iRadimed Corporation 2026 Q3 Earnings Call

Mr. Susi? Thank you. Good morning, and welcome to IRadimed's third quarter 2026 earnings call.

I'm very proud to say that the new 3870 MR IV pump launch is showing itself to be everything we'd hoped for and more. Though you may recall that we discussed the ramping of this new pump would be quite a stretch, we have been able to push very hard and make it happen. With our initial testing the waters release of a few dozen pumps during Q4 and Q1, to the broad market launch in Q2, and with having produced now over 400 systems during Q3, our teams have risen to perform extraordinarily well. The job of ramping production of this complex electromechanical device at the rate achieved is a very difficult task, and these hardworking ladies and gentlemen of your company have really risen to the challenge.

The ramp rate of the 3870 production to achieve Q3's revenue was huge, at over 125% increase from Q2's production, thus the large stretch goal for production. To support the goal was a great selling effort. Consider that during Q3, our sales team booked record numbers of both the 3880 monitor and 3870 pumps, proving the customer acceptance of these devices and building a very comfortable backlog for Q4. For Q4, we will again grow revenue of the new 3870 pump by another 50-plus percent. Again, very pleased to report that our teams have delivered. Here are the numbers. We achieved record quarterly revenue of $24.2 million, up 14% from Q3 of 2025, and an 18% sequential increase from Q2. Earnings were $0.51 per share, GAAP, and $0.55 non-GAAP, up from $0.41 and $0.46 respectively in the second quarter.

As we expected, as our manufacturing teams climbs the 3870 learning curve, we begin realizing efficiencies we had anticipated with a gross margin improving 2 full points sequentially to 76%. Behind these quarter-end numbers is the performance of not only our production, engineering, quality, and materials teams in-house, but our field sales team as well. We had concerns that the long-anticipated new 3870 pump could steal sales focus from the monitor, so we put in place special targets to mitigate such an issue. Indeed, though Q1 did show weak monitor bookings, this was quickly turned around in Q2 with a record number of monitors booked, and we are once again extremely proud to note that that record was exceeded again in Q3. In short, monitor sales are strong and growing.

This, along with what is now clearly becoming a successful launch of the long and awaited 3870 MR IV pump. Though our hospital customers usually need 4, 5 to 6 months or more to budget and finally issue purchase orders for new equipment, we are finding a very significant number motivated to move to purchase our new pump in much shorter timeframes, with this resulting in a growing backlog of 3870 pumps on the books after shipping over 300 in Q3 as we enter into Q4. It's this order rate and the backlog produced that give us confidence in our ability to clearly forecast revenue for Q4. But wait for our guidance just a moment longer. I'd like to recap this pump opportunity first.

The rather low-hanging and quick-to-attain fruit is the replacement opportunity we've been discussing from established users of the old 3860 pump system as they replace and upgrade to the new 3870 MR pump. It's a great opportunity with still nearly 6,400 older, meaning over 5 years of age, 3860, 3861 pump channels in the U.S. market. But it's proven to be better than simply replacing what was a $19,000 3860 channel with a similarly priced 3870. First off, we have approximately 70% of the replacement orders for 2 of the older model channels for one new quad stack. Meaning that for every 2 channels of the older 3860 or 3861 setups being replaced, 70% of the customers are buying 4 3870 channels. So, the 6,400 old pump channels translates to over 10,000 unit 3870 opportunity.

With our plan to sell about 2,000 to 2,500 3870s per year, just this presently existing pool of older pumps takes years to replace. Meanwhile, more and more pumps turn 5 and become part of the replacement target. A second silver lining to the business is that the ASP of the new pump system is not equal to the older unit. It is not similarly priced, but rather commanding nearly $25,000 per channel, a lift from the older 3860 ASP of 23% to 25%. Finally, for a less stringent measure of success than the numbers just mentioned, our customers are loving what they see. This device practically selling itself, I'd say. It shows well, and its operation is exciting to the user.

This is being proven by the fact that we have also already received orders from facilities who did not care for the original 3860 system, thus remained part of our greenfield opportunity. But when showed the 3870, they have not hesitated to become a customer and decided quickly that the new 3870 was spot on and a welcome addition to their imaging practice. In a word, it's happening. The new 3870 pump system is doing what we thought it could do and more. More channels, higher ASP, and penetration of the greenfield. At this point, it's execution. Ramping production while building in quality and growing margin is where we are headed. Q4 will show more of this trend, with 2027 giving us much run room to return to great growth of revenue, earnings, and a business we are very proud of.

Now I'd like to have Jack Glenn, our CFO, provide financial details. I'll iterate that as we enter Q4 with a solid backlog of our new 3870 pump and 3880 monitor systems, as well as a strong backlog of the FMD system. Now, I'll turn the call over to Jack Glenn, our CFO, to review the quarter's financial results and provide color on our outlook for the fourth quarter and full year.

Thank you, Roger, and good morning, everyone. As in the past, we report our results on a GAAP basis and non-GAAP basis. You can find a description of our non-GAAP measures in this morning's earnings release and a reconciliation to GAAP on the last page. For the three months ended September 30, 2026, revenue was a record $24.2 million, up 14% from $21.2 million in the third quarter of 2025, and up 18% sequentially from $20.5 million in the second quarter. Pump revenue was $8.7 million, up 4% year-over-year as 3870 shipments continue to ramp. MRI-compatible patient vital signs monitoring systems contributed $8 million, up 17% year-over-year, and ferromagnetic detection systems contributed $0.5 million, up 28%. On the recurring side, disposables revenue grew 21% to $5 million. Amortization of extended maintenance agreements grew 31% to $0.8 million, and services and other grew 42% to $1.2 million.

For the nine months, revenue was $66.6 million, up 9% from $61.1 million in the prior year period. Domestic sales accounted for 82% of total revenue in the third quarter, down from 85% a year earlier. International revenue grew 45% to $4.5 million, while domestic revenue grew 9% to $19.7 million. Over the nine months, domestic sales accounted for 82% of revenue, down from 85% a year ago, while international revenue rose 37% to $12.2 million. Gross profit for the quarter was $18.5 million, with a 76% margin, up from $16.5 million and 78% in the third quarter of 2025. Sequentially, gross margin improved two points to 74% from 72% in the second quarter, as 3870 production volumes increased and we began realizing the manufacturing efficiencies we anticipated. The year-over-year decline reflects the remaining initial production inefficiencies on the new 3870.

For the nine months, gross profit was $50.4 million, with a 76% margin compared with 77% a year earlier. We expect gross margin to continue to improve in the fourth quarter as 3870 volumes build. Total operating expenses for the quarter were $10.3 million, up 7% from $9.7 million, but declined to 43% of revenue compared with 46% a year ago. General and administrative expense was $4.5 million, up 4%, primarily due to higher legal and professional fees, consulting, and payroll and benefits. Sales and marketing expense was $4.9 million, up 6%, primarily due to higher sales commissions on increased monitor and 3870 bookings in the quarter. Research and development expense was $0.9 million, up 30%, primarily reflecting lower capitalization of payroll costs for internal software development in the quarter.