Annual Report for Fiscal Year Ending DECEMBER 31, 2025 (Form 10-K)

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

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:

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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.

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.

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Comparison of the Years Ended December 31, 2025 and 2024

Revenue by Geographic Region

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Revenue by Type

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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

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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

improved inventory management; and offset by increased overhead costs related to, employment costs, shipping logistics, and depreciation.

Operating Expenses

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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.

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.

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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.

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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

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: