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General and Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2021
Accounting Policies [Abstract] |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Preparation ICU Medical, Inc. ("ICU" or "we"), a Delaware corporation, operates in one business segment engaged in the development, manufacturing and sale of innovative medical devices used in infusion therapy and critical care applications. We are one of the world's leading pure-play infusion therapy companies with a wide-ranging product portfolio that includes IV solutions, IV smart pumps with pain management and safety software technology, dedicated and non-dedicated IV sets and needlefree connectors designed to help meet clinical, safety and workflow goals. We sell the majority of our products through our direct sales force and through independent distributors throughout the U.S. and internationally. Additionally, we sell our products on an original equipment manufacturer basis to other medical device manufacturers. The manufacturing for all product groups occurs in Salt Lake City, Utah, Austin, Texas, Mexico and Costa Rica. All subsidiaries are wholly owned and are included in the consolidated financial statements. All intercompany accounts and transactions have been eliminated. Results of operations of companies purchased are included from the dates of acquisition. The consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. These consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash, Cash Equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. Accounts Receivable Accounts receivable are stated at net realizable value. An allowance is provided for estimated collection losses based on an assessment of various factors. We consider prior payment trends, the age of the accounts receivable balances, financial status and other factors to estimate the cash which ultimately will be received. Such amounts cannot be known with certainty at the financial statement date. We regularly review individual past due balances for collectability. Inventories Inventories are stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. Inventory costs include material, labor and overhead related to the manufacturing of our products. Inventories consist of the following (in thousands):
| As of December 31,
| 2021 |  | 2020
Raw materials | $ | 135,528 |  |  | $ | 126,499 |
Work in process | 36,490 |  |  | 33,053 |
Finished goods | 118,217 |  |  | 155,376 |
Total | $ | 290,235 |  |  | $ | 314,928 |
Property, Plant and Equipment Property, plant and equipment consists of the following (in thousands):
| As of December 31,
| 2021 |  | 2020
Machinery and equipment | $ | 321,078 |  |  | $ | 291,331 |
Land, building and building improvements | 243,377 |  |  | 241,199 |
Molds | 60,463 |  |  | 60,381 |
Computer equipment and software | 102,979 |  |  | 98,311 |
Furniture and fixtures | 7,670 |  |  | 7,767 |
Instruments placed with customers(1) | 97,384 |  |  | 90,383 |
Construction in progress | 72,153 |  |  | 53,724 |
Total property, plant and equipment, cost | 905,104 |  |  | 843,096 |
Accumulated depreciation | (436,739) |  |  | (376,468) |
Property, plant and equipment, net | $ | 468,365 |  |  | $ | 466,628 |
_______________________________ (1) Instruments placed with customers consist of drug-delivery and monitoring systems placed with customers under operating leases. All property, plant and equipment are stated at cost. We use the straight-line method for depreciating property, plant and equipment over their estimated useful lives. Estimated useful lives are:
Buildings | 15 - 30 years
Building improvements | 15 - 30 years
Machinery, equipment and molds | 2 - 15 years
Furniture, fixtures and office equipment | 2 - 5 years
Computer equipment and software | 3 - 5 years
Instruments placed with customers | 3 - 10 years
We capitalize expenditures that materially increase the life of the related assets; maintenance and repairs are expensed as incurred. The costs and related accumulated depreciation applicable to property, plant and equipment sold or retired are removed from the accounts and any gain or loss is reflected in the statements of operations at the time of disposal. Depreciation expense was $65.9 million, $62.4 million and $59.3 million in 2021, 2020 and 2019, respectively. Goodwill We test goodwill for impairment on an annual basis in the month of November, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. Generally, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If, based on an assessment of relevant qualitative factors, we determine that this is not the case, then the quantitative impairment test is not required to be performed. Conversely, if we determine based on the qualitative assessment that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we will perform the quantitative impairment test. For the quantitative impairment test, we calculate the estimated fair value of the reporting unit. If the estimated fair value of the reporting unit is less than its carrying amount, the goodwill of the reporting unit is determined to be impaired. An impairment charge is recorded in an amount equal to the excess of the carrying amount over its estimated fair value, limited to the total amount of goodwill allocated to the reporting unit. For our annual impairment test for the year ended December 31, 2021, we performed a qualitative assessment and concluded that it was more likely than not that the fair value of our reporting unit exceeded its carrying amount, and therefore, no further impairment testing was required. There were no accumulated impairment losses as of December 31, 2021, 2020 and 2019. The following table presents the changes in the carrying amount of our goodwill for 2021, 2020 and 2019 (in thousands):
|  | Total
Balance as of January 1, 2019 |  | $ | 11,195 |
Goodwill acquired(1) |  | 20,026 |
Other |  | 24 |
Balance as of December 31, 2019 |  | $ | 31,245 |
Other(2) |  | 1,756 |
Balance as of December 31, 2020 |  | 33,001 |
Goodwill(3) |  | 10,626 |
Currency translation |  | (188) |
Balance as of December 31, 2021 |  | $ | 43,439 |
_______________________________ (1) In 2019, we acquired Pursuit Vascular, Inc. ("Pursuit"), which resulted in $19.1 million of goodwill. We also acquired a small foreign distributor, which resulted in $0.9 million of goodwill. (2) In 2020, "Other" relates to a $1.3 million measurement period adjustment to deferred taxes related to the Pursuit acquisition and foreign currency translation. (3) In 2021, we acquired a small foreign infusion systems supplier, which resulted in $10.6 million of goodwill. Intangible Assets Intangible assets, carried at cost less accumulated amortization and amortized on a straight-lined basis, were as follows (in thousands):
|  | Weighted-Average Amortization Life in Years |  | December 31, 2021
|  |  | Cost |  | Accumulated Amortization |  | Net
Patents |  | 10 |  | $ | 27,429 |  |  | $ | 16,764 |  |  | $ | 10,665 |
Customer contracts |  | 12 |  | 10,412 |  |  | 6,196 |  |  | 4,216 |
Non-contractual customer relationships |  | 9 |  | 57,316 |  |  | 33,004 |  |  | 24,312 |
Trademarks |  | 4 |  | 425 |  |  | 425 |  |  | — |
Trade name |  | 15 |  | 18,260 |  |  | 4,731 |  |  | 13,529 |
Developed technology |  | 13 |  | 152,893 |  |  | 49,406 |  |  | 103,487 |
Non-compete |  | 3 |  | 9,100 |  |  | 2,356 |  |  | 6,744 |
Total amortized intangible assets |  |  |  | $ | 275,835 |  |  | $ | 112,882 |  |  | $ | 162,953 |
Internally developed software* |  |  |  | $ | 25,358 |  |  |  |  | $ | 25,358 |
Total intangible assets |  |  |  | $ | 301,193 |  |  | $ | 112,882 |  |  | $ | 188,311 |
_______________________________ * Internally developed software will be amortized when the projects are complete and the assets are ready for their intended use.
|  | Weighted-Average Amortization Life in Years |  | December 31, 2020
|  |  | Cost |  | Accumulated Amortization |  | Net
Patents |  | 10 |  | $ | 24,797 |  |  | $ | 15,056 |  |  | $ | 9,741 |
Customer contracts |  | 12 |  | 10,365 |  |  | 5,852 |  |  | 4,513 |
Non-contractual customer relationships |  | 9 |  | 58,061 |  |  | 26,711 |  |  | 31,350 |
Trademarks |  | 4 |  | 425 |  |  | 425 |  |  | — |
Trade name |  | 15 |  | 18,270 |  |  | 3,500 |  |  | 14,770 |
Developed technology |  | 13 |  | 152,893 |  |  | 36,927 |  |  | 115,966 |
Non-compete |  | 3 |  | 2,500 |  |  | 972 |  |  | 1,528 |
Total amortized intangible assets |  |  |  | $ | 267,311 |  |  | $ | 89,443 |  |  | $ | 177,868 |
Internally developed software* |  |  |  | $ | 19,363 |  |  |  |  | $ | 19,363 |
Total intangible assets |  |  |  | $ | 286,674 |  |  | $ | 89,443 |  |  | $ | 197,231 |
_______________________________ * Internally developed software will be amortized when the projects are complete and the assets are ready for their intended use. Amortization expense was $23.8 million, $23.2 million and $17.7 million in 2021, 2020 and 2019, respectively. As of December 31, 2021, estimated annual amortization for our intangible assets for each of the next five years is approximately (in thousands):
2022 |  | $ | 25,668 |
2023 |  | 24,191 |
2024 |  | 23,551 |
2025 |  | 16,057 |
2026 |  | 15,324 |
Thereafter |  | 58,162 |
Total |  | $ | 162,953 |
Our intangible assets that are not subject to amortization are reviewed annually for impairment or more often if there are indications of possible impairment. We perform our annual intangible assets impairment test in November of each year. We did not have any intangible asset impairments in 2021, 2020 or 2019. Long-Lived Assets We periodically evaluate the recoverability of long-lived assets whenever events and changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the carrying values of the assets are evaluated in relation to the operating performance and future undiscounted cash flows of the underlying business. The net book value of the underlying asset is adjusted to fair value if the sum of the expected discounted cash flows is less than book value. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and discount rates, reflecting varying degrees of perceived risk. We did not have any long-lived asset impairments in 2021, 2020 or 2019. Investment Securities Short-term investments, exclusive of cash equivalents, are marketable securities intended to be sold within one year and may include trading securities, available-for-sale securities, and held-to-maturity securities (if maturing within one year at the time of acquisition). Long-term investments are marketable securities intended to be sold after one year and may include trading securities, available-for-sale securities, and held-to-maturity securities. Investments in Available-for-sale Securities Our investment securities are considered available-for-sale and currently consist of short-term and long-term corporate bonds. These securities are considered “investment grade” and are carried at fair value. We assess our investment in available-for-sale debt securities for impairment each reporting period. If an unrealized loss exists, we determine whether any portion of the decline in fair value below the carrying value is credit-related by reviewing several factors, including, but not limited to, the extent of the fair value decline and changes in the financial condition of the issuer. We record an impairment for credit-related losses through an allowance, limited to the amount of the unrealized loss. If we either intend to sell or it is more likely than not we will be required to sell the debt security before its anticipated recovery, any allowance is written off and the amortized cost basis is written down to fair value through a charge against net earnings. Unrealized gains and non-credit-related unrealized losses are recorded, net of tax, in other comprehensive income (loss). We did not have any investments in available-for-sale debt securities in unrealized loss positions as of December 31, 2021 or 2020. The amortized cost of the debt securities is adjusted for the amortization of premiums computed under the effective interest method. Such amortization is included in other income, net in the consolidated statements of operations. Realized gains and losses are accounted for on the specific identification method. There have been no realized gains or losses on the disposal of these investments. The scheduled maturities of the debt securities are between 2022 and 2024. All short-term investment securities are callable within one year. Our short-term and long-term investments in available-for-sale securities consist of the following (in thousands):
| As of December 31, 2021
| Amortized Cost |  | Unrealized Holding Gains (Losses) |  | Fair Value
Short-term corporate bonds | $ | 14,420 |  |  | $ | — |  |  | $ | 14,420 |
Long-term corporate bonds | 4,620 |  |  | — |  |  | 4,620 |
Total investment securities | $ | 19,040 |  |  | $ | — |  |  | $ | 19,040 |
| As of December 31, 2020
| Amortized Cost |  | Unrealized Holding Gains (Losses) |  | Fair Value
Short-term corporate bonds | $ | 14,687 |  |  | $ | — |  |  | $ | 14,687 |
Long-term corporate bonds | 12,974 |  |  | — |  |  | 12,974 |
Total investment securities | $ | 27,661 |  |  | $ | — |  |  | $ | 27,661 |
Investments in Non-Marketable Equity Securities In the third quarter of 2021, we acquired approximately a 20.0% non-marketable equity interest in a nonpublic company and entered into a three-year distribution agreement where we have the exclusive rights to market, sell and distribute the company's products in exchange for a cash payment of $3.3 million. In addition, we were granted an exclusive license for all of the seller's intellectual property. At the expiration of the distribution agreement we have the right but not the obligation to acquire the remaining interest in the business. We apply the equity method of accounting for investments when we determine we have a significant influence, but not a controlling interest in the investee. We determine whether we have significant influence by considering key factors such as ownership interest, representation on the board of directors, participation in policy making decisions, business relationship and material intra-entity transactions, among other factors. Our equity method investment is reported at cost and adjusted each period for our share of the investee's income or (loss) and dividend paid, if any. We eliminate any intra-entity profits to the extent of our beneficial interest. We record our share of the investee's income or (loss) on a one quarter lag. We report our proportionate share of the investee's income or (loss) resulting from this investment in other income, net in our consolidated statements of operations. The carrying value of our equity method investment is reported in other assets on the consolidated balance sheets. We assess our equity method investments for impairment on an annual basis or whenever events or circumstances indicate that the carrying value of the investment may not be recoverable. During 2021, there were no indications that our non-marketable equity method investment was impaired. Our recorded share of the investee's loss was not material for the year ended December 31, 2021. We did not receive any dividend distributions from this investment during 2021. Our non-marketable equity method investment consists of the following (in thousands):
| As of December 31,
| 2021 |  | 2020
Equity method investment | $ | 3,238 |  |  | $ | — |
Income Taxes Deferred taxes are determined based on the differences between the financial statements and the tax bases using rates as enacted in the laws. A valuation allowance is established if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized. We recognize interest and penalties related to unrecognized tax benefits in the tax provision. We recognize liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. We have not recorded any material interest or penalties during any of the years presented. Foreign Currency Generally, the functional currency of our international subsidiaries is the local currency. Generally, we translate the financial statements of these subsidiaries to U.S. dollars at the exchange rate in effect at the balance sheet date and revenues and expenses are translated at the average monthly exchange rates during the year. Certain of our international subsidiaries consolidate first with another subsidiary that utilizes a functional currency other than U.S. dollars. In those cases, we follow a step by step translation process utilizing the same sequence as the consolidation process. Translation adjustments are recorded as a component of accumulated other comprehensive loss, a separate component of stockholders' equity on our consolidated balance sheets and the effect of exchange rate changes on cash and cash equivalents are reflected on our consolidated statements of cash flows. Gains and losses for transactions denominated in a currency other than the functional currency of the entity are included in our consolidated statements of operations in other income, net. Foreign currency transaction losses (gains), net were $1.0 million, $7.2 million and $(0.7) million in 2021, 2020 and 2019, respectively. Revenue Recognition We recognize revenues when we transfer control of promised goods to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods. We offer certain volume-based rebates to our distribution customers, which we consider variable consideration when calculating the transaction price. Rebates are offered on both a fixed and tiered/variable basis. In both cases, we use information available at the time and our historical experience with each customer to estimate the most likely rebate amount. We also provide chargebacks to distributors that sell to end customers at prices determined under a contract between us and the end customer. Chargebacks are the difference between prices we charge our distribution customers and contracted prices we have with the end customer which are processed as credits to our distribution customers. In estimating the expected value of chargeback amounts for use in determining the transaction price, we use information available at the time, including our historical experience. We also warrant products against defects and have a policy permitting the return of defective products, for which we accrue and expense at the time of sale using information available and our historical experience. Our revenues are recorded at the net sales price, which includes an estimate for variable consideration related to rebates, chargebacks and product returns. The vast majority of our sales of Infusion Consumables, Infusion Systems, IV Solutions and Critical Care products are sold on a standalone basis and control of these products transfers to the customer upon shipment. Our software license renewals are considered to be transferred to a customer at a point in time at the start of each renewal period, therefore revenue is recognized at that time. Arrangements with Multiple Deliverables In certain circumstances, we enter into arrangements in which we provide multiple deliverables to our customers. These bundled arrangements typically consist of the sale of infusion systems equipment, along with annual software licenses and related software implementation services, as well as infusion consumables, IV solutions and extended warranties. Our most significant judgments related to these arrangements are (i) identifying the various performance obligations and (ii) estimating the relative standalone selling price of each performance obligation, typically using a directly observable method or calculated on a cost plus margin basis method. Revenue related to the bundled equipment, software and software implementation services are typically combined into a single performance obligation and recognized upon implementation. As annual software licenses are renewed, we recognize revenue for the license at a point in time, at the start of each annual renewal period. The transaction price allocated to the extended service-type warranty is recognized as revenue over the period the warranty service is provided. Consumables and solutions are separate performance obligations, recognized at a point in time. Shipping Costs Costs to ship finished goods to our customers are included in cost of goods sold on the consolidated statements of operations. Advertising Expenses Advertising expenses are expensed as incurred and reflected in selling, general and administrative expenses in our consolidated statements of operations and were $0.2 million, $0.2 million and $0.1 million in 2021, 2020 and 2019, respectively. Post-retirement and Post-employment Benefits We sponsor a Section 401(k) retirement plan ("plan") for employees. Our contributions to our 401(k) plan were approximately $11.0 million, $10.7 million and $11.4 million in 2021, 2020 and 2019, respectively. We also have post-retirement and post-employment obligations related to employees located in certain international countries. These obligations are immaterial to our financial statements taken as a whole. Research and Development The majority of our research and development costs are expensed as incurred. In certain circumstances when an asset will have an alternative future use we capitalize the costs related to those assets. Research and development costs include salaries and related benefits, consulting fees, production supplies, samples, travel costs, utilities and other miscellaneous administrative costs. Net Income Per Share Net income per share is computed by dividing net income by the weighted-average number of common shares outstanding. Diluted net income per share is computed by dividing net income by the weighted-average number of common shares outstanding plus dilutive securities. Dilutive securities include outstanding common stock options and unvested restricted stock units, less the number of shares that could have been purchased with the proceeds from the exercise of the options, using the treasury stock method. Options that are anti-dilutive, where their exercise price exceeds the average market price of the common stock, are not included in the treasury stock method calculation. Restricted stock units that are anti-dilutive are not included in the treasury stock method. There were 12,354, 12,083 and 10,760 anti-dilutive shares in 2021, 2020 and 2019, respectively. The following table presents the calculation of net earnings per common share (“EPS”) — basic and diluted (in thousands, except per share data):
|  | Year ended December 31,
|  | 2021 |  | 2020 |  | 2019
Net income |  | $ | 103,135 |  |  | $ | 86,870 |  |  | $ | 101,035 |
Weighted-average number of common shares outstanding (basic) |  | 21,206 |  |  | 20,907 |  |  | 20,629 |
Dilutive securities |  | 575 |  |  | 684 |  |  | 916 |
Weighted-average common and common equivalent shares outstanding (diluted) |  | 21,781 |  |  | 21,591 |  |  | 21,545 |
EPS — basic |  | $ | 4.86 |  |  | $ | 4.16 |  |  | $ | 4.90 |
EPS — diluted |  | $ | 4.74 |  |  | $ | 4.02 |  |  | $ | 4.69 |
New Accounting Pronouncements Recently Issued Accounting Standards In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional guidance for a limited period of time to ease the potential burden for reference rate reform on financial reporting. Due to concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate ("LIBOR"), regulators around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform. Optional expedients may be applied to contracts that are modified as a result of the reference rate reform. Modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate. Modifications of contracts within the scope of ASC 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate (incremental borrowing rate). Exceptions to Topic 815, Derivatives and Hedging, results in not having a dedesignation of a hedging relationship if certain criteria are met. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. In November 2021, we entered into two forward-starting swaps whereby the variable leg of the swap references LIBOR, these swaps will be amended in early 2022 to transition to an alternative reference rate (see Note 7: Derivatives and Hedging Activities). The amendments in this ASU allow for certain expedients that will allow us to assume that our hedged interest payments are probable of occurring regardless of any expected modification in their terms related to reference rate reform and will allow us to continue hedge accounting for a cash flow hedge for which the hedged interest rate risk changes if the hedge is highly effective under ASC 815, Derivatives and Hedging or the optional expedient under this ASU is elected. The impact of this ASU on our contracts has not been and is not expected to be material.

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