Company: ICUI
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0000883984-25-000030
Chunk: 148

Company: ICU MEDICAL INC/DE
Filing Date: 2025-08-07
Form: 10-Q
Item: Item 8
Chunk 148
---
2021 Warning Letter"). The 2021 Warning Letter cited, among other things, failures to comply with FDA's medical device reporting requirements and failures to comply with applicable portions of the Quality System Regulation. A provision for the estimated costs related to the field service corrective actions identified as of the closing date of the acquisition was recorded on the opening acquired balance sheet of Smiths Medical in the amount of $55.1 million. The initial estimate recorded was based on a probability-weighted estimate of the costs required to settle the obligation related to known field corrective actions. The actual costs to be incurred are dependent upon the scope of the work necessary to achieve regulatory clearance, including potential additional field corrective actions, and could differ from the original estimate. For the three and six months ended June 30, 2025, we recorded a net reversal to the provision of $2.4 million and $0.7 million, respectively, to adjust the estimated cost to complete the field corrective actions to the amounts expected to be incurred based on historical experience. As of June 30, 2025, approximately $25.8 million of the $32.6 million of accrued field service corrective action recorded was related to the 2021 Warning Letter.

34

ICU MEDICAL, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In 2015, legislation was enacted in Italy which requires medical device companies to make payments to the Italian government if Italy's medical device expenditures for certain years exceeded annual regional expenditure ceilings. Since its enactment, the legislation has been subject to appeals in the Italian court system. In the third quarter of 2024, Italy's Constitutional Court issued two judgments, one of which confirmed the legitimacy of the legislation on the Italy Medical Device Payback ("IMDP"); however, litigation proceedings are still pending and the ultimate resolution remains unknown.  Recent examination of the legislation by the Italian Government has prompted potential amendments that if converted into law, could result in an opportunity for companies to settle certain historical periods (2015-2018) for less than the original assessed value. Therefore, the timing and amount of payments could ultimately differ from our current expectations (see Note 16: Accrued Liabilities for details on amounts accrued for potential payments related to the IMDP).In April 2025, the Company received a warning letter from the FDA following an inspection of Smiths Medical's Oakdale, Minnesota Facility that occurred from July 23