KORU Medical Systems, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Strategic Progress: 2024 was a significant year with advancements in becoming a global leader in large-volume subcutaneous drug delivery. The SCIg market grew over 10% in 2024. The broader large-volume subcutaneous market has over 18 drugs in development.
• Financial Performance: Fourth quarter saw record revenues, continued gross margin expansion, and positive cash flow. Full year revenues totaled $33.6 million, an 18% growth. Gross margin for the fourth quarter was 62.9%, and full year was 63.4%. Year-end cash balance was $9.6 million.
• Operational Highlights: Expanded gross margin led to record full-year gross profit. Disciplined operating expense management. Initiated 2025 guidance.
• FDA Announcement: Addressed voluntary withdrawal of certain immunoglobulin lots, noting only one SCIg-related drug was affected, with no expected impact on KORU's business.
• Product Pipeline: Pending launch of three new products over the next year, including a flow controller, new consumables, and a next-generation SCIg pump.

Segment Performance

• Core Business: Fourth quarter revenues were $6.7 million, a 20% increase year-over-year. Full year core revenues totaled $25.2 million, representing 12% growth.
• International: Fourth quarter international revenues were $1.5 million, up 14% year-over-year. Full year international revenues reached $6 million, a 32% year-over-year increase.
• Novel Therapies (now Pharma Services and Clinical Trials): Fourth quarter revenues were $700,000, a 122% increase year-over-year. Full year novel therapies revenues were $2.4 million, a 62% year-over-year growth.

Guidance

• Net revenues between $38 million and $39 million, representing 13% to 16% growth.
• Full year gross margin between 61% and 63%.
• Expect to be operationally cash flow positive for the full year 2025.
• Key drivers include sustained SCIg market growth, domestic and international share gains, product line extensions, and new collaborations in the novel therapies pipeline.

Risks

• Tariffs: Slight impact on assembly parts from mainland China, factored into gross margin guidance at around a half-point impact.
• Lumpiness in Revenues: Novel therapies revenues can be lumpy due to the non-recurring nature of the business.
• Supply Chain: Potential supply chain impacts, though FDA-related immunoglobulin withdrawal had minimal expected impact on KORU.

Question and Answer

Q: Could you break down 2025 guidance by domestic, international, and novel therapies?

A: Domestic expected 10%-15% growth, international over 20% growth, and novel therapies between $2 million to $3 million in revenue.

Q: On the oncology opportunity, what's left to do for filing?

A: Working on market assessment, proving value proposition, understanding reimbursement, and establishing a new distribution partner.

Q: How does the new product portfolio affect gross margin long term?

A: New consumables launch with automation to drive efficiencies, aiming for 65%+ gross margin range, with yield improvements and price premiums from new products.