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 STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS” for a discussion of the uncertainties, risks and assumptions associated with these statements.
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 a non-magnetic IV infusion pump system that is 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 system has 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 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 warranty 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, 2024, our direct U.S. sales force consisted of 27 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 negotiate volume purchase prices for hospitals, group practices, and other clinics that are members of a GPO. Under our
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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 $73.2 million in 2024 and $65.6 million in 2023. Our diluted earnings per share was $1.50 in 2024, and $1.35 in 2023. Our cash provided by operations was $25.6 million in 2024, and $13.5 million in 2023.
Our estimated cumulative unit sales of medical devices are as follows:
December 31,
Patient Vital Signs Monitoring Systems 2,679 2,166
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 warranty 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 warranty 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
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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 21.8 23.1
Sales and marketing 21.3 18.5
Research and development 3.9 4.4
Total operating expenses 47.0 46.0
Income from operations 30.0 30.6
Other income, net 3.2 2.6
Income before provision for income taxes 33.2 33.2
Provision for income tax expense 6.9 6.9
Comparison of the Years Ended December 31, 2024 and 2023
Revenue by Geographic Region
Year Ended
December 31,
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Revenue by Type
Year Ended
December 31,
Devices:
For the year ended December 31, 2024, total revenue increased $7.6 million, or 12 percent, to $73.2 million from $65.6 million for the same period in 2023.
For the year ended December 31, 2024, revenue from sales in the U.S. increased $8.1 million, or 15.4 percent, to $60.6 million from $52.5 million for the same period in 2023. Revenue from sales internationally decreased $0.4 million, or 3.1 percent, to $12.6 million from $13.0 million for the same period in 2023. Domestic sales accounted for 83 percent of total revenue for the year ended December 31, 2024, compared to 80 percent for the same period in 2023.
For the year ended December 31, 2024, revenue from sales of devices increased $6.0 million, or 13.0 percent, to $51.9 million from $45.9 million for the same period in 2023. This increase was the result of higher overall unit sales, particularly our IV infusion pump systems.
For the year ended December 31, 2024, revenue from sales of our disposables, service and other increased $1.5 million, or 8.5 percent, to $19.1 million from $17.6 million for the same period in 2023. Revenue from the amortization of our extended warranty agreements increased $0.2 million, or 11.7 percent, to $2.2 million from $2.0 million for the same period in 2023. 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,
Gross profit percentage 76.9 % 76.5 %
Cost of revenue increased approximately $1.5 million, or 9.7 percent, to $16.9 million for the year ended December 31, 2024, from $15.4 million for the same period in 2023. Gross profit increased approximately $6.1 million, or 12.1 percent, to $56.3 million for the year ended December 31, 2024 from $50.2 million for the same period in 2023. The increase in cost of revenue and gross profit is primarily due to higher revenue during the year ended December 31, 2024, compared to the same period in 2023.
Gross profit margin was 76.9 percent and 76.5 percent for the years ended December 31, 2024 and 2023, respectively. The increase in gross profit margin is the result of favorable overhead variance adjustments and higher average selling prices in 2024 compared to 2023, a reduction in raw material costs, and increased management oversight of inventory. The increase in year over year sales also positively impacts the Company’s ability to favorably absorb overhead costs and increase gross profit margin.
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Operating Expenses
December 31,
Percentage of revenue 21.8 % 23.1 %
Percentage of revenue 21.3 % 18.5 %
Percentage of revenue 3.9 % 4.4 %
General and Administrative
General and administrative expense increased approximately $0.8 million, or 5.4 percent, to $15.9 million for the year ended December 31, 2024, from $15.1 million for the same period in 2023. This increase is primarily due to higher expenses for legal and professional costs, regulatory approval and consulting costs, and payroll and employee benefits costs. These increases are a direct result of the continued growth of the Company and need for additional support resources.
Sales and Marketing
Sales and marketing expenses increased approximately $3.5 million, or 28.6 percent, to $15.6 million for the year ended December 31, 2024, from $12.1 million for the same period in 2023. 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 direct result of the continued growth of the Company.
Research and Development
Research and development expense remained relatively consistent at $2.8 million for the year ended December 31, 2024, compared to $2.9 million for the same period in 2023. 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 $2.3 million and $1.7 million for the years ended December 31, 2024 and 2023, respectively. This increase is primarily the result of higher interest income during the year ended December 31, 2024 compared to the same period in 2023.
Income Taxes
We recorded a provision for income tax expense of approximately $5.0 million for the year ended December 31, 2024, compared to a tax expense of approximately $4.5 million for the same period in 2023. Our effective tax rate for the year ended December 31, 2024 was 20.8 percent compared to 20.9 percent for the same period in 2023. The decrease in our effective tax rate is negligible and attributable to a number of immaterial factors.
Liquidity and Capital Resources
Our principal sources of liquidity have historically been our cash and cash equivalents balances, our investments, cash flow from operations and access to the financial markets. Our principal uses of cash are operating expenses, working capital requirements, capital expenditures and dividend payments.
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As of December 31, 2024, we had cash and investments of $52.2 million, stockholders’ equity of $86.8 million, and working capital of $66.2 million, compared to cash and cash equivalents and investments of $49.8 million, stockholders’ equity of $71.4 million, and working capital of $59.7 million as of December 31, 2023.
Year Ended
December 31,
Comparison of the Years Ended December 31, 2024 and 2023
Operating Activities
For the year ended December 31, 2024, cash provided by operations increased $12.1 million to $25.6 million, from $13.5 million in 2023. During 2024, cash provided by operations was positively impacted by higher net income, lower inventory, lower accounts receivable, and increased stock compensation. Cash provided by operations was negatively impacted by higher accounts payable and other accruals, higher deferred revenue, and higher deferred income taxes.
Investing Activities
For the year ended December 31, 2024, cash used in investing activities increased $0.8 million to $8.8 million, from $8.0 million used in 2023. During 2024, cash related to investing activities was impacted by purchases of property and equipment, specifically ongoing construction costs for our new corporate office and manufacturing facility in Orange County, Florida.
Financing Activities
For the year ended December 31, 2024, cash used in financing activities increased $0.6 million to $14.3 million, from $13.7 million used in 2023. During 2024, cash used in financing activities was related to cash payments for dividends and 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 23,100 square feet located in Winter Springs, Florida. This facility has been leased from Susi, LLC, an entity controlled by our President, Chief Executive Officer, and Chairman, Roger Susi. Pursuant to the terms of the Amended Lease Amendment, the monthly base rent is $34,133, adjusted annually for changes in the consumer price index.
We believe our sources of liquidity, including cash flow from operations, existing cash, and available financing sources 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. Any equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants that increase our costs. We monitor our capital requirements to ensure our needs are in line with available capital resources. From time to time, 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 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;
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● 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, 2024.
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, 2024, we expect a corresponding change of approximately $489,000 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, 2024, 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, 2024 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
During the three months ended December 31, 2024, none of our directors or "officers" (as such term is defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408(a) of Regulation S-K).
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 report:
2. Financial Statement Schedule: Not applicable.
ITEM 16. FORM 10-K SUMMARY
None.
EXHIBIT INDEX
Incorporated by Reference
Exhibit Filing Filed
Number Description of Exhibit Form File No. Date Herewith
19.1 Insider Trading Policy X
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101.INS XBRL Instance Document X
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 Winter Springs, State of Florida, on March 6, 2025.
IRADIMED CORPORATION
(Registrant)
Dated: March 6, 2025 /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 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, 2025
John Glenn (Principal Financial and Accounting Officer)
/s/ Monty Allen Director March 6, 2025
Monty Allen
/s/ Anthony Vuoto Director March 6, 2025
Anthony Vuoto
/s/ James Hawkins Director March 6, 2025
James Hawkins
/s/ Hilda Scharen-Guivel Director March 6, 2025
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
WehaveauditedtheaccompanyingbalancesheetsofIRADIMEDCORPORATION(theCompany)asof December 31, 2024 and 2023, the related statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to thefinancial 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, 2024 and 2023, 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
ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityisto 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 weplanandperformtheaudittoobtainreasonable assuranceaboutwhetherthefinancialstatementsare 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,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Such proceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthe 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 financialstatementsthatwascommunicatedorrequiredtobecommunicatedtotheauditcommitteeand that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved ourespeciallychallenging,subjectiveorcomplexjudgments.Thecommunicationofcriticalauditmatters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicatingthecriticalauditmatterbelow,providingaseparateopiniononthecriticalauditmatteror on the accounts or disclosures to which it relates.
Deferred Revenue Recorded on the Sale of Extended Warranties
As discussed in Notes 1 and 2 to the financial statements, the Company recorded deferred revenue relatedtothesaleofextendedwarrantyagreementsof$5,162,417atDecember31,2024.TheCompany 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. Revenue related to extended warranty agreements is deferred and recognized over the warranty agreement period, which can range from one to four years, starting after the expiration of the initial one-year manufacturing
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warranty. Management’s calculation of deferred revenue is based upon inputs, including the extended warranty sales price and the term of the extended warranty, 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 warranties as a critical audit matter due to the impact these inputshaveontheamountofrevenuetobedeferredatyearendandtheextentofauditeffortrequiredto audit those inputs.
Ourauditproceduresrelatedtothecompletenessandaccuracyoftheinputsusedbymanagementinthe calculation of deferred revenue on the sale of extended warranties included the following, among
-Weagreedthewarrantysalespriceandwarrantytermtotheunderlyingcustomercontracts.
We have served as the Company’s auditor since 2013.
/s/ RSM US LLP
Orlando, Florida
March 6, 2025
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IRADIMED CORPORATION
BALANCE SHEETS
December 31, December 31,
ASSETS
Current assets:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of operating lease liabilities 153,264 427,963
Accrued income taxes — 250,041
Operating lease liabilities, non-current 1,424 1,615,080
Stockholders’ equity:
See accompanying notes to financial statements.
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IRADIMED CORPORATION
STATEMENTS OF OPERATIONS
Year Ended
December 31,
Operating expenses:
Net income per share:
Weighted average shares outstanding:
See accompanying notes to financial statements.
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IRADIMED CORPORATION
STATEMENTS OF STOCKHOLDERS’ EQUITY
Additional
Common Stock Paid-in Retained Stockholders’
Shares Amount Capital Earnings Equity
Stock-based compensation expense — — 2,186,909 — 2,186,909
Stock-based compensation expense — — 2,524,536 — 2,524,536
See accompanying notes to financial statements.
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IRADIMED CORPORATION
STATEMENTS OF CASH FLOWS
Year Ended
December 31,
Operating activities:
Provision for excess and obsolete inventory 87,641 181,443
Loss on disposal of property and equipment 3,871 12,537
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (320,233) (562,487)
Investing activities:
Financing activities:
Proceeds from exercises of stock options 29,618 176,744
Net increase (decrease) in cash and cash equivalents 2,471,709 (8,198,666)
Supplemental disclosure of cash flow information:
Dividends declared not yet paid $ — $ 7,975,997
ROU asset recognized in exchange for new lease obligation $ — $ 227,982
ROU asset and liability adjustment $ 1,486,093 $ —
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”) 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 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 a non-magnetic IV infusion pump system that is 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 system has 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 Winter Springs, Florida.
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.
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Revenue Recognition
We generate revenue from the sale of MRI compatible medical devices and accessories, extended warranty 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 warranty 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.
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 warranty 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 warranty agreements is deferred and recognized over the warranty 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.
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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 warranty 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.
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, 2024 and 2023, our allowance for credit losses was $274,300 and $368,835, 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:
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.
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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. 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.
Long-lived Assets
Long-lived assets, such as our property and equipment and including right-of-use assets, 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.
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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 and 2023, 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 a peer group or index 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 200 percent, depending on the Company’s relative total return performance.
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 exercise of stock options or vesting of restricted stock units and PSUs.
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
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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,
Effect of dilutive securities:
Performance-based restricted stock units 51,380 38,588
Basic net income per share $ 1.52 $ 1.36
Diluted net income per share $ 1.50 $ 1.35
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 2,583 419
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.
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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 2024
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures. The FASB amended the guidance in ASC 280, Segment Reporting ("ASC 280"), to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is applied retrospectively to all periods presented in financial statements, unless it is impracticable. This new guidance is effective for public business entities for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. The Company adopted this new standard effective December 31, 2024. See Note 6, Segment Information, for disclosures related to the adoption of ASU 2023-07.
Recently Issued Accounting Pronouncements to be Implemented
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). The update enhances the disclosure requirements related to tax rate reconciliations and income taxes paid. The standard will take effect for public business entities for annual periods beginning after December 15, 2024. We are currently evaluating the impact the adoption of this ASU will have, if any, on our financial statements. We are adopting this ASU on January 1, 2025 and will include enhanced disclosures in our fiscal year-end 2025 annual consolidated financial statements, as applicable.
In November 2024, the FASB issued Accounting Standards Update 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"). ASU2024-03 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 expensecaptions 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 interimreporting 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.
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.
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Revenue information by geographic region is as follows:
Year Ended
December 31,
Revenue information by type is as follows:
Year Ended
December 31,
Devices:
Contract Liabilities
Our contract liabilities consist of:
As of December 31,
Changes in the contract liabilities during the period are as follows:
Deferred
Revenue
Increases due to cash received from customers 4,452,412
Decreases due to recognition of revenue (4,559,869)
Capitalized Contract Costs
Our capitalized contract costs totaled $179,597 and $162,134 as of December 31, 2024 and 2023, respectively.
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3 — Inventory, net
Inventory consists of:
As of December 31,
4 — Property and Equipment, net
Property and equipment consist of:
As of December 31,
The increase in construction in-process is related to the continued construction of new executive offices and manufacturing facility.
Depreciation expense of property and equipment was $585,542 and $648,133 for the year ended December 31, 2024 and 2023, respectively.
Property and equipment, net by geographic region is as follows:
As of December 31,
Long-lived assets held outside of the United States consist principally of tooling, which is a component of machinery and equipment, net.
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5 — Intangible Assets, net
The following table summarizes the components of intangible asset balances:
As of December 31,
Amortization expense of intangible assets was $232,114 and $117,047 for the year ended December 31, 2024, and 2023, respectively.
Expected annual amortization expense for the next five years related to intangible assets is as follows (excludes in-process intangible assets):
6 — Segment Reporting
The Company operates in one business segment that develops, manufactures, markets and distributes MRI compatible medical devices and related accessories, disposables and services relating to them. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s appointed chief operating decision maker (“CODM”), who is President, Chief Executive Officer, and Chairman of the Board of Directors, Roger Susi. As the Company has only one operating segment and is managed on a consolidated basis, the measure of profit or loss is consolidated net income or loss. See the Consolidated Statements of Operations.
7 — Stock-Based Compensation
In April 2014, our Board of Directors adopted and our stockholders approved the 2014 Equity Incentive Plan (“2014 Plan”). Upon adoption and approval of the 2014 Plan, the previous equity incentive plan was terminated and the remaining shares available for future awards were canceled. The 2014 Plan initially reserved 1,000,000 shares of our common stock for awards of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, RSUs, performance awards and other stock-based and cash awards. On June 12, 2020, the stockholders approved an amendment to the 2014 Plan, which reserved an additional 1,000,000 shares of our common stock for the various equity awards mentioned above. The 2014 Plan expired in April 2024 and the remaining shares available for granting future awards were cancelled.
On June 15, 2023, our Board of Directors adopted, and our stockholders approved the 2023 Equity Incentive Plan (“2023 Plan”). The 2023 Plan reserves 1,500,000 shares of our common stock for awards of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, RSUs, performance awards and other stock-based awards. As of December 31, 2024, there were 1,309,213 shares available for future granting and vesting of
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awards under the 2023 Plan. The 2023 Plan will expire on June 15, 2033, when any remaining shares available for future awards will be cancelled.
Stock-based compensation was recognized as follows in the Statements of Operations:
Year Ended
December 31,
Stock Options
The following table presents a summary of our stock option activity as of and for the year ended December 31, 2024:
Weighted-Average
Weighted-Average Remaining Aggregate
Exercise Price Contractual Intrinsic
Options Per Share Life (Yrs.) Value
Outstanding beginning of period 3,010 $ 9.84 — $ —
Options exercised (3,010) 9.84 — —
Outstanding end of period — $ — — $ —
The total intrinsic value of options exercised during the year ended December 31, 2024 and 2023 was $132,219 and $698,855 respectively.
No options were granted during the years ended December 31, 2024 and December 31, 2023.
Restricted Stock Units
The following table presents a summary of our RSU activity as of and for the year ended December 31, 2024:
Restricted Weighted-Average
Stock Grant Date
Units Fair Value
As of December 31, 2024, we had $4,692,820 of unrecognized compensation cost related to the unvested RSUs, which is expected to be recognized over a weighted-average period of 2.54 years.
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Performance-Based Restricted Stock Units
The following table presents a summary of our PSU activity as of and for the year ended December 31, 2024:
Performance-Based Weighted-Average
Restricted Grant Date
Stock Units Fair Value
Cancelled/Forfeited — $ —
During the year ended December 31, 2024, the Company awarded 12,272 PSUs. The awards will vest three years from the award date based on the achievement of certain performance criteria approved by the Compensation Committee.
During the year ended December 31, 2023, the Company awarded 13,160 PSUs. The awards will vest three years from the award date based on the achievement of certain performance criteria approved by the Compensation Committee.
Based on the level of achievement of the performance criteria at the end of the three years for each of the PSUs awarded, the number of shares earned can range from zero to 200 percent of the remaining shares outstanding; therefore, the maximum number of shares that can be issued under these awards is twice the original remaining outstanding awards of 44,251 PSUs, or 88,502 shares. Currently, for accounting purposes, we assume the full 88,502 are probable.
For the year ended December 31, 2024, the Company recognized $16,789 in stock compensation expense related to the 12,272 PSUs granted in December 2024 compared to $17,779 in stock compensation expense for the same period recognized in 2023 related to the 13,160 PSUs granted in December 2023.
For the year ended December 31, 2024, the grant date fair value of the PSUs was $71.41 per unit, which was calculated using a Monte-Carlo simulation model with an expected term of three years and a risk-free interest rate of 4.13%. The Monte-Carlo simulation incorporated the volatility and dividend yield for the Company and the Nasdaq US Small Cap Medical Equipment Index. Index volatility was 31.0% and dividend yield was 1.0%. The volatility and dividend yield used for the Company was 46.8% and 1.0%, respectively.
As of December 31, 2024, we had $1,583,150 of unrecognized compensation cost related to the unvested PSUs, which is expected to be recognized over a weighted-average period of 2.34 years.
8 — Other Income, Net
Other income, net consists of:
Year Ended December 31,
Foreign currency exchange losses (42,888) (148,842)
Other income, net 164,346 —
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9 — Income Taxes
The components of the provision for income taxes are as follows: