Utah Medical Products, Inc. Reports Financial Performance for Second Quarter 2019 Contact: Crystal Rios (801) 566-1200

Utah Medical Products, Inc. Reports Financial Performance for Second Quarter 2019

Contact: Crystal Rios (801) 566-1200 July 30, 2019

Salt Lake City, Utah - In the second calendar quarter (2Q) and first half (1H) of 2019, Utah Medical Products, Inc. (Nasdaq: UTMD) attained results which

reflect that the Company remains on target to achieve its financial goals for year 2019 despite the apparent negative comparison with 2Q and 1H 2018 results.

Currencies in this release 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. Currency amounts throughout this report are in thousands, except per share amounts and where noted.

Summary of Financial Results

In USD terms, changes in 2Q and 1H 2019 consolidated income statement results compared to the same time periods in the prior calendar year were as follows:

Financial results in 2Q 2019 continued to be hampered on the top line by a stronger USD, on the operating income line by the new intangible asset

amortization expense from UTMD's February 2019 Filshie Clip System (Filshie device) U.S. exclusive distribution rights acquisition, and on the bottom line by a higher consolidated income tax provision rate than in 2018. Net income was also lower

because UTMD had realized $450 in non-operating income from one-time sales of unneeded assets in 2Q 2018 which did not repeat in 2Q 2019.

Because 29% of 1H 2019 consolidated sales were in foreign currencies, the volatility of foreign currency exchange (FX) rates for sales and expenses outside

the U.S. (OUS) continued to have an impact on period-to-period relative financial results. FX rates for income statement purposes are transaction-weighted averages. The average rates from the applicable foreign currency to USD during 2Q 2019 and 1H

2019 compared to the same periods in 2018 follow:

UTMD's revenues invoiced in the above foreign currencies represented 28.6% of total consolidated USD sales in 2Q 2019 and 29.2% in 1H 2019. The weighted

average negative impact on all foreign currency sales from the change in FX rates was 5.6% in 2Q 2019 and 6.1% in 1H 2019, reducing reported USD sales in 2Q 2019 by $194 relative to the same FX rates in 2Q 2018 and by $431 in 1H 2019 relative to the

same FX rates in 1H 2018. In constant currency terms, i.e. using the same FX rates as in the applicable periods in 2018, total consolidated 2Q 2019 sales were up $1,075 (+9.8%), and 1H 2019 total consolidated constant currency sales were up $1,158

Other significant revenue changes in 2Q and 1H 2019 compared to the same periods in 2018 had to do with the change in distribution of Filshie devices in

the U.S., which is described later in this report; a substantial increase in 1H 2019 U.S. OEM sales; a solid increase in direct sales to U.S. domestic medical facilities; and a pause in U.S. neonatal device exports due to regulatory re-registrations

by third party distributors in China, Brazil and Mexico.

UTMD profit margins in 2Q 2019 and 1H 2019 compared to 2Q 2018 and 1H 2018 follow:

UTMD's 2019 Gross Profit Margin (GPM) has not benefited yet from the early 2019 acquisition of distribution rights of its Filshie devices in the U.S. from

CooperSurgical Inc (CSI) because of the substantial remaining CSI inventory which was repurchased by UTMD at CSI's cost. Although UTMD has picked up the distributor margin on higher U.S. Filshie device sales, which has allowed UTMD's total

consolidated GPM to not be diluted, it has not realized any GP contribution from Femcare sales of Filshie devices to the U.S. yet. Another way to explain this is that 71% of the 2018 GP generated by Femcare sales of Filshie devices to the U.S. (to

third party distributor CSI) was recorded in 1H 2018, whereas in 1H 2019 Femcare's GP contribution from sales of Filshie devices to the U.S. (to intercompany distributor UTMD) has been zero. Profit in inventory from intercompany sales is eliminated

when consolidating financial results (i.e. not recognized until the devices are sold to a third party). UTMD estimates the remaining CSI repurchased inventory will likely last well into 4Q 2019. The slightly lower consolidated GPM was due

primarily to a disproportionate increase in U.S. OEM sales which are at a lower average GPM.

On the other hand, UTMD's Operating Income Margin (OIM) was substantially reduced by a 1H $1,842 expense from straight-line amortization of the $21,000

purchase price that UTMD paid CSI to acquire the remaining 4.75 years' exclusive U.S. Filshie device distribution rights. The purchase price of CSI's remaining exclusive distribution rights was recognized as an identifiable intangible asset (IIA).

Because the IIA amortization began on February 1 and expensed on a straight-line basis over 4.75 years, the expected improved GPM from the acquisition will ramp up after the CSI inventory has been consumed and as UTMD is able to grow Filshie device

sales in the U.S. IIA amortization expense in total, including that remaining from the 2011 Femcare Group acquisition, which comprises a significant portion of General & Administrative (G&A) operating expenses, was 13.7% of 2Q 2019

consolidated sales and 12.7% of 1H 2019 consolidated sales. In other words, UTMD's OIM excluding Femcare-related IIA amortization expense was 51% in both 2Q and 1H 2019.

On top of the period-to-period differences in OI, additional differences in Income Before Tax (EBT) were due mainly to the $450 non-operating income (NOI)

from sale of unneeded assets in 2Q 2018 that did not repeat in 2Q 2019. Net NOI was $85 in 2Q 2019 compared to $501 in 2Q 2018, and $120 in 1H 2019 compared to $538 in 1H 2018.

UTMD's Net Income Margin (NIM) in 2Q and 1H 2019 was incrementally lower than in the same periods of 2018 not only because of the EBT differences, but also

due to combined entity income tax provision rates that were 22.8% in 2Q 2019 compared to 22.5% of EBT in 2Q 2018, and 23.4% in 1H 2019 compared to 20.5% in 1H 2018. The reasons for the higher estimated provision rate were a different mix of

subsidiary EBT (with varying tax rates) and a higher U.S. income tax provision rate as a result of the GILTI tax slipped into the U.S. Tax Cuts and Jobs Act (TCJA), enacted in December 2017, which was not in the estimated provision of UTMD in 1H

UTMD's 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 June 2019 and the end of June 2018 follow:

UTMD's June 30, 2019 Balance Sheet, in the absence of debt, remained strong. Ending Cash and Investments were $32.9 million on June 30, 2019 compared to

$51.1 million on December 31, 2018, after investing $23.1 million acquiring CSI's Filshie device distribution rights and remaining inventory, paying $2.1 million in cash dividends to stockholders and repurchasing $0.4 million in UTMD stock during 1H

2019. Stockholders' Equity was up $4.9 million in the six month period from December 31, 2018 after netting the combined $2.5 million in dividends and stock repurchases which reduced Stockholders' Equity.

Total consolidated 2Q 2019 UTMD sales were $881 (+8.0%) higher than in 2Q 2018. Constant currency sales were $1,075 (+9.8%) higher. Total consolidated 1H

2019 UTMD sales were $727 (+3.3%) higher than in 1H 2018. Constant currency sales in 1H 2019 were $1,158 (+5.3%) higher than in 1H 2018.

In 2Q 2019 compared to 2Q 2018, U.S. domestic sales were 28% higher and outside the U.S. (OUS) sales were 12% lower. 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. In 1H 2019 compared to 1H 2018, U.S. domestic sales were 19% higher and outside

the U.S. (OUS) sales were 12% lower than in 1H 2018.

Domestic sales in 2Q 2019 were $6,997 compared to $5,481 in 2Q 2018. Domestic sales in 1H 2019 were $12,791 compared to $10,736 in 1H 2018. 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 sales, 2) "OEM sales" of components and other products manufactured by UTMD for

other medical device and non-medical device companies, and 3) "Filshie sales", which in 2018 were by UTMD's UK subsidiary, Femcare Ltd (Femcare), to CSI for distribution in the U.S., and in 2019 were by UTMD direct to U.S. clinical users after

February 1. Domestic direct sales in 2Q 2019 excluding Filshie devices, representing 51% of total domestic sales, were $256 (+8%) higher than in 2Q 2018. Domestic direct sales in 1H 2019 excluding Filshie devices, representing 55% of total domestic

sales, were $517 (+8%) higher than in 1H 2018. OEM sales in 2Q 2019, representing 20% of total domestic sales, were $487 (+52%) higher than in 2Q 2018. OEM sales in 1H 2019, representing 22% of total domestic sales, were $971 (+53%) higher than in

1H 2018. Filshie device sales direct to U.S. domestic end-user facilities were $772 (+64%) higher in 2Q 2019 compared to Filshie device sales to CSI in 2Q 2018. Filshie device sales direct to U.S. domestic end-user facilities were $568 (+24%)

higher in 1H 2019 compared to Filshie device sales to CSI in 1H 2018. Filshie device sales by Femcare to CSI in 1H 2018 represented 71% of total 2018 U.S. Filshie device sales. As a result, looking forward, UTMD expects that 2H 2019 domestic direct

end-user sales of Filshie devices should exceed 2H 2018 Filshie device sales to CSI by about $3,000 (+317%), resulting in total 2019 domestic Filshie device sales more than double 2018 domestic Filshie device sales.

OUS sales in 2Q 2019 were $4,850 compared to $5,484 in 2Q 2018. OUS sales in 1H 2019 were $9,788 compared to $11,116 in 1H 2018. OUS sales invoiced in GBP,

EUR, AUD and CAD currencies were $194 lower in 2Q 2019 and $431 lower in 1H 2019 as a result of changes in FX rates. In other words, 31% of the lower 2Q 2019 OUS sales and 32% of the lower 1H 2019 OUS sales were due to a stronger USD. The foreign

currency OUS sales in 2Q 2019 were $3,385, which was 70% of all OUS sales and 29% of total consolidated sales. In comparison, foreign currency OUS sales in 2Q 2018 were $3,429, which was 63% of all OUS sales and 31% of total consolidated sales. The

foreign currency OUS sales in 1H 2019 were $6,590, which was 67% of all OUS sales and 29% of total consolidated sales. Foreign currency OUS sales in 1H 2018 were $7,042, which was 63% of all OUS sales and 32% of total consolidated sales. U.S. export

sales of neonatal devices (invoiced in USD) were $408 lower in 2Q 2019 compared to 2Q 2018, and $826 lower in 1H 2019 compared to 1H 2018, as a result of a pause in orders from UTMD distributors in China, Brazil and Mexico, presumably while obtaining

regulatory device re-registrations. Although difficult to estimate, UTMD suspects that some amount of the lower sales can be explained by foreign distributor reluctance, at least temporarily, to place orders for U.S. goods due to the stronger USD, as

well as recently threatened "trade wars."

GP results from subtracting the costs of manufacturing and shipping products to customers. UTMD's GP was $516 (+7.4%) higher in 2Q 2019 than in 2Q 2018,

and $366 (+2.6%) higher in 1H 2019 than in 1H 2018, roughly consistent with the increase in revenues. UTMD did not get a GPM benefit from the February beginning of Filshie device sales direct to U.S. end-users because of selling remaining CSI

inventory which it acquired at the same price CSI had previously paid Femcare. In other words, GP resulting from CSI's price minus the Femcare cost of manufacturing had been realized in 2018, leaving only the distributor margin to-date in 2019.

Because UTMD estimates that the remaining CSI inventory may not be depleted until 4Q 2019, it does not expect a significant improvement in GPM until next year 2020. To date in 2019, the Company has generally maintained the productivity of its direct

labor and manufacturing overhead costs consistent with the prior year's periods.

Operating Income (OI).

OI results from subtracting Operating Expenses (OE) from GP. OE, comprised of G&A expenses, sales and marketing (S&M) expenses and product

development (R&D) expenses, were $3,019 in 2Q 2019 (25.5% of sales) compared to $1,928 in 2Q 2018 (17.6% of sales). OE were $5,691 in 1H 2019 (25.2% of sales) compared to $3,880 in 1H 2018 (17.8% of sales).

Ignoring the new IIA amortization expense (from purchasing the CSI distribution agreement) which was not present in 2018, 2Q 2019 OE expenses were $1,914

(16.2% of sales), and 1H 2019 OE expenses were $3,849 (17.0% of sales). In 2Q 2019 compared to 2Q 2018, a stronger USD reduced OUS OE excluding Femcare IIA amortization expense in USD terms by $26. The 399 Femcare IIA amortization expense in both

2Q 2019 and 2Q 2018 was reduced by $30. In 1H 2019 compared to 1H 2018, a stronger USD reduced OUS OE excluding Femcare IIA amortization expense in USD terms by $64. The constant 798 Femcare IIA amortization expense was reduced by $65.

Consolidated G&A expenses were $2,440 (20.6% of sales) in 2Q 2019 compared to $1,382 (12.6% of sales) in 2Q 2018. The G&A expenses in 2Q 2019

included $512 (4.3% of sales) of non-cash expense from the amortization of IIA resulting from the 2011 Femcare acquisition, which were $542 (4.9% of sales) in 2Q 2018. The lower USD amortization expense was the result of the stronger USD, as the

Femcare amortization expense in GBP was 399 in both periods. In addition, 2Q 2019 G&A expenses included a new $1,105 (9.3% of sales) IIA amortization expense resulting from the purchase of the CSI U.S. exclusive Filshie devices distribution

rights. Excluding the Filshie-related non-cash IIA amortization expenses, G&A expenses were $823 (6.9% of sales) in 2Q 2019 compared to $839 (7.7% of sales) in 2Q 2018. The change in FX rates reduced 2Q 2019 OUS G&A expenses excluding IIA

amortization expense by $18.

Consolidated G&A expenses were $4,580 (20.3% of sales) in 1H 2019 compared to $2,810 (12.9% of sales) in 1H 2018. The G&A expenses in 1H 2019

included $1,032 (4.6% of sales) of non-cash expense from the amortization of IIA resulting from the 2011 Femcare acquisition, which were $1,097 (5.0% of sales) in 1H 2018. The lower USD amortization expense was the result of the stronger USD, as the

Femcare amortization expense in GBP was 798 in both periods. In addition, 1H 2019 G&A expenses included a new $1,842 (8.2% of sales) IIA amortization expense resulting from the purchase of the CSI U.S. exclusive Filshie devices distribution

rights. Excluding the Filshie-related non-cash IIA amortization expenses, G&A expenses were $1,706 (7.6% of sales) in 1H 2019 compared to $1,713 (7.8% of sales) in 1H 2018. The change in FX rates reduced 1H 2019 OUS G&A expenses excluding

IIA amortization expense by $46.

S&M expenses were $466 (3.9% of sales) in 2Q 2019 compared to $430 (3.9% of sales) in 2Q 2018. S&M expenses were $883 (3.9% of sales) in 1H 2019

compared to $839 (3.8% of sales) in 1H 2018. The change in FX rates reduced 2Q 2019 OUS S&M expenses by $9, and 1H 2019 OUS S&M expenses by $18. The higher 2019 S&M expenses were due to incremental marketing expenses associated with

beginning to market Filshie devices directly in the U.S.

R&D expenses in 2Q 2019 were $113 (1.0% of sales) compared to $117 (1.1% of sales) in 2Q 2018. R&D expenses in 1H 2019 were $228 (1.0% of sales)

compared to $230 (1.1% of sales) in 1H 2018. Since almost all R&D is being carried out in the U.S., the FX impact was negligible.

In summary, OI in 2Q 2019 was $4,481 (37.8% of sales) compared to $5,056 (46.1% of sales) in 2Q 2018. OI in 2Q 2019 was $575 lower which obviously was the

result of the new $1,105 CSI acquisition IIA amortization expense included in 2Q 2019 G&A but not in 2Q 2018. In other words, excluding the new 2Q 2019 CSI acquisition IIA amortization expense which was not applicable in 2Q 2018, OI increased

$530 (+10.5%). OI in 1H 2019 was $8,582 (38.0% of sales) compared to $10,027 (45.9% of sales) in 1H 2018. Excluding the new 1H 2019 CSI acquisition IIA amortization expense which was not applicable in 1H 2018, OI increased $398 (+4.0%).

Income Before Tax (EBT).

EBT results from subtracting net non operating expense (NOE) or adding NOI from or to, as applicable, OI. Consolidated 2Q 2019 EBT was $4,565 (38.5% of

sales) compared to $5,556 (50.7% of sales) in 2Q 2018. Consolidated 1H 2019 EBT was $8,702 (38.5% of sales) compared to $10,565 (48.3% of sales) in 1H 2018.

NOE/NOI includes the combination of 1) expenses from loan interest and bank fees; 2) expenses or income from losses or gains from remeasuring the value of

EUR cash bank balances in the UK, and GBP cash balances in Ireland, in USD terms; and 3) income from rent of underutilized property, investment income and royalties received from licensing the Company's technology. Negative NOE is NOI. Net NOI in 2Q