Welcome to the IRADIMED CORPORATION Third Quarter 2025 Financial Results Conference Call. 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 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 continued to impress. I am pleased to report that shipments of our MRI patient monitor grew by 16%, clearly showing that our focus on monitoring sales for 2025 is proving successful. Next, I want to discuss 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 main growth driver for the new 3870 pump. We anticipate a price increase of 10% to 14%. The design of the 3870 allows us to penetrate the greenfield opportunity more effectively, while also driving increased utilization among existing customers who use their older pumps less frequently. The most significant increases will come from the large replacement opportunity, which we see as the primary driver for pump revenue growth in the coming years. It's notable that even the older 3860 model delivered 20% growth in the third quarter. This growth has been fueled by limiting our extended maintenance offering to pumps under 7 years old, which has led to replacement orders for about one-third of the pumps in the older age group. With the advanced 3870 pump benefiting from 20 years of technological improvements over the aging 3860, we expect significant demand to replace the large pool of older pumps starting now with those 5 years and older. In the U.S. market alone, there are approximately 6,300 5-plus year old or older 3860 pump channels ready for replacement, and we currently sell about 1,000 such channels annually in the domestic market. We plan to add another 1,000 channels per year in sales through replacements from the existing 6,300 units. This will be our focus starting in Q2 and throughout the rest of 2026. Selling 1,000 channels per year still leaves many thousands more to replace in future years. To quantify this opportunity for our domestic business, selling over 2,000 3870 pump channels annually at a slightly higher anticipated average selling price would bring us close to a $50 million revenue run rate for pumps. Including disposables, maintenance, international sales, and the MR monitoring business, we are confident in reaching the $100-plus million revenue range. I’d like to provide our thoughts on the timing for the rollout of the 3870. In December, we will deliver an initial order of 23 3870 systems, for which we will offer high levels of clinical support and monitor usage through January and February to adjust our plans based on user feedback. The full sales team rollout in the U.S. will begin after the national sales meeting in the third week of January. Considering the time needed for our hospital customers to be sold, approve funding, and place orders, we expect bookings to start building in Q2 and ramp up significantly in the second half of the year. We expect to maintain quarterly revenue in the first half of 2026 through the growing MRI monitoring business and our backlog of 3860 pumps. Now let’s discuss our updated financial guidance. For the fourth quarter of 2025, we expect revenue of $21.4 million to $22.4 million, with GAAP diluted earnings per share anticipated at $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 previous range of $80 million to $82.5 million. GAAP diluted earnings per share is now expected to be $1.68 to $1.72, increased from $1.60 to $1.70. Non-GAAP diluted earnings per share is expected to be $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, payable on November 25. I'll now 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 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 measures 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 a 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.

Our first question will come from 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 the $50 million run rate in pumps. I appreciate the timing you laid out related to the 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 that $50 million run rate? Can we see that in late '26? Or is that more of a 2027 event?

It's Roger. I'll start off and let Jack add any additional insights later. As I mentioned, we will begin actively selling the 3870 model in mid-January. By the time we start selling, we'll already be halfway through Q1. Additionally, orders won't be processed immediately, even from customers who have been eager for a new pump after 20 years with the 3860. Therefore, we expect to see revenue growth primarily in the latter half of 2026, with bookings reported in the first half. The significant revenue increase will occur in the third and fourth quarters. By the fourth quarter, we anticipate that we will have doubled the number of pump channels booked, and revenue will start reflecting that growth 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 maybe 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?

I believe this demonstrates that we managed the transition effectively by relocating the entire operation in Orlando and successfully getting it back up and running without any issues that would negatively affect revenues and the cost of goods. The main point to note is that the revenue we didn't ship in Q3 was primarily domestic, which likely contributed to the 1% increase in gross margin. Regarding sustainability, as we experience quarters where domestic business decreases compared to international business, we can expect some fluctuations.

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?

It's great to have you with us, Kyle. I look forward to meeting in person soon. To address your question, the answer is no; we haven't provided discounts. While it may be surprising, the benefits from the old 3860 pump orders have had a positive impact on our average selling prices, and we've maintained our pricing without any discounts.

Great to hear. How are you thinking about inventory levels for 3870 ahead of the launch? What are the current levels? How do you expect to manage that?

It's great to hear from you, Kyle. Regarding the inventory levels of 3860, we have the necessary inventory in place and will manage it for our current backlog, which will be shipped throughout the first quarter and into the second quarter of next year. For the 3870, we are starting to make those purchases now, so you will see that we are building up inventory for the 3870s in the fourth quarter, and this will continue with appropriate levels for the first quarter and beyond. We have sufficient working capital in that regard, so there are no issues.

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 mainly a regulatory challenge. We have the new MDR requirements to keep our CE Mark for the European market. This is quite demanding, but our regulatory team has just completed a challenging process with the FDA to get the 3870 approved back in May. They took a short break but are now fully focused on obtaining the MDR, which is essentially a registration for the CE Mark. We're aiming to complete that in Q4. Consequently, our international business will transition to the 3870 in 2027, rather than 2026, as we'll be receiving the MDR towards the end of 2026. Additionally, Japan is another significant market for our pumps. I'm currently in Japan for this call, and I'll be engaging with our contacts there in the next couple of days to work on clearing the product. We plan to address this simultaneously, but it will likely take until the fourth quarter to finalize that approval. Therefore, both of our major international markets will start using the new product in 2027.

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 2.5 times 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?

The new facility is 2.5 times larger than the previous one. Previously, we generated $20 million a quarter from that smaller space. Based on that, we believe there's no reason we can't reach $50 million a quarter in the new facility. We’re not landlocked this time. As mentioned, we paid cash for the construction and also acquired 26 acres, with the building occupying about 5 or 6 of those acres. This leaves us with plenty of space, and we've designed the building for easy expansion into the adjacent land we own. Expanding production into that area won't require significant effort or additional investment for construction or land. We have proactively ensured that we have ample physical capacity for growth.

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.