KORU Medical Systems Reports Fourth Quarter and Full Year 2020 Financial Results

KORU Medical Systems Reports Fourth Quarter and Full Year 2020 Financial Results




KORU Medical Systems Reports Fourth Quarter and Full Year 2020 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 fourth quarter and full year ended December 31, 2020.

2020 Full Year Financial Highlights:

  • Net revenue of $24.2 million
  • Gross margin of 62%
  • Net loss of $1.2 million
  • Ended the year with $27.3 million in cash and cash equivalents

Q4 2020 Financial Highlights:

  • Net revenue of $4.1 million
  • Gross margin of 57%
  • Net loss of $0.8 million

“Like many companies in the healthcare sector, 2020 was a challenging year for KORU Medical,” said Jim Beck, Interim Chief Executive Officer. “Despite these challenges, we made progress on many fronts and our employees have remained steadfast in their commitment to improving patients’ lives through the use of our specialty infusion solutions. As we move into 2021, our Company remains focused on executing our long-term strategies to drive growth and expand the market for subcutaneous infusions for life-saving therapies. We are excited about our new CEO and are confident that under Linda Tharby’s direction, KORU Medical is well positioned for our next phase of growth.”

2020 Full Year Financial Results

Net sales were $24.2 million for 2020, a 4.4% increase from $23.2 million in 2019. Growth was primarily driven by an increase in product sales volume and higher novel therapies sales of $0.9 million, offset by higher allowances which include (i) rebates resulting from the net impact of pricing increases at our largest distributor in the second half of 2019, and (ii) pricing decreases and growth rebates to secure our contractual position with several large customers in 2020. Further increasing allowances were payment discounts and distribution fees at our largest distributor under new contract terms entered into the fourth quarter of 2019.

Gross margin was 62% in 2020 compared to 64% in 2019. The decrease was primarily driven by the higher allowances as described above.

Total operating expenses increased 13% to $16.2 million in 2020 compared to $14.3 million in 2019. The increase was primarily driven by salary and related benefits and consulting fees related to marketing, regulatory and strategic initiatives, partially offset by lower trade show and travel expenses due to COVID-19 related travel restrictions and lower legal fees.

Net loss was $1.2 million in 2020, which includes the non-cash settlement expense of $2.2 million, compared to net income of $0.6 million in 2019.

Adjusted EBITDA for 2020 was $3.7 million compared to $6.2 million in 2019.

Our inventory position grew from $2.4 million at December 31, 2019 to $6.8 million at December 31, 2020 mostly to ensure timely order fulfillment as we transition manufacturing of our needle sets and tubing products for supply continuity to Command Medical Products, Inc. As the transition is completed this inventory is expected to convert to a source of cash in the future

Cash and cash equivalents were $27.3 million as of December 31, 2020.

Q4 2020 Financial Results

Net sales were $4.1 million for Q4 2020, a 34.8% decrease from $6.2 million in Q4 2019. Net sales were down primarily due to inventory in the channel from the precautionary buying related to COVID-19 in the first half of the year and the large early order placed in the third quarter of 2020, as well as lower international sales and novel therapies sales, which currently includes clinical trial sales. Higher allowances also contributed to lower net sales in the quarter.

Gross margin was 57% in Q4 2020 compared to 63% in Q4 2019, primarily driven by lower net sales for reasons described above.

Total operating expenses decreased 15.7% to $3.5 million in Q4 2020 compared to $4.1 million in Q4 2019. The decrease was primarily due to lower litigation expense and lower bonus accrual, partially offset by consulting for sustainability and strategic initiatives.

Net loss was $0.8 million in Q4 2020, compared to a net loss of $0.1 million in Q4 2019.

Adjusted EBITDA for Q4 2020 was ($0.3) million compared to $1.5 million in Q4 2019.

Financial Guidance

While KORU Medical Systems does not intend to provide quarterly guidance in the future, and given the timing of its release in the quarter, the Company expects net sales for the first quarter of 2021 to be at least $5.0 million.

Stock Repurchase Plan

As announced on November 16, 2020, the Board of Directors authorized a stock repurchase program under which the Company may purchase up to $10.0 million of its outstanding common stock through December 31, 2021. Through December 31, 2020, the Company had acquired 683,271 shares of its outstanding common stock for a total purchase price of $3.5 million.

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 that involve risks and uncertainties. Forward-looking statements can be identified by words such as “may,” “believe” and “enables.” 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 COVID-19, future operating results, availability of investment opportunities, market fluctuations, 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 March 23, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,315,286

 

 

$

5,870,929

 

Accounts receivable less allowance for doubtful accounts of $24,469 and $32,645 for December 31, 2020, and December 31, 2019, respectively

 

 

2,572,954

 

 

 

3,234,521

 

Inventory

 

 

6,829,772

 

 

 

2,388,477

 

Prepaid expenses

 

 

807,780

 

 

 

387,396

 

TOTAL CURRENT ASSETS

 

 

37,525,792

 

 

 

11,881,323

 

Property and equipment, net

 

 

1,167,623

 

 

 

611,846

 

Intangible assets, net of accumulated amortization of $199,899 and $288,967 at December 31, 2020 and December 31, 2019, respectively

 

 

843,587

 

 

 

807,135

 

Operating lease right-of-use assets

 

 

236,846

 

 

 

373,734

 

Deferred income tax assets, net

 

 

125,274

 

 

 

188,241

 

Other assets

 

 

19,812

 

 

 

19,582

 

TOTAL ASSETS

 

$

39,918,934

 

 

$

13,881,861

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable

 

$

624,920

 

 

$

572,656

 

Accrued expenses

 

 

2,610,413

 

 

 

1,296,612

 

Accrued payroll and related taxes

 

 

287,130

 

 

 

190,265

 

Accrued tax liability

 

 

 

 

 

204,572

 

Finance lease liability – current

 

 

2,646

 

 

 

5,296

 

Operating lease liability – current

 

 

141,293

 

 

 

136,888

 

TOTAL CURRENT LIABILITIES

 

 

3,666,402

 

 

 

2,406,289

 

Finance lease liability, net of current portion

 

 

 

 

 

2,646

 

Operating lease liability, net of current portion

 

 

95,553

 

 

 

236,846

 

TOTAL LIABILITIES

 

 

3,761,955

 

 

 

2,645,781

 

Commitments and contingencies (Refer to Note 9)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 75,000,000 shares authorized, 46,680,119 and 42,239,788 shares issued; 43,259,617 and 39,502,557 shares outstanding at December 31, 2020, and December 31, 2019, respectively

 

 

466,801

 

 

 

422,398

 

Additional paid-in capital

 

 

35,880,986

 

 

 

6,293,069

 

Treasury stock, 3,420,502 shares and 2,737,231 shares at December 31, 2020 and December 31, 2019, respectively, at cost

 

 

(3,843,562

)

 

 

(344,204

)

Retained earnings

 

 

3,652,754

 

 

 

4,864,817

 

TOTAL STOCKHOLDERS’ EQUITY

 

 

36,156,979

 

 

 

11,236,080

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

39,918,934

 

 

$

13,881,861

 

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

Three Months Ended

 

 

 

For the

Years Ended

 

 

 

December 31,

 

 

 

December 31,

 

 

 

2020

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

4,057,220

 

$

6,222,134

 

 

$

24,176,448

 

 

$

23,162,621

 

 

Cost of goods sold

 

 

1,759,947

 

 

2,274,850

 

 

 

9,240,362

 

 

 

8,308,811

 

 

Gross Profit

 

 

2,297,273

 

 

3,947,284

 

 

 

14,936,086

 

 

 

14,853,810

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

2,988,330

 

 

2,794,861

 

 

 

12,028,310

 

 

 

9,771,744

 

 

Litigation

 

 

466

 

 

934,412

 

 

 

2,447,213

 

 

 

3,415,683

 

 

Research and development

 

 

352,116

 

 

290,020

 

 

 

1,296,753

 

 

 

740,475

 

 

Depreciation and amortization

 

 

120,794

 

 

87,635

 

 

 

418,595

 

 

 

340,229

 

 

Total Operating Expenses

 

 

3,461,706

 

 

4,106,928

 

 

 

16,190,871

 

 

 

14,268,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating (Loss)/Profit

 

 

(1,164,433

)

 

(159,644)

 

 

 

(1,254,785

)

 

 

585,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain/(Loss) on currency exchange

 

 

12,700

 

 

2,529

 

 

 

1,536

 

 

 

(17,754

)

 

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

 

 

 

 

(1,910)

 

 

 

16,591

 

 

 

47,830

 

 

Interest income, net

 

 

18,705

 

 

21,572

 

 

 

42,395

 

 

 

80,663

 

 

TOTAL OTHER INCOME

 

 

31,405

 

 

22,191

 

 

 

60,522

 

 

 

110,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS)/INCOME BEFORE INCOME TAXES

 

 

(1,133,028

)

 

(137,453)

 

 

 

(1,194,263

)

 

 

696,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Benefit/(Expense)

 

 

298,400

 

 

57,197

 

 

 

(17,800

)

 

 

(132,069

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS)/INCOME

 

$

(834,628

)

$

(80,256

 

$

(1,212,063

)

 

$

564,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS)/INCOME PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.02

)

$

0.00

 

 

$

(0.03

)

 

$

0.01

 

 

Diluted

 

$

(0.02

)

$

0.00

 

 

$

(0.03

)

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

43,732,728

 

 

39,502,152

 

 

 

41,929,736

 

 

 

38,778,074

 

 

Diluted

 

 

43,732,728

 

 

39,502,152

 

 

 

41,929,736

 

 

 

39,061,310

 

 

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended

December 31,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net (Loss)/Income

 

$

(1,212,063

)

 

$

564,349

 

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

1,618,732

 

 

 

1,204,844

 

Stock-based litigation settlement expense

 

 

1,285,102

 

 

 

 

Depreciation and amortization

 

 

418,595

 

 

 

340,229

 

Gain on disposal of fixed assets

 

 

(16,591

)

 

 

(47,830

)

Deferred capital gain – building lease

 

 

 

 

 

(3,763

)

Deferred income taxes

 

 

62,967

 

 

 

(186,775

)

Provision for doubtful accounts

 

 

(8,176

)

 

 

(4,855

)

Abandonment of intangible assets

 

 

41,919

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Decrease/(Increase) in accounts receivable

 

 

669,743

 

 

 

(1,803,812

)

Increase in inventory

 

 

(4,441,295

)

 

 

(284,598

)

Increase in prepaid expenses and other assets

 

 

(420,614

)

 

 

(140,805

)

Increase in accounts payable

 

 

52,264

 

 

 

119,158

 

Increase/(Decrease) in accrued payroll and related taxes

 

 

96,865

 

 

 

(231,449

)

Increase in accrued expenses

 

 

1,313,801

 

 

 

607,963

 

(Decrease)/Increase in accrued tax liability

 

 

(204,572

)

 

 

187,964

 

NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES

 

 

(743,323

)

 

 

320,620

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(920,604

)

 

 

(201,174

)

Purchases of intangible assets

 

 

(140,548

)

 

 

(224,365

)

Proceeds from certificates of deposit

 

 

 

 

 

1,517,927

 

Proceeds from disposal of property and equipment

 

 

25,000

 

 

 

217,821

 

NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES

 

 

(1,036,152

)

 

 

1,310,209

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from issuance of equity

 

 

26,728,486

 

 

 

508,900

 

Purchase of treasury stock

 

 

(3,499,358

)

 

 

 

Borrowings from indebtedness

 

 

4,976,508

 

 

 

 

Payments on indebtedness

 

 

(4,976,508

)

 

 

 

Payments on finance lease liability

 

 

(5,296

)

 

 

(4,783

)

Payment for cancelled shares

 

 

 

 

 

(2,820

)

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

23,223,832

 

 

 

501,297

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

 

21,444,357

 

 

 

2,132,126

 

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

 

 

5,870,929

 

 

 

3,738,803

 

CASH AND CASH EQUIVALENTS, END OF YEAR

 

$

27,315,286

 

 

$

5,870,929

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

Cash paid during the years for:

 

 

 

 

 

 

 

 

Interest

 

$

27,736

 

 

$

342

 

Income taxes

 

$

321,983

 

 

$

130,879

 

 

 

 

 

 

 

 

 

 

Schedule of Non-Cash Investing and Financing Activities:

Non-cash equity issuance for the EMED Settlement

$

938,094

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Year Ended

Reconciliation of GAAP Net (Loss)/Income

 

December 31,

 

 

December 31,

to Non-GAAP Adjusted EBITDA:

 

2020

 

 

2019

 

 

2020

 

2019

GAAP Net (Loss)/Income

 

$

(834,628

)

 

$

(80,256)

 

 

$

(1,212,063

)

$

564,349

 

Income Tax Expense

 

 

(298,400

)

 

 

(57,197)

 

 

 

17,800

 

 

132,069

 

Depreciation and Amortization

 

 

120,794

 

 

 

87,635

 

 

 

418,595

 

 

340,229

 

Interest Income, Net

 

 

(18,705

)

 

 

(21,572

)

 

 

(42,395

)

 

(80,663

)

Reorganization Charges

 

 

95,700

 

 

 

 

 

 

95,700

 

 

354,926

 

Discontinued Product Expense

 

 

(459

)

 

 

 

 

 

70,859

 

 

 

Litigation

 

 

466

 

 

 

934,212

 

 

 

2,447,213

 

 

3,415,683

 

Manufacturing Initiative Expenses

 

 

51,723

 

 

 

110,282

 

 

 

246,527

 

 

230,668

 

Stock-based Compensation Expense

 

 

607,592

 

 

 

564,069

 

 

 

1,618,732

 

 

1,204,844

 

Non-GAAP Adjusted EBITDA

 

$

(275,917

)

 

$

1,537,173

 

 

$

3,660,968

 

$

6,162,105

 

 

Contacts

Investor Contact:
Greg Chodaczek

347-620-7010

investor@korumedical.com