IRadimed Corporation
Q2 2021 Earnings Call Transcript

Published: 1 Aug 2021

[Operator:]

Welcome to the IRadimed 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’ll conduct the question-and-answer session. As a reminder, this call is being reported today, July 30, 2021, and contains time-sensitive information that is accurate only as of today. Earlier, IRadimed released financial results for the second quarter 2021. A copy of this press release announcing the company's earnings is available under the heading News on their 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. This call is being broadcast live over the Internet on the company’s website at iradimed.com, and a replay of the call will be available on the website for the next 90 days.

[Roger Susi:]

Thank you, operator, and good morning, and 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-induced low reached in Q2 of 2020 and further also a very healthy revenue and earnings growth over Q1 of 2021. During the first half of 2021, the team had worked diligently in what continues to be a less than optimal environment. It seems that though some of the COVID headwinds appear to be lessening, for example, with our hospital customers again purchasing, 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 can appears near-constant changes created by the pandemic, IRadimed is on pace to show revenue growth from our pre-COVID full-year 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 IRadimed and the potential for accelerated revenue and earnings growth created by the recent launch of our FMD 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 44% higher than the second quarter last year and 6.4% higher than the first quarter of this year. Our non-GAAP earnings were $0.14 per share compared to $0.05 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.

[Chris Scott:]

Thank you, Roger, and good morning, everyone. First, I'll start with the regulatory status of our 510(k) application for our next-generation IV pump. We have begun a highly interactive phase of the review process and are in frequent communication with FDA. We believe this phase of the review benefits both IRadimed and FDA, as it opens a line of communication where we are able to respond to their comments more frequently than the more traditional review process we've completed in the past. 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 chain, 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 an increasing amount of energy in managing through these global shortages. However, despite these challenges, we have not yet experienced a significant impact on our ability to source materials. We continue to see cost increases typically ranging from approximately 10% to as high as 30%, as well as greater enforcement of tariffs by our vendors. To-date, we have been able to digest these cost increases without a significant impact to margin.

[Operator:]

Our first question comes from Scott Henry with ROTH Capital. Your line is open.

[Scott Henry:]

Thank you. Good morning. Congratulations on the results and the expanded role as well, Chris. Just a couple of questions. First, looking at the quarter; clearly monitor sales were strong and pump sales were a little weaker, although still robust. Should we expect those trends to continue in the rest of the year with the outperformance being more monitor-driven than pump-driven, perhaps particularly in front of that next-generation pump coming? How should we think about that?

[Chris Scott:]

Scott, I think that our expectation is that, we'll see some normalization of pump sales in the second half. We were monitor-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.

[Scott Henry:]

Okay. And then, the disposables and services revenue jumped up pretty significantly in Q2. Any thoughts on what's going on there? And should we expect that to revert back to the trend line, or how should we think about that?

[Chris Scott:]

Our viewpoint is that, the disposables and service line is going to continue to be strong for us. We're seeing higher IV set sales, but also remember now wrapped up in 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 roll out the door as well. So, we expect continued strength on that line item.

[Scott Henry:]

Okay. Great. And then, I think you mentioned that you had three units ordered for the FMD. Could you remind me, what is the price point? And I guess, maybe will it start out lower for the initial adopters, or how should we think about the price per unit?

[Roger Susi:]

Yes, may be I’ll take that one. Well, those units have a small discount I think of about 4% or 5%. It's not much. So, they were pretty close to the pricing we are targeting, which in that configuration, there's a couple of ways you can roll it out. But at that particular configuration of those three, the list price adds up to about $24,000.

[Scott Henry:]

Okay. Great. Thank you for the color, Roger. And then, final question gross margins. I think, Chris, you've given us a lot of color, but we did see a little -- it is still pretty high relative to the past years, a little downtick in 2Q versus 1Q. I think, what you're saying and I just want to confirm is, we should probably think of 2Q is more reflective of what we should see in the next couple of quarters and perhaps maybe a little bit lower, but still within historical range. Is that the right way to interpret that?

[Chris Scott:]

I think when we go forward, we expect one-off. Going forward with Q3 and Q4, we expect higher gross margins than Q2. So we expect growth there, largely due to the output higher volumes, based on higher revenue. But you won’t see, in our mines, you won’t see something like -- in the past, we've seen gross margins as high as 80%, 81.5%. I don't think you're going to see that this year. You'll see something that's more in line with those historical ranges like I said somewhere in the mid-70% to 78% something along those lines.

[Scott Henry:]

Okay. Great. That’s helpful. That should do it for me. Thank you for taking the questions.

[Chris Scott:]

Thanks, Scott.

[Roger Susi:]

Thanks, Scott.

[Operator:]

Thank you. Our next question comes from Lisa Springer with Singular Research. Your line is open.

[Lisa Springer:]

Thank you. Congratulations on the strong quarter.

[Chris Scott:]

Thanks, Lisa.

[Roger Susi:]

Thanks.

[Lisa Springer:]

I have a question. What are you seeing in terms of ASP early in the third quarter?

[Chris Scott:]

Lisa, I don't know that we would make any comments on that. I think, as you know, ASP is largely reflective of the geographic sales mix. 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 ASPs will end up for the quarter -- for this current quarter.

[Lisa Springer:]

Okay. Well, that’s helpful. Thank you.

[Operator:]

Thank you. I'll turn the call back over to Mr. Susi for any closing remarks.

[Roger Susi:]

Thank you. I continue to be pleased by the good work of everyone at IRadimed, which produced these results. We've shown the ability to grow in the face of uncertainty and I'm 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 FMD, we are as optimistic about IRadimed's future as ever. Thank you and we look forward to speaking with you again in about three months.

[Operator:]

Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect. Everyone have a wonderful day.