Roger Susi - President and Chief Executive Officer Chris Scott - Chief Financial Officer and Secretary.

Chris Lewis - ROTH Capital Partners LLC.

Ladies and gentlemen, thank you for standing by. Welcome to iRadimed Corporation Fourth Quarter 2014 Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

As a reminder, this conference call is being recorded today, February 5, 2015 and contains time-sensitive information that is accurate only as of today. Earlier today iRadimed released financial results for the fourth quarter 2014.

A copy of this press release and also the company’s earnings is available under the heading, News, on their website at iradimed.com. A copy of the press release was also furnished to Securities and Exchange Commission on Form 8-K. A copy of this Form 8-K can be found at sec.gov.

This call is being broadcast live on the internet at the company’s website at iradimed.com. And a replay of the call will be on the website for the next 90 days. The agenda for today’s call will be as follows.

Roger Susi, President, Chief Executive Officer of iRadimed will present opening comments; then Chris Scott iRadimed’s Chief Financial Officer will summarize the company’s financial results before opening the call up to your questions.

Some of the information to be furnished in today’s session will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those focused on future performance, results, plans, and events, and include the company’s expected results for 2015.

iRadimed reminds you that future results may differ materially from these forward looking statements due to a number of risk factors.

For a description of the relevant risk and uncertainties that may affect the company’s business, please see the Risk Factors section of the company’s most recent reports filed with the Securities and Exchange Commission, which may be obtained for free from the SEC’s website in sec.gov.

I would now like to turn the call over Roger Susi, President and Chief Executive Officer of the iRadimed Corporation. Mr.

Susi?.

Thank you, operator, and good morning. For our first quarter results released earlier this morning, we reported 4% increase in revenue to $3.6 million from $3.5 million during the fourth quarter of 2013. We also reported gross margin of 74.4% for the current quarter compared to 72.3% for the 2013 quarter.

And non-GAAP diluted earnings of $0.03 per share compared to our pre-IPO $0.06 per share in the fourth quarter last year. Our current quarter results as previously guided were negatively impacted by the domestic stop ship resulting from the FDA warning letter.

As a review the FDA action began on September 2, when we announced receipt of a warning letter, and upon receipt we immediately ceased all domestic shipments of our pump systems after request of FDA. The warning letter also demanded that we submit a new 510(k) for our pumps, and on November 25, we filed a new 510(k) submission with FDA.

At that time we also began dialogue with the FDA’s compliance office and asked that they reconsider their request of us to cease domestic distribution. Through the use of their discretion and with consideration of the public health need, we were able to resume domestic shipments of our pumps on December 22.

However, without the dose reduction, what we call, DERS, Dose Error Reduction System option. Though this occurred late in the quarter, we managed to rapidly restart distribution, which resulted in higher revenue than we had previously guided.

Through additional dialogue with the FDA and just after year-end on January 28, we resumed domestic distribution of our Dose Error Reduction System option. With this action we are now back to shipping the full suite of our M IV pump systems and options and have fully restarted our U.S. sales activity.

We continue our dialogue and efforts with the FDA to move through the 510(k) processes as quickly as possible. And all indications thus far have been positive to that end. Now, moving on to the revenue and custom orders, we continue to see strong demand for our products from both domestic and international customers.

Our fourth quarter revenue from international customers was strong and came in at approximately 68% of total revenue for the quarter. During 2015, however, we expect a large skew to our domestic business as we return to shipping domestically and expeditiously delivering orders held up during the nearly four months of the recent shipping stoppage.

I’ll now turn it over to Chris for summary of our financial results.

Chris?.

Thank you, Roger. Good morning, everyone. Today, I’ll be discussing our financial results on a GAAP basis, as well as on non-GAAP basis. Our non-GAAP operating results excludes stock compensation expense and related tax effects. And our free cash flow measure is cash flow from operations, less cash used for purchases of property and equipment.

We believe that the presentation of these non-GAAP measures along with our GAAP financial statements provided a more thorough analysis of our on-going financial performance. You can find a reconciliation of our earnings on a GAAP versus non-GAAP basis on the last page of today’s press release.

As Roger stated, revenue in the fourth quarter increased 4% to $3.6 million, compared to $3.5 million for the prior year quarter. Revenue from domestic sales decreased to 32% of total revenue for the current quarter compared to 76% for the same period in 2013.

This decrease was caused by the domestic stop-ship that was in place for all but the last two weeks of the quarter. Revenue from devices was approximately 77% of total revenue for the 2014 quarter, compared to 84% for the 2013 quarter.

Revenue from IV sets and services was approximately 23% of total revenue for 2014, compared to 16% for the same quarter last year. We sold 132 IV pumps in the fourth quarter 2014, compared to 135 pumps in the fourth quarter last year.

Our average selling price for the quarter was approximately $19,700, compared to $21,500 for the same period last year. Gross margin increased to 74.4% in the most recent quarter, compared to 72.3% in the same quarter last year.

The increase in gross margin is due to a number of our lower priced 3850 model pumps being sold last year in the 2013 quarter. The ASP was significantly influenced by the amount of domestic sales as a percent of total revenue when comparing to the same data point in the fourth quarter of 2013.

This global mix of sales drives changes in ASP and margins, as we sell at higher price points through our direct sales force domestically than we do to distributors internationally. Operating expenses for the fourth quarter 2014 increased to 68% of revenue, compared to 52% in the prior-year quarter.

This increase primarily relates to higher payroll and employee benefits costs resulting from our growing employee base, higher legal and professional fees, and higher stock compensation expense. Operating income for the quarter decreased to 6% of revenue, compared to 20% of revenue for the prior-year quarter.

This resulted in non-GAAP operating income of 12% of revenue, compared to 22% for the fourth quarter 2013. Our fourth quarter effective tax rate was negative 59% compared to 30% for the 2013 period. The lower effective tax rate is primarily due to lower than estimated annual taxable income.

Net income for the current quarter was $0.02 per diluted share, compared to $0.05 per diluted share in the 2013 period. Weighted average diluted shares outstanding increased by 2.9 million shares over the 2013 quarter. On a non-GAAP basis, net income was $0.03 per diluted share for the fourth quarter 2014, compared to $0.06 for the prior year quarter.

Now, taking a look at our balance sheet and cash flow. Cash provided by operations increased by $1.1 million to $2.6 million for 2014 from $1.5 million for all of 2013. In December, we used $8 million of cash to purchase investments.

Our free cash flow and non-GAAP measure increased to $2 million for the year ended December 31, 2014, compared to $1.3 million for the 2013 year. 2014 capital expenditures totaled $584,000, which includes $286,000 related to the relocation of our new headquarters facility. Now on to our 2015 financial guidance.

On January 12 of this year, we announced our 2015 annual and first quarter financial guidance. For the full-year 2015, we expect revenue of between $28 million and $29 million and non-GAAP diluted EPS of $0.50 to $0.52.

For the first quarter 2015, we expect to report revenue between $6.8 million and $7 million and non-GAAP diluted EPS of $0.11 to $0.13. With that, I will turn it over to questions.

Operator?.

[Operator Instructions] Our first question comes from Chris Lewis with ROTH Capital..

Hi, guys, good morning. Thanks for taking the question. Roger, I just wanted to start with you in the FDA review, I guess, given this is a first call since the announcement that you are in domestic shipments. Can you walk us through the process in a bit more detail on how that U.S.

commercial resumption came to be, what ultimately drove the decision for the FDA to okay that despite their ongoing review, and what do you think that says about the future regulatory outlook with the pending review of your 510(k) submission?.

Well, yes, there is two areas that we’re feeling with - here within the FDA, one, we call the ODE, which is the - that’s the group that essentially asked for and looked at evaluating devices looking at 510(k), it’s the Office of Device Evaluation. And the other is the enforcement side or compliance as they are called.

And so we basically have this compliance portion attached to that warning letter we got, we announced back in September, where they asked us to seize domestic distribution. And as we got this 510(k) prepared, they also asked for 510(k) as you know.

And as we got it prepared and delivered to them in November, we started to speak to the compliance folks.

And compliance, I guess, when we just brought this initially to their tension, the idea about us having stop shipping our pumps, they were relatively open quickly to the concept of reexamining that enforcement action, and felt that it was possibly too extensive for the situation.

So we were asked –– we had a couple of phone calls and we were asked questions just to clarify for them information that would give them enough input to determine essentially two things, the risk benefit.

And so they asked questions about, what the risks had been, and reviewed the 483 findings and the warning letter comments, and they also looked at the benefit. And I think, I can’t speak for them, but at the end and result was the benefits outweigh the risks and so they allowed us to begin shipping.

And first as we mentioned, we’re just the pump, and they’ve clarified that the subject matter of the 510(k) is articulated with regard to the DORES software, it’s not the whole - it’s not the entire device in all of its features. So with that, they were still little squeamish about alarming the DORES shipment they thought about it some more.

And as you know, a week or two ago, we had another conversation with FDA regarding the DORES, and they again applied the same sort of risk benefit thinking and decided that, it’s under public health interest to also have the DORES option available.

So I think that’s the entire sequence of advances we saw them from our perspective and quite good news, of course..

Great. I appreciate the color there. And then you mentioned you continue to see high level of product interest in orders and sounds like, you really haven’t lost any pending customers out there.

So can you give us a sense of what’s driving the underlying demand there whether it’s from Medrad conversion customers or more of a mix between the conversion and new customers, and then maybe talk about the backlog and potentially quantify that?.

Yes, sure. So it’s still a mix, it’s still a mix, there is still - the greater proportion of the market doesn’t have any sort of pump of Medrad or ours.

And so there is still a great potential from customers that are virgin to this whole concept of IV fluid delivery with the machine, with an IV pump in the MRI and/or one that’s made specifically for MRI is up in the case of ours. So the demand is made up of both.

The Medrad numbers we took quite a few into the bookings throughout last year, and we think there is still quite a few left there as well. So, yes, it’s a - there is business on both fronts and the interest is both fronts. So you asked a little about going forward. So 2015 will be very, very strong as we’ve indicated.

And I mentioned, it’s going to be pumped up for sure, because we have an extension next four months, so nearly four months of product that we were domestic product that is that we couldn’t ship here until very recently. So that that pretty much adds to what we were expecting to do before this whole stop shifting occurred during 2015.

And we still see business beyond that into 2016, there will still be more growth clearly in 2016..

Okay.

And can you talk about your approach to filling that sizable backlog and what it requires in terms of expanding manufacturing capacity and potentially expanding the number of sales reps you have out there?.

Yes. Well, we are still on plan as we talked about that, I think, in at least one or two previous calls that during the - those four months, we did keep building. And that’s one reason when we got this clearance to start shipping. We were able to make up some lost ground rather quickly we had product built.

And we expanded the production, we added yet one more line - test line to our capabilities. So our capacity has increased during these last few months by better than 30%. And as we go to this coming - this quarter that we’re in and the next, we’ll be gaining more capacity, probably half again as much as we’ve already put on.

So the new facility allows us a plenty of space and we think with those folks we’ve already put into manufacturing as they get more skilled, this will be sufficient. This would be good to hold us through to 2015 without any great significant additional things to do there.

The sales force plan was to add some training people to our clinical side, whereas - where we do the in-servicing and so forth, as well as some sales territories. So we still have on the target to add two possibly three sales territories, and two more clinical support people, we have two now, we’re going to double that.

So in this quarter there is a little capacity taken from sales, as we have rather few change in the number of shipments obviously from last quarter, and those shipments require training. So the sales force is a bit engaged in helping with that load.

And as we have the two nursing folks to our clinical support team, that load will reduce on the sales force and they will be able to spend increasing amounts of time looking for new business..

Great. And then maybe a question for Chris, and I’ll jump back in queue. Sounds like you used $8 million during the quarter for purchases of investments. Can you elaborate on what those investments are, and how should we think about cash generation in 2015? Thanks..

Yes. There were corporate debt securities - high quality corporate debt securities, at least, add some excess cash and we thought generating a little bit of yield would be a good idea with that. So that’s where the $8 million went.

And from cash, Chris, your second question was cash from operations for 2015, is that right?.

Yes..

Yes.

So we expect to generate cash, obviously, I don’t have the exact number in front of me, but we do expect to generate cash in 2015, greater than what we experienced here in 2014?.

Okay, thanks. I’ll hop back in queue..

[Operator Instructions] Our next question is follow-up question from Chris Lewis with ROTH Capital..

Hey, guys, just a few follow-ups, in terms of operating margin, you mentioned in the press release talking about production, efficiencies, improving margins. I think your 2015 guidance implies a - kind of a GAAP gross operating margin of 28% to 29% range, if my math is correct.

In the past, you’ve talked about the business being a 25% to 30% operating margin type business.

Given your - how are you expecting the approach kind of in the mid-to-high end of that ranges here, how should we think about the operating margin profile and potential for the company over the longer-term?.

I think over the longer-term, Chris, we stick with that operating margin of that 25% to 30%. This year, given our heavy waiting towards domestic business, I think, operating margin will be higher and non-modeling in the mid-30s this year.

But, again, I think for the long-term, if you’re looking at the long-term, I think that 25% to 30% range that we’ve always talked about is the appropriate range..

Okay, great.

And then in terms of the pipeline, can you provide an update for the development of the pipeline product, MRI monitor, and how should we expect that - the R&D expense line item this year?.

Good question. So the new product is, we’re anticipating being able to start filing something with the FDA to clear that portion for marketing this summer. And, of course, just to give you a little, I guess, again, review touching on the FDA, there is a lot going on with the FDA obviously.

We are still thinking this 510(k), it’s moving forward quite well from what we can see at this point. And so we really think that will be cleared by them as well, which means the warning letter needs to be cleared too.

So we are anticipating a return here inspection from the FDA, so that they can clear that warning letter and we can get this 510(k) for the pumps released. So almost concurrently with all of that, we’ll be submitting another 510(k) mid-to-late summer for the new product.

And the new product should - it’s not - it doesn’t go to the same group at ODE, and it’s a type of device that’s approved generally faster than IV pumps. So we feel fairly comfortable that approval will come late in the fourth quarter, yes should come late in the fourth quarter, if not early in the first quarter next year.

And that - but it’s a revenue plan for 2016, so revenue from that device will start to build in 2016..

Okay. Thanks a lot. Congrats on all the progress..

Hey, Chris, just a follow-up on your cash question. I think we could generate between $7 million and $8 million in cash from operations this year..

Thanks..

And I’m not showing any further questions at this time. I would like to turn the conference back over to our host..

All right. So Chris and I want to thank you all for participating in today’s call. And for your interest and support in iRadimed, and we both look forward to speaking with you soon again. Thank you all..

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect, and have a wonderful day..