ICU Medical (NASDAQ:ICUI) reported second-quarter revenue of $548 million, up 6% organically and 1% on a reported basis, as growth in its consumables and infusion systems businesses helped offset continued pressure in Vital Care and the effects of the IV Solutions joint venture deconsolidation.
Adjusted EBITDA rose 10% year over year to $110 million, while adjusted diluted earnings per share increased 13% to $2.37. The company raised and narrowed its full-year adjusted EBITDA guidance to $415 million to $435 million, from $400 million to $430 million, and lifted adjusted EPS guidance to $8.60 to $9.00, from $7.75 to $8.45.
Consumables and Infusion Systems Set Revenue Records
Infusion systems revenue increased 13% reported and 12% organically, driven by a record quarter in pumps. Dedicated sets tracked the favorable consumables trend, while capital sales were also strong. However, declines in OEM revenue are expected to remain a headwind to growth for the rest of the year.
Jain said some installations occurred earlier than expected during the second quarter and will shift out of later periods. He reiterated that the company expects infusion systems organic growth to continue at or above 6% in the near term.
During the question-and-answer session, Jain said the pump results primarily reflected installation of competitive wins secured last year or earlier in 2026, rather than a broad acceleration in replacement activity. Some sales were upgrades for existing customers, but he said the majority were competitive wins. The company does not expect customers to accelerate upgrades ahead of their normal capital cycles.
Jain also said pricing for the company’s Duo and Solo large-volume pumps has held in the market, which he attributed to the products’ value proposition.
Vital Care Stabilizes After Product Actions
Vital Care revenue declined 4% organically and 32% on a reported basis. The reported decline reflected the mid-2025 formation of Otsuka ICU Medical LLC and the resulting deconsolidation of the IV Solutions business from ICU Medical’s income statement.
Management said Vital Care improved sequentially and expects the business to be relatively stable through the remainder of 2026, though down slightly for the full year due to first-quarter performance. Jain said much of the SKU rationalization work in the business was completed earlier in the year, contributing to the sharp first-quarter decline. He added that the company has also identified a small product-line exit in an international market.
On potential strategic actions involving Vital Care, Jain said the company has considered operational and strategic alternatives but has not found the right alignment of “fit and value and circumstance.” He said ICU Medical does not feel compelled to pursue a value-destructive transaction solely to achieve a modest increase in growth.
Margins, Tariffs and Cash Flow
Adjusted gross margin was 41% in the second quarter, in line with management’s expectations. CFO Brian Bonnell said higher logistics costs associated with elevated diesel prices were offset by lower tariff expense, as Section 122 tariffs carried a lower average rate than the IEEPA tariffs included in the company’s original guidance.
ICU Medical recognized $8 million in tariff expense during the quarter, equivalent to about 1.5% of adjusted revenue, and received $20 million in tariff refunds. The refunds were excluded from the company’s non-GAAP income statement and therefore did not affect adjusted gross margin, but they were included in free cash flow.
Adjusted SG&A expense was $112 million, or 20.4% of adjusted revenue, down one percentage point from both the prior-year quarter and the first quarter. Bonnell attributed the improvement partly to operational efficiencies from IT systems integration, as well as favorable expense timing. He cautioned that the second-quarter SG&A run rate should not be viewed as a normalized level.
Restructuring, integration and strategic transaction expenses totaled $21 million, including $10 million of non-cash asset write-offs and charges related to exiting manufacturing and distribution facilities. Bonnell said cash spending on these activities declined sequentially and is expected to fall further during the second half as longer-term projects are completed.
Free cash flow was $62 million, including the tariff refunds. ICU Medical spent $11 million on quality-system and product-related remediation activities, $11 million on restructuring and integration, and $19 million on capital expenditures. The company paid down $50 million of debt during the quarter, ending with $1.24 billion of debt and $298 million of cash. Net leverage declined to 2.3 times.
Management maintained its goal of approximately $150 million in free cash flow for 2026 and said it believes it is on track to reach a leverage ratio of about two times by year-end.
Guidance Assumes Stable Conditions
For the full year, ICU Medical now expects adjusted gross margin of about 41.5%, reflecting lower tariffs and faster synergy capture, partially offset by higher oil prices. The company continues to project adjusted operating expenses of approximately 25% of revenue, net interest expense of about $65 million, an adjusted tax rate of 25%, and diluted shares outstanding of 25.2 million.
The outlook assumes stable macroeconomic conditions, including inflation, currency and interest rates near current levels, along with no changes in existing tariff policies or rates. Bonnell said the company has incorporated current expectations for oil and diesel prices into its updated forecast.
The company expects its 40% equity investment in the IV Solutions joint venture to be breakeven or generate a small loss for the full year. The venture contributed $3 million of EBITDA in the second quarter, but management expects losses in the second half to offset that contribution.
Product Pipeline and IV Solutions Investment
Jain said the company has made substantial progress on additional FDA verification testing for its Medfusion 5000 syringe pump and expects to submit an amended package to the FDA this year. He said the company is prioritizing Medfusion before advancing timing for its CAD platform.
ICU Medical also highlighted products including LifeShield, Plum Duo and Solo, which Jain said are being well received. The company’s strategy is to offer hospital large-volume, syringe and ambulatory pumps connected through a common software platform and user interface.
Separately, Jain noted that Otsuka, ICU Medical’s joint venture partner, announced funding for a $500 million investment in IV Solutions production intended to bring PVC-free products and manufacturing technology to the U.S. market. The companies plan to hold an Aug. 24 groundbreaking ceremony for a greenfield IV Solutions production site adjacent to the current facility.
Jain said ICU Medical still faces annual tariff headwinds of roughly $30 million to $40 million and has experienced approximately $60 million of negative impact over the past four years from movements in the Costa Rican colón, Japanese yen and Mexican peso. Management said it remains focused on capturing an additional two percentage points of gross-margin opportunity through plant and logistics consolidations, pricing and product mix improvements.
About ICU Medical (NASDAQ:ICUI)
ICU Medical, Inc, together with its subsidiaries, develops, manufactures, and sells medical devices used in infusion therapy, vascular access, and vital care applications worldwide. Its infusion therapy products include needlefree products under the MicroClave, MicroClave Clear, and NanoClave brands; Neutron catheter patency devices; ChemoClave and ChemoLock closed system transfer devices, which are used to limit the escape of hazardous drugs or vapor concentrations, block the transfer of environmental contaminants into the system, and eliminates the risk of needlestick injury; Tego needle free connectors; Deltec GRIPPER non-coring needles for portal access; and ClearGuard, SwabCap, and SwabTip disinfection caps.
