Full Press Release Details
KORU MEDICAL SYSTEMS, INC. ANNOUNCES 2023 FOURTH QUARTER,
FULL YEAR FINANCIAL RESULTS, AND 2024 GUIDANCE
MAHWAH, NJ - March 13, 2024 - KORU
Medical Systems, Inc. (NASDAQ: KRMD) ("KORU Medical" or the "Company"), a leading medical technology company focused
on development, manufacturing, and commercialization of innovative and patient-centric large volume subcutaneous infusion solutions, today
reported financial results for the fourth quarter and full year ended December 31, 2023. The Company also issued guidance for the full
| Fourth quarter 2023 net revenues of $7.2 million, a 2% decrease from the prior year; Full year 2023 net revenues of $28.5 million, a 2% increase over the prior year | |
| Full year 6.7% Core business growth (U.S. and International) driven by overall SCIg market growth, share gains and expansion in new geographies | |
| Fourth quarter gross margin of 60.3%, reflecting year-over-year improvement of 470 basis points; Full year gross margin of 58.6%, reflecting year-over-year improvement of 350 basis points | |
| Positive cash flow of $0.7 million in the fourth quarter of 2023, ending the year with a cash balance of $11.5 million | |
| Entered 3 Novel Therapies collaborations during 2023 and announced 2 new collaborations in the first quarter of 2024 | |
| Recorded a non-cash valuation allowance against deferred tax assets of $6.0 million. Net loss for the year, which included this allowance, was ($13.7) million, or ($0.30) per share. Adjusted EBITDA was ($6.0) million, or ($0.13) per share vs. ($6.1) million or ($0.14) in the prior year. | |
| Signed a $10 million credit facility with HSBC USA to replace an expired $3.5 million revolver agreement; the credit facility will be reserved for strategic growth capital | |
| Issued full year 2024 net revenues guidance of $31.2-$32.2 million, representing 10-13% growth |
am proud of the KORU team for delivering a solid end to 2023, led by performance in our Core business. Entry into multiple geographic
markets drove international sales, and in the US, we hit a key milestone with
the FDA clearance and launch of the 50mL prefill pump platform, which we anticipate will be a significant growth driver in 2024. Additionally,
we saw double-digit growth in our end-user specialty pharmacy sales, reflective of share gains and a growing Ig market" said
Linda Tharby, KORU Medical's President and CEO. "Within our Novel Therapies business, we recently
announced collaborations for two late-stage therapies. On the operational side, we increased
gross margins, were cash flow positive in the fourth quarter and finished the year with a significantly lower cash burn than the prior
year. We are excited by the momentum we are carrying into 2024, we remain focused on the execution of our Vision 2026 strategy, and positioning
KORU for growth, profitability and value creation for our customers and shareholders."
2023 Fourth Quarter Financial Results
| Three Months Ended December 31, | Change from Prior Year | % of Total | ||||||||||||||
| 2023 | 2022 | $ | % | 2023 | 2022 | |||||||||||
| Net Revenues | ||||||||||||||||
| Domestic Core | $ | 5,565,349 | $ | 5,314,836 | $ | 250,513 | 4.7% | 77.4% | 72.4% | |||||||
| International Core | 1,315,036 | 1,221,540 | 93,496 | 7.7% | 18.3% | 16.6% | ||||||||||
| Novel Therapies | 305,547 | 808,305 | (502,758 | ) | (62.2% | ) | 4.3% | 11.0% | ||||||||
| Total | $ | 7,185,932 | $ | 7,344,681 | $ | (158,749 | ) | (2.2% | ) |
Total net revenues decreased $0.2 million, or 2.2%,
for the three months ended December 31, 2023, as compared with the same period last year. Domestic Core net revenues increased by 4.7%
year-over-year, driven by growth in pumps and consumables, due to competitive share gain in new accounts. International Core net revenues
increased by 7.7%, driven by strong SCIg volume and growth in several OUS geographies as we continue to expand into new markets. Novel
Therapies net revenues declined by 62% year-over-year, primarily driven by the completion of a large milestone for a pharmaceutical NRE
Gross profit increased $0.3 million or 6.2% for the
three months ended December 31, 2023, as compared with the same period last year. Gross profit stated as a percentage of net revenues
increased to 60.3% for the fourth quarter of 2023 compared to 55.5% in the fourth quarter of 2022. The increase was primarily driven by
production efficiencies from the completion of an outsourced manufacturing initiative and consolidation of our manufacturing sites. Allowing
for a one-time inventory adjustment for a product discontinuation, adjusted gross margin for the fourth quarter of 2023 was 63.1%. A reconciliation
of adjusted gross margin to the most directly comparable GAAP measure is provided at the end of this press release.
Total operating expenses for the fourth quarter of
2023 were $6.7 million, an increase of $0.1 million or 1.6%, compared to $6.6 million in the prior year period. The increase was driven
primarily by the hiring of our new Chief Commercial Officer to lead our Core business growth strategy, partially offset by efficiencies
Net loss for the fourth quarter of 2023 was $7.5 million,
or $(0.16) per diluted share, compared to a net loss of $2.0 million, or ($0.04) per diluted share for the same period of 2022. Net
loss included a tax valuation allowance of $6.0 million for the fourth quarter of 2023. Adjusted EBITDA for the quarter was ($1.0 million),
or ($0.02) per diluted share versus ($1.6 million), or ($0.04) in the prior year. A reconciliation of adjusted EBITDA and adjusted diluted
EPS to the most directly comparable GAAP measures is provided at the end of this press release.
2023 Full Year Financial Results
| Years Ended December 31, | Change from Prior Year | % of Total | ||||||||||||||
| 2023 | 2022 | $ | % | 2023 | 2022 | |||||||||||
| Net Revenues | ||||||||||||||||
| Domestic Core | $ | 22,446,519 | $ | 21,205,204 | $ | 1,241,315 | 5.9% | 78.7% | 76.0% | |||||||
| International Core | 4,596,097 | 4,164,714 | 431,383 | 10.4% | 16.1% | 14.9% | ||||||||||
| Novel Therapies | 1,475,050 | 2,526,119 | (1,051,069 | ) | (41.6% | ) | 5.2% | 9.1% | ||||||||
| Total | $ | 28,517,666 | $ | 27,896,037 | $ | 621,629 | 2.2% |
Total net revenues increased $0.6 million, or 2.2%,
for the year ended December 31, 2023, as compared with the same period last year. Domestic Core growth of 5.9% was driven by volume growth
in pumps and consumables attributed to share gains. International Core growth of 10.4% was driven by increased volume across several EU
markets and the entry into multiple new geographic markets. The growth in Core offset a 41.6% year-over-year decline in Novel Therapies
net revenues, primarily driven by the completion of a large milestone for a pharmaceutical NRE agreement in 2022.
Gross profit increased $1.3 million or 8.7% for the
year ended December 31, 2023, compared to the same period in 2022. Gross profit as a percentage of net revenues increased to 58.6% compared
to 55.1% from the prior year. The increase was driven by improvements in manufacturing productivity and product mix. Allowing for a one-time
inventory adjustment for a product discontinuation, adjusted gross margin for the year ended 2023 was 59.6%. A reconciliation of adjusted
gross margin to the most directly comparable GAAP measure is provided at the end of this press release.
Selling, general and administrative expenses decreased
$0.2 million, or 1.2%, during the year ended December 31, 2023, compared to the same period last year, primarily driven by lower executive
restructuring costs partially offset by an increase of new hires in commercial business development and medical affairs.
Research and development expenses increased $0.8 million,
or 15.9%, during the year ended December 31, 2023, compared with the same period last year, primarily due to compensation and expenses
to support new hires focused on new product development.
Net loss for the full year 2023 was $13.7 million,
or $(0.30) per diluted share, compared to a net loss of $8.7 million, or $(0.19) per diluted share for the same period of 2022. Net loss
included a tax valuation allowance of $6.0 million for the full year 2023. Adjusted EBITDA for the full year was ($6.0) million, or ($0.13)
per diluted share versus ($6.1) million or ($0.14) in the prior year. A reconciliation of adjusted EBITDA and adjusted diluted EPS to
the most directly comparable GAAP measures is provided at the end of this press release.
Cash and cash equivalents were $11.5 million as of
December 31, 2023, reflecting positive cash flow of $0.7 million in the fourth quarter and a reduction of cash burn to $5.9 million in
2023 from $8 million in 2022.
The Company has entered into a $5M revolving credit
facility and a $5M term loan facility with HSBC Bank USA, which replaced a $3.5M revolving credit facility with a regional bank that expired
in August of 2023. This new debt facility provides KORU Medical with additional capital flexibility to support a reserve for growth and
strategic opportunities.
The Company has received an assessment report from
its notified body in the EU, BSI, stating that, following BSI's review of technical documentation submitted by the Company in connection
with a prior audit nonconformance, a recommendation for continued certification cannot be made. The Company has filed an appeal to this
determination. Management believes that the Company's appeal will be successful in limiting the scope of the suspension to have
minimal impact on the Company's revenues, if any.
Assumptions and Guidance for Full Year 2024
KORU Medical's guidance for the full year 2024 reflects
numerous assumptions that could affect its business, based on the information management has as of this date. Management will discuss
its outlook and several of its assumptions on its fourth quarter 2023 earnings call.
KORU Medical expects:
| Full year 2024 net revenue between $31.2 and $32.2 million, representing growth in the range of 10% to 13% | ||||
| o | SCIg market growth of mid-to- high single digits | |||
| o | Three new Novel Therapies collaborations | |||
| o | Prefilled syringe market penetration of approximately 20%-25% | |||
| Gross margin between 59% and 610% for the full year 2024 | ||||
| o | Geographic expansion into lower ASP markets | |||
| o | Supply chain inflationary pricing pressure | |||
| o | Production line start-up in Q4 for new product introduction | |||
| 2024 year-end cash balance greater than $8.0 million | ||||
| o | Operating expenses of approximately $23.5- $24.0 million, exclusive of stock compensation expense | |||
| o | Cash flow breakeven in in the fourth quarter of 2024 and cash flow positive for full year 2025 | |||
| o | Ending cash balance is exclusive of the new $10 million credit facility, which will be reserved for strategic growth capital opportunities |
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 13, 2024, 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: 6447448. 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 gross margin," "adjusted diluted EPS" and "adjusted EBITDA" 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 develops, manufactures, and commercializes
innovative and patient-centric large volume subcutaneous infusion solutions that improve quality of life for patients around the world.
The FREEDOM Syringe Infusion System ("the FREEDOM 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