KORU Medical Systems Announces 2020 First Quarter Financial Results

Montag, 04.05.20 22:52
Newsbild
Bildquelle: Fotolia

CHESTER, N.Y. –

Repro Med Systems, Inc. dba KORU Medical Systems (NASDAQ: KRMD) (“KORU Medical” or the “Company”) today announced financial results for the first quarter ended March 31, 2020 (“Q1 2020”).

“We reported a strong Q1 2020 with net sales, net income, and Adjusted EBITDA rising from Q1 2019,” said Don Pettigrew, President and CEO. “We are an essential business under current New York state guidelines, and experienced minimal operational disruptions from the impact of COVID-19 in the quarter. I am very proud of how our team has responded to the COVID-19 crisis with their commitment, resiliency, and continuing support of our patients and healthcare partners. Our products allow high-risk patients with immune diseases and other chronic conditions to receive treatment at-home and keep them out of institutional settings – important advantages during these challenging times.”

Q1 2020 Overview

The Company continued in Q1 2020 to capitalize on the growth of its primary end markets of Primary Immune Deficiency Diseases (“PIDD”) and Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”) while pursuing longer-term growth initiatives, including broadening pharmaceutical relationships with an emphasis on the numerous new subcutaneous drugs coming to market, expanding indications beyond its primary disease states, and pursuing customers in new geographies.

Net sales rose 27% to $6.3 million in Q1 2020 from $5.0 million in Q1 2019, with growth in all product categories (pumps, needle sets, and tubing). We believe this growth was primarily driven by an increased utilization of our products by PIDD patients and ongoing expansion of Hizentra® into CIDP. Net sales for Q1 2020 also reflected higher clinical trial sales compared to Q1 2019.

Gross profit in Q1 2020 rose 24% to $3.8 million from $3.1 million in Q1 2019, primarily due to increased sales volume. Gross margin of 60% declined from 61% in Q1 2019, reflecting a non-cash $0.1 million obsolescence reserve related to a discontinued legacy product and an increase in overtime, partially offset by price increases; excluding the charge, gross margin in Q1 2020 was 62%.

Total operating expenses for Q1 2020 were stable at $3.2 million when compared to Q1 2019. Selling, general & administrative expenses were $2.8 million, or 44% of net sales, compared to $2.5 million, or 50% of net sales in Q1 2019. Litigation costs declined to $0.1 million from $0.5 million in Q1 2019, reflecting a decreased level of activity with respect to ongoing legal activity with our competitor. Research and development expenses increased to $0.3 million from $0.1 million in Q1 2019, mostly due to increased salary and related benefits due to higher headcount as we continue our commitment to development initiatives.

Net income for Q1 2020 was $0.4 million, or $0.01 per share, as compared to a net loss of $0.1 million, or $0.00 per diluted share, in the prior year period.

Q1 2020 Adjusted EBITDA rose 38% to $1.3 million from Adjusted EBITDA of $0.9 million in Q1 2019. Adjusted EBITDA excludes from net income: tax expense, depreciation and amortization, interest income, net, operating expenses associated with the Company's organizational changes prior to March 31, 2019, discontinued product expense, litigation costs, manufacturing initiative expenses, and stock option expense.

COVID-19 Update

The COVID-19 pandemic has spread to the countries in which the Company, its customers and suppliers conduct business. The Company currently qualifies as an “essential business” under New York state guidelines and its operations remain active. We serve patients that are managing chronic medical conditions and remain committed to doing all we can so that these vulnerable individuals have access to our Freedom Integrated Infusion System, which allows them to utilize home-based drug therapy.

The Company has responded to this crisis by developing and deploying a multi-faceted set of operational and financial initiatives designed to minimize disruptions to its normal business activities and preserve its ability to execute its long-term growth objectives.

To protect the safety, health and well-being of employees, customers, suppliers and communities, we are following federal, state, and local guidelines to ensure safety in all facilities, including: increased frequency of cleaning and disinfecting, social distancing practices, requiring most non-production related team members to work remotely where possible, business travel restrictions, cancellation of certain events, and limitations on visitor access to facilities.

The Company is currently continuing to manufacture and ship products on schedule and is managing its inventory and supply chain to minimize disruptions. That said, there can be no assurance that this will continue in the face of COVID-19 uncertainty.

“We are confident that KORU Medical will successfully navigate the challenges of COVID-19 and remain focused on achieving our long-term growth objectives,” continued Mr. Pettigrew. “We have not experienced any material disruption to our business thus far, continue to execute on our Strategic Plan, and are prudently managing working capital and cash flow. Longer term, we believe that the COVID-19 experience may accelerate the shift of drug infusion therapy to an at-home model and further advance the adoption of subcutaneous immunoglobulin drugs.”

Balance Sheet, Liquidity Initiatives and Credit

Cash and equivalents as of March 31, 2020 totaled $7.4 million, a $1.6 million increase from December 31, 2019. Substantially all of the increase was due to a March 2020 draw down of $1.5 million on the Company’s line of credit, the full amount available at that time.

On April 14, 2020, the Company signed a new $3.5 million revolving line of credit with its lender that extended the above-referenced $1.5 million line of credit, and subsequently drew down on the full amount available out of concern about the potential impact of COVID-19.

On April 20, 2020, the Company entered into an agreement with its lender pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act, providing for a loan in the principal amount of approximately $1.5 million. The loan was funded on April 27, 2020.

On April 27, 2020, the Company entered into an agreement with a division of its lender, to provide up to $2.5 million in financing for equipment purchases from third party vendors.

Additional information regarding these agreements is available in the Company’s public filings.

To date, the Company has not experienced any significant slowdown in customer payments, and the Company believes that cash on hand and cash expected to be generated from future operating activities will be sufficient to fund its operations for the foreseeable future. That said, there can be no assurance that this will continue in the face of COVID-19 uncertainty.

Non-GAAP Measures

This press release includes the non-GAAP financial measure of “Adjusted EBITDA” that is not in accordance with, nor an alternate to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, this non-GAAP measure is 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 our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. The non-GAAP financial measure is meant to supplement, and to be viewed in conjunction with, GAAP financial results. A reconciliation of our non-GAAP measure is included in an attachment to this press release.

Conference Call

Interested parties may participate in the call by dialing:

  • (877) 407-9753 (Domestic) or
  • (201) 493-6739 (International)

Webcast registration: Click Here

Following the live call, a replay will be available for six months on the Company's website, www.korumedical.com under "Investor Relations."

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 “will” and “believe.” 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 risks and uncertainties included under the captions “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as amended, and our most recent Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, which are on file with the SEC and are available on our website at www.korumedical.com/investors and on the SEC website at www.sec.gov. In addition, there are risks and uncertainties with respect to the impact of COVID-19 on our supply chain, operations and financial condition. All information provided in this release and in the attachments is as of May 4, 2020. 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

 

 

 

 

 

 

 

 

 

 

 

March 31,
2020

 

December 31,

 

 

 

(Unaudited)

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,427,679

 

$

5,870,929

 

Accounts receivable less allowance for doubtful accounts of $32,645 at March 31, 2020 and December 31, 2019

 

 

3,419,681

 

 

3,234,521

 

Inventory

 

 

3,089,016

 

 

2,388,477

 

Prepaid expenses

 

 

543,454

 

 

387,396

 

TOTAL CURRENT ASSETS

 

 

14,479,830

 

 

11,881,323

 

Property and equipment, net

 

 

638,670

 

 

611,846

 

Patents, net of accumulated amortization of $303,425 and $288,967 at
March 31, 2020 and December 31, 2019, respectively

 

 

873,225

 

 

807,135

 

Right of use assets, net

 

 

340,118

 

 

373,734

 

Deferred tax asset

 

 

251,444

 

 

188,241

 

Other assets

 

 

19,812

 

 

19,582

 

TOTAL ASSETS

 

$

16,603,099

 

$

13,881,861

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Line of credit payable

 

$

1,500,000

 

$

 

Accounts payable

 

 

1,097,054

 

 

572,656

 

Accrued expenses

 

 

888,318

 

 

1,296,612

 

Accrued payroll and related taxes

 

 

229,836

 

 

190,265

 

Accrued tax liability

 

 

409,703

 

 

204,572

 

Finance lease liability - current

 

 

4,252

 

 

5,296

 

Operating lease liability - current

 

 

138,520

 

 

136,888

 

TOTAL CURRENT LIABILITIES

 

 

4,267,683

 

 

2,406,289

 

Finance lease liability, net of current portion

 

 

1,842

 

 

2,646

 

Operating lease liability, net of current portion

 

 

201,598

 

 

236,846

 

TOTAL LIABILITIES

 

 

4,471,123

 

 

2,645,781

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value; 75,000,000 shares authorized, 42,423,977 and 42,239,788 shares issued,
39,686,746 and 39,502,557 shares outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

424,240

 

 

422,398

 

Additional paid-in capital

 

 

6,737,695

 

 

6,293,069

 

Retained earnings

 

 

5,314,245

 

 

4,864,817

 

 

 

 

12,476,180

 

 

11,580,284

 

Less: Treasury stock, 2,737,231 shares at March 31, 2020 and December 31, 2019, respectively, at cost

 

 

(344,204

)

 

(344,204

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

12,131,976

 

 

11,236,080

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

16,603,099

 

$

13,881,861

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF OPERATIONS

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

For the
Three Months Ended

 

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

6,330,009

 

 

$

4,974,278

 

Cost of goods sold

 

 

2,541,799

 

 

 

1,926,324

 

Gross Profit

 

 

3,788,210

 

 

 

3,047,954

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

2,762,980

 

 

 

2,484,868

 

Litigation

 

 

99,158

 

 

 

492,515

 

Research and development

 

 

256,025

 

 

 

101,959

 

Depreciation and amortization

 

 

87,224

 

 

 

83,651


Quelle: Business Wire



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