KORU Medical Systems, Inc. (KRMD) Q2 2026 Earnings Call Transcript

Greetings, and welcome to KORU Medical Systems Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, please press the appropriate button on your phone. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Louisa Smith. Thank you. You may begin.

Thank you, operator, and good afternoon, everyone. Joining me on the call today are Adam Kalbermatten, President and CEO, and Tom Adams, CFO. Earlier today, KORU released financial results for the second quarter ended 06/30/2026. A copy of the press release is available on the company's website. I encourage listeners to have our press release in front of them, which includes our financial results and commentary on the quarter. Additionally, we will use slides to support further 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 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, 08/05/2026 at approximately 04:30 Eastern time. Since then, the company may have made additional comments related to the topics discussed. I would now like to turn the call over to Adam. Please go ahead.

Thank you, Louisa, and good afternoon, everyone. I will begin with commentary on this quarter's highlights and strategic progress. Tom will then speak to our financial performance and the current assumptions around guidance before we open the line for questions. This is my first quarter reporting as CEO, and I want to start by saying how excited I am about the company's position and the opportunities that lie ahead for KORU. Today, we are the global leader in large-volume subcutaneous infusion devices for drug delivery, serving the at-home infusion needs of roughly 60 thousand chronic and recurring immunoglobulin patients through our Freedom Infusion System. The broad market opportunity for subcutaneous IG administration continues to shift from hospitals to infusion centers and increasingly into the home. KORU continues to be positioned as a direct beneficiary of that shift by providing an easy-to-use and differentiated way for patients to deliver their therapies outside the clinical setting. My focus as CEO is on extending our leadership position as the broader drug landscape follows this shift toward alternate sites of care focused on subcutaneous infusion versions versus IV. We are constantly assessing opportunities to bring more drugs onto our label and improve our technology. To achieve this, our fundamental strategy remains focused on scaling our industry-leading mechanical platforms while selectively integrating smart capabilities that complement our core devices. By adding data-driven smart connectivity into our existing infusion systems, as is our intention with this quarter's technology asset acquisition, we aim to provide an enhanced level of support for the patients who want it while offering valuable data-driven insights to our pharmaceutical and specialty pharmacy partners. This approach allows us to preserve the simple, trusted mechanical experience that patients rely on while building the foundational capabilities to lead the drug delivery market as it gradually adopts connected health solutions. I am pleased with our performance in Q2, delivering $12 million in revenue, representing 18% growth for the quarter and 20% for the first half of the year. This momentum is built on the strong predictable foundation of our recurring IG patient base, coupled with our proven ability to capture new patient starts and actively expand our market share both in the U.S. and internationally across both home and alternate-site clinical environments. Financially, we executed well. We improved gross margin by nearly 200 basis points above our 2026 range, and notably, we delivered positive net income for the first time since 2019 — a major milestone in KORU's strategic evolution and further evidence of our ability to drive profitable growth. As I step into the CEO role, we are actively building upon this momentum. Our foundational three-pillar strategy remains our central focus, and we are executing against it with a heightened sense of urgency, scale, and vision. Looking at our growth pillars: on the domestic side, we grew our core business more than 12% year-over-year, which is heavily supported by patient retention and continued market share gains with new patient starts in a growing population. Our domestic business continues to remain strong and has been growing at or above expectations quarter after quarter. On RYSTIGGO, we continue to see adoption with new patient starts and are receiving strong feedback from both clinicians and patients. We view RYSTIGGO as a contributor to our domestic business, but more importantly as a strategic validation of our platform's capability to deliver innovative non-IG chronic therapies. We are highly encouraged by this ongoing expansion, which further reinforces our ability to successfully diversify our clinical indications and expand our addressable patient footprint. Internationally, we grew the business by 59% year-over-year. This strong performance was driven by high volumes of both pumps and consumables, fueled by sales to distributors who are supporting the conversion of patients into prefilled syringe formats, along with strong momentum from new patient starts within our established international markets. Looking ahead to the back half of this year, we remain highly focused on executing our international expansion, though we expect our near-term international core growth to moderate as we navigate some specific regional launch dynamics. As we continue to build out our presence in newer prefilled syringe markets, some markets may take longer to ramp than we initially anticipated. In tender markets, we win the pharma practically overnight. In other markets like the U.S., where we win every new patient start as our distributors methodically convert from vial to PFS one by one, it may take a little more time. In our Q1 call, we noted that our growth rates in these newer regions can be lumpy as we deepen our local market knowledge and expand our capabilities. It is crucial for the long-term health of the business that we establish the right distribution and reimbursement pathways. Unlocking this opportunity is simply taking us a little longer than forecasted in our assumptions. While this pacing may impact the international core growth rate in the short term, we remain encouraged by the progress in these markets as the foundational pieces fall into place. We also remain confident in the size of the overall international prefilled syringe market opportunity and are bullish in our long-term ability to capture significant market share internationally. Building the right commercial and regulatory foundation in these new conversion markets takes time, but we are highly disciplined and diligent at the outset so that we are positioned to maintain permanent market leadership in the future. In our pharma services business, we continue to systematically advance our established programs while initiating early-stage discussions with new potential pharmaceutical partners. Because many of these collaborations are designed to navigate the multiyear pharmaceutical development pathway, they serve as the engine for fueling our long-term growth pipeline. Biogen's recent acquisition of Apellis is an example of this. There may be some challenges to the timing and magnitude of near-term clinical trial activity as they work through standard post-acquisition integration activities, but we remain focused on a long-term partnership supporting their clinical development pipeline as their subcutaneous infusion programs advance. Turning to some strategic updates, we are pleased to announce our acquisition of a connected monitoring technology asset we believe will enhance the patient experience, deepen our value proposition, give us a meaningful new capability in generating real-time data insights, and assist us in entering new clinical trials with pharmaceutical partners. Ultimately, the technology will support a better day-to-day experience for patients in addition to providing specialty pharmacies and pharmaceutical companies real-world evidence across the patient base. Additionally, we believe this will be a key differentiator of the best-in-class KORU mechanical platform in our pharma services business where partners will have real-time insights into dosing data during clinical trials. This capability will be valuable because precise adherence tracking and real-world data capture are vital for ensuring trial integrity, accelerating regulatory approval timelines, and ultimately generating the robust evidence required to secure favorable payer reimbursement upon commercialization. This is a multiyear build for us, but we are very excited to have the technology and see it as an important building block for how we position our platform going forward. It reflects the broader approach we intend to take as we keep expanding the KORU platform and remain thoughtful about the right opportunities that have the potential to strengthen our market position. Turning to an important emerging catalyst for our core SCIG business, I want to highlight the continued industry advancements we are seeing within secondary immunodeficiency, or SID. Today's SID market growth is expanding beyond the broader primary immunodeficiency market, largely driven by patients who develop immunodeficiencies following treatments with immunosuppressive drugs such as chemotherapy or cell therapies for various cancers and autoimmune conditions. To address this growing unmet need, major pharmaceutical players have made SID a clinical priority, with several ongoing pivotal clinical trials expected to reach their endpoints over the next 12 to 18 months. As these trials conclude and SCIG manufacturers expand their active marketing efforts to hematologists and oncologists, we anticipate a significant expansion in reimbursement coverage domestically for secondary immunodeficiencies. For KORU, this represents a new incremental high-growth patient population. Because our platform is already a trusted standard of care for subcutaneous IG delivery, we are perfectly positioned to capture this volume and meaningfully broaden our total addressable market with these new indications as they come online. Turning to our regulatory pipeline, I would like to provide an update on our two recent 510(k) submissions: Phesgo and deferoxamine. First, regarding our broader oncology strategy and our submission for use of the Freedom system with Phesgo, we have made a strategic decision to pivot our focus toward alternative molecules for our initial entry into the U.S. and withdraw our application from the FDA for Phesgo in the U.S. Following productive conversations with the agency, there are specific considerations with the Phesgo label that make pursuing other high-volume oncology biologics more favorable to our oncology strategy in the U.S. Our conviction in the oncology market remains unchanged; it is a core strategic priority where we see a large opportunity for KORU. Simultaneously, we continue to advance our international oncology efforts including with Phesgo, which we view as a highly compelling long-term growth driver, bolstered by the strong insights and positive nursing studies we have already generated in Europe, such as our work in Denmark last year. While we refine our U.S. oncology pathway, our regulatory momentum in other non-IG therapies remains strong. As a reminder, KORU officially submitted a 510(k) application for the clearance of the Freedom Infusion System with deferoxamine at the end of the first quarter. That application remains active, and our team is engaged in productive collaborative discussions with the FDA as we navigate the standard review process. We are committed to getting deferoxamine on label and believe it will unlock an estimated 200 thousand annual U.S. infusions and further solidify our platform's expansion into non-IG therapies. Regarding our new product pipeline, we remain on track with our target for a 510(k) submission by the end of next year for our next-generation pump, which we are calling Freedom360. In the second quarter, we completed the final stages of the development process for Freedom360, which were steps that had represented the greatest area of risk in the development timeline. With that critical milestone now behind us, we are confident in our U.S. submission timing. I am proud of the team's execution and the robust growth we demonstrated across the business this quarter. Stepping back, our fundamental strategy remains rooted in our three growth pillars, but as CEO, my mandate is to actively accelerate our execution against them. I am more energized by the magnitude of the opportunities ahead of us today than I was on day one. We are successfully transforming KORU from a highly reliable mechanical device manufacturer into a dominant digitally enabled drug delivery platform. Whether it is preparing for our upcoming Freedom360 launch, advancing our international and oncology road maps, or integrating digital connected health capabilities, we are deliberately widening our competitive moat. We have a clear, disciplined strategy to drive sustainable, profitable growth and deliver significant long-term value to our shareholders and the patients we serve. With that, I will turn it over to Tom to walk through the financials.

Thanks, Adam. During the second quarter, we delivered record quarterly revenues: $12 million, representing 18% growth year-over-year. Our domestic core revenue was $8 million for the quarter, up 12% year-over-year. Growth was driven primarily by momentum from new patient starts and continued market share gains as we once again outpaced the underlying SCIG market. International core revenue was $3.5 million for the quarter, up 59% year-over-year and driven by growth in our established markets and additional volumes driven by supporting the prefilled syringe conversion strategy in Europe through distribution channels. Pharma services revenue was $600 thousand for the quarter, down 35% year-over-year, driven primarily by lower orders for clinical trial use due to customer order timing. Once again, I will remind our audience that the pharma services business will continue to have inherent variability from quarter to quarter based on customer timelines. On gross margin, we delivered 65.1% for the quarter versus 63.5% in the prior year period, a 160 basis point increase year-over-year. The primary drivers of the improvement included productivity and efficiency-led reductions in manufacturing costs, along with higher average selling prices and a more favorable customer mix. Also of importance during the quarter, we extended a key supplier contract. With the signing of this new multi-year agreement, we were able to secure improved pricing which will continue to improve as our business grows, resulting in continued margin expansion. Turning to cash, we ended the quarter with $8.3 million, reflecting minimal cash usage of $500 thousand in the quarter. We were expecting Q2 to be our heaviest usage quarter, but with lower net losses from strong revenues and improved gross margins, along with tighter management of spending, we were able to generate positive cash flow from operations. Additionally, we closed the technology asset acquisition in the second quarter while maintaining minimal cash usage. Based on our current run rate, we believe our current cash is sufficient to support operations for the foreseeable future as we achieve cash flow positivity in the coming quarters. As a reminder, we also have access to our unused $10 million debt facility which provides additional financial flexibility for incremental opportunities as we execute against our growth plans. I would also like to note that we did not draw down on our credit facility to fund the technology acquisition during the quarter. As we review the first half of the year, we see strength across the P&L and balance sheet. We grew 20% revenue, gross margin trended higher and it improved by 20 basis points to 60.3%. We continue to deliver improved operating leverage against our revenue growth with operating expenses increasing only 9%. We improved net losses by 60% and delivered positive adjusted EBITDA of $900 thousand. Finally, we have demonstrated improvement in cash usage by 62% versus a year ago. Having said this, we will continue to invest strategically in areas that improve and grow our business in sales and marketing and research and development, and we will do so while maintaining spending discipline across the business to drive operational leverage. Turning to guidance: in prior commentary, we noted the back half revenue would be weighted more heavily, largely driven by new prefilled geographies ramping up. However, as Adam described, we are navigating complexities associated with specific regional launches in non-tender markets in order to ensure we have the proper market foundations in place. This deliberate setup in select geographies positions us for a more effective launch, but it is also resulting in a more moderate ramp in the third and fourth quarters. As a result, we are narrowing our full-year revenue guidance to $47.5 million to $48.5 million. We view this as primarily timing-related as the broader prefilled conversion story across the rest of Europe continues to move in the right direction. We have updated our internal forecast to assume recognition of the opportunity in certain markets more meaningfully in 2027 versus the second half of 2026. We remain encouraged by the overall market opportunity; it is just that unlocking it is taking a little longer than our guidance assumptions accounted for. Also, I will note that while our initial guidance assumes some modest incremental revenue from pending 510(k) clearances, the update on Phesgo that Adam detailed is not a contributing factor to our updated outlook. Following the signing of an extended supplier contract, we believe that the bottom end of our gross margin guidance has been sufficiently de-risked and there is room for additional upside in the back half of the year. As a result, we are raising gross margin guidance from 61% to 63% up to 62% to 64%. We are also adjusting our cash guidance to account for the technology acquisition and associated operating costs with a small R&D headcount. We now expect that our year-end cash balance will be greater than $7.5 million. We also want to reiterate that we still expect to have positive adjusted EBITDA for the full year. I will now turn the call back over to Adam for additional comments on our forward momentum. Adam?

Thank you, Tom. Before we open the call to questions, I want to reiterate why I am so energized by the road ahead for KORU. Over the past few years, we have systematically transformed KORU from a single-therapy device provider into a true multifaceted technology platform. We have successfully expanded our label with novel therapies like RYSTIGGO, more than doubled our international footprint, engineered next-generation capabilities to capture the market shift to prefilled syringes, and built a robust pharma services pipeline that embeds us directly into the clinical trials of innovative new drugs. We are operating from a position of strength in a large and rapidly expanding market for subcutaneous drug delivery. Our core business commands a leading share, consistently outpaces underlying market growth, and generates highly durable recurring revenue driven by the 60 thousand patients who rely on our system every single day. Building on this incredibly solid foundation, we have several powerful strategic catalysts on the horizon: expansion across our core IG business in the secondary immunodeficiency market, oncology initiatives, our pharma services expansion, and the integration of our newly acquired connected health technology, all of which we believe will meaningfully accelerate our growth trajectory, expand our competitive moat, and elevate our platform's value. Each of these initiatives represents a deliberate step in our evolution, reinforcing KORU's position as the definitive standard of care in home and alternate-site drug delivery. Our long-term targets remain resolute: $100 million in revenue, gross margins above 65%, and EBITDA margins of 20% or greater. This quarter's milestone of returning to positive net income proves our model works. We intend to keep executing with that same rigorous discipline as we build the definitive standard of care in home infusion. With that, I would now like to open the call for questions.

Thank you. At this time, we will be conducting a Q&A session. If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset. One moment please while we poll for questions. Our first question comes from Frank Takkinen with Lake Street Capital. Your line is now live.

Great. Thank you for taking the questions and congrats on the solid Q2. I was hoping to start with asking for a little bit more color on the OUS dynamics. What needs to happen in order to unlock some of the non-tender markets to capture some of the growth you were counting on in 2026? With any of these initiatives, could they potentially be pulled forward still into 2026 and are you exercising some conservatism, or is this mostly all really going to hit in 2027?

Hi, Frank. Thanks for the question and I appreciate the congrats on the solid quarter. On international, we are still really excited about the opportunity overall. We see this as a major growth driver for KORU moving forward. As we look at the back half of the year, it is really about getting all of the different elements in place for each of the regional dynamics. We are working hard on that and see very good progress. A lot of the patient starts are warming up here, and over the next 12 to 18 months, we still see a significant opportunity. It is really about a delay in timing, but we remain very excited about the overall opportunity. We are focused on executing as quickly as we can to get the various country dynamics aligned. Tom, anything else you can add to that?

No, I think you covered that, Adam.

Okay. And then maybe a follow-up on the connected monitoring technology acquisition. Let me go a little deeper into the use case for this. Where in the development stage might this be, are there still things that need to happen before it is deployed into the field, and any other relevant color you can provide?

We are super excited about this. This was an acquisition that came up for us and was opportunistic as we were looking at our mechanical system. We really love the simplicity that the mechanical system provides to patients. As we looked at where that platform was going to continue to go, we wanted to see how we could bring additional value to those patients. We came across this technology asset and are very hopeful for what it could bring down the line. I want to stress that it is a multiyear build, so it is going to take some time. It is something that we look at for the ability to communicate with patients and collect additional data from the infusion, but we are still in the early stages of evaluating that. We wanted to signal that we did make that acquisition this quarter.

Okay. Fair enough. I will hop back in queue. Thank you.

Our next question comes from Chase Knickerbocker with Craig Hallum Capital Group. Your line is now live.

Good afternoon. Thanks for taking the questions. If I can start on a little more detail around the Phesgo dynamics. Can you give a little more detail as far as what the FDA feedback was? You mentioned focusing on other molecules that would potentially be more attractive to get on label. Can you define the characteristics of an attractive oncology molecule for you?

Hi, Chase. Good to hear from you. I want to start by saying we are still very excited about the oncology market opportunity. We see it across a number of different molecules, with the total TAM today being about $60 million and continuing to grow over the next four to five years to upwards of $140 million. Regarding Phesgo and our pivot, we applied to bring Phesgo on label at the end of last year and have had ongoing discussions with the FDA. Through those discussions, we identified a consideration with the Phesgo label that made pursuing other high-volume oncology biologics a more attractive opportunity for our U.S. oncology strategy. That resulted in our decision to pivot. Internationally, we still see Phesgo as an avenue we will pursue. For the U.S. entry, we are focusing on molecules where we see a more attractive volume and return on investment. We remain very excited about oncology and still excited about Phesgo internationally, but we will pivot in the U.S.

When we think about Phesgo, the volume of infusions internationally is more prevalent than what we see in the U.S. It is higher volume in annual infusions across European markets versus the United States.

Got it. I guess just to follow up, any changes in timelines for U.S. oncology market entry or go-to-market? And as a follow-up, any update on how you are thinking about the domestic core business? Are you still thinking about kind of 8% to 10% core SCIG market growth in the U.S. and several hundred basis points of outperformance for your business?

Absolutely. On timing for oncology, we had been planning our U.S. entry for later this year with Phesgo and were expecting second-half activity. That will shift a bit now. We are still working through exact timing and will announce that when appropriate, but there will be a delay as we pivot to other molecules. We are actively working the process and hope to continue at a rapid pace. On the domestic SCIG market, we see healthy growth continuing and we continue to grow above the market.

On the U.S. side, our U.S. business is still very strong. We continue to outperform the SCIG market. When we think about our guidance, U.S. remains a strong market, pharma services and our clinical trial business continue to do well, and this guide is fairly isolated to our international business.

Thanks.

Our next question comes from Caitlin Roberts with Canaccord Genuity. Your line is now live.

Great. Thanks for taking the questions. I would love a bit more color on the OUS dynamics. If you could provide any insight into what percent of the markets you would say are tender versus the one-by-one work like in the U.S.? Given those dynamics and pursuing those more gradual markets, will this maybe smooth out revenue expectations for international?

Hi, Caitlin. Great question. Internationally, specifically Europe, the market is primarily dominated by electronic pumps as the standard of care today. We are entering where prefilled syringes are entering the market and see fertile ground to bring additional value to patients. It starts with prefilled syringes providing a more patient-friendly and simplified experience, and we introduce the KORU pump to amplify that simplicity. Over the last three to four quarters we converted one market that was a pharmaceutical tender and we fast-followed quickly with that pharmaceutical company. Other countries are more competitive and not tender-driven, which means we need to manage the channel through distributors and relationships with home care companies that train patients. The whole market does not convert at once; it converts through new patient starts, similar to the U.S. domestic market. We have many of those distributor and provider relationships now and are in the process of driving new patient starts and consumable flows once patients start on the pumps.

No, I think we are good, Adam.

Great. And then maybe just a question on secondary immunodeficiency: what is the go-to-market strategy here, and does that differ from the core SCIG market in the U.S.?

Absolutely. As we think about secondary immunodeficiency, many major pharmaceutical companies are already engaged and there are a number of clinical trials ongoing with endpoints coming toward the end of 2027. A lot of those trials use existing SCIG drugs that KORU already has on label. We are staying on top of which trials are ongoing, who the manufacturers are, what the pathway toward approval is for different SID indications, and what channel setup we need to get our products into the hands of those patients. The good news is we have many of those drugs already on label for those in the clinical trials today, so as pharmaceutical companies wrap up trial endpoints, we are well positioned to serve more patients and bring them onto our system.

Great. Thank you.

Our next question comes from Joseph Downing with Piper Sandler. Your line is now live.

Hey, Adam and Tom. Thanks for taking the question and congrats on the quarter. Just another question on the Phesgo withdrawal. It sounds like you are keeping Phesgo alive internationally, and looking at the deck it now looks like you sized the opportunity around 600 thousand annual infusions versus the 1.1 or 1.2 million previously. Is that delta simply the U.S. coming out? Can you frame the international economics and how they compare in terms of pricing, channels and geographies?

Hey Joe. Yes, you caught the correct drawdown from pulling out the U.S. market for Phesgo; that reduces the overall infusion count. We remain focused on the U.S. for other oncology opportunities, and international is one we plan to move forward with Phesgo. There is additional work needed in Europe in terms of real-world evidence and the MDR process, so that will take time. In terms of economics, we still see favorable dynamics in international markets and Europe for these oncology drugs. Reimbursement differs from the U.S., but we continue to see very positive contribution potential and strong interest.

When we think about Phesgo, the annual volume of infusions internationally, especially in European markets, is higher than in the United States.

Right. I appreciate all the color there. Adam, a bigger-picture question now that you have been in the seat for a little bit: given the long-range framework you inherited, how are you thinking about what it takes to get this business to be a sustainable 20% grower and hold it there for multiple years rather than a one-off year? Specifically, can this be sustained if the U.S. is in a low double-digit to mid-teens range?

Great question. Our long-term strategy is built on the three growth pillars: continue to grow domestically and defend our share; grow internationally; and work with pharma companies to bring more drugs on label. As we continue to grow within the IG market, we plan to take more than our fair share. To get growth rates materially higher, it is about bringing additional drugs on label and expanding internationally. Oncology initiatives and other non-IG opportunities are about increasing our TAM and getting additional drugs on label so we can serve more patients and retain them over the long term. Those levers combined are how we aim to drive sustained 20% growth.

Thanks, Adam.

We have reached the end of the question-and-answer session. I would now like to turn the call back over to management for any closing comments.

Thank you all for joining us this afternoon. I really enjoyed the call and look forward to updating you further on our progress in our third quarter call. Have a great evening and the rest of your day.

This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.