Merit Medical Systems, Inc. (MMSI Quick QuoteMMSI - Free Report) is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism, led by a solid performance so far in 2025 and its continued spending on research and development (R&D), is expected to contribute further. However, macro headwinds and forex volatility persist.

This Zacks Rank #3 (Hold) company’s shares have declined 9% so far this year against the industry’s 12.5% growth. The S&P 500 has climbed 18.3% during the same time frame.

The renowned medical device provider has a market capitalization of $5.2 billion. The company projects 9.6% growth for the next five years and expects to maintain its strong performance going forward. It delivered an average earnings surprise of 14.09% for the past four quarters.

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Let’s delve deeper.

Positive Drivers

Sustained Organic Growth With Broad-Based Cardiovascular Momentum: Merit Medical’s third-quarter performance reinforced the durability of its growth engine, with 7.8% organic constant-currency growth, which was comfortably above management’s expectations. The Cardiovascular segment was the clear anchor, as both Peripheral Intervention and Cardiac Intervention franchises delivered upside.

Demand for embolics such as Embosphere and QuadraSphere remained strong, while access and electrophysiology-related products benefited from focused sales execution and portfolio depth. Notably, growth was geographically balanced, with the United States, EMEA and APAC exceeding internal plans. This diversification reduces dependence on any single procedure category or market, positioning Merit Medical to better absorb localized slowdowns while sustaining above-market growth.

Margin Expansion and Strong Free Cash Flow Generation:The third quarter marked a structural inflection in profitability for Merit Medical, with gross margin reaching a record 53.6%, even as tariffs created a meaningful headwind. Management attributed the 267-basis-point year-over-year expansion to favorable product and geographic mix, pricing discipline, and improved freight and distribution costs. These gains flowed through to operating margin expansion and $52.5 million in quarterly free cash flow, up 38% year over year. The company’s ability to generate cash while simultaneously investing in R&D, manufacturing, and acquisitions strengthens balance sheet optionality and reinforces confidence in achieving its multi-year profitability and cash flow targets through 2026.

WRAPSODY CIE Commercial Traction and Reimbursement Progress: WRAPSODY CIE is emerging as a meaningful long-term growth catalyst, with early U.S. inpatient adoption tracking ahead of expectations following NTAP reimbursement effective Oct. 1, 2025. Management highlighted rapid physician training progress, rising utilization, and encouraging early pull-through across Merit's broader dialysis access portfolio.

Beyond inpatient settings, the pending decision on Transitional Pass-Through (TPT) reimbursement for outpatient and ASC procedures represents a pivotal next step. With a potential January 2026 effective date, successful TPT approval is likely to significantly expand the addressable market, accelerating WRAPSODY CIE’s revenue ramp up and reinforcing Merit's position in dialysis access innovation.

Key Challenges

Tariff and Trade Policy Uncertainty: Despite strong execution in the third quarter, tariffs remain a persistent and unpredictable risk for Merit Medical. Management estimates that tariff-related cost impacts could range from $7.6 million to as much as $16 million in 2025, depending on the evolution of global trade policies. While operational initiatives helped offset tariff pressure this quarter, future changes — including new tariffs or retaliatory measures — could materially affect the cost of goods and margin performance.

The lack of visibility around trade policy timing, scope, and duration limits earnings predictability and remains a variable largely outside management’s control, particularly given Merit's global manufacturing and sourcing footprint.

China and OEM Exposure Amid Weak Macro Conditions: China represented a relative soft spot in the third quarter, with reported sales down 1% year over year, reflecting broader macroeconomic weakness rather than competitive or volume-driven issues. Management emphasized that core demand remained stable and that the impact of volume-based procurement (VBP) was better than expected.

However, softness in OEM demand continues to weigh on results, highlighting the inherent volatility of this revenue stream. While OEM has historically supported growth, its sensitivity to economic cycles introduces quarterly variability and constrains near-term visibility in a market that has been strategically important to Merit Medical's international expansion.

Integration and Execution Risk From Ongoing Acquisitions: Merit Medical’s active tuck-in acquisition strategy remains a double-edged sword. Recent deals, including assets from Cook Medical, BioLife, and the planned C2 CryoBalloon acquisition, are strategically aligned and expand the company’s portfolio depth.

However, management acknowledged near-term execution challenges, particularly within Endoscopy, where sales growth lagged expectations amid sales force integration and portfolio rationalization. Successfully translating acquired assets into sustained organic growth will require disciplined integration, effective sales training and operational focus. Missteps could lead to temporary disruption, diluting near-term performance even as long-term strategic benefits remain intact.

Merit Medical Systems, Inc. Price

Merit Medical Systems, Inc. price | Merit Medical Systems, Inc. Quote

Estimate Trend

MMSI is witnessing a positive estimate revision trend for 2025. In the past 60 days, the Zacks Consensus Estimate for earnings per share (EPS) has moved north 4 cents to $3.73.

The Zacks Consensus Estimate for the company’s fourth-quarter 2025 revenues is pegged at $387.5 million, suggesting a 9.1% rise from the year-ago reported number. The consensus mark for EPS is pegged at 95 cents, implying a 2.2% improvement from the prior-year reported figure.

Stocks to Consider

Some better-ranked stocks in the broader medical space are Masimo (MASI Quick QuoteMASI - Free Report) , Cencora, Inc. (COR Quick QuoteCOR - Free Report) and Boston Scientific Corporation (BSX Quick QuoteBSX - Free Report) .

Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 20% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.41%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s shares have gained 0.7% against the industry’s 3% decline so far this year.

Cencora, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.1%. COR’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 4.9%.

Cencora’s shares have gained 19.5% compared to the industry’s 6% decline year to date.

Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.

Boston Scientific’s shares have rallied 15.4% compared with the industry’s 7.2% growth so far this year.