Medical device maker ICU Medical Inc. beat expectations with its first-quarter results last week, showing more progress in diversifying its sales base beyond a longstanding key customer.
San Clemente-based ICU posted a first-quarter profit of $8.1 million, nearly double from the same period last year and about 20% better than analysts’ expectations.
First-quarter revenue rose 11% to $71.5 million, slightly above Wall Street’s estimate of $70.4 million.
ICU makes needleless connectors and other products used to deliver intravenous fluids and drugs to patients in hospitals and other healthcare settings.
It also makes products for administering powerful cancer drugs, a catheter protector used in kidney dialysis and a pump to deliver insulin to diabetics.
• Headquarters: San Clemente
• Business: medical devices
• Products: used to deliver cancer drugs, fluids, insulin, dialysis
• Projected 2011 sales: $295 million to $305 million
• Market value: $615 million
Full-Year Boost
The device maker boosted its full-year outlook.
ICU said its profit for the year could come in at $32.3 million to $35.1 million. Previously, ICU had said it expected earnings of $31.6 million to $34.4 million.
On average, Wall Street projects ICU’s full-year profit at $33.5 million.
As for revenue, ICU reiterated its full-year projection of $295 million to $305 million. Analysts are looking for ICU’s revenue to come in at $305.8 million.
ICU also said it booked $2.5 million from a legal settlement but did not elaborate about it during its earnings call.
Product sales “exceeded our projections,” said Matt Dolan, a senior medical device analyst with Roth Capital Partners LLC of Newport Beach, in a report.
During the call, ICU officials highlighted the performance of several products, including the Tego device used in kidney dialysis. Tego sales were nearly $2 million in the quarter, up 152% from a year earlier, according to Chief Executive George Lopez.
ICU’s first-quarter performance also reflected one of its major goals in reducing its dependence on Chicago-area diversified drug and device maker Hospira Inc.
Hospira accounted for 39% of ICU’s U.S. first-quarter revenue. At one time, sales to Hospira accounted for 75% of ICU’s sales.
ICU started to develop and sell other types of devices a few years ago in a bid to reduce its historical reliance on Hospira, which has been its core customer since its days as part of Abbott Laboratories.
Custom Business
ICU’s custom business, where it makes and sells devices to the specification of clients, now accounts for about 35% of its yearly revenue.
The custom business now is on equal footing with Clave, a needleless connector that is ICU’s biggest-selling product to Hospira.
“We are excited about the custom set opportunities that should come from our new operations in Slovakia,” Lopez said on the call.
Last year, ICU opened a $14 million, 100,000-square-foot plant in Slovakia in an attempt to boost its market share. International sales account for some 20% of ICU’s $200 million-plus in annual revenue.
The company’s confident that the Slovakia plant “significantly strengthens our market positions in the European market and provides us with significant distribution and cost savings,” Lopez said.
ICU’s competitors include B. Braun Medical Inc., a unit of Germany’s B. Braun Melsungen AG with about 1,300 Orange County workers, Becton Dickinson & Co. of Franklin Lakes, N.J., and Baxter Inter-national Inc., a suburban Chicago company with 300 area workers.
Shortly before ICU announced its results it said it received a three-year contract from Premier Purchasing Partners LP, a Charlotte, N.C.-based hospital buying group.
ICU will sell hemodynamic monitors at special prices and terms that were pre-negotiated by Premier to its more than 2,500 members.
The company also is going to be a single-source supplier of hemodynamic monitors to a Premier program called Accelerated Supply Chain Endeavors.
