Conference Transcript - KRMD 2026-08-12

Thomas Adams, CFO

Okay, so good morning everyone. I'm Tom Adams, CFO of KORU Medical. Happy to be here today. I'm going to show a couple slides just to give an overview of our company, what KORU does, KORU at a glance, strategic initiatives, and then talk a little bit about our long-range plan. So I'll start off here with a short slide deck. So slide one, so what does Koro do? We enable, simplify, enhance the delivery of large-volume subcutaneous drugs into the home in the clinic. So we are a player that since COVID and the shift over from intravenous hospital settings to subcutaneous therapy, we are the home delivery device. So we play in the home infusion space and also with the infusion clinics our platform which is our freedom infusion system today it's primarily used by about 60 thousand patients these are chronic recurring patients that require subcutaneous immunoglobulin drug therapy treatments we are expanding our market beyond SCIG so not only are we on this but we have current collaborations We have today eight collaborations where we work closely with our pharmaceutical companies to really bring new drugs onto our platform. So that requires working with them, getting their drugs, testing their product, and then submission via 510K to FDA or MDR through the EU. We are leveraging a low-cost go-to-market by basically serving pharmaceutical companies. we specify pharmaceutical companies in the home care networks and all as well as distributors if you look at our company at a glance we have about 60,000 patients globally which covers nine drugs that are on our label through 30 countries our guidance right now is about 47 and a half to 48 and a half so we've been running at about a 19% CAGR which I'll go through in a few slides This year, our growth is around 15% to 18%. Cash balance on the balance sheet, $8.3 million. We're located in Malawi, New Jersey. And really what our model is, as I mentioned, we work upstream with pharmaceutical companies. We obtain their drugs. We test them. And we submit to FDA for use on our delivery system. If you look at what our products actually are, this is a picture of the Freedom System. We have the Freedom 60 and the Freedom Edge, which are our two pumps, and we actually have another one under development as our next generation pump. These pumps work together with the infusion sets that you see listed below, such as a needle set and a tubing set, which basically attaches to the patient and delivers the drug. And again, these drugs are delivered into home space by chronic patients roughly about once per week. If you look at the movement of healthcare from hospital to the home, we are driving a large subcontinuous infusion opportunity. So if you think about the SCIG opportunity, which is largely our base of our business today, but we are moving towards this non-IG opportunity, which are all the other drugs. There's about 95 drugs out there in development by pharmaceutical companies which we are actively targeting and working with to get these new drugs on our label. So that's our strategy from an overall company. And then as you look at our strategic growth pillars, we have a core business, which is around 80% of our business, and we continue to pick up market share. We're around 60% to 65% market share in the U.S. We are expanding international, so we have a lower share in international with a lot of room to grow for market expansion. And then finally, as I mentioned, enabling more drugs onto our platform gives us more outreach for more patients out there. Looking at our financial highlights, you can see over the last couple of years we've grown nicely with about a 19% CAGR. And this is largely driven by, again, defending our share in the U.S., but also expanding internationally. So we've done a nice job with respect to revenue. If you look at our first half of the year, we're up about 20% growth year over year. Gross margin has been picking up at around 63%. Our OPEX, we have a nice leverage platform. We don't need a lot of feet on the street to sell our products. We work basically through specialty pharmacies. and distribution. So we have a nice leverage scale as we grow our top line. We don't need to add as much on the bottom lines. Our net losses have been pared down over the last few years. We just had a first quarter of net income positivity just in Q2, and our adjusted EBITDA is positive at about $900,000 first half of the year. From a cash perspective, we burned some cash in the last few years, but we're now at the point where we are no longer burning significant cash. We had reinvested back into the business, back into our footprint, and now we're starting to see some returns on our investment coming through this year and also in future years to come. As we look at our execution and our key strategic progress, again as I mentioned Q2 revenue was about $12 million and represented about 18% growth. Our net income was about a 222% improvement over the prior year so again we we had net income in the black for the first time since 2019 so we've made that inflection point on that income we acquired a connected and monitoring digital asset asset to potentially strengthen patient support so that what this means is it's a technology that allows us to better control the adherence and use of our pump which we believe that data monitoring will be important for our future across our product platform going forward. Our Q2 gross margins hit 65 percent so we expect we actually lifted our gross margins for the rest of the year. We've done some nice work with the contract manufacturing supplier obtaining a five-year multi-year contract with a significant margin expansion on cost of goods we withdrew our 510 application we had a 510 application for Fesco which was a oncology product it wasn't a significant product in our portfolio but we withdrew it due to a due to a label labeling requirement on the IFU we entered in again we entered into an updated supplier agreement supporting our long-term operational strategy and gross margin of expansion so as I mentioned earlier with with volumes moving upward the last couple years we've been able to obtain and secure a longer-term favorable supply agreement with that with our contract manufacturer and then finally we narrowed our year over year revenue guidance to 47 and a half to 48.5 million to account for our PFS conversion PFS is a pre-filled syringe conversion. We're doing well with it, and we're very excited about the opportunity. We are just a little slower in Europe simply because of the market dynamics and the time to convert patients in some countries over in Europe. Then finally, last slide here is just really looking at the future and our strategic growth plans. we are fundamentally we have a large growing market for sc drug devices and we we contain the we maintain the leading market share in the u.s again we have a recurrent revenue from about 60 000 patients and most of these patients are chronic on our system and we continue to grow of that position of patients. We have new strategic catalysts in SID, which we feel is a nice, it's going to be a nice tailwind for us in the future as SID gets reimbursement out there in late in 2027. And we have non, not, excuse me, eight non-IG pipeline drugs with Restigua as one of them and a few others that are near-term, you know, single base hit opportunities but they allow us to establish a footprint in the clinical setting as well as what we already have which is the home setting. You know when we when we stand back and look at the long-term financial goals we expect to be a hundred million revenue company so we've doubled in the last few years in terms of revenue last three or four years we expected to achieve about a $100 million. We expect double-digit revenue CAGR to continue and accelerate our gross margins. So as I mentioned, we just signed a new supplier agreement and we're doing a lot of things with continuous improvement to really maintain that plus 65% gross margin profile. And then of course, you know, at least 20% EBITDA margins. So with $100 million in revenue, we should be able to maintain these long-term financial goals. That is it, Caitlin.

Operator

Great. Thanks, Tom. Maybe just touching on a few of the points that you highlighted, oncology continues to be a major focus for you guys, particularly with FESGO, although you noted the withdrawal of the 510K for use of FESGO with Freedom Edge in the U.S. Maybe just a little more color on the withdrawal and why it's still a viable option for pursuing OUS.

Thomas Adams, CFO

Sure. So the withdrawal of Fesco was really related to a specific issue on the label, particularly on the Fesco product. It really didn't have anything to do with the safety and efficacy of our pump platform. Fesco was really a pilot for us. It was an early entry. It didn't really have a significant market share, but we had the drug at hand. We had the collaboration. So we were using that as a as an initial go-to-market The other molecules while we were waiting for the FESCO submission we learned a lot about the ecology space and In the meantime, we've secured or we're working to secure a much larger opportunity So we were very excited about the space and getting into that oncology Oncology field with our learnings from FESCO, so we feel pretty good about it going forward And I think you noted on the call as well that Fesco was a larger opportunity internationally.

Operator

Can you maybe just quantify how large the Fesco opportunity was, U.S. versus OUS, and then just broadening out, as you talked about, there's other oncology drugs within this TAM. Just speak to how broad the actual overall TAM is and which of those you could pursue for your label.

Thomas Adams, CFO

Sure, sure. Sure. So that's correct. So with Fesco, it was specific to the U.S. So we do feel that there's still an opportunity to launch in the EU with this drug. And so we are continuing to pursue that. With the opportunity in itself, there's about 4 million infusions. So we're looking at a $60 million TAM overall, which is growing at a pretty good pace. So we expect it to grow over the next four years or so up to about 140 million TAM opportunities. So we continue to move forward in the oncology space. We think we're a very attractive alternative simply because today the space uses a hand or manual push where we believe that our mechanical pump serves an unmet need to patients. So we feel that we can take advantage of that space and that's why we're working with other partners to actively pursue entries. So once again, a small hiccup with the U.S. physical submission, but we feel pretty confident going forward.

Operator

And, you know, do you expect this change to delay the timing of the U.S. oncology entry?

Thomas Adams, CFO

Well, I would say slightly. Like I've been mentioning, we've been working in sync with another potential partner. We're hoping to have some good news to share on the October, or excuse me, the November earnings call where we are in terms of that strategy. But that, you know, because of the size versus the smaller size of the FESGO, if we can work quickly and get it filed per our timelines, we don't think there'll be such a substantial miss from what we lost in FESGO.

Operator

And just on that point, any extra work that needs to be done to get a new submission together for a different molecule, such as studies or anything else?

Thomas Adams, CFO

Yeah, so great question, Caitlin. So the way it works typically is you secure a commitment. You receive the drug from our partners. We do testing. We test for potency, biocompatibility, and there's a number of tests, flow rates. And then once we achieve the results that are desired or required per the specs, we then submit. And typically from an FDA perspective, it's between 90 and 120 days of approval time. So once we secure, or if the opportunity comes alive, that's how the timeline will play out.

Operator

And I think oncology was one of your infusion clinic opportunities, along with the recently on-label versus... Restigo. Maybe talk to that launch and your go-to-market approach in the infusion clinic site of care.

Thomas Adams, CFO

Yeah, so it's exciting. Again, we're primarily a home care company where our patients were taking the infusions at home. With the approval of the Restigio, now we are in the clinics, so nurses are using it. And so we've been very active. Restigio is a nice drug. It's grown 65% in 2025 so it continues to do well so we are there you know with supporting nurses our sales team is there it's primarily in a similar channel from a from a you know end-to-end process and so we were familiar with that channel Caitlin and so we continued to to work it through and you know it's it's a single. It's not a home-run type of drug, but we do see some nice incremental sales from Rustigio.

Operator

You also called out on the earnings call Biogen's acquisition of Apelis, which is the maker of M. Povelli S. Povelli, which you also have on label. Apelis was working on expanded indications for the drug. How are you viewing the potential for disruption from this acquisition on the R&D timeline there?

Thomas Adams, CFO

Sure, with any time a large pharmaceutical company buys another one they they typically put everything on hold until they can evaluate and and then they make decisions. We don't anticipate this having any major impact on our PST revenues which is where those those revenues are slotted as we support their clinical trials so it's you know no impact to our PST business we're still guiding between 2.5 and 3 million on our PST.

Operator

And then turning to international, you noted it's been a big contributor to results over the past year or so as you penetrate the PFS opportunity in Europe. And you also pointed to a more measured growth trajectory versus the kind of more lumpier results that you've previously seen. Can you speak to the dynamics here and why your expectation for the pace of growth has changed?

Thomas Adams, CFO

Sure, sure. So Europe is, as we all know in this room, Europe is many different countries, and it's not globally centralized from a company management perspective. And what I mean by that is a drug company management perspective. Reimbursements are different in each country. Some countries are tender markets where reimbursement really isn't involved, and the pharmaceutical company converts the market very swiftly. And in other countries are more reimbursement markets that take a little bit more time. And there's more complexities in terms of setting up a new market launch such as the PFS and the mechanical pump to go with it. So we're taking them one by one. And so what we've learned is these more complex companies are taking a little bit more time for us. We're really excited about the opportunity. We just think this is a timing delay as we get our pieces in place and set up the foundation so we see that's these revenue shift more towards 2027 as opposed to 2026 and that was the reason for our call down which was primarily isolated in international. U.S. business is humming right along with that quarter over quarter sequential growth.

Operator

And you launched in Japan recently. Anything related to that in the guidance change, and just how the launch is going there?

Thomas Adams, CFO

Yeah, launch is slow going. Japan is a complex market. It's hospital-driven. It's a hospital-driven market, so it takes a little time to penetrate into that market, and you have to set up distribution and importation and a little bit more complexities, but it's moving along, and we continue to see growth there. And so we're still excited about the opportunity. It's just a little slower than we had anticipated.

Operator

Maybe just turning to financials, speak to the opportunity for just the continued margin expansion in the short and the long term, and what levers you can pull to improve. I know you mentioned the supply agreement. Anything else there?

Thomas Adams, CFO

Yeah, so there's a few things. I would start with the supply agreement. Again, with the last couple of years, we grew last year at 22%. Year before that, 18% growth. So with that comes a lot of volume. So we've been able to leverage that that volume that we've been given to our key suppliers and Basically turn that into a new favorable agreement for us and for them as they're getting the benefit of the volume So so that's come along nicely and we're seeing some nice a couple percentage couple hundred percentage points from that and then obviously Pricing I mean we still have some nice good stick in the US market where we're a dominant player We're a 60% to 65% market share, so we continue to see that annual stick. So I think those two things in combination are helping us with some nice margin improvements.

Operator

And then as you move into a new chapter where you call them PFTs, call them novel therapies, are transitioning to becoming part of your core portfolio, is there any change in the cadence or composition of your spending going forward?

Thomas Adams, CFO

No, I mean, I think, you know, with our spending, every opportunity is different. You know, from an R&D perspective, you know, we will continue to innovate. And we, especially with the new acquisition of the technology, we will continue to innovate that into our next generation product portfolio. We will continue to work with our pharma partners. You know, sometimes some of the drugs are more complex than others and require more resources. But I don't expect a major shift from what we've been spending. We'll still keep a percentage of sales on our R&D efforts.

Operator

And then just turning to the core business and the potential SID opportunity, maybe just talk about that. How is that different from SEIG and what's the go-to-market strategy there?

Thomas Adams, CFO

Yeah, SID is coming around the corner. I think there's four clinical trials out there to get reimbursement in SID. It's a huge market opportunity. We believe it's a nice tailwind that reimbursement will be approved. I think the clinicals are completed sometime in late 27, so we feel there's a nice upswing with respect to new patients coming onto our platform, especially once that reimbursement And so we're excited about it. We're going to be ready for it. It's the same drugs. So all the drugs that are being used today on our platform for PID and CIDP will be available now for SID. And there will be a lot more patients. So, again, it's hard to know exactly how many patients per se because it's not chronic. It could be temporary. People go on it. People are on it for a longer time. But there's a massive amount of patients that'll enter into that population once reimbursement is established So we're really excited about that in the years to come Any questions from the audience Yeah, great great question. Thank you So the Freedom 360 is our next generation pump. What that's going to do is it brings versatility. It allows several different sizes of pre-filled syringers to be used. Today, there's no alternative for that. So there's different pumps for different sizes. So it provides a lot of flexibility. It allows for less inventory to be held on shelves at specialty pharmacies. So we're excited about it. The submission timing is still this year. So we're expecting a second-half submission and then a typical 90 to 120-day FDA approval for the U.S. market. And then ultimately for MDR in the European market will be sometime later in 2017.

Operator

Okay, great. And then, Tom, anything you want to leave the audience in the last minute that we have about the business and trajectory going forward?

Thomas Adams, CFO

Yeah, I'm excited for the business, clearly. We've been growing very well. You know, you can see double digits the last couple years, as I mentioned, 22 and 18%. You know, we have a lot of excitement. We had a little bit of a timing delay in the EU with the pre-filled syringe conversion, but the opportunity is great, and it's there. I also am very excited about the oncology opportunity. We do think it's an unmet need in the space, and we feel confident that we will get into that space. So I'll leave it with that. Thank you.

Operator

Thanks, Tom. Thank you, everyone.