KORU Medical Systems, Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights:

• Revenue: Third quarter revenues reached $8.2 million, a 17% increase year-over-year, marking the third consecutive quarter of double-digit revenue growth.
• Gross Profit/Margin: Gross profit grew 19% year-over-year, and gross margin improved 140 basis points to 63.4%.
• Cash Position: Ending cash balance was $8.8 million, with a 60% reduction in year-to-date cash usage compared to 2023.
• Product Launches/Filings: Next-generation pump 510(k) submission moved to mid-2025; rare disease biologic 510(k) filing rescheduled to 2025.
• Novel Therapies Pipeline: 16 collaborations covering broad disease states, with potential for 6 commercial drug launches by 2026; positive study results for KORU FreedomEdge pump in oncology infusion.

Segment Performance:

• Domestic Core: Revenues totaled $6.4 million, representing 12% year-over-year growth and 10% year-to-date growth, contributing significantly to overall revenue.
• International Core: Quarterly revenue was $1.1 million, with 5% year-over-year growth and 38% year-to-date growth, excluding residual effects of Q2 BSI stocking orders. Normalized growth excluding those effects would be ~24%.
• Novel Therapies: Revenues were $600,000, marking 276% year-over-year growth and 46% year-to-date growth, driven by new collaborations and clinical trial orders.

Guidance:

• Revenue: Raised revenue guidance to $32.750 million to $33.250 million, representing 15%-17% growth.
• Gross Margin: Raised gross margin guidance to 62%-63%.
• Cash Flow: Anticipate cash flow breakeven in the fourth quarter and end the year with a cash balance of at least $8.8 million.
• 510(k) Timing: Next-generation pump 510(k) submission expected in mid-2025; rare disease biologic 510(k) filing in 2025.

Risks:

• Supply Chain: Higher inventory due to macroeconomic supply chain mitigations like dock strikes and hurricanes.
• Product Delays: Delays in 510(k) submissions for next-generation pump and rare disease biologic, but no material impact on revenues expected.

Question and Answer: Q: Color on next-generation pump delay and launch plans A: Delay was due to consumables; new pump still expected in early 2025, 510(k) submission mid-2025, launch near end of 2025, no material revenue impact.

Q: Commercial team, sales reps, territories A: US has ~5 sales reps covering key accounts; international works with 26 distributors, CCO led distribution meeting, expanding into new markets like Austria.

Q: 510(k) filings for drugs, SCIG market commentary A: Rare disease biologics and oncology biologic filings in parallel mid-2025 and end-2025; SCIG market growing high single digits, KORU outpacing with share gains.

Q: Prefilled syringe adoption, Japan commercialization A: Prefilled syringe adoption at 30%, market share gains driving US growth; Japan distribution finalized, sales early 2025.

Q: Macro issues, SCHOTT partnership A: Inventory grew due to supply chain mitigations; SCHOTT partnership progressing, optimizing prefilled syringes and pipeline collaborations.