iRadimed Corporation

Welcome to the ARADIMED Corporation Fourth Quarter 2025 Financial Results Conference Call. All participants are current in listen-only mode. At the end of the call, we will conduct a question-and-answer session. This call is being recorded today, February 10, 2026, and contains time-sensitive, accurate information that is valid only for today. Earlier, ARADIMED released its financial results for the fourth quarter of 2025. A copy of this press release announcing the company's earnings is available under the heading News on the website at IRDMed.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 on the company's website at irdmed.com, and a replay will be available there 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, and may include the company's expected future results. Aradiomed 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 factor 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 want to turn the call over to Roger Sussi, President and Chief Executive Officer of Aradimet Corporation. Mr. Sussi.

Thank you, and good morning. Thank you all for joining us on today's call. And once again, we have some exciting performance to announce. I'm very proud to report that AranaMed achieved its 18th consecutive quarter of record revenue, with the fourth quarter of 2025 reaching $22.7 million, a 17% increase over the fourth quarter of 2024 and exceeding our prior guidance. For the full year 2025, we delivered record revenues of $83.8 million, which was up 14% year over year. Our GAAP diluted earnings per share for the quarter was $0.50, up 25%, and non-GAAP diluted earnings per share was $0.54, up 23%. For the full year, GAAP diluted earnings per share reached $1.75, which was up 17%, and non-GAAP diluted earnings per share was $1.93, up 16%. Gross margins remained strong at approximately 77% for the year and 75% for Q4. These results are reflective of solid execution across our product lines. MR compatible infusion pump systems, while still the legacy 3860 system, grew strongly. Sales of patient vital signs monitoring systems also grew very well and disposable revenue increased with higher utilization. We also saw a meaningful contribution from the ferromagnetic detection system. Allow me now to recap the expectations for the new 3870 MR IV pump. Recall that in positioning this new product and its pricing, we anticipate 3870 pump deal ASP will increase 10% to 14%. And yes, the 3870 design is much It is such that we fully expect to penetrate the greenfield opportunities more effectively and also increase utilization among existing customers who may currently only use their older pumps sporadically. But to be very clear, the most significant increase comes from the large replacement opportunity, which is the number one driver we see and will deliver a significant step change in revenue. continuing to be our key growth driver for the next several years. Recall how the older 3860 model delivered approximately 20% growth in fiscal 2025, driven by simply limiting our extended maintenance offering to pumps under seven years old. This minor change generated replacement orders for only a portion of pumps in that age group, but that portion resulted in significant revenue growth from pumps sales in 2025, that being the old pump. The promising news is that there remains a majority of these 7 plus year old pumps to be replaced, plus many more that are 5 years and older. In the US market alone, there are approximately 6,400 5 plus year old 3860, 3861 pump channels that are up for replacement. approximately 1,100 such channels annually into the domestic market. And we'll be targeting adding an additional 1,000 channels per year through replacement sales from those existing 6,400 units that are over five years old. This will be our target starting in June 2 and continuing through the rest of 2026. It's also important to understand that replacing only 1,000 channels per year leaves many thousands more to be replaced over the coming years. For our domestic business only, selling north of 2,038 70 pump channels annually with the higher anticipated ASP, we expect to approach a $50 million annual revenue run rate for pumps. With the addition of disposables and maintenance, international sales, In the MR monitoring business, one can understand our confidence in achieving a $100 million plus revenue run rate during 2026. As planned, in December, we delivered an initial order of 23 3870 systems for which we are providing an extraordinary level of clinical support and monitoring through February and into early March in an... in an effort to make sure that the most stable and highest quality exists in the device before the larger general sales release, which shall start in April. Bearing in mind the time required for our hospital customers to be sold, approve funding, issue orders and such, we expect bookings to build in this Q2 and ramp significantly in the second half of the year. We expect to maintain quarterly revenue in the first half of 2026, driven by growth in MRI monitoring and our 3860 pump backlog, but also anticipate booking strength of the 3870 systems, which will result in those initial shipments in April of approximately 100 to 130 3870 pump channels. I'd like to turn the call over to Jack Glenn, our CFO, to review the quarter's financial results. Thanks, 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 measures in this morning's earnings release and a reconciliation to GAAP on the last page. For the three months ended December 31, 2025, revenue was $22.7 million, up 17% from $19.4 million in the fourth quarter of 2024. This growth was driven by strong performance across all of our product lines, with MRI-compatible IV infusion pump systems contributing 9.1 million, up 20% year-over-year, and patient vital signs monitoring systems contributing 7.1 million, up 7.5%. Disposable revenue grew 18% to 4.3 million, reflecting a continued increase in utilization of our devices, while ferromagnetic detection systems also saw solid gains. For the full year 2025, revenue reached $83.8 million, up 14% from $73.2 million in 2024. Domestic sales accounted for 81% of total revenue in the fourth quarter and 84% for the full year, reflecting consistent strong U.S. performance, especially in the domestic pump business. Gross profit for the quarter was $17 million, with a margin of 75%. And for the full year, growth profit was $64.3 million, with a margin of approximately 77%, consistent with 2024. Operating expenses for the quarter were $9.9 million, and for the full year, $38.2 million, reflecting higher general and administrative expenses to support growth, along with modest increases in sales and marketing and R&D. Income from operations for the quarter was $7.1 million, and for the full year, $26.1 million, Tax expense for the quarter was $1.3 million, resulting in an effective tax rate of 17.3%. The decrease in the effective tax rate for the quarter was primarily due to a true-up based on our year-end tax provision, with our effective tax rate for the year at 20.7%, lower than our previously estimated 22%. Net income for the quarter was $6.4 million, or 50 cents per diluted share, up 25%. Non-GAAP net income was $7 million, or $0.54 per diluted share, up 23%. For the full year, net income was $22.5 million, or $1.75 per diluted share, up 17%. And non-GAAP, $24.8 million, or $1.93 per diluted share, up 16%. We ended the year with cash and cash equivalents of $51.2 million. Cash flow from operations was $5.9 million for the quarter and $24.9 million for the full year. Non-GAAP-free cash flow was $5.5 million for the quarter and $16.5 million for the year after capital expenditures primarily related to the new facility. And with that, I will now turn the call over to questions. Operator?

And as a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again. One moment for our first question. And it comes from the line of Frank Takinen with Lake Street Capital Markets. Please proceed.

Great. Thank you for taking the questions. Congrats on a solid finish to the year. Roger, I was hoping I could start with just some anecdotal thoughts around the initial market feedback from the pilot in the year. What can you tell us? What has the feedback been, and how has this influenced your decision to scale the 3870 launch in the second quarter here, or first and second quarter here?

Good question. Frank, good to talk to you. So, yeah, well, it's been very positive. So maybe I should give a little more color. We've been showing the pump to more people than just that first taker of the 23 pumps. We actually have orders that we have on the books already. Maybe, I don't know, another 15 or 20 pumps are on order already. So, you know, we just launched this to our sales force a week before last, I believe it was. And so up until that time, we had some maybe three or four specialists in our sales team during November and December even, showing the product to some select customers. So the feedback's been pretty tremendous. To go specifically to our... lack of a better word, but it's called a beta site. It's not really a beta site, but this first user, you know, they have approved FDA products, so it's not really a beta, but, you know, we ship it to them and then hold off keeping these existing orders that we have already booked, and as I said, holding off launching it to the greater sales team until two weeks ago to learn from that. You know, so that's a user who's been using our 3860, the older pump, for a long while, and I guess, I mean, they're pretty excited with the changes in the new pump. The people who showed it to, that are familiar with using the old pump are pretty excited about the new pump, I guess. It's simple enough to say. I had one of our, an anesthesiologist in here last week from one of our long-time large users up in the Boston area, and he She's very familiar with using the pump daily in the MRI environment. Very excited. Very excited about the change. So the product's really sexy. It's very, you know, it just presses the buttons. It's quite modernized, right? The old pump was a genesis of that design. It's almost 20 years old. So this represents a big, bold new step. And lots of folks are We're really thinking the demand will be great. And so we just wanted to do this couple months test with this one first single large user and make sure we have everything polished up just right because it's going to hit hard once it starts to ship.

Yep, that's very helpful. Maybe one for Jack on the gross margin profile. How should we think about gross margin scaling? I assume there's a subscale period, and then as that production is ramping, and then that improves over time. But maybe any incremental color you could give us on how gross margins should trend throughout the year would be helpful.

Sure. I think that initially in the early part of the year, the first half, it'll probably be kind of in line with where we have been. But we anticipate that as we, you know, get into the second half of the year on those higher volumes, which we certainly are looking for, along with, as Roger pointed out, what we're looking for is the higher ASP as well, that we would think that we could, you know, certainly trend a little bit higher in the second half of the year. Now, having said that, I mean, we hit quarters previously around 78%. That might be, you know, kind of in that range, certainly, but maybe possibly as time goes on, a little bit better. But that's certainly our plan.

Got it. That's helpful. And then last one, at the risk of getting over our skis, what's next for the R&D team now that the 3870 is launched and beginning to scale? What's the R&D team up to next, and how should we think about that effort?

No rest for us, huh, Frank?

Exactly.

Well, up. Well, actually, we've already started a few months ago working on the facelift, let's call it, next generation MRI monitor. So the monitor we have now, we launched about, what, seven years ago. So we plan to have a new updated monitor on the market in 2028. So we've been working on that a good six months already. And that's the next thing on the roadmap.

Nice. That's great. I appreciate the call. Thanks, guys.

Thank you. Thank you. Our next question comes from Kyle Bowser with Ross Capital Partners. Please proceed.

Hi, Roger and Jack. Great results, and thanks for taking my questions. Maybe on disposables and services, they were up very nicely in the quarter. Can you talk a little bit about strength here and primary drivers, the growth rate looked outside compared to in the recent past.

Yeah, sure. I can touch on that a little bit. I think, you know, from a disposable basis, we kind of already said that we would think that the growth would be kind of commensurate with the capital side of things, hopefully, right? And so that kind of is reflected in that. The one thing I would point out going forward is we believe that we can hopefully increase that utilization with the 3870 And a lot of that is based on what we've talked about, the user interface and so forth. And so hopefully we can continue to grow it like that, but maybe even a little bit higher as time goes on with the 3870.

Okay. Makes sense. And for the 3860, how do inventory levels look? What's the backlog? Do you still kind of feel like, you know, you'll be good kind of through Q2? Just wanted to check in on how the levels look there.

Yeah, I mean, from an inventory standpoint, we're managing that 3860 as best we can, right? We don't want to have too much as we make the transition over, but we want to make sure that we can fulfill that backlog as we move forward. So we're monitoring that very closely. I think we're in pretty good shape there. But, yeah, going forward, certainly, and we're bringing in that 3870 inventory, and that's reflected in the inventory numbers you see in Q4, the increase in inventory. We've brought in quite a bit of that 3870 in anticipation of the shipments But, you know, certainly it's going to be – the challenge will be as we manage that transition over from 3860 to 3870, and a lot of that will be in Q2.

Okay. Got it. And then, Roger, following up on Frank's question just about early feedback, has there been any changes or audibles you've had to call or tweaks, or has it been, you know, pretty smooth and you feel like you understand – you know, where the market's at and that the product is ready to go for the full launch.

Well, we anticipated, I mean, that's why we did this, like preview launch, is to get, you know, real users in the trenches feedback and make final tweaks. So we are. We've been making some tweaks here and there and making it just optimal for these, you know, our target users. That's the point of this prelaunch.

Got it. And then lastly, can you provide any updates on the regulatory process for 3870 into Europe and Japan? Does this still feel like kind of late 26 events here?

Yeah, oh, yeah. That'll be CE mark in the end of the year. So we're working on Japan, but Japan also is, you know, takes some time. Probably won't be cleared in Japan until next summertime. Okay. And not this summer.

Okay, great.

Following summer.

Following summer. Right. Got it. Okay. Well, really impressive results, and I appreciate you taking my questions. Thank you. You're welcome.

Thank you. And this will conclude our Q&A session, and I will pass it back to Roger Susi for closing comments.

Thank you, Operator, and thank you all once again for joining today's call. And we look forward to displaying Aratomed's ability to execute launch of our exciting new 3870MR IV pump systems and to capitalize upon the huge replacement opportunity throughout 2026 and beyond, utilizing the expanded capacity of our beautiful new facility here in Orlando, Florida. So, thank you.

This will conclude our call for today. Thank you. You may now disconnect.