Merit Medical Acquires the HeRO®Graft From CryoLife, Inc.
February 04 2016 - 9:00AM
Merit Medical Systems, Inc. (NASDAQ:MMSI), a leading manufacturer
and marketer of proprietary disposable medical devices used in
interventional and diagnostic procedures, particularly in
cardiology, radiology and endoscopy, today announced that it has
purchased the HeRO®Graft device and related assets from CryoLife,
Inc.
The HeRO®Graft is a fully subcutaneous vascular access system
that is intended for use in maintaining long-term vascular access
for chronic hemodialysis patients who have exhausted peripheral
venous access sites suitable for fistulas or grafts. The
product has received 510(k) clearance from the FDA and has the CE
marking. Additional information can be reviewed at
merit.com/hero.
Merit believes that during 2015, HeRO®Graft revenues were
approximately $7.5 million, and gross margins were approximately
55%. Merit purchased the HeRO®Graft assets for $18.5 million
and financed the deal under existing banking agreements.
“This is a product line we have had interest in for some time,”
said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive
Officer. “We believe the HeRO®Graft will help enhance our
existing presence with vascular surgeons as well as interventional
radiologists. We believe other Merit product lines, such as
our peritoneal dialysis catheters, which are most often implanted
by vascular surgeons, and our line of chronic dialysis catheters,
will be improved as well. We understand that ninety percent
of the HeRO®Graft sales have been in the United States with the
balance mainly in Germany and the United Kingdom. We believe
that a substantial opportunity exists in the international
marketplace, especially with our global sales, marketing and
clinical footprint.”
“Additionally, we believe vascular surgery represents a
substantial opportunity for existing product pull-through,
including catheters, guide wires, access devices and a host of
other products,” Lampropoulos said. “We continue to see
expansion by vascular surgeons to many imaging procedures as well
as cooperation with nephrologists and interventional
radiologists.”
“We expect GAAP earnings attributable to the HeRO®Graft for the
first fiscal year ending December 31, 2016 to be flat, due
primarily to deal costs, inventory markup and manufacturing
transfer,” said Bernard Birkett, Merit’s Chief Financial
Officer. “We expect non-GAAP earnings attributable to the
HeRO®Graft will be accretive by $0.02 the first fiscal year ending
December 31, 2016, and triple to $0.06 in the third fiscal year of
production.”
In connection with this transaction, Canaccord Genuity provided
financial advice to Merit.
CONFERENCE CALLMerit invites all interested parties to
participate in its conference call (conference ID number 46478849)
today, February 4, at 11:00 a.m. Eastern (10:00 a.m. Central, 9:00
a.m. Mountain, and 8:00 a.m. Pacific). The domestic phone
number is (877) 313-5341, and the international number is (253)
336-8671. A live webcast as well as a rebroadcast of the call
can be accessed at merit.com.
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 and diagnostic procedures,
particularly in cardiology, radiology and endoscopy. Merit
serves client hospitals worldwide with a domestic and international
sales force totaling approximately 200 individuals. Merit
employs approximately 3,700 people worldwide with facilities in
South Jordan, Utah; Pearland, Texas; Richmond, Virginia; Malvern,
Pennsylvania; Maastricht and Venlo, The Netherlands; Paris, France;
Galway, Ireland; Beijing, China; Tijuana, Mexico; and Rockland,
Massachusetts.
Statements contained in this release which are not purely
historical, including, without limitation, statements regarding
Merit's future performance, are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
and 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, 2014. Such risks and uncertainties include risks relating
to Merit’s efforts to transition, integrate, manufacture and
commercialize the HeRO®Graft assets, product recalls and product
liability claims; potential restrictions on Merit’s liquidity or
Merit’s ability to operate its business by its current credit
agreement, and the consequences of any default under that
agreement; possible infringement of Merit’s technology or the
assertion that Merit’s technology infringes the rights of other
parties; the potential imposition 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;
expenditures relating to research, development, testing and
regulatory approval or clearance of Merit’s products and the risk
that such products may not be developed successfully or approved
for commercial use; greater governmental scrutiny and regulation of
the medical device industry; reforms to the 510(k) process
administered by the U.S. Food and Drug Administration (the "FDA");
laws targeting fraud and abuse in the healthcare industry;
potential for significant adverse changes in, or Merit’s failure to
comply with, governing regulations; increases in the price of
commodity components; negative changes in economic and industry
conditions in the United States and other countries; termination or
interruption of relationships with Merit’s suppliers, or failure of
such suppliers to perform; Merit’s potential inability to
successfully manage growth through acquisitions, including the
inability to commercialize technology acquired through recent,
proposed or future acquisitions; costs and expenses
associated with Merit’s pursuit of a strategic plan to grow through
acquisitions; fluctuations in Euro and GBP exchange rates; Merit’s
need to generate sufficient cash flow to fund its debt obligations,
capital expenditures, and ongoing operations; concentration of
Merit’s revenues among a few products and procedures; development
of new products and technology that could render Merit’s existing
products obsolete; market acceptance of new products; volatility in
the market price of Merit’s common stock; modification or
limitation of governmental or private insurance reimbursement
policies; changes in health care markets related to health care
reform initiatives; failures to comply with applicable
environmental laws; changes in key personnel; work stoppage or
transportation risks; uncertainties associated with potential
healthcare policy changes which may have a material adverse effect
on Merit; introduction of products in a timely fashion; price and
product competition; availability of labor and materials; cost
increases; fluctuations in and obsolescence of inventory; and other
factors referred to in Merit’s Annual Report on Form 10-K for
the year ended December 31, 2014 and other materials filed
with the Securities and Exchange Commission. 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, and Merit assumes no
obligation to update or disclose revisions to those estimates.
Contact: Anne-Marie Wright, Vice President, Corporate Communications
Phone: (801) 208-4167 e-mail: awright@merit.com Fax: (801) 253-1688
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