Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading manufacturer
and marketer of proprietary disposable devices used in
interventional, diagnostic and therapeutic procedures, particularly
in cardiology, radiology, oncology, critical care and endoscopy,
today announced that it has acquired substantially all of the
assets of Vascular Insights, LLC, based in Quincy, Massachusetts.
Vascular Insights’ primary assets are the ClariVein®IC and
ClariVein®OC specialty infusion and occlusion catheter systems,
which have been utilized in more than 120,000 cases to treat
superficial venous disease, particularly below the knee (BTK), and
venous leg ulcers (VLU). The ClariVein systems address a $700
million global market. The ClariVein IC system has 510(k)
clearance from the FDA, the ClariVein OC system is CE-marked, and
the systems are covered by 43 patents issued worldwide.
The purchase price was $40 million plus additional milestone
payments that could amount to an additional $20 million if certain
sales targets are achieved.
“We have had our eye on these products for some time,” said Fred
P. Lampropoulos, Merit’s Chairman and CEO. “These products
complement our existing peripheral intervention sales platform, add
to our capability to provide many existing Merit products, such as
our micropuncture and vascular access products, and increase our
ability to customize the entire procedure for our customers.
Additionally, our global sales footprint allows for expansion of
sales in previously underserved areas.”
“We are excited to reach this agreement with Merit,” said James
(Chip) Draper, Chief Executive Officer of Vascular Insights. "This
acquisition will allow ClariVein to reach more patients in more
ways and in more places with the commitment to treat venous
disease.”
“I am thrilled that Merit and ClariVein will bring
transformative relief to millions of venous disease sufferers
worldwide, especially those suffering from debilitating venous leg
ulcers,” said Michael Tal, M.D., inventor of the ClariVein systems
and co-founder of Vascular Insights.
Parr Brown Gee & Loveless provided legal counsel to Merit.
SunTrust Robinson Humphrey served as the financial advisor to
Merit.
Latham & Watkins, LLP provided legal counsel to Vascular
Insights. Oppenheimer & Co. Inc. served as the financial
advisor to Vascular Insights.
2018 GUIDANCEThe effect of the Vascular Insights acquisition on
Merit’s earnings for 2018 is expected to be dilutive to Merit’s
earnings per share on a GAAP basis of approximately ($0.03) per
common share and on a non-GAAP basis of approximately ($0.02) per
common share, with both Merit’s GAAP, non-GAAP gross margins, and
revenue contributions expected to be inconsequential for
2018. NOTE: Non-GAAP earnings per share dilution and non-GAAP
gross margin are non-GAAP financial measures. Information about how
Merit uses non-GAAP measures in its business, and an explanation of
how these measures relate to their most directly comparable GAAP
financial measures, is included under the heading “Non-GAAP
Financial Measures” below.
2019 GUIDANCEThe effect of the Vascular Insights acquisition on
Merit’s earnings for 2019 is expected to be dilutive to Merit’s
earnings per share on a GAAP basis in the range of ($0.05–$0.07)
per common share and accretive to Merit’s earnings per share on a
non-GAAP basis in the range of $0.00-$0.02 per common share. Merit
anticipates GAAP gross margins of 21-28% and non-GAAP gross margins
of 60-65% on the ClariVein systems, dilutive to Merit’s GAAP gross
margin in the range of 25-30 basis points and accretive to non-GAAP
gross margin in the range of 8-14 basis points. Merit anticipates
additional 2019 revenues in the range of $10-$11 million. NOTE:
Non-GAAP earnings per share accretion and non-GAAP gross margin are
non-GAAP financial measures. Information about how Merit uses
non-GAAP measures in its business, and an explanation of how these
measures relate to their most directly comparable GAAP financial
measures, is included under the heading “Non-GAAP Financial
Measures” below.
NON-GAAP FINANCIAL MEASURESAlthough 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 certain non-GAAP financial measures
referred to in this release 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:
- non-GAAP earnings per share; and
- non-GAAP gross margin.
Merit’s management team uses these non-GAAP financial measures
to evaluate Merit’s profitability and efficiency, to compare
operating results to prior periods, to evaluate changes in the
operating 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 such measures determined in accordance with
GAAP.
Readers should consider non-GAAP financial 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
earnings per share and non-GAAP gross margin 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 new
acquisitions, non-cash expenses related to amortization of
previously acquired tangible and intangible assets, unusual
compensation expenses or expenses resulting from non-ordinary
course litigation, governmental proceedings or changes in tax
regulations. 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.
Non-GAAP Gross MarginNon-GAAP gross margin 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 Net IncomeNon-GAAP net income is calculated by
adjusting GAAP net 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 new
acquisitions, non-cash expenses related to amortization of acquired
tangible and intangible assets, unusual compensation expenses or
expenses resulting from non-ordinary course litigation,
governmental proceedings or changes in tax regulations, as well as
other items.
Non-GAAP Earnings Per ShareNon-GAAP earnings per share is
defined as non-GAAP net income divided by the diluted shares
outstanding for the corresponding period.
ABOUT MERITFounded 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 in excess of 300
individuals. Merit employs approximately 5,600 people
worldwide with facilities in South Jordan, Utah; Pearland, Texas;
Richmond, Virginia; Malvern, Pennsylvania; Rockland, Massachusetts;
San Jose and Aliso Viejo, California; Maastricht and Venlo, The
Netherlands; Paris, France; Galway, Ireland; Beijing, China;
Tijuana, Mexico; Joinville, Brazil; Markham, Ontario, Canada;
Melbourne, Australia; Tokyo, Japan; and Singapore.
FORWARD-LOOKING STATEMENTSStatements contained in this release
which are not purely historical 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, 2017 and subsequent filings with the Securities and
Exchange Commission. Such risks and uncertainties include the
following: Merit's potential inability to successfully manage the
integration of the ClariVein systems and achieve anticipated
financial results, product development and other anticipated
benefits; uncertainties as to whether Merit will achieve sales,
gross margin, net income, cash flow and other results from the
Vascular Insights acquisition which are comparable to the
experience of Vascular Insights; unknown costs and risks associated
with the business and operations of Vascular Insights; Merit’s
internal models or the projections in this release; expenditures
relating to research, development, testing and regulatory approval
or clearance of Merit's products and risks that such products may
not be developed successfully or approved for commercial use;
governmental scrutiny and regulation of the medical device
industry, including governmental inquiries, investigations and
proceedings involving Merit or the business and operations
conducted by Vascular Insights; 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 (including the ClariVein systems) infringes
the rights of other parties; product recalls and product liability
claims; changes in customer purchasing patterns or the mix of
products Merit sells; 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;
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 countries; increases in the prices of commodity
components; negative changes in economic and industry conditions in
the United States or other countries; termination or interruption
of relationships with Merit's suppliers, or failure of such
suppliers to perform; fluctuations in exchange rates; concentration
of a substantial portion 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 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; introduction of products in a
timely fashion; price and product competition; availability of
labor and materials; 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, 2017 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
CommunicationsPhone:
(801) 208-4167 e-mail: awright@merit.com
Fax: (801) 253-1688
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