Shares of Repro Med Systems (KRMD 1.45%), which conducts its business as KORU Medical, were sinking 13.4% as of 11 a.m. EST on Tuesday. The decline came after the specialty infusions solutions company provided an update after the market closed on Monday. KORU gave preliminary financial results for full-year 2020. It also announced the immediate resignation of Don Pettigrew as president and CEO.
Any time a company's CEO departs unexpectedly, investors become nervous. Pettigrew had led Repro Med/KORU Medical for nearly two years. The company's board of directors named former home infusion executive and KORU Medical board member Jim Beck as interim CEO.
This news overshadowed the company's preliminary 2020 results. Revenue is expected to come in at around $24 million, up 3.4% year over year. This figure is well under the average analyst estimate of $25.9 million.
There were several factors that weighed on the company's revenue last year. International sales and clinical trial partnerships didn't meet expectations in the second half of 2020. The COVID-19 pandemic negatively impacted new patient starts. KORU also experienced major fluctuations in demand due to buying patterns of several large customers. In addition, the company's revenue grew more slowly than anticipated last year as a result of what KORU referred to as "strengthening of our contractual position with large customers."
Could a positive catalyst be on the way for the healthcare stock after today's big drop? It isn't likely that KORU's fourth-quarter update scheduled for March will help very much considering the company's full-year 2020 preliminary results. The company's board will actively search for a new CEO, but that probably won't help boost its share price much either. What KORU mainly needs is solid sales growth. Investors might have to wait at least until the first-quarter update later this year to see if the company can deliver.