Your husband's sperm count of 40 million/ml and 60% normal-shaped sperm are both solid numbers, well above the levels used to define male-factor infertility. The sample volume came in a little below the lab's own reference range, and the report shows some pus cells, which can point to a mild infection worth checking.
Next Steps
Ask your husband to get the pus cells evaluated and treated if needed before your next cycle, since an infection can affect sperm quality over time. Please discuss with your fertility specialist whether to repeat IUI or move to IVF, since that depends on your own ovarian reserve, tubal status and how the last two cycles went.
Health Tips
At 37, time matters for egg quality too, so please don't let this decision drag on without a plan.