ICU Medical(US:ICUI)2025-05-08 21:06PART I. Financial Information Item 1. Financial Statements (Unaudited) This section presents ICU Medical, Inc.'s unaudited condensed consolidated financial statements for Q1 2025, including balance sheets, income, equity, and cash flow statements, with detailed notes on accounting policies and financial activities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,423,915 | $1,441,983 | | Total Assets | $4,184,581 | $4,203,931 | | Total Current Liabilities | $549,024 | $556,182 | | Long-Term Debt | $1,488,565 | $1,531,858 | | Total Liabilities | $2,196,892 | $2,238,696 | | Total Stockholders' Equity | $1,987,689 | $1,965,235 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Account | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenues | $604,702 | $566,655 | | Gross Profit | $210,109 | $185,244 | | Income (Loss) from Operations | $12,888 | $(10,655) | | Net Loss | $(15,476) | $(39,471) | | Net Loss Per Share (Basic & Diluted) | $(0.63) | $(1.63) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $51,327 | $45,791 | | Net cash used in investing activities | $(16,811) | $(17,862) | | Net cash used in financing activities | $(56,336) | $(26,845) | | Net Decrease in Cash and Cash Equivalents | $(18,862) | $(2,799) | | Cash and Cash Equivalents, end of period | $289,704 | $251,423 | Note 4: Assets Held For Sale The company agreed to sell a 60% equity interest in its IV Solutions product line to OPF for approximately $209.5 million in cash, with the transaction closing on April 24, 2025, and net assets held for sale valued at $256.5 million as of March 31, 2025 - The company agreed to sell a 60% stake in its IV Solutions business to OPF for approximately $209.5 million in cash plus potential milestone payments. The transaction closed subsequent to the quarter end, on April 24, 202544160 Assets and Liabilities Held for Sale (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets held for sale | $286,122 | $284,382 | | Total liabilities held for sale | $29,664 | $32,911 | | Net assets held for sale | $256,458 | $251,471 | Note 5: Revenue Total revenues for the three months ended March 31, 2025, increased to $604.7 million from $566.7 million in the prior-year period, with growth across all product lines and the United States remaining the largest market Revenues by Product Line (in thousands) | Product line | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Consumables | $266,226 | $244,039 | | Infusion Systems | $166,300 | $157,338 | | Vital Care | $172,176 | $165,278 | | Total Revenues | $604,702 | $566,655 | Revenues by Geography (in thousands) | Geography | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | United States | $388,245 | $366,155 | | Europe, the Middle East and Africa | $95,688 | $98,389 | | APAC | $59,411 | $51,853 | | Other Foreign | $61,358 | $50,258 | | Total Revenues | $604,702 | $566,655 | Note 18: Long-Term Debt The company's long-term debt totaled $1.54 billion as of March 31, 2025, primarily consisting of Term Loan A and Term Loan B, with $47.8 million in principal repayments made during Q1 2025, and the company remaining in compliance with all financial covenants Carrying Value of Long-Term Debt (in thousands) | Debt Component | March 31, 2025 | | :--- | :--- | | Term Loan A — principal | $759,688 | | Term Loan B — principal | $789,500 | | Less unamortized debt issuance costs | $(12,810) | | Total carrying value of long-term debt | $1,536,378 | - Total principal payments on term loans were $47.8 million for Q1 2025, which included an additional prepayment of $35.0 million on Term Loan B131 - The company was in compliance with all financial covenants, including the Senior Secured Leverage Ratio and the Interest Coverage Ratio, as of March 31, 2025140 Note 20: Commitments and Contingencies The company faces FDA Warning Letters, including a new one in April 2025 regarding infusion pumps, and has accrued liabilities for corrective actions and Italy's Medical Device Payback legislation - In April 2025, the company received a new warning letter from the FDA regarding changes to its MedFusion™ Model 4000 and CADD™ Solis VIP infusion pumps that may require new 510(k) clearance. The financial impact is not yet predictable154 - As of March 31, 2025, the accrued liability for field service corrective actions, primarily related to the 2021 FDA Warning Letter, was $37.6 million152 - The company has accrued $25.5 million for potential payments related to the Italy Medical Device Payback (IMDP) legislation, though the ultimate resolution remains unknown153110 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports a 6.7% increase in total revenue to $604.7 million for Q1 2025, driven by growth across all product segments and improved gross margin, while highlighting risks from new U.S. tariffs and strong liquidity supported by cash from operations and debt paydown from the IV Solutions business sale Revenue Change by Segment (in millions) | Segment | Q1 2025 Revenue (GAAP) | YoY % Change (GAAP) | YoY % Change (Constant Currency) | | :--- | :--- | :--- | :--- | | Consumables | $266.2 | 9.1% | 10.3% | | Infusion Systems | $166.3 | 5.7% | 7.6% | | Vital Care | $172.2 | 4.2% | 5.1% | - Gross margin increased to 34.8% in Q1 2025 from 32.7% in Q1 2024, primarily due to price increases, higher production levels, favorable foreign exchange impact, lower supply chain costs, and integration synergies199 - The company highlights risks from new U.S. tariffs imposed in early 2025, which could materially impact business due to a significant portion of products being manufactured in Mexico and Costa Rica and imported into the U.S188249 - Cash and cash equivalents decreased by $18.9 million during the quarter to $289.7 million, primarily due to debt principal payments of $47.8 million215 - Subsequent to the quarter, the company received $209.5 million from the sale of 60% of its IV Solutions business and used approximately $200.0 million to prepay a portion of its Term Loan A debt160224 Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk on its $2.2 billion variable-rate debt through swaps, with a 1% SOFR change impacting annual interest expense by $15.5 million, and mitigates foreign currency risk, where a 10% weakening would decrease derivative fair value by $4.3 million - The company is exposed to interest rate risk on its variable-rate term loans. A 1% increase or decrease in the SOFR rate would result in an approximate $15.5 million change in annual interest expense239 - To manage interest rate risk, the company has entered into three interest rate swaps, effectively converting portions of its floating-rate term loans to fixed rates240 - The company is exposed to foreign currency risk. A sensitivity analysis showed that a hypothetical 10% weakening in foreign currency exchange rates would result in an estimated $4.3 million decrease in the fair value of its outstanding derivative contracts243 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the principal executive and financial officers, concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level245 - There were no material changes to the company's internal control over financial reporting during the first quarter of 2025246 PART II. Other Information Legal Proceedings The company is involved in routine legal proceedings not expected to materially impact its financial position or results of operations, with further details referenced in Note 20 of the financial statements - The company is involved in routine legal proceedings which are not expected to have a material adverse impact on its financial position or operations148247 Risk Factors The company highlights new U.S. tariffs as a material risk, potentially increasing costs and impacting financial results, given a significant portion of revenue comes from products manufactured in Costa Rica and Mexico and imported into the U.S - A key risk is the imposition of U.S. tariffs and foreign retaliatory measures, as a significant portion of revenues are from products manufactured in Costa Rica and Mexico and imported to the U.S249251 - Tariffs imposed in January and April 2025 are likely to have a material impact on the business, financial condition, and results of operations by increasing costs249252 Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, ICU Medical did not repurchase any common stock, with its $100.0 million share purchase plan remaining fully available but currently limited by Credit Agreement terms Stock Repurchase Activity - Q1 2025 | Period | Total number of shares purchased | Average price paid per share | Approximate dollar value that may yet be purchased under the program | | :--- | :--- | :--- | :--- | | Q1 2025 Total | 0 | $0 | $100,000,000 | - The company's ability to repurchase shares is limited by the terms and conditions of its Credit Agreement255 Other Information During the three months ended March 31, 2025, no directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement in Q1 2025256 Exhibits This section lists the exhibits filed with the Form 10-Q, including the Purchase Agreement with Otsuka, CEO and CFO certifications, and XBRL data files - The report includes a list of all exhibits filed, such as various agreements and required CEO/CFO certifications259