Q2 2024 IRadimed Corp Earnings Call
Welcome to the Aretamed Corporation's second quarter of 2020 for financial results conference call.
Operator: Currently, all participants are in a listen-only mode, and at the end of this call, we will conduct a question and answer session. As a reminder, this call is being recorded today, August 1, 2024, and contains time-sensitive, accurate information only today. Earlier, IRadimed released its financial results for the second quarter of 2024. A copy of this press release announcing the company's earnings is available under the heading news on our website at iradimed.com.
Operator: Currently, all participants are in a listen-only mode, and at the end of this call, we will conduct a question-and-answer session. As a reminder, this call is being recorded today, August 1st, 2024, and contains time and dev accurate information only today.
Speaker Change: Currently, all participants are in a listen-only mode, and at the end of this call, we will conduct a question-and-answer session. As a reminder, this call is being recorded today, August 1, 2024, and contains time-sensitive, accurate information only today.
Operator: Earlier, IRadimed released its financial results for the second quarter of 2024. A copy of this press release announcing the company's earnings is available under the heading News on our website at 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.
Earlier, Aretamed released its financial results for the second quarter of 2024. A copy of this press release announcing the company's earnings is available under the heading news on our website at aretamed.com.
A copy of the press release was also furnished to the Securities and Exchange Commission on Form 8K and can be found at sec.gov. This call is being broadcast live over the internet and on the company's website at iretamed.com and a replay will be available on the website for the next 30 days.
Operator: This call is being broadcast live over the internet and on the company's website at IRadimed.com, and a replay will be available on the website for the next 30 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, a focus on future performance, results, plans, and events that may include the company's expected future results. IRadimed reminds you that the future results may differ materially from those forward-looking statements due to several risk factors.
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 focus on future performance, results, plans, and events that may include the company's expected future results.
Aratomed reminds you that the future results may differ materially from those forward-looking statements due to several risk factors.
Operator: For a description of the relevant risks and uncertainties that may affect the company's business, please see the risk factor section of the company's most recent reports filed with the Securities and Exchange Commission, which may be obtained free from the SEC's website at sec.gov.
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 with the Securities and Exchange Commission, which may be obtained free from the SEC's website at sec.gov.
Roger Susi: I would now like to turn the call over to Roger Susie, President and Chief Executive Officer of IRadimed Corporation. Mr. Susie. Thank you, operator, and good morning. Thank you all for joining us on today's call. I'm very happy to report yet another record quarter. In fact, our 12th consecutive record quarter. Driving this record quarter was revenue at over 17.9 million. In addition, gross profit was up. Reaching 78%, and earnings came in very strong as well. With gap diluted earnings per share, increasing 19% from Q1 of this year. Recall that the pump order intake rate in Q1 was very strong, and Q2 now reflects the revenue generated as we move to keep the pump backlog and check.
Roger Susi: I would now like to turn the call over to Roger Susi, President and Chief Executive Officer of Aretamedic Corporation, Mr. Susi.
Operator: A copy of the press release was also furnished to the Securities and Exchange Commission on Form 8K and can be found at sec.gov. This call is being broadcast live over the internet and on the company's website at iradimed.com, and a replay will be available on the website for the next 30 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.
Roger Susi: Thank you, operator and good morning and thank you all for joining us on today's call.
Operator: Forward-looking statements focus on future performance, results, plans, and events that may include the company's expected future results. IRadimed reminds you that future results may differ materially from those 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's website at sec.gov.
Roger Susi: I'm very happy to report yet another record quarter. In fact, our 12th consecutive record quarter. Driving this record quarter was revenue at over 17.9 million.
Operator: I would now like to turn the call over to Roger Susi, President and Chief Executive Officer of IRadimed Corporation. Mr. Susi? Bye. Bye.
Roger Susi: Thank you, operator, and good morning, and thank you all for joining us on today's call. I'm very happy to report yet another record quarter, in fact, our twelfth consecutive record quarter. Driving this record quarter was revenue at over $17.9 million. In addition, gross profit was up reaching 78%, and earnings came in very strong as well, with gap diluted earnings per share increasing 19% from Q1 of this year. Recall that the pump order intake rate in Q1 was very strong.
In addition, gross profit was up, reaching 78%, and earnings came in very strong as well, with gap-diluted earnings per share increasing 19% from Q1 of this year.
Roger Susi: And Q2 now reflects the revenue generated as we move to keep the pump backlog in check. Plus, this pump backlog, being mostly domestic, results in a sizable gross margin. Once again, our team is executing very well.
Recall that the pump order intake rate in Q1 was very strong and Q2 now reflects the revenue generated as we move to keep the pump backlog in check.
Roger Susi: Plus, this pump backlog, being mostly domestic, results in the size of both gross margin. Once again, our team is executing very well, and product demand remains strong, actually extraordinary in the case of the current 3860 model IV pumps. We are on target to have the strong year that we have planned, even though the new 3870 IV pump is still not on the menu.
Plus, this pump backlog, being mostly domestic, results in the sizable gross margin.
Roger Susi: And product demand remains strong, actually extraordinary, in the case of the current 3860 model IV pump. We are on target to have the strong year that we have planned, even though the new 3870 IV pump is still not on the menu. I'll defer to Matt, who's standing in for our CFO Jack Glenn this morning, for more details regarding the revenue and earnings comp. So let me move on to the new pump progress.
Once again, our team is executing very well and product demand remains strong, actually extraordinary in the case of the current 3860 model IV pumps.
We are on target to have the strong year that we have planned, even though the new 3870 IV pump is still not on the menu.
Roger Susi: I'll defer to Matt, who's standing in for RCFO Jack Glenn this morning, for more details regarding the revenue and earnings comps. So let me move on to the new pump progress. It's all about getting that clearance that we've been working so hard to achieve. Of course, key to this is having a clear, concise, complete 510(k) file then soon. My recent commitment for 510K delivery was in August, and we are very confident that it will be in the FDA's hands in these next few weeks of August. Again, the FDA will ask questions. questions, and sometimes we'll transpire during the review an additional question period.
Matt: I'll defer to Matt who's standing in for our CFO Jack Glenn this morning for more details regarding the revenue and earnings comps.
Roger Susi: It's all about getting that clearance that we've been working so hard to achieve. Of course, key to this is having a clear, concise, complete 510k file then soon. My recent commitment for 510K delivery was in August, and we are very confident that it will be in the FDA's hands in these next few weeks of August. Again, FDA will ask questions, and sometimes it will transpire during the review and additional question period.
Matt: So let me move on to the new pump progress. It's all about getting that clearance that we've been working so hard to achieve. Of course, key to this is having a clear, concise, complete 510K file then soon.
Matt: My recent commitment for 510K delivery was in August, and we are very confident that it will be in the FDA's hands in these next few weeks of August.
Matt: Again, FDA will ask questions.
Matt: and some time.
Roger Susi: We will have a better indication of the time required for final clearance of the 510(k) after receiving that first response and list of questions that we fully expect from FDA, which we expect to see in late October. At this point, as I've stated in the past, the 3870 will be a 2026 story revenue-wise. Clarence in mid-2025 means that we would expect only light revenues from this new device in Q4 25, as well as the cell and shipment cycles are measured in months, not days. Due to strong increases in sales of the existing pump, help by order or replacement of these older pumps that are seven years and beyond, which we started seeing strongly in January 1.
Roger Susi: We will have a better indication of the time required for final clearance of the 510K after receiving that first response and list of questions that we fully expect from FDA, which we expect to see in late October. At this point, as I've stated in the past, the 3870 will be a 2026 revenue story. Clearance in mid 2025 means that we would expect only light revenues from this new device in Q4 25, as well as, you know, as the sales and shipment cycles are measured in months, not days.
Matt: Sometimes, we'll transpire during the review and additional question period. We will have a better indication of the time required for final clearance of the 510K after receiving that first response and list of questions that we fully expect from FDA, which we expect to see in late October.
Matt: At this point, as I've stated in the past, the 3870 will be a 2026 story, revenue-wise.
Matt: Clearance in mid-2025 means that we would expect only light revenues from this new device in Q4-25, as well as, you know, the sell and shipment cycles are measured in months, not days.
Roger Susi: Due to strong increases in sales of the existing pump, helped by orders or replacement of these older pumps that are seven years and beyond, which we started seeing strongly in January 1, we have now stepped up efforts in the monitor business via new sales strategies and incentives. Though the monitor business has been steady and strong, we believe these new incentives and methods will drive monitor growth to yet a new level. There's also been a steady adoption of the FMD device.
Matt: Due to strong increases in sales of the existing pump,
Matt: helped by order for replacement of these older pumps that are seven years and beyond, which we started seeing strongly in January 1, we have now stepped up efforts on the monitor business via new sales strategies and incentives.
Roger Susi: We have now stepped up efforts on the monitor business via new sales strategies and incentives. Though the monitor business has been steady and strong, we believe these new incentives and methods will drive monitor growth to get a new level. There's also been a steady adoption of the FMD device. This relatively new offering is gaining in the market, though there is an inertia due to the placement of many of these units tied to the construction of new MR suites. Construction being a rather drawn out process and subjected to delay places a limit on the speed of delivery and revenue for the FMD line, dissimilar to the pump and monitor.
Matt: Though the monitor business has been steady and strong, we believe these new incentives and methods will drive monitor growth to yet a new level.
Roger Susi: This relatively new offering is gaining ground in the market, though there is an inertia due to the placement of many of these units tied to the construction of new MR suites. Construction being a rather drawn-out process and subject to delay places a limit on the speed of delivery and revenue for the FMD line, just similar to the pump and monitor. Still, as you will hear from Matt, revenue for the FMD is growing. Finally, a bit about our new headquarters.
Matt: There's also been a steady adoption of the FMD device. This relatively new offering is gaining in the market, though there is an inertia due to the placement of many of these units tied to construction of new MR suites.
Matt: Construction, being rather drawn out process and subject to delay, places a limit on the speed of delivery and revenue for the FMD line, just similar to the pump and monitor. Still, as you will hear from Matt, revenue for the FMD is growing.
Roger Susi: Still, as you will hear from Matt, revenue for the FMD is growing.
Roger Susi: Finally, a bit about our new headquarters. Construction is well underway, and the weather has not been overly cruel to the schedule. The walls and roof should be up and nearly dried in by the time of my next report. With the exception of moving with our expectations, excuse me, of moving just before next summer, right in time, it began production of a newly cleared 3870 MR pump.
Roger Susi: Construction is well underway, and the weather has not been overly cruel to the schedule. The walls and roof should be up and nearly dried in by the time of my next report, with the exception of moving, with our expectation, excuse me, of moving just before next summer, right in time to begin production of the newly cleared 3870MR pump.
Roger Susi: Now, before Matt steps in for Jack and comes online, I'd like to finish with a report of what we see in Q3. For the third quarter 2024 financial guidance, we expect revenue of $18 million to $18.2, with gap-diluted earnings per share of $0.34 to $0.37 and non-gap-diluted earnings per share of $0.38 to $0.41. Accordingly, we reiterate our guidance for the full year 24, and we expect to report revenues of $72 to $74 million with gap-diluted earnings per share annually of $1.37 to $1.47 and non-gap diluted earnings per share of $1.52 to $1.62. Now, I'd like to turn the call over to Matt Garner, who, as I said, is going to stand in for Jack, who's out on leave this morning.
Roger Susi: Now, before Matt steps in for Jack, it comes online, I'd like to finish with a report of what we see in Q3. For the third quarter, 2024 financial guidance, we expect revenue of 18 million to 18.2. Would gap the Luder and Ernie's per share 34 to 37 cents and non-gap the Luder and Ernie's per share 38 to 41 cents. Accordingly, we reiterate our guidance for the full year 24, and we expect to report revenues of 72 to 74 million. With gap the Luder and Ernie's per share annually of $1.37 to $1.47 and non-gap the Luder and Ernie's per share of $1.52 to $1.62.
Matt: And we expect to report revenues of $72 to $74 million with gap-diluted earnings per share annually of $1.37 to $1.47 and non-gap-diluted earnings per share of $1.52 to $1.62.
Matt Garner: Now, I'd like to turn the call over to Matt Gardner, who, as I said, is going to stand in for Jack, who's out on leave this morning. Matt, thank you. Roger, and good morning, everyone. As in the past, our results are reported on a gap basis and a non-GAAP basis. You can find a description of our non-GAAP operating measures in this morning's Ernie's release and a reconciliation of these non-GAAP measures to the GAAP measures on the last page of today's release. As we reported earlier this morning, revenue in the second quarter of 2024 was 17.9 million, an increase of 11 percent compared to the second quarter of 2023.
Matt Garner: Thank you, Roger, and good morning, everyone. As in the past, our results are reported on a GAAP basis and on 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 measures on the last page of today's release. As we reported earlier this morning, revenue in the second quarter of 2024 was $17.9 million, an increase of 11% compared to the second quarter of 2023. This increase was due to strong bookings and a resulting backlog for our pump in the first quarter. This strength in bookings for the pump continued into the second quarter.
Matt: Thank you, Roger, and good morning, everyone.
Matt Garner: Domestic sales increased 19% to $15.5 million, and international sales decreased 23% to $2.4 million. Overall, domestic revenue accounted for approximately 86% of total revenue for Q2 2024, compared to 80% for Q2 2023. Device revenue increased 17% to $12.7 million. This was driven by a 52% increase in pump revenue.
Matt Garner: This increase was due to strong bookings and resulting backlog for our pump in the first quarter. This strengthened bookings for the pump continued into the second quarter. Domestic sales increased 19 percent to 15.5 million, and international sales decreased 23 percent to 2.4 million. Overall domestic revenue accounted for approximately 86 percent of total revenue for Q2 2024 compared to 80 percent for Q2 of 2023. Device revenue increased 17 percent to 12.7 million. This was driven by a 52 percent increase in pump revenue. Revenue from disposables and services decreased 3 percent to 4.7 million for the second quarter of 2024, while our maintenance contracts remained stable at 600,000.
Matt: Device revenue increased 17% to $12.7 million. This was driven by a 52% increase in pump revenue.
Matt Garner: Revenue from disposables and services decreased 3% to $4.7 million for the second quarter of 2024, while our maintenance contracts remain stable at $600,000. As Roger mentioned, the gross margin was 78.1% for the second quarter of 2024 compared to 75.5% for the 2023 quarter. This increase in gross margin is primarily due to favorable geographic sales mix of Domestic Revenue, a decrease in raw material costs, and direct labor efficiency. Operating expenses were $8.4 million, or 46% of revenue, compared to $7.2 million, or 44% of revenue, for the second quarter of 2023. On a dollar basis, this increase is primarily due to higher sales and marketing expenses for higher sales commissions and sales activity expenses, along with higher regulatory and payroll and benefit expenses.
Speaker Change: Revenue from disposables and services decreased 3% to $4.7 million for the second quarter of 2024, while our maintenance contracts remain stable at $600,000.
Matt Garner: As Roger mentioned, the gross margin was 78.1 percent for the second quarter of 2024 compared to 75.5 percent for the 2023 quarter. This increasing gross margin is primarily due to favorable geographic sales mix of domestic revenue, a decrease in raw material cost, and direct labor efficiencies. Operating expenses were 8.4 million, or 46 percent of revenue, compared to 7.2 million, or 44 percent of revenue, for the second quarter of 2023. On a dollar basis, this increases primarily due to higher sales and marketing expenses for higher sales commissions and sales activity expenses, along with higher regulatory and payroll and benefit expenses.
Speaker Change: As Roger mentioned, the gross margin was 78.1% for the second quarter of 2024 compared to 75.5% for the 2023 quarter.
Roger Susi: This increase in gross margin is primarily due to favorable geographic sales mix of domestic revenue, a decrease in raw material costs, and direct labor efficiencies.
Okay.
Speaker Change: Operating expenses were $8.4 million, or 46% of revenue, compared to $7.2 million, or 44% of revenue, for the second quarter of 2023.
Speaker Change: On a dollar basis, this increase is primarily due to higher sales and marketing expenses for higher sales commissions and sales activity expenses, along with higher regulatory and payroll and benefit expenses.
Matt Garner: The noted strength in the gross margin resulted in income from operations growing 13.4 percent to 5.6 million for 2024 second quarter. We recognize a tax expense of approximately 1.4 million during the second quarter of 2024, resulting in an effective tax rate of 21.8 percent for the quarter, which is in line with the effective tax rate of 21.1 percent in 2023. On a gap basis, net income was 38 cents per diluted share and increased of 15 percent as compared to 33 cents for the 2023 quarter. On a non-gap basis, adjusted income was 42 cents per diluted share for the second quarter of 2024 compared to 36 cents for the second quarter of 2023.
Matt Garner: The noted strength in the gross margin resulted in income from operations growing 13.4% to $5.6 million for the second quarter of 2024. We recognize a tax expense of approximately $1.4 million during the second quarter of 2024, resulting in an effective tax rate of 21.8% for the quarter, which is in line with the effective tax rate of 21.1% in 2023. On a GAAP basis, net income was $0.38 per diluted share, an increase of 15%, as compared to $0.33 for the 2023 quarter.
Speaker Change: On a gap basis, net income was $0.38 per diluted share, an increase of 15%, as compared to $0.33 for the 2023 quarter.
Matt Garner: On a non-GAAP basis, adjusted income was $0.42 per diluted share for the second quarter of 2024 compared to $0.36 for the second quarter of 2023. Cash from operations was $6.6 million for the three months ended June 30, 2024, which is up $3.5 million for the same period in 2023. For the three months ended June 30th, 2024, our FREEC cash flow, a non-gap measure, was $5.4 million, up from $3.1 million for the same period in 2023. And with that, I will turn the call over to you for questions, Operator.
Speaker Change: On a non-GAAP basis, adjusted income was $0.42 per diluted share for the second quarter of 2024, compared to $0.36 for the second quarter of 2023.
Matt Garner: Cash from operations was 6.6 million for the three months ended June 30th, 2024, which is up 3.5 million for the same period in 2023.
Speaker Change: Cash from operations was $6.6 million for the three months ended June 30, 2024, which is up $3.5 million for the same period in 2023.
Matt Garner: For the three months ended June 30th of 2024, our free cash flow, a non-GAAP measure, was 5.4 million, up from 3.1 million for the same period in 2023.
Speaker Change: For the three months ended June 30th of 2024, our free cash flow, a non-gap measure, was $5.4 million, up from $3.1 million for the same period in 2023.
Operator: And with that, I will turn the call over for questions, Operator. Certainly, as a reminder to ask a question, please press star 1-1 from your telephone. To be removed from the queue, please press star 1-1 again.
Operator: Certainly, as a reminder, to ask a question, please press star 11 from your telephone. To be removed from the queue, please press star 11 again. Please stand by while we compile our Q&A roster. And our first question will come from Frank Takkinen of Lake Street Capital Markets. Your line is open, Frank.
Speaker Change: And with that, I will turn the call over for questions. Operator?
Speaker Change: Certainly, as a reminder, to ask a question please press star 1 1 from your telephone. To be removed from the queue please press star 1 1 again. Please stand by while we compile our Q&A roster.
Operator: Please stand by. How will we compile our Q&A roster?
Frank Takkinen: and our first question will come from Frank Takkinen of Lake Street Capital Market. Your line is open, Frank. Great, thanks very much.
Speaker Change: And our first question will come from Frank Takinen of Lake Street Capital Markets. Your line is open, Frank.
Frank Takkinen: Great, thanks for taking the questions. Congratulations on all the progress.
Frank Takkinen: The question is congrats on all the progress. I wanted to start with one, maybe on the revenue growth expectations by line item. Obviously, pumps is growing very well as a recently given the seven plus heroes warranty force conversion. Should we expect that continues through the end of the year, is that normalize down a little bit lower than the 52% growth rate this year?
Frank Takkinen: I wanted to start with one maybe on the revenue growth expectations by line item. Obviously, pumps are growing very well as of recently given the seven plus year old warranty force conversion. Should we expect that to continue through the end of the year, or is that normalized down a little bit lower than the 52% growth rate this year, and then monitors come back, or maybe just talk a little bit about the growth expectations by pumps and monitors for the back half of the year?
Frank Takinen: Great, thanks for taking the questions. Congrats on all the progress. I wanted to start with one maybe on the revenue growth expectations by line item. Obviously, pumps is growing very well as of recently given the 7 plus year old warranty.
Frank Takinen: force conversion. Should we expect that continues through the end of the year or is that normalized down a little bit lower than the 52% growth rate this year and then monitors comes back or maybe just talk a little bit about the growth expectations by pumps and monitors for the back half of the year.
Frank Takkinen: And then monitors comes back and we just talk a little bit about the growth expectations by pumps and monitors for the back half of the year.
Roger Susi: Yeah, hi, Frank. Good to talk to you.
Roger Susi: Yeah, hi Frank. Good to talk to you. Roger here.
Roger Susi: Roger here. So, yeah, we will see revenue from this uptick in the 3860, the original big existing, the old IB pump, which, as you know, we kicked off with this notice to our customers that we weren't going to do the service contracts on seven-plus-year-old pumps. So, that is coming in fairly steadily. So, your question was, is it going to grow? Well, it was as I as I mentioned, it's it's surprisingly large, frankly, to us what happened. And no, I don't think it's going to grow more, but I do see it carrying us, you know, through the rest of these final two quarters of 24 and even into 25.
Speaker Change: Yeah. Hi, Frank. Good to talk to you. Roger here. So, yeah, we
Roger Susi: So yeah, we'll see revenue from this uptick in the 3860, the existing, the old IV pump, which, as you know, we kicked off with this notice to our customers that we weren't going to do the service contracts on seven plus year old pumps. So that is coming in fairly steadily. So your question was, is it going to grow? Well, it was, as I mentioned, surprisingly large, frankly, to us what happened.
Speaker Change: You know, we will see revenue from this uptick in the 3860, the original, the existing, the old IV pump which, as you know, we kicked off with this
Speaker Change: notice to our customers that we weren't going to do the service contracts on seven plus year old pumps.
Speaker Change: So, that is coming in fairly steadily, so your question was, is it going to grow? Well, it was, as I mentioned, it's surprisingly large, frankly, to us, what happened.
Roger Susi: And no, I don't think it's going to grow more. But I do see it carrying us through the rest of these final two quarters of 24 and even into 25. So, if you will, we've stepped up to quite a nice plateau, some 35-40% boost to this 38-60 product line. And we feel that's going to stay there.
Speaker Change: And no, I don't think it's going to grow more, but I do see it carrying us, you know, through the rest of
Speaker Change: These final two quarters of 24 and and even into 25 So if you will we've stepped up to a quite a
Roger Susi: So, if you will, we've stepped up to quite a nice plateau, some 35%–40% boost to this 3860 product line. And we can we feel that's going to stay there. Now, it's not going to grow to 45% or 50%. No, but it's going to be very healthy and very, very much unexpected from what we were looking at two quarters ago when we first launched this program. And so, it'll remain a healthy booster to our revenues, as I said, into 2025. So, given that, this is why I mentioned that, you know, we're incentivizing and doing some marketing things with the sales force to come to do the same thing, or I don't expect it to be 40 percent with the monitor, but to boost that monitor growth from what it's been. It's been nice, but we hope to boost it a little bit more, not 30, 40%, like we got out of this pump, but healthily.
Speaker Change: nice plateau, some 35-40 percent boost to this 38-60 product line. And we feel that's going to stay there. Now it's not going to grow to 45 or 50 percent.
Roger Susi: Now, it's not going to grow to 45 or 50%. No, but it's going to be very healthy and very much unexpected from what we were looking at two quarters ago when we first launched this program. And so it'll remain a healthy booster to our revenues, as I said, into 2025. So, given that, this is why I mentioned that, you know, we're incentivizing and doing some marketing things with the sales force to do the same thing. Or I don't expect it to be 40% with the monitor, but to boost that monitor growth from what it's been.
Roger Susi: It's been nice, but we hope to boost it a little bit more. Not 30, 40%, like we got out of this pump, but healthily. And so, this is why we'll look forward to 2025, if you want to get a little out of our skis, and we expect, you know, 2025, even though, as I mentioned, the new pump revenue won't have much of an impact until late, and probably only a small amount. We're seeing 25 as another year in which we can grow again based upon the continued plateau of business from the old pump and pulling off some incentive and marketing ideas that we're putting behind the monitor.
Roger Susi: And so, this is why we'll look forward in 2025, if you want to get a little out over our skis. And we expect, you know, 25, even though the, as I mentioned, the new pump revenue won't be much of an impact, so late in 2025, and probably only a small amount. We're seeing 25 as another year in which we can grow again based upon the continued plateau of business from the old pump, and pulling off some incentive and marketing ideas that we're putting behind the monitor.
Speaker Change: probably only a small amount, we're seeing 25 as another year in which we can grow again based upon the continued plateau of business from the old pump and pulling off some incentive and marketing.
Frank Takkinen: Carolina. Okay, that's good color. I appreciate that.
Speaker Change: of ideas that we're putting behind the monitor line.
Frank Takkinen: Okay, that's a good color. I appreciate that.
Frank Takkinen: Maybe it's a broader question. I don't know if it's been brought up in the last couple of calls. In the past, you've been able to push through ASP increases. What's the latest status with ASPs? Do you think there's still more room to expand those ASPs? Keep them where they are? Or how does that look over the next couple of months? Oh, yeah. So we're still doing that. I mean, we're basically our biggest contracts have already happened in the U.S. market. There's a few smaller ones, which we'll see some price increases, both mostly with the monitor, but also the pump a little bit.
Frank Takkinen: Maybe just a broader question. I don't know if it's been brought up in the last couple calls. In the past, you've been able to push through ASP increases. What's the latest status on ASPs? Do you think there's still more room to expand those ASPs, keep them where they are? Or how does that look over the next 12 months?
Speaker Change: Okay, that's good color. I appreciate that. Maybe just a broader question. I don't know if it's been brought up in the last couple calls. In the past, you've been able to push through ASP increases. What's the latest status with ASPs? Do you think there's still more room to expand those ASPs, keep them where they are? Or how does that look over the next 12 months?
Roger Susi: Oh, yeah, so. We're still doing that. I mean, we basically are.
Speaker Change: Oh yeah, so we're still doing that. I mean, we're basically...
Roger Susi: Our biggest contracts have already happened in the US market. There are a few smaller ones, which we'll see some pricing for, mostly with the monitor, but also with the pump a little bit. But we're also doing this internationally, you know, internationally. Every time we have these calls, we point out, you know, that when the revenue mix is made up that more heavily from international, it shows in the gross margins and in the bottom line.
Speaker Change: Our biggest contracts have already happened in the U.S. market. There's a few smaller ones which will see some price increases.
Speaker Change: both for mostly with the monitor but also the pump a little bit.
Roger Susi: But we're also doing this internationally. Internationally, every time we have these calls, we point out that when the revenue mix is made up at more heavily from international, it shows in the gross margins and in the bottom line. So we think there's got to be some increases yet in a number of countries internationally. So yes, I guess to your point. But in the domestic side, the big agreements have already been boosted, and by contract, we won't be able to move those again for another year and a half or two. Okay, that's helpful.
Speaker Change: But we're also doing this internationally, you know, internationally every time we have these calls we point out, you know, that, you know, that when the revenue mix is made up more heavily from international, it shows in the gross margins.
Roger Susi: So we think there's got to be some increases yet in a number of countries internationally. So yes, I guess to your point, but on the domestic side. The big agreements have already been boosted, and we, by contract, won't be able to move those again for another year and a half or two.
Speaker Change: and in the bottom line. So we think there's gotta be some increases yet in a number of countries internationally. So yes, I guess to your point, but in the domestic side,
Speaker Change: the big agreements have already been boosted and we, by contract, won't have, we won't be able to move those again for another year and a half or two.
Frank Takkinen: Okay, that's helpful. Then maybe just last one for me on the backlog. Typically, if you've carried a fair amount of backlog, that's going to help you meet expectations. Does that continue to be the case? Do you continue to carry a backlog? And maybe if you can kind of parse out between disposables as well as equipment, that would be helpful.
Frank Takkinen: The maybe just last one for me on the backlog. Typically, you've carried a fair amount of backlog that's going to help you execute the expectations. Is that continue to be the case to continue to carry a backlog? And maybe if you can kind of parse out between disposables as well as equipment, that would be helpful.
Speaker Change: Okay, that's helpful. Then maybe just last one for me on the backlog. Typically, if you've carried a fair amount of backlog, that's going to help you execute the expectations. Does that continue to be the case? Do you continue to carry a backlog? And maybe if you can kind of parse out between disposables as well as equipment, that would be helpful.
Frank Takkinen: Yeah, maybe I'll let Matt help you out with that one.
Roger Susi: Yeah, maybe I'll let Matt help you out with that one. I mean, that really relates to our backlog. It continues to be strong. We don't really get too deep into what it's comprised of. But we do, we continue to have growth; our sales force. We've got four territories now. So the backlog is remaining consistent as it has in the past.
Matt Garner: Yeah, I mean, related to our backlog, it continues to be strong. We don't really, you know, we don't really get too deep into the, you know, what it's comprised of, but we do, you know, we continue to have growth. Our sales force, you know, we've got four territories now. So the backlog is remaining consistent as it has in the past.
Speaker Change: Yeah, maybe I'll let Matt help you out with that one.
Matt: Yeah, I mean, you know, related to our backlog, it continues to be strong. We don't really, you know, we don't really get too deep into what it's comprised of, but we do, we continue to have growth. Our sales force, you know, we've got four territories now.
Matt Garner: Yeah, that's the takeaway. It's pretty consistent. So if you were looking, yeah, this is one reason why we're bullish on where we can get through the rest of this year and even in the next year. The backlog has been very steady.
Matt Garner: That's the takeaway. It's pretty consistent. So if you were looking Yeah, this is one reason why we're bullish on where we can get through the rest of this year and even into next year. The backlog's been very steady.
Speaker Change: So the backlog is remaining consistent as it has in the past.
Speaker Change: Yeah, that's the takeaway. It's pretty consistent. So, if you're looking, yeah, this is one reason why we're bullish on where we can get through the rest of this year and even into next year. The backlog's been very steady. Perfect. I'll stop there. Thanks for taking the questions.
Frank Takkinen: Perfect. I'll stop there. Thanks for taking the questions.
Frank Takkinen: Perfect.
Frank Takkinen: I'll stop there. Thanks. Take the questions. All right, Frank. Thank you.
Operator: Thank you. One moment for our next question. Our next question will be coming from Jason Wittes of Roth. Your line is open.
Jason Witt: One moment for our next question. Our next question will be coming from Jason Witt. So Rob, your line is open. Hi, thanks for taking the question, and you're out on a nice quarter. So, in terms of what are the timing for the new pump? Could you just walk us through kind of the milestones in terms of when you expect approval and how long the manufacturing is going to take before and how long it will take to basically fill orders? Because I think you mentioned it's going to have only a modest impact on Q4 next year.
Frank Takinen: All right, Frank.
Speaker Change: Thank you. One moment for our next question. Our next question will be coming from Jason Witts of Roth. Your line is open.
Jason Wittes: Hi, thanks for taking the question and congrats on a nice quarter. So in terms of what the timing is for the new pump, could you just walk us through kind of the milestones in terms of when you expect approval and how long the manufacturing is going to take before and how long it will take to basically fill orders, because I think you mentioned it's going to have only a modest impact on Q4 of next year. So I'm just curious in terms of what the assumptions behind that are.
Jason Witts: Hi, thanks for taking the question and congrats on a nice quarter. So in terms of what are the the timing for the new pump, could you just walk us through kind of the the milestones in terms of when you expect approval and how long the manufacturing is going to take?
Speaker Change: before and how long it will take to basically fill orders because you caught I think you mentioned it's going to have only a modest impact on q4 of next year so just curious in terms of what are the assumptions behind that
Roger Susi: So just curious in terms of what are the assumptions behind that? Yeah, let me give you some depth there, right? So, as I mentioned, we’ll get the 510(k) in this month, you know, really to make a prediction on how we expected to come out until we see this first round of additional information requested by the FDA. I could; it's anyone's guess. So it's very crucial what we'll see with that first AI round. Now that I can predict pretty well when that will happen. They're pretty, they're pretty steady. Once they get a 510K to get AI questions back to the applicants in 60, 65 days, they've been pretty well able to do that even during the COVID period. With, you know, they were able to get us questions back in 65, 70 days.
Roger Susi: Oh yeah, yeah, let me give you some depth there, right? So, as I mentioned...
Speaker Change: Oh, yeah, yeah, let me give you some depth there, right?
Roger Susi: So we'll get the 510K this month. You know, really, to make a prediction on how we expect it to come out until we see this first round of additional information requested by the FDA is, I could, it's anyone's guess.
Speaker Change: So, as I mentioned, so we'll get the 510K in this month.
Speaker Change: You know, really.
Speaker Change: to make a prediction on how we expect it to come out until we see this first round of additional information requested by the FDA.
Roger Susi: So it's very crucial what we'll see with that first AI round. Now, I can predict pretty well when that will happen. They're pretty, they're pretty, study once they get a 510K to get AI questions back to the applicants in 60-65 days.
Frank Takinen: I could, it's anyone's guess.
Speaker Change: So it's very crucial what we'll see with that first AI round. Now that I can predict pretty well when that will happen.
Speaker Change: They're pretty, they're pretty.
Speaker Change: steady once they get a 510k to get AI questions back to the applicants in 60-65 days. They've been
Roger Susi: They've been pretty well able to do that, even during the COVID period with, you know, they were able to get us questions back in 65, 70 days. So that would put us sometime, let's say, the latter part of October or early November. That's about when we'll have our, it'll be getting close to when we'll have our next earnings call. So really, by the next earnings call, depending on the scope and depth of these AI questions, I'll be able to tell you we have a longer slog or, you know, it's looking like we're on a faster track, from at this point having no benefit of that and just making a filing in It's, yeah.
Speaker Change: and they've been pretty well able to do that, even during the COVID period with, you know, they were able to get us questions back in 65, 70 days. So that would put us sometime, let's say latter part of October, early November.
Roger Susi: So that would put us sometime, let's say, latter part of October, early November. That's about when we'll have our, that'll be getting close to when we'll have our next earnings call. So, really by next earnings call, depending on the scope and depth of these AI questions, I'll be able to tell you we got a longer slog or, you know, it's looking like we're on a pasture track. From, from at this point, having no benefit of that and just making a filing in, in, in, in August, it's, you know, it's, it's very difficult to predict. So, got to give me, got to give me about 65, 70 days yet to hear something back or, or started from once we, to get it in later in this month to get really any real color on that.
Speaker Change: That's about when we'll have our, it'll be getting close to when we'll have our next earnings call. So really by next earnings call, depending on the scope and depth of these AI questions.
Speaker Change: I'll be able to to tell you we got a longer slog or or you know it's looking like we're on a faster track.
Speaker Change: From from at this point, having no benefit of that and just making a filing in in in August, it's yeah.
Roger Susi: It's very difficult to predict. So, I got to give me about 65, 70 days yet to hear back from them or start it from once we get it in later this month to get really any real color on that. So, after that, right? I'm hopeful that we'll get a handful, you know; we'll get no more than a few handfuls of questions, certainly not 100 or 200, but less than that, you know. And if that's the case, then I think we're on a pretty good track to have this thing cleared in the latter part of Q1 or early part of Q2. So that'll fit in fairly well if that happens.
Speaker Change: It's
Speaker Change: It's very difficult to predict, so.
Speaker Change: Got to give me got to give me about 65, 70 days yet to hear something back or or started from once We should get it in later in this month to get really any real color on that. So after that, right
Roger Susi: So, after that, right? I'm hopeful that we get a handful; you know, we get no more than a few handfuls of questions, certainly not 100 or 200, but less than that, you know. And, and if that's the case, then I'd, I think we're on a pretty good track to have this thing cleared in the latter part of Q1 or early part of Q2. So, that'll fit in fairly well if that happens. If we have clearance towards the middle of next year, certainly it'll be fine. That's the time we'll be moving into our new building, as I mentioned.
Speaker Change: I'm hopeful that we get a handful, you know, we'll get no more than a few handfuls of questions, certainly not 100 or 200, but less than that, you know. And if that's the case, then I'd.
Speaker Change: I think we're on a pretty good track to have this thing cleared in the latter part of Q1 or early part of Q2.
Jason Wittes: If we have clearance towards the middle of next year, it'll be fine. That's the time we'll be moving into our new building, as I mentioned. And that's where we really plan to start up the production of the pump, is with that increased capacity, the new pump. So given that we get clearance in that early part of 2025, and we have new capacity online right in the middle of 2025, that's when we'll start building our demo equipment and getting the sales teams all amplified up and really hit the ground and start to talk about the new pump and take orders.
Speaker Change: So that'll fit in fairly well if that happens. If we have clearance towards the middle of next year, certainly it'll be fine. That's the time we'll be moving into our new building, as I mentioned, and that's where we really plan to start up the production of the pump.
Roger Susi: And that's where we really plan to start up the production of the pump, is with that increased capacity, the new pump. And so, given that we get clearance in that early part of 2025 and we have new capacity online and right in the middle of 2025. That's when we start building our demo equipment and getting the sales teams all amplified up and really hit the ground and start to talk about the new pump and take orders. So, it won't be really a question of making pumps because, by the time we actually get orders to fill, you know, the initial few orders.
Speaker Change: is with that increased capacity, the new pump.
Jason Wittes: So it won't really be a question of making pumps, because by the time we actually get orders to fill, you know, the initial few orders, this is why I said Q4 would show some revenue we anticipate from 3870, but probably not in huge amounts. Those would just be the initial orders coming in. And it takes, you know, there's a selling cycle here. So given that we start showing the product in Q3, we won't, we won't have tons of orders to ship in Q4, but we expect to have something that'll be on the boards. The real story, as I said, is probably getting into 2020. That's when the revenue will really start to be significant from the new crop.
Roger Susi: This is why I said Q4 will show some revenue we anticipate from 3870, but probably not huge amounts. Those are just the initial orders coming in, and it takes, you know, there's a sell cycle here. So, given that we start showing the product in two, three. We won't have tons of orders to ship in Q4, but we expect to have something that will be on the boards.
Jason Witt: The real story, as I said, is probably getting into 2026. That's when the revenue will really start to be significant from the new Chrome. Okay, that's appreciate all the color on that. That's very helpful. And then in terms of I know you characterize the backlog, but if I think about your pump sales and sounds like, you know, they're nicely above our expectations. I think that was. I'm guessing a lot of it had to do with acceleration of the backlog to some degree. At the same time, it seemed like the monitors were a little lighter than at least our expectations.
Jason Wittes: Okay, that's, that's, I appreciate all the color on that. That's very helpful.
Jason Wittes: And then in terms of, I know you characterize the backlog, but if I think about your pump sales, it sounds like, You know, they're nicely above our expectations. I think that was. I'm guessing a lot of it has to do with the acceleration of the backlog to some degree. At the same time, it seemed like the monitors were a little lighter than, at least, our expectations. Was that also backlog driven, or what were the dynamics between those two businesses and what you saw this quarter and what the outlook might be?
Speaker Change: Okay, that's, appreciate all the color on that, that's very helpful. And then in terms of, I know you characterized the backlog, but if I think about your pump sales, it sounds like
Speaker Change: You know, they were nicely above our expectations. I think that was...
Speaker Change: I'm guessing a lot of it has to do with acceleration of the backlog to some degree. At the same time, it seemed like the monitors were a little lighter than at least our expectations. Was that also backlog driven or what were the dynamics between those two businesses and what you saw this quarter and what the outlook might be?
Roger Susi: Was that also backlog driven, or what were the dynamics between those two businesses and what you saw this quarter and what the outlook might be? Well, like I said, we started getting these orders in from that new program with 3860 pump in Q1. And, you know, we just did want that backlog from that product to get too long in the tooth and too far out of hand. So, yeah, we shipped heavily; we shipped heavily to keep that under control, old pumps, you know, 3860s in Q2. We didn't hold back; we didn't hold back much on the monitor, but maybe a little bit to get these pumps out ahead of it.
Roger Susi: Well, like I said, we started getting these orders in from that new program with the 3860 pump in Q1. You know, we just didn't want that backlog from that product to get too long in the tooth and too far out of hand. So yeah, we shipped heavily. We shipped heavily to bring that under control. Old pumps, you know, 3860s in Q2. We didn't hold back.
Speaker Change: Well, like I said, we started getting these orders in from that new program with the 3860 pump in Q1.
Speaker Change: You know, we just didn't want that backlog from that product to get too long in the tooth and too far out of hand So yeah, we we shipped heavily We shipped heavily to bring keep that under control old pumps, you know 3860s in Q2
Roger Susi: We didn't hold back much on the monitor, but maybe a little bit big, you know, to get these pumps out ahead of it. So backlog, in general, that's your question that you're driving at is very healthy. It sells a good mix, still a little heavy, maybe on 3860s, but that'll start to balance out as we get towards Q4. I think we'll have Q3 will still be a little heavy on the old pump.
Jason Witt: So backlog in general, that's your question that you're driving at. It's very healthy. It sounds a good mix. Still a little heavy, maybe on 3860s, but that'll start to balance out as we get towards Q4. I think we'll have Q3 will still be a little heavy on the old pump. Okay, thank you. Very helpful. I'll jump back in here. Thanks. All right. Good to talk to you, Jason.
Speaker Change: Still a little heavy maybe on 3860s, but that will start to balance out as we get towards Q4. I think we'll have Q3 will still be a little heavy on the old pump.
Jason Wittes: Okay, thank you. Very helpful. I'll jump back in. Thank you.
Roger Susi: Thanks. All right. Good to talk to you, Jason.
Speaker Change: Okay, thank you. Very helpful. I'll jump back in queue.
Roger Susi: And that would now like to turn the call back to Roger remark. Oh, okay.
Operator: And I would now like to turn the call back to Roger for his comments.
Speaker Change: Thanks. All right. Good to talk to you, Jason.
Roger Susi: Oh, okay. Well, it's been a great pleasure once again that we can report our 2-2-24 excellent results. And it's also with great pride that we can say that we expect strong performance and are on the right track as the year progresses. With that, I look forward to reporting our future successes as 2024 progresses, and thank you all for joining us.
Speaker Change: And I would now like to turn the call back to Roger for Mark.
Roger Susi: Again, well, it's been a great pleasure once again that we can report our Q224 excellent results. And it's also a great pride that we can guide that we expect strong performance and around the right track as the year progresses. With that, I look forward to reporting our future successes as 2024 progresses. And thank you all for joining us. Thank you.
Roger Susi: Oh okay, again, well it's been a great pleasure once again that we can report our 2-2-24 excellent results and it's also with great pride that we can guide that we expect strong performance and are on the right track as the year progresses.
Operator: Thank you. This concludes the call. You may now disconnect.
Operator: This concludes the call. You may now disconnect. Thank you.
Speaker Change: Thank you. This concludes the call. You may now disconnect.
Frank Takkinen: Frank Takkinen, Scott Henry, John Glenn, Roger Susi, Jason Wittes, Frank DiLorenzo, Matt Garner