ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read this discussion and analysis together with our audited financial statements, the notes to such statements and the other financial information included in this Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the section entitled “Risk Factors” and elsewhere in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. See “CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS” for a discussion of the uncertainties, risks and assumptions associated with these statements. Due to rounding, certain amounts in the tables herein may not sum precisely.
Our Business
We develop, manufacture, market and distribute MRI compatible medical devices and accessories, disposables and services relating to them.
We are a leader in the development of innovative MRI compatible medical devices. We are the only known provider of non-magnetic IV infusion pump systems specifically designed to be safe for use during MRI procedures. We were the first to develop an infusion delivery system that largely eliminates many of the dangers and problems present during MRI procedures. Standard infusion pumps contain magnetic and electronic components which can create radio frequency interference and are dangerous to operate in the presence of the powerful magnet that drives an MRI system. Our patented MRidium MRI compatible IV infusion pump systems have been designed with a non-magnetic ultrasonic motor, uniquely designed non-ferrous parts and other special features to safely and predictably deliver anesthesia and other IV fluids during various MRI procedures. Our pump solutions provide a seamless approach that enables accurate, safe and dependable fluid delivery before, during and after an MRI scan, which is important to critically ill patients who cannot be removed from their vital medications, and children and infants who must generally be sedated to remain immobile during an MRI scan.
Each IV infusion pump system generally consists of an MRidium MRI compatible IV infusion pump, non-magnetic mobile stand, proprietary disposable IV tubing sets and many of these systems contain additional optional upgrade accessories.
Our 3880 MRI compatible patient vital signs monitoring system has been designed with non-magnetic components and other special features to safely and accurately monitor a patient’s vital signs during various MRI procedures. The IRadimed 3880 system operates dependably in magnetic fields up to 30,000 gauss, which means it can operate virtually anywhere in the MRI scanner room. The IRadimed 3880 has a compact, lightweight design allowing it to travel with the patient from their critical care unit, to the MRI and back, resulting in increased patient safety through uninterrupted vital signs monitoring and decreasing the amount of time critically ill patients are away from critical care units. The features of the IRadimed 3880 include: wireless ECG with dynamic gradient filtering; wireless SpO2 using Masimo® algorithms; non-magnetic respiratory CO2; invasive and non-invasive blood pressure; patient temperature; and optional advanced multi-gas anesthetic agent unit featuring continuous Minimum Alveolar Concentration measurements. The IRadimed 3880 MRI compatible patient vital signs monitoring system has an easy-to-use design and allows for the effective communication of patient vital signs information to clinicians.
We generate revenue from the sale of MRI compatible medical devices and accessories, extended maintenance agreements, services related to maintaining our products and the sale of disposable products used with our devices. The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the United States and internationally. As of December 31, 2025, our direct U.S. sales force consisted of 29 field sales representatives, 4 regional sales directors and supplemented by 10 clinical application specialists. Internationally, we have distribution agreements with independent distributors selling our products.
Selling cycles for our devices have varied widely and have historically ranged between three and six months in duration. We also enter into agreements with IDNs and healthcare supply contracting companies, which are commonly referred to as GPOs in the U.S., which enable us to sell and distribute our products to their member hospitals. GPOs
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negotiate volume purchase prices for hospitals, group practices, and other clinics that are members of a GPO. Under our GPO agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO. Sales to participating IDNs do not have an associated fee.
Financial Highlights and Outlook
Our revenue was $83.8 million in 2025 and $73.2 million in 2024. Our diluted earnings per share was $1.75 in 2025 and $1.50 in 2024. Our cash provided by operations was $24.9 million in 2025, and $25.6 million in 2024.
Our estimated cumulative unit sales of medical devices are as follows:
December 31,
Patient Vital Signs Monitoring Systems 3,397 2,679
Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires us to make estimates and use assumptions that affect the reported amounts of assets, liabilities and related disclosures at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Our significant accounting policies are more fully described in Note 1 to the Financial Statements. However, we believe that the following critical accounting policies require the use of significant estimates, assumptions and judgments. The use of different estimates, assumptions and judgments could have a material effect on the reported amounts of assets, liabilities and related disclosures as of the date of the financial statements and revenue and expenses during the reporting period.
Revenue Recognition
We generate revenue from the sale of MRI compatible medical devices and accessories, extended maintenance agreements, services related to maintaining our products and the sale of disposable products used with our devices. The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the U.S. and internationally. In the U.S. we sell our products through our direct sales force and outside of the U.S. we sell our products through third-party distributors who resell our products to end users.
For many domestic sales, we enter into agreements with IDN systems and healthcare supply contracting companies, commonly referred to as GPOs.
GPO agreements enable us to sell and distribute our products to their member hospitals. Our agreements with GPOs typically include negotiated pricing for all group members established at time of GPO contract execution. Under these agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO. We do not sell to GPOs. Hospitals, group practices and other acute care facilities that are members of a GPO, purchase products directly from us under the terms of our GPO agreements.
We recognize revenue when all of the following criteria are met: we have a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the amount we expect to receive, is determinable and we have transferred control of the promised products or services to the customer. We consider transfer of control evidenced upon the passage of title and risks and rewards of ownership to the customer, which is typically at a point in time, except for our extended maintenance agreements. We allocate the transaction price using the relative standalone selling price method.
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Customer sale prices for our medical devices and related disposables and services are contractually fixed over the contract term. We recognize a receivable at the point in time we have an unconditional right to payment. Payment terms are typically within 45 days after transferring control to U.S. customers. Most international distributors are required to pay a portion of the transaction price in advance and the remaining amount within 30 days of receiving the related products. Accordingly, we have elected to use the practical expedient that allows us to ignore the possible existence of a significant financing component within the contract.
We have elected to account for shipping and handling charges billed to customers as revenue and shipping and handling related expenses as cost of revenue.
In certain U.S. states we are required to collect sales taxes from our customers. We have elected to exclude the amounts collected for these taxes from revenue and record them as a liability until remitted to the taxing authority.
Results of Operations
The following table sets forth, for the periods indicated, selected statements of operations data as a percentage of total revenue. Our historical operating results are not necessarily indicative of the results for any future period.
Percent of Revenue
Year Ended
December 31,
Operating expenses:
General and administrative 21.2 21.8
Sales and marketing 20.8 21.3
Research and development 3.5 3.9
Total operating expenses 45.5 47.0
Income from operations 31.2 30.0
Other income, net 2.6 3.2
Income before provision for income taxes 33.8 33.2
Provision for income tax expense 7.0 6.9
Comparison of the Years Ended December 31, 2025 and 2024
Revenue by Geographic Region
Year Ended
December 31,
(in thousands)
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Revenue by Type
Year Ended
December 31,
Devices: (in thousands)
MRI Compatible IV Infusion Pump Systems $ 31,636 $ 26,599
MRI Compatible Patient Vital Signs Monitoring Systems 26,427 24,412
Ferro Magnetic Detection Systems 1,916 909
Amortization of extended maintenance agreements 2,380 2,249
Services and other 3,891 4,056
For the year ended December 31, 2025, total revenue increased $10.6 million, or 14.4 percent, to $83.8 million from $73.2 million for the same period in 2024.
For the year ended December 31, 2025, revenue from sales in the U.S. increased $10.0 million, or 16.4 percent, to $70.6 million from $60.6 million for the same period in 2024. Revenue from sales internationally increased $0.6 million, or 4.8 percent, to $13.2 million from $12.6 million for the same period in 2024. Domestic sales accounted for 84 percent of total revenue for the year ended December 31, 2025, compared to 83 percent for the same period in 2024.
For the year ended December 31, 2025, revenue from sales of devices increased $8.1 million, or 15.5 percent, to $60.0 million from $51.9 million for the same period in 2024. This increase was the result of higher overall unit sales, particularly our IV infusion pump systems.
For the year ended December 31, 2025, revenue from the amortization of our extended maintenance agreements increased $0.2 million, or 6.7 percent, to $2.4 million from $2.2 million for the same period in 2024. Revenue from sales of our disposables increased $2.5 million, or 17.0 percent, to $17.5 million from $15.0 million for the same period in 2024. Revenue from services and other decreased $0.2 million, or 4.1 percent, to $3.9 million from $4.1 million for the same period in 2024. The increase in ancillary product sales and revenue from amortization aligns with the increased gross sales of our devices.
Cost of Revenue and Gross Profit
Year Ended
December 31,
(in thousands)
Gross profit percentage 77 % 77 %
Cost of revenue increased approximately $2.6 million, or 15.4 percent, to $19.5 million for the year ended December 31, 2025, from $16.9 million for the same period in 2024. Gross profit increased approximately $8.0 million, or 14.2 percent, to $64.3 million for the year ended December 31, 2025 from $56.3 million for the same period in 2024. The increase in cost of revenue and gross profit is primarily due to higher revenue and associated material costs during the year ended December 31, 2025, compared to the same period in 2024.
Gross profit margin remained consistent at 77 percent for the years ended December 31, 2025 and 2024. This is the result of higher average selling prices in 2025 compared to 2024, a reduction in certain raw material costs, and
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improved inventory management; and offset by increased overhead costs related to, employment costs, shipping logistics, and depreciation.
Operating Expenses
Year Ended
December 31,
(in thousands)
Percentage of revenue 21.2 % 21.8 %
Percentage of revenue 20.8 % 21.3 %
Research and development $ 2,975 $ 2,832
Percentage of revenue 3.5 % 3.9 %
General and Administrative
General and administrative expense increased approximately $1.9 million, or 12 percent, to $17.8 million for the year ended December 31, 2025, from $15.9 million for the same period in 2024. This increase is primarily due to higher expenses related to regulatory approval and consulting costs, payroll and employee benefits costs, and non-capital expenses related to the New Facility. These increases are a result of the support needs for the continued growth of the Company.
Sales and Marketing
Sales and marketing expenses increased approximately $1.8 million, or 12 percent, to $17.4 million for the year ended December 31, 2025, from $15.6 million for the same period in 2024. This increase is primarily the result of increased expenses for sales commissions, sales-related travel costs, and higher expenses for payroll and benefits. Higher commissions are related to the sales cycle, and in line with revenue growth. The increases are a result of the continued growth of the Company.
Research and Development
Research and development expense remained relatively consistent at $3.0 million for the year ended December 31, 2025, compared to $2.8 million for the same period in 2024. This is primarily due to higher payroll and benefits costs, offset by lower prototype design and consulting expenses.
Other Income, Net
Other income, net consists of interest income, foreign currency transactional gains and losses, and other miscellaneous income. We reported other income of approximately $2.2 million and $2.3 million for the years ended December 31, 2025 and 2024, respectively. This decrease is primarily the result of lower available interest rates during the year ended December 31, 2025 compared to the same period in 2024.
Income Taxes
We recorded a provision for income tax expense of approximately $5.9 million for the year ended December 31, 2025, compared to a tax expense of approximately $5.0 million for the same period in 2024. Our effective tax rate for the year ended December 31, 2025 was 20.7 percent compared to 20.8 percent for the same period in 2024. The decrease in our effective tax rate is negligible and attributable to a number of immaterial factors.
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Liquidity and Capital Resources
Our principal sources of liquidity have historically been our cash and cash equivalents balances, and our cash flow from operations. Our principal uses of cash are operating expenses, working capital requirements, capital expenditures and dividend payments.
As of December 31, 2025, we had cash and investments of $51.2 million, stockholders’ equity of $94.6 million, and working capital of $71.0 million, compared to cash and cash equivalents and investments of $52.2 million, stockholders’ equity of $86.8 million, and working capital of $66.7 million as of December 31, 2024.
Year Ended
December 31,
(in thousands)
Net cash provided by operating activities $ 24,947 $ 25,624
Net cash used in investing activities (8,421) (8,817)
Net cash used in financing activities (17,601) (14,336)
Comparison of the Years Ended December 31, 2025 and 2024
Operating Activities
For the year ended December 31, 2025, cash provided by operations decreased $0.7 million to $24.9 million, from $25.6 million in 2024. During 2025, cash provided by operations was positively impacted by higher net income, income tax effects, and deferred revenue collections, while negatively impacted by higher accounts receivable, inventory and expense accruals.
Investing Activities
For the year ended December 31, 2025, cash used in investing activities decreased $0.4 million to $8.4 million, from $8.8 million used in 2024. During 2025 and 2024, cash outflows were primarily the cost of our new corporate office and manufacturing facility in Orlando, Florida, which is now completed and occupied.
Financing Activities
For the year ended December 31, 2025, cash used in financing activities increased $3.3 million to $17.6 million, from $14.3 million used in 2024. During 2025 and 2024, cash used in financing activities was related to higher cash payments for dividends and higher taxes paid for the net share settlement of restricted stock units.
Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses.
Our manufacturing operations and headquarters facility is approximately 62,300 square feet located in Orlando, Orange County, Florida. The Company funded the approximately $15.2 million construction project entirely with available cash. The land and facility thereon is wholly owned without related debt.
We believe our sources of liquidity, including cash flow from operations, existing cash, and available financing sources, if needed, will be sufficient to meet our projected cash requirements for at least the next 12 months from the date the financial statements are issued and into the foreseeable future. We monitor our capital requirements to ensure our needs are in line with these available sources. From time to time, if necessary and beneficial, we may explore additional financing sources to meet our working capital requirements, make continued investment in research and development, expand our business and acquire products or businesses that complement our current business. These
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actions would likely affect our future capital requirements and the adequacy of our available funds. Our future liquidity and capital requirements will depend on numerous factors, including the:
● Amount and timing of revenue and expenses;
● Dividend policy;
● Extent to which our existing and new products gain market acceptance;
● Extent to which we make acquisitions;
● Cost and timing of selling and marketing activities; and
● Availability of borrowings or other means of financing.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We develop our products in the U.S. and sell those products into approximately 80 countries throughout the world. We also purchase certain components for our products from foreign vendors. Most of our sale and purchase transactions are denominated in the U.S. Dollar. As a result, our financial results could be affected by factors such as foreign currency exchange rates relative to the U.S. Dollar or weak economic conditions in foreign markets. In addition, changes in exchange rates may also affect the end-user prices of our products compared to those of our competitors, who may be selling their products in local currencies, making our products less competitive in some countries.
Foreign Currency Exchange Risk
We have foreign currency risks related to our cost of revenue denominated in currencies other than the U.S. Dollar, principally the Japanese yen (“Yen”). The volatility of the Yen depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains and losses related to revaluing Yen denominated accounts payable balances. In the event our Yen denominated accounts payable or expenses increase, our operating results may be affected by fluctuations in the Yen exchange rate. If the U.S. Dollar uniformly increased or decreased in strength by 10 percent relative to the Yen, our net income would have correspondingly increased or decreased by an immaterial amount for the year ended December 31, 2025.
Interest Rate Risk
When able, we invest excess cash in money-market funds, and in the past, corporate debt securities or discrete short-term investments. Our interest income is sensitive to changes in the general level of interest rates in the U.S. If market interest rates were to change by 100 basis points from levels at December 31, 2025, we expect a corresponding change of approximately $474 thousand in interest income earned on our excess cash held in interest bearing accounts.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements and Supplementary Data required by this Item 8 are incorporated by reference to information beginning on Page F-1 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. In accordance with Rule 13a-15(b) under the Exchange Act, as of the end of the period covered by this Annual Report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this Annual Report, were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. All internal control systems, no matter how well designed, have inherent limitations.
We conducted an assessment of the effectiveness of our system of internal control over financial reporting as of December 31, 2025, the last day of our fiscal year. This assessment was based on criteria established in the framework Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission, and included an evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. Based on our assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. GAAP. We reviewed the results of management’s assessment with the Audit Committee.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Controls
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
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ITEM 9B. OTHER INFORMATION
Item 408(a) – Rule 10b5-1 Trading Arrangements
On November 5, 2025, Roger Susi, the Company’s President, Chief Executive Officer and Chairman of the Board, adopted a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K) intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (a “10b5-1 trading plan”). The trading plan provides for the potential sale of up to 100,000 shares of the Company’s common stock, subject to certain conditions. The trading plan’s expiration date is November 5, 2026.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Other than as noted below, the information required by this Item 10 will be included in the Proxy Statement to be filed within 120 days after the fiscal year covered by this Form 10-K and is incorporated herein by reference.
Insider Trading Policy
The Company has an Insider Trading Policy governing the purchase, sale and other dispositions of its securities by its directors, officers, and employees that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and Nasdaq listing standards. The Insider Trading Policy is filed with this Form 10-K as Exhibit 19.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 will be included in the Proxy Statement, and such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this Item 12, including Equity Compensation Plan Information, will be included in the Proxy Statement, and such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item 13 will be included in the Proxy Statement, and such information is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item 14 will be included in the Proxy Statement, and such information is incorporated herein by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Annual Report:
2. Financial Statement Schedule: Not applicable.
ITEM 16. FORM 10-K SUMMARY
None.
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EXHIBIT INDEX
Incorporated by Reference
Exhibit Filing Filed
Number Description of Exhibit Form File No. Date Herewith
101.INS XBRL Instance Document X
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101.SCH XBRL Taxonomy Extensions Schema Document X
101.DEF XBRL Taxonomy Extension Definition Document X
101.LAB XBRL Taxonomy Extension Label Linkbase Document X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X
+ Indicates a management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Orlando, State of Florida, on March 6, 2026.
IRADIMED CORPORATION
(Registrant)
Dated: March 6, 2026 /s/ Roger Susi
By: Roger Susi
Chief Executive Officer and President
(Principal Executive Officer)
Each person whose signature appears below constitutes and appoints Roger Susi and John Glenn as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company in the capacities and on the dates indicated.
Signature Title Date
Roger Susi (Principal Executive Officer)
/s/ John Glenn Chief Financial Officer and Secretary March 6, 2026
John Glenn (Principal Financial and Accounting Officer)
/s/ Monty Allen Director March 6, 2026
Monty Allen
/s/ Joe Kiani Director March 6, 2026
Joe Kiani
/s/ James Hawkins Director March 6, 2026
James Hawkins
/s/ Hilda Scharen-Guivel Director March 6, 2026
Hilda Scharen-Guivel
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IRADIMED CORPORATION FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID: 49) F-2
Balance Sheets F-4
Statements of Operations F-5
Statements of Stockholders’ Equity F-6
Statements of Cash Flows F-7
Notes to Financial Statements F-8
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Report of Independent Registered Public Accounting Firm
Stockholders’ and the Board of Directors of IRADIMED CORPORATION
Opinion on the Financial Statements
We have audited the accompanying balance sheets of IRADIMED CORPORATION (the Company) as of December 31, 2025 and 2024, the related statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Deferred Revenue Recorded on the Sale of Extended Maintenance Agreements
As discussed in Notes 1 and 2 to the financial statements, the Company recorded deferred revenue related to the sale of extended maintenance agreements of $6,270 as of December 31, 2025. The Company records contract liabilities, or deferred revenue, when it has an obligation to provide a product or service to the customer and payment is received in advance of the Company’s performance. Revenue related to extended maintenance agreements is deferred and recognized over the extended maintenance agreement period, which can range from one to four years, starting after the expiration of the initial one-year manufacturing warranty. Management’s calculation of deferred revenue on extended
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maintenance agreements is based upon inputs, including the sales price and the term of the extended maintenance agreement, which are derived from the underlying contract with the customer.
We identified the completeness and accuracy of the inputs used by management in the calculation of deferred revenue on the sale of extended maintenance agreements as a critical audit matter due to the impact these inputs have on the amount of revenue to be deferred at year-end and the extent of audit effort required to audit those inputs.
Our audit procedures related to the completeness and accuracy of the inputs used by management in the calculation of deferred revenue on the sale of extended maintenance agreements included the following, among others:
We have served as the Company’s auditor since 2013.
/s/ RSM US LLP
Orlando, Florida
March 6, 2026
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IRADIMED CORPORATION
BALANCE SHEETS
(in thousands)
December 31, December 31,
ASSETS
Current assets:
Prepaid expenses and other current assets 4,757 2,050
Deferred tax asset, net 94 2,820
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued payroll and benefits 3,218 3,772
Other current liabilities 313 466
Accrued income taxes 1,814 —
Deferred revenue, non-current 3,978 2,993
Operating lease liabilities, non-current — 2
Stockholders’ equity:
Total liabilities and stockholders’ equity $ 108,776 $ 98,326
See accompanying notes to financial statements.
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IRADIMED CORPORATION
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Year Ended
December 31,
Operating expenses:
Research and development 2,975 2,832
Income before provision for income taxes 28,361 24,275
Provision for income tax expense 5,881 5,041
Net income per share:
Diluted $ 1.75 $ 1.50
Weighted average shares outstanding:
See accompanying notes to financial statements.
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IRADIMED CORPORATION
STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
Additional
Common Stock Paid-in Retained Stockholders’
Shares Amount Capital Earnings Equity
Dividends declared — — — (5,701) (5,701)
Stock-based compensation expense — — 2,524 — 2,524
Exercise of stock options 3 — 30 — 30
Dividends declared — — — (15,040) (15,040)
Stock-based compensation expense — — 2,919 — 2,919
See accompanying notes to financial statements.
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IRADIMED CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended
December 31,
Operating activities:
Allowance for credit losses (84) (95)
Provision for excess and obsolete inventory 47 88
Depreciation & amortization 1,166 818
Loss on disposal of property and equipment 37 4
Stock-based compensation 2,919 2,524
Deferred income taxes, net 2,727 (698)
Changes in operating assets and liabilities:
Accounts receivable (3,027) 1,762
Prepaid income taxes (2,575) (786)
Prepaid expenses and other current assets (132) (320)
Other assets (40) (17)
Accounts payable (76) (862)
Accrued payroll and benefits (554) 997
Other accrued taxes 150 60
Warranty reserve 26 1
Deferred revenue 1,596 (111)
Other current liabilities (150) (100)
Accrued income taxes 1,814 —
Net cash provided by operating activities 24,947 25,624
Investing activities:
Purchases of property and equipment (7,765) (8,005)
Capitalized intangible assets (656) (812)
Net cash used in investing activities (8,421) (8,817)
Financing activities:
Proceeds from exercises of stock options — 29
Net cash used in financing activities (17,601) (14,336)
Net (decrease) increase in cash and cash equivalents (1,075) 2,472
Cash and cash equivalents, beginning of period 52,234 49,762
Cash and cash equivalents, end of period $ 51,159 $ 52,234
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 3,923 $ 6,512
ROU asset and liability adjustment $ — $ 1,486
See accompanying notes to financial statements.
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IRADIMED CORPORATION
NOTES TO FINANCIAL STATEMENTS
1 — Organization and Significant Accounting Policies
Organization
IRADIMED CORPORATION (“IRadimed,” the “Company,” “we,” “our” or similar terms) was originally incorporated in Oklahoma under the name IRI Development, Inc. in 1992, and we merged our Oklahoma corporation into the newly formed Delaware corporation, IRADIMED CORPORATION, in April 2014. We develop, manufacture, market and distribute a Magnetic Resonance Imaging (“MRI”) compatible intravenous (“IV”) infusion pump system and MRI compatible patient vital signs monitoring systems and related accessories, disposables and services.
We are a leader in the development of innovative MRI compatible medical devices. We are the only known provider of non-magnetic IV infusion pump systems specifically designed to be safe for use during MRI procedures. We were the first to develop an infusion delivery system that largely eliminates many of the dangers and problems present during MRI procedures. Standard infusion pumps contain magnetic and electronic components which can create radio frequency interference and are dangerous to operate in the presence of the powerful magnet that drives an MRI system. Our patented MRidium MRI compatible IV infusion pump systems have been designed with a non-magnetic ultrasonic motor, uniquely designed non-ferrous parts and other special features to safely and predictably deliver anesthesia and other IV fluids during various MRI procedures. Our pump solution provides a seamless approach that enables accurate, safe and dependable fluid delivery before, during and after an MRI scan, which is important to critically ill patients who cannot be removed from their vital medications, and children and infants who must generally be sedated to remain immobile during an MRI scan.
Each IV infusion pump system consists of an MRidium MRI compatible IV infusion pump, non-magnetic mobile stand, proprietary disposable IV tubing sets and many of these systems contain additional optional upgrade accessories.
Our 3880 MRI compatible patient vital signs monitoring system has been designed with non-magnetic components and other special features to safely and accurately monitor a patient’s vital signs during various MRI procedures. The IRadimed 3880 system operates dependably in magnetic fields up to 30,000 gauss, which means it can operate virtually anywhere in the MRI scanner room. The IRadimed 3880 has a compact, lightweight design allowing it to travel with the patient from their critical care unit, to the MRI and back, resulting in increased patient safety through uninterrupted vital signs monitoring and decreasing the amount of time critically ill patients are away from critical care units. The features of the IRadimed 3880 include: wireless Electrocardiogram with dynamic gradient filtering; wireless blood oxygen saturation monitoring using Masimo® algorithms; non-magnetic respiratory carbon dioxide; invasive and non-invasive blood pressure; patient temperature, and optional advanced multi-gas anesthetic agent unit featuring continuous Minimum Alveolar Concentration measurements. The IRadimed 3880 MRI compatible patient vital signs monitoring system has an easy-to-use design and allows for the effective communication of patient vital signs information to clinicians.
Our principal executive offices are located in Orlando, Florida.
Basis of Presentation
Beginning with the current period, the Company changed the rounding of amounts presented in its financial statements to thousands, except per share amounts or where otherwise indicated. All prior-period amounts have been rounded to conform to the current presentation. This change represents a presentation change only and did not affect the Company’s financial position, results of operations, or cash flows.
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Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the reported amount of revenue and expenses during the reporting period. Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, long lived assets, intangible assets, stock-based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes. Actual results could differ from those estimates.
Revenue Recognition
We generate revenue from the sale of MRI compatible medical devices and accessories, extended maintenance agreements, services related to maintaining our products and the sale of disposable products used with our devices. The principal customers for our MRI compatible products include hospitals and acute care facilities, both in the U.S. and internationally. In the U.S. we sell our products through our direct sales force and outside of the U.S. we sell our products through third-party distributors who resell our products to end users.
For many domestic sales, we enter into agreements with integrated delivery health systems and healthcare supply contracting companies, commonly referred to as Group Purchasing Organizations (“GPOs”).
GPO agreements enable us to sell and distribute our products to their member hospitals. Our agreements with GPOs typically include negotiated pricing for all group members established at the time of GPO contract execution. Under these agreements, we are required to pay the GPOs a fee of three percent of the sales of our products to members of the GPO. We do not sell to GPOs. Hospitals, group practices and other acute care facilities that are members of a GPO, purchase products directly from us under the terms of our GPO agreements.
We recognize revenue when all of the following criteria are met: we have a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the amount we expect to receive, is determinable and we have transferred control of the promised products or services to the customer. We consider transfer of control evidenced upon the passage of title and risks and rewards of ownership to the customer, which is typically at a point in time, except for our extended maintenance agreements. We allocate the transaction price using the relative standalone selling price method.
Customer sale prices for our medical devices and related disposables and services are contractually fixed over the contract term. We recognize a receivable at the point in time we have an unconditional right to payment. Payment terms are typically within 45 days after transferring control to U.S. customers. Most international distributors are required to pay a portion of the transaction price in advance and the remaining amount within 30 days of receiving the related products. Accordingly, we have elected to use the practical expedient that allows us to ignore the possible existence of a significant financing component within the contract.
We have elected to account for shipping and handling charges billed to customers as revenue and shipping and handling related expenses as cost of revenue.
In certain U.S. states we are required to collect sales taxes from our customers. We have elected to exclude the amounts collected for these taxes from revenue and record them as a liability until remitted to the taxing authority.
Contract Liabilities
We record contract liabilities, or deferred revenue, when we have an obligation to provide a product or service to the customer and payment is received in advance of our performance. When we sell a product or service with a future performance obligation, we defer revenue allocated to the unfulfilled performance obligation and recognize this revenue when, or as, the performance obligation is satisfied.
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Our deferred revenue consists of advance payments received from customers prior to the transfer of products or services, shipments that are in-transit at the end of a period and sales of extended maintenance agreements. Advance payments received from customers and shipments in-transit are recognized in revenue at the time control of the related products has been transferred to the customer or services have been delivered. Revenue related to extended maintenance agreements is deferred and recognized over the maintenance agreement period, which can range from one to four years, starting after the expiration of the initial one-year manufacturing warranty. This recognition pattern best depicts the transfer of services being provided.
Deferred revenue is classified as current or long-term deferred revenue in our Balance Sheets, depending on the expected timing of satisfying the related performance obligations.
Capitalized Contract Costs
We capitalize commissions paid to our sales managers related to contracts with customers when the associated revenue is expected to be earned over a period of time. Deferred commissions are primarily related to the sale of extended maintenance agreements. Capitalized commissions are included in Prepaid Expenses and Other Current Assets in our Balance Sheets when the associated expense is expected to be recognized in one year or less, or in Other Assets when the associated expense is expected to be recognized in greater than one year. The associated expense is included in Sales and Marketing expenses in our Statements of Operations.
Variable Consideration
Our sales are typically subject to 30 to 60-day customer-specified acceptance provisions primarily for purposes of ensuring products were not damaged during the shipping process. Historically, we have experienced immaterial product returns and, when experienced, we typically exchange the affected products with new products. Accordingly, variable consideration from contracts with customers is immaterial to our financial statements.
Cash Equivalents
All highly liquid instruments purchased with an original maturity of three months or less are classified as cash equivalents. We consider money market fund holdings to be cash equivalents. Money market fund holdings comprise a significant portion of our cash and cash equivalents.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable is recorded at the transaction price of the related products and services. We regularly assess the sufficiency of the allowance for estimated uncollectible accounts receivable. Estimates are based on historical collection experience and other customer-specific information, such as bankruptcy filings or known liquidity problems of our customers. When it is determined that an account receivable is uncollectible, it is written off and relieved from the allowance. Any future determination that the allowance for estimated uncollectible accounts receivable is not adequate could result in changes in operating expense and results of operations. As of December 31, 2025 and 2024, our allowance for credit losses was $191 thousand and $274 thousand, respectively.
Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels of inputs are:
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Financial instruments include cash and cash equivalents, investments, accounts receivable, accounts payable and accrued expenses. Cash and cash equivalents are reported at their respective fair values on the balance sheet dates. The recorded carrying amount of accounts receivable, accounts payable and accrued expenses approximates their fair values due to their short-term nature.
Inventory
Inventory is stated at the lower of standard cost, which approximates actual cost, on a first-in, first-out basis, or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. We may be exposed to a number of factors that could result in portions of our inventory becoming either obsolete or in excess of anticipated usage. These factors include, but are not limited to, technological changes, competitive pressures in products and prices, and the introduction of new product lines. We regularly evaluate our ability to realize the value of inventory based on a combination of factors, including historical usage rates, forecasted sales, product life cycles, and market acceptance of new products. When inventory that is obsolete or in excess of anticipated usage is identified, it is written down to net realizable value or an inventory valuation allowance is established.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over estimated useful lives of the respective assets, which are generally three to five years for computer software and hardware and five to seven years for furniture, fixtures, machinery and equipment, fifteen years for land and building improvements, and thirty years for building. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the improvements.
Repair and maintenance costs that do not extend the useful life of our property and equipment are expensed as incurred.
Intangible Assets
Intangible assets include application and legal costs incurred to obtain patents. We capitalize these costs when we determine that probable future economic benefits exist. In making this determination, we consider the projected future operating results associated with the patents, industry and economic trends, and the entry of new products in the market. Costs incurred prior to this determination are expensed in the period they are incurred. We amortize capitalized patent costs using the straight-line method over their useful lives, which is typically 20 years. Periodic costs incurred to maintain existing patents are expensed as incurred.
Research & Development and Capitalized Software Development Costs
Research and development costs are expensed as incurred. Some of our products include embedded software which is essential to the products’ functionality. Costs incurred in the research and development of new software components and enhancements to existing software components are expensed as incurred until technological feasibility has been established. We capitalize software development costs when the product reaches technological feasibility and cease capitalization when the product is ready for commercial sale. Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over the estimated useful life of the product and included in cost of revenue. Amortization begins when the product is available for general sales to customers.
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Long-lived Assets
Long-lived assets, such as our property and equipment and including right-of-use assets, if any, are tested for impairment whenever changes in circumstances indicate the carrying value of these assets may be impaired. Impairment indicators include, but are not limited to, technological obsolescence, unfavorable court rulings, significant negative industry and economic trends, and significant underperformance relative to historical and projected future operating results. Impairment is considered to have occurred when the estimated undiscounted future cash flows related to the asset groups are less than its carrying value. Estimates of future cash flows involve consideration of many factors including the marketability of new products, product acceptance and lifecycle, competition, appropriate discount rates and operating margins. An impairment is recognized as the amount by which the carrying value is greater than the fair value of the asset or asset group.
Warranty
The Company provides for the estimated cost of product warranties at the time revenue is recognized. While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our suppliers, the estimated warranty obligation is affected by ongoing product failure rates, material usage costs and direct labor incurred in correcting a product failure. Actual product failure rates, material usage costs and the amount of labor required to repair products that differ from estimates result in revisions to the estimated liability. We warrant for a limited period of time that our products will be free from defects in materials and workmanship. We estimate warranty allowances based on historical warranty experience. The estimates we use in projecting future product warranty costs may prove to be incorrect. Any future determination that our provision for product warranty is understated could result in increases to our cost of revenue and a reduction in our operating profits and results of operations. Historically, warranty expenses have not been material to our financial statements.
Stock-Based Compensation
Historically, we have granted three types of employee equity awards, stock options, restricted stock units and performance-based restricted stock units (“PSUs”).
We recognize stock-based compensation expense associated with employee equity awards on a straight-line basis over the requisite service period for stock options and restricted stock units, which is generally four years for employees and two years for the Board. Expense related to our PSUs is recognized straight-line over the requisite performance period, which is three years.
The grant date fair value of our restricted stock units is based on the closing price of our common stock on the date of grant.
In December 2024, the Company granted PSUs to certain employees under the Company’s Long-Term Incentive Pan (“LTIP”), which was adopted under the Company’s Amended and Restated 2014 Equity Incentive Plan. Payouts of the PSUs will be based on the Company’s total stockholder return compared to an appropriate index of total stockholder return. For purposes of the LTIP, total stockholder return is calculated as the share price at the end of the performance period, which is three years, including the reinvestment of any dividends during the performance period, as compared to the share price at the beginning of the performance period. The payout range for participants will be between 0 percent and 200percent, depending on the Company’s relative total return performance. There were no PSU’s granted in 2025.
The grant date fair value of our PSUs is based on a Monte Carlo simulation, the closing price of our common stock, and other pertinent factors on the grant date. Compensation expense for the PSUs is recognized on a straight-line basis over the requisite performance period, which is three years from the grant date.
We elect to recognize forfeitures as they occur.
We issue new shares of common stock upon vesting of restricted stock units and PSUs.
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Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is recorded to offset net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
We recognize the tax benefit of uncertain tax positions, if any, in the financial statements based on the technical merits of the position. When the tax position is deemed more likely than not of being sustained, we recognize the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement.
Foreign Currency
Gains and losses from transactions denominated in currencies other than our functional currency are included in other income, net. Foreign currency gains and losses result primarily from fluctuations in the exchange rate between the U.S. Dollar and the Japanese Yen.
Basic and Diluted Net Income per Share
Basic net income per share is based on the weighted-average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The stock options, restricted stock units, and PSUs granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding.
The following table presents the computation of basic and diluted net income per share:
Year Ended December 31,
(in thousands, except per share data)
Weighted-average shares outstanding — Basic 12,722 12,670
Effect of dilutive securities:
Stock options — 2
Restricted stock units 67 60
Performance-based restricted stock units 65 52
Weighted-average shares outstanding — Diluted 12,854 12,784
Basic net income per share $ 1.77 $ 1.52
Diluted net income per share $ 1.75 $ 1.50
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Stock options to purchase shares of our common stock and restricted stock units excluded from the calculation of diluted net income per share because the effect would have been anti-dilutive are as follows:
Year Ended
December 31,
Anti-dilutive restricted stock units 1,364 2,583
Certain Significant Risks and Uncertainties
We market our products to end users in the United States and to third-party distributors internationally. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses.
We have deposited our cash and cash equivalents with various financial institutions. A substantial majority of our cash and cash equivalents balances exceed federally insured limits. We have not incurred any losses related to these balances.
Our medical devices require clearance from the Food and Drug Administration and international regulatory agencies prior to commercialized sales. Our future products may not receive required approvals. If we were denied such approvals, or if such approvals were revoked or delayed or if we were unable to timely renew certain approvals for existing products, it would have a materially adverse impact on our business, results of operations and financial condition.
Certain key components of our products essential to their functionality are sole-sourced. Any disruption in the availability of these components would have a materially adverse impact on our business, results of operations and financial condition.
Recent Accounting Pronouncements
Accounting Pronouncements Implemented in 2025
InDecember2023,theFASBissuedASU2023-09, IncomeTaxes(Topic740):ImprovementstoIncomeTaxDisclosures,whichrequirespublicentities, onanannualbasis,toprovidedisclosureofspecificcategoriesintheratereconciliation,aswellasdisclosureofincometaxespaiddisaggregatedby jurisdiction.ASU2023-09iseffectiveforfiscalyearsbeginningafterDecember 15, 2024 with early adoption permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. See Note 9 Income
Taxes in the accompanying notes to the financial statements for further detail.
Recently Issued Accounting Pronouncements to be Implemented
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued Accounting Standards Update No.2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact of the adoption of this standard on the related disclosures.
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In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326). This update introduces a practical expedient to address challenges encountered when applying guidance in Topic 326. The updated guidance is effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods, and is applicable to the Company beginning with its annual report on Form 10-K for fiscal 2027. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-05 on its financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). The FASB issued this update to improve the accounting for software costs under Subtopic 350-40. The updated guidance is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, and is applicable to the Company beginning with its annual report on Form 10-K for fiscal 2029. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-06 on its financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-11 and does not expect the standard to have a material impact on its financial statements, as the amendments primarily affect interim disclosures.
2 — Revenue
Disaggregation of Revenue
We disaggregate revenue from contracts with customers by geographic region and revenue type as we believe it best depicts the nature, amount, timing and uncertainty of our revenue and cash flow.
Revenue information by geographic region is as follows:
Year Ended
December 31,
(in thousands)
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Revenue information by type is as follows:
Year Ended
December 31,
(in thousands)
Devices:
Ferro Magnetic Detection Systems 1,916 910
Amortization of extended maintenance agreements 2,380 2,249
Services and other 3,891 4,056
Contract Liabilities
Our contract liabilities consist of:
As of December 31,
(in thousands)
Advance payments from customers $ 486 $ 88
Shipments in-transit 93 2
Extended maintenance agreements 6,270 5,163
Changes in the contract liabilities during the period indicated are as follows:
Deferred
Revenue
(in thousands)
Contract liabilities, December 31, 2024 $ 5,253
Increases due to cash received from customers 5,400
Decreases due to recognition of revenue (3,804)
Contract liabilities, December 31, 2025 $ 6,849
Capitalized Contract Costs
Our capitalized contract costs totaled $239 and $180 as of December 31, 2025 and 2024, respectively.
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3 — Inventory, net
Inventory consists of:
As of December 31,
(in thousands)
Work in process 831 568
Inventory before allowance for excess and obsolete 12,175 10,910
Allowance for excess and obsolete (555) (508)
4 — Property and Equipment, net
Property and equipment consist of:
As of December 31,
(in thousands)
Land improvements 1,409 -
Building 11,526 -
Computer software and hardware 2,187 1,585
Furniture and fixtures 2,078 1,843
Leasehold improvements - 270
Machinery and equipment 3,600 2,645
Construction in-process 23 8,809
Accumulated depreciation (5,072) (4,595)
During the third quarter of 2025, the Company completed the construction of our new facility in Orlando, Florida (“New Facility”). Upon receiving the certificate of occupancy, associated construction in-process balances were allocated to their respective property classifications and depreciation began to be recognized.
Depreciation expense of property and equipment was $796 and $586 for the year ended December 31, 2025 and 2024, respectively.