ICU Medical (NASDAQ:ICUI) is the type of medical device company that will fly under most investors' radar. Not a large company, ICU doesn't make any especially exciting products, nor is the company well followed by the analyst community. But on boring and overlooked terrain is where I often pitch my tent, and I've been scouting ICU Medical for about seven years now.

For most of the time I've watched the company, it built itself upon its IV connection systems business -- particularly, the needle-free connective device called CLAVE. In February of this year, though, the company struck a significant deal with one of its distributors that has significantly changed the business.

For $32 million in cash, ICU Medical acquired a manufacturing facility from Hospira (NYSE:HSP) and a long-term agreement to manufacture various critical-care medical devices for resale by Hospira.

In many ways, this will be a challenging deal for ICU Medical. First of all, the deal includes an obligation for ICU Medical to reduce the cost of goods sold to Hospira over time -- essentially forcing the company to take costs out of the manufacturing process. Second, the products in question are mostly commodity products that compete based upon price. Third, the nature of the agreement will significantly lower ICU Medical's margins in the immediate future.

Whatever the ultimate fate of this deal, second-quarter results looked pretty sharp. Revenue was up 88% to just less than $41 million; without the manufacturing facility included, growth was 27%. As for the aforementioned margins, operating margin fell from 23% to 14% for the period while net income climbed 38%. With this performance, ICU handily beat the few analysts' estimates out there, particularly on the EPS line -- suggesting to this Fool that the company has already gotten ahead of analysts' expectations on margins.

Looking ahead, ICU hopes to roll out some new products in the second half of the year, including a product line for insulin pump users. What's more, management reiterated that it is actively interested in acquiring additional companies and/or products.

Although the company did quite well in the second quarter, its valuation (based on management's projections for the rest of the year) is above its historical high-teens/low-20s P/E range. What's more, this company has had erratic financial results in the past, as orders from distributors like Hospira have fluctuated quite a bit.

So while I appreciate the steps that management has taken in attempt to grow the business, I'd wait for a more reasonable valuation before buying shares.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).