iRadimed Corporation

Welcome to the Eradimed Corporation third quarter 2024 financial results conference call. Currently, all participants are in a listen-only mode. And at the end of the call, we will conduct the question and answer session. As a reminder, this call is being recorded today, October 31st, 2024, and contains time-sensitive, accurate information only today. Earlier, Eradimed released its financial results for the second quarter of 2024. A copy of this press release announcing the company's earnings is available under the heading News, on their website at iradimed.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's website at iradimed.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 Securities Litigation Reform Act of 1995. forward-looking statements focuses on future performance, results, plans, and events, and may include the company's expected future results. Eratomed reminds you the future results may differ materially from these forward-looking statements due to several risk factors. For a description of the relevant risks and uncertainties that may affect the company's business, please see the risk factors section of the company's most recent report filed with the Securities and Exchange Commission, which may be obtained free from the SEC's website at sec.gov. I would like to turn the call over to Roger Susi, President and Chief Executive Officer of Iridimed Corporation. Mr. Susi?

Thank you, operator. Good morning and thank everyone for joining us on today's call. Once again, I'm very happy to report yet another record quarter. In fact, our 13th consecutive record quarter. Driving this quarter was revenue coming in at $18.3 million. Recall that the previous quarter was 17.9 so growth continues to be attainable by all involved here at Aratamid. In addition, gross profit remains impressive at 77.4% with earnings very strong as well at 40 cents a diluted share. Again, pump orders remain strong and revenue likewise is is following that strength that continued in this quarter as it had been in the previous two. I'll be deferring to Jack, our CFO, later for more details on revenue and earnings. But at this point, I'd like to briefly move on and discuss a subject near and dear to us all, which is the progress on the new pump. Basically, it's all about getting that FDA clearance and as as we had promised during the last call, we did make that filing. It was, I believe, September 11th when it finally got filed with the FDA. We have had some interactive questions arising from that almost immediately, which is not a bad sign, where they they call with a given question and most of them are housekeeping, where is this document, how is this tied to that document, et cetera. So I really can't give much color on that being a positive or a negative either way, but we are now, we were just a day or two informed ago that they will be producing the actual AI letter, the initial AI additional information letter for us to work on and so I'm sure by next quarter's end call we'll have a lot more color on how that is progressing. Of course it's, you know, it's all important to get that 510k and again we are still planning on that happening sometime in the second quarter of 2025 and again as we mentioned in earlier calls. Given that, we would be planning to have some revenue, though only a small amount, initial revenue starting on that in the fourth quarter of 2025. We also have some news on our new headquarters, which we mentioned in the previous call. We had a couple of storms come through the Florida area, but all in all, I believe we only have suffered about four days lost to the overall construction schedule. So walls are up, ceilings being put on, paint's going on the walls, windows will be put in, and it'll be, as they call it, dried in before Thanksgiving. And from there, it's, you know, all the interior trim. So we're still on schedule to expect a move in also in about May of next year. And that'll, of course, coincide with the Necessity of further production space to launch the new pump very well. I'd like to finish with a brief report of what we see in Q4 coming up. For the fourth quarter of 2024 financial guidance, we expect revenue of 18.8 million to 19.2 million. Gap diluted earnings per share of 39 to 42 cents and non-gap diluted earnings per share of 42 to 45 cents. So thusly, we'd expect to report revenue for the year of 72.7 to 73.1 million, and we are raising our guidance on GAAP diluted earnings per share of $1.49 to $1.52 from the previous guidance of $1.37 to $1.47. And non-GAAP diluted earnings per share will be raising to $1.64 to $1.67 from the previous $1.52 to $1.62. And with that, I'd like to turn the call over to Jack Glenn.

Jack? Thank you, Roger, and good morning, everyone. As in the past, our results are reported on a GAAP basis and a 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 third quarter of 2024 was $18.3 million, an increase of 11% compared to the third quarter of 2023. This increase was due to the continued strength of our IV pump product in the third quarter as our end-of-life replacement program continues to drive exceptional growth for our pumps. Domestic sales increased 9% to $15.2 million, and international sales increased 22% to $3.1 million. Overall, domestic revenue accounted for approximately 83% of total revenue for Q3 2024, compared to 84% for Q3 2023. Device revenue increased 10% to $13 million, driven by a 78% increase in pump revenue. Revenue from disposables and services increased 12% to $4.7 million for the third quarter of 2024, while our maintenance contracts remained stable at $600,000. The gross margin was 77.4% for the third quarter, slightly below the 77.8% for the 2023 quarter. The higher mix of domestic versus international revenue contributed to the continued strength in our gross margin. Operating expenses were 8.4 million or 46% of revenue compared to 6.9 million or 42% of revenue for the third quarter of 2023. on a dollar and percentage of revenue basis, this increase is primarily due to sales and marketing expenses for higher sales commissions and sales activity, along with higher regulatory and quality expenses and payroll and benefits expenses. The noted increase in sales commission expense resulted in operating income slightly down from 5.9 million in Q3 of last year to 5.8 million for the 2024 quarter. We recognize the tax expense of approximately 1.4 million during the third quarter of 2024, resulting in an effective tax rate of 21.3% for the quarter, slightly higher than the effective tax rate of 20.9% in 2023. On a GAAP basis, net income for the quarter was 40 cents per diluted share, the same as for the 2023 third quarter. On a non-GAAP basis, adjusted income was 43 cents per diluted share for the third quarter of 2024, the same as for the 2023 third quarter. Cash from operation was a very strong 9.1 million for the three months ended September 30, 2024, up from 1.4 million for the same period in 2023, as we were able to drive efficiencies in our working capital management, particularly in accounts receivable and inventory. For the three months ended September 30, 2024, our free cash flow, a non-GAAP measure, was 5.1 million, up from 954,000 for the same period in 2023. In the quarter, the capital expenditure of $4 million was primarily for the construction of our new building. And with that, I will turn the call over for questions. Operator?