Core Insights - Merit Medical Systems, Inc. announced the regulatory approval of the Wrapsody Cell-Impermeable Endoprosthesis (CIE) from Health Canada, enabling immediate commercialization in Canada [1] - The WRAPSODY CIE is designed to address vascular access stenosis in hemodialysis patients, a common complication that can lead to severe health risks [2][6] - The device features a unique tri-layer design that enhances its effectiveness compared to previous generation devices, aiming to improve patient outcomes [4][6] Product Development and Clinical Insights - The development of the WRAPSODY CIE was informed by an understanding of previous device failures, particularly the issue of tissue accumulation within the PTFE layer [3] - Key clinical insights from Dr. Bart Dolmatch contributed to the innovative design of the device, which includes features such as optimized radial force and high compression resistance [4] - Results from the WAVE trial indicated that the WRAPSODY CIE demonstrated significantly higher primary patency rates compared to percutaneous transluminal angioplasty (PTA) at both six and twelve months [5][7] Market Position and Future Outlook - The WRAPSODY CIE received premarket approval from the FDA in December 2024 and began commercialization in the U.S. in January 2025, with prior CE Mark approval for the European Union [6] - The device is expected to enhance the standard of care for hemodialysis patients in Canada, providing a valuable option for maintaining vascular access [6] - Merit Medical Systems, founded in 1987, continues to focus on developing high-quality medical devices for various therapeutic procedures, employing approximately 7,300 individuals globally [9]

Core Insights - The article compares Labcorp (LH) and Merit Medical (MMSI) to determine which stock offers better value for investors [1] Valuation Metrics - Labcorp has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Merit Medical has a Zacks Rank of 4 (Sell) [3] - Labcorp's forward P/E ratio is 15.44, significantly lower than Merit Medical's forward P/E of 28.18 [5] - Labcorp has a PEG ratio of 1.57, while Merit Medical's PEG ratio is 2.74, suggesting Labcorp is expected to grow earnings at a more favorable rate [5] - Labcorp's P/B ratio is 2.50 compared to Merit Medical's P/B of 3.96, indicating Labcorp is more favorably valued against its book value [6] - Based on these metrics, Labcorp earns a Value grade of A, while Merit Medical receives a Value grade of D [6] Earnings Outlook - Labcorp is noted for its improving earnings outlook, which enhances its attractiveness as a value investment [7]

Core Insights - The Merit WRAPSODY Cell-Impermeable Endoprosthesis (CIE) demonstrated a 60.2% target lesion primary patency (TLPP) at 12 months in the AVG cohort of the WAVE trial [1] - The WAVE trial's single-arm cohort included 112 patients, achieving a 6-month TLPP of 81.4%, exceeding the performance goal of 60% by 21.4 percentage points [2] - The safety performance goal was surpassed, with 95.4% of AVG patients free from adverse events compared to the goal of 89.0% [2] - Access circuit primary patency (ACPP) at 6 months was 69.2% and at 12 months was 36.2% [2] - Previous findings from the randomized arm of the WAVE trial indicated a TLPP of 70.1% and ACPP of 58.1% at 12 months [4] Company Overview - Merit Medical Systems, Inc. specializes in the development, manufacture, and distribution of proprietary disposable medical devices for interventional, diagnostic, and therapeutic procedures [6] - The company has a global presence, serving client hospitals with a sales force and clinical support team of over 800 individuals and employing approximately 7,300 people worldwide [6] - The WRAPSODY CIE is currently available in Brazil and the European Union, and it is approved for commercial distribution in the United States [5]

Core Viewpoint - Merit Medical Systems, Inc. (MMSI) reported strong first-quarter 2025 results with adjusted earnings per share (EPS) of 86 cents, reflecting a 14.7% increase year over year, surpassing the Zacks Consensus Estimate by the same percentage [1][2] Revenue Summary - Total revenues reached $355.4 million, up 9.8% year over year, exceeding the Zacks Consensus Estimate by 0.9% [2] - Revenues at constant exchange rate (CER) increased by 10.9% year over year, while organic revenues rose by 6% [2] - Revenue contributions included $9.2 million from the acquisition of Cook Medical's lead management product portfolio and $6.6 million from EndoGastric Solutions' assets [2] Geographic Performance - U.S. sales were $213.6 million, a 14.8% increase year over year, surpassing projections of $207 million [4] - International sales totaled $141.8 million, up 3.2% year over year, slightly below the projection of $144.4 million [4] - Asia-Pacific revenues were $62.6 million, down 0.5% year over year, while Europe, the Middle East, and Africa revenues were $63.3 million, up 3.7% [5] - Revenues from the Rest of World region were $15.9 million, reflecting a 17.7% increase year over year [6] Segment Performance - The Cardiovascular segment reported revenues of $338.7 million, an 8.1% increase year over year [7] - Peripheral Intervention (PI) revenues were $137.3 million, up 5.5%, while Cardiac Intervention (CI) revenues rose 10.6% to $99.7 million [8] - Custom Procedural Solutions (CPS) revenues declined 1.2% to $47.9 million, while OEM revenues improved 20.5% to $53.8 million [9][10] - Endoscopy devices generated revenues of $16.6 million, a significant increase of 64.2% year over year [10] Margin Analysis - Gross profit increased by 13.4% to $172 million, with gross margin expanding by 151 basis points to 48.4% [11] - Selling, general & administrative expenses rose 13.8% to $107.5 million, while research and development expenses increased by 4.6% to $22.5 million [11] - Adjusted operating profit totaled $42.1 million, reflecting a 17.5% increase, with an adjusted operating margin of 11.8% [12] Financial Position - Cash and cash equivalents at the end of the first quarter were $395.5 million, up from $376.7 million at the end of 2024 [13] - Total long-term debt was $730.7 million, slightly up from $729.6 million at the end of 2024 [13] - Net cash provided by operating activities was $40.6 million, compared to $36.2 million a year ago [13] Guidance - MMSI projects net revenues for 2025 to be between $1.470 billion and $1.490 billion, reflecting an increase of 8.4-9.8% year over year [14] - Cardiovascular segment revenues are expected to be in the range of $1.397 billion to $1.415 billion, while Endoscopy segment revenues are projected between $73 million and $75 million [15][16] - Adjusted EPS for 2025 is now projected to be between $3.29 and $3.42, a decrease from previous guidance [17] Market Reaction and Future Outlook - Shares of MMSI fell nearly 4.9% in after-hours trading following the earnings report [3] - The company announced the U.S. commercial release of its Ventrax Delivery System and the enrollment of the first patient in a study for the Bloom Micro Occluder System, indicating potential growth opportunities [20] - However, lower revenues in the APAC region and CPS revenues were disappointing, with specific challenges noted in the Chinese market [21]

Financial Data and Key Metrics Changes - The company reported total revenue of $355.4 million, up 9.8% year-over-year on a GAAP basis and up 10.9% year-over-year on a constant currency basis, exceeding growth expectations [11][12] - Non-GAAP operating margin increased nearly 230 basis points year-over-year to 19.3%, representing a first quarter record for the company [12][29] - Non-GAAP EPS grew by 15%, exceeding the high end of expectations [12][30] Business Line Data and Key Metrics Changes - Cardiovascular segment sales grew by 9%, while Endoscopy segment sales surged by 64% [17][18] - Cardiac intervention product sales increased by 12%, driven primarily by the acquisition of Cook Medical Products [20] - Sales of OEM products increased by 21%, significantly outperforming guidance [21] Market Data and Key Metrics Changes - U.S. sales increased by 14% on a constant currency basis, exceeding expectations [23] - International sales grew by 6% year-over-year, with APAC and EMEA regions performing at the high end of expectations [24] - Sales in China decreased by 10%, attributed to broader macroeconomic conditions rather than specific demand issues [25][62] Company Strategy and Development Direction - The company remains focused on delivering strong execution, solid constant currency growth, and free cash flow generation in 2025 [15][37] - Updated financial guidance reflects the impact of tariffs and trade policies, with non-GAAP EPS expectations adjusted to $3.29 to $3.42 [34][37] - The company is implementing cost control measures and leveraging existing initiatives to mitigate tariff impacts [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges posed by tariffs and macroeconomic conditions [41][112] - The company is monitoring the tariff situation closely but is not making long-term decisions based on short-term fluctuations [110][112] - Management remains optimistic about the demand for products in China despite recent challenges [63][99] Other Important Information - The company generated $19.5 million of free cash flow in Q1 2025, down 20% year-over-year due to increased capital expenditures [32] - Total debt obligations stood at $747.5 million, with a net leverage ratio of 1.8x as of March 31, 2025 [33] Q&A Session Summary Question: Can you provide more color on mitigation efforts regarding tariffs? - Management indicated that mitigation efforts are centered around existing initiatives and operational efficiencies, with a focus on maintaining execution [54][56] Question: What is the outlook for demand in China? - Management noted that the softer revenue results in China were primarily due to macroeconomic factors, and they have not changed their full-year outlook for the region [62][99] Question: How is the company managing tariff impacts on free cash flow? - Management emphasized that they have a plan in place to manage working capital and mitigate tariff impacts, maintaining a free cash flow guidance of at least $150 million for 2025 [90][94] Question: What is driving the recent growth in the OEM business? - Management attributed the growth to new accounts and the company's longstanding reputation for quality and reliability, rather than inventory pull-forward due to tariffs [101][105]

Merit Medical Systems (MMSI) Q1 2025 Earnings Call April 25, 2025 02:35 AM ET Company Participants Fred Lampropoulos - Founder, CEO & ChairmanBrian Lloyd - Chief Legal Officer and Corporate SecretaryRaul Parra - CFO & TreasurerSimran Modi - Vice PresidentMichael Petusky - Managing DirectorJon Young - DirectorJayson Bedford - Managing Director, Equity Research Conference Call Participants Jason Bednar - Senior Research AnalystSteve Lichtman - Managing Director, Senior Research AnalystRobbie Marcus - AnalystC ...

Core Insights - Merit Medical reported revenue of $355.35 million for the quarter ended March 2025, reflecting a year-over-year increase of 9.8% and exceeding the Zacks Consensus Estimate of $352.33 million by 0.86% [1] - The company's EPS for the quarter was $0.86, up from $0.77 in the same quarter last year, resulting in an EPS surprise of 14.67% compared to the consensus estimate of $0.75 [1] Financial Performance Metrics - U.S. sales reached $213.56 million, surpassing the average estimate of $208.66 million by analysts, marking a year-over-year increase of 14.8% [4] - International sales were reported at $141.79 million, slightly below the estimated $143.33 million, with a year-over-year growth of 3.2% [4] - Revenue from Cardiovascular-Peripheral Intervention was $137.28 million, below the average estimate of $141.95 million, showing a 2% increase year-over-year [4] - Cardiovascular-Cardiac Intervention revenue was $99.74 million, exceeding the estimated $98.79 million, with a 10% year-over-year increase [4] - Endoscopy revenue was reported at $16.64 million, below the average estimate of $17.89 million, but reflecting a significant year-over-year increase of 64.2% [4] - Cardiovascular-OEM revenue reached $53.75 million, surpassing the average estimate of $43.84 million, with a year-over-year increase of 36.9% [4] - Total Cardiovascular revenue was $338.71 million, slightly above the estimated $334.45 million, representing an 8.1% year-over-year increase [4] - Revenue from Cardiovascular-Custom Procedural Solutions was $47.94 million, below the average estimate of $49.74 million, indicating a year-over-year decline of 1.8% [4] Stock Performance - Over the past month, Merit Medical's shares have returned -9.6%, compared to a -5.1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Merit Medical (MMSI) came out with quarterly earnings of $0.86 per share, beating the Zacks Consensus Estimate of $0.75 per share. This compares to earnings of $0.77 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 14.67%. A quarter ago, it was expected that this maker of disposable medical devices would post earnings of $0.83 per share when it actually produced earnings of $0.93, delivering a surprise of 12.05%.Over the last f ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements for Q1 2025 and 2024 show overall growth in sales, income, assets, and equity [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------- | :---------------- | :------- | | Total assets | $2,467,973 | $2,418,603 | +$49,370 | | Total liabilities | $1,039,550 | $1,039,244 | +$306 | | Total stockholders' equity | $1,428,423 | $1,379,359 | +$49,064 | Current Assets (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------- | :---------------- | :------- | | Cash and cash equivalents | $395,529 | $376,715 | +$18,814 | | Trade receivables — net | $199,550 | $190,243 | +$9,307 | | Inventories | $317,936 | $306,063 | +$11,873 | | Total current assets | $958,635 | $923,774 | +$34,861 | Current Liabilities (in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------- | :---------------- | :------- | | Total current liabilities | $196,823 | $216,402 | -$19,579 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income (Three Months Ended March 31, in thousands, except per share amounts) | Metric | 2025 | 2024 | Change | YoY Growth | | :-------------------------- | :--- | :--- | :------- | :--------- | | Net sales | $355,351 | $323,508 | +$31,843 | 9.8% | | Cost of sales | $183,331 | $171,793 | +$11,538 | 6.7% | | Gross profit | $172,020 | $151,715 | +$20,305 | 13.4% | | Income from operations | $41,033 | $35,922 | +$5,111 | 14.2% | | Net income | $30,147 | $28,240 | +$1,907 | 6.7% | | Basic EPS | $0.51 | $0.49 | +$0.02 | 4.1% | | Diluted EPS | $0.49 | $0.48 | +$0.01 | 2.1% | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :--- | :--- | :------- | | Net income | $30,147 | $28,240 | +$1,907 | | Foreign currency translation adjustment | $5,854 | $(3,404) | +$9,258 | | Total other comprehensive income (loss) | $4,025 | $(1,122) | +$5,147 | | Total comprehensive income | $34,172 | $27,118 | +$7,054 | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Changes (Three Months Ended March 31, 2025, in thousands) | Metric | Amount | | :-------------------------------- | :------- | | Balance — January 1, 2025 | $1,379,359 | | Net income | $30,147 | | Other comprehensive income | $4,025 | | Stock-based compensation expense | $7,885 | | Options exercised | $14,610 | | Shares surrendered for payroll tax liabilities | $(6,145) | | Balance — March 31, 2025 | $1,428,423 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | Change | | :---------------------------------------------------- | :--- | :--- | :------- | | Net cash provided by operating activities | $40,572 | $36,216 | +$4,356 | | Net cash used in investing activities | $(29,635) | $(22,051) | $(7,584) | | Net cash provided by (used in) financing activities | $6,955 | $(18,003) | +$24,958 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $18,828 | $(5,157) | +$23,985 | Key Operating Cash Flow Adjustments (Three Months Ended March 31, in thousands) | Adjustment | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Depreciation and amortization | $29,292 | $23,599 | | Stock-based compensation expense | $9,078 | $5,234 | | Changes in inventories | $(10,599) | $(382) | | Changes in trade payables | $4,453 | $(14,148) | | Changes in accrued expenses | $(20,747) | $(8,891) | Key Investing Cash Flow Items (Three Months Ended March 31, in thousands) | Item | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Capital expenditures for property and equipment | $(21,061) | $(11,682) | | Cash paid for notes receivable and other investments | $(7,117) | $(6,508) | | Cash paid in acquisitions, net of cash acquired | $(1,000) | $(3,000) | Key Financing Cash Flow Items (Three Months Ended March 31, in thousands) | Item | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Proceeds from issuance of common stock | $13,152 | $7,730 | | Payments on long-term debt | $0 | $(24,063) | | Payment of taxes related to common stock exchange | $(6,145) | $(1,592) | [Condensed Notes to Consolidated Financial Statements](index=11&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) [Note 1. Basis of Presentation and Other Items](index=11&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Other%20Items) - Interim financial statements are unaudited and prepared with normal recurring accruals, not including all annual disclosures[18](index=18&type=chunk) - A change in cash flow statement presentation reclassified investments in privately held companies from 'Cash paid in acquisitions' to 'Cash paid for notes receivable and other investments'[19](index=19&type=chunk) [Note 2. Recently Issued Accounting Standards](index=11&type=section&id=Note%202.%20Recently%20Issued%20Accounting%20Standards) - ASU 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024; the company is evaluating its impact[20](index=20&type=chunk) - ASU 2024-03 (Disaggregation of Income Statement Expenses) is effective for fiscal years beginning after December 15, 2026, and is anticipated to have a **significant impact** on financial statement disclosures[21](index=21&type=chunk) [Note 3. Revenue from Contracts with Customers](index=11&type=section&id=Note%203.%20Revenue%20from%20Contracts%20with%20Customers) - Revenue is recognized when a customer obtains control of promised goods, consistent with prior disclosures[22](index=22&type=chunk) Revenue by Segment and Product Category (Three Months Ended March 31, in thousands) | Segment/Category | 2025 | 2024 | Change | YoY Growth | | :-------------------------- | :--- | :--- | :------- | :--------- | | **Cardiovascular** | | | | | | Peripheral Intervention | $137,279 | $130,066 | +$7,213 | 5.5% | | Cardiac Intervention | $99,741 | $90,176 | +$9,565 | 10.6% | | Custom Procedural Solutions | $47,942 | $48,523 | $(581) | (1.2)% | | OEM | $53,751 | $44,609 | +$9,142 | 20.5% | | *Total Cardiovascular* | *$338,713* | *$313,374* | *+$25,339* | *8.1%* | | **Endoscopy** | | | | | | Endoscopy Devices | $16,638 | $10,134 | +$6,504 | 64.2% | | *Total Endoscopy* | *$16,638* | *$10,134* | *+$6,504* | *64.2%* | | **Grand Total** | **$355,351** | **$323,508** | **+$31,843** | **9.8%** | Revenue by Geographic Region (Three Months Ended March 31, in thousands) | Region | 2025 | 2024 | Change | YoY Growth | | :-------------------------- | :--- | :--- | :------- | :--------- | | United States | $213,564 | $186,094 | +$27,470 | 14.8% | | International | $141,787 | $137,414 | +$4,373 | 3.2% | | **Total** | **$355,351** | **$323,508** | **+$31,843** | **9.8%** | - Effective January 1, 2025, spine device sales (approximately **$5.3 million in 2024**) were realigned to the OEM product category for comparability[24](index=24&type=chunk) [Note 4. Acquisitions and Investments](index=13&type=section&id=Note%204.%20Acquisitions%20and%20Investments) - On November 1, 2024, acquired Cook's lead management business for **$210 million**; generated **$9.2 million** in sales for Q1 2025 within the Cardiovascular segment[26](index=26&type=chunk) - On July 1, 2024, acquired EsophyX® Z+ device and related assets from EndoGastric Solutions (EGS) for **$105 million**; generated **$6.6 million** in sales for Q1 2025 within the Endoscopy segment[29](index=29&type=chunk) - On March 8, 2024, acquired assets associated with Bioptome, Novatome, and Sensatome devices from Scholten Surgical Instruments, Inc (SSI) for an upfront payment of **$3 million** and three deferred payments of **$1 million** each[30](index=30&type=chunk) [Note 5. Inventories](index=15&type=section&id=Note%205.%20Inventories) Inventories (in thousands) | Category | March 31, 2025 | December 31, 2024 | Change | | :--------------- | :------------- | :---------------- | :------- | | Finished goods | $163,368 | $168,437 | $(5,069) | | Work-in-process | $36,162 | $27,114 | +$9,048 | | Raw materials | $118,406 | $110,512 | +$7,894 | | **Total inventories** | **$317,936** | **$306,063** | **+$11,873** | [Note 6. Goodwill and Intangible Assets](index=15&type=section&id=Note%206.%20Goodwill%20and%20Intangible%20Assets) - Goodwill balance at March 31, 2025, was **$464.36 million**, with a slight increase of **$0.849 million** due to foreign exchange effects in Q1 2025[31](index=31&type=chunk) - **No goodwill impairments** were recorded for the three-month periods ended March 31, 2025, or 2024[31](index=31&type=chunk) Other Intangible Assets (Net Carrying Amount, in thousands) | Category | March 31, 2025 | December 31, 2024 | Change | | :---------------- | :------------- | :---------------- | :------- | | Patents | $18,885 | $18,665 | +$220 | | Trademarks | $22,457 | $23,436 | $(979) | | Customer lists | $20,799 | $21,710 | $(911) | | **Total Other Intangibles** | **$64,628** | **$66,499** | **$(1,871)** | - Aggregate amortization expense for developed technology and other intangible assets **increased by 37.0%** year-over-year, from **$14.6 million** in Q1 2024 to **$20.0 million** in Q1 2025[32](index=32&type=chunk) Estimated Amortization Expense for Intangible Assets (in thousands) | Year ending December 31, | Estimated Amortization Expense | | :----------------------- | :----------------------------- | | Remaining 2025 | $62,428 | | 2026 | $72,797 | | 2027 | $69,127 | | 2028 | $67,728 | | 2029 | $56,158 | [Note 7. Income Taxes](index=17&type=section&id=Note%207.%20Income%20Taxes) Income Tax Expense and Effective Tax Rate (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | Change | | :---------------- | :--- | :--- | :------- | | Income tax expense | $7,811 | $6,108 | +$1,703 | | Effective tax rate | 20.6% | 17.8% | +2.8 percentage points | - The increase in the effective tax rate was primarily due to **decreased benefit from discrete items** (e.g., deferred compensation) and increased impact of foreign income inclusions[34](index=34&type=chunk) - The company is monitoring OECD Pillar Two global minimum tax rules, which could increase future effective income tax rates and cash income tax payments, but **no material impact is anticipated for fiscal 2025**[35](index=35&type=chunk) [Note 8. Debt](index=17&type=section&id=Note%208.%20Debt) Long-term Debt (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Convertible notes | $747,500 | $747,500 | | Less unamortized debt issuance costs | $(16,827) | $(17,949) | | **Total long-term debt** | **$730,673** | **$729,551** | - Future minimum principal payments on long-term debt total **$747.5 million**, all due in 2029[36](index=36&type=chunk) - The Fourth Amended and Restated Credit Agreement provides a **$150 million** term loan and a **$700 million** revolving credit commitment, maturing June 6, 2028[37](index=37&type=chunk) - As of March 31, 2025, the company had **no outstanding borrowings** under the credit agreement and approximately **$697 million** in additional available borrowings, while remaining in compliance with all financial covenants[41](index=41&type=chunk)[42](index=42&type=chunk) - Convertible Notes, issued in December 2023, bear **3.00% interest** annually and mature on February 1, 2029, with an initial conversion price of approximately **$86.83 per share**[43](index=43&type=chunk)[44](index=44&type=chunk) - Capped Call Transactions were entered into in December 2023 at a cost of **$66.5 million** to reduce potential dilution from the Convertible Notes, with a cap price of approximately **$114.68 per share**[49](index=49&type=chunk)[50](index=50&type=chunk) [Note 9. Derivatives](index=23&type=section&id=Note%209.%20Derivatives) - The company uses interest rate swaps and foreign currency forward contracts to mitigate risks from interest rate and foreign currency exchange rate fluctuations[52](index=52&type=chunk) - Foreign currency forward contracts designated as cash flow hedges had aggregate notional amounts of **$179.9 million** as of March 31, 2025, and **$117.5 million** as of December 31, 2024[56](index=56&type=chunk) - Foreign currency forward contracts not designated as hedging instruments had aggregate notional amounts of **$100.6 million** as of March 31, 2025, and **$95.7 million** as of December 31, 2024[57](index=57&type=chunk) Fair Value of Derivative Instruments (in thousands) | Type | Balance Sheet Location | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :-------------------------- | :------------- | :---------------- | | **Designated as Hedging Instruments** | | | | | Assets (Fwd Contracts) | Prepaid expenses & other assets | $2,120 | $3,771 | | Assets (Fwd Contracts) | Other assets (long-term) | $526 | $1,064 | | Liabilities (Fwd Contracts) | Accrued expenses | $(1,533) | $(1,332) | | Liabilities (Fwd Contracts) | Other long-term obligations | $(427) | $(287) | | **Not Designated as Hedging Instruments** | | | | | Assets (Fwd Contracts) | Prepaid expenses & other assets | $1,839 | $2,595 | | Liabilities (Fwd Contracts) | Accrued expenses | $(877) | $(1,288) | - A gain of **$(158) thousand** from non-designated foreign currency forward contracts was recognized in Q1 2025, compared to a loss of **$883 thousand** in Q1 2024[61](index=61&type=chunk) [Note 10. Commitments and Contingencies](index=26&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) - The company is involved in various claims and litigation matters in the ordinary course of business[62](index=62&type=chunk) - An **SEC Inquiry**, commenced in January 2022, is ongoing regarding business activities of Merit's subsidiary in China; the company is cooperating but cannot predict the outcome or estimate a reasonably possible loss[63](index=63&type=chunk) [Note 11. Earnings Per Common Share (EPS)](index=27&type=section&id=Note%2011.%20Earnings%20Per%20Common%20Share%20(EPS)) Earnings Per Common Share (Three Months Ended March 31, in thousands, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Net income | $30,147 | $28,240 | | Basic EPS | $0.51 | $0.49 | | Diluted EPS | $0.49 | $0.48 | | Weighted average shares outstanding (Basic) | 58,897 | 57,958 | | Total potential shares outstanding (Diluted) | 61,278 | 58,567 | - Convertible notes had a **dilutive effect in Q1 2025** (1,363 thousand shares) because the average common stock price exceeded the conversion price of $86.83[65](index=65&type=chunk)[66](index=66&type=chunk) [Note 12. Stock-Based Compensation Expense](index=28&type=section&id=Note%2012.%20Stock-Based%20Compensation%20Expense) Total Stock-Based Compensation Expense (Before Taxes, in thousands) | Metric | 2025 | 2024 | Change | YoY Growth | | :-------------------------------- | :----- | :----- | :------- | :--------- | | Total stock-based compensation expense | $9,078 | $5,234 | +$3,844 | 73.4% | Stock-Based Compensation Expense Breakdown (Three Months Ended March 31, in thousands) | Category | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Nonqualified stock options | $1,955 | $2,480 | | Performance-based restricted stock units | $3,581 | $1,867 | | Restricted stock units | $2,330 | $587 | | Cash-settled performance-based awards | $1,193 | $300 | - Total remaining unrecognized compensation cost for stock-settled Performance Stock Units was **$38.8 million**, expected to be recognized over a weighted average period of **1.8 years**[73](index=73&type=chunk) - Total remaining unrecognized compensation cost for cash-settled Liability Awards was **$7.1 million**, expected to be recognized over a weighted average period of **1.9 years**[77](index=77&type=chunk) [Note 13. Segment Reporting](index=31&type=section&id=Note%2013.%20Segment%20Reporting) - The company operates in two segments: **Cardiovascular** (Peripheral Intervention, Cardiac Intervention, Custom Procedural Solutions, OEM) and **Endoscopy** (Gastroenterology and Pulmonology devices)[80](index=80&type=chunk) Segment Financials (Three Months Ended March 31, in thousands) | Metric | Cardiovascular 2025 | Endoscopy 2025 | Consolidated 2025 | Cardiovascular 2024 | Endoscopy 2024 | Consolidated 2024 | | :-------------------------------- | :------------------ | :--------------- | :------------------ | :------------------ | :--------------- | :------------------ | | Net sales | $338,713 | $16,638 | $355,351 | $313,374 | $10,134 | $323,508 | | Cost of sales standard | $138,440 | $4,363 | | $133,066 | $3,109 | | | Selling, general and administrative expenses | $100,974 | $6,512 | | $91,300 | $3,128 | | | Research and development expenses | $21,954 | $524 | | $20,916 | $566 | | | Income from operations | $38,538 | $2,495 | $41,033 | $32,907 | $3,015 | $35,922 | Total Depreciation and Amortization by Operating Segment (Three Months Ended March 31, in thousands) | Segment | 2025 | 2024 | | :-------------- | :----- | :----- | | Cardiovascular | $26,970 | $23,388 | | Endoscopy | $2,322 | $211 | | **Total** | **$29,292** | **$23,599** | [Note 14. Fair Value Measurements](index=33&type=section&id=Note%2014.%20Fair%20Value%20Measurements) Assets (Liabilities) Measured at Fair Value (March 31, 2025, in thousands) | Item | Total Fair Value | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :--------------- | :------ | :------ | :------ | | Money market funds | $30,330 | $30,330 | $— | $— | | Foreign currency contract assets | $4,485 | $— | $4,485 | $— | | Foreign currency contract liabilities | $(2,837) | $— | $(2,837) | $— | | Contingent consideration liabilities | $(4,429) | $— | $— | $(4,429) | - Contingent consideration liabilities increased from **$3.486 million** (Dec 31, 2024) to **$4.429 million** (March 31, 2025), with a **$1.023 million** expense recognized in Q1 2025[85](index=85&type=chunk) - Contingent consideration liabilities are measured using **Level 3 inputs**, including discount rates, projected payment years, and probability of milestone payments[87](index=87&type=chunk)[89](index=89&type=chunk) - The fair value of Convertible Notes was **$1,016.6 million** as of March 31, 2025, determined using **Level 2 valuation input**[91](index=91&type=chunk) [Note 15. Accumulated Other Comprehensive Income (Loss)](index=38&type=section&id=Note%2015.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Balance Jan 1, 2025 | Net OCI (Loss) | Balance Mar 31, 2025 | | :-------------------------- | :------------------ | :--------------- | :------------------- | | Cash Flow Hedges | $2,765 | $(1,823) | $942 | | Foreign Currency Translation | $(22,166) | $5,848 | $(16,318) | | **Total** | **$(19,401)** | **$4,025** | **$(15,376)** | - Foreign currency translation adjustment contributed **$5.854 million** in Q1 2025, a significant improvement compared to a **$(3.404) million** loss in Q1 2024[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial performance, highlighting a 9.8% sales increase, improved margins, and the impact of recent acquisitions [Overview](index=39&type=section&id=Overview_MD%26A) - Merit Medical Systems, Inc is a leading manufacturer and marketer of proprietary medical devices for interventional, diagnostic, and therapeutic procedures across cardiology, radiology, oncology, critical care, and endoscopy[98](index=98&type=chunk) Key Financial Highlights (Three Months Ended March 31) | Metric | 2025 | 2024 | Change | YoY Growth | | :-------------------------- | :--- | :--- | :------- | :--------- | | Net sales | $355.4 million | $323.5 million | +$31.8 million | 9.8% | | Gross profit % of sales | 48.4% | 46.9% | +1.5 pp | | | Net income | $30.1 million | $28.2 million | +$1.9 million | 6.7% | | Diluted EPS | $0.49 | $0.48 | +$0.01 | 2.1% | - Foreign currency fluctuations (net of hedging) decreased net sales by **$(3.4) million** for Q1 2025[99](index=99&type=chunk) - Revenue growth in Q1 2025 was primarily driven by demand in the U.S. and favorable international sales trends, particularly in ROW and EMEA regions[101](index=101&type=chunk) - As of March 31, 2025, the company had **$397.6 million** in cash, cash equivalents, and restricted cash, with approximately **$697 million** in net available borrowing capacity[101](index=101&type=chunk) - Changes in U.S. trade policies, including increased tariffs (e.g., between U.S. and China), could lead to higher production costs and pricing, potentially negatively affecting business[101](index=101&type=chunk)[102](index=102&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations_MD%26A) [Sales](index=41&type=section&id=Sales_MD%26A) Sales by Product Category (Three Months Ended March 31, in thousands) | Category | 2025 | 2024 | % Change | | :-------------------------- | :--- | :--- | :------- | | **Cardiovascular** | | | | | Peripheral Intervention | $137,279 | $130,066 | 5.5% | | Cardiac Intervention | $99,741 | $90,176 | 10.6% | | Custom Procedural Solutions | $47,942 | $48,523 | (1.2)% | | OEM | $53,751 | $44,609 | 20.5% | | *Total Cardiovascular* | *$338,713* | *$313,374* | *8.1%* | | **Endoscopy** | | | | | Endoscopy Devices | $16,638 | $10,134 | 64.2% | | **Total Sales** | **$355,351** | **$323,508** | **9.8%** | - Cardiovascular sales **increased by 8.1%**, driven by Peripheral Intervention (access, embolotherapy, delivery systems), Cardiac Intervention (CRM/EP, fluid management), and OEM products (kits, access, intervention, angiography)[105](index=105&type=chunk) - Endoscopy sales **surged by 64.2%**, significantly boosted by **$6.6 million** in sales from the EsophyX® Z+ device acquisition[106](index=106&type=chunk) Sales by Geography (Three Months Ended March 31, in thousands) | Region | 2025 | 2024 | % Change | | :-------------------------- | :--- | :--- | :------- | | United States | $213,564 | $186,094 | 14.8% | | International | $141,787 | $137,414 | 3.2% | | **Total** | **$355,351** | **$323,508** | **9.8%** | - U.S. sales **increased by 14.8%**, driven by U.S. Direct, OEM, and Endoscopy businesses; International sales **increased by 3.2%**, with growth in ROW (17.7%) and EMEA (3.7%), partially offset by a decrease in APAC (0.5%)[107](index=107&type=chunk)[108](index=108&type=chunk) [Gross Profit](index=43&type=section&id=Gross%20Profit_MD%26A) - Gross profit as a percentage of sales **increased to 48.4%** in Q1 2025 from 46.9% in Q1 2024[109](index=109&type=chunk) - The increase in gross profit percentage was primarily due to **higher sales and favorable changes in product mix**, partially offset by higher intangible amortization expense as a percentage of sales associated with acquisitions[109](index=109&type=chunk) [Operating Expenses](index=43&type=section&id=Operating%20Expenses_MD%26A) Operating Expenses (Three Months Ended March 31, in thousands, and as % of sales) | Metric | 2025 | 2024 | Change | YoY Growth | % of Sales 2025 | % of Sales 2024 | | :-------------------------------- | :--- | :--- | :------- | :--------- | :-------------- | :-------------- | | Selling, general and administrative | $107,486 | $94,428 | +$13,058 | 13.8% | 30.2% | 29.2% | | Research and development | $22,478 | $21,482 | +$996 | 4.6% | 6.3% | 6.6% | | Contingent consideration expense (benefit) | $1,023 | $(117) | +$1,140 | N/A | 0.3% | (0.0)% | | **Total operating expenses** | **$130,987** | **$115,793** | **+$15,194** | **13.1%** | | | - Selling, general and administrative (SG&A) expenses **increased by 13.8%** due to higher labor-related costs (headcount additions from EGS and Cook acquisitions) and increased advertising and promotional expenses[110](index=110&type=chunk) - Research and development (R&D) expenses **increased by 4.6%** due to higher R&D activity, partially offset by a decrease in regulatory costs associated with clinical trials[111](index=111&type=chunk) - Contingent consideration shifted from a benefit of **$(0.1) million** in Q1 2024 to an expense of **$1.0 million** in Q1 2025, reflecting changes in estimated fair value of acquisition obligations[113](index=113&type=chunk) [Operating Income](index=45&type=section&id=Operating%20Income_MD%26A) Operating Income by Segment (Three Months Ended March 31, in thousands) | Segment | 2025 | 2024 | Change | | :---------------- | :--- | :--- | :------- | | Cardiovascular | $38,538 | $32,907 | +$5,631 | | Endoscopy | $2,495 | $3,015 | $(520) | | **Total operating income** | **$41,033** | **$35,922** | **+$5,111** | - Cardiovascular operating income increased due to **higher sales and gross margin**, partially offset by increased SG&A, R&D, and contingent consideration expenses[114](index=114&type=chunk) - Endoscopy operating income decreased despite higher sales, primarily due to a **lower gross margin** (increased amortization from EGS acquisition) and higher SG&A expenses (headcount for EGS integration)[115](index=115&type=chunk) [Other Expense – Net](index=45&type=section&id=Other%20Expense%20%E2%80%93%20Net_MD%26A) - Total other expense – net **increased to $3.1 million** in Q1 2025 from $1.6 million in Q1 2024[116](index=116&type=chunk) - This increase was primarily due to **decreased interest income** (associated with reduced cash and cash equivalent balances), partially offset by a decrease in interest expense (due to no outstanding term loan borrowings)[116](index=116&type=chunk) [Effective Tax Rate](index=45&type=section&id=Effective%20Tax%20Rate_MD%26A) - The effective tax rate **increased to 20.6%** in Q1 2025 from 17.8% in Q1 2024[117](index=117&type=chunk) - The increase was primarily due to **decreased benefit from discrete items** (e.g., deferred compensation) and the impact of increased foreign income inclusions[117](index=117&type=chunk) [Net Income](index=45&type=section&id=Net%20Income_MD%26A) - Net income **increased to $30.1 million** in Q1 2025 from $28.2 million in Q1 2024[118](index=118&type=chunk) - The increase was driven by **higher sales and gross margin**, partially offset by increased SG&A, R&D, contingent consideration expense, other expenses, and income tax expense[118](index=118&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources_MD%26A) - Current assets exceeded current liabilities by **$761.8 million** as of March 31, 2025[119](index=119&type=chunk) - Cash, cash equivalents, and restricted cash totaled **$397.6 million** as of March 31, 2025, with **$57.2 million** held by foreign subsidiaries[119](index=119&type=chunk) Cash Flows Summary (Three Months Ended March 31, in thousands) | Activity | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $40,572 | $36,216 | | Net cash used in investing activities | $(29,635) | $(22,051) | | Net cash provided by (used in) financing activities | $6,955 | $(18,003) | - Capital expenditures for property and equipment **increased to $21.1 million** in Q1 2025 (from $11.7 million in Q1 2024), including costs for a new distribution facility[120](index=120&type=chunk) - Anticipated capital expenditures for 2025 are approximately **$90 to $100 million**[120](index=120&type=chunk) - Financing activities provided cash in Q1 2025, primarily due to **$13.2 million** from common stock issuance and **no payments on long-term debt**, contrasting with **$24.1 million** in debt repayments in Q1 2024[123](index=123&type=chunk) - The company had approximately **$697 million** in additional available borrowings under the Amended Fourth A&R Credit Agreement as of March 31, 2025[124](index=124&type=chunk) - Management believes existing cash, anticipated future cash flows from operations, and long-term debt agreements are **adequate to fund current and planned future operations** for the foreseeable future[125](index=125&type=chunk) [Critical Accounting Policies and Estimates](index=49&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates_MD%26A) - There were **no changes** to the application of critical accounting policies previously disclosed in the 2024 Annual Report on Form 10-K during the three-month period ended March 31, 2025[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risk disclosures during Q1 2025 compared to the 2024 Annual Report - **No material changes** in quantitative and qualitative disclosures about market risk (currency exchange rate risk and interest rate risk) in Q1 2025 compared to the 2024 Annual Report on Form 10-K[135](index=135&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes identified - Disclosure controls and procedures were evaluated and **deemed effective** at a reasonable assurance level as of March 31, 2025[136](index=136&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three-month period ended March 31, 2025[137](index=137&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings_Other) This section refers to Note 10 for details on legal proceedings, including the ongoing SEC Inquiry into the company's China subsidiary - Refer to Note 10, Commitments and Contingencies, for information on legal proceedings[139](index=139&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, emphasizing potential adverse impacts from global economic conditions and changes in trade policies - The global macroeconomic environment remains challenging due to **inflation, credit market instability, geopolitical conflicts**, and economic challenges in China[141](index=141&type=chunk) - Changes in U.S. trade policies, including **increased tariffs** on imports from countries like Mexico, Ireland, and China, could significantly increase manufacturing costs[142](index=142&type=chunk) - China imposed a **125% tariff** on goods imported from the U.S. on April 12, 2025, in response to U.S. tariffs, which could increase expenses on products sold in China[143](index=143&type=chunk) - Potential impacts of trade tensions include **increased manufacturing costs, supply chain disruptions**, limitations on product sales, and reductions in sales volumes and gross margins[143](index=143&type=chunk) - Disruptions and volatility in financial markets may lead to adverse changes in the **availability, terms, and cost of capital**, limiting funding for growth opportunities[145](index=145&type=chunk) [Item 5. Other information](index=56&type=section&id=Item%205.%20Other%20information) Two Board of Directors members adopted Rule 10b5-1 trading plans on February 28, 2025, for the sale of common stock - David K. Floyd adopted a Rule 10b5-1 Trading Plan on February 28, 2025, to sell up to **5,021 shares** of Common Stock[146](index=146&type=chunk) - Michael R. McDonnell adopted a Rule 10b5-1 Trading Plan on February 28, 2025, to sell up to **3,500 shares** of Common Stock[147](index=147&type=chunk) [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and required certifications - The report includes various exhibits such as corporate governance documents (Articles of Incorporation, Bylaws), director trading plans (Rule 10b5-1), executive compensation agreements (Performance Stock Unit, Restricted Stock Unit Award Agreements), and Sarbanes-Oxley Act certifications[150](index=150&type=chunk) - Financial information for the quarter ended March 31, 2025, is formatted in **Inline Extensible Business Reporting Language (iXBRL)**[150](index=150&type=chunk) [SIGNATURES](index=59&type=section&id=SIGNATURES) - The report was signed by Fred P. Lampropoulos, Chief Executive Officer and President, and Raul Parra, Chief Financial Officer and Treasurer, on **April 24, 2025**[155](index=155&type=chunk)

Contacts: PR/Media Inquiries: Sarah Comstock Merit Medical +1-801-432-2864 +1-443-213-0509 Investor Inquiries: Mike Piccinino, CFA, IRC ICR Healthcare sarah.comstock@merit.com mike.piccinino@icrhealthcare.com FOR IMMEDIATE RELEASE MERIT MEDICAL REPORTS FIRST QUARTER 2025 RESULTS AND UPDATES FULL-YEAR GUIDANCE First Quarter Highlights† Exhibit 99.1 † Comparisons above are calculated for the current quarter compared with the first quarter of 2024, unless otherwise specified. Amounts stated in this release are ...