ICU Medical, Inc. Announces Fourth Quarter and Fiscal Year 2016 Results

March 1, 2017

SAN CLEMENTE, Calif., March 01, 2017 (GLOBE NEWSWIRE) -- ICU Medical, Inc. (Nasdaq:ICUI), a leader in the development, manufacture and sale of innovative medical devices used in infusion therapy, oncology and critical care applications, today announced financial results for the fourth quarter and fiscal year ended December 31, 2016.

Fourth Quarter 2016 Results
Fourth quarter 2016 revenue was $95.7 million, compared to $90.4 million in the same period last year. GAAP net income for the fourth quarter of 2016 was $9.5 million, or $0.54 per diluted share, as compared to GAAP net income of $5.5 million, or $0.33 per diluted share, for the fourth quarter of 2015. Adjusted diluted earnings per share for the fourth quarter of 2016 were $1.20 as compared to $0.96 for the fourth quarter of 2015. Also, adjusted EBITDA was $34.3 million for the fourth quarter of 2016 as compared to $30.1 million for the fourth quarter of 2015.

Full Fiscal Year 2016 Results
Fiscal year 2016 revenue was $379.4 million, compared to $341.7 million in the same period last year. GAAP net income for fiscal year 2016 was $63.1 million, or $3.66 per diluted share, as compared to GAAP net income of $45.0 million, or $2.73 per diluted share, for fiscal year 2015. Adjusted diluted earnings per share for fiscal year 2016 were $4.88 as compared to $3.96 for fiscal year 2015.  Also, adjusted EBITDA was $134.1 million for fiscal year 2016 as compared to $113.9 million for fiscal year 2015.

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, "We are pleased with our revenue, adjusted EBITDA, and adjusted earnings per share results in the fourth quarter. Our growth was driven by continued strength in our Direct Channels for infusion therapy and oncology market segments."

Revenue for the three and twelve months ended December 31, 2016 and 2015 were as follows:

   (dollars in millions)
   Three months ended December 31, 2016  Three months ended December 31, 2015   
Market Segment  Direct  OEM  Total  Direct  OEM  Total  Total Change
Infusion Therapy  $43.5   $25.9   $69.4   $36.7   $28.7   $65.4   $4.0 
Critical Care  13.3   0.1   13.4   13.0      13.0   0.4 
Oncology  9.5   3.2   12.7   7.3   4.3   11.6   1.1 
Other  0.1   0.1   0.2   0.3   0.1   0.4   (0.2)
   $66.4   $29.3   $95.7   $57.3   $33.1   $90.4   $5.3 
   (dollars in millions)
   Year ended December 31, 2016  Year ended December 31, 2015   
Market Segment  Direct  OEM  Total  Direct  OEM  Total  Total Change
Infusion Therapy  $162.5   $110.1   $272.6   $132.6   $112.1   $244.7   $27.9 
Critical Care  53.5   0.1   53.6   54.3      54.3   (0.7)
Oncology  37.6   14.7   52.3   26.9   14.6   41.5   10.8 
Other  0.7   0.2   0.9   1.0   0.2   1.2   (0.3)
   $254.3   $125.1   $379.4   $214.8   $126.9   $341.7   $37.7 

The Company ended the fourth quarter with a strong balance sheet. As of December 31, 2016, cash, cash equivalents and investment securities totaled $445.1 million and working capital was $528.6 million. Additionally, the Company generated operating cash flow of $89.9 million for the fiscal year of 2016.

Fiscal Year 2017 Guidance

For the fiscal year of 2017, the Company expects revenue to be in the range of $1.2 billion to $1.25 billion; adjusted diluted earnings per share to be in the range of $3.55 to $3.90, and adjusted EBITDA to be in the range of $165 million to $175 million.

ICU Medical Conference Call

ICU Medical, Inc. invites you to review the presentation here.

The Company will be conducting a conference call  at 4:30 p.m. EST (1:30 p.m. PST), today, Wednesday, March  1, 2017. The call can be accessed at 800-936-9761, international 408-774-4587, conference ID 72955804. The conference call will be simultaneously available by webcast, which can be accessed by going to the Company's website at, clicking on the Investors tab, clicking on the Webcast icon and following the prompts. The webcast will also be available for replay.

About ICU Medical, Inc.

ICU Medical, Inc. (Nasdaq:ICUI) develops, manufactures and sells innovative medical devices used in vascular therapy, oncology and critical care applications. ICU Medical's product portfolio includes IV smart pumps, sets, connectors, closed transfer devices for hazardous drugs, 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

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 full year 2017 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 continued growth or improving efficiencies, unexpected changes in the Company's arrangements with its largest customers and the Company's ability to meet expectations regarding integration of the Hospira infusion systems business. 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 Information contained in this press release is 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.

(Amounts in thousands, except per share data)
   December 31,
   2016   2015
Cash and cash equivalents  $445,082    $336,164 
Short-term investment securities      41,233 
Accounts receivable, net  56,161    57,847 
Inventories  49,264    43,632 
Prepaid income taxes  11,235    14,366 
Prepaid expenses and other current assets  7,355    7,631 
Assets held for sale      4,134 
Total current assets  569,097    505,007 
PROPERTY AND EQUIPMENT, net  85,696    74,320 
GOODWILL  5,577    6,463 
INTANGIBLE ASSETS, net  22,383    23,936 
DEFERRED INCOME TAXES  21,935    17,099 
TOTAL ASSETS  $704,688    $626,825 
Accounts payable  $14,641    $13,670 
Accrued liabilities  25,896    28,948 
Total current liabilities  40,537    42,618 
LONG-TERM LIABILITIES  1,107    1,476 
DEFERRED INCOME TAXES  1,370    1,372 
INCOME TAX LIABILITY  1,519    1,488 
Convertible preferred stock       
Common stock  1,633    1,608 
Additional paid-in capital  162,828    145,125 
Treasury stock, at cost  (14)    
Retained earnings  516,980    453,896 
Accumulated other comprehensive loss  (21,272)   (20,758)
Total stockholders' equity  660,155    579,871 

(Amounts in thousands, except per share data)
  Year ended December 31,
  2016  2015  2014
Net sales $379,339   $341,254   $308,770 
Other 33   414   490 
TOTAL REVENUE 379,372   341,668   309,260 
COST OF GOODS SOLD 177,974   160,871   157,859 
GROSS PROFIT 201,398   180,797   151,401 
Selling, general and administrative 89,426   83,216   88,939 
Research and development 12,955   15,714   18,332 
Restructuring and strategic transaction 15,348   8,451   5,093 
Gain on sale of building    (1,086)   
Legal settlements    1,798    
Impairment of assets held for sale 728   4,139    
TOTAL OPERATING EXPENSES 118,457   112,232   112,364 
INCOME FROM OPERATIONS 82,941   68,565   39,037 
OTHER INCOME 767   1,134   755 
Income before income taxes 85,164   69,699   39,792 
PROVISION FOR INCOME TAXES (22,080)  (24,714)  (13,457)
NET INCOME $63,084   $44,985   $26,335 
Basic $3.90   $2.84   $1.72 
Diluted $3.66   $2.73   $1.68 
Basic 16,168   15,848   15,282 
Diluted 17,254   16,496   15,647 

(Amounts in thousands, except per share data)
   Three months ended December 31,
   2016   2015
Net sales  $95,680    $90,378 
Other  8    9 
TOTAL REVENUE  95,688    90,387 
COST OF GOODS SOLD  44,928    42,130 
Gross profit  50,760    48,257 
Selling, general and administrative  22,598    22,519 
Research and development  2,654    4,057 
Restructuring and strategic transaction  11,009    5,040 
Impairment of assets held for sale  728    4,139 
Total operating expenses  36,989    35,755 
Income from operations  13,771    12,502 
OTHER INCOME  318    139 
Income before income taxes  14,089    12,641 
NET INCOME  $9,512    $5,463 
Basic  $0.58    $0.34 
Diluted  $0.54    $0.33 
Basic  16,331    16,020 
Diluted  17,563    16,697 

(Amounts in thousands)
   Year ended December 31,
   2016   2015   2014
Net income  $63,084    $44,985    $26,335 
Adjustments to reconcile net income to net cash provided by operating activities:           
Depreciation and amortization  19,050    18,073    19,447 
Provision for doubtful accounts      54    34 
Provision for warranty and returns  559    52    (360)
Stock compensation  15,242    12,827    9,592 
Loss (gain) on disposal of property and equipment  59    (1,106)   8 
Bond premium amortization  1,355    1,670    2,188 
Impairment of assets held for sale  728    4,139     
Bargain purchase gain  (1,456)        
Other  75         
Changes in operating assets and liabilities:           
Accounts receivable  744    (20,515)   4,912 
Inventories  (5,501)   (8,337)   (3,836)
Prepaid expenses and other assets  (3,028)   (1,832)   1,970 
Accounts payable  (463)   3,118    (621)
Accrued liabilities  (1,221)   9,454    2,344 
Income taxes, including excess tax benefits and deferred income taxes  714    1,613    4,327 
Net cash provided by operating activities  89,941    64,195    66,340 
Purchases of property and equipment  (23,361)   (12,984)   (16,604)
Proceeds from sale of assets      3,592    5 
Proceeds from the disposal of assets held for sale, net  3,268         
Intangible asset additions  (1,192)   (951)   (989)
Business acquisitions, net of cash acquired  (2,584)   (56,786)    
Proceeds from sale of business      28,970     
Purchases of investment securities  (118,384)   (56,137)   (93,588)
Proceeds from sale of investment securities  158,534    83,054    89,426 
Net cash provided by (used in) investing activities  16,281    (11,242)   (21,750)
Proceeds from exercise of stock options  17,346    15,042    16,998 
Proceeds from employee stock purchase plan  2,361    2,162    2,485 
Purchase of treasury stock  (17,235)   (1,523)   (5,836)
Net cash provided by financing activities  2,472    15,681    13,647 
Effect of exchange rate changes on cash  224    (8,282)   (8,447)
NET INCREASE IN CASH AND CASH EQUIVALENTS  108,918    60,352    49,790 
CASH AND CASH EQUIVALENTS, beginning of period  336,164    275,812    226,022 
CASH AND CASH EQUIVALENTS, end of period  $445,082    $336,164    $275,812 

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:

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.

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.

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.

Restructuring and strategic transaction: 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.

Gain on sale of building: Occasionally, we may sell certain assets if no longer needed for current operations. We exclude any gains or losses recognized on the sale 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.

Legal settlement: We may incur charges or benefits as well as legal costs related to litigation and other contingencies. We exclude these charges or benefits, when significant as well as the legal costs associated with significant legal matters, because we do not believe they are an indication of our operating performance.

Impairment of assets held for saleWe have excluded the effect of the impairment on assets held for sale in calculating our non-GAAP adjusted EBITDA and non-GAAP adjusted earnings per share.  Impairments on assets no longer used in operations are not reflective of our ongoing business and operating results.

Bargain purchase gain: We may incur a bargain purchase gain on certain acquisitions if the fair market value of the identifiable assets acquired and liabilities assumed, net of deferred taxes exceeds the total consideration paid. We exclude such gains as they are related to acquisitions and have no direct correlation to the operation of our ongoing business.

Adjusted Diluted EPS excludes, net of tax, intangible asset amortization expense, stock compensation expense, restructuring and strategic transaction, gain on sale of building, legal settlement, impairment of assets held for sale and bargain purchase gain, which was tax free. We apply our GAAP consolidated effective tax rate to our non-GAAP financial measures, other than when the underlying item has a materially different tax treatment.

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
(Amounts in thousands, except per share data)
   Adjusted EBITDA
   Q4   Year Ended
  2016  2015  2016  2015
GAAP net income $9,512   $5,463   $63,084   $44,985 
Non-GAAP adjustments:           
Stock compensation expense 3,778   3,522   15,242   12,827 
Depreciation and amortization expense 4,699   4,807   19,050   18,073 
Restructuring and strategic transaction expense 11,009   5,040   15,348   8,451 
Gain on sale of building          (1,086)
Legal settlements          1,798 
Impairment of assets held for sale 728   4,139   728   4,139 
Bargain purchase gain       (1,456)   
Provision for income taxes 4,577   7,178   22,080   24,714 
Total non-GAAP adjustments 24,791   24,686   70,992   68,916 
Adjusted EBITDA $34,303   $30,149   $134,076   $113,901 
   Adjusted diluted earnings per share
   Q4   Year Ended
  2016  2015  2016  2015
GAAP diluted earnings per share $0.54   $0.33   $3.66   $2.73 
Non-GAAP adjustments:           
Stock compensation expense $0.22   $0.21   $0.88   $0.78 
Amortization expense $0.04   $0.04   $0.16   $0.13 
Restructuring and strategic transaction expense $0.63   $0.30   $0.89   $0.51 
Gain on sale of building $   $   $   $(0.07)
Legal settlements $   $   $   $0.11 
Impairment of assets held for sale $0.04   $0.25   $0.04   $0.25 
Bargain purchase gain $   $   $(0.08)  $ 
Estimated income tax impact from adjustments $(0.27)  $(0.17)  $(0.67)  $(0.48)
Adjusted diluted earnings per share $1.20   $0.96   $4.88   $3.96 

ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures - Fiscal Year 2017 Outlook
(In millions, except per share data)
  Low End of Guidance   High End of Guidance
GAAP net income $59    $66 
Non-GAAP adjustments:      
Stock compensation expense 18    18 
Depreciation and amortization expense 62    62 
Provision for income taxes 26    29 
Total non-GAAP adjustments 106    109 
Adjusted EBITDA $165    $175 
GAAP diluted earnings per share $2.89    $3.24 
Non-GAAP adjustments:      
Stock compensation expense $0.86    $0.86 
Amortization expense $0.14    $0.14 
Estimated income tax impact from adjustments $(0.34)   $(0.34)
Adjusted diluted earnings per share $3.55    $3.90 

ICU Medical, Inc.
Scott Lamb, Chief Financial Officer
(949) 366-2183

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