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

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SAN CLEMENTE, Calif., Nov 05, 2020 (GLOBE NEWSWIRE via COMTEX) — 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                 Nine months ended
                      September 30,                      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,        December 31,
                                                                                                                                                                                                                                     2020                 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

______________________________________________________

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              Nine months ended
                                                     September 30,                   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 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.

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

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COMTEX_374007353/2010/2020-11-05T16:06:41

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