KORU Medical Systems Inc
For the period ended Dec 31, 2024. Filed Mar 12, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 12, 2025
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-K
Period ended 2023-12-31; filed 2024-03-13.
0001161697-24-000139
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-12.
0001161697-25-000103
Item 7. 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 64 previous paragraphs and 59 current paragraphs.
37 unchanged; 16 reworded; 5 added; 10 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 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 (5)
Current report
Research and development expenses decreased $0.5 million, or 8.4%, to $5.3 million, during the year ended December 31, 2024 compared with the same period last year, primarily due to lower overall project spend driven by timing, partially offset by CTO severance costs and an increase in compensation and benefits-related bonus accrual related to year over year company performance.
Current report
Depreciation and amortization expense remained flat at $0.9 million during the year ended December 31, 2024, as compared to $0.9 million during the same period in 2023, primarily driven by capital spending related to projects.
Current report
Our net loss decreased $7.7 million in the year ended December 31, 2024 compared with the same period last year, mostly driven by lower net operating losses of $3.8 million as a result of our gross profit improvement of 27.7%, and an operating expense increase of 3%. In the prior year we established an allowance for the non-realization of deferred tax assets which reversed a tax benefit of $4.0 million, partially offsetting in the current year was lower interest income of $0.1 million driven by a lower cash balance coupled with lower yields.
Current report
Net cash used in operating activities was $0.3 million for the year ended December 31, 2024. This net cash usage was primarily due to the net loss of $6.1 million, offset by a $2.6 million increase in accrued expenses for 2024 bonuses and payroll, $0.7 million in lower inventories, and $0.7 million in increased accounts payable, partially offset by a higher accounts receivable balance of $1.7 million, and $0.2 million of changes in other liabilities, prepaids, and other assets.
Current report
Net cash used in financing activities of $0.2 million for the year ended December 31, 2024 was primarily due to payments on our note payable for insurance premium financing, partially offset by new borrowings for a subsequent insurance premium financing agreement. In addition, we had payments for taxes related to net share settlement of equity awards of $0.1 million.
Removed paragraphs (10)
Previous report
The Company completed its transition of substantially all finished goods manufacturing of its needle and tubing sets to Command Medical Products, a third-party contract manufacturing organization which also provides subassemblies for all of the Company’s products, in the second quarter of 2023.
Previous report
The Company entered into a lease commencing March 1, 2022 for a new corporate headquarters and manufacturing facility located in Mahwah, NJ. During the quarter ended June 30, 2022, the Company completed the first phase of the move, the headquarters and office staff to the new location, and completed the move of its manufacturing facility at the end of the first quarter 2023.
Previous report
Research and development expenses increased $0.8 million, or 15.9% during the year ended December 31, 2023 compared with the same period last year, primarily due to $0.5 million in compensation and benefits, $0.1 million in stock compensation and $0.1 million in expenses, to support acceleration and insourcing of our innovation efforts.
Previous report
Depreciation and amortization expense increased by 48.2% to $0.9 million in the year ended December 31, 2023 compared with $0.6 million in the year ended December 31, 2022 resulting from prior year investments in our Mahwah, NJ facility which includes our corporate office, in-house manufacturing, and research and development labs and the associated annualized depreciation impact.
Previous report
Our net loss increased $5.1 million in the year ended December 31, 2023 compared with the same period last year mostly driven by the establishment of an allowance for the nonrealization of deferred tax assets of $6.0 million offset by a higher gross profit of $1.3 million, an increase in other income of $0.4 million due to higher interest and dividend income from our treasury bill investments, which was partially offset by higher operating expenses of $0.8 million.
Previous report
In October 2023, the Company received a payroll tax credit under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) of $0.7 million. This credit was previously recorded as a receivable..
Previous report
Net cash used in operating activities of $5.4 million for the year ended December 31, 2022 was primarily due to the net loss of $8.7 million, working capital changes which included an increase in accounts payable and other liabilities of $1.3 million, an increase in accrued payroll of $0.4 million increase in inventory of $0.3 million, an increase in accrued expenses of $0.2 million. Further contributing were deferred tax assets of $2.0 million increased for book to tax differences related to stock option expense. Offsetting these were primarily non-cash charges for stock-based compensation of $3.1 million, and depreciation and amortization of $0.6 million.
Previous report
The $0.3 million provided by financing activities for the year ended December 31, 2022, was from $0.4 million in option exercises offset by $0.08 million in net borrowings on our indebtedness for a note payable for insurance premium financing and $0.05 million in equipment financing.
Previous report
Subsequent Event
Previous report
In March 2024, the Company received an assessment report from its notified body in the EU, BSI, stating that, following BSI’s review of technical documentation submitted by the Company in connection with a prior audit nonconformance, a recommendation for continued certification cannot be made. The Company has filed an appeal to this determination. If the Company’s appeal is denied, then its EU certification may be suspended with respect to some or all of the Company’s products as determined by a BSI review panel. Management believes that the Company’s appeal will be successful in limiting the scope of the suspension to have minimal impact on the Company’s revenues, if any.
Reworded paragraphs (16)
Previous wording
The Company ended the 2023 fiscal year with $28.5 million in net revenues, a 2.2% increase compared with $27.9 million in the same period last year driven by volume growth in our core domestic and international business of 5.9% and 10.4% respectively, offset by a 41.6% decline in our novel therapies business.
Current wording
The Company ended the 2024 fiscal year with $33.6 million in net revenues, an 18.0% increase compared with $28.5 million in the same period last year driven by growth in our core domestic and international business of 12.3% and 31.5% respectively, and further driven by a 61.9% increase in our novel therapies business.
Previous wording
Gross profit, for the year ended December 31, 2023, was $16.7 million, an increase of 8.7% or $1.3 million from the same period last year, and stated as a percentage of net revenues was 58.6%, an increase from 55.1% in the prior year.
Current wording
Gross profit, for the year ended December 31, 2024, was $21.3 million, an increase of 27.7% or $4.6 million from the same period last year. Gross margin was 63.4% for the year ended December 31, 2024, an increase from 58.6% from the prior year. We define gross margin as gross profit stated as a percentage of net revenues.
Previous wording
Operating expenses for the year ended December 31, 2023, were $27 million, up from $26.1 million for the same period last year, the increase was driven primarily by research and development and depreciation, partially offset by selling, general and administrative expenses.
Current wording
Operating expenses for the year ended December 31, 2024, were $27.8 million, up from $27.0 million for the same period last year.
Previous wording
Domestic core growth of 5.9% was primarily driven by volume growth in pumps and consumables attributed to overall SCIG market growth and new account share gains. International core growth of 10.4% was driven by increased volume across several EU markets and the entry into multiple new geographic markets. Novel therapies net revenues declined by 41.6% driven primarily by lower NRE revenue of $0.9 million and fewer clinical trial supply shipments of $0.2 million than in the prior year.
Current wording
Total net revenues increased $5.1 million, or 18.0%, to $33.6 million, for the year ended December 31, 2024, as compared with the same period last year. Domestic core growth of 12.3% was primarily driven by volume growth in pumps and consumables attributed to overall SCIg market growth and new account share gains. International core growth of 31.5% was driven by overall SCIg market growth, increased penetration in several established EU markets, and the entry into multiple new geographic markets. Novel therapies net revenues increased $0.9 million, or 61.9%, driven primarily by an increase in NRE collaborations and an increase in clinical trial supply shipments when compared to the prior year.
Previous wording
Gross profit increased $1.3 million or 8.7% in the year ended December 31, 2023, compared to the same period in 2022 driven by the increase in net revenues of $0.6 million coupled with a favorable cost of goods sold impact of $0.7 million. Gross profit as a percentage of net revenues increased to 58.6% in the year ended 2023 compared to 55.1% for the year ended 2022 primarily driven by increased manufacturing productivity and product mix versus the prior year.
Current wording
Gross profit increased $4.6 million, or 27.7%, to $21.3 million, in the year ended December 31, 2024, compared to the same period in 2023 driven by the increase in net revenues of $5.1 million coupled with significant gross margin improvement. Gross margin increased to 63.4% in the year ended 2024 compared to 58.6% for the year ended 2023, primarily driven by increased manufacturing productivity, improved margin on product revenue mix, and increases in average selling prices versus the prior year.
Previous wording
Our selling, general and administrative, research and development and depreciation and amortization costs for the years ended December 31, 2023, and 2022 are as follows:
Current wording
Our selling, general and administrative, research and development and depreciation and amortization expenses for the years ended December 31, 2024, and 2023 are as follows:
Previous wording
Selling, general and administrative expenses decreased $0.2 million, or 1.2%, during the year ended December 31, 2023 compared with the same period last year, primarily due to a $0.4 million decrease in compensation and benefits related to executive management restructuring costs that took place in the prior year, and a decrease in stock compensation costs of $0.2 million, partially offset by $0.4 million increase in compensation costs related to business development and medical affairs new hires.
Current wording
Selling, general and administrative expenses increased $1.3 million, or 6.2%, to $21.6 million, during the year ended December 31, 2024 compared with the same period last year, primarily due to a $1.7 million increase in compensation and benefits-related bonus accrual and sales commission related to year over year company performance, partially offset by lower recruiting expenses and liability insurance costs.
Previous wording
Our principal source of liquidity is our cash on hand of $11.5 million as of December 31, 2023. Our principal source of operating cash inflows is from sales of our products and NRE services to customers. 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, innovation, and equipment. Operating expenses for the 2023 fiscal year were $27.0 million.
Current wording
Our principal source of liquidity is our cash on hand of $9.6 million as of December 31, 2024. Our principal source of operating cash inflows is from sales of our products in our core business, NRE services, and clinical trial products to our customers. 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, innovation, and equipment. Operating expenses for the 2024 fiscal year were $27.8 million.
Previous wording
Our inventory position was $3.5 million at December 31, 2023, which reflected a decrease of $2.9 million from December 31, 2022.
Current wording
Our inventory position was $2.8 million at December 31, 2024, which reflects a decrease of $0.7 million from December 31, 2023.
Previous wording
We expect that our cash on hand and cash flows from operations will be sufficient to meet our requirements at least through the next twelve months. Continued execution on our longer-term strategic plan may require the Company to draw on our new credit facility, take on additional debt or raise capital through issuance of equity, or a combination of both. Our future capital requirements may vary from those currently planned and will depend on many factors, including our rate of sales growth, the timing and extent of spending on various strategic initiatives including research and development, our international expansion, the timing of new product introductions, market acceptance of our solutions, and overall economic conditions including inflation and the potential impact of global supply imbalances on the global financial markets. To the extent that current and anticipated future sources of liquidity are or are expected to be insufficient to fund our future business activities and requirements, we may be required to draw on our existing credit facility, seek additional equity or debt financing sooner. There can be no assurance the Company will be able to obtain the financing or raise the capital required to fund its operations or planned expansion.
Current wording
We expect that our cash on hand and cash flows from operations will be sufficient to meet our requirements at least through the next twelve months. Continued execution on our longer-term strategic plan may require the Company to draw on our credit facility, take on additional debt, raise capital through issuance of equity, or a combination. Our future capital requirements may vary from those currently planned and will depend on many factors, including our rate of sales growth, the timing and extent of spending on various strategic initiatives including research and development, our international expansion, the timing of new product introductions, market acceptance of our solutions, and overall economic conditions including inflation and the potential impact of global supply imbalances on the global financial markets. To the extent that current and anticipated future sources of liquidity are or are expected to be insufficient to fund our future business activities and requirements, we may be required to draw on our new credit facility or seek additional equity or debt financing sooner. There can be no assurance the Company will be able to obtain the financing or raise the capital required to fund its operations or planned expansion.
Previous wording
Net cash used in operating activities was $4.9 million for the year ended December 31, 2023. This net cash usage was primarily due to the net loss of $13.7, plus cash flows used to reduce accrued expenses of $1.2 million primarily from the payment of 2023 employee bonuses, and a decrease in accounts payable of $1.4 million. Partially offsetting these increases were cash flows generated from a decrease in inventory of $2.9 million, a decrease in accounts receivable of $0.5 million, and changes in working capital of $0.4 million.
Current wording
Net cash used in operating activities of $4.9 million for the year ended December 31, 2023 was primarily due to the net loss of $13.7 million, plus cash flows used to reduce accrued expenses of $1.2 million primarily from the payment of 2023 employee bonuses, and a decrease in accounts payable of $1.4 million. Partially offsetting these increases were cash flows generated from a decrease in inventory of $2.9 million, a decrease in accounts receivable of $0.5 million, and other changes in working capital of $0.4 million.
Previous wording
Further contributing to this change were non-cash items including a deferred tax asset increase of $2.0 million partially offset by the establishment of an allowance for non-realization of deferred tax assets of $6.0 million, stock-based compensation expense of $2.8 million, depreciation and amortization expense of $0.9 million and a loss on disposal of fixed assets of $0.1 million.
Current wording
Further contributing to this change were the establishment of an allowance for non-realization of deferred tax assets of $4.0 million, stock-based compensation of $2.8 million, depreciation and amortization of $0.9 million, and a loss on disposal of fixed assets of $0.1 million.
Previous wording
Net cash used in investing activities of $2.8 million for the year ended December 31, 2022, was for capital expenditures for manufacturing space, research and development laboratories and office equipment for our corporate office and manufacturing facilities move.
Current wording
Net cash used in investing activities of $1.3 million for the year ended December 31, 2024, was driven by capital expenditures for manufacturing equipment related to our production line for our next generation consumables.
Previous wording
Net cash used in financing activities for the year ended December 31, 2023 of $0.2 million, was from a net between borrowings and payments on our note payable for insurance premium financing of $0.1 million, and $0.1 million for payments on our finance leases.
Current wording
Net cash used in financings activities of $0.2 million for the year ended December 31, 2023, due to payments on our note payable for insurance premium financings, partially offset by the borrowings for the insurance premium financing, and $0.1 million for payments on our finance leases.
Previous wording
Refer to “NOTE 10 — DEBT OBLIGATIONS” and “NOTE 11 — SUBSEQUENT EVENT” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding debt and borrowing capacity.
Current wording
Refer to “NOTE 5 — DEBT OBLIGATIONS” in the accompanying “Notes to Financial Statements” appearing in this Annual Report on Form 10-K for further details regarding debt and borrowing capacity.
Previous wording
We have finance and operating leases for our corporate office and certain office and computer equipment. Our two operating leases have remaining lease terms of 8.6 years and 5 years, respectively. Our three finance leases have remaining lease terms of 3.4 years, 3 years, and 4.75 years, respectively.
Current wording
We have finance and operating leases for our corporate office and certain office and computer equipment. Our three operating leases have remaining lease terms of 7.7 years, 4.1 years, and 3.4 years, respectively. Our three finance leases have remaining lease terms of 2.4 years, 2.0 years, and 3.8 years, respectively.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Further contributing to this change were non-cash items of $3.8 million including stock-based compensation expense of $2.6 million, depreciation and amortization expense of $0.9 million, and $0.3 million for non-cash leasing charges and losses on disposals of fixed assets.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Total net revenues increased $0.6 million, or 2.2%, for the year ended December 31, 2023, as compared with the same period last year.