Merit Medical Systems, Inc. Announces Results for the Quarter Ended September 30, 2014

SOUTH JORDAN, Utah, Oct. 23, 2014 (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 revenues of $128.8 million for the quarter ended September 30, 2014, an increase of 12% over revenues of $115.2 million for the third quarter of 2013. Revenues for the nine-month period ended September 30, 2014 were a record $376.9 million, compared with $329.0 million for the comparable nine-month period in 2013, an increase of 15%.

Merit's non-GAAP net income for the quarter ended September 30, 2014, adjusted to eliminate non-recurring costs and amortization of intangibles, was a record $10.7 million, or $0.25 per share, compared to $10.5 million, or $0.25 per share, for the quarter ended September 30, 2013.

Merit's non-GAAP net income for the nine months ended September 30, 2014, adjusted to eliminate non-recurring costs and amortization of intangibles, was $22.5 million, or $0.52 per share, compared to $21.1 million, or $0.49 per share, for the corresponding period of 2013.

GAAP net income for the quarter ended September 30, 2014 was a record $7.8 million, or $0.18 per share, compared to $5.6 million, or $0.13 per share, for the comparable quarter of 2013.

GAAP net income for the nine-month period ended September 30, 2014 was $14.3 million, or $0.33 per share, compared to $10.0 million, or $0.23 per share, for the corresponding period of 2013.

For both the three- and nine-month periods ended September 30, 2014, GAAP operating income and net income were affected by a net non-recurring, non-cash impairment of approximately $329,000 ($204,000 after tax). Merit recorded a write-down of intangible assets related to the decreased future revenue forecast of an acquired product.

In the third quarter of 2014, compared to the third quarter of 2013, BioSphere sales increased 25%; catheter sales grew 20%; stand-alone device sales increased 14%; inflation device sales were up 13%; Merit Endotek sales rose 6%; custom kit and tray sales were up 5%; and Malvern sales were down 9%.

For the nine-month period ended September 30, 2014, compared to the nine-month period ended September 30, 2013, BioSphere sales increased 33%; stand-alone device sales grew 17%; catheter sales rose 17%; inflation device sales were up 14%; Malvern sales increased 14%; custom kit and tray sales grew 6%; and Merit Endotek sales rose 6%.

Merit's non-GAAP gross margin was 46.7% of sales for the quarter ended September 30, 2014, compared to 46.5% of sales for the quarter ended September 30, 2013. Non-GAAP gross margin was 46.0% of sales for the nine months ended September 30, 2014, compared to 45.2% of sales for the nine months ended September 30, 2013. GAAP gross margin for the third quarter of 2014 was 44.6% of sales, compared to 44.3% of sales for the third quarter of 2013. Gross margin was up 140 basis points sequentially from 43.2% of sales from the second quarter of 2014. GAAP gross margin for the nine-month period ended September 30, 2014 was 43.8% of sales, compared to 42.9% of sales for the comparable period of 2013. The increase in gross margin from the three- and nine-month periods ended September 30, 2013 to the corresponding periods of 2014 was primarily related to lower average fixed overhead unit costs resulting from higher production volumes and a favorable product mix (primarily from sales of BioSphere products).

Non-GAAP selling, general and administrative expenses for the third quarter of 2014 were 27.1% of sales, compared to 26.2% of sales for the third quarter of 2013. Non-GAAP SG&A expenses for the nine months ended September 30, 2014 were 28.6% of sales, compared to 27.3% of sales for the nine months ended September 30, 2013. GAAP SG&A expenses for the third quarter of 2014 were 28.2% of sales, compared to 27.2% of sales for the third quarter of 2013. For the nine-month period ended September 30, 2014, GAAP SG&A expenses were 29.6% of sales, compared to 28.9% of sales for the first nine months of 2013. The increase in SG&A expenses for both periods was primarily related to headcount additions and the costs to support Merit's domestic sales force reorganization, as well as international sales expansion and costs associated with the launch of Merit's new facility in Pearland, Texas, which are currently being recorded as SG&A expenses during a transition period of approximately nine months as Merit completes the movement and qualification of production equipment from the old facility in Angleton, Texas to the new Pearland facility.

Research and development costs during the third quarter of 2014 were 6.7% of sales, compared to 6.3% of sales for the third quarter of 2013. Research and development costs were 7.2% of sales for the first nine months of 2014, compared to 7.6% of sales for the comparable period of 2013. The increase in research and development costs for the third quarter of 2014 can be attributed primarily to headcount additions and an Irish government research and development benefit in the third quarter of 2013 related to the completion of Merit's new building in Galway, Ireland. The decrease in research and development expenses as a percentage of sales for the nine months ended September 30, 2014 was primarily the result of a higher rate of sales growth (15%), and a reduced rate of R&D expense growth (8%), compared to the same period in 2013.

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