KORU Medical Systems, Inc. (KRMD) Earnings

Management highlights

### Strategic Position & Core Leadership - KORU is the global leader in large volume subcutaneous infusion devices for at-home drug delivery, serving ~60,000 chronic and recurring IG patients via its Freedom Infusion System. - The core market is shifting from hospital-based IV infusion to home and alternate-site subcutaneous delivery, and KORU is positioned to benefit from this trend. - New CEO Adam Kalbermatten's priority is extending market leadership by expanding the number of drugs on KORU's label and improving core technology, while balancing simple, trusted mechanical device design with selective integration of smart connected capabilities. ### Strategic Acquisition Update - KORU acquired a connected monitoring technology asset in Q2 2026, which will enable real-time infusion data capture, enhanced patient support, and data-driven insights for pharmaceutical and specialty pharmacy partners. - The technology will improve clinical trial adherence tracking, support regulatory approval timelines, and strengthen KORU's value proposition for PST partners, and is a multi-year development build to expand the platform's long-term competitive position. ### Growth Pillar Progress - **Domestic Core Business**: 12% year-over-year growth, with strong patient retention, continued market share gains, and positive adoption of the Restego therapy, which validates the platform's ability to support non-IG chronic therapies and diversify KORU's addressable patient base. - **International Business**: 59% year-over-year growth, but near-term core growth will moderate as the company establishes distribution and reimbursement pathways in new non-tender pre-filled syringe markets; longer-term opportunity remains large, with disciplined foundational setup prioritized over near-term growth to secure permanent market leadership. - **PST Business**: Early-stage collaboration discussions with new pharmaceutical partners are ongoing, with multi-year development pipelines serving as the engine for long-term growth. Post-acquisition integration at Biogen (which acquired Apellis) may delay near-term clinical trial activity, but KORU remains committed to the long-term partnership. ### Regulatory & Pipeline Updates - KORU withdrew its 510(k) submission for Fezgo (oncology indication) in the U.S. to pivot to higher-volume, more attractive oncology biologics aligned with its U.S. oncology strategy; Fezgo development continues internationally, and oncology remains a core strategic priority. - The 510(k) submission for deferoxamine (non-IG therapy) remains active, with productive ongoing discussions with the FDA; approval is expected to unlock ~200,000 annual U.S. infusions and expand the platform into non-IG indications. - Next-generation Freedom 360 pump development completed its highest-risk final development stages in Q2, and remains on track for a 510(k) submission by the end of 2027. - New High-Growth Market Opportunity: Secondary immunodeficiency (SID) is a fast-growing emerging market driven by immunosuppressive cancer and autoimmune treatment side effects; major pharma trials are expected to read out in 12-18 months, with expanded domestic reimbursement expected to follow, creating an incremental new patient population for KORU that leverages its existing approved platform.

Guidance

- Full-year 2026 revenue guidance was narrowed to $47.5 to $48.5 million, down from prior guidance, due to slower-than-expected ramp in new international non-tender markets; the delay is timing-related, with revenue from these markets now expected to be recognized more meaningfully in 2027 rather than the second half of 2026. The Fezgo U.S. submission withdrawal did not impact this guidance revision. - Gross margin guidance was raised to 62% to 64%, up from the prior range of 61% to 63%, after the extended key supplier contract de-risked the lower end of the margin outlook and creates potential for additional back-half upside. - Full-year 2026 cash guidance was adjusted to reflect the connected technology acquisition and associated operating costs, with the company now expecting a year-end cash balance greater than $7.5 million. - Management reaffirmed guidance for full-year positive adjusted EBITDA. - Long-term targets remain unchanged: $100 million in annual revenue, gross margins above 65%, and EBITDA margins of 20% or greater.

Segment performance

For the second quarter ended June 30, 2026, KORU Medical Systems generated total revenue of $12 million, up 18% year over year. 1. Domestic Core: Revenue was $8 million for the quarter, representing 66.7% of total quarterly revenue, with 12% year-over-year growth driven by new patient starts and continued market share gains that outpaced underlying SCIG market growth. 2. International Core: Revenue was $3.5 million for the quarter, representing 29.2% of total quarterly revenue, with 59% year-over-year growth, driven by volume gains from pre-filled syringe conversion strategy in European distribution channels and growth in established markets. 3. PST (Pharma Services and Technology): Revenue was $0.5 million for the quarter (rounded to $600,000 in the transcript), representing approximately 4.2% of total quarterly revenue, down 35% year over year due to timing shifts in clinical trial customer orders. Gross margin for the quarter was 65.1%, a 160 basis point increase year over year, driven by lower manufacturing costs, higher average selling prices, favorable customer mix, and improved pricing from an extended multi-year key supplier contract. The company delivered positive net income for the first time since 2019, with positive adjusted EBITDA of $900,000 in the first half of 2026.

Risks & headwinds

- International expansion in new non-tender pre-filled syringe markets is progressing slower than initially forecast, as establishing required distribution, reimbursement, and local partner relationships takes longer than prior guidance assumptions, leading to near-term lower international growth. - Post-acquisition integration activity at partner Biogen (following its acquisition of Apellis) may create delays and reduce the magnitude of near-term PST clinical trial activity. - The U.S. oncology market entry timeline has shifted back from the prior expectation of second half 2026 as management pivots to alternative higher-volume molecules, creating near-term delay in this strategic priority. - PST revenue has inherent quarter-over-quarter variability based on customer clinical trial timelines, leading to unpredictable quarterly results for this segment. - All forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from current predictions, including regulatory and market entry execution risks.

Analyst Q&A

• Q: What needs to be done to unlock growth in international non-tender markets, and is all delayed growth pushed to 2027, or could some come in 2026? /

  A: Management remains highly positive on the long-term international growth opportunity. Growth is only delayed, not lost, as the team works to put all required regional foundational elements in place, with patient demand already starting to build. Management is moving as quickly as possible, but prioritizes proper setup to secure long-term market leadership, with most delayed growth now expected to materialize in 2027 rather than late 2026.

• Q: What is the use case and development stage of the newly acquired connected monitoring technology? /

  A: The acquisition was opportunistic, designed to add value to KORU's existing simple mechanical platform by enabling patient communication and infusion data collection for patients and pharma partners. The technology is still in early development stages, and will require a multi-year build before commercial deployment. The acquisition signals KORU's strategic focus on integrating digital capabilities to strengthen its competitive position.

• Q: Why did KORU withdraw its U.S. Fezgo 510(k) submission, and what defines an attractive oncology molecule? What is the impact on U.S. oncology entry timing? /

  A: FDA discussions revealed specific label considerations for Fezgo that made pursuing other higher-volume oncology biologics a more attractive use of KORU's resources for its U.S. oncology entry. Fezgo development continues internationally. U.S. oncology entry, previously expected in H2 2026, will be moderately delayed as the company pivots to new target molecules, but development remains active and oncology remains a core strategic priority.

• Q: What percentage of international markets are tender vs. gradual non-tender markets, and how does this affect revenue? /

  A: Most of KORU's recent international growth came from a fast-ramping tender market, while new expansion markets are primarily non-tender competitive markets that grow incrementally via new patient starts, similar to the U.S. This gradual conversion means growth ramps slower than tender markets, but creates more durable, consistent long-term revenue as converted patients generate ongoing recurring consumables revenue.

• Q: What is KORU's strategy for the emerging secondary immunodeficiency (SID) market? /

  A: Most major SID clinical trials are being run with SCIG drugs that KORU already has on its label. KORU is tracking trial progress and manufacturer plans, and will leverage its existing commercial pathway to serve new SID patients once trials read out and reimbursement expands, requiring minimal additional infrastructure to capture this incremental growth.

• Q: How does KORU plan to sustain 20% annual long-term growth if U.S. core growth is only low double digits? /

  A: Sustained 20% growth will come from KORU's three pillars: steady domestic core market share gains, large-scale international expansion, and adding new non-IG drugs to the platform's label. Expanding into new indications and therapies increases KORU's total addressable market, adding incremental patient volumes that will lift overall growth above the domestic core growth rate.