ICUI
$192.06
I C U Medical
($.74)
(.38%)
Earnings Details
2nd Quarter June 2020
Monday, August 10, 2020 4:05:00 PM
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Summary

I C U Medical (ICUI) Recent Earnings

I C U Medical (ICUI) reported 2nd Quarter June 2020 earnings of $1.45 per share on revenue of $303.4 million. The consensus earnings estimate was $1.02 per share on revenue of $271.1 million. Revenue fell 2.9% compared to the same quarter a year ago.

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
$1.45
Earnings Whisper
-
Consensus Estimate
$1.02
Reported Revenue
$303.4 Mil
Revenue Estimate
$271.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

ICU Medical, Inc. Announces Second Quarter 2020 Results

SAN CLEMENTE, Calif., Aug. 10, 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 June 30, 2020.

Second Quarter 2020 Results

Second quarter 2020 revenue was $303.4 million, compared to $312.3 million in the same period last year. GAAP gross profit for the second quarter of 2020 was $106.3 million, as compared to $103.9 million in the same period last year. GAAP gross margin for the second quarter of 2020 was 35%, as compared to 33% in the same period last year. GAAP net income for the second quarter of 2020 was $18.9 million, or $0.88 per diluted share, as compared to GAAP net income of $22.8 million, or $1.06 per diluted share, for the second quarter of 2019.  Adjusted diluted earnings per share for the second quarter of 2020 were $1.65 as compared to $1.99 for the second quarter of 2019.  Also, adjusted EBITDA was $58.1 million for the second quarter of 2020 as compared to $66.7 million for the second 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, “Second quarter results were generally in line with our expectations and reflected strong demand for our infusion pumps due to the COVID-19 pandemic.”

Revenues by product line for the three and six months ended June 30, 2020 and 2019 were as follows (in millions):

  Three months ended
June 30,
   Six months ended
June 30,
  
Product Line 2020 2019 $ Change 2020 2019 $ Change
Infusion Consumables $111.0  $117.7  $(6.7)  $234.5  $238.2  $(3.7)
Infusion Systems 91.1  81.3  9.8   179.5  165.6  13.9 
IV Solutions* 89.2  102.6  (13.4)  193.5  215.8  (22.3)
Critical Care 12.1  10.7  1.4   24.5  23.6  0.9 
  $303.4  $312.3  $(8.9)  $632.0  $643.2  $(11.2)

*IV Solutions includes $15.5 million and $29.0 million of contract manufacturing to Pfizer for the three and six months ended June 30, 2020, respectively, as compared to $23.0 million and $44.5 million for the same periods in the prior year.

Conference Call

The Company will host a conference call to discuss second 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 4305099.  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,
2020
 December 31,
2019
  (Unaudited) (1)
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $446,134  $268,670 
Short-term investment securities 14,564  23,967 
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES 460,698  292,637 
Accounts receivable, net of allowance for doubtful accounts 197,775  202,219 
Inventories 322,766  337,640 
Prepaid income taxes 11,694  15,720 
Prepaid expenses and other current assets 43,772  33,981 
TOTAL CURRENT ASSETS 1,036,705  882,197 
PROPERTY AND EQUIPMENT, net 454,824  456,085 
OPERATING LEASE RIGHT-OF-USE ASSETS 49,712  34,465 
GOODWILL 32,472  31,245 
INTANGIBLE ASSETS, net 203,720  211,408 
DEFERRED INCOME TAXES 28,776  27,998 
OTHER ASSETS 52,853  48,984 
TOTAL ASSETS $1,859,062  $1,692,382 
LIABILITIES AND STOCKHOLDERS’ EQUITY    
CURRENT LIABILITIES:    
Accounts payable $101,127  $128,629 
Accrued liabilities 107,083  117,776 
Short-term debt 150,000   
Income tax payable 941  2,063 
TOTAL CURRENT LIABILITIES 359,151  248,468 
CONTINGENT EARN-OUT LIABILITY 20,000  17,300 
OTHER LONG-TERM LIABILITIES 49,883  32,820 
DEFERRED INCOME TAXES 2,091  2,091 
INCOME TAX PAYABLE 16,140  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 — 20,937 shares at June 30, 2020 and
20,743 shares at December 31, 2019 and outstanding — 20,936 shares at June 30, 2020 and 20,742 shares at
December 31, 2019
 2,094  2,074 
Additional paid-in capital 675,497  668,947 
Treasury stock, at cost (140) (157)
Retained earnings 757,524  721,782 
Accumulated other comprehensive loss (23,178) (15,402)
TOTAL STOCKHOLDERS' EQUITY 1,411,797  1,377,244 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,859,062  $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
June 30,
 Six months ended
June 30,
  2020 2019 2020 2019
TOTAL REVENUES $303,379   $312,282   $631,986   $643,214  
COST OF GOODS SOLD 197,095   208,413   404,287   404,042  
GROSS PROFIT 106,284   103,869   227,699   239,172  
OPERATING EXPENSES:                
Selling, general and administrative 67,242   67,824   139,547   140,457  
Research and development 10,279   11,199   21,025   24,022  
Restructuring, strategic transaction and integration 6,482   37,041   18,789   61,433  
Change in fair value of contingent earn-out 2,700   (39,500) 2,700   (47,200)
Contract settlement 25   1,039   25   3,822  
TOTAL OPERATING EXPENSES 86,728   77,603   182,086   182,534  
INCOME FROM OPERATIONS 19,556   26,266   45,613   56,638  
INTEREST EXPENSE (771) (139) (967) (272)
OTHER INCOME (EXPENSE), net 2,053   1,479   (3,427) 4,670  
INCOME BEFORE INCOME TAXES 20,838   27,606   41,219   61,036  
PROVISION FOR INCOME TAXES (1,930) (4,773) (5,477) (7,205)
NET INCOME $18,908   $22,833   $35,742   $53,831  
NET INCOME PER SHARE        
Basic $0.91   $1.11   $1.72   $2.62  
Diluted $0.88   $1.06   $1.66   $2.50  
WEIGHTED AVERAGE NUMBER OF SHARES                
Basic 20,880   20,622   20,831   20,577  
Diluted 21,506   21,520   21,545   21,546  
             

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 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.

Supply chain restructuring: Occasionally, we incur 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.

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, contract settlement, and supply chain restructuring.  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,
 2020 2019
GAAP net income$18,908  $22,833 
    
Non-GAAP adjustments:   
Interest, net(161) (1,565)
Stock compensation expense5,410  6,229 
Depreciation and amortization expense21,618  18,764 
Restructuring, strategic transaction and integration6,482  37,041 
Change in fair value of contingent earn-out2,700  (39,500)
Contract settlement1,210  1,808 
Supply chain restructuring  16,349 
Provision for income taxes1,930  4,773 
Total non-GAAP adjustments39,189  43,899 
    
Adjusted EBITDA$58,097  $66,732 
    
  Adjusted diluted earnings per
share
 Three months ended
June 30,
 2020 2019
GAAP diluted earnings per share$0.88  $1.06 
    
Non-GAAP adjustments:   
Stock compensation expense$0.25  $0.29 
Amortization expense$0.27  $0.19 
Restructuring, strategic transaction and integration$0.30  $1.72 
Change in fair value of contingent earn-out$0.13  $(1.84)
Contract settlement$0.06  $0.08 
Supply chain restructuring$  $0.76 
Estimated income tax impact from adjustments$(0.24) $(0.27)
Adjusted diluted earnings per share$1.65  $1.99 
        
        

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.