Utah Medical Products (UTMD 0.31%), a developer and manufacturer of specialty medical devices for women’s health, neonatal, and critical care markets, released its second quarter 2025 earnings on July 24, 2025. The company reported a 4.3% decrease in GAAP revenue compared to the prior year, as expected, in line with management’s projections. Revenue for the period was $9.95 million, largely affected by the anticipated drop in sales to its biggest biopharma equipment customer, PendoTECH. Diluted earnings per share (GAAP) came in at $0.94. Net income (GAAP) fell to $3.05 million. Both gross and net margins contracted from the previous year, mainly due to higher costs and shifts in product mix, particularly at Irish operations. Domestic direct sales increased significantly year over year, but ongoing weakness in international distribution and continued, though reduced, legal expense burden. Overall, the quarter matched company forecasts with notable pressures in international segments and gross margins.
| Metric | 2Q 2025 | 2Q 2024 | Y/Y Change |
|---|---|---|---|
| EPS (GAAP, Diluted) | $0.94 | $0.98 | (4.0%) |
| Revenue (GAAP) | $9.95 million | $10.40 million | -4.3% |
| Gross Profit Margin | 56.2% | 60.1% | (3.9 pp) |
| Operating Income | $3.20 million | $3.44 million | (7.1%) |
| Net Income | $3.05 million | $3.45 million | (11.7%) |
Company Overview and Strategic Focus
Utah Medical Products specializes in medical technology for women’s reproductive health, neonatal care, and surgical applications. It develops and manufactures products like the Filshie Clip System, an implantable contraceptive device, and the Intran Plus intrauterine pressure catheter. The company’s business spans direct sales and global distributors, with operations and manufacturing in the US, UK, Ireland, Australia, and Canada.
In recent years, its focus has included product innovation, strong regulatory compliance, and the expansion of international business. Success hinges on sustaining new product development, consistent distribution performance, and navigating regulatory requirements. The ability to defend against legal risk—mainly related to the Filshie Clip System—and to offset declining OEM (original equipment manufacturer) sales, especially following the reduction in orders from PendoTECH, remains crucial, as reflected in PendoTECH’s 71% contribution to the decline in Q2 2025 sales and 86% in 1H 2025 sales.
Quarterly Developments: Sales, Margins, and Cost Controls
Revenue fell by $447,000 from the same period last year. The loss was almost entirely due to the planned decline in PendoTECH sales, which represented 71% of the drop. All other domestic direct sales in the United States held steady or improved. Direct domestic sales of other devices were 10% higher than in 2Q 2024. Sales of the Filshie Clip System in the U.S. were 8% higher than in 2Q 2024. However, domestic OEM sales—which include PendoTECH—dropped 38%, now accounting for just 12% of domestic sales.
International sales sharply underperformed, declining 11.6% in 1H 2025 compared to 1H 2024. Direct sales from subsidiaries in Ireland, Canada, and Australia experienced double-digit percentage drops, while the UK saw a single-digit decline, a trend management links to "distributor caution over reciprocal tariffs" and a sluggish Canadian reimbursement environment. In constant currency terms, foreign currency sales fell 21.4% from a year ago, highlighting underlying weakness beyond foreign exchange gains. International sales made up 43% of total revenue in 2024.
Gross profit margin (GAAP) contracted by nearly 400 basis points year over year to 56.2%, the lowest in several years. Management attributes this drop mainly to unfavorable product mix and lower production volumes at Irish manufacturing sites. Higher raw material costs in Ireland added further pressure. US-produced products maintained margins, but these favorable results were outweighed by challenges abroad. Operating and net income margins (GAAP) also thinned in tandem with revenue and gross profit compared to Q2 2024, signaling broader cost and profitability headwinds.
On the expense side, the company reduced operating costs by $416,000 versus the prior year quarter. This was mainly achieved through reduced litigation expenses—$355,000 lower than the prior year—and decreased research and development spending. General and administrative costs included amortization from the Femcare acquisition, with the majority of legal costs tied to product liability litigation in the US. While these measures offset some profit pressure, the company highlighted ongoing legal exposure as a persistent risk.
Product and Geographic Mix, Legal Liabilities, and Shareholder Returns
Filshie Clip System sales in the US demonstrated resilience, growing meaningfully within direct channels. Other direct device sales also rose. In contrast, OEM sales collapsed as business from PendoTECH dried up. The decline of this formerly largest customer leaves a noticeable gap that other segments have yet to fill.
The international segment faced broad-based challenges. Management cited distributor pressure in Canada and behavior affected by tariff threats as hurdles to overseas growth. Despite facilities in Ireland, UK, Australia, and Canada designed to improve responsiveness, international execution lagged overall company objectives and contributed to the shortfall in revenue and margins. Direct international sales were down 15.8%, with Australia and New Zealand seeing the steepest decline.
Legal expenses declined sharply year over year, with G&A costs dominated by litigation expenses and amortization related to the Filshie Clip System. While this improvement contributed helpfully to profitability for the period, legal risk remains present. Operating expense control, a slowdown in research and development spending, and lower litigation costs were notable features of the quarter’s cost structure.
The company’s balance sheet remains strong, with $82.2 million in cash and investments and no debt at quarter-end. Utah Medical Products returned $1.0 million to shareholders through dividends (up slightly to $0.305 per share from $0.300 a year ago), and repurchased 119,255 shares at an average price of $56.26, allocating $6.7 million to buybacks in the first half of 2025. These actions have partially supported earnings per share (GAAP), even as overall profitability has declined.
Looking Forward: Guidance and Risks
Management reaffirmed that year-to-date performance matches projections made at the start of 2025. The second half of 2025 is expected to see an additional $200,000 reduction in PendoTECH-related revenue compared to the same period in 2024. The company signaled no other concrete updates to forward-looking revenue or earnings guidance, beyond reaffirming its target for annual non-GAAP EBITDA of $17–$18 million for 2025.
Investors are advised to monitor international sales trends, gross margin developments—especially from Irish operations—and ongoing legal exposure as key factors in coming quarters. Management again highlighted risks from market conditions, regulatory changes, foreign exchange movements, and unresolved legal matters. The company paid a dividend of $0.305 per share, compared to $0.300 per share in Q2 2024.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
