Yahoo Finance Merit Medical (MMSI) Up 5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Merit Medical (MMSI). Shares have added about 5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Merit Medical due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Merit Medical Q1 Earnings Top Estimates, Margins Up
Merit Medical delivered adjusted earnings per share of 77 cents in the first quarter of 2024 compared with 64 cents in the year-ago period. The figure surpassed the Zacks Consensus Estimate by 8.5%.
The adjustments include expenses related to the amortization of intangibles, and Medical Device Regulation expenses, among others.
GAAP earnings per share for the quarter was 48 cents compared with 36 cents in the year-ago period.
Revenues in Detail
Merit Medical registered revenues of $323.5 million in the first quarter, up 8.7% year over year. The figure surpassed the Zacks Consensus Estimate by 2.4%.
Total revenues at CER inched up 9.3% year over year, whereas CER, organic revenues increased 7% year over year.
Per management, the better-than-expected CER revenue growth in the first quarter was driven by strong organic growth as well as contributions from acquired products.
Geographic Results
The U.S. sales amounted to $186.1 million, which increased 8.6% on a reported basis and 9.1% at CER year over year.
International sales amounted to $137.4 million, up 8.9% on a reported basis and 9.5% at CER year over year.
Revenues from the APAC region were $62.9 million (up 9.3% and 14% on a reported basis and CER, respectively).
Revenues from EMEA region were $61 million (up 5.1% and 2.5% on a reported basis and CER, respectively).
Revenues from the ROW region were $13.5 million (up 27.6% and 23.1% on a reported basis and CER, respectively).
Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported first-quarter revenues of $313.4 million, up 8.8% on a reported basis and 9.4% at CER year over year.
The Cardiovascular segment includes the following product categories: PI, CI, CPS and OEM.
PI product line revenues were $134.6 million, up 18.3% on a reported basis and 18.6% at CER year over year.
CI revenues of $90.7 million rose 6.3% on a reported basis and 7.4% at CER year over year.
CPS revenues improved 2.3% on a reported basis and 3.1% at CER year over year to $48.8 million.
OEM revenues declined 4.6% on a reported basis and 4.7% at CER year over year to $39.3 million.
Endoscopy devices’ revenues totaled $10.1 million, up 5.7% year over year on a reported basis and 6% at CER.
Margins
In the quarter under review, Merit Medical’s gross profit rose 9.7% to $151.7 million. The gross margin expanded 40 basis points (bps) to 46.9%.
Selling, general & administrative expenses increased 4.8% to $94.4 million. Research and development expenses rose 0.8% year over year to $21.5 million. Adjusted operating expenses of $115.9 million climbed 3.9% year over year.
Adjusted operating profit totaled $35.8 million, reflecting a 33.1% increase from the prior-year quarter. The adjusted operating margin in the first quarter expanded 203 bps to 11.1%.
Financial Position
Merit Medical exited first-quarter 2024 with cash and cash equivalents of $581.9 million compared with $587 million at 2023-end. Total debt at the end of first-quarter 2024 was $800.1 million compared with $823 million at 2023-end.
Net cash flow provided by operating activities at the end of first-quarter 2024 was $36.2 million compared with $14.5 million a year ago.
2024 Guidance
Merit Medical has reiterated its 2024 outlook.
Net revenues for 2024 are continued to be projected between $1.312 billion and $1.325 billion (reflecting an increase of approximately 4-5% over the comparable reported figures of 2023). The Zacks Consensus Estimate stands at $1.32 billion.
Net revenues from the Cardiovascular segment are continued to be expected in the range of $1.272 billion-$1.285 billion, representing an increase of approximately 4-5% over the comparable reported figures of 2023.
The Endoscopy segment’s net revenues are continued to be projected between $39.7 million and $40.1 million, representing an increase of approximately 8-9% over the comparable reported figures of 2023.
Adjusted earnings per share for 2024 is continued to be projected in the range of $3.28-$3.35, representing an increase of approximately 9-11% over the comparable reported figures of 2023. The Zacks Consensus Estimate is pegged at $3.31.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Merit Medical has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
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.
Performance of an Industry Player
Merit Medical is part of the Zacks Medical - Dental Supplies industry. Over the past month, Conmed (CNMD), a stock from the same industry, has gained 8.6%. The company reported its results for the quarter ended March 2024 more than a month ago.
Conmed reported revenues of $312.27 million in the last reported quarter, representing a year-over-year change of +5.7%. EPS of $0.79 for the same period compares with $0.66 a year ago.
Conmed is expected to post earnings of $0.92 per share for the current quarter, representing a year-over-year change of +10.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Conmed. Also, the stock has a VGM Score of A.
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Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
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