IRADIMED CORP

Previous wording

The following discussion and analysis should be read in conjunction with our condensed financial statements and the related notes to those statements included in this Quarterly Report, the discussion of certain risks and uncertainties contained in Part II, Item 1A of this Quarterly Report, the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in the 2023 Annual Report and the cautionary information regarding forward-looking statements at the beginning of this Quarterly Report.

Current wording

The following discussion and analysis should be read in conjunction with our condensed financial statements and the related notes to those statements included in this Quarterly Report, the discussion of certain risks and uncertainties contained in “Part I, Item 1A, Risk Factors” of this Quarterly Report, the discussion under “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part I, Item 1. Business” included in the 2023 Annual Report and the “Cautionary Statements Regarding Forward-Looking Statements” section at the beginning of this Quarterly Report.

Previous wording

We develop, manufacture, market and distribute Magnetic Resonance Imaging (“MRI”) compatible medical devices and accessories, disposables and services relating to them.

Current wording

We develop, manufacture, market and distribute MRI compatible medical devices and accessories, disposables and services relating to them.

Previous wording

We generate revenue from the sale of MRI compatible medical devices and accessories, extended warranty agreements, services related to maintaining our products and the sale of disposable products used with our devices. The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the United States and internationally. As of March 31, 2024, our direct U.S. sales force consisted of 26 field sales representatives, 4 regional sales directors and supplemented by 8 clinical application specialists. Internationally, we have distribution agreements with independent distributors selling our products.

Current wording

We generate revenue from the sale of MRI compatible medical devices and accessories, extended warranty agreements, services related to maintaining our products and the sale of disposable products used with our devices. The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the United States and internationally. As of June 30, 2024, our direct U.S. sales force consisted of 28 field sales representatives, 4 regional sales directors and supplemented by 7 clinical application specialists. Internationally, we have distribution agreements with independent distributors selling our products.

Previous wording

Selling cycles for our devices have varied widely and have historically ranged between three and six months in duration with more recent trends lengthening beyond this historical range due to lingering pandemic issues. We also enter into agreements with IDNs and healthcare supply contracting companies, which are commonly referred to as GPOs in the U.S., which enable us to sell and distribute our products to their member hospitals. GPOs negotiate volume purchase prices for hospitals, group practices, and other clinics that are members of a GPO. Under our GPO agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO. Sales to participating IDNs do not have an associated fee.

Current wording

Selling cycles for our devices have varied widely and have historically ranged between three and six months in duration with more recent trends lengthening beyond this historical range due to lingering pandemic issues. We also enter into agreements with integrated delivery networks (“IDNs”) and healthcare supply contracting companies, which are commonly referred to as group purchasing organizations (“GPOs”) in the U.S., which enable us to sell and distribute our products to their member hospitals. GPOs negotiate volume purchase prices for hospitals, group practices, and other clinics that are members of a GPO. Under our GPO agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO. Sales to participating IDNs do not have an associated fee.

Previous wording

For the quarter ended March 31, 2024, our revenue increased $2.1 million, or 13.7 percent, to $17.6 million, compared to $15.5 million for the quarter ended March 31, 2023. Income before the provision for income taxes was $5.2 million for the quarter ended March 31, 2024, compared to $4.3 million for the quarter ended March 31, 2023. Net income was $4.1 million, or $0.32 per diluted share in the quarter ended March 31, 2024, compared to $3.4 million, or $0.27 per share in the quarter ended March 31, 2023.

Current wording

For the quarter ended June 30, 2024, our revenue increased by $1.8 million, or 11.2 percent, to $17.9 million, compared to $16.1 million for the quarter ended June 30, 2023. Income before the provision for income taxes was $6.3 million for the quarter ended June 30, 2024, compared to $5.3 million for the quarter ended June 30, 2023. Net income

Previous wording

The discussion and analysis of our financial condition and results of operations are based on our consolidated

Current wording

The discussion and analysis of our financial condition and results of operations are based on our condensed

Previous wording

financial statements, which we have prepared in accordance with GAAP. The preparation of these consolidated financial

Current wording

financial statements, which we have prepared in accordance with GAAP. The preparation of these condensed financial

Previous wording

statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable

Current wording

statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements as well as the reported revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different

Previous wording

We believe that the estimates, assumptions and judgments involved in the accounting policies described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations*”* in Part II,

Current wording

We believe that the estimates, assumptions and judgments involved in the accounting policies described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations*”* of our 2023 Annual Report have the greatest potential impact on our financial statements, so we consider them to

Previous wording

be our critical accounting policies and estimates. Except as disclosed in Note 1 to the unaudited condensed financial statements contained herein related to the adoption of recent accounting pronouncements, there have been no changes to these policies during the three months ended March 31, 2024.

Current wording

be our critical accounting policies and estimates. As of June 30, 2024, there were no material changes to the information provided regarding recent accounting pronouncements in Note 1 to the Financial Statements in the 2023 Annual Report.

Previous wording

For the three months ended March 31, 2024, revenue increased by $2.1 million, or 13.7 percent, to $17.6 million from $15.5 million for the same period in 2023. This is attributed to continued demand for our Patient Vital Signs Monitor, disposable sales, and service revenue.

Current wording

For the three months ended June 30, 2024, revenue increased by $1.8 million, or 11.2 percent, to $17.9 million from $16.1 million for the same period in 2023. This is attributed to continued demand for our IV Infusion Pump System and extended warranty revenue.

Previous wording

Revenue from sales in the U.S. increased by $1.4 million, or 11.9 percent, to $13.4 million for the three months ended March 31, 2024, from $12.0 million for the same period in 2023. Revenue from sales internationally increased by $0.7 million, or 19.8 percent, for the three months ended March 31, 2024 to $4.2 million, from $3.5 million for the same period in 2023. Domestic sales accounted for 76.2 percent of revenue for the three months ended March 31, 2024, compared to 77.4 percent for the same period in 2023.

Current wording

Revenue from sales in the U.S. increased by $2.6 million, or 20.2 percent, to $15.5 million for the three months ended June 30, 2024, from $12.9 million for the same period in 2023. Revenue from sales internationally decreased by $0.8 million, or 25.0 percent, for the three months ended June 30, 2024 to $2.4 million, from $3.2 million for the same period in 2023. Domestic sales accounted for 86.6 percent of revenue for the three months ended June 30, 2024, compared to 80.1 percent for the same period in 2023.

Previous wording

Revenue from sales of devices increased by $1.4 million, or 13.0 percent, to $11.9 million for the three months ended March 31, 2024, from $10.5 million for the same period in 2023.

Current wording

Revenue from sales of devices increased by $1.9 million, or 17.2 percent, to $12.7 million for the three months ended June 30, 2024, from $10.8 million for the same period in 2023.

Previous wording

Revenue from sales of our disposables, service and other increased by $0.8 million, or 17.5 percent, to $5.2 million for the three months ended March 31, 2024, from $4.4 million for the same period in 2023. Revenue from the amortization of extended warranty agreements was consistent at $0.5 million for the three months ended March 31, 2024 and 2023.

Current wording

Revenue from sales of our disposables, service and other decreased by $0.1 million, or 2.1 percent, to $4.7 million for the three months ended June 30, 2024, from $4.8 million for the same period in 2023. Revenue from the amortization of extended warranty agreements increased by $0.1 million, or 18.4 percent, to $0.6 million from $0.5 million for the three months ended June 30, 2024 and 2023.

Previous wording

For the three months ended March 31, 2024 our cost of revenue increased by $0.5 million, or 12.2 percent to $4.2 million from $3.8 million for the same period in 2023. For the three months ended March 31, 2024, our gross profit increased by $1.7 million, or 14.2 percent, to $13.4 million from $11.7 million for the same period in 2023. Gross profit margin was 76.1 percent for the three months ended March 31, 2024, compared to 75.7 percent for the same period in 2023. The increase in gross profit margin is primarily due to increased raw material costs and direct labor efficiencies offset by increased overhead spending.

Current wording

For the three months ended June 30, 2024 our cost of revenue remained consistent at $3.9 million for the same period in 2023. For the three months ended June 30, 2024, our gross profit increased by $1.8 million, or 15.0 percent, to $14.0 million from $12.2 million for the same period in 2023. Gross profit margin was 78.1 percent for the three months ended June 30, 2024, compared to 75.5 percent for the same period in 2023. The increase in gross profit margin is primarily due to decreased raw material costs, direct labor efficiencies, and favorable geographic sales mix.

Previous wording

For the three months ended March 31, 2024, general and administrative expense increased by $0.1 million, or 1.8 percent, to $4.0 million from $3.9 million for the same period in 2023. This increase is primarily due to higher regulatory, legal and professional expenses, and increased payroll and benefit expenses.

Current wording

For the three months ended June 30, 2024, general and administrative expense increased by $0.8 million, or 24.2 percent, to $4.1 million from $3.3 million for the same period in 2023. This increase is primarily due to higher regulatory, legal and professional expenses, and increased payroll and benefit expenses.

Previous wording

For the three months ended March 31, 2024, sales and marketing expenses increased by $0.8 million, or 27.6 percent, to $3.8 million from $3.0 million for the same period in 2023. This increase is primarily due to higher sales commissions, sales activities expenses, and payroll and benefits expenses.

Current wording

For the three months ended June 30, 2024, sales and marketing expense increased by $0.6 million, or 20.7 percent, to $3.5 million from $2.9 million for the same period in 2023. This increase is primarily due to higher sales commissions, sales activities expenses, and payroll and benefits expenses.

Previous wording

For the three months ended March 31,2024 and 2023, research and development expenses remained constant at $0.8 million. This is primarily due to us no longer allocating recently approved product parts related to the next generation pump to research and development, offset by increased payroll and benefit expenses. These approved parts are now included in raw material inventory.

Current wording

For the three months ended June 30,2024, research and development expense decreased by $0.2 million, or 20.0 percent, to $0.8 million from $1.0 million for the same period in 2023. This is primarily due to us no longer allocating recently approved product parts related to the next generation pump to research and development, offset by increased payroll and benefit expenses. These approved parts are now included in raw material inventory.

Previous wording

Other income, net consists of interest income, foreign currency gains and losses, and other miscellaneous income. For the three months ended March 31, 2024, other income, net increased by $0.2 million, to $0.5 million from $0.3 million for the same period in 2023. This increase is due to higher interest rates earned by money market fund investments that comprise a significant portion of our cash balances.

Current wording

Other income, net consists of interest income, foreign currency gains and losses, and other miscellaneous income. For the three months ended June 30, 2024, other income, net increased by $0.3 million, to $0.6 million from $0.3 million for the same period in 2023. This increase is due to higher interest rates earned by money market fund investments that comprise a significant portion of our cash balances.

Previous wording

For the three months ended March 31, 2024 and 2023, we recorded a provision for income tax expense of $1,106,968 and $943,589 respectively. Our effective tax rate was 21.1 percent and 21.7 percent for the three months ended March 31, 2024 and 2023, respectively, and differed from the U.S. Federal statutory rate primarily due to U.S. state income tax expense, partially offset by benefits from foreign derived intangible income and research and development tax credits.

Current wording

For the three and six months ended June 30, 2024, we recorded a provision for income tax expense of $1,368,036 and $2,475,004 respectively. Our effective tax rate was 21.8 percent and 21.5 percent for the three and six months ended June 30, 2024, respectively, and differed from the U.S. Federal statutory rate primarily due to U.S. state income tax expense, partially offset by research and development tax credits.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $45.1 million, stockholders’ equity of $76.1million, and working capital of $64.3 million. As of December 31, 2023, we had cash and investments of $49.7 million, stockholders’ equity of $71.4 million, and working capital of $59.7 million.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $48.5 million, stockholders’ equity of $79.7 million, and working capital of $66.1 million. As of December 31, 2023, we had cash and investments of $49.8 million, stockholders’ equity of $71.4 million, and working capital of $59.7 million.

Previous wording

We believe that our current cash, and any cash generated from operations will be sufficient to meet our ongoing operating requirements for at least the next 12 months and into the foreseeable future. We have acquired land from an unrelated third party and plan to make subsequent improvements thereon in the next two or so years to accommodate our increased operations and expand capacity. We anticipate using available cash for that investment in our future growth. We do not anticipate requiring additional capital; however, if required or desirable, we may seek to obtain a credit facility, raise debt, or issue additional equity in private or public markets.

Current wording

We believe that our current cash, and any cash generated from operations will be sufficient to meet our ongoing operating requirements for at least the next 12 months and into the foreseeable future. We have acquired land from an unrelated third party and plan to make subsequent improvements thereon in the next one to two years to accommodate our increased operations and expand capacity. We anticipate using available cash for that investment in our future growth. We do not anticipate requiring additional capital; however, if required or desirable, we may seek to obtain a credit facility, raise debt, or issue additional equity in private or public markets.

Previous wording

Cash provided by operating activities decreased by $0.7 million, to $3.9 million for the three months ended March 31, 2024, compared to $4.6 million for the same period in 2023. During the three months ended March 31, 2024, cash provided by operations was positively impacted by net income, inventory purchases, and payroll and benefits and negatively impacted by cash outflows related to accounts receivable, accounts payable, and cash outflows related to working capital items.

Current wording

Cash provided by operating activities increased by $2.3 million, to $10.5 million for the six months ended June 30, 2024, compared to $8.2 million for the same period in 2023. During the six months ended June 30, 2024, cash provided by operations was positively impacted by net income and inventory purchases, and negatively impacted by cash outflows related to accounts payable.

Previous wording

Cash used in investing activities decreased by $6.1 million, to $0.5 million for the three months ended March 31, 2024, compared to $6.6 million for the same period in 2023. For the three months ended March 31, 2024, we acquired land for $6.2 million in cash to be used for future office, assembly, warehouse, and shipping space to accommodate our increased operations and anticipated growth.

Current wording

Cash used in investing activities decreased by $5.2 million, to $1.7 million for the six months ended June 30, 2024, compared to $6.9 million for the same period in 2023. For the six months ended June 30, 2023, we acquired land for $6.2 million in cash to be used for future office, assembly, warehouse, and shipping space to accommodate our increased operations and anticipated growth.

Previous wording

Cash used in financing activities decreased by $5.3 million, to $8.0 for the three months ended March 31, 2024, compared to approximately $13.3 for the same period in 2023. In both periods, the Company paid special dividends to our stockholders; and in the 2024 period we commenced a regular quarterly dividend policy, subject to the sole discretion of the Company’s Board of Directors and applicable law.

Current wording

Cash used in financing activities decreased by $3.4 million, to $10.0 million for the six months ended June 30, 2024, compared to approximately $13.4 million for the same period in 2023. In both periods, the Company paid special dividends to our stockholders; and in the 2024 period we commenced a regular quarterly dividend policy, subject to the sole discretion of the Company’s Board of Directors and applicable law.