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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-27 · 482 added, 454 removed, 1330 unchanged (41% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 202 3 , 202 2 and 202 1

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 202 4 , 202 3 and 202 2

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We have audited the accompanying consolidated balance sheets of ICU Medical, Inc.

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENT SECURITIES 308,566 254,723

Accounts receivable, net of allowance for doubtful accounts of $ 11,064 and $ 8,530 at December 31, 2023 and 2022, respectively

Accounts receivable, net of allowance of $ 12,977 and $ 11,064 at December 31, 2024 and 2023, respectively

182,828 161,566

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Prepaid expenses and other current assets 70,287 73,640

Assets held for sale 284,382 —

TOTAL CURRENT ASSETS 1,441,983 1,221,272

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OPERATING LEASE RIGHT-OF-USE ASSETS 53,295 69,909

LONG-TERM INVESTMENT SECURITIES — 516

GOODWILL 1,432,772 1,472,446

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Contingent earn-out liability — 4,879

Liabilities held for sale 32,911 —

TOTAL CURRENT LIABILITIES 556,182 481,838

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Change in fair value of contingent earn-out ( 5,399 ) ( 16,247 ) ( 32,091 )

Contract settlement — — 127

TOTAL OPERATING EXPENSES 781,818 717,048 740,659

INCOME (LOSS) FROM OPERATIONS 42,964 22,825 ( 42,898 )

INTEREST (EXPENSE) INCOME, NET ( 95,219 ) ( 66,375 ) 1,982

INTEREST EXPENSE, NET ( 95,753 ) ( 95,219 ) ( 66,375 )

OTHER EXPENSE, NET ( 13,223 ) ( 5,905 ) ( 5,136 )

(LOSS) INCOME BEFORE INCOME TAXES ( 78,299 ) ( 114,409 ) 123,186

BENEFIT (PROVISION) FOR INCOME TAXES 48,644 40,123 ( 20,051 )

NET (LOSS) INCOME $ ( 29,655 ) $ ( 74,286 ) $ 103,135

NET (LOSS) INCOME PER SHARE

LOSS BEFORE INCOME TAXES ( 66,012 ) ( 78,299 ) ( 114,409 )

(PROVISION) BENEFIT FOR INCOME TAXES ( 51,676 ) 48,644 40,123

NET LOSS $ ( 117,688 ) $ ( 29,655 ) $ ( 74,286 )

NET LOSS PER SHARE

Basic $ ( 4.83 ) $ ( 1.23 ) $ ( 3.11 )

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands)

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2024 2023 2022

NET (LOSS) INCOME $ ( 29,655 ) $ ( 74,286 ) $ 103,135

Other comprehensive (loss) income, net of tax:

NET LOSS $ ( 117,688 ) $ ( 29,655 ) $ ( 74,286 )

Other comprehensive loss, net of tax:

Cash flow hedge adjustments, net of tax of $ 0 , $( 5,951 ) and $ 12,941 for the years ended December 31, 2024, 2023 and 2022, respectively

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

603 1,203 ( 62 )

Other comprehensive income (loss), net of tax 27,897 ( 61,709 ) ( 17,747 )

COMPREHENSIVE (LOSS) INCOME $ ( 1,758 ) $ ( 135,995 ) $ 85,388

Other comprehensive (loss) income, net of tax ( 86,320 ) 27,897 ( 61,709 )

COMPREHENSIVE LOSS $ ( 204,008 ) $ ( 1,758 ) $ ( 135,995 )

The accompanying notes are an integral part of these consolidated financial statements.

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Tax withholding payments related to net share settlement of equity awards ( 48 ) — — ( 10,883 ) — — ( 10,883 )

Issuance of common stock for acquisitions 2,500 250 575,725 — — — 575,975

Stock compensation — — 36,025 — — — 36,025

Other comprehensive loss, net of tax — — ( 10 ) — — ( 61,709 ) ( 61,719 )

Net income — — — — 103,135 — 103,135

Net loss — — — — ( 74,286 ) — ( 74,286 )

Balance, December 31, 2022 23,995 2,399 1,331,249 ( 243 ) 837,501 ( 80,978 ) 2,089,928

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Tax withholding payments related to net share settlement of equity awards ( 59 ) — — ( 9,350 ) — — ( 9,350 )

Issuance of common stock for acquisitions 2,500 250 575,725 — — 575,975

Stock compensation — — 40,563 — — — 40,563

Other comprehensive loss, net of tax — — ( 10 ) — — ( 61,709 ) ( 61,719 )

Other comprehensive income, net of tax — — 5 — — 27,897 27,902

Net loss — — — — ( 29,655 ) — ( 29,655 )

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Stock compensation — — 46,883 — — — 46,883

Other comprehensive income, net of tax — — 5 — — 27,897 27,902

Other comprehensive loss, net of tax — — 3 — — ( 86,320 ) ( 86,317 )

Net loss — — — — ( 117,688 ) — ( 117,688 )

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income $ ( 29,655 ) $ ( 74,286 ) $ 103,135

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Net Loss $ ( 117,688 ) $ ( 29,655 ) $ ( 74,286 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 219,512 228,774 235,151

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Loss on disposal or write-off of property, plant and equipment 2,522 2,109 2,010

Bond premium amortization 17 264 655

Debt issuance cost amortization 6,807 6,814 6,972

Change in fair value of contingent earn-out ( 5,399 ) ( 16,247 ) ( 32,091 )

Product-related charges — — 3,380

Usage of spare parts 18,298 17,050 11,924

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Business acquisitions, net of cash acquired — — ( 1,844,164 )

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

Purchases of investment securities — — ( 3,397 )

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Accounts payable for property, plant and equipment $ 7,443 $ 6,570 $ 4,854

Non-compete agreement with associated contingent earn-out liability $ — $ — $ 2,589

Detail of assets acquired and liabilities assumed in acquisitions:

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as well as a range of respiratory, anesthesia, patient monitoring, and temperature management products.

All significant operating decisions are based on analysis of ICU as a single global business, accordingly, we operate in one business segment.

We sell the majority of our products globally through our direct sales force and through independent distributors throughout the U.S.

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All subsidiaries are wholly owned and are included in the consolidated financial statements.

All intercompany accounts and transactions have been eliminated.

All intercompany balances and transactions have been eliminated.

Results of operations of companies purchased are included from the dates of acquisition.

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These consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S.

Certain reclassifications have been made to the prior year footnotes to conform to the presentation used in the current year.

In the statements of operations, we reclassified interest income to interest expense, net from other expense, net and in Note 4:

Revenues, certain reclassifications were made to revenues disaggregated by product line and by geography.

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

Certain reclassifications have been made to the prior year financial statements and footnotes to conform to the presentation used in the current year.

In the consolidated statements of cash flows, we reclassified bond premium amortization to other.

The reclassification had no impact on cash flows from operating activities as previously reported.

Income Taxes, we reclassified certain provision (benefit) for income taxes and tax asset categories.

These reclassifications had no impact on the consolidated statement of operations and consolidated balance sheets.

Segment Reporting

We operate as a single operating and reportable segment.

Our Chief Operating Decision Maker ("CODM"), the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance.

Segment Data.

Use of Estimates

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We regularly review individual past due balances for collectability.

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 CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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):

As of December 31,

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Total $ 584,676 $ 709,360

_____________________________

As of December 31, 2024, inventory account balances that are part of a disposal group that met the criteria for assets held for sale during the fourth quarter of 2024 were combined with other disposal group assets and presented as a separate line item "Assets Held For Sale" in our consolidated balance sheet (See Note 4:Assets Held For Sale).

Property, Plant and Equipment

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Machinery and equipment (1)

$ 400,861 $ 483,382

Land, building and building improvements (1)

177,089 278,251

Molds 96,318 89,573

Computer equipment and software (1)

122,208 122,038

Furniture and fixtures (1)

27,871 30,662

Instruments placed with customers (2)

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Construction in progress (1)

87,006 117,219

Total property, plant and equipment, cost 1,035,643 1,236,797

Accumulated depreciation (1)

( 592,897 ) ( 623,888 )

Property, plant and equipment, net (1)

$ 442,746 $ 612,909

_______________________________

(1) As of December 31, 2024, certain property, plant and equipment category account balances that are part of a disposal group that met the criteria for assets held for sale during the fourth quarter of 2024 were combined with other disposal group assets and presented as a separate line item "Assets held For Sale" in our consolidated balance sheet, $99.4 million of accumulated depreciation was included in the disposal group and reclassified to assets held for sale.

Assets Held For Sale.

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

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Estimated useful lives are:

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Buildings 15 - 30 years

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The costs and related accumulated depreciation applicable to property, plant and equipment sold or retired are removed from the accounts and any gain or loss is reflected in the statements of operations at the time of disposal.

Depreciation expense was $ 96.7 million, $ 95.8 million and $ 65.9 million in 2023, 2022 and 2021, respectively.

Depreciation expense was $ 85.2 million, $ 96.7 million and $ 95.8 million in 2024, 2023 and 2022, respectively, of which $ 73.7 million, $ 75.4 million, and $ 74.1 million, respectively, are included in cost of goods sold.

We test goodwill for impairment on an annual basis in the month of November, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist.

In 2023, we bypassed a qualitative assessment and performed a quantitative assessment to determine whether an impairment exists.

We determine the fair value of our reporting unit using the income approach and market approach to valuation, as well as other generally accepted valuation methodologies.

The income approach utilizes a discounted cash flow analysis using management's assumptions.

The market approach compares our reporting unit to similar companies with the assumption that companies operating in the same industry will share similar characteristics and that company values will correlate to those characteristics.

If the carrying amount of the reporting unit

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exceeds the reporting unit’s fair value, we recognize an impairment loss equal to the difference between the carrying amount and the estimated fair value of the reporting unit.

Generally, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

If, based on an assessment of relevant qualitative factors, we determine that this is not the case, then the quantitative impairment test is not required to be performed.

Conversely, if we determine based on the qualitative assessment that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we will perform the quantitative impairment test.

For the quantitative impairment test, we calculate the estimated fair value of the reporting unit.

If the estimated fair value of the reporting unit is less than its carrying amount, the goodwill of the reporting unit is determined to be impaired.

An impairment charge is recorded in an amount equal to the excess of the carrying amount over its estimated fair value, limited to the total amount of goodwill allocated to the reporting unit.

In 2024, we performed a qualitative assessment and concluded that it was more likely than not that the fair value of our reporting unit exceeded its carrying amount, and therefore, no further impairment testing was required.

We concluded that there was no impairment of goodwill during fiscal 2024, 2023, or 2022.

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Balance as of January 1, 2022 $ 43,439

Goodwill acquired (1)

Other ( 188 )

Balance as of December 31, 2021 43,439

Disposition (3)

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Balance as of December 31, 2023 1,472,446

Currency translation ( 39,674 )

Balance as of December 31, 2024 $ 1,432,772

_______________________________

(1) In 2021, we acquired a small foreign infusion systems supplier, which resulted in $ 10.6 million of goodwill.

(1) Relates to Smiths Medical acquired on January 6, 2022 (see Note 2:

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

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Weighted-Average Amortization Life

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Developed technology (1)

10 619,540 227,869 391,671

Non-compete 3 9,100 9,100 —

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Internally developed software (2)

$ 12,377 $ 12,377

Total intangible assets $ 1,257,714 $ 516,925 $ 740,789

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

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(1) Developed technology primarily consists acquired patented technologies and internally developed software.

Upon completion of development, the assets will be amortized over their estimated useful lives.

(2) Internally developed software will be reclassified to developed technology and amortized when the projects are complete and the assets are ready for their intended use.

During 2024, we reclassified $ 33.2 million to developed technology.

Weighted-Average Amortization Life

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

Amortization expense was $ 132.1 million, $ 139.4 million and $ 23.8 million in 2023, 2022 and 2021, respectively.

As of December 31, 2023, estimated annual amortization for our intangible assets for each of the next five years is approximately (in thousands):

Amortization expense was $ 134.3 million, $ 132.1 million and $ 139.4 million in 2024, 2023 and 2022, respectively, of which $ 1.7 million, $ — million, and $ 0.3 million, respectively, are included in cost of goods sold.

As of December 31, 2024, estimated annual amortization for our intangible assets for each of the next five years and thereafter is approximately (in thousands):

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2025 $ 129,604

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We did not have any long-lived asset impairments in 2024, 2023 or 2022.

Assets Held for Sale

We classify a long-lived asset or disposal groups as held for sale in the period in which all of the following criteria are met:

(1) management, having the authority to approve the action, commits to a plan to sell the asset or disposal group;

(2) the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups;

(3) an active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated;

(4) the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year;

(5) the asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value;

and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

We initially measure a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell and immediately recognize any estimated losses.

Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale.

Each reporting period that a long-lived asset or disposal group remains as held for sale, the carrying value of the long-lived asset or disposal group is adjusted for subsequent changes in fair value less cost to sell, losses are recognized for a subsequent write-down to fair value less cost to sell and gains are recognized for an increase in fair value less cost to sell although limited to the amount of any previous cumulative losses recognized.

We cease depreciation and amortization of a long-lived asset, or assets within a disposal group, upon their designation as held for sale.

Assets Held For Sale.

Investment Securities

Short-term investments, exclusive of cash equivalents, are marketable securities intended to be sold within one year and may include trading securities, available-for-sale securities, and held-to-maturity securities (if maturing within one year at

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the time of acquisition).

Long-term investments are marketable securities intended to be sold after one year and may include trading securities, available-for-sale securities, and held-to-maturity securities.

Investments in Available-for-sale Securities

Our investment securities are considered available-for-sale and consist of corporate bonds, U.S.

Our investment securities were historically considered available-for-sale and consisted of corporate bonds, U.S.

treasury securities, and government bonds.

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

These securities were considered “investment grade” and were carried at fair value.

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

If an unrealized loss exists, we determine whether any portion of the decline in fair value below the carrying value is credit-related by reviewing several factors, including, but not limited to, the extent of the fair value decline and changes in the financial condition of the issuer.

If an unrealized loss exists,

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we determine whether any portion of the decline in fair value below the carrying value is credit-related by reviewing several factors, including, but not limited to, the extent of the fair value decline and changes in the financial condition of the issuer.

We record an impairment for credit-related losses through an allowance, limited to the amount of the unrealized loss.

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The amortized cost of the debt securities and U.S treasury securities is adjusted for the amortization of premiums computed under the effective interest method.

Such amortization is included in interest (expense) income, net in the consolidated statements of operations.

Such amortization is included in interest expense, net in the consolidated statements of operations.

Realized gains and losses are accounted for on the specific identification method.

There have been no realized gains or losses on the disposal of these investments.

The scheduled maturities of our current debt securities are in 2024.

All short-term investment securities are callable within one year.

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

As of December 31, 2023

Amortized Cost Unrealized Holding Gains (Losses) Fair Value

Short-term corporate bonds $ 501 $ — $ 501

Short-term U.S.

treasury securities — — —

Short-term government bonds — — —

Total short-term investment securities 501 — 501

Long-term corporate bonds — — —

Total investment securities $ 501 $ — $ 501

As of December 31, 2024, we did not have any investment securities.

As of December 31, 2023, the amortized cost, unrealized holding gains (losses) and fair value of our available-for-sale investment securities were as follows (in thousands):

As of December 31, 2023

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Short-term corporate bonds $ 501 $ — $ 501

Short-term U.S.

treasury securities 1,412 — 1,412

Short-term government bonds 498 — 498

Total short-term investment securities 4,224 — 4,224

Long-term corporate bonds 516 — 516

Total investment securities $ 4,740 $ — $ 4,740

Investments in Non-Marketable Equity Securities

During the third quarter of 2021, we acquired approximately a 20.0 % non-marketable equity interest in a nonpublic company and entered into a three-year distribution agreement where we have the exclusive rights to market, sell and distribute the company's products in exchange for a cash payment of $ 3.3 million.

In addition, we were granted an exclusive license for

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all of the seller's intellectual property.

We own approximately a 20.0 % non-marketable equity interest in a nonpublic company and entered into a three-year distribution agreement where we have the exclusive rights to market, sell and distribute the company's products in exchange for a cash payment of $ 3.3 million.

In addition, we were granted an exclusive license for all of the seller's intellectual property.

At the expiration of the distribution agreement we have the right but not the obligation to acquire the remaining interest in the business.

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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.

During 2023 and 2022, there were no indications that our non-marketable equity method investment was impaired.

Our recorded share of the investee's loss was not material for the years ended December 31, 2023 and 2022.

We did not receive any dividend distributions from this investment during 2023 and 2022.

Our recorded share of the investee's loss was not material for the years ended December 31, 2024, 2023 or 2022.

We did not receive any dividend distributions from this investment during 2024, 2023 or 2022.

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

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In 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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Deferred taxes are determined based on the differences between the financial statements and the tax bases using rates as enacted in the laws.

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Gains and losses for transactions denominated in a currency other than the functional currency of the entity are included in our consolidated statements of operations in other expense, net (see Other expense, net table below).

Foreign currency transaction losses (gains), net were $ 5.9 million, $ 5.8 million and $ 1.0 million in 2023, 2022 and 2021, respectively.

Foreign currency transaction losses, net were $ 9.8 million, $ 5.9 million and $ 5.8 million in 2024, 2023 and 2022, respectively.

Revenue Recognition

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We recognize revenues when we transfer control of promised goods to our customers, which for the majority of our sales of products sold on a standalone basis to our distributors and end customers for direct sales, is deemed to be at point of shipment.

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For purposes of estimating the expected chargeback amount, we utilize actual recent historical chargebacks paid to the specific distributor for similar products as determined at either a product or product-family level.

While individual chargeback rates can vary significantly depending on the product and contracted prices with distributors and end customers, our chargeback reserve estimate is not overly sensitive to those individual price changes due to the long-term nature of our distributor and end customer contracts as well as consistency in purchasing patterns.

While individual chargeback

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rates can vary significantly depending on the product and contracted prices with distributors and end customers, our chargeback reserve estimate is not overly sensitive to those individual price changes due to the long-term nature of our distributor and end customer contracts as well as consistency in purchasing patterns.

Additionally, the use of the actual chargeback history to calculate an average chargeback rate has historically resulted in a reasonable estimation of overall current contract rates.

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The chargeback reserve reflects a reasonable estimate of the amount of consideration using the expected value method and is recorded as a reduction of accounts receivable, net on the consolidated balance sheets.

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We also offer certain volume-based rebates to both our distribution and end customers, which we record as variable consideration when calculating the transaction price.

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Post-retirement and Post-employment Benefits

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We sponsor a Section 401(k) retirement plan ("plan") for employees.

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Research and development costs include salaries and related benefits, consulting fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs.

Interest (expense) income, net

Interest expense, net

The following table presents interest (expense) income, net (in thousands):

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Interest income 10,788 7,508 4,430

Interest (expense) income, net $ ( 95,219 ) $ ( 66,375 ) $ 1,982

Interest expense, net $ ( 95,753 ) $ ( 95,219 ) $ ( 66,375 )

Other expense, net

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The following table presents other expense, net (in thousands):

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Loss on disposition of assets ( 1,608 ) ( 153 ) ( 2,554 )

Other miscellaneous income, net 166 3,198 627

Other miscellaneous (expense) income, net ( 1,823 ) 166 3,198

Other expense, net $ ( 13,223 ) $ ( 5,905 ) $ ( 5,136 )

The foreign exchange losses in 2023 were primarily related to the devaluation of the Argentine peso.

In 2023, other miscellaneous income, net primarily includes $ 3.7 million in fees related to our accounts receivable purchase program (see Note 17:

The foreign exchange losses in 2024 were primarily related to the strengthening of the U.S.

dollar relative to certain foreign currencies, including the Mexican peso and Argentine peso.

In 2024, other miscellaneous (expense) income, net primarily includes $ 2.6 million in fees related to our accounts receivable purchase program.

In 2023, other miscellaneous (expense) income, net primarily includes $ 3.7 million in fees related to our accounts receivable purchase program (see Note 18:

Accounts Receivable Purchase Program) mostly offset by a business interruption gain.

We received total insurance recoveries for property damage and business interruption of $ 3.1 million, $ 2.6 million of which was related to insurance proceeds for business interruption included within other miscellaneous income, net.

In 2022, other miscellaneous income, net primarily relates to sale of certain other assets.

Net (Loss) Income Per Share

Basic net (loss) earnings per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding for the period.

Diluted net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding plus any dilutive potential securities.

Dilutive potential securities include outstanding common stock options and unvested restricted stock units, less the number of shares that could have been purchased with the proceeds from the exercise of the options, using the treasury stock method.

Options that are anti-dilutive, where their exercise price exceeds the average market price of the common stock, are not included in the treasury stock method calculation.

Restricted stock units that are anti-dilutive are not included in the treasury stock method.

Due to the net loss for the years ended December 31, 2023 and 2022 the inclusion of any potential securities is antidilutive, accordingly, basic and diluted net loss per share is the same for this period.

There were 12,354 anti-dilutive shares in 2021.

Net Loss Per Share

Due to the net loss for the years ended December 31, 2024, 2023 and 2022, both basic and diluted net loss per share are computed by dividing net loss by the weighted-average number of common shares outstanding for the period.

With net losses the inclusion of any potential securities is antidilutive, accordingly, basic and diluted net loss per share are the same in periods with losses.

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

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2024 2023 2022

Net (loss) income $ ( 29,655 ) $ ( 74,286 ) $ 103,135

Net loss $ ( 117,688 ) $ ( 29,655 ) $ ( 74,286 )

Weighted-average number of common shares outstanding (basic) 24,388 24,091 23,868

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EPS — diluted $ ( 4.83 ) $ ( 1.23 ) $ ( 3.11 )

Total anti-dilutive stock options and restricted stock awards ( shares in thousands)

New Accounting Pronouncements

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No.

2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The amendments in this update provide optional guidance for a limited period of time to ease the potential burden for reference rate reform on financial reporting.

Due to concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate ("LIBOR"), regulators around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation.

The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference

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rate expected to be discontinued as a result of reference rate reform.

Optional expedients may be applied to contracts that are modified as a result of the reference rate reform.

Modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate.

Modifications of contracts within the scope of ASC 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate (incremental borrowing rate).

Exceptions to Topic 815, Derivatives and Hedging, results in not having a dedesignation of a hedging relationship if certain criteria are met.

The amendments in this ASU were effective for all entities as of March 12, 2020 through December 31, 2022.

2022-06, Reference Rate Reform:

Deferral of the Sunset Date of Topic 848 deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

In November 2021, we entered into two forward-starting swaps whereby the variable leg of the swap references LIBOR, these swaps were amended in early 2022 to transition to an alternative reference rate (see Note 7:

Derivatives and Hedging Activities).

The amendments in this ASU allow for certain expedients that allowed us to assume that our hedged interest payments are probable of occurring regardless of any expected modification in their terms related to reference rate reform and allowed us to continue hedge accounting for a cash flow hedge for which the hedged interest rate risk changes if the hedge is highly effective under ASC 815, Derivatives and Hedging or the optional expedient under this ASU is elected.

The impact of these ASU's on our contracts has not been and is not expected to be material.

Recently Issued Accounting Standards Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative.

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We are currently assessing what impact this guidance will have on the Company's consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.

The amendments in this update expand disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s significant expenses, interim segment profit or loss, and a description of how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources.

The amendments clarify that a single reportable segment entity must apply ASC 280 in its entirety.

The update will be effective for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

This ASU is applicable to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and subsequent interim periods, with early application permitted.

We are currently assessing the effect of this update on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.

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We are currently assessing the effect of this update on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses.

The guidance requires disclosure of disaggregated income statement expense information about specific categories (including purchases of inventory, employee compensation, depreciation, and intangible asset amortization) in the notes to financial statements.

In January 2025, FASB released ASU 2025-01 to clarify the guidance will be effective for annual periods beginning after December 15, 2026.

This update will be applicable to our Annual Report on Form 10-K for the fiscal year December 31, 2027, with early application permitted.

We are currently assessing the effect of this update on our consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07 "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures," which requires the Company to expand the breadth and frequency of segment disclosures to include additional information about significant segment expenses, the chief operating decision maker (CODM) and other items, and also require the annual disclosures on an interim basis.

This guidance was effective for annual periods beginning with the Company's fiscal year 2024, and in interim periods within the Company's fiscal year 2025.

The Company adopted the requirements of this ASU in Note 6, Segment Data of this Annual Report.

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2022 Acquisitions

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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 opening market price of our common stock on the acquisition date.

The fair value of the shares of common stock 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").

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the event that (a) on or prior to the third anniversary of closing the 30-day volume-weighted average price for our common stock, as defined in the Purchase Agreement, equals or exceeds $ 300.00 per share or (b) on or prior to the fourth anniversary of closing the 45-day volume-weighted average price for our common stock, as defined in the Purchase Agreement, equals or exceeds $ 300.00 per share (each a "Price Target"), and provided Smiths beneficially owns at least 50.0 % of the shares of common stock issued at closing at the time the Price Target is achieved, then Smiths will be entitled to receive the additional $ 100.0 million in cash consideration.

In the event that (a) on or prior to the third anniversary of closing the 30-day volume-weighted average price for our common stock, as defined in the Purchase Agreement, equals or exceeds $ 300.00 per share or (b) on or prior to the fourth anniversary of closing the 45-day volume-weighted average price for our common stock, as defined in the Purchase Agreement, equals or exceeds $ 300.00 per share (each a "Price Target"), and provided Smiths beneficially owns at least 50.0 % of the shares of common stock issued at closing at the time the Price Target is achieved, then Smiths will be entitled to receive the additional $ 100.0 million in cash consideration.

The fair value of the contingent consideration was determined using an option pricing model, specifically the Monte Carlo Simulation.

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The fair value of the contingent consideration is then calculated as the average present value across all simulated paths.

As of December 31, 2023, the estimated fair value of the contingent earn-out was $ 4.0 million.

During July 2024, Smiths sold 1.2 million shares of common stock of ICU Medical, Inc.

which were issued as partial consideration for the 2022 acquisition of Smiths Medical.

The sale of shares when combined with other sales in prior periods rendered Smiths unable to achieve the contingent consideration based on certain price targets during the third and fourth anniversary of closing as Smiths no longer meets the required minimum beneficial ownership percentage.

Accordingly, the valuation of the contingent earn-out liability as of December 31, 2024 has been reduced to zero.

Smiths became a related party to us when we issued 2.5 million shares of our common stock as partial consideration for the acquisition of Smiths Medical.

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The TSA includes certain information technology, human resource and tax support services for an initial term of twelve months with the option to extend up to 24 months.

In 2023, we expensed $ 8.3 million for services provided under the TSA and we had no related open payables as of December 31, 2023.

In 2022, we expensed $ 37.6 million for services provided under the TSA and we had $ 5.1 million in related open payables as of December 31, 2022.

In 2023, we expensed $ 8.3 million for services provided by Smiths under the TSA.

Since December 31, 2023, there were no services being provided under the TSA and we had no remaining related-party open payables as of December 31, 2023.

Final Price Allocation

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

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Cash consideration for acquired assets $ 1,922,955

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Purchase Consideration $ 2,552,450

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_______________________________________________

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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, five years for internally developed software, and six months for the trade mark.

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

(2) 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.

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The prepaid expenses and other current assets and assumed liabilities were recorded at their carrying values as of the date of the acquisition, as their carrying values approximated their fair values due to their short-term nature.

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Unaudited Pro Forma Information

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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 $ 1.9 million and $ 24.7 million for the twelve months ended December 31, 2022, and 2021, respectively, incremental interest expense, including amortization of debt discount and debt issuance costs, on the Credit Facilities of $ 1.2 million and $ 73.5 million for the twelve months ended December 31, 2022, and 2021, respectively and a $ 27.4 million expense related to the increase in fair value of inventory for the twelve months ended December 31, 2021.

incremental amortization expense on intangible assets acquired of $ 1.9 million for the twelve months ended December 31, 2022, and incremental interest expense, including amortization of debt discount and debt issuance costs, on the Credit Facilities of $ 1.2 million for the twelve months ended December 31, 2022.

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

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Any differences in accounting policies were adjusted to reflect the accounting policies of the Company in the unaudited pro forma results presented.

2021 Acquisitions

During November 2021, we acquired a small foreign infusion systems supplier and paid an initial gross cash payment of approximately $ 15.4 million.

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

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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.

The contingent earn-out based on the achievement of certain revenue targets obtained for the annual period ending December 31, 2022 was forfeited at December 31, 2022 as the minimum threshold for earning the earn-out was not met.

As of December 31, 2023, the estimated fair value for the contingent earn-out related to certain product-related regulatory certifications was $ 1.5 million.

RESTRUCTURING, STRATEGIC TRANSACTION AND INTEGRATION

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In 2024, we incurred restructuring charges primarily related to severance expenses.

We adjusted certain severance restructuring accrued balances, shown in the table below under "Other adjustments", as a result of merging Smiths Medical entities during 2024.

In 2023, we incurred restructuring charges primarily related to severance expenses.

We adjusted certain facility and severance restructuring accrued balances, shown in the table below under "Other adjustments", to reverse certain accrued balances that will not be utilized.

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Acquisitions.

In 2021, we adjusted certain facility restructuring liabilities by $ 2.0 million, shown in the table below under "Other adjustments," to reflect actual amounts owed which resulted in net restructuring credits of $( 1.8 ) million.

The following table summarizes the activity in our restructuring-related accrual by major type of cost (in thousands):

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Severance Pay and Benefits Retention and Facility Closure Costs Total

Accrued balance, January 1, 2023 $ 4,416 $ 1,507 $ 5,923

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

Charges incurred 5,521 1,189 6,710

Payments ( 6,694 ) ( 1,192 ) ( 7,886 )

Currency translation ( 425 ) ( 188 ) ( 613 )

Other adjustments (1)

( 234 ) ( 785 ) ( 1,019 )

Currency translation ( 198 ) 38 ( 160 )

Accrued balance, December 31, 2023 $ 2,811 $ 757 $ 3,568

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Other adjustments (2)

( 234 ) ( 785 ) ( 1,019 )

Currency translation ( 212 ) 10 ( 202 )

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(1) Relates to accrued restructuring charges for estimated facility closure costs and severance costs that will not be utilized and were reversed during the year.

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(2) Relates to adjustments to accrued restructuring charges as a result of merging Smiths Medical entities during 2024.

Strategic Transaction and Integration Expenses

We incurred $ 40.2 million, $ 35.6 million and $ 61.7 million in strategic transaction and integration expenses in 2024, 2023 and 2022, respectively, which are included in restructuring, strategic transaction and integration expenses in our consolidated statement of operations.

The strategic transaction and integration expenses during 2023 were primarily related to consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022.

The strategic transaction and integration expenses during 2024 and 2023 were primarily related to consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022.

The strategic transaction and integration expenses during 2022 were primarily related to transaction and integration expenses associated with our acquisition of Smiths Medical on January 6, 2022 (see Note 2:

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

The strategic transaction and integration expenses during 2021 were related to integration costs associated with acquisitions, the Hospira Infusion Systems ("HIS") earn-out dispute with Pfizer, one-time costs incurred to comply with regulatory initiatives and transaction expenses incurred in connection with entering into a definitive agreement to acquire Smiths Medical.

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ASSETS HELD FOR SALE

On November 12, 2024, the Company and ICU Medical Sales, Inc., a Delaware corporation (collectively, the "ICU Medical Entities") entered into a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc., a Delaware corporation ("OPF").

Pursuant to the Agreement, prior to the closing, the ICU Medical Entities will form a Delaware limited liability company (the "LLC") and the ICU Medical Entities, and the LLC shall enter into a contribution agreement under which the ICU Medical Entities shall transfer the assets, liabilities and operations that comprise the IV Solutions product line to the LLC.

At the closing, OPF will acquire a 60% equity interest in the LLC from the ICU Medical Entities.

Pursuant to the Agreement, the consideration receivable by the ICU Medical Entities is comprised of (a) estimated cash consideration of approximately $ 200 million at closing and (b) a milestone payment paid by OPF to the Company for any incremental revenue and incremental gross profit recognized by the LLC, as calculated under the terms of the Agreement upon the final determination of the LLC's audited financial statements for the year-ending and as of December 31, 2026.

Additionally, at closing, the LLC, ICU Medical Entities and OPF shall enter into an operating agreement, and the LLC and the Company shall enter into one or more commercial agreements, a services agreement and a license agreement, which will provide for, among other things, certain administrative, marketing, distribution, sales support and logistic services to the LLC for a specified period of time.

The transaction is expected to be completed during the second quarter of 2025.

Based upon initial estimates, no impairment in the assets held for sale was identified and the expected gain from the sale will be recognized upon close of the transaction.

As of December 31, 2024, certain presentation criteria were met (see Note:1 Basis of Presentation and Significant Accounting Policies- Assets Held For Sale), accordingly we presented certain IV Solutions assets and liabilities as held for sale.

The following table summarizes the carrying values of the assets and liabilities presented as held for sale in our consolidated balances sheet as of December 31, 2024 (in thousands):

Accounts receivable, net of allowance of $ 465 at December 31, 2024

Inventories 88,656

Prepaid expenses and other current assets 4,140

Property, plant and equipment, net 155,426

Other assets 22,829

Total assets held for sale $ 284,382

Accounts payable $ 13,533

Accrued liabilities 19,378

Total liabilities held for sale $ 32,911

Net assets held for sale $ 251,471

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Revenue Recognition

As part of the integration of our acquisition of Smiths Medical, we have renamed our business units and reorganized the products thereunder and, as of January 1, 2023, our business unit structure is composed of Consumables, Infusion Systems and Vital Care.

All prior periods herein have been retrospectively conformed to the current presentation.

Our business units are Consumables, Infusion Systems and Vital Care.

The vast majority of our sales of these products within these business units are made on a stand-alone basis to hospitals and distributors.

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The following table represents our revenues disaggregated by product line (in thousands) and our disaggregated product line revenue as a percentage of total revenue:

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Year ended December 31,

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

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Year ended December 31,

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The following table presents the changes in our contract balances for the years ended December 31, 2024 and 2023, (in thousands):

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Contract Liabilities

Beginning balance, January 1, 2023 $ 45,866

Fair value of acquired deferred revenue ( 51,245 )

Equipment revenue recognized ( 34,121 )

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Software revenue deferred due to implementation 19,947

Government grant deferred revenue ( 3,729 )

Government grant recognized 1,514

Other deferred revenue ( 1,500 )

Government grant income recognized (1)

Government grant income deferred 944

Other deferred revenue recognized ( 6,041 )

Other deferred revenue 1,924

Ending balance, December 31, 2023 42,177

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Software revenue deferred due to implementation 29,913

Government grant deferred revenue ( 944 )

Government grant recognized 3,684

Other deferred revenue ( 1,924 )

Government grant income recognized (1)

Government grant income deferred —

Other deferred revenue recognized ( 2,576 )

Other deferred revenue 503

Ending balance, December 31, 2024 $ 39,403

____________________________

(1) The government grant income deferred is amortized over the life of the related depreciable asset as a reduction to depreciation expense.

During 2024, we recognized $ 26.0 million in revenue that was included in the opening contract balances as of December 31, 2023.

As of December 31, 2024, revenue from remaining performance obligations is as follows (in thousands):

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Recognition Timing

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Software revenue 11,214 471

Government grant revenue (1)

( 2,064 ) ( 9,415 )

Government grant deferred income (1)

Other deferred revenue (2)

( 1,717 ) ( 383 )

Total $ 30,358 $ 9,045

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Practical expedients and exemptions

In addition to the practical expedient applied to sales commissions, under ASC Topic 606, we elected to apply the practical expedient for shipping and handling costs incurred after the customer has obtained control of a good.

We will continue to treat these costs as a fulfillment cost rather than as an additional promised service.

The Company has a single operating and reportable segment.

The segment is organized by and derives revenues from the manufacture and sale of our medical products which are used in infusion therapy, vascular access, and vital care applications.

Our product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software;

dedicated and non-dedicated IV sets, needlefree IV connectors, IV catheters, sharps safety products, and sterile IV solutions;

closed system transfer devices and pharmacy compounding systems;

as well as a range of respiratory, anesthesia, patient monitoring, and temperature management products.

Our product lines, as disclosed in Note 5:

Revenue, were determined to be a single operating segment as discrete financial information by product-line is limited to revenue and standard cost.

Other cost of sale expenses, which include above-site manufacturing costs, manufacturing variances and supply chain costs including freight and warehousing are not allocated to individual product lines.

Similarly, quality, regulatory and other operating expenses are only provided to our chief operating decision maker ("CODM") at the consolidated level.

The accounting policies of our single reportable segment are the same as those described in Note 1:

Basis of Presentation and Significant Accounting Policies.

For information on disaggregation of revenues by product-line and geography, see Note 5:

Our chief executive officer is our CODM.

Our CODM uses net profit (loss) to manage our business activities on a consolidated basis and to evaluate and assess the performance of the Company when determining how to allocate capital resources.

Our segment performance is monitored and resource allocation is determined during the annual budget/forecast processes.

The measure of segment assets is reported on the consolidated balance sheets as total assets.

In 2024, 2023 and 2022, expenditures for additions to long-lived assets were $ 90.2 million, $ 93.7 million, and $ 99.3 million, respectively.

The following table presents information about our segment revenue, segment profit or loss, and significant segment expenses (in thousands):

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We will continue to treat these costs as a fulfillment cost rather than as an additional promised service.

Year ended December 31,

2024 2023 2022

REVENUES $ 2,382,046 $ 2,259,126 $ 2,279,997

Standard COGS (1)

1,193,994 1,114,294 1,052,455

Quality remediation/recall (2)

19,126 58,243 70,036

Other COGS (3)

344,144 346,716 459,745

Selling, general and administrative 638,762 606,693 608,345

Research and development 88,615 85,344 92,984

Restructuring and integration 59,840 41,258 71,421

Other segment items (4)

( 2,964 ) ( 17,850 ) ( 31,385 )

Interest expense 106,541 102,727 70,805

Income tax provision (benefit) 51,676 ( 48,644 ) ( 40,123 )

Consolidated net loss $ ( 117,688 ) $ ( 29,655 ) $ ( 74,286 )

_______________

(1) Represents the average annual budgeted cost of producing each good sold in the period.

(2) Represents significant labor and material costs to replace or repair a product outside the scope of standard warranty and compliance costs related to quality systems and manufacturing operations.

(3) Includes costs related to capitalized manufacturing variances to standard COGS, supply chain and logistics costs including freight, inventory management and reserves, hardware service, quality and regulatory, and operations and supply chain management costs.

(4) Includes changes in fair value of contingent earn-out, interest income, gain/loss on disposition of assets, gain/loss on foreign exchange, other miscellaneous income/expense and equity in the income of equity method investees.

For information on depreciation and amortization expense, see Note 1:

Basis of Presentation and Significant Accounting Policies.

Significant Customers

We sell products worldwide, on credit terms on an unsecured basis, as an OEM supplier, to independent medical supply distributors and directly to end customers.

The manufacturers and distributors, in turn, sell our products to healthcare providers.

In 2024, 2023 and 2022, we had net sales to a single distributor of 18 %, 16 % and 15 %, respectively of consolidated worldwide net sales.

Geographic Information

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The table below presents our gross long-lived assets, consisting of property, plant and equipment, by country or region (in thousands):

As of December 31,

Costa Rica $ 156,149 $ 143,380

Mexico 111,043 110,124

Other LATAM 55,451 47,564

Canada 5,284 5,694

Italy 29,124 28,201

Spain 17,141 21,921

Czech Republic 11,909 12,256

Other Europe 11,445 11,440

APAC 27,550 22,966

Total Foreign $ 425,096 $ 403,546

United States* 610,547 833,251

Worldwide Total $ 1,035,643 $ 1,236,797

________________________________

*During the fourth quarter of 2024, we presented within the assets held for sale line item in our consolidated balance sheet, the gross long-lived assets that were part of a disposal group that met the criteria as held for sale during the fourth quarter (See Note 4:

Assets Held For Sale).

We determine if an arrangement is a lease at inception.

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Our leases have original lease terms of one year to fifteen years , some of which include options to extend the leases for up to an additional five years .

For all of our leases, we do not include optional periods of extension in our current lease terms for the exercise of options to extend is not reasonably certain.

For all of our leases, we do not include optional periods of extension in our current lease terms because we determined the exercise of options to extend is not reasonably certain.

The following table presents the components of our lease cost (in thousands):

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Year ended December 31,

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Operating cash flows from operating leases $ 24,251 $ 24,604 $ 25,225

$ 24,604 $ 25,225 $ 11,256

Operating cash flows from finance leases $ 182 $ 125 $ 112

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Finance leases $ 1,809 $ 1,028 $ 715

_____________________________

(1) In January 2022, we acquired $ 55.2 million of operating right-of-use assets as part of the Smiths Medical acquisition, see Note 2:

Acquisitions.

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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):

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

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As of December 31,

Finance leases

Finance lease right-of-use assets $ 2,707 $ 2,598

Other assets $ 3,259 $ 2,707

Accrued liabilities $ 1,066 $ 860

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As of December 31, 2024, the maturities of our operating and finance lease liabilities for each of the next five years are approximately (in thousands):

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Operating Leases Finance Leases

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SHARE-BASED AWARDS

We have a stock incentive plan for employees and directors and an employee stock purchase plan, however, the employee stock purchase plan was suspended in 2017.

We have a stock incentive plan for employees and directors and an employee stock purchase plan;

however, the employee stock purchase plan was suspended in 2017.

Shares to be issued under these plans will be issued either from authorized but unissued shares or from treasury shares.

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We receive a tax benefit on stock compensation expense and direct tax benefits from the exercise of stock options and vesting of restricted stock units.

We also have indirect tax benefits upon exercise of stock options and vesting of restricted stock units related to research and development tax credits which are recorded as a reduction of income tax expense.

We also have had indirect tax benefits upon exercise of stock options and vesting of restricted stock units related to research and development tax credits which are recorded as a reduction of income tax expense.

The table below summarizes compensation costs and related tax benefits (in thousands):

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Indirect tax benefit $ — $ — $ 749

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As of December 31, 2024, we had $ 55.3 million of unamortized stock compensation cost which we will recognize as an expense over a weighted-average period of approximately 0.7 years.

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Options granted under the 2011 Plan may be "non-statutory stock options" which expire no more than ten years from date of grant or "incentive stock options" as defined in Section 422 of the Internal Revenue Code of 1986, as amended.

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Time-based Stock Options

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Weighted-average grant-date fair value per option $ 70.86

There were no stock options granted during the year ended December 31, 2023.

There were no stock options granted during the years ended December 31, 2024 and 2023.

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A summary of our stock option activity as of and for the year ended December 31, 2024 is as follows:

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The following table presents information regarding stock option activity (in thousands):

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Year ended December 31,

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Tax benefit from stock option exercises $ 1,034 $ 1,733 $ 3,637

In 2024, we granted PRSUs to our executive officers and certain other non-executive employees.

The PRSUs will cliff-vest on March 8, 2026, subject to continued service through such vesting date and the achievement of minimum two-year cumulative adjusted EBITDA, commencing on January 1, 2024 and ending on December 31, 2025, which when reviewed against a predetermined vesting matrix could result in the vesting of 0% to 250% of the awarded PRSUs.

We also granted certain other one-off PRSU awards to non-executive employees with various performance requirements, whereby the PRSUs will be earned if the minimum requirements are met.

In 2023, we granted PRSUs to our executive officers.

For the executive officers other than the Chief Executive Officer ("CEO"), Chief Operations Officer ("COO"), the Chief Financial Officer ("CFO") and the Corporate Vice President, General Counsel ("CVP, GC"), the PRSUs will vest as to one-third of the total number of PRSUs underlying the award on the first, second and third anniversaries of the applicable grant date, subject to a determination by the CEO and Compensation Committee that the officers have met their individual performance goals for the applicable year and continued service through such vesting date.

For the executive officers other than the CEO, COO, CFO and the CVP, GC, the PRSUs will vest as to one-third of the total number of PRSUs underlying the award on the first, second and third anniversaries of the applicable grant date, subject to a determination by the CEO and Compensation Committee that the officers have met their individual performance goals for the applicable year and continued service through such vesting date.

For the CEO, COO, the CFO, and the CVP, GC, the PRSUs will cliff-vest on March 15, 2026, subject to continued service through such vesting date and the achievement of minimum three-year adjusted revenue and adjusted EBITDA compound annual growth rates, commencing on January 1, 2023 and ending on December 31, 2025, which when reviewed against a predetermined vesting matrix could result in the vesting of 0% to 250% of the awarded PRSUs.

In February 2024, the Compensation Committee made the determination that the executive officers other than the CEO, CFO, COO and CVP, GC met their individual performance goals for 2023 with respect to the PRSUs subject to annual vesting, as outlined above, and therefore one-third of their 2023 PRSUs vested during 2024.

In 2022, we granted our annual PRSUs to our executive officers and certain other non-executive employees.

These PRSUs will cliff-vest on March 7, 2024, subject to continued service through such vesting date and the achievement of net synergy savings targets related to the Smiths Medical acquisition achieved during the performance period commencing on January 1, 2022 and ending on December 31, 2023, which when reviewed against predetermined targets could result in the vesting of 0% to 200% of the awarded PRSUs.

These PRSUs cliff-vested on March 7, 2024, subject to continued service through such vesting date and the achievement of net synergy savings targets related to the Smiths Medical acquisition achieved during the performance period commencing on January 1, 2022 and ending on December 31, 2023, which when reviewed against predetermined targets could have resulted in the vesting of 0% to 200% of the awarded PRSUs.

We also granted certain other one-off PRSU awards to non-executive employees with various performance requirements, whereby the PRSUs will be earned if the minimum requirements are met within a specified time period.

The performance period related to the annual 2022 PRSUs ended on December 31, 2023 and is subject to the Compensation Committee review and determination that between 0% and 200% of the PRSUs awarded were earned based on the actual net synergy savings related to the Smiths Medical acquisition achieved during the performance period.

In 2021, we granted PRSUs to our executive officers.

For the executive officers other than the CEO, COO and the CFO, the PRSUs will vest as to one-third of the total number of PRSUs underlying the award on the first, second and third anniversaries of the applicable grant date, subject to a determination by the CEO and Compensation Committee that the officers have met their individual performance goals for the applicable years and continued service through such vesting date.

For the CEO, COO and the CFO, the PRSUs will cliff-vest on March 8, 2024, subject to continued service through such vesting date and the achievement of minimum three-year cumulative adjusted revenue dollar target frowth rate and adjusted EPS dollar target growth rate targets, commencing on January 1, 2021 and ending on December 31, 2023, which when reviewed against a predetermined vesting matrix could result in the vesting of 0% to 250% of the awarded PRSUs.

In February 2022, the Compensation Committee made the determination that the executive officers other than the CEO, CFO and COO met their individual performance goals for 2021, therefore one-third of their 2021 PRSUs awarded vested during 2022.

In February 2023, the Compensation Committee made the determination that the executive officers other than the CEO, CFO and COO met their individual performance goals for 2022, therefore one-third of their 2021 PRSUs awarded vested during 2023.

The performance period related to the final third of the PRSUs awarded to the executive officers other than the CEO, CFO and COO ended on December 31, 2023 and is subject to the Compensation Committee review and determination that the PRSUs will be earned at 100% of the awarded PRSUs based on whether the officers met their individual performance goals for 2023.

The performance period related to the 2021 CEO, COO and CFO PRSUs ended on December 31, 2023 and is subject to the Compensation Committee review and determination that between 0% and 250% of the awarded PRSUs will be earned based on the actual cumulative adjusted revenue dollar target growth rate and adjusted EPS dollar target growth rate achieved during the performance period.

In 2020, we granted PRSUs to our executive officers.

For the executive officers other than the CEO, COO and the CFO, the PRSUs vested as to one-third of the total number of PRSUs underlying the award on the first, second and third anniversaries of the applicable grant date, subject to a determination by the CEO and Compensation Committee that the officers had met their individual performance goals for the applicable years and continued service through such vesting date.

For the CEO, COO and the CFO, the PRSUs cliff-vested on March 6, 2023 and were further subjected to continued service through such vesting date and the achievement of minimum three-year cumulative adjusted revenue dollar target growth rate and

The performance period related to the annual 2022 PRSUs ended on December 31, 2023 and in

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

adjusted EPS dollar target growth rate targets, which when reviewed against a predetermined vesting matrix could have resulted in the vesting 0% to 250% of the awarded PRSUs.

In February 2021, the Compensation Committee made the determination that the executive officers other than the CEO, COO and CFO met their individual performance goals for 2020;

therefore one-third of their 2020 PRSUs awarded vested during 2021.

Additionally, during February 2021, the Compensation Committee, modified the potential vesting percentages related to the 2020 PRSU awards for the CEO, COO and CFO, as the original potential percentages were established immediately before the onset of the COVID-19 pandemic.

February 2024 the Compensation Committee determined that 200% of the PRSUs awarded were earned based on the actual net synergy savings related to the Smiths Medical acquisition achieved during the performance period.

In 2021, we granted PRSUs to our executive officers.

In February 2022, 2023 and 2024, the Compensation Committee made the determination that the executive officers other than the CEO, CFO and COO met their individual performance goals for 2021, 2022 and 2023, respectively, and therefore one-third of their 2021 PRSUs vested during each of 2022, 2023 and 2024.

For the CEO, COO and the CFO, the PRSUs cliff-vested on March 8, 2024, subject to continued service through such vesting date and the achievement of minimum three-year cumulative adjusted revenue dollar target growth rate and adjusted EPS dollar target growth rate targets, commencing on January 1, 2021 and ending on December 31, 2023, which when reviewed against a predetermined vesting matrix could have resulted in the vesting of 0% to 250% of the awarded PRSUs.

The performance period related to the 2021 CEO, COO and CFO PRSUs ended on December 31, 2023 and in February 2024 the Compensation Committee determined that 110% of the awarded PRSUs were earned based on the actual cumulative adjusted revenue dollar target growth rate and adjusted EPS dollar target growth rate achieved during the performance period.

In 2020, we granted PRSUs to our executive officers.

In February 2021, 2022, and 2023, the Compensation Committee made the determination that the executive officers other than the CEO, CFO and COO met their individual performance goals for 2021, 2022 and 2023, respectively, and therefore one-third of their 2020 PRSUs awarded vested during 2021, 2022 and 2023.

For the CEO, COO and the CFO, the PRSUs cliff-vested on March 6, 2023, subject to continued service through such vesting date and the achievement of minimum three-year cumulative adjusted revenue dollar target growth rate and adjusted EPS dollar target growth rate targets, which when reviewed against a predetermined vesting matrix such PRSUs originally had the potential to vest from 0% to 250% of the awarded PRSUs.

During February 2021, the Compensation Committee, modified the potential vesting percentages related to the 2020 PRSU awards for the CEO, COO and CFO, as the original potential percentages were established immediately before the onset of the COVID-19 pandemic.

The Compensation Committee determined to adjust the CEO, COO and CFO's potential to earn from between 0% and 250% of the awarded PRSUs, to an increased potential to earn between 50% and 300% of the award granted, subject to the same minimum threshold revenue and EPS targets set forth above to be achieved by the Company.

The additional compensation expense as a result of modifying the 2020 PRSUs granted to our CEO, COO and CFO totaled $ 2.1 million recognized over the remaining amortization period from the date of modification.

In February 2023, the Compensation Committee made the determination that the executive officers other than the CEO, CFO and COO met their individual performance goals for 2022, therefore the final third of their 2020 PRSUs awarded vested during 2023.

The performance period related to the 2020 CEO, COO and CFO PRSUs ended on December 31, 2022 and in February 2023 the Compensation Committee determined that 188% of the awarded PRSUs were earned based on the actual cumulative adjusted revenue dollar growth rate and adjusted EPS dollar target growth rate achieved during the performance period.

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For the executive officers other than the CEO and the COO, the PRSUs vested as to one-third of the total number of PRSUs underlying the award on the first, second and third anniversaries of the applicable grant date, subject to a determination by the CEO and Compensation Committee that the officers had met their individual performance goals for the applicable years and continued service through such vesting date.

In February 2020, 2021 and 2022, the Compensation Committee made the determination that the executive officers other than the CEO and COO met their individual performance goals for 2019, 2020 and 2021, respectively, and therefore one-third of their 2019 PRSUs awarded vested during 2020, 2021 and 2022.

For the CEO and the COO, the PRSUs were to cliff-vest on March 6, 2022, subject to continued service through such vesting date and the achievement of a minimum Cumulative Adjusted EBITDA growth target over the performance period.

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If, on the vesting date, the Cumulative Adjusted EBITDA had a growth of over 10%, 200% of the awarded PRSUs would have vested.

The performance period related to the 2019 CEO and COO PRSUs ended on December 31, 2021 and in February 2022 the Compensation Committee determined that zero PRSUs were earned based on the actual Cumulative Adjusted EBITDA growth achieved during the performance period.

In 2019, we also granted PRSUs to one of our non-executive employees.

These PRSUs vested at the end of a three-year period ending on March 31, 2022, based on meeting certain minimum performance goals.

In February 2020, the Compensation Committee made the determination that the executive officers other than the CEO and COO met their individual performance goals for 2019, therefore, one-third of their 2019 PRSUs awarded vested during 2020.

In February 2021, the Compensation Committee made the determination that the executive officers other than the CEO and COO met their individual performance goals for 2020, therefore, one-third of their 2019 PRSUs awarded vested during 2021.

In February 2022, the Compensation Committee made the determination that the executive officers other than the CEO and COO met their individual performance goals for 2021, therefore, the final third of their 2019 PRSUs awarded vested during 2022.

In 2018, we granted PRSUs to our executive officers.

For the executive officers other than the CEO and the COO, the PRSUs were vested as to one-third of the total number of PRSUs underlying the award on the first, second and third anniversaries of the applicable grant date, subject to a determination by the CEO and Compensation Committee that the officers have met their individual performance goals for the applicable year and continued service through such vesting date.

For the CEO and the COO, the PRSUs cliff-vested ending on February 15, 2021, subject to continued service through such vesting date and the achievement of a minimum Cumulative Adjusted EBITDA growth target over the performance period.

If, for the three -year period ending on December 31, 2020, the Cumulative Adjusted EBITDA had a growth of at least 6% to 8%, 50% of the awarded PRSUs would vest.

If, on the vesting date, the Cumulative Adjusted EBITDA had a growth of between 8% to 10%, 100% of the awarded PRSUs would vest.

If, on the vesting date, the Cumulative Adjusted EBITDA had a growth of over 10%, 200% of the awarded PRSUs would vest.

In February 2019, the Compensation Committee made the determination that six of the eight executive officers other than the CEO and COO who received a 2018 PRSU award met their individual performance goals for 2018, therefore, one-third of the 2018 PRSUs awarded for those executives vested during 2019.

The two executive officers who did not earn one-third of the PRSUs awarded during the 2018 performance period additionally earned those shares in 2019.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In February 2021, the Compensation Committee made the determination that the executive officers other than the CEO and COO met their individual performance goals for 2020, therefore, the final third of their 2018 PRSUs awarded vested during 2021.

Also in February 2021, the Compensation Committee determined that based on the actual Cumulative Adjusted EBITDA growth achieved during the performance period, the CEO and COO's 2018 PRSUs were earned at 100% of the PRSUs granted.

Restricted stock units are granted annually to our non-employee directors and vest on the first anniversary of the grant date, or the date of our annual meeting, whichever occurs first.

In 2023, 2022 and 2021, we granted RSUs to certain employees that vest ratably on the anniversary of the grant over three years.

In 2024, 2023 and 2022, we granted RSUs to certain employees that typically vest ratably on the anniversary of the grant over three years.

We recognize forfeitures as they occur.

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_______________________________

(1) PRSU shares earned in 2024 were related to performance awards granted to executives and certain other employees in 2021, 2022 and 2023.

PRSU shares earned in 2023 were related to performance awards granted to executives in 2020 and 2021 and performance awards granted to a non-executive employees in 2022.

PRSU shares earned in 2022 were related to performance awards granted to executives in 2019, 2020 and 2021 and performance award granted to a non-executive employee in 2019, 2020, and 2021.

PRSU shares earned in 2021 were related to performance awards granted to executives in 2018, 2019 and 2020.

The table below provides a summary of our PRSU and RSU activity as of and for the year ended December 31, 2024:

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employees may purchase up to $25,000 annually of common stock at 85% of its fair market value at the beginning or the end of a six-month offering period, whichever is lower.

There are 750,000 shares of common stock reserved for issuance under the ESPP, which is subject to an annual increase of the least of 300,000 shares, two percent of the shares outstanding or such a number as determined by the Board.

There were 750,000 shares of common stock reserved for issuance under the ESPP, which is subject to an annual increase of the least of 300,000 shares, two percent of the shares outstanding or such a number as determined by the Board.

To date, there have been no increases.

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Hedge Accounting and Hedging Program

The purposes of our cash flow hedging programs are to manage the foreign currency exchange rate risk on forecasted expenses denominated in currencies other than the functional currency of the operating unit, and to manage floating interest rate risk associated with future interest payments on variable-rate term loans issued in January 2022.

The purposes of our cash flow hedging programs are to manage the foreign currency exchange rate risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit, and to manage floating interest rate risk associated with future interest payments on variable-rate term loans issued in 2022.

We do not issue derivatives for trading or speculative purposes.

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Foreign Currency Exchange Rate Risk

Forward Exchange Forward Contracts

Foreign Exchange Forward Contracts

We enter into foreign exchange forward contracts to hedge a portion of our forecasted foreign currency-denominated revenues and expenses to minimize the effect of foreign exchange rate movements on the related cash flows.

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Our current foreign exchange forward contracts hedge exposures principally denominated in Mexican Pesos ("MXN"), Euros, Japanese Yen ("JPY"), Chinese Renminbi ("CNH"), Canadian Dollar ("CAD"), U.S.

Dollar ("USD") 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 December 31, 2023 was $ 172.6 million, which included the notional equivalent of $ 27.1 million in MXN, $ 35.6 million in Euros, $ 17.4 million in JPY, $ 8.1 million in CNH, $ 18.4 million in CAD, $ 14.2 million in AUD, $ 42.6 million in USD and $ 9.2 million in other foreign currencies, with terms currently through November 2025.

Dollar ("USD") and Australian Dollar ("AUD") and have varying maturities with an average term of approximately eleven months.

The total notional amount of these outstanding derivative contracts as of December 31, 2024 was $ 112.5 million, which included the notional equivalent of $ 53.4 million in MXN, $ 6.9 million in Euros, $ 6.5 million in CAD, $ 6.4 million in AUD, $ 30.6 million in USD and $ 8.7 million in other foreign currencies, with terms currently through December 2025.

Cross-currency Par Forward Contracts

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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 March 2020, we entered into a one-year cross-currency par forward contract.

The total notional amount of this outstanding derivative as of December 31, 2020 was approximately 436.8 million MXN.

The term of this one-year contract was November 3, 2020 to December 1, 2021.

The derivative instrument matured in equal monthly amounts at a fixed forward rate of 24.26 MXN/USD.

In November 2021, we entered into a one-year cross-currency par forward contract.

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

Floating Interest Rate Risk

In 2022, we entered into interest rate swaps to reduce the interest rate volatility on our variable-rate term loan A and variable-rate term loan B (see Note 13:

Long-Term Obligations).

We exchange, at specified intervals, the difference between

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Floating Interest Rate Risk

In November 2021, in anticipation of entering into the new senior secured credit facilities in January 2022, which included a variable-rate term loan A and a variable-rate term loan B (see Note 11:

Long-Term Obligations), we entered into two forward-starting interest rate swaps.

In February 2022, certain terms under the agreements were amended to reflect the transition from LIBOR to the Secured Overnight Financing Rate ("SOFR"), an alternative reference rate.

Under the interest rate swap agreements we exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount.

The term loan A swap, as amended, has an initial notional amount of $ 300.0 million, reducing to $ 150.0 million evenly on a quarterly basis through its final maturity on March 30, 2027.

fixed and floating interest amounts calculated by reference to an agreed-upon notional amount.

Effective March 30, 2022, the term loan A swap, as amended, has an initial notional amount of $ 300.0 million, reducing to $ 150.0 million evenly on a quarterly basis through its final maturity on March 30, 2027.

We pay a fixed rate of 1.32 % and will receive the greater of 3-month USD SOFR or ( 0.15 )%.

The total notional amount of this outstanding derivative as of December 31, 2024 was approximately $ 213.2 million.

The term loan B swap, as amended, has an initial notional amount of $ 750.0 million, reducing to $ 46.9 million evenly on a quarterly basis through its final maturity on March 30, 2026.

Effective March 30, 2022, the term loan B swap, as amended, has an initial notional amount of $ 750.0 million, reducing to $ 46.9 million evenly on a quarterly basis through its final maturity on March 30, 2026.

We pay a fixed rate of 1.17 % and receive the greater of 3-month USD SOFR or 0.35 %.

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Accrued liabilities $ 7,391 $ — $ 7,391

Other long-term liabilities 240 — 240

Total liabilities $ 7,391 $ — $ 7,391

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_______________________________

(1) Represents location of gain reclassified from accumulated other comprehensive income (loss) into other expense, net as a result of ineffectiveness.

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

We recognized the following gains (losses) on our derivative instruments designated as cash flow hedges in other comprehensive income (loss) before reclassifications to income (in thousands):

Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)

(1) Represents location of gain reclassified from accumulated other comprehensive (loss) income into other expense, net as a result of ineffectiveness.

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

We recognized the following (losses) gains on our derivative instruments designated as cash flow hedges in other comprehensive loss before reclassifications to income (in thousands):

Amount of Gain Recognized in Other Comprehensive Loss

Year Ended December 31,

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Total derivatives designated as cash flow hedging instruments $ 14,042 $ 15,988 $ 72,374

As of December 31, 2023, we expect an estimated $ 4.2 million in deferred gains on the outstanding foreign exchange forward contract and an estimated $ 23.9 million in deferred gains on the forward-starting 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 (loss) income.

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2024, we expect an estimated $ 0.7 million in deferred losses on the outstanding foreign exchange forward contract and an estimated $ 11.4 million in deferred gains on the forward-starting 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 (loss) income.

FAIR VALUE MEASUREMENTS

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Contingent earn-out liabilities

In the fourth quarter of 2019, we recognized an earn-out liability related to the acquisition of Pursuit (see Note 2:

Acquisitions).

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.

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.

During the earn-out period, we used a Monte Carlo simulation model to determine the fair value of the earn-out liability.

The Monte Carlo simulation model utilized multiple input variables to determine the value of the earn-out liability including historical volatility, a risk-free interest rate, counter party credit risk and projected future gross profit (see the simulation input table below related to Pursuit).

The historical volatility was based on the median of ICU and a certain peer group.

The risk-free interest rate was equal to the yield, as of the valuation date, of the zero-coupon U.S.

Treasury bill that was commensurate with the term of the earn-out.

The counter party credit risk was based on a synthetic credit rating of B1.

As of June 30, 2021, the earn-out measurement period ended.

Based on the actual sales and gross profit achieved during the measurement period, we calculated the actual earn-out amount to be $ 26.3 million.

The $ 26.3 million earn-out calculation was finalized and accepted by Pursuit's former equity holders and was paid out in the fourth quarter of 2021.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In 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.

The terms of the agreement include a contingent earn-out payment.

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 December 31, 2023, the fair value of the contingent earn-out was determined to be $ 3.4 million and was paid out in the first quarter of 2024.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 November 2021, we acquired a small foreign infusion systems supplier.

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 December 31, 2023, the estimated fair value for the contingent consideration related to certain product-related regulatory certifications was estimated to be $ 1.5 million.

As of December 31, 2022, the measurement period related to the contingent earn-out based on certain revenue targets ended and based on the actual revenue achieved during the measurement period we determined the fair value of the contingent earn-out was zero as the minimum threshold for earning the earn-out was not met.

On January 6, 2022, we acquired Smiths Medical with a combination of cash consideration and share consideration issued at closing.

Total consideration for the acquisition includes a potential earn-out payment of $ 100.0 million in cash contingent on our common stock achieving certain Price Targets from the closing date to either the third or fourth anniversary of closing (see Note 2:

Acquisitions) and provided Smiths beneficially owns at least 50.0 % of the shares of common stock issued at closing at the time the Price Target is achieved.

The terms of the agreement included a contingent earn-out payment.

The contingent earn-out payment could not exceed $ 6.0 million and was to 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.

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

As of December 31, 2023, the earn-out measurement period ended.

The fair value of the contingent earn-out was determined to be $ 3.4 million and was paid out in the first quarter of 2024.

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

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 obtaining certain product-related regulatory certifications by May 26, 2024.

As of December 31, 2022, the measurement period related to the contingent earn-out based on certain revenue targets ended and based on the actual revenue achieved during the measurement period, the fair value of the contingent earn-out was determined to be zero as the minimum threshold for earning the earn-out was not met.

As of December 31, 2024, the earn-out measurement period related to certain product-related regulatory certifications had ended and the product-related regulatory certification had not been achieved, accordingly, the estimated fair value for the contingent consideration was reduced to zero.

In 2022, we acquired Smiths Medical with a combination of cash consideration and share consideration issued at closing.

Total consideration for the acquisition included a potential earn-out payment of $ 100.0 million in cash contingent on our common stock achieving a certain volume-weighted average price (the "Price Targets") from the closing date to either the third or fourth anniversary of closing and provided Smiths beneficially owns at least 50.0 % of the shares of common stock issued at closing at the time the Price Target is achieved.

The initial estimated fair value of the earn-out was determined to be $ 53.5 million using a Monte Carlo simulation model.

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Treasury securities at constant maturity for the period commensurate with the term of the earn-out.

At each reporting date subsequent to the acquisition, we remeasure the earn-out liability and recognize any changes in its fair value in our consolidated statements of operations.

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 December 31, 2023, the estimated fair value of the contingent earn-out is $ 4.0 million.

At each reporting date subsequent to the acquisition, we remeasured the earn-out liability and recognized any changes in its fair value in our consolidated statements of operations.

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

As of December 31, 2023, the estimated fair value of the contingent earn-out was $ 4.0 million.

During 2024, Smiths sold all of their remaining shares of common stock of ICU Medical, Inc.

The sale of these shares rendered Smiths unable to achieve the contingent consideration based on certain price targets during the third and fourth anniversary of closing as Smiths no longer met the required minimum beneficial ownership percentage.

Accordingly, the valuation of the contingent earn-out liability as of December 31, 2024 was zero.

Our contingent earn-out liabilities are separately stated on our consolidated balance sheets.

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Contingent earn-out liability, January 1, 2022 $ 2,589

Contingent earn-out non-compete arrangement 2,589

Transfer of Pursuit earn-out liability into Level 2 (1)

Contingent earn-out liability, December 31, 2021 2,589

Acquisition date fair value estimate of earn-out (1)

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Contingent earn-out liability, December 31, 2023 5,491

Change in fair value of contingent earn-out (included in income from operations as a separate line item) (6)

Currency translation ( 92 )

Contingent earn-out liability, December 31, 2024 $ —

_______________________________

(1) The Pursuit earn-out was transferred out of Level 3 and into Level 2 in the third quarter of 2021 when the amount of the actual payment was known, and subsequently settled during the fourth quarter of 2021.

(1) $ 53.5 million relates to our acquisition of Smiths Medical and $ 1.6 million relates to our acquisition of a small foreign infusions systems supplier in the fourth quarter of 2021 (see Note 2:

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The contingent earn-out was not earned based on our determination that the threshold target was not met.

(4) Primarily relates to the change in fair value of our Smiths Medical earn-out and the earn-out with one of our international distributors.

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

(4) Primarily relates to the reclassification to accrued liabilities of a holdback liability not subject to unobservable inputs when determining the fair market value.

(5) The Mediverse earn-out was transferred out of Level 3 and into Level 2 in the fourth quarter of 2023 when the amount of the actual payment was known, and subsequently settled during first quarter of 2024.

(6) Relates to the change in fair value of our Smiths Medical earn-out and the earn-out with one of our small foreign infusion systems suppliers, both of which were written down to zero as of December 31, 2024.

The following table provides quantitative information about Level 3 inputs for fair value measurement of our earn-out liabilities related to Smiths Medical:

Smiths Medical Earn-out

December 31, 2023 As of

December 31, 2023

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These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative.

The fair value of our Level 2 interest rate swaps is estimated using a pricing model that reflects the terms of the contracts, including the period to maturity, and relies on observable market inputs such as known notional value amounts and USD interest rate curves.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other than the Mediverse earn-out liability described above, there were no transfers between levels in 2024 or 2023.

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inputs (level 3)

Available-for-sale debt securities:

Short-term corporate bonds $ 501 $ — $ 501 $ —

Foreign exchange forwards:

Prepaid expenses and other current assets $ 6,716 $ — $ 6,716 $ —

Other assets 673 — 673 —

Interest rate contracts:

2 unchanged sentences

Total Assets $ 23,478 $ — $ 23,478 $ —

Contingent earn-out liability-ST $ 4,879 $ — $ 3,379 $ 1,500

Contingent earn-out liability - LT 3,991 — — 3,991

Foreign exchange contracts:

Accrued liabilities $ 7,391 $ — $ 7,391 $ —

Other long-term liabilities 240 — 240 —

Total Liabilities $ 7,391 $ — $ 7,391 $ —

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Short-term corporate bonds $ 501 $ — $ 501 $ —

Short-term U.S.

treasury securities 1,412 1,412 — —

Short-term government bonds 498 — 498 —

Long-term corporate bonds 516 — 516 —

Foreign exchange forwards:

Prepaid expenses and other current assets 6,785 — 6,785 —

4,860 — 4,860 —

Other assets 673 — 673 —

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Prepaid expenses and other current assets 23,065 — 23,065 —

28,431 — 28,431 —

Other assets 4,876 — 4,876 —

26,753 — 26,753 —

Total Assets $ 35,900 $ — $ 35,900 $ —

Contingent earn-out liability-ST $ 4,879 $ 3,379 $ 1,500

Contingent earn-out liability - LT 3,991 $ — — $ 3,991

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Accrued liabilities 2,590 — 2,590 —

1,847 — 1,847 —

Other long-term liabilities 240 — 240 —

Total Liabilities $ 11,700 $ — $ 6,209 $ 5,491

_______________________________

(1) Subsequent to the issuance of the financial statements as of and for the year ended December 31, 2022, the Company determined that the tabular disclosure of the level for these amounts were incorrectly presented within level 3, and accordingly the Company has corrected these disclosures to present them as level 2 within this table.

The Company determined the impact of the adjustments to the table to be immaterial, individually and in the aggregate, based on consideration of quantitative and qualitative factors.

PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS

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

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31,

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$ 70,287 $ 73,640

____________________________

*As of December 31, 2024, certain prepaid expense account balances that are part of a disposal group that met the criteria for assets held for sale during the fourth quarter of 2024 were combined with other disposal group assets and presented as a separate line item "Assets Held For Sale" in our consolidated balance sheet (See Note 4:Assets Held For Sale).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other assets consist of the following (in thousands):

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$ 68,135 $ 94,020

____________________________

*As of December 31, 2024, spare parts account balances that are part of a disposal group that met the criteria for assets held for sale during the fourth quarter of 2024 were combined with other disposal group assets and presented as a separate line item "Assets Held For Sale" in our consolidated balance sheet (See Note 4:Assets Held For Sale).

ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

Accrued liabilities consist of the following (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31,

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Italy medical device payback provision (2)

23,937 23,176

Legal accrual 3,425 1,874

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Accrued interest 667 1,431

Accrued research and development — 3,538

Other 8,867 8,664

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_____________________________

(1) Primarily includes 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 15:

Commitments and Contingencies for further detail.

(2) As of December 31, 2022, there was an additional $ 12.1 million in payback provision recorded as a reduction to accounts receivable, net.

Whereas we recorded the amount for the payback provision to accrued liabilities from accounts receivable in Q3 2023, the payback provision was not reclassified as of December 31, 2022 to conform to the current year presentation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Primarily includes field corrective actions associated with certain products in connection with a 2021 Warning Letter (as defined below) received by Smiths Medical from the FDA following an inspection of Smiths Medical's Oakdale, Minnesota Facility (see Note 16:

Commitments and Contingencies for further details).

(2) Related to potential payments associated with the IMDP (as defined below) as a result of 2015 legislation enacted requiring medical device companies to make payments to the Italian government based on regional expenditure ceilings (see Note 16:

Commitments and Contingencies for further details).

As of December 31, 2024, certain accrued liability account balances that are part of a disposal group that met the criteria for assets held for sale during the fourth quarter of 2024 were presented as a separate line item "Liabilities held for sale" in our consolidated balance sheet (See Note 4:Assets Held For Sale).

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

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Field service corrective action (1)

26,056 25,294

Accrued rent 618 841

2 unchanged sentences

_______________________________

(1) Related 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 15:

Commitments and Contingencies for further detail.

(1) Primarily related to field corrective actions associated with certain products in connection with a 2021 Warning Letter (as defined below) received by Smiths Medical from the FDA following an inspection of Smiths Medical's Oakdale, Minnesota Facility (see Note 16:

Commitments and Contingencies for further details).

LONG-TERM OBLIGATIONS

2022 Credit Agreement

On January 6, 2022, in connection with the acquisition of Smiths Medical, we entered into a Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, Wells Fargo Securities, LLC, Barclays Bank PLC and certain other financial institutions (the “Lenders”) for $ 2.2 billion of senior secured credit facilities.

In 2022, in connection with the acquisition of Smiths Medical, we entered into a Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, Wells Fargo Securities, LLC, Barclays Bank PLC and certain other financial institutions (the “Lenders”) for $ 2.2 billion of senior secured credit facilities.

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").

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

In connection with entering into the Credit Agreement, during the period ended March 31, 2022, we incurred $ 37.8 million in debt discount and issuance costs, which were allocated to the Term Loan A, the Term Loan B and the Revolving Credit Facility based on lender commitment amounts relative to each type of fees paid.

The lender and third-party discount and issuance costs allocated to the Term Loan A and the Term Loan B were $ 15.8 million and $ 13.4 million, respectively, and are reflected as a direct deduction from the face amount of the corresponding term loans on the consolidated balance sheet.

In connection with entering into the Credit Agreement, in 2022, we incurred $ 37.8 million in debt discount and issuance costs, which were allocated to the Term Loan A, the Term Loan B and the Revolving Credit Facility based on lender commitment amounts relative to each type of fees paid.

The lender and third-party discount and issuance costs allocated to the Term Loan A and the Term Loan B were $ 15.8 million and $ 13.4 million, respectively, the current unamortized balances are reflected as a direct deduction from the face amount of the corresponding term loans on the consolidated balance sheet.

These costs are being amortized to interest expense over the respective terms of the loans using the effective interest method.

The issuance costs allocated to the Revolving Credit Facility were $ 8.6 million, which are capitalized and included in prepaid expenses and other current assets and other assets on our consolidated balance sheets.

The issuance costs allocated to the Revolving Credit Facility were $ 8.6 million, which are capitalized and included in prepaid

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expenses and other current assets and other assets on our consolidated balance sheets.

These costs are being amortized to interest expense over the term of the Revolving Credit Facility using the straight-line method.

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Interest Rate Terms

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Less than or equal to 2.00 to 1.0 1.25 % 0.25 % 0.15 %

The Term Loan B has an initial applicable margin of 1.5 % per annum for Base Rate Loans and 2.5 % per annum for Term SOFR Loans.

Effective on the first Adjustment Date, as defined in the Credit Agreement, occurring subsequent to our quarter ended June 30, 2022, the applicable margin for the Term Loan B is determined by reference to the leverage ratio in effect from time to time as set forth in the following table:

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Term Loan B has an initial applicable margin of 1.5 % per annum for Base Rate Loans and 2.5 % per annum for Term SOFR Loans.

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

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We may borrow, prepay and re-borrow amounts under the Revolving Credit Facility, in accordance with the terms and conditions of the Credit Agreement, with all outstanding amounts due at maturity.

During March 2022, we prepaid $ 16.0 million in principal payments on the Term Loan A principal balance, total principal paid on both Term Loans for the year ended December 31, 2022 was $ 22.4 million.

For the twelve months ended December 31, 2023, total principal payments on both Term Loans was $ 29.7 million.

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

For the years ended December 31, 2024, 2023 and 2022, total principal payments on both Term Loans was $ 51.0 million, $ 29.7 million and $22.4 million, respectively.

Interest Payments

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The Credit Agreement contains affirmative and negative covenants, including certain financial covenants.

The negative covenants include restrictions regarding the incurrence of liens and indebtedness, certain merger and acquisition transactions, asset sales and other dispositions, other investments, dividends, share purchases and payments affecting subsidiaries, changes in nature of business, fiscal year or organizational documents, prepayments and redemptions of subordinated and other junior debt, transactions with affiliates, and other matters.

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 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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

The maximum Senior Secured Leverage Ratio is 4.50 to 1.00 until June 30, 2024.

subsidiaries, changes in nature of business, fiscal year or organizational documents, prepayments and redemptions of subordinated and other junior debt, transactions with affiliates, and other matters.

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 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.

The maximum Senior Secured Leverage Ratio was 4.50 to 1.00 until June 30, 2024.

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

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If an event of default occurs and is not cured within any applicable grace period or is not waived, the administrative agent and the Lenders are entitled to take various actions, including, without limitation, the acceleration of all amounts due and the termination of commitments under the Senior Secured Credit Facilities.

2017 Credit Facility

On November 8, 2017, we entered into a five-year senior secured revolving credit facility with various lenders for $ 150.0 million, with Wells Fargo Bank, National Association as the administrative agent, swingline lender and issuing lender (the "Credit Facility").

The Credit Facility, which was set to mature on November 8, 2022 , was terminated in connection with entering into the Credit Agreement on January 6, 2022.

There were no borrowings outstanding under the Credit Facility at that date or at December 31, 2021.

The remaining unamortized deferred debt issuance costs related to the Credit Facility were not material and were expensed in connection with its termination.

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

Effective Interest Rate As of

December 31, 2023

2024 Effective Interest Rate As of December 31, 2023 Effective Interest Rate

Senior Secured Credit Facilities:

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Less unamortized debt issuance costs (1)

( 14,080 ) ( 19,168 )

Total carrying value of long-term debt 1,582,858 1,628,770

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_______________________________

(1) Comprised of $ 9.3 million and $ 9.9 million relating to the Term Loan A and the Term Loan B, respectively.

(1) In 2024, c omprised of $ 6.1 million and $ 8.0 million relating to the Term Loan A and the Term Loan B, respectively.

In 2023, comprised of $ 9.3 million and $ 9.9 million relating to the Term Loan A and the Term Loan B, respectively.

As of December 31 2024, 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):

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2025 $ 51,000

Thereafter 792,625

Total $ 1,596,938

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$ 51,676 $ ( 48,644 ) $ ( 40,123 )

We have accrued for tax contingencies for potential tax assessments, and in 2023 we recognized a $ 24.5 million net increase, most of which related to various federal, state and foreign tax reserves.

A reconciliation of the provision for income taxes at the statutory rate to our effective tax rate is as follows (dollars in thousands):

We have accrued for tax contingencies for potential tax assessments, and in 2024 we recognized a $ 5.7 million net decrease, most of which related to federal, state, and foreign tax reserves net of the release of various federal and foreign tax reserves.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A reconciliation of the provision for income taxes at the statutory rate to our effective tax rate is as follows (dollars in thousands):

Year Ended December 31,

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Tax reserve releases ( 2,216 ) 3.3 % ( 6,884 ) 8.8 % ( 1,834 ) 1.6 %

Legal Settlement ( 2,100 ) 3.2 % — — % — — %

Valuation allowance 81,713 ( 123.8 ) % — — % — — %

Other ( 431 ) 0.7 % ( 545 ) 0.7 % 1,642 ( 1.4 ) %

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Stock-based compensation 3,940 6,987

Foreign currency translation adjustments — —

Tax credits 17,068 15,095

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Depreciation and amortization 160,368 212,429

Section 481(a) adjustment - change in accounting method — —

Foreign currency translation and derivative instrument adjustments — 3,630

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Deferred tax (liability) asset, net $ ( 24,603 ) $ ( 18,590 )

Tax Holidays and Carryforwards

Net operating loss ("NOL") carryforwards consist of:

(a) federal NOL carryforwards of $ 1.4 million which will expire at various dates from 2031 to indefinite carryforward periods, (b) state NOL carryforwards of $ 4.1 million which will expire at

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

various dates from 2026 to indefinite carryforward periods and (c) foreign NOL carryforwards of $ 32.6 million which will expire at various dates from 2024 to indefinite carryforward periods.

The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized.

In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence.

This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income.

Due to the weight of objectively verifiable negative evidence, the Company recorded a valuation allowance of $ 81.7 million tax expense and $ 3.9 million foreign currency translation and derivative instrument adjustments against certain U.S.

federal and state deferred tax assets for the tax years ending December 31, 2024.

The significant piece of objectively verifiable negative evidence evaluated was the recent U.S.

cumulative losses.

Our ability to use our deferred tax assets depends on the amount of taxable income in future periods.

Tax Holidays and Carryforwards

Net operating loss ("NOL") carryforwards consist of:

(a) federal NOL carryforwards of $ 1.3 million which will expire at various dates from 2031 to indefinite carryforward periods, (b) state NOL carryforwards of $ 2.6 million which has indefinite carryforward periods and (c) foreign NOL carryforwards of $ 114.3 million which will expire at various dates from 2025 to indefinite carryforward periods.

We have recorded a net deferred tax asset of $ 6.8 million, $ 29.5 million gross deferred tax asset net of tax reserves of $ 22.7 million, related to our foreign NOL carryforwards.

The deferred tax assets recognized for these foreign NOLs are presented net of tax reserves.

We believe that it is more likely than not that the benefit from certain foreign NOL carryforwards will not be realized.

In recognition of this risk, we have provided a valuation allowance of $ 9.0 million on the $ 9.5 million deferred tax assets related to these foreign NOL carryforwards.

In recognition of this risk, we have provided a valuation allowance of $ 5.9 million on the $ 6.8 million net deferred tax assets related to these foreign NOL carryforwards.

Under Section 382 of the Internal Revenue Code, certain ownership changes limit the utilization of the NOL carryforwards, and the amount of federal NOL carryforwards recorded is the net federal benefit available.

Other carryforwards include state research and development (“R&D”) tax credit carryforwards of $ 20.4 million, which have an indefinite carryforward period.

Other carryforwards include state research and development (“R&D”) tax credit carryforwards of $ 23.9 million, the majority of which have an indefinite carryforward period.

A substantial portion of our manufacturing operations in Costa Rica operate under various tax holiday and tax incentive programs due to expire in whole or in part in 2029.

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The net impact of these tax holiday and tax incentives was an increase to our net earnings by $ 11.1 million or $ 0.45 per diluted share in 2024 and by $ 8.0 million or $ 0.33 per diluted share in 2023.

Foreign currency translation and derivative instrument adjustments, and related tax effects, are an element of “other comprehensive income” and are not included in net income other than the revaluation of the associated deferred tax asset due to the Tax Act.

Foreign currency translation and derivative instrument adjustments, and related tax effects, are an element of “other comprehensive income” and are not included in net income.

As of December 31, 2024, we have estimated $ 322 million of undistributed foreign earnings and profits.

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In total, we have accrued for interest and penalties of $ 2.6 million and $ 1.6 million, respectively as of December 31, 2024, and $ 2.9 million and $ 2.0 million, respectively, as of December 31, 2023.

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes our cumulative gross unrecognized tax benefits (in thousands):

8 unchanged sentences

Decrease related to settlements with tax authorities ( 1,133 ) ( 403 ) —

Decrease related to exchange rate fluctuations ( 524 ) — —

Ending balance $ 72,819 $ 78,558 $ 54,053

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In December 2022, the European Union agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold.

A number of countries have enacted or have announced plans to enact legislation to adopt Pillar Two.

The Pillar Two legislation is effective for our fiscal year beginning January 1, 2024 and for fiscal year 2024 we do not anticipate that it will have a material impact to our tax provision or effective tax rate.

In December 2022, the European Union (EU) agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold.

All of the EU countries and some of the non-EU countries in which we operate have enacted or have announced plans to enact legislation to adopt Pillar Two.

The Pillar Two legislation is effective for our fiscal year beginning January 1, 2024 and for fiscal year 2024, Pillar 2 did not have a material impact to our tax provision or effective tax rate.

However, the Pillar Two rules continue to evolve and their application may alter our tax obligations in certain countries in which we operate for fiscal periods beyond 2024 as we continue to assess the impact of tax legislation in these jurisdictions.

GEOGRAPHIC INFORMATION AND SIGNIFICANT CUSTOMERS

Significant Customers

We sell products worldwide, on credit terms on an unsecured basis, as an OEM supplier, to independent medical supply distributors and directly to the end customer.

The manufacturers and distributors, in turn, sell our products to healthcare providers.

In 2023, we had net sales to Medline of 16 % of consolidated worldwide net sales.

Geographic Information

The table below presents our gross long-lived assets, consisting of property, plant and equipment, by country or region (in thousands):

As of December 31,

Costa Rica $ 143,380 $ 128,179

Mexico 110,124 99,849

Other LATAM 47,564 39,270

Canada 5,694 5,374

Italy 28,201 24,323

Spain 21,921 18,948

Czech Republic 12,256 10,732

Other Europe 11,440 11,375

APAC 22,966 20,930

Total Foreign $ 403,546 $ 358,980

United States 833,251 803,577

Worldwide Total $ 1,236,797 $ 1,162,557

STOCKHOLDERS' EQUITY

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We had 2,428 shares remaining in treasury at December 31, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In 2022, we withheld 47,664 shares of our common stock from employee vested restricted stock units in consideration for $ 10.9 million in payments for the employees' share award income tax withholding obligations.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Balance as of January 1, 2022 $ ( 19,045 ) $ ( 237 ) $ 13 $ ( 19,269 )

Other comprehensive loss before reclassifications ( 14,664 ) ( 403 ) ( 62 ) ( 15,129 )

Amounts reclassified from AOCI — ( 2,618 ) — ( 2,618 )

Other comprehensive loss ( 14,664 ) ( 3,021 ) ( 62 ) ( 17,747 )

Balance as of December 31, 2021 $ ( 19,045 ) $ ( 237 ) $ 13 $ ( 19,269 )

Other comprehensive (loss) income before reclassifications ( 103,928 ) 54,962 1,203 ( 47,763 )

6 unchanged sentences

Balance as of December 31, 2023 $ ( 76,784 ) $ 21,884 $ 1,819 $ ( 53,081 )

Other comprehensive loss before reclassifications ( 70,158 ) 14,042 — ( 56,116 )

Amounts reclassified from AOCI — ( 30,204 ) — ( 30,204 )

Other comprehensive loss ( 70,158 ) ( 16,162 ) — ( 86,320 )

Balance as of December 31, 2024 $ ( 146,942 ) $ 5,722 $ 1,819 $ ( 139,401 )

COMMITMENTS AND CONTINGENCIES

7 unchanged sentences

Contingencies

During November 2019, we acquired Pursuit.

Total consideration for the acquisition included a potential contractual earn-out of up to $ 50.0 million to be paid to former Pursuit equity holders, calculated based upon the achievement of certain performance targets during the earn-out period.

As of June 30, 2021, the earn-out measurement period had ended and based on

The terms of the agreement included a contingent earn-out payment.

As of December 31, 2023, the earn-out measurement period ended.

The fair value of the contingent earn-out was determined to be $ 3.4 million and was paid out in the first quarter of 2024 (see Note 10:

Fair Value Measurements).

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

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 obtaining certain product-related regulatory certifications by May 26, 2024.

As of December 31, 2022, the measurement period related to the contingent earn-out based on certain revenue targets ended and based on the actual

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the actual sales and gross profit achieved during the measurement period we calculated the actual earn-out to be $ 26.3 million.

In October 2021, the $ 26.3 million earn-out was finalized and paid to the former Pursuit equity holders (see Note 8:

Fair Value Measurements).

The terms of the agreement include a contingent earn-out payment.

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 December 31, 2023, the fair value of the contingent earn-out was determined to be $ 3.4 million and was paid out in the first quarter of 2024 (see Note 8:

revenue achieved during the measurement period, the fair value of the contingent earn-out was determined to be zero as the minimum threshold for earning the earn-out was not met.

As of December 31, 2024, the earn-out measurement period related to certain product-related regulatory certifications had ended and the product-related regulatory certification had not been achieved, and accordingly, the estimated fair value for the contingent consideration was reduced to zero (see Note 10:

Fair Value Measurements).

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

As of December 31, 2023, the estimated fair value for the contingent consideration related to certain product-related regulatory certifications was estimated to be $ 1.5 million.

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 December 31, 2023, the estimated fair value of the contingent earn-out is $ 4.0 million (see Note 8:

In January 2022, we acquired Smiths Medical.

Total consideration for the acquisition included a potential earn-out payment of $ 100.0 million in cash contingent on our common stock achieving the Price Targets from the closing date to either the third or fourth anniversary of closing and provided Smiths beneficially owned at least 50.0% of the shares of common stock issued at closing at the time the Price Target is achieved.

During 2024, Smiths sold all of their remaining shares of common stock of ICU Medical, Inc.

The sale of these shares renders Smiths unable to achieve the contingent consideration based on certain price targets during the third and fourth anniversary of closing as Smiths no longer met the required minimum beneficial ownership percentage.

Accordingly, the valuation of the contingent earn-out liability as of December 31, 2024 was zero (see Note 10:

Fair Value Measurements).

Prior to being acquired, during 2021, Smiths Medical received a Warning Letter from the FDA following an inspection of Smiths Medical’s Oakdale, Minnesota Facility.

Prior to being acquired, during 2021, Smiths Medical received a Warning Letter from the FDA following an inspection of Smiths Medical’s Oakdale, Minnesota Facility (the "2021 Warning Letter").

The 2021Warning Letter cited, among other things, failures to comply with FDA's medical device reporting requirements and failures to comply with applicable portions of the Quality System Regulation.

2 unchanged sentences

The actual costs to be incurred are dependent upon the scope of the work necessary to achieve regulatory clearance, including potential additional field corrective actions, and could differ from the original estimate.

For the years ended December 31, 2023 and 2022, we recorded additional expense of $ 20.3 million and $ 5.3 million, respectively, primarily related to additional field corrective actions identified and initiated during those periods.

As of December 31, 2023, approximately $ 53.6 million of the $ 56.3 million of accrued field service corrective action was related to Smiths Medical.

For the years ended December 31, 2024 and 2023, we recorded a net reversal to the provision of $ 5.2 million and a provision of $ 20.3 million, respectively, to adjust the estimated cost to complete the field corrective actions to the amounts expected to be incurred based on historical experience.

As of December 31, 2024, approximately $ 31.7 million of the $ 39.2 million of accrued field service corrective action recorded was related to the 2021 Warning Letter.

In 2015, legislation was enacted in Italy which requires medical device companies to make payments to the Italian government if Italy's medical device expenditures for certain years exceeded annual regional expenditure ceilings.

Since its enactment, the legislation has been subject to appeals in the Italy court system.

In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the Italy Medical Device Payback ("IMDP").

However, litigation proceedings are still pending and the ultimate resolution remains unknown.

The timing and amount of payments could ultimately differ from our current expectations (see Note 12:

Accrued Liabilities and Other Long-Term Liabilities for details on amounts accrued for potential payments related to the IMDP).

We have non-cancelable operating lease agreements where we are contractually obligated to pay certain lease payment amounts (see Note 7:

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COLLABORATIVE AND OTHER ARRANGEMENTS

On February 3, 2017, we entered into two Manufacturing and Supply Agreements ("MSAs") whereby (i) Pfizer will manufacture and supply us with certain agreed upon products for an initial five-year term with a one-time two-year option to extend and (ii) we will manufacture and supply Pfizer certain agreed upon products for a term of five or ten years depending on the product, also with a one-time two-year option to extend.

On February 3, 2017, we entered into two Manufacturing and Supply Agreements ("MSAs") whereby (i) Pfizer would manufacture and supply us with certain agreed upon products for an initial five-year term with a one-time two-year option to extend and (ii) we will manufacture and supply Pfizer certain agreed upon products for a term of five or ten years depending on the product, also with a one-time two-year option to extend.

We no longer purchase products from Pfizer under the MSA as described in (i) above.

The MSA described in (ii) above provides each party with mutually beneficial interests and is 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.

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

The amendments included a change to the term of the agreement to end on December 31, 2024 with Pfizer's unilateral election to extend through December 31, 2025.

Other changes to the terms of the MSA included (i) amendments to our level of supply of products to Pfizer, (ii) certain changes to our manufacturing lines, (iii) updates to our supply price with added volume price tiers for annual periods and (iv) certain minimum purchase requirements for certain products.

On February 1, 2022, effective as of January 1, 2022, upon our request, Pfizer executed a Product Addendum (the "Product Addendum") to our MSA agreement, whereby Pfizer manufactures and supplies to us certain agreed upon products.

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

The Product Addendum included a minimum purchase obligation of $ 29.6 million.

The minimum purchase obligation under the addendum was satisfied during 2022.

The Product Addendum expired on November 30, 2022.

The amendments included a change to the term of the agreement to end on December 31, 2024.

The MSA was amended on January 24, 2025 to extend the term through 2027 for certain Solutions products.

Changes to the terms of the MSA include (i) amendments to our level of supply of products to Pfizer and (ii) updates to our supply price for 2025.

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTS RECEIVABLE PURCHASE PROGRAM

1 unchanged sentence

This agreement provided for a less expensive form of capital.

The discount rate applied to the sold receivables equals a rate per annum equal to the sum of (i) an applicable margin of 1.75%, plus (ii) Term SOFR for a period equal to the discount period which is calculated with respect to the payment terms of the specific receivable.

The discount rate applied to sold receivables equals a rate per annum equal to the sum of (i) an applicable margin, plus (ii) Term SOFR for a period equal to the discount period which is calculated with respect to the payment terms of the specific receivable.

The accounts receivable sold have payment terms ranging between 30 and 60 days, and are related to customer accounts with good credit history.

The transfer of the purchased accounts receivable under the agreement is intended to be an absolute and irrevocable transfer constituting a true sale as the transferred receivables have been isolated beyond the reach of the Company and our creditors, even in bankruptcy or other receivership.

We do not retain effective control over the sold receivables and BOW has the right upon purchase to pledge and/or exchange the transferred assets without restrictions.

The Company acts as collection agent for BOW and collection services are undertaken by our accounts receivable personnel in their normal course of business and collected funds are remitted to BOW.

We do not retain effective control over the sold receivables and BMO has the right upon purchase to pledge and/or exchange the transferred assets without restrictions.

The Company acts as collection agent for BMO and collection services are undertaken by our accounts receivable personnel in their normal course of business and collected funds are remitted to BMO.

We do not have any continuing involvement with the sold receivables other than the collection services which does not provide us with more than a trivial benefit.

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therefore, we did not separately record any related servicing assets or liabilities related to the sold receivables.

For the year ended December 31, 2023, the carrying value of trade receivables sold to BOW in connection with the purchase program was $ 629.1 million.

In exchange for the sale of trade receivables, we received cash of $ 625.3 million.

For the year ended December 31, 2023, the sale of the receivables resulted in a loss of $ 3.7 million, recorded in other expense, net in our consolidated statement of operations.

For the year ended December 31, 2023, we have collected and remitted $ 553.2 million in cash to BOW.

As of December 31, 2023, cash remaining to be collected on behalf of BOW was $ 75.9 million, which has been removed from our consolidated balance sheet as of December 31, 2023 and is reflected as cash provided by operating activities in the consolidated statement of cash flows.

The following table presents information in connection with the purchase program (in thousands):

Year Ended December 31,

Trade receivables sold (1)

$ 435,438 $ 629,065

Cash received in exchange for trade receivables sold (2)

432,803 625,341

Loss on sale of receivables (3)

_______________________________

(1) Represents carrying value of trade receivables sold to BMO.

(2) Cash proceeds received from BMO.

(3) Reflected in other expense, net in our condensed consolidated statement of operations.

As of December 31, 2024, we are not actively utilizing the program and there are no outstanding balances to be collected on behalf of BMO.

At December 31, 2023, cash remaining to be collected on behalf of BMO was $ 75.9 million which has been removed from our consolidated balance sheet as of December 31, 2023, and is reflected as cash provided by operating activities in the consolidated statement of cash flows in the same period.

There were no such balances at December 31, 2022.

2 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-K

Item 8. Financial Statements and Supplementary Data