ICU Medical, Inc. Announces Third Quarter 2015 Results

SAN CLEMENTE, Calif., Nov. 5, 2015 (GLOBE NEWSWIRE) — ICU Medical, Inc., (Nasdaq:ICUI) (“ICU Medical”), a leader in the development, manufacture and sale of innovative medical devices used in infusion therapy, oncology and critical care applications, today announced financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Results

Third quarter 2015 revenue was $86.0 million, compared to $77.5 million in the same period last year. GAAP net income for the third quarter of 2015 was $16.3 million, or $0.98 per diluted share, as compared to GAAP net income of $6.4 million, or $0.42 per diluted share, for the third quarter of 2014. Adjusted diluted earnings per share for the third quarter of 2015 was $1.00 as compared to $0.66 for the third quarter of 2014. Also, adjusted EBITDA was $29.7 million for the third quarter of 2015 as compared to $18.9 million for the third quarter of 2014.

Vivek Jain, ICU Medical’s Chief Executive Officer, said, “Our revenue, gross margin, adjusted EBITDA and net income results in the third quarter were above our expectations as we achieved growth in both our direct and OEM channels. Based on our results year-to-date in 2015 and expectations for the remainder of the year, we are adjusting our full year 2015 guidance.”

Revenues by market segment for the three months ended September 30, 2015 and 2014 were as follows:

  (dollars in millions)
  Three months ended
September 30,
Market Segment 2015 2014  Change
Infusion Therapy $62.1 $55.0 $7.1
Oncology 11.2 9.4 1.8
Critical Care 12.5 12.8 (0.3)
Other 0.2 0.3 (0.1)
  $86.0 $77.5 $8.5

The Company ended the third quarter with a strong balance sheet. As of September 30, 2015, cash, cash equivalents and investment securities totaled $394.1 million and working capital was $476.5 million. Additionally, the Company generated operating cash flow of $16.7 million for the third quarter of 2015.

Updated Fiscal Year 2015 Guidance

For the year, the Company now expects revenue to be in the range of $335 million to $340 million, compared to the previous range of $325 million to $330 million; GAAP diluted earnings per share to be in the range of $3.13 to $3.21, compared to the previous range of $2.63 to $2.83; adjusted diluted earnings per share to be in the range of $3.88 to $3.96, compared to the previous range of $3.49 to $3.69; and adjusted EBITDA to be in the range of $110 million to $112 million, compared to the previous range of $100 million to $105 million.

Conference Call

The Company will be conducting a conference call concerning these announcements at 4:30 p.m. EST (1:30 p.m. PST), today, Thursday, November 5, 2015. The call can be accessed at 800-936-9761, international 408-774-4587, conference ID 6382989. The conference call will be simultaneously available by webcast, which can be accessed by going to the Company’s website at www.icumed.com, clicking on the Investors tab, clicking on the Webcast icon and following the prompts. The webcast will also be available by replay.

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”). 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. 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 intangible asset amortization expense, depreciation expense, stock compensation expense, restructuring and strategic transaction expense, gain on sale of building, legal settlements and income tax expense. Adjusted Diluted EPS excludes, net of tax, intangible asset amortization expense, stock compensation expense, restructuring and strategic transaction expense, gain on sale of building and legal settlements.

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 limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.

Reconciliations of our GAAP to non-GAAP financial are included in the financial tables in this press release.

About ICU Medical, Inc.

ICU Medical, Inc. (Nasdaq:ICUI) develops, manufactures and sells innovative medical technologies used in infusion therapy, oncology, and critical care applications. ICU Medical’s products improve patient outcomes by helping prevent bloodstream infections and protect healthcare workers from exposure to infectious diseases or hazardous drugs. The Company’s complete product line includes custom IV systems, closed delivery systems for hazardous drugs, needlefree IV connectors, closed blood sampling systems, and hemodynamic monitoring systems. ICU Medical is headquartered in San Clemente, California. For more information, visit the Company’s website 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, our full year 2015 guidance 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 continued 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 Annual Report on Form 10-K for the year ended December 31, 2014. 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
(Amounts in thousands, except per share data)
     
  September 30, December 31,
  2015 2014
  (unaudited) (1)
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents  $ 355,368  $ 275,812
Investment securities 38,695 70,952
Cash, cash equivalents and investment securities 394,063 346,764
Accounts receivable, net of allowance for doubtful accounts of $1,123 at September 30, 2015 and $1,127 at December 31, 2014 49,242 39,051
Inventories 40,681 36,933
Prepaid income taxes 8,798 3,963
Prepaid expenses and other current assets 14,379 5,818
Deferred income taxes 6,534 4,683
Total current assets 513,697 437,212
     
PROPERTY AND EQUIPMENT, net 78,768 86,091
GOODWILL 1,478 1,478
INTANGIBLE ASSETS, net 6,365 7,063
DEFERRED INCOME TAXES 9,920 9,258
   $ 610,228  $ 541,102
LIABILITIES AND STOCKHOLDERS’ EQUITY    
CURRENT LIABILITIES:    
Accounts payable  $ 14,732  $ 11,378
Accrued liabilities 22,471 17,350
Total current liabilities 37,203 28,728
     
LONG-TERM LIABILITIES 1,566
DEFERRED INCOME TAXES 3,069 1,376
INCOME TAX LIABILITY 1,222 2,746
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 and outstanding, 15,951 shares at September 30, 2015 and 15,595 shares at December 31, 2014 1,595 1,559
Additional paid-in capital 134,413 107,336
Retained earnings 448,433 408,911
Accumulated other comprehensive loss (17,273) (9,554)
Total stockholders’ equity 567,168 508,252
   $ 610,228  $ 541,102
______________________________________________________    
(1) December 31, 2014 balances were derived from audited consolidated financial statements.
 
 
ICU Medical, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Amounts in thousands, except per share data)
(unaudited)
         
  Three months ended
September 30,
Nine months ended
September 30,
  2015 2014 2015 2014
REVENUES:        
Net sales  $ 85,891  $ 77,329  $ 250,876  $ 228,997
Other 125 128 405 367
TOTAL REVENUE 86,016 77,457 251,281 229,364
COST OF GOODS SOLD 39,751 39,310 118,741 117,648
Gross profit 46,265 38,147 132,540 111,716
OPERATING EXPENSES:        
Selling, general and administrative 20,206 21,843 60,698 68,640
Research and development 4,227 5,055 11,657 13,252
Restructuring and strategic transaction 3,411 2,840 3,411 2,840
Gain on sale of building (1,086) (1,086)
Legal settlements (5,261) 1,798
Total operating expenses 21,497 29,738 76,478 84,732
Income from operations 24,768 8,409 56,062 26,984
OTHER INCOME 230 155 996 572
Income before income taxes 24,998 8,564 57,058 27,556
PROVISION FOR INCOME TAXES (8,732) (2,136) (17,536) (8,593)
NET INCOME  $ 16,266  $ 6,428  $ 39,522  $ 18,963
NET INCOME PER SHARE        
Basic  $ 1.02  $ 0.42  $ 2.50  $ 1.25
Diluted  $ 0.98  $ 0.42  $ 2.41  $ 1.22
WEIGHTED AVERAGE NUMBER OF SHARES        
Basic 15,894 15,319 15,790 15,220
Diluted 16,575 15,488 16,409 15,497
 
ICU Medical, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(unaudited)
  Nine months ended September 30,
  2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income  $ 39,522  $ 18,963
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 13,266 14,642
Provision for doubtful accounts 53 3
Provision for warranty and returns 38 (488)
Stock compensation 9,305 6,990
Loss (gain) on disposal of property and equipment (1,102) 8
Bond premium amortization 1,451 1,599
Cash provided (used) by changes in operating assets and liabilities    
Accounts receivable (11,390) 9,433
Inventories (4,867) (4,655)
Prepaid expenses and other assets (8,824) 2,146
Accounts payable 3,246 681
Accrued liabilities 6,915 2,123
Income taxes, including excess tax benefits and deferred income taxes (5,177) (3,098)
Net cash provided by operating activities 42,436 48,347
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment (7,729) (14,924)
Proceeds from sale of asset 3,592 5
Intangible asset additions (778) (709)
Purchases of investment securities (40,217) (78,993)
Proceeds from sale of investment securities 70,293 69,470
Net cash provided (used) by investing activities 25,161 (25,151)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from exercise of stock options 10,974 9,105
Proceeds from employee stock purchase plan 2,162 2,485
Tax benefits from exercise of stock options 6,194 2,734
Purchase of treasury stock (1,523) (5,836)
Net cash provided by financing activities 17,807 8,488
Effect of exchange rate changes on cash (5,848) (5,465)
NET INCREASE IN CASH AND CASH EQUIVALENTS 79,556 26,219
CASH AND CASH EQUIVALENTS, beginning of period 275,812 226,022
CASH AND CASH EQUIVALENTS, end of period  $ 355,368  $ 252,241
     
NON-CASH INVESTING ACTIVITIES    
 Accrued liabilities for property and equipment  $ 1,106  $ 100
 
 
ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures 
(Amounts in thousands, except per share data)
(unaudited)
         
         
  Adjusted EBITDA Adjusted EBITDA
  Three months ended September 30, Nine months ended September 30,
  2015 2014 2015 2014
         
GAAP net income $16,266 $6,428 $39,522 $18,963
         
Non-GAAP adjustments:        
 Stock compensation expense (a) 3,358 2,531 9,305 6,990
 Depreciation and amortization expense (b) 4,240 4,976 13,266 14,642
 Restructuring and strategic transaction expense (c) 3,411 2,840 3,411 2,840
 Gain on sale of building (d) (1,086) (1,086)
 Legal settlements (e) (5,261) 1,798
 Provision for income taxes (f) 8,732 2,136 17,536 8,593
Total non-GAAP adjustments 13,394 12,483 44,230 33,065
         
Adjusted EBITDA $29,660 $18,911 $83,752 $52,028
         
         
  Adjusted diluted earnings per share Adjusted diluted earnings per share
  Three months ended September 30, Nine months ended September 30,
  2015 2014 2015 2014
         
GAAP diluted earnings per share $0.98 $0.42 $2.41 $1.22
         
Non-GAAP adjustments:        
 Stock compensation expense (a) $0.20 $0.16 $0.57 $0.45
 Amortization expense (g) $0.02 $0.04 $0.09 $0.12
 Restructuring and strategic transaction expense (c) $0.21 $0.18 $0.21 $0.18
 Gain on sale of building (d)  $ (0.07) $ —  $ (0.07) $ —
 Legal settlements (e)  $ (0.32) $ — $0.11 $ —
 Estimated income tax impact from adjustments (h)  $ (0.02)  $ (0.14)  $ (0.31)  $ (0.26)
         
Adjusted diluted earnings per share $1.00 $0.66 $3.01 $1.71
         
         
(a) Stock-based compensation expense in accordance with ASC 718.
(b) Depreciation of fixed assets and amortization of intangible assets.
(c) Restructuring and strategic transaction expense.
(d) Gain on sale of building.
(e) Legal settlements. 
(f) Income tax expense recognized during the period.
(g) Amortization expense. 
(h) Estimated income tax effect on adjustments for stock compensation expense, amortization expense, restructuring and strategic transaction expense, gain on sale of building and legal settlements.
 
ICU Medical, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures – Fiscal Year 2015 Outlook
(Amounts in thousands, except per share data)
(unaudited)
     
     
GAAP net income $51,555 $52,879
     
Non-GAAP adjustments:    
 Stock compensation expense (a) 12,695 12,695
 Depreciation and amortization expense (b) 17,936 17,936
 Restructuring and strategic transaction expense (c) 3,411 3,411
 Gain on sale of building (d) (1,086) (1,086)
 Legal settlements (e) 1,798 1,798
 Provision for income taxes (f) 23,734 24,416
Total non-GAAP adjustments 58,488 59,170
     
Adjusted EBITDA $110,043 $112,049
     
     
GAAP diluted earnings per share $3.13 $3.21
     
Non-GAAP adjustments:    
 Stock compensation expense (a) $0.77 $0.77
 Amortization expense (g) $0.11 $0.11
 Restructuring and strategic transaction expense (c) $0.21 $0.21
 Gain on sale of building (d)  $ (0.07)  $ (0.07)
 Legal settlements (e) $0.11 $0.11
 Estimated income tax impact from adjustments (h)  $ (0.38)  $ (0.38)
     
Adjusted diluted earnings per share $3.88 $3.96
     
(a) Stock-based compensation expense in accordance with ASC 718.
(b) Depreciation of fixed assets and amortization of intangible assets.
(c) Restructuring and strategic transaction expense.
(d) Gain on sale of building.
(e) Legal settlements. 
(f) Income tax expense recognized during the period.
(g) Amortization expense. 
(h) Estimated income tax effect on adjustments for stock compensation expense, amortization expense, restructuring and strategic transaction expense, gain on sale of building and legal settlements.
CONTACT: ICU Medical, Inc.
         Scott Lamb, Chief Financial Officer
         (949) 366-2183
         
         ICR, Inc.
         John Mills, Partner
         (646) 277-1254