• Total Revenue: $580 million, representing a 7% growth on a constant currency basis and 6% on a reported basis.
• Adjusted EBITDA: $95 million, a 6% increase from the previous year.
• EPS (Earnings Per Share): $1.59, compared to $1.57 last year.
• Gross Margin: 37%, slightly better than expected due to favorable product mix and supply chain efficiencies.
• Free Cash Flow: $16 million, including a $26 million outflow related to accounts receivable purchase program.
• Cash Balance: Approximately $313 million.
• Debt: $1.6 billion.
• Consumables Growth: 9% growth on both constant currency and reported basis.
• IT Systems Business Unit Growth: 10% constant currency growth and 7% on a reported basis.
• Vital Care Segment: Flat year-over-year on a constant currency and reported basis.
• Adjusted SG&A Expense: $120 million.
• Adjusted R&D Expense: $20 million.
• Adjusted Operating Expenses: $140 million, representing 24.2% of revenue.
• Adjusted Effective Tax Rate: 20%.
• Guidance for Adjusted EBITDA: Raised to a range of $355 million to $365 million.
• Guidance for Adjusted EPS: Raised to a range of $5.40 to $5.70 per share.

• Warning! GuruFocus has detected 8 Warning Signs with ICUI.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ICU Medical Inc (NASDAQ:ICUI) reported a 7% growth in total company revenue on a constant currency basis, with consumables growing 9% and IT systems business unit growing 10%.
• The company achieved higher-than-expected gross margins due to supply chain efficiencies and favorable foreign exchange impacts.
• ICU Medical Inc (NASDAQ:ICUI) generated strong free cash flow, allowing for a reduction in accounts receivable factoring and an increase in cash balance to $313 million.
• The company announced a strategic joint venture with Otsuka Pharmaceutical, expected to enhance innovation and supply reliability in the IV solutions market.
• ICU Medical Inc (NASDAQ:ICUI) raised its full-year adjusted EPS guidance, reflecting improved outlook and performance in the third quarter.

Negative Points

• The company will deconsolidate IV solutions financial results due to the joint venture, impacting revenue reporting.
• ICU Medical Inc (NASDAQ:ICUI) faces challenges in driving meaningful innovation in the IV solutions category as a standalone entity.
• The company experienced some disruption during the implementation of its new ERP system in North America.
• There is potential for unfavorable foreign currency impacts in the fourth quarter as the US dollar strengthens.
• ICU Medical Inc (NASDAQ:ICUI) anticipates a reduction in utilization of its accounts receivable factoring program, which may affect cash flow.

Q & A Highlights

Q: Can you elaborate on the strategic thought process behind entering the joint venture with Otsuka and why you chose to stay in the solutions business? A: Vivek Jain, CEO, explained that selling was never considered as the solutions business is core to their offerings. The joint venture allows ICU Medical to stay in the market while bringing in innovation and diversification through Otsuka's global leadership and innovation capabilities.

Q: Was there any disruption from the ERP implementation in North America, and what benefits are expected moving forward? A: Brian Bonnell, CFO, acknowledged some disruption during the implementation, particularly in August, but stated that the quarter was not materially impacted. The successful implementation is expected to streamline operations and improve efficiencies.

Q: How is the pricing for the Plum dual infusion system holding up in the market? A: Vivek Jain, CEO, stated that they have maintained their pricing strategy, focusing on the value of the technology and customer belief in it. They have not made any changes to their pricing levels and feel confident about their competitive position.

Q: What is the outlook for the Mexican peso and potential tariffs affecting your operations? A: Vivek Jain, CEO, mentioned that while the situation is unclear, they are not overly concerned about potential tariffs impacting their operations significantly, given the broader context of trade between Mexico and the U.S.

Q: Can you provide more details on the put-call option in the joint venture agreement with Otsuka? A: Vivek Jain, CEO, explained that the option can be exercised after five years and is based on a multiple of revenue, allowing ICU Medical to benefit from market growth and ensuring flexibility in the partnership's future direction.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.