Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading manufacturer
and marketer of proprietary medical devices used in interventional,
diagnostic and therapeutic procedures, particularly in cardiology,
radiology, oncology, critical care and endoscopy, today announced
revenue of $248.9 million for the quarter ended March 31, 2021, an
increase of 2.2% compared to the prior year period. Constant
currency revenue, organic* for the first quarter of 2021 was up
0.6% compared to the prior year period.
Merit’s GAAP gross margin for the first quarter
of 2021 was 45.0%, compared to GAAP gross margin of 42.6% for the
prior year period. Merit’s non-GAAP gross margin* for the first
quarter of 2021 was 49.2%, compared to non-GAAP gross margin* of
48.5% for the prior year period.
Merit’s GAAP net income for the first quarter of
2021 was $11.0 million, or $0.19 per share, compared to a GAAP net
loss of ($3.2) million, or ($0.06) per share, for the prior year
period. Merit’s non-GAAP net income* for the first quarter of 2021
was $29.9 million, or $0.52 per share, compared to non-GAAP net
income* of $21.1 million, or $0.38 per share, for the prior year
period.
Merit’s revenue by operating segment and product
category for the three months ended March 31, 2021,
compared to the corresponding period in 2020, was as follows
(unaudited; in thousands, except for percentages):
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
% Change |
|
2021 |
|
2020 |
Cardiovascular |
|
|
|
|
|
|
|
|
|
|
Peripheral Intervention |
6.7 |
|
% |
|
$ |
92,914 |
|
|
$ |
87,075 |
|
Cardiac Intervention |
3.0 |
|
% |
|
|
74,737 |
|
|
|
72,591 |
|
Custom Procedural Solutions |
(4.6 |
) |
% |
|
|
45,421 |
|
|
|
47,621 |
|
OEM |
(1.1 |
) |
% |
|
|
27,934 |
|
|
|
28,257 |
|
Total |
2.3 |
|
% |
|
|
241,006 |
|
|
|
235,544 |
|
|
|
|
|
|
|
|
|
|
|
|
Endoscopy |
|
|
|
|
|
|
|
|
|
|
Endoscopy devices |
(0.9 |
) |
% |
|
|
7,907 |
|
|
|
7,981 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
2.2 |
|
% |
|
$ |
248,913 |
|
|
$ |
243,525 |
|
“Despite a slow start to fiscal year 2021 as a
result of continued challenges in the operating environment due to
COVID-19, we saw measured improvements as we moved through the
first quarter, and we delivered better-than-expected revenue
results due in large part to a record month of March,” said Fred P.
Lampropoulos, Merit’s Chairman and Chief Executive Officer. “We are
also proud of the strong financial results we delivered in the
first quarter; we leveraged low single-digit revenue growth to
drive impressive growth in our non-GAAP operating income* and
non-GAAP net income*, which increased 26% and 41%, respectively,
compared to the prior year period. Importantly, we continue to make
progress towards our goal of enhancing Merit’s long-term growth and
profitability profile, as evidenced by the $29 million of free cash
flow* we generated in the first quarter.”
Mr. Lampropoulos continued: “We are pleased with
the solid start to the year and remain cautiously optimistic in our
outlook for measured improvement in the operating environment as we
move through the remainder of 2021. We remain confident in our 2021
guidance for total revenue growth, on a constant currency basis*,
in the low-to-mid single digits year-over-year and, importantly,
excluding the impact of divestitures and product sales that
uniquely benefitted from pandemic-related demand trends in 2020,
our constant currency revenue guidance* continues to reflect growth
in the mid-to-high single digits year-over-year in 2021. We also
continue to expect profitability improvement and notable free cash
flow generation driven by strong execution and contributions from
our multi-year strategic initiatives driven by our Foundations for
Growth Program.”
As of March 31, 2021, Merit had cash on hand of
approximately $58.5 million, long term debt obligations of
approximately $321 million, and available borrowing capacity of
$418 million, compared to cash on hand of approximately $56.9
million, long term debt obligations of $352 million, and available
borrowing capacity of $389 million as of December 31, 2020.
Updated Fiscal Year 2021 Financial Guidance
Based upon information currently available to
Merit’s management, Merit is updating net revenue expectations for
the year ending December 31, 2021, absent material
acquisitions, non-recurring transactions or other factors beyond
Merit’s control, the Company now expects:
- Net revenue in the range of $994
million to $1,014 million, representing an increase of
approximately 3.1% to 5.2% year over year, as compared to net
revenue of $963.9 million for the twelve months ended December 31,
2020. The updated net revenue range assumes a benefit from the
changes in foreign currency exchange rates in the range of
approximately $8.0 million to $8.5 million, compared to the prior
guidance range which assumed a benefit in the range of
approximately $4.0 million to $4.5 million.
- The updated fiscal year 2021 net
revenue guidance range assumes:
- Net revenue from the cardiovascular
segment of between $963 million and $982 million, representing an
increase of approximately 3.1% to 5.2% year-over-year as compared
to net revenue of $934.2 million for the twelve months ended
December 31, 2020. The prior guidance range assumed growth of
approximately 2.7% to 4.8% year-over-year.
- Net revenue from the endoscopy
segment of between $30.8 million and $31.9 million, representing an
increase of approximately 4% to 7% year-over-year as compared to
net revenue of $29.7 million for the twelve months ended December
31, 2020. This net revenue range is unchanged from prior
guidance.
- GAAP net income in the range of
$47.3 million to $55.9 million, or $0.83 to $0.98 per diluted
share, compared to GAAP net loss of $(9.8) million, or $(0.18) per
diluted share, for the twelve months ended December 31, 2020. The
GAAP net income range is unchanged from prior guidance.
- Non-GAAP net income* in the range
of $104.8 million to $112.7 million, or $1.84 to $1.98 per diluted
share, compared to non-GAAP net income* of $93.3 million, or $1.65
per diluted share, for the twelve months ended December 31, 2020.
The non-GAAP net income range is unchanged from prior
guidance.
Merit’s financial guidance for the year
ending December 31, 2021 is subject to risks and uncertainties
identified in this release and Merit’s filings with the U.S.
Securities and Exchange Commission (the “SEC”).
CONFERENCE CALL
Merit will hold its investor conference call
(conference ID 9669737) today, Thursday, April 29, 2021, at
5:00 p.m. Eastern (4:00 p.m. Central, 3:00 p.m.
Mountain, and 2:00 p.m. Pacific). The domestic telephone
number is (844) 578-9672 and the international number is (508)
637-5656. A live webcast and slide deck will also be available at
merit.com.
CONSOLIDATED BALANCE SHEETS(in
thousands)
|
|
|
|
|
|
|
March 31, |
|
|
|
|
2021 |
|
December 31, |
|
(Unaudited) |
|
2020 |
ASSETS |
|
|
|
|
|
Current Assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
58,519 |
|
|
$ |
56,916 |
|
Trade receivables, net |
|
150,314 |
|
|
|
146,641 |
|
Other receivables |
|
8,719 |
|
|
|
7,774 |
|
Inventories |
|
200,308 |
|
|
|
198,019 |
|
Prepaid expenses and other assets |
|
13,617 |
|
|
|
13,120 |
|
Prepaid income taxes |
|
3,680 |
|
|
|
3,688 |
|
Income tax refund receivables |
|
3,331 |
|
|
|
3,549 |
|
Total current assets |
|
438,488 |
|
|
|
429,707 |
|
|
|
|
|
|
|
Property and equipment,
net |
|
378,177 |
|
|
|
382,728 |
|
Intangible assets, net |
|
356,025 |
|
|
|
367,915 |
|
Goodwill |
|
362,500 |
|
|
|
363,533 |
|
Deferred income tax
assets |
|
4,529 |
|
|
|
4,597 |
|
Operating lease right-of-use
assets |
|
74,714 |
|
|
|
78,240 |
|
Other assets |
|
37,286 |
|
|
|
37,676 |
|
Total Assets |
$ |
1,651,719 |
|
|
$ |
1,664,396 |
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Trade payables |
$ |
52,986 |
|
|
$ |
49,837 |
|
Accrued expenses |
|
132,173 |
|
|
|
111,944 |
|
Current portion of long-term debt |
|
7,500 |
|
|
|
7,500 |
|
Current operating lease liabilities |
|
12,246 |
|
|
|
12,903 |
|
Income taxes payable |
|
2,773 |
|
|
|
2,820 |
|
Total current liabilities |
|
207,678 |
|
|
|
185,004 |
|
|
|
|
|
|
|
Long-term debt |
|
312,875 |
|
|
|
343,722 |
|
Deferred income tax
liabilities |
|
33,252 |
|
|
|
33,312 |
|
Long-term income taxes
payable |
|
347 |
|
|
|
347 |
|
Liabilities related to
unrecognized tax benefits |
|
1,016 |
|
|
|
1,016 |
|
Deferred compensation
payable |
|
16,227 |
|
|
|
16,808 |
|
Deferred credits |
|
1,896 |
|
|
|
1,923 |
|
Long-term operating lease
liabilities |
|
67,980 |
|
|
|
70,941 |
|
Other long-term
obligations |
|
33,756 |
|
|
|
52,748 |
|
Total liabilities |
|
675,027 |
|
|
|
705,821 |
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
Common stock |
|
615,113 |
|
|
|
606,224 |
|
Retained earnings |
|
368,761 |
|
|
|
357,803 |
|
Accumulated other comprehensive loss |
|
(7,182 |
) |
|
|
(5,452 |
) |
Total stockholders' equity |
|
976,692 |
|
|
|
958,575 |
|
Total Liabilities and
Stockholders' Equity |
$ |
1,651,719 |
|
|
$ |
1,664,396 |
|
CONSOLIDATED STATEMENTS OF INCOME
(LOSS)(Unaudited; in thousands except per share
amounts)
|
Three Months Ended |
|
March 31, |
|
2021 |
|
2020 |
NET SALES |
$ |
248,913 |
|
|
$ |
243,525 |
|
|
|
|
|
|
|
COST OF SALES |
|
137,019 |
|
|
|
139,741 |
|
|
|
|
|
|
|
GROSS PROFIT |
|
111,894 |
|
|
|
103,784 |
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
Selling, general and administrative |
|
81,024 |
|
|
|
78,808 |
|
Research and development |
|
16,274 |
|
|
|
14,872 |
|
Impairment charges |
|
— |
|
|
|
3,845 |
|
Contingent consideration expense |
|
402 |
|
|
|
4,897 |
|
|
|
|
|
|
|
Total operating expenses |
|
97,700 |
|
|
|
102,422 |
|
|
|
|
|
|
|
INCOME FROM OPERATIONS |
|
14,194 |
|
|
|
1,362 |
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE): |
|
|
|
|
|
Interest income |
|
472 |
|
|
|
79 |
|
Interest expense |
|
(1,537 |
) |
|
|
(3,144 |
) |
Other expense - net |
|
(435 |
) |
|
|
(289 |
) |
|
|
|
|
|
|
Total other expense — net |
|
(1,500 |
) |
|
|
(3,354 |
) |
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME
TAXES |
|
12,694 |
|
|
|
(1,992 |
) |
|
|
|
|
|
|
INCOME TAX EXPENSE |
|
1,736 |
|
|
|
1,162 |
|
|
|
|
|
|
|
NET INCOME (LOSS) |
$ |
10,958 |
|
|
$ |
(3,154 |
) |
|
|
|
|
|
|
EARNINGS (LOSS) PER COMMON
SHARE: |
|
|
|
|
|
Basic |
$ |
0.20 |
|
|
$ |
(0.06 |
) |
|
|
|
|
|
|
Diluted |
$ |
0.19 |
|
|
$ |
(0.06 |
) |
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES
OUTSTANDING: |
|
|
|
|
|
Basic |
|
55,717 |
|
|
|
55,246 |
|
|
|
|
|
|
|
Diluted |
|
56,978 |
|
|
|
55,246 |
|
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 certain 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;
- core
revenue;
- non-GAAP gross
margin;
- non-GAAP
operating income and margin;
- non-GAAP net
income;
- non-GAAP
earnings per share; 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
earnings per share, non-GAAP gross margin, non-GAAP operating
income and margin, and non-GAAP net income (in each case, as
further illustrated in the reconciliation tables 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, gains or losses on disposal of certain
assets, and debt issuance costs. 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 reconciliations of its
non-GAAP financial measures to the comparable GAAP financial
measures, 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. The constant currency revenue adjustment of ($3.8) million to
reported revenue for the three-month period ended
March 31, 2021 was calculated using the applicable
average foreign exchange rates for the three-month period ended
March 31, 2020.
Constant Currency Revenue, Organic
Merit’s constant currency revenue, organic, is
defined, with respect to prior fiscal year periods, as GAAP
revenue. With respect to current fiscal year periods, constant
currency revenue, organic, is defined as constant currency revenue
(as defined above), less revenue from certain acquisitions. For the
three-month period ended March 31, 2021, Merit’s constant
currency revenue, organic, excludes revenues attributable to the
acquisition of KA Medical, LLC in November 2020.
Core Revenue
Merit’s core revenue is defined, with respect to
prior fiscal year periods, as GAAP revenue less revenue from
certain dispositions. For the three-month period ended March 31,
2020, Merit’s core revenue excludes revenues attributable to its
distribution agreement with NinePoint Medical, Inc., which was
suspended during the first quarter of 2020, revenues attributable
to the manufacture of Merit’s Hypotube product which were divested
in August 2020, and revenues attributable to the ITL Healthcare Pty
Ltd (“ITL”) procedure pack business in Australia which was closed
in December 2020.
With respect to current fiscal year periods,
core revenue is defined as constant currency revenue, organic (as
defined above), less $0.9 million of revenue attributable to sales
of the Cultura nasopharyngeal swab and test kit (which benefited
from high demand in 2020 resulting from the COVID-19 pandemic but
which is not expected to be a significant revenue contribution in
the future), as well as $0.2 million of revenue attributable to the
final sales of products from the closed ITL procedure pack business
(which were carried over from the fourth quarter of 2020 to the
first quarter of 2021 and are not expected to impact sales in
future periods).
Non-GAAP Gross Margin
Non-GAAP gross margin is calculated by reducing
GAAP cost of sales by amounts recorded for amortization of
intangible assets and certain inventory write-offs, divided by
reported net sales.
Non-GAAP Operating Income and Margin
Non-GAAP operating income 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 new
acquisitions, 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 or changes in
industry regulations, as well as other items set forth in the
tables below. Non-GAAP operating margin is calculated by dividing
non-GAAP operating income by reported net sales.
Non-GAAP Net Income
Non-GAAP net income is calculated by adjusting
GAAP net income (loss) for the items set forth in the definition of
non-GAAP operating margin above, as well as for expenses related to
debt issuance costs, gains or losses on disposal of certain assets,
changes in tax regulations, and other items set forth in the tables
below.
Non-GAAP EPS
Non-GAAP EPS is defined as non-GAAP net income
divided by the diluted shares outstanding for the corresponding
period.
Free Cash Flow
Free cash flow is defined as cash flow from
operations calculated in accordance with GAAP, less capital
expenditures calculated in accordance with GAAP, as set forth in
the consolidated statement of cash flows.
Non-GAAP Financial Measure Reconciliations
The following tables set forth supplemental
financial data and corresponding reconciliations of non-GAAP
financial measures to Merit’s corresponding financial measures
prepared in accordance with GAAP, in each case, for the three-month
periods ended March 31, 2021 and 2020. The non-GAAP
income adjustments referenced in the following tables do not
reflect non-performance-based stock compensation expense of
approximately $2.6 million and $2.3 million for the three-month
periods ended March 31, 2021 and 2020, respectively.
Reconciliation of GAAP Net Income (Loss) to
Non-GAAP Net Income(Unaudited; in thousands except per
share amounts)
|
Three Months Ended |
|
March 31, 2021 |
|
Pre-Tax |
|
Tax Impact |
|
After-Tax |
|
Per Share Impact |
GAAP net income |
$ |
12,694 |
|
|
$ |
(1,736 |
) |
|
$ |
10,958 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles |
|
10,679 |
|
|
|
(2,652 |
) |
|
|
8,027 |
|
|
|
0.14 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration expense |
|
402 |
|
|
|
8 |
|
|
|
410 |
|
|
|
0.01 |
|
Amortization of intangibles |
|
1,816 |
|
|
|
(454 |
) |
|
|
1,362 |
|
|
|
0.02 |
|
Performance-based share-based compensation (b) |
|
1,016 |
|
|
|
(120 |
) |
|
|
896 |
|
|
|
0.02 |
|
Corporate transformation and restructuring (c) |
|
5,446 |
|
|
|
(1,345 |
) |
|
|
4,101 |
|
|
|
0.07 |
|
Acquisition-related |
|
4,782 |
|
|
|
(1,186 |
) |
|
|
3,596 |
|
|
|
0.06 |
|
Medical Device Regulation expenses (d) |
|
381 |
|
|
|
(95 |
) |
|
|
286 |
|
|
|
0.01 |
|
Other (e) |
|
139 |
|
|
|
(35 |
) |
|
|
104 |
|
|
|
0.00 |
|
Other (Income) Expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of long-term debt issuance costs |
|
151 |
|
|
|
(37 |
) |
|
|
114 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income |
$ |
37,506 |
|
|
$ |
(7,652 |
) |
|
$ |
29,854 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares |
|
|
|
|
|
|
|
|
|
|
|
|
56,978 |
|
|
Three Months Ended |
|
March 31, 2020 |
|
Pre-Tax |
|
Tax Impact |
|
After-Tax |
|
Per Share Impact |
GAAP net loss |
$ |
(1,992 |
) |
|
$ |
(1,162 |
) |
|
$ |
(3,154 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles |
|
12,818 |
|
|
|
(3,303 |
) |
|
|
9,515 |
|
|
|
0.17 |
|
Inventory write-off (a) |
|
1,431 |
|
|
|
(368 |
) |
|
|
1,063 |
|
|
|
0.02 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration expense |
|
4,897 |
|
|
|
73 |
|
|
|
4,970 |
|
|
|
0.09 |
|
Impairment charges |
|
3,845 |
|
|
|
(92 |
) |
|
|
3,753 |
|
|
|
0.07 |
|
Amortization of intangibles |
|
2,182 |
|
|
|
(592 |
) |
|
|
1,590 |
|
|
|
0.03 |
|
Performance-based share-based compensation (b) |
|
447 |
|
|
|
(52 |
) |
|
|
395 |
|
|
|
0.01 |
|
Corporate transformation and restructuring (c) |
|
1,776 |
|
|
|
(443 |
) |
|
|
1,333 |
|
|
|
0.03 |
|
Acquisition-related |
|
307 |
|
|
|
(131 |
) |
|
|
176 |
|
|
|
0.00 |
|
Medical Device Regulation expenses (d) |
|
299 |
|
|
|
(77 |
) |
|
|
222 |
|
|
|
0.00 |
|
Other (e) |
|
1,582 |
|
|
|
(408 |
) |
|
|
1,174 |
|
|
|
0.02 |
|
Other (Income) Expense |
|
|
|
|
|
|
|
|
|
|
|
Amortization of long-term debt issuance costs |
|
151 |
|
|
|
(39 |
) |
|
|
112 |
|
|
|
0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income |
$ |
27,743 |
|
|
$ |
(6,594 |
) |
|
$ |
21,149 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares (f) |
|
|
|
|
|
|
|
|
|
|
56,015 |
|
____________________________Note: Certain per share impacts may
not sum to totals due to rounding.
Reconciliation of Reported Operating Income to Non-GAAP
Operating Income(Unaudited; in thousands except
percentages)
|
Three Months Ended |
|
Three Months Ended |
|
March 31, 2021 |
|
March 31, 2020 |
|
Amounts |
|
% Sales |
|
Amounts |
|
% Sales |
Net Sales as Reported |
$ |
248,913 |
|
|
|
|
|
$ |
243,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Income |
|
14,194 |
|
|
5.7 |
% |
|
|
1,362 |
|
|
0.6 |
% |
Cost of Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles |
|
10,679 |
|
|
4.3 |
% |
|
|
12,818 |
|
|
5.3 |
% |
Inventory write-off (a) |
|
— |
|
|
— |
|
|
|
1,431 |
|
|
0.6 |
% |
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration expense |
|
402 |
|
|
0.2 |
% |
|
|
4,897 |
|
|
2.0 |
% |
Impairment charges |
|
— |
|
|
— |
|
|
|
3,845 |
|
|
1.6 |
% |
Amortization of intangibles |
|
1,816 |
|
|
0.7 |
% |
|
|
2,182 |
|
|
0.9 |
% |
Performance-based share-based compensation (b) |
|
1,016 |
|
|
0.4 |
% |
|
|
447 |
|
|
0.2 |
% |
Corporate transformation and restructuring (c) |
|
5,446 |
|
|
2.2 |
% |
|
|
1,776 |
|
|
0.7 |
% |
Acquisition-related |
|
4,782 |
|
|
1.9 |
% |
|
|
307 |
|
|
0.1 |
% |
Medical Device Regulation expenses (d) |
|
381 |
|
|
0.2 |
% |
|
|
299 |
|
|
0.1 |
% |
Other (e) |
|
139 |
|
|
0.1 |
% |
|
|
1,582 |
|
|
0.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating Income |
$ |
38,855 |
|
|
15.6 |
% |
|
$ |
30,946 |
|
|
12.7 |
% |
____________________________Note: Certain percentages may not
sum to totals due to rounding
a) |
Represents write-off of inventory related to the suspension of
Merit’s distribution agreement with NinePoint Medical, Inc. |
b) |
Represents performance-based share-based compensation expense,
including stock-settled and cash-settled awards. |
c) |
Includes severance related to corporate initiatives, write-offs and
valuation adjustments of other long-term assets associated with
restructuring activities, expenses related to Merit’s Foundations
for Growth program, and other transformation costs. |
d) |
Represents incremental expenses incurred to comply with the Medical
Device Regulation (“MDR”) in Europe. |
e) |
Represents expense from abandoned patents, costs incurred in
responding to an inquiry from the U.S. Department of Justice, and,
in 2021, certain external costs incurred to comply with our
corporate integrity agreement. |
f) |
For the three-month period ended March 31, 2020, the non-GAAP net
income per diluted share calculation includes approximately 769,000
shares that were excluded from GAAP net income (loss) per diluted
share calculation. |
|
|
Reconciliation of Reported Revenue to
Constant Currency Revenue (Non-GAAP), Constant Currency Revenue,
Organic (Non-GAAP), and Core Revenue (Non-GAAP)(Unaudited;
in thousands except percentages)
|
|
|
|
Three Months Ended |
|
|
|
|
March 31, |
|
% Change |
|
2021 |
|
2020 |
Reported Revenue |
2.2 |
% |
|
$ |
248,913 |
|
|
$ |
243,525 |
|
|
|
|
|
|
|
|
|
|
Add: Impact of foreign
exchange |
|
|
|
|
(3,825 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Constant Currency Revenue
(a) |
0.6 |
% |
|
$ |
245,088 |
|
|
$ |
243,525 |
|
|
|
|
|
|
|
|
|
|
Less: Revenue from certain
acquisitions |
|
|
|
|
(38 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Constant Currency Revenue,
Organic (a) |
0.6 |
% |
|
$ |
245,050 |
|
|
$ |
243,525 |
|
|
|
|
|
|
|
|
|
|
Less: Revenue from
Cultura |
|
|
|
|
(937 |
) |
|
|
— |
|
Less: Revenue from certain
dispositions |
|
|
|
|
(181 |
) |
|
|
(3,529 |
) |
|
|
|
|
|
|
|
|
|
Core Revenue (a) |
1.6 |
% |
|
$ |
243,932 |
|
|
$ |
239,996 |
|
___________________________ |
(a) |
A non-GAAP financial measure. For a definition of this and other
non-GAAP financial measures, see the Non-GAAP Financial Measures
section above in this release. |
|
|
Reconciliation of Reported Gross Margin
to Non-GAAP Gross Margin (Non-GAAP)(Unaudited; as
a percentage of reported revenue)
|
Three Months Ended |
|
|
March 31, |
|
|
2021 |
|
2020 |
Reported Gross Margin |
45.0 |
% |
|
42.6 |
% |
|
|
|
|
|
|
Add back impact of: |
|
|
|
|
|
Amortization of intangibles |
4.3 |
% |
|
5.3 |
% |
Inventory write-off (a) |
— |
% |
|
0.6 |
% |
|
|
|
|
|
|
Non-GAAP Gross Margin |
49.2 |
% |
|
48.5 |
% |
____________________________ |
Note: Certain percentages may not sum to totals due to
rounding |
|
|
(a) |
Represents write-off of inventory related to the suspension of
Merit’s distribution agreement with NinePoint Medical, Inc. |
|
|
ABOUT MERIT
Founded in 1987, Merit Medical
Systems, Inc. is a leading manufacturer and marketer of
proprietary 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 500
individuals. Merit employs approximately 6,300 people
worldwide with facilities in South Jordan, Utah; Pearland, Texas;
Richmond, Virginia; Rockland, Massachusetts; Aliso Viejo,
California; Maastricht and Venlo, The Netherlands; Paris, France;
Galway, Ireland; Beijing, China; Tijuana, Mexico; Joinville,
Brazil; Ontario, Canada; Melbourne, Australia; Tokyo, Japan;
Reading, United Kingdom; Johannesburg, South Africa; and
Singapore.
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, net sales, net income or loss
(GAAP and non-GAAP), operating income (GAAP and non-GAAP), gross
and operating margins (GAAP and non-GAAP), earnings per share (GAAP
and non-GAAP), free cash flow, and other financial measures, the
potential impact, scope and duration of, and Merit’s response to,
the COVID-19 pandemic and the potential for recovery from that
pandemic, future growth and profit expectations or forecasted
economic conditions, or the implementation of, and results achieved
through, Merit’s Foundations for Growth program or other expense
reduction initiatives, or the development and commercialization of
new products, 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,
2020 (the “2020 Annual Report”) and other filings with the SEC.
Such risks and uncertainties include inherent risks and
uncertainties relating to Merit’s internal models or the
projections in this release; risks and uncertainties associated
with the COVID-19 pandemic and Merit’s response thereto; 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; negative changes in
economic and industry conditions in the United States or other
countries; 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; litigation and
other judicial proceedings affecting Merit; 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; 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; reduced
availability of, and price increases associated with, commodity
components; 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; 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 or future 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; failure to
introduce products in a timely fashion; price and product
competition; availability of labor and materials; fluctuations in
and obsolescence of inventory; and other factors referenced in the
2020 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. and its subsidiaries in the United
States and other jurisdictions.
|
|
Contacts: |
|
|
|
PR/Media Inquiries: |
Investor Inquiries: |
Teresa Johnson |
Mike Piccinino, CFA, IRC |
Merit Medical |
Westwicke - ICR |
+1-801-208-4295 |
+1-443-213-0509 |
tjohnson@merit.com |
mike.piccinino@westwicke.com |
|
|
Merit Medical Systems (NASDAQ:MMSI)
Historical Stock Chart
From Aug 2024 to Sep 2024
Merit Medical Systems (NASDAQ:MMSI)
Historical Stock Chart
From Sep 2023 to Sep 2024