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Press release content from Business Wire. The AP news staff was not involved in its creation.

KORU Medical Systems Announces 2021 Third Quarter Financial Results

November 10, 2021 GMT

CHESTER, N.Y.--(BUSINESS WIRE)--Nov 10, 2021--

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 third quarter ended September 30, 2021.

Recent Highlights:

  • Achieved net revenue of $6.0 million, a 9% increase versus Q2 2021, marking the third consecutive quarter of positive sequential growth
  • Received FDA 510(k) clearance for CSL Hizentra ® 20 ml prefilled syringe with the Freedom Edge ® Syringe Infusion System
  • Appointed three leadership team hires and announced an external innovation collaboration
  • Scheduled strategic plan update presentation on December 2, 2021

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“Our strong third quarter top-line results reflect continued momentum in all areas of our business – core US and international, as well as our novel therapies pipeline,” said Linda Tharby, KORU Medical’s CEO. “I’m proud of the team’s progress this quarter as we strengthen our foundation, continue to build the KORU Medical team, and increase our investment in innovation. We remain focused on continued execution of our strategy, which drives incremental growth and market expansion building on our leadership position in large volume subcutaneous home infusion and extending that position into new drug therapies.”

Third Quarter 2021 Financial Results

Net revenue was $6.0 million, (0.7)% lower compared with $6.1 million in the prior-year period. Adjusting for net inventory stocking of $0.6 million last year, adjusted net revenue grew 9%, with growth in all areas of our business; domestic core driven by pumps, international driven by consumables and increased novel therapies revenues. Sequential quarterly net revenue growth was 9%, with domestic core growth of 10% driven by pumps and needle sets and growth in novel therapies revenue.

Gross margin was 57.9% for the third quarter of 2021, a decline from prior year of 64.8%. The majority of the decline was driven by delays in the transition to our secondary manufacturing source. We also recorded a reserve for in-process material scrap. This was partially offset by favorability in product mix. We are confident in our path to accelerate margin improvement in 2022.

Total operating expenses for the third quarter of 2021 were $4.8 million, compared to $3.6 million for the same period in 2020. The increase in operating expenses is due to increased spend in support of strategic initiatives including commercialization, regulatory filings, and research and development.

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Net loss for the third quarter of 2021 was $1.1 million, or $(0.02) per diluted share, compared with net income of $0.2 million, or $0.01 per diluted share for the same period in 2020.

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. Forward-looking statements can be identified by words such as “scheduled”, “our path”, and “look forward”. 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, 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, 2020, 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 November 10, 2021. 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)

 

 

September 30,

 

December 31,

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

26,233,411

 

$

27,315,286

 

Accounts receivable less allowance for doubtful accounts of $24,469 for September 30, 2021 and December 31, 2020

 

 

3,122,665

 

 

2,572,954

 

Inventory

 

 

6,967,932

 

 

6,829,772

 

Prepaid expenses

 

 

1,336,819

 

 

807,780

 

TOTAL CURRENT ASSETS

 

 

37,660,827

 

 

37,525,792

 

Property and equipment, net

 

 

1,159,819

 

 

1,167,623

 

Intangible assets, net of accumulated amortization of $248,252 and $199,899 at September 30, 2021 and December 31, 2020, respectively

 

 

821,071

 

 

843,587

 

Operating lease right-of-use assets

 

 

131,228

 

 

236,846

 

Deferred income tax assets, net

 

 

1,565,334

 

 

125,274

 

Other assets

 

 

19,812

 

 

19,812

 

TOTAL ASSETS

 

$

41,358,091

 

$

39,918,934

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

1,385,413

 

$

624,920

 

Accrued expenses

 

 

2,036,848

 

 

2,610,413

 

Accrued payroll and related taxes

 

 

332,814

 

 

287,130

 

Finance lease liability – current

 

 

414

 

 

2,646

 

Operating lease liability – current

 

 

131,228

 

 

141,293

 

Note Payable

 

 

673,133

 

 

 

TOTAL CURRENT LIABILITIES

 

 

4,559,850

 

 

3,666,402

 

Operating lease liability, net of current portion

 

 

 

 

95,553

 

TOTAL LIABILITIES

 

 

4,559,850

 

 

3,761,955

 

Commitments and contingencies (Refer to Note 3)

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value, 75,000,000 shares authorized, 47,931,664 and 46,680,119 shares issued 44,511,162 and 43,259,617 shares outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

479,317

 

 

466,801

 

Additional paid-in capital

 

 

40,004,197

 

 

35,880,986

 

Treasury stock, 3,420,502 shares at September 30, 2021 and December 31, 2020, at cost

 

 

(3,843,562

)

 

(3,843,562

)

Retained earnings

 

 

158,289

 

 

3,652,754

 

TOTAL STOCKHOLDERS' EQUITY

 

 

36,798,241

 

 

36,156,979

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

41,358,091

 

$

39,918,934

 

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

6,040,544

 

$

6,080,315

 

$

16,999,669

 

$

20,119,228

 

Cost of goods sold

 

 

2,544,794

 

 

2,139,592

 

 

7,061,881

 

 

7,480,415

 

Gross Profit

 

 

3,495,750

 

 

3,940,723

 

 

9,937,788

 

 

12,638,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

3,901,830

 

 

3,075,169

 

 

12,980,604

 

 

9,039,980

 

Litigation

 

 

 

 

675

 

 

 

 

2,446,747

 

Research and development

 

 

800,020

 

 

390,416

 

 

1,523,739

 

 

944,637

 

Depreciation and amortization

 

 

115,934

 

 

115,637

 

 

349,822

 

 

297,801

 

Total Operating Expenses

 

 

4,817,784

 

 

3,581,897

 

 

14,854,165

 

 

12,729,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating (Loss)/Profit

 

 

(1,322,034

)

 

358,826

 

 

(4,916,377

)

 

(90,352

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Operating (Expense)/Income

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/Gain on currency exchange

 

 

(7,283

)

 

1,927

 

 

(21,761

)

 

(11,164

)

Gain on disposal of fixed assets, net

 

 

273

 

 

22,113

 

 

1,009

 

 

16,591

 

Interest (expense)/income, net

 

 

(2,838)

 

 

9,662

 

 

16,883

 

 

23,690

 

TOTAL OTHER (EXPENSE)/INCOME

 

 

(9,848

)

 

33,702

 

 

(3,869)

 

 

29,117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS)/INCOME BEFORE INCOME TAXES

 

 

(1,331,882

)

 

392,528

 

 

(4,920,246

)

 

(61,235

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Benefit/(Expense)

 

 

238,104

 

 

(143,353

)

 

1,425,781

 

 

(316,200

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS)/INCOME

 

$

(1,093,778

)

$

249,175

 

$

(3,494,465

)

$

(377,435

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS)/INCOME PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.02

)

$

0.01

 

$

(0.08

)

$

(0.01

)

Diluted

 

$

(0.02

)

$

0.01

 

$

(0.08

)

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,322,335

 

 

43,914,542

 

 

44,510,021

 

 

41,326,815

 

Diluted

 

 

44,322,335

 

 

44,119,511

 

 

44,510,021

 

 

41,326,815

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

For the
Nine Months Ended

 

 

 

September 30,

 

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net Loss

 

$

(3,494,465

)

$

(377,435

)

Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

1,967,632

 

 

1,191,146

 

Stock-based litigation settlement expense

 

 

 

 

1,285,102

 

Depreciation and amortization

 

 

349,822

 

 

297,801

 

Deferred income taxes

 

 

(1,440,060

)

 

(161,368

)

Gain on disposal of fixed assets

 

 

(1,009

)

 

(16,591

)

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(549,711

)

 

(502,075

)

Increase in inventory

 

 

(138,160

)

 

(3,244,662

)

Increase in prepaid expenses and other assets

 

 

(529,039

)

 

(457,330

)

Increase in accounts payable

 

 

760,493

 

 

790,414

 

Increase in accrued payroll and related taxes

 

 

45,684

 

 

249,879

 

(Decrease)/Increase in accrued expenses

 

 

(573,565

)

 

1,754,970

 

Increase in accrued tax liability

 

 

 

 

158,586

 

NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES

 

 

(3,602,378

)

 

968,437

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(301,720

)

 

(908,323

)

Proceeds from disposal of property and equipment

 

 

9,065

 

 

25,000

 

Purchases of intangible assets

 

 

(25,838

)

 

(124,216

)

NET CASH USED IN INVESTING ACTIVITIES

 

 

(318,493

)

 

(1,007,539

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Borrowings from indebtedness

 

 

924,389

 

 

4,976,508

 

Payments on indebtedness

 

 

(251,255

)

 

(4,976,508

)

Proceeds from issuance of equity

 

 

1,230,000

 

 

26,606,486

 

Common stock issuance as settlement for litigation

 

 

938,094

 

 

 

Payments on finance lease liability

 

 

(2,232

)

 

(4,502

)

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

2,838,996

 

 

26,601,984

 

 

 

 

 

 

 

 

 

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(1,081,875

)

 

26,562,882

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

27,315,286

 

 

5,870,929

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

26,233,411

 

$

32,433,811

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

Cash paid during the periods for:

 

 

 

 

 

 

 

Interest

 

$

6,194

 

$

27,698

 

Income Taxes

 

$

850

 

$

318,983

 

 

 

 

 

 

 

 

 

Schedule of Non-Cash Operating, Investing and Financing Activities:

 

 

 

 

 

 

 

Issuance of common stock as compensation

 

$

295,947

 

$

180,006

 

Issuance of common stock as settlement for litigation

 

$

938,094

 

$

938,094

 

REPRO MED SYSTEMS, INC.

SUPPLEMENTAL INFORMATION

(UNAUDITED)

The following table summarizes our net sales for the three and nine months ended September 30, 2021 and 2020:

 

Three Months
Ended September 30,  

 

Nine Months
Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

Domestic

$

5,076,294

 

$

5,289,076

 

$

14,084,552

 

$

15,719,419

 

International

 

747,281

 

 

702,034

 

 

2,585,881

 

 

2,539,944

 

Novel Therapies

 

216,969

 

 

89,205

 

 

329,236

 

 

1,859,865

 

Total

$

6,040,544

 

$

6,080,315

 

$

16,999,669

 

$

20,119,228

 

 

A reconciliation of one of our non-GAAP measures is below:

Reconciliation of Reported Net Sales to Non-GAAP Net Sales

 

Three Months Ended
September 30,

 

 

Change from Prior Year

 

 

 

2021

 

2020

 

 

$

 

%

 

Reported Net Sales

 

$

6,040,544

 

$

6,080,315

 

 

$

(39,771

)

(0.7%

)

Early Order/Inventory Stocking

 

 

 

 

(552,000

)

 

 

552,000

 

(100.0%

)

Non-GAAP Adjusted Net Sales

 

$

6.040,544

 

$

5,528,315

 

 

$

512,229

 

9.3%

 

Reconciliation of Reported Net Sales to Non-GAAP Net Sales

 

Nine Months Ended
September 30,

 

 

Change from Prior Year

 

 

 

2021

 

2020

 

 

$

 

%

 

Reported Net Sales

 

$

16,999,669

 

$

20,119,228

 

 

$

(3,119,559

)

(15.5%

)

Early Order/Inventory Stocking

 

 

 

 

(1,335,000

)

 

 

1,335,000

 

(100.0%

)

Non-GAAP Adjusted Net Sales

 

$

16,999,669

 

$

18,784,228

 

 

$

(1,784,559

)

(9.5%

)

Early Order/Inventory Stocking. We have excluded the effect of an early order and COVID related inventory stocking in calculating our non-GAAP measure. We had an early order from our largest distributor in the three months ended September 30, 2020, which would have otherwise been placed in the three months ended December 31, 2020, as well as higher purchases in the six months ended June 30, 2020, that we believe would have normally been made in the second half of 2020, had it not been for the pandemic.

REPRO MED SYSTEMS, INC.

SUPPLEMENTAL INFORMATION

(UNAUDITED)

 

A reconciliation of our non-GAAP measures is below:

 

 

Three Months Ended

 

 

Nine Months Ended

Reconciliation of GAAP Net (Loss)/Income

 

September 30,

 

 

September 30,

to Non-GAAP Adjusted EBITDA:

 

2021

 

 

2020

 

 

2021

 

2020

GAAP Net Loss

 

$

(1,093,778

)

 

$

249,175

 

 

$

(3,494,465

)

$

(377,435

)

Tax (Benefit)/Expense

 

 

(238,104

)

 

 

143,353

 

 

 

(1,425,781

)

 

316,200

 

Depreciation and Amortization

 

 

115,934

 

 

 

115,637

 

 

 

349,822

 

 

297,801

 

Interest Expense/(Income), Net

 

 

2,838

 

 

 

(9,662

)

 

 

(16,883

)

 

(23,690

)

Reorganization Charges

 

 

(1,262

)

 

 

 

 

 

1,192,618

 

 

 

Discontinued Product Expenses

 

 

 

 

 

(6,659

)

 

 

 

 

71,318

 

Litigation Expenses

 

 

 

 

 

675

 

 

 

 

 

2,446,747

 

Manufacturing Initiative Expenses

 

 

35,892

 

 

 

59,045

 

 

 

237,333

 

 

194,804

 

Stock-based Compensation Expense

 

 

628,276

 

 

 

406,325

 

 

 

1,967,632

 

 

1,191,146

 

Non-GAAP Adjusted EBITDA

 

$

(550,204

)

 

$

957,889

 

 

$

(1,189,724

 

$

4,116,891

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

Reconciliation of Reported Diluted EPS

 

September 30,

 

 

September 30,

to Non-GAAP Adjusted Diluted EPS*:

 

2021

 

 

2020

 

 

2021

 

2020

Reported Diluted Earnings Per Share

 

$

(0.02

)

 

$

0.01

 

$

(0.08

)

$

(0.01

)

Reorganization Charges

 

 

 

 

 

 

 

 

0.03

 

 

 

Discontinued Product Expense

 

 

 

 

 

 

 

 

 

 

 

Litigation Expenses

 

 

 

 

 

 

 

 

 

 

0.06

 

Manufacturing Initiative Expenses

 

 

 

 

 

 

 

 

0.01

 

 

 

Stock-based Compensation Expense

 

 

 

 

 

 

 

 

0.01

 

 

 

Tax (Expense) Adjustment

 

 

 

 

 

 

 

 

(0.01

)

 

(0.01

)

Non-GAAP Adjusted Diluted Earnings Per Share

 

$

(0.02

)

 

$

0.01

 

 

$

(0.04

)

$

0.04

 

*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. 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.

Discontinued Product Expense. We have excluded the effect of expenses related to a discontinued product line in calculating our non-GAAP measures. We did not incur any related expense in 2021.

Litigation. We have excluded litigation expenses in calculating our non-GAAP measures. Litigation expenses in 2020 included professional fees associated with our litigation with EMED, which discontinued as a result of the settlement on May 20, 2020.

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 six to nine 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 common stock to our board of directors and our CEO. 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 nine months ended September 30, 2021 included stock-based compensation expense of $0.4 million related to the departure and replacement of our chief executive officer. This expense is the only amount included in Stock-based Compensation Expense in calculating Adjusted Diluted EPS.

View source version on businesswire.com:https://www.businesswire.com/news/home/20211110006338/en/

CONTACT: Investor Contact:

Greg Chodaczek

347-620-7010

investor@korumedical.com

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: HEALTH MEDICAL SUPPLIES MEDICAL DEVICES

SOURCE: KORU Medical Systems

Copyright Business Wire 2021.

PUB: 11/10/2021 04:03 PM/DISC: 11/10/2021 04:03 PM

http://www.businesswire.com/news/home/20211110006338/en