UTMD Reports Audited Year 2018 and Fourth Quarter Financial Performance Contact: Crystal Rios

UTMD Reports Audited Year 2018 and Fourth Quarter Financial Performance

Salt Lake City, Utah - Excluding a large favorable adjustment correcting the U.S. repatriation tax (REPAT) on foreign

subsidiary cash and cumulative earnings (E&P), Utah Medical Products, Inc. (Nasdaq: UTMD) concluded a solid year in 2018 in which it was able to exceed its beginning of year projections to stockholders. Currencies in this report are denoted as

$ or USD = U.S. Dollars; AUD = Australia Dollars; GBP = UK Pound Sterling; EUR = Euros; and CAD = Canadian Dollars. Currency amounts are in thousands, except per share amounts and where noted.

Stockholders may recall that the REPAT tax adjustment was recorded in the third quarter (3Q) of 2018. UTMD's initial

estimate of the combined Federal and Utah State REPAT tax was $6,288, recorded in 4Q 2017 financial results, the period in which the "Tax Cuts and Jobs Act" (TCJA) was enacted by Congress. In 3Q 2018, after more IRS information became available

and when UTMD's independent tax advisors completed the 2017 income tax return, it became known to the Company that the actual REPAT tax liability is $3,058, resulting in a favorable $3,230 adjustment to UTMD's 3Q 2018 income tax provision. In

addition, there is now a new Global Intangible Low-Taxed Income (GILTI) tax applicable for 2018 that resulted from the TCJA, an estimate for which was included in both the 3Q and 4Q 2018 tax provision.

The REPAT and GILTI tax provisions had a significant impact on UTMD's U.S. GAAP Net Income (NI) in 2017 and 2018 because

about half of UTMD's business has in recent years been outside the U.S. (OUS), and profits generated by UTMD's OUS subsidiaries had not been repatriated to the U.S. since 2005 following the Bush "American Jobs Creation Act of 2004" enacted in

All income statement categories of UTMD's operating performance are unaffected by the REPAT tax adjustment and GILTI tax

estimate except for NI, which are profits after tax, and Earnings Per Share (EPS), which is NI divided by diluted shares outstanding. A more complete explanation of the income tax changes follows later in this report.

UTMD management believes that the presentation of results excluding the favorable REPAT tax liability adjustment, and the new

2018 GILTI tax, to its 4Q 2018 and year 2018 income tax provision, provides meaningful supplemental information to both management and investors that is more clearly indicative of UTMD's operating results in 2018 compared to 2017.

A quick comparison of income statement categories, including the referenced non-GAAP Net Income (NI) and Earnings Per Share

(EPS), for the applicable time periods in 2018 to 2017 is as follows:

The weaker 4Q 2018 results compared to 4Q 2017, which were not indicative of the year as a whole, do not represent a trend

and were actually better than expected. Currency amounts in this report are in thousands, except per share amounts and where noted.

The non-GAAP NI and EPS amounts, excluding the 4Q 2017 REPAT tax provision and deferred tax liability (DTL) adjustment due to

the new 21% U.S. tax rate, the REPAT tax adjustment in 3Q 2018 and the GILTI tax accrual in 2H 2018 follow:

The $6,288 REPAT provision recorded in 4Q 2017 rendered both NI and EPS in 4Q 2017 to be negative. So, a U.S.

GAAP percentage change in NI and EPS comparing fourth quarters is not applicable. The corrected REPAT tax provision booked in 3Q 2018, and the GILTI tax provisions booked in 3Q and 4Q 2018, provided the following change in U.S. GAAP NI and EPS

comparing the full year of 2018 compared to the full year of 2017:

U.S. GAAP NI for the 2018 calendar year was $18,555 compared to $8,505 in 2017. U.S. GAAP EPS for the 2018 calendar year were

$4.950 compared to $2.276 in 2017. In UTMD management's view, comparing U.S. GAAP NI and EPS between 2018 and 2017 does not provide stockholders with meaningful insight about UTMD's financial performance. It also suggests a fluctuation in

non-tax-related financial performance that is simply not accurate.

The associated key profit margins (profits as a percentage of sales) compared to the same time periods in the prior calendar

year were as follows:

The 2018 EBTM and non-GAAP NIM expansion was due to non-operating income resulting from higher interest rates on higher cash

balances, and a gain from a 3Q 2018 sale of an unneeded Utah storage facility. The lower GPM came from higher direct material costs, a portion of which was due to a mix change toward finished devices with higher direct material content. Although

loaded direct labor costs were higher, the labor productivity of UTMD's manufacturing plants remained consistent with the prior year. The lower OPM resulted from the effect of the lower GPM plus 3% (+$224) higher Operating Expenses (OE) with only

1% higher revenues for the year. Although OE as a whole were up $224, both general and administrative (G&A) expenses, excluding the expense from amortizing Femcare Identifiable Intangible Assets (IIA), and product development (R&D) expenses

in USD terms were about the same as in the prior year. The G&A expense of amortizing Femcare IIA in USD terms was up $75 (+4%), even though in GBP terms the amortization expense was the same in both years, because of the strength of the GBP

compared to the USD in the 1H 2018. Sales and marketing (S&M) expenses were up $164 (+11%) as UTMD added some people.

Excluding the noncash effects of depreciation, amortization of intangible assets, remeasured value of foreign currency bank

balances and non-cash stock option expense, 2018 consolidated earnings before taxes and interest expense (EBITDA) were $22,464 compared to $21,979 in 2017. The REPAT tax accrual in 2017 and adjustment in 2018, 2017 DTL adjustment and GILTI tax

accrual in 2018 had no effect on this EBITDA metric. All things considered, the primary difference that led to higher EBITDA in 2018 was the net non-operating income (NOI) from sale of an unneeded storage facility in Utah.

Income Statement Summary.

Total consolidated revenues (sales) were $584 (+1.4%) higher in 2018 than in 2017. There were several offsetting factors as

described in more detail below. Total U.S. domestic sales were up $906 (+4.5%) in 2018, at $21,192 compared to $20,286 in 2017. OUS sales, which represented 50% of total sales in USD terms, were down $322 (1.5%) compared to 2017.

UTMD's GPM was squeezed by higher labor and direct materials costs, as well as a product mix difference. OEM sales, which

grew faster than other sales categories, have inherently lower GPMs than direct end user device sales, because someone else incurs the OE associated with S&M, as well as much of R&D and G&A. The combination of higher variable

manufacturing costs and change in product mix resulted in a 2018 GPM of 62.6% compared to 63.7% in 2017, which remained above management's overall GPM target of 60%.

Total consolidated OE increased 3%, which was faster than the 1% increase in total sales, which further diluted the impact of

a lower GPM on UTMD's OIM. One-third of the OE increase was foreign currency exchange (FX) rate related due to a $75 USD-value increase in the Femcare IIA amortization which was actually the same in GBP. The OE ratio in 2018 was 18.1% of sales

compared to 17.8% in 2017. The 2018 OE ratio still represented very tightly controlled OE compared with similar companies in the industry. As a result of the above factors, UTMD's OIM slipped to 44.5% in 2018 from 45.9% in 2017. The lower 2018 OIM

still represents very consistent, high performing UTMD financial performance.

UTMD's $761 NOI in 2018 was substantially higher than the $71 NOI in 2017. This was because of a $450 gain from 2Q 2018

sales of assets, primarily a storage facility in Utah, and $201 higher interest income resulting from higher interest rates on higher cash balances in 2018 compared to 2017. As a result, UTMD's GAAP 2018 EBT increased $377 (+2%) compared to 2017,

and UTMD's 2018 EBTM improved to 46.3% of sales compared to 46.1% of sales in 2017.

The U.S. TCJA enacted in December 2017 levied a theoretical one-time REPAT tax on UTMD, resulting from the cumulative income

of UTMD's foreign subsidiaries. The State of Utah followed the IRS and also levied a REPAT tax. UTMD's initial estimate of the REPAT tax substantially reduced NI and EPS in 4Q 2017. After more IRS information became available and when UTMD's

independent tax advisors completed the 2017 income tax return, it became known to the Company in 3Q 2018 that the actual REPAT tax liability was $3,058, resulting in a favorable $3,230 adjustment to UTMD's 3Q 2018 income tax provision. The result

was a very favorable $3,230 increase in 2018 NI and EPS. In addition, there is a new Global Intangible Low-Taxed Income (GILTI) tax applicable for 2018 that resulted from the TCJA, in contradiction to the "one-time" REPAT tax. A total $179 GILTI

tax estimate is included in the 3Q and 4Q 2018 tax provisions for the first time.

The TCJA reduced the U.S. corporate income tax rate from 34% in 2017 to 21% in 2018. The State of Utah reduced its corporate

rate from 5% to 4.95%. The 2018 tax rates in OUS sovereignties remained the same: 19% in the UK; 12.5% in Ireland; 30% in Australia and 26% in Ontario, Canada. Given the change in the U.S. income tax rate and variation in mix of pretax income

generated by OUS subsidiaries, UTMD's average tax provision rate in 2018 (prior to the REPAT tax adjustment and GILTI tax) was 20.3% compared to 23.7% in 2017 (prior to the REPAT tax estimate in 4Q 2017). This lower combined corporate income tax

rate, together with the 2% higher EBT, produced 2018 non-GAAP NI of $15,504 compared to non-GAAP NI of $14,562 in 2017, a $942 (+6.5%) increase. This non-GAAP NI resulted in non-GAAP 2018 EPS of $4.14 instead of the beginning of year projection of

Additional details follow to augment the Summary above.

Consolidated Revenues (Sales).

Total sales in 2018 were $41,998 (+1.4%) compared to $41,414 in 2017, an overall result slightly better than UTMD's beginning

of year projection. Total sales in 4Q 2018 were $9,756 (4.4% lower) compared to $10,201 in 4Q 2017. Sixty-one percent of the lower 4Q sales were due to $270 lower domestic sales of the Filshie Clip System to CSI.

U.S. domestic sales in 2018 were $21,192 (50% of total sales) compared to $20,286 (49% of total sales) in 2017. The primary

contributors to the 2018 total $906 (+4.5%) higher domestic sales were $968 (+31%) higher sales of components and finished devices used in other companies' products (OEM customers) and $402 (+3.0%) higher direct sales of UTMD finished devices to

domestic end-users. The OEM and Direct user sales increases were partially offset by $464 (12.3%) lower sales to CSI, Femcare's US distributor of the Filshie Clip System.

Domestic OEM sales in 2018 represented almost 10% of total sales compared to 8% in 2017. UTMD sold components and finished

devices to 152 different U.S. companies in 2018 compared to 148 companies in 2017, for use in their product offerings. Sales to UTMD's largest OEM customer, which are expected to continue to grow at a rapid rate in 2019, were up 67%.

Domestic direct (end-user) sales of neonatal products were $4,185 (+3% higher), labor & delivery (L&D) products

$3,749 (about the same), pressure monitoring (BPM) products $1,021 (+9% higher) and gynecology/electrosurgery/ urology products excluding the Filshie Clip System $4,849 (+4% higher).

In 4Q 2018, domestic U.S. sales were $5,187 (53% of total sales) compared to $4,857 (48% of total sales) in 4Q 2017.

Domestic sales in 4Q 2018 were $329 (+6.8%) higher than in 4Q 2017, despite that a portion of domestic sales to CSI were $270 (37.2%) lower. On December 31, 2018 UTMD entered into a definitive agreement with CSI to purchase the remaining 4.75 year

life of CSI's exclusive U.S. distribution rights for the Filshie Clip System in the U.S., with shipments beginning to customers as of February 1, 2019. In addition to adding the distributor margin to sales looking forward, UTMD hopes to expand its

direct domestic gynecology sales of the Filshie Clip System through a focus with end users and a conversion to single use applicator kits, approved by the FDA for distribution in the U.S. in late 2016, which UTMD believes is in the best interest of

Outside the U.S. (OUS) Sales.

Sales OUS in 2018 were $20,806 (1.5% lower) compared to $21,129 in 2017.

Sixty-seven percent of (USD denominated) 2018 OUS sales were invoiced in foreign currencies compared to 64% in 2017. As a

portion of total sales, 33% of UTMD's USD-equivalent sales were invoiced in foreign currencies in both 2018 and 2017. In 2018, the GBP, EUR, AUD and CAD converted sales represented 10%, 12%, 5% and 6% of total 2018 USD sales, respectively. This

compares to 10% GBP, 10% EUR, 6% AUD and 7% CAD of total 2017 USD sales. Because a significant portion of UTMD's sales are invoiced in foreign currencies, changes in FX rates can potentially have a material effect on period-to-period

USD-denominated sales. FX rates had a varied impact during 2018.

UTMD's FX rates for income statement purposes are transaction-weighted averages. The average rates from the applicable

foreign currency to USD during 4Q 2018 and year 2018 compared to the same periods in 2017 follow:

FX rates added $306 to 2018 year (as a whole) sales using the same FX rates as in 2017 (constant currency). The above table

identifies that the USD strengthened considerably in late 2018, which reduced 4Q 2018 sales by $134 in constant currency terms.

OUS sales in 4Q 2018 were $4,569 ($774 lower) compared to $5,344 in 4Q 2017. The FX rate change noted above explains 17% of

the lower 4Q OUS sales. The variance in order pattern of UTMD's China distributor for BPM devices explains another 55% of the difference. In 2017, this distributor purchased five shipments at an average $393 each, with two of the shipments in the

2Q 2017. In 2018, this distributor purchased three shipments at an average $416 each, with one in each of the first three quarters and none in 4Q 2018. The actual sales difference was $425 lower sales comparing 4Q 2018 with 4Q 2017. This was

expected and included in UTMD's projections at the beginning of 2018 because this distributor placed an annual fixed order at the beginning of each year. The order received from this distributor in fixed USD for 2019 returns to four shipments

during the year at an average of $419 per shipment, which will add $430 in 2019 sales compared to 2018. The remaining $215 in lower 4Q 2018 OUS sales compared to 4Q 2017 was a result of $178 lower Filshie Clip System sales in Australia and Canada,

and a minor variance in other international distributors' order patterns for exports from Ireland and the U.S.

USD-denominated trade (excludes intercompany) sales of devices to OUS customers by UTMD's Ireland facility (UTMD Ltd) were

$5,008 in 2018 compared to $5,224 in 2017. The FX impact added $134 to 2018 sales and subtracted $34 from 4Q 2018 sales compared to same period foreign currency sales in 2017. Ireland produces the sales of BPM devices to UTMD's China distributor,

which were $716 lower in 2018 than in 2017 due to the previously described order pattern fluctuation. In constant EUR currency and eliminating sales of BPM devices to its China distributor in both periods, 2018 Ireland trade sales experienced 11%

growth compared to 2017. In EUR terms, UTMD Ltd 2018 sales including intercompany shipments and China trade sales were 6% higher for the year.