Strong Start to 2023
With 18% Revenue Growth
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
first quarter ended March 31, 2023.
Highlights:
- First quarter net revenue growth versus prior year of 18% to
$7.4 million, marking the sixth consecutive quarter of double-digit
growth with strength in all three businesses
- U.S. Core business growth of 15% outpacing the subcutaneous
immunoglobulin drug market growth
- International Core business growth of 23%, driven by growth in
several markets and increases in SCIg global drug availability
- Novel Therapies business growth of 62%, increasing the total
number of pharmaceutical collaborations to 15
- Sequential quarterly gross margin improvement to 56.1%, and
completion of the manufacturing transition paving the way to exit
the year with 60%-62% gross margin
- Reaffirming 2023 net revenues expected to be between $32.5 and
$33.5 million, representing growth in the range of 17-20%
“The first quarter represents continued momentum towards our
Vision 26 strategy, as our team delivered strong double-digit
growth across all three of our businesses,” said Linda Tharby, KORU
Medical’s President and CEO. “In our US core business, we continue
to increase our leadership position in a growing home subcutaneous
drug delivery market. We are seeing impact from our geographic
expansion strategy with strong results in our international core
business. Our efforts in the novel therapies business to bring new
drugs and patients to our Freedom System is accelerating with
increased numbers of total collaborations and pipeline
opportunities. We are excited by a strong start to our year, and by
the value we are creating for our patients, customers, and
shareholders.”
2023 First Quarter Financial Results
Three Months Ended March
31,
Change from Prior Year
2023
2022
$
%
Net Revenues
Domestic Core
$
5,719,135
$
4,993,536
$
725,599
$
14.5
%
International Core
1,097,490
894,942
202,548
22.6
%
Novel Therapies
575,980
355,852
220,128
61.9
%
Total
$
7,392,605
$
6,244,330
$
1,148,275
$
18.4
%
Total net revenues increased $1.1 million, or 18%, for the three
months ended March 31, 2023, as compared with the same period last
year, with double-digit growth across all businesses. Domestic Core
growth of 15% was primarily driven by increased growth in pumps and
consumables from a growing SCIg market, new account wins, increased
prefilled syringe adoption, and increases in average selling
prices. International Core growth of 23%, was driven by strength
across several EU markets, expanded distribution, and growing
global Immunoglobulin drug volume availability. Novel Therapies net
revenues grew by 62% primarily related to services performed on an
NRE innovation development agreement for a pharmaceutical
customer.
Gross profit increased $0.5 million or 15% in the three months
ended March 31, 2023, compared to the same period in 2022. The 2023
first quarter gross profits increase was driven by the increase in
net revenues of $1.1 million as described above. Gross profit as a
percentage of revenues decreased to 56.1% compared to 58.0% from
the first quarter of 2022. The decline in the gross profit as a
percentage of revenues was primarily caused by higher manufacturing
costs associated with labor and materials in connection with our
transition from Chester, partially offset by an increase in average
selling prices.
Total operating expenses for the first quarter of 2023, were
$7.2 million, compared to $6.7 million for the same period in 2022.
The increase in operating expenses was primarily due to investments
in research and development.
Net loss for the first quarter of 2023 was $2.4 million, or
$(0.05) per diluted share, compared to a net loss of $2.5 million,
or ($0.06) per diluted share for the same period of 2022. Net loss
included a tax benefit of $0.6 million for the first quarter of
2023.
Assumptions and Outlook for Full Year 2023
KORU Medical reaffirms all prior guidance for 2023. The
Company’s guidance for full year 2023 reflects numerous assumptions
that could affect its business, based on the information management
has as of this date, which includes, SCIg market growth rate of
~10%, prefilled syringe penetration of 15-20%, plasma supply,
clinical trial activity and expansion of the novel therapies
pipeline, inflationary impact (including labor and supply price
increases), third party contract manufacturing execution, supply
chain and labor shortage impacts, and timely receipt of other
receivable credits. Management will discuss its outlook and several
of its assumptions on its first quarter 2023 earnings call.
KORU Medical reaffirms:
- Full year 2023 net revenues between $32.5 and $33.5 million,
representing growth in the range of 17%-20%
- Gross margin between 58% and 60% on a full year, with first
half margin expected between 55% to 57% and a planned exit between
60% and 62%
- 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 Thursday,
May 4, 2023, at 4:30 PM ET.
To participate in the call, please dial (800)-734-8507
(domestic) or (212)-231-2925 (international) and provide conference
ID: 22026692. 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 March 31,
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 May 4,2023. 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.
KORU MEDICAL SYSTEMS,
INC.
BALANCE SHEETS
(UNAUDITED)
March 31,
December 31,
2023
2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
12,224,865
$
17,408,257
Accounts receivable less allowance for
doubtful accounts of $21,459 for March 31, 2023, and for December
31, 2022
4,164,513
3,558,884
Inventory
6,638,418
6,404,867
Other Receivables
1,014,761
972,396
Prepaid expenses
1,172,101
1,457,232
TOTAL CURRENT ASSETS
25,214,658
29,801,636
Property and equipment, net
3,906,067
3,886,975
Intangible assets, net of accumulated
amortization of $341,755 and $325,872 at March 31, 2023 and
December 31, 2022, respectively
782,531
787,182
Operating lease right-of-use assets
3,706,874
3,786,545
Deferred income tax assets, net
4,544,880
3,967,480
Other assets
98,970
102,625
TOTAL ASSETS
$
38,253,980
$
42,332,443
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable
$
1,503,120
$
2,391,799
Accrued expenses
1,591,737
2,889,941
Note Payable
218,403
433,295
Other Liabilities
261,544
257,337
Accrued payroll and related taxes
500,415
542,399
Financing lease liability – current
99,694
98,335
Operating lease liability – current
349,304
345,834
TOTAL CURRENT LIABILITIES
4,524,217
6,958,940
Financing lease liability, net of current
portion
368,844
394,283
Operating lease liability, net of current
portion
3,564,619
3,653,257
TOTAL LIABILITIES
8,457,680
11,006,480
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, 75,000,000
shares authorized, 48,960,766 and 48,861,891 shares issued
45,540,264 and 45,441,389 shares outstanding at March 31, 2023, and
December 31, 2022, respectively
489,608
488,619
Additional paid-in capital
45,132,350
44,252,117
Treasury stock, 3,420,502 shares at March
31, 2023 and December 31, 2022, at cost
(3,843,562
)
(3,843,562
)
Retained deficit
(11,982,096
)
(9,571,211
)
TOTAL STOCKHOLDERS' EQUITY
29,796,300
31,325,963
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
38,253,980
$
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
March 31,
2023
2022
NET SALES
$
7,392,605
$
6,244,330
Cost of goods sold
3,245,570
2,622,025
Gross Profit
4,147,035
3,622,305
OPERATING EXPENSES
Selling, general and administrative
5,425,877
5,491,213
Research and development
1,564,869
1,148,355
Depreciation and amortization
213,117
109,252
Total Operating Expenses
7,203,863
6,748,820
Net Operating Loss
(3,056,828
)
(3,126,515
)
Non-Operating Income/(Expense)
Loss on currency exchange
(680
)
(7,135
)
Loss on disposal of fixed assets, net
(56,279
)
—
Interest income (expense), net
125,502
(1,463
)
TOTAL OTHER INCOME/(EXPENSE)
68,543
(8,598
)
LOSS BEFORE INCOME TAXES
(2,988,285
)
(3,135,113
)
Income Tax Benefit
577,400
597,599
NET LOSS
$
(2,410,885
)
$
(2,537,514
)
NET LOSS PER SHARE
Basic
$
(0.05
)
$
(0.06
)
Diluted
$
(0.05
)
$
(0.06
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic
45,487,593
44,667,977
Diluted
45,487,593
44,667,977
The accompanying notes are an integral part of
these financial statements.
KORU MEDICAL SYSTEMS,
INC.
STATEMENTS OF CASH
FLOWS
(UNAUDITED)
For the Three Months
Ended
March 31,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss
$
(2,410,885
)
$
(2,537,514
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
881,222
837,556
Depreciation and amortization
213,117
109,252
Deferred income taxes
(577,400
)
(597,599
)
Loss on disposal of fixed assets
56,279
—
ROU landlord credit
(5,497
)
—
Changes in operating assets and
liabilities:
(Increase)/Decrease in accounts
receivable
(647,994
)
447,489
Decrease in other receivables
—
38,145
(Increase)/Decrease in inventory
(233,551
)
88,601
Decrease/(Increase) in prepaid expenses
and other assets
288,786
(11,805
)
Increase in other Liabilities
4,207
25,625
(Decrease)/Increase in accounts
payable
(888,679
)
40,447
(Decrease)/Increase in accrued payroll and
related taxes
(41,984
)
345,712
Decrease in accrued expenses
(1,298,204
)
(537,981
)
NET CASH USED IN OPERATING ACTIVITIES
(4,660,583
)
(1,752,072
)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
(272,605
)
(750,908
)
Purchases of intangible assets
(11,232
)
(1,694
)
NET CASH USED IN INVESTING ACTIVITIES
(283,837
)
(752,602
)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on indebtedness
(214,892
)
(252,968
)
Payments on finance lease liability
(24,080
)
—
NET CASH USED IN FINANCING ACTIVITIES
(238,972
)
(252,968
)
NET DECREASE IN CASH AND CASH
EQUIVALENTS
(5,183,392
)
(2,757,642
)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
17,408,257
25,334,889
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
12,224,865
$
22,577,247
Supplemental Information
Cash paid during the periods for:
Interest
$
12,326
$
4,425
Income Taxes
$
—
$
—
Schedule of Non-Cash Operating, Investing
and Financing Activities:
Issuance of common stock as
compensation
$
175,776
$
142,500
The accompanying notes are an integral part of
these financial statements.
KORU MEDICAL SYSTEMS,
INC.
SUPPLEMENTAL
INFORMATION
(UNAUDITED)
Three Months Ended
Reconciliation of GAAP Net Loss
March 31,
to Non-GAAP Adjusted EBITDA:
2023
2022
GAAP Net Loss
$
(2,410,885
)
$
(2,537,514
)
Tax Benefit
(577,400
)
(597,599
)
Depreciation/Amortization
213,117
109,252
Interest Income, Net
(125,502
)
1,463
Reorganization Charges
—
295,000
Manufacturing Initiative Expenses
49,053
38,005
Stock-based Compensation Expense
881,222
837,556
Non-GAAP Adjusted EBITDA
$
(1,970,395
)
$
(1,853,837
)
Reconciliation of Reported Diluted EPS
to
Three Months Ended
March 31,
Non-GAAP Adjusted Diluted EPS*:
2023
2022
Reported Diluted Earnings Per
Share
$
(0.05
)
$
(0.06
)
Reorganization Charges
—
0.01
Manufacturing Initiative Expenses
—
—
Reorganization Stock-based Compensation
Expense
—
—
Tax (Expense) adjustment
—
—
Non-GAAP Adjusted Diluted Earnings Per
Share
$
(0.05
)
$
(0.05
)
*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.
We expect to incur related expenses for the next three 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 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/20230504005947/en/
Investor Contact: Greg Chodaczek
347-620-7010 investor@korumedical.com
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