You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and accompanying notes in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and related notes thereto included in our 2025 Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the caption entitled “Forward-Looking Statements” in this Quarterly Report and Part I, Item 1A. “Risk Factors” in our 2025 Annual Report on Form 10-K as may be further updated from time to time in our other filings with the SEC.
When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” and “our” refer to ICU Medical, Inc. ("ICU" or the "Company") and its consolidated subsidiaries included in our condensed consolidated financial statements unless context requires otherwise.
Business Overview and Highlights
We develop, manufacture, and sell innovative medical products used in infusion systems, infusion consumables and high-value critical care products used in hospital, alternate site and home care settings. Our team is focused on providing quality, innovation and value to our clinical customers worldwide. 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, patient monitoring, and temperature management products. We also offer IV Solutions products through a commercial relationship with the joint venture.
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. Infusion sets used in hospitals and ambulatory clinics consist of flexible sterile tubing running from an IV bag or bottle containing a drug product or solution to a catheter inserted in a patient’s vein that may or may not be used with an infusion pump. Disinfection caps are used to actively disinfect access points into the infusion sets and catheters. Our primary Infusion Therapy products are:
•Clave™ needlefree products, including the MicroClave, MicroClave Clear, and NanoClave™ brand of connectors, accessories, extension and administration sets used for the administration of IV fluids and medications;
•Neutron™ catheter patency device, used to help maintain patency of central venous catheters;
•Tego™ needlefree connector utilized to access catheters for hemodialysis and apheresis applications; and
•ClearGuard™, SwabCap™ and SwabTip™ disinfection caps.
Oncology
Closed System Transfer Devices ("CSTD") and hazardous drug compounding systems are used to prepare and deliver hazardous IV medications such as those used in chemotherapy, which, if released, can have harmful effects on the healthcare worker and environment. Our primary Oncology products are:
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•ChemoLockTM CSTD ("Chemolock"), which utilizes a proprietary needlefree connection method, is used for the preparation and administration of hazardous drugs. ChemoLock is used to limit the escape of hazardous drug or vapor concentrations, block the transfer of environmental contaminants into the system, and eliminates the risk of needlestick injury;
•ChemoClaveTM ("Chemoclave"), an ISO Connection standard and universally compatible CSTD used for the preparation and administration of hazardous drugs. ChemoClave utilizes standard ISO luer locking connections, making it compatible with all brands of needlefree connectors and pump delivery systems. ChemoClave also is used to limit the escape of hazardous drug or vapor concentrations, block the transfer of environmental contaminants into the system, and eliminate the risk of needlestick injury; and
•Deltec® GRIPPER® non-coring needles for portal access.
The preparation of hazardous drugs typically takes place in a pharmacy where drugs are removed from vials and prepared for delivery to a patient. Those prepared drugs are then transferred to a nursing unit where the chemotherapy is administered via an infusion pump set to a patient. Components of the ChemoClave and ChemoLock product lines are used both in pharmacies and on the nursing floors for the preparation and administration of hazardous drugs.
Vascular Access
Our Vascular Access products are used by clinicians to access the patients' bloodstream to deliver fluids and medication or to obtain blood samples. Our primary Vascular Access products are:
•Jelco® safety and conventional peripheral IV catheters and sharps safety devices for hypodermic injection, designed to help prevent accidental needlestick injury;
•Safe-T Wing® venipuncture and blood collection devices;
•Port-A-Cath® implantable ports;
•Portex® arterial blood sampling syringes;
•PowerWand® midline catheters; and
•Cleo® subcutaneous infusion catheters and sets.
Tracheostomy
Our tracheostomy products are used in the placement of a secure airway using both surgical and percutaneous insertion techniques. 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;
•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.
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:
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•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. 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. The systems incorporate features to support clinic workflows, including reduced alarm and setup requirements and on-screen guidance. 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. 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. 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.
Ambulatory Infusion Hardware:
•CADD™ ambulatory infusion pumps and disposables, including administration sets and medication cassette reservoirs, serve as a single pain management platform across all types of IV pain management therapies and all clinical care areas from the hospital to outpatient treatment.
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.
IV Medication Safety Software:
•LifeShield™ infusion safety software for Plum precision 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. The system utilizes hybrid architecture that includes cloud-based functionality for remote access and on-premise system management providing security and control.
•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. 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.
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.
Vital Care
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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 (as defined below), we transferred certain interests, including our IV Solutions product line, to OPF. See "Disposition of our IV Solutions Business and Prepayment of a portion of our Long-term Obligations" further below for more information on this transaction. We sell and distribute IV Solutions products to customers on behalf of the joint venture pursuant to a commercial agreement.
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.
Hemodynamic Monitoring
Our Hemodynamic Monitoring products are designed to help clinicians get accurate real-time access to patients’ hemodynamic and cardiac status with an extensive portfolio of monitoring systems and advanced sensors & catheters. Measurements provided by our systems help clinicians determine how well the heart is pumping blood and how efficiently oxygen from the blood is being used by the tissues. Our Hemodynamic Monitoring products include:
•Cogent™ 2-in-1 hemodynamic monitoring system;
•CardioFlo™ hemodynamic monitoring system;
•TDQ™ and OptiQ™ cardiac output monitoring catheters;
•TriOxTM venous oximetry catheters;
•Transpac™ blood pressure transducers;
•SafeSet™ closed blood sampling and conservation system; and
•MEDEX® LogiCal® Pressure Monitoring System and components.
General Anesthesia & Respiratory
We offer a broad range of anesthesia systems and devices and breathing circuits, ventilation, respiratory and specialty airway products that maintain patients’ airways before, during and after surgery. 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.
Temperature Management Solutions
Temperature Management solutions systems are used in perioperative and critical care settings to help monitor and regulate patient temperature. Our primary Temperature Management products include:
•Level 1® rapid infusion, fluid warming, routine blood and fluid warming, irrigation fluid warming, convective patient warming and temperature probes.
Regional Anesthesia/Pain Management Trays
We offer a comprehensive range of Portex® regional anesthesia/pain management trays and components. Our primary products include:
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•Epidural Trays;
•Spinal Trays;
•Combined (CSE) Trays;
•Peripheral Nerve Block Trays; and
•Specialty Trays (Lumbar Puncture, Amniocentesis, Myelogram).
In the U.S. a substantial amount of our products are sold to group purchasing organization member hospitals. We believe that as healthcare providers continue to either consolidate or join major buying organizations, the success of our products will depend, in part, on our ability, either independently or through strategic relationships, to secure long-term contracts with large healthcare providers and major buying organizations.
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 in foreign currency exchange rates, and freight costs driven by higher fuel prices.
2026 Events
In February 2026, the Supreme Court ruled that the U.S. Administration lacked the authority to impose tariffs under the International Emergency Economic Powers Act ("IEEPA"); the U.S. Court of International Trade subsequently ruled that companies are entitled to seek refunds for tariffs previously paid under that Act. We account for potential tariff refunds under the gain contingency model, recognizing recoveries in the period in which the contingency is resolved and realization is assured; during the second quarter of 2026, $18.9 million of tariff refunds were recognized in cost of goods sold and $0.7 million of related interest income was recognized in interest expense, net. The ultimate outcome, timing and amount of any additional potential refunds remain uncertain. In response to the Supreme Court ruling, the Administration formally repealed the tariffs imposed under IEEPA while immediately implementing new broader tariff measures under Section 122 of the Trade Act of 1974. The Section 122 tariffs expired on July 24, 2026 and the Administration subsequently announced new tariffs under Section 301 of the Trade Act of 1974, including tariffs ranging from 10% to 12.5% on imports from certain countries. In addition, the U.S. Department of Commerce continues to evaluate imports of medical consumables and equipment under a Section 232 national security investigation, which could result in additional tariffs and/or changes to currently available exemptions such as the United States-Mexico-Canada Agreement if the imports are determined to pose a national security risk. The applicability, duration, and resulting impact of these tariff measures, including ongoing legal challenges and potential changes to tariff levels or exemptions, remain uncertain. Any new tariffs, increases to existing tariff levels, or changes to currently available exemptions could increase the cost of products we import into the U.S. and adversely affect our business, financial condition and results of operations.
Based on current geopolitical conditions we expect foreign currency exchange rates, freight costs, oil prices, interest rates, and general inflation to remain subject to volatility in the market. For example, the conflict involving Iran has and could continue to significantly disrupt the global oil and fuel supply-demand balance, increase commodity price volatility and heighten uncertainty in regional operating conditions. Higher fuel prices along with disruptions to transportation routes are expected to result in higher logistics costs and affect our operating results, liquidity, and cash flows, particularly if conditions persist or escalate. In addition, because resin is a primary petroleum-based raw material for our products, sustained increases in crude oil prices directly impact our manufacturing costs. While the situation remains fluid, adverse impacts could continue in future periods. We will continue to monitor developments and assess potential impacts on our business and financial position.
While we continually monitor the ongoing and evolving impact of the above events on our operations the overall impact remains uncertain and may not be fully reflected in our results of operations until future periods. The overall impact to our results of operations will depend on a number of factors, many of which are out of our control, none of which can be fully predicted at this time. See "Part I. Item 1A. Risk Factors" in our 2025 Annual Report on Form 10-K as updated in this Quarterly Report on Form 10-Q for a discussion of risks and uncertainties.
Disposition of our IV Solutions Business and Prepayment of a Portion of our Long-term Obligations
On April 24, 2025, pursuant to a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc. a Delaware corporation ("OPF") (described in Note 4: Disposal of Business to our accompanying condensed consolidated financial statements), we completed the formation of ICU Medical Pearl LLC (n/k/a Otsuka ICU Medical LLC (the "joint venture")) and transferred the assets, liabilities and operations that comprise our IV Solutions product line to the joint venture.
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At the closing of the transaction on May 1, 2025, under the Agreement, we sold a 60% interest in the joint venture to OPF. The total sales price, inclusive of our final purchase price adjustments, was $211.2 million, of which we used $200.0 million of the proceeds from the sale to pay down a portion of our outstanding Term Loan A (as defined below) long-term debt during the second quarter of 2025.
Consolidated Results of Operations
We present income statement data in Part I, Item 1. "Financial Statements." The following table shows, for the three and six months ended June 30, 2026 and 2025, the percentages of each income statement caption in relation to total revenue:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
Total revenues 100 % 100 % 100 % 100 %
Gross profit 43 % 38 % 41 % 36 %
Selling, general and administrative expenses 28 % 29 % 28 % 27 %
Research and development expenses 4 % 4 % 4 % 4 %
Restructuring, strategic transaction and integration expenses 4 % 3 % 4 % 3 %
Total operating expenses 36 % 36 % 36 % 34 %
Income from operations 7 % 2 % 5 % 2 %
Interest expense, net (3) % (4) % (3) % (4) %
Other (expense) income, net — % — % — % — %
Gain on sale of business — % 8 % — % 4 %
Income before income taxes and equity in earnings of unconsolidated affiliates 4 % 6 % 2 % 2 %
(Provision) benefit for income taxes (1) % — % 3 % — %
Net income from consolidated companies 3 % 6 % 5 % 2 %
Equity in earnings of unconsolidated affiliates 1 % 1 % — % — %
Net income 4 % 7 % 5 % 2 %
Seasonality/Quarterly Results
There are no significant seasonal aspects to our business. 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. Our expenses often do not fluctuate in the same manner as net sales, which may cause fluctuations in operating income that are disproportionate to fluctuations in our revenue. In addition, the results of our joint venture may be affected by seasonal factors, including planned facility shutdowns, which may result in lower earnings from the joint venture during the second half of the year.
Non-GAAP Financial Measures
In addition to comparing changes in revenue on a U.S. GAAP basis, we also compare the changes in revenue from one period to another using constant currency. 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. We believe this information is useful to investors to facilitate comparisons and better identify trends in our business. Our constant currency revenues reflect current period local currency revenues at prior period's average exchange rates. We consistently apply this approach to revenues for all currencies where the functional currency is not the U.S. dollar. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Revenues on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.
Consumables
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The following table summarizes our total Consumables revenue (in millions, except percentages):
Three months ended June 30, Six months ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Consumables revenue (GAAP) $ 289.3 $ 273.1 $ 16.2 5.9 % $ 567.6 $ 539.4 $ 28.2 5.2 %
Impact of foreign currency exchange rate changes (2.0) (8.8)
Consumables revenue on a constant currency basis (non-GAAP) $ 287.3 $ 558.8
$ Change in constant currency $ 14.2 $ 19.4
% Change in constant currency 5.2 % 3.6 %
Consumables revenue increased for the three and six months ended June 30, 2026, as compared to the same periods in the prior year. Price increases contributed approximately 1% to growth, for both the three and six months ended June 30, 2026, with the remaining revenue increase driven by higher sales volumes for our Infusion Consumables and Oncology product lines of approximately $9 million and $17 million for the three and six months ended June 30, 2026, respectively.
Infusion Systems
The following table summarizes our total Infusion Systems revenue (in millions, except percentages):
Three months ended June 30, Six months ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Infusion Systems (GAAP) $ 189.0 $ 167.7 $ 21.3 12.7 % $ 368.6 $ 334.0 $ 34.6 10.4 %
Impact of foreign currency exchange rate changes (0.9) (4.6)
Infusion Systems on a constant currency basis (non-GAAP) $ 188.1 $ 364.0
$ Change in constant currency $ 20.4 $ 30.0
% Change in constant currency 12.2 % 9.0 %
Infusion Systems revenue increased for the three and six months ended June 30, 2026, as compared to the same periods in the prior year, primarily driven by approximately $26 million and $33 million, respectively, in increased sales volumes of LVP hardware.
Vital Care
The following table summarizes our total Vital Care revenue (in millions, except percentages):
Three months ended June 30, Six months ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Vital Care (GAAP) $ 73.4 $ 108.0 $ (34.6) (32.0) % $ 145.7 $ 280.2 $ (134.5) (48.0) %
Impact of foreign currency exchange rate changes 0.1 (1.3)
Vital Care on a constant currency basis (non-GAAP) $ 73.5 $ 144.4
$ Change in constant currency $ (34.5) $ (135.8)
% Change in constant currency (31.9) % (48.5) %
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Vital Care revenue decreased for the three and six months ended June 30, 2026, as compared to the same periods in the prior year, primarily due to the sale of our IV Solutions business on May 1, 2025 (see Note 4: Disposal of Business to our accompanying condensed consolidated financial statements), which reduced revenue by approximately $32 million and $127 million, respectively. The remaining decrease of approximately $3 million and $8 million, respectively, was primarily due to lower sales volumes of Pain Management and Temperature Management products.
Gross Margins
For the three and six months ended June 30, 2026, gross margins were 42.6% and 40.8%, respectively, as compared to 37.9% and 36.3% for the same periods in the prior year.
The increase in gross margin for the three months ended June 30, 2026, as compared to the same period in the prior year, was primarily driven by (i) 18.9 million or 3.4% impact from tariff refunds that were received during the second quarter of 2026 and (ii) approximately a 1.7% impact from the May 1, 2025 sale of a 60% interest in our lower margin IV Solutions business. The remaining increase was related to integration synergies and pricing changes. These favorable impacts were partially offset by a 1% unfavorable impact from tariff expense and the impact of foreign currency exchange rate changes.
The increase in gross margin for the six months ended June 30, 2026, as compared to the same period in the prior year, was primarily driven by (i) 18.9 million or 1.7% impact from tariff refunds that were received during the second quarter of 2026 and (ii) approximately a 3.4% impact from the May 1, 2025 sale of a 60% interest in our lower margin IV Solutions business. The remaining increase was related to integration synergies and pricing changes. These favorable impacts were partially offset by a 1.3% unfavorable impact from tariff expense and the impact of foreign currency exchange rate changes.
The impact of any additional potential tariff refunds on future gross margins will depend on the ultimate outcome, timing and amount of such refunds, which remain uncertain.
Selling, General and Administrative (“SG&A”) Expenses
The following table summarizes our total SG&A Expenses (in millions, except percentages):
Three months ended June 30, Six months ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
SG&A $ 151.9 $ 159.4 $ (7.5) (4.7) % $ 306.5 $ 316.6 $ (10.1) (3.2) %
SG&A expenses decreased for the three months ended June 30, 2026, as compared to the same period in the prior year, primarily due to a decrease of $2.7 million in stock based compensation and $1.1 million in professional services, which were combined with other smaller category increases and decreases. Stock based compensation decreased driven by the timing of our equity award vestings, which resulted in one less outstanding annual award during the second quarter of 2026, partially offset by the adoption of a retirement policy on the 2026 equity awards. Professional services decreased primarily due to lower costs related to the use of third-party service providers supporting various projects and initiatives.
SG&A expenses decreased for the six months ended June 30, 2026, as compared to the same period in the prior year, primarily due to a decrease of $2.4 million in dealer fees, $1.9 million in IT expenses, $1.8 million in facilities expenses, $1.5 million in loss contract amortization, combined with other smaller category decreases, were primarily offset by an increase of $1.6 million in compensation costs. Dealer fees decreased primarily due to the timing of end customer sales. IT expenses decreased primarily due to lower computer maintenance costs and lower outsourced data processing costs as a result of integration synergies. Facilities expenses decreased primarily due to a decrease in rent expense as a result of the expiration and exit of certain facility leases and due to lower operating lease expense driven by a lower amortization base following ROU asset impairments. Loss contract amortization decreased due to the release of an unfavorable contract liability related to the sale of the IV Solutions business in the second quarter of 2025. Compensation increased due to an increase in cash incentive compensation and employee benefits.
Research and Development (“R&D”) Expenses
The following table summarizes our total R&D Expenses (in millions, except percentages):
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Three months ended June 30, Six months ended June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
R&D $ 22.7 $ 21.9 $ 0.8 3.7 % $ 44.0 $ 45.2 $ (1.2) (2.7) %
R&D expenses slightly increased for the three months ended June 30, 2026, as compared to the same period in the prior year, primarily related to higher employment expense that support ongoing R&D projects. R&D expenses decreased for the six months ended June 30, 2026, as compared to the same period in the prior year, primarily related to organizational synergies and project reprioritization. R&D expenses for both periods presented 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 $21.3 million and $38.1 million for the three and six months ended June 30, 2026, respectively, as compared to $16.2 million and $32.9 million for the three and six months ended June 30, 2025, respectively.
Restructuring charges
Restructuring charges were $13.0 million and $19.9 million for the three and six months ended June 30, 2026, respectively, as compared to $8.2 million and $15.0 million for the three and six months ended June 30, 2025, respectively. The restructuring costs for the three and six months ended June 30, 2026 were primarily related to facility closure costs and severance costs, which included $5.8 million of non-cash impairment charges related to operating lease right-of-use assets and property, plant and equipment. The restructuring costs for the three and six months ended June 30, 2025 were primarily related to facility closure costs and severance costs. As of June 30, 2026, we expect to pay the majority of our outstanding restructuring charges during the next twelve months. We expect restructuring costs to decrease during the remainder of 2026.
Strategic transaction and integration expenses
Strategic transaction and integration expenses were $8.3 million and $18.2 million for the three and six months ended June 30, 2026, respectively, as compared to $8.0 million and $17.9 million for the three and six months ended June 30, 2025, respectively. The strategic transaction and integration expenses during the three and six months ended June 30, 2026 and 2025 were primarily related to ongoing consulting expenses, employee costs and costs from certain facility consolidations incurred to integrate our Smiths Medical business acquired in 2022. For the three and six months ended June 30, 2025, transaction costs also included expenses related to the sale of 60% of our IV solutions business that was completed during the second quarter of 2025.
Interest Expense, net
The following table presents interest expense, net (in thousands):
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
Interest expense $ (18,557) $ (23,065) $ (37,090) $ (48,328)
Interest income 2,810 2,516 4,849 5,748
Interest expense, net $ (15,747) $ (20,549) $ (32,241) $ (42,580)
Interest expense, net for the three and six months ended June 30, 2026 and 2025 primarily included 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 18: Long-Term Debt in our accompanying condensed consolidated financial statements), the impact of the interest rate swaps, and interest income. Additionally, interest expense includes the interest accretion on an unfavorable contract loss provision beginning in the second quarter of 2025.
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The interest expense component decreased for the three and six months ended June 30, 2026, as compared to the respective prior year periods, primarily due to lower obligation principal balances resulting from principal prepayments including the $200.0 million paydown of our Term Loan A in May 2025 using proceeds from the sale of a 60% interest of our IV Solutions business.
Other (Expense) Income, net
The following table presents other (expense) income, net (in thousands):
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
Foreign exchange (loss) gain, net $ (853) $ 1,943 (1,761) 141
Loss on disposition of assets (567) $ (57) (702) (227)
Other miscellaneous income (expense), net 1,184 (68) 1,167 141
Other expense, net $ (236) $ 1,818 $ (1,296) $ 55
For the three and six months ended June 30, 2026, the foreign exchange losses were primarily related to the strengthening of the U.S. dollar relative to certain foreign currencies, including the Euro. For the three and six months ended, June 30, 2025, the foreign exchange gains were primarily related to the weakening of the U.S. dollar relative to certain foreign currencies, most notably including the British Pound in the second quarter of 2025.
For the three and six months ended June 30, 2026, other miscellaneous income (expense), net primarily includes the recognition of UK research and development tax credits.
Income Taxes
For the three and six months ended June 30, 2026, income taxes were accrued at an estimated effective tax rate of 31% and (144)%, respectively, as compared to 3% and 25% for the three and six months ended June 30, 2025, respectively.
The effective tax rate for the three and six months ended June 30, 2026 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, section 162(m) excess compensation, federal and state valuation allowance, FDII, and tax credits. Additionally, the effective tax rate for the three and six months ended June 30, 2026 included a tax benefit of $0.9 million and $30.1 million, respectively, related to unrecognized tax benefits released as a result of the expiration of statute of limitations.
The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. 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 $1.5 million tax expense and $2.7 million tax benefit during the three and six months ended June 30, 2026, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses. The Company's ability to use our deferred tax assets depends on the amount of taxable income in future periods.
The effective tax rate for the three and six months ended June 30, 2025 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S. and foreign incomes, section 162(m) excess compensation, federal and state valuation allowance, and tax credits. The effective tax rate during the three and six months ended June 30, 2025 included a tax expense of $6.1 million related to the sale of a 60% interest of our IV solutions business. Additionally, there were unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and six months ended June 30, 2025 of $5.0 million.
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The Company recorded a change to the valuation allowance against certain U.S. federal and state deferred tax assets, resulting in a $2.7 million tax benefit and $3.7 million tax expense during the three and six months ended June 30, 2025, respectively.
Equity in Earnings of Unconsolidated Affiliates
For the three and six months ended June 30, 2026, we recorded equity in earnings of unconsolidated affiliates of $3.0 million and $2.4 million, respectively, as compared to equity in earnings of unconsolidated affiliates of $2.8 million for each of the three and six months ended June 30, 2025, related to our 40% proportionate share of the joint venture's financial results (see Note 4: Disposal of Business to our accompanying condensed consolidated financial statements). The joint venture's earnings are typically lower in the second half of the year due to seasonality and planned facility shutdowns.
Liquidity and Capital Resources
We regularly evaluate our liquidity and capital resources, including our access to external capital, to assess our ability to meet our principal cash requirements, which include working capital requirements, planned capital investments in our business, commitments, acquisition restructuring and integration expenses, investments in quality systems and quality compliance objectives, payment of interest expense, repayment of outstanding borrowings, income tax obligations, potential share repurchase opportunities and acquisition opportunities in accordance with our growth strategy.
Sources of Liquidity
Our current primary sources of liquidity are cash and cash equivalents, cash flows from our operations including access to borrowing arrangements.
Funds generated from operations are held in cash and cash equivalents. During the six months ended June 30, 2026, our cash and cash equivalents decreased by $9.7 million from $308.0 million at December 31, 2025 to $298.3 million at June 30, 2026. This decrease was due to principal payments in 2026, including a $45.3 million prepayment on our Term Loan B during the second quarter of 2026 and $38.9 million of tax withholding payments made during 2026 to settle employee equity award vests. Tax withholding payments are typically highest during the first quarter due to the timing of employee equity vesting activity. These payments represent the value of the shares withheld by the Company to satisfy employee tax obligations, which effectively reduced the total number of shares issued upon vesting and minimized shareholder dilution.
Credit Facilities and Access to Capital
As discussed in Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements, on October 31, 2025 (the "Closing Date"), we entered into an Amendment No. 2 to our Credit Agreement (the "Amendment"), whereby we refinanced our Term Loan A and our Revolving Credit Facility under our existing Credit Agreement dated as of January 6, 2022 (as amended by Amendment No. 1, dated as of October 5, 2022, the "Existing Credit Agreement" and as further amended by the Amendment, the "Amended Credit Agreement"). 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"). The outstanding aggregate principal amount of the term loans is $1.2 billion as of June 30, 2026, which includes the Term Loan A that will mature in October 2030 and the Term Loan B that will mature in January 2029. There are no outstanding borrowings under the New Revolving Facility as of June 30, 2026.
As part of entering into the Senior Secured Credit Facilities, we were assigned issuer and Term Loan B credit ratings. At the date of issuance of this report, our issuer and Term Loan B credit ratings assigned and outlook were as follows:
Issuer/Term Loan B Credit Ratings Outlook
Moody's Ba3/Ba3 Stable
Fitch BB/BB+ Stable
Standard & Poor's BB-/BB- Positive
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
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may receive. In addition, credit rating agencies review their ratings periodically, and there is no guarantee our current credit rating will remain the same as described above. If our credit rating were to be lowered, our ability to access the debt markets, our cost of funds, and other terms for new incurrence of debt could be adversely impacted.
The Credit Agreement contains financial covenants that pertain to the Term Loan A and the New Revolving Facility. Specifically, we were required to maintain a Secured Net Leverage Ratio of no more than 4.50 to 1.00, with a step-down to 4.00 to 1.00 starting with the quarter ending June 30, 2027 and an Interest Coverage Ratio of no less than 3.00 to 1.00 (defined and discussed in greater detail in Note 18: Long-Term Debt to our accompanying condensed consolidated financial statements). We were in compliance with these financial covenants as of June 30, 2026.
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. The program accelerates our access to capital and may be utilized as needed. The program was not utilized during the periods presented, and there were no outstanding sold receivables as of June 30, 2026 and 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 New Credit Facilities will provide us with sufficient liquidity to finance our cash requirements for the next twelve months and the foreseeable future. In the event that we experience downturns, cyclical fluctuations in our business that are more severe or longer than anticipated, fail to achieve anticipated revenue and expense levels, or have significant unplanned cash expenditures, we may need to obtain or seek alternative sources of capital or financing, and we can provide no assurances that the terms of such capital or financing will be available to us on favorable terms, if at all. Our ability to generate cash flows from operations, issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers, deterioration in our key financial ratios or credit ratings or other significantly unfavorable changes in economic conditions. See Part I. Item 1A. "Risk Factors” in our 2025 Annual Report on Form 10-K for discussion of the risks and uncertainties associated with our debt financing.
Uses of Liquidity
Capital Expenditures
As of June 30, 2026, we now expect capital expenditures to be approximately $85 million for estimated 2026 planned capital expenditures, which is at the low end of our previously disclosed $85 million to $100 million range in our 2025 Annual Report on Form 10-K.
Contractual Obligations
Our principal commitments at June 30, 2026 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. For more information regarding our operating lease obligations, (see Note 7: Leases to our accompanying condensed consolidated financial statements).
Long-term Debt
The proceeds from and commitments under the New Credit Facilities, described above, were used to (i) repay the outstanding principal amount of the Term Loan A and refinance the existing Revolving Credit Facility (collectively, the "Refinancing") under the Existing Credit Agreement (ii) repay $190.0 million of the outstanding balance of the Term Loan B under the Existing Credit Agreement and (iii) to finance the payment of fees and expenses incurred in connection with the Refinancing. The proceeds of future borrowings under the New Revolving 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.
The New Credit Facilities mature on October 31, 2030, subject to a springing maturity provision under which, if any of the Term Loan B tranche remains outstanding on the date that is 91 days prior to the Term Loan B maturity date (the "Springing Maturity Date"), the maturity date for the Term Loan A and the Revolving Credit Facility will automatically accelerate to the
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Springing Maturity Date, if earlier than October 31, 2030. We are monitoring our liquidity position to ensure we can address this potential earlier repayment obligation.
Interest payments on the term loans were estimated using an Adjusted Term SOFR rate and an applicable margin of 1.50% for Term Loan A and 2.25% for Term Loan B and the revolver commitment fees were estimated using a rate of 0.20%. 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 18: Long-Term Debt to our accompanying condensed consolidated financial statements for pricing grids related to the Senior Secured Credit Facilities).
Term Loan B Principal Prepayments
Due to a principal prepayment of $45.3 million during the second quarter of 2026 and principal prepayments in 2025, we have no mandatory principal payments on our 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.
(in millions)
Remainder of 2026 2027 2028 2029 2030 Thereafter
Term Loan A Principal Payments* $ 9.3 $ 18.8 $ 37.5 $ 37.5 $ 637.5 $ —
Term Loan A Interest Payments* 19.7 38.2 36.9 34.8 32.5 —
Term Loan B Principal Payments — — — 499.2 — —
Term Loan B Interest Payments 15.6 30.9 31.0 0.5 — —
Revolver Commitment Fee 0.5 1.0 1.0 1.0 1.0 —
$ 45.1 $ 88.9 $ 106.4 $ 573.0 $ 671.0 $ —
*The Term Loan A principal and interest payments in the above table are subject to the springing maturity clause described in Exhibit 10.1 as filed as an exhibit to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025.
Other Future Capital Investments
Other future capital investments include restructuring and integration expenses along with spending to support quality systems and quality compliance objectives, which includes acquired field action liabilities. As of June 30, 2026, there have been no material changes to our range of $60 million to $80 million for estimated 2026 other future capital investments previously disclosed in our 2025 Annual Report on Form 10-K.
Contingent Payments
In 2015, legislation was enacted in Italy, which requires medical device companies to make payments to the Italian government if Italy's medical device expenditures for certain years exceeded annual regional expenditure ceilings. 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 Italy Medical Device Payback ("IMDP"). In September 2025, the Italian government enacted a law that allows medical device companies to settle certain historical periods (2015-2018) for 25% of the original assessed value. During the third quarter of 2025, we settled the liability related to the 2015-2018 historical periods and paid $2.5 million. Additionally, we recorded a release of $3.8 million in previously established reserves. See Note 16: Accrued Liabilities to our accompanying condensed consolidated financial statements for details on remaining amounts accrued for potential payments related to the IMDP.
We expect to fund our capital expenditures and contractual obligations with our existing cash and cash equivalents and cash generated from our future operations.
Indemnifications
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In the normal course of business, we have agreed to indemnify our officers and directors to the maximum extent permitted under Delaware law and to indemnify customers as to certain intellectual property matters related to sales of our products. There is no maximum limit on the indemnification that may be required under these agreements. Although we can provide no assurances, we have never incurred, nor do we expect to incur, any liability for indemnification.
Historical Cash Flows
Cash Flows from Operating Activities
Our net cash provided by operations for the six months ended June 30, 2026 was $119.1 million. The changes in operating assets and liabilities included a $4.6 million decrease in inventories. Offsetting these amounts was a $7.6 million increase in accounts receivable, a $16.5 million increase in prepaid expenses and other current assets, a $2.9 million increase in other assets, a $4.9 million decrease in accounts payable, $5.9 million decrease in accrued liabilities, and $45.3 million in net changes in income taxes, including excess tax benefits and deferred income taxes. The decrease in inventory was primarily due to strong sales volume of certain products and delays in the inventory production as a result of plant transfers. The increase in accounts receivable was primarily due to the amount and timing of collections. The increase in prepaid expenses and other current assets was primarily due to an increase in deferred costs related to infusion pumps sold, prepaid income taxes, and amounts due from the joint venture. The increase in other assets was due to the purchase of spare parts. The decrease in accounts payable was due to the timing of payments. The decrease in accrued liabilities was primarily due to payout of annual bonuses and operating lease payments offset by an increase in deferred revenue. The net changes in income taxes was a result of the timing of payments, recording of the current deferred provision, and valuation allowance.
Our net cash provided by operations for the six months ended June 30, 2025 was $62.5 million. The changes in operating assets and liabilities included a $16.7 million decrease in accounts receivable and a $14.4 million increase in accounts payable. Offsetting these amounts was a $29.2 million increase in inventories, a $9.2 million increase in prepaid expenses and other current assets, a $5.7 million increase in other assets, $19.8 million decrease in accrued liabilities, and $28.1 million in net changes in income taxes, including excess tax benefits and deferred income taxes. The decrease in accounts receivable was primarily due to the sale of accounts receivable as part of our accounts receivable purchase program with BMO and the amount and timing of revenues. 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 in our accounting. 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 payout of annual bonuses and operating lease payments. The net changes in income taxes was a result of the timing of payments.
Cash Flows from Investing Activities
The following table summarizes the changes in our investing cash flows (in thousands):
Six months ended June 30,
2026 2025 Change
Investing Cash Flows:
Purchases of property, plant and equipment $ (29,813) $ (34,317) $ 4,504 (1)
Proceeds from sale of business — 209,464 (209,464) (2)
Deposit received for the sale of a business 2,000 — 2,000 (3)
Proceeds from sale of assets 22 42 (20)
Intangible asset additions (3,555) (4,541) 986
Net cash (used in) provided by investing activities $ (31,346) $ 170,648 $ (201,994)
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(1) Our purchases of property, plant and equipment may vary from period to period based on additional investments needed to support new and existing products and expansion of our manufacturing facilities.
(2) In 2025, we sold a 60% ownership interest in our IV Solutions business to OPF, see Note 4: Disposal of Business to our accompanying condensed consolidated financial statements.
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(3) On March 6, 2026, we entered into a definitive agreement to sell certain assets that constitute a business, as defined under ASC 805, Business Combinations. We received a $2.0 million advanced deposit on the pending sale, see Note 4: Disposal of Business to our accompanying condensed consolidated financial statements.
Cash Flows from Financing Activities
The following table summarizes the changes in our financing cash flows (in thousands):
Six months ended June 30,
2026 2025 Change
Financing Cash Flows:
Principal payments on long-term debt $ (54,688) $ (247,750) $ 193,062 (1)
Proceeds from exercise of stock options 490 5,972 (5,482) (2)
Payments on finance leases (1,297) (885) (412)
Tax withholding payments related to net share settlement of equity awards (38,862) (8,688) (30,174) (3)
Net cash used in financing activities $ (94,357) $ (251,351) $ 156,994
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(1) Relates to scheduled principal payments and any prepayments on the Senior Secured Credit Facilities. In March 2025, we prepaid $35.0 million on our Term Loan B. In May 2025, we used $200.0 million received from the sale of a 60% interest in our IV Solutions business to pay down a portion of our Term Loan A. In June 2026, we prepaid $45.3 million on our Term Loan B. Due to prepayments in 2025 and 2026, we do not have any mandatory principal payment on our Term Loan B until 2029.
(2) 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.
(3) During the six months ended June 30, 2026, our employees surrendered 296,524 shares of our common stock from vested restricted stock unit awards as consideration for approximately $38.9 million in minimum statutory withholding obligations paid on their behalf. During the six months ended June 30, 2025, our employees surrendered 61,066 shares of our common stock from vested restricted stock unit awards as consideration for approximately $8.7 million in minimum statutory withholding obligations paid on their behalf.
Our common stock purchase plan, which authorizes the repurchase of up to $100.0 million of our common stock, was approved by our Board of Directors in August 2019. This plan has no expiration date. As of June 30, 2026, 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 18: Long-Term Debt in our accompanying condensed consolidated financial statements).
Critical Accounting Policies
In our 2025 Annual Report on Form 10-K, we identified the critical accounting policies which affect our more significant estimates and assumptions used in preparing our consolidated financial statements. There have been no material changes to our critical accounting policies from those previously disclosed in our 2025 Annual Report on Form 10-K.
New Accounting Pronouncements
See Note 2: New Accounting Pronouncements Not Yet Adopted to the accompanying condensed consolidated financial statements.