ICU MEDICAL INC/DE

Previous wording

On May 1, 2025, at the closing of our transaction with OPF (as defined below), we transferred certain interests, including our IV Solutions product line, to OPF. See "Disposition of our IV Solutions Business and Prepayment of a portion of our Long-term Obligations" further below for more information on this transaction.

Current wording

On May 1, 2025, at the closing of our transaction with OPF (as defined below), we transferred certain interests, including our IV Solutions product line, to OPF. See "Disposition of our IV Solutions Business and Prepayment of a portion of our Long-term Obligations" further below for more information on this transaction. In connection with the formation of the joint venture, we sell and distribute IV Solutions products to customers on behalf of the joint venture.

Previous wording

Our IV Solutions products include a broad portfolio of injection, irrigation, nutrition and specialty IV solutions including:

Current wording

The IV Solutions products include a broad portfolio of injection, irrigation, nutrition and specialty IV solutions including:

Previous 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.

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. During the third quarter of 2025, we incurred $10.9 million in incremental reciprocal tariffs as a result of the tariffs imposed by the U.S. Administration in 2025, of which $1.6 million was capitalized and $9.3 million was expensed.

Previous wording

Based on current economic conditions we expect foreign currency rates, freight costs and interest rates to remain subject to volatility in the market.

Current wording

Based on current geopolitical conditions we expect foreign currency rates, freight costs, oil prices, interest rates, and general inflation to remain subject to volatility in the market.

Previous wording

On April 24, 2025, pursuant to a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc. a Delaware corporation ("OPF") (described in Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements), we completed the formation of Otsuka ICU Medical LLC (the "joint venture") and transferred the assets, liabilities and operations that comprise our IV Solutions product line to the joint venture. On May 1, 2025, at the closing under the Agreement, we sold a 60% interest in the joint venture to OPF for preliminary cash consideration paid at closing of $209.5 million, comprising the estimated sales price. On May 1, 2025, we used $200.0 million of those proceeds to pay down a portion of our outstanding Term Loan A (as defined below) long-term debt.

Current wording

On April 24, 2025, pursuant to a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc. a Delaware corporation ("OPF") (described in Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements), we completed the formation of Otsuka ICU Medical LLC (the "joint venture") and transferred the assets, liabilities and operations that comprise our IV Solutions product line to the joint venture. At the closing of the transaction on May 1, 2025, under the Agreement, we sold a 60% interest in the joint venture to OPF. The total sales price, inclusive of our final purchase price adjustments, was $211.2 million, of which we used $200.0 million of the proceeds from the sale to pay down a portion of our outstanding Term Loan A (as defined below) long-term debt during the second quarter of 2025.

Previous 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:

Current wording

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

Previous 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.

Current wording

Consumables revenue increased for the three and nine months ended September 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 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.

Current wording

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

Previous wording

Vital Care revenue decreased for the three and six months ended June 30, 2025, as compared to the same periods in the prior year, primarily due to lower IV Solutions sales resulting from the sale of a controlling ownership interest in our IV Solutions business on May 1, 2025 (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).

Current wording

Vital Care revenue decreased for the three and nine months ended September 30, 2025, as compared to the same periods in the prior year, primarily due to lower IV Solutions sales resulting from the sale of a controlling ownership interest in our IV Solutions business on May 1, 2025 (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).

Previous 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.

Current wording

For the three and nine months ended September 30, 2025, gross margins were 37.4% and 36.6%, respectively, as compared to 34.8% and 34.1% for the three and nine months ended September 30, 2024, respectively. The increases in gross margin for the three and nine months ended September 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, the impact of foreign exchange rates, lower supply chain costs and the realization of integration synergies. These improvements were partially offset by an increase in tariff costs of $9.3 million and $14.3 million for the three and nine months ended September 30, 2025.

Previous wording

SG&A expenses slightly decreased for the three months ended June 30, 2025, as compared to the same period in the prior year, primarily due to a decrease of $2.6 million in depreciation and amortization expense, $2.4 million in compensation costs, and $1.7 million in dealer fees, which when combined with other smaller category increases, were mostly offset by an increase of $2.9 million in stock based compensation and $2.6 million in legal fees. 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). Dealer fees decreased due to the timing of end customer sales. 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.

Current wording

SG&A expenses decreased for the three months ended September 30, 2025, as compared to the same period in the prior year, primarily due to a decrease of $6.7 million in dealer fees and $2.8 million in depreciation and amortization, which when combined with other smaller category decreases, were mostly offset by an increase of $3.6 million in stock based compensation. Dealer fees and depreciation and amortization expenses 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). Stock based compensation increased due to a change in the probability of meeting certain financial targets related to a performance equity award.

Previous 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.

Current wording

SG&A expenses decreased for the nine months ended September 30, 2025, as compared to the same period in the prior year, primarily due to a decrease of $7.8 million in depreciation and amortization, $6.6 million in dealer fees, $2.9 million in compensation costs, and $2.4 million in bad debt and warranty expense, which when combined with other smaller category decreases, were partially offset by an increase of $6.8 million in stock based compensation, $3.6 million in legal fees, and $3.0 million in professional services. Depreciation and amortization expense and dealer fees 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). Warranty expense decreased due to the release of reserves related to certain products and lower warranty estimated reserve due to lower warranty claims expected. Stock based compensation increased due to a change in the probability of meeting certain financial targets 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 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.

Current wording

R&D expenses slightly increased for the three and nine months ended September 30, 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.

Previous 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.

Current wording

Restructuring, strategic transaction and integration expenses were $13.1 million and $46.1 million for the three and nine months ended September 30, 2025, respectively, as compared to $16.8 million and $50.1 million for the three and nine months ended September 30, 2024, respectively.

Previous 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.

Current wording

Restructuring charges were $6.2 million and $21.2 million for the three and nine months ended September 30, 2025, respectively, as compared to $3.6 million and $16.6 million for the three and nine months ended September 30, 2024. The restructuring costs for the three and nine months ended September 30, 2025 were primarily related to facility closure costs and severance costs. The restructuring costs for the three and nine months ended September 30, 2024 were primarily related to severance costs. As of September 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 $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.

Current wording

Strategic transaction and integration expenses were $6.9 million and $24.9 million for the three and nine months ended September 30, 2025, respectively, as compared to $13.2 million and $33.5 million for the three and nine months ended September 30, 2024. The strategic transaction and integration expenses during the three and nine months ended September 30, 2025 and 2024 were primarily related to ongoing consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022. The nine months ended September 30, 2025 also included transaction costs related to the sale of a 60% interest of our IV Solutions business in the second quarter of 2025.

Previous 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.

Current wording

For the three and nine months ended September 30, 2024, we recorded a gain of $3.9 million and $4.0 million primarily related to adjusting the contingent earn-out related to the Smiths Medical acquisition. 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 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.

Current wording

Interest expense, net for the three and nine months ended September 30, 2025 and 2024 primarily included the contractual interest incurred on borrowings under the Credit Agreement, as defined below, 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 nine months ended September 30, 2025, includes the interest accretion on an unfavorable contract loss provision. The interest expense component decreased for the three and nine months ended September 30, 2025, as compared to the respective prior year periods, primarily due to decreases in the applicable SOFR reference rate and due to lower 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

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.

Current wording

For the three and nine months ended, September 30, 2025, the foreign exchange gains were primarily related to the weakening of the U.S. dollar relative to certain foreign currencies, including the Euro and British Pound, partially offset by the strengthening of the U.S. dollar relative to the Mexico Peso.

Previous wording

For the three and six months ended, June 30, 2025, the gain on the sale of business of $41.8 million comprised of the sum of a $45.6 million gain from the disposal of a 60% ownership interest in the joint venture, a $16.4 million gain from the difference between the fair value of our retained 40% ownership interest in the joint venture and our carrying value of that same proportionate ownership interest, and a $20.2 million unfavorable contract loss (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).

Current wording

For the three months ended September 30, 2025, we recorded a gain on the sale of business of $3.0 million related to the difference between the fair value of our retained 40% ownership interest in the joint venture and our carrying value of that same proportionate ownership interest. For the nine months ended September 30, 2025, the gain on the sale of business of $44.8 million comprised of the sum of a $45.6 million gain from the disposal of a 60% ownership interest in the joint venture, a $19.4 million gain from the difference between the fair value of our retained 40% ownership interest in the joint venture and our carrying value of that same proportionate ownership interest, and a $20.2 million unfavorable contract loss (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).

Previous 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.

Current wording

For the three and nine months ended September 30, 2025 and 2024, income taxes were accrued at an estimated effective tax rate of 26% and 25%, respectively, as compared to (84)% and (26)% for the three and nine months ended September 30, 2024, respectively.

Previous 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.

Current wording

The effective tax rate for the three and nine months ended September 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 nine months ended September 30, 2025 included a discrete tax expense of $0.0 million and $6.1 million, respectively, 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 nine months ended September 30, 2025 of $0.0 million and $5.0 million, respectively. Furthermore, U.S. return-to-provision adjustments net of related tax reserves for the year ended December 31, 2024 resulted in a tax benefit of $12.0 million for both the three and nine months ended September 30, 2025. The adjustments related primarily to a decrease to the U.S. valuation allowance.

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 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.

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 $1.4 million tax benefit and $2.3 million tax expense during the three and nine months ended September 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

On July 4, 2025, the U.S. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14", commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements as additional guidance becomes available and uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the three and six months ended June 30, 2025.

Current wording

On July 4, 2025, the U.S. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14", commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements as additional guidance becomes available and uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. The impacts are included in our operating results for the three and nine months ended September 30, 2025, however, we do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025.

Previous 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.

Current wording

The effective tax rate for the three and nine months ended September 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 nine months ended September 30, 2024 of $0.0 million and $4.0 million, respectively. Furthermore, U.S. return-to-provision adjustments net of related tax reserves for the year ended December 31, 2023 resulted in a tax expense of $1.6 million for both the three and nine months ended September 30, 2024. The adjustments related primarily to changes in estimate for the research and development credit and an increase to the U.S. valuation allowance.

Previous 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.

Current wording

The Company recorded an increase in valuation allowance of $22.4 million and $42.9 million against certain U.S. federal and state deferred tax assets during the three and nine months ended September 30, 2024, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses.

Previous wording

Equity in Earnings of Unconsolidated Affiliates

Current wording

Equity in (Losses) Earnings of Unconsolidated Affiliates

Previous wording

For the three and six months ended June 30, 2025, we recorded equity in earnings of unconsolidated affiliates of $2.8 million related to our 40% proportionate share of the earnings of the joint venture (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).

Current wording

For the three and nine months ended September 30, 2025, we recorded equity in (losses) earnings of unconsolidated affiliates of $(1.5) million and $1.3 million, respectively, related to our 40% proportionate share of the earnings of the joint venture (see Note 4: Assets Held For Sale and Disposal of Business to our accompanying condensed consolidated financial statements).

Previous 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.

Current wording

Funds generated from operations are held in cash and cash equivalents. During the nine months ended September 30, 2025, our cash and cash equivalents decreased by $8.8 million from $308.6 million at December 31, 2024 to $299.7 million at September 30, 2025. This decrease was primarily due to principal payments made during 2025 consisting of (i) $47.8 million payment on our Term Loan B during the first quarter of 2025 (ii) $200.0 million of the $209.5 million received in cash consideration for the sale of a 60% interest in our IV Solutions business used to pay down a portion of our Term Loan A during the second quarter of 2025 and (iii) $25.0 million payment on Term Loan B during the third quarter of 2025.

Previous 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.

Current wording

As of September 30, 2025, our range for estimated 2025 planned capital expenditures is $85 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 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).

Current wording

In January 2022, we incurred borrowings under Senior Secured Credit Facilities. 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 2.25% 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 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.

Current wording

During the third quarter of 2025, we made a prepayment of $25.0 million on our Term Loan B. During the second quarter of 2025 we used $200.0 million of the $209.5 million in proceeds received during the quarter 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 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.

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"). In September 2025, the Italian government enacted a law that allows medical device companies to settle certain historical periods (2015-2018) for 25% of the original assessed value. During the third quarter of 2025, we settled the liability related to the 2015-2018 historical periods and paid $2.5 million. Additionally, we recorded a release of $3.8 million in previously established reserves. The release is included in total revenues in our condensed consolidated statements of operations. See Note 16: Accrued Liabilities to our accompanying condensed consolidated financial statements for details on amounts accrued for potential payments related to the IMDP.

Previous 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.

Current wording

Our net cash provided by operations for the nine months ended September 30, 2025 was $119.2 million. The changes in operating assets and liabilities included a $3.9 million decrease in accounts receivable and a $23.3 million increase in accounts payable. Offsetting these amounts was a $36.2 million increase in inventories, a $4.7 million increase in prepaid expenses and other current assets, a $7.1 million increase in other assets, $28.9 million decrease in accrued liabilities, and $33.5 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 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 decrease in deferred revenue. The net changes in income taxes was a result of the timing of payments.

Previous 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.

Current wording

Our net cash provided by operations for the nine months ended September 30, 2024 was $163.8 million. The changes in operating assets and liabilities included a $17.5 million increase in other assets, a $11.2 million increase in prepaid expenses and other current assets, a $11.5 million increase in accounts receivable and $4.4 million in net changes in income taxes, including excess tax benefits and deferred income taxes. Offsetting these amounts was a $21.1 million increase in accounts payable, a $20.5 million increase in accrued liabilities and a $9.4 million decrease in inventories. The increase in other assets was due to the purchase of spare parts. 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 accounts receivable was primarily due to the amount and timing of revenues and we sold less receivables under our account receivable purchase program (see Note 22: Accounts Receivable Purchase Program). 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 accounts payable was due to the timing of payments. The increase in accrued liabilities was primarily due to employee costs. The decrease in inventory was primarily due to our focus on reducing inventory levels.

Previous 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.

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. 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. In September 2025, we prepaid $25.0 million on our Term Loan B.

Previous 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.

Current wording

(4) During the nine months ended September 30, 2025, our employees surrendered 61,304 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 nine months ended September 30, 2024, our employees surrendered 114,023 shares of our common stock from vested restricted stock unit awards as consideration for approximately $11.9 million in minimum statutory withholding obligations paid on their behalf.