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

    المصدر: Nasdaq GlobeNewswire / 01 أغسطس 2024 15:10:01   America/Chicago

    Second Quarter 2024 Highlights†

    • Reported revenue of $338.0 million, up 5.6%
    • Constant currency revenue* up 6.6%
    • Constant currency revenue, organic,* up 5.0%
    • GAAP operating margin of 13.6%, compared to 9.0% in prior year period
    • Non-GAAP operating margin* of 20.1%, compared to 19.1% in prior year period
    • GAAP EPS $0.61, up 75.7%
    • Non-GAAP EPS* $0.92, up 16.8%

    † Comparisons noted in the bullet points are calculated for the current quarter compared with the same prior year period unless otherwise specified.

    * The 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.

    SOUTH JORDAN, Utah, Aug. 01, 2024 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading global manufacturer and marketer of healthcare technology, today announced revenue of $338.0 million for the quarter ended June 30, 2024, an increase of 5.6% compared to the quarter ended June 30, 2023. Constant currency revenue for the second quarter of 2024 increased 6.6% compared to the prior year period and increased 5.0% compared to the prior year period on a constant currency revenue, organic, basis.

    “We delivered better-than-expected revenue and financial results in the second quarter, reflecting continued strong momentum over the first half of fiscal year 2024,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer. “Our constant currency, organic, revenue and our constant currency total revenue exceeded the high-end of our expectations in the second quarter and we delivered year-over-year improvements in both our non-GAAP gross and operating margins and our non-GAAP earnings per share. Importantly, our strong growth and profitability performance fueled free cash flow generation of more than $80 million over the first half of fiscal year 2024. We are also pleased to announce that our application for premarket approval (PMA) of our Wrapsody™ Cell-Impermeable Endoprosthesis device was submitted to the FDA in the second quarter.” 

    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 results to-date and the forecasted impacts of the acquisition of EndoGastric Solutions announced on July 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 six-month periods ended June 30, 2024 and 2023 was as follows (unaudited; in thousands, except for percentages):

     Three Months Ended
     Reported     Constant Currency *
     June 30,     Impact of foreign June 30,    
     2024 2023 % Change exchange 2024 % Change
    Cardiovascular                       
    Peripheral Intervention$139,247  $125,909   10.6% $1,030  $140,277   11.4%
    Cardiac Intervention 93,863   93,775   0.1%  1,273   95,136   1.5%
    Custom Procedural Solutions 50,416   49,384   2.1%  635   51,051   3.4%
    OEM 44,289   42,207   4.9%  60   44,349   5.1%
    Total 327,815   311,275   5.3%  2,998   330,813   6.3%
                            
    Endoscopy                       
    Endoscopy Devices 10,188   8,781   16.0%  35   10,223   16.4%
                            
    Total$338,003  $320,056   5.6% $3,033  $341,036   6.6%


     Six Months Ended
     Reported     Constant Currency *
     June 30,     Impact of foreign June 30,    
     2024 2023 % Change exchange 2024 % Change
    Cardiovascular                       
    Peripheral Intervention$273,873  $239,692   14.3% $1,397  $275,270   14.8%
    Cardiac Intervention 184,551   179,103   3.0%  2,205   186,756   4.3%
    Custom Procedural Solutions 99,210   97,085   2.2%  1,038   100,248   3.3%
    OEM 83,555   83,371   0.2%  23   83,578   0.2%
    Total 641,189   599,251   7.0%  4,663   645,852   7.8%
                            
    Endoscopy                       
    Endoscopy Devices 20,322   18,370   10.6%  62   20,384   11.0%
                            
    Total$661,511  $617,621   7.1% $4,725  $666,236   7.9%


    Merit’s GAAP gross margin for the second quarter of 2024 was 47.7%, compared to GAAP gross margin of 47.7% for the second quarter of 2023. Merit’s non-GAAP gross margin* for the second quarter of 2024 was 51.5%, compared to non-GAAP gross margin* of 51.4% for the second quarter of 2023.

    Merit’s GAAP net income for the second quarter of 2024 was $35.7 million, or $0.61 per share, compared to GAAP net income of $20.2 million, or $0.35 per share, for the second quarter of 2023. Merit’s non-GAAP net income* for the second quarter of 2024 was $53.8 million, or $0.92 per share, compared to non-GAAP net income* of $45.9 million, or $0.78 per share, for the second quarter of 2023.

    As of June 30, 2024, Merit had cash and cash equivalents of $636.7 million, total debt obligations of $822.5 million, and available borrowing capacity of approximately $680 million, compared to cash and cash equivalents of $587 million, total debt obligations of $846.6 million, and available borrowing capacity 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, absent material acquisitions, non-recurring transactions or other factors beyond Merit’s current expectations, Merit now expects the following:

    Revenue and Earnings Guidance*

         
     Updated Guidance(1)Prior Guidance(2)
    Financial MeasureYear Ending% ChangeYear Ending% Change
    ($, millions, except per share figures)December 31, 2024Y/YDecember 31, 2024Y/Y
         
    Net Sales$1,335 - $1,3456% - 7%$1,324 - $1,3405% - 7%
    Cardiovascular Segment$1,281 - $1,2895% - 6%$1,272 - $1,2854% - 5%
    Endoscopy Segment$54 - $5645% - 52%$53 - $5645% - 51%
         
    Non-GAAP    
    Earnings Per Share(3)$3.27 - $3.3515% - 17%$3.22 - $3.3113% - 16%

    *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)6.2% 7.0% 5.3% 6.6%
    Estimated impact of foreign currency exchange rate fluctuations0.7% 0.7% 0.5% 0.5%
    2024 Net Sales Guidance - % Change from Prior Year (Constant Currency)6.9% 7.7% 5.8% 7.1%

    *Percentage figures approximated and may not foot due to rounding

    (1) “Updated Guidance” reflects Merit’s updated full-year 2024 financial guidance on a standalone basis, plus the forecasted impacts of the acquisition of the assets of EndoGastric Solutions, Inc. (“EGS”) from the closing date on July 1, 2024 through December 31, 2024.

    (2) “Prior Guidance” previously introduced on April 30, 2024, and reflects Merit’s full-year 2024 financial guidance on a standalone basis, and updated on July 1, 2024 to include the forecasted impacts of the acquisition of the assets of EGS from the closing date on July 1, 2024 through December 31, 2024.

    (3) Beginning in the second quarter of 2024, consulting expenses associated with initiatives conducted under our Foundations for Growth Program (“FFG Program”) are no longer adjusted as part of our non-GAAP measures. As a result, our non-GAAP measures for prior periods have been recast and the associated change in comparison to prior year has been calculated using the adjusted earnings per share. For the year ended December 31, 2023, our non-GAAP financial measures have been updated to no longer adjust $12.3 million for consulting fees under our FFG Program and the related income tax effect.

    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 severance expenses, 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, Thursday, August 1, 2024, at 5:00 p.m. Eastern (4:00 p.m. Central, 3:00 p.m. Mountain, and 2:00 p.m. Pacific). 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.



    CONSOLIDATED BALANCE SHEETS
    (in thousands)
          
     June 30,   
      2024   December 31, 
     (Unaudited)  2023 
    ASSETS     
    Current Assets     
    Cash and cash equivalents$636,658  $587,036 
    Trade receivables, net 182,415   177,885 
    Other receivables 10,612   10,517 
    Inventories 298,224   303,871 
    Prepaid expenses and other assets 26,179   24,286 
    Prepaid income taxes 4,123   4,016 
    Income tax refund receivables 4,335   859 
    Total current assets 1,162,546   1,108,470 
          
    Property and equipment, net 385,939   383,523 
    Intangible assets, net 303,422   325,883 
    Goodwill 381,433   382,240 
    Deferred income tax assets 7,013   7,288 
    Operating lease right-of-use assets 69,903   63,047 
    Other assets 61,583   54,793 
    Total Assets$2,371,839  $2,325,244 
          
    LIABILITIES AND STOCKHOLDERS' EQUITY     
    Current Liabilities     
    Trade payables$55,573  $65,944 
    Accrued expenses 117,574   120,447 
    Current operating lease liabilities 11,743   12,087 
    Income taxes payable 1,325   5,086 
    Total current liabilities 186,215   203,564 
          
    Long-term debt 801,321   823,013 
    Deferred income tax liabilities 5,510   5,547 
    Long-term income taxes payable 347   347 
    Liabilities related to unrecognized tax benefits 1,912   1,912 
    Deferred compensation payable 18,588   17,167 
    Deferred credits 1,553   1,605 
    Long-term operating lease liabilities 58,036   56,259 
    Other long-term obligations 15,912   13,830 
    Total liabilities 1,089,394   1,123,244 
          
    Stockholders' Equity     
    Common stock 658,724   638,150 
    Retained earnings 639,150   575,184 
    Accumulated other comprehensive loss (15,429)  (11,334)
    Total stockholders' equity 1,282,445   1,202,000 
    Total Liabilities and Stockholders' Equity$2,371,839  $2,325,244 



    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited, in thousands except per share amounts)
                
     Three Months Ended Six Months Ended
     June 30, June 30,
      2024   2023   2024   2023 
    Net sales$338,003  $320,056  $661,511  $617,621 
    Cost of sales 176,903   167,274   348,696   326,477 
    Gross profit 161,100   152,782   312,815   291,144 
                
    Operating expenses:           
    Selling, general and administrative 94,585   100,927   189,013   191,071 
    Research and development 20,263   20,129   41,745   41,443 
    Impairment charges —   270   —   270 
    Contingent consideration expense 306   1,094   189   1,615 
    Acquired in-process research and development —   1,550   —   1,550 
    Total operating expenses 115,154   123,970   230,947   235,949 
                
    Income from operations 45,946   28,812   81,868   55,195 
                
    Other income (expense):           
    Interest income 7,561   221   14,837   352 
    Interest expense (7,679)  (3,682)  (15,725)  (5,693)
    Other income (expense) — net 15   (451)  (789)  546 
    Total other expense — net (103)  (3,912)  (1,677)  (4,795)
                
    Income before income taxes 45,843   24,900   80,191   50,400 
                
    Income tax expense 10,117   4,655   16,225   9,452 
                
    Net income$35,726  $20,245  $63,966  $40,948 
                
    Earnings per common share           
    Basic$0.61  $0.35  $1.10  $0.71 
    Diluted$0.61  $0.35  $1.09  $0.70 
                
    Weighted average shares outstanding           
    Basic 58,139   57,537   58,049   57,445 
    Diluted 58,740   58,473   58,653   58,329 



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited, in thousands)
          
     Six Months Ended
     June 30,
      2024   2023 
    CASH FLOWS FROM OPERATING ACTIVITIES:   
    Net income$63,966  $40,948 
    Adjustments to reconcile net income to net cash provided by operating activities:     
    Depreciation and amortization 47,690   42,316 
    Write-off of certain intangible assets and other long-term assets 280   328 
    Amortization of right-of-use operating lease assets 6,063   5,935 
    Fair value adjustments related to contingent consideration liabilities 189   1,615 
    Acquired in-process research and development —   1,550 
    Stock-based compensation expense 12,245   9,549 
    Other adjustments 2,981   5,087 
    Changes in operating assets and liabilities, net of acquisitions and divestitures (28,692)  (75,497)
    Total adjustments 40,756   (9,117)
    Net cash, cash equivalents, and restricted cash provided by operating activities 104,722   31,831 
          
    CASH FLOWS FROM INVESTING ACTIVITIES:     
    Capital expenditures for property and equipment (22,309)  (18,556)
    Issuance of note receivables (6,162)  — 
    Cash paid in acquisitions and investments, net of cash acquired (8,493)  (138,349)
    Other investing, net (1,574)  (846)
    Net cash, cash equivalents, and restricted cash used in investing activities (38,538)  (157,751)
          
    CASH FLOWS FROM FINANCING ACTIVITIES:   
    Proceeds from issuance of common stock 10,931   9,463 
    Proceeds from (payments on) long-term debt (24,063)  141,812 
    Long-term debt issuance costs —   (5,240)
    Contingent payments related to acquisitions (142)  (3,434)
    Payment of taxes related to an exchange of common stock (1,592)  (1,592)
    Net cash, cash equivalents, and restricted cash provided by (used in) financing activities (14,866)  141,009 
    Effect of exchange rates on cash (1,750)  (1,497)
    Net increase in cash, cash equivalents and restricted cash 49,568   13,592 
          
    CASH, CASH EQUIVALENTS AND RESTRICTED CASH:     
    Beginning of period 589,144   60,558 
    End of period$638,712  $74,150 
          
    RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:     
    Cash and cash equivalents 636,658   72,084 
    Restricted cash reported in prepaid expenses and other current assets 2,054   2,066 
    Total cash, cash equivalents and restricted cash$638,712  $74,150 


    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 severance expenses, 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 $3.0 million and $4.7 million to reported revenue for the three and six-month periods ended June 30, 2024, respectively, were calculated using the applicable average foreign exchange rates for the three and six-month periods ended June 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 and six-month periods ended June 30, 2024, Merit’s constant currency revenue, organic, excludes revenues attributable to 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 severance expenses, 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 six-month periods ended June 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 $3.4 million and $3.2 million for the three-month periods ended June 30, 2024 and 2023, respectively and $6.5 million and $5.8 million for the six-month periods ended June 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
     June 30, 2024
     Pre-Tax Tax Impact After-Tax Per Share Impact
    GAAP net income$45,843  $(10,117) $35,726  $0.61 
                
    Non-GAAP adjustments:           
    Cost of Sales           
    Amortization of intangibles 13,126   (3,104)  10,022   0.17 
    Operating Expenses           
    Contingent consideration expense 306   (72)  234   0.00 
    Amortization of intangibles 1,744   (413)  1,331   0.02 
    Performance-based share-based compensation (b) 3,532   (563)  2,969   0.05 
    Corporate restructuring (c) (54)  13   (41)  (0.00)
    Acquisition-related 1,221   (288)  933   0.02 
    Medical Device Regulation expenses (d) 1,930   (456)  1,474   0.03 
    Other (e) 55   (12)  43   0.00 
    Other (Income) Expense           
    Amortization of long-term debt issuance costs 1,477   (349)  1,128   0.02 
                
    Non-GAAP net income$69,180  $(15,361) $53,819  $0.92 
                
    Diluted shares          58,740 


     Three Months Ended
     June 30, 2023 (a)
     Pre-Tax Tax Impact After-Tax Per Share Impact
    GAAP net income$24,900  $(4,655) $20,245  $0.35 
                   
    Non-GAAP adjustments:              
    Cost of Sales              
    Amortization of intangibles 11,448   (2,753)  8,695   0.15 
    Inventory mark-up related to acquisitions 260   (62)  198   0.00 
    Operating Expenses              
    Contingent consideration expense 1,094   47   1,141   0.02 
    Impairment charges 270   —   270   0.00 
    Amortization of intangibles 1,965   (474)  1,491   0.03 
    Performance-based share-based compensation (b) 2,377   (340)  2,037   0.03 
    Corporate restructuring (c) 5,577   (1,338)  4,239   0.07 
    Acquisition-related 4,856   (1,166)  3,690   0.06 
    Medical Device Regulation expenses (d) 3,010   (722)  2,288   0.04 
    Other (e) 1,603   (385)  1,218   0.02 
    Other (Income) Expense              
    Amortization of long-term debt issuance costs 478   (115)  363   0.01 
                   
    Non-GAAP net income$57,838  $(11,963) $45,875  $0.78 
                   
    Diluted shares            58,473 

    ____________________________

    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)

     Six Months Ended
     June 30, 2024 (a)
     Pre-Tax Tax Impact After-Tax Per Share Impact
    GAAP net income$80,191  $(16,225) $63,966  $1.09 
                
    Non-GAAP adjustments:           
    Cost of Sales           
    Amortization of intangibles 25,931   (6,132)  19,799   0.34 
    Operating Expenses           
    Contingent consideration expense 189   (25)  164   0.00 
    Amortization of intangibles 3,508   (830)  2,678   0.05 
    Performance-based share-based compensation (b) 5,660   (857)  4,803   0.08 
    Corporate restructuring (c) (54)  13   (41)  (0.00)
    Acquisition-related 1,259   (297)  962   0.02 
    Medical Device Regulation expenses (d) 4,137   (977)  3,160   0.05 
    Other (e) 177   (42)  135   0.00 
    Other (Income) Expense           
    Amortization of long-term debt issuance costs 2,954   (697)  2,257   0.04 
                
    Non-GAAP net income$123,952  $(26,069) $97,883  $1.67 
                
    Diluted shares          58,653 


     Six Months Ended
     June 30, 2023 (a)
     Pre-Tax Tax Impact After-Tax Per Share Impact
    GAAP net income$50,400  $(9,452) $40,948  $0.70 
                   
    Non-GAAP adjustments:              
    Cost of Sales              
    Amortization of intangibles 22,064   (5,306)  16,758   0.29 
    Inventory mark-up related to acquisitions 260   (62)  198   0.00 
    Operating Expenses              
    Contingent consideration expense 1,615   2   1,617   0.03 
    Impairment charges 270   —   270   0.00 
    Amortization of intangibles 3,630   (876)  2,754   0.05 
    Performance-based share-based compensation (b) 3,664   (427)  3,237   0.06 
    Corporate restructuring (c) 7,203   (1,728)  5,475   0.09 
    Acquisition-related 5,111   (1,227)  3,884   0.07 
    Medical Device Regulation expenses (d) 6,668   (1,600)  5,068   0.09 
    Other (e) 1,637   (393)  1,244   0.02 
    Other (Income) Expense              
    Amortization of long-term debt issuance costs 629   (151)  478   0.01 
                   
    Non-GAAP net income$103,151  $(21,220) $81,931  $1.40 
                   
    Diluted shares            58,329 

    ____________________________

    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 Six Months Ended Six Months Ended
     June 30, 2024 June 30, 2023 (a) June 30, 2024 (a) June 30, 2023 (a)
     Amounts % Sales Amounts % Sales Amounts % Sales Amounts % Sales
    Net Sales as Reported$338,003     $320,056      $661,511     $617,621     
                                
    GAAP Operating Income 45,946   13.6%  28,812   9.0%  81,868   12.4%  55,195   8.9%
    Cost of Sales                           
    Amortization of intangibles 13,126   3.9%  11,448   3.6%  25,931   3.9%  22,064   3.6%
    Inventory mark-up related to acquisitions —   —   260   0.1%  —   —   260   0.0%
    Operating Expenses                           
    Contingent consideration expense 306   0.1%  1,094   0.3%  189   0.0%  1,615   0.3%
    Impairment charges —   —   270   0.1%  —   —   270   0.0%
    Amortization of intangibles 1,744   0.5%  1,965   0.6%  3,508   0.5%  3,630   0.6%
    Performance-based share-based compensation (b) 3,532   1.0%  2,377   0.7%  5,660   0.9%  3,664   0.6%
    Corporate restructuring (c) (54)  (0.0)%  5,577   1.7%  (54)  (0.0)%  7,203   1.2%
    Acquisition-related 1,221   0.4%  4,856   1.5%  1,259   0.2%  5,111   0.8%
    Medical Device Regulation expenses (d) 1,930   0.6%  3,010   0.9%  4,137   0.6%  6,668   1.1%
    Other (e) 55   0.0%  1,603   0.5%  177   0.0%  1,637   0.3%
                                
    Non-GAAP Operating Income$67,806   20.1% $61,272   19.1% $122,675   18.5% $107,317   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 FFG Program are no longer adjusted as part of our non-GAAP measures. As a result, our non-GAAP measures for prior periods have been recast for comparability. For the three-month period ended June 30, 2023, our non-GAAP financial measures have been updated to no longer adjust $2.3 million for consulting fees under our FFG Program and the related income tax effect. For the six-month periods ended June 30, 2024 and 2023, our non-GAAP financial measures have been updated to no longer adjust $1.0 million and $4.2 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 $(0.1) million for both the three and six-month periods ended June 30, 2024 for employee termination benefits associated with activities related to corporate restructuring initiatives. Includes employee termination benefits associated with restructuring activities related to corporate initiatives of $1.3 million and $2.9 million for the three and six-month periods ended June 30, 2023, respectively; 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 for both the three and six-month periods ended June 30, 2023.

    (d) Represents incremental expenses incurred to comply with the E.U. Medical Device Regulation (“MDR”).

    (e) Represents costs to comply with Merit’s corporate integrity agreement with the U.S. Department of Justice (the “DOJ”). The 2023 periods also include 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     Six Months Ended
         June30,      June30, 
      % Change  2024  2023  % Change  2024  2023
    Reported Revenue 5.6% $338,003  $320,056   7.1% $661,511  $617,621 
                          
    Add: Impact of foreign exchange     3,033   —       4,725   — 
                          
    Constant Currency Revenue (a) 6.6% $341,036  $320,056   7.9% $666,236  $617,621 
                          
    Less: Revenue from certain acquisitions     (4,835)  —       (11,563)  — 
                          
    Constant Currency Revenue, Organic (a) 5.0% $336,201  $320,056   6.0% $654,673  $617,621 

    ____________________________

    (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 Six Months Ended
     June30,  June30, 
      2024   2023   2024   2023 
    Reported Gross Margin 47.7%  47.7%  47.3%  47.1%
                    
    Add back impact of:               
    Amortization of intangibles 3.9%  3.6%  3.9%  3.6%
    Inventory mark-up related to acquisitions —%  0.1%  —%  0.0%
                    
    Non-GAAP Gross Margin 51.5%  51.4%  51.2%  50.8%

    ____________________________

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

    ABOUT MERIT

    Founded in 1987, Merit Medical Systems, Inc. is engaged in the development, manufacture, and distribution of proprietary disposable medical devices used in interventional, diagnostic, and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care, and endoscopy. Merit serves client hospitals worldwide with a domestic and international sales force and clinical support team totaling more than 700 individuals. Merit employs approximately 7,000 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 not comprehensive, such risks and uncertainties include inherent risks and uncertainties associated with Merit’s integration of products acquired from EGS and its ability to achieve anticipated financial results, product development and other anticipated benefits of the EGS acquisition; 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 that acquisition; 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; 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:
    Teresa Johnson
    Merit Medical    		Investor Inquiries:
    Mike Piccinino, CFA, IRC
    Westwicke – ICR
    +1-801-208-4295+1-443-213-0509
    tjohnson@merit.commike.piccinino@westwicke.com

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