KORU Medical Systems Inc
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 13, 2024
KRMD$3.09+2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001161697-24-000334
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001161697-24-000441
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 56 current paragraphs.
29 unchanged; 24 reworded; 2 added; 2 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Selling, general and administrative expenses increased $0.5 million, or 10.9%, to $5.1 million during the three months ended September 30, 2024, as compared to $4.6 million in the same period in 2023. The increase in selling, general and administrative expenses was primarily driven by compensation related to new hires and bonus accruals.
Current report
Research and development expenses increased $0.2 million, or 18.6%, to $1.5 million during the three months ended September 30, 2024, as compared to $1.3 million in the same period in 2023, primarily due to executive severance related to the elimination of the CTO role.
Removed paragraphs (2)
Previous report
Selling, general and administrative expenses remained flat during the three months ended June 30, 2024 compared with the same period last year.
Previous report
Research and development expenses decreased $0.5 million, or 29.0% during the three months ended June 30, 2024 compared with the same period last year, primarily due to increased efficiencies related to insourcing and timing of project spend.
Reworded paragraphs (24)
Previous wording
The Company ended the second quarter of 2024 with $8.4 million in net revenues, a 21.5% increase compared with $6.9 million in the same period last year. Revenues were driven by growth in our core domestic and international business of 14.3% and 45.8%, respectively, and 49.9% in our novel therapies business.
Current wording
The Company ended the third quarter of 2024 with $8.2 million in net revenues, a 16.8% increase compared to $7.0 million in the same period last year. Revenues were driven by growth in our core domestic and international business of 11.7% and 5.1%, respectively, and 275.6% in our novel therapies business.
Previous wording
Gross profit for the three months ended June 30, 2024, was $5.5 million, an increase of $1.6 million, or 40.9%, from $3.9 million for the same period last year, driven primarily by additional revenue from volume growth in each of our core and novel therapies businesses, and manufacturing efficiencies compared to the same period last year. Gross margin was 65.0% for the three months ended June 30, 2024, an increase from 56.1% in the prior year period. We define gross margin as gross profit stated as a percentage of net revenues.
Current wording
Gross profit for the third quarter of 2024 was $5.2 million, a 19.4% increase compared to $4.3 million in the same period last year, primarily driven by additional revenue from volume growth in each of our core and novel therapies businesses. Gross margin was 63.4% for the three months ended September 30, 2024, an increase from 62.0% in the prior year period. We define gross margin as gross profit stated as a percentage of net revenues.
Previous wording
Operating expenses for the three months ended June 30, 2024, were $6.7 million, compared to $7.1 million for the same period last year, driven primarily by a decrease of $0.5 million in research and development expenses primarily due to timing of project spend.
Current wording
Operating expenses for the third quarter of 2024 were $6.9 million, compared to $6.1 million for the same period last year, driven by an increase of $0.5 million in selling, general, and administrative expenses and an increase of $0.2 million in research and development expenses.
Previous wording
Total net revenues increased $1.5 million, or 21.5%, to $8.4 million for the three months ended June 30, 2024, as compared with the same period in 2023. Domestic core revenues increased by 14.3% to $6.2 million, primarily due to higher consumable and pump volumes driven by new patients starts and share gains. International core revenues increased by 45.8% to $1.6 million, primarily due to higher consumable and pump volumes driven largely by increased Ig supply, increased penetration within certain approved indications, and geographic expansion. International orders were expedited for certain distribution partners of $0.3 million in the second quarter of 2024 related to the BSI regulatory review process which has since been successfully appealed. Novel therapies net revenues increased by 49.9% to $0.6 million in the three months ended June 30, 2024 primarily driven by Phase III clinical trial orders and milestone completion from our collaboration agreements.
Current wording
Total net revenues increased $1.2 million, or 16.8%, to $8.2 million for the three months ended September 30, 2024, as compared to $7 million in the same period in 2023. Domestic core revenues increased by 11.7% to $6.4 million over the prior year period, primarily due to higher consumable and pump volumes driven by new patients starts and market share gains. International core revenues increased by 5.1% to $1.1 million over the prior year period, primarily due to higher consumable volumes driven largely by increased Ig supply, increased penetration within certain approved indications, and geographic expansion. Partially offsetting the growth were lower orders from a distribution partner that expedited $0.3 million orders in the second quarter of 2024 related to the BSI regulatory review which has since been successfully appealed. Novel therapies net revenues increased by 275.6% to $0.6 million over the prior year period, primarily driven by clinical trial orders and progress on NRE milestones completed for multiple collaboration agreements.
Previous wording
Gross profit increased $1.6 million to $5.5 million in the three months ended June 30, 2024, compared to $3.9 million in the same period in 2023. Gross margin increased to 65.0% compared to 56.1% in the three months ended June 30, 2023. The increase in gross margin was primarily driven by increased production efficiencies, favorable sales mix driven by clinical trial orders, and increased average selling prices when compared to the prior year period. We also had a positive inventory valuation adjustment of $0.1 million during the three months ended June 30, 2024 which is not expected to recur in 2024.
Current wording
Gross profit increased $0.8 million, or 19.4%, to $5.2 million in the three months ended September 30, 2024, as compared to $4.3 million in the same period in 2023. Gross margin increased to 63.4% in the three months ended September 30, 2024, as compared to 62.0% in the prior year period. The increase in gross margin was primarily driven by a favorable sales mix of clinical trial orders, an improved NRE mix of more profitable services, and increased average selling prices when compared to the prior year period.
Previous wording
Depreciation and amortization expense remained flat at $0.2 million in the three months ended June 30, 2024 compared with $0.2 million in the three months ended June 30, 2023 primarily driven by timing of projects and related capital spending.
Current wording
Depreciation and amortization expense remained flat at $0.2 million during the three months ended September 30, 2024, as compared to $0.2 million during the same period in 2023, primarily driven by timing of projects and related capital spending.
Previous wording
Our net loss decreased $2.0 million in the six months ended June 30, 2024 compared with the same period last year mostly driven by an increase in gross profit of $2.5 million and a decrease in operating expenses of $0.6 million, partially offset by a prior year tax benefit of $1.2 million.
Current wording
Our net loss increased $0.2 million in the three months ended September 30, 2024, as compared to the same period last year, primarily driven by an increase in operating expenses of $0.8 million, and a prior year tax benefit of $0.2 million offset by an increase in gross profit of $0.8 million.
Previous wording
The following table summarizes our net revenues for the six months ended June 30, 2024, and 2023:
Current wording
The following table summarizes our net revenues for the nine months ended September 30, 2024, and 2023:
Previous wording
Total net revenues increased $2.3 million, or 16.0% to $16.6 million, for the six months ended June 30, 2024, as compared with the same period last year. Domestic core revenues increased by 9.0% to $12.1 million, primarily due to volume growth in pumps and consumables driven by new patients starts and share gains. International core revenues increased by 54.4% to $3.4 million, primarily due to higher consumable and pump volumes driven largely by increased Ig supply, increased penetration within certain approved indications, and geographic expansion. International orders were expedited for certain distribution partners of $0.3 million in the second quarter of 2024, related to the BSI regulatory review process, which has since been successfully appealed. Novel therapies net revenues increased by 9.2% to $1.1 million in the six months ended June 30, 2024 as compared to the prior year period, driven by Phase 3 clinical trial orders and milestone completion from our collaboration agreements.
Current wording
Total net revenues increased $3.5 million, or 16.3% to $24.8 million, for the nine months ended September 30, 2024, as compared to $21.3 million in the same period in 2023. Domestic core revenues increased by 9.9% to $18.6 million over the prior year period, primarily due to volume growth in consumables driven by new patients starts and share gains. International core revenues increased by 38.4% to $4.5 million over the prior year period, primarily due to higher consumable and pump volumes driven largely by increased Ig supply, increased penetration within certain approved indications, and geographic expansion. Novel therapies net revenues increased by 46.3% to $1.7 million over the prior year period, driven by Phase III clinical trial orders and milestone completion from our collaboration agreements in the current period.
Previous wording
Our gross profit for the six months ended June 30, 2024 and 2023 is as follows:
Current wording
Our gross profit for the nine months ended September 30, 2024 and 2023 is as follows:
Previous wording
Gross profit increased $2.5 million or 31.7% in the six months ended June 30, 2024, compared to the same period in 2023. The increase in the first half of 2024 was driven by the increase in net revenues of $2.3 million as described above and improvements in manufacturing efficiency. Gross margin increased to 63.6% in the first half of 2024 compared to 56.1% from the first half of 2023. The increase in gross margin was primarily driven by increased manufacturing efficiencies versus the prior year. Additionally, we realized improved NRE margin compared with the prior year period driven by a more profitable mix of services performed.
Current wording
Gross profit increased $3.4 million, or 27.4% to $15.8 million, for the nine months ended September 30, 2024, as compared to $12.4 million in the same period in 2023. The increase in gross profit was driven by the increase in net revenues of $3.5 million as described above and improvements in manufacturing efficiency. Gross margin increased to 63.6% in the first nine months of 2024 as compared to 58.0% in the same prior year period. The increase in gross margin was primarily driven by increased manufacturing efficiencies versus the prior year. Additionally, we realized improved NRE margin compared with the prior year period driven by a more profitable mix of services performed.
Previous wording
Our selling, general and administrative, research and development and depreciation and amortization expenses for the six months ended June 30, 2024 and 2023 are as follows:
Current wording
Our selling, general and administrative, research and development and depreciation and amortization expenses for the nine months ended September 30, 2024 and 2023 are as follows:
Previous wording
Selling, general and administrative expenses decreased $0.1 million, or 0.5%, during the six months ended June 30, 2024 compared with the same period last year, primarily due to decreases in compensation and benefits expense.
Current wording
Selling, general and administrative expenses increased $0.5 million, or 2.9% to $15.8 million, for the nine months ended September 30, 2024, as compared to $15.3 million in the same period in 2023, primarily due to increases in compensation and benefits expense.
Previous wording
Research and development expenses decreased $0.6 million, or 17.4% during the six months ended June 30, 2024 compared with the same period last year, primarily due to a $0.8 million decrease in consulting expense due to less outsourcing activities and timing of project spend, partially offset by a $0.3 million increase in compensation and benefits.
Current wording
Research and development expenses decreased $0.3 million, or 7.0% to $4.1 million, for the nine months ended September 30, 2024, as compared to $4.5 million in the same period in 2023, primarily due to a $1.1 million decrease in consulting expense due to less outsourcing activities and timing of project spend, partially offset by a $0.4 million increase in severance expense due to the elimination of the CTO role, and a $0.4 million increase in compensation and benefits.
Previous wording
Depreciation and amortization expense remained flat at $0.4 million in the six months ended June 30, 2024 compared with $0.4 million in the six months ended June 30, 2023 resulting from minimal purchases of new PP&E during the period.
Current wording
Depreciation and amortization expense remained flat at $0.7 million for the nine months ended September 30, 2024, compared to $0.6 million in the same period in 2023, resulting from minimal purchases of new PP&E being commissioned during the period.
Previous wording
Our net loss decreased $1.5 million in the three months ended June 30, 2024 compared with the same period last year, mostly driven by an increase in gross profit of $1.6 million and in interest income of $0.1 million, partially offset by a decrease in tax benefit of $0.6 million and in operating expenses of $0.4 million.
Current wording
Our net loss decreased $1.8 million in the nine months ended September 30, 2024, as compared to the same period in 2023, mostly driven by an increase in gross profit of $3.4 million, partially offset by an increase in operating expense of $0.2 million and a prior year tax benefit of $1.4 million.
Previous wording
Our principal source of liquidity is our cash on hand of $10.5 million as of June 30, 2024. Our principal source of operating cash inflows is from sales of our products and NRE. Our principal cash outflows relate to the purchase and production of inventory, funding of research and development, and selling, general and administrative expenses. To develop new products, support future growth, achieve operating efficiencies, and maintain product quality, we are continuing to invest in research and development and manufacturing equipment.
Current wording
Our principal source of liquidity is our cash on hand of $8.8 million as of September 30, 2024. Our principal source of operating cash inflows is from sales of our products and NRE. Our principal cash outflows relate to the purchase and production of inventory, funding of research and development, and selling, general and administrative expenses. To develop new products, support future growth, achieve operating efficiencies, and maintain product quality, we are continuing to invest in research and development and manufacturing equipment.
Previous wording
Our inventory position was $2.6 million at June 30, 2024, which reflects a decrease of $0.9 million from December 31, 2023.
Current wording
Our inventory position was $3.9 million at September 30, 2024, which reflects an increase of $0.4 million from December 31, 2023.
Previous wording
Net cash used in operating activities was $0.3 million for the six months ended June 30, 2024 vs $4.8 million in the prior year. This net cash usage of $0.3 million was primarily due to the net loss of $2.9 million and an increase in accounts receivable of $1.8 million, which was mostly offset by decreases in inventory of $0.9 million, decreases in pre-paid expenses of $0.8 million, and increases in accounts payable and accruals of $1.0 million. Additional offsets to the net loss were non-cash items including stock-based compensation expense of $1.3 million, and depreciation and amortization expense of $0.4 million.
Current wording
Net cash used in operating activities was $1.3 million for the nine months ended September 30, 2024, as compared to $6.0 million in the same period in 2023. This net cash usage of $1.3 million was primarily due to the net loss of $4.5 million, an increase in accounts receivable of $1.2 million, and increases in inventory of $0.4 million, partially offset by increases in accounts payable and payroll bonus accruals of $1.9 million, and decreases in pre-paid expenses of $0.3 million. Additional offsets to the net loss were non-cash items including stock-based compensation expense of $1.9 million, and depreciation and amortization expense of $0.7 million.
Previous wording
Net cash used in operating activities was $4.8 million for the six months ended June 30, 2023. This net cash usage was primarily due to the net loss of $4.9 million, plus cash flows used to fund a decrease in accrued expenses of $1.7 million, primarily from the payment of 2022 employee bonuses, and a decrease in accounts payable of $0.8 million, offset by cash flows generated from a decrease in inventory of $1.1 million, an increase in accounts receivable of $0.2 million and a decrease in prepaid expense of $0.7 million. Further contributing to this change were non-cash items including an increase in deferred tax assets of $1.2 million offset by stock-based compensation expense of $1.7 million, depreciation and amortization expense of $0.4 million and a loss on disposal of fixed assets of $0.1 million.
Current wording
Net cash used in operating activities was $6.0 million for the nine months ended September 30, 2023. This net cash usage was primarily due to the net loss of $6.3 million, plus cash flows used to reduce accrued expenses of $1.4 million, primarily from the payment of 2023 bonuses, and a decrease in accounts payable of $1.4 million, offset by cash flows generated from a decrease in inventory of $1.7 million, and an increase in accounts receivable of $0.3 million. Further contributing to this change were non-cash items including an increase in deferred tax assets of $1.5 million offset by stock-based compensation expense of $2.4 million, depreciation and amortization expense of $0.6 million and a loss on disposal of fixed assets of $0.1 million.
Previous wording
Net cash used in investing activities of $0.3 million for the six months ending June 30, 2024, was for capital expenditures for research and development and manufacturing equipment.
Current wording
Net cash used in investing activities of $1.4 million for the nine months ending September 30, 2024, was for capital expenditures for manufacturing equipment related to our new consumables production lines.
Previous wording
Net cash used in investing activities of $0.4 million for the six months ending June 30, 2023, was for capital expenditures for research and development and office equipment.
Current wording
Net cash used in investing activities of $0.6 million for the nine months ending September 30, 2023, was for capital expenditures for research and development and office equipment.
Previous wording
Net cash used in financing activities of $0.4 million for the six months ended June 30, 2024 was due to payments on our note payable for insurance premium financing.
Current wording
Net cash used in financing activities of $0.03 million for the nine months ended September 30, 2024 was due to payments on our note payable for insurance premium financing, partially offset by new borrowings for a subsequent insurance premium financing agreement.
Previous wording
Net cash used in financing activities of $0.5 million for the six months ended June 30, 2023, was due to payments on our note payable for insurance premium financing as well as for payments on our finance leases.
Current wording
Net cash used in financing activities of $0.04 million for the nine months ended September 30, 2023, was due to payments on our note payable for insurance premium financing as well as for payments on our finance leases.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Nine months ended September 30, 2024, compared to September 30, 2023
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Six months ended June 30, 2024, compared to June 30, 2023