Earnings Call Transcript - ICUI Q3 2025

Operator, Operator

Good afternoon, everyone, and welcome to ICU Medical's Third Quarter 2025 Earnings Conference Call. Please note that today's event is being recorded. I would now like to turn the conference over to Deirdre Thomson of ICR. Please go ahead.

Deirdre Thomson, IR Representative

Good afternoon, everyone. Thank you for joining us to discuss ICU Medical's financial results for the third quarter of 2025. On the call today representing ICU Medical is Vivek Jain, Chief Executive Officer and Chairman; and Brian Bonnell, Chief Financial Officer. We wanted to let everyone know that we have a presentation accompanying today's prepared remarks. To view the presentation, please go to our Investor page and click on Events Calendar, and it will be under the Third Quarter 2025 event. Before we start our prepared remarks, I want to touch upon any forward-looking statements made during the call, including beliefs and expectations about the company's future results. Please be aware they are based on the best available information to management and assumptions that are reasonable. Such statements are not intended to be a representation of future results and are subject to risks and uncertainties. Future results may differ materially from management's current expectations. We refer all of you to the company's SEC filings for more detailed information on the risks and uncertainties that have a direct bearing on operating results and financial position. Please note that during today's call, we will also discuss non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency into ICU Medical's ongoing results of operations, particularly when comparing underlying results from period to period. We've also included a reconciliation of these non-GAAP measures in today's release and provide as much detail as possible on any addendums that are added back. And with that, it's my pleasure to turn the call over to Vivek.

Vivek Jain, CEO

Thanks, Deirdre, and good afternoon, everyone. I'll walk through our Q3 revenue and earnings performance and provide some commentary on the businesses and then turn it over to Brian to recap the full Q3 results and balance sheet and provide an update to our latest outlook. After that, I'll come back with a few comments on how we evaluate our performance year-to-date, where we are in our mission of creating a comprehensive infusion therapy company, our goals around the balance sheet and optimizing our portfolio; and lastly, a couple of thoughts on the medium-term priorities of the company. The short story for Q3 is revenue was $533 million for a total company growth of 5% on an organic basis or minus 8% reported year-over-year. Gross margins increased, operating expenses declined, leading to more EBITDA and EPS. As a reminder, the reported results are impacted by the midyear creation of the Otsuka ICU Medical JV and resulting deconsolidation of IV Solutions from our income statement. Consumables and IV Systems had good year-over-year growth. Both revenues and gross margins were slightly positively impacted from a settlement of a portion of the Italian payback liability, which was an expense we absorbed towards the end of 2022, and Brian will provide more detail. Adjusted EBITDA was $106 million and EPS was $2.03. Free cash flow generation improved. And as of today, we've repaid $273 million in principal year-to-date. The broader demand and utilization environment in Q3 continued to be attractive across almost every geography with the growth rates positive, but not at the levels we saw last year. The capital environment is status quo, that it does appear investments that customers need to get done are getting done. Getting into our businesses more specifically, our Consumables business in Q3 grew 8% reported and 7% organic. It was a record quarter in absolute sales levels with growth driven by new customer implementations, rapid growth in some of our niche markets and solid census. We had the best sequential increase in absolute dollars since Q2 of 2024. For the balance of the year, we're very comfortable with our comments on mid-single-digit growth for the year, but don't expect Q4 to have the same growth rates as this quarter. On the last few calls, we've made some high-level comments around new product filings and innovation in our Consumables business with a number of line extensions or adjacencies that are rapidly pushing the development process and/or have already submitted 510(k)s to further strengthen our market positions. These products at their core are around enhancing patient safety and workflow efficiencies in the infusion drug delivery process. A number of these programs combine the parts and pieces of legacy ICU and what we acquired from Smiths. We believe these developments alongside our existing commercial opportunity can keep this segment growing at historical rates into the medium term. Our IV Systems business grew 9% reported and 8% organic. Unlike Q2, this was driven by all three main product families as we lapped the difficult comparison in the CADD ambulatory product line. LVP pumps and dedicated sets were again the largest contributors with double-digit growth driven by new installations and strong census for dedicated set utilization. We continue to be engaged in many new RFP processes and are beginning customer discussions around the multiyear refresh of our Plum 360 installed base with Plum Solo, now that it's been cleared. As we've discussed, since the new Plum Duo Solo products have been approved, the installation schedule is not predictable enough to be perfectly smooth just yet. Hence, we knew Q3 would be a record quarter as some installs from Q2 pushed into Q3 and even a few Q4 installs came forward. For the balance of the year, we're very comfortable with the previous comments on mid-single-digit growth for the year. We don't expect Q4 to have the same growth rates as this quarter given the comments we just made on installs and the very large sequential step-up in Q4 over Q3 in 2024. Since the last call, we've been in dialogue with FDA about the submitted 510(k)s for both the Medfusion 5000 syringe pump and the CADD ambulatory pumps and related LifeShield safety software. These submissions are working their way through the process, and we would call the process fair and like prior experiences with no real change in responsiveness from the agency even with all the challenges they're dealing with. As a reminder, we characterized the Medfusion 5000 as a groundbreaking new innovative product. But like what we did with Plum Duo and Plum Solo, we conserve the guts of the product that made Medfusion a market leader based on accuracy and workflow. We would describe the CADD submission as more like a catch-up 510(k), bringing a variety of product iterations up to date in the filing. When these products get cleared, all of our pump modalities will connect to a single software solution, bringing ease of use and tighter control of all types of infusions to a hospital customer. This was the core tenet of the acquisition to have a single software solution across hospital LVP, syringe and ambulatory pumps. We want customers to have the right tool for the right job, all connected with a common user interface and software solution that minimizes training, speeds onboarding, supports interoperability and enables standardization for our enterprise customers. We believe we're seeing the benefits of this vision in the marketplace today with three distinct value drivers, which can be summarized as: first, the opportunity to win competitive market share with a full suite of the newest and best-in-class products; second, the opportunity to refresh our installed base of not only the LVP pumps but also the installed base of syringe and ambulatory pumps as that is a very significant installed base. And lastly, to create new revenue streams via software and home care connectivity, which are still in the very early days. We believe these drivers, again, which are frankly the main reasons for the acquisition, position us for sustained growth in the medium term. Just wrapping up the business segments, our Vital Care segment was down 52% reported and down 4% organically as IV Solutions revenues were deconsolidated from our income statement. Critical Care and Respiratory were slightly up year-over-year. That's a quick summary for me on the businesses. I'll come back shortly with a few more comments. And so with that, over to you, Brian.

Brian Bonnell, CFO

Thanks, Vivek, and good afternoon, everyone. Since Vivek covered the Q3 revenue for each of the businesses, I'll focus my remarks on recapping the Q3 performance for the remainder of the P&L, along with the Q3 balance sheet and cash flow and then provide commentary on the implications for our latest outlook. As you can see from the GAAP to non-GAAP reconciliation in the press release, adjusted gross margin for the third quarter was 41%, which was slightly better than our expectations. Here, we saw a meaningful improvement on both a year-over-year and sequential basis. There were three discrete items that impacted our gross margin rate for the quarter that are worth calling out. The first was the one-time benefit associated with settling the Italy medical device payback liability related to the years 2015 through 2018, whereby we paid $2.5 million to resolve those historical periods at less than assessed values and therefore reversed the excess accruals, which resulted in a one-time increase to both revenue and gross profit of approximately $4 million, improving the gross margin rate by just under 0.5 percentage point. The second item was that consistent with our previous guidance, we saw the full benefit from deconsolidation of the IV Solutions business, which improved our gross margin rate in the third quarter by almost 5 percentage points, whereas in comparison, the second quarter of this year, we experienced approximately half of the same benefit given the timing of the joint venture transaction. And the third item was the impact of tariffs. Here, we incurred and paid $11 million of tariffs during the quarter and recognized an expense of $9 million in the P&L after capitalizing an incremental $2 million into inventory. The $9 million of expense in Q3, which reduced our gross margin rate by approximately 2 percentage points, was a meaningful step-up relative to Q2's expense of $3 million, but a bit less than our prior guidance had assumed. Also contributing to the year-over-year improvement were continued benefits from integration synergies and favorable foreign exchange. With the third quarter results, we continue to progress towards our previously stated gross margin goals. In prior years, when our gross margin rate was in the mid-30s, we established a target of 40% gross margins to be achieved from a combination of manufacturing and supply chain synergies, price increases and improved manufacturing absorption from volume growth. Then last year, we increased the target to 45% to reflect the expected benefit from the deconsolidation of the IV Solutions business. This target of 45% was prior to the imposition of tariffs beginning in early 2025. And therefore, if you exclude the 2 percentage point impact of tariffs from our Q3 results for comparison purposes, our gross margin would have been 43%, which is within 2 percentage points of our goal, and we continue to believe sufficient operational improvement opportunities exist to allow us to close this remaining 2 percentage point gap over time. Adjusted SG&A expense was $109 million in Q3 and adjusted R&D was $21 million. Total adjusted operating expenses were $130 million and represented 24.3% of revenue. The total dollar amount of spend was less than the past two quarters as a result of lower incentive compensation expense and the timing benefit from the deferral of discretionary spending as we've implemented cost controls across the company due to the uncertain and changing environment. Restructuring, integration and strategic transaction expenses were $13 million in the third quarter and related primarily to continued efforts to integrate our IT systems and consolidate our manufacturing network. Adjusted diluted earnings per share for the quarter increased by 28% to $2.03 compared to $1.59 last year. The current quarter results reflect net interest expense of $20 million, an adjusted effective tax rate of 27% and diluted shares outstanding of 24.8 million. And finally, adjusted EBITDA for Q3 increased by 12% to $106 million compared to $95 million last year. Now moving on to cash flow and the balance sheet. For the quarter, free cash flow was $28 million and includes the impact of a $10 million outflow related to reducing our utilization of our accounts receivable purchase program to 0. It was another solid free cash flow quarter when taking into consideration the impact from lower usage of the receivable program, along with the cash flow impact from higher tariffs. During the quarter, we invested $12 million of cash spend for quality system and product-related remediation activities, $13 million on restructuring and integration and $29 million on CapEx for general maintenance and capacity expansion at our facilities as well as placement of revenue-generating infusion pumps with customers outside the U.S. And just to wrap up the balance sheet, we finished the quarter with $1.3 billion of debt and $300 million of cash. During the quarter, we paid down $25 million of principal on our Term Loan B, bringing total debt principal payments during 2025 to $273 million. Subsequent to quarter end, on October 31, we completed the refinancing of the pro rata portion of our credit facility that reset the 5-year term of the revolver and Term Loan A, which were scheduled to become current in January 2026. As part of the refinancing, we increased the size of the Term Loan A by $190 million and used these additional proceeds to pay down our higher rate Term Loan B by $190 million. We expect the refinancing to save approximately $2 million annually in interest expense as a result of this reallocation of principal, along with other more favorable pricing terms. Moving forward to the outlook for the remainder of the year. Given the strong performance in Q3, we are increasing our previously provided full year EBITDA guidance range of $380 million to $390 million to a range of $395 million to $405 million. And for the full year adjusted EPS, we are updating our previous guidance range of $6.85 to $7.15 per share to $7.35 to $7.65 per share. This guidance assumes fourth quarter revenues and underlying profitability are generally consistent with the third quarter plus the impact of three specific items. The first is the absence of the discrete $4 million benefit from the Italy payback settlement that we experienced in Q3. The second is higher tariff expense in the fourth quarter as we will incur a full quarter impact of the Costa Rica tariff rate that increased from 10% to 15% effective August 7. We expect fourth quarter tariff expense to be in the range of $12 million to $14 million, which would bring the full year tariff expense to around $25 million. And the third item is sequentially higher operating expenses as the third quarter benefit from the lower incentive compensation and deferral of discretionary spend is not expected to be experienced to the same degree in Q4. As a result, for the fourth quarter, we're assuming operating expenses to be approximately 25.5% of revenue, which despite being higher than Q3, is lower than our previously provided guidance of 26% for the back half of this year. After considering these items, Q4 gross margin should be in the range of 40% to 41%, consistent with our previous guidance and assumes the current tariff environment and foreign exchange rates remain in place through the end of this year. Net interest expense should be approximately $19 million in Q4. And for modeling purposes, you can assume fourth quarter adjusted tax rate of 25%. To wrap up, we're happy with the solid performance of the business during the third quarter as our Consumables and Infusion Systems businesses are as large as they've ever been. We continue to progress towards our gross margin goals, and we saw sequential EBITDA improvements despite the increasing headwinds from the tariffs and the deconsolidation of IV Solutions. Now I'll hand the call back over to Vivek to close out with a few additional thoughts.

Vivek Jain, CEO

Thanks, Brian. I'll make a few remarks on how we're evaluating our performance, both financially and strategically, our goals around the balance sheet and optimizing our portfolio, and lastly, a couple of thoughts on the medium-term priorities of the company. In terms of assessing our financial performance on the income statement, I'll use some of the numbers Brian just ran through. If we assume the full 2025 tariff impact is approximately $25 million and added that back to the midpoint of our current view of $400 million of EBITDA, we would be pleased with the result of $425 million as compared to the $370 million in EBITDA last year, and that doesn't even correct for the $15 million or $20 million of EBITDA that was deconsolidated with the JV creation. Since early 2024, we've been talking about under-earning, and these pro forma results show that we're closing the gap. But we fully understand we don't live in a pro forma universe, and tariffs are actual costs. So as previously discussed, we continue to do everything possible to mitigate. Strategically, our goal has been to build the most comprehensive and innovative infusion-focused company. This shows first in our recent historical revenue. And the data on Slide 3 lays out our revenue growth for the last six quarters. Throughout the difficulties of the last few years, we did not skimp on R&D and innovation nor capital investments into the manufacturing assets of our Consumables and Systems segment, and we found a win-win with Otsuka in the JV. As a result, we believe in IV Systems, we have a complete and clinically differentiated platform solution that will anchor the segment for the next 10-plus years as the product life cycles are incredibly long. And in Infusion Consumables, we have the scale underpinned by leading brands with great clinical data that will be supported with more innovation in the core and adjacencies of this segment to support growth. We believe these investments alongside good commercial execution can continue the revenue trends seen on the chart I just referenced. The balance sheet and overall portfolio also play a role in maximizing revenue growth and EPS. We assume over time, we'll have less leverage and be in a lower rate environment. So we would expect EPS would increase faster than EBITDA. At the end of 2025, we would expect to be 2.5x levered net debt to EBITDA, and our previous comments still apply. Our ideal place is to be around 2x levered, and given the innovation we believe we have in-house to return any additional capital to shareholders in the most efficient fashion. The most obvious and fully under our control way of getting there is organically by improving free cash flow. It's why in addition to offsets tariffs, we're focused on reductions to below-the-line cash outlays and restructuring, integration and quality as they've been material. The less in our control means is via any available portfolio optimizing like we did with IV Solutions. And if that is available to us, it would be a positive for the overall company revenue growth rate and likely gross margins. But with the balance sheet in the safe position as now and an improving interest rate environment, we're on better footing to evaluate and optimize each piece of the portfolio if the opportunity was to arise. In terms of our medium-term execution priorities, they can be summarized at a high level as the following: First, to continue to commercially execute to sustain and supplement the revenue growth shown on Slide 3. Second, to work with our partners at FDA to gain approval for the new infusion systems hardware and software and bring resolution of the warning letters. Third, to complete the integration activities in the areas of consolidations in our production, logistics and real estate network that are important contributors to the 2 points of gross margin Brian just referenced. And lastly, make progress on the leverage ratio either way to allow for capital return. All in all, it's a good place to be with our best businesses growing, reaching record sizes and projects nearing completion. We expect our Consumables and Systems businesses to be reliable growers with an industry acceptable profit margin, the tightest and most optimized manufacturing network and each with a multiyear innovation portfolio and ultimately, to transfer value from debt to equity for the company. There's no confusion within the company in the pursuit of these goals, and we don't really have any frivolous activities here. We produce essential items that require significant clinical training, hold manufacturing barriers and in general, are items that customers do not want to switch unless they must. The market needs ICU Medical to be an innovative, reliable supplier and our company is stronger from all the events of the last few years. Thanks to all the team members and customers as we improve each day. And with that, we'll open it up to questions.

Operator, Operator

And we will go first to Jayson Bedford with Raymond James.

Jayson Bedford, Analyst

Congratulations on the progress. I wanted to start with Consumables. Last quarter, you mentioned the expanded label for Clave. Could you provide more insight into the sources of strength here? I find it hard to believe that it’s solely due to the expanded label, and I know this business can be quite inconsistent. If you could elaborate on the source of this strength, that would be great.

Vivek Jain, CEO

Thank you for the question, Jayson, and for your kind words. There are likely a few key drivers of this performance. The marketing efforts we discussed in the last call are certainly beneficial. One significant factor is that when we have more opportunities, we tend to excel in consumables. Additionally, we've seen some market share gains toward the end of last year and early this year, particularly with customer wins related to IV Solutions and Consumables that are now being implemented. Another factor is our focus on niche markets, including oncology, dialysis, and other specialty markets where we've made considerable progress. I believe these areas are performing well. I’m not sure if Brian has anything to add, but those are the main reasons. Lastly, I want to mention that international markets, especially in Western Europe, have shown positive results.

Brian Bonnell, CFO

Nothing else to add.

Jayson Bedford, Analyst

Okay. I understand that Consumables won't experience the same sequential growth from 2Q to 3Q. However, can we expect that Consumables will see some sequential growth?

Vivek Jain, CEO

I mean, I think, Jayson, I don't know that we'd want to be so precise in everything. We hit a really good plateau here. You can look at the track record and that slide lays out exactly what's happening in Consumables. We're standing by our mid-single-digit comments for the year. We feel very good about it for the balance of the year. We feel very good about next year. I don't want to be in a place where we say something we're not 100% able to commit to. So I don't want to be so precise.

Jayson Bedford, Analyst

Okay. That's fair. Maybe just one more for me, and I'll let some others jump in. On Infusion Systems, can you comment on Duo and the traction you're seeing in the market, if there's any metrics you can provide in terms of percent of installs, orders, anything like that, that would be great. And then just are you taking orders for Solo now?

Vivek Jain, CEO

We are taking orders for Solo now. And so we are signing contracts, which is great. I think the installs are still in the relative early days. I'm not sure we'd say a lot more than that other than there's a lot of dialogue going on in the pump market in the U.S.

Operator, Operator

And we can move next to Brett Fishbin with KeyBanc Capital Markets.

Brett Fishbin, Analyst

I'm just going to stick to one and then I'll jump back in the queue. I wanted to just ask about 2026. I think you gave some maybe directional commentary on like tariffs. Just curious how you're thinking about maybe the full year picture for 2026 in regards to tariff exposure, given you've had some additional updates in the last few months and maybe a little more time to work on potential mitigation. I know in the past, you've said not to necessarily annualize the 2H impact, but just sounds like kind of a high 4Q exit rate.

Vivek Jain, CEO

Sure. This is obviously an important topic, and we don’t want to focus solely on that. I appreciate the question. We stand by everything we've communicated during our fall presentations, which is the actual number we've provided. This year, please don’t annualize it. We are addressing all aspects of the supply chain and manufacturing to mitigate the impact as much as we can. A lot of that work is currently ongoing. I would prefer to keep the discussion away from tariffs at this moment.

Operator, Operator

And we will move next to Mike Matson with Needham.

Michael Matson, Analyst

You talked about the 45% gross margin target. And I understand the tariffs have affected that. But let's just say you get to that 45% on a tariff-adjusted basis. What happens then? I mean, is there still room to go higher? Will you be able to get leveraged earnings growth? Or are you going to be sort of more reliant on financial leverage where, as you said, with the leverage ratio coming down, you'll return maybe do buybacks and things like that to drive more earnings growth?

Vivek Jain, CEO

We appreciate your question, Mike. It's interesting to reflect on how far we've come since reaching 36. We're pleased with our progress, but we know we still have some work to do to bridge the gap. The key factors are the value of our technology and hardware, and our ability to maintain and enhance that over time. We also need to consider how we can adjust our product mix by introducing more software products to boost our Consumables and overall company mix. Historically, the margins in Consumables have been quite appealing, as you can see in the 10-K, but we need the right mix to make a significant impact overall, and we are actively working on that. Some of our businesses currently fall below the corporate margin average, and in the right situation, we may explore options to address those. Essentially, our strategy involves multiple avenues for growth: the value of the technology, the overall portfolio mix, and the financial run rate you've mentioned. These are all critical components in driving our earnings. I've been listening to industry calls recently, and others are also focused on returning capital and managing through the current industry challenges, and we are following a similar approach.

Michael Matson, Analyst

Yes. Not taking anything away from the tremendous gross margin improvement we've already seen, which is great. And then I guess my other question would just be around pricing. What are you seeing? I know you had talked in the past about some of these contract renewals and things like that. And are you getting improved pricing anywhere?

Vivek Jain, CEO

I believe you're touching on a core issue that's been a challenge for our industry. We've been operating under fixed price contracts for many categories for quite some time, and managing inflation has been difficult. We've all been focused on ensuring we receive fair value for our products and we seek every opportunity to do so. However, these discussions can be challenging. The system is experiencing some pressure in certain areas. Where the market structure, clinical value, and our competitiveness align, we do believe we can achieve better pricing. Brian can provide more details on the macro numbers and the annual price impact. Would you like to add anything to that?

Brian Bonnell, CFO

Yes. I mean I think earlier in the year, we said we were expecting to get around 1% overall price increase. And I think we're very much on track to see that in the P&L this year.

Operator, Operator

We will go next to Larry Solow with CJS Securities.

Lawrence Solow, Analyst

I have a couple of follow-up questions about the Systems. Can you describe your discussions regarding replacements and the opportunities there? I believe you mentioned that a significant portion of your base is eligible or nearing the time for a refresh. Could you elaborate on that opportunity in the coming years? Additionally, you mentioned a refresh cycle for ambulatory and syringe. If you receive the necessary 510(k) approvals, could that also begin next year?

Vivek Jain, CEO

Sure. Yes, Larry, in the pump business, we believe there are three ways to create value. Over the past couple of years, particularly after Hospira, the Plum 360 entered the U.S. pump market as a new device, and we didn't have many opportunities for refreshing or replacing our installed base. Our main focus has been on gaining competitive market share, which remains the primary way to create value. However, if we can provide more technology in our current devices, the Duo and Solo, to our existing customers who already purchase multiple products from us across our various segments, that presents an opportunity to enhance value for that customer base. We are just beginning this process. Most of those devices came into the U.S. market when Hospira reintroduced the 360 around 2016 and 2017. We expect this to take off in earnest by the middle to the end of next year from a contractual standpoint. If there are any benefits, we likely won't see them until the end of next year, as this is just starting.

Lawrence Solow, Analyst

Got you. And just a question on free cash flow.

Vivek Jain, CEO

Sorry, let me answer the CADD and Medfusion are the same. Those are very large installed bases, too. We've been so focused on the LVP discussion. There's some opportunities there, too, that we're focused on. And that's why Medfusion 5000 is really important.

Lawrence Solow, Analyst

Right. And then on the free cash flow in the quarter, pretty solid and especially if we back out the AR impact and then the remediation and restructuring, you would actually have done $60 million. I know the remediation and restructuring probably are not stopping anytime soon, but maybe you can't just say you're going to do $250 million next year multiply by 4. But does this demonstrate the sort of ability for your business to generate significant free cash flow and as remediation and restructuring expenses start to hopefully wane over the next coming quarters, should we see a nice jump in free cash flow?

Brian Bonnell, CFO

Yes, that's a great question. It's challenging to take any single quarter's free cash flow and project it for the year because there are often variations from one quarter to another. However, we believe that free cash flow represents a significant opportunity for us to enhance value, particularly as we start achieving our goals regarding gross margin improvements. I think you've pinpointed the next key value driver for us. While we might not see immediate short-term results from reducing some expenses, we have a strong opportunity ahead of us.

Vivek Jain, CEO

It's about time we've been investing capital to complete the consolidation and logistics.

Lawrence Solow, Analyst

Those remediation restructuring expenses have averaged close to $100 million a year, right, I think since you acquired Smiths, is that number directionally going to start dropping materially as you look out over the next few years?

Vivek Jain, CEO

Yes. I mean I hate to be a little bit of a downer on this one, Larry. Yes, that number is going to go down, but the tariffs do consume some cash on the front end, too. So we're trying to balance that.

Operator, Operator

And we will move next to Jason Bednar with Piper Sandler.

Jason Bednar, Analyst

Congrats on a really good quarter here, guys. Sorry, I've been bounce around a couple of calls, so apologies if these have been asked. But I would assume if there was an update to be shared on the FDA and the warning letters, we would have heard it today, you'd have proactively addressed that. But just checking in on that topic, is there anything new to share on those warning letters? Any updated dialogue or scheduled interactions with the agency?

Vivek Jain, CEO

Thank you for the question, Jason. It's good we didn't discuss it in the Q&A. We are making efforts to bring the issues to resolution, which mainly revolve around obtaining approvals for new products. We're very focused on that. I provided an update in the script regarding the normal dialogue we're having, despite the government's recent activities. They are being responsive, and it feels similar to what we experienced with the Duo Solo. Overall, there has been positive communication. Our primary focus remains on obtaining product approvals, and that has not changed with the current developments.

Jason Bednar, Analyst

Okay. Perfect. Status quo. I have a follow-up question related to a topic we've discussed previously. Vivek, you have indicated a willingness to consider more portfolio management within the Vital Care segment. While there's nothing to announce today, could you share your thoughts or provide a status update on the strategic evaluation of what fits within that segment and what doesn't? Are there any interested parties, and are discussions currently taking place? Any insights you can provide on the future of that segment would be appreciated.

Vivek Jain, CEO

Yes, it's risky to make firm commitments when it's stated that we're definitely pursuing a certain direction and then it doesn't occur. We've aimed to be transparent. Looking back, we were a $300 million parts supplier seven years ago, demonstrating our capability to collaborate with large multinationals globally. That's been a key strength of our team over the years, and we continue to explore all potential opportunities. If there was a viable option, we would have already acted on it. We're taking a thoughtful approach, ensuring we avoid decisions that could harm our value. Brian has done an outstanding job with the balance sheet, securing financing that gives us some patience while we explore our options. I hesitate to provide more specifics or assurances since it's not entirely within our control. Our script and presentation reflect a variety of growth rates across our businesses, and we have been clear about our circumstances. For example, with IV Solutions, we recognized our technology wasn't sufficient to compete effectively, so we sought a partner. The same reasoning might apply to some of our smaller business units as well.

Operator, Operator

And this does conclude the Q&A session. I'd like to turn the program back over to Vivek Jain for any closing remarks.

Vivek Jain, CEO

Thanks, everyone, for the interest. We got more Q&A on the call, more people covering us. It's great. We appreciate everybody's time and attention. And we wish everyone a good end to the year, and we look forward to talking to you in early 2026. Thanks very much.

Operator, Operator

Thank you for your participation. This does conclude today's program. You may disconnect at any time.