KORU Medical Systems Inc (KRMD) Q1 2024 Earnings Call Transcript Highlights: Record Revenue and ...

• Revenue: $8.2 million, an 11% increase year-over-year.

• Net Revenue Growth: Double-digit growth, highest quarterly revenue in company history.

• Gross Margin: Increased to 62.3%.

• Cash Burn: Reduced to $700,000 from $5.2 million in the same period last year.

• Domestic Core Revenue: Grew 4%, totaling $6 million.

• International Core Revenue: Grew 63% year-over-year, totaling $1.8 million.

• Novel Therapies Revenue: $500,000, a 21% decline from Q1 2023.

• Ending Cash Balance: $10.8 million as of March 31.

• 2024 Revenue Guidance: Expected to be between $31.2 million to $32.2 million.

• 2024 Gross Margin Forecast: Anticipated to be between 59% and 61%.

• 2024 Ending Cash Balance Goal: At least $8 million, aiming for cash flow positivity in Q4.

• Warning! GuruFocus has detected 5 Warning Signs with KRMD.

Release Date: May 01, 2024

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

Positive Points

• Record-setting quarterly revenue of $8.2 million, marking an 11% increase compared to the previous year.

• Achieved a gross margin of 62.3%, maintaining a margin above 60% for the third consecutive quarter.

• Significant reduction in cash burn to $700,000 from $5.2 million in the same period last year, demonstrating improved financial management.

• Strong international growth with a 63% increase in revenue, driven by successful market expansions and new distributor onboarding.

• Progress in novel therapies with three new collaborations signed in 2024, including a promising oncology collaboration.

Negative Points

• Domestic core growth was modest at 4%, indicating potential challenges in more saturated markets.

• Novel therapies revenue declined by 21% compared to Q1 2023, reflecting the variable and milestone-based nature of this revenue stream.

• Guidance for the year was only reaffirmed, not increased, despite a strong first quarter, suggesting caution about future performance.

• Some regulatory delays in international markets like Japan, which could affect the timing of expected revenue contributions.

• Ongoing need to manage inflationary pressures and production line startup costs, which could impact gross margins in the future.

Q & A Highlights

Q: Can you discuss the guidance reiteration despite the strong Q1 performance? A: Linda Tharby, President and CEO, explained that the Q1 results were within the expected guidance range, with potential upside from international expansion and novel therapies. However, they are cautiously monitoring several areas before considering any guidance adjustment.

Q: Any updates on the 15 milliliter prefilled syringe and its market impact? A: Linda Tharby mentioned that the product was launched in Q4 and is seeing gradual patient conversion to prefilled therapy. The company anticipates increased penetration throughout the year and is closely watching the market's response to discontinuation of vials by a major player, which could further drive growth.

Q: What is the expected timeline for regulatory approval of the commercial oncology asset? A: Linda Tharby indicated that the internal process would take about six to nine months, followed by an FDA approval process of three to six months, assuming no unforeseen delays.

Q: How does the company view the potential impact of already approved therapies on the novel therapies business? A: Linda Tharby highlighted the strategic focus on Phase three and launch drugs, particularly in oncology, where there are multiple drugs with similar unmet needs that could benefit from KORU's system.

Q: Can you provide an update on the Japan and Canadian market expansions? A: Linda Tharby updated that Japan's approval is anticipated within the next quarters, with no significant concerns but slight regulatory delays. For Canada, the trial is progressing with the product already in the country, and the study is expected to begin soon.

Q: What are the growth expectations for the U.S. core market, and what is driving the share gains? A: Linda Tharby attributed the share gains to increased focus and penetration into key accounts, realignment of sales territories, and targeted programs. The overall FES IG market is expected to grow at a mid to high single-digit rate globally.

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

This article first appeared on GuruFocus.