Good afternoon, everyone, and welcome to today's ICU Medical Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Also, please note that today's event is being recorded. I would now like to turn the conference over to Mr. John Mills, Managing Partner at ICR. Please go ahead, sir. John Mil

Thank you, and thank you for joining us to discuss ICU Medical's financial results for the second 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 is under the second quarter 2025 events. 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 provided as much detail as possible on any addendums that are added back. And with that, it is my pleasure to turn the call over to Vivek.

Thanks, John, and good afternoon, everyone. I'll walk through our Q2 revenue and earnings performance and provide some commentary on the businesses and then turn it over to Brian to recap the full Q2 results and the more positive gross margin implications of our IV Solutions joint venture now that it's operational and our current view on the impact of tariffs at the moment as there was an increase levied on our core production environment of Costa Rica. After that, I'll come back with some color on where we are in creating a comprehensive infusion therapy company and optimizing our portfolio and a bit of qualitative discussion on the evolving tariffs and just make a few comments about the medium-term activities of the company. Revenue for Q2 was in line with our expectations at $544 million for total company growth of 2% on an organic basis or minus 6% reported, which is driven by the impact of the JV being consummated. Consumables and IV Systems had good year-over-year growth. Adjusted EBITDA was $100 million and EPS was $2.10. Gross margins were ahead of our expectations due to the JV and cash generation was neutral as some cash was tied up in the JV creation itself, tax payment and tariffs. As a reminder, between excess cash generated in Q1 and the net proceeds from the creation of the JV, we have repaid $250 million in principal year-to-date and expect the only variance to our cash flow planning for the year to be tariff payments. The broader demand and utilization environment in Q2 continued to be attractive across almost every geography with the growth rate positive, but not at the levels we saw last year. The capital environment is status quo, and it does appear investments that customers need to get done are getting done. Currency at the moment is not quite as good as it was earlier in the quarter, but is obviously a benefit in the key selling geographies. Getting into our businesses more specifically, our consumables business grew 4% organic and 3% reported. It was a record quarter in absolute sales levels with good sequential growth driven by new global customer implementations, price improvements, rapid growth in some of our niche markets and solid census. We had mentioned on the previous call that last year, we had major sequential increases in Q2 over Q1 of 2024, so we didn't expect Q2 growth now to be at the same rates as Q1. For the near term of Q3, we again see sequential growth and are very comfortable with our comments of mid-single-digit growth for the year. On the last few calls, we've made some high-level comments around new product filings and innovation in our consumables business. One example of this in Q2 was we received an additional 510(k) clearance for our Clave neutral displacement connectors, which are the anchor product of the segment. Inside this updated 510(k) is a published study, which correlates the usage of Clave connectors with lower patient infection rates. Specifically, the study shows that hospitals with standardized on Clave needle-free connector technology report significantly lower patient infection rates versus hospitals not using Clave technology. We're excited about this new clearance, both in that it provides more evidence around our largest, most differentiated business that we will market on for years to come, and it updates the regulatory approval to 2025 standards. We have a number of other new consumable line extensions and adjacencies that we're rapidly pushing in 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 are combining the parts and pieces of legacy ICU and what we acquired from Smiths. Our IV Systems business grew 2% organic and reported. This was entirely driven by LVP growth, which was double digits even with some of the installs that came in a little ahead of schedule in Q1. LVP growth was from 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 cleared. As we described in the last call, we had an excellent 2024 in selling our CADD ambulatory pumps and would have a tougher set of comps on this line, particularly in Q2, which muted the overall segment growth. For the near term of Q3, we again see sequential growth here, frankly, expect a record quarter in aggregate for the IV Systems segment and are comfortable with the previous comments on mid-single-digit growth for the year. On the last call, we provided a lot of detail on the actions related to the FDA warning letter, efforts to remediate products in the field and filings over this year to ensure all pump products had the most up-to-date 510(k)s and modern architecture. So I won't go into that detail again. What we are pleased to announce is that in early July, we did submit 510(k)s for both the Medfusion 5000 syringe pump, the CADD ambulatory pumps and all related LifeShield safety software. These submissions have crossed the first acceptance stage of the review process and dialogue has started around the filings themselves. I would characterize the Medfusion 5000 as a groundbreaking new innovative product, but like what we did with Plum Duo and Plum Solo, we conserved the core of the product that made it a market leader based on accuracy and workflow. We would describe the CADD submission as more of a catch-up filing, bringing a variety of product iterations up to date in a current filing. But the most important aspect of this and what really is a milestone when these products get cleared is that all of our pumps will now connect on a single software solution across all pump modalities, bringing the ease of use and tighter control of all types of infusions to a hospital customer. This was a core tenet of the acquisition to have a single software solution across hospital LVPs, 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. The last development item that will take longer to finish is what we call CADD Connect and is really final frontier, connecting the home care CADD environment back into the same common software framework. We believe we're seeing the benefits of this vision in the marketplace today. And in addition to continuing to focus on competitive opportunities, we are just in the very early stages of refreshing our own installed base with opportunities to create more value from the hardware and software offerings here. Just wrapping up the business segments, our Vital Care segment was down 4% and 34% reported as IV Solutions revenues were deconsolidated from our income statement. The non-IV Solutions product lines in the segment were basically down $4 million sequentially. For the year, we continue to believe these products to be flattish, either up or down marginally. I'll come back after Brian with some comments on the joint venture, how we're thinking about the overall portfolio within Vital Care and tariffs. And so with that, over to you, Brian.

Thanks, Vivek, and good afternoon, everyone. Since Vivek covered the Q2 revenue for each of the businesses, I'll focus my remarks on recapping the Q2 performance for the remainder of the P&L, along with the Q2 balance sheet and cash flow and then provide commentary on the rest of the year given the closing of the JV transaction and ongoing developments in the tariff environment. As you can see from the GAAP to non-GAAP reconciliation in the press release, adjusted gross margin for the second quarter was 40%, which was in line with our expectations. Here, we saw meaningful improvement with a 3 percentage point expansion on both a year-over-year as well as a sequential basis. The biggest driver of this improvement was the deconsolidation of the IV Solutions business, which contributed approximately 2.5 percentage points of gross margin expansion for the quarter. Continued integration synergies and favorable foreign exchange also contributed to the improvement. For the second quarter, the P&L impact from tariffs was not significant, reducing gross margins by only 50 basis points. That is because while we incurred and paid a little over $10 million in new tariffs, the majority of this was capitalized in inventory as of the end of the quarter, and therefore, only $3 million of expense was recognized in the P&L. Adjusted SG&A expense was $116 million in Q2, and adjusted R&D was $21 million. Total adjusted operating expenses were $138 million and represented 25.3% of revenue. The total dollar amount of spend was the same as the past 2 quarters and a bit below our original full year guidance as we have been measured in making some of the strategic R&D and commercial investments that we mentioned earlier this year as well as exercising general cost controls across the company given the uncertain and changing environment. Restructuring, integration and strategic transaction expenses were $16 million in the second quarter and related primarily to continued efforts to integrate our IT systems and consolidate our manufacturing network, along with transaction expenses associated with the IV Solutions joint venture. Adjusted diluted earnings per share for the quarter was $2.10 compared to $1.56 last year. The current quarter results reflect net interest expense of $21 million. The second quarter adjusted effective tax rate was 16% and includes a discrete benefit from the release of tax contingencies as a result of the expiration of various tax statutes of limitation periods, which contributed approximately $0.20 per share. For comparison purposes, the prior year tax rate reflected discrete benefits, which contributed approximately $0.15 per share. Diluted shares outstanding for the quarter were 24.7 million. And finally, adjusted EBITDA for Q2 increased by 10% to $100 million compared to $91 million last year. And it's worth noting that the second quarter EBITDA results positively benefited from $3 million of income related to our remaining 40% equity investment in the IV Solutions joint venture, which is now reported as a separate line item in our P&L. The earnings contribution from the joint venture was higher than planned and is not expected to continue at the same level. Now moving on to cash flow and the balance sheet. For the quarter, free cash flow was a net outflow of $8 million, which largely reflects the offsetting impact associated with the positive timing benefits from working capital that we experienced during the first quarter and mentioned on our last earnings call, in particular, for accounts receivable and accounts payable. It also reflects the timing impact of higher tax payments in Q2, which will not recur this year, along with higher tariff payments, which will continue. During the quarter, we invested $13 million of cash spend for quality system and product-related remediation activities, $16 million on restructuring and integration and $20 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 on the balance sheet, we finished the quarter with $1.35 billion of debt and $300 million of cash. During the second quarter, upon closing the JV transaction on May 1, we used all of the $200 million of net proceeds to pay down the Term Loan A, bringing total principal payments year-to-date to approximately $250 million. Moving forward to the 2025 outlook. Recall that during our last earnings call, we quantified the expected full year financial impacts of the JV transaction, which are included as referenced on Slide #4 of the presentation. And we are confirming that the previously provided impacts for revenue, adjusted EBITDA and adjusted EPS have not changed. We also provided updates on the expected impacts of the evolving situation around tariffs and foreign exchange. Specifically, we said that we anticipated the direct expense from tariffs in FY '25 to be in the range of $25 million to $30 million, the vast majority of which would be recognized in the back half of the year given the cap and roll accounting process. At that time, we also expected the weaker U.S. dollar to offset almost half of the direct tariff expense and said that we would offset a portion of the remaining net exposure through various measures, including lower incentive compensation expense and general cost controls, but expected $5 million to $10 million of unmitigated residual impact from tariffs that would cause us to be at the low end of our annual guidance range for adjusted EBITDA, adjusted EPS and adjusted gross margin. Now that we've reached the midpoint of the fiscal year when we typically update our outlook, in consideration of these items, we are updating our full year guidance for adjusted EBITDA and adjusted EPS. For full year adjusted EBITDA, we are narrowing our previous guidance range of $380 million to $405 million to a range of $380 million to $390 million for the full year. And for adjusted EPS, we are narrowing our previous guidance range of $6.55 to $7.25 per share to $6.85 to $7.15 per share. Our updated guidance for adjusted EBITDA includes the expected impact from last week's executive order, which established new reciprocal tariffs that became effective today, and we estimate will cause our 2025 tariff expense to increase by an additional $5 million. The majority of this $5 million is driven by the tariff rate for Costa Rica, increasing from 10% to 15% as Costa Rica represented our largest tariff exposure country even prior to this latest increase. As a result, we now expect to be at the high end of the $25 million to $30 million range for FY '25 tariff expense. The updated EPS guidance includes the same impacts as adjusted EBITDA plus lower net interest expense and the previously mentioned $0.20 tax benefit recognized in the second quarter. On the revenue line, as Vivek alluded to, there are no changes from our original expectations for the full year. For gross margin, despite the $30 million impact from tariffs, we continue to expect full year adjusted gross margin in the range of 39% to 40%, consistent with our original pre-tariff guidance at the beginning of the year. The impact from tariffs is being largely offset by realization of the full gross margin expansion from the IV Solutions deconsolidation sooner than previously modeled. This implies a back half average gross margin rate of just above 40%, inclusive of the tariff headwind of between 2 to 3 percentage points. As we said before, the gross margin expansion resulting from the JV deconsolidation doesn't actually generate higher EBITDA, but it does highlight and make more obvious the actual gross margin contribution of the rest of the ICU portfolio, and Vivek will provide some further thoughts on that topic. Adjusted operating expenses should be approximately 26% of revenue for the back half of the year. Net interest expense should be approximately $83 million for the full year. And for modeling purposes, you can assume a back half adjusted tax rate of 25% and back half diluted shares outstanding of 24.9 million. Note that our updated guidance reflects tariff policies that are in place today and assumes foreign exchange rates as of August 3. It does not consider potential future impacts such as additional retaliatory tariffs or the broader effects from higher inflation. We are also assuming the income from our equity interest of the joint venture is minimal in the back half of the year, given the additional costs related to the scheduled annual maintenance shutdown of the JV's Austin plant. To wrap up, we're happy with the performance of the business for the first half of this year. And although it is difficult to see given all the moving pieces, we expect both Q3 and Q4 to continue to show underlying sequential improvement for revenue and adjusted EBITDA when you exclude the quarterly phasing from the JV transaction, tariffs and foreign exchange. These improvements are driven by growth within the consumables business and LVP pump line, along with continued synergy capture and cost management. And just to help quantify the underlying performance improvements in the business that we expect this year, if you were to exclude the $30 million impact of tariffs, the midpoint of our updated EBITDA guidance range would be $10 million above the top end of our original post-JV guidance. But we understand tariffs aren't something that can be ignored as they reduce our profitability and it's real cash out the door. So while others can speculate on the permanence of the current tariffs or future trading deals for individual countries, our goal is to minimize and offset the impact anywhere we can, including implementation of price increases where possible, realization of cost savings and carefully managing cash spend for integration and remediation activities. And that's what we're focused on as we begin to approach 2026. Now I'll hand the call back over to Vivek to expand upon some of the initiatives we're currently focused on.

Thanks, Brian. Let me try to go back to the strategy of what we've been building here and how that ultimately gets profitized given some of the new challenges in this environment and why shareholders should care. First and foremost, our goal since having to go from a needle-free component supplier to an integrated vendor was to build the most comprehensive and innovative infusion-focused company. We believe our track record in infusion consumables speaks for itself as we have great brands supported by great clinical data and manufacturing scale that is and will continue to be globally competitive regardless of tariffs. And we will have more innovation in the core and adjacencies of this segment to supplement growth. In our IV Systems business, we believe we're very close to delivering a complete platform solution with the most modern clinically relevant devices and enterprise cloud-based software for customers. This platform solution will anchor the segment for the next 10- plus years as the product life cycles are incredibly long with a great opportunity for new customers, but also to offer more value to our existing installed base. The IV Systems business in the short term bears the highest tariff burden as we went all in on Costa Rica. But we believe as we work off the backlog signed to date that we will overcome these burdens due to the technology value offered and as contracts again come up for renewal. These product developments have been substantial R&D investments that we did not skimp on even with the difficulties we faced following the acquisition, but many investments are reaching fruition. We also believe that IV Solutions are relevant to the total offering for customers. But in that product category, there are others who could innovate better than us, and we were able to make a unique relationship with Otsuka. While early, Otsuka's commitment to date has been great, and they have a road map in all the right areas, PVC-free delivery technology, ready-to-use premixes and nutrition, reconstitution formats, et cetera, and the significant capital required and time horizon to invest in these markets, and we will bring all of this with our consumables and systems offerings together to customers over time. So that all sounds logical and nice, but of course, it needs to be profitized to the right levels. We clearly stated last year, we believe that we were under-earning and have made progress on the gross margin line due to the synergies being realized and accounting impacts of the JV. Our primary focus for the last 18 months after we stabilized the business has been to improve our gross margins after finally recovering some of the historical inflation and stabilizing the inconsistent volume we faced. The tariffs in 2025 now eat into some of the real cash from those improvements and burden the gross margin line even if it's showing major improvement. While mitigation was the topic on the last call and well described, we continue -- and we continue to do everything possible to mitigate. Our mindset is shifting to offsetting as much of the tariff burden on the assumption that these are now permanent, and that will be our work over the balance of the year, and we'll have more comments on this later in the year. It's a good place to be with our best businesses growing with sustained revenue growth reaching record sizes and projects nearing completion to objectively assess what level of infrastructure we should be carrying. We continue to be on track with the consolidation of our production network, rest of world order to cash conversions, logistics and real estate consolidations. These were important items to drive our step-up in profitability in 2025 and beyond. And even if tariffs consume some of the benefit, nothing changes with all the work, and I feel we've described these items many times on previous calls. It all needs to happen in concert with increasing revenues. In terms of where the balance sheet, income statement, portfolio optimization and capital deployment intersect, we would offer a few comments. First, our #1 priority last year and to date has been to stand up the IV Solutions JV. This helped the income statement and balance sheet and will continue to help the balance sheet as we may realize an earn-out payment and we will definitely receive a back-end payment. When looking at the remainder of the Vital Care portfolio versus the innovation in the Consumables and Systems segment, it's pretty obvious Vital Care is dilutive to the overall company growth rate, and it's a safe assumption that it's also dilutive to the overall corporate gross margin. But these are businesses that still generate good positive cash flow with very low capital investments, and we're not interested in making value-destructive decisions in the name of margin or growth rate. But we can now spend a little time thinking how to optimize each piece of the portfolio if the opportunity was to arise. 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. It's also why in addition to offsets to tariffs, we have to focus on reductions to below-the-line capital outlays in restructuring, integration and quality. To be direct on our goals for the next year or 2, we want 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, so we can ultimately transfer value from debt to equity. 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 in general and in general, items customers do not want to switch unless they must. The market needs ICU Medical being an innovative, reliable supplier, and our company is stronger from all the events of the last few years. Thank you to all our team members and customers as we improve each day. And with that, we'll open it up to Q&A.

[Operator Instructions] And we'll go first this afternoon to Jayson Bedford of Raymond James.

Can you hear me okay?

Perfectly Jayson.

Okay. So a few questions, and I hate to start on tariffs, but I'm going to. I appreciate the increase in the tariff rate in Costa Rica. But what have you assumed for China? I'm a little surprised that, that level or exposure didn't come down.

The current guidance assumes China at the current rates in effect today. And we did receive a little bit -- we did get a little bit of benefit because of the pause, which is part of the reason why we're sort of just at the high end of our previous range as opposed to sort of being above it. Plus we -- as we've been working through it, we are seeing some additional tariff exposure on some raw materials and other areas that maybe hadn't been fully quantified previously. So there's always a lot of puts and takes when it comes to these sorts of exercises.

And I guess the other -- and I don't mean to be a bad guy with this question, but I think last quarter, you kind of steered folks towards the low end of the range, but you thought the EBITDA range was appropriate. But you're kind of lowering the top end of the range now. Outside of tariffs, is there anything else that's impacting your view?

No, not at all. It essentially comes down to just tariffs. And obviously, if we didn't have to deal with that situation, we'd be in a much different position as it relates to our outlook for the year, but this is the reality that we find ourselves in.

Given what we've put people through, we don't want a number out there that is not realistic, right? And so I think we said we'd be at the low end. I think we're narrowing what we have out there and Brian tried to be as precise in a world that's not the one we live in, if these things didn't exist, what performance would have been.

Fair enough. Maybe just on revenue. I thought you spoke encouragingly about the expected sequential growth in 3Q. Can you just talk about the demand profile, specifically for Duo and where you are with the implementation and just the Infusion Systems segment in general?

Sure. I mean I think in both big pillars in consumables and pumps, we feel really good about the revenue side. So it's obviously -- if you go back 5 or 6 quarters, it's been consistent. This was a little bit lighter than the others, but it was obviously a very steep ramp last year. So on consumables, this was a record. We think we'll have sequential growth off of this one, as I said. And then specifically on systems, we have installed some Duos now. They're up and running at customer sites. The real interoperable sites are just coming out of LMR. The interoperable runs are coming out of LMR. As soon as we're able to move on that, I think the pace of installations will increase. And there's -- as we said in the script, there's a lot of dialogue out there. Obviously, a lot of [Technical Difficulty] in the infusion pump market. We all live in glass houses. We have to be very mindful of ensuring caution on these [Technical Difficulty], but it feels pretty good.

And it's safe to say that just on LVPs, the landscape is more opportunistic today than it's been in quite some time.

I just think it's the confluence of events that we've talked about for the last 2 years have been building up and the window that people want to make decisions on the aging of the technology itself is all kind of at a good place for the next couple of quarters. And it's -- I'm glad our innovation is in hand to get that done, and we're excited about the new stuff we filed, right? All the headache of the transaction we did was to bring these different platforms together. And I think it's months away from that coming together if we can work our way through these approvals.

We'll go next now to Mike Matson of Needham & Company.

I guess just a few things I wanted to clarify. So on the tariff impact, the incremental $5 million that you're expecting, that would essentially put that kind of net impact that you guys do the $5 million to $10 million basically at $10 million for this year. So in other words, like the part that's actually flowing through the P&L, the headwind would be about $10 million. Is that -- am I hearing that correctly or...

Rough math, Mike, that's correct.

All right. And then the commentary around sequential growth, so you expect sequential growth in Consumables and Infusion Systems, I think. So I know -- I don't remember what you said on Vital Care, but do you expect overall to see sequential growth for the total revenue in Q3 and Q4.

It does come down a little bit to what happens in Vital Care. I think we'd rather talk about it at the individual segment levels, right? What we measure, Mike, Consumables is the business bigger than ever. The Consumables quarter was the largest quarter we ever had in the history of the company in Consumables. We said we think the Systems business could be a record level in Q3, the largest in the history of the company. Those are the things with the profits and cash flow through. So I think we're probably more focused on those. I don't have such a precise answer on Vital Care for Q3 right now.

And then just this news around Baxter suspending sales of their Novum pump. I know it's probably only temporary, maybe until the end of the year or something. But do you think that helps you guys at all over the next couple of quarters?

Again, I think we all live in a glass house, right? And so we're very kind of respectful of the things people have to go through to get these products approved and stabilized. We believe customers make a technology choice. These products have a 10-year life cycle. And we have to believe everybody, and the same is with the other market participant, everybody is back on the market. We have to believe our technology is evaluated over a 10-year run. And so it still has to -- and everybody will get their technologies up and running. And so maybe a little bit, at least forces people to look at things a little closer. But I think if you take a long-term view, you have to assume everybody is going to be in the market. And we still feel good about where we are.

We'll go next now to Will Korner of KeyBanc Capital Markets.

I just want to ask about tariffs. I know that the landscape there seems to be kind of constantly evolving. But last quarter, you were saying that we shouldn't be thinking about the tariff number given on an annualized basis for 2026. I was just wondering if you have any updated thoughts on that.

I think the same language would apply, Will, which is please don't take what this year is and annualize it. We tried to somewhat in the script, say what we thought there, which is at least on some of the pump items, we're installing pumps that we contracted before the tariffs kicked in as time goes by and those installations stop, you should make an assumption on items we're selling today where we have the ability to correct price. We have, but those implementations are still a ways out. So it will burden our P&L certainly for a bit. But that's why we said in the last call, please don't annualize. And then we continue to -- some of the mitigations take time and logistics efforts, et cetera, and we continue to work on those. So I'm not sure we would have a precise number for you today. I think we just stay with the same high level, please don't annualize what's there.

That's helpful. And then switching over to Plum, I just would like to hear if there's been any customer feedback that is maybe surprising you just by the amount that's getting brought up or potentially like what customers are finding to be incremental?

I don't think there's anything that -- the question was, is there anything that's surprising us. I don't think that there's anything that's surprising us so much. Our goal in all the products is to make sure customers are delighted. And I think the experience we're having is that is it a smooth installation? Is the user experience good? Is the training good? Is the onboarding good, et cetera? I mean I think we're trying to check all of those boxes. And we believe the device itself has sort of solved the technology gaps in terms of multiplexing and cybersecurity and visualization, except the user interface that weren't present in the previous device. And we think the curve appeal of all that together gets people's attention. So I don't know if there's one item we point to. Even if the device is great, we like any vendor have to ensure that the implementation and the experience for people coming on board is strong and where these things fall down is getting anyone to change is really hard. And if that effort to change falls down in the early days, it sometimes backfires. And so we just need to make sure that the whole install process is very seamless from our end.

[Operator Instructions] We'll go next now to Larry Solow of CJS.

It's actually Charlie Strauzer for Larry. On the ongoing plant consolidation, how much of the heavy lifting have you already completed? And when you look at how much of that benefit is already incorporated into your '25 outlook versus future benefits?

I mean the best fit that sort of evaporated, the one that is 100% done was the move of all infusion pumps from Minnesota into Costa Rica. And so that did have benefit associated with it until Costa Rica had incremental tariffs. And so that one, great, is fully completed. The other 2 important ones, one North American, one European are very close to completion, probably both done certainly within the next 9 months, hopefully done within the next 6 months. So not a lot is built in this year from those 2 items. They are intended to be helpful next year. And there's really not any beyond that. So that's the last of it.

And then just going back to the commentary on Plum, how do you view the opportunity for sales via upgrades from existing customers versus market share gains?

I think they're both very valuable. And normally, you don't think about -- if you were being objective refresh of your existing customer installed base, the way the business model has operated historically, really getting these dedicated sets. It didn't create a lot of NPV if you're essentially getting the same set you had. I think what's different about the opportunity with Plum Solo is not only does maybe the capital have enough technology that deserves to be valued differently, but if you can enhance the software offering and capture more value there, that does have real NPV associated with it. And so creation of kind of new value streams from existing installed base is really, really important beyond just the revenue goodness of refreshing the hardware. So I think we're excited about that. And then obviously, the juicy stuff is competitive, and we remain focused on that. So both are good opportunity. We continue to have very, very minimal rollover in our entire book of business on pumps today.

We go next now to Michael Toomey of Jefferies.

Most of my questions have been answered, just to double-click on one of them. Do you think you're already seeing like the replacement cycle come through? Did that contribute in the second quarter? Or any signs that that's starting to come through already, the replacement cycle of your existing fleet?

Nothing's come through so far of consequence on replacement cycle, Michael.

When do you think you'd start to see that come through? Is that this year or kind of into next year?

I think the discussion is starting right now. I think realistically, it's more of a next year event. The devices really hit kind of 9 years at the end of this year that have been out there, and they're built like tanks. So I think it's probably more of a next year event. And so that should give you some color with our comments around how we felt about LVP anyway, right, heading into next quarter segment without the replacement cycle or so.

[Operator Instructions] And gentlemen, it appears we have no further questions today. Mr. Jain, I'd like to turn things back to you, sir, for any closing comments.

to updating everybody on our Q3 call. Thanks very much.

Thank you, gentlemen. And again, ladies and gentlemen, that will conclude the ICU Medical Second Quarter 2025 Earnings Call. Again, thanks so much for joining us, everyone, and we wish you all a great remainder of your day. Goodbye.