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KM

KORU Medical Systems, Inc. (KRMD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net revenues were $8.84M (+23.0% YoY) with gross margin at 62.9%; adjusted EBITDA was ($0.7)M and diluted EPS was ($0.03). The company generated positive Q4 cash flow of $0.8M and ended the year with $9.6M in cash .
  • Initiated FY 2025 guidance: net revenues of $38.0–$39.0M (+13–16% YoY), gross margin of 61–63%, and operational cash flow positive for the full year; management expects sequential quarterly revenue growth in 2025 .
  • Core business strength drove the quarter: Domestic Core +19.6% and International Core +14.4% YoY; Novel Therapies +121.7% YoY, supported by increased collaborations and trial supply orders .
  • Strategic catalysts: three new products (flow controller line extension in Q3 2025; next-gen consumables FDA submission in H2 2025; next-gen pump 510(k) by late 2025/early 2026), ongoing international expansion, and the renaming of Novel Therapies to Pharma Services & Clinical Trials (PST) starting Q1 2025 .
  • Stock reaction catalysts: clarity on FY25 growth/OCF positivity, international acceleration (>20% expected), ePump consumable partnerships OUS, and near-term product launches that support margin and pricing expansion .

What Went Well and What Went Wrong

What Went Well

  • Domestic Core outpaced the SCIg market with Q4 revenues of $6.66M (+19.6% YoY), driven by new patient starts, market share gains, and targeted account work. “The team … use[s] some AI to understand which accounts to call on … leading to nice growth opportunity” .
  • International momentum: Q4 International Core $1.50M (+14.4% YoY) and FY 2024 +31.5% YoY, entering new geographies and advancing ePump consumable collaborations where manufacturers lack their own needle sets .
  • Margin expansion: Q4 gross margin 62.9% (+260 bps YoY) and FY 2024 63.4% (+480 bps YoY), driven by manufacturing efficiencies, favorable mix, and ASPs; supply chain cost increases were mitigated .

What Went Wrong

  • Profitability remains a work-in-progress: Q4 net loss ($1.56M), adjusted EBITDA ($0.73M), and FY 2024 net loss ($6.07M); operating expenses increased in Q4 due to performance-based compensation .
  • 2025 top-line growth guided below FY 2024 growth due to lumpiness in PST/Novel Therapies despite strength in core; management highlighted a large 2024 Phase III collaboration will not repeat in the same way in 2025 .
  • Anticipated margin headwinds in 2025 from product ramp costs, higher international mix, inflation/tariffs (assumed ~50 bps GM impact), partly offset by pricing and operational excellence programs .

Financial Results

Summary Financials (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Net Revenues ($USD Millions)$8.43 $8.18 $8.84
Gross Profit ($USD Millions)$5.48 $5.19 $5.60
Gross Margin (%)65.0% 63.4% 62.9%
Net Loss ($USD Millions)($0.99) ($1.58) ($1.56)
Diluted EPS ($USD)($0.02) ($0.03) ($0.03)
Adjusted EBITDA ($USD Millions)($0.37) ($0.43) ($0.73)

Segment Revenues (Quarterly)

Segment ($USD Millions)Q2 2024Q3 2024Q4 2024
Domestic Core$6.16 $6.45 $6.66
International Core$1.63 $1.12 $1.50
Total Core$7.78 $7.57 $8.16
Novel Therapies / PST$0.65 $0.61 $0.68
Total Net Revenues$8.43 $8.18 $8.84

KPIs and Balance Sheet Indicators

KPIQ2 2024Q3 2024Q4 2024
Cash & Cash Equivalents ($USD Millions, period-end)$10.46 $8.81 $9.58
Net Change in Cash (Quarter)($1.02)M ($2.68)M YTD change; Q3 usage $1.7M +$0.80M
Accounts Receivable ($USD Millions, period-end)$5.85 $5.16 $5.72
Recurring Revenue Base Share of Revenues (%)~75% ~75% ~75%
Estimated Recurring Annual Infusions (Millions)~2.0 ~2.0 ~2.0 (+18% YoY)

Note: Novel Therapies business is being renamed PST starting Q1 2025 without changing revenue recognition composition .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenues ($USD Millions)FY 2025N/A$38.0–$39.0 (+13–16% YoY) New
Gross Margin (%)FY 2025N/A61–63 New
Operational Cash FlowFY 2025Cash flow positive FY 2025 reiterated in Q2/Q3 Operational cash flow positive FY 2025 Maintained
OpEx excl. SBC ($USD Millions)FY 2025N/A$26–$27 New
Capital Equipment Investments ($USD Millions)FY 2025N/A< $2 New
Domestic Core Growth (%)FY 2025N/A10–15% New
International Core Growth (%)FY 2025N/A≥20% New
PST/Novel Therapies Revenue ($USD Millions)FY 2025N/A~$2–$3 (NRE + clinical product) New
GM Headwinds/DriversFY 2025N/AOnetime ramp costs; higher OUS mix; inflation/tariffs offset by pricing/efficiencies New
Tariff Impact on GMFY 2025N/A~50 bps GM headwind assumed New

Earnings Call Themes & Trends

TopicQ2 2024 (context)Q3 2024 (context)Q4 2024 (current)Trend
SCIg Market & Core GrowthRaised FY24 guidance; strong US/Core growth Third consecutive double-digit growth; FY24 guidance raised Domestic +19.6% YoY; International +14.4% YoY; FY24 core +15.6% Strengthening core momentum
International ExpansionJapan clearance; new geographies Geographies expanded; BSI-related order timing Multiple new geographies; targeting ePump consumable partnerships; ~10% OUS share Accelerating OUS growth
PST/Novel TherapiesPhase III trials; collaborations NT +276% YoY in Q3; pipeline execution NT +122% YoY; 4 new 2024 collabs; 2 added in early 2025; rename to PST Diversifying pipeline; lumpy revenue
Pricing/Mix & MarginsGM 65% driven by mix/efficiencies GM 63.4% + ASPs/mix GM 62.9% Q4; FY GM 63.4%; mitigated supply chain costs Sustained >60% GM with puts/takes
Tariffs/MacroNot highlightedEU certification context; macro in FLS ~50 bps GM headwind anticipated; broader inflation/supply pressures Manageable headwind
Product InnovationN/AOncology clinic preference data; path to clinic entry Flow controller line extension in Q3 2025; consumables submission H2 2025; next-gen pump 510(k) late 2025/early 2026 Near-term launch milestones
AI/Commercial ExecutionN/AN/A“use some AI to understand which accounts to call on” improving domestic penetration Targeted sales efficiency increasing

Management Commentary

  • “We saw double digit growth across each of our businesses … increased the number of collaborations … generated significant operating leverage that led to positive cash flow in the fourth quarter” – Linda Tharby, CEO .
  • “Fourth quarter gross margins were 62.9% … driven by manufacturing efficiencies … higher ASPs” – Tom Adams, CFO .
  • “Starting in the first quarter of 2025, we will be renaming our Novel Therapies segment to Pharma Services and Clinical Trials … reflects the nonrecurring nature of the business” – Tom Adams and press release .
  • “We expect sequential quarterly growth throughout [2025] … sustained global SCIg market growth in the 8% to 10% range … Japanese market entry” – Tom Adams .
  • “We are excited by the pending launch of 3 new products … flow controller … new consumables … next-generation SCIg pump” – Linda Tharby .

Q&A Highlights

  • Guidance breakdown: Domestic growth 10–15%; International ≥20%; PST ~$2–$3M; sequential quarterly growth expected in 2025 .
  • Domestic share gains drivers: AI-enabled account targeting, new agreements preferring KORU for new patient starts, and price increases in July contributing in Q4 .
  • ePump consumables strategy OUS: Early innings with substantial runway; manufacturers lack their own consumables; KORU at ~10% OUS share with scope to grow .
  • Oncology clinic opportunity: Focus on proving nursing time savings, patient satisfaction, reimbursement feasibility, and US distribution; filing pathway well-understood .
  • Cash flow and deployment: International working capital needs are planned; line of credit available for larger ROI opportunities; operational cash flow positive targeted for FY25 .
  • Tariffs: Comprehensive review completed; minor impact from certain China-sourced assembly parts; ~0.5 percentage point GM impact assumed .

Estimates Context

  • Attempts to retrieve S&P Global consensus EPS and revenue estimates for Q4 2024 (and Q3/Q2 2024) encountered a rate-limit error, making consensus unavailable at the time of analysis. As a result, we cannot assess beat/miss versus Wall Street for this quarter from S&P Global data [functions.GetEstimates error].
  • Given management’s FY25 guidance (13–16% revenue growth; 61–63% GM; OCF positive), consensus models may need to reflect sequential quarterly growth, OUS acceleration, PST lumpiness, and near-term margin headwinds from product ramp and tariff/inflation pressures .

Key Takeaways for Investors

  • Core business momentum with Q4 net revenues $8.84M (+23% YoY) and sustained >60% gross margins positions KRMD for mid-teens revenue growth in FY25, with sequential quarterly ramp .
  • International expansion (>20% growth expected) and ePump consumable partnerships are structural growth drivers as the company enters new geographies and leverages consumables in pump-dominant markets .
  • PST/Novel Therapies provides optionality but remains lumpy; management expects ~$2–$3M FY25 contribution as collaborations progress toward potential commercial launches by 2026 .
  • Near-term product catalysts (flow controller line extension in Q3 2025; consumables submission H2 2025; next-gen pump 510(k) late 2025/early 2026) can expand addressable market, improve margins, and support pricing .
  • Margin trajectory: FY25 GM 61–63% despite headwinds (ramp costs, OUS mix, tariffs/inflation); operational excellence and pricing initiatives aim to offset and sustain margin profile .
  • Cash discipline: Q4 positive cash flow (+$0.8M) and FY25 OCF positive guidance reduce financing risk; line of credit provides flexibility for larger ROI opportunities .
  • Watch for updates on oncology clinic entry, expanded nephrology indication, and Japan commercialization—each a potential catalyst altering growth and mix dynamics .

Appendix: Prior Quarter Context (for Trend Analysis)

Q3 2024 Highlights

  • Net revenues $8.18M (+16.8% YoY); GM 63.4%; NT +275.6% YoY; FY24 revenue guidance raised to $32.75–$33.25M and GM to 62–63% .

Q2 2024 Highlights

  • Net revenues $8.43M (+21.5% YoY); GM 65.0%; record quarterly revenues; FY24 revenue guidance raised to $32.0–$32.5M and GM to 61–62% .

Preliminary Q4/FY 2024 (Jan 2025)

  • Preliminary Q4 revenues ~$8.9M (+23% YoY); FY revenues ~$33.7M (+18% YoY); ending cash $9.6M with Q4 positive cash flow $0.8M .