ICU Medical, Inc. Announces Third Quarter 2021 Results


SAN CLEMENTE, Calif., Nov. 03, 2021 (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, 2021.

Third Quarter 2021 Results

Third quarter 2021 revenue was $336.1 million, compared to $318.6 million in the same period last year. GAAP gross profit for the third quarter of 2021 was $127.8 million, as compared to $113.9 million in the same period last year. GAAP gross margin for the third quarter of 2021 was 38%, as compared to 36% in the same period last year. GAAP net income for the third quarter of 2021 was $31.1 million, or $1.43 per diluted share, as compared to GAAP net income of $25.0 million, or $1.16 per diluted share, for the third quarter of 2020. Adjusted diluted earnings per share for the third quarter of 2021 were $2.07 as compared to $1.90 for the third quarter of 2020. Also, adjusted EBITDA was $71.9 million for the third quarter of 2021 as compared to $62.2 million for the third quarter of 2020.

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.”

Revenues by product line for the three and nine months ended September 30, 2021 and 2020 were as follows (in millions):

  Three months ended
September 30,
   Nine months ended
September 30,
  
Product Line 2021 2020 $ Change 2021 2020 $ Change
Infusion Consumables $144.9 $116.1 $28.8  $407.5 $350.6 $56.9 
Infusion Systems 90.7 88.4 2.3  259.7 267.9 (8.2)
IV Solutions* 89.2 101.9 (12.7) 271.8 295.4 (23.6)
Critical Care 11.3 12.2 (0.9) 36.8 36.7 0.1 
  $336.1 $318.6 $17.5  $975.8 $950.6 $25.2 

*IV Solutions includes $7.9 million and $32.2 million of contract manufacturing to Pfizer for the three and nine months ended September 30, 2021, respectively, as compared to $15.8 million and $44.8 million for the three and nine months ended September 30, 2020, respectively.

Conference Call

The Company will host a conference call to discuss third quarter 2021 financial results, today at 4:30 p.m. EDT (1:30 p.m. PDT). The call can be accessed at (877) 407-3982 or international (201) 493-6780. 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, the impact of the ongoing COVID-19 pandemic on the Company and our financial results and the Company’s ability to successfully close and subsequently integrate the pending Smiths Medical acquisition. 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,
2021
 December 31,
2020
 (Unaudited) (1) 
ASSETS   
CURRENT ASSETS:   
Cash and cash equivalents$519,485  $396,097 
Short-term investment securities18,009  14,687 
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES537,494  410,784 
Accounts receivable, net of allowance for doubtful accounts116,043  124,093 
Inventories291,601  314,928 
Prepaid income taxes31,381  29,480 
Prepaid expenses and other current assets34,718  41,492 
TOTAL CURRENT ASSETS1,011,237  920,777 
PROPERTY AND EQUIPMENT, net458,041  466,628 
OPERATING LEASE RIGHT-OF-USE ASSETS40,979  46,571 
LONG-TERM INVESTMENT SECURITIES7,172  12,974 
GOODWILL32,760  33,001 
INTANGIBLE ASSETS, net192,778  197,231 
DEFERRED INCOME TAXES35,585  31,034 
OTHER ASSETS60,799  55,475 
TOTAL ASSETS$1,839,351  $1,763,691 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
CURRENT LIABILITIES:   
Accounts payable$62,008  $71,864 
Accrued liabilities94,133  97,021 
Income tax payable2,636  303 
Contingent earn-out liability26,300  26,300 
TOTAL CURRENT LIABILITIES185,077  195,488 
    
CONTINGENT EARN-OUT LIABILITY3,100   
OTHER LONG-TERM LIABILITIES40,853  47,835 
DEFERRED INCOME TAXES1,663  1,663 
INCOME TAX PAYABLE18,686  16,440 
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 — 21,238 shares at September 30, 2021 and 21,058 at December 31, 2020 and outstanding 21,238 shares at September 30, 2021 and 21,058 shares at December 31, 20202,124  2,106 
Additional paid-in capital711,152  693,068 
Treasury stock, at cost(48) (39)
Retained earnings891,862  808,652 
Accumulated other comprehensive loss(15,118) (1,522)
TOTAL STOCKHOLDERS' EQUITY1,589,972  1,502,265 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,839,351  $1,763,691 

______________________________________________________
(1) December 31, 2020 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,
 2021  2020  2021  2020 
TOTAL REVENUES$336,060  $318,567  $975,783  $950,553 
COST OF GOODS SOLD208,269  204,643  611,783  608,930 
GROSS PROFIT127,791  113,924  364,000  341,623 
OPERATING EXPENSES:       
Selling, general and administrative74,815  70,854  221,127  210,401 
Research and development12,238  10,126  34,332  31,151 
Restructuring, strategic transaction and integration2,358  4,114  8,994  22,903 
Change in fair value of contingent earn-out  4,300    7,000 
Contract settlement  (1,000) 127  (975)
TOTAL OPERATING EXPENSES89,411  88,394  264,580  270,480 
INCOME FROM OPERATIONS38,380  25,530  99,420  71,143 
INTEREST EXPENSE(168) (616) (492) (1,583)
OTHER (EXPENSE) INCOME, net(287) 1,252  921  (2,175)
INCOME BEFORE INCOME TAXES37,925  26,166  99,849  67,385 
PROVISION FOR INCOME TAXES(6,844) (1,180) (16,639) (6,657)
NET INCOME$31,081  $24,986  $83,210  $60,728 
NET INCOME PER SHARE       
Basic$1.47  $1.19  $3.93  $2.91 
Diluted$1.43  $1.16  $3.83  $2.82 
WEIGHTED AVERAGE NUMBER OF SHARES       
Basic21,214  20,948  21,189  20,870 
Diluted21,730  21,556  21,735  21,561 

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.

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, stock compensation expense, intangible asset amortization expense, restructuring, strategic transaction and integration, change in fair value of contingent earn-out and product-related charges. 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,
 2021  2020 
GAAP net income$31,081  $24,986 
    
Non-GAAP adjustments:   
Interest, net(559) (142)
Stock compensation expense6,533  6,265 
Depreciation and amortization expense22,245  21,462 
Restructuring, strategic transaction and integration2,358  4,114 
Change in fair value of contingent earn-out  4,300 
Product-related charges3,380   
Provision for income taxes6,844  1,180 
Total non-GAAP adjustments40,801  37,179 
    
Adjusted EBITDA$71,882  $62,165 


    
  Adjusted diluted earnings per share
 Three months ended
September 30,
 2021  2020 
GAAP diluted earnings per share$1.43  $1.16 
    
Non-GAAP adjustments:   
Stock compensation expense$0.30  $0.29 
Amortization expense$0.27  $0.27 
Restructuring, strategic transaction and integration$0.11  $0.19 
Change in fair value of contingent earn-out$  $0.20 
Product-related charges$0.16  $ 
Estimated income tax impact from adjustments$(0.20) $(0.21)
Adjusted diluted earnings per share$2.07  $1.90 
 

CONTACT:
ICU Medical, Inc.
Brian Bonnell, Chief Financial Officer
(949) 366-2183
     
ICR, Inc.
John Mills, Partner
(646) 277-1254