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| 8-K - FORM 8-K CURRENT REPORT FOR 08-11-2021 - REPRO MED SYSTEMS INC | form_8-k.htm |
EXHIBIT 99.1
KORU Medical Systems Announces 2021 Second Quarter Financial Results
CHESTER, NY – August 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® 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 “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.
Investor Contact:
Greg Chodaczek
347-620-7010
investor@korumedical.com
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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 for doubtful accounts of $24,469 for June 30, 2021, and December 31, 2020 | 2,577,400 | 2,572,954 | |||||
| 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 accumulated amortization of $232,820 and $199,899 at June 30, 2021 and December 31, 2020, respectively | 834,644 | 843,587 | |||||
| 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 portion | 24,033 | 95,553 | |||||
| TOTAL LIABILITIES | 3,335,158 | 3,761,955 | |||||
| Commitments and contingencies (Refer to Note 3) | |||||||
| STOCKHOLDERS’ EQUITY | |||||||
| Common stock, $0.01 par value, 75,000,000 shares authorized, 47,910,676 and 46,680,119 shares issued 44,490,174 and 43,259,617 shares outstanding at June 30, 2021, and December 31, 2020, respectively | 479,106 | 466,801 | |||||
| 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 cost | (3,843,562 | ) | (3,843,562 | ) | |||
| 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 | |||
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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 | |||||||||
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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 | |||
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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 Ended June 30, |
Six Months 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 | |||
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 | |||
| 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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