IRadimed Corporation (NASDAQ:IRMD) Q4 2022 Earnings Call Transcript

IRadimed Corporation (NASDAQ:IRMD) Q4 2022 Earnings Call Transcript February 2, 2023

Operator: Ladies and gentlemen, welcome to IRadimed Corporation Fourth Quarter and Full Year 2022 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. As a reminder, this call is being recorded today, February 2, 2023, and contains time-sensitive information that is accurate only as of today. Earlier, IRadimed released its financial results for the fourth quarter and full-year 2022. A copy of this press release announcing the company’s earnings is available under the heading “News” on their website at iradimed.com. A press release copy was also furnished to the Securities and Exchange Commission on Form 8-K and can be found at sec.gov.

This call is being broadcast live over the Internet on the company’s website at iradimed.com and a replay of the call 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 meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements focused on future performance, results, plans, and events and may include the company’s expected future results. IRadimed 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 website at sec.gov.

I would now like to turn the call over to Mr. Roger Susi, President and Chief Executive Officer of IRadimed Corporation. Mr. Susi, please go ahead.

Roger Susi: Thank you. And thank you all for joining us on today’s earnings call. It’s truly wonderful to report that once again IRadimed had yet another excellent quarter of revenue and earnings growth. As we reported in this morning’s release Q4 2022 was our top revenue quarter ever and our sixth consecutive quarter record revenues. I’m also very pleased to announce today that as you may have seen; our Board of Directors has approved a special cash dividend of $1.05 per share. Allow me to take a short dive into the financial performance we have achieved. As reported in this morning’s release, fourth quarter revenue was $14.9 million, a 25% increase over the fourth quarter last year, with GAAP diluted earnings per share for that fourth quarter of $0.29.

Photo by Trnava University on Unsplash

For the full-year ended December 31, 2022, our revenue was $53.3 million, a 28% increase over the prior year ended in December 2021. GAAP diluted earnings per share for the full-year 2022 has come in at $1.02 per share, a 37% increase over the full-year in 2021. Our teams from sales to purchasing and production engineering to service regulatory to finance dealt not only with the challenges of delivering this 28% growth, but they did it in the face of continuing supply disruptions and regulatory challenges as well as worldwide tension. I’m extraordinarily pleased with these results and the extraordinary efforts of our entire IRadimed team. The sales team did an exceptional job this past year with bookings outstripping our fantastic 2022 shipment volume such that we enter 2023 with an even larger backlog than we started.

Customer demand is strong for all the product lines and with the continuing problems of our competitor in the MR monitor space and the reported business directions, we feel very confident in continuing record revenue and earnings growth into 2023. Additionally, the strong backlog provides us excellent visibility and allows us to maneuver and reallocate resources as supply issues may arise. 2022 sales growth was well balanced and strong for both the pump and the monitor product lines, with an increasing number of new FMD products shipping as well, though; we will expect the monitor line growth to become a leading driver in 2023. Last quarter, as reported previously, we withdrew the 510(k) for our new 3870 MR IV pump. And we will refire it — re-file it, excuse me, later this year.

Although this was unfortunate and will lead to delay in it, of course, in the launch of this new pump, as you see IRadimed’s growth has been and I firmly believe will remain extraordinary. Though, one door may have been closed temporarily, another has apparently opened. The MR monitor business is simply on fire and we expect 2023 to deliver revenue growth near 20% again. You shall hear more of this later and I would welcome any questions regarding details of either revenue or FDA issues in our Q&A session. As we announced a few weeks earlier, we expect to report revenue in 2023 of $61 million to $63 million, with GAAP diluted earnings per share of $1.10 to $1.20 and non-GAAP diluted earnings of $1.23 to $1.34. For the first quarter 2023, we expect to report revenues of $14.6 million to $14.9 million, with GAAP diluted earnings per share of $0.23 to $0.25 and non-GAAP diluted earnings per share of $0.26 to $0.28.

Now I’d like to turn the call over to our relatively new now CFO, Jack Glenn, to review the financial results of the quarter.

Jack Glenn: 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 2022 was $14.9 million, an increase of 25% compared to the fourth quarter of 2021. On a sequential basis, revenue grew 11% over Q3 of 2022. Domestic sales increased 28% to $12.2 million compared to $9.5 million in the fourth quarter of 2021. International sales increased 8% in the quarter to $2.6 million. Overall, domestic revenue accounted for 82% of total revenue for Q4 2022 compared to 80% for Q4 of 2021.

Device revenue increased 23% to $9.8 million. This was driven by a 51% increase in monitor revenue as our sales team continued to execute and gain market share in the monitoring business. Revenue from disposables and services increased 32% to $4.5 million for the fourth quarter of 2022, while our maintenance contracts increased 17% to $595,000. The gross margin was 75.5% for the 2022 quarter compared to 77.9% for the 2021 quarter. For the full-year 2022, the gross margin was 77.4%. The big piece in gross margin for the quarter was primarily due to the higher input costs and variations in the product mix. Operating expenses were $7 million or 47% of revenue compared to $6.1 million or 52% of revenue for the fourth quarter of 2021. On a dollar basis, this increase is primarily due to higher sales commissions and sales activities, higher general and administrative expenses for additional headcount, and higher legal and professional expenses.

As a result, income from operations grew 37% to $4.3 million for the fourth quarter of 2022. We recognized a tax expense during the fourth quarter of 2022 of approximately $1,031,000 compared to a tax benefit of approximately $779,000 in the fourth quarter of 2021. The tax benefit in the fourth quarter of 2021 was primarily due to a one-time benefit associated with stock-based compensation expense. The effective tax rate for the year of 2022 was 20.7%. On a GAAP basis, net income was $0.29 per diluted share compared to $0.31 for the 2021 quarter with the difference due to the tax benefit of Q4 in 2021. On a non-GAAP basis, adjusted income was $0.32 per diluted share for the 2022 fourth quarter compared to $0.33 for the fourth quarter of 2021.

Cash from operations was $3 million for the three months that ended December 31, 2022, down from $3.4 million for the same period in 2021. For the three months ended December 31, 2022 and 2021, our free cash flow, a non-GAAP measure was $2.6 million and $3.2 million, respectively. And with that, I will now turn the call over for questions. Operator?

See also Buffett Stock Portfolio: Recent Buys and 13 Best Value Dividend Stocks to Buy .

Q&A Session

Operator: Thank you. We’ll now begin the question-and-answer session. . And our first question coming from the line of Scott Henry with ROTH Capital. Your line is open.

Scott Henry: Thank you. Good morning and congratulations on the strong results. I did have a couple of questions. First, perhaps I missed it, but did you give the average price of the pumps and monitors during the quarter?

Jack Glenn: No, we didn’t, Scott. And we’ve discussed internally, and we’re not going to be giving the specific as we have in the past on the ASPs, unless there’s any material change in it. There is — the calculation can get quite complicated and also just from a competitive standpoint, but also just the calculation can vary quite a bit with the different types of product, the monitors and pumps, et cetera. But I can — the ASPs in the quarter were solid, and there was no real difference from previous quarters.

Scott Henry: Okay. Thank you. That’s helpful. And then disposables and services wasn’t just strong, it was really strong, $1 million higher than we’ve seen before, often a number was a three in it. Could you tell me — could you give any color on what happened? And more importantly, is whether that should continue or was an aberration or a trend, I guess?

Roger Susi: Well, maybe I’ll jump in a little bit, then I’ll let Jack follow-up. But it shows we were selling a lot of IV sets. So the disposables mainly are leading the way from the pump perspective with the sterile sets. But also, we’ve seen this electrode, which is the largest of the, let’s say, accessory or disposable items that go with the monitor, the electrodes have been just running strong. As I said earlier, the monitors has been hugely successful since we launched it in this past year was just off the hook growth. And along with that, are going these electrodes. So — and then we’re selling maintenance quite well too. The maintenance sales had a — they’ve been deemphasized a bit about two years ago with a change in sort of the ideology of commissioning, if you will, of that item.

And we put that back. We sort of corrected that two years ago. And so you’re seeing the sale of the extended maintenance kicking in and returning to and passing where it had been prior to that change two years ago. So you put all those together and yes, we’re doing a great job with these accessory and maintenance items as well. So do we expect at this level to continue? With the continued growth of the monitor, that will keep pulling the electrode with — along with it, the growth rate of the disposables is just right along with the pumps, and we had good growth with the pump this past year. So yes, I mean, we see it as sustainable generally. That’s — we would be surprised if it hit some sort of plateau at this point.

Scott Henry: Okay. Great. Thank you, Roger. And since I got you on the line, maybe could you give a little more color on the competitive landscape? I mean you talked about competitor problems in the monitor market. Just any kind of at least big picture idea of what you’re seeing out there and how we should factor that into 2023 and beyond?