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Merit Medical Reports Third Quarter 2024 Results and Raises Full-Year Guidance

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Merit Medical Systems (NASDAQ: MMSI) reported strong Q3 2024 results with revenue of $339.8 million, up 7.8% year-over-year. The company achieved a GAAP operating margin of 11.0% and non-GAAP operating margin of 19.2%. GAAP EPS increased 8.0% to $0.48, while non-GAAP EPS grew 21.1% to $0.86. Free cash flow generation reached $120 million in the first nine months of 2024, up 116%. Based on strong performance, Merit raised its full-year 2024 guidance, projecting revenue between $1.344-$1.352 billion and non-GAAP EPS of $3.33-$3.38.

Merit Medical Systems (NASDAQ: MMSI) ha riportato risultati solidi per il terzo trimestre del 2024, con un fatturato di 339,8 milioni di dollari, in aumento del 7,8% rispetto all'anno precedente. L'azienda ha raggiunto un margine operativo GAAP dell'11,0% e un margine operativo non-GAAP del 19,2%. L'EPS GAAP è aumentato dell'8,0% a 0,48 dollari, mentre l'EPS non-GAAP è cresciuto del 21,1% a 0,86 dollari. La generazione di flusso di cassa libero ha raggiunto 120 milioni di dollari nei primi nove mesi del 2024, con un incremento del 116%. Basandosi su questa forte performance, Merit ha rivisto al rialzo le previsioni per l'intero anno 2024, stimando un fatturato compreso tra 1,344 e 1,352 miliardi di dollari e un EPS non-GAAP tra 3,33 e 3,38 dollari.

Merit Medical Systems (NASDAQ: MMSI) reportó resultados sólidos para el tercer trimestre de 2024, con ingresos de 339,8 millones de dólares, un aumento del 7,8% en comparación con el año anterior. La compañía logró un margen operativo GAAP del 11,0% y un margen operativo no-GAAP del 19,2%. El EPS GAAP aumentó un 8,0% a 0,48 dólares, mientras que el EPS no-GAAP creció un 21,1% a 0,86 dólares. La generación de flujo de caja libre alcanzó 120 millones de dólares en los primeros nueve meses de 2024, un incremento del 116%. Con base en este sólido desempeño, Merit elevó su pronóstico para todo el año 2024, proyectando ingresos entre 1,344 y 1,352 mil millones de dólares y un EPS no-GAAP de entre 3,33 y 3,38 dólares.

Merit Medical Systems (NASDAQ: MMSI)는 2024년 3분기 강력한 실적을 보고하며, 매출이 3억 3,980만 달러로 지난해 대비 7.8% 증가했습니다. 회사는 GAAP 운영 이익률 11.0%와 비GAAP 운영 이익률 19.2%를 달성했습니다. GAAP 주당순이익(EPS)은 8.0% 증가한 0.48달러, 비GAAP EPS는 21.1% 증가한 0.86달러로 나타났습니다. 2024년 첫 9개월 동안 자유현금흐름 생성은 1억 2,000만 달러에 도달하며 116% 증가했습니다. 이러한 실적을 바탕으로 Merit는 2024년 전체 연도 가이던스를 상향 조정하여, 매출이 134억 4천만 달러에서 135억 2천만 달러, 비GAAP EPS는 3.33달러에서 3.38달러 사이일 것이라고 예상했습니다.

Merit Medical Systems (NASDAQ: MMSI) a annoncé de solides résultats pour le troisième trimestre 2024, avec des revenus de 339,8 millions de dollars, en hausse de 7,8 % par rapport à l'année précédente. L'entreprise a atteint une marge opérationnelle GAAP de 11,0 % et une marge opérationnelle non-GAAP de 19,2 %. Le BPA GAAP a augmenté de 8,0 % pour atteindre 0,48 dollar, tandis que le BPA non-GAAP a crû de 21,1 % pour atteindre 0,86 dollar. La génération de flux de trésorerie libre a atteint 120 millions de dollars au cours des neuf premiers mois de 2024, en hausse de 116 %. Sur la base de ces solides performances, Merit a relevé ses prévisions pour l'ensemble de l'année 2024, projetant des revenus compris entre 1,344 et 1,352 milliard de dollars et un BPA non-GAAP de 3,33 à 3,38 dollars.

Merit Medical Systems (NASDAQ: MMSI) hat starke Ergebnisse für das dritte Quartal 2024 gemeldet, mit Umsätzen von 339,8 Millionen Dollar, was einem Anstieg von 7,8% im Jahresvergleich entspricht. Das Unternehmen erzielte eine GAAP-Betriebsüberschussmarge von 11,0% und eine nicht-GAAP-Betriebsüberschussmarge von 19,2%. Der GAAP EPS stieg um 8,0% auf 0,48 Dollar, während der nicht-GAAP EPS um 21,1% auf 0,86 Dollar wuchs. Der freie Cashflow erreichte in den ersten neun Monaten von 2024 120 Millionen Dollar, was einen Anstieg von 116% bedeutet. Basierend auf diesen starken Leistungen hat Merit die Prognose für das Gesamtjahr 2024 angehoben und erwartet Umsätze zwischen 1,344 und 1,352 Milliarden Dollar sowie einen nicht-GAAP EPS zwischen 3,33 und 3,38 Dollar.

Positive
  • Revenue increased 7.8% to $339.8 million in Q3 2024
  • Non-GAAP operating margin improved to 19.2% from 17.4%
  • Non-GAAP EPS grew 21.1% to $0.86
  • Free cash flow increased 116% to $120 million in first nine months
  • Raised full-year 2024 guidance for both revenue and earnings
Negative
  • GAAP operating margin slightly decreased to 11.0% from 11.1%
  • Total debt obligations of $770.5 million as of September 30, 2024

Insights

Merit Medical's Q3 2024 results showcase strong financial performance with several key highlights: revenue growth of 7.8% to $339.8 million, improved non-GAAP operating margin of 19.2% and impressive free cash flow generation of $120 million over nine months. The company's strategic acquisitions, including EndoGastric Solutions and the pending Cook Medical lead management portfolio, position it for continued growth.

Notable improvements in profitability metrics include non-GAAP EPS growth of 21.1% to $0.86 and gross margin expansion to 50.9%. The company's strong balance sheet with $523.1 million in cash and increased guidance for FY2024 indicate robust financial health and positive momentum.

The acquisition strategy and product portfolio expansion demonstrate Merit's commitment to growth in high-value segments. The EsophyX® Z+ acquisition strengthens their position in the GERD treatment market, while positive trial results for the Wrapsody™ device show promise in the dialysis segment. The Cook Medical lead management portfolio acquisition will further diversify their cardiovascular offerings.

Segment performance shows strong growth in Peripheral Intervention (7.7%) and exceptional growth in Endoscopy (85.9%), indicating successful market penetration and execution of their expansion strategy. These developments position Merit favorably in the growing medical device market.

Third Quarter 2024 Highlights†

  • Reported revenue of $339.8 million, up 7.8%
  • Constant currency revenue* and constant currency revenue, organic* up 7.9% and up 5.7%, respectively
  • GAAP operating margin of 11.0%, compared to 11.1% in prior year period
  • Non-GAAP operating margin* of 19.2%, compared to 17.4% in prior year period
  • GAAP EPS $0.48, up 8.0%, and non-GAAP EPS* $0.86, up 21.1%
  • Generated free cash flow* $120 million over the first nine months of 2024, up 116% year-over-year
  • Completed the acquisition of certain assets from EndoGastric Solutions, Inc., which included the EsophyX® Z+, a device intended for the treatment of chronic gastroesophageal reflux disease
  • Announced positive 6-month findings from a pivotal trial relating to the Wrapsody™ Cell-Impermeable Endoprosthesis** device, which is intended to extend long-term vessel patency in dialysis patients
  • Entered into an asset purchase agreement for the acquisition of the lead management portfolio of medical devices and certain related assets from Cook Medical Holdings LLC; closing of the acquisition is expected to occur on November 1, 2024

† Comparisons noted in the bullet points are calculated for the current quarter compared with the third quarter of 2023 unless otherwise specified. Amounts in this presentation are rounded while percentages are calculated from the underlying amounts.

* Constant currency revenue; constant currency revenue, organic; non-GAAP gross profit and margin; non-GAAP operating income and margin; non-GAAP net income; non-GAAP EPS; and free cash flow figures (used here and below) are non-GAAP financial measures. A reconciliation of these financial measures to their most directly comparable GAAP financial measures is included under the heading “Non-GAAP Financial Measures” below.

** The WRAPSODY Cell-Impermeable Endoprosthesis device is not approved or available for commercial distribution in the United States. For additional information, see the heading “WRAPSODY Cell-Impermeable Endoprosthesis” below.

SOUTH JORDAN, Utah, Oct. 30, 2024 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading global manufacturer and marketer of healthcare technology, today announced revenue of $339.8 million for the quarter ended September 30, 2024, an increase of 7.8% compared to the quarter ended September 30, 2023. Constant currency revenue for the third quarter of 2024 increased 7.9% compared to the prior year period and increased 5.7% compared to the prior year period on a constant currency revenue, organic, basis.

“We delivered better-than-expected financial results in the third quarter, reflecting continued strong execution,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer. “Our constant currency, organic, revenue and our constant currency total revenue modestly exceeded the high-end of our expectations in the third quarter. We delivered impressive year-over-year improvements in our non-GAAP operating margin and our non-GAAP earnings per share, which increased 180 basis points and 21%, respectively, year-over-year. We also delivered strong free cash flow generation in the third quarter and have generated more than $120 million over the first nine months of 2024, representing an increase of 116% year-over-year.”

Mr. Lampropoulos continued: “We are confident in our team’s ability to deliver our financial guidance for fiscal year 2024, which we have updated to reflect the stronger-than-expected organic growth and profitability results to-date. Our updated guidance continues to assume the forecasted impacts from the acquisition of EndoGastric Solutions on July 1, 2024 and the projected impacts from our acquisition of assets from Cook Medical announced on September 17, 2024 following the expected closing date of November 1, 2024. We are focused on delivering continued strong execution, stable constant currency growth, improving profitability and solid free cash flow in 2024, as well as continued progress in our Continued Growth Initiatives Program and related financial targets for the three-year period ending December 31, 2026.”

Merit’s revenue by operating segment and product category for the three and nine-month periods ended September 30, 2024 and 2023 was as follows (unaudited; in thousands, except for percentages):

 Three Months Ended
 Reported    Constant Currency *
 September 30,    Impact of foreign September 30,   
 2024 2023 % Change exchange 2024 % Change
Cardiovascular                 
Peripheral Intervention$137,932 $128,385 7.4% $303  $138,235 7.7%
Cardiac Intervention 90,769  89,106 1.9%  (19)  90,750 1.8%
Custom Procedural Solutions 50,768  48,624 4.4%  4   50,772 4.4%
OEM 43,386  39,969 8.5%  (21)  43,365 8.5%
Total 322,855  306,084 5.5%  267   323,122 5.6%
                  
Endoscopy                 
Endoscopy Devices 16,990  9,146 85.8%  14   17,004 85.9%
                  
Total$339,845 $315,230 7.8% $281  $340,126 7.9%
                   


 Nine Months Ended
 Reported    Constant Currency *
 September 30,    Impact of foreign September 30,   
 2024 2023 % Change exchange 2024 % Change
Cardiovascular                 
Peripheral Intervention$411,805 $368,077 11.9% $1,700 $413,505 12.3%
Cardiac Intervention 275,320  268,209 2.7%  2,186  277,506 3.5%
Custom Procedural Solutions 149,978  145,709 2.9%  1,042  151,020 3.6%
OEM 126,941  123,340 2.9%  2  126,943 2.9%
Total 964,044  905,335 6.5%  4,930  968,974 7.0%
                  
Endoscopy                 
Endoscopy Devices 37,312  27,516 35.6%  76  37,388 35.9%
                  
Total$1,001,356 $932,851 7.3% $5,006 $1,006,362 7.9%
                  

Merit’s GAAP gross margin for the third quarter of 2024 was 46.4%, compared to GAAP gross margin of 45.1% for the third quarter of 2023. Merit’s non-GAAP gross margin* for the third quarter of 2024 was 50.9%, compared to non-GAAP gross margin* of 49.8% for the third quarter of 2023.

Merit’s GAAP net income for the third quarter of 2024 was $28.4 million, or $0.48 per share, compared to GAAP net income of $25.8 million, or $0.44 per share, for the third quarter of 2023. Merit’s non-GAAP net income* for the third quarter of 2024 was $51.2 million, or $0.86 per share, compared to non-GAAP net income* of $41.4 million, or $0.71 per share, for the third quarter of 2023.

As of September 30, 2024, Merit had cash and cash equivalents of $523.1 million, total debt obligations of $770.5 million, and had issued letter of credit guarantees of $2.4 million, with additional available borrowings of approximately $697 million under the Amended Fourth A&R Credit Agreement, compared to cash and cash equivalents of $587 million, total debt obligations of $846.6 million, and had issued letter of credit guarantees of $2.7 million under the Amended Fourth A&R Credit Agreement, with additional available borrowings of approximately $626 million as of December 31, 2023.

Updated Fiscal Year 2024 Financial Guidance

Based upon the information currently available to Merit’s management, for the year ending December 31, 2024, after giving effect to the projected contribution of the assets Merit proposes to acquire from Cook Medical Holdings LLC (“Cook Medical”), assuming the proposed acquisition closes on or about November 1, 2024, and absent material acquisitions, non-recurring transactions or other factors beyond Merit’s current expectations, Merit anticipates the following financial results:

Revenue and Earnings Guidance*

  Updated Guidance(1)Prior Guidance(2)
Financial Measure Year Ending% ChangeYear Ending% Change
  December 31, 2024Y/YDecember 31, 2024Y/Y
      
Net Sales $1.344 - $1.352 billion6.9% - 7.6%$1.339 - $1.351 billion6.5% - 7.5%
Cardiovascular Segment $1.289 - $1.296 billion5.6% - 6.2%$1.285 - $1.295 billion5.3% - 6.1%
Endoscopy Segment $55 - $56 million49% - 52%$54 - $56 million45% - 52%
      
Non-GAAP     
Earnings Per Share $3.33 - $3.3817% - 19%$3.25 - $3.3414% - 17%
      

*Percentage figures approximated; dollar figures may not foot due to rounding

2024 Net Sales Guidance - % Change from Prior Year (Constant Currency) Reconciliation*

        
 Updated Guidance(1) Prior Guidance(2)
 Low High Low High
2024 Net Sales Guidance - % Change from Prior Year (GAAP)6.9% 7.6% 6.5% 7.5%
Estimated impact of foreign currency exchange rate fluctuations0.6% 0.6% 0.7% 0.7%
2024 Net Sales Guidance - % Change from Prior Year (Constant Currency)7.4% 8.1% 7.2% 8.2%
        

*Percentage figures approximated and may not foot due to rounding

(1)“Updated Guidance” reflects Merit’s updated full-year 2024 financial guidance as of October 30, 2024, and continues to include the projected impacts of the proposed acquisition of assets from Cook Medical from a projected closing date of November 1, 2024 through December 31, 2024, previously announced on September 17, 2024.
  
(2)“Prior Guidance” reflects Merit’s full-year 2024 financial guidance, previously introduced on August 1, 2024, plus the projected impacts from a projected closing date of November 1, 2024 through December 31, 2024 of the proposed acquisition of assets from Cook Medical announced on September 17, 2024.
  

Merit does not provide guidance for GAAP reported financial measures (other than revenue) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP reported financial measures (other than revenue) because Merit is unable to predict with reasonable certainty the financial impact of various items which could impact Merit’s future financial results, such as expenses related to acquisitions or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, certain employee termination benefits, performance-based stock compensation expenses, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, governmental proceedings, and changes in governmental or industry regulations. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. For the same reasons, Merit is unable to address the significance of the unavailable information, which could be material to future results. Specifically, Merit is not, without unreasonable effort, able to reliably predict the impact of these items and Merit believes inclusion of a reconciliation of these forward-looking non-GAAP measures to their GAAP counterparts could be confusing to investors or cause undue reliance.

Merit’s financial guidance for the year ending December 31, 2024 is subject to risks and uncertainties identified in this release and Merit’s filings with the U.S. Securities and Exchange Commission (the “SEC”).

CONFERENCE CALL

Merit will hold its investor conference call today, Wednesday, October 30, 2024, at 5:00 p.m., Eastern Time. To access the conference call, please pre-register using the following link. Registrants will receive confirmation with dial-in details. A live webcast and slide deck will also be available at merit.com.

WRAPSODY CELL-IMPERMEABLE ENDOPROSTHESIS

The Merit WRAPSODY Cell-Impermeable Endoprosthesis is not approved or available for commercial distribution in the United States and may not be approved or available for sale or use in other countries. In the United States, the device is being used under an Investigational Device Exemption from the US Food and Drug Administration (FDA). Findings from the WRAPSODY Arteriovenous Access Efficacy (WAVE) pivotal trial expand on results from the first-in-human study (WRAPSODY FIRST) and support the Premarket Approval application to the FDA for commercial use in the United States. The device is available in Brazil and in the European Union. For additional information on Merit’s WAVE study, please visit: https://clinicaltrials.gov/ct2/show/NCT04540302.

CONSOLIDATED BALANCE SHEETS
(in thousands)
      
 September 30,   
 2024
 December 31,
 (Unaudited) 2023
ASSETS     
Current Assets     
Cash and cash equivalents$523,128  $587,036 
Trade receivables, net 189,831   177,885 
Other receivables 15,325   10,517 
Inventories 310,527   303,871 
Prepaid expenses and other assets 27,105   24,286 
Prepaid income taxes 4,216   4,016 
Income tax refund receivables 8,185   859 
Total current assets 1,078,317   1,108,470 
      
Property and equipment, net 389,653   383,523 
Intangible assets, net 372,164   325,883 
Goodwill 399,448   382,240 
Deferred income tax assets 7,253   7,288 
Operating lease right-of-use assets 68,867   63,047 
Other assets 62,382   54,793 
Total Assets$2,378,084  $2,325,244 
      
LIABILITIES AND STOCKHOLDERS' EQUITY     
Current Liabilities     
Trade payables$60,808  $65,944 
Accrued expenses 127,255   120,447 
Current operating lease liabilities 11,469   12,087 
Income taxes payable 1,547   5,086 
Total current liabilities 201,079   203,564 
      
Long-term debt 750,505   823,013 
Deferred income tax liabilities 5,571   5,547 
Long-term income taxes payable 347   347 
Liabilities related to unrecognized tax benefits 1,912   1,912 
Deferred compensation payable 19,218   17,167 
Deferred credits 1,527   1,605 
Long-term operating lease liabilities 57,178   56,259 
Other long-term obligations 17,341   13,830 
Total liabilities 1,054,678   1,123,244 
      
Stockholders' Equity     
Common stock 669,207   638,150 
Retained earnings 667,594   575,184 
Accumulated other comprehensive loss (13,395)  (11,334)
Total stockholders' equity 1,323,406   1,202,000 
Total Liabilities and Stockholders' Equity$2,378,084  $2,325,244 
        


CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands except per share amounts)
 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2024
 2023
 2024
 2023
Net sales$339,845  $315,230  $1,001,356  $932,851 
Cost of sales 182,310   173,031   531,006   499,508 
Gross profit 157,535   142,199   470,350   433,343 
            
Operating expenses:           
Selling, general and administrative 99,644   86,854   288,657   277,925 
Research and development 20,527   19,646   62,272   61,089 
Impairment charges          270 
Contingent consideration expense 103   562   292   2,177 
Acquired in-process research and development          1,550 
Total operating expenses 120,274   107,062   351,221   343,011 
            
Income from operations 37,261   35,137   119,129   90,332 
            
Other income (expense):           
Interest income 6,652   181   21,489   533 
Interest expense (7,501)  (4,841)  (23,226)  (10,534)
Other income (expense) — net 245   (255)  (544)  291 
Total other expense — net (604)  (4,915)  (2,281)  (9,710)
            
Income before income taxes 36,657   30,222   116,848   80,622 
            
Income tax expense 8,213   4,388   24,438   13,840 
            
Net income$28,444  $25,834  $92,410  $66,782 
            
Earnings per common share           
Basic$0.49  $0.45  $1.59  $1.16 
Diluted$0.48  $0.44  $1.57  $1.14 
            
Weighted average shares outstanding           
Basic 58,231   57,682   58,110   57,525 
Diluted 59,537   58,375   58,948   58,345 
                


CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
 Nine Months Ended
 September 30,
 2024
 2023
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net income$92,410  $66,782 
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization 74,093   66,359 
Write-off of certain intangible assets and other long-term assets 401   461 
Amortization of right-of-use operating lease assets 9,043   8,621 
Fair value adjustments related to contingent consideration liabilities 292   2,177 
Acquired in-process research and development    1,550 
Stock-based compensation expense 18,958   15,346 
Other adjustments 4,569   5,427 
Changes in operating assets and liabilities, net of acquisitions and divestitures (47,711)  (83,823)
Total adjustments 59,645   16,118 
Net cash, cash equivalents, and restricted cash provided by operating activities 152,055   82,900 
      
CASH FLOWS FROM INVESTING ACTIVITIES:     
Capital expenditures for property and equipment (31,668)  (27,151)
Issuance of note receivables (6,662)   
Cash paid in acquisitions and investments, net of cash acquired (113,743)  (138,278)
Other investing, net (2,133)  (1,575)
Net cash, cash equivalents, and restricted cash used in investing activities (154,206)  (167,004)
      
CASH FLOWS FROM FINANCING ACTIVITIES:   
Proceeds from issuance of common stock 15,424   11,446 
Proceeds from (payments on) long-term debt (76,063)  88,875 
Long-term debt issuance costs    (5,240)
Contingent payments related to acquisitions (209)  (3,502)
Payment of taxes related to an exchange of common stock (1,592)  (5,123)
Net cash, cash equivalents, and restricted cash provided by (used in) financing activities (62,440)  86,456 
Effect of exchange rates on cash 724   (2,181)
Net increase (decrease) in cash, cash equivalents and restricted cash (63,867)  171 
      
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:     
Beginning of period 589,144   60,558 
End of period$525,277  $60,729 
      
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:     
Cash and cash equivalents 523,128   58,673 
Restricted cash reported in prepaid expenses and other current assets 2,149   2,056 
Total cash, cash equivalents and restricted cash$525,277  $60,729 
        

Non-GAAP Financial Measures

Although Merit’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), Merit’s management believes that the non-GAAP financial measures referenced in this release may provide investors with useful information regarding the underlying business trends and performance of Merit’s ongoing operations and can be useful for period-over-period comparisons of such operations. Non-GAAP financial measures used in this release include:

  • constant currency revenue;
  • constant currency revenue, organic;
  • non-GAAP gross profit and margin;
  • non-GAAP operating income and margin;
  • non-GAAP net income;
  • non-GAAP earnings per share; and
  • free cash flow.

Merit’s management team uses these non-GAAP financial measures to evaluate Merit’s profitability and efficiency, to compare operating and financial results to prior periods, to evaluate changes in the results of its operating segments, and to measure and allocate financial resources internally. However, Merit’s management does not consider such non-GAAP measures in isolation or as an alternative to measures determined in accordance with GAAP.

Readers should consider non-GAAP measures used in this release in addition to, not as a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures generally exclude some, but not all, items that may affect Merit’s net income. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded. Merit believes it is useful to exclude such items in the calculation of non-GAAP gross profit and margin, non-GAAP operating income and margin, non-GAAP net income, and non-GAAP earnings per share (in each case, as further illustrated in the reconciliation tables below) because such amounts in any specific period may not directly correlate to the underlying performance of Merit’s business operations and can vary significantly between periods as a result of factors such as acquisition or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, certain employee termination benefits, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, governmental proceedings or changes in tax or industry regulations, gains or losses on disposal of certain assets, and debt issuance costs. Merit may incur similar types of expenses in the future, and the non-GAAP financial information included in this release should not be viewed as a statement or indication that these types of expenses will not recur. Additionally, the non-GAAP financial measures used in this release may not be comparable with similarly titled measures of other companies. Merit urges readers to review the reconciliations of its non-GAAP financial measures to their most directly comparable GAAP financial measures included herein, and not to rely on any single financial measure to evaluate Merit’s business or results of operations.

Constant Currency Revenue

Merit’s constant currency revenue is prepared by converting the current-period reported revenue of subsidiaries whose functional currency is a currency other than the U.S. dollar at the applicable foreign exchange rates in effect during the comparable prior-year period and adjusting for the effects of hedging transactions on reported revenue, which are recorded in the U.S. dollar. The constant currency revenue adjustments of $0.3 million and $5.0 million to reported revenue for the three and nine-month periods ended September 30, 2024, respectively, were calculated using the applicable average foreign exchange rates for the three and nine-month periods ended September 30, 2023.

Constant Currency Revenue, Organic

Merit’s constant currency revenue, organic, is defined, with respect to prior fiscal year periods, as GAAP revenue. With respect to current fiscal year periods, constant currency revenue, organic, is defined as constant currency revenue (as defined above), less revenue from certain acquisitions. For the three-month period ended September 30, 2024, Merit’s constant currency revenue, organic, excludes revenues attributable to assets acquired from EndoGastric Solutions, Inc. (“EGS”) in July 2024. For the nine-month period ended September 30, 2024, Merit’s constant currency revenue, organic, excludes revenues attributable to assets acquired from EGS in July 2024 as well as certain assets acquired from AngioDynamics, Inc. (“AngioDynamics”) in June 2023.

Non-GAAP Gross Profit and Margin

Non-GAAP gross profit is calculated by reducing GAAP cost of sales by amounts recorded for amortization of intangible assets and inventory mark-up related to acquisitions. Non-GAAP gross margin is calculated by dividing non-GAAP gross profit by reported net sales.

Non-GAAP Operating Income and Margin

Non-GAAP operating income is calculated by adjusting GAAP operating income for certain items which are deemed by Merit’s management to be outside of core operations and vary in amount and frequency among periods, such as expenses related to acquisitions or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, certain employee termination benefits, performance-based stock compensation expenses, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, governmental proceedings, and changes in governmental or industry regulations, as well as other items referenced in the tables below. Non-GAAP operating margin is calculated by dividing non-GAAP operating income by reported net sales.

Non-GAAP Net Income

Non-GAAP net income is calculated by adjusting GAAP net income for the items set forth in the definition of non-GAAP operating income above, as well as for expenses related to debt issuance costs and other items set forth in the tables below.

Non-GAAP EPS

Non-GAAP EPS is defined as non-GAAP net income divided by the diluted shares outstanding for the corresponding period.

Free Cash Flow

Free cash flow is defined as cash flow from operations calculated in accordance with GAAP, less capital expenditures for property and equipment calculated in accordance with GAAP, as set forth in the consolidated statement of cash flows.

Non-GAAP Financial Measure Reconciliations

The following tables set forth supplemental financial data and corresponding reconciliations of non-GAAP financial measures to Merit’s corresponding financial measures prepared in accordance with GAAP, in each case, for the three and nine-month periods ended September 30, 2024 and 2023. The non-GAAP income adjustments referenced in the following tables do not reflect non-performance-based stock compensation expense of approximately $3.1 million and $3.4 million for the three-month periods ended September 30, 2024 and 2023, respectively and $9.6 million and $9.2 million for the nine-month periods ended September 30, 2024 and 2023, respectively.

Reconciliation of GAAP Net Income to Non-GAAP Net Income
(Unaudited, in thousands except per share amounts)

            
 Three Months Ended
 September 30, 2024
 Pre-Tax Tax Impact After-Tax Per Share Impact
GAAP net income$36,657 $(8,213) $28,444 $0.48
            
Non-GAAP adjustments:           
Cost of Sales           
Amortization of intangibles 14,896  (3,522)  11,374  0.19
Inventory mark-up related to acquisitions 559  (132)  427  0.01
Operating Expenses           
Contingent consideration expense 103  (6)  97  0.00
Amortization of intangibles 2,038  (482)  1,556  0.03
Performance-based share-based compensation (b) 3,736  (609)  3,127  0.05
Corporate restructuring (c) 2,084  (492)  1,592  0.03
Acquisition-related 2,351  (555)  1,796  0.03
Medical Device Regulation expenses (d) 1,983  (468)  1,515  0.03
Other (e) 125  (30)  95  0.00
Other (Income) Expense           
Amortization of long-term debt issuance costs 1,477  (349)  1,128  0.02
            
Non-GAAP net income$66,009 $(14,858) $51,151 $0.86
            
Diluted shares          59,537
            


 Three Months Ended
 September 30, 2023 (a)
 Pre-Tax Tax Impact After-Tax Per Share Impact
GAAP net income$30,222  $(4,388) $25,834  $0.44 
            
Non-GAAP adjustments:           
Cost of Sales           
Amortization of intangibles 13,120   (3,154)  9,966   0.17 
Inventory mark-up related to acquisitions 1,741   (418)  1,323   0.02 
Operating Expenses           
Contingent consideration expense 562   (123)  439   0.01 
Amortization of intangibles 2,329   (560)  1,769   0.03 
Performance-based share-based compensation (b) 2,403   (344)  2,059   0.04 
Acquisition-related 107   (26)  81   0.00 
Medical Device Regulation expenses (d) 2,444   (587)  1,857   0.03 
Other (e) (2,946)  707   (2,239)  (0.04)
Other (Income) Expense           
Amortization of long-term debt issuance costs 425   (102)  323   0.01 
            
Non-GAAP net income$50,407  $(8,995) $41,412  $0.71 
            
Diluted shares          58,375 
             

___________________________

Note: Certain per-share impacts may not sum to totals due to rounding.

Reconciliation of GAAP Net Income to Non-GAAP Net Income
(Unaudited; in thousands except per share amounts)

            
 Nine Months Ended
 September 30, 2024 (a)
 Pre-Tax Tax Impact After-Tax Per Share Impact
GAAP net income$116,848 $(24,438) $92,410 $1.57
            
Non-GAAP adjustments:           
Cost of Sales           
Amortization of intangibles 40,827  (9,654)  31,173  0.53
Inventory mark-up related to acquisitions 559  (132)  427  0.01
Operating Expenses           
Contingent consideration expense 292  (31)  261  0.00
Amortization of intangibles 5,546  (1,312)  4,234  0.07
Performance-based share-based compensation (b) 9,396  (1,466)  7,930  0.13
Corporate restructuring (c) 2,030  (479)  1,551  0.03
Acquisition-related 3,610  (852)  2,758  0.05
Medical Device Regulation expenses (d) 6,120  (1,445)  4,675  0.08
Other (e) 302  (72)  230  0.00
Other (Income) Expense           
Amortization of long-term debt issuance costs 4,431  (1,046)  3,385  0.06
            
Non-GAAP net income$189,961 $(40,927) $149,034 $2.53
            
Diluted shares          58,948
            


 Nine Months Ended
 September 30, 2023 (a)
 Pre-Tax Tax Impact After-Tax Per Share Impact
GAAP net income$80,622  $(13,840) $66,782  $1.14 
            
Non-GAAP adjustments:           
Cost of Sales           
Amortization of intangibles 35,184   (8,460)  26,724   0.46 
Inventory mark-up related to acquisitions 2,001   (480)  1,521   0.03 
Operating Expenses           
Contingent consideration expense 2,177   (121)  2,056   0.04 
Impairment charges 270      270   0.00 
Amortization of intangibles 5,959   (1,436)  4,523   0.08 
Performance-based share-based compensation (b) 6,067   (771)  5,296   0.09 
Corporate restructuring (c) 7,203   (1,729)  5,474   0.09 
Acquisition-related 5,218   (1,253)  3,965   0.07 
Medical Device Regulation expenses (d) 9,112   (2,187)  6,925   0.12 
Other (e) (1,309)  314   (995)  (0.02)
Other (Income) Expense           
Amortization of long-term debt issuance costs 1,054   (253)  801   0.01 
            
Non-GAAP net income$153,558  $(30,216) $123,342  $2.11 
            
Diluted shares          58,345 
             

___________________________

Note: Certain per-share impacts may not sum to totals due to rounding.

Reconciliation of Reported Operating Income to Non-GAAP Operating Income
(Unaudited, in thousands except percentages)

                        
 Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
 September 30, 2024 September 30, 2023 (a) September 30, 2024 (a) September 30, 2023 (a)
 Amounts % Sales Amounts % Sales Amounts % Sales Amounts % Sales
Net Sales as Reported$339,845    $315,230     $1,001,356    $932,851    
                        
GAAP Operating Income 37,261 11.0%  35,137  11.1 %  119,129 11.9%  90,332  9.7 %
Cost of Sales                       
Amortization of intangibles 14,896 4.4%  13,120  4.2 %  40,827 4.1%  35,184  3.8 %
Inventory mark-up related to acquisitions 559 0.2%  1,741  0.6 %  559 0.1%  2,001  0.2 %
Operating Expenses                       
Contingent consideration expense 103 0.0%  562  0.2 %  292 0.0%  2,177  0.2 %
Impairment charges               270  0.0 %
Amortization of intangibles 2,038 0.6%  2,329  0.7 %  5,546 0.6%  5,959  0.6 %
Performance-based share-based compensation (b) 3,736 1.1%  2,403  0.8 %  9,396 0.9%  6,067  0.7 %
Corporate restructuring (c) 2,084 0.6%        2,030 0.2%  7,203  0.8 %
Acquisition-related 2,351 0.7%  107  0.0 %  3,610 0.4%  5,218  0.6 %
Medical Device Regulation expenses (d) 1,983 0.6%  2,444  0.8 %  6,120 0.6%  9,112  1.0 %
Other (e) 125 0.0%  (2,946) (0.9)%  302 0.0%  (1,309) (0.1)%
                        
Non-GAAP Operating Income$65,136 19.2% $54,897  17.4 % $187,811 18.8% $162,214  17.4 %
                            

___________________________

Note: Certain percentages may not sum to totals due to rounding.

(a)Beginning in the second quarter of 2024, consulting expenses associated with initiatives conducted under our Foundations for Growth Program (“FFG Program”) are not adjusted as part of our non-GAAP financial measures. As a result, our non-GAAP financial measures for prior periods have been recast for comparability. For the three-month period ended September 30, 2023, our non-GAAP financial measures have been updated to no longer adjust $2.8 million for consulting fees under our FFG Program and the related income tax effect. For the nine-month periods ended September 30, 2024 and 2023, our non-GAAP financial measures have been updated to no longer adjust $1.0 million and $7.0 million, respectively, for consulting fees under our FFG Program and the related income tax effects. As of December 31, 2023, we completed the final year of our FFG Program.
  
(b)Represents performance-based share-based compensation expense, including stock-settled and cash-settled awards.
  
(c)Includes $2.1 million and $2.0 million for the three and nine-month periods ended September 30, 2024, respectively, for employee termination benefits associated with activities related to corporate restructuring initiatives primarily for the integration of our acquisition of EGS. For the nine-month period ended September 30, 2023, includes employee termination benefits associated with restructuring activities related to corporate initiatives of $2.9 million and includes $4.3 million for the write-off of other long-term assets associated with the divestiture or exit of certain businesses or product lines.
  
(d)Represents incremental expenses incurred to comply with the E.U. Medical Device Regulation (“MDR”).
  
(e)Represents costs to comply with our corporate integrity agreement with the U.S. Department of Justice (the “DOJ”). The three and nine-month periods ended September 30, 2023 also include an insurance reimbursement of approximately $(3.0) million for costs incurred in responding to an inquiry by the DOJ which was settled in 2020. The nine-month period ended September 30, 2023 also includes acquired in-process research and development charges of $1.6 million.
  

Reconciliation of Reported Revenue to Constant Currency Revenue (Non-GAAP), and Constant Currency Revenue, Organic (Non-GAAP) 
(Unaudited, in thousands except percentages)

                
   Three Months Ended   Nine Months Ended
   September30,    September30, 
 % Change 2024
 2023 % Change 2024
 2023
Reported Revenue7.8%$339,845  $315,230 7.3%$1,001,356  $932,851
                
Add: Impact of foreign exchange   281       5,006   
                
Constant Currency Revenue (a)7.9%$340,126  $315,230 7.9%$1,006,362  $932,851
                
Less: Revenue from certain acquisitions   (6,805)      (18,368)  
                
Constant Currency Revenue, Organic (a)5.7%$333,321  $315,230 5.9%$987,994  $932,851
                  

___________________________

(a)   A non-GAAP financial measure. For a definition of this and other non-GAAP financial measures, see the section of this release entitled “Non-GAAP Financial Measures.”

Reconciliation of Reported Gross Margin to Non-GAAP Gross Margin (Non-GAAP)
(Unaudited, as a percentage of reported revenue)

            
 Three Months Ended Nine Months Ended
 September30,  September30, 
 2024 2023 2024 2023
Reported Gross Margin46.4% 45.1% 47.0% 46.5%
            
Add back impact of:           
Amortization of intangibles4.4% 4.2% 4.1% 3.8%
Inventory mark-up related to acquisitions0.2% 0.6% 0.1% 0.2%
            
Non-GAAP Gross Margin50.9% 49.8% 51.1% 50.4%
            

___________________________

Note: Certain percentages may not sum to totals due to rounding.

ABOUT MERIT

Founded in 1987, Merit is engaged in the development, manufacture, and distribution of proprietary medical devices used in interventional, diagnostic, and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care, and endoscopy. Merit serves customers worldwide with a domestic and international sales force and clinical support team totaling more than 700 individuals. Merit employs approximately 7,200 people worldwide.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Forward-looking statements include, among others:

  • statements that are not purely historical, including, without limitation, statements regarding Merit’s forecasted plans, revenues, net sales, gross profit and margin (GAAP and non-GAAP), operating income and margin (GAAP and non-GAAP), net income (GAAP and non-GAAP), earnings per share (GAAP and non-GAAP), free cash flow and other financial measures, future growth and profit expectations or forecasted economic conditions, or the implementation of, and results which may be achieved through, Merit’s Continued Growth Initiatives Program or other expense reduction initiatives; and
  • statements proceeded or followed by, or that include the words, “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “seeks,” “believes,” “estimates,” “potential,” “target,” “forecasts,” “continue,” or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology.

Forward-looking statements contained in this release are based on management’s current expectations and assumptions regarding future events or outcomes, all of which are subject to risks and uncertainties such as those described in Merit’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”) and other filings with the SEC. While the following list is not comprehensive, such risks and uncertainties include inherent risks and uncertainties associated with Merit’s proposed acquisition of Cook Medical’s lead management portfolio, Merit’s integration of products acquired from EGS and proposed to be acquired from Cook Medical, Merit’s ability to achieve anticipated financial results, product development and other anticipated benefits of the EGS acquisition and the proposed acquisition of the lead management portfolio and associated operations of Cook Medical; uncertainties as to whether Merit will achieve sales, gross and operating margins, net income and earnings per share performance consistent with its forecasts associated with those completed and proposed acquisitions; uncertainties as to whether Merit will be successful in completing the proposed acquisition of the lead management portfolio of Cook Medical; disruptions in Merit’s supply chain, manufacturing or sterilization processes; reduced availability of, and price increases associated with, commodity components and other raw materials; adverse changes in freight, shipping and transportation expenses; negative changes in economic and industry conditions in the United States or other countries, including inflation; risks relating to Merit’s potential inability to successfully manage growth through acquisitions generally, including the inability to effectively integrate acquired operations or products or commercialize technology developed internally or acquired through completed, proposed or future transactions; risks associated with Merit’s ongoing or prospective manufacturing transfers and facility consolidations; fluctuations in interest or foreign currency exchange rates; risks and uncertainties associated with Merit’s information technology systems, including the potential for breaches of security and evolving regulations regarding privacy and data protection; governmental scrutiny and regulation of the medical device industry, including governmental inquiries, investigations and proceedings involving Merit; consequences associated with a Corporate Integrity Agreement executed between Merit and the DOJ; difficulties, delays and expenditures relating to development, testing and regulatory approval or clearance of Merit’s products, including the pursuit of approvals under the MDR, and risks that such products may not be developed successfully or approved for commercial use; outcomes of ongoing and future clinical trials and market studies relating to Merit’s products; litigation and other judicial proceedings affecting Merit; the potential of fines, penalties or other adverse consequences if Merit’s employees or agents violate the U.S. Foreign Corrupt Practices Act or other laws or regulations; restrictions on Merit’s liquidity or business operations resulting from its debt agreements; infringement of Merit’s technology or the assertion that Merit’s technology infringes the rights of other parties; product recalls and product liability claims; changes in customer purchasing patterns or the mix of products Merit sells; laws and regulations targeting fraud and abuse in the healthcare industry; potential for significant adverse changes in governing regulations, including reforms to the procedures for approval or clearance of Merit’s products by the U.S. Food & Drug Administration or comparable regulatory authorities in other jurisdictions; changes in tax laws and regulations in the United States or other jurisdictions or exposure to additional tax liabilities which may adversely affect our effective tax rate; termination of relationships with Merit’s suppliers, or failure of such suppliers to perform; development of new products and technology that could render Merit’s existing or future products obsolete; market acceptance of new products; dependance on distributors to commercialize Merit’s products in various jurisdictions outside the United States; volatility in the market price of Merit’s common stock; modification or limitation of governmental or private insurance reimbursement policies; changes in healthcare policies or markets related to healthcare reform initiatives; failure to comply with applicable environmental laws; changes in key personnel; work stoppage or transportation risks; failure to introduce products in a timely fashion; price and product competition; fluctuations in and obsolescence of inventory; extreme weather events; geopolitical events; and other factors referenced in the 2023 Annual Report and other materials filed with the SEC.

All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results. Those estimates and all other forward-looking statements included in this document are made only as of the date of this document, and except as otherwise required by applicable law, Merit assumes no obligation to update or disclose revisions to estimates and all other forward-looking statements.

TRADEMARKS

Unless noted otherwise, trademarks and registered trademarks used in this release are the property of Merit Medical Systems, Inc., its subsidiaries, or its licensors.

Contacts:

 
PR/Media Inquiries:
Sarah Comstock
Merit Medical
Investor Inquiries:
Mike Piccinino, CFA, IRC
Westwicke – ICR
+1-801-432-2864+1-443-213-0509
sarah.comstock@merit.commike.piccinino@westwicke.com

FAQ

What was Merit Medical's (MMSI) revenue growth in Q3 2024?

Merit Medical reported revenue of $339.8 million in Q3 2024, representing a 7.8% increase compared to Q3 2023.

How much did Merit Medical's (MMSI) EPS grow in Q3 2024?

Merit Medical's GAAP EPS grew 8.0% to $0.48, while non-GAAP EPS increased 21.1% to $0.86 in Q3 2024.

What is Merit Medical's (MMSI) updated revenue guidance for 2024?

Merit Medical raised its 2024 revenue guidance to $1.344-$1.352 billion, representing 6.9-7.6% year-over-year growth.

How much free cash flow did Merit Medical (MMSI) generate in the first nine months of 2024?

Merit Medical generated $120 million in free cash flow during the first nine months of 2024, representing a 116% increase year-over-year.

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