Good day. And welcome to the ICU Medical, Inc. Fourth Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, today’s event is being recorded. I’d now like to turn the conference over to John Mills. Please go ahead, sir.

Good afternoon, everyone. Thank you for joining us to discuss ICU Medical’s financial results for the fourth quarter of 2024. On the call today representing ICU Medical is Vivek Jain, Chief Executive Officer and Chairman; and Brian Bonnell, Chief Financial Officer. We wanted to let everyone know that we have a presentation accompanying today’s prepared remarks. To view the presentation, please go to our Investor page and click on the Events Calendar, and it will be under the Fourth Quarter and Full Year 2024 Events. Before we start our prepared remarks, I want to touch upon any forward-looking statements made during the call, including belief and expectations about the company’s future results. Please be aware they are based on the best available information to management and assumptions that are reasonable. Such statements are not intended to be a representation of future results and are subject to risk and uncertainties. Future results may differ materially from management’s current expectations. We refer all of you to the company’s SEC filings for more detailed information on the risk and uncertainties that have a direct bearing on operating results and financial position. Please note that during today’s call, we will also discuss non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency in the ICU Medical’s ongoing results of operations, particularly when comparing underlying results from period to period. We also included a reconciliation of these non-GAAP measures in today’s release and provided as much detail as possible on any addendums that are added back. And with that, it is my pleasure to turn the call over to Vivek.

Thanks, John, and good afternoon, everyone. I’ll walk through our Q4 revenue and earnings performance, highlight and provide some commentary on our assessment of 2024, and then turn it over to Brian to recap the full Q4 and fiscal 2024 results and provide our 2025 guidance. After that, I’ll come back with some brief comments on our medium-term outlook and on the actions and opportunities that should finally begin to address our under earning. Revenue for Q4 was $622 million for total company growth of 9% on a constant currency basis or 8% reported and was aided by the temporary shortage in IV Solutions. All three reporting segments had good year-over-year growth. Adjusted EBITDA was $106 million and EPS was $211. Gross margins were down slightly sequentially as we had a higher mix of IV Solutions and overall revenues. Cash balances were close to flat sequentially as we used cash to fully pay down our AR factoring program. The broader demand and utilization environment in Q4 continued to be solid across almost every geography. The capital environment is status quo and it does appear investments that customers need to get done do get done. The only other headwind in Q4 was, again, currency, as the dollar was weaker in our selling geographies than earlier in 2024. Getting into our businesses more specifically, our Consumables business in Q4 grew 6%, both constant currency and reported. For the year, the legacy ICU product families of IV therapy and Oncology combined again hit a record level in absolute sales, and Vascular Access had its best growth in years. The sequential growth was driven by new global customer implementations, price improvements, rapid growth in some of our niche markets, and less so by census, as it was solid but stable. Our IV Systems business…

Thanks, Vivek, and good afternoon, everyone. Since Vivek covered the Q4 revenue for each of the businesses, I’ll focus my remarks on; first, recapping the 2024 full-year revenue performance compared to our original expectations; second, discussing Q4 performance for the remainder of the P&L, along with the Q4 balance sheet and cash flow; and third, providing guidance on our expectations for 2025. So, to recap our full-year 2024 revenue performance, consolidated adjusted revenue was up 6% on a reported basis and up 7% constant currency. At the business unit level, Consumables revenue for the year was up 7% on both a reported and constant currency basis compared to our original expectations of mid-single-digit growth. Here, all four product categories contributed to the over performance, with each growing at or above the mid-single-digit target for the business unit as a whole. Infusion Systems revenue for the year was up 4% on a reported basis and up 7% constant currency, slightly better than our original guidance of mid-single-digits, driven by a combination of the ambulatory and LVP product lines. And Vital Care was up 5% for the year on both a reported and constant currency basis, which was better than our original guidance of flat. Here, IV Solutions was the largest contributor of the over performance, which included the benefit from higher demand during the fourth quarter. Excluding the IV Solutions benefit in Q4 Vital Care growth for the full year would have been 1% constant currency. Moving on to Q4 results and further down the P&L, as you can see from the GAAP to non-GAAP reconciliation in the press release, gross margin for the fourth quarter was 37%, which was in line with the expectations we laid out in our Q3 call, whereby we experienced the benefits from continued capture of…

Okay. Thanks, Brian. That was a lot. We hope it’s obvious to everyone that this year’s revenue guidance is the same as last year’s, with a better track record over the last five quarters or six quarters in our ability to deliver more predictable revenue growth. While we’re on solid footing now and have improved many of the most valuable acquired product lines to be closer to historical levels, sustained revenue growth is about consistent execution combined with consistent innovation to refresh the portfolio. Our heaviest investments over the last years have gone into our pump business, where in addition to the approval of Plum Duo, we are on the verge of submitting our expected final response to the FDA for the 510(k) review process for our Plum Solo single-channel pump and the related LifeShield Safety software. At our best estimate today, his new 510(k)s will be submitted for our Medfusion and CADD pumps over the next few quarters. All of these products will connect to our LifeShield Safety software and provide us the most modern fleet of infusion devices that can anchor the portfolio for many years to come. Simplistically, we want customers to have the right tools for the right job, all connected with a common user interface and software solution that minimizes training, speeds onboarding, enables interoperability and drives standardization. The Plum Solo will enable a clear upgrade path for our existing install base in addition to participating in the broader competitive opportunities. In Consumables, we’re also on the verge of a number of important filings which will bring innovation, continue to create new markets and sustain our revenue growth. And these are all alongside some of the previously mentioned recent launches in the pharmacy prep and trade family of products. It’s great that we have innovation…

[Operator Instructions] And we’ll take our first question from Jayson Bedford with Raymond James. Your line is open.

Good afternoon, guys. Thanks for all the detail. I think you’ve made my head spin a little faster now. So I guess a few questions, and I apologize if I’m jumping around here, but Consumables stood out as a driver here. Nice comp adjusted reacceleration in Consumables in the fourth quarter. You mentioned legacy IV therapy, faster access, but is there anything else that’s driving that? Was price a major component just because the growth did stand out?

Thanks, Jayson. It’s nice to hear from you. I don’t think there was anything we didn’t mention in the script there. It was a combination of everything. It was new installs. It was global growth. It was price. It’s all the little things in each spot finally and it’s been like that for a number of quarters in a row. So it feels good there and everything’s working production operationally quite well.

Okay. Is it possible to level set us on what your EBITDA margin was ex Solutions in 2024? I’ve got an estimate, but it felt like the contribution -- the EBITDA contribution from IV Solutions is a little higher in the fourth quarter, but I’m just wondering, you talked about that 20%. What was the baseline here that we should work off of in 2024?

Jayson, I don’t think we’ve disclosed, nor actually have we sort of gone back and done a complete carve-out on the IV Solutions for the 2024 period around the EBITDA impact, but I don’t think it would be EBITDA excluding IV Solutions. I don’t -- it wouldn’t be materially different than what we’ve reported in total for the company.

I mean, Jayson, you can do what we announced, $370 million over the revenues of $335 million and use the same assumptions that Brian’s laying out in the chart for IV Solutions. That would give you a proxy.

Right. Okay. Okay. And just on IV Solutions, how much of the $350 million in 2025 are you going to recognize in the first half of the year?

It’s slowing. If the question is, if that question really means, hey, is it still hot in the market? It is cooling off. And so I don’t know that there’s a disproportionate share. I think it’s a very safe assumption, $55 million, $45 million in the front half or something like that would be safe. I’m not sure we even know that level of precision, but it’s much more about what’s the exact closing day in Q2 and then we give the exact answer and how many months it’s in the P&L. The deconsolidation is all those words Brian had to go through. It was saying it’s in the P&L for part of the year.

Right. Okay. Okay. And then just maybe last one and I’ll let others get in queue. Brian, I think when you refer to kind of Plum Duo implementations with respect to the growth and Infusion Systems, I think you referred to second half of the year, products been out there for, I guess, a year now. Why wouldn’t you see some impact in the first half? Thanks.

I think we will see some impact in the first half. It’s just going to be more pronounced in the second half. So, it’s a more material driver to the growth rate in the second half of the year than the first.

Okay.

Just because the product will have been out there longer, obviously, by the time we get to the second half of the year.

Okay. Thank you.

Thanks, Jayson.

We’ll move next to Brett Fishbin with KeyBanc Capital Markets. Your line is open.

Hey, guys. Thank you very much for taking the questions. I’ll just ask a follow-up, actually, on the last question and really wanted just, was wondering if you could talk a little bit more about the capital equipment demand environment that you saw in 4Q and into 2025. I think you used the word normal, but yeah, just wondering like, really like how you’re feeling about also the rate of competitive wins you’re seeing with Plum Duo and then how you’re thinking about potential market share as the year progresses?

Yeah. Hi, Brett. It’s hard to kind of unpack what the truth is because everybody if you look across the pump landscape, everybody’s winning. I think we’re very focused on the net difference in what we want. The only way we believe we create material value and PV is really with competitive wins and we try to focus on what’s the net competitive wins of anything. We hope we don’t, but occasionally you do lose something. We feel like we’ve signed up a real amount of market share over the last year and upcoming, and it’ll take some time to install it. I don’t think our installation was anything above a point last year, right? Probably somewhere between 75 bps and a point. But I think we are holding more stuff we’ve signed and we need to get installed to the point Brian was making. In terms of the environment, I think if people, the same words we’ve used on the script for four quarters, right? Things that need to get done are getting done. People have capital to make the choice in some cases are forced to make the choice. So while it is a, is a real capital outlay, it’s certainly not as big as other equipment purchases or it’s certainly not it purchases people make and so transactions are moving forward.

All right. Super helpful. And then just one other question on Consumables. I think you mentioned kind of like a mid-single-digit baseline growth expectation for next year. So thinking about some of the pricing benefits with the GPO contract, as well as the benefit of placing more of these pumps. Do you think that there could be upside to that number? If some of the that you saw really much of much of 2024 continues?

I think it’s a very fair question, Brett, and obviously, the data speaks for it’s the performance of those product lines around the core Infusion, Consumables and Onco products is self-evident. I think what we put people through, we don’t want to set any irrational expectations and there’s been a number of quarters it’s worked well now. It’s not really, I mean, the pricing is nice and the GPO stuff is relevant. It’s also in every little corner of the planet and it’s all these niche markets we try to create. So it’s making sure all the, to the earlier question, all those things are happening at the same time. It’s not as simple as just saying, saying, price in the -- in under a certain set of contracts.

All right. Thanks again. Appreciate it.

Thanks Brett.

We’ll move next to Larry Solow with CJS Securities. Your line is open.

Hi. It’s actually Charlie Strauzer for Larry. How are you?

Hi, Charlie.

Can we talk a little bit about the balance sheet and performance leverage after the partial sale of Solutions in mid-2025, it’s probably going to be in the low 3s of equity or kind of target optimal level for a ratio there?

Charlie, I’m going to flip that one to Brian.

Yeah. I think we’ve always said kind of for a company of our size and operating in our industry, we would feel comfortable with a leverage ratio on a net leverage ratio somewhere around 2 times. And obviously, since the, since the acquisition, we’ve been well into the 3s. The -- we will see a little bit of deleveraging as we close the JV transaction and use the proceeds to pay it out debt, probably, get at least 0.3 times reduction in leverage as a result of that.

I mean, I think, Charlie, you can do the math, right? If we were saying it’s a $1 billion net at the end of the year, even if you took this year’s guidance and applied it to where that you can impute what next year’s and we would have to -- we have -- the first term loan comes current at some point next year, you can impute what kind of leverage ratio that would apply. And the company should have some debt on it. The way we ran with all cash and no debt for years made no sense. Obviously the cost of capital change dramatically. There should be some, we just don’t think it’s much above 2 times and then we can decide what to do with the rest of the capital if we have that kind of luxury.

Yeah. That makes sense. And looking at the -- is there a ability for maybe additional asset sales potentially?

It takes 2 to tango. I think, again, if it’s pretty, we made a very important portfolio optimization decision on this Solutions JV, it’s going to be great for customers. There are a few things that we either got to figure out how to be more relevant in or do something else. And I think it’s the same story we’ve said in the last couple of calls, just to make sure they’re growing predictably and have a clean quality bill of health before we can explore things. But I -- if the right situation was there, we would do it. That can obviously also change that math of what kind of ratio you get to 1, so it’s not lost on us. It’s a good question too.

Got it. Thank you very much on that. And then, just one last question for me, looking at the consolidation of the facilities process underway, how much of that improvement is incorporated into your outlook and how much incremental benefit in 2026 and beyond could we possibly see?

I mean, I think when we went in the darkest days, like six quarters ago, five quarters ago, when gross margins hit 36%, we said our goal was to be at pre-JV, all this stuff. Our goal was to be a 40% gross margins and the plant consolidations are key. And the logistics consolidations are a key portion of that. With the guidance this year, we’re not exactly halfway there, but we’re pretty close. And then, it depends where we at this year and what, what comes in next year, but all those things are in light. I don’t think anything’s different than the goal we laid out before and then the 5 points ultimately that come from the JV long-term are on top of that.

Great. Thank you very much.

Thanks, Charlie.

We’ll move next to Michael Toomey with Jefferies. Your line is open.

Great. Hey, guys. Congrats on the results and thanks for the color on the JV as well. That’s super useful. Just on the tariff, I know you said that the guidance excludes the tariff impact and you mentioned some mitigating factors. Could you just run us through the reason maybe for excluding the impacts? I guess that’s just because it is changing every week, but on the mitigating factors as well. Could you just dig into the details on some of those, like how much capacity you have at the facility in Costa Rica? What actions can you kind of take immediately in terms of maybe moving inventory north of the border and anything you can do on price or is that going to have a lagged effect there? Just any color that would be super useful?

I mean, I think the nature of our industry is that price is the long pole in the tent item, right? Given contracts, et cetera. So not, not every piece of business is on contracts. So I wouldn’t want to say that universally. I think as it relates to the first part of your question in Costa Rica, Costa Rica is a large site. We bought a hospital site years ago that ran at much, much higher volumes than we run at today. And we’ve synergized that by moving products that pumps and other things from Smith’s that came into that site. We continue to have the ability to do that. It takes time. And is it a worthwhile, we’re burning a lot of calories on these items right now, a lot of calories. And as Brian tried to say before one puts up capital and kind of goes all the way, you’d like to have some certainty of how long this is going to be and is there any payback? And so I, you could hear it in my voice kind of how we all feel about this stuff. We have the -- we have capacity. It would take a while to do it. We could do it. As it relates to moving stuff North of the border. Yes, we do have some flexibility, but that also consumes capital and so capital has been at a premium around here. We’ve been trying to reduce inventory, not increase. And then there’s another question of flows through the U.S. or so U.S. we can set up a logistics network that’s for East. We have a very global business. And in some of these categories, things that go outside the U.S. go straight from where they’re produced, less capital intensive, but still a reasonable amount of work to set that up and so we’ve been going on that. I think those are really the big levers. I’ve certainly listened to what every other industry participant has said, and we’re probably going to play it right down the middle and say, we’ll be more specific when there are more specifics provided to us, but we are inserting energy on this right now.

Okay. That’s great. And then on the post-JV numbers you provided, I know you said that’s kind of a half year impact. So I guess it’s -- you have another leg to that in 2026, right? You talked about the 300 bps, 400 bps on the gross margin. What’s in the presentation to 200 bps this year. So that’s assumed by it’d be another 200 bps the following year and you get those same benefits?

Exactly. Whatever we don’t get this year, we’ll get next year. And it’ll add -- it’ll be something between 3 percentage points to 4 percentage points, again, with an additional 1 percentage point to 2 percentage points to come longer term.

I mean, again, Mike, just to make the math simple, if you hypothetically assumed it closed one-third of the way through this year, you multiply two-thirds times, 3, right or two-thirds times 4.

Okay. And then just excluding the JV, anything on the phasing of the margin expansion throughout 2025?

I would say nothing worth noting probably just excluding -- yeah, excluding the impact of the JV. Any other margin expansion would probably be fairly gradual throughout the year.

Okay. All right. Great. Thanks guys. Congrats again.

Thank you, Mike.

We’ll take our next question from Mike Matson with Needham. Your line is open.

Hey. Thanks for taking our questions. This is Joseph on for Mike. Maybe just looking at the guidance that you guys gave, mid-single digits in Consumables. I was just wondering if you could maybe dissect that a little bit. Oncology, Vascular Access seems to be like some big growers having record quarters, you guys called out. Yeah, I was just wondering if you could dissect some of the components of that.

Vivek?

Yeah. I think, here in Q4, the biggest contributors were, well, we would consider to be probably the legacy ICU product lines of core Infusion and Oncology. And I think as you look to 2025 guidance, we expect all four product lines to contribute certainly to the growth, but perhaps, we feel most confident in those legacy ICU lines as making sure we’re at least mid-single-digit…

The majority of the segment.

Yes. The majority of the Consumable stack.

Okay. Thanks. It’s helpful. And then I guess, Vivek, maybe looking at, you had this $500 million EBITDA goal you guys had talked about. Obviously EBITDA in the margin in the low 20s gets you well on your way there. But I guess just, looking forward, can you maybe talk about the drivers that, that get you there? I know you probably wouldn’t put a timing on it, but if there’s anything rough that you can really talk about 2027, 2028, longer than that, that’d be helpful?

Sure. I mean, that is when we get up and you look in the mirror of the things we said, that is exactly what we said. And so you have a good memory on the transaction, even though you weren’t here then. I think the biggest drivers to make that happen first, you have to have sustained revenue growth, which is why we’re saying that you only have that with innovation. And you can’t -- you have to innovate in these. It’s interesting you look at what’s going on in the industry and all the participants and every rearranging assets and all the other things that are going on. I mean, fundamentally you have to add more value to your product life and customer and we feel like we’re doing that in our core businesses. And then it’s about gross margins where the biggest components are price, which we’ve talked a lot about, and then, synergizing assets that we acquired. And that’s about production, logistics, IT, functional costs, et cetera, to be more competitive. And I think there’s -- it is a lot of value at stake and then you need a little bit of tailwind for some of these items that really gobbled a lot of earnings along the way, like currency, the yen, the euro to break in the right direction. That took a lot of earnings over the last few years. And so I think those are the three, currency doesn’t matter if you don’t have revenue growth and you’re not making your assets as competitive as possible. But if all three broke in the right way, that goes a long way to getting there and to be at the levels we expected to be, right? We lost time.

Sure. Sure. That makes perfect sense. Well, hopefully the wind is at your back moving forward then. Thank you.

The first two pieces were on. So we appreciate it very much.

This does conclude the Q&A portion of the call. I’ll now turn it back to Vivek Jain for any additional or closing remarks.

Thanks everyone. Sorry, the call was late after the quarter and a lot of things going on and standing up to JV, et cetera. We appreciate everybody’s interest in ICU Medical. We feel optimistic about what 2025 will bring for us and we look forward to you very quickly on our Q1 call.

This does conclude today’s program. Thank you for your participation. You may disconnect at any time and have a wonderful evening.