KORU Medical Systems, Inc.

Greetings. Welcome to the Coru Medical System's fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Greg Hodicek. You may begin.

Thank you, Alex, and good afternoon, everyone. Earlier today, Kourou Medical Systems released financial results for the fourth quarter and year ended December 31st, 2020. A copy of the press release is available on the company's website. During this call, we will discuss our business outlook and make certain forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to several risks and uncertainties, including those mentioned in the associated slide presentation, and our most recent filings with the FCC, along with the associated press releases. We assume no obligation to update any forward-looking statements. The associated slide presentation will be posted in the investor relations section on our website at www.corumedical.com. I encourage listeners to have our press release in front of you, which includes our financial results as well as commentary on the quarter and full year. During the call, management will discuss certain non-GAAP financial measures in our press release and slide presentation accompanying this website and our filings with the SEC, each of which are posted on our website. You will find additional disclosure regarding these non-GAAP measures, including reconciliations of these measures with the comparable GAAP measures. Our results are inherently unpredictable and may be materially affected by many factors. including the introduction of competitive products, the availability of insurance reimbursement, the success of our research and development efforts, acceptance of and demand for our new and existing products, expanded marketing acceptance of the freedom system, the cost, duration, and ultimate outcomes of any litigation, general economic and business conditions in the United States and abroad, the impact of COVID-19 and other factors described in our filings with the SEC. Therefore, Our actual results could differ materially from those goals. For the benefit of those listening to the replay, this call was held and recorded on Tuesday, March 23, 2021 at approximately 4.30 p.m. Eastern Time. Since then, the company may have made additional comments related to the topics discussed. And please reference the company's most recent press releases and filings with the SEC. With that said, I'd like to turn the call over to Jim Beck, interim CEO of Koru Medical Systems. Jim, please go ahead.

Thanks, Greg, and good afternoon, everyone. We appreciate you taking the time to join us today. Before reviewing our year 2020 operational highlights, I would like to thank the Koru Medical Systems team for their hard work and dedication throughout the past 12 months. Despite the many challenges that they encountered this past year, the team rose to the occasion. KORU is stronger and more dedicated than ever. And we look to use this perseverance to drive more robust outcomes in 2021. We are also excited about our new CEO announced last week. We are confident that under Linda Tharby's leadership, KORU Medical is well positioned for our next phase of growth. I would now like to turn to our results. I'd like to take a few minutes to talk about our net sales and add some transparency to our business. We break down our net sales into three categories, domestic core, novel therapies, which currently includes clinical trial sales and international core. The largest of the three is our domestic core net sales, which is derived from sales of our easy to use mechanical infusion pumps and their corresponding consumables. These pumps are currently used to deliver subcutaneous IG therapy to patients suffering from chronic primary immune deficiency disorders. Net sales growth in all three of these categories was disrupted in 2020. Starting with domestic core net sales, the disruptions related to both pricing and volume dynamics. Beginning January 1st, 2020, KORU decided to strengthen its contractual position as a vendor of choice with key customers by providing allowances, including growth rebates. As of the beginning of 2021, we have lapped these allowance agreements, and our net sales will more closely track our actual volume growth going forward. Regarding the quarterly cadence of our domestic core net sales, the emergence of COVID-19 in the U.S., altered the ordering patterns of our largest customers. At the beginning of the pandemic, these customers, including our largest distributor, increased their inventory of our products. In the second half of the year, and especially the fourth quarter, those customers and distributor reduced their inventories by purchasing less product from us. Based on our conversation with these customers, we believe that purchases in the first half of the year were because customers and distributor were concerned about future availability and that their inventory levels have now returned to normal levels. Switching to our novel therapy sales, although novel therapies, which currently include sales into clinical trials, was $900,000 higher than last year, this revenue experienced purchase volume variability throughout the year. Further, we were made aware of delays in trial activity due to COVID-19. We continue to advance the strategy of novel therapies with potential pharma customers, although we anticipate novel therapies will continue to be an unpredictable portion of our overall revenue. 2020 was also a challenging year for our international business, as COVID-19 hampered our ability to create new opportunities for our products overseas. We believe there is demand for our infusion systems in Europe and Asia, and we will continue to pursue these opportunities. This past year, Coral Road Medical had several significant accomplishments, including entering into an agreement with Command Medical Products to manufacture our subassemblies, needle sets, and tubing for future supply continuity and cost savings. In addition, the completion of a capital raise of net $26.6 million and the announcement of a stock repurchase program through December of 2021. The company remains committed to growth over the long term as we make short-term investments to execute on our strategic initiatives. The company's primary areas of focus for the year 2021 will include continued focus on improving the customer and patient experience, continued research and development efforts to introduce compelling products into the markets we serve, expansion of sales into other drug therapies, both existing and new, and an expanded presence in international markets, and the implementation of secondary sourcing of our needle and tubing sets. Before turning things over to Karen, I just want to add that I'm thrilled about the appointment of Linda Tharvey as CORU Medical's President and Chief Executive Officer effective April 12th. Linda brings our company a wealth of relevant executive experience and a successful track record of building and leading robust global organizations. Throughout her 24 years at Beckman Dickinson, Linda had developed and commercialized multiple product and service innovations and delivered solutions to patients in the home setting. The board and I look forward to working with Linda as Cobra Medical enters its next stage of growth. I would now like to turn the call over to Karen to review our 2020 financial summary.