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A month has gone by since the last earnings report for Merit Medical (MMSI). Shares have lost about 4.3% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Merit Medical due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Merit Medical Q1 Earnings Beat, FY22 View Unchanged
Merit Medical delivered adjusted earnings per share of 53 cents in the first quarter of 2022, up by a penny year over year. The figure also surpassed the Zacks Consensus Estimate by 12.8%.
The adjustments include expenses related to amortization of intangibles, and corporate transformation and restructuring, among others.
GAAP earnings per share for the quarter was 18 cents a share, down by a penny year over year.
Revenues in Detail
Merit Medical registered revenues of $275.4 million in the first quarter, up 10.6% year over year. The figure surpassed the Zacks Consensus Estimate by 4.5%.
CER, organic revenues inched up 11.3% year over year on the back of 7.4% growth in the United States and 16.6% growth in international sales during the period.
Per management, the top line was primarily driven by 11.5% growth in sales of cardiovascular products and 7.6% growth in sales of endoscopy products.
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported first-quarter revenues of $266.9 million, up 10.8% year over year.
The Cardiovascular segment includes the following product categories: PI, CI, Custom Procedural Solutions and OEM.
PI product line revenues were $105.8 million, up 13.8% year over year. CI revenues rose 9% to $81.5 million. OEM revenues climbed 19.6% to $33.4 million, whereas Custom Procedural Solutions revenues climbed 1.9% to $46.3 million.
Endoscopy devices’ revenues totaled $8.5 million, up 7.2% year over year, driven primarily by a 13% increase in sales of the EndoMAXX line and a 14% uptick in the sales of other stents.
In the quarter under review, Merit Medical’s gross profit rose 8.1% to $120.9 million. However, gross margin contracted 105 basis points (bps) to 43.9%.
Selling, general & administrative expenses rose 3.7% to $84 million. Research and development expenses went up 6.8% year over year to $17.4 million. Adjusted operating expenses of $101.4 million increased 4.2% year over year.
Adjusted operating profit totaled $19.5 million, reflecting a 33.6% uptick from the prior-year quarter. Adjusted operating margin in the first quarter expanded by 122 bps to 7.1%.
Merit Medical exited first-quarter 2022 with cash and cash equivalents of $53.9 million compared with $67.8 million at the end of 2021. Total debt (including the current portion) at the end of first-quarter 2022 was $252.5 million compared with $242.8 million at the end of 2021.
Net cash flow from operating activities at the end of first-quarter 2022 was $12 million compared with $35.2 million a year ago.
Merit Medical has reiterated its 2022 outlook.
Net revenues for 2022 are continued to be projected between $1.117-$1.140 billion, reflecting an increase of approximately 4-6% over the comparable reported figures of 2021. The Zacks Consensus Estimate for the same is pegged at $1.13 billion.
Net revenues from the cardiovascular segment are expected in the range of $1.083-$1.106 billion, representing an increase of approximately 4-6% over the comparable reported figures of 2021.
Endoscopy segment’s net revenues are expected in the range of $33.5-$34.1 million, reflecting an uptick of around 6-8% over the comparable reported figures of 2021.
Adjusted earnings per share for 2022 are projected in the range of $2.41-$2.56. The Zacks Consensus Estimate for the same stands at $2.49.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -11.92% due to these changes.
At this time, Merit Medical has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Merit Medical has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
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