ICU Medical (NasdaqGS:ICUI) Q4 2025 Earnings call February 19, 2026 04:30 PM ET Company ParticipantsBrian Bonnell - CFOJayson Bedford - Managing Director of Medical TechnologyJohn Mills - Managing PartnerLarry Solow - PartnerVivek Jain - CEO and ChairmanConference Call ParticipantsBrett Fishbin - VP and Senior Equity Research AnalystJason Bednar - Senior Research AnalystMike Matson - Senior AnalystOperatorGood day, and welcome to the ICU Medical, Inc., fourth quarter 2025 earnings conference call. All parti ...

ICU Medical (NasdaqGS:ICUI) Q4 2025 Earnings call February 19, 2026 04:30 PM ET Company ParticipantsBrian Bonnell - CFOJayson Bedford - Managing Director of Medical TechnologyJohn Mills - Managing PartnerLarry Solow - PartnerVivek Jain - CEO and ChairmanConference Call ParticipantsBrett Fishbin - VP and Senior Equity Research AnalystJason Bednar - Senior Research AnalystMike Matson - Senior AnalystOperatorGood day, and welcome to the ICU Medical, Inc., fourth quarter 2025 earnings conference call. All parti ...

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]

ICU Medical FY Conference Summary Company Overview - **Company**: ICU Medical (NasdaqGS:ICUI) - **Industry**: IV Therapy - **Segments**: Consumables, Systems, Vital Care - **Revenue Sources**: Two-thirds of revenues and profits come from North America, with 87% of items being single-use disposables priced at $10 or less [3][4] Financial Metrics - **Equity Value**: Approximately $3.8 billion - **Net Debt**: About $1 billion, resulting in a leverage ratio of over 2.5 times [4] - **Revenue Growth**: Historical average growth of 5-7% in major business segments [9] - **Gross Margins**: Targeting 40% gross margins, currently at 41%, with potential for further improvement [22] Market Dynamics - **IV Therapy Industry**: Characterized by high demand, with 90% of hospital patients receiving infusion therapy. The industry has long product life cycles and high regulatory barriers, leading to a consolidated market with limited players [5][6] - **Growth Opportunities**: Identifying niches within the market that grow faster than the overall census, focusing on safety, clinical efficiency, and workflow improvements [6][19] Innovation and Product Development - **Investment in Innovation**: Over $100 million spent on developing new infusion pump systems and software, aiming for integrated solutions that enhance safety and efficiency [17][19] - **Product Launches**: Upcoming launches include Plum Dual, Plum Solo, and Medfusion 5000 syringe pump, which are expected to drive growth [24] - **Consumables Innovation**: Focused on improving patient safety and clinical workflows, leading to a billion-dollar business in consumables [20][21] Strategic Goals - **Revenue Growth**: Aiming for mid-single-digit growth through competitive share gains and focusing on faster-growing markets [11][12] - **Financial Health**: Plans to improve free cash flow and reduce net debt, with a clear capital allocation strategy to return capital to shareholders [23][24] - **Operational Challenges**: Addressing remaining integration issues from the Smiths Medical acquisition and managing tariff impacts [27][28] Conclusion - **Investment Rationale**: ICU Medical is positioned at an inflection point with new product cycles, consistent innovation, and improving financials. The company is focused on leveraging its strengths in the IV therapy market to drive future growth [24][26]

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 - 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]