Group 1 - The company has shown evolving dynamics in its story, indicating a positive shift in its operational strategy [2] - The recent personal stock purchase by Vivek Jain suggests increased confidence and enthusiasm in the company's future prospects [2] - The restructuring and integration of Smiths has been a significant focus for the company, reflecting its commitment to enhancing operational efficiency [2]

Summary of ICU Medical Conference Call Company Overview - **Company**: ICU Medical - **Industry**: Medical Devices, specifically focusing on infusion systems and consumables Key Points Business Segments Performance - **Consumables Segment**: - Grew 4% in Q2, with expectations of mid-single digit growth for the year [4] - Historical growth rate of 5-6% annually over the past five years [4] - Drivers include strong end-market demand, demographic trends, and a national shortage of IV solutions [4][5] - Incremental innovations and FDA clearances are expected to enhance competitive advantage [6][8] - **IV Systems**: - Double-digit growth in LVP (Large Volume Pump) revenue [10] - Market growth is estimated at 3-4%, with ICU Medical outpacing this due to market refresh from competitors' device issues [12] - Focus on integrating various pumping modalities into a single software platform for improved user experience [10][11] - **Vital Care Division**: - Approximately $600 million division, now reduced to $300 million post joint venture with Otsuka Pharmaceutical [24][25] - Experienced a decline of 4% in Q2, with expectations of flat growth moving forward [29] Regulatory Landscape - Regulatory scrutiny is high, which is seen as a necessary barrier to ensure safety in drug delivery systems [15] - The company is focused on maintaining compliance and improving product standards to avoid setbacks [45] Innovation and Product Development - Recent FDA approvals for new products are expected to drive growth in both consumables and IV systems [16][17] - The company is investing in R&D to enhance product offerings and maintain competitive edge [42] Financial Guidance and Market Outlook - Updated guidance reflects a $17 million EBITDA loss from divestiture and $30 million in tariffs impacting the second half of the year [35][36] - Anticipated growth in 2026 is supported by innovation in consumables and a potential increase in average selling prices (ASP) for new pump technologies [40][46] - The company aims for mid-single digit growth while improving gross margins and generating cash flow for shareholder returns [42][57] Strategic Focus - Emphasis on home care as a growth area, leveraging existing market share and technology [22][20] - The company is cautious about pursuing new M&A opportunities unless they are compelling [57] Competitive Landscape - ICU Medical is positioned well against competitors by offering integrated solutions that enhance user experience and operational efficiency [18][19] - The company is focused on differentiating its offerings in the home care market, which is fragmented and competitive [21] Conclusion - ICU Medical is at a pivotal point with ongoing innovations and strategic initiatives aimed at sustaining growth and enhancing shareholder value. The focus remains on executing current opportunities while navigating regulatory challenges and market dynamics [61]

Financial Data and Key Metrics Changes - The company reported a 4% organic growth in the consumables business for the second quarter and expects sequential sales growth to average mid-single digits for the year [4][5] - The guidance for 2025 was updated, with the high end of the range adjusted from $425 million to $408 million due to the divestment of solutions and unexpected tariffs amounting to $30 million [41][42] Business Segment Data and Key Metrics Changes - The consumables business has compounded growth at 5% to 7% annually for over five years, driven by good clinical outcomes, brand inertia, and market share gains due to industry shortages [5][6] - The LVP (Large Volume Pump) revenue experienced double-digit growth, attributed to increased utilization and competitive wins, with a new product, Plum Duo, recently installed at customers [10][12] - The Vital Care segment saw a negative 4% organic growth in the second quarter, with expectations for flat sales in 2025 [33] Market Data and Key Metrics Changes - The overall market for infusion pumps has been abnormal, with significant catch-up growth due to actions taken by other manufacturers [10] - The competitive environment is shifting, with recalls and sales pauses affecting market dynamics, leading to a need for hospitals to decide on infusion pump platforms in the next 18 to 24 months [18][19] Company Strategy and Development Direction - The company is focused on maintaining competitive advantages through product innovation and integration of all pumps on a single platform, which enhances operational efficiency for customers [30] - The joint venture with Otsuka Pharmaceutical is seen as a strategic move to align with a leading innovator in the market, enhancing the company's product offerings without the capital intensity of traditional manufacturing [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the utilization rates across geographies, indicating a stable operating environment despite some challenges [3] - The company anticipates that the replacement cycle for its pump products will begin towards the end of next year, which could drive future revenue growth [16][17] Other Important Information - The company is navigating a complex regulatory environment, with ongoing scrutiny and multiple product approvals in the pipeline, which are critical for future growth [23][24] - Management highlighted the importance of not annualizing the impact of tariffs, as they are actively working on mitigating their effects through various strategies [56] Q&A Session Summary Question: What are the drivers of the consumables business growth? - Management identified good clinical outcomes, brand inertia, and market share gains from industry shortages as key drivers [5][6] Question: How does the company view the competitive environment for LVP? - Management noted that the competitive landscape is changing due to recalls and the need for hospitals to make decisions on infusion pump platforms [18][19] Question: What is the expectation for the approval of new devices? - Management expects a minimum of nine months for the approval of new devices, with ongoing efforts to streamline the process [26] Question: How does the company plan to address the Vital Care segment's performance? - Management indicated they are exploring the right solutions for the Vital Care segment, acknowledging its different growth rates compared to other segments [33][34] Question: What is the company's strategy for capital deployment once leverage ratios improve? - Management stated that they are focused on organic growth and do not feel pressured to pursue M&A, emphasizing the importance of R&D investments [61][62]

Financial Data and Key Metrics Changes - The company reported 4% organic growth in the consumables business for Q2 and expects mid-single digit sequential sales growth for the year [4][5] - The guidance for 2025 was updated, with the high end of the range adjusted from $425 million to $408 million due to tariffs and divestiture of the solutions business [42][43] Business Segment Data and Key Metrics Changes - The consumables business has compounded growth of 5% to 7% annually for over five years, driven by good clinical outcomes, brand inertia, and market share gains due to industry shortages [5][6] - The LVP (Large Volume Pump) revenue experienced double-digit growth, attributed to strong volume, competitive wins, and improvements in software and service [11][12] - The Vital Care segment saw a negative 4% organic growth in Q2, with expectations for flat sales in 2025 [34] Market Data and Key Metrics Changes - The infusion pump market has been abnormal for years, with current growth driven by catch-up from competitors and the company's competitive pipeline [11][19] - The competitive environment is influenced by recalls and sales pauses from other manufacturers, creating opportunities for market share gains [19][20] Company Strategy and Development Direction - The company is focused on integrating all pumps onto a single platform to enhance operational efficiency and customer experience [30][31] - The joint venture with Otsuka Pharmaceutical is seen as a strategic move to align with a leading innovator and improve product offerings in IV solutions [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the utilization rates across geographies, indicating a stable operating environment [3] - The company anticipates that the replacement cycle for pumps will begin towards the end of next year, which could drive future growth [17][18] Other Important Information - The company is navigating challenges related to tariffs, which are expected to impact gross margins by 200 to 300 basis points [49] - Management emphasized the importance of maintaining high regulatory standards in the infusion pump market, which they view as a competitive advantage [24] Q&A Session Summary Question: Why did the CEO buy back stock personally? - The CEO felt the market was missing the earnings opportunity and believed it was a good time to act [2] Question: What are the growth drivers for the consumables business? - Key drivers include good clinical outcomes, brand inertia, and market share gains from industry shortages [5][6] Question: How does the company view the competitive environment for LVP? - The company sees opportunities due to competitors facing recalls and the need for market remediation [19][20] Question: What is the expectation for the approval of new devices? - The company expects approvals for new devices like Plum Duo and Plum Solo within nine months [27] Question: How are tariffs impacting the financial outlook? - Tariffs are expected to have a $30 million impact, but the company is confident in mitigating some of these effects through cost-saving measures [43][45]

Company Overview - ICU Medical's 2024 revenues reached $2.35 billion[8] - The company's revenue mix includes 44% from consumables and 28% from systems pre-JV, which shifts to 52% and 33% post-JV respectively[6] - Vital Care accounts for 28% of revenue pre-JV and 16% post-JV[7] - Geographically, 64% of revenue comes from the US & Canada, and 36% from OUS post-JV[11] - Single-use consumables make up 88% of revenue, while hardware accounts for 12% post-JV[11] Financial Highlights - The company's diluted equity value is $3.2 billion, with a net debt of $1.0 billion, resulting in an enterprise value of $4.2 billion[11] Growth and Strategy - The industry is experiencing pump replacement cycle acceleration due to distinct circumstances[14] - The company is focused on improving its quality system and FDA warning letter remediation[37] - The company aims to achieve gross margin expansion, targeting 42-43% in the near-med term and 45% in the longer term[34] - The company is working towards a fully stable supply chain, production, and distribution network[37] - The company is focused on contract renewals of a significant portion of L-ICU US sales in late 2024[37]

Core Insights - ICU Medical (ICUI) is facing a recall notice from the FDA for its Plum Duo Infusion System due to software issues, but the recall does not require the device to be removed from use [1][5][8] FDA Recall Details - The FDA has classified the recall as the most serious type, warning that the affected Plum Duo Infusion System with software version 1.1.3 or earlier may cause the pump to stop responding, potentially leading to serious injury or death if not corrected [2][8] - The affected devices are identified by Unique Device Identifier 400020401 and Model M335400021, with the software version of 1.13 or earlier [6][9] Device Usage and Impact - The Plum Duo Infusion System is designed for delivering parenteral fluids and medications through intravenous, intra-arterial, and subcutaneous routes in various patient populations [3] - ICU Medical has advised users to quarantine the affected pumps until a software patch is available, emphasizing that if removing the device could harm patient care, users should monitor the 'CONFIRM STOP' message to prevent unintended interruptions [10][9] Company Response and Market Performance - ICU Medical is actively working on software corrections and has issued an Urgent Medical Device Correction notice to all affected users [4] - Despite the recall, ICU Medical's shares have remained steady, with a year-to-date decline of 17.7%, compared to a 7.7% gain in the industry and a 10.1% increase in the S&P 500 Index [5]

Financial Data and Key Metrics Changes - Revenue for Q2 was $544 million, reflecting a 2% organic growth but a reported decline of 6% due to the impact of the joint venture [5][6] - Adjusted EBITDA was $100 million, with EPS at $2.1, and gross margins improved due to the joint venture [6][14] - Adjusted gross margin for Q2 was 40%, showing a three percentage point expansion year-over-year and sequentially [14][15] - Free cash flow was a net outflow of $8 million, influenced by higher tax payments and tariff payments [17][18] Business Line Data and Key Metrics Changes - Consumables business grew 4% organically and 3% reported, achieving record sales levels [7][8] - IV Systems business grew 2% organically and reported, driven by double-digit growth in LVP [9][10] - Vital Care segment reported a decline of 434% due to the deconsolidation of IV Solutions revenues [12][13] Market Data and Key Metrics Changes - The demand and utilization environment in Q2 remained attractive across most geographies, although growth rates were not as high as the previous year [6][24] - The capital environment is stable, with customers proceeding with necessary investments [6] Company Strategy and Development Direction - The company aims to build a comprehensive infusion therapy company, focusing on innovation and optimizing its portfolio [5][26] - The strategy includes enhancing patient safety and workflow efficiencies through new product developments and regulatory approvals [8][11] - The company is focused on mitigating tariff impacts and optimizing its manufacturing network to improve profitability [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by tariffs and their impact on profitability, emphasizing the need for cost controls and price increases [20][30] - The outlook for Q3 and Q4 is positive, with expectations for sequential growth in consumables and IV systems [24][51] - The company is cautious about the evolving tariff landscape and its potential long-term implications [58] Other Important Information - The company has made significant progress in integrating its IT systems and consolidating its manufacturing network [15][31] - The joint venture is expected to continue benefiting the balance sheet and income statement [31] Q&A Session Summary Question: What assumptions have been made regarding tariffs, particularly for China? - The current guidance assumes tariffs at existing rates, with some benefits from pauses in tariff increases [38] Question: Is there anything outside of tariffs impacting the EBITDA outlook? - The primary impact on the EBITDA outlook is from tariffs, with no other significant factors affecting the guidance [39] Question: What is the demand profile for Duo and the infusion systems segment? - There is a positive outlook for both consumables and infusion systems, with installations of Duo underway [42][44] Question: How does the suspension of Baxter's no room pump sales affect the company? - While it may create some opportunities, the long-term view remains that all competitors will eventually return to the market [53] Question: What is the status of ongoing planning consolidation? - The move of infusion pumps to Costa Rica is complete, with other consolidations expected to be finalized within the next six to nine months [64] Question: Is the replacement cycle starting to contribute to revenue? - The replacement cycle is not yet significant, but discussions are beginning, with expectations for next year [71][72]

In $Millions 1 Disclosures 2 > Any statement concerning Management's expectation with respect to future results is a forward-looking statement based upon the best information currently available to Management and assumptions Management believes are reasonable, but Management does not intend the statement to be a representation as to future results. > Future results are subject to risks and uncertainties, including the risk factors described in the Company's filings with the Securities and Exchange Commissio ...

[Forward-Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This section outlines forward-looking statements, covered by safe harbor provisions, and identifies various risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are covered by **safe harbor provisions** and are subject to known and unknown risks and uncertainties[8](index=8&type=chunk)[9](index=9&type=chunk) - Key risks include **competition**, **declining demand**, inability to fund product development, **macroeconomic factors** (inflation, interest rates, foreign exchange), changes in trade/tax policies (tariffs on Mexico/Costa Rica), **healthcare cost pressures**, **FDA disruptions**, **cybersecurity**, **supply chain issues**, dependence on third-party suppliers, and challenges from the **Smiths Medical acquisition**[11](index=11&type=chunk)[12](index=12&type=chunk) - A **2025 FDA Warning Letter** regarding MedFusion™ Model 4000 Syringe Infusion Pump and CADD™ Solis VIP Ambulatory Infusion Pump modifications could impact continued commercial activity[12](index=12&type=chunk) [PART I. Financial Information](index=5&type=section&id=PART%20I.%20Financial%20Information) This section provides the company's unaudited condensed consolidated financial information and management's analysis [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents ICU Medical's unaudited condensed consolidated financial statements and detailed explanatory notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | **Assets:** | | | | | Cash and cash equivalents | $300,025 | $308,566 | $(8,541) | | Accounts receivable, net | $179,495 | $182,828 | $(3,333) | | Inventories | $616,474 | $584,676 | $31,798 | | Assets held for sale | — | $284,382 | $(284,382) | | TOTAL CURRENT ASSETS | $1,180,115 | $1,441,983 | $(261,868) | | TOTAL ASSETS | $4,107,389 | $4,203,931 | $(96,542) | | **Liabilities & Equity:** | | | | | TOTAL CURRENT LIABILITIES | $482,777 | $556,182 | $(73,405) | | LONG-TERM DEBT | $1,337,731 | $1,531,858 | $(194,127) | | TOTAL STOCKHOLDERS' EQUITY | $2,115,776 | $1,965,235 | $150,541 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $4,107,389 | $4,203,931 | $(96,542) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric (in thousands, except per share) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | TOTAL REVENUES | $548,866 | $596,455 | $1,153,568 | $1,163,110 | | GROSS PROFIT | $208,064 | $207,428 | $418,173 | $392,672 | | INCOME (LOSS) FROM OPERATIONS | $10,587 | $7,692 | $23,475 | $(2,963) | | NET INCOME (LOSS) | $35,338 | $(21,406) | $19,862 | $(60,877) | | Basic EPS | $1.43 | $(0.88) | $0.81 | $(2.51) | | Diluted EPS | $1.43 | $(0.88) | $0.80 | $(2.51) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the company's unaudited condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | NET INCOME (LOSS) | $35,338 | $(21,406) | $19,862 | $(60,877) | | Other comprehensive income (loss), net of tax | $72,753 | $(22,247) | $106,759 | $(38,704) | | COMPREHENSIVE INCOME (LOSS) | $108,091 | $(43,653) | $126,621 | $(99,581) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section presents the company's unaudited condensed consolidated statements of stockholders' equity for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Balance, January 1, 2025 | Balance, June 30, 2025 | Balance, January 1, 2024 | Balance, June 30, 2024 | | :-------------------- | :----------------------- | :--------------------- | :----------------------- | :--------------------- | | Common Stock (Amount) | $2,452 | $2,469 | $2,414 | $2,443 | | Additional Paid-in Capital | $1,412,118 | $1,435,935 | $1,366,493 | $1,380,703 | | Treasury Stock | $(92) | $(6) | $(262) | $(518) | | Retained Earnings | $690,158 | $710,020 | $807,846 | $746,969 | | Accumulated Other Comprehensive Loss | $(139,401) | $(32,642) | $(53,081) | $(91,785) | | Total Stockholders' Equity | $1,965,235 | $2,115,776 | $2,123,410 | $2,037,812 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $62,538 | $127,744 | | Net cash provided by (used in) investing activities | $170,648 | $(39,554) | | Net cash used in financing activities | $(251,351) | $(37,229) | | NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | $(8,541) | $48,426 | | CASH AND CASH EQUIVALENTS, end of period | $300,025 | $302,648 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, new pronouncements, and specific financial line items [Note 1: Basis of Presentation](index=11&type=section&id=Note%201%3A%20Basis%20of%20Presentation) The unaudited interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules, reflecting normal recurring adjustments - Financial statements are **unaudited** and prepared under **U.S. GAAP** and **SEC rules**, including normal recurring adjustments[31](index=31&type=chunk) - ICU Medical develops, manufactures, and sells **innovative medical products** for infusion therapy, vascular access, and vital care, including IV pumps, sets, connectors, catheters, and respiratory/anesthesia products[32](index=32&type=chunk) - Certain prior-year financial statement **reclassifications** were made for presentation consistency, with **no impact** on reported results[33](index=33&type=chunk) [Note 2: New Accounting Pronouncements](index=11&type=section&id=Note%202%3A%20New%20Accounting%20Pronouncements) This note details recently issued accounting standards not yet adopted by the company, with effective dates ranging from 2025 to 2027 - The company is assessing the **impact** of **ASU 2023-06** (Disclosure Improvements), **ASU 2023-09** (Income Taxes), and **ASU 2024-03** (Disaggregation of Income Statement Expenses)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - ASU **2023-09** (Income Taxes) will be effective for annual periods beginning after **December 15, 2024**, and **ASU 2024-03** (Disaggregation of Income Statement Expenses) will be effective for annual periods beginning after **December 15, 2026**[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3: Restructuring, Strategic Transaction and Integration](index=12&type=section&id=Note%203%3A%20Restructuring%2C%20Strategic%20Transaction%20and%20Integration) Restructuring, strategic transaction, and integration expenses slightly decreased for the three and six months ended June 30, 2025, compared to 2024 Restructuring, Strategic Transaction and Integration Expenses (in millions) | Expense Category (in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Restructuring, Strategic Transaction and Integration Expenses | $16.2 | $17.1 | $32.9 | $33.2 | | Restructuring Charges | $8.2 | $7.7 | $15.0 | $13.0 | | Strategic Transaction and Integration Expenses | $8.0 | $9.4 | $17.9 | $20.2 | - Restructuring charges for **2025** were primarily related to **facility closure costs** and **severance costs**[39](index=39&type=chunk) - Strategic transaction and integration expenses in **2025** were primarily related to ongoing consulting and employee costs for **Smiths Medical integration**, and transaction costs for the **sale of a 60% ownership** in the IV Solutions business[41](index=41&type=chunk) [Note 4: Assets Held For Sale and Disposal of Business](index=12&type=section&id=Note%204%3A%20Assets%20Held%20For%20Sale%20and%20Disposal%20of%20Business) ICU Medical divested a controlling interest in its IV Solutions business to OPF, recognizing a total gain of $41.8 million and retaining a 40% equity method investment - On **November 12, 2024**, ICU Medical entered an agreement to **divest a controlling interest** in its IV Solutions business to Otsuka Pharmaceutical Factory America, Inc. (OPF)[42](index=42&type=chunk) - On **May 1, 2025**, ICU Medical **sold a 60% ownership interest** in the Otsuka ICU Medical LLC joint venture for preliminary cash proceeds of **$209.5 million**[45](index=45&type=chunk)[46](index=46&type=chunk) - The transaction resulted in a **total gain of $41.8 million**, comprising a **$45.6 million gain** from the disposal, a **$16.4 million gain** from the retained **40% interest**, and a **$20.2 million unfavorable contract liability**[50](index=50&type=chunk) - ICU Medical retains a **40% ownership interest** in the joint venture, accounted for as an **equity method investment**, and provides commercial, logistics, manufacturing, and administrative services for up to **five years**[45](index=45&type=chunk)[46](index=46&type=chunk)[52](index=52&type=chunk) [Note 5: Revenue](index=14&type=section&id=Note%205%3A%20Revenue) Revenue is primarily recognized upon product shipment for consumables, infusion systems, and vital care products, and at the start of the license term for software - Revenue is generally recognized upon **transfer of control** at shipment for products and at the start of the license term for software[56](index=56&type=chunk) - Variable consideration, primarily **distributor chargebacks and rebates**, is estimated using historical data and inventory levels, and recorded as a **reduction of accounts receivable**[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) Revenue by Product Line (in thousands) | Product Line (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consumables | $273,133 | $261,816 | $539,359 | $505,855 | | Infusion Systems | $167,696 | $163,638 | $333,996 | $320,976 | | Vital Care | $108,037 | $171,001 | $280,213 | $336,279 | | Total Revenues | $548,866 | $596,455 | $1,153,568 | $1,163,110 | Revenue by Geography (in thousands) | Geography (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $335,432 | $383,140 | $723,676 | $749,295 | | Europe, the Middle East and Africa | $99,059 | $95,310 | $194,747 | $193,699 | | APAC | $58,404 | $61,224 | $117,816 | $113,077 | | Other Foreign | $55,971 | $56,781 | $117,329 | $107,039 | | Total Revenues | $548,866 | $596,455 | $1,153,568 | $1,163,110 | [Note 6: Segment Data](index=17&type=section&id=Note%206%3A%20Segment%20Data) The company operates as a single operating and reportable segment, as discrete financial information is not provided to the chief operating decision maker at the product-line level - The company has a **single operating and reportable segment** because discrete financial information (beyond revenue and standard cost) is not allocated to individual product lines for the **CODM**[71](index=71&type=chunk)[73](index=73&type=chunk) - The chief executive officer, as **CODM**, uses **consolidated net profit (loss)** to manage business activities and allocate capital resources[75](index=75&type=chunk) - A single distributor accounted for **19%** of consolidated worldwide net sales for the three months ended **June 30, 2025**, and **18%** for the six months ended **June 30, 2025**[77](index=77&type=chunk) Geographic Long-Lived Assets (in thousands) | Geographic Long-Lived Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Costa Rica | $160,676 | $156,149 | | Mexico | $117,835 | $111,043 | | Other LATAM | $64,060 | $55,451 | | Total Foreign | $454,101 | $425,096 | | United States | $628,671 | $610,547 | | Worldwide Total | $1,082,772 | $1,035,643 | [Note 7: Leases](index=19&type=section&id=Note%207%3A%20Leases) The company recognizes operating lease ROU assets and liabilities based on the present value of future minimum lease payments, using its incremental borrowing rate - Lease **ROU assets and liabilities** are recognized based on the **present value of future minimum lease payments**, using the **incremental borrowing rate**[81](index=81&type=chunk) - Lease terms range from **one to fifteen years**, with options to extend for up to **five additional years**, though these are not included in current lease terms unless reasonably certain[82](index=82&type=chunk) Lease Cost (in thousands) | Lease Cost (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $5,103 | $5,638 | $10,129 | $11,452 | | Finance lease cost — interest | $107 | $47 | $161 | $80 | | Finance lease cost — reduction of ROU asset | $623 | $301 | $812 | $555 | | Short-term lease cost | $5 | — | $7 | — | | Total lease cost | $5,838 | $5,986 | $11,109 | $12,087 | Lease Liabilities (in thousands) | Lease Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Total operating lease liabilities | $62,632 | $56,472 | | Total finance lease liabilities | $4,588 | $3,398 | [Note 8: Net Income (Loss) Per Share](index=21&type=section&id=Note%208%3A%20Net%20Income%20(Loss)%20Per%20Share) Basic EPS is calculated by dividing net income (loss) by weighted-average common shares outstanding, with diluted EPS including dilutive securities unless anti-dilutive - **Basic EPS** is calculated by dividing net income (loss) by weighted-average common shares outstanding[88](index=88&type=chunk) - **Diluted EPS** includes dilutive securities (common stock options and unvested restricted stock units) using the **treasury stock method**, unless a net loss makes them **anti-dilutive**[88](index=88&type=chunk) EPS (per share data) | EPS (per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $35,338 | $(21,406) | $19,862 | $(60,877) | | Basic EPS | $1.43 | $(0.88) | $0.81 | $(2.51) | | Diluted EPS | $1.43 | $(0.88) | $0.80 | $(2.51) | [Note 9: Derivatives and Hedging Activities](index=22&type=section&id=Note%209%3A%20Derivatives%20and%20Hedging%20Activities) ICU Medical uses cash flow hedging programs to manage foreign currency exchange rate risk and floating interest rate risk on variable-rate term loans - The company uses **cash flow hedging programs** to manage **foreign currency exchange rate risk** and **floating interest rate risk** on variable-rate term loans[91](index=91&type=chunk) - Foreign exchange forward contracts, with a total notional amount of **$137.6 million** as of **June 30, 2025**, hedge exposures in various currencies with an average term of **nine months**[93](index=93&type=chunk) - **Interest rate swaps** are used to convert floating-rate term loans to fixed rates, with notional amounts of approximately **$197.4 million** (Term Loan A swap), **$140.6 million** (Term Loan B swap), and an additional **$300.0 million** swap hedging both term loans[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) Derivative Fair Values (in thousands) | Derivative Fair Values (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total Assets (Derivatives) | $3,434 | $23,478 | | Total Liabilities (Derivatives) | $5,055 | $7,391 | [Note 10: Fair Value Measurements](index=24&type=section&id=Note%2010%3A%20Fair%20Value%20Measurements) Fair value measurements are categorized into Level 1, 2, or 3 inputs, with recurring measurements including contingent earn-out liabilities and derivative financial instruments - **Fair value measurements** are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[101](index=101&type=chunk) - The **contingent earn-out liability** for the Smiths Medical acquisition was reduced to **zero** in **2024** because Smiths no longer met the required minimum beneficial ownership percentage[100](index=100&type=chunk) - Foreign exchange contracts and interest rate swaps are classified as **Level 2 fair value measurements**, relying on **observable market inputs**[104](index=104&type=chunk)[105](index=105&type=chunk) - A **nonrecurring Level 3 fair value measurement** was made for the retained **equity method investment** in Otsuka ICU Medical LLC following the partial sale of the IV Solutions business[107](index=107&type=chunk) [Note 11: Investment Securities](index=26&type=section&id=Note%2011%3A%20Investment%20Securities) ICU Medical holds equity method investments in unconsolidated affiliates, including a 40% ownership interest in Otsuka ICU Medical LLC - ICU Medical applies the **equity method** for investments in unconsolidated affiliates where it has **significant influence** but not a controlling interest[108](index=108&type=chunk) - On **April 24, 2025**, the company formed Otsuka ICU Medical LLC (joint venture) and retained a **40% ownership interest**, with an initial investment of **$125.8 million**[109](index=109&type=chunk) - **Equity in earnings** of unconsolidated affiliates was **$2.8 million** for both the three and six months ended **June 30, 2025**, with no such balances in **2024**[111](index=111&type=chunk) Investment Securities (in thousands) | Investment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Otsuka ICU Medical LLC | $128,662 | — | | Other equity method investment | $2,963 | $3,038 | | Total | $131,625 | $3,038 | [Note 12: Prepaid Expenses and Other Current Assets](index=27&type=section&id=Note%2012%3A%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Prepaid expenses and other current assets totaled $84.1 million as of June 30, 2025, an increase from $81.5 million at December 31, 2024 Prepaid Expenses and Other Current Assets (in thousands) | Prepaid Expenses and Other Current Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------------------- | :------------ | :---------------- | | Other prepaid expenses and receivables | $29,645 | $17,312 | | Prepaid insurance and property taxes | $6,358 | $10,284 | | VAT/GST receivable | $10,031 | $4,445 | | Interest rate contracts | — | $11,038 | | Prepaid income taxes | $14,810 | $11,244 | | Other | $23,277 | $27,208 | | Total | $84,121 | $81,531 | [Note 13: Inventories](index=27&type=section&id=Note%2013%3A%20Inventories) Inventories are valued at the lower of cost or net realizable value using the FIFO method, and increased to $616.5 million at June 30, 2025 - Inventories are stated at the **lower of cost or net realizable value**, with cost determined using the **FIFO method**, including material, labor, and overhead[113](index=113&type=chunk) Inventories (in thousands) | Inventories (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Raw materials | $283,874 | $265,275 | | Work in process | $48,317 | $37,528 | | Finished goods | $284,283 | $281,873 | | Total inventories | $616,474 | $584,676 | [Note 14: Property, Plant and Equipment](index=28&type=section&id=Note%2014%3A%20Property%2C%20Plant%20and%20Equipment) Net property, plant and equipment increased to $452.4 million at June 30, 2025, with depreciation expense decreasing due to asset disposals Property, Plant and Equipment (in thousands) | Property, Plant and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Machinery and equipment | $421,294 | $400,861 | | Land, building and building improvements | $178,951 | $177,089 | | Instruments placed with customers | $142,010 | $124,290 | | Total property, plant and equipment, net | $452,442 | $442,746 | - Depreciation expense for the three months ended **June 30, 2025**, was **$16.9 million** (down from **$22.3 million** in **2024**), and for the six months was **$33.8 million** (down from **$44.7 million** in **2024**)[117](index=117&type=chunk) - The **decrease in depreciation expense** was partly due to the **disposal of certain assets** related to the sale of a **60% interest** of the IV Solutions business[117](index=117&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) [Note 15: Goodwill and Intangible Assets, Net](index=28&type=section&id=Note%2015%3A%20Goodwill%20and%20Intangible%20Assets%2C%20Net) Goodwill increased to $1,501.9 million due to currency translation, while net intangible assets decreased to $698.0 million Goodwill (in thousands) | Goodwill (in thousands) | Amount | | :---------------------- | :----- | | Balance as of January 1, 2025 | $1,432,772 | | Currency translation | $69,148 | | Balance as of June 30, 2025 | $1,501,920 | Intangible Assets, Net (in thousands) | Intangible Assets, Net (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Developed technology | $365,588 | $391,671 | | Non-contractual customer relationships | $290,660 | $310,137 | | Total intangible assets | $698,009 | $740,789 | - Intangible asset amortization expense was **$32.7 million** for the three months ended **June 30, 2025** (vs. **$33.1 million** in **2024**) and **$65.3 million** for the six months ended **June 30, 2025** (vs. **$66.2 million** in **2024**)[120](index=120&type=chunk) [Note 16: Accrued Liabilities](index=30&type=section&id=Note%2016%3A%20Accrued%20Liabilities) Accrued liabilities increased to $313.8 million at June 30, 2025, with the field service corrective action accrual related to the 2021 FDA Warning Letter Accrued Liabilities (in thousands) | Accrued Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Salaries and benefits | $83,464 | $60,815 | | Incentive compensation | $42,796 | $59,445 | | Deferred revenue | $21,919 | $30,358 | | Italy medical device payback provision | $29,287 | $23,937 | | Field service corrective action | $25,488 | $32,844 | | Other | $110,844 | $99,524 | | Total | $313,798 | $306,923 | - The **field service corrective action accrual** is primarily associated with the **2021 FDA Warning Letter** received by Smiths Medical[123](index=123&type=chunk) [Note 17: Income Taxes](index=30&type=section&id=Note%2017%3A%20Income%20Taxes) The effective tax rate for the three and six months ended June 30, 2025, was 3% and 25% respectively, influenced by the IV Solutions business sale and valuation allowances Effective Tax Rate | Effective Tax Rate | Three months ended June 30, 2025 | Six months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2024 | | :----------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Effective Tax Rate | 3% | 25% | (10)% | (8)% | - The **2025 effective tax rate** includes a **$6.1 million tax expense** from the IV Solutions business sale and a **$5.0 million release** of unrecognized tax benefits due to statute of limitations expiration[125](index=125&type=chunk) - The company recorded a **$2.7 million tax benefit** and **$3.7 million tax expense** from changes to the **valuation allowance** against U.S. federal and state deferred tax assets in the three and six months ended **June 30, 2025**, respectively, due to recent U.S. cumulative losses[128](index=128&type=chunk) - The U.S. enacted the **"One Big Beautiful Bill Act" (OBBBA)** on **July 4, 2025**, and the company is currently assessing its impact on consolidated financial statements[130](index=130&type=chunk) [Note 18: Long-Term Debt](index=31&type=section&id=Note%2018%3A%20Long-Term%20Debt) ICU Medical's $2.2 billion Credit Agreement includes Term Loan A and B, with $1.3 billion outstanding as of June 30, 2025, and significant prepayments made - The **2022 Credit Agreement** includes a **$850.0 million Term Loan A** (maturing **Jan 2027**), a **$850.0 million Term Loan B** (maturing **Jan 2029**), and a **$500.0 million Revolving Credit Facility**[133](index=133&type=chunk)[137](index=137&type=chunk)[241](index=241&type=chunk) - As of **June 30, 2025**, the outstanding aggregate principal amount of the term loans is **$1.3 billion**[242](index=242&type=chunk) - Total principal payments on Term Loans for the six months ended **June 30, 2025**, were **$247.8 million**, including a **$200 million prepayment** on Term Loan A (from IV Solutions sale proceeds) and a **$35 million prepayment** on Term Loan B[148](index=148&type=chunk)[240](index=240&type=chunk)[249](index=249&type=chunk) - The company was in **compliance** with all financial covenants (**Senior Secured Leverage Ratio** and **Interest Coverage Ratio**) as of **June 30, 2025**[155](index=155&type=chunk)[242](index=242&type=chunk) Long-Term Debt (in thousands) | Long-Term Debt (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Term Loan A — principal | $559,688 | $770,000 | | Term Loan B — principal | $789,500 | $820,000 | | Total carrying value of long-term debt | $1,337,731 | $1,531,858 | [Note 19: Stockholders' Equity](index=35&type=section&id=Note%2019%3A%20Stockholders%27%20Equity) The Board approved a $100.0 million share purchase plan, with no shares purchased in Q2 2025, and AOCI significantly improved due to foreign currency translation adjustments - A **$100.0 million share purchase plan** was approved in **August 2019**, with **no purchases** made in **Q2 2025** or **Q2 2024**, and the **full amount remains available**, subject to **Credit Agreement limitations**[160](index=160&type=chunk)[259](index=259&type=chunk) - For the six months ended **June 30, 2025**, **61,066 shares** were withheld for **$8.7 million** in tax withholding payments related to employee vested restricted stock units[161](index=161&type=chunk)[263](index=263&type=chunk) Accumulated Other Comprehensive (Loss) Income (in thousands) | Accumulated Other Comprehensive (Loss) Income (in thousands) | January 1, 2025 | June 30, 2025 | | :--------------------------------------------------------- | :-------------- | :------------ | | Foreign Currency Translation Adjustments | $(146,942) | $(25,483) | | Unrealized Losses on Cash Flow Hedges | $5,722 | $(8,978) | | Other Adjustments | $1,819 | $1,819 | | Total AOCI | $(139,401) | $(32,642) | [Note 20: Commitments and Contingencies](index=36&type=section&id=Note%2020%3A%20Commitments%20and%20Contingencies) The company is involved in routine legal proceedings and faces contingencies including FDA Warning Letters and the Italy Medical Device Payback legislation - The company is involved in **routine legal proceedings**, but management does not believe they will have a **material adverse impact**[164](index=164&type=chunk) - As of **June 30, 2025**, approximately **$25.8 million** of the **$32.6 million** accrued for field service corrective actions is related to the **2021 FDA Warning Letter** for Smiths Medical's Oakdale facility[167](index=167&type=chunk) - A **2025 FDA Warning Letter** cited changes to MedFusion™ Model 4000 Syringe Infusion Pump and CADD™ Solis VIP Ambulatory Infusion Pump requiring new **510(k) clearance**; **no loss contingency** is recorded due to uncertain outcome[169](index=169&type=chunk) - The company has accrued **$29.3 million** for potential payments related to the **Italy Medical Device Payback (IMDP) legislation**, but potential amendments could lead to settlement for less than the original assessed value[168](index=168&type=chunk)[252](index=252&type=chunk) [Note 21: Collaborative and Other Arrangements](index=37&type=section&id=Note%2021%3A%20Collaborative%20and%20Other%20Arrangements) ICU Medical's Manufacturing and Supply Agreement with Pfizer was amended to extend terms through 2027, with Solutions product rights assigned to the joint venture - The **Manufacturing and Supply Agreement (MSA)** with Pfizer was amended on **December 31, 2024**, extending terms through **2027** for certain Solutions and Abboject products[172](index=172&type=chunk) - ICU's rights and obligations related to Solutions products under the **MSA** were assigned to the **joint venture** as of **January 24, 2025**[172](index=172&type=chunk) [Note 22: Accounts Receivable Purchase Program](index=37&type=section&id=Note%2022%3A%20Accounts%20Receivable%20Purchase%20Program) ICU Medical has a revolving $150 million uncommitted receivables purchase agreement with BMO Bank, selling $10.0 million in trade receivables for the six months ended June 30, 2025 - The company has a revolving **$150 million uncommitted receivables purchase agreement** with BMO Bank, N.A., entered in **January 2023**, to accelerate capital access[173](index=173&type=chunk) - The transfer of receivables is intended as a **true sale**, isolating them from the company and its creditors[173](index=173&type=chunk) Accounts Receivable Purchase Program (in thousands) | Accounts Receivable Purchase Program (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Trade receivables sold | $10,009 | $172,755 | $10,009 | $348,447 | | Cash received in exchange for trade receivables sold | $9,978 | $171,682 | $9,978 | $346,282 | | Loss on sale of receivables | $32 | $1,073 | $32 | $2,165 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses ICU Medical's financial condition and results of operations, covering business overview, product offerings, global economic challenges, the IV Solutions business disposition, consolidated results, and liquidity and capital resources [Business Overview and Highlights](index=39&type=section&id=Business%20Overview%20and%20Highlights) ICU Medical develops and sells innovative medical products across infusion systems, consumables, and critical care, facing global economic challenges and recently divesting its IV Solutions business - Product offerings include **Consumables** (Infusion Therapy, Oncology, Vascular Access, Tracheostomy), **Infusion Systems** (LVP, Ambulatory, Syringe pumps, IV Medication Safety Software, Professional Services), and **Vital Care** (IV Solutions, Hemodynamic Monitoring, General Anesthesia & Respiratory, Temperature Management, Regional Anesthesia/Pain Management)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - The company experiences **significant impacts** from **global economic challenges**, including fluctuating inflation, increased raw material costs, supply chain disruptions, higher interest rates, and foreign currency volatility[202](index=202&type=chunk)[206](index=206&type=chunk) - On **July 31, 2025**, the U.S. announced a **tariff increase to 15%** for certain countries, including Costa Rica, which could **materially impact** the business, though tariffs did not significantly impact Q2 2025 results[203](index=203&type=chunk)[204](index=204&type=chunk) - On **May 1, 2025**, the company **sold a 60% interest** in its IV Solutions business for **$209.5 million**, using **$200.0 million** of the proceeds to pay down Term Loan A long-term debt[208](index=208&type=chunk) [Consolidated Results of Operations](index=44&type=section&id=Consolidated%20Results%20of%20Operations) Total revenues decreased due to the IV Solutions divestiture, while gross margins improved significantly, and net income improved substantially from a prior-year loss Consolidated Results of Operations (in thousands) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $548,866 | $596,455 | $1,153,568 | $1,163,110 | | Gross Profit | $208,064 | $207,428 | $418,173 | $392,672 | | Gross Margin | 37.9% | 34.8% | 36.3% | 33.8% | | Income (Loss) from Operations | $10,587 | $7,692 | $23,475 | $(2,963) | | Net Income (Loss) | $35,338 | $(21,406) | $19,862 | $(60,877) | | Gain on Sale of Business | $41,823 | — | $41,823 | — | - **Consumables revenue increased by 4.3%** (3 months) and **6.6%** (6 months) YoY, driven by new customer installations and increased demand[214](index=214&type=chunk) - **Infusion Systems revenue increased by 2.4%** (3 months) and **4.0%** (6 months) YoY, primarily due to increased sales of LVP pump hardware and dedicated sets[215](index=215&type=chunk) - **Vital Care revenue decreased significantly by 36.8%** (3 months) and **16.7%** (6 months) YoY, primarily due to lower IV Solutions sales following the divestiture of a controlling ownership interest[216](index=216&type=chunk) - **Gross margins increased primarily** due to the impact of the IV Solutions business sale (a lower-margin business), price increases, higher production levels, foreign exchange impact, lower supply chain costs, and integration synergies, partially offset by increased tariff costs[217](index=217&type=chunk) - **SG&A expenses slightly decreased** due to lower depreciation/amortization, compensation costs (offset by service fee income from joint venture), and dealer fees, partially offset by increased stock-based compensation and legal fees[218](index=218&type=chunk)[219](index=219&type=chunk) - **Interest expense, net, decreased** due to lower SOFR rates and reduced long-term debt principal balances following prepayments[227](index=227&type=chunk) - **Other income (expense), net, improved significantly**, primarily due to foreign exchange gains from the weakening U.S. dollar[228](index=228&type=chunk) - The **effective tax rate** for the six months ended **June 30, 2025**, was **25%**, compared to **(8)%** in **2024**, influenced by the IV Solutions business sale tax expense and valuation allowance changes[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) - **Equity in earnings of unconsolidated affiliates** was **$2.8 million** for the three and six months ended **June 30, 2025**, related to the **40% share** of the joint venture's earnings[237](index=237&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) ICU Medical's liquidity sources include cash, operating cash flows, and borrowing arrangements, with cash decreasing due to debt prepayments and planned capital expenditures reduced - **Primary liquidity sources** include cash and cash equivalents, cash flows from operations, and access to borrowing arrangements (**Senior Secured Credit Facilities** and **accounts receivable purchase program**)[239](index=239&type=chunk) - Cash and cash equivalents **decreased by $8.5 million** from **$308.6 million** (Dec 31, 2024) to **$300.0 million** (June 30, 2025), primarily due to **$247.8 million in debt prepayments**[240](index=240&type=chunk)[258](index=258&type=chunk) - The **Senior Secured Credit Facilities** include **$1.3 billion** in outstanding term loans as of **June 30, 2025**, and a **$500.0 million Revolving Credit Facility** with **no outstanding borrowings**[242](index=242&type=chunk) - Estimated **2025 planned capital expenditures** are **$75 million to $95 million**, reduced from **$90 million to $110 million** due to the IV Solutions business disposal[245](index=245&type=chunk) - **Net cash provided by operating activities** for the six months ended **June 30, 2025**, was **$62.5 million**, a **decrease** from **$127.7 million** in **2024**, influenced by changes in accounts receivable, inventories, and accrued liabilities[255](index=255&type=chunk)[256](index=256&type=chunk) - **Net cash provided by investing activities** for the six months ended **June 30, 2025**, was **$170.6 million**, a **significant increase** from **$(39.6) million** in **2024**, primarily due to **$209.5 million** in proceeds from the sale of the IV Solutions business[257](index=257&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) ICU Medical is exposed to interest rate risk from variable-rate term loans, partially mitigated by interest rate swaps, and foreign currency exchange rate risk on international revenues and expenses - The company is exposed to **interest rate risk** from its **variable-rate Term Loan A and Term Loan B facilities**[262](index=262&type=chunk)[264](index=264&type=chunk) - A hypothetical **1% increase or decrease** in the **SOFR rate** would result in approximately **$13.5 million** in additional annual interest expense or savings related to the term loans[264](index=264&type=chunk) - **Interest rate swaps** are used to **mitigate interest rate risk**, effectively converting portions of floating-rate term loans to fixed rates[265](index=265&type=chunk) - **Foreign currency exchange rate risk** arises from international revenues and expenses denominated in multiple currencies, managed through foreign exchange forward contracts, though **not all exposure is hedged**[267](index=267&type=chunk)[268](index=268&type=chunk) - A hypothetical **10% weakening** in foreign currency exchange rates would result in an estimated **$2.5 million increase** in the fair value of outstanding foreign exchange derivative contracts[268](index=268&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level - **Disclosure controls and procedures** were evaluated as **effective** at the **reasonable assurance level** as of **June 30, 2025**[271](index=271&type=chunk) - **No material changes** in **internal control over financial reporting** occurred during the quarter ended **June 30, 2025**[272](index=272&type=chunk) - Management acknowledges that controls and procedures provide only **reasonable assurance** due to inherent limitations and resource constraints[269](index=269&type=chunk) [PART II. Other Information](index=55&type=section&id=PART%20II.%20Other%20Information) This section provides other information, including legal proceedings, updated risk factors, unregistered sales of equity securities, and exhibit listings [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the discussion of legal proceedings in Note 20, which states that routine legal proceedings are not expected to have a material adverse impact - **Legal proceedings** are discussed in **Note 20: Commitments and Contingencies**[273](index=273&type=chunk) - Management does not believe that the resolution of unsettled legal proceedings will have a **material adverse impact** on financial position or results of operations[164](index=164&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors from the 2024 Annual Report, highlighting risks related to non-U.S. sales and manufacturing, particularly concerning tariffs on imports from Costa Rica and Mexico - **No material changes** to risk factors from the **2024 Annual Report on Form 10-K**, except as updated in this report[274](index=274&type=chunk) - **Significant portion of revenues** derived from non-U.S. sales and products manufactured at non-U.S. facilities (Costa Rica, Mexico) and imported into the U.S., exposing the company to **tariff risks**[275](index=275&type=chunk)[277](index=277&type=chunk) - On **July 31, 2025**, the U.S. announced an **increase to a 15% baseline reciprocal tariff** for certain countries, including Costa Rica, which is likely to have a **material impact** on costs[278](index=278&type=chunk) - **Elimination of USMCA exemptions** for products manufactured in Mexico would **substantially increase tariff expenses**[278](index=278&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a $100.0 million common stock purchase plan, with no shares purchased in Q2 2025, and the full amount remains available subject to Credit Agreement limitations - A **$100.0 million common stock purchase plan** was approved in **August 2019**, with **no expiration date**[280](index=280&type=chunk) - **No shares were purchased** under the plan during the **second quarter of 2025**, and the **full $100.0 million remains available**[280](index=280&type=chunk) - Share purchases are **limited** by the terms and conditions of the **Credit Agreement**[280](index=280&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) This section confirms no other information to report under sub-items (a) and (b), and no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers - **No other information** to report under sub-items (a) and (b)[281](index=281&type=chunk) - **No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements** during the three months ended **June 30, 2025**[281](index=281&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various agreements, corporate documents, stock incentive plan amendments, and certifications - The exhibits include various agreements such as the **Share Sale and Purchase Agreement**, **Put Option Deed**, and **Purchase Agreement** related to the IV Solutions business[285](index=285&type=chunk) - Corporate governance documents like the **Certificate of Incorporation** and **Bylaws**, along with amendments to the **stock incentive plan**, are filed as exhibits[285](index=285&type=chunk) - **Certifications** from the Chief Executive Officer and Chief Financial Officer (pursuant to Sections **302** and **906** of Sarbanes-Oxley Act) and **XBRL documents** are also included[285](index=285&type=chunk) [Signature](index=58&type=section&id=Signature) This section contains the signature of Brian M. Bonnell, Chief Financial Officer of ICU Medical, Inc., certifying the filing of the report on August 7, 2025 - The report is signed by **Brian M. Bonnell**, **Chief Financial Officer**, on behalf of ICU Medical, Inc.[289](index=289&type=chunk) - The **filing date** of the report is **August 7, 2025**[289](index=289&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) ICU Medical reported mixed Q2 2025 results with decreased revenue but improved profitability, and updated its fiscal year 2025 guidance [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Results) ICU Medical reported mixed results for Q2 2025, with a decrease in total revenue but significant improvements in GAAP net income and adjusted profitability metrics compared to the prior year | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change ($) | Change (%) | | :--------------------- | :----------------- | :----------------- | :--------- | :--------- | | **Total Revenue** | $548.9 | $596.5 | $(47.6) | -7.98% | | **GAAP Gross Profit** | $208.1 | $207.4 | $0.7 | 0.34% | | **GAAP Gross Margin** | 38% | 35% | 3 ppts | | | **GAAP Net Income (Loss)** | $35.3 | $(21.4) | $56.7 | N/A | | **GAAP Diluted EPS** | $1.43 | $(0.88) | $2.31 | N/A | | **Adjusted Diluted EPS** | $2.10 | $1.56 | $0.54 | 34.62% | | **Adjusted EBITDA** | $100.3 | $91.3 | $9.0 | 9.86% | | Product Line | Q2 2025 (Millions) | Q2 2024 (Millions) | Change ($) | | :--------------- | :----------------- | :----------------- | :--------- | | **Consumables** | $273.1 | $261.8 | $11.3 | | **Infusion Systems** | $167.7 | $163.7 | $4.0 | | **Vital Care*** | $108.0 | $171.0 | $(63.0) | - ICU Medical's CEO, Vivek Jain, stated that "Second quarter results were generally in line with our expectations"[5](index=5&type=chunk) [Fiscal Year 2025 Guidance Update](index=1&type=section&id=Fiscal%20Year%202025%20Guidance) The company updated its fiscal year 2025 guidance, narrowing the GAAP net loss and diluted loss per share ranges, and adjusting the adjusted EBITDA and diluted earnings per share ranges | Metric | Previous Range (Millions) | Updated Range (Millions) | | :------------------------- | :------------------------ | :----------------------- | | **GAAP Net Loss** | $(45) to $(28) | $(43) to $(35) | | **GAAP Diluted Loss Per Share** | $(1.81) to $(1.11) | $(1.68) to $(1.38) | | **Adjusted EBITDA** | $380 to $405 | $380 to $390 | | **Adjusted Diluted EPS** | $6.55 to $7.25 | $6.85 to $7.15 | [Company Information](index=1&type=section&id=Company%20Information) This section provides an overview of ICU Medical as a global leader in medical infusion products and details the nature and risks associated with forward-looking statements [About ICU Medical](index=1&type=section&id=About%20ICU%20Medical) ICU Medical, Inc. is a global leader in infusion systems, infusion consumables, and high-value critical care products, serving hospital, alternate site, and home care settings worldwide - ICU Medical is a global leader in infusion systems, infusion consumables, and high-value critical care products[10](index=10&type=chunk) - The company's products are used in hospital, alternate site, and home care settings[10](index=10&type=chunk) - ICU Medical is headquartered in San Clemente, California, and focuses on providing quality, innovation, and value to clinical customers[10](index=10&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section outlines the forward-looking nature of certain statements in the press release, emphasizing that they are based on management's current expectations and are subject to various risks and uncertainties - Forward-looking statements are based on management's current expectations, estimates, forecasts, and projections, subject to risks and uncertainties[11](index=11&type=chunk) - Key risks include doing business in foreign countries, competition, decreased demand, raw material costs, operating efficiencies, inflation, geopolitical conditions, healthcare costs, regulatory disruptions, and risks related to acquisitions and intellectual property[11](index=11&type=chunk) - The company undertakes no obligation to update or revise forward-looking statements unless required by law[11](index=11&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated balance sheets, statements of operations, and cash flows, highlighting key financial movements including asset reclassification, revenue changes, and cash flow dynamics [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet shows a decrease in total assets primarily due to the reclassification of assets held for sale in the prior period, and a reduction in cash and cash equivalents | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | **TOTAL CURRENT ASSETS** | $1,180,115 | $1,441,983 | | **TOTAL ASSETS** | $4,107,389 | $4,203,931 | | **TOTAL CURRENT LIABILITIES** | $482,777 | $556,182 | | **LONG-TERM DEBT** | $1,337,731 | $1,531,858 | | **TOTAL STOCKHOLDERS' EQUITY** | $2,115,776 | $1,965,235 | - Cash and cash equivalents decreased from **$308.6 million** at December 31, 2024, to **$300.0 million** at June 30, 2025[13](index=13&type=chunk) - Assets held for sale, which were **$284.4 million** at December 31, 2024, were no longer present at June 30, 2025, indicating a completed sale or reclassification[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 2025, total revenues decreased year-over-year, but gross profit remained stable, leading to an improved gross margin, with the company swinging from a net loss to a net income | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **TOTAL REVENUES** | $548,866 | $596,455 | $1,153,568 | $1,163,110 | | **GROSS PROFIT** | $208,064 | $207,428 | $418,173 | $392,672 | | **INCOME (LOSS) FROM OPERATIONS** | $10,587 | $7,692 | $23,475 | $(2,963) | | **GAIN ON SALE OF BUSINESS** | $41,823 | — | $41,823 | — | | **NET INCOME (LOSS)** | $35,338 | $(21,406) | $19,862 | $(60,877) | | **Diluted EPS** | $1.43 | $(0.88) | $0.80 | $(2.51) | - The gain on sale of business contributed **$41.8 million** to income before income taxes in Q2 2025[15](index=15&type=chunk) - Operating expenses remained relatively stable year-over-year for both the three and six-month periods[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash provided by operating activities decreased significantly, while investing activities generated a substantial net cash inflow, offsetting a large net cash outflow from financing activities | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | **Net cash provided by operating activities** | $62,538 | $127,744 | | **Net cash provided by (used in) investing activities** | $170,648 | $(39,554) | | **Net cash used in financing activities** | $(251,351) | $(37,229) | | **NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS** | $(8,541) | $48,426 | - Proceeds from the sale of business amounted to **$209.5 million** for the six months ended June 30, 2025[17](index=17&type=chunk) - Principal repayments of long-term debt were **$247.8 million** for the six months ended June 30, 2025, a significant increase from **$25.5 million** in the prior year period[17](index=17&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section details the company's non-GAAP financial measures, including reconciliations for Adjusted EBITDA, Adjusted Diluted EPS, and Free Cash Flow, explaining adjustments made to GAAP figures [Use of Non-GAAP Financial Information](index=6&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) This section explains the company's use of non-GAAP financial measures, which are considered supplemental to GAAP and provide useful information for evaluating performance by excluding highly variable or unusual special items - Non-GAAP financial measures are supplemental to GAAP and are used by management and investors to assess performance and facilitate period-over-period comparisons[18](index=18&type=chunk) - Special items excluded from non-GAAP measures include contract manufacturing, stock compensation expense, intangible asset amortization, depreciation expense reduction for assets held for sale, restructuring and strategic transaction charges, contract settlements, changes in fair value of contingent earn-outs, quality system and product-related remediation, noncash release of loss on contract provision, asset write-offs, and gain on sale of business[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - Adjusted EBITDA further excludes depreciation expense, interest (net), and taxes, as these can vary significantly among companies and are deemed non-core to the business[31](index=31&type=chunk)[32](index=32&type=chunk) [Reconciliation of Adjusted EBITDA](index=8&type=section&id=Adjusted%20EBITDA) The reconciliation shows an increase in Adjusted EBITDA for Q2 2025 compared to Q2 2024, driven by various non-GAAP adjustments, notably the exclusion of the gain on sale of business in 2025 | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | | **GAAP net income (loss)** | $35,338 | $(21,406) | | **Total non-GAAP adjustments** | $64,971 | $112,743 | | **Adjusted EBITDA** | $100,309 | $91,337 | - Key adjustments for Q2 2025 included adding back interest (net) (**$20.5M**), stock compensation (**$14.5M**), depreciation and amortization (**$49.7M**), and restructuring charges (**$16.2M**), while subtracting the gain on sale of business (**$41.8M**)[37](index=37&type=chunk) [Reconciliation of Adjusted Diluted EPS (Q2 2025)](index=9&type=section&id=Adjusted%20Diluted%20EPS%20(Q2%202025)) For Q2 2025, Adjusted Diluted EPS was **$2.10**, significantly higher than GAAP diluted EPS of **$1.43**, after accounting for various non-GAAP adjustments | Metric (in thousands, except per share) | Q2 2025 | | :-------------------------------------- | :------ | | **Reported (GAAP) Net income** | $35,338 | | **Reported (GAAP) Diluted EPS** | $1.43 | | **Adjusted (Non-GAAP) Net income** | $51,988 | | **Adjusted (Non-GAAP) Diluted EPS** | $2.10 | - Significant adjustments increasing EPS included stock compensation expense (**$0.44**), amortization expense (**$1.00**), restructuring, strategic transaction and integration (**$0.50**), and quality system and product related remediation (**$0.18**)[38](index=38&type=chunk) - The gain on sale of business had a negative impact on adjusted EPS of **$(1.28)** as it was excluded from non-GAAP measures[38](index=38&type=chunk) [Reconciliation of Adjusted Diluted EPS (Q2 2024)](index=10&type=section&id=Adjusted%20Diluted%20EPS%20(Q2%202024)) For Q2 2024, Adjusted Diluted EPS was **$1.56**, a positive figure compared to the GAAP diluted loss per share of **$(0.88)**, primarily due to the exclusion of various charges and a tax expense | Metric (in thousands, except per share) | Q2 2024 | | :-------------------------------------- | :------ | | **Reported (GAAP) Net (loss)** | $(21,406) | | **Reported (GAAP) Diluted (loss) per share** | $(0.88) | | **Adjusted (Non-GAAP) Net income** | $38,067 | | **Adjusted (Non-GAAP) Diluted EPS** | $1.56 | - Key adjustments increasing EPS included stock compensation expense (**$0.34**), amortization expense (**$1.02**), restructuring, strategic transaction and integration (**$0.53**), quality system and product-related remediation (**$0.12**), and tax expense from valuation allowance (**$0.42**)[40](index=40&type=chunk) [Reconciliation of Free Cash Flow](index=11&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) Free cash flow for the three months ended June 30, 2025, was negative, a significant decrease from the prior year, while the six-month period remained positive but also decreased year-over-year | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Net cash provided by operating activities** | $11,211 | $81,953 | $62,538 | $127,744 | | **Purchase of property, plant and equipment** | $(19,696) | $(19,467) | $(34,317) | $(35,382) | | **Free cash flow** | $(8,485) | $62,671 | $28,263 | $93,054 | - The decrease in free cash flow for both periods was primarily driven by a reduction in net cash provided by operating activities[43](index=43&type=chunk) [Fiscal Year 2025 Outlook](index=12&type=section&id=Fiscal%20Year%202025%20Outlook) This section provides the updated fiscal year 2025 guidance, including both GAAP and non-GAAP projections for net loss, adjusted EBITDA, and earnings per share [Updated Fiscal Year 2025 Guidance](index=12&type=section&id=Fiscal%20Year%202025%20Outlook%20(Unaudited)) ICU Medical provided updated guidance for fiscal year 2025, including both GAAP and non-GAAP projections, anticipating a GAAP net loss but projecting positive adjusted EBITDA and adjusted earnings per share | Metric | Low End of Guidance (Millions) | High End of Guidance (Millions) | | :------------------------- | :----------------------------- | :------------------------------ | | **GAAP net loss** | $(43) | $(35) | | **Adjusted EBITDA** | $380 | $390 | | **GAAP loss per share** | $(1.68) | $(1.38) | | **Adjusted earnings per share** | $6.85 | $7.15 | - Non-GAAP adjustments for the full year 2025 are estimated to total between **$423 million** and **$425 million**, significantly impacting the difference between GAAP net loss and Adjusted EBITDA[45](index=45&type=chunk) - Key non-GAAP adjustments for EPS include stock compensation expense (**$2.11**), amortization expense (**$5.47**), restructuring, strategic transaction and integration (**$2.36**), and quality and regulatory initiatives and remediation (**$1.73**)[45](index=45&type=chunk)