Imricor Medical Systems, Inc. (IMR) Earnings Call Transcript & Summary

Good morning, everyone, and thanks for joining the webinar where we present Imricor Medical Systems' results for the third quarter. I'm Simon Hinsley with NWR Communications, and with me today are Steve Wedan, Imricor's President and CEO, and Jonathon Gut, our CFO. Before Steve takes over and walks through the presentation that's up on the screen, a quick reminder that questions can be submitted using the Q&A button located at the bottom of your screen. Analysts are also able to raise a hand and ask a question audibly. So with that, Steve, I'll turn things over to you.

Appreciate that, Simon. During the quarter we just wrapped up—the third—regulatory headway began converting into commercial momentum. Right now we have two hospital customers in the U.S., and each one sits among America's leading children's hospitals. Revenue climbed by more than five times compared with the same quarter last year, though it captures only one of the two NorthStar sales, because our installation at Dallas Children's wrapped up after the period closed, so that revenue landed in the fourth quarter; regarding regulatory matters, 14 of the 15 FDA submissions that collectively comprise our full U.S. Every submission to the platform has either been cleared or is being reviewed by the agency at this point, and Philips—among the biggest med tech firms globally—is now alongside us in the market as a new commercial partner. Our vision is displayed right on this slide, and across 20 years it has stayed the same: delivering interventional magnetic resonance, or IMR, to each cardiac center worldwide. What is different now is that customers, a global partner, and a sales force stand behind this vision. The quarter's highlights are what I will walk you through today. After Jon takes you through the financials, I'll return to discuss where we stand on the regulatory front, our partnership with Philips, and the reasons I think the industry is now converging on the future we've been building. We'll then open it up for your questions. Our disclaimer is on the screen, and I'd encourage everyone to give it a read when you have a moment; for those just getting acquainted with the story, I'll begin by explaining what Imricor is. We're not simply a medical device company — we're a technology platform, and we're creating a whole new medical field: interventional MR, or IMR. In an IMR lab, heart procedures—and ultimately, more broadly across the body—are guided by real-time MR imaging instead of X-ray imaging. MR makes soft tissue visible. X-ray does not. With IMR, physicians can view the heart they are treating and observe what their delivered therapy accomplishes, all while the patient and the medical team get zero radiation. Making this happen demanded that we build the technology platform first. That is easy to say; doing it is extraordinarily difficult. In fact, it was too difficult for any of the med tech giants and many smaller companies, all of which attempted this more than 20 years ago. We've developed the capital equipment, the software layer within our guidance system, NorthStar, along with the MR-compatible consumable devices that power our recurring revenue model. Then we moved into electrophysiology. That's a huge market that keeps expanding, already beyond $15 billion each year. More recently, we launched Imricor Cardiovascular, which targets interventional cardiology — a completely new market on top of electrophysiology. Looking ahead, we'll keep expanding into neurology, oncology, and beyond. That's how a new medical field comes into being. Having the chance to work for — or invest in — a company pioneering a whole new industry is something very few people get to do in their lifetime. I take tremendous pride in what we've achieved up to this point, and I'm eager about the impact we can have in the worldwide healthcare sector. Yes, it's been a long road, but when shallow, short-lived advantages get eroded more quickly than ever these days, I take comfort in knowing how deep and broad the moat we've built is — spanning technology, expertise, patents, and regulatory approvals. Any competitor trying to get into our space has to complete the same drawn-out journey that we're just now finishing. Here's a look at the key points from what was an outstanding quarter, with the biggest item right at the top: our U.S. commercial launch is now underway. Turning to business matters, as noted earlier, we've secured agreements with our first two US clients, with more on the way. Rady Children's Hospital-San Diego was the first to set up a commercial IMR cardiac catheterization program in the United States, less than a month after we received FDA clearance for the NorthStar system, and that launch marked the start of our US rollout; Children's Medical Center Dallas came on board as our second American customer only two weeks afterward. That client, together with the early commercial results from our Philips compatibility efforts — which I'll discuss shortly. Both of those wins came by way of Imricor Cardiovascular, a fresh business vertical we started following our 3D mapping and guidance system, NorthStar, together with NorthStar's FDA clearance; it unlocks a U.S. market encompassing over 250 children's hospitals and more than 2,000 adult hospitals. We additionally partnered with DLL to introduce Imricor Finance. Hospitals may now distribute payments over a span of one to seven years while Imricor receives full payment upfront, and that provides our customers with real flexibility regarding how they take up the technology. Turning to strategy: following thorough testing of every piece of Imricor equipment with Philips MR scanners, we obtained the Philips compatibility declaration. That unlocked Philips' MR installed base for NorthStar for the first time across both the U.S. and Europe. Subsequently, in late August at the European Society of Cardiology Congress in Munich, we kicked off our commercial alliance with Philips by unveiling the interventional MR lab solution—a turnkey cardiac IMR lab constructed on the Philips 1.5 Tesla BlueSeal platform. It ranks among the most significant accomplishments of this quarter, and I'll share much more on that soon, right after that siren passes. All right. Regulatory activity has not slowed down at all. Every one of our outstanding 510(k) filings has now gone in. Both NorthStar and the Vision-MR Diagnostic Catheter have received clearance for pediatric patients, so that covers every age group. For our Class III devices — seven products in total, with the Vision-MR Ablation Catheter among them — the FDA has accepted and closed the PMA manufacturing model. Out of the fifteen submissions required, fourteen are either cleared or currently under review, bringing us quite close to putting our complete transformative platform into the hands of patients throughout the United States. On the financial front, we've hit a turning point for revenue. During this quarter, revenue increased $188,000 — over five times the figure from the same period last year. Sure, that's coming off a low base, but it's the first clear sign that our U.S. clearances are turning into revenue. Dallas came in after the quarter closed, so that revenue gets recognized in Q4. As the installed base grows and the platform gets established, we anticipate revenue will continue to build; we ended the quarter holding more than $62 million in cash, about AUD 90 million, so we're doing this launch from real financial strength. With that, I'll hand things over to Jon, who'll take you through the key numbers. Jon, over to you.

Thanks, Steve, and good morning, everyone. I'll just note that every figure here is unaudited and stated in US dollars. Revenue for the third quarter was $188,000, which came from selling and installing NorthStar at Rady Children's Hospital-San Diego — our first site in the U.S. Our second NorthStar sale, to Children's Medical Center Dallas, was installed once the quarter had already ended, so we'll recognize that revenue in the fourth quarter. We're still keeping a tight grip on costs. We've brought on staff in sales, marketing, manufacturing, R&D, and regulatory, and those investments are delivering results. The regulatory team we bolstered during the second half of 2025 is a prime example. The additional personnel we brought onboard last year are playing a major role in the regulatory progress Steve just walked through. Although we have increased headcount, it's important to point out that personnel costs during the quarter contained approximately $1 million in non-cash stock-based compensation tied to the vesting of performance-based stock options that were granted in an earlier year. Note nine of the financial statements in our Form 10-Q, which we released earlier today, provides a fuller discussion of these stock-based compensation expenses. Our net loss for the quarter came to $2.9 million, a 17% decline compared with the prior period. However, that reduction largely stems from the change in fair value of the convertible notes and warrants, which represent non-cash accounting adjustments. Excluding those fair value adjustments, our net loss came in at $7.7 million. Now let's turn to the balance sheet. As Steve noted, we're heading into this U.S. commercial launch period with a solid cash position of $62.1 million — roughly AUD 90 million at today's exchange rate. We don't hold any marketable securities anymore, so that entire balance now shows up as cash and cash equivalents. Inventory overall has risen to $2.6 million, compared with $1.5 million at the close of last year, since we brought in stock ahead of the pivotal U.S. launch. The convertible notes are carried at an estimated fair value of about $29 million. Since both notes come due in December 2026 and March 2027, they're carried as current liabilities. As I've mentioned previously, fair value isn't what we'd hand over were those notes paid off in cash at maturity. At September 30, principal still owed plus accrued interest on the two notes totaled $7.1 million. The option and warrant liabilities stem from securities issued in prior financing rounds, and US GAAP also requires them to be carried at fair value. During the quarter, the current portion of the option liabilities was settled after the underlying CDI options were exercised in July. During the quarter, cash used in operations came to roughly $7.3 million. The main driver of that increase was the staffing investments I mentioned earlier, with some added support from modest growth in professional services tied to product development and expenses from our ongoing clinical trials. The proceeds from maturing marketable securities are U.S. Treasury bills, which form part of our treasury management approach. All of those Treasury bills matured during the quarter, so by September 30 our full cash balance appears as cash and cash equivalents. Steve, over to you.

Thanks, Jon. Now let's look at where we stand on the regulatory side. What Imricor is doing here isn't typical. For most medical device companies, the path is one device through the FDA, then word of an approval or clearance; in our case, a whole ecosystem is moving through multiple FDA approval processes at the same time. Slide 10 here follows our regulatory progress, and it covers not one device but the entire platform. This year has been remarkable. Back in February, 7 of our 15 submissions had been cleared or were with the FDA. As of today, that number is 14 of 15. We've completed six device clearances, reviewed and closed 2 PMA modules, have 6 submissions currently under review, and just 1 PMA module remains to be filed. On this slide, changing a box from yellow to green might look like a small thing. But it isn't. Think of a ruler standing upright — 30 cm, or 12 in. About 3,000 sheets stacked up would reach that height. The submission this slide represents would stand taller than 30 rulers — over 9 m, or 30 ft, of paper. Just picture how much effort is behind that volume of paper. Over the years, I've often found myself explaining what an IMR lab is. We have a list of items here. Today I'd prefer to demonstrate them for you. This brief video walks you through an entire Imricor IMR lab, covering every product shown on our regulatory progress slide. From the control room all the way to the bedside, you'll see how the pieces fit together. NorthStar is running the MR scanner, the Advantage-MR system is recording each heartbeat, and a number of our catheters sit on the table. This is the product platform, and these are what we sell. That amounts to a complete iMR lab. Every device in that room was engineered specifically to function safely inside a magnetic resonance setting — one that is benign for humans, with no harmful radiation, yet electromagnetically hostile toward ordinary medical devices. No one else in the world has the capability to produce that kind of equipment in that particular room. That's who we are at IMR. Which brings me to what stands out as one of the biggest commercial milestones we've ever achieved — our alliance with Philips. We introduced it together at the ESC Congress in Munich, among the largest cardiology gatherings globally, and there are two reasons it carries real weight. Number one: MR compatibility. Thanks to the Philips electromagnet compatibility declaration, Imricor gains access to the Philips MR installed base across the U.S. and Europe for the very first time. Number two: a turnkey iMR lab constructed on the Philips 1.5 Tesla BlueSeal MR platform. That matters a great deal. Hospitals can now buy a full interventional MR solution from two firms operating as a single unit. Philips brings a broad set of sales channels across Europe and the U.S., and that’s going to expand our reach considerably while substantially scaling how we roll out the combined iMR solution. I’ve got one more brief video to show you, taken from Philips’ own site. You’ll probably notice a good deal of Imricor technology in it, and I hope it comes through clearly that Philips is aligned with our view of where interventional medicine is going. Let me go over a handful of important details from the clip that you may not have caught. To start, that real-time interventional software interface reflects years of work by Philips, built so our NorthStar system can link up with the scanner, so NorthStar can command the scanner and get images back from it in real time, and so NorthStar and our Advantage-MR system can jointly work with the scanner to track where our actively tracked catheters sit inside a patient's body. This point matters more than it appears to. Here's why. A standard MR scanner carries roughly 1,500 L of liquid helium for cooling its superconducting magnet. That makes it very heavy, which is why it usually sits on a hospital's ground floor atop reinforced concrete slabs. Since the helium might one day need venting, the scanner requires a venting chimney, known as a quench pipe, and that forces it to be near an external wall; for decades those two constraints have restricted where MR scanners could be installed in hospitals. Philips, though, has devoted years to redesigning the magnet so those limitations disappear. Their magnet, BlueSeal, carries only 7 L of helium, sealed permanently within the system, making it light enough to go upstairs in your cardiology center. Because there's no quench pipe, it doesn't have to be positioned against an outside wall, and the video shows a blue shadow marking the spot where the old quench pipe used to be. Beyond those design changes, this is a wide-bore system, which improves access to the patient during a procedure, and importantly, at 1.5 Tesla there is no trade-off in image quality. I've said all along that we are not putting interventions into MRI suites. That approach wouldn't succeed, because MRI suites are located downstairs, distant from cardiology, and were built and set up for diagnostic imaging. No — what we're doing instead is taking MR technology into the interventional cath lab, the iMR lab. This commercial iMR lab solution captures that objective. It's a premium, state-of-the-art iMR platform. Philips' introduction means a worldwide imaging heavyweight is now attaching its name, brand, and sales team to the field we pioneered, and what I particularly appreciate is that a lot of Imricor products and technology remain part of it, including NorthStar on the screen. As the earlier video showed, a greater share of our equipment now resides in the control room. And finally, that line belongs to Philips, not to me. I garbled their wording about the future of interventional MRI. The future of intervention is MRI-guided. We have been saying that for 20 years, and this shows Philips holds that belief as well. The last point I want to leave you with is that the industry isn't alone in believing this. The medical community is advancing alongside us as well. AIM IMR 2026 — the Amsterdam International Meeting on Interventional Magnetic Resonance — stands as the first international interventional gathering dedicated wholly to our IMR field. This isn't an Imricor-run event. Philips and Imricor serve as co-sponsors, yet the medical community has handled all of the organizing. When doctors from across the globe come together to discuss interventional MR and nothing else, that tells you the field has truly arrived. Ideas are being shared, work is already being carried out, and Imricor sits at the heart of both. With that, Simon, I'll turn it back to you, and we're glad to take questions.

Appreciate that, Steve. A quick note before we begin: should you wish to ask something, you'll find the Q&A button located at the bottom of your screen. To start us off, we have a question coming from Tristan Maher of Jarden. Tristan, the floor is yours.

Hey Steve. Hey Jonathon. Regarding your customers, Dallas and Rady clearly both came on board within a few weeks of launch. From what I understand, one thing that might have played into that is they already had an MRI in the cath lab. Of course, cutting radiation is a genuinely critical matter, especially in pediatrics. Do you have any sense of how common this situation is, where a hospital's cath lab or cardiology department more broadly has pretty solid or unrestricted MRI access, and so how many sites might be switched over to Imricor's equipment fairly fast, maybe in the U.S. and/or Europe?

Tristan, that is a — let me just check I'm not muted. Yep, I am. Tristan, great question; as it happens, I'm not in the office today. I'm at an offsite meeting with the U.S. sales team, discussing precisely how we keep sharpening and structuring our plan for rolling out across the U.S., including a lot of talk about how we'll partner with Philips and the work already underway with Philips to get this launched. Part of that involves doing what you just mentioned, which is figuring out where the cardiac MR centers are, who already has an MRI in their cardiology space. Because once that MR is in your cardiology space, that's the quickest, simplest route for us to begin, exactly as happened at Dallas and exactly as happened at Rady in San Diego. There are others; it isn't only about those being available and being in pediatric centers. This cardiac catheterization makes plenty of sense for adult hospitals too, from a financial standpoint. Basically, what we're doing with cardiac catheterizations is taking two procedures you'd otherwise do — MR analysis on one day and pressure measurements in the cath lab, in the X-ray cath lab, on another day — and you do them both together, getting all the MR information you need and all the catheterization you need in a single procedure. It saves time, it saves money, and it keeps the cath lab actually open and free to do other things and generate additional revenue for the hospital. So our pipeline of sites adopting the interventional cardiology, NorthStar, really for interventional cardiology purposes, includes both pediatric sites and adult sites. One thing we'll be working on closely with Philips now through this partnership is identifying where — who already has an MR in their cardiology space so we can target those. It was interesting. I was in Dallas just last week, and while we're there, we're showing them some of the new software ideas we have for interventional cardiology that will be within NorthStar. When I speak with the doctors and others, and as they're leaving, a few of the folks working in the lab — the MR techs, the nurses, and so on — I hear them ask, "Who are our visitors today?" And they answer, "Oh, yeah, those are the guys from NorthStar." That's how significant NorthStar is. They don't even realize we're from Imricor and that NorthStar is our product. NorthStar is such a big deal that they believe the company is NorthStar. That's the impact this type of technology is already having at sites like this.

Great, thanks. And just one more quick follow-up on that. Rady has sort of indicated that they intend to expand beyond catheterizations—as you were just saying—into diagnostic EP and cardiac ablations too. From your discussions, I suppose, with those early customers who've already signed on or who are in the final stages of the purchasing process, is it the same kind of—are they pointing toward that same path? I realize, of course, that you can't speak for them, but also what portion of their pediatric volume or cath volume would you expect, or are they indicating that they'll shift to MRI-based use of NorthStar?

Yes, so consider a child who is frequently treated at a site like this for right heart, where many right heart catheterizations are done—these are kids who, sadly, were born with hearts that didn't form properly. Over the course of their young lives they'll undergo a series of open-heart surgeries to rebuild the heart. Each time one of those surgeries happens, there will be one of these right heart catheterization diagnostics beforehand. So a key motivation for the interventional cardiologists at these children's hospitals is sparing these kids the radiation exposure again and again and again throughout their young lives. And eventually, as they're still young people but still children, they end up with a heart they can live with for the rest of their lives. They've had a great deal of cardiac surgery, and that surgery leaves scar tissue behind. Scar tissue on the heart is the kind of thing—if you were tuned in a bit earlier, you saw Gerhard Hindricks discussing substrate and scar; that same scar that will create, that can arise naturally as people age and create arrhythmias, is going to be present in these kids as well. It doesn't really show up as arrhythmia until they're a bit older. So even though it's still a children's hospital, they perform electrophysiology procedures to counter this scar tissue and the substrate that's forming arrhythmia as these people get older and become fully grown adults. I don't want to misstate it, but I believe the pediatric interventional cardiologist I spoke with just last week in Dallas said his oldest patient was around 60 or 70 years old, and this was a pediatric patient because he's been treated by these folks his whole life. Yes, interventional cardiology at Children's Medical Center Dallas leads to electrophysiology in adult patients. And also, if you talk to leading pediatric centers, they'll tell you very proudly that what we do in adults today all began in pediatrics. They're the group that, purely out of necessity, has pioneered a path forward for treatments used in adults. So what happens is that at Children's Medical Center Dallas, you have adult electrophysiologists from UT Southwestern, with whom they're affiliated, coming straight over, observing procedures, and learning how to bring this into their own practices. It also expands somewhat organically from the pediatric sites.

All right, thank you, Steve.

Our next question comes from Nick Lau with Taylor Collison. Nick, the floor is yours.

Hello Steve and Jon. Thanks so much for making time for me this morning. I just wanted to ask about the Philips BlueSeal technology. What approach has Philips taken when it comes to marketing BlueSeal alongside the Imricor products? Are you seeing a step change in opportunities tied to greater access to BlueSeal MRIs that aren't situated on ground floors? How should we view the commercial opportunity shifting as a result of this partnership? My second question, if I may, is that I noticed revenues in the Netherlands have bounced back substantially this quarter compared with the prior quarter, and Hungary too. What's driving that? Is it tied to more commercial Flutter patients coming back? If so, how should we view the U.S. Flutter trial submission, given that a prior announcement mentioned submitting it this month? Those are my two questions.

Okay, Nick, let me return to the first one and make sure I've got it right. You're asking about BlueSeal and whether we've seen a step change in the availability of those systems. Is that correct?

Yeah.

Yeah, the BlueSeal magnet is fairly recent, and it's being launched—they're rolling it out at this very moment together with this IMR. A BlueSeal MRI can also be purchased for diagnostic imaging. But right now we aren't seeing them in hospitals out in the market, because this is something that, or at least not in large numbers, since this is something fairly recent. What it does, though, is open up for us the ability to site MRIs in areas of a hospital where previously they couldn't be placed. That matters a lot, because what you truly want is, if you've got a cardiology center with three cath labs doing every procedure in those three cath labs, those labs sit right beside one another. What we want is the IMR lab positioned right there alongside the cath labs. If you must locate it downstairs against an exterior wall, either of those two options puts it somewhere that's inconvenient for the cardiology teams, for the anesthesia teams, for the nurses moving back and forth among all these labs; that makes a big difference when it comes to bringing MR technology into the cath lab; it really means now you can simply build a lab wherever you want. Rather than installing an X-ray machine, you install an MR machine, and you create an IMR lab instead. So it is, I wouldn't call it a step change. I'd call it the change that's happening now. Our teams are collaborating very closely. Our sales and marketing leadership traveled to Best in the Netherlands to speak with the sales and marketing leadership at Philips so we could organize ourselves across Europe and the U.S. to work on the partnerships as they relate to cardiology or commercial rollout. All of that is in progress. It's one of the things we've been discussing here with our internal U.S. team over the past couple of days as well. That is all happening now. More to come on this. It's going to be, I think, a pretty significant platform rollout that we'll see across the next year, two, and three. On the revenue side, some of the sites—Amsterdam is one of them now—have finished enrolling all the patients they're permitted to enroll in our Flutter trial for FDA approval. They've now rolled over into performing commercial cases, and they will keep advancing our VT trial as well. In Hungary, it was actually a different situation, where they were doing this kind of thing we've discussed many times, where you perform a procedure in a lab whose time you're borrowing, and it's inconvenient logistically and so on. At this point they’ve gotten themselves established in a lab with greater access, and we’re enthusiastic about kicking off a few really exciting initiatives there in Hungary—not doing cases just once a month because that’s the sole occasion they’re able to use their scanner, and then making certain that scanner day coincides with a patient arriving, but instead doing several cases per day, across many consecutive days, and genuinely focusing on workflow efficiency, and perhaps even publishing something on what comes out of that kind of efficiency study. Plenty of exciting developments are taking place in Hungary too.

Thanks, Steve. I'd like to squeeze in one quick follow-up, if I may, and it concerns the Flutter trial. It's encouraging that the Netherlands has completed enrollment; earlier you said a submission could come this month, and now with the latest update, the final PMA module will be submitted by the time the trial ends. Was the reason the trial design or the data? I'm trying to read the tea leaves here, I guess — how are we meant to view the submission timeline?

Yeah; it has nothing to do with how the trial was designed or with the outcomes. Scheduling is the issue. Honestly, I remain frustrated, but at times we simply have bad luck. A patient falls ill and isn't treated on the day scheduled, yet that's the only day available to us, and so it goes on and on. Look, we're nearing the finish; the end is very close. We'll complete the remaining handful of patients, and after that we'll send everything to the FDA. Nothing is wrong with the trials, and nothing alarming is going on. This is simply the usual process. I think I've been more open than most companies would be about when we expect the trial to finish, since these matters can't be predicted; but look, everything keeps moving forward, the end is very close, and we will submit these data to the FDA. Look, I'd like everyone to remember that we've already been through this process once. Everything we're submitting to the FDA is commercially cleared in Europe. Frankly, gaining European regulatory approval today, in 2024, 2025, and 2026, under the Medical Device Regulation is really, really difficult. Some people, I'd say, would argue it's harder than getting FDA approval. So look, it's a rigorous process; it's a great deal. That's part of what creates the deep and wide moat I'm talking about, because anyone following behind us will have to go through the very same thing. But it's all progressing; it's going just as it should; so that's all.

Thank you so much, Steve.

You bet, Nick.