Hello, everyone, and thank you for joining us during the Lytham Partners 2024 Investor Select Conference. My name is Joe Diaz, Managing Partner of Lytham Partners. Today we welcome IRadimed Corporation, which trades on the Nasdaq under the ticker IRMD. Joining us from the company is Jack Glenn, Chief Financial Officer. Before Jack jumps into his presentation, I want to remind everyone that he's available for one-on-one meetings throughout the conference. If you have not already signed up and would like to schedule a one-on-one, please visit lythampartners.com/select2024. From there, you can click on the Investor Registration button to make your one-on-one selection. Jack, thank you very much for joining us today. We greatly appreciate your time, and I will turn over the floor to you right now.
Well, thank you, Joe, and welcome everyone. Just get started here. Before we go too far into what we do at IRadimed, I thought it would be helpful just to kind of give a few key metrics of what we believe sets us apart from other med tech companies of relative size. First, we finished 2023 with revenues of $65.6 million, and record profits with gross margins over 75% and operating margins over 25%. Our revenue growth has exceeded 20% over the last three years, and our balance sheet is exceptionally strong, with nearly $50 million in cash and no debt at the end of 2023. This was before we recently announced and paid in the current quarter a special dividend of $0.48 and established a quarterly dividend of $0.15 per share.
So here at IRadimed, we are focused on MRI safety and patient care, and our two main products are an IV infusion pump and a vital signs monitor. We also provide an MRI room entry safety device, referred to as an FMD, that detects any ferrous metal entering the MRI room. So here's a little timeline of Iradimed. Our Roger Susi, our CEO and founder, pioneered the development of the first MRI patient monitor in the late 1980s when he founded Invivo Research. Roger went on to develop the first wireless technology in the MRI in the 1990s, and Invivo was sold in 2005, and a year later was acquired by Philips Medical, where the MRI monitor developed by Roger has been marketed and sold by Philips over the last 18 years.
After the sale of Invivo, Roger set out to develop the world's first MRI-compatible IV pump and founded IRadimed. In 2012, IRadimed began selling the IV pump through a direct sales force and went public in 2014. In 2016, Roger and IRadimed introduced the first truly non-magnetic MRI patient monitor to compete with the Philips unit he had designed several years before. We are currently working on with the FDA clearance for a next-generation IV pump, and I will be addressing the status of that process a bit later. What makes this special niche, and what is the challenge of having equipment in the MRI room? First, ferrous components create serious hazards and create the possibility of a piece of equipment becoming a projectile and being sucked into the magnet bore.
Also, the device can be altered by the magnetic field, as well as the image artifact, interfering with diagnosis due to the RF noise. And lastly, there is a significant burn risk from the use of conductive materials, as evidenced by the chart showing the various MRI adverse type, event types reported to the FDA. Our technical expertise in IP is a core strength of the business. The technical breakthrough for developing a true non-magnetic IV pump was the finding and developing of a piezoceramic ultrasonic motor. Also, we developed MRI wireless connectivity via proprietary radio design. This IP is well protected, with 19 issued patents and three pending. So here is our 3860 IV infusion pump system, the world's only non-magnetic, non-magnetic IV pump. It is our foundational product, and it has a wireless remote display and can have two channels via a sidecar unit.
Our current installed base is approximately 6,600 units, and although our initial assumption was one pump forever, every MRI, we discovered that as we grew our installed base, many customers needed multiple units for each MRI as a workflow solution in the transport of patients to and from the critical care unit. This is what we refer to as the multiplier effect. The gross margin for our IV pumps is in the mid-70% range, and our proprietary IV sets provide a recurring revenue component, which equates to approximately 25%-30% of our total revenues. As I mentioned earlier, we are working on the clearance of a next-generation pump with a 510(k) filing date planned for this upcoming May, and a commercial release date planned for the second half of mid-2025.
We believe we have a significant replacement opportunity with the new pump, as a large percentage of our existing installed base is nearing the end of its useful life, and I will, I will get into what I mean by for us and the potential revenue in just a minute. So we have seen the multiplier effect with our IV pump and with many of our customers, and we believe we can do the same with our MRI monitor. Compared to our competition, we are the only true non-magnetic monitor, and we are portable, something that our main competitor, Philips, is not on both counts. Because of this, we believe we can continue to grow our monitoring business by taking market share from our competitor, and also increasing our total addressable market by this multiplier effect. So this is our 3880 portable and non-magnetic vital signs monitor.
Our direct competitor, as I mentioned, is Philips, and we have an installed base of approximately 2,200 units. The unit has gross margins similar to our pump in the mid-70% range. The monitoring business also has a recurring revenue component, just like the IV pump, and it has our proprietary electrodes and disposables, which also provide a re-growing recurring revenue base for us. So the total global market opportunity for us is quite large, as shown here, and although there are nearly 38,000 MRI systems globally, the real focus of our efforts is on the providers in the high acuity market, which is made up of approximately 5,700 MRI scanners here in the U.S., and approximately 21,000 units in the rest of the world. Another key item of note is the global number of MRI scans performed annually, which is close to 100 million.
From a market penetration standpoint, our monitor installed base is approximately 2,200 units, which we believe compares to Philips' installed base of approximately 10,000 units. We sell and market our products through a direct sales force here in the U.S., which consists of 28 direct sales people, and we sell internationally through a worldwide network of distributors in approximately 80 countries, managed by two sales personnel. We strive for best-in-class service and have a clinical training with the technical service team at our Florida facility, and we have five field clinical specialists spread throughout the U.S. So here is our next generation pump, for which we plan to file our 510(k) with the FDA this upcoming May. As I discussed earlier, we believe the next generation IV pump replacement opportunity is quite large.
Based on the projected installed base of approximately 7,500 units or so by the end of 2024, and an estimate of 4,000 or so units at the end of their life, a rather rough calculation of 25% of those end-of-life units would be approximately 1,000 units, or roughly 2 times our current shipments of the IV, IV pumps. This essentially would be doubling of our current annual pump business. As for our growth roadmap, we are targeting $100 million in revenues by the end of 2026. This is based on two key factors, first being the continued growth of our monitoring business, as I mentioned, over the next 2-3 years, as we continue to take market share from Philips. Then second, being the significant pump replacement market, with the planned introduction of our new pump in the second half of 2025.
In addition, we continue to leverage our recurring revenue opportunity with our proprietary disposables, which currently account for less than 0.5% of the nearly 100 million scans per year I mentioned earlier. As I stated earlier, our revenue growth has been steady over the last 3 years, along with consistent profitability and cash flow growth. Our gross margin has remained steady over the last 5 years at 76%, and this really evidences our pricing power and our continued efficiencies in our manufacturing here in Orlando. As you can see, on a quarterly basis, our revenue and EPS growth has been very consistent, as well as we were able to raise our revenue and earnings guidance twice in 2023.
So in summary, we believe we can continue to grow based on, first, our ability to continue to create and drive customer value for our customers in the MRI market; secondly, our distinct advantage of technical expertise in that market; third, our robust global sales and distribution network; and lastly, the growing adoption of our products as our installed base continues to grow. And lastly, we have a very experienced management team here, Roger Susi being our founder and CEO, myself, a CFO with over 30 years of experience in the medical device industry, along with Steve Kachelmeyer, our VP of Regulatory, and Lynn Neuhardt , our VP of R&D. And with that, I would just say thank you again, Joe, very much, and appreciate the opportunity to be part of the 2024 Lytham Investor Select Conference.
Well, Jack, thanks so much for your insights here. A couple questions, if I might. Outside of Philips and Invivo, are there other competitors in your market?
Well, in the IV pump market, we have no competitors. The only real competitor, I guess you could say, is that hospitals will sometimes have a workaround using long lines instead of having, you know, a pump there in, next to the MRI, and that really has, you know, proven to be not very safe. So that, there is no real true competition on the IV pump side. On the monitoring side, of course, we have Philips, and that's our main competitor there, Philips being in the market for the last 15, 20 years. And there are maybe a couple of the smaller players in the European market, but really it's between us and Philips. And if...
Again, you know, we've introduced our monitor about five to six years ago, and we believe that we continue to take market share from Philips and eat into that installed base with a really better product, as I mentioned, based on its portability and mobility throughout the hospital.
Would it be reasonable to assume that you have a, quote, unquote, "moat" in this business that makes it very, very difficult for anybody else to get into it, and for your competitors to stop your momentum? Can you comment on that?
Sure. No, I think we do, and we believe that, you know, with our technology and the ability that we have currently, you know, the only non-magnetic IV pump and monitor, truthfully, we think that, yeah, there is a definite moat there, and it would be very difficult for others to enter into the market. Not saying it couldn't be, but certainly we believe with our technology that there is definitely that in both of our products.
Right. You maintain very high margins. You, you mentioned manufacturing in Orlando. Do you do all of your own in-house manufacturing, or do you have a contract manufacturer that works for you, and is it all in the U.S.?
Yes, we do all of our manufacturing and assembly here in Orlando. And we think that's one of our key strengths, actually, because we don't contract out, and that really helped us in our flexibility in getting through, you know, the issues that many faced, through the last few years on the supply chain, and we were able to overcome a lot of those based on our flexibility in being able to do things here. We currently are actually our capacity is a bit constrained here in the current facility, and that's why we recently purchased some land and are beginning to actually hopefully break ground here shortly on a new facility that will basically increase our manufacturing capacity by two and a half times.
So then that new building we're planning and hoping to have it completed by about a year or so from now.
Does your business lend itself to international markets? Are you operating internationally to any great extent as we speak?
Yes.
What's the plan going forward on that?
Yes, we are, and it makes up about, roughly about 20% of our total revenue, and that's been pretty consistent. There is a definite market for our products in certain countries. We are primarily in Europe, in some of the main countries, Germany being one of our key countries that we operate in. We operate through distribution throughout the world. We do have two, two people internally that manage those distributors, and we also have a pretty good presence in the Far East, and particularly in Japan and Taiwan and so forth. So yeah, it is a nice market for us, but the real, you know, the dominant market for us really is here in the U.S. for right now.
Now, you, you spoke about the multiplier effect. Can you just touch on that a little bit more?
Sure.
Sounds like a fascinating impact on your business.
Yeah, because of our... Initially, when we had developed the IV pump, the thought was that it would be one pump for every one MRI. And what it, what it turned out to be is that we started to grow the market, many of the larger, you know, hospitals that we you know, particularly target started buying more IV pumps. And the reason was, of course, to help increase their throughput throughout the MRI, as they line up patients, and it's gonna be very busy. The certainly the portability and the ability to move patients through, really, we started to see what we call that multiplier effect.
What we think it certainly can work, we believe, in the monitoring market will be very much the same, is because our monitor, unlike Philips, is portable, and it can be moved throughout the hospital with the patient. Philips' monitor actually has to sit there. It weighs 110 pounds and is not easily mobile. So that, we believe, with our monitor, we can see some of the same multiplier effect that we saw with the IV pump, where we'll have multiple monitors utilized throughout the hospital and improve the transport of the patient, you know, through the MRI and back to, say, the critical care unit.
So, with the appropriate patient, could that monitor actually be in that patient's room, monitoring what's going on, and then they just move it, along with the patient, into the MRI? Is that part of what's going on?
That is kind of yeah. Basically, when they hook up a patient to go to the MRI, they would take them off their current monitor, per se-
Right
And put them on our monitor. Our monitor certainly is, because of it being, you know, the technology being non-magnetic and so forth, it really has a premium price over a general monitor that you would see in the hospital. But they would then, you know, hook up the patient to our monitor, say in the critical care unit, and then transport them down to the MRI, and that's where the mobility of our product really plays. And so, again, that's why we, you know, we believe that multiplier effect can take place with the monitor as well.
So just going back to the dynamics of the number of units between you and Philips that are out there, I think you mentioned Philips has 10,000 units deployed, and you've got... You've got how many?
We've got roughly around you know 2,200 units worldwide. The estimate that we believe with Philips is somewhere around that 10,000 or so units. So we believe that, you know, there's still the overall market is, in MRIs, new MRIs, is probably, you know, mid- to single-digit, you know, kind of growth. But overall, we believe there's still plenty of opportunity based on that, you know, installed base at Philips and our ability to take market share from them that, you know, has a significant opportunity over the next few years.
Given your plan to double your revenues from 2022 to, I believe it was 2026, what percent of the market does Philips have now, and what's your goal for you to have in 2026?
Yeah, we believe that, you know, this is sort of rough estimates, but we believe that, you know, we have about a third of the market or so right now. As we looking going forward, we certainly think, you know, as we continue to take market share, it becomes more difficult as you continue down that path. But certainly, you know, we believe we can be approaching over half the market, you know, by then or more.
Right. Wow, that's with regards to the difference between Philips and Invivo and your product, what are the primary cost and feature differences between the products?
Yeah, so the cost, the price of you know ours versus Philips is pretty much the you know very nearly the same. The average selling price here in the U.S. is somewhere in that $75,000-$80,000 range. They're very similar in price. Ours may be a little bit higher on the pricing side, but the big difference really is in the technology, and ours being a... As you can see, it's a monitor that's you know the size of a lunchbox. It can... Again, it's transportable, can move with the patient, unlike Philips, which weighs 110 pounds, is basically anchored there in the MRI room and can't be transported easily. So that's the big difference between the two.
Ours is truly, again, non-magnetic, whereby Philips is usually using some shielding and so forth in gravity, basically, a way to make theirs, you know, be able to work inside the MRI.
Right. And as it relates to the special dividend or the quarterly dividend that you mentioned, what are the factors that went into bringing these things to be?
Yeah, so, you know, the company, it goes back about a little over two years, where, you know, back. As I mentioned, we have very strong cash flow, and it built up quite a bit of cash on the balance sheet. And the board, it decided that a good way to return some of that back to the shareholders was via a special dividend. And so back two years ago, there was a dividend of $1 per share, and then last end of 2022, there was a... Or beginning of 2023, there was a payment of another special dividend of $1.05 per share.
And so when it came to the end of this current year, the board had thought that, again, it would be a good idea to also, you know, pay a special dividend, but also maybe establish a quarterly dividend, which is $0.15 per share, as we had just recently announced and paid in this current quarter. And so I think that was looked as a way of the board, you know, getting back some of that return to our shareholders via a dividend versus continuing... We believe that certainly, again, that we have enough cash on the balance sheet for our operating needs and capital expenditures going forward. So again, a good way to get some of the return back to the shareholders.
Well, Jack, we're gonna have to leave it there. We thank you so much for your time today. Really appreciate it. Fascinating potential growth story here, and we'll see how the street reacts to all the great things you've got coming down the pipe. So again, thank you for your time. Before we wrap it up here, a quick reminder to our audience, to anyone that has not already signed up for a one-on-one meeting with IRadimed, please visit lythampartners.com/select2024 and click the Investor Registration button to make your one-on-one selections. We all hope you enjoy the conference. Have a great day. And Jack, again, thank you so much for your time and your insights.
Thank you again, Joe.