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Merit Medical (MMSI) Q1 Earnings Top Estimates, Margins Up
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Merit Medical Systems, Inc. (MMSI - Free Report) delivered adjusted earnings per share (EPS) of 77 cents in the first quarter of 2024 compared with 64 cents in the year-ago period. The figure surpassed the Zacks Consensus Estimate by 8.5%.
The adjustments include expenses related to the amortization of intangibles, and Medical Device Regulation expenses, among others.
GAAP EPS for the quarter was 48 cents compared with 36 cents in the year-ago period.
Revenues in Detail
Merit Medical registered revenues of $323.5 million in the first quarter, up 8.7% year over year. The figure surpassed the Zacks Consensus Estimate by 2.4%.
Total revenues at constant exchange rate (CER) inched up 9.3% year over year, whereas CER, organic revenues increased 7% year over year.
Per management, the better-than-expected CER revenue growth in the first quarter was driven by strong organic growth as well as contributions from acquired products.
Geographic Results
The U.S. sales amounted to $186.1 million, which increased 8.6% on a reported basis and 9.1% at CER year over year. This figure compares to our first-quarter projection of $179.8 million.
International sales amounted to $137.4 million, up 8.9% on a reported basis and 9.5% at CER year over year. This figure compares to our first-quarter projection of $136 million.
Revenues from the Asia-Pacific region were $62.9 million (up 9.3% and 14% on a reported basis and CER, respectively). This figure compares to our first-quarter projection of $65.1 million.
Revenues from Europe, the Middle East, and Africa region were $61 million (up 5.1% and 2.5% on a reported basis and CER, respectively). This figure compares to our first-quarter projection of $61.4 million.
Revenues from the Rest of World region were $13.5 million (up 27.6% and 23.1% on a reported basis and CER, respectively). This figure compares to our first-quarter projection of $9.5 million.
Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported first-quarter revenues of $313.4 million, up 8.8% on a reported basis and 9.4% at CER year over year. This figure compares to our segmental projection of $305.5 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).
PI product line revenues were $134.6 million, up 18.3% on a reported basis and 18.6% at CER year over year. This compares to our projection of $125 million.
CI revenues of $90.7 million rose 6.3% on a reported basis and 7.4% at CER year over year. This compares to our projection of $87.6 million.
CPS revenues improved 2.3% on a reported basis and 3.1% at CER year over year to $48.8 million. This compares to our projection of $48.7 million.
OEM revenues declined 4.6% on a reported basis and 4.7% at CER year over year to $39.3 million. This compares to our projection of $44.2 million.
Endoscopy devices’ revenues totaled $10.1 million, up 5.7% year over year on a reported basis and 6% at CER. This figure compares to our segmental projection of $10.4 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 9.7% to $151.7 million. The gross margin expanded 40 basis points (bps) to 46.9%.
We had projected 47.9% of gross margin for the first quarter.
Selling, general & administrative expenses increased 4.8% to $94.4 million. Research and development expenses rose 0.8% year over year to $21.5 million. Adjusted operating expenses of $115.9 million climbed 3.9% year over year.
Adjusted operating profit totaled $35.8 million, reflecting a 33.1% increase from the prior-year quarter. The adjusted operating margin in the first quarter expanded 203 bps to 11.1%.
Financial Position
Merit Medical exited first-quarter 2024 with cash and cash equivalents of $581.9 million compared with $587 million at 2023-end. Total debt at the end of first-quarter 2024 was $800.1 million compared with $823 million at 2023-end.
Net cash flow provided by operating activities at the end of first-quarter 2024 was $36.2 million compared with $14.5 million a year ago.
2024 Guidance
Merit Medical has reiterated its 2024 outlook.
Net revenues for 2024 are continued to be projected between $1.312 billion and $1.325 billion (reflecting an increase of approximately 4-5% over the comparable reported figures of 2023). The Zacks Consensus Estimate stands at $1.32 billion.
Net revenues from the Cardiovascular segment are continued to be expected in the range of $1.272 billion-$1.285 billion, representing an increase of approximately 4-5% over the comparable reported figures of 2023.
The Endoscopy segment’s net revenues are continued to be projected between $39.7 million and $40.1 million, representing an increase of approximately 8-9% over the comparable reported figures of 2023.
Adjusted EPS for 2024 is continued to be projected in the range of $3.28-$3.35, representing an increase of approximately 9-11% over the comparable reported figures of 2023. The Zacks Consensus Estimate is pegged at $3.31.
Our Take
Merit Medical exited the first quarter of 2024 with better-than-expected results. The year-over-year uptick in the top line and bottom line was impressive. The company saw revenue growth in both its segments and across the majority of the product categories within its Cardiovascular unit. Robust performances in the United States and outside were impressive. The expansion of both margins bodes well for the stock.
In March, Merit Medical announced the commercial release of its FDA-cleared Micro ACE Advanced Micro-Access System. In February, the company received the FDA’s 501(k) clearance for the SCOUT MD Surgical Guidance System. These also look promising for the stock.
However, the decline in its OEM revenues was disappointing. The current challenging global macro environment also 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 Align Technology, Inc. (ALGN - Free Report) , ResMed Inc. (RMD - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2, reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
ResMed reported third-quarter of fiscal 2024 adjusted EPS of $2.13, beating the Zacks Consensus Estimate by 10.9%. Revenues of $1.19 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 10.7%. RMD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.
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Merit Medical (MMSI) Q1 Earnings Top Estimates, Margins Up
Merit Medical Systems, Inc. (MMSI - Free Report) delivered adjusted earnings per share (EPS) of 77 cents in the first quarter of 2024 compared with 64 cents in the year-ago period. The figure surpassed the Zacks Consensus Estimate by 8.5%.
The adjustments include expenses related to the amortization of intangibles, and Medical Device Regulation expenses, among others.
GAAP EPS for the quarter was 48 cents compared with 36 cents in the year-ago period.
Revenues in Detail
Merit Medical registered revenues of $323.5 million in the first quarter, up 8.7% year over year. The figure surpassed the Zacks Consensus Estimate by 2.4%.
Total revenues at constant exchange rate (CER) inched up 9.3% year over year, whereas CER, organic revenues increased 7% year over year.
Per management, the better-than-expected CER revenue growth in the first quarter was driven by strong organic growth as well as contributions from acquired products.
Geographic Results
The U.S. sales amounted to $186.1 million, which increased 8.6% on a reported basis and 9.1% at CER year over year. This figure compares to our first-quarter projection of $179.8 million.
International sales amounted to $137.4 million, up 8.9% on a reported basis and 9.5% at CER year over year. This figure compares to our first-quarter projection of $136 million.
Revenues from the Asia-Pacific region were $62.9 million (up 9.3% and 14% on a reported basis and CER, respectively). This figure compares to our first-quarter projection of $65.1 million.
Revenues from Europe, the Middle East, and Africa region were $61 million (up 5.1% and 2.5% on a reported basis and CER, respectively). This figure compares to our first-quarter projection of $61.4 million.
Revenues from the Rest of World region were $13.5 million (up 27.6% and 23.1% on a reported basis and CER, respectively). This figure compares to our first-quarter projection of $9.5 million.
Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported first-quarter revenues of $313.4 million, up 8.8% on a reported basis and 9.4% at CER year over year. This figure compares to our segmental projection of $305.5 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).
PI product line revenues were $134.6 million, up 18.3% on a reported basis and 18.6% at CER year over year. This compares to our projection of $125 million.
CI revenues of $90.7 million rose 6.3% on a reported basis and 7.4% at CER year over year. This compares to our projection of $87.6 million.
CPS revenues improved 2.3% on a reported basis and 3.1% at CER year over year to $48.8 million. This compares to our projection of $48.7 million.
OEM revenues declined 4.6% on a reported basis and 4.7% at CER year over year to $39.3 million. This compares to our projection of $44.2 million.
Endoscopy devices’ revenues totaled $10.1 million, up 5.7% year over year on a reported basis and 6% at CER. This figure compares to our segmental projection of $10.4 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 9.7% to $151.7 million. The gross margin expanded 40 basis points (bps) to 46.9%.
We had projected 47.9% of gross margin for the first quarter.
Selling, general & administrative expenses increased 4.8% to $94.4 million. Research and development expenses rose 0.8% year over year to $21.5 million. Adjusted operating expenses of $115.9 million climbed 3.9% year over year.
Adjusted operating profit totaled $35.8 million, reflecting a 33.1% increase from the prior-year quarter. The adjusted operating margin in the first quarter expanded 203 bps to 11.1%.
Financial Position
Merit Medical exited first-quarter 2024 with cash and cash equivalents of $581.9 million compared with $587 million at 2023-end. Total debt at the end of first-quarter 2024 was $800.1 million compared with $823 million at 2023-end.
Net cash flow provided by operating activities at the end of first-quarter 2024 was $36.2 million compared with $14.5 million a year ago.
2024 Guidance
Merit Medical has reiterated its 2024 outlook.
Net revenues for 2024 are continued to be projected between $1.312 billion and $1.325 billion (reflecting an increase of approximately 4-5% over the comparable reported figures of 2023). The Zacks Consensus Estimate stands at $1.32 billion.
Net revenues from the Cardiovascular segment are continued to be expected in the range of $1.272 billion-$1.285 billion, representing an increase of approximately 4-5% over the comparable reported figures of 2023.
The Endoscopy segment’s net revenues are continued to be projected between $39.7 million and $40.1 million, representing an increase of approximately 8-9% over the comparable reported figures of 2023.
Adjusted EPS for 2024 is continued to be projected in the range of $3.28-$3.35, representing an increase of approximately 9-11% over the comparable reported figures of 2023. The Zacks Consensus Estimate is pegged at $3.31.
Our Take
Merit Medical exited the first quarter of 2024 with better-than-expected results. The year-over-year uptick in the top line and bottom line was impressive. The company saw revenue growth in both its segments and across the majority of the product categories within its Cardiovascular unit. Robust performances in the United States and outside were impressive. The expansion of both margins bodes well for the stock.
In March, Merit Medical announced the commercial release of its FDA-cleared Micro ACE Advanced Micro-Access System. In February, the company received the FDA’s 501(k) clearance for the SCOUT MD Surgical Guidance System. These also look promising for the stock.
However, the decline in its OEM revenues was disappointing. The current challenging global macro environment also 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 Align Technology, Inc. (ALGN - Free Report) , ResMed Inc. (RMD - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2, reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
ResMed reported third-quarter of fiscal 2024 adjusted EPS of $2.13, beating the Zacks Consensus Estimate by 10.9%. Revenues of $1.19 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently carries a Zacks Rank #2.
ResMed has a long-term estimated growth rate of 10.7%. RMD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.