ICU Medical, Inc. (NASDAQ:ICUI) Q2 2023 Earnings Call Transcript

Vivek Jain: I mean I think the customers the customers have had a belief that all market participants would be on the market eventually. And to some degree that, that has — and that was certainly our belief, as we’ve said we act very directly, and to some degree, that likely stalled people’s decisions on making a purchase or when not all choices were available. And so we did okay for the last time. And we always said we don’t need that much, and we’ve clawed back a chunk of what Hospira had lost that made ICU do the transaction in the first place that theirs, continued opportunity available for us. So we just hope people get on with making decisions because there’s really no reason to not make a decision anymore. So we’re kind of probably a bit more optimistic about it than concerned because the message of the customer as [attributable] from all Parkinson’s was very consistent over the last years that everybody was going to be there.

So everybody is there, time to get on with that.

Larry Solow : Okay. That’s fair. Can you just on the sort of shortfall and vascular access? You mentioned sort of $20 million, $25 million for the year. You also spoke to some new business that I think maybe you said it was delayed. So can you just kind of help us or tell us why it’s been slower? And is it timing? Is it just your ability to to get new contracts? And I guess, part 2 of that question would be as you doesn’t feel your confidence has changed too much and you get into where you inevitably want to be there. So can you just kind of help us through that?

Vivek Jain: Yes. I mean this particular — these particular lines, which are in the acquired vascular access category, have been in the market for many, many years with until recently a very consistent share position, but they really didn’t get a lot of focus in the last 4 or 5 years and with some of the supply chain interruptions and production failures, customers were not served well and moved away from them. We never assumed that, that would all come back. We assume that some portion would come back. And it’s only been a year in earnest because we only combined our commercial or a year ago-or-so or 14 months ago, and it just takes time. We thought a few more things would come in than did. And it was really the difference between what we thought for Q2 and [Indiscernible] getting a couple of million bucks, which means we know that there were pieces of business in the hopper, it just takes longer to get them in and implemented.

But we’re not talking about some assumptions over the long term that are huge shifts in market share, more subtle shifts in market share in the category that we literally connect to with our largest and most core business. So I don’t think we’re sitting here with some outlander set of long-term market share recapture assumptions, just takes a little bit of time to have a few points to come back in.

Larry Solow : Got it. Okay. Great. Great. And then just last question maybe for Brian, just on the gross margin. So obviously, it was better this quarter than expected. It was mostly mix related. Was some of the — I know you certainly slowed your inventory production, but had you initially expected to slow production even more in this quarter I think your original assumptions gross margin was going down sequentially like 100 bps instead of going up 100 bps. So I guess part of it was mix, but was part of it just a slower slowdown in production that’s going to kind of be picking up more in the second half? And then I guess the other question would be just to clarify, your guidance kind of assumes a 35.5% gross margin in the back half. Is that right?