Greetings. And welcome to the KORU Medical Systems’ Fourth Quarter and Full Year 2024 Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I’d now like to turn the conference over to Louisa Smith of Gilmartin Group, please go ahead.

Thank you, Juilian, and good afternoon, everyone. Joining me on the call today are Linda Tharby, President and CEO of KORU Medical Systems and Tom Adams, Chief Financial Officer. Earlier today, KORU released financial results for the fourth quarter ended December 31st, 2024. A copy of the press release is available on the company's website. I encourage listeners to have our press release in front of you, which includes our financial results as well as commentary on the quarter. Additionally, we will use slides to support commentary in today's call, which are also available on the Investor Relations section of our website. During this call, we will make certain forward-looking statements regarding our business plans and other matters. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to risks and uncertainties, including those mentioned in the associated press release and our most recent filings with the SEC. We assume no obligation to update any forward-looking statements. During the call, management will also discuss certain non-GAAP financial measures. You will find additional disclosures, including reconciliations of these non-GAAP measures with comparable GAAP measures in our press release, the accompanying investor presentation, and SEC filings. For the benefit of those listening to the replay, this call was held and recorded on Wednesday, March 12, 2025, at approximately 4:30 p.m. Eastern Time. Since then, the company may have made additional comments related to the topics discussed. I'd now like to turn the call over to Linda Tharby, President and CEO. Linda, please go ahead.

Thank you, Louisa. Good afternoon, everyone, and thank you to all of the investors and analysts joining us on our earnings call today. I'll begin with commentary on our strategic progress, including fourth quarter and full year updates, followed by Tom, who will review our financials and 2025 guidance. We will then open the line for your questions. 2024 marked a significant year for KORU Medical with several advancements in our strategy to become a global leader in large-volume subcutaneous drug delivery in the home and in the clinics. Today, the majority of this large-volume subcutaneous market is made up of immunoglobulin, which accounts for approximately 90% of our current patient base. The SCIg market grew more than 10% in 2024 as a result of rising global infection rates, driving increased patient diagnosis. And with only 20% to 30% global penetration of SCIg into the broader IG market, we see significant growth potential ahead. In addition to the core SCIg market, the broader large-volume subcutaneous market is rapidly growing. There are over 18 large-volume drugs in development as we continue to see pharmaceutical companies drive their portfolios to the subcutaneous format, supporting the broader trend of movement of care away from the hospital setting. These novel therapies represent a significant opportunity and the growing potential to bring new patients onto the KORU Freedom Infusion System. We also delivered strong financial performance in the year. Fourth quarter results saw record-setting revenues, continued gross margin expansion, and positive cash flow. Q4 revenues grew 23% and full year revenues totaled $33.6 million, representing 18% growth. Each of our businesses saw double-digit increases. Our core business grew by 16% on the year, outperforming robust SCIg market growth as a result of great work by our team to drive increased market share capture and enter…

Thanks, Linda. Starting with our fourth quarter results, we had an excellent finish to the year, delivering $8.8 million in revenues, representing 23% growth over the prior year period. Our domestic core revenues were $6.7 million, a 20% increase over the prior year, as our growth continued to outpace the overall SCIg market. Strong performance was driven by growth in both consumable and pump volumes as a result of new patient starts and market share gains during the quarter. In the international core business, we delivered strong revenues of $1.5 million, representing growth of 14% over the prior year. Growth was driven by continued penetration in our established markets as well as geographic expansion into new territories. Novel therapies revenues were $700,000 or 122% growth over the prior year. The growth was driven by continued progress on our NT pipeline with an increased number of collaborations generating NRE service revenue and related clinical trial product revenue. Moving over to our full year results, we delivered strong performance with $33.6 million in revenues, representing 18% growth over the prior year. Our domestic core revenues were $25.2 million, a 12% increase over the prior year, outpacing SCIg market growth. Domestic core was driven by strong pump and consumable volume growth, driven by the share gains in new and existing accounts. International core revenues were $6 million, representing growth of 32% year-over-year. Growth in our international business was driven by consistent SCIg supply, overall market growth, consumable growth across both new and existing markets, and strong performance in newly entered geographies. Our novel therapies revenues were $2.4 million compared to $1.5 million in the prior year, also representing 62% growth. Revenue growth was driven by an increased number of NRE collaborations and increased clinical trial product revenue. Moving to our gross margin performance,…

Thanks, Tom. Over the last several years, we have invested in our innovation capabilities, and we are excited by the pending launch of three new products over the next year. These are all focused on offering increased convenience, time-saving, and improved patient comfort for the patients and clinicians that use our products every day in the home and in the clinic. Starting with the flow controller, this is a product we offer today in various selected geographies in the EU that allow clinicians and patients the ability to adjust flow rates with an easy-to-use dial. We plan to roll out the device in two phases. The first phase is a line extension that does not require an updated 510(k) submission and is expected to launch in Q3 with an improved cost of goods sold and increased in overall production capacity, allowing us to expand to new geographies. The second phase is our next generation product, which will have a 510(k) submission in the first quarter of 2026. The new product will come with increased performance and accuracy compared to our current offering and allow KORU to pursue expanded label indications and enter new markets. Our second pending launch is our new consumables product that is planned to be submitted to the FDA in the second half of 2025. The product features compatibility for an expanded range of flow rates and dosage sizes while also having a simplified user interface and providing increased comfort during infusion. The customizable platform will be compatible with mechanical and e-pumps, allowing us to better serve new and existing markets as we add new drug classes to our labels and continue our collaborations with pharma companies developing their new drug therapy. We plan to submit the next generation SCIg pump for 501(k) clearance between the end…

[Operator Instructions] Our first question comes from Chase Knickerbocker with Craig-Hallum Capital Group.

Good afternoon and thanks for taking the questions and congrats again on a great quarter. Maybe just first on 2025 guidance. Tom, if you could break it down just a little bit more for us on kind of your growth assumptions specifically in domestic and international and then kind of what contribution you expect from pharma services and clinical trials in the year can be a bit lumpy and sometimes hard for us to model. So, kind of a breakdown would be nice. Thanks.

Yes, thanks for the question, Chase. Yes, the way we were looking at our guidance from a domestic standpoint, you can expect between 10% and 15% revenue growth. From an international perspective, we expect over 20% growth where we continue to expand in that region. So, 20% being the minimum. And then from a novel therapies standpoint, you can always expect between around $2 million to $3 million between our NRE and our clinical product sales of revenue for the year.

Got it. And then just on the domestic side and internationally as well, I mean, it's kind of helped us think about the breakdown between kind of call it new wins and kind of expansion other drugs and other opportunities versus kind of just continued share taking with existing drugs and existing indications broadly in 2025, both domestically and internationally, kind of what drives the above market growth kind of as a share of those two?

Yes. So, let me start with the exciting part, which would be the international space. So, as you can see with the performance that we had last year, we entered into many new geographies. So, as we think about those new geographies and the annualization impact of those geographies, we see some nice upside with those markets. In addition, some of the new geographies we're entering into, such as Japan and some other countries that we continue to expand on, we expect to see some nice upside in those areas. And just to note too, we do expect sequential growth from a cadence perspective, quarterly sequential growth in that geography. From an o-US standpoint, yes, we continue to push. We continue to add new customers to our distribution accounts. We have seen a nice traction since last year with respect to market growth. As Linda mentioned earlier in the remarks diagnosis of infections have gone up. The market is still very strong heading into the first quarter here. So, we continue to see some nice upside in the U.S. as well. I don’t know, Linda you want to add some more stuff.

Maybe just Tom said o-US, but I think he meant to say U.S. market in his last set of remarks. The only thing that I would add, Tom, excellent summary, is that we continue to see increased traction o-US with our e-pump collaborations with our needle sets. That is driving some significant growth for us with the commercial team there really focusing on that in the back half of ‘24, and we've seen some nice progress into 2025 in that area, so.

Helpful. And then, Linda, just if I could sneak one more in. On the oncology opportunity, can you remind us what's left to do on the filing there and when we could be in the infusion clinic there?

Yes. I would say on the filing, we actually feel pretty confident about what it takes to get an FDA approval here. More of the work we're doing is on the market assessment side. So, we've got three things. We're looking at proving out here our value proposition the product and saving nursing time, increasing patient satisfaction. So, we're actively working today with clinics to generate that data. Second is understanding reimbursement and ensuring that the increase in costs that we see about $10 on average for infusion can be absorbed with reimbursement, and also that it drives the savings and efficiencies in the clinic that we are anticipating. And then the third is establishing a new distribution partner for ourselves in the U.S. market. Making good progress on all of those and look forward to giving you updates as the year progresses.

Our next question comes from Frank Takkinen with Lake Street Capital Markets.

Great. Thanks for taking the questions. Congrats on a really solid finish to the year. I was hoping we could talk a little bit more about the core domestic business. Clearly, that business outperformed really well in the fourth quarter. I don't think we've seen you outperform market growth as much as you did this quarter. So, just curious if there was something different that occurred that kind of is maybe allowing you to take more market share and if that 20% growth or 20% plus growth in the core business is something that you could replicate beyond kind of your thoughts around the 10% to 15% growth that you've laid out?

Yes. So, first, I would say that the team has been focused all year on really a go-to-market model where they use some AI to understand which accounts to call on and to further focus on for increased penetration. That led to some nice growth opportunity for us that picked up and carried steam throughout the year. We also signed some new agreements with some of our accounts which preferred KORU for their new patient starts. So, I think we're seeing some uptick relative to that. We had a little bit of price impact in the fourth quarter that we carried from a price increase we did in July of this year. So, all of those things combined, we are extremely pleased with, as you know, our U.S. business is the biggest part of our business and the overall market growth continuing to accelerated each quarter. And I don't know about you, but everyone I know has had been sick for a long period of time this season. And, of course, well, we don't like that for humans. It is good for our business because increased infections lead to increased diagnosis of immune deficient populations. And that is really, we're seeing a lot of uptick there. So, as for your question, well, we can anticipate 20% growth. We do feel confident in that 10% to 15% growth ongoing for this is an area. But it's an area we'll watch for continued upside, which could be driven by continued SCIg market growth beyond the 10% level, 8% to 10% is in our guidance. And also, based upon new account wins that we could see would drive increased U.S. performance.

Okay. Really helpful. Maybe talking a little bit more about the e-pump opportunity, maybe explain that market a little bit more to us in relation to kind of where you feel your penetration is into that with partnering your disposable with existing e-pumps out there and maybe an analogy and what inning we're in into your penetration. And that would kind of help us understand how much more there is to go in penetrating that e-pump opportunity.

Sure. So, maybe just as context in Europe, the subcutaneous IG market is dominated by e-pumps. We have our mechanical pumps in one region, which is the Nordic region, where that therapy tends to dominate driven by a KOL that started with mechanical pumps several years ago. In the remainder of the markets, I think kudos to our commercial team really said this year, let's try to forge new partnerships and go after the consumables, which really drive 85% of our business. So, that strategy, I would say we really started in earnest in about second quarter of last year. So, I'd say we're in the early innings and we see it as a potential significant growth driver for us moving forward. We've already seen upsides to our numbers that we were anticipating in 2024. We've had some nice wins early in 2025 in that area. And as I said we have just over 10% market share. So, a lot of room to grow there into that population. None of those manufacturers have their own consumables. So, happy to partner with us. And with our new consumables launch, we think we'll have opportunity for even more upside.

Okay, great. And then just maybe one last one on gross margin. Maybe think about gross margin a little bit longer term. I heard the comments about there's some one-time expenses related to the scale up in this year, maybe longer term. How do you feel the new product portfolio allows you to expand gross margins and where could we see that shake out over time?

Yes, maybe I'll start and then I'll hand it to Tom. So, one of the things we're most excited about is our new consumables launch. We work really hard on increasing efficiencies driven primarily through automation as we ramp to that line. So, we expect that new manufacturing strategy will drive us to that 65% plus gross margin range. Tom, any further comments?

Yes, and of course, Frank, we are constantly reviewing our manufacturing footprint. We have operational excellence programs. And so, yield improvements are constantly being looked at. As we grow in size and we sell more volume, we will continue to find margin improvements within our manufacturing space. And then, of course, as Linda mentioned, with the new product launches that are coming out, we expect to have some price premium on those products on the longer term.

Our next question comes from Jason Bednar with Piper Sandler.

Hey, good afternoon. Linda, I want to start with I think you made some comments just on the press release here today just that the strength that you had in ‘24 continued into ‘25. It's really good to hear. But your guidance is calling for a deceleration in revenue growth versus ‘24 and also versus where you finish in the fourth quarter. So, I guess how should we reconcile those comments that you made within in the context of that financial guidance and even in response to that, could you maybe compare and contrast the factors that are maybe within your control versus those that are more market dependent when we think about that $1 million range in your revenue guidance?

So, what I would say around our guidance is the primary reason for that is due to our novel therapies. And remember, that business, we could support a really big trial in 2024, which we did. We had a really big Phase 3 trial that we announced in 2024. And that drove significant revenues. And you start from ground zero with those revenues every single year. So, we anticipate some lumpiness in those revenues in that guidance range that I talked about. With respect to our core business, I think our U.S. business that we saw grow this year overall in that 12% range, as we said to Tom, we anticipate increased performance in that area this year. And in our o-US business, international, we expect this year we saw 30%. We're anticipating plus 20%, a little bit of a higher base, but that could be opportunity for outperformance. So, really the difference there that you see is just that novel therapy space and the lumpiness that we see there. But both other areas of the business, Jason, I would say are stronger. And overall, the guidance that we discussed is in line with what we saw in 2024

Okay. Linda, thanks. That's helpful. But maybe the swing factor, high-end, low-end in your guide and how much is in your control versus market dependent?

Yes. Thank you. I missed that second part of the question. I would say that, first of all, the biggest swing factor then, of course, is our novel therapies revenues and how much we can accelerate into 2025 based upon various movements with pharmaceutical manufacturers. We feel good about our guidance range today relative to the commitments that we have with pharmaceutical manufacturers. And then, obviously, further international growth and some wins that we haven't anticipated, faster growth in Japan become big opportunities for us on the upside. Continued U.S. market share growth is big for us. Obviously, that overall market is not within our control. But based upon all of the earnings reports and forward-looking analysis presented by all of the IG manufacturers, they all grew those franchises in the 15-plus percent range this year, which they're all highlighting in those areas for continued growth for them. So, we feel quite good that all four of those manufacturers are reporting strong, forward-looking growth in that IG market.

Yes. Absolutely. That's encouraging. Tom, if I could shift over to you, maybe a couple of questions here, and I'll ask them both up front. One, as we think about the international expansion, typically, this tends to be a working capital use for companies when they go through this process. You got, we got more inventory you have to carry, you have longer receivable terms. How has this factored into your view on cash flow positivity for the year? And then, related to that point, the second part of the question is, as we transition to this cash flow positivity, which is great to see, how do you think about deployment from here? How aggressive do you look to get with internal investments to further support top-line growth and maybe even take some riskier bets out there?

Yes, great questions. Thanks for that, Jason. Yes, so, just on the first one, in terms of the o-US expansion, it's all within our planning. We realized that we grew 30% o-US last year. We do realize that payment terms are generally 15 to 30 days higher than likely our U.S. business. That's all planned in our guidance from that growth perspective. So, I would say from that perspective, we feel pretty good. We feel also pretty good about our inventory levels and the respective planning around building those inventories for those markets. So, all planned out and part of our operational cash flow guidance, I'd say. Just from a deployment standpoint of future capital as we continue to grow, yes, of course, we expect to be operational cash flow breakeven. We do have a means to reinvest up to a certain level, I would say, of cash. We still hold a lot of credit if needed for larger ROI opportunities internationally. And so, we feel with our current strategic plan that we have enough capital to deploy in those areas, if need be, for opportunities. Obviously, if a very large opportunity comes our way, we would, of course, revisit those opportunities in line with our debt and in line with any other types of cash raises.

Our next question comes from Anderson Shack with B. Riley Securities.

Hi. Congrats on the great quarter and thank you for taking our questions. So, first, with your agreement with SCHOTT Pharma, is this integrating the next-gen pump you're submitting for 510(k) clearance later this year with their pre-filled syringes or are you developing another pump alongside SCHOTT?

So, the pump is being developed in collaboration with SCHOTT in so much as they are sharing all of their pipeline relative to pre-filled syringes. They're sharing all of their advancements in those areas so that we can ensure the interaction of those syringes with our pump. It will be; however, a KORU-owned IP pump and it will be a KORU submitted for 510(k) separate from their pre-filled submissions. The real beauty of it is we get a really early read on everything happening in the pre-filled syringe environment.

Okay. Got it. And this is the pump you plan on submitting later this year?

Correct. Later this year or first quarter of 2026.

Okay. Got it. And then will the next-gen consumables be compatible with the existing Freedom Edge and FREEDOM60 pumps?

They will. They will be compatible, obviously, with that and with our new pump. Our new pump will not be compatible with anyone else's consumable.

Okay. And then, finally, how many of your 15 novel therapy partners right now are in Phase 3 clinical trials?

That is a great question. I'm going to have a quick look at, but I believe it is four that we have in there, but it could be one more than that. Let me have a look. Yes. So, one, two, three, sorry, five. Five in total. I missed one of the IG candidates.

Our next question comes from Michaela Smith with the Canaccord.

Hi, everyone. Michaela filling in for Caitlin Cronin today. Thanks for taking the question and congrats on a great quarter and a strong end to the year. I was wondering if you could talk a little bit about any expected business impacts from tariffs and do you have any thoughts on how the tariffs might affect manufacturing and supply chain costs, potential headwinds or challenges to the o-US business, especially with your focus on expansion?

Sure. Hi, Michaela. I'll take that one. So, we did have a comprehensive review on tariff impacts. As you know, our assembly production is here in the US and our consumer production is down in Nicaragua. Obviously, those countries are not impacted. We do have a slight impact on some assembly parts that we procure out of mainland China. And so, we have factored that into our guidance. But I would say it's relatively immaterial because they are not main components for those assembly of our pumps. So, we're assuming about a half a point for the tariff impact on full year gross margin.

It doesn't look like there are any further questions at this time. I'd like to turn the floor back to Linda Tharby for closing remarks.

So, again, I'd like to thank you all for joining us this afternoon. We look forward to providing you with further updates on additional opportunities as we make progress against our 2025 milestones. Have a great rest of your day.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.