[10-Q] ICU MEDICAL INC/DE Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
ICU Medical (ICUI) reported Q3 2025 results. Revenue was $536.99 million versus $589.13 million last year, with gross profit of $200.88 million. Operating income reached $13.72 million, but the company posted a net loss of $3.40 million (basic and diluted EPS -$0.14) as interest expense offset operating gains.
Year-to-date, revenue was $1.69 billion and net income $16.47 million, aided by a $44.79 million gain on sale of business tied to divesting a 60% stake in the IV Solutions business to OPF for $211.19 million cash and retaining a 40% equity-method interest. The retained interest was recorded at fair value and equity income was $1.30 million for the nine months (Q3 equity loss $1.54 million).
Cash and equivalents were $299.73 million, and long‑term debt declined to $1.31 billion from $1.53 billion at year‑end. Segment revenue mix in Q3: Consumables $285.09 million, Infusion Systems $173.91 million, and Vital Care $77.99 million. U.S. revenue was $307.13 million. Shares outstanding were 24,686,660 as of October 31, 2025.
Positive
- Debt reduction: Long-term debt decreased to $1.31B from $1.53B as of year-end 2024, supported by $211.19M cash proceeds from the IV Solutions sale.
Negative
- None.
Insights
Q3 loss narrowed; debt down; IV Solutions JV reshapes mix.
ICU Medical delivered Q3 revenue of
The company closed the sale of 60% of IV Solutions for
Balance sheet trends look steadier: cash ended at
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended: September 30, 2025
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from: to
Commission File No.: 001-34634
ICU MEDICAL, INC.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |||||||
| incorporation or organization) | Identification No.) | |||||||
| , | , | |||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
(949 ) 366-2183
(Registrant’s telephone number including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
| (Global Select Market) | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
| Class | Outstanding at October 31, 2025 | |||||||
| Common | ||||||||
ICU MEDICAL, INC. AND SUBSIDIARIES
Form 10-Q
September 30, 2025
Table of Contents
| Page Number | |||||||||||
Forward Looking Statements | 1 | ||||||||||
| PART I. | Financial Information | ||||||||||
| Item 1. | Financial Statements (Unaudited) | ||||||||||
Condensed Consolidated Balance Sheets at September 30, 2025 and December 31, 2024 | 3 | ||||||||||
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 | 4 | ||||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2025 and 2024 | 5 | ||||||||||
Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024 | 6 | ||||||||||
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 | 8 | ||||||||||
Notes to Condensed Consolidated Financial Statements | 10 | ||||||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 40 | |||||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 55 | |||||||||
| Item 4. | Controls and Procedures | 56 | |||||||||
| PART II. | Other Information | ||||||||||
| Item 1. | Legal Proceedings | 57 | |||||||||
| Item1A. | Risk Factors | 57 | |||||||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 58 | |||||||||
| Item 5. | Other Information | 60 | |||||||||
| Item 6. | Exhibits | 60 | |||||||||
Signature | 61 | ||||||||||
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding: our future results of operations and financial position, business strategy and approach; our expected use of proceeds from the New Credit Facilities (as defined below); the anticipated benefits and costs associated with our purchase agreement with OPF (as defined below); expected capital expenditures; anticipated consumer demand; supply chain constraints; timing and resolution of the 2025 Warning Letter (as defined below); the expected impact of macroeconomic developments, such as foreign exchange, inflation and interest rates, and new accounting and tax regulations; tariffs; the impact of the One Big Beautiful Bill Act (the "OBBBA"); as well as plans and objectives of management for future operations, are forward-looking statements. Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expect,” “exploring,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seeks,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance, or achievements, and one should avoid placing undue reliance on such statements.
The forward looking statements in this Quarterly Report on Form 10-Q are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of known and unknown risks, uncertainties and assumptions, including without limitation, the following:
•our failure to compete successfully with our competitors and maintain market share;
•significant decline in demand for our products;
•our inability to fund substantial investment in product development and recover such investment through commercial product sales;
•prolonged periods of inflation, rising interest rates and the impact of foreign currency exchange rates as a result of the current global macroeconomic and geopolitical conditions, for example, armed conflicts between Ukraine and Russia and in Israel;
•significant changes in U.S. trade, tax or other policies that restrict imports or increase import tariffs for certain countries, particularly Mexico and Costa Rica, will escalate trade wars and will have a material adverse effect on our results of operations.
•continuing pressures to reduce healthcare costs and inadequate coverage and reimbursement;
•disruptions at the FDA, other government agencies or notified bodies caused by funding shortages, global health concerns, layoffs or turnover of personnel;
•failure to protect our information technology systems against security breaches, service interruptions, or misappropriation of data;
•our exposure to risks related to foreign currency exchange rates;
•damage to any of our manufacturing facilities or disruption to our supply chain network;
•our dependence on single and limited source third-party suppliers, which subjects our business and results of operations to risks of supplier business interruptions, and a loss or degradation in performance in our suppliers;
•our failure to achieve expected operating efficiencies or expense reductions associated with cost reduction and restructuring efforts;
•significant sales through our distributors;
•additional risks from international sales, related to competition with larger international companies and established local companies and our possibly higher cost structure;
•actual or perceived failures to comply with foreign, federal, and state data privacy and security laws, regulations and standards, or certain fraud and abuse and transparency laws;
•our failure to defend and enforce our patents or other proprietary rights and the cost of enforcing and of defending patent claims or claims of other proprietary rights; and expiration of our patents;
•our failure to effectively complete the integration of our business resulting from the Smiths Medical acquisition or manage our growth and changes to our business resulting from any other future acquisitions;
•our use of a significant portion of our cash on hand and incurrence of a substantial amount of debt to finance the Smiths Medical acquisition, which could adversely affect our business, including by restricting our ability to engage in additional transactions or incur additional indebtedness; and
1
•our ability to comply with applicable laws, rules and regulations, including, without limitation, matters raised in a warning letter issued by the FDA in 2025, regarding modifications to our cleared MedFusion™ Model 4000 Syringe Infusion Pump and CADD™ Solis VIP Ambulatory Infusion Pump that could affect the safety or effectiveness of these devices and could impact our continued commercial activity.
For a more detailed discussion of these and other factors, see the information under the sections entitled “Summary Risk Factors,” Part I. Item 1A. “Risk Factors” and Part II. Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “2024 Annual Report on Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”), and the sections in this Quarterly Report on Form 10-Q entitled Part II. Item 1A “Risk Factors” and Part I. Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case as updated by our periodic filings with the SEC.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
2
PART I - FINANCIAL INFORMATION
Item1.Financial Statements (Unaudited)
ICU MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value data and treasury shares)
| September 30, 2025 | December 31, 2024 | ||||||||||
| (Unaudited) | (1) | ||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for doubtful accounts $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Assets held for sale | |||||||||||
| TOTAL CURRENT ASSETS | |||||||||||
| PROPERTY, PLANT AND EQUIPMENT, net | |||||||||||
| OPERATING LEASE RIGHT-OF-USE ASSETS | |||||||||||
| GOODWILL | |||||||||||
| INTANGIBLE ASSETS, net | |||||||||||
| DEFERRED INCOME TAXES | |||||||||||
| OTHER ASSETS | |||||||||||
| INVESTMENTS IN UNCONSOLIDATED AFFILIATES | |||||||||||
| TOTAL ASSETS | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Current portion of long-term debt | |||||||||||
| Income tax payable | |||||||||||
| Liabilities held for sale | |||||||||||
| TOTAL CURRENT LIABILITIES | |||||||||||
| LONG-TERM DEBT | |||||||||||
| OTHER LONG-TERM LIABILITIES | |||||||||||
| DEFERRED INCOME TAXES | |||||||||||
| INCOME TAX LIABILITY | |||||||||||
| COMMITMENTS AND CONTINGENCIES (Note 20) | |||||||||||
| STOCKHOLDERS’ EQUITY: | |||||||||||
Convertible preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
Treasury stock, at cost ( | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| TOTAL STOCKHOLDERS' EQUITY | |||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | |||||||||
______________________________________________________
(1) December 31, 2024 balances were derived from audited consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
ICU MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| TOTAL REVENUES | $ | $ | $ | $ | |||||||||||||||||||
| COST OF GOODS SOLD | |||||||||||||||||||||||
| GROSS PROFIT | |||||||||||||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Research and development | |||||||||||||||||||||||
| Restructuring, strategic transaction and integration | |||||||||||||||||||||||
| Change in fair value of contingent earn-out | ( | ( | |||||||||||||||||||||
| TOTAL OPERATING EXPENSES | |||||||||||||||||||||||
| INCOME FROM OPERATIONS | |||||||||||||||||||||||
| INTEREST EXPENSE, NET | ( | ( | ( | ( | |||||||||||||||||||
| OTHER INCOME (EXPENSE), NET | ( | ( | |||||||||||||||||||||
| GAIN ON SALE OF BUSINESS | |||||||||||||||||||||||
| (LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN (LOSSES) EARNINGS OF UNCONSOLIDATED AFFILIATES | ( | ( | ( | ||||||||||||||||||||
| BENEFIT (PROVISION) FOR INCOME TAXES | ( | ( | ( | ||||||||||||||||||||
| NET (LOSS) INCOME FROM CONSOLIDATED COMPANIES | ( | ( | ( | ||||||||||||||||||||
| EQUITY IN (LOSSES) EARNINGS OF UNCONSOLIDATED AFFILIATES | ( | ||||||||||||||||||||||
| NET(LOSS) INCOME | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| NET (LOSS) INCOME PER SHARE | |||||||||||||||||||||||
| Basic | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Diluted | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ICU MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(In thousands)
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| NET(LOSS) INCOME | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Other comprehensive (loss) income, net of tax: | |||||||||||||||||||||||
Cash flow hedge adjustments, net of tax of $ | ( | ( | ( | ||||||||||||||||||||
Foreign currency translation adjustment, net of tax of $ | ( | ||||||||||||||||||||||
| Other comprehensive (loss) income, net of tax | ( | ( | |||||||||||||||||||||
| COMPREHENSIVE (LOSS) INCOME | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ICU MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(Amounts in thousands)
| Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Total | ||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock and exercise of stock options | ( | — | — | |||||||||||||||||||||||||||||||||||||||||
| Tax withholding payments related to net share settlement of equity awards | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock and exercise of stock options | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Tax withholding payments related to net share settlement of equity awards | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock and exercise of stock options | ( | — | — | |||||||||||||||||||||||||||||||||||||||||
| Tax withholding payments related to net share settlement of equity awards | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
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| Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Total | ||||||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock and exercise of stock options | ( | — | — | |||||||||||||||||||||||||||||||||||||||||
| Tax withholding payments related to net share settlement of equity awards | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock and exercise of stock options | ( | — | — | |||||||||||||||||||||||||||||||||||||||||
| Tax withholding payments related to net share settlement of equity awards | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock and exercise of stock options | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Tax withholding payments related to net share settlement of equity awards | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||
| Stock compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
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ICU MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
| Nine months ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Noncash lease expense | |||||||||||
| Stock compensation | |||||||||||
| Loss on disposal of property, plant and equipment and other assets | |||||||||||
| Debt issuance costs amortization | |||||||||||
| Change in fair value of contingent earn-out liability | ( | ||||||||||
| Undistributed equity in earnings of unconsolidated affiliates | ( | ||||||||||
| Net gain on sale of business | ( | ||||||||||
| Other | |||||||||||
| Changes in operating assets and liabilities, net of amounts acquired: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Inventories | ( | ||||||||||
| Prepaid expenses and other current assets | ( | ( | |||||||||
| Other assets | ( | ( | |||||||||
| Accounts payable | |||||||||||
| Accrued liabilities | ( | ||||||||||
| Income taxes, including excess tax benefits and deferred income taxes | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of property, plant and equipment | ( | ( | |||||||||
| Proceeds from sale of business | |||||||||||
| Proceeds from sale of assets | |||||||||||
| Intangible asset additions | ( | ( | |||||||||
| Proceeds from sale and maturities of investment securities | |||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Principal repayments of long-term debt | ( | ( | |||||||||
| Proceeds from exercise of stock options | |||||||||||
| Payments on finance leases | ( | ( | |||||||||
| Payments of contingent earn-out liability | ( | ||||||||||
| Tax withholding payments related to net share settlement of equity awards | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash | |||||||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | ( | ||||||||||
| CASH AND CASH EQUIVALENTS, beginning of period | |||||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ICU MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - CONTINUED
(In thousands)
| Nine months ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES: | |||||||||||
| Purchases of property, plant, and equipment in accounts payable | $ | $ | |||||||||
| Equity method investment - noncash (see Note 4) | $ | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1:Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements of ICU Medical, Inc., ("ICU" or the "Company"), a Delaware corporation, have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S.") and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the consolidated results for the interim periods presented. Results for the interim period are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of ICU for the year ended December 31, 2024.
We develop, manufacture and sell innovative medical products used in infusion therapy, vascular access, and vital care applications. ICU's product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, peripheral IV catheters, closed system transfer devices, pharmacy compounding systems, and sterile IV solutions, as well as a range of respiratory, anesthesia, patient monitoring, and temperature management products. We sell the majority of our products globally through our direct sales force and through independent distributors throughout the U.S. and internationally. We also sell certain products on an original equipment manufacturer basis to other medical device manufacturers. All subsidiaries are wholly owned and are included in the condensed consolidated financial statements. All intercompany balances and transactions have been eliminated.
Certain reclassifications have been made to the prior year financial statements and footnotes to conform to the presentation used in the current year. On the condensed consolidated balance sheet, we combined prepaid income taxes with the "prepaid expenses and other current assets" line item. On the condensed consolidated statement of cash flows, we combined provision for doubtful accounts, provision for warranty, returns and field action, and usage of spare parts with the "other" line item. In Note 12: Prepaid Expenses and Other Current Assets we combined deferred tax charge, foreign exchange contracts, and VAT/GST receivable with the "other" line item. In Note 16: Accrued Liabilities we combined operating lease liability, restructuring accrual, accrued sales taxes and other taxes, accrued freight, accrued audit and professional services, distribution fees, warranties and returns, legal accrual, defined benefit plan, foreign exchange forward contracts, and accrued interest with the "other" line item. These reclassifications had no impact on the reported results of operations.
Note 2: New Accounting Pronouncements
Recently Issued Accounting Standards Not Yet Adopted
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification ("ASC") in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. For entities within the scope, the guidance will be applied prospectively with the effective date for each amendment to be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If the SEC has not removed the related disclosure from its regulations by June 30, 2027, the amendments will be removed from the Codification and will not become effective. We are currently assessing what impact this guidance will have on the Company's consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The amendments in this update expand disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid information. The update was effective for annual periods beginning after December 15, 2024 and is applicable to our Annual Report on Form 10-K for the fiscal year December 31, 2025, with early application permitted. We are currently assessing the effect of this update on the Company's consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The guidance requires disclosure of disaggregated income statement expense information about specific categories (including purchases of inventory, employee compensation, depreciation, and intangible asset amortization) in the notes to financial statements. In January 2025, FASB released ASU 2025-01 to clarify the guidance will be effective for annual periods beginning after December 15, 2026. This update will be applicable to our Annual Report on Form 10-K for the fiscal year December 31, 2027,
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
with early application permitted. We are currently assessing the effect of this update on the Company's consolidated financial statements and related disclosures.
There have been no other recent accounting pronouncements or changes in accounting pronouncements that are of significance or potential significance to us during the nine months ended September 30, 2025, as compared to the recent accounting pronouncements described in our 2024 Annual Report on Form 10-K.
Note 3: Restructuring, Strategic Transaction and Integration
Restructuring, strategic transaction and integration expenses were $13.1 million and $46.1 million for the three and nine months ended September 30, 2025, respectively, as compared to $16.8 million and $50.1 million for the three and nine months ended September 30, 2024, respectively.
Restructuring
During the three and nine months ended September 30, 2025 restructuring charges were $6.2 million and $21.2 million, respectively, as compared to $3.6 million and $16.6 million for the three and nine months ended September 30, 2024, respectively, and were primarily related to facility closure costs and severance costs.
The following table summarizes the activity in our restructuring-related accrual by major type of cost for the three and nine months ended September 30, 2025 (in thousands), which is included in accrued liabilities and other long-term liabilities on the condensed consolidated balance sheets:
| Employee & Related Costs | Facility & Other Closure Costs | Total | ||||||||||||||||||||||||
| Accrued balance, January 1, 2025 | $ | $ | $ | |||||||||||||||||||||||
| Charges incurred | ||||||||||||||||||||||||||
| Payments | ( | ( | ( | |||||||||||||||||||||||
Other(1) | ( | ( | ||||||||||||||||||||||||
| Currency translation | ||||||||||||||||||||||||||
Accrued balance, March 31, 2025 | $ | $ | $ | |||||||||||||||||||||||
| Charges incurred | ||||||||||||||||||||||||||
| Payments | ( | ( | ( | |||||||||||||||||||||||
| Currency translation | ||||||||||||||||||||||||||
Accrued balance, June 30, 2025 | $ | $ | $ | |||||||||||||||||||||||
| Charges incurred | ||||||||||||||||||||||||||
| Payments | ( | ( | ( | |||||||||||||||||||||||
| Currency translation | ( | |||||||||||||||||||||||||
Accrued balance, September 30, 2025 | $ | $ | $ | |||||||||||||||||||||||
__________________________
(1) Relates to prior year accrued restructuring charges for estimated severances costs that were reclassed to other accounts during the three months ended March 31, 2025.
Strategic Transaction and Integration Expenses
We incurred and expensed $6.9 million and $24.9 million in strategic transaction and integration expenses during the three and nine months ended September 30, 2025, respectively, as compared to $13.2 million and $33.5 million in strategic transaction and integration expenses during the three and nine months ended September 30, 2024, respectively, which are included in restructuring, strategic transaction and integration expenses in our condensed consolidated statements of operations. The strategic transaction and integration expenses during the three and nine months ended September 30, 2025 and 2024 were primarily related to ongoing consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022. The nine months ended September 30, 2025 also included transaction costs related to the sale of a 60% ownership in our IV Solutions business in the second quarter of 2025.
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Note 4: Assets Held For Sale and Disposal of Business
Assets Held For Sale
On November 12, 2024, we entered into a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc., a Delaware corporation ("OPF") to divest a controlling interest in our IV Solutions business. As of December 31, 2024, we concluded the initial criteria for classification as held for sale were met, and accordingly we presented the IV Solution's net assets as held for sale in our condensed consolidated balance sheet.
The following table summarizes the carrying values of the assets and liabilities presented as held for sale in our condensed consolidated balance sheet as of December 31, 2024 (in thousands):
| As of | |||||||||||
| Assets: | December 31, 2024 | ||||||||||
Accounts receivable, net of allowance of $ | $ | ||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Other assets | |||||||||||
| Total assets held for sale | $ | ||||||||||
| Liabilities: | |||||||||||
| Accounts payable | $ | ||||||||||
| Accrued liabilities | |||||||||||
| Total liabilities held for sale | $ | ||||||||||
| Net assets held for sale | $ | ||||||||||
Disposal of IV Solutions Business
On May 1, 2025, we sold to OPF a 60% ownership interest in Otsuka ICU Medical LLC (the "joint venture"), an entity we formed in 2025 and to which we contributed the net assets of our IV Solutions business. Upon the sale and as a result of a loss of control, we derecognized the net assets that comprised our IV Solutions business and recorded our retained 40% ownership interest at its estimated fair value as an equity method investment in the joint venture (see Note 11: Investment Securities). We have the ability to exercise significant influence over operating and financial policies of the joint venture, primarily through having two of the five seats on its Board of Directors.
Cash proceeds received from the sale, subject to conventional purchase price adjustments, were $211.2 million. We also are entitled to contingent consideration if the joint venture exceeds planned revenues or gross margin for the year ended December 31, 2026. Additionally, we have agreed to provide commercial, logistics, administrative, and other services, including continuing to provide certain manufacturing services for component parts for a period of up to five years from transaction close (see below table). Certain logistic and warehouse costs incurred on behalf of and reimbursed by the joint venture are pass-through expenses and net to zero within cost of goods sold in the condensed consolidated statement of operations. Other services are provided in exchange for fixed fee arrangements or reimbursement of our costs, depending on the respective terms of service negotiated. Fees charged for the services are recorded as reductions to the costs incurred to provide such services in the condensed consolidated statement of operations. Those services provided under fixed price arrangements were determined to be at less than fair value and, as such, we recognized an unfavorable contract liability of $20.2 million to account for the difference between the fair value of services to be provided and the estimated cost of providing such services over the five years from transaction close. The unfavorable contract liability is presented within other liabilities in our condensed consolidated balance sheet, with the current portion included in accrued liabilities. This liability is being released to our condensed consolidated statement of operations as reduction to the costs incurred to provide the respective services within selling, general and administrative expenses.
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
For the three and nine months ended September 30, 2025, we recognized $3.2 million and $5.3 million, respectively, in fixed and variable service fees related to reimbursed expenses under the various transition service agreements and $1.0 million and $1.8 million, respectively, related to the release of the unfavorable contract liability. The fees, reimbursements and release of unfavorable contract liability serve to reduce the same line items as their respective incurred expenses within cost of goods sold or selling, general, and administrative expenses in our condensed consolidated statement of operations.
Fair value for our retained 40% ownership interest was determined using a market approach based on the proceeds received from OPF for its 60% controlling ownership interest. Fair value for services was estimated using a market approach based on observable margins for comparable services and the difference between the fair value of services and the estimated cost to provide the services through the term of the services agreement was discounted using our effective borrowing rate.
The combined effect of the transaction was a gain of $44.8 million, comprising the sum of a $45.6 million gain from the disposal of a 60% ownership interest in the joint venture, a $19.4 million gain from the difference between the fair value of our retained 40% ownership interest in the joint venture and our carrying value of that same proportionate ownership interest, and a $20.2 million unfavorable contract liability recorded upon disposition. The gain is presented as a separate line item in our condensed consolidated statement of operations. No gain related to contingent consideration was recorded. We will record such gain, if any, if and when the measurement period has ended and we have concluded that a payment will be received.
As part of the transaction, we provided OPF a call option to acquire our retained 40% ownership in the joint venture. Additionally, OPF provided us with a put option giving us the right to compel OPF to purchase our retained 40% ownership interest in the joint venture. The call and put options are exercisable at certain specified dates and for specified amounts based on certain historical financial metrics as set forth in the joint venture's Operating Agreement beginning five years after the closing. The call and put options were not recorded in our condensed consolidated financial statements since they do not meet the definition of a derivative specifically due to the absence of a net settlement feature.
Related Party Transactions
We account for our retained 40% interest in the joint venture as an equity method investment (see Note 11: Investment Securities), having the ability to exercise significant influence over operating and financial policies of the joint venture, primarily through having two of the five seats on its Board of Directors. Additionally, in connection with the closing of the transaction on May 1, 2025, we entered into certain agreements with OPF, which cover the governance of the joint venture and require us to provide certain commercial, logistics, manufacturing supply, administrative, and other services for a period of up to five years from transaction close.
The following table presents condensed consolidated financial statement data resulting from transactions with the joint venture (in thousands):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2025 | ||||||||||||||||||||||
| Condensed consolidated statement of operations: | |||||||||||||||||||||||
| Manufacturing services agreement revenue | $ | $ | |||||||||||||||||||||
| Manufacturing services agreement cost of goods sold | $ | $ | |||||||||||||||||||||
| Service fees - Otsuka ICU Medical LLC (cost of goods sold) | $ | $ | |||||||||||||||||||||
| Service fees - Otsuka ICU Medical LLC (selling, general & administrative) | $ | $ | |||||||||||||||||||||
| Equity in (losses) earnings of unconsolidated affiliates | $ | ( | $ | ||||||||||||||||||||
The joint venture is a pass-through entity for income tax purposes and, as such, does not record income tax at the entity level. We record our equity in (losses) earnings of unconsolidated affiliates before any related income tax recognized as a separate line item in our condensed consolidated statements of operations. Income taxes on our share of the joint venture's earnings are included within provision for income taxes in our condensed consolidated statements of operations.
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
As of September 30, 2025, a $0.5 million related-party receivable to the joint venture was included within prepaid expenses and other current assets in our condensed consolidated balance sheet.
Note 5: Revenue
Revenue Recognition
Our business units are Consumables, Infusion Systems and Vital Care. The vast majority of our sales of these products within these business units are made on a stand-alone basis to hospitals and distributors. Revenue is typically recognized upon transfer of control of the products, which we deem to be at point of shipment. For purposes of revenue recognition for our software licenses and renewals, we consider the control of these products to be transferred to a customer at a certain point in time; therefore, we recognize revenue at the start of the applicable license term.
Payment is typically due in full within 30 days of delivery or the start of the contract term. Revenue is recorded in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We include variable consideration in net sales only to the extent that a significant reversal in revenue is not probable when the uncertainty is resolved. Our variable consideration includes distributor chargebacks, product returns and end customer rebates with distributor chargebacks representing the majority and subject to the greatest judgment.
Chargebacks are the difference between the prices we charge our distribution customers at the time they purchase our products and the contracted prices we have with the end customer, most often in the U.S. and Canada. When a distributor sells our products to one of our contracted end customers, the distributor typically will claim a refund from us for the chargeback amount which we process as a credit to the distributor.
In estimating the transaction price to present as net revenue for sales to distributors, we must estimate the expected chargeback amount that we will refund to the distributor after they sell our product to a contracted end customer. Determining the appropriate chargeback reserve requires judgment around the following assumptions:
(i) The estimated chargeback amount (the difference between the price we invoice the distributor and the contractually agreed price with specified end customers); and
(ii) The estimated period of time between the sale to the distributor and the receipt of a chargeback claim.
For purposes of estimating the expected chargeback amount, we utilize actual recent historical chargebacks paid to the specific distributor for similar products as determined at either a product or product-family level. While individual chargeback rates can vary significantly depending on the product and contracted prices with distributors and end customers, our chargeback reserve estimate is not overly sensitive to those individual price changes due to the long-term nature of our distributor and end customer contracts as well as consistency in purchasing patterns. Additionally, the use of the actual chargeback history to calculate an average chargeback rate has historically resulted in a reasonable estimation of overall current contract rates.
For purposes of estimating the period of time between the sale to the distributor and the receipt of a chargeback claim, we utilize several sources of information including actual inventory quantities of our products on hand at distributors. This inventory on hand information is received from the distributors or, when specific quantities are not provided, estimated by using the targeted days of inventory on hand for distributors. Historical experience of actual chargebacks paid has indicated that use of this information has reasonable predictive value of outstanding chargebacks and accounts for the variability of purchasing
patterns and expected timing and volume of sales to end customers. The value of the chargeback reserve generally represents approximately two months of obligation due to the timing difference between the initial sale to a distributor and the processing of a chargeback claim after the product is sold to the end customer.
The chargeback reserve estimates change from period-to-period primarily based on changes in revenue from/and the inventory levels of distributors. Our judgments regarding the information used to calculate the chargeback reserve are consistent from period to period; however, on a regular basis, we evaluate the adequacy of the chargeback reserve to reassess and ensure that the variable consideration is appropriately constrained, and the likelihood of future revenue reversal is not probable. We use metrics including chargeback provision as a percentage of gross revenue, movements in inventory on hand at distributors, trends in accrued versus paid chargebacks and impacts from price changes and similar metrics.
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The chargeback reserve reflects a reasonable estimate of the amount of consideration using the expected value method and is recorded as a reduction of accounts receivable, net on the consolidated balance sheets.
We also offer certain volume-based rebates to both our distribution and end customers, which is recorded as variable consideration when calculating the transaction price. Rebates are offered on both a fixed and tiered/variable basis. In both cases, we use information available at the time, including current contractual requirements, our historical experience with each customer and forecasted customer purchasing patterns, to estimate the most likely rebate amount.
We also warrant products against defects and have a policy permitting the return of defective products, for which we accrue and expense at the time of sale using information available at that time and our historical experience. We also provide for extended service-type warranties, which we consider to be separate performance obligations. We allocate a portion of the transaction price to the extended service-type warranty based on its estimated relative selling price, and recognize revenue over the period the warranty service is provided.
Arrangements with Multiple Performance Obligations
We also enter into arrangements which include multiple performance obligations. The most significant judgments related to these arrangements include:
•Identifying the various performance obligations of these arrangements.
•Estimating the relative standalone selling price of each performance obligation, typically using a directly observable method or calculated on a cost plus margin basis method.
Revenue Disaggregated
The following table represents our revenues disaggregated by product line (in thousands):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| Product line | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Consumables | $ | $ | $ | $ | |||||||||||||||||||
| Infusion Systems | |||||||||||||||||||||||
| Vital Care | |||||||||||||||||||||||
| Total Revenues | $ | $ | $ | $ | |||||||||||||||||||
The following table represents our revenues disaggregated by geography (in thousands):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| Geography | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Europe, the Middle East and Africa | |||||||||||||||||||||||
| APAC | |||||||||||||||||||||||
| Other Foreign | |||||||||||||||||||||||
| Total Revenues | $ | $ | $ | $ | |||||||||||||||||||
Contract Balances
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
| Contract Liabilities | |||||
| Beginning balance, January 1, 2025 | $ | ||||
| Equipment revenue recognized | ( | ||||
| Equipment revenue deferred due to implementation | |||||
| Software revenue recognized | ( | ||||
| Software revenue deferred due to implementation | |||||
Government grant income recognized(1) | ( | ||||
| Other deferred revenue recognized | ( | ||||
| Other deferred revenue | |||||
Ending balance, September 30, 2025 | $ | ||||
| Beginning balance, January 1, 2024 | $ | ||||
| Equipment revenue recognized | ( | ||||
| Equipment revenue deferred due to implementation | |||||
| Software revenue recognized | ( | ||||
| Software revenue deferred due to implementation | |||||
Government grant income recognized(1) | ( | ||||
| Other deferred revenue recognized | ( | ||||
| Other deferred revenue | |||||
Ending balance, September 30, 2024 | $ | ||||
____________________________
(1) The government grant income deferred is amortized over the life of the related depreciable asset as a reduction to depreciation expense.
Our contract liabilities are included in accrued liabilities or other long-term liabilities in our condensed consolidated balance sheet based on the expected timing of revenue recognition.
As of September 30, 2025, revenue from remaining performance obligations is as follows:
| Recognition Timing | |||||||||||
| (in thousands) | < 12 Months | > 12 Months | |||||||||
| Equipment deferred revenue | $ | $ | |||||||||
| Software deferred revenue | |||||||||||
Government grant deferred income(1) | |||||||||||
Other deferred revenue(2) | |||||||||||
| Total | $ | $ | |||||||||
_________________________________
(1) The government grant deferred income is amortized over the life of the related depreciable asset as a reduction to depreciation expense.
(2) Other deferred revenue includes pump development programs, purchased training and extended warranty.
Note 6: Segment Data
The Company has a single operating and reportable segment. The Company derives revenues from the manufacture and sale of our medical products which are used in infusion therapy, vascular access, and vital care applications. Our product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, IV catheters, sharps safety products, and sterile IV solutions; closed system transfer devices and pharmacy compounding systems; as well as a range of respiratory, anesthesia, patient monitoring, and temperature management
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
products. Our product lines, as disclosed in Note 5: Revenue, were determined to be a single operating segment as discrete financial information by product-line is limited to revenue and standard cost. Other cost of sale expenses, which include above-site manufacturing costs, manufacturing variances and supply chain costs including freight and warehousing are not allocated to individual product lines. Similarly, quality, regulatory and other operating expenses are only provided to our chief operating decision maker ("CODM") at the consolidated level.
For information on disaggregation of revenues by product-line and geography, see Note 5: Revenue.
Our chief executive officer is our CODM. Our CODM uses net profit (loss) to manage our business activities on a consolidated basis and to evaluate and assess the performance of the Company when determining how to allocate capital resources. Our segment performance is monitored and resource allocation is determined during the consolidated annual budget/forecast processes. The measure of segment assets is reported on the consolidated balance sheets as total assets. Expenditures for additions to long-lived assets were $31.7 million and $70.6 million for the three and nine months ended September 30, 2025 and $22.9 million and $63.6 million for the three and nine months ended September 30, 2024, respectively.
The following table presents information about our segment revenue, segment profit or loss, and significant segment expenses (in thousands):
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| REVENUES | $ | $ | $ | $ | ||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
Standard COGS(1) | ||||||||||||||||||||||||||
Quality remediation/recall(2) | ||||||||||||||||||||||||||
Other COGS(3) | ||||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||
| Restructuring and integration | ||||||||||||||||||||||||||
Other segment items(4) | ( | ( | ( | ( | ||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Income tax provision | ( | |||||||||||||||||||||||||
| Equity in losses (earnings) of unconsolidated affiliates | ( | |||||||||||||||||||||||||
| Consolidated net income (loss) | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
_______________
(1) Represents the average annual budgeted cost of producing each good sold in the period.
(2) Represents significant labor and material costs to replace or repair a product outside the scope of standard warranty and compliance costs related to quality systems and manufacturing operations.
(3) Includes costs related to capitalized manufacturing variances to standard COGS, supply chain and logistics costs including freight, inventory management and reserves, hardware service, quality and regulatory, and operations and supply chain management costs.
(4) Includes changes in fair value of contingent earn-out, interest income, gain/loss on disposition of assets, gain/loss on foreign exchange, other miscellaneous income/expense, and gain on sale of business.
For information on depreciation expense, see Note 14: Property, Plant, & Equipment. For information on amortization expense, see Note 15: Goodwill and Intangible Assets, Net.
Significant Customers
We sell products worldwide, on credit terms on an unsecured basis, as an OEM supplier, to independent medical supply distributors and directly to end customers. The manufacturers and distributors, in turn, sell our products to healthcare providers. For the three and nine months ended September 30, 2025, our consolidated worldwide net sales to a single distributor were 17 %, and 17 %, respectively, and for the three and nine months ended September 30, 2024, were 18 % and 17 %.
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Geographic Information
The table below presents our gross long-lived assets, consisting of property, plant and equipment, by country or region (in thousands):
| As of | ||||||||||||||
| September 30, 2025 | December 31, 2024 | |||||||||||||
| Costa Rica | ||||||||||||||
| Mexico | ||||||||||||||
| Other LATAM | ||||||||||||||
| Canada | ||||||||||||||
| Italy | ||||||||||||||
| Spain | ||||||||||||||
| Czech Republic | ||||||||||||||
| Other Europe | ||||||||||||||
| APAC | ||||||||||||||
| Total Foreign | $ | $ | ||||||||||||
| United States* | ||||||||||||||
| Worldwide Total | $ | $ | ||||||||||||
________________________________
*As of December 31, 2024, we presented within the assets held for sale line item in our consolidated balance sheet, the gross long-lived assets that were part of a disposal group that met the criteria as held for sale during the fourth quarter of 2024 (See Note 4: Assets Held For Sale and Disposal of Business).
Note 7: Leases
We determine if an arrangement is a lease at inception. Our operating lease assets are separately stated in operating lease right-of-use ("ROU") assets and our financing lease assets are included in other assets on our condensed consolidated balance sheets. Our lease liabilities are included in accrued liabilities and other long-term liabilities on our condensed consolidated balance sheets. We have elected not to recognize an ROU asset and lease liability for leases with terms of twelve months or less.
Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Most of our leases do not provide an implicit rate; therefore, we use our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term based on the information available at commencement date. Our lease ROU assets exclude lease incentives and initial direct costs incurred. Our lease terms include options to extend when it is reasonably certain that we will exercise that option. All of our leases have stated lease payments, which may include fixed rental increases. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
Our leases are for corporate, research and development and sales and support offices, manufacturing and distribution facilities, device service centers and certain equipment. Our leases have original lease terms of one year to fifteen years , some of which include options to extend the leases for up to an additional five years . For all of our leases, we do not include optional periods of extension in our current lease terms because we determined the exercise of options to extend is not reasonably certain.
The following table presents the components of our lease cost (in thousands):
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Finance lease cost — interest | |||||||||||||||||||||||
| Finance lease cost — reduction of ROU asset | |||||||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | |||||||||||||||||||
Interest expense on our finance leases is included in interest expense, net in our condensed consolidated statements of operations. The reduction of the operating and finance ROU assets is included as noncash lease expense in costs of goods sold and selling, general and administrative expenses in our condensed consolidated statements of operations.
The following table presents the supplemental cash flow information related to our leases (in thousands):
| Nine months ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||
| Operating cash flows from finance leases | $ | $ | |||||||||
| Right-of-use assets obtained in exchange for lease obligations: | |||||||||||
| Operating leases | $ | $ | |||||||||
| Finance leases | $ | $ | |||||||||
The following table presents the supplemental balance sheet information related to our operating leases (in thousands, except lease term and discount rate):
| As of | |||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||
| Operating leases | |||||||||||
| Operating lease right-of-use assets | $ | $ | |||||||||
| Accrued liabilities | $ | $ | |||||||||
| Other long-term liabilities | |||||||||||
| Total operating lease liabilities | $ | $ | |||||||||
| Weighted-Average Remaining Lease Term | |||||||||||
| Operating leases | |||||||||||
| Weighted-Average Discount Rate | |||||||||||
| Operating leases | % | % | |||||||||
The following table presents the supplemental balance sheet information related to our finance leases (in thousands, except lease term and discount rate):
19
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
| As of | |||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||
| Finance leases | |||||||||||
| Finance lease right-of-use assets | $ | $ | |||||||||
| Accrued liabilities | $ | $ | |||||||||
| Other long-term liabilities | |||||||||||
| Total finance lease liabilities | $ | $ | |||||||||
| Weighted-Average Remaining Lease Term | |||||||||||
| Finance leases | |||||||||||
| Weighted-Average Discount Rate | |||||||||||
| Finance leases | % | % | |||||||||
As of September 30, 2025, the maturities of our operating and finance lease liabilities for each of the next five years and thereafter are approximately (in thousands):
| Operating Leases | Finance Leases | ||||||||||
| Remainder of 2025 | $ | $ | |||||||||
| 2026 | |||||||||||
| 2027 | |||||||||||
| 2028 | |||||||||||
| 2029 | |||||||||||
| 2030 | |||||||||||
| Thereafter | |||||||||||
| Total Lease Payments | |||||||||||
| Less imputed interest | ( | ( | |||||||||
| Total | $ | $ | |||||||||
Note 8: Net (Loss) Income Per Share
Basic net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period. Diluted (loss) income per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period plus dilutive securities. Dilutive securities include outstanding common stock options and unvested restricted stock units, less the number of shares that could have been purchased with the proceeds from the exercise of the options, using the treasury stock method. Options and restricted stock units that are anti-dilutive are not included in the treasury stock method calculation. A net loss for the three months ended September 30, 2025 and 2024 and nine months ended September 30, 2024 causes all of the potentially dilutive common shares to be antidilutive and, accordingly, they were not included in the computation of diluted earnings per share, and basic and diluted net loss per share are equal for each of these periods.
20
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net (loss) income | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Weighted-average number of common shares outstanding (basic) | |||||||||||||||||||||||
Dilutive securities(1) | |||||||||||||||||||||||
| Weighted-average common and common equivalent shares outstanding (diluted) | |||||||||||||||||||||||
| EPS — basic | $ | ( | $ | ( | $ | ( | |||||||||||||||||
| EPS — diluted | $ | ( | $ | ( | $ | ( | |||||||||||||||||
| Total anti-dilutive stock options and restricted stock awards | |||||||||||||||||||||||
_______________________________
(1) Due to the net loss for the three months ended September 30, 2025 and 2024 and nine months ended September 30, 2024, there are no potentially dilutive common shares included in the computation of diluted earnings per share.
Note 9: Derivatives and Hedging Activities
Hedge Accounting and Hedging Program
The purposes of our cash flow hedging programs are to manage the foreign currency exchange rate risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit, and to manage floating interest rate risk associated with future interest payments on the variable-rate term loans issued in 2022. We do not issue derivatives for trading or speculative purposes.
To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative instruments we utilize, including various foreign exchange contracts and interest rate swaps, are designated and qualify as cash flow hedges. Our derivative instruments are recorded at fair value on the condensed consolidated balance sheets and are classified based on the instrument's maturity date. We record gains or losses from changes in the fair values of the derivative instruments as a component of other comprehensive income (loss) and we reclassify those gains or losses into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. If the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on the related derivative instrument from accumulated other comprehensive loss into earnings immediately.
Foreign Currency Exchange Rate Risk
Foreign Exchange Forward Contracts
We enter into foreign exchange forward contracts to hedge a portion of our forecasted foreign currency-denominated revenues and expenses to minimize the effect of foreign exchange rate movements on the related cash flows. These contracts are agreements to buy or sell a quantity of a currency at a predetermined future date and at a predetermined exchange rate. Our foreign exchange forward contracts hedge exposures principally denominated in Mexican Pesos ("MXN"), Euros ("EUR"), Czech Koruna ("CZK"), Japanese Yen ("JPY"), Swedish Krona ("SEK"), Danish Krone ("DKK"), Chinese Renminbi ("CNH"), Canadian Dollar ("CAD"), U.S. Dollar ("USD") and Australian Dollar ("AUD") and have varying maturities with an average term of approximately nine months. The total notional amount of these outstanding derivative contracts as of September 30, 2025 was $112.2 million, which included the notional equivalent of $15.7 million in CAD, $44.5 million in EUR, $22.7 million in MXN, $10.2 million in JPY, $7.8 million in USD, $6.4 million in AUD and $4.9 million in other foreign currencies, with terms currently through January 2027.
Floating Interest Rate Risk
21
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
In 2022, we entered into interest rate swaps to reduce the interest rate volatility on our variable-rate term loan A and variable-rate term loan B (see Note 18: Long-Term Debt). We exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount. Effective March 30, 2022, the term loan A swap, as amended, has an initial notional amount of $300.0 million, reducing to $150.0 million evenly on a quarterly basis excluding its final maturity on March 30, 2027. We pay a fixed rate of 1.32 % and will receive the greater of 3-months USD Secured Overnight Financing Rate ("SOFR") or (0.15 )%. The total notional amount of this outstanding derivative as of September 30, 2025 was approximately $189.5 million. Effective March 30, 2022, the term loan B swap, as amended, has an initial notional amount of $750.0 million, reducing to $46.9 million evenly on a quarterly basis through its final maturity on March 30, 2026. We pay a fixed rate of 1.17 % and will receive the greater of 3-months USD SOFR or 0.35 %. The total notional amount of this outstanding derivative as of September 30, 2025 was approximately $93.8 million.
In June 2023, we entered into an additional interest rate swap that hedges both term loan A and term loan B interest payments. The total notional amount of the swap is $300.0 million. The hedge matures on June 30, 2028. We pay a fixed rate of 3.88 % and will receive 3-months USD SOFR.
These swaps effectively convert the relevant portion of the floating-rate term loans to fixed rates.
The following table presents the fair values of our derivative instruments included within the Condensed Consolidated Balance Sheets (in thousands):
| Derivatives Designated as Cash Flow Hedging Instruments | ||||||||||||||||||||
| Condensed Consolidated Balance Sheet Location | Foreign Exchange Contracts | Interest Rate Swaps | Gross Derivatives | |||||||||||||||||
As of September 30, 2025 | ||||||||||||||||||||
| Prepaid expenses and other current assets | $ | $ | $ | |||||||||||||||||
| Other assets | ||||||||||||||||||||
| Total assets | $ | $ | $ | |||||||||||||||||
| Accrued liabilities | $ | $ | $ | |||||||||||||||||
| Other long-term liabilities | ||||||||||||||||||||
| Total liabilities | $ | $ | $ | |||||||||||||||||
As of December 31, 2024 | ||||||||||||||||||||
| Prepaid expenses and other current assets | $ | $ | $ | |||||||||||||||||
| Other assets | ||||||||||||||||||||
| Total assets | $ | $ | $ | |||||||||||||||||
| Accrued liabilities | $ | $ | $ | |||||||||||||||||
| Total liabilities | $ | $ | $ | |||||||||||||||||
We recognized the following (losses) gains on our derivative instruments designated as cash flow hedges in other comprehensive income before reclassifications to net loss (in thousands):
22
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
| (Losses) Gains Recognized in Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Derivatives designated as cash flow hedging instruments: | ||||||||||||||||||||||||||
| Foreign exchange forward contracts | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Interest rate swaps | ( | ( | ||||||||||||||||||||||||
| Total derivatives designated as cash flow hedging instruments | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
The following table presents the effects of our derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Operations (in thousands):
| Gains (Losses) Reclassified From Accumulated Other Comprehensive Income (Loss) into Income | ||||||||||||||||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
| Location of Gains (Losses) Recognized in Net Loss | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||
| Derivatives designated as cash flow hedging instruments: | ||||||||||||||||||||||||||||||||
| Foreign exchange forward contracts | Total revenues | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||
| Foreign exchange forward contracts | Cost of goods sold | ( | ( | |||||||||||||||||||||||||||||
| Interest rate swaps | Interest expense | |||||||||||||||||||||||||||||||
| Total derivatives designated as cash flow hedging instruments | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Note 10: Fair Value Measurements
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair value:
•Level 1: quoted prices in active markets for identical assets or liabilities;
•Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
•Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.
Recurring Fair Value Measurements
We measure certain assets and liabilities on a recurring basis, including contingent earn-out liabilities and derivative financial instruments.
Contingent Earn-out Liabilities
In 2022, we acquired Smiths Medical with a combination of cash consideration and share consideration issued at closing. Total consideration for the acquisition included a potential earn-out payment of $100.0 million in cash contingent on
23
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
our common stock achieving a certain volume-weighted average price (the "Price Targets") from the closing date to either the third or fourth anniversary of closing and provided Smiths beneficially owns at least 50.0 % of the shares of common stock issued at closing at the time the Price Target is achieved. During July 2024, Smiths sold 1.2 million common shares of ICU Medical, Inc. The sale of shares when combined with other sales in prior periods renders Smiths unable to achieve the contingent consideration based on certain price targets during the third and fourth anniversary of closing as Smiths no longer meets the required minimum beneficial ownership percentage. Accordingly, the valuation of the contingent earn-out liability as of December 31, 2024 was zero.
In November 2021, we acquired a small foreign infusion systems supplier. Total consideration for the acquisition included a potential earn-out payment of up to $2.5 million, consisting of (i) a cash payment of $1.0 million contingent on the achievement of certain revenue targets for the annual period ended December 31, 2022 and, separately, (ii) a cash payment of $1.5 million contingent upon obtaining certain product-related regulatory certifications. As of December 31, 2022, the measurement period related to the contingent earn-out based on certain revenue targets ended and based on the actual revenue achieved during the measurement period the fair value of the contingent earn-out was determined to be zero as the minimum threshold for earning the earn-out was not met. As of December 31, 2024, the earn-out measurement period related to certain product-related regulatory certifications had ended and the product-related regulatory certification had not been achieved, accordingly, the estimated fair value for the contingent consideration was reduced to zero.
In August 2021, we entered into an agreement with one of our international distributors whereby that distributor would not compete with us in a specific territory for a three-year period that ended September 2024. The terms of the agreement included a contingent earn-out payment. The contingent earn-out payment could not exceed $6.0 million and was to be earned based on certain revenue targets over a twelve-month measurement period determined by the highest four consecutive quarters commencing over a two-year period starting on the closing date of the agreement and provided that the distributor is in compliance with its obligations under the agreement. As of December 31, 2023, the earn-out measurement period ended. The fair value of the contingent earn-out was determined to be $3.4 million and was paid out in the first quarter of 2024.
Foreign Exchange Contracts and Interest Rate Contracts
The fair value of our Level 2 foreign exchange contracts is estimated using observable market inputs such as known notional value amounts, spot and forward exchange rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative.
The fair value of our Level 2 interest rate swaps is estimated using a pricing model that reflects the terms of the contracts, including the period to maturity, and relies on observable market inputs such as known notional value amounts and USD interest rate curves.
Our assets and liabilities measured at fair value on a recurring basis consisted of the following Level 1, 2 and 3 inputs as defined above (in thousands):
24
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Fair value measurements as of September 30, 2025 | |||||||||||||||||||||||
| Total carrying value | Quoted prices in active markets for identical assets (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Foreign exchange contracts: | |||||||||||||||||||||||
| Prepaid expenses and other current assets | $ | $ | $ | $ | |||||||||||||||||||
| Other assets | |||||||||||||||||||||||
| Interest rate contracts: | |||||||||||||||||||||||
| Prepaid expenses and other current assets | |||||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign exchange contracts: | |||||||||||||||||||||||
| Accrued liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Other long-term liabilities | |||||||||||||||||||||||
| Interest rate contracts: | |||||||||||||||||||||||
| Other long-term liabilities | |||||||||||||||||||||||
| Total Liabilities | $ | $ | $ | $ | |||||||||||||||||||
Fair value measurements as of December 31, 2024 | |||||||||||||||||||||||
| Total carrying value | Quoted prices in active markets for identical assets (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Foreign exchange contracts: | |||||||||||||||||||||||
| Prepaid expenses and other current assets | $ | $ | $ | $ | |||||||||||||||||||
| Interest rate contracts: | |||||||||||||||||||||||
| Prepaid expenses and other current assets | |||||||||||||||||||||||
| Other assets | |||||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign exchange contracts: | |||||||||||||||||||||||
| Accrued liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Total Liabilities | $ | $ | $ | $ | |||||||||||||||||||
Nonrecurring Fair Value Measurements
We measure certain items on a nonrecurring basis due to particular circumstances or when specific transactions occur such as a retained investment resulting from a partial sale. On May 1, 2025, we measured our retained equity method investment in Otsuka ICU Medical LLC (see Note 11: Investment Securities) at fair value in connection to the sale of a 60%
25
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Note 11: Investment Securities
Investments in Non-Marketable Equity Securities
Investments in Unconsolidated Affiliates
We hold equity method investments in certain entities. We apply the equity method of accounting for investments in unconsolidated affiliates when we determine we have a significant influence, but not a controlling interest in the investee. We determine whether we have significant influence by considering key factors such as ownership interest, representation on the board of directors, participation in policy making decisions, business relationship and material intra-entity transactions, among other factors. Our equity method investments are reported at cost and adjusted each period for our share of the investee's income or (loss) and dividend paid, if any. We eliminate any intra-entity profits to the extent of our beneficial interest. For our other equity method investment, we report our proportionate share of the investee's income or (loss) resulting from this investment in other income, net in our condensed consolidated statements of operations. We assess our equity method investments for impairment on an annual basis or whenever events or circumstances indicate that the carrying value of the investment may not be recoverable.
On April 24, 2025, the Company completed the formation of the Otsuka ICU Medical LLC (“joint venture”) and transferred the assets, liabilities and operations that comprise the IV Solutions business to the joint venture. Pursuant to the agreement, we sold 60% of our IV Solutions business to OPF and the Company retained 40 % ownership interest in the business. The initial investment, which includes a step up in basis on the retained 40% interest of $19.4 million, was recorded in the amount of $129.9 million. As provided under the joint venture's Operating Agreement, each of OPF and the ICU Medical Entities have been granted certain exclusive call and put options, respectively, with respect to the ICU Medical Entities' remaining ownership interest in the joint venture. Such options are exercisable at certain specified dates and for such amounts as are set forth in the Operating Agreement beginning five years after the transaction closing. If exercised, they could effectively eliminate the Company’s ownership interest. See Note 4: Assets Held for Sale and Disposal of Business for more information.
We also own approximately 20 % non-marketable equity interest in a nonpublic company and entered into a three-year distribution agreement where we have the exclusive rights to market, sell and distribute the company's products in exchange for a cash payment of $3.3 million. In addition, we were granted an exclusive license for all of the seller's intellectual property. At the expiration of the distribution agreement we have the right but not the obligation to acquire the remaining interest in the business.
Our investment in unconsolidated affiliates consist of the following (in thousands):
| As of | ||||||||||||||
| September 30, 2025 | December 31, 2024 | |||||||||||||
| Otsuka ICU Medical LLC | $ | $ | ||||||||||||
| Other equity method investment | ||||||||||||||
| $ | $ | |||||||||||||
Our recorded share of our investees' (loss) income was $(1.6 ) million and $1.2 million for the three and nine months ended September 30, 2025, respectively. There were no such balances in 2024. We did not receive any dividend distributions from these investments during the three and nine months ended September 30, 2025 and 2024.
26
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Note 12: Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
| As of | ||||||||||||||
| September 30, 2025 | December 31, 2024 | |||||||||||||
| Other prepaid expenses and receivables* | $ | $ | ||||||||||||
| Deferred costs | ||||||||||||||
| Prepaid insurance and property taxes* | ||||||||||||||
| Interest rate contracts** | ||||||||||||||
| Prepaid income taxes | ||||||||||||||
| Other* | ||||||||||||||
| $ | $ | |||||||||||||
____________________________
*As of December 31, 2024, certain prepaid expense account balances that are part of a disposal group that met the criteria for assets held for sale during the fourth quarter of 2024 were combined with other disposal group assets and presented as a separate line item "Assets Held For Sale" in our consolidated balance sheet (See Note 4:Assets Held For Sale and Disposal of Business).
**See Note 9: Derivatives and Hedging Activities
Note 13: Inventories
Inventories are stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. Inventory costs include material, labor and overhead related to the manufacturing of our products.
Inventories consist of the following (in thousands):
| As of | |||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||
| Raw materials | $ | $ | |||||||||
| Work in process | |||||||||||
| Finished goods | |||||||||||
| Total inventories | $ | $ | |||||||||
_____________________________
As of December 31, 2024, inventory account balances that are part of a disposal group that met the criteria for assets held for sale during the fourth quarter of 2024 were combined with other disposal group assets and presented as a separate line item "Assets Held For Sale" in our consolidated balance sheets (See Note 4:Assets Held For Sale and Disposal of Business).
27
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Note 14: Property, Plant and Equipment
Property, plant and equipment consists of the following (in thousands):
| As of | |||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||
Machinery and equipment(1) | $ | $ | |||||||||
Land, building and building improvements(1) | |||||||||||
| Molds | |||||||||||
Computer equipment and software(1) | |||||||||||
Furniture and fixtures(1) | |||||||||||
Instruments placed with customers(2) | |||||||||||
Construction in progress(1) | |||||||||||
Total property, plant and equipment, cost(1) | |||||||||||
Accumulated depreciation(1) | ( | ( | |||||||||
Property, plant and equipment, net(1) | $ | $ | |||||||||
______________________________
(1) As of December 31, 2024, certain property, plant and equipment category account balances that are part of a disposal group that met the criteria for assets held for sale during the fourth quarter of 2024 were combined with other disposal group assets and presented as a separate line item "Assets held For Sale" in our consolidated balance sheets.
(2) Instruments placed with customers consist of drug-delivery and monitoring systems placed with customers under operating leases.
Depreciation expense was $17.7 million and $51.5 million for the three and nine months ended September 30, 2025, respectively, as compared to $21.4 million and $66.0 million for the three and nine months ended September 30, 2024, respectively. Depreciation expense included in costs of goods sold was $16.0 million and $46.2 million, for the three and nine months ended September 30, 2025, respectively, as compared to $18.5 million and $57.2 million for the three and nine months ended September 30, 2024, respectively.
Note 15: Goodwill and Intangible Assets, Net
Goodwill
| Total | ||||||||
Balance as of January 1, 2025 | $ | |||||||
| Currency translation | ||||||||
Balance as of September 30, 2025 | $ | |||||||
Intangible Assets, Net
28
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| Weighted-Average Amortization Life in Years | September 30, 2025 | |||||||||||||||||||||||||
| Cost | Accumulated Amortization | Net | ||||||||||||||||||||||||
| Patents | $ | $ | $ | |||||||||||||||||||||||
| Customer contracts | ||||||||||||||||||||||||||
| Non-contractual customer relationships | ||||||||||||||||||||||||||
| Trademarks | ||||||||||||||||||||||||||
| Trade name | ||||||||||||||||||||||||||
Developed technology(1) | ||||||||||||||||||||||||||
| Non-compete | ||||||||||||||||||||||||||
| Total amortized intangible assets | $ | $ | $ | |||||||||||||||||||||||
Internally developed software(2) | $ | $ | ||||||||||||||||||||||||
| Total intangible assets | $ | $ | $ | |||||||||||||||||||||||
______________________________
(1) Developed technology primarily consists of acquired patented technologies and internally developed software. Upon completion of development, the assets are amortized over their estimated useful lives.
(2) Internally developed software will be reclassified to developed technology and amortized when the projects are complete and the assets are ready for their intended use.
| Weighted-Average Amortization Life in Years | December 31, 2024 | |||||||||||||||||||||||||
| Cost | Accumulated Amortization | Net | ||||||||||||||||||||||||
| Patents | $ | $ | $ | |||||||||||||||||||||||
| Customer contracts | ||||||||||||||||||||||||||
| Non-contractual customer relationships | ||||||||||||||||||||||||||
| Trademarks | ||||||||||||||||||||||||||
| Trade name | ||||||||||||||||||||||||||
Developed technology(1) | ||||||||||||||||||||||||||
| Non-compete | ||||||||||||||||||||||||||
| Total amortized intangible assets | $ | $ | $ | |||||||||||||||||||||||
Internally developed software(2) | $ | $ | ||||||||||||||||||||||||
| Total intangible assets | $ | $ | $ | |||||||||||||||||||||||
_______________________________
(1) Developed technology primarily consists of acquired patented technologies and internally developed software. Upon completion of development, the assets are amortized over their estimated useful lives.
(2) Internally developed software will be reclassified to developed technology and amortized when the projects are complete and the assets are ready for their intended use. During 2024, we reclassified $33.2 million to developed technology.
Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives. Intangible asset amortization expense was $33.1 million and $98.4 million for the three and nine months ended September 30, 2025, respectively, as compared to $34.3 million and $100.5 million during the three and nine months ended September 30, 2024, respectively. Intangible asset amortization expense included in cost of goods sold was $1.2 million and $3.3 million, for the three and nine months ended September 30, 2025, respectively, as compared to $0.7 million and $0.7 million during the three and nine months ended September 30, 2024.
29
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of September 30, 2025 estimated annual amortization for our intangible assets for each of the next five years and thereafter is approximately (in thousands):
| Remainder of 2025 | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
Note 16: Accrued Liabilities
| As of | |||||||||||
| September 30, 2025 | December 31, 2024 | ||||||||||
| Salaries and benefits | $ | $ | |||||||||
| Incentive compensation | |||||||||||
| Deferred revenue | |||||||||||
Italy medical device payback provision(1) | |||||||||||
Field service corrective action(2) | |||||||||||
| Other | |||||||||||
| $ | $ | ||||||||||
___________________________
(1) Related to potential payments associated with the Italy Medical Device Payback ("IMDP") as a result of 2015 legislation enacted requiring medical device companies to make payments to the Italian government based on regional expenditure ceilings (see Note 20: Commitments and Contingencies for further details).
(2) Primarily includes field corrective actions associated with certain products in connection with a 2021 Warning Letter (as defined below) received by Smiths Medical from the FDA following an inspection of Smiths Medical's Oakdale, Minnesota Facility (see Note 20: Commitments and Contingencies for further details).
Note 17: Income Taxes
Income taxes were accrued at an estimated effective tax rate of 26 % and 25 % for the three and nine months ended September 30, 2025, respectively, as compared to (84 )% and (26 )% for the three and nine months ended September 30, 2024, respectively.
The effective tax rate for the three and nine months ended September 30, 2025 differs from the federal statutory rate of 21 % principally because of the effect of the mix of U.S. and foreign incomes, section 162(m) excess compensation, federal and state valuation allowance, tax credits, and the following discrete items recognized during the interim period:
•Tax expense of $0.0 million and $6.1 million related to the sale of a 60% interest of our IV solutions business during the three and nine months ended September 30, 2025 respectively.
•Unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and nine months ended September 30, 2025 of $0.0 million and $5.0 million, respectively.
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
•U.S. return-to-provision adjustments net of related tax reserves for the year ended December 31, 2024 resulted in a tax benefit of $12.0
The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company recorded a change to the valuation allowance against certain U.S. federal and state deferred tax assets, resulting in a $1.4 million tax benefit and $2.3 million tax expense during the three and nine months ended September 30, 2025, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses. The company's ability to use our deferred tax assets depends on the amount of taxable income in future periods.
In December 2022, the European Union (EU) agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold. All of the EU countries and some of the non-EU countries in which we operate have enacted or have announced plans to enact legislation to adopt Pillar Two. The Pillar Two legislation has been effective for our fiscal year beginning January 1, 2024. For fiscal year 2025, we have considered the impact of Pillar Two on our tax provision and effective tax rate. However, the Pillar Two rules continue to evolve and their application may alter our tax obligations in certain countries in which we operate for fiscal periods beyond 2025 as we continue to assess the impact of tax legislation in these jurisdictions.
On July 4, 2025, the U.S. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14", commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements as additional guidance becomes available and uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. The impacts are included in our operating results for the three and nine months ended September 30, 2025, however, we do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025.
The effective tax rate for the three and nine months ended September 30, 2024 differs from the federal statutory rate of 21 % principally because of the effect of the mix of U.S. and foreign incomes, state income taxes, section 162(m) excess compensation, federal and state valuation allowance, tax credits, and the following discrete items recognized during the interim period:
•Unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and nine months ended September 30, 2024 of $0.0 million and $4.0 million, respectively.
•U.S. return-to-provision adjustments net of related tax reserves for the year ended December 31, 2023 results in a tax expense of $1.6 million for both the three and nine months ended September 30, 2024. The adjustments related primarily to changes in estimate for the research and development credit and an increase to the U.S. valuation allowance.
Note 18: Long-Term Debt
2022 Credit Agreement
In 2022, in connection with the acquisition of Smiths Medical, we entered into a Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, Wells Fargo Securities, LLC, Barclays Bank PLC and certain other financial institutions (the “Lenders”) for $2.2 billion of senior secured credit facilities. The senior secured credit facilities include (i) a five-year Tranche A term loan of $850.0 million (the "Term Loan A"), (ii) a seven-year Tranche B term loan of $850.0 million (the "Term Loan B") and (iii) a five-year revolving credit facility of $500.0 million (the "Revolving Credit Facility"), with separate sub-limits of $50.0 million for letters of credit and swingline loans (collectively, the "Senior Secured
31
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Credit Facilities"). We used the proceeds from borrowings under the Term Loan A and the Term Loan B (collectively, the "Term Loans") to fund a portion of the cash consideration for the purchase of Smiths Medical and the related fees and expenses incurred in connection with the acquisition. We did not incur borrowings under the Revolving Credit Facility on the closing date of the acquisition. The proceeds from any future borrowings under the Revolving Credit Facility may be used for working capital and other general corporate purposes.
In connection with entering into the Credit Agreement in 2022, we incurred $37.8 million in debt discount and issuance costs, which were allocated to the Term Loan A, the Term Loan B and the Revolving Credit Facility based on lender commitment amounts relative to each type of fees paid. The lender and third-party discount and issuance costs allocated to the Term Loan A and the Term Loan B were $15.8 million and $13.4 million, respectively, the current unamortized balances are reflected as a direct deduction from the face amount of the corresponding term loans on the condensed consolidated balance sheets. These costs are being amortized to interest expense over the respective terms of the loans using the effective interest method. The issuance costs allocated to the Revolving Credit Facility were $8.6 million, which are capitalized and included in prepaid expenses and other current assets on our condensed consolidated balance sheets. These costs are being amortized to interest expense over the term of the Revolving Credit Facility using the straight-line method.
The net funds received from the Term Loan A and the Term Loan B, after deducting debt issuance costs, were $834.2 million and $836.6 million, respectively.
Maturity Dates
The maturity date for the Term Loan A and the Revolving Credit Facility is January 6, 2027 , and the maturity date for the Term Loan B is January 6, 2029 . Pursuant to the terms and conditions of the Credit Agreement, the maturity dates of the Term Loans and the Revolving Credit Facility may be extended upon our request, subject to the consent of the Lenders.
Interest Rate Terms
In general, the Term Loans and borrowings under the Revolving Credit Facility denominated in U.S. dollars bear interest, at our option, on either: (1) the Base Rate, as defined below, plus the applicable margin, as indicated below ("Base Rate Loans") or (2) the Adjusted Term Secured Overnight Financing Rate ("Adjusted Term SOFR"), as defined below, plus the applicable margin, as indicated below ("Term SOFR Loans").
The Base Rate is defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50 % and (c) Adjusted Term SOFR (as defined below) for a one-month period plus, in each case, 1.00 %.
Adjusted Term SOFR is the rate per annum equal to (a) the Term SOFR plus (b) the Term SOFR Adjustment. Term SOFR is the forward-looking term rate based on SOFR and is calculated separately for Term SOFR Loans and Base Rate Loans, as specified in the Credit Agreement. The Term SOFR Adjustment is a percentage per annum of 0.10 % for Base Rate Loans and between 0.10 % to 0.25 % for Term SOFR Loans based on the applicable interest period.
Revolving Credit Facility Commitment Fee
The Revolving Credit Facility has a per annum commitment fee at an initial rate of 0.25 % which is applied to the available amount of the Revolving Credit Facility. Effective on the first Adjustment Date, as defined in the Credit Agreement, occurring subsequent to our quarter ended June 30, 2022, the commitment fee is determined by reference to the leverage ratio in effect from time to time as set forth in the table below.
Applicable Interest Margins
The Term Loan A and borrowings under the Revolving Credit Facility have an initial applicable margin of 0.75 % per annum for Base Rate Loans and 1.75 % per annum for Term SOFR Loans.
Effective on the first Adjustment Date, as defined in the Credit Agreement, occurring subsequent to our quarter ended June 30, 2022, the applicable margin for the Term Loan A and borrowings under the Revolving Credit Facility is determined by reference to the leverage ratio in effect from time to time as set forth in the following table:
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ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| Leverage Ratio | Applicable Margin for Term SOFR Loans | Applicable Margin for Base Rate Loans | Commitment Fee Rate | ||||||||
| Greater than 4.00 to 1.0 | |||||||||||
| Less than or equal to 4.00 to 1.0 but greater than 3.00 to 1.0 | |||||||||||
| Less than or equal to 3.00 to 1.0 but greater than 2.50 to 1.0 | |||||||||||
| Less than or equal to 2.50 to 1.0 but greater than 2.00 to 1.0 | |||||||||||
| Less than or equal to 2.00 to 1.0 | |||||||||||
The Term Loan B has an initial applicable margin of 1.5 % per annum for Base Rate Loans and 2.5 % per annum for Term SOFR Loans.
Effective on the first Adjustment Date, as defined in the Credit Agreement, occurring subsequent to our quarter ended June 30, 2022, the applicable margin for the Term Loan B is determined by reference to the leverage ratio in effect from time to time as set forth in the following table:
| Leverage Ratio | Applicable Margin for Term SOFR Loans | Applicable Margin for Base Rate Loans | ||||||
| Greater than 2.75 to 1.0 | ||||||||
| Less than 2.75 to 1.0 | ||||||||
Principal Payments
Principal payments on the Term Loans are due on the last day of each calendar quarter commencing on June 30, 2022.
The Term Loan A amortizes in nineteen consecutive quarterly installments in an amount equal to 2.50 % of the original principal amount in each of the first two years, 5.00 % in each of the third and fourth years and 7.50 % in the fifth year, with a final payment of the remaining outstanding principal balance due on the maturity date.
The Term Loan B matures in twenty-seven consecutive quarterly installments in an amount equal to 0.25 % of the original principal amount, with a final payment of the remaining outstanding principal balance due on the maturity date.
We may borrow, prepay and re-borrow amounts under the Revolving Credit Facility, in accordance with the terms and conditions of the Credit Agreement, with all outstanding amounts due at maturity.
For the nine months ended September 30, 2025 and 2024, total principal payments on the Term Loans were $272.8 million and $38.3 million, respectively. During the first quarter of 2025, we made a prepayment of $35.0 million on Term Loan B. During the second quarter of 2025, we made a prepayment of $200 million on Term Loan A, which was paid with the proceeds from the sale of our IV Solutions business, see Note 4: Assets Held For Sale and Disposal of Business. During the third quarter of 2025, we made a prepayment of $25.0 million on Term Loan B.
Interest Payments
Interest payments on Base Rate Loans are payable quarterly in arrears on the last business day of each calendar quarter and the applicable maturity date. Interest periods on Term SOFR Loans are determined, at our option, as either one, three or six months and will be payable on the last day of each interest period and the applicable maturity date. In the case of any interest periods of more than three months' duration, the interest payment are payable on each day prior to the last day of such interest period that occurs at three-month intervals.
The commitment fee on the Revolving Credit Facility is payable quarterly in arrears on the third business day following the last day of each calendar quarter and at the maturity date. The commitment fee is included in interest expense in our condensed consolidated statements of operations.
33
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Guarantors and Collateral
Our obligations under the Credit Agreement are unconditionally guaranteed, on a joint and several basis, by ICU Medical, Inc. and certain of our existing subsidiaries.
Debt Covenants
The Credit Agreement contains affirmative and negative covenants, including certain financial covenants. The negative covenants include restrictions regarding the incurrence of liens and indebtedness, certain merger and acquisition transactions, asset sales and other dispositions, other investments, dividends, share purchases and payments affecting subsidiaries, changes in nature of business, fiscal year or organizational documents, prepayments and redemptions of subordinated and other junior debt, transactions with affiliates, and other matters.
The financial covenants include the Senior Secured Leverage Ratio and the Interest Coverage Ratio, both defined below, and pertain to the Term Loan A and the Revolving Credit Facility.
The Senior Secured Leverage Ratio is defined, at any measurement date, as the ratio of: (a) all Funded Debt, as defined in the Credit Agreement, that is secured by a lien on any asset or property minus the lesser of (i) all unrestricted cash and cash equivalents and (ii) $500.0 million, to (b) Consolidated EBITDA, as defined in the Credit Agreement, for the most recently completed four fiscal quarters, calculated on a pro forma basis. The maximum Senior Secured Leverage Ratio is 4.50 to 1.00 until June 30, 2024. Thereafter, the maximum Senior Secured Leverage Ratio is 4.00 to 1.00, with limited permitted exception.
The Interest Coverage ratio is defined, at any measurement date, as the ratio of Consolidated EBITDA, as defined in the Credit Agreement, to Consolidated Interest Expense, as defined in the Credit Agreement, paid or payable in cash, for the most recently completed four fiscal quarters. The minimum Interest Coverage ratio is 3.00 to 1.00.
We were in compliance with all financial covenants as of September 30, 2025.
The Credit Agreement contains customary events of default, including, among others: non-payments of principal and interest; breach of representations and warranties; covenant defaults; cross-defaults and cross-acceleration to certain other material indebtedness; the existence of bankruptcy or insolvency proceedings; certain events under ERISA; material judgments; and a change of control. If an event of default occurs and is not cured within any applicable grace period or is not waived, the administrative agent and the Lenders are entitled to take various actions, including, without limitation, the acceleration of all amounts due and the termination of commitments under the Senior Secured Credit Facilities.
The carrying values of our long-term debt consist of the following (in thousands):
| Effective Interest Rate | As of September 30, 2025 | Effective Interest Rate | As of December 31, 2024 | ||||||||||||||||||||||||||
| Senior Secured Credit Facilities: | |||||||||||||||||||||||||||||
| Term Loan A — principal | % | $ | % | $ | |||||||||||||||||||||||||
| Term Loan B — principal | % | % | |||||||||||||||||||||||||||
| Revolving Credit Facility — principal | % | % | |||||||||||||||||||||||||||
Less unamortized debt issuance costs(1) | ( | ( | |||||||||||||||||||||||||||
| Total carrying value of long-term debt | |||||||||||||||||||||||||||||
| Less current portion of long-term debt | |||||||||||||||||||||||||||||
| Long-term debt, net | $ | $ | |||||||||||||||||||||||||||
_______________________________
(1) Comprised of $3.7 million and $6.5 million relating to the Term Loan A and the Term Loan B, respectively, as of September 30, 2025. Comprised of $6.1 million and $8.0 million relating to the Term Loan A and the Term Loan B, respectively, as of December 31, 2024.
34
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of September 30, 2025, the aggregate amount of principal repayments of our long-term debt (including any current portion) for each of the next five years and thereafter is approximately (in thousands):
| Remainder of 2025 | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Total | $ | |||||||
The following table presents the total interest expense related to our long-term debt (in thousands):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Contractual interest | $ | $ | $ | $ | |||||||||||||||||||
| Amortization of debt issuance costs | |||||||||||||||||||||||
| Commitment fee — Revolving Credit Facility | |||||||||||||||||||||||
| Total long-term debt-related interest expense | $ | $ | |||||||||||||||||||||
We currently hedge against the contractual interest expense on our long-term debt (see Note 9: Derivatives and Hedging Activities).
On October 31, 2025, we refinanced the Credit Agreement (see Note 23: Subsequent Event).
Note 19: Stockholders' Equity
Treasury Stock
In August 2019, our Board approved a share purchase plan to purchase up to $100.0 million of our common stock. This plan has no expiration date. During the three months ended September 30, 2025 and 2024, we did not purchase any shares of our common stock under our share purchase plan. As of September 30, 2025, all of the $100.0 million available for purchase was remaining under the plan. We are currently limited on share purchases in accordance with the terms and conditions of our Credit Agreement (see Note 18: Long-Term Debt).
For the nine months ended September 30, 2025, we withheld 61,304 shares of our common stock from employee vested restricted stock units in consideration for $8.7 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations. For the nine months ended September 30, 2024, we withheld 114,023 shares of our common stock from employee vested restricted stock units in consideration for $11.9 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations. Treasury stock is used to issue shares for stock option exercises and restricted stock grants.
Accumulated Other Comprehensive (Loss) Income ("AOCI")
35
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
| Foreign Currency Translation Adjustments | Unrealized Losses on Cash Flow Hedges | Other Adjustments | Total | |||||||||||||||||||||||
Balance as of January 1, 2025 | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | |||||||||||||||||||||||||
| Amounts reclassified from AOCI | ( | ( | ||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | |||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | |||||||||||||||||||||||||
| Amounts reclassified from AOCI | ( | ( | ||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | |||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | |||||||||||||||||||||||||
| Amounts reclassified from AOCI | ( | ( | ||||||||||||||||||||||||
| Other comprehensive (loss) income | ( | ( | ||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
| Foreign Currency Translation Adjustments | Unrealized Gains (Losses) on Cash Flow Hedges | Other Adjustments | Total | |||||||||||||||||||||||
Balance as of January 1, 2024 | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | ||||||||||||||||||||||||
| Amounts reclassified from AOCI | ( | ( | ||||||||||||||||||||||||
| Other comprehensive (loss) income | ( | ( | ||||||||||||||||||||||||
Balance as of March 31, 2024 | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | ||||||||||||||||||||||||
| Amounts reclassified from AOCI | ( | ( | ||||||||||||||||||||||||
| Other comprehensive loss | ( | ( | ( | |||||||||||||||||||||||
Balance as of June 30, 2024 | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | |||||||||||||||||||||||||
| Amounts reclassified from AOCI | ( | ( | ||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | |||||||||||||||||||||||||
Balance as of September 30, 2024 | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
36
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 20: Commitments and Contingencies
Legal Proceedings
From time to time, we are involved in various legal proceedings, most of which are routine litigation, in the normal course of business. Our management does not believe that the resolution of the unsettled legal proceedings that we are involved with will have a material adverse impact on our financial position or results of operations.
Off-Balance Sheet Arrangements
In the normal course of business, we have agreed to indemnify our officers and directors to the maximum extent permitted under Delaware law and to indemnify customers as to certain intellectual property matters or other matters related to sales of our products. There is no maximum limit on the indemnification that may be required under these agreements.
Although we can provide no assurances, we have never incurred, nor do we expect to incur, any material liability for indemnification.
Contingencies
Prior to being acquired, during 2021, Smiths Medical received a Warning Letter from the U.S. Food and Drug Administration ("FDA") following an inspection of Smiths Medical’s Oakdale, Minnesota Facility (the "2021 Warning Letter"). The 2021 Warning Letter cited, among other things, failures to comply with FDA's medical device reporting requirements and failures to comply with applicable portions of the Quality System Regulation. A provision for the estimated costs related to the field service corrective actions identified as of the closing date of the acquisition was recorded on the opening acquired balance sheet of Smiths Medical in the amount of $55.1 million. The initial estimate recorded was based on a probability-weighted estimate of the costs required to settle the obligation related to known field corrective actions. The actual costs to be incurred are dependent upon the scope of the work necessary to achieve regulatory clearance, including potential additional field corrective actions, and could differ from the original estimate. For the three months ended September 30, 2025, we did not record any adjustment and for the nine months ended September 30, 2025, we recorded a net reversal to the provision of $0.7 million, to adjust the estimated cost to complete the field corrective actions to the amounts expected to be incurred based on historical experience. As of September 30, 2025, approximately $23.3 million of the $36.0 million of accrued field service corrective action recorded was related to the 2021 Warning Letter.
In 2015, legislation was enacted in Italy which requires medical device companies to make payments to the Italian government if Italy's medical device expenditures for certain years exceeded annual regional expenditure ceilings. Since its enactment, the legislation has been subject to appeals in the Italian court system. In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the IMDP. In September 2025, the Italian government enacted a law that allows medical device companies to settle certain historical periods (2015-2018) for 25% of the original assessed value. During the third quarter of 2025, we settled the liability related to the 2015-2018 historical periods and paid $2.5 million. Additionally, we recorded a release of $3.8 million in previously established reserves. The release is included in total revenues in our condensed consolidated statements of operations. See Note 16: Accrued Liabilities for details on amounts accrued for potential payments related to the IMDP.
In April 2025, we received a warning letter from the FDA following an inspection of Smiths Medical's Oakdale, Minnesota Facility that occurred from July 23, 2024 through August 9, 2024 (the "2025 Warning letter"). The 2025 Warning Letter noted changes we made to the MedFusion™ Model 4000 Syringe Infusion Pump and CADD™ Solis VIP Ambulatory Infusion Pump that could affect the safety or effectiveness of these devices and therefore require new 510(k) clearance. We are seeking clearance for its next generation of MedFusion and CADD infusion pumps and submitted 510(k) applications to the FDA in July 2025. We cannot, however, give any assurances that the FDA will be satisfied with its response or its expected timing to address the matters cited in the 2025 Warning Letter. Until the matters cited in the 2025 Warning Letter are resolved to the FDA’s satisfaction, additional legal or regulatory action may be taken without further notice. As a result, the outcome and the financial impact of the 2025 Warning Letter cannot be predicted at this time. Accordingly, no loss contingency has been recorded for the 2025 Warning Letter, and the likelihood of loss is not considered probable and reasonably estimable as of September 30, 2025.
Commitments
37
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 21: Collaborative and Other Arrangements
On February 3, 2017, we entered into two Manufacturing and Supply Agreements ("MSAs") whereby (i) Pfizer would manufacture and supply us with certain agreed upon products for an initial five-year term with a one-time two-year option to extend and (ii) we will manufacture and supply Pfizer certain agreed upon products for a term of five or ten years depending on the product, also with a one-time two-year option to extend. We no longer purchase products from Pfizer under the MSA as described in (i) above.
The MSA described in (ii) above provides each party with mutually beneficial interests and is jointly managed by both Pfizer and ICU. On January 1, 2021, we amended our MSA with Pfizer, whereby we manufacture and supply certain agreed upon products to Pfizer. The MSA was amended on December 31, 2024 to extend the term through 2027 for certain Solutions and Abboject products. The terms of the MSA with Pfizer relating to ICU are immaterial. Changes to the terms of the MSA include (i) amendments to our level of supply of products to Pfizer and (ii) updates to our supply price for 2025. ICU’s rights and obligations relating to such Solutions products have been assigned as of January 24, 2025 to the joint venture.
Note 22: Accounts Receivable Purchase Program
On January 19, 2023, we entered into a revolving $150 million uncommitted receivables purchase agreement with Bank of The West, which was subsequently acquired by BMO Bank, N.A. ("BMO") in February 2023. This agreement provided for a less expensive form of capital. The discount rate applied to the sold receivables equals a rate per annum equal to the sum of (i) an applicable margin, plus (ii) Term SOFR for a period equal to the discount period which is calculated with respect to the payment terms of the specific receivable. The accounts receivable sold have payment terms ranging between 30 and 60 days, and are related to customer accounts with good credit history. The transfer of the purchased accounts receivable under the agreement is intended to be an absolute and irrevocable transfer constituting a true sale as the transferred receivables have been isolated beyond the reach of the Company and our creditors, even in bankruptcy or other receivership. We do not retain effective control over the sold receivables and BMO has the right upon purchase to pledge and/or exchange the transferred assets without restrictions. The Company acts as collection agent for BMO and collection services are undertaken by our accounts receivable personnel in their normal course of business and collected funds are remitted to BMO. We do not have any continuing involvement with the sold receivables other than the collection services which does not provide us with more than a trivial benefit. The discount rate has been negotiated net of consideration for the collection services, the cost of collection is immaterial to the Company; therefore, we did not separately record any related servicing assets or liabilities related to the sold receivables.
The following table presents information in connection with the purchase program (in thousands):
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||
Trade receivables sold(1) | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Cash received in exchange for trade receivables sold(2) | ||||||||||||||||||||||||||||||||
Loss on sale of receivables(3) | ||||||||||||||||||||||||||||||||
_______________________________
(1) Represents carrying value of trade receivables sold to BMO.
(2) Cash proceeds received from BMO.
(3) Reflected in other expense, net in our condensed consolidated statement of operations.
As of September 30, 2025 and December 31, 2024, there were no outstanding balances to be collected on behalf of BMO.
38
ICU MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 23: Subsequent Event
On October 31, 2025 (the "Closing Date"), ICU Medical, Inc., as Borrower, entered into Amendment No. 2 to the Existing Credit Agreement (the "Amendment") with Wells Fargo Bank and certain other financial institutions (the “Lenders”) to refinance the existing Term Loan A and the existing Revolving Credit Facility under the Credit Agreement dated as of January 6, 2022 (as amended by Amendment No. 1, dated as of October 5, 2022, the "Existing Credit Agreement," and as further amended by the Amendment, the "Amended Credit Agreement").
The existing Term Loan A had an outstanding principal balance of $559.7 million as of September 30, 2025 and there were no borrowings under the existing $500.0 million revolver as of September 30, 2025.
The Amended Credit Agreement includes new credit facilities (the "New Credit Facilities") that consists of a $750.0 million senior secured term loan A and a new $500.0 million revolving credit facility. The proceeds from and commitments under the New Credit Facilities were used to (i) repay the outstanding principal amount of the existing Term Loan A in full and refinance the existing Revolving Credit Facility (collectively, the "Refinancing") under the Existing Credit Agreement, (ii) repay a portion of the outstanding balance of the existing Term Loan B under the Existing Credit Agreement and (iii) to finance the payment of fees and expenses incurred in connection with the Refinancing.
The final maturity of the New Credit Facilities is on the fifth anniversary of the Closing Date.
Borrowings under the New Credit Facilities will not be subject to the credit spread adjustment under the Existing Credit Agreement, which ranges from 10 to 25 basis points, thereby reducing interest expense on such borrowings. The material terms of the Term Loan B (including the credit spread adjustment applicable thereto) remain unchanged.
All affirmative and negative covenants remain substantially the same as the Existing Credit Agreement. The financial covenants of the New Credit Facilities include (i) a new maximum Secured Net Leverage Ratio of 4.50 to 1.00, tested at the end of each quarter, with a step-down to 4.00 to 1.00 starting with the quarter ending June 30, 2027; provided that, in the event the Borrower or its restricted subsidiaries consummate a material acquisition, the Borrower may elect (on no more than one occasion) to cause the Secured Net Leverage Ratio financial covenant level set forth above to be increased by 0.50x for each of the four fiscal quarters ending immediately after the consummation of such material acquisition and (ii) a minimum Interest Coverage Ratio of 3.00 to 1.00, which remains unchanged from the Existing Credit Agreement.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and accompanying notes in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and related notes thereto included in our 2024 Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the caption entitled “Forward-Looking Statements” in this section and Part I, Item 1A. “Risk Factors” in our 2024 Annual Report on Form 10-K as may be further updated from time to time in our other filings with the SEC.
When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” and “our” refer to ICU Medical, Inc. ("ICU" or the "Company") and its consolidated subsidiaries included in our condensed consolidated financial statements unless context requires otherwise.
Business Overview and Highlights
We develop, manufacture, and sell innovative medical products used in infusion systems, infusion consumables and high-value critical care products used in hospital, alternate site and home care settings. Our team is focused on providing quality, innovation and value to our clinical customers worldwide. Our product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, peripheral IV catheters, and sterile IV solutions; closed system transfer devices and pharmacy compounding systems; as well as a range of respiratory, anesthesia, patient monitoring, and temperature management products.
Products
Our primary product offerings are described below.
Consumables
Our Consumables business unit includes Infusion Therapy, Oncology, Vascular Access and Tracheostomy products.
Infusion Therapy
Our Infusion Therapy products include non-dedicated infusion sets, extension sets, needle-free connectors, and disinfection caps. Infusion sets used in hospitals and ambulatory clinics consist of flexible sterile tubing running from an IV bag or bottle containing a drug product or solution to a catheter inserted in a patient’s vein that may or may not be used with an infusion pump. Disinfection caps are used to actively disinfect access points into the infusion sets and catheters. Our primary Infusion Therapy products are:
•Clave™ needlefree products, including the MicroClave, MicroClave Clear, and NanoClave™ brand of connectors, accessories, extension and administration sets used for the administration of IV fluids and medications;
•Neutron™ catheter patency device, used to help maintain patency of central venous catheters;
•Tego™ needlefree connector utilized to access catheters for hemodialysis and apheresis applications; and
•ClearGuard™, SwabCap™ and SwabTip™ disinfection caps.
Oncology
Closed System Transfer Devices ("CSTD") and hazardous drug compounding systems are used to prepare and deliver hazardous IV medications such as those used in chemotherapy, which, if released, can have harmful effects on the healthcare worker and environment. Our primary Oncology products are:
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•ChemoLockTM CSTD ("Chemolock"), which utilizes a proprietary needlefree connection method, is used for the preparation and administration of hazardous drugs. ChemoLock is used to limit the escape of hazardous drug or vapor concentrations, block the transfer of environmental contaminants into the system, and eliminates the risk of needlestick injury;
•ChemoClaveTM ("Chemoclave"), an ISO Connection standard and universally compatible CSTD used for the preparation and administration of hazardous drugs. ChemoClave utilizes standard ISO luer locking connections, making it compatible with all brands of needlefree connectors and pump delivery systems. ChemoClave also is used to limit the escape of hazardous drug or vapor concentrations, block the transfer of environmental contaminants into the system, and eliminate the risk of needlestick injury; and
•Deltec® GRIPPER® non-coring needles for portal access.
The preparation of hazardous drugs typically takes place in a pharmacy where drugs are removed from vials and prepared for delivery to a patient. Those prepared drugs are then transferred to a nursing unit where the chemotherapy is administered via an infusion pump set to a patient. Components of the ChemoClave and ChemoLock product lines are used both in pharmacies and on the nursing floors for the preparation and administration of hazardous drugs.
Vascular Access
Our Vascular Access products are used by clinicians to access the patients' bloodstream to deliver fluids and medication or to obtain blood samples. Our primary Vascular Access products are:
•Jelco® safety and conventional peripheral IV catheters and sharps safety devices for hypodermic injection, designed to help prevent accidental needlestick injury;
•Safe-T Wing® venipuncture and blood collection devices;
•Port-A-Cath® implantable ports;
•Portex® arterial blood sampling syringes;
•PowerWand® midline catheters; and
•Cleo® subcutaneous infusion catheters and sets.
Tracheostomy
Our tracheostomy products are used in the placement of a secure airway using both surgical and percutaneous insertion techniques. Our primary Tracheostomy products are:
•Portex BLUselect® PVC tracheostomy tubes, which feature an inner cannula as well as a Suctionaid option for above the cuff suctioning and vocalization capability;
•Portex Bivona® silicone tracheostomy tubes, which offer the added benefits of comfort and mobility and come in a variety of configurations suited to meet the clinical needs of neonatal through adult patients; and
•Portex BLUperc® percutaneous insertion kits, which allow for safe placement of the tracheostomy tube at the bedside.
Infusion Systems
We offer a comprehensive portfolio of infusion pumps, dedicated IV sets, software and professional services to meet the wide range of infusion needs. Our primary Infusion System products are:
Large Volume Pump ("LVP") Hardware:
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•Plum Duo™ and Plum Solo™ precision infusion pumps, which recently received FDA 510(k) clearance during April 2025, are a new category of precision pumps that bring unprecedented accuracy and unmatched usability in a flexible, clinician-friendly single or dual channel design, capable of delivering up to four compatible medications through a single pump (dual channel). These pumps provide ±3% delivery accuracy, regardless of the placement of the medication bag or pump, or positioning of the patient. Designed with clinical efficiency in mind, Plum precision pumps simplify workflows with fewer alarm and setup burdens, smarter guidance, and more focused care. The pumps feature vibrant high-definition displays that provide clear, critical information at a glance. Combined with LifeShield™ IV safety software, Plum precision pumps are fully IV-EHR interoperable and provide a future-ready platform to enhance safety and efficiency across all IV touchpoints.
•Plum 360™ infusion pumps feature the unique Plum cassette system that helps to enhance patient safety and workflow efficiency. PlumSet™ dedicated IV sets include an air trap to help minimize interruptions and a direct connection to the secondary line that eliminates the risk of common setup errors and enables concurrent delivery of two compatible medications through a single line. Plum 360 has been named Best in KLAS for eight years in a row (2018, 2019, 2020, 2023 – Best in KLAS Smart Pump Traditional; 2021, 2022, 2023, 2024, 2025 Best in KLAS Smart Pump EMR Integrated) and was the first medical device to be awarded UL Cybersecurity Assurance Program Certification.
Ambulatory Infusion Hardware:
•CADD™ ambulatory infusion pumps and disposables, including administration sets and medication cassette reservoirs, serve as a single pain management platform across all types of IV pain management therapies and all clinical care areas from the hospital to outpatient treatment.
Syringe Infusion Hardware:
•Medfusion™ syringe infusion pumps are designed for the administration of fluids and medication to address the needs of the most vulnerable patients requiring precisely controlled infusion rates. Focused on delivery accuracy, the Medfusion 4000 can deliver from a comprehensive portfolio of syringes to meet syringe pump guidance to deliver medication from the smallest syringe size possible.
IV Medication Safety Software:
•LifeShield™ infusion safety software for Plum precision pumps (Plum Solo, Plum Duo) is an enterprise-wide platform designed with the input of pharmacists, nurses and administrators to empower health systems to raise the bar in IV performance. The system’s hybrid architecture provides cloud-based functionality to allow access anywhere with on-premise management providing security and control.
•ICU Medical MedNet™ software is an enterprise-class medication management platform that can help reduce medication errors, improve quality of care, streamline workflows and maximize revenue capture. ICU Medical MedNet connects our industry-leading Plum 360 smart pumps to a hospital’s electronic health record ("EHR"), asset tracking systems, and alarm notification platforms to further enhance infusion safety and efficiency.
•PharmGuard™ medication safety software for Medfusion 4000 syringe and CADD-Solis™ pumps allows for customized drug libraries to support the standardization of protocols for medication administration throughout the facility.
Professional Services:
•In addition to the products above, our teams of clinical and technical experts work with customers to develop
safe and efficient infusion systems, providing customized and personalized configuration, implementation,
and data analytics services to optimize our infusion hardware and software.
Vital Care
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Our Vital Care business unit includes IV Solutions, Hemodynamic Monitoring, General Anesthesia and Respiratory, Temperature Management Solutions and Regional Anesthesia/Pain Management products.
IV Solutions
On May 1, 2025, at the closing of our transaction with OPF (as defined below), we transferred certain interests, including our IV Solutions product line, to OPF. See "Disposition of our IV Solutions Business and Prepayment of a portion of our Long-term Obligations" further below for more information on this transaction. In connection with the formation of the joint venture, we sell and distribute IV Solutions products to customers on behalf of the joint venture.
The IV Solutions products include a broad portfolio of injection, irrigation, nutrition and specialty IV solutions including:
•IV Therapy and Diluents, including Sodium Chloride, Dextrose, Balanced Electrolyte Solutions, Lactated Ringer's, Ringer's, Mannitol, Sodium Chloride/Dextrose and Sterile Water.
•Irrigation, including Sodium Chloride Irrigation, Sterile Water Irrigation, Physiologic Solutions, Ringer's Irrigation, Acetic Acid Irrigation, Glycine Irrigation, Sorbitol-Mannitol Irrigation, Flexible Containers and Pour Bottle Options.
Hemodynamic Monitoring
Our Hemodynamic Monitoring products are designed to help clinicians get accurate real-time access to patients’ hemodynamic and cardiac status with an extensive portfolio of monitoring systems and advanced sensors & catheters. Measurements provided by our systems help clinicians determine how well the heart is pumping blood and how efficiently oxygen from the blood is being used by the tissues. Our Hemodynamic Monitoring products include:
•Cogent™ 2-in-1 hemodynamic monitoring system;
•CardioFlo™ hemodynamic monitoring system;
•TDQ™ and OptiQ™ cardiac output monitoring catheters;
•TriOxTM venous oximetry catheters;
•Transpac™ blood pressure transducers;
•SafeSet™ closed blood sampling and conservation system; and
•MEDEX® LogiCal® Pressure Monitoring System and components.
General Anesthesia & Respiratory
We offer a broad range of anesthesia systems and devices and breathing circuits, ventilation, respiratory and specialty airway products that maintain patients’ airways before, during and after surgery. Our primary Anesthesia & Respiratory products are:
•Portex® acapella® bronchial hygiene products used to mobilize pulmonary secretions to facilitate the opening of airways in patients with chronic respiratory diseases such as chronic obstructive pulmonary disease, or COPD, asthma and cystic fibrosis.
Temperature Management Solutions
Temperature Management solutions systems are used in perioperative and critical care settings to help monitor and regulate patient temperature. Our primary Temperature Management products include:
•Level 1® rapid infusion, fluid warming, routine blood and fluid warming, irrigation fluid warming, convective patient warming and temperature probes.
Regional Anesthesia/Pain Management Trays
We offer a comprehensive range of Portex® regional anesthesia/pain management trays and components. Our primary products include:
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•Epidural Trays;
•Spinal Trays;
•Combined (CSE) Trays;
•Peripheral Nerve Block Trays; and
•Specialty Trays (Lumbar Puncture, Amniocentesis, Myelogram).
In the U.S. a substantial amount of our products are sold to group purchasing organization member hospitals. We believe that as healthcare providers continue to either consolidate or join major buying organizations, the success of our products will depend, in part, on our ability, either independently or through strategic relationships, to secure long-term contracts with large healthcare providers and major buying organizations.
Global Economic Challenges
In recent years, we have experienced, and may continue to experience, significant impacts to our business as a result of global economic challenges, resulting from, among other events, health pandemics and geopolitical conflicts which have resulted in fluctuating inflation rates, especially with respect to freight costs driven by higher fuel prices, increased cost and shortages of raw materials, supply chain disruptions, higher interest rates and volatility on foreign currency exchange rates.
2025 Events
The U.S. administration has continued to engage in trade discussions and impose tariffs on imports from other countries. Certain of these tariffs have been subsequently paused or modified, and the situation remains highly fluid. For example, most recently, on July 31, 2025, the U.S. announced that the 10% baseline reciprocal tariff on imports from all countries would be raised to 15% for certain countries, including Costa Rica.
A meaningful portion of our global revenues are from products manufactured in our Costa Rica and Mexico manufacturing facilities and imported into the U.S. Currently the majority of products manufactured in our Mexico facilities are exempted from tariffs under the United States-Mexico-Canada Agreement ("USMCA"). If, however, the USMCA exemptions were eliminated in the future, our tariff expense for products manufactured in Mexico would increase substantially. The tariffs as currently implemented are likely to have a material impact on our business, financial condition and results of operations through the incurrence of additional costs; however, the extent to which the imposition of tariffs, possible delays and exemptions may have a material impact remains fluid. During the third quarter of 2025, we incurred $10.9 million in incremental reciprocal tariffs as a result of the tariffs imposed by the U.S. Administration in 2025, of which $1.6 million was capitalized and $9.3 million was expensed.
In September 2025, the U.S. Commerce Department (the "Department") initiated a national security investigation into imports of medical consumables and equipment under Section 232 of the Trade Expansion Act (the "Act"). The Act allows the President to negotiate tariffs to promote international trade. Section 232 of the Act specifically grants the President the authority to impose tariffs if the Department determines imports threaten U.S. national security. The Department has 270 days to deliver its policy recommendations to the President, who then has up to 90 days to decide on potential action and 15 days to implement it. If the probes conducted determine these imports, which comprise the vast majority of our product portfolio, pose a national security risk, it could result in potential tariffs imposed in addition to the country-based tariffs and/or could reduce the benefits we receive from currently available exemptions such as the USMCA.
Based on current geopolitical conditions we expect foreign currency rates, freight costs, oil prices, interest rates, and general inflation to remain subject to volatility in the market.
While we continually monitor the ongoing and evolving impact of the above events on our operations the overall impact remains uncertain and may not be fully reflected in our results of operations until future periods. The overall impact to our results of operations will depend on a number of factors, many of which are out of our control, none of which can be fully predicted at this time. See "Part I. Item 1A. Risk Factors" in our 2024 Annual Report on Form 10-K as updated in this Quarterly Report on Form 10-Q for a discussion of risks and uncertainties.
Disposition of our IV Solutions Business and Prepayment of a portion of our Long-term Obligations
On April 24, 2025, pursuant to a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc. a Delaware corporation ("OPF") (described in Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements), we completed the formation of Otsuka ICU Medical LLC (the "joint venture") and transferred the assets, liabilities and operations that comprise our IV Solutions product line to the joint venture. At the
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closing of the transaction on May 1, 2025, under the Agreement, we sold a 60% interest in the joint venture to OPF. The total sales price, inclusive of our final purchase price adjustments, was $211.2 million, of which we used $200.0 million of the proceeds from the sale to pay down a portion of our outstanding Term Loan A (as defined below) long-term debt during the second quarter of 2025.
Consolidated Results of Operations
We present income statement data in Part I, Item 1. "Financial Statements." The following table shows, for the three and nine months ended September 30, 2025 and 2024, the percentages of each income statement caption in relation to total revenue:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Total revenues | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Gross profit | 37 | % | 35 | % | 37 | % | 34 | % | |||||||||||||||
| Selling, general and administrative expenses | 28 | % | 28 | % | 28 | % | 27 | % | |||||||||||||||
| Research and development expenses | 4 | % | 4 | % | 4 | % | 4 | % | |||||||||||||||
| Restructuring, strategic transaction and integration expenses | 2 | % | 3 | % | 3 | % | 3 | % | |||||||||||||||
| Change in fair value of contingent earn-out | — | % | (1) | % | — | % | — | % | |||||||||||||||
| Total operating expenses | 34 | % | 34 | % | 35 | % | 34 | % | |||||||||||||||
| Income from operations | 3 | % | 1 | % | 2 | % | — | % | |||||||||||||||
| Interest expense, net | (4) | % | (4) | % | (4) | % | (4) | % | |||||||||||||||
| Other income (expense), net | — | % | — | % | — | % | — | % | |||||||||||||||
| Gain on sale of business | 1 | % | — | % | 3 | % | — | % | |||||||||||||||
| Income (Loss) before income taxes and equity in (losses) earnings of unconsolidated affiliates | — | % | (3) | % | 1 | % | (4) | % | |||||||||||||||
| Benefit (Provision) for income taxes | — | % | (3) | % | — | % | (1) | % | |||||||||||||||
| Net (loss) income from consolidated companies | — | % | (6) | % | 1 | % | (5) | % | |||||||||||||||
Seasonality/Quarterly Results
There are no significant seasonal aspects to our business. We can experience fluctuations in net sales as a result of variations in the ordering patterns of our largest customers, which may be driven more by production scheduling and customer inventory levels, and less by seasonality. Our expenses often do not fluctuate in the same manner as net sales, which may cause fluctuations in operating income that are disproportionate to fluctuations in our revenue.
Non-GAAP Financial Measures
In addition to comparing changes in revenue on a U.S. GAAP basis, we also compare the changes in revenue from one period to another using constant currency. The presentation of revenues on a constant currency basis is a non-GAAP financial measure that excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods. We provide constant currency information to enhance the visibility of underlying business trends, excluding the effects of changes in foreign currency translation rates. We believe this information is useful to investors to facilitate comparisons and better identify trends in our business. Our constant currency revenues reflect current period local currency revenues at prior period's average exchange rates. We consistently apply this approach to revenues for all currencies where the functional currency is not the U.S. dollar. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Revenues on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
Consumables
The following table summarizes our total Consumables revenue (in millions, except percentages):
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| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Consumables revenue (GAAP) | $ | 285.1 | $ | 264.9 | $ | 20.2 | 7.6 | % | $ | 824.4 | $ | 770.7 | $ | 53.7 | 7.0 | % | |||||||||||||||||||||||||||||||
| Impact of foreign currency exchange rate changes | (2.8) | (2.4) | |||||||||||||||||||||||||||||||||||||||||||||
| Consumables revenue on a constant currency basis (non-GAAP) | $ | 282.3 | $ | 822.0 | |||||||||||||||||||||||||||||||||||||||||||
| $ Change in constant currency | $ | 17.4 | $ | 51.3 | |||||||||||||||||||||||||||||||||||||||||||
| % Change in constant currency | 6.6 | % | 6.7 | % | |||||||||||||||||||||||||||||||||||||||||||
Consumables revenue increased for the three and nine months ended September 30, 2025, as compared to the same periods in the prior year, primarily due to new customer installations and increased demand for our Infusion Consumables and Oncology product lines.
Infusion Systems
The following table summarizes our total Infusion Systems revenue (in millions, except percentages):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Infusion Systems (GAAP) | $ | 173.9 | $ | 159.8 | $ | 14.1 | 8.8 | % | $ | 507.9 | $ | 480.7 | $ | 27.2 | 5.7 | % | |||||||||||||||||||||||||||||||
| Impact of foreign currency exchange rate changes | (1.3) | 1.2 | |||||||||||||||||||||||||||||||||||||||||||||
| Infusion Systems on a constant currency basis (non-GAAP) | $ | 172.6 | $ | 509.1 | |||||||||||||||||||||||||||||||||||||||||||
| $ Change in constant currency | $ | 12.8 | $ | 28.4 | |||||||||||||||||||||||||||||||||||||||||||
| % Change in constant currency | 8.0 | % | 5.9 | % | |||||||||||||||||||||||||||||||||||||||||||
Infusion Systems revenue increased for the three and nine months ended September 30, 2025, as compared to the same periods in the prior year, primarily due to increased sales of LVP hardware and dedicated sets.
Vital Care
The following table summarizes our total Vital Care revenue (in millions, except percentages):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Vital Care (GAAP) | $ | 78.0 | $ | 164.5 | $ | (86.5) | (52.6) | % | $ | 358.2 | $ | 500.8 | $ | (142.6) | (28.5) | % | |||||||||||||||||||||||||||||||
| Impact of foreign currency exchange rate changes | (0.9) | (0.8) | |||||||||||||||||||||||||||||||||||||||||||||
| Vital Care on a constant currency basis (non-GAAP) | $ | 77.1 | $ | 357.4 | |||||||||||||||||||||||||||||||||||||||||||
| $ Change in constant currency | $ | (87.4) | $ | (143.4) | |||||||||||||||||||||||||||||||||||||||||||
| % Change in constant currency | (53.1) | % | (28.6) | % | |||||||||||||||||||||||||||||||||||||||||||
Vital Care revenue decreased for the three and nine months ended September 30, 2025, as compared to the same periods in the prior year, primarily due to lower IV Solutions sales resulting from the sale of a controlling ownership interest in our IV Solutions business on May 1, 2025 (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).
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Gross Margins
For the three and nine months ended September 30, 2025, gross margins were 37.4% and 36.6%, respectively, as compared to 34.8% and 34.1% for the three and nine months ended September 30, 2024, respectively. The increases in gross margin for the three and nine months ended September 30, 2025, as compared to the same periods in the prior year, were primarily driven by the impact of the sale of a 60% interest of our IV Solutions business on May 1, 2025, a lower margin business. Gross margin also increased as a result of price increases, the impact of foreign exchange rates, lower supply chain costs and the realization of integration synergies. These improvements were partially offset by an increase in tariff costs of $9.3 million and $14.3 million for the three and nine months ended September 30, 2025.
Selling, General and Administrative (“SG&A”) Expenses
The following table summarizes our total SG&A Expenses (in millions, except percentages):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| SG&A | $ | 152.8 | $ | 162.7 | $ | (9.9) | (6.1) | % | $ | 469.4 | $ | 479.9 | $ | (10.5) | (2.2) | % | |||||||||||||||||||||||||||||||
SG&A expenses decreased for the three months ended September 30, 2025, as compared to the same period in the prior year, primarily due to a decrease of $6.7 million in dealer fees and $2.8 million in depreciation and amortization, which when combined with other smaller category decreases, were mostly offset by an increase of $3.6 million in stock based compensation. Dealer fees and depreciation and amortization expenses decreased primarily due to the disposal of certain assets related to the sale of a 60% interest of our IV Solutions business (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements). Stock based compensation increased due to a change in the probability of meeting certain financial targets related to a performance equity award.
SG&A expenses decreased for the nine months ended September 30, 2025, as compared to the same period in the prior year, primarily due to a decrease of $7.8 million in depreciation and amortization, $6.6 million in dealer fees, $2.9 million in compensation costs, and $2.4 million in bad debt and warranty expense, which when combined with other smaller category decreases, were partially offset by an increase of $6.8 million in stock based compensation, $3.6 million in legal fees, and $3.0 million in professional services. Depreciation and amortization expense and dealer fees decreased primarily due to the disposal of certain assets related to the sale of a 60% interest of our IV Solutions business (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements). Compensation costs decreased primarily due to service fee income recorded in the same line as the related personnel expenses for services provided to the joint venture (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements). Warranty expense decreased due to the release of reserves related to certain products and lower warranty estimated reserve due to lower warranty claims expected. Stock based compensation increased due to a change in the probability of meeting certain financial targets related to a performance equity award. Legal fees increased due to services performed during the current year related to various legal matters. Professional services increased due to increase in audit and consulting fees.
Research and Development (“R&D”) Expenses
The following table summarizes our total R&D Expenses (in millions, except percentages):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| R&D | $ | 21.3 | $ | 21.0 | $ | 0.3 | 1.4 | % | $ | 66.4 | $ | 66.3 | $ | 0.1 | 0.2 | % | |||||||||||||||||||||||||||||||
R&D expenses slightly increased for the three and nine months ended September 30, 2025, as compared to the same period in the prior year, primarily related to higher headcount and employment expense in support of ongoing R&D projects. R&D expenses for both periods presented generally included increased compensation and benefit expenses, consulting fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs incurred in our ongoing R&D projects.
Restructuring, Strategic Transaction and Integration Expenses
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Restructuring, strategic transaction and integration expenses were $13.1 million and $46.1 million for the three and nine months ended September 30, 2025, respectively, as compared to $16.8 million and $50.1 million for the three and nine months ended September 30, 2024, respectively.
Restructuring charges
Restructuring charges were $6.2 million and $21.2 million for the three and nine months ended September 30, 2025, respectively, as compared to $3.6 million and $16.6 million for the three and nine months ended September 30, 2024. The restructuring costs for the three and nine months ended September 30, 2025 were primarily related to facility closure costs and severance costs. The restructuring costs for the three and nine months ended September 30, 2024 were primarily related to severance costs. As of September 30, 2025, we expect to pay the majority of our outstanding restructuring charges during the next twelve months.
Strategic transaction and integration expenses
Strategic transaction and integration expenses were $6.9 million and $24.9 million for the three and nine months ended September 30, 2025, respectively, as compared to $13.2 million and $33.5 million for the three and nine months ended September 30, 2024. The strategic transaction and integration expenses during the three and nine months ended September 30, 2025 and 2024 were primarily related to ongoing consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022. The nine months ended September 30, 2025 also included transaction costs related to the sale of a 60% interest of our IV Solutions business in the second quarter of 2025.
Change in Fair Value of Contingent Earn-out
For the three and nine months ended September 30, 2024, we recorded a gain of $3.9 million and $4.0 million primarily related to adjusting the contingent earn-out related to the Smiths Medical acquisition. As of December 31, 2024, Smiths Medical had sold all of its ownership interest in ICU Medical shares. Smiths Medical no longer holds the shares necessary to meet the minimum beneficial ownership percentage required to earn the contingent earn-out. Accordingly, the Smiths Medical contingent earn-out was adjusted to zero during 2024.
Interest Expense, net
The following table presents interest expense, net (in thousands):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Interest expense | $ | (22,229) | $ | (27,287) | $ | (70,557) | $ | (80,353) | |||||||||||||||
| Interest income | 2,421 | 2,604 | 8,169 | 8,057 | |||||||||||||||||||
| Interest expense, net | $ | (19,808) | $ | (24,683) | $ | (62,388) | $ | (72,296) | |||||||||||||||
Interest expense, net for the three and nine months ended September 30, 2025 and 2024 primarily included the contractual interest incurred on borrowings under the Credit Agreement, as defined below, the per annum commitment fee charged on the available amount of the revolving credit facility contained in the Credit Agreement, the amortization of debt issuance costs incurred in connection with entering into the Credit Agreement (see Note 18: Long-Term Debt in our accompanying condensed consolidated financial statements), the impact of the interest rate swaps, and interest income. Additionally, interest expense for the three and nine months ended September 30, 2025, includes the interest accretion on an unfavorable contract loss provision. The interest expense component decreased for the three and nine months ended September 30, 2025, as compared to the respective prior year periods, primarily due to decreases in the applicable SOFR reference rate and due to lower obligation principal balances after the prepayment of $35 million on our Term Loan B in March 2025 and the prepayment of $200 million on our Term Loan A in May 2025 using the proceeds from the sale of a 60% interest of our IV Solutions business.
Other Income (Expense), net
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The following table presents other income (expense), net (in thousands):
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Foreign exchange gain (loss), net | $ | 1,827 | $ | (1,059) | 1,967 | (5,202) | |||||||||||||||||
| Loss on disposition of assets | (1,458) | $ | (100) | (1,685) | (23) | ||||||||||||||||||
| Other miscellaneous income (expense), net | 238 | (322) | 380 | (1,981) | |||||||||||||||||||
| Other income (expense), net | $ | 607 | $ | (1,481) | $ | 662 | $ | (7,206) | |||||||||||||||
For the three and nine months ended, September 30, 2025, the foreign exchange gains were primarily related to the weakening of the U.S. dollar relative to certain foreign currencies, including the Euro and British Pound, partially offset by the strengthening of the U.S. dollar relative to the Mexico Peso.
For the three and nine months ended September 30, 2024, the foreign exchange losses were primarily related to the strengthening of the U.S. dollar relative to certain foreign currencies, including the Mexican Peso and Argentine Peso.
Gain on Sale of Business
For the three months ended September 30, 2025, we recorded a gain on the sale of business of $3.0 million related to the difference between the fair value of our retained 40% ownership interest in the joint venture and our carrying value of that same proportionate ownership interest. For the nine months ended September 30, 2025, the gain on the sale of business of $44.8 million comprised of the sum of a $45.6 million gain from the disposal of a 60% ownership interest in the joint venture, a $19.4 million gain from the difference between the fair value of our retained 40% ownership interest in the joint venture and our carrying value of that same proportionate ownership interest, and a $20.2 million unfavorable contract loss (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).
Income Taxes
For the three and nine months ended September 30, 2025 and 2024, income taxes were accrued at an estimated effective tax rate of 26% and 25%, respectively, as compared to (84)% and (26)% for the three and nine months ended September 30, 2024, respectively.
The effective tax rate for the three and nine months ended September 30, 2025 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, section 162(m) excess compensation, federal and state valuation allowance, and tax credits. The effective tax rate during the three and nine months ended September 30, 2025 included a discrete tax expense of $0.0 million and $6.1 million, respectively, related to the sale of a 60% interest of our IV solutions business. Additionally, there were unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and nine months ended September 30, 2025 of $0.0 million and $5.0 million, respectively. Furthermore, U.S. return-to-provision adjustments net of related tax reserves for the year ended December 31, 2024 resulted in a tax benefit of $12.0 million for both the three and nine months ended September 30, 2025. The adjustments related primarily to a decrease to the U.S. valuation allowance.
The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company recorded a change to the valuation allowance against certain U.S. federal and state deferred tax assets, resulting in a $1.4 million tax benefit and $2.3 million tax expense during the three and nine months ended September 30, 2025, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses. The Company's ability to use our deferred tax assets depends on the amount of taxable income in future periods. Based on current earnings and anticipated future earnings along with expected changes in our deferred tax asset and liability balances, it is likely that the current valuation allowance position will be adjusted during the year. An additional valuation allowance may be required beyond the current year if future earnings are not sufficient to support the realization of deferred tax assets.
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In December 2022, the European Union (EU) agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold. All of the EU countries and some of the non-EU countries in which we operate have enacted or have announced plans to enact legislation to adopt Pillar Two. The Pillar Two legislation has been effective for our fiscal year beginning January 1, 2024. For fiscal year 2025, we have considered the impact of Pillar Two on our tax provision and effective tax rate. However, the Pillar Two rules continue to evolve and their application may alter our tax obligations in certain countries in which we operate for fiscal periods beyond 2025 as we continue to assess the impact of tax legislation in these jurisdictions.
On July 4, 2025, the U.S. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14", commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements as additional guidance becomes available and uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. The impacts are included in our operating results for the three and nine months ended September 30, 2025, however, we do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025.
The effective tax rate for the three and nine months ended September 30, 2024 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, state income taxes, section 162(m) excess compensation, federal and state valuation allowance, and tax credits. Additionally, there were unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and nine months ended September 30, 2024 of $0.0 million and $4.0 million, respectively. Furthermore, U.S. return-to-provision adjustments net of related tax reserves for the year ended December 31, 2023 resulted in a tax expense of $1.6 million for both the three and nine months ended September 30, 2024. The adjustments related primarily to changes in estimate for the research and development credit and an increase to the U.S. valuation allowance.
The Company recorded an increase in valuation allowance of $22.4 million and $42.9 million against certain U.S. federal and state deferred tax assets during the three and nine months ended September 30, 2024, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses.
Equity in (Losses) Earnings of Unconsolidated Affiliates
For the three and nine months ended September 30, 2025, we recorded equity in (losses) earnings of unconsolidated affiliates of $(1.5) million and $1.3 million, respectively, related to our 40% proportionate share of the earnings of the joint venture (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).
Liquidity and Capital Resources
We regularly evaluate our liquidity and capital resources, including our access to external capital, to assess our ability to meet our principal cash requirements, which include working capital requirements, planned capital investments in our business, commitments, acquisition restructuring and integration expenses, investments in quality systems and quality compliance objectives, payment of interest expense, repayment of outstanding borrowings, income tax obligations and acquisition opportunities in accordance with our growth strategy.
Sources of Liquidity
Our current primary sources of liquidity are cash and cash equivalents, cash flows from our operations including access to borrowing arrangements and cash flows from our accounts receivable purchase program.
Funds generated from operations are held in cash and cash equivalents. During the nine months ended September 30, 2025, our cash and cash equivalents decreased by $8.8 million from $308.6 million at December 31, 2024 to $299.7 million at September 30, 2025. This decrease was primarily due to principal payments made during 2025 consisting of (i) $47.8 million payment on our Term Loan B during the first quarter of 2025 (ii) $200.0 million of the $209.5 million received in cash consideration for the sale of a 60% interest in our IV Solutions business used to pay down a portion of our Term Loan A during the second quarter of 2025 and (iii) $25.0 million payment on Term Loan B during the third quarter of 2025.
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2022 Credit Agreement and Access to Capital
As discussed in Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements, we entered into the Credit Agreement with various lenders on January 6, 2022 in connection with the closing of the Smiths Medical acquisition. The Credit Agreement provides for a five-year term loan A facility of $850.0 million (the "Term Loan A"), a seven-year term loan B facility of $850.0 million (the "Term Loan B") and a five-year revolving credit facility of $500.0 million (the "Revolving Credit Facility") (collectively, the "Senior Secured Credit Facilities"). The proceeds from the term loans were used to finance a portion of the cash consideration for the Smiths Medical acquisition. The outstanding aggregate principal amount of the term loans is $1.3 billion as of September 30, 2025, which includes the Term Loan A that will mature in January 2027 and the Term Loan B that will mature in January 2029. The proceeds of future borrowings under the Revolving Credit Facility, which expires in January 2027, may be used as a source of liquidity to support our ongoing working capital requirements and other general corporate purposes. There are no outstanding borrowings under the Revolving Credit Facility as of September 30, 2025. As part of entering into the Senior Secured Credit Facilities, we were assigned issuer and Term Loan B credit ratings. At the date of issuance of this report, our issuer and Term Loan B credit ratings assigned and outlook were as follows:
| Issuer/Term Loan B Credit Ratings | Outlook | ||||||||||
| Moody's | B1/B1 | Stable | |||||||||
| Fitch | BB/BB+ | Negative | |||||||||
| Standard & Poor's | BB-/BB- | Positive | |||||||||
These credit ratings are not a recommendation by the rating agency to buy, sell, or hold our securities, are subject to revision or withdrawal at any time by the rating agency and should be evaluated independently of any other credit rating we may receive. In addition, credit rating agencies review their ratings periodically, and there is no guarantee our current credit rating will remain the same as described above. If our credit rating were to be lowered, our ability to access the debt markets, our cost of funds, and other terms for new incurrence of debt could be adversely impacted.
The Credit Agreement contains financial covenants that pertain to the Term Loan A and the Revolving Credit Facility. Specifically, we were required to maintain a Senior Secured Leverage Ratio of no more than 4.00 to 1.00 and an Interest Coverage Ratio of no less than 3.00 to 1.00 (defined and discussed in greater detail in Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements). We were in compliance with these financial covenants as of September 30, 2025.
In January 2023, we entered into a receivables purchase agreement with Bank of the West, which was subsequently acquired by BMO Bank, N.A. ("BMO") in February 2023. This agreement accelerates our access to capital, which we utilize on an as needed basis (see Note 22: Accounts Receivable Purchase Program).
We believe that our existing cash and cash equivalents along with cash flows expected to be generated from future operations, the funds received and accessible under the Senior Secured Credit Facilities and funds received under the accounts receivable program will provide us with sufficient liquidity to finance our cash requirements for the next twelve months and the foreseeable future. In the event that we experience downturns, cyclical fluctuations in our business that are more severe or longer than anticipated, fail to achieve anticipated revenue and expense levels, or have significant unplanned cash expenditures, we may need to obtain or seek alternative sources of capital or financing, and we can provide no assurances that the terms of such capital or financing will be available to us on favorable terms, if at all. Our ability to generate cash flows from operations, issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers, deterioration in our key financial ratios or credit ratings or other significantly unfavorable changes in economic conditions. See Part I. Item 1A. "Risk Factors” in our 2024 Annual Report on Form 10-K for discussion of the risks and uncertainties associated with our debt financing.
Uses of Liquidity
Capital Expenditures
As of September 30, 2025, our range for estimated 2025 planned capital expenditures is $85 million to $95 million, which has been reduced from the previously disclosed $90 million to $110 million range in our 2024 Annual Report on Form 10-K due to the impact of the IV Solutions business disposal.
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Contractual Obligations
Our principal commitments at September 30, 2025 include both short and long-term future obligations.
Operating Leases
We have non-cancelable operating lease agreements where we are contractually obligated for certain lease payment amounts. For more information regarding our operating lease obligations, (see Note 7: Leases to our accompanying condensed consolidated financial statements).
Long-term Debt
Existing Credit Facility
In January 2022, we incurred borrowings under Senior Secured Credit Facilities. Interest payments on the term loans were estimated using an Adjusted Term SOFR rate and an applicable margin of 1.75% for Term Loan A and 2.25% for Term Loan B and the revolver commitment fees were estimated using the rate of 0.25%. The applicable margin rate and commitment fee rate will change from time to time in accordance with a preset pricing grid based on the leverage ratio (see Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements for pricing grids related to the Senior Secured Credit Facilities).
Fiscal 2025 Principal Pre-Payments
During the third quarter of 2025, we made a prepayment of $25.0 million on our Term Loan B. During the second quarter of 2025 we used $200.0 million of the $209.5 million in proceeds received during the quarter from the sale of a 60% interest of our IV Solutions business to prepay Term Loan A principal payments. In the first quarter of 2025, we prepaid $35.0 million in Term Loan B principal payments. Due to these prepayments, there are no principal payments due on Term Loan A until 2027 or on Term Loan B until 2029.
New October 2025 Credit Facility
On October 31, 2025 (the "Closing Date"), we entered into an Amendment No. 2 to our Credit Agreement (the "Amendment"), whereby we refinanced our Term Loan A and our Revolving Credit Facility under our existing Credit Agreement dated as of January 6, 2022 (as amended by Amendment No. 1, dated as of October 5, 2022, the "Existing Credit Agreement" and as further amended by the Amendment, the "Amended Credit Agreement"). The Amended Credit Agreement includes new credit facilities (the "New Credit Facilities") that consists of a $750.0 million senior secured term loan A and a new $500.0 million revolving credit facility (the "New Revolving Facility"). The proceeds from and commitments under the New Credit Facilities were used to (i) repay the outstanding principal amount of the Term Loan A and refinance the existing Revolving Credit Facility (collectively, the "Refinancing") under the Existing Credit Agreement (ii) repay $190.0 million of the outstanding balance of the Term Loan B under the Existing Credit Agreement and (iii) to finance the payment of fees and expenses incurred in connection with the Refinancing. The New Credit Facilities mature five years from the Closing Date, subject to a springing maturity provision under which the New Credit Facilities will mature 91 days prior to the maturity date of the Term Loan B if the maturity date of the Term Loan B is less than 91 days after the scheduled maturity of the New Credit Facilities at that time. This provision could accelerate the maturity of the Term Loan A and New Revolving Facility, requiring earlier repayment. We are monitoring our liquidity position to ensure we can address this potential earlier repayment obligation. See Note 23: Subsequent Event to our accompanying condensed consolidated financial statements for additional details.
The principal repayment obligations, estimated interest payments and revolver commitment fee payments updated to reflect the New Credit Facilities are estimated in the below table*:
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| (in millions) | ||||||||||||||||||||||||||
| Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | |||||||||||||||||||||
| Term Loan A Principal Payments | $ | — | $ | 18.7 | $ | 18.7 | $ | 37.5 | $ | 37.5 | $ | 637.5 | ||||||||||||||
| Term Loan A Interest Payments | 10.1 | 36.8 | 33.7 | 32.6 | 30.7 | 24.0 | ||||||||||||||||||||
| Term Loan B Principal Payments | — | — | — | — | 764.5 | — | ||||||||||||||||||||
| Term Loan B Interest Payments | 12.6 | 44.4 | 42.5 | 42.7 | 0.6 | — | ||||||||||||||||||||
| Revolver Commitment Fee | 0.3 | 1.1 | 1.0 | 1.0 | 1.0 | 0.8 | ||||||||||||||||||||
| $ | 23.0 | $ | 101.0 | $ | 95.9 | $ | 113.8 | $ | 834.3 | $ | 662.3 | |||||||||||||||
*The Term Loan A principal and interest payments in the above table are subject to the springing maturity clause described in Exhibit 10.1 as filed as an exhibit to this Quarterly Report on Form 10-Q.
Other Future Capital Investments
Other future capital investments include restructuring and integration expenses along with spending to support quality systems and quality compliance objectives, which includes acquired field action liabilities. As of September 30, 2025, there have been no material changes to our range of $90 million to $110 million for estimated 2025 other future capital investments previously disclosed in our 2024 Annual Report on Form 10-K.
Contingent Payments
In 2015, legislation was enacted in Italy, which requires medical device companies to make payments to the Italian government if Italy's medical device expenditures for certain years exceeded annual regional expenditure ceilings. Since its enactment, the legislation has been subject to appeals in the Italian court system. In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the Italy Medical Device Payback ("IMDP"). In September 2025, the Italian government enacted a law that allows medical device companies to settle certain historical periods (2015-2018) for 25% of the original assessed value. During the third quarter of 2025, we settled the liability related to the 2015-2018 historical periods and paid $2.5 million. Additionally, we recorded a release of $3.8 million in previously established reserves. The release is included in total revenues in our condensed consolidated statements of operations. See Note 16: Accrued Liabilities to our accompanying condensed consolidated financial statements for details on amounts accrued for potential payments related to the IMDP.
We expect to fund our capital expenditures and contractual obligations with our existing cash and cash equivalents and cash generated from our future operations.
Indemnifications
In the normal course of business, we have agreed to indemnify our officers and directors to the maximum extent permitted under Delaware law and to indemnify customers as to certain intellectual property matters related to sales of our products. There is no maximum limit on the indemnification that may be required under these agreements. Although we can provide no assurances, we have never incurred, nor do we expect to incur, any liability for indemnification.
Historical Cash Flows
Cash Flows from Operating Activities
Our net cash provided by operations for the nine months ended September 30, 2025 was $119.2 million. The changes in operating assets and liabilities included a $3.9 million decrease in accounts receivable and a $23.3 million increase in accounts payable. Offsetting these amounts was a $36.2 million increase in inventories, a $4.7 million increase in prepaid expenses and other current assets, a $7.1 million increase in other assets, $28.9 million decrease in accrued liabilities, and $33.5 million in net changes in income taxes, including excess tax benefits and deferred income taxes. The decrease in accounts receivable was primarily due to the amount and timing of revenues. The increase in accounts payable was due to the timing of payments. The increase in inventory was primarily to build inventory safety stock levels and the impact of the capitalization of
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tariffs in our accounting. The increase in prepaid expenses and other current assets was primarily due to an increase in the payment of miscellaneous prepaid invoices. The increase in other assets was due to the purchase of spare parts. The decrease in accrued liabilities was primarily due to payout of annual bonuses and decrease in deferred revenue. The net changes in income taxes was a result of the timing of payments.
Our net cash provided by operations for the nine months ended September 30, 2024 was $163.8 million. The changes in operating assets and liabilities included a $17.5 million increase in other assets, a $11.2 million increase in prepaid expenses and other current assets, a $11.5 million increase in accounts receivable and $4.4 million in net changes in income taxes, including excess tax benefits and deferred income taxes. Offsetting these amounts was a $21.1 million increase in accounts payable, a $20.5 million increase in accrued liabilities and a $9.4 million decrease in inventories. The increase in other assets was due to the purchase of spare parts. The increase in prepaid expenses and other current assets was primarily due to an increase in deferred costs related to infusion pumps sold and the payment of other miscellaneous prepaid invoices. The increase in accounts receivable was primarily due to the amount and timing of revenues and we sold less receivables under our account receivable purchase program (see Note 22: Accounts Receivable Purchase Program). The net changes in income taxes was a result of recording the current deferred provision, the timing of payments, and valuation allowance. The increase in accounts payable was due to the timing of payments. The increase in accrued liabilities was primarily due to employee costs. The decrease in inventory was primarily due to our focus on reducing inventory levels.
Cash Flows from Investing Activities
The following table summarizes the changes in our investing cash flows (in thousands):
| Nine months ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Investing Cash Flows: | ||||||||||||||||||||
| Purchases of property, plant and equipment | $ | (63,397) | $ | (55,292) | $ | (8,105) | (1) | |||||||||||||
| Proceeds from sale of business | 211,185 | — | $ | 211,185 | (2) | |||||||||||||||
| Proceeds from sale of assets | 42 | 695 | (653) | |||||||||||||||||
| Intangible asset additions | (7,210) | (8,317) | 1,107 | |||||||||||||||||
| Proceeds from sale of investment securities | — | 500 | (500) | (3) | ||||||||||||||||
| Net cash provided by (used in) investing activities | $ | 140,620 | $ | (62,414) | $ | 203,034 | ||||||||||||||
_______________________________
(1) Our purchases of property, plant and equipment may vary from period to period based on additional investments needed to support new and existing products and expansion of our manufacturing facilities.
(2) In 2025, we sold a 60% ownership interest in our IV Solutions business to OPF, see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements.
(3) Proceeds from the sale of our investment securities may vary from period to period based on the maturity dates of the investments.
Cash Flows from Financing Activities
The following table summarizes the changes in our financing cash flows (in thousands):
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| Nine months ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| Financing Cash Flows: | ||||||||||||||||||||
| Principal payments on long-term debt | $ | (272,750) | $ | (38,250) | $ | (234,500) | (1) | |||||||||||||
| Proceeds from exercise of stock options | 5,972 | 5,883 | 89 | (2) | ||||||||||||||||
| Payments on finance leases | (1,543) | (775) | (768) | |||||||||||||||||
| Payment of contingent earn-out liability | — | (2,600) | 2,600 | (3) | ||||||||||||||||
| Tax withholding payments related to net share settlement of equity awards | (8,719) | (11,867) | 3,148 | (4) | ||||||||||||||||
| Net cash used in financing activities | $ | (277,040) | $ | (47,609) | $ | (229,431) | ||||||||||||||
_______________________________
(1) Relates to scheduled principal payments and prepayments on the Senior Secured Credit Facilities. In March 2025, we prepaid $35.0 million on our Term Loan B. In May 2025, we used $200.0 million received from the sale of a 60% interest in our IV Solutions business to pay down a portion of our Term Loan A. In September 2025, we prepaid $25.0 million on our Term Loan B.
(2) Proceeds from the exercise of stock options will vary from period to period based on the volume of options exercised and the exercise price of the specific options exercised.
(3) During the first quarter of 2024, we paid $3.4 million in cash related to the settlement of a contingent earn-out to one of our international distributors. Of the $3.4 million, the amount recorded as the acquisition date fair value, which is considered financing cash flows, was $2.6 million (see Note 10: Fair Value Measurements).
(4) During the nine months ended September 30, 2025, our employees surrendered 61,304 shares of our common stock from vested restricted stock unit awards as consideration for approximately $8.7 million in minimum statutory withholding obligations paid on their behalf. During the nine months ended September 30, 2024, our employees surrendered 114,023 shares of our common stock from vested restricted stock unit awards as consideration for approximately $11.9 million in minimum statutory withholding obligations paid on their behalf.
Our common stock purchase plan, which authorized the repurchase of up to $100.0 million of our common stock, was approved by our Board of Directors in August 2019. This plan has no expiration date. As of September 30, 2025, all of the $100.0 million available for purchase was remaining under the plan. We are limited on share purchases in accordance with the terms and conditions of our Credit Agreement (see Note 18: Long-Term Debt in our accompanying condensed consolidated financial statements).
Critical Accounting Policies
In our 2024 Annual Report on Form 10-K, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. There have been no material changes to our critical accounting policies from those previously disclosed in our 2024 Annual Report on Form 10-K.
New Accounting Pronouncements
See Note 2: New Accounting Pronouncements Not Yet Adopted to the accompanying condensed consolidated financial statements.
Item 3.Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
Existing Credit Facility
In connection with the Smiths Medical acquisition on January 6, 2022 we entered into the Senior Secured Credit Facilities totaling approximately $2.2 billion consisting of a variable-rate term loan A facility of $850.0 million, a variable-rate term loan B facility of $850.0 million and a revolving credit facility of $500.0 million. We are exposed to changes in interest rates on all of these variable-rate debt instruments.
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The term loan A facility currently bears interest based on Adjusted Term SOFR plus an applicable margin of 1.75% per year. The term loan B facility currently bears interest based on Adjusted Term SOFR subject to a 0.50% floor plus an applicable margin of 2.25%. We used a sensitivity analysis to measure our interest rate risk exposure. If the SOFR rate increases or decreases 1% from September 30, 2025, the additional annual interest expense or savings related to the existing term loans would amount to approximately $13.2 million before considering any offsetting impacts of our interest rate swaps.
In order to mitigate and offset a portion of this interest rate risk exposure associated with these debt instruments we entered into interest rate swaps to achieve a targeted mix of fixed and variable-rate debt. The term loan A swap has an initial notional amount of $300.0 million, reducing to $150.0 million evenly on a quarterly basis through its final maturity on March 30, 2027 and we will pay a fixed rate of 1.32% and will receive the greater of 3-month USD SOFR or (0.15)%. The term loan B swap has an initial notional amount of $750.0 million, reducing to $46.9 million evenly on a quarterly basis through its final maturity on March 30, 2026 and we will pay a fixed rate of 1.17% and will receive the greater of 3-month USD SOFR or 0.35%. In June 2023, we entered into an additional swap with a notional amount of $300.0 million with a maturity date of June 30, 2028 and we will pay a fixed rate of 3.8765% starting on June 30, 2023 and receive 3-month USD SOFR. See Note 9: Derivatives and Hedging Activities to our accompanying condensed consolidated financial statements.
Foreign Currency Exchange Rate Risk
We transact business globally in multiple currencies, some of which are considered volatile. Our international revenues and expenses and working capital positions denominated in these foreign currencies expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. As the receiver of foreign currencies we are adversely affected by the strengthening of the U.S. dollar and other currencies relative to the operating unit functional currency. Our hedging policy attempts to manage these risks to an acceptable level. We manage our foreign currency exposures on a consolidated basis to take advantage of net exposures and natural offsets, which are then further reduced by the gains and losses of our hedging instruments. Gains and losses on the hedging instruments offset gains and losses on the hedged forecasted transactions and reduce the earnings volatility related to foreign exchange, however we do not hedge our entire foreign exchange exposure and are still subject to earnings volatility due to foreign currency exchange rate risk.
Our foreign currency exchange forward contracts hedge a portion of our forecasted foreign currency-denominated revenues and expenses (principally U.S. Dollar, Euros, Mexican Pesos, Czech Koruna, Japanese Yen, Swedish Krona, Danish Krone, Canadian Dollar, Australian Dollar, and Chinese Renminbi) that differ from the functional currency of the operating unit. These derivative contracts are designated and qualify as cash flow hedges (see Note 9: Derivatives and Hedging Activities to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q). We performed a sensitivity analysis to estimate changes in the fair value of our foreign exchange derivatives due to potential changes in near-term foreign currency exchange rates. At September 30, 2025, the effect of a hypothetical 10% weakening in the actual foreign currency exchange rates used for the applicable currencies would result in an estimated increase in the fair value of these outstanding derivative contracts by approximately $4.5 million.
Item 4.Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the
desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there
are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible
controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of the end of the period covered by this Quarterly Report. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.
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Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1.Legal Proceedings
Certain legal proceedings in which we are involved are discussed in Part I, Item 1. "Financial Statements" of this Form 10-Q in Note 20. Commitments and Contingencies to the Condensed Consolidated Financial Statements.
Item 1A.Risk Factors
In evaluating an investment in our common stock, investors should consider carefully, among other things, the risk factors previously disclosed in Part I, Item 1A of our 2024 Annual Report on Form 10-K, as well as the information contained in this Quarterly Report, in each case, as updated by our other filings with the SEC. There have been no material changes to the risk factors disclosed in Part I, Item 1A of our 2024 Annual Report on Form 10-K, except as set forth below.
We derive a significant portion of our revenues from non-U.S. sales and from products manufactured at our non-U.S. facilities which are then imported to the U.S. We are therefore subject to risks of doing business in other countries, including those related to tariffs, retaliatory counter measures and further escalation of trade tensions.
The imposition of tariffs by the U.S. government and retaliatory tariffs imposed by other foreign governments is expected to increase our costs. Where possible, we may address increasing supply chain costs in pricing; however, we operate to a large extent under long-term contracts whereby pricing is fixed for a set period of time. The tariffs as currently implemented are likely to have a material impact on our business, financial condition and results of operations; however, the extent to which the imposition of tariffs, possible delays and exemptions may have a material impact remains fluid.
Additionally, the imposition of higher tariffs could undermine the competitiveness of a U.S. based company in the global market and could result in termination of orders by customers, lower demand for products and the loss of market share.
A meaningful portion of our global revenues is from products manufactured in our Costa Rica and Mexico manufacturing facilities which are then imported into the U.S. We expect revenues from goods manufactured in Costa Rica and Mexico and imported to the U.S. to remain a significant portion of our revenues for the foreseeable future.
The U.S. administration has continued to engage in trade discussions and impose tariffs on imports from other countries. Certain of these tariffs have been subsequently paused or modified, and the situation remains highly fluid. For example, most recently, on July 31, 2025, the U.S. announced that the 10% baseline reciprocal tariff on imports from all countries would be raised to 15% for certain countries, including Costa Rica. As to the majority of products manufactured in our Mexico facilities, these are currently exempted from tariffs under the United States-Mexico-Canada Agreement ("USMCA"). If, however, the USMCA exemptions were eliminated in the future, our tariff expense for products manufactured in Mexico would increase substantially.
In September 2025, the U.S. Commerce Department ("the Department") initiated a national security investigation into imports of medical consumables and equipment under Section 232 of the Trade Expansion Act (the "Act"). The Act allows the President to negotiate tariffs to promote international trade. Section 232 of the Act specifically grants the President the authority to impose tariffs if the Department determines imports threaten U.S. national security. The Department has 270 days to deliver its policy recommendations to the President, who then has up to 90 days to decide on potential action and 15 days to implement it. If the probes conducted determine these imports, which comprise the vast majority of our product portfolio, pose a national security risk, it could result in potential tariffs imposed in addition to the country-based tariffs and/or could reduce the benefits we receive from currently available exemptions such as the USMCA.
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These actions have resulted, and are expected to further result, in retaliatory measures on U.S. goods by other foreign governments. If maintained, these recently announced tariffs, and the potential escalation of trade disputes could pose a risk to our business that could further affect our financial condition or results of operations and/or cash flows, as well as, our long-term investment strategies. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and are expected to be impacted by various factors, such as negotiations between U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that already exist or may be granted, availability and cost of alternative sources of our products and materials, and our ability to offset the effects of any tariffs that might be imposed.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Purchase of Equity Securities
The following is a summary of our stock repurchasing activity during the third quarter of 2025:
| Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of a publicly announced program | Approximate dollar value of shares that may yet be purchased under the program(1) | ||||||||||||||||||||||
| 07/01/2025 — 07/31/2025 | — | $ | — | — | $ | 100,000,000 | ||||||||||||||||||||
| 08/01/2025 — 08/31/2025 | — | $ | — | — | $ | 100,000,000 | ||||||||||||||||||||
| 09/01/2025— 09/30/2025 | — | $ | — | — | $ | 100,000,000 | ||||||||||||||||||||
| Third quarter of 2025 total | — | $ | — | — | $ | 100,000,000 | ||||||||||||||||||||
____________________________
(1) Our common stock purchase plan, which authorized the repurchase of up to $100.0 million of our common stock, was authorized by our Board of Directors and publicly announced in August 2019. This plan has no expiration date. We are not obligated to make any purchases under our stock purchase program. Subject to applicable state and federal corporate and securities laws and any restrictions on share purchases under our debt agreements, purchases under a stock purchase program may be made at such times and in such amounts as we deem appropriate. Purchases made under our stock purchase program can be discontinued at any time we feel additional purchases are not warranted. We are limited on share purchases in accordance with the terms and conditions of our Credit Agreement (see Note 18: Long-Term Debt in our accompanying condensed consolidated financial statements).
Item 5. Other Information
(a) Credit Agreement
On October 31, 2025 (the "Closing Date"), ICU Medical, Inc. (the "Company"), as Borrower, entered into an Amendment No. 2 to the Credit Agreement (the "Amended Credit Agreement") by and among ICU Medical, Inc., as Borrower, certain subsidiaries of the Company party thereto, as guarantors, the lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, and certain other financial institutions, to amend the Credit Agreement dated as of January 6, 2022 (as amended by Amendment No. 1, dated as of October 5, 2022) (the "Existing Credit Agreement"). Terms not defined shall have the meanings ascribed to them in the Amended Credit Agreement. The Amended Credit Agreement includes new credit facilities (the "New Credit Facilities") in an aggregate principal amount of $1.3 billion, and such New Credit Facilities consist of:
(a) New Revolving Credit Facility (the "New Revolving Credit Facility") in the aggregate principal amount of $500.0 million.
(b) New Term Loan A Facility (the "New Term Loan A Facility") in an aggregate principal amount of $750.0 million.
On the Closing Date, we drew down $750.0 million of the New Term Loan A Facility and did not draw down any amounts under the New Revolving Credit Facility. The proceeds from and commitments under the New Credit Facilities,
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plus cash on hand of the Borrower, were used to (a) repay the outstanding principal amount of the Term Loan A and refinance the existing Revolving Credit Facility under the Existing Credit Agreement, (b) repay a portion of the outstanding balance of the Term Loan B (the "Tranche B Term Loan Repayment") under the Existing Credit Agreement, and (c) to finance the payment of fees and expenses incurred in connection with the Refinancing.
The final maturities of the New Credit Facilities will occur on the fifth anniversary of the Closing Date, subject to a springing maturity provision under which the New Credit Facilities will mature 91 days after the scheduled maturity of the New Credit Facilities at that time.
The interest rates and fees under the New Credit Facilities are the same as the existing credit facility under the Existing Credit Agreement, except no credit spread adjustment is applicable to the New Credit Facilities. The applicable Interest Margins and the Commitment Fee with respect to the New Revolving Credit Facility and the New Term Loan A Facility is based on the following pricing grid:
| Leverage Ratio | Applicable Margin for Eurocurrency Rate Loans and RFR Loans | Applicable Margin for Base Rate Loans | Commitment Fee Rate | ||||||||
| Greater than 4.00 to 1.0 | 2.25% | 1.25% | 0.35% | ||||||||
| Less than or equal to 4.00 to 1.0 but greater than 3.00 to 1.0 | 2.00% | 1.00% | 0.30% | ||||||||
| Less than or equal to 3.00 to 1.0 but greater than 2.50 to 1.0 | 1.75% | 0.75% | 0.25% | ||||||||
| Less than or equal to 2.50 to 1.0 but greater than 2.00 to 1.0 | 1.50% | 0.50% | 0.20% | ||||||||
| Less than or equal to 2.00 to 1.0 but greater than 1.75 to 1.0 | 1.25% | 0.25% | 0.15% | ||||||||
| Less than or equal to 1.75 to 1.0 | 1.00% | —% | 0.10% | ||||||||
The Amended Credit Agreement contains affirmative and negative covenants, including certain financial covenants. The negative covenants include restrictions regarding the incurrence of liens and indebtedness, certain merger and acquisition transactions, asset sales and other dispositions, other investments, dividends, share purchases and payments affecting subsidiaries, changes in nature of business, fiscal year or organizational documents, prepayments and redemptions of subordinated and other junior debt, transactions with affiliates, and other matters.
The New Credit Facilities are subject to certain financial covenants, which include (i) a new Maximum Secured Net Leverage Ratio of 4.50 to 1.00, tested at the end of each quarter, with a step-down to 4.00 to 1.00 starting with the quarter ending June 30, 2027; provided that in the event the Borrower or its restricted subsidiaries consummate a material acquisition, the Borrower may elect (on no more than one occasion) to cause the Secured Net Leverage Ratio financial covenant level set forth above to be increased by 0.50x for each of the four fiscal quarters ending immediately after the consummation of such material acquisition, and (ii) a Minimum Interest Coverage Ratio of 3.00 to 1.00, which remains unchanged from the Existing Credit Agreement.
The above summary of the Amended Credit Agreement is not complete. The complete text of the Amended Credit Agreement is attached as Exhibit 10.1 to this Quarterly Report on Form 10-Q and incorporated herein by reference.
All outstanding borrowings under the Existing Credit Agreement related to the Tranche A Term Loans were paid in full, and a portion of the outstanding borrowings under the Existing Credit Agreement related to the Tranche B Term Loans were paid from proceeds of the New Credit Facilities. The financings under the Term Loan A and Term Loan B of the Existing Credit Agreement were scheduled to mature on January 6, 2027 and January 6, 2029, respectively. There were no penalties paid as a result of the early termination.
(b) None.
(c) During the three months ended September 30, 2025, none of the Company's directors or "officers" (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" intended to
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satisfy the affirmative defense of Rule 10b5-1(c) or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits
| Exhibit Number | Exhibit Description | Filed/ Furnished Herewith | |||||||||
2.1 | Share Sale and Purchase Agreement, dated September 8, 2021, by and between Smiths Group International Holdings Limited, a private limited company incorporated in England and Wales, and ICU Medical, Inc., a Delaware corporation. Filed as an Exhibit to Registrant's Current Report on Form 8-K filed on September 8, 2021 (File No. 001-34634). | ||||||||||
2.2 | Put Option Deed from ICU Medical, Inc., a Delaware corporation to Smiths Group International Holdings Limited, a private limited company incorporated in England and Wales. Filed as an Exhibit to Registrant's Current Report on Form 8-K filed on September 8, 2021 (File No. 001-34634). | ||||||||||
2.3† | Purchase Agreement, dated November 12, 2024, by and between ICU Medical, Inc., a Delaware corporation, ICU Medical Sales, Inc., a Delaware corporation and Otsuka Pharmaceutical Factory America, Inc., a Delaware corporation. Filed as an Exhibit to Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, filed on November 12, 2024 (File No. 001-34634). | ||||||||||
3.1 | Registrant's Certificate of Incorporation, as amended and restated. Filed as an Exhibit to Registrant's Current Report on Form 8-K filed on June 10, 2014 (File No. 001-34634). | ||||||||||
3.2 | Registrant's Bylaws, as amended and restated. Filed as an Exhibit to Registrant's Current Report on Form 8-K filed on November 3, 2023 (File No. 001-34634). | ||||||||||
10.1† | Amendment No. 2, dated as of October 31, 2025, to the Credit Agreement, dated as of January 6, 2022, as amended by Amendment No. 1, dated as of October 31, 2025, among ICU Medical, Inc., as Borrower, the other Loan Parties party thereto, the Lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent | * | |||||||||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | * | |||||||||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | * | |||||||||
32.1 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ** | |||||||||
| 101.INS | XBRL Instance Document - this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | * | |||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | * | |||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | * | |||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | * | |||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | * | |||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | * | |||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | * | |||||||||
* Filed herewith.
** Furnished herewith.
† Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted schedule or similar attachment to the SEC upon request.
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ICU Medical, Inc.
| (Registrant) | ||||||||
| /s/ Brian M. Bonnell | Date: | November 6, 2025 | ||||||
| Brian M. Bonnell | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer and Authorized Officer) | ||||||||
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FAQ
What were ICU Medical (ICUI) Q3 2025 revenues and earnings?
Revenue was $536.99 million and the company reported a net loss of $3.40 million (EPS -$0.14).
How did ICU Medical’s year-to-date 2025 results compare?
For the nine months, revenue was $1.69 billion and net income $16.47 million, including a $44.79 million gain on sale of business.
What changed in ICU Medical’s portfolio in 2025?
On May 1, 2025, ICU sold 60% of its IV Solutions business to OPF for $211.19 million and retained a 40% equity-method interest.
What is ICU Medical’s current debt and cash position?
As of September 30, 2025, cash was $299.73 million and long-term debt was $1.31 billion.
How was Q3 2025 revenue distributed by product line?
Consumables $285.09M, Infusion Systems $173.91M, and Vital Care $77.99M.
What was ICU Medical’s U.S. revenue in Q3 2025?
U.S. revenue was $307.13 million.
How many ICUI shares were outstanding?
Common shares outstanding were 24,686,660 as of October 31, 2025.
Icu Medical
NASDAQ:ICUI
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Nov 12, 2025
[Form 4] ICU MEDICAL INC/DE Insider Trading Activity
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[Form 4] ICU MEDICAL INC/DE Insider Trading Activity
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[8-K] ICU MEDICAL INC/DE Reports Material Event
Sep 15, 2025
[Form 4] ICU MEDICAL INC/DE Insider Trading Activity
Aug 27, 2025
[Form 4] ICU Medical Inc Insider Trading Activity
ICUI Stock Data
3.27B
23.98M
3.14%
113.48%
5.47%
Medical Instruments & Supplies
Surgical & Medical Instruments & Apparatus
United States
SAN CLEMENTE