UTMD Reports Audited Year 2019 and Fourth Quarter Financial Performance Contact: Crystal Rios

UTMD Reports Audited Year 2019 and Fourth Quarter Financial Performance

Salt Lake City, Utah - In the final calendar quarter (4Q) of 2019, Utah Medical Products, Inc. (Nasdaq: UTMD) began to realize accretive profits net of the quarterly amortization of the purchase

price paid to CooperSurgical Inc. (CSI) for the acquisition of exclusive Filshie Clip System distribution rights in the U.S. The 4Q results allowed UTMD to meet its beginning of 2019 year projections to stockholders for the year as a whole.

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.

Summary of Financial Results

In USD terms, changes in 4Q and Year 2019 consolidated US GAAP income statement results compared to the same time periods in the prior calendar year were as follows:

UTMD sales (revenue) growth in 2019 was higher than projected at the beginning of the year primarily because of an unexpected 89% increase in demand from UTMD's largest OEM customer. The higher

sales growth in 4Q 2019 compared to 4Q 2018 was primarily due to the fact that 4Q 2018 was the lowest quarter of Femcare Filshie Clip System sales to CSI in 2018. In comparison, 4Q 2019 UTMD direct sales to U.S. end users were 313% higher than the

4Q 2018 distributor sales to CSI.

Gross Profit growth for the year 2019 was not leveraged more than the sales growth, as was expected, for two reasons: 1) UTMD had to sell off remaining CSI inventory for which the cost was the

price at which CSI had previously purchased it from Femcare, and 2) a change in sales mix where 63% of UTMD's growth in total sales came from OEM product sales and sales of blood pressure monitoring (BPM) kits to UTMD's China distributor at lower

gross profit margins (GPMs) than the average GPM from sales of finished medical devices to end users.

The immediate financial benefit of UTMD's purchase of the CSI exclusive U.S. distribution rights agreement effective February 1, 2019 was higher sales at end user prices instead of distributor

prices and theoretically even higher gross profits, offset by higher operating expenses for marketing expenses together with a non-cash expense of amortizing the purchase price as an identifiable intangible asset (IIA) over the remaining 4.75 year

life of the CSI agreement. As it took time to sell off the remaining CSI inventory, the Gross Profit increase did not cover the straight line amortization of IIA until 4Q 2019, yielding $1,065 lower Operating Income for the year as a whole. The

2019 non-cash IIA amortization expense of the CSI purchase was $4,053.

Adding to the difference in Operating Income, U.S. GAAP Net Income and Earnings Per Share (EPS) in 4Q 2019 and year 2019 were affected again by a change in UTMD's estimate of its tax liability

under the "Tax Cuts and Jobs Act" (TCJA) enacted by Congress in December 2017. Stockholders may recall that UTMD recorded a 3Q 2018 favorable $3,230 adjustment to its initial estimate of the combined Federal and Utah State IRC 965 transition

(REPAT) tax recorded in 4Q 2017 financial results, and an unfavorable $129 adjustment in 4Q 2018 for the new Global Intangible Low-Taxed Income (GILTI) tax. The 2018 tax estimate adjustments made to UTMD's income tax provision had a substantial

positive impact on U.S. GAAP 2018 Net Income and EPS with which 2019 results are compared. As additional IRS guidance has become available, and the State of Utah's policy for the calculating its REPAT tax and GILTI tax has become more clear despite

lack of published guidance, UTMD's independent tax advisors have recently recommended a further $582 favorable estimate adjustment, which has been recorded in UTMD's 4Q 2019 income tax provision. The adjustment emanates from an updated estimate of

the 2017 Utah REPAT tax, application of Utah rules for income apportionment and further clarification of the new Foreign-Derived Intangible Income (FDII) regime associated with the GILTI regime as part of the TCJA. UTMD management believes that the

presentation of Net Income and EPS results excluding the REPAT/ GILTI/ FDII tax liability estimate adjustments in 2018 and 2019 provides meaningful supplemental information to both management and investors that is more clearly indicative of UTMD's

bottom line results in comparing 2019 to 2018.

Excluding the income tax provision adjustments related to the TCJA, changes in 4Q and Year 2019 consolidated non-US GAAP Net Income and Earnings Per Share results compared to the same time periods

in the prior calendar year were as follows:

This comparison is substantially different from the U.S. GAAP comparison at the beginning of this summary. In UTMD management's view, comparing U.S. GAAP Net Income and EPS between 2019 and 2018

does not provide stockholders with meaningful insight about UTMD's financial performance. It could be read to suggest 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:

Again, the non-US GAAP Net Income Margins exclude the tax provision adjustments made due to the TCJA.

Excluding the noncash effects of depreciation, amortization of intangible assets, remeasured value of foreign currency bank balances and non-cash stock option expense, 2019 consolidated earnings

before taxes and interest expense (non-US GAAP EBITDA) were $24,917 compared to $22,464 in 2018. For 4Q 2019, the non-US GAAP EBITDA was $6,600 compared to $5,136 in 4Q 2018. Income tax provision accruals and adjustments have no effect on this

EBITDA metric. EBITDA in 2018 included a $450 gain from 2Q 2018 sales of assets which did not recur in 2019. All things considered, the primary difference that led to the almost $3 million higher EBITDA in 2019 (excluding the 2018 asset sale

gains), and the almost $1.5 million higher EBITDA in 4Q 2019, was the outcome of UTMD selling Filshie Clip System devices directly to end users in the U.S.

UTMD's 2019-ending balance sheet remained strong. Consolidated cash balances at year-end 2019 were $42.8 million compared to $51.1 million at the end of 2018, with no debt at either year-end. In

other words, cash declined only $8.3 million despite UTMD using $23.1 million to repurchase the CSI U.S. Filshie Clip System distribution rights and inventory, paying $4.1 million in cash dividends to stockholders and repurchasing $0.4 million in

UTMD stock in the open market. Despite the $8.3 million decline in cash, working capital declined only $4.2 million due to increases in accounts receivable and inventory needed to support direct U.S. sales of the Filshie Clip System devices.

UTMD's current ratio improved to 15.9 at year-end 2019 from 11.6 at year-end 2018. Excluding a $0.4 million lease liability which is now recorded per U.S. GAAP but was not on the balance sheet at the end of 2018, total liabilities declined by $2.1

million. Stockholders' Equity at the end of 2019 increased to $101.1 million from $89.0 million at the end of 2018 despite the $4.5 million used in stockholder dividends and stock repurchases, which reduce stockholders' equity.

Income Statement Summary.

Total consolidated revenues (sales) were $4,906 (+11.7%) higher in 2019 than in 2018. Total U.S. domestic sales were up $6,302 (+29.7%) in 2019, at $27,493 compared to $21,192 in 2018. OUS sales,

which represented 41% of total sales in USD terms, were down $1,395 (6.7%) compared to 2018. The change in foreign currency exchange (FX) rates reduced 2019 USD-denominated sales by $631 (stronger USD). In other words, at the same FX rates in 2019

that were in effect in 2018 ("constant currency"), total consolidated revenues would have been up 13.0% and OUS sales down only 3.7%.

UTMD's GPM was slightly higher at 62.8% in 2019 compared to 62.6% in 2018. U.S. sales of Filshie Clip System devices in 2019 were at end-user prices instead of CSI distributor prices in 2018.

Nevertheless, because of the overhang of substantial inventory repurchased from Femcare's prior distributor, the gross margin for Filshie Clip System devices sold in the U.S. during most of 2019 was limited to the distributor margin. In addition,

lower margin combined sales to UTMD's largest OEM customer and UTMD's distributor of BPM kits in China at wholesale prices were 15.0% of total 2019 sales compared to 9.4% in 2018. With OEM sales, GPM are lower because some other entity incurs the

operating expenses associated with sales and marketing, much of research and development and general and administrative expenses. In general, maintaining a 2019 GPM consistent with 2018, given the sales mix change, was an excellent result and

occurred because UTMD's 2019 productivity of higher variable manufacturing costs was consistent with the prior year and fixed manufacturing overhead expenses were diluted by higher sales.

Total consolidated operating expenses increased 56%, obviously more than the 12% increase in total sales, which resulted in a dilution in UTMD's operating income margin and 5.7% lower operating

income compared to the prior year. Ninety-six percent of the operating expense increase was a $4,053 non-cash expense from the amortization of IIA resulting from the purchase of the remaining life of the CSI exclusive U.S. distribution rights for

the Fishie Clip System. The operating expense ratio in 2019 was 25.2% of sales compared to 18.1% in 2018. Without the CSI IIA amortization expense (which will be fully amortized in less than four more years), the operating expense ratio in 2019 was

16.7%. UTMD's Operating Income Margin (Operating Income as a percent of Sales) slipped to 37.6% in 2019 from 45.5% in 2018.

UTMD's $252 non-operating income in 2019 was substantially less than the $761 non-operating income in 2018. This was because of a $450 gain from 2Q 2018 sales of assets, primarily a storage

facility in Utah, with no similar asset sales in 2019, and a $76 remeasured foreign currency loss in 2019 instead of a $13 gain in 2018. As a result of the $509 lower non-operating income combined with $1,065 lower operating income, UTMD's 2019

consolidated Income Before Income Taxes (EBT) declined 8.1% compared to 2018, and UTMD's 2019 EBT margin (EBT as a percent of sales) declined to 38.1% of sales compared to 46.3% of sales in 2018.

Corporate income tax rates remained the same in all sovereignties in which UTMD pays income taxes for both years 2019 and 2018. The non-US GAAP consolidated income tax rate for UTMD's income tax

provision was 20.9% in 2019 compared to 20.3% in 2018 excluding the TCJA tax provision adjustments in both years. (The consolidated income tax provision rates in 2019 and 2018 per U.S. GAAP, which were 17.7% and 4.6% respectively, have no relation

to 2019 or 2018 EBT.) The higher non-US GAAP rate in 2019 was due to the mix of profits (i.e., in which sovereignties, with differing tax rates, profits were earned) and changes in foreign currency exchange rates (which convert taxes accrued in

foreign currency terms to USD for consolidated USD results). EBT were higher in the U.S. in 2019 than in 2018 with a combined State and Federal tax rate of 25.95%, and were lower in Ireland and the UK with substantially lower corporate income tax

The combination of lower 2019 consolidated EBT and higher non-US GAAP combined income tax provision rate resulted in a decline in non-US GAAP Net Income of 8.8% and a decline in non-US GAAP

fully-diluted EPS of 8.5%. Fully-diluted outstanding shares were slightly less in 2019 because of share repurchases. Net Income and EPS per U.S. GAAP were 20.6% and 20.4% lower, respectively, because of the much larger REPAT tax adjustment made in

2018. UTMD's 2019 non-US GAAP EPS of $3.78 met its beginning of year projection of $3.70 - $3.80.

The following description is intended to augment the summary above. For additional details, please read UTMD's SEC Form 10-K, which will be filed on or before March 13.

Consolidated Revenues (Sales).

Total sales in 2019 were $46,904 (+11.7%) compared to $41,998 in 2018, overall growth better than UTMD's beginning of year projection due to unexpected OEM product demand. Total sales in 4Q 2019

were $11,831 (+21.3%) compared to $9,756 in 4Q 2018. Sixty-nine percent of the higher 4Q 2019 sales were due to $1,430 higher U.S. sales of the Filshie Clip System in the period.

U.S. domestic sales in 2019 were $27,493 (59% of total sales) compared to $21,192 (50% of total sales) in 2018. All three segments of U.S. domestic sales contributed to the total $6,302 (+29.7%)

higher domestic sales in 2019 compared to 2018: 1) $349 (+3%) higher direct sales of UTMD devices (excluding Filshie Clip System devices) to end-user facilities; 2) $2,452 (+60%) higher sales of components and finished devices used in other

companies' products (OEM customers); and 3) $3,501 (+106%) higher direct sales of Filshie Clip System devices to U.S. customers.

Domestic OEM sales in 2019 represented 14% of total worldwide sales compared to 10% in 2018. UTMD sold components and finished devices to 147 different U.S. companies in 2019 compared to 152

companies in 2018, for use in their product offerings. Sales to UTMD's largest OEM customer were up 89%, and represented 75% of total domestic OEM sales.

Domestic direct (end-user) sales of neonatal products were $4,654 (+2% higher), labor & delivery (L&D) products $4,053 (+8% higher), pressure monitoring (BPM) products excluding the NICU

$619 (6% lower) and gynecology/ electrosurgery/ urology products excluding the Filshie Clip System $4,826 (about the same).

In 4Q 2019, domestic U.S. sales were $7,127 (60% of total sales) compared to $5,187 (53% of total sales) in 4Q 2018. Domestic sales in 4Q 2019 were $1,941 (+37%) higher than in 4Q 2018, because

domestic direct sales of Filshie Clip System devices in 4Q 2019 were $1,428 (+313%) higher than the Filshie Clip System sales to CSI in 4Q 2018, and OEM product sales in 4Q 2019 were $604 (+50%) higher than in 4Q 2018.

Outside the U.S. (OUS) Sales.

Sales OUS in 2019 were $19,411 (6.7% lower) compared to $20,806 in 2018.

Sixty-six percent of (USD denominated) 2019 OUS sales were invoiced in foreign currencies compared to 67% in 2018. As a portion of total sales, 27% of UTMD's USD-equivalent sales were invoiced in

foreign currencies in 2019 compared to 33% in 2018. In 2019, the GBP, EUR, AUD and CAD converted sales represented 8%, 11%, 4% and 4% of total 2019 USD sales, respectively. This compares to 10% GBP, 12% EUR, 5% AUD and 6% CAD of total 2018 USD

sales. Because a significant portion of UTMD's sales are invoiced in foreign currencies, changes in FX rates potentially have a material effect on period-to-period USD-denominated sales.

UTMD's FX rates for income statement purposes are transaction-weighted averages. The average rates from the applicable foreign currency to USD during 4Q 2019 and year 2019 compared to the same

periods in 2018 follow:

The FX rate effect of a stronger USD in 2019 reduced OUS sales $631 (4.7%), which represented 55% of the 2019 decline in OUS USD-denominated sales compared to 2018. Despite a stronger USD which

reduced foreign currency sales $56 (1.7%), 4Q 2019 OUS sales of $4,704 were $135 (+3.0%) higher compared to $4,569 in 4Q 2018. Constant currency 4Q 2019 OUS sales were 4.2% higher than in 4Q 2018.

A fluctuation in order pattern of UTMD's China distributor for neonatal devices, which were down $519 compared to the prior year, explains another 37% of the lower OUS sales. For the full year of

2018, this distributor purchased neonatal devices worth $604, but nothing in 4Q 2018. For the full year 2019, this distributor purchased only $85, but $60 of it was in 4Q 2019.

On the other hand, UTMD's China distributor (a different entity) for BPM products purchased $662 more in 2019 than it did in 2018. This is another example of a distributor significantly varying its

order pattern. Stockholders may remember that this distributor purchased $716 less in 2018 than it did in 2017.

USD-denominated trade (excludes intercompany) sales of devices to OUS customers by UTMD's Ireland facility (UTMD Ltd) were $5,894 (+18%) in 2019 compared to $5,008 in 2018. As the EUR was down

5.1% relative to the USD in 2019, the FX impact subtracted $277 from 2019 sales. In other words, constant currency sales were $6,171 (+23%). UTMD Ltd produces the BPM devices sold to UTMD's China distributor. In constant EUR currency and

eliminating sales of BPM devices to its China distributor in both years 2019 and 2018, 2019 Ireland trade sales experienced 13% growth compared to 2018.

In 2019, UTMD's UK subsidiary, Femcare Ltd., had $5,382 trade sales of devices to domestic UK, domestic France and international distributor customers, compared to $5,849 (8%) in 2018. The FX

impact subtracted $174 (4.3%) from 2019 sales, explaining about half of the lower sales in USD terms. The 2018 trade sales figure excludes sales to CSI, which in 2019 were intercompany sales.

USD-denominated sales of devices to end-users in Australia by Femcare's Australia distribution subsidiary (Femcare Australia Pty Ltd) were 12% lower in 2019 compared to 2018. The FX impact