ICU Medical Q4 Earnings Call Highlights

Key Points

• Q4 results: ICU Medical reported revenue of $536 million with 2% organic growth and delivered adjusted EBITDA of $98 million and adjusted EPS of $1.91, while gross margin was about 40.5%; year‑over‑year EBITDA and EPS were pressured by the IV Solutions deconsolidation and ~$11 million of tariffs (about a $25 million EBITDA headwind).
• Integration and regulatory progress: Management closed a broad FDA warning letter tied to Smiths Medical, largely completed major manufacturing and ERP integrations, and is pursuing 510(k) clearances for key pumps and its LifeShield software—actions that should unlock synergies and address prior regulatory concerns.
• 2026 outlook and balance‑sheet focus: Guidance calls for low‑ to mid‑single‑digit organic growth with adjusted EBITDA of $400–430 million and adjusted EPS of $7.75–8.45, gross margin roughly 41%, and an emphasis on improving free cash flow to pay down debt toward a target 2x net leverage by early 2027 before returning cash to shareholders.

ICU Medical NASDAQ: ICUI reported fourth-quarter 2025 revenue of $536 million and said it delivered 2% organic growth in the period and 5% organic growth for the full year, as management pointed to record quarters in both its consumables and infusion systems businesses. The company also highlighted progress on major integration and regulatory initiatives following its Smiths Medical acquisition, while outlining a 2026 outlook that calls for continued low- to mid-single-digit organic growth and gradual margin expansion.

Fourth-quarter results and key drivers

Chief Executive Officer Vivek Jain said gross margins were “again above 40%” in the quarter and that the company delivered adjusted EBITDA of $98 million and adjusted earnings per share of $1.91. Jain emphasized that reported comparisons continue to be affected by the mid-2025 creation of the Otsuka ICU Medical joint venture and the resulting deconsolidation of the IV Solutions business from the company’s income statement.

Chief Financial Officer Brian Bonnell provided additional detail, stating adjusted gross margin for the quarter was 40.5%, in line with prior guidance of 40% to 41%. He said the quarter included $11 million of tariff expense, a $2 million sequential increase from the third quarter. Bonnell also noted that gross margin continued to benefit from the IV Solutions deconsolidation and ongoing integration synergies.

On expenses, Bonnell reported adjusted SG&A of $113 million and adjusted R&D of $21 million, with total adjusted operating expenses of $134 million, or 25% of revenue. He said operating expenses came in a half point below prior guidance, citing deferred spending and general cost controls. Restructuring, integration, and strategic transaction expenses were $20 million in the quarter, tied primarily to IT systems integration and manufacturing plant consolidation projects, where spending “peaked in Q4” as projects approach completion in early 2026.

Adjusted EBITDA declined 7% year over year from $106 million, which Bonnell attributed to two factors: (1) the deconsolidation of IV Solutions, which he said contributed “higher than normal earnings” in Q4 2024 due to additional volumes from a U.S. market shortage, and (2) current-year tariffs. Combined, those items represented an approximate $25 million year-over-year EBITDA headwind in the quarter. Adjusted EPS declined 9% year over year, and Bonnell cited adjusted net interest expense of $18 million, an adjusted effective tax rate of 23%, and 25.2 million diluted shares outstanding.

Performance across consumables, infusion systems, and vital care

Jain said the broader demand and utilization environment remained “attractive across almost every geography” during Q4, while noting a sharper flu spike in the U.S. late in the year that has since normalized. He also described the capital environment as stable, saying customer investments “are getting done.”

• Consumables: Q4 consumables revenue grew 6% reported and 5% organic, which Jain described as a record quarter operationally. For full-year 2025, consumables grew 7% reported and 6% organic. Jain said infusion consumables, oncology, and tracheostomy were “all at high single-digit levels” for the year and that the company believes it can improve performance in vascular access through operational stability and innovation. Management reiterated a view that mid-single-digit growth is a “good assumption” for the medium term.
• Infusion systems: Jain said IV systems revenue grew 3% reported and 1% organic in Q4, calling it the “best quarter in Pumps,” even with some installations pulled into Q3. For 2025, he said LVPs were low double digits and syringe pumps were high single digits, while the ambulatory line was negative due to a single OEM customer that has been declining for several years and is expected to fully exit in 2026. Management again characterized mid-single-digit organic growth as a reasonable near-term assumption for the segment.
• Vital Care: Jain said Vital Care declined 6% organically and 35% reported due to the IV Solutions deconsolidation, and was “essentially flat” sequentially and for the year. He said the company is discontinuing loss-making SKUs and “harvesting” certain low- or negative-profit SKUs that still generate positive cash flow, with most of that work expected to wrap up over the next few months and the “biggest year-over-year impacts” expected in Q1. Management’s near-term revenue assumption for these businesses is flat to slightly down as profitability improves.

Regulatory and integration updates

Jain said the company received official closure of a broad FDA warning letter originally issued to Smiths Medical prior to ICU Medical’s acquisition. He suggested the closure, combined with planned profitability improvements in Vital Care, could expand strategic options.

He also said ICU Medical is continuing work on new 510(k) clearances for the Medfusion 5000 syringe pump and CADD ambulatory pump, as well as the related LifeShield safety software. Jain described the effort as central to the company’s strategy of connecting modern infusion devices through a single software solution and said it also addresses what he characterized as the primary concern of a warning letter received in early 2025.

Operationally, Jain said the company has largely completed manufacturing integration at two large legacy Smiths Medical sites and expects benefits as bridge inventory is depleted toward the end of 2026. He also said the company went live in the quarter with a full order-to-cash conversion for Europe and is now on a single modern ERP across most of the organization, with limited legacy Smiths Medical Asia-Pacific regions still outside the system.

2026 guidance: growth, margins, and cash flow

For 2026, Bonnell guided to consolidated organic revenue growth in the low- to mid-single-digit range. He said underlying segment growth assumptions remain consistent with prior long-term commentary: mid-single digits for consumables and infusion systems, and flat to slightly down for Vital Care.

On phasing, management said consolidated quarterly growth should be higher in the back half of 2026 due to the infusion systems implementation schedule. Bonnell also said consumables typically see a sequential step down from Q4 to Q1 and that the late-December flu demand in 2025 would not change that expectation.

On profitability, Bonnell projected full-year adjusted gross margin of around 41%, with improvement through the year and an exit rate above the annual average. He said the outlook reflects synergy capture, partially offset by manufacturing inflation and the strengthening Mexican peso, and assumes tariff expense of approximately 2% of revenue based on current rates and exemptions.

Operating expenses are expected to total about 25% of revenue (approximately 21% SG&A and 4% R&D). Bonnell guided to net interest expense of about $70 million and an adjusted tax rate around 25%, with average diluted shares of 25.3 million. The company’s 2026 outlook includes adjusted EBITDA of $400 million to $430 million and adjusted EPS of $7.75 to $8.45.

Balance sheet priorities and longer-term targets

In Q4, Bonnell said free cash flow was $44 million. He cited $17 million of quality and product-related remediation spending, $20 million on restructuring and integration, and $25 million of capital expenditures that included revenue-generating pump placements with customers outside the U.S.

The company ended the quarter with $1.3 billion of debt and $308 million of cash. Bonnell said ICU Medical paid down $30 million of Term Loan B principal in Q4, bringing total 2025 debt principal payments to $303 million. Net debt was described as around $1 billion, with a net leverage ratio just under 2.5x.

Management said free cash flow in 2026 is expected to improve versus 2025 (when free cash flow totaled $100 million), driven by higher earnings and reduced integration and remediation spending, with cash generation weighted to the back half. Bonnell said free cash flow in 2026 will continue to be prioritized toward debt paydown, reiterating a long-term leverage target of 2x. Once that target is reached, he said free cash flow would be available for share repurchases, with an expectation of reaching targeted leverage by the beginning of 2027 based on organic cash flows, potentially sooner if the company completes transactions.

Jain also discussed portfolio considerations, stating that Critical Care is “less synergistic” and dilutive to growth, while cautioning that any strategic moves would need to avoid value destruction. In the Q&A, he added that Vital Care is likely below the corporate gross margin and said the company would aim, directionally, to pursue outcomes that do not significantly damage earnings power, while acknowledging that precision is difficult due to commingled infrastructure.

About ICU Medical NASDAQ: ICUI

ICU Medical, Inc, together with its subsidiaries, develops, manufactures, and sells medical devices used in infusion therapy, vascular access, and vital care applications worldwide. Its infusion therapy products include needlefree products under the MicroClave, MicroClave Clear, and NanoClave brands; Neutron catheter patency devices; ChemoClave and ChemoLock closed system transfer devices, which are used to limit the escape of hazardous drugs or vapor concentrations, block the transfer of environmental contaminants into the system, and eliminates the risk of needlestick injury; Tego needle free connectors; Deltec GRIPPER non-coring needles for portal access; and ClearGuard, SwabCap, and SwabTip disinfection caps.

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