What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-19 compared with 2025-02-27 · 181 added, 152 removed, 316 unchanged (51% of the section changed)

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Our 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, and sterile IV solutions;

dedicated and non-dedicated IV sets, needlefree IV connectors, and peripheral IV catheters;

closed system transfer devices and pharmacy compounding systems;

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

as well as a range of respiratory, anesthesia,

patient monitoring, and temperature management products.

We also offer IV Solutions products through a commercial relationship with the joint venture.

Global Economic Challenges

We have experienced and may continue to experience significant impacts to our business as a result of global economic challenges, resulting from, among other events, health pandemics and geopolitical conflicts.

These impacts, which negatively impacted our gross profit margin during 2023 and 2022, include the impact of rising inflation, especially with respect to freight costs driven by higher fuel prices, increased cost and shortages of raw materials, and supply chain disruptions.

While we expect the pressure on the supply chain to lessen and inflation to continue to subside, freight costs are expected to remain subject to volatility in the market.

We also continue to expect higher interest rates and volatility in foreign currency rates due to the strengthening of the U.S.

dollar against most global currencies.

Our 2024, 2023 and 2022 financial results were negatively impacted by foreign exchange losses and our results of operations may continue to be impacted in the future.

More recently, in January 2025, the current administration issued executive orders imposing tariffs on imported goods from Canada, Mexico, and China.

In response, Canada announced similar tariffs on U.S.

A meaningful portion of our global revenues are from products manufactured in our Mexico manufacturing facilities and imported into the U.S.

In addition, Canada is our second largest country in terms of revenue and the vast majority of products sold in Canada are imported from the U.S.

The 25% tariff levied on all goods shipped from Mexico to the U.S., combined with the 25% tariff on products shipped from the U.S.

to Canada could potentially have a meaningful impact to our costs and any further trade war escalation could increase that impact.

In recent years, we have experienced, and may continue to experience, significant impacts to our business as a result of global economic challenges, resulting from, among other events, health pandemics and geopolitical conflicts which have resulted in fluctuating inflation rates, especially with respect to increased cost and shortages of raw materials, supply chain disruptions, higher interest rates, volatility on foreign currency exchange rates, and freight costs driven by higher fuel prices.

administration has continued to engage in trade discussions and impose tariffs on imports from other countries.

Certain of these tariffs have been subsequently paused or modified, and the situation remains highly fluid.

For example, on July 31, 2025, the U.S.

announced that the 10% baseline reciprocal tariff on imports from all countries would be raised to 15% for certain countries, including Costa Rica.

More recently, the U.S.

administration threatened to impose additional tariffs on European allies as a penalty for the Greenland dispute.

In response, the European Union prepared a list of retaliatory tariffs;

subsequently, the U.S.

withdrew the proposed tariffs following diplomatic discussions.

The majority of our global revenues are from products manufactured in our Costa Rica and Mexico manufacturing facilities and imported into the U.S.

Currently the vast majority of products manufactured in our Mexico facilities are exempted from tariffs under the United States-Mexico-Canada Agreement ("USMCA").

If, however, the USMCA exemptions were eliminated in the future, our tariff expense for products manufactured in Mexico would increase substantially.

The tariffs as currently implemented are likely to have a material impact on our business, financial condition and results of operations through the incurrence of additional costs;

however, the extent to which the imposition of tariffs, possible delays and exemptions may have a material impact remains fluid.

During 2025, we incurred $33.6 million in incremental reciprocal tariffs as a result of the tariffs imposed by the U.S.

Administration in 2025, of which $7.9 million was capitalized and $25.7 million was expensed.

In September 2025, the U.S.

Commerce Department (the "Department") initiated a national security investigation into imports of medical consumables and equipment under Section 232 of the Trade Expansion Act (the "Act").

The Act allows the President to negotiate tariffs to promote international trade.

Section 232 of the Act specifically grants the President the authority to impose tariffs if the Department determines imports threaten U.S.

national security.

The Department has 270 days to deliver its policy recommendations to the President, who then has up to 90 days to decide on potential action and 15 days to implement it.

If the probes conducted determine these imports, which comprise the vast majority of our product portfolio, pose a national security risk, it could result in potential tariffs imposed in addition to the country-based tariffs and/or could reduce the benefits we receive from currently available exemptions such as the USMCA.

Based on current geopolitical conditions we expect foreign currency rates, freight costs, oil prices, interest rates, and general inflation to remain subject to volatility in the market.

While we continually monitor the ongoing and evolving impact of the above events on our operations the overall impact remains uncertain and may not be fully reflected in our results of operations until future periods.

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Risk Factors" for a discussion of risks and uncertainties.

Disposition of our IV Solutions Business and Prepayment of a portion of our Long-term Obligations

On April 24, 2025, pursuant to a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc.

a Delaware corporation ("OPF") (described in Note 3:

Assets Held For Sale and Disposal of Business to our accompanying consolidated financial statements), we completed the formation of ICU Medical Pearl LLC (n/k/a Otsuka ICU Medical LLC (the "joint venture")) and transferred the assets, liabilities and operations that comprise our IV Solutions product line to the joint venture.

At the closing of the transaction on May 1, 2025, under the Agreement, we sold a 60% interest in the joint venture to OPF.

The total sales price, inclusive of our final price adjustments, was $211.2 million, of which we used $200.0 million of the proceeds from the sale to pay down a portion of our outstanding Term Loan A (as defined below) long-term debt during the second quarter of 2025.

Consolidated Results of Operations

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Other expense, net — % (1) % — %

Loss before income taxes (4) % (3) % (5) %

Gain on sale of business 2 % — % — %

Income (Loss) before income taxes and equity in losses of unconsolidated affiliates — % (4) % (3) %

(Provision) benefit for income taxes — % 2 % (2) %

Net loss (6) % (1) % (3) %

Net income (loss) from consolidated affiliates — % (6) % (1) %

Equity in losses of unconsolidated affiliates — % — % — %

Net income (loss) — % (6) % (1) %

Total revenues were $2.2 billion, $2.4 billion and $2.3 billion for 2025, 2024 and 2023, respectively.

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There are no significant seasonal aspects to our business.

We can experience fluctuations in net sales as a result of variations in the ordering patterns of our largest customers, which may be driven more by production scheduling and customer inventory levels, and less by seasonality.

We can experience fluctuations in net sales as a result of variations in the ordering patterns of our largest customers, which may be driven more by customer inventory levels and production scheduling, and less by seasonality.

Our expenses often do not fluctuate in the same manner as net sales, which may cause fluctuations in operating income that are disproportionate to fluctuations in our revenue.

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GAAP basis, we also compare the changes in revenue from one period to another using constant currency.

The presentation of revenues on a constant currency basis is a non-GAAP financial measure that excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods.

The presentation of revenues on a constant currency basis is a non-GAAP financial

measure that excludes the impact of fluctuations in foreign currency exchange rates that occurred between the comparative periods.

We provide constant currency information to enhance the visibility of underlying business trends, excluding the effects of changes in foreign currency translation rates.

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% Change in constant currency 6.1 % 7.5 %

Consumables revenue increased in 2025, as compared to 2024, primarily due to new customer installations and increased demand for our Infusion Consumables, Oncology, and Tracheostomy product lines.

Consumables revenue increased in 2024, as compared to 2023, primarily due to new customer installations and increased demand for our Infusion Consumables, Vascular Access and Oncology product lines.

Consumables revenue decreased in 2023, as compared to 2022, primarily due to a decrease in our vascular access revenues as a result of lost customers and backorder recovery in 2022.

The revenue decrease was partially offset by an increase in Infusion Therapy and Oncology revenues.

Infusion Systems

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% Change in constant currency 4.7 % 6.9 %

Infusion Systems revenue increased in 2024, as compared to 2023, primarily due to higher sales of our large volume pump ("LVP") dedicated sets on a larger installed base, as well as growth in our ambulatory hardware and dedicated sets.

Infusion Systems revenue increased in 2023, as compared to 2022, primarily due to higher sales of our syringe pumps and LVP dedicated sets.

Infusion Systems revenue increased in 2025, as compared to 2024, primarily due to increased sales of LVP hardware and dedicated sets.

Infusion Systems revenue increased in 2024, as compared to 2023, primarily due to increased sales of LVP dedicated sets on a larger installed base, as well as growth in our ambulatory hardware and dedicated sets.

The following table summarizes our total Vital Care revenue (in millions, except percentages):

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% Change in constant currency (36.9) % 4.9 %

Vital Care revenue decreased in 2025, as compared to 2024, primarily due to lower IV Solutions sales of $213.9 million as a result of the sale of a controlling ownership interest in our IV Solutions business on May 1, 2025 (see Note 3:

Assets Held For Sale and Disposal of Business to our accompanying consolidated financial statements).

Vital Care revenue increased in 2024, as compared to 2023, due to higher sales volume of IV Solutions primarily driven by a market shortage of these products in the U.S.

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In response, we actively increased production of our IV Solutions product lines in anticipation of increased demand due to the temporary market shortage.

We experienced increased demand for our IV Solutions product lines in the fourth quarter of 2024 and may continue to see elevated demand in the near term given the sustained market shortage until conditions normalize.

Vital Care revenue decreased in 2023, as compared to 2022, primarily due to lower sales volume of IV Solutions which was impacted by supply disruptions related to finished good products purchased from third-party manufacturers and lower sales volume for products acquired from Smiths Group plc ("Smiths") due to backorder recovery in 2022.

We experienced increased demand for our IV Solutions product lines in the fourth quarter of 2024.

Gross Margins

Gross margins were 36.8%, 34.6% and 32.8% for 2025, 2024 and 2023, respectively.

The increase in gross margin in 2025, as compared to 2024, was primarily driven by the impact of the sale of a 60% interest of our IV Solutions business on May 1, 2025, which is a lower margin business.

Gross margin also increased as a result of price increases, the impact of foreign exchange rates, lower supply chain costs and the realization of integration synergies.

These improvements were partially offset by an increase in IEEPA tariff costs of $25.7 million in 2025.

The increase in gross margin in 2024, as compared to 2023, was primarily driven by lower supply chain costs due to synergies and freight rates, price increases, reduced spend on quality remediation activities and the impact of foreign exchange rate changes which was partially offset by lower manufacturing absorption and higher inventory write-offs.

The increase in gross margin in 2023, as compared to 2022, was primarily driven by lower freight costs, lower spend on quality remediation and the cost recognition of a purchase accounting write-up of inventory in 2022, offset by continued inflationary impacts on costs and stronger Mexican peso.

Selling, General and Administrative ("SG&A") Expenses

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SG&A $ 625.2 $ 638.8 $ 606.7 $ (13.6) (2.1) % $ 32.1 5.3 %

Consolidated SG&A expenses decreased in 2025, as compared to 2024, primarily due to a decrease of $9.8 million in depreciation and amortization, $5.9 million in bad debt and warranty expense, and $5.5 million in compensation costs which when combined with other smaller category decreases, were partially offset by an increase of $8.3 million in stock based compensation and $4.9 million in professional services.

Depreciation and amortization expense decreased primarily due to the disposal of certain assets related to the sale of a 60% interest of our IV Solutions business (see Note 3:

Assets Held For Sale and Disposal of Business to our accompanying consolidated financial statements).

Bad debt expense is adjusted quarterly, if deemed necessary, based on an assessment of our accounts receivables and our expectations regarding the collectability of those accounts.

Warranty expense decreased due to the release of reserves related to certain products and lower warranty estimated reserve due to lower warranty claims expected.

Compensation costs decreased primarily due to service fee income recorded in the same line as the related personnel expenses for services provided to the joint venture (see Note 3:

Assets Held For Sale and Disposal of Business to our accompanying consolidated financial statements).

Stock based compensation increased due to a change in the probability of meeting certain financial targets related to a performance equity award.

Professional services increased primarily due to higher costs related to the use of third-party service providers supporting various projects and initiatives.

Consolidated SG&A expenses increased in 2024, as compared to 2023, primarily due to increases of $11.3 million in compensation costs, $9.4 million in commissions, $5.6 million in stock based compensation and $5.2 million in dealer fees.

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Depreciation and amortization decreased in 2024 due to certain assets reaching the end of their useful lives and certain assets classified as held for sale during the fourth quarter.

Consolidated SG&A expenses decreased slightly in 2023, as compared to 2022, primarily due to decreases of $7.5 million in depreciation and amortization, $4.8 million in dealer fees, $3.9 million of office expenses, and $2.6 million of IT expenses.

The overall decreases were mostly offset by increases of $7.8 million in compensation costs, $5.2 million in commissions, $3.5 million in stock based compensation, and $1.3 million in sales and marketing expenses.

Depreciation and amortization decreased in 2023 as the trademark intangible recognized as part of the January 2022 Smiths Medical acquisition had a useful life of six months and was fully amortized in 2022.

Dealer fees decreased due to a decrease in revenues to distributors.

Office and IT expenses decreased based on current operating needs.

Compensation costs increased primarily due to an increase in cash incentive compensation and employee benefits.

Commissions increased primarily due to sales performance in 2023 measured against preset sales targets as compared to sales performance achieved against targets in the comparable 2022 period.

Stock based compensation increased due to an increase in the fair value of amounts awarded in 2023 over the fair value of the awards in 2022.

Sales and marketing expenses increased due to an increase in trade show, conference, and related expenses.

Research and Development ("R&D") Expenses

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R&D $ 87.5 $ 88.6 $ 85.3 $ (1.1) (1.2) % $ 3.3 3.9 %

R&D expenses slightly decreased in 2025, as compared to 2024, primarily due to lower headcount and employment expense that support ongoing R&D projects.

R&D expenses generally include compensation and benefit expenses, consulting fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs incurred in our ongoing R&D projects.

R&D expenses increased in 2024, as compared to 2023, primarily due to higher headcount and employment expense in support of ongoing R&D projects.

R&D expenses decreased in 2023, as compared to 2022, due to organizational synergies and project reprioritization as a result as a result of the Smiths Medical acquisition.

R&D expenses are primarily related to headcount and employment expenses in support of ongoing R&D projects.

R&D expenses generally include compensation and benefit expenses, consulting

fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs incurred in our ongoing R&D projects.

Restructuring, Strategic Transaction and Integration Expenses

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Restructuring Charges

In 2025, we incurred restructuring charges of $30.0 million primarily related to facility closure costs and severance costs.

In 2024, we incurred restructuring charges of $19.6 million primarily related to severance costs.

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We reversed approximately $1.0 million in accrued restructuring balances related to severance and facility closure costs that will not be utilized.

In 2022, we incurred restructuring charges of $9.7 million primarily related to severance costs.

Strategic Transaction and Integration Expenses

In 2025 we incurred $36.5 million in strategic transaction and integration expenses primarily related to consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022, and transaction costs related to the sale of a 60% interest of our IV Solutions business in the second quarter of 2025.

In 2024, we incurred $40.2 million in strategic transaction and integration expenses primarily related to consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022.

In 2023, we incurred $35.6 million in strategic transaction and integration expenses primarily related to consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022.

In 2022, we incurred $61.7 million in strategic transaction and integration expenses primarily related to our acquisition of Smiths Medical, which included legal expenses, bank fees and employee costs, and a United Kingdom stamp tax.

Change in fair value of contingent earn-out

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Smiths no longer holds the shares necessary to meet the minimum beneficial ownership percentage required to earn the contingent earn-out.

In 2023, the fair value revaluation of our contingent earn-outs resulted in a decrease in value of $16.2 million.

This decrease was primarily related to the fair value revaluation of our Smiths Medical contingent earn-out liability.

The change in fair value of the Smiths Medical contingent earn-out was driven by a decrease in our stock price.

Interest expense, net

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Interest expense, net $ (83,031) $ (95,753) $ (95,219)

In 2024, 2023 and 2022, interest expense primarily includes the contractual interest incurred on borrowings under the Credit Agreement, the per annum commitment fee charged on the available amount of the revolving credit facility contained in the Credit Agreement, the amortization of debt issuance costs incurred in connection with entering into the Credit Agreement (see Note 13:

In 2025, 2024 and 2023, interest expense primarily includes the contractual interest incurred on borrowings under the Credit Agreement, as defined below, the per annum commitment fee charged on the available amount of the revolving credit facility contained in the Credit Agreement, the amortization of debt issuance costs incurred in connection with entering into the Credit Agreement (see Note 12:

Long-Term Obligations in our accompanying consolidated financial statements) offset by the impact of the interest rate swaps (see Note 8:

Derivatives and Hedging in our accompanying consolidated financial statements).

expense increased in 2024, as compared to 2023, primarily due to amortization of certain swaps.

The interest expense increased in 2023, as compared to 2022, primarily due to increases in the applicable SOFR reference rate.

Derivatives and Hedging in our accompanying consolidated financial statements) and interest income.

Additionally, interest expense during 2025 includes the interest accretion on an unfavorable contract loss provision and a loss on debt extinguishment due to a debt refinancing which we completed in October 2025, (see Note 12:

Long-Term Obligations in our accompanying consolidated financial statements).

The interest expense component decreased in 2025, as compared to 2024, primarily due to decrease in the applicable SOFR reference rate and due to lower obligation principal balances.

During 2025 we prepaid $35.0 million on our Term Loan B in March 2025, $200.0 million on our Term Loan A in May 2025 using proceeds from the sale of a 60% interest of our IV Solutions business, $25.0 million on our Term Loan B in September 2025, and $30.0 million on our Term Loan B in December 2025.

Additionally, the October 2025 debt refinance reduced borrowing costs in the last part of the year as $190.0 million of the lower rate Term Loan A issuance was used to settle a portion of the higher rate Term Loan B in a cashless roll.

The interest expense increased in 2024, as compared to 2023, primarily due to amortization of certain swaps.

Interest income in all years was related to interest earned on interest-bearing securities and cash holdings.

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2025 2024 2023

Foreign exchange losses, net $ (9,792) $ (5,918) $ (5,780)

Foreign exchange gains (losses), net $ 3,786 $ (9,792) $ (5,918)

Loss on disposition of assets (4,366) (1,608) (153)

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

Other miscellaneous income (expense) , net 348 (1,823) 166

Other expense, net $ (232) $ (13,223) $ (5,905)

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

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

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

The foreign exchange gains, net in 2025 were primarily related to the weakening of the U.S.

dollar relative to certain foreign currencies, including the Euro and British Pound, partially offset by the weakening of the U.S.

dollar relative to the Mexican Peso.

In 2024, other miscellaneous (expense) income, net primarily includes $2.6 million in fees associated with our accounts receivable purchase program with BMO Bank N.A.

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

Gain on Sale of Business

In 2025, we recorded a gain on the sale of business of $44.8 million comprising of 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 loss (see Note 3:

Assets Held For Sale and Disposal of Business to our accompanying consolidated financial statements).

Income taxes were accrued at an estimated annual effective tax rate of 56%, (78)% and 62% in 2025, 2024 and 2023, respectively.

The effective tax rate in 2025 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S.

and foreign income, foreign-derived intangible income (“FDII”), federal and state valuation allowance, tax reserve releases, and tax credits.

The effective tax rate in 2024 included a tax benefit of $10.1 million primarily related to unrecognized tax benefits released as a result of the expiration of the statute of limitations offset by a tax expense of $81.7 million related to a valuation allowance against certain U.S.

federal and state deferred tax assets.

and foreign income, section 162(m) excess compensation, federal and state valuation allowance, and tax credits.

Additionally, the effective tax rate in 2025 included a tax benefit of $7.1 million primarily related to unrecognized tax benefits released as a result of the expiration of the statute of limitations.

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

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

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

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

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 $8.7 million tax expense and $2.8 million foreign currency translation and derivative instrument adjustments, for the tax years ending December 31, 2025.

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

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

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

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

The Pillar Two legislation has been effective since our fiscal year beginning January 1, 2024.

For fiscal year 2025, we considered the impact of Pillar Two in 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 where 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.

1 "A bill to provide for reconciliation pursuant to Title II of H.

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 will assess its future impact on our consolidated financial statements as additional guidance becomes available as uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions.

To the extent known, the impact is included in our tax provision and effective tax rate for the year ended December 31, 2025.

The effective tax rate in 2024 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S.

and foreign income, state income taxes, section 162(m) excess compensation, foreign-derived intangible income (“FDII”), and tax credits.

The effective tax rate in 2023 included a tax benefit of $9.6 million primarily related to unrecognized tax benefits released as a result of the expiration of the statute of limitations.

and foreign income, foreign-derived intangible income (“FDII”), federal and state valuation allowance, tax reserve releases, and tax credits.

federal and state deferred tax assets.

The effective tax rate in 2023 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S.

and foreign income, state income taxes, section 162(m) excess compensation, FDII, and tax credits.

The effective tax

rate in 2023 included a tax benefit of $9.6 million primarily related to unrecognized tax benefits released as a result of the expiration of the statute of limitations.

The effective tax rate for 2023 also included a tax benefit of $0.8 million related to the excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.

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The adjustments related to primarily to changes in estimates for the research and development credit and foreign tax credits.

Additionally, the effective tax rate 2023 included the tax impact of the revaluation of contingent consideration of $16.2 million.

The effective tax rate in 2022 differs from the federal statutory rate of 21% principally because of the effect of the mix of U.S.

and foreign incomes, state income taxes, section 162(m) excess compensation, FDII, global intangible low-taxed income ("GILTI") and tax credits.

The effective tax rate during 2022 included a tax benefit of $4.2 million related to the excess tax benefits recognized on stock option exercises and the vesting of restricted stock units during the period.

The effective tax rate during 2022 also included a $0.0 million tax impact of the revaluation of contingent consideration of $6.8 million.

Lastly, the effective tax rate 2023 included the tax impact of the revaluation of contingent consideration of $16.2 million.

Equity in Earnings of Unconsolidated Affiliates

In 2025, we recorded equity in losses of unconsolidated affiliates of $(1.2) million related to our 40% proportionate share of the earnings of the joint venture (see Note 3:

Assets Held For Sale and Disposal of Business to our accompanying consolidated financial statements).

Liquidity and Capital Resources

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Sources of Liquidity

Our current primary sources of liquidity are cash and cash equivalents and cash flows from our operations including access to borrowing arrangements.

Funds generated from operations are held in cash and cash equivalents and investment securities.

During 2024, our cash and cash equivalents and short-term investment securities increased by $53.8 million from $254.7 million at December 31, 2023 to $308.6 million at December 31, 2024.

This increase was primarily due to cash generated from operations.

Our current primary sources of liquidity are cash and cash equivalents, cash flows from our operations including access to borrowing arrangements and cash flows from our accounts receivable purchase program.

Funds generated from operations are held in cash and cash equivalents.

During 2025, our cash and cash equivalents and short-term investment securities decreased by $0.6 million from $308.6 million at December 31, 2024 to $308.0 million at December 31, 2025.

This slight decrease was primarily due to cash generated from operations offset by principal payments made during 2025 consisting of (i) $47.8 million payment on our Term Loan A and Term Loan B during the first quarter of 2025 (ii) $200.0 million of the $209.5 million received in cash consideration for the sale of a 60% interest in our IV Solutions business used to pay down a portion of our Term Loan A during the second quarter of 2025 (iii) $25.0 million payment on Term Loan B during the third quarter of 2025 and (iv) $30.0 million payment on Term Loan B during the fourth quarter of 2025.

Credit Facilities and Access to Capital

As discussed in Note 12:

Long-Term Obligations to our accompanying consolidated financial statements, we entered into the Credit Agreement with various lenders on January 6, 2022 in connection with the closing of the Smiths Medical acquisition.

The Credit Agreement provides for a five-year term loan A facility of $850.0 million (the "Term Loan A"), a seven-year term loan B facility of $850.0 million (the "Term Loan B") and a five-year revolving credit facility of $500.0 million (the "Revolving Credit Facility") (collectively, the "Senior Secured Credit Facilities").

The proceeds from the term loans were used to finance a portion of the cash consideration for the Smiths Medical acquisition.

The outstanding aggregate principal amount of the term loans is $1.6 billion as of December 31, 2024, which includes the Term Loan A that will mature in January 2027 and the Term Loan B that will mature in January 2029.

The proceeds of future borrowings under the Revolving Credit Facility, which expires in January 2027, may be used as a source of liquidity to support our ongoing working capital requirements and other general corporate purposes.

Long-Term Obligations to our accompanying consolidated financial statements, on October 31, 2025, we amended our Existing Credit Agreement to refinance our existing Term Loan A and Revolving Credit Facilities.

The amended credit facility includes a new five-year term loan A facility of $750.0 million (the "Term Loan A"), and a new five-year revolving credit facility of $500.0 million (the "Revolving Credit Facility").

The proceeds from the new Term Loan A were primarily used by the lenders to (i) directly repay in full the $559.7 million of outstanding principal of the existing Term Loan A and (ii) directly repay $190.0 million of the outstanding balance of the Term Loan B under the Existing Credit Agreement.

The outstanding aggregate principal amount of the term loans is $1.3 billion as of December 31, 2025, which includes the Term Loan A that will mature in October 2030 and the Term Loan B that will mature in January 2029.

The proceeds of future borrowings under the Revolving Credit Facility, which expires in October 2030, may be used as a source of liquidity to support our ongoing working capital requirements and other general corporate purposes.

There are no outstanding borrowings under the Revolving Credit Facility as of December 31, 2025.

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Fitch BB/BB+ Negative

Standard & Poor's BB-/BB- Negative

Standard & Poor's BB-/BB- Positive

These credit ratings are not a recommendation by the rating agency to buy, sell, or hold our securities, are subject to revision or withdrawal at any time by the rating agency and should be evaluated independently of any other credit rating we may receive.

In addition, credit rating agencies review their ratings periodically, and there is no guarantee our current credit rating will remain the same as described above.

If our credit rating were to be lowered, our ability to access the debt markets, our cost of funds, and other terms for new incurrence of debt could be adversely impacted.

The Credit Agreement contains financial covenants that pertain to the Term Loan A and the Revolving Credit Facility.

Specifically, we were required to maintain a Senior Secured Leverage Ratio of no more than 4.50 to 1.00 until June 30, 2024, with a stepdown to 4.00 to 1.00 thereafter, and an Interest Coverage Ratio of no less than 3.00 to 1.00 (defined and discussed in

greater detail in Note 13:

Specifically, we were required to maintain a Senior Secured Leverage Ratio of no more than 4.00 to 1.00 and an Interest Coverage Ratio of no less than 3.00 to 1.00 (defined and discussed in greater detail in Note 12:

Long-Term Obligations to our accompanying consolidated financial statements).

We were in compliance with these financial covenants as of December 31, 2025.

In January 2023, we entered into a receivables purchase agreement with Bank of the West, which was subsequently acquired by BMO in February 2023.

This agreement provides for an additional source of capital;

however as of December 31, 2024, we are not currently utilizing this program (see Note 18:

In January 2023, we entered into a receivables purchase agreement with Bank of the West, which was subsequently acquired by BMO Bank, N.A.

("BMO") in February 2023.

This agreement accelerates our access to capital, which we utilize on an as needed basis (see Note 16:

Accounts Receivable Purchase Program).

We believe that our existing cash and cash equivalents along with cash flows expected to be generated from future operations and the funds received and accessible under the Senior Secured Credit Facilities will provide us with sufficient liquidity to finance our cash requirements for the next twelve months and the foreseeable future.

We believe that our existing cash and cash equivalents along with cash flows expected to be generated from future operations, the funds received and accessible under the New Credit Facilities and funds received under the accounts receivable program will provide us with sufficient liquidity to finance our cash requirements for the next twelve months and the foreseeable future.

In the event that we experience downturns, cyclical fluctuations in our business that are more severe or longer than anticipated, fail to achieve anticipated revenue and expense levels, or have significant unplanned cash expenditures, we may need to obtain or seek alternative sources of capital or financing, and we can provide no assurances that the terms of such capital or financing will be available to us on favorable terms, if at all.

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Amounts of spending are estimates and actual spending may substantially differ from those amounts.

2022 Acquisitions

On January 6, 2022, we acquired Smiths Medical.

We financed the $1.9 billion cash portion of the purchase price at closing with a combination of proceeds from the Senior Secured Credit Facilities and our cash and cash equivalents.

Acquisitions and Note 13:

Long-Term Obligations in our accompanying consolidated financial statements for additional information.

Contractual Obligations

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Long-term Debt Obligations

As discussed above, in January 2022, we incurred borrowings under Senior Secured Credit Facilities.

The principal repayment obligations and estimated interest payments on the term loans and estimated commitment fee payments on the revolver are estimated in the table below.

In January 2022, we incurred borrowings under the Senior Secured Credit Facilities to finance the Smiths Medical acquisition.

On October 31, 2025 (the "Closing Date"), we entered into an Amendment No.

2 to our Credit Agreement (the "Amendment"), whereby we refinanced our Term Loan A and our Revolving Credit Facility under our existing Credit Agreement dated as of January 6, 2022 (as amended by Amendment No.

1, dated as of October 5, 2022, the "Existing Credit Agreement" and as further amended by the Amendment, the "Amended Credit Agreement").

The Amended Credit Agreement includes new credit facilities (the "New Credit Facilities") that consists of a $750.0 million senior secured Term Loan A and a new $500.0 million revolving credit facility (the "New Revolving Facility").

The proceeds from and commitments under the

New Credit Facilities were used to (i) repay the outstanding principal amount of the Term Loan A of $559.7 million and refinance the existing Revolving Credit Facility (collectively, the "Refinancing") under the Existing Credit Agreement (ii) repay $190.0 million of the outstanding balance of the Term Loan B under the Existing Credit Agreement and (iii) to finance the payment of fees and expenses incurred in connection with the Refinancing.

The New Credit Facilities mature five years from the Closing Date, subject to a springing maturity provision under which the New Credit Facilities will mature 91 days prior to the maturity date of the Term Loan B if the maturity date of the Term Loan B is less than 91 days after the scheduled maturity of the New Credit Facilities at that time.

This provision could accelerate the maturity of the Term Loan A and New Revolving Facility, requiring earlier repayment.

We are monitoring our liquidity position to ensure we can address this potential earlier repayment obligation.

Interest payments on the term loans were estimated using an Adjusted Term SOFR rate and an applicable margin on of 1.75% for term loan A and 2.25% for term loan B and the revolver commitment fees were estimated using a rate of 0.25%.

The applicable margin rate and commitment fee rate will change from time to time in accordance with a preset pricing grid based on the leverage ratio (see Note 12:

Long-Term Obligations in our accompanying consolidated financial statements for pricing grids related to the Senior Secured Credit Facilities).

Long-Term Obligations in our accompanying consolidated financial statements for pricing grids related to the New Credit Facilities).

Fiscal 2025 Principal Pre-Payments

In 2025, we made total prepayments of $290.0 million.

This comprised of (i) a $30.0 million prepayment on Term Loan B in the fourth quarter (ii) a $25.0 million prepayment on Term Loan B in the third quarter (iii) a $200 million prepayment on Term Loan A during the second quarter funded by the proceeds from the sale of our IV Solutions business (see Note 3:

Assets Held For Sale and Disposal of Business) and (iv) a $35.0 million prepayment on Term Loan B in the first quarter.

Due to these prepayments, there is no principal payments due on Term Loan B until 2029.

The principal repayment obligations, estimated interest payments and revolver commitment fee payments are estimated in the below table.

We expect to fund these obligations with our existing cash and cash equivalents and cash generated from our future operations.

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$ 92.8 $ 83.2 $ 100.9 $ 613.9 $ 666.9 $ —

*The Term Loan A principal and interest payments in the above table are subject to the springing maturity clause described in Exhibit 10.1 as filed as an exhibit to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025.

Other Future Capital Investments

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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 IMDP.

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

As of December 31, 2024, we have accrued $23.9 million for potential payments related to the IMDP, which is classified within our accrued liabilities.

Given the uncertainty regarding this legislation and its enforcement, the timing and amount of payments could ultimately differ from our current expectations.

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 consolidated statements of operations.

Accrued Liabilities to our accompanying consolidated financial statements for details on amounts accrued for potential payments related to the IMDP.

We expect to fund our capital expenditures and contractual obligations with our existing cash and cash equivalents and cash generated from our future operations.

Historical Cash Flows

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Our cash provided by operations was $179.8 million in 2025.

The changes in operating assets and liabilities included an $8.9 million decrease in accounts receivable and a $7.0 million increase in accounts payable.

Offsetting these amounts was a $26.3 million increase in inventories, a $11.0 million increase in prepaid expenses and other current assets, a $7.0 million increase in other assets, $37.0 million decrease in accrued liabilities, and $24.8 million in net changes in income taxes, including excess tax benefits and deferred income taxes.

The decrease in accounts receivable was primarily due to the amount and timing of revenue.

The increase in accounts payable was due to the timing of payments.

The increase in inventory was primarily to build inventory safety stock levels and the impact of the capitalization of tariffs.

The increase in prepaid expenses and other current assets was primarily due to an increase in the payment of miscellaneous prepaid invoices.

The increase in other assets was due to the purchase of spare parts.

The decrease in accrued liabilities was primarily due to utilization of field service action reserve.

The net changes in income taxes was a result of the timing of payments, recording of the current deferred provision, and valuation allowance.

Our cash provided by operations was $204.0 million in 2024.

The changes in operating assets and liabilities included a $46.8 million increase in accounts receivable, a $23.2 million increase in other assets, and $8.8 million increase in prepaid expenses and other current assets.

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The increase in other assets was due to the purchase of spare parts.

The primary drivers for the net decrease in accrued liabilities was primarily due to payments for field corrective actions,

operating lease liabilities and distributor rebates as well as a decrease in deferred revenue offset partially by increases in accrued employee costs.

The net changes in income taxes was a result of recording the current deferred provision and the timing of payments.

Our cash used by operations was $(62.1) million in 2022.

The changes in operating assets and liabilities included a $201.1 million increase in inventories, a $21.3 million increase in other assets, a $55.8 million decrease in accrued liabilities, $66.7 million in net changes in income taxes, including excess tax benefits and deferred income taxes, and a $19.2 million increase in accounts receivable.

Offsetting these amounts was a $22.9 million decrease in prepaid expenses and other current assets and a $37.5 million increase in accounts payable.

The increase in inventory was primarily to build inventory safety stock levels.

The increase in other assets was due to the purchase of spare parts.

The primary drivers for the net decrease in accrued liabilities was primarily due to the payout of annual bonuses and decrease in deferred revenue.

The primary drivers for the net decrease in accrued liabilities was primarily due to payments for field corrective actions, operating lease liabilities and distributor rebates as well as a decrease in deferred revenue offset partially by increases in accrued employee costs.

The net changes in income taxes was a result of recording the current deferred provision and the timing of payments.

The increase in accounts receivable was primarily due to the net impact of collection efforts and the timing of revenue.

The net decrease in prepaid expenses and other current assets was primarily due to a decrease in deferred costs mostly offset by capitalized debt issuance costs allocated to the revolving credit facility.

The increase in accounts payable was due to the timing of payments.

Cash Flows from Investing Activities

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Purchases of property, plant and equipment $ (88,043) $ (79,373) $ (83,893) $ (8,670) $ 4,520 (1)

Proceeds from sale of business 211,185 — — 211,185 — (2)

Proceeds from sale of assets 8,059 746 1,501 7,313 (755) (3)

Intangible asset additions (8,972) (10,833) (9,777) 1,861 (1,056)

Business acquisitions, net of cash acquired — — (1,844,164) — 1,844,164 (2)

Purchases of investment securities — — (3,397) — 3,397 (3)

Proceeds from sale of investment securities — 500 4,222 (500) (3,722) (4)

Net cash used in investing activities $ (88,960) $ (87,947) $ (1,909,468) $ (1,013) $ 1,821,521

Net cash provided by (used in) investing activities $ 122,229 $ (88,960) $ (87,947) $ 211,189 $ (1,013)

__________________________

(1) Our purchases of property, plant and equipment will vary from period to period based on additional investments needed to support new and existing products and expansion of our manufacturing facilities.

(2) Our business acquisitions will vary from period to period based upon our current growth strategy and our ability to execute on desirable target companies.

In 2022, we acquired Smiths Medical.

The cash consideration for the transaction was $1.9 billion, which was financed with existing cash balances and borrowings under the Credit Agreement.

Acquired cash was $78.8 million.

(3) Our purchases of investment securities will vary from period to period based on current cash needs, planning for known future transactions and changes in our investment strategy.

Our investment policy allows for the purchase of securities with final maturities in excess of one year.

If cash is not needed for known future transactions our investment strategy takes advantage of the long-term securities with higher yields.

Typically, our longer term securities have maturities up to three years.

(2) In 2025, we sold a 60% ownership interest in our IV Solutions business to OPF, see Note 3:

Assets Held For Sale and Disposal of Business to our accompanying consolidated financial statements.

(3) Primarily relates to the sale of our warehouse/manufacturing property in Keene, New Hampshire in 2025.

(4) Proceeds from the sale of our investment securities will vary based on the maturity dates of the investments.

In 2022, proceeds from sale of investment securities includes $19.0 million received from a promissory note related to an acquired investment as part of the Smiths Medical acquisition.

Cash Flows from Financing Activities

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Financing Cash Flows:

Proceeds from issuance of long-term debt, net of lender debt issuance costs $ — $ — $ 1,664,362 $ — $ (1,664,362) (1)

Proceeds from issuance of long-term debt $ 313 $ — $ — $ 313 $ — (1)

Payments of lender debt issuance costs (2,825) — — $ (2,825) $ — (2)

Principal payments on long-term debt (302,750) (51,000) (29,688) (251,750) (21,312) (3)

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Tax withholding payments related to net share settlement of equity awards (8,766) (11,992) (9,350) 3,226 (2,642) (7)

Net cash (used in) provided by financing activities $ (55,800) $ (35,979) $ 1,637,032 $ (19,821) $ (1,673,011)

Net cash used in financing activities $ (311,525) $ (55,800) $ (35,979) $ (255,725) $ (19,821)

__________________________

(1) During 2022, we borrowed an aggregate of $1.7 billion under the Senior Secured Credit Facilities contained in the Credit Agreement to partially finance our acquisition of Smiths Medical (see Note 13:

(1) During 2025, we refinanced the existing Term Loan A and the existing Revolving Credit Facility (see Note 12:

Long-Term Obligations to our accompanying consolidated financial statements for additional information).

The proceeds are net of $37.8 million in payments of lender debt issuance costs.

(2) Relates to scheduled principal payments on the Senior Secured Credit Facilities.

(3) Relates to third-party debt issuance costs in connection with entering into the Senior Secured Credit Facilities.

The proceeds represent the incremental borrowings resulting from the refinancing.

(2) Relates to lender debt issuance costs in connection with entering into New Credit Facilities.

(3) Relates to scheduled principal payments and prepayments on the Senior Secured Credit Facilities.

In March 2025, we prepaid $35.0 million on our Term Loan B.

In May 2025, we used $200.0 million received from the sale of a 60% interest in our IV Solutions business to pay down a portion of our Term Loan A.

In September 2025, we prepaid $25.0 million on Term Loan B.

In December 2025, we prepaid $30.0 million on our Term Loan B.

(4) Relates to third-party debt issuance costs in connection with entering into the New Credit Facilities.

(5) Proceeds from the exercise of stock options will vary from period to period based on the volume of options exercised and the exercise price of the specific options exercised.

(5) During the first quarter of 2024, we paid $3.4 million in cash related to the settlement of the Mediverse contingent earn-out.

(6) During the first quarter of 2024, we paid $3.4 million in cash related to the settlement of a contingent earn-out to one of our international distributors.

Of the $3.4 million, the amount recorded as the acquisition date fair value, which is considered financing cash flows, was $2.6 million (see Note 9:

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We evaluate our estimates, assumptions and judgments on a regular basis and apply our accounting policies on a consistent basis.

We believe that the estimates, assumptions and judgments involved in the accounting for revenue recognition, accounts receivable, and business combinations have the most potential impact on our consolidated financial statements.

We believe that the estimates, assumptions and judgments involved in the accounting for revenue recognition, and accounts receivable have the most potential impact on our consolidated financial statements.

Historically, our estimates, assumptions and judgments relative to our critical accounting policies have not differed materially from actual results.

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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.

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 and our historical experience.

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If actual collection losses exceed expectations, we could be required to accrue additional bad debt expense, which could have an adverse effect on our operating results in the period in which the accrual occurs.

Business Combinations

The application of the acquisition method of accounting for business combinations requires the use of significant estimates, assumptions and judgments in the determination of the estimated fair value of assets acquired and liabilities assumed in order to properly allocate the purchase price at the acquisition date.

Although we believe the estimates, assumptions and judgments we have made are reasonable, they are based in part on historical experience, industry data, information obtained from the management of the acquired companies and assistance from independent third-party appraisal/valuation firms, and are inherently uncertain.

Examples of critical estimates in valuing certain of the tangible and intangible assets we have acquired, and certain liabilities assumed include but are not limited to:

• Inventories - we used the comparative sales method, which estimates the selling price of finished goods and work-in-progress inventory, reduced by estimated costs expected to be incurred in selling the inventory and a profit on those costs.

The fair value of inventory is recognized in our statements of operations as the inventory is sold.

Based on internal forecasts and estimates of inventory turnover, acquisition date inventory is sold and recognized in cost of goods sold over an estimated period of six months after the acquisition date.

• Property, Plant and Equipment - the fair value estimate of acquired property, plant and equipment is determined based upon the nature of the asset using either the cost approach, the sales comparison approach or the income capitalization approach.

The cost approach measures the value of an asset by estimating the cost to acquire or reproduce comparable assets.

The sales comparison approach measures the value of an asset through an analysis of comparable property sales.

The income approach values the asset based on its earnings potential.

The fair value of land was estimated using a sales comparison approach.

Land and building improvements were valued using the cost approach.

Personal property assets, such as, leasehold improvements, tooling, laboratory equipment, furniture and fixtures, and equipment, computer hardware, computer software, dies and molds were all valued using the cost approach.

Transportation equipment and major manufacturing and equipment were valued using the sales comparison method.

Construction-in-progress assets were valued based on the cost approach less adjustments for the nature of the assets.

The fair value of property, plant and equipment will be recognized in our statements of operations over the expected useful life of the individual depreciable assets.

• Identifiable Intangible Assets - The fair value of the significant acquired identifiable intangible assets generally is determined using varying methods under the income approach.

This method starts with a forecast of all of the expected future net cash flows associated with the asset and then adjusts the forecast to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Other critical estimates used to estimate the fair value are derived from royalty rates, customer retention rates and/or estimated useful lives.

• Contingent Earn-out Liability - The fair value of the earn-out liabilities were valued using a Monte Carlo simulation and a probability-weighted cash flow model, as appropriate (see Note 10:

Fair Value Measurements to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for details).

Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis