iRadimed Corporation

Welcome to the Eratomed Corporation's second quarter of 2025 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, August 1, 2025, and contains time-sensitive, accurate information only today. Earlier, Eratomed released its financial results for the second quarter of 2025. A copy of this press release announcing the company's earnings is available under the heading News on their website at eratamed.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 eratamed.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 meeting of the Private Securities 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. Eratomed reminds you that 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 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 Soucy, President and Chief Executive Officer of Aradamid Corporation. Mr. Soucy?

Thank you, Operator. Good morning, and thank you all for joining us on today's call. I am indeed very pleased to report yet another record quarter, marking our 16th consecutive quarter of record revenues. For the second quarter of 2025, we achieved revenue of $20.4 million, a 14% increase over the same period last year. Gross profit came in at 78%, with earnings very strong as well. GAAP diluted earnings per share, increasing 18% from Q2 of 2024. Pump shipments led performance in the quarter, as our 3860 MRI IV pump continued to excel in Q2. In addition to the great pump performance, I am also very happy to report that shipments of our MR patient monitor grew 9%. and that bookings in Q2 indicate that our emphasis on monitoring sales for 2025 can be expected to achieve our plans with this product line as well. I'd like to quickly follow up on comments regarding tariffs and DOGE impacts, which we had discussed at some length during our earnings call of Q1. We can now look back and see that, though tariffs had been collected on some of the components we utilized, The actual impact is still very small. We do feel, however, that as tariffs become stable and finalized, especially Chinese tariffs, and as pre-tariff inventories dwindle here within our stocks, we will have a better idea of the measurable tariff impacts to manage and report upon in the future. As for doge effects upon various agencies and possible issues secondarily affecting Aradamid, such impacts did not materialize. In fact, as announced on May 22nd, the FDA cleared our new 3870 IV pump systems for distribution. With this long-awaited and hard-fought FDA action, the road ahead for Aradamid is clear and wide. Since the founding of Aradamid 20 years ago, This clearance and the sales growth that the new pump will ignite will prove to be a seminal event. Reflecting a moment, when I founded Eratomed, frankly, though we had a strong vision that an MRIV pump would be a highly successful niche device, my revenue targets from then now appear overly modest, being in the double digits. Now that revenue vision looks to be passing the 100 million revenue run rate as we progress through 2026. I could not be prouder of what we have done with this fascinating MRI niche. Let me share how we envision these next several quarters. Most of you have seen the effect on the sales of our existing legacy pump. The original design core from 20 years ago when we simply discontinued offering service contracts for units seven years and older. This action led a number of customers to replace older 3860 pumps with newer newly manufactured 3860 pumps. But now that we have a new state-of-the-art pump with 20 years of technological advancement, we anticipate a huge demand for replacing older 3860 model pumps starting at the five-year-old level. For context, in the U.S. market alone, there are over 6,200 five-plus-year-old 386061 pump channels up for replacement. We currently sell approximately 1,000 such channels annually into the domestic market. We will target adding to that base of 1,000 channels per year another 1,000 channels through update replacement sales from that 6,200 units that are over five years old. This will be our target in 2026. In subsequent years, we expect to increase the drawdown of old pump channels from 1,000 to over 2,000 and growing and so on. Again, adding the increased sales for replacements into the current base run rate of 1,000 a year and you can understand why I see piercing that 100 million revenue run rate in 2026 and continuing strong growth for years afterwards. To put numbers on this, for our domestic opportunity only, as we sell 2,038 70 pump channels annually, with a slightly higher ASP we anticipate, The 2025 domestic pump device revenue currently expected at $28 million in 2025 will become nearly $50 million, adding in disposables, then international sales, plus the MR monitor business, and one can understand my confidence in breaking through this $100 million revenue rank. Now let's discuss our updated financial guidance. For the third quarter of 2025, we expect revenue of 20.5 million to 20.9 million, representing 12 to 14% growth over Q3 2024, which was 18.3 million. We anticipate gap diluted earnings per share of 41 to 45 cents and non-gap diluted earnings per share of 45 to 49 cents, reflecting a 10 to 12% growth over Q3 2024's $0.40 to $0.43, respectively. Tempered by anticipated but short-lived operational inefficiencies during our facility transition, which we've just moved into our new building. For the full year 2025, we are raising our guidance to reflect our strong first half performance. We now expect revenues of $80 to $82.5 million, up from our prior range of $78 to $82 million. representing 9% to 13% growth over 2024's 73.2 million revenues. GAAP diluted earnings per share now expected to be $1.60 to $1.70, up from $1.55 to $1.65, and non-GAAP diluted earnings per share is $1.76 to $1.86, up from $1.71 to $1.81. These ranges account for approximately $2.6 million in stock-related compensation expense, net of tax for the full year, and $0.6 million for Q3. We also remain committed to delivering value through our $0.17 per share quarterly dividend declared for Q3 and payable on August 28, 2025. Now I'll turn the call over to Jack Glenn, our CFO, to review the quarter's financial results in detail.

Thank you, Roger, and good morning, everyone. As in the past, our results are reported on a gap basis and a non-gap basis. You can find a description of our non-gap operating measures in this morning's earnings release and a reconciliation of these non-gap measures to the gap measure on the last page of today's release. For the three months into June 30, 2025, we reported revenue of $20.4 million, a 14% increase from $17.9 million in the second quarter of 2024. This growth was driven by strong performance across all product lines with MRI-compatible IV infusion pump systems contributing $8.2 million, up 19% year-over-year, and patient vital signs monitoring systems contributing $5.9 million, up 9%. Disposables revenue grew 14% to 4.2 million, reflecting increased utilization of our devices, while ferromagnetic detection systems and services revenue also saw a solid gain. Domestic sales increased 18% to 18.2 million, and international sales decreased 9% to 2.2 million. Overall, domestic revenue accounted for 89% of total revenue for Q2 2025, compared to 86% for Q2 2024. Gross profit was 16 million, up 14% from 14 million in Q2 of 2024, with a gross margin of 78%, consistent with the prior year. The strong margin performance was supported by increased overhead absorption as we built inventory ahead of the new facility's opening. Operating expenses for the quarter were 9.2 million, up 9% from 8.4 million in Q2 of 2024, driven by higher sales and marketing expenses to support our growth, and modest increases in general administrative costs. Research and development expenses remain steady at approximately $0.9 million. Income from operations grew 21% to $6.8 million from $5.6 million in Q2 2024. Tax expense for the quarter was $1.6 million, resulting in an effective tax rate of 21.2%. Net income was $5.8 million or $0.45 per diluted share, an 18% increase from $4.9 million or $0.38 per diluted share in Q2 of 2024. On a non-GAAP basis, net income was $6.4 million or $0.49 per diluted share, up 17% from $0.42, excluding $0.6 million of stock-based compensation expense net of tax. Now turning to our balance sheets. We ended the quarter with cash and cash equivalents of 53 million, up from 52.2 million at year end 2024. Cash flow from operations was a strong 7.7 million for the quarter, up 17% from 6.6 million in Q2 of 2024, and 12 million for the first half, up 14% from 10.5 million. Free cash flow was 4.9 million for the quarter and 5.3 million for the first half, reflecting capital expenditures of $6.7 million year-to-date, primarily related to the new facility. We expect final payments of approximately $1.1 million for the facility in Q3, bringing the total construction cost to approximately $12.6 million. And with that, I will turn the call over to the operator for questions. Operator?