ICUI
$194.00
I C U Medical
$3.22
1.69%
Earnings Details
3rd Quarter September 2020
Thursday, November 05, 2020 4:05:00 PM
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Summary

ICU Medical Raises Guidance

I C U Medical (ICUI) reported 3rd Quarter September 2020 earnings of $1.61 per share on revenue of $318.6 million. The consensus earnings estimate was $1.10 per share on revenue of $280.6 million. Revenue grew 3.6% on a year-over-year basis.

The company said it expects 2020 earnings of $6.65 to $7.00 per share. The company's previous guidance was earnings of $5.95 to $6.65 per share and the current consensus earnings estimate is $6.40 per share for the year ending December 31, 2020.

ICU Medical Inc is engaged in the development, manufacture and sale of medical devices used in infusion therapy, oncology and critical care applications. Its products include needlefree connectors, nanoclave, chemoclock, chemoclave, and among others.

Results
Reported Earnings
$1.61
Earnings Whisper
-
Consensus Estimate
$1.10
Reported Revenue
$318.6 Mil
Revenue Estimate
$280.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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

SAN CLEMENTE, Calif., Nov. 05, 2020 (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, 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
September 30,
   Nine months ended
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,
2020
 December 31,
2019
 (Unaudited) (1)
ASSETS   
CURRENT ASSETS:   
Cash and cash equivalents$350,993  $268,670 
Short-term investment securities12,544  23,967 
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES363,537  292,637 
Accounts receivable, net of allowance for doubtful accounts164,538  202,219 
Inventories321,961  337,640 
Prepaid income taxes8,032  15,720 
Prepaid expenses and other current assets42,071  33,981 
TOTAL CURRENT ASSETS900,139  882,197 
PROPERTY AND EQUIPMENT, net456,348  456,085 
OPERATING LEASE RIGHT-OF-USE ASSETS47,802  34,465 
GOODWILL32,651  31,245 
INTANGIBLE ASSETS, net200,428  211,408 
DEFERRED INCOME TAXES36,373  27,998 
OTHER ASSETS55,795  48,984 
TOTAL ASSETS$1,729,536  $1,692,382 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
CURRENT LIABILITIES:   
Accounts payable$81,027  $128,629 
Accrued liabilities103,397  117,776 
Income tax payable935  2,063 
TOTAL CURRENT LIABILITIES185,359  248,468 
CONTINGENT EARN-OUT LIABILITY24,300  17,300 
OTHER LONG-TERM LIABILITIES48,750  32,820 
DEFERRED INCOME TAXES2,091  2,091 
INCOME TAX PAYABLE16,816  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, 20192,097  2,074 
Additional paid-in capital683,326  668,947 
Treasury stock, at cost(180) (157)
Retained earnings782,510  721,782 
Accumulated other comprehensive loss(15,533) (15,402)
TOTAL STOCKHOLDERS' EQUITY1,452,220  1,377,244 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,729,536  $1,692,382 

______________________________________________________
(1) 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
September 30,
 Nine months ended
September 30,
 2020 2019 2020 2019
TOTAL REVENUES$318,567  $307,471  $950,553  $950,685 
COST OF GOODS SOLD204,643  188,919  608,930  592,961 
GROSS PROFIT113,924  118,552  341,623  357,724 
OPERATING EXPENSES:       
Selling, general and administrative70,854  65,876  210,401  206,333 
Research and development10,126  12,002  31,151  36,024 
Restructuring, strategic transaction and integration4,114  7,975  22,903  69,408 
Change in fair value of contingent earn-out4,300  (200) 7,000  (47,400)
Contract settlement(1,000)   (975) 3,822 
TOTAL OPERATING EXPENSES88,394  85,653  270,480  268,187 
INCOME FROM OPERATIONS25,530  32,899  71,143  89,537 
INTEREST EXPENSE(616) (139) (1,583) (411)
OTHER INCOME (EXPENSE), net1,252  (10) (2,175) 4,660 
INCOME BEFORE INCOME TAXES26,166  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       
Basic20,948  20,666  20,870  20,607 
Diluted21,556  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 settlementOccasionally, 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 expense6,265  3,723 
Depreciation and amortization expense21,462  19,187 
Restructuring, strategic transaction and integration4,114  7,975 
Change in fair value of contingent earn-out4,300  (200)
Contract settlement  794 
Provision for income taxes1,180  6,187 
Total non-GAAP adjustments37,179  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 expense24  24 
Depreciation and amortization expense86  86 
Restructuring, strategic transaction and integration30  30 
Change in fair value of contingent earn-out7  7 
Contract settlement and product-related charges5  5 
Provision for income taxes11  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


ICU Medical logo.jpg

Source: ICU Medical, Inc.