Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• KORU Medical Systems Inc (NASDAQ:KRMD) reported a 17% increase in third-quarter revenues, marking the third consecutive quarter of double-digit revenue growth.
• The company achieved a gross margin improvement of 140 basis points to 63.4%, driven by improved non-recurring engineering margins and contractual price increases.
• KORU Medical Systems Inc (NASDAQ:KRMD) raised its revenue and gross margin guidance for the second time this year, reflecting strong performance and confidence in future growth.
• The international segment showed strong performance with a 38% year-to-date growth, supported by significant and sustainable growth drivers.
• The novel therapies segment experienced a 276% revenue growth over the prior year, with six commercial drug launches expected by 2026, indicating a robust pipeline.

Negative Points

• The 510(k) submission for the next-generation device has been delayed to mid-2025, which could impact the timing of future product launches.
• International growth was affected by residual effects of Q2 V SI stocking orders, which normalized growth to about 25% instead of the reported 5%.
• The company reported a net loss of $800,000 excluding non-cash items, contributing to a cash usage of $1.7 million in the quarter.
• Operating expenses are expected to finish slightly higher than previously guided, at $24.5 to $25 million, due to stronger revenue performance.
• The oncology biologic launch is anticipated by the end of 2025, which may delay potential revenue contributions from this segment.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with KRMD.

Q: Can you provide more details on the delay of the next-generation pump and its impact on the launch timeline? A: The delay is related to our consumables, not the pump itself. We expect the new pump to launch in early 2025, with a 510(k) submission by mid-2025. The delay will not materially impact 2025 revenues, and we anticipate a combined launch of the consumable and pump, offering advantages for our commercial team and customers. - Linda Barbe, President and CEO

Q: Could you update us on the status of your sales team and any hiring plans? A: Our business model benefits from pharmaceutical companies driving demand. We have expanded our commercial sales force in the U.S. to about five people, focusing on key accounts. Internationally, we work with 26 distributors and are making significant progress. - Linda Barbe, President and CEO

Q: What are your initial thoughts on 2025 growth drivers, and how does the current street estimate of 15% growth align with your expectations? A: While we are not providing specific 2025 guidance yet, our U.S. core business is growing double digits, international expansion continues, and novel therapies are showing consistent revenue. These factors position us well for 2025. - Linda Barbe, President and CEO

Q: Can you explain the timing and process for the 510(k) filings for the two drugs expected next year? A: The filings for the rare disease biologic and consumables will be submitted in parallel by mid-2025. The oncology biologic is expected to launch by the end of 2025, using our current product platform. - Linda Barbe, President and CEO

Q: How is the commercialization in Japan progressing, and what are your expectations? A: We are collaborating closely with pharmaceutical partners in Japan and finalizing distribution details. We anticipate sales to begin early in 2025, and Japan is a top 10 IG market, which should be positive for us. - Linda Barbe, President and CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.