ICU MEDICAL INC/DE (ICUI) Q3 2025 Earnings Summary
Executive Summary
- Q3 2025 revenue was $537.0M, down 8.8% YoY due to IV Solutions deconsolidation, but beat S&P Global consensus by ~$25.5M; adjusted EPS was $2.03, materially above consensus, while GAAP diluted EPS was -$0.14, reflecting non-GAAP adjustments and tariff headwinds . Values retrieved from S&P Global.*
- Adjusted gross margin rose to 41% (from 37% YoY and 40% in Q2), driven by IV Solutions deconsolidation, synergies, FX, and a one-time Italy payback accrual reversal; tariffs reduced gross margin by ~200 bps in Q3 .
- FY 2025 guidance was raised: adjusted EBITDA to $395–$405M (from $380–$390M) and adjusted EPS to $7.35–$7.65 (from $6.85–$7.15); GAAP net loss narrowed to $(8)–$0 and GAAP loss per share to $(0.30)–$0.00 .
- Segment performance: Consumables and Infusion Systems grew YoY (record levels), while Vital Care fell with IV Solutions deconsolidation; free cash flow improved to $27.6M despite higher tariffs .
- Potential stock reaction catalysts: broad beats vs consensus, raised FY guidance, record Consumables/Systems scale; watch Q4 tariff step-up and FDA warning letter resolution timeline .
What Went Well and What Went Wrong
What Went Well
- Record Consumables quarter: +8% reported, +7% organic, driven by new implementations, niche markets (oncology/dialysis), and strong census; “It was a record quarter in absolute sales levels” .
- Infusion Systems +9% reported, +8% organic, with double-digit growth in LVP pumps and dedicated sets; active RFPs and start of Plum 360 refresh with Solo approval .
- Adjusted gross margin improved to 41%, aided by IV Solutions deconsolidation (
+500 bps), FX, and Italy payback settlement ($4M revenue/GP) . - Refinancing shifted $190M from higher-cost Term Loan B to A, saving ~$2M annually in interest; $273M debt principal repaid YTD, ending Q3 with $1.3B debt and $300M cash .
What Went Wrong
- Reported revenue declined YoY (to $537.0M from $589.1M), primarily from IV Solutions deconsolidation, and Vital Care fell 52% reported YoY .
- Tariffs stepped up: ~$11M incurred; ~$9M expensed reduced Q3 gross margin
200 bps; CFO guided Q4 tariff expense to $12–$14M ($25M FY total) . - Sequential operating expenses expected to rise in Q4 as incentive comp and discretionary spend deferrals normalize; Q4 OpEx modeled at ~25.5% of revenue vs 24.3% in Q3 .
Financial Results
- Revenue beat consensus; GAAP EPS beat consensus; Adjusted EBITDA beat S&P consensus definition despite tariff headwinds. Values retrieved from S&P Global.*
Segment Revenue Breakdown (Q3 2025 vs Q3 2024)
- Note: IV Solutions disposed May 1, 2025; Vital Care Q3 2025 includes $0.0M IV Solutions vs $88.0M in Q3 2024 .
KPIs and Cash Flow
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “The short story for Q3 is revenue was $533 million…gross margins increased, operating expenses declined, leading to more EBITDA and EPS” (non-GAAP revenue adjustment removes contract manufacturing) .
- “Adjusted gross margin for the third quarter was 41%…benefits from deconsolidation of IV solutions, Italy payback settlement, and FX; tariffs reduced gross margin by ~2 percentage points” .
- “We repaid $273 million in principal year to date…completed refinancing shifting $190 million to term loan A, saving ~$2 million annually” .
- “Strategically, our goal has been to build the most comprehensive and innovative infusion-focused company…we expect consumables and systems businesses to be reliable growers with industry-acceptable profit margin” .
- “We are pleased with our third quarter results” .
Q&A Highlights
- Consumables drivers: wins where ICU holds pump accounts, earlier IV Solutions + consumables wins installing, niche markets (oncology/dialysis), Western Europe strength .
- Plum Duo/Solo traction: taking orders for Solo, signing contracts; installs early days; multi-year refresh of installed base expected to begin mid/late 2026 with impact later that year .
- Tariffs 2026: management reiterated not to annualize 2025 run-rate; multiple supply chain and pricing mitigations in flight .
- Gross margin path: tariff-adjusted target effectively near 43% in Q3 vs 45% long-term goal; levers include technology value, mix shift, portfolio optimization, and financial leverage .
- Free cash flow: solid Q3 despite AR program reduction and tariffs; remediation/restructuring spend expected to decline over time, but tariffs consume cash near-term .
- FDA/warning letters: continued normal dialogue; focus on approvals to drive resolution .
Estimates Context
- ICU beat on top-line and EPS, and outperformed S&P’s EBITDA consensus despite tariff headwinds and IV Solutions deconsolidation . Values retrieved from S&P Global.*
- Note: S&P “EBITDA actual” may reflect standardized (not company “adjusted”) EBITDA; ICU discloses adjusted EBITDA with reconciliation .
Key Takeaways for Investors
- Broad-based beat and raised FY guidance suggest operational momentum in core segments (Consumables, Infusion Systems) despite tariff headwinds .
- Watch Q4 modeling: tariffs $12–$14M, gross margin 40–41%, OpEx ~25.5% of revenue, net interest ~$19M, adjusted tax ~25%, diluted shares ~25M .
- Medium-term: Infusion pump refresh cycle (Plum Solo/Duo, Medfusion 5000, CADD) and software monetization are key growth levers; approvals/closure of warning letters are catalysts .
- Balance sheet: continued deleveraging and refinancing benefits ($~2M interest savings annually); target ~2–2.5x net debt/EBITDA enhances potential for capital return over time .
- Segment mix shift (post IV Solutions JV) structurally lifts margins; Vital Care remains dilutive but cash generative—management open to portfolio optimization where accretive .
- Pricing tailwind (~1% annually) plus synergy capture/FX should help offset tariffs; do not annualize 2025 tariff impact given ongoing mitigation .
- Near-term trading: positive setup from guidance raise and operating beats; monitor tariff headlines, FDA developments, and Q4 OpEx normalization as potential volatility drivers .
Footnote: *Values retrieved from S&P Global.