# Iradimed Corp: Form 10-Q for the period ended Mar 31, 2023

- Company: [Iradimed Corp](/companies/irmd.md) (CIK 1325618)
- Form: 10-Q
- Filed: 2023-05-04
- Accepted by EDGAR: May 4, 2023, 08:33 ET
- Period: 2023-03-31
- Accession: 0001558370-23-007988
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1325618/000155837023007988/irmd-20230331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1325618/000155837023007988/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $15.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-01-01 to 2023-03-31 | $3.8m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-01-01 to 2023-03-31 | $11.7m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-01-01 to 2023-03-31 | $793.7k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-01-01 to 2023-03-31 | $4.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | $943.6k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | $3.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.27 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.27 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 12,686,699 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | $4.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-01 to 2023-03-31 | $6.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2023-01-01 to 2023-03-31 | $13.2m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2023-03-31 | $42.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-03-31 | $61.3m | us-gaap:AssetsCurrent |
| Total assets | at 2023-03-31 | $75.6m | us-gaap:Assets |
| Current liabilities | at 2023-03-31 | $6.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-03-31 | $11.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-03-31 | $64.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 18,861 characters.

*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 our Annual Report filed on Form 10-K for the fiscal year ended December 31, 2022 and the cautionary information regarding forward-looking statements at the beginning of this Quarterly Report.*

### Our Business

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

We are a leader in the development of innovative MRI compatible medical devices. We are the only known provider of a non-magnetic intravenous (“IV”) infusion pump system that is specifically designed to be safe for use during MRI procedures. We were the first to develop an infusion delivery system that largely eliminates many of the dangers and problems present during MRI procedures. Standard infusion pumps contain magnetic and electronic components which can create radio frequency interference and are dangerous to operate in the presence of the powerful magnet that drives an MRI system. Our patented MRidium® MRI compatible IV infusion pump system has been designed with a non-magnetic ultrasonic motor, uniquely designed non-ferrous parts and other special features to safely and predictably deliver anesthesia and other IV fluids during various MRI procedures. Our pump solution provides a seamless approach that enables accurate, safe and dependable fluid delivery before, during and after an MRI scan, which is important to critically ill patients who cannot be removed from their vital medications, and children and infants who must generally be sedated to remain immobile during an MRI scan.

Each IV infusion pump system consists of an MRidium® MRI compatible IV infusion pump, non-magnetic mobile stand, proprietary disposable IV tubing sets and many of these systems contain additional optional upgrade accessories.

Our 3880 MRI compatible patient vital signs monitoring system has been designed with non-magnetic components and other special features to safely and accurately monitor a patient’s vital signs during various MRI procedures. The IRADIMED 3880 system operates dependably in magnetic fields up to 30,000 gauss, which means it can operate virtually anywhere in the MRI scanner room. The IRADIMED 3880 has a compact, lightweight design allowing it to travel with the patient from their critical care unit to the MRI and back, resulting in increased patient safety through uninterrupted vital signs monitoring and decreasing the amount of time critically ill patients are away from critical care units. The features of the IRADIMED 3880 include: wireless ECG with dynamic gradient filtering; wireless SpO2 using Masimo® algorithms; non-magnetic respiratory CO2; invasive and non-invasive blood pressure; patient temperature, and optional advanced multi-gas anesthetic agent unit featuring continuous Minimum Alveolar Concentration measurements. The IRADIMED 3880 MRI compatible patient vital signs monitoring system has an easy-to-use design and allows for the effective communication of patient vital signs information to clinicians.

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, 2023 our direct U.S. sales force consisted of 28 field sales representatives, 3 regional sales directors and supplemented by 5 clinical application specialists. Internationally, we have distribution agreements with independent distributors selling our products.

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 health systems and healthcare supply contracting companies in the U.S. Our agreements with healthcare supply contracting companies enable us to sell and distribute our products and services to their member hospitals. Under these agreements, we are required to pay these group purchasing organizations (“GPOs”) a fee of three percent of the sales of our products to their member hospitals.

### Financial Highlights

For the first quarter ended March 31, 2023, our revenue increased $3.2 million, or 25.7 percent, to $15.2 million, compared to $12.3 million for the first quarter last year. Income before the provision for income taxes was $4.6 million for the first quarter 2023, compared to $3.1 million for the first quarter last year. Net income was $3.4 million, or $0.27 per diluted share in the first quarter ended March 31, 2023, compared to $2.5 million, or $0.20 per share in the first quarter last year.

For the remainder of 2023, we expect higher revenue when compared to the same period in 2022 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 2022 primarily due to higher sales and marketing, and general and administrative expenses.

### Application of Critical Accounting Policies

We prepare our financial statements in conformity with generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make estimates and use assumptions that affect the reported amounts of assets, liabilities, and related disclosures at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

We believe revenue recognition, accounts receivable, allowance for doubtful accounts, inventory valuation, product warranties, stock compensation, and income taxes are critical accounting policies requiring the use of significant estimates, assumptions, and judgments.

These critical accounting policies are described in more detail in our Annual Report filed on Form 10-K, under *Management’s Discussion and Analysis and Results of Operations.* 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, 2023.

The use of different estimates, assumptions, and judgments could have a material effect on the reported amounts of assets, liabilities, and related disclosures as of the date of the financial statements and revenue and expenses during the reporting period.

### Results of Operations

The following table sets forth selected statements of operations data as a percentage of total revenue for the periods indicated. Our historical operating results are not necessarily indicative of the results for any future period.

| ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ Percent of Revenue Three Months Ended March 31, 2023 | ​ ​ 2022 |
| --- | ---: | ---: |
| Revenue | 100.0% | 100.0% |
| Cost of revenue | 24.3 | 23.8 ​ |
| Gross profit | 75.7 | 76.2 ​ |
| Operating expenses: | ​ | ​ ​ |
| General and administrative | 25.3 | 22.1 ​ |
| Sales and marketing | 19.4 | 24.9 ​ |
| Research and development | 5.1 | 4.2 ​ |
| Total operating expenses | 49.8 | 51.2 ​ |
| Income from operations | 25.9 | 25.0 ​ |
| Other income (expense), net | 2.2 | (0.1) ​ |
| Income before provision for income taxes | 28.1 | 24.9 ​ |
| Provision for income tax expense | 6.1 | 4.7 ​ |
| Net income | 22.0% | 20.2% |

### Three Months Ended March 31, 2023 and 2022

### Revenue by Geographic Region

*(unaudited)*

| ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: |
| United States | ​ | $11,979,523 | ​ | $9,979,340 |
| International | ​ | 3,495,560 | ​ | 2,331,370 |
| Total revenue | ​ | $15,475,083 | ​ | $12,310,710 |

### Revenue by Type

*(unaudited)*

| ​ ​ ​ ​ ​ Devices: | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ | ​ | ​ ​ 2022 ​ |
| --- | --- | ---: | --- | ---: |
| MRI Compatible IV Infusion Pump Systems | ​ | $5,538,817 | ​ | $3,281,939 |
| MRI Compatible Patient Vital Signs Monitoring Systems | ​ | 4,696,818 | ​ | 5,194,751 |
| Ferro Magnetic Detection Systems | ​ | 300,589 | ​ | — |
| Total Devices revenue | ​ | 10,536,224 | ​ | 8,476,690 |
| Disposables, services and other | ​ | 4,431,741 | ​ | 3,318,902 |
| Amortization of extended warranty agreements | ​ | 507,118 | ​ | 515,118 |
| Total revenue | ​ | $15,475,083 | ​ | $12,310,710 |

For the three months ended March 31, 2023, revenue increased $3.2 million, or 25.7 percent, to $15.5 million from $12.3 million for the same period in 2022.

Revenue from sales in the U.S. increased $2.0 million, or 20.0 percent, to $12.0 million for the first quarter 2023, from $10.0 million for the first quarter 2022. Revenue from sales internationally increased $1.2 million, or

49.9 percent, to $3.5 million for the first quarter 2023, from $2.3 million for the first quarter 2022. Domestic sales accounted for 77.4 percent of revenue for the first quarter 2023, compared to 81.1 percent for the first quarter 2022.

Revenue from sales of devices increased $2.1 million, or 24.3 percent, to $10.5 million for the three months ended March 31, 2023, from $8.5 million for the same period in 2022.

Revenue from sales of our disposables, service and other increased $1.1 million, or 33.5 percent, to $4.4 million for the three months ended March 31, 2023, from $3.3 million for the same period in 2022. Revenue from the amortization of extended warranty agreements was consistent at $0.5 million for the three months ended March 31, 2023 and 2022.

### Cost of Revenue and Gross Profit

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, 2023 | ​ ​ ​ 2022 |
| --- | --- | ---: | ---: |
| Revenue | ​ | $15,475,083 ​ | $12,310,710 ​ |
| Cost of revenue | ​ | 3,753,635 ​ | 2,931,186 ​ |
| Gross profit | ​ | $11,721,448 ​ | $9,379,524 ​ |
| Gross profit percentage | ​ | 75.7% | 76.2% |

For the three months ended March 31, 2023 and 2022, cost of revenue increased $0.8 million, or 28.1 percent to $3.8 million from $2.9 million for the same period 2022. Gross profit increased $2.3 million, or 25.0 percent, to $11.7 million for the first quarter 2023 from $9.4 million for the same period in 2022. Gross profit margin was 75.7 percent for first quarter 2023, compared to 76.2 percent for the first quarter 2022. The decrease in gross profit margin is primarily due to an unfavorable overhead variance adjustment, sales mix, and increased raw material costs due to inflation.

### Operating Expenses

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, 2023 | ​ ​ ​ 2022 |
| --- | --- | ---: | ---: |
| General and administrative | ​ | $3,920,510 ​ | $2,715,950 ​ |
| Percentage of revenue | ​ | 25.3% | 22.1% |
| Sales and marketing | ​ | $2,999,976 ​ | $3,069,556 ​ |
| Percentage of revenue | ​ | 19.4% | 24.9% |
| Research and development | ​ | $793,716 ​ | $519,095 ​ |
| Percentage of revenue | ​ | 5.1% | 4.2% |

#### General and Administrative

For the three months ended March 31, 2023, general and administrative expense increased $1.2 million, or 44.4 percent, to $3.9 million from $2.7 million for the same period last year. This increase is primarily due to higher legal and professional expenses and increased payroll and benefit expenses.

#### Sales and Marketing

For the three months ended March 31, 2023, sales and marketing expense decreased $0.1 million, or 2.3 percent, to $3.0 million from $3.1 million for the same period last year. This decrease is primarily due to lower sales commissions, sales activities expenses, and payroll and benefits expenses.

#### Research and Development

For the three months ended March 31, 2023, and 2022, research and development expense increased $0.3 million, or 52.9 percent to $0.8 million from $0.5 million for the same period last year. This is primarily due to higher consulting expenses related to next generation pump, payroll and benefits expenses offset by reductions in prototype expense.

### Other Income, Net

Other income, net consists of interest income, foreign currency gains and losses, and other miscellaneous income. For the three months ended March 31, 2023, other income net increased $0.4 million, to $0.3 million from a loss of $(15,000) for the same period last year. This increase is due to interest received on money market fund investments.

### Income Taxes

For the three months ended March 31, 2023, we recorded a provision for income tax expense of $943,589. Our effective tax rate was 21.7 percent 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.

For the three months ended March 31, 2022, we recorded a provision for income tax expense of $573,295. Our effective tax rate was 18.7 percent and differed from the U.S. Federal statutory rate primarily due to benefits from foreign derived intangible income, stock compensation and research and development tax credits, partially offset by U.S. state income tax expense. For the full year 2023, we expect an effective tax rate of approximately 22 percent.

As of March 31, 2023, and December 31, 2022, we had not identified or accrued for any uncertain tax positions. We are currently unaware of any uncertain tax positions that could result in significant payments, accruals or other material deviations in this estimate over the next 12 months. We believe that our tax positions comply in all material respects with applicable tax law. However, tax law is subject to interpretation, and interpretations by taxing authorities could be different from ours, which could result in the imposition of additional taxes and penalties.

We file tax returns in the United States Federal jurisdiction and many U.S. state jurisdictions. 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 2017 and subsequent years.

### Liquidity and Capital Resources

Our principal sources of liquidity have historically been our cash and cash equivalents balances, our investments, cash flow from operations and access to the financial markets. Our principal uses of cash are operating expenses, working capital requirements, capital expenditures and dividend payments, if any.

As of March 31, 2023, we had cash and cash equivalents of $42.8 million, stockholders’ equity of $64.3 million, and working capital of $54.5 million. During the quarter ended March 31, 2023, we paid a special dividend of $13.2 million to our shareholders. As of December 31, 2022, we had cash and investments of $57.9 million, stockholders’ equity of $73.7 million, and working capital of $68.9 million.

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. We have acquired land from an unrelated party and plan to make subsequent improvements thereon in the next two years to accommodate our increased operations and expand capacity. We anticipate using available cash and cash equivalents 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.

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: |
| Net cash provided by operating activities | ​ | $4,646,092 | ​ | $1,426,187 |
| Net cash used in investing activities | ​ | (6,557,014) | ​ | (424,694) |
| Net cash used in financing activities | ​ | (13,272,783) | ​ | (12,554,559) |

Cash provided by operating activities increased $3.2 million, to $4.6 million for the three months ended March 31, 2023, compared to $1.4 million for the same period in 2022. During the three months ended March 31, 2023, cash provided by operations was positively impacted by net income and cash inflows from collection of accounts receivable and negatively impacted by cash outflows to purchase inventory, and a decrease in accrued payroll from the prior period.

Cash used in investing activities increased $6.1 million, to $(6.5) million for the three months ended March 31, 2023, compared to $(0.4) million for the same period in 2022. During the three months ended March 31, 2023, cash used in investing was primarily the result of the $6.2 million land purchase to be used for future manufacturing, research lab and office space.

Cash used in financing activities was approximately $(13.2) million for the three months ended March 31, 2023, compared to approximately $(12.6) for the same period in 2022. In both periods, the company paid special dividends to our shareholders.

We market our products to end users in the U.S. and to distributors internationally. Sales to end users in the U.S. are generally made on open credit terms. Management maintains an allowance for potential credit losses.

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.

### Off-Balance Sheet Arrangements

As of March 31, 2023 and December 31, 2022, we did not have any off-balance sheet arrangements, as such term is defined under Item 303 of Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

### Contractual Obligations

There have been no material changes outside the ordinary course of business to our contractual obligations and commercial commitments since December 31, 2022.

### Recent Accounting Pronouncements

See Note 1 to the unaudited condensed financial statements contained herein for a full description of recent accounting pronouncements including the respective expected dates of adoption and status of evaluation of expected effects on results of our operations and financial condition.

## Market risk

As filed, 868 characters.

### Foreign Currency Exchange Risk

We have foreign currency risks related to our cost of revenue denominated in currencies other than the U.S. Dollar, principally the Japanese yen (“Yen”). The volatility of the Yen depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains and losses related to revaluing Yen denominated accounts payable balances. In the event our Yen denominated accounts payable or expenses increase, our operating results may be affected by fluctuations in the Yen exchange rate. If the U.S. Dollar uniformly increased or decreased in strength by 10 percent relative to the Yen, our net income would have correspondingly increased or decreased by an immaterial amount for the three months ended March 31, 2023 and 2022.

## Controls and procedures

As filed, 1,797 characters.

### Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are designed to ensure that: (1) information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (2) such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2023. Our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of March 31, 2023 were effective.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 1,008 characters.

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. The occurrence of any of these risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. In evaluating the Company and its business, you should carefully consider the information included in this Quarterly Report on Form 10-Q and the factors discussed under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as well as in other documents we file with the SEC. Except as described below, there have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Filed May 4, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-007988. Last ingested by Listed: Nov 6, 2026, 03:39 ET. No prices; not investment advice.