ICU MEDICAL INC/DE 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE Page No. Reports of Independent Registered Public Accounting Firm 58 Consolidated Balance Sheets as of December 31, 2025 and 2024 61 Consolidated Statements of Operations for the Years Ended December 31, 2025 , 2024 and 2023 62 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2025 , 2024 and 2023 63 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2025 , 2024 and 2023 64 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 , 2024 and 2023 65 Notes to Consolidated Financial Statements 67 Schedule II-Valuation and Qualifying Accounts 117 57 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of ICU Medical, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of ICU Medical, Inc. 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. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition – Chargeback Reserve — Refer to Notes 1 and 4 to the financial statements Critical Audit Matter Description The Company recognizes revenue and the related accounts receivable for product sales, net of a reserve for estimated chargebacks. Chargebacks are the difference between prices the Company charges distribution customers and contracted prices the Company has with the end-customer which are processed as credits to the distribution customers. Chargebacks are accounted for as variable consideration when determining the transaction price for purposes of recognizing revenue. Variable consideration is included in net sales only to the extent that a significant reversal in revenue is not probable when the uncertainty is resolved. The Company estimates and reserves for chargebacks as a reduction of revenue and the related accounts receivable at the time of sale to its distribution customers using information available at that time, including historical experience. 58 Given the subjectivity and complexity of evaluating management’s assumptions used in the determination of the chargeback reserve, including the estimated chargeback amount for sales to distribution customers and the time to settle chargeback obligations, auditing the chargeback reserve requires a high degree of auditor judgment and an increased extent of effort. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the chargeback reserve included the following, among others: • We tested the effectiveness of certain controls related to management's assessment of assumptions related to estimating the provision for chargeback reserves, the provisioning, processing, and monitoring of chargeback transactions, and the reconciliation of chargeback reserves. • We tested chargeback estimates for purposes of determining whether revenues recognized at the time of sale were recorded in the proper period. • We evaluated the methods and assumptions used by management to estimate the chargeback reserve by: – Analyzing trends in the chargeback provision as a percent of revenues and the chargeback reserve as a percent of revenues. – Testing the underlying data, including historical sales to distribution customers, chargeback settlements with distribution customers, and inventory days on hand reported from distributors, that are utilized as the basis for the chargeback reserve, to test whether the inputs to the estimate were reasonable. – Developing an expectation of the chargeback reserve based on monthly sales to distribution customers, historical experience, and the time to settle chargeback obligations, and comparing our expectation to the amount recorded by management. – Performing retrospective reviews comparing management's estimates of expected chargeback reserves to actual amounts incurred subsequent to the dates of estimation, to assess management's ability to reasonably estimate these obligations and to identify potential bias in management's assessment of the reserve. /s/ DELOITTE & TOUCHE LLP Costa Mesa, California February 19, 2026 We have served as the Company's auditor since 2008. 59 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of ICU Medical, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of ICU Medical, Inc. and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 19, 2026, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP Costa Mesa, California February 19, 2026 60 ICU MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except par value data and treasury shares) December 31, 2025 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 307,963 $ 308,566 Accounts receivable, net of allowance of $ 14,383 and $ 12,977 at December 31, 2025 and 2024, respectively 180,515 182,828 Inventories 615,859 584,676 Prepaid expenses and other current assets 86,217 81,531 Assets held for sale — 284,382 TOTAL CURRENT ASSETS 1,190,554 1,441,983 PROPERTY, PLANT AND EQUIPMENT, net 451,817 442,746 OPERATING LEASE RIGHT-OF-USE ASSETS 54,470 53,295 GOODWILL 1,499,754 1,432,772 INTANGIBLE ASSETS, net 633,559 740,789 DEFERRED INCOME TAXES 25,891 24,211 OTHER ASSETS 62,877 65,097 INVESTMENTS IN UNCONSOLIDATED AFFILIATES 131,586 3,038 TOTAL ASSETS $ 4,050,508 $ 4,203,931 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 154,374 $ 148,020 Accrued liabilities 315,337 306,923 Current portion of long-term debt 18,750 51,000 Income tax payable 10,400 17,328 Liabilities held for sale — 32,911 TOTAL CURRENT LIABILITIES 498,861 556,182 LONG-TERM DEBT 1,265,917 1,531,858 OTHER LONG-TERM LIABILITIES 89,536 66,745 DEFERRED INCOME TAXES 37,756 48,814 INCOME TAX LIABILITY 34,613 35,097 COMMITMENTS AND CONTINGENCIES (Note 15) — — STOCKHOLDERS’ EQUITY: Convertible preferred stock, $ 1.00 par value; Authorized— 500 shares; Issued and outstanding— none — — Common stock, $ 0.10 par value; Authorized— 80,000 shares; Issued— 24,688 and 24,518 shares at December 31, 2025 and 2024, respectively, and outstanding— 24,688 and 24,517 shares at December 31, 2025 and 2024, respectively 2,469 2,452 Additional paid-in capital 1,465,118 1,412,118 Treasury stock, at cost ( 172 and 571 shares, respectively) ( 22 ) ( 92 ) Retained earnings 690,890 690,158 Accumulated other comprehensive loss ( 34,630 ) ( 139,401 ) TOTAL STOCKHOLDERS' EQUITY 2,123,825 1,965,235 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,050,508 $ 4,203,931 The accompanying notes are an integral part of these consolidated financial statements. 61 ICU MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) Year ended December 31, 2025 2024 2023 TOTAL REVENUES $ 2,231,262 $ 2,382,046 $ 2,259,126 COST OF GOODS SOLD 1,409,223 1,557,264 1,519,253 GROSS PROFIT 822,039 824,782 739,873 OPERATING EXPENSES: Selling, general and administrative 625,210 638,762 606,693 Research and development 87,495 88,615 85,344 Restructuring, strategic transaction and integration 66,505 59,840 41,258 Change in fair value of contingent earn-out — ( 5,399 ) ( 16,247 ) TOTAL OPERATING EXPENSES 779,210 781,818 717,048 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 ) 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 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 ) Diluted $ 0.03 $ ( 4.83 ) $ ( 1.23 ) WEIGHTED AVERAGE NUMBER OF SHARES Basic 24,640 24,388 24,091 Diluted 24,904 24,388 24,091 The accompanying notes are an integral part of these consolidated financial statements. 62 ICU MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Amounts in thousands) Year ended December 31, 2025 2024 2023 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 ( 15,206 ) ( 16,162 ) ( 18,895 ) Foreign currency translation adjustment, net of tax of $ 0 for all periods 119,917 ( 70,158 ) 46,189 Other adjustments, net of tax of $ 0 for all periods 60 — 603 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. 63 ICU MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands) Common Stock Additional Paid-In Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shares Amount Balance, January 1, 2023 23,995 $ 2,399 $ 1,331,249 $ ( 243 ) $ 837,501 $ ( 80,978 ) $ 2,089,928 Issuance of restricted stock and exercise of stock options 208 15 ( 5,324 ) 9,331 — — 4,022 Tax withholding payments related to net share settlement of equity awards ( 59 ) — — ( 9,350 ) — — ( 9,350 ) Stock compensation — — 40,563 — — — 40,563 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 Tax withholding payments related to net share settlement of equity awards ( 115 ) — — ( 11,992 ) — — ( 11,992 ) Stock compensation — — 46,883 — — — 46,883 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 Tax withholding payments related to net share settlement of equity awards ( 62 ) — — ( 8,766 ) — — ( 8,766 ) Stock compensation — — 55,758 — — — 55,758 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 The accompanying notes are an integral part of these consolidated financial statements. 64 ICU MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year ended December 31, 2025 2024 2023 CASH FLOWS FROM 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 lease expense 17,251 21,344 21,910 Stock compensation 55,758 46,883 40,563 Loss on disposal or write-off of property, plant and equipment 5,900 2,522 2,109 Debt issuance cost amortization 6,178 6,807 6,814 Change in fair value of contingent earn-out — ( 5,399 ) ( 16,247 ) 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 Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable 8,876 ( 46,844 ) 48,635 Inventories ( 26,252 ) 16,829 ( 6,079 ) Prepaid expenses and other current assets ( 10,958 ) ( 8,829 ) 11,672 Other assets ( 6,982 ) ( 23,154 ) ( 24,695 ) Accounts payable 6,998 12,531 ( 68,301 ) Accrued liabilities ( 36,967 ) 20,668 ( 14,479 ) Income taxes, including excess tax benefits and deferred income taxes ( 24,759 ) 26,230 ( 82,356 ) 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 ) Proceeds from sale of investment securities — 500 4,222 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 313 — — Payments of lender debt issuance costs ( 2,825 ) — — Principal repayments of long-term debt ( 302,750 ) ( 51,000 ) ( 29,688 ) Payment of third-party debt issuance costs ( 1,555 ) — — Proceeds from exercise of stock options 6,106 10,939 4,022 Payments on finance leases ( 2,048 ) ( 1,147 ) ( 963 ) Payment of contingent earn-out — ( 2,600 ) — Tax withholding payments related to net share settlement of equity awards ( 8,766 ) ( 11,992 ) ( 9,350 ) 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 (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 CASH AND CASH EQUIVALENTS, end of period $ 307,963 $ 308,566 $ 254,222 The accompanying notes are an integral part of these consolidated financial statements. 65 ICU MEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (Amounts in thousands) Year ended December 31, 2025 2024 2023 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for interest $ 83,742 $ 99,717 $ 95,913 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES: 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. 66 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Operations ICU Medical, Inc. ("ICU" or "we"), a Delaware corporation, develops, manufactures and sells innovative medical products used in infusion therapy, vascular access, and vital care applications. ICU's product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, 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. and internationally. We also sell certain products on an original equipment manufacturer basis to other medical device manufacturers. Basis of Presentation All subsidiaries are wholly owned and are included in the consolidated financial statements. All intercompany balances and transactions have been eliminated. Results of operations of companies purchased are included from the dates of acquisition. The consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. These consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Certain reclassifications have been made to the prior year financial statements and footnotes to conform to the presentation used in the current year. On the 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. In Note 10: Prepaid Expenses and Other Current Assets we combined deferred tax charge, foreign exchange contracts, and VAT/GST receivable with the "other" line item. In Note 11: 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 We operate as a single operating and reportable segment. Our Chief Operating Decision Maker ("CODM"), the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance. See Note 5: Segment Data. Use of Estimates Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents 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. 67 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Accounts Receivable Accounts receivable are stated at net realizable value. An allowance is provided for estimated collection losses based on an assessment of various factors. We consider prior payment trends, the age of the accounts receivable balances, the financial status of our customers and other factors to estimate the cash which ultimately will be received. Such amounts cannot be known with certainty at the financial statement date. We regularly review individual past due balances for collectability. Inventories Inventories are stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. Inventory costs include material, labor and overhead related to the manufacturing of our products. Inventories consist of the following (in thousands): As of December 31, 2025 2024 Raw materials $ 265,383 $ 265,275 Work in process 38,097 37,528 Finished goods 312,379 281,873 Total $ 615,859 $ 584,676 Property, Plant and Equipment Property, plant and equipment consists of the following (in thousands): As of December 31, 2025 2024 Machinery and equipment $ 434,959 $ 400,861 Land, building and building improvements 176,972 177,089 Molds 107,296 96,318 Computer equipment and software 116,259 122,208 Furniture and fixtures 23,055 27,871 Instruments placed with customers (1) 148,441 124,290 Construction in progress 90,748 87,006 Total property, plant and equipment, cost 1,097,730 1,035,643 Accumulated depreciation ( 645,913 ) ( 592,897 ) Property, plant and equipment, net $ 451,817 $ 442,746 _______________________________ (1) Instruments placed with customers consist of drug-delivery and monitoring systems placed with customers under operating leases. All property, plant and equipment are stated at cost. We use the straight-line method for depreciating property, plant and equipment over their estimated useful lives. Estimated useful lives are: 68 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Buildings 15 - 30 years Building improvements 15 - 30 years Machinery and equipment and molds 2 - 15 years Furniture, fixtures and office equipment 2 - 5 years Computer equipment and software 3 - 5 years Instruments placed with customers 3 - 10 years We capitalize expenditures that materially increase the life of the related assets; maintenance and repairs are expensed as incurred. The costs and related accumulated depreciation applicable to property, plant and equipment sold or retired are removed from the accounts and any gain or loss is reflected in the statements of operations at the time of disposal. Depreciation expense was $ 69.3 million, $ 85.2 million and $ 96.7 million in 2025, 2024 and 2023, respectively, of which $ 62.2 million, $ 73.7 million, and $ 75.4 million, respectively, are included in cost of goods sold. Goodwill We test goodwill for impairment on an annual basis in the month of November, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. Generally, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, based on an assessment of relevant qualitative factors, we determine that this is not the case, then the quantitative impairment test is not required to be performed. Conversely, if we determine based on the qualitative assessment that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we will perform the quantitative impairment test. For the quantitative impairment test, we calculate the estimated fair value of the reporting unit. If the estimated fair value of the reporting unit is less than its carrying amount, the goodwill of the reporting unit is determined to be impaired. An impairment charge is recorded in an amount equal to the excess of the carrying amount over its estimated fair value, limited to the total amount of goodwill allocated to the reporting unit. In 2025, we performed a qualitative assessment and concluded that it was more likely than not that the fair value of our reporting unit exceeded its carrying amount, and therefore, no further impairment testing was required. We concluded that there was no impairment of goodwill during fiscal 2025, 2024, or 2023. The following table presents the changes in the carrying amount of our goodwill for 2025, 2024 and 2023 (in thousands): Total Balance as of January 1, 2023 $ 1,449,258 Currency translation 23,188 Balance as of December 31, 2023 1,472,446 Currency translation ( 39,674 ) Balance as of December 31, 2024 1,432,772 Currency translation 66,982 Balance as of December 31, 2025 $ 1,499,754 Intangible Assets Intangible assets, carried at cost less accumulated amortization and amortized on a straight-lined basis , were as follows (in thousands): 69 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Weighted-Average Amortization Life in Years December 31, 2025 Cost Accumulated Amortization Net Patents 10 $ 40,582 $ 25,455 $ 15,127 Customer contracts 12 9,959 7,356 2,603 Non-contractual customer relationships 8 561,199 304,287 256,912 Trademarks 1 5,425 5,425 — Trade name 15 18,249 9,574 8,675 Developed technology (1) 10 637,589 293,506 344,083 Non-compete 3 9,100 9,100 — Total amortized intangible assets $ 1,282,103 $ 654,703 $ 627,400 Internally developed software (2) $ 6,159 $ 6,159 Total intangible assets $ 1,288,262 $ 654,703 $ 633,559 _______________________________ (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 2025, we reclassified $ 11.4 million to developed technology. Weighted-Average Amortization Life in Years December 31, 2024 Cost Accumulated Amortization Net Patents 10 $ 36,811 $ 22,913 $ 13,898 Customer contracts 12 9,818 6,994 2,824 Non-contractual customer relationships 8 546,404 236,267 310,137 Trademarks 1 5,425 5,425 — Trade name 15 18,239 8,357 9,882 Developed technology (1) 10 619,540 227,869 391,671 Non-compete 3 9,100 9,100 — Total amortized intangible assets $ 1,245,337 $ 516,925 $ 728,412 Internally developed software (2) $ 12,377 $ 12,377 Total intangible assets $ 1,257,714 $ 516,925 $ 740,789 _______________________________ (1) Developed technology primarily consists of acquired patented technologies and internally developed software. Upon completion of development, the assets are amortized over their estimated useful lives. (2) Internally developed software will be reclassified to developed technology and amortized when the projects are complete and the assets are ready for their intended use. During 2024, we reclassified $ 33.2 million to developed technology. 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. 70 ICU MEDICAL, INC. AND SUBSIDIARIES 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 2027 120,367 2028 119,768 2029 116,676 2030 54,191 Thereafter 80,014 Total $ 627,400 Our intangible assets that are not subject to amortization are reviewed annually for impairment or more often if there are indications of possible impairment. We perform our annual intangible assets impairment test in November of each year. We did not have any intangible asset impairments in 2025, 2024 or 2023. Long-Lived Assets We periodically evaluate the recoverability of long-lived assets whenever events and changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the carrying values of the assets are evaluated in relation to the operating performance and future undiscounted cash flows of the underlying business. The net book value of the underlying asset is adjusted to fair value if the sum of the expected discounted cash flows is less than book value. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and discount rates, reflecting varying degrees of perceived risk. We did not have any long-lived asset impairments in 2025, 2024 or 2023. Assets Held for Sale We classify a long-lived asset or disposal groups as held for sale in the period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the asset or disposal group; (2) the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups; (3) an active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated; (4) the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year; (5) the asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. We initially measure a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell and immediately recognize any estimated losses. Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale. Each reporting period that a long-lived asset or disposal group remains as held for sale, the carrying value of the long-lived asset or disposal group is adjusted for subsequent changes in fair value less cost to sell, losses are recognized for a subsequent write-down to fair value less cost to sell and gains are recognized for an increase in fair value less cost to sell although limited to the amount of any previous cumulative losses recognized. We cease depreciation and amortization of a long-lived asset, or assets within a disposal group, upon their designation as held for sale. See Note 3: Assets Held For Sale and Disposal of Business. Investments 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 71 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) income or (loss) and dividend paid, if any. We eliminate any intra-entity profits to the extent of our beneficial interest. For our other equity method investment, we report our proportionate share of the investee's income or (loss) resulting from this investment in other income, net in our consolidated statements of operations. We assess our equity method investments for impairment on an annual basis or whenever events or circumstances indicate that the carrying value of the investment may not be recoverable. On April 24, 2025, the Company completed the formation of 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. See Note 3: 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, 2025 2024 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. Income Taxes 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 (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. Foreign Currency Generally, the functional currency of our international subsidiaries is the local currency. Generally, we translate the financial statements of these subsidiaries to U.S. dollars at the exchange rate in effect at the balance sheet date and revenues and expenses are translated at the average monthly exchange rates during the year. Certain of our international subsidiaries consolidate first with another subsidiary that utilizes a functional currency other than U.S. dollars. In those cases, we follow a step by step translation process utilizing the same sequence as the consolidation process. Translation adjustments are recorded 72 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). Revenue Recognition We recognize revenues when we transfer control of promised goods to our customers, which for the majority of our sales of products sold on a standalone basis to our distributors and end customers for direct sales, is deemed to be at point of shipment. Our software license renewals are considered to be transferred to a customer at a point in time at the start of each renewal period, therefore revenue is recognized at that time. Payment is typically due in full within 30 days of delivery or the start of the contract term. Revenue is recorded in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We include variable consideration in net sales only to the extent that a significant reversal in revenue is not probable when the uncertainty is resolved. Our variable consideration includes distributor chargebacks, product returns and end customer rebates, with distributor chargebacks representing the majority and subject to the greatest judgment. Chargebacks are the difference between the prices we charge our distribution customers at the time they purchase our products and the contracted prices we have with the end customer, most often in the U.S. and Canada. When a distributor sells our products to one of our contracted end customers, the distributor typically will claim a refund from us for the chargeback amount which we process as a credit to the distributor. In estimating the transaction price to present as net revenue for sales to distributors, we must estimate the expected chargeback amount that we will refund to the distributor after they sell our product to a contracted end customer. Determining the appropriate chargeback reserve requires judgment around the following assumptions: (i) The estimated chargeback amount (the difference between the price we invoice the distributor and the contractually agreed price with specified end customers); and (ii) The estimated period of time between the sale to the distributor and the receipt of a chargeback claim. For purposes of estimating the expected chargeback amount, we utilize actual recent historical chargebacks paid to the specific distributor for similar products as determined at either a product or product-family level. While individual chargeback rates can vary significantly depending on the product and contracted prices with distributors and end customers, our chargeback reserve estimate is not overly sensitive to those individual price changes due to the long-term nature of our distributor and end customer contracts as well as consistency in purchasing patterns. Additionally, the use of the actual chargeback history to calculate an average chargeback rate has historically resulted in a reasonable estimation of overall current contract rates. For purposes of estimating the period of time between the sale to the distributor and the receipt of a chargeback claim, we utilize several sources of information including actual inventory quantities of our products on hand at distributors. This inventory on hand information is received from the distributors or, when specific quantities are not provided, estimated by using the targeted days of inventory on hand for distributors. Historical experience of actual chargebacks paid has indicated that use of this information has reasonable predictive value of outstanding chargebacks and accounts for the variability of purchasing patterns and expected timing and volume of sales to end customers. The value of the chargeback reserve generally represents approximately two months of obligation due to the timing difference between the initial sale to a distributor and the processing of a chargeback claim after the product is sold to the end customer. The chargeback reserve estimates change from period-to-period primarily based on changes in revenue from/and the inventory levels of distributors. Our judgments regarding the information used to calculate the chargeback reserve are consistent from period to period; however, on a regular basis, we evaluate the adequacy of the chargeback reserve to reassess and ensure that the variable consideration is appropriately constrained, and the likelihood of future revenue reversal is not probable. We 73 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. We also offer certain volume-based rebates to both our distribution and end customers, which we record as variable consideration when calculating the transaction price. Rebates are offered on both a fixed and tiered/variable basis. In both cases, we use information available at the time, including current contractual requirements, our historical experience with each customer and forecasted customer purchasing patterns, to estimate the most likely rebate amount. We also warrant products against defects and have a policy permitting the return of defective products, for which we accrue and expense at the time of sale using information available at that time and our historical experience. We also provide for extended service-type warranties, which we consider to be separate performance obligations. We allocate a portion of the transaction price to the extended service-type warranty based on its estimated relative selling price, and recognize revenue over the period the warranty service is provided. Arrangements with Multiple Deliverables In certain circumstances, we enter into arrangements in which we provide multiple deliverables to our customers. These bundled arrangements typically consist of the sale of infusion systems equipment, along with annual software licenses and related software implementation services, software maintenance services and extended warranties. Our most significant judgments related to these arrangements are (i) identifying the various performance obligations and (ii) estimating the relative standalone selling price of each performance obligation, typically using a directly observable method or calculated on a cost plus margin basis method. Revenue related to the bundled equipment, software and software implementation services are typically combined into a single performance obligation and recognized upon implementation. As annual software licenses are renewed, we recognize revenue for the license at a point in time, at the start of each annual renewal period. The transaction price allocated to the extended service-type warranty is recognized as revenue over the period the warranty service is provided. Consumables and IV Solutions are separate performance obligations, recognized at a point in time. Shipping Costs Costs to ship finished goods to our customers are included in cost of goods sold on the consolidated statements of operations. Post-retirement and Post-employment Benefits We sponsor a Section 401(k) retirement plan ("plan") for employees. Our contributions to our 401(k) plan were approximately $ 16.9 million, $ 19.1 million and $ 19.2 million in 2025, 2024 and 2023, respectively. We also have post-retirement and post-employment obligations related to employees located in certain international countries. These obligations are immaterial to our financial statements taken as a whole. Research and Development The majority of our research and development costs are expensed as incurred. In certain circumstances when an asset will have an alternative future use we capitalize the costs related to those assets. Research and development costs include salaries and related benefits, consulting fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs. Interest expense, net 74 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table presents interest expense, net (in thousands): As of December 31, 2025 2024 2023 Interest expense $ ( 93,338 ) $ ( 106,541 ) $ ( 102,727 ) Interest income 10,307 10,788 7,508 Interest expense, net $ ( 83,031 ) $ ( 95,753 ) $ ( 95,219 ) Other expense, net The following table presents other expense, net (in thousands): As of December 31, 2025 2024 2023 Foreign exchange gains (losses), net $ 3,786 $ ( 9,792 ) $ ( 5,918 ) Loss on disposition of assets ( 4,366 ) ( 1,608 ) ( 153 ) Other miscellaneous income (expense) , net 348 ( 1,823 ) 166 Other expense, net $ ( 232 ) $ ( 13,223 ) $ ( 5,905 ) 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. The following table presents the calculation of net earnings per common share (“EPS”) — basic and diluted (in thousands, except per share data): Year ended December 31, 2025 2024 2023 Net income (loss) $ 732 $ ( 117,688 ) $ ( 29,655 ) Weighted-average number of common shares outstanding (basic) 24,640 24,388 24,091 Dilutive securities 264 — — Weighted-average common and common equivalent shares outstanding (diluted) 24,904 24,388 24,091 EPS — basic $ 0.03 $ ( 4.83 ) $ ( 1.23 ) EPS — diluted $ 0.03 $ ( 4.83 ) $ ( 1.23 ) Total anti-dilutive stock options and restricted stock awards ( shares in thousands) 40 42 129 75 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) New Accounting Pronouncements Recently Issued Accounting Standards Not Yet Adopted In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the Accounting Standards Codification ("ASC") in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. For entities within the scope, the guidance will be applied prospectively with the effective date for each amendment to be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If the SEC has not removed the related disclosure from its regulations by June 30, 2027, the amendments will be removed from the Codification and will not become effective. We are currently assessing what impact this guidance will have on the Company's consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The guidance requires disclosure of disaggregated income statement expense information about specific categories (including purchases of inventory, employee compensation, depreciation, and intangible asset amortization) in the notes to financial statements. In January 2025, FASB released ASU 2025-01 to clarify the guidance will be effective for annual periods beginning after December 15, 2026. This update will be applicable to our Annual Report on Form 10-K for the fiscal year December 31, 2027, with early application permitted. We are currently assessing the effect of this update on 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 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. NOTE 2. RESTRUCTURING, STRATEGIC TRANSACTION AND INTEGRATION Restructuring, strategic transaction and integration expenses were $ 66.5 million, $ 59.8 million and $ 41.3 million in 2025, 2024 and 2023, respectively. Restructuring 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. 76 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In 2024, we incurred restructuring charges primarily related to severance expenses. We adjusted certain severance restructuring accrued balances, shown in the table below under "Other adjustments", as a result of merging Smiths Medical entities during 2024. In 2023, we incurred restructuring charges primarily related to severance expenses. We adjusted certain facility and severance restructuring accrued balances 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): Employee & Related Costs Facility & Other Closure Costs Total Accrued balance, January 1, 2024 $ 2,811 $ 757 $ 3,568 Charges incurred 18,299 1,272 19,571 Payments ( 11,687 ) ( 1,632 ) ( 13,319 ) Other adjustments (1) 327 — 327 Currency translation ( 212 ) 10 ( 202 ) Accrued balance, December 31, 2024 $ 9,538 $ 407 $ 9,945 Charges incurred 11,083 18,963 30,046 Payments ( 13,805 ) ( 13,734 ) ( 27,539 ) Other adjustments (2) ( 900 ) — ( 900 ) Currency translation 495 101 596 Accrued balance, December 31, 2025 $ 6,411 $ 5,737 $ 12,148 _______________________________________________ (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 We incurred $ 36.5 million, $ 40.2 million and $ 35.6 million in strategic transaction and integration expenses in 2025, 2024 and 2023, respectively, which are included in restructuring, strategic transaction and integration expenses in our consolidated statement of operations. 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. During 2025, transaction costs also included expenses related to the sale of a 60% ownership in our IV Solutions business. NOTE 3: 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): 77 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Assets: 2024 Accounts receivable, net of allowance of $ 465 at December 31, 2024 $ 13,331 Inventories 88,656 Prepaid expenses and other current assets 4,140 Property, plant and equipment, net 155,426 Other assets 22,829 Total assets held for sale $ 284,382 Liabilities: Accounts payable $ 13,533 Accrued liabilities 19,378 Total liabilities held for sale $ 32,911 Net assets held for sale $ 251,471 Disposal of IV Solutions Business On May 1, 2025, we sold to OPF a 60% ownership interest in 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. 78 ICU MEDICAL, INC. AND SUBSIDIARIES 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): Year ended December 31, 2025 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. NOTE 4: REVENUE Revenue Recognition Our business units are Consumables, Infusion Systems and Vital Care. The vast majority of our sales of these products within these business units are made on a stand-alone basis to hospitals and distributors. Revenue is typically recognized upon transfer of control of the products, which we deem to be at point of shipment. For purposes of revenue recognition for our 79 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. Payment is typically due in full within 30 days of delivery or the start of the contract term. Revenue is recorded in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We include variable consideration in net sales only to the extent that a significant reversal in revenue is not probable when the uncertainty is resolved. Our variable consideration includes distributor chargebacks, product returns and end customer rebates with distributor chargebacks representing the majority and subject to the greatest judgment (see Note 1: Basis of Presentation and Significant Accounting Policies). We also offer certain volume-based rebates to both our distribution and end customers, which is recorded as variable consideration when calculating the transaction price. Rebates are offered on both a fixed and tiered/variable basis. In both cases, we use information available at the time, including current contractual requirements, our historical experience with each customer and forecasted customer purchasing patterns, to estimate the most likely rebate amount. We also warrant products against defects and have a policy permitting the return of defective products. We also provide for extended service-type warranties, which we consider to be separate performance obligations. We allocate a portion of the transaction price to the extended service-type warranty based on its estimated relative selling price, and recognize revenue over the period the warranty service is provided. See Note 1: Basis of Presentation and Significant Accounting Policies for further discussion. Arrangements with Multiple Performance Obligations We also enter into arrangements which include multiple performance obligations, (see Note 1: Basis of Presentation and Summary of Significant Accounting Policies). The most significant judgments related to these arrangements include: • Identifying the various performance obligations of these arrangements. • Estimating the relative standalone selling price of each performance obligation, typically using a directly observable method or calculated on a cost plus margin basis method. Revenue disaggregated The following table represents our revenues disaggregated by product line (in thousands) and our disaggregated product line revenue as a percentage of total revenue: Year ended December 31, 2025 2024 2023 Product line Revenue % of Revenue Revenue % of Revenue Revenue % of Revenue Consumables $ 1,109,130 50 % $ 1,038,869 44 % $ 969,129 43 % Infusion Systems 684,208 31 % 652,410 27 % 629,043 28 % Vital Care 437,924 19 % 690,767 29 % 660,954 29 % Total Revenues $ 2,231,262 100 % $ 2,382,046 100 % $ 2,259,126 100 % We report revenue on a "where sold" basis, which reflects the revenue within the country or region in which the ultimate sale is made to our external customer. The following table represents our revenues disaggregated by geography (in thousands): 80 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year ended December 31, Geography 2025 2024 2023 United States $ 1,356,114 $ 1,532,104 $ 1,440,017 Europe, the Middle East and Africa 411,684 393,530 373,571 Asia-Pacific 232,903 232,820 241,699 Other Foreign 230,561 223,592 203,839 Total Revenues $ 2,231,262 $ 2,382,046 $ 2,259,126 Domestic sales accounted for 61 %, 64 % and 64 % of total revenue in 2025, 2024 and 2023, respectively. International sales accounted for 39 %, 36 % and 36 % of total revenue in 2025, 2024 and 2023, respectively. Contract balances 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). The following table presents the changes in our contract balances for the years ended December 31, 2024 and 2023, (in thousands): Contract Liabilities Beginning balance, January 1, 2024 $ 42,177 Equipment revenue recognized ( 56,182 ) Equipment revenue deferred due to implementation 55,932 Software revenue recognized ( 28,292 ) Software revenue deferred due to implementation 29,913 Government grant income recognized (1) ( 2,072 ) Government grant income deferred — Other deferred revenue recognized ( 2,576 ) Other deferred revenue 503 Ending balance, December 31, 2024 39,403 Equipment revenue recognized ( 65,792 ) Equipment revenue deferred due to implementation 74,836 Software revenue recognized ( 35,715 ) Software revenue deferred due to implementation 31,373 Government grant income recognized (1) ( 2,066 ) Government grant income deferred — Other deferred revenue recognized ( 1,983 ) Other deferred revenue 1,177 Ending balance, December 31, 2025 $ 41,233 ____________________________ (1) The government grant income deferred is amortized over the life of the related depreciable asset as a reduction to depreciation expense. During 2025, we recognized $ 35.5 million in revenue that was included in the opening contract balances as of December 31, 2024. As of December 31, 2025, revenue from remaining performance obligations is as follows (in thousands): 81 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Recognition Timing <12 Months > 12 Months Equipment revenue $ 24,530 $ 372 Software revenue 6,361 1,719 Government grant deferred income (1) 2,064 5,277 Other deferred revenue (2) 888 22 Total $ 33,843 $ 7,390 ____________________________ (1) The government grant deferred income is amortized over the life of the related depreciable asset as a reduction to depreciation expense. (2) Other deferred revenue includes pump development programs, purchased training and extended warranty. Costs to Obtain a Contract with a Customer As part of the cost to obtain a contract, we may pay incremental commissions to sales employees upon entering into a sales contract. Under ASC Topic 606, we have elected to expense these costs as incurred as the period of benefit is less than one year. Practical expedients and exemptions In addition to the practical expedient applied to sales commissions, under ASC Topic 606, we elected to apply the practical expedient for shipping and handling costs incurred after the customer has obtained control of a good. We will continue to treat these costs as a fulfillment cost rather than as an additional promised service. NOTE 5. SEGMENT DATA The Company has a single operating and reportable segment. The segment is organized by and derives revenues from the manufacture and sale of our medical products which are used in infusion therapy, vascular access, and vital care applications. Our product portfolio includes ambulatory, syringe, and large volume IV pumps and safety software; dedicated and non-dedicated IV sets, needlefree IV connectors, IV catheters, 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: Revenue, were determined to be a single operating segment as discrete financial information by product-line is limited to revenue and standard cost. Other cost of sale expenses, which include above-site manufacturing costs, manufacturing variances and supply chain costs including freight and warehousing are not allocated to individual product lines. Similarly, quality, regulatory and other operating expenses are only provided to our chief operating decision maker ("CODM") at the consolidated level. The accounting policies of our single reportable segment are the same as those described in Note 1: Basis of Presentation and Significant Accounting Policies. For information on disaggregation of revenues by product-line and geography, see Note 4: Revenue. Our chief executive officer is our CODM. Our CODM uses net profit (loss) to manage our business activities on a consolidated basis and to evaluate and assess the performance of the Company when determining how to allocate capital resources. Our segment performance is monitored and resource allocation is determined during the annual budget/forecast processes. The measure of segment assets is reported on the consolidated balance sheets as total assets. In 2025, 2024 and 2023, expenditures for additions to long-lived assets were $ 97.0 million, $ 90.2 million, and $ 93.7 million, respectively. The following table presents information about our segment revenue, segment profit or loss, and significant segment expenses (in thousands): 82 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year ended December 31, 2025 2024 2023 REVENUES $ 2,231,262 $ 2,382,046 $ 2,259,126 Less: Standard COGS (1) 1,007,545 1,193,994 1,114,294 Quality remediation/recall (2) 40,459 19,126 58,243 Other COGS (3) 326,914 344,144 346,716 Tariff expense (4) 34,305 — — Selling, general and administrative 625,210 638,762 606,693 Research and development 87,495 88,615 85,344 Restructuring and integration 66,505 59,840 41,258 Other segment items (5) ( 54,867 ) ( 2,964 ) ( 17,850 ) Interest expense 93,338 106,541 102,727 Income tax provision (benefit) 2,437 51,676 ( 48,644 ) Equity in losses of unconsolidated affiliates 1,189 — — Consolidated net income (loss) $ 732 $ ( 117,688 ) $ ( 29,655 ) _______________ (1) Represents the average annual budgeted cost of producing each good sold in the period. (2) Represents significant labor and material costs to replace or repair a product outside the scope of standard warranty and compliance costs related to quality systems and manufacturing operations. (3) Includes costs related to capitalized manufacturing variances to standard COGS, supply chain and logistics costs including freight, inventory management and reserves, hardware service, quality and regulatory, and operations and supply chain management costs. (4) 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: Basis of Presentation and Significant Accounting Policies. Significant Customers We sell products worldwide, on credit terms on an unsecured basis, as an OEM supplier, to independent medical supply distributors and directly to end customers. The manufacturers and distributors, in turn, sell our products to healthcare providers. In 2025, 2024 and 2023, we had net sales to a single distributor of 18 %, 18 % and 16 %, respectively of consolidated worldwide net sales. Geographic Information 83 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The table below presents our gross long-lived assets, consisting of property, plant and equipment, by country or region (in thousands): As of December 31, 2025 2024 Costa Rica $ 168,678 $ 156,149 Mexico 127,389 111,043 Other LATAM 71,054 55,451 Canada 1,982 5,284 Italy 35,468 29,124 Spain 21,532 17,141 Czech Republic 14,111 11,909 Other Europe 11,485 11,445 APAC 28,239 27,550 Total Foreign $ 479,938 $ 425,096 United States 617,792 610,547 Worldwide Total $ 1,097,730 $ 1,035,643 NOTE 6. LEASES We determine if an arrangement is a lease at inception. Our operating lease assets are separately stated in operating lease right-of-use ("ROU") assets and our financing lease assets are included in other assets on our consolidated balance sheets. Our lease liabilities are included in accrued liabilities and other long-term liabilities on our consolidated balance sheets. We have elected not to recognize an ROU asset and lease liability for leases with terms of twelve months or less. Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Most of our leases do not provide an implicit rate, therefore we use our incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term based on the information available at commencement date. Our lease ROU assets exclude lease incentives and initial direct costs incurred. Our lease terms include options to extend when it is reasonably certain that we will exercise that option. All of our leases have stated lease payments, which may include fixed rental increases. Our leases are for corporate, research and development and sales and support offices, manufacturing and distribution facilities, device service centers and certain equipment. Our leases have original lease terms of one year to fifteen years , some of which include options to extend the leases for up to an additional five years . For all of our leases, we do not include optional periods of extension in our current lease terms because we determined the exercise of options to extend is not reasonably certain. The following table presents the components of our lease cost (in thousands): Year ended December 31, 2025 2024 2023 Operating lease cost $ 18,386 $ 22,037 $ 24,024 Finance lease cost — interest 388 182 125 Finance lease cost — reduction of ROU asset 1,937 1,158 1,035 Short-term lease cost 7 9 29 Total lease cost $ 20,718 $ 23,386 $ 25,213 Interest expense on our finance leases is included in interest expense, net in our consolidated statements of operations. The reduction of the operating and finance ROU assets is included as noncash lease expense in costs of goods sold and selling, general and administrative expenses in our consolidated statements of operations. 84 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table presents the supplemental cash flow information related to our leases (in thousands): Year ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 17,324 $ 24,251 $ 24,604 Operating cash flows from finance leases $ 388 $ 182 $ 125 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 13,756 $ 12,580 $ 15,873 Finance leases $ 4,063 $ 1,809 $ 1,028 The following table presents the supplemental balance sheet information related to our operating leases (in thousands, except lease term and discount rate): As of December 31, 2025 2024 Operating leases Operating lease right-of-use assets $ 54,470 $ 53,295 Accrued liabilities $ 13,825 $ 15,695 Other long-term liabilities 43,951 40,777 Total operating lease liabilities $ 57,776 $ 56,472 Weighted-Average Remaining Lease Term Operating leases 6.3 years 5.8 years Weighted-Average Discount Rate Operating leases 5.40 % 4.90 % The following table presents the supplemental balance sheet information related to our finance leases (in thousands, except lease term and discount rate): 85 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) As of December 31, 2025 2024 Finance leases Other assets $ 5,599 $ 3,259 Accrued liabilities $ 2,095 $ 1,066 Other long-term liabilities 3,729 2,332 Total finance lease liabilities $ 5,824 $ 3,398 Weighted-Average Remaining Lease Term Finance leases 3.0 years 3.5 years Weighted-Average Discount Rate Finance leases 6.29 % 5.63 % As of December 31, 2025, the maturities of our operating and finance lease liabilities for each of the next five years are approximately (in thousands): Operating Leases Finance Leases 2026 $ 15,917 $ 2,391 2027 13,088 2,000 2028 9,842 1,464 2029 7,833 468 2030 4,663 58 Thereafter 16,356 — Total Lease Payments 67,699 6,381 Less imputed interest ( 9,923 ) ( 557 ) Total $ 57,776 $ 5,824 NOTE 7. SHARE-BASED AWARDS 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 86 ICU MEDICAL, INC. AND SUBSIDIARIES 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. The table below summarizes compensation costs and related tax benefits (in thousands): Year ended December 31, 2025 2024 2023 Stock compensation expense $ 55,758 $ 46,883 $ 40,563 Tax benefit from stock-based compensation cost $ 5,900 $ 5,524 $ 5,379 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. Time-based Stock Options 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 — $ — Exercised ( 63,197 ) $ 96.61 Forfeited or expired — $ — Outstanding at December 31, 2025 44,943 $ 191.68 3.71 $ 202 Exercisable at December 31, 2025 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. The following table presents information regarding stock option activity (in thousands): Year ended December 31, 2025 2024 2023 Intrinsic value of options exercised $ 2,437 $ 18,651 $ 8,441 Cash received from exercise of stock options $ 6,106 $ 10,939 $ 4,022 Tax benefit from stock option exercises $ 174 $ 1,034 $ 1,733 Stock Awards 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 87 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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. The PRSUs will cliff-vest on March 8, 2026, subject to continued service through such vesting date and the achievement of minimum two-year cumulative adjusted EBITDA, commencing on January 1, 2024 and ending on December 31, 2025, which when reviewed against a predetermined vesting matrix could result in the vesting of 0% to 250% of the awarded PRSUs. We also granted certain other one-off PRSU awards to non-executive employees with various performance requirements, whereby the PRSUs will be earned if the minimum requirements are met. 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. 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. These PRSUs cliff-vested on March 7, 2024, subject to continued service through such vesting date and the achievement of net synergy savings targets related to the Smiths Medical acquisition achieved during the performance period commencing on January 1, 2022 and ending on December 31, 2023, which when reviewed against predetermined targets could have resulted in the vesting of 0% to 200% of the awarded PRSUs. We also granted certain other one-off PRSU awards to non-executive employees with various performance requirements, whereby the PRSUs will be earned if the minimum requirements are met within a specified time period. The performance period related to the annual 2022 PRSUs ended on December 31, 2023 and 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. 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. In February 2022, 2023 and 2024, the Compensation Committee made the determination that the executive officers other than the CEO, CFO and COO met their individual performance goals for 2021, 2022 and 2023, respectively, and therefore one-third of their 2021 PRSUs vested during each of 2022, 2023 and 2024. For the CEO, COO and the CFO, the PRSUs cliff-vested on March 8, 2024, subject to continued service through such vesting date and the achievement of minimum three-year cumulative adjusted revenue dollar target growth rate and adjusted EPS dollar target growth rate targets, commencing on January 1, 2021 and ending on December 31, 2023, which when reviewed against a predetermined vesting matrix could have resulted in the vesting of 0% to 250% of the awarded PRSUs. The performance period related to the 2021 CEO, COO and CFO PRSUs ended on December 31, 2023 and in February 2024 the Compensation Committee determined that 110% of the awarded PRSUs were earned based on the actual cumulative adjusted revenue dollar target growth rate and adjusted EPS dollar target growth rate achieved during the performance period. In 2020, we granted PRSUs to our executive officers. 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 88 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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. For the CEO, COO and the CFO, the PRSUs cliff-vested on March 6, 2023, subject to continued service through such vesting date and the achievement of minimum three-year cumulative adjusted revenue dollar target growth rate and adjusted EPS dollar target growth rate targets, which when reviewed against a predetermined vesting matrix such PRSUs originally had the potential to vest from 0% to 250% of the awarded PRSUs. During February 2021, the Compensation Committee, modified the potential vesting percentages related to the 2020 PRSU awards for the CEO, COO and CFO, as the original potential percentages were established immediately before the onset of the COVID-19 pandemic. The Compensation Committee determined to adjust the CEO, COO and CFO's potential to earn from between 0% and 250% of the awarded PRSUs, to an increased potential to earn between 50% and 300% of the award granted, subject to the same minimum threshold revenue and EPS targets set forth above to be achieved by the Company. The additional compensation expense as a result of modifying the 2020 PRSUs granted to our CEO, COO and CFO totaled $ 2.1 million recognized over the remaining amortization period from the date of modification. 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. Restricted stock units are granted annually to our non-employee directors and vest on the first anniversary of the grant date, or the date of our annual meeting, whichever occurs first. In 2025, 2024 and 2023, we granted RSUs to certain employees that typically vest ratably on the anniversary of the grant over three years. We recognize forfeitures as they occur. The grant-date fair market value of our PRSUs and RSUs is determined by our stock price on the grant date. The table below summarizes our restricted stock award activity (dollars in thousands): Year ended December 31, 2025 2024 2023 PRSU Shares granted 67,800 150,218 78,213 Shares earned (1) 14,515 142,735 49,314 Grant-date fair value per share $ 141.97 $ 104.52 $ 190.02 Grant-date fair value $ 9,626 $ 15,701 $ 14,862 Intrinsic value vested $ 2,078 $ 15,145 $ 8,024 RSU Shares granted 198,703 223,899 156,111 Grant-date fair value per share $ 141.83 $ 105.94 $ 173.10 Grant-date fair value $ 28,181 $ 23,721 $ 27,024 Intrinsic value vested $ 22,014 $ 11,963 $ 14,179 _______________________________ (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: 89 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 Granted 266,503 $ 141.86 Vested ( 169,541 ) $ 152.03 Forfeited ( 12,597 ) $ 124.59 Non-vested at December 31, 2025 635,376 $ 132.21 0.8 $ 90,649 Expected to vest at December 31, 2025 (1) 935,993 ____________________________________ (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. NOTE 8. 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 and refinanced in 2025. We do not issue derivatives for trading or speculative purposes. To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. The derivative instruments we utilize, including various foreign exchange contracts and interest rate swaps, are designated and qualify as cash flow hedges. Our derivative instruments are recorded at fair value on the consolidated balance sheets and are classified based on the instrument's maturity date. We record changes in the fair value of the effective portion of the gain or loss on the derivative instrument as a component of other comprehensive (loss) income and we reclassify that gain or loss into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings. Foreign Currency Exchange Rate Risk Foreign Exchange Forward Contracts We enter into foreign exchange forward contracts to hedge a portion of our forecasted foreign currency-denominated revenues and expenses to minimize the effect of foreign exchange rate movements on the related cash flows. These contracts are agreements to buy or sell a quantity of a currency at a predetermined future date and at a predetermined exchange rate. Our 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 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 In 2022, we entered into interest rate swaps to reduce the interest rate volatility on our variable-rate term loan A and variable-rate term loan B (see Note 12: Long-Term Obligations). 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- 90 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) month USD SOFR or ( 0.15 )%. The total notional amount of this outstanding derivative as of December 31, 2025 was approximately $ 181.6 million. Effective March 30, 2022, the term loan B swap, as amended, has an initial notional amount of $ 750.0 million, reducing to $ 46.9 million evenly on a quarterly basis through its final maturity on March 30, 2026. We pay a fixed rate of 1.17 % and receive the greater of 3-month USD SOFR or 0.35 %. The total notional amount of this outstanding derivative as of December 31, 2025 was approximately $ 46.9 million. In June 2023, we entered into an additional interest rate swap that hedges both term loan A and term loan B interest payments. The total notional amount of the swap is $ 300.0 million. The hedge matures on June 30, 2028. We pay a fixed rate of 3.88 % and receive 3-months USD SOFR. These forward-starting swaps effectively convert the relevant portion of the floating-rate term loans to fixed rates. The following table presents the fair values of our derivative instruments included within the consolidated balance sheets (in thousands): Derivatives Designated as Cash Flow Hedging Instruments Consolidated Balance Sheet Location Foreign Exchange Forward Contracts Interest Rate Swaps Gross Derivatives As of December 31, 2025 Prepaid expenses and other current assets $ 1,093 $ 3,745 $ 4,838 Other assets 70 664 734 Total assets $ 1,163 $ 4,409 $ 5,572 Accrued liabilities $ 479 $ 1,508 $ 1,987 Other long-term liabilities 67 3,196 3,263 Total liabilities $ 546 $ 4,704 $ 5,250 Derivatives Designated as Cash Flow Hedging Instruments As of December 31, 2024 Foreign Exchange Forward Contracts Forward-Starting Interest Rate Swaps Gross Derivatives Prepaid expenses and other current assets $ 6,716 $ 11,038 $ 17,754 Other assets — 5,724 5,724 Total assets $ 6,716 $ 16,762 $ 23,478 Accrued liabilities $ 7,391 $ — $ 7,391 Other long-term liabilities — — — Total liabilities $ 7,391 $ — $ 7,391 The following table presents the effects of our derivative instruments designated as cash flow hedges on the Consolidated Statements of Operations (in thousands): 91 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Gain Reclassified From Accumulated Other Comprehensive (Loss) Income into Income Location of Gain in the Consolidated Statements of Operations Year Ended December 31, 2025 2024 2023 Derivatives designated as cash flow hedging instruments: Foreign exchange forward contracts Total revenues $ 1,237 $ 2,981 $ 296 Foreign exchange forward contracts Cost of goods sold 1,147 91 7,852 Foreign exchange forward contracts Other expense, net (1) — — 229 Foreign exchange forward contracts Interest expense (2) — — 13 Interest rate swaps Interest expense 12,042 27,132 32,444 Total derivatives designated as cash flow hedging instruments $ 14,426 $ 30,204 $ 40,834 _______________________________ (1) Represents location of gain reclassified from accumulated other comprehensive (loss) income into other expense, net as a result of ineffectiveness. (2) Represents location of gain reclassified from accumulated other comprehensive (loss) income into interest expense as a result of a forecasted transaction being no longer probable of occurring. We recognized the following (losses) gains on our derivative instruments designated as cash flow hedges in other comprehensive loss before reclassifications to income (in thousands): Amount of Gain (Loss) Recognized in Other Comprehensive Loss Year Ended December 31, 2025 2024 2023 Derivatives designated as cash flow hedging instruments: Foreign exchange forward contracts $ 3,508 $ ( 1,912 ) $ 10,788 Interest rate swaps ( 5,015 ) 15,954 5,200 Total derivatives designated as cash flow hedging instruments $ ( 1,507 ) $ 14,042 $ 15,988 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. NOTE 9. FAIR VALUE MEASUREMENTS Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: • Level 1: quoted prices in active markets for identical assets or liabilities; • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or • Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. Contingent earn-out liabilities 92 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In August 2021, we entered into an agreement with one of our international distributors whereby that distributor would not compete with us in a specific territory for a three-year period that 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. In November 2021, we acquired a small foreign infusion systems supplier. Total consideration for the acquisition includes a potential earn-out payment of up to $ 2.5 million, consisting of (i) a cash payment of $ 1.0 million contingent on the achievement of certain revenue targets for the annual period ending December 31, 2022 and, separately, (ii) a cash payment of $ 1.5 million contingent on obtaining certain product-related regulatory certifications by May 26, 2024. As of December 31, 2022, the measurement period related to the contingent earn-out based on certain revenue targets ended and based on the actual revenue achieved during the measurement period, the fair value of the contingent earn-out was determined to be zero as the minimum threshold for earning the earn-out was not met. As of December 31, 2024, the earn-out measurement period related to certain product-related regulatory certifications had ended and the product-related regulatory certification had not been achieved, accordingly, the estimated fair value for the contingent consideration was reduced to zero. In 2022, we acquired Smiths Medical with a combination of cash consideration and share consideration issued at closing. Total consideration for the acquisition included a potential earn-out payment of $ 100.0 million in cash contingent on our common stock achieving a certain volume-weighted average price (the "Price Targets") from the closing date to either the third or fourth anniversary of closing and provided Smiths beneficially owns at least 50.0 % of the shares of common stock issued at closing at the time the Price Target is achieved. The initial estimated fair value of the earn-out was determined to be $ 53.5 million using a Monte Carlo simulation model. The model utilized several assumptions including volatility and the risk-free interest rate. The assumed volatility is based on the average of the historical volatility of our common stock price and the implied volatility of certain at-the-money traded options. The risk-free interest rate is equal to the yield on U.S. Treasury securities at constant maturity for the period commensurate with the term of the earn-out. At each reporting date subsequent to the acquisition, we remeasured the earn-out liability and recognized any changes in its fair value in our consolidated statements of operations. If the probability of achieving the Price Targets during their respective measurement periods was significantly greater than initially anticipated, the realization of an additional liability and related expense would have had a significant impact on our consolidated financial statements in the period recognized. During 2024, Smiths sold all of their remaining shares of common stock of ICU Medical, Inc. The sale of these shares rendered Smiths unable to achieve the contingent consideration based on certain price targets during the third and fourth anniversary of closing as Smiths no longer met the required minimum beneficial ownership percentage. Accordingly, the valuation of the contingent earn-out liability as of December 31, 2024 was zero. Our contingent earn-out liabilities are separately stated on our consolidated balance sheets. 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): Earn-out Liability Contingent earn-out liability, January 1, 2023 $ 25,572 Change in fair value of contingent earn-out (included in income from operations as a separate line item) (1) ( 16,247 ) Other (2) ( 496 ) Transfer of Mediverse earn-out liability into Level 2 (3) ( 3,379 ) Currency translation 41 Contingent earn-out liability, December 31, 2023 5,491 Change in fair value of contingent earn-out (included in income from operations as a separate line item) (4) ( 5,399 ) Currency translation ( 92 ) Contingent earn-out liability, December 31, 2024 — 93 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) _______________________________ (1) Primarily relates to the change in fair value of our Smiths Medical earn-out. (2) Primarily relates to the reclassification to accrued liabilities of a holdback liability not subject to unobservable inputs when determining the fair market value. (3) The Mediverse earn-out was transferred out of Level 3 and into Level 2 in the fourth quarter of 2023 when the amount of the actual payment was known, and subsequently settled during first quarter of 2024. (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. Investments, Foreign Currency Contracts and Interest Rate Contracts Our investments historically consist of corporate, government bonds and U.S. treasury securities. The fair value of our corporate and government bonds are estimated using observable market-based inputs such as quoted prices, interest rates and yield curves or Level 2 inputs. The fair value of our U.S. treasury securities are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The fair value of our Level 2 forward currency contracts is estimated using observable market inputs such as known notional value amounts, spot and forward exchange rates. These inputs relate to liquid, heavily traded currencies with active markets which are available for the full term of the derivative. The fair value of our Level 2 interest rate swaps is estimated using a pricing model that reflects the terms of the contracts, including the period to maturity, and relies on observable market inputs such as known notional value amounts and USD interest rate curves. 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): 94 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fair value measurements as of December 31, 2025 Total carrying value Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Assets: Foreign exchange contracts: Prepaid expenses and other current assets $ 1,093 $ — $ 1,093 $ — Other assets 70 — 70 — Interest rate contracts: Prepaid expenses and other current assets 3,745 — 3,745 — Other assets 664 — 664 — Total Assets $ 5,572 $ — $ 5,572 $ — Liabilities: Foreign exchange contracts: 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 $ — Fair value measurements as of December 31, 2024 Total carrying value Quoted prices in active markets for identical assets (level 1) Significant other observable inputs (level 2) Significant unobservable inputs (level 3) Assets: Foreign exchange contracts: Prepaid expenses and other current assets 6,716 — 6,716 — Interest rate contracts: Prepaid expenses and other current assets 11,038 — 11,038 — Other assets 5,724 — 5,724 — Total Assets $ 23,478 $ — $ 23,478 $ — Liabilities: Foreign exchange contracts: Accrued liabilities 7,391 — 7,391 — Total Liabilities $ 7,391 $ — $ 7,391 $ — NOTE 10. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following (in thousands): 95 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) As of December 31, 2025 2024 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 Prepaid income taxes 16,549 11,244 Other* 20,500 22,593 $ 86,217 $ 81,531 _______________________ *See Note 8: Derivatives and Hedging Activities NOTE 11. ACCRUED LIABILITIES Accrued liabilities consist of the following (in thousands): As of December 31, 2025 2024 Salaries and benefits $ 70,526 $ 60,815 Incentive compensation 60,799 59,445 Deferred revenue 33,843 30,358 Italy medical device payback provision (1) 24,597 23,937 Field service corrective action (2) 27,777 32,844 Other 97,795 99,524 $ 315,337 $ 306,923 _____________________________ (1) Related to potential payments associated with the Italy Medical Device Payback ("IMDP") as a result of 2015 legislation enacted requiring medical device companies to make payments to the Italian government based on regional expenditure ceilings (see Note 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). NOTE 12. LONG-TERM OBLIGATIONS 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 96 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 Term Loan 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 Revolver 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. There were no penalties paid as a result of the early termination. Maturity Dates 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. dollars bear interest, at our option, on either: (1) the Base Rate, as defined below, plus the applicable margin, as indicated below ("Base Rate Loans") or (2) the Adjusted Term Secured Overnight Financing Rate ("Adjusted Term SOFR"), as defined below, plus the applicable margin, as indicated below ("Term SOFR Loans"). 97 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 %. Adjusted Term SOFR is the rate per annum equal to (a) the Term SOFR plus (b) the Term SOFR Adjustment. Term SOFR is the forward-looking term rate based on SOFR and is calculated separately for Term SOFR Loans and Base Rate Loans, as specified in the Credit Agreement. The Term SOFR Adjustment is a percentage per annum of 0.10 % for Base Rate Loans and between 0.10 % to 0.25 % for Term SOFR Loans based on the applicable interest period. Revolving Credit Facility Commitment 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. 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 % Less than or equal to 4.00 to 1.0 but greater than 3.00 to 1.0 2.00 % 1.00 % 0.30 % Less than or equal to 3.00 to 1.0 but greater than 2.50 to 1.0 1.75 % 0.75 % 0.25 % Less than or equal to 2.50 to 1.0 but greater than 2.00 to 1.0 1.50 % 0.50 % 0.20 % Less than or equal to 2.00 to 1.0 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 % The applicable margin for the Term Loan B is determined by reference to the leverage ratio in effect from time to time as set forth in the following table: Leverage Ratio Applicable Margin for Term SOFR Loans Applicable Margin for Base Rate Loans Greater than 2.75 to 1.0 2.50 % 1.50 % Less than 2.75 to 1.0 2.25 % 1.25 % Principal Payments Principal payments on the Term Loans are due on the last day of each calendar quarter. 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. 98 ICU MEDICAL, INC. AND SUBSIDIARIES 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. 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 Interest payments on Base Rate Loans are payable quarterly in arrears on the last business day of each calendar quarter and the applicable maturity date. Interest periods on Term SOFR Loans are determined, at our option, as either one, three or six months and will be payable on the last day of each interest period and the applicable maturity date. In the case of any interest periods of more than three months' duration, the interest payment are payable on each day prior to the last day of such interest period that occurs at three-month intervals. The commitment fee on the Revolving Credit Facility is payable quarterly in arrears on the third business day following the last day of each calendar quarter and at the maturity date. The commitment fee is included in interest expense in our consolidated statements of operations. Guarantors and Collateral Our obligations under the Credit Agreement are unconditionally guaranteed, on a joint and several basis, by ICU Medical, Inc. and certain of our existing subsidiaries. Debt Covenants The 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. The Credit Agreement contains customary events of default, including, among others: non-payments of principal and interest; breach of representations and warranties; covenant defaults; cross-defaults and cross-acceleration to certain other material indebtedness; the existence of bankruptcy or insolvency proceedings; certain events under ERISA; material judgments; and a change of control. If an event of default occurs and is not cured within any applicable grace period or is not waived, the administrative agent and the Lenders are entitled to take various actions, including, without limitation, the acceleration of all amounts due and the termination of commitments under the New Credit Facilities. Prior Credit Facilities 99 ICU MEDICAL, INC. 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): 2025 Effective Interest Rate As of December 31, 2024 Effective Interest Rate 2025 2024 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 % Revolving Credit Facility — principal — — % Less unamortized debt issuance costs (1) ( 9,833 ) ( 14,080 ) Total carrying value of long-term debt 1,284,667 1,582,858 Less current portion of long-term debt 18,750 51,000 Long-term debt, net $ 1,265,917 $ 1,531,858 _______________________________ (1) In 2025 , c omprised of $ 5.3 million and $ 4.5 million relating to the Term Loan A and the Term Loan B, respectively. In 2024, comprised of $ 6.1 million and $ 8.0 million relating to the Term Loan A and the Term Loan B, respectively. As of December 31, 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): 2026 $ 18,750 2027 18,750 2028 37,500 2029 582,000 2030 637,500 Thereafter — Total $ 1,294,500 The following table presents the total interest expense related to our long-term debt (in thousands): Year Ended December 31, 2025 2024 2023 Contractual interest $ 93,888 $ 125,012 $ 125,550 Amortization of debt issuance costs 8,903 6,807 6,814 Commitment fee — Revolving Credit Facility 1,355 1,524 1,518 Total long-term debt-related interest expense $ 104,146 $ 133,343 $ 133,882 100 ICU MEDICAL, INC. 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). NOTE 13. INCOME TAXES Income from continuing operations before taxes consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 United States $ ( 31,495 ) $ ( 116,024 ) $ ( 136,980 ) Foreign 35,853 50,012 58,681 $ 4,358 $ ( 66,012 ) $ ( 78,299 ) The provision (benefit) for income taxes consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ ( 10,147 ) $ 16,589 $ ( 8,235 ) State 1,627 4,256 5,035 Foreign 24,731 25,164 24,500 $ 16,211 $ 46,009 $ 21,300 Deferred: Federal $ ( 1,947 ) $ 1,294 $ ( 43,042 ) State ( 2,288 ) 14,850 ( 14,657 ) Foreign ( 9,539 ) ( 10,477 ) ( 12,245 ) ( 13,774 ) 5,667 ( 69,944 ) $ 2,437 $ 51,676 $ ( 48,644 ) 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. 2023-09: 101 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended December 31, 2025 (In thousands, except percentages) Amount Percent U.S. federal statutory tax rate $ 915 21.0 % State and local income taxes, net of federal income tax effect* 479 11.0 % Foreign tax effects: Costa Rica 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 % Tax credits: 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 % ___________________________ *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. 2023-09: Year Ended December 31, 2024 2023 (In thousands, except percentages) Amount Percent Amount Percent U.S. 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 % Global intangible low-taxed income 2,977 ( 4.5 )% ( 2,658 ) 3.4 % Foreign income tax differential ( 4,231 ) 6.4 % ( 2,506 ) 3.2 % Stock-based compensation 2,824 ( 4.3 ) % ( 289 ) 0.4 % Foreign-derived intangible income ( 3,756 ) 5.7 % ( 3,299 ) 4.2 % Contingent consideration ( 838 ) 1.3 % ( 3,407 ) 4.4 % Section 162(m) 1,880 ( 2.8 ) % 3,268 ( 4.2 ) % Tax reserve releases ( 2,216 ) 3.3 % ( 6,884 ) 8.8 % Legal settlement ( 2,100 ) 3.2 % — — % Valuation allowance 81,713 ( 123.8 ) % — — % Other ( 431 ) 0.7 % ( 545 ) 0.7 % 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. 102 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of our deferred income tax assets (liabilities) are as follows (in thousands): As of December 31, 2025 2024 Deferred tax asset: Accruals/other $ 45,020 $ 41,947 Acquired future tax deductions 7,606 7,869 Stock-based compensation 4,650 3,940 Tax credits 22,477 17,068 Inventory reserves 20,100 25,015 Section 163(j) - interest expense limitation 25,153 27,078 Chargebacks, discounts, customer concessions 32,759 52,709 Capitalized research and development 66,396 56,975 Valuation allowance ( 102,706 ) ( 90,950 ) $ 121,455 $ 141,651 Deferred tax liability: State income taxes $ 5,525 $ 5,886 Depreciation and amortization 127,795 160,368 $ 133,320 $ 166,254 Deferred tax (liability) asset, net $ ( 11,865 ) $ ( 24,603 ) The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company recorded a change to the valuation allowance against certain U.S. federal and state deferred tax assets, resulting in a $ 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. cumulative losses. Our ability to use our deferred tax assets depends on the amount of taxable income in future periods. Tax Holidays and Carryforwards 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. The deferred tax assets recognized for these foreign NOLs are presented net of tax reserves. We believe that it is more likely than not that the benefit from certain foreign NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $ 6.3 million on the $ 7.3 million net deferred tax assets related to these foreign NOL carryforwards. 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. Certain of the holidays may be extended if specific conditions are met. 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. 103 ICU MEDICAL, INC. AND SUBSIDIARIES 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. As of December 31, 2025, we have estimated $ 349 million of undistributed foreign earnings and profits. Such earnings were previously subject to U.S. tax as a result of the Tax Act and much of any future remittances would generally be subject to no U.S. tax as a result of dividends received deductions and/or foreign tax credit relief. We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which we incur significant additional costs upon repatriation of such amounts. We are subject to taxation in the U.S. and various states and foreign jurisdictions. Our U.S. federal income tax returns for tax years 2022 and forward are subject to examination by the Internal Revenue Service. Our principal state income tax returns for tax years 2012 and forward are subject to examination by the state tax authorities. The total gross amount of unrecognized tax benefits as of December 31, 2025 was $ 71.8 million which, if recognized, would impact the effective tax rate. We believe that adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. We recognized $ 0.6 million of interest expense and $ 0.1 million of penalties in income tax benefit during 2025 and released $ 0.8 million of interest expense and $ 0.6 million of penalties in 2025. 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. The following table summarizes our cumulative gross unrecognized tax benefits (in thousands): Year Ended December 31, 2025 2024 2023 Beginning balance $ 72,819 $ 78,558 $ 54,053 Increases to prior year tax positions 2,373 1,945 2,347 Increases due to acquisitions — Increases to current year tax positions 4,778 4,441 34,607 Decreases to prior year tax positions ( 851 ) ( 406 ) ( 2,455 ) Decrease related to lapse of statute of limitations ( 7,080 ) ( 10,062 ) ( 9,591 ) Decrease related to settlements with tax authorities ( 78 ) ( 1,133 ) ( 403 ) Decrease related to exchange rate fluctuations ( 146 ) ( 524 ) — Ending balance $ 71,815 $ 72,819 $ 78,558 In December 2022, the European Union (EU) agreed to implement Pillar Two, the OECD’s global minimum tax rate of 15% for multinationals that meet a global revenue threshold. All of the EU countries and some of the non-EU countries in which we operate have enacted or have announced plans to enact legislation to adopt Pillar Two. The Pillar Two legislation has been effective 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. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14", commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We 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 104 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 State 4,245 Foreign: Italy 7,230 Japan 2,158 Netherlands 1,989 Other 4,305 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, 2024 2023 Cash paid during the year for: Income taxes, net of refunds $ 25,253 $ 35,809 NOTE 14. STOCKHOLDERS' EQUITY Treasury Stock In August 2019, our Board of Directors approved a common stock purchase plan to purchase up to $ 100.0 million of our common stock. This plan has no expiration date. We have $ 100.0 million remaining on this purchase plan. We did not purchase any of our common stock under our common stock purchase plan in 2024, 2023 or 2022. We are limited on share purchases in accordance with the terms and conditions of our Senior Secured Credit Facilities (see Note 12: Long-Term Obligations). In 2025, we withheld 61,693 shares of our common stock from employee vested restricted stock units in consideration for $ 8.8 million in payments for the employees' share award income tax withholding obligations. We had 172 shares remaining in treasury at December 31, 2025. In 2024, we withheld 114,787 shares of our common stock from employee vested restricted stock units in consideration for $ 12.0 million in payments for the employees' share award income tax withholding obligations. We had 571 shares remaining in treasury at December 31, 2024. In 2023, we withheld 59,377 shares of our common stock from employee vested restricted stock units in consideration for $ 9.4 million in payments for the employees' share award income tax withholding obligations. We had 2,428 shares remaining in treasury at December 31, 2023. We use treasury stock to issue shares for stock option exercises and restricted stock grants. Accumulated Other Comprehensive (Loss) Income ("AOCI") 105 ICU MEDICAL, INC. AND SUBSIDIARIES 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 income before reclassifications 46,189 12,096 603 58,888 Amounts reclassified from AOCI — ( 30,991 ) — ( 30,991 ) Other comprehensive income (loss) 46,189 ( 18,895 ) 603 27,897 Balance as of December 31, 2023 $ ( 76,784 ) $ 21,884 $ 1,819 $ ( 53,081 ) Other comprehensive (loss) income before reclassifications ( 70,158 ) 14,042 — ( 56,116 ) Amounts reclassified from AOCI — ( 30,204 ) — ( 30,204 ) Other comprehensive loss ( 70,158 ) ( 16,162 ) — ( 86,320 ) Balance as of December 31, 2024 $ ( 146,942 ) $ 5,722 $ 1,819 $ ( 139,401 ) 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 ) NOTE 15. COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, we are involved in various legal proceedings, most of which are routine litigation, in the normal course of business. Our management does not believe that the resolution of the unsettled legal proceedings that we are involved with will have a material adverse impact on our financial position or results of operations. Off Balance Sheet Arrangements In the normal course of business, we have agreed to indemnify our officers and directors to the maximum extent permitted under Delaware law and to indemnify customers as to certain intellectual property matters related to sales of our products. There is no maximum limit on the indemnification that may be required under these agreements. We have never incurred, nor do we expect to incur, any liability for indemnification. Contingencies Prior to being acquired, during 2021, Smiths Medical received a Warning Letter from the FDA following an inspection of Smiths Medical’s Oakdale, Minnesota Facility (the "2021 Warning Letter"). The 2021Warning Letter cited, among other things, failures to comply with FDA's medical device reporting requirements and failures to comply with applicable portions of the Quality System Regulation. A provision for the estimated costs related to the field service corrective actions identified as of the closing date of the acquisition was recorded on the opening acquired balance sheet of Smiths Medical. The initial estimate recorded was based on a probability-weighted estimate of the costs required to settle the obligation related to known field corrective actions. The actual costs to be incurred are dependent upon the scope of the work necessary to achieve regulatory clearance, including potential additional field corrective actions, and could differ from the original estimate. For the 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 106 ICU MEDICAL, INC. AND SUBSIDIARIES 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. 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 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. See Note 11: 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. Commitments We have non-cancelable operating lease agreements where we are contractually obligated to pay certain lease payment amounts (see Note 6: Leases). NOTE 16: ACCOUNTS RECEIVABLE PURCHASE PROGRAM On January 19, 2023, we entered into a revolving $ 150 million uncommitted receivables purchase agreement with Bank of The West ("BOW"), which was subsequently acquired by BMO in February 2023. This agreement provided for a less expensive form of capital. The discount rate applied to sold receivables equals a rate per annum equal to the sum of (i) an applicable margin, plus (ii) Term SOFR for a period equal to the discount period which is calculated with respect to the payment terms of the specific receivable. The accounts receivable sold have payment terms ranging between 30 and 60 days, and are related to customer accounts with good credit history. The transfer of the purchased accounts receivable under the agreement is intended to be an absolute and irrevocable transfer constituting a true sale as the transferred receivables have been isolated beyond the reach of the Company and our creditors, even in bankruptcy or other receivership. We do not retain effective control over the sold receivables and BMO has the right upon purchase to pledge and/or exchange the transferred assets without restrictions. The Company acts as collection agent for BMO and collection services are undertaken by our accounts receivable personnel in their normal course of business and collected funds are remitted to BMO. We do not have any continuing involvement with the sold receivables other than the collection services which does not provide us with more than a trivial benefit. The discount rate has been negotiated net of consideration for the collection services, the cost of collection is immaterial to the Company; therefore, we did not separately record any related servicing assets or liabilities related to the sold receivables. The following table presents information in connection with the purchase program (in thousands): 107 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2025 2024 Trade receivables sold (1) $ 10,009 $ 435,438 Cash received in exchange for trade receivables sold (2) 9,978 432,803 Loss on sale of receivables (3) 32 2,635 _______________________________ (1) Represents carrying value of trade receivables sold to BMO. (2) Cash proceeds received from BMO. (3) Reflected in other expense, net in our consolidated statement of operations. As of December 31, 2025, and 2024, there were no outstanding balances to be collected on behalf of BMO. 108 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.