IRADIMED Corporation — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021; unaudited. IRADIMED develops, manufactures and sells MRI-compatible medical devices, disposables and related services to hospitals and acute-care facilities.
Financial results
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $9.81 million | $6.79 million | $19.03 million | $15.47 million |
| Gross profit / margin | $7.33 million / 74.7% | $4.93 million / 72.6% | $14.39 million / 75.6% | $11.39 million / 73.6% |
| Operating income (loss) | $1.84 million | $(2.93) million | $3.62 million | $(2.19) million |
| Net income (loss) | $1.47 million | $(2.11) million | $2.86 million | $(0.34) million |
| Diluted EPS | $0.12 | $(0.17) | $0.23 | $(0.03) |
Q2 revenue rose 44.4%; six-month revenue rose 23.0%. Q2 U.S. revenue increased 73.2% to $8.04 million, while international revenue declined 17.9% to $1.77 million. Device revenue increased 53.4% in Q2, supported by higher average selling prices and favorable product and geographic mix. Gross-margin improvement was attributed primarily to favorable geographic mix, partly offset by inventory-reserve adjustments and overhead variances.
Q2 operating expenses were $5.49 million versus $7.86 million a year earlier. General and administrative expense fell chiefly because Q2 2020 included compensation costs related to the former CEO’s separation. For the six-month comparison, 2020 also included substantial stock-based compensation tied to that separation. Sales and marketing and R&D expenses were broadly stable.
Cash flow, liquidity and obligations
- Cash and cash equivalents were $55.16 million at June 30, 2021; investments were $0.95 million. Combined cash and investments were $56.1 million, compared with $52.0 million at December 31, 2020.
- Working capital was $62.3 million, up from $58.8 million; stockholders’ equity was $64.9 million.
- Six-month operating cash flow was $4.51 million, versus $1.99 million in 2020. Investing activities provided $0.61 million and financing activities used $0.03 million. Cash ended the period at $55.16 million.
- The filing reports no borrowings or material off-balance-sheet arrangements. Operating lease liabilities totaled $2.61 million. Management said cash, investments and expected operating cash flow should cover requirements for at least 12 months; it did not anticipate needing additional capital.
Outlook, risks and notable items
No quantified revenue or earnings guidance is provided. Management said COVID-19 effects remain uncertain, including impacts on hospital procedures and demand, customer payments, supply and distribution channels, staffing and operations. The company cited regulatory-clearance and inspection risks, reliance on a limited number of products and sole-sourced key components, competition, and possible product liability or recalls. The filing says there were no material changes to previously disclosed risk factors.
Purchase orders for goods and services totaled $4.82 million and were not recorded as liabilities. The manufacturing and headquarters facility is leased from an entity controlled by CEO and Chairman Roger Susi; monthly base rent is $34,133, subject to annual CPI adjustments. Management stated that known ordinary-course legal matters were not expected to materially affect results or financial position. Disclosure controls were assessed as effective, with no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether U.S. sales growth and favorable sales mix continue, given the decline in international revenue.
- How COVID-19, hospital procedure volumes and supply-chain conditions affect future demand and delivery.
- Whether gross-margin gains persist despite inventory-reserve adjustments and overhead variances.
- Regulatory status and availability of sole-sourced components for current and future products.
- Terms and governance of the related-party facility lease, alongside lease liabilities and purchase commitments.