RMS Medical Products Announces 2019 Second Quarter Financial Results

Conference Call Scheduled for August 7 at 9:00 am ET

Q2 2019 Highlights

  • Net sales rose 18.8% to $5.3 million
  • Gross margin improved to 65.0%
  • Further strengthened management and Board of Directors

CHESTER, N.Y.–(BUSINESS WIRE)–Repro Med Systems, Inc. dba RMS Medical Products (OTCQX:REPR) (“RMS Medical”) today announced financial results for the second quarter (“Q2 2019”) ended June 30, 2019.

“We believe that momentum is building across our enterprise, which is reflected in improved financial performance, the scaling of our business to pursue anticipated growth opportunities, and the ongoing penetration of the PIDD and CIDP markets,” said Don Pettigrew, President and CEO of RMS Medical. “As a result, net sales of $5.3 million in the second quarter of 2019 represented the second consecutive quarter of record net sales.

“During the quarter, we expanded our team with the additions of John Toomey to the newly created position of Vice President of Growth and Innovation, Craig S. Ross as Vice President of Sales and Marketing, and healthcare industry veteran R. John Fletcher, former Chairman of the Board of Spectranetics Corporation, as a member of our Board of Directors. We also mourned the loss of long-time board member, mentor and friend Arthur J. Radin.”

Mr. Pettigrew concluded, “We are continuing to position RMS Medical as the preferred drug delivery partner for specific infusion therapies in select markets. This includes developing new products and exploring new indications for our existing product portfolio, strengthening our industry relationships, and working closely with drug manufacturers as they develop and introduce new subcutaneous therapies for which RMS Medical’s safe, easy-to-use, and cost-effective Freedom infusion system can become the delivery mechanism of choice.”

Q2 2019 Overview

Net sales rose 18.8% to $5.3 million in Q2 2019 from $4.5 million in Q2 2018, driven primarily by RMS Medical’s focus on growth in the primary immunodeficiency diseases (“PIDD”) market and expansion into the neurology market following the 2018 approval of Hizentra® to treat chronic inflammatory demyelinating polyneuropathy (“CIDP”).

Gross profit in Q2 2019 rose to $3.5 million, or 65.0% of net sales, from $2.7 million, or 60.9% of net sales, in Q2 2018. Higher gross profit and gross margin were primarily driven by increased net sales and associated production efficiencies.

Total operating expenses for Q2 2019 rose to $3.4 million from $2.1 million in Q2 2018. The increase of $1.3 million was due primarily to a $1.0 million increase in legal costs associated with ongoing litigation against a competitor included in selling, general & administrative expenses. Total operating expenses for Q2 2019 also included a $0.2 million increase in research and development expenses compared to the prior year period associated with increased headcount and expanded product development activity as we continue to invest in innovation.

Net income for Q2 2019 was $0.1 million compared to net income of $0.5 million in Q2 2018. The variance was due primarily to the above-referenced increase in expenses in Q2 2019.

Q2 2019 Adjusted EBITDA rose to $1.5 million, or 27.9% of net sales, from Adjusted EBITDA of $0.9 million, or 20.7% of net sales, in Q2 2018. Adjusted EBITDA excludes from net income: tax expense, depreciation and amortization, interest income, operating expenses associated with the company’s organizational changes, litigation costs, and stock option expense. The Company ended the quarter with $3.8 million in cash and no debt.

Our cash flow statement at June 30, 2019 reflected both: a $1.8 million increase in accounts receivable reflecting a change in payment terms by a large distributor of our products from net 30 days to net 60 days; and a $0.4 million increase in inventory as we prepare for anticipated growth and strengthen our ability to satisfy customer demand for our products. These increases were partially offset by $1.5 million in proceeds realized from the maturation of a Certificate of Deposit in Q2 2019.

Non-GAAP Measures

This press release includes non-GAAP financial measures that are not in accordance with, nor an alternate to, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. They are limited in value because they exclude charges that have a material effect on our reported results and, therefore, should not be relied upon as the sole financial measures to evaluate our financial results. The non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. A reconciliation of our non-GAAP measures is included in an attachment to this press release.

Conference Call

Management will host a conference call on Wednesday, August 7, 2019 at 9:00 am ET to discuss Q2 2019 results and business activities.

Interested parties may participate in the call by dialing:

  • (877) 407-9753 (Domestic) or
  • (201) 493-6739 (International)

Webcast registration: Click Here

Following the live call, a replay will be available for six months on the Company’s website, www.rmsmedicalproducts.com, under “Investor Relations.”

Forward-looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “focused on,” “goals,” “believe,” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our ability to achieve our goals set forth in our strategic plan and otherwise and our expectation that charges excluded from non-GAAP measures presented in this press release will not recur.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: introduction of competitive products; availability of insurance reimbursement; changes in U.S. Food and Drug Administration regulations; changes to health care policies; success of our research and development efforts; our ability to raise capital if or when needed; acceptance of and demand for new and existing products; expanded market acceptance of the FREEDOM Syringe Infusion System; our ability to obtain required governmental approvals; success in enforcing and obtaining patents; continued performance by principal suppliers; continued customer preference to work through distributors; continued service of key personnel and attracting and maintaining new personnel; the costs, duration and ultimate outcome of litigation; and general economic and business conditions.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

About RMS Medical Products

RMS Medical develops, manufactures and commercializes innovative and easy-to-use specialty infusion solutions that improve quality of life for patients around the world. The FREEDOM Syringe Infusion System currently includes the FREEDOM60® and FreedomEdge® Syringe Infusion Drivers, RMS Precision Flow Rate Tubing and RMS HIgH-Flo Subcutaneous Safety Needle Sets. These devices are used for infusions administered in the home and alternate care settings. For more information about RMS Medical, please visit.

 

REPRO MED SYSTEMS, INC.

BALANCE SHEETS

 

 

 

 

 

 

 

June 30,

2019

December 31,

 

 

(Unaudited)

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,807,192

 

$

3,738,803

 

Certificates of deposit

 

 

 

 

1,517,927

 

Accounts receivable less allowance for doubtful accounts of

 

 

 

 

 

 

 

$37,299 at June 30, 2019 and $37,500 at December 31, 2018

3,293,196

1,425,854

Inventory

 

 

2,571,585

 

 

2,103,879

 

Prepaid expenses

 

 

257,320

 

 

246,591

 

TOTAL CURRENT ASSETS

 

 

9,929,293

 

 

9,033,054

 

Property and equipment, net

 

 

615,555

 

 

858,781

 

Patents, net of accumulated amortization of $260,812 and $239,581 at

 

 

 

 

 

 

 

June 30, 2019 and December 31, 2018, respectively

747,106

632,156

Right of use assets, net

 

 

439,782

 

 

 

Deferred tax asset

 

 

 

 

1,466

 

Other assets

 

 

19,582

 

 

19,582

 

TOTAL ASSETS

 

$

11,751,318

 

$

10,545,039

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Deferred capital gain – current

 

$

 

$

3,763

 

Accounts payable

 

 

530,380

 

 

453,498

 

Accrued expenses

 

 

1,034,830

 

 

688,649

 

Accrued payroll and related taxes

 

 

171,984

 

 

421,714

 

Accrued tax liability

 

 

 

 

16,608

 

Finance lease liability – current

 

 

4,295

 

 

 

Operating lease liability – current

 

 

133,417

 

 

 

TOTAL CURRENT LIABILITIES

 

 

1,874,906

 

 

1,584,232

 

Deferred tax liability

 

 

65,029

 

 

 

Finance lease liability, net of current portion

 

 

 

 

 

Operating lease liability, net of current portion

 

 

306,365

 

 

 

TOTAL LIABILITIES

 

 

2,246,300

 

 

1,584,232

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Common stock, $0.01 par value; 75,000,000 shares authorized, 41,121,211 and 40,932,911 shares issued,

 

 

 

 

 

 

 

38,383,980 and 38,195,680 shares outstanding at June 30, 2019 and December 31, 2018, respectively

411,212

409,329

Additional paid-in capital

 

 

5,144,749

 

 

4,595,214

 

Retained earnings

 

 

4,293,261

 

 

4,300,468

 

 

 

 

9,849,222

 

 

9,305,011

 

Less: Treasury stock, 2,737,231 shares at June 30, 2019 and December 31, 2018, respectively, at cost

 

 

(344,204

)

 

(344,204

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

9,505,018

 

 

8,960,807

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

11,751,318

 

$

10,545,039

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

Three Months Ended

 

For the

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

5,348,812

 

$

4,502,326

 

$

10,323,090

 

$

8,535,550

 

Cost of goods sold

 

 

1,873,148

 

 

1,762,742

 

 

3,799,472

 

 

3,330,142

 

Gross Profit

 

 

3,475,664

 

 

2,739,584

 

 

6,523,618

 

 

5,205,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

3,175,382

 

 

2,022,631

 

 

6,152,765

 

 

3,902,900

 

Research and development

 

 

178,235

 

 

23,963

 

 

280,194

 

 

33,811

 

Depreciation and amortization

 

 

86,169

 

 

75,978

 

 

169,820

 

 

150,556

 

Total Operating Expenses

 

 

3,439,786

 

 

2,122,572

 

 

6,602,779

 

 

4,087,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Profit/(Loss)

 

 

35,878

 

 

617,012

 

 

(79,161

)

 

1,118,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Operating Income/(Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on currency exchange

 

 

(1,235

)

 

(19,838

)

 

(10,925

)

 

(10,414

)

Gain on disposal of fixed asset, net

 

 

49,980

 

 

 

 

49,740

 

 

 

Interest, net and other income, net

 

 

18,243

 

 

5,501

 

 

35,723

 

 

6,116

 

TOTAL OTHER INCOME/(EXPENSE)

 

 

66,988

 

 

(14,337

)

 

74,538

 

 

(4,298

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME/(LOSS) BEFORE TAXES

 

 

102,866

 

 

602,675

 

 

(4,623

)

 

1,113,843

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

 

(24,683

)

 

(126,952

)

 

(2,584

)

 

(234,693

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME/(LOSS)

 

$

78,183

 

$

475,723

 

$

(7,207

)

$

879,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.00

 

$

0.01

 

$

0.00

 

$

0.02

 

Diluted

 

$

0.00

 

$

0.01

 

$

0.00

 

$

0.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

38,353,000

 

 

38,100,040

 

 

38,279,718

 

 

38,058,500

 

Diluted

 

 

39,299,800

 

 

38,872,998

 

 

39,219,752

 

 

38,815,301

 

 

REPRO MED SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net (Loss)/Income

 

$

(7,207

)

$

879,150

 

Adjustments to reconcile net(loss)/income to net cash (used in)/provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation expense

 

 

529,538

 

 

94,170

 

Depreciation and amortization

 

 

169,820

 

 

150,556

 

Deferred capital gain – building lease

 

 

(3,763

)

 

(11,240

)

Deferred taxes

 

 

66,494

 

 

(941

)

Gain on disposal of fixed asset

 

 

(49,740

)

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

(Increase)/Decrease in accounts receivable

 

 

(1,867,342

)

 

21,855

 

Increase in inventory

 

 

(467,706

)

 

(59,613

)

Decrease/(Increase) in prepaid expense and other assets

 

 

44,874

 

 

(85,149

)

Increase in accounts payable

 

 

76,882

 

 

257,549

 

Decrease in accrued payroll and related taxes

 

 

(249,730

)

 

(147,597

)

Increase/(Decrease) in accrued expense

 

 

346,181

 

 

(118,587

)

Decrease in accrued tax liability

 

 

(72,210

)

 

(24,366

)

NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES

 

 

(1,483,909

)

 

955,787

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Payments for capital expenditures

 

 

(67,079

)

 

(93,185

)

Purchase of certificate of deposit

 

 

 

 

(1,500,000

)

Reinvested earnings on certificate of deposit

 

 

 

 

(4,818

)

Payments for patents

 

 

(136,182

)

 

(64,436

)

Proceeds on disposal of fixed asset

 

 

217,821

 

 

 

Proceeds from certificates of deposit

 

 

1,517,927

 

 

103,807

 

NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES

 

 

1,532,487

 

 

(1,558,632

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Stock issuances

 

 

24,700

 

 

51,250

 

Payment for cancelled shares

 

 

(2,820

)

 

(1,755

)

Finance lease

 

 

(2,069

)

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

19,811

 

 

49,495

 

 

 

 

 

 

 

 

 

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

68,389

 

 

(553,350

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

3,738,803

 

 

3,974,536

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

3,807,192

 

$

3,421,186

 

 

 

 

 

 

 

 

 

Supplemental Information

 

 

 

 

 

 

 

Cash paid during the periods for:

 

 

 

 

 

 

 

Interest

 

$

233

 

$

 

Taxes

 

$

 

$

260,000

 

 

 

 

 

 

 

 

 

NON-CASH FINANCING AND INVESTING ACTIVITIES

 

 

 

 

 

 

 

Issuance of common stock as compensation

 

$

212,898

 

$

67,500

 

 

REPRO MED SYSTEMS, INC.

RECONCILIATION OF NON-GAAP MEASURES

 

 

 

Three Months Ended

 

Six Months Ended

Reconciliation of GAAP Net (Loss)/Income

 

June 30,

 

June 30,

to Non-GAAP Adjusted EBITDA:

 

2019

 

2018

 

2019

 

2018

GAAP Net Income/(Loss)

 

$

78,183

 

$

475,723

 

$

(7,207

)

$

879,150

 

Tax Expense

 

 

24,683

 

 

126,952

 

 

2,584

 

 

234,693

 

Depreciation/Amortization

 

 

86,169

 

 

75,978

 

 

169,820

 

 

150,556

 

Interest Income, Net

 

 

(18,243

)

 

(5,501

)

 

(35,723

)

 

(6,116

)

Reorganization Charges

 

 

 

 

78,646

 

 

354,926

 

 

151,197

 

Litigation

 

 

1,124,947

 

 

150,500

 

 

1,617,462

 

 

306,300

 

Stock Option Expense

 

 

194,765

 

 

29,487

 

 

316,640

 

 

56,670

 

Non-GAAP Adjusted EBITDA

 

$

1,490,504

 

$

931,785

 

$

2,418,502

 

$

1,772,450

 

 

 

Contacts

The Equity Group Inc.

Devin Sullivan

Senior Vice President

212-836-9608

dsullivan@equityny.com

Kalle Ahl, CFA

Vice President

212-836-9614

kahl@equityny.com

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