ICU Medical Conference Call Summary Company Overview - **Company**: ICU Medical (NasdaqGS:ICUI) - **Event**: 2026 Conference at KeyBanc Healthcare Forum - **Date**: March 18, 2026 Key Industry Insights - **Market Conditions**: The company expects hospital census to remain stable, with no significant growth assumptions for the year [3][4] - **Tariffs and Currency**: The company anticipates no worsening of tariffs and a slightly less favorable currency environment compared to previous assessments [4][5] - **Fuel Prices**: Increased oil prices are seen as a headwind, but the impact is less significant than in previous years due to reduced exposure in the IV solutions business [7][8] Financial Guidance - **EBITDA Guidance**: Initial guidance for 2026 is set between $400 million and $430 million [1] - **Growth Expectations**: Mid-single-digit growth is expected in both consumables and systems segments for the year [10][14] - **Gross Margin Target**: The company aims for a gross margin of around 41% for 2026, with improvements expected from manufacturing consolidations and increased volumes [26][29] Segment Performance Consumables - **Growth Drivers**: The consumables segment has shown strong performance due to effective marketing, increased market share from pump sales, and growth in niche markets like oncology and dialysis [51][52] - **Price Recovery**: The company plans to resume price increases in GPO contracts in the fall of next year to recover inflation costs from previous years [52] Systems - **Pump Segment**: The company has experienced growth in the pump segment, with a focus on refreshing the aging installed base [36][38] - **New Product Launches**: The Plum Solo and Plum Duo pumps are expected to drive future growth, with positive customer feedback on new technology [39][40] Strategic Initiatives - **SKU Rationalization**: The company is focusing on improving profitability in the Vital Care portfolio by eliminating lower-margin products [21][23] - **Software Monetization**: ICU Medical is exploring ways to monetize its software offerings, which have historically been underpriced [47][48] Integration and Synergies - **Smiths Integration**: The integration of Smiths is nearing completion, with significant efforts in manufacturing and IT systems consolidation expected to yield benefits in the near future [57][58] - **Free Cash Flow**: The company aims to improve its free cash flow profile as integration costs decrease, with a goal of returning capital to shareholders [62][63] Market Outlook - **Competitive Landscape**: The company believes that the market is at a critical juncture where many legacy devices need replacement, presenting opportunities for growth [36][38] - **Regulatory Environment**: The company is actively engaging with regulatory bodies regarding new product approvals, with constructive feedback received on submissions [44][45] Conclusion - **Investment Thesis**: ICU Medical maintains a positive outlook on its risk-reward profile for shareholders, emphasizing the potential for EPS growth and improved market positioning as integration efforts conclude and new products are launched [69][70]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $536 million, representing a 2% organic growth but a -14% reported decline, with full-year organic growth at 5% [4] - Gross margins were above 40%, with EBITDA of $98 million and EPS of $1.91, reflecting a year-over-year decline in EBITDA due to deconsolidation and tariffs [5][18] - Adjusted gross margin for Q4 was 40.5%, in line with previous guidance, with adjusted EBITDA decreasing by 7% from $106 million last year [16][18] Business Line Data and Key Metrics Changes - Consumables business grew 6% reported and 5% organic in Q4, with full-year growth at 7% reported and 6% organic [7][8] - IV systems business grew 3% reported and 1% organic, with LVPs showing low double-digit growth for the year [8][9] - Vital Care decreased 6% organically and 35% reported due to the deconsolidation of IV Solutions, with expectations for flat to slightly down revenue in the near term [10][11] Market Data and Key Metrics Changes - The demand environment remained attractive across geographies, with a notable flu spike in the U.S. towards year-end [6] - The capital environment was stable, with investments being made as needed [7] - Currency fluctuations, particularly the weaker U.S. dollar, positively impacted revenues in selling geographies [7] Company Strategy and Development Direction - The company aims to create a comprehensive infusion therapy company, focusing on operational stability and innovation [4][32] - Future growth is expected to be driven by volume increases in core infusion lines and niche categories like oncology [20][21] - The company is working on modernizing its IV Solutions business through a joint venture with Otsuka [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the capital environment and ongoing demand for their products [6][7] - The company anticipates improved free cash flow in 2026, driven by higher earnings and reduced spending on restructuring and integration [26] - Management acknowledged challenges from tariffs and interest rates but believes they can overcome these hurdles [29][34] Other Important Information - The company ended 2025 with $1.3 billion in debt and $308 million in cash, having paid down $303 million in principal during the year [20][27] - Adjusted operating expenses were 25% of revenue, lower than previous guidance, due to cost controls [17] - The company expects to reach a targeted leverage ratio of 2x by early 2027, prioritizing debt paydown with free cash flow [27] Q&A Session Summary Question: Can you discuss the current capital environment and customer decision-making? - Management indicated that the capital environment has been stable, with deals getting done and no significant changes from historical behavior [39] Question: What is the expected impact of new product launches on sales? - Management confirmed that there has been no slowdown in customer interest regarding future product roadmaps, and they are optimistic about upcoming clearances [43][45] Question: How is the company addressing tariff impacts? - Management noted that while there are still challenges related to tariffs, they have implemented structural changes to mitigate these impacts [55] Question: What is the outlook for the Syringe Pumps market? - Management clarified that the Syringe Pumps market is smaller than LVPs but emphasized the importance of having an integrated view for customers [60] Question: What are the margins for the Critical Care business? - Management indicated that most of the Vital Care business likely operates below corporate gross margins, complicating potential divestiture discussions [64]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $536 million, representing a 2% organic growth but a -14% reported decline, with full-year organic growth at 5% [4] - Gross margins were above 40%, with EBITDA of $98 million and EPS of $1.91, reflecting a year-over-year decline in EBITDA due to deconsolidation and tariffs [5][16] - Adjusted diluted EPS for Q4 was $1.91, down 9% from $2.11 the previous year [17] Business Line Data and Key Metrics Changes - Consumables business grew 6% reported and 5% organic in Q4, with full-year growth of 7% reported and 6% organic [7][8] - IV systems business grew 3% reported and 1% organic, with LVPs showing low double-digit growth for the year [8][9] - Vital Care decreased 6% organically and 35% reported due to deconsolidation, remaining flat for the year [10] Market Data and Key Metrics Changes - The demand environment in Q4 was attractive across most geographies, with a notable flu spike in the U.S. towards year-end [6] - The capital environment remained stable, with investments being executed as planned [7] Company Strategy and Development Direction - The company aims to create a comprehensive infusion therapy company, focusing on operational stability and innovation [4][30] - Future growth is expected to be driven by volume increases in core infusion lines and niche markets, with a long-term goal of mid-single-digit growth [18][19] - The company is working on integrating manufacturing and IT systems to improve operational efficiency and profitability [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the capital environment and ongoing demand for their products [7][36] - The company anticipates improved free cash flow in 2026, driven by higher earnings and reduced spending on restructuring and integration [24][25] - Management acknowledged challenges from tariffs and interest rates but believes they can overcome these hurdles [27][32] Other Important Information - The company ended 2025 with $1.3 billion in debt and $308 million in cash, having paid down $303 million in principal during the year [18][25] - The company expects to reach a targeted leverage ratio of 2 times by early 2027, prioritizing debt repayment with free cash flow [25][26] Q&A Session Summary Question: Can you discuss the current customer environment for systems? - Management indicated that the capital environment has been stable, with deals being executed as expected [37] Question: What is the expected impact of new product clearances on sales? - Management stated that there has been no slowdown in sales due to pending clearances, and customers are engaged with future product roadmaps [41] Question: How is the company addressing tariff impacts? - Management confirmed ongoing structural changes to mitigate tariff impacts, with some benefits already seen in Q4 [52][53] Question: What is the market size and share for syringe pumps? - Management clarified that the syringe pump market is significantly smaller than LVPs, but they hold a higher market share in syringes [58][59] Question: What are the margins for the Vital Care business? - Management indicated that Vital Care likely operates below corporate gross margins, complicating potential divestiture discussions [63]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $536 million, representing a 2% organic growth but a -14% reported decline, with full-year organic growth at 5% [4] - Gross margins were above 40%, with EBITDA of $98 million and EPS of $1.91, reflecting a year-over-year decline in EBITDA due to deconsolidation and tariffs [5][17] - Adjusted gross margin for Q4 was 40.5%, with adjusted EBITDA decreasing by 7% from $106 million last year [15][17] - Free cash flow for Q4 was $44 million, contributing to a total of $100 million for the year, slightly better than guidance [18][25] Business Line Data and Key Metrics Changes - Consumables business grew 6% reported and 5% organic in Q4, with full-year growth at 7% reported and 6% organic [6][7] - IV systems business grew 3% reported and 1% organic, with the best quarter in pumps despite some installations being pulled into Q3 [7][8] - Vital Care decreased 6% organically and 35% reported due to deconsolidation, remaining flat for the year [9] Market Data and Key Metrics Changes - The demand environment in Q4 was strong across most geographies, with a notable flu spike in the U.S. towards year-end [5] - The capital environment remained stable, with investments being executed as planned [6] Company Strategy and Development Direction - The company aims to create a comprehensive infusion therapy company, focusing on operational stability and innovation to improve performance in vascular access [6][31] - The strategy includes modernizing the IV solutions business through a joint venture with Otsuka and enhancing product offerings with FDA-cleared devices [30][32] - Long-term goals include achieving mid-single-digit growth in consumables and infusion systems, while Vital Care is expected to remain flat to slightly down [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational improvements and expected benefits from completed integration projects, leading to better cash flow and margins [27][81] - The company anticipates challenges from tariffs and interest rates but believes it can overcome these hurdles to achieve original targets [28][33] Other Important Information - The company has made significant progress in integrating manufacturing sites and IT systems, which is expected to yield operational synergies [11][12] - The company plans to prioritize debt repayment with free cash flow generated in 2026, targeting a long-term leverage ratio of 2 times [26] Q&A Session Summary Question: Current environment for systems and customer decision-making - Management indicated that the capital environment is stable, with deals being executed as expected [39] Question: Impact of new product cycles and competitive landscape - Management noted that while competitive challenges exist, they are starting from a stronger position and expect to grow through existing headwinds [76] Question: Underlying volume trends in consumables - Management confirmed that underlying demand remains positive, despite some seasonal fluctuations [54] Question: Tariff mitigation efforts - Management stated that structural changes have been made to mitigate tariff impacts, with some benefits already seen in Q4 [57] Question: Potential sale of the critical care business - Management acknowledged the complexities involved in assessing the critical care business due to its integration with other operations [66]

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]

Financial Data and Key Metrics Changes - Revenue for Q4 was $622 million, representing a total company growth of 9% on a constant currency basis or 8% reported, aided by a temporary shortage in IV Solutions [9][10] - Adjusted EBITDA increased by 22% to $106 million compared to $86 million last year [27] - Adjusted diluted earnings per share for the quarter was $2.11, compared to $1.57 last year [25] Business Segment Data and Key Metrics Changes - Consumables business grew 6% both in constant currency and reported terms in Q4 [11] - IV Systems business grew 7% reported and 4% constant currency, marking the best absolute quarter in pumps [12] - Vital Care segment grew 16% on a constant currency and reported basis, primarily due to the national shortage in IV Solutions [13] Market Data and Key Metrics Changes - The broader demand and utilization environment in Q4 remained solid across almost every geography [10] - The capital environment is stable, with necessary investments being completed [10] Company Strategy and Development Direction - The company is preparing for a joint venture with Otsuka Pharmaceutical Factory, which is expected to enhance operational capabilities and customer service [14] - Focus on improving profitability through operational efficiencies and innovation in product offerings [44][50] - Plans to optimize the manufacturing network and logistics to achieve better gross margins [99] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving healthy revenue growth in all differentiated product lines [16] - The company aims to improve free cash flow by completing quality remediation and integration activities [40] - Management acknowledged the challenges posed by currency fluctuations and inflation but remains focused on operational improvements [50] Other Important Information - The company expects the IV Solutions JV transaction to close in Q2 2025, which will impact financial reporting [29][30] - Anticipated reduction in adjusted revenue of $350 million and adjusted EBITDA of $25 million post-JV transaction [31] Q&A Session Summary Question: What is driving the growth in Consumables? - Management indicated that growth was driven by a combination of new installations, global growth, and pricing [60] Question: What was the EBITDA margin excluding IV Solutions in 2024? - Management did not disclose specific figures but suggested that it would not be materially different from the reported total [62] Question: What is the demand environment for capital equipment? - Management described the environment as normal, with necessary capital investments being made [80] Question: Can you elaborate on the expected growth in Consumables? - Management expects all four product lines to contribute to growth, with confidence in legacy ICU lines [122] Question: What are the drivers for achieving the $500 million EBITDA goal? - Management highlighted sustained revenue growth, gross margin improvements, and currency stabilization as key drivers [128]