Roger Susi, President and Chief Executive Officer of IRADIMED, will present opening comments; then Brent Johnson, IRADIMED's Executive Vice President of Worldwide Sales and Marketing, will discuss customer orders; and finally, Chris Scott, IRADIMED's Chief Financial Officer, will summarize the company's financial results before opening the call up to questions.

Some of the information to be furnished in today's session will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those focused on the future performance, results, plans and events and include the company's expected results for 2019.

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

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

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

Susi?.

Thank you, and good morning. I have the very pleasant task of reporting IRADIMED's first quarter 2019 revenue of $8.4 million today, an 18.7% increase over the first quarter last year.

GAAP net earnings - net income was $0.15 per diluted share, which is 113% higher than last year and non-GAAP net income was $0.13 per diluted share or approximately 32% higher than last year. I'd also like to note that our first quarter bookings performance came in higher than any quarter in the past five years.

We're very pleased with these results, especially when considering our new high watermark in bookings. As I mentioned in the past, all of our functional areas are performing well, and I believe these results are evidence of that.

This quarter was a continuation of the strength and momentum from last year, and we look forward to maintaining and building upon it over the longer term. From our operations perspective, I will start with a quick review of progress we have made regarding our CE Mark for the 3880 MRI patient monitoring system.

As you may recall, we announced in January that our notified body was requiring additional documentation before renewing our EC Certificate, which allows us to place the CE Mark on our monitor. As I said on our fourth quarter call and to be clear today again, only shipments of the 3880 into EU countries are being held by this lapse in CE Marking.

This is not due to any safety concern, and there's no effect on the selling or shipping of our other devices or disposables into the impacted countries. Additionally, this does not impact the patient monitors that are already in the field.

After a tremendous effort by our regulatory team, I am happy to report that we have submitted the additional documentation to our notified body, and we look forward to working with them to resolve this matter in a timely manner.

Once resolved, we will immediately resume shipments of the monitor into customers located in the EU that have patiently waited for resolution and the renewal of our ability to apply the CE Mark. Now related to engineering and our product development efforts.

We continue to make progress on our next-generation IV pump, and I maintain the project calendar without adjustments. At this time, I still expect to release this next-gen pump into international customers in early 2021 and U.S. customers soon thereafter.

Progress on our magnetic detection device is steady, and we continue to believe that we will be ready to launch this product late in the year. As a reminder, the magnetic detection product is not a medical device. And accordingly, we are not required to seek FDA clearance prior to commercialization.

Now I'd like to review our financial guidance for the full year and outline our expectations for the second quarter of 2019. For the full year 2019, we maintain our initial guidance and continue to expect revenue of $38.5 million to $39.5 million with GAAP earnings per share of $0.60 to $0.64 and non-GAAP diluted earnings per share of $0.69 to $0.73.

For the second quarter of 2019, we expect revenue of $8.8 million to $9 million, GAAP earnings per share of $0.11 to $0.12 and non-GAAP diluted earnings per share of $0.14 to $0.15.

Our full year and second quarter guidance includes the impact of the CE Mark issue I just mentioned, which we believe will negatively impact the full calendar year revenue by less than 2%. Additionally, our full year revenue guidance includes less than $1 million in sales on the new magnetic detection device.

Now I'll turn the call over to Brent for a discussion of customer orders and our expanding sales force..

Thank you, Roger, and good morning, everybody. As Roger mentioned in his remarks, the first quarter of our new year was another great booking quarter for the sales team and even exceeded our fourth quarter booking, which is typically our strongest quarter in the year.

On the domestic side, we saw a strong increase in Q1 bookings of IV pumps versus Q4 of last year with increases in both the multi-pump orders and the dual-pump orders.

These increases are tangible results from our focus on the critical care areas of the hospital and shows how this effort drives not only the increased demand for MRI IV pumps, but also drives the demand for increased pump channels as well.

Our critical care strategy has been fully adopted by the sales team, and we expect to see continued growth in this area of our business. We also had another solid quarter with our MRI patient monitor, where we continue to take market share from our competitors.

Our core sales team is fully up to speed on the product, and we're continuing to provide additional education for the new hires we have made as we build out our sales team with more expansion.

We saw record levels of new MRI monitor opportunities added to the sales pipeline in Q1, and we expect those increased opportunities to result in strong sales in the remainder of 2019.

The international team had another good booking performance for the quarter with the MRI patient monitor, even in the face of the regulatory issues that Roger spoke about. Our EU-based distributors remain engaged and active with the product, and we continue to receive orders from these partners.

We're actively supporting these distributors and are planning to recommence the shipment to fulfill those existing orders after our CE certificate is renewed.

On the international personnel side, our new Singapore-based Asia Pacific and Middle East sales director is already making an impact with strong contributions and will provide a great base to continue to build our business in this area of the world.

We're continuing to have success with bundling our new patient monitor with our IV pump and sales opportunities, and we're seeing the strategy succeed in both the domestic and international sides of our business.

As we've previously discussed, by bundling our IV pump and monitor into a combined sale, we can really differentiate our product offering as IRADIMED is the only company in the world with the capability to provide hospitals with a truly mobile patient care system that allows for transporting patients to the MRI and back without having to make multiple time-consuming equipment changeovers.

This patient safety and enhanced workflow concept really resonates with our customers and is a key differentiator between IRADIMED's product offering and anything else in the market. During the first quarter, we continued with our sales force expansion to put more feet on the street and better penetrate the marketplace.

We added 2 additional direct sales managers to our domestic sales team, bringing our total number there to 26, and we're actively searching for 2 additional expansions in Q2 with more hires planned before the end of the calendar year.

We are also actively continuing to search for 1 additional clinical application specialist to give us a total of 6 on our clinical support team. Now I'll turn it over to Chris to summarize the financial results..

Good morning. I'll be discussing our financial results on a GAAP basis as well as on a non-GAAP basis. Our non-GAAP operating results exclude stock-based compensation expense and the related tax effects.

Infrequent tax items are considered based on their nature and excluded from the provision for income taxes as these items are not indicative of our normal provision for income taxes. Free cash flow is cash flow from operations less cash used for purchases of property and equipment.

We believe the presentation of these non-GAAP measures, along with our GAAP financial statements, can be helpful in providing a more thorough analysis of our ongoing financial performance. You can find a reconciliation of these non-GAAP measures to the nearest GAAP measure on the last page of today's press release.

As stated, we reported first quarter revenue of $8.4 million compared to $7.1 million for the same quarter last year, a nearly 19% increase. Geographically, domestic revenue was $7.1 million for the current quarter compared to $6 million for the same quarter last year.

And revenue from international sales was $1.4 million for the first quarter 2019 compared to $1.1 million for the first quarter 2018. Revenue from devices was $6 million for the 2019 quarter compared to $4.8 million for the 2018 quarter.

Included in revenue from devices for the first quarter 2019 is $1.8 million in sales of our MRI-compatible patient vital signs monitor compared to $1.2 million for the 2018 quarter. Revenue from disposables and services was $2 million for the current quarter compared to $1.9 million for the 2018 quarter.

And lastly, revenue from the amortization of our extended maintenance contracts was $0.4 million and $0.3 million in the 2019 and 2018 quarters, respectively. The average selling price of IV pumps recognized in revenue during the first quarter 2019 was approximately $35,800 compared to approximately $33,300 for the same quarter last year.

The increase in ASP is the result of a favorable geographic and product sales mix when compared to the same quarter last year. ASP for our patient vital signs monitoring systems was approximately $37,400 for the first quarter 2019 and approximately $36,300 for the 2018 quarter.

The increase in ASP is due to our favorable product mix when compared to the 2018 quarter. Gross margin was 75.7% for the current quarter and 76.2% for the 2018 quarter. The decrease in gross margin percent is the result of unfavorable inventory overhead costing adjustments partially offset by the higher average selling prices I just spoke about.

Operating expenses for the first quarter 2019 were $4.9 million or 57.8% of revenue compared to $4.3 million or 60.9% of revenue for the first quarter last year.

On a dollar basis, operating expenses increased due to higher payroll expenses from higher headcount, higher sales commissions due to higher sales and higher corporate franchise taxes partially offset by lower regulatory expenses. Our effective tax rate for the current quarter was negative 14.9% compared to 25.4% for the 2018 period.

The lower effective tax rate is primarily due to tax windfalls associated with the exercise of employee incentive stock options during the current quarter. On a GAAP basis, net income for the current quarter was $0.15 per diluted share compared to $0.07 for the first quarter last year.

On a non-GAAP basis, net income was $0.13 per diluted share for the current quarter compared to $0.10 for the first quarter last year. For the three months ended March 31, 2019, cash provided by operations was $700,000 compared to $1.6 million for the same period in 2018.

The decrease is primarily the result of lower cash inflows from accounts receivable due to a large shipment to a single domestic customer near the end of the quarter. This was partially offset by higher net income and cash inflows from deferred revenue items.

For the 3 months ended March 31, 2019 and 2018, our free cash flow, a non-GAAP measure, was $600,000 and $1.5 million, respectively. And as of March 31, 2019, we had $35.4 million of cash and investment. I'll now turn the call over for questions.

Bridget?.

[Operator Instructions]. Our first question comes from the line of Larry Solow with CJS Securities..

Sorry about that. This is Stefanos Crist calling for Larry. Fiscal year '18 pump sales grew about 7%, 15% growth in volume, but that was offset by a 7% decline in price.

Do you expect price to be more stable in 2019 with a similar domestic mix?.

Well, I think we always expect the domestic revenue to be somewhere around 80%. And I mean, pricing for the most part or ASP - the changes in ASP for the most part from one period to the next really relates to how far we move away from that 80%.

And then of course the additional product mix increases that we've seen, our ability to sell more optional features with each of our pumps from one quarter to the next..

Got it. And then one more question.

Can you talk about - more about the impact from the temporary suspension of sales in EU? And do you still expect that issue to be resolved by the end of Q2?.

Yes. This is Roger. As I said, we - I guess the short answer to your question is yes. We put together the information that was required and we got it off to them just very recently. And they've committed to acting on it very quickly.

So we think very quickly for these guys is - by the time it's all said and done, it might take a month or 5 weeks before we hear that, "Yes, it's good." And then it takes them another 3 weeks or so or 4 weeks to actually print out the paper that gets distributed in Europe.

So when stuff hits the ports in Europe, they - the import folks have a place to check it. But as soon as we hear that it's acceptable - that our information we gave them the other day is acceptable and it passes the muster, we'll begin applying the CE Mark based on that here and be preparing shipments to go.

So at this point, we completely anticipate exactly what we announced back in January, that before the end of Q2, we'll be shipping our monitors back into Europe with the CE Mark restored..

[Operator Instructions]. Our next question comes from the line of Scott Henry with Roth Capital..

I guess, starting - pump sales looked very strong in Q1, which is typically a seasonably weak quarter.

I guess my question is do you think some sales pulled forward into Q1 or perhaps trends are just very strong in general?.

Yes, Scott. This is Brent Johnson. The sales we saw in Q1 did include a large order to one of our customers here domestically. But even when you remove that large order, we still had an increase from Q4 to Q1.

And really, I'd go back to - I think this is just more evidence of our critical care strategy really starting to pay off - or continuing to pay off, I should say, and the added increase in the sales force expansion and those new salespeople coming up to speed with their education and training.

So I really believe a big part of it is that, and that's what - and some of it is opportunistic as well. I mean, again, sometimes there's just more opportunities in a quarter than seasonally is typical, but all of that together to really continue our growth in that area.

And that's - and I guess those are some of the reasons that I believe that happened..

Okay. Great. And then on the monitor business, it appears like it declined sequentially from Q4 to Q1. The question there is can you talk a little about - a bit about how OUS performed versus U.S.? I mean, is that decline - is that some of the CE Marking issue? How is the U.S.

business sequentially Q4 to Q1? And maybe there's some seasonality there as well..

Yes. Again, going back to it, we don't give specifics on bookings per category. But speaking generally, there is a little seasonality there. Q4 is typically the strongest quarter for - a very strong quarter for MRI patient monitoring bookings.

I go back to my experience running the sales team at Invivo, which is now Philips, and it was by far always our largest quarter of the year. So it's somewhat seasonality, but again, still a good, solid booking performance from both sides, the international side and the domestic side.

We were hurt on the revenue side, obviously, for international on the MRI patient monitor. And I alluded to the fact that our European distributors are continuing to book orders, and that we expect to catch those orders up or deliver those orders as soon as we get the CE Marking. So that definitely was an effect on the revenue in Q1..

Okay. And then, I mean when I look at your guidance for the year and Q2 when we've got Q1 in the books, it's starting to look more and more back-end loaded.

Is that with the expectation of sort of the monitors selling a lot in Q4? And is there anything in Q4 for the FMD product, although I wouldn't imagine it to be significant?.

Yes to both questions. Again, we do see that it is back-end loaded somewhat. Q4 is obviously going to be very important, but we do see increasing sales throughout the year. This is not - when it comes to the MRI patient monitors, especially in the domestic side of the business.

I talked about the fact that we had a large increase in our opportunities in the first quarter, and I really believe that that's going to translate into increased sales and not just in Q4, that we will see that happening in Q2, Q3 and Q4 rising up. So again, hopefully, that answers your question..

And Scott, maybe just to add, I mean just to kind of give you a few points to think about. The continued growth in the sales team, last year, we hired 6 new sales managers, and they're all up and running 100% today. We're on track this year to continue our expansion and expect production from those folks that we hired early in the year.

So I think that's one point. Two is cleaning up the CE Mark issue and being able to ship back into the European Union market. And then three, as Roger mentioned - you asked about the magnetic detection device. As Roger mentioned in his comments, there is - it's less than $1 million in the fourth quarter related to sales of the FMD.

So maybe just 3 points to think about there in summary.

Okay. Maybe I heard that incorrectly.

Is that $1 million for the first 12 months or for the first quarter of sales?.

It's only going to be for sale in the last quarter, and we expect it to be good for about $1 million in sales in that quarter..

Okay.

So that's not the first 12 months since launch, that's in this year?.

Yes. Less than $1 million in the fourth quarter of this year..

I'm not showing any further questions. I'll now turn the call back over to Mr. Roger Susi for closing remarks..

Thank you, operator. We thank you all for participating in today's call, and I'm pleased with these results and excited about the rest of 2019. And we look forward to reporting back to you after the second quarter..

Thank you..

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a great day..