ICU Medical, Inc. Announces Fourth Quarter and Fiscal Year 2015 Results

February 3, 2016

SAN CLEMENTE, Calif., Feb. 03, 2016 (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, 2015.

Fourth Quarter 2015 Results

Fourth quarter 2015 revenue was $90.4 million, compared to $79.9 million in the same period last year. GAAP net income for the fourth quarter of 2015 was $5.5 million, or $0.33 per diluted share, as compared to GAAP net income of $7.4 million, or $0.46 per diluted share, for the fourth quarter of 2014. Adjusted diluted earnings per share for the fourth quarter of 2015 were $0.96 as compared to $0.68 for the fourth quarter of 2014. Also, adjusted EBITDA was $30.1 million for the fourth quarter of 2015 as compared to $21.9 million for the fourth quarter of 2014.

Full Fiscal Year 2015 Results

Fiscal year 2015 revenue was $341.7 million, compared to $309.3 million in the same period last year. GAAP net income for fiscal year 2015 was $45.0 million, or $2.73 per diluted share, as compared to GAAP net income of $26.3 million, or $1.68 per diluted share, for fiscal year 2014. Adjusted diluted earnings per share for fiscal year 2015 were $3.96 as compared to $2.38 for fiscal year 2014. Also, adjusted EBITDA was $113.9 million for fiscal year 2015 as compared to $73.9 million for fiscal year 2014.

Vivek Jain, ICU Medical's Chief Executive Officer, said, "Our revenue, gross margin and adjusted EBITDA results in the fourth quarter were above our expectations as we achieved growth in both our direct and OEM channels."

Revenue for the three and twelve months ended December 31, 2015 and 2014 were as follows:

 (dollars in millions)  
 Fiscal year ended December 31,Three months ended December 31,
Market Segment   2015    2014   Change   2015    2014   Change
Infusion Therapy$244.8 $216.3 $28.5 $66.1 $56.5 $9.6 
Oncology 41.4  36.7  4.7  11.1  9.3  1.8 
Critical Care 54.3  55.1  -0.8  13.1  13.8  -0.7 
Other 1.2  1.2  -  0.1  0.3  -0.2 
 $341.7 $309.3 $32.4 $90.4 $79.9 $10.5 

The Company ended the fourth quarter with a strong balance sheet. As of December 31, 2015, cash, cash equivalents and investment securities totaled $377.4 million and working capital was $462.4 million. Additionally, the Company generated operating cash flow of $54.9 million for the fiscal year of 2015.

Fiscal Year 2016 Guidance

For the year, the Company expects revenue to be in the range of $355 million to $365 million; adjusted diluted earnings per share to be in the range of $4.34 to $4.46, and adjusted EBITDA to be in the range of $123 million to $127 million.

Conference Call

The Company will be conducting a conference call concerning these announcements at 4:30 p.m. EST (1:30 p.m. PST), today, Wednesday, February 3, 2016. The call can be accessed at 800-936-9761, international 408-774-4587, conference ID 34390619. The conference call will be simultaneously available by webcast, which can be accessed by going to the Company's website at www.icumed.com, clicking on the Investors tab, clicking on the Webcast icon and following the prompts. The webcast will also be available by replay by dialing (855) 859-2056, (404) 537-3406 international.

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"). 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. 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 intangible asset amortization expense, depreciation expense, stock compensation expense, restructuring and strategic transaction expense, gain on sale of building, legal settlements, impairment of assets held for sale and income tax expense. Adjusted Diluted EPS excludes, net of tax, intangible asset amortization expense, stock compensation expense, restructuring and strategic transaction expense, gain on sale of building, legal settlements and impairment of assets held for sale.

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 limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.

Reconciliations of our GAAP to non-GAAP financial are included in the financial tables in this press release.

About ICU Medical, Inc.

About ICU Medical, Inc. (Nasdaq:ICUI) develops, manufactures and sells innovative medical devices used in vascular therapy, oncology and critical care applications. ICU Medical's products improve patient outcomes by helping prevent bloodstream infections and protecting healthcare workers from exposure to infectious diseases or hazardous drugs. The company's complete product line includes custom IV systems, closed delivery systems for hazardous drugs, needlefree IV connectors, catheters and cardiac monitoring systems. 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, our full year 2016 guidance 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 and unexpected changes in the Company's arrangements with its largest customers. 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 Annual Report on Form 10-K for the year ended December 31, 2014. 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
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value data)
(unaudited)
 December 31,
 2015 2014
ASSETS   
CURRENT ASSETS:   
Cash and cash equivalents$336,164  $275,812 
Investment securities41,233  70,952 
Cash, cash equivalents and investment securities377,397  346,764 
Accounts receivable, net of allowance for doubtful accounts of $1,101 and $1,127 at December 31, 2015 and 2014, respectively57,847  39,051 
Inventories43,632  36,933 
Prepaid income taxes14,366  3,963 
Prepaid expenses and other current assets7,631  5,818 
Assets held for sale4,134  — 
Total current assets505,007  432,529 
    
PROPERTY AND EQUIPMENT, net74,320  86,091 
GOODWILL6,463  1,478 
INTANGIBLE ASSETS, net23,936  7,063 
DEFERRED INCOME TAXES17,099  13,941 
 $626,825  $541,102 
LIABILITIES AND STOCKHOLDERS' EQUITY   
CURRENT LIABILITIES:   
Accounts payable$13,670  $11,378 
Accrued liabilities28,948  17,350 
Total current liabilities42,618  28,728 
    
LONG-TERM LIABILITIES1,476  — 
DEFERRED INCOME TAXES1,372  1,376 
INCOME TAX LIABILITY1,488  2,746 
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 and outstanding, 16,086 shares at December 31, 2015 and 15,595 shares at December 31, 20141,608  1,559 
Additional paid-in capital145,125  107,336 
Retained earnings453,896  408,911 
Accumulated other comprehensive loss(20,758) (9,554)
Total stockholders' equity579,871  508,252 
 $626,825  $541,102 


ICU MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(unaudited)
 
 Year ended December 31,
 2015 2014 2013
REVENUES:     
Net sales$341,254  $308,770  $313,056 
Other414  490  660 
TOTAL REVENUE341,668  309,260  313,716 
COST OF GOODS SOLD160,871  157,859  158,984 
Gross profit180,797  151,401  154,732 
OPERATING EXPENSES:     
Selling, general and administrative83,216  88,939  89,006 
Research and development15,714  18,332  12,407 
Restructuring and strategic transaction8,451  5,093  1,370 
Gain on sale of building(1,086) —  — 
Legal settlements1,798  —  — 
Impairment of assets held for sale4,139  —  — 
Total operating expenses112,232  112,364  102,783 
Income from operations68,565  39,037  51,949 
OTHER INCOME1,134  755  765 
Income before income taxes69,699  39,792  52,714 
PROVISION FOR INCOME TAXES(24,714) (13,457) (12,296)
NET INCOME$44,985  $26,335  $40,418 
NET INCOME PER SHARE     
Basic$2.84  $1.72  $2.75 
Diluted$2.73  $1.68  $2.65 
WEIGHTED AVERAGE NUMBER OF SHARES     
Basic15,848  15,282  14,688 
Diluted16,496  15,647  15,274 


ICU MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(unaudited)
 
 Three months ended December 31,
 2015 2014
REVENUES:   
Net sales$90,378  $79,773 
Other9  123 
TOTAL REVENUE90,387  79,896 
COST OF GOODS SOLD42,130  40,211 
Gross profit48,257  39,685 
OPERATING EXPENSES:   
Selling, general and administrative22,519  20,299 
Research and development4,057  5,080 
Restructuring and strategic transaction5,040  2,253 
Impairment of assets held for sale4,139  — 
Total operating expenses35,755  27,632 
Income from operations12,502  12,053 
OTHER INCOME139  183 
Income before income taxes12,641  12,236 
PROVISION FOR INCOME TAXES(7,178) (4,864)
NET INCOME$5,463  $7,372 
NET INCOME PER SHARE   
Basic$0.34  $0.48 
Diluted$0.33  $0.46 
WEIGHTED AVERAGE NUMBER OF SHARES   
Basic16,020  15,469 
Diluted16,697  15,934 


ICU MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
 
 Year ended December 31,
 2015 2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income$44,985  $26,335  $40,418 
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization18,073  19,447  19,506 
Provision for doubtful accounts54  34  185 
Provision for warranty and returns52  (360) 671 
Stock compensation12,827  9,592  5,434 
(Gain) loss on disposal of property and equipment(1,106) 8  (36)
Bond premium amortization1,670  2,188  2,715 
Impairment of assets held for sale4,139  —  — 
Changes in operating assets and liabilities:     
Accounts receivable(20,515) 4,912  3,556 
Inventories(8,337) (3,836) 2,319 
Prepaid expenses and other assets(1,832) 1,970  (383)
Accounts payable3,118  (621) (31)
Accrued liabilities9,454  2,344  (2,215)
Income taxes, including excess tax benefits and deferred income taxes(7,717) (1,373) (6,413)
Net cash provided by operating activities54,865  60,640  65,726 
CASH FLOWS FROM INVESTING ACTIVITIES:     
Purchases of property and equipment(12,984) (16,604) (18,415)
Proceeds from sale of assets3,592  5  49 
Intangible asset additions(951) (989) (1,080)
Business acquisitions, net of cash acquired(56,786) —  — 
Proceeds from sale of business28,970  —  — 
Purchases of investment securities(56,137) (93,588) (86,022)
Proceeds from sale of investment securities83,054  89,426  92,348 
Net cash used by investing activities(11,242) (21,750) (13,120)
CASH FLOWS FROM FINANCING ACTIVITIES:     
Proceeds from exercise of stock options15,042  16,998  18,004 
Proceeds from employee stock purchase plan2,162  2,485  2,457 
Tax benefits from exercise of stock options9,330  5,700  6,966 
Purchase of treasury stock(1,523) (5,836) (3,033)
Net cash provided by financing activities25,011  19,347  24,394 
Effect of exchange rate changes on cash(8,282) (8,447) 2,122 
NET INCREASE IN CASH AND CASH EQUIVALENTS60,352  49,790  79,122 
CASH AND CASH EQUIVALENTS, beginning of period275,812  226,022  146,900 
CASH AND CASH EQUIVALENTS, end of period$336,164  $275,812  $226,022 
      
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION     
Cash paid during the year for income taxes$22,998  $8,668  $12,172 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:     
Accrued liabilities for property and equipment$182  $789  $212 


ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in thousands, except per share data)
(unaudited)
 
  Adjusted EBITDA
  Q4  Year Ended
 2015 2014 2015 2014
GAAP net income$5,463  $7,372  $44,985  $26,335 
        
Non-GAAP adjustments:       
Stock compensation expense (a)3,522  2,602  12,827  9,592 
Depreciation and amortization expense (b)4,807  4,805  18,073  19,447 
Restructuring and strategic transaction expense (c)5,040  2,253  8,451  5,093 
Gain on sale of building (d)—  —  (1,086) — 
Legal settlements (e)—  —  1,798  — 
Impairment of  assets held for sale (f)4,139  —  4,139  — 
Provision for income taxes (g)7,178  4,864  24,714  13,457 
Total non-GAAP adjustments24,686  14,524  68,916  47,589 
        
 Adjusted EBITDA$30,149  $21,896  $113,901  $73,924 
        
        
  Adjusted diluted earnings per share
  Q4  Year Ended
 2015 2014 2015 2014
 GAAP diluted earnings per share$0.33  $0.46  $2.73  $1.68 
        
Non-GAAP adjustments:       
Stock compensation expense (a)$0.21  $0.16  $0.78  $0.61 
Amortization expense (h)$0.04  $0.04  $0.13  $0.15 
Restructuring and strategic transaction expense (c)$0.30  $0.14  $0.51  $0.33 
Gain on sale of building (d)$—  $—  $(0.07) $— 
Legal settlements (e)$—  $—  $0.11  $— 
Impairment of assets held for sale (f)$0.25  $—  $0.25  $— 
Estimated income tax impact from adjustments (i)$(0.17) $(0.12) $(0.48) $(0.39)
Adjusted diluted earnings per share$0.96  $0.68  $3.96  $2.38 
        
        
 (a)  Stock-based compensation expense in accordance with ASC 718.     
 (b)  Depreciation of fixed assets and amortization of intangible assets.  
 (c)  Restructuring and strategic transaction expense.      
 (d)  Gain on sale of building.      
 (e)  Legal settlements.      
 (f)  Impairment of assets held for sale.     
 (g)  Income tax expense recognized during the period.     
 (h)  Amortization expense       
 (i)  Estimated income tax effect on adjustments for stock compensation expense, amortization expense, restructuring and strategic transaction expense, gain on sale of building, legal settlements and impairment of assets held for sale, a permanent loss of a tax benefit related to the acquisition of Excelsior.


ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures - Fiscal Year 2016 Outlook
(Amounts in millions, except per share data)
(unaudited)
 
GAAP net income$61   $63 
    
Non-GAAP adjustments:   
Stock compensation expense (a)15  15 
Depreciation and amortization expense (b)19  19 
Provision for income taxes (c)28  30 
Total non-GAAP adjustments62  64 
    
Adjusted EBITDA$123  $127 
    
    
    
    
GAAP diluted earnings per share$3.62  $3.74 
    
Non-GAAP adjustments:   
Stock compensation expense (a)$0.89  $0.89 
Amortization expense (d)$0.17  $0.17 
Estimated income tax impact from adjustments (e)$(0.34) $(0.34)
Adjusted diluted earnings per share$4.34  $4.46 
    
(a)  Stock-based compensation expense in accordance with ASC 718.
(b)  Depreciation of fixed assets and amortization of intangible assets.
(c)  Income tax expense recognized during the period.  
(d)  Amortization expense   
(e)  Estimated income tax effect on adjustments for stock compensation expense and amortization expense.
 
CONTACT:
ICU Medical, Inc.
Scott Lamb, Chief Financial Officer
(949) 366-2183

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