IRadimed (IRMD) Q3 2026 Earnings Call: Record Revenue, 3870 Pump Ramp

Key Takeaways

• IRadimed Corporation (NASDAQ: IRMD) reported record Q3 2026 revenue of $24.2 million, up 14% year over year and 18% sequentially.
• GAAP diluted EPS rose 17% year over year to $0.51. Non-GAAP diluted EPS was $0.55, compared with $0.47 a year earlier.
• The 3870 MR IV pump launch continued to scale. IRadimed produced more than 400 systems and shipped more than 300 during Q3, while pump revenue reached $8.7 million.
• Gross margin was 76%. Management expects further sequential improvement in Q4 as 3870 production volumes increase and manufacturing efficiency improves.
• Q4 guidance calls for revenue of $25.0 million to $26.5 million and non-GAAP diluted EPS of $0.57 to $0.61, putting the company above a $100 million annualized revenue run rate.
• Full-year 2026 guidance was narrowed to revenue of $91.7 million to $93.2 million, reflecting a controlled production ramp designed to protect product quality.

Key Financial Data

Nine-month revenue was $66.6 million, up 9% year over year. GAAP diluted EPS was $1.37, while non-GAAP diluted EPS reached $1.50.

International revenue increased 45% to $4.5 million in Q3, while domestic revenue rose 9% to $19.7 million. International sales represented 18% of quarterly revenue, up from 15% a year earlier.

Business and Operating Performance

The 3870 MR IV pump was the primary operating focus. Production increased by more than 125% from Q2, and management expects Q4 pump output and revenue to rise by more than 50% sequentially. Record bookings for both the 3870 pump and 3880 monitor created what management described as a comfortable Q4 backlog.

Management identified approximately 6,400 installed 3860/3861 pump channels in the U.S. that are more than five years old. About 70% of replacement customers are buying a four-channel 3870 configuration to replace two older channels. Based on that purchasing pattern, management estimates the existing replacement pool represents more than 10,000 potential 3870 channels.

The new system is commanding an average selling price of nearly $25,000 per channel, approximately 23% to 25% above the older 3860 system. IRadimed plans to sell roughly 2,000 to 2,500 3870 channels annually.

Management also reported initial orders from greenfield customers that had previously rejected or underused the 3860. It attributed the improved reception to the 3870’s updated user interface, added sensors, embedded intelligence and on-screen operating guidance.

Monitor demand remained strong, with Q3 bookings exceeding the record set in Q2. IRadimed has expanded the 3880 monitor’s remote capabilities, allowing additional remote units to connect through a hospital’s wired Ethernet network.

Disposable revenue growth was still driven mainly by the existing pump and monitor installed base. Management said the newly shipped 3870 systems generally require six to eight weeks for training and activation, so meaningful disposable pull-through had not yet appeared in Q3.

Management Guidance

The previous full-year revenue range was $91 million to $96 million. Prior GAAP EPS guidance was $1.90 to $2.05, and prior non-GAAP EPS guidance was $2.06 to $2.21.

Management expects gross margin to improve sequentially in Q4. Based on higher production volumes, manufacturing efficiencies and the 3870’s pricing, the company expects gross margin to return toward its historical 77% to 78% range in early 2027, with potential for further improvement over time.

The expected Q4 effective tax rate is approximately 24% to 25%. Non-GAAP guidance excludes stock-based compensation expense, net of tax, of approximately $0.6 million in Q4 and $2.5 million for the full year.

For 2027, IRadimed did not issue formal guidance. However, management said it believes annual revenue growth could reach approximately 15% to 17%, supported by higher pump output, monitor growth and rising disposable usage.

Risks and Watch Items

• Management lowered the top end of full-year guidance because increasing pump production faster could threaten product quality. The company intends to keep the ramp controlled.
• The 3870 remains on a manufacturing learning curve. Although efficiency improved in Q3, gross margin remained below the 78% recorded a year earlier.
• A higher international revenue mix can pressure gross margin because distributor sales carry heavier discounts.
• The contribution from 3870-related disposables depends on customer training, activation and actual pump utilization after shipment.
• The expected Q4 tax rate of 24% to 25% is higher than IRadimed’s historical level, partly because the equity-vesting tax deduction will be smaller than previously anticipated.

Analyst Q&A Highlights

Analysts focused on the narrower 2026 guidance, the 3870 manufacturing ramp and the outlook for 2027. Management said demand was not the reason for the reduced upper end of annual guidance. Instead, production is being moderated to maintain quality while output rises.

For Q4, management expects to approach 500 pump channels, supporting an annualized pump revenue run rate of about $50 million and total company revenue above a $100 million annualized rate. Quarterly production increases should become more measured during 2027, starting from a base in the 500-channel range.

Management also expects the expanding 3870 installed base to begin driving disposable demand near the end of Q4, with the effect building throughout 2027. The 3880 monitor is expected to continue growing, although at a slower rate than the new pump platform.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

Welcome to the IRadimed Corporation's Third Quarter of 2026 Financial Results Conference Call. [Operator Instructions] This call is being recorded today, October 30, 2026, and contains time-sensitive accurate information that is valid only for today.

Earlier, IRadimed released its third quarter 2026 financial results. 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 the press release was also furnished to the Securities and Exchange Commission on Form 8-K and can be found at sec.gov. This call is being broadcast live on the company's website at iradimed.com, and a replay will be available there for the next 90 days.

Some of the information in today's session will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements focus on future performance, results, plans and events and may include the company's expected future results. IRadimed reminds you that future results may differ materially from these forward-looking statements due to several risk factors.

For a description of the relevant risks 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 free from the SEC's website at sec.gov.

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

Roger Susi

Thank you. Good morning, and welcome to IRadimed's Third Quarter 2026 Earnings Call. I'm very proud to say that the new 3870 MR IV pump launch is showing itself to be everything we had hoped for and more. Though you may recall that we discussed the ramping of this new pump would be quite a stretch, we have been able to push very hard and make it happen. With our initial testing of the waters release of a few dozen pumps during Q4 and Q1 to the broad market launch in Q2 and with having produced now over 400 systems during Q3, our teams have risen to perform extraordinarily well.

The job of ramping production of this complex electromechanical device at the rate achieved is a very difficult task. And these hard-working ladies and gentlemen of your company have really risen to the challenge. The ramp rate of the 3870 production to achieve Q3's revenue was huge at over 125% increase from Q2's production, thus the large stretch goal for production. And to support the goal was a great selling effort. Consider that during Q3, our sales team booked record numbers of both the 3880 monitor and 3870 pumps, proving the customer acceptance of these devices and building a very comfortable backlog for Q4. For Q4, we will again grow revenue of the new 3870 pump by another 50-plus percent. Again, very pleased to report that our teams have delivered.

Here are the numbers. We achieved record quarterly revenue of $24.2 million, up 14% from Q3 of 2025 and an 18% sequential increase from Q2. Earnings were $0.51 per share GAAP and $0.55 non-GAAP, up from $0.41 and $0.46, respectively, in the second quarter. And as we expected, as our manufacturing teams climbs the 3870 learning curve, we begin realizing efficiencies we had anticipated with the gross margin improving 2 full points sequentially to 76%. Behind these quarter-end numbers is the performance of not only our production, engineering, quality and materials teams in-house, but our field sales team as well.

We had concerns that the long-anticipated new 3870 pump could steal sales focus from the monitor, and so we put in place special targets to mitigate such an issue. Indeed, though, Q1 did show weak monitor bookings. However, this was quickly turned around in Q2 with a record number of monitors booked, and we are once again extremely proud to note that, that record was exceeded again in Q3. In short, monitor sales are strong and growing. This, along with what is now clearly becoming a successful launch of the long-awaited 3870 MR IV pump.

Though our hospital customers usually need 4, 5 to 6 months or more to budget and finally issue purchase orders for new equipment, we are finding a very significant number motivated to move to purchase our new pump in much shorter time frames, with this resulting in a growing backlog of 3870 pumps on the books after shipping over 300 in Q3 as we enter into Q4. It's this order rate and the backlog produced that give us confidence in our ability to clearly forecast revenue for Q4, but wait for our guidance just a moment longer.

I'd like to recap this pump opportunity first. The rather low-hanging and quick to attain fruit is the replacement opportunity we've been discussing from established users of the old 3860 pump system as they replace and upgrade to the new 3870 MR pump. It's a great opportunity with still nearly 6,400 older, meaning over 5 years of age, 3860/61 pump channels in the U.S. market. But it's proven to be better than simply replacing what was a $19,000 3860 channel with a similarly priced 3870.

First off, we have approximately 70% of the replacement orders for two of the older model channels for 1 new quad stack, meaning that for every 2 channels of the older 3860/70 -- 3860 or 61 setups being replaced, 70% of the customers are buying 4 3870 channels. So the 6,400 old pump channels translates to over 10,000 unit 3870 opportunity. With our plan to sell about 2,000 to 2,500 3870s per year, just this presently existing pool of older pumps takes years to replace. Meanwhile, more and more pumps turn 5 and become part of the replacement target.

A second silver lining to the business is that the ASP of the new pump system is not equal to the older unit. It is not similarly priced, but rather commanding nearly $25,000 per channel, a lift from the older 3860 ASP of 23% to 25%. Finally, for a less stringent measure of success than the numbers just mentioned, our customers are loving what they see. This device practically selling itself, I'd say, it shows well and its operation is exciting to the user.

This is being proven by the fact that we have also already received orders from facilities who did not care for the original 3860, thus remain part of our greenfield opportunity. But when showed the 3870, they have not hesitated to become a customer and decided quickly that the new 3870 was spot on and a welcome addition to their imaging practice. In a word, it's happening. The new 3870 pump system is doing what we thought it could do and more, more channels, higher ASP and penetration of the greenfield.

At this point, it's execution. Ramping production while building in quality and growing margin is where we are headed. Q4 will show more of this trend with 2027 giving us much run room to return to great growth of revenue, earnings and a business we are very proud of. Now I'd like to have Jack Glenn, our CFO, provide financial details, but I'll iterate that as we enter Q4 with a solid backlog of our new 3870 pump and 3880 monitor systems as well as a strong backlog of the FMD system.

Now I'll turn the call over to Jack Glenn, our CFO, to review the quarter's financial results and provide color on our outlook for the fourth quarter and full year.

John Glenn

Thank you, Roger, and good morning, everyone. As in the past, we report our results on a GAAP basis and non-GAAP basis. You can find a description of our non-GAAP measures in this morning's earnings release and a reconciliation to GAAP on the last page. For the 3 months ended September 30, 2026, revenue was a record $24.2 million, up 14% from $21.2 million in the third quarter of 2025 and up 18% sequentially from $20.5 million in the second quarter.

Pump revenue was $8.7 million, up 4% year-over-year as 3870 shipments continue to ramp. MRI-compatible patient vital signs monitoring systems contributed $8 million, up 17% year-over-year, and ferromagnetic detection systems contributed $0.5 million, up 28%. On the recurring side, disposables revenue grew 21% to $5 million. Amortization of extended maintenance agreements grew 31% to $0.8 million and services and other grew 42% to $1.2 million.

For the 9 months, revenue was $66.6 million, up 9% from $61.1 million in the prior year period. Domestic sales accounted for 82% of total revenue in the third quarter, down from 85% a year earlier. International revenue grew 45% to $4.5 million, while domestic revenue grew 9% to $19.7 million. Over the 9 months, domestic sales accounted for 82% of revenue, down from 85% a year ago, while international revenue rose 37% to $12.2 million.

Gross profit for the quarter was $18.5 million with a 76% margin, up from $16.5 million and 78% in the third quarter of 2025. Sequentially, gross margin improved 2 points to 74% from 72% in the second quarter as 3870 production volumes increased and we began realizing the manufacturing efficiencies we anticipated. The year-over-year decline reflects the remaining additional production inefficiencies on the new 3870. For the 9 months, gross profit was $50.4 million with a 76% margin compared with 77% a year earlier. We expect gross margin to continue to improve in the fourth quarter as 3870 volumes build.

Total operating expenses for the quarter were $10.3 million, up 7% from $9.7 million, but declined to 43% of revenue compared with 46% a year ago. General and administrative expense was $4.5 million, up 4%, primarily due to higher legal and professional fees, consulting and payroll and benefits. Sales and marketing expense was $4.9 million, up 6%, primarily due to higher sales commissions on increased monitor and 3870 bookings in the quarter. Research and development expense was $0.9 million, up 30%, primarily reflecting lower capitalization of payroll costs for internal software development in the quarter.

Income from operations for the quarter was $8.1 million or 34% of revenue, up 19% from $6.8 million or 32% of revenue a year ago. Tax expense for the quarter was $2.2 million with an effective tax rate of 24.9%, up from 23.6% in the third quarter of 2025. The rate differs from the U.S. federal statutory rate primarily due to state income tax expense and nondeductible compensation expense, partially offset by benefits from foreign-derived income and research and development tax credits. As we discussed on our last call, the windfall deduction tied to the vesting of equity grants, most of which occurs in the fourth quarter, will be smaller than we originally anticipated, and we expect an effective tax rate of approximately 24% to 25% for the fourth quarter.

Net income for the quarter was $6.5 million or $0.51 per diluted share, up 17% from $5.6 million or $0.43 per diluted share a year ago. Non-GAAP net income was $7.1 million or $0.55 per diluted share compared with $6.1 million or $0.47 per diluted share, excluding $0.6 million and $0.5 million, respectively, of stock compensation expense net of tax benefit. For the 9 months, net income was $17.5 million or $1.37 per diluted share, up 9% and non-GAAP net income was $19.3 million or $1.50 per diluted share, up 8%.

We ended the quarter with cash and cash equivalents of $63.3 million, up from $59.1 million at the end of the second quarter and $51.2 million at year-end. Cash flow from operations was $7 million for the quarter, consistent with prior year quarter and $21.2 million for the 9 months, up 12%. Capital expenditures were $0.2 million for the quarter and $1.1 million for the 9 months, down from $8 million in the prior year period, which included construction of our new corporate office and manufacturing facility.

Non-GAAP free cash flow was $6.8 million for the quarter, up from $5.7 million and $20.1 million for the 9 months, up from $11 million.

On the dividend, our Board of Directors also declared a regular quarterly cash dividend of $0.20 per share payable on November 27, 2026, to stockholders of record as of the close of business on November 13, 2026. For the fourth quarter, we expect revenue of $25 million to $26.5 million, GAAP diluted earnings per share of $0.53 to $0.57 and non-GAAP diluted earnings per share of $0.57 to $0.61.

For the full year 2026, we are updating our guidance and now expect revenue of $91.7 million to $93.2 million compared to our prior range of $91 million to $96 million, GAAP diluted earnings per share of $1.90 to $1.94 compared to $1.90 to $2.05 and non-GAAP diluted earnings per share of $2.06 to $2.10 compared to $2.06 to $2.21. Our non-GAAP earnings per share guidance excludes stock-based compensation expense, net of tax, which we expect approximately $0.6 million for the fourth quarter and about $2.5 million for the full year.

And with that, I will now turn it over to the operator for questions.

Operator

[Operator Instructions] Our first question comes from the line of [ Anderson Schock ] with ROTH Capital Partners.

Question-and-Answer Session

Unknown Analyst

Congrats on the strong quarter. So quarter bookings were a record, but the full year revenue guidance on the top end came down about $3 million. Could you discuss what you're seeing that drove this revision?

Roger Susi

Yes, for sure. Good to have you on the call. This is Roger Susi.

So yes, it was basically that ramping these pumps was tough. And even though, as I pointed out, we increased things by enormous percentages to make up that difference of the $2.8 million or so you see for the year would be required even a higher lift of the number of pump channels that we would have put out. So though the team did great lifting the output over -- with over 100% increase Q2 to Q3.

And again, here, plus -- 50-plus percent in Q4, we're shooting for. We can't get out over our skis pushing this ramp rate so hard that the quality slips. And so yes, you have to sort of -- you have to pay that piper and you have to be careful that the ramp rate is not so ridiculously high that you can't keep the quality up. And so yes, we have to have a little bit of throttle on that.

Unknown Analyst

Okay. Got it. And then disposables grew 21%. How much of that growth came from the newer 3870 installed base versus the 3860 base? And now that the early 3870 sites have had a few months to use, I guess, what are you seeing in disposable pull-through per channel compared with the 3860 channel?

Roger Susi

Well, frankly, none yet, almost none. Though we ship these things, people don't start using them really until we get out there and do the in-servicing and that process takes -- that process takes itself 6, 8 weeks. So essentially, though we shipped a lot of 3870s, great for revenue, the actual usage yet in the field would be only starting to ramp up. So that effect, we should see as we get towards the end of Q4. But what we see with -- thus far, not so impactful from the new pump. These disposable sales are still ramping from the original base, both of monitors and the older pump.

So I guess the good news is, again, as we pointed out, with 70% of our customers basically doubling the channels they have going to the quad stack from having 2 channels of the older system. We do anticipate an effect on those disposables, but you're not seeing it yet, no, too soon.

Unknown Analyst

Okay. Got it.

Operator

Our next question comes from the line of Frank Takkinen with Lake Street Capital Markets.

Frank Takkinen

Congrats on all the progress. I was hoping to take an initial stab at 2027. I know you're not providing formal guidance at this time, but trying to square between your commentary of selling in the neighborhood of about 1,000 channels of the 3860 to going to 2,000 of the 3870 at that higher ASP. So going from in the neighborhood of kind of $30 million of pump revenue into the kind of $50 million range. How should we think about the time line to that? You've got obviously a lot of wind at your sales related to ordering patterns and your manufacturing scaling up, but how should we expect that to kind of translate to revenue in 2027 on the pump line?

Roger Susi

Yes, you said it, right? So as we start to get towards -- in Q4, we're going to put out, as I said, another 50% or more channels over Q3 and get start to approach 500 channels. And that will continue through 2027. Now the ramp rate of the output won't be 50%, but we'll go from 500 to 560, 570. Now those step -- those added number of channels throughout each quarter next year won't be at this 50% or 100% quarter-over-quarter rate. But the platform -- the base will start at in the 500s with Q1.

So given the ASP that we've been reporting, right, it's pretty simple math, and I think you've got it, where these new pumps are going to take us from a standpoint of the revenue provided from the pump hardware. And then the other question is -- also as people start to use these new pumps, we expect that to begin to pull through IVs that, which I said we haven't seen that effect yet because they're just beginning to actually use them. And we see that will start to compound throughout 2027 as well.

Frank Takkinen

Got it. Very helpful. Maybe to follow-up a little bit on your greenfield commentary. I would be curious how those decisions were made and how their ordering patterns are going related to if they're also pursuing quad stack configurations? Or what specifically maybe did they like more about the 3870 that they didn't like on the 3860 that got them over the line?

Roger Susi

Yes, great question. But we don't talk too much about the greenfield. The opportunity still remaining from this older installed base is just -- that's such a big number. It tends to suck up all the air in the room. But yes, the greenfield, as I pointed out, we have been pleasantly surprised that we've sold a few of those that I mentioned here in my comments earlier, where basically, there are customers that -- a matter of fact, we have two contributions to this greenfield. We had customers that -- they've just remain doing it the old way with the long lines or refusing to do patients in the MR that need IV fluids delivered.

They just weren't tickled by the design, the use model of the old 3860. I think I've spoken to this in years past that the 3860 pump, of course, that thing Genesis was 2005. It's 21 years old in its look and how it's used. And so people look at that and they think we really want something a little bit more updated and more automated, let's say, in its use, #1. And #2, we tailored that pump after -- there's 3 big manufacturers of IV pumps in this market and in the rest of the market outside of the MRI that is. And we tailored it after one of them. So facilities that had been using one of those other 3 non-MRI pumps throughout the rest of the facility could warm up to the use of the 3860 because they kind of have the same look and feel.

But the flip of that is it didn't have the look and feel of the other 2/3 of the market. So people that had -- where schools of thought from those other 2/3 type pumps would look at it, oh, it's too difficult for our team to learn something else. We're worried they'll make mistakes. There's a host of reasons. And they basically pooh-poohed it. So those are greenfield customers that we at least had reached and got turned down. And there's still a greenfield of customers that we haven't even talked to yet.

And there's also some greenfield for customers who bought a 3860 and their usage on it went down. The champion who decided to buy the pump in the first place in the facility moved on, others didn't know how to use it. And some of these pumps sat a little bit dormant, and we've talked about that in relationship to the number of disposables that are being consumed. We can tell where the users have gone pretty light on us. And that is essentially greenfield as well. We've also sold some of those customers who -- though they bought 3860s, they weren't fans. They weren't big fans. They weren't -- they were underutilized.

And some of those when shown the 3870 as well as this other greenfield people that never bought it in the first place, they just find the pump very attractive use model. And I've spoken to this before where this is really what the genesis of the new pump was. As a mechanism, the pumping, the heart of it, the mechanical -- electromechanical part that moves fluid, it's not much difference. Accuracy, similar. Those things we didn't change much, pump is a pump. It's the user interface, and we put sensors and some intelligence into the device, so we can tell what the person is doing as well as we put little animations on the screen to help them learn to use the pump, so they're not fearful of it and they can -- their outcome is going to be great, and they're seeing it.

This is what we're extremely proud of. They're seeing it. I kind of mentioned that earlier. And I think this is what is really getting this attention from these users that kind of turned their back on us before and coming back real strong and just loving this new pump.

Frank Takkinen

Yes. That's great color. Maybe just one last one, Roger, and I appreciate you taking all the questions. Great to see monitors continue to be strong. How should we think about that outlook into 2027?

Roger Susi

Yes, the monitor is doing great. So we've -- we've done a few things to enhance it. We expanded the remote capability, which seems to be interesting to not a large group of hospitals, but a significant number, where I don't know if you recall the configuration of the device, but we have these wireless remote controls that we put in the control room for both the monitor and the pump because people aren't in that room, that magnet scan room with the patient. They're in the control room or elsewhere.

And so we have remotes out there, so you can completely monitor the vital signs, for example, of the monitor and set the alarm limits and so forth from wherever you want to sit out in this area that's not inside that scan room. We expanded that recently. We made a capability where you can put another remote, actually 2 more remotes elsewhere in the building, and we hook them up through your network, the hospital's backbone wired Ethernet network. And so that fits the bill for some users, and it's given us more to talk about with the monitor.

So yes, we see the monitor bottom line is it's still very much on point. Competitors haven't done anything to shore up the deficiencies or the weaknesses they have vis-a-vis our monitor. And in fact, we've extended it a little bit with this extra twin remotes you can place elsewhere in the building. So yes, monitor, though its growth rate, it's not anywhere near what the new pumps growth rate is, of course, it's still growing. We're able to push up -- we're able to push that rope along. So very happy with that.

Frank Takkinen

Got it. Great color.

Operator

Our next question comes from the line of David Saxon with Needham & Company.

David Saxon

So maybe just to follow-up on the fourth quarter guidance. Roger, in the past, you had talked about reaching a $50 million run rate for pump revenue in the fourth quarter. So is that still what's implied or assumed in the fourth quarter guide?

John Glenn

That was not just pump revenue. That was overall revenue, right, $25 million...

Roger Susi

I missed your question, David. But go ahead, you said $50 million or what -- I mean...

John Glenn

$100 million run rate.

David Saxon

Yes, sorry. So I think in the past, you had talked about reaching a $50 million run rate for pump revenue in the fourth quarter, and that would also get you to $100 million run rate for total revenue. So the question is, is the pump...

Roger Susi

Oh, yes. If you annualize it out yearly, so in the quarter, $12.5 million, let's say, right? That's what you're saying, right?

David Saxon

Yes. Exactly. So is that still what's implied in the fourth quarter guide?

Roger Susi

Yes, I'd say so for sure. We're looking at -- as I mentioned, we're going to push towards another 50-plus percent increase in the pump output and revenue. And that means about 500 units. So yes, at this ASP, you got it. That's right.

David Saxon

Okay. Great. And then maybe just taking a stab at '27, understanding you're not going to give guidance. But -- so fourth quarter guide implies $103 million run rate. It sounds like output growth is going to be more modest in '27. So should we be expecting some modest growth off the $103 million in 2027? Is that a fair framework to kind of think about the kind of scenarios for '27?

Roger Susi

Oh boy, well, I differ with you a bit. Using the word modest, modest compared to -- modest compared to our peers, I think we're going to see double-digit double -- upper teens of growth in 2027. I'm not so sure that's modest at all. But yes, I think we're going to be doing the kind of growth that we were putting on the boards back in previous years and breaking revenue records quarter after quarter again.

But if 15%, 16%, 17% growth is modest, I guess it's modest, but I don't think so. I think we're going to be growing the business pretty good throughout 2027, though the number of pumps, yes, when we go -- when we talk about the growth in the number of pumps we produce being in the 100% from Q2 to 3 and 50-plus percent Q3 to 4. Well, yes, that's not going to be what you see. But the revenue growth rate will be, I think, toe to toe with any of the best of our peers.

David Saxon

Yes. That was helpful. Just -- yes, just to clarify, I was talking more about manufacturing, not expecting 50% that will moderate, obviously. But no, I appreciate the color on 2027.

And then maybe just to get Jack involved, gross margin, obviously, seeing some nice improvement. How are you thinking about that sequential improvement continuing into the fourth quarter? And then as we think about the next 12 months, considering the price benefit of the 3870 and whatnot, how should we think about kind of the continued magnitude of gross margin improvement potential?

John Glenn

Sure. Yes. So I think, yes, as we pointed out that, yes, we believe that the fourth quarter will be an improvement on the third, which is 76%, right? So we think -- I think going in Q4, we'll see that sequential improvement. But I would also just say, yes, in the not-too-distant future, I think in early next year, based on these kind of volumes, you will see us getting back to those historical 77%, 78% and even potentially even better as time goes on.

The key again to that is we're going to obviously get better at making these pumps, but also that ASP factor that really gets factored in going forward and what we're seeing, especially selling these quad systems, which are $100,000 or north of $100,000.

David Saxon

Great.

Roger Susi

Yes, I'd add maybe in this quarter, we did have a -- we've spoken about this before, but our balance between domestic and international business was more favorable international, which is lower-margin business. So yes, we still hit that -- we still hit a gross margin of 76% with a rather large contribution of the lower-margin international business. So bear that in mind, too.

And yes, so as we get into 2027, always international quarter-to-quarter. You've seen that in our history. When international is up, it pinches the gross margin a bit because that's lower. We discount that more heavily for our distributors. And #2, tax rate, as Jack reported, tax rate is a little bit higher than historical here for us as well. So we'll see how the taxes go through the next year also effect on the bottom line. But thanks for all the question.

Operator

Thank you. And I'm currently showing no further questions at this time. I'd now like to hand the call back over to Roger Susi for closing remarks.

Roger Susi

Well, thank you. Yes. Well, it should be clear with the record revenue and record bookings in the quarter, continued strong customer reception of the new 3870 pump and another record quarter for monitor bookings and improving manufacturing efficiencies, we believe we're well positioned for a strong finish to the year.

And of note, our fourth quarter guidance puts IRadimed at its anticipated $100 million-plus annualized run rate. So I'd like to thank you all for joining today's call, and I look forward to continuing to ramp production and regain efficiencies as we capitalize on the huge opportunities before us. Thank you.

Operator

Thank you. This concludes the call. You may now disconnect.