ICU MEDICAL INC/DE

Previous wording

In recent years, we have experienced, and may continue to experience, significant impacts to our business as a result of global economic challenges, resulting from, among other events, health pandemics and geopolitical conflicts which have resulted in rising inflation, especially with respect to freight costs driven by higher fuel prices, increased cost and shortages of raw materials, supply chain disruptions, higher interest rates and volatility on foreign currency exchange rates.

Current wording

In recent years, we have experienced, and may continue to experience, significant impacts to our business as a result of global economic challenges, resulting from, among other events, health pandemics and geopolitical conflicts which have resulted in fluctuating inflation rates, especially with respect to freight costs driven by higher fuel prices, increased cost and shortages of raw materials, supply chain disruptions, higher interest rates and volatility on foreign currency exchange rates.

Previous wording

More recently, in January 2025, the current presidential administration issued executive orders imposing tariffs on certain imported goods from countries including Mexico, Canada and China, and in response, Canada and China announced similar tariffs on U.S. imports. On April 2, 2025, the U.S. imposed a 10% baseline reciprocal tariff on imports from all countries, plus an additional country-specific tariff on imports from select trading partners, and again in response other countries have announced retaliatory actions or plans for retaliatory actions. On April 9, 2025, the U.S. implemented a 90-day pause on the country-specific tariffs for all countries except China, while maintaining the 10% baseline tariff. It is uncertain to what extent the U.S. tariffs and retaliatory tariffs will be imposed, if at all, following the 90-day pause. A meaningful portion of our global revenues are from products manufactured in our Costa Rica and Mexico manufacturing facilities and imported into the U.S. Currently the majority of products manufactured in our Mexico facilities are exempted from tariffs under the United States-Mexico-Canada Agreement ("USMCA"). If the USMCA exemptions were eliminated in the future, our tariff expense for products manufactured in Mexico would increase substantially. The tariffs as currently implemented are likely to have a material impact on our business, financial condition and results of operations through the incurrence of additional costs; however, the extent to which the imposition of tariffs, possible delays and exemptions remains fluid. These tariffs did not significantly impact our results of operations for the three months ended March 31, 2025.

Current wording

A meaningful portion of our global revenues are from products manufactured in our Costa Rica and Mexico manufacturing facilities and imported into the U.S. Currently the majority of products manufactured in our Mexico facilities are exempted from tariffs under the United States-Mexico-Canada Agreement ("USMCA"). If, however, the USMCA exemptions were eliminated in the future, our tariff expense for products manufactured in Mexico would increase substantially. The tariffs as currently implemented are likely to have a material impact on our business, financial condition and results of operations through the incurrence of additional costs; however, the extent to which the imposition of tariffs, possible delays and exemptions may have a material impact remains fluid. These tariffs did not significantly impact our results of operations for the three and six months ended June 30, 2025. During the second quarter of 2025, we incurred $12.3 million in tariffs, of which $8.6 million was capitalized and $3.7 million was expensed.

Previous wording

We present income statement data in Part I, Item 1. "Financial Statements." The following table shows, for the three months ended March 31, 2025 and 2024, the percentages of each income statement caption in relation to total revenue:

Current wording

We present income statement data in Part I, Item 1. "Financial Statements." The following table shows, for the three and six months ended June 30, 2025 and 2024, the percentages of each income statement caption in relation to total revenue:

Previous wording

Consumables revenue increased for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to new customer installations and increased demand for our Infusion Consumables, Vascular Access and Oncology product lines.

Current wording

Consumables revenue increased for the three and six months ended June 30, 2025, as compared to the same periods in the prior year, primarily due to new customer installations and increased demand for our Infusion Consumables and Oncology product lines.

Previous wording

Infusion Systems revenue increased for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to increased sales of LVP pump hardware and dedicated sets.

Current wording

Infusion Systems revenue increased for the three and six months ended June 30, 2025, as compared to the same periods in the prior year, primarily due to increased sales of LVP pump hardware and dedicated sets.

Previous wording

For the three months ended March 31, 2025 and 2024, gross margins were 34.8% and 32.7%, respectively. The increase in gross margin for the three months ended March 31, 2025, as compared to the same period in the prior year, was primarily driven by price increases, higher production levels, the impact of foreign exchange, lower supply chain costs and the realization of integration synergies.

Current wording

For the three and six months ended June 30, 2025, gross margins were 37.9% and 36.3%, respectively, as compared to 34.8% and 33.8% for the three and six months ended June 30, 2024, respectively. The increases in gross margin for the three and six months ended June 30, 2025, as compared to the same periods in the prior year, were primarily driven by the impact of the sale of a 60% interest of our IV Solutions business on May 1, 2025, a lower margin business. Gross margin also increased as a result of price increases, higher production levels, the impact of foreign exchange, lower supply chain costs and the realization of integration synergies. These improvements were partially offset by an increase in tariff costs.

Previous wording

SG&A expenses slightly decreased for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily due to a decrease of $2.4 million in depreciation and amortization expense, which when combined with other smaller category decreases were mostly offset by increases of $1.8 million in dealer fees and $1.5 million in professional services. Depreciation and amortization expense decreased primarily due to certain assets that reached the end of their useful lives and and certain assets classified as held for sale. Dealer fees increased due to an increase in revenue to distributors. Professional services increased due to increase in audit and consulting fees.

Current wording

SG&A expenses slightly decreased for the six months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a decrease of $5.0 million in depreciation and amortization, $2.5 million in compensation costs, and $1.6 million in bad debt and warranty expense, which when combined with other smaller category increases, were mostly offset by an increase of $3.2 million in stock based compensation, $2.8 million in legal fees, and $2.6 million in professional services. Depreciation and amortization expense decreased primarily due to the disposal of certain assets related to the sale of a 60% interest of our IV Solutions business (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements). Compensation costs decreased primarily due to service fee income recorded in the same line as the related personnel expenses for services provided to the joint venture (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements). Bad debt expense decreased as a result of the quarterly assessment of our reserves related to our accounts receivable. Stock based compensation increased due to a change in the probability of meeting a certain earning potential related to a performance equity award. Legal fees increased due to services performed during the current year related to various legal matters. Professional services increased due to increase in audit and consulting fees.

Previous wording

R&D expenses increased for the three months ended March 31, 2025, as compared to the same period in the prior year, primarily related to higher headcount and employment expense in support of ongoing R&D projects. R&D expenses for both periods presented generally included increased compensation and benefit expenses, consulting fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs incurred in our ongoing R&D projects.

Current wording

R&D expenses decreased for the three months ended June 30, 2025, as compared to the same period in the prior year, primarily related to lower headcount and employment expense in support of ongoing R&D projects. R&D expenses for the three months ended June 30, 2025 generally included decreased compensation and benefit expenses, consulting fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs incurred in our ongoing R&D projects. R&D expenses were flat for the six months ended June 30, 2025, as compared to the same period in the prior year.

Previous wording

Restructuring, strategic transaction and integration expenses were $16.7 million and $16.1 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Restructuring, strategic transaction and integration expenses were $16.2 million and $32.9 million for the three and six months ended June 30, 2025, respectively, as compared to $17.1 million and $33.2 million for the three and six months ended June 30, 2024, respectively.

Previous wording

Restructuring charges were $6.8 million and $5.3 million for the three months ended March 31, 2025 and 2024, respectively, and were primarily related to facility closure costs and severance costs, respectively. As of March 31, 2025, we expect to pay the majority of our outstanding restructuring charges during the remainder of 2025.

Current wording

Restructuring charges were $8.2 million and $15.0 million for the three and six months ended June 30, 2025, respectively, as compared to $7.7 million and $13.0 million for the three and six months ended June 30, 2024. The restructuring costs for the three and six months ended June 30, 2025 were primarily related to facility closure costs and severance costs. The restructuring costs for the three and six months ended June 30, 2024 were primarily related to severance costs. As of June 30, 2025, we expect to pay the majority of our outstanding restructuring charges during the next twelve months.

Previous wording

Strategic transaction and integration expenses were $9.9 million and $10.8 million for the three months ended March 31, 2025 and 2024, respectively. The strategic transaction and integration expenses during the three months ended March 31, 2025 and 2024 were primarily related to ongoing consulting expenses, employee costs incurred to integrate our Smiths Medical business acquired in 2022, and transaction costs related to the sale of 60% of our IV solutions business in the first quarter of 2025.

Current wording

Strategic transaction and integration expenses were $8.0 million and $17.9 million for the three and six months ended June 30, 2025, respectively, as compared to $9.4 million and $20.2 million for the three and six months ended June 30, 2024. The strategic transaction and integration expenses during the three and six months ended June 30, 2025 were primarily related to ongoing consulting expenses, and employee costs incurred to integrate our Smiths Medical business acquired in 2022, and transaction costs related to the sale of a 60% interest of our IV Solutions business. The strategic transaction and integration expenses during the three and six months ended June 30, 2024 were primarily related to ongoing consulting expenses and employee costs incurred to integrate our Smiths Medical business.

Previous wording

For the three months ended March 31, 2024, we recorded a loss of $0.3 million related to adjusting the contingent earn-out related to the Smiths Medical acquisition. As of December 31, 2024, Smiths had sold all of its ownership interest in ICU Medical shares. Smiths no longer holds the shares necessary to meet the minimum beneficial ownership percentage required to earn the contingent earn-out. Accordingly, the Smiths Medical contingent earn-out was adjusted to zero during 2024.

Current wording

For the three months ended June 30, 2024, we recorded a gain of $0.3 million related to adjusting the contingent earn-out related to the Smiths Medical acquisition. The change in the fair value of the contingent earn-out for the six months ended June 30, 2024 was essentially flat. As of December 31, 2024, Smiths Medical had sold all of its ownership interest in ICU Medical shares. Smiths Medical no longer holds the shares necessary to meet the minimum beneficial ownership percentage required to earn the contingent earn-out. Accordingly, the Smiths Medical contingent earn-out was adjusted to zero during 2024.

Previous wording

Interest expense, net for the three months ended March 31, 2025 and 2024 primarily included the contractual interest incurred on borrowings under the Credit Agreement, the per annum commitment fee charged on the available amount of the revolving credit facility contained in the Credit Agreement, the amortization of debt issuance costs incurred in connection with entering into the Credit Agreement (see Note 18: Long-Term Debt in our accompanying condensed consolidated financial statements), the impact of the interest rate swaps, and interest income. The interest expense component decreased for the three months ended March 31, 2025, as compared to the respective prior year periods, primarily due to decreases in the applicable SOFR reference rate.

Current wording

Interest expense, net for the three and six months ended June 30, 2025 and 2024 primarily included the contractual interest incurred on borrowings under the Credit Agreement, the per annum commitment fee charged on the available amount of the revolving credit facility contained in the Credit Agreement, the amortization of debt issuance costs incurred in connection with entering into the Credit Agreement (see Note 18: Long-Term Debt in our accompanying condensed consolidated financial statements), the impact of the interest rate swaps, and interest income. Additionally, interest expense for the three and six months ended June 30, 2025, includes the interest accretion on an unfavorable contract loss provision (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements). The interest expense component decreased for the three and six months ended June 30, 2025, as compared to the respective prior year periods, primarily due to decreases in the applicable SOFR reference rate and due to lower long-term obligation principal balances after the prepayment of $35 million on our Term Loan B in March 2025 and the prepayment of $200 million on our Term loan A in May 2025 using the proceeds from the sale of a 60% interest of our IV Solutions business.

Previous wording

The following table presents other expense, net (in thousands):

Current wording

The following table presents other income (expense), net (in thousands):

Previous wording

For the three months ended, March 31, 2025 and 2024, the foreign exchange losses were primarily related to the strengthening of the U.S. dollar relative to certain foreign currencies, most notably including the British Pound in the first quarter of 2025 and the Mexican peso and Argentine peso during the first quarter of 2024.

Current wording

For the three and six months ended, June 30, 2025 and 2024, the foreign exchange gains were primarily related to the weakening of the U.S. dollar relative to certain foreign currencies, most notably including the British Pound in the second quarter of 2025 and the strengthening of the U.S. dollar relative to foreign currencies, including the Mexican peso and Argentine peso in the second quarter of 2024.

Previous wording

For the three months ended March 31, 2025 and 2024, income taxes were accrued at an estimated effective tax rate of (42)% and (7)%, respectively.

Current wording

For the three and six months ended June 30, 2025 and 2024, income taxes were accrued at an estimated effective tax rate of 3% and 25%, respectively, as compared to (10)% and (8)% for the three and six months ended June 30, 2024, respectively.

Previous wording

The effective tax rate for the three months ended March 31, 2025 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, section 162(m) excess compensation, federal and state valuation allowance, and tax credits.

Current wording

The effective tax rate for the three and six months ended June 30, 2025 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, section 162(m) excess compensation, federal and state valuation allowance, and tax credits. The effective tax rate during the three and six months ended June 30, 2025 included a tax expense of $6.1 million related to the sale of a 60% interest of our IV solutions business. Additionally, there were unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and six months ended June 30, 2025 of $5.0 million.

Previous wording

The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company recorded an additional valuation allowance of $6.4 million tax expense, against certain U.S. federal and state deferred tax assets during the three months ended March 31, 2025. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses. The Company's ability to use our deferred tax assets depends on the amount of taxable income in future periods. Based on current earnings and anticipated future earnings along with expected changes in our deferred tax asset and liability balances, it is likely that the current valuation allowance position will be adjusted during the year. An additional valuation allowance may be required beyond the current year if future earnings are not sufficient to support the realization of deferred tax assets.

Current wording

The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company recorded a change to the valuation allowance against certain U.S. federal and state deferred tax assets, resulting in a $2.7 million tax benefit and $3.7 million tax expense during the three and six months ended June 30, 2025, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses. The Company's ability to use our deferred tax assets depends on the amount of taxable income in future periods. Based on current earnings and anticipated future earnings along with expected changes in our deferred tax asset and liability balances, it is likely that the current valuation allowance position will be adjusted during the year. An additional valuation allowance may be required beyond the current year if future earnings are not sufficient to support the realization of deferred tax assets.

Previous wording

In December 2022, the European Union (EU) agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold. All of the EU countries and some of the non-EU countries in which we operate have enacted or have announced plans to enact legislation to adopt Pillar Two. Some aspects of the Pillar Two legislation were effective for our fiscal year beginning January 1, 2024, with certain remaining impacts to be effective in 2025. For fiscal year 2025, we have considered the impact of Pillar 2 in our tax provision and effective tax rate. However, the Pillar Two rules continue to evolve and their application may alter our tax obligations in certain countries in which we operate for fiscal periods beyond 2025 as we continue to assess the impact of tax legislation in these jurisdictions.

Current wording

In December 2022, the European Union (EU) agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold. All of the EU countries and some of the non-EU countries in which we operate have enacted or have announced plans to enact legislation to adopt Pillar Two. The Pillar Two legislation has been effective for our fiscal year beginning January 1, 2024. For fiscal year 2025, we have considered the impact of Pillar Two on our tax provision and effective tax rate. However, the Pillar Two rules continue to evolve and their application may alter our tax obligations in certain countries in which we operate for fiscal periods beyond 2025 as we continue to assess the impact of tax legislation in these jurisdictions.

Previous wording

The effective tax rate for the three months ended March 31, 2024 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, state income taxes, section 162(m) excess compensation, federal and state valuation allowance, and tax credits.

Current wording

The effective tax rate for the three and six months ended June 30, 2024 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, state income taxes, section 162(m) excess compensation, federal and state valuation allowance, and tax credits. Additionally, there were unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and six months ended June 30, 2024 of $3.9 million and $4.0 million, respectively.

Previous wording

The Company recorded a valuation allowance of $10.1 million tax expense, against certain U.S. federal and state deferred tax assets during the three months ended March 31, 2024. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses.

Current wording

The Company recorded a valuation allowance of $10.4 million and $20.5 million tax expense, against certain U.S. federal and state deferred tax assets during the three and six months ended June 30, 2024, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses.

Previous wording

Our current primary sources of liquidity are cash and cash equivalents and cash flows from our operations including access to borrowing arrangements.

Current wording

Our current primary sources of liquidity are cash and cash equivalents, cash flows from our operations including access to borrowing arrangements and cash flows from our accounts receivable purchase program.

Previous wording

Funds generated from operations are held in cash and cash equivalents. During the three months ended March 31, 2025, our cash and cash equivalents decreased by $18.9 million from $308.6 million at December 31, 2024 to $289.7 million at March 31, 2025, primarily due to debt principal payments of $47.8 million during the quarter.

Current wording

Funds generated from operations are held in cash and cash equivalents. During the six months ended June 30, 2025, our cash and cash equivalents decreased by $8.5 million from $308.6 million at December 31, 2024 to $300.0 million at June 30, 2025. This decrease was primarily due to principal payments of $47.8 million made during the first quarter of 2025 on our Term Loan B. During the second quarter of 2025, $200.0 million of the $209.5 million received in cash consideration for the sale of a 60% interest in our IV Solutions business was used to pay down a portion of our Term Loan A.

Previous wording

As discussed in Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements, we entered into the Credit Agreement with various lenders on January 6, 2022 in connection with the closing of the Smiths Medical acquisition. The Credit Agreement provides for a five-year term loan A facility of $850.0 million (the "Term Loan A"), a seven-year term loan B facility of $850.0 million (the "Term Loan B") and a five-year revolving credit facility of $500.0 million (the "Revolving Credit Facility") (collectively, the "Senior Secured Credit Facilities"). The proceeds from the term loans were used to finance a portion of the cash consideration for the Smiths Medical acquisition. The outstanding aggregate principal amount of the term loans is $1.5 billion as of March 31, 2025, which includes the Term Loan A that will mature in January 2027 and the Term Loan B that will mature in January 2029. The proceeds of future borrowings under the Revolving Credit Facility, which expires in January 2027, may be used as a source of liquidity to support our ongoing working capital requirements and other general corporate purposes. There are no outstanding borrowings under the Revolving Credit Facility as of March 31, 2025. As part of entering into the Senior Secured Credit Facilities, we were assigned issuer and Term Loan B credit ratings. At the date of issuance of this report, our issuer and Term Loan B credit ratings assigned and outlook were as follows:

Current wording

As discussed in Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements, we entered into the Credit Agreement with various lenders on January 6, 2022 in connection with the closing of the Smiths Medical acquisition. The Credit Agreement provides for a five-year term loan A facility of $850.0 million (the "Term Loan A"), a seven- year term loan B facility of $850.0 million (the "Term Loan B") and a five-year revolving credit facility of $500.0 million (the "Revolving Credit Facility") (collectively, the "Senior Secured Credit Facilities"). The proceeds from the term loans were used to finance a portion of the cash consideration for the Smiths Medical acquisition. The outstanding aggregate principal amount of the term loans is $1.3 billion as of June 30, 2025, which includes the Term Loan A that will mature in January 2027 and the Term Loan B that will mature in January 2029. The proceeds of future borrowings under the Revolving Credit Facility, which expires in January 2027, may be used as a source of liquidity to support our ongoing working capital requirements and other general corporate purposes. There are no outstanding borrowings under the Revolving Credit Facility as of June 30, 2025. As part of entering into the Senior Secured Credit Facilities, we were assigned issuer and Term Loan B credit ratings. At the date of issuance of this report, our issuer and Term Loan B credit ratings assigned and outlook were as follows:

Previous wording

The Credit Agreement contains financial covenants that pertain to the Term Loan A and the Revolving Credit Facility. Specifically, we were required to maintain a Senior Secured Leverage Ratio of no more than 4.00 to 1.00 and an Interest

Current wording

The Credit Agreement contains financial covenants that pertain to the Term Loan A and the Revolving Credit Facility. Specifically, we were required to maintain a Senior Secured Leverage Ratio of no more than 4.00 to 1.00 and an Interest Coverage Ratio of no less than 3.00 to 1.00 (defined and discussed in greater detail in Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements). We were in compliance with these financial covenants as of June 30, 2025.

Previous wording

In January 2023, we entered into a receivables purchase agreement with Bank of the West, which was subsequently acquired by BMO in February 2023. This agreement accelerates our access to capital; however as of December 31, 2024, we are not currently utilizing this program (see Note 22: Accounts Receivable Purchase Program).

Current wording

In January 2023, we entered into a receivables purchase agreement with Bank of the West, which was subsequently acquired by BMO Bank, N.A. ("BMO") in February 2023. This agreement accelerates our access to capital, which we utilize on an as needed basis (see Note 22: Accounts Receivable Purchase Program).

Previous wording

We believe that our existing cash and cash equivalents along with cash flows expected to be generated from future operations and the funds received and accessible under the Senior Secured Credit Facilities will provide us with sufficient liquidity to finance our cash requirements for the next twelve months and the foreseeable future. In the event that we experience downturns, cyclical fluctuations in our business that are more severe or longer than anticipated, fail to achieve anticipated revenue and expense levels, or have significant unplanned cash expenditures, we may need to obtain or seek alternative sources of capital or financing, and we can provide no assurances that the terms of such capital or financing will be available to us on favorable terms, if at all. Our ability to generate cash flows from operations, issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers, deterioration in our key financial ratios or credit ratings or other significantly unfavorable changes in economic conditions. See Part I. Item 1A. "Risk Factors” in our 2024 Annual Report on Form 10-K for discussion of the risks and uncertainties associated with our debt financing.

Current wording

We believe that our existing cash and cash equivalents along with cash flows expected to be generated from future operations, the funds received and accessible under the Senior Secured Credit Facilities and funds received under the accounts receivable program will provide us with sufficient liquidity to finance our cash requirements for the next twelve months and the foreseeable future. In the event that we experience downturns, cyclical fluctuations in our business that are more severe or longer than anticipated, fail to achieve anticipated revenue and expense levels, or have significant unplanned cash expenditures, we may need to obtain or seek alternative sources of capital or financing, and we can provide no assurances that the terms of such capital or financing will be available to us on favorable terms, if at all. Our ability to generate cash flows from operations, issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers, deterioration in our key financial ratios or credit ratings or other significantly unfavorable changes in economic conditions. See Part I. Item 1A. "Risk Factors” in our 2024 Annual Report on Form 10-K for discussion of the risks and uncertainties associated with our debt financing.

Previous wording

As of March 31, 2025, there have been no material changes to our range of $90 million to $110 million for estimated 2025 planned capital expenditures previously disclosed in our 2024 Annual Report on Form 10-K.

Current wording

As of June 30, 2025, our range for estimated 2025 planned capital expenditures is $75 million to $95 million, which has been reduced from the previously disclosed $90 million to $110 million range in our 2024 Annual Report on Form 10-K due to the impact of the IV Solutions business disposal.

Previous wording

In January 2022, we incurred borrowings under Senior Secured Credit Facilities. The principal repayment obligations and estimated interest payments on the term loans and estimated commitment fee payments on the revolver are estimated in the table below. Interest payments on the term loans were estimated using an Adjusted Term SOFR rate and an applicable margin of 2.00% for Term Loan A and 2.50% for Term Loan B and the revolver commitment fees were estimated using the rate of 0.30%. The applicable margin rate and commitment fee rate will change from time to time in accordance with a preset pricing grid based on the leverage ratio (see Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements for pricing grids related to the Senior Secured Credit Facilities).

Current wording

In January 2022, we incurred borrowings under Senior Secured Credit Facilities. The principal repayment obligations and estimated interest payments on the term loans and estimated commitment fee payments on the revolver are estimated in the table below. Interest payments on the term loans were estimated using an Adjusted Term SOFR rate and an applicable margin of 1.75% for Term Loan A and 2.50% for Term Loan B and the revolver commitment fees were estimated using the rate of 0.25%. The applicable margin rate and commitment fee rate will change from time to time in accordance with a preset pricing grid based on the leverage ratio (see Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements for pricing grids related to the Senior Secured Credit Facilities).

Previous wording

We expect to fund these capital expenditures and contractual obligations with our existing cash and cash equivalents, cash generated from our future operations and expected proceeds of approximately $209.5 million from the sale of 60% of our IV Solutions business. The expected proceeds from the sale of 60% of the IV Solutions business will be used to prepay a portion of the Term Loan A during the second quarter of 2025. In the first quarter of 2025 we prepaid $35.0 million in Term Loan B principal payments; therefore there are no principal payments due on Term Loan B until 2029. See Note 23: Subsequent Events to our accompanying condensed consolidated financial statements.

Current wording

We expect to fund these capital expenditures and contractual obligations with our existing cash and cash equivalents and cash generated from our future operations. During the second quarter of 2025 we used $200.0 million of the $209.5 million in proceeds received from the sale of a 60% interest of our IV Solutions business to prepay Term Loan A principal payments. In the first quarter of 2025 we prepaid $35.0 million in Term Loan B principal payments. Due to these prepayments, there are no principal payments due on Term Loan A until 2027 or on Term Loan B until 2029.

Previous wording

In 2015, legislation was enacted in Italy, which requires medical device companies to make payments to the Italian government if Italy's medical device expenditures for certain years exceeded annual regional expenditure ceilings. Since its enactment, the legislation has been subject to appeals in the Italian court system. In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the Italy Medical Device Payback ("IMDP"), however, litigation proceedings are still pending and the ultimate resolution remains unknown. As of March 31, 2025, we have accrued $25.5 million for potential payments related to the IMDP, which is classified within our accrued liabilities; however, the timing and amount of payments could ultimately differ from our current expectations.

Current wording

In 2015, legislation was enacted in Italy, which requires medical device companies to make payments to the Italian government if Italy's medical device expenditures for certain years exceeded annual regional expenditure ceilings. Since its enactment, the legislation has been subject to appeals in the Italian court system. In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the Italy Medical Device Payback ("IMDP"); however, litigation proceedings are still pending and the ultimate resolution remains unknown. As of June 30, 2025, we have accrued $29.3 million for potential payments related to the IMDP, which is classified within our accrued liabilities; however, recent examination of the legislation by the Italian Government has prompted potential amendments that if converted into law, could result in an opportunity for companies to settle certain historical periods (2015-2018) for less than the original assessed value. Therefore, the timing and amount of payments could ultimately differ from our current expectations.

Previous wording

Our net cash provided by operations for the three months ended March 31, 2024 was $45.8 million. The changes in operating assets and liabilities included a $14.0 million decrease in accounts receivable, $14.2 million decrease in inventories, and a $5.3 million increase in accounts payable. Offsetting these amounts was a $5.7 million increase in prepaid expenses and other current assets, a $5.2 million increase in other assets, $16.5 million decrease in accrued liabilities, and $1.9 million in net changes in income taxes, including excess tax benefits and deferred income taxes. The decrease in accounts receivable was primarily due to the amount and timing of revenues. The decrease in inventory was primarily due to our focus on reducing inventory levels. The increase in accounts payable was due to the timing of payments. The increase in prepaid expenses and other current assets was primarily due to increase in deferred costs and the payment of other miscellaneous prepaid invoices. The increase in other assets was due to the purchase of spare parts. The net changes in income taxes was a result of recording the current deferred provision, the timing of payments, and valuation allowance. The decrease in accrued liabilities was primarily due to payout of annual bonuses, accrued freight charges and payments of field service corrective action.

Current wording

Our net cash provided by operations for the six months ended June 30, 2025 was $62.5 million. The changes in operating assets and liabilities included a $16.7 million decrease in accounts receivable and a $14.4 million increase in accounts payable. Offsetting these amounts was a $29.2 million increase in inventories, a $9.2 million increase in prepaid expenses and other current assets, a $5.7 million increase in other assets, $19.8 million decrease in accrued liabilities, and $28.1 million in net changes in income taxes, including excess tax benefits and deferred income taxes. The decrease in accounts receivable was primarily due to the sale of accounts receivable as part of our accounts receivable purchase program with BMO (see Note 22: Accounts Receivable Purchase Program) and the amount and timing of revenues. The increase in accounts payable was due to the timing of payments. The increase in inventory was primarily to build inventory safety stock levels and the impact of the capitalization of tariffs in our accounting. The increase in prepaid expenses and other current assets was primarily due to an increase in the payment of miscellaneous prepaid invoices. The increase in other assets was due to the purchase of spare parts. The decrease in accrued liabilities was primarily due to payout of annual bonuses and operating lease payments. The net changes in income taxes was a result of the timing of payments.

Previous wording

Our net cash provided by operations for the three months ended March 31, 2025 was $51.3 million. The changes in operating assets and liabilities included a $22.4 million decrease in accounts receivable and a $32.1 million increase in accounts payable. Offsetting these amounts was a $8.2 million increase in inventories, a $8.5 million increase in prepaid expenses and other current assets, a $6.8 million increase in other assets, $36.3 million decrease in accrued liabilities, and $6.6 million in net changes in income taxes, including excess tax benefits and deferred income taxes. The decrease in accounts receivable was primarily due to the amount and timing of revenues. The increase in accounts payable was due to the timing of payments. The increase in inventory was primarily to build inventory safety stock levels. The increase in prepaid expenses and other current assets was primarily due to an increase in deferred costs related to infusion pumps sold and the payment of other miscellaneous prepaid invoices. The increase in other assets was due to the purchase of spare parts. The decrease in accrued liabilities was primarily due to payout of annual bonuses, accrued freight charges and payments of field service corrective action. The net changes in income taxes was a result of recording the current deferred provision, the timing of payments, and valuation allowance.

Current wording

Our net cash provided by operations for the six months ended June 30, 2024 was $127.7 million. The changes in operating assets and liabilities included a $6.7 million decrease in accounts receivable, a $21.1 million decrease in inventories, a $9.4 million increase in accounts payable, and a $20.2 million increase in accrued liabilities. Offsetting these amounts was a $12.6 million increase in prepaid expenses and other current assets, a $11.1 million increase in other assets, and $5.1 million in net changes in income taxes, including excess tax benefits and deferred income taxes. The decrease in accounts receivable was primarily due to the amount and timing of revenues. The decrease in inventory was primarily due to our focus on reducing inventory levels. The increase in accounts payable was due to the timing of payments. The increase in prepaid expenses and other current assets was primarily due to increase in deferred costs related to infusion pumps sold and the payment of other miscellaneous prepaid invoices. The increase in other assets was due to the purchase of spare parts. The net changes in income taxes was a result of recording the current deferred provision, the timing of payments, and valuation allowance. The increase in accrued liabilities was primarily due to employee costs.

Previous wording

(1)Relates to scheduled principal payments on the Senior Secured Credit Facilities. In March 2025, we prepaid $35.0 million on our Term Loan B.

Current wording

(1)Relates to scheduled principal payments and prepayments on the Senior Secured Credit Facilities. In March 2025, we prepaid $35.0 million on our Term Loan B and in May 2025 we used $200.0 million received from the sale of a 60% interest in our IV Solutions business to pay down a portion of our Term Loan A.

Previous wording

(3) During the first quarter of 2024, we paid $3.4 million in cash related to the settlement of the Mediverse contingent earn-out. Of the $3.4 million, the amount recorded as the acquisition date fair value, which is considered financing cash flows, was $2.6 million (see Note 10: Fair Value Measurements).

Current wording

(3) During the first quarter of 2024, we paid $3.4 million in cash related to the settlement of a contingent earn-out to one of our international distributors. Of the $3.4 million, the amount recorded as the acquisition date fair value, which is considered financing cash flows, was $2.6 million (see Note 10: Fair Value Measurements).

Previous wording

(4) During the three months ended March 31, 2025, our employees surrendered 58,858 shares of our common stock from vested restricted stock unit awards as consideration for approximately $8.4 million in minimum statutory withholding obligations paid on their behalf. During the three months ended March 31, 2024, our employees surrendered 110,119 shares of our common stock from vested restricted stock unit awards as consideration for approximately $11.4 million in minimum statutory withholding obligations paid on their behalf.

Current wording

(4) During the six months ended June 30, 2025, our employees surrendered 61,066 shares of our common stock from vested restricted stock unit awards as consideration for approximately $8.7 million in minimum statutory withholding obligations paid on their behalf. During the six months ended June 30, 2024, our employees surrendered 112,876 shares of our common stock from vested restricted stock unit awards as consideration for approximately $11.7 million in minimum statutory withholding obligations paid on their behalf.