Welcome to the IRadimed Corporation fourth quarter 2021 financial results conference call. Currently, all participants are in a listen-only mode, and at the end of the call, we will conduct a question-and-answer session. As a reminder, this call is being recorded today, February 4th, 2022, and contains time-sensitive information that is accurate only as of today. Earlier, IRadimed released the financial results for the fourth quarter 2021. A copy of its press release announcing the company's earnings is available under the headings News on their website at iradimed.com. A copy of the press release was also furnished to the Securities and Exchange Commission on Form 8-K and can be found at sec.gov.
This call is being broadcast live over the Internet on the company's website at iradimed.com, and a replay of the call will be available on the website for the next 90 days. Some of the information to be furnished in today's session will contain forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those focused on the future performance, results, plans, and events and may include the company's expected future results. IRadimed reminds you that future results may differ materially from these forward-looking statements due to several risk factors. For a description of the relevant risks and uncertainties that may affect the company's business, please see the Risk Factors section of the company's most recent filed report with the SEC, Securities and Exchange Commission, which again may be obtained for free from the SEC's website at sec.gov.
I would now like to turn the conference over to Roger Susi, President and Chief Executive Officer of IRadimed Corporation. Mr. Susi, please go ahead.
Thank you. Good morning, and thank you all for participating in the call today. I am happy to report another very good quarter of revenue and earnings growth, as well as an exciting and outstanding year. As we reported in this morning's press release, Q4 revenue was $11.9 million, a 39% increase over the fourth quarter of 2020. Non-GAAP earnings were $0.33 or 373% over that fourth quarter of 2020. On a sequential basis, we continued our path of growth trend, with Q4 revenue coming in at 9% over Q3 2021 and adjusted earnings in at over 43%. From the sales perspective, customer demand for our products started off and remained strong all year and continually outpaced our expectations.
We saw strength of demand demonstrated in our record bookings which were 39% higher in the full year 2021 over 2020. Our string of extremely strong bookings growth continued directly into the fourth quarter when bookings increased nearly 48% over the fourth quarter of 2020 on a sequential basis, over 25% from the third quarter of 2021. The level of demand for our products has also allowed us to grow backlog which at the end of the year stood at $10.9 million compared to $4.4 million at the end of 2020. We feel that the strong demand for our products and growing backlog level adds to our confidence and further validates the value that we bring to our customers. Regarding engineering and new product development, much of our attention has turned to supporting the regulatory team towards clearance of our next-generation IV pump.
We've continued to work with FDA on the additional testing and documentation they've been requiring. We expect that this will continue for much of the first half of the year and still anticipate potential clearance coming in the second half of 2022. Other areas of focus for the engineering team have been finalizing the Ferromagnetic Detector and preparing for its first deliveries. We feel very good about where we are with this device, and we believe that we have technologically superior product in this device compared with other devices currently in the field. With our technology and direct sales team, we are well positioned for success in this market. Now before turning the call over to Chris for additional information and updates, I'd like to review our 2022 financial guidance with all of you.
As I mentioned, we have growing confidence and visibility with the strong results of 2021. We believe we are at an inflection point, as customers realize more and more the value that our products bring. Additionally, we continue to take market share with our monitor, and we will have these first deliveries of the FMD in 2022 as well. That said, for the full year 2022, we expect revenue of $51.4 million-$52.2 million, with GAAP earnings of $0.82-$0.90 and non-GAAP earnings of $0.91-$1.01. For the first quarter of 2022, we expect revenue of $12.1 million-$12.3 million with GAAP earnings of $0.16-$0.18 and non-GAAP earnings of $0.20-$0.21.
With that, now I'd like to turn the call over to Chris, and he'll run through some more of the detail. Chris?
Thank you, and good morning, everyone. I'll review our financial results, and as always, I'll be discussing the results on a GAAP basis as well as on a non-GAAP basis. You can find a description of our non-GAAP operating measures in this morning's earnings release. You can also find a reconciliation of these non-GAAP measures to the nearest GAAP measure on the last page of today's release. Also, please keep in mind that when comparing year-to-date results, during 2020, we recognized $3.2 million of general administrative expenses related to our former CEO. As we reported earlier this morning, fourth quarter 2021 revenue was $11.9 million, an increase of 38.9% compared to the fourth quarter last year. On a sequential basis, revenue grew by 9.1% over Q3 2021.
Revenue from domestic sales increased 33.3% to $9.5 million during the fourth quarter, and revenue from international sales increased 66.8% to $2.4 million. Overall, domestic revenue accounted for 79.8% of total revenue for the 2021 quarter, compared to 83.1% for the 2020 quarter. Device revenue increased 49.7% to $8 million for the fourth quarter 2021. This was driven by a 50.9% increase in monitor revenue and a 48.5% increase in IV pump revenue. The average selling price of our MRI Compatible IV Infusion Pump System during the fourth quarter 2021 was approximately $33,800 compared to approximately $37,600 for the fourth quarter 2020.
This decrease relates to higher international unit sales and an unfavorable product sales mix during the current quarter. The average selling price of our MRI Compatible Patient Vital Signs Monitoring System during the fourth quarter 2021 was approximately $41,000 compared to approximately $37,500 in the same period 2020. This increase relates to price increases we have been in the process of instituting across our monitor lineup, partially offset by unfavorable product sales mix and higher international unit sales during the current quarter. Revenue from disposables and service increased 24.3% to $3.4 million for the fourth quarter 2021, and revenue from our maintenance contracts was consistent at a half million dollars for both periods. Gross margin was 77.9% for the 2021 quarter compared to 75.3% for the 2020 quarter.
The increase in gross margin percent is a result of favorable overhead absorption from higher unit production required to meet customer demand, partially offset by higher international sales. We have commented in the past about supply chain matters, and we remain cautious about materials costs at this time. However, we continue to believe that any negative impact from higher costs will likely be limited and partially offset by higher levels of unit production required to satisfy customer demand, resulting in gross margins that are very consistent with our historical ranges. Operating expenses were $6.1 million or 51.7% of revenue, compared to $5.8 million or approximately 67.7% of revenue for the fourth quarter last year.
On a dollar basis, this increase is primarily due to higher bonus accruals, payroll and benefits costs, sales activities expenses, and costs related to regulatory activities, partially offset by lower legal and professional expenses. As a result, income from operations grew 378% to $3.1 million for the 2021 quarter. We recognized a tax benefit during the fourth quarter 2021 of approximately $779,000 compared to tax expense of approximately $27,000 for the 2020 quarter. This decrease is due to tax benefits associated with the exercise and sale of stock options, partially offset by higher taxable income. Going forward, we expect a normalized tax rate. On a GAAP basis, net income was $0.31 per share, compared to $0.05 for the 2020 quarter.
On a non-GAAP basis, adjusted income was $0.33 per diluted share for the fourth quarter 2021, compared to $0.07 for the fourth quarter 2020. Cash from operations grew to $11.3 million for the full year 2021 from $5.8 million for the full year 2020. For the three months ended December 31st, 2021 and 2020, our free cash flow, a non-GAAP measure, was $3.3 million and $2.4 million, respectively. Now I'll provide some additional commentary around the financial guidance that Roger just reviewed. From a revenue standpoint, we are not providing guidance on a product-by-product basis. However, we expect growth across all products, with our monitor leading the way.
We have also begun to forecast modest amounts of revenue from the sale of our FMD and anticipate these sales will ramp throughout the year. We expect gross margins that are consistent with historical ranges and expect higher operating expenses from higher sales commissions and headcount. We also expect additional costs in Q1 and Q2 of 2022 related to the testing and administrative matters from our 510(k) application. We expect the bulk of these additional regulatory and engineering costs will diminish significantly in the second half of the year. We also anticipate a normalized tax rate for 2022, as well as modest growth in our diluted share count. With that, I'll turn the call over for questions. Michelle.
Thank you. If you have a question at this time, please press star and then one on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue please press the pound key. Our first question comes from the line of Scott Henry with Roth Capital. Your line is open. Please go ahead.
Thank you. Good morning, and congratulations on the strong results and guidance for next year. I did have a couple questions. First, with regards to the backlog, is that, you know, tilted in one category versus the other, or is it largely split between monitors and pumps?
I would say, Scott, that we wouldn't normally get into the composition of backlog, but I would say that we've got a healthy levels of backlog across pumps, monitors, and to a smaller extent, disposables.
Okay. You know, at some point, does production catch up such that you fill the backlog or, you know, how should we think about, you know, what happens to that backlog over time? I mean, do you expect to work through it in 2022 or is it just kind of a steady state backlog that we should think about?
I think there's a steady state, and I think we're having those discussions internally of how much backlog should we carry, as say a percentage of you know future revenue, but at the same time manage lead time so that we're not asking our customers to wait too long for our products.
Okay, great. Really strong guidance for 2022. I know, Chris, you're typically a conservative guy, so it makes it even more impressive. Question is, you know, is the guidance reliant on the next generation pump coming out, or does that factor into your outlook for 2022?
We haven't included any revenue contribution from the next gen pump. I mean, our feeling, you know, we still feel, and I think Roger said this in his comments, that, you know, the back half of the year is still our base case. Even if it comes in the back half of the year, it's still gonna have to work through the sales cycle. We may in fact have a few placements towards the end of the year, but you know, the real contribution from the next gen pump is gonna be in 2023.
Yeah. No, to Scott, just Roger to pipe in. We didn't, we included zero revenue of the new pump in this guidance.
Okay, great. Thank you for that color. I guess just the final question, again, on this theme of, you know, why 2022 looks as strong as it does. It sounds like you said that the monitor would be a key driver. At least that's what I took away. I mean, are you just reaching that inflection point where it's gaining traction or, you know, why the optimism for the monitors in 2022?
Well, maybe I could take that one, Chris, if you don't mind.
Yeah, go.
I used that word inflection. I'm gonna use it a lot. You know, we're really seeing that the stars are aligning with the monitor in a few of its aspects, right? Number one, our sales team has really learned how to position it, go in and help physicians use it, hands-on sort of work, compete with the big competitor, Philips. That's a big contributor that the sales teams come up to speed on it. A second big contributor is that, as Chris mentioned, we have been fairly successful at increasing the price of it while we're selling more.
The third aspect that's probably helping us out a bit is it's no secret that the big competitor, Philips, has their hands full with some other issues. That's probably helping us a good bit as well. Overall, probably the biggest point that's causing this inflection is we've got enough of the product out there now. There's certainly, you know, 600 or 800 of these units out there now that it's no longer looked at as maybe a bit of a dare or very new product that you might feel a little risk being the first one to buy. That is probably the largest contributor in the mind of the customer.
I think all of these factors together are what give us great cause for, you know, looking very excitedly at the potential of the monitor into the next, you know, few years at any rate.
Okay, great. Thank you, Roger. That was really helpful. That should do it for me. Thanks again, guys, and congratulations.
Thanks.
Thanks, Scott.
Thank you. As a reminder, if you have a question at this time, please press star then one. Our next question comes from the line of Lisa Springer with Singular Research. Your line is open. Please go ahead.
Thank you, and congratulations on a really strong quarter and a really good year.
Thanks.
My first question is, I wonder if you can comment on how you see sales unfolding in the U.S. market versus the European market in 2022. Are you seeing one market stronger than the other?
Yeah. The domestic market is definitely opening up much quicker. Yeah. Since with the COVID issue, you know, that's primarily what I'm referring to when I say opening, right? I'd say the COVID problems in Europe continue to be a bit of a drag on sales growth there. All in all, the monitor's acceptability and how the buyer is looking at it is very positive in all areas of the world, also Asia, and even we even had a large order in Mexico come in a few weeks ago. That monitor is just really starting to impress, I think.
Okay, excellent. Can you comment on what assumptions you're making about supply chain issues in 2022? Are you looking for them to ease in the second half of the year?
Well, like Chris said, you know, they're, it's no fun. I think that's what Chris was trying to say.
Mm-hmm.
We deal with it, you know, quite a bit on a near-daily basis. I suppose having been in that fight now for the last several months, we feel two things. We feel that, you know, we've gotten our hands around the critical stuff that we need. As you alluded to, we do see that this is a capacity from, you know, chip suppliers and so forth is, it is starting to show a little glimmer of hope that it's not gonna continue. It's not getting worse, and that it's not gonna continue for an exorbitantly long period of time.
Okay. Could you comment for me on the cadence of revenues, quarterly revenues you see in 2022? Are you expecting the majority of revenues in the second half of the year?
No, I think we got a nice even rollout throughout the year. I think the one item that might impact second half revenue or cause it to accelerate a little bit more than the first half is just how the FMD ramps up. Again, it's not a lot of money that's coming in for the FMD, but we do anticipate the second half of the year to be higher than the first half when it comes to that product.
Okay. Very good.
As for the other products, we expect nice even growth to come through.
Okay. Just one more question. You're building up quite a bit of cash on the balance sheet. I'm just wondering, what are your priorities for allocating capital, if you can comment on the cash position?
I think the board continues to have these discussions.
You wanna take that, Chris?
Yeah. I'd say the board continues to have these discussions around capital allocation . It's something that we are very aware of. You know, we don't have any more comments other than that at this point. These are discussions that continue to consume a lot of time at the board level.
Okay. Thank you very much, gentlemen.
Thanks, Lisa.
Thank you.
Thank you. I'm showing no further questions at this time, and I would like to turn the conference back over to Roger Susi for any further remarks.
Well, thank you. Well, please forgive me again for being a bit repetitious, but I'd like to drive home just how very pleased we are with our results and how proud of the entire team's performance this year that we all are. I had said earlier and believe that we are at an inflection point. We've used that word a few times as customers realize more and more the value that our products bring to them, which in turn gives us faith in our guidance. It's a confirmation that we have the right products at the right time. We'll continue to make significant strides in building demand, and we look forward to expanding our momentum continually through 2022. As always, we remain steadfast in our optimism and look forward to speaking with you again soon. Thank you all.
This concludes today's conference call. Thank you for participating. You may now disconnect.