Third Quarter 2016 Financial Results

IRADIMED CORPORATION Announces Third Quarter 2016 Financial Results

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IRADIMED CORPORATION Announces Third Quarter 2016 Financial Results • Reports third quarter revenue of $7.7 million • Reports third quarter GAAP diluted earnings per share of $0.13 and non-GAAP of $0.14 Winter Springs, Florida, October 28, 2016 – IRADIMED CORPORATION (NASDAQ:IRMD), the only known provider of non-magnetic intravenous (IV) infusion pump systems that are designed to be safe for use during magnetic resonance imaging (MRI) procedures, today announced financial results for the three and nine months ended September 30, 2016. For the third quarter ended September 30, 2016, the Company reported revenue of $7.7 million compared to $8.2 million for the third quarter 2015. Revenue for the third quarters ended September 30, 2016 and 2015 included approximately $3.4 million and $2.4 million from backlog, respectively. Gross profit margin was 81.7%, compared to 80.6% for the third quarter 2015. Net income was $1.6 million compared to $1.9 million for the third quarter 2015 and diluted earnings per share was $0.13 compared to $0.15 for the third quarter 2015. Non-GAAP net income was $1.7 million for the third quarter ended September 30, 2016 compared to $2.3 million for the same period in 2015. Non-GAAP diluted earnings per share was $0.14 compared to $0.19 for the same period in 2015. Free cash flow was $3.3 million for the third quarter 2016. For the nine months ended September 30, 2016, the Company reported revenue of $26.5 million compared to $22.8 million for the third quarter 2015. Revenue for the nine months ended September 30, 2016 and 2015 included approximately $11.2 million and $1.4 million from backlog, respectively. Gross profit margin was 81.7% compared to 81.0% for the same period in 2015. Net income was $6.1 million compared to $5.1 million for the same period in 2015 and diluted earnings per share was $0.50 compared to $0.42 for the same period in 2015. Non-GAAP net income was $7.1 million for the nine months ended September 30, 2016 compared to $5.9 million for the same period in 2015. Non-GAAP diluted earnings per share was $0.59 compared to $0.48 for the same period in 2015. Cash and cash equivalents decreased by $3.4 million to $16.0 million during the nine months ended September 30, 2016. The Company generated $7.2 million of cash from operations and repurchased $10.0 million of its stock during the nine months ended September 30, 2016. “Third quarter revenue and earnings came in slightly above our revised guidance provided earlier this month and we have increased our full year earnings guidance to reflect these results. Bookings continued along recent trends resulting in approximately $3.4 million of third quarter revenue coming from backlog. Opportunities reported by our sales team and the quoting activity are consistently positive and show increased interest in our pump systems from multiple hospital departments. We remain committed to our sales strategy that now includes calling on hospital critical care departments in addition to radiology and anesthesiology, where we historically focused our sales efforts, believing these additional call points are necessary to drive growth,” said Roger Susi, President and Chief Executive Officer of the Company. Financial Guidance The Company provided revenue and earnings guidance for the fourth quarter and updated its earnings guidance for the full year 2016. For the fourth quarter, the Company expects revenue of approximately $6.5 to $6.7 million, GAAP diluted earnings per share of $0.03 to $0.04 and non-GAAP diluted earnings per share of $0.04 to $0.06. The Company expects that approximately $1.0 million of the remaining $2.7 million of backlog will be included in fourth quarter revenue. The Company reiterated its full year revenue guidance of $32.9 million to $33.2 million. The Company adjusted its full year earnings guidance to reflect third quarter results and now expects GAAP diluted earnings per share of $0.54 to $0.55 and non-GAAP diluted earnings per share of $0.63 to $0.65. The Company expects that approximately $13.0 million of 2016 revenue will come from backlog. Use of non-GAAP Financial Measures The Company believes the presentation of non-GAAP net income, free cash flow and infrequent tax items can be helpful to our investors. These measures, which we refer to as our non-GAAP financial measures, are not prepared in accordance with GAAP. We calculate non-GAAP net income as net income excluding stock-based compensation expense, net of tax. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, we believe that providing non-GAAP financial measures that exclude stock-based compensation expense allow for meaningful comparisons between our operating results from period to period. We calculate free cash flow as net cash provided by operating activities less net cash used in investing activities for purchases of property and equipment. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making acquisitions, strengthening our balance sheet and returning cash to our shareholders via share repurchases. Infrequent tax items are considered based on their nature and are excluded from the provision for income taxes as these costs or benefits are not indicative of our normal or future provision for income taxes. All of our non-GAAP financial measures are important tools for financial and operational decision making and for evaluating our operating results. A reconciliation of the non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found in the table later in this release immediately following the condensed statements of cash flows. These non-GAAP financial measures should not be considered in isolation or as a substitute for a measure of the Company’s operating performance or liquidity prepared in accordance with U.S. GAAP and are not indicative of net income or cash provided by operating activities. Conference Call IRADIMED has scheduled a conference call to discuss this announcement beginning at 11:00 a.m. Eastern Time today, October 28, 2016. Individuals interested in listening to the conference call may do so by dialing 1-844-413-1781 for domestic callers, or 1-716-247-5767 for international callers, and entering the reservation code 2986888. The conference call will also be available real-time via the internet at www.iradimed.com/enus/investors/index.php and selecting Events & Presentation. A recording of the call will be available on the Company’s website following the completion of the call. About IRADIMED CORPORATION IRADIMED CORPORATION is the only known provider of non-magnetic intravenous (IV) infusion pump systems that are specifically designed to be safe for use during magnetic resonance imaging (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 (RF) 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 in order 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 in order to remain immobile during an MRI scan. MRidium is a trademark of IRADIMED CORPORATION. For more information please visit www.iradimed.com. Forward-Looking Statements This press release contains forward-looking statements as defined in the Private Securities Litigation Act of 1995, particularly statements regarding our expectations, beliefs, plans, intentions, future operations, financial condition and prospects, and business strategies. These statements relate to future events or our future financial performance or condition and involve unknown risks, uncertainties and other factors that could cause our actual results, level of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. The risks and uncertainties referred to above include, but are not limited to, risks associated with the Company’s ability to receive clearance of its 510(k) submission, additional actions by or requests from the FDA (including a request to cease domestic distribution of products) and unanticipated costs or delays associated with resolution of these matters; our reliance on a single product; unexpected costs, expenses and diversion of management attention resulting from the FDA warning letter; potential disruptions in our limited supply chain for our products; a reduction in international distribution as we focus on fulfilling orders from our U.S. backlog; actions of the FDA or other regulatory bodies that could delay, limit or suspend product development, manufacturing or sales; the effect of recalls, patient adverse events or deaths on our business; difficulties or delays in the development, production, manufacturing and marketing of new or existing products and services; changes in laws and regulations or in the interpretation or application of laws or regulations. Further information on these and other factors that could affect the Company’s financial results is included in filings we make with the Securities and Exchange Commission from time to time. All forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update forward-looking statements. IRADIMED CORPORATION CONDENSED BALANCE SHEETS September 30, 2016 December 31, 2015 (unaudited) ASSETS Current assets: Cash and cash equivalents ..............................................................................$ 16,004,062 $ 19,368,114 Investments ..................................................................................................... 7,811,611 7,602,204 Accounts receivable, net ................................................................................. 4,493,262 3,863,632 Inventory, net .................................................................................................. 3,467,543 2,383,158 Prepaid expenses and other current assets ...................................................... 445,565 320,529 Prepaid income taxes ...................................................................................... 215,873 273,968 Deferred income taxes .................................................................................... 317,709 141,446 Total current assets .................................................................................... 32,755,625 33,953,051 Property and equipment, net ................................................................................. 1,283,809 905,622 Intangible assets, net ............................................................................................ 766,089 193,243 Deferred income taxes .......................................................................................... 519,886 88,398 Other assets .......................................................................................................... 162,723 103,893 Total assets ................................................................................................$ 35,488,132 $ 35,244,207 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable ............................................................................................$ 991,918 $ 1,005,460 Accrued payroll and benefits .......................................................................... 1,295,915 1,288,248 Other accrued taxes ......................................................................................... 191,281 30,687 Warranty reserve ............................................................................................. 38,142 34,081 Deferred revenue ............................................................................................. 751,140 529,867 Other current liabilities ................................................................................... 115,489 — Total current liabilities .............................................................................. 3,383,885 2,888,343 Deferred revenue .................................................................................................. 1,461,563 422,839 Total liabilities ........................................................................................... 4,845,448 3,311,182 Stockholders’ equity: Common stock ................................................................................................ 1,129 1,118 Additional paid-in capital ............................................................................... 21,887,503 19,332,023 Retained earnings ............................................................................................ 18,728,914 12,655,169 Treasury stock ................................................................................................. (9,969,468) — Accumulated other comprehensive loss .......................................................... (5,394) (55,285) Total stockholders’ equity ......................................................................... 30,642,684 31,933,025 Total liabilities and stockholders’ equity ...................................................$ 35,488,132 $ 35,244,207 IRADIMED CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Revenue ........................................................... $ 7,673,217 $ 8,193,616 $ 26,506,275 $ 22,794,464 Cost of revenue ................................................ 1,405,884 1,590,222 4,850,748 4,340,429 Gross profit ......................................... 6,267,333 6,603,394 21,655,527 18,454,035 Operating expenses: General and administrative ........................ 1,869,927 1,675,784 7,217,854 5,629,071 Sales and marketing ................................... 1,346,742 1,206,203 4,039,550 3,399,581 Research and development ......................... 457,134 518,562 983,291 1,264,310 Total operating expenses ..................... 3,673,803 3,400,549 12,240,695 10,292,962 Income from operations ...................... 2,593,530 3,202,845 9,414,832 8,161,073 Other (expense) income, net ............................ (4,017) 64,709 23,092 157,660 Income before provision for income taxes .................................................... 2,589,513 3,267,554 9,437,924 8,318,733 Provision for income taxes .............................. 1,029,029 1,400,406 3,364,179 3,193,519 Net income ...................................................... $ 1,560,484 $ 1,867,148 $ 6,073,745 $ 5,125,214 Net income per share: Basic ................................................... $ 0.15 $ 0.17 $ 0.56 $ 0.47 Diluted ................................................ $ 0.13 $ 0.15 $ 0.50 $ 0.42 Weighted average shares outstanding: Basic ................................................... 10,684,650 11,028,551 10,852,476 10,970,189 Diluted ................................................ 11,867,997 12,382,531 12,055,467 12,294,307 IRADIMED CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2016 2015 Operating activities: Net income .......................................................................................................... $ 6,073,745 $ 5,125,214 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expense ............................................................................................. 19,100 15,728 Provision for excess and obsolete inventory ................................................... 86,543 103,471 Depreciation and amortization ........................................................................ 184,282 163,709 Excess tax benefit on the exercise of stock options ......................................... (550,431) (878,146) Stock-based compensation .............................................................................. 1,788,045 913,234 Impairment of intangible assets ....................................................................... — 55,433 Loss on maturity of securities ......................................................................... 80,542 — Changes in operating assets and liabilities: Accounts receivable ........................................................................................ (648,730) (1,483,730) Inventory ......................................................................................................... (1,170,928) (236,923) Prepaid expenses and other current assets ....................................................... (96,865) (80,182) Other assets ..................................................................................................... (87,001) (22,589) Deferred income taxes ..................................................................................... (638,467) (93,858) Accounts payable ............................................................................................ (13,542) 287,715 Accrued payroll and benefits ........................................................................... 7,667 (109,934) Other accrued taxes ......................................................................................... 160,594 (42,495) Warranty reserve ............................................................................................. 4,061 35,155 Deferred revenue ............................................................................................. 1,259,997 347,442 Other current liabilities .................................................................................... 115,489 — Prepaid income taxes ....................................................................................... 608,526 983,366 Net cash provided by operating activities ................................................ 7,182,627 5,082,610 Investing activities: Purchases of investments ................................................................................ (4,284,445) — Proceeds from the maturities of investments ................................................... 4,075,103 — Purchases of property and equipment ............................................................. (547,087) (193,368) Capitalized intangible assets ........................................................................... (588,228) (13,110) Net cash used in investing activities ........................................................ (1,344,657) (206,478) Financing activities: Proceeds from stock option exercises ............................................................. 217,015 320,807 Income tax benefits credited to equity ............................................................ 550,431 878,146 Purchases of treasury stock ............................................................................. (9,969,468) — Net cash (used in) provided by financing activities ................................. (9,202,022) 1,198,953 Net (decrease) increase in cash and cash equivalents ............................................. (3,364,052) 6,075,085 Cash and cash equivalents, beginning of period ..................................................... 19,368,114 9,454,150 Cash and cash equivalents, end of period ............................................................... $ 16,004,062 $ 15,529,235 IRADIMED CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Non-GAAP Net Income and Diluted EPS Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net income............................................................ $ 1,560,484 $ 1,867,148 $ 6,073,745 $ 5,125,214 Excluding: Stock-based compensation expense, net of taxes.................................................................. 136,849 264,677 1,074,712 612,858 Infrequent tax item ........................................... — 180,887 — 180,887 Non-GAAP net income................................. $ 1,697,333 $ 2,312,712 $ 7,148,457 $ 5,918,959 Weighted-average shares outstanding – diluted ... 11,867,997 12,382,531 12,055,467 12,294,307 Non-GAAP net income per share – diluted ......... $ 0.14 $ 0.19 $ 0.59 $ 0.48 Free Cash Flow Three Months Ended September 30, 2016 Net cash provided by operating activities............................................................. $ 3,420,757 Less: Purchases of property and equipment ............................................................... 123,040 Free cash flow ............................................................................................... $ 3,297,717

 

Kevin Jirka