iRadimed Corp (IRMD) (Q2 2026) Earnings Call Highlights: Strong Demand for New 3,870 Pump ...

Negative Points

• Gross margin declined to 74% in Q2 2026 from 78% in the prior year quarter, due to higher manufacturing costs and inefficiencies from the initial production ramp of the new 3,870 pump.

• Total revenue growth was nearly flat, increasing only 0.5% year-over-year to $20.5 million, as the company transitioned from the older 3,860 pump to the new 3,870 model.

• GAAP net income decreased to $5.2 million ($0.41 per diluted share) in Q2 2026, down from $5.8 million ($0.45 per diluted share) in Q2 2025.

• The effective tax rate increased to 24.2% in Q2 2026 from 21.2% in the prior year quarter, and the company no longer expects a large windfall deduction, leading to a higher expected tax rate for the remainder of the year.

• The company is still in a controlled production ramp phase, with Q3 production planned to more than double to over 300 units, which will continue to incur startup costs and inefficiencies, though at a reduced level compared to Q2.

Q & A Highlights

Q: Can you provide more detail on the operational requirements for the 3,870 pump ramp from 130+ units in Q2 to over 300 in Q3? Are you adding shifts or headcount, and does the pace continue to step up in Q4? A: Roger Susi (President and CEO) explained that the company had already completed the necessary staffing in previous months to meet production demands, so no additional hiring is required. The primary challenge is the manufacturing learning curve, where employees are gaining efficiency and speed through experience. While this learning process is cost-free in terms of new expenses, it requires overtime and initially results in lower efficiency. The focus is on achieving "muscle memory" in production to improve output and reduce costs.

Q: As the 3,860 units phase out, how should we think about the service and disposable revenue attached to that installed base, and what are the expectations for recurring revenue per site with the 3,870 quad replacement? A: Jack Glenn (CFO) noted that disposables revenue is already showing strong growth, with a 14% increase in the quarter, driven by continued utilization of the existing 3,860 base. The company is excited about the future potential of the quad stack (4-channel) systems, which should further drive utilization and recurring revenue growth, as four pumps per site naturally increase usage compared to two.

Q: If a hospital signs a quad system order today, what is the expected lead time for shipment? Are new bookings landing in Q4 or pushing into Q1 of next year? A: Jack Glenn (CFO) stated that current lead times are approximately three months for new orders. Roger Susi (President and CEO) added that as the backlog buildswith bookings more than double the units shipped in Q2lead times will likely extend back to historic levels of four to six months, or potentially longer, given the strong demand for the new system and the pleasant surprise of selling double the number of pumps with quad systems.

Q: What were the key drivers of the strong bookings in Q2, and how does the replacement opportunity for the 3,860 installed base factor into the growth strategy? A: Roger Susi (President and CEO) highlighted that bookings were more than double the units shipped, driven by strong customer acceptance of the new 3,870 pump. The primary growth driver is the replacement of the aging installed base of 3,860 systems, with approximately 6,400 channels over five years old in the US market. Notably, 70% of replacements were for the four-channel quad system, requiring twice the number of pumps and providing a 20%+ lift in ASP per pump, with quad system ASPs exceeding $110,000.

Q: Can you elaborate on the gross margin decline in Q2 and the expectations for improvement in the second half of the year? A: Jack Glenn (CFO) explained that the gross margin declined to 74% in Q2 from 78% a year earlier, reflecting higher manufacturing costs associated with the first sizable production ramp of the 3,870 pump. The company expects gross margins to improve in the second half of the year as 3,870 volumes build and manufacturing efficiencies take hold. Roger Susi (President and CEO) added that startup costs experienced in Q2 are expected to be reduced by more than 50% in Q3, with the company nearing historic manufacturing efficiencies by Q4.

Q: What is the outlook for the patient monitor business, and how did it perform in Q2? A: Roger Susi (President and CEO) reported fantastic news for the patient monitor segment, with a record high of 71 monitors sold in the domestic market during Q2, while maintaining a high ASP. This performance was achieved despite the sales team's focus on the new 3,870 pump launch, demonstrating the strength and demand for the company's MRI-compatible patient vital signs monitoring systems.

Q: Can you provide more color on the revenue breakdown and performance across different product lines in Q2? A: Jack Glenn (CFO) detailed that total revenue was $20.5 million, up 0.5% year-over-year. MRI-compatible patient vital signs monitoring systems contributed $6.7 million, up 12% year-over-year, while ferromagnetic detection systems contributed $0.8 million, up 57%. Recurring revenue showed strong growth, with disposables up 14% to $4.8 million, amortization of extended maintenance agreements up 28% to $0.8 million, and services and other growing to $1.1 million. Domestic sales were 82% of total revenue in Q2.

Q: What is the company's guidance for Q3 and the full year 2026, and how does the production ramp factor into these expectations? A: Jack Glenn (CFO) provided guidance for Q3 2026, expecting revenue of $23 million to $24.5 million, GAAP diluted EPS of $0.49 to $0.54, and non-GAAP diluted EPS of $0.54 to $0.59. For the full year, the company reaffirmed guidance with revenue of $91 million to $96 million, GAAP diluted EPS of $1.90 to $2.05, and non-GAAP diluted EPS of $2.09 to $2.24. The guidance reflects the continued production ramp of the 3,870 pump and expected improvements in manufacturing efficiencies.

Q: How did operating expenses perform in Q2, and what were the key drivers of the changes? A: Jack Glenn (CFO) reported total operating expenses of $8.8 million, down 4% from $9.2 million in the prior year, representing 43% of revenue. General and administrative expenses decreased 10% to $3.9 million, primarily due to lower legal and professional fees, regulatory consulting, and payroll benefits. Sales and marketing expenses increased 6% to $4.2 million, driven by higher sales commissions from the strong bookings. Research and development expenses decreased 25% to $0.7 million, reflecting increased capitalized internal software development on the next-generation monitor.

Q: Can you discuss the company's cash position and capital allocation priorities? A: Jack Glenn (CFO) noted that the company ended Q2 with cash and cash equivalents of $59.1 million, up from $51.2 million at year-end. Cash flow from operations was $5.9 million for the quarter and $

For the complete transcript of the earnings call, please refer to the full earnings call transcript .