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ICU MEDICAL INC

ICU MEDICAL INCICUIEarnings & Financial Report

Nasdaq · Health Care · Surgical & Medical Instruments & Apparatus

ICU Medical, Inc. is a medical technology company based in San Clemente, California. ICU Medical products are designed to prevent bloodstream infections and protect healthcare workers from exposure to infectious diseases or hazardous drugs. ICU Medical product line includes intravenous therapy (IV) products, pumps, needle-free vascular access devices, custom infusion sets, closed system hazardous drug handling devices and systems, sensor catheters, needle-free closed blood sampling systems, a...

What changed in ICU MEDICAL INC's 10-K — 2023 vs 2024

Top changes in ICU MEDICAL INC's 2024 10-K

356 paragraphs added · 337 removed · 278 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

72 edited+11 added−12 removed121 unchanged
Our primary Infusion Therapy products are: • Clave™ needlefree products, including the MicroClave, MicroClave Clear, and NanoClave™ brand of connectors, accessories, extension and administration sets used for the administration of IV fluids and medications; • Neutron™ catheter patency device, used to help maintain patency of central venous catheters; 1 • Tego™ needlefree connector utilized to access catheters for hemodialysis and apheresis applications; and • ClearGuard™, SwabCap™ and SwabTip™ disinfection caps.
Our primary Infusion Therapy products are: 1 • Clave™ needlefree products, including the MicroClave, MicroClave Clear, and NanoClave™ brand of connectors, accessories, extension and administration sets used for the administration of IV fluids and medications; • Neutron™ catheter patency device, used to help maintain patency of central venous catheters; • Tego™ needlefree connector utilized to access catheters for hemodialysis and apheresis applications; and • ClearGuard™, SwabCap™ and SwabTip™ disinfection caps.
Regional Anesthesia/Pain Management Trays We offer a comprehensive range of Portex® regional anesthesia/pain management trays and components. Our primary products include: • Epidural Trays; • Spinal Trays; • Combined (CSE) Trays; • Peripheral Nerve Block Trays; and 4 • Specialty Trays (Lumbar Puncture, Amniocentesis, Myelogram).
Regional Anesthesia/Pain Management Trays We offer a comprehensive range of Portex® regional anesthesia/pain management trays and components. Our primary products include: 4 • Epidural Trays; • Spinal Trays; • Combined (CSE) Trays; • Peripheral Nerve Block Trays; and • Specialty Trays (Lumbar Puncture, Amniocentesis, Myelogram).
The Federal Trade Commission ("FTC") also regulates the advertising of our products. Further, we are subject to laws directed at preventing fraud and abuse, which subject our sales and marketing, training and other practices to government scrutiny. 5 Medical Device Regulation in the U.S. The majority of our products are regulated by the FDA as medical devices in the U.S.
The 5 Federal Trade Commission ("FTC") also regulates the advertising of our products. Further, we are subject to laws directed at preventing fraud and abuse, which subject our sales and marketing, training and other practices to government scrutiny. Medical Device Regulation in the U.S. The majority of our products are regulated by the FDA as medical devices in the U.S.
Consumables We believe that our ability to effectively compete in the Consumables market depends upon our ability to differentiate our products based on continued innovation, safety, quality, convenience, reliability, patent protection, ease of use and the pricing of our products, in addition the access to distribution channels.
Consumables We believe that our ability to effectively compete in the Consumables market depends upon our ability to differentiate our products based on continued innovation, safety, quality, convenience, reliability, patent protection, ease of use and the pricing of our products, in addition to the access to distribution channels.
The process required by the FDA before a drug may be marketed in the U.S. generally involves the following: • completion of preclinical laboratory tests and animal studies performed in accordance with the FDA's Good Laboratory Practice requirements; • submission to the FDA of an investigational new drug application ("IND"), which must become effective before clinical trials may begin; • approval by an institutional review board or ethics committee at each clinical site before the trial is commenced; • performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed product candidate for its intended purpose; • preparation of and submission to the FDA of a New Drug Application ("NDA") or abbreviated new drug application ("ANDA") after completion of all required clinical trials; • satisfactory completion of an FDA Advisory Committee review, if applicable; • a determination by the FDA within 60 days of its receipt of an NDA to file the application for review; • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMPs and to assure that the facilities, methods and controls 7 are adequate to preserve the product's continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the U.S.
The process required by the FDA before a drug may be marketed in the U.S. generally involves the following: • completion of preclinical laboratory tests and animal studies performed in accordance with the FDA's Good Laboratory Practice requirements; • submission to the FDA of an investigational new drug application ("IND"), which must become effective before clinical trials may begin; • approval by an institutional review board or ethics committee at each clinical site before the trial is commenced; • performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed product candidate for its intended purpose; • preparation of and submission to the FDA of a New Drug Application ("NDA") or Abbreviated New Drug Application ("ANDA") after completion of all required clinical trials; • satisfactory completion of an FDA Advisory Committee review, if applicable; 7 • a determination by the FDA within 60 days of its receipt of an NDA to file the application for review; • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMPs and to assure that the facilities, methods and controls are adequate to preserve the product's continued safety, purity and potency, and of potential inspection of selected clinical investigation sites to assess compliance with Good Clinical Practices; and • FDA review and approval of the NDA to permit commercial marketing of the product for particular indications for use in the U.S.
Class I devices are those that pose the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA's General Controls for medical devices, which include compliance with the applicable portions of current good manufacturing practices ("cGMPs") for medical devices known as the Quality System Regulation ("QSR"), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Class I devices are those that pose the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA's General Controls for medical devices, which include compliance with the applicable portions of current good manufacturing practices ("cGMPs") for medical devices currently known as the Quality System Regulation ("QSR"), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
MHRA seeks to amend the UK Medical Devices Regulations 2002 (which are based on EU legislation, primarily the EU Medical Devices Directive and the EU In Vitro Diagnostic Medical Devices Directive 98/79/EC), in particular to create a new access pathway to support innovation, create an innovative framework for regulating software and artificial intelligence as medical devices, reform IVD regulation and foster sustainability through the reuse and remanufacture of medical devices.
MHRA seeks to amend the UK Medical Devices Regulations 2002 (which are based on EU legislation, primarily the EU Medical Devices Directive and the EU In Vitro Diagnostic Medical Devices Directive 98/79/EC), in particular to create a new access pathway to support innovation, create an innovative framework for regulating software and artificial intelligence as medical devices, reform in vitro diagnostic regulation and foster sustainability through the reuse and remanufacture of medical devices.
The FDA may approve a PMA with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA approval or requirements to conduct additional clinical 6 studies post-approval.
The FDA may approve a PMA with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA approval or requirements to conduct additional clinical studies post-approval.
We believe our ability to effectively compete in this industry is determined by our ability to provide a wide breadth of cost-effective, high quality products. We believe the added breadth of our acquired product portfolios have increased our competitiveness as we can now provide a one-stop shop for customers and offer more flexible competitive pricing.
We believe our ability to effectively compete in this industry is determined by our ability to provide a wide breadth of cost-effective, high quality products. We believe the added breadth of our acquired product portfolios have increased our competitiveness as we can now provide a one-stop shop for customers and offer more flexible 13 competitive pricing.
In addition, we have initiated litigation, and may continue to initiate litigation in the future, to enforce our intellectual property rights against those we believe to be infringing on our patents. Such litigation could result in substantial cost and diversion of resources. Seasonality/Quarterly Results Our business is not significantly impacted by seasonal aspects.
In addition, we have initiated litigation, and may continue to initiate litigation in 14 the future, to enforce our intellectual property rights against those we believe to be infringing on our patents. Such litigation could result in substantial cost and diversion of resources. Seasonality/Quarterly Results Our business is not significantly impacted by seasonal aspects.
Alternatively, if a UK notified body conducts such assessment, a 'UKNI' mark is applied and the device may only be placed on the market in Northern Ireland and not the EU. 11 Manufacturing Regulation We must also comply with FDA and International Organization for Standardization ("ISO") governing medical device manufacturing practices.
Alternatively, if a UK notified body conducts such assessment, a UK Northern Ireland (“UKNI”) mark is applied and the device may only be placed on the market in Northern Ireland and not the EU. Manufacturing Regulation We must also comply with FDA and International Organization for Standardization ("ISO") governing medical device manufacturing practices.
ICU's product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, IV catheters, sharps safety products, and sterile IV solutions; closed system transfer devices and pharmacy compounding systems; as well as a range of respiratory, anesthesia, patient monitoring, and temperature management products.
ICU's product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, peripheral IV catheters, sharps safety products, and sterile IV solutions; closed system transfer devices and pharmacy compounding systems; as well as a range of respiratory, anesthesia, patient monitoring, and temperature management products.
Our expenses do not typically fluctuate in the same manner as net sales, which may result in cause fluctuations in operating income that are disproportionate to fluctuations in our revenue. Research and Development We continue to invest in certain research and development ("R&D") projects to drive future growth and to remain competitive in our product lines.
Our expenses do not typically fluctuate in the same manner as net sales, which may cause fluctuations in operating income that are disproportionate to fluctuations in our revenue. Research and Development We continue to invest in certain research and development ("R&D") projects to drive future growth and to remain competitive in our product lines.
Human Capital Management We believe our employees are the foundation of our business and are key to executing our strategy globally. The knowledge, skills and abilities of our diverse workforce is paramount in upholding our mission of connecting patients and caregivers through safe, life-saving, life enhancing IV therapy products, systems, and services.
Human Capital Management We believe our employees are the foundation of our business and are key to executing our strategy globally. The knowledge, skills and abilities of our workforce is paramount in upholding our mission of connecting patients and caregivers through safe, life-saving, life enhancing IV therapy products, systems, and services.
The ability of our customers to obtain appropriate coverage and reimbursement for healthcare services and products from third-party payors is critical because it affects which products customer purchase and the prices they are willing to pay since our products are not separately reimbursed by any third-party payor.
The ability of our customers to obtain appropriate coverage and reimbursement for healthcare services and products from third-party payors is critical because it affects which products customers purchase and the prices they are willing to pay since our products are not separately reimbursed by any third-party payor.
ChemoLock is used to limit the escape of hazardous drug or vapor concentrations, block the transfer of environmental contaminants into the system, and eliminates the risk of needlestick injury; • ChemoClaveTM, an ISO Connection standard and universally compatible CSTD used for the preparation and administration of hazardous drugs.
ChemoLock is used to limit the escape of hazardous drug or vapor concentrations, block the transfer of environmental contaminants into the system, and eliminates the risk of needlestick injury; • ChemoClaveTM (“ChemoClave”), an ISO Connection standard and universally compatible CSTD used for the preparation and administration of hazardous drugs.
Certain countries also mandate implementation of commercial compliance programs. 10 In the EU, regulatory authorities have the power to carry out announced and, if necessary, unannounced inspections of companies, as well as suppliers and/or sub-contractors and, where necessary, the facilities of professional users.
Certain countries also mandate implementation of commercial compliance programs. In the EU, regulatory authorities have the power to carry out announced and, if necessary, unannounced inspections of companies, as well as suppliers and/or sub-contractors and, where necessary, the facilities of professional users.
Regulatory authorities have broad compliance and enforcement powers and, if such issues cannot be resolved to their satisfaction, can take a variety of actions, including untitled or warning letters, fines, consent decrees, injunctions, or civil or criminal penalties.
Regulatory authorities have broad compliance 10 and enforcement powers and, if such issues cannot be resolved to their satisfaction, can take a variety of actions, including untitled or warning letters, fines, consent decrees, injunctions, or civil or criminal penalties.
We also have our code of ethics posted on our website (http://www.icumed.com). The information on our website is not incorporated into this Annual Report on Form 10-K. We use our Investor Relations website as a means of disclosing material information.
We also have our code of ethics posted on our website (http://www.icumed.com). The information on our website is 15 not incorporated into this Annual Report on Form 10-K. We use our Investor Relations website as a means of disclosing material information.
As a general rule, demonstration of conformity of medical devices and their manufacturers with the essential requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.
As a general rule, demonstration of conformity of medical devices and their manufacturers with the general safety and performance requirements must be based, among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.
We offer competitive salaries and benefit packages to all employees as well as select participation in incentive plans based on individual and company performance. We believe the development of our workforce is critical for personal growth and the success of our company as well.
We believe we offer competitive salaries and benefit packages to our employees as well as select participation in incentive plans based on individual and company performance. We believe the development of our workforce is critical for personal growth and the success of our company as well.
The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s).
The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and 6 that there is reasonable assurance that the device is safe and effective for its intended use(s).
Data Privacy and Security 13 Medical device companies may be subject to U.S. federal and state and foreign data privacy, security and data breach notification laws governing the collection, use, disclosure and protection of health-related and other personal information.
Data Privacy and Security Medical device companies may be subject to U.S. federal and state and foreign data privacy, security and data breach notification laws governing the collection, use, disclosure and protection of health-related and other personal information.
Drug Regulation in the U.S. Certain of our IV solutions products are regulated by the FDA as drugs. In the U.S., the FDA regulates drugs under the FDC Act, and its implementing regulations, and biologics under the FDC Act and its implementing regulations.
Drug Regulation in the U.S. Certain of our IV solutions products are regulated by the FDA as drugs. In the U.S., the FDA regulates drugs under the FDC Act and its implementing regulations.
ICU Medical MedNet connects our industry-leading Plum 360 smart pumps to a hospital’s EHR, asset tracking systems, and alarm notification platforms to further enhance infusion safety and efficiency. • LifeShield™ infusion safety software for Plum Duo infusion pumps is an enterprise-wide platform designed with the input of pharmacists, nurses and administrators to empower health systems to raise the bar in IV performance.
ICU Medical MedNet connects our industry-leading Plum 360 smart pumps to a hospital’s electronic health record ("EHR"), asset tracking systems, and alarm notification platforms to further enhance infusion safety and efficiency. • LifeShield™ infusion safety software for Plum Duo infusion pumps is an enterprise-wide platform designed with the input of pharmacists, nurses and administrators to empower health systems to raise the bar in IV performance.
Headquartered in San Clemente, California, ICU was founded in 1984. Our primary customers are acute care hospitals, wholesalers, ambulatory clinics and alternate site facilities, such as outpatient clinics, home health care providers, and long-term care facilities. Since our inception we have grown organically and through acquisition. In February 2017, we acquired Pfizer Inc.’s (“Pfizer”) Hospira Infusion Systems (“HIS”) business.
Headquartered in San Clemente, California, ICU was founded in 1984. Our primary customers are acute care hospitals, wholesalers, ambulatory clinics and alternate site facilities, such as outpatient clinics, home health care providers, and long-term care facilities. Since our inception we have grown organically and through acquisitions. In February 2017, we acquired Pfizer Inc.’s (“Pfizer”) Hospira Infusion Systems (“HIS”) business.
Our primary Oncology products are: • ChemoLockTM CSTD, which utilizes a proprietary needlefree connection method, is used for the preparation and administration of hazardous drugs.
Our primary Oncology products are: • ChemoLockTM CSTD (“ChemoLock”), which utilizes a proprietary needlefree connection method, is used for the preparation and administration of hazardous drugs.
Other Healthcare Laws We are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.
Other Healthcare Laws 11 We are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.
Third-party payors are increasingly reducing coverage and reimbursement for certain healthcare services and products and challenging prices charged for healthcare services and products. Health Care Reform in the U.S.
Third-party payors are increasingly reducing coverage and reimbursement for certain healthcare services and products and challenging prices charged for healthcare services and products. 12 Health Care Reform in the U.S.
In January 2022, we acquired Smiths Medical 2020 Limited (“Smiths Medical”), the holding company of Smiths Group plc’s global medical device business. The Smiths Medical acquisition complemented and broadened our preexisting product portfolio by adding syringe and ambulatory infusion devices, vascular access, and vital care products, and significantly strengthened and expanded our global market reach.
In January 2022, we acquired Smiths Medical 2020 Limited (“Smiths Medical”), the holding company of Smiths Group plc’s ("Smiths") global medical device business. The Smiths Medical acquisition complemented and broadened our preexisting product portfolio by adding syringe and ambulatory infusion devices, vascular access, and vital care products, and we believe has significantly strengthened and expanded our global market reach.
The aforementioned EU rules are generally applicable in the European Economic Area ("EEA") which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland. Brexit Since January 1, 2021, the Medicines and Healthcare Products Regulatory Agency ("MHRA") has become the sovereign regulatory authority responsible for Great Britain (i.e.
The aforementioned EU rules are generally applicable in the European Economic Area ("EEA") which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland. Brexit and the UK Regulatory Framework Since January 1, 2021, the Medicines and Healthcare Products Regulatory Agency ("MHRA") has become the sovereign regulatory authority responsible for Great Britain (i.e.
In the United States ("U.S.") our competitors include BD, Baxter, B. Braun, Moog Medical, and Fresenius Kabi, a division of Fresenius Group. Outside of the U.S., our primary competitors are BD, B. Braun, Fresenius, and a large number of local market pump manufacturers. These competitors benefit from greater financial, research and development and marketing resources than we have.
In the U.S. our competitors include BD, Baxter, B. Braun, Moog Medical, and Fresenius Kabi, a division of Fresenius Group. Outside of the U.S., our primary competitors are BD, B. Braun, Fresenius, and a large number of local market pump manufacturers. These competitors benefit from greater financial, research and development and marketing resources than we have.
Plum 360 has been named Best in KLAS for seven years in a row (2018, 2019, 2020, 2023 – Best in KLAS Smart Pump Traditional; 2021, 2022, 2023, 2024 Best in KLAS Smart Pump EMR Integrated) and was the first medical device to be awarded UL Cybersecurity Assurance Program Certification. • Plum Duo™ infusion pumps with LifeShield™ safety software are dual channel devices capable of delivering up to four compatible medications at independent rates with a single pump.
Plum 360 has been named Best in KLAS for eight years in a row (2018, 2019, 2020, 2023 – Best in KLAS Smart Pump Traditional; 2021, 2022, 2023, 2024, 2025 Best in KLAS Smart Pump EMR Integrated) and was the first medical device to be awarded UL Cybersecurity Assurance Program Certification. • Plum Duo™ infusion pumps with LifeShield™ safety software are dual channel devices capable of delivering up to four compatible medications at independent rates with a single pump.
We encounter significant competition in this market both from global, large, established medical device manufacturers and from smaller companies. We compete with products and systems marketed by Becton Dickinson ("BD"), Baxter International ("Baxter"), B. Braun Medical, Inc. ("B. Braun"), Angiodynamics and Teleflex. Infusion Systems We face strong global competitors in the Infusion Systems market.
We encounter significant competition in this market both from global, large, established medical device manufacturers and from smaller companies. We compete with products and systems marketed by Becton Dickinson ("BD"), Baxter International ("Baxter"), B. Braun Medical, Inc. ("B. Braun"), Angiodynamics, Teleflex, EquaShield and Medtronic. Infusion Systems We face strong global competitors in the Infusion Systems market.
A notified body would typically audit and examine a product's technical dossiers and the manufacturer's quality system (the notified body must presume that quality systems which implement the relevant harmonized standards – which is ISO 13485:2016 for Medical Devices Quality Management Systems – conform to these requirements).
A notified body would typically audit and examine a product’s technical dossiers and the manufacturers’ quality system (notified body must presume that quality systems which implement the relevant harmonized standards – which is ISO 13485:2016 for Medical Devices Quality Management Systems – conform to these requirements).
Our Hemodynamic Monitoring products include: • Cogent™ 2-in-1 hemodynamic monitoring system; • CardioFlo™ hemodynamic monitoring system; • TDQ™ and OptiQ™ cardiac output monitoring catheters; • TriOxTM venous oximetry catheters; • Transpac™ blood pressure transducers; • SafeSet™ closed blood sampling and conservation system; and • MEDEX® LogiCal® Pressure Monitoring System and components.
Our Hemodynamic Monitoring products include: • Cogent™ 2-in-1 hemodynamic monitoring system; • CardioFlo™ hemodynamic monitoring system; • TDQ™ and OptiQ™ cardiac output monitoring catheters; • TriOx™ venous oximetry catheters; • Transpac™ blood pressure transducers; • SafeSet™ closed blood sampling and conservation system; and • MEDEX® LogiCal® Pressure Monitoring System and components.
See Item 1A. Risk Factors - We are dependent on single and limited source third-party suppliers, which subjects our business and results of operations to risks of supplier business interruptions, and a loss or degradation in performance in our suppliers could have an adverse effect on our business and financial condition.
Risk Factors - We are dependent on single and limited source third-party suppliers, which subjects our business and results of operations to risks of supplier business interruptions, and a loss or degradation in performance in our suppliers could have an adverse effect on our business and financial condition.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; • the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services ("CMS") information related to payments or other "transfers of value" made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician health care professionals (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals and ownership and investment interests held by the physicians described above and their immediate family members; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical and device companies to comply with the industry's voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to track and report information related to payments and other "transfers of value" to physicians and other healthcare providers or pricing, marketing expenditures and information. 12 Violations of any of the laws described above include civil and criminal penalties, damages, fines, the curtailment or restructuring of an entity’s operations, the debarment, suspension or exclusion from federal and state healthcare programs and/or imprisonment.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; • the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare & Medicaid Services ("CMS") information related to payments or other "transfers of value" made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician health care professionals (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives), and teaching hospitals and ownership and investment interests held by the physicians described above and their immediate family members; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical and device companies to comply with the industry's voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to track and report information related to payments and other "transfers of value" to physicians and other healthcare providers or pricing, marketing expenditures and information.
For instance, in December 2021, Regulation (EU) No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was adopted. While the Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim.
For instance, in December 2021, Regulation (EU) No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was adopted. While the Regulation entered into force in January 2022, it only began to apply from January 2025 onwards, with preparatory and implementation-related steps that took place in the interim.
While we have obtained certain patents and applied for additional U.S. and foreign patents covering certain of our products, there is no assurance that the scope of any patent 14 protection will prevent competitors from introducing similar or competing devices or that any of our patents will be held valid if subsequently challenged.
While we have obtained certain patents and applied for additional U.S. and foreign patents covering certain of our products, there is no assurance that the scope of any patent protection will prevent competitors from introducing similar or competing devices or that any of our patents will be held valid if subsequently challenged. We can also lose patent protection through expiration.
We reinforce this with challenging, yet rewarding assignments, continued learning and training programs through our global iLearning platform, and support continued education globally through tuition reimbursement programs. Our team believes in diversity, collaboration, and removing barriers to communication—all to create an environment where innovation and creativity can flourish.
We reinforce this with challenging, yet rewarding assignments, continued learning and training programs through our global iLearning platform, and support continued education globally through tuition reimbursement programs. Our team believes in collaboration and removing barriers to communication—all with the goal of creating an environment where innovation and creativity can flourish.
Until May 25, 2021, medical devices were regulated by Council Directive 93/42/EEC (the "EU Medical Devices Directive") which has been repealed and replaced by Regulation (EU) No 2017/745 (the "EU Medical Devices Regulation"). Our current certificates have been granted under the EU Medical Devices Directive whose regime is described below.
Until May 25, 2021, medical devices were regulated by Council Directive 93/42/EEC (the "EU Medical Devices Directive") which has been repealed and replaced by Regulation (EU) No 2017/745 (the "EU Medical Devices Regulation"). Our current certificates have been granted under the EU Medical Devices Directive.
We can, however, experience fluctuations in net sales as a result of variations in the ordering patterns of our largest customers, which can be driven by global health crisis or pandemics, as well as fluctuations due to supply constraints as a result of other macroeconomic and global geopolitical events, such as the conflicts in Eastern Europe and the Middle East.
We can, however, experience fluctuations in net sales as a result of variations in the ordering patterns of our largest customers, which can be driven by global health crisis or pandemics, as well as fluctuations due to supply constraints as a result of other macroeconomic and global geopolitical events.
In accordance with its recently extended transitional provisions, both (i) devices lawfully placed on the market pursuant to the EU Medical Devices Directive prior to May 26, 2021 and (ii) legacy devices lawfully placed on the EU market after May 26, 2021 in accordance with the EU Medical Devices Regulation transitional provisions may generally continue to be made available on the market or put into service, provided that the requirements of the transitional provisions are fulfilled.
In accordance with the EU Medical Devices Regulation’s recently extended transitional provisions, both (i) devices lawfully placed on the market pursuant to the EU Medical Devices Directive prior to May 26, 2021 and (ii) legacy devices lawfully placed on the EU market after May 26, 2021 in accordance with the EU Medical Devices Regulation transitional provisions may generally continue to be made available on the market or put into service, provided that the requirements of the transitional provisions are fulfilled as may be assessed by the notified body.
Our main R&D facilities are located in the U.S and India. Our R&D costs primarily relate to headcount and employment expense in support of the ongoing development of new products. Research and development costs were $85.3 million in 2023, $93.0 million in 2022 and $47.5 million in 2021.
Our main R&D facilities are located in the U.S and India. Our R&D costs primarily relate to headcount and employment expense in support of the ongoing development of new products. Research and development costs were $88.6 million in 2024, $85.3 million in 2023 and $93.0 million in 2022.
We make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and other filings and amendments thereto those reports, free of charge on our website as soon as reasonably practicable after filing or furnishing them with the Securities and Exchange Commission ("SEC").
Available Information Our website address is http://www.icumed.com. We make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and other filings and amendments thereto those reports, free of charge on our website as soon as reasonably practicable after filing or furnishing them with the Securities and Exchange Commission ("SEC").
We can also lose patent protection through expiration. The inability to obtain effective patent protection or the loss of patent protection on a specific product line could adversely affect our ability to exclude other company from producing effective competitive products. The loss of a significant portion of our patent portfolio could have an adverse impact on our financial results.
The inability to obtain effective patent protection or the loss of patent protection on a specific product line could adversely affect our ability to exclude other companies from producing effective competitive products. The loss of a significant portion of our patent portfolio could have an adverse impact on our financial results.
Other potential consequences include, among other things: complete withdrawal of the product from the market, product recalls, fines, warning letters, untitled letters, clinical holds on clinical studies, refusal of the FDA to approve pending applications or supplements to approved applications, product seizures or detention, refusal to permit the import or export of products, consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs, the issuance of corrective information, injunctions, or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: complete withdrawal of the product from the market, product recalls, fines, warning letters, untitled letters, clinical holds on clinical studies, refusal of the FDA to approve pending applications or supplements to approved applications, product seizures or detention, refusal to permit the import or export of products, consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs, the issuance of corrective information, injunctions, or the imposition of civil or criminal penalties. 8 In addition, the FDA closely regulates the marketing, labeling, advertising and promotion of drugs and medical devices.
Our primary Tracheostomy products includes: • Portex BLUselect® PVC tracheostomy tubes, which feature an inner cannula as well as a Suctionaid option for above the cuff suctioning and vocalization capability; • Portex Bivona® silicone tracheostomy tubes, which offer the added benefits of comfort and mobility and come in a variety of configurations suited to meet the clinical needs of neonatal through adult patients; and • Portex BLUperc® percutaneous insertion kits, which allow for safe placement of the tracheostomy tube at the bedside. 2 Infusion Systems We offer a comprehensive portfolio of infusion pumps, dedicated IV sets, software and professional services to meet the wide range of infusion needs.
Our primary Tracheostomy products are: • Portex BLUselect® PVC tracheostomy tubes, which feature an inner cannula as well as a Suctionaid option for above the cuff suctioning and vocalization capability; 2 • Portex Bivona® silicone tracheostomy tubes, which offer the added benefits of comfort and mobility and come in a variety of configurations suited to meet the clinical needs of neonatal through adult patients; and • Portex BLUperc® percutaneous insertion kits, which allow for safe placement of the tracheostomy tube at the bedside.
This includes designing our work environments with a safety first mindset, providing personal protective equipment and safety training beginning day one.
This includes designing our work environments intended to prioritize safety first, providing personal protective equipment and safety training beginning day one.
In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers' or suppliers' facilities to ensure compliance with the QSR.
In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers' or suppliers' facilities to ensure compliance with the QSR, which will be replaced by the QMSR, as defined below, beginning in February of 2026.
There are also harmonized standards relating to design and manufacture. While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the essential requirements as a practical matter as it creates a rebuttable presumption that the device satisfies that essential requirement.
While not mandatory, compliance with these standards is viewed as the easiest way to satisfy the general safety and performance requirements as a practical matter as it creates a rebuttable presumption that the device satisfies that general safety and performance requirements.
Once applicable, it will have a phased implementation depending on the concerned products. The Regulation intends to boost cooperation among EU member states in assessing health technologies, including certain high-risk medical devices, and providing the basis for cooperation at the EU level for joint clinical assessments in these areas.
The Regulation intends to boost cooperation among EU member states in assessing health technologies, including certain high-risk medical devices, and provide the basis for cooperation at the EU level for joint clinical assessments in these areas.
Professional Services: • In addition to the products above, our teams of clinical and technical experts work with customers to develop safe and efficient infusion systems, providing customized and personalized configuration, implementation, and data analytics services to optimize our infusion hardware and software. 3 Vital Care Our Vital Care business unit includes IV Solutions, Hemodynamic Monitoring, General Anesthesia and Respiratory, Temperature Management Solutions and Regional Anesthesia/Pain Management products.
Professional Services: 3 • In addition to the products above, our teams of clinical and technical experts work with customers to develop safe and efficient infusion systems, providing customized and personalized configuration, implementation, and data analytics services to optimize our infusion hardware and software.
We no longer purchase products from Pfizer under the MSA. We operate regional device service centers, in a number of locations, including Salt Lake City, Utah, U.S., Grasbrunn, Germany; Sligo, Ireland; San Laurent, Quebec, Canada; Taipei, Taiwan and Rydalmere, Australia. See Part I, Item 2 of this Annual Report on Form 10-K.
See Part I, Item 2 of this Annual Report on Form 10-K. Additionally, we have historically relied on certain outside manufacturers for certain product lines in Infusion Systems. We operate regional device service centers, in a number of locations, including Salt Lake City, Utah, U.S., Grasbrunn, Germany; Sligo, Ireland; San Laurent; Quebec, Canada; Taipei, Taiwan and Rydalmere, Australia.
To demonstrate compliance with the essential requirements laid down in Annex I to the EU Medical Devices Directive, medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification.
To demonstrate compliance with the general safety and performance requirements, medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification.
Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can self-assess the conformity of its products with the essential requirements (except for any parts which relate to sterility or metrology), a conformity assessment procedure requires the intervention of a notified body.
Except for low-risk medical devices (Class I), where the manufacturer can issue an EC declaration of conformity based on a self-assessment of the conformity of its products with the general safety and performance requirements (except for any parts which relate to sterility, metrology or reuse aspects), a conformity assessment procedure requires the intervention of a notified body.
In addition, the FDA closely regulates the marketing, labeling, advertising and promotion of drugs and medical devices. A company can make only those claims relating to safety and efficacy, purity and potency that are cleared or approved by the FDA and in accordance with the provisions of the authorized label.
A company can make only those claims relating to safety and efficacy, purity and potency that are cleared or approved by the FDA and in accordance with the provisions of the authorized label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.
However, even in this case, manufacturers must comply with a number of new or reinforced requirements set forth in the EU Medical Devices Regulation, in particular the obligations described below.
However, even in this case, manufacturers must comply with a number of new or reinforced requirements set forth in the EU Medical Devices Regulation with regard to registration of economic operators and of devices, post-market surveillance and vigilance requirements.
Pursuing marketing of medical devices in the EU will notably require that our devices be certified under the new regime set forth in the EU Medical Devices Regulation.
Pursuing marketing of medical devices in the EU will notably require that our devices be certified under the new regime set forth in the EU Medical Devices Regulation and comply with the requirements of notified bodies. In the EU, there is currently no premarket government review of medical devices.
Our primary Infusion System products include: Large Volume Pump ("LVP") Hardware: • Plum 360™infusion pumps feature a unique delivery system that helps to enhance patient safety and workflow efficiency.
Infusion Systems We offer a comprehensive portfolio of infusion pumps, dedicated IV sets, software and professional services to meet the wide range of infusion needs. Our primary Infusion System products are: Large Volume Pump ("LVP") Hardware: • Plum 360™ infusion pumps feature a unique delivery system that helps to enhance patient safety and workflow efficiency.
Regulation of Medical Devices in the European Union The European Union ("EU") has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Regulation of Medical Devices in the European Union The European Union ("EU") has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.
If satisfied that the relevant product conforms to the relevant essential requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity. The manufacturer may then apply the European Conformity ("CE") mark to the device, which allows the device to be placed on the market throughout the EU.
If satisfied that the relevant product conforms to the relevant general safety and performance requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity.
Consumables Our Consumables business unit includes Infusion Therapy, Oncology, Vascular Access and Tracheostomy products. Infusion Therapy Our Infusion Therapy products include non-dedicated infusion sets, extension sets, needle-free connectors, and disinfection caps.
The transaction is expected to be completed during the second quarter of 2025. Products Our primary product offerings are described below. Consumables Our Consumables business unit includes Infusion Therapy, Oncology, Vascular Access and Tracheostomy products. Infusion Therapy Our Infusion Therapy products include non-dedicated infusion sets, extension sets, needle-free connectors, and disinfection caps.
Geographic Data Information regarding financial data by geography is set forth in Part II, Item 8. "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K in Notes 4 and 13 to the Consolidated Financial Statements, and is incorporated herein by reference. Available Information Our website address is http://www.icumed.com.
At December 31, 2024, we had approximately 15,000 employees located in over 35 countries. Geographic Data Information regarding financial data by geography is set forth in Part II, Item 8. "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K in Notes 5 and 6 to the Consolidated Financial Statements, and is incorporated herein by reference.
Sales, Marketing and Administration We sell globally through our own direct sales force and through independent distributors. We currently serve customers in over 100 countries throughout the world.
Sales, Marketing and Administration We sell globally through our own direct sales force and through independent distributors. We currently serve customers in over 100 countries throughout the world. The majority of our sales is denominated in U.S. dollars and we have sales denominated in Euros, Canadian dollars, Japanese Yen, British Pound and Australian dollars as well as other currencies.
In addition, the device must achieve the performance intended by the manufacturer and be designed, manufactured, and packaged in a suitable manner. The European Commission has adopted various standards applicable to medical devices. These include standards governing common requirements, such as sterilization and safety of medical electrical equipment and product standards for certain types of medical devices.
The European Commission has adopted various standards applicable to medical devices. These include standards governing common requirements, such as sterilization and safety of medical electrical equipment and product standards for certain types of medical devices. There are also harmonized standards relating to design and manufacture.
In 2021, we did not have sales over 10% to any single customer. Distribution Our products are marketed and distributed in the U.S. and internationally to medical product manufacturers, independent distributors and directly to end users.
In 2024, 2023, and 2022, we had worldwide net sales to a single distributor of 18%, 16%, and 15% of consolidated net sales, respectively. Distribution Our products are marketed and distributed in the U.S. and internationally to medical product manufacturers, independent distributors and directly to end users.
EU Medical Devices Directive Under the EU Medical Devices Directive, all medical devices placed on the market in the EU must meet the relevant essential requirements laid down in Annex I to the EU Medical Devices Directive, including the requirement that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users and others.
However, the EU requires that all medical devices placed on the market in the EU must meet the general safety and performance requirements laid down in Annex I to the EU Medical Devices Regulation including the requirement that a medical device must be designed and manufactured in such a way that, during normal conditions of use, it is suitable for its intended purpose.
Finally, we believe that our leadership team, with its broad, and deep category knowledge and averaging approximately 12 years of experience in IV therapy has the necessary experience to effectively lead the execution of our strategy. 15 At December 31, 2023, we had approximately 14,000 employees located in over 35 countries.
This is principal for us in attracting, developing, retaining and rewarding talent on a global scale. Finally, we believe that our leadership team, with its broad, and deep category knowledge and averaging approximately 22 years of experience in IV therapy has the necessary experience to effectively lead the execution of our strategy.
Raw Materials We purchase many of the components and raw materials used in manufacturing our products from numerous suppliers in various countries. Certain components and raw materials are available only from a single supplier. We currently attempt to manage the risk associated with such suppliers by means of inventory management, relationship management and evaluation of alternative sources when feasible.
We currently attempt to manage the risk associated with such suppliers by means of inventory management, relationship management and evaluation of alternative sources when feasible. See Item 1A.
Throughout the term of the certificate of conformity, the manufacturer will be subject to periodic surveillance audits to verify continued compliance with the applicable requirements. In particular, there will be a new audit by the notified body before it will renew the relevant certificate(s). EU Medical Devices Regulation The regulatory landscape related to medical devices in the EU recently evolved.
Among other activities, in particular, there will be a new audit by the notified body before it will renew the relevant certificate(s).
Removed
Products As part of the integration of our acquisition of Smiths Medical, we have renamed our business units and reorganized the products thereunder and, as of January 1, 2023, our business unit structure is composed of Consumables, Infusion Systems and Vital Care. The product offerings under these business units are described below.
Added
In November 2024, we entered into a purchase agreement with Otsuka Pharmaceutical Factory America, Inc. (“Otsuka”), a global IV solutions manufacturing subsidiary of Otsuka Holdings Co., Ltd.
Removed
See Part I, Item 2 of this Annual Report on Form 10-K. We also rely on certain outside manufacturers for certain product lines in Infusion Systems and have in the past leveraged a long-term manufacturing and supply agreement ("MSA") with Pfizer to provide additional IV Solution products to us when requested.
Added
Under the agreement, a joint venture will be formed among the Company and ICU Medical Sales, Inc., a wholly owned subsidiary of the Company (collectively, the “ICU Medical Entities”), and Otsuka, to provide additional supply chain resiliency and innovation to our North American IV solutions market under commercial agreements, a services agreement and a license agreement.
Removed
The majority of our sales is denominated in United States ("U.S.") dollars and we have sales denominated in Euros, Canadian dollars, Japanese Yen, British Pound and Australian dollars as well as other currencies. In 2023 and 2022, we had worldwide net sales to Medline of 16% and 15% of consolidated net sales, respectively.
Added
Vital Care Our Vital Care business unit includes IV Solutions, Hemodynamic Monitoring, General Anesthesia and Respiratory, Temperature Management Solutions and Regional Anesthesia/Pain Management products.
Removed
The FDA and other agencies actively enforce the 8 laws and regulations prohibiting the promotion of off-label uses. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.
Added
See Part I, Item 2 of this Annual Report on Form 10-K. Raw Materials We purchase many of the components and raw materials used in manufacturing our products from numerous suppliers in various countries. Certain components and raw materials are available only from a single supplier.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Most of the materials used in our products are resins, plastics and other material that depend upon oil or natural gas as their raw material. Crude oil and natural gas prices have been volatile in recent years. Crude oil markets have historically been affected by political uncertainty in the Middle East and more recently, by the conflict in the Ukraine.
Most of the materials used in our products are resins, plastics and other material that depend upon oil or natural gas as their raw material. Crude oil and natural gas prices have been volatile in recent years. Crude oil markets have historically been affected by political uncertainty in the Middle East and more recently, by the conflict in Ukraine.
In 2022, we experienced these supply chain disruptions, increased raw material costs and shipping costs, as prices on several commodities, including oil and gas, increased as a result of the conflict in the Ukraine and its impact on the global economy.
In 2022, we experienced these supply chain disruptions, increased raw material costs and shipping costs, as prices on several commodities, including oil and gas, increased as a result of the conflict in Ukraine and its impact on the global economy.
If we encounter delays or difficulties in securing these components, materials or services and, if we cannot then obtain an acceptable substitute on a timely basis, our commercial operations could be interrupted, and we could experience an adverse effect on our results of operations and financial condition , and.
If we encounter delays or difficulties in securing these components, materials or services and, if we cannot then obtain an acceptable substitute on a timely basis, our commercial operations could be interrupted, and we could experience an adverse effect on our results of operations and financial condition.
Subject to the transitional provisions and in order to sell our products in EU member states, our products must comply with the general safety and performance requirements of the EU Medical Devices Regulation, which repeals and replaces EU Medical Devices Directive.
Subject to the transitional provisions and in order to sell our products in EU member states, our products must comply with the general safety and performance requirements of the EU Medical Devices Regulation, which repeals and replaces the EU Medical Devices Directive.
If our manufacturing facilities or those of any of our component suppliers are found to be in violation of applicable laws and regulations, or we or our suppliers have significant noncompliance issues or fail to timely and adequately respond to any adverse inspectional observations or product safety issues, or if any corrective action plan that we or our suppliers propose in response to observed deficiencies is not sufficient, the FDA or foreign regulatory authorities could take enforcement action, including any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for clearance or approval or certifications of new products or modified products; • withdrawing clearances, approvals, or certifications that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
If our manufacturing facilities or those of any of our component suppliers are found to be in violation of applicable laws and regulations, or we or our suppliers have significant noncompliance issues or fail to timely and adequately respond to any adverse inspectional observations or product safety issues, or if any corrective action plan that we or our suppliers propose 26 in response to observed deficiencies is not sufficient, the FDA or foreign regulatory authorities could take enforcement action, including any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for clearance or approval or certifications of new products or modified products; • withdrawing clearances, approvals, or certifications that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
It is also possible that enforcement authorities might take action under other regulatory authority, such as false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil 31 and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.
It is also possible that enforcement authorities might take action under other regulatory authority, such as false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.
In addition, acquisitions may involve a number of special risks in 36 addition to the difficulty of integrating cultures and operations and the diversion of management’s attention, including adverse short-term effects on our reported operating results, dependence on retention, hiring and training of key personnel, risks associated with unanticipated problems or legal liabilities, and amortization of acquired intangible assets, some or all of which could materially and adversely affect our operations and financial performance.
In addition, acquisitions may involve a number of special risks in addition to the difficulty of integrating cultures and operations and the diversion of management’s attention, including adverse short-term effects on our reported operating results, dependence on retention, hiring and training of key personnel, risks associated with unanticipated problems or legal liabilities, and amortization of acquired intangible assets, some or all of which could materially and adversely affect our operations and financial performance.
Disruptions at the FDA, other government agencies or notified bodies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared, approved, certified, or commercialized in a timely manner, or at all, which could negatively impact our business.
Disruptions at the FDA, other government agencies or notified bodies caused by funding shortages, global health concerns, or personnel turnover could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, cleared, approved, certified, or commercialized in a timely manner, or at all, which could negatively impact our business.
The ability of the FDA, foreign regulatory authorities and notified bodies to review and approve or certify new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, a government agency's ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the government's ability to perform routine functions.
The ability of the FDA, foreign regulatory authorities and notified bodies to review and approve or certify new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory and policy changes, a government agency's ability to hire and retain key leadership and other personnel and accept the payment of user fees, and other events that may otherwise affect the government's ability to perform routine functions.
In the United States, we and some of our component manufacturers are required to comply with regulatory requirements known as the FDA's QSR, a complex regulatory scheme which covers the procedures and documentation of the design, testing, production, control, quality assurance, inspection, complaint handling, recordkeeping, management review, labeling, packaging, sterilization, storage and shipping of our device products.
In the United States, we and some of our component manufacturers are required to comply with regulatory requirements known as the FDA's QSR, a complex regulatory scheme which currently covers the procedures and documentation of the design, testing, production, control, quality assurance, inspection, complaint handling, recordkeeping, management review, labeling, packaging, sterilization, storage and shipping of our device products.
For the Smiths Medical acquisition, we used a significant portion of our cash on hand and incurred a substantial amount of debt to finance the cash consideration portion and certain other amounts paid in connection with the Smiths Medical acquisition, which could adversely affect our business, including by restricting our ability to engage in additional transactions or incur additional indebtedness.
For the Smiths Medical acquisition, we used a significant portion of our cash on hand and incurred a substantial amount of debt to finance the cash consideration portion and certain other amounts paid in connection with the Smiths Medical 36 acquisition, which could adversely affect our business, including by restricting our ability to engage in additional transactions or incur additional indebtedness.
Although these costs were less volatile in 2023, we may continue to experience these inflationary increases in our manufacturing costs and operating expenses, including higher materials and labor costs, as well as negative impacts on our operating results from the strengthening of the U.S. dollar relative to foreign currencies weakening exchange rates.
Although these costs were less volatile in 2023 and 2024, we may continue to experience these inflationary increases in our manufacturing costs and operating expenses, including higher materials and labor costs, as well as negative impacts on our operating results from the strengthening of the U.S. dollar relative to foreign currencies weakening exchange rates.
Furthermore, our contract manufacturers 22 could require us to move to another one of their production facilities. We have experienced, and may continue to experience, significant challenges to our global transportation channels and other aspects of the global supply chain network, including the cost and availability of raw materials and components due to shortages and resulting cost inflation..
Furthermore, our contract manufacturers could require us to move to another one of their production facilities. We have experienced, and may continue to experience, significant challenges to our global transportation channels and other aspects of the global supply chain network, including the cost and availability of raw materials and components due to shortages and resulting cost inflation.
We could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
We could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the 28 manner in which we provide our services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
There are numerous U.S. federal and state, as well as foreign, laws pertaining to healthcare fraud and abuse, including anti-kickback, false claims and transparency laws regarding payments and other transfers of value made to physicians and other 25 licensed healthcare professionals. Our business practices and relationships with providers are subject to scrutiny under these laws.
There are numerous U.S. federal and state, as well as foreign, laws pertaining to healthcare fraud and abuse, including anti-kickback, false claims and transparency laws regarding payments and other transfers of value made to physicians and other licensed healthcare professionals. Our business practices and relationships with providers are subject to scrutiny under these laws.
If we do not achieve significant sales of these new/transitioned products, it might be necessary for us to recognize an impairment charge for the value of the production tooling because its costs may not be recovered through production of saleable product, which could adversely affect our financial condition.
If we do not achieve significant sales of these new/transitioned products, it might be necessary for us to recognize an impairment charge for the value of the production 16 tooling because its costs may not be recovered through production of saleable product, which could adversely affect our financial condition.
This 23 evolution may create uncertainty in our business, affect our or our collaborators', service providers' and contractors' ability to operate in certain jurisdictions or to collect, store, transfer, use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.
This evolution may create uncertainty in our business, affect our or our collaborators', service providers' and contractors' ability to operate in certain jurisdictions or to collect, store, transfer, use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.
Further, there is no assurance that patents pending will issue or that the protection from patents which have issued or may issue in the future will be broad enough to prevent competitors from introducing similar devices, that such patents, if challenged, will be upheld by the courts or that we will be able to prove infringement and damages in litigation.
Further, there is no assurance that patents pending will issue or that the protection from patents 30 which have issued or may issue in the future will be broad enough to prevent competitors from introducing similar devices, that such patents, if challenged, will be upheld by the courts or that we will be able to prove infringement and damages in litigation.
Our hedging activities, however, may not sufficiently offset the adverse financial impact caused by unfavorable movement in foreign currency exchange rates 33 applicable to our business, and such exchange rate impacts could materially adversely affect our financial condition or results of operations. See “Item 7A.
Our hedging activities, however, may not sufficiently offset the adverse financial impact caused by unfavorable movement in foreign currency exchange rates applicable to our business, and such exchange rate impacts could materially adversely affect our financial condition or results of operations. See “Item 7A.
We may also experience losses related to investments in other companies, which could have an adverse effect on our results of operations and financial condition. As such, there can be no assurance that any past or future transactions or investments will be successful.
We may also experience losses related to investments in other 37 companies, which could have an adverse effect on our results of operations and financial condition. As such, there can be no assurance that any past or future transactions or investments will be successful.
We do not have "key person" life insurance policies on any of our employees. The price of our common stock has been and may continue to be highly volatile due to many factors. The public equity market can be highly volatile, and we have experienced significant volatility in the price of our common stock in the past.
We do not have "key person" life insurance policies on any of our employees. The price of our common stock has been and may continue to be highly volatile due to many factors. 20 The public equity market can be highly volatile, and we have experienced significant volatility in the price of our common stock in the past.
If the cost of key components or raw materials increases and we are unable to fully recover those increased costs through price increases or offset these increases through other cost reductions, we could experience an adverse effect on our results of operations and financial condition.
If the cost of key components or raw materials increases and we are unable to fully recover those increased costs through price 22 increases or offset these increases through other cost reductions, we could experience an adverse effect on our results of operations and financial condition.
The ability of our customers to obtain appropriate coverage and reimbursement for healthcare 18 services and products from third-party payors is critical because it affects the kinds of products customers purchase and the prices they are willing to pay.
The ability of our customers to obtain appropriate coverage and reimbursement for healthcare services and products from third-party payors is critical because it affects the kinds of products customers purchase and the prices they are willing to pay.
The FDA and foreign regulatory bodies have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable 32 risk to health.
The FDA and foreign regulatory bodies have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health.
Even after we have obtained the proper regulatory clearance or approval to market a product, we have ongoing responsibilities under FDA 28 regulations and applicable foreign laws and regulations. The FDA, state and foreign regulatory authorities have broad enforcement powers.
Even after we have obtained the proper regulatory clearance or approval to market a product, we have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations. The FDA, state and foreign regulatory authorities have broad enforcement powers.
Operating in more than one jurisdiction is likely to make our compliance with ESG and sustainability-related rules more complex and expensive, and potentially expose us to greater levels of legal risks associated with our compliance.
Operating in more than one jurisdiction is likely to make our compliance with sustainability and ESG rules more complex and expensive, and potentially expose us to greater levels of legal risks associated with our compliance.
To be "substantially equivalent," the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.
To be "substantially equivalent," the proposed device must have the same intended use as the predicate device, and either have 23 the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.
As a result of entering into the Senior Secured Credit Facilities, we incurred additional borrowing costs. At December 31, 2023, our long-term debt outstanding was $1.6 billion. Our more leveraged financial position following the Smiths Medical transaction could make us more vulnerable to general economic downturns and industry conditions, and place us at a competitive disadvantage relative to our competitors.
As a result of entering into the Senior Secured Credit Facilities, we incurred additional borrowing costs. At December 31, 2024, our long-term debt outstanding was $1.6 billion. Our more leveraged financial position following the Smiths Medical transaction could make us more vulnerable to general economic downturns and industry conditions, and place us at a competitive disadvantage relative to our competitors.
Despite the implementation of security measures, our information technology systems, and those of third parties on which we rely, are vulnerable to attack, interruption and damage from, among others, computer viruses, malware (e.g. ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyber-attacks or cyber-intrusions over the Internet, phishing and other social engineering schemes, human error, theft or misuse by persons inside our organization, or persons with access to systems inside our organization, fraud, denial or degradation of service attacks and sophisticated nation-state and nation-state-supported actors or similar disruptive problems.
Despite the implementation of security measures, our information technology systems, and those of third parties on which we rely, are vulnerable to attack, interruption and damage from, among others, computer viruses, malware (e.g. ransomware), misconfigurations, “bugs” or other vulnerabilities, malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyber-attacks or cyber-intrusions over the Internet, phishing and other social engineering schemes, human error, theft or misuse by persons inside our organization, or persons with access to systems inside our organization, fraud, denial or degradation of service attacks and sophisticated nation-state and nation-state-supported actors or similar disruptive problems.
Even if we succeed in creating new product candidates from these innovations, we may still fail to successfully commercially such products. The success of new medical device products depends on several factors, including our ability to anticipate and meet customers' or patients' needs, obtain timely regulatory approvals, clearances or certifications, and manufacture quality products in an economic and timely manner.
Even if we succeed in creating new product candidates from these innovations, we may still fail to successfully commercialize such products. The success of new medical device products depends on several factors, including our ability to anticipate and meet customers' or patients' needs, obtain timely regulatory approvals, clearances or certifications, and manufacture quality products in an economic and timely manner.
Such transactions or investments could result in unforeseen operating difficulties or expenditures and require significant management resources, charges or write-downs that could adversely impact our business and operating results. We have and may continue to seek to supplement our internal growth through acquisitions of complementary businesses, technologies, services, or products, as well as investments and strategic alliances.
Such transactions or investments could result in unforeseen operating difficulties or expenditures and require significant management resources, charges or write-downs that could adversely impact our business and operating results. We have and may continue to seek to supplement our internal growth through acquisitions of complementary businesses, technologies, services, or products, as well as investments, joint ventures and strategic alliances.
Our failure to comply with any applicable rules or regulations could lead to penalties and adversely impact our reputation, customer attraction and retention, access to capital and employee retention. Such ESG matters may also impact our suppliers and customers, which may augment or cause additional impacts on our business, financial condition, or results of operations.
Our failure to comply with any 21 applicable rules or regulations could lead to penalties and adversely impact our reputation, customer attraction and retention, access to capital and employee retention. Such sustainability and ESG matters may also impact our suppliers and customers, which may augment or cause additional impacts on our business, financial condition, or results of operations.
For example, on October 1, 2021, Smiths Medical received a Warning Letter from the FDA following an inspection of 30 Smiths Medical’s Minneapolis, Minnesota Facility on March 30, 2021. The Warning Letter cited, among other things, failures to comply with FDA's medical device reporting requirements and failures to comply with applicable portions of the QSR.
For example, on October 1, 2021, Smiths Medical received a Warning Letter from the FDA following an inspection of Smiths Medical’s Minneapolis, Minnesota Facility during February to March 30, 2021. The Warning Letter cited, among other things, failures to comply with FDA's medical device reporting requirements and failures to comply with applicable portions of the QSR.
The risks associated with our operations outside the U.S. include, without limitation: • economic and political uncertainty; • changes in non-U.S. government programs; • multiple non-U.S. regulatory requirements that are subject to change and that could restrict our ability to manufacture and sell our products; • different local medical practices, product preferences and product requirements; • possible failure to comply with trade protection and restriction measures and import or export licensing requirements; • difficulty in establishing, staffing and managing non-U.S. operations; • different labor regulations or work stoppages or strikes; • changing geopolitical conditions arising from political instability and any actual or anticipated military or political conflicts (such as the conflict in Ukraine and in the Middle East); • economic instability in other parts of the world and the impact on interest rates, inflation and the credit worthiness of our customers in foreign countries, such as the devaluation of the Argentine Peso; • uncertainties regarding judicial systems and procedures; • minimal or diminished protection of intellectual property in some countries; • natural disasters or outbreak of diseases or pandemics; • fluctuations in foreign currency exchange rates; • changes to international trade agreements and trade relationships and conflicts between countries; and • imposition of government controls, such as economic sanctions and export controls.
The risks associated with our operations outside the U.S. include, without limitation: • economic and political uncertainty; • changes in non-U.S. government programs; • multiple non-U.S. regulatory requirements that are subject to change and that could restrict our ability to manufacture and sell our products; • different local medical practices, product preferences and product requirements; • possible failure to comply with trade protection and restriction measures and import or export licensing requirements; • difficulty in establishing, staffing and managing non-U.S. operations; • different labor regulations or work stoppages or strikes; • changing geopolitical conditions arising from political instability and any actual or anticipated military or political conflicts; • economic instability in other parts of the world and the impact on interest rates, inflation and the credit worthiness of our customers in foreign countries, such as the devaluation of the Argentine Peso; • tariffs on products imported to the U.S.; • uncertainties regarding judicial systems and procedures; • minimal or diminished protection of intellectual property in some countries; • natural disasters or outbreak of diseases or pandemics; • fluctuations in foreign currency exchange rates; • changes to international trade agreements and trade relationships and conflicts between countries; and • imposition of government controls, such as economic sanctions and export controls.
Sales to customers outside of the U.S. composed approximately 36% of our revenues in 2023 and as our operations and sales located in Europe and other areas outside the U.S. increase, we may face new challenges and uncertainties, although we can give no assurance that such operations and sales will increase.
Sales to customers outside of the U.S. composed approximately 36% of our revenues in 2024 and as our operations and sales located in Europe and other areas outside the U.S. increase, we may face new challenges and uncertainties, although we can give no assurance that such operations and sales will increase.
However, even in this case, manufacturers must comply with a number of new or reinforced requirements set forth in the EU Medical Devices Regulation with regard to registration of economic operators and of devices, post-market surveillance, market surveillance and vigilance requirements.
However, even in this case, manufacturers must comply with a number of new or reinforced requirements set forth in the EU Medical Devices Regulation with regard to registration of economic operators and of devices, post-market surveillance, market surveillance and vigilance requirements and comply with the requirements of the notified body.
The success of any acquisition, investment or alliance may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate any business we may acquire into our existing business.
The success of any acquisition, investment, joint venture or alliance may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate any business we may acquire into our existing business.
On October 12, 2023, the UK Extension to the DPF came into effect (as approved by the UK Government), as a UK GDPR data transfer mechanism to U.S. entities self-certified under the UK Extension to the DPF.
On October 12, 2023, the UK Extension to the DPF came into effect (as approved by the UK Government), as a data transfer mechanism from the UK to U.S. entities self-certified under the DPF.
If we are unable to comply with QMSR, once effective, or with any other changes in the laws or regulations enforced by FDA or comparable regulatory authorities, we may be subject to enforcement action, which could have an adverse effect on our business, financial condition and results of operations. 29 For instance, the EU landscape concerning medical devices recently evolved.
If we are unable to comply with QMSR, once effective, or with any other changes in the laws or regulations enforced by FDA or comparable regulatory authorities, we may be subject to enforcement action, which could have an adverse effect on our business, financial condition and results of operations. In addition, the EU landscape concerning medical devices recently evolved.
We have been and will be ordering production molds and equipment for our new products. We expect to order semi-automated or fully automated assembly machines for certain products in 2024.
We have been and will be ordering production molds and equipment for our new products. We expect to order semi-automated or fully automated assembly machines for certain products in 2025.
Costs of the defense of such litigation, even if successful, could be substantial. We maintain insurance against product liability and defense costs in the amount of $40 million per occurrence.
Costs of the defense of such litigation, even if successful, could be substantial. We maintain insurance against product liability and defense costs in the amount of $50 million per occurrence.
We believe that factors such as quarter-to-quarter fluctuations in financial results, differences between stock analysts’ expectations and actual quarterly and annual results, new product introductions by us or our competitors, acquisitions or divestitures, changing regulatory environments, litigation, changes in healthcare reimbursement policies, sales or the perception in the market of possible sales of common stock by insiders, market rumors, general macroeconomic trends (including as a result of pandemics or other health outbreaks, geopolitical tensions and uncertainties including as a result of the current conflicts in Eastern Europe and the Middle East) and substantial product orders could contribute to the volatility in the price of our common stock.
We believe that factors such as quarter-to-quarter fluctuations in financial results, differences between stock analysts’ expectations and actual quarterly and annual results, new product introductions by us or our competitors, acquisitions or divestitures, changing regulatory environments, litigation, changes in healthcare reimbursement policies, sales or the perception in the market of possible sales of common stock by insiders, market rumors, general macroeconomic trends (including as a result of pandemics or other health outbreaks, geopolitical tensions and uncertainties) and substantial product orders could contribute to the volatility in the price of our common stock.
For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. One such shut down was as a result of COVID-19, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
For example, in recent years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. One such shut down was as a result of COVID-19, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points.
In addition, the costs associated with conducting and closing this recall or any other product recalls, including any liabilities we may incur, could have a material adverse effect on our business, financial condition and results of operations.
In addition, the costs associated with conducting and closing these or any other product recalls, including any liabilities we may incur, could have a material adverse effect on our business, financial condition and results of operations.
In addition, even if we are effective at addressing such concerns, we may experience increased costs as a result of executing upon our sustainability goals that may not be offset by any benefit to our reputation, which could have an adverse impact on our business and financial condition.
In addition, even if we are effective at addressing such matters, we may experience increased costs as a result of executing upon our sustainability and ESG goals that may not be offset by any benefit to our reputation, which could have an adverse impact on our business, operations and financial condition.
See “Business and Operating Risks - The agreements governing our debt contain a number of restrictive covenants which limit our flexibility in operating our business, finance future operations or pursue our business strategies . ” We have and may continue to acquire businesses, form strategic alliances or make investments in businesses or technologies.
See “Business and Operating Risks - The agreements governing our debt contain a number of restrictive covenants which limit our flexibility in operating our business, finance future operations or pursue our business strategies . ” We have and may continue to acquire businesses, form strategic alliances, enter into joint ventures or make investments in businesses or technologies.
On December 13, 2021, Regulation No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was adopted. While the Regulation entered into force in January 2022, it will only begin to apply from January 2025 onwards, with preparatory and implementation-related steps to take place in the interim. Once applicable, it will have a phased implementation depending on the concerned products.
On December 13, 2021, Regulation No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was adopted. While the Regulation entered into force in January 2022, it only began to apply from January 2025 onwards, with preparatory and implementation-related steps that took place in the interim. Once applicable, it will have a phased implementation depending on the concerned products.
As the current conflict in the Middle East continues to develop and geopolitical tensions rise in the region or globally, there is no assurance that crude oil supplies will not be interrupted or crude oil prices will not rise in the future.
As the current conflict in the Middle East and Ukraine continues and geopolitical tensions rise in the region or globally, there is no assurance that crude oil supplies will not be interrupted or crude oil prices will not rise in the future.
Compliance with these requirements is a prerequisite to be able to affix the CE mark to our products, without which they cannot be sold or marketed in the EU. See – Government Regulation.
Compliance with these requirements is a prerequisite to be able to affix the European Conformity ("CE") mark to our products, without which 25 they cannot be sold or marketed in the EU. See – Government Regulation.
Because of the significance of the Smiths Medical business acquisition to us, our failure to successfully integrate the Smiths Medical business with that of our own could have a material adverse impact on our business, financial condition and results of operations.
Because of the significance of the Smiths Medical business acquisition to us, our failure to successfully complete the integration of the Smiths Medical business with that of our own could have a material adverse impact on our business, financial condition and results of operations.
Most of our common stock is held by, or included in accounts managed by, institutional investors or managers. Several of those institutions own or manage a significant percentage of our outstanding shares, with the ten largest interests accounting for approximately 63% of our outstanding shares at the end of 2023.
Most of our common stock is held by, or included in accounts managed by, institutional investors or managers. Several of those institutions own or manage a significant percentage of our outstanding shares, with the ten largest interests accounting for approximately 59% of our outstanding shares at the end of 2024.
In accordance with its recently extended transitional provisions, both (i) devices lawfully placed on the market pursuant to the EU Medical Devices Directive prior to May 26, 2021 and (ii) legacy devices lawfully placed on the EU market after May 26, 2021 in accordance with the EU Medical Devices Regulation transitional provisions may generally continue to be made available on the market or put into service, provided that the requirements of the transitional provisions are fulfilled.
In accordance with its recently extended transitional provisions, both (i) devices lawfully placed on the market pursuant to the EU Medical Devices Directive prior to May 26, 2021 and (ii) legacy devices lawfully placed on the EU market after May 26, 2021 in accordance with the EU Medical Devices Regulation transitional provisions may generally continue to be made available on the market or put into service, provided that the requirements of the transitional provisions are fulfilled as may be assessed by the notified body.
The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation and adversely impact our financial results. There has been increasing public focus by investors, patients, environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters.
The increasing focus on sustainability and environmental, social and governance ("ESG") initiatives could increase our costs, harm our reputation and adversely impact our financial results. There has been increasing public focus by investors, patients, the media, governmental and nongovernmental organizations and other stakeholders on a variety of sustainability and ESG matters.
A severe weather event, including climate change-related severe weather or disasters, other natural or man-made disaster, or any other significant disruption, such as global epidemics/pandemics, the impact of war or political instability (such as the conflicts in Eastern Europe and the Middle East), work stoppages, labor shortages and similar interruptions affecting our manufacturing facilities or our suppliers and logistics partners could materially and adversely impact our business, financial condition and results of operations.
A severe weather event, including climate change-related severe weather or disasters, other natural or man-made disasters, or any other significant disruption, such as global epidemics/pandemics, the impact of war or political instability, work stoppages, labor shortages and similar interruptions affecting our manufacturing facilities or our suppliers and logistics partners could materially and adversely impact our business, financial condition and results of operations.
International sales pose additional risks related to competition with larger international companies and established local companies and higher credit risk. We have undertaken an initiative to increase our international sales, and have distribution arrangements in all the principal countries in Western Europe, the Pacific Rim, Middle East, Latin America, Canada and South Africa.
Quantitative and Qualitative Disclosures About Market Risk.” International sales pose additional risks related to competition with larger international companies and established local companies and higher credit risk. We have undertaken an initiative to increase our international sales, and have distribution arrangements in all the principal countries in Western Europe, the Pacific Rim, Middle East, Latin America, Canada and South Africa.
While we have not previously breached and are not currently in breach of these or any other covenants contained in our credit agreement, our ability to comply with these covenants may be affected by events beyond our control, including health crises and global pandemics, other geopolitical events, such as the conflicts in Eastern Europe and the Middle East, supply chain interruptions or general economic environment, including high inflation and interest rates.
While we have not previously breached and are not currently in breach of these or any other covenants contained in our credit agreement, our ability to comply with these covenants may be affected by events beyond our control, including health crises and global pandemics, other geopolitical events, supply chain interruptions or general economic environment, including high inflation and interest rates.
See “Part 1, Item 1. Government Regulation - Regulation of Medical Devices in the European Union - Brexit.” If we or our comp onent manufacturers fail to comply with the FDA's Quality System Regulation or Good Manufacturing Practice regulations or other requirements, our manufacturing operations could be interrupted, and our product sales and operating results could suffer.
Government Regulation - Regulation of Medical Devices in the European Union – Brexit and the UK Regulatory Framework.” If we or our comp onent manufacturers fail to comply with the FDA's Quality System Regulation or Good Manufacturing Practice regulations or other requirements, our manufacturing operations could be interrupted, and our product sales and operating results could suffer.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers; and state laws related to insurance fraud in the case of claims involving private insurers.
Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; and • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers; and state laws related to insurance fraud in the case of claims involving private insurers. 29 These laws and regulations, among other things, constrain our business, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs, we may have with hospitals, physicians or other potential purchasers of our products.
Similar laws have passed in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the U.S. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
Additional compliance investment and potential business process changes may be required. Similar laws have passed in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the U.S. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a further discussion of the financial impact of exchange rate fluctuations on our results of operations.
See Item 7. 33 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a further discussion of the financial impact of exchange rate fluctuations on our results of operations.
If our operations are found to be in violation of any of the healthcare laws or regulations described above or any other healthcare regulations that apply to us, we may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm, disgorgement and the curtailment or restructuring of our operations. 26 Healthcare regulation and reform measures could adversely affect our revenue and financial condition.
If our operations are found to be in violation of any of the healthcare laws or regulations described above or any other healthcare regulations that apply to us, we may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm, disgorgement and the curtailment or restructuring of our operations.
If we fail to effectively manage this growth and change to our business in a manner that preserves our reputation with customers and the key aspects of our corporate culture, our business, financial condition and results of operations could be harmed.
If we fail to effectively complete the integration of our business in a manner that preserves our reputation with customers and the key aspects of our corporate culture, our business, financial condition and results of operations could be harmed.
The Smiths Medical acquisition has resulted in significant growth in our personnel and operations, adding approximately 6,700 employees to our headcount at the time of acquisition. Our total headcount as of December 31, 2023 is approximately 14,000 employees.
The Smiths Medical acquisition has resulted in significant growth in our personnel and operations, adding approximately 6,700 employees to our headcount at the time of acquisition. Our total headcount as of December 31, 2024 was approximately 15,000 employees.
If we are not effective in addressing environmental, social and other sustainability matters affecting our business, or setting and meeting relevant sustainability goals, our reputation and financial results may suffer.
If we are not effective in addressing the sustainability and ESG matters affecting our business, or setting and meeting relevant goals, our reputation and financial results may suffer.
Our production tooling is relatively expensive, with each "module," which consists of an automated assembly machine and the molds and molding machines that mold the components, costing several million dollars. Most of the modules are for the Clave product family.
Our production tooling is relatively expensive, with each "module," which consists of an automated assembly machine and the molds and molding machines that mold the components, costing several million dollars. The modules are utilized for certain products.
Failure to protect our information technology systems against security breaches, service interruptions, or misappropriation of data could disrupt operations, compromise sensitive data, and expose us to liability, possibly causing our business and reputation to suffer. We depend heavily on information technology infrastructure and systems to achieve our business objectives.
Failure to protect our information technology systems against security breaches, service interruptions, or misappropriation of data could disrupt operations, compromise sensitive data, and expose us to liability, possibly causing our business and reputation to suffer.
For the year ended December 31, 2023 and 2022, business from one distributor, Medline, accounted for approximately 16% and 15% of our consolidated revenues, respectively. We may rely on one or more key distributors for a product, and the loss of these distributors could reduce our revenue.
For the years ended December 31, 2024 and 2023, business from a single distributor accounted for approximately 18% and 16% of our consolidated revenues, respectively. We may rely on one or more key distributors for a product, and the loss of these distributors could reduce our revenue.
If we fail to comply with applicable laws and regulations, we would be unable to affix the CE mark to our products, which would prevent us from selling them within the EU. The aforementioned EU rules are generally applicable in the EEA. Non-compliance with the above requirements would also prevent us from selling our products in these three countries.
If we fail to comply with applicable laws and regulations, we would be unable to affix the CE mark to our products, which would prevent us from selling them within the EU. The aforementioned EU rules are generally applicable in the EEA.
We may experience pressure to make commitments relating to sustainability matters that affect us, including the design and implementation of specific risk mitigation strategic initiatives relating to sustainability. Expectations regarding the management of ESG initiatives continues to evolve rapidly.
We may experience pressure to make commitments relating to sustainability matters that affect us, including the design and implementation of risk mitigation strategies related to sustainability. Expectations regarding the management of ESG initiatives also continue to evolve rapidly.
The European Commission adopted its Adequacy Decision in relation to the DPF on July 10, 2023, rendering the DPF effective as a GDPR transfer mechanism to U.S. entities self-certified under the DPF.
On July 10, 2023, the European Commission adopted its Adequacy Decision in relation to the new EU-US Data Privacy Framework (“DPF”), rendering the DPF effective as a GDPR transfer mechanism to U.S. entities self-certified under the DPF.
There is no guarantee that we will be able to successfully resolve the issues identified in the Warning Letter or do so in a timely manner or that similar compliance issues will not be identified in a future FDA inspection.
There is no guarantee that we will be able to successfully resolve the issues identified in the Warning Letter or do so in a timely manner or that similar compliance issues will not be identified in a future FDA inspection. If we are unable to resolve the Warning Letter, we may be subject to the sanctions listed below.
The U.S. government has recently initiated substantial changes in U.S. trade policy and U.S. trade agreements, including the initiation of tariffs on certain foreign goods. In response to these tariffs, certain foreign governments, including China, have instituted or are considering imposing tariffs on certain U.S. goods.
In certain years, the U.S. government has initiated substantial changes in U.S. trade policy and U.S. trade agreements, including the initiation of tariffs on certain foreign goods. In response to these tariffs, certain foreign governments, including Canada, China and Mexico, have retaliated imposing tariffs on certain U.S. goods.
We may expand our product offerings through acquisitions of companies or product lines from time to time. We can provide no assurance that we will be able to identify, acquire, develop or profitably manage additional companies or operations or successfully integrate such companies or operations into our existing operations without substantial costs, delays or other challenges.
We can provide no assurance that we will be able to identify, acquire, develop or profitably manage additional companies or operations or successfully integrate such companies or operations into our existing operations without substantial costs, delays or other challenges.
If a prolonged government shutdown occurs, or if a global health concern prevents the FDA, other regulatory authorities or notified bodies from conducting their regular inspections, audits, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities or notified bodies to timely review and process our regulatory submissions, which could have a material adverse effect on our business. 19 For instance, in the EU, notified bodies must be officially designated to certify products and services in accordance with the EU Medical Devices Regulation.
If a prolonged government shutdown occurs, or if a global health concern prevents the FDA, other regulatory authorities or notified bodies from conducting their regular inspections, audits, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities or notified bodies to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
If we do not effectively integrate, train and manage our combined employee base and maintain strong customer relationships, our corporate culture could be undermined, the quality of our products and customer service could suffer, and our reputation could be harmed, each of which could adversely impact our business, financial condition and results of operations. 35 The Smiths Medical acquisition was a significant acquisition for us and the product offerings within Smiths Medical are not product offerings that we previously offered.
If we do not effectively integrate, train and manage our combined employee base and maintain strong customer 35 relationships, our corporate culture could be undermined, the quality of our products and customer service could suffer, and our reputation could be harmed, each of which could adversely impact our business, financial condition and results of operations.
Certain states have also adopted privacy and security laws and regulations, some of which may be more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
Certain states have also adopted privacy and security laws and regulations, which govern the privacy, processing and protection of health-related and other personal information. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.
The successful implementation of such a strategy by one or more of our competitors could materially and adversely affect us. 16 If demand for our products were to decline significantly, we might not be able to recover the cost of our expensive automated molding and assembly equipment and tooling, which could have an adverse effect on our financial condition and results of operations.
If demand for our products were to decline significantly, we might not be able to recover the cost of our expensive automated molding and assembly equipment and tooling, which could have an adverse effect on our financial condition and results of operations.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results. Geographic Risks Our operations may be adversely impacted by our exposure to risks related to foreign currency exchange rates.
Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.
If we are forced to lower the price we charge for our products, our gross margins will decrease, which could have a material adverse effect on our business, financial condition and results of operations and impair our ability to grow our business. Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs.
If we are forced to lower the price we charge for our products or if the costs to manufacture our products exceeds the price at which we are able to sell our products, our gross margins will decrease, which could have a material adverse effect on our business, financial condition and results of operations and impair our ability to grow our business.
Our IV Solutions are manufactured at our manufacturing facility in Austin, Texas and in past years also by a third party manufacturer, Pfizer, in Rocky Mount, North Carolina or our suppliers’ facilities. We also operate various other manufacturing facilities in the U.S., Mexico, Italy and Czech Republic.
Our IV Solutions are manufactured at our manufacturing facility in Austin, Texas or our suppliers’ facilities. We also operate various other manufacturing facilities in the U.S., Mexico, Italy and Czech Republic.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our ISC is responsible for the regular oversight of cybersecurity risk, information security and technology risk and assessing and managing our material risks from cybersecurity threats and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our ISC facilitates communications between executive, business/process level and the implementation/operations level to coordinate the implementation of our cybersecurity risk program.
Our ISC is responsible for the regular oversight of cybersecurity risk, information security and technology risk and assessing and managing our material risks from cybersecurity threats and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. 38 Our ISC facilitates communications between executive, business/process level and the implementation/operations level to coordinate the implementation of our cybersecurity risk program.
On a quarterly basis, our Audit Committee receives updates from our CIO with respect to the status of our cybersecurity initiatives to strengthen our cybersecurity risk management. In addition, our CISO updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
On a quarterly basis, our Audit Committee receives updates from our CISO with respect to the status of our cybersecurity initiatives to strengthen our cybersecurity risk management. In addition, our CISO updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
The ISC team meets on a regular basis, at least quarterly and more frequently as needed, to discuss significant initiatives, critical metrics and address certain risk responses. 38 Our ISC members includes our CIO and our Director of IT Security, Risk and Compliance who have a combined 20 years of risk management experience encompassing cybersecurity and technology security, such as threat assessments, risk management, cybersecurity insurance, incident response, end user awareness and vulnerability management.
Our ISC members includes our Chief Information Security Officer ("CISO") and our Director of IT Security, Risk and Compliance who have a combined 20 years of risk management experience encompassing cybersecurity and technology security, such as threat assessments, risk management, cybersecurity insurance, incident response, end user awareness and vulnerability management.
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The ISC team meets on a regular basis, at least quarterly and more frequently as needed, to discuss significant initiatives, critical metrics and address certain risk responses.

Item 2. Properties

Properties — owned and leased real estate

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PROPERTIES Our material properties used by us in connection with our corporate administrative operations, manufacturing, distribution, research and development and service centers as of December 31, 2023, are as follows: 39 Location Approximate Square Footage Primary Use Owned/Leased San Clemente, California, U.S. 39,000 Corporate Headquarters and R&D Owned San Clemente, California, U.S. 19,958 Corporate Headquarters Leased San Diego, California, U.S. 44,779 Corporate Offices and R&D Leased Lake Forest, Illinois, U.S. 137,498 Corporate Offices Leased Dublin, Ohio, U.S. 13,021 Corporate Offices Leased Houten, Netherlands 7,341 Corporate Offices Leased Montreal, Canada 31,890 Corporate Offices/Device Service Center Leased Rydalmere, NSW Australia 14,735 Corporate Offices/Device Service Center Leased Chennai, India 36,879 R&D Leased Plymouth, Minnesota, U.S. 182,250 Corporate Offices Leased Kent, United Kingdom 24,172 Corporate Offices Leased Ontario, Canada 25,020 Corporate Offices Leased Grasbrunn, Germany 38,155 Corporate Offices/Device Service Center Leased Austin, Texas, U.S. 594,602 Manufacturing Owned Ensenada, Baja California, Mexico 265,021 Manufacturing Owned La Aurora, Costa Rica 626,869 Manufacturing Owned Salt Lake City, Utah, U.S. 450,000 Manufacturing/Device Service Center Owned Dublin, Ohio, U.S. 117,212 Manufacturing Owned Gary, Indiana, U.S. 40,316 Manufacturing Owned Southington, Connecticut, U.S. 132,000 Manufacturing Owned Tijuana, Mexico (multiple locations) 243,935 Manufacturing Leased Hranice, Czech Republic 129,953 Manufacturing Leased Latina, Italy 62,400 Manufacturing Leased Keene, New Hampshire, U.S. 141,195 Warehouse/Manufacturing Owned Oakdale, Minnesota, U.S. 93,648 Warehouse/Manufacturing/Device Service Center Leased Round Rock, Texas, U.S. 71,960 Warehouse/Manufacturing Owned Dallas, Texas, U.S. 610,806 Distribution Warehouse Leased King of Prussia, Pennsylvania, U.S. 105,571 Distribution Warehouse Owned Santa Fe Springs, California, U.S. 76,794 Distribution Warehouse Owned Wijchen, Netherlands 149,565 Distribution Warehouse Leased Olive Branch, Mississippi, U.S. 239,863 Distribution Warehouse Leased Sligo, Ireland 26,000 Device service center Leased In addition to the above, we own and lease additional office and building space, research and development, and sales and support offices primarily in North America, Europe, South America, and Asia.
PROPERTIES Our material properties used by us in connection with our corporate administrative operations, manufacturing, distribution, research and development and service centers as of December 31, 2024, are as follows: 39 Location Approximate Square Footage Primary Use Owned/Leased San Clemente, California, U.S. 39,000 Corporate Headquarters and R&D Owned San Clemente, California, U.S. 9,779 Corporate Headquarters Leased San Diego, California, U.S. 13,237 Corporate Offices and R&D Leased Lake Forest, Illinois, U.S. 54,298 Corporate Offices Leased Dublin, Ohio, U.S. 13,021 Corporate Offices Leased Houten, Netherlands 7,341 Corporate Offices Leased Montreal, Canada 31,890 Corporate Offices/Device Service Center Leased Rydalmere, NSW Australia 14,735 Corporate Offices/Device Service Center Leased Chennai, India 36,879 R&D Leased Plymouth, Minnesota, U.S. 182,250 Corporate Offices Leased Kent, United Kingdom 24,172 Corporate Offices Leased Ontario, Canada 25,020 Corporate Offices Leased Grasbrunn, Germany 38,155 Corporate Offices/Device Service Center Leased Austin, Texas, U.S. 594,602 Manufacturing Owned Ensenada, Baja California, Mexico 265,021 Manufacturing Owned Monterrey, Mexico 100,000 Manufacturing Owned La Aurora, Costa Rica 626,869 Manufacturing Owned Salt Lake City, Utah, U.S. 440,104 Manufacturing/Device Service Center Owned Dublin, Ohio, U.S. 153,121 Manufacturing Owned Gary, Indiana, U.S. 45,416 Manufacturing Owned Gary, Indiana, U.S. 14,040 Manufacturing/Corporate Offices Leased Southington, Connecticut, U.S. 132,000 Manufacturing Owned Tijuana, Mexico (multiple locations) 243,935 Manufacturing Leased Hranice, Czech Republic 129,953 Manufacturing Leased Latina, Italy 62,441 Manufacturing Owned Keene, New Hampshire, U.S. 153,427 Warehouse/Manufacturing Owned Oakdale, Minnesota, U.S. 93,648 Warehouse/Device Service Center Leased Round Rock, Texas, U.S. 80,929 Warehouse/Manufacturing Owned Dallas, Texas, U.S. 610,806 Distribution Warehouse Leased King of Prussia, Pennsylvania, U.S. 105,611 Distribution Warehouse Owned Santa Fe Springs, California, U.S. 76,794 Distribution Warehouse Owned Wijchen, Netherlands 149,565 Distribution Warehouse Leased Olive Branch, Mississippi, U.S. 239,863 Distribution Warehouse Leased Sligo, Ireland 26,000 Device service center Leased In addition to the above, we own and lease additional office and building space, research and development, and sales and support offices primarily in North America, Europe, South America, and Asia.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS The information required with respect to this Item 3. is discussed in Part II, Item 8. "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K in Note 15. Commitments and Contingencies to the Consolidated Financial Statements, and is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS The information required with respect to this Item 3. is discussed in Part II, Item 8. "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K in Note 16. Commitments and Contingencies to the Consolidated Financial Statements, and is incorporated herein by reference. 40

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Issuer Purchases of Equity Securities The following is a summary of our stock repurchasing activity during the fourth quarter of 2023: Period Shares purchased Average price paid per share Shares purchased as part of a publicly announced program Approximate dollar value that may yet be purchased under the program (1) 10/01/2023 - 10/31/2023 — $ — — $ 100,000,000 11/01/2023 - 11/30/2023 — $ — — $ 100,000,000 12/01/2023 - 12/31/2023 — $ — — $ 100,000,000 Fourth quarter 2023 total — $ — — $ 100,000,000 ____________________________ (1) Our common stock purchase plan, which authorized the repurchase of up to $100.0 million of our common stock, was authorized by our Board of Directors and publicly announced in August 2019.
Issuer Purchases of Equity Securities The following is a summary of our stock repurchasing activity during the fourth quarter of 2024: Period Shares purchased Average price paid per share Shares purchased as part of a publicly announced program Approximate dollar value that may yet be purchased under the program (1) 10/01/2024 - 10/31/2024 — $ — — $ 100,000,000 11/01/2024 - 11/30/2024 — $ — — $ 100,000,000 12/01/2024 - 12/31/2024 — $ — — $ 100,000,000 Fourth quarter 2024 total — $ — — $ 100,000,000 ____________________________ (1) Our common stock purchase plan, which authorized the repurchase of up to $100.0 million of our common stock, was authorized by our Board of Directors and publicly announced in August 2019.
Purchases made under our stock purchase program can be discontinued at any time we determine additional purchases are not warranted. 41 COMPARISON OF CUMULATIVE TOTAL RETURN FROM DECEMBER 31, 2018 TO DECEMBER 31, 2023 OF ICU MEDICAL, INC., NASDAQ AND NASDAQ MEDICAL SUPPLIES INDEX The following graph shows the total stockholder return on our common stock based on the market price of the common stock from December 31, 2018 to December 31, 2023 and the total returns of the NASDAQ U.S.
Purchases made under our stock purchase program can be discontinued at any time we determine additional purchases are not warranted. 41 COMPARISON OF CUMULATIVE TOTAL RETURN FROM DECEMBER 31, 2019 TO DECEMBER 31, 2024 OF ICU MEDICAL, INC., NASDAQ AND NASDAQ MEDICAL SUPPLIES INDEX The following graph shows the total stockholder return on our common stock based on the market price of the common stock from December 31, 2019 to December 31, 2024 and the total returns of the NASDAQ U.S.
Any future determination as to payment of dividends or purchase of our shares will depend upon our financial condition, results of operations and such other factors as the Board of Directors deems relevant. Stockholders As of January 31, 2024, we had 44 stockholders of record.
Any future determination as to payment of dividends or purchase of our shares will depend upon our financial condition, results of operations and such other factors as the Board of Directors deems relevant.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock trades on the Nasdaq Global Select Market under the symbol “ICUI.” Dividends We have never paid dividends and do not anticipate paying dividends in the foreseeable future as the Board of Directors intends to retain future earnings for use in our business to pay down our long-term debt or to purchase our shares.
Dividends We have never paid dividends and do not anticipate paying dividends in the foreseeable future as the Board of Directors intends to retain future earnings for use in our business to pay down our long-term debt or to purchase our shares.
Index and NASDAQ Medical Supplies Index for the same period. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 ICU Medical, Inc. 100.00 81.49 93.41 103.36 68.58 43.44 Nasdaq U.S. Index 100.00 131.17 159.07 200.26 160.75 203.23 Nasdaq Medical Supplies Index 100.00 131.83 167.31 200.81 131.67 139.30 Assumes $100 invested on December 31, 2018 in ICU Medical Inc.’s common stock, the NASDAQ U.S.
Index and NASDAQ Medical Supplies Index for the same period. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 ICU Medical, Inc. 100.00 114.63 126.84 84.16 53.30 82.93 Nasdaq U.S. Index 100.00 121.27 152.67 122.55 154.93 192.86 Nasdaq Medical Supplies Index 100.00 126.91 152.33 99.88 105.67 96.08 Assumes $100 invested on December 31, 2019 in ICU Medical Inc.’s common stock, the NASDAQ U.S.
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock trades on the Nasdaq Global Select Market under the symbol “ICUI.” Stockholders As of January 31, 2025, we had 40 stockholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Strategic Transaction and Integration Expenses In 2023, we incurred $35.6 million in strategic transaction and integration expenses primarily related to consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022.
In 2023, we incurred $35.6 million in strategic transaction and integration expenses primarily related to consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022.
Other critical estimates used to estimate the fair value are derived from royalty rates, customer retention rates and/or estimated useful lives. 55 • Contingent Earn-out Liability - The fair value of the earn-out liabilities were valued using a Monte Carlo simulation and a probability-weighted cash flow model, as appropriate (see Note 8: Fair Value Measurements to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for details).
Other critical estimates used to estimate the fair value are derived from royalty rates, customer retention rates and/or estimated useful lives. 55 • Contingent Earn-out Liability - The fair value of the earn-out liabilities were valued using a Monte Carlo simulation and a probability-weighted cash flow model, as appropriate (see Note 10: Fair Value Measurements to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for details).
The primary drivers for the net decrease in accrued liabilities was primarily due to payments for field corrective actions, operating lease liabilities and distributor rebates as well as a decrease in deferred revenue offset partially by increases in accrued employee costs.
The primary drivers for the net decrease in accrued liabilities was primarily due to payments for field corrective actions, 51 operating lease liabilities and distributor rebates as well as a decrease in deferred revenue offset partially by increases in accrued employee costs.
The net changes in income taxes was a result of recording the current deferred provision and the timing of payments. Our cash used in operations was $(62.1) million in 2022.
The net changes in income taxes was a result of recording the current deferred provision and the timing of payments. Our cash used by operations was $(62.1) million in 2022.
Depreciation and amortization decreased in 2023 as the trademark intangible recognized as part of the January 2022 Smiths Medical acquisition had a useful life of six months and was fully amortized in the prior year. Dealer fees decreased due to a decrease in revenues to distributors. Office and IT expenses decreased based on current operating needs.
Depreciation and amortization decreased in 2023 as the trademark intangible recognized as part of the January 2022 Smiths Medical acquisition had a useful life of six months and was fully amortized in 2022. Dealer fees decreased due to a decrease in revenues to distributors. Office and IT expenses decreased based on current operating needs.
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 11: Long-Term Obligations in our accompanying consolidated financial statements for pricing grids related to the Senior Secured Credit Facilities).
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 13: Long-Term Obligations in our accompanying consolidated financial statements for pricing grids related to the Senior Secured Credit Facilities).
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 December 31, 2023.
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 December 31, 2024.
At the date of issuance of this report, our issuer and Term Loan B credit ratings assigned and outlook were as follows: Issuer/Term Loan B Credit Ratings Outlook Moody's Ba3/Ba3 Stable Fitch BB/BB+ Stable Standard & Poor's BB-/BB- Negative The Credit Agreement contains financial covenants that pertain to the Term Loan A and the Revolving Credit Facility.
At the date of issuance of this report, our issuer and Term Loan B credit ratings assigned and outlook were as follows: Issuer/Term Loan B Credit Ratings Outlook Moody's B1/B1 Stable Fitch BB/BB+ Negative Standard & Poor's BB-/BB- Negative The Credit Agreement contains financial covenants that pertain to the Term Loan A and the Revolving Credit Facility.
These impacts, which negatively impacted our gross profit margin during 2022 and 2023, include rising inflation, especially with respect to freight costs driven by higher fuel prices, increased cost and shortages of raw materials, and supply chain disruptions.
These impacts, which negatively impacted our gross profit margin during 2023 and 2022, include the impact of rising inflation, especially with respect to freight costs driven by higher fuel prices, increased cost and shortages of raw materials, and supply chain disruptions.
For more information regarding our operating lease obligations, (see Note 5: Leases in our accompanying consolidated financial statements). Long-term Debt Obligations As discussed above, in January 2022, we incurred borrowings under Senior Secured Credit Facilities.
For more information regarding our operating lease obligations, see Note 7: Leases in our accompanying consolidated financial statements. Long-term Debt Obligations As discussed above, in January 2022, we incurred borrowings under Senior Secured Credit Facilities.
The outstanding aggregate principal amount of the term loans is $1.6 billion as of December 31, 2023, which includes the Term Loan A that will mature in January 2027 and the Term Loan B that will mature in January 2029.
The outstanding aggregate principal amount of the term loans is $1.6 billion as of December 31, 2024, which includes the Term Loan A that will mature in January 2027 and the Term Loan B that will mature in January 2029.
The following table sets forth, for the periods indicated, total revenue by product line as a percentage of total revenue: 43 Year Ended December 31, Product line 2023 2022 2021 Consumables 43 % 43 % 42 % Infusion Systems 28 % 27 % 27 % Vital Care 29 % 30 % 31 % 100 % 100 % 100 % We manage our product distribution through a network of owned and leased distribution facilities in combination with independent distributors and third-party fulfillment and logistics providers.
The following table sets forth, for the periods indicated, total revenue by product line as a percentage of total revenue: 43 Year Ended December 31, Product line 2024 2023 2022 Consumables 44 % 43 % 43 % Infusion Systems 27 % 28 % 27 % Vital Care 29 % 29 % 30 % 100 % 100 % 100 % We manage our product distribution through a network of owned and leased distribution facilities in combination with independent distributors and third-party fulfillment and logistics providers.
See Part I. Item 1A. Risk Factors” for discussion of the risks and uncertainties associated with our debt financing. Uses of Liquidity Capital Expenditures Our capital expenditures relate to the expansion and maintenance of our business.
See Part I. Item 1A. Risk Factors for discussion of the risks and uncertainties associated with our debt financing. Uses of Liquidity Capital Expenditures Our capital expenditures relate to the expansion and maintenance of our business.
Consolidated Results of Operations We present our consolidated statements of operations for each of the three years ended December 31, 2023, 2022 and 2021 in Item 8. Financial Statements and Supplementary Data.
Consolidated Results of Operations We present our consolidated statements of operations for each of the three years ended December 31, 2024, 2023 and 2022 in Item 8. Financial Statements and Supplementary Data.
In 2023, other miscellaneous income, net primarily includes $3.7 million in fees related to our accounts receivable purchase program (see Note 17: Accounts Receivable Purchase Program) mostly offset by a business interruption gain recognized upon receipt of insurance proceeds.
In 2023, other miscellaneous (expense) income, net primarily includes $3.7 million in fees related to our accounts receivable purchase program (see Note 18: Accounts Receivable Purchase Program) mostly offset by a business interruption gain recognized upon receipt of insurance proceeds.
This plan has no expiration date. As of December 31, 2023, all of the $100.0 million available for purchase was remaining under the plan. We are limited on share purchases in accordance with the terms and conditions of our Credit Agreement (see Note 11: Long-Term Obligations in our accompanying consolidated financial statements).
This plan has no expiration date. As of December 31, 2024, all of the $100.0 million available for purchase was remaining under the plan. We are limited on share purchases in accordance with the terms and conditions of our Credit Agreement (see Note 13: Long-Term Obligations in our accompanying consolidated financial statements).
While we can provide no assurances, we estimate that our capital expenditures in 2024 will be in the range of $90 million to $110 million.
While we can provide no assurances, we estimate that our capital expenditures in 2025 will be in the range of $90 million to $110 million.
See Note 2: Acquisitions and Note 11: Long-Term Obligations in our accompanying consolidated financial statements for additional information. Contractual Obligations Our principal commitments at December 31, 2023 include both short and long-term future obligations. Operating Leases We have non-cancelable operating lease agreements where we are contractually obligated for certain lease payment amounts.
See Note 2: Acquisitions and Note 13: Long-Term Obligations in our accompanying consolidated financial statements for additional information. Contractual Obligations Our principal commitments at December 31, 2024 include both short and long-term future obligations. Operating Leases We have non-cancelable operating lease agreements where we are contractually obligated for certain lease payment amounts.
The following table shows, for each of the three most recent years, the respective percentages of items in our statements of operations in relation to total revenues: Percentage of Revenues 2023 2022 2021 Total revenues 100 % 100 % 100 % Gross profit 33 % 31 % 37 % Selling, general and administrative expenses 27 % 27 % 23 % Research and development expenses 4 % 4 % 4 % Restructuring, strategic transaction and integration expenses 2 % 3 % 1 % Change in fair value of contingent earn-out (1) % (1) % — % Contract settlement — % — % — % Total operating expenses 32 % 33 % 28 % Income from operations 1 % (2) % 9 % Interest expense (4) % (3) % — % Other income, net — % — % — % (Loss) income before income taxes (3) % (5) % 9 % (Benefit) provision for income taxes (2) % (2) % 1 % Net (loss) income (1) % (3) % 8 % Total revenues were $2.3 billion, $2.3 billion and $1.3 billion for 2023, 2022 and 2021, respectively.
The following table shows, for each of the three most recent years, the respective percentages of items in our statements of operations in relation to total revenues: Percentage of Revenues 2024 2023 2022 Total revenues 100 % 100 % 100 % Gross profit 35 % 33 % 31 % Selling, general and administrative expenses 27 % 27 % 27 % Research and development expenses 4 % 4 % 4 % Restructuring, strategic transaction and integration expenses 3 % 2 % 3 % Change in fair value of contingent earn-out — % (1) % (1) % Total operating expenses 34 % 32 % 33 % Income from operations 1 % 1 % (2) % Interest expense, net (4) % (4) % (3) % Other expense, net (1) % — % — % Loss before income taxes (4) % (3) % (5) % Provision (benefit) for income taxes 2 % (2) % (2) % Net loss (6) % (1) % (3) % Total revenues were $2.4 billion, $2.3 billion and $2.3 billion for 2024, 2023 and 2022, respectively.
Specifically, we are required to maintain a Senior Secured Leverage Ratio of no more than 4.50 to 1.00 until June 30, 2024, with step-downs to 4.00 to 1.00 thereafter, and an Interest Coverage Ratio of no less than 3.00 to 1.00 (defined and discussed in greater detail in Note 11: Long-Term Obligations to our accompanying consolidated financial statements).
Specifically, we were required to maintain a Senior Secured Leverage Ratio of no more than 4.50 to 1.00 until June 30, 2024, with a stepdown to 4.00 to 1.00 thereafter, and an Interest Coverage Ratio of no less than 3.00 to 1.00 (defined and discussed in 49 greater detail in Note 13: Long-Term Obligations to our accompanying consolidated financial statements).
Compensation costs increased primarily due to an increase in cash incentive compensation and employee benefits. Commissions increased primarily due to sales performance in the current period measured against preset sales targets as compared to sales performance achieved against targets in the comparable prior year period.
Compensation costs increased primarily due to an increase in cash incentive compensation and employee benefits. Commissions increased primarily due to sales performance in 2023 measured against preset sales targets as compared to sales performance achieved against targets in the comparable 2022 period.
We believe that our existing cash and cash equivalents along with cash flows expected to be generated from future operations, cash received from our uncommitted trade accounts receivable purchase facility and the funds received and 49 accessible under the Senior Secured Credit Facilities will provide us with sufficient liquidity to finance our cash requirements for the next twelve months.
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.
(4) Proceeds from the exercise of stock options will vary from period to period based on the volume of options exercised and the exercise price of the specific options exercised. (5) During 2021, we paid $26.3 million in cash related to the settlement of the Pursuit contingent earn-out.
(4) Proceeds from the exercise of stock options will vary from period to period based on the volume of options exercised and the exercise price of the specific options exercised. (5) During the first quarter of 2024, we paid $3.4 million in cash related to the settlement of the Mediverse contingent earn-out.
Sources of Liquidity Our primary sources of liquidity are cash and cash equivalents, our short-term investment portfolio, cash flows from our operations and access to borrowing arrangements. Funds generated from operations are held in cash and cash equivalents and investment securities.
Sources of Liquidity Our current primary sources of liquidity are cash and cash equivalents and cash flows from our operations including access to borrowing arrangements. Funds generated from operations are held in cash and cash equivalents and investment securities.
We expect to fund these obligations with our existing cash and cash equivalents and cash generated from our future operations. 50 (in millions) 2024 2025 2026 2027 2028 Thereafter Term Loan A Principal Payments $ 42.5 $ 42.5 $ 63.8 $ 664.1 $ — $ — Term Loan A Interest Payments 56.1 42.2 37.2 — — — Term Loan B Principal Payments 8.5 8.5 8.5 8.5 8.5 792.6 Term Loan B Interest Payments 62.8 50.2 47.2 47.9 47.6 — Revolver Commitment Fee 1.5 1.5 1.5 — — — $ 171.4 $ 144.9 $ 158.2 $ 720.5 $ 56.1 $ 792.6 Other Future Capital Investments In connection with the January 2022 acquisition of Smiths Medical, we estimate the investment needed in 2024 for restructuring and integration expenses along with spending to support quality systems and quality compliance objectives to be in the range of $90 million to $110 million, which includes acquired accrued field action liabilities.
We expect to fund these obligations with our existing cash and cash equivalents and cash generated from our future operations. 50 (in millions) 2025 2026 2027 2028 2029 Thereafter Term Loan A Principal Payments $ 42.5 $ 63.8 $ 664.1 $ — $ — $ — Term Loan A Interest Payments 47.9 41.9 0.6 — — — Term Loan B Principal Payments 8.5 8.5 8.5 8.5 792.6 — Term Loan B Interest Payments 56.4 54.2 52.4 51.5 0.8 — Revolver Commitment Fee 1.5 1.3 — — — — $ 156.8 $ 169.7 $ 725.6 $ 60.0 $ 793.4 $ — Other Future Capital Investments In connection with the January 2022 acquisition of Smiths Medical, we estimate the investment needed in 2025 for restructuring and integration expenses along with spending to support quality systems and quality compliance objectives to be in the range of $90 million to $110 million, which includes acquired accrued field action liabilities.
In 2021, our employees surrendered 40,350 shares of our common stock from vested restricted stock awards as consideration for approximately $8.3 million in minimum statutory withholding obligations paid on their behalf. Our common stock purchase plan, which authorized the repurchase of up to $100.0 million of our common stock, was approved by our Board of Directors in August 2019.
In 2022, our employees surrendered 47,664 shares of our common stock from vested restricted stock awards as consideration for approximately $10.9 million in minimum statutory withholding obligations paid on their behalf. Our common stock purchase plan, which authorized the repurchase of up to $100.0 million of our common stock, was approved by our Board of Directors in August 2019.
The change in fair value of the Smiths Medical contingent earn-out was driven by a decrease in our stock price. In 2022, the fair value revaluation of our contingent earn-outs resulted in a decrease in value of $32.1 million. This decrease was primarily related to the fair value revaluation of our Smiths Medical contingent earn-out liability.
This decrease was primarily related to the fair value revaluation of our Smiths Medical contingent earn-out liability. The change in fair value of the Smiths Medical contingent earn-out was driven by a decrease in our stock price.
Cash Flows from Financing Activities The following table summarizes the changes in our financing cash flows (in thousands): 52 For the Years Ended December 31, Variance 2023 2022 2021 2023 2022 Financing Cash Flows: Proceeds from issuance of long-term debt, net of lender debt issuance costs $ — 1,664,362 — (1,664,362) 1,664,362 (1) Principal payments on long-term debt (29,688) (22,375) — (7,313) (22,375) (2) Payment of third-party debt issuance costs — (2,177) — 2,177 (2,177) (3) Proceeds from exercise of stock options 4,022 8,785 9,372 (4,763) (587) (4) Payments on finance leases (963) (680) (607) (283) (73) Payment of contingent earn-out — — (17,300) — 17,300 (5) Tax withholding payments related to net share settlement of equity awards (9,350) (10,883) (8,335) 1,533 (2,548) (6) Net cash (used in) provided by financing activities $ (35,979) $ 1,637,032 $ (16,870) $ (1,673,011) $ 1,653,902 __________________________ (1) During 2022, we borrowed an aggregate of $1.7 billion under the Senior Secured Credit Facilities contained in the Credit Agreement to partially finance our acquisition of Smiths Medical (see Note 11: Long-Term Obligations to our accompanying consolidated financial statements for additional information).
Cash Flows from Financing Activities The following table summarizes the changes in our financing cash flows (in thousands): 52 For the Years Ended December 31, Variance 2024 2023 2022 2024 2023 Financing Cash Flows: Proceeds from issuance of long-term debt, net of lender debt issuance costs $ — $ — $ 1,664,362 $ — $ (1,664,362) (1) Principal payments on long-term debt (51,000) (29,688) (22,375) (21,312) (7,313) (2) Payment of third-party debt issuance costs — — (2,177) — 2,177 (3) Proceeds from exercise of stock options 10,939 4,022 8,785 6,917 (4,763) (4) Payments on finance leases (1,147) (963) (680) (184) (283) Payment of contingent earn-out (2,600) — — (2,600) — (5) Tax withholding payments related to net share settlement of equity awards (11,992) (9,350) (10,883) (2,642) 1,533 (6) Net cash (used in) provided by financing activities $ (55,800) $ (35,979) $ 1,637,032 $ (19,821) $ (1,673,011) __________________________ (1) During 2022, we borrowed an aggregate of $1.7 billion under the Senior Secured Credit Facilities contained in the Credit Agreement to partially finance our acquisition of Smiths Medical (see Note 13: Long-Term Obligations to our accompanying consolidated financial statements for additional information).
In December 2022, the European Union agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold. A number of countries have enacted or have announced plans to enact legislation to adopt Pillar Two.
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.
This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A. “Risk Factors” or in other sections of this Annual Report on Form 10-K.
This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A.
Restructuring, Strategic Transaction and Integration Expenses Restructuring, strategic transaction and integration expenses were $41.3 million, $71.4 million and $18.0 million in 2023, 2022 and 2021, respectively. 46 Restructuring Charges In 2023, we incurred restructuring charges net of reversed accruals of $5.7 million primarily related to severance costs.
Restructuring, Strategic Transaction and Integration Expenses Restructuring, strategic transaction and integration expenses were $59.8 million, $41.3 million and $71.4 million in 2024, 2023 and 2022, respectively. Restructuring Charges In 2024, we incurred restructuring charges of $19.6 million primarily related to severance costs. In 2023, we incurred restructuring charges net of reversed accruals of $5.7 million primarily related to severance costs.
In 2022, our employees surrendered 47,664 shares of our common stock from vested restricted stock awards as consideration for approximately $10.9 million in minimum statutory withholding obligations paid on their behalf.
In 2023, our employees surrendered 59,377 shares of our common stock from vested restricted stock awards as consideration for approximately $9.4 million in minimum statutory withholding obligations paid on their behalf.
Of the $26.3 million, the amount recorded as the acquisition date fair value, which is considered financing cash flows, was $17.3 million (see Note 8: Fair Value Measurements). (6) In 2023, our employees surrendered 59,377 shares of our common stock from vested restricted stock awards as consideration for approximately $9.4 million in minimum statutory withholding obligations paid on their behalf.
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). (6) In 2024, our employees surrendered 114,787 shares of our common stock from vested restricted stock awards as consideration for approximately $12.0 million in minimum statutory withholding obligations paid on their behalf.
Gross Margins Gross margins were 32.8%, 30.6% and 37.3% for 2023, 2022 and 2021, respectively. 45 The increase in gross margin in 2023, as compared to 2022, was primarily driven by lower freight costs, lower spend on quality remediation and the cost recognition of a purchase accounting write-up of inventory in 2022, offset by continued inflationary impacts on costs and stronger Mexican peso.
The increase in gross margin in 2023, as compared to 2022, was primarily driven by lower freight costs, lower spend on quality remediation and the cost recognition of a purchase accounting write-up of inventory in 2022, offset by continued inflationary impacts on costs and stronger Mexican peso.
The Pillar Two legislation is effective for our fiscal year beginning January 1, 2024 and for fiscal year 2024 we do not anticipate that it will have a material impact to our tax provision or effective tax rate.
The Pillar Two legislation is effective for our fiscal year beginning January 1, 2024 and for fiscal year 2024, Pillar 2 did not have a material impact to our tax provision or effective tax rate.
Infusion Systems The following table summarizes our total Infusion Systems revenue (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2023 2022 2021 2023 over 2022 2022 over 2021 Infusion Systems (GAAP) $ 629.0 $ 617.4 $ 352.3 $ 11.6 1.9% $ 265.1 75.2% Impact of foreign exchange rate changes 10.5 Infusion Systems on a constant currency basis (non-GAAP) $ 639.5 $ Change in constant currency $ 22.1 % Change in constant currency 3.6 % Infusion Systems revenue increased in 2023, as compared to 2022, primarily due to higher sales of our syringe pumps and large volume pump ("LVP") dedicated sets.
Infusion Systems The following table summarizes our total Infusion Systems revenue (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2024 2023 2022 2024 over 2023 2023 over 2022 Infusion Systems (GAAP) $ 652.4 $ 629.0 $ 617.4 $ 23.4 3.7 % $ 11.6 1.9 % Impact of foreign exchange rate changes 20.3 $ 10.5 Infusion Systems on a constant currency basis (non-GAAP) $ 672.7 $ 639.5 $ Change in constant currency $ 43.7 $ 22.1 % Change in constant currency 6.9 % 3.6 % Infusion Systems revenue increased in 2024, as compared to 2023, primarily due to higher sales of our large volume pump ("LVP") dedicated sets on a larger installed base, as well as growth in our ambulatory hardware and dedicated sets.
R&D expenses are primarily related to headcount and employment expenses in support of ongoing R&D projects. R&D expenses generally include 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 increased in 2022, as compared to 2021, due to the acquisition of Smiths Medical.
R&D expenses are primarily related to headcount and employment expenses in support of ongoing R&D projects. R&D expenses generally include compensation and benefit expenses, consulting 46 fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs incurred in our ongoing R&D projects.
(6) Proceeds from the sale of our investment securities will vary based on the maturity dates of the investments. In 2022, proceeds from sale of investment securities includes $19.0 million received from a promissory note related to an acquired investment as part of the Smiths Medical acquisition.
In 2022, proceeds from sale of investment securities includes $19.0 million received from a promissory note related to an acquired investment as part of the Smiths Medical acquisition.
The effective tax rate for 2023 also included a tax benefit of $0.8 million related to the excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period. Additionally, the effective tax rate for 2023 included a tax benefit of $6.5 million related to U.S. federal return-to-provision adjustments net of related tax reserves.
The effective tax rate for 2023 also included a tax benefit of $0.8 million related to the excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.
Stock based compensation increased due to an increase in the fair value of amounts awarded in the current year over the fair value of the awards in the prior year. Sales and marketing expenses increased due to an increase in trade show, conference, and related expenses. Consolidated SG&A expenses increased in 2022, as compared to 2021.
Stock based compensation increased due to an increase in the fair value of amounts awarded in 2023 over the fair value of the awards in 2022. Sales and marketing expenses increased due to an increase in trade show, conference, and related expenses.
The decrease in prepaid expenses and other current assets was primarily attributable to insurance, property taxes, and prepaid vendor expenses. The increase in inventory was primarily to build inventory safety stock levels. The decrease in accounts payable was due to the timing of payments. The increase in other assets was due to the purchase of spare parts.
The increase in inventory was primarily to build inventory safety stock levels. The decrease in accounts payable was due to the timing of payments. The increase in other assets was due to the purchase of spare parts.
Cash Flows from Investing Activities The following table summarizes the changes in our investing cash flows (in thousands): For the Years Ended December 31, Variance 2023 2022 2021 2023 2022 Investing Cash Flows: Purchases of property, plant and equipment $ (83,893) $ (90,311) $ (68,542) $ 6,418 $ (21,769) (1) Proceeds from sale of assets 1,501 989 218 512 771 Intangible asset additions (9,777) (9,018) (12,627) (759) 3,609 (2) Business acquisitions, net of cash acquired — (1,844,164) (14,452) 1,844,164 (1,829,712) (3) Investments in non-marketable equity securities — — (3,250) — 3,250 (4) Purchases of investment securities — (3,397) (10,034) 3,397 6,637 (5) Proceeds from sale of investment securities 4,222 36,433 18,000 (32,211) 18,433 (6) Net cash used in investing activities $ (87,947) $ (1,909,468) $ (90,687) $ 1,821,521 $ (1,818,781) __________________________ (1) Our purchases of property, plant and equipment will vary from period to period based on additional investments needed to support new and existing products and expansion of our manufacturing facilities.
Cash Flows from Investing Activities The following table summarizes the changes in our investing cash flows (in thousands): For the Years Ended December 31, Variance 2024 2023 2022 2024 2023 Investing Cash Flows: Purchases of property, plant and equipment $ (79,373) $ (83,893) $ (90,311) $ 4,520 $ 6,418 (1) Proceeds from sale of assets 746 1,501 989 (755) 512 Intangible asset additions (10,833) (9,777) (9,018) (1,056) (759) Business acquisitions, net of cash acquired — — (1,844,164) — 1,844,164 (2) Purchases of investment securities — — (3,397) — 3,397 (3) Proceeds from sale of investment securities 500 4,222 36,433 (3,722) (32,211) (4) Net cash used in investing activities $ (88,960) $ (87,947) $ (1,909,468) $ (1,013) $ 1,821,521 __________________________ (1) Our purchases of property, plant and equipment will vary from period to period based on additional investments needed to support new and existing products and expansion of our manufacturing facilities.
We were in compliance with these financial covenants as of December 31, 2023. 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 provides for an additional source of capital (see Note 17: Accounts Receivable Purchase Program).
We were in compliance with these financial covenants as of December 31, 2024. In January 2023, we entered into a receivables purchase agreement with Bank of the West, which was subsequently acquired by BMO in February 2023.
Selling, General and Administrative ("SG&A") Expenses The following table summarizes our SG&A expenses (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2023 2022 2021 2023 over 2022 2022 over 2021 SG&A $ 606.7 $ 608.3 $ 302.6 $ (1.6) (0.3) % $ 305.7 101.0 % Consolidated SG&A expenses decreased slightly in 2023, as compared to 2022, primarily due to decreases of $7.5 million in depreciation and amortization, $4.8 million in dealer fees, $3.9 million of office expenses, and $2.6 million of IT expenses.
Selling, General and Administrative ("SG&A") Expenses The following table summarizes our SG&A expenses (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2024 2023 2022 2024 over 2023 2023 over 2022 SG&A $ 638.8 $ 606.7 $ 608.3 $ 32.1 5.3 % $ (1.6) (0.3) % Consolidated SG&A expenses increased in 2024, as compared to 2023, primarily due to increases of $11.3 million in compensation costs, $9.4 million in commissions, $5.6 million in stock based compensation and $5.2 million in dealer fees.
The effective tax rate in 2023 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign income, state income taxes, section 162(m) excess compensation, foreign-derived intangible income (“FDII”), and tax credits.
The effective tax rate in 2024 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign income, foreign-derived intangible income (“FDII”), federal and state valuation allowance, tax reserve releases, and tax credits.
We reversed approximately $1.0 million in accrued restructuring balances related to severance and facility closure costs that will not be utilized. In 2022, we incurred restructuring charges of $9.7 million primarily related to severance costs. In 2021, we adjusted certain facility restructuring liabilities by $2.0 million to reflect actual amounts owed resulting in annual net restructuring credits of $(1.8) million.
We reversed approximately $1.0 million in accrued restructuring balances related to severance and facility closure costs that will not be utilized. In 2022, we incurred restructuring charges of $9.7 million primarily related to severance costs.
Consumables The following table summarizes our total Consumables revenue (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2023 2022 2021 2023 over 2022 2022 over 2021 Consumables revenue (GAAP) $ 969.1 $ 975.0 $ 555.2 $ (5.9) (0.6) % $ 419.8 75.6 % Impact of foreign exchange rate changes 4.0 Consumables revenue on a constant currency basis (non-GAAP) $ 973.1 $ Change in constant currency $ (1.9) % Change in constant currency (0.2) % 44 Consumables revenue decreased in 2023, as compared to 2022, primarily due to a decrease in our vascular access revenues as a result of lost customers and backorder recovery in the prior year.
Consumables The following table summarizes our total Consumables revenue (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2024 2023 2022 2024 over 2023 2023 over 2022 Consumables revenue (GAAP) $ 1,038.9 $ 969.1 $ 975.0 $ 69.8 7.2 % $ (5.9) (0.6) % Impact of foreign exchange rate changes 2.8 $ 4.0 Consumables revenue on a constant currency basis (non-GAAP) $ 1,041.7 $ 973.1 $ Change in constant currency $ 72.6 $ (1.9) % Change in constant currency 7.5 % (0.2) % 44 Consumables revenue increased in 2024, as compared to 2023, primarily due to new customer installations and increased demand for our Infusion Consumables, Vascular Access and Oncology product lines.
In 2023 and 2022, interest expense primarily includes 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 11: Long-Term Obligations in our accompanying consolidated financial statements) offset by the impact of the interest rate swaps (see Note 7: Derivatives and Hedging in our accompanying consolidated financial statements).
Interest expense, net The following table presents interest expense, net (in thousands): Year ended December 31, 2024 2023 2022 Interest expense $ (106,541) $ (102,727) $ (70,805) Interest income $ 10,788 $ 7,508 $ 4,430 Interest expense, net $ (95,753) $ (95,219) $ (66,375) In 2024, 2023 and 2022, interest expense primarily includes 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 13: Long-Term Obligations in our accompanying consolidated financial statements) offset by the impact of the interest rate swaps (see Note 9: Derivatives and Hedging in our accompanying consolidated financial statements).
Our short-term investment portfolio currently consists of investment-grade corporate bonds and is primarily intended to facilitate capital preservation. 2022 Credit Facilities and Access to Capital As discussed in Note 11: Long-Term Obligations to our accompanying 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.
This increase was primarily due to cash generated from operations. 2022 Credit Facilities and Access to Capital As discussed in Note 13: Long-Term Obligations to our accompanying 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.
Other (expense) income, net The following table presents other expense, net (in thousands): Year ended December 31, 2023 2022 2021 Foreign exchange losses, net $ (5,918) $ (5,780) $ (1,017) Loss on disposition of assets $ (153) $ (2,554) $ (1,651) Other miscellaneous (expense) income, net $ 166 $ 3,198 $ 627 Other expense, net $ (5,905) $ (5,136) $ (2,041) The foreign exchange losses in 2023 were primarily related to the devaluation of the Argentine peso during the fourth quarter of 2023.
Other expense, net The following table presents other expense, net (in thousands): Year ended December 31, 2024 2023 2022 Foreign exchange losses, net $ (9,792) $ (5,918) $ (5,780) Loss on disposition of assets (1,608) (153) (2,554) Other miscellaneous (expense) income, net (1,823) 166 3,198 Other expense, net $ (13,223) $ (5,905) $ (5,136) The foreign exchange losses in 2024 were primarily related to the strengthening of the U.S. dollar relative to certain foreign currencies, including the Mexican peso and Argentine peso.
Our investment policy allows for the purchase of securities with final maturities in excess of one year. If cash is not needed for known future transactions our investment strategy takes advantage of the long-term securities with higher yields. Typically, our longer term securities have maturities up to three years.
If cash is not needed for known future transactions our investment strategy takes advantage of the long-term securities with higher yields. Typically, our longer term securities have maturities up to three years. (4) Proceeds from the sale of our investment securities will vary based on the maturity dates of the investments.
We received total insurance recoveries for property damage and business interruption of $3.1 million, $2.6 million of which was related to insurance proceeds for business interruption included within other miscellaneous income, net. In 2022, other miscellaneous income, net primarily related to the sale of certain other assets.
We received total insurance recoveries for property damage and business interruption of $3.1 million, $2.6 million of which was related to insurance proceeds for business interruption included within other miscellaneous (expense) income, net. Income taxes Income taxes were accrued at an estimated annual effective tax rate of (78)%, 62% and 35% in 2024, 2023 and 2022, respectively.
Supply Constraints, Global Geopolitical Events We have experienced significant impacts to our business as a result of global economic challenges, resulting from, among other events, the COVID-19 pandemic and the continuing conflict between Russia and Ukraine.
Global Economic Challenges 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.
Research and Development ("R&D") Expenses The following table summarizes our total R&D expenses (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2023 2022 2021 2023 over 2022 2022 over 2021 R&D $ 85.3 $ 93.0 $ 47.5 $ (7.7) (8.3) % $ 45.5 95.8 % R&D expenses decreased in 2023, as compared to 2022, due to organizational synergies and project reprioritization as a result as a result of the Smiths Medical acquisition.
Research and Development ("R&D") Expenses The following table summarizes our total R&D expenses (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2024 2023 2022 2024 over 2023 2023 over 2022 R&D $ 88.6 $ 85.3 $ 93.0 $ 3.3 3.9 % $ (7.7) (8.3) % R&D expenses increased in 2024, as compared to 2023, primarily due to higher headcount and employment expense in support of ongoing R&D projects.
During 2023, our cash and cash equivalents and short-term investment securities increased by $41.7 million from $213.0 million at December 31, 2022 to $254.7 million at December 31, 2023. This increase was primarily due to cash generated from operations.
During 2024, our cash and cash equivalents and short-term investment securities increased by $53.8 million from $254.7 million at December 31, 2023 to $308.6 million at December 31, 2024.
Vital Care The following table summarizes our total Vital Care revenue (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2023 2022 2021 2023 over 2022 2022 over 2021 Vital Care (GAAP) $ 661.0 $ 687.6 $ 408.8 $ (26.6) (3.9)% $ 278.8 68.2% Impact of foreign exchange rate changes 4.5 Vital Care on a constant currency basis (non-GAAP) $ 665.5 $ Change in constant currency $ (22.1) % Change in constant currency (3.2) % Vital Care revenue decreased in 2023, as compared to 2022, primarily due to lower sales volume of IV Solutions which was impacted by supply disruptions related to finished good products purchased from third party manufacturers and lower sales volume for products acquired from Smiths Group due to backorder recovery in the prior year.
Vital Care The following table summarizes our total Vital Care revenue (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2024 2023 2022 2024 over 2023 2023 over 2022 Vital Care (GAAP) $ 690.7 $ 661.0 $ 687.6 $ 29.7 4.5 % $ (26.6) (3.9) % Impact of foreign exchange rate changes 2.9 $ 4.5 Vital Care on a constant currency basis (non-GAAP) $ 693.6 $ 665.5 $ Change in constant currency $ 32.6 $ (22.1) % Change in constant currency 4.9 % (3.2) % Vital Care revenue increased in 2024, as compared to 2023, due to higher sales volume of IV Solutions primarily driven by a market shortage of these products in the U.S. during the fourth quarter of 2024, as explained below.
The increase in accounts payable was due to the timing of payments. Our cash provided by operations was $267.5 million in 2021.
The increase in accounts payable was due to the timing of payments.
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 2024 as we continue to assess the impact of tax legislation in these jurisdictions.
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 2024 as we continue to assess the impact of tax legislation in these jurisdictions. 48 The effective tax rate in 2023 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign income, state income taxes, section 162(m) excess compensation, foreign-derived intangible income (“FDII”), and tax credits.
The adjustments related primarily to changes in estimates for the research and development credit and foreign tax credits. Additionally, the effective tax rate 2023 included the nil tax impact of the revaluation of contingent consideration of $16.2 million.
Additionally, the effective tax rate for 2023 included a tax benefit of $6.5 million related to U.S. federal and state return-to-provision adjustments net of related tax reserves. The adjustments related to primarily to changes in estimates for the research and development credit and foreign tax credits.
The changes in operating assets and liabilities included a $20.8 million decrease in inventories, a $13.8 million decrease in accounts receivable, a $6.3 million increase in accrued liabilities, a $2.3 million increase in accounts payable, and $0.9 million in net changes in income taxes, including excess tax benefits and deferred income taxes.
Offsetting these amounts was a $20.7 million increase in accrued liabilities, a $16.8 million decrease in inventories, a $12.5 million increase in accounts payable and $26.2 million in net changes in income taxes, including excess tax benefits and deferred income taxes.
The revenue decrease was partially offset by an increase in Infusion Therapy and Oncology revenues. Consumables revenue increased in 2022, as compared to 2021. The increase in revenue was primarily due to $408.4 million in acquired revenue from our January 2022 acquisition of Smiths Medical.
Consumables revenue decreased in 2023, as compared to 2022, primarily due to a decrease in our vascular access revenues as a result of lost customers and backorder recovery in 2022. The revenue decrease was partially offset by an increase in Infusion Therapy and Oncology revenues.
Change in fair value of contingent earn-out In 2023, the fair value revaluation of our contingent earn-outs resulted in a decrease in value of $16.2 million. This decrease was primarily related to the fair value revaluation of our Smiths Medical contingent earn-out liability.
Change in fair value of contingent earn-out In 2024, the fair value revaluation of our contingent earn-outs resulted in a decrease in value of $5.4 million.
The increase in other assets was primarily 51 due to the purchase of spare parts. The net increase in prepaid expenses and other current assets was primarily due to an increase in deferred costs.
The increase in other assets was due to the purchase of spare parts. The increase in prepaid expenses and other current assets was primarily attributable to deferred costs related to infusion pumps sold and insurance and property taxes. The net change in income taxes was a result of recording the current deferred provision and the timing of payments.
(4) In 2021, we paid $3.3 million to acquire approximately a 20% non-marketable equity interest in a non-public company. (5) Our purchases of investment securities will vary from period to period based on current cash needs, planning for known future transactions and changes in our investment strategy.
(3) Our purchases of investment securities will vary from period to period based on current cash needs, planning for known future transactions and changes in our investment strategy. Our investment policy allows for the purchase of securities with final maturities in excess of one year.
The decrease in accounts receivable was primarily due to the sale of accounts receivable as part of our accounts receivable purchase program with Bank of the West, which was subsequently acquired by BMO in February 2023 (see Note 17: Accounts Receivable Purchase Program).
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 18: Accounts Receivable Purchase Program). The decrease in prepaid expenses and other current assets was primarily attributable to insurance, property taxes, and prepaid vendor expenses.
In 2022, we acquired Smiths Medical. The cash consideration for the transaction was $1.9 billion, which was financed with existing cash balances and borrowings under the Credit Agreement. Acquired cash was $78.8 million. In 2021, we acquired a small foreign infusion systems supplier for approximately $15.4 million.
(2) Our business acquisitions will vary from period to period based upon our current growth strategy and our ability to execute on desirable target companies. In 2022, we acquired Smiths Medical. The cash consideration for the transaction was $1.9 billion, which was financed with existing cash balances and borrowings under the Credit Agreement. Acquired cash was $78.8 million.
The overall impact to our results of operations will depend on a number of factors, many of which are out of our control, such as the duration and extent of the current global economic challenges, including any impact from conflicts in Eastern Europe and the Middle East more generally, and the resurgence of the pandemic or the emergence of a new public health crisis, none of which can be fully predicted at this time.
The overall impact to our results of operations will depend on a number of factors, many of which are out of our control, none of which can be fully predicted at this time. See "Part I. Item 1A. Risk Factors" for a discussion of risks and uncertainties.
Infusion Systems revenue increased in 2022, as compared to 2021, primarily due to $266.4 million in acquired revenue from our January 2022 acquisition of Smiths Medical.
Infusion Systems revenue increased in 2023, as compared to 2022, primarily due to higher sales of our syringe pumps and LVP dedicated sets.
We expect the pressure on the supply chain to continue and freight costs to remain subject to volatility in the market for the foreseeable future.
While we expect the pressure on the supply chain to lessen and inflation to continue to subside, freight costs are expected to remain subject to volatility in the market. We also continue to expect higher interest rates and volatility in foreign currency rates due to the strengthening of the U.S. dollar against most global currencies.
The interest expense increased in 2023, as compared to 2022, primarily due to increases in the applicable SOFR reference rate. 47 In 2021, interest income, net primarily includes the per annum commitment fee charged on the unused portion of the revolver under our then five-year revolving credit facility and the amortization of financing costs that were incurred in 2017 in connection with entering into the then existing credit facility.
The interest 47 expense increased in 2024, as compared to 2023, primarily due to amortization of certain swaps. The interest expense increased in 2023, as compared to 2022, primarily due to increases in the applicable SOFR reference rate. Interest income in all years was related to interest earned on interest-bearing securities and cash holdings.
Removed
As part of the integration of our acquisition of Smiths Medical, we have renamed our business units and reorganized the products thereunder and, as of January 1, 2023, our business unit structure is composed of Consumables, Infusion Systems and Vital Care. All prior periods herein have been retrospectively conformed to the current presentation.
Added
“Risk Factors” or in other sections of this Annual Report on Form 1 0 -K as may be further updated from time to time in our other filings with the SEC.
Removed
The rising interest rates and foreign currency impact due to the strengthening of the U.S. dollar and Mexican peso and the devaluation of the Argentine Peso have also impacted our results of operations during 2022 and 2023.
Added
Our 2024, 2023 and 2022 financial results were negatively impacted by foreign exchange losses and our results of operations may continue to be impacted in the future. More recently, in January 2025, the current administration issued executive orders imposing tariffs on imported goods from Canada, Mexico, and China. In response, Canada announced similar tariffs on U.S. imports.
Removed
These challenges arising from global economic conditions could worsen as a result of the current armed conflict in the Middle East, which is highly uncertain at this time.
Added
A meaningful portion of our global revenues are from products manufactured in our Mexico manufacturing facilities and imported into the U.S. In addition, Canada is our second largest country in terms of revenue and the vast majority of products sold in Canada are imported from the U.S.
Removed
See "Part I. Item 1A. Risk Factors: Heightened inflation, higher interest rates and foreign currency rate fluctuations as a result of global macroeconomic and geopolitical conditions have had and could in the future have a material adverse effect on our operations” for a discussion of risks and uncertainties.
Added
The 25% tariff levied on all goods shipped from Mexico to the U.S., combined with the 25% tariff on products shipped from the U.S. to Canada could potentially have a meaningful impact to our costs and any further trade war escalation could increase that impact.
Removed
In 2022, our legacy operations revenue increased primarily due to customer demand in our global core Infusion, Global Oncology and Renal products.
Added
During the third quarter of 2024, a competitor’s U.S. IV solutions manufacturing facility was damaged as a result of Hurricane Helene causing a national shortage of IV solutions. In response, we actively increased production of our IV Solutions product lines in anticipation of increased demand due to the temporary market shortage.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed10 unchanged
We are exposed to changes in interest rates on all of these variable-rate debt instruments. The term loan A facility currently bears interest based on Adjusted Term SOFR plus an applicable margin of 2.00% per year. The term loan B facility currently bears interest based on Adjusted Term SOFR subject to a 0.50% floor plus an applicable margin of 2.5%.
We are exposed to changes in interest rates on all of these variable-rate debt instruments. The term loan A facility currently bears interest based on Adjusted Term SOFR plus an applicable margin of 2.00% per year. The term loan B facility currently bears interest based on Adjusted Term SOFR subject to a 0.50% floor plus an applicable margin of 2.50%.
In June 2023, we entered into an additional swap with a notional amount of $300 million with a maturity date of June 30, 2028 and we pay a fixed rate of 3.8765% starting on June 30, 2023 and receive 3-month USD SOFR.
In June 2023, we entered into an additional swap with a notional amount of $300.0 million with a maturity date of June 30, 2028 and we pay a fixed rate of 3.8765% starting on June 30, 2023 and receive 3-month USD SOFR.
A 1% change in SOFR rates on the accounts receivable sales would not have a material impact on our results of operations, (see Note 17: Accounts Receivable Purchase Program to the Consolidated Financial Statements in Part II, Item 8. Of this Annual Report on Form 10-K).
A 1% change in SOFR rates on the accounts receivable sales would not have a material impact on our results of operations, (see Note 18: Accounts Receivable Purchase Program to the Consolidated Financial Statements in Part II, Item 8. Of this Annual Report on Form 10-K).
These derivative contracts are designated and qualify as cash flow hedges (see Note 7: Derivatives and Hedging Activities to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K).
These derivative contracts are designated and qualify as cash flow hedges (see Note 9: Derivatives and Hedging Activities to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K).
The sensitivity analysis recalculates the fair value of the exchange contracts outstanding at December 31, 2023 using the actual forward rates at December 31, 2023, which are then adjusted to be 10% weaker for each respective currency. 57
The sensitivity analysis recalculates the fair value of the exchange contracts outstanding at December 31, 2024 using the actual forward rates at December 31, 2024, which are then adjusted to be 10% weaker for each respective currency. 57
We used a sensitivity analysis to measure our interest rate risk exposure. If the SOFR rate increases or decreases 1% from December 31, 2023, the additional annual interest expense or savings related to the term loans would be approximately $16.5 million.
We used a sensitivity analysis to measure our interest rate risk exposure. If the SOFR rate increases or decreases 1% from December 31, 2024, the additional annual interest expense or savings related to the term loans would be approximately $16.0 million.
At December 31, 2023, the effect of a hypothetical 10% weakening in the actual foreign exchange rates used for the applicable currencies would result in an estimated decrease in the fair value of these outstanding derivatives contracts by approximately $4.6 million.
At December 31, 2024, the effect of a hypothetical 10% weakening in the actual foreign exchange rates used for the applicable currencies would result in an estimated decrease in the fair value of these outstanding derivatives contracts by approximately $5.4 million.
We use foreign exchange forward contracts to hedge a portion of our forecasted foreign currency-denominated revenues and expenses (principally Mexican Pesos, Euros, Japanese Yen, U.S. Dollar, Chinese Renminbi, Canadian Dollar, and Australian Dollar) that differ from the functional currency of the operating unit.
We use foreign exchange forward contracts to hedge a portion of our forecasted foreign currency-denominated revenues and expenses (principally Mexican Pesos, Euros, Czech Koruna, Japanese Yen, Swedish Krona, Danish Krone, Chinese Renminbi, Canadian Dollar, U.S. Dollar, and Australian Dollar) that differ from the functional currency of the operating unit.
(see Note 7: Derivatives and Hedging Activities to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K). Accounts Receivable Purchase Program Additionally, our accounts receivable purchase program with Bank of the West, which was subsequently acquired by BMO in February 2023, bears discount rates tied to SOFR.
(see Note 9: Derivatives and Hedging Activities to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K). Accounts Receivable Purchase Program Additionally, our accounts receivable purchase program with BMO bears discount rates tied to SOFR.

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