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Item 8. Financial Statements and Supplementary Data

2026-02-19 compared with 2025-02-27 · 451 added, 580 removed, 1232 unchanged (46% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 2025 , 2024 and 2023

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

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2025 , 2024 and 2023

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025 , 2024 and 2023

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

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

and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

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Cash and cash equivalents $ 307,963 $ 308,566

Short-term investment securities — 501

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

Accounts receivable, net of allowance of $ 14,383 and $ 12,977 at December 31, 2025 and 2024, respectively

1 unchanged sentence

Inventories 615,859 584,676

Prepaid income taxes 11,244 21,983

Prepaid expenses and other current assets 86,217 81,531

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OTHER ASSETS 62,877 65,097

INVESTMENTS IN UNCONSOLIDATED AFFILIATES 131,586 3,038

TOTAL ASSETS $ 4,050,508 $ 4,203,931

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Income tax payable 10,400 17,328

Contingent earn-out liability — 4,879

Liabilities held for sale — 32,911

TOTAL CURRENT LIABILITIES 498,861 556,182

CONTINGENT EARN-OUT LIABILITY — 3,991

LONG-TERM DEBT 1,265,917 1,531,858

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TOTAL OPERATING EXPENSES 779,210 781,818 717,048

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

INCOME FROM OPERATIONS 42,829 42,964 22,825

INTEREST EXPENSE, NET ( 83,031 ) ( 95,753 ) ( 95,219 )

OTHER EXPENSE, NET ( 232 ) ( 13,223 ) ( 5,905 )

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

GAIN ON SALE OF BUSINESS 44,792 — —

INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN LOSSES OF UNCONSOLIDATED AFFILIATES 4,358 ( 66,012 ) ( 78,299 )

(PROVISION) BENEFIT FOR INCOME TAXES ( 2,437 ) ( 51,676 ) 48,644

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

NET LOSS PER SHARE

NET INCOME (LOSS) FROM CONSOLIDATED COMPANIES $ 1,921 $ ( 117,688 ) $ ( 29,655 )

EQUITY IN LOSSES OF UNCONSOLIDATED AFFILIATES ( 1,189 ) — —

NET INCOME (LOSS) $ 732 $ ( 117,688 ) $ ( 29,655 )

NET INCOME (LOSS) PER SHARE

Basic $ 0.03 $ ( 4.83 ) $ ( 1.23 )

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

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2025 2024 2023

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

Other comprehensive loss, net of tax:

NET INCOME (LOSS) $ 732 $ ( 117,688 ) $ ( 29,655 )

Other comprehensive income (loss), net of tax:

Cash flow hedge adjustments, net of tax of $( 727 ), $ 0 and $( 5,951 ) for the years ended December 31, 2025 , 2024 and 2023, respectively

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

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

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

Other comprehensive income (loss), net of tax 104,771 ( 86,320 ) 27,897

COMPREHENSIVE INCOME (LOSS) $ 105,503 $ ( 204,008 ) $ ( 1,758 )

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

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

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

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

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

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

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

Balance, December 31, 2023

24,144 2,414 1,366,493 ( 262 ) 807,846 ( 53,081 ) 2,123,410

Issuance of restricted stock and exercise of stock options 489 38 ( 1,261 ) 12,162 — — 10,939

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

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

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

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

Balance, December 31, 2024

24,518 2,452 1,412,118 ( 92 ) 690,158 ( 139,401 ) 1,965,235

Issuance of restricted stock and exercise of stock options 232 17 ( 2,747 ) 8,836 — — 6,106

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Stock compensation — — 55,758 — — — 55,758

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

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

Other comprehensive (loss) income, net of tax — — ( 11 ) — — 104,771 104,760

Net income — — — — 732 — 732

Balance, December 31, 2025 24,688 $ 2,469 $ 1,465,118 $ ( 22 ) $ 690,890 $ ( 34,630 ) $ 2,123,825

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CASH FLOWS FROM OPERATING ACTIVITIES:

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

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

Net Income (Loss) $ 732 $ ( 117,688 ) $ ( 29,655 )

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

Depreciation and amortization 200,741 219,512 228,774

Noncash expense for inventory step-up — — 26,519

Noncash lease expense 17,251 21,344 21,910

Provision for doubtful accounts 5,800 838 1,036

Provision for warranty and returns 1,130 21,582 4,902

Stock compensation 55,758 46,883 40,563

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

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

Undistributed equity in loss of unconsolidated affiliates 1,189 — —

Net gain on sale of business ( 44,792 ) — —

Loss on extinguishment of debt 2,463 — —

Other 24,471 32,621 47,536

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Income taxes, including excess tax benefits and deferred income taxes ( 24,759 ) 26,230 ( 82,356 )

Net cash provided by (used in) operating activities 204,033 166,201 ( 62,129 )

Net cash provided by operating activities 179,847 204,033 166,201

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment ( 88,043 ) ( 79,373 ) ( 83,893 )

Proceeds from sale of business 211,185 — —

Proceeds from sale of assets 8,059 746 1,501

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

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

Purchases of investment securities — — ( 3,397 )

Proceeds from sale of investment securities — 500 4,222

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

Net cash provided by (used in) investing activities 122,229 ( 88,960 ) ( 87,947 )

CASH FLOWS FROM FINANCING ACTIVITIES:

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

Proceeds from issuance of long-term debt 313 — —

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

Principal repayments of long-term debt ( 302,750 ) ( 51,000 ) ( 29,688 )

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

Net cash (used in) provided by financing activities ( 55,800 ) ( 35,979 ) 1,637,032

Net cash used in financing activities ( 311,525 ) ( 55,800 ) ( 35,979 )

Effect of exchange rate changes on cash 8,846 ( 4,929 ) 3,163

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 54,344 45,438 ( 344,043 )

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 603 ) 54,344 45,438

CASH AND CASH EQUIVALENTS, beginning of period 308,566 254,222 208,784

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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the year for income taxes $ 25,253 $ 35,809 $ 27,504

Cash paid during the year for interest $ 83,742 $ 99,717 $ 95,913

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:

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

Detail of assets acquired and liabilities assumed in acquisitions:

Fair value of assets acquired $ 1,606,300

Cash paid for acquisitions, net of cash acquired ( 1,844,164 )

Issuance of common stock for acquisitions ( 575,975 )

Contingent consideration ( 55,158 )

Goodwill, acquired/adjusted during period 1,462,752

Liabilities assumed/Adjustments to liabilities assumed $ 593,755

Purchases of property, plant, and equipment in accounts payable $ 4,453 $ 7,443 $ 6,570

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:

Issuance of long-term debt to refinance existing credit facility $ 750,000

Direct payoff of a portion of the existing credit facility $ ( 749,687 )

Net cash proceeds from issuance of long-term debt $ 313

Equity method investment - noncash (see Note 3) $ 129,851

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

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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, 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.

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

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

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

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

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

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

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

On the consolidated balance sheet, we combined prepaid income taxes with the "prepaid expenses and other current assets" line item.

On the 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.

Prepaid Expenses and Other Current Assets we combined deferred tax charge, foreign exchange contracts, and VAT/GST receivable with the "other" line item.

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 were made to conform to current year presentation and had no impact on the reported results of operations.

Segment Reporting

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Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase.

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounts Receivable

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We regularly review individual past due balances for collectability.

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Total $ 615,859 $ 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 sheet (See Note 4:Assets Held For Sale).

Property, Plant and Equipment

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Machinery and equipment $ 434,959 $ 400,861

$ 400,861 $ 483,382

Land, building and building improvements 176,972 177,089

177,089 278,251

Molds 107,296 96,318

Computer equipment and software 116,259 122,208

122,208 122,038

Furniture and fixtures 23,055 27,871

27,871 30,662

Instruments placed with customers (1)

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Construction in progress 90,748 87,006

87,006 117,219

Total property, plant and equipment, cost 1,097,730 1,035,643

Accumulated depreciation ( 645,913 ) ( 592,897 )

( 592,897 ) ( 623,888 )

Property, plant and equipment, net

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_______________________________

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

Assets Held For Sale.

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

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Balance as of January 1, 2023 $ 1,449,258

Disposition (3)

Currency translation 23,188

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Balance as of December 31, 2025

_______________________________

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

Acquisitions).

(2) Reflects a measurement period adjustment related to the 2021 acquisition of a small foreign infusion systems supplier.

(3) Relates to the sale of a certain line of infusion products in China.

Intangible Assets

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_______________________________

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

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

(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.

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Developed technology (1)

10 619,540 227,869 391,671

Non-compete 3 9,100 9,100 —

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Internally developed software (2)

$ 12,377 $ 12,377

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

_______________________________

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

(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.

Amortization expense was $ 131.4 million, $ 134.3 million and $ 132.1 million in 2025, 2024 and 2023, respectively, of which $ 4.5 million, $ 1.7 million, and $ — million, respectively, are included in cost of goods sold.

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2025, estimated annual amortization for our intangible assets for each of the next five years and thereafter is approximately (in thousands):

2026 $ 136,384

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

Assets Held For Sale.

Investment Securities

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

Investments in Available-for-sale Securities

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

treasury securities, and government bonds.

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

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

If an unrealized loss exists,

Assets Held For Sale and Disposal of Business.

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

If we either intend to sell or it is more likely than not we will be required to sell the debt security before its anticipated recovery, any allowance is written off and the amortized cost basis is written down to fair value through a charge against net earnings.

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

We did not have any investments in available-for-sale debt securities in unrealized loss positions as of December 31, 2024 or 2023.

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

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

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

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

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

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

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

As of December 31, 2023

Amortized Cost Unrealized Holding Gains (Losses) Fair Value

Short-term corporate bonds $ 501 $ — $ 501

Investments in Non-Marketable Equity Securities

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

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

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

We apply the equity method of accounting for investments when we determine we have a significant influence, but not a controlling interest in the investee.

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

income or (loss) and dividend paid, if any.

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

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

The carrying value of our equity method investment is reported in other assets on the consolidated balance sheets.

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 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.

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

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

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

On April 24, 2025, the Company completed the formation of ICU Medical Pearl LLC (n/k/a 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 Otsuka Pharmaceutical Factory America, Inc.

a Delaware corporation ("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.

Assets Held for Sale and Disposal of Business for more information.

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

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

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

Our investment in unconsolidated affiliates consist of the following (in thousands):

As of December 31,

Equity method investment $ 3,038 $ 3,120

Investments in non-marketable debt securities

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

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Otsuka ICU Medical LLC $ 128,662 $ —

Other equity method investment 2,924 3,038

$ 131,586 $ 3,038

Our recorded share of the investee's loss was $ 1.3 million for the year ended December 31, 2025.

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

We did not receive any dividend distributions from these investments during 2025, 2024 and 2023.

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

A valuation allowance is established if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized.

We recognize interest and penalties related to unrecognized tax benefits in the tax provision.

We recognize interest and penalties related to unrecognized tax benefits in the tax provision (see Note 13:

Income Taxes for accrued interest and penalties).

We recognize liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities.

Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

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

Foreign Currency

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In those cases, we follow a step by step translation process utilizing the same sequence as the consolidation process.

Translation adjustments are recorded as a component of accumulated other comprehensive loss, a separate component of stockholders' equity on our consolidated balance sheets and the effect of exchange rate changes on cash and cash equivalents are reflected on our consolidated statements of cash flows.

Translation adjustments are recorded

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

as a component of accumulated other comprehensive loss, a separate component of stockholders' equity on our consolidated balance sheets and the effect of exchange rate changes on cash and cash equivalents are reflected on our consolidated statements of cash flows.

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

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

Revenue Recognition

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

While individual chargeback

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

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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.

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

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The transaction price allocated to the extended service-type warranty is recognized as revenue over the period the warranty service is provided.

Consumables and solutions are separate performance obligations, recognized at a point in time.

Consumables and IV Solutions are separate performance obligations, recognized at a point in time.

Shipping Costs

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Post-retirement and Post-employment Benefits

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Interest expense, net

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

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

As of December 31,

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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.

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

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

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

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

Net Loss Per Share

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

Net Income (Loss) Per Share

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

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

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

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

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

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

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

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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2025 2024 2023

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

Net income (loss) $ 732 $ ( 117,688 ) $ ( 29,655 )

Weighted-average number of common shares outstanding (basic) 24,640 24,388 24,091

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

New Accounting Pronouncements

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

In 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 will be 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 our consolidated financial statements and related disclosures.

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

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

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

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

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging.

The guidance aims to more closely align hedge accounting with the economics of an entity's risk management activities and to better reflect those strategies in financial reporting by enabling entities to achieve and maintain hedge accounting for highly effective economic hedges of forecasted transactions.

This update will be effective for fiscal years beginning after December 15, 2026, and interim periods periods within those annual reporting periods.

Early adoption is permitted.

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

Recently Adopted Accounting Pronouncements

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

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

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

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

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2022 Acquisitions

On January 6, 2022, we acquired 100 % of the equity interests in Smiths Medical, the holding company of Smiths Group plc's global medical device business, from Smiths Group International Holdings Limited (“Smiths”).

The acquisition of Smiths Medical aligns with our strategic growth plans, enabling us to broaden our product offerings to include syringe and ambulatory infusion devices, vascular access, and vital care products and to strengthen and expand our global market reach.

Total cash consideration for the acquisition was $ 1.9 billion, which was financed with existing cash balances and proceeds from the credit agreement entered into on January 6, 2022 (see Note 13:

Long-Term Obligations).

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

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

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

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

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

In the analysis, the determinants of payout are simulated in a risk neutral framework over a large number of simulation paths.

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

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

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

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

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

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

Additionally, we entered in to a transition services agreement ("TSA") with certain members of Smiths Group, plc.

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

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

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

Final Price Allocation

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash consideration for acquired assets $ 1,922,955

Fair value of contingent consideration payable to Smiths 53,520

Issuance of ICU Medical, Inc.

common shares:

Number of shares issued to Smiths 2,500

Price per share (ICU's opening market price on the acquisition date) $ 230.39

Fair value of ICU shares issued to Smiths $ 575,975

Total Consideration $ 2,552,450

Purchase Price Allocation

Cash and cash equivalents $ 78,791

Accounts receivables 106,132

Inventories 228,919

Prepaid expenses and other current assets 53,554

Property, plant and equipment 206,333

Operating lease right-of-use assets 55,161

Intangible assets (1)

Other assets 379

Accounts payable ( 105,291 )

Accrued liabilities (2)

Income tax payable ( 40,312 )

Other long-term liabilities ( 85,490 )

Deferred income taxes ( 187,455 )

Total identifiable net assets acquired $ 1,082,570

Goodwill - not tax deductible 1,469,880

Purchase Consideration $ 2,552,450

_______________________________________________

(1) Identifiable intangible assets included $ 510.0 million of customer relationships, $ 400.0 million of developed technology, $ 30.0 million of internally developed software, and $ 5.0 million of trade mark.

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

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

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

The identifiable intangible assets and other long-lived assets acquired have been valued utilizing Level 3 inputs as defined in Note 10:

Fair Value Measurements.

The fair value of identifiable intangible assets were generally developed using the income approach and are based on critical estimates, judgments and assumptions derived from:

analysis of market conditions;

discount rate;

discounted cash flows;

royalty rates;

customer retention rates;

and/or estimated useful lives.

Certain other intangible assets were valued using a cost to replace method, estimating the labor and non-labor costs required to replace the asset under the premise that it was not part of the transaction.

Property, plant and equipment was valued with the consideration of remaining economic lives.

The raw materials inventory was valued at historical cost and adjusted for any obsolescence which we estimate to approximate replacement cost, the work in process inventory was valued at estimated sales proceeds less costs to complete and costs to sell, and finished goods inventory was valued at estimated sales proceeds less costs to sell.

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited Pro Forma Information

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

Total revenues and net loss attributable to Smiths Medical for the period from January 7, 2022 to December 31, 2022 were $ 950.7 million and $( 74.3 ) million, respectively.

The net loss figure is an estimate as the results by company are less identifiable due to integration.

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

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

Twelve months ended December 31,

(In thousands) 2022

Revenues $ 2,300,371

Net (Loss) Income $ ( 70,286 )

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

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

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

GAAP adjustments for Smiths Medical historical results and adjustments for accounting policy alignment, which were materially similar to the Company.

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

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 cash taxes paid information.

The update was effective for annual periods beginning with the Company's fiscal year 2025.

The Company adopted the requirements of this ASU in Note 13:

Income Taxes of this Annual Report.

There have been no other recent accounting pronouncements or changes in accounting pronouncements that are of significance or potential significance to us during the year.

RESTRUCTURING, STRATEGIC TRANSACTION AND INTEGRATION

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Restructuring

Restructuring charges net of any reversed accruals were $ 19.6 million, $ 5.7 million and $ 9.7 million in 2024, 2023 and 2022, respectively, and are included in the above restructuring, strategic transaction and integration expenses in our consolidated statement of operations.

Restructuring charges net of any reversed accruals were $ 30.0 million, $ 19.6 million and $ 5.7 million in 2025, 2024 and 2023, respectively, which are included in the above restructuring, strategic transaction and integration expenses in our consolidated statement of operations.

In 2025, we incurred restructuring charges primarily related to facility closure costs and severance expenses.

We adjusted certain severance restructuring accrued balances, shown in the table below under "Other adjustments", to reclass prior year accrued restructuring charges for estimated severance costs to other accounts.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

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

In 2022, we incurred restructuring charges primarily related to severance in connection with the January 6, 2022 acquisition of Smiths Medical, see Note 2:

Acquisitions.

We adjusted certain facility and severance restructuring accrued balances to reverse certain accrued balances that will not be utilized.

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Severance Pay and Benefits Retention and Facility Closure Costs Total

Employee & Related Costs Facility & Other Closure Costs Total

Accrued balance, January 1, 2024 $ 2,811 $ 757 $ 3,568

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Other adjustments (1)

( 234 ) ( 785 ) ( 1,019 )

Currency translation ( 212 ) 10 ( 202 )

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Other adjustments (2)

( 900 ) — ( 900 )

Currency translation 495 101 596

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_______________________________________________

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

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

(2) Relates to prior year accrued restructuring charges for estimated severances costs that were reclassed to other accounts during the first quarter of 2025.

Strategic Transaction and Integration Expenses

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The strategic transaction and integration expenses during 2025, 2024 and 2023 were primarily related to consulting expenses and employee costs incurred to integrate our Smiths Medical business acquired in 2022.

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

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

During 2025, transaction costs also included expenses related to the sale of a 60% ownership in our IV Solutions business.

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.

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 consolidated balance sheet.

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ASSETS HELD FOR SALE

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

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

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

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

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

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

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

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

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

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

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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 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 1:

Basis of Presentation and Significant Accounting Policies).

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 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 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 long-term liabilities in our consolidated balance sheet, with the current portion included in accrued liabilities.

This liability is being released to our consolidated statement of operations as reduction to the costs incurred to provide the respective services within selling, general and administrative expenses.

During 2025, we recognized $ 9.2 million in fixed and variable service fees related to reimbursed expenses under the various transition service agreements and $ 2.9 million 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 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.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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 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 1:

Basis of Presentation and Significant Accounting Policies), 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 consolidated financial statement data resulting from transactions with the joint venture (in thousands):

Consolidated statement of operations:

Manufacturing services agreement revenue (net revenue) $ 11,886

Manufacturing services agreement cost of goods sold (costs of good sold) $ 11,131

Service fees - Otsuka ICU Medical LLC (cost of goods sold) $ 969

Service fees - Otsuka ICU Medical LLC (selling, general & administrative) $ 8,206

Equity in losses of unconsolidated affiliates $ ( 1,189 )

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 of unconsolidated affiliates before any related income tax recognized as a separate line item in our consolidated statements of operations.

Income taxes on our share of the joint venture's earnings are included within (provision) benefit for income taxes in our consolidated statements of operations.

As of December 31, 2025, a $ 0.8 million related-party receivable from the joint venture was included within prepaid expenses and other current assets in our consolidated balance sheet.

Revenue Recognition

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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;

For purposes of revenue recognition for our

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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Our contract balances (deferred revenue) are recorded in accrued liabilities and other long-term liabilities in our consolidated balance sheet (see Note 11:

Accrued Liabilities and Other Long-term Liabilities).

Accrued Liabilities).

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

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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;

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

closed system transfer devices and pharmacy compounding systems;

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.

Our product lines, as disclosed in Note 4:

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326,914 344,144 346,716

Tariff expense (4)

Selling, general and administrative 625,210 638,762 606,693

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Income tax provision (benefit) 2,437 51,676 ( 48,644 )

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

Equity in losses of unconsolidated affiliates 1,189 — —

Consolidated net income (loss) $ 732 $ ( 117,688 ) $ ( 29,655 )

_______________

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

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

(4) For the year ended 2025, total tariff expense includes $ 3.1 million in tariffs typically grouped within standard COGS and $ 31.2 million typically grouped within other COGS.

Prior year comparative data for tariff-related expenses is not presented as these costs were historically integrated within broad general ledger accounts and are not practicable to discretely calculate without unreasonable effort.

(5) 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 and amortization expense, see Note 1:

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Worldwide Total $ 1,097,730 $ 1,035,643

________________________________

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

Assets Held For Sale).

We determine if an arrangement is a lease at inception.

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year ended December 31,

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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 consolidated statements of operations.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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SHARE-BASED AWARDS

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

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

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

We incur stock compensation expense for stock options, restricted stock units ("RSU") and performance restricted stock units ("PRSU").

2011 Stock Incentive Plan (the "2011 Plan")

Our stock incentive plan is intended to attract, retain and provide incentives for our employees and directors.

Shares to be issued under this plan will be issued either from authorized but unissued or reacquired shares.

In 2025, our stockholders approved an amendment to the 2011 plan that increased the shares available for issuance under the 2011 plan by 2.2 million shares, bringing the total common shares reserved for issuance under the 2011 plan as of December 31, 2025 to 8.5 million shares.

We currently grant restricted stock units ("RSUs") and performance restricted stock units ("PRSUs") to eligible employees and directors under the 2011 Plan.

We have not granted stock options under the 2011 Plan since 2022.

Shares subject to awards other than options and stock appreciation rights are charged against the 2011 Plan's share reserve as 2.09 shares for 1 share issued.

Stock-based Compensation Expense

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We incur stock compensation expense for RSUs and PRSUs and in years prior to 2024 also for stock options.

As of 2023, our outstanding stock options were all fully vested.

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

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

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

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Tax benefit from stock-based compensation cost $ 5,900 $ 5,524 $ 5,379

Indirect tax benefit $ — $ — $ 749

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2025, we had $ 48.5 million of unamortized stock compensation cost which we will recognize as an expense over a weighted-average period of approximately 0.9 years.

Stock Option Plans

Our 2011 Stock Incentive Plan ("2011 Plan") replaced our 2003 Stock Option Plan ("2003 Plan").

Our 2011 Plan initially had 650,000 shares available for issuance, plus the remaining available shares for grant from the 2003 Plan and any shares that were forfeited, terminated or expired that would have otherwise returned to the 2003 Plan.

In years 2012, 2014, 2017 and 2023, our stockholders approved amendments to the 2011 plan that increased the shares available for issuance by a total of 5,461,000 , bringing the initial shares available for issuance to 6,111,000 , plus the remaining 248,700 shares that remained available for grant from the 2003 Plan.

As of December 31, 2024, the 2011 Plan has 6,374,300 shares of common stock reserved for issuance to employees, which includes 263,300 shares that transferred from the 2003 Plan.

Shares issued as options or stock appreciation rights ("SARs") are charged against the 2011 Plan's share reserve as one share for one share issued.

Shares subject to awards other than options and SARs are charged against the 2011 Plan's share reserve as 2.09 shares for 1 share issued.

Options may be granted with exercise prices at no less than fair market value at date of grant.

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

Time-based Stock Options

To date, all options granted under 2011 Plan and 2003 Plan have been non-statutory stock options.

The majority of the time-based outstanding employee option grants vested 25% after one year from the grant date and the balance vested ratably on a monthly basis over 36 months.

The outstanding employee option grants are all fully vested.

The majority of the outstanding options granted to non-employee directors vest one year from the grant date.

The options generally expire 10 years from the grant date.

The fair value of time-based option grants is calculated using the Black-Scholes option valuation model.

The expected term for the option grants was based on historical experience and expected future employee behavior.

We estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock, based on the average expected exercise term.

The table below summarizes the total time-based stock options granted, total valuation and the weighted-average assumptions (dollars and shares in thousands, except per option amounts):

Year ended December 31,

Number of time-based options granted 7,620

Grant-date fair value of options granted $ 540

Weighted-average assumptions for stock option valuation:

Expected term (years) 5.5

Expected stock price volatility 36.0 %

Risk-free interest rate 3.0 %

Expected dividend yield — %

Weighted-average grant-price per option $ 185.79

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Shares Weighted-Average Exercise Price Per Share Weighted-Average Contractual Life (Years) Aggregate Intrinsic Value (in thousands)

We have not granted time-based stock options since 2022.

Our outstanding options expire no more than ten years from date of grant.

A summary of our stock options outstanding as of and for the year ended December 31, 2025 is as follows:

Shares Weighted-Average Exercise Price Per Share Weighted-Average Contractual Life (Years) Aggregate Intrinsic Value

Outstanding at December 31, 2024

108,140 $ 136.12

Granted — $ —

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Outstanding at December 31, 2025

44,943 $ 191.68 3.71 $ 202

Exercisable at December 31, 2025

Vested and expected to vest, December 31, 2024 108,140 $ 136.12 2.21 $ 3,963

44,943 $ 191.68 3.71 $ 202

Vested December 31, 2025

44,943 $ 191.68 3.71 $ 202

The intrinsic values for options exercisable, outstanding and vested or expected to vest at December 31, 2025 are based on our closing stock price of $ 142.67 at December 31, 2025 and are before applicable taxes.

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Tax benefit from stock option exercises $ 174 $ 1,034 $ 1,733

In 2025, we granted PRSUs to our executive officers.

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

For the CEO, COO, CFO, President and the CVP, GC, the PRSUs will cliff-vest on March 7, 2028, subject to continued service through such vesting date and the achievement of minimum three-year cumulative adjusted revenue and

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minimum three-year cumulative adjusted EBITDA, commencing on January 1, 2025 and ending on December 31, 2027, which when reviewed against a predetermined vesting matrix could result in the vesting of 0% to 250% of the awarded PRSUs.

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

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

The performance period related to the annual 2024 PRSUs ended on December 31, 2025 and in February 2026 the Compensation Committee determined that 250% of the PRSUs awarded were earned based on the cumulative adjusted EBITDA achieved.

In 2023, we granted PRSUs to our executive officers.

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

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

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

In February 2024, 2025 and 2026, the Compensation Committee made the determination that the executive officers other than the CEO, CFO, COO and CVP, GC met their individual performance goals for 2023, 2024 and 2025 with respect to the PRSUs subject to annual vesting, as outlined above, and therefore one-third of their 2023 PRSUs vested at 100% during 2024 and 2025 and one-third will vest during 2026 subject to continued service through March 15, 2026.

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

The performance period related to the annual 2023 PRSUs awarded to the CEO, COO, CFO and CVP, GC ended on December 31, 2025 and in February 2026 the Compensation Committee determined that 117% of the PRSUs awarded were earned based on the three-year adjusted revenue and adjusted EBITDA achieved.

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

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

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

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

The performance period related to the annual 2022 PRSUs ended on December 31, 2023 and in February 2024 the Compensation Committee determined that 200% of the PRSUs awarded were earned based on the actual net synergy savings related to the Smiths Medical acquisition achieved during the performance period, and therefore the 2022 PRSUs vested in during 2024.

In 2021, we granted PRSUs to our executive officers.

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In 2020, we granted PRSUs to our executive officers.

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

For the executive officers other than the CEO, COO and the CFO, the PRSUs vested as to one-third of the total number of PRSUs underlying the award on the first, second and third

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anniversaries of the applicable grant date, subject to a determination by the CEO and Compensation Committee that the officers had met their individual performance goals for the applicable years and continued service through such vesting date.

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

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

In 2019, we granted PRSUs to our executive officers.

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

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

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

If, for the three-year period ending on December 31, 2021, the Cumulative Adjusted EBITDA had a growth of at least 6% to 8%, 50% of the awarded PRSUs would have vested.

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

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

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

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

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

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

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_______________________________

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

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

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

(1) PRSU shares earned in 2025, where both performance and service conditions have been met, were related to performance awards granted to executives in 2023 and PRSUs granted to certain other employees in 2024.

PRSU shares earned in 2024, where both performance and service conditions have been met, were related to performance awards granted to executives and certain other employees in 2021, 2022 and 2023.

PRSU shares earned in 2023, where both performance and service conditions have been met, were related to performance awards granted to executives and certain other employees in 2020, 2021 and 2022.

The table below provides a summary of our PRSU and RSU activity as of and for the year ended December 31, 2025:

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Number of Units Grant-Date Fair Value Per Share Weighted-Average Contractual Life (Years) Aggregate Intrinsic Value (in thousands)

Non-vested at December 31, 2024 551,011 $ 133.47

Change in units due to performance expectations (1)

2,081 $ 198.05

Granted 266,503 $ 141.86

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Forfeited ( 12,597 ) $ 124.59

Non-vested and expected to vest at December 31, 2024 551,011 $ 133.47 1.0 $ 85,500

Non-vested at December 31, 2025 635,376 $ 132.21 0.8 $ 90,649

Expected to vest at December 31, 2025 (1)

____________________________________

(1) Relates to adjustments to 2021 PRSUs granted to executives that vested during 2024.

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We have an ESPP under which U.S.

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

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

To date, there have been no increases.

The ESPP is intended to constitute an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code.

We suspended our ESPP in 2017.

All shares unissued under the plan expired during 2022.

(1) As of December 31, 2025, the additional goal shares expected to vest include the following:

2023 PRSUs 6,431 shares;

2024 PRSUs 221,016 shares;

and 2025 PRSUs 73,170 shares.

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 variable-rate term loans issued in 2022.

We do not issue derivatives for trading or speculative purposes.

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

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

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

Cross-currency Par Forward Contracts

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

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

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

The total notional amount of this outstanding derivative as of December 31, 2021 was approximately 413.1 million MXN.

The term of this one-year contract was December 1, 2021 to December 1, 2022.

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

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 December 31, 2025 was $ 24.3 million, which included the notional equivalent of $ 3.3 million in MXN, $ 7.5 million in JPY, $ 3.5 million in Euros, $ 6.5 million in AUD, $ 3.1 million in USD and $ 0.4 million in other foreign currencies, with terms currently through December 2025.

Floating Interest Rate Risk

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Long-Term Obligations).

We exchange, at specified intervals, the difference between

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 through its final maturity on March 30, 2027.

We pay a fixed rate of 1.32 % and will receive the greater of 3-

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

month USD SOFR or ( 0.15 )%.

The total notional amount of this outstanding derivative as of December 31, 2025 was approximately $ 181.6 million.

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Accrued liabilities $ 479 $ 1,508 $ 1,987

Other long-term liabilities 67 3,196 3,263

Total liabilities $ 546 $ 4,704 $ 5,250

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

Amount of Gain Recognized in Other Comprehensive Loss

Amount of Gain (Loss) Recognized in Other Comprehensive Loss

Year Ended December 31,

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Total derivatives designated as cash flow hedging instruments $ ( 1,507 ) $ 14,042 $ 15,988

As of December 31, 2024, we expect an estimated $ 0.7 million in deferred losses on the outstanding foreign exchange forward contract and an estimated $ 11.4 million in deferred gains on the forward-starting interest rate swaps will be reclassified from accumulated other comprehensive loss to net income during the next 12 months concurrent with the underlying hedged transactions also being reported in net (loss) income.

As of December 31, 2025, we expect an estimated $ 0.6 million in deferred gains on the outstanding foreign exchange forward contract and an estimated $ 2.3 million in deferred gains on the forward-starting interest rate swaps will be reclassified from accumulated other comprehensive loss to net income during the next 12 months concurrent with the underlying hedged transactions also being reported in net (loss) income.

FAIR VALUE MEASUREMENTS

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

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

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

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The following table provides a reconciliation of our Level 3 earn-out liabilities measured at estimated fair value based on an initial valuation and updated quarterly for the years ended December 31, 2024 and 2023 (in thousands):

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Earn-out Liability

Contingent earn-out liability, January 1, 2023 $ 25,572

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

Change in fair value of contingent earn-out (included in income from operations as a separate line item) (1)

Currency translation ( 84 )

Contingent earn-out liability, December 31, 2022 25,572

Change in fair value of contingent earn-out (included in income from operations as a separate line item) (3

Transfer of Mediverse earn-out liability into Level 2 (3)

4 unchanged sentences

Contingent earn-out liability, December 31, 2024 —

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_______________________________

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

Acquisitions).

(2) Primarily relates to the change in fair value of our Smiths Medical earn-out and an adjustment to reduce to zero a contingent earn-out issued as part of the 2021 acquisition of a small foreign infusion systems supplier.

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

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

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

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

Smiths Medical Earn-out

December 31, 2023

Simulation Input

Volatility 47.00 %

Risk-Free Rate 4.18 %

Investments, Foreign Currency Contracts and Interest Rate Contracts

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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.

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

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):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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):

Fair value measurements as of December 31, 2025

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inputs (level 3)

Foreign exchange forwards:

Foreign exchange contracts:

Prepaid expenses and other current assets $ 1,093 $ — $ 1,093 $ —

Other assets 70 — 70 —

Interest rate contracts:

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Accrued liabilities $ 479 $ — $ 479 $ —

Other long-term liabilities 67 — 67 —

Interest rate swaps:

Accrued liabilities 1,508 — 1,508 —

Other long-term liabilities 3,196 — 3,196 —

Total Liabilities $ 5,250 $ — $ 5,250 $ —

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Fair value measurements as of December 31, 2024

4 unchanged sentences

inputs (level 3)

Available-for-sale debt securities:

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

Foreign exchange forwards:

Foreign exchange contracts:

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

Other assets 673 — 673 —

Interest rate contracts:

2 unchanged sentences

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

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

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

Foreign exchange contracts:

Accrued liabilities 7,391 — 7,391 —

Other long-term liabilities 240 — 240 —

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

PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

As of December 31,

Other prepaid expenses and receivables* $ 15,423 $ 17,833

Prepaid vendor expenses 1,889 1,309

Deferred costs 9,060 1,668

Prepaid insurance and property taxes* 10,284 9,547

VAT/GST receivable 4,445 2,748

Deferred tax charge 5,511 5,822

Foreign exchange forward contract 6,716 6,785

Interest rate contracts 11,038 23,065

Deposits* 1,207 1,196

Other 4,714 3,667

$ 70,287 $ 73,640

____________________________

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other assets consist of the following (in thousands):

As of December 31,

Pump lease receivables $ 23,631 $ 30,627

Spare parts* 28,632 46,496

Equity method investments 3,038 3,120

Other prepaid expenses and receivables $ 23,390 $ 17,312

Deferred costs 13,110 9,060

Prepaid insurance and property taxes 8,923 10,284

Interest rate contracts* 3,745 11,038

Deferred debt issuance costs 1,719 3,439

Finance lease right-of-use assets 3,259 2,707

Prepaid income taxes 16,549 11,244

Other* 20,500 22,593

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

ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

Derivatives and Hedging Activities

ACCRUED LIABILITIES

Accrued liabilities consist of the following (in thousands):

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Incentive compensation 60,799 59,445

Operating lease liability-ST 15,695 20,161

Accrued professional fees 3,167 2,803

Field service corrective action (1)

32,844 30,281

Italy medical device payback provision (2)

23,937 23,176

Legal accrual 3,425 1,874

Accrued sales taxes 4,449 6,748

Warranties and returns 4,094 3,682

Deferred revenue 33,843 30,358

Accrued other taxes 4,564 3,024

Distribution fees 16,548 13,049

Accrued freight 13,206 17,215

Restructuring accrual 9,945 3,568

Foreign exchange contracts 7,391 2,590

Accrued audit fees 4,395 5,492

Defined benefit plan 3,111 2,575

Accrued interest 667 1,431

Other 8,867 8,664

$ 306,923 $ 268,215

Italy medical device payback provision (1)

24,597 23,937

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

Commitments and Contingencies for further details).

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

Commitments and Contingencies for further details).

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

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

As of December 31,

Operating lease liability-LT $ 40,777 $ 52,972

Finance lease liability-LT 2,332 1,954

Deferred revenue 9,045 10,585

Benefits 3,830 4,207

Field service corrective action (2)

Accrued rent 618 841

27,777 32,844

Other 97,795 99,524

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_____________________________

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

(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 15:

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 15:

Commitments and Contingencies for further details).

LONG-TERM OBLIGATIONS

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 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 consolidated balance sheet.

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

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

Amended Credit Agreement

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 Amendment 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 the New Term Loan A were primarily used by the borrower to (i) directly repay the $ 559.7 million outstanding principal amount of the existing Term Loan A in full (the "Refinancing") under the Existing Credit Agreement, and (ii) directly repay $ 190.0 million of the outstanding

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

balance of the Term Loan B under the Existing Credit Agreement.

These direct payoffs have been excluded from the proceeds from and payments on long-term debt within the consolidated cash flows.

The refinancing was evaluated on a lender-by-lender basis to determine the appropriate accounting treatment.

For those lenders who did not participate in the New Credit Facilities, we accounted for that portion of the refinancing as an extinguishment of debt.

For those lenders who participated in both the Existing Credit Facilities and the New Credit Facilities ("Continuing Lenders"), we determined that the terms were not substantially different, accordingly, this portion of the refinancing was accounted for as a debt modification, whereby existing unamortized debt discount and issuance costs remained on the balance sheet and new debt discount/issuance costs were capitalized.

The following table summarizes the accounting treatment applied to the various costs, distinguishing between fees paid to lenders and those paid to third parties based on modification or extinguishment status:

Extinguishment expense Capitalize Remains capitalized

Original unamortized debt discount $ 1,807 $ 6,400

Original unamortized debt costs 374 1,276

New lender fees 1,626

New debt issuance costs - third party 937

Original unamortized debt discount 246 1,502

Original unamortized debt costs 36 221

New lender fees 1,199

New debt issuance costs - third party 618

$ 2,463 $ 4,380 $ 9,399

The Term Loan unamortized balances are reflected as a direct deduction from the face amount of the corresponding term loans on the consolidated balance sheets.

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

The Revolving Credit Facility unamortized balances are included in prepaid expenses and other current assets on our consolidated balance sheets.

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

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.

There were no penalties paid as a result of the early termination.

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 .

The final maturity date of the New Credit Facilities is October 31, 2030 , subject to a springing maturity provision under which the New Credit Facilities will mature 91 days after the scheduled maturity of the New Credit Facilities at that time.

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

The interest rates and fees under the New Credit Facilities are primarily the same as those under the existing credit facility under the Existing Credit Agreement, except that the New Credit Facilities do not include a credit spread adjustment and include an additional pricing tier applicable when the Company's leverage ratio is below 1.75x.

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

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(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").

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 %.

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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.

Revolving Credit Facility Commitment Fees

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

The Revolving Credit Facility has a per annum commitment fee 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:

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

The applicable Interest Margins and the Commitment Fee with respect to the New Revolving Credit Facility and the New Term Loan A Facility is determined by reference to the leverage ratio in effect from time to time as set forth in the table below:

Leverage Ratio Applicable Margin for Eurocurrency Rate Loans and RFR Loans Applicable Margin for Base Rate Loans Commitment Fee Rate

Greater than 4.00 to 1.0 2.25 % 1.25 % 0.35 %

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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 but greater than 1.75 to 1.0 1.25 % 0.25 % 0.15 %

Less than or equal to 1.75 to 1.0 1.00 % — % 0.10 %

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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:

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

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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.

Principal payments on the Term Loans are due on the last day of each calendar quarter.

The Term Loan A amortizes in nineteen consecutive quarterly installments, each equal to 0.625 % of the original principal amount in each of the first two years, 1.25 % in each of the third and fourth years and 1.875 % in the fifth year, with a final payment of the remaining outstanding principal balance due on the maturity date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Term Loan B matures in twenty-seven consecutive quarterly installments, each 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.

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

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

For the year ended December 31, 2025 and 2024, total principal payments on the Term Loans were $ 302.8 million and $ 51.0 million, respectively.

During the first, third and fourth quarter of 2025, we made a prepayment of $ 35.0 million, $ 25.0 million and $ 30.0 million, respectively, 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 3:

Assets Held For Sale and Disposal of Business.

Interest Payments

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Debt Covenants

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

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.

The Amended 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 New Credit Facilities are subject to certain financial covenants, which 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.

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

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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.

Prior Credit Facilities

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Before the Refinancing, our Existing Credit Facility included (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.

Whereas the Term Loan A and the Revolving Credit Facility were refinanced by the Amendment, the Term Loan B continues to be governed by the original terms of the Existing Credit Agreement.

The maturity date for the Term Loan B is January 6, 2029 .

Pursuant to the terms and conditions of the Existing Credit Agreement, the maturity date of the Term Loan B may be extended upon our request, subject to the consent of the Lenders.

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

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Senior Secured Credit Facilities:

New Credit Facilities:

Term Loan A — principal 7.02 % $ 750,000

Revolving Credit Facility — principal — —

Prior Credit Facilities:

Term Loan A — principal 770,313 8.03 %

Term Loan B — principal 7.56 % 544,500 826,625 8.38 %

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As of December 31, 2025, the aggregate amount of principal repayments of our long-term debt (including any current portion) for each of the next five years is approximately (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2026 $ 18,750

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Total long-term debt-related interest expense $ 104,146 $ 133,343 $ 133,882

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We currently hedge against the contractual interest expense on our long-term debt (see Note 8:

Derivatives and Hedging Activities).

Income from continuing operations before taxes consisted of the following (in thousands):

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We have accrued for tax contingencies for potential tax assessments, and in 2025 we recognized a $ 1.0 million net decrease, most of which related to federal, state, and foreign tax reserves net of the release of various federal and foreign tax reserves.

During 2025, on a prospective basis, we adopted ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Taxes Disclosures .

The following table is a reconciliation of the provision for income taxes at the U.S.

federal statutory rate of 21% to our effective tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU No.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Year Ended December 31,

(In thousands, except percentages) Amount Percent

federal statutory tax rate $ 915 21.0 %

State and local income taxes, net of federal income tax effect* 479 11.0 %

Foreign tax effects:

Statutory tax rate differences between Costa Rica and United Sates ( 8,645 ) ( 198.4 ) %

Other foreign jurisdictions 6,703 153.8 %

Effect of cross-border tax laws 810 18.6 %

Research and development tax credits ( 3,606 ) ( 82.8 ) %

Changes in valuation allowances 6,193 142.1 %

Nontaxable or nondeductible items:

Section 162(m) 6,353 145.8 %

Other 936 21.5 %

Changes in unrecognized tax benefits ( 6,508 ) ( 149.4 ) %

Other adjustments ( 1,193 ) ( 27.4 ) %

Total provision for income taxes $ 2,437 55.8 %

___________________________

Amount Percent Amount Percent Amount Percent

Federal tax at the expected statutory rate $ ( 13,862 ) 21.0 % $ ( 16,443 ) 21.0 % $ ( 24,026 ) 21.0 %

State income tax, net of federal effect 701 ( 1.1 ) % ( 6,057 ) 7.7 % ( 5,050 ) 4.4 %

*For the year ended December 31, 2025, state and local income taxes in Minnesota made up the majority (greater than 50 percent) of the tax effect in this category.

The following table is a reconciliation of the provision for income taxes at the U.S.

federal statutory rate of 21% to our effective tax rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU No.

Year Ended December 31,

(In thousands, except percentages) Amount Percent Amount Percent

federal statutory tax rate $ ( 13,862 ) 21.0 % $ ( 16,443 ) 21.0 %

State income taxes, net of federal income tax effect 701 ( 1.1 ) % ( 6,057 ) 7.7 %

Tax credits ( 10,985 ) 16.6 % ( 9,824 ) 12.5 %

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Foreign-derived intangible income ( 3,756 ) 5.7 % ( 3,299 ) 4.2 %

Transaction cost — — % — — % 2,299 ( 2.0 ) %

Contingent consideration ( 838 ) 1.3 % ( 3,407 ) 4.4 %

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Other ( 431 ) 0.7 % ( 545 ) 0.7 %

$ 51,676 ( 78.3 ) % $ ( 48,644 ) 62.1 % $ ( 40,123 ) 35.1 %

Total provision (benefit) for income taxes $ 51,676 ( 78.3 ) % $ ( 48,644 ) 62.1 %

Tax credits in 2024 and 2023 consist principally of research and developmental tax credits.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of our deferred income tax assets (liabilities) are as follows (in thousands):

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Inventory reserves 20,100 25,015

Warranty reserve 1,098 13,788

Section 163(j) - interest expense limitation 25,153 27,078

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Depreciation and amortization 127,795 160,368

Foreign currency translation and derivative instrument adjustments — 3,630

$ 133,320 $ 166,254

Deferred tax (liability) asset, net $ ( 11,865 ) $ ( 24,603 )

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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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Tax Holidays and Carryforwards

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

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

The Company has income tax net operating loss ("NOL") carryforwards related to our foreign operations of approximately $ 106.8 million which will expire at various dates from 2026 to indefinite carryforward periods.

We have recorded a net deferred tax asset of $ 7.3 million, $ 27.7 million gross deferred tax asset net of tax reserves of $ 20.4 million, related to our foreign NOL carryforwards.

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In recognition of this risk, we have provided a valuation allowance of $ 6.3 million on the $ 7.3 million net deferred tax assets related to these foreign NOL carryforwards.

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

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

Other carryforwards include state research and development (“R&D”) tax credit carryforwards.

We have recorded a net deferred tax asset of $ 21.5 million, $ 31.5 million gross deferred tax asset net of tax reserves of $ 10.0 million.

We believe that it is more likely than not that the benefit from certain state R&D tax credit carryforwards will not be realized.

A valuation allowance of $ 18.1 million has been provided on the $ 21.5 million of state R&D credit carryforwards.

The majority of the state R&D credit carryforwards have an indefinite carryforward period.

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

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The net impact of these tax holiday and tax incentives was an increase to our net earnings by $ 12.5 million or $ 0.51 per diluted share in 2025 and by $ 11.1 million or $ 0.45 per diluted share in 2024.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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However, the outcome of tax examinations cannot be predicted with certainty.

As of December 31, 2024, it is reasonably possible that the expiration of the U.S.

federal statute of limitations will cause the gross amount of unrecognized tax benefits to decrease by $ 5.2 million within the next twelve months.

It is not possible to estimate any other amount of change, if any, in the unrecognized tax benefits that is reasonably possible within the next twelve months.

We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense.

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In total, we have accrued for interest and penalties of $ 2.4 million and $ 1.0 million, respectively as of December 31, 2025, and $ 2.6 million and $ 1.6 million, respectively, as of December 31, 2024.

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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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.

Cash Taxes Paid

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025:

Year Ended December 31, 2025

Federal $ 8,949

Netherlands 1,989

Ending Balance 28,876

Below is a summary of income taxes paid for the years ended December 31, 2024 and December 31, 2023:

As of December 31,

Cash paid during the year for:

Income taxes, net of refunds $ 25,253 $ 35,809

STOCKHOLDERS' EQUITY

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Accumulated Other Comprehensive (Loss) Income ("AOCI")

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

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

Balance as of January 1, 2023 $ ( 122,973 ) $ 40,779 $ 1,216 $ ( 80,978 )

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

Amounts reclassified from AOCI — ( 13,946 ) — ( 13,946 )

Other comprehensive (loss) income ( 103,928 ) 41,016 1,203 ( 61,709 )

Balance as of December 31, 2022 $ ( 122,973 ) $ 40,779 $ 1,216 $ ( 80,978 )

Other comprehensive income before reclassifications 46,189 12,096 603 58,888

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

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

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

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

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

Other comprehensive income (loss) before reclassifications 119,917 ( 950 ) 60 119,027

Amounts reclassified from AOCI — ( 14,256 ) — ( 14,256 )

Other comprehensive income (loss) 119,917 ( 15,206 ) 60 104,771

Balance as of December 31, 2025 $ ( 27,025 ) $ ( 9,484 ) $ 1,879 $ ( 34,630 )

COMMITMENTS AND CONTINGENCIES

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Contingencies

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.

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

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

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

Fair Value Measurements).

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

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

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

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

Fair Value Measurements).

In January 2022, we acquired Smiths Medical.

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

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

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

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

Fair Value Measurements).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For the years ended December 31, 2025 and 2024, we recorded a net reversal to the provision of $ 0.7 million and a net reversal to the provision of $ 5.2 million, respectively, to adjust the estimated cost to complete the field corrective actions to the amounts expected to be incurred based on historical experience.

As of December 31, 2025, approximately $ 20.4 million of the $ 33.0 million accrued

ICU MEDICAL, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

field service corrective action represents outstanding fulfillment costs to complete work under the 2021 Warning Letter.

On February 5, 2026, the FDA notified us that the 2021 Warning Letter has been closed.

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

In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the 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 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 updated 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 has been recorded for the 2025 Warning Letter, and the likelihood of loss is not considered probable and reasonably estimable as of December 31, 2025.

We have non-cancelable operating lease agreements where we are contractually obligated to pay certain lease payment amounts (see Note 6:

ACCOUNTS RECEIVABLE PURCHASE PROGRAM

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

ICU MEDICAL, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31,

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(2) Cash proceeds received from BMO.

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

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

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

There were no such balances at December 31, 2022.

The carrying value of the sold receivables approximated the fair value at December 31, 2023.

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

As of December 31, 2025, and 2024, there were no outstanding balances to be collected on behalf of BMO.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data