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UTMD's Q3 Earnings Dip Y/Y on Trade Disruptions, Margins Squeeze
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Shares of Utah Medical Products, Inc. (UTMD - Free Report) have declined 4.1% since the company reported its earnings for the quarter ended Sept. 30, 2025. This compares to the S&P 500 index’s 2.8% growth over the same time frame. Over the past month, the stock has declined 7.1% compared with the S&P 500’s 3.1% growth.
For the third quarter of 2025, Utah Medical reported an earnings per share (EPS) of 82 cents, which declined 19.9% from $1.025 in the prior-year quarter.
The company witnessed a 1.9% decline in revenue to $9.8 million from $10 million in the prior-year quarter.
Net income dropped by 26.2% to $2.6 million from $3.6 million. These results reflect a challenging operating environment marked by trade disruptions and a weaker sales pipeline.
Utah Medical Products, Inc. Price, Consensus and EPS Surprise
Gross profit for the third quarter was down 3.4% year over year to $5.6 million, with a corresponding gross margin decline to 57.1% from 58%, reflecting both higher manufacturing overhead and increased tariffs, particularly on imported Filshie devices from Ireland.
Operating income fell 21.9% to $2.6 million, yielding an operating margin of 26.6%, down from 33.4%.
Adjusted EBITDA, a non-GAAP measure used by management to assess core operational performance, dropped 15.9% to $4.2 million in the quarter. Adjusted EBITDA margin contracted to 42.5% from 49.6%. These declines signal reduced profitability across operations, despite ongoing cost controls.
Management Commentary
Management attributed the disappointing quarter to an unexpected cancellation or delay of previously confirmed orders from two non-U.S. distributors. This resulted in a direct revenue loss of $0.6 million and triggered a $0.4 million bad debt provision, adversely impacting operating income. The cancellation from the China distributor, in particular, may signal a potential end to a two-decade-long business relationship. CEO Brian Koopman stressed that these disruptions had an outsized impact on the quarter, but noted that UTMD remains financially robust.
UTMD also faced reduced sales from its former major OEM customer, PendoTECH, which fell to just $0.01 million in the quarter from $0.3 million a year earlier. However, the company noted that PendoTECH-related sales have almost bottomed out and may no longer significantly drag future performance.
Factors Influencing Results
Several macro and operational factors played into the reported declines. Manufacturing costs rose due to U.S. tariffs — $0.08 million in the third quarter alone — affecting the cost of goods sold on imported components. Gross margins were further squeezed by under-absorption of fixed overheads, a function of lower sales volumes.
Litigation expenses also remained high at $0.38 million for the quarter, though down from $0.43 million a year earlier. The amortization of identifiable intangible assets, particularly related to UTMD’s 2011 Femcare acquisition, remained substantial at $0.5 million, or 5.5% of quarterly revenue. However, this amortization will end in the first quarter of 2026, offering a path for margin improvement.
On the revenue side, domestic U.S. sales actually rose 3% year over year, driven by a 7.7% increase in direct device sales and a 16.5% gain in Filshie product sales. However, this was offset by an 8.5% decline in international sales, notably affected by a 21.7% drop in constant currency OUS sales.
Guidance
Management now expects full-year 2025 revenue to decline approximately 7% year over year, compared to an earlier estimate of a 5% drop. This revision reflects both the unexpected Q3 distributor cancellations and generally softer economic conditions abroad. Adjusted EBITDA for the full year is now projected in the range of $17 to $18 million.
Other Developments
During the quarter, UTMD repurchased 11,729 of its own shares for $0.7 million, bringing the total year-to-date buybacks to 130,984 shares worth $7.4 million. Dividends paid during the quarter totaled $1 million, representing 38% of quarterly net income. Since the end of 2023, UTMD has spent $34.6 million on share repurchases and dividends, while its cash and investments balance decreased by only $8.6 million over that period, highlighting its strong cash generation capacity.
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UTMD's Q3 Earnings Dip Y/Y on Trade Disruptions, Margins Squeeze
Shares of Utah Medical Products, Inc. (UTMD - Free Report) have declined 4.1% since the company reported its earnings for the quarter ended Sept. 30, 2025. This compares to the S&P 500 index’s 2.8% growth over the same time frame. Over the past month, the stock has declined 7.1% compared with the S&P 500’s 3.1% growth.
For the third quarter of 2025, Utah Medical reported an earnings per share (EPS) of 82 cents, which declined 19.9% from $1.025 in the prior-year quarter.
The company witnessed a 1.9% decline in revenue to $9.8 million from $10 million in the prior-year quarter.
Net income dropped by 26.2% to $2.6 million from $3.6 million. These results reflect a challenging operating environment marked by trade disruptions and a weaker sales pipeline.
Utah Medical Products, Inc. Price, Consensus and EPS Surprise
Utah Medical Products, Inc. price-consensus-eps-surprise-chart | Utah Medical Products, Inc. Quote
Other Key Business Metrics
Gross profit for the third quarter was down 3.4% year over year to $5.6 million, with a corresponding gross margin decline to 57.1% from 58%, reflecting both higher manufacturing overhead and increased tariffs, particularly on imported Filshie devices from Ireland.
Operating income fell 21.9% to $2.6 million, yielding an operating margin of 26.6%, down from 33.4%.
Adjusted EBITDA, a non-GAAP measure used by management to assess core operational performance, dropped 15.9% to $4.2 million in the quarter. Adjusted EBITDA margin contracted to 42.5% from 49.6%. These declines signal reduced profitability across operations, despite ongoing cost controls.
Management Commentary
Management attributed the disappointing quarter to an unexpected cancellation or delay of previously confirmed orders from two non-U.S. distributors. This resulted in a direct revenue loss of $0.6 million and triggered a $0.4 million bad debt provision, adversely impacting operating income. The cancellation from the China distributor, in particular, may signal a potential end to a two-decade-long business relationship. CEO Brian Koopman stressed that these disruptions had an outsized impact on the quarter, but noted that UTMD remains financially robust.
UTMD also faced reduced sales from its former major OEM customer, PendoTECH, which fell to just $0.01 million in the quarter from $0.3 million a year earlier. However, the company noted that PendoTECH-related sales have almost bottomed out and may no longer significantly drag future performance.
Factors Influencing Results
Several macro and operational factors played into the reported declines. Manufacturing costs rose due to U.S. tariffs — $0.08 million in the third quarter alone — affecting the cost of goods sold on imported components. Gross margins were further squeezed by under-absorption of fixed overheads, a function of lower sales volumes.
Litigation expenses also remained high at $0.38 million for the quarter, though down from $0.43 million a year earlier. The amortization of identifiable intangible assets, particularly related to UTMD’s 2011 Femcare acquisition, remained substantial at $0.5 million, or 5.5% of quarterly revenue. However, this amortization will end in the first quarter of 2026, offering a path for margin improvement.
On the revenue side, domestic U.S. sales actually rose 3% year over year, driven by a 7.7% increase in direct device sales and a 16.5% gain in Filshie product sales. However, this was offset by an 8.5% decline in international sales, notably affected by a 21.7% drop in constant currency OUS sales.
Guidance
Management now expects full-year 2025 revenue to decline approximately 7% year over year, compared to an earlier estimate of a 5% drop. This revision reflects both the unexpected Q3 distributor cancellations and generally softer economic conditions abroad. Adjusted EBITDA for the full year is now projected in the range of $17 to $18 million.
Other Developments
During the quarter, UTMD repurchased 11,729 of its own shares for $0.7 million, bringing the total year-to-date buybacks to 130,984 shares worth $7.4 million. Dividends paid during the quarter totaled $1 million, representing 38% of quarterly net income. Since the end of 2023, UTMD has spent $34.6 million on share repurchases and dividends, while its cash and investments balance decreased by only $8.6 million over that period, highlighting its strong cash generation capacity.