ICU Medical, Inc Q4 2024 Conference Call Presentation February 27, 2025 1 Disclosures 2 Warming Anesthesia & Resp Pain Kits Critical Care IV Solutions Infusion Therapy Oncology Vascular Access Consumables Infusion Systems Vital Care Ambulatory Syringe LVP Infusion Tracheostomy > 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, bu ...

Group 1 - ICU Medical reported quarterly earnings of $2.11 per share, exceeding the Zacks Consensus Estimate of $1.48 per share, and up from $1.57 per share a year ago, representing an earnings surprise of 42.57% [1] - The company achieved revenues of $621.62 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.95%, and an increase from $587.86 million year-over-year [2] - Over the last four quarters, ICU Medical has consistently surpassed consensus EPS and revenue estimates [2] Group 2 - The stock has underperformed the market, losing about 0.6% since the beginning of the year compared to the S&P 500's gain of 1.3% [3] - The current consensus EPS estimate for the upcoming quarter is $1.14 on revenues of $569.1 million, and for the current fiscal year, it is $6.94 on revenues of $2.23 billion [7] - The Zacks Industry Rank indicates that the Medical - Products sector is in the bottom 49% of over 250 Zacks industries, which may impact stock performance [8] Group 3 - The estimate revisions trend for ICU Medical is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Acquisition and Organizational Changes - The company completed the acquisition of Smiths Medical in January 2022, which has resulted in organizational changes and an increase in business size[19]. - The Smiths Medical acquisition in January 2022 has increased organizational size and complexity, requiring effective integration to maintain reputation[19]. - The company has incurred substantial debt to finance the Smiths Medical acquisition, which may restrict its ability to engage in additional transactions[19]. - The company has incurred substantial debt to finance the Smiths Medical acquisition, which may restrict future transactions[19]. Economic and Market Risks - The company faces significant risks from global macroeconomic conditions, including prolonged inflation and rising interest rates, which could adversely affect operations[17]. - Heightened inflation and rising interest rates have adversely affected operations, with potential future impacts[17]. - The company is subject to pressures to reduce healthcare costs, which may adversely affect pricing and profitability[17]. - The company must navigate pressures to reduce healthcare costs, which may affect pricing and profitability[17]. - International sales present additional risks related to competition and higher credit risk[19]. Supplier and Operational Risks - The company is dependent on single and limited source third-party suppliers, exposing it to risks of supplier interruptions and performance degradation[19]. - The company is dependent on limited third-party suppliers, exposing it to risks of business interruptions and performance degradation[19]. - The company faces significant risks including competition, demand decline, and inability to recover product development investments[13]. Regulatory and Compliance Risks - The company must comply with FDA regulations, and any failure could interrupt manufacturing operations and negatively impact sales[19]. - Compliance with FDA regulations is critical; failure to resolve existing warnings could lead to significant sanctions[17]. - The company has identified potential disruptions at the FDA and other agencies that could hinder product development and approval processes[19]. - Disruptions at government agencies could hinder product development and approval processes, negatively impacting business[17]. Financial Performance Risks - The company is exposed to risks related to foreign currency exchange rates, which could impact financial performance[19]. - Risks related to foreign currency exchange rates could adversely impact financial performance[19]. - The company anticipates challenges in recovering substantial investments in product development through commercial sales[17]. - The company emphasizes the importance of protecting its information technology systems against security breaches to avoid operational disruptions[19].

Financial Performance - Fourth quarter 2024 revenue was $629.8 million, a 7.9% increase from $587.9 million in the same period last year[3] - GAAP gross profit for Q4 2024 was $227.3 million, compared to $171.6 million in Q4 2023, resulting in a gross margin of 36.1% versus 29.2%[3] - Adjusted EBITDA for Q4 2024 was $105.5 million, up from $86.3 million in Q4 2023[3] - Total revenues for the twelve months ended December 31, 2024, were $2.38 billion, an increase of $122.9 million from $2.26 billion in 2023[15] - Consumables revenue for Q4 2024 was $268.1 million, a $14.1 million increase from $254.0 million in Q4 2023[5] - The company reported a GAAP net loss of $(23.8) million for Q4 2024, compared to a net loss of $(17.1) million in Q4 2023[3] - Net loss for the twelve months ended December 31, 2024, was $117.688 million, compared to a net loss of $29.655 million in 2023[17] - Adjusted EBITDA for the three months ended December 31, 2024, was $105.515 million, up from $86.266 million in 2023, reflecting a year-over-year increase of about 22.3%[36] - The adjusted (non-GAAP) net income was $52.1 million, with diluted earnings per share of $2.11, compared to a net loss of $32.0 million and a diluted loss per share of $0.97 on a GAAP basis[37] - The adjusted income before income taxes was $90.2 million, which is 15% of total revenues, indicating a significant improvement from the previous period[37] Future Projections - For fiscal year 2025, the company estimates a GAAP net loss between $(45) million to $(28) million, translating to a net loss per share of $(1.81) to $(1.11)[7] - Excluding the impact from the IV Solutions joint venture, adjusted EBITDA for FY 2025 is expected to be between $395 million to $425 million, with adjusted EPS ranging from $6.55 to $7.25[8] - The IV Solutions joint venture is anticipated to close in Q2 2025, potentially reducing adjusted EBITDA guidance by $15 million to $20 million[8] - For fiscal year 2025, the company projects a GAAP net loss between $45 million and $28 million, with adjusted EBITDA expected to be between $395 million and $425 million[43] - The company anticipates total non-GAAP adjustments for fiscal year 2025 to be between $440 million and $453 million[43] - The projected GAAP loss per share for fiscal year 2025 is estimated to be between $(1.81) and $(1.11)[43] Cash Flow and Liquidity - Cash and cash equivalents increased to $308.6 million as of December 31, 2024, from $254.2 million a year earlier[13] - Net cash provided by operating activities increased to $204.033 million in 2024 from $166.201 million in 2023, representing an increase of approximately 22.7%[17] - Cash and cash equivalents at the end of the period increased to $308.566 million in 2024 from $254.222 million in 2023, marking a growth of approximately 21.4%[17] - The company reported a net cash used in investing activities of $88.960 million in 2024, slightly higher than $87.947 million in 2023[17] - Free cash flow for the three months ended December 31, 2023, was $16.162 million, with net cash provided by operating activities amounting to $40.192 million[41] Expenses and Costs - The company incurred $8.2 million in restructuring and strategic transaction costs, impacting the overall financial results[37] - Research and development expenses amounted to $22.4 million, accounting for 4% of total revenues[37] - The total operating expenses, including selling, general, and administrative expenses, were $158.8 million, which is approximately 25% of total revenues[37] - The company reported a restructuring, strategic transaction, and integration expense of $10.731 million for the three months ended December 31, 2023[40] - The quality system and product-related remediation costs amounted to $24.003 million for the same period[40] Debt and Financial Adjustments - Principal repayments of long-term debt increased to $51.000 million in 2024 from $29.688 million in 2023, indicating a significant rise of about 72.2%[17] - Total non-GAAP adjustments for the three months ended December 31, 2024, amounted to $129.343 million, compared to $103.413 million in 2023[36] - The provision for doubtful accounts increased to $5.800 million in 2024 from $0.838 million in 2023, showing a substantial rise of over 590%[17] - The company recorded a change in fair value of contingent earn-out of $(3.991) million during the reporting period[40] Exchange Rate Impact - The effect of exchange rate changes on cash resulted in a decrease of $4.929 million in 2024, contrasting with an increase of $3.163 million in 2023[17]

Core Insights - ICU Medical, Inc. reported a revenue increase of 7.1% in Q4 2024, reaching $629.8 million compared to $587.9 million in Q4 2023 [2] - The company experienced a GAAP gross profit of $227.3 million in Q4 2024, up from $171.6 million in the same quarter of the previous year, resulting in a gross margin improvement from 29.2% to 36.1% [2] - Despite the revenue growth, ICU Medical reported a GAAP net loss of $(23.8) million in Q4 2024, compared to a net loss of $(17.1) million in Q4 2023 [2][4] Financial Performance - Adjusted diluted earnings per share for Q4 2024 was $2.11, an increase from $1.57 in Q4 2023 [2] - Adjusted EBITDA for Q4 2024 was $105.5 million, compared to $86.3 million in Q4 2023, reflecting a significant year-over-year increase [2] - For the fiscal year 2024, total revenues reached $2.38 billion, up from $2.26 billion in 2023, marking a growth of $122.9 million [2][4] Product Line Performance - Revenue from consumables in Q4 2024 was $268.1 million, an increase of $14.1 million from $254.0 million in Q4 2023 [4] - Infusion systems revenue rose to $171.7 million in Q4 2024, up by $6.6 million from $165.1 million in Q4 2023 [4] - Vital care product line revenue increased by $21.3 million to $190.0 million in Q4 2024, compared to $168.7 million in Q4 2023 [4] Fiscal Year 2025 Guidance - The company estimates a GAAP net loss for fiscal year 2025 to be between $(45) million and $(28) million, with a projected net loss per share ranging from $(1.81) to $(1.11) [5] - Excluding the impact from the IV Solutions joint venture, adjusted EBITDA for fiscal year 2025 is expected to be between $395 million and $425 million, with adjusted EPS projected to be between $6.55 and $7.25 [6] Cash Flow and Balance Sheet - As of December 31, 2024, cash and cash equivalents increased to $308.6 million from $254.2 million a year earlier [11] - The total assets of the company decreased to $4.20 billion from $4.38 billion as of December 31, 2023 [11] - Current liabilities increased to $556.2 million from $481.8 million in the previous year [11]

Core Viewpoint - ICU Medical, Inc. is set to release its fourth quarter 2024 earnings results on February 27, 2025, followed by a conference call to discuss these results [1][2]. Company Information - ICU Medical is a global leader in infusion systems, infusion consumables, and high-value critical care products utilized in various healthcare settings, including hospitals and home care [3]. - The company is headquartered in San Clemente, California, and emphasizes quality, innovation, and value for its clinical customers worldwide [3].

Core Points - ICU Medical will present at the Raymond James 46th Annual Institutional Investors Conference in Orlando, Florida from March 3-5, 2025 [1] - The presentation is scheduled for March 3, 2025, at 5:40 a.m. PT (8:40 a.m. ET) [1] - Company management will also engage in one-on-one meetings on the same day [1] Company Overview - ICU Medical is a global leader in infusion systems, infusion consumables, and high-value critical care products [3] - The company focuses on providing quality, innovation, and value to clinical customers worldwide [3] - ICU Medical is headquartered in San Clemente, California [3]

Company Presentation - ICU Medical management will present at the 43rd Annual J P Morgan Healthcare Conference on January 15 2025 at 10 30 a m PT (1 30 p m ET) [1] - The company will also participate in one-on-one meetings on January 15 and 16 2025 [1] - The presentation will be webcast live and available for replay on the company's website under the Investors and Event Calendar tabs [2] Company Overview - ICU Medical is a global leader in infusion systems infusion consumables and high-value critical care products used in hospital alternate site and home care settings [3] - The company is headquartered in San Clemente California and focuses on providing quality innovation and value to clinical customers worldwide [3]

Financial Data and Key Metrics - Q3 revenue was $580 million, representing 7% growth on a constant currency basis and 6% on a reported basis [9] - Adjusted EBITDA for Q3 was $95 million, a 6% increase compared to $90 million last year [26] - Adjusted EPS for Q3 was $1.59, up from $1.57 last year [25] - Gross margins were higher than expected due to supply chain efficiencies, FX, and sales mix [9] - Free cash flow for Q3 was $16 million, with year-to-date free cash flow at $109 million, already exceeding full-year guidance [27][29] - Cash balance increased to $313 million, and net debt stood at $1.3 billion [9][45] Business Unit Performance - **Consumables**: Grew 9% on both constant currency and reported basis, driven by infusion consumables, vascular access, and oncology [11] - **IV Systems**: Grew 10% on a constant currency basis and 7% on a reported basis, with strong performance in LVP line and new contract signings for Plum Duo infusion system [12] - **Vital Care**: Flat year-over-year on both constant currency and reported basis [15] Market Performance - Healthy demand and utilization across all geographies in Q3, with no major changes observed in Q4 [9] - Favorable foreign exchange impact in Q3, though the U.S. dollar has since strengthened, which may affect Q4 margins [22] Strategic Direction and Industry Competition - Announced a joint venture with Otsuka Pharmaceutical Factory for IV Solutions, aiming to bring innovation, supply redundancy, and geographic diversification to the market [36][38] - The joint venture will deconsolidate IV Solutions financial results, with ICU Medical recognizing only its proportional share in the net earnings of the JV [43] - The company aims to have the most modern fleet of infusion devices, focusing on clinical outcomes, new market creation, and innovation [13][14] Management Commentary on Operating Environment and Future Outlook - Management expects full-year results to finish above original mid-single-digit targets, with legacy ICU consumables lines at record levels [11] - The company is focused on improving profitability through revenue growth, operational efficiencies, and waiting for macro improvements in currency and interest rates [44] - The joint venture is expected to be EPS breakeven initially, with potential for margin improvements over time [43] Other Important Information - The company completed the cutover of its U.S. and Canada order-to-cash systems in Q3, with plans to optimize North American logistics and expand internationally [16] - Factory consolidations are mostly completed, with savings expected to contribute to profitability from 2025 onwards [16] - The company received no observations during a detailed FDA follow-up inspection at its Minneapolis site, marking progress in its quality improvement journey [17] Q&A Session Summary Question: Strategic rationale for the joint venture with Otsuka - The joint venture allows ICU Medical to stay in the IV Solutions market while leveraging Otsuka's innovation and global manufacturing footprint [51][60] Question: Impact of ERP system implementation - The U.S. and Canada ERP system cutover was completed in Q3, with some disruption in August but no material impact on the quarter's performance [52][53] Question: Pricing and market share for LVP and Plum Duo - The company is focused on maintaining pricing levels for new technology and feels confident about its competitive position in the market [54][55] Question: Impact of Mexican peso and potential tariffs - The company is not currently planning for significant impacts from potential tariffs, as it is a major player in the healthcare industry with substantial operations in Mexico [56] Question: FDA inspection and warning letter follow-up - The FDA follow-up inspection at the Minneapolis site resulted in no observations, and the company is awaiting the final report [57][58] Question: Gross margin outlook and supply chain efficiencies - The company is ahead of schedule in capturing $50 million in supply chain synergies, with gross margins expected to improve further as factory consolidations are completed [66][68] Question: Free cash flow and CapEx implications of the joint venture - The joint venture is expected to be marginally positive to neutral on free cash flow, with potential reinvestment in other areas [84][85] Question: Put-call option in the joint venture agreement - The put-call option allows either party to exercise starting in 2030, based on a multiple of revenues, providing flexibility depending on market developments [89] Question: Incremental capacity and revenue expectations - The company is focused on sustainable long-term growth rather than short-term gains from increased demand [87]

Financial Performance - ICU Medical reported quarterly earnings of $1.59 per share, exceeding the Zacks Consensus Estimate of $1.25 per share, and showing a slight increase from $1.57 per share a year ago, resulting in an earnings surprise of 27.20% [1] - The company achieved revenues of $580.07 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.92% and increasing from $553.31 million year-over-year [2] Stock Performance - ICU Medical shares have appreciated approximately 78.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 25.8% [3] Future Outlook - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $1.43 for the upcoming quarter and $5.21 for the current fiscal year, alongside projected revenues of $596 million and $2.3 billion respectively [7] - The Zacks Rank for ICU Medical is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Medical - Products industry, to which ICU Medical belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]