iRadimed Corporation

Welcome to Aratamid Corporation first quarter of 2024 Financial Results Conference Call. Currently, all participants are in listen-only mode, and at the end of the call, we will conduct a question-and-answer session. This call is being recorded today, May 2, 2024, and contains time-sensitive accurate information only today. Earlier, Aratamid released its financial results for the first quarter of 2024. A copy of this press release announcing the company's earnings is available under the heading News on the website aratamid.com. A copy of the press release was also furnished to the Securities and Exchange Commission on form 8K and can be found at sec.gov. This call is being broadcast live over the internet on the company website at aradamant.com. And a replay will be available on the website for the next 90 days. Some of the information in today's session will constitute forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. Forward-looking statements focus on future performance, results, plans, and events and may include the company's expected future results. Heredity reminds you that future results may differ materially from these forward-looking statements due to several risk factors. For description of a relevant risk and uncertainties that may affect the company's business, please see the risk factors section of the company's most recent reports filed with the Securities and Exchange Commissions, which may be obtained free from the SEC website at sec.gov. I would like to turn the call over to Roger Susi, President and Chief Executive Officer of Aratamid Corporation. Mr. Susi.

Good morning. Thank you all for joining us on today's call. As recently reported, I'm, once again, very pleased to announce yet another consecutive quarter of record ERADMED revenue generated in our recent Q1 2024 quarter. This is our 11th revenue increase in a row. As this morning's press release announced, in the first quarter of 2024, revenue came in at $17.6 million, representing a 13.7% increase over the first quarter of 2013. Gap diluted earnings per share for the first quarter were $0.32, while non-gap diluted earnings were $0.36 per share, a 20% increase over Q1 of 23. All product lines performed well, with our inside and outside teams executing exceptionally well. From the revenue standpoint in Q1, the MR patient monitor bested the IV pump and increased by 38% compared to Q1 of 23. However, this doesn't show the strength of one product line over the other, as bookings for the MRIV pump product in Q1 greatly exceeded expectations. So we actually expect that in Q2, the table may turn in favor of pump revenue. As I previously discussed, We notified customers with pumps seven years and older that our extended maintenance would no longer be offered for such older devices. This, as expected, has prompted the uptick in pump orders we've seen in Q1, which we hope to continue to see in the upcoming quarters as well. To be sure, our major products remain viable and fitting for their markets while we continue to make inroads with our newer FMD products. Previously, I had spoken about reducing our delivery time for disposables and the associated reduction of backlog. Though, as seen in financial disclosures, the disposable business remains strong and growing, we have managed to reduce the lead time of these products and continue to work to improve these lead times. Though orders continue growing, production is not outpaced. Along those lines, we recently began construction. on our new 61,000-square-foot manufacturing facility here in Orlando, Florida, to consolidate operations, improve efficiencies, and prepare for the continued and expanding growth we foresee. We anticipate spending approximately $13 million on its development over the next 12 months, and we will keep you posted in these coming quarters as construction progresses towards a moving date. Now, regarding the progress of our 510 case admission for the new 3870 MRI IV pump, the team is focused and pushing very hard, yet we are still not quite there due primarily to some expanded testing. As previously reported, we have engaged a third-party consultant with two very recent ex-FDA reviewers on their staff, from whom we are getting excellent inputs. Their feedback has, however, driven us to repeat some of the previous tests, mainly because the device is under test from many months ago, and they have undergone some changes. Our ex-FDA consultants believe the FDA would be much more comfortable with all testing done on the absolute final configuration of the device. Therefore, the aim is to have the test reports reference the very latest version of the device, thus removing any questions It's anticipated these steps should impact the delivery of the 510K by approximately 9 to 10 weeks. Still remain on plan with expected clearance in Q1 2025 and plan to show the revenue from the new device in the back half of 2025. I'd like to present our expected financial performance guidance for the coming quarter and the balance of the year. For the second quarter of 2024 financial guidance, we expect revenues $17.6 to $17.8 million. GAAP diluted earnings per share of $0.33 to $0.36 and non-GAAP diluted earnings per share of $0.36 to $0.39. We reiterate our guidance for the full year of 2024. We expect to report revenues of $72 to $74 million. with GAAP diluted earnings per share of $1.37 to $1.47, and non-GAAP diluted earnings per share of $1.52 to $1.62. Lastly, I'm pleased to report that our Board of Directors has declared a quarterly cash dividend of 15 cents, payable on May 30, 2024, and we expect to pay the quarterly cash dividend going forward to reward our loyal shareholders. Now I'd like to turn the call over to Jack Glenn, our CFO, to review the quarter's financial results.

Thank you, Roger, and good morning, everyone. As in the past, our results have been reported on both a GAAP and non-GAAP basis. You can find a description of our non-GAAP operating measures in this morning's earnings release and a reconciliation of these non-GAAP measures to the GAAP measure on the last page of today's release. As we reported earlier this morning, revenue in the first quarter of 2024 was $17.6 million, an increase of 14% compared to the first quarter of 2023. Domestic sales increased 12% to $13.4 million, and international sales increased 20% to $4.2 million. Overall, domestic revenue accounted for 76% of total revenue for Q1 2024, compared to 77% for Q1 2023. Device revenue increased 13 percent to $11.9 million, driven by a 38 percent increase in monitor revenue. Revenue from disposables and services increased 17 percent to a record $5.2 million for the first quarter of 2024, while our maintenance contracts remained stable at $487,000. The gross margin was 76.1 percent for the first 2024 quarter, compared to 75.7 percent for the 2023 quarter. The increase in gross margin is primarily due to increased revenue, decreased raw material costs, and direct labor efficiencies offset by overhead spending. Operating expenses were 8.6 million or 49 percent of revenue compared to 7.7 million or 50 percent of revenue for the first quarter of 2023. On a dollar basis, this increase is primarily due to higher sales and marketing expenses for higher sales commissions sales activity expenses, and payroll and benefit expenses. As a result, income from operations grew 18.5 percent to 4.7 million for the 2024 first quarter. We recognize the tax expense of approximately 1.1 million during the first quarter of 2024, resulting in an effective tax rate of 21.1 percent for the quarter, which was in line with the effective tax rate of 20.9 percent in 2023. On a GAAP basis, net income was 32 cents per diluted share compared to 27 cents for the 2023 quarter. On a non-GAAP basis, adjusted net income was 36 cents per diluted share for the 2024 first quarter compared to 30 cents for the first quarter of 2023. Cash from operations was 3.9 million for the three months ending March 31, 2024, down from 4.6 million for the same period in 2023. For the three months ended March 31, 2024, our free cash flow, a non-GAAP measure, was $3.4 million. This compares to a negative free cash flow figure of $1.9 million in the first quarter of 2023 when we purchased the land for our future facility for $6.2 million. Our cash and cash equivalents totaled $45.1 million as of March 31, 2024. And with that, I will now turn the call over to the operator for questions.