What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-09 · 229 added, 162 removed, 961 unchanged (29% of the section changed)

10 unchanged sentences

TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES 268,889 567,247

Accounts receivable, net of allowance for doubtful accounts of $ 6,921 at March 31, 2022 and $ 7,038 at December 31, 2021

Accounts receivable, net of allowance for doubtful accounts of $ 7,557 at June 30, 2022 and $ 7,038 at December 31, 2021

216,124 105,894

17 unchanged sentences

Income tax payable 17,102 1,454

Contingent earn-out liability 290 —

TOTAL CURRENT LIABILITIES 485,985 200,777

11 unchanged sentences

Authorized — 80,000 shares;

Issued — 23,897 shares at March 31, 2022 and 21,280 shares at December 31, 2021;

and outstanding — 23,884 shares at March 31, 2022 and 21,280 shares at December 31, 2021

Issued — 23,899 shares at June 30, 2022 and 21,280 shares at December 31, 2021;

and outstanding — 23,898 shares at June 30, 2022 and 21,280 shares at December 31, 2021

Additional paid-in capital 1,309,598 721,412

13 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

TOTAL REVENUES $ 561,004 $ 321,677 $ 1,104,126 $ 639,723

5 unchanged sentences

Restructuring, strategic transaction and integration 13,525 3,753 47,430 6,636

Change in fair value of contingent earn-out ( 27,194 ) — ( 27,194 ) —

Contract settlement — — — 127

2 unchanged sentences

INTEREST EXPENSE ( 16,273 ) ( 163 ) ( 29,917 ) ( 324 )

OTHER INCOME, net 1,004 683

OTHER (EXPENSE) INCOME, net ( 533 ) 525 471 1,208

(LOSS) INCOME BEFORE INCOME TAXES ( 16,854 ) 34,832 ( 71,655 ) 61,924

13 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

NET (LOSS) INCOME $ ( 7,474 ) $ 28,398 $ ( 45,542 ) $ 52,129

Other comprehensive income (loss), net of tax:

Cash flow hedge adjustments, net of tax of ($ 7,312 ) and $ 298 for the three months ended March 31, 2022 and 2021, respectively

Cash flow hedge adjustments, net of tax of $ 4,370 and $( 111 ) for the three months ended June 30, 2022 and 2021, respectively, and $ 11,681 and $( 409 ) for the six months ended June 30, 2022 and 2021, respectively.

8,144 ( 352 ) 31,716 ( 1,296 )

2 unchanged sentences

Other adjustments, net of tax of $ 0 for all periods

Other comprehensive income (loss), net of tax 18,641 ( 8,391 )

Other comprehensive (loss) income, net of tax ( 91,647 ) 962 ( 73,006 ) ( 7,429 )

COMPREHENSIVE (LOSS) INCOME $ ( 99,121 ) $ 29,360 $ ( 118,548 ) $ 44,700

19 unchanged sentences

Balance, March 31, 2022 23,897 $ 2,390 $ 1,306,264 $ ( 2,843 ) $ 873,719 $ ( 628 ) $ 2,178,902

Issuance of restricted stock and exercise of stock options 10 — ( 4,428 ) 4,446 — — 18

Tax withholding payments related to net share settlement of equity awards ( 8 ) — — ( 1,695 ) — — ( 1,695 )

Stock compensation — — 7,762 — — — 7,762

Other comprehensive loss, net of tax — — — — — ( 91,647 ) ( 91,647 )

Net loss — — — — ( 7,474 ) — ( 7,474 )

Balance, June 30, 2022 23,899 $ 2,390 $ 1,309,598 $ ( 92 ) $ 866,245 $ ( 92,275 ) $ 2,085,866

Common Stock Additional

3 unchanged sentences

Comprehensive

(Loss) Income

Shares Amount Total

6 unchanged sentences

Balance, March 31, 2021 21,219 $ 2,122 $ 701,586 $ ( 5,410 ) $ 832,383 $ ( 9,913 ) $ 1,520,768

Issuance of restricted stock and exercise of stock options — — ( 2,685 ) 3,237 — — 552

Tax withholding payments related to net share settlement of equity awards — — — ( 96 ) — — ( 96 )

Stock compensation — — 6,681 — — — 6,681

Other comprehensive income, net of tax — — — — — 962 962

Net income — — — — 28,398 — 28,398

Balance, June 30, 2021 21,219 $ 2,122 $ 705,582 $ ( 2,269 ) $ 860,781 $ ( 8,951 ) $ 1,557,265

ICU MEDICAL, INC.

2 unchanged sentences

(In thousands)

Three months ended

Six months ended

CASH FLOWS FROM OPERATING ACTIVITIES:

10 unchanged sentences

Debt issuance costs amortization 3,495 144

Change in fair value of contingent earn-out ( 27,194 ) —

Usage of spare parts 5,229 5,356

15 unchanged sentences

Purchases of investment securities ( 3,397 ) ( 10,034 )

Proceeds from sale of investment securities 3,500 7,000

Proceeds from sale and maturities of investment securities 26,198 7,000

Net cash used in investing activities ( 1,872,942 ) ( 36,660 )

16 unchanged sentences

(In thousands)

Three months ended

Six months ended

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:

25 unchanged sentences

Acquisitions.

Our condensed consolidated statement of operations includes the results of operations for Smiths Medical from January 7, 2022 through March 26, 2022, which is the current end of their 4-4-5 accounting period.

Our condensed consolidated statement of operations includes the results of operations for Smiths Medical from January 7, 2022 through June 25, 2022, which is the current end of their 4-4-5 accounting period.

New Accounting Pronouncements

24 unchanged sentences

We also issued share consideration to Smiths of 2.5 million shares of our common stock.

The fair value of the common shares issued to Smiths was determined based on the closing market price of our common stock on the acquisition date.

The fair value of the common shares issued to Smiths was determined based on the opening market price of our common stock on the acquisition date.

Smiths may be entitled to an additional $ 100.0 million in cash consideration contingent on our common stock achieving certain price targets for certain periods after closing in accordance with the terms of the Share Sale and Purchase Agreement (the "Purchase Agreement").

4 unchanged sentences

Preliminary Purchase Price Allocation

The following table summarizes the preliminary purchase price and the preliminary allocation of the purchase price related to the assets acquired and liabilities assumed (in thousands):

The following table summarizes the estimated purchase price and the preliminary allocation of the purchase price related to the assets acquired and liabilities assumed (in thousands):

ICU MEDICAL, INC.

28 unchanged sentences

_______________________________

(1) Preliminary identifiable intangible assets include $ 500.0 million of customer relationships, $ 420.0 million of developed technology, and $ 5.0 million of trade mark.

(1) Estimated identifiable intangible assets include $ 540.0 million of customer relationships, $ 400.0 million of developed technology, $ 30.0 million of internally developed software, and $ 5.0 million of trade mark.

The estimated weighted-average amortization period for the total identifiable intangible assets is approximately nine years, and, for each identifiable intangible asset is estimated as follows:

eight years for customer relationships, ten years for developed technology, and six months for the trade mark.

(2) Preliminary accrued liabilities includes, among other things, accrued warranty reserves, accrued restructuring initiatives, accrued salaries and related benefits, deferred revenue and accrued sales and use taxes.

eight years for customer relationships, ten years for developed technology, five years for internally developed software, and six months for the trade mark.

(2) Estimated accrued liabilities includes, among other things, accrued warranty reserves, accrued restructuring initiatives, accrued salaries and related benefits, deferred revenue and accrued sales and use taxes.

The above purchase price and purchase price allocation are preliminary and subject to future revision as the acquired assets and liabilities assumed are dependent upon the finalization of the related valuations.

16 unchanged sentences

Smiths Medical is included in our consolidated results beginning on January 7, 2022.

Total revenues and net loss attributable to Smiths Medical for the period from January 7, 2022 to March 31, 2022 were $ 214.9 million and $ 40.4 million, respectively.

Total revenues and net loss attributable to Smiths Medical for the period from January 7, 2022 to June 30, 2022 were $ 437.8 million and $ 65.5 million, respectively, and for the three months ended June 30, 2022 were $ 222.9 million and $ 26.0 million.

The following unaudited pro forma financial information presents the combined results of operations of ICU and Smiths Medical as if the acquisition had occurred on January 1, 2021.

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on the date indicated or of results that may occur in the future.

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

(In thousands) 2022 2021 2022 2021

2 unchanged sentences

The unaudited pro forma results presented above include the impact of the following adjustments:

incremental amortization expense on intangible assets acquired of $ 3.3 million and $ 26.3 million for the three months ended March 31, 2022 and 2021, respectively, incremental interest expense, including amortization of debt discount and debt issuance costs, on the Credit Facilities of $ 0.8 million and $ 12.6 million for the three months ended March 31, 2022 and 2021, respectively;

and a $ 18.8 million expense related to the increase in fair value of inventory for the three months ended March 31, 2021.

In addition, there were non-recurring adjustments directly attributable to the business combination, including acquisition-related cost of $ 13.5 million for the three months ended March 31, 2021 and adjustments related to the extinguishment of related party loans receivable and payable equal to $ 81.0 million and $ 31.0 million for the three months ended March 31, 2022 and 2021, respectively.

incremental amortization expense on intangible assets acquired of $ 1.3 million and $ 55.5 million for the six months ended June 30, 2022 and 2021, respectively, incremental interest expense, including amortization of debt discount and debt issuance costs, on the Credit Facilities of $ 0.8 million and $ 25.4 million for the six months ended June 30, 2022 and 2021, respectively;

and a $ 27.4 million expense related to the increase in fair value of inventory for the six months ended June 30, 2021.

In addition, there were non-recurring adjustments directly attributable to the business combination, including acquisition-related cost of $ 13.5 million for the six months ended June 30, 2021 and adjustments related to the extinguishment of related party loans receivable and payable equal to $ 80.7 million and $ 45.0 million for the six months ended June 30, 2022 and 2021, respectively.

The unaudited pro forma results include IFRS to U.S.

4 unchanged sentences

In addition to the initial cash consideration, total consideration for the acquisition includes an additional holdback of $ 0.5 million, to be paid two years from the completion date of the acquisition, and also a potential earn-out payment of up to $ 2.5 million, consisting of (i) a cash payment of $ 1.0 million contingent on the achievement of certain revenue targets for the annual period ending December 31, 2022 and, separately, (ii) a cash payment of $ 1.5 million contingent on certain product-related regulatory certifications obtained by May 26, 2024.

As of March 31, 2022, the total consideration which includes the acquisition date fair value of the contingent consideration was $ 17.1 million.

As of June 30, 2022, the total consideration which includes the acquisition date fair value of the contingent consideration was $ 17.1 million.

ICU MEDICAL, INC.

2 unchanged sentences

Restructuring, Strategic Transaction and Integration

Restructuring, strategic transaction and integration expenses were $ 33.9 million and $ 2.9 million for the three months ended March 31, 2022 and 2021, respectively.

Restructuring, strategic transaction and integration expenses were $ 13.5 million and $ 3.8 million for the three months ended June 30, 2022 and 2021, respectively, and $ 47.4 million and $ 6.6 million for six months ended June 30, 2022 and 2021, respectively.

Restructuring

During the three months ended March 31, 2022, restructuring charges were $ 3.2 million and were related to severance costs.

Restructuring charges during the three months ended March 31, 2021 were not material.

The following table summarizes the activity in our restructuring-related accrual by major type of cost for the period ended March 31, 2022 (in thousands):

Accrued Balance

January 1, 2022 Acquired Restructuring Liabilities Charges

Incurred Payments Currency

Translation Accrued Balance

March 31, 2022

Severance pay and benefits $ 499 5,796 $ 3,222 $ ( 2,030 ) $ ( 147 ) $ 7,340

Facility closure expenses 165 1,740 — — ( 40 ) 1,865

$ 664 $ 7,536 $ 3,222 $ ( 2,030 ) $ ( 187 ) $ 9,205

During the three and six months ended June 30, 2022, restructuring charges were $ 1.7 million and $ 4.9 million, respectively, and were related to severance costs.

Restructuring charges during the three and six months ended June 30, 2021 were not material.

The following table summarizes the activity in our restructuring-related accrual by major type of cost for the period ended June 30, 2022 (in thousands):

Severance Pay and Benefits Retention and Facility Closure Costs Total

Accrued balance, January 1, 2022 $ 499 $ 165 $ 664

Acquired restructuring liabilities 5,796 1,740 7,536

Charges incurred 3,222 — 3,222

Payments ( 2,030 ) — ( 2,030 )

Currency translation ( 147 ) ( 40 ) ( 187 )

Accrued balance, March 31, 2022 $ 7,340 $ 1,865 $ 9,205

Charges incurred 1,710 — 1,710

Payments ( 3,352 ) ( 212 ) ( 3,564 )

Currency translation ( 256 ) ( 94 ) ( 350 )

Other adjustments ( 38 ) — ( 38 )

Accrued balance, June 30, 2022 $ 5,404 $ 1,559 $ 6,963

Strategic Transaction and Integration Expenses

We incurred and expensed $ 30.7 million and $ 2.9 million in strategic transaction and integration expenses during the three months ended March 31, 2022 and 2021, respectively, which are included in restructuring, strategic transaction and integration expenses in our condensed consolidated statements of operations.

The strategic transaction and integration expenses during the three months ended March 31, 2022 were primarily related to transaction and integration expenses associated with our acquisition of Smiths Medical on January 6, 2022 (see Note 3:

Acquisitions) which primarily included legal expenses, bank fees, a United Kingdom stamp tax and employee costs.

The strategic transaction and integration expenses for the three months ended March 31, 2021 were primarily related to integration costs associated with acquisitions, the Hospira Infusion Systems ("HIS") earn-out dispute with Pfizer and one-time costs incurred to comply with regulatory initiatives.

We incurred and expensed $ 11.8 million and $ 3.7 million in strategic transaction and integration expenses during the three months ended June 30, 2022 and 2021, respectively, and we incurred and expensed $ 42.5 million and $ 6.5 million in strategic transaction and integration expenses during the six months ended June 30, 2022 and 2021, respectively, which are included in restructuring, strategic transaction and integration expenses in our condensed consolidated statements of operations.

The strategic transaction and integration expenses during the three and six months ended June 30, 2022 were primarily related to transaction and integration expenses associated with our acquisition of Smiths Medical on January 6, 2022 (see Note 3:

Acquisitions) which primarily included legal expenses, bank fees and employee costs.

The six months ended June 30, 2022 also included a United Kingdom stamp tax.

The strategic transaction and integration expenses for the three and six months ended June 30, 2021 were primarily related to integration costs associated with acquisitions, the Hospira Infusion Systems ("HIS") earn-out dispute with Pfizer and one-time costs incurred to comply with regulatory initiatives.

Revenue Recognition

4 unchanged sentences

therefore, we recognize revenue at the start of the applicable license term.

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Payment is typically due in full within 30 days of delivery or the start of the contract term.

8 unchanged sentences

We also provide for extended service-type warranties, which we consider to be separate performance obligations.

We allocate a portion of the transaction price to the extended service-type warranty based on its estimated relative selling price, and recognize revenue over

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the period the warranty service is provided.

We allocate a portion of the transaction price to the extended service-type warranty based on its estimated relative selling price, and recognize revenue over the period the warranty service is provided.

Our revenues are recorded at the net sales price, which includes an estimate for variable consideration related to rebates, chargebacks and product returns.

2 unchanged sentences

Three months ended

June 30, Six months ended

Product line 2022 2021 2022 2021

10 unchanged sentences

Three months ended

June 30, Six months ended

Geography 2022 2021 2022 2021

8 unchanged sentences

Contract balances

The following table presents the changes in our contract balances for the three months ended March 31, 2022 and 2021 (in thousands):

The following table presents the changes in our contract balances for the six months ended June 30, 2022 and 2021 (in thousands):

Contract Liabilities

9 unchanged sentences

Other deferred revenue recognized 2,458

Ending balance, March 31, 2022 $ ( 58,236 )

Ending balance, June 30, 2022 $ ( 53,066 )

Beginning balance, January 1, 2021 $ ( 6,430 )

3 unchanged sentences

Software revenue deferred due to implementation ( 2,212 )

Ending balance, March 31, 2021 $ ( 8,888 )

As of March 31, 2022, revenue from remaining performance obligations is as follows:

Ending balance, June 30, 2021 $ ( 4,968 )

As of June 30, 2022, revenue from remaining performance obligations is as follows:

Recognition Timing

26 unchanged sentences

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Operating lease cost $ 5,475 $ 2,822 $ 10,653 $ 5,657

6 unchanged sentences

The following table presents the supplemental cash flow information related to our leases (in thousands):

Three months ended

Six months ended

Cash paid for amounts included in the measurement of lease liabilities:

8 unchanged sentences

The following table presents the supplemental balance sheet information related to our operating leases (in thousands, except lease term and discount rate):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Operating leases

8 unchanged sentences

The following table presents the supplemental balance sheet information related to our finance leases (in thousands, except lease term and discount rate):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Finance leases

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of March 31, 2022, the maturities of our operating and finance lease liabilities for each of the next five years are approximately (in thousands):

As of June 30, 2022, the maturities of our operating and finance lease liabilities for each of the next five years are approximately (in thousands):

Operating Leases Finance Leases

14 unchanged sentences

Options and restricted stock units that are anti-dilutive are not included in the treasury stock method calculation.

Due to the net loss for the three months ended March 31, 2022, any potentially common shares were not included in the computation of diluted earnings per share as they would have had an anti-dilutive effect, therefore basic and diluted net loss per share are equal for the period.

There were nil and 12,080 anti-dilutive securities for the three months ended March 31, 2022 and March 31, 2021, respectively.

Due to the net loss for the three and six months ended June 30 2022, any potentially common shares were not included in the computation of diluted earnings per share as they would have had an anti-dilutive effect, therefore basic and diluted net loss per share are equal for the period.

There were 12,107 and 12,080 anti-dilutive securities for the three and six months ended June 30, 2021, respectively.

The following table presents the calculation of net earnings per common share (“EPS”) — basic and diluted (in thousands, except per share data):

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Net (loss) income $ ( 7,474 ) $ 28,398 $ ( 45,542 ) $ 52,129

5 unchanged sentences

_______________________________

(1) No dilutive effect for the three months ended March 31, 2022;

(1) No dilutive effect for the three and six months ended June 30, 2022;

therefore, zero incremental shares included for the period.

3 unchanged sentences

We do not issue derivatives for trading or speculative purposes.

To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions.

The derivative

ICU MEDICAL, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

instruments we utilize, including various foreign exchange contracts and interest rate swaps, are designated and qualify as cash flow hedges.

The derivative instruments we utilize, including various foreign exchange contracts and interest rate swaps, are designated and qualify as cash flow hedges.

Our derivative instruments are recorded at fair value on the condensed consolidated balance sheets and are classified based on the instrument's maturity date.

5 unchanged sentences

These contracts are agreements to buy or sell a quantity of a currency at a predetermined future date and at a predetermined exchange rate.

Our foreign exchange forward contracts hedge exposures principally denominated in Mexican Pesos, Euros, Czech Koruna and Japanese Yen, and have varying maturities with an average term of approximately twelve months.

The total notional amount of these outstanding derivative contracts as of March 31, 2022 was $ 231.8 million, which included the notional equivalent of $ 58.7 million in Mexican Pesos, $ 42.4 million in Euros, $ 23.5 million in Czech Koruna, $ 22.2 million in Japanese Yen and $ 85.0 million in other foreign currencies, with terms currently through July 2023.

Our foreign exchange forward contracts hedge exposures principally denominated in Mexican Pesos ("MXN"), Euros, Czech Koruna ("CZK"), Japanese Yen ("JPY"), U.S.

Dollar ("USD") and Chinese Renminbi ("CNH") and have varying maturities with an average term of approximately twelve months.

The total notional amount of these outstanding derivative contracts as of June 30, 2022 was $ 209.2 million, which included the notional equivalent of $ 43.1 million in MXN, $ 39.7 million in Euros, $ 18.3 million in CZK, $ 18.8 million in JPY, $ 19.3 million in CNH, $ 36.3 million in USD and $ 33.9 million in other foreign currencies, with terms currently through July 2023.

We did not have such derivative contracts as of December 31, 2021.

Cross-currency Par Forward Contracts

We enter into cross-currency par forward contracts to hedge a portion of our Mexico forecasted expenses denominated in Mexican Pesos ("MXN").

We enter into cross-currency par forward contracts to hedge a portion of our Mexico forecasted expenses denominated in MXN.

These contracts are agreements to exchange cash flows from one currency to another at specified intervals over the contract term with all exchanges occurring at the same predetermined rate.

In November 2021, we entered into a one-year cross-currency par forward contract with a term from December 1, 2021 to December 1, 2022.

The total notional amount of this outstanding derivative as of March 31, 2022 and December 31, 2021 was approximately 311.6 million MXN and 413.1 million MXN, respectively.

The total notional amount of this outstanding derivative as of June 30, 2022 and December 31, 2021 was approximately 208.2 million MXN and 413.1 million MXN, respectively.

The derivative instrument matures in equal monthly amounts at a fixed forward rate of 21.60 MXN/USD.

16 unchanged sentences

Condensed Consolidated Balance Sheet Location Foreign Exchange Contracts Interest Rate Swaps Gross Derivatives

As of March 31, 2022

As of June 30, 2022

Prepaid expenses and other current assets $ 9,463 $ 15,407 $ 24,870

11 unchanged sentences

Total liabilities $ — $ 1,480 $ 1,480

We recognized the following gains (losses) on our derivative instruments designated as cash flow hedges (in thousands):

Gain (Loss) Recognized in Other Comprehensive Income

We recognized the following gains on our derivative instruments designated as cash flow hedges (in thousands):

Gain Recognized in Other Comprehensive Income

Three months ended

June 30, Six months ended

2022 2021 2022 2021

Derivatives designated as cash flow hedging instruments:

6 unchanged sentences

The following table presents the effects of our derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Operations (in thousands):

Gain (Loss) Reclassified From Accumulated Other Comprehensive Income into Income

Gain (Loss) Reclassified From Accumulated Other Comprehensive (Loss) Income into Income

Three months ended

June 30, Six months ended

Location of Gain (Loss) Recognized in Income 2022 2021 2022 2021

3 unchanged sentences

Foreign exchange contracts Interest expense (1)

Interest rate swaps Interest expense ( 1,524 ) — ( 1,524 ) —

Total derivatives designated as cash flow hedging instruments $ 1,857 $ 903 $ 4,136 $ 1,744

1 unchanged sentence

(1) Represents location of gain reclassified from accumulated other comprehensive income into income as a result that a forecasted transaction is no longer probable of occurring.

As of March 31, 2022, we expect an estimated $ 1.9 million in deferred gains on the outstanding foreign exchange contracts and an estimated $ 3.9 million in deferred losses on the interest rate swaps will be reclassified from accumulated other comprehensive loss to net income during the next 12 months concurrent with the underlying hedged transactions also being reported in net income.

As of June 30, 2022, we expect an estimated $ 8.5 million in deferred gains on the outstanding foreign exchange contracts and an estimated $ 15.7 million in deferred gains on the interest rate swaps will be reclassified from accumulated other comprehensive loss to net income during the next 12 months concurrent with the underlying hedged transactions also being reported in net income.

Fair Value Measurements

16 unchanged sentences

If the probability of achieving the Price Targets during their respective measurement periods is significantly greater than initially anticipated, the realization of an additional liability and related expense will have a significant impact on our consolidated financial statements in the period recognized.

As of June 30, 2022, the estimated fair value of the contingent earn-out is $ 26.1 million.

ICU MEDICAL, INC.

3 unchanged sentences

Total consideration for the acquisition includes a potential earn-out payment of up to $ 2.5 million, consisting of (i) a cash payment of $ 1.0 million contingent on the achievement of certain revenue targets for the annual period ending December 31, 2022 and, separately, (ii) a cash payment of $ 1.5 million contingent on certain product-related regulatory certifications obtained by May 26, 2024.

As of March 31, 2022, the estimated fair value of the total contingent earn-out is $ 1.6 million.

As of June 30, 2022, the estimated fair value of the total contingent earn-out is $ 1.7 million.

During August 2021, we entered into an agreement with one of our international distributors whereby that distributor would not compete with us in a specific territory for a three-year period that will end in September 2024.

1 unchanged sentence

The contingent earn-out payment shall not exceed $ 6.0 million, which will be earned based on certain revenue targets over a twelve-month measurement period determined by the highest four consecutive quarters commencing over a two-year period starting on the closing date of the agreement and provided that the distributor is in compliance with its obligations under the agreement.

As of both March 31, 2022 and December 31, 2021, the estimated fair value of the contingent earn-out is $ 2.6 million.

As of both June 30, 2022 and December 31, 2021, the estimated fair value of the contingent earn-out is $ 2.6 million.

The estimated fair value of the contingent earn-out is calculated using a probability-weighted cash flow model based on historical revenue streams and the likelihood that the revenue targets will be met.

18 unchanged sentences

Accrued balance, March 31, 2022 $ 57,701

Change in fair value of earn-out (included in income from operations as a separate line item) (2)

Currency translation ( 98 )

Accrued balance, June 30, 2022 $ 30,409

_______________________________

1 unchanged sentence

Acquisitions).

(2) Primarily relates to the change in fair value of the Smiths Medical earn-out.

Earn-out Liability

2 unchanged sentences

Accrued balance, March 31, 2021 $ 26,300

The following tables provide quantitative information about Level 3 inputs for fair value measurement of our earn-out liabilities related to Smiths Medical and Pursuit:

Smiths Medical Earn-out

Change in fair value of earn-out (included in income from operations as a separate line item) —

Accrued balance, June 30, 2021 $ 26,300

ICU MEDICAL, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Simulation Input At Acquisition

The following tables provide quantitative information about Level 3 inputs for fair value measurement of our earn-out liabilities related to Smiths Medical and Pursuit:

Smiths Medical Earn-out

Simulation Input As of

June 30, 2022 At Acquisition

January 6, 2022

3 unchanged sentences

Simulation Input As of

March 31, 2021

June 30, 2021

Revenue/Gross Profit Volatility 25.00 %

3 unchanged sentences

Investments, Foreign Exchange Contracts and Interest Rate Contracts

The fair value of our investments, which consist of corporate bonds, is estimated using observable market-based inputs such as quoted prices, interest rates and yield curves or Level 2 inputs.

Our investments consist of corporate bonds and U.S treasury securities.

The fair value of our corporate bonds is estimated using observable market-based inputs such as quoted prices, interest rates and yield curves or Level 2 inputs.

The fair value of our U.S.

treasury securities are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy.

The fair value of our Level 2 foreign exchange contracts, including forward contracts and cross-currency par forward contracts, is estimated using observable market inputs such as known notional value amounts, spot and forward exchange rates.

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair value measurements as of March 31, 2022

Fair value measurements as of June 30, 2022

Total carrying

4 unchanged sentences

Available-for-sale debt securities:

Short-term $ 14,864 $ — $ 14,864 $ —

Long-term 2,539 — 2,539 —

Short-term corporate bonds $ 11,787 $ — $ 11,787 $ —

Short-term U.S.

treasury securities 1,404 1,404 — —

Long-term corporate bonds 1,837 — 1,837 —

Foreign exchange contracts:

2 unchanged sentences

Interest rate contracts:

Prepaid expenses and other current assets 15,407 — 15,407 —

Other assets 23,834 — 23,834 —

Total Assets $ 63,844 $ 1,404 $ 62,440 $ —

Contingent earn-out liability - ST $ 290 $ — $ — $ 290

Contingent earn-out liability - LT 30,119 — — 30,119

10 unchanged sentences

Available-for-sale debt securities:

Short-term $ 14,420 $ — $ 14,420 $ —

Long-term 4,620 — 4,620 —

Short-term corporate bonds $ 14,420 $ — $ 14,420 $ —

Long-term corporate bonds 4,620 — 4,620 —

Cross-currency par forward contract:

10 unchanged sentences

Investments in Available-for-sale Securities

Our available-for-sale investment securities currently consist of short-term and long-term corporate bonds and are considered “investment grade” and are carried at fair value.

Our available-for-sale investment securities currently consist of short-term and long-term corporate bonds and short-term U.S.

treasury securities and are considered “investment grade” and are carried at fair value.

We assess our investment in available-for-sale debt securities for impairment each reporting period.

3 unchanged sentences

Unrealized gains and non-credit-related unrealized losses are recorded, net of tax, in other comprehensive income (loss).

We did not have any investments in available-for-sale debt securities in unrealized loss positions as of March 31, 2022 or December 31, 2021.

We did not have any investments in available-for-sale debt securities in unrealized loss positions as of June 30, 2022 or December 31, 2021.

The amortized cost of the debt securities are adjusted for the amortization of premiums computed under the effective interest method.

5 unchanged sentences

Our short-term and long-term investments in available-for-sale securities consist of the following (in thousands):

As of March 31, 2022

As of June 30, 2022

Amortized Cost Unrealized Holding

1 unchanged sentence

Short-term corporate bonds $ 11,787 $ — $ 11,787

Short-term U.S.

treasury securities 1,404 — 1,404

Long-term corporate bonds 1,837 — 1,837

16 unchanged sentences

We report our proportionate share of the investee's income or (loss) resulting from this investment in other income, net in our condensed consolidated statements of operations.

The carrying value of our equity method investment is reported in other assets on our condensed consolidated balance sheets (see Note 11:

Prepaid Expenses and Other Current Assets and Other Assets).

We assess our equity method investments for impairment on an annual basis or whenever events or circumstances indicate that the

The carrying value of our equity method investment is reported in other assets on our

ICU MEDICAL, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

carrying value of the investment may not be recoverable.

Our recorded share of the investee's loss was not material for the period ended March 31, 2022.

We did not receive any dividend distributions from this investment during the period ended March 31, 2022.

condensed consolidated balance sheets (see Note 11:

Prepaid Expenses and Other Current Assets and Other Assets).

We assess our equity method investments for impairment on an annual basis or whenever events or circumstances indicate that the carrying value of the investment may not be recoverable.

Our recorded share of the investee's loss was not material for the three and six months ended June 30, 2022.

We did not receive any dividend distributions from this investment during the three and six months ended June 30, 2022.

Our non-marketable equity method investment consists of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Equity method investment $ 3,206 $ 3,238

Investments in non-marketable debt securities

During the second quarter 2022, we received $ 19.0 million in proceeds from a promissory note related to an acquired investment as part of the Smiths Medical acquisition.

Prepaid Expenses and Other Current Assets and Other Assets

Prepaid expenses and other current assets consist of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Other prepaid expenses and receivables $ 27,081 $ 14,763

Prepaid vendor expenses 5,655 —

Deferred costs 7,648 12,746

3 unchanged sentences

Foreign exchange contracts 9,463 1,061

Interest rate contracts 15,407 —

Deposits 1,294 1,343

2 unchanged sentences

Other assets consist of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Pump lease receivables $ 28,436 $ 25,941

7 unchanged sentences

$ 101,728 $ 63,743

Inventories are stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method.

Inventory costs include material, labor and overhead related to the manufacturing of our products.

Inventories consist of the following (in thousands):

ICU MEDICAL, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2022 December 31, 2021

Inventories are stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method.

Inventory costs include material, labor and overhead related to the manufacturing of our products.

Inventories consist of the following (in thousands):

June 30, 2022 December 31, 2021

Raw materials $ 240,804 $ 135,528

2 unchanged sentences

Total inventories $ 583,050 $ 290,235

During the quarter ended March 31, 2022, inventories increased significantly due to the acquisition of Smiths Medical.

During 2022, inventories increased significantly due to the acquisition of Smiths Medical.

All acquired inventory was recorded at fair value on January 6, 2022 in accordance with ASC 805, Business Combinations (see Note 3:

2 unchanged sentences

Property, plant and equipment consists of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Machinery and equipment $ 407,580 $ 321,078

11 unchanged sentences

(1) Instruments placed with customers consist of drug-delivery and monitoring systems placed with customers under operating leases.

Depreciation expense was $ 21.4 million and $ 16.3 million for the three months ended March 31, 2022 and 2021, respectively.

During the quarter ended March 31, 2022, property, plant and equipment and related depreciation expense increased significantly due to the acquisition of Smiths Medical (see Note 3:

Depreciation expense was $ 24.9 million and $ 46.4 million for the three and six months ended June 30, 2022, respectively.

Depreciation expense was $ 16.3 million and $ 32.7 million for the three and six months ended June 30, 2021 and 2021, respectively.

During the three and six months ended June 30, 2022, property, plant and equipment and related depreciation expense increased significantly due to the acquisition of Smiths Medical (see Note 3:

Acquisitions).

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Goodwill and Intangible Assets, Net

3 unchanged sentences

Currency translation ( 60,034 )

Balance as of March 31, 2022 $ 1,526,866

Balance as of June 30, 2022 $ 1,421,216

_______________________________

(1) Relates to Smiths Medical acquired on January 6, 2022.

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(2) Other relates to measurement period adjustments related to a 2021 acquisition of a small foreign infusion systems supplier.

(2) Other reflects measurement period adjustments related to a 2021 acquisition of a small foreign infusion systems supplier.

Intangible Assets, Net

Intangible assets, carried at cost less accumulated amortization and amortized on a straight-lined basis, were as follows (in thousands):

Weighted-Average Amortization Life in Years March 31, 2022

Weighted-Average Amortization Life in Years June 30, 2022

Cost Accumulated

12 unchanged sentences

* Internally developed software will be amortized when the projects are complete and the assets are ready for their intended use.

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Weighted-Average Amortization Life in Years December 31, 2021

14 unchanged sentences

Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives.

During the three months ended March 31, 2022 and 2021, intangible asset amortization expense was $ 31.7 million and $ 5.8 million, respectively.

During the quarter ended March 31, 2022, intangible assets and related amortization expense increased significantly due to the acquisition of Smiths Medical (see Note 3:

During the three months ended June 30, 2022 and 2021, intangible asset amortization expense was $ 41.6 million and $ 5.8 million, respectively.

During the six months ended June 30, 2022 and 2021, intangible asset amortization expense was $ 73.3 million and $ 11.6 million, respectively.

During the three and six months ended June 30, 2022, intangible assets and related amortization expense increased significantly due to the acquisition of Smiths Medical (see Note 3:

Acquisitions).

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As of March 31, 2022 estimated annual amortization for our intangible assets for each of the next five years is approximately (in thousands):

As of June 30, 2022 estimated annual amortization for our intangible assets for each of the next five years is approximately (in thousands):

Remainder of 2022 $ 65,893

3 unchanged sentences

Accrued liabilities consist of the following (in thousands):

March 31, 2022 December 31, 2021

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June 30, 2022 December 31, 2021

Salaries and benefits $ 56,453 $ 27,304

9 unchanged sentences

Warranties and returns 546 532

Field service corrective action (1)

Accrued freight 10,903 9,194

Foreign exchange contracts 577 —

Acquired restructuring liability 6,775 —

Accrued transaction/integration costs 8,982 —

Accrued audit fees 4,741 1,008

3 unchanged sentences

___________________________

(1) Includes $ 31.3 million of estimated remediation costs related to a 2021 Warning Letter received by Smiths Medical from the FDA following an inspection of Smiths Medical’s Oakdale, Minnesota Facility, see Note 19:

(1) Relates to field corrective actions associated with certain products in connection with a 2021 Warning Letter received by Smiths Medical from the FDA following an inspection of Smiths Medical’s Oakdale, Minnesota Facility, see Note 19:

Commitments and Contingencies for further detail.

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Other long-term liabilities consist of the following (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Operating lease liability-LT $ 68,491 $ 33,971

11 unchanged sentences

(1) Consists of contracts with customers and suppliers that were valued at below market at the time of the Hospira Infusion Systems acquisition.

(2) Long-term portion of the estimated remediation costs related to a 2021 Warning Letter received by Smiths Medical from the FDA following an inspection of Smiths Medical’s Oakdale, Minnesota Facility, see Note 19:

(2) Relates to field corrective actions associated with certain products in connection with a 2021 Warning Letter received by Smiths Medical from the FDA following an inspection of Smiths Medical’s Oakdale, Minnesota Facility, see Note 19:

Commitments and Contingencies for further detail.

Income taxes were accrued at an estimated effective tax rate of 31 % and 12 % for the three months ended March 31, 2022 and 2021, respectively.

The effective tax rate for the three months ended March 31, 2022 differs from the federal statutory rate of 21 % principally because of the effect of the mix of U.S.

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Income taxes were accrued at an estimated effective tax rate of 56 % and 36 % for the three and six months ended June 30, 2022, respectively, as compared to 18 % and 16 % for the three and six months ended June 30, 2021, respectively.

The effective tax rate for the three and six months ended June 30, 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, foreign-derived intangible income ("FDII") and tax credits and the following discrete items recognized during the interim period:

• Excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the three months ended March 31, 2022 of $ 2.6 million.

The effective tax rate for the three months ended March 31, 2021 differs from the federal statutory rate of 21 % principally because of the effect of the mix of U.S.

• Excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the three and six months ended June 30, 2022 of $ 0.0 million and $ 2.6 million, respectively.

• The revaluation of the contingent consideration during the three and six months ended June 30, 2022 resulted in a tax expense of $ 0.0 million and $ 0.0 million , respectively.

The effective tax rate for the three and six months ended June 30, 2021 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, global intangible low taxed income ("GILTI"), FDII and tax credits.

The effective tax rate during the three months ended March 31, 2021 included a discrete tax benefit of $ 1.8 million related to excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.

The effective tax rate during the three and six months ended June 30, 2021 included a discrete tax benefit of $ 0.4 million and $ 2.2 million, respectively, related to excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.

Long-Term Debt

3 unchanged sentences

We used the proceeds from borrowings under the Term Loan A and the Term Loan B (collectively, the "Term Loans") to fund a portion of the cash consideration for the purchase of Smiths Medical and the related fees and expenses incurred in connection with the acquisition.

We did not incur borrowings under the Revolving Credit Facility on the

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closing date of the acquisition.

We did not incur borrowings under the Revolving Credit Facility on the closing date of the acquisition.

The proceeds from any future borrowings under the Revolving Credit Facility may be used for working capital and other general corporate purposes.

9 unchanged sentences

Interest Rate Terms

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In general, the Term Loans and borrowings under the Revolving Credit Facility denominated in U.S.

11 unchanged sentences

Effective on the first Adjustment Date, as defined in the Credit Agreement, occurring subsequent to our quarter ending June 30, 2022, the applicable margin for the Term Loan A and borrowings under the Revolving Credit Facility will be determined by reference to the leverage ratio in effect from time to time as set forth in the following table:

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Leverage Ratio Applicable Margin for Term SOFR Loans Applicable Margin for Base Rate Loans Commitment Fee Rate

9 unchanged sentences

Less than 2.75 to 1.0 2.25 % 1.25 %

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Principal Payments

4 unchanged sentences

During March 2022, we prepaid $ 16.0 million in principal payments on the Term Loan A principal balance.

During 2022, we paid $ 18.1 million in principal payments.

Interest Payments

5 unchanged sentences

Guarantors and Collateral

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Our obligations under the Credit Agreement are unconditionally guaranteed, on a joint and several basis, by ICU Medical, Inc.

10 unchanged sentences

The minimum Interest Coverage ratio is 3.00 to 1.00.

We were in compliance with all financial covenants as of March 31, 2022.

We were in compliance with all financial covenants as of June 30, 2022.

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The Credit Agreement contains customary events of default, including, among others:

15 unchanged sentences

The carrying values of our long-term debt consist of the following (in thousands):

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Effective Interest Rate As of

March 31, 2022

June 30, 2022

Senior Secured Credit Facilities:

8 unchanged sentences

(1) Comprised of $ 14.2 million and $ 12.6 million relating to the Term Loan A and the Term Loan B, respectively.

As of March 31, 2022, the aggregate amount of principal repayments of our long-term debt (including any current portion) for each of the next five years is approximately (in thousands):

As of June 30, 2022, the aggregate amount of principal repayments of our long-term debt (including any current portion) for each of the next five years is approximately (in thousands):

Remainder of 2022 $ 4,250

2 unchanged sentences

The following table presents the total interest expense related to our long-term debt (in thousands):

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Three months ended

June 30, Six months ended

2022 2021 2022 2021

Contractual interest $ 12,622 $ — $ 22,639 $ —

9 unchanged sentences

The Shareholders Agreement also permits Smiths to designate one individual for election to our Board of Directors (the "Board") so long as Smiths beneficially owns at least 5.0 % of the total outstanding shares of our common stock.

On February 1, 2022, our Board appointed a new director designated by Smiths

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

pursuant to the Shareholders Agreement who will stand for election to the Board at the 2022 Annual Meeting of Stockholders to be held in May 2022.

On February 1, 2022, our Board appointed a new director designated by Smiths pursuant to the Shareholders Agreement who was elected to the Board at the 2022 Annual Meeting of Stockholders held in May 2022.

This appointment expands the size of our Board from eight to nine members.

3 unchanged sentences

This plan has no expiration date.

During the three months ended March 31, 2022, we did not purchase any shares of our common stock under our share purchase plan.

As of March 31, 2022, all of the $ 100.0 million available for purchase was remaining under the plan.

During the three months ended June 30, 2022, we did not purchase any shares of our common stock under our share purchase plan.

As of June 30, 2022, all of the $ 100.0 million available for purchase was remaining under the plan.

We are currently limited on share purchases in accordance with the terms and conditions of our Credit Agreement (see Note 17:

Long-Term Debt).

For the three months ended March 31, 2022, we withheld 37,279 shares of our common stock from employee vested restricted stock units in consideration for $ 8.7 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations.

For the three months ended March 31, 2021, we withheld 37,423 shares of our common stock from employee vested restricted stock units in consideration for $ 7.7 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations.

For the six months ended June 30, 2022, we withheld 44,759 shares of our common stock from employee vested restricted stock units in consideration for $ 10.4 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations.

For the three months ended June 30, 2021, we withheld 37,882 shares of our common stock from employee vested restricted stock units in consideration for $ 7.8 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations.

Treasury stock is used to issue shares for stock option exercises and restricted stock grants.

1 unchanged sentence

The components of AOCI, net of tax, were as follows (in thousands):

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Foreign Currency Translation Adjustments Unrealized (Losses) Gains on Cash Flow Hedges Other Adjustments Total

5 unchanged sentences

Balance as of March 31, 2022 $ ( 23,991 ) $ 23,335 $ 28 $ ( 628 )

Other comprehensive (loss) income before reclassifications ( 99,805 ) 10,245 14 ( 89,546 )

Amounts reclassified from AOCI — ( 2,101 ) — ( 2,101 )

Other comprehensive (loss) income ( 99,805 ) 8,144 14 ( 91,647 )

Balance as of June 30, 2022 $ ( 123,796 ) $ 31,479 $ 42 $ ( 92,275 )

Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Other Adjustments Total

5 unchanged sentences

Balance as of March 31, 2021 $ ( 11,839 ) $ 1,839 $ 87 $ ( 9,913 )

Other comprehensive income before reclassifications 1,302 335 12 1,649

Amounts reclassified from AOCI — ( 687 ) — ( 687 )

Other comprehensive income (loss) 1,302 ( 352 ) 12 962

Balance as of June 30, 2021 $ ( 10,537 ) $ 1,487 $ 99 $ ( 8,951 )

Commitments and Contingencies

3 unchanged sentences

Off-Balance Sheet Arrangements

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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 or other matters related to sales of our products.

3 unchanged sentences

On January 6, 2022, we acquired Smiths Medical.

Total consideration for the acquisition includes a potential earn-out payment of $ 100.0 million in cash contingent on our common stock achieving a certain volume-weighted average price from the closing date to either the third or fourth anniversary of closing.

As of March 31, 2022, the estimated fair value of the contingent earn-out is $ 53.5 million (see Note 9:

Total consideration for the acquisition includes a potential earn-out payment of $ 100.0 million in cash contingent on our common stock achieving a certain volume-weighted average price from

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the closing date to either the third or fourth anniversary of closing.

As of June 30, 2022, the estimated fair value of the contingent earn-out is $ 26.1 million (see Note 9:

Fair Value Measurements).

4 unchanged sentences

The actual costs to be incurred are dependent upon the scope of the work necessary to achieve regulatory clearance and could differ from the original estimate.

The estimated field service corrective action recorded at March 31, 2022 is $ 54.7 million.

The estimated field service corrective action recorded at June 30, 2022 is $ 53.9 million.

During November 2021, we acquired a small foreign infusion systems supplier.

As of March 31, 2022, the estimated fair value of the contingent earn-out is $ 1.6 million (see Note 9:

As of June 30, 2022, the estimated fair value of the contingent earn-out is $ 1.7 million (see Note 9:

Fair Value Measurements).

2 unchanged sentences

The contingent earn-out shall not exceed $ 6.0 million, which will be earned based on certain revenue targets over a twelve-month measurement period determined by the highest four consecutive quarters commencing over a two-year period starting on the closing date of the agreement and provided that the distributor is in compliance with its obligations under the agreement.

As of March 31, 2022, the estimated fair value of the contingent earn-out is $ 2.6 million (see Note 9:

As of June 30, 2022, the estimated fair value of the contingent earn-out is $ 2.6 million (see Note 9:

Fair Value Measurements).

9 unchanged sentences

The Product Addendum includes the supply of additional product to us subject to certain time and pricing terms and conditions.

The Product Addendum includes a

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minimum purchase obligation of $ 29.6 million and expires on November 30, 2022.

The Product Addendum includes a minimum purchase obligation of $ 29.6 million and expires on November 30, 2022.

As of March 31, 2022, we had satisfied the minimum purchase obligations under the Product Addendum.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements