iRadimed Corporation

Welcome to the I Ready Med Corporation fourth quarter 2021 financial results conference call. Currently, all participants are in a listen-only mode, and at the end of the call, we will conduct a question and answer session. As a reminder, this call is being recorded today, February 4, 2022, and contains time-sensitive information that is accurate only as of today. Earlier, I Ready Med Release the financial results for the fourth quarter 2021. A copy of its press release announcing the company's earnings is available under the headings news on their website at aridmed.com. A copy of the press release was also furnished to the security and exchange commissions on form 8K and can be found at sec.gov. This call is being broadcast live over the internet on the company's website at aridmed.com. and a replay of the call will be available on the website for the next 90 days. Some of the information to be Furnished in today's session will contain forward-looking statements within the meanings of the Private Security Litigation Reform Act of 1995. Forward-looking statements are those focused on the future performance results, plans, and events and may include the company's expected future results. I already remind you that future results may differ materially from these forward-looking statements due to several risk factors. For a description of the relevant risk and uncertainties that may affect the company's business, please see the risk factor section of the company's most recent filed report with the Security and Exchange Commission, which, again, may be obtained for free from the SEC's website at sec.com. I would now like to turn the conference over to Roger Susi, President and Executive Chief Executive Officer of ReadyMade Corporation. Mr. Suti, please go ahead. Thank you.

Good morning, and thank you all for participating in the call today. I am happy to report another very good quarter of revenue and earnings growth, as well as an exciting and outstanding year. As we reported in this morning's press release, Q4 revenue was $11.9 million, a 39% increase over the fourth quarter of 2020. non-GAAP earnings were 33 cents or 373% over that fourth quarter 2020. On a sequential basis, we continued our path of growth trend with Q4 revenue coming in at 9% over Q3 2021 and adjusted earnings in over 43%. From a sales perspective, Customer demand for our products started off and remained strong all year and continually outpaced our expectations. We saw strength of demand demonstrated in our record bookings, which were 39% higher in the full year 2021 over 2020. Our string of extremely strong bookings growth continued directly into the fourth quarter when bookings increased nearly 48% over the fourth quarter of 2020 on a sequential basis, over 25% from the third quarter of 2021. The level of demand for our products has also allowed us to grow backlog, which at the end of the year stood at 10.9 million compared to 4.4 million at the end of 2020. We feel that the strong demand for our products and growing backlog level adds to our confidence and further validates the value that we bring to our customers. Regarding engineering and new product development, much of our attention has turned to supporting the regulatory team towards clearance of our next generation IV pump. We've continued to work with FDA on the additional testing and documentation they've been requiring. We expect that this will continue for much of the first half of the year and still anticipate potential clearance coming in the second half of 2022. Other areas of focus for the engineering team have been finalizing the ferromagnetic detector and preparing for its first deliveries. We feel very good about where we are with this device and we believe that we have technologically superior product in this device compared with other devices currently in the field. With our technology and direct sales team, we are well positioned for success in this market. Now, before turning the call over to Chris for additional information and updates, I'd like to review our 2022 financial guidance with all of you. As I mentioned, we have growing confidence and visibility with the strong results of 2021. We believe we are at an inflection point as customers realize more and more the value that our products bring. Additionally, we continue to take market share with our monitor, and we will have this first deliveries of the FMD in 2022 as well. That said, for the full year 2022, we expect revenue of $51.4 million to $52.2 million, with gap earnings of $0.82 to $0.90, and non-gap earnings of $0.91 to $1.01. For the first quarter of 2022, we expect revenue of 12.1 million to 12.3, and with gap earnings of 16 to 18 cents, and non-gap earnings of 20 to 21 cents. With that, now I'd like to turn the call over to Chris, and he'll run through some more of the detail. Chris?

Thank you, and good morning, everyone. I'll review our financial results, and as always, I'll be discussing the results on a GAAP basis as well as on a non-GAAP basis. You can find a description of our non-GAAP operating measures in this morning's earnings release. You can also find a reconciliation of these non-GAAP measures to the nearest GAAP measure on the last page of today's release. Also, please keep in mind that when comparing year-to-date results, During 2020, we recognized $3.2 million of general administrative expenses related to our former CEO. As we reported earlier this morning, fourth quarter 2021 revenue was $11.9 million, an increase of 38.9% compared to the fourth quarter last year. And on a sequential basis, revenue grew by 9.1% over Q3 2021. Revenue from domestic sales increased 33.3% to $9.5 million during the fourth quarter, and revenue from international sales increased 66.8% to $2.4 million. Overall, domestic revenue accounted for 79.8% of total revenue for the 2021 quarter compared to 83.1% for the 2020 quarter. Device revenue increased 49.7% to $8 million for the fourth quarter 2021. This was driven by a 50.9% increase in monitor revenue and a 48.5% increase in IV pump revenue. The average selling price of our MRI compatible IV infusion pump system during the fourth quarter 2021 was approximately $33,800. compared to approximately $37,600 for the fourth quarter 2020. This decrease relates to higher international unit sales and an unfavorable product sales mix during the current quarter. The average selling price of our MRI compatible patient vital signs monitoring system during the fourth quarter 21 was approximately $41,000 compared to approximately $37,500 in the same period 2020. This increase relates to price increases we have been in the process of instituting across our monitored lineup, partially offset by unfavorable product sales mix and higher international unit sales during the current quarter. Revenue from disposables and service increased 24.3% to $3.4 million for the fourth quarter 2021. And revenue from our maintenance contracts was consistent at a half a million dollars for both periods. Gross margin was 77.9% for the 21 quarter compared to 75.3% for the 20 quarter. The increase in gross margin percent is a result of favorable overhead absorption from higher unit production required to meet customer demand, partially offset by higher international sales. We have commented in the past about supply chain matters and we remain cautious about materials costs at this time. However, we continue to believe that any negative impact from higher costs will likely be limited and partially offset by higher levels of unit production required to satisfy customer demand resulting in gross margins that are very consistent with our historical ranges. Operating expenses were $6.1 million or 51.7% of revenue compared to 5.8 million or approximately 67.7% of revenue for the fourth quarter last year. On a dollar basis, this increase is primarily due to higher bonus accruals, payroll and benefits costs, sales activities expenses, and costs related to regulatory activities, partially offset by lowered legal and professional expenses. As a result, Income from operations grew 378% to $3.1 million for the 2021 quarter. We recognize a tax benefit during the fourth quarter 21 of approximately $779,000 compared to tax expense of approximately $27,000 for the 2020 quarter. This decrease is due to tax benefits associated with the exercise and sale of stock options, partially offset by higher taxable income. Going forward, we expect a normalized tax rate. On a GAAP basis, net income was $0.31 per share compared to $0.05 for the 2020 quarter. On a non-GAAP basis, adjusted income was $0.33 per diluted share for the 21 quarter compared to $0.07 for the fourth quarter 2020. Cash from operations grew to $11.3 million for the full year 2021 from 5.8 million for the full year 2020. For the three months ended December 31st, 2021 and 2020, our free cash flow, a non-GAAP measure, was $3.3 million and $2.4 million, respectively. Now I'll provide some additional commentary around the financial guidance that Roger just reviewed. From a revenue standpoint, we are not providing guidance on a product by product basis. However, we expect growth across all products with our monitor leading the way. We have also begun to forecast modest amounts of revenue from the sale of our FMD and anticipate these sales will ramp throughout the year. We expect gross margins that are consistent with historical ranges and expect higher operating expenses from higher sales commissions and headcounts. We also expect additional costs in Q1 and Q2 of 2022 related to the testing and administrative matters from our 510K application. We expect the bulk of these additional regulatory and engineering costs will diminish significantly in the second half of the year. We also anticipate a normalized tax rate for 2022, as well as modest growth in our diluted share count. And with that, I'll turn the call over for questions. Michelle?