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Merit Medical (MMSI) Tops Q1 Earnings Estimates, Ups FY23 View
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Merit Medical Systems, Inc. (MMSI - Free Report) delivered adjusted earnings per share (EPS) of 64 cents in the first quarter of 2022, up 20.8% year over year. The figure surpassed the Zacks Consensus Estimate by 16.4%.
The adjustments include expenses related to the amortization of intangibles, and corporate transformation and restructuring.
Our projection of adjusted EPS was 55 cents.
GAAP EPS for the quarter was 36 cents a share, up 100% year over year.
Revenues in Detail
Merit Medical registered revenues of $297.6 million in the first quarter, up 8% year over year. The figure surpassed the Zacks Consensus Estimate by 5.9%.
First-quarter revenues compare to our estimate of $279.6 million.
Per management, the overall top line was driven by 12% growth in U.S. sales and a 3% rise in international sales. Strong performances by both segments and the Cardiovascular segment’s product categories contributed to the top line.
Constant exchange rate (CER), organic revenues rose 9.8% year over year.
Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported first-quarter revenues of $287.9 million, up 7.9% year over year on a reported basis. CER, organic revenues moved up 9.7% year over year.
This figure compares to our segmental projection of $270.7 million for the first quarter.
The Cardiovascular segment includes the following product categories — Peripheral Intervention (PI), Cardiac Intervention (CI), Custom Procedural Solutions (CPS) and original equipment manufacturer (OEM).
On a reported basis, PI product line revenues were $113.8 million, up 7.6% year over year, whereas CI revenues rose 4.7% to $85.3 million. OEM revenues climbed 23.2% to $41.2 million, whereas CPS revenues improved 3.1% to $47.7 million, both on a reported basis. This compares to our projections of $109 million, $82.3 million, $33.9 million and $45.4 million, respectively.
Endoscopy devices’ revenues totaled $9.6 million, up 13.1% year over year. CER, organic revenues also jumped 13.6% year over year.
This figure compares to our segmental projection of $8.9 million for the first quarter.
Merit Medical Systems, Inc. Price, Consensus and EPS Surprise
In the quarter under review, Merit Medical’s gross profit rose 14.4% to $138.4 million. The gross margin expanded 260 basis points (bps) to 46.5%.
We had projected 46.2% of gross margin for the first quarter.
Selling, general and administrative expenses rose 7.3% to $90.1 million. Research and development expenses rose 22.6% year over year to $21.3 million. Adjusted operating expenses of $111.5 million increased 9.9% year over year.
Adjusted operating profit totaled $26.9 million, reflecting a 37.9% increase from the prior-year quarter. The adjusted operating margin in the first quarter expanded by 196 bps to 9%.
Financial Position
Merit Medical exited first-quarter 2023 with cash and cash equivalents of $57.9 million compared with $58.4 million at the end of 2022. Total debt (including the current portion) at the end of first-quarter 2023 was $197.7 million compared with $198 million at the end of 2022.
Net cash flow from operating activities at the end of first-quarter 2023 was $14.5 million compared with $12 million a year ago.
2023 Guidance
Merit Medical raised its 2023 outlook.
Net revenues for 2023 are projected between $1.217 billion and $1.229 billion, suggesting an increase of 6-7% over the comparable reported figures of 2022. This is up from the earlier guidance of $1.194-$1.210 billion, indicating an increase of 4-5% over the comparable reported figures of 2022. The Zacks Consensus Estimate for the same is pegged at $1.20 billion.
Net revenues from the cardiovascular segment are expected to be $1.179-$1.191 billion, suggesting an increase of 5-6% over the comparable reported figures of 2022. This is up from the prior outlook of $1.156-$1.172 billion, implying an increase of 3-5% over the comparable reported figures of 2022.
The endoscopy segment’s net revenues are projected between $37.8 million and $38.1 million, suggesting an increase of 15-16% over the comparable reported figures of 2022. This is up from the prior outlook of $37.5-$37.8 million, indicating an increase of 14-16% over the comparable reported figures of 2022.
Adjusted EPS for 2023 is projected to be $2.83-$2.93, up from the earlier stated $2.80-$2.89. The Zacks Consensus Estimate for the same is pegged at $2.88.
Our Take
Merit Medical exited the first quarter of 2023 with better-than-expected results. The year-over-year uptick in the top and bottom lines is impressive. The company saw revenue growth in both its segments and across all the product categories within its Cardiovascular unit. Robust performances in the United States and outside are impressive. Strong execution and improving customer demand trends pushed up the overall top line, which is encouraging. The expansion of both margins bodes well for the stock.
The company stands to benefit from the execution of its global growth and profitability plan. A robust product line raises investors’ optimism about the stock.
In March, Merit Medical announced the expansion of its SwiftNINJA Steerable Microcatheter product line, which belongs to its delivery systems portfolio. In February, Merit Medical announced the FDA’s grant of Breakthrough Device Designation for the SCOUT MD Surgical Guidance System. These also look promising for the stock.
However, the current challenging global macro environment raises our apprehension.
Zacks Rank and Other Key Picks
Merit Medical currently has a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation (EW - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported a first-quarter 2023 adjusted EPS of $2.68, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. The company currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.
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Merit Medical (MMSI) Tops Q1 Earnings Estimates, Ups FY23 View
Merit Medical Systems, Inc. (MMSI - Free Report) delivered adjusted earnings per share (EPS) of 64 cents in the first quarter of 2022, up 20.8% year over year. The figure surpassed the Zacks Consensus Estimate by 16.4%.
The adjustments include expenses related to the amortization of intangibles, and corporate transformation and restructuring.
Our projection of adjusted EPS was 55 cents.
GAAP EPS for the quarter was 36 cents a share, up 100% year over year.
Revenues in Detail
Merit Medical registered revenues of $297.6 million in the first quarter, up 8% year over year. The figure surpassed the Zacks Consensus Estimate by 5.9%.
First-quarter revenues compare to our estimate of $279.6 million.
Per management, the overall top line was driven by 12% growth in U.S. sales and a 3% rise in international sales. Strong performances by both segments and the Cardiovascular segment’s product categories contributed to the top line.
Constant exchange rate (CER), organic revenues rose 9.8% year over year.
Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported first-quarter revenues of $287.9 million, up 7.9% year over year on a reported basis. CER, organic revenues moved up 9.7% year over year.
This figure compares to our segmental projection of $270.7 million for the first quarter.
The Cardiovascular segment includes the following product categories — Peripheral Intervention (PI), Cardiac Intervention (CI), Custom Procedural Solutions (CPS) and original equipment manufacturer (OEM).
On a reported basis, PI product line revenues were $113.8 million, up 7.6% year over year, whereas CI revenues rose 4.7% to $85.3 million. OEM revenues climbed 23.2% to $41.2 million, whereas CPS revenues improved 3.1% to $47.7 million, both on a reported basis. This compares to our projections of $109 million, $82.3 million, $33.9 million and $45.4 million, respectively.
Endoscopy devices’ revenues totaled $9.6 million, up 13.1% year over year. CER, organic revenues also jumped 13.6% year over year.
This figure compares to our segmental projection of $8.9 million for the first quarter.
Merit Medical Systems, Inc. Price, Consensus and EPS Surprise
Merit Medical Systems, Inc. price-consensus-eps-surprise-chart | Merit Medical Systems, Inc. Quote
Margins
In the quarter under review, Merit Medical’s gross profit rose 14.4% to $138.4 million. The gross margin expanded 260 basis points (bps) to 46.5%.
We had projected 46.2% of gross margin for the first quarter.
Selling, general and administrative expenses rose 7.3% to $90.1 million. Research and development expenses rose 22.6% year over year to $21.3 million. Adjusted operating expenses of $111.5 million increased 9.9% year over year.
Adjusted operating profit totaled $26.9 million, reflecting a 37.9% increase from the prior-year quarter. The adjusted operating margin in the first quarter expanded by 196 bps to 9%.
Financial Position
Merit Medical exited first-quarter 2023 with cash and cash equivalents of $57.9 million compared with $58.4 million at the end of 2022. Total debt (including the current portion) at the end of first-quarter 2023 was $197.7 million compared with $198 million at the end of 2022.
Net cash flow from operating activities at the end of first-quarter 2023 was $14.5 million compared with $12 million a year ago.
2023 Guidance
Merit Medical raised its 2023 outlook.
Net revenues for 2023 are projected between $1.217 billion and $1.229 billion, suggesting an increase of 6-7% over the comparable reported figures of 2022. This is up from the earlier guidance of $1.194-$1.210 billion, indicating an increase of 4-5% over the comparable reported figures of 2022. The Zacks Consensus Estimate for the same is pegged at $1.20 billion.
Net revenues from the cardiovascular segment are expected to be $1.179-$1.191 billion, suggesting an increase of 5-6% over the comparable reported figures of 2022. This is up from the prior outlook of $1.156-$1.172 billion, implying an increase of 3-5% over the comparable reported figures of 2022.
The endoscopy segment’s net revenues are projected between $37.8 million and $38.1 million, suggesting an increase of 15-16% over the comparable reported figures of 2022. This is up from the prior outlook of $37.5-$37.8 million, indicating an increase of 14-16% over the comparable reported figures of 2022.
Adjusted EPS for 2023 is projected to be $2.83-$2.93, up from the earlier stated $2.80-$2.89. The Zacks Consensus Estimate for the same is pegged at $2.88.
Our Take
Merit Medical exited the first quarter of 2023 with better-than-expected results. The year-over-year uptick in the top and bottom lines is impressive. The company saw revenue growth in both its segments and across all the product categories within its Cardiovascular unit. Robust performances in the United States and outside are impressive. Strong execution and improving customer demand trends pushed up the overall top line, which is encouraging. The expansion of both margins bodes well for the stock.
The company stands to benefit from the execution of its global growth and profitability plan. A robust product line raises investors’ optimism about the stock.
In March, Merit Medical announced the expansion of its SwiftNINJA Steerable Microcatheter product line, which belongs to its delivery systems portfolio. In February, Merit Medical announced the FDA’s grant of Breakthrough Device Designation for the SCOUT MD Surgical Guidance System. These also look promising for the stock.
However, the current challenging global macro environment raises our apprehension.
Zacks Rank and Other Key Picks
Merit Medical currently has a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation (EW - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported a first-quarter 2023 adjusted EPS of $2.68, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. The company currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.