IRADIMED CORPORATION — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021; filed November 5, 2021. Interim financial statements are unaudited. IRADIMED develops, manufactures and sells MRI-compatible medical devices, accessories, disposables and services, principally infusion pumps and patient vital-sign monitoring systems.
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $10.91M | $7.70M | $29.94M | $23.17M |
| Gross profit / margin | $8.41M / 77.1% | $5.74M / 74.6% | $22.80M / 76.1% | $17.13M / 73.9% |
| Operating income (loss) | $3.09M | $0.78M | $6.71M | ($1.41M) |
| Net income | $2.58M | $1.07M | $5.43M | $0.73M |
| Diluted EPS | $0.20 | $0.09 | $0.43 | $0.06 |
- Q3 revenue grew 41.7%; nine-month revenue grew 29.2%. Device revenue rose 61.1% in Q3 and 41.2% for the nine months. Q3 U.S. revenue increased 34.2% and international revenue 80.8%; year-to-date U.S. growth was 37.6%, while international growth was 3.6%.
- Q3 gross margin improved to 77.1%, primarily on favorable overhead absorption from higher production, partly offset by geographic sales mix. Nine-month margin improved to 76.1%, reflecting higher production and favorable geographic mix, partly offset by inventory-reserve adjustments.
- Nine-month operating expenses fell to $16.09M from $18.54M. The comparison benefited from approximately $2.8M of 2020 general and administrative expense related to the former CEO’s separation. Sales and marketing expense increased; R&D was broadly unchanged.
- Nine-month operating cash flow was $7.89M, versus $3.32M in 2020. Investing activities provided $0.39M, mainly reflecting investment maturities, and financing activities provided $0.02M. Cash and cash equivalents increased to $58.37M from $50.07M at year-end 2020.
Financial position and liquidity
- At September 30, 2021, cash and investments totaled approximately $59.32M; working capital was $65.3M, versus $58.8M at December 31, 2020. Stockholders’ equity was $67.89M.
- The filing reports no borrowings or debt. Total liabilities were $10.51M, including operating lease liabilities of $2.55M and deferred revenue. The company stated that cash, investments and operating cash generation should meet requirements for at least 12 months and that it did not anticipate needing additional capital.
- Purchase orders for goods and services totaled $5.61M at quarter-end and were not recognized on the balance sheet.
Outlook, risks and other notable matters
- Management expected higher revenue for the remainder of 2021 than in the comparable 2020 period, driven by devices, accessories, disposables and services; it also expected higher operating expenses, primarily sales and marketing and general and administrative. No numerical full-year guidance was provided.
- Management said COVID-19 impacts remained uncertain, citing potential supply-chain and manufacturing disruptions, procedure postponements, uncertain demand, customer payment delays and staffing or facility disruptions. Device sales cycles had lengthened beyond the historical three-to-six-month range.
- Key risks include reliance on a limited product range, required FDA and other regulatory clearances, sole-sourced critical components, competition and product-liability exposure. The filing reported no material changes to the risk factors in the 2020 Form 10-K.
- The manufacturing and headquarters facility is leased from an entity controlled by CEO and Chairman Roger Susi. The lease was extended through May 2024, with an additional five-year option management expects to exercise. Management stated known legal matters were not expected to have a material effect.
- Disclosure controls were assessed as effective, with no material change in internal control over financial reporting reported during the quarter.
Important facts for investors to verify
- Whether revenue growth, particularly device sales and international growth, continued after Q3, and how COVID-related delays and supply constraints affected orders and fulfillment.
- Whether gross-margin improvement is sustainable given sales mix, production levels and inventory-reserve adjustments.
- The extent and terms of the related-party facility lease, and the status of the $5.61M in purchase commitments and sole-source supply dependencies.
- Whether regulatory approvals, customer demand and cash generation remain consistent with management’s liquidity outlook; the filing provides no numerical forward guidance.