iRadimed Corporation

Welcome to Aratamad Corporation's first quarter of 2026 Financial Results Conference Call. All participants are currently in listen-only mode. At the end of the call, we will conduct a question-and-answer session. This call is being recorded today, May 1, 2026, and contains time-sensitive accurate information that is valid only for today. Earlier, Aratamad released its financial results for the first quarter of 2026. 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 FCC.gov. This call is being broadcast live on the company's website at ArataMed.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 with the meetings of the Private Securities Litigation Reform Act of 1995. Forward-looking statements focus on the future performance, results, plans, and events, and may include the company's expected future results. A RADMED 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 reports filed with the Securities Exchange Commission, which may be obtained free from the SEC's website at sec.gov. I want to turn the call over to Roger Susi, President and Chief Executive Officer of Aradamage Corporation. Mr. Susi?

Thank you, Operator, and good morning. Welcome to Aradamage 212026. Aradamage calls. Sorry for the late start. We have a little microphone problem on this end. Reloadspin has a very positive performance to it else. With the first quarter of 2026 revenue of $22 million, a 13% increase over the first quarter of 2045. These results reflect solid execution across our product line. This strong revenue contribution of all of our MRI compatible IV infusion pump and our MR patient monitoring, noting that revenue substantially derived from the . There are also continues to be growing revenue support for our federal magnetic detection systems. Our continued revenue growth combined with disciplined expense management, including a modified commission structure, grow operating income of 7.2 million. a 33% improvement over the first quarter of 2025, with net income of $5.8 million, or $0.45 per diluted share, a 22% increase over that prior year. Next, I'd like to provide a brief recap of our expectations for the new 3870 MRI depot. Recalling that in positioning this new product and its pricing, we had anticipated that the 3870 pump would increase by some 10 to 14% over the historical 3860 pump ASP. However, though just beginning, initial quality and actual orders are showing a lift closer to 20% from 3870 ASP. Additionally, we are seeing that a majority of this new business is for quad four-pump systems rather than simply replacing the older 3860 dual-channel system. Thus, we are seeing both a higher per-pump ASP and a larger group of customers purchasing twice as many pump channels, doubling the number of pump channels at a particular customer site. Though obviously our sales efforts are in the very early stages, these two factors present a most exciting prospect for bookings and revenue as the year progresses. Opportunities for the 38-7 comp system, as previously described, are both increased penetration of greenfield, which are predominantly those facilities that continue to deal with IV fluid delivery in the MR setting via various old school workarounds, as well as the quite substantial replacement of Hermann's H install base of 3865 systems. The most immediate and significant increase coming from the large replacement opportunity. This replacement opportunity will be our key growth driver for the next several years, as that growth as mentioned has now begun to be the driving factor in this second quarter. To provide some clarity, to the revenue expectations in Q2 and beyond, it will not be a step change, but rather a controlled rank, which is initially controlled, composed of declining revenue derived from the older 3860 comp system, domestic orders which have trailed off as expected, also positively by increasing revenue from the new 3870 system as we ramp up its production. A general RGFO will provide R2-2 guidance for further quantifying how R2-2 is expected to develop. To reiterate, source of the 3870 opportunity as given in our previous. For the U.S. market, there are approximately 6,400 5-plus-year-old or older 3860s, 3861 pump channels up for replacement. We have been selling approximately 1,100 such 3860 channels a year. With the new 3870, we are targeting adding another 1,000 channels per year to replacement sales from the existing 6,438 units that are over five years old. As advertised, this starts in Q2 and continues through the rest of 2026 and beyond. It is also important to understand that replacing only 1,000 channels per year, leaves many thousands more to be replaced in the years to come. For our domestic business only, selling more than 2,000 3870 pump channels annually, with the higher ASP currently being issued, we expect to approach a $50 million annual revenue run rate for pumps, adding disposable maintenance, International sales, the MR monitoring business, the ferromagnetic system, one can understand our confidence in achieving 100 plus revenue run rate as 2026 progresses. Timing has been discussed previously as well. But to recap that, we did not launch our sales effort for 3870 until late January. As advised, we targeted shipping, 130, 135, 3870s in June 2. Both the launch and the manufacture of those initial 130, 135, 3870s are progressing and playing. As we issued in this morning press release, the interest in the new 3870 has been very gratified. The number of orders, $10 size, well ahead of our expectations this early in product launch, giving us great encouragement. Still, however, Q2 revenue will not fully reflect this high level of exciting motor activity, as shipping even 135 new 3870 systems, combined with declining revenue of over 3860s, keeps Q2 revenue somewhat in check. Again, it will be the back half of 2026 that will shine. As we continue to vote more costs at that higher ESP, and the fixing production, published in 1876. I'll turn the call over to Jack Brown, our CFO, to review the course financial results and provide a deeper color on growth through the balance of the year. Jack? Thank you, Roger, and good morning, everyone. As we have asked, 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 release and our conciliation to GAAP on the last page. For the three-month end of March 31st, 2026, revenue was $22 million, up 13% from $19.5 million in the first quarter of 2025. IV infusion pump systems contributed $7.7 million, up 28% year-over-year, reflecting a fulfillment of 3860 pump backlogs from the beginning of the year. Patient biocide monitoring systems contributed $7.1 million, up 9% year-over-year. The closing revenue was $4.9 million, consistent with the prior year period, while ferromagnetic detection systems contributed $600,000. Domestic sales accounted for 82% of total revenue, consistent with the first quarter of 2025. Growth profits in the quarter was $16.8 million, with a gross market of 77% up from 76% in the first quarter of 2025. Total operating expenses for the quarter were $9.6 million, roughly in line with the first quarter of 2025. Generally administrative expenses were $4.6 million, sales and marketing were $4.1 million, and research and development were $1.1 million. The increase in R&D was largely due to the end of capitalizing internally developed software for the 38th decade compared with Q1 of 2025, as well as new product developments in the next generation model. Income from operations for the quarter was $7.2 million. Net income was $5.8 million, or 45 cents per diluted share on the GAAP basis, a 22% increase over the prior year period. Non-GAAP net income was $6.4 million, or 49 cents per diluted share, up 17%. The effective tax rate for the quarter was approximately 25%. The increase in the effective tax rate for the quarter was largely due to the timing of deductions tied to the windfall deduction for equity grants, which is a discrete item taken at the time of investing of the equity grants, most of which will occur in the fourth quarter of this year. Therefore, we anticipate that the rate will trend down and by the end of the year be more in line with previous years. We ended the quarter with cash with tax equivalents of $56.4 million. Cash flow from operations was $8.3 million per quarter compared to $4.3 million in the first quarter of 2025, an increase of 93% in quite the desired net income and favorable working capital movement. Non-gap free tax flow was $7.8 million for the quarter after capital expenditures of approximately $500,000. Also today, the company's board of directors declared a regular 40-day tax dividend of $0.20 per share of outstanding common stock, payable on May 29, 2026, to stockholders of record as of the close of business on May 15, 2026. And lastly, for our financial guidance, for the second quarter of 2026, we expect revenue of $20 to $21 million, gas delivery earnings per share of $0.40 to $0.44, and non-gap delivery earnings per share of $0.44 to $0.48. For the full year 2026, we will reaffirm our guidance with a revenue of $91 to $96 million, GAAP's minimum earnings per share of $1.90 to $2.05, and non-GAAP's minimum earnings per share of $2.06 to $2.21. The company expects stock-based compensation expense net tax to be approximately $2.4 million for the full year and $600,000 for the second quarter of 2026. With that, I will turn the call over to questions. Dr. Raven?

Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star 1-1. If your question hasn't answered and you'd like to remove yourself from the queue, please press star 1-1 again. Our first question comes from Frank Takanan with Lake Street Capital Markets. Your line is open.

Great. Thank you for taking my questions and congrats on all the solid progress. I was hoping to start with a follow up on Roger, your comments related to cloud system ordering. How do you maybe break that down a little bit? Why you think folks are going from a single dual channel to ordering for individual channels? And then my assumption is you can't assume everybody goes to ordering four channels, but is there something specific to call out with some of these early customers that would be more likely to order four systems, or is it fair to assume that a lot of your customers reordering could fall into this camp of ordering four systems at once?

Yeah, good question, Frank. Yeah, that's a good question. It's a bit of a surprise that sold, that more than half of these orders have been taken so far have been for this system, so that's a bit surprising. You know, we were hoping for maybe 10, 15% customers, we could step up to this, you know, doubling the number of channels they operate. So, why? The question I get is why is that happening? So, I'd have to say that, you know, I'm going to give the sales force a little credit for this by and large. You know, they are close to the customers, and they felt that, you know, with the new system, the way it works and the way the impression you can leave customers, well, you know, it's smaller than the old pump. And the way they actually staff together on a pole, they really work together as four people. very easily and uh so we're showing it that way and we showed we walk in and we we're showing the quad stack and the customers see it though they of course hadn't been thinking in terms of that before because they only had a two-channel version before it does seem that it's fairly uh it's fairly quick that they said more than half these these existing customers fairly quickly see that, oh, wow, we've had some cases come up over the years that we've been using the older Batman Punk where, yeah, we needed a third and a fourth channel handy. And this sort of stimulates this conversation, makes customers think of those situations where they could see that they needed that many channels. And And they put the budget through, and another very positive sign has been, you know, these orders get, you know, started selling this thing in late January, as I pointed out. So orders that were getting in at this point have been rather quick, quicker than the typical, you know, cycle time for getting orders so far. So it's all very positive. But I think that's generally the reason you picked it out, and that customers do have experience where, as the channels were required and passed, and they're going in and taking advantage of buying a quad stack.

That's great. And then maybe just want to follow up on that. Is there a financial element to it as well? Are they getting a better per pump deal if they're buying four at a time?

No, that pump ASP is what I said. at 24 mils high, and the mixed price of the previous pump was, you know, 20,000. So, let's re-carriage that, right? So, the mixed price of the previous pump was 20,000. You can buy the second channel for about another 10. So, as we've told many times, our typical ASP pump needle, Well, it's just under 40 by the time you get the pump and sidecar and pole and the remote and all that. That's where it was landing. So, the PLOS systems they've been selling, again, PLOS back in the 3870s, again, the IV pole, the remote control, these are coming in at more than 100,000. So, it's very exciting.

Well, that's great. Maybe a bigger picture question, the concept that you laid out from going from around 1,000, I think you said 1,100 pumps a year, to adding another incremental 1,000 on top of that. What are the drivers to that? I assume this concept we just talked about, the quad pump ordering is a significant driver too, but is there an assumption of greenfield capture in that number as well, or is it really just a replacement?

I don't know. No, when I was speaking about that earlier in the call, I'm just talking taking a thousand out of the installed base for the old console, and frankly, I'll make it more clear, but frankly, the excitement level and customers, existing customers calling us wanting to see the new pump is kind of a frenzy right now. I don't see that we're going to have the time to start calling on Greenfield for a line. So, no, that doesn't have any upside from Greenfield factored in at this point.

Yeah, that's great. And just the last one for me, and I appreciate all the time, on manufacturing, how are you feeling from that standpoint, I think? In our previous conversations, you felt really good about that, but as you're taking orders now and scaling that, how is all of that going?

Well, sales team wants us to ramp it up a lot faster, but, you know, we're trying to take it a bit, you know, cautiously and, you know, ramp it up here. That's why I'm talking about the 130, 135 pumps for this quarter, you know, Now, the sales team would like us to shift over 200, but we just can't do it. We're going to stay at that level. We're going to get them right, and then third quarter, you know, we'll plan to double that up again over in the next quarter, maybe a little bit more in third quarter, and so on in the fourth quarter, where we should be by fourth quarter, pretty heavy stride on the number of the new costs we're kicking out of here. And, of course, having this new facility, we've got the space, And, you know, it's a matter of running for nothing all around and stabilizing the supply chain. And so, that's why we're being a conservative on the grant.

Perfect. Thanks for taking the questions.

Thank you. As a reminder, to ask a question, please press star 11. I'm sure no further questions at this time. I'd like to turn the call back over to Roger Susi for closing remarks.

Well, thank you all once again for joining us on today's call. I'd like to add, as we close the call today, that the market is very excited about the new 3870 comp system, and we are being invited into customer facilities to show the device at a very high rate, and sales team is rather inundated. We have had bookings with greater than expected ASPs, as well as if the majority of those orders thus far are for double the number of pump channels. So it's clear to us that the 3870 is having a great acceptance, generates great excitement, and motivates very positive and rather quick customer response. So we're quite pleased. And with that, I look forward to demonstrating, rather than success, and require their execution along with the Society 3870 MRI depop system and capitalize on the huge replacement opportunity throughout 2026 and beyond. Thank you.

Thank you. This concludes the call. You may now disconnect.