KORU Medical Systems Announces 2021 First Quarter Financial Results

First Quarter 2021 Summary:

• Announced Linda Tharby, med-tech veteran, as President and CEO, effective April 12, 2021
• Recorded solid net revenue of $5.4 million; robust sequential quarterly growth
• Gross margin of 59.5%
• Recorded a net loss of $1.3 million, including leadership change expenses totaling $1.3 million

“I am very excited and grateful for the opportunity to lead KORU Medical in its mission to improve the quality of life of home infusion patients around the globe,” said Linda Tharby, KORU Medical’s new CEO. “KORU Medical has built a leading market position in a growing home infusion space with its Freedom Integrated Infusion System. I look forward to working with our team in accelerating our growth potential, delivering innovation to our customers, and creating value for shareholders.”

“In the first quarter of 2021, we faced difficult year-over-year quarterly revenue comparisons, which included several one-time purchases and a current year COVID-19 impact on new patient starts. I am encouraged by our strong sequential quarterly growth and increasing new pump placements, indicating newly diagnosed SCIg patients returning to pre-COVID levels.”

First Quarter 2021 Financial Results

Net sales were $5.4 million for the three months ending March 31, 2021, a 14% decrease from $6.3 million in the same period of 2020, with strong sequential quarterly growth. The decrease was due principally to lower novel therapies sales compared to last year due to a non-recurring clinical trial, lower domestic core pump volume primarily due to ordering patterns, and a one-time pharmaceutical customer pump purchase in the prior year. Domestic core business also reflected a slowdown in the growth of new patient starts for SCIg therapy, as the COVID-19 pandemic continued to delay provider visits and new diagnoses.

International revenues were $1.0 million, flat with prior year.

Gross margin was 59.5% for the first quarter of 2021, roughly equivalent to the same period in 2020.

Total operating expenses for the first quarter of 2021 were $5.4 million, compared to $3.2 million for the same period in 2020. The $2.2 million increase was due principally to expenses of $1.3 million related to leadership changes, which included non-cash equity charges, as well as costs of $0.6 million associated with new hires in the second half of last year to support commercialization, business development, and medical affairs for the Company’s novel therapies initiatives.

Net loss for the first quarter of 2021 was $1.3 million, or $(0.03) per diluted share, compared to a net gain of $0.4 million, or $0.01 per diluted share for the same period of 2020. Net loss for the first quarter of 2021 included $1.3 million of recent leadership change expenses, as noted above. On a non-GAAP basis, adjusted diluted earnings per share was $0.00 compared to $0.02 in the same period of 2020.

Non-GAAP adjusted EBITDA for the first quarter of 2021 was $(0.4) million, compared to $1.3 million in the first quarter of 2020.

About KORU Medical Systems

KORU Medical Systems develops, manufactures, and commercializes innovative and easy-to-use specialty infusion solutions that improve quality of life for patients around the world. The FREEDOM Syringe Infusion System currently includes the FREEDOM60^® and FreedomEdge^® Syringe Infusion Drivers, Precision Flow Rate Tubing^™ and HIgH-Flo Subcutaneous Safety Needle Sets^™. These devices are used for infusions administered in the home and alternate care settings. For more information, please visit www.korumedical.com.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. All statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by words such as “may,” “look forward” and “confidence.” Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, uncertainties associated with the shift to increased healthcare delivery in the home, new patient diagnoses, customer ordering patterns and COVID-19, and those risks and uncertainties included under the captions “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, which is on file with the SEC and is available on our website at www.korumedical.com/investors and on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of March 31, 2021. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

Reorganization Charges. We have excluded the effect of reorganization charges in calculating our non-GAAP measures. We incurred significant expenses in connection with the departure and replacement of our chief executive officer and the recruiting of two new board members, which we would not have otherwise incurred in periods presented as part of our continuing operations.

Discontinued Product Expense. We have excluded the effect of expenses related to a discontinued product line in calculating our non-GAAP measures. We expected to retire our Res-Q-Vac product line towards the end of 2020, but due to the failure of equipment used to manufacture the product, the discontinuation and resulting expense was accelerated into the first quarter of 2020 which we would not have otherwise incurred in periods presented as part of our continuing operations. We did not incur any related expense in 2021.

Litigation. We have excluded litigation expenses in calculating our non-GAAP measures. Litigation expenses in 2020 included professional fees associated with our litigation with EMED, which discontinued as a result of the settlement on May 20, 2020.

Manufacturing Initiative Expenses. We have excluded the effect of expenses related to creating manufacturing efficiencies, in calculating our non-GAAP measures. We incurred expenses in connection with these initiatives which we would not have otherwise incurred in periods presented as part of our continuing operations. We expect to incur related expenses for the next nine to fifteen months.

Stock-based Compensation Expense. We have excluded the effect of stock-based compensation expense in calculating our non-GAAP measures. We record non-cash compensation expense related to grants of options for executives, employees and consultants, and grants of restricted shares to our board of directors. Depending upon the size, timing and the terms of the grants, the non-cash compensation expense may vary significantly but will recur in future periods. Adjusted EBITDA for the three months ended March 31, 2021 included stock-based compensation expense of $0.4 million related to the departure and replacement of our chief executive officer. This expense is included in Reorganization Stock-based Compensation Expense in calculating Adjusted Diluted EPS.

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