Business Wire | Aug 11, 2021 04:01PM EDT

KORU Medical Systems Announces 2021 Second Quarter Financial Results

Aug. 11, 2021

CHESTER, N.Y.--(BUSINESS WIRE)--Aug. 11, 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 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(r) and FreedomEdge(r) Syringe Infusion Drivers, Precision Flow Rate Tubing(tm) and HIgH-Flo Subcutaneous Safety Needle Sets(tm). 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 fordoubtful accounts of $24,469 for June 30, 2,577,400 2,572,954 2021, and December 31, 2020

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 accumulatedamortization of $232,820 and $199,899 at June 834,644 843,587 30, 2021 and December 31, 2020, respectively

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 24,033 95,553 portion

TOTAL LIABILITIES 3,335,158 3,761,955

Commitments and contingencies (Refer to Note 3)

STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, 75,000,000shares authorized, 47,910,676 and 46,680,119shares issued 44,490,174 and 43,259,617 shares 479,106 466,801 outstanding at June 30, 2021, and December 31,2020, respectively

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 (3,843,562 ) (3,843,562 )cost

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 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 2,317,990 2,799,024 4,517,087 5,340,823 sold

Gross Profit 3,210,184 4,909,880 6,442,038 8,698,090



OPERATING EXPENSES

Selling,general and 4,085,945 3,201,831 9,078,774 5,964,811 administrative

Litigation - 2,346,914 - 2,446,072

Research and 386,878 298,196 723,719 554,221 development

Depreciationand 118,415 94,940 233,888 182,164 amortization

TotalOperating 4,591,238 5,941,881 10,036,381 9,147,268 Expenses



Net Operating (1,381,054 ) (1,032,001 ) (3,594,343 ) (449,178 )Loss



Non-OperatingIncome/ (Expense)

Gain/(Loss) oncurrency 1,239 (2,594 ) (14,478 ) (13,091 )exchange

(Loss)/Gain ondisposal of - (5,522 ) 736 (5,522 )fixed assets,net

Interest 9,950 (5,002 ) 19,721 14,028 income, net

TOTAL OTHERINCOME/ 11,189 (13,118 ) 5,979 (4,585 )(EXPENSE)



LOSS BEFORE (1,369,865 ) (1,045,119 ) (3,588,364 ) (453,763 )INCOME TAXES



Income TaxBenefit/ 245,316 (30,919 ) 1,187,677 (172,847 )(Expense)



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 )



WEIGHTEDAVERAGE NUMBEROF COMMON SHARESOUTSTANDING



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.

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 346,227 (156,316 )other assets

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 (2,776,150 ) 2,707,549 ACTIVITIES



CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment (152,223 ) (363,750 )

Proceeds from disposal of property and 9,065 - equipment

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 938,094 - litigation

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 (776,808 ) 32,258,420 EQUIVALENTS

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 $ 938,094 $ 938,094 litigation

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)

The following table summarizes our net sales for the three and six months endedJune 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

REPRO MED SYSTEMS, INC.

SUPPLEMENTAL INFORMATION

(UNAUDITED)

A reconciliation of our non-GAAP measures is below:



Three Months Ended Six Months Ended

Reconciliation of June 30, June 30,GAAP Net (Loss)

to Non-GAAP 2021 2020 2021 2020Adjusted EBITDA:

GAAP Net Loss $ (1,124,549 ) $ (1,076,038 ) $ (2,400,687 ) $ (626,610 )

Tax (Benefit)/ (245,316 ) 30,919 (1,187,677 ) 172,847 Expense

Depreciation and 118,415 94,940 233,888 182,164 Amortization

Interest Income, (9,950 ) 5,002 (19,721 ) (14,028 )Net

Reorganization 224,605 - 1,193,880 - Charges

Discontinued - (31,581 ) - 77,977 Product Expense

Litigation - 2,346,914 - 2,446,071 Expenses

ManufacturingInitiative 149,718 25,957 201,441 135,759 Expenses

Stock-basedCompensation 605,172 423,853 1,339,356 784,821 Expense

Non-GAAP Adjusted $ (281,905 ) $ 1,819,966 $ (639,520 ) $ 3,159,001 EBITDA

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.

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CONTACT: Investor Contact: Greg Chodaczek 347-620-7010 investor@korumedical.com