Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading global
manufacturer and marketer of healthcare technology, today
introduced its Continued Growth Initiatives Program and related
financial targets for the three-year period ending December 31,
2026.
Merit’s new multi-year financial targets
are:
- Total revenue
increase at a compound annual growth rate (CAGR) of 5% to 7% on an
organic, constant currency, basis* for the three-year period ending
December 31, 2026.
- Non-GAAP
operating margin* of 20.0% to 22.0% for the year ending December
31, 2026.
- Cumulative free
cash flow* generation of at least $400 million for the three-year
period ending December 31, 2026.
* Organic revenue, organic revenue on a constant currency basis,
non-GAAP operating margin and free cash flow are non-GAAP financial
measures. A reconciliation of these non-GAAP financial measures to
their most directly comparable GAAP financial measures is included
under the heading “Non-GAAP Financial Measures” below. Merit does
not provide financial targets for GAAP reported financial measures
(other than revenue) or a reconciliation of forward-looking
Non-GAAP financial measures to the most directly comparable GAAP
reported financial measures because Merit is unable to predict with
reasonable certainty the financial impact of items such as expenses
related to acquisitions or other extraordinary transactions,
non-cash expenses related to amortization or write-off of
previously acquired tangible and intangible assets, certain
severance expenses, performance-based stock compensation expenses,
corporate transformation expenses, expenses resulting from
non-ordinary course litigation or administrative proceedings and
resulting settlements, governmental proceedings, and changes in
governmental or industry regulations. These items are uncertain,
depend on various factors, and could have a material impact on GAAP
reported results for the guidance period. For the same reasons, the
Company is unable to address the significance of the unavailable
information, which could be material to future results.
Specifically, Merit is not, without unreasonable effort, able to
reliably predict the impact of these items and Merit believes
inclusion of a reconciliation of these forward-looking non-GAAP
measures to their GAAP counterparts could be confusing to investors
or cause undue reliance.
CONFERENCE CALL
Merit will discuss the Continued Growth
Initiatives Program as part of its fourth quarter and full year
2023 financial results investor conference call today, Wednesday,
February 28, 2024, at 5:00 p.m. Eastern (4:00 p.m.
Central, 3:00 p.m. Mountain, and 2:00 p.m. Pacific).
To access the conference call, please pre-register using
the following link. A
live webcast will also be available at merit.com.
Non-GAAP Financial Measures
Although 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 the non-GAAP financial measures referenced
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:
- constant
currency revenue;
- constant
currency revenue, organic;
- non-GAAP
operating margin; and
- free cash
flow.
Merit’s management team uses these non-GAAP
financial measures to evaluate Merit’s profitability and
efficiency, to compare operating and financial results to prior
periods, to evaluate changes in the 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 measures
determined in accordance with GAAP.
Readers should consider non-GAAP 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
operating margin (as further illustrated in the descriptions below)
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 acquisition or other extraordinary transactions,
non-cash expenses related to amortization or write-off of
previously acquired tangible and intangible assets, certain
severance expenses, expenses resulting from non-ordinary course
litigation or administrative proceedings and resulting settlements,
corporate transformation expenses, governmental proceedings or
changes in tax or industry regulations, and gains or losses on
disposal of certain assets. 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. Merit urges readers to review the definitions of its
non-GAAP financial measures in relation to their most directly
comparable GAAP financial measures included herein, and not to rely
on any single financial measure to evaluate Merit’s business or
results of operations.
Constant Currency Revenue
Merit’s constant currency revenue is prepared by
converting the current-period reported revenue of subsidiaries
whose functional currency is a currency other than the U.S. dollar
at the applicable foreign exchange rates in effect during the
comparable prior-year period and adjusting for the effects of
hedging transactions on reported revenue, which are recorded in the
U.S. dollar.
Constant Currency Revenue, Organic
Merit’s constant currency revenue, organic, is
defined as constant currency revenue (as defined above), less
revenue from certain acquisitions.
Non-GAAP Operating Margin
Non-GAAP operating margin is calculated by
adjusting GAAP operating 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
acquisitions or other extraordinary transactions, non-cash expenses
related to amortization or write-off of previously acquired
tangible and intangible assets, certain severance expenses,
performance-based stock compensation expenses, corporate
transformation expenses, expenses resulting from non-ordinary
course litigation or administrative proceedings and resulting
settlements, governmental proceedings, and changes in governmental
or industry regulations, as well as other items. Non-GAAP operating
margin is calculated by dividing non-GAAP operating income by
forecasted net sales.
Free Cash Flow
Free cash flow is defined as cash flow from
operations calculated in accordance with GAAP, less capital
expenditures for property and equipment calculated in accordance
with GAAP, as set forth in the consolidated statement of cash
flows.
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,
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 more than 700 individuals.
Merit employs approximately 7,000 people worldwide.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this release which are
not purely historical, including, without limitation, statements
regarding Merit’s forecasted plans, revenues, operating income and
margin (GAAP and non-GAAP), free cash flow and other financial
measures, future growth and profit expectations or forecasted
economic conditions, or the implementation of, and results which
may be achieved through, Merit’s Continued Growth Initiatives
Program or other expense reduction initiatives, are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, 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, 2023 (the “2023 Annual Report”) and
other filings with the SEC. Such risks and uncertainties include
inherent risks and uncertainties associated with Merit’s
integration of products acquired from AngioDynamics, Inc.
(“AngioDynamincs”) and its ability to achieve anticipated financial
results, product development and other anticipated benefits of the
AngioDynamics acquisition; uncertainties as to whether Merit will
achieve sales, gross and operating margins, net income and earnings
per share performance consistent with its forecasts associated with
that acquisition; disruptions in Merit’s supply chain,
manufacturing or sterilization processes; reduced availability of,
and price increases associated with, commodity components and other
raw materials; adverse changes in freight, shipping and
transportation expenses; negative changes in economic and industry
conditions in the United States or other countries, including
inflation; risks relating to Merit’s potential inability to
successfully manage growth through acquisitions generally,
including the inability to effectively integrate acquired
operations or products or commercialize technology developed
internally or acquired through completed, proposed or future
transactions; risks associated with Merit’s ongoing or prospective
manufacturing transfers and facility consolidations; fluctuations
in interest or foreign currency exchange rates; risks and
uncertainties associated with Merit’s information technology
systems, including the potential for breaches of security and
evolving regulations regarding privacy and data protection;
governmental scrutiny and regulation of the medical device
industry, including governmental inquiries, investigations and
proceedings involving Merit; consequences associated with a
Corporate Integrity Agreement executed between Merit and the U.S.
Office of Inspector General; difficulties, delays and expenditures
relating to development, testing and regulatory approval or
clearance of Merit’s products, including the pursuit of approvals
under the E.U. Medical Device Regulation, and risks that such
products may not be developed successfully or approved for
commercial use; litigation and other judicial proceedings affecting
Merit; 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;
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 infringes the rights of other
parties; product recalls and product liability claims; changes in
customer purchasing patterns or the mix of products Merit sells;
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 jurisdictions; termination of relationships with
Merit’s suppliers, or failure of such suppliers to perform;
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 or future products
obsolete; market acceptance of new products; dependance on
distributors to commercialize Merit’s products in various
jurisdictions outside the United States; 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;
failure to introduce products in a timely fashion; price and
product competition; fluctuations in and obsolescence of inventory;
and other factors referenced in the 2023 Annual Report and other
materials filed with the SEC.
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. Those estimates and all other forward-looking
statements included in this document are made only as of the date
of this document, and except as otherwise required by applicable
law, Merit assumes no obligation to update or disclose revisions to
estimates and all other forward-looking statements.
TRADEMARKS
Unless noted otherwise, trademarks and
registered trademarks used in this release are the property of
Merit Medical Systems, Inc., its subsidiaries, or its
licensors.
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Contacts: |
|
PR/Media Inquiries:Teresa Johnson
Merit Medical |
Investor Inquiries:Mike
Piccinino, CFA, IRCWestwicke - ICR |
+1-801-208-4295 |
+1-443-213-0509 |
tjohnson@merit.com |
Mike.piccinino@westwicke.com |
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