Welcome to IRADIMED CORPORATION First Quarter of 2024 Financial Results Conference Call. This call is being recorded today, May 2, 2024, and contains time-sensitive accurate information only today. Earlier, IRADIMED released its financial results for the first quarter of 2024. A copy of this press release announcing the company's earnings is available under the heading News on the website, iradimed.com. A copy of the press release was also furnished to the Securities and Exchange Commission on Form 8-K and can be found at sec.gov. This call is being broadcast live over the Internet on the company's website at iradimed.com. And a replay will be available on the website 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 focused 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 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 website at sec.gov. I would like to turn the call over to Roger Susi, President and Chief Executive Officer of IRADIMED CORPORATION. Mr. Susi?

Good morning. Thank you all for joining us on today's call. As recently reported, I'm once again very pleased to announce yet another consecutive quarter of record IRADIMED net revenue generated in our recent Q1 2024 quarter. This is our 11th revenue increase in a row. As this morning's press release announced, in the first quarter of 2024, revenue came in at $17.6 million, representing a 13.7% increase over the first quarter of '23. GAAP diluted earnings per share for the first quarter were $0.32. While non-GAAP diluted earnings were $0.36 per share, a 20% increase over Q1 of '23. All product lines performed well with our inside and outside teams executing exceptionally well. From the revenue standpoint in Q1, the MR patient monitor bested the IV pump and increased by 38% compared to Q1 of '23. However, this doesn't show the strength of one product line over the other as bookings for the MR IV pump product in Q1 greatly exceeded expectations. So we actually expect that in Q2, the table may turn in favor of pump revenue. As I previously discussed, we notified customers with pumps 7 years and older that our extended maintenance would no longer be offered for such older devices. This, as expected, has prompted the uptick in pump orders we've seen in Q1, which we hope to continue to see in the upcoming quarters as well. To be sure, our major products remain viable and fitting for their markets, while we continue to make inroads with our newer FMD product. Previously, I had spoken about reducing our delivery time for disposables and the associated reduction of backlog. Though as seen in financial disclosures, the disposable business remains strong and growing, we have managed to reduce the lead time of these products and continue to work to improve these lead times. Orders continue growing, but production is not outpaced. Along those lines, we recently began construction on our new 61,000 square foot manufacturing facility here in Orlando, Florida, to consolidate operations, improve efficiencies and prepare for the continued and expanding growth we foresee. We anticipate spending approximately $13 million on its development over the next 12 months. And we will keep you posted in these coming quarters as construction progresses towards a moving date. Now regarding the progress of our 510(k) submission for the new 3870 MRI IV pump, the team is focused and pushing very hard, yet we are still not quite there due primarily to some expanded testing. As previously reported, we have engaged a third-party consultant with 2 very recent ex-FDA reviewers on their staff, from whom we are getting excellent input. Their feedback has, however, driven us to repeat some of the previous tests, mainly because of devices under test for many months ago, and they have undergone some changes. Our ex-FDA consultants believe the FDA would be much more comfortable with all testing done on the absolute final configuration of the device. Therefore, the aim is to have the test reports reference the very latest version of the device, thus removing any questions; it is anticipated that these steps should impact the delivery of the 510(k) by approximately 9 to 10 weeks. We still remain on plan with expected clearance in Q1 2025 and plan to show the revenue from the new device in the back half of 2025. Now I'd like to present our expected financial performance guidance for the coming quarter and the balance of the year. For the second quarter of 2024 financial guidance, we expect revenues of $17.6 million to $17.8 million. GAAP diluted earnings per share of $0.33 to $0.36 and non-GAAP diluted earnings per share of $0.36 to $0.39. We reiterate our guidance for the full year of 2024. We expect to report revenues of $72 million to $74 million, with GAAP diluted earnings per share of $1.37 to $1.47 and non-GAAP diluted earnings per share of $1.52 to $1.62. Lastly, I'm pleased to report that our Board of Directors has declared a quarterly cash dividend of $0.15, payable on May 30, 2024. And we expect to pay the quarterly cash dividend going forward to reward our loyal shareholders. Now I'd like to turn the call over to Jack Glenn, our CFO, to review the quarter's financial results.

Thank you, Roger, and good morning, everyone. As in the past, our results have been reported on both a GAAP 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 the GAAP measure on the last page of today's release. As we reported earlier this morning, revenue in the first quarter of 2024 was $17.6 million, an increase of 14% compared to the first quarter of 2023. Domestic sales increased 12% to $13.4 million and International sales increased 20% to $4.2 million. Overall, Domestic revenue accounted for 76% of total revenue for Q1 2024 compared to 77% for Q1 2023. Device revenue increased 13% to $11.9 million, driven by a 38% increase in Monitor revenue. Revenue from Disposables and Services increased 17% to a record $5.2 million for the first quarter of 2024, while our maintenance contracts remained stable at $487,000. The gross margin was 76.1% for the first 2024 quarter compared to 75.7% for the 2023 quarter. The increase in gross margin is primarily due to increased revenue, decreased raw material costs, and direct labor efficiencies offset by overhead spending. Operating expenses were $8.6 million or 49% of revenue compared to $7.7 million or 50% of revenue for the first quarter of 2023. On a dollar basis, this increase is primarily due to higher sales and marketing expenses for higher sales commissions, sales activity expenses, and payroll and benefit expenses. As a result, income from operations grew 18.5% to $4.7 million for the 2024 first quarter. We recognized a tax expense of approximately $1.1 million during the first quarter of 2024, resulting in an effective tax rate of 21.1% for the quarter, which was in line with the effective tax rate of 20.9% in 2023. On a GAAP basis, net income was $0.32 per diluted share compared to $0.27 for the 2023 quarter. On a non-GAAP basis, adjusted net income was $0.36 per diluted share for the 2024 first quarter, compared to $0.30 for the first quarter of 2023. Cash from operations was $3.9 million for the 3 months ending March 31, 2024, down from $4.6 million for the same period in 2023. For the 3 months ended March 31, 2024, our free cash flow, a non-GAAP measure, was $3.4 million. This compares to a negative free cash flow figure of $1.9 million in the first quarter of 2023 when we purchased the land for our future facility for $6.2 million. Our cash and cash equivalents totaled $45.1 million as of March 31, 2024. And with that, I will now turn the call over to the operator for questions.

Our first question comes from Jason Wittes of ROTH Capital Partners.

In terms of the Monitor business, yes, it did look quite strong, obviously. Have you sent any communications to the field about your Monitors and about the competition that may have spurred on some growth in this quarter?

Jason, it’s great to hear from you. I’m not entirely sure I understand your question. Could you please repeat it?

I understand that you have indicated to your customers that you will stop servicing the pumps after seven years. Have you made any similar announcements regarding Monitors that could have contributed to growth? The growth this quarter was unexpected, so I am curious about what might have driven it or your thoughts on the matter.

No, it may have been overlooked in my earlier comments when I mentioned that there isn't significant strength of one product line, whether it be pumps or monitors, over the other. It's primarily a matter of timing. However, we absolutely would not issue any kind of notice declaring any part of the Monitor obsolete, including support. We haven't even been selling them for five years. So, I want to emphasize that the growth is simply due to the strength of the team selling monitors.

Sounds good. Yes, it's impressive. It was a strong number, much stronger than I was anticipating. And then in terms of what you said about the submission for the 510(k) for the new pump, I guess that would put it I think originally, it was last communication, it was sort of expected second quarter. And now I guess that you're saying 9 to 10 weeks, I guess that would put it into the third quarter in terms of when you would submit that 510(k)?

Yes, to put months on it, we'd anticipated getting it out of here by the end of this month. That's what we've been focusing on. But with this curve ball here, it's an abundance of caution to redo some of these tests. And of course, then getting them scheduled has been a delay because we rely on third parties and all of that. So, yes, we think it's going to add about 9, 10 weeks to that. So that puts us somewhere very end of July or early August. We think of it more monthly rather than something that's tied to a quarter.

I appreciate that precision. It's good to hear that. Now, for a final question, the communication you put out seems to be driving growth in pumps. Can you provide any details regarding who has been upgrading or replacing their pumps? Are many of the pumps being replaced those that you communicated would no longer be serviced after seven years?

We anticipated that question just before the call. We don't have a definitive metric to provide you at this moment, but we will soon. We'll share that information with you. Generally, this represents a significant portion of the bookings I mentioned, which saw a considerable increase in Q1. Much of it is attributed to that. As I mentioned, we will have some numbers to share with you shortly.

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

Roger, Jack, congrats on a good start to the year. I was hoping to ask one on the guidance. Obviously, you had a nice outperformance versus your Q1 expectations, and then you kind of hinted at the expectation for pumps to be strong next quarter from some of the Q1 ordering. I was curious kind of the thought process you went through when thinking about slightly increasing the guidance versus reiterating it? Was it just a function of conservatism? Or was there anything else baked into that thought process?

Well, I think, Chris, that yes, based on our past experience, we've tried to be somewhat conservative in the guidance we give. The second half of the year certainly presents much larger numbers to reach our goals. However, we feel confident. As we move through the year, we may provide updates, but for now, we believe it's best to maintain our existing guidance for the year.

Perfect. So, concerning the backlog, I understand that you have reduced some of the disposable backlog, but the commentary about the pumps may have led to an increase in pump backlog. Can you clarify the total backlog, how much visibility you have, and how that gives you confidence for the remainder of the year?

Well, of course, we don't give the exact numbers, as you know. But again, it's probably very much in line with where the backlog was as we came into the end of the year. So remains strong, gives us good visibility, for at least a quarter out for sure, but very strong and stable backlog. And especially, again, a lot of that too, due to the pump backlog going into this Q2.

Yes. Maybe to add a little more color, Frank, to the topic, though we are trying to shave that lead time and associated backlog with the disposable side, which we're making progress, as I said. Yes, due to the orders on the hardware side, what Jack is saying is that the backlog remains pretty consistent as it's been in the last half a dozen quarters.

Got it. That's helpful. And then maybe just one more for me on the Monitor side. I think, Roger, we've talked about in the past, the day-to-day business or quarter-to-quarter business, you talk about the active systems being replaced on the Monitor side and your share of that market and then the broader 10,000 or so pieces of equipment installed. Maybe just give us an update on how you feel you're penetrating those? How you feel about the low-hanging fruit opportunity still existing within those? And just anything else you could talk about in those monitoring markets.

Yes, that's a good question. We still haven't captured the majority of the market and remain in an underdog position, meaning there's a lot of potential ahead. We estimate that we have reached about 30 percent of this business, so there is still much more for us to achieve. With every small percentage gain against a well-established competitor, the easier opportunities are a bit harder to reach. Our team is working diligently to advance beyond previous quarters. We're continuing to focus on capturing our share within the Monitor business, which generally corresponds with magnets. We've had some favorable developments; the real potential lies in leveraging the transport strategy we applied with the pumps to the monitors. We may need to add a feature or two to the pumps to enhance this process, but we are already seeing some interest. Each quarter, we are bringing in monitors that are sometimes linked to additional magnets, and we're beginning to see interest in this transport concept, which will be officially implemented in the coming quarters. For now, we are concentrating on optimizing our existing monitor placements, and we anticipate sustaining a solid performance for several more quarters with our current strategy. Eventually, we plan to implement this transport strategy and amplify the impact of the monitors, so that it isn't just one monitor per MRI.

This concludes the question-and-answer session. I would now like to turn it back to Roger Susi for closing remarks.

Well, thank you, operator. Good. Again, we are pleased with our Q1 2024 results, as stated. And we also say, as guided, that we expect continued strong performance as the new year progresses. So we look forward to reporting our future successes to you, and thank you all.

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