Merit Medical Reports Third Quarter 2024 Results and Raises Full-Year Guidance
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
% Change
Year Ending
% Change
December 31, 2024
Y/Y
December 31, 2024
Y/Y
Net Sales
$1.344 - $1.352 billion
6.9% - 7.6%
$1.339 - $1.351 billion
6.5% - 7.5%
Cardiovascular Segment
$1.289 - $1.296 billion
5.6% - 6.2%
$1.285 - $1.295 billion
5.3% - 6.1%
Endoscopy Segment
$55 - $56 million
49% - 52%
$54 - $56 million
45% - 52%
Non-GAAP
Earnings Per Share
$3.33 - $3.38
17% - 19%
$3.25 - $3.34
14% - 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 fluctuations
0.6%
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:
