iRadimed NASDAQ: IRMD reported second-quarter 2026 revenue of $20.5 million, up 0.5% from a year earlier, as the company began general-release production of its new 3870 MRI IV pump system and worked through the costs associated with an initial manufacturing ramp.
GAAP net income was $5.2 million, or $0.41 per diluted share, compared with $5.8 million, or $0.45 per share, in the second quarter of 2025. Non-GAAP net income was $5.9 million, or $0.46 per diluted share, versus $6.4 million, or $0.49 per share, a year ago.
President and Chief Executive Officer Roger Susi said the company manufactured more than 130 of the new 3870 pumps during the quarter, meeting its planned target of 130 to 135 units. The launch required substantial labor and overhead, contributing to a decline in gross margin.
3870 Pump Demand Exceeds Shipments
Susi said bookings for the new 3870 pump exceeded the number of units shipped by more than two times during the quarter, citing strong early customer acceptance and demand tied largely to replacement opportunities within the company’s existing installed base.
The company estimates that approximately 6,400 3860/3861 pump channels in the U.S. are more than five years old and eligible for replacement. iRadimed had been selling roughly 1,100 3860 channels annually and is targeting an additional 1,000 channels per year through replacement sales of older systems.
Management said 70% of the older two-channel systems replaced during the period were replaced with four-channel, or quad, pump systems. Susi said those quad systems carried average selling prices above $110,000 and provided more than a 20% increase in average selling price per pump.
“The demand is exceeding our expectations in both the number of pumps and the ASP,” Susi said.
The company expects to manufacture more than 300 3870 pumps in the third quarter, including a target of more than 338 units cited by management. Susi said iRadimed had already added staffing in prior months to prepare for the ramp and does not expect additional staffing to be the principal driver of costs going forward. Instead, he characterized the remaining challenge as a manufacturing learning curve, with workers gaining experience and improving efficiency.
Susi said startup costs tied to the launch are expected to decline by more than 50% in the third quarter from second-quarter levels. The company expects further efficiency gains in the fourth quarter, when it anticipates approaching historical manufacturing efficiency levels.
Monitoring, Recurring Revenue Growth
MRI-compatible patient vital signs monitoring systems generated $6.7 million in second-quarter revenue, an increase of 12% from the prior-year period. Susi said the domestic sales force booked a record 71 patient monitors while maintaining a high average selling price.
Ferromagnetic detection system revenue was $0.8 million, up 57% year over year.
Recurring revenue categories also grew during the quarter:
- Disposables revenue rose 14% to $4.8 million, driven by higher device utilization.
- Amortization of extended maintenance agreements increased 28% to $0.8 million.
- Services and other revenue rose 7% to $1.1 million.
Chief Financial Officer Jack Glenn said the company expects the use of four-channel pump systems to support future disposable utilization because the systems contain four pumps rather than two. The existing 3860 installed base also continues to generate disposable revenue, he said.
On order timing, Glenn said the company currently expects incoming orders to be deliverable within roughly three months. However, Susi said lead times could extend toward the company’s historical four- to six-month range, or potentially longer, as demand and backlog build.
Margins Decline During Production Ramp
Gross profit was $15.2 million, and gross margin was 74%, compared with $16 million and a 78% margin in the second quarter of 2025. Glenn attributed the margin decline to higher manufacturing costs during the first sizable 3870 production ramp.
For the first six months of 2026, gross margin was 75%, down from 77% in the prior-year period. The company expects gross margin to improve in the second half as 3870 production volume rises and manufacturing efficiencies improve.
Operating expenses declined 4% to $8.8 million, representing 43% of revenue compared with 45% a year earlier. General and administrative expense fell 10%, while sales and marketing expense increased 6%, primarily because of higher sales commissions associated with strong bookings. Research and development expense declined 25%, reflecting increased capitalization of internal software development for the next-generation monitor.
Operating income totaled $6.4 million, or 31% of revenue, compared with $6.8 million a year ago. The company’s effective tax rate was 24.2%, and Glenn said iRadimed now expects its tax rate to remain around 24% for the rest of 2026.
Guidance Reaffirmed, Dividend Declared
iRadimed ended the quarter with $59.1 million in cash and cash equivalents, up from $51.2 million at year-end. Operating cash flow was $5.9 million for the quarter and $14.2 million for the first half, an 18% increase from the prior-year first half.
The board declared a quarterly cash dividend of $0.20 per share, payable Aug. 28 to shareholders of record as of Aug. 14.
The company reaffirmed its full-year 2026 outlook and issued third-quarter guidance:
- Third quarter: Revenue of $23 million to $24.5 million; GAAP diluted earnings per share of $0.49 to $0.54; and non-GAAP diluted earnings per share of $0.54 to $0.59.
- Full year: Revenue of $91 million to $96 million; GAAP diluted earnings per share of $1.90 to $2.05; and non-GAAP diluted earnings per share of $2.09 to $2.24.
Susi said that, with the new pump’s customer reception, continued patient-monitor sales and improving manufacturing experience, a $100 million quarterly annualized revenue run rate in the fourth quarter is “well within our grasp.”
About iRadimed (NASDAQ:IRMD)
iRadimed Corporation designs, develops and manufactures medical device solutions for MRI environments. The company's core product line consists of MRI-compatible infusion systems engineered to deliver precise fluid management during magnetic resonance imaging procedures. These devices are crafted to minimize electrical noise and interference, ensuring both patient safety and image clarity in diagnostic and interventional settings.
In addition to infusion pumps, iRadimed offers a range of complementary accessories and monitoring solutions tailored to MRI suites.
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