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ICU MEDICAL INC/DE (ICUI) Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid operational results: revenue $548.9M, GAAP gross margin 38%, adjusted EPS $2.10, adjusted EBITDA $100.3M; adjusted gross margin expanded to 40%, aided by IV Solutions JV deconsolidation .
  • Versus Wall Street consensus, ICUI beat on revenue ($548.9M vs $540.4M*) and posted a significant upside on EPS ($2.10 vs -$0.79*), reflecting JV-related accounting items (gain on sale) and tax benefits, plus margin expansion; guidance narrowed (EBITDA $380–$390M; adj. EPS $6.85–$7.15) .
  • Management flagged tariffs as the primary headwind, with ~$30M FY25 expense now expected (Costa Rica tariff increased to 15%); most Q2 tariff cash outlay was capitalized in inventory, limiting P&L impact to ~$3M in the quarter .
  • Strategic catalysts: continued consumables strength (record quarter), IV Systems momentum (Plum Duo/Solo platform, pending 510(k) filings for MedFusion 5000 and CAD pumps), and JV equity income; the narrative supports sequential improvement in H2 despite tariff pressures .

What Went Well and What Went Wrong

What Went Well

  • Record Consumables sales with organic growth; management cited new customer implementations, price improvements, and niche-market strength: “It was a record quarter... driven by new global customer expectations, price improvements, rapid growth in some of our niche markets” .
  • Gross margin expanded meaningfully to 40% (adjusted), driven by IV Solutions deconsolidation (~+250 bps) and FX synergies; EBITDA up 10% YoY to $100M .
  • Platform progress: 510(k) submissions underway for MedFusion 5000 and CAD pumps, enabling a unified LifeShield software across pump modalities and paving the way for an enterprise infusion platform refresh .

What Went Wrong

  • Tariffs increased the annual headwind (now at the high end of $25–$30M for FY25) after Costa Rica rates moved from 10% to 15%; EBITDA guidance narrowed to reflect higher tariff costs .
  • Free cash flow was negative in Q2 (-$8.5M) on higher tax and tariff payments and JV timing effects, despite positive operating cash flow .
  • Vital Care revenue declined sharply YoY due to IV Solutions deconsolidation, reducing reported segment contribution; management expects Vital Care to be flattish for the year excluding IV Solutions .

Financial Results

Consolidated Performance vs Prior Quarters

MetricQ4 2024 (oldest)Q1 2025Q2 2025 (newest)
Revenue ($USD Millions)$629.8 $604.7 $548.9
GAAP Gross Margin %36.1% 35% 38%
Adjusted Gross Margin %—37% 40%
GAAP Diluted EPS ($)$(0.97) $(0.63) $1.43
Adjusted Diluted EPS ($)$2.11 $1.72 $2.10
Adjusted EBITDA ($USD Millions)$105.5 $99.4 $100.3
Free Cash Flow ($USD Millions)$16.2 $36.7 $(8.5)

Notes:

  • Q2 included a $41.8M gain on sale of business (IV Solutions JV), impacting GAAP EPS .
  • Q2 tariff expense recognized in P&L was ~$3M; most was capitalized at quarter-end .

Segment Revenue Breakdown (Reported)

Segment ($USD Millions)Q4 2024 (oldest)Q1 2025Q2 2025 (newest)
Consumables$268.1 $266.2 $273.1
Infusion Systems$171.7 $166.3 $167.7
Vital Care$190.0 $172.2 $108.0
Total$629.8 $604.7 $548.8

KPIs and P&L Detail (Q2 2025)

KPI / Line ItemQ2 2025
GAAP Gross Profit ($M)$208.1
Adjusted EBITDA ($M)$100.3
Net Income ($M)$35.3
Gain on Sale of Business ($M)$41.8
Equity in Earnings of Unconsolidated Affiliates ($M)$2.8
Adjusted SG&A ($M)$116.3
Adjusted R&D ($M)$21.3
Free Cash Flow ($M)$(8.5)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP Net Loss ($M)FY 2025$(45) to $(28) $(43) to $(35) Narrowed (improved mid-point)
GAAP Loss per Share ($)FY 2025$(1.81) to $(1.11) $(1.68) to $(1.38) Narrowed (improved mid-point)
Adjusted EBITDA ($M)FY 2025$380 to $405 $380 to $390 Lowered top-end (narrowed)
Adjusted EPS ($)FY 2025$6.55 to $7.25 $6.85 to $7.15 Narrowed (raised low-end)
Adjusted Gross Margin (%)FY 202539%–40% (pre-tariff context) 39%–40% despite ~$30M tariffs Maintained
Adjusted OpEx (% of Revenue)H2 2025—~26% New modeling detail
Net Interest Expense ($M)FY 2025—~83 New modeling detail
Adjusted Tax Rate (%)H2 2025—~25% New modeling detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Tariffs/MacroFY25 tariff headwind initially framed at $25–$30M with FX offsets; “please don’t annualize” for 2026 Costa Rica tariff raised to 15%; FY25 tariff expense likely at high end ~$30M; P&L Q2 impact ~50 bps GM and ~$3M expense due to inventory capitalization Headwinds intensified; mitigation shifting to offsets
IV Solutions JVQ1: JV closed May 1; neutral to adj. EPS; deconsolidation expected to expand GM; $200M proceeds used to reduce debt Q2: ~$2.8M equity income; deconsolidation added ~250 bps to GM; gain on sale $41.8M Strategic execution; accretive to GM; minimal H2 JV equity expected
Consumables StrengthQ1: double-digit growth; oncology and chronic-care niches; pricing +100 bps annual Record quarter; ongoing mid-single-digit growth outlook Sustained momentum
IV Systems PlatformQ1: Plum Duo/Solo cleared; unified LifeShield vision; remediation progress 510(k) filings submitted (MedFusion 5000, CAD); refresh cycle discussions starting; sequential segment growth expected; potential record Q3 Product cycle building
Quality/RegulatoryQ1: major remediation spend; FDA warning letter requiring new 510(k)s; field actions underway Continued remediation spend ($13M in Q2 cash); filings accepted into review Execution ongoing
Balance Sheet/DeleveragingQ1: ~$250M YTD principal repaid including JV proceeds Debt $1.35B; cash $300M; goal to transfer value from debt to equity over time Deleveraging track continues

Management Commentary

  • “Adjusted gross margin for the second quarter was 40%... a three percentage point expansion... The biggest driver... deconsolidation of the IV Solutions business (~2.5%)” — CFO .
  • “We received an additional 510(k) clearance for our Clave Neutral Displacement Connectors… correlates usage with lower patient infection rates” — CEO .
  • “We submitted 510(k)s for both the MedFusion 5000 syringe pump, the CAD ambulatory pumps, and all related LifeShield safety software… all of our pumps will now connect on a single software solution” — CEO .
  • “Our mindset is shifting to offsetting as much of the tariff burden on the assumption that these are now permanent” — CEO .
  • “If you were to exclude the $30M impact of tariffs, the midpoint of our updated EBITDA guidance range would be $10M above the top end of our original post-JV guidance” — CFO .

Q&A Highlights

  • Tariffs: Guidance assumes China at current rates; FY25 EBITDA narrowing driven essentially by tariffs; Costa Rica exposure largest; do not annualize to 2026 .
  • Sequential growth: Expect Q3 sequential growth in Consumables and IV Systems; Vital Care outlook less precise; narrative focuses on profit/cash flow from core segments .
  • Competitive landscape: Baxter pump suspension may prompt closer evaluations but management expects all players to return; ICUI positioning is for long-term technology value .
  • Replacement cycle: ICUI’s installed base likely to enter replacement discussions into 2026; minimal impact in Q2; Plum Solo enables meaningful upgrade economics via software value capture .

Estimates Context

  • Q2 beats versus consensus:
    • Revenue $548.866M vs $540.375M* (beat) .
    • Primary EPS $2.10 vs -$0.785* (strong beat) .
MetricQ2 2025 Consensus*Q2 2025 Actual
Revenue ($USD Millions)540.375*548.866
Primary EPS ($)-0.785*2.10

Values marked with * retrieved from S&P Global.

Implications:

  • Street likely revises EPS higher given outsized beat and narrowed FY25 adj. EPS range ($6.85–$7.15) .
  • Revenue trajectory shows resilience despite deconsolidation and tariffs; H2 margin math supports maintaining 39–40% adjusted GM .

Key Takeaways for Investors

  • Core businesses (Consumables, IV Systems) are driving margin and cash-generation narratives; Q2 adjusted GM at 40% despite tariff headwinds underscores structural improvement .
  • Tariffs are the primary constraint on guidance; management is shifting from mitigation to offsets (pricing, cost actions), with ~$30M FY25 tariff expense modeled and limited P&L Q2 impact due to inventory capitalization .
  • Platform and regulatory progress (MedFusion/CAD 510(k)s) should catalyze IV Systems refresh and competitive wins in 2026; near-term sequential growth expected and potential record IV Systems quarter in Q3 .
  • JV deconsolidation is accretive to reported gross margins and contributed equity income; balance sheet deleveraging continues, positioning for eventual value transfer from debt to equity .
  • Guidance narrowing (adj. EBITDA $380–$390M; adj. EPS $6.85–$7.15) is conservative and tariff-informed; upside exists if offsets exceed expectations or FX remains favorable .
  • Tactical trading view: results and margin trajectory favor constructive near term; watch tariff policy developments, FDA review timelines, and IV Systems deployment pace as stock catalysts .

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