Track topics on Twitter Track topics that are important to you
Non-GAAP Net Income Up 70% for 2Q
Revenues Up 7.2% for 2Q
Revenues Up 10% for 2Q and YTD When Adjusted for Constant Currency
Non-GAAP Gross Margin Up 80 Basis Points Over 2Q 2014 and Up 124 Basis Points Over 1Q 2015
Expense Discipline Continues
Tijuana, Mexico Facility Commences Production
SOUTH JORDAN, Utah, July 23, 2015 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (NASDAQ:MMSI), a leading manufacturer and marketer of proprietary disposable medical devices used in interventional and diagnostic procedures, particularly in cardiology, radiology and endoscopy, today announced record revenues of $138.1 million for the quarter ended June 30, 2015, an increase of 7% over revenues of $128.9 million for the quarter ended June 30, 2014. Revenues for the six-month period ended June 30, 2015 were a record $267.7 million, compared to $248.1 million for the corresponding period in 2014, an increase of 8%. The growth of revenues in constant currency would have been 10% for both the quarter and the six months ended June 30, 2015.
Merit’s non-GAAP net income for the quarter ended June 30, 2015 was $10.9 million, up 70%, or $0.25 per share, compared to $6.4 million, or $0.15 per share, for the quarter ended June 30, 2014.
Merit’s non-GAAP net income for the six months ended June 30, 2015 was $18.8 million, up 60%, or $0.42 per share, compared to $11.8 million, or $0.27 per share, for the corresponding period of 2014.
GAAP net income for the quarter ended June 30, 2015 was $7.4 million, up 99%, or $0.17 per share, compared to $3.7 million, or $0.09 per share, for the comparable quarter of 2014.
GAAP net income for the six-month period ended June 30, 2015 was $12.6 million, up 92%, or $0.28 per share, compared to $6.5 million, or $0.15 per share, for the corresponding period of 2014.
“We are pleased with the results of the second quarter as we continue to execute our plan,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer. “We are particularly pleased with the expense discipline that has contributed to the improvement in our operating results.”
“In the past two weeks we have commenced production in our new Tijuana, Mexico facility,” Lampropoulos continued. “We were able to initiate production with no significant interruption because of our agreement with our former contract manufacturer to transfer existing employees to our new facility. We were able to accomplish this with essentially no employee fallout which we believe will contribute to continued product quality with our trained and stable workforce. We anticipate that this facility will be a substantial contributor to our operating plan as we move forward.”
“Our product pipeline is stocked with strategic products that we intend to introduce over the next few quarters and which we believe will provide substantial momentum for 2016 and beyond,” Lampropoulos said.
In the second quarter of 2015, compared to the second quarter of 2014, Endotek sales rose 26%; catheter sales were up 12%; Malvern sales rose 10%; stand-alone device sales grew 9%; BioSphere sales increased 6%; custom kit and tray sales grew 4%; and inflation device sales decreased 1%. Excluding sales to an OEM customer, inflation device sales were up 1%.
For the six-month period ended June 30, 2015, compared to the six-month period ended June 30, 2014, Endotek sales increased 19%; catheter sales rose 14%; stand-alone device sales were up 8%; BioSphere sales grew 8%; custom kit and tray sales increased 7%; inflation device sales increased 4%; and Malvern sales were essentially flat. Excluding sales to an OEM customer, inflation device sales were up 3%.
Merit’s non-GAAP gross profit was 46.1% of sales for the quarter ended June 30, 2015, compared to 45.3% of sales for the quarter ended June 30, 2014. Non-GAAP gross profit was 45.5% of sales for the six months ended June 30, 2015, compared to 45.6% of sales for the six months ended June 30, 2014. GAAP gross profit was 44.1% of sales for the quarter ended June 30, 2015, compared to 43.2% of sales for the quarter ended June 30, 2014. GAAP gross profit for the six months ended June 30, 2015 and 2014 was 43.4% of sales. The increase in gross profit for the quarter ended June 30, 2015 was primarily related to a decrease in Merit’s Euro-based manufacturing expenses due to the weakening of the Euro against the U.S. Dollar.
Merit’s non-GAAP selling, general and administrative expenses for the second quarter of 2015 were 26.6% of sales, compared to 29.1% of sales for the second quarter of 2014. Non-GAAP SG&A expenses for the six months ended June 30, 2015 were 27.1%, compared to 29.5% of sales for the six months ended June 30, 2014. GAAP selling, general and administrative expenses for the second quarter of 2015 were 28.5% of sales, compared to 29.9% of sales for the second quarter of 2014. For the six-month period ended June 30, 2015, GAAP SG&A expenses were 28.5% of sales, compared with 30.4% of sales for the first six months of 2014. The decrease in SG&A expenses as a percentage of sales for both periods was primarily related to increased sales, as well as a decrease in Merit’s Euro-based SG&A expenses, primarily due to the weakening of the Euro against the U.S. Dollar of approximately $1.7 million and approximately $3.1 million, for the three-and six-month periods ended June 30, 2015, respectively, when compared to the corresponding periods for 2014.
Research and development costs during the second quarter of 2015 were 6.7% of sales, compared to 7.5% of sales for the second quarter of 2014. R&D costs were 7.1% of sales for the first six months of 2015, compared to 7.4% of sales for the corresponding period of 2014. The decrease in R&D expenses as a percentage of sales for both periods was primarily the result of higher sales and expenses that were relatively flat compared to the corresponding periods of 2014. Research and development expenses did not increase significantly for the three-and six- month periods ended June 30, 2015, when compared to the corresponding periods of 2014, primarily as the result of decreases in Merit’s Euro-based R&D expenses due to the weakening of the Euro against the U.S. Dollar.
Non-GAAP income from operations was $17.7 million, or 12.8% of sales for the quarter ended June 30, 2015, compared to $11.5 million, or 8.9% of sales for the quarter ended June 30, 2014. Non-GAAP income from operations was $30.5 million, or 11.4% of sales for the six months ended June 30, 2015, compared to $21.8 million, or 8.8% of sales for the six months ended June 30, 2014. GAAP income from operations was $12.2 million, or 8.9% of sales for the quarter ended June 30, 2015, compared to $7.4 million, or 5.7% of sales for the quarter ended June 30, 2014. GAAP income from operations for the six months ended June 30, 2015 was $20.9 million, or 7.8% of sales, compared to $13.9 million, or 5.6% of sales for the six months ended June 30, 2014. The increase in income from operations was primarily attributable to higher sales and leverage from lower operating expenses as a percentage of sales.
Merit’s effective tax rate for the second quarter of 2015 was 29.7%, compared with 26.9% for the second quarter of 2014. For the six-month period ended June 30, 2015, Merit’s effective tax rate was 30.1%, compared to 27.1% for the same period of 2014. The increase in the effective tax rate for both periods, when compared to the prior-year periods, was due primarily to the impact of certain tax benefits recognized during the second quarter of 2014.
Merit invites all interested parties to participate in its conference call today, July 23, at 5:00 p.m. Eastern (4:00 p.m. Central, 3:00 p.m. Mountain, and 2:00 p.m. Pacific). The domestic phone number is (888) 359-3627, and the international number is (719) 325-2495. A live webcast as well as a rebroadcast of the call can be accessed at www.merit.com.
|June 30,||December 31,|
|Cash and cash equivalents||$||12,102||$||7,355|
|Trade receivables, net||67,397||72,717|
|Prepaid income taxes||1,237||1,273|
|Deferred income tax assets||6,376||6,375|
|Income tax refunds receivable||270||155|
|Total Current Assets||192,357||192,340|
|Property and equipment, net||254,404||244,171|
|Other intangibles, net||106,236||110,308|
|Deferred income tax assets||9||9|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Current portion of long-term debt||10,000||10,000|
|Advances from employees||642||381|
|Income taxes payable||2,978||1,413|
|Total Current Liabilities||79,346||75,430|
|Deferred income tax liabilities||6,177||6,385|
|Liabilities related to unrecognized tax benefits||1,353||1,353|
|Deferred compensation payable||9,458||8,635|
|Other long-term obligation||3,410||2,722|
|Accumulated other comprehensive income||(4,437||)||(2,412||)|
|Total stockholders' equity||452,798||435,259|
|Total Liabilities and Stockholders' Equity||$||755,122||$||747,165|
|(Unaudited, in thousands except per share amounts)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|COST OF SALES||77,196||73,241||151,390||140,434|
|Selling, general and administrative||39,321||38,591||76,206||75,354|
|Research and development||9,202||9,641||18,874||18,421|
|INCOME FROM OPERATIONS||12,242||7,384||20,946||13,873|
|OTHER INCOME (EXPENSE)|
|Other income (expense)||(85||)||(28||)||195||(92||)|
|Total other (expense) - net||(1,719||)||(2,302||)||(2,960||)||(4,905||)|
|INCOME BEFORE INCOME TAX EXPENSE||10,523||5,082||17,986||8,968|
|INCOME TAX EXPENSE||3,122||1,366||5,411||2,429|
|EARNINGS PER SHARE-|
|AVERAGE COMMON SHARES-|
Although Merit’s financial statements are prepared in accordance with accounting principles which are generally accepted in the United States of America (“GAAP”), Merit’s management believes that certain non-GAAP financial measures provide investors with useful information regarding the underlying business trends and performance of Merit’s ongoing operations and can be useful for period-over-period comparisons of such operations. The following table sets forth supplemental financial data and corresponding reconciliations to GAAP financial statements for the three- and six-month periods ended June 30, 2015 and 2014. Readers should consider these non-GAAP measures in addition to, not as a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures exclude some, but not all, items that affect Merit's net income. Additionally, these calculations may not be comparable with similarly-titled measures of other companies.
|Merit Medical Systems, Inc.|
|Non-GAAP Income Statement|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|GAAP net income||$||7,401||$||3,716||$||12,575||$||6,539|
|Termination Fee (a)||800||--||800||--|
|Long-term asset impairment charges (b)||--||287||14||321|
|Long-term debt issuance charges||247||247||494||494|
|Amortization of intangible assets|
|Cost of sales||2,797||2,784||5,568||5,521|
|FV adjustment to contingent consideration (c)||121||8||243||19|
|Income tax effect of reconciling items (d)||(2,163||)||(1,655||)||(3,821||)||(3,212||)|
|Non-GAAP net income||$||10,930||$||6,416||$||18,808||$||11,780|
|Non-GAAP net income per share||$||0.25||$||0.15||$||0.42||$||0.27|
|Diluted shares used to compute Non-GAAP net income per share||44,517||43,310||44,332||43,272|
The non-GAAP income adjustments referenced in the preceding table do not reflect stock-based compensation expense of approximately $565,000 and approximately $324,000 for each of the three-month periods ended June 30, 2015 and 2014, respectively, and stock-based compensation of approximately $1.1 million and approximately $663,000 for the six- month periods ended June 30, 2015 and 2014, respectively.
(a) Costs associated the termination of our agreement with a third-party contract manufacturer in Tijuana, Mexico.
(b) Amounts represent abandoned patents.
(c) Represents changes in the fair value of contingent consideration liabilities for recent acquisitions.
(d) Reflects an estimated annual income tax rate of 38% on a non-GAAP basis.
Founded in 1987, Merit Medical Systems, Inc. is engaged in the development, manufacture and distribution of proprietary disposable medical devices used in interventional and diagnostic procedures, particularly in cardiology, radiology and endoscopy. Merit serves client hospitals worldwide with a domestic and international sales force totaling approximately 200 individuals. Merit employs approximately 3,300 people worldwide, with facilities in South Jordan, Utah; Angleton, Texas; Pearland, Texas, Richmond, Virginia; Malvern, Pennsylvania; Maastricht and Venlo, The Netherlands; Paris, France; Galway, Ireland; Beijing, China; Rockland, Massachusetts and Tijuana, Mexico.
Statements contained in this release which are not purely historical, including, without limitation, statements regarding Merit's forecasted revenues, net income, financial results or anticipated acquisitions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties such as those described in Merit's Annual Report on Form 10-K for the year ended December 31, 2014. Such risks and uncertainties include risks relating to Merit's potential inability to successfully manage growth through acquisitions, including the inability to commercialize technology acquired through completed, proposed or future transactions; product recalls and product liability claims; expenditures relating to research, development, testing and regulatory approval or clearance of Merit's products and risks that such products may not be developed successfully or approved for commercial use; greater governmental scrutiny and regulation of the medical device industry; reforms to the 510(k) process administered by the U.S. Food and Drug Administration; compliance with governmental regulations and administrative procedures; potential restrictions on Merit's liquidity or its ability to operate its business in compliance with its current debt agreements; possible infringement of Merit's technology or the assertion that Merit's technology infringes the rights of other parties; the potential of fines, penalties or other adverse consequences if Merit's employees or agents violate the U.S. Foreign Corrupt Practices Act or other laws and regulations; laws targeting fraud and abuse in the healthcare industry; potential for significant adverse changes in, or failure to comply with, governing regulations; the effect of changes in tax laws and regulations in the United States or other countries; increases in the prices of commodity components; negative changes in economic and industry conditions in the United States and other countries; termination or interruption of relationships with Merit's suppliers, or failure of such suppliers to perform; fluctuations in Euro and GBP exchange rates; Merit's need to generate sufficient cash flow to fund its debt obligations, capital expenditures, and ongoing operations; concentration of Merit's revenues among a few products and procedures; development of new products and technology that could render Merit's existing products obsolete; market acceptance of new products; volatility in the market price of Merit's common stock; modification or limitation of governmental or private insurance reimbursement policies; changes in health care markets related to health care reform initiatives; failure to comply with applicable environmental laws; changes in key personnel; work stoppage or transportation risks; uncertainties associated with potential healthcare policy changes which may have a material adverse effect on Merit; introduction of products in a timely fashion; price and product competition; availability of labor and materials; cost increases; fluctuations in and obsolescence of inventory; and other factors referred to in Merit's Annual Report on Form 10-K for the year ended December 31, 2014 and other materials filed with the Securities and Exchange Commission. All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and Merit assumes no obligation to update or disclose revisions to those estimates.
Contact: Anne-Marie Wright, Vice President, Corporate Communications Phone: (801) 208-4167 e-mail: firstname.lastname@example.org Fax: (801) 253-1688NEXT ARTICLE
Cardiology is a specialty of internal medicine. Cardiac electrophysiology : Study of the electrical properties and conduction diseases of the heart. Echocardiography : The use of ultrasound to study the mechanical function/physics of the h...
Radiology is the branch of medicine that studies imaging of the body; X-ray (basic, angiography, barium swallows), ultrasound, MRI, CT and PET. These imaging techniques can be used to diagnose, but also to treat a range of conditions, by allowing visuali...
Collaborations in biotechnology
Commercial and academic collaborations are used throughout the biotechnology and pharmaceutical sector to enhance research and product development. Collaborations can take the form of research and evaluation agreements, licensing, partnerships etc. ...