SCIg Therapy Adoption And Oncology Expansion Will Ultimately Disappoint Long-Term Expectations

Catalysts

About KORU Medical Systems

KORU Medical Systems develops and commercializes subcutaneous drug delivery systems, focused on infusions for immunoglobulin therapies and other specialty biologics.

What are the underlying business or industry changes driving this perspective?

• SCIg therapy adoption is expected to grow at around 9% annually, but KORU is already deeply penetrated in this niche and may struggle to sustain recent 20% plus company growth once easier share gains fade, which could pressure long term revenue expansion.
• The rapid conversion from vials to prefilled syringes in Europe concentrates growth in a single administration format and partner strategy. This raises the risk that any competitive device advances or slower than expected country level rollouts cap international revenue and compress margins through lower average selling prices.
• Ambitious plans to expand oncology infusion usage and secure 510(k) clearances could face clinical adoption hurdles and slower clinic workflow standardization than anticipated, which may delay access to a consumables market projected to more than double and limit the earnings contribution from this category.
• Heavy reliance on a growing pipeline of Ig and non Ig drug collaborations, some already delayed into 2027, exposes the company to regulatory and trial timing slippage that can push out expected launches and undermine the outlook for high margin revenue and operating leverage.
• As international sales mix rises and tariffs, manufacturing cost variability and lower price emerging markets weigh on profitability, management’s goal of lifting gross margin above 65% may prove unrealistic. This could constrain future net margins and earnings growth even if top line continues to increase.

Assumptions

This narrative explores a more pessimistic perspective on KORU Medical Systems compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming KORU Medical Systems's revenue will grow by 16.0% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from -9.5% today to 5.0% in 3 years time.
• The bearish analysts expect earnings to reach $3.0 million (and earnings per share of $0.06) by about December 2028, up from $-3.7 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $4.1 million.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 77.9x on those 2028 earnings, up from -73.5x today. This future PE is greater than the current PE for the US Medical Equipment industry at 29.7x.
• The bearish analysts expect the number of shares outstanding to grow by 0.8% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.7%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The global shift toward subcutaneous delivery, including SCIg market growth of roughly 9% annually with only about 20% penetration today, could sustain double digit volume expansion for KORU’s core Freedom System and drive higher than expected long term revenue and earnings.
• Rapid international adoption of prefilled syringes in Europe, where KORU has already converted one large electronic pump market and targets share gains from the mid teens to around 40%, may unlock a 10 million to 20 million incremental opportunity that supports sustained revenue growth and stabilizes gross margins.
• A broad and expanding collaboration pipeline, including 7 Ig partnerships across all major manufacturers and 9 non Ig drugs expected to contribute up to 10 million of commercial potential by the end of 2028, could diversify growth drivers and deliver higher recurring revenue and operating leverage than currently assumed.
• Successful entry into the oncology infusion consumables market, with a projected expansion from about 60 million in 2025 to 138 million by 2030 and strong clinical feedback on workflow efficiencies, may add a new secular growth leg that uplifts long term revenue, gross margin and earnings.
• Demonstrated operating discipline, with 22% year to date revenue growth, gross margins above 60%, halved net losses and positive adjusted EBITDA, may indicate a credible path to sustained profitability, supporting higher valuation multiples and improving net margins and cash flow over time.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for KORU Medical Systems is $4.0, which represents up to two standard deviations below the consensus price target of $5.56. This valuation is based on what can be assumed as the expectations of KORU Medical Systems's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $7.0, and the most bearish reporting a price target of just $4.0.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be $61.0 million, earnings will come to $3.0 million, and it would be trading on a PE ratio of 77.9x, assuming you use a discount rate of 7.7%.
  
• Given the current share price of $5.89, the analyst price target of $4.0 is 47.2% lower. Despite analysts expecting the underlying business to improve, they seem to believe the market's expectations are too high.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.