KORU Medical Systems Announces Record 2019 Fourth Quarter and Full Year Financial Results

Conference Call Scheduled for February 26 at 9:00 am ET

Q4 2019 Highlights

  • Net sales rose 45.7% to $6.2 million
  • Gross margin of 63.4%
  • Net loss narrowed to $0.1 million
  • Adjusted EBITDA increased 47.3% to $1.1 million

Full Year 2019 Highlights

  • Net sales rose 33.5% to a record $23.2 million
  • Gross margin increased to 64.1%
  • Net income of $0.6 million
  • Adjusted EBITDA increased 55.9% to $5.6 million
  • Cash & cash equivalents increased to $5.9 million

CHESTER, N.Y.–(BUSINESS WIRE)–Repro Med Systems, Inc. dba KORU Medical Systems (NASDAQ: KRMD) (“KORU Medical” or the “Company”) today announced financial results for the fourth quarter (“Q4 2019”) and full year ended December 31, 2019.

“2019 was a milestone year for KORU Medical,” said Don Pettigrew, President and CEO. “Four consecutive quarters of comparative net sales growth produced record annual net sales, expanded gross margins, net income of $0.6 million, and record Adjusted EBITDA of $5.6 million. We continued our participation in multiple clinical trials, accelerated our international expansion plans, strengthened our leadership team, and capped off our Nasdaq up-listing by ringing the closing bell.”

He added, “As we look ahead to 2020, our focus is on capitalizing on multiple industry tailwinds in PIDD and CIDP, which combine to represent an estimated total addressable U.S. market of $300 million. We are also growing our pharmaceutical relationships with an emphasis on new subcutaneous drugs coming to market, expanded indications beyond our primary disease states, and new geographic regions. We look forward to the U.S. launch of the HIgH-Flo Super26™ Subcutaneous Safety Needle Set in Q1 2020, with anticipated full commercialization to follow shortly after.”

Q4 2019 Overview

Net sales rose 45.7% to $6.2 million in Q4 2019 from $4.3 million in Q4 2018, with growth in all product categories (pumps, needle sets, tubing). This growth was driven by the Company’s continued success in expanding its U.S. presence in the Primary Immune Deficiency Disease (“PIDD”) and Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”) markets, higher international sales, greater clinical trial participation, and to a lesser extent price increases.

Gross profit in Q4 2019 rose to $3.9 million from $2.7 million in Q4 2018, primarily due to increased sales volume. Gross margin of 63.4% was stable compared to 63.5% in Q4 2018, reflecting the integration of new hires in production during the quarter partially offset by price increases.

Total operating expenses for Q4 2019 rose to $4.1 million from $3.2 million in Q4 2018. Selling, general & administrative expenses were $2.8 million, or 44.9% of net sales, compared to $2.7 million, or 62.8% of net sales in Q4 2018. Research and development expenses increased to $0.3 million from $0.1 million in Q4 2018, reflecting expanded product development initiatives and increased headcount. Litigation costs increased to $0.9 million from $0.3 million in Q4 2018, due to continued defense and increased legal activity against our competitor. We have had several favorable rulings in the New York and Texas courts dismissing those cases and have filed motions for court costs and attorney fees of which one fee motion has been recommended to be granted by the Magistrate Judge in New York, and the fee motion in Texas is stayed pending appeal of the case.

Net loss for Q4 2019 narrowed to less than $0.1 million, or $0.00 per diluted share, from a net loss of $0.4 million, or $0.01 per diluted share, in Q4 2018.

Q4 2019 Adjusted EBITDA rose 47.3% to $1.1 million from Adjusted EBITDA of $0.8 million in Q4 2018. Adjusted EBITDA excludes from net income: tax expense, depreciation and amortization, interest income, operating expenses associated with the Company’s organizational changes prior to March 31, 2019, litigation costs, and stock option expense.

Cash and equivalents as of December 31, 2019 totaled $5.9 million. Cash flow of $2.1 million for the twelve months ended December 31, 2019 included a $1.8 million increase in accounts receivable as well as a $0.3 million increase in inventory both commensurate with sales growth. The increase also included $1.5 million in proceeds realized from the maturation of a Certificate of Deposit in Q2 2019 and $0.5 million associated with the exercise of warrants and options in 2019.

Non-GAAP Measures

This press release includes the non-GAAP financial measures of “Adjusted EBITDA” that are 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, these non-GAAP measures are 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 measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. A reconciliation of our non-GAAP measures is included in an attachment to this press release.

Conference Call

Management will host a conference call on Wednesday, February 26, 2020 at 9:00 am ET to discuss Q4 2019 and full year 2019 results and business activities.

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 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 about the Company, please visit www.korumedical.com.

Forward-looking Statements

This press release may contain forward-looking statements that involve risks and uncertainties. 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. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2019. All information provided in this release and in the attachments is as of February 25, 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

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,870,929

 

 

$

3,738,803

 

Certificates of deposit

 

 

 

 

 

1,517,927

 

Accounts receivable less allowance for doubtful accounts of $32,645 and $37,500 for December 31, 2019, and December 31, 2018, respectively

 

 

3,234,521

 

 

 

1,425,854

 

Inventory

 

 

2,388,477

 

 

 

2,103,879

 

Prepaid expenses

 

 

387,396

 

 

 

246,591

 

TOTAL CURRENT ASSETS

 

 

11,881,323

 

 

 

9,033,054

 

Property and equipment, net

 

 

611,846

 

 

 

858,781

 

Patents, net of accumulated amortization of $288,967 and $239,581 at December 31, 2019 and December 31, 2018, respectively

 

 

807,135

 

 

 

632,156

 

Right of use assets, net

 

 

373,734

 

 

 

 

Deferred tax asset

 

 

188,241

 

 

 

1,466

 

Other assets

 

 

19,582

 

 

 

19,582

 

TOTAL ASSETS

 

$

13,881,861

 

 

$

10,545,039

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Deferred capital gain – current

 

$

 

 

$

3,763

 

Accounts payable

 

 

572,656

 

 

 

453,498

 

Accrued expenses

 

 

1,296,612

 

 

 

688,649

 

Accrued payroll and related taxes

 

 

190,265

 

 

 

421,714

 

Accrued tax liability

 

 

204,572

 

 

 

16,608

 

Finance lease liability – current

 

 

5,296

 

 

 

 

Operating lease liability – current

 

 

136,888

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

2,406,289

 

 

 

1,584,232

 

Finance lease liability, net of current portion

 

 

2,646

 

 

 

 

Operating lease liability, net of current portion

 

 

236,846

 

 

 

 

TOTAL LIABILITIES

 

 

2,645,781

 

 

 

1,584,232

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 75,000,000 shares authorized, 42,239,788 and 40,932,911 shares issued; 39,502,557 and 38,195,680 shares outstanding at December 31, 2019, and December 31, 2018, respectively

 

 

422,398

 

 

 

409,329

 

Additional paid-in capital

 

 

6,293,069

 

 

 

4,595,214

 

Retained earnings

 

 

4,864,817

 

 

 

4,300,468

 

 

 

 

11,580,284

 

 

 

9,305,011

 

Less: Treasury stock, 2,737,231 shares at December 31, 2019 and December 31, 2018, respectively, at cost

 

 

(344,204

)

 

 

(344,204

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

11,236,080

 

 

 

8,960,807

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

13,881,861

 

 

$

10,545,039

 

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF OPERATIONS

 

 

 

For the

Three Months Ended

 

 

For the

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

6,222,134

 

 

$

4,271,001

 

 

$

23,162,621

 

 

$

17,353,737

 

Cost of goods sold

 

 

2,274,850

 

 

 

1,557,489

 

 

 

8,308,811

 

 

 

6,543,249

 

Gross Profit

 

 

3,947,284

 

 

 

2,713,512

 

 

 

14,853,810

 

 

 

10,810,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

2,794,861

 

 

 

2,682,838

 

 

 

9,771,744

 

 

 

8,196,562

 

Litigation

 

 

934,412

 

 

 

306,215

 

 

 

3,415,683

 

 

 

899,003

 

Research and development

 

 

290,020

 

 

 

80,389

 

 

 

740,475

 

 

 

241,124

 

Depreciation and amortization

 

 

87,635

 

 

 

80,362

 

 

 

340,229

 

 

 

309,263

 

Total Operating Expenses

 

 

4,106,928

 

 

 

3,149,804

 

 

 

14,268,131

 

 

 

9,645,952

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating (Loss)/Profit

 

 

(159,644

)

 

 

(436,292

)

 

 

585,679

 

 

 

1,164,536

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Operating Income/(Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain/(Loss) on currency exchange

 

 

2,529

 

 

 

(4,363

)

 

 

(17,754

)

 

 

(20,620

)

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

 

 

(1,910

)

 

 

(1,069

)

 

 

47,830

 

 

 

4,930

 

Interest, net

 

 

21,572

 

 

 

15,015

 

 

 

80,663

 

 

 

28,104

 

TOTAL OTHER INCOME

 

 

22,191

 

 

 

9,583

 

 

 

110,739

 

 

 

12,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE TAXES

 

 

(137,453

)

 

 

(426,709

)

 

 

696,418

 

 

 

1,176,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax (Benefit)/Expense

 

 

(57,197

)

 

 

(71,576

)

 

 

132,069

 

 

 

266,380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS)/INCOME

 

$

(80,256

)

 

$

(355,133

)

 

$

564,349

 

 

$

910,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.00

 

 

$

(0.01)

 

 

$

0.01

 

 

$

0.02

 

Diluted

 

$

0.00

 

 

$

(0.01)

 

 

$

0.01

 

 

$

0.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

39,502,152

 

 

 

38,202,539

 

 

 

38,778,074

 

 

 

38,128,260

 

Diluted

 

 

39,729,309

 

 

 

39,028,511

 

 

 

39,061,310

 

 

 

38,921,622

 

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

 

 

 

For the Years Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net Income

 

$

564,349

 

 

$

910,570

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Stock based compensation expense

 

 

1,204,844

 

 

 

366,081

 

Depreciation and amortization

 

 

340,229

 

 

 

309,263

 

Gain on sale of fixed asset

 

 

(47,830

)

 

 

(4,930

)

Deferred capital gain

 

 

(3,763

)

 

 

(22,480

)

Deferred taxes

 

 

(186,775

)

 

 

(23,141

)

Provision for returns and doubtful accounts

 

 

(4,855

)

 

 

(39,567

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

(Increase)/ Decrease in accounts receivable

 

 

(1,803,812

)

 

 

475,662

 

Increase in inventory

 

 

(284,598

)

 

 

(445,198

)

Increase in prepaid expense

 

 

(140,805

)

 

 

(75,852

)

Decrease in other assets

 

 

 

 

 

12,000

 

Increase/(Decrease) in accounts payable

 

 

119,158

 

 

 

(900

)

(Decrease)/Increase in accrued payroll and related taxes

 

 

(231,449

)

 

 

86,811

 

Increase in accrued expense

 

 

607,963

 

 

 

30,589

 

Increase/(Decrease) in accrued tax liability

 

 

187,964

 

 

 

(99,246

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

320,620

 

 

 

1,479,662

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Payments for capital expenditures

 

 

(201,174

)

 

 

(297,018

)

Payments for patents

 

 

(224,365

)

 

 

(184,148

)

Purchase of certificate of deposit

 

 

 

 

 

(1,500,000

)

Proceeds from certificates of deposit

 

 

1,517,927

 

 

 

245,342

 

Proceeds on sale of fixed assets

 

 

217,821

 

 

 

6,000

 

NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES

 

 

1,310,209

 

 

 

(1,729,824

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Stock issuances

 

 

508,900

 

 

 

51,250

 

Finance lease

 

 

(4,783

)

 

 

 

Payment for cancelled shares

 

 

(2,820

)

 

 

(36,821

)

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

501,297

 

 

 

14,429

 

 

 

 

 

 

 

 

 

 

Net Increase (Decrease) in CASH AND CASH EQUIVALENTS

 

 

2,132,126

 

 

 

(235,733

)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

 

 

3,738,803

 

 

 

3,974,536

 

CASH AND CASH EQUIVALENTS, END OF YEAR

 

$

5,870,929

 

 

$

3,738,803

 

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

 

Cash paid during the years for:

 

 

 

 

 

 

 

 

Interest

 

$

342

 

 

$

 

Taxes

 

$

130,879

 

 

$

378,000

 

NON-CASH FINANCING AND INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Issuance of common stock as compensation

 

$

316,525

 

 

$

118,041

 

 

REPRO MED SYSTEMS, INC.

RECONCILIATION OF NON-GAAP MEASURES

 

 

 

Three Months Ended

 

 

Twelve Months Ended

Reconciliation of GAAP Net Income

 

December 31,

 

 

December 31,

to Non-GAAP Adjusted EBITDA:

 

2019

 

 

2018

 

 

2019

 

 

2018

GAAP (Loss)/Net Income

 

$

(80,257

)

 

$

(355,133

)

 

$

564,349

 

 

$

910,570

 

Tax (Benefit)/Expense

 

 

(57,197

)

 

 

(71,576

)

 

 

132,069

 

 

 

266,380

 

Depreciation/Amortization

 

 

87,635

 

 

 

80,362

 

 

 

340,229

 

 

 

309,263

 

Interest Income, Net

 

 

(21,572

)

 

 

(15,015

)

 

 

(80,663

)

 

 

(28,104

)

Reorganization Charges

 

 

 

 

 

612,779

 

 

 

354,926

 

 

 

996,447

 

Litigation

 

 

934,412

 

 

 

306,215

 

 

 

3,415,683

 

 

 

899,003

 

Stock Option Expense

 

 

247,544

 

 

 

196,448

 

 

 

888,319

 

 

 

248,040

 

Non-GAAP Adjusted EBITDA

 

$

1,110,565

 

 

$

754,080

 

 

$

5,614,912

 

 

$

3,601,599

 

 

Contacts

The Equity Group Inc.
Devin Sullivan

Senior Vice President

212-836-9608

[email protected]

Kalle Ahl, CFA

Vice President

212-836-9614

[email protected]

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