Merit Medical Systems (NasdaqGS:MMSI) Q4 2025 Earnings call February 24, 2026 04:30 PM ET Company ParticipantsAidan Lahey - Equity Research AssociateBrian G. Lloyd - Chief Legal Officer and Corporate SecretaryMartha Aronson - President and CEORaul Parra - CFO and TreasurerConference Call ParticipantsDavid Rescott - Director and Senior Research AnalystJason Bednar - Managing Director and Senior Research AnalystJayson Bedford - Managing Director and Senior AnalystJim Sidoti - Senior Equity AnalystJohn Young - ...

Core Insights - Merit Medical Systems, Inc. (MMSI) is positioned for growth due to a strong product portfolio and solid performance in 2025, despite facing macroeconomic headwinds and forex volatility [2] - The company has experienced a 9% decline in shares this year, while the industry has grown by 12.5% and the S&P 500 has increased by 18.3% [2] Company Performance - Merit Medical has a market capitalization of $5.2 billion and projects a 9.6% growth rate over the next five years, with an average earnings surprise of 14.09% over the past four quarters [3] - The third quarter saw a 7.8% organic constant-currency growth, driven by strong performance in the Cardiovascular segment, particularly in Peripheral and Cardiac Intervention franchises [5][9] Positive Drivers - The demand for embolics like Embosphere and QuadraSphere remains robust, with balanced growth across the U.S., EMEA, and APAC regions, reducing dependence on any single market [6] - The gross margin reached a record 53.6%, with a 267-basis-point year-over-year expansion attributed to favorable product mix, pricing discipline, and improved distribution costs [10] - The company generated $52.5 million in quarterly free cash flow, up 38% year over year, while continuing to invest in R&D and acquisitions [10] Growth Catalysts - WRAPSODY CIE is gaining traction post NTAP reimbursement, with early adoption tracking ahead of expectations, which could significantly expand the addressable market [11][12] - The potential approval of Transitional Pass-Through (TPT) reimbursement for outpatient procedures could further accelerate WRAPSODY CIE's revenue growth [12] Key Challenges - Tariff-related costs could impact earnings significantly, with estimates ranging from $7.6 million to $16 million in 2025, depending on global trade policy developments [13] - Sales in China declined by 1% year over year, reflecting broader macroeconomic weakness, while OEM demand remains volatile, affecting revenue predictability [15][16] - Integration challenges from ongoing acquisitions could pose risks to near-term performance, particularly in the Endoscopy segment [17][18] Estimate Trends - The Zacks Consensus Estimate for earnings per share (EPS) for 2025 has increased by 4 cents to $3.73, with fourth-quarter 2025 revenue estimates at $387.5 million, indicating a 9.1% rise from the previous year [19]

Core Insights - Merit Medical Systems, Inc. announced positive results from the randomized AVF arm of the WAVE trial, showcasing the effectiveness of the WRAPSODY CIE device in restoring vascular access for hemodialysis patients [1][4]. Company Overview - Merit Medical Systems, Inc. is a leader in healthcare technology, focusing on the development, manufacture, and distribution of proprietary medical devices for interventional, diagnostic, and therapeutic procedures [13]. - The company employs approximately 7,400 people globally and serves hospitals worldwide with a dedicated sales force and clinical support team [13]. Product and Trial Details - The WRAPSODY CIE is designed to restore vascular access in patients undergoing hemodialysis who face obstructions in their veins [2][6]. - The WAVE trial involved 245 hemodialysis patients treated with either the WRAPSODY CIE or percutaneous transluminal angioplasty (PTA) across 43 centers in the U.S., South America, and the U.K. [3][4]. - Results showed that 24 months post-treatment, the target lesion primary patency (TLPP) was significantly higher for the WRAPSODY CIE group at 48.6% compared to 29.8% for PTA (p<0.0001), and access circuit primary patency (ACPP) was also higher at 31.3% versus 20.6% (p=0.003) [4][9]. Regulatory Approvals - The WRAPSODY CIE received premarket approval from the U.S. FDA on December 19, 2024, and was subsequently approved by Health Canada on April 30, 2025 [6]. - The device has also received the Conformité Européenne (CE) Mark for commercial use in the European Union and is available in Brazil [6]. Ongoing Research and Registries - Real-world clinical outcomes of the WRAPSODY CIE are being evaluated in the WRAP North America Registry, which aims to enroll up to 250 patients [8]. - The WRAP Global registry is also assessing real-world outcomes outside of North America [8]. - Data from the WAVE trial and these registries will provide evidence on the largest cohort of patients for a single indication in dialysis access to date [10].

Core Insights - Merit Medical Systems, Inc. has successfully enrolled the first patient in the WRAP North America registry, aimed at evaluating the WRAPSODY Cell-Impermeable Endoprosthesis (CIE) for patients on hemodialysis experiencing vascular access obstructions [1][2][5] Group 1: WRAP North America Registry - The WRAP North America registry is designed to enroll up to 250 patients in the US and Canada who are on hemodialysis and face obstructions in their vascular access [2][4] - The study will evaluate clinical outcomes over a three-year period for patients treated with the WRAPSODY CIE [2][4] - The first patient was enrolled by Dr. Omar Davis, highlighting the importance of this registry in assessing the device's effectiveness [2][3] Group 2: WRAPSODY CIE Device - The WRAPSODY CIE has shown superior performance in previous clinical trials, specifically the WRAPSODY Arteriovenous Access Efficacy (WAVE) pivotal trial [3][4] - The WAVE trial compared outcomes of patients treated with WRAPSODY CIE versus those treated with percutaneous transluminal angioplasty (PTA) [3] - The WRAPSODY CIE received premarket approval from the FDA on December 19, 2024, and was subsequently approved by Health Canada on April 30, 2025 [7] Group 3: Future Prospects - The WRAP North America registry aims to contribute to a growing portfolio of clinical evidence supporting the WRAPSODY CIE, potentially representing the largest cohort of patients treated with an implantable device for vascular access restoration [4][5] - A parallel WRAP Global registry is also being conducted to evaluate real-world outcomes, with an expected final enrollment of up to 500 patients outside North America by the end of 2025 [5][6]

Core Insights - Merit Medical Systems, Inc. has successfully enrolled the first patient in the WRAP North America registry, aimed at evaluating the WRAPSODY Cell-Impermeable Endoprosthesis (CIE) for patients on hemodialysis [1][5][8] Group 1: WRAP North America Registry - The WRAP North America registry is designed to enroll up to 250 patients in the US and Canada who are on hemodialysis and experience vascular access obstructions [2][4] - The registry will evaluate clinical outcomes over three years for patients treated with the WRAPSODY CIE [2][4] - The first patient was enrolled by Dr. Omar Davis at Bluff City Vascular, marking a significant milestone for the company [2][5] Group 2: WRAPSODY CIE Device - The WRAPSODY CIE aims to restore vascular access for hemodialysis patients facing obstructions, with promising results demonstrated in the previous WAVE pivotal trial [3][4] - The WAVE trial compared the WRAPSODY CIE with percutaneous transluminal angioplasty (PTA) and historical outcomes of patients treated with previous-generation covered stents [3] - The device received premarket approval from the FDA on December 19, 2024, and was approved by Health Canada on April 30, 2025 [7] Group 3: Clinical Evidence and Future Prospects - The WRAP North America registry is expected to contribute to a growing portfolio of clinical evidence supporting the WRAPSODY CIE [4] - A parallel WRAP Global registry is also being conducted to enroll up to 500 patients outside North America, with final enrollment expected by the end of 2025 [5] - The company emphasizes the importance of real-world effectiveness data to address critical questions regarding the device's broader impact in clinical practice [4][5]

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]