What CEOs Are Saying - 8.10.25

Let's check in with medical device CEOs.

The medical device industry isn’t one that’s very forgiving of mistakes, given that lives hang in the balance.

In 2025, the companies making things like infusion pumps, endoscopes, and blood management systems are under growing regulatory scrutiny. Unlike other tech sectors where you can patch a bug without too much consequence, medical device failures can be fatal. That makes safety measures critical and requires flawless regulatory compliance.

Today, I’m pulling interesting insights and quotes from three earnings calls held by dominant players in the industry (ICU Medical, Haemonetics, and Olympus). A few of the biggest takeaways before we get to the calls:

1. The 96% Problem: Perfect Compliance or Total Shutdown

Tokyo-based Olympus provides the industry’s starkest lesson: completing 96% of FDA quality commitments means absolutely nothing when the remaining 4% triggers import alerts blocking 58 device models from the U.S. market.

Despite these affected products generating only 1% of revenue, the regulatory overhang collapsed operating profit by 65%. In medical devices, “close enough” kills. You either meet every single regulatory requirement or face complete market exclusion.

2. Software as the Ultimate Moat in Connected Healthcare

Haemonetics demonstrates how owning the software layer creates unbreachable competitive advantages. They control roughly 80% of U.S. plasma donor management software and are “the only 510(k) approved DMS software available for commercial sale in the U.S.” This software monopoly locks plasma centers into their ecosystem for years, driving 11-14% organic growth from contracted upgrades.

3. Competitor Safety Failures Create Massive Opportunity Windows

The timing of ICU Medical's latest product rollouts exemplifies how quickly competitive landscapes shift when safety is paramount. Just as they received FDA clearance for new unified pump platforms, rival Baxter's Novum pumps were potentially linked (via reports to the FDA) to 79 serious injuries and 2 deaths, triggering Class I recalls. This creates a “perfect storm opportunity” in markets where hospitals replace equipment every 9-10 years. When device failures occur, the entire competitive balance can change overnight.

ICU Medical: Q2 2025 Earnings Call

ICU Medical, founded in 1984 and based in San Clemente, California, makes the critical infrastructure that keeps hospital patients alive: infusion pumps, IV connectors, and software that prevents deadly dosing errors. They basically supply the plumbing of modern medicine, having become one of the largest players in infusion therapy following major acquisitions from Pfizer (2017) and Smiths Group (2022).

Quarterly performance

Second quarter revenue of $548.9 million beat expectations despite an 8% decline (entirely from spinning off their low-margin IV solutions business). Adjusted EPS of $2.10 crushed analyst expectations of $1.50, a 40% beat. Yet shares fell 10.5% as investors fixated on the revenue decline rather than underlying strength. Their core needle-free connectors business hit a company record, and management expects their pump division to deliver a record quarter next.

Major decision

Tariffs interfere with a Costa Rica manufacturing bet

ICU moved all pump manufacturing to Costa Rica to slash costs, a strategy that worked beautifully… until tariffs hit. Now they're facing $25-30 million in tariff expenses for 2025, with Costa Rica’s rate jumping from 10% to 15%. Management has shifted from mitigation mode to permanent adaptation. CEO Vivek Jain:

Our mindset is shifting to offsetting as much of the tariff burden on the assumption that these are now permanent.

Industry insight

A competitor’s failure can be a perfect opportunity

ICU just received FDA clearance for their new Plum Solo and Plum Duo precision pumps, plus unified LifeShield safety software across all their devices. The timing couldn't be better. Rival Baxter's Novum pumps are possibly linked to 79 serious injuries and 2 deaths due to dosing errors, triggering a Class I FDA recall in July 2025. This creates a massive market opportunity for ICU just as they received FDA clearance for their new unified pump platform. The broader lesson is that in fields like medical devices, where mistakes kill patients, reliability trumps everything. Hospital infusion pumps stay in place for 9-10 years, and ICU's installed base is approaching that replacement cycle just as competitors stumble with safety issues.

Infusion technology from ICU Medical

Memorable quotes from the call

On realistic guidance after past struggles:

Given what we've put people through, we don't want a number out there that is not realistic.

On the replacement cycle timing:

The devices really hit kind of nine years at the end of this year... it's probably more of a next year event.

On competitor troubles:

We all live in a glass house, right? And so we're very respectful of the things people have to go through to get these products approved and stabilized.

On unified platform strategy:

All of our pumps will now connect on a single software solution... minimizing training, speeds onboarding, supports interoperability.