UTAH MEDICAL PRODUCTS INC 10-Q

Item 1. Financial Statements UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS AS OF JUNE 30, 2025 AND DECEMBER 31, 2024 (in thousands) (unaudited) (audited) JUNE 30, 2025 DECEMBER 31, 2024 ASSETS Current assets: Cash & investments $ 82,179 $ 82,976 Accounts & other receivables, net 3,632 4,094 Inventories 8,233 8,812 Other current assets 331 448 Total current assets 94,375 96,330 Property and equipment, net 10,257 9,763 Goodwill 14,193 13,580 Other intangible assets 56,636 53,772 Other intangible assets - accumulated amortization ( 54,659 ) ( 50,907 ) Other intangible assets, net 1,977 2,865 Total assets $ 120,802 $ 122,538 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 737 $ 696 Accrued expenses 1,517 3,061 Total current liabilities 2,254 3,757 Deferred tax liability - Femcare IIA 389 603 Other long term liabilities - - Operating lease liability 256 282 Deferred income taxes 370 469 Total liabilities 3,269 5,111 Stockholders' equity: Common stock - $ 0.01 par value; authorized - 50,000 shares; issued and outstanding - June 30, 2025, 3,216 shares and December 31, 2024, 3,335 shares 32 33 Accumulated other comprehensive loss ( 9,362 ) ( 11,908 ) Additional paid-in capital - - Retained earnings 126,863 129,302 Total stockholders' equity 117,533 117,427 Total liabilities and stockholders' equity $ 120,802 $ 122,538 see notes to consolidated condensed financial statements 1 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND JUNE 30, 2024 (in thousands, except per share amounts - unaudited) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Sales, net $ 9,953 $ 10,400 $ 19,663 $ 21,740 Cost of goods sold 4,358 4,147 8,530 8,722 Gross profit 5,595 6,253 11,133 13,018 Operating expense Selling, general and administrative 2,264 2,560 4,495 5,176 Research & development 135 255 289 521 Total operating expenses 2,399 2,815 4,784 5,697 Operating income 3,196 3,438 6,349 7,321 Other income 640 773 1,345 1,689 Income before provision for income taxes 3,836 4,211 7,694 9,010 Provision for income taxes 788 758 1,605 1,601 Net income $ 3,048 $ 3,453 $ 6,089 $ 7,409 Earnings per common share (basic) $ 0.94 $ 0.98 $ 1.86 $ 2.07 Earnings per common share (diluted) $ 0.94 $ 0.98 $ 1.86 $ 2.07 Shares outstanding - basic 3,246 3,532 3,278 3,579 Shares outstanding - diluted 3,246 3,532 3,278 3,579 Other comprehensive income (loss): Foreign currency translation net of taxes of $ 0 in all periods $ 1,828 $ ( 33 ) $ 2,546 $ ( 664 ) Total comprehensive income $ 4,876 $ 3,420 $ 8,635 $ 6,745 see notes to consolidated condensed financial statements 2 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND JUNE 30, 2024 (in thousands - unaudited) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,089 $ 7,409 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 405 327 Amortization 1,048 1,023 Provision for (recovery of) losses on accounts receivable ( 7 ) ( 6 ) Amortization of Right-of-Use Assets 26 26 Deferred income taxes ( 360 ) ( 364 ) Stock-based compensation expense 168 131 Tax benefit attributable to exercise of stock options - 20 Changes in operating assets and liabilities: Accounts receivable and other receivables 409 ( 297 ) Inventories 908 441 Prepaid expenses and other current assets 145 45 Accounts payable 37 66 Accrued expenses ( 1,531 ) ( 783 ) Total adjustments 1,248 629 Net cash provided by operating activities 7,337 8,038 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures for: Property and equipment ( 235 ) ( 132 ) Intangible assets - ( 5 ) Proceeds from sale of property and equipment - 27 Net cash used in investing activities ( 235 ) ( 110 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock - options - 390 Common stock purchased and retired ( 6,708 ) ( 9,393 ) Payment of dividends ( 2,018 ) ( 2,170 ) Net cash used in financing activities ( 8,726 ) ( 11,173 ) Effect of exchange rate changes on cash 827 ( 404 ) Net increase in cash and cash equivalents ( 797 ) ( 3,649 ) Cash at beginning of period 82,976 92,868 Cash at end of period $ 82,179 $ 89,219 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for income taxes $ 2,327 $ 2,791 Cash paid during the period for interest - - see notes to consolidated condensed financial statements 3 UTAH MEDICAL PRODUCTS, INC. CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY Three Months and Six Months Ended June 30, 2025 and 2024 (In thousands - unaudited) Accumulated Additional Other Total Common Stock Paid-in Comprehensive Retained Stockholders' Shares Amount Capital Income Earnings Equity Balance at December 31, 2024 3,335 $ 33 $ - $ ( 11,908 ) $ 129,302 $ 117,427 Stock option compensation expense - - 82 - - 82 Common stock purchased and retired ( 54 ) ( 1 ) ( 82 ) - ( 3,138 ) ( 3,221 ) Foreign currency translation adjustment - - - 718 - 718 Common stock dividends - - - - ( 1,001 ) ( 1,001 ) Net income - - - - 3,041 3,041 Balance at March 31, 2025 3,281 $ 33 $ - $ ( 11,190 ) $ 128,204 $ 117,047 Stock option compensation expense - - 86 - - 86 Common stock purchased and retired ( 65 ) ( 1 ) ( 86 ) - ( 3,402 ) ( 3,488 ) Foreign currency translation adjustment - - - 1,828 - 1,828 Common stock dividends - - - - ( 988 ) ( 988 ) Net income - - - - 3,048 3,048 Balance at June 30, 2025 3,216 $ 32 $ - $ ( 9,362 ) $ 126,862 $ 117,533 Balance at December 31, 2023 3,630 $ 36 $ 593 $ ( 10,658 ) $ 138,341 $ 128,313 Shares issued upon exercise of employee stock options for cash 2 - 96 - - 96 Stock option compensation expense - - 79 - - 79 Common stock purchased and retired ( 43 ) - ( 769 ) - ( 2,221 ) ( 2,990 ) Foreign currency translation adjustment - - - ( 631 ) - ( 631 ) Common stock dividends - - - - ( 1,081 ) ( 1,081 ) Net income - - - - 3,956 3,956 Balance at March 31, 2024 3,588 $ 36 $ - $ ( 11,289 ) $ 138,995 $ 127,742 Shares issued upon exercise of employee stock options for cash 6 - 294 - - 294 Stock option compensation expense - - 52 - - 52 Common stock purchased and retired ( 95 ) ( 1 ) ( 346 ) - ( 6,056 ) ( 6,403 ) Foreign currency translation adjustment - - - ( 33 ) - ( 33 ) Common stock dividends - - - - ( 1,052 ) ( 1,052 ) Net income - - - - 3,453 3,453 Balance at June 30, 2024 3,499 $ 35 $ ( 0 ) $ ( 11,322 ) $ 135,339 $ 124,052 see notes to consolidated condensed financial statements 4 UTAH MEDICAL PRODUCTS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) (1) The unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States. These statements should be read in conjunction with the financial statements and notes included in the Utah Medical Products, Inc. ("UTMD" or "the Company") annual report on Form 10-K for the year ended December 31, 2024. In the opinion of management, the accompanying financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. Currency amounts are in thousands except per-share amounts and where noted. (2) Recent Accounting Standards. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting AUS 2023-09. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. (3) Inventories at June 30, 2025 and December 31, 2024 consisted of the following: June 30, December 31, 2025 2024 Finished goods $ 971 $ 1,913 Work-in-process 1,407 1,414 Raw materials 5,855 5,485 Total $ 8,233 $ 8,812 (4) Stock-Based Compensation. At June 30, 2025, the Company has stock-based employee compensation plans which authorize the grant of stock options to eligible employees and directors. The Company accounts for stock compensation under FASB Accounting Standards Codification (“ASC”) 718, Compensation - Stock Compensation . This statement requires the Company to recognize compensation cost based on the grant date fair value of options granted to employees and directors. In the quarters ended June 30, 2025 and 2024, the Company recognized $ 86 and $ 52 , respectively, in stock-based compensation expense. In the six months ended June 30, 2025 and 2024, the Company recognized $ 168 and $ 131 , respectively, in stock-based compensation expense. (5) Warranty Reserve. The Company’s published warranty is: “UTMD warrants its products to conform in all material respects to all published product specifications in effect on the date of shipment, and to be free from defects in material and workmanship for a period of thirty (30) days for supplies, or twenty-four (24) months for equipment, from date of shipment. During the warranty period UTMD shall, at its option, replace any products shown to UTMD's reasonable satisfaction to be defective at no expense to the Purchaser or refund the purchase price.” UTMD maintains a warranty reserve to provide for estimated costs which are likely to occur. The amount of this reserve is adjusted, as required, to reflect its actual experience. Based on its analysis of historical warranty claims and its estimate that existing warranty obligations were immaterial, no warranty reserve was made at December 31, 2024 or June 30, 2025. 5 (6) Global 2Q 2025 revenues (USD) by product category: Domestic Outside US Total Obstetrics $ 818 $ 207 $ 1,025 Gynecology/Electrosurgery/Urology 2,421 2,386 4,807 Neonatal 1,737 365 2,102 Blood Pressure Monitoring and Accessories 889 1,130 2,019 Total $ 5,865 $ 4,088 $ 9,953 Global 1H 2025 revenues (USD) by product category: Domestic Outside US Total Obstetrics $ 1,650 $ 400 $ 2,050 Gynecology/Electrosurgery/Urology 4,751 4,952 9,703 Neonatal 3,358 726 4,084 Blood Pressure Monitoring and Accessories 1,689 2,137 3,826 Total $ 11,448 $ 8,215 $ 19,663 (7) Earnings Per Share. Basic earnings per share is calculated by dividing net income attributable to the common stockholders of the company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by assuming the exercise of stock options at the closing price of stock on June 30, 2025. The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share: (in thousands) Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 Numerator Net income 3,048 3,453 6,089 7,409 Denominator Weighted average shares, basic 3,246 3,532 3,278 3,579 Dilutive effect of stock options - - - - Diluted shares 3,246 3,532 3,278 3,579 Earnings per share, basic 0.94 0.98 1.86 2.07 Earnings per share, diluted 0.94 0.98 1.86 2.07 6 8) Segment Information. The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated gross profit margin, operating margin, and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions such as the allocation of budget between cost of sales, sales and marketing, research and development, and general and administrative expenses. The following table presents selected financial information with respect to the Company’s single operating segment for the quarters ended June 30, 2025 and June 30, 2024: Quarter Ended June 30, 2025 2024 Revenues 9,953 10,400 Less: Standard cost of sales 3,763 3,307 Other cost of sales 595 840 Gross Profit 5,595 6,253 Gross Profit Margin 56.2 % 60.1 % Sales & Marketing 525 546 Research & Development 135 254 Litigation Fees 284 637 Amortization 540 509 Other General & Administrative 915 869 Operating Income 3,196 3,438 Operating Income Margin 32.1 % 33.1 % Other Income Interest income 679 858 Other income (expense) ( 40 ) ( 85 ) Income before income taxes 3,835 4,211 Provision for income taxes 787 758 Net Income 3,048 3,453 (9) Subsequent Events. UTMD has evaluated subsequent events through the date the financial statements were issued, and concluded there were no other events or transactions during this period that required recognition or disclosure in its financial statements . After June 30, 2025 through August 11, 2025, the Company made additional repurchases of 10,178 shares of its stock in the open market for $567, at an average price of $55.67 per share. 7