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Merit Medical's (MMSI) Q2 Earnings Top Estimates, '21 View Up

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Merit Medical Systems, Inc MMSI delivered adjusted earnings per share (“EPS”) of 62 cents in the second quarter of 2021, skyrocketing 100% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate by 40.9%.

The adjustments include expenses related to amortization of intangibles, and impairment charges, among others.

GAAP EPS for the quarter was 9 cents a share against the year-earlier loss of 34 cents per share.

Revenues in Detail

Merit Medical registered revenues of $280.3 million in the second quarter, up 28.4% year over year. The figure surpassed the Zacks Consensus Estimate by 11.5%.

At constant exchange rate (CER), the figure inched up 25.5% year over year.

Per management, the top line was significantly driven by strong execution and improving customer demand trends resulting from the gradual business recovery.

Segmental Details

Merit Medical operates through two segments — Cardiovascular and Endoscopy.

The Cardiovascular unit reported second-quarter revenues of $272.3 million, up 28.3% year over year.

The Cardiovascular segment includes the following product categories: Peripheral Intervention, Cardiac Intervention, Custom Procedural Solutions and OEM.

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

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

Merit Medical Systems, Inc. price-consensus-eps-surprise-chart | Merit Medical Systems, Inc. Quote

Peripheral Intervention product line revenues were $105.6 million, up 45.4% year over year. Cardiac Intervention revenues rose 29.8% to $85.7 million. Custom Procedural Solutions revenues improved 7.3% to $48.6 million. OEM revenues climbed 14.8% to $32.4 million.

Endoscopy devices revenues totaled $8 million, up 29.7% year over year.

Margins

In the quarter under review, Merit Medical’s gross profit rose 47.4% to $124.1 million. Gross margin expanded 572 basis points (bps) to 44.3%.

Selling, general & administrative expenses rose 37.1% to $91.6 million. Research and development expenses went up 25.4% year over year to $17.6 million. Adjusted operating expenses of $109.2 million increased 35.1% year over year.

Adjusted operating profit totaled $14.9 million, reflecting a 337.7% surge from the prior-year quarter. Adjusted operating margin in the second quarter expanded by 378 bps to 5.3%.

Financial Position

Merit Medical exited the second quarter of 2021 with cash and cash equivalents of $69.7 million compared with $58.5 million at the end of the first quarter. Total debt (including current portion) at the end of the second quarter of 2021 was $292.4 million compared with $320.4 million at the end of the first quarter.

2021 Guidance

Merit Medical, boosted by its strong performances, raised its 2021 outlook.

Net revenues for 2021 are now projected between $1,060-$1,070 million, up from the prior guidance of $994-$1,014 million. The Zacks Consensus Estimate for the same is pegged at $1.01 billion.

At CER, revenue growth is projected to be 9-10%.

Net revenues from the cardiovascular segment are expected to be in the range of $1,028 million-$1,038 million, representing an increase of approximately 10-11%. This is significantly up from the earlier-projected revenues of $963-$982 million, representing an increase of approximately 3.1-5.2%.

Endoscopy segment’s net revenues are anticipated to be $32.5-$32.7 million, representing an increase of approximately 9.6-10.2%. This is significantly up from the earlier-projected revenues of $30.8-$31.9 million, representing an increase of approximately 4-7%.

Adjusted EPS for 2021 is now projected in the range of $2.07- $2.22, up from the earlier provided outlook of $1.84-$1.98. The Zacks Consensus Estimate for the same stands at $1.93.

Our Take

Merit Medical exited the second quarter of 2021 with better-than-expected results. The company saw revenue growth not only across both its segments, but also across all product categories within its Cardiovascular unit. Strong execution and improving customer demand trends resulting from the gradual business recovery pushed up the overall top line, which is encouraging.

The company stands to benefit from the execution of its global growth and profitability plan. A robust product line and other internally developed products raise investor optimism on the stock. Expansion of both margins also bodes well. A raised financial outlook for the full year raises our optimism.

Stiff competition and higher consolidation in the healthcare industry are dampeners. Continued pandemic-led uncertainties add to the woes.

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 already announced their quarterly results are Boston Scientific Corporation BSX, West Pharmaceutical Services, Inc. WST and Laboratory Corporation of America Holdings LH or LabCorp, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Boston Scientific reported second-quarter 2021 adjusted EPS of 40 cents, which beat the Zacks Consensus Estimate by 8.1%. Second-quarter revenues of $3.08 billion outpaced the consensus mark by 4.4%.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.

LabCorp reported second-quarter 2021 adjusted EPS of $6.13, surpassing the Zacks Consensus Estimate by 8.7%. Revenues of $3.84 billion exceeded the Zacks Consensus Estimate by 6.9%.


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