EX-99.1 2 exhibit991q32019er.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
ICU Medical, Inc. Announces Third Quarter 2019 Results

SAN CLEMENTE, Calif., November 11, 2019 (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, 2019.

Third Quarter 2019 Results

Third quarter 2019 revenue was $307.5 million, compared to $327.2 million in the same period last year. GAAP gross profit for the third quarter of 2019 was $118.6 million, as compared to $134.6 million in the same period last year. GAAP gross margin for the third quarter of 2019 was 39%, as compared to 41% in the same period last year. GAAP net income for the third quarter of 2019 was $26.6 million, or $1.24 per diluted share, as compared to GAAP net income of $0.2 million, or $0.01 per diluted share, for the third quarter of 2018. Adjusted diluted earnings per share for the third quarter of 2019 were $1.65 as compared to $1.88 for the third quarter of 2018. Also, adjusted EBITDA was $62.6 million for the third quarter of 2019 as compared to $68.4 million for the third quarter of 2018.

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 revenue, adjusted EBITDA and adjusted diluted earnings per share were generally in line with our expectations.”

Revenues by market segment for the three and nine months ended September 30, 2019 and 2018 were as follows (in millions):
 
 
Three months ended
September 30,
 
 
 
 
 
Nine months ended
September 30,
 
 
Market Segment
 
2019
 
2018
 
$ Change
 
%
Change
 
2019
 
2018
 
$
Change
 
%
Change
Infusion Consumables
 
$
119.8

 
$
117.8

 
$
2.0

 
1.7%
 
$
358.0

 
$
361.5

 
$
(3.5
)
 
(1.0)%
IV Solutions*
 
98.2

 
114.4

 
(16.2
)
 
(14.2)%
 
314.0

 
394.2

 
(80.2
)
 
(20.3)%
Infusion Systems
 
78.9

 
81.5

 
(2.6
)
 
(3.2)%
 
244.5

 
263.3

 
(18.8
)
 
(7.1)%
Critical Care
 
10.6

 
13.5

 
(2.9
)
 
(21.5)%
 
34.2

 
40.7

 
(6.5
)
 
(16.0)%
 
 
$
307.5

 
$
327.2

 
$
(19.7
)
 
(6.0)%
 
$
950.7

 
$
1,059.7

 
$
(109.0
)
 
(10.3)%
*IV Solutions includes $16.8 million and $61.3 million of contract manufacturing to Pfizer for the three and nine months ended September 30, 2019, respectively, as compared to $21.7 million and $59.3 million for the same periods in the prior year.

Conference Call

The Company will host a conference call to discuss third quarter 2019 financial results 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 8184417. 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, 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, 2018 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
CONSOLIDATED BALANCE SHEETS
(In thousands)

 
September 30,
2019
 
December 31,
2018
 
(Unaudited)
 
(1)
ASSETS
 
 
 
CURRENT ASSETS:
 

 
 

Cash and cash equivalents
$
315,949

 
$
344,781

Short-term investment securities
20,845

 
37,329

TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES
336,794

 
382,110

Accounts receivable, net of allowance for doubtful accounts
210,449

 
176,298

Inventories
343,715

 
311,163

Prepaid income taxes
19,724

 
11,348

Prepaid expenses and other current assets
33,807

 
46,117

TOTAL CURRENT ASSETS
944,489

 
927,036

PROPERTY AND EQUIPMENT, net
444,087

 
432,641

OPERATING LEASE RIGHT-OF-USE ASSETS
35,787

 
—

LONG-TERM INVESTMENT SECURITIES
—

 
2,025

GOODWILL
11,019

 
11,195

INTANGIBLE ASSETS, net
131,644

 
133,421

DEFERRED INCOME TAXES
23,242

 
38,654

OTHER ASSETS
47,516

 
40,419

TOTAL ASSETS
$
1,637,784

 
$
1,585,391

LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 
 

CURRENT LIABILITIES:
 

 
 

Accounts payable
$
125,355

 
$
120,469

Accrued liabilities
130,056

 
128,820

TOTAL CURRENT LIABILITIES
255,411

 
249,289

CONTINGENT EARN-OUT LIABILITY
—

 
47,400

OTHER LONG-TERM LIABILITIES
37,614

 
20,592

DEFERRED INCOME TAXES
690

 
721

INCOME TAX LIABILITY
3,734

 
3,734

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 20,671 shares at September 30, 2019, Issued 20,492 shares at December 31, 2018 and outstanding 20,491 shares at December 31, 2018
2,067

 
2,049

Additional paid-in capital
659,709

 
657,899

Treasury stock, at cost
—

 
(95
)
Retained earnings
701,141

 
620,747

Accumulated other comprehensive loss
(22,582
)
 
(16,945
)
TOTAL STOCKHOLDERS' EQUITY
1,340,335

 
1,263,655

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,637,784

 
$
1,585,391

______________________________________________________
(1) December 31, 2018 balances were derived from audited consolidated financial statements.




ICU MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)

 
Three months ended
September 30,
 
Nine months ended
September 30,
 
2019
 
2018
 
2019
 
2018
TOTAL REVENUES
$
307,471

 
$
327,169

 
$
950,685

 
$
1,059,662

COST OF GOODS SOLD
188,919

 
192,582

 
592,961

 
624,274

GROSS PROFIT
118,552

 
134,587

 
357,724

 
435,388

OPERATING EXPENSES:
 

 
 

 
 

 
 

Selling, general and administrative
65,876

 
76,640

 
206,333

 
243,471

Research and development
12,002

 
13,181

 
36,024

 
39,342

Restructuring, strategic transaction and integration
7,975

 
24,012

 
69,408

 
64,271

Contract settlement
—

 
—

 
3,822

 
28,917

Change in fair value of contingent earn-out
(200
)
 
18,500

 
(47,400
)
 
20,500

TOTAL OPERATING EXPENSES
85,653

 
132,333

 
268,187

 
396,501

INCOME FROM OPERATIONS
32,899

 
2,254

 
89,537

 
38,887

INTEREST EXPENSE
(139
)
 
(283
)
 
(411
)
 
(548
)
OTHER (EXPENSE) INCOME, net
(10
)
 
(534
)
 
4,660

 
(3,482
)
INCOME BEFORE INCOME TAXES
32,750

 
1,437

 
93,786

 
34,857

(PROVISION) BENEFIT FOR INCOME TAXES
(6,187
)
 
(1,218
)
 
(13,392
)
 
1,291

NET INCOME
$
26,563

 
$
219

 
$
80,394

 
$
36,148

NET INCOME PER SHARE
 

 
 

 
 

 
 

Basic
$
1.29

 
$
0.01

 
$
3.90

 
$
1.78

Diluted
$
1.24

 
$
0.01

 
$
3.73

 
$
1.67

WEIGHTED AVERAGE NUMBER OF SHARES
 

 
 

 
 

 
 

Basic
20,666

 
20,474

 
20,607

 
20,362

Diluted
21,487

 
21,633

 
21,556

 
21,588















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.

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,
 
2019
 
2018
GAAP net income
$
26,563

 
$
219

 
 
 
 
Non-GAAP adjustments:
 
 
 
Interest, net
(1,601
)
 
(947
)
Stock compensation expense
3,723

 
6,232

Depreciation and amortization expense
19,187

 
19,161

Restructuring, strategic transaction and integration
7,975

 
24,012

Change in fair value of contingent earn-out
(200
)
 
18,500

Contract settlement
794

 
—

Provision (Benefit) for income taxes
6,187

 
1,218

Total non-GAAP adjustments
36,065

 
68,176

 
 
 
 
 Adjusted EBITDA
$
62,628

 
$
68,395


 
 Adjusted diluted earnings per share
 
Three months ended
September 30,
 
2019
 
2018 (1)
 GAAP diluted earnings per share
$
1.24

 
$
0.01

 
 
 
 
 Non-GAAP adjustments:
 
 
 
Stock compensation expense
$
0.17

 
$
0.29

Amortization expense
$
0.20

 
$
0.19

Restructuring, strategic transaction and integration
$
0.37

 
$
1.11

Change in fair value of contingent earn-out
$
(0.01
)
 
$
0.86

Contract settlement
$
0.04

 
$
—

Estimated income tax impact from adjustments
$
(0.36
)
 
$
(0.58
)
 Adjusted diluted earnings per share
$
1.65

 
$
1.88

_______________________________________________
(1) During 2019, we changed our methodology when computing adjusted diluted earnings per share to remove interest, net from the calculation, accordingly we conformed the prior year adjusted diluted earnings per share to the current year presentation.


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