Full Press Release Details
Medical Systems Announces 2022 Q4 AND full year Financial Results, Accelerating to 19% REVENUE GROWTH in 2022
- March 8, 2023 -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 subcutaneous
drug delivery systems that improve quality of life for patients, today reported financial results for the fourth quarter and full year
ended December 31, 2022. The Company also issued guidance for the full year 2023.
| Fourth quarter net revenue growth of 13% to $7.3 million, marking the fifth consecutive quarter of double-digit growth, and full year net revenue growth of 19% to $27.9 million | |
| Novel Therapies business finished the year with 14 total collaborations to date - growing pre-commercial revenue from $0.5 million in 2021 to $2.5 million for full year 2022 | |
| 11% Core business growth (U.S. and International) for the year driven by overall SCIg market growth and market share gains through prefilled syringe adoptions | |
| Improved cash position to $17.4 million ending the fourth quarter via strong working capital management | |
| 2023 net revenues expected to be between $32.5 and $33.5 million, representing growth in the range of 17-20% |
"2022 was a very impactful year for KORU Medical, as we executed on
the first year of our Vision 2026 strategy and strengthened our position as a leading provider of drug delivery in the home," said
Linda Tharby, KORU Medical's President and CEO. "We grew revenue by 19%, more than doubled our novel therapies revenues and pipeline,
and delivered double-digit revenue growth in our Core business. We continued to build a strong team, and we are excited by the momentum
we carry into 2023. We anticipate another strong year of growth across both our Novel Therapies and Core businesses, as well as completion
of our operational improvements to drive our gross margin profile. We look forward to continuing to build value for our patients, customers
2022 Fourth Quarter Financial Results
| Three Months Ended December 31, | Change from Prior Year | ||||||||||
| 2022 | 2021 | $ | % | ||||||||
| Net Revenues | |||||||||||
| Domestic Core | $ | 5,314,836 | $ | 5,004,192 | $ | 310,644 | 6.2% | ||||
| International Core | 1,221,540 | 1,261,731 | (40,191 | ) | (3.2)% | ||||||
| Novel Therapies | 808,305 | 224,584 | 583,721 | 259.9% | |||||||
| Total | $ | 7,344,681 | $ | 6,490,507 | $ | 854,174 | 13.2% |
Total net revenues increased $0.9 million, or 13.2%, for the three months
ended December 31, 2022 compared to the same period in 2021. Novel Therapies net revenues grew by 259.9% in the fourth quarter of 2022
driven by significant progress related to a non-recurring engineering (NRE) innovation services agreement and revenues in support of ongoing
clinical trials. Domestic Core growth of 6.2% was driven by growth in Freedom Edge pumps to support prefilled syringe adoption and increases
in average selling prices, offset by store consolidations in a large specialty pharmacy account and the impact of lower SCIg script volumes
in the third quarter of 2022. International Core net revenues were lower by 3.2% driven by prior year timing of orders from two distributors,
partially offset by new distributor revenue growth in Germany and growth in other markets related to new label indications.
Gross profit increased $0.2 million or 6.4% in the three months ended December
31, 2022, compared to the same period in 2021. This increase in gross profit was primarily driven by the increase in net revenues of $0.9
million, as described above. Gross profit as a percentage of net revenues decreased to 55.5% compared to 59.0% from the fourth quarter
of 2021. The decline in the gross profit as a percentage of revenues was primarily due to higher year on year manufacturing costs associated
with labor and materials, and expenses related to our manufacturing transition as we prepare to exit our Chester facility and complete
the transition to our Mahwah facility and outsourced manufacturing organization. Offsetting these increases was a higher margin for Novel
Therapies NRE service revenue mix and an increase in Core average selling price and product mix.
Total operating expenses for the fourth quarter of 2022 were $6.6 million,
compared to $5.9 million for the same period in 2021. The increase in operating expenses was primarily due to innovation investments in
research and development.
Net loss for the fourth quarter of 2022 was $2.0
million, or $(0.04) per diluted share, compared to a net loss of $1.1 million, or ($0.02) per diluted share for the same period
of 2021. Net loss included a tax benefit of $0.5 million for the fourth quarter of 2022.
2022 Full Year Financial Results
| Twelve Months Ended December 31, | Change from Prior Year | ||||||||||
| 2022 | 2021 | $ | % | ||||||||
| Net Revenues | |||||||||||
| Domestic Core | $ | 21,205,204 | $ | 19,045,512 | $ | 2,159,692 | $ | 11.3% | |||
| International Core | 4,164,714 | 3,856,972 | 307,742 | 8.0% | |||||||
| Novel Therapies | 2,526,119 | 587,691 | 1,938,428 | 329.8% | |||||||
| Total | $ | 27,896,037 | $ | 23,490,175 | $ | 4,405,862 | $ | 18.8% |
Total net revenues increased $4.4 million, or 18.8%, for the year ended
December 31, 2022, as compared with the same period last year. Double-digit revenue growth was achieved in our Domestic Core and Novel
Therapies businesses. Domestic Core growth was primarily driven by increased volume attributed to SCIg market growth and new label indications,
including prefilled syringes, and increases in average selling prices. Novel Therapies revenues grew by 329.8% for the year ended 2022
related to services performed on an NRE innovation development agreement for a pharmaceutical customer and increases in clinical trial
product sales for several pharmaceutical customers. Revenues growth in our International Core business was driven by volume growth in
several EU markets compared with prior year.
Gross profit increased $1.6 million or 11.6% for the year ended December
31, 2022, compared to the same period in 2021. Gross profit as a percent of revenues decreased to 55.1% compared to 58.6% from the prior
year. The decline in the gross profit as a percentage of revenues was primarily due to higher manufacturing costs associated with labor
and materials, and expenses related to our manufacturing transition as we prepare to exit our Chester facility to complete the transition
to our Mahwah facility and outsourced manufacturing organization, and a lower Novel Therapies service revenue margin. Partially offsetting
these declines was an increase in core average selling price and product mix.
Selling, general and administrative expenses increased $2.7 million, or
15.4%, during the year ended December 31, 2022 compared to the same period last year, primarily due to $2.5 million in investments for
new hires in commercial for Domestic Core and Novel Therapies businesses, as well as quality and regulatory to support our strategic growth
Research and development expenses increased $2.5 million, or 100.4%, during
the year ended December 31, 2022 compared with the same period last year primarily due to new product development initiatives.
Net loss for the full year 2022 was $8.6
million, or $(0.19) per diluted share, compared to a net loss of $4.6 million, or ($0.10) per diluted share for the same period
of 2021. Net loss included a tax benefit of $2.0 million for the full year 2022.
Cash and cash equivalents were $17.4 million as of December 31, 2022.
Assumptions and Guidance for Full Year 2023
KORU Medical'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 contractor 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 fourth quarter 2022 earnings
KORU Medical expects:
| o | To sign 6 new Novel Therapies collaborations | |
| o | Two 510(k) filings submitted in second half |
| o | Operating expenses of approximately $30.0 million, inclusive of stock compensation expense | |
| o | Working capital improvements in inventory of approximately $2.0 million | |
| o | Breakeven in second half of 2024 based on current strategic outlook |
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, March 8, 2023, 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: 13736062. The live webcast will be available on the IR Calendar on the News/Events page of
the Investors section of KORU Medical's website.
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 2023. 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," "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, those referenced under "Assumptions
and Outlook for Full Year 2023" in this press release, uncertainties associated with the shift to increased healthcare delivery
in the home, new patient diagnoses, customer ordering patterns, 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 which is on file with the SEC and available on our website at www.korumedical.com/investors