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 December 31, 2019.
Fourth Quarter 2019 Results
Fourth quarter 2019 revenue was $315.5 million, compared to
$340.4 million in the same period last year. GAAP gross profit for
the fourth quarter of 2019 was $114.1 million, as compared to
$134.6 million in the same period last year. GAAP gross
margin for the fourth quarter of 2019 was 36%, as compared to 40%
in the same period last year. GAAP net income for the fourth
quarter of 2019 was $20.6 million, or $0.96 per diluted share, as
compared to GAAP net loss of $7.4 million, or $0.36 loss per
diluted share, for the fourth quarter of 2018. Adjusted
diluted earnings per share for the fourth quarter of 2019 were
$1.94 as compared to $2.14 for the fourth quarter of 2018.
Also, adjusted EBITDA was $60.7 million for the fourth quarter of
2019 as compared to $69.3 million for the fourth 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, “Fourth
quarter revenue and adjusted EBITDA were generally in line with our
expectations.”
Revenues by market segment for the three and twelve
months ended December 31, 2019 and 2018 were as follows (in
millions):
|
|
Three months endedDecember
31, |
|
|
|
|
|
|
Year endedDecember 31, |
|
|
|
|
Market Segment |
|
2019 |
|
2018 |
|
$Change |
|
%Change |
|
|
2019 |
|
2018 |
|
$Change |
|
|
%Change |
|
Infusion Consumables |
|
$ |
119.6 |
|
|
$ |
121.5 |
|
|
$ |
(1.9 |
) |
|
(1.6 |
)% |
|
$ |
477.6 |
|
|
$ |
483.0 |
|
|
$ |
(5.4 |
) |
|
(1.1 |
)% |
Infusion Systems |
|
83.8 |
|
|
92.2 |
|
|
(8.4 |
) |
|
(9.1 |
)% |
|
328.3 |
|
|
355.5 |
|
|
(27.2 |
) |
|
(7.7 |
)% |
IV Solutions* |
|
101.0 |
|
|
113.8 |
|
|
(12.8 |
) |
|
(11.2 |
)% |
|
415.0 |
|
|
508.0 |
|
|
(93.0 |
) |
|
(18.3 |
)% |
Critical Care |
|
11.1 |
|
|
12.8 |
|
|
(1.7 |
) |
|
(13.3 |
)% |
|
45.3 |
|
|
53.5 |
|
|
(8.2 |
) |
|
(15.3 |
)% |
|
|
$ |
315.5 |
|
|
$ |
340.3 |
|
|
$ |
(24.8 |
) |
|
(7.3 |
)% |
|
$ |
1,266.2 |
|
|
$ |
1,400.0 |
|
|
$ |
(133.8 |
) |
|
(9.6 |
)% |
*IV Solutions includes $19.7 million and $81.0 million of
contract manufacturing to Pfizer for the three and twelve months
ended December 31, 2019, respectively, as compared to $18.9 million
and $78.2 million for the same periods in the prior year.
Fiscal Year 2020 Guidance
For the Fiscal Year 2020, the Company expects adjusted EBITDA to
be in the range of $240 million to $260 million, and adjusted
diluted EPS to be in the range of $6.50 to $7.20.
Conference Call
The Company will host a conference call to discuss fourth
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 9482926. 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, including our fiscal year 2020
guidance. 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
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
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In thousands)
|
December 31, 2019 |
|
December 31, 2018 |
|
(Unaudited) |
|
(1) |
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
268,670 |
|
|
$ |
344,781 |
|
Short-term investment securities |
23,967 |
|
|
37,329 |
|
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT
SECURITIES |
292,637 |
|
|
382,110 |
|
Accounts receivable, net of allowance for doubtful accounts |
202,219 |
|
|
176,298 |
|
Inventories |
337,640 |
|
|
311,163 |
|
Prepaid income taxes |
15,720 |
|
|
11,348 |
|
Prepaid expenses and other current assets |
33,981 |
|
|
46,117 |
|
TOTAL CURRENT ASSETS |
882,197 |
|
|
927,036 |
|
PROPERTY AND EQUIPMENT,
net |
456,085 |
|
|
432,641 |
|
OPERATING LEASE RIGHT-OF-USE
ASSETS |
34,465 |
|
|
— |
|
LONG-TERM INVESTMENT
SECURITIES |
— |
|
|
2,025 |
|
GOODWILL |
31,245 |
|
|
11,195 |
|
INTANGIBLE ASSETS, net |
211,408 |
|
|
133,421 |
|
DEFERRED INCOME TAXES |
27,998 |
|
|
38,654 |
|
OTHER ASSETS |
48,984 |
|
|
40,419 |
|
TOTAL ASSETS |
$ |
1,692,382 |
|
|
$ |
1,585,391 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable |
$ |
128,629 |
|
|
$ |
120,469 |
|
Accrued liabilities |
117,776 |
|
|
128,820 |
|
Income tax liability |
2,063 |
|
|
— |
|
TOTAL CURRENT LIABILITIES |
248,468 |
|
|
249,289 |
|
CONTINGENT EARN-OUT
LIABILITY |
17,300 |
|
|
47,400 |
|
OTHER LONG-TERM
LIABILITIES |
32,820 |
|
|
20,592 |
|
DEFERRED INCOME TAXES |
2,091 |
|
|
721 |
|
INCOME TAX PAYABLE |
14,459 |
|
|
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 20,743 shares at December 31,
2019 and 20,492 at December 31, 2018 and outstanding 20,742
shares at December 31, 2019 and 20,491 shares at December 31,
2018 |
2,074 |
|
|
2,049 |
|
Additional paid-in capital |
668,947 |
|
|
657,899 |
|
Treasury stock, at cost |
(157 |
) |
|
(95 |
) |
Retained earnings |
721,782 |
|
|
620,747 |
|
Accumulated other comprehensive loss |
(15,402 |
) |
|
(16,945 |
) |
TOTAL STOCKHOLDERS' EQUITY |
1,377,244 |
|
|
1,263,655 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY |
$ |
1,692,382 |
|
|
$ |
1,585,391 |
|
______________________________________________________(1) December 31,
2018 balances were derived from audited consolidated financial
statements.
ICU MEDICAL, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)(In thousands, except per share data)
|
Three months endedDecember
31, |
|
Twelve months endedDecember
31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
TOTAL REVENUES |
$ |
315,523 |
|
|
$ |
340,378 |
|
|
$ |
1,266,208 |
|
|
$ |
1,400,040 |
|
COST OF GOODS SOLD |
201,383 |
|
|
205,738 |
|
|
794,344 |
|
|
830,012 |
|
GROSS PROFIT |
114,140 |
|
|
134,640 |
|
|
471,864 |
|
|
570,028 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
Selling, general and administrative |
70,649 |
|
|
76,531 |
|
|
276,982 |
|
|
320,002 |
|
Research and development |
12,587 |
|
|
13,525 |
|
|
48,611 |
|
|
52,867 |
|
Restructuring, strategic transaction and integration |
11,166 |
|
|
41,119 |
|
|
80,574 |
|
|
105,390 |
|
Contract settlement |
1,915 |
|
|
12,696 |
|
|
5,737 |
|
|
41,613 |
|
Change in fair value of contingent earn-out |
— |
|
|
(100 |
) |
|
(47,400 |
) |
|
20,400 |
|
TOTAL OPERATING EXPENSES |
96,317 |
|
|
143,771 |
|
|
364,504 |
|
|
540,272 |
|
INCOME (LOSS) FROM
OPERATIONS |
17,823 |
|
|
(9,131 |
) |
|
107,360 |
|
|
29,756 |
|
INTEREST EXPENSE |
(138 |
) |
|
(161 |
) |
|
(549 |
) |
|
(709 |
) |
OTHER INCOME (EXPENSE),
net |
3,236 |
|
|
(3,191 |
) |
|
7,896 |
|
|
(6,673 |
) |
INCOME (LOSS) BEFORE INCOME
TAXES |
20,921 |
|
|
(12,483 |
) |
|
114,707 |
|
|
22,374 |
|
(PROVISION) BENEFIT FOR INCOME
TAXES |
(280 |
) |
|
5,128 |
|
|
(13,672 |
) |
|
6,419 |
|
NET INCOME (LOSS) |
$ |
20,641 |
|
|
$ |
(7,355 |
) |
|
$ |
101,035 |
|
|
$ |
28,793 |
|
NET INCOME (LOSS) PER
SHARE |
|
|
|
|
|
|
|
Basic |
$ |
1.00 |
|
|
$ |
(0.36 |
) |
|
$ |
4.90 |
|
|
$ |
1.41 |
|
Diluted |
$ |
0.96 |
|
|
$ |
(0.36 |
) |
|
$ |
4.69 |
|
|
$ |
1.33 |
|
WEIGHTED AVERAGE NUMBER OF
SHARES |
|
|
|
|
|
|
|
Basic |
20,693 |
|
|
20,490 |
|
|
20,629 |
|
|
20,394 |
|
Diluted |
21,393 |
|
|
20,490 |
|
|
21,545 |
|
|
21,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Adjustment to reverse the cost recognition related to the
purchase accounting write-up of inventory to fair market
value: The inventory step-up represents the expense
recognition of fair value adjustments in excess of the historical
cost basis of inventory obtained through acquisition, these charges
are outside of our normal operations and are excluded.
Disposition of certain assets: Occasionally, we may dispose of
certain assets if no longer needed for current operations. We
exclude any gains or losses recognized on the sale of these assets
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.
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,
adjustment to reverse the cost recognition related to the purchase
accounting write-up of inventory to fair market value and
disposition of certain assets. 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
SUBSIDIARIESReconciliation of GAAP to Non-GAAP
Financial Measures (Unaudited)(In thousands)
|
Adjusted EBITDA |
|
Three months EndedDecember
31, |
|
2019 |
|
2018 |
GAAP net income (loss) |
$ |
20,641 |
|
|
$ |
(7,355 |
) |
|
|
|
|
Non-GAAP adjustments: |
|
|
|
Interest, net |
(1,563 |
) |
|
(2,008 |
) |
Stock compensation expense |
5,757 |
|
|
6,249 |
|
Depreciation and amortization expense |
19,891 |
|
|
19,667 |
|
Restructuring, strategic transaction and integration |
11,166 |
|
|
41,119 |
|
Change in fair value of contingent earn-out |
— |
|
|
(100 |
) |
Contract settlement |
3,019 |
|
|
12,810 |
|
Adjustment to reverse the cost recognition related to the purchase
accounting write-up of inventory to fair market value |
1,512 |
|
|
— |
|
Disposition of certain assets |
— |
|
|
4,059 |
|
Provision (Benefit) for income taxes |
280 |
|
|
(5,128 |
) |
Total non-GAAP
adjustments |
40,062 |
|
|
76,668 |
|
|
|
|
|
Adjusted EBITDA |
$ |
60,703 |
|
|
$ |
69,313 |
|
|
Adjusted diluted earnings per share |
|
Three months endedDecember
31, |
|
2019 |
|
2018 (1) |
GAAP diluted earnings (loss) per share |
$ |
0.96 |
|
|
$ |
(0.36 |
) |
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
Stock compensation expense |
$ |
0.27 |
|
|
$ |
0.29 |
|
Amortization expense |
$ |
0.24 |
|
|
$ |
0.20 |
|
Restructuring, strategic transaction and integration |
$ |
0.52 |
|
|
$ |
1.91 |
|
Change in fair value of contingent earn-out |
$ |
— |
|
|
$ |
— |
|
Contract settlement |
$ |
0.14 |
|
|
$ |
0.59 |
|
Adjustment to reverse the cost recognition related to the purchase
accounting write-up of inventory to fair market value |
$ |
0.07 |
|
|
$ |
— |
|
Disposition of certain assets |
$ |
— |
|
|
$ |
0.19 |
|
Estimated income tax impact from adjustments |
$ |
(0.26 |
) |
|
$ |
(0.68 |
) |
Adjusted diluted
earnings per share |
$ |
1.94 |
|
|
$ |
2.14 |
|
_______________________________________________
(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.
ICU Medical, Inc. and
SubsidiariesReconciliation of GAAP to Non-GAAP Financial
Measures - Fiscal Year 2020 Outlook(In millions, except per share
data)(unaudited)
|
Low End of Guidance |
|
High End of Guidance |
GAAP net income |
$ |
71 |
|
|
$ |
86 |
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
Interest, net |
(3 |
) |
|
(3 |
) |
Stock compensation expense |
22 |
|
|
22 |
|
Depreciation and amortization expense |
87 |
|
|
87 |
|
Restructuring, strategic transaction and integration |
40 |
|
|
40 |
|
Contract settlement |
4 |
|
|
4 |
|
Provision for income taxes |
19 |
|
|
24 |
|
Total non-GAAP adjustments |
169 |
|
|
174 |
|
|
|
|
|
Adjusted EBITDA |
$ |
240 |
|
|
$ |
260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share |
$ |
3.29 |
|
|
$ |
3.99 |
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
Stock compensation
expense |
$ |
1.02 |
|
|
$ |
1.02 |
|
Amortization
expense |
$ |
1.07 |
|
|
$ |
1.07 |
|
Restructuring, strategic transaction and integration |
$ |
1.86 |
|
|
$ |
1.86 |
|
Contract settlement |
$ |
0.17 |
|
|
$ |
0.17 |
|
Estimated income tax
impact from adjustments |
$ |
(0.91 |
) |
|
$ |
(0.91 |
) |
Adjusted diluted
earnings per share |
$ |
6.50 |
|
|
$ |
7.20 |
|
CONTACT:ICU Medical, Inc.Scott Lamb, Chief Financial
Officer(949) 366-2183
ICR, Inc.John Mills, Partner(646) 277-1254
ICU Medical (NASDAQ:ICUI)
Historical Stock Chart
From Jun 2024 to Jul 2024
ICU Medical (NASDAQ:ICUI)
Historical Stock Chart
From Jul 2023 to Jul 2024