Merit Medical (MMSI) Fourth Quarter Earnings and Revenue Key Estimates – February 28, 2022

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Merit Medical Systems, Inc. (MMSI Free Report) generated adjusted earnings per share (“EPS”) of 71 cents in the fourth quarter of 2021, up 31.5% year-over-year. The figure also exceeded Zacks’ consensus estimate of 42%.

The adjustments include, among other things, expenses related to the amortization of intangible assets and the transformation and restructuring of the business.

GAAP EPS for the quarter was 36 cents per share, up 33.3% year-over-year.

Adjusted EPS for the full year was $2.37, reflecting a 43.6% increase over 2020. The metric beat Zacks consensus estimate by 9.7%.

Income in detail

Merit Medical reported fourth-quarter revenue of $278.5 million, up 7.9% year-over-year. The figure topped Zacks’ consensus estimate of 3.2%.

On a constant exchange rate (“CER”) basis, organic revenue slightly increased 8.4% year-over-year, driven by growth of 6.6% in the US and 10.8% outside the United States during the period.

According to management, revenue was primarily driven by low double-digit year-over-year growth in peripheral and cardiac interventional product sales from Merit Medical, and year-over-year growth the other from original equipment manufacturer (“OEM”) sales. some products.

Full-year revenue was $1.07 billion, reflecting an 11.5% improvement over the same period last year. The metric was consistent with the Zacks consensus estimate.

CER, organic revenue for 2021 was up 10.4% from 2020.

Details by segment

Merit Medical operates through two segments – Cardiovascular and Endoscopy.

The cardiovascular unit reported revenue of $270.2 million in the fourth quarter, up 8.1% year-over-year.

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

Peripheral Intervention product line revenue was $105.5 million, up 11% year-over-year. Revenue from cardiac procedures increased 11.7% to $80.4 million. OEM revenue climbed 15.8% to $33.8 million. However, revenue from custom procedural solutions fell 6.3% to $50.5 million.

Endoscopy devices revenue totaled $8.3 million, up 4.2% year-over-year, primarily driven by a 27% increase in sales of the EndoMAXX line.

Margins

In the quarter under review, gross profit for Merit Medical increased 15.9% to $128.8 million. Gross margin increased by 317 basis points (bps) to 46.3%.

Selling, general and administrative expenses decreased 4.1% to $76.6 million. Research and development expenses increased 34.8% year over year to $20.4 million. Adjusted operating expenses of $97 million increased 2.1% year over year.

Adjusted operating profit totaled $31.8 million, reflecting a 97.4% increase over the prior year quarter. Fourth quarter adjusted operating margin increased 517 basis points to 11.4%.

Financial situation

Merit Medical ended 2021 with cash and cash equivalents of $67.8 million compared to $56.9 million at the end of 2020. Total debt (including current portion) at the end of the year 2021 was $242.8 million compared to $351.2 million at the end of 2020.

Cumulative net cash flow from operating activities at the end of 2021 was $147.2 million, compared to $165.3 million a year ago.

Orientation 2022

Merit Medical has launched its 2022 outlook.

Net revenue for 2022 is projected between $1.117 billion and $1.140 billion, which reflects an increase of approximately 4-6% from the reported comparable numbers of 2021. Zacks consensus estimate for the same is pegged at $1.12 billion.

Net revenues for the cardiovascular segment are expected to be between $1.083 billion and $1.106 billion, representing an increase of approximately 4-6% over 2021 reported comparable numbers.

Endoscopy segment net revenue is expected to be between $33.5 million and $34.1 million, reflecting an increase of approximately 6-8% from 2021 reported comparable numbers.

Adjusted EPS for 2022 is expected to be between $2.41 and $2.56. The Zacks consensus estimate for the same stands at $2.48.

Our opinion

Merit Medical ended the fourth quarter of 2021 with better than expected results. The company recorded revenue growth in its Cardiovascular and Endoscopy segments, as well as in the majority of its product categories within its Cardiovascular unit. Strong product sales are also promising. Rugged performance in the US and away is impressive. Strong execution and improving customer demand trends drove overall revenue up, which is encouraging.

The company should benefit from the execution of its global plan for growth and profitability. A robust product lineup and other in-house developed products are bolstering investor optimism about the stock. The expansion of both margins also bodes well.

However, the decline in revenue from Merit Medical’s procedural solutions is disappointing. Fierce competition and increased consolidation in the healthcare industry are holding back.

Zacks Ranking and Key Picks

Merit Medical currently has a Zacks rank of #3 (Hold).

Some top-ranked stocks in the broader medical field that have announced quarterly results are AMN Healthcare Services, Inc. (AMN free report), llscripts Healthcare Solutions, Inc. (MDRX free report) and Henry Schein, Inc. (HSIC free report).

AMN Healthcare, posting a Zacks No. 1 ranking (Strong Buy), reported Q4 2021 Adjusted EPS of $2.95, which beat the Zacks consensus estimate by 14.3%. Revenue of $1.36 billion exceeded the consensus mark by 0.5%. You can see the full list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings have exceeded estimates for the past four quarters, with the average surprise being 20%.

Allscripts, sporting a No. 1 Zacks ranking, reported fourth-quarter 2021 adjusted EPS of 79 cents, which topped the Zacks consensus estimate of 154.8%. Revenue of $391.7 million topped the consensus mark by 0.1%.

Allscripts has an estimated long-term growth rate of 12.4%. MDRX earnings have exceeded estimates for the past four quarters, with the average surprise being 64.8%.

Henry Schein reported Q4 2021 Adjusted EPS of $1.07, which beat Zacks’ consensus estimate by 18.9%. Fourth-quarter revenue of $3.33 billion beat Zacks’ consensus estimate by 4.7%. He currently has a No. 1 Zacks rank.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings have exceeded estimates for the past four quarters, with the average surprise being 25.5%.

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