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ICU Medical, Inc. Announces Second Quarter 2021 Results

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Company Updated FY 2021 Guidance

SAN CLEMENTE, Calif., Aug. 04, 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 June 30, 2021.

Second Quarter 2021 Results

Second quarter 2021 revenue was $321.7 million, compared to $303.4 million in the same period last year. GAAP gross profit for the second quarter of 2021 was $123.5 million, as compared to $106.3 million in the same period last year. GAAP gross margin for the second quarter of 2021 was 38%, as compared to 35% in the same period last year. GAAP net income for the second quarter of 2021 was $28.4 million, or $1.31 per diluted share, as compared to GAAP net income of $18.9 million, or $0.88 per diluted share, for the second quarter of 2020. Adjusted diluted earnings per share for the second quarter of 2021 were $1.88 as compared to $1.65 for the second quarter of 2020. Also, adjusted EBITDA was $66.9 million for the second quarter of 2021 as compared to $58.1 million for the second 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, “Second quarter results were generally in line with our expectations.”

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

Three months ended
June 30,

Six months ended
June 30,

Product Line

2021

2020

$ Change

2021

2020

$ Change

Infusion Consumables

$

136.2

$

111.0

$

25.2

$

262.6

$

234.5

$

28.1

Infusion Systems

84.7

91.1

(6.4

)

169.0

179.5

(10.5

)

IV Solutions*

88.4

89.2

(0.8

)

182.6

193.5

(10.9

)

Critical Care

12.4

12.1

0.3

25.5

24.5

1.0

$

321.7

$

303.4

$

18.3

$

639.7

$

632.0

$

7.7

*IV Solutions includes $10.4 million and $24.3 million of contract manufacturing to Pfizer for the three and six months ended June 30, 2021, respectively, as compared to $15.5 million and $ 29.0 million for the three and six months ended June 30, 2020, respectively.

Fiscal Year 2021 Guidance Update

The Company is updating its full year 2021 guidance of adjusted EBITDA from a range of $245 million to $265 million to a range of $250 million to $260 million and adjusted diluted earnings per share from a range of $6.50 to $7.20 to a range of $6.80 to $7.20.

Conference Call

The Company will host a conference call to discuss second quarter 2021 financial results on the Company, today at 4:30 p.m. EDT (1:30 p.m. PDT). The call can be accessed at (866) 248-8441 or international (408) 774-4587. 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)

June 30,
2021

December 31,
2020

(Unaudited)

(1)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

462,037

$

396,097

Short-term investment securities

14,661

14,687

TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES

476,698

410,784

Accounts receivable, net of allowance for doubtful accounts

120,782

124,093

Inventories

299,610

314,928

Prepaid income taxes

38,285

29,480

Prepaid expenses and other current assets

37,979

41,492

TOTAL CURRENT ASSETS

973,354

920,777

PROPERTY AND EQUIPMENT, net

458,785

466,628

OPERATING LEASE RIGHT-OF-USE ASSETS

43,315

46,571

LONG-TERM INVESTMENT SECURITIES

15,670

12,974

GOODWILL

32,927

33,001

INTANGIBLE ASSETS, net

189,620

197,231

DEFERRED INCOME TAXES

31,120

31,034

OTHER ASSETS

58,051

55,475

TOTAL ASSETS

$

1,802,842

$

1,763,691

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

69,782

$

71,864

Accrued liabilities

85,283

97,021

Income tax payable

2,299

303

Contingent earn-out liability

26,300

26,300

TOTAL CURRENT LIABILITIES

183,664

195,488

OTHER LONG-TERM LIABILITIES

42,951

47,835

DEFERRED INCOME TAXES

1,663

1,663

INCOME TAX PAYABLE

17,299

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 — 21,219 shares at June 30, 2021 and 21,058 at December 31, 2020 and outstanding 21,208 shares at June 30, 2021 and 21,058 shares at December 31, 2020

2,122

2,106

Additional paid-in capital

705,582

693,068

Treasury stock, at cost

(2,269

)

(39

)

Retained earnings

860,781

808,652

Accumulated other comprehensive loss

(8,951

)

(1,522

)

TOTAL STOCKHOLDERS' EQUITY

1,557,265

1,502,265

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,802,842

$

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
June 30,

Six months ended
June 30,

2021

2020

2021

2020

TOTAL REVENUES

$

321,677

$

303,379

$

639,723

$

631,986

COST OF GOODS SOLD

198,148

197,095

403,514

404,287

GROSS PROFIT

123,529

106,284

236,209

227,699

OPERATING EXPENSES:

Selling, general and administrative

73,921

67,242

146,312

139,547

Research and development

11,385

10,279

22,094

21,025

Restructuring, strategic transaction and integration

3,753

6,482

6,636

18,789

Change in fair value of contingent earn-out

2,700

2,700

Contract settlement

25

127

25

TOTAL OPERATING EXPENSES

89,059

86,728

175,169

182,086

INCOME FROM OPERATIONS

34,470

19,556

61,040

45,613

INTEREST EXPENSE

(163

)

(771

)

(324

)

(967

)

OTHER INCOME (EXPENSE), net

525

2,053

1,208

(3,427

)

INCOME BEFORE INCOME TAXES

34,832

20,838

61,924

41,219

PROVISION FOR INCOME TAXES

(6,434

)

(1,930

)

(9,795

)

(5,477

)

NET INCOME

$

28,398

$

18,908

$

52,129

$

35,742

NET INCOME PER SHARE

Basic

$

1.34

$

0.91

$

2.46

$

1.72

Diluted

$

1.31

$

0.88

$

2.40

$

1.66

WEIGHTED AVERAGE NUMBER OF SHARES

Basic

21,200

20,880

21,176

20,831

Diluted

21,703

21,506

21,718

21,545

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, stock compensation expense, intangible asset amortization expense, restructuring, strategic transaction and integration 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
June 30,

2021

2020

GAAP net income

$

28,398

$

18,908

Non-GAAP adjustments:

Interest, net

(545

)

(161

)

Stock compensation expense

6,681

5,410

Depreciation and amortization expense

22,164

21,618

Restructuring, strategic transaction and integration

3,753

6,482

Change in fair value of contingent earn-out

2,700

Contract settlement

1,210

Provision for income taxes

6,434

1,930

Total non-GAAP adjustments

38,487

39,189

Adjusted EBITDA

$

66,885

$

58,097


Adjusted diluted earnings per share

Three months ended
June 30,

2021

2020

GAAP diluted earnings per share

$

1.31

$

0.88

Non-GAAP adjustments:

Stock compensation expense

$

0.31

$

0.25

Amortization expense

$

0.27

$

0.27

Restructuring, strategic transaction and integration

$

0.17

$

0.30

Change in fair value of contingent earn-out

$

$

0.13

Contract settlement

$

$

0.06

Estimated income tax impact from adjustments

$

(0.18

)

$

(0.24

)

Adjusted diluted earnings per share

$

1.88

$

1.65

ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures - Fiscal Year 2021 Outlook (Unaudited)
(In millions, except per share data)

Low End of Guidance

High End of Guidance

GAAP net income

$

97

$

106

Non-GAAP adjustments:

Interest, net

(2

)

(2

)

Stock compensation expense

26

26

Depreciation and amortization expense

90

90

Restructuring, strategic transaction and integration

15

15

Change in fair value of contingent earn-out

Provision for income taxes

24

25

Total non-GAAP adjustments

$

153

$

154

Adjusted EBITDA

$

250

$

260

GAAP diluted earnings per share

$

4.48

$

4.88

Non-GAAP adjustments:

Stock compensation expense

$

1.17

$

1.17

Amortization expense

$

1.07

$

1.07

Restructuring, strategic transaction and integration

$

0.69

$

0.69

Change in fair value of contingent earn-out

$

0.01

$

0.01

Estimated income tax impact from adjustments

$

(0.62

)

$

(0.62

)

Adjusted diluted earnings per share

$

6.80

$

7.20

CONTACT:
ICU Medical, Inc.
Brian Bonnell, Chief Financial Officer
(949) 366-2183

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