ICU MEDICAL INC/DE 10-Q

Item1. Financial Statements (Unaudited) ICU MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value data and treasury shares) September 30, 2025 December 31, 2024 (Unaudited) (1) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 299,732 $ 308,566 Accounts receivable, net of allowance for doubtful accounts $ 12,802 at September 30, 2025 and $ 12,977 at December 31, 2024 191,541 182,828 Inventories 622,443 584,676 Prepaid expenses and other current assets 93,574 81,531 Assets held for sale — 284,382 TOTAL CURRENT ASSETS 1,207,290 1,441,983 PROPERTY, PLANT AND EQUIPMENT, net 455,967 442,746 OPERATING LEASE RIGHT-OF-USE ASSETS 56,598 53,295 GOODWILL 1,498,767 1,432,772 INTANGIBLE ASSETS, net 664,827 740,789 DEFERRED INCOME TAXES 23,976 24,211 OTHER ASSETS 61,385 65,097 INVESTMENTS IN UNCONSOLIDATED AFFILIATES 134,086 3,038 TOTAL ASSETS $ 4,102,896 $ 4,203,931 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 171,752 $ 148,020 Accrued liabilities 316,103 306,923 Current portion of long-term debt — 51,000 Income tax payable 5,045 17,328 Liabilities held for sale — 32,911 TOTAL CURRENT LIABILITIES 492,900 556,182 LONG-TERM DEBT 1,313,931 1,531,858 OTHER LONG-TERM LIABILITIES 93,558 66,745 DEFERRED INCOME TAXES 41,371 48,814 INCOME TAX LIABILITY 33,886 35,097 COMMITMENTS AND CONTINGENCIES (Note 20) STOCKHOLDERS’ EQUITY: Convertible preferred stock, $ 1.00 par value; Authorized — 500 shares; Issued and outstanding — none — — Common stock, $ 0.10 par value; Authorized — 80,000 shares; Issued — 24,686 shares at September 30, 2025 and 24,518 shares at December 31, 2024; and outstanding — 24,686 shares at September 30, 2025 and 24,517 shares at December 31, 2024 2,469 2,452 Additional paid-in capital 1,451,146 1,412,118 Treasury stock, at cost ( 99 shares at September 30, 2025 and 571 shares at December 31, 2024) ( 12 ) ( 92 ) Retained earnings 706,624 690,158 Accumulated other comprehensive loss ( 32,977 ) ( 139,401 ) TOTAL STOCKHOLDERS' EQUITY 2,127,250 1,965,235 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,102,896 $ 4,203,931 ______________________________________________________ (1) December 31, 2024 balances were derived from audited consolidated financial statements. The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents ICU MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 TOTAL REVENUES $ 536,990 $ 589,131 $ 1,690,558 $ 1,752,241 COST OF GOODS SOLD 336,109 384,279 1,071,504 1,154,717 GROSS PROFIT 200,881 204,852 619,054 597,524 OPERATING EXPENSES: Selling, general and administrative 152,773 162,707 469,398 479,913 Research and development 21,251 21,028 66,409 66,260 Restructuring, strategic transaction and integration 13,138 16,828 46,053 50,069 Change in fair value of contingent earn-out — ( 3,947 ) — ( 3,991 ) TOTAL OPERATING EXPENSES 187,162 196,616 581,860 592,251 INCOME FROM OPERATIONS 13,719 8,236 37,194 5,273 INTEREST EXPENSE, NET ( 19,808 ) ( 24,683 ) ( 62,388 ) ( 72,296 ) OTHER INCOME (EXPENSE), NET 607 ( 1,481 ) 662 ( 7,206 ) GAIN ON SALE OF BUSINESS 2,969 — 44,792 — (LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN (LOSSES) EARNINGS OF UNCONSOLIDATED AFFILIATES ( 2,513 ) ( 17,928 ) 20,260 ( 74,229 ) BENEFIT (PROVISION) FOR INCOME TAXES 658 ( 15,055 ) ( 5,090 ) ( 19,631 ) NET (LOSS) INCOME FROM CONSOLIDATED COMPANIES ( 1,855 ) ( 32,983 ) 15,170 ( 93,860 ) EQUITY IN (LOSSES) EARNINGS OF UNCONSOLIDATED AFFILIATES ( 1,541 ) — 1,296 — NET(LOSS) INCOME $ ( 3,396 ) $ ( 32,983 ) $ 16,466 $ ( 93,860 ) NET (LOSS) INCOME PER SHARE Basic $ ( 0.14 ) $ ( 1.35 ) $ 0.67 $ ( 3.85 ) Diluted $ ( 0.14 ) $ ( 1.35 ) $ 0.66 $ ( 3.85 ) WEIGHTED AVERAGE NUMBER OF SHARES Basic 24,686 24,438 24,624 24,353 Diluted 24,686 24,438 24,783 24,353 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents ICU MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (In thousands) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 NET(LOSS) INCOME $ ( 3,396 ) $ ( 32,983 ) $ 16,466 $ ( 93,860 ) Other comprehensive (loss) income, net of tax: Cash flow hedge adjustments, net of tax of $ 0 and $ 6,428 for the three months ended September 30, 2025 and 2024, respectively, and $( 2,247 ) and $ 6,453 for the nine months ended September 30, 2025 and 2024, respectively. 4,185 ( 20,232 ) ( 10,515 ) ( 20,254 ) Foreign currency translation adjustment, net of tax of $ 0 for all periods ( 4,520 ) 49,581 116,939 10,899 Other comprehensive (loss) income, net of tax ( 335 ) 29,349 106,424 ( 9,355 ) COMPREHENSIVE (LOSS) INCOME $ ( 3,731 ) $ ( 3,634 ) $ 122,890 $ ( 103,215 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents ICU MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (Amounts in thousands) Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Loss Shares Amount Total Balance, January 1, 2025 24,518 $ 2,452 $ 1,412,118 $ ( 92 ) $ 690,158 $ ( 139,401 ) $ 1,965,235 Issuance of restricted stock and exercise of stock options 152 9 ( 8,299 ) 8,423 — — 133 Tax withholding payments related to net share settlement of equity awards ( 59 ) — — ( 8,391 ) — — ( 8,391 ) Stock compensation — — 12,179 — — — 12,179 Other comprehensive income, net of tax — — 3 — — 34,006 34,009 Net loss — — — — ( 15,476 ) — ( 15,476 ) Balance, March 31, 2025 24,611 $ 2,461 $ 1,416,001 $ ( 60 ) $ 674,682 $ ( 105,395 ) $ 1,987,689 Issuance of restricted stock and exercise of stock options 77 8 5,480 351 — — 5,839 Tax withholding payments related to net share settlement of equity awards ( 2 ) — — ( 297 ) — — ( 297 ) Stock compensation — — 14,457 — — — 14,457 Other comprehensive income, net of tax — — ( 3 ) — — 72,753 72,750 Net income — — — — 35,338 — 35,338 Balance, June 30, 2025 24,686 $ 2,469 $ 1,435,935 $ ( 6 ) $ 710,020 $ ( 32,642 ) $ 2,115,776 Issuance of restricted stock and exercise of stock options — — ( 25 ) 25 — — — Tax withholding payments related to net share settlement of equity awards — — — ( 31 ) — — ( 31 ) Stock compensation — — 15,243 — — — 15,243 Other comprehensive income, net of tax — — ( 7 ) — — ( 335 ) ( 342 ) Net loss — — — — ( 3,396 ) — ( 3,396 ) Balance, September 30, 2025 24,686 $ 2,469 $ 1,451,146 $ ( 12 ) $ 706,624 $ ( 32,977 ) $ 2,127,250 6 Table of Contents Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Loss Shares Amount Total Balance, January 1, 2024 24,144 $ 2,414 $ 1,366,493 $ ( 262 ) $ 807,846 $ ( 53,081 ) $ 2,123,410 Issuance of restricted stock and exercise of stock options 378 27 ( 6,847 ) 6,970 — — 150 Tax withholding payments related to net share settlement of equity awards ( 110 ) — — ( 11,400 ) — — ( 11,400 ) Stock compensation — — 11,598 — — — 11,598 Other comprehensive loss, net of tax — — — — — ( 16,457 ) ( 16,457 ) Net loss — — — — ( 39,471 ) — ( 39,471 ) Balance, March 31, 2024 24,412 $ 2,441 $ 1,371,244 $ ( 4,692 ) $ 768,375 $ ( 69,538 ) $ 2,067,830 Issuance of restricted stock and exercise of stock options 21 2 ( 1,537 ) 4,459 — — 2,924 Tax withholding payments related to net share settlement of equity awards ( 3 ) — — ( 285 ) — — ( 285 ) Stock compensation — — 10,998 — — — 10,998 Other comprehensive loss, net of tax — — ( 2 ) — — ( 22,247 ) ( 22,249 ) Net loss — — — — ( 21,406 ) — ( 21,406 ) Balance, June 30, 2024 24,430 $ 2,443 $ 1,380,703 $ ( 518 ) $ 746,969 $ ( 91,785 ) $ 2,037,812 Issuance of restricted stock and exercise of stock options 32 3 2,314 492 — — 2,809 Tax withholding payments related to net share settlement of equity awards ( 1 ) — — ( 182 ) — — ( 182 ) Stock compensation — — 11,770 — — — 11,770 Other comprehensive income, net of tax — — 12 — — 29,349 29,361 Net loss — — — — ( 32,983 ) — ( 32,983 ) Balance, September 30, 2024 24,461 $ 2,446 $ 1,394,799 $ ( 208 ) $ 713,986 $ ( 62,436 ) $ 2,048,587 7 Table of Contents ICU MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine months ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 16,466 $ ( 93,860 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 149,912 166,519 Noncash lease expense 13,739 16,008 Stock compensation 41,879 34,366 Loss on disposal of property, plant and equipment and other assets 3,211 184 Debt issuance costs amortization 5,112 5,111 Change in fair value of contingent earn-out liability — ( 3,991 ) Undistributed equity in earnings of unconsolidated affiliates ( 1,296 ) — Net gain on sale of business ( 44,792 ) — Other 18,217 24,403 Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable 3,943 ( 11,517 ) Inventories ( 36,213 ) 9,416 Prepaid expenses and other current assets ( 4,721 ) ( 11,188 ) Other assets ( 7,149 ) ( 17,540 ) Accounts payable 23,328 21,086 Accrued liabilities ( 28,887 ) 20,484 Income taxes, including excess tax benefits and deferred income taxes ( 33,501 ) 4,360 Net cash provided by operating activities 119,248 163,841 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 63,397 ) ( 55,292 ) Proceeds from sale of business 211,185 — Proceeds from sale of assets 42 695 Intangible asset additions ( 7,210 ) ( 8,317 ) Proceeds from sale and maturities of investment securities — 500 Net cash provided by (used in) investing activities 140,620 ( 62,414 ) CASH FLOWS FROM FINANCING ACTIVITIES: Principal repayments of long-term debt ( 272,750 ) ( 38,250 ) Proceeds from exercise of stock options 5,972 5,883 Payments on finance leases ( 1,543 ) ( 775 ) Payments of contingent earn-out liability — ( 2,600 ) Tax withholding payments related to net share settlement of equity awards ( 8,719 ) ( 11,867 ) Net cash used in financing activities ( 277,040 ) ( 47,609 ) Effect of exchange rate changes on cash 8,338 4,472 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 8,834 ) 58,290 CASH AND CASH EQUIVALENTS, beginning of period 308,566 254,222 CASH AND CASH EQUIVALENTS, end of period $ 299,732 $ 312,512 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents ICU MEDICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - CONTINUED (In thousands) Nine months ended September 30, 2025 2024 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES: Purchases of property, plant, and equipment in accounts payable $ 5,544 $ 4,022 Equity method investment - noncash (see Note 4) $ 129,851 The accompanying notes are an integral part of these condensed consolidated financial statements. 9 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1: Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of ICU Medical, Inc., ("ICU" or the "Company"), a Delaware corporation, have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S.") and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the consolidated results for the interim periods presented. Results for the interim period are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of ICU for the year ended December 31, 2024. We develop, manufacture and sell innovative medical products used in infusion therapy, vascular access, and vital care applications. ICU's product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, peripheral IV catheters, closed system transfer devices, pharmacy compounding systems, and sterile IV solutions, as well as a range of respiratory, anesthesia, patient monitoring, and temperature management products. We sell the majority of our products globally through our direct sales force and through independent distributors throughout the U.S. and internationally. We also sell certain products on an original equipment manufacturer basis to other medical device manufacturers. All subsidiaries are wholly owned and are included in the condensed consolidated financial statements. All intercompany balances and transactions have been eliminated. Certain reclassifications have been made to the prior year financial statements and footnotes to conform to the presentation used in the current year. On the condensed consolidated balance sheet, we combined prepaid income taxes with the "prepaid expenses and other current assets" line item. On the condensed consolidated statement of cash flows, we combined provision for doubtful accounts, provision for warranty, returns and field action, and usage of spare parts with the "other" line item. In Note 12: Prepaid Expenses and Other Current Assets we combined deferred tax charge, foreign exchange contracts, and VAT/GST receivable with the "other" line item. In Note 16: Accrued Liabilities we combined operating lease liability, restructuring accrual, accrued sales taxes and other taxes, accrued freight, accrued audit and professional services, distribution fees, warranties and returns, legal accrual, defined benefit plan, foreign exchange forward contracts, and accrued interest with the "other" line item. These reclassifications had no impact on the reported results of operations. Note 2: New Accounting Pronouncements 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. The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification ("ASC") in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. For entities within the scope, the guidance will be applied prospectively with the effective date for each amendment to be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If the SEC has not removed the related disclosure from its regulations by June 30, 2027, the amendments will be removed from the Codification and will not become effective. We are currently assessing what impact this guidance will have on the Company's consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The amendments in this update expand disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid information. The update was effective for annual periods beginning after December 15, 2024 and is applicable to our Annual Report on Form 10-K for the fiscal year December 31, 2025, with early application permitted. We are currently assessing the effect of this update on the Company's 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, 10 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) with early application permitted. We are currently assessing the effect of this update on the Company's consolidated financial statements and related disclosures. There have been no other recent accounting pronouncements or changes in accounting pronouncements that are of significance or potential significance to us during the nine months ended September 30, 2025, as compared to the recent accounting pronouncements described in our 2024 Annual Report on Form 10-K. Note 3: Restructuring, Strategic Transaction and Integration Restructuring, strategic transaction and integration expenses were $ 13.1 million and $ 46.1 million for the three and nine months ended September 30, 2025, respectively, as compared to $ 16.8 million and $ 50.1 million for the three and nine months ended September 30, 2024, respectively. Restructuring During the three and nine months ended September 30, 2025 restructuring charges were $ 6.2 million and $ 21.2 million, respectively, as compared to $ 3.6 million and $ 16.6 million for the three and nine months ended September 30, 2024, respectively, and were primarily related to facility closure costs and severance costs. The following table summarizes the activity in our restructuring-related accrual by major type of cost for the three and nine months ended September 30, 2025 (in thousands), which is included in accrued liabilities and other long-term liabilities on the condensed consolidated balance sheets: Employee & Related Costs Facility & Other Closure Costs Total Accrued balance, January 1, 2025 $ 9,538 $ 407 $ 9,945 Charges incurred 2,401 4,397 6,798 Payments ( 3,482 ) ( 2,905 ) ( 6,387 ) Other (1) ( 900 ) — ( 900 ) Currency translation 155 14 169 Accrued balance, March 31, 2025 $ 7,712 $ 1,913 $ 9,625 Charges incurred 4,289 3,934 8,223 Payments ( 3,930 ) ( 2,538 ) ( 6,468 ) Currency translation 287 95 382 Accrued balance, June 30, 2025 $ 8,358 $ 3,404 $ 11,762 Charges incurred 2,901 3,267 6,168 Payments ( 3,409 ) ( 3,389 ) ( 6,798 ) Currency translation 41 ( 26 ) 15 Accrued balance, September 30, 2025 $ 7,891 $ 3,256 $ 11,147 __________________________ (1) Relates to prior year accrued restructuring charges for estimated severances costs that were reclassed to other accounts during the three months ended March 31, 2025. Strategic Transaction and Integration Expenses We incurred and expensed $ 6.9 million and $ 24.9 million in strategic transaction and integration expenses during the three and nine months ended September 30, 2025, respectively, as compared to $ 13.2 million and $ 33.5 million in strategic transaction and integration expenses during the three and nine months ended September 30, 2024, respectively, which are included in restructuring, strategic transaction and integration expenses in our condensed consolidated statements of operations. The strategic transaction and integration expenses during the three and nine months ended September 30, 2025 and 2024 were primarily related to ongoing consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022. The nine months ended September 30, 2025 also included transaction costs related to the sale of a 60% ownership in our IV Solutions business in the second quarter of 2025. 11 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) Note 4: Assets Held For Sale and Disposal of Business Assets Held For Sale On November 12, 2024, we entered into a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc., a Delaware corporation ("OPF") to divest a controlling interest in our IV Solutions business. As of December 31, 2024, we concluded the initial criteria for classification as held for sale were met , and accordingly we presented the IV Solution's net assets as held for sale in our condensed consolidated balance sheet. The following table summarizes the carrying values of the assets and liabilities presented as held for sale in our condensed consolidated balance sheet as of December 31, 2024 (in thousands): As of Assets: December 31, 2024 Accounts receivable, net of allowance of $ 465 at December 31, 2024 $ 13,331 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 Liabilities: Accounts payable $ 13,533 Accrued liabilities 19,378 Total liabilities held for sale $ 32,911 Net assets held for sale $ 251,471 Disposal of IV Solutions Business On May 1, 2025, we sold to OPF a 60% ownership interest in Otsuka ICU Medical LLC (the "joint venture"), an entity we formed in 2025 and to which we contributed the net assets of our IV Solutions business. Upon the sale and as a result of a loss of control, we derecognized the net assets that comprised our IV Solutions business and recorded our retained 40% ownership interest at its estimated fair value as an equity method investment in the joint venture (see Note 11: Investment Securities). We have the ability to exercise significant influence over operating and financial policies of the joint venture, primarily through having two of the five seats on its Board of Directors. Cash proceeds received from the sale, subject to conventional purchase price adjustments, were $ 211.2 million. We also are entitled to contingent consideration if the joint venture exceeds planned revenues or gross margin for the year ended December 31, 2026. Additionally, we have agreed to provide commercial, logistics, administrative, and other services, including continuing to provide certain manufacturing services for component parts for a period of up to five years from transaction close (see below table). Certain logistic and warehouse costs incurred on behalf of and reimbursed by the joint venture are pass-through expenses and net to zero within cost of goods sold in the condensed consolidated statement of operations. Other services are provided in exchange for fixed fee arrangements or reimbursement of our costs, depending on the respective terms of service negotiated. Fees charged for the services are recorded as reductions to the costs incurred to provide such services in the condensed consolidated statement of operations. Those services provided under fixed price arrangements were determined to be at less than fair value and, as such, we recognized an unfavorable contract liability of $ 20.2 million to account for the difference between the fair value of services to be provided and the estimated cost of providing such services over the five years from transaction close. The unfavorable contract liability is presented within other liabilities in our condensed consolidated balance sheet, with the current portion included in accrued liabilities. This liability is being released to our condensed consolidated statement of operations as reduction to the costs incurred to provide the respective services within selling, general and administrative expenses. 12 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) For the three and nine months ended September 30, 2025, we recognized $ 3.2 million and $ 5.3 million, respectively, in fixed and variable service fees related to reimbursed expenses under the various transition service agreements and $ 1.0 million and $ 1.8 million, respectively, related to the release of the unfavorable contract liability. The fees, reimbursements and release of unfavorable contract liability serve to reduce the same line items as their respective incurred expenses within cost of goods sold or selling, general, and administrative expenses in our condensed consolidated statement of operations. Fair value for our retained 40% ownership interest was determined using a market approach based on the proceeds received from OPF for its 60% controlling ownership interest. Fair value for services was estimated using a market approach based on observable margins for comparable services and the difference between the fair value of services and the estimated cost to provide the services through the term of the services agreement was discounted using our effective borrowing rate. The combined effect of the transaction was a gain of $ 44.8 million, comprising the sum of a $ 45.6 million gain from the disposal of a 60% ownership interest in the joint venture, a $ 19.4 million gain from the difference between the fair value of our retained 40% ownership interest in the joint venture and our carrying value of that same proportionate ownership interest, and a $ 20.2 million unfavorable contract liability recorded upon disposition. The gain is presented as a separate line item in our condensed consolidated statement of operations. No gain related to contingent consideration was recorded. We will record such gain, if any, if and when the measurement period has ended and we have concluded that a payment will be received. As part of the transaction, we provided OPF a call option to acquire our retained 40% ownership in the joint venture. Additionally, OPF provided us with a put option giving us the right to compel OPF to purchase our retained 40% ownership interest in the joint venture. The call and put options are exercisable at certain specified dates and for specified amounts based on certain historical financial metrics as set forth in the joint venture's Operating Agreement beginning five years after the closing. The call and put options were not recorded in our condensed consolidated financial statements since they do not meet the definition of a derivative specifically due to the absence of a net settlement feature. Related Party Transactions We account for our retained 40% interest in the joint venture as an equity method investment (see Note 11: Investment Securities), having the ability to exercise significant influence over operating and financial policies of the joint venture, primarily through having two of the five seats on its Board of Directors. Additionally, in connection with the closing of the transaction on May 1, 2025, we entered into certain agreements with OPF, which cover the governance of the joint venture and require us to provide certain commercial, logistics, manufacturing supply, administrative, and other services for a period of up to five years from transaction close. The following table presents condensed consolidated financial statement data resulting from transactions with the joint venture (in thousands): Three months ended September 30, Nine months ended September 30, 2025 2025 Condensed consolidated statement of operations: Manufacturing services agreement revenue $ 3,632 $ 7,145 Manufacturing services agreement cost of goods sold $ 3,428 $ 6,529 Service fees - Otsuka ICU Medical LLC (cost of goods sold) $ 311 $ 428 Service fees - Otsuka ICU Medical LLC (selling, general & administrative) $ 2,843 $ 4,917 Equity in (losses) earnings of unconsolidated affiliates $ ( 1,541 ) $ 1,296 The joint venture is a pass-through entity for income tax purposes and, as such, does not record income tax at the entity level. We record our equity in (losses) earnings of unconsolidated affiliates before any related income tax recognized as a separate line item in our condensed consolidated statements of operations. Income taxes on our share of the joint venture's earnings are included within provision for income taxes in our condensed consolidated statements of operations. 13 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) As of September 30, 2025, a $ 0.5 million related-party receivable to the joint venture was included within prepaid expenses and other current assets in our condensed consolidated balance sheet. Note 5: Revenue Revenue Recognition 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. Revenue is typically recognized upon transfer of control of the products, which we deem to be at point of shipment. For purposes of revenue recognition for our software licenses and renewals, we consider the control of these products to be transferred to a customer at a certain point in time; therefore, we recognize revenue at the start of the applicable license term. Payment is typically due in full within 30 days of delivery or the start of the contract term. Revenue is recorded in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We include variable consideration in net sales only to the extent that a significant reversal in revenue is not probable when the uncertainty is resolved. Our variable consideration includes distributor chargebacks, product returns and end customer rebates with distributor chargebacks representing the majority and subject to the greatest judgment. Chargebacks are the difference between the prices we charge our distribution customers at the time they purchase our products and the contracted prices we have with the end customer, most often in the U.S. and Canada. When a distributor sells our products to one of our contracted end customers, the distributor typically will claim a refund from us for the chargeback amount which we process as a credit to the distributor. In estimating the transaction price to present as net revenue for sales to distributors, we must estimate the expected chargeback amount that we will refund to the distributor after they sell our product to a contracted end customer. Determining the appropriate chargeback reserve requires judgment around the following assumptions: (i) The estimated chargeback amount (the difference between the price we invoice the distributor and the contractually agreed price with specified end customers); and (ii) The estimated period of time between the sale to the distributor and the receipt of a chargeback claim. 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. 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. For purposes of estimating the period of time between the sale to the distributor and the receipt of a chargeback claim, we utilize several sources of information including actual inventory quantities of our products on hand at distributors. This inventory on hand information is received from the distributors or, when specific quantities are not provided, estimated by using the targeted days of inventory on hand for distributors. Historical experience of actual chargebacks paid has indicated that use of this information has reasonable predictive value of outstanding chargebacks and accounts for the variability of purchasing patterns and expected timing and volume of sales to end customers. The value of the chargeback reserve generally represents approximately two months of obligation due to the timing difference between the initial sale to a distributor and the processing of a chargeback claim after the product is sold to the end customer. The chargeback reserve estimates change from period-to-period primarily based on changes in revenue from/and the inventory levels of distributors. Our judgments regarding the information used to calculate the chargeback reserve are consistent from period to period; however, on a regular basis, we evaluate the adequacy of the chargeback reserve to reassess and ensure that the variable consideration is appropriately constrained, and the likelihood of future revenue reversal is not probable. We use metrics including chargeback provision as a percentage of gross revenue, movements in inventory on hand at distributors, trends in accrued versus paid chargebacks and impacts from price changes and similar metrics. 14 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) 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. We also offer certain volume-based rebates to both our distribution and end customers, which is recorded as variable consideration when calculating the transaction price. Rebates are offered on both a fixed and tiered/variable basis. In both cases, we use information available at the time, including current contractual requirements, our historical experience with each customer and forecasted customer purchasing patterns, to estimate the most likely rebate amount. We also warrant products against defects and have a policy permitting the return of defective products, for which we accrue and expense at the time of sale using information available at that time and our historical experience. We also provide for extended service-type warranties, which we consider to be separate performance obligations. We allocate a portion of the transaction price to the extended service-type warranty based on its estimated relative selling price, and recognize revenue over the period the warranty service is provided. Arrangements with Multiple Performance Obligations We also enter into arrangements which include multiple performance obligations. The most significant judgments related to these arrangements include: • Identifying the various performance obligations of these arrangements. • Estimating the relative standalone selling price of each performance obligation, typically using a directly observable method or calculated on a cost plus margin basis method. Revenue Disaggregated The following table represents our revenues disaggregated by product line (in thousands): Three months ended September 30, Nine months ended September 30, Product line 2025 2024 2025 2024 Consumables $ 285,089 $ 264,875 $ 824,448 $ 770,730 Infusion Systems 173,909 159,769 507,905 480,745 Vital Care 77,992 164,487 358,205 500,766 Total Revenues $ 536,990 $ 589,131 $ 1,690,558 $ 1,752,241 The following table represents our revenues disaggregated by geography (in thousands): Three months ended September 30, Nine months ended September 30, Geography 2025 2024 2025 2024 United States $ 307,131 $ 369,515 $ 1,030,808 $ 1,118,810 Europe, the Middle East and Africa 115,092 101,710 309,839 295,409 APAC 57,477 60,288 175,292 173,365 Other Foreign 57,290 57,618 174,619 164,657 Total Revenues $ 536,990 $ 589,131 $ 1,690,558 $ 1,752,241 Contract Balances The following table presents the changes in our contract balances for the nine months ended September 30, 2025 and 2024 (in thousands), which are included in accrued liabilities and other long-term liabilities on the condensed consolidated balance sheets: 15 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) Contract Liabilities Beginning balance, January 1, 2025 $ 39,403 Equipment revenue recognized ( 46,677 ) Equipment revenue deferred due to implementation 51,563 Software revenue recognized ( 8,758 ) Software revenue deferred due to implementation 4,293 Government grant income recognized (1) ( 1,545 ) Other deferred revenue recognized ( 1,712 ) Other deferred revenue 646 Ending balance, September 30, 2025 $ 37,213 Beginning balance, January 1, 2024 $ 42,177 Equipment revenue recognized ( 41,392 ) Equipment revenue deferred due to implementation 38,825 Software revenue recognized ( 23,591 ) Software revenue deferred due to implementation 24,559 Government grant income recognized (1) ( 1,551 ) Other deferred revenue recognized ( 2,562 ) Other deferred revenue 503 Ending balance, September 30, 2024 $ 36,968 ____________________________ (1) The government grant income deferred is amortized over the life of the related depreciable asset as a reduction to depreciation expense. Our contract liabilities are included in accrued liabilities or other long-term liabilities in our condensed consolidated balance sheet based on the expected timing of revenue recognition. As of September 30, 2025, revenue from remaining performance obligations is as follows: Recognition Timing (in thousands) < 12 Months > 12 Months Equipment deferred revenue $ 20,341 $ 403 Software deferred revenue 5,884 2,072 Government grant deferred income (1) 2,064 5,798 Other deferred revenue (2) 611 40 Total $ 28,900 $ 8,313 _________________________________ (1) The government grant deferred income is amortized over the life of the related depreciable asset as a reduction to depreciation expense. (2) Other deferred revenue includes pump development programs, purchased training and extended warranty. Note 6: Segment Data The Company has a single operating and reportable segment. The Company 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 16 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) 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. For information on disaggregation of revenues by product-line and geography, see Note 5: Revenue. 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 consolidated annual budget/forecast processes. The measure of segment assets is reported on the consolidated balance sheets as total assets. Expenditures for additions to long-lived assets were $ 31.7 million and $ 70.6 million for the three and nine months ended September 30, 2025 and $ 22.9 million and $ 63.6 million for the three and nine months ended September 30, 2024, respectively. The following table presents information about our segment revenue, segment profit or loss, and significant segment expenses (in thousands): Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 REVENUES $ 536,990 $ 589,131 $ 1,690,558 $ 1,752,241 Less: Standard COGS (1) 230,728 296,622 773,952 878,052 Quality remediation/recall (2) 13,797 7,737 29,483 19,159 Other COGS (3) 91,584 79,920 268,069 257,506 Selling, general and administrative 152,773 162,707 469,398 479,913 Research and development 21,251 21,028 66,409 66,260 Restructuring and integration 13,138 16,828 46,053 50,069 Other segment items (4) ( 5,997 ) ( 5,070 ) ( 53,623 ) ( 4,842 ) Interest expense 22,229 27,287 70,557 80,353 Income tax provision ( 658 ) 15,055 5,090 19,631 Equity in losses (earnings) of unconsolidated affiliates 1,541 — ( 1,296 ) — Consolidated net income (loss) $ ( 3,396 ) $ ( 32,983 ) $ 16,466 $ ( 93,860 ) _______________ (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 gain on sale of business. For information on depreciation expense, see Note 14: Property, Plant, & Equipment. For information on amortization expense, see Note 15: Goodwill and Intangible Assets, Net. 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. For the three and nine months ended September 30, 2025, our consolidated worldwide net sales to a single distributor were 17 %, and 17 %, respectively, and for the three and nine months ended September 30, 2024, were 18 % and 17 %. 17 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) 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 September 30, 2025 December 31, 2024 Costa Rica 163,685 156,149 Mexico 122,523 111,043 Other LATAM 67,330 55,451 Canada 1,903 5,284 Italy 34,979 29,124 Spain 20,048 17,141 Czech Republic 13,928 11,909 Other Europe 11,563 11,445 APAC 28,803 27,550 Total Foreign $ 464,762 $ 425,096 United States* 626,827 610,547 Worldwide Total $ 1,091,589 $ 1,035,643 ________________________________ *As of December 31, 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 of 2024 (See Note 4: Assets Held For Sale and Disposal of Business). Note 7: Leases We determine if an arrangement is a lease at inception. Our operating lease assets are separately stated in operating lease right-of-use ("ROU") assets and our financing lease assets are included in other assets on our condensed consolidated balance sheets. Our lease liabilities are included in accrued liabilities and other long-term liabilities on our condensed consolidated balance sheets. We have elected not to recognize an ROU asset and lease liability for leases with terms of twelve months or less. Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Most of our leases do not provide an implicit rate; therefore, we use our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term based on the information available at commencement date. Our lease ROU assets exclude lease incentives and initial direct costs incurred. Our lease terms include options to extend when it is reasonably certain that we will exercise that option. All of our leases have stated lease payments, which may include fixed rental increases. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Our leases are for corporate, research and development and sales and support offices, manufacturing and distribution facilities, device service centers and certain equipment. 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 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): 18 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Operating lease cost $ 4,648 $ 5,786 $ 14,778 $ 17,239 Finance lease cost — interest 136 45 296 126 Finance lease cost — reduction of ROU asset 617 292 1,429 847 Short-term lease cost — 3 7 3 Total lease cost $ 5,401 $ 6,126 $ 16,510 $ 18,215 Interest expense on our finance leases is included in interest expense, net in our condensed consolidated statements of operations. The reduction of the operating and finance ROU assets is included as noncash lease expense in costs of goods sold and selling, general and administrative expenses in our condensed consolidated statements of operations. The following table presents the supplemental cash flow information related to our leases (in thousands): Nine months ended September 30, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 13,531 $ 19,175 Operating cash flows from finance leases $ 296 $ 126 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 12,195 $ 10,340 Finance leases $ 3,728 $ 1,257 The following table presents the supplemental balance sheet information related to our operating leases (in thousands, except lease term and discount rate): As of September 30, 2025 December 31, 2024 Operating leases Operating lease right-of-use assets $ 56,598 $ 53,295 Accrued liabilities $ 13,552 $ 15,695 Other long-term liabilities 46,624 40,777 Total operating lease liabilities $ 60,176 $ 56,472 Weighted-Average Remaining Lease Term Operating leases 6.4 years 5.8 years Weighted-Average Discount Rate Operating leases 5.34 % 4.90 % The following table presents the supplemental balance sheet information related to our finance leases (in thousands, except lease term and discount rate): 19 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) As of September 30, 2025 December 31, 2024 Finance leases Finance lease right-of-use assets $ 5,804 $ 3,259 Accrued liabilities $ 2,024 $ 1,066 Other long-term liabilities 3,987 2,332 Total finance lease liabilities $ 6,011 $ 3,398 Weighted-Average Remaining Lease Term Finance leases 3.2 years 3.5 years Weighted-Average Discount Rate Finance leases 6.24 % 5.63 % As of September 30, 2025, the maturities of our operating and finance lease liabilities for each of the next five years and thereafter are approximately (in thousands): Operating Leases Finance Leases Remainder of 2025 $ 4,251 $ 595 2026 15,530 2,298 2027 12,382 1,905 2028 9,671 1,369 2029 7,804 394 2030 4,628 52 Thereafter 16,542 — Total Lease Payments 70,808 6,613 Less imputed interest ( 10,632 ) ( 602 ) Total $ 60,176 $ 6,011 Note 8: Net (Loss) Income Per Share Basic net (loss) income per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period. Diluted (loss) income per share is computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the period plus dilutive securities. Dilutive 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 and restricted stock units that are anti-dilutive are not included in the treasury stock method calculation. A net loss for the three months ended September 30, 2025 and 2024 and nine months ended September 30, 2024 causes all of the potentially dilutive common shares to be antidilutive and, accordingly, they were not included in the computation of diluted earnings per share, and basic and diluted net loss per share are equal for each of these periods. The following table presents the calculation of net earnings per common share (“EPS”) — basic and diluted (in thousands, except per share data): 20 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Net (loss) income $ ( 3,396 ) $ ( 32,983 ) $ 16,466 $ ( 93,860 ) Weighted-average number of common shares outstanding (basic) 24,686 24,438 24,624 24,353 Dilutive securities (1) — — 159 — Weighted-average common and common equivalent shares outstanding (diluted) 24,686 24,438 24,783 24,353 EPS — basic $ ( 0.14 ) $ ( 1.35 ) 0.67 $ ( 3.85 ) EPS — diluted $ ( 0.14 ) $ ( 1.35 ) 0.66 $ ( 3.85 ) Total anti-dilutive stock options and restricted stock awards 41 89 40 112 _______________________________ (1) Due to the net loss for the three months ended September 30, 2025 and 2024 and nine months ended September 30, 2024, there are no potentially dilutive common shares included in the computation of diluted earnings per share. Note 9: Derivatives and Hedging Activities Hedge Accounting and Hedging Program 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 the variable-rate term loans issued in 2022. We do not issue derivatives for trading or speculative purposes. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative instruments we utilize, including various foreign exchange contracts and interest rate swaps, are designated and qualify as cash flow hedges. Our derivative instruments are recorded at fair value on the condensed consolidated balance sheets and are classified based on the instrument's maturity date. We record gains or losses from changes in the fair values of the derivative instruments as a component of other comprehensive income (loss) and we reclassify those gains or losses into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. If the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, we reclassify the gain or loss on the related derivative instrument from accumulated other comprehensive loss into earnings immediately. Foreign Currency Exchange Rate Risk 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. These contracts are agreements to buy or sell a quantity of a currency at a predetermined future date and at a predetermined exchange rate. Our foreign exchange forward contracts hedge exposures principally denominated in Mexican Pesos ("MXN"), Euros ("EUR"), Czech Koruna ("CZK"), Japanese Yen ("JPY"), Swedish Krona ("SEK"), Danish Krone ("DKK"), Chinese Renminbi ("CNH"), Canadian Dollar ("CAD"), U.S. Dollar ("USD") and Australian Dollar ("AUD") and have varying maturities with an average term of approximately nine months. The total notional amount of these outstanding derivative contracts as of September 30, 2025 was $ 112.2 million, which included the notional equivalent of $ 15.7 million in CAD, $ 44.5 million in EUR, $ 22.7 million in MXN, $ 10.2 million in JPY, $ 7.8 million in USD, $ 6.4 million in AUD and $ 4.9 million in other foreign currencies, with terms currently through January 2027. Floating Interest Rate Risk 21 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) 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 18: Long-Term Debt). We exchange, at specified intervals, the difference between 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 excluding its final maturity on March 30, 2027. We pay a fixed rate of 1.32 % and will receive the greater of 3-months USD Secured Overnight Financing Rate ("SOFR") or ( 0.15 )%. The total notional amount of this outstanding derivative as of September 30, 2025 was approximately $ 189.5 million. 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 will receive the greater of 3-months USD SOFR or 0.35 %. The total notional amount of this outstanding derivative as of September 30, 2025 was approximately $ 93.8 million. In June 2023, we entered into an additional interest rate swap that hedges both term loan A and term loan B interest payments. The total notional amount of the swap is $ 300.0 million. The hedge matures on June 30, 2028. We pay a fixed rate of 3.88 % and will receive 3-months USD SOFR. These swaps effectively convert the relevant portion of the floating-rate term loans to fixed rates. The following table presents the fair values of our derivative instruments included within the Condensed Consolidated Balance Sheets (in thousands): Derivatives Designated as Cash Flow Hedging Instruments Condensed Consolidated Balance Sheet Location Foreign Exchange Contracts Interest Rate Swaps Gross Derivatives As of September 30, 2025 Prepaid expenses and other current assets $ 3,400 $ 3,977 $ 7,377 Other assets 28 — 28 Total assets $ 3,428 $ 3,977 $ 7,405 Accrued liabilities $ 1,265 $ — $ 1,265 Other long-term liabilities 23 2,384 2,407 Total liabilities $ 1,288 $ 2,384 $ 3,672 As of December 31, 2024 Prepaid expenses and other current assets $ 6,716 $ 11,038 $ 17,754 Other assets — 5,724 5,724 Total assets $ 6,716 $ 16,762 $ 23,478 Accrued liabilities $ 7,391 $ — $ 7,391 Total liabilities $ 7,391 $ — $ 7,391 We recognized the following (losses) gains on our derivative instruments designated as cash flow hedges in other comprehensive income before reclassifications to net loss (in thousands): 22 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) (Losses) Gains Recognized in Other Comprehensive Income (Loss) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Derivatives designated as cash flow hedging instruments: Foreign exchange forward contracts $ 858 $ ( 5,713 ) $ 2,515 $ ( 4,738 ) Interest rate swaps 6,885 ( 14,030 ) ( 5,181 ) 3,874 Total derivatives designated as cash flow hedging instruments $ 7,743 $ ( 19,743 ) $ ( 2,666 ) $ ( 864 ) The following table presents the effects of our derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Operations (in thousands): Gains (Losses) Reclassified From Accumulated Other Comprehensive Income (Loss) into Income Three months ended September 30, Nine months ended September 30, Location of Gains (Losses) Recognized in Net Loss 2025 2024 2025 2024 Derivatives designated as cash flow hedging instruments: Foreign exchange forward contracts Total revenues $ ( 79 ) $ 740 $ 794 $ 2,073 Foreign exchange forward contracts Cost of goods sold 722 ( 843 ) ( 685 ) 1,497 Interest rate swaps Interest expense 2,915 7,020 9,987 22,273 Total derivatives designated as cash flow hedging instruments $ 3,558 $ 6,917 $ 10,096 $ 25,843 As of September 30, 2025, we expect an estimated $ 2.1 million in deferred gains on the outstanding foreign exchange contracts and an estimated $ 4.1 million in deferred gains on the interest rate swaps will be reclassified from accumulated other comprehensive loss to net income during the next 12 months concurrent with the underlying hedged transactions also being reported in net income. Note 10: Fair Value Measurements Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair value: • Level 1: quoted prices in active markets for identical assets or liabilities; • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or • Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. Recurring Fair Value Measurements We measure certain assets and liabilities on a recurring basis, including contingent earn-out liabilities and derivative financial instruments. Contingent Earn-out Liabilities 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 23 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) 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. During July 2024, Smiths sold 1.2 million common shares of ICU Medical, Inc. The sale of shares when combined with other sales in prior periods 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 meets the required minimum beneficial ownership percentage. Accordingly, the valuation of the contingent earn-out liability as of December 31, 2024 was zero. In November 2021, we acquired a small foreign infusion systems supplier. Total consideration for the acquisition included 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 ended December 31, 2022 and, separately, (ii) a cash payment of $ 1.5 million contingent upon obtaining certain product-related regulatory certifications. 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 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 ended September 2024. 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. 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. Foreign Exchange Contracts and Interest Rate Contracts The fair value of our Level 2 foreign exchange contracts is estimated using observable market inputs such as known notional value amounts, spot and forward exchange rates. 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. Our assets and liabilities measured at fair value on a recurring basis consisted of the following Level 1, 2 and 3 inputs as defined above (in thousands): 24 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) Fair value measurements as of September 30, 2025 Total carrying value Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Assets: Foreign exchange contracts: Prepaid expenses and other current assets $ 3,400 $ — $ 3,400 $ — Other assets 28 — 28 — Interest rate contracts: Prepaid expenses and other current assets 3,977 — 3,977 — Total Assets $ 7,405 $ — $ 7,405 $ — Liabilities: Foreign exchange contracts: Accrued liabilities $ 1,265 $ — $ 1,265 $ — Other long-term liabilities 23 — 23 — Interest rate contracts: Other long-term liabilities 2,384 — 2,384 — Total Liabilities $ 3,672 $ — $ 3,672 $ — Fair value measurements as of December 31, 2024 Total carrying value Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Assets: Foreign exchange contracts: Prepaid expenses and other current assets $ 6,716 $ — $ 6,716 $ — Interest rate contracts: Prepaid expenses and other current assets 11,038 — 11,038 — Other assets 5,724 — 5,724 — Total Assets $ 23,478 $ — $ 23,478 $ — Liabilities: Foreign exchange contracts: Accrued liabilities $ 7,391 $ — $ 7,391 $ — Total Liabilities $ 7,391 $ — $ 7,391 $ — Nonrecurring Fair Value Measurements We measure certain items on a nonrecurring basis due to particular circumstances or when specific transactions occur such as a retained investment resulting from a partial sale. On May 1, 2025, we measured our retained equity method investment in Otsuka ICU Medical LLC (see Note 11: Investment Securities) at fair value in connection to the sale of a 60% 25 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) interest of our IV Solutions business (see Note 4: Assets Held for Sale and Disposal of Business). The fair value was estimated using a market-based approach and is classified as a Level 3 fair value measurement. Note 11: Investment Securities Investments in Non-Marketable Equity Securities Investments in Unconsolidated Affiliates We hold equity method investments in certain entities. We apply the equity method of accounting for investments in unconsolidated affiliates when we determine we have a significant influence, but not a controlling interest in the investee. We determine whether we have significant influence by considering key factors such as ownership interest, representation on the board of directors, participation in policy making decisions, business relationship and material intra-entity transactions, among other factors. Our equity method investments are reported at cost and adjusted each period for our share of the investee's income or (loss) and dividend paid, if any. We eliminate any intra-entity profits to the extent of our beneficial interest. For our other equity method investment, we report our proportionate share of the investee's income or (loss) resulting from this investment in other income, net in our condensed consolidated statements of operations. 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. On April 24, 2025, the Company completed the formation of the Otsuka ICU Medical LLC (“joint venture”) and transferred the assets, liabilities and operations that comprise the IV Solutions business to the joint venture. Pursuant to the agreement, we sold 60% of our IV Solutions business to OPF and the Company retained 40 % ownership interest in the business. The initial investment, which includes a step up in basis on the retained 40% interest of $19.4 million, was recorded in the amount of $ 129.9 million. As provided under the joint venture's Operating Agreement, each of OPF and the ICU Medical Entities have been granted certain exclusive call and put options, respectively, with respect to the ICU Medical Entities' remaining ownership interest in the joint venture. Such options are exercisable at certain specified dates and for such amounts as are set forth in the Operating Agreement beginning five years after the transaction closing. If exercised, they could effectively eliminate the Company’s ownership interest. See Note 4: Assets Held for Sale and Disposal of Business for more information. We also own approximately 20 % 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. Our investment in unconsolidated affiliates consist of the following (in thousands): As of September 30, 2025 December 31, 2024 Otsuka ICU Medical LLC $ 131,147 $ — Other equity method investment 2,939 3,038 $ 134,086 $ 3,038 Our recorded share of our investees' (loss) income was $( 1.6 ) million and $ 1.2 million for the three and nine months ended September 30, 2025, respectively. There were no such balances in 2024. We did not receive any dividend distributions from these investments during the three and nine months ended September 30, 2025 and 2024. 26 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) Note 12: Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): As of September 30, 2025 December 31, 2024 Other prepaid expenses and receivables* $ 25,691 $ 17,312 Deferred costs 11,488 9,060 Prepaid insurance and property taxes* 3,024 10,284 Interest rate contracts** 3,977 11,038 Prepaid income taxes 26,311 11,244 Other* 23,083 22,593 $ 93,574 $ 81,531 ____________________________ *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 and Disposal of Business). **See Note 9: Derivatives and Hedging Activities Note 13: Inventories 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 September 30, 2025 December 31, 2024 Raw materials $ 293,690 $ 265,275 Work in process 44,401 37,528 Finished goods 284,352 281,873 Total inventories $ 622,443 $ 584,676 _____________________________ 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 sheets (See Note 4:Assets Held For Sale and Disposal of Business). 27 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued) Note 14: Property, Plant and Equipment Property, plant and equipment consists of the following (in thousands): As of September 30, 2025 December 31, 2024 Machinery and equipment (1) $ 427,864 $ 400,861 Land, building and building improvements (1) 179,894 177,089 Molds 108,026 96,318 Computer equipment and software (1) 114,191 122,208 Furniture and fixtures (1) 26,589 27,871 Instruments placed with customers (2) 145,251 124,290 Construction in progress (1) 89,774 87,006 Total property, plant and equipment, cost (1) 1,091,589 1,035,643 Accumulated depreciation (1) ( 635,622 ) ( 592,897 ) Property, plant and equipment, net (1) $ 455,967 $ 442,746 ______________________________ (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 sheets. (2) Instruments placed with customers consist of drug-delivery and monitoring systems placed with customers under operating leases. Depreciation expense was $ 17.7 million and $ 51.5 million for the three and nine months ended September 30, 2025, respectively, as compared to $ 21.4 million and $ 66.0 million for the three and nine months ended September 30, 2024, respectively. Depreciation expense included in costs of goods sold was $ 16.0 million and $ 46.2 million, for the three and nine months ended September 30, 2025, respectively, as compared to $ 18.5 million and $ 57.2 million for the three and nine months ended September 30, 2024, respectively. Note 15: Goodwill and Intangible Assets, Net Goodwill The following table presents the changes in the carrying amount of our goodwill (in thousands): Total Balance as of January 1, 2025 $ 1,432,772 Currency translation 65,995 Balance as of September 30, 2025 $ 1,498,767 Intangible Assets, Net Intangible assets, carried at cost less accumulated amortization and amortized on a straight-line basis, were as follows (in thousands): 28 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Weighted-Average Amortization Life in Years September 30, 2025 Cost Accumulated Amortization Net Patents 10 $ 39,997 $ 24,794 $ 15,203 Customer contracts 12 10,060 7,321 2,739 Non-contractual customer relationships 8 561,041 288,073 272,968 Trademarks 1 5,425 5,425 — Trade name 15 18,247 9,270 8,977 Developed technology (1) 10 625,973 277,434 348,539 Non-compete 3 9,100 9,100 — Total amortized intangible assets $ 1,269,843 $ 621,417 $ 648,426 Internally developed software (2) $ 16,401 $ 16,401 Total intangible assets $ 1,286,244 $ 621,417 $ 664,827 ______________________________ (1) Developed technology primarily consists of acquired patented technologies and internally developed software. Upon completion of development, the assets are 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. Weighted-Average Amortization Life in Years December 31, 2024 Cost Accumulated Amortization Net Patents 10 $ 36,811 $ 22,913 $ 13,898 Customer contracts 12 9,818 6,994 2,824 Non-contractual customer relationships 8 546,404 236,267 310,137 Trademarks 1 5,425 5,425 — Trade name 15 18,239 8,357 9,882 Developed technology (1) 10 619,540 227,869 391,671 Non-compete 3 9,100 9,100 — Total amortized intangible assets $ 1,245,337 $ 516,925 $ 728,412 Internally developed software (2) $ 12,377 $ 12,377 Total intangible assets $ 1,257,714 $ 516,925 $ 740,789 _______________________________ (1) Developed technology primarily consists of acquired patented technologies and internally developed software. Upon completion of development, the assets are 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. Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives. Intangible asset amortization expense was $ 33.1 million and $ 98.4 million for the three and nine months ended September 30, 2025, respectively, as compared to $ 34.3 million and $ 100.5 million during the three and nine months ended September 30, 2024, respectively. Intangible asset amortization expense included in cost of goods sold was $ 1.2 million and $ 3.3 million, for the three and nine months ended September 30, 2025, respectively, as compared to $ 0.7 million and $ 0.7 million during the three and nine months ended September 30, 2024. 29 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) As of September 30, 2025 estimated annual amortization for our intangible assets for each of the next five years and thereafter is approximately (in thousands): Remainder of 2025 $ 32,410 2026 135,833 2027 119,412 2028 118,813 2029 115,717 2030 53,215 Thereafter 73,026 Total $ 648,426 Note 16: Accrued Liabilities Accrued liabilities consist of the following (in thousands): As of September 30, 2025 December 31, 2024 Salaries and benefits $ 82,685 $ 60,815 Incentive compensation 56,794 59,445 Deferred revenue 28,900 30,358 Italy medical device payback provision (1) 23,646 23,937 Field service corrective action (2) 29,264 32,844 Other 94,814 99,524 $ 316,103 $ 306,923 ___________________________ (1) Related to potential payments associated with the Italy Medical Device Payback ("IMDP") 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 20: Commitments and Contingencies for further details). (2) 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 20: Commitments and Contingencies for further details). As of December 31, 2024, certain accrued liability account balances that were 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 and Disposal of Business). Note 17: Income Taxes Income taxes were accrued at an estimated effective tax rate of 26 % and 25 % for the three and nine months ended September 30, 2025, respectively, as compared to ( 84 )% and ( 26 )% for the three and nine months ended September 30, 2024, respectively. The effective tax rate for the three and nine months ended September 30, 2025 differs from the federal statutory rate of 21 % principally because of the effect of the mix of U.S. and foreign incomes, section 162(m) excess compensation, federal and state valuation allowance, tax credits, and the following discrete items recognized during the interim period: • Tax expense of $ 0.0 million and $ 6.1 million related to the sale of a 60% interest of our IV solutions business during the three and nine months ended September 30, 2025 respectively. • Unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and nine months ended September 30, 2025 of $ 0.0 million and $ 5.0 million, respectively. 30 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) • U.S. return-to-provision adjustments net of related tax reserves for the year ended December 31, 2024 resulted in a tax benefit of $ 12.0 million, for both the three and nine months ended September 30, 2025. The adjustments related primarily to a decrease to the U.S. valuation allowance. The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company recorded a change to the valuation allowance against certain U.S. federal and state deferred tax assets, resulting in a $ 1.4 million tax benefit and $ 2.3 million tax expense during the three and nine months ended September 30, 2025, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses. The company's ability to use our deferred tax assets depends on the amount of taxable income in future periods. 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 has been effective for our fiscal year beginning January 1, 2024. For fiscal year 2025, we have considered the impact of Pillar Two on our tax provision and 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 2025 as we continue to assess the impact of tax legislation in these jurisdictions. On July 4, 2025, the U.S. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14", commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements as additional guidance becomes available and uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. The impacts are included in our operating results for the three and nine months ended September 30, 2025, however, we do not expect the OBBBA to have a material impact on our estimated annual effective tax rate in 2025. The effective tax rate for the three and nine months ended September 30, 2024 differs from the federal statutory rate of 21 % principally because of the effect of the mix of U.S. and foreign incomes, state income taxes, section 162(m) excess compensation, federal and state valuation allowance, tax credits, and the following discrete items recognized during the interim period: • Unrecognized tax benefits released as a result of the expiration of statute of limitations during the three and nine months ended September 30, 2024 of $ 0.0 million and $ 4.0 million, respectively. • U.S. return-to-provision adjustments net of related tax reserves for the year ended December 31, 2023 results in a tax expense of $1.6 million for both the three and nine months ended September 30, 2024. The adjustments related primarily to changes in estimate for the research and development credit and an increase to the U.S. valuation allowance. The Company recorded an increase in valuation allowance of $ 22.4 million and $ 42.9 million, against certain U.S. federal and state deferred tax assets during the three and nine months ended September 30, 2024, respectively. The significant piece of objectively verifiable negative evidence evaluated was the recent U.S. cumulative losses. Note 18: Long-Term Debt 2022 Credit Agreement 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 31 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Credit Facilities"). We used the proceeds from borrowings under the Term Loan A and the Term Loan B (collectively, the "Term Loans") to fund a portion of the cash consideration for the purchase of Smiths Medical and the related fees and expenses incurred in connection with the acquisition. We did not incur borrowings under the Revolving Credit Facility on the closing date of the acquisition. The proceeds from any future borrowings under the Revolving Credit Facility may be used for working capital and other general corporate purposes. 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 condensed consolidated balance sheets. 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 on our condensed consolidated balance sheets. These costs are being amortized to interest expense over the term of the Revolving Credit Facility using the straight-line method. The net funds received from the Term Loan A and the Term Loan B, after deducting debt issuance costs, were $ 834.2 million and $ 836.6 million, respectively. Maturity Dates The maturity date for the Term Loan A and the Revolving Credit Facility is January 6, 2027 , and the maturity date for the Term Loan B is January 6, 2029 . Pursuant to the terms and conditions of the Credit Agreement, the maturity dates of the Term Loans and the Revolving Credit Facility may be extended upon our request, subject to the consent of the Lenders. Interest Rate Terms In general, the Term Loans and borrowings under the Revolving Credit Facility denominated in U.S. dollars bear interest, at our option, on either: (1) the Base Rate, as defined below, plus the applicable margin, as indicated below ("Base Rate Loans") or (2) the Adjusted Term Secured Overnight Financing Rate ("Adjusted Term SOFR"), as defined below, plus the applicable margin, as indicated below ("Term SOFR Loans"). The Base Rate is defined as the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50 % and (c) Adjusted Term SOFR (as defined below) for a one-month period plus, in each case, 1.00 %. Adjusted Term SOFR is the rate per annum equal to (a) the Term SOFR plus (b) the Term SOFR Adjustment. Term SOFR is the forward-looking term rate based on SOFR and is calculated separately for Term SOFR Loans and Base Rate Loans, as specified in the Credit Agreement. The Term SOFR Adjustment is a percentage per annum of 0.10 % for Base Rate Loans and between 0.10 % to 0.25 % for Term SOFR Loans based on the applicable interest period. Revolving Credit Facility Commitment Fee The Revolving Credit Facility has a per annum commitment fee at an initial rate of 0.25 % which is applied to the available amount of the Revolving Credit Facility. Effective on the first Adjustment Date, as defined in the Credit Agreement, occurring subsequent to our quarter ended June 30, 2022, the commitment fee is determined by reference to the leverage ratio in effect from time to time as set forth in the table below. Applicable Interest Margins The Term Loan A and borrowings under the Revolving Credit Facility have an initial applicable margin of 0.75 % per annum for Base Rate Loans and 1.75 % 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 A and borrowings under the Revolving Credit Facility is determined by reference to the leverage ratio in effect from time to time as set forth in the following table: 32 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Leverage Ratio Applicable Margin for Term SOFR Loans Applicable Margin for Base Rate Loans Commitment Fee Rate Greater than 4.00 to 1.0 2.25 % 1.25 % 0.35 % Less than or equal to 4.00 to 1.0 but greater than 3.00 to 1.0 2.00 % 1.00 % 0.30 % Less than or equal to 3.00 to 1.0 but greater than 2.50 to 1.0 1.75 % 0.75 % 0.25 % Less than or equal to 2.50 to 1.0 but greater than 2.00 to 1.0 1.50 % 0.50 % 0.20 % 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: Leverage Ratio Applicable Margin for Term SOFR Loans Applicable Margin for Base Rate Loans Greater than 2.75 to 1.0 2.50 % 1.50 % Less than 2.75 to 1.0 2.25 % 1.25 % Principal Payments Principal payments on the Term Loans are due on the last day of each calendar quarter commencing on June 30, 2022. The Term Loan A amortizes in nineteen consecutive quarterly installments in an amount equal to 2.50 % of the original principal amount in each of the first two years, 5.00 % in each of the third and fourth years and 7.50 % in the fifth year, with a final payment of the remaining outstanding principal balance due on the maturity date. The Term Loan B matures in twenty-seven consecutive quarterly installments in an amount equal to 0.25 % of the original principal amount, with a final payment of the remaining outstanding principal balance due on the maturity date. 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. For the nine months ended September 30, 2025 and 2024, total principal payments on the Term Loans were $ 272.8 million and $ 38.3 million, respectively. During the first quarter of 2025, we made a prepayment of $ 35.0 million on Term Loan B. During the second quarter of 2025, we made a prepayment of $ 200 million on Term Loan A, which was paid with the proceeds from the sale of our IV Solutions business, see Note 4: Assets Held For Sale and Disposal of Business. During the third quarter of 2025, we made a prepayment of $ 25.0 million on Term Loan B. Interest Payments Interest payments on Base Rate Loans are payable quarterly in arrears on the last business day of each calendar quarter and the applicable maturity date. Interest periods on Term SOFR Loans are determined, at our option, as either one, three or six months and will be payable on the last day of each interest period and the applicable maturity date. In the case of any interest periods of more than three months' duration, the interest payment are payable on each day prior to the last day of such interest period that occurs at three-month intervals. The commitment fee on the Revolving Credit Facility is payable quarterly in arrears on the third business day following the last day of each calendar quarter and at the maturity date. The commitment fee is included in interest expense in our condensed consolidated statements of operations. 33 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Guarantors and Collateral Our obligations under the Credit Agreement are unconditionally guaranteed, on a joint and several basis, by ICU Medical, Inc. and certain of our existing subsidiaries. Debt Covenants 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 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. Thereafter, the maximum Senior Secured Leverage Ratio is 4.00 to 1.00, with limited permitted exception. The Interest Coverage ratio is defined, at any measurement date, as the ratio of Consolidated EBITDA, as defined in the Credit Agreement, to Consolidated Interest Expense, as defined in the Credit Agreement, paid or payable in cash, for the most recently completed four fiscal quarters. The minimum Interest Coverage ratio is 3.00 to 1.00. We were in compliance with all financial covenants as of September 30, 2025. The Credit Agreement contains customary events of default, including, among others: non-payments of principal and interest; breach of representations and warranties; covenant defaults; cross-defaults and cross-acceleration to certain other material indebtedness; the existence of bankruptcy or insolvency proceedings; certain events under ERISA; material judgments; and a change of control. 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. The carrying values of our long-term debt consist of the following (in thousands): Effective Interest Rate As of September 30, 2025 Effective Interest Rate As of December 31, 2024 Senior Secured Credit Facilities: Term Loan A — principal 7.04 % $ 559,688 8.03 % $ 770,313 Term Loan B — principal 7.40 % 764,500 8.38 % 826,625 Revolving Credit Facility — principal — % — — % — Less unamortized debt issuance costs (1) ( 10,257 ) ( 14,080 ) Total carrying value of long-term debt 1,313,931 1,582,858 Less current portion of long-term debt — 51,000 Long-term debt, net $ 1,313,931 $ 1,531,858 _______________________________ (1) Comprised of $ 3.7 million and $ 6.5 million relating to the Term Loan A and the Term Loan B, respectively, as of September 30, 2025. Comprised of $ 6.1 million and $ 8.0 million relating to the Term Loan A and the Term Loan B, respectively, as of December 31, 2024. 34 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) As of September 30, 2025, the aggregate amount of principal repayments of our long-term debt (including any current portion) for each of the next five years and thereafter is approximately (in thousands): Remainder of 2025 $ — 2026 — 2027 559,688 2028 — 2029 764,500 2030 — Total $ 1,324,188 The following table presents the total interest expense related to our long-term debt (in thousands): Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Contractual interest $ 22,815 $ 32,059 $ 73,571 $ 96,186 Amortization of debt issuance costs 1,629 1,700 5,112 5,111 Commitment fee — Revolving Credit Facility 319 384 1,036 1,141 Total long-term debt-related interest expense $ 24,763 $ 34,143 79,719 102,438 We currently hedge against the contractual interest expense on our long-term debt (see Note 9: Derivatives and Hedging Activities). On October 31, 2025, we refinanced the Credit Agreement (see Note 23: Subsequent Event). Note 19: Stockholders' Equity Treasury Stock In August 2019, our Board approved a share purchase plan to purchase up to $ 100.0 million of our common stock. This plan has no expiration date. During the three months ended September 30, 2025 and 2024, we did not purchase any shares of our common stock under our share purchase plan. As of September 30, 2025, all of the $ 100.0 million available for purchase was remaining under the plan. We are currently limited on share purchases in accordance with the terms and conditions of our Credit Agreement (see Note 18: Long-Term Debt). For the nine months ended September 30, 2025, we withheld 61,304 shares of our common stock from employee vested restricted stock units in consideration for $ 8.7 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations. For the nine months ended September 30, 2024, we withheld 114,023 shares of our common stock from employee vested restricted stock units in consideration for $ 11.9 million in payments made on the employees' behalf for their minimum statutory income tax withholding obligations. Treasury stock is used to issue shares for stock option exercises and restricted stock grants. Accumulated Other Comprehensive (Loss) Income ("AOCI") The components of AOCI, net of tax, were as follows (in thousands): 35 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Foreign Currency Translation Adjustments Unrealized Losses on Cash Flow Hedges Other Adjustments Total Balance as of January 1, 2025 $ ( 146,942 ) $ 5,722 $ 1,819 $ ( 139,401 ) Other comprehensive income (loss) before reclassifications 39,890 ( 3,260 ) — 36,630 Amounts reclassified from AOCI — ( 2,624 ) — ( 2,624 ) Other comprehensive income (loss) 39,890 ( 5,884 ) — 34,006 Balance as of March 31, 2025 $ ( 107,052 ) $ ( 162 ) $ 1,819 $ ( 105,395 ) Other comprehensive income (loss) before reclassifications 81,569 ( 6,524 ) — 75,045 Amounts reclassified from AOCI — ( 2,292 ) — ( 2,292 ) Other comprehensive income (loss) 81,569 ( 8,816 ) — 72,753 Balance as of June 30, 2025 $ ( 25,483 ) $ ( 8,978 ) $ 1,819 $ ( 32,642 ) Other comprehensive (loss) income before reclassifications ( 4,520 ) 7,743 — 3,223 Amounts reclassified from AOCI — ( 3,558 ) — ( 3,558 ) Other comprehensive (loss) income ( 4,520 ) 4,185 — ( 335 ) Balance as of September 30, 2025 $ ( 30,003 ) $ ( 4,793 ) $ 1,819 $ ( 32,977 ) Foreign Currency Translation Adjustments Unrealized Gains (Losses) on Cash Flow Hedges Other Adjustments Total Balance as of January 1, 2024 $ ( 76,784 ) $ 21,884 $ 1,819 $ ( 53,081 ) Other comprehensive (loss) income before reclassifications ( 22,817 ) 13,908 — ( 8,909 ) Amounts reclassified from AOCI — ( 7,548 ) — ( 7,548 ) Other comprehensive (loss) income ( 22,817 ) 6,360 — ( 16,457 ) Balance as of March 31, 2024 $ ( 99,601 ) $ 28,244 $ 1,819 $ ( 69,538 ) Other comprehensive (loss) income before reclassifications ( 15,865 ) 436 — ( 15,429 ) Amounts reclassified from AOCI — ( 6,818 ) — ( 6,818 ) Other comprehensive loss ( 15,865 ) ( 6,382 ) — ( 22,247 ) Balance as of June 30, 2024 $ ( 115,466 ) $ 21,862 $ 1,819 $ ( 91,785 ) Other comprehensive income (loss) before reclassifications 49,581 ( 14,975 ) — 34,606 Amounts reclassified from AOCI — ( 5,257 ) — ( 5,257 ) Other comprehensive income (loss) 49,581 ( 20,232 ) — 29,349 Balance as of September 30, 2024 $ ( 65,885 ) $ 1,630 $ 1,819 $ ( 62,436 ) 36 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 20: Commitments and Contingencies Legal Proceedings From time to time, we are involved in various legal proceedings, most of which are routine litigation, in the normal course of business. Our management does not believe that the resolution of the unsettled legal proceedings that we are involved with will have a material adverse impact on our financial position or results of operations. Off-Balance Sheet Arrangements In the normal course of business, we have agreed to indemnify our officers and directors to the maximum extent permitted under Delaware law and to indemnify customers as to certain intellectual property matters or other matters related to sales of our products. There is no maximum limit on the indemnification that may be required under these agreements. Although we can provide no assurances, we have never incurred, nor do we expect to incur, any material liability for indemnification. Contingencies Prior to being acquired, during 2021, Smiths Medical received a Warning Letter from the U.S. Food and Drug Administration ("FDA") following an inspection of Smiths Medical’s Oakdale, Minnesota Facility (the "2021 Warning Letter"). The 2021 Warning 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. A provision for the estimated costs related to the field service corrective actions identified as of the closing date of the acquisition was recorded on the opening acquired balance sheet of Smiths Medical in the amount of $ 55.1 million. The initial estimate recorded was based on a probability-weighted estimate of the costs required to settle the obligation related to known field corrective actions. 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 three months ended September 30, 2025, we did not record any adjustment and for the nine months ended September 30, 2025, we recorded a net reversal to the provision of $ 0.7 million, to adjust the estimated cost to complete the field corrective actions to the amounts expected to be incurred based on historical experience. As of September 30, 2025, approximately $ 23.3 million of the $ 36.0 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 Italian court system. In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the IMDP. In September 2025, the Italian government enacted a law that allows medical device companies to settle certain historical periods (2015-2018) for 25% of the original assessed value. During the third quarter of 2025, we settled the liability related to the 2015-2018 historical periods and paid $ 2.5 million. Additionally, we recorded a release of $ 3.8 million in previously established reserves. The release is included in total revenues in our condensed consolidated statements of operations. See Note 16: Accrued Liabilities for details on amounts accrued for potential payments related to the IMDP. In April 2025, we received a warning letter from the FDA following an inspection of Smiths Medical's Oakdale, Minnesota Facility that occurred from July 23, 2024 through August 9, 2024 (the "2025 Warning letter"). The 2025 Warning Letter noted changes we made to the MedFusion™ Model 4000 Syringe Infusion Pump and CADD™ Solis VIP Ambulatory Infusion Pump that could affect the safety or effectiveness of these devices and therefore require new 510(k) clearance. We are seeking clearance for its next generation of MedFusion and CADD infusion pumps and submitted 510(k) applications to the FDA in July 2025. We cannot, however, give any assurances that the FDA will be satisfied with its response or its expected timing to address the matters cited in the 2025 Warning Letter. Until the matters cited in the 2025 Warning Letter are resolved to the FDA’s satisfaction, additional legal or regulatory action may be taken without further notice. As a result, the outcome and the financial impact of the 2025 Warning Letter cannot be predicted at this time. Accordingly, no loss contingency has been recorded for the 2025 Warning Letter, and the likelihood of loss is not considered probable and reasonably estimable as of September 30, 2025. Commitments We have non-cancelable operating lease agreements where we are contractually obligated to pay certain lease payment amounts (see Note 7: Leases). 37 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 21: Collaborative and Other Arrangements 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. On January 1, 2021, we amended our MSA with Pfizer, whereby we manufacture and supply certain agreed upon products to Pfizer. The MSA was amended on December 31, 2024 to extend the term through 2027 for certain Solutions and Abboject products. The terms of the MSA with Pfizer relating to ICU are immaterial. 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’s rights and obligations relating to such Solutions products have been assigned as of January 24, 2025 to the joint venture. Note 22: Accounts Receivable Purchase Program On January 19, 2023, we entered into a revolving $ 150 million uncommitted receivables purchase agreement with Bank of The West, which was subsequently acquired by BMO Bank, N.A. ("BMO") in February 2023. 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, 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 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. The discount rate has been negotiated net of consideration for the collection services, the cost of collection is immaterial to the Company; therefore, we did not separately record any related servicing assets or liabilities related to the sold receivables. The following table presents information in connection with the purchase program (in thousands): Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Trade receivables sold (1) $ — $ 86,991 $ 10,009 $ 435,438 Cash received in exchange for trade receivables sold (2) — 86,521 9,978 432,803 Loss on sale of receivables (3) — 469 32 2,635 _______________________________ (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 September 30, 2025 and December 31, 2024, there were no outstanding balances to be collected on behalf of BMO. 38 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 23: Subsequent Event On October 31, 2025 (the "Closing Date"), ICU Medical, Inc., as Borrower, entered into Amendment No. 2 to the Existing Credit Agreement (the "Amendment") with Wells Fargo Bank and certain other financial institutions (the “Lenders”) to refinance the existing Term Loan A and the existing Revolving Credit Facility under the Credit Agreement dated as of January 6, 2022 (as amended by Amendment No. 1, dated as of October 5, 2022, the "Existing Credit Agreement," and as further amended by the Amendment, the "Amended Credit Agreement"). The existing Term Loan A had an outstanding principal balance of $ 559.7 million as of September 30, 2025 and there were no borrowings under the existing $ 500.0 million revolver as of September 30, 2025. The Amended Credit Agreement includes new credit facilities (the "New Credit Facilities") that consists of a $ 750.0 million senior secured term loan A and a new $ 500.0 million revolving credit facility. The proceeds from and commitments under the New Credit Facilities were used to (i) repay the outstanding principal amount of the existing Term Loan A in full and refinance the existing Revolving Credit Facility (collectively, the "Refinancing") under the Existing Credit Agreement, (ii) repay a portion of the outstanding balance of the existing Term Loan B under the Existing Credit Agreement and (iii) to finance the payment of fees and expenses incurred in connection with the Refinancing. The final maturity of the New Credit Facilities is on the fifth anniversary of the Closing Date. Borrowings under the New Credit Facilities will not be subject to the credit spread adjustment under the Existing Credit Agreement, which ranges from 10 to 25 basis points, thereby reducing interest expense on such borrowings. The material terms of the Term Loan B (including the credit spread adjustment applicable thereto) remain unchanged. All affirmative and negative covenants remain substantially the same as the Existing Credit Agreement. The financial covenants of the New Credit Facilities include (i) a new maximum Secured Net Leverage Ratio of 4.50 to 1.00, tested at the end of each quarter, with a step-down to 4.00 to 1.00 starting with the quarter ending June 30, 2027; provided that, in the event the Borrower or its restricted subsidiaries consummate a material acquisition, the Borrower may elect (on no more than one occasion) to cause the Secured Net Leverage Ratio financial covenant level set forth above to be increased by 0.50x for each of the four fiscal quarters ending immediately after the consummation of such material acquisition and (ii) a minimum Interest Coverage Ratio of 3.00 to 1.00, which remains unchanged from the Existing Credit Agreement. 39 Table of Contents