ICU Medical Hit Hard As Smiths Medical Needs Significant TLC

ICU Medical's (NASDAQ:ICUI) transformative acquisition of Smiths Medical from Smiths Group (OTCPK:SMGZY) is off to a rough start, as ICUI management has encountered more operational challenges in the new-to-them business than they'd counted on in these first quarters of ownership. Add in sector-wide margin pressures from input costs and a rerating across the med-tech space, and the stock has taken a beating.

Down about 25% since my last update against a roughly 10% decline for the medical device sector, it's going to take time, money, and management attention to get Smiths Medical into proper shape. Wall Street is not a particularly patient place in the best of times, and the significant hit to FY'22 and FY'23 margin assumptions is a tough headwind to overcome. I do still think that the logic of the deal is sound and that better, more profitable, days lie ahead of ICU Medical, but investors will have to exercise some patience before those benefits are reflected in the shares.

 

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ICU Medical Hit Hard As Smiths Medical Needs Significant TLC