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Merit Medical (MMSI) Q4 Earnings Top Estimates, Gross Margin Up
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Merit Medical Systems, Inc. (MMSI - Free Report) delivered adjusted earnings per share (EPS) of 81 cents in the fourth quarter of 2023, up 2.5% year over year. The figure also surpassed the Zacks Consensus Estimate by 5.2%.
The adjustments include expenses related to the amortization of intangibles, and Medical Device Regulation expenses, among others.
GAAP EPS for the quarter was 47 cents, down 18.9% year over year.
Full-year 2023 adjusted EPS was $3.01, down 11.5% compared with that at the end of the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 1.3%.
Revenues in Detail
Merit Medical registered revenues of $$324.5 million in the fourth quarter, up 10.6% year over year. The figure surpassed the Zacks Consensus Estimate by 1.7%.
Total revenues at constant exchange rate (CER) inched up 10.3% year over year, whereas CER, organic revenues increased 8.3% year over year.
Per management, the better-than-expected CER revenue growth in the fourth quarter was driven by strong organic growth, reflecting particular strength in Peripheral Intervention (PI), Custom Procedural Solutions (CPS) and original equipment manufacturer (OEM) product categories, and relatively balanced contributions from both the U.S. and international markets.
Full-year 2023 revenues were $1.26 billion, reflecting a 9.2% uptick from the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 0.8%.
Geographic Results
The U.S. sales increased 13% on CER basis and 9% on a CER, organic basis.
International sales increased 7% on a CER, organic basis, driven primarily by 7% growth in Europe, the Middle East, and Africa region, 30% growth in the rest of the world region and 4% growth in the Asia-Pacific region.
Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported fourth-quarter revenues of $315.2 million, up 10.3% on a reported basis and 10.1 % at CER year over year. This figure compares to our segmental projection of $305.2 million for the fourth quarter.
The Cardiovascular segment includes the following product categories: PI, Cardiac Intervention (CI), CPS and OEM.
PI product line revenues were $134.1 million, up 19.4% on a reported basis and 19% at CER year over year. This compares to our projection of $123.2 million.
CI revenues of $90.2 million rose 5.8% on a reported basis and 5.6% at CER year over year. This compares to our projection of $88.7 million.
CPS revenues improved 1% on a reported basis and 0.8% at CER year over year to $49.6 million. This compares to our projection of $50.2 million.
OEM revenues climbed 6.1% on a reported basis and 5.7% at CER year over year to $41.2 million. This compares to our projection of $43.1 million.
Endoscopy devices’ revenues totaled $9.3 million, up 19.9% year over year on a reported basis and 20% at CER. This figure compares to our segmental projection of $9.5 million for the fourth quarter.
Merit Medical Systems, Inc. Price, Consensus and EPS Surprise
In the quarter under review, Merit Medical’s gross profit rose 11.9% to $150.5 million. The gross margin expanded 53 basis points (bps) to 46.4%.
We had projected 48.3% of gross margin for the fourth quarter.
Selling, general & administrative expenses increased 15% to $95.8 million. Research and development expenses rose 5.9% year over year to $21.6 million. Adjusted operating expenses of $117.4 million climbed 13.2% year over year.
Adjusted operating profit totaled $33.1 million, reflecting a 7.3% increase from the prior-year quarter. The adjusted operating margin in the fourth quarter contracted 31 bps to 10.2%.
Financial Position
Merit Medical exited 2023 with cash and cash equivalents of $587 million compared with $58.4 million at 2022-end. Total debt (including the current portion) at the end of 2023 was $823 million compared with $198 million at 2022-end.
Cumulative net cash flow provided by operating activities at the end of 2023 was $145.2 million compared with $114.3 million a year ago.
2024 Guidance
Merit Medical has initiated its 2024 outlook.
Net revenues for 2024 are projected to be between $1.312 billion and $1.325 billion (reflecting an increase of approximately 4-5% over the comparable reported figures of 2022). The Zacks Consensus Estimate stands at $1.33 billion.
Net revenues from the Cardiovascular segment are expected to be in the range of $1.272 billion-$1.285 billion, representing an increase of approximately 4-5% over the comparable reported figures of 2022.
The Endoscopy segment’s net revenues are now projected to be between $39.7 million and $40.1 million, representing an increase of approximately 8-9% over the comparable reported figures of 2022.
Adjusted EPS for 2024 is projected to be in the range of $3.28-$3.35, representing an increase of approximately 9-11% over the comparable reported figures of 2022. The Zacks Consensus Estimate is pegged at $3.32.
Our Take
Merit Medical exited the fourth quarter of 2023 with better-than-expected results. The year-over-year uptick in the top line and adjusted EPS was 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 were impressive. The expansion of gross margin bodes well for the stock.
This month, Merit Medical introduced its Continued Growth Initiatives Program and related financial targets for the three-year period ending Dec 31, 2026. The same month, the company received the FDA’s 501(k) clearance for the SCOUT MD Surgical Guidance System. These also look promising for the stock.
However, rising operating costs putting pressure on the adjusted operating margin do not bode well. The current challenging global macro environment also raises our apprehension.
Zacks Rank and Key Picks
Merit Medical currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cencora, Inc. (COR - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
Cencora, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2024 adjusted EPS of $3.28, beating the Zacks Consensus Estimate by 14.7%. Revenues of $72.25 billion outpaced the consensus mark by 5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cencora has a long-term estimated growth rate of 9.8%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.7%.
Elevance Health reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 14.2%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.
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Merit Medical (MMSI) Q4 Earnings Top Estimates, Gross Margin Up
Merit Medical Systems, Inc. (MMSI - Free Report) delivered adjusted earnings per share (EPS) of 81 cents in the fourth quarter of 2023, up 2.5% year over year. The figure also surpassed the Zacks Consensus Estimate by 5.2%.
The adjustments include expenses related to the amortization of intangibles, and Medical Device Regulation expenses, among others.
GAAP EPS for the quarter was 47 cents, down 18.9% year over year.
Full-year 2023 adjusted EPS was $3.01, down 11.5% compared with that at the end of the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 1.3%.
Revenues in Detail
Merit Medical registered revenues of $$324.5 million in the fourth quarter, up 10.6% year over year. The figure surpassed the Zacks Consensus Estimate by 1.7%.
Total revenues at constant exchange rate (CER) inched up 10.3% year over year, whereas CER, organic revenues increased 8.3% year over year.
Per management, the better-than-expected CER revenue growth in the fourth quarter was driven by strong organic growth, reflecting particular strength in Peripheral Intervention (PI), Custom Procedural Solutions (CPS) and original equipment manufacturer (OEM) product categories, and relatively balanced contributions from both the U.S. and international markets.
Full-year 2023 revenues were $1.26 billion, reflecting a 9.2% uptick from the comparable 2022 period. The figure topped the Zacks Consensus Estimate by 0.8%.
Geographic Results
The U.S. sales increased 13% on CER basis and 9% on a CER, organic basis.
International sales increased 7% on a CER, organic basis, driven primarily by 7% growth in Europe, the Middle East, and Africa region, 30% growth in the rest of the world region and 4% growth in the Asia-Pacific region.
Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported fourth-quarter revenues of $315.2 million, up 10.3% on a reported basis and 10.1 % at CER year over year. This figure compares to our segmental projection of $305.2 million for the fourth quarter.
The Cardiovascular segment includes the following product categories: PI, Cardiac Intervention (CI), CPS and OEM.
PI product line revenues were $134.1 million, up 19.4% on a reported basis and 19% at CER year over year. This compares to our projection of $123.2 million.
CI revenues of $90.2 million rose 5.8% on a reported basis and 5.6% at CER year over year. This compares to our projection of $88.7 million.
CPS revenues improved 1% on a reported basis and 0.8% at CER year over year to $49.6 million. This compares to our projection of $50.2 million.
OEM revenues climbed 6.1% on a reported basis and 5.7% at CER year over year to $41.2 million. This compares to our projection of $43.1 million.
Endoscopy devices’ revenues totaled $9.3 million, up 19.9% year over year on a reported basis and 20% at CER. This figure compares to our segmental projection of $9.5 million for the fourth 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 11.9% to $150.5 million. The gross margin expanded 53 basis points (bps) to 46.4%.
We had projected 48.3% of gross margin for the fourth quarter.
Selling, general & administrative expenses increased 15% to $95.8 million. Research and development expenses rose 5.9% year over year to $21.6 million. Adjusted operating expenses of $117.4 million climbed 13.2% year over year.
Adjusted operating profit totaled $33.1 million, reflecting a 7.3% increase from the prior-year quarter. The adjusted operating margin in the fourth quarter contracted 31 bps to 10.2%.
Financial Position
Merit Medical exited 2023 with cash and cash equivalents of $587 million compared with $58.4 million at 2022-end. Total debt (including the current portion) at the end of 2023 was $823 million compared with $198 million at 2022-end.
Cumulative net cash flow provided by operating activities at the end of 2023 was $145.2 million compared with $114.3 million a year ago.
2024 Guidance
Merit Medical has initiated its 2024 outlook.
Net revenues for 2024 are projected to be between $1.312 billion and $1.325 billion (reflecting an increase of approximately 4-5% over the comparable reported figures of 2022). The Zacks Consensus Estimate stands at $1.33 billion.
Net revenues from the Cardiovascular segment are expected to be in the range of $1.272 billion-$1.285 billion, representing an increase of approximately 4-5% over the comparable reported figures of 2022.
The Endoscopy segment’s net revenues are now projected to be between $39.7 million and $40.1 million, representing an increase of approximately 8-9% over the comparable reported figures of 2022.
Adjusted EPS for 2024 is projected to be in the range of $3.28-$3.35, representing an increase of approximately 9-11% over the comparable reported figures of 2022. The Zacks Consensus Estimate is pegged at $3.32.
Our Take
Merit Medical exited the fourth quarter of 2023 with better-than-expected results. The year-over-year uptick in the top line and adjusted EPS was 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 were impressive. The expansion of gross margin bodes well for the stock.
This month, Merit Medical introduced its Continued Growth Initiatives Program and related financial targets for the three-year period ending Dec 31, 2026. The same month, the company received the FDA’s 501(k) clearance for the SCOUT MD Surgical Guidance System. These also look promising for the stock.
However, rising operating costs putting pressure on the adjusted operating margin do not bode well. The current challenging global macro environment also raises our apprehension.
Zacks Rank and Key Picks
Merit Medical currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cencora, Inc. (COR - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
Cencora, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2024 adjusted EPS of $3.28, beating the Zacks Consensus Estimate by 14.7%. Revenues of $72.25 billion outpaced the consensus mark by 5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cencora has a long-term estimated growth rate of 9.8%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.7%.
Elevance Health reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 14.2%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.