IRadimed Corporation Price & Performance (IRMD)

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 AratanaMed Corporation. Mr. Susie? 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 fourteenth consecutive quarter. Driving this record quarter is revenue at over $1,940,000,0.0 Gross profit came in at $7,610,000,0.0 with earnings very strong as well meaning GAAP diluted earnings per share increasing 11% from For the year, pump sales continued their extraordinarily strong trend However, also proud to say that The team also has brought in monitor bookings domestically for and pump sales continue their extraordinary strong trend as well. This is due to the sales team's focus and continuing customer interest Jacqueline, our CFO, shall provide more details on revenue and earnings comps in a bit, Well, 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 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 in the first week April From there, we would expect a few possible follow-up questions to come in May 0. With our final responses shortly thereafter. Given the turmoil with various agencies and 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 To reiterate what I mentioned, this new device, the 3870 MRIV pump will be a 26 story. Clearance in means that we expect only light revenue from the new device in As the sell 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 progressed through 2026 and into 2027. And beyond. Finally, with regard to our new facility it's now under construction, progress has been steady and planned with only minor material supply disturbances.

Which the general contractor has managed to mitigate well. Interior walls were 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 the June 0 final certificate of occupancy and commencements of of our move shortly thereafter. I'd now like to provide a bit of what we expect to see in For this financial guidance, we expect revenue of $1,920,000,0.0 to $1,940,000,0.0 with a GAAP diluted earnings per share of $0,.35 to $0,.39 Non GAAP diluted earnings per share of $0,.39 to $0,.43 We look forward to reporting revenue of $78 to $82,000,000 for the full year. And we would expect GAAP diluted earnings per share of $1,.55 to $1,.65 dollars with non GAAP diluted earnings per share of $1,.71 to 1,.81 And with that, I'll turn the call over to Jacklyn, our CFO, the quarter's 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 was $1,940,000,0.0 an increase of 11% compared to the For revenue increased 12% to $7,320,000,0.0 The increase for the quarter and the year was due to sustained strong demand for our IV pump as our end of life replacement program continues to drive exceptional growth for our pump.

Domestic sales increased 21% to $1,650,000,0.0 and international sales decreased 24% to $290,000,0.0 Overall domestic revenue accounted for approximately 85% of total revenue for compared to 78% for Device revenue increased 12% to $1,430,000,0.0 in the and 13% to $52,000,000 in again driven by a 3436% increase in pump revenue respectively. Revenue from disposables and services increased 9% for both the and The gross margin was 76.1% for the slightly below the 76.9% for the The gross margin for increased to 76.9% compared to 76.5% for 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 $9,000,000 or 46% of revenue compared to $830,000,0.0 or 47% of revenue for the For 2024, operating expenses were $34,000,000 or 47% of revenue compared to $30,000,000 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 reflect the exceptional bookings for the quarter and a result in record backlog as we enter 2025.

Operating income was $580,000,0.0 for the quarter and $22,000,000 for as we maintained a solid operating margin of 30% for the quarter and the year. We recognized a tax expense of approximately $5,000,000 for resulting in an effective tax rate of 20.8% for the year and 18.9% for the This rate was in line with the 20.9% effective rate in 2023. On a GAAP basis, net income for the quarter was $0.4 per diluted share compared to $0,.36 per diluted share for the On a GAAP basis, net income for was $1.5 per [indiscernible] compared to $1,.35 per diluted share for On a non GAAP basis, adjusted net income was $0,.44 per diluted share for the compared to $0,.39 per diluted share for the On a non GAAP basis, adjusted net income was $1,.66 per diluted share for compared to $1,.48 per diluted share in 2023, an increase of 12% year over year. Cash from operations was $6,000,000 for the three months ended December '31, 2024, up from $390,000,0.0 for the same period in 2023 as we drove efficiencies in our working capital management particularly in inventory. For the three months ended Dec. 31, 2024, our free cash flow, a non GAAP measure, was $290,000,0.0 down from $330,000,0.0 for the same period in 2023.

This decline is related to our ongoing capital expenditures for construction of our new building which were $270,000,0.0 for the quarter. As Roger noted, we expect to complete the new facility by June 0 and will spend approximately another $550,000,0.0 to complete the project. And with that, I will turn the call over to the operator for questions. Operator?

Thank you. We will now begin our Q and A session. Our first question comes from the line of Jason Witts of ROTH Capital Partners. Your question please, Jason.

Hi.

Thanks for taking the questions and solid quarter here. So terms of next year, should we assume that the sales force is going to focus more on the monitor business? And we see an uptick there. Or how do you see this 2025 at least on the top line sort of forming.

Hi, Jason. Yes, this is Roger. Good question. I've spoken to it, I guess, the last maybe two quarters here since we would indeed be highlighting sales of the monitor as far as how we are going to incentivize the sales team. And so we would expect that the [indiscernible] business in 2025 will will be significantly impacted. As I mentioned, it started to show already. We had We had some very strong bookings for the monitor this So yes, 2025 as you put it is is going to have more to come on the monitor.

So related to the uptick, has there already been sort of a shift in focus [indiscernible] Is part of the reason we saw this sort of uptick in monitor business or is it just sort of Yes, yes. Yes, I'd say midyear or slightly past last midyear. We did some minor tweaks to the to the goals surrounding the the monitor versus the pump. And that's starting to show it's been bared some fruit already in Got it. And it didn't impact the pump business.

So very That's good too. Pretty happy with that. [indiscernible] So then if I think about then looking at your bottom line assumptions, Does R and D come down because of you now have submitted for the pump? And also what do I think about gross margins for 2025?

Yes. Jason, this is Jack. So, yes, from the R and D spend, I would say it's going to be pretty consistent, maybe a little uptick from where we're at right now, as we might add some headcount in that area. Into 2025. But fairly consistent. As far as ARO's margin, I think yes, in R and D, yes. And then as far as the gross margin, I would say that we right now feel it's pretty much going to be in line with where we're at in that 76%, 77% range.

Going into 2025. Always a little dependent upon the mix as far as geographical is As you know, we roughly 20% of the business is international and we sell it at fairly sizable discounted through just distribution. But overall, I should say pretty in that range for 2025.

Sorry, just to clarify on a dollar basis or a percentage basis? When you say in Percentage basis. [indiscernible] [indiscernible] Okay, got it. And then so I guess that means that you're going to see if I look at the math here in terms of getting to Plugging in the numbers you provided for guidance, sounds like there's going to be some leverage in G and A and S and M. I don't know if you can elaborate any on that and how that might play out this year?

Yes, I think that we will. Hopefully, that's our plan is get some leverage in the model of and the G and A. Sales and marketing is what I spoke to is the big piece there is the variable expense, right, the sales commissions.

And that was reflected in our We do accrue for commissions on bookings. And we had again a very strong bookings quarter that was and you can see the increase in the sales and marketing in Going forward, I would say that yes, we expect it kind of to be in that same range though, but certainly maybe a little more leverage as we go through the year. Always dependent upon how the performance is to plan, which is if it succeeds that certainly a good problem to have, right? Right. We're trying to this year in getting prepared, for having the new pump next year though, we will be we will be also extending, I guess, overextending for lack of a better word, it would look like over extension in 2025 to get ready for the 2026 launch of the new new pump in that we'll be adding some of the support people in the clinical specialists. We've probably put in some we'll be starting to put in some territories, additional territory plug ins. So, yes, there'll be some there'll be some cost increases that aren't directly commissions paid for actual sales made in 2025 as well.

Got it. I will jump back in queue. Thank you very much. Thank you. Good to talk. Our next question Hey, Roger and Jack. This is Nelson Cox on for Freight. Thanks for taking the questions.

Kind of just following up on that, correct me if I'm wrong, I think the last we had talked, you talked about 35 territories kind of being an optimal number. [indiscernible] the new pump approval and I think that's versus 30 today. Is there any change to the thinking there on how you are thinking about an optimal sales organization kind of post approval of the new pump? No, that's why we that is still the plan. And of course, it means we'll seed that ground starting a little early. We won't put in 35 in calendar year 2025 on the 1 hand, but we will be putting in a few extra above our current 20 where we at 28 right now actually. So that's why we'll have some expense there in preparation for right sizing the sales team to do the business we anticipate [indiscernible] Perfect. And then sounds like the backlog is providing good visibility and good to see the strength there. Can you maybe just walk us through how you're thinking about backlog as you move through the year? Any commentary on how you're thinking about the overall composition of the backlog possibly changing throughout the year would be helpful.

Sounds like monitors maybe take a bigger portion with the the focus there on the sales team, but any additional color there would be helpful.

Yes. Nelson, this is Jack. Yes, it is as we mentioned, it is a very strong backlog beginning the year. So that gives us very good visibility, especially into the first half of the year. I would say that the backlog right now is certainly based on the pump bookings is very strong on pump. But not and also at the same time though, as Roger mentioned that we had a very strong bookings as number of units here domestically on the monitoring side. So it's I think right now it may be a little more biased towards the pumps, but certainly our plan as we've talked about would be to have the monitors pick up as we go along. But again, it gives us very good visibility, especially for the first the year?

And then maybe just 1 last quick 1 of the current pump installed base out there, can you just walk us through starting in 2026, how many pumps you think you can renew a year?

With the 3870. Do you mean this replacement business? [indiscernible] Well, as we've talked in the past, right, We'll have we'll have over 4000 mid-four thousand of pops that are older than five years of our current 3860 model. And we feel it'll be feel that we want to kind of hold the demand to where it's it's going to be about 800 to 1000 replace which ultimately is about 1600 to 2000 pumps because most of the systems we'd be replacing are twin channel systems in The U. S. Market. So that represents given that currently today, twin channels what we're selling now is about 1200 We're looking at more than doubling The number of pumps that we sell In 2026. In 2026, yes.

All right. Thank you.

Thank you. I would now like to turn the conference back to Roger Susi for closing remarks.

Good. Well, thanks. 1 last thought I had here. Is regarding concerns that folks may have over this various tariffs that are being implemented. And I'd like to say that this will mix into probably both every manufacturer in The U. S. Has some exposure to that. In our case, we source only 3 or 4 rather expensive components from countries that are going to be hit with the tariffs.

And and increasing and or increased tariffs over what we've already been paying. Of course, there's a larger number of inexpensive components, which we feel the impact from those is very negligible. But still these larger parts make up less than 3% of BOM cost, the bill of material cost. So with tariffs as a fraction of that, therefore, do the math and we wouldn't expect tariffs to affect gross margin materially. And I just thought I'd speak to that briefly.

So and with that, as always, it has been a great pleasure that we take this opportunity. We view progresses.

That, thank you.

Thank you. This concludes the call. You may now disconnect. [indiscernible]