ICU Medical, Inc.

Good day, everyone, and welcome to today's ICU Medical, Inc.' 's third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note this call may be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. John Mills. Please go ahead, sir.

Thank you. Good afternoon, everyone. Thank you for joining us to discuss ICU Medical's financial results for the third quarter of 2024. On the call today representing ICU Medical is Vivek Jain, Chief Executive Officer and Chairman, and Brian Bunnell, 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 third quarter 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 could 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've 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 quickly walk through our summary Q3 revenue and earnings performance, as we believe the results are straightforward, and then provide a few highlights on the various earnings and quality improvement efforts. Brian will take it from there for more specifics on the quarter and the balance of the year. Then I'll come back with a discussion on the strategic joint venture we just announced today with Otsuka and the overall situation around IV solutions and the implications for our customers and ICU Medical with this transaction. Revenue for Q3 was $580 million for total company growth of 7% on a constant currency basis or 6% on a reported basis. Adjusted EBITDA was $95 million and EPS was $1.59 million. Gross margins were a little higher than expected due to capture of supply chain efficiencies, FX, and sales mix. We again had a good quarter of free cash flow generation, which enabled us to reduce some of the AR factoring line, as previously discussed, and our cash balance increased to approximately $313 million. The broader demand and utilization environment Q3 was healthy across all geographies and has felt that way this year to date. And since we're almost halfway through Q4, we've not really seen any major changes in the environment. The capital environment with status quo and the investments that customers need to make are getting made. Then finally, we had a quarter with the net impact of foreign exchange in our favor. Getting into our business units more specifically, consumables grew 9% on both a constant currency and reported basis. The largest lies in the segment in order. Infusion consumables, vascular access, and oncology all grew high single digits or better. We continue to advance the points made on previous calls around focusing on clinical outcomes, new market creation, and improving in geographies where we had a low share and now have direct operations. And we're focused on progressing the innovation roadmap as we've mentioned previously. For the balance of 2024, nothing else is new here, and we would expect the full-year results likely to finish above our original mid-single-digit targets with the legacy ICU consumables lines being at record levels. Our IV systems business unit grew 10% constant currency and 7% on a reported basis. We had more balance across the product lines here as compared to Q2. Sequentially, off the very strong Q2 for ambulatory hardware devices, those levels decreased, and the install calendar for LVPs was stronger than Q2, and therefore we saw sequential growth in the LVP line. Some key highlights here include continued new contract signings for our Plum Duo infusion system, and we're pleased with what we're seeing so far. We continue to advance our 510K submissions for our Plum Solo and LifeShield safety software. We have received FDA feedback on those submissions and we're working to clear up the open questions. After these products are cleared, the combination of the dual channel Plum Duo and the single channel Plum Solo will provide customers flexibility across all clinical care areas and our energy will shift towards the refreshed syringe platform of MedFusion with the goal of filing that 510K submission over the next several quarters and having it connect to our LifeShield safety software as well. Our ambition is to have 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, improves onboarding, enables interoperability, and drives standardization. For the balance of 2024, nothing else is new here. We would expect results in line with our original targets. Just wrapping up the business segments, our vital care segment was flat year over year on a constant currency and reported basis. Obviously, since the first day of Q4, there's been a lot happening in the IV solutions marketplace, and we'll discuss that when we explain the choice to enter this new joint venture. From an operations and quality standpoint, the cutover of our US and Canada order to cash systems was executed in Q3, and many thanks to the numerous folks who went above and beyond to make this as smooth as possible. Now that this work is under our belts, we're focused on optimizing our North American physical logistics, and then we'll begin these activities internationally. We continue to work on the previously announced factory consolidations with essentially most projects intended to be completed by the end of 2025. The vast majority of our real estate contracts have now been exited or repriced, and savings in this area will come into the P&L over 2025 and beyond. While these may seem like mundane topics, All three items I just mentioned are economically meaningful and contribute to improving our profitability level. From a quality perspective, we believe we've launched the majority of field corrective actions as we needed to stabilize the acquired LSM products. There will be a few more here, but we're optimistic that they will be smaller, both in terms of absolute number and scope. In Q3, we also had a very detailed FDA follow-up inspection relating to the acquired warning letter at our Minneapolis site. That inspection was completed with no observations and is an important part of our quality improvement journey, and we're awaiting our end of inspection report. That's really the quick update on Q3, and with that, I'll turn it over to Brian, and then I'll come back to talk a bit more about IB Solutions and our newly announced joint venture. Thanks, Vivek, and good afternoon, everyone.