Q2 2021 IRadimed Corp Earnings Call
Welcome to the rent of Mac Corporation second quarter 2021 financial results Conference call. Currently all participants are in a listen only mode and at the end of the call. We will conduct the question and answer session. As a reminder of this call is being reported today July 30 of 2021 and contains time sensitive information.
Accurate only as of today.
Earlier I read of Med released financial results for the second quarter 2021a copy of this press release announcing the company's earnings is available under the heading news on the web site at the Red.
Net dot com a copy of the press release was also furnished to the secured.
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 <unk> Dot com and a replay of this call will be available on the website for the next 90 days from.
Some of the information.
To be furnished in today's session will constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 forward looking statements of those focused on the future performance results plans and events and May not include the Companys expected future results of read of bag.
It reminds you that future results may differ materially from these forward looking statements did for a number of risk factors for.
A description of the relevant risks and uncertainties and 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 again may be.
Obtained for 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 of Radnet operation. Mr. Sushi. Please begin.
Thank you operator and good morning.
<unk>.
Thank you all for participating today.
Once again I am happy to report that what we feel was a very good quarter showing significant growth over the COVID-19 induced low reached in Q2 of 2020 and further also a very healthy revenue on earnings growth over Q1 of 2021.
During the first half.
Half of 2021. The team has worked diligently in what continues to be of less than optimal environment.
It seems that there was some of the COVID-19 headwinds appear to be lessening for.
Example, with our hospital customers again, purchasing new and new issues have presented themselves specifically around supply chain.
Which I'm sure everyone has been hearing of lately.
Chris will provide some color around that issue in just a moment.
Despite what it kind of appears near constant changes created by the pandemic errata, Matt is on pace to show revenue growth.
From our pre Covid full year <unk>.
2019 level, which was our previous record high revenue level.
We are seeing growing demand for our products with our patient monitor leading the way.
As we look forward, we are optimistic about the future of of Radnet and the potential for accelerated revenue and earnings growth created by the recent launch of our F. M D.
And the expected commercialization of our next generation IV pump early next year.
Regarding our second quarter 2021 financial results.
We reported revenues of $9.8 million, which comes in over 40 for 4% higher than the second quarter of last year.
And 6.4% higher than the first quarter of this year.
Our non-GAAP earnings of 14 per share compared to 5 cents per share in Q2 last year.
As I just mentioned I'm very happy with these results and our ability to continue growing in a seemingly ever evolving environment.
Another very.
And positive trend is that bookings for the quarter remained impressive and set of new high watermark for the company.
This not only allowed us to exceed our internal forecast, but also give us visibility and confidence for the back half of the year and going into the anticipated launch of our nexgen.
<unk> generation IV pump.
Further we expect bookings to remain strong for the second half of the year as we continue to gain more access to our customers for these reasons, we have reestablished financial guidance.
Chris will review in just a few moments.
Regarding our ferromagnetic detection device.
Part of reported last quarter, we had just released the product to the area of leaders of our sales team and very recently now to the entire sales group. Since then interest in the product has been positive and earlier. This month, we received our first order for 3 units.
We are encouraged.
<unk> by the quick interest shown on this device and expect a growing number of bookings with more time for our sales team to develop additional on.
For <unk>.
Now I'd like to turn the call over to Chris Scott, Our CFO, who has recently accepted the expanded operational duties as Chief operating Officer, Chris.
Thank you Roger and good morning, everyone.
First I'll start with the regulatory status of our 5.10-K application for our next generation of IV pumps.
We have begun the highly interactive phase of the review process under our frequent communication with FDA.
We believe this phase of the review of benefits both of the RASM, Ed and FDA.
Open the lineup of communication, where we are able to respond to their comments more frequently.
Then the more traditional of your process, we've completed in the past based.
Based on our recent interactions we continue to believe that clearance could come as early as December this year or early next year.
Regarding our supply.
As Roger hinted to we noted last quarter that we were seeing higher materials costs, some stretching of lead times and difficulty in sourcing certain parks.
This trend remains and we continue to put on an increasing amount of energy and managing through these global shortages.
However, despite these challenges we have not yet experienced.
Change can impact on our ability to source materials.
We continue to see cost increases typically ranging.
From approximately 10% to as high as 30% as.
As well as greater enforcement of tariffs by our vendors.
To date, we have been able to digest these cost increases without significant impact to margin.
Also as we mentioned last quarter, we are increasing the size of our material orders.
Building inventory on an attempt to mitigate risks of extended delays and disruptions in global supply chains.
While we are exerting, an increasing amount of energy in this area, we have not experienced any changes to our production schedules to date.
Now I'll review, our financials for the quarter as in the past I will be discussing these results on a GAAP basis as well as on a non-GAAP basis, you can find the description of our non-GAAP operating measures in this morning's earnings release.
Also find the reconciliation of these non-GAAP measures to the nearest GAAP measure on the last page of today's release.
Also please keep in mind that beginning in Q2 of last year, our business was negatively impacted by COVID-19.
Additionally, during the second quarter last year, we recognized $2.8 million of G&A expenses related to our former CEO.
Since Q2 last year, we have experienced strong sequential revenue and non-GAAP.
Growth as we have adjusted the continuing to conducting business and the ups and downs of accretive by the global pandemic.
As we reported this morning second quarter 2021 revenue was $9.8 million on.
The increase of 44, 4% compared to the second quarter last year.
This also represents the fourth quarter.
Earnings for the ROE of sequential growth with a 6.4% increase in revenue over the first quarter of this year.
At this growth rate, we are on track to show of full year revenue growth over the pre pandemic 2019 time period.
Okay.
In addition to the sequent to the continued sequential growth.
We.
We added to our already elevated backlog, we reported at the end of 2020, which gives us confidence going into the second half of the year.
Revenue from domestic sales increased 73, 2% to $8 million during the quarter, while revenue from international sales decreased 17, 9% to $1.8 million.
Sure.
The increase in domestic revenue was primarily driven by higher IV pump and monitor sales while the decrease in international revenue was driven by lower IV pump sales.
The overall domestic revenue accounted for 82% of revenue for the quarter compared to approximately 68%.
For the prior year quarter.
Device revenue increased 53, 4% to $5.8 million for the second quarter. This year.
And was driven this was driven by a 75, 2% increase in monitor revenue on a 31% increase in pump revenue.
The average.
The selling price of our MRI compatible IV infusion pump system during the second quarter 2021 was approximately $41600.
Compared to approximately $30200 for the second quarter last year.
This increase in ASP relates to higher domestic unit sales and a favorable product.
The sales mix as more customers purchase optional features during the current quarter.
The average selling price of our patient vital signs monitoring system during the second quarter 2021 was.
It was approximately $39700.
Compared to approximately 30000 of $600 for the same peer.
In 2020.
This increase relates to a favorable product mix and higher domestic unit sales.
Revenue from Disposables and service increased 37, 7% to $3.5 million for the current quarter, primarily due to higher sales of our IV sets and.
And finally.
Revenue from maintenance contracts, Wisconsin.
$5 million for both periods.
Gross margin was 74, 7% for the 'twenty, 1 quarter compared to 72, 6% for the 20 quarter.
The increase in gross margin percent is the result of favorable geographic sales mix, partially offset by.
The unfavorable inventory reserve adjustments and overhead variances.
To reiterate our comments about the global supply chain, we expect pressure on gross margin going forward due to the cost increases. However, we continue to believe the impact will be limited, resulting in gross margins that are very consistent with our historical ranges.
Operating.
As for $5.5 million or 55, 9% of revenue compared to 7.9% or 116% of revenue for the second quarter last year.
On a dollar basis. This decrease is primarily due to stock and cash compensation expenses incurred during the second quarter last year related.
The expense separation of our former CEO.
This decrease was partially offset by higher sales commissions and sales activity expenses incurred during the current quarter.
As a result income from operations grew $1.8 million for the current quarter compared to a loss of $2.9 million for the second quarter last year.
<unk>, we recognized tax expense of approximately $388000 this quarter compared to a tax benefit of approximately $799000 in the 2020 quarter.
This increase was due to higher taxable income in the current quarter and the benefit taken last year from the cares act that allowed us to carry back Nols to years prior.
To the tax cuts of the jobs Act.
On a GAAP basis net income was <unk> 12 per share compared to a loss of <unk> 17 for the 2020 quarter.
On the non-GAAP basis, adjusted income was <unk> 14 per diluted share for the current quarter compared to <unk> for the second quarter last year.
Yeah.
Cash flow from operations was for $5 million for the 6 months ended June 30 of 2021 compared to $2 million for the same period of 2020.
For the 2021 period cash provided by operations was positively impacted by cash inflows from deferred revenue and negatively.
The impacted by cash outflows.
For prepaid expenses and inventory purchases.
For the 3 months ended June 32021, and 2020, our free cash flow of non-GAAP measure was $3.5 million and zero point $7 million respectively.
As Roger mentioned, the strength of customer orders.
For PDF on us visibility and confidence in the remaining portion of 2021.
For that reason, we are providing Q3 and full year revenue and earnings guidance.
For the third quarter, we expect revenue of 10, 3 to $10.5 million GAAP earnings of <unk> 14 to 15.
And.
<unk> has GAAP earnings of <unk> 16 to 17.
For the full year 2021, we expect revenue of $40 million to $44 million GAAP earnings of <unk> 53 to 55.
And non-GAAP earnings of $60 to 62.
And with that I'll turn the call over for.
Questions Norma.
Thank you as a reminder to ask the question you will need the press star 1 on your telephone to withdraw your question. Please press the pound key please standby will be compile the Q&A roster. Our first question comes from Scott Henry with Roth Capital. Your line is open.
Thank you.
<unk>.
And non.
Congratulations on the results and of the expanded role as well Chris.
Just a cup a couple of questions.
First.
Looking at the quarter.
Clearly monitor sales were strong.
And pump sales were a little weaker.
Although it's still robust.
Should we expect those trends to continue in the rest of the year with the outperformance being more monitor driven and then pump driven perhaps.
Particularly in front of that next generation pump coming how should we think about that.
And.
Scott.
That.
Our expectation is that we'll see some normalization of pump sales in the second half.
We were a martyr heavy.
This quarter second quarter and in the first half, but when we take a look at our order book.
And the plan going forward.
We do see some normalization of the IV pump business.
Yes.
Okay.
Okay, and then the disposables and services revenue jumped up pretty significantly in Q2.
Any thoughts on on what's going on there and should we expect that to revert back to the the trend line or how.
How should we think about that.
Our viewpoint is that the disposables and service line is going to continue to be strong for us.
We're seeing we're seeing higher.
IV set sales, but we're also remember now wrapped up in that on that line item are the disposables related to our monitor.
And as that business continues to grow we're seeing more and more disposables monitor disposables rollout of the door as well. So we expect continued strength on that line item.
Okay, great and the.
Then I think you mentioned.
You had 3 units ordered for the F. M. D could you remind me what is the price point and I guess, maybe we'll start out lower for for the initial adopters or how should we think about the.
The price per unit.
Yeah, maybe I'll take that 1.
Well those are.
Those are those units habits of the small discount I think of about.
For for a 5% not much so.
They were pretty close to the pricing.
We are targeting which are in that configuration of there's a couple of ways you can roll it out but of that particular configuration of those 3.
The.
The the list price adds up to about 24000.
Okay.
Great. Thank you for the color Roger.
And then you'll final question.
Gross margin, so I think Chris you've given us a lot of color.
But we did see a little.
Still pretty high relative to past years of little downtick.
The cute in <unk> versus <unk>.
I think what you're saying and I just want to confirm is we should probably think of 2 key was more reflective of what we should see the next couple of quarters in and perhaps maybe a little bit lower but but still within historical range is is that.
On the right way to interpret that.
And I think when we go forward.
We expect.
What else.
Going forward for Q3, and Q4, we expect higher gross margins in Q2. So we expect we expect growth there largely due to the the output of higher.
Higher volumes based on higher revenue.
But you won't see in our minds, you won't see something like the high <unk>.
In the past, we've seen gross margin as high as 80% 81, 5% I don't think youre going to see that this year.
You'll see something that's more in line with what.
Of those historical range is like I said somewhere in the mid seventies.
98% something along those.
Okay. Great. That's helpful. I, then that should do it for me. Thank you for taking the questions.
Thanks Scott.
Thank you our next our next question comes from Lisa Springer with singular research. Your line is open.
Thank you congratulations on the strong quarter.
Thanks, Susan.
It's true.
I have a question of what are you seeing in terms of a.
A S P early in the third quarter.
At least I don't know that we would we would make any comments on that I think you know as you.
As you know Asps is largely reflective of the.
Graphics sales mix so the the so to the extent that we are heavy domestic we see higher asps.
I don't know that we're in a position right now to comment on where we think Asp's will end up for the quarter for for this current quarter.
Okay, well that's helpful. Thank you.
Thank you.
Got it okay.
Alright, I will turn the call back over to Mr. Susi for any closing remarks.
Thank you.
Thank you.
I continue to be pleased by the good work of everyone at or out of Med, which produced these results.
Shown the ability to grow in the face of uncertain.
Certainly I am proud of the entire team.
With the strong bookings we are seeing the next gen pump on the horizon and the first sales of our SMB, we are as optimistic about of red random its future as ever.
Thank you and we look forward to speaking with you again in about 3 months.
Thank you ladies and gentlemen.
Gentlemen. This concludes today's conference call you may now disconnect everyone have a wonderful day.
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