KORU Medical Systems, Inc. announces 2023 Q3 financial results

KORU Medical Systems, Inc. reported financial results for the third quarter ended September 30, 2023 and updates full year 2023 outlook.

Highlights:

• Third quarter net revenue of $7.0 million, a 10% decline versus prior year
• Novel Therapies net revenue decline of $0.6 million was impacted primarily by a large clinical trial order in the prior year and timing of collaborations
• Domestic Core net revenue of $5.8 million, a 2% decline, reflected a prior year backorder clearance of $0.3 million
• Improved gross margin to 62.0%, an increase of 630 BPS versus prior year, driven by increased manufacturing efficiencies
• Continued strategic, operational expense discipline, ending the quarter with $10.8 million in cash and cash equivalents
• Revised full year 2023 net revenue guidance to $28.0 to $28.5 million, reaffirmed gross margin guidance between 58%-60% for full-year and a planned Q4 exit between 60%-62%, and increased year-end cash balance guidance to greater than $10.5 million
• Announced a new Novel Therapies innovation collaboration and brought the total closed collaborations to 15
• Received a 510(k) clearance for FREEDOM60^® Infusion System as the first and only FDA-cleared device for use with Hizentra^® 50 mL prefilled syringes
• Named Ken Miller, a 30-year healthcare and pharmaceutical executive, as Chief Commercial Officer

“Our third quarter revenues were impacted by our Novel Therapies business due to the timing of collaborations and by our Domestic Core business, which saw lower than anticipated growth in the underlying market. We progressed several initiatives in the quarter aimed at growing our top-line, including expanding our Novel Therapies collaborations, outperforming the U.S. subcutaneous immunoglobulin market, advancing our geographic expansion efforts, and gaining a new 510(k) clearance for a prefilled syringe indication,” said Linda Tharby, KORU Medical’s President and CEO. “We simultaneously advanced our efforts towards profitability and delivered on our gross margin goals despite revenue headwinds by exercising strategic operational expense discipline in light of our current environment. We are confident we have the right plan in place to capitalize on upcoming catalysts, grow our position in our subcutaneous immunoglobulin business, and expand into the larger addressable Novel Therapies market.”

2023 third quarter financial results

Total net revenues decreased $0.8 million, or 9.8%, for the three months ended September 30, 2023, as compared with the same period last year. Novel Therapies net revenues declined by 78.7%, primarily driven by a large clinical trial order of $0.5 million in the prior period and the timing of collaboration revenue. Domestic Core net revenues declined by 2.1% driven by lower consumable volumes as compared to the prior year period, which included a clearing of a $0.3 million consumable backorder. Partially offsetting this decline, was an increase in pump units sold. International Core net revenues declined by 2.8%, driven largely by a tender order in the prior year period, partially offset by growth in several countries.

Gross profit was mostly flat compared to the prior year, with revenue declines offset by a decrease in manufacturing costs. Gross margin increased to 62.0% compared to 55.7% in the third quarter of 2022. The increase was primarily driven by production efficiencies from the outsourced manufacturing initiative and Chester site exit when compared to the prior year.

Operating expenses for the three months ended September 30, 2023, were $6.1 million, up from $5.9 million for the same period last year, driven primarily by an increase of $0.4 million in research and development expense mostly offset by a reduction of $0.2 million in selling, general and administrative expenses.

Net loss for the third quarter of 2023 was $1.4 million, or $(0.03) per diluted share, compared to a net loss of $1.2 million, or ($0.03) per diluted share for the same period of 2022. Net loss included a tax benefit of $0.3 million for the third quarter of 2023.

Assumptions and outlook for full year 2023
For the full year 2023, the Company’s guidance has been revised to reflect the slower anticipated growth in the underlying U.S. subcutaneous immunoglobulin market and the timing of Novel Therapies collaboration wins and expected milestone completion. KORU Medical is updating its 2023 growth outlook on the underlying U.S. subcutaneous immunoglobulin drug market Q4 growth of 3-4% from a prior full year expectation of 5%.

KORU medical outlook:

• Reducing full year 2023 net revenue guidance to $28.0 – $28.5 million, from prior guidance of $31.0 – $32.5 million
• Reaffirming 2023 gross margin guidance between 58%-60% and a planned 2023 exit between 60%-62%
• Increasing cash balance guidance at year-end 2023 to greater than $10.5 million

MB Bureau