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, announced today
that it has reached an agreement in principle to settle the
securities class action lawsuit against Merit and its Chief
Executive Officer and Chief Financial Officer currently pending in
the United States District Court for the Central District of
California. The lawsuit was filed in June 2020 after Merit’s stock
price declined following disclosures made by Merit with respect to
its operating and financial performance during 2019. The settlement
was reached following a voluntary mediation process.
“We are pleased to resolve this matter and put
it behind us in order to focus our attention on the continued
growth and development of our business,” said Fred P. Lampropoulos,
Merit’s Chairman and Chief Executive Officer. “While we continue to
believe the allegations in the case were without merit, we also
believe that eliminating the distraction, expense and risk of
continued litigation is in the best interests of Merit and its
shareholders.”
The proposed settlement calls for a payment of
$18.25 million in resolution of all claims asserted against Merit
and all other defendants. Approximately $8.5 million of the
settlement payment is expected to be satisfied with proceeds of
available insurance. Merit anticipates that the settlement will
also provide a full release of all claims against all defendants,
including Merit and its officers, and will contain no admission of
liability, wrongdoing or responsibility by any of the defendants.
The settlement remains subject to final
documentation and approval by the court and is subject to
satisfaction of customary conditions to effectiveness. A final
non-appealable closure of the litigation could take several
months.
Fiscal Year 2021 Financial Guidance
Based upon information currently available to
Merit’s management, for the twelve months ending December 31, 2021,
Merit is reaffirming net revenue, non-GAAP net income and non-GAAP
earnings per share expectations and updating GAAP net income and
earnings per share expectations to reflect the after-tax impact of
the settlement payment, net of insurance proceeds, of approximately
$7.3 million and $0.13 per share, respectively. Absent material
acquisitions, non-recurring transactions or other factors beyond
Merit’s control, Merit now expects the following:
|
|
|
|
|
|
|
|
Financial Measure |
|
Prior Guidance Range |
|
Updated Guidance Range |
|
|
|
|
|
|
|
|
|
Net
Sales |
|
$1,060 - $1,070 million |
|
$1,060 - $1,070 million |
|
|
|
|
|
|
|
|
|
GAAP |
|
|
|
|
|
|
Net Income |
|
$38.1 - $46.4 million |
|
$30.7 - $39.0 million |
|
|
Earnings Per Share |
|
$0.66 - $0.81 |
|
$0.53 - $0.68 |
|
|
|
|
|
|
|
|
|
Non-GAAP |
|
|
|
|
|
|
Net Income |
|
$118.8 - $127.1 million |
|
$118.8 - $127.1 million |
|
|
Earnings Per Share |
|
$2.07 - $2.22 |
|
$2.07 - $2.22 |
|
- Non-GAAP net income and non-GAAP
earnings per share are non-GAAP financial measures. A
reconciliation of these financial measures to their most directly
comparable GAAP financial measures is included under the heading
“Non-GAAP Financial Measures” below.
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 6,700 people
worldwide with facilities in South Jordan, Utah; Pearland, Texas;
Richmond, Virginia; 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 the agreement in principle to settle the pending class
action litigation, Merit’s expectations regarding the likelihood,
terms, conditions and timing of the anticipated settlement and
Merit’s forecasted plans, net sales, net income (GAAP and
non-GAAP), earnings per share (GAAP and non-GAAP) and other
financial measures, 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, but are not limited to,
whether the agreement in principle to settle the pending securities
class action litigation will become effective; whether Merit will
be able to enter into definitive documentation with the plaintiffs
on the terms and conditions it currently anticipates; risks and
uncertainties associated with the COVID-19 pandemic and Merit’s
response thereto; disruptions in Merit’s supply chain,
manufacturing or sterilization processes; 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; 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; 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; 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; 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 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 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.
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:
- non-GAAP
operating income;
- non-GAAP net
income; and
- non-GAAP
earnings per share.
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 operating income and non-GAAP net
income 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.
Non-GAAP Operating Income
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
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 or changes in industry
regulations, as well as other items disclosed in reconciliation
tables in the Company’s quarterly earnings releases.
Non-GAAP Net Income
Non-GAAP net income is calculated by adjusting
GAAP net income for the items set forth in the definition of
non-GAAP operating income above, as well as for expenses related to
debt issuance costs, gains or losses on disposal of certain assets,
changes in tax regulations, as well as other items disclosed in
reconciliation tables in the Company’s quarterly earnings press
releases.
Non-GAAP Earning per Share
Non-GAAP earnings per share is defined as
non-GAAP net income divided by the diluted shares outstanding for
the corresponding period.
|
|
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 |
|
|
Merit Medical Systems (NASDAQ:MMSI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Merit Medical Systems (NASDAQ:MMSI)
Historical Stock Chart
From Apr 2023 to Apr 2024