Press Release Details

Press Release Details

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

November 5, 2020 at 4:05 PM EST

SAN CLEMENTE, Calif., Nov. 05, 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 September 30, 2020.

Third Quarter 2020 Results

Third quarter 2020 revenue was $318.6 million, compared to $307.5 million in the same period last year. GAAP gross profit for the third quarter of 2020 was $113.9 million, as compared to $118.6 million in the same period last year. GAAP gross margin for the third quarter of 2020 was 36%, as compared to 39% in the same period last year. GAAP net income for the third quarter of 2020 was $25.0 million, or $1.16 per diluted share, as compared to GAAP net income of $26.6 million, or $1.24 per diluted share, for the third quarter of 2019. Adjusted diluted earnings per share for the third quarter of 2020 were $1.90 as compared to $1.65 for the third quarter of 2019. Also, adjusted EBITDA was $62.2 million for the second quarter of 2020 as compared to $62.6 million for the third 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, “Third quarter results were generally in line with our expectations and reflected improved demand for our products in the U.S.”

Revenues by product line for the three and nine months ended September 30, 2020 and 2019 were as follows (in millions):

    Three months ended
September 30,
      Nine months ended
September 30,
   
Product Line   2020   2019   $ Change   2020   2019   $ Change
Infusion Consumables   $ 116.1     $ 119.8     $ (3.7 )     $ 350.6     $ 358.0     $ (7.4 )
Infusion Systems   88.4     78.9     9.5       267.9     244.5     23.4  
IV Solutions*   101.9     98.2     3.7       295.4     314.0     (18.6 )
Critical Care   12.2     10.6     1.6       36.7     34.2     2.5  
    $ 318.6     $ 307.5     $ 11.1       $ 950.6     $ 950.7     $ (0.1 )

*IV Solutions includes $15.8 million and $44.8 million of contract manufacturing to Pfizer for the three and nine months ended September 30, 2020, respectively, as compared to $16.8 million and $61.3 million for the same periods in the prior year.

Fiscal Year 2020 Guidance Update

The Company is narrowing its 2020 outlook for adjusted EBITDA from a range of $230 million to $250 million to a range of $235 million to $245 million and updating adjusted earnings per share from a range of $5.95 to $6.65 to a range of $6.65 to $7.00.

Conference Call

The Company will host a conference call to discuss third quarter 2020 financial results  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 9959519.  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. 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)

  September 30,
2020
  December 31,
2019
  (Unaudited)   (1)
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 350,993     $ 268,670  
Short-term investment securities 12,544     23,967  
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES 363,537     292,637  
Accounts receivable, net of allowance for doubtful accounts 164,538     202,219  
Inventories 321,961     337,640  
Prepaid income taxes 8,032     15,720  
Prepaid expenses and other current assets 42,071     33,981  
TOTAL CURRENT ASSETS 900,139     882,197  
PROPERTY AND EQUIPMENT, net 456,348     456,085  
OPERATING LEASE RIGHT-OF-USE ASSETS 47,802     34,465  
GOODWILL 32,651     31,245  
INTANGIBLE ASSETS, net 200,428     211,408  
DEFERRED INCOME TAXES 36,373     27,998  
OTHER ASSETS 55,795     48,984  
TOTAL ASSETS $ 1,729,536     $ 1,692,382  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
CURRENT LIABILITIES:      
Accounts payable $ 81,027     $ 128,629  
Accrued liabilities 103,397     117,776  
Income tax payable 935     2,063  
TOTAL CURRENT LIABILITIES 185,359     248,468  
CONTINGENT EARN-OUT LIABILITY 24,300     17,300  
OTHER LONG-TERM LIABILITIES 48,750     32,820  
DEFERRED INCOME TAXES 2,091     2,091  
INCOME TAX PAYABLE 16,816     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 — 20,969 shares at September 30, 2020 and 20,743 shares at December 31, 2019 and outstanding — 20,968 shares at September 30, 2020 and 20,742 shares at December 31, 2019 2,097     2,074  
Additional paid-in capital 683,326     668,947  
Treasury stock, at cost (180 )   (157 )
Retained earnings 782,510     721,782  
Accumulated other comprehensive loss (15,533 )   (15,402 )
TOTAL STOCKHOLDERS' EQUITY 1,452,220     1,377,244  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,729,536     $ 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
September 30,
  Nine months ended
September 30,
  2020   2019   2020   2019
TOTAL REVENUES $ 318,567     $ 307,471     $ 950,553     $ 950,685  
COST OF GOODS SOLD 204,643     188,919     608,930     592,961  
GROSS PROFIT 113,924     118,552     341,623     357,724  
OPERATING EXPENSES:              
Selling, general and administrative 70,854     65,876     210,401     206,333  
Research and development 10,126     12,002     31,151     36,024  
Restructuring, strategic transaction and integration 4,114     7,975     22,903     69,408  
Change in fair value of contingent earn-out 4,300     (200 )   7,000     (47,400 )
Contract settlement (1,000 )       (975 )   3,822  
TOTAL OPERATING EXPENSES 88,394     85,653     270,480     268,187  
INCOME FROM OPERATIONS 25,530     32,899     71,143     89,537  
INTEREST EXPENSE (616 )   (139 )   (1,583 )   (411 )
OTHER INCOME (EXPENSE), net 1,252     (10 )   (2,175 )   4,660  
INCOME BEFORE INCOME TAXES 26,166     32,750     67,385     93,786  
PROVISION FOR INCOME TAXES (1,180 )   (6,187 )   (6,657 )   (13,392 )
NET INCOME $ 24,986     $ 26,563     $ 60,728     $ 80,394  
NET INCOME PER SHARE              
Basic $ 1.19     $ 1.29     $ 2.91     $ 3.90  
Diluted $ 1.16     $ 1.24     $ 2.82     $ 3.73  
WEIGHTED AVERAGE NUMBER OF SHARES              
Basic 20,948     20,666     20,870     20,607  
Diluted 21,556     21,487     21,561     21,556  
                       

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 settlementOccasionally, 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.

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, and contract settlement.  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
September 30,
  2020   2019
GAAP net income $ 24,986     $ 26,563  
       
Non-GAAP adjustments:      
Interest, net (142 )   (1,601 )
Stock compensation expense 6,265     3,723  
Depreciation and amortization expense 21,462     19,187  
Restructuring, strategic transaction and integration 4,114     7,975  
Change in fair value of contingent earn-out 4,300     (200 )
Contract settlement     794  
Provision for income taxes 1,180     6,187  
Total non-GAAP adjustments 37,179     36,065  
       
Adjusted EBITDA $ 62,165     $ 62,628  


       
   Adjusted diluted earnings per share
  Three months ended
September 30,
  2020   2019
GAAP diluted earnings per share $ 1.16     $ 1.24  
       
Non-GAAP adjustments:      
Stock compensation expense $ 0.29     $ 0.17  
Amortization expense $ 0.27     $ 0.20  
Restructuring, strategic transaction and integration $ 0.19     $ 0.37  
Change in fair value of contingent earn-out $ 0.20     $ (0.01 )
Contract settlement $     $ 0.04  
Estimated income tax impact from adjustments $ (0.21 )   $ (0.36 )
Adjusted diluted earnings per share $ 1.90     $ 1.65  
               

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 $ 73     $ 81  
       
Non-GAAP adjustments:      
Interest, net (1 )   (1 )
Stock compensation expense 24     24  
Depreciation and amortization expense 86     86  
Restructuring, strategic transaction and integration 30     30  
Change in fair value of contingent earn-out 7     7  
Contract settlement and product-related charges 5     5  
Provision for income taxes 11     13  
Total non-GAAP adjustments $ 162     $ 164  
       
Adjusted EBITDA $ 235     $ 245  
       
       
       
GAAP diluted earnings per share $ 3.41     $ 3.76  
       
Non-GAAP adjustments:      
Stock compensation expense $ 1.11     $ 1.11  
Amortization expense $ 1.07     $ 1.07  
Restructuring, strategic transaction and integration $ 1.39     $ 1.39  
Change in fair value of contingent earn-out $ 0.32     $ 0.32  
Contract settlement and product-related charges $ 0.21     $ 0.21  
Estimated income tax impact from adjustments $ (0.86 )   $ (0.86 )
Adjusted diluted earnings per share $ 6.65     $ 7.00  
               

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