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Merit Medical (MMSI) Q1 Earnings & Revenues Beat Estimates

Zacks Equity Research

Merit Medical Systems, Inc. MMSI reported first-quarter 2019 adjusted earnings per share (EPS) of 37 cents, outpacing the Zacks Consensus Estimate of 36 cents by 2.8%. The bottom line also improved 19.4% from the year-ago quarter.

This Utah-based provider of peripheral and cardiac intervention products reported worldwide revenues of $238.3 million, up 17.4% from the year-ago quarter. On a comparable, constant-currency basis, the metric increased 10% year over year. Revenues surpassed the Zacks Consensus Estimate of $233 million.

Segmental Analysis

Cardiovascular

The Cardiovascular unit reported first-quarter revenues of $230.5 million, up 17.7% year over year. The upside can be attributed to year-over-year increase of 14.6% in the segment’s Stand-alone devices to $95.4 million. Further, revenues from Catheters surged 27.1% to $43 million. The same at the CRM/EP unit rose 18.3% to $12.4 million.

Meanwhile, revenues from Custom kits and procedure trays unit, under the Cardiovascular segment, dropped 1% to $32.9 million. Inflation devices revenues were down 1.8% year over year to $22 million. Further, embolization devices’ revenues fell 6% to $11.8 million.

Endoscopy Devices

Revenues from the Endoscopy devices totaled $7.9 million, up 9.6% year over year.

Merit Medical Systems, Inc. Price, Consensus and EPS Surprise

 

Merit Medical Systems, Inc. Price, Consensus and EPS Surprise | Merit Medical Systems, Inc. Quote

Margins

In the quarter under review, gross profit totaled $104.6 million, up 18.8% on a year-over-year basis. Gross margin came in at 43.9% of net revenues, up 50 bps year over year. Adjusted gross margins expanded 170 bps on a year-over-year basis to 49.2% of net revenues.

Merit Medical registered selling, general and administrative expenses of $78.3 million, up 20.6% year over year.

Meanwhile, research and development expenses summed $16 million, up 12% year over year.

Adjusted operating income in the quarter totaled $10.3 million, up 17% from the year-ago quarter. Adjusted operating margin was 4.3% of net revenues, remaining flat year over year.

Financial Update

Cash and cash equivalents came in at $49.5 million, down 26.5% from the 2018-end level.

Total assets came in at $1.69 billion, up 4.3% from the year-end 2018.

Wrapping Up

Merit Medical exited the first quarter of 2019 on a solid note, with considerable expansion in adjusted gross margins. Robust Cardiovascular segment is an added positive.

Management is optimistic about Merit Medical’s Becton Dickinson deal that is set for completion at the end of this year. The acquisitions of Cianna Medical and Vascular Insights continue to contribute substantially to the company’s results. Further, the company stands to benefit from the execution of the global growth and profitability plan. New products like EmboCube Embolization Gelatin, the basixTAU Inflation Device, the Prelude Prestige Splittable Sheath Introducer, the Prelude Ideal Sheath Introducer, thePreludeSYNC Radial Hemostasis Device are likely to expand the company’s customer base.

The company remains optimistic about several new products that are in the pipeline and slated for introduction in the second quarter of 2019. These are expected to aid the company’s growth and margins.

However, escalating operating expenses remains a concern. Headwinds like stiff competition and higher consolidation in the healthcare industry add to the woes. Sluggishness in the Custom kits and procedure trays and Embolization devices units is also worrisome.

Zacks Rank & Key Picks

Merit Medical currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space are Bio-Rad Laboratories, Inc. BIO, ICU Medical Inc. ICUI and Varian Medical Systems, Inc. VAR.

Bio-Rad is scheduled to release first-quarter 2019 results on May 8. The Zacks Consensus Estimate for the quarterly adjusted EPS is pegged at $1.12. The consensus estimate for revenues stands at $548.8 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

ICU Medical is scheduled to release first-quarter 2019 results on May 9. The Zacks Consensus Estimate for the period’s adjusted EPS is pegged at $2.18. The consensus estimate for revenues stands at $321.1 million. The stock carries a Zacks Rank #2 (Buy).

Varian is slated to release first-quarter 2019 results on Apr 24. The Zacks Consensus Estimate for the quarterly adjusted EPS stands at $1.16. The consensus estimate for revenues is pegged at $779.01 million. The stock has a Zacks Rank of 2.

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