What iRadimed (IRMD) Said on Its Q3 Earnings Call

Key Points

• Record Q3 performance: Revenue rose 14% year over year to $24.2 million, while GAAP net income increased 17% to $6.5 million. Growth was driven by accelerating shipments of the new 3870 MR IV pump and higher recurring revenue.
• Strong 3870 demand and expansion opportunity: iRadimed produced more than 400 systems and shipped over 300 during the quarter, with fourth-quarter 3870 revenue expected to increase more than 50% sequentially. Management highlighted substantial replacement demand, higher pricing of nearly $25,000 per channel, and new customers adopting the platform.
• Guidance narrowed due to quality-focused production: The company reduced the high end of its full-year revenue and EPS outlook as it moderates the production ramp to protect product quality. Management expects margin improvement as manufacturing efficiencies develop and projects “upper teens” revenue growth beyond 2026.

iRadimed NASDAQ: IRMD reported record third-quarter revenue as shipments of its newly launched 3870 MR IV pump accelerated, while the company said it is moderating its production ramp to protect product quality.

Revenue for the three months ended Sept. 30 rose 14% from a year earlier and 18% sequentially to $24.2 million. GAAP net income increased 17% year over year to $6.5 million, or $0.51 per diluted share, while non-GAAP net income was $7.1 million, or $0.55 per diluted share.

President and Chief Executive Officer Roger Susi said the company produced more than 400 3870 systems during the quarter, following a broad commercial launch in the second quarter. Production of the new pump increased more than 125% from the second quarter, he said.

“The new 3870 pump system is doing what we thought it could do and more,” Susi said, citing higher channel counts per order, a higher average selling price and sales to new customers.

3870 Pump Ramp Drives Record Bookings

Susi said iRadimed booked record numbers of both its 3870 pumps and 3880 patient monitors during the quarter, creating what he described as a comfortable backlog entering the fourth quarter. The company shipped more than 300 3870 pumps in the third quarter and expects fourth-quarter revenue from the new pump to rise by more than 50% from third-quarter levels.

The company is targeting production of approximately 2,000 to 2,500 3870 units annually, according to Susi. He said the replacement market alone includes nearly 6,400 older 3860 and 3861 pump channels in the U.S. that are more than five years old.

Management said approximately 70% of replacement orders involve customers replacing two legacy pump channels with a new four-channel 3870 configuration. Based on that purchasing pattern, Susi said the legacy installed base represents an opportunity of more than 10,000 3870 units.

The 3870 is also selling at a higher average price than the prior-generation system. Susi said the new system is commanding nearly $25,000 per channel, representing a 23% to 25% increase from the older 3860 pump’s average selling price.

In addition to replacement demand, Susi said iRadimed has received orders from facilities that had not adopted the older pump platform. He attributed the interest to the new model’s user interface, sensors and on-screen animations intended to make the device easier for hospital staff to learn and operate.

Revenue Mix and Margins

Pump revenue totaled $8.7 million, up 4% from the prior-year quarter as 3870 shipments continued to ramp. MRI-compatible patient vital signs monitoring revenue rose 17% to $8 million, while ferromagnetic detection system revenue increased 28% to $0.5 million.

Recurring revenue also grew. Disposables revenue increased 21% to $5 million, amortization of extended maintenance agreements increased 31% to $0.8 million, and services and other revenue rose 42% to $1.2 million.

Susi said the 3870 installed base has not yet made a meaningful contribution to disposables revenue because newly shipped systems require installation and in-servicing, a process that can take six to eight weeks. He said the company expects the effect of the new pump base on disposable usage to begin emerging toward the end of the fourth quarter and build through 2027.

Gross profit was $18.5 million, producing a reported gross margin of 76%, compared with 78% a year earlier. Chief Financial Officer Jack Glenn said the year-over-year margin decline reflected remaining initial production inefficiencies associated with the new 3870. He said margins improved sequentially as production volumes increased and manufacturing efficiencies began to emerge.

Glenn said iRadimed expects further gross-margin improvement in the fourth quarter and believes it could return to historical gross margin levels of 77% to 78% or higher in early 2027, depending on production volumes and sales mix. Susi noted that international business carries lower margins because of distributor discounts, and international sales represented 18% of quarterly revenue.

International revenue rose 45% year over year to $4.5 million, while domestic revenue grew 9% to $19.7 million.

Guidance Updated as Company Prioritizes Quality

For the fourth quarter, iRadimed forecast revenue of $25 million to $26.5 million, GAAP diluted earnings per share of $0.53 to $0.57, and non-GAAP diluted earnings per share of $0.57 to $0.61.

The company updated its full-year outlook to revenue of $91.7 million to $93.2 million, compared with its previous range of $91 million to $96 million. It expects GAAP diluted EPS of $1.90 to $1.94, versus prior guidance of $1.90 to $2.05, and non-GAAP EPS of $2.06 to $2.10, compared with the previous range of $2.06 to $2.21.

Susi said the reduction at the top end of the revenue outlook stemmed from the challenge of scaling pump production at a rapid pace. While the company increased output sharply from the second to third quarter and expects another increase in the fourth quarter, he said management does not want to push production so aggressively that product quality suffers.

Looking beyond 2026, Susi did not provide formal 2027 guidance but said he expects revenue growth in the “upper teens” as the company builds on its fourth-quarter production base. He also said the fourth-quarter outlook implies an annualized revenue run rate above $100 million.

Cash Position and Dividend

iRadimed ended the quarter with $63.3 million in cash and cash equivalents, up from $59.1 million at the end of the second quarter and $51.2 million at year-end. Operating cash flow was $7 million in the quarter, while non-GAAP free cash flow totaled $6.8 million.

The board declared a quarterly cash dividend of $0.20 per share, payable Nov. 27 to shareholders of record as of Nov. 13.

About iRadimed (NASDAQ:IRMD)

iRadimed Corporation NASDAQ: IRMD develops, manufactures and sells medical devices designed for use during magnetic resonance imaging (MRI) procedures. The company focuses on solutions that allow clinicians to deliver intravenous medications and monitor patients safely while they are in or near an MRI scanner.

Its principal products include the MRidium MRI-compatible infusion pump systems, which are designed to administer intravenous fluids and medications without interfering with MRI operations.

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