UTAH MEDICAL PRODUCTS INC (UTMD)

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, 2025 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; 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 the first quarter (1Q) of 2026 compared to 1Q 2025 were as follows:

Profit margins in 1Q 2026 compared to 1Q 2025 follow:

Consolidated sales in 1Q 2026 were $987 lower than in 1Q 2025. As expected and previously reported, UTMD did not have any 1Q 2026 sales to its previous largest medical device distributor of blood pressure monitoring kits in China, or to its previous OEM customer, PendoTECH.  The combined sales to those two entities in 1Q 2025 were $857, representing 87% of the lower 1Q 2026 sales. Although overall domestic sales were about the same in both 1Q 2026 and 2025, sales outside the U.S. (OUS) excluding the China distributor were another $176 lower, due to lower Filshie Clip System sales OUS.

Using the same foreign currency exchange (FX) rates for sales not invoiced in USD, i.e. in “constant currency” terms, OUS sales would have been an additional $169 lower because of a weaker USD. FX rates for income statement purposes are transaction-weighted averages.

The average FX rates from the applicable foreign currency to USD during 1Q 2026 and 1Q 2025 follow:

UTMD’s 1Q 2026 Gross Profit at $5,282 was $256 lower than 1Q 2025 Gross Profit of $5,538. The 4.6% lower Gross Profit was less than the 10.2% decline in sales as a result of a more favorable product mix and a yearly one-time adjustment to standard costs which increased inventory value. Historically, sales to UTMD’s largest OUS distributor in China had a significantly lower Gross Profit Margin (GPM), Gross Profit/Revenues, than UTMD’s

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average GPM.  Although manufacturing overhead costs were higher, which should lower the GPM when sales are lower, UTMD continues to effectively manage its variable manufacturing expenses.

Consolidated worldwide (WW) Operating Income, which is Gross Profit less Operating Expense (OE), in 1Q 2026 at $2,565 (29.4% of sales) was $588 lower than 1Q 2025 Operating Income of $3,154 (32.5% of sales).  Operating Income was $332 lower in addition to the $256 lower Gross Profit, due to $127 higher litigation expenses, $147 higher employee health care costs in U.S. General and Administrative (G&A) expense and $65 higher same foreign currency exchange rate of OUS OE due to a weaker USD.  In the aggregate, the components of WW OE in USD terms were Product Development (R&D) expenses about the same, Sales & Marketing (S&M) expenses $19 higher and G&A expenses $314 higher than in 1Q 2025, respectively.

Income Before Tax (EBT) declined more than the $588 lower Operating Income because net non-operating income (NOI) in 1Q 2026 was just $617 compared to $705 in 1Q 2025. The lower NOI was due to lower interest earned on cash balances. Combining the $588 lower Operating Income with the about $89 lower NOI yielded 1Q 2026 EBT $677 (17.5%) lower than in 1Q 2025. UTMD’s EBT Margin (EBT/sales) was 36.5% in 1Q 2026 compared to 39.7% in 1Q 2025.

UTMD’s consolidated income tax provision rate in 1Q 2026 was 18.2% compared to 21.2% in 1Q 2025. An EBT mix difference among subsidiary sovereignties caused the provision rate difference. The basic corporate income tax rate for the U.S. (including Utah state income tax) is 25.45% and for Ireland on EBT from exports is 12.5%. The lower income tax provision rate offset the 17.5% lower EBT, resulting in 1Q 2026 Net Income that was 14.4% lower than in 1Q 2025. Fewer outstanding shares as a result of UTMD’s share repurchases further reduced the decline in 1Q 2026 earnings per share (EPS), which is Net Income/diluted number of outstanding shares, to be just 11.0% lower than in 1Q 2025. During the four calendar quarters following the end of 1Q 2025, UTMD repurchased 96,864 of its shares in the open market. There was no dilution from outstanding employee stock options for purposes of calculating diluted EPS in either 1Q 2026 or 1Q 2025.  In income statement summary, with revenues declining 10.5% in 1Q 2026 compared to 1Q 2025, EPS declined 11.0%.

UTMD’s March 31, 2026 Balance Sheet, in the absence of debt, remained strong. After using $9.5 million in cash during the most recent twelve-month period to make share repurchases, pay stockholder dividends and purchase new equipment, UTMD’s March 31, 2026 cash equivalent balances were $4.1 million higher than at March 31, 2025. Ending 1Q 2026 cash equivalent balances were about $1.7 million higher than three months earlier at December 31, 2025.  Stockholders’ Equity at $120.4 million improved $1.1 million at the end of 1Q 2026 from three months earlier, despite the fact that dividends and share repurchases reduce Stockholders’ Equity.

FX rates for Balance Sheet purposes are the applicable rates at the end of each reporting period. The FX rates from the applicable foreign currency to USD for assets and liabilities at the end of 1Q 2026 and the end of 1Q 2025 follow:

b)Revenues

Terms of sale are established in advance of UTMD’s acceptance of customer orders.  In the U.S., Ireland, UK, Canada, Australia and New Zealand, UTMD generally accepted orders directly from and shipped directly to end user clinical facilities, as well as third party medical/surgical distributors, under UTMD’s Standard Terms and Conditions (T&C) of Sale during both 1Q 2026 and 1Q 2025.  UTMD may have separate discounted pricing agreements with a specific clinical facility or group of affiliated facilities based on volume of purchases.  Pricing agreements which are documented arrangements with clinical facilities, or groups of affiliated facilities, if applicable, are established in advance of orders accepted or shipments made. For existing customers, past actual shipment volumes typically determine the fixed price by part number for the next agreement period of one year. For new customers, the customer’s best estimate of volume is usually accepted by UTMD for determining the ensuing fixed prices for the agreement period. Prices are not adjusted after an order is accepted. For the sake of clarity, the

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separate pricing agreements with clinical facilities based on volume of purchases disclosure is not inconsistent with UTMD’s disclosure that the selling price is fixed prior to the acceptance of a specific customer order.

Total consolidated 1Q 2026 UTMD revenues (sales) were $987 (10.2%) lower than in 1Q 2025. Constant currency sales, which are foreign currency sales converted to USD at 1Q 2025 currency exchange rates, were $1,156 (11.9%) lower. U.S. domestic sales were 0.4% lower, and OUS sales were 23.4% lower.

Domestic sales in 1Q 2026 were almost the same at $5,560 compared to $5,583 in 1Q 2025.  The components of domestic sales include 1) “direct sales” of UTMD’s medical devices to user facilities (and med/surg stocking distributors for hospitals), excluding Filshie device sales, 2) “OEM sales” of components and other products manufactured by UTMD for other medical device and non-medical device companies, and 3) “Filshie device sales”, manufactured by Femcare and distributed in the U.S. by UTMD.

1)Direct medical device sales, representing 61% of total domestic sales, were $503 (12.8%) lower in 1Q 2026 than in 1Q 2025. Sales were lower in all product categories in what was hopefully just an abnormally weak demand quarter.

2)Total domestic OEM sales in 1Q 2026, representing 11% of all domestic sales, were $13 (2.1%) lower than in 1Q 2025, as the final $69 order backlog to PendoTECH was shipped in 1Q 2025.

3)Domestic Filshie device sales, representing 28% of all domestic sales, were $493 (+47.4%) higher in 1Q 2026 compared to 1Q 2025, which appears to be an abnormally high U.S. medical facility demand quarter.

OUS sales in 1Q 2026 were $965 (23.4%) lower at $3,162 compared to $4,127 in 1Q 2025.  Sales to UTMD’s former distributor in China which were $789 in 1Q 2025 (and zero in 1Q 2026), which explains 82% of the $965 lower OUS sales. Although Filshie device sales directly to medical facilities in Ireland and the UK were about the same in both periods, direct Filshie device sales to medical facilities in Canada, France and Australia were $230 lower. OUS foreign currency sales actually benefited $169 from a weaker USD. On a constant currency basis, 1Q 2026 OUS sales were $1,133 (27.5%) lower than in 1Q 2025. OUS sales invoiced in foreign currencies in 1Q 2026 were $2,327, which was 74% of all OUS sales, and 27% of total 1Q 2026 UTMD consolidated sales.  Foreign currency OUS sales in 1Q 2025 were $2,944, which was 71% of all OUS sales and 30% of total 1Q 2025 UTMD consolidated sales.

The following table provides USD consolidated sales amounts divided into general product categories for total worldwide sales and the subset of OUS sales.

WW revenues (USD) by product category:

OUS revenues (USD) by product category:

*includes molded components sold to OEM customers.

c) Gross Profit

UTMD’s 1Q 2026 Gross Profit was $256 (4.6%) lower in 1Q 2026 than in 1Q 2025, driven by 10.2% lower sales. Gross Profit results from subtracting the costs of manufacturing products, including direct labor, raw materials and manufacturing overhead (MOH) expenses, from revenues. MOH, whi

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ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Currency amounts are in thousands except per-share amounts and where noted.  Currencies are abbreviated as follows: the U.S. Dollar (USD or $), the Great Britain Pound (GBP or £), the Euro (EUR or €), the Australian Dollar (AUD or A$), the New Zealand Dollar (NZD) and the Canadian Dollar (CAD or C$).

The following comments should be read in conjunction with the accompanying financial statements.

Overview.

With some unexpected circumstances in 2025, Utah Medical Products, Inc (UTMD) did not achieve its beginning of year financial projections.  Nevertheless, the Company retained excellent profit margins, and increased its year-ending cash balances to $85.8 million despite paying $4.0 million in dividends to stockholders and repurchasing 4.5% (since the end of 2024) of its shares in the open market for $8.4 million.

In 2025, income statement measures of Utah Medical Products, Inc. (Nasdaq: UTMD) consolidated financial performance were lower than in 2024, as follows.

Profit margins in 4Q and year 2025 were hampered by higher operating costs coupled with lower sales, as described later in this report:

Because revenue results for any given three-month period in comparison with a previous three-month period are not indicative of comparative results for the year as a whole, UTMD suggests that investors should focus primarily on the annual results in 2025.

Focusing on the causes of the $2.4 million consolidated worldwide (WW) decline in annual revenues in 2025, the lower sales can be explained by the three following categories:

UTMD’s China distributor for Deltran blood pressure monitoring kits (Item 2), for which a non-changeable/noncancellable order in late 2024 for 2025 shipments was surprisingly cancelled just before the final shipment in 3Q 2025, resulted in $431 lower revenues than had been committed, and $310 lower sales than in 2024. Furthermore, $0.4 million of the $2.1 million sales in 2025 was written off in G&A expense as an uncollectible receivable.

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The decline in WW Filshie device revenues (item 3 above) can be divided into three parts:

OUS Direct Filshie revenues were sales by UTMD subsidiaries directly to medical facilities in the UK, France, Ireland, Canada, Australia and New Zealand. In contrast to a sales increase in the U.S., OUS Filshie sales were significantly lower.

Because of additional cost-of-living adjustments for employees in 2025 and continued inflation in raw material costs, UTMD realized an expected decrease in its 2025 gross profit margin compared to 2024.  Notably though, UTMD was able to maintain its GP margin in 4Q 2025 consistent with 4Q 2024, in part due to the low gross profit margin of former sales to its China distributor which were absent in the 4Q of both years.

Although WW operating expenses remained about the same as in the previous year, UTMD’s Operating Income margin in 2025 was lower than in 2024 as a result of lower sales. Legal costs associated with the Filshie clip litigation in the U.S., which are captured in G&A operating expenses, were $783 lower in 2025. But that benefit was more than offset by the following three unusual G&A expense elements: 1) recognition of $395 write-off of cancellation fees due from the China distributor, 2) recognition of a $195 loss from embezzled funds by UTMD’s Australia subsidiary manager, who pled guilty, but hasn’t repaid, and 3) a $100 increase in OUS G&A expenses relative to 2024 FX rates due to a much stronger EUR and GBP in 2025 relative to the USD.  The remaining $93 increase in WW operating expenses was due essentially to higher salaries and recorded noncash option expense for the same number of people.

Non-operating income was lower primarily as a result of lower interest rates on UTMD’s higher cash balances. Year-to-year income tax provision rates varied as a result of the mix of pretax profits in various sovereignties, including truing up for prior tax provisions after actually filing in 2025.  EPS benefited from UTMD repurchasing over 4.5% of its shares during the year.

Foreign currency exchange (FX) rates for Balance Sheet purposes are the applicable rates at the end of each reporting period. The FX rates from the applicable foreign currency to USD for assets and liabilities at the end of calendar year 2025 compared to the end of 2024, and the end of 3Q 2025 follow:

Despite $3,983 in stockholder dividends and $8,355 in share repurchases in 2025, which reduced both cash and Stockholders’ Equity, measures of the Company’s liquidity and overall financial condition remained strong as of the end of 2025 compared to the end of 2024.  Because of the increase in cash, 2025 year-end working capital increased $2,570. The Company’s current ratio improved to 37.6 at the end of 2025 from 25.6 at the end of 2024. As a result of continued strong positive cash flow from normal operations, 2025 year-end Stockholders’ Equity increased $1,841 despite the $12,338 share repurchases and cash dividends. In comparison, UTMD paid $4,260 in stockholder cash dividends and made $19,968 in share repurchases in 2024. The Company also used $371 in cash in 2025 along with $231 in 2024 to invest in new manufacturing equipment and fixtures, as well as maintaining existing Property, Plant and Equipment (PP&E) in good working order. Two-year net capital expenditures for PP&E were $955 less than depreciation.

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Productivity of Fixed Assets and Working Capital Assets.

Assets.

Year-end 2025 total consolidated assets were $122,542 comprised of $97,742 in current assets, $9,908 in consolidated net PP&E and $14,892 in net intangible assets.  This compares to $122,538 total assets at the end of 2024 comprised of $96,330 in current assets, $9,763 in consolidated net PP&E and $16,445 in net intangible assets. Total asset turns (total consolidated sales divided by average total assets for the year) in 2025 were 31% compared to 32% in 2024, reflecting the decrease in sales.

Current assets increased $1,412 due to the $2,780 increase in year-end cash and investments offset by $877 lower inventories and $573 lower accounts and other receivables. The remaining net increase was due to Other Current Assets $81 higher. Year-end 2025 and 2024 cash and investment balances were $85,756 and $82,976, representing 70% and 68% of total assets, respectively.  Net (after allowance for doubtful accounts) year-end trade accounts receivable (A/R) balances were $573 lower at the end of 2025 compared to 2024 because 4Q 2025 sales were $113 lower than in 4Q 2024 and days in receivables were also lower. Ending 2025 average days in A/R were 35 based on 4Q trade sales, instead of 40 days at the end of 2024. A/R over 90 days from invoice date declined to 2.2% of total A/R at the end of 2025 from 6.4% at the end of 2024.  The Company believes any older A/R will be collected or are within its reserve balances for uncollectible amounts. Inventories net of reserves for obsolescence at 2025 year-end were 10% lower from the end of 2024 when 2025 sales were just 6% lower.

Working capital (current assets minus current liabilities) at year-end 2025 was 3% higher at $95,144 compared to $92,574 at year-end 2024, primarily due to an increase in cash from profitable operations. The end of 2025 working capital exceeds UTMD’s needs for normal operations in an uncertain economic environment, funding of future organic growth and timely payment of accrued tax liabilities. Management believes that, despite the negative impact on Return on Stockholders’ Equity, retaining a high cash balance increases its likelihood of being able to allow for substantial funding of any future accretive acquisition without diluting stockholder interest, as well as repurchase of UTMD shares while paying a consistent dividend, and thus will leverage stockholder value in the long term.

December 31, 2025 net $9,908 total PP&E includes Utah, Ireland and England manufacturing molds, production tooling and equipment, test equipment, and product development laboratory equipment.  In addition, PP&E includes computers and software, warehouse equipment, furniture and fixtures, facilities and real estate for all five locations in Utah, Ireland, UK, Canada and Australia. Manufacturing facilities in Utah, Ireland and the UK are standalone buildings with a combined 220,000 square feet on 15 acres of land.  The distribution facilities in Australia and Canada with a combined 8,000 square feet are part of larger industrial condominiums.  Management estimates the fair market value of the five owned facilities to be at least $35 million excluding the contents, the fungible value of which increases stockholder enterprise value relative to most of UTMD’s industry peers which lease their facilities.

Compared to the end of 2024, ending 2025 net consolidated PP&E (depreciated book value of all fixed assets) increased $145 despite depreciation exceeding new capital expenditures by $455 because of the effect of foreign currency exchange (FX) rates on year-end foreign subsidiary asset balances, because at the end of 2025 compared to the end of 2024, the EUR was 13% higher, the GBP was 7% higher, the AUD was 8% higher and the CAD was 5% higher relative to the USD.

The following end-of-year FX rates to USD were applied to assets and liabilities of each applicable foreign subsidiary:

The year-end 2025 net book value (after accumulated depreciation) of consolidated PP&E was 28% of purchase cost.  End-of-year PP&E turns (Net Sales divided by Net PP&E) was 3.9 in 2025 compared to 4.2 in 2024 due to 6% lower 2025 sales and higher USD-denominated asset values of foreign subsidiary assets. A future leverage in productivity of fixed assets will be a source of incremental profitability because assets will not have to be increased in proportion to new business activity.

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Net intangible assets (after accumulated amortization) are comprised of the capitalized costs of obtaining patents and other intellectual property, as well as the value of identifiable intangible assets (IIA) and goodwill resulting from acquisitions. Net intangible assets were $14,892 (12% of total assets) at the end of 2025 compared to $16,445 (13% of total assets) at the end of 2024.  Per US GAAP, intangible assets are categorized as either 1) IIA, which are amortized over the estimated useful life of the assets, or 2) goodwill, which is not amortized or expensed until the associated economic value of the acquired asset becomes impaired. Those two categories of Femcare intangibles at year-end 2025 were net IIA of $457 and goodwill of $6,861. The accumulated amortization of Femcare IIA as of December 31, 2025 since the March 18, 2011 acquisition was $31,808. The remaining Femcare IIA will be fully amortized in 1Q 2026. The goodwill portion of intangible assets resulting from the Femcare acquisition, which is not amortized, increased $472 due to a stronger GBP FX rate at year-end. UTMD’s goodwill balance from prior acquisitions including Femcare, Columbia Medical, Gesco and Abcorp was $14,052 at the end of 2025.

Because the products associated with UTMD’s acquisitions of Columbia Medical in 1997, Gesco in 1998, Abcorp in 2004 and Femcare in 2011 continue to be viable parts of UTMD’s overall business, UTMD does not expect the current goodwill value associated with the four acquisitions to become impaired in 2026. Amortization of IIA was $2,126 in 2025 compared to $2,065 in 2024. The difference was predominantly due to the GBP FX rate difference for Femcare IIA amortization. The Femcare IIA amortization expense was the same in both 2025 and 2024 at £1,589.  But because of a difference in FX rates, the 2025 non-cash amortization expense of Femcare IIA was $2,095 compared to $2,030 in 2024. The 2026 non-cash amortization expense (included as part of consolidated G&A operating expenses) of Femcare IIA will be £340.

Liabilities.

As a reminder, payments for the Federal and State repatriation (REPAT) tax liability which resulted from the U.S. TCJA enacted in 2017 were 8% of the respective tax liability per year for the first five years, 15% in the sixth year, 20% in the seventh year and 25% in the eighth year. At the end of 2024, UTMD’s total remaining REPAT tax liability was $698. Calendar year 2025 represented the eighth year, so the end of 2024 liability was a current liability and no REPAT tax liability remains at the end of 2025.

Year-end 2025 current liabilities were $1,158 lower than at the end of 2024. In addition to the elimination of the $698 REPAT tax current liability at the end of 2024, 2025 year-end accrued liabilities were $676 lower due mainly to lower customer deposits and tax liabilities as a result of lower sales activity in 2025. Accounts payable, on the other hand, were $215 higher at the end of 2025, which was just a function of timing. UTMD pays its vendors promptly, well within agreed payment terms, in order to maintain good supplier relationships.

Total liabilities were $1,837 lower at the end of 2025 compared to the end of 2024. The resulting 2025 year-end total debt ratio (total liabilities/ total assets) was just 3% compared to 4% at the end of 2024.  UTMD has no bank debt.

The year-end 2025 Deferred Tax Liability balance created as a result of the fifteen-year deferred tax consequence of the amortization of Femcare’s IIA was $114, down from $604 at the end of 2024. The difference in the $490 book decline compared to the $524 tax effect of 25% (current UK tax rate) times $2,096 in 2025 amortization of Femcare IIA was due to the difference in the GBP FX rate on the remaining DTL balance at the end of 2025 as well as the USD/GBP currency exchange conversion of the IIA amortization during 2025. In addition to liabilities stated on the balance sheet, UTMD has operating lease and purchase obligations described in Note 14 and Note 12, respectively, to the financial statements.

Results of Operations.

a)Revenues.

Under accounting standards applicable for 2025, the Company believed that revenue should be recognized at the time of shipment as title generally passes to the customer at the time of shipment, or completion of services performed under contract.  Revenue recognized by UTMD is based upon documented arrangements and fixed contracts in which the selling price is fixed prior to acceptance and completion of an order.  Revenue from product or service sales is generally recognized at the time the product is shipped or service completed and invoiced, and collectability is reasonably assured. Over 99% of UTMD’s revenue is recognized at the time UTMD ships a physical device to a customer’s designated location, where the selling price for the item

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shipped was agreed prior to UTMD’s acceptance and completion of the customer order. There are no post-shipment obligations which have been or are expected to be material to financial results.

There are circumstances under which revenue may be recognized when product is not shipped, which have met the criteria of ASC 606: the Company provides engineering services, for example, design and production of manufacturing tooling that may be used in subsequent UTMD manufacturing of custom components for other companies.  This revenue is recognized when UTMD’s service has been completed according to a fixed contractual agreement.

Terms of sale are established in advance of UTMD’s acceptance of customer orders. In the U.S., Ireland, UK, France, Australia, New Zealand and Canada, UTMD generally accepts orders directly from and ships directly to end-user clinical facilities, as well as third party medical/surgical distributors, under UTMD’s Standard Terms and Conditions (T&C) of Sale. About 15% of UTMD’s 2025 domestic end-user sales went through third party med/surg distributors which contract separately with clinical facilities to provide purchasing, storage and scheduled delivery functions for the applicable facility.  UTMD’s T&C of Sale to end-user medical facilities are substantially the same in the U.S., Canada, Ireland, UK, France, Australia and New Zealand.

UTMD may allow separate discounted pricing agreements with a specific clinical facility or group of affiliated facilities based on volume of purchases.  Pricing agreements which are documented arrangements with clinical facilities, or groups of affiliated facilities, if applicable, are established in advance of orders accepted or shipments made.  For existing customers, past actual shipment volumes typically determine the fixed price by part number for the next agreement period. For new customers, the customer’s best estimate of volume is usually accepted by UTMD for determining the ensuing fixed prices for the agreement period. Prices are not adjusted after an order is accepted. For the sake of clarity, the separate pricing agreements with clinical facilities based on volume of purchases disclosure is not inconsistent with UTMD’s disclosure above that the selling price is fixed prior to the acceptance of a specific customer order.

UTMD’s global consolidated trade sales are comprised of domestic and OUS sales. Domestic sales in 2025 included 1) direct domestic sales, sales of finished devices to end-user facilities and med/surg distributors in the U.S., and 2) domestic OEM sales, sales of components or finished products, which may not be medical devices, to other companies for inclusion in their products.  OUS sales are export sales from UTMD in the U.S. to customers outside the U.S. invoiced in USD, and sales from UTMD subsidiaries in Ireland, Canada, Australia and the UK which may be invoiced in EUR, GBP, CAD, AUD, NZD or USD.  The term “trade” means sales to customers which are not part of UTMD. Each UTMD manufacturing entity had 2025 intercompany sales of components and/or finished devices to other UTMD entities.

The following table shows the 2025 USD-denominated revenues by sales channel compared to 2024.  Because domestic sales in foreign countries were invoiced in native currencies, the comparison in USD terms includes the change in foreign currency translation (FX) rates. In other words, just the FX rate relative to the USD in 2025 compared to 2024 decreased Canada USD-denominated domestic sales by 2.3% and Australia sales by 2.5%. On the other hand, the FX rate differences increased Ireland and France domestic sales by 5.0% and UK domestic sales by 3.2%.

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In summary, UTMD total worldwide (WW) consolidated USD sales in 2025 at $38,520 were $2,383 (5.8%) lower than in 2024 at $40,903. Consolidated sales including constant currency OUS sales (i.e. using the same FX rates as in the prior year) were 6.8% lower.  The decline can be explained primarily from three sales categories highlighted in the overview at the beginning of this Item 7, page 19: 1) an expected $2,295 (85%) decrease in OEM sales of biopharma pressure sensors and accessories to PendoTECH, reducing Ireland OUS sales $429 and U.S. OEM sales $1,866; 2) in other device sales excluding Filshie devices, an unexpected $310 (13%) lower UTMD Ltd (Ireland) sales to UTMD’s China distributor of blood pressure monitoring kits, which was $431 lower than its “non-changeable” 2025 annual order; and 3) $745 (7%) lower WW sales of Filshie Clip System devices.

Looking forward to 2026 WW consolidated sales, OEM sales to PendoTECH and blood pressure monitoring kits to China are expected to be zero, compared to $2.5 million in 2025. Although UTMD plans with substantial uncertainty to offset those losses entirely with new product sales including sales to other biopharma customers, combining that with modest growth in organic device sales including domestic Filshie device sales, as well as improvement in OUS Filshie device sales, this will yield 2026 consolidated sales about the same as in 2025.

Domestic Sales.

Domestic sales in the U.S. in 2025 were $22,761 compared to $23,444 in 2024, which was $683 (2.9%) lower than in 2024. The $1,866 lower domestic PendoTECH OEM sales were offset by $1,183 higher other domestic sales. Domestic Filshie device sales, representing 20% of domestic sales, were $436 (+10.8%) higher. The unit volume of Filshie clips sold was 12% higher. Domestic direct sales of other devices were $872 (+5.9%) higher, led by a 16% increase in domestic NICU device sales. All other U.S.OEM (not PendoTECH) sales in 2025, which fluctuate from year-to-year, were $125 lower than in 2024.

OUS Sales.

OUS USD-denominated sales in 2025 were $1,700 (9.7%) lower at $15,758 compared to $17,458 in 2024. UTMD Ltd (Ireland) 2025 sales to PendoTECH which were zero in 2025 were $429 lower, and to its China distributor for pressure monitoring kits $310 lower. OUS Filshie device sales, both direct to OUS medical facilities and to OUS distributors combined, which are shipped from Ireland or the UK, were $1,181 lower. Sales of other UTMD devices to OUS distributors were $220 higher in 2025.

Sales invoiced in foreign currencies, which were $11,388 when converted to USD, represented 72% of OUS sales and 30% of consolidated total sales. The stronger EUR and GBP added $397 in OUS foreign currency sales compared to constant currency terms.  FX rates for income statement purposes are transaction-weighted averages. The weighted-average FX rates from the applicable foreign currency to USD during 2025 and 2024 for revenue purposes follow:

The combined weighted-average favorable FX impact on 2025 foreign currency OUS sales was 3.6%, increasing reported 2025 USD sales by $397 relative to the same foreign currency sales in 2024.  In constant currency terms, OUS sales in 2025 were 12.0% lower than OUS sales in 2024. The portion of OUS sales invoiced in foreign currencies in USD terms was 30% of total consolidated 2025 USD sales compared to 32% in 2024. Including the impact of changed FX rates, OUS 2025 direct to end-user sales by UTMD subsidiaries in USD terms were 13% lower.

Sales by Product Category

UTMD groups its revenues into four general product categories: 1) obstetrics, comprised of labor and delivery management tools for monitoring fetal and maternal well-being, for reducing risk in performing difficult delivery procedures and for improving clinician and patient safety;  2) gynecology/ electrosurgery/ urology, comprised of tools for gynecological procedures associated primarily with cervical/ uterine disease including LETZ, endometrial tissue sampling, transvaginal uterine sonography, diagnostic laparoscopy,

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surgical contraception and other MIS procedures; specialty excision and incision tools; conservative urinary incontinence therapy devices; and urology surgical procedure devices;  3) neonatal critical care, comprised of devices that provide developmentally-friendly care to the most critically ill babies, including providing vascular access, enteral feeding, administering vital fluids, oxygen therapy while maintaining a neutral thermal environment, providing protection and assisting in specialized applications; and 4) blood pressure monitoring/ accessories/ other, comprised of specialized transducers and components as well as molded parts and assemblies sold on an OEM basis to other companies.  In these four categories, UTMD’s primary revenue contributors enjoy significant brand awareness by clinical users.

Global revenues by product category:

OUS revenues by product category:

*includes molded components and finished medical and non-medical devices sold to OEM customers.

b)  Gross Profit.

UTMD’s consolidated Gross Profit, the surplus after subtracting costs of manufacturing, which includes purchasing and transporting raw materials (along with applicable tariffs), forming components, assembling, inspecting, testing, packaging and sterilizing products, from net revenues, was $22,001 (57.1% of sales) in 2025 compared to $24,143 (59.0% of sales) in 2024. Gross Profit in 2025 was $2,142 (8.9%) lower with a 5.8% decrease in revenues.

The Gross Profit Margin (GPM) in 2025, which is Gross Profit divided by sales, although still healthy, contracted 1.9 percentage points from 2024, mainly due to the fact that many fixed manufacturing overhead costs increased as expected while sales decreased. Management did not reduce important manufacturing overhead resources in the same proportion as the 2025 decline in sales as doing so would have limited future UTMD capabilities to grow the Company. U.S. tariffs in 2025 were $140 (0.4%-points of consolidated sales) compared to $15 in 2024, representing about 20% of the margin change. Although supplier costs for raw materials overall continued to increase and the Company implemented further cost-of-living salary adjustments during 2025 for employees, management expects to be able to control the productivity of its variable manufacturing costs in 2026 consistent with the past.  Except for a late year increase in domestic Filshie device prices to help offset tariffs on Utah intercompany purchases of Filshie devices from its Ireland manufacturing subsidiary, UTMD did not increase prices to medical facilities in 2025. UTMD does not intend to increase prices to customers again in 2026, with the exception of specific custom OEM products. If the Company is successful in its objective to replace all of the lost China Deltran low GPM 2025 revenues and remaining 2025 PendoTECH revenues with new product revenues in 2026, the resulting 2026 GPM could expand a full percentage point higher than in 2025, resulting in a 2% increase in Gross Profit for the same level of revenues.

UTMD’s Ireland subsidiary’s (UTMD Ltd’s) 2025 Gross Profit was EUR 5,524 (12.1% lower) compared to EUR 6,283 in 2024 as total EUR revenues, including direct sales to France and intercompany sales of devices manufactured in Ireland, were 8.8% lower. The associated GPMs were 56.3% in 2025 and 58.4% in 2024. Femcare UK Gross Profit was GBP 1,440 in 2025 compared to GBP 1,579 in 2024. The 2025 UK GPM was 54.6% compared to 55.7% in 2024 while UK GBP sales including intercompany revenues were 7.0% lower. Femcare Australia and Femcare Canada are just distribution facilities for UTMD finished devices in their respective countries. Gross Profit is the result of subtracting intercompany purchase prices of devices, plus incoming freight, duties and applicable tariffs, from revenues. Australia 2025 Gross Profit was AUD 518 (46.0% of sales) compared to AUD 623 (46.9% of sales) in 2024. Canada 2025 Gross Profit was CAD 414 (40.4% of sales) compared to CAD 538 (41.2% of sales) in 2024. The GPMs in both Australia and Canada

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were diluted not only by higher overhead costs with lower sales, but also higher direct material costs resulting from weaker local currencies for devices purchased from the U.S., Ireland and the UK.  In the U.S., Gross Profit was $13,846 (1.0% lower) in 2025 compared to $13,991 in 2024 when revenues including intercompany sales were 3.8% lower. The U.S. GPM was 49.9% in 2025 compared to 48.5% in 2024. A summation of the above subsidiaries’ Gross Profit will not yield UTMD’s consolidated total Gross Profit because of the elimination of profit in inventory for intercompany sales.

c)Operating Income.

Operating Income results from subtracting Operating Expenses from Gross Profit. For the year 2025, Operating Income was $11,402 compared to $13,594 in 2024, a 16.1% decrease. The $2,192 decrease in Operating Income was from a combination of $2,142 lower Gross Profit with $50 higher Operating Expenses.

The UTMD Ltd (Ireland) Operating Income margin in 2025 was 48.4% compared to 54.4% in 2024. Femcare UK’s Operating Income margin per US GAAP, which includes the IIA amortization expense of the 2011 acquisition, was negative in both 2025 and 2024.  Femcare Australia’s 2025 US GAAP Operating Income margin was negative as a result of the recognition in 4Q 2025 of a $195 loss of funds embezzled by UTMD’s former Australia subsidiary manager, about which she admitted guilt and promised to repay, but in fact hasn’t yet, compared to 23.6% in 2024.  Femcare Canada’s 2025 Operating Income margin was 15.0% compared to 22.4% in 2024. UTMD’s 2025 Operating Income margin in the U.S. was 32.7% compared to 33.1% in 2024.  For clarity, in both 2025 and 2024 the Femcare IIA amortization expense hit the Femcare UK Operating Income margin.

Operating expenses include sales and marketing (S&M) expenses, product development (R&D) expenses and general and administrative (G&A) expenses. Consolidated WW operating expenses were $10,599 (27.5% of sales) in 2025 compared to $10,549 (25.8% of sales) in 2024. The following table provides a comparison of operating expense categories, as well as a further segmentation of G&A expenses:

Description of Operating Expense Categories:

i) S&M expenses:

S&M expenses are the costs of communicating UTMD’s differences and product advantages, providing training and other customer service in support of the use of UTMD’s solutions, attending clinical meetings and medical trade shows, administering customer agreements, advertising, processing orders and shipping, and paying commissions to outside independent representatives. In markets where UTMD sells directly to end-users, which in 2024-2025 included the U.S., Ireland, UK, Australia, New Zealand, France and Canada, the largest components of S&M expenses were the cost of customer service required to timely process orders and the distribution costs associated with shipping products.

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S&M expenses in 2025 were $2,051 (5.3% of sales) compared to $1,901 (4.6% of sales) in 2024. The higher expenses were due to higher salaries from cost-of-living adjustments, $48 higher med/surg distributor fees in the U.S., $38 lower reimbursement of shipping fees in the U.S. and Ireland, and $25 higher advertising and trade show fees in the U.S. Consolidated OUS S&M expenses in 2025 compared to 2024 were increased by a net $9 from FX rate changes due to weaker USD when converting OUS EUR and GBP S&M expenses to USD.  UTMD plans to add marketing talent in the U.S. in 2026, with consolidated S&M expenses overall remaining less than 6% of projected revenues.

S&M expenses include all customer support costs including training. In general, training is not required for UTMD’s products since they are well-established and have been clinically widely used. Written “Instructions For Use” are packaged with all finished devices. Although UTMD does not have any explicit contracts with customers to provide training, it does provide hospital in-service and clinical training as required and reasonably requested.

UTMD promises prospective customers that it will provide, at no charge in reasonable quantities, electronic media and other instructional materials developed for the use of its products. UTMD provides customer support from offices in the U.S., Canada, Ireland, UK and Australia by telephone to answer user questions and help troubleshoot any user issues. Occasionally, on a case-by-case basis, UTMD may utilize the services of an independent practitioner to provide educational assistance to clinicians. All in-service and training expenses are routinely expensed as they occur.  Except for the consulting services of independent practitioners and occasional use of marketing consultants, all of these services are allocated from fixed S&M overhead costs. Historically, additional consulting costs have been immaterial to financial results, which is also UTMD’s expectation for the future.

ii) R&D expenses:

R&D expenses in 2025 were $668 (1.7% of sales) compared to $813 (2.0% of sales) in 2024. R&D expenses include the costs of investigating clinical needs, developing innovative concepts, testing concepts for viability, validating methods of manufacture and materials, completing any necessary premarketing clinical trials, regulatory documentation and other activities required for design control, responding to customer requests for product enhancements, and assisting manufacturing engineering on an ongoing basis in developing new processes or improving existing processes. Product development (R&D) expenses declined in 2025 primarily as a result of higher costs of independent testing and validation of materials used in UTMD’s own biopharma sensors in 2024.  R&D also continued to play a significant role in manufacturing process improvements and quality assurance. UTMD expects R&D expenses in 2026 will again be between 1% and 2% of projected revenues.

iii)  G&A expenses:

The major year-to-year changes in Operating Expense were in the G&A expense category, although the total consolidated 2025 G&A expenses were just $45 higher than in 2024. G&A expenses in 2025 were $7,880 (20.5% of sales) compared to $7,835 (19.2% of sales) in 2024. G&A expenses include the “front office” functional costs of executive management and outside directors, finance and accounting, corporate information systems, human resources, stockholder relations, corporate risk management, corporate governance, protection of intellectual property, amortization of identifiable intangibles, litigation and other legal costs, and provision for bad debts.  The table above helps identify specific categories of G&A expenses which might be of interest to stockholders.

Two unexpected 2025 G&A expense increases were 1) the 3Q bad debt write-off of the $395 balance of a cancellation fee charged UTMD’s China distributor for work-in-process and custom materials used solely for that customer, based on a non-changeable annual order commitment, the last shipment of which in 3Q 2025 was surprisingly cancelled before shipment, and 2) the recognition in 4Q 2025 of a $195 loss of funds embezzled by UTMD’s former Australia subsidiary manager, about which she admitted guilt and promised to repay, but in fact hasn’t repaid yet. In addition to the two “one-time” unusual G&A expenses of $590 in 2025, the FX impact of G&A expense OUS added another $100.

Lower U.S. product liability lawsuit legal expenses, which were $783 lower for the year, offset the $690 unusual one-time expenses and FX rate impact.  U.S. Filshie product liability litigation expenses were $1,355 (3.5% of sales) in 2025 compared to $2,139 (5.2% of sales) in 2024. As of March 2026, fifteen of nineteen courts where cases have been filed around the country have dismissed the lawsuits. Three more are awaiting

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court decisions on UTMD summary judgment motions. If a summary judgment motion is denied, the case would go to trial. No case has gone to trial as yet. While there are currently fewer active cases, and thus less discovery and motion work anticipated in 2026, any case that must go to trial could drive up 2026 litigation expenses significantly.

Otherwise, cost of living salary increases for all G&A employees except the CEO made up the remaining increase in 2025 G&A expenses.

With respect to the $100 FX impact on G&A expenses, a stronger GBP added $84 for the year 2025, $65 of which was just the FX change impact on the same GBP Femcare IIA amortization expense as in the prior year. A stronger EUR added $21, offset by $5 lower OUS G&A expenses in Australia and Canada for slightly weaker AUD and CAD.  Prediction of future FX rates is too uncertain to project looking forward, so UTMD’s 2026 financial projections in this report assume the same currency exchange rates in 2026 as near the end of 2025.  However, since the substantial GBP Femcare IIA amortization expense goes away after 1Q 2026, the FX impact of GBP/USD currency exchange rates in 2026 should be much less.

A division of G&A expenses by location follows:

In summary, looking forward to 2026, with expected revenues about the same, a one-percentage point GPM expansion, litigation expenses no higher than in 2025 and Femcare IIA amortization expenses complete after 1Q 2026, UTMD management projects Operating Income should increase 15-18%.

d)Non-operating income/ Non-operating expense and Income Before Taxes (EBT).

Non-operating income includes royalties from licensing UTMD’s technology, rent from leasing underutilized property to others, income earned from investing the Company’s excess cash and gains from the sale of assets.  Non-operating expense includes interest on bank loans, bank service fees, excise taxes and losses from the sale of assets. Also, the period-to-period remeasured value of EUR cash balances held in the UK, and GBP balances held in Ireland, generates a gain or loss which is booked at reporting period end as non-operating income or expense, as applicable.

i)  Net non-operating income.  Net non-operating income (combination of non-operating income and non-operating expense) was $2,707 in 2025 and $3,208 in 2024. A description of components of UTMD’s non-operating income or expense follows:

1)  Interest Expense.  There was no interest expense in 2025 or 2024.  Absent an acquisition or very large repurchase of shares that requires new borrowing, UTMD does not expect any interest expense in 2026.

2)  Investment of excess cash.  Consolidated investment income (including gains and losses on sales of investments) was $2,807 in 2025 compared to $3,367 in 2024. Average cash balances in 2025 were about $5 million lower than in 2024, and average interest rates were also lower. UTMD is projecting current interest rates to decline further in 2026, leading to a decrease in non-operating interest income. For purposes of providing an estimate of 2026 financial results, management has included approximately $400 less in interest income as realized in 2025.

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3)  Excise Tax on Share Repurchases. As part of the 2022 Inflation Reduction Act, the U.S. government enacted a new 1% excise tax on publicly-traded company share repurchases.  This non-operating expense first impacted UTMD in 2024. The excise tax was $84 in 2025 and $200 in 2024.

4)  Royalties.  Royalties in 2025 were $20 compared to $15 in 2024. Presently, there is only one arrangement which began in 2020 under which UTMD is receiving royalties on its technology.

5)  Gains/ losses from remeasured currency in bank accounts. UTMD recognized a $23 loss in 2025 compared to a $1 gain in 2024 from gains/losses on remeasured foreign currency bank balances.  EUR currency cash balances in the UK, and GBP currency cash bank balances in Ireland, are subject to remeasured currency translation gains/ losses as a result of period-to-period changes in FX rates.

6)  Other non-operating income or expense.  Income received from renting unused warehouse space in Ireland and parking lot space in Utah for a cell phone tower, offset by bank fees, and other miscellaneous non-operating expenses resulted in net non-operating expense of $13 in 2025 compared to a net non-operating income of $25 in 2024.

ii)  Income Before Taxes (EBT).  EBT results from adding net non-operating income or subtracting net non-operating expense from Operating Income. Consolidated EBT was $14,110 (36.6% of sales) in 2025 compared to $16,802 (41.1% of sales) in 2024. The lower consolidated 2025 EBT was consistent with the lower Operating Income.

The 2025 EBT of UTMD Ltd. (Ireland) was €4,515 (46.0% of sales) compared to €5,648 (52.5% of sales) in 2024. Ireland had a disproportionate decline in EBT because it manufactures and sells all of the DPT kits sold to UTMD’s China distributor, and it lost all of its previous PendoTECH demand in 2025. Femcare Ltd.’s (UK) 2025 EBT was (£1,688) compared to (£2,815) in 2024. Femcare Ltd. supports worldwide regulatory requirements in addition to, according to US GAAP, absorbing the IIA amortization expense of the 2011 Femcare Group acquisition. As the developer and legal manufacturer of the Filshie Clip System, Femcare Ltd. is the corporate entity ultimately liable for Filshie product liability claims. In both 2025 and 2024, Utah Medical Products, Inc (Utah corporation parent of Femcare Ltd) transferred the U.S. Filshie litigation expenses to Femcare Ltd. which explains the large year-to-year loss in UK EBT. On a consolidated financial basis, it makes no difference which corporate entity absorbs the expense, except in Net Income when income tax rates vary sovereignty to sovereignty. Femcare AUS’s 2025 EBT was (AUD 85) compared to AUD 364 (27.4% of sales) in 2024. The AUD 302 write-off of the embezzlement by Femcare AUS’s manager caused the loss. Femcare Canada’s 2025 EBT was CAD 148 (14.5% of sales) compared to CAD 289 (22.1% of sales) in 2024.  In addition to the embezzlement in AUS, the EBT declines in both the Australia and Canada distribution entities were due to both lower Filshie device sales and lower profit margins. Since they purchase finished devices in EUR and USD from other UTMD entities, and their native currencies were weaker, their GPMs decreased.

EBITDA is a non-US GAAP metric that UTMD management believes is of interest to investors because it provides meaningful supplemental information to both management and investors that represents profitability performance without factoring in effects of financing, accounting decisions regarding non-cash expenses, capital expenditures or tax environments. If the Company were to need to borrow to pay for a major asset or acquisition, the projected EBITDA metric would be of primary interest to a lending institution to determine UTMD’s credit worthiness. Although the U.S. Securities and Exchange Commission advises that EBITDA is a non-GAAP metric, UTMD’s non-US GAAP EBITDA is the sum of the following elements in the table below, each of which is a US GAAP number:

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UTMD’s adjusted consolidated EBITDA as a percentage of sales was 45.3% for the year 2025 compared to 48.5% in 2024.  Management believes that this operating performance metric provides meaningful supplemental information to both management and investors and confirms UTMD’s ongoing excellent financial performance.

In summary, UTMD’s 2025 non-US GAAP EBITDA declined 12.1% compared to 2024.  With the foregoing assumptions for 2026 financial performance in mind, despite Femcare IIA amortization expense approximately $1.6 million lower in 2026, the non-US GAAP EBITDA metric in 2026 is expected to also be in the range of $17-18 million.

e)Net Income, Earnings Per Share (EPS) and Return on Equity (ROE).

i) Net Income

Net Income results after subtracting a provision for estimated income taxes from EBT. UTMD’s Net Income in 2025 was $11,286 (29.3% of sales) compared to $13,874 (33.9% of sales) in 2024. The lower Net Income margin in 2025 was due to a lower EBT margin as well as a higher average consolidated income tax provision rate. UTMD’s average consolidated income tax provision rates were 20.0% in 2025 and 17.4% in 2024.

In general, year-to-year fluctuations in the combined average income tax provision rate will result from variation in EBT contribution from subsidiaries in jurisdictions with different corporate income tax rates. Taxes in foreign subsidiaries are based on taxable EBT in those sovereignties, which can be different from the contribution to consolidated EBT per US GAAP.  UTMD estimates, barring any new tax law changes which are currently unknown, assuming an adjusted EBT mix, that its combined income tax rate for 2026 will also be in the 20% range, yielding Net Income approximately 14-15% higher than in 2025.

The UK had a corporate income tax rate of 25% for 2025 and 2024.  The UK also allowed a tax deduction for sales of UK patented products which varied from year-to-year based on somewhat complicated rules which are sorted out for UTMD by independent UK tax specialists. The corporate income tax rate for AUS was 30% for both 2025 and 2024. The income tax rate for Canada was about 27.5% for both years. Profits of the Ireland subsidiary were taxed at a 12.5% rate on exported manufactured products, and a 25% rate on rental and other types of income including income from sales of medical devices in Ireland domestically.  U.S. federal corporate income taxes are not 21% of U.S. EBT as set by the 2017 Tax Cuts and Jobs Act, as income taxes paid to the State are a deductible expense for Federal tax purposes, other expenses such as the excise tax on share repurchases and stock option compensation expense are not deductible, and there remains an R&D tax credit along with other credits, not to mention a special GILTI tax related to foreign income and FDII tax credit related to profits on export sales. Utah state income taxes remain at a 4.95% rate.

ii) Earnings Per Share (EPS)

EPS are Net Income divided by the number of shares of stock outstanding (diluted to take into consideration stock option awards which are “in the money,” i.e., have exercise prices below the applicable period’s weighted average market value).  Diluted EPS in year 2025 were $3.483 compared to $3.961 in 2024, a 12.1% decrease. The decrease in EPS was less than the 18.7% decrease in Net Income as a result of share repurchases. Diluted shares were 3,329,927 for the year 2025 compared to 3,503,165 in 2024. Dilution for “in the money” unexercised options for both years 2025 and 2024 was zero. Actual outstanding common shares as of December 31, 2025 were 3,186,221 compared to 3,335,156 at the end of 2024. Although the Company is interested in continuing share repurchases when the stock appears undervalued, without additional repurchases in 2026 UTMD expects an increase in 2026 EPS in the range of 14-16%, yielding a target north of $4.00/ share.

iii) Stockholder Return on Equity (ROE)

Maximizing ROE remains a key management objective for UTMD in order to grow performance without diluting stockholder interest. ROE is the quotient of Net Income divided by average Stockholders’ Equity, but more specifically it is the product of the Net Income margin, productivity of assets and financial leverage. UTMD’s high Net Income margin is the primary factor that continues to drive its ROE, with low financial leverage and decreasing asset productivity as cash balances grow. Cash dividends to stockholders and repurchase of shares, on the other hand, help in lowering average Stockholders’ Equity, reducing the

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denominator in calculating ROE. Building cash balances that increase Stockholders’ Equity, without proportionately increasing Net Income, reduces ROE. UTMD’s 2025 ROE before stockholder dividends was 9.4%.  In comparison, 2024 ROE was 11.3%.

The lower 2025 ROE compared to 2024 was the result of 18.7% lower Net Income. ROE declined just 16.8% due to the $8,355 reduction in Stockholders’ Equity in 2025 from share repurchases. Average Stockholders’ Equity in 2025 was $118,348 compared to $122,870 in 2024. From a longer-term perspective, UTMD’s Stockholders’ Equity almost tripled over the last fourteen years to $119 million at the end of 2025 from $41 million at the end of 2011. This was achieved despite reducing Stockholders’ Equity by returning $61 million in dividends to stockholders, plus $44 million in share repurchases over that same period of time. UTMD’s average ROE over the last 10 years was 15%, and over the last 33 years was 23%.

Looking forward to 2026, UTMD expects at a high level of probability that it will not obtain any revenues from its previous OEM customer PendoTECH or its previous China distributor for BPM kits.  The combined 2025 revenues to those two customers were $2,458, or 6.4% of consolidated 2025 sales.  Management is focused on obtaining revenue growth in other areas to offset those losses, and achieve the same revenues in 2026 as in 2025.  But the projection of new revenue growth is at a lower level of certainty than the projected losses.

On the positive side, if replacing those lost revenues is achieved, it is likely that UTMD’s GPM can improve by about one percentage point relative to 2025, as the previous device sales to UTMD’s China distributor were at its lowest GPM.  From an operating expense perspective, the U.S. Filshie product liability litigation dark cloud remains not fully resolved, so UTMD is conservatively planning about the same $1.3 million litigation expense in 2026 as in 2025, although this might be a source of upside change in Operating Income as 14 of the 19 courts have already dismissed the lawsuits in UTMD’s favor. Litigation expense is included in G&A expenses which reduce UTMD’s Operating Income.  The largest Operating Expense positive change in 2026 will be from the fact that the identifiable intangible asset (IIA) amortization expense associated with the 2011 acquisition of Femcare becomes fully amortized in 1Q 2026. This G&A expense has previously reduced UTMD’s Operating Income by over $2 million per year for the last nearly 15 years.  UTMD’s G&A expense from the previous amortization of Femcare IIA will be $1.6 million lower in 2026 than in 2025.

But the gains in 2026 quarterly financial performance relative to the same quarter in the prior year will not be spread evenly. The 2025 revenues which will be lost in 2026 were in the first part of 2025, and the 2026 gains in new revenues are likely to come in the latter part of 2026. UTMD expects that 1Q 2026 in particular will continue to demonstrate substantially negative comparative results.  For one thing, the final Femcare IIA amortization expense will all be in 1Q 2026. Based on those thoughts and targeted outcomes, although with a high level of uncertainty, management is estimating that UTMD’s consolidated EPS in 2026 will once again be north of $4.00/ share.  In any event, UTMD expects to continue to operate at a high level of relative profitability and positive cash generation, and utilize its cash trove opportunistically to achieve an accretive acquisition or repurchase shares in a way that maximizes long-term stockholder value.

Liquidity and Capital Resources

Cash Flows.

Net cash provided from operating activities in 2025 totaled $14,692 compared to $14,831 in 2024. Although a similar net amount of cash was provided in both years, there were several differences which largely offset each other.  In 2025 relative to 2024, the cash generated by Net Income was $2,589 lower and the reduction in deferred income taxes was $300 higher, together generating $2,889 less cash than in 2025. On the other side, a $371 greater provision for losses on accounts receivable together with a $2,085 greater reduction in non-cash working capital from three sources helped provide more cash than was provided in 2025. The three sources were a $338 decrease in trade accounts receivable compared to an $835 increase in 2025, a $608 greater decrease in inventories and a $211 increase in accounts payable rather than a $73 decrease in the prior year.

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In investing activities, during 2025 UTMD used $371 in capital expenditures to purchase new molds and manufacturing equipment and fixtures for expanded capabilities as well as to maintain and improve existing operating capabilities, compared to investing $231 in 2024. The 2024 expenditures were partly offset by $27 in proceeds from the sale of used equipment. In 2024, UTMD also invested $5 in intangible assets. Capital expenditures in 2025 were $455 less than depreciation.

In 2025, no employee options were exercised.  In 2024 UTMD received $390 and issued 7,592 shares of stock upon the exercise of employee stock options. Option exercises in 2024 were at an average price of $51.39 per share. The Company received a $20 tax benefit from option exercises in 2024. UTMD repurchased 148,935 shares of its stock in the open market during 2025 at an average cost of $56.10 per share.  UTMD repurchased 301,961 shares of its stock in the open market during 2024 at an average cost of $66.13 per share.  The total cost of repurchasing shares was $8,355 in 2025 compared to $19,968 in 2024.  As a subsequent event in 2026 as of March 23, UTMD has repurchased another 1,196 shares of its stock in the open market at an average cost of $55.88 per share. During 2024, 2025 and to date in 2026, the Company repurchased 12.2% of outstanding shares net of 2024 employee option exercises.

UTMD did not borrow in the years 2025 and 2024. Cash dividends paid to stockholders were $3,983 in 2025 compared to $4,260 in 2024. The amount of cash used for dividends was lower despite an approximate 2% higher dividend per share, as a result of the share repurchases.

Management believes that future income from operations and effective management of working capital will continue to provide the liquidity internally needed to finance growth plans.  In an uncertain economic environment, UTMD’s cash balances allow management to operate with the long-term best interest of stockholders in mind.  Planned 2026 capital expenditures for ongoing operations are expected to not be more than depreciation of PP&E, although additional capital expenditure opportunities that benefit future growth will always be considered.

Management plans to opportunistically utilize cash not needed to support normal operations in one or a combination of the following: 1) in general, to continue to invest at opportune times in ways that will enhance future profitability; 2) to make additional investments in new technology and/or processes; and/or 3) to acquire a product line or company that will augment revenue and EPS growth and better utilize UTMD’s existing infrastructure.  If there are no better strategic uses for UTMD’s cash, the Company will continue to return cash to stockholders in the form of dividends and share repurchases when the stock appears undervalued.

Management's Outlook.

UTMD remains small compared to other medical device companies with which it competes, but its employees are experienced and remain diligent in their work. UTMD’s passion is in providing differentiated clinical solutions that will help improve the outcomes of medical procedures and reduce health risks, particularly for women and their babies.

The safety, reliability and performance of UTMD’s medical devices are consistently high and represent significant clinical benefits while providing minimum total cost of care.  UTMD will continue to leverage its reputation as a device innovator and reliable manufacturer which will responsively take on challenges to work with clinicians who use its specialty devices.  In doing so, UTMD will continue to differentiate itself, especially from its commodity-oriented competitors.

In 2026, UTMD plans to

1) realize new sales of a line of high-pressure process control transducer configurations directly to biopharmaceutical manufacturers;

2)regain OUS business which has been hindered by recent U.S. government trade policies;

3)substantially bring the Filshie Clip System product liability lawsuits in the U.S. to a favorable conclusion;

4)introduce additional products helpful to clinicians through product development;

5)continue to achieve excellent overall financial operating performance;

6)utilize positive cash generation to continue providing cash dividends to stockholders and make open market share repurchases if/ when the UTMD share price seems undervalued; and

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7)remain vigilant for affordable accretive acquisition opportunities which may be brought about by difficult economic conditions.

The Company has a fundamental focus to do an excellent job in meeting clinicians’ and patients’ needs, while providing stockholders with excellent returns.  In the combined form of cash dividends and share repurchases, UTMD “returned” $12,338 (109% of Net Income) in 2025 to stockholders compared to $24,228 (175% of Net Income) in 2024.

In 2025, the value of UTMD’s stock declined 9%, ending the year at $55.96/ share, while $1.22 in cash dividends/ share were paid to stockholders. The DJIA, S&P 500 and NASDAQ Composite (where UTMD is traded) indices were all higher in 2025, respectively by 13%, 16% and 20%.

In comparison in 2024, the value of UTMD’s stock declined 27%, ending the year at $61.47/ share, while $1.20 in cash dividends/ share were paid to stockholders. The DJIA, S&P 500 and NASDAQ Composite (where UTMD is traded) indices were all higher in 2024, respectively by 13%, 23% and 29%.

It is safe to say that UTMD’s stock has substantially underperformed the stock market recently. In contrast to the last two years’ performance, combining share price appreciation and a capital allocation strategy that includes opportunistic share repurchases with steadily growing quarterly cash dividends paid to stockholders since 2004, long-term UTMD stockholders have however experienced excellent returns.  UTMD management is committed to recapture the longer-term performance.

Off Balance Sheet Arrangements

None

Contractual Obligations

The following is a summary of UTMD’s significant contractual obligations and commitments as of December 31, 2025:

Critical Accounting Policies and Estimates

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the reported amounts of revenues and expenses during the reporting period.

Management bases its estimates and judgments on historical experience, current economic and industry conditions and on various other factors that are believed to be reasonable under the circumstances. This forms the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Management has identified the following as the Company’s most critical accounting policies which require significant judgment and estimates. Although management believes its estimates are reasonable, actual results may differ from these estimates under different assumptions or conditions.

·Allowance for doubtful accounts: The majority of the Company’s receivables are with healthcare facilities and medical device distributors.  Although the Company has historically not had significant write-offs of bad debt, the possibility exists, particularly with foreign distributors where collection efforts can be difficult or in the event of widespread hospital bankruptcies.

·Inventory valuation reserves:  The Company strives to maintain inventory to 1) meet its customers’ needs and 2) optimize manufacturing lot sizes while 3) not tying-up an unnecessary amount of the Company’s capital increasing the possibility of, among other things, obsolescence. The Company believes its method of reviewing actual and projected demand for its existing inventory allows it to arrive at a fair inventory valuation reserve. While the Company has historically not had significant inventory write-offs, the possibility exists that one or more of its products may become unexpectedly obsolete for which a reserve has not previously been created. The Company’s historical write-offs have not been materially different from its estimates.

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Accounting Policy Changes

The Company’s management has evaluated the recently issued accounting pronouncements through the filing date of these financial statements and has determined that the application of these pronouncements will not have a material impact on the Company’s financial position and results of operations.