Yahoo Finance IRadimed Corporation (NASDAQ:IRMD) Q1 2024 Earnings Call Transcript
IRadimed Corporation (NASDAQ:IRMD) Q1 2024 Earnings Call Transcript May 4, 2024
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Operator: Welcome to IRADIMED CORPORATION First Quarter of 2024 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, May 2, 2024, and contains time-sensitive accurate information only today. Earlier, IRADIMED released its financial results for the first quarter of 2024. A copy of this press release announcing the Company's earnings is available under the heading News on the website, iradimed.com. A copy of the press release 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 iramimed.com.
And a replay 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 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 like to turn the call over to Roger Susi, President and Chief Executive Officer of IRADIMED CORPORATION. Mr. Susi?
Roger Susi: Good morning. Thank you all for joining us on today's call. As recently reported, I'm once again very pleased to announce yet another consecutive quarter of record IRADIMED net revenue generated in our recent Q1 2024 quarter. This is our 11th revenue increase in a row. As this morning's press release announced, in the first quarter of 2024, revenue came in at $17.6 million, representing a 13.7% increase over the first quarter of '23. GAAP diluted earnings per share for the first quarter were $0.32. While non-GAAP diluted earnings were $0.36 per share, a 20% increase over Q1 of '23. All product lines performed well with our inside and outside teams executing exceptionally well. From the revenue standpoint in Q1, the MR patient monitor bested the IV pump and increased by 38%, compared to Q1 of '23.
However, this doesn't show the strength of one product line over the other as bookings for the MR IV pump product in Q1, greatly exceeded expectations. So we actually expect that in Q2, the table may turn in favor of pump revenue. As I previously discussed, we notified customers with pumps seven years and older that our extended maintenance would no longer be offered for such older devices. This, as expected, has prompted the uptick in pump orders we've seen in Q1, which we hope to continue to see in the upcoming quarters as well. To be sure, our major products remain viable and fitting for their markets, while we continue to make inroads with our newer FMD product. Previously, I had spoken about reducing our delivery time for disposables and the associated reduction of backlog, though as seen in financial disclosures, the disposable business remains strong and growing, we have managed to reduce the lead time of these products and continue to work to improve these lead times, though orders continue growing, production is not outpaced.
Along those lines, we recently began construction on our new 61,000 square foot manufacturing facility here in Orlando, Florida, to consolidate operations, improve efficiencies and prepare for the continued and expanding growth we foresee. We anticipate spending approximately $13 million on its development over the next 12 months. And we will keep you posted in these coming quarters as construction progresses towards a moving date. Now regarding the progress of our 510(k) submission for the new 3870 MRI IV pump. The team is focused and pushing very hard, yet we are still not quite there due primarily to some expanded testing. As previously reported, we have engaged a third-party consultant with two very recent ex-FDA reviewers on their staff, from whom we are getting excellent input.
Their feedback has, however, driven us to repeat some of the previous tests, mainly because of devices under test for many months ago, and they have undergone some changes. Our ex-FDA consultants sleeve, the FDA would be much more comfortable with all testing done on the absolute final configuration of the device. Therefore, the aim is to have the test reports referenced, the very latest version of the device, thus removing any questions, is anticipated that these steps should impact the delivery of the 510(k) by approximately 9 to 10 weeks. Still remain on plan with expected clearance in Q1 2025 and plan to show the revenue from the new device in the back half of 2025. Now I'd like to present our expected financial performance guidance for the coming quarter and the balance of the year.
For the second quarter of 2024 financial guidance, we expect revenues of $17.6 million to $17.8 million. GAAP diluted earnings per share of $0.33 to $0.36 and non-GAAP diluted earnings per share of $0.36 to $0.39. We reiterate our guidance for the full year of 2024. We expect to report revenues of $72 million to $74 million, with GAAP diluted earnings per share of $1.37 to $1.47 and non-GAAP diluted earnings per share of $1.52 to $1.62. Lastly, I'm pleased to report that our Board of Directors has declared a quarterly cash dividend of $0.15, payable on May 30, 2024. And we expect to pay the quarterly cash dividend going forward, to reward our loyal shareholders. Now I'd like to turn the call over to Jack Glenn, our CFO, to review the quarter's financial results.
Jack Glenn: Thank you, Roger, and good morning, everyone. As in the past, our results have been reported on both a GAAP and 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 first quarter of 2024 was $17.6 million, an increase of 14% compared to the first quarter of 2023. Domestic sales increased 12% to $13.4 million and International sales increased 20% to $4.2 million. Overall, Domestic revenue accounted for 76% of total revenue for Q1 2024 compared to 77% for Q1 2023. Device revenue increased 13% to $11.9 million, driven by a 38% increase in Monitor revenue.
Revenue from Disposables and Services increased 17% to a record $5.2 million for the first quarter of 2024, while our maintenance contracts remained stable at $487,000. The gross margin was 76.1% for the first 2024 quarter compared to 75.7% for the 2023 quarter. The increase in gross margin is primarily due to increased revenue, decreased raw material costs and direct labor efficiencies offset by overhead spending. Operating expenses were $8.6 million or 49% of revenue compared to $7.7 million or 50% of revenue for the first quarter of 2023. On a dollar basis, this increase is primarily due to higher sales and marketing expenses for higher sales commissions, sales activity expenses and payroll and benefit expenses. As a result, income from operations grew 18.5% to $4.7 million for the 2024 first quarter.
We recognized a tax expense of approximately $1.1 million during the first quarter of 2024, resulting in an effective tax rate of 21.1% for the quarter, which was in line with the effective tax rate of 20.9% in 2023. On a GAAP basis, net income was $0.32 per diluted share compared to $0.27 for the 2023 quarter. On a non-GAAP basis, adjusted net income was $0.36 per diluted share for the 2024 first quarter, compared to $0.30 for the first quarter of 2023. Cash from operations was $3.9 million for the three months ending March 31, 2024, down from $4.6 million for the same period in 2023. For the three months ended March 31, 2024, our free cash flow, a non-GAAP measure, was $3.4 million. This compares to a negative free cash flow figure of $1.9 million in the first quarter of 2023, when we purchased the land for our future facility for $6.2 million.
Our cash and cash equivalents totaled $45.1 million as of March 31, 2024. And with that, I will now turn the call over to the operator for questions.
Operator: [Operator Instructions] Our first question comes from the line of Jason Wittes of ROTH Capital Partners.
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