CHESTER, N.Y.--(BUSINESS WIRE)--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 fourth quarter and full year ended December 31, 2020.
2020 Full Year Financial Highlights:
- Net revenue of $24.2 million
- Gross margin of 62%
- Net loss of $1.2 million
- Ended the year with $27.3 million in cash and cash equivalents
Q4 2020 Financial Highlights:
- Net revenue of $4.1 million
- Gross margin of 57%
- Net loss of $0.8 million
"Like many companies in the healthcare sector, 2020 was a challenging year for KORU Medical," said Jim Beck, Interim Chief Executive Officer. "Despite these challenges, we made progress on many fronts and our employees have remained steadfast in their commitment to improving patients' lives through the use of our specialty infusion solutions. As we move into 2021, our Company remains focused on executing our long-term strategies to drive growth and expand the market for subcutaneous infusions for life-saving therapies. We are excited about our new CEO and are confident that under Linda Tharby's direction, KORU Medical is well positioned for our next phase of growth."
2020 Full Year Financial Results
Net sales were $24.2 million for 2020, a 4.4% increase from $23.2 million in 2019. Growth was primarily driven by an increase in product sales volume and higher novel therapies sales of $0.9 million, offset by higher allowances which include (i) rebates resulting from the net impact of pricing increases at our largest distributor in the second half of 2019, and (ii) pricing decreases and growth rebates to secure our contractual position with several large customers in 2020. Further increasing allowances were payment discounts and distribution fees at our largest distributor under new contract terms entered into the fourth quarter of 2019.
Gross margin was 62% in 2020 compared to 64% in 2019. The decrease was primarily driven by the higher allowances as described above.
Total operating expenses increased 13% to $16.2 million in 2020 compared to $14.3 million in 2019. The increase was primarily driven by salary and related benefits and consulting fees related to marketing, regulatory and strategic initiatives, partially offset by lower trade show and travel expenses due to COVID-19 related travel restrictions and lower legal fees.
Net loss was $1.2 million in 2020, which includes the non-cash settlement expense of $2.2 million, compared to net income of $0.6 million in 2019.
Adjusted EBITDA for 2020 was $3.7 million compared to $6.2 million in 2019.
Our inventory position grew from $2.4 million at December 31, 2019 to $6.8 million at December 31, 2020 mostly to ensure timely order fulfillment as we transition manufacturing of our needle sets and tubing products for supply continuity to Command Medical Products, Inc. As the transition is completed this inventory is expected to convert to a source of cash in the future
Cash and cash equivalents were $27.3 million as of December 31, 2020.
Q4 2020 Financial Results
Net sales were $4.1 million for Q4 2020, a 34.8% decrease from $6.2 million in Q4 2019. Net sales were down primarily due to inventory in the channel from the precautionary buying related to COVID-19 in the first half of the year and the large early order placed in the third quarter of 2020, as well as lower international sales and novel therapies sales, which currently includes clinical trial sales. Higher allowances also contributed to lower net sales in the quarter.
Gross margin was 57% in Q4 2020 compared to 63% in Q4 2019, primarily driven by lower net sales for reasons described above.
Total operating expenses decreased 15.7% to $3.5 million in Q4 2020 compared to $4.1 million in Q4 2019. The decrease was primarily due to lower litigation expense and lower bonus accrual, partially offset by consulting for sustainability and strategic initiatives.
Net loss was $0.8 million in Q4 2020, compared to a net loss of $0.1 million in Q4 2019.
Adjusted EBITDA for Q4 2020 was ($0.3) million compared to $1.5 million in Q4 2019.
Financial Guidance
While KORU Medical Systems does not intend to provide quarterly guidance in the future, and given the timing of its release in the quarter, the Company expects net sales for the first quarter of 2021 to be at least $5.0 million.
Stock Repurchase Plan
As announced on November 16, 2020, the Board of Directors authorized a stock repurchase program under which the Company may purchase up to $10.0 million of its outstanding common stock through December 31, 2021. Through December 31, 2020, the Company had acquired 683,271 shares of its outstanding common stock for a total purchase price of $3.5 million.
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 that involve risks and uncertainties. Forward-looking statements can be identified by words such as "may," "believe" and "enables." 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 COVID-19, future operating results, availability of investment opportunities, market fluctuations, 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 March 23, 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.
REPRO MED SYSTEMS, INC. |
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BALANCE SHEETS |
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December 31, |
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December 31, |
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2020 |
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2019 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
27,315,286 |
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$ |
5,870,929 |
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Accounts receivable less allowance for doubtful accounts of $24,469 and $32,645 for December 31, 2020, and December 31, 2019, respectively |
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2,572,954 |
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3,234,521 |
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Inventory |
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6,829,772 |
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2,388,477 |
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Prepaid expenses |
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807,780 |
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387,396 |
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TOTAL CURRENT ASSETS |
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37,525,792 |
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11,881,323 |
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Property and equipment, net |
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1,167,623 |
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611,846 |
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Intangible assets, net of accumulated amortization of $199,899 and $288,967 at December 31, 2020 and December 31, 2019, respectively |
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843,587 |
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807,135 |
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Operating lease right-of-use assets |
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236,846 |
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373,734 |
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Deferred income tax assets, net |
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125,274 |
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188,241 |
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Other assets |
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19,812 |
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19,582 |
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TOTAL ASSETS |
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$ |
39,918,934 |
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$ |
13,881,861 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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CURRENT LIABILITIES |
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Accounts payable |
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$ |
624,920 |
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$ |
572,656 |
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Accrued expenses |
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2,610,413 |
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1,296,612 |
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Accrued payroll and related taxes |
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287,130 |
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190,265 |
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Accrued tax liability |
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— |
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204,572 |
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Finance lease liability – current |
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2,646 |
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5,296 |
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Operating lease liability – current |
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141,293 |
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136,888 |
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TOTAL CURRENT LIABILITIES |
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3,666,402 |
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2,406,289 |
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Finance lease liability, net of current portion |
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— |
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2,646 |
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Operating lease liability, net of current portion |
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95,553 |
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236,846 |
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TOTAL LIABILITIES |
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3,761,955 |
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2,645,781 |
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Commitments and contingencies (Refer to Note 9) |
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STOCKHOLDERS' EQUITY |
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Common stock, $0.01 par value, 75,000,000 shares authorized, 46,680,119 and 42,239,788 shares issued; 43,259,617 and 39,502,557 shares outstanding at December 31, 2020, and December 31, 2019, respectively |
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466,801 |
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422,398 |
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Additional paid-in capital |
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35,880,986 |
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6,293,069 |
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Treasury stock, 3,420,502 shares and 2,737,231 shares at December 31, 2020 and December 31, 2019, respectively, at cost |
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(3,843,562 |
) |
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(344,204 |
) |
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Retained earnings |
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3,652,754 |
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4,864,817 |
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TOTAL STOCKHOLDERS' EQUITY |
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36,156,979 |
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|
11,236,080 |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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$ |
39,918,934 |
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$ |
13,881,861 |
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REPRO MED SYSTEMS, INC. |
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STATEMENTS OF OPERATIONS |
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For the
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For the
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December 31, |
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December 31, |
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2020 |
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2019 |
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2020 |
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2019 |
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NET SALES |
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$ |
4,057,220 |
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$ |
6,222,134 |
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$ |
24,176,448 |
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$ |
23,162,621 |
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Cost of goods sold |
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1,759,947 |
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2,274,850 |
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9,240,362 |
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8,308,811 |
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Gross Profit |
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2,297,273 |
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3,947,284 |
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14,936,086 |
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14,853,810 |
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OPERATING EXPENSES |
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Selling, general and administrative |
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2,988,330 |
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2,794,861 |
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12,028,310 |
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9,771,744 |
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Litigation |
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466 |
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934,412 |
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2,447,213 |
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3,415,683 |
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Research and development |
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352,116 |
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290,020 |
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1,296,753 |
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740,475 |
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Depreciation and amortization |
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120,794 |
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87,635 |
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418,595 |
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340,229 |
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Total Operating Expenses |
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3,461,706 |
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4,106,928 |
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16,190,871 |
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14,268,131 |
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Net Operating (Loss)/Profit |
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(1,164,433 |
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(159,644) |
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(1,254,785 |
) |
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585,679 |
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Non-Operating Income |
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Gain/(Loss) on currency exchange |
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12,700 |
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2,529 |
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1,536 |
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(17,754 |
) |
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(Loss)/Gain on disposal of fixed assets, net |
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— |
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|
(1,910) |
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|
16,591 |
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|
47,830 |
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Interest income, net |
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18,705 |
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21,572 |
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42,395 |
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80,663 |
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TOTAL OTHER INCOME |
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31,405 |
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22,191 |
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|
60,522 |
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|
110,739 |
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(LOSS)/INCOME BEFORE INCOME TAXES |
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(1,133,028 |
) |
|
(137,453) |
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(1,194,263 |
) |
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|
696,418 |
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Income Tax Benefit/(Expense) |
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298,400 |
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57,197 |
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(17,800 |
) |
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(132,069 |
) |
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NET (LOSS)/INCOME |
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$ |
(834,628 |
) |
$ |
(80,256 |
) |
|
$ |
(1,212,063 |
) |
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$ |
564,349 |
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NET (LOSS)/INCOME PER SHARE |
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Basic |
|
$ |
(0.02 |
) |
$ |
0.00 |
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$ |
(0.03 |
) |
|
$ |
0.01 |
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Diluted |
|
$ |
(0.02 |
) |
$ |
0.00 |
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$ |
(0.03 |
) |
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$ |
0.01 |
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
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||||||
Basic |
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43,732,728 |
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39,502,152 |
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|
41,929,736 |
|
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|
38,778,074 |
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Diluted |
|
|
43,732,728 |
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|
39,502,152 |
|
|
|
41,929,736 |
|
|
|
39,061,310 |
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REPRO MED SYSTEMS, INC. |
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STATEMENTS OF CASH FLOWS |
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For the Years Ended December 31, |
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2020 |
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2019 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net (Loss)/Income |
|
$ |
(1,212,063 |
) |
|
$ |
564,349 |
|
|
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities: |
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Stock-based compensation expense |
|
|
1,618,732 |
|
|
|
1,204,844 |
|
|
Stock-based litigation settlement expense |
|
|
1,285,102 |
|
|
|
— |
|
|
Depreciation and amortization |
|
|
418,595 |
|
|
|
340,229 |
|
|
Gain on disposal of fixed assets |
|
|
(16,591 |
) |
|
|
(47,830 |
) |
|
Deferred capital gain – building lease |
|
|
— |
|
|
|
(3,763 |
) |
|
Deferred income taxes |
|
|
62,967 |
|
|
|
(186,775 |
) |
|
Provision for doubtful accounts |
|
|
(8,176 |
) |
|
|
(4,855 |
) |
|
Abandonment of intangible assets |
|
|
41,919 |
|
|
|
— |
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|
Changes in operating assets and liabilities: |
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|
Decrease/(Increase) in accounts receivable |
|
|
669,743 |
|
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|
(1,803,812 |
) |
|
Increase in inventory |
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|
(4,441,295 |
) |
|
|
(284,598 |
) |
|
Increase in prepaid expenses and other assets |
|
|
(420,614 |
) |
|
|
(140,805 |
) |
|
Increase in accounts payable |
|
|
52,264 |
|
|
|
119,158 |
|
|
Increase/(Decrease) in accrued payroll and related taxes |
|
|
96,865 |
|
|
|
(231,449 |
) |
|
Increase in accrued expenses |
|
|
1,313,801 |
|
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|
607,963 |
|
|
(Decrease)/Increase in accrued tax liability |
|
|
(204,572 |
) |
|
|
187,964 |
|
|
NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES |
|
|
(743,323 |
) |
|
|
320,620 |
|
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CASH FLOWS FROM INVESTING ACTIVITIES |
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|
Purchases of property and equipment |
|
|
(920,604 |
) |
|
|
(201,174 |
) |
|
Purchases of intangible assets |
|
|
(140,548 |
) |
|
|
(224,365 |
) |
|
Proceeds from certificates of deposit |
|
|
— |
|
|
|
1,517,927 |
|
|
Proceeds from disposal of property and equipment |
|
|
25,000 |
|
|
|
217,821 |
|
|
NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES |
|
|
(1,036,152 |
) |
|
|
1,310,209 |
|
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CASH FLOWS FROM FINANCING ACTIVITIES |
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|
Proceeds from issuance of equity |
|
|
26,728,486 |
|
|
|
508,900 |
|
|
Purchase of treasury stock |
|
|
(3,499,358 |
) |
|
|
— |
|
|
Borrowings from indebtedness |
|
|
4,976,508 |
|
|
|
— |
|
|
Payments on indebtedness |
|
|
(4,976,508 |
) |
|
|
— |
|
|
Payments on finance lease liability |
|
|
(5,296 |
) |
|
|
(4,783 |
) |
|
Payment for cancelled shares |
|
|
— |
|
|
|
(2,820 |
) |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
|
23,223,832 |
|
|
|
501,297 |
|
|
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|
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|
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|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
21,444,357 |
|
|
|
2,132,126 |
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR |
|
|
5,870,929 |
|
|
|
3,738,803 |
|
|
CASH AND CASH EQUIVALENTS, END OF YEAR |
|
$ |
27,315,286 |
|
|
$ |
5,870,929 |
|
|
|
|
|
|
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|
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|
Supplemental Information |
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|
Cash paid during the years for: |
|
|
|
|
|
|
|
|
|
Interest |
|
$ |
27,736 |
|
|
$ |
342 |
|
|
Income taxes |
|
$ |
321,983 |
|
|
$ |
130,879 |
|
|
|
|
|
|
|
|
|
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|
|
Schedule of Non-Cash Investing and Financing Activities: |
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Non-cash equity issuance for the EMED Settlement |
$ | 938,094 |
$ |
— |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
||||||||||
Reconciliation of GAAP Net (Loss)/Income |
|
December 31, |
|
|
December 31, |
||||||||||
to Non-GAAP Adjusted EBITDA: |
|
2020 |
|
|
2019 |
|
|
2020 |
|
2019 |
|||||
GAAP Net (Loss)/Income |
|
$ |
(834,628 |
) |
|
$ |
(80,256) |
|
|
$ |
(1,212,063 |
) |
$ |
564,349 |
|
Income Tax Expense |
|
|
(298,400 |
) |
|
|
(57,197) |
|
|
|
17,800 |
|
|
132,069 |
|
Depreciation and Amortization |
|
|
120,794 |
|
|
|
87,635 |
|
|
|
418,595 |
|
|
340,229 |
|
Interest Income, Net |
|
|
(18,705 |
) |
|
|
(21,572 |
) |
|
|
(42,395 |
) |
|
(80,663 |
) |
Reorganization Charges |
|
|
95,700 |
|
|
|
— |
|
|
|
95,700 |
|
|
354,926 |
|
Discontinued Product Expense |
|
|
(459 |
) |
|
|
— |
|
|
|
70,859 |
|
|
— |
|
Litigation |
|
|
466 |
|
|
|
934,212 |
|
|
|
2,447,213 |
|
|
3,415,683 |
|
Manufacturing Initiative Expenses |
|
|
51,723 |
|
|
|
110,282 |
|
|
|
246,527 |
|
|
230,668 |
|
Stock-based Compensation Expense |
|
|
607,592 |
|
|
|
564,069 |
|
|
|
1,618,732 |
|
|
1,204,844 |
|
Non-GAAP Adjusted EBITDA |
|
$ |
(275,917 |
) |
|
$ |
1,537,173 |
|
|
$ |
3,660,968 |
|
$ |
6,162,105 |
|