iRadimed Corporation

Welcome to the Erotomed Corporation fourth quarter of 2024 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. This call is being recorded today, February 13, 2025, and contains time-sensitive, accurate information only today. Earlier, Aratamed released its financial results for the fourth quarter of 2024. A copy of this press release announcing the company's earnings is available under the heading News on their website at aratamed.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 aratamed.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 focus on future performance. results, plans, and events that may include the company's expected future results. ARETA-Med reminds you that future results may differ materially from these four 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 factors section of the company's most recent reports filed with the Securities and Exchange Commission. which may be obtained free from the SEC's website at sec.gov. I would now like to turn the call over to Roger Susi, President and Chief Executive Officer of Aradamant Corporation. Mr. Susi.

Thank you, and good morning, and thank you all for joining us on today's call. Once again, I am in a fairly unique position to report yet another record quarter, our 14th consecutive quarter. Driving this record quarter is revenue at over $19.4 million. Gross profit came in at $76.1 with earnings very strong as well, meaning GAAP diluted earnings per share, increasing 11% from Q4 2023. For the year, pump sales continued their extraordinarily strong trend. Also proud to say that the team also has brought in monitor bookings domestically for the quarter at a record-tying rate. And pump sales continue their extraordinarily strong trend as well. This is due to the sales team's focus and continuing customer interest and demand. Jacqueline, our CFO, shall provide more details on revenue and earnings comps in a bit, while I would like to discuss the new pump's progress through FDA clearance. As previously discussed, we received an additional information letter from the FDA shortly after the submission was made in early September. We've engaged with the agency twice via SIR meetings to clarify certain items in this AI additional information letter. With our team pushing, our teams have been pushing very hard gathering data and writing the formal responses. With that, we plan to have this response back to the FDA the first week of April. From there, we would expect a few possible follow-up questions to come in May, with our final responses shortly thereafter. Given the turmoil with various agencies in the current administration, it's anyone's guess if the FDA may be operating more slowly than usual. However, We do not see any strong sign as of yet, and so we will expect clearance, as previously stated, midsummer. To reiterate what I mentioned, this new device, the 3870 MRI view pump, will be a 2026 story. Clearance in mid-25 means that we expect only light revenue from the new device in fourth quarter of 2025. as the cell and shipment cycle is measured in months, not days. However, as witnessed by the strong sales of replacing the older IV pump after we discontinued offering our extended maintenance on pumps seven years and older, the new 3870 pump sales are expected to dwarf sales of this older model as the quarters progress through 2026 and into 2027 and beyond. Finally, With regard to our new facility, it's now under construction, progress has been steady and to plan with only minor material supply disturbances, which the general contractor has managed to mitigate well. Interior walls are up, electrical and plumbing are well past halfway, and with the installation of the glass going in very soon, the building will be totally dried in and ready for the interior final trim. we remain confident in a June final certificate of occupancy and commencements of our move shortly thereafter. I'd now like to provide a bit of what we expect to see in Q1 2025. For this first quarter of 2025 financial guidance, we expect revenue of 19.2 to 19.4 million, with a gap diluted earnings per share of 35 to 39 cents. non-GAAP diluted earnings per share of 39 to 43 cents. We look forward to reporting revenue of 78 to 82 million for the full year. And we would expect GAAP diluted earnings per share of $1.55 to $1.65 with non-GAAP diluted earnings per share of $1.71 to $1.81. And with that, I'll turn the call over to Jacqueline, our CFO, to review the Corps' financial results.

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 fourth quarter of 2024 was $19.4 million, an increase of 11% compared to the fourth quarter of 2023. For fiscal year 2024, revenue increased 12% to $73.2 million. The increase for the quarter and the year was due to the sustained strong demand for our IV pump as our end-of-life replacement program continues to drive exceptional growth for our pumps. Domestic sales increased 21% to $16.5 million, and international sales decreased 24% to $2.9 million. Overall, domestic revenue accounted for approximately 85% of total revenue for Q4 2024 compared to 78% for Q4 of 2023. Device revenue increased 12% to $14.3 million in the fourth quarter and 13% to $52 million in fiscal 2024, again driven by a 34% and 36% increase in pump revenue, respectively. Revenue from disposables and services increased 9% for both the fourth quarter of 2024 and fiscal 2024. The gross margin was 76.1% for the fourth quarter of 2024, slightly below the 76.9% for the 2023 quarter. The gross margin for fiscal 2024 increased to 76.9% compared to 76.5% for fiscal 2023. The increase in overhead spending year over year primarily was driven by the slight decline in the gross margin for the quarter. Operating expenses were 9 million or 46% of revenue compared to 8.3 million or 47% of revenue for the fourth quarter of 2023. For 2024, operating expenses were $34 million or 47% of revenue compared to $30 million or 46% of revenue for 2023. The dollar increase in operating expenses for the quarter and the year is primarily due to increased sales and marketing expenses due to higher sales commission expenses. We accrue and pay sales commissions on orders booked, so the higher sales and marketing expenses in the fourth quarter reflect the exceptional bookings for the quarter and a resultant record backlog as we enter 2025. Operating income was $5.8 million for the quarter and $22 million for fiscal 2024 as we maintained a solid operating margin of 30% for the quarter and the year. We recognized a tax expense of approximately $5 million for fiscal 2024, resulting in an effective tax rate of 20.8% for the year and 18.9% for the fourth quarter. This rate was in line with the 20.9% effective rate in 2023. On a GAAP basis, net income for the quarter was 40 cents per diluted share compared to 36 cents per diluted share for the 2023 fourth quarter. On a GAAP basis, net income for fiscal 2024 was $1.50 per diluted share compared to $1.35 per diluted share for fiscal 2023. On a non-GAAP basis, adjusted net income was $0.44 per diluted share for the fourth quarter of 2024, compared to $0.39 per diluted share for the fourth quarter of 2023. On a non-GAAP basis, adjusted net income was $1.66 per diluted share for fiscal 2024, compared to $1.48 per diluted share in 2023, an increase of 12% year over year. Cash from operations was 6 million for the three months ended December 31, 2024, up from 3.9 million for the same period in 2023, as we drove efficiencies in our working capital management, particularly in inventory. For the three months ended December 31, 2024, our free cash flow, a non-GAAP measure, was 2.9 million, down from 3.3 million for the same period in 2023. This decline is related to our ongoing capital expenditures for construction of our new building, which were 2.7 million for the quarter. As Roger noted, we expect to complete the new facility by June, and we'll spend approximately another 5.5 million to complete the project. And with that, I will turn the call over to the operator for questions. Operator?