Merit Medical Systems Posts Strong Q3 2024 Results: Revenue and Earnings Beat Estimates
Merit Medical Systems, Inc. (MMSI) reported an adjusted earnings per share (EPS) of 86 cents for the third quarter of 2024, marking a 21.1% increase compared to the same period last year. This figure exceeded the Zacks Consensus Estimate by 7.5%.
The generally accepted accounting principles (GAAP) EPS for this quarter was 48 cents, showing a 9.1% year-over-year increase.
Check the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenue Performance at MMSI
Total revenues reached $339.8 million, reflecting a 7.8% year-over-year growth. This also surpassed the Zacks Consensus Estimate by 1.4%.
When adjusted for constant exchange rates (CER), total revenues increased by 7.9%, while organic revenues grew by 5.7% year over year.
Management attributed this growth at CER to strong organic demand and contributions from recently acquired products, both exceeding the company’s expectations.
Despite these positive results, shares of Merit Medical slipped nearly 1% by the end of the trading day.
Geographic Revenue Breakdown
In the United States, sales amounted to $206.5 million, a rise of 10.1% on a reported basis and 10.2% at CER year over year, surpassing our Q3 estimate of $203.2 million.
According to management, this growth in domestic sales was largely driven by contributions from the U.S. Direct and Endoscopy divisions.
International sales totaled $133.4 million, up 4.4% year over year on a reported basis and 4.5% at CER, outperforming our estimate of $131 million.
In the Asia-Pacific region, revenues stood at $60.4 million, reflecting a small increase of 0.9% on a reported basis and 0.6% at CER year over year. This fell short of our projection of $62.1 million.
Revenues from Europe, the Middle East, and Africa reached $58.5 million, which represented a 5.9% increase on a reported basis and 4.8% at CER year over year, slightly surpassing our estimate of $58 million.
The Rest of World region generated revenues of $14.5 million, marking a significant increase of 14.3% on a reported basis and 21.8% at CER, compared to our projection of $10.8 million.
Segment Performance Overview
Merit Medical is divided into two segments: Cardiovascular and Endoscopy.
The Cardiovascular segment reported revenues of $322.9 million, up 5.5% year over year on a reported basis and 5.6% at CER, exceeding our estimate of $318 million.
The Cardiovascular segment includes various product categories: Peripheral Intervention (PI), Cardiac Intervention (CI), Custom Procedural Solutions (CPS), and original equipment manufacturer (OEM).
Revenues from the PI product line reached $137.9 million, indicating a growth of 7.4% on a reported basis and 7.7% at CER, which aligned closely with our estimate of $137.3 million.
The CI revenues stood at $90.8 million, rising by 1.9% on a reported basis and 1.8% at CER year over year, falling slightly below our projection of $91.2 million.
CPS revenues improved by 4.4% year over year, both on a reported basis and at CER, totaling $50.8 million, above our estimate of $48.2 million.
OEM revenues grew by 8.5% year over year, also both on a reported basis and at CER, amounting to $43.4 million, exceeding our projection of $41.3 million.
Revenue from Endoscopy devices reached $16.9 million, a dramatic increase of 85.8% year over year on a reported basis and 85.9% at CER, surpassing our estimate of $16.1 million for the third quarter.
Merit Medical Systems, Inc. Price, Consensus and EPS Surprise
Merit Medical Systems, Inc. price-consensus-eps-surprise-chart | Merit Medical Systems, Inc. Quote
Margin Analysis Insights
In the quarter, Merit Medical reported a gross profit of $157.5 million, up 10.8% year over year. The gross margin expanded by 125 basis points to 46.4%, exceeding our forecast of 45.8%.
Selling, general, and administrative expenses increased by 14.7% to $99.6 million, while research and development expenses rose by 4.5% to $20.5 million. Adjusted operating expenses overall climbed by 12.8% to $120.2 million.
The adjusted operating profit amounted to $37.4 million, reflecting a 4.7% increase compared to the prior year. However, the adjusted operating margin contracted by 33 basis points to 10.9% during the quarter.
Financial Position Update
At the conclusion of the third quarter, Merit Medical had cash and cash equivalents of $523.1 million, a decline from $636.7 million at the end of the second quarter. Total debt decreased to $770.5 million from $822.5 million in the prior quarter.
Cumulative net cash generated by operating activities rose to $152.1 million, compared to $82.9 million a year earlier.
Outlook for 2024
Merit Medical has updated its revenue guidance for 2024.
Net revenues are now expected to be between $1.344 billion and $1.352 billion, representing a 6.9% to 7.6% increase from 2023 figures. Previously, the guidance was $1.339 billion to $1.351 billion, reflecting a growth of 6.5% to 7.5%. The Zacks Consensus Estimate currently stands at $1.34 billion.
Expected net revenues for the Cardiovascular segment are now between $1.289 billion and $1.296 billion, an increase of 5.6% to 6.2% over 2023 figures, higher than the prior estimate of $1.285 billion to $1.295 billion, which forecasted a gain of 5.3% to 6.1%.
Revenues from the Endoscopy segment are projected to range from $55 million to $56 million, an increase of 49% to 52% compared to 2023. This narrows from earlier expectations of $54 million to $56 million (reflecting a 45% to 52% increase).
The adjusted EPS forecast for 2024 is now set between $3.33 and $3.38, indicating a 17% to 19% rise year over year, up from the previous expectation of $3.25 to $3.34 (a 14% to 17% increase). The Zacks Consensus Estimate for EPS is $3.30.
Merit Medical Reports Strong Q3 Results Amid Acquisitions
Quarterly Performance Overview
Merit Medical ended the third quarter with results that exceeded expectations. Year-over-year revenue and profit growth was notable. The company experienced an increase in revenue across both segments and all product categories within its Cardiovascular unit. Strong performances both in the United States and internationally contributed positively to the results. Additionally, the expanding gross margin is a positive sign for investors.
During the quarter, Merit Medical completed the purchase of several assets from EndoGastric Solutions, Inc., including the EsophyX Z+. It also entered into an asset purchase agreement for Cook Medical Holdings LLC’s lead management portfolio of medical devices and related assets. Furthermore, MMSI reported favorable six-month results from a pivotal trial for the Wrapsody Cell-Impermeable Endoprosthesis device, designed to improve long-term vessel patency for dialysis patients, which may positively influence the stock.
Though the contraction in adjusted operating margin was disappointing, there are concerns about the current challenging global economic environment.
Zacks Rank and Notable Competitors
Merit Medical currently holds a Zacks Rank of #3 (Hold).
Some competitors with better rankings in the medical sector that have reported quarterly results include Quest Diagnostics Incorporated (DGX), ResMed Inc. (RMD), and Boston Scientific Corporation (BSX).
Quest Diagnostics, which has a Zacks Rank of #2 (Buy), reported adjusted EPS of $2.30 for the third quarter of 2024, surpassing the Zacks Consensus Estimate by 1.8%. Its revenues reached $2.49 billion, exceeding expectations by 3.4%.
The company boasts a long-term growth estimate of 6.5%, with earnings consistently exceeding estimates over the last four quarters, averaging a surprise of 3.4%.
ResMed announced first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Its revenues of $1.22 billion also topped expectations by 2.9%. ResMed carries a Zacks Rank of #2 and has a long-term growth estimate of 14.8%, with an impressive earnings surprise average of 6.4% over four quarters.
Boston Scientific reported an adjusted EPS of 63 cents for the third quarter of 2024, exceeding the Zacks Consensus Estimate by 8.6%. The company’s revenues of $4.21 billion outpaced the consensus mark by 4.4%, and it holds a Zacks Rank of #2. Boston Scientific has an estimated long-term growth rate of 13.8% and has consistently surpassed earnings expectations, averaging an 8.3% surprise over the last four quarters.
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