ICU Medical Inc. (NASDAQ:ICUI) and Pfizer Inc. (NYSE:PFE) today
announced that they have entered into a definitive agreement under
which ICU Medical will acquire all of Pfizer’s global infusion
therapy business, Hospira Infusion Systems (HIS), for $1 billion in
cash and stock. The Hospira Infusion Systems business includes IV
pumps, solutions, and devices that, when combined with ICU
Medical’s existing businesses, will create a leading pure-play
infusion therapy company, with estimated pro forma combined
revenues of approximately $1.45 billion based on trailing twelve
month results as of June 2016.
Under the terms of the agreement, Pfizer will
receive approximately $400 million in newly issued shares of ICU
Medical common stock and $600 million in cash from ICU Medical
subject to customary adjustment for net working capital. Upon
completion of the transaction, which the companies expect to occur
in the first quarter of 2017 subject to customary closing
conditions including required regulatory approvals, Pfizer will own
approximately 16.6 percent of ICU Medical. In addition, so
long as Pfizer continues to hold 10% or more of ICU Medical’s
common equity, it will have the right to nominate one director to
the company’s board of directors in ICU Medical’s proxy materials,
and Pfizer has agreed to certain restrictions on transfer of its
shares for at least 18 months.
John Young, Group President of Pfizer Essential
Health commented, “We are pleased that Hospira Infusion Systems is
combining with ICU Medical, and we believe the combined company
will be well positioned in the marketplace to deliver value to
customers through its strong product portfolio and the expertise of
colleagues from both companies. I’m proud of the Hospira Infusion
Systems team and their positive impact on patients around the
world.”
The acquisition complements ICU Medical’s
existing business by creating a company that has a complete IV
therapy product portfolio from solutions to pumps to non-dedicated
infusion sets, and gives the company a significantly enhanced
global footprint and a platform for continued competitiveness and
growth. With an integrated product offering, ICU Medical will hold
industry-leading positions in key segments and have access to the
full US infusion marketplace with a compelling product
portfolio.
“The combination of these two businesses is the
natural evolution of a productive relationship that began more than
20 years ago when Hospira began integrating ICU Medical’s
needlefree technology into their infusion offering globally,”
explained Vivek Jain, ICU Medical’s Chief Executive Officer. “By
acquiring the Hospira Infusion Systems business, currently our
largest single customer, we create a pure-play infusion business
with the focus and scale to compete globally, eliminate our single
customer concentration issue, and have a significant value creation
opportunity as a much larger company. We look forward to serving
more customers as we continue to bring clinical and economic value
to the marketplace.”
ICU Medical’s financial advisors for the
transaction were Barclays and Wells Fargo Securities, LLC, and
Latham & Watkins acted as its legal advisor. Goldman, Sachs
& Co. and Guggenheim Securities served as Pfizer’s financial
advisors for the transaction, while Skadden, Arps, Slate, Meagher
& Flom LLP and Ropes & Gray LLP served as its legal
advisors.
ICU Medical Q3 Preliminary Results and
Fiscal Year 2016 Guidance Update
For the third quarter of 2016, ICU Medical
expects to report quarterly revenue of approximately $96 million
and adjusted EBITDA of approximately $33.5 million, and $1.20
adjusted earnings per share. For the year, ICU Medical expects to
report results slightly above the high-end of its previously
announced guidance of $370 million revenue, $131 million adjusted
EBITDA, and $4.60 adjusted diluted earnings per share. See
reconciliation of GAAP to non-GAAP financial measures (unaudited)
below.
ICU Medical Conference Call and Investor
Meetings
ICU Medical, Inc. invites you to review the
presentation here.
ICU Medical will host a conference call to
discuss the Hospira Infusion Systems acquisition this morning,
October 6, 2016 at 8:30 a.m. EDT (5:30 am PDT). The call can be
accessed at (800) 936-9761, international (408) 774-4587,
conference ID 94524232. The conference call will be simultaneously
available by webcast, which can be accessed by going to ICU
Medical’s website at www.icumed.com, clicking on the Investors
tab, clicking on the Webcast icon and following the prompts. The
webcast will also be available by replay.
Members of the ICU Management team will be
holding an open investor group meeting in Boston, today October 6
at 12:00 pm at the Boston Hilton, 89 Broad Street, Boston, MA in
the Kilby Room and available for one-on-one meetings in Boston on
October 6th and New York on October 7th. Please email John Mills at
John.Mills@icrinc.com to schedule a meeting or confirm
participation in the group meeting.
ICU Medical Cautionary Statements
Regarding Forward-Looking Information
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995 and may often be identified by the use of words such as
''will'', "may", ''could'', "should", ‘‘would,’’ "project",
''believe'', "anticipate", ''expect'', "plan", "estimate",
"forecast", "potential", "intend", ''continue'', "target",
''build'', ''expand'' or the negative thereof or comparable
terminology, and may include (without limitation) information
regarding ICU Medical expectations, goals or intentions regarding
the future, including, but not limited to, its full year 2016
guidance, the transaction, the expected timetable for completing
the transaction, benefits and synergies of the combined business or
the transaction, future opportunities for ICU Medical and products
and any other statements regarding ICU Medical and the combined
business’s future operations, anticipated business levels, future
earnings, planned activities, anticipated growth, market
opportunities, strategies, competition, and other expectations and
targets for future periods.
These forward-looking statements are based on
Management's current expectations, estimates, forecasts and
projections about ICU Medical and assumptions Management believes
are reasonable, all of which are subject to risks and uncertainties
that could cause actual results and events to differ materially
from those stated in the forward-looking statements. These risks
and uncertainties include, but are not limited to, decreased demand
for ICU Medical 's products; decreased free cash flow; the
inability to recapture conversion delays or part/resource shortages
on anticipated timing, or at all; changes in product mix; increased
competition from competitors; lack of continued growth or improving
efficiencies; unexpected changes in ICU Medical's arrangements with
its largest customers; the parties’ ability to meet expectations
regarding the timing, completion and accounting and tax treatments
of the transaction; changes in relevant tax and other laws; the
parties’ ability to consummate the transaction; the conditions to
the completion of the transaction; the regulatory approvals
required for the transaction not being obtained on the terms
expected or on the anticipated schedule; inherent uncertainties
involved in the estimates and judgments used in the preparation of
financial statements, and the providing of estimates of financial
measures, in accordance with GAAP and related standards or on an
adjusted basis; the integration of the acquired business by ICU
Medical being more difficult, time-consuming or costly than
expected; operating costs, customer loss and business disruption
(including, without limitation, difficulties in maintaining
relationships with employees, customers, clients or suppliers)
being greater than expected following the transaction; the
retention of certain key employees of the business being difficult;
ICU Medical’s and the business’s expected or targeted future
financial and operating performance and results; the scope, timing
and outcome of any ongoing legal proceedings and the impact of any
such proceedings on ICU Medical’s and the business’s consolidated
financial condition, results of operations or cash flows; ICU
Medical’s and the business’s ability to protect their intellectual
property and preserve their intellectual property rights; the
effect of any changes in customer and supplier relationships and
customer purchasing patterns; the ability to attract and retain key
personnel; changes in third-party relationships; the impacts of
competition; changes in economic and financial conditions of ICU
Medical’s business or the business; uncertainties and matters
beyond the control of management; and the possibility that ICU
Medical may be unable to achieve expected synergies and operating
efficiencies in connection with the Transaction within the expected
time-frames or at all and to successfully integrate the
business.
For more detailed information on the risks and
uncertainties, associated with ICU Medical’s business activities,
see the risks described in ICU Medical's Annual Report on Form 10-K
for the year ended December 31, 2015 filed with the Securities and
Exchange Commission (the "SEC"). You can access ICU Medical’s Form
10-K through the SEC website at www.sec.gov, and ICU Medical
strongly encourages you to do so. ICU Medical undertakes no
obligation to update any statements herein for revisions or changes
after the date of this communication.
PFIZER DISCLOSURE NOTICE
The information contained in this release is as
of October 6, 2016. Pfizer assumes no obligation to update
forward-looking statements contained in this release as the result
of new information or future events or developments.
This release contains forward-looking
information related to, among other things, an agreement by Pfizer
to sell its Hospira Infusion Systems business to ICU Medical,
including the potential benefits of the transaction and the
anticipated timing of the completion of the transaction, that
involves substantial risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by such statements. Risks and uncertainties include, among other
things, risks related to satisfaction of the conditions to closing
the transaction (including the failure to obtain necessary
regulatory approvals) in the anticipated timeframe or at all,
including the possibility that the transaction does not close;
risks related to the ability to realize the anticipated benefits of
the transaction; potential decreases in the market value of the
stock component of the consideration package; potential dilution to
Pfizer’s ownership position; other business effects, including the
effects of industry, market, economic, political or regulatory
conditions; and risks related to the ICU Medical common stock that
Pfizer will receive in the transaction.
A further description of risks and uncertainties
can be found in Pfizer’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2015 and in its subsequent reports on Form
10-Q, including in the sections thereof captioned “Risk Factors”
and “Forward-Looking Information and Factors That May Affect Future
Results”, as well as in its subsequent reports on Form 8-K, all of
which are filed with the U.S. Securities and Exchange Commission
and available at www.sec.gov and www.pfizer.com.
About ICU Medical,
Inc.: ICU Medical, Inc. develops, manufactures and
sells innovative medical devices used in vascular therapy, oncology
and critical care applications. ICU Medical’s products improve
patient outcomes by helping prevent bloodstream infections and
protecting healthcare workers from exposure to infectious diseases
or hazardous drugs. The company’s complete product line includes
custom IV systems, closed delivery systems for hazardous drugs,
needlefree IV connectors, catheters and cardiac monitoring systems.
ICU Medical is headquartered in San Clemente, California. More
information about ICU Medical, Inc. can be found
at www.icumed.com.
About Pfizer: Working together for a
healthier world® At Pfizer, we apply science and our
global resources to bring therapies to people that extend and
significantly improve their lives. We strive to set the standard
for quality, safety and value in the discovery, development and
manufacture of health care products. Our global portfolio includes
medicines and vaccines as well as many of the world's best-known
consumer health care products. Every day, Pfizer colleagues work
across developed and emerging markets to advance wellness,
prevention, treatments and cures that challenge the most feared
diseases of our time. Consistent with our responsibility as one of
the world's premier innovative biopharmaceutical companies, we
collaborate with health care providers, governments and local
communities to support and expand access to reliable, affordable
health care around the world. For more than 150 years, Pfizer has
worked to make a difference for all who rely on us. For more
information, please visit us at http://www.pfizer.com. In addition,
to learn more, follow us on Twitter at @Pfizer and @PfizerNews,
LinkedIn, YouTube and like us on Facebook at
Facebook.com/Pfizer.
Use of Non-GAAP Financial Information
This press release contains financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). The non-GAAP financial measures should
be considered supplemental to, and not as a substitute for, or
superior to, financial measures calculated in accordance with
GAAP. There are material limitations in using these non-GAAP
financial measures because they are not prepared in accordance with
GAAP and may not be comparable to similarly titled non-GAAP
financial measures used by other companies, including peer
companies. Our management believes that the non-GAAP data
provides useful supplemental information to management and
investors regarding our performance and facilitates a more
meaningful comparison of results of operations between current and
prior periods. We use non-GAAP financial measures in addition
to and in conjunction with GAAP financial measures to analyze and
assess the overall performance of our business, in making
financial, operating and planning decisions, and in determining
executive incentive compensation. The non-GAAP financial
measures included in this press release are adjusted EBITDA and
adjusted diluted earnings per share ("Adjusted Diluted
EPS").
Adjusted EBITDA excludes the following items:
Intangible asset amortization expense: We
do not acquire businesses or capitalize certain patent costs on a
predictable cycle. The amount of purchase price allocated to
intangible assets and the term of amortization can vary
significantly and are unique to each acquisition. Capitalized
patent costs can vary significantly based on our current level of
development activities. We believe that excluding
amortization of intangible assets provides the users of our
financial statements with a consistent basis for comparison across
accounting periods.
Depreciation expense: We exclude
depreciation expense in deriving adjusted EBITDA because companies
utilize productive assets of different ages and the depreciable
lives can vary significantly resulting in considerable variability
in depreciation expense among companies.
Stock compensation expense: Stock-based
compensation is generally fixed at the time the stock-based
instrument is granted and amortized over a period of several
years. The value of stock options is determined using a
complex formula that incorporates factors, such as market
volatility, that are beyond our control. The value of our
restricted stock awards is determined using the grant date stock
price, which may not be indicative of our operational performance
over the expense period. Additionally, in order to establish
the fair value of performance-based stock awards, which are
currently an element of our ongoing stock-based compensation, we
are required to apply judgment to estimate the probability of the
extent to which performance objectives will be achieved.
Based on the above factors, we believe it is useful to exclude
stock-based compensation in order to better understand our
operating performance.
Restructuring and strategic transaction:
We incur restructuring and strategic transaction charges that
result from events, which arise from unforeseen circumstances
and/or often occur outside of the ordinary course of our ongoing
business. Although these events are reflected in our GAAP
financial statements, these unique transactions may limit the
comparability of our ongoing operations with prior and future
periods.
Adjusted Diluted EPS excludes, net of
tax, intangible asset amortization expense, stock compensation
expense, restructuring and strategic transaction, legal settlement
and bargain purchase gain, which was tax free. We apply our
GAAP consolidated effective tax rate to our non-GAAP financial
measures, other than when the underlying item has a materially
different tax treatment.
From time to time in the future, there may be other items that
we may exclude if we believe that doing so is consistent with the
goal of providing useful information to investors and
management.
The following tables reconcile our expected GAAP and non-GAAP
financial measures:
|
ICU MEDICAL, INC. AND
SUBSIDIARIES |
Reconciliation of GAAP to Non-GAAP Financial
Measures (Unaudited) |
(In thousands, except per share data) |
|
|
|
|
|
|
"Expected" |
|
|
|
Adjusted EBITDA |
|
|
|
Three months endedSeptember 30,
2016 |
|
GAAP net income |
|
$ |
17,501 |
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
Stock compensation expense |
|
|
3,824 |
|
|
Depreciation and amortization expense |
|
|
4,863 |
|
|
Restructuring and strategic transaction expense |
|
|
520 |
|
|
Provision for income taxes |
|
|
6,793 |
|
|
Total non-GAAP adjustments |
|
|
16,000 |
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
33,500 |
|
|
|
|
|
|
|
|
Adjusted diluted earningsper
share |
|
|
|
Three months endedSeptember 30,
2016 |
|
GAAP diluted earnings per share |
|
$ |
1.01 |
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
Stock compensation expense |
|
$ |
0.22 |
|
|
Amortization expense |
|
$ |
0.04 |
|
|
Restructuring and strategic transaction expense |
|
$ |
0.03 |
|
|
Estimated income tax impact from adjustments |
|
$ |
(0.11 |
) |
|
Adjusted diluted earnings per share |
|
$ |
1.20 |
|
|
ICU Medical Investor Contacts:
Scott Lamb, ICU Medical, Inc.
949-366-2183
slamb@icumed.com
John Mills, ICR, Inc
646-277-1254
John.Mills@icrinc.com
Media Contact:
Tom McCall, ICU Medical, Inc.
949-366-4368
tmccall@icumed.com
Pfizer Inc. Investor Contact
Chuck Triano
212-733-3901
Media Contact:
Joan Campion
212-733-2798
ICU Medical (NASDAQ:ICUI)
Historical Stock Chart
From Mar 2024 to Apr 2024
ICU Medical (NASDAQ:ICUI)
Historical Stock Chart
From Apr 2023 to Apr 2024