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Merit Medical Systems, Inc. MMSI reported third-quarter 2024 adjusted earnings per share (EPS) of 86 cents, up 21.1% from the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate by 7.5%.
GAAP EPS for the quarter was 48 cents, up 9.1% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
MMSI’s Revenue Details
Revenues grossed $339.8 million in the reported quarter, up 7.8% year over year. The metric topped the Zacks Consensus Estimate by 1.4%.
Total revenues at constant exchange rate (CER) increased 7.9% year over year, whereas CER, organic revenues increased 5.7%.
Per management, the uptick in total revenues at CER was driven by strong organic growth and contributions from acquired products, both of which came in at the high-end of the company’s growth expectations.
The shares of this company declined nearly 1% at yesterday’s market close.
Merit Medical’s Geographic Results
The U.S. sales amounted to $206.5 million, which increased 10.1% year over year on a reported basis and 10.2% at CER. This figure compares to our third-quarter projection of $203.2 million.
Per management, the increase in domestic sales in the third quarter was driven primarily by Merit Medical’s U.S. Direct and Endoscopy businesses.
International sales amounted to $133.4 million, up 4.4% year over year on a reported basis and 4.5% at CER. This figure compares to our third-quarter projection of $131 million.
Revenues from the Asia-Pacific region were $60.4 million (up 0.9% and 0.6% year over year on a reported basis and CER, respectively). This figure compares to our third-quarter projection of $62.1 million.
Revenues from Europe, the Middle East and Africa region were $58.5 million (up 5.9% and 4.8% year over year on a reported basis and CER, respectively). This figure compares to our third-quarter projection of $58 million.
Revenues from the Rest of World region were $14.5 million (up 14.3% and 21.8% year over year on a reported basis and CER, respectively). This figure compares to our third-quarter projection of $10.8 million.
MMSI’s Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported third-quarter revenues of $322.9 million, up 5.5% on a reported basis and 5.6% at CER year over year. This figure compares to our segmental projection of $318 million for the third quarter.
The Cardiovascular segment includes the following product categories: Peripheral Intervention (PI), Cardiac Intervention (CI), Custom Procedural Solutions (CPS) and original equipment manufacturer (OEM).
PI product line revenues were $137.9 million, up 7.4% on a reported basis and 7.7% at CER year over year. This compares to our projection of $137.3 million.
CI revenues of $90.8 million rose 1.9% on a reported basis and 1.8% at CER year over year. This compares to our projection of $91.2 million.
CPS revenues improved 4.4% both on a reported basis and at CER year over year to $50.8 million. This compares to our projection of $48.2 million.
OEM revenues improved 8.5% both on a reported basis and at CER year over year to $43.4 million. This compares to our projection of $41.3 million.
Endoscopy devices’ revenues totaled $16.9 million, up 85.8% year over year on a reported basis and 85.9% at CER. This figure compares to our segmental projection of $16.1 million for the third quarter.
Merit Medical Systems, Inc. Price, Consensus and EPS Surprise
Merit Medical Systems, Inc. Price, Consensus and EPS Surprise
Merit Medical Systems, Inc. price-consensus-eps-surprise-chart | Merit Medical Systems, Inc. Quote
Merit Medical’s Margin Analysis
In the quarter under review, Merit Medical’s gross profit increased 10.8% year over year to $157.5 million. The gross margin expanded 125 basis points (bps) to 46.4%. We had projected a 45.8% gross margin for the third quarter.
Selling, general & administrative expenses increased 14.7% to $99.6 million. Research and development expenses rose 4.5% year over year to $20.5 million. Adjusted operating expenses of $120.2 million climbed 12.8%.
Adjusted operating profit totaled $37.4 million, reflecting a 4.7% increase from the prior-year quarter. However, the adjusted operating margin in the third quarter contracted 33 bps to 10.9%.
MMSI’s Financial Position
Merit Medical exited the third quarter with cash and cash equivalents of $523.1 million compared with $636.7 million at the second-quarter end. Total debt at the end of third-quarter 2024 was $770.5 million compared with $822.5 million at the second-quarter end.
Cumulative net cash provided by operating activities at the end of the third quarter was $152.1 million compared with $82.9 million a year ago.
Merit Medical’s Guidance
MMSI has revised its outlook for 2024.
Net revenues for 2024 are now projected between $1.344 billion and $1.352 billion (reflecting an increase of 6.9-7.6% over the comparable reported figures of 2023), up from the prior outlook of net revenues of $1.339 billion-$1.351 billion (reflecting an increase of 6.5-7.5% over the comparable reported figures of 2023). The Zacks Consensus Estimate stands at $1.34 billion.
Net revenues from the Cardiovascular segment are now expected in the range of $1.289 billion-$1.296 billion (representing an increase of 5.6-6.2% over the comparable reported figures of 2023), up from the earlier projection of revenues of $1.285 billion-$1.295 billion (representing an increase of 5.3-6.1% over the comparable reported figures of 2023).
The Endoscopy segment’s net revenues are now projected between $55 million and $56 million (representing an increase of 49-52% over the comparable reported figures of 2023), narrowing from the earlier expectations of revenues of $54 million-$56 million (representing an increase of 45-52% over the comparable reported figures of 2023).
Adjusted EPS for 2024 is now projected in the range of $3.33-$3.38 (representing an increase of 17-19% over the comparable reported figures of 2023), up from the earlier projection of $3.25-$3.34 (representing an increase of 14-17% over the comparable reported figures of 2023). The Zacks Consensus Estimate is pegged at $3.30.
Our Take
Merit Medical exited the third quarter with better-than-expected results. The year-over-year uptick in the top line and bottom line was impressive. The company saw revenue growth in both its segments and across all the product categories within its Cardiovascular unit. Robust performances in the United States and outside were impressive. The expansion of gross margin bodes well for the stock.
During the quarter, Merit Medical completed the acquisition of certain assets from EndoGastric Solutions, Inc., which included the EsophyX Z+, and 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. MMSI also announced positive six-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. These look promising for the stock.
However, the contraction of the adjusted operating margin was disappointing. The current challenging global macro environment also raises our apprehension.
MMSI’s Zacks Rank and Key Picks
Merit Medical currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, ResMed Inc. RMD and Boston Scientific Corporation BSX.
Quest Diagnostics, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2024 adjusted EPS of $2.30, beating the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion outpaced the consensus mark by 3.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has a long-term estimated growth rate of 6.5%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.4%.
ResMed reported first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.4%.
Boston Scientific reported third-quarter 2024 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.
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