therapies business,
KORU Medical provides products for use by biopharmaceutical
companies in feasibility/clinical trials during the drug
development process and, as needed, is capable of customizing the
Freedom System for clinical and commercial use across multiple drug
categories. 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, oncology biologic clinic entry, launch an expanded
nephrology indication, success of Novel Therapies collaborations
and related commercial launches, financial guidance and expected
operating performance for fiscal 2024. 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 “guidance”, “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 SCIg market growth, prefilled syringe penetration,
plasma supply, clinical trial activity and success, approval and
commercialization of new drug indications, the Company’s EU
certification, the shift to increased healthcare delivery in the
home, new patient diagnoses, customer ordering patterns, global
health crises, innovation and competition, labor and supply price
increases, inflationary impacts, labor supply, 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, 2023,
which is on file with the SEC and 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 November 13, 2024. 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.
KORU MEDICAL SYSTEMS,
INC.
BALANCE SHEETS
September 30,
December 31,
2024
2023
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
8,806,310
$
11,482,240
Accounts receivable less allowance for
credit losses of $0 as of September 30, 2024 and $24,777 as of
December 31, 2023
5,164,700
4,045,211
Inventory
3,928,318
3,481,301
Other receivables
74,312
28,889
Prepaid expenses
955,213
1,218,288
TOTAL CURRENT ASSETS
18,928,853
20,255,929
Property and equipment, net
4,552,176
3,837,657
Intangible assets, net of accumulated
amortization of $441,186 and $390,341 as of September 30, 2024 and
December 31, 2023, respectively
746,302
754,361
Operating lease right-of-use assets
3,063,731
3,514,055
Other assets
98,970
98,970
TOTAL ASSETS
$
27,390,032
$
28,460,972
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable
$
1,670,300
$
975,193
Accrued expenses
2,792,967
1,711,427
Note payable
401,993
314,344
Other liabilities
181,745
512,520
Accrued payroll and related taxes
766,867
462,941
Financing lease liability – current
114,297
109,540
Operating lease liability – current
395,954
368,313
TOTAL CURRENT LIABILITIES
6,324,123
4,454,278
Financing lease liability, net of current
portion
230,332
316,623
Operating lease liability, net of current
portion
3,102,097
3,336,300
TOTAL LIABILITIES
9,656,552
8,107,201
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, 75,000,000
shares authorized, 49,275,830 and 49,059,583 shares issued
45,837,304 and 45,639,081 shares outstanding as of September 30,
2024, and December 31, 2023, respectively
492,758
490,899
Additional paid-in capital
48,940,978
47,018,707
Treasury stock, 3,438,526 and 3,420,502
shares as of September 30, 2024 and December 31, 2023,
respectively, at cost
(3,882,493
)
(3,843,562
)
Accumulated deficit
(27,817,763
)
(23,312,273
)
TOTAL STOCKHOLDERS’ EQUITY
17,733,480
20,353,771
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
27,390,032
$
28,460,972
KORU MEDICAL SYSTEMS,
INC.
STATEMENTS OF
OPERATIONS
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
NET REVENUES
$
8,179,977
$
7,003,198
$
24,807,864
$
21,331,734
Cost of goods sold
2,993,986
2,661,021
9,038,825
8,954,398
Gross Profit
5,185,991
4,342,177
15,769,038
12,377,336
OPERATING EXPENSES
Selling, general and administrative
5,127,658
4,623,928
15,804,966
15,352,972
Research and development
1,533,845
1,293,256
4,143,751
4,454,739
Depreciation and amortization
227,785
216,014
677,019
642,050
Total Operating Expenses
6,889,288
6,133,198
20,625,736
20,449,761
Net Operating Loss
(1,703,297
)
(1,791,021
)
(4,856,698
)
(8,072,425
)
Non-Operating Income/(Expense)
Gain/(Loss) on currency exchange
9,485
(9,390
)
(12,674
)
(12,542
)
Loss on disposal of fixed assets, net
—
(3,527
)
(300
)
(59,806
)
Interest income, net
112,995
135,429
364,183
392,098
TOTAL OTHER INCOME
122,480
122,512
351,208
319,750
LOSS BEFORE INCOME TAXES
(1,580,817
)
(1,668,509
)
(4,505,490
)
(7,752,675
)
Income Tax Benefit
—
300,247
—
1,477,642
NET LOSS
$
(1,580,817
)
$
(1,368,262
)
$
(4,505,490
)
$
(6,275,033
)
NET LOSS PER SHARE
Basic & Diluted
$
(0.03
)
$
(0.03
)
$
(0.10
)
$
(0.14
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic & Diluted
45,851,019
45,639,081
45,791,756
45,578,314
KORU MEDICAL SYSTEMS,
INC.
STATEMENTS OF CASH
FLOWS
(UNAUDITED)
For the Nine Months
Ended
September 30,
2024
2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss
$
(4,505,490
)
$
(6,275,033
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense and
warrant expense
1,924,131
2,379,613
Depreciation and amortization
677,019
642,050
Deferred income taxes
—
(1,477,643
)
Loss on disposal of fixed assets
300
59,806
Non-cash lease adjustments
243,762
(16,489
)
Changes in operating assets and
liabilities:
Accounts receivable
(1,119,490
)
(332,975
)
Inventory
(447,017
)
1,727,954
Prepaid expenses and other assets
217,652
87,540
Other liabilities
(330,773
)
243,283
Accounts payable
695,107
(1,446,180
)
Accrued payroll and related taxes
303,927
(149,872
)
Accrued expenses
1,081,539
(1,431,412
)
NET CASH USED IN OPERATING ACTIVITIES
(1,259,333
)
(5,989,358
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
(1,340,994
)
(586,897
)
Purchases of intangible assets
(42,786
)
(19,312
)
NET CASH USED IN INVESTING ACTIVITIES
(1,383,780
)
(606,209
)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from insurance finance
indebtedness
487,516
565,172
Payments on insurance finance
indebtedness
(399,867
)
(532,441
)
Payments on finance lease liability
(81,534
)
(73,243
)
Payments for taxes related to net share
settlement of equity awards
(38,932
)
—
NET CASH USED IN FINANCING ACTIVITIES
(32,817
)
(40,512
)
NET DECREASE IN CASH AND CASH
EQUIVALENTS
(2,675,930
)
(6,636,079
)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
11,482,240
17,408,257
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
8,806,310
$
10,772,178
Supplemental Information
Cash paid during the periods for:
Interest
$
46,014
$
34,773
Income taxes
$
—
$
3,160
KORU MEDICAL SYSTEMS,
INC.
SUPPLEMENTAL
INFORMATION
(UNAUDITED)
A reconciliation of our non-GAAP measures
is below:
Three Months Ended
Nine Months Ended
Reconciliation of GAAP Net
(Loss)
September 30,
September 30,
to Non-GAAP Adjusted EBITDA:
2024
2023
2024
2023
GAAP Net Loss
$
(1,580,817
)
$
(1,368,262
)
$
(4,505,490
)
$
(6,275,033
)
Tax Benefit
(314,095
)
(300,247
)
(892,524
)
(1,477,642
)
Allowance for Tax Benefit
314,095
—
892,524
—
Reorganization Charges
396,926
—
496,255
—
Depreciation and Amortization
227,785
216,014
677,019
642,050
Interest Income, Net
(112,997
)
(135,429
)
(364,183
)
(392,098
)
Manufacturing Initiative Expense
—
—
—
55,361
Stock-based Compensation Expense
634,608
697,658
1,948,992
2,379,613
Non-GAAP Adjusted EBITDA
$
(434,495
)
$
(890,266
)
$
(1,747,407
)
$
(5,067,749
)
Weighted average number of common
shares
45,851,019
45,606,603
45,791,756
45,547,427
Three Months Ended
Nine Months Ended
Reconciliation of Reported Diluted
EPS
September 30,
September 30,
to Non-GAAP Adjusted Diluted
EPS:
2024
2023
2024
2023
Reported Diluted Earnings Per Share
$
(0.03
)
$
(0.03
)
$
(0.10
)
$
(0.14
)
Tax Benefit
(0.01
)
(0.01
)
(0.02
)
(0.03
)
Allowance for Tax Benefit
0.01
—
0.02
—
Reorganization Charges
0.01
—
0.01
—
Depreciation and Amortization
—
—
0.01
0.01
Interest Income, Net
—
—
(0.01
)
(0.01
)
Manufacturing Initiative Expense
—
—
—
—
Stock-based Compensation Expense
0.01
0.02
0.04
0.05
Non-GAAP Adjusted Diluted Earnings Per
Share
$
(0.01
)
$
(0.02
)
$
(0.05
)
$
(0.12
)
*Numbers presented are rounded to the
nearest whole cent
Allowance for nonrealization of deferred tax assets (DTA). We
have excluded the effect of recording a full valuation allowance on
our deferred tax assets in the third quarter ended 2024 in the
amount of $0.3 million. It was determined that no valuation
allowance was necessary in the third quarter ended 2023.
Reorganization Charges. We have excluded the effect of
reorganization charges in calculating our non-GAAP measures. In
2024 we incurred severance expenses related to the reorganization
of the leadership team, which we would not have otherwise incurred
in periods presented as part of continuing operations.
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 expenses related to
grants of equity-based awards for executives, employees,
consultants, and directors. Depending upon the size, timing and the
terms of the grants, the non-cash compensation expense may vary
significantly but is expected to recur in future periods.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241113344251/en/
Investor Contact: Louisa Smith
investor@korumedical.com
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