What changed in this filing

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Item 1. Financial Statements

2022-11-07 compared with 2022-08-09 · 233 added, 170 removed, 1020 unchanged (28% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value data)

(In thousands, except par value data and treasury shares)

September 30,

2022 December 31,

4 unchanged sentences

TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES 246,798 567,247

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

Accounts receivable, net of allowance for doubtful accounts of $ 8,006 at September 30, 2022 and $ 7,038 at December 31, 2021

212,845 105,894

31 unchanged sentences

Authorized — 80,000 shares;

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

Issued — 23,980 shares at September 30, 2022 and 21,280 shares at December 31, 2021;

and outstanding — 23,979 shares at September 30, 2022 and 21,280 shares at December 31, 2021

Additional paid-in capital 1,323,178 721,412

13 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

11 unchanged sentences

INTEREST EXPENSE ( 21,151 ) ( 168 ) ( 51,068 ) ( 492 )

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

OTHER INCOME (EXPENSE), net 311 ( 287 ) 782 921

(LOSS) INCOME BEFORE INCOME TAXES ( 21,307 ) 37,925 ( 92,962 ) 99,849

13 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

1 unchanged sentence

Other comprehensive income (loss), net of tax:

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.

Cash flow hedge adjustments, net of tax of $( 3,676 ) and $ 259 for the three months ended September 30, 2022 and 2021, respectively, and $( 15,357 ) and $ 668 for the nine months ended September 30, 2022 and 2021, respectively.

16,915 ( 819 ) 48,631 ( 2,116 )

2 unchanged sentences

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

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

227 12 256 36

Other comprehensive loss, net of tax ( 73,407 ) ( 6,167 ) ( 146,413 ) ( 13,596 )

COMPREHENSIVE (LOSS) INCOME $ ( 86,615 ) $ 24,914 $ ( 205,163 ) $ 69,614

25 unchanged sentences

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

Issuance of restricted stock and exercise of stock options 82 8 4,837 69 — — 4,914

Tax withholding payments related to net share settlement of equity awards ( 2 ) — — ( 103 ) — — ( 103 )

Stock compensation — — 8,743 — — — 8,743

Other comprehensive loss, net of tax — — — — — ( 73,407 ) ( 73,407 )

Net loss — — — — ( 13,208 ) — ( 13,208 )

Balance, September 30, 2022 23,979 $ 2,398 $ 1,323,178 $ ( 126 ) $ 853,037 $ ( 165,682 ) $ 2,012,805

ICU MEDICAL, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)(continued)

(Amounts in thousands)

Common Stock Additional

18 unchanged sentences

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

Issuance of restricted stock and exercise of stock options 20 2 ( 963 ) 2,511 — — 1,550

Tax withholding payments related to net share settlement of equity awards ( 1 ) — — ( 290 ) — — ( 290 )

Stock compensation — — 6,533 — — — 6,533

Other comprehensive loss, net of tax — — — — — ( 6,167 ) ( 6,167 )

Net income — — — — 31,081 — 31,081

Balance, September 30, 2021 21,238 $ 2,124 $ 711,152 $ ( 48 ) $ 891,862 $ ( 15,118 ) $ 1,589,972

ICU MEDICAL, INC.

2 unchanged sentences

(In thousands)

Six months ended

Nine months ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

11 unchanged sentences

Change in fair value of contingent earn-out ( 31,253 ) —

Product-related charges — 3,380

Usage of spare parts 7,915 9,831

14 unchanged sentences

Intangible asset additions ( 6,560 ) ( 10,216 )

Investments in non-marketable equity investments — ( 3,250 )

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

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(In thousands)

Six months ended

Nine months ended

September 30,

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:

Accounts payable for property, plant and equipment $ 2,757 $ 2,897

Non-compete agreement with associated contingent earn-out liability $ — $ 3,100

Detail of assets acquired and liabilities assumed in acquisitions*:

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The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of ICU Medical, Inc., ("ICU"), a Delaware corporation, filed with the SEC for the year ended December 31, 2021.

Certain reclassifications have been made to the prior year footnote information for revenue disaggregated by geography in Note 5:

Revenues to conform to classifications used in the current year.

These reclassifications had no impact on net loss, shareholder's equity or cash flows as previously reported.

We are engaged in the development, manufacturing and sale of innovative medical products used in infusion therapy and critical care applications.

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Acquisitions.

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.

Our condensed consolidated statement of operations includes the results of operations for Smiths Medical from January 7, 2022 through September 30, 2022.

During the third quarter ended September 30, 2022, Smiths Medical changed their reporting period to align with ICU's calendar quarter from their historic 4-4-5 reporting period, this change did not have a material impact on our consolidated financial statements for the three and nine months ended September 30, 2022.

Our condensed consolidated statement of operations includes the results of operations for Smiths Medical from June 26, 2022 through September 30, 2022 and January 7, 2022 through September 30, 2022 for the three and nine months ended September 30, 2022, respectively.

New Accounting Pronouncements

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_______________________________

(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:

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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 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.

Total revenues and net loss attributable to Smiths Medical for the period from January 7, 2022 to September 30, 2022 were estimated to be $ 699.1 million and $ 79.0 million, respectively, and for the three months ended September 30, 2022 were estimated to be $ 261.4 million and $ 13.6 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 June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

(In thousands) 2022 2021 2022 2021

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

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.

incremental amortization expense on intangible assets acquired of $ 1.9 million and $ 1.9 million for the nine months ended September 30, 2022 and 2021, respectively, incremental interest expense, including amortization of debt discount and debt issuance costs, on the Senior Secured Credit Facilities (as defined in Note 17:

Long-Term Debt) of $ 1.4 million and $ 47.1 million for the nine months ended September 30, 2022 and 2021, respectively;

and a $ 27.4 million expense adjustment related to the increase in fair value of inventory to remove the expense for the nine months ended September 30, 2022 and to add the expense for the nine months ended September 30, 2021.

In addition, there was a non-recurring adjustment directly attributable to the business combination for acquisition-related costs of $ 11.6 million for the nine months ended September 30, 2021.

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

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

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

ICU MEDICAL, INC.

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Restructuring, Strategic Transaction and Integration

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, strategic transaction and integration expenses were $ 14.4 million and $ 2.4 million for the three months ended September 30, 2022 and 2021, respectively, and $ 61.8 million and $ 9.0 million for nine months ended September 30, 2022 and 2021, respectively.

Restructuring

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):

During the three and nine months ended September 30, 2022, restructuring charges were $ 2.4 million and $ 7.3 million, respectively, and were related to severance costs.

During the third quarter 2021 we adjusted certain facility restructuring liabilities by $2.0 million to reflect actual amounts owed which resulted in net restructuring credits of $(1.9) million and $(1.8) million for the three and nine months ended September 30, 2021, respectively.

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

Severance Pay and Benefits Retention and Facility Closure Costs Total

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

Charges incurred 2,428 — 2,428

Payments ( 2,181 ) ( 19 ) ( 2,200 )

Currency translation ( 310 ) ( 114 ) ( 424 )

Accrued balance, September 30, 2022 $ 5,341 $ 1,426 $ 6,767

Strategic Transaction and Integration Expenses

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:

We incurred and expensed $ 12.0 million and $ 4.3 million in strategic transaction and integration expenses during the three months ended September 30, 2022 and 2021, respectively, and we incurred and expensed $ 54.5 million and $ 10.8 million in strategic transaction and integration expenses during the nine months ended September 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 nine months ended September 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.

The nine months ended September 30, 2022 also included a United Kingdom stamp tax.

The strategic transaction and integration expenses for the three and nine months ended September 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 and transaction costs related to the Smiths Medical transaction.

Revenue Recognition

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Following our acquisition of Smiths Medical, our primary product lines are Infusion Consumables, Infusion Systems, IV Solutions, Critical Care, Infusion Systems-Smiths Medical, Vascular Access-Smiths Medical and Vital Care-Smiths Medical.

3 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.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

Product line 2022 2021 2022 2021

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The following table represents our revenues disaggregated by geography (in thousands):

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

Geography 2022 2021 2022 2021

Europe, the Middle East and Africa $ 87,415 $ 37,761 $ 173,619 $ 72,560

Other Foreign 109,723 59,249 218,850 115,145

Total Foreign 197,138 97,010 392,469 187,705

United States $ 376,691 $ 245,298 $ 1,088,348 $ 697,316

Canada 29,129 19,026 86,473 61,560

LATAM 23,599 14,875 59,827 44,191

Americas 429,419 279,199 1,234,648 803,067

Europe, the Middle East and Africa 101,869 36,239 275,488 108,800

APAC 66,569 20,622 191,847 63,916

Total Revenues $ 597,857 $ 336,060 $ 1,701,983 $ 975,783

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contract balances

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

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

Contract Liabilities

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Other deferred revenue recognized 3,488

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

Ending balance, September 30, 2022 $ ( 50,639 )

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

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Software revenue deferred due to implementation ( 2,967 )

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

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

Ending balance, September 30, 2021 $ ( 4,662 )

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

Recognition Timing

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*Other deferred revenue includes pump development programs, purchased training and extended warranty.

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We determine if an arrangement is a lease at inception.

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Our lease terms include options to extend when it is reasonably certain that we will exercise that option.

All of our leases have

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

stated lease payments, which may include fixed rental increases.

All of our leases have stated lease payments, which may include fixed rental increases.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

4 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

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

Six months ended

Nine months ended

September 30,

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

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

June 30, 2022 December 31, 2021

September 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):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Finance leases

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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):

As of September 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

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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 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.

Due to the net loss for the three and nine months ended September 30, 2022, any potentially dilutive 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 12,235 and 12,132 anti-dilutive securities for the three and nine months ended September 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

September 30, Nine months ended

September 30,

2022 2021 2022 2021

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_______________________________

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

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

therefore, zero incremental shares included for the period.

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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.

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

The total notional amount of these outstanding derivative contracts as of September 30, 2022 was $ 145.2 million, which included the notional equivalent of $ 31.5 million in MXN, $ 27.9 million in Euros, $ 10.9 million in CZK, $ 12.2 million in JPY, $ 15.0 million in CNH, $ 26.2 million in USD, $ 11.7 million in CAD, $ 6.8 million in AUD and $ 3.1 million in other foreign currencies, with terms currently through July 2023.

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

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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 June 30, 2022 and December 31, 2021 was approximately 208.2 million MXN and 413.1 million MXN, respectively.

The total notional amount of this outstanding derivative as of September 30, 2022 and December 31, 2021 was approximately 103.8 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.

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

As of June 30, 2022

As of September 30, 2022

Prepaid expenses and other current assets $ 11,695 $ 24,924 $ 36,619

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

Gain Recognized in Other Comprehensive Income

Gain (Loss) Recognized in Other Comprehensive Income

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

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

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(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 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.

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

As of September 30, 2022, we expect an estimated $ 9.9 million in deferred gains on the outstanding foreign exchange contracts and an estimated $ 25.6 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

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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.

As of September 30, 2022, the estimated fair value of the contingent earn-out is $ 21.8 million.

ICU MEDICAL, INC.

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

As of September 30, 2022, the estimated fair value of the total contingent earn-out is $ 1.8 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.

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

As of both September 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.

During the fourth quarter of 2019, we recognized an earn-out liability related to the acquisition of Pursuit Vascular, Inc.

Pursuit's former equity holders were entitled up to $ 50.0 million in additional cash consideration contingent upon the achievement of certain sales and gross profit targets for specific customers.

Pursuit's former equity holders were entitled to up to $ 50.0 million in additional cash consideration contingent upon the achievement of certain sales and gross profit targets for specific customers.

The earn-out was calculated as a percentage of gross profit achieved during the earn-out period against a pre-determined target gross profit, not to exceed $ 50.0 million.

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Accrued balance, June 30, 2022 $ 30,409

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

Currency translation ( 108 )

Accrued balance, September 30, 2022 $ 26,242

_______________________________

2 unchanged sentences

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

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Earn-out Liability

4 unchanged sentences

Accrued balance, June 30, 2021 $ 26,300

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contingent earn-out — non-compete arrangement 3,100

Transfer of Pursuit earn-out liability into Level 2 ( 26,300 )

Accrued balance, September 30, 2021 $ 3,100

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:

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Simulation Input As of

June 30, 2022 At Acquisition

September 30, 2022 At Acquisition

January 6, 2022

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair value measurements as of June 30, 2022

Fair value measurements as of September 30, 2022

Total carrying

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Long-term corporate bonds 1,333 — 1,333 —

Long-term government bonds 498 — 498 —

Foreign exchange contracts:

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Accrued liabilities 1,752 — 1,752 —

Other long-term liabilities 50 — 50 —

Total Liabilities $ 27,994 $ — $ 1,752 $ 26,242

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Investments in Available-for-sale Securities

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.

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

treasury securities and long-term government bonds 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.

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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 June 30, 2022 or December 31, 2021.

We did not have any investments in available-for-sale debt securities in unrealized loss positions as of September 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.

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

As of June 30, 2022

As of September 30, 2022

Amortized Cost Unrealized Holding

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Long-term corporate bonds 1,333 — 1,333

Long-term government bonds 498 — 498

Total investment securities $ 4,750 $ — $ 4,750

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Our equity method investment is reported at cost and adjusted each period for our share of the investee's income or (loss) and dividend paid, if any.

We eliminate any intra-entity profits to the extent of our beneficial interest.

We record our share of the investee's income or (loss) on a one quarter lag.

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

We eliminate any intra-entity profits to the

ICU MEDICAL, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

condensed consolidated balance sheets (see Note 11:

extent of our beneficial interest.

We record our share of the investee's income or (loss) on a one quarter lag.

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

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

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Equity method investment $ 3,188 $ 3,238

1 unchanged sentence

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.

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Prepaid Expenses and Other Current Assets and Other Assets

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Other prepaid expenses and receivables $ 22,738 $ 14,763

6 unchanged sentences

Interest rate contracts 24,924 —

Interest receivable 2,426 293

Deposits 1,312 1,343

2 unchanged sentences

Other assets consist of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Pump lease receivables $ 27,024 $ 25,941

4 unchanged sentences

Interest rate contracts 33,386 —

Foreign exchange contracts 112 —

Other 2,156 526

$ 110,604 $ 63,743

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

1 unchanged sentence

Inventories consist of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Raw materials $ 264,518 $ 135,528

5 unchanged sentences

Acquisitions).

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Property, Plant and Equipment

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Machinery and equipment $ 409,349 $ 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 $ 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:

Depreciation expense was $ 23.0 million and $ 69.4 million for the three and nine months ended September 30, 2022, respectively.

Depreciation expense was $ 16.4 million and $ 49.1 million for the three and nine months ended September 30, 2021, respectively.

During the three and nine months ended September 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 ( 116,571 )

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

Balance as of September 30, 2022 $ 1,369,717

_______________________________

3 unchanged sentences

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 June 30, 2022

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Weighted-Average Amortization Life in Years September 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 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:

During the three months ended September 30, 2022 and 2021, intangible asset amortization expense was $ 35.6 million and $ 5.8 million, respectively.

During the nine months ended September 30, 2022 and 2021, intangible asset amortization expense was $ 108.9 million and $ 17.4 million, respectively.

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

Acquisitions).

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

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

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Remainder of 2022 $ 33,624

3 unchanged sentences

Accrued liabilities consist of the following (in thousands):

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June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Salaries and benefits $ 49,409 $ 27,304

14 unchanged sentences

Defined benefit plan 2,527 —

Accrued interest 2,788 —

Other 9,424 8,099

3 unchanged sentences

Commitments and Contingencies for further detail.

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Operating lease liability-LT $ 62,902 $ 33,971

1 unchanged sentence

Accrued rent 1,030 1,262

Contract liabilities (1)

Forward-starting interest rate swaps — 1,480

Foreign exchange contracts 50 —

Finance lease liability-LT 1,692 2,067

4 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.

(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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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.

Income taxes were accrued at an estimated effective tax rate of 38 % and 37 % for the three and nine months ended September 30, 2022, respectively, as compared to 18 % and 17 % for the three and nine months ended September 30, 2021, respectively.

The effective tax rate for the three and nine months ended September 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 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.

• Excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the three and nine months ended September 30, 2022 of $ 1.5 million and $ 4.1 million, respectively.

• The revaluation of the contingent consideration during the three and nine months ended September 30, 2022 of $ 4.1 million and $ 31.3 million, respectively, resulted in a tax expense of $ 0.0 million and $ 0.0 million , respectively.

The effective tax rate for the three and nine months ended September 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 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.

The effective tax rate during the three and nine months ended September 30, 2021 included a discrete tax benefit of $ 1.1 million and $ 3.3 million, respectively, related to excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.

Additionally, U.S.

federal return-to-provision adjustments for the year ended December 31, 2020 primarily due to changes in estimates for GILTI, FDII, subpart F income, and related foreign tax credits along with other prior period adjustments resulted in a tax provision of $1.1 million for the three and nine months ended September 30, 2021.

Long-Term Debt

2 unchanged sentences

The senior secured credit facilities include (i) a five-year Tranche A term loan of $ 850.0 million (the "Term Loan A"), (ii) a seven-year Tranche B term loan of $ 850.0 million (the "Term Loan B") and (iii) a five-year revolving credit facility of $ 500.0 million (the "Revolving Credit Facility"), with separate sub-limits of $ 50.0 million for letters of credit and swingline loans (collectively, the "Senior Secured Credit Facilities").

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 used the proceeds from borrowings under the Term Loan A and the Term Loan B (collectively,

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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 closing date of the acquisition.

10 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.

1 unchanged sentence

(1) the Base Rate, as defined below, plus the applicable margin, as indicated below ("Base Rate Loans") or (2) the Adjusted Term Secured Overnight Financing Rate ("Adjusted Term SOFR"), as defined below, plus the applicable margin, as indicated below ("Term SOFR Loans").

The Base Rate is defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50 % and (c) Adjusted Term SOFR (as defined below) for a one-month period plus, in each case, plus 1.00 %.

Adjusted Term SOFR is the rate per annum equal to (a) Term SOFR plus (b) the Term SOFR Adjustment.

The Base Rate is defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50 % and (c) Adjusted Term SOFR (as defined below) for a one-month period plus, in each case, 1.00 %.

Adjusted Term SOFR is the rate per annum equal to (a) the Term SOFR plus (b) the Term SOFR Adjustment.

Term SOFR is the forward-looking term rate based on SOFR and is calculated separately for Term SOFR Loans and Base Rate Loans, as specified in the Credit Agreement.

6 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.

For the nine months ended September 30, 2022, we paid total of $ 20.3 million in principal payments on both Term Loans.

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.

4 unchanged sentences

The financial covenants include the Senior Secured Leverage Ratio and the Interest Coverage Ratio, both defined below, and pertain to the Term Loan A and the Revolving Credit Facility.

The Senior Secured Leverage Ratio is defined, at any such date, as the ratio of:

The Senior Secured Leverage Ratio is defined, at any measurement date, as the ratio of:

(a) all Funded Debt, as defined in the Credit Agreement, that is secured by a lien on any asset or property minus the lesser of (i) all unrestricted cash and cash equivalents and (ii) $ 500.0 million, to (b) Consolidated EBITDA, as defined in the Credit Agreement, for the most recently completed four fiscal quarters, calculated on a pro forma basis.

1 unchanged sentence

Thereafter, the maximum Senior Secured Leverage Ratio is 4.00 to 1.00, with limited permitted exception.

The Interest Coverage ratio is defined, at any such date, as the ratio of Consolidated EBITDA, as defined in the Credit Agreement, to Consolidated Interest Expense, as defined in the Credit Agreement, paid or payable in cash, for the most recently completed four fiscal quarters.

The Interest Coverage ratio is defined, at any measurement date, as the ratio of Consolidated EBITDA, as defined in the Credit Agreement, to Consolidated Interest Expense, as defined in the Credit Agreement, paid or payable in cash, for the most recently completed four fiscal quarters.

The minimum Interest Coverage ratio is 3.00 to 1.00.

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

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

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

June 30, 2022

September 30, 2022

Senior Secured Credit Facilities:

8 unchanged sentences

(1) Comprised of $ 13.4 million and $ 12.2 million relating to the Term Loan A and the Term Loan B, respectively.

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):

As of September 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 $ 2,125

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

September 30, Nine months ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

Commitment fee — Revolving Credit Facility 334 58 994 171

Total interest expense $ 14,730 $ 129 26,742 257

Total long-term debt-related interest expense $ 21,320 $ 130 48,062 387

Stockholders' Equity

3 unchanged sentences

At closing, in connection with the issuance of the share consideration, we entered into a Shareholders Agreement (the “Shareholders Agreement”) with Smiths.

The Shareholders Agreement imposes certain restrictions on Smiths including prohibiting certain transfers of the shares of our common stock issued (i) for 6 months following the closing of the acquisition transaction and (ii) to certain of our competitors and certain other parties, as well as customary standstill limitations.

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.

The Shareholders Agreement imposes certain restrictions on Smiths including prohibiting certain transfers of the shares of our common stock issued (i) for 6 months following the closing of the acquisition and (ii) to certain of our competitors and certain other parties, as well as customary standstill limitations.

The Shareholders Agreement also permits Smiths to designate one individual for

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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 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.

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

See our Current Report on Form 8-K filed on February 1, 2022 for additional information.

2 unchanged sentences

This plan has no expiration date.

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.

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

As of September 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 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.

For the nine months ended September 30, 2022, we withheld 45,370 shares of our common stock from employee vested restricted stock units in consideration for $ 10.5 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations.

For the nine months ended September 30, 2021, we withheld 39,371 shares of our common stock from employee vested restricted stock units in consideration for $ 8.1 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

9 unchanged sentences

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

Other comprehensive (loss) income before reclassifications ( 90,549 ) 18,784 227 ( 71,538 )

Amounts reclassified from AOCI — ( 1,869 ) — ( 1,869 )

Other comprehensive (loss) income ( 90,549 ) 16,915 227 ( 73,407 )

Balance as of September 30, 2022 $ ( 214,345 ) $ 48,394 $ 269 $ ( 165,682 )

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

9 unchanged sentences

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

Other comprehensive (loss) income before reclassifications ( 5,360 ) ( 83 ) 12 ( 5,431 )

Amounts reclassified from AOCI — ( 736 ) — ( 736 )

Other comprehensive (loss) income ( 5,360 ) ( 819 ) 12 ( 6,167 )

Balance as of September 30, 2021 $ ( 15,897 ) $ 668 $ 111 $ ( 15,118 )

Commitments and Contingencies

8 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

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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:

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 September 30, 2022, the estimated fair value of the contingent earn-out is $ 21.8 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 June 30, 2022 is $ 53.9 million.

The estimated field service corrective action recorded at September 30, 2022 is $ 47.5 million.

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

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

As of September 30, 2022, the estimated fair value of the contingent earn-out is $ 1.8 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 June 30, 2022, the estimated fair value of the contingent earn-out is $ 2.6 million (see Note 9:

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

Fair Value Measurements).

3 unchanged sentences

The MSAs provide each party with mutually beneficial interests and both of the MSAs are to be jointly managed by both Pfizer and ICU.

The initial supply price, which will be annually updated, is in full consideration for all costs associated with the manufacture, documentation, packaging and certification of the products.

The initial supply price, which is subject to an annual update, is in full consideration for all costs associated with the manufacture, documentation, packaging and certification of the products.

On January 1, 2021, we amended our MSA with Pfizer, whereby we manufacture and supply certain agreed upon products to Pfizer.

6 unchanged sentences

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