KORU Medical Systems, Inc. (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
second quarter ended June 30, 2023 and updates full year 2023
outlook.
Highlights:
- Second quarter net revenue growth versus prior year of 6% to
$6.9 million
- Domestic Core business growth of 8%, outperforming a second
quarter U.S. script decline in subcutaneous immunoglobulin (SCIg)
market, driven by strong volumes in consumables and pumps
- International Core business growth of 17%, driven by growth in
several markets and increases in SCIg global drug availability
- Announced a new Novel Therapies collaboration for a Phase III
study
- Submitted a 510(k) for FREEDOM60® Infusion System with
Hizentra® 50 mL prefilled syringes
- Reduced 2023 net revenues guidance to $31.0 - $32.5 million,
representing growth in the range of 11-17% from prior guidance of
$32.5 - $33.5 million representing growth in the range of
17-20%
- Named Tom Adams as Chief Financial Officer
"I am pleased with our second quarter progress, as our growth
exceeded the overall SCIg market in both the U.S. and
Internationally," said Linda Tharby, KORU Medical's President and
CEO. "The foundation of our business remains sound, and we are
diligently focused on delivering above-market revenue performance,
advancing our portfolio with our innovation efforts, and increasing
the number of drugs on our Freedom Infusion System. We are excited
to welcome Tom Adams as our Chief Financial Officer and look
forward to his continued leadership contributions. We remain
committed and on track to attain our Vision 2026 strategic goals,
and deliver added value to patients, customers and
shareholders."
2023 Second Quarter Financial Results
Three Months Ended June
30,
Change from Prior Year
2023
2022
$
%
Net Revenues
Domestic Core
$
5,388,172
$
4,996,791
$
391,381
7.8
%
International Core
1,117,004
951,485
165,519
17.4
%
Novel Therapies
430,754
598,352
(167,598
)
(28.0
)%
Total
$
6,935,930
$
6,546,628
$
389,302
5.9
%
Total net revenue increased $0.4 million, or 6%, for the three
months ending June 30, 2023, compared to last year. Domestic Core
growth of 8% was primarily driven by increased growth in
consumables and pumps, new accounts, and increased prefilled
syringe adoption. International Core growth of 17% was driven by
strength across several EU markets, and growing global
immunoglobulin drug volume availability. Novel Therapies net
revenue declined by 28% in primarily related to strong
non-recurring engineering revenues in the comparable quarter last
year as well as the timing of 2023 pipeline wins.
Gross profit increased $0.5 million or 16% in the three months
ended June 30, 2023, compared to the same period in 2022. The gross
profit increase was driven by the rise in net revenue of $0.4
million, as described above. Gross profit as a percentage of
revenue increased to 56.1% compared to 51.1% in the second quarter
of 2022. The increase in the gross profit as a percentage of
revenue was primarily driven by increased production efficiencies
compared to the prior year.
Total operating expenses for the second quarter of 2023 were
$7.1 million, compared to $7.0 million for the same period in 2022.
The increase in operating expenses was primarily due to the impact
of research and development costs in support of our innovation
efforts.
Net loss for the second quarter of 2023 was $2.5 million, or
$(0.05) per diluted share, compared to a net loss of $2.9 million,
or ($0.07) per diluted share for the same period of 2022. Net loss
included a tax benefit of $0.6 million for the second quarter of
2023.
Assumptions and Outlook for Full Year 2023
KORU Medical updates prior guidance for 2023. The Company's
guidance for full year 2023 has been updated to reflect a
contraction in the underlying U.S. subcutaneous immunoglobulin
market. KORU Medical is updating its 2023 growth outlook on the
underlying U.S. subcutaneous immunoglobulin market to 5% from 10%.
In addition, the Company’s guidance reflects a change in the timing
of 2023 Novel Therapy deal signings.
KORU Medical Outlook:
- Reducing full year 2023 net revenue guidance to $31.0 - $32.5
million, representing growth in the range of 11%-17% from prior
guidance of $32.5 - $33.5 million, representing growth in the range
of 17-20%
- Reaffirming 2023 gross margin between 58%-60% and a planned
2023 exit between 60%-62%
- Reaffirming cash balance at year-end 2023 greater than $10.0
million
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,
August 9, 2023, at 4:30 PM ET.
To participate in the call, please dial (844) 826-3035
(domestic) or (412) 317-5195 (international) and provide conference
ID: 10180800. 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 EBITDA" and "Adjusted Diluted Earnings Per Share" 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 subcutaneous drug delivery systems 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. 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, 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, 2022 and
our Quarterly Report on Form 10-Q for the quarter ended June 30,
2023, which are 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 August 9, 2023. 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.
The accompanying notes are an integral part of
these financial statements.
KORU MEDICAL SYSTEMS, INC.
BALANCE SHEETS (UNAUDITED)
June 30,
December 31,
2023
2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
11,719,405
$
17,408,257
Accounts receivable less allowance for
doubtful accounts of $21,459 as of June 30, 2023 and December 31,
2022
3,639,755
3,558,884
Inventory
5,278,224
6,404,867
Other receivables
1,131,115
972,396
Prepaid expenses
772,893
1,457,232
TOTAL CURRENT ASSETS
22,541,392
29,801,636
Property and equipment, net
3,811,843
3,886,975
Intangible assets, net of accumulated
amortization of $357,809 and $325,872 as of June 30, 2023 and
December 31, 2022, respectively
772,543
787,182
Operating lease right-of-use assets
3,626,348
3,786,545
Deferred income tax assets, net
5,144,876
3,967,480
Other assets
98,970
102,625
TOTAL ASSETS
$
35,995,972
$
42,332,443
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable
$
1,574,630
$
2,391,799
Accrued expenses
1,362,293
2,889,941
Note payable
—
433,295
Other liabilities
263,253
257,337
Accrued payroll and related taxes
422,623
542,399
Financing lease liability – current
101,072
98,335
Operating lease liability – current
352,809
345,834
TOTAL CURRENT LIABILITIES
4,076,680
6,958,940
Financing lease liability, net of current
portion
343,053
394,283
Operating lease liability, net of current
portion
3,475,092
3,653,257
TOTAL LIABILITIES
7,894,825
11,006,480
Commitments and Contingencies (Note
7)
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, 75,000,000
shares authorized, 49,033,652 and 48,861,891 shares issued
45,613,150 and 45,441,389 shares outstanding as of June 30, 2023,
and December 31, 2022, respectively
490,337
488,619
Additional paid-in capital
45,932,354
44,252,117
Treasury stock, 3,420,502 shares as of
June 30, 2023 and December 31, 2022, at cost
(3,843,562
)
(3,843,562
)
Accumulated deficit
(14,477,982
)
(9,571,211
)
TOTAL STOCKHOLDERS’ EQUITY
28,101,147
31,325,963
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
35,995,972
$
42,332,443
The accompanying notes are an integral part of
these financial statements.
KORU MEDICAL SYSTEMS, INC.
STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
NET REVENUES
$
6,935,931
$
6,546,628
$
14,328,536
$
12,790,958
Cost of goods sold
3,047,807
3,200,455
6,293,377
5,822,480
Gross Profit
3,888,124
3,346,173
8,035,159
6,968,478
OPERATING EXPENSES
Selling, general and administrative
5,303,167
5,530,022
10,729,044
11,021,235
Research and development
1,596,614
1,303,731
3,161,483
2,452,086
Depreciation and amortization
212,919
125,882
426,036
235,134
Total Operating Expenses
7,112,700
6,959,635
14,316,563
13,708,455
Net Operating Loss
(3,224,576
)
(3,613,462
)
(6,281,404
)
(6,739,977
)
Non-Operating Income/(Expense)
Loss on currency exchange
(2,472
)
(21,705
)
(3,152
)
(28,840
)
Loss on disposal of fixed assets, net
—
—
(56,279
)
—
Interest income, net
131,167
3,566
256,669
2,103
TOTAL OTHER INCOME/(EXPENSE)
128,695
(18,139
)
197,238
(26,737
)
LOSS BEFORE INCOME TAXES
(3,095,881
)
(3,631,601
)
(6,084,166
)
(6,766,714
)
Income Tax Benefit
599,995
710,260
1,177,395
1,307,859
NET LOSS
$
(2,495,886
)
$
(2,921,341
)
$
(4,906,771
)
$
(5,458,855
)
NET LOSS PER SHARE
Basic
$
(0.05
)
$
(0.07
)
$
(0.11
)
$
(0.12
)
Diluted
$
(0.05
)
$
(0.07
)
$
(0.11
)
$
(0.12
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic
45,606,603
44,921,870
45,547,427
44,795,625
Diluted
45,606,603
44,921,870
45,547,427
44,795,625
The accompanying notes are an integral part of
these financial statements.
KORU MEDICAL SYSTEMS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months
Ended
June 30,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss
$
(4,906,771
)
$
(5,458,855
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
1,681,955
1,579,151
Depreciation and amortization
426,036
235,134
Deferred income taxes
(1,177,395
)
(1,308,069
)
Loss on disposal of fixed assets
56,279
—
ROU landlord credit
(10,994
)
—
Changes in operating assets and
liabilities:
(Increase) in Accounts receivable
(239,590
)
(454,452
)
Decrease / (Increase) in Inventory
1,126,643
(665,176
)
Decrease in Prepaid expenses and other
assets
687,994
334,193
Increase in Other liabilities
5,916
150,501
(Decrease) / Increase in Accounts
payable
(817,169
)
1,162,329
(Decrease) / Increase in Accrued payroll
and related taxes
(119,776
)
535,438
Decrease in Accrued expenses
(1,527,648
)
(735,508
)
NET CASH USED IN OPERATING ACTIVITIES
(4,814,520
)
(4,625,314
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
(375,246
)
(1,915,289
)
Purchases of intangible assets
(17,298
)
(13,540
)
NET CASH USED IN INVESTING ACTIVITIES
(392,544
)
(1,928,829
)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on indebtedness
(433,295
)
(508,583
)
Payments on finance lease liability
(48,493
)
(6,611
)
NET CASH USED IN FINANCING ACTIVITIES
(481,788
)
(515,194
)
NET DECREASE IN CASH AND CASH
EQUIVALENTS
(5,688,852
)
(7,069,337
)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
17,408,257
25,334,889
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
11,719,405
$
18,265,552
Supplemental Information
Cash paid during the periods for:
Interest
$
20,165
$
6,204
Income taxes
$
3,160
$
—
Schedule of Non-Cash Operating, Investing
and Financing Activities:
Issuance of common stock as
compensation
$
266,023
$
258,005
The accompanying notes are an integral part of
these financial statements.
A reconciliation of our non-GAAP measures is below:
KORU MEDICAL SYSTEMS, INC.
SUPPLEMENTAL INFORMATION (UNAUDITED)
Three Months Ended
Six Months Ended
Reconciliation of GAAP Net
(Loss)
June 30,
June 30,
to Non-GAAP Adjusted EBITDA:
2023
2022
2023
2022
GAAP Net Loss
$
(2,495,886
)
$
(2,921,341
)
$
(4,906,771
)
$
(5,458,855
)
Tax (Benefit)/Expense
(599,995
)
(710,260
)
(1,177,395
)
(1,307,859
)
Depreciation and Amortization
212,919
125,882
426,036
235,134
Interest (Income)/Expense, Net
(131,168
)
(3,566
)
(256,669
)
(2,103
)
Reorganization Charges
—
270,433
—
565,433
Manufacturing Initiative Expenses
6,308
50,344
55,361
88,349
Stock-based Compensation Expense
800,734
821,513
1,681,956
1,659,070
Non-GAAP Adjusted EBITDA
$
(2,207,088
)
$
(2,366,995
)
$
(4,177,482
)
$
(4,220,831
)
Three Months Ended
Six Months Ended
Reconciliation of Reported Diluted
EPS
June 30,
June 30,
to Non-GAAP Adjusted Diluted
EPS:
2023
2022
2023
2022
Reported Diluted Earnings Per Share
$
(0.05
)
$
(0.07
)
$
(0.11
)
$
(0.12
)
Reorganization Charges
—
0.01
—
0.01
Manufacturing Initiative Expenses
—
—
—
—
Stock-based Compensation Expense
—
—
—
—
Tax (Expense) Adjustment
—
—
—
—
Non-GAAP Adjusted Diluted Earnings Per
Share
$
(0.05
)
$
(0.06
)
$
(0.11
)
$
(0.11
)
*Numbers presented are rounded to the
nearest whole cent
Reorganization Charges. We have excluded the effect of
reorganization charges in calculating our non-GAAP measures. In
2022 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.
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.
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 options and restricted shares for executives, employees
and consultants, and grants of 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809998850/en/
Investor Contact: Greg Chodaczek 347-620-7010
investor@korumedical.com
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