Press Release Details

Press Release Details

ICU Medical, Inc. Announces First Quarter 2020 Results and Updates Fiscal Year 2020 Guidance

May 7, 2020 at 4:05 PM EDT

SAN CLEMENTE, Calif., May 07, 2020 (GLOBE NEWSWIRE) -- ICU Medical, Inc. (Nasdaq:ICUI), a leader in the development, manufacture and sale of innovative medical products used in infusion therapy and critical care applications, today announced financial results for the quarter ended March 31, 2020.

First Quarter 2020 Results

First quarter 2020 revenue was $328.6 million, compared to $330.9 million in the same period last year. GAAP gross profit for the first quarter of 2020 was $121.4 million, as compared to $135.3 million in the same period last year.  GAAP gross margin for the first quarter of 2020 was 37%, as compared to 41% in the same period last year.  GAAP net income for the first quarter of 2020 was $16.8 million, or $0.78 per diluted share, as compared to GAAP net income of $31.0 million, or $1.44 per diluted share, for the first quarter of 2019.  Adjusted diluted earnings per share for the first quarter of 2020 were $1.81 as compared to $2.58 for the first quarter of 2019.  Also, adjusted EBITDA was $63.0 million for the first quarter of 2020 as compared to $77.9 million for the first quarter of 2019.

Adjusted EBITDA and adjusted diluted earnings per share are measures calculated and presented on the basis of methodologies other than in accordance with GAAP. Please refer to the Use of Non-GAAP Financial Information following the financial statements herein for further discussion and reconciliations of these measures to GAAP measures.

Vivek Jain, ICU Medical’s Chief Executive Officer, said, “First quarter results were generally in line with our expectations except for some additional demand within our IV Solutions business due to the COVID-19 pandemic.”

Revenues by product line for the three months ended March 31, 2020 and 2019 were as follows (in millions):

    Three months ended
March 31,
   
Product Line   2020   2019   $ Change
Infusion Consumables   $ 123.5     $ 120.5     $ 3.0  
Infusion Systems   88.4     84.3     4.1  
IV Solutions*   104.3     113.2     (8.9 )
Critical Care   12.4     12.9     (0.5 )
    $ 328.6     $ 330.9     $ (2.3 )
 
*IV Solutions includes $13.5 million and $21.5 million of contract manufacturing to Pfizer for the three months ended March 31, 2020 and 2019, respectively.
 

Fiscal Year 2020 Guidance Update

Due to significant changes in certain foreign currency exchange rates, lower interest rates on cash balances and incremental interest expense from borrowings on the Company’s revolving credit line, the Company is updating its full year 2020 guidance to reflect these impacts and will provide any other updates if necessary on the second quarter conference call consistent with the Company’s historical practice. The Company is revising adjusted EBITDA from a range of $240 million to $260 million to a range of $230 million to $250 million and adjusted earnings per share from a range of $6.50 to $7.20 to a range of $5.95 to $6.65.

Conference Call

The Company will host a conference call to discuss first quarter 2020 financial results, as well as, provide a comprehensive update of the impact of the COVID-19 pandemic on the Company, today at 4:30 p.m. EDT (1:30 p.m. PDT). The call can be accessed at (800) 936-9761, international (408) 774-4587, conference ID 9758925. The conference call will be simultaneously available by webcast, which can be accessed by going to the Company's website at icumed.com, clicking on the Investors tab, clicking on Event Calendar and clicking on the Webcast icon and following the prompts. The webcast will also be available by replay.

About ICU Medical, Inc.

ICU Medical, Inc. (Nasdaq:ICUI) develops, manufactures and sells innovative medical products used in infusion therapy, and critical care applications. ICU Medical's product portfolio includes IV smart pumps, sets, connectors, closed system transfer devices for hazardous drugs, sterile IV solutions, cardiac monitoring systems, along with pain management and safety software technology designed to help meet clinical, safety and workflow goals. ICU Medical is headquartered in San Clemente, California. More information about ICU Medical, Inc. can be found at www.icumed.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as ''will,'' ''expect,'' ''believe,'' ''could,'' ''would,'' ''estimate,'' ''continue,'' ''build,'' ''expand'' or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding the future, including our fiscal year 2020 guidance. These forward-looking statements are based on management's current expectations, estimates, forecasts and projections about the Company and assumptions management believes are reasonable, all of which are subject to risks and uncertainties that could cause actual results and events to differ materially from those stated in the forward-looking statements. These risks and uncertainties include, but are not limited to, decreased demand for the Company's products, decreased free cash flow, the inability to recapture conversion delays or part/resource shortages on anticipated timing, or at all, changes in product mix, increased competition from competitors, lack of growth or improving efficiencies, unexpected changes in the Company's arrangements with its largest customers and the impact of the ongoing COVID-19 pandemic on the Company and our financial results. Future results are subject to risks and uncertainties, including the risk factors, and other risks and uncertainties, described in the Company's filings with the Securities and Exchange Commission, which include those in the Company's most recent Annual Report on Form 10-K and our subsequent filings. Forward-looking statements contained in this press release are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

ICU MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

  March 31,
 2020
  December 31,
 2019
  (Unaudited)   (1)
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 419,557     $ 268,670  
Short-term investment securities 20,115     23,967  
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES 439,672     292,637  
Accounts receivable, net of allowance for doubtful accounts 198,158     202,219  
Inventories 311,604     337,640  
Prepaid income taxes 18,140     15,720  
Prepaid expenses and other current assets 34,601     33,981  
TOTAL CURRENT ASSETS 1,002,175     882,197  
PROPERTY AND EQUIPMENT, net 455,624     456,085  
OPERATING LEASE RIGHT-OF-USE ASSETS 50,430     34,465  
GOODWILL 30,767     31,245  
INTANGIBLE ASSETS, net 206,837     211,408  
DEFERRED INCOME TAXES 21,904     27,998  
OTHER ASSETS 49,242     48,984  
TOTAL ASSETS $ 1,816,979     $ 1,692,382  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
CURRENT LIABILITIES:      
Accounts payable $ 86,348     $ 128,629  
Accrued liabilities 120,009     117,776  
Short-term debt 150,000      
Income tax payable 944     2,063  
TOTAL CURRENT LIABILITIES 357,301     248,468  
CONTINGENT EARN-OUT LIABILITY 17,300     17,300  
OTHER LONG-TERM LIABILITIES 50,041     32,820  
DEFERRED INCOME TAXES 1,985     2,091  
INCOME TAX PAYABLE 14,459     14,459  
COMMITMENTS AND CONTINGENCIES      
STOCKHOLDERS’ EQUITY:      
Convertible preferred stock, $1.00 par value Authorized—500 shares; Issued and outstanding— none      
Common stock, $0.10 par value — Authorized, 80,000 shares; Issued — 20,833 shares at March 31, 2020 and 20,743 shares at December 31, 2019 and outstanding — 20,825 shares at March 31, 2020 and 20,742 shares at December 31, 2019 2,083     2,074  
Additional paid-in capital 665,679     668,947  
Treasury stock, at cost (1,573 )   (157 )
Retained earnings 738,616     721,782  
Accumulated other comprehensive loss (28,912 )   (15,402 )
TOTAL STOCKHOLDERS' EQUITY 1,375,893     1,377,244  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,816,979     $ 1,692,382  
                 
 
(1) December 31, 2019 balances were derived from audited consolidated financial statements.
 

ICU MEDICAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)

  Three months ended
March 31,
  2020   2019
TOTAL REVENUES $ 328,607     $ 330,932  
COST OF GOODS SOLD 207,192     195,629  
GROSS PROFIT 121,415     135,303  
OPERATING EXPENSES:      
Selling, general and administrative 72,305     72,633  
Research and development 10,746     12,823  
Restructuring, strategic transaction and integration 12,307     24,392  
Change in fair value of contingent earn-out     (7,700 )
Contract settlement     2,783  
TOTAL OPERATING EXPENSES 95,358     104,931  
INCOME FROM OPERATIONS 26,057     30,372  
INTEREST EXPENSE (196 )   (133 )
OTHER (EXPENSE) INCOME, net (5,480 )   3,191  
INCOME BEFORE INCOME TAXES 20,381     33,430  
PROVISION FOR INCOME TAXES (3,547 )   (2,432 )
NET INCOME $ 16,834     $ 30,998  
NET INCOME PER SHARE      
Basic $ 0.81     $ 1.51  
Diluted $ 0.78     $ 1.44  
WEIGHTED AVERAGE NUMBER OF SHARES      
Basic 20,780     20,527  
Diluted 21,507     21,551  
           

Use of Non-GAAP Financial Information

This press release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  The non-GAAP financial measures should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.  There are material limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled non-GAAP financial measures used by other companies, including peer companies.  Our management believes that the non-GAAP data provides useful supplemental information to management and investors regarding our performance and facilitates a more meaningful comparison of results of operations between current and prior periods.  We use non-GAAP financial measures in addition to and in conjunction with GAAP financial measures to analyze and assess the overall performance of our business, in making financial, operating and planning decisions, and in determining executive incentive compensation.  The non-GAAP financial measures included in this press release are adjusted EBITDA and adjusted diluted earnings per share ("Adjusted Diluted EPS").

Adjusted EBITDA excludes the following items from net income:

Interest, net:  We exclude interest in deriving adjusted EBITDA as interest can vary significantly among companies depending on a company's level of income generating instruments and/or level of debt.

Stock compensation expense:  Stock-based compensation is generally fixed at the time the stock-based instrument is granted and amortized over a period of several years.  The value of stock options is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control.  The value of our restricted stock awards is determined using the grant date stock price, which may not be indicative of our operational performance over the expense period.  Additionally, in order to establish the fair value of performance-based stock awards, which are currently an element of our ongoing stock-based compensation, we are required to apply judgment to estimate the probability of the extent to which performance objectives will be achieved.  Based on the above factors, we believe it is useful to exclude stock-based compensation in order to better understand our operating performance.

Intangible asset amortization expense:  We do not acquire businesses or capitalize certain patent costs on a predictable cycle.  The amount of purchase price allocated to intangible assets and the term of amortization can vary significantly and are unique to each acquisition.  Capitalized patent costs can vary significantly based on our current level of development activities.  We believe that excluding amortization of intangible assets provides the users of our financial statements with a consistent basis for comparison across accounting periods.

Depreciation expense:  We exclude depreciation expense in deriving adjusted EBITDA because companies utilize productive assets of different ages and the depreciable lives can vary significantly resulting in considerable variability in depreciation expense among companies.

Restructuring, strategic transaction and integration:  We incur restructuring and strategic transaction charges that result from events, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our ongoing business.  Although these events are reflected in our GAAP financial statements, these unique transactions may limit the comparability of our ongoing operations with prior and future periods.

Change in fair value of contingent earn-out:  We exclude the impact of certain amounts recorded in connection with business combinations.  We exclude items that are either non-cash or not normal, recurring operating expenses due to their nature, variability of amounts, and lack of predictability as to occurrence and/or timing.

Product-related charges:  We exclude non-cash product-related charges in determining our non-GAAP financial measures as they may limit the comparability of our ongoing operations with prior and future periods and distort the evaluation of our normal operating performance.

Contract settlement:  Occasionally, we are involved in contract renegotiations that may result in one-time settlements. We exclude these settlements as they have no direct correlation to the operation of our ongoing business.

Write-off of assets: Occasionally, we may write-off certain assets. We exclude the non-cash write-off of these assets in determining our non-GAAP financial measures as they may limit the comparability of our ongoing operations with prior and future periods and distort the evaluation of our normal operating performance.

Taxes:  We exclude taxes in deriving adjusted EBITDA as taxes are deemed to be non-core to the business and may limit the comparability of our ongoing operations with prior and future periods and distort the evaluation of our normal operating performance.

Adjusted Diluted EPS excludes from diluted EPS, net of tax, intangible asset amortization expense, stock compensation expense, restructuring, strategic transaction and integration, change in fair value of contingent earn-out, product-related charges, contract settlement, and write-off of certain assets.  The tax effect on the above adjustments is calculated using the specific tax rate applied to each adjustment based on the nature of the item/or the tax jurisdiction in which the item has been recorded.

From time to time in the future, there may be other items that we may exclude if we believe that doing so is consistent with the goal of providing useful information to investors and management.

The following tables reconcile our GAAP and non-GAAP financial measures:

ICU MEDICAL, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)
(In thousands)

   Adjusted EBITDA
  Three months Ended
March 31,
  2020   2019
GAAP net income $ 16,834     $ 30,998  
       
Non-GAAP adjustments:      
Interest, net (1,102 )   (1,476 )
Stock compensation expense 6,939     6,209  
Depreciation and amortization expense 20,957     19,074  
Restructuring, strategic transaction and integration 12,307     11,716  
Change in fair value of contingent earn-out     (7,700 )
Product-related charges 2,626      
Contract settlement 860     3,973  
Write-off of assets     12,676  
Provision for income taxes 3,547     2,432  
Total non-GAAP adjustments 46,134     46,904  
       
Adjusted EBITDA $ 62,968     $ 77,902  
 


   Adjusted diluted earnings per share
  Three months ended
March 31,
  2020   2019
GAAP diluted earnings per share $ 0.78     $ 1.44  
       
Non-GAAP adjustments:      
Stock compensation expense $ 0.32     $ 0.29  
Amortization expense $ 0.27     $ 0.19  
Restructuring, strategic transaction and integration $ 0.57     $ 0.54  
Change in fair value of contingent earn-out $     $ (0.36 )
Product-related charges $ 0.12     $  
Contract settlement $ 0.04     $ 0.18  
Write-off of assets $     $ 0.59  
Estimated income tax impact from adjustments $ (0.29 )   $ (0.29 )
Adjusted diluted earnings per share $ 1.81     $ 2.58  
 

ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures - Fiscal Year 2020 Outlook (Unaudited)
(In millions, except per share data)

  Low End of Guidance   High End of Guidance
GAAP net income $ 64     $ 79  
       
Non-GAAP adjustments:      
Interest, net 1     1  
Stock compensation expense 22     22  
Depreciation and amortization expense 86     86  
Restructuring, strategic transaction and integration 34     34  
Contract settlement and product-related charges 4     4  
Provision for income taxes 19     24  
Total non-GAAP adjustments 166     171  
       
Adjusted EBITDA $ 230     $ 250  
       
       
       
       
GAAP diluted earnings per share $ 2.97     $ 3.67  
       
Non-GAAP adjustments:      
Stock compensation expense $ 1.04     $ 1.04  
Amortization expense $ 1.06     $ 1.06  
Restructuring, strategic transaction and integration $ 1.57     $ 1.57  
Contract settlement and product-related charges $ 0.20     $ 0.20  
Estimated income tax impact from adjustments $ (0.89 )   $ (0.89 )
Adjusted diluted earnings per share $ 5.95     $ 6.65  
 

CONTACT:
ICU Medical, Inc.
Brian Bonnell, Chief Financial Officer
(949) 366-2183

ICR, Inc.
John Mills, Partner
(646) 277-1254

ICU Medical logo.jpg

Source: ICU Medical, Inc.

Primary Contact

Info Request:
Phone: (949) 366-2183
E-mail: ir@icumed.com