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 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.

Current wording

The following discussion and analysis should be read in conjunction with our unaudited 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 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.

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 September 30, 2024, our direct U.S. sales force consisted of 27 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.

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 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.

Current wording

Selling cycles for our devices have varied widely and have historically ranged between three and six months in duration. 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 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

Current wording

For the quarter ended September 30, 2024, our revenue increased by $1.8 million, or 11.0% to $18.3 million, compared to $16.5 million for the quarter ended September 30, 2023. Income before the provision for income taxes was $6.4 million for the quarter ended September 30, 2024, compared to $6.4 million for the quarter ended

Previous wording

was $4.9 million, or $0.38 per diluted share in the quarter ended June 30, 2024, compared to $4.2 million, or $0.33 per diluted share in the quarter ended June 30, 2023.

Current wording

September 30, 2023. Net income remained consistent at $5.0 million, or $0.40 per diluted share in the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023.

Previous wording

For the remainder of 2024, we expect higher revenue when compared to the same period in 2023 due to higher sales of our medical devices, related accessories, disposables, and services. We also expect higher operating expenses compared to the same period in 2023 primarily due to higher sales and marketing, regulatory, and general and administrative expenses.

Current wording

For the remainder of 2024, we expect higher revenue when compared to the same period in 2023 primarily due to higher sales of our medical devices, related accessories, disposables, and services. We also expect higher operating expenses compared to the same period in 2023 primarily due to higher sales and marketing, regulatory, and general and administrative expenses.

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 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

Current wording

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed financial statements, which we have prepared in accordance with GAAP. The preparation of these unaudited condensed financial 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 unaudited 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 assumptions or conditions.

Previous wording

Comparison of the Three Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three Months Ended and Nine Months Ended September 30, 2024 and 2023

Previous 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.

Current wording

For the three months ended September 30,2024, revenue increased by $1.8 million, or 11.0%, to $18.3 million from $16.5 million for the same period in 2023. This is attributed to continued demand for our IV Infusion Pump System, Disposables and extended warranty revenue.

Previous 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.

Current wording

Revenue from sales in the U.S. increased by $1.3 million, or 9.4%, to $15.2 million for the three months ended September 30, 2024, from $13.9 million for the same period in 2023. Revenue from sales internationally increased by $0.5 million, or 19.2%, for the three months ended September 30, 2024 to $3.1 million, from $2.6 million for the same period in 2023. Domestic sales accounted for 82.9% of revenue for the three months ended September 30, 2024, compared to 84.2% for the same period in 2023.

Previous 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.

Current wording

Revenue from sales of devices increased by $1.2 million, or 10.4%, to $13.0 million for the three months ended September 30, 2024, from $11.8 million for the same period in 2023.

Previous 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.

Current wording

Revenue from sales of our disposables, service and other increased by $0.5 million, or 11.9%, to $4.7 million for the three months ended September 30, 2024, from $4.2 million for the same period in 2023. Revenue from the amortization of extended warranty agreements increased by $0.1 million, or 15.0%, to $0.6 million for the three months ended September 30, 2024, from $0.5 million for the three months ended September 30, 2023.

Previous wording

For the six months ended June 30, 2024, revenue increased by $3.9 million, or 12.3 percent, to $35.5 million from $31.6 million for the same period in 2023. This is attributed to the increase in our IV Infusion Pump System, Patient Vital Signs Monitoring Systems, and Ferro Magnetic Detection System.

Current wording

For the nine months ended September 30, 2024, revenue increased by $5.7 million, or 11.9%, to $53.9 million from $48.1 million for the same period in 2023. This is attributed to the increase in our IV Infusion Pump System, Ferro Magnetic Detection System, Disposables, and extended warranty revenue.

Previous wording

Revenue from sales of devices increased by $3.2 million, or 15.1 percent, to $24.6 million for the six months ended June 30, 2024, from $21.4 million for the same period in 2023.

Current wording

Revenue from sales of devices increased by $4.4 million, or 13.4%, to $37.6 million for the nine months ended September 30, 2024, from $33.2 million for the same period in 2023.

Previous wording

Revenue from sales of our disposables, service and other increased by $0.6 million, or 6.7 percent, to $9.9 million for the six months ended June 30, 2024, from $9.3 million for the same period in 2023. Revenue from the amortization of extended warranty agreements increased by $0.1 million, or 6.9 percent, to $1.1 million from $1.0 million for the six months ended June 30, 2024 and 2023.

Current wording

Revenue from sales of our disposables, service and other increased by $1.1 million, or 8.5%, to $14.6 million for the nine months ended September 30, 2024, from $13.5 million for the same period in 2023. Revenue from the amortization of extended warranty agreements increased by $0.1 million, or 9.6%, to $1.6 million for the nine months ended September 30, 2024, from $1.5 million for the nine months ended September 30, 2023.

Previous 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.

Current wording

For the three months ended September 30, 2024 our cost of revenue increased by $0.4 million, or 12.3%, to $4.1 million from $3.7 million for the same period in 2023. For the three months ended September 30, 2024, our gross profit increased by $1.4 million, or 10.5%, to $14.2 million from $12.8 million for the same period in 2023. Gross profit margin was 77.4% for the three months ended September 30, 2024, compared to 77.8% for the same period in 2023. The decrease in gross profit margin is primarily due to a favorable inventory adjustment in prior year and current quarter geographic sales mix.

Previous wording

For the six months ended June 30, 2024, cost of revenue increased by $0.4 million, or 5.6 percent, to $8.1 million from $7.7 million for the same period in 2023. Gross profit increased by $3.5 million, or 14.6 percent, to $27.4 million for the six months ended June 30, 2024 from $23.9 million for the same period in 2023. Gross profit margin was 77.1 percent for six months ended June 30,2024, compared to 75.6 percent for the same period in 2023. The increase in gross profit margin is primarily due to decreased raw material costs, favorable geographic sales mix, and overhead spent as a percentage of revenue.

Current wording

For the nine months ended September 30, 2024, cost of revenue increased by $0.9 million, or 7.9%, to $12.3 million from $11.4 million for the same period in 2023. Gross profit increased by $4.9 million, or 13.2%, to $41.6 million for the nine months ended September 30, 2024 from $36.7 million for the same period in 2023. Gross profit margin was 77.2% for the nine months ended September 30,2024, compared to 76.4% for the same period in 2023. The increase in gross profit margin is primarily due to decreased raw material costs, favorable geographic sales mix, and overhead spent as a percentage of revenue.

Previous 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.

Current wording

For the three months ended September 30, 2024, general and administrative expense increased by $0.4 million, or 11.1%, to $4.0 million from $3.6 million for the same period in 2023. This increase is primarily due to higher legal and professional expenses, software maintenance, and increased payroll and benefit expenses.

Previous wording

For the six months ended June 30, 2024, general and administrative expense increased by $0.9 million, or 12.5 percent, to $8.1 million from $7.2 million for the same period last year. This increase is primarily due to higher legal and professional expenses, regulatory consulting, and payroll and benefits expenses.

Current wording

For the nine months ended September 30, 2024, general and administrative expense increased by $1.3 million, or 12.0%, to $12.1 million from $10.8 million for the same period last year. This increase is primarily due to higher legal and professional expenses, regulatory consulting, and payroll and benefits expenses.

Previous 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.

Current wording

For the three months ended September 30, 2024, sales and marketing expense increased by $0.9 million, or 31.0%, to $3.8 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 six months ended June 30, 2024, sales and marketing expense increased by $1.4 million, or 23.7 percent, to $7.3 million from $5.9 million for the same period last year. This increase is primarily due to higher sales commissions, sales activities expenses, and payroll and benefits expenses.

Current wording

For the nine months ended September 30, 2024, sales and marketing expense increased by $2.3 million, or 26.1%, to $11.1 million from $8.8 million for the same period last year. This increase is primarily due to higher sales commissions, sales activities expenses, and payroll and benefits expenses.

Previous 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.

Current wording

For the three months ended September 30,2024, research and development expense increased by $0.1 million, or 20.0%, to $0.6 million from $0.5 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

For the six months ended June 30, 2024, research and development expense decreased $0.2 million, or 11.1 percent, to $1.6 million from $1.8 million for the same period last year. This is primarily due to higher payroll and benefits expenses as well as prototype and consulting expenses related to the next generation pump.

Current wording

For the nine months ended September 30, 2024, research and development expense increased by $0.1 million, or 4.5%, to $2.3 million from $2.2 million for the same period last year. This is primarily due to higher payroll and benefits expenses as well as software maintenance, and consulting expenses related to the next generation pump.

Previous 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.

Current wording

Other income, net consists of interest income, foreign currency gains and losses, and other miscellaneous income. For the three months ended September 30, 2024, other income, net increased by $0.1 million, to $0.6 million from $0.5 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 six months ended June 30, 2024 and 2023, we reported other income, net, of $1.1 million and $0.7 million, respectively. The change is primarily due to interest received in 2023 on money market fund investments.

Current wording

For the nine months ended September 30, 2024 and 2023, we reported other income, net, of $1.8 million and $1.2 million, respectively. The change is primarily due to higher interest rates earned by money market fund investments.

Previous 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.

Current wording

For the three and nine months ended September 30, 2024, we recorded a provision for income tax expense of $1,368,830 and $3,843,834, respectively. Our effective tax rate was 21.3% and 21.4% for the three and nine months ended September 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

For the three and six months ended June 30,2023, we recorded a provision for income tax expense of $1,118,582 and $2,062,171 respectively. Our effective tax rate was 21.1 percent and 21.4 percent respectively and differed from the U.S. Federal statutory rate primarily due to U.S. Federal income tax expense partially offset by research and development tax credits.

Current wording

For the three and nine months ended September 30,2023, we recorded a provision for income tax expense of $1,341,352 and $3,403,523, respectively. Our effective tax rate was 20.9% and 21.2%, respectively, and differed from the U.S. Federal statutory rate primarily due to U.S. Federal income tax expense partially offset by research and development tax credits.

Previous wording

We file tax returns in the United States Federal jurisdiction and many U.S. state jurisdictions. To our knowledge, our returns are not currently under examination by the Internal Revenue Service. The Company remains subject to income tax examinations for our United States Federal and certain U.S. state income taxes for 2019 and subsequent years.

Current wording

On July 31, 2024, the Company received notice of examination from the U.S. Internal Revenue Service for the tax year ended December 31, 2021. We are currently complying with the taxing authority and believe our tax position for the year under review was appropriate and have not accounted for any proposed adjustments at this time. The Company remains subject to income tax examinations for our United States Federal and certain U.S. state income taxes for 2019 and subsequent years.

Previous 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.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $51.7 million, stockholders’ equity of $83.4 million, and working capital of $66.2 million. As of December 31, 2023, we had cash and cash equivalents 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 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.

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 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 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.

Current wording

Cash provided by operating activities increased by $10.0 million, to $19.6 million for the nine months ended September 30, 2024, compared to $9.6 million for the same period in 2023. During the nine months ended September 30, 2024, cash provided by operations was positively impacted by net income, lower inventory purchases, and reduced accounts receivable and negatively impacted by higher cash outflows related to accounts payable.

Previous 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.

Current wording

Cash used in investing activities decreased by $1.6 million, to $5.8 million for the nine months ended September 30, 2024, compared to $7.4 million for the same period in 2023. For the nine months ended September 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. The majority of our 2024 spend in investing activities is attributed to construction costs of our new facility on the aforementioned land.

Previous 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.

Current wording

Cash used in financing activities decreased by $1.5 million, to $11.9 million for the nine months ended September 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.

Previous wording

Our current manufacturing and headquarters facility has been leased from Susi, LLC, an entity controlled by our Chairman of the Board and Chief Executive Officer, Roger Susi. Pursuant to the terms of our lease, the monthly base rent is $34,133, adjusted annually for changes in the consumer price index.

Current wording

Our current manufacturing and headquarters facility has been leased from Susi, LLC, an entity controlled by our President, Chief Executive Officer, and Chairman of the Board, Roger Susi. Pursuant to the terms of the Lease Amendment, the monthly base rent is $34,133, adjusted annually for changes in the consumer price index.