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KM

KORU Medical Systems, Inc. (KRMD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered 27% YoY revenue growth to $10.40M with 60.2% gross margin; international strength (PFS-driven) offset a 5% domestic decline tied to distributor inventory actions and a one-off cross-border ordering dynamic that management has corrected .
  • The company raised FY2025 revenue guidance to $40.5–$41.0M (from $39.5–$40.5M) and reiterated gross margin of 61%–63% and positive operating cash flow; ending cash is targeted >$8.2M .
  • Against S&P Global consensus, revenue beat by ~7.6% and EPS was essentially in line/slightly better: $10.40M vs. $9.67M*; GAAP diluted EPS $(0.02) vs. $(0.0225)*. The beat was driven by European prefilled syringe conversions and international stocking for anticipated demand; tariffs and mix moderated margins (expected to improve in Q4) .
  • Stock-relevant catalysts: raised guidance, international acceleration on prefilled conversions, oncology infusion progress (100% administration success; 70% of nurses reported ability to multitask) with 510(k) submission targeted late 2025/early 2026 and potential 2H26 entry .

What Went Well and What Went Wrong

  • What Went Well

    • International Core accelerated 230% YoY to $3.70M on prefilled syringe conversions and market share gains; management sees this as a multi-year opportunity with additional EU markets in the pipeline .
    • Raised FY2025 revenue guidance to $40.5–$41.0M; reiterated 61%–63% gross margin and positive operating cash flow, reinforcing execution confidence .
    • Oncology pilot completed across five U.S. infusion clinics with 100% administration success, high satisfaction and workflow efficiency benefits (70% of nurses able to multitask), supporting a 510(k) filing by late 2025/early 2026 and potential market entry in 2H26 .

  • What Went Wrong

    • Gross margin compressed 320 bps YoY to 60.2%, driven by higher manufacturing costs, geographic mix (more OUS at lower ASPs), and tariff-related charges; management expects improvement in Q4 .
    • Domestic Core declined 5% YoY to $6.12M due to a U.S. distributor inventory reduction and a one-off cross-border sale (international distributor sold into the U.S.), which inflated OUS and depressed U.S.; company says the dynamic has been corrected .
    • PST revenues dipped 4% YoY to $0.58M given timing variability of NRE work; inherent fluctuations persist across quarters .

Financial Results

Headline metrics versus prior periods

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$8.180 $10.195 $10.402
Gross Margin %63.4% 63.5% 60.2%
GAAP Diluted EPS ($)$(0.03) $0.00 $(0.02)
Net Loss ($USD Millions)$(1.581) $(0.207) $(0.778)
Adjusted EBITDA ($USD Millions)$(0.434) $0.339 $0.089

Actual vs. consensus (S&P Global) – Q3 2025

MetricActualConsensusSurprise
Revenue ($USD Millions)$10.402 $9.665*+$0.737 (+7.6%)
GAAP Diluted EPS ($)$(0.02) $(0.0225)*+$0.0025

Values retrieved from S&P Global.*

Segment breakdown (YoY)

Net RevenuesQ3 2024 ($)Q3 2025 ($)YoY %
Domestic Core$6,447,469 $6,122,365 (5.0%)
International Core$1,121,196 $3,695,524 229.6%
Total Core$7,568,665 $9,817,889 29.7%
Pharma Services & Clinical Trials$611,312 $584,274 (4.4%)
Total Net Revenues$8,179,977 $10,402,163 27.2%

Mix in Q3 2025: Domestic 58.9%, International 35.5%, PST 5.6% .

Quarterly trend KPIs

KPIQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$9.6 $10.195 $10.402
Gross Margin %62.8% 63.5% 60.2%
Cash & Equivalents (quarter-end, $USD Millions)$8.7 $8.1 $8.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenuesFY2025$39.5–$40.5M (Aug-6) $40.5–$41.0M (Nov-12) Raised
Gross MarginFY202561%–63% 61%–63% Maintained
Cash Flow from OperationsFY2025Positive; ending cash >$8.1M Positive; ending cash >$8.2M Maintained (ending cash +$0.1M)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Prefilled syringe (PFS) conversions in EuropeQ1: Key tender win; OUS PFS a multi-year driver . Q2: First market conversion; more markets expected through 2026 .OUS core +230% YoY; outsized stocking to support PFS demand; several EU countries preparing conversions .Accelerating
Domestic distributor dynamicsQ2 previewed inventory reduction at a large U.S. distributor in Q3 .U.S. Core −5% YoY from inventory reduction and cross-border ordering; $1.2M underlying mix impact; issue corrected .Transitory headwind, normalized
Gross margin driversQ1/Q2 reiterated 61%–63%; tariffs ~<100 bps; mix shifting OUS .GM 60.2% on mfg costs, OUS mix, ~50 bps tariffs; expect Q4 improvement; long-run 65%+ target .Near-term down; medium-term improving
Oncology infusion entryQ2: U.S. pilot launched; EU study showed 97% nurse preference .U.S. pilot: 100% success; 70% nurse multitask; reimbursement already supports pump admin; 510(k) late 2025/early 2026; 2H26 entry .De-risking; progressing to submission
International expansion (Japan)Q2: Registrations completed; sales to begin 2H25; bigger 2026 impact .On track; 2025 sales ~$0.3–$0.5M; PFS Europe remains larger near-term driver .Building; PFS > Japan near-term
New drugs on label (non-IG)Q1/Q2: Multiple 510(k) submissions; Empaveli expanded indication; rare disease biologic submission .Nine active collaborations; potential up to $10M by 2028 from non-IG; recent ForCast Ortho collaboration .Expanding
FY2026 growth outlook—“Number that starts with a two” for 2026; potential acceleration from PFS, oncology, new drugs .Positive setup

Management Commentary

  • “We achieved our second consecutive quarter with more than $10 million in revenue, representing 27% year-over-year growth… we are raising our full-year revenue guidance to $40.5 million–$41 million” — Linda Tharby, CEO .
  • “There were three specific factors that drove this geographic shift… U.S. distributor inventory reduction; outsized stocking orders in Europe to support PFS; and an international distributor sold product to a U.S. distributor… approximately $1.2 million underlying impact” — Tom Adams, CFO .
  • “We achieved a 100% success rate [in oncology], met all safety requirements… 70% of nurses reported the ability to multitask… we are on track for a 510(k) submission… with anticipated commercial entry in the second half of 2026” — Linda Tharby, CEO .
  • “We continue to consistently deliver margins greater than 60%… Q3 gross margin of 60.2%… we reiterate full-year margin guidance of 61%–63%” — Tom Adams, CFO .

Q&A Highlights

  • Oncology workflow and reimbursement: Clinics reported nurse multitasking (70%); existing reimbursement codes already cover pump-administered drugs in infusion centers, supporting adoption .
  • Q4 revenue mix cadence: Management suggested modeling ~70% U.S. and ~23%–24% international (remainder PST), normalizing after Q3’s mix shift .
  • 2026 outlook: While not issuing formal guidance, management is “comfortable with a number that starts with a two,” with upside from PFS conversions, oncology, and new drugs .
  • PFS cadence in Europe: First large market fully converted (vials delisted); manufacturer aims to complete most major markets by end of 2026; country-by-country rollouts expected .
  • Margin trajectory: Near-term mix/tariff headwinds, but long-term plan targets 65%+ gross margin through manufacturing efficiencies as scale grows .
  • Japan: 2025 sales expected ~$0.3–$0.5M; PFS Europe remains the larger near-term growth driver .
  • Cross-border ordering: Pricing protections and tracing requirements were used to identify and prevent recurrence; corrected within the quarter .

Estimates Context

  • Q3 2025 results vs consensus: Revenue $10.402M vs $9.665M* (beat +7.6%); GAAP diluted EPS $(0.02) vs $(0.0225)* (slight beat) .
  • Implications: Estimate revisions likely move higher on international PFS strength and raised FY revenue guidance; margin expectations may modestly compress near term on mix/tariffs, with Q4 improvement expected .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • International led the quarter (PFS conversions), driving a material revenue beat and a guidance raise; mix/tariffs compressed GM but Q4 improvement is expected, and long-term 65%+ remains the target .
  • Domestic softness appears transient and related to distributor actions and a one-off cross-border sale; management has corrected the issue and continues to see robust end-user demand .
  • Oncology pilot de-risked initial clinical and workflow elements; reimbursement already supports pump use in clinics; 510(k) filing near-term and 2H26 commercial entry provide a new adjacency catalyst .
  • Pipeline breadth (IG and non-IG) and pharma collaborations support medium-term acceleration, with management signaling comfort in sustaining “20%+” growth into 2026 .
  • Cash discipline continues: positive adjusted EBITDA in Q3, cash generation in the quarter, and reiterated positive operating cash flow for FY2025 with year-end cash >$8.2M .
  • Watch near-term: cadence of EU PFS conversions and Q4 margin follow-through; medium-term: 510(k) submissions (oncology, next-gen pump/flow controller) and Japan ramp .

Appendix: Additional Q3 Context

  • Development agreement (Nov 4): Collaboration with a global pharma company on a next-gen SCIg infusion system accommodating both vials and prefilled syringes, using SCHOTT TOPPAC polymer syringes—expanding partner alignment in PFS and device innovation .