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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 — 2024 vs 2025

Top changes in ICU MEDICAL INC's 2025 10-K

371 paragraphs added · 369 removed · 265 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

54 edited+11 added−31 removed119 unchanged
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.
Our primary Tracheostomy products are: 2 • 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.
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.
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, and certified nurse 10 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.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of cleared devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDC Act that may present a risk to health; • complying with requirements governing Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA's Global Unique Device Identification Database; • the FDA's recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect public health or to provide additional safety and effectiveness data for the device.
These include: • establishment registration and device listing with the FDA; • QMSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of cleared devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDC Act that may present a risk to health; • complying with requirements governing Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA's Global Unique Device Identification Database; • the FDA's recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect public health or to provide additional safety and effectiveness data for the device.
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.
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.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical studies to assess new safety risks, or imposition of distribution restrictions or other restrictions.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to 7 add new safety information, imposition of post-market studies or clinical studies to assess new safety risks, or imposition of distribution restrictions or other restrictions.
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.
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.
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.
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. Medical Device Regulation in the U.S. The majority of our products are regulated by the FDA as medical devices in the U.S.
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.
Certain countries also mandate implementation of commercial compliance programs. 9 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.
Our primary Anesthesia & Respiratory products are: • Portex® acapella® bronchial hygiene products used to mobilize pulmonary secretions to facilitate the opening of airways in patients with chronic respiratory diseases such as chronic obstructive pulmonary disease, or COPD, asthma and cystic fibrosis.
Our primary Anesthesia & Respiratory products are: 4 • Portex® acapella® bronchial hygiene products used to mobilize pulmonary secretions to facilitate the opening of airways in patients with chronic respiratory diseases such as chronic obstructive pulmonary disease, or COPD, asthma and cystic fibrosis.
The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), de novo classification request or a PMA in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination.
The FDA requires each manufacturer to determine whether the 6 proposed change requires submission of a 510(k), de novo classification request or a PMA in the first instance, but the FDA can review any such decision and disagree with a manufacturer’s determination.
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.
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.
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.
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.
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.
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.
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).
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).
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).
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 • Specialty Trays (Lumbar Puncture, Amniocentesis, Myelogram).
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.
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; San Laurent; Quebec, Canada; Taipei, Taiwan and Rydalmere, Australia.
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.
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.
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.
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.
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.
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 23 years of experience in IV therapy has the necessary experience to effectively lead the execution of our strategy.
We are a FDA and ISO registered medical device manufacturer, and must demonstrate that we and our contract manufacturers comply with the FDA's QSR, cGMPs and similar foreign requirements. The FDA, other regulatory agencies and notified bodies outside the U.S. monitor compliance with these requirements through inspections and audits of manufacturing facilities.
We are a FDA and ISO registered medical device manufacturer, and must demonstrate that we and our contract manufacturers comply with the FDA's QMSR, cGMPs and similar foreign requirements. The FDA, other regulatory agencies and notified bodies outside the U.S. monitor compliance with these requirements through inspections and audits of manufacturing facilities.
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.
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 Management System Regulation ("QMSR"), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
IV Solutions Our IV Solutions products include a broad portfolio of injection, irrigation, nutrition and specialty IV solutions including: • IV Therapy and Diluents, including Sodium Chloride, Dextrose, Balanced Electrolyte Solutions, Lactated Ringer's, Ringer's, Mannitol, Sodium Chloride/Dextrose and Sterile Water. • Irrigation, including Sodium Chloride Irrigation, Sterile Water Irrigation, Physiologic Solutions, Ringer's Irrigation, Acetic Acid Irrigation, Glycine Irrigation, Sorbitol-Mannitol Irrigation, Flexible Containers and Pour Bottle Options.
The IV Solutions products include a broad portfolio of injection, irrigation, nutrition and specialty IV solutions including: • IV Therapy and Diluents, including Sodium Chloride, Dextrose, Balanced Electrolyte Solutions, Lactated Ringer's, Ringer's, Mannitol, Sodium Chloride/Dextrose and Sterile Water. • Irrigation, including Sodium Chloride Irrigation, Sterile Water Irrigation, Physiologic Solutions, Ringer's Irrigation, Acetic Acid Irrigation, Glycine Irrigation, Sorbitol-Mannitol Irrigation, Flexible Containers and Pour Bottle Options.
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).
A notified body would typically audit and examine a product’s technical dossiers and the manufacturer’s quality system (notified body must presume that quality systems which implement the relevant harmonized standards – which is ISO 13485:2016 for 8 Medical Devices Quality Management Systems – conform to these requirements).
Financial information relating to our reporting segment and primary product lines is set forth in Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report on Form 10-K, and is incorporated herein by reference. Manufacturing Facilities Our manufacturing facilities are concentrated in the United States, Costa Rica, Mexico, and Czech Republic.
Financial information relating to our reporting segment and primary product lines is set forth in Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report on Form 10-K. Manufacturing Facilities Our manufacturing facilities are concentrated in the United States, Costa Rica, Mexico, and Czech Republic.
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.
In 2025, 2024, and 2023, we had worldwide net sales to a single distributor of 18%, 18%, and 16% of consolidated net sales, respectively. Distribution 5 Our products are marketed and distributed in the U.S. and internationally to medical product manufacturers, independent distributors and directly to end users.
The pumps work with PlumSet™ dedicated IV sets that include an air trap to help minimize interruptions and a direct connection to the secondary line that eliminates the risk of setup errors and enables concurrent delivery of two compatible medications through a single line.
PlumSet™ dedicated IV sets include an air trap to help minimize interruptions and a direct connection to the secondary line that eliminates the risk of common setup errors and enables concurrent delivery of two compatible medications through a single line.
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.
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 offered on behalf of our joint venture; closed system transfer devices and pharmacy compounding systems; as well as a range of respiratory, anesthesia, patient monitoring, and temperature management products.
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.
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 $87.5 million in 2025, $88.6 million in 2024 and $85.3 million in 2023.
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 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").
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.
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. In the EU, there is currently no premarket government review of medical devices.
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.
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.
Our ability to compete in this market will depend on our ability to continue to make technological advances to our products, thereby increasing customer efficiency, and our ability to provide product support and successful customer training aimed at improving clinical decision-making that ultimately enhances patient safety and focuses on demonstrable patient outcomes.
Our primary competitors include Edwards Lifesciences, Belmont, Medical Technologies and Intersurgical plc. 12 Our ability to compete in this market will depend on our ability to continue to make technological advances to our products, thereby increasing customer efficiency, and our ability to provide product support and successful customer training aimed at improving clinical decision-making that ultimately enhances patient safety and focuses on demonstrable patient outcomes.
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.
In November 2024, we entered into a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc. (“OPF”), a global IV solutions manufacturing subsidiary of Otsuka Holdings Co., Ltd., to divest a controlling interest in our IV Solutions business.
The manufacturer may then apply the CE mark to the device, which allows the device to be placed on the market throughout the EU. 9 Throughout the process of the product authorization in accordance with the EU Medical Devices Directive, the manufacturer will be subject to, by the notified body, periodic surveillance audits and other certifications to verify continued compliance with the applicable requirements of the EU Medical Devices Directive.
Throughout the process of the product authorization in accordance with the EU Medical Devices Directive, the manufacturer will be subject to, by the notified body, periodic surveillance audits and other certifications to verify continued compliance with the applicable requirements of the EU Medical Devices Directive.
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.
At December 31, 2025, we had approximately 13,000 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 [4] and [5] to the Consolidated Financial Statements. Available Information Our website address is http://www.icumed.com.
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.
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.
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.
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. We are currently complying with the new regulations and working closely with our notified bodies.
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.
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 QMSR,.
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.
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. The manufacturer may then apply the CE mark to the device, which allows the device to be placed on the market throughout the EU.
Our ability to attract and retain talented individuals globally begins with our commitment to offer a career that gives people a unique opportunity to work in an exhilarating, fast-paced, inspiring, and collaborative environment where what they do makes a difference.
This includes designing our work environments intended to prioritize safety first, providing personal protective equipment and safety training beginning day one. 13 Our ability to attract and retain talented individuals globally begins with our commitment to offer a career that gives people a unique opportunity to work in an exhilarating, fast-paced, inspiring, and collaborative environment where what they do makes a difference.
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.
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.
The FDA, state, foreign agencies and ISO require manufacturers to register and subject manufacturers to periodic FDA, state, foreign agencies and notified bodies and ISO inspections and audits of their manufacturing facilities.
Manufacturing Regulation We must also comply with FDA and International Organization for Standardization ("ISO") governing medical device manufacturing practices. The FDA, state, foreign agencies and ISO require manufacturers to register and subject manufacturers to periodic FDA, state, foreign agencies and notified bodies and ISO inspections and audits of their manufacturing facilities.
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.
In addition, the FDA closely regulates the marketing, labeling, advertising and promotion of medical devices. A company can make only those claims relating to safety and efficacy, that are cleared or approved by the FDA and in accordance with the provisions of the authorized label.
Vital Care Our IV Solutions products are sold in the U.S. and Canada and compete in the U.S. with Baxter and B. Braun. Our other Vital Care products compete with numerous competitors due to our broad product portfolio. Our primary competitors include Edwards Lifesciences, Belmont and Intersurgical plc.
Vital Care The products that we sell and distribute on behalf of the joint venture are sold in the U.S. and Canada and compete in the U.S. with Baxter and B. Braun. Our other Vital Care products compete with numerous competitors due to our broad product portfolio.
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.
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.
IV Medication Safety Software: • ICU Medical MedNet™ software is an enterprise-class medication management platform that can help reduce medication errors, improve quality of care, streamline workflows and maximize revenue capture.
The system utilizes hybrid architecture that includes cloud-based functionality for remote access and on-premise system management providing security and control. 3 • ICU Medical MedNet™ software is an enterprise-class medication management platform that can help reduce medication errors, improve quality of care, streamline workflows and maximize revenue capture.
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.
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.
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.
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. IV Solutions On May 1, 2025, at the closing of our transaction with OPF, we transferred certain interests, including our IV Solutions product line, to OPF.
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.
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.
Manufacturers are also notably responsible for entering the necessary data on Eudamed, which includes the UDI database, and for keeping it up to date. The obligations for registration in Eudamed will become applicable at a later date (as Eudamed is not yet fully functional).
Manufacturers are also notably responsible for entering the necessary data on Eudamed, which includes the UDI database, and for keeping it up to date. The obligations for registration in Eudamed will become applicable on May 28, 2026 (for the four first modules related to (i) economic actor and (ii) UDI/devices registrations, (iii) notified bodies and certificates, and (iv) market surveillance).
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.
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. • PharmGuard™ medication safety software for Medfusion 4000 syringe and CADD-Solis™ pumps allows for customized drug libraries to support the standardization of protocols for medication administration throughout the facility.
Syringe Infusion Hardware: • Medfusion™ syringe infusion pumps are designed for the administration of fluids and medication to address the needs of the most vulnerable patients requiring precisely controlled infusion rates. Focused on delivery accuracy, the Medfusion 4000 can deliver from a comprehensive portfolio of syringes to meet syringe pump guidance to deliver medication from the smallest syringe size possible.
The Company has filed a 510(k) application for new clearance for a refreshed CADD™ infusion pump in July 2025. Syringe Infusion Hardware: • Medfusion™ syringe infusion pumps are designed for the administration of fluids and medication to address the needs of the most vulnerable patients requiring precisely controlled infusion rates.
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.
For instance, in December 2021, Regulation (EU) No 2021/2282 on Health Technology Assessment (“HTA”) amending Directive 2011/24/EU, was 11 adopted. The Regulation entered into force in January 2022 and has been applicable since January 2025, with phased implementation based on the type of product i.e., certain high-risk medical devices as of 2026.
On January 2, 2013, the American Taxpayer Relief Act of 2012, was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals. We cannot predict whether future healthcare initiatives will be implemented at the federal or state level or internationally, or the effect any future legislation or regulation will have on us.
On January 2, 2013, the American Taxpayer Relief Act of 2012, was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals. More recently, the One Big Beautiful Bill Act (“OBBBA”), which was enacted in July 2025, imposes significant reductions in the funding of the Medicaid program.
Removed
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.
Added
In April 2025, pursuant to the Agreement, ICU Medical Pearl LLC (n/k/a Otsuka ICU Medical LLC (the "joint venture")) was formed, and the assets, liabilities and operations comprising the IV Solutions product line were transferred to the joint venture.
Removed
The Plum Duo combines the award-winning legacy of Plum 360 with modern innovation, including a large touch screen and highly intuitive user interface to help guide users through programming, while streamlining complex tasks.
Added
In May 2025, upon the closing under the Agreement, we sold a 60% ownership interest in the joint venture to OPF and the Company retained a 40% ownership interest in the business. Pursuant to commercial agreements, a services agreement and a license agreement, we sell and distribute products to customers on behalf of the joint venture.
Removed
The system’s hybrid architecture provides cloud-based functionality to allowing access anywhere with on-premise management providing security and control. • PharmGuard™ medication safety software for Medfusion 4000 syringe and CADD-Solis™ pumps allows for customized drug libraries to support the standardization of protocols for medication administration throughout the facility.
Added
Our primary Infusion System products are: Large Volume Pump ("LVP") Hardware: • Plum Duo™ and Plum Solo™ precision infusion pumps (together, the "Plum precision pumps") are single-channel and dual-channel infusion pump systems that received FDA 510(k) clearance in April 2025.
Removed
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.
Added
The Plum precision pumps are designed to deliver compatible intravenous medications through a single or dual channel, with the dual channel configuration capable of delivering up to four compatible medications through a single pump. The Plum precision pumps are designed to provide delivery accuracy of ±3%, independent of medication bag, pump placement, or patient positioning.
Removed
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.
Added
The systems incorporate features to support clinic workflows, including reduced alarm and setup requirements and on-screen guidance.
Removed
Prior to beginning clinical trials of a drug product in the U.S., an IND must be submitted to the FDA. An IND is a request for authorization from the FDA to administer an investigational new drug product to humans. An IND must become effective before human clinical trials may begin.
Added
Combined with LifeShield™ IV safety software, Plum precision pumps are designed to support IV-EHR interoperability and provide a platform intended to support safety and efficiency across all intravenous medication delivery processes. • Plum 360™ infusion pumps feature the unique Plum cassette system that helps to enhance patient safety and workflow efficiency.
Removed
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.
Added
Focused on delivery accuracy, the Medfusion™ 4000 can deliver from a comprehensive portfolio of syringes to meet syringe pump guidance to deliver medication from the smallest syringe size possible. The Company has filed a 510(k) application for new clearances for the next generation MedFusion™ infusion pump in July 2025.
Removed
The NDA must include all relevant data available from preclinical and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling, among other things.
Added
IV Medication Safety Software: • LifeShield™ infusion safety software for Plum infusion pumps (Plum Solo, Plum Duo) is an enterprise-wide platform designed with the input of pharmacists, nurses and administrators. The software is designed to support intravenous medication management across health systems.
Removed
The submission of an NDA requires payment of a substantial application user fee to the FDA, unless a waiver or exemption applies.
Added
We sell and distribute IV Solutions products to customers on behalf of the joint venture pursuant to a commercial agreement.
Removed
After the FDA evaluates an NDA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will be produced and of select clinical trial sites, the FDA may issue an approval letter or a Complete Response Letter ("CRL"). An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.
Added
The FDA and other agencies actively enforce the 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.
Removed
A CRL will generally describe all of the deficiencies that the FDA has identified in the NDA. In issuing the CRL, the FDA may recommend actions that the applicant might take to place the NDA in condition for approval, including requests for additional information or clarification.
Added
Such reductions are expected to decrease the number of persons enrolled in Medicaid and reduce the services covered by Medicaid, which could adversely affect our sales of our products. We cannot predict whether future healthcare initiatives will be implemented at the federal or state level or internationally, or the effect any future legislation or regulation will have on us.
Removed
The FDA may delay or refuse approval of an NDA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product.
Removed
If regulatory approval of a drug is granted, such approval will be granted for particular indications and may include limitations on the indicated uses for which such drug may be marketed. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.
Removed
The FDA may also require one or more post-market studies and additional surveillance to further assess and monitor the drug’s safety and effectiveness after commercialization, and may limit further marketing of the drug based on the results of these post-marketing studies.
Removed
Any drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

108 edited+42 added−33 removed253 unchanged
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.
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; 34 • 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.
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.
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.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention, or seizure of our products; • customer notifications or repair, replacement or refunds; • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future 510(k) clearances, PMA approvals or foreign regulatory approvals of new products, new intended uses, or modifications to existing products; • withdrawals or suspensions of current 510(k) clearances or PMAs or foreign regulatory approvals, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention, or seizure of our products; • customer notifications or repair, replacement or refunds; • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future 510(k) clearances, PMA approvals or foreign regulatory approvals or certifications of new products, new intended uses, or modifications to existing products; • withdrawals or suspensions of current 510(k) clearances or PMAs or foreign regulatory approvals, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
Department of Health and Human Services' CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, anesthesiology assistants and certified nurse midwives, and teaching hospitals), and applicable manufacturers and GPOs, to report annually ownership and investment interests held by physicians and their immediate family members; • HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters.
Department of Health and Human Services' CMS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists, and certified nurse midwives, and teaching hospitals), and applicable manufacturers and GPOs, to report annually ownership and investment interests held by physicians and their immediate family members; • HIPAA, which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters.
For example, California enacted the California Consumer Privacy Act of 2018 (the "CCPA"), as amended by the California Privacy Rights Act (collectively, the CCPA) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information;, and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
For example, California enacted the California Consumer Privacy Act of 2018 (the "CCPA"), as amended by the California Privacy Rights Act (collectively, the CCPA) which requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information;, and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, require: additional testing prior to obtaining clearance, approval, or certification; changes to manufacturing methods; recall, replacement or discontinuance of our products; or additional record keeping.
We cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if promulgated, enacted or 24 adopted may have on our business in the future. Such changes could, among other things, require: additional testing prior to obtaining clearance, approval, or certification; changes to manufacturing methods; recall, replacement or discontinuance of our products; or additional record keeping.
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.
In accordance with its 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.
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.
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 22 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.
Due to the highly competitive nature of the group purchasing organizations ("GPOs") or integrated delivery networks ("IDNs") contracting processes, we may not be able to obtain or maintain contract positions with major GPOs and IDNs across our products portfolio. Furthermore, the increasing leverage of organized buying groups may reduce market prices for our products thereby affecting our profitability.
Due to the highly 14 competitive nature of the group purchasing organizations ("GPOs") or integrated delivery networks ("IDNs") contracting processes, we may not be able to obtain or maintain contract positions with major GPOs and IDNs across our products portfolio. Furthermore, the increasing leverage of organized buying groups may reduce market prices for our products thereby affecting our profitability.
We train our marketing personnel and direct sales force to not promote our products for uses outside of the FDA-cleared or approved indications for use, known as "off-label uses." We cannot, however, prevent a physician from using our products off-label, when in the physician's independent professional medical judgment he or she deems it appropriate.
We train our marketing personnel and direct sales force to not promote our products for uses 30 outside of the FDA-cleared or approved indications for use, known as "off-label uses." We cannot, however, prevent a physician from using our products off-label, when in the physician's independent professional medical judgment he or she deems it appropriate.
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.
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 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.
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.
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.
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.
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, 26 use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us.
The GDPR provides that EU and EEA member states may impose further obligations relating to the processing of genetic, biometric or health data, which could limit our ability to collect, use and share personal data, or could cause our compliance costs to increase, ultimately having an adverse impact on our business.
The GDPR provides that EU and EEA member states or the UK may impose further obligations relating to the processing of genetic, biometric or health data, which could limit our ability to collect, use and share personal data, or could cause our compliance costs to increase, ultimately having an adverse impact on our business.
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.
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.
Even if we successfully develop and commercialize enhanced or new products, they may be quickly rendered obsolete by competitors’ innovations, changing customer preferences, or changing industry or regulatory standards. Cost volatility or loss of supply of our raw materials could have an adverse effect on our profitability.
Even if we successfully develop and commercialize enhanced or new products, they may be quickly rendered obsolete by competitors’ innovations, changing customer preferences, or changing industry or regulatory standards. 15 Cost volatility or loss of supply of our raw materials could have an adverse effect on our profitability.
There can also be no assurance that our and our third-party service providers’, strategic partners’, contractors’, consultants’, CROs’ and collaborators’ cybersecurity risk management program and processes, including policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems, networks and Confidential Information.
There can also be no assurance that our and our third-party service providers’, strategic partners’, contractors’, consultants’, CROs’ and collaborators’ cybersecurity risk management program and processes, including policies, controls or 18 procedures, will be fully implemented, complied with or effective in protecting our systems, networks and Confidential Information.
In addition, we operate in various jurisdictions that have adopted or proposed laws and regulations related to sustainability and ESG reporting. For example, we and our subsidiaries may be subject to the European Union’s Corporate Sustainability Reporting Directive, which requires in scope entities to provide detailed reporting on various climate change and sustainability topics.
In addition, we operate in various jurisdictions that have adopted or proposed laws and regulations related to sustainability and ESG reporting. For example, we and our subsidiaries may be subject to the European Union’s Corporate Sustainability Reporting Directive ("CSRD"), which requires in-scope entities to provide detailed reporting on various climate change and sustainability topics.
Average review times at the FDA, other government agencies, foreign regulatory authorities and notified bodies have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Average review 17 times at the FDA, other government agencies, foreign regulatory authorities and notified bodies have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
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 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.
Additionally, if customers’ or suppliers’ operating and financial performance deteriorates, or if they are unable to make scheduled payments or obtain credit, customers may not be able to pay, or may delay payment of, accounts receivable owed to us and suppliers may impose different payment terms that are less favorable to us.
Additionally, if customers’ or suppliers’ operating and financial performance deteriorates, or if they are unable to make scheduled payments or obtain credit, customers may not be able to pay, or may delay payment of, accounts receivable owed to us and suppliers may impose different payment 16 terms that are less favorable to us.
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.
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 intend to continue to expand our marketing and distribution capability, which may include external expansion through acquisitions both in the U.S. and foreign markets. The expansion of our marketing, distribution and product offerings both internally and through acquisitions or by contract may place substantial burdens on our management resources and financial controls.
We intend to continue to expand our marketing and distribution capability, which may include external expansion through acquisitions both in the U.S. and foreign markets. The expansion of our marketing, distribution and product offerings both internally and through acquisitions or by 35 contract may place substantial burdens on our management resources and financial controls.
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.
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.
A decline in the value of the local currency in relation to the U.S. dollar has in prior years adversely affected and may in future years adversely affect their ability to profitably sell in their market the products they buy from us, and has in prior years adversely affected and may in future years adversely affect their ability to make payment to us for the products they purchase.
A decline in the value of the local currency in relation to the U.S. dollar has in prior years adversely affected and may in future years adversely affect 33 their ability to profitably sell in their market the products they buy from us, and has in prior years adversely affected and may in future years adversely affect their ability to make payment to us for the products they purchase.
Any inability of current and/or potential customers to pay us for our products or any demands by suppliers for different payment terms may adversely affect our earnings and cash flow. Continuing pressures to reduce healthcare costs and inadequate coverage and reimbursement may adversely affect our prices.
Any inability of current and/or potential customers to pay us for our products or any demands by suppliers for different payment terms may adversely affect our earnings and cash flow. Continuing pressures to reduce healthcare costs and inadequate coverage and reimbursement may adversely affect our prices and volume.
While we may from time to time engage in various initiatives (including but not limited to voluntary disclosures, policies or goals) to improve our ESG profile or respond to stakeholder expectations, we cannot guarantee that these initiatives will have the desired effect.
While we may from time to time engage in various initiatives (including but not limited to voluntary disclosures, policies or goals) to improve our ESG profile or respond to certain stakeholder expectations, we cannot guarantee that these initiatives will have the desired effect.
Payors continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and procedures. There can be no assurance that third-party payor policies will provide coverage for 18 procedures in which our products are used.
Payors continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and procedures. There can be no assurance that third-party payor policies will provide coverage for procedures in which our products are used.
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.
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. 25 The aforementioned EU rules are generally applicable in the EEA.
In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information, preclinical and clinical trial data, and personal information (collectively, “Confidential Information”) of customers 19 and our employees and contractors.
In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information, preclinical and clinical trial data, and personal information (collectively, “Confidential Information”) of customers and our employees and contractors.
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.
Compliance with these requirements is a prerequisite to be able to affix the European Conformity ("CE") mark to our products, without which they cannot be sold or marketed in the EU. See – Government Regulation.
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.
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.
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.
If we are not effective in addressing sustainability and ESG matters affecting our business, or setting and meeting relevant goals, our reputation and financial results may suffer.
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.
In the United States, we and some of our component manufacturers are required to comply with regulatory requirements known as the FDA's QMSR, 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.
Additionally, pursuant to the terms of the Agreement, we will not have sole decision-making authority with matters related to the Joint Venture, or have the ability exert control over the actions of Otsuka, which could result in impasses on decisions or decisions made by our partners, which we may be unable to resolve in a manner that will be favorable to us.
Additionally, pursuant to the terms of the Agreement, we do not have sole decision-making authority with matters related to the joint venture, or have the ability to control over the actions of Otsuka, which could result in impasses on decisions or decisions made by our partners, which we may be unable to resolve in a manner that will be favorable to us.
Increased tariffs could require us to increase our prices, which likely could decrease demand for our products, and in certain cases we may be unable to pass along increased costs to our customers if they are under long-term fixed price contracts. Additionally, we are subject to income taxes in the U.S. and numerous foreign jurisdictions.
Increased tariffs could require us to increase our prices, which likely could decrease demand for our products, and in many cases we may be unable to pass along increased costs to our customers if they are under long-term fixed price contracts. Additionally, we are subject to income taxes in the U.S. and numerous foreign jurisdictions.
Geographic Risks Significant changes in U.S. trade, tax or other policies that restrict imports or increase import tariffs for certain countries, particularly Mexico, can escalate trade wars and could have a meaningful adverse effect on our results of operations. A significant amount of our products are manufactured outside of the U.S.
Geographic Risks Significant changes in U.S. trade, tax or other policies that restrict imports or increase import tariffs for certain countries, particularly Mexico and Costa Rica, can escalate trade wars and could have a meaningful adverse effect on our results of operations. A significant amount of our products are manufactured outside of the U.S.
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.
Although these costs were less volatile in 2025 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.
A notified body would typically audit and examine a product's technical dossiers and the manufacturers' 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 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).
The credit agreement governing our Senior Secured Credit Facilities contains, among other things, certain customary restrictive covenants that limit our ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, make certain investments, pay dividends, enter into certain transactions with affiliates, and transfer or dispose of assets as well as financial covenants.
The credit agreement governing our New Credit Facilities contains, among other things, certain customary restrictive covenants that limit our ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, make certain investments, pay dividends, enter into certain transactions with affiliates, and transfer or dispose of assets as well as financial covenants.
Foreign Corrupt Practices Act and other worldwide anti-bribery laws. 34 The Foreign Corrupt Practices Act and anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business or other commercial advantage.
The Foreign Corrupt Practices Act and anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business or other commercial advantage.
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.
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 are 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.
We face exposure to adverse movements in foreign currency exchange rates due to our operations in foreign markets through our foreign subsidiaries and other international distributors. Our primary foreign currency exchange rate exposures are currently with the Euro, Mexican Peso, Canadian Dollar, Czech Koruna, Japanese Yen, Chinese Renminbi, and the Australian Dollar against the U.S. dollar.
We face exposure to adverse movements in foreign currency exchange rates due to our operations in foreign markets through our foreign subsidiaries and other international distributors. Our primary foreign currency exchange rate exposures are currently with the Euro, Mexican Peso, Canadian Dollar, Czech Koruna, Costa Rican Colon, Japanese Yen, Chinese Renminbi, and the Australian Dollar against the U.S. dollar.
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.
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 2026.
Transition impacts of climate-related events may subject us to increased regulations, reporting requirements, standards or expectations regarding the environmental impacts of our business. Any of such adverse impacts from these or other climate-related events may also adversely affect our reputation, business, or financial performance.
Transitions to address climate-related events may subject us to increased regulations, reporting requirements, standards or expectations regarding the environmental impacts of our business. Any of such adverse impacts from these or other climate-related events may also adversely affect our reputation, business, or financial performance.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques (including artificial intelligence) that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
In 2022, we acquired the Smiths Medical business, which includes syringe and ambulatory infusion devices, vascular access, and vital care products, but we have made and continue to make significant integration efforts to achieve the anticipated benefits. See “ The Smiths Medical acquisition completed in January 2022 has resulted in organizational changes and significant growth to our business.
In 2022, we acquired the Smiths Medical business, which includes syringe and ambulatory infusion devices, vascular access, and vital care products, but we have made and continue to make significant integration efforts to achieve the anticipated benefits. See “ The Smiths Medical acquisition completed in January 2022 has resulted in organizational changes and an increase in size to 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.
Disruptions at the FDA, other government agencies or notified bodies caused by funding shortages, policy changes, 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.
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.
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 70% of our outstanding shares at the end of 2025.
Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the European Economic Area, or the EEA, and the United States remains uncertain.
Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EEA, and the United States remains uncertain.
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.
For the years ended December 31, 2025 and 2024, business from a single distributor accounted for approximately 18% of our consolidated revenues. We may rely on one or more key distributors for a product, and the loss of these distributors could reduce our revenue.
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.
Sales to customers outside of the U.S. composed approximately 39% of our revenues in 2025 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.
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.
For the Smiths Medical acquisition, we 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.
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.
We may experience conflicting pressures 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.
Moreover, our Senior Secured Credit Facilities have certain restrictions that may limit how we operate our business, including our ability to engage in certain transactions and incur additional indebtedness, and our business may be materially and adversely affected if these restrictions prevent us from implementing our business plan.
Moreover, our New Credit Facilities (defined below) have certain restrictions that may limit how we operate our business, including our ability to engage in certain transactions and incur additional indebtedness, and our business may be materially and adversely affected if these restrictions prevent us from implementing our business plan.
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 . ” We have additional production facilities outside the U.S. to reduce labor costs.
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 . ” We have additional production facilities outside the U.S. to reduce labor costs.
As such, these restrictive covenants contained in our Senior Secured Credit Facility may restrict our ability to pursue our business strategies. Significant sales through distributors expose us to risks that could have a material effect on our results of operations.
As such, these restrictive covenants contained in our New Credit Facilities may restrict our ability to pursue our business strategies. Significant sales through distributors expose us to risks that could have a material effect on our results of operations.
Potential difficulties that may be encountered in the integration process include the following: • challenges in preserving important strategic customer and other third-party relationships of both businesses; • the diversion of management’s attention to integration matters; • challenges in maintaining employee morale and retaining or attracting key employees; • potential incompatibility of corporate cultures; • costs, delays and other difficulties consolidating corporate and administrative infrastructures and information systems and implementing common systems and procedures including, in particular, our internal controls over financial reporting; and • coordinating and integrating a geographically dispersed organization, including operations in jurisdictions we did not operate in prior to the Smiths Medical transaction.
Potential difficulties that may be encountered in the integration process include the following: • challenges in preserving important strategic customer and other third-party relationships of both businesses; • the diversion of management’s attention to integration matters; • costs, delays and other difficulties consolidating corporate and administrative infrastructures and information systems and implementing common systems and procedures including, in particular, our internal controls over financial reporting; and • coordinating and integrating a geographically dispersed organization, including operations in jurisdictions we did not operate in prior to the Smiths Medical transaction.
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.
As a result of entering into the amended credit facility, we incurred additional borrowing costs. At December 31, 2025, our long-term debt outstanding was $1.3 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.
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.
Risks Related to our Strategic Transactions If we fail to effectively complete the integration of our acquired businesses 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.
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 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 28 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.
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.
Additional compliance investment and potential business process changes may be required. Similar laws have passed in other states, 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.
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.
“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.
We may also be subject to the International Sustainability Standards Board’s sustainability and climate disclosure standards, to the extent adopted by jurisdictions in which we operate, among other regulations or requirements.
We may also be subject to the International Sustainability Standards Board’s sustainability and climate disclosure standards, to the extent adopted by jurisdictions in which we operate, among other regulations or requirements. We are assessing our reporting obligations in the jurisdictions where we operate.
The most significant potential impact to us is the additional tariffs on Mexican imports, which could result in a meaningful impact to our results of operations due to our manufacturing facilities in Mexico.
The most significant potential impact to us is the additional tariffs on Costa Rican and Mexican imports, which could result in a meaningful impact to our results of operations due to our manufacturing facilities in these countries.
Although we believe our manufacturing facilities and those of our critical component suppliers are in compliance with the QSR requirements, and with other applicable cGMPs for our products, we cannot provide assurance that any future inspection will not result in adverse findings.
Although we believe our manufacturing facilities are in compliance with the QMSR requirements, and with other applicable cGMPs for our products, we cannot provide assurance that any future inspection will not result in adverse findings.
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.
If we are unable to comply with QMSR 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.
Business and Operating Risks Damage to, or interruptions at, any of our manufacturing facilities or our suppliers' facilities could impair our ability to produce our products.
Damage to, or interruptions at, any of our manufacturing facilities or our suppliers' facilities could impair our ability to produce our products.
Such concerns may require us to conduct more operations from the U.S. rather than Mexico, which may negatively impact our operations and result in higher costs and inefficiencies. We could be adversely affected by violations of the U.S.
Such concerns may require us to conduct more operations from the U.S. rather than Mexico, which may negatively impact our operations and result in higher costs and inefficiencies. We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and other worldwide anti-bribery laws.
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.
As the regulatory guidance and enforcement landscape in relation to data transfers continue to develop, 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 operate our business, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.
We are subject to the FDA's medical device reporting regulations and similar foreign regulations, which require us to report to the FDA and foreign regulatory authorities when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury.
The discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on us. 31 We are subject to the FDA's medical device reporting regulations and similar foreign regulations, which require us to report to the FDA and foreign regulatory authorities when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury.
California’s Climate Corporate Data Accountability Act, Climate-Related Financial Risk Act, both of which are being challenged in federal courts, and Voluntary Carbon Market Disclosures Act would require third-party assurance of greenhouse gas emissions information for certain entities, climate-related financial risk reporting and disclosures regarding carbon reduction claims.
Similarly, California’s Climate Corporate Data Accountability Act ("SB 253"), Climate-Related Financial Risk Act ("SB 261"), both of which are being challenged in federal courts, and Voluntary Carbon Market Disclosures Act would respectively require third-party assurance of greenhouse gas emissions information for certain entities, climate-related financial risk reporting and disclosures regarding carbon reduction claims. On November 18, 2025, the U.S.
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.
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.
The failure to complete this transaction or, if completed, for the Joint Venture to meet our performance and financial expectations could adversely impact our ability to meet internal forecasts and expectations.
The failure for the joint venture to meet our performance and financial expectations could adversely impact our ability to meet internal forecasts and expectations.
In addition to fines, a breach of the GDPR may result in regulatory investigations, reputational damage, orders to cease/ change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/ or civil claims (including class actions).
Fines for non-compliance with the GDPR are significant - the greater of €20 million/£17.5 million or 4% of global turnover. In addition to fines, a breach of the GDPR may result in regulatory investigations, reputational damage, orders to cease/ change our data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/ or civil claims (including class actions).
Non-compliance with the above requirements including as determined by a notified body would also prevent us from selling our products in these geographies. The rules applicable in Great Britain differ from the EEA as a result of Brexit.
Non-compliance with the above requirements including as determined by a notified body would also prevent us from selling our products in these geographies.
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. 17 Global macroeconomic conditions and geopolitical tensions and resulting impacts therefrom, for example, heightened inflation, higher interest rates and capital costs, and currency rate fluctuations have resulted in, and may continue to result in, increased raw material costs, higher shipping costs, higher labor costs, and global supply chain disruptions.
Global macroeconomic conditions and geopolitical tensions and resulting impacts therefrom, for example, heightened inflation, higher interest rates and capital costs, and currency rate fluctuations have resulted in, and may continue to result in, increased raw material costs, higher shipping costs, higher labor costs, and global supply chain disruptions.
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.
If we or our comp onent manufacturers fail to comply with the FDA's Quality Management 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.
The QSR applies to the manufacture of medical device components and finished medical devices. The FDA audits compliance with these regulatory requirements through periodic announced and unannounced inspections of manufacturing and other facilities. The FDA may conduct inspections or audits at any time, and we and some of our component suppliers are subject to such inspections.
The FDA audits compliance with these regulatory requirements through periodic announced and unannounced inspections of manufacturing and other facilities. The FDA may conduct inspections or audits at any time, and we are subject to such inspections.
FDA regulatory processes are time consuming and expensive. Uncertainties as to the time required to obtain FDA clearances or approvals could adversely affect the timing and expense of new product introductions. The regulations to which we are subject are complex and have tended to become more stringent over time.
FDA regulatory processes are time consuming and expensive. Uncertainties as to the time required to obtain FDA clearances or approvals could adversely affect the timing and expense of new product introductions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our Audit Committee discusses the potential impact of cybersecurity risks on our financial condition, results of operations or our reputation. Our Audit Committee periodically reports to the Board regarding its activities, including those related to cybersecurity. The Board also periodically receives briefings from management on our cyber risk management program.
Our Audit Committee discusses the potential impact of cybersecurity risks on our financial condition, results of operations or our reputation. Our Audit Committee also periodically reports to the Board regarding its activities, including those related to cybersecurity. The full Board also periodically receives briefings from management on our cyber risk management program.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business 37 strategy, results of operations, or financial condition.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program is integrated into our overall risk management program, and shares common methodologies, reporting channels and governance processes that apply across the risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Board members receive periodic presentations on cybersecurity topics from our CISO, internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies.
Board members receive periodic presentations on cybersecurity topics from our CIO, internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
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.
Our ISC is responsible for the regular oversight of cybersecurity 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 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.
Our ISC members includes, among others, 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 cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • evaluations of our readiness to assess, respond and, as applicable, recover from potential cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity training to educate our employees (including senior management and incident response personnel), consultants, and other users about their individual responsibilities regarding protecting our IT systems and data; • a third-party risk management process for service providers, suppliers and vendors who have access to our critical systems and information.
Key elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; • evaluations of our readiness to assess, respond and, as applicable, recover from potential cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity training to educate our employees (including senior management and incident response personnel), consultants, and other users about their individual responsibilities regarding protecting our IT systems and data; • a third-party risk management process for key service providers, based on our assessment of their criticality to our operations and respective risk profile.
For more information, see the section titled “Risk Factor—Market and Other External Risks— 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.” Cybersecurity Governance Our cybersecurity risk management program is led by our Chief Information Officer (“CIO”) through our Information Security Committee (“ISC”), which includes a cross-functional group of senior leaders who are responsible for the dissemination and promotion of our cybersecurity strategy, implementation of cybersecurity objectives and top-down communication and monitoring of the risk management program as described above.
For more information, see the section titled “Risk Factor—Market and Other External Risks— 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.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit and Compliance Committee ("Audit Committee") oversight of cybersecurity, including management’s implementation of our cybersecurity risk management program.
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.
On a quarterly basis, our Audit Committee receives updates from our Chief Information Officer ("CIO") with respect to the status of our cybersecurity initiatives to strengthen our cybersecurity risk management. In addition, our CIO updates the Audit Committee, where it deems appropriate, regarding cybersecurity incidents it considers to be significant or potentially significant.
Removed
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks. Our Audit Committee oversees management’s implementation of our cybersecurity risk management program.
Added
We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition.
Added
Our cybersecurity risk management program is led by our CIO through our Information Security Committee (“ISC”), which includes a cross-functional group of senior leaders who are responsible for the dissemination and promotion of our cybersecurity strategy, implementation of cybersecurity objectives and top-down communication and monitoring of the risk management program as described above.
Added
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include: briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.

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, 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.
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, 2025, are as follows: 38 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 Rydalmere, NSW Australia 14,735 Corporate Offices/Device Service Center Leased Chennai, India 30,838 R&D Leased Plymouth, Minnesota, U.S. 19,847 Corporate Offices Leased Kent, United Kingdom 11,100 Corporate Offices Leased Grasbrunn, Germany 38,155 Corporate Offices/Device Service Center Leased 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 Leased Oakdale, Minnesota, U.S. 93,648 Warehouse/Device Service Center - Idle Leased 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 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 16. Commitments and Contingencies to the Consolidated Financial Statements, and is incorporated herein by reference. 40
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.

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 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.
Issuer Purchases of Equity Securities The following is a summary of our stock repurchasing activity during the fourth quarter of 2025: 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) 10/01/2025 - 10/31/2025 — $ — — $ 100,000,000 11/01/2025 - 11/30/2025 — $ — — $ 100,000,000 12/01/2025 - 12/31/2025 — $ — — $ 100,000,000 Fourth quarter 2025 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.
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 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, 2026, we had 31 stockholders of record.
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.
Purchases made under our stock purchase program can be discontinued at any time we determine additional purchases are not warranted. 40 COMPARISON OF CUMULATIVE TOTAL RETURN FROM DECEMBER 31, 2020 TO DECEMBER 31, 2025 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, 2020 to December 31, 2025 and the total returns of 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.
Index and NASDAQ Medical Supplies Index for the same period. 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 ICU Medical, Inc. 100.00 110.65 73.42 46.50 72.34 66.52 Nasdaq U.S. Index 100.00 125.89 101.05 127.76 159.03 186.96 Nasdaq Medical Supplies Index 100.00 120.03 78.70 83.26 75.71 67.95 Assumes $100 invested on December 31, 2020 in ICU Medical Inc.’s common stock, the NASDAQ U.S.

Item 7. Management's Discussion & Analysis

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

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We can experience fluctuations in net sales as a result of variations in the ordering patterns of our largest customers, which may be driven more by production scheduling and customer inventory levels, and less by seasonality.
We can experience fluctuations in net sales as a result of variations in the ordering patterns of our largest customers, which may be driven more by customer inventory levels and production scheduling, and less by seasonality.
The presentation of revenues on a constant currency basis is a non-GAAP financial measure that excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods. We provide constant currency information to enhance the visibility of underlying business trends, excluding the effects of changes in foreign currency translation rates.
The presentation of revenues on a constant currency basis is a non-GAAP financial 43 measure that excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods. We provide constant currency information to enhance the visibility of underlying business trends, excluding the effects of changes in foreign currency translation rates.
Rebates are offered on both a fixed and tiered/variable basis. In both cases, 54 we use information available at the time, including current contractual requirements, our historical experience with each customer and forecasted customer purchasing patterns, to estimate the most likely rebate amount.
Rebates are offered on both a fixed and tiered/variable basis. In both cases, we use information available at the time, including current contractual requirements, our historical experience with each customer and forecasted customer purchasing patterns, to estimate the most likely rebate amount.
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 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.
If actual collection losses exceed expectations, we could be required to accrue additional bad debt expense, which could have an adverse effect on our operating results in the period in which the accrual occurs.
If actual collection losses exceed expectations, we could be required to accrue additional bad debt expense, which could have an adverse effect on our operating results in the period in which the accrual occurs. 55
The effective tax rate in 2023 included a tax benefit of $9.6 million primarily related to unrecognized tax benefits released as a result of the expiration of the statute of limitations.
The effective tax 48 rate in 2023 included a tax benefit of $9.6 million primarily related to unrecognized tax benefits released as a result of the expiration of the statute of limitations.
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.
Change in fair value of contingent earn-out 46 In 2024, the fair value revaluation of our contingent earn-outs resulted in a decrease in value of $5.4 million.
The increase in accounts receivable was primarily due to the amount and timing of revenues and we sold less receivables under our accounts receivable purchase program with BMO as we did not utilize the program during the fourth quarter of 2024 (see Note 18: Accounts Receivable Purchase Program).
The increase in accounts receivable was primarily due to the amount and timing of revenues and we sold less receivables under our accounts receivable purchase program with BMO as we did not utilize the program during the fourth quarter of 2024 (see Note 16: 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.
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 16: Accounts Receivable Purchase Program). The decrease in prepaid expenses and other current assets was primarily attributable to insurance, property taxes, and prepaid vendor expenses.
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).
This plan has no expiration date. As of December 31, 2025, 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 12: Long-Term Obligations in our accompanying consolidated financial statements).
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.
The following table sets forth, for the periods indicated, total revenue by product line as a percentage of total revenue: Year Ended December 31, Product line 2025 2024 2023 Consumables 50 % 44 % 43 % Infusion Systems 31 % 27 % 28 % Vital Care 19 % 29 % 29 % 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.
Our product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, peripheral IV 42 catheters, 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 product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, and peripheral IV catheters; closed system transfer devices and pharmacy compounding systems; as well as a range of respiratory, anesthesia, 41 patient monitoring, and temperature management products.
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.
("BMO") (see Note 16: Accounts Receivable Purchase Program). 47 In 2023, other miscellaneous (expense) income, net primarily includes $3.7 million in fees related to our accounts receivable purchase program (see Note 16: Accounts Receivable Purchase Program) mostly offset by a business interruption gain recognized upon receipt of insurance proceeds.
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.
Consolidated Results of Operations 42 We present our consolidated statements of operations for each of the three years ended December 31, 2025, 2024 and 2023 in Item 8. Financial Statements and Supplementary Data.
Strategic Transaction and Integration Expenses In 2024, we incurred $40.2 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 2024, we incurred $40.2 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.
Additionally, the effective tax rate 2023 included the tax impact of the revaluation of contingent consideration of $16.2 million.
Lastly, the effective tax rate 2023 included the tax impact of the revaluation of contingent consideration of $16.2 million.
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.
The proceeds of future borrowings under the Revolving Credit Facility, which expires in October 2030, 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, 2025.
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.
We believe that our existing cash and cash equivalents along with cash flows expected to be generated from future operations, the funds received and accessible under the New Credit Facilities and funds received under the accounts receivable program will provide us with sufficient liquidity to finance our cash requirements for the next twelve months and the foreseeable future.
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.
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. 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 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.
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 2025 2024 2023 Total revenues 100 % 100 % 100 % Gross profit 37 % 35 % 33 % Selling, general and administrative expenses 28 % 27 % 27 % Research and development expenses 4 % 4 % 4 % Restructuring, strategic transaction and integration expenses 3 % 3 % 2 % Change in fair value of contingent earn-out — % — % (1) % Total operating expenses 35 % 34 % 32 % Income from operations 2 % 1 % 1 % Interest expense, net (4) % (4) % (4) % Other expense, net — % (1) % — % Gain on sale of business 2 % — % — % Income (Loss) before income taxes and equity in losses of unconsolidated affiliates — % (4) % (3) % (Provision) benefit for income taxes — % 2 % (2) % Net income (loss) from consolidated affiliates — % (6) % (1) % Equity in losses of unconsolidated affiliates — % — % — % Net income (loss) — % (6) % (1) % Total revenues were $2.2 billion, $2.4 billion and $2.3 billion for 2025, 2024 and 2023, respectively.
Interest payments on the term loans were estimated using an Adjusted Term SOFR rate and an applicable margin on of 2.00% for term loan A and 2.50% for term loan B and the revolver commitment fees were estimated using a rate of 0.30%.
Interest payments on the term loans were estimated using an Adjusted Term SOFR rate and an applicable margin on of 1.75% for term loan A and 2.25% for term loan B and the revolver commitment fees were estimated using a rate of 0.25%.
Gross Margins Gross margins were 34.6%, 32.8% and 30.6% for 2024, 2023 and 2022, respectively. 45 The increase in gross margin in 2024, as compared to 2023, was primarily driven by lower supply chain costs due to synergies and freight rates, price increases, reduced spend on quality remediation activities and the impact of foreign exchange rate changes which was partially offset by lower manufacturing absorption and higher inventory write-offs.
The increase in gross margin in 2024, as compared to 2023, was primarily driven by lower supply chain costs due to synergies and freight rates, price increases, reduced spend on quality remediation activities and the impact of foreign exchange rate changes which was partially offset by lower manufacturing absorption and higher inventory write-offs.
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.
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. We experienced increased demand for our IV Solutions product lines in the fourth quarter of 2024.
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.
Consumables The following table summarizes our total Consumables revenue (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2025 2024 2023 2025 over 2024 2024 over 2023 Consumables revenue (GAAP) $ 1,109.2 $ 1,038.9 $ 969.1 $ 70.3 6.8 % $ 69.8 7.2 % Impact of foreign exchange rate changes (6.6) 2.8 Consumables revenue on a constant currency basis (non-GAAP) $ 1,102.6 $ 1,041.7 $ Change in constant currency $ 63.7 $ 72.6 % Change in constant currency 6.1 % 7.5 % Consumables revenue increased in 2025, as compared to 2024, primarily due to new customer installations and increased demand for our Infusion Consumables, Oncology, and Tracheostomy product lines.
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.
The interest expense increased in 2024, as compared to 2023, primarily due to amortization of certain swaps. Interest income in all years was related to interest earned on interest-bearing securities and cash holdings.
Due to the weight of objectively verifiable negative evidence, the Company recorded a valuation allowance of $81.7 million tax expense and $3.9 million foreign currency translation and derivative instrument adjustments against certain U.S. federal and state deferred tax assets for the tax years ending December 31, 2024.
Due to the weight of objectively verifiable negative evidence, the Company recorded a change to the valuation allowance against certain U.S. federal and state deferred tax assets, resulting in a $8.7 million tax expense and $2.8 million foreign currency translation and derivative instrument adjustments, for the tax years ending December 31, 2025.
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 outstanding aggregate principal amount of the term loans is $1.3 billion as of December 31, 2025, which includes the Term Loan A that will mature in October 2030 and the Term Loan B that will mature in January 2029.
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.
Sources of Liquidity Our current primary sources of liquidity are cash and cash equivalents, cash flows from our operations including access to borrowing arrangements and cash flows from our accounts receivable purchase program. Funds generated from operations are held in cash and cash equivalents.
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).
Interest expense, net The following table presents interest expense, net (in thousands): Year ended December 31, 2025 2024 2023 Interest expense $ (93,338) $ (106,541) $ (102,727) Interest income $ 10,307 $ 10,788 $ 7,508 Interest expense, net $ (83,031) $ (95,753) $ (95,219) In 2025, 2024 and 2023, interest expense primarily includes the contractual interest incurred on borrowings under the Credit Agreement, as defined below, the per annum commitment fee charged on the available amount of the revolving credit facility contained in the Credit Agreement, the amortization of debt issuance costs incurred in connection with entering into the Credit Agreement (see Note 12: Long-Term Obligations in our accompanying consolidated financial statements) offset by the impact of the interest rate swaps (see Note 8: Derivatives and Hedging in our accompanying consolidated financial statements) and interest income.
The effective tax rate in 2022 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, state income taxes, section 162(m) excess compensation, FDII, global intangible low-taxed income ("GILTI") and tax credits.
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, FDII, and tax credits.
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.
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 9: Fair Value Measurements). 53 (7) In 2025, our employees surrendered 61,693 shares of our common stock from vested restricted stock awards as consideration for approximately $8.8 million in minimum statutory withholding obligations paid on their behalf.
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.
While we can provide no assurances, we estimate that our capital expenditures in 2026 will be in the range of $85 million to $100 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.
We reversed approximately $1.0 million in accrued restructuring balances related to severance and facility closure costs that will not be utilized.
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.
Infusion Systems The following table summarizes our total Infusion Systems revenue (in millions, except percentages): Year Ended December 31, $ change % change $ change % change 2025 2024 2023 2025 over 2024 2024 over 2023 Infusion Systems (GAAP) $ 684.2 $ 652.4 $ 629.0 $ 31.8 4.9 % $ 23.4 3.7 % Impact of foreign exchange rate changes (1.3) 20.3 Infusion Systems on a constant currency basis (non-GAAP) $ 682.9 $ 672.7 $ Change in constant currency $ 30.5 $ 43.7 % Change in constant currency 4.7 % 6.9 % Infusion Systems revenue increased in 2025, as compared to 2024, primarily due to increased sales of LVP 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 46 fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs incurred in our 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 2024, as compared to 2023, primarily due to higher headcount and employment expense in support of ongoing R&D projects.
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.
For more information regarding our operating lease obligations, see Note 6: Leases in our accompanying consolidated financial statements. Long-term Debt Obligations In January 2022, we incurred borrowings under the Senior Secured Credit Facilities to finance the Smiths Medical acquisition.
As of December 31, 2024, Smiths had sold all of its ownership interest in ICU Medical shares. Smiths no longer holds the shares necessary to meet the minimum beneficial ownership percentage required to earn the contingent earn-out. In 2023, the fair value revaluation of our contingent earn-outs resulted in a decrease in value of $16.2 million.
As of December 31, 2024, Smiths had sold all of its ownership interest in ICU Medical shares. Smiths no longer holds the shares necessary to meet the minimum beneficial ownership percentage required to earn the contingent earn-out.
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.
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.
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.
Other expense, net The following table presents other expense, net (in thousands): Year ended December 31, 2025 2024 2023 Foreign exchange gains (losses), net $ 3,786 $ (9,792) $ (5,918) Loss on disposition of assets (4,366) (1,608) (153) Other miscellaneous income (expense) , net 348 (1,823) 166 Other expense, net $ (232) $ (13,223) $ (5,905) The foreign exchange gains, net in 2025 were primarily related to the weakening of the U.S. dollar relative to certain foreign currencies, including the Euro and British Pound, partially offset by the weakening of the U.S. dollar relative to the Mexican Peso.
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.
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 2025 2024 2023 2025 over 2024 2024 over 2023 R&D $ 87.5 $ 88.6 $ 85.3 $ (1.1) (1.2) % $ 3.3 3.9 % R&D expenses slightly decreased in 2025, as compared to 2024, primarily due to lower headcount and employment expense that support ongoing R&D projects.
Since its enactment, the legislation has been subject to appeals in the Italian court system. In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the IMDP. However, litigation proceedings are still pending and the ultimate resolution remains unknown.
Since its enactment, the legislation has been subject to appeals in the Italian court system. In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the IMDP.
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).
Specifically, we were required to maintain a Senior Secured Leverage Ratio of no more than 4.00 to 1.00 and an Interest Coverage Ratio of no less than 3.00 to 1.00 (defined and discussed in greater detail in Note 12: Long-Term Obligations to our accompanying consolidated financial statements). We were in compliance with these financial covenants as of December 31, 2025.
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.
The net changes in income taxes was a result of the timing of payments, recording of the current deferred provision, and valuation allowance. Our cash provided by operations was $204.0 million in 2024.
Historically, our estimates, assumptions and judgments relative to our critical accounting policies have not differed materially from actual results. 53 Revenue recognition We recognize revenues when we transfer control of promised goods to our customers, which for the majority of our sales of products sold on a standalone basis to our distributors and end customers for direct sales, is deemed to be at point of shipment.
Revenue recognition We recognize revenues when we transfer control of promised goods to our customers, which for the majority of our sales of products sold on a standalone basis to our distributors and end customers for direct sales, is deemed to be at point of shipment.
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.
Cash Flows from Investing Activities The following table summarizes the changes in our investing cash flows (in thousands): 52 For the Years Ended December 31, Variance 2025 2024 2023 2025 2024 Investing Cash Flows: Purchases of property, plant and equipment $ (88,043) $ (79,373) $ (83,893) $ (8,670) $ 4,520 (1) Proceeds from sale of business 211,185 — — 211,185 — (2) Proceeds from sale of assets 8,059 746 1,501 7,313 (755) (3) Intangible asset additions (8,972) (10,833) (9,777) 1,861 (1,056) Proceeds from sale of investment securities — 500 4,222 (500) (3,722) (4) Net cash provided by (used in) investing activities $ 122,229 $ (88,960) $ (87,947) $ 211,189 $ (1,013) __________________________ (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.
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.
During 2025, our cash and cash equivalents and short-term investment securities decreased by $0.6 million from $308.6 million at December 31, 2024 to $308.0 million at December 31, 2025.
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 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 12: Long-Term Obligations in our accompanying consolidated financial statements for pricing grids related to the New Credit Facilities). Fiscal 2025 Principal Pre-Payments In 2025, we made total prepayments of $290.0 million.
We believe that the estimates, assumptions and judgments involved in the accounting for revenue recognition, accounts receivable, and business combinations have the most potential impact on our consolidated financial statements.
We believe that the estimates, assumptions and judgments involved in the accounting for revenue recognition, and accounts receivable have the most potential impact on our consolidated financial statements. Historically, our estimates, assumptions and judgments relative to our critical accounting policies have not differed materially from actual results.
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).
Cash Flows from Financing Activities The following table summarizes the changes in our financing cash flows (in thousands): For the Years Ended December 31, Variance 2025 2024 2023 2025 2024 Financing Cash Flows: Proceeds from issuance of long-term debt $ 313 $ — $ — $ 313 $ — (1) Payments of lender debt issuance costs (2,825) — — $ (2,825) $ — (2) Principal payments on long-term debt (302,750) (51,000) (29,688) (251,750) (21,312) (3) Payment of third-party debt issuance costs (1,555) — — (1,555) — (4) Proceeds from exercise of stock options 6,106 10,939 4,022 (4,833) 6,917 (5) Payments on finance leases (2,048) (1,147) (963) (901) (184) Payment of contingent earn-out — (2,600) — 2,600 (2,600) (6) Tax withholding payments related to net share settlement of equity awards (8,766) (11,992) (9,350) 3,226 (2,642) (7) Net cash used in financing activities $ (311,525) $ (55,800) $ (35,979) $ (255,725) $ (19,821) __________________________ (1) During 2025, we refinanced the existing Term Loan A and the existing Revolving Credit Facility (see Note 12: Long-Term Obligations to our accompanying consolidated financial statements for additional information).
Historical Cash Flows Cash Flows from Operating Activities Our cash provided by operations was $204.0 million in 2024. The changes in operating assets and liabilities included a $46.8 million increase in accounts receivable, a $23.2 million increase in other assets, and $8.8 million increase in prepaid expenses and other current assets.
The changes in operating assets and liabilities included a $46.8 million increase in accounts receivable, a $23.2 million increase in other assets, and $8.8 million increase in prepaid expenses and other current 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.
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.
Determining the appropriate chargeback reserve requires judgment around the following assumptions: (i) The estimated chargeback amount (the difference between the price we invoice the distributor and the contractually agreed price with specified end customers); and (ii) The estimated period of time between the sale to the distributor and the receipt of a chargeback claim.
Determining the appropriate chargeback reserve requires judgment around the following assumptions: (i) The estimated chargeback amount (the difference between the price we invoice the distributor and the contractually agreed price with specified end customers); and (ii) The estimated period of time between the sale to the distributor and the receipt of a chargeback claim. 54 For purposes of estimating the expected chargeback amount, we utilize actual recent historical chargebacks paid to the specific distributor for similar products as determined at either a product or product-family level.
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.
Strategic Transaction and Integration Expenses In 2025 we incurred $36.5 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, and transaction costs related to the sale of a 60% interest of our IV Solutions business in the second quarter of 2025.
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.
Amounts of spending are estimates and actual spending may substantially differ from those amounts. Contractual Obligations Our principal commitments at December 31, 2025 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.
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.
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 2025 2024 2023 2025 over 2024 2024 over 2023 SG&A $ 625.2 $ 638.8 $ 606.7 $ (13.6) (2.1) % $ 32.1 5.3 % Consolidated SG&A expenses decreased in 2025, as compared to 2024, primarily due to a decrease of $9.8 million in depreciation and amortization, $5.9 million in bad debt and warranty expense, and $5.5 million in compensation costs which when combined with other smaller category decreases, were partially offset by an increase of $8.3 million in stock based compensation and $4.9 million in professional services.
The foreign exchange losses in 2023 were primarily related to the devaluation of the Argentine peso during the fourth quarter of 2023. In 2024, other miscellaneous (expense) income, net primarily includes $2.6 million in fees associated with our accounts receivable purchase program with BMO Bank N.A. ("BMO") (see Note: 18 Accounts Receivable Purchase Program).
In 2024, other miscellaneous (expense) income, net primarily includes $2.6 million in fees associated with our accounts receivable purchase program with BMO Bank N.A.
The primary drivers for the net decrease in accrued liabilities was primarily due to the payout of annual bonuses and decrease in deferred revenue. The net changes in income taxes was a result of recording the current deferred provision and the timing of payments.
The net changes in income taxes was a result of recording the current deferred provision and the timing of payments.
Infusion Systems revenue increased in 2023, as compared to 2022, primarily due to higher sales of our syringe pumps and LVP dedicated sets.
Infusion Systems revenue increased in 2024, as compared to 2023, primarily due to increased sales of LVP dedicated sets on a larger installed base, as well as growth in our ambulatory hardware and dedicated sets.
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.
Restructuring Charges In 2025, we incurred restructuring charges of $30.0 million primarily related to facility closure costs and severance costs. 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.
The Credit Agreement provides for a five-year term loan A facility of $850.0 million (the "Term Loan A"), a seven-year term loan B facility of $850.0 million (the "Term Loan B") and a five-year revolving credit facility of $500.0 million (the "Revolving Credit Facility") (collectively, the "Senior Secured Credit Facilities").
The Amended Credit Agreement includes new credit facilities (the "New Credit Facilities") that consists of a $750.0 million senior secured Term Loan A and a new $500.0 million revolving credit facility (the "New Revolving Facility").
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.
Vital Care The following table summarizes our total Vital Care revenue (in millions, except percentages): 44 Year Ended December 31, $ change % change $ change % change 2025 2024 2023 2025 over 2024 2024 over 2023 Vital Care (GAAP) $ 437.9 $ 690.7 $ 661.0 $ (252.8) (36.6) % $ 29.7 4.5 % Impact of foreign exchange rate changes (1.8) 2.9 Vital Care on a constant currency basis (non-GAAP) $ 436.1 $ 693.6 $ Change in constant currency $ (254.6) $ 32.6 % Change in constant currency (36.9) % 4.9 % Vital Care revenue decreased in 2025, as compared to 2024, primarily due to lower IV Solutions sales of $213.9 million as a result of the sale of a controlling ownership interest in our IV Solutions business on May 1, 2025 (see Note 3: Assets Held For Sale and Disposal of Business to our accompanying consolidated financial statements).
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.
The Pillar Two legislation has been effective since our fiscal year beginning January 1, 2024. For fiscal year 2025, we considered the impact of Pillar Two in our tax provision and effective tax rate.
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.
The majority of our global revenues are from products manufactured in our Costa Rica and Mexico manufacturing facilities and imported into the U.S. Currently the vast majority of products manufactured in our Mexico facilities are exempted from tariffs under the United States-Mexico-Canada Agreement ("USMCA").
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.
However, the Pillar Two rules continue to evolve and their application may alter our tax obligations in certain countries where we operate for fiscal periods beyond 2025 as we continue to assess the impact of tax legislation in these jurisdictions.
The changes in operating assets and liabilities included a $201.1 million increase in inventories, a $21.3 million increase in other assets, a $55.8 million decrease in accrued liabilities, $66.7 million in net changes in income taxes, including excess tax benefits and deferred income taxes, and a $19.2 million increase in accounts receivable.
Offsetting these amounts was a $26.3 million increase in inventories, a $11.0 million increase in prepaid expenses and other current assets, a $7.0 million increase in other assets, $37.0 million decrease in accrued liabilities, and $24.8 million in net changes in income taxes, including excess tax benefits and deferred income taxes.
The proceeds are net of $37.8 million in payments of lender debt issuance costs. (2) Relates to scheduled principal payments on the Senior Secured Credit Facilities. (3) Relates to third-party debt issuance costs in connection with entering into the Senior Secured Credit Facilities.
The proceeds represent the incremental borrowings resulting from the refinancing. (2) Relates to lender debt issuance costs in connection with entering into New Credit Facilities. (3) Relates to scheduled principal payments and prepayments on the Senior Secured Credit Facilities. In March 2025, we prepaid $35.0 million on our Term Loan B.
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.
In January 2023, we entered into a receivables purchase agreement with Bank of the West, which was subsequently acquired by BMO Bank, N.A. ("BMO") in February 2023. This agreement accelerates our access to capital, which we utilize on an as needed basis (see Note 16: Accounts Receivable Purchase Program).
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.
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- Positive 49 These credit ratings are not a recommendation by the rating agency to buy, sell, or hold our securities, are subject to revision or withdrawal at any time by the rating agency and should be evaluated independently of any other credit rating we may receive.
(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.
(6) During the first quarter of 2024, we paid $3.4 million in cash related to the settlement of a contingent earn-out to one of our international distributors.
The increase in accounts payable was due to the timing of payments.
The decrease in accounts receivable was primarily due to the amount and timing of revenue. The increase in accounts payable was due to the timing of payments. The increase in inventory was primarily to build inventory safety stock levels and the impact of the capitalization of tariffs.
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.
Other Future Capital Investments In connection with the January 2022 acquisition of Smiths Medical, we estimate the investment needed in 2026 for restructuring and integration expenses along with spending to support quality systems and quality compliance objectives to be in the range of $60 million to $80 million, which includes acquired accrued field action liabilities.
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 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.
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. Restructuring, Strategic Transaction and Integration Expenses Restructuring, strategic transaction and integration expenses were $66.5 million, $59.8 million and $41.3 million in 2025, 2024 and 2023, respectively.
The principal repayment obligations and estimated interest payments on the term loans and estimated commitment fee payments on the revolver are estimated in the table below.
Due to these prepayments, there is no principal payments due on Term Loan B until 2029. The principal repayment obligations, estimated interest payments and revolver commitment fee payments are estimated in the below table. We expect to fund these obligations with our existing cash and cash equivalents and cash generated from our future operations.
Offsetting these amounts was a $22.9 million decrease in prepaid expenses and other current assets and a $37.5 million increase in accounts payable. The increase in inventory was primarily to build inventory safety stock levels. The increase in other assets was due to the purchase of spare parts.
The increase in prepaid expenses and other current assets was primarily due to an increase in the payment of miscellaneous prepaid invoices. The increase in other assets was due to the purchase of spare parts. The decrease in accrued liabilities was primarily due to utilization of field service action reserve.
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.
Professional services increased primarily due to higher costs related to the use of third-party service providers supporting various projects and initiatives. 45 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.
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.
Based on current geopolitical conditions we expect foreign currency rates, freight costs, oil prices, interest rates, and general inflation to remain subject to volatility in the market.
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.
(4) Proceeds from the sale of our investment securities will vary based on the maturity dates of the investments.
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.
Global Economic Challenges In recent years, 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 which have resulted in fluctuating inflation rates, especially with respect to increased cost and shortages of raw materials, supply chain disruptions, higher interest rates, volatility on foreign currency exchange rates, and freight costs driven by higher fuel prices. 2025 Events The U.S. administration has continued to engage in trade discussions and impose tariffs on imports from other countries.
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.
Credit Facilities and Access to Capital As discussed in Note 12: Long-Term Obligations to our accompanying consolidated financial statements, on October 31, 2025, we amended our Existing Credit Agreement to refinance our existing Term Loan A and Revolving Credit Facilities.
Removed
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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).
These derivative contracts are designated and qualify as cash flow hedges (see Note 8: 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, 2024 using the actual forward rates at December 31, 2024, 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, 2025 using the actual forward rates at December 31, 2025, which are then adjusted to be 10% weaker for each respective currency. 56
We manage our foreign currency exposures on a consolidated basis to take advantage of net exposures and natural offsets, which are then further reduced by the gains and losses of our hedging instruments.
Our hedging policy attempts to manage these risks to an acceptable level. We manage our foreign currency exposures on a consolidated basis to take advantage of net exposures and natural offsets, which are then further reduced by the gains and losses of our hedging instruments.
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.
At December 31, 2025, the effect of a hypothetical 10% weakening in the actual foreign exchange rates used for the applicable currencies would result in an estimated increase in the fair value of these outstanding derivatives contracts by approximately $0.7 million.
Foreign Exchange Risk We transact business globally in multiple currencies, some of which are considered volatile. Our international revenues and expenses and working capital positions denominated in these foreign currencies expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar.
Our international revenues and expenses and working capital positions denominated in these foreign currencies expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. As the receiver of foreign currencies we are adversely affected by the strengthening of the U.S. dollar and other currencies relative to the operating unit functional currency.
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%.
The term loan B facility currently bears interest based on Adjusted Term SOFR subject to a 0.50% floor plus an applicable margin of 2.25%. We used a sensitivity analysis to measure our interest rate risk exposure.
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.
If the SOFR rate increases or decreases 1% from December 31, 2025, the additional annual interest expense or savings related to the existing term loans would be approximately $12.9 million before considering any offsetting impacts of our interest rate swaps.
(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.
(see Note 8: Derivatives and Hedging Activities to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K). Foreign Exchange Risk We transact business globally in multiple currencies, some of which are considered volatile.
Removed
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk In connection with the Smiths Medical acquisition on January 6, 2022 we entered into the Senior Secured Credit Facilities totaling approximately $2.2 billion consisting of a variable-rate term loan A facility of $850.0 million, a variable-rate term loan B facility of $850.0 million and a revolving credit facility of $500.0 million.
Added
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our variable-rate term loans and revolving credit facility are exposed to changes in interest rates. The term loan A facility currently bears interest based on Term SOFR plus an applicable margin of 1.75% per year.
Removed
These variable discount rates would affect the amount of factoring costs we incur, and the amount of cash we receive upon the sales of accounts receivable under this program.
Removed
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).
Removed
As the receiver of foreign currencies we are adversely affected by the strengthening of the U.S. dollar and other currencies relative to the operating unit functional currency. Our hedging policy attempts to manage these risks to an acceptable level.

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