IRadimed Corp. (IRMD) CEO Roger Susi on Q2 2016 Results - Earnings Call Transcript

| About: iRadimed Corp. (IRMD)

IRadimed Corp. (NASDAQ:IRMD)

Q2 2016 Earnings Conference Call

July 29, 2016 11:00 AM ET

Executives

Roger Susi - President and Chief Executive Officer

Chris Scott - Chief Financial Officer

Analysts

Chris Lewis - ROTH Capital

Larry Haimovitch - HMTC Capital

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the IRadimed Corporation Second Quarter 2016 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded today, July 29, 2016 and contains time-sensitive information that is accurate only as of today.

Earlier today IRadimed released financial results for the second quarter 2016. A copy of this press release announcing the company's earnings is available under the heading, News, on their website at iradimed.com. A copy of this press release was also furnished to the Securities and Exchange Commission on Form 8-K. A copy of the Form 8-K can be found at sec.gov.

This call is being broadcasted live over the internet on the company's website at iradimed.com. And a replay of the call will be available on the website for the next 90 days. The agenda for today's call will be as follows. Roger Susi, President and Chief Executive Officer of IRadimed will present opening comments; then Chris Scott IRadimed's Chief Financial Officer will summarize the company's financial results before opening the call up to questions.

Some of the information to be furnished in today's session that will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those focused on future performance, results, plans, and events, and include the company's expected results for 2016.

IRadimed reminds you that future results may differ materially from these forward looking statements, due to a number of risk factors. For a description of the relevant risk and uncertainties that may affect the company's business, please see the Risk Factors section of the company's most recent reports filed with the Securities and Exchange Commission, which may be obtained for free at the SEC's website at sec.gov.

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

Roger Susi

Good morning. Earlier this morning, we were pleased to report our second quarter revenue of $9.9 million. This compared to $7.6 million for the same quarter last year, representing nearly a 30%. We also reported non-GAAP diluted earnings $0.24 a share an increase of nearly 50% compared with the $0.16 for Q2 of last year.

During the quarter, we continued our sales force expansion and through today we have increased the size of our team, find additional three new sales managers bringing us to a total of 17 with an additional sales manager starting next week. Bear in mind that currently 40% or so of our sales team has less than 12 months experience with it, we remain committed to both expanding and training in order to build the dynamics, high performance sales team. Although as we discussed in the past, summer months are typically a low point booking and we expect this to hold through this year. We still are maintaining our expansion and training efforts, while maintaining focus on our goal of expanding the multi pump system sales.

Regardless the hard work of our expanded sales team beginning to show with a higher volume of quotes being requested by our customers and additionally the dollar side of these quotes is higher than our historical leverage. We would do this as a positive since this we all going to appreciation [indiscernible].

Our production team is operating efficiently and hope that had stabilized. As we now achieved our previously stated goal of six to eight weeks of backlog, allowing us to better meet our customers’ expectations regarding product delivery. Our production team has also been preparing for the first production runs of our new patient vital signs monitoring system and in fact we have a number of international demo unit orders in hand.

From a regulatory perspective, I have some great news of recent progressed report. First the status of the pump [indiscernible]. During our last call we discussed with due to the receipt of a non-substantial equivalents letter effectively closing our long suffering IV pump 510 (NYSE:K) that we filed in November of 2014. We also reported upon our appeal of that letter and in appeal meeting with the FDA that was scheduled and held May 2. Since then, on June 9, we announced what we felt was positive news in that FDA responded favorably to our appeal and had reinstated the review of our 510 (K) application and provide a clear direction to revise certain messages all these displayed by the pump. Additionally FDA stated that no further human factors testing is necessary.

The FDA provide a 180 days first to revise the messages and revalidate pump software and submit the supporting documents for them to review. This work is currently in progress and we anticipate submitting our response in September, with FDA’s final response expected to follow relatively shortly.

Secondly, as announced in today’s press release, we are recently submitted the full 510 (k) application to FDA for patient monitor for MRI. We look forward to hearing back from FDA on our submission and look forward to launch this product later this year. We have a high level of confidence in the monitors’ success, as we continue to receive positive feedback, and if mentioned, we’ve already begun receiving us the list of orders from several of our additional distributors.

We are in the process of training our sales force for the monitors’ capabilities, preparing our production team and build the stocks of monitor material to ensure a successful launch.

Finally, also as announced in today’s press release, we recently underwent an FDA site inspection. And our duty inspection went well and we closed the inspection with only minor observation which we shall completely respond to during next week. We now wait to hear back from FDA on the next steps regarding testing the warning letter. Clearly, we have made significant progress in all the areas of business and we feel its regulatory matters that have demanded so much of our attention of over the past two years that are approaching the positive conclusion.

Now before turning the call over to Chris, I’d like to review our financial guidance for the third quarter and the rest of the year. For the third quarter 2016, we expect revenue of $9.9 million to $10 million and non-GAAP diluted earnings is $0.23, $0.24 per share. For the full year 2016, we now expect non-GAAP diluted earnings with $0.91 to $0.93 per share, combined with our previous guidance of $0.88 – compared sorry, to our previous guidance of $0.88 to $0.90 per share.

We are leaving our full year revenue guidance unchanged to $39 million to $40 million. We feel this is prudent guidance at this time considering sales disability from our developing sales team and as multi pump prospecting target, along with the unknowns of new product introduction.

Now I’d like to turn the call over to Chris for summary of our financial results.

Chris Scott

Good morning. Today I’ll be discussing our financial results on a GAAP basis as well as on a non-GAAP basis.

Our non-GAAP operating results excludes stock-based compensation expense and the related tax effects. Our free cash flow measure is cash flow from operations, less cash used for purchases of property and equipment. We believe that the presentation of these non-GAAP measures along with our GAAP financial statements would be helpful for providing a more thorough analysis of our ongoing financial performance. You can find it reconciliation of these non-GAAP measures to the nearest GAAP measure on the last page of today's press release.

As Roger stated, we reported second quarter revenue of $9.9 million, a 30% increase from the second quarter last year. Revenue from domestic sales was 91% of total for the current quarter compared to 95% for the same quarter in 2015. Revenue from devices was 83% of the total revenue for the current quarter compared to 84% for the same period last year, and revenue from IV sets and services was 17% and 16% of total revenue for the respective periods.

We’ve recognized revenue on 262 IV pumps this quarter compared to 220 pumps in the second quarter last year. Our average selling price for the 2016 quarter was approximately $31,000 compared to approximately $29,000 for the 2015 quarter.

The increase in ASP is a result of favorable sales mix as customers purchased more accessories with each pump order than in the comparative period. Gross margin was 82.4% for the current quarter and 81.3% for the 2015 quarter. The increase primarily the result of higher sales leverage and sales mix partially offset by higher international sales as a percent of total compared to the same period last year.

Operating expenses for the second quarter 2016 increased to approximately 49% of revenue compared to 46% in the prior year quarter. This increase primarily relates to higher stock compensation expense associated with the modification of awards previously granted to our former chairman. Higher payroll and employee benefits related to the increase and the number of employees and higher sales, higher prototype expense associated with the development of our patient monitoring system partially offset by lower research and development expense related to the capitalization of certain software development costs and lower medical device excise tax expense when compared to the same quarter last year.

Our effective tax rate for the current quarter was 33.1% compared to 35.4% for the 2015 quarter. The lower effective tax rate is primarily due to discrete items and research and development patch credits partially offset by higher USP tax expense. On a GAAP basis, net income for the current quarter was $0.19 per diluted share compared to $0.15 per diluted share in the 2015 period.

On a non-GAAP basis, net income was $0.24 per diluted share for the second quarter of 2016 compared to $0.16 for the prior year quarter. Weighted average diluted shares outstanding decreased by approximately 141,000 shares compared to the 2015 quarter.

Now let’s look at cash flow and the balance sheet. For the first six months of 2016, cash provided by operations increased to $3.8 million compared to $2.7 million for the 2015 period. Our free cash flow, a non-GAAP measure was $1.1 million for the first six months of 2016 as we had higher net cash flows for certain operating assets and liabilities, as well as increased CapEx related to [indiscernible] and anticipation of the patient monitor production runs. We also repurchased approximately $10 million of company stock during the period. As of June 30, 2016 we had $20.1 million of cash and investments.

And with that that I'll turn the call over for questions. Andrea?

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Larry [indiscernible] Securities. Your line is now open.

Unidentified Analyst

Hey good morning. I was wondering if you can give us a little more color, Roger you mentioned you’re seeing higher dollar value size of the quotes, is that – do you mean that you’re getting more multiple orders of monitors or the actual pricing on the monitor, excuse me, on the pump going higher or is the combination of the two?

Roger Susi

I’d say good question, Larry and nice to meet you by the way.

Unidentified Analyst

Yeah you too, look forward to chat more.

Roger Susi

No, the quotes are fattening up not because of an increase in the price of what’s on them but because of how much stock has gone, so that part and parcel to what I mentioned is our strategy of going after the multi pump sales have kicked off of seven, eight months ago. We started to really move the sales force into – instead of just going into radiology and trying to selling that one pump per MRI machine, slow down a bit and cover the ancillary department, the ones that [indiscernible] patients down the MRI which we – have always had some business from. If you understand, we talked always about having the multiplier that where it’s more than one pump for MRI scanner and we want to keep that ratio moving northward and eight months ago we really put a strategy in our sales team to go after that.

So what you’re seeing is you’re seeing the effect of that in size which we quite.

Unidentified Analyst

Right. And in light of that we shift to try and get into other departments outside of just radiology, how much is just in general to better frame the market for someone like myself and some other letter through the name. In terms of there is like this 80% of whatever available market, but at some point does it become a tougher sale, in other words, a lot of sales you already had to date more in the [indiscernible] hospitals and places that would really demand the pump or is it still a lot of that opportunity still available. If you can give a little more now that’ll be great.

Roger Susi

Yeah, no the opportunities are [indiscernible], the volume of the quotes, we have more quotes in number and as I said they’re bigger. Do you understand why they’re bigger in dollar value but more in number?

Unidentified Analyst

Yeah.

Roger Susi

We have quite a bit in number compared to last year. And that reflects on the opportunity, so everybody to a man in the sales force sees the opportunity ad were demonstrating it and if we have some this quotes kind of substantiate that. So opportunity is great, now is still – is the opportunity still a huge portion of it coming from children, hospitals specifically, no not really. We’re expanding that and getting – we’re expanding that and these multi pump orders are getting more and more each month and each quarter from areas that have not conventionally been on our radar to go [indiscernible] basically ITUs, but not necessarily [indiscernible] periodic IPs.

Unidentified Analyst

Okay, got it. And then just lastly on the sales force expansion, you mentioned close to or 40% or so your sales force is less than 12 months experience. What’s the average about where people get up to sort of their quarter, loans they generate?

Roger Susi

Good question. The average – boy it’s choppy but…

Unidentified Analyst

Right, you don’t have a lot of year of experience, I guess you’re still ramping so it’s probably a tough question to answer but what sort of your estimate if you will?

Roger Susi

It takes a couple of quarters, it takes two, three quarters. You got to get out there and you generally get their feet wet. So, yeah if they’re not doing so good after three quarters we get a little nervous.

Unidentified Analyst

Got it, okay. Okay, great, thanks. Appreciate it.

Roger Susi

You’re welcome. Thanks.

Operator

Thank you. And our next question comes from the line of Chris Lewis with ROTH Capital. Your line is now open.

Chris Lewis

Hi guys, thanks for taking the question.

Roger Susi

Hi Chris.

Chris Scott

Hey, good morning Chris.

Chris Lewis

I wanted to start on the regulatory front and a couple of different things. First just on the pump 510 (k) appeal process. I guess, can you give us an update on have do you started to work on the FDAs requested changes, if so, how is that process going and what additional work needs to be done there?

Roger Susi

Okay. Yeah, no we didn’t actually get much of a start on it yet, but we’re pretty busy wrapping up the 510 (k) for the monitor and then having inspection, to follow up inspection – there were so many inspection we did. So, it’s really just now we’re starting to being able to get our team back into doing the change for the 510 (k) that they request. With that said, technically it’s not a very big job, we’re just going to change a word and word it on the front of the pump for different work. So the actual engineering side of it is not measured even in REITs, to do that it’s measured in ounce. But of course, we got to revalidate and packaging it all back up into an appropriate answer to send up there and of course, running a validation on the pump takes us about six weeks.

So we run it back to all the B & C process and of course, we test it and that we didn’t do anything we didn’t tend to have change them, even no sort of things that’s what the B & C test does. But that’s consistently something, it always takes six weeks to run, then we’ll run it and we’ll put that in response and that’s it.

Chris Lewis

Okay, great. And then on the facility re-inspection you noted minor observation, does that mean the FDA has already provided you with their complete observation report?

Roger Susi

Yeah, right sorry. Yes, yeah they do that when they closed out the meet.

Chris Lewis

Okay, so they’ll give it to you right there, there is no time gap.

Roger Susi

No.

Chris Scott

No.

Roger Susi

No, so we did that. And yeah, it was – it went perfectly clean slate as I mentioned but with what we came up with, and with some of the comments around them that they gave us verbally we feel pretty comfortable we can have those cleared off the table pretty quickly.

Chris Lewis

Great. And do you see that warning letter being lifted as a requirement before you get new 510 (k) clearance for the pump, do you think they come in conjunction or is it just still PPD?

Roger Susi

We asked our inspector about that and of course, from his standpoint he felt no connection. But we’ve always had this fear because of ODE [indiscernible] the ones that demand to begin with new 510 (k), we’ve had this fear that they might do that even though that’s not the law. So we caution that all along [indiscernible] two years ago. It’s high that we have to say I feel less worried about them pulling a surprise on us, the ODE group and that it will hold it up. However, even if it does I think they’re both going to happen sometime off the mid fourth quarter anyways.

So, yeah I don’t – in other words it’s not a problem even if they do.

Chris Lewis

Great. And then switching gears little bit to the monitor production run, can you just elaborate on what type of processes and kind of investments you’ve made there, I’d say it sounds like you’re starting to manufacture that product. If so, kind of what’s the output and then how do you going to see the output increasing once you do get approval and start selling that product in the back half of this year and to 2017?

Roger Susi

Yeah, you asked well. We have – we’re going to load up with materials for the tune of about 100 to be capable to make about 100. Now we don’t anticipate shipping [indiscernible] fourth quarters that’s not – we’ve all along said that for the year, for this year that the revenue parts from the monitors won’t be that significant in number but it’ll – in the whole year probably not significant but in the fourth quarter it’ll be more significant of course, because that’s when most happen.

Still when I plan to ship that, but we’re going to prepared with materials to have that many in the pipeline as we go to the end of fourth quarter and into the first quarter next year. So I hope that answers your question but where the cost is, what we’ve invested in – the investment side is tooling, there is a lot of tooling that we’ve had to buy to make this thing, we have many rather large die cast parts in there, cast aluminum and those tools are rather expensive. And there are some big plastic that make us the product, so again there are some tooling and that’s all been - management has been put the work already and the tools are, these tools are yield for shots to even as we speak.

Chris Lewis

Great, very helpful. And just one more from me and I’ll hop back in queue. I know you don’t want to give guidance for 2017 yet but obviously we’re going to that point where people are starting to look at it. Any commentary you can provide around your expectations for sales of the monitory product in 2017? Thanks.

Roger Susi

Well, monitor product is of course we hope that we look for to do great things next year. That business is of course, we’ve talked about how the size of that business of what it is and that’s a business is of course, long standing. People – radiology departments have been buying these monitors now for 20 plus years so it’s kind of built into their site to do so. And we hope we can couple into that the stream of things with this what we think is quite a paradigm shifting, game changing approach to a monitor for MRI.

So as you know, there is some maybe 11 – 10, 11, 1,200 of these types of products sold worldwide each year and we hope to get – we hope in 2017 to have a significant piece of that, the 20%, 30% chunk of that would be on our low side of expectation.

Chris Lewis

Okay, great. Thanks. I’ll hop back in queue.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Larry Haimovitch with HMTC. Your line is now open.

Larry Haimovitch

Good morning gentlemen, and congrats on another solid, very good quarter.

Chris Scott

Good morning, Larry.

Roger Susi

Hi Larry.

Larry Haimovitch

So I have a couple of questions. One, obviously domestic is doing very, very well, could you give us a little more flavor, little more color on international? It’s a pretty small part of your business, do you put a lot of energy into it, is it just so much going on domestically that it doesn’t get maybe all the attention that perhaps needs or deserves?

Roger Susi

Well, we probably could exploit those opportunities better that’s my belief, there is more there to be mined out of the international market. Certain – a couple of reasons why we’ve been maybe a little backed off from that market is it takes a lot of regulatory attention to get going in these markets anymore. In the last four or five years a lot of the countries where we would find opportunities have also put in place some pretty – they’ve been produced relatively new regulations and processes to control imports of medical devices. And being new at it, everything hasn’t fully gelled, so the process ends up taking an enormous amount of time for the potential upside. So we pick and choose those pretty carefully, especially the last two year as we talked right, we’ve been basically regulatory wise up to our eyeballs dealing with the FDA.

So we began, we had to really focus carefully on the international stuff we have the bandwidth to take on that, plus international why – we still run the rest of the world essentially with one manager and so that’s going to change over the next 12 months, we’re going to start seeing the world and put in some more international sales management because it’s a lot of work for one guy obviously. So yeah, we’ve been weak there but it does represented opportunity, so we focus on the big markets where we get the most back out of them but there is just a ton of little markets that can add up to significant revenues still waiting out there for us to go and develop.

Larry Haimovitch

Roger, do you envision a day possibly when there is an international market or area that would be large enough that you could actually be direct there or is it likely for the foreseeable future and probably for a long time that I would all with this distributors rather?

Roger Susi

No, Europe as a whole – it’s interesting now that [indiscernible] may jump off but Europe as a whole is something that would be the first target for such thing, yeah we have those thoughts.

Larry Haimovitch

Okay, my follow-up question is just on the U.S. market, do you see any signs of competition in your current market, obviously you’re entering another market light of where you are going to be competing with others, but do you see any signs at all of competition or is the field still wide open for you and it’s really just a matter of you penetrating the market itself without competition?

Roger Susi

We’ve make analysis probably if there was competition, everybody would be interested in that I have to say that would be news and so no, we don’t have [indiscernible] competition and there is nothing that we even can foresee that’s coming our way. So, no it’s still our little plum.

Larry Haimovitch

I have one more final question, I know you did some share buybacks in the quarter, is the buyback program still active?

Chris Scott

Larry, we’d use the money that was authorized by the board at this point.

Larry Haimovitch

Okay. I was looking at the cash flow statement that you’ve released and I see purchases of treasuries – oh there is it, $9.9 million, I was looking at the wrong line, okay I see it, yeah. So you did $10 million and that’s what was authorized by the board?

Chris Scott

That’s right.

Larry Haimovitch

And which is why the cash was down then, right, mainly because of that because you’ve used $10 million for that so that’s where the cash balances drop from 19 to 12?

Chris Scott

Right, yeah. You’re seeing – that’s right.

Larry Haimovitch

Chris, when you budget the year taking away the buyback, how much is positive cash flow from the business itself approximately, just a ballpark number, I’m not trying to get guidance specifically but just the ballpark number?

Chris Scott

We had anticipated that cash from Ops would offset buyback plan.

Larry Haimovitch

Okay. So approximately $10 million?

Chris Scott

Yeah.

Larry Haimovitch

Okay, great. Thanks guys, congrats again.

Roger Susi

Thanks.

Chris Scott

Thanks, Larry.

Operator

Thank you. Our next question comes from the line of Scott [indiscernible] Capital. Your line is now open.

Unidentified Analyst

Hey, can you guys hear me?

Roger Susi

Yes, sir.

Chris Scott

Hey Scott, how are you?

Unidentified Analyst

Good, good. Hey, so now that your lead times are kind of in that target range Chris, I assume shifting from backlog is probably over as of the June quarter so correct me if I’m wrong on that. And then when you guys think about this pipeline you’ve got with the sales guys, I mean is it way up to where you’re highly confident, you ship all of September out of turn?

Roger Susi

We ship – what was the last statement, what did you say, ship all of what? I’ve missed that.

Unidentified Analyst

You ship all September out of inter quarter terms business.

Roger Susi

There are still backlog, so, I mean we still have some backlog. So I think what you’re asking is, do we have to make the third quarter number with all new bookings, is that kind of what you’re asking or what?

Unidentified Analyst

Yeah, yeah I guess I’ve just fell under assumption as you got these lead times down to where you want them, your backlog will stabilize and you’ll shift from the run rate of the business and not from backlog?

Roger Susi

No, and that’s what we’d like to do with – we’ll still probably not that backlog down a little bit to that four to six week ranges just to [indiscernible] more.

Unidentified Analyst

Okay, okay. And then can you just refresh [indiscernible] size of the new product?

Roger Susi

You’re…

Chris Scott

Marketing size of the new product. Scott, you’re breaking up a little bit, but I think you’re talking about market size of the new product, the monitor.

Unidentified Analyst

Yeah.

Roger Susi

Yeah, with the 11 or 1,200 sold a year the ASP overall being what it is and the accessories and the goodies that go along with it, it’s about a $80 million to $90 million market.

Unidentified Analyst

Okay, thanks. Appreciate it.

Operator

Thank you. And we have a follow-up question from the line of Larry [indiscernible] Securities.

Unidentified Analyst

Just a couple quick follow ups. I realized the monitor potentially getting 20% to 30% next year, that’s not guidance I’m not saying it is, but you think that’s actually the attainable number in year one potentially?

Roger Susi

Yeah.

Unidentified Analyst

Okay, great. Just a couple other just more model type questions on the gross margin, obviously been running I know guys target sort of in around 80s and then running a little bit above 80 and you talk about little bit better mix and I realized also most of the sales the domestic so that gives you a better pricing. So, the outlook for the gross margin is that – could it sort of sustain this sort of a little bit above 80% number or how do you look at that?

Chris Scott

I don’t model that higher Larry for forecasting purposes or internal purposes, we’re trying to back it on little bit to something closer to 80.

Unidentified Analyst

Okay.

Chris Scott

Just trying to mitigate any risk associated with the impacts to sales mix or big pumps in international sales or anything like that.

Unidentified Analyst

Okay. And then the G&A number popped up a little bit this quarter, I know you mentioned there was some the stock comp I know it sounds like that’s a onetime thing, that’s probably some of that jump up. Anything else unusual, was there a little higher regulatory stuff for your appeals or legal fees or anything like that or anything else in there that might not ordinarily be in there?

Chris Scott

No, everything that was just normal growth but largest piece of that and a bulk of that came from the modification of the orders, that was probably 80% or 85% of the increase there.

Unidentified Analyst

Got it, but that is a onetime type thing and you’ll come back down on that stock com number going forward?

Chris Scott

Yeah so they were – yeah, this was the period of the modification so there was a bigger charge than what we would anticipate going forward.

Unidentified Analyst

Got it, got it. And then just lastly just touching real quick the monitor, on your guidance for 2016, do you actually – is there a modest amount of monitor sales in there and I guess that would be from international, is that what you’re assuming or is it not really moving needle for the year?

Roger Susi

Well, for the year it’s not a big contributor but – and as far as – yeah, gross margins, right. So…

Unidentified Analyst

Yeah I would just – yeah, go ahead.

Roger Susi

There’ll be a number of those monitors that are going to go to international people and this demo gear, so that’s the most heavily discounted stuff.

Unidentified Analyst

Right.

Roger Susi

Yeah, so…

Unidentified Analyst

Okay.

Roger Susi

Yeah, so we’re going to have them but the initial bowlers of these monitors will go out – will probably in the lowest gross margins that you’ll see in that product because heavy on demo gear.

Unidentified Analyst

Got it. And internationally, do you not need to get – do you have to get September approve or you essentially able to sell that, how does that work?

Roger Susi

Yeah, well Europe is CE marked country so with our quality system that makes [indiscernible] we can pass – basically we pass it on our own quality system. And the other market that we anticipate some early revenues on is Japan, now that does taken approval but we’ve been working real hard on that one for about three months already. So, yeah we got some markets doing and some markets are CE.

Unidentified Analyst

Right. So you actually, you have gotten the CE in Europe or you anticipate that in the coming months?

Roger Susi

Yeah we’re putting that stuff, you build what’s the technical filing.

Unidentified Analyst

Right.

Roger Susi

Yeah, so we’re building that now.

Unidentified Analyst

Much lower hurdle, I know it’s a much lower hurdle right then…

Roger Susi

We have an 10-K filing so we’re building that now, so yeah that’s – we don’t anticipate any problem at all with the CE marking timing and getting some revenue from Europe. The Japanese ones are not so much under our control because they do their own independent thing but we’re working hard with our distributor in Japan and for example, we’ve already got the 200 operating operators manual translated into Japanese and some testing done and continuing in Japan. So working hard and making sure that comes through as well.

Unidentified Analyst

Got you. Okay, great. Thank you very much.

Roger Susi

You’re welcome.

Operator

Thank you. This concludes our Q&A session for today. I would like to turn the call back over to Roger Susi for any closing remarks.

Roger Susi

Thank you. I’d like to say again that I’m pleased with the second quarter and with the progress that we’ve made this year in all areas of the business. Chris and I look forward to reporting back to you again later this year. And thanks for participating in today’s call and for your interest and support of IRadimed.

Operator

Thank you. This concludes the call. Please disconnect.

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