UTMD Q3 Net Income Plunges 26% Amidst Distributor Order Cancellations

TL;DR

**UTMD's Q3 results are a red flag, with plummeting sales and net income driven by international distributor issues and a hefty bad debt charge – time to be cautious.**

AI Summary

UTAH MEDICAL PRODUCTS INC (UTMD) reported a significant decline in financial performance for the three and nine months ended September 30, 2025. Net sales decreased by 1.9% to $9,812 thousand in Q3 2025 from $10,005 thousand in Q3 2024, and by 7.2% to $29,475 thousand for the nine months from $31,745 thousand in the prior year. Net income saw a substantial drop of 26.2% to $2,631 thousand in Q3 2025 from $3,564 thousand, and 20.5% to $8,720 thousand for the nine months from $10,972 thousand. Earnings per diluted share also fell by 19.9% to $0.82 in Q3 2025 and 13.5% to $2.68 for the nine months. Key business changes include the cancellation or delay of non-cancellable orders by two outside-U.S. distributors, resulting in a loss of $581 thousand in Q3 2025 revenues and an additional $395 thousand bad debt expense. Sales to the China distributor were $395 thousand in Q3 2025, down from $781 thousand in Q3 2024, and sales to PendoTECH were $96 thousand, down from $290 thousand. The company's gross profit margin decreased to 57.1% in Q3 2025 from 58.0% in Q3 2024, and operating income margin declined to 26.6% from 33.4%. Strategic outlook is uncertain regarding the China distributor relationship if the cancellation fee is not paid.

Why It Matters

This significant decline in UTMD's Q3 and 9M 2025 financial performance, driven by unexpected foreign trade events and a substantial bad debt reserve, signals potential instability for investors. The loss of key distributor relationships, particularly with the China distributor and PendoTECH, could impact future revenue streams and market share, especially in competitive medical device sectors. Employees might face uncertainty if these trends continue, potentially affecting job security or growth opportunities. Customers could experience disruptions in product availability or support if distribution channels are altered. The broader market may view this as a cautionary tale regarding international trade risks and reliance on specific OEM partners.

Risk Assessment

Risk Level: high — The risk level is high due to a 26.2% drop in net income for Q3 2025 and a 20.5% drop for the nine months ended September 30, 2025. This is primarily driven by the cancellation of $581 thousand in Q3 2025 revenues from two outside-U.S. distributors and an additional $395 thousand bad debt expense related to the China distributor, indicating significant operational and international trade risks.

Analyst Insight

Investors should consider reducing exposure to UTMD given the substantial decline in net income and the unresolved issues with key international distributors. Monitor future filings closely for updates on the China distributor relationship and any further erosion of sales from other OEM customers.

Financial Highlights

debt To Equity

0.03

revenue

$9,812,000

operating Margin

26.6%

total Assets

$121,975,000

total Debt

$3,723,000

net Income

$2,631,000

eps

$0.82

gross Margin

57.1%

cash Position

$84,267,000

revenue Growth

-1.9%

Revenue Breakdown

Key Numbers

• $9.81M — Net Sales (Q3 2025) (Decreased by 1.9% from $10.01M in Q3 2024)
• $2.63M — Net Income (Q3 2025) (Decreased by 26.2% from $3.56M in Q3 2024)
• $0.82 — Diluted EPS (Q3 2025) (Decreased by 19.9% from $1.025 in Q3 2024)
• $581K — Lost Revenues (Q3 2025) (Due to foreign distributor order cancellations)
• $395K — Bad Debt Expense (Q3 2025) (Additional reserve for China distributor)
• 57.1% — Gross Profit Margin (Q3 2025) (Reduced from 58.0% in Q3 2024 due to lower sales and absorption)
• 26.6% — Operating Income Margin (Q3 2025) (Declined from 33.4% in Q3 2024)
• 3,203,672 — Shares Outstanding (As of November 10, 2025)
• $7.36M — Common Stock Purchased and Retired (9M 2025) (Reduced from $13.26M in 9M 2024)
• $84.27M — Cash & Investments (Sept 30, 2025) (Increased from $82.98M at Dec 31, 2024)

Key Players & Entities

• UTAH MEDICAL PRODUCTS INC (company) — Registrant and manufacturer of medical devices
• PendoTECH (company) — Previous major OEM customer with declining sales to UTMD
• China distributor (company) — Outside-U.S. distributor with cancelled orders and unpaid cancellation fees
• $9,812 thousand (dollar_amount) — Net sales for Q3 2025
• $10,005 thousand (dollar_amount) — Net sales for Q3 2024
• $2,631 thousand (dollar_amount) — Net income for Q3 2025
• $3,564 thousand (dollar_amount) — Net income for Q3 2024
• $581 thousand (dollar_amount) — Lost Q3 2025 revenues due to distributor cancellations
• $395 thousand (dollar_amount) — Additional bad debt expense in Q3 2025
• NASDAQ (regulator) — Exchange where UTMD common stock is registered

FAQ

Risk Factors

• Foreign Distributor Order Cancellations [high — operational]: Two outside-U.S. distributors cancelled or delayed non-cancellable orders, resulting in a $581,000 loss in Q3 2025 revenues. This also led to an additional $395,000 bad debt expense due to potential non-payment of cancellation fees by the China distributor.
• Bad Debt Expense and China Distributor Relationship [high — financial]: A $395,000 bad debt expense was reserved for the China distributor, impacting Q3 2025 operating income. The future relationship with this distributor, which has spanned over two decades, is uncertain if the cancellation fee is not paid.
• Dependence on Key Distributors [medium — market]: The company's revenue is significantly impacted by the performance and order patterns of its international distributors, as evidenced by the substantial revenue loss from two OUS distributors in Q3 2025.
• Inventory Management and Cancellation Fees [medium — operational]: The company incurred costs for inventory (finished goods, work-in-process, raw materials) intended for cancelled orders, leading to a cancellation fee invoiced to the China distributor. The inability to recoup these costs poses an operational and financial risk.

Industry Context

UTMD operates in the specialty medical device market, characterized by innovation and regulatory oversight. The company's performance is sensitive to global supply chain dynamics and the purchasing decisions of international distributors, as highlighted by recent order cancellations.

Regulatory Implications

While no specific new regulatory issues are detailed, the company's reliance on international sales means it must comply with varying import/export regulations and product standards in different markets. The bad debt and cancellation fee issues could also attract scrutiny if they escalate.

What Investors Should Do

1. Monitor China Distributor Relationship
2. Assess Impact of Foreign Distributor Issues
3. Analyze Margin Compression

Key Dates

• 2025-09-30: End of Third Quarter and Nine Months Reporting Period — Financial results for Q3 and the first nine months of 2025 were reported, showing a decline in sales and net income compared to the prior year.
• 2025-11-10: Shares Outstanding Date — Provided the number of outstanding shares (3,203,672) as of this date, relevant for per-share calculations and market capitalization.

Glossary

Non-cancellable orders

Orders that, by agreement, cannot be cancelled by the buyer without penalty or consequence. (The cancellation of these orders by distributors significantly impacted UTMD's Q3 2025 revenue and led to additional expenses.)

Bad debt expense

An expense recognized when a company determines that an amount owed to it will not be collected. (UTMD reserved an additional $395,000 in bad debt expense related to a China distributor's order cancellation, reducing operating income.)

Gross profit margin

The percentage of revenue that exceeds the cost of goods sold. (Decreased to 57.1% in Q3 2025 from 58.0% in Q3 2024, indicating reduced profitability on product sales.)

Operating income margin

The percentage of revenue that remains after deducting operating expenses. (Declined to 26.6% in Q3 2025 from 33.4% in Q3 2024, reflecting lower profitability from core business operations.)

Other comprehensive income (loss)

Unrealized gains or losses on investments, foreign currency translation adjustments, and pension plan adjustments that are not included in net income. (Reported a loss of $376,000 in Q3 2025, compared to a gain of $1,432,000 in Q3 2024, affecting total comprehensive income.)

Year-Over-Year Comparison

Compared to the prior year, UTMD experienced a 1.9% decrease in net sales for Q3 2025 and a 7.2% decrease for the nine-month period. Net income and EPS also saw significant declines of 26.2% and 19.9% respectively for Q3. Gross profit margin slightly decreased to 57.1% from 58.0%, while operating income margin saw a more substantial drop to 26.6% from 33.4%, reflecting increased operational challenges and reduced sales absorption.

Key Financial Figures

• $0.01 — nge on which registered: Common stock, $0.01 par value UTMD NASDAQ Indicate by
• $29 — res of its stock in the open market for $29, at a price of $57.90 per share. 7 It
• $57.90 — the open market for $29, at a price of $57.90 per share. 7 Item 2. Management's Dis
• $10,005 — 9M 2024 Change Net Sales $ 9,812 $10,005 ( 1.9%) $ 29,475 $31,745 ( 7.2%) G
• $31,745 — s $ 9,812 $10,005 ( 1.9%) $ 29,475 $31,745 ( 7.2%) Gross Profit 5,604 5,802 (
• $976 — cellable orders. As a result, UTMD lost $976 in 3Q 2025 shipments and $581 in 3Q 202
• $581 — UTMD lost $976 in 3Q 2025 shipments and $581 in 3Q 2025 revenues. The lower loss of
• $395 — ervatively, UTMD reserved an additional $395 in 3Q 2025 bad debt expense (G&A expens
• $193 — (WW) consolidated sales in 3Q 2025 were $193 lower than in 3Q 2024, and were 2,270 l
• $781 — ancellation fee) in 3Q 2025 compared to $781 in 3Q 2024, and $2,054 in 9M 2025 compa
• $2,054 — Q 2025 compared to $781 in 3Q 2024, and $2,054 in 9M 2025 compared to $2,368 in 9M 202
• $2,368 — 2024, and $2,054 in 9M 2025 compared to $2,368 in 9M 2024. The negative sales trend fr
• $96 — ottomed out. Sales to PendoTECH WW were $96 in 3Q 2025 compared to $290 in 3Q 2024,
• $290 — TECH WW were $96 in 3Q 2025 compared to $290 in 3Q 2024, and $360 in 9M 2025 compare
• $360 — Q 2025 compared to $290 in 3Q 2024, and $360 in 9M 2025 compared to $2,346 in 9M 202

Filing Documents

• utmd-20250930_10q.htm (10-Q) — 572KB
• utmd_ex31z1.htm (EX-31.1) — 7KB
• utmd_ex31z2.htm (EX-31.2) — 7KB
• utmd_ex32z1.htm (EX-32.1) — 3KB
• utmd_ex32z2.htm (EX-32.2) — 3KB
• 0001096906-25-001839.txt ( ) — 2405KB
• utmd-20250930_cal.xml (EX-101.CAL) — 29KB
• utmd-20250930_def.xml (EX-101.DEF) — 34KB
• utmd-20250930_lab.xml (EX-101.LAB) — 125KB
• utmd-20250930_pre.xml (EX-101.PRE) — 102KB
• utmd-20250930.xsd (EX-101.SCH) — 18KB
• utmd-20250930_10q_htm.xml (XML) — 254KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Consolidated Condensed Balance Sheets as of September 30, 2025 and December 31, 2024 1 Consolidated Condensed Statements of Income for the t hree and n ine months ended S eptember 30 , 2025 and S eptember 30 , 2024 2 Consolidated Condensed Statements of Cash Flows for the n ine months ended S eptember 30 , 2025 and S eptember 30 , 2024 3 Consolidated Condensed Statements of Stockholders' Equity for the t hree and n ine months ended S eptember 30 , 2025 and S eptember 30 , 2024 4 Notes to Consolidated Condensed Financial Statements 5

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 18

Controls and Procedures

Item 4. Controls and Procedures 18

– OTHER INFORMATION

PART II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 19

Risk Factors

Item 1A. Risk Factors 19

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19

Exhibits

Item 6. Exhibits 20

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS AS OF SEPTEMBER 30, 2025 AND DECEMBER 31, 2024 (in thousands) (unaudited) (audited) SEPTEMBER 30, 2025 DECEMBER 31, 2024 ASSETS Current assets: Cash & investments $ 84,267 $ 82,976 Accounts & other receivables, net 3,725 4,094 Inventories 8,118 8,812 Other current assets 422 448 Total current assets 96,532 96,330 Property and equipment, net 10,000 9,763 Goodwill 14,051 13,580 Other intangible assets 55,948 53,772 Other intangible assets - accumulated amortization ( 54,556 ) ( 50,907 ) Other intangible assets, net 1,392 2,865 Total assets $ 121,975 $ 122,538 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 768 $ 696 Accrued expenses 2,243 3,061 Total current liabilities 3,011 3,757 Deferred tax liability - Femcare IIA 248 603 Operating lease liability 241 282 Deferred income taxes 223 469 Total liabilities 3,723 5,111 Stockholders' equity: Common stock - $ 0.01 par value; authorized - 50,000 shares; issued - September 30, 2025, 3,204 shares and December 31, 2024, 3,335 shares 32 33 Accumulated other comprehensive income (loss) ( 9,738 ) ( 11,908 ) Additional paid-in capital - - Retained earnings 127,958 129,302 Total stockholders' equity 118,252 117,427 Total liabilities and stockholders' equity $ 121,975 $ 122,538 see notes to consolidated condensed financial statements 1 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND SEPTEMBER 30, 2024 (in thousands, except per share amounts - unaudited) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2025 2024 2025 2024 Sales, net $ 9,812 $ 10,005 $ 29,475 $ 31,745 Cost of goods sold 4,208 4,203 12,738

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Utah Medical Products, Inc. (UTMD) manufactures and markets a well-established range of specialty medical devices. The Company's Form 10-K Annual Report for the year ended December 31, 2024, provided a detailed description of products, technologies, markets, regulatory issues, business initiatives, resources and business risks, among other details, and should be read in conjunction with this report. Because of the relatively short span of time, results for any given three-month period in comparison with a previous three-month period may not be indicative of comparative results for the year as a whole. Currency amounts in the report are in thousands, except per share amounts or where otherwise noted. Currencies in this report are denoted as $ or USD = U.S. Dollars; A$ or AUD = Australia Dollars; or GBP = UK Pound Sterling; C$ or CAD = Canadian Dollars; and or EUR = Euros. Analysis of Results of Operations a) Overview Income statement results in 3Q and 9M 2025 compared to the same periods of 2024 were as follows: 3Q 2025 3Q 2024 Change 9M 2025 9M 2024 Change Net Sales $ 9,812 $10,005 ( 1.9%) $ 29,475 $31,745 ( 7.2%) Gross Profit 5,604 5,802 ( 3.4%) 16,737 18,820 (11.1%) Operating Income 2,611 3,343 (21.9%) 8,961 10,664 (16.0%) Income Before Tax 3,309 4,179 (20.8%) 11,004 13,189 (16.6%) Net Income (NI) 2,631 3,564 (26.2%) 8,720 10,972 (20.5%) Earnings per Diluted Share (EPS) 0.820 1.025 (19.9%) 2.680 3.098 (13.5%) UTMD's 3Q 2025 financial performance was unusually affected by foreign trade events: i.e., the cancellation or possible delay of "non-changeable/non-cancellable orders" by two outside the U.S. (OUS) distributors. Payment terms for these distributors in the past have been full payment prior to shipment of ordered devices in order to eliminate risk of uncollectible receivables. So, non-prepayment

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