KRMD - Earnings call transcript Q2 2022 | KORU Medical Systems, Inc.

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Operator

Greetings, and welcome to KORU Medical Systems Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, Greg Chodaczek of Gilmartin Group. Please go ahead, sir.

Gregory Chodaczek

Thank you, Ryan, and good afternoon, everyone. Systems XX, results XXXX. Medical quarter the KORU June ended today, released for financial second Earlier A available website. on of the copy the company's press release is

During events SEC. based risks those on statements predictions and to certain and will many of and matters. could our this mentioned today. differ as business due Actual other are including our results in plans forward-looking comments These expectations call, we or uncertainties, regarding our make materially the assume our We you, most in results recent to on as financial the any no front as our associated press update commentary with obligation the release and encourage filings listeners press of We forward-looking statements. quarter. well includes to which have release

management our discuss measures each presentation will accompanying investor of financial non-GAAP our press on our posted and website. call, filings the in and certain which During with SEC, release the are

these comparable press of additional reconciliations non-GAAP You including disclosure accompanying and release measures, will GAAP those investor presentation regarding find filings. measures, and with in matters these our

additional the topics of recent may the the press p.m. replay, held with was SEC. Eastern call filings approximately Wednesday, the to Since most XXXX, recorded listening discussed. on Time. And then, For please this and August made X:XX to the have X, those comments company's benefit related at company reference release and

today please Tom the Linda President of go Tharby, call on is Medical's Financial KORU Adams, and Joining Interim Officer. Medical ahead. us Systems; and CEO Chief KORU Linda,

Linda Tharby

hard our team instrumental Their another dedication the improve therapy are and self-administering life in quarter. for emphasize start, home. for quality thank of want joining to and you patients us efforts infusion delivering you, of the To Thank I Medical strong Good on the in afternoon, the in today. to mission entire KORU delivering everyone, Greg. work

to the Q&A. slides the second call business remarks, I will our will update to turn During concluding will call commentary. financials then quarter. will After to up our the before XXXX Tom I today's support to for be open discuss I the with guidance. of call, prepared then quarterly use happy our updates over and we to begin with Tom the ending

results, our vision Before leading company system. comments holds our XX,XXX subcu drug progress with delivery few leading in large over FREEDOM our a and provider. patients on drug as the volume quarterly diving a a share market position therapy into on growing The Infusion

subcu less the FREEDOM market substantial past Medical for conditions serves with infusion current from a indications on in of suffering market X opportunity, patients Our than label with new commercialized year. we with subcu primarily of chronic XX% having doubled patients KORU and expansions our CIDP, number home the have PIDD the on XX System, drug Currently, Infusion therapy.

continue subcu drugs clinical market we new our expand, overall development As billion. development for build the continues and last trials over $X the our pipeline months potential increasing in that to new XX drug to are market addressable total over to several with agreements

our the results Now turning quarter. to for

indicative with quarter. 'XX QX growth X the with quarter pleased this novel second in Leading row. consecutive momentum which results very growth quarter fronts. and our business, several of marked for a this nicely growth. closed double-digit revenue are therapies We grew our this our our This new third on quarter prior deals is was of deals

U.S. of Ig subcu KORU business performed also a Our rebounding market. U.S. ahead

in. and enabling our new phase Mahwah, completing R&D New move continue to the operations headquarters Jersey, to a of our foundation, and solidify great environment our customers and our capabilities corporate new for We to employees in first collaborate

new completed in to plant. is goods progressed reduced to source create 'XX. a expected cost This is plant eliminating hiring and further manufacturing dual Operating team, to we executive our role of And addition, regulatory the and a solidified operations, SVP quality, In Officer. Operations, be of of Operations VP promoting of and encompassing the and role, intended our Pazdan Chris further Chief outsourced of we QX manufacturing of finally,

above revenue us million our guidance confidence the range raise of $XX gives a progress of to million. to to All $XX.X

turning X.X%, U.S. Novel our sales of include core for company net XXXX. deals second growth the $XXX,XXX and and growth quarter a order Domestic in Domestic contributions market chain double-digit our from from momentum QX arising parts the results. our with increase represented rebounding quarter were million $X.X X continued that growth Now for to outpacing business. reported from third to QX of consecutive clinical prior strong up with all orders. in growth quarterly with not and therapies pipeline of expansion supply prefills. due to from our core We back led sales the in led SCIg issues XX.X% engineering both of did marking a and revenues business. This an services revenues label sales consumables growth year-over-year,

clear action service get plan to an levels the prioritized the to and have our from high QX. back to expect patients in and order customers We expect back KORU

business, Our we and in saw tender XX.X% label increasing European strength expanded continue put where as multiple we key to markets due indications year-on-year international up focus, wins. to was

sales out progress we of The our XXXX. strategic share rolled of second December another want this in quarter for represented towards now made strong the performance to I quarter that initiatives quarter company.

XX% and prebuild relates addressable X drivers capturing $XXX associated are area winning to increasing a represents the market. There this expansion. first KORU Ig subcu market with penetration, U.S. patient million strategy, include This growth growth geographic which starts, The of SCIG broader opportunity. total which is new under

And the past by tender generate growing overall Overall, in expansions as begins X.X% XXX% it focus as over continued few indication with leading progress continue driver expand as starts upon growth the quarters, distributors. XX.X% represent FREEDOM U.S. quarter QX experience outperforming this opportunity up increase our positive and patients hired core our business a represents Prefills indications. opportunity on is was are look indications. increasing put pillar we sales continued increase the year-to-date. in platform international on-label managing pharmaceutical the FDA with new to label KORU This clearance System. up to and label subcutaneous Label new share. and quarters, as post business, the XX.X% area In strong quarter, with working increasing of a provide clearance XX% in accounts trends We new will Infusion pump will have of A see choice. is quarter. and an and a FREEDOM have penetration, to our and quarter to Medical population past and indicator, with with expansion X.X% our these new in to the patient pharma a growing and our wins. start we pursue prelaunch indications now forward our key this to driven partner Prefills to our new penetration international a adds for with I a Each our with moment. reported easier in increase commercial makes partners we indications. we markets. it of the SCIg growth, our few new our leading to company clear patient tremendous drug X with FDA for start, an the market, of of a on-label the New the in in pumps international We've we saw to leader these the company, select critical specialty

turning Now syringe the market. dive into towards a deeper prefilled

their partners significant XX as specifically cleared syringes market anticipate specialty focused prefilled we continue QX. an a new fast-growing growth uniquely opportunity. As capture Ig continue we We and market on the of remain that the prefilled focus syringes adoption for have pump represents we our market leader, is communicated, market double to pharmaceutical working the provide. early-stage, market partners. we and seen share, market XX% pharmacy Hizentra within prefilled in QX to increasing patients capture syringe conversion, the QX to capture our and X% as market for care Prefilled positioned share share and to Since on patient adoption mL the recognize the market in remain share have with the advantages grow format. with XXX(k) have use providers market to of and will label only CSL's they that our We indication, syringes

Additionally, the and are behind format, commercialization. for we choice putting of partner increased prefilled generation efforts the plan we to remain

our monitoring novel therapies expansion, pipeline driver business. to The label new IV here to Moving and expansion, is our and evaluating therapeutics. primary includes new geographic continuously subcu opportunities indications, which

in new position the leadership our drug close to across to early categories high-volume and commercialization goal agreements Our clinical home. phases in delivery feasibility subcu drug multiple from in extend is

from indication sales service revenue showed another an pipeline a strong Phase immunology the second new from our In new from quarter to new quarter for pipeline. signed of we that deals, clinical expect XXXX second growth quarter, deals in previously for one product and we commercialize X on second engineering closed The and nephrology. in expanded in the a both in indication II

In of for different X new in successful with addition, closed commercialization Phase The XX majority our over XXXX. execution III now of our signed XXXX agreement We is on anticipated to we therapies scope total earlier the are X work our and expanded based across pursuing additional previously opportunities. innovation novel of have milestones. studies drug agreements categories

of key growth call now novel Tom over as will prioritize to a a discussion in to the our QX financials. continue We for investment therapies expansion driver. turn I

Tom Adams

a you, same from net milestone to second growth previously revenues for growth sales over quarter, XX.X% excited large $X.X Thank pipeline completion our increase were $XXX,XXX prior clinical of for included last contributing of The quarter Linda, increase novel growth, good for net everyone. period the million, therapies ending in a I'm trial of agreement year. quarter pharmaceutical double-digit related sales to XXX% report to the increase. customer. sales novel of approximately Novel the the expansion. Also consecutive therapies third afternoon, and a therapies million or announced were year our for $XXX,XXX $X.X our an with an

by XX.X% approximately for created the driven grew bridge manufacturing in margin prefills, labor that with by KORU gross reported total a XXX increase are therapies margin, bridge, by KORU average International chain our issues due including $XXX,XXX domestic basis The of KORU XX.X% experienced in $XXX,XXX. was driven walking margin saw growth increase from a inclusive in growth, in the Starting with supply year margin in following revenue net The by several we market and attributed supply variances and wins. impact up partially label SCIg related sales was number. gross back our lower QX expansions, of of selling inclusive which our key engineering by orders to the increase was to the our tender prices. gross novel by the QX and to year-over-year European growth due was XXXX, prices in issues service of slide that mix. for included or domestic business quarter. Our products. approximately XXXX business and back volume nominal through average business right, amortization this points left and offset driven than impacted bridge revenue, by in markets the of to The orders, services selling was not X.X% of impacts XX.X% our we shows shortages, a was demand, Continuing from prior nominal core

treatment gross material event, the was margin by losses be to was second and of improvement a believe year accounting approximately labor margin primarily inventory investments and our of lower caused of expect million in in quarter. was with half of headquarters amortization to repeated, the and gross million, due goods And was raw accounting $X and of which the not cash the approximately margin levels Total will from in the in reported work-in-process total issues We new nonrecurring year. be we this first and to basis inventory. variances points related shortages. in increases our this on half of largest supply $X driven finished used gross net the also manufacturing the and accelerated by treatment quarter XXX impact an XX.X%, Finally, for

margin half driven the to raw transition reduce line to gross expect lower in the manufacturing and continue to second of in we working planning due and reductions guidance; materials improvements work-in-process in higher for lower addition, cash capital, our our as net We the usage by Command. year with losses by to sales

financing equipment we employee cash reimbursements. state-filed and incoming preapproved Finally, expect improvement credits, from retention leasehold

expect As a our million. of of we projections, result to ending cash our a second $XX be half minimum

share of or in $X.XX of $X.XX as million to diluted a loss compared diluted included XXXX. loss over a comments. benefit XXXX. of I compared share share Net will loss million per of adjusted loss $XXX,XXX per quarter of of Finally, and turn for XXXX. the the appendix, basis, second $X.XX or tax for our loss earnings now per back was of indicated same $X.XX $X.XX same of to the the a $X.XX period for in On the non-GAAP a a Linda net diluted for second loss loss guidance a in quarter XXXX period net to was a closing the call of

Linda Tharby

Thank you, Tom.

Turning expectations to for fiscal XXXX. our

and a receipt reminder, is increases; the inventory on supply, SCIg price high inflationary shortage pipeline; drivers: plasma As digits; the planned by financing labor XXXX. clinical and several equipment novel supply rooted credit; timely supply in activity therapies and trial our and chain impacts; in year-end of and impacts, growth outlook key labor single rate reductions market expansion including

'XX, $XX.X million, novel the million strength to $XX.X to therapies are primarily full pipeline. million, year revenue our to million based For $XX of raising previously $XX we guidance on our

have guiding the year, in to XX% in first are QX disruption supply exit XX% are We expected rate. from of impacts unfavorable chain resulted 'XX to to XX% variances which updated a manufacturing the exit half a year, the improve. to margin gross

improvement XXXX. expect expect now support anticipate for be the of We plan. XXXX. be gross We manufacturer we headquarter expense range operating and half to burn steady line our our for minimum sequentially our Additionally, completed beginning reiterate we where QX the of transfer finally, We in margin lower the $XX we of year outsourced to of margins. significant anticipate improvement expenses a remainder and QX experienced gross strategic our in to And onetime anticipate in position We cash reflect to million. QX. balance our year-end for from in relocation investing had of activities first rate

reimbursements. sales our are higher and we progress expect and improved priorities. in equipment we significant making strategic to come to forecast, In per preapproved in financing margin our addition tenant ERC In from gross cash filed our advancing closing,

are We is core continued growth, rebounding market. advancements making and U.S. the deal progress have new met domestic our our third within business double-digit outpacing SCIg therapies pipeline quarter a and novel

we the supply chain stronger a build and we remedy We have to foundation. plan challenges have to continue KORU faced, a

are our in evidence strong results. We our seeing quarterly of results

delivery forward you KORU a as against continuing We our are to strategic team. And excited by will our player. in date plan the Thank our again the now and I look build progress executing to position to call to leading Q&A. drug turn over for

Operator

Instructions]. [Operator

first Capital. the Stevenson Craig-Hallum comes line from Our Connor question from of

Connor Stevenson

afternoon. we recovery guess, This trended is of in kind how volumes starts? a for this and of you Connor patient to into on And Alex continuing June first could see to speak July? are out off, new I just

Linda Tharby

Yes. Connor, thanks question. the for

recovery starts, growth, we as quarter seeing, see about X.X% to a from are continue the overall, X% month. the new We for patient reported, in with to we and month growth

Connor Stevenson

had new you we headquarters. and investment about what half, obviously, puts to just kind just should make the kind an second half, in And of cost of second expect in on guess Thinking of there? half takes first see kind some investments side, then I just the the

Linda Tharby

Yes. handle Thanks, I'll Connor. that. let Tom

Tom Adams

the So we have that of the year half transfer. the Connor, of second is the in manufacturing the investments completion

than have equipment do the items will additional significant be nature, capital less some that but of we that So it of and some half. equipment first

Operator

from next Canaccord. from of question is the Kyle Our line Rose

Gibran Ahmed

QX gross Gibran some walk efficiencies I in on a the on quarterly just provided. Maybe and gives gross a start in bit you're we stronger little sort is headwinds there if a maybe appreciate of strong to some just confidence This half operational margin on you unfavorable margins, you for walk on side? were appreciate And quarter. those the maybe to more, guess just Congrats realize. second could Kyle. of to in through margin what dig looking that the

Linda Tharby

Thanks, Gibran.

is important So recall to you through I'm what's most that it. with let to started going Tom the we XX.X%. think here And I walk

So quarter that the and in really some the realized we important, talk of is what you see three. we've efficiencies we'll and explanation through treatment accounting already will then the in

Tom Adams

the Gibran, Yes, for thanks question.

So and here the production to productivity we lines. restaff continue the labor we in and we issue quarter as will anticipate our improve help output, will This quarter. which the second in that be hire third our further remediated generate shortages had of to margins

We also from anticipate on supplier better performance perspective, from materials the a have the shipments perspective, we raw Linda? received.

Linda Tharby

Yes.

has I Tom about, since quarter. been in a the In we addition, as downtime, third And which some would had now, equipment production have we staffed talked shift. say, appropriately the added remedied

third full this, efficiencies of up we the quarter. all with production getting anticipate our back during to So

Gibran Ahmed

on Understood. next-generation can pipeline enhanced will just side. That's system sort give and the on have maybe Any helpful. product of improve and you And I you developing? mentioned some you're had convenience think color upon it innovation side then previously, the connectivity.

you're CTO Brian with how in wondering thinking Just pipeline now? now seat a few about the months for having innovation been the

Linda Tharby

Yes.

for first, which So significant talk is area a of me us. focus about prefills, let maybe

You position KORU see indication. expanding, of that label the market overall our advantage taking with

So is focus efforts. our of of our prefills area first innovation

and like convenience, to right, talk I'd comfort, about Cs, terms connected. so the this Second, in X of

making we're So on side, working comfortable patients. consumables on most lot the our experience convenience that and our for the a really

way Anticipate across really can be at then side, of the required the us. making mls number for reducing platform. that overall and we're for that On overall XX plus smaller steps utilized up platform the ml looking XX it range of to the convenience a a platform from universally that all

what end convenience, that of say Brian of we'll the partners are to the towards the more now our system But year year. have as the comfort, connected themes. key gets and with X the fiscal looks his to like, define him. under You'll working We're really feet hear more at pharma really end

Operator

the from Piper of comes Bednar Jason line question next Sandler. from Our

Jason Bednar

Congrats if us been you challenging on actually you've putting do have performance you But better it here. Could been little comps start up? the back the orders a I quarters. really this bit to more revenue nice revenue if start with even could here not mentioned. the actually the would Linda, coming the for growth get help like of sustainability seems there. It over

as end the the maybe contributions So as well around the in acceleration for the revenue therapies. us with share and help as as gains trajectory far thinking assuming how of updating from you're inputs you're novel about maybe maybe and sustained as a what rate you're KORU growth market growth guide,

Linda Tharby

Sure.

So thanks, Jason.

areas So at that guidance. three to drive to revenue gave confidence outlook improve performance primary that look our the really we us and the and raise what overall

So novel first therapies. is

latter agreements So the you the quarter overall new X in of we months. saw X past the last come announced us by year to end X and of half out X, in

those to starting So for clinical us. progressing through revenue now trials. are are produce agreements products They

current Some FREEDOM of in new them system. our to resulting innovations

all that then as pipeline those signed, look we already conjunction, at this see So our see and just I we in. we've see. deals deals in is of we announced with what of expansion that then the additional quarter, what in of as pipeline we opportunities And coming new

be that the So would first.

that You're in. therapies kick pipeline starting really to see novel

And expectations. they internal what we much prefills, better. better, the a when that anticipated. do are that been us outperforming to with which X% nice for market bit at And looking pump is to there more our quarters have we're and associated due that's about the as that overall to we we Second saying X% growth see the in only prefills, we've better than out market U.S. business than It's do little first X primarily a doing been year. growth

into third we've our put additional that So business. second. is, begun some would to And international efforts be

for initial we're days So well. whole effort although some that see earlier international, paybacks starting as there it's to in

one nice, in our ways several to have in company, So and expectations. starting for hopefully, different where those can that different and it's we're picked growth up areas the and of outperform we to contribute this see call, for you opportunities we now to each look with the

Jason Bednar

guess, I I really a pulling can gross helpful. just in I the gross the XXXX relative I little the for think issues margin in view out you really then gross reset. on and want gross that year potential? guidance, here and all appreciate to Linda, as that if gross XXXX, looking bit ago, a the also sitting bridge. again, understand thinking does this we how intermediate just of That's Maybe follow then mean, not guidance push you're long-term prior to where up I margin XXXX do are X better margin question. the you're that today have And of months if ahead changed? here Tom but adjust outsourcing, your And has might about margin here margin business been And to for to the

Linda Tharby

Yes.

the And most XX% the to quarter margin get the into second So they on our an everyone accounting were part the has would gross variances, gone was X. think fundamentally, no, a really all to not in for outlook to accelerated. I was treatment important our of have gross variances And changed. understand which acceleration where typically quarter those margin the

we variances. took of X quarters So

So our quarter remember X from to. chain for which production was of the really us look shortage and in getting by we that had us supply intended full vendors, prevented important with number then out we And XX.X% a is at. really the it impacted that to

handle back outsource where our that is completion back months, anticipate That this can And get to to full completing transition pushed ensuring just quarter get mid-XX% be. So we very on range is it and with range. near that have those efficiencies us need really to Bringing by get supplier the that anticipate so focus back move closely few we that then We happening. XX% on, a that. out quarter of XX% to we we levels. increased getting to of a things and getting brings in X X the now all really as XX% the we out working we're are is cleared manufacturer. to we to in production order us where we seeing just And then and

on So us we a clear XX% a gross our overall no that transition complete. we little and just guidance in to see all a get margin, get to the change bit when pushout, to still at range of headway Command for

Operator

would Ms. for end question-and-answer Linda And CEO, and the remarks. gentlemen, now the we call like of turn session. closing Tharby, to Ladies have the to reached back I

Linda Tharby

So just patients, great in again say much. team, I customers support another want to so incredible closing, the of thanks to KORU all Thank and for quarter. you their our to for

Operator

KORU Thank concluded. you. The of you Systems Thank has Medical now conference for your participation.

You may now disconnect your lines.

KORU Medical Systems (KRMD) 7 Aug 222022 Q2 Earnings call transcript