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Merit Medical's (MMSI) Q3 Earnings, Revenues Top Estimates

Merit Medical (MMSI), in the third quarter, benefits from revenue growth in its Cardiovascular segment, and from the majority of the product categories within its Cardiovascular unit.

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This story originally appeared on Zacks

Merit Medical Systems, Inc MMSI delivered adjusted earnings per share (“EPS”) of 52 cents in the third quarter of 2021, up 23.8% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate by 18.2%.

- Zacks

The adjustments include expenses related to amortization of intangibles, and corporate transformation and restructuring, among others.

GAAP EPS for the quarter was 21 cents a share against the year-earlier loss of 5 cents per share.

Revenues in Detail

Merit Medical registered revenues of $267 million in the third quarter, up 9.4% year over year. The figure surpassed the Zacks Consensus Estimate by 2.4%.

At constant exchange rate (CER), the figure inched up 8.9% year over year whereas CER (organic) revenues climbed 8.8% year over year.

Per management, the top line was significantly driven by strong execution and more favorable sales trends in China, along with robust U.S. and international sales.

Segmental Details

Merit Medical operates through two segments — Cardiovascular and Endoscopy.

The Cardiovascular unit reported third-quarter revenues of $259.7 million, up 9.9% year over year.

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

Peripheral Intervention product line revenues were $101.1 million, up 16.5% year over year. Cardiac Intervention revenues rose 15.5% to $79.8 million. OEM revenues climbed 21.9% to $29.4 million. However, Custom Procedural Solutions revenues declined 12.4% to $49.4 million.

Endoscopy devices revenues totaled $7.3 million, down 3.2% 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. price-consensus-eps-surprise-chart | Merit Medical Systems, Inc. Quote

Margins

In the quarter under review, Merit Medical’s gross profit rose 18.1% to $120.5 million. Gross margin expanded 331 basis points (bps) to 45.1%.

Selling, general & administrative expenses rose 19.7% to $86.5 million. Research and development expenses went up 25.7% year over year to $16.9 million. Adjusted operating expenses of $103.4 million increased 20.7% year over year.

Adjusted operating profit totaled $17 million, reflecting a 4.6% uptick from the prior-year quarter. However, adjusted operating margin in the third quarter contracted by 29 bps to 6.4%.

Financial Position

Merit Medical exited the third quarter of 2021 with cash and cash equivalents of $68.9 million compared with $69.7 million at the end of the second quarter. Total debt (including current portion) at the end of the third quarter of 2021 was $278.7 million compared with $292.4 million at the end of the second quarter.

Cumulative net cash flow from operating activities at the end of the third quarter was $101.4 million compared with $128.4 million a year ago.

2021 Guidance

Merit Medical has reiterated its 2021 outlook.

Net revenues for 2021 are continued to be projected between $1,060-$1,070 million. The Zacks Consensus Estimate for the same is pegged at $1.07 billion.

Revenue growth is still projected to be 9-10% at CER and 12-13% at CER excluding the impact of divestitures and product sales that benefitted from pandemic-related demand trends in 2020.

Net revenues from the cardiovascular segment are continued to be expected in the range of $1,028 million-$1,038 million, which represented an increase of approximately 10-11%.

Endoscopy segment’s net revenues have been maintained in the range of $32.5-$32.7 million, which represented an increase of approximately 9.6-10.2%.

Adjusted EPS for 2021 have been maintained in the range of $2.07-$2.22. The Zacks Consensus Estimate for the same stands at $2.14.

Our Take

Merit Medical exited the third quarter of 2021 with better-than-expected results. The company saw revenue growth in its Cardiovascular segment as well as across the majority of its 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 gross margin also bodes well.

However, fall in Merit Medical’s Endoscopy devices as well as in Procedural Solutions revenues is disappointing. Contraction of adjusted operating margin also raises apprehension. 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 announced quarterly results are West Pharmaceutical Services, Inc. WST, Thermo Fisher Scientific Inc. TMO, and AngioDynamics, Inc. ANGO.

West Pharmaceutical, carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted EPS of $2.06, which beat the Zacks Consensus Estimate by 13.2%. Third-quarter revenues of $706.5 million outpaced the consensus mark by 3.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently carries a Zacks Rank #2.

AngioDynamics reported first-quarter fiscal 2022 adjusted loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%. It currently sports a Zacks Rank #1.



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