ICU Medical, Inc.

Good day and welcome to the ICU Medical, Inc. First Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be opportunity to ask questions. Please note today's event is being recorded. I'd like to now turn the conference over to John Mills. Please go ahead.

Thank you. Good afternoon, everyone. Thank you for joining us to discuss ICU Medical's financial results for the first quarter of 2025. 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 first quarter 2025 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 full 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 into 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. We know it's the end of a long and complicated earnings season, so we'll try to be as brief as possible. I'll walk through our Q1 revenue and earnings performance and provide some commentary on the businesses and then turn it over to Brian to recap the full Q1 results and implications of the joint venture and our view on the impact of tariffs, at least as of this moment. After that, I'll come back with some color on some items at the intersection of innovation and quality, more detail on tariffs, and just make a few comments about the medium-term activities of the company. Revenue for Q1 was $599 million for total company growth of 10% on a constant currency basis, or 8% reported, and was aided far less than Q4 2024 from IV Solutions as the national shortage ended. All three reporting segments had good year-over-year growth. Adjusted EBITDA was $99 million, and adjusted EPS was $1.72. Gross margins were in line with our expectations, and cash generation was healthy. Between excess cash generated in Q1 and the net proceeds from the creation of the JV last week, we have repaid almost $250 million in principal year-to-date, and Brian will provide more detail on this. The broader demand and utilization environment in Q1 continued to be attractive across almost every geography, with the rate positive but not at the levels we saw last year. The capital environment is status quo, and it does appear investments that customers need to get done do get done. Currency has obviously flipped since the last call with the dollar weakening. Getting into our businesses more specifically, our consumables business in Q1 grew 10% constant currency and 9% reported. All product lines contributed to this growth. This year-over-year 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. Just as a reminder, when looking at last year, we had major sequential increases in Q2 over Q1 of 2024, so we don't expect the rate of growth for the next quarter to continue what we had here in Q1, but still feel very comfortable about the year. Our IB systems business grew 8% constant currency and 6% reported. This was driven by good dedicated set utilization in all geographies, and some LVP hardware installs earlier in the year than anticipated. We continue to be engaged in many new RFP processes and are beginning customer discussions around the multi-year refresh of our Plum 360 pumps with Plum Solo now that it's approved. As we described in the last call, we had an excellent 2024 in selling our CAD ambulatory pumps, and we're seeing the benefit of increased disposables utilization, but have a tougher set of year-over-year hardware comps in this length. Just wrapping up the business segments, our vital care segment grew 11% constant currency and 10% reported, with IV solutions being the largest component of segment growth, with the remainder of the segment being up slightly. There is no longer a market shortage for IV solutions. We announced the formation and stand-up of our joint venture with Otsuka Pharmaceutical Factory, and thanks to the many colleagues at both companies that worked tirelessly on this for the last few months. While the manufacturing operations of this JV are straightforward, it has been work from a systems perspective to ensure everything is seamless to customers, and we will monitor this closely as it's another set of long-term service agreements we had to put into place. We continue to be impressed with their commitment, innovation, and fundamental manufacturing experience in this arena, and believe we have aligned with the right partner. We believe this will be a win-win for each of us, and most importantly, customers in the United States. From a value perspective, while creating this JV is a wash to our earnings, we still own 40% of an asset that's hard to replicate that now has better access to technology and eventually will have a more complete product offering, which benefits other parts of our portfolio, and we have a potential earn-out payment in the medium term. That's my brief recap of Q1 at the high level. I'll now turn it over to Brian and then come back with some of the color on the other items I mentioned in the intro.