8-K: KORU Medical Systems Amends Key Manufacturing Pact

KORU Medical Systems, Inc. has entered into an amended and restated manufacturing and supply agreement with Command Medical Products, LLC, effective January 1, 2024, securing continued supply of critical medical device components.

Summary

• KORU Medical Systems, Inc. (KORU) entered into an Amended and Restated Manufacturing and Supply Agreement with Command Medical Products, Inc. (Command) on November 19, 2025, which became effective retroactively on January 1, 2024.
• The agreement amends and restates the original manufacturing and supply agreement dated November 11, 2020, covering the manufacture and supply of KORU's subassemblies, needle sets, and tubing products.
• The initial term of the agreement expires on December 31, 2026, and will automatically renew for successive one-year periods unless either party provides notice of non-renewal [***] calendar days or more prior to the end of the current term.
• KORU retains sole and exclusive ownership of all technology related to the products, including any developed by Command, and all associated intellectual property.
• Command will provide KORU with volume-based annual rebates, calculated based on aggregate dollar purchases, with specific percentages for 2024, 2025, and 2026+ (e.g., [***]%, [***]%, [***]%). The 2024 rebate credit was issued in the second quarter of 2025.
• KORU is required to provide a 12-month rolling forecast and commit to a Minimum Volume Commitment (MVC) of at least [***]% of the Baseline Demand over a period of [***] quarters or [***] weeks, and [***]% for each quarter, with liability capped at [***] quarters or [***] weeks of MVC.
• Command is obligated to maintain [***] months of sub-assembly inventory and [***] weeks of raw material safety stock.
• The agreement includes provisions for pricing, payment, delivery, inspection procedures, warranties, quality management, business continuity plans, confidentiality, and indemnification.
• Command is subject to a non-competition clause, preventing it from accepting new sizable customers (equal to or more than [***]% of Command's annual sales revenues) to develop, manufacture, supply, distribute, or market directly competing subcutaneous mechanical pump delivery systems or products.

Sentiment

Score: 7

Explanation: The agreement provides operational stability, secures supply, and includes favorable terms like rebates and IP ownership for KORU. While not a growth catalyst, it strengthens the company's foundational operations, which is a positive development.

Positives

• The agreement secures a stable manufacturing and supply chain for KORU's critical medical device components through at least December 31, 2026, with automatic renewals.
• KORU benefits from volume-based annual rebates on product purchases, offering potential cost efficiencies.
• KORU maintains sole and exclusive ownership of all intellectual property and technology related to its products, including any developed by Command.
• The agreement includes a robust business continuity plan, requiring Command to maintain safety stock and expedite manufacturing transfer to KORU's facility in case of significant business interruption at Command's Nicaragua facility.
• The agreement is non-exclusive for KORU, allowing the company flexibility to source manufacturing from alternative suppliers if needed.
• Command is subject to a non-competition clause, protecting KORU's market position for its subcutaneous mechanical pump delivery systems.

Negatives

• KORU is subject to a Minimum Volume Commitment (MVC) of at least [***]% of its Baseline Demand, creating a purchase obligation.
• KORU may be liable for excess or obsolete inventory purchased by Command if product end-of-life (EOL) occurs within lead times or if KORU fails to meet order requirements.
• Price adjustments may occur if KORU fails to meet the MVC for [***] periods, potentially increasing costs by up to [***]%.

Risks

• Potential for supply chain disruption if Command experiences a material breach or failure to perform, despite business continuity plans.
• KORU's financial liability for excess or obsolete inventory under specific conditions, such as product end-of-life occurring within lead times.
• Reliance on Command for the manufacture of specific subassemblies, needle sets, and tubing products, even with non-exclusive terms, could pose a risk if Command faces unforeseen operational challenges not covered by the business continuity plan.
• Potential for increased costs if raw material and freight costs increase by greater than [***]% and are agreed to by KORU.

Future Outlook

The amended agreement secures manufacturing and supply for KORU's products through at least December 31, 2026, with automatic renewals, supporting KORU's ongoing operations and product availability. This provides a stable foundation for KORU's production needs and allows for long-term planning with a key supplier.

Management Comments

• Linda Tharby, President and Chief Executive Officer of KORU Medical Systems, Inc., signed the agreement on behalf of the registrant.
• Michael Fillion, CEO of Command Medical Products, LLC, signed the agreement on behalf of Command.

Industry Context

This amended manufacturing and supply agreement is a standard operational update for a medical device company like KORU, which relies on contract manufacturers for specialized components. Such agreements are crucial for ensuring supply chain stability, product quality, and regulatory compliance in the highly regulated medical device industry. The non-exclusive nature of the agreement provides KORU with flexibility, a common strategy to mitigate reliance on a single supplier, while the non-competition clause protects KORU's specific product market.

Comparison to Industry Standards

• The inclusion of cGMP compliance, FDA inspection rights, and detailed quality agreements aligns with standard practices in the highly regulated medical device industry, similar to agreements seen with major contract manufacturers like Flex or Jabil Healthcare.
• The business continuity plan, including provisions for second-site manufacturing transfer, is a critical risk mitigation strategy, comparable to best practices adopted by companies like Medtronic or Boston Scientific to ensure uninterrupted supply.
• Volume-based rebates are a common incentive in long-term supply contracts, encouraging higher purchase volumes and offering cost efficiencies, similar to those offered by suppliers to large pharmaceutical or medical technology firms.
• The non-competition clause for Command regarding subcutaneous mechanical pump delivery systems is a standard protective measure for KORU's core product line, ensuring the contract manufacturer does not directly compete using acquired knowledge.

Stakeholder Impact

• Shareholders: Enhanced operational stability and supply chain security for KORU's products, potentially leading to more consistent product availability and revenue.
• Customers: Assured supply of KORU's medical devices due to a robust manufacturing agreement and business continuity planning.
• Employees: Stable manufacturing operations support job security within KORU's supply chain management and related departments.
• Suppliers (Command): Continued business relationship with KORU, with clear terms for forecasts, purchase orders, and payment.

Next Steps

• KORU will provide Command with a 12-month rolling forecast for all products required under the agreement.
• The parties will review Minimum Volume Commitment (MVC) compliance on a quarterly basis.
• Command will provide KORU with quarterly reports on Safety Stock inventory position and material inventory levels.
• Command and KORU will review and update the existing Quality Agreement within [***] days following the Execution Date.
• Command will maintain and follow a written disaster recovery plan (KORU's Business Continuity Plan) to ensure product supply.

Key Dates

Recommendation

The amended manufacturing and supply agreement provides KORU with a stable and well-defined framework for the production of its key components, including favorable terms such as volume rebates and a robust business continuity plan. This operational stability is a positive, but the agreement is a standard business update rather than a catalyst for significant growth or a change in the company's fundamental outlook. Investors should hold, awaiting more impactful financial or strategic developments.

Keywords

KORU Medical Systems, KRMD, Command Medical Products, Manufacturing Agreement, Supply Agreement, Medical Devices, Subassemblies, Needle Sets, Tubing Products, SEC Filing, 8-K, Contract Manufacturing, Corporate Governance, Supply Chain, Rebates, Intellectual Property