IRMD | iRadimed Corporation | earnings call 2026-08-07
Verbatim transcript (source: faster-whisper-small.en)

Welcome to Aratomat Corporation's first quarter of the 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 1st, 2026 and contains time-sensitive accurate information that is valid only for today. Earlier, Aratomat 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 aratomed.com. A copy of the press release was also furnished to the Securities and Exchange Commission on Form 8K and can be found at scc.gov. This call is being broadcast live on the company's website at aratomed.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. Aratomat 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 followed by the Securities and Exchange Commission which may be obtained free from the SEC's website at scc.gov. I want to turn the call over to Roger Susie, President and Chief Executive Officer of Aratomat Corporation. Mr. Susie? Thank you operator and good morning. Welcome to Aratomat's Q1 2026 earnings call. Sorry for the late start, we have a little microphone problem. We once again have a very good last of the performance to announce. With the first quarter 2026 revenue of $22 million, a 13% increase owe the first quarter $20.25. These results reflect solid execution across our product line. With strong revenue contribution from a whole market MRI compatible IV infusion pump and our MR patient monitor. Noting that the revenue substantially derived from the last six-month system. There also continues to be growing revenue support for our federal magnetic detection systems. Our continued revenue growth combined with discipline expense management including a modified commission structure drove 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 MR IV pump. Recalling that in positioning this new product and its pricing, we had anticipated that the 3870 pump deal typically, that is ASP, would increase by some 10 to 14% over the historical 3860 pump ASP. However, though just beginning, initial quoting and actual orders are showing a lift closer to 20% for the 3870 ASP. Additionally, we are seeing that a majority of this new business is for quad 4 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 old stages, these two factors present a most exciting prospect for bookings and revenue as the year progresses. Opportunities for the new 3870 pump system as previously described are both increased penetration of the 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 the radiments aged install base of 3860 pump 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, 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 control rate, which is initially composed of declining revenue derived from the older 3860 pump system, domestic orders which have trailed off as expected, all said positively by increasing revenue from the new 3870 system as we ramp up its production. JAP RCFO will provide our Q2 guidance for further quantifying how Q2 is expected to develop. To reiterate, the source of the 3870 opportunity is given in our previous slide. For the US 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 annually. With the new 3870, we are targeting adding another 1,000 channels per year to replacement sales from the existing 13860 units that are over 5 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 north of 2,000 3870 pump channels annually, with the higher ASP currently being experienced, 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 a 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 the 3870 until late January. As advised, we targeted shipping 130 to 135 3870s in Q2. Both the launch and the manufacture of those initial 130, 135, 3870s are progressing and planned. As we issued in this morning's press release, the interest in the new 3870 has been very high. The number of orders and the dollar size are well ahead of our expectations this early in the product launch, giving us great encouragement. Still, however, Q2 revenue will not fully reflect this high level of exciting order 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 on this at the higher ESP and increasing production of this 3870 system. I'll turn the call over to Jack Lamb, our CFO, to review the course financial results and provide a deeper caller on growth through balance of the year. Thank you, Roger, and good morning everyone. As of the past, our results are reported on a gap basis and a non-gap basis. You can find a description of our non-gap measures in this morning's release and a reconciliation to gap on the last page. For the three months ended March 31, 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 the fulfillment of 3860 pump backlog from the beginning of the year. Patient Bioscience monitoring systems contributed $7.1 million, up 9% year over year. Disfotional 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 profit for the quarter was $16.8 million with a growth margin 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. General 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 3870 compared with Q1 of 2025 as well as new product development for the next generation monitoring. Improve from operations for the quarter was $7.2 million. Net income was $5.8 million or $0.45 per diluted share on a gap basis, a 22% increase over the prior year period. Non-gap net income was $6.4 million or $0.49 per diluted share up 17%. The effective tax rate for the quarter was approximately 25%. The increase in the effective tax rates for the quarter is 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 and cash 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% reflecting the higher net income and favorable working capital movements. Non-gap free cash 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 quarterly cash dividend of $20 per share about standing common stock, payable on May 29, 2026 to stock holders 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, gap deluded earnings per share of $0.40 to $0.44, and non-gap deluded earnings per share of $0.44 to $0.48. For the full year 2026, we affirm our guidance with a revenue of $91 to $96 million, gap deluded earnings per share of $1.90 to $2.05, and non-gap deluded earnings per share of $2.06 to $2.21. The company expects stock-based compensation expense, net of 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. Operator? Thank you. We will now begin the question and answer question. If you'd like to ask a question, please press star 11. If your question has an answer and you'd like to remove yourself in the queue, please press star 11 again. Our first question comes from Frank Tackenen 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 break that down a little bit? Why do 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 for channels, but is there something specific to call out with some of these early customers that would be more likely to order for systems, or is it fair to assume that a lot of your customers reordering could fall into this camp of ordering for systems at once? Yeah, good question, Frank. Yeah, welcome. Yeah, that's a good question. So it's a bit of a surprise that sold. Yeah, more than half of these orders we've taken so far have been to this cloud system, so that's a bit surprising. We were hoping for maybe 10-15% customers we could step up to this doubling the number of channels they operate. So why? Your question, I guess, is why did that happen? So I have to say that I've got to give the sales force a little credit for this by and large. They are close to the customers, and they felt that with the new system the way it works, and the way the impression it can lead customers, it's smaller than the old pump, and the way they actually step together on a pole they really work together as four very easily. So we're showing it that way. We walk in and we're showing the quad stack, and when customers see it though, of course they 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 quick that, as I said, more than half 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 version where, yeah, we need the third and fourth channel handy. And this sort of stimulates this conversation to make customers think of those situations where they could see that they needed that many channels, and they put the budget through, and another very positive sign has been, you know, these orders get, you know, we only started selling this thing in late January as I pointed out. So orders that we're getting in at this point have been rather quicker than the typical cycle time for getting orders so far. So it's all very awesome. But I think that's generally the reason if you picked it out that customers do have experience where extra channels were required in the past, and they're going ahead 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, as I said, 24. You know, it's higher. The lowest price of the previous pump was 20,000. So let's recapture that, right? So the lowest price of the previous pump was 20,000. You could buy the second channel for about another 10. So as we've told many times, our typical ASP pump deal, it's just under 40 by the time you get the pump and the sidecar and the pole and the remote and all that. That's where it was landing. So the quad systems, we've been selling again a quad stack of 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? No, no. When I was speaking about that earlier in the call, I'm just talking, taking 1,000 out of the installed base where the old pumps are. Greenfield would be extra. And frankly, I'll make it more clear, but frankly, the excitement level and the existing customers calling us wanting to see the new pump, is it kind of a frenzy right now? I don't see that we're going to have time to start calling on the greenfield for a while. So no, that doesn't have any upside from the greenfield factor in it 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 we're trying to take it a bit cautiously and ramp it up here, that's what I'm talking about, 130, 135 pumps for this quarter. 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, 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 shouldn't be by fourth quarter hitting a pretty heavy stride on the number of these new pumps that we're kicking out of here. And of course, having this new facility, we got the space, and it's a matter of ramping up the knowhow and stabilizing the supply chain, and so that's why we're being more conservative on the ramp. 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 Sussi 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 pump system, and we are being invited into customer facilities to show the device at a very high rate, and the sales team is rather inundated. Further, we have had bookings with greater than expected ASP, as well as that 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 as we further execute the launch of this exciting 3870 MRIV pump system and capitalize on the huge replacement opportunity throughout 2026 and beyond. Thank you. Thank you. This concludes the call. You may now disconnect.