EXHIBIT 99.1

 

KORU MEDICAL SYSTEMS ANNOUNCES 2021 THIRD QUARTER FINANCIAL RESULTS

 

CHESTER, NY – November 10, 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 third quarter ended September 30, 2021.

 

Recent Highlights:

 

Achieved net revenue of $6.0 million, a 9% increase versus Q2 2021, marking the third consecutive quarter of positive sequential growth
   
Received FDA 510(k) clearance for CSL Hizentra® 20 ml prefilled syringe with the Freedom Edge® Syringe Infusion System
   
Appointed three leadership team hires and announced an external innovation collaboration
   
Scheduled strategic plan update presentation on December 2, 2021

 

“Our strong third quarter top-line results reflect continued momentum in all areas of our business – core US and international, as well as our novel therapies pipeline,” said Linda Tharby, KORU Medical’s CEO. “I’m proud of the team’s progress this quarter as we strengthen our foundation, continue to build the KORU Medical team, and increase our investment in innovation. We remain focused on continued execution of our strategy, which drives incremental growth and market expansion building on our leadership position in large volume subcutaneous home infusion and extending that position into new drug therapies.”

 

Third Quarter 2021 Financial Results

 

Net revenue was $6.0 million, (0.7)% lower compared with $6.1 million in the prior-year period. Adjusting for net inventory stocking of $0.6 million last year, adjusted net revenue grew 9%, with growth in all areas of our business; domestic core driven by pumps, international driven by consumables and increased novel therapies revenues. Sequential quarterly net revenue growth was 9%, with domestic core growth of 10% driven by pumps and needle sets and growth in novel therapies revenue.

 

Gross margin was 57.9% for the third quarter of 2021, a decline from prior year of 64.8%. The majority of the decline was driven by delays in the transition to our secondary manufacturing source. We also recorded a reserve for in-process material scrap. This was partially offset by favorability in product mix. We are confident in our path to accelerate margin improvement in 2022.

 


 

Total operating expenses for the third quarter of 2021 were $4.8 million, compared to $3.6 million for the same period in 2020. The increase in operating expenses is due to increased spend in support of strategic initiatives including commercialization, regulatory filings, and research and development.

 

Net loss for the third quarter of 2021 was $1.1 million, or $(0.02) per diluted share, compared with net income of $0.2 million, or $0.01 per diluted share for the same period in 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® 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 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 “scheduled”, “our path”, and “look forward”. 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 November 10, 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.

 

Investor Contact:

 

Greg Chodaczek

347-620-7010

investor@korumedical.com

 

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REPRO MED SYSTEMS, INC.

BALANCE SHEETS

(UNAUDITED)

 

    September 30,   December 31,  
    2021   2020  
               
ASSETS              
               
CURRENT ASSETS              
Cash and cash equivalents   $ 26,233,411   $ 27,315,286  
Accounts receivable less allowance for doubtful accounts of $24,469 for September 30, 2021 and December 31, 2020     3,122,665     2,572,954  
Inventory     6,967,932     6,829,772  
Prepaid expenses     1,336,819     807,780  
TOTAL CURRENT ASSETS     37,660,827     37,525,792  
Property and equipment, net     1,159,819     1,167,623  
Intangible assets, net of accumulated amortization of $248,252 and $199,899 at September 30, 2021 and December 31, 2020, respectively     821,071     843,587  
Operating lease right-of-use assets     131,228     236,846  
Deferred income tax assets, net     1,565,334     125,274  
Other assets     19,812     19,812  
TOTAL ASSETS   $ 41,358,091   $ 39,918,934  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY              
               
CURRENT LIABILITIES              
Accounts payable   $ 1,385,413   $ 624,920  
Accrued expenses     2,036,848     2,610,413  
Accrued payroll and related taxes     332,814     287,130  
Finance lease liability – current     414     2,646  
Operating lease liability – current     131,228     141,293  
Note Payable     673,133      
TOTAL CURRENT LIABILITIES     4,559,850     3,666,402  
Operating lease liability, net of current portion         95,553  
TOTAL LIABILITIES     4,559,850     3,761,955  
Commitments and contingencies (Refer to Note 3)              
STOCKHOLDERS’ EQUITY              
Common stock, $0.01 par value, 75,000,000 shares authorized, 47,931,664 and 46,680,119 shares issued 44,511,162 and 43,259,617 shares outstanding at September 30, 2021 and December 31, 2020, respectively     479,317     466,801  
Additional paid-in capital     40,004,197     35,880,986  
Treasury stock, 3,420,502 shares at September 30, 2021 and December 31, 2020, at cost     (3,843,562 )   (3,843,562 )
Retained earnings     158,289     3,652,754  
TOTAL STOCKHOLDERS’ EQUITY     36,798,241     36,156,979  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 41,358,091   $ 39,918,934  

 

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REPRO MED SYSTEMS, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

    Three Months Ended   Nine Months Ended  
    September 30,   September 30,  
    2021   2020   2021   2020  
                           
NET SALES   $ 6,040,544   $ 6,080,315   $ 16,999,669   $ 20,119,228  
Cost of goods sold     2,544,794     2,139,592     7,061,881     7,480,415  
Gross Profit     3,495,750     3,940,723     9,937,788     12,638,813  
                           
OPERATING EXPENSES                          
Selling, general and administrative     3,901,830     3,075,169     12,980,604     9,039,980  
Litigation         675         2,446,747  
Research and development     800,020     390,416     1,523,739     944,637  
Depreciation and amortization     115,934     115,637     349,822     297,801  
Total Operating Expenses     4,817,784     3,581,897     14,854,165     12,729,165  
                           
Net Operating (Loss)/Profit     (1,322,034 )   358,826     (4,916,377 )   (90,352 )
                           
Non-Operating (Expense)/Income                          
(Loss)/Gain on currency exchange     (7,283 )   1,927     (21,761 )   (11,164 )
Gain on disposal of fixed assets, net     273     22,113     1,009     16,591  
Interest (expense)/income, net     (2,838 )   9,662     16,883     23,690  
TOTAL OTHER (EXPENSE)/INCOME     (9,848 )   33,702     (3,869 )   29,117  
                           
(LOSS)/INCOME BEFORE INCOME TAXES     (1,331,882 )   392,528     (4,920,246 )   (61,235 )
                           
Income Tax Benefit/(Expense)     238,104     (143,353 )   1,425,781     (316,200 )
                           
NET (LOSS)/INCOME   $ (1,093,778 ) $ 249,175   $ (3,494,465 ) $ (377,435 )
                           
NET (LOSS)/INCOME PER SHARE                          
                           
Basic   $ (0.02 ) $ 0.01   $ (0.08 ) $ (0.01 )
Diluted   $ (0.02 ) $ 0.01   $ (0.08 ) $ (0.01 )
                           
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING                          
                           
Basic     44,322,335     43,914,542     44,510,021     41,326,815  
Diluted     44,322,335     44,119,511     44,510,021     41,326,815  

 

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REPRO MED SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

    For the
Nine Months Ended
 
    September 30,  
    2021   2020  
               
CASH FLOWS FROM OPERATING ACTIVITIES              
Net Loss   $ (3,494,465 ) $ (377,435 )
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:              
Stock-based compensation expense     1,967,632     1,191,146  
Stock-based litigation settlement expense         1,285,102  
Depreciation and amortization     349,822     297,801  
Deferred income taxes     (1,440,060 )   (161,368 )
Gain on disposal of fixed assets     (1,009 )   (16,591 )
               
Changes in operating assets and liabilities:              
Increase in accounts receivable     (549,711 )   (502,075 )
Increase in inventory     (138,160 )   (3,244,662 )
Increase in prepaid expenses and other assets     (529,039 )   (457,330 )
Increase in accounts payable     760,493     790,414  
Increase in accrued payroll and related taxes     45,684     249,879  
(Decrease)/Increase in accrued expenses     (573,565 )   1,754,970  
Increase in accrued tax liability         158,586  
NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES     (3,602,378 )   968,437  
               
CASH FLOWS FROM INVESTING ACTIVITIES              
Purchases of property and equipment     (301,720 )   (908,323 )
Proceeds from disposal of property and equipment     9,065     25,000  
Purchases of intangible assets     (25,838 )   (124,216 )
NET CASH USED IN INVESTING ACTIVITIES     (318,493 )   (1,007,539 )
               
CASH FLOWS FROM FINANCING ACTIVITIES              
Borrowings from indebtedness     924,389     4,976,508  
Payments on indebtedness     (251,255 )   (4,976,508 )
Proceeds from issuance of equity     1,230,000     26,606,486  
Common stock issuance as settlement for litigation     938,094      
Payments on finance lease liability     (2,232 )   (4,502 )
NET CASH PROVIDED BY FINANCING ACTIVITIES     2,838,996     26,601,984  
               
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS     (1,081,875 )   26,562,882  
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     27,315,286     5,870,929  
CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 26,233,411   $ 32,433,811  
               
Supplemental Information              
Cash paid during the periods for:              
Interest   $ 6,194   $ 27,698  
Income Taxes   $ 850   $ 318,983  
               
Schedule of Non-Cash Operating, Investing and Financing Activities:              
Issuance of common stock as compensation   $ 295,947   $ 180,006  
Issuance of common stock as settlement for litigation   $ 938,094   $ 938,094  

 

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REPRO MED SYSTEMS, INC.

SUPPLEMENTAL INFORMATION

(UNAUDITED)

 

The following table summarizes our net sales for the three and nine months ended September 30, 2021 and 2020:

 

  Three Months
Ended September 30,
  Nine Months
Ended September 30,
  2021   2020   2021   2020
Net Sales                    
Domestic $ 5,076,294   $ 5,289,076   $ 14,084,552   $ 15,719,419
International   747,281     702,034     2,585,881     2,539,944
Novel Therapies   216,969     89,205     329,236     1,859,865
Total $ 6,040,544   $ 6,080,315   $ 16,999,669   $ 20,119,228

 

 

A reconciliation of one of our non-GAAP measures is below:

 

Reconciliation of Reported Net Sales to Non-GAAP Net Sales   Three Months
Ended September 30,
  Change from Prior Year  
    2021   2020   $   %  
Reported Net Sales   $ 6,040,544   $ 6,080,315   $ (39,771 ) (0.7% )
Early Order/Inventory Stocking         (552,000 )   552,000   (100.0% )
Non-GAAP Adjusted Net Sales   $ 6.040,544   $ 5,528,315   $ 512,229   9.3%  

 

 

Reconciliation of Reported Net Sales to Non-GAAP Net Sales   Nine Months
Ended September 30,
  Change from Prior Year  
    2021   2020   $   %  
Reported Net Sales   $ 16,999,669   $ 20,119,228   $ (3,119,559 ) (15.5% )
Early Order/Inventory Stocking         (1,335,000 )   1,335,000   (100.0% )
Non-GAAP Adjusted Net Sales   $ 16,999,669   $ 18,784,228   $ (1,784,559 ) (9.5% )

 

Early Order/Inventory Stocking.  We have excluded the effect of an early order and covid related inventory stocking in calculating our non-GAAP measure.  We had an early order from our largest distributor in the three months ended September 30, 2020, which would have otherwise been placed in the three months ended December 31, 2020, as well as higher purchases in the six months ended June 30, 2020, that we believe would have normally been made in the second half of 2020, had it not been for the pandemic.

 

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REPRO MED SYSTEMS, INC.

SUPPLEMENTAL INFORMATION

(UNAUDITED)

 

A reconciliation of our non-GAAP measures is below:

 

    Three Months Ended   Nine Months Ended
Reconciliation of GAAP Net (Loss)/Income   September 30,   September 30,
to Non-GAAP Adjusted EBITDA:   2021     2020   2021   2020
GAAP Net Loss   $ (1,093,778 )   $ 249,175   $ (3,494,465 ) $ (377,435 )
Tax (Benefit)/Expense     (238,104 )     143,353     (1,425,781 )   316,200  
Depreciation and Amortization     115,934       115,637     349,822     297,801  
Interest Expense/(Income), Net     2,838       (9,662 )   (16,883 )   (23,690 )
Reorganization Charges     (1,262 )         1,192,618      
Discontinued Product Expenses           (6,659 )       71,318  
Litigation Expenses           675         2,446,747  
Manufacturing Initiative Expenses     35,892       59,045     237,333     194,804  
Stock-based Compensation Expense     628,276       406,325     1,967,632     1,191,146  
Non-GAAP Adjusted EBITDA   $ (550,204 )   $ 957,889   $ (1,189,724 ) $ 4,116,891  

 

 

    Three Months Ended   Nine Months Ended
Reconciliation of Reported Diluted EPS   September 30,   September 30,
to Non-GAAP Adjusted Diluted EPS*:   2021     2020   2021   2020
Reported Diluted Earnings Per Share   $ (0.02 )   $ 0.01   $ (0.08 ) $ (0.01 )
Reorganization Charges               0.03      
Discontinued Product Expense                    
Litigation Expenses                   0.06  
Manufacturing Initiative Expenses               0.01      
Stock-based Compensation Expense               0.01      
Tax (Expense) Adjustment               (0.01 )   (0.01 )
Non-GAAP Adjusted Diluted Earnings Per Share   $ (0.02 )   $ 0.01   $ (0.04 ) $ 0.04  

 

*Numbers presented are rounded to the nearest whole cent

 

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 nine months ended September 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 the only amount included in Stock-based Compensation Expense in calculating Adjusted Diluted EPS.

 

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