Health care and the various sub-sectors that make up the space continue to be among the highest growth areas of the economy. As the nation’s population ages, the demand for health care products and services should continue to climb. Diagnostic tools represent an attractive area within healthcare and as technology advances, providers can provide better care to patients, justifying the investment. iRadimed Corporation (NASDAQ: IRMD) is a small-cap medical device company that makes components and accessories that are used with Magnetic Resonance Imaging (MRI) technology. The $524 million market cap company has been in business since 1992 and is headquartered in Winter Springs, Florida.
Some of the MRI-compatible products iRadimed makes include an intravenous infusion pump system with disposable tubing, vital sign monitoring systems, non-magnetic IV poles, and wireless display modules. Other product lines include systems designed to reduce errors due to incorrect medicine doses and oxygen monitoring sensors. The company’s primary customers are hospitals, outpatient imaging facilities, and acute care centers.
Growth and profitability are the main reasons why iRadimed is worth a look for investors’ watch lists. The company has seen 1, 3, and 5-year sales growth averages of 31.8%, 11.1%, and 5.2% respectively which compares quite favorably to the industry averages of 17.1%, 4.6%, and 3.9% for the same periods. iRadimed has a gross margin of 76.7% and a net margin of 22.3% which stack up nicely against the industry averages of 58.1% for gross margin and 12.1% net margin.
Management’s interests are closely aligned with shareholders since insiders own a massive 47% of shares and the company’s rapid growth has not been financed with an overreliance on debt. The company’s balance sheet has $62.5 million in cash compared to only $2.5 million in debt demonstrating that growth can be organically funded.
On the valuation side, iRadimed has a high multiple typical of fast-growing companies but its strong profit margins help justify it. In the small-cap medical device space, IRMD looks good compared to firms of similar market cap size like Pulmonx (NASDAQ: LUNG), 908 Devices (NASDAQ: MASS), and Sight Sciences (NASDAQ: SGHT). IRMD has an EV/EBITDA of 41.3 which is lofty but at least positive. Conversely, LUNG has an EV/EBITDA of -15.3, MASS is -17.3, and SGHT has a ratio of -2.9.
The country’s aging population is a growth driver for healthcare as a whole, but the proliferation of outpatient MRI facilities makes IRMD especially interesting within the sector. iRadimed represents a fast-growing opportunity that also has a demonstrated history of profitable operations that can be a good candidate for investors who want to add a health care name to their portfolio.
Disclosure: No position. Spotlight Growth has no relationships with any of the companies mentioned in this article and did not receive payment in any form for its creation. This is an opinion article and is not meant to be financial advise. We are not broker-dealers or investment professionals. Please conduct your own due diligence. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/
