KORU Medical Systems (KRMD) Q4 2024 Earnings Call March 12, 2025 04:30 PM ET Company Participants Louisa Smith - PrincipalLinda Tharby - President and CEOTom Adams - Chief Financial OfficerMichaela Smith - Equity Research Conference Call Participants Chase Knickerbocker - Senior Equity Research Analyst - HealthcareFrank Takkinen - Senior Research AnalystJason Bednar - Senior Research AnalystAnderson Schock - Research Analyst Operator Greetings, and welcome to the Coram Medical Systems Fourth Quarter and Ful ...

Market Position and Strategy - KORU Medical focuses on developing innovative large volume subcutaneous infusion solutions, primarily targeting the subcutaneous drug delivery market regulated by the FDA[23]. - The company generates revenue from three sources: domestic core (US and Canada), international core, and novel therapies, with a focus on immunoglobulin delivery for PIDD and CIDP[24]. - KORU Medical aims to strengthen its position in the subcutaneous immunoglobulin (SCIg) market and expand into emerging subcutaneous drug therapies, leveraging the FREEDOM Infusion System[27]. - The company identifies key market trends driving SCIg growth, including increasing diagnoses of PIDD and expansion of on-label SCIg indications[29]. - KORU Medical estimates that at least 100 large-volume drugs greater than 2ml are in clinical development utilizing subcutaneous infusion, with approximately 20% being greater than 10ml[32]. - The FREEDOM System remains the market-leading delivery system in the U.S. for SCIg treatments, with increasing patient access expected as new drugs are developed[36]. - The company’s strategy includes ongoing clinical and product innovation, strategic partnerships, and commercial excellence to enhance its global market position[31]. Product Development and Innovation - The FREEDOM System is FDA 510(k) cleared and certified for several on-label subcutaneous indications, including Cutaquig®, Cuvitru®, and Hizentra®[35]. - HIgH-Flo Subcutaneous Safety Needle Sets are integral to the FREEDOM System, available in 26- and 24-gauge sizes for subcutaneous self-administration[37]. - The company invested $5.3 million and $5.7 million in research and development for the years ended December 31, 2024 and 2023, respectively, with plans for further investments in a next-generation infusion pump[43]. - The company is committed to innovation and product development, recognizing its importance for long-term success[43]. - The company’s strategy includes investing in innovation and new product development to achieve revenue growth, which requires substantial resources[73]. Regulatory and Compliance Challenges - The company faces regulatory scrutiny from the FDA and other authorities, which impacts the development, testing, and marketing of its medical devices[44]. - The company’s products are subject to ongoing regulatory compliance even after receiving FDA clearance, which can impact marketing and sales strategies[52]. - The company aims to comply with EU MDR regulations by December 2028, which will require significant investment to avoid losing the ability to sell products in the EU[75][76]. - The company is subject to extensive regulatory requirements, including compliance with the new EU Medical Device Regulation (MDR) effective May 2021, which will require significant investment to implement[116]. - Compliance with complex regulations, particularly from the FDA, is critical, and failure to maintain approvals could adversely affect financial condition and operations[90]. Financial Performance and Risks - The company does not currently intend to pay dividends on its common stock, which may affect investor attractiveness[28]. - The FREEDOM System's sales are primarily through six distributors, accounting for approximately 75% of net revenues, with one U.S. distributor contributing about 35%[40]. - The company faces significant risks related to patent litigation, which could result in loss of patent protection and substantial sales losses[107]. - The company may need additional funding in the future to support product development and commercialization efforts, which could lead to shareholder dilution if raised through equity offerings[137]. - The company’s financial results may be adversely affected by significant price increases from single-source suppliers[127]. Competition and Market Dynamics - Competition for the FREEDOM System includes various types of pumps, with key factors influencing selection being safety, cost-effectiveness, and ease of use[60]. - The company faces competition from a wide range of international and domestic companies in the infusion market, which may have greater financial and marketing resources[84]. - The company faces competition from generic and biosimilar therapies, which could significantly reduce the commercial viability of brand name injectable therapies[125]. - The medical technology industry is experiencing significant consolidation, leading to increased competition and downward pricing pressure for medical device suppliers[87]. Operational and Supply Chain Considerations - The company manufactures 100% of its pump product volume and 15% of consumables at its Mahwah, NJ facility, while 85% of consumables are sourced from Command Medical Products in Nicaragua[41]. - The company does not have binding contracts with suppliers, relying on single-source suppliers for components, which may pose risks to meeting customer demand[42]. - The company has a five-year agreement with Command established in 2020, but lacks long-term agreements with other suppliers, complicating supply chain stability[130]. - The company sources most components and raw materials from single suppliers, which poses risks to timely delivery and cost-effectiveness[126]. Human Resources and Management - As of December 31, 2024, the company employed 80 full-time employees, with approximately 49% being female and 43% being minorities[62]. - The company has a dedicated internet-based learning platform for employee training, aligning with their responsibilities and career development[63]. - The company maintains competitive compensation and benefits to attract and retain skilled labor, including health insurance and a 401(k) plan with matching contributions[64]. - The company does not maintain "key man" insurance policies, making it vulnerable to the loss of key management personnel[111]. - The company has made several changes to its management structure, which may lead to integration challenges and affect business operations[139]. External Economic Factors - The company is exposed to foreign currency exchange risks, which could affect revenues derived from international sales[144]. - The company faces risks from potential tariffs, including a 25% tariff on imports from Canada and Mexico and a 10% tariff on imports from China, which could adversely affect its financial results[142]. - Changes in tax or labor laws could increase operational costs and reduce profit margins, impacting overall financial performance[140]. - Rising inflation rates have increased economic uncertainty, potentially requiring the company to raise prices to maintain operating margins[154]. - The company faces uncertainties in the UK market due to Brexit, which may impact business operations and regulatory compliance[155]. Legal and Liability Risks - Product liability claims and lawsuits could result in significant legal costs and negatively affect the company's reputation and financial condition[104]. - Quality management is essential for maintaining customer confidence; quality issues could lead to recalls and regulatory actions, adversely impacting business[100]. - Protection of patents and proprietary rights is crucial; loss of intellectual property rights could materially damage competitiveness and business prospects[105]. Environmental and Social Considerations - Increased focus on environmental, social, and governance (ESG) issues may adversely affect the company's reputation and financial condition if not addressed appropriately[157]. - Climate change poses immediate and long-term risks, including increased operational costs and supply chain disruptions[158].

Company Overview - KORU Medical Systems Inc. (KRMD) currently holds a Momentum Style Score of A, indicating strong momentum potential [3] - The company has a Zacks Rank of 2 (Buy), suggesting favorable investment conditions [4] Price Performance - KRMD shares have increased by 3.28% over the past week, outperforming the Zacks Medical - Instruments industry, which rose by 1.15% [6] - Over the past month, KRMD's price change is 2.76%, while the industry average is 3.26% [6] - In the last quarter, KRMD shares rose by 40.41%, and over the past year, they have increased by 93.4%, significantly outperforming the S&P 500, which moved 5.86% and 27.32% respectively [7] Trading Volume - KRMD's average 20-day trading volume is 106,547 shares, which serves as a useful price-to-volume baseline [8] Earnings Outlook - In the past two months, one earnings estimate for KRMD has moved higher, while none have moved lower, resulting in a consensus estimate increase from -$0.14 to -$0.13 [10] - For the next fiscal year, two estimates have been revised upwards with no downward revisions [10] Conclusion - Given the strong momentum indicators and positive earnings outlook, KRMD is positioned as a promising investment opportunity [12]

Financial Results - KORU Medical Systems, Inc. announced preliminary financial results for the fiscal quarter and year ended December 31, 2024[4]. - The financial results are based on current estimates and are subject to change pending completion of closing and review procedures[5]. - The company has not provided specific financial figures in the current report but will disclose them in future filings[5]. Investor Relations - An investor presentation was posted on January 13, 2025, which may be used for presentations to investors and analysts[7]. - The press release and investor presentation are available on the company's investor relations website[7]. - The company has not committed to publicly updating or revising the information provided in the report[7]. Company Classification and Trading - The company is classified as an emerging growth company under the Securities Act of 1933[4]. - The company is headquartered in Mahwah, NJ, and its common stock is traded on The Nasdaq Stock Market under the symbol KRMD[4]. Report Details - The report does not include any liabilities under Section 18 of the Exchange Act[6]. - The report was signed by Linda Tharby, President and CEO, on January 13, 2025[11].

Financial Performance - KORU Medical Systems Inc. reported a quarterly loss of $0.03 per share, consistent with the Zacks Consensus Estimate, compared to a loss of $0.03 per share a year ago [1] - The company posted revenues of $8.18 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 6.86%, and up from $7 million in the same quarter last year [2] - Over the last four quarters, KORU Medical has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2][3] Stock Performance - KORU Medical shares have increased by approximately 21% since the beginning of the year, while the S&P 500 has gained 25.5% [3] - The current Zacks Rank for KORU Medical is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $8.01 million, and for the current fiscal year, it is -$0.13 on revenues of $32.28 million [7] - The estimate revisions trend for KORU Medical is mixed, and future earnings expectations will depend on management's commentary during the earnings call [3][4] Industry Context - The Medical - Instruments industry, to which KORU Medical belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

KORU Medical Systems Q3 2024 Earnings Call November 13, 2024 1 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 regarding our expectations for future performance, including but not limited to the existence and timing of potential drug launches, the success and timing of our novel therapies collaborations, our future financial performance (including but not limited t ...

Financial Data and Key Metrics Changes - Second-quarter revenues reached $8.4 million, representing a 22% increase compared to the same period in 2023 [5][18] - Gross margin improved to 65%, an increase of 890 basis points year-over-year, marking the fourth consecutive quarter with margins above 60% [19][20] - Ending cash balance as of June 30 was $10.5 million, with cash usage of $300,000 in the quarter, an improvement of $1.9 million over the prior year [20][21] Business Line Data and Key Metrics Changes - Core business revenues grew 20%, driven by SCIG market growth and geographic expansion [5] - Domestic core revenue increased by 14% to $6.2 million, while international core business grew 46% year-over-year to $1.6 million [18] - Novel Therapies revenue was $600,000, a 50% improvement compared to the prior year, driven by clinical trial orders [19] Market Data and Key Metrics Changes - The U.S. SCIg market is projected to grow in the mid to high single digits, with KORU holding a leadership position [12] - International sales saw a strong performance with 46% growth, excluding distributor stocking, normalized growth was approximately 20% [9][18] - The overall SCIg market recorded six consecutive quarters of growth, indicating an increase in new patient starts [9] Company Strategy and Development Direction - The company is focused on achieving cash flow breakeven by the fourth quarter of 2024 and has raised its full-year revenue and gross margin guidance [6][22] - Strategic growth pillars include protecting and growing the core domestic SCIg business, expanding internationally, and broadening relevance through Novel Therapies [8][16] - The company aims to leverage partnerships with pharmaceutical companies and distributors to enhance market penetration and drive growth [15][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cash flow breakeven and highlighted strong momentum in both domestic and international markets [6][26] - The approval of expanded labels for SCIg drugs is expected to facilitate easier patient transitions to SCIg therapy, potentially increasing market share [13][35] - The company anticipates continued growth in the Novel Therapies pipeline, with multiple drugs approaching approval [16][25] Other Important Information - The company received regulatory clearance for the FreedomEdge infusion system in Japan, marking a significant milestone for international expansion [6][10] - A new organizational structure was announced, promoting Chris Pazdan to COO to enhance operational focus and alignment [7] Q&A Session Summary Question: What is the current status of prefilled syringe penetration? - Management indicated that CSL has launched their prefilled syringe platform, which is compatible with KORU devices, and market uptake is strengthening [27] Question: Will KORU pursue CUVITRU clearance in other geographies? - Management confirmed that they are cleared for CUVITRU in the U.S. and Japan, with plans to seek further approvals in Latin America and Asia Pacific [31] Question: How will the expanded label for XEMBIFY impact the business? - Management noted that the new label allows patients to start directly on SCIg, which is expected to simplify the transition and potentially increase market share [34] Question: What is the strategy for entering the Japanese market? - Management is working on establishing distributor relationships and anticipates that Japan will become a significant market over time, primarily focusing on consumables [36] Question: What is driving the outperformance in the first half of the year? - Management attributed growth to a combination of new patient starts, strong performance in both domestic and international markets, and business development efforts in Novel Therapies [40] Question: What are the commercialization plans for new Novel Therapies? - Management emphasized the importance of partnerships with pharmaceutical companies for launch plans and targeting specific clinics for new drug introductions [47] Question: Any updates on the potential expansion into Canada? - Management is in discussions with pharmaceutical partners and expects to launch in Canada in early 2025 [49]

KORU Medical Systems Inc. (KRMD) came out with a quarterly loss of $0.02 per share versus the Zacks Consensus Estimate of a loss of $0.04. This compares to loss of $0.05 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 50%. A quarter ago, it was expected that this company would post a loss of $0.04 per share when it actually produced a loss of $0.02, delivering a surprise of 50%.Over the last four quarters, the company has surp ...

Q1 2024 Earnings Call May 1, 2024 This presentation contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 regarding our expectations for future performance, including but not limited to our 501(k) clearances, new novel therapies collaborations, new patient starts, International expansion, prefill syringe market growth, revenues, gross margin, operating expenses, cash balance, and cash flow. Forward-looking statemen ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=2&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the quarter ended March 31, 2024, detailing a net loss of **$1.9 million**, an improvement from **$2.4 million** in the prior-year period, driven by higher revenues and improved gross margins [Balance Sheets](index=2&type=section&id=Balance%20Sheets) As of March 31, 2024, total assets were **$27.5 million**, slightly down from **$28.5 million** at year-end 2023, primarily due to reduced cash, while liabilities increased and equity decreased reflecting the net loss Balance Sheet Data | Balance Sheet Data | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $10,820,317 | $11,482,240 | | Total Current Assets | $19,479,262 | $20,255,929 | | Total Assets | $27,500,548 | $28,460,972 | | **Liabilities & Equity** | | | | Total Current Liabilities | $4,852,927 | $4,454,278 | | Total Liabilities | $8,383,017 | $8,107,201 | | Total Stockholders' Equity | $19,117,531 | $20,353,771 | [Statements of Operations](index=3&type=section&id=Statements%20of%20Operations) For the three months ended March 31, 2024, net revenues increased **10.9%** to **$8.2 million**, gross profit grew **23.1%** to **$5.1 million**, and the net loss narrowed to **$1.9 million**, or **($0.04)** per share, from **$2.4 million** in Q1 2023 Statement of Operations | Statement of Operations | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net Revenues | $8,197,798 | $7,392,605 | | Gross Profit | $5,103,298 | $4,147,035 | | Net Operating Loss | ($1,961,366) | ($3,056,828) | | Net Loss | ($1,935,958) | ($2,410,885) | | Net Loss Per Share (Basic & Diluted) | ($0.04) | ($0.05) | [Statements of Cash Flows](index=4&type=section&id=Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly decreased to **$0.35 million** in Q1 2024 from **$4.66 million** in Q1 2023, reflecting improved operating results and working capital management, with the quarter ending with **$10.8 million** in cash Cash Flow Activity | Cash Flow Activity | For the Three Months Ended March 31, 2024 | For the Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($346,720) | ($4,660,583) | | Net Cash Used in Investing Activities | ($133,083) | ($283,837) | | Net Cash Used in Financing Activities | ($182,120) | ($238,972) | | Net Decrease in Cash | ($661,923) | ($5,183,392) | | Cash and Cash Equivalents, End of Period | $10,820,317 | $12,224,865 | [Statements of Stockholders' Equity](index=5&type=section&id=Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from **$20.4 million** at year-end 2023 to **$19.1 million** as of March 31, 2024, primarily due to the **$1.9 million** net loss - Total stockholders' equity decreased from **$20,353,771** on December 31, 2023, to **$19,117,531** on March 31, 2024[19](index=19&type=chunk) - The decrease was primarily caused by a net loss of **$1,935,958** for the quarter[19](index=19&type=chunk) [Notes to Financial Statements](index=5&type=section&id=Notes%20to%20Financial%20Statements) The notes detail accounting policies, a new **$10 million** HSBC loan facility, a **$6.4 million** deferred tax asset valuation allowance, and a successful regulatory appeal upholding EU sales - Revenues are derived from three sources: domestic core (US and Canada), international core, and novel therapies[38](index=38&type=chunk) - On March 8, 2024, the Company entered into a loan agreement with HSBC for a **$5 million** revolving credit facility and a **$5 million** term loan facility, with no outstanding borrowings as of March 31, 2024[74](index=74&type=chunk) - On April 8, 2024, the Company's appeal to BSI regarding a prior audit was upheld, preventing disruption of sales to the EU market[84](index=84&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial results, highlighting **10.9%** revenue growth to **$8.2 million**, improved gross margin to **62.3%**, a narrowed net loss, and sufficient liquidity [Results of Operations](index=15&type=section&id=Results%20of%20Operations) Total net revenues grew **10.9%** to **$8.2 million**, driven by strong International Core performance, with gross profit rising **23.1%** to **$5.1 million** and margin expanding to **62.3%** Net Revenues by Segment | Net Revenues by Segment | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Domestic Core | $5,953,865 | $5,719,135 | 4.1% | | International Core | $1,790,483 | $1,097,490 | 63.1% | | Novel Therapies | $453,450 | $575,980 | (21.3%) | | **Total** | **$8,197,798** | **$7,392,605** | **10.9%** | - Gross margin increased to **62.3%** in Q1 2024 from **56.1%** in Q1 2023, primarily driven by production efficiencies from outsourced manufacturing and consolidation of US manufacturing sites[94](index=94&type=chunk) - Operating expenses decreased by **1.9%** year-over-year, mainly due to a **5.7%** decrease in research and development expenses related to the timing of project spending[95](index=95&type=chunk)[96](index=96&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended Q1 2024 with **$10.8 million** in cash, with net cash used in operating activities significantly improving to **$0.3 million** from **$4.7 million** in the prior-year quarter, ensuring sufficient liquidity for at least the next twelve months - The company's principal source of liquidity is cash on hand, which was **$10.8 million** as of March 31, 2024[99](index=99&type=chunk) - Net cash used in operating activities improved to **$0.3 million** in Q1 2024 from **$4.7 million** in Q1 2023[102](index=102&type=chunk)[103](index=103&type=chunk) - Management expects that cash on hand and cash flows from operations will be sufficient to meet requirements for at least the next twelve months[101](index=101&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=17&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has determined that quantitative and qualitative disclosures about market risk are not applicable for this reporting period, indicating no material exposure requiring such disclosure - The company has determined that quantitative and qualitative disclosures about market risk are not applicable[108](index=108&type=chunk) [Controls and Procedures](index=17&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report[109](index=109&type=chunk) - No changes in the Company's internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[110](index=110&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=17&type=section&id=ITEM%201A.%20Risk%20Factors) The company refers to the risk factors described in its Annual Report on Form 10-K for the year ended December 31, 2023, with no new or materially changed risk factors reported in this 10-Q - The company directs readers to the risk factors disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for a description of various risks and uncertainties[111](index=111&type=chunk) [Exhibits](index=17&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, primarily consisting of CEO and CFO certifications required by Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL documents - The report includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[111](index=111&type=chunk) - Inline XBRL instance and taxonomy documents are also filed as exhibits to the report[111](index=111&type=chunk)[116](index=116&type=chunk) [Signatures](index=18&type=section&id=Signatures) - The report was duly signed and authorized on May 1, 2024, by Linda Tharby, President and Chief Executive Officer, and Thomas Adams, Chief Financial Officer and Treasurer[115](index=115&type=chunk)