KORU Medical Systems Announces 2021 Second Quarter Financial Results

KORU Medical Systems Announces 2021 Second Quarter Financial Results




KORU Medical Systems Announces 2021 Second 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 second quarter ended June 30, 2021.

Second Quarter 2021 Summary:

  • Solid net revenue of $5.5 million; positive sequential quarterly growth
  • Gross margin of 58.1%
  • Net loss of $1.1 million

“We are pleased with our performance and sequential revenue growth in the second quarter and look forward to continuing to build growth and momentum in the second half of 2021. We are beginning to see a rebound in growth in the subcutaneous immunoglobulin market, and we are well positioned to remain the category leader,” said Linda Tharby, KORU Medical’s CEO. “We are focused on executing on our strategy, driving growth in our core SCIg therapy franchise through commercial efforts to increase penetration of home subcutaneous delivery, building a pipeline of subcutaneous therapeutic candidates and introducing product and technology innovations to generate further topline growth. ”

Second Quarter 2021 Financial Results

Net sales were $5.5 million, a decline of 28.3% compared to the second quarter of 2020, due to approximately $2.3 million of COVID-related stocking orders and higher novel therapies sales from non-recurring clinical trials, each in the prior year. Sequential quarter net sales growth was 2%, driven by a 4% increase in domestic core business, and growth in novel therapies revenues. Both the overall domestic immunoglobulin market and our end-user sales to the specialty pharmacy channel grew mid-single digits through Q2 2021, which we believe indicates market recovery in new patient starts for SCIg therapy.

Gross margin was 58.1% for the second quarter of 2021, a decrease of 5.6 percentage points compared to the second quarter of 2020. Gross margin was negatively impacted by lower volumes, resulting in unfavorable absorption in the quarter.

Total operating expenses for the second quarter of 2021 were $4.6 million, compared to $5.9 million for the same period in 2020, which included $2.3 million of litigation expenses. Excluding the impact of litigation expenses, operating expenses grew primarily due to new commercialization, research and development, and regulatory initiatives in support of our growth strategy, as well as CEO transition related costs.

Net loss for the second quarter of 2021 was $1.1 million, or $(0.03) per diluted share, unchanged from the same period in 2020. On a non-GAAP basis, adjusted diluted earnings per share was $(0.02), $0.04 lower than the same period in 2020.

Non-GAAP adjusted EBITDA for the second quarter of 2021 was $(0.3) million, compared to $1.8 million in the second quarter of 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 “believe”, “look forward,” “focused on” and “indicating”. 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 June 30, 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)

 

 

 

 

 

 

 

 

June 30,

December 31,

 

 

2021

2020

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

26,538,478

 

$

27,315,286

 

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

 

 

2,577,400

 

 

2,572,954

 

Inventory

 

 

7,562,750

 

 

6,829,772

 

Prepaid expenses

 

 

461,553

 

 

807,780

 

TOTAL CURRENT ASSETS

 

 

37,140,181

 

 

37,525,792

 

Property and equipment, net

 

 

1,110,550

 

 

1,167,623

 

Intangible assets, net of accumulated amortization of $232,820 and $199,899 at June 30, 2021 and December 31, 2020, respectively

 

 

834,644

 

 

843,587

 

Operating lease right-of-use assets

 

 

166,483

 

 

236,846

 

Deferred income tax assets, net

 

 

1,327,230

 

 

125,274

 

Other assets

 

 

19,812

 

 

19,812

 

TOTAL ASSETS

 

$

40,598,900

 

$

39,918,934

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable

 

$

1,005,653

 

$

624,920

 

Accrued expenses

 

 

1,771,666

 

 

2,610,413

 

Accrued payroll and related taxes

 

 

390,326

 

 

287,130

 

Finance lease liability – current

 

 

1,030

 

 

2,646

 

Operating lease liability – current

 

 

142,450

 

 

141,293

 

TOTAL CURRENT LIABILITIES

 

 

3,311,125

 

 

3,666,402

 

Operating lease liability, net of current portion

 

 

24,033

 

 

95,553

 

TOTAL LIABILITIES

 

 

3,335,158

 

 

3,761,955

 

Commitments and contingencies (Refer to Note 3)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, $0.01 par value, 75,000,000 shares authorized, 47,910,676 and 46,680,119 shares issued 44,490,174 and 43,259,617 shares outstanding at June 30, 2021, and December 31, 2020, respectively

 

 

479,106

 

 

466,801

 

Additional paid-in capital

 

 

39,376,131

 

 

35,880,986

 

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

 

 

(3,843,562

)

 

(3,843,562

)

Retained earnings

 

 

1,252,067

 

 

3,652,754

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

37,263,742

 

 

36,156,979

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

40,598,900

 

$

39,918,934

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Six Months Ended

 

 

June 30,

June 30,

 

 

2021

2020

2021

2020

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

5,528,174

 

$

7,708,904

 

$

10,959,125

 

$

14,038,913

 

Cost of goods sold

 

 

2,317,990

 

 

2,799,024

 

 

4,517,087

 

 

5,340,823

 

Gross Profit

 

 

3,210,184

 

 

4,909,880

 

 

6,442,038

 

 

8,698,090

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

4,085,945

 

 

3,201,831

 

 

9,078,774

 

 

5,964,811

 

Litigation

 

 

 

 

2,346,914

 

 

 

 

2,446,072

 

Research and development

 

 

386,878

 

 

298,196

 

 

723,719

 

 

554,221

 

Depreciation and amortization

 

 

118,415

 

 

94,940

 

 

233,888

 

 

182,164

 

Total Operating Expenses

 

 

4,591,238

 

 

5,941,881

 

 

10,036,381

 

 

9,147,268

 

 

 

 

 

 

 

 

 

 

 

Net Operating Loss

 

 

(1,381,054

)

 

(1,032,001

)

 

(3,594,343

)

 

(449,178

)

 

 

 

 

 

 

 

 

 

 

Non-Operating Income/(Expense)

 

 

 

 

 

 

 

 

 

Gain/(Loss) on currency exchange

 

 

1,239

 

 

(2,594

)

 

(14,478

)

 

(13,091

)

(Loss)/Gain on disposal of fixed assets, net

 

 

 

 

(5,522

)

 

736

 

 

(5,522

)

Interest income, net

 

 

9,950

 

 

(5,002

)

 

19,721

 

 

14,028

 

TOTAL OTHER INCOME/(EXPENSE)

 

 

11,189

 

 

(13,118

)

 

5,979

 

 

(4,585

)

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(1,369,865

)

 

(1,045,119

)

 

(3,588,364

)

 

(453,763

)

 

 

 

 

 

 

 

 

 

 

Income Tax Benefit/(Expense)

 

 

245,316

 

 

(30,919

)

 

1,187,677

 

 

(172,847

)

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(1,124,549

)

$

(1,076,038

)

$

(2,400,687

)

$

(626,610

)

 

 

 

 

 

 

 

 

 

 

NET LOSS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.03

)

$

(0.03

)

$

(0.05

)

$

(0.02

)

Diluted

 

$

(0.03

)

$

(0.03

)

$

(0.05

)

$

(0.02

)

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,489,853

 

 

40,361,924

 

 

44,226,936

 

 

40,018,559

 

Diluted

 

 

44,489,853

 

 

40,361,924

 

 

44,226,936

 

 

40,018,559

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

For the

Six Months Ended

 

 

June 30,

 

 

2021

2020

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Net Loss

 

$

(2,400,687

)

$

(626,610

)

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

 

 

 

 

 

Stock-based compensation expense

 

 

1,339,356

 

 

784,821

 

Stock-based litigation settlement expense

 

 

 

 

1,285,102

 

Depreciation and amortization

 

 

233,888

 

 

182,164

 

Deferred income taxes

 

 

(1,201,956

)

 

(145,770

)

(Gain)/Loss on disposal of fixed assets

 

 

(736

)

 

5,522

 

Changes in operating assets and liabilities:

 

 

 

 

 

(Increase)/Decrease in accounts receivable

 

 

(4,446

)

 

268,619

 

Increase in inventory

 

 

(732,978

)

 

(1,278,811

)

Decrease/(Increase) in prepaid expenses and other assets

 

 

346,227

 

 

(156,316

)

Increase in accounts payable

 

 

380,733

 

 

347,350

 

Increase in accrued payroll and related taxes

 

 

103,196

 

 

333,272

 

(Decrease)/Increase in accrued expenses

 

 

(838,747

)

 

1,389,588

 

Increase in accrued tax liability

 

 

 

 

318,618

 

NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES

 

 

(2,776,150

)

 

2,707,549

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Purchases of property and equipment

 

 

(152,223

)

 

(363,750

)

Proceeds from disposal of property and equipment

 

 

9,065

 

 

 

Purchases of intangible assets

 

 

(23,978

)

 

(149,523

)

NET CASH USED IN INVESTING ACTIVITIES

 

 

(167,136

)

 

(513,273

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

Borrowings from indebtedness

 

 

 

 

3,500,000

 

Proceeds from issuance of equity

 

 

1,230,000

 

 

26,567,861

 

Common stock issuance as settlement for litigation

 

 

938,094

 

 

 

Payments on finance lease liability

 

 

(1,616

)

 

(3,717

)

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

2,166,478

 

 

30,064,144

 

 

 

 

 

 

 

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(776,808

)

 

32,258,420

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

27,315,286

 

 

5,870,929

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

26,538,478

 

$

38,129,349

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

Cash paid during the periods for:

 

 

 

 

 

Interest

 

$

47

 

$

13,554

 

Income Taxes

 

$

850

 

$

 

 

 

 

 

 

 

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

 

 

 

 

 

Issuance of common stock as compensation

 

$

153,446

 

$

120,004

 

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 six months ended June 30, 2021 and 2020:

 

 

 

 

 

 

 

 

 

 

Three Months

Six Months

Ended June 30,

Ended June 30,

 

2021

2020

2021

2020

Net Sales

 

 

 

 

 

 

 

Domestic

$

4,597,797

$

5,557,577

$

9,010,214

$

10,430,343

International

 

859,694

 

853,043

 

1,838,600

 

1,837,910

Novel Therapies

 

70,683

 

1,298,284

 

110,311

 

1,770,660

Total

$

5,528,174

$

7,708,904

$

10,959,125

$

14,038,913

REPRO MED SYSTEMS, INC.

SUPPLEMENTAL INFORMATION

(UNAUDITED)

 

A reconciliation of our non-GAAP measures is below:

 

 

 

Three Months Ended

Six Months Ended

Reconciliation of GAAP Net (Loss)

June 30,

June 30,

to Non-GAAP Adjusted EBITDA:

2021

2020

2021

2020

GAAP Net Loss

$

(1,124,549

)

$

(1,076,038

)

$

(2,400,687

)

$

(626,610

)

Tax (Benefit)/Expense

 

(245,316

)

 

30,919

 

 

(1,187,677

)

 

172,847

 

Depreciation and Amortization

 

118,415

 

 

94,940

 

 

233,888

 

 

182,164

 

Interest Income, Net

 

(9,950

)

 

5,002

 

 

(19,721

)

 

(14,028

)

Reorganization Charges

 

224,605

 

 

 

 

1,193,880

 

 

 

Discontinued Product Expense

 

 

 

(31,581

)

 

 

 

77,977

 

Litigation Expenses

 

 

 

2,346,914

 

 

 

 

2,446,071

 

Manufacturing Initiative Expenses

 

149,718

 

 

25,957

 

 

201,441

 

 

135,759

 

Stock-based Compensation Expense

 

605,172

 

 

423,853

 

 

1,339,356

 

 

784,821

 

Non-GAAP Adjusted EBITDA

$

(281,905

)

$

1,819,966

 

$

(639,520

)

$

3,159,001

 

 

 

Three Months Ended

 

Six Months Ended

Reconciliation of Reported Diluted EPS

 

June 30,

 

June 30,

to Non-GAAP Adjusted Diluted EPS:

 

2021

 

2020

 

2021

2020

Reported Diluted Earnings Per Share

 

$

(0.03

)

 

$

(0.02

)

 

$

(0.05

)

$

(0.01

)

Reorganization Charges

 

 

0.01

 

 

 

 

 

 

0.03

 

 

 

Discontinued Product Expense

 

 

 

 

 

 

 

 

 

 

 

Litigation Expenses

 

 

 

 

 

0.06

 

 

 

 

 

0.06

 

Manufacturing Initiative Expenses

 

 

 

 

 

 

 

 

 

 

 

Stock-based Compensation Expense

 

 

 

 

 

 

 

 

0.01

 

 

 

Tax (Expense) Adjustment

 

 

 

 

 

(0.02

)

 

 

(0.01

)

 

(0.01

)

Non-GAAP Adjusted Diluted Earnings Per Share

 

$

(0.02

)

 

$

0.02

 

 

$

(0.02

)

$

0.04

 

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 six months ended June 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 included in Stock-based Compensation Expense in calculating Adjusted Diluted EPS.

Contacts

Investor Contact:
Greg Chodaczek

347-620-7010

investor@korumedical.com