Earnings call transcript: Iradimed Co Q4 2024 beats EPS forecasts, stock drops

Iradimed Co (IRMD) reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an EPS of $0.44 against the forecasted $0.405. Despite this positive earnings surprise, the company’s stock fell by 9.44% in pre-market trading, reflecting investor concerns over other aspects of the report. According to InvestingPro data, IRMD maintains a "GREAT" financial health score of 3.66 out of 5, with particularly strong profitability metrics. The stock has demonstrated impressive momentum, delivering a 38% return over the past six months.

Key Takeaways

• Iradimed Co beat EPS forecasts for Q4 2024, reporting $0.44 against $0.405 expected.
• Revenue reached $19.39 million, exceeding the forecast of $18.8 million.
• Stock price dropped by 9.44% following the earnings call.
• Domestic sales saw a significant increase, while international sales declined.

Company Performance

Iradimed Co demonstrated strong performance in Q4 2024, with revenue increasing by 11% year-over-year to $19.4 million. This growth was primarily driven by a 21% rise in domestic sales, although international sales faced a 24% decrease. The company’s focus on its medical device pumps has resulted in 14 consecutive record quarters, underscoring its robust market position.

Financial Highlights

• Revenue: $19.4 million, up 11% year-over-year
• GAAP EPS: $0.40, up 11%
• Non-GAAP EPS: $0.44, up 12.8%
• Gross Margin: 76.1% for Q4 and 76.9% for the full year
• Cash from Operations: $6 million, a 54% increase

Earnings vs. Forecast

Iradimed Co’s Q4 2024 EPS of $0.44 exceeded the forecasted $0.405, marking a positive surprise of approximately 8.6%. This performance aligns with the company’s historical trend of surpassing expectations, contributing to its record-setting streak.

Market Reaction

Despite the earnings beat, Iradimed Co’s stock price fell by 9.44%, closing at $54.77, down from its previous close of $60.48. This decline may reflect investor apprehension about the company’s international sales performance and future growth prospects, despite strong domestic sales.

Outlook & Guidance

For Q1 2025, Iradimed Co projects revenue between $19.2 million and $19.4 million. The full-year 2025 revenue is expected to range from $78 million to $82 million. The company also anticipates GAAP EPS of $1.55 to $1.65 and non-GAAP EPS of $1.71 to $1.81, signaling confidence in continued growth.

Executive Commentary

CEO Roger Susi highlighted the company’s strategic focus, stating, "2025 we would indeed be highlighting sales of the monitor." He also expressed optimism about the year ahead, noting, "We expect strong performance as 2025 progresses."

Risks and Challenges

• Decline in international sales poses a risk to global revenue growth.
• Potential tariffs could impact cost structures, though minimal impact is expected.
• Market saturation in domestic markets could limit future growth opportunities.
• Supply chain disruptions may affect the timely launch of new products.

Q&A

During the earnings call, analysts inquired about the company’s focus on the monitor business and the expected impact of the new pump launch. Executives emphasized the importance of expanding sales territories and maintaining consistent R&D spending to support future growth initiatives.

Full transcript - Iradimed Co (IRMD) Q4 2024:

Conference Call Operator/Moderator: Welcome to the IRADAMed Corporation Fourth Quarter of twenty twenty four 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, 02/13/2025, and contains time sensitive accurate information only today. Earlier, Iradimed released its financial results for the fourth quarter of twenty twenty four.

A copy of this press release announcing the company’s earnings is available under the heading news on their website at iradomed.com. A copy of the press release was also furnished to the Securities and Exchange Commission on Form eight ks and can be found at sec.gov. This call is being broadcast live over the Internet on the company’s website at aredimed.com, and a replay will be available on the website for the next ninety 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.

Oretimed 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 Susi, President and Chief Executive Officer of Aradiman Corporation. Mr. Souci?

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: 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 $19,400,000 Gross profit came in at $76,100,000 with earnings very strong as well, meaning GAAP diluted earnings per share increasing 11% from Q4 twenty twenty three. 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 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 pushings 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 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 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 mid summer.

To reiterate what I mentioned, this new device, the 3,870 MR IV pump will be a 2026 story. Clearance in mid-twenty five means that we expect only light revenue from the new device in fourth quarter of twenty twenty five 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 pump seven years and older, the new 3,870 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 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 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 twenty twenty five. For this first quarter of twenty twenty five financial guidance, we expect revenue of $19,200,000 to $19,400,000 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 $78,000,000 to $82,000,000 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 quarter’s financial results.

Jacqueline, Chief Financial Officer, IRADAMed Corporation: 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 twenty twenty four was $19,400,000 an increase of 11% compared to the fourth quarter of twenty twenty three. For fiscal year ’20 ’20 ’4, revenue increased 12 to $73,200,000 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 16,500,000 and international sales decreased 24% to $2,900,000 Overall domestic revenue accounted for approximately 85% of total revenue for Q4 twenty twenty four compared to 78% for Q4 of twenty twenty three. Device revenue increased 12% to $14,300,000 in the fourth quarter and 13% to $52,000,000 in fiscal twenty twenty four, again driven by a 3436% increase in pump revenue respectively. Revenue from disposables and services increased 9% for both the fourth quarter of twenty twenty four and fiscal twenty twenty four. The gross margin was 76.1% for the fourth quarter of twenty twenty four, slightly below the 76.9% for the twenty twenty three quarter. The gross margin for fiscal twenty twenty four increased to 76.9% compared to 76.5% for fiscal twenty twenty three.

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 percent of revenue compared to $8,300,000 or 47% of revenue for the fourth quarter of twenty twenty three. 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 fourth quarter reflect the exceptional bookings for the quarter and a result in record backlog as we enter 2025.

Operating income was $5,800,000 for the quarter and $22,000,000 for fiscal twenty twenty four 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 fiscal twenty twenty four 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 $0.4 per diluted share compared to $0.36 per diluted share for the twenty twenty three fourth quarter. On a GAAP basis, net income for fiscal twenty twenty four was $1.5 per diluted share compared to $1.35 per diluted share for fiscal twenty twenty three.

On a non GAAP basis, adjusted net income was $0.44 per diluted share for the fourth quarter of twenty twenty four compared to $0.39 per diluted share for the fourth quarter of twenty twenty three. On a non GAAP basis, adjusted net income was $1.66 per diluted share for fiscal twenty twenty four 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 12/31/2024, up from $3,900,000 for the same period in 2023 as we drove efficiencies in our working capital management, particularly in inventory. For the three months ended 12/31/2024, our free cash flow, a non GAAP measure was $2,900,000 down from $3,300,000 for the same period in 2023. This decline is related to our ongoing capital expenditures for construction of our new building, which were $2,700,000 for the quarter.

As Roger noted, we expect to complete the new facility by June and will spend approximately another $5,500,000 to complete the project. And with that, I will turn the call over to the operator for questions. Operator?

Conference Call Operator/Moderator: Thank you. We will now begin our Q and A session. Our first question comes from the line of Jason Wyts of Roth Capital Partners (WA:CPAP). Your question please, Jason.

Jason Wyts, Analyst, Roth Capital Partners: Hi. Thanks for taking the questions and solid quarter here. So in 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?

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: Hey, Jason. Yes, this is Roger. Good question. I’ve spoken to it, I guess, the last maybe two quarters here since probably mid year last year that 2025 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 monitor business in 2025 will be significantly impacted.

As I mentioned, it started to show already. We had some very strong bookings for the monitor in this fourth quarter. So yes, 2025 as you put it is going to have more to come on the monitor.

Jason Wyts, Analyst, Roth Capital Partners: So related to the uptick, has there already been sort of a shift in focus to Salesforce (NYSE:CRM) or is part of the reason we saw this sort of uptick in monitor business or is it just sort

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: of Yes, yes. Yes, I’d say mid year slightly past last mid year. We did some minor tweaks to the goals surrounding the monitor versus the pump And that’s starting to show it’s been bared some fruit already in Q4. And it didn’t impact the pump business. So pretty happy with that.

Jason Wyts, Analyst, Roth Capital Partners: Yes. So then if I think about then on 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?

Jacqueline, Chief Financial Officer, IRADAMed Corporation: Jack? Yes. Jason, this is Jack. So 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 may add some headcount in that area into 2025, but fairly consistent. As far as the gross 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 that’s pretty much going to be in line with where we’re at in that 76%, seventy seven % range going into twenty twenty five percent. Always a little dependent upon the mix as far as geographical. As you know, we roughly 20% of the business is international and we sell it at fairly sizable discount through distribution. But overall, I should say, pretty in that range for 2025.

Jason Wyts, Analyst, Roth Capital Partners: Sorry, just to clarify on a dollar basis or a percentage basis when you say in Percentage basis.

Jacqueline, Chief Financial Officer, IRADAMed Corporation: Yes, pretty consistent in that, like I said.

Jason Wyts, Analyst, Roth Capital Partners: Okay, got it. And then so I guess that means that you’re going to see if I look at the map here in terms of getting to plugging in the numbers you provided for guidance, it 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?

Jacqueline, Chief Financial Officer, IRADAMed Corporation: Yes, I think that we will hopefully that’s our plan is get some leverage in the model and the G and A. Sales and marketing is right, I spoke to is the big piece there is the variable expense, right, the sales commissions and that was reflected in our Q4. 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 Q4. 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?

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: We’re trying to this year in getting prepared for having the new pump next year though, we will be also extending, I guess, over extending for lack of a better word, it would look like over extension in 2025 to get ready for the 2026 launch of the new pump in that we’ll be adding some of the support people, the clinical specialists. We’ll probably put in some we’ll be starting to put in some territories, additional territory plug in. So, yes, there’ll be some cost increases. There aren’t directly commissions paid for actual sales made in 2025 as well.

Jason Wyts, Analyst, Roth Capital Partners: Got it. I will jump back in queue. Thank you very much.

Conference Call Operator/Moderator: Thank you.

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: Good to talk.

Conference Call Operator/Moderator: Our next question is from Scott Buchanan of Lake Street.

Nelson Cox, Analyst, Lake Street: 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

Jacqueline, Chief Financial Officer, IRADAMed Corporation: I’m wrong, I think the last we

Nelson Cox, Analyst, Lake Street: had talked, you talked about 35 territories kind of being an optimal number post 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?

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: No, that’s where we that is still the plan. And of course, it means we’ll see that ground starting a little early. We won’t put in 35 in calendar year 2025 on the one 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 rightsizing the sales team to do the business we anticipate we’ll have with the pump.

Nelson Cox, Analyst, Lake Street: Perfect. And then, it 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. It sounds like monitors maybe take a bigger portion with the focus there on the sales team, but any additional color there would be helpful.

Jacqueline, Chief Financial Officer, IRADAMed Corporation: Yes. Nelson, this is Jack. Yes, it is as we mentioned, it is a very strong backlog beginning of 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’s maybe 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 half of the year.

Nelson Cox, Analyst, Lake Street: Perfect. And then maybe just one last quick one. 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

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: with the 3,870? You mean this replacement business?

Jacqueline, Chief Financial Officer, IRADAMed Corporation: Yes.

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: Yes. Well, as we’ve talked in the past, right, we’ll have over 4,000 mid-4000s of pumps that are older than five years of our current 3,860 model. And we feel it’ll be we feel that we want to kind of hold the demand to where it’s going to be about 800 to 1,000 replacements of those systems, which ultimately is about 1,600 to 2,000 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 1,200. We’re looking at more than doubling the number of pumps that we sell. In 2026. In 2026, yes.

Jacqueline, Chief Financial Officer, IRADAMed Corporation: All

Nelson Cox, Analyst, Lake Street: right. Thank you.

Jacqueline, Chief Financial Officer, IRADAMed Corporation: It’s very good.

Conference Call Operator/Moderator: Thank you. I would now like to turn the conference back to Roger Soussi for closing remarks. Sir?

Roger Susi, President and Chief Executive Officer, IRADAMed Corporation: Good. Well, thanks. Let’s see. One 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 most every manufacturer in The U.

S. Has some exposure to that. In our case, we source only three or four rather expensive components from countries that are going to be hit with the tariffs and increasing and or increased tariffs over what we’ve already been paying. And 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 our BOM costs, the bill of material costs. 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 to review Eradim as progress for you all. And we also probably state that we expect strong performance as 2025 progresses. With that, thank you.

Conference Call Operator/Moderator: Thank you. This concludes the call. You may now disconnect.

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