KORU Medical Systems Announces 2022 First Quarter Financial Results

CHESTER, N.Y.–(BUSINESS WIRE)–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.

Contacts

Investor Contact:
Greg Chodaczek
347-620-7010
[email protected]

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