Q1 2022 IRadimed Corp Earnings Call
[music].
Okay.
Okay.
Welcome to the <unk> Corporation first quarter 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 April 29, 2022 and contains time sensitive information that is accurate only as of today.
Earlier <unk> released its financial results for the first quarter of 2022, a copy of this press release announcing the company's earnings is available under the heading news on their website at <unk> Dot 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 Dot Gov.
This call is being broadcast live over the Internet on the Companys website at <unk> Dot com and a replay of the call will be available on the website for the next 90 days.
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 $19 95 forward looking statements are those focused on future performance results plans and events and May include the company's expected future.
<unk>.
<unk> 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 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 a regimen cooperation Mr. Susi.
Thanks, operator, good morning, and thank you all for joining us on the call. This morning.
<unk> had another very good quarter of revenue and earnings growth as well as reported in this year.
Earnings release.
The trend of strong demand for our products remains intact and thus we feel very good about the coming quarters as well.
As reported in this morning's release first quarter revenue was $12 3 million nearly a 34% increase over the first quarter last year.
non-GAAP earnings were 22 cents or 69% over Q1 2021.
I am very pleased with these results and the strong start our company has had in 2022.
Our sales team continues to perform well increasingly driving customer demand for our products.
Total Q1 bookings remained at record levels coming in 52% higher than Q1 last year.
Strong demand for our products has given us additional visibility to our growing backlog, which increased from its year end level of $10 9 million.
Our engineering and regulatory teams continue to work closely on obtaining 510 cake clearance for our next generation IV pump, which has been branded them Iridium 3800 70.
We continue working diligently to meet our timelines for the second half of this year and while there is still much to complete we are committed to doing everything we can do to achieve our goal.
Regarding our new ferromagnetic detection system, we plan to install our first placements this quarter.
Growing number of installations from that point on.
As I have said in the past we are very.
We feel very good about where we are with this product and believe that we have a technologically superior system compared to the others already in the field.
Regarding our financial guidance, we have considered that.
Booking trends and the added visibility we have through growing backlog. We have also considered the macro risks associated with supply chain and feel confident in increasing our full year expectations.
Apply issues are near daily consideration at some level and supply and stability is now a familiar norm the world over as.
As we have the means and tenacity to find work around solutions as necessary. We have comfort that we can continue to make shipments without material delay.
Considering Q1 with an eye on sales levels and deal count.
We now expect full year 2022 revenue of $52 5 million to $53 2 million.
With GAAP earnings of 89 to 95 cents and non-GAAP earnings of <unk> 96 cents to $1 three.
Additionally for the second quarter. This year, we expect revenue 12, five to $12 7 million with GAAP earnings of <unk> 21 to 23, and non-GAAP earnings of <unk> 23 to 25.
Now before turning the call over.
To address the executive transition that we announced yesterday afternoon.
As disclosed Chris Scott has resigned from the company effective may 27 to pursue other opportunities.
Over the next 30 days will be focused on a smooth transition of financial responsibilities to Matt Garner who will serve as interim CFO , while we go through a search process.
Chris has been a valued partner to me and the rest of the organization during his eight plus years here.
He has supported the company every step of the way and will be missed.
Sorry, as we are to see him go.
He leaves a very capable finance team.
And the company in good shape.
Which the finance team will now be led by Matt.
This has been the situation for the last several years I am confident that abilities and maintain to maintain the quality and integrity of our financial information during the search process.
And now I'd like to turn the call over to Matt. So he can introduce himself and to review the financial results of the quarter Matt.
Thank you Roger and good morning, everyone.
Before summarizing the financial results I'd like to spend a moment and introduce myself.
Again with the <unk> in February 2014, as the assistant controller and in 2020 was elevated to the controller role.
Over these last eight years with the RASM, Ed I developed a deep understanding of the company and its culture.
Overall, I have 15 years of experience within the medical equipment industry, including seven years at Rogers former company.
I also hold a bachelors degree in accounting from Southern New Hampshire University.
I am thankful for the opportunity to serve as the company's interim CFO and look forward to interfacing with you while the search proceed.
Now onto the financial summary.
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 a description of our non-GAAP operating measures in this morning's earnings release.
You can also find a reconciliation of these non-GAAP measures to the nearest GAAP measure on the last page of today's release.
As reported earlier. This morning first quarter 2022 revenue was $12 3 million, an increase of 33, 5% compared to the first quarter of 2021.
Revenue from domestic sales increased 37, 2% to $10 million and revenue from international sales increased 19, 5% to $2 3 million.
Okay.
Overall domestic revenue accounted for 81, 1% of total revenue for Q1 2022 compared to 78, 8% for Q1 of 2021.
Device revenue increased 38, 8% to $8 5 million.
This was driven by a 99, 5% increase in monitor revenue, resulting from continued customer acceptance and win rates.
The average selling price of our MRI compatible IV IV infusion pump system. During the first quarter 2022, with approximately 33800 compared to approximately 32700 for the first quarter of 2021.
This increase relates to higher domestic unit sales, partially offset by an unfavorable product sales mix.
The average selling price of our MRI compatible compatible patient vital signs monitoring system during the first quarter of 2022.
With approximately 46800 compared to approximately $38300 for the same period in 2021.
This increase relates to higher domestic unit sales and price increases that we began implementing during the second half of 2021.
Revenue from disposables and services increased 25, 9% to $3 3 million for the first quarter of 2022.
And revenue from our matron maintenance contracts with consistent at a half a million dollars for both periods.
Gross margin was 76, 2% for the 2022 quarter compared to 76, 6% for the 2021 quarter.
The decrease in gross margin percent is primarily due to unfavorable labor labor and overhead expenses, partially offset by higher domestic sales.
While the supply chain remains challenging we continue to believe that any negative impact from higher costs will likely be limited and partially offset by higher levels of unit production, resulting in gross gross margins that are consistent with our historical ranges.
Operating expenses were $6 3 million or 51, 2% of revenue compared to $5 3 million or approximately 57, 3% of revenue for the first quarter of 2021.
On a dollar basis. This increase is primarily due to higher sales commissions payroll and.
Cost of sales.
Sales activity expenses and engineering costs for prototyping and design.
As a result income from operations grew 73% to $3 1 million for the 2022 quarter.
Yeah.
We recognized a tax expense during the first quarter 2022 of approximately 573000.
Resulting in effective and an effective tax rate of 18, 7%.
Compared to a tax expense of approximately 384000 in the 2021 quarter.
This increase is due to higher taxable income, partially offset by benefits associated with stock compensation and research and development credits.
On a GAAP basis net income was <unk> 20 per share compared to <unk> 11 for the 2021 quarter.
On a non-GAAP basis adjusted income was 2022 per diluted share for the 2022 quarter.
Impaired to 13 for the first quarter 2021.
Cash from operations grew to $1 4 million for the three months ended March 31, 2022 from <unk> 9 million for the same period in 2021.
For the three months ended March 31, 2022, and 2021 are.
Our free cash flow, a non-GAAP measure was $1 2 million and <unk> 8 million respectively.
And with that I will turn the call over for questions operator.
Thank you as a reminder to ask a question you will need to press star one on your Touchtone telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
Again, Thats star one on your Touchtone telephone to ask a question.
Our first question comes from the line of Scott Henry with Roth Capital. Your line is open.
Thank you and good morning first Chris Best of luck to you it's been a pleasure working with you.
<unk>.
Second Roger you told US the name of the next generation pump what was that again.
We call it the 38 70 it tomorrow, we use the same.
Meridian name.
The name of the.
<unk> carried through these pumps for all these years.
$38 50, we current constant 38 60, this won't call. It a 38 70.
Perfect and.
Is there any update as far as correspondence with the FDA and how we should think about the timeline.
For approval.
Of that product.
Yeah, we've had a couple of calls actually Scott.
In the last <unk>.
Six weeks in the last six weeks.
Yes, so the communications have been.
Say.
Good.
Okay. So those communications are in the form of what we call.
Information request clarifications to the questions that we've been trying to answer formerly you can submit.
And have such calls so they are engaged with us and that's been positive and.
On this and as I said, we're working.
It's all hands on deck, there are regulatory and engineering side.
Answering this host of questions and we plan to get them.
To the FDA in August .
And.
And then we hope that they can.
<unk> support in and.
Take care business on their end and get this thing done.
Okay.
Thanks for the update there and I think I heard on the FMT product no revenues in Q1, but should we expect to see revenues in Q2.
Yes, yes, yes were going to install we're going to we're in start install a couple of these ones that we've had these orders booked on.
And you book the revenues.
Post installation is that correct yes.
Yes.
Okay.
Just a couple of final questions.
How is the pricing environment, given kind of the inflationary backdrop do you feel that you have some pricing power to maybe not immediately but certainly raise price over time.
Answer is yes, but I've got to point out.
We were proactive on that and as I said.
We had some pretty good increases that we started on about this time last year and youre seeing the fruit of that.
Particularly in the monitor.
As you saw the average price that Matt quoted yet that.
There's been pretty significant.
Okay, Great and then.
Final question, maybe maybe for Matt.
Get them involved.
The tax rate.
Should we still be thinking about kind of a 24% 25% tax rate for the full year.
Certainly lower than that in the first quarter.
Okay.
Thereabouts I mean for what we're looking at we've got roughly at 23% for the for the full year.
Okay.
Perfect. Thank you for that color and thanks for taking the questions guys.
Alright, Scott appreciate it.
Thank you once again to ask a question. Please press star one on your Touchtone telephone again Thats Star one on your Touchtone telephone to ask a question.
Our next question comes from the line of Lisa Springer of singular research. Your line is open.
Thank you.
Good morning, Roger I was wondering if you can comment on in terms of the model the surgeon monitor sales.
In terms of customer segments was there any particular group of customers that was driving that or was it kind of spread across your whole customer base.
The monitor yes, Lisa yes.
Yes, yes.
Yes.
It's across the whole customer base, we find ourselves.
As these quarters of rolled along since we launched the monitor.
We're participating in larger and larger deals as well so that's very encouraging meaning.
We're moving from selling maybe one or two monitors at a pop to 810 12, so it's pretty exciting.
For sure.
Okay.
Have you seen any impact on your European sales from the Ukraine.
Yeah.
Maybe too soon to tell if it's because of the Ukraine issues, but.
The European business is I'd have to say international has been a little sluggish and as you noticed.
Where we said.
Kind of favorable from the mix being domestic a little bit stout.
I don't think that I don't I can't tell you if thats anything to do with.
Hesitation in Europe from the Ukraine thing or not but.
I guess, it's probably a good question and a logical thing to think if.
But at this point I don't have any reason to tell you, yes or no.
Okay. Thank you Roger.
Hmm.
Thank you at this time I would like to turn the call back over to Roger Susi for any closing remarks, Sir.
Well I'll wrap up the call by saying again, how pleased I am with our Q1 results with how well the business is operating.
I continue to believe strongly with customers are realizing the value that our products bring which shows in the high level of bookings that we achieved quarter after quarter here. These last few quarters.
I guess.
Yes.
I'd like to say that.
Chris will be here working through the rest of the month to help Matt and everyone through this transition and he's going to be he.
He is going to be missed.
But.
<unk> got to do what he's got to do and he says fit in.
We wish him well.
We're off to a great start in 2022, and I look forward to speaking with you all again next quarter. So thank you very much.
Thank you. This concludes the call you may now disconnect.
[music].
[music].
[music].
Welcome to the <unk> Corporation first quarter 2022 financial results Conference call.
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 April 29th 2022 and contains time sensitive information that is accurate only as of today.
Earlier, I, rather med released its financial results for the first quarter of 2022.
A copy of this press release announcing the company's earnings is available under the heading news on their website at <unk> Dot 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 <unk> Dot com and a replay of the call will be available on the website for the next 90 days.
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 are those focused on future performance results plans and events and May include the company's expected future.
Results.
Alright, I'm Ed 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 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 <unk> Corporation, Mr. Susi.
So operator and good morning, and thank you all for joining us on the call. This morning.
<unk> had another very good quarter of revenue and earnings growth as well as reported in this year in this morning's release.
The trend of strong demand for our products remains intact and thus we feel very good about the coming quarters as well.
As reported in this morning's release first quarter revenue was $12 3 million nearly a 34% increase over the first quarter last year.
non-GAAP earnings were 22 cents or 69% over Q1 2021.
I'm very pleased with these results and the strong start our company has had in 2022.
Our sales team continues to perform well increasingly driving customer demand for our products.
Total Q1 bookings remained at record levels coming in 52% higher than Q1 last year.
Strong demand for our products has given us additional visibility to our growing backlog.
<unk> increased from its year end level of $10 9 million.
Our engineering and regulatory teams continue to work closely on obtaining 510 cake clearance for our next generation IV pump, which has been branded Meridian 3800 70.
We continue working diligently to meet our timelines for the second half of this year and while there is still much to complete we are committed to doing everything we can do to achieve our goal.
Regarding our new ferromagnetic detection system, we plan to install our first placements this quarter.
A growing number of installations from that point on.
As I have said in the past we're very we.
Very good about where we are with this product and believe that we have a technologically superior system compared to the others already in the field.
Regarding our financial guidance, we have considered the booking trends and the added visibility we have through growing backlog. We have also considered the macro risks associated with supply chain and feel confident in increasing our full year expectations.
Those supply issues are near daily consideration at some level and supply and stability is enough familiar norm the world over.
As we have the means and tenacity to find work around solutions as necessary. We have comfort that we can continue to make shipments without material delay.
Considering Q1 with an eye on sales levels and deal count.
We now expect full year 2022 revenue of $52 5 million to $53 2 million.
With GAAP earnings of 89 to 95 cents and non-GAAP earnings of <unk> 96.
It's to a $1 three.
Additionally for the second quarter. This year, we expect revenue 12, five to $12 7 million with GAAP earnings of <unk> 21 to 23 and.
And non-GAAP earnings of <unk> 23 to 25.
Now before turning the call over.
I'd like to address the executive transition that we announced yesterday afternoon.
As disclosed Chris Scott has resigned from the company effective may 27th to pursue other opportunities.
Over the next 30 days will be focused on a smooth transition of financial responsibilities to Matt Garner who will serve as interim CFO , while we go through a search process.
Chris has been a valued partner to me and the rest of the organization during his eight plus years here.
He has supported the company every step of the way and will be missed.
Sorry, as we are to see him go.
He leaves a very capable finance team and.
And the company in good shape.
Which the finance team will now be led by Matt.
This has been the situation for the last several years I am confident Matt abilities and maintain to maintain the quality and integrity of our financial information during the search process.
And now I'd like to turn the call over to Matt. So he can introduce himself and to review the financial results of the quarter Matt.
Thank you Roger and good morning, everyone.
Before summarizing the financial results I'd like to spend a moment and introduce myself.
Again with the <unk> in February 2014, as the assistant controller and in 2020 was elevated to the controller role.
Over these last eight years with the RASM, Ed I developed a deep understanding of the company and its culture.
Overall, I have 15 years of experience within the medical equipment industry, including seven years at Rogers Pharma company.
I also hold a bachelors degree in accounting from Southern New Hampshire University.
I am thankful for the opportunity to serve as the company's interim CFO and look forward to interfacing with you while the search proceed.
Okay.
Now onto the financial summary.
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 a description of our non-GAAP operating measures in this morning's earnings release.
You can also find a reconciliation of these non-GAAP measures to the nearest GAAP measure on the last page of today's release.
As reported earlier. This morning first quarter 2022 revenue was $12 3 million, an increase of 33, 5% compared to the first quarter of 2021.
Revenue from domestic sales increased 37, 2% to $10 million and revenue from international sales increased 19, 5% to $2 3 million.
Okay.
Overall domestic revenue accounted for 81, 1% of total revenue for Q1 2022 compared to 78, 8% for Q1 of 2021.
Device revenue increased 38, 8% to $8 5 million.
This was driven by a 99, 5% increase in monitor revenue, resulting from continued customer acceptance and win rates.
The average selling price of our MRI compatible IV IV infusion pump system. During the first quarter 2022, with approximately 33800 compared to approximately 32700 for the first quarter of 2021.
This increase relates to higher domestic unit sales, partially offset by an unfavorable product sales mix.
The average selling price of our MRI compatible compatible patient vital signs monitoring system during the first quarter of 2022.
With approximately 46800 compared to approximately 38300 for the same period in 2021.
This increase relates to higher domestic unit sales and price increases that we began implementing during the second half of 2021.
Revenue from disposables and services increased 25, 9% to $3 3 million for the first quarter of 2022.
And revenue from our matron maintenance contracts with consistent at a half a million dollars for both periods.
Yeah.
Gross margin was 76, 2% for the 2022 quarter compared to 76, 6% for the 2021 quarter.
The decrease in gross margin percent is primarily due to unfavorable labor labor and overhead expenses, partially offset by higher domestic sales.
While the supply chain remains challenging we continue to believe that any negative impact from higher costs will likely be limited and partially offset by higher levels of unit production, resulting in gross gross margins that are consistent with our historical ranges.
Operating expenses were $6 3 million or 51, 2% of revenue compared to $5 3 million or approximately 57, 3% of revenue for the first quarter of 2021.
On a dollar basis. This increase was primarily due to higher sales commissions payroll and benefit cost sales.
Sales activity expenses and engineering costs for prototyping and design.
As a result income from operations grew 73% to $3 1 million for the 2022 quarter.
Okay.
We recognized a tax expense during the first quarter 2022 of approximately 573000.
Results in an effective and an effective tax rate of 18, 7%.
Compared to a tax expense of approximately 384000 in the 2021 quarter.
This increase is due to higher taxable income, partially offset by benefits associated with stock compensation and research and development credits.
On a GAAP basis net income was <unk> 20 per share compared to <unk> 11 for the 2021 quarter.
On a non-GAAP basis adjusted income was 2022 per diluted share for the 2022 quarter.
Impaired to 13 for the first quarter 2021.
Cash from operations grew to $1 4 million for the three months ended March 31, 2022 from <unk> 9 million for the same period in 2021.
For the three months ended March 31, 2022, and 2021 are.
Our free cash flow, a non-GAAP measure was $1 2 million and <unk> 8 million respectively.
And with that I will turn the call over for questions operator.
Thank you as a reminder to ask a question you will need to press star one on your Touchtone telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
Again, Thats star one on your Touchtone telephone to ask a question.
Our first question comes from the line of Scott Henry with Roth Capital. Your line is open.
Thank you Nan and good.
Morning, first Chris Best of luck to you it's been a pleasure working with you.
Hi.
Second Roger you told US the name of the next generation pump what was that again.
Because the 38 70, it's a model we use the same.
Meridian name.
The name of the.
<unk> carried through these pumps for all these years.
38, <unk> current pumps to $38 60, this won't call it a $38 70.
Perfect and.
Is there any update as far as correspondence with the FDA and how we should think about the timeline.
For approval.
That product.
Yes, we've had a couple of calls actually Scott.
In the last <unk>.
Six weeks in the last six weeks.
Yes, so the communications have been.
Good.
Good.
Okay. So that those communications are in the form of what we call.
Information request clarifications to the questions that we've been trying to answer formerly you can submit.
And have such calls so they are engaged with us and that's been positive.
On this and as I said, we're working.
It's all hands on deck, there and our regulatory and engineering side.
Answering this host of questions and we plan to get them.
To the FDA in August .
<unk>.
And then we hope that they can.
Pull their support in <unk> and <unk>.
Take care business on their end and get this thing done.
Okay. Thanks.
Thanks for the update there and I think I heard on the FMT product no revenues in Q1, but should we expect to see revenues in Q2.
Yes, yes, yes were going to install organize and start install a couple of these ones that we've had these orders booked on.
And you book the revenues.
Post installation is that correct yes.
Yes.
Okay.
Just a couple of final questions.
How is the pricing environment, given kind of the inflationary backdrop do you feel that you have some pricing power to maybe not immediately but certainly raise price over time.
The answer is yes, but I've got to point out.
We were proactive on that and as I said.
We had some pretty good increases that we started on about this time last year and youre seeing the fruit of that.
Particularly in the monitor.
As you saw the average price that Matt quoted yet that.
There's been pretty significant.
Okay, Great and then.
Final question, maybe maybe for Matt.
Get them involved.
The tax rate.
Should we still be thinking about kind of a 24% 25% tax rate for the full year.
It was certainly lower than that in the first quarter.
Okay.
Thereabouts I mean for what we're looking at we've got roughly at 23% for the full year.
Okay perfect. Thank you for that color and thanks for taking the questions guys.
Alright, Scott appreciate it.
Thank you once again to ask a question. Please press star one on your Touchtone telephone again Thats Star one on your Touchtone telephone to ask a question.
Our next question comes from the line of Lisa Springer of singular research. Your line is open.
Thank you.
Good morning, Roger I was wondering if you can comment on in terms of the model the surgeon monitor sales.
In terms of customer segments was there any particular group of customers that was driving that or was it kind of spread across your whole customer base.
The monitor yes, Lisa yes.
Yes, yes.
Yes.
<unk>.
Yes.
It's across the whole customer base, we find ourselves.
As these quarters of rolled along since we launched the monitor.
We're participating in larger and larger deals as well so that's very encouraging meaning.
We're moving from selling maybe one or two monitors at a pop to $8 $10 12, So it's pretty exciting.
Krishna.
Okay.
Have you seen any impact on your European sales from the Ukraine.
Maybe too soon to tell if it's because of the Ukraine issues, but.
The European business is I'd have to say international has been a little sluggish and as you noticed.
Where we said.
Favorable from the mix being domestic a little bit stout.
I don't think that I don't I can't tell you if thats anything to do with <unk>.
Hesitation in Europe from the Ukraine thing or not but.
Yes.
Yes, it's probably a good question and a logical thing to think if.
But at this point I don't have any reason to tell you, yes or no.
Okay. Thank you Roger.
Mhm.
Okay.
Thank you at this time I would like to turn the call back over to Roger Susi for any closing remarks, Sir.
Well I'll wrap up the call by saying again, how pleased I am with our Q1 results with how well the business is operating.
I continue to believe strongly with customers are realizing the value that our products bring which shows in the high level of bookings that we achieved quarter after quarter here. These last few quarters.
I guess.
I'd like to say that.
Chris will be here working through the rest of the month to help Matt and everyone through this transition and he's going to be he.
He is going to be missed.
Yes.
<unk> got to do what he's got to do and he says fit in.
We wish him well.
We're off to a great start in 2022, and I look forward to speaking with you all again next quarter. So thank you very much.
Thank you. This concludes the call you may now disconnect.