iRadimed Corp Stock

Welcome to the IRadimed Corporation's Third Quarter of 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded today, October 30, 2026, and contains time-sensitive accurate information that is valid only for today.

Earlier, IRadimed released its third quarter 2026 financial results. 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 on the company's website at iradimed.com, and a replay will be available there for the next 90 days.

Some of the information in today's session will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements focus on future performance, results, plans and events and may include the company's expected future results. IRadimed reminds you that future results may differ materially from these forward-looking statements due to several risk factors.

For a description of 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.

I want to turn the call over to Roger Susi, President and Chief Executive Officer of IRadimed Corporation. Mr. Susi?

Thank you. Good morning, and welcome to IRadimed's Third Quarter 2026 Earnings Call. I'm very proud to say that the new 3870 MR IV pump launch is showing itself to be everything we had hoped for and more. Though you may recall that we discussed the ramping of this new pump would be quite a stretch, we have been able to push very hard and make it happen. With our initial testing of the waters release of a few dozen pumps during Q4 and Q1 to the broad market launch in Q2 and with having produced now over 400 systems during Q3, our teams have risen to perform extraordinarily well.

The job of ramping production of this complex electromechanical device at the rate achieved is a very difficult task. And these hard-working ladies and gentlemen of your company have really risen to the challenge. The ramp rate of the 3870 production to achieve Q3's revenue was huge at over 125% increase from Q2's production, thus the large stretch goal for production. And to support the goal was a great selling effort. Consider that during Q3, our sales team booked record numbers of both the 3880 monitor and 3870 pumps, proving the customer acceptance of these devices and building a very comfortable backlog for Q4. For Q4, we will again grow revenue of the new 3870 pump by another 50-plus percent. Again, very pleased to report that our teams have delivered.

Here are the numbers. We achieved record quarterly revenue of $24.2 million, up 14% from Q3 of 2025 and an 18% sequential increase from Q2. Earnings were $0.51 per share GAAP and $0.55 non-GAAP, up from $0.41 and $0.46, respectively, in the second quarter. And as we expected, as our manufacturing teams climbs the 3870 learning curve, we begin realizing efficiencies we had anticipated with the gross margin improving 2 full points sequentially to 76%. Behind these quarter-end numbers is the performance of not only our production, engineering, quality and materials teams in-house, but our field sales team as well.

We had concerns that the long-anticipated new 3870 pump could steal sales focus from the monitor, and so we put in place special targets to mitigate such an issue. Indeed, though, Q1 did show weak monitor bookings. However, this was quickly turned around in Q2 with a record number of monitors booked, and we are once again extremely proud to note that, that record was exceeded again in Q3. In short, monitor sales are strong and growing. This, along with what is now clearly becoming a successful launch of the long-awaited 3870 MR IV pump.

Though our hospital customers usually need 4, 5 to 6 months or more to budget and finally issue purchase orders for new equipment, we are finding a very significant number motivated to move to purchase our new pump in much shorter time frames, with this resulting in a growing backlog of 3870 pumps on the books after shipping over 300 in Q3 as we enter into Q4. It's this order rate and the backlog produced that give us confidence in our ability to clearly forecast revenue for Q4, but wait for our guidance just a moment longer.

I'd like to recap this pump opportunity first. The rather low-hanging and quick to attain fruit is the replacement opportunity we've been discussing from established users of the old 3860 pump system as they replace and upgrade to the new 3870 MR pump. It's a great opportunity with still nearly 6,400 older, meaning over 5 years of age, 3860/61 pump channels in the U.S. market. But it's proven to be better than simply replacing what was a $19,000 3860 channel with a similarly priced 3870.

First off, we have approximately 70% of the replacement orders for two of the older model channels for 1 new quad stack, meaning that for every 2 channels of the older 3860/70 -- 3860 or 61 setups being replaced, 70% of the customers are buying 4 3870 channels. So the 6,400 old pump channels translates to over 10,000 unit 3870 opportunity. With our plan to sell about 2,000 to 2,500 3870s per year, just this presently existing pool of older pumps takes years to replace. Meanwhile, more and more pumps turn 5 and become part of the replacement target.

A second silver lining to the business is that the ASP of the new pump system is not equal to the older unit. It is not similarly priced, but rather commanding nearly $25,000 per channel, a lift from the older 3860 ASP of 23% to 25%. Finally, for a less stringent measure of success than the numbers just mentioned, our customers are loving what they see. This device practically selling itself, I'd say, it shows well and its operation is exciting to the user.

This is being proven by the fact that we have also already received orders from facilities who did not care for the original 3860, thus remain part of our greenfield opportunity. But when showed the 3870, they have not hesitated to become a customer and decided quickly that the new 3870 was spot on and a welcome addition to their imaging practice. In a word, it's happening. The new 3870 pump system is doing what we thought it could do and more, more channels, higher ASP and penetration of the greenfield.

At this point, it's execution. Ramping production while building in quality and growing margin is where we are headed. Q4 will show more of this trend with 2027 giving us much run room to return to great growth of revenue, earnings and a business we are very proud of. Now I'd like to have Jack Glenn, our CFO, provide financial details, but I'll iterate that as we enter Q4 with a solid backlog of our new 3870 pump and 3880 monitor systems as well as a strong backlog of the FMD system.

Now I'll turn the call over to Jack Glenn, our CFO, to review the quarter's financial results and provide color on our outlook for the fourth quarter and full year.

Thank you, Roger, and good morning, everyone. As in the past, we report our results on a GAAP basis and non-GAAP basis. You can find a description of our non-GAAP measures in this morning's earnings release and a reconciliation to GAAP on the last page. For the 3 months ended September 30, 2026, revenue was a record $24.2 million, up 14% from $21.2 million in the third quarter of 2025 and up 18% sequentially from $20.5 million in the second quarter.

Pump revenue was $8.7 million, up 4% year-over-year as 3870 shipments continue to ramp. MRI-compatible patient vital signs monitoring systems contributed $8 million, up 17% year-over-year, and ferromagnetic detection systems contributed $0.5 million, up 28%. On the recurring side, disposables revenue grew 21% to $5 million. Amortization of extended maintenance agreements grew 31% to $0.8 million and services and other grew 42% to $1.2 million.

For the 9 months, revenue was $66.6 million, up 9% from $61.1 million in the prior year period. Domestic sales accounted for 82% of total revenue in the third quarter, down from 85% a year earlier. International revenue grew 45% to $4.5 million, while domestic revenue grew 9% to $19.7 million. Over the 9 months, domestic sales accounted for 82% of revenue, down from 85% a year ago, while international revenue rose 37% to $12.2 million.

Gross profit for the quarter was $18.5 million with a 76% margin, up from $16.5 million and 78% in the third quarter of 2025. Sequentially, gross margin improved 2 points to 74% from 72% in the second quarter as 3870 production volumes increased and we began realizing the manufacturing efficiencies we anticipated. The year-over-year decline reflects the remaining additional production inefficiencies on the new 3870. For the 9 months, gross profit was $50.4 million with a 76% margin compared with 77% a year earlier. We expect gross margin to continue to improve in the fourth quarter as 3870 volumes build.

Total operating expenses for the quarter were $10.3 million, up 7% from $9.7 million, but declined to 43% of revenue compared with 46% a year ago. General and administrative expense was $4.5 million, up 4%, primarily due to higher legal and professional fees, consulting and payroll and benefits. Sales and marketing expense was $4.9 million, up 6%, primarily due to higher sales commissions on increased monitor and 3870 bookings in the quarter. Research and development expense was $0.9 million, up 30%, primarily reflecting lower capitalization of payroll costs for internal software development in the quarter.

Income from operations for the quarter was $8.1 million or 34% of revenue, up 19% from $6.8 million or 32% of revenue a year ago. Tax expense for the quarter was $2.2 million with an effective tax rate of 24.9%, up from 23.6% in the third quarter of 2025. The rate differs from the U.S. federal statutory rate primarily due to state income tax expense and nondeductible compensation expense, partially offset by benefits from foreign-derived income and research and development tax credits. As we discussed on our last call, the windfall deduction tied to the vesting of equity grants, most of which occurs in the fourth quarter, will be smaller than we originally anticipated, and we expect an effective tax rate of approximately 24% to 25% for the fourth quarter.

Net income for the quarter was $6.5 million or $0.51 per diluted share, up 17% from $5.6 million or $0.43 per diluted share a year ago. Non-GAAP net income was $7.1 million or $0.55 per diluted share compared with $6.1 million or $0.47 per diluted share, excluding $0.6 million and $0.5 million, respectively, of stock compensation expense net of tax benefit. For the 9 months, net income was $17.5 million or $1.37 per diluted share, up 9% and non-GAAP net income was $19.3 million or $1.50 per diluted share, up 8%.

We ended the quarter with cash and cash equivalents of $63.3 million, up from $59.1 million at the end of the second quarter and $51.2 million at year-end. Cash flow from operations was $7 million for the quarter, consistent with prior year quarter and $21.2 million for the 9 months, up 12%. Capital expenditures were $0.2 million for the quarter and $1.1 million for the 9 months, down from $8 million in the prior year period, which included construction of our new corporate office and manufacturing facility.

Non-GAAP free cash flow was $6.8 million for the quarter, up from $5.7 million and $20.1 million for the 9 months, up from $11 million.

On the dividend, our Board of Directors also declared a regular quarterly cash dividend of $0.20 per share payable on November 27, 2026, to stockholders of record as of the close of business on November 13, 2026. For the fourth quarter, we expect revenue of $25 million to $26.5 million, GAAP diluted earnings per share of $0.53 to $0.57 and non-GAAP diluted earnings per share of $0.57 to $0.61.

For the full year 2026, we are updating our guidance and now expect revenue of $91.7 million to $93.2 million compared to our prior range of $91 million to $96 million, GAAP diluted earnings per share of $1.90 to $1.94 compared to $1.90 to $2.05 and non-GAAP diluted earnings per share of $2.06 to $2.10 compared to $2.06 to $2.21. Our non-GAAP earnings per share guidance excludes stock-based compensation expense, net of tax, which we expect approximately $0.6 million for the fourth quarter and about $2.5 million for the full year.

And with that, I will now turn it over to the operator for questions.

[Operator Instructions] Our first question comes from the line of [ Anderson Schock ] with ROTH Capital Partners.

Congrats on the strong quarter. So quarter bookings were a record, but the full year revenue guidance on the top end came down about $3 million. Could you discuss what you're seeing that drove this revision?

Yes, for sure. Good to have you on the call. This is Roger Susi.

So yes, it was basically that ramping these pumps was tough. And even though, as I pointed out, we increased things by enormous percentages to make up that difference of the $2.8 million or so you see for the year would be required even a higher lift of the number of pump channels that we would have put out. So though the team did great lifting the output over -- with over 100% increase Q2 to Q3.

And again, here, plus -- 50-plus percent in Q4, we're shooting for. We can't get out over our skis pushing this ramp rate so hard that the quality slips. And so yes, you have to sort of -- you have to pay that piper and you have to be careful that the ramp rate is not so ridiculously high that you can't keep the quality up. And so yes, we have to have a little bit of throttle on that.

Okay. Got it. And then disposables grew 21%. How much of that growth came from the newer 3870 installed base versus the 3860 base? And now that the early 3870 sites have had a few months to use, I guess, what are you seeing in disposable pull-through per channel compared with the 3860 channel?

Well, frankly, none yet, almost none. Though we ship these things, people don't start using them really until we get out there and do the in-servicing and that process takes -- that process takes itself 6, 8 weeks. So essentially, though we shipped a lot of 3870s, great for revenue, the actual usage yet in the field would be only starting to ramp up. So that effect, we should see as we get towards the end of Q4. But what we see with -- thus far, not so impactful from the new pump. These disposable sales are still ramping from the original base, both of monitors and the older pump.

So I guess the good news is, again, as we pointed out, with 70% of our customers basically doubling the channels they have going to the quad stack from having 2 channels of the older system. We do anticipate an effect on those disposables, but you're not seeing it yet, no, too soon.

Okay. Got it.

Our next question comes from the line of Frank Takkinen with Lake Street Capital Markets.

Congrats on all the progress. I was hoping to take an initial stab at 2027. I know you're not providing formal guidance at this time, but trying to square between your commentary of selling in the neighborhood of about 1,000 channels of the 3860 to going to 2,000 of the 3870 at that higher ASP. So going from in the neighborhood of kind of $30 million of pump revenue into the kind of $50 million range. How should we think about the time line to that? You've got obviously a lot of wind at your sales related to ordering patterns and your manufacturing scaling up, but how should we expect that to kind of translate to revenue in 2027 on the pump line?

Yes, you said it, right? So as we start to get towards -- in Q4, we're going to put out, as I said, another 50% or more channels over Q3 and get start to approach 500 channels. And that will continue through 2027. Now the ramp rate of the output won't be 50%, but we'll go from 500 to 560, 570. Now those step -- those added number of channels throughout each quarter next year won't be at this 50% or 100% quarter-over-quarter rate. But the platform -- the base will start at in the 500s with Q1.

So given the ASP that we've been reporting, right, it's pretty simple math, and I think you've got it, where these new pumps are going to take us from a standpoint of the revenue provided from the pump hardware. And then the other question is -- also as people start to use these new pumps, we expect that to begin to pull through IVs that, which I said we haven't seen that effect yet because they're just beginning to actually use them. And we see that will start to compound throughout 2027 as well.

Got it. Very helpful. Maybe to follow-up a little bit on your greenfield commentary. I would be curious how those decisions were made and how their ordering patterns are going related to if they're also pursuing quad stack configurations? Or what specifically maybe did they like more about the 3870 that they didn't like on the 3860 that got them over the line?

Yes, great question. But we don't talk too much about the greenfield. The opportunity still remaining from this older installed base is just -- that's such a big number. It tends to suck up all the air in the room. But yes, the greenfield, as I pointed out, we have been pleasantly surprised that we've sold a few of those that I mentioned here in my comments earlier, where basically, there are customers that -- a matter of fact, we have two contributions to this greenfield. We had customers that -- they've just remain doing it the old way with the long lines or refusing to do patients in the MR that need IV fluids delivered.

They just weren't tickled by the design, the use model of the old 3860. I think I've spoken to this in years past that the 3860 pump, of course, that thing Genesis was 2005. It's 21 years old in its look and how it's used. And so people look at that and they think we really want something a little bit more updated and more automated, let's say, in its use, #1. And #2, we tailored that pump after -- there's 3 big manufacturers of IV pumps in this market and in the rest of the market outside of the MRI that is. And we tailored it after one of them. So facilities that had been using one of those other 3 non-MRI pumps throughout the rest of the facility could warm up to the use of the 3860 because they kind of have the same look and feel.

But the flip of that is it didn't have the look and feel of the other 2/3 of the market. So people that had -- where schools of thought from those other 2/3 type pumps would look at it, oh, it's too difficult for our team to learn something else. We're worried they'll make mistakes. There's a host of reasons. And they basically pooh-poohed it. So those are greenfield customers that we at least had reached and got turned down. And there's still a greenfield of customers that we haven't even talked to yet.

And there's also some greenfield for customers who bought a 3860 and their usage on it went down. The champion who decided to buy the pump in the first place in the facility moved on, others didn't know how to use it. And some of these pumps sat a little bit dormant, and we've talked about that in relationship to the number of disposables that are being consumed. We can tell where the users have gone pretty light on us. And that is essentially greenfield as well. We've also sold some of those customers who -- though they bought 3860s, they weren't fans. They weren't big fans. They weren't -- they were underutilized.

And some of those when shown the 3870 as well as this other greenfield people that never bought it in the first place, they just find the pump very attractive use model. And I've spoken to this before where this is really what the genesis of the new pump was. As a mechanism, the pumping, the heart of it, the mechanical -- electromechanical part that moves fluid, it's not much difference. Accuracy, similar. Those things we didn't change much, pump is a pump. It's the user interface, and we put sensors and some intelligence into the device, so we can tell what the person is doing as well as we put little animations on the screen to help them learn to use the pump, so they're not fearful of it and they can -- their outcome is going to be great, and they're seeing it.

This is what we're extremely proud of. They're seeing it. I kind of mentioned that earlier. And I think this is what is really getting this attention from these users that kind of turned their back on us before and coming back real strong and just loving this new pump.

Yes. That's great color. Maybe just one last one, Roger, and I appreciate you taking all the questions. Great to see monitors continue to be strong. How should we think about that outlook into 2027?

Yes, the monitor is doing great. So we've -- we've done a few things to enhance it. We expanded the remote capability, which seems to be interesting to not a large group of hospitals, but a significant number, where I don't know if you recall the configuration of the device, but we have these wireless remote controls that we put in the control room for both the monitor and the pump because people aren't in that room, that magnet scan room with the patient. They're in the control room or elsewhere.

And so we have remotes out there, so you can completely monitor the vital signs, for example, of the monitor and set the alarm limits and so forth from wherever you want to sit out in this area that's not inside that scan room. We expanded that recently. We made a capability where you can put another remote, actually 2 more remotes elsewhere in the building, and we hook them up through your network, the hospital's backbone wired Ethernet network. And so that fits the bill for some users, and it's given us more to talk about with the monitor.

So yes, we see the monitor bottom line is it's still very much on point. Competitors haven't done anything to shore up the deficiencies or the weaknesses they have vis-a-vis our monitor. And in fact, we've extended it a little bit with this extra twin remotes you can place elsewhere in the building. So yes, monitor, though its growth rate, it's not anywhere near what the new pumps growth rate is, of course, it's still growing. We're able to push up -- we're able to push that rope along. So very happy with that.

Got it. Great color.

Our next question comes from the line of David Saxon with Needham & Company.

So maybe just to follow-up on the fourth quarter guidance. Roger, in the past, you had talked about reaching a $50 million run rate for pump revenue in the fourth quarter. So is that still what's implied or assumed in the fourth quarter guide?

That was not just pump revenue. That was overall revenue, right, $25 million...

I missed your question, David. But go ahead, you said $50 million or what -- I mean...

$100 million run rate.

Yes, sorry. So I think in the past, you had talked about reaching a $50 million run rate for pump revenue in the fourth quarter, and that would also get you to $100 million run rate for total revenue. So the question is, is the pump...

Oh, yes. If you annualize it out yearly, so in the quarter, $12.5 million, let's say, right? That's what you're saying, right?

Yes. Exactly. So is that still what's implied in the fourth quarter guide?

Yes, I'd say so for sure. We're looking at -- as I mentioned, we're going to push towards another 50-plus percent increase in the pump output and revenue. And that means about 500 units. So yes, at this ASP, you got it. That's right.

Okay. Great. And then maybe just taking a stab at '27, understanding you're not going to give guidance. But -- so fourth quarter guide implies $103 million run rate. It sounds like output growth is going to be more modest in '27. So should we be expecting some modest growth off the $103 million in 2027? Is that a fair framework to kind of think about the kind of scenarios for '27?

Oh boy, well, I differ with you a bit. Using the word modest, modest compared to -- modest compared to our peers, I think we're going to see double-digit double -- upper teens of growth in 2027. I'm not so sure that's modest at all. But yes, I think we're going to be doing the kind of growth that we were putting on the boards back in previous years and breaking revenue records quarter after quarter again.

But if 15%, 16%, 17% growth is modest, I guess it's modest, but I don't think so. I think we're going to be growing the business pretty good throughout 2027, though the number of pumps, yes, when we go -- when we talk about the growth in the number of pumps we produce being in the 100% from Q2 to 3 and 50-plus percent Q3 to 4. Well, yes, that's not going to be what you see. But the revenue growth rate will be, I think, toe to toe with any of the best of our peers.

Yes. That was helpful. Just -- yes, just to clarify, I was talking more about manufacturing, not expecting 50% that will moderate, obviously. But no, I appreciate the color on 2027.

And then maybe just to get Jack involved, gross margin, obviously, seeing some nice improvement. How are you thinking about that sequential improvement continuing into the fourth quarter? And then as we think about the next 12 months, considering the price benefit of the 3870 and whatnot, how should we think about kind of the continued magnitude of gross margin improvement potential?

Sure. Yes. So I think, yes, as we pointed out that, yes, we believe that the fourth quarter will be an improvement on the third, which is 76%, right? So we think -- I think going in Q4, we'll see that sequential improvement. But I would also just say, yes, in the not-too-distant future, I think in early next year, based on these kind of volumes, you will see us getting back to those historical 77%, 78% and even potentially even better as time goes on.

The key again to that is we're going to obviously get better at making these pumps, but also that ASP factor that really gets factored in going forward and what we're seeing, especially selling these quad systems, which are $100,000 or north of $100,000.

Great.

Yes, I'd add maybe in this quarter, we did have a -- we've spoken about this before, but our balance between domestic and international business was more favorable international, which is lower-margin business. So yes, we still hit that -- we still hit a gross margin of 76% with a rather large contribution of the lower-margin international business. So bear that in mind, too.

And yes, so as we get into 2027, always international quarter-to-quarter. You've seen that in our history. When international is up, it pinches the gross margin a bit because that's lower. We discount that more heavily for our distributors. And #2, tax rate, as Jack reported, tax rate is a little bit higher than historical here for us as well. So we'll see how the taxes go through the next year also effect on the bottom line. But thanks for all the question.

Thank you. And I'm currently showing no further questions at this time. I'd now like to hand the call back over to Roger Susi for closing remarks.

Well, thank you. Yes. Well, it should be clear with the record revenue and record bookings in the quarter, continued strong customer reception of the new 3870 pump and another record quarter for monitor bookings and improving manufacturing efficiencies, we believe we're well positioned for a strong finish to the year.

And of note, our fourth quarter guidance puts IRadimed at its anticipated $100 million-plus annualized run rate. So I'd like to thank you all for joining today's call, and I look forward to continuing to ramp production and regain efficiencies as we capitalize on the huge opportunities before us. Thank you.

Thank you. This concludes the call. You may now disconnect.

Hello, and welcome to the IRadimed Corporation's Second Quarter of 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded today, July 31, 2026, and contains time-sensitive accurate information that is valid only for today.

Earlier IRadimed released its financial results for the second quarter of 2026. A copy of this press release announcing the company's earnings is available under the headings 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 on the company's website at iradimed.com, and a replay will be available there for the next 90 days. Some of the information in today's section 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 and may include the company's expected future results. IRadimed reminds you that future results may differ materially from these forward-looking statements due to severe risk factors. For a description of the relevant risks and uncertainties that may affect the company's business, please see the Risk Factors section in the company's most recent report filed with the Securities and Exchange Commission, which may obtain free from the SEC's website at sec.gov.

I want to turn the call over to Roger Susi, President and Chief Executive Officer of IRadimed Corporation. Mr. Susi?

Thank you, operator. Good morning, and welcome to IRadimed Corp's Second Quarter 2026 Earnings Call. This quarter, we embarked on the first general release production of the new 3870 MR IV pump system as planned, targeting, as discussed last quarter, the building of 130 to 135 of these new pumps. I'm very pleased to report that our teams performed exceptionally well and achieved our manufacturing target, no small task.

Taking 3870 production from a standing start to an impressive rate in the quarter. Those efforts with those efforts, we were able to achieve revenue and earnings per our guidance with revenue of $20.5 million and earnings of $0.41 on a GAAP basis and non-GAAP earnings of $0.46 per share. As we expected and guided. The new pump launch consumes significant effort, including increased labor and overhead expenses, much of which is reflected in the quarter's gross margin of 74%.

I want to speak to what's next, and that starts with a discussion of how bookings were in the quarter, how fast we can continue to ramp the new 3870 pump production and a short recap of our opportunity. Opportunities for the new 3870 pump system are both the increased penetration of the greenfield which are predominantly those facilities that continue to deal with IV fluid delivery in the MR setting via the various old school workarounds, expansion of current customer use requiring more pumps, as well as the quite substantial replacement of IRadimed aged installed base of 3860 pump systems. The most immediate and significant increase coming from the large replacement opportunity. This replacement opportunity will be our key growth driver for the next several years and was indeed a significant factor for many of the orders booked in the second quarter.

Recalling that for the U.S. market, there are approximately 6,400 5-plus year old 3860/61 pump channels up for replacement, we had been selling approximately 1,100 such 3860 channels annually. And with the new 3870, we target adding another 1,000 channels per year through replacement sales of those -- from those existing 6,400 old 3860 units that are over 5 years old.

Bookings for the quarter were more than double the units shipped showing very strong customer acceptance and quick decision-making while only scratching this -- at the target replacement based mildly. Add to this that not only are we replacing those older 2-channel pump systems, but an astounding 70% of those were replaced with our 4-channel quad pump system, thus requiring twice the number of pumps. Additionally, the ASP of this quad systems has been north of $110,000, providing well over a 20% lift in the ASP per pump.

In short, the demand is exceeding our expectations in both the number of pumps and the ASP. But there's also some fantastic news with our patient monitor. Though the sales team was quite busy obtaining orders for the new 3870, they outperformed themselves and brought in a record high of 71 monitors from the domestic market while maintaining a high ASP.

With a strong backlog and the sales potential we have, it comes down to the ramp-up of production and the ramp down of costs associated with manufacturing learning curve, which we've all been climbing every day. Q2 was a huge effort with plenty of inefficiencies and costs as we went from 0 to 130-plus 3870 pumps. Q3 will remain a stretch as we plan to more than double production again to over 300 units. However, we see that we are indeed riding that learning curve well and taming it, so we expect that the start-up costs experienced in Q2 will be better than 50% reduced in Q3, while earnings will reflect such a strong positive move as well. This will continue into Q4 by which time we anticipate nearing our historic manufacturing efficiencies.

So what's coming in Q3, let me have Jack Glenn, our CFO, detail this for you, but I will say that as we enter Q3 with a solid backlog of our pump and monitor systems as well as a strong backlog of FMD systems, We, again, however, will be in a controlled production ramp phase, though ramping from 130 to our Q3 production target of over 300 3870 pumps is certainly a very high ramp rate. The team is performing, and we will feel -- and we feel confident we will deliver along with ever more MRI patient monitoring systems as well. Thus, you can expect IRadimed to be heading back to and beyond the strong growth rates of the past with expectations that by Q4 and with 2 early product launch quarters in the rearview, our gross margins will have not only returned but be setting new records, which fall directly to the bottom line, of course.

Now I'll turn the call over to Jack Glenn, our CFO, to review the quarter's financial results and provide a deeper color on the growth through the balance of the year.

Thank you, Roger, and good morning, everyone. As in the past, our results are reported on a GAAP basis and a non-GAAP basis. You can find a description of our non-GAAP measures in this morning's earnings release and a reconciliation to GAAP on the last page. For the 3 months ended June 30, 2026, revenue was $20.5 million, up 0.5% from $20.4 million in the second quarter of 2025.

Pump revenue was in line with our expectations as we transitioned from the 3860 to the next-generation 3870 pump. MRI compatible patient vital signs monitoring systems contributed $6.7 million, up 12% year-over-year, and Ferro-magnetic Detection System contributed $0.8 million, up 57%. On the recurring side, disposables grew revenue -- disposables revenue grew 14% to $4.8 million, driven by continued increases in device utilization, amortization of extended maintenance agreements grew 28% to $0.8 million and services and other grew 7% to $1.1 million.

Domestic sales were 82% of total revenue in the second quarter compared to 89% a year earlier as domestic 3860 pump revenues were exceptionally strong in Q2 of last year. For the 6 months, domestic sales accounted for 82% of revenue, down from 86% a year ago. Gross profit for the quarter was $15.2 million with a margin of 74% compared with $16 million and 78% in the second quarter of 2025. The decline in gross margin reflects the higher manufacturing costs associated with our first sizable production ramp of the 3870. For the 6 months, gross profit was $32 million with a margin of 75%, down from 77% a year earlier. We expect the gross margin to improve in the second half of the year as 3870 volumes build and manufacturing efficiencies take hold.

Total operating expenses for the quarter were $8.8 million, down 4% from $9.2 million and 43% of revenue compared with 45% a year ago. General and administrative expense was $3.9 million, down 10%, primarily due to lower legal and professional fees, regulatory consulting and payroll and benefits. Sales and marketing expense was $4.2 million, up 6%, primarily due to higher sales commissions driven by the strong bookings in the quarter. Research and development expense was $0.7 million, down 25%, primarily reflecting an increase in capitalized internal software development on the next-generation monitor in the quarter.

Income from operations for the quarter was $6.4 million or 31% of revenue compared with $6.8 million a year ago. Tax expense for the quarter was $1.7 million, with an effective tax rate of 24.2% compared with a 21.2% rate in the second quarter of 2025. The rate differs from the U.S. federal statutory rate, primarily due to state income tax expense, partially offset by benefits from research and development tax credits. As we stated in our first quarter call, the effective tax rate is also affected by the timing of deductions tied to the windfall deduction for equity grants, which is a discrete item taken at the time of vesting of the equity grants, most of which occur in the fourth quarter of the year.

We no longer expect the windfall deduction to be as large as we originally thought, and therefore, believe the effective tax rate will be likely in the 24% range for the remainder of the year. Net income for the quarter was $5.2 million or $0.41 per diluted share compared with $5.8 million or $0.45 per diluted share. Non-GAAP net income was $5.9 million or $0.46 per diluted share compared with $6.4 million or $0.49 per diluted share, excluding $0.6 million of stock-based compensation expense net of tax benefit.

For the 6 months, net income was $11 million or $0.86 per diluted share, up 5% and non-GAAP net income was $12.2 million or $0.95 per diluted share, up 4%. We ended the quarter with cash and cash equivalents of $59.1 million, up from $51.2 million at year-end. Cash flow from operations was $5.9 million for the quarter and $14.2 million for the 6 months, an increase of 18% over the first half of last year. Capital expenditures were $0.4 million for the quarter and $0.9 million for the 6 months, down from $6.7 million in the prior year period, which had included the construction of our new corporate office and manufacturing facility.

Non-GAAP free cash flow was $5.5 million for the quarter and $13.3 million for the 6 months. Also, our Board of Directors declared a quarterly cash dividend of $0.20 per share payable on August 28, 2026, to stockholders of record as of the close of business on August 14, 2026. And lastly, to repeat our guidance.

For the third quarter of we expect revenue of $23 million to $24.5 million, GAAP diluted earnings per share of $0.49 to $0.54 and non-GAAP diluted earnings per share of $0.54 to $0.59. For the full year 2026, we reaffirm our guidance and expect revenue of $91 million to $96 million, GAAP diluted earnings per share of $1.90 to $2.05 and non-GAAP diluted earnings per share of $2.09 to $2.24. Our non-GAAP earnings per share guidance excludes stock-based compensation expense and net of tax, which we expect to be approximately $2.5 million for the full year.

And with that, I will turn the call over to questions. Operator?

[Operator Instructions] Our first question comes from the line of Frank Takkinen with Lake Street Capital Markets.

This is Nelson on for Frank. I want to start with the 3870 ramp. You went from 0 to 130-plus pumps in Q2 and now are planning for over 300 in Q3. I mean can you talk a little bit more about what that requires operationally? And are you adding additional shifts or production headcount, or does the existing line gets you there? And does the pace keep stepping up in Q4? Or should we kind of -- or how are you kind of wanting us to think about that?

No, we're not -- we kind of did the staffing stuff over the previous several months anticipating exactly what we need to meet the demands of making a new pump. So we're no longer doing that. That's -- so those expenses those had been in place, and that's not where we're going. It's exactly what I mentioned a few times over. It's strictly learning curve. It's experience, it's the efficiencies come when the folks that are making these products, basically they becomes sort of second nature, muscle memory, what have you, that's the experience I'm talking about. So it's -- at this point, cost-wise, free. But time-wise, they look to work over time to do this learning, and they're not as efficient and as fast.

Helpful. And then as your 3860 units are phasing out, what happens -- how should we think about the service and disposable revenue attached to that install base. Maybe just talk through the 3870 quad replacement and your expectations with that for recurring revenue per site as those phase out. Is there any kind of transition gap you're thinking about? Or should we not really see anything like that?

Yes, I can take that one, maybe. As far as the disposal revenue, you're seeing some nice growth already, right? I think in the quarter, had over 14% growth on the disposables, so the 3860 installed base continues, hopefully, on the same kind of utilization. What we're really excited about and we think will help us even grow that more in the future is the quad stack. Of course, we're seeing, right? That should help us really drive utilization just as you see 4 pumps compared to 2, so we're excited about the opportunity there, I think, in the future on the 3870 and the utilization.

Got it. And then maybe just last one. If you're a hospital -- say, a hospital signs a quad stack order today, when are you kind of expecting that shift. Our new bookings landing maybe in Q4? Is it -- are we pushing into Q1 of next year? Or how is that playing out?

As far as lead time?

Yes, as far as lead time goes.

I think as far as lead times, we're able to right now probably get it within the next quarter kind of thing, probably or at least orders that are coming in fill within 3 months.

Yes. So I mean, our -- our bookings of the new pump were more than doubled what we shipped. So the backlog is building. And as we go through the coming quarters, I wasn't quite sure of your question. But as we go through the coming quarters, of course, there'll be what customers experience as the lead time will extend back out to more historic levels, which is -- we've had lead times out in the 4 and 5 months zone on 6-month zone through much of our history and we're probably headed there and maybe a little more, frankly, because of the demand of this new system and because of the pleasant surprise of basically selling double the number of pumps with these quad systems.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Roger for closing remarks.

Thank you, operator. Well, as you heard, with the excellent customer reception of the new 3870 IV pump and continued strong sales of a 3880 patient monitor, along with production experience growing pushing up our ability to ramp 3870s, our $100 million run rate in Q4 is now well within our grasp. So with that, I'd like to thank you all for joining today's call and look forward to ramping production and regaining efficiencies as we capitalize on this huge opportunity before us. Thank you.

Thank you. This concludes the call. You may now disconnect.

Welcome to IRADIMED Corporation's First Quarter of 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded today, May 1, 2026, and contains time-sensitive accurate information that is valid only for today.

Earlier, IRADIMED released its financial results for the first quarter of 2026. 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 on the company's website at iradimed.com, and a replay will be available there for the next 90 days. Some of the information in today's session will constitute forward-looking statements with the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements focused on the future performance, results, plans and events and may include the company's expected future results. IRADIMED reminds you that future results may differ materially from these forward-looking statements due to several risk factors. For a description of 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.

I want to turn the call over to Roger Susi, President and Chief Executive Officer of IRADIMED Corporation. Mr. Susi?

Thank you, operator, and good morning. Welcome to IRADIMED Q1 2026 earnings call. Sorry for a late start, we have a microphone problem. We withstand have a very rosy performance to announce with the first quarter 2026 revenue of $22 million, a 13% increase over the first quarter 2025. These results reflect solid execution across our product lines with strong revenue contribution of our MRI compatible IV infusion pump and our MR patient monitor noting that some revenue substantially drive from the [indiscernible]. There also continues to be growing revenue support for our ferromagnetic detection systems.

Our continued revenue growth, combined with disciplined expense management, including a modified commission structure, drove operating income up $7.2 million, a 33% improvement over the first quarter of 2025 with net income of $5.8 million or $0.45 per diluted share, a 22% increase over the prior year.

Next, I'd like to provide a brief recap of our expectations for the new 3870 MR IV pump. Recalling that in positioning this new product and its pricing, we have anticipated that the 3870 pump [indiscernible] would increase by some 10% to 14% over the historical 3860 pump ASP. However, they'll just beginning. Initial quoting and actual orders are showing a lift closer to 20% for the 3870 ASP.

Additionally, we are seeing that a majority of this new business is for Quad for pump systems rather than simply replacing the older 3860 Doble channel system. Thus, we are seeing both a higher per pop ASP and a larger group of customers purchasing twice as many pump channels, doubling the number of pump channels at a particular customer site.

Though obviously, our sales efforts are in the very stages. These 2 factors present a most exciting prospect for bookings and revenue as the year progresses. Opportunities for their 3870 pump system, as previously described, are both increased penetration on the greenfield which are predominantly those facilities that continue to deal with IV fluid delivery in the MR setting via various full school workarounds as well as the quite substantial replacement of imatinib aged installed base of 3860 pump systems.

The most immediate and significant increase coming from the large replacement opportunity. This replacement opportunity will be our key growth driver for the next several years. As that growth, as mentioned, has now begun to be in the driving factor in this second quarter. To provide some clarity to the revenue expectations in Q2 and beyond, it will not be a step change, but rather a controlled rank. which is initially controlled -- composed of declining revenue derived from the older 3860 pump system, domestic orders, which have trailed off as expected, offset positively by increasing revenue from the new 3870 system as we ramp up its production.

And Jim, our CFO, will provide our Q2 guidance for further quantifying how Q2 is expected to develop. To reiterate, source of the 3870 opportunity is given in our previous. For the U.S. market, there are approximately 6,400 5-plus year over 3860, 3861 pump channels up for replacement. We have been selling approximately 1,100 such 3860 channels annually. With the new 3870, we are targeting adding another 1,000 channels per year through replacement sales from the existing 6400 3860 units that are over 5 years old. As advertised, this starts in Q2 and continues through the rest of 2026 and beyond.

It is also important to understand that replacing only 1,000 channels per year, leaves many thousands more or be replaced in the years to come. For our domestic business on selling north of 2,000, 3870 pump channel [indiscernible] with the higher ASP currently being experienced. We expect to approach a $50 million annual revenue run rate [indiscernible] adding disposable maintenance, international sales, the MR monitoring business, prefer magnetic system, one can understand our confidence in achieving a 100-plus revenue run rate as 2026 progresses.

Timing has been discussed previously as well. But to recap that, we did not launch our sales effort for 3870 until late January. As advised, we targeted shipping 130 to 135, 3870 in Q2. Both the launch and the manufacturer of those initial 130, 135, 3870s are progressing as planned. As we issued in this morning's press release, the interest in the new 3870 has been gratified. The number of orders and dollar size, well ahead of our expectations this early in the product launch.

Given this great curve, still, however, Q2 revenue will not fully reflect this high level of exciting order activity as shipping even 135 new 3870 systems combined with the declining revenue of over 3860s keeps Q2 revenue somewhat in check. Again, it will be the back half of 2026 that was shy. As we continue to book more comps, at a higher ASP and fixing production of this 3870. I'll turn the call over to Jack Glenn, our CFO, to review the quarter's financial results and provide deeper color on growth through the balance of the year. Jack?

Thank you, Roger, and good morning, everyone. As in the past, our results are reported on a GAAP basis and a non-GAAP basis. You can find a description of our non-GAAP measures in this morning's earnings release and a reconciliation to GAAP on the last page.

For the three months ended March 31, 2026, revenue was $22 million, up 13% from $19.5 million in the first quarter of 2025. IV Infusion Pump Systems contributed $7.7 million, up 28% year-over-year, reflecting the fulfillment of 3860 pump backlog from the beginning of the year. Patient bioclin Fonti systems contributed $7.1 million, up 9% year-over-year. Disposable revenue was $4.9 million, consistent with the prior year period, while ferromagnetic detection systems contributed $600,000.

Domestic sales accounted for 82% of total revenue, consistent with the first quarter of 2025. Gross profit for the quarter was $16.8 million with a gross margin of 77%, up from 76% in the first quarter of 2025. Total operating expenses for the quarter were $9.6 million, roughly in line with the first quarter of 2025. General and administrative expenses were $4.6 million. Sales and marketing were $4.1 million and research and development were $1.1 million. The increase in R&D was largely due to the end of capitalized internally developed software for the 3870 compared with Q1 of 2025 as well as new product development for the next-generation line.

Income from operations for the quarter was $7.2 million. Net income was $5.8 million or $0.45 per diluted share on GAAP basis, a 22% increase over the prior year period. Non-GAAP net income was $6.4 million or $0.49 per diluted share, up 17%. The effective tax rate for the quarter was approximately 25%. The increase in the effective tax rate for the quarter was largely due to the timing of deductions tied to the Windfall deduction for equity grants, which is a discrete item taken at the time of vesting of the equity brands, most of which will occur in the fourth quarter of this year. Therefore, we anticipate that the rate will trend down by the end of the year be more in line with previous years.

We ended the quarter with cash and cash equivalents of $56.4 million. Cash flows from operations was $8.3 million for the quarter compared to $4.3 million in the first quarter of 2025, an increase of 93%, reflecting higher net income and favorable working capital movements. Non-GAAP free cash flow was $7.6 million for the quarter after capital expenditures of approximately $500,000. Also today, the company's Board of Directors declared a regular quarterly cash dividend of $0.20 per share on outstanding common stock payable on May 29, 2026, to stockholders of record as of the close of business on May 15, 2026.

And lastly, for our financial guidance. For the second quarter of 2026, we expect revenue of $20 million to $21 million. GAAP diluted earnings per share of $0.40 to $0.44 and non-GAAP diluted earnings per share of $0.44 to $0.48. For the full year 2026, we reaffirm our guidance with a revenue of $91 million to $96 million, GAAP diluted earnings per share of $1.90 to $2.05 and non-GAAP diluted earnings per share of $2.06 to $2.21. The company expects stock-based comp exchange expense net of tax to be approximately $2.4 million for the full year and $600,000 for the second quarter of 2026.

With that, I will turn the call over to questions.

Operator?

[Operator Instructions]

Our first question comes from Frank Takkinen with Lake Street Capital Markets.

.

And congrats on all the solid progress. I was hoping to start with a follow-up on Roger, your comments related to quad system ordering. How do you -- maybe break that down a little bit why you think folks are going from a single dual channel to ordering for individual channels. And then my assumption is you can't assume everybody goes to ordering 4 channels. But is there something specific to call out with some of these early customers that would be more likely to order 4 systems? Or is it fair to assume that a lot of your customers reordering could fall into this camp of ordering quad system channel?.

Yes, good question, Frank. Well, yes, that's a good question. So it's a bit of a surprise that sold -- yes, more than half of these orders have been taken so far and in that is quad system, so that's a bit surprising. We were hoping for maybe 10% and 15% customers, we could step up to this doubling the number of channels they operate. So why? Your question, I guess, is why they have it? So I have to say that I'm going to give the sales force a little credit for this by and large. They are close to the customers. And they felt that with the new system, the way it works and the way the impression on me customers well, it's smaller than the old pump. And the way they actually step together on a poll that they really work together as 4 very easy.

And so we're showing it that way. We show -- we walk in and we're showing the Quad stack. And when customers see it, though they, of course, I've been thinking in terms of that before because they only had 2 channel [indiscernible] before. It does seem that it's fairly -- is fairly quick that, as I said, more than happy these pretty suggesting customers fairly quickly see that oh, wow, we've had -- we've had some cases come up over the years to give us in the older and pump where, yes, we needed a third and a fourth channel handy.

And this sort of stimulates this conversation to make customers think of those situations where they consider they needed that many channels. And they put the budget through and and another very positive sign has been -- these orders get -- we really started [ slowing ] in late January, as I pointed out. So orders that we're getting in at this point have been rather quick -- quicker than the typical cycle time for any more so far. So it's all very positive. But I think that's generally the reason if you picked it out that customers do have experience where after channels were required in the past, and there they go on it and taking advantage quad staff.

That's great. And then maybe just one follow-up on that. Is there a financial element to it as well? Are they getting a better per pump deal if they're buying 4 at a time....

No. That's not the -- pump is, as I said, was high. the net price of the previous pump was 20,000. So let's [indiscernible], right? So the greater spot was 20,000. You can buy the second channel providing to 10. So as we've told many times, our typical ASP pump deal -- it's just under 4 by the time you get the [indiscernible] and all that and the remote and all that. That's where it was landing. So the quad system we've been selling again quad staff, again, 3870 the IV pole remote control, these are coming in at more than 100,000. So it's very exciting.

Well, that's great. Maybe a bigger picture question. The concept that you laid out from going from around 1,000. I think you said 1,100 pumps a year to adding another incremental 1,000 on top of that. What are the drivers to that? I assume this concept, we just talked about the quad pump ordering is a significant driver, too. But is there an assumption of greenfield capture in that number as well? Or is it really just replacement?

No. No. What I was speaking about that earlier in the call, I'm just talking taking 1,000 out of the installed base where the old pumps are refill would be extra. And frankly, maybe I probably more clear, but frankly, the excitement well and the customers -- existing customers calling us [indiscernible] see the new pump is it kind of a fancy right now. I don't see that we're going to have time to start calling on the greenfield for a while. So no, that doesn't have any upside from greenfield factored in at this point.

That's great. And then just last one for me, and I appreciate all the time on manufacturing. How are you feeling from that standpoint? I think in our previous conversations, you felt really good about that. But as you're taking orders now and scaling that, how is all that going?

Well, sales team wants us to ramp it up a lot faster. But we're trying to take it a bit cautiously and ramp it up here, that's why I'm talking about 130, 135 pumps for this quarter. The sales team would like us to ship over 200, but we just can't do it. We're going to stay at that low. We're going to get them right. And then third quarter, we'll plan to near double that up again over -- in the next quarter, maybe a little bit more in third quarter. and so on in the fourth quarter, where we should be by fourth quarter is a pretty heavy stride on the number of the new pumps that we're kicking out of here.

And of course, having this new facility, we got the space and, yes, it's a matter of ramping up to [indiscernible] and stabilizing the supply chain. And so that's why we've been a little conservative on the ramp.

[Operator Instructions]

I'm showing no further questions at this time. I'd like to turn the call back over to Roger Susi for closing remarks.

Well, thank you all once again for joining us on today's call. I'd like to add as we close the call today, that the market is very excited about the new 3870 pump system, and we are being invited into customer facilities to show the device at a very high rate and the sales team is rather than on date.

Further, we have had bookings with greater-than-expected ASP as well as if the majority of those were thus far are for double the number of pump channels. So it's clear to us that the 3870 is having a great acceptance, generates great excitement and motivated very positive and rather quick customer response. So we're quite pleased.

And with that, I look forward to demonstrating rather success, as we further execute the launch of the exciting 3870 MRI up system and capitalize on the huge replacement opportunity throughout 2026 and beyond. Thank you.

Thank you. This concludes the call. You may now disconnect.

Welcome to the IRADIMED CORPORATION Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions]

This call is being recorded today, February 10, 2026, and contains time-sensitive accurate information that is valid only for today.

Earlier, Iradimed released its financial results for the fourth quarter of 2025. A copy of this press release announcing the company's earnings is available under the heading News on the 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 on the company's website at iradimed.com, and a replay will be available there for the next 90 days.

Some of the information in today's session will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements focus on future performance, results, plans and events and may include the company's expected future results. Iradimed reminds you that future results may differ materially from these forward-looking statements due to several risk factors. For a description of 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.

I want to turn the call over to Roger Susi, President and Chief Executive Officer of IRADIMED CORPORATION. Mr. Susi.

Thank you, and good morning. Thank you all for joining us on today's call. And once again, we have some exciting performance to announce.

I'm very proud to report that Iradimed achieved its 18th consecutive quarter of record revenue, with the fourth quarter of 2025 reaching $22.7 million, a 17% increase over the fourth quarter of 2024 and exceeding our prior guidance. For the full year 2025, we delivered record revenues of $83.8 million, which was up 14% year-over-year. Our GAAP diluted earnings per share for the quarter was $0.50, up 25%, and non-GAAP diluted earnings per share was $0.54, up 23%. For the full year, GAAP diluted earnings per share reached $1.75, which was up 17%, and non-GAAP diluted earnings per share was $1.93, up 16%. Gross margins remained strong at approximately 77% for the year and 75% for the Q4.

These results are reflective of solid execution across our product lines. MRI-compatible infusion pump systems, while still the legacy 3860 system, grew strongly. Sales of patient bioscience monitoring systems also grew very well, and disposable revenue increased with higher utilization. We also saw a meaningful contribution from the ferromagnetic detection system.

Allow me now to recap the expectations for the new 3870 MR IV pump. Recall that in positioning this new product and its pricing, we anticipate 3870 pump deal ASP will increase 10% to 14%. And yes, the 3870 design is much -- is such that we fully expect to penetrate the greenfield opportunities more effectively and also increase utilization among existing customers who may currently only use their older pumps sporadically.

But to be very clear, the most significant increase comes from the large replacement opportunity, which is the #1 driver we see and will deliver a significant step change in revenue, continuing to be our key growth driver for the next several years.

Recall how the older 3860 model delivered approximately 20% growth in fiscal 2025, driven by simply limiting our extended maintenance offering to pumps under 7 years old. This minor change generated replacement [ urge ] for only a portion of pumps in that age group, but that portion resulted in significant revenue growth from pump sales in 2025. That being the old one.

The promising news is that there remain a majority of these 7-plus year-old pumps to be replaced, plus many more that are 5 years and older. In the U.S. market alone, there are approximately 6,400 5-plus-year-old 3860, 3861 pump channels that are up for replacement. We currently sell approximately 1,100 such channels annually into the domestic market. And we'll be targeting adding an additional 1,000 channels per year through replacement sales from those existing 6,400 units that are over 5 years old. This will be our target starting in Q2 and continuing through the rest of 2026. It's also important to understand that replacing only 1,000 channels per year leaves many thousands more to be replaced over the coming years.

For our domestic business only, selling north of 2,038 70 pump channels annually, with the higher anticipated ASP, we expect to approach a $50 million annual revenue run rate for pumps. With the addition of disposables and maintenance, international sales and the MRI monitoring business, one can understand our confidence in achieving a $100 million-plus revenue run rate during 2026.

As planned, in December, we delivered an initial order of 23 3870 systems, for which we are providing an extraordinary level of clinical support and monitoring through February and into early March, in an effort to make sure that the most stable and highest-quality exists in the device before the larger general sales release which shall start in April. Bearing in mind the time required for our hospital customers to be sold, approve funding, issue orders and such, we expect bookings to build in this Q2 and ramp significantly in the second half of the year.

We expect to maintain quarterly revenue in the first half of 2026 driven by growth in MRI monitoring and our 3860 pump backlog. But also anticipate booking strength of the 3870 systems, which will result in those initial shipments in April of approximately 100 to 130 3870 pump channels.

I'd like to turn the call over to Jack Glenn, our CFO, to review the quarter's financial results. Thanks, Jack.

Thank you, Roger, and good morning, everyone. As in the past, our results are reported on a GAAP basis and a non-GAAP basis. You can find a description of our non-GAAP measures in this morning's earnings release and a reconciliation to GAAP on the last page.

For the 3 months ended December 31, 2025, revenue was $22.7 million, up 17% from $19.4 million in the fourth quarter of 2024. This growth was driven by strong performance across all of our product lines, with MRI-compatible IV infusion pump systems contributing $9.1 million, up 20% year-over-year, and patient vital signs monitoring systems contributing $7.1 million, up 7.5%. Disposable revenue grew 18% to $4.3 million, reflecting the continued increase in utilization of our devices, while ferromagnetic detection systems also saw solid gains.

For the full year 2025, revenue reached $83.8 million, up 14% from $73.2 million in 2024. Domestic sales accounted for 81% of total revenue in the fourth quarter and 84% for the full year, reflecting consistent strong U.S. performance, especially in the domestic pump business.

Gross profit for the quarter was $17 million with a margin of 75%. And for the full year, gross profit was $64.3 million with a margin of approximately 77%, consistent with 2024.

Operating expenses for the quarter were $9.9 million and, for the full year, $38.2 million, reflecting higher general and administrative expenses to support growth along with modest increases in sales and marketing and R&D.

Income from operations for the quarter was $7.1 million and, for the full year, is $26.1 million. Tax expense for the quarter was $1.3 million, resulting in an effective tax rate of 17.3%. The decrease in the effective tax rate for the quarter was primarily due to a true-up based on our year-end tax provision, with our effective tax rate for the year at 20.7%, lower than our previously estimated 22%.

Net income for the quarter was $6.4 million or $0.50 per diluted share, up 25%. Non-GAAP net income, $7 million or $0.54 per diluted share, up 23%. For the full year, net income was $22.5 million or $1.75 per diluted share, up 17%; and non-GAAP, $24.8 million or $1.93 per diluted share, up 16%.

We ended the year with cash and cash equivalents of $51.2 million. Cash flow from operations was $5.9 million for the quarter and $24.9 million for the full year. Non-GAAP free cash flow was $5.5 million for the quarter and $16.5 million for the year after capital expenditures primarily related to the new facility.

And with that, I will now turn the call over to questions. Operator?

[Operator Instructions] One moment for our first question. It comes from the line of Frank Takkinen with Lake Street Capital Markets.

Congrats on a solid finish to the year. Roger, I was hoping I could start with just some anecdotal thoughts around the initial market feedback from the pilot in the year. What can you tell us? What has the feedback been? And how has this influenced your decision to scale the 3870 launch in the second quarter here -- or first and second quarter here?

Good question. Frank, good to talk to you. So while it's been very positive, so maybe I should give a little more color. We've been showing the pump to more people than just that first taker of the 23 pumps. We actually have orders that we have on the books already, maybe, I don't know, another 15 or 20 pumps that are on order already. So we just launched this to our sales force a week before last, I believe it was. And so up until that time, we had some maybe 3 or 4 specialists in our sales team during November and December even showing the product to some select customers. So the feedback has been pretty tremendous.

To go specifically to our, lack of a better word, let's call it beta site. It's not really a beta site, but the first user, they have approved FDA products, so it's not really a beta. But we shipped it to them and then hold off keeping these existing orders that we have already booked, and as I said, holding off launching it to the greater sales team until 2 weeks ago, to learn from that. So that's a user who's been using our 3860, the older pump, for a long while. And I guess, I mean, they're pretty excited with the changes in the new pump.

The people we've showed it to, that are familiar with using the old pump are pretty excited about the new pump, I guess, it's simple enough to say. I had one of our -- an anesthesiologist was just in here last week from one of our long time large users up in the Boston area, and she's very familiar with using the pump daily in the MRI environment. Very excited, very excited about the changes.

So the product's products really sexy. It's very -- it just presses the button. It's quite modernized, right? The old pump was -- the genesis of that design is almost 20 years old. So this represents a big, bold new step. And lots of folks are excited. We're really thinking that demand will be great. And so we just wanted to do this a couple of months test with this one first single large user and make sure we have everything polished up just right because it's going to hit hard once it starts to ship.

Yes, that's very helpful. Maybe one for Jack on the gross margin profile. How should we think about gross margin scaling? I assume there's a subscale period. And then as that production is running and then that improves over time. But maybe any incremental color you could give us on how gross margin should trend throughout the year, would be helpful.

Sure. I think that initially in the early part of the year, the first half, it will probably be in kind of in line with where we have been. But we anticipate that as we get into the second half of the year on those higher volumes, which we certainly are looking for, along with, as Roger pointed out, the -- what we're looking for is the higher ASP as well, that we would think that we could certainly trend a little bit higher in the second half of the year.

Now having said that, I mean, we hit the quarters previously around 78%. That might be kind of in that range certainly, but maybe possibly as time goes on, a little bit better. But that's certainly our plan.

Got it. That's helpful. And then last one, at the risk of getting over our skis, what's next for the R&D team now that the 3870 is launched and beginning to scale? Is there -- what's the R&D team up to next? And how should we think about that effort?

No respite, huh, Frank? Well, actually, we've been -- we've already started a few months ago working on the facelift, let's call, our next-generation MRI monitors. So the monitor we have now, we launched about, what, 7 years ago. So we plan to have a new updated monitor on the market in 2028. So we've been working on that a good 6 months already. And that's the next thing on the road map.

Our next question comes from Kyle Bauser with ROTH Capital Partners.

Roger and Jack, great results. Maybe on disposables and services, they were up very nicely in the quarter. Can you talk a little bit about strength here and the primary drivers that the growth rate looked outsized compared to in the recent past?

Yes, sure. I can touch on that a little bit. I think on a disposable basis, we've kind of already said that we would think that the growth will be kind of commensurate with the capital side of things, hopefully, right? And so that kind of is reflected in that.

The one thing I would point out going forward is we believe that we can hopefully increase that utilization with the 3870. And a lot of that is based on is what we've talked about the user interface and so forth. And so hopefully, we can continue to grow it like that, but maybe even a little bit higher as we -- as time goes on with the 3870.

Okay. Makes sense. And for the 3860, how do inventory levels look? What's the backlog? Do you still kind of feel like it'll be good through Q2? Just wanted to check in on how levels look there.

Yes. I mean from an inventory standpoint, we're managing that 3860 as best we can, right? We don't want to have too much that we mixed the transition over, but we want to make sure that we can fulfill that backlog as we move forward. So we're monitoring that very closely. I think we're in pretty good shape there. But yes, going forward, certainly -- and we're bringing in that 3870 inventory, and that's reflected in the inventory numbers you see in Q4 as the increase in inventory as we brought in quite a bit of that 3870 in anticipation of the shipments. But certainly, it's going to be -- the challenge will be as we manage that transition over from the 3860 to 3870, and a lot of that will be in Q2.

Okay. Got it. And then, Roger, following up on Frank's question just about early feedback, has there been any changes or [ audibles ] you've had to call or tweaks? Or has it been pretty smooth and you feel like you kind of understand where the market is at and if the product is ready to go for the full launch?

We anticipate -- I mean that's why we did this like preview launch, is to get -- real users in the [ tranches ] feedback and make final tweaks. So we are. We've been making some tweaks here and there and making it just optimal for these -- our target user. That's the point of this prelaunch.

Got it. And then lastly, can you provide any updates on the regulatory process for 3870 into Europe and Japan? Does this still feel like kind of late '26 events here?

Yes. That will be -- CE Mark in the end of the year. So yes, we're working on Japan, but Japan also takes some time. Probably won't be cleared in Japan until next summer time.

Okay.

Not this summer. The following summer.

Following summer. Right. Got it. Okay. Well, really impressive results, and I appreciate you taking my questions.

Thank you. And this will conclude our Q&A session, and I will pass it back to Roger Susi for closing comments.

Thank you, operator, and thank you all once again for joining today's call. And we look forward to displaying Iradimed's ability to execute launch of our exciting new 3870 MR IV pump systems and to capitalize upon the huge replacement opportunity throughout 2026 and beyond utilizing the expanded capacity of our beautiful new facility here in Orlando, Florida. So thank you.

This will conclude our call for today. Thank you. You may now disconnect.

Welcome to the IRADIMED CORPORATION Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] This call is being recorded today, November 3, 2025, and contains time-sensitive accurate information that is valid only for today.

IRADIMED released its financial results for the third quarter of 2025. 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 on the company's website at iradimed.com, and a replay will be available for the next 90 days.

Some of the information in today's session will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements 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 in 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.

I would now like to turn the call over to Roger Susi, President and Chief Executive Officer of IRADIMED Corporation. Mr. Susi?

Thank you, operator. Good morning, and thank you all for joining us on today's call. I am indeed very proud to report that IRADIMED achieved its 17th consecutive quarter of record revenue with the recent third quarter surpassing the 2024 third quarter by 16%.

In the third quarter of 2025, we achieved revenue of $21.2 million. Our gross profit came in at 78% and earnings remained strong with GAAP diluted earnings per share increasing 8% from Q3 of '24. Pump shipments again led performance in the quarter as our 3860 MRI IV pump grew another 20% year-over-year in Q3. Our MR monitor sales have also continued to impress. I am also pleased to report that shipments of our MRI patient monitor grew by 16%, clearly showing that our emphasis on monitoring sales for 2025 is proving successful.

Next, I want to touch on the planned rollout and commercial launch of the new 3870 MRI IV pump system, which was cleared in Q2. Let's recap what I have been saying about the #1 growth driver for the new 3870 pump. But first, yes, we anticipate a price increase of 10% to 14%. And yes, the 3870 design is such that we fully expect to penetrate the greenfield opportunity more effectively and also drive increased utilization among some of the existing customers who only use their older pumps rather sporadically. But most significant increases come from the large replacement opportunity, which is the #1 driver we see step changing the pump revenue and will continue to be our key growth driver in pump area for several years to come.

It is very telling that even the old 3860 model delivered 20% growth in the third quarter. This is driven mainly by limiting, again, our extended maintenance offering to pumps under 7 years old -- to 2 pumps rather under 7 years old, which has brought in replacement orders for about 1/3 of the pumps in that 7 and up age group. With the new state-of-the-art 3870 pump having 20 years of technological advancement over the aging 3860, we anticipate a significant demand to replace the very large pool of older 3860 model pumps starting now at the 5-year and older level.

Consider that in the U.S. market alone, there are approximately 6,300 5-plus year old or older 3860, [ 61 ] pump channels up for replacement. And we currently sell approximately 1,000 such channels annually in the domestic market. We will target adding another 1,000 channels per year in sales through replacement sales out of that existing 6,300 units that are over 5 years -- that are over 5 years old. This will be our target starting in Q2 and throughout the rest of 2026.

And as you can see, replacing 1,000 channels per year leaves many thousands more to replace in the years to come. To put numbers to this opportunity for our domestic business only, selling north of 2,000 3870 pump channels annually at a slightly higher anticipated ASP, we would be approaching nearly a $50 million revenue run rate for pumps. Adding disposables and maintenance, international sales and the MR monitoring business, one can understand our confidence in breaking into the $100-plus million revenue range.

I'd like to provide our thoughts as to timing on the rollout of the 3870. In December, we will deliver an initial order of 23 3870 systems, for which we will provide an extraordinarily level -- extraordinary high level of clinical support and monitoring of the use of the pumps through January and February to review and adjust planning based on user input. The full sales team rollout in the U.S. will begin after the national sales meeting in the third week of January.

Given the time required for our hospital customers to be sold, approve funding and issue orders, we expect bookings to build beginning in Q2 and ramp significantly in the second half of the year. We expect to maintain quarterly revenue in the first half of 2026 through the increasing MRI monitoring business and our 3860 pump backlog.

Now let's discuss our updated financial guidance. For the fourth quarter of 2025, we expect revenue now of $21.4 million to $22.4 million and anticipate GAAP diluted earnings per share of $0.43 to $0.47 and non-GAAP diluted EPS of $0.47 to $0.50. For the full year 2025, we are raising our guidance to $82.5 million to $83.5 million, up from our prior range of $80 million to $82.5 million.

GAAP diluted earnings per share is now expected to be $1.68 to $1.72, up from $1.60 to $1.70. And non-GAAP diluted earnings per share is expected is $1.84 to $1.88, up from $1.76 to $1.86. We also remain committed to delivering value through our $0.17 per share quarterly dividend declared for Q4 and payable on November 25.

I'll turn over the call to Jack Glenn, our CFO, now, to review the quarter's financial results. Jack?

Thank you, Roger, and good morning, everyone. As in the past, our results are reported on a GAAP basis and non-GAAP basis. You can find a description of our non-GAAP operating measures in this morning's earnings release and a reconciliation of these non-GAAP measures to GAAP measure on the last page of today's release.

For the 3 months ended September 30, 2025, we reported revenue of $21.2 million, a 16% increase from $18.3 million in the third quarter of 2024. This growth was driven by strong performance across our product lines with MRI compatible IV infusion pump systems contributing $8.3 million, up 20% year-over-year and patient vital signs monitoring systems contributing $6.9 million, up 16%. Disposable revenue grew 12% to $4.1 million, reflecting increased utilization of our devices, while ferromagnetic detection systems also saw solid gains.

Domestic sales increased 19% to $18.1 million and international sales remained consistent at $3.1 million. Overall, domestic revenue accounted for 85% of total revenue for Q3 2025 compared to 83% for Q3 2024.

Gross profit was $16.4 million, up 16% from $14.1 million in Q3 2024, with a gross margin of 78% compared to 77% in Q3 of 2024. The strong margin performance was especially noteworthy as we moved manufacturing operations into the new facility at the beginning of the quarter and stayed on track with our shipment and cost of goods sold targets.

Operating expenses for the quarter were $9.7 million, up 15% from $8.4 million in Q3 of 2024, driven by higher sales and marketing expenses to support our growth and modest increases in general and administrative costs and research and development expenses. The increase in sales and marketing expenses was primarily due to higher sales commissions for our direct sales force in the U.S. as they exceeded their bookings plan in the quarter.

Income from operations grew 17% to $6.8 million from $5.8 million in Q3 of 2024. Tax expense for the quarter was $1.7 million, resulting in an effective tax rate of 23.6%. The increase in the effective tax rate was primarily due to a catch-up in the quarter with our projected effective tax rate for the year now estimated at 22%.

Net income was $5.6 million or $0.43 per diluted share, a 12% increase from $5 million or $0.40 per diluted share in Q3 of 2024. On a non-GAAP basis, net income was $6.1 million or $0.47 per diluted share, up 9% from $0.43, excluding $0.5 million of stock-based compensation expense net of tax.

Now turning to our balance sheet. We ended the quarter with cash and cash equivalents of $56.5 million, up from $52.2 million at year-end 2024. Cash flow from operations was a strong $7 million for the quarter and $19 million year-to-date. Free cash flow, on non-GAAP measure, was $5.7 million for the quarter and $11 million year-to-date, reflecting capital expenditures of $8 million year-to-date, primarily related to the new facility. Final payments totaling approximately $1.3 million for the facility were made in the third quarter, bringing the total construction cost to approximately $13.3 million.

And with that, I will now turn the call over for questions. Operator?

[Operator Instructions] Our first question is going to come from the line of Frank Takkinen with Lake Street Capital Markets.

Congrats on the solid quarter and all the progress. I was hoping we could start with some more color around the kind of bridge to $50 million run rate in pumps. I appreciate the timing you laid out related to sales meeting, launching after that in January and then ramping the backlog in Q2 through mid-2026. When should we expect that to flow through to kind of revenue to that $50 million run rate? Can we see that in late '26? Or is that more of a 2027 event?

We should -- yes, Frank, it's Roger. Maybe I'll pick it up first and let Jack jump in if he has some more color for you. As I said, most of that -- given that we start pounding the pavement shall we say, to sell 3870 here in me mid-January, the early part. But by the time they get out there, you're basically half of Q1. And as I mentioned, orders don't just immediately get turned around even from people that are -- we think are pretty well pent up with desire to get a new pump now after at least 20 years of 3860.

So yes, the story is in the back half of 2026 for revenue. We anticipate bookings and so forth, that we'll be able to report on in the first half, certainly. But the real revenue will start to ramp up in the third and fourth quarter. And so yes, by that fourth quarter, we think it will be pretty clear that we're doubling the number of pump channels that we're booking certainly and the revenues should start to reflect that as well.

Got it. That's helpful. And then I wanted to follow up on one comment in the press release. I think it was along the lines of despite some inefficiencies with the transition, we maintained a 78% gross margin. Quite honestly, I figured that would be followed with our gross margin was negatively impacted and below expectations, but that was still above expectations. Is it may be kind of hinting at the fact that you can get even better gross margins out of this product potentially into the 80%? Or how should we kind of read through on that inefficiencies and how that impacted the quarter?

Well, I think it shows that we did a great job. transition, moving the entire operation across Orlando essentially and getting it plugged in and running again, that we didn't have any glitch negatively impacting revenues and subsequently cost of goods. And -- but I think the real impact there is that the revenue -- the stuff that we didn't ship out by and large, in Q3 was heavily domestic. And so that is probably what accounts for that 1% boost in the gross margin. So can it be sustained? Well, as we get quarters where domestic business is a little bit on the lesser side from international business, that will fluctuate probably by that point.

Our next question comes from the line of Kyle Bauser with ROTH Capital Partners.

Congrats on the great results. Maybe we can talk a little bit about inventory levels for 3860 and 3870. Maybe first on 3860. Obviously, demand is still very strong here. It doesn't sound like any air pockets, which is impressive. Is pricing stable on that? Or are you planning on maybe sort of providing any sort of discounted levels there as you kind of roll out that inventory and move into 3870?

Kyle, nice to have you on board here with us. By the way, and hope to meet face-to-face soon. But to answer your question, the question is simple, no. No. We haven't -- it's surprising maybe, but yes, that boost -- that gift that keeps on giving from these old 3860 pump orders is straight at the ASPs we've always enjoyed, no discounting, no, haven't done that.

Great. Great to hear. And maybe on -- how are you thinking about inventory levels for 3870 ahead of the launch? And what are current levels? Or do you expect -- how do you expect to manage that, et cetera?

Well, there's lots of money going there. I'll let Jack pick that one up.

Sure. So good to hear from you, Kyle. So yes, as far as the inventory levels of 3860, certainly, we have the inventories and we'll plan the inventories for the backlog that we have currently with the 3860, which will be shipping throughout Q1 of next year and end of Q2, it looks like.

As far as the 3870, we are beginning those buys now. And so you'll see in Q4, there certainly -- we're building up inventory for those 3870s and now will be appropriate build for Q1 and beyond. And so certainly, we have the working capital from that perspective, no issues there.

Okay. Appreciate that. And I don't want to get ahead of myself here since you're just kind of beginning the rollout into the U.S. But can you remind me plans eventually to secure entry into international markets for 3870 and how you're kind of thinking about that?

Yes. It's primarily a regulatory issue. There's the new MDR requirements to maintain your CE Mark for European community business. That's a heavy lift, but our regulatory folks, they came off of a long battle with FDA, as you know, to clear the 3870, but that was back in May. They took a breather, but they're hot and heavy on obtaining that MDR, let's call it a clearance, but it's a registration where the CE Mark. And that will -- that's what we're targeting to be done in Q4. So international business will switch over to the 3870 next year, 2027, I should say, not in 2026. We'll just be getting the MDR towards the latter part of 2026.

Likewise, our other large market for pumps is Japan. And I'll be speaking with them. I'm in Japan calling on this call right now. I'm speaking to them here in the next day or 2 and working with the Japanese to clear the product here in Japan. We're going to do that simultaneously. But it probably still will be somewhere in the fourth quarter by the time we get that cleared. And then we'll switch Japan over. So both those largest international markets will be a 2027 kicked in.

Okay. Great. Appreciate that. And maybe just one more quick one. Glad to hear you're fully moved into the new facility. I think it's 2.5x the size of the previous facility. Correct me if I'm wrong. But any sense as to kind of what level of sales this could support or capacity, however you want to frame it?

Well, it is 2.5x the size. That's right. And we were doing $20 million a quarter out of that 2.5x smaller space. So the math of it's pretty equal. We don't see any reason why we can't get to $50 million a quarter in the new facility. And so yes, 2.5x. But unlike the old facility, we're not landlocked where we are.

As you might recall, Jack mentioned the cost of construction of the building that we did pay cash and we built it with our cash flow. But we also purchased the 26 acres. The building sits on about 5 of it, 5 or 6 of that. So there's lots of space around us that's ours to -- and the way we constructed the building was so it could easily be expanded into that adjacent space that we own.

So we have plenty of space without spending another nickel on any construction or buying more land. And to expand the production side of the building into the land that we already own is not that heavy of a lift. So we have, I guess, paid forward quite a ways these plenty capacity physically.

Thank you. And this will conclude today's question-and-answer session. And I would now like to turn the conference back over to Roger Susi for closing remarks.

Thank you, operator, and I thank you all once again for joining today's call and look forward to displaying IRADIMED's ability to execute once again as we introduce our new MRI IV pump and capitalize on the huge replacement opportunity throughout 2026 and beyond. Thank you.

Thank you. This concludes the call. You may now disconnect. Everyone, have a great day.