ICU MEDICAL INC/DE (ICUI) Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered a broad-based beat: revenue $604.7M vs $574.2M consensus, and adjusted EPS $1.72 vs -$0.46 consensus, with GAAP gross margin 35.0% and adjusted EBITDA $99.4M; management characterized results as “generally in line with our expectations” . Values retrieved from S&P Global.*
• Guidance framework maintained post May 1 IV Solutions JV close; FY25 revenue reduced by ~$235M and adjusted EBITDA by $15–$20M, neutral to adjusted EPS, with trends likely at the low end given new tariff headwinds .
• Tariffs now expected to cost $25–$30M in FY25 (mostly 2H), with FX offsets potentially covering about half, and $5–$10M residual unmitigated impact; management urges not to annualize this number .
• Strategic catalysts: JV creates a large-scale, resilient IV solutions network; new FDA clearances for Plum Solo/Duo and LifeShield software; 510(k) filings planned within 90 days for Medfusion and CAD following an FDA warning letter .
• Balance sheet progress: $48M debt paydown in Q1 and a further $200M after JV close, nearly $250M principal repaid year-to-date, supporting deleveraging narrative .

What Went Well and What Went Wrong

What Went Well

• Broad-based growth: “All 3 reporting segments had good year-over-year growth,” with Consumables +9% reported, Infusion Systems +6%, Vital Care +10% reported; IV solutions shortage tailwind has ended but momentum continued .
• Profitability and cash: Adjusted EPS rose to $1.72 (vs $0.96 y/y), adjusted EBITDA to $99.4M (vs $78.8M y/y), and free cash flow was $36.7M, highlighting quality of earnings and working capital benefits .
• Product innovation: Multiple 510(k) clearances over 18 months and launch of Plum Solo/Duo with LifeShield software; “we can expect to have the most modern fleet of infusion devices” anchoring the portfolio .

What Went Wrong

• Tariff headwind: FY25 direct tariff expense of $25–$30M, mostly in 2H, likely drives guidance outcomes to the low end absent further offsets .
• Regulatory overhang: FDA warning letter requesting new 510(k)s for Medfusion and CAD products; filings targeted within 90 days, but timing and clearance remain uncertain .
• Mix and tailwinds normalizing: IV solutions national shortage ended, reducing extraordinary demand; Vital Care may see later-year revenue impact from halting imports of unprofitable sourced items (China) as inventory depletes .

Financial Results

Segment revenue breakdown and YoY comparison:

Key KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Revenue for Q1 was $599 million… Adjusted EBITDA was $99 million and adjusted EPS was $1.72.” (prepared remarks) .
• “Adjusted gross margin for the quarter was 37%… Total adjusted operating expenses were $138 million and represented 23.1% of revenue.” (CFO) .
• “We have repaid almost $250 million in principal year-to-date… subsequent to quarter end… used the $200 million of proceeds to pay down the term loan A.” (CFO) .
• “Please do not annualize the FY ’25 tariff expense… we would anticipate the direct expense from tariffs… $25 million to $30 million… favorable EBITDA impact from currency… offset almost half.” (CFO) .
• “Last month, we received a warning letter from FDA… asking for new 510(k) on the Medfusion and CAD product families… we believe we will have 510(k)s for both products filed within 90 days.” (CEO) .
• JV strategic value: “We still own 40% of an asset that's hard to replicate… better access to technology… potential earn-out payment.” (CEO) .

Q&A Highlights

• Consumables drivers: Oncology, renal, home infusion/chronic care, and early-year GPO pricing actions; price not the main driver of Q1’s ~10% growth .
• Infusion Systems adoption: Very few Plum Duo installs so far; ramp expected in 2H; upgrade cycle with Plum Solo begins late 2025/2026 .
• Tariffs: Costa Rica is largest exposure; China-sourced low-tech items to be requalified or discontinued; Mexico exposure mitigated via USMCA exemption and logistics .
• Guidance tone: Aim to hold the low end of ranges for gross margin (39–40%) and adjusted EBITDA ($380–$405M including JV impact) amid tariffs/FX .
• Capital environment: Status quo; essential investments proceed; no meaningful slowdown attributed to tariffs .

Estimates Context

How Q1 2025 results compared to Wall Street consensus:

Key Takeaways for Investors

• Strong beat vs consensus on revenue and EPS; sustained segment momentum despite the end of the IV solutions shortage supports top-line resilience . Values retrieved from S&P Global.*
• FY25 outcomes likely track to the low end for adjusted EBITDA/EPS/gross margin without additional offsets, but FX tailwinds and cost controls cushion tariff impact; monitor Q2 tariff/FX update .
• JV with Otsuka enhances IV solutions supply resilience and innovation, with ICU retaining 40% ownership and commercial control in North America—an underappreciated medium-term asset .
• Regulatory execution is critical: near-term 510(k) filings for Medfusion/CAD aim to resolve the warning letter and unlock portfolio harmonization on LifeShield, supporting competitive positioning .
• Plum Solo/Duo platforms are cleared; expect 2H install momentum and a multi-year installed base upgrade cycle starting late 2025/2026—a visible driver for Systems and Consumables .
• Deleveraging continues: ~$250M principal repaid YTD (including JV proceeds), improving equity value transfer over time; watch FCF durability and working capital trends .
• Near-term trading: Positive reaction likely on beats and deleveraging; volatility around tariff headlines and FDA progress is the key risk; medium-term thesis centers on execution of mitigations, regulatory clearances, and pump upgrade cycle .