Merit Medical Systems, Inc. Reports Record Revenues And Income For The Quarter And Year Ended December 31, 2014
SOUTH JORDAN, Utah, Feb. 24, 2015 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (Nasdaq:MMSI), a leading manufacturer and marketer of proprietary disposable devices used primarily in cardiology, radiology and endoscopy, today announced record revenues of $132.8 million for the quarter ended December 31, 2014, an increase of 11% over revenues of $120.0 million for the quarter ended December 31, 2013. Revenues for the year ended December 31, 2014 were a record $509.7 million, an increase of 14% over revenues of $449.0 million for the year ended December 31, 2013. Revenues from Merit's core business grew 11% and 12% for the quarter and year ended December 31, 2014, respectively, compared to the corresponding periods of 2013.
Merit's non-GAAP net income for the quarter ended December 31, 2014 was a record $11.3 million, up 20%, or $0.26 per share, compared to $9.4 million, or $0.22 per share, for the quarter ended December 31, 2013. Merit's non-GAAP net income for the year ended December 31, 2014 was a record $33.8 million, up 11%, or $0.78 per share, compared to $30.4 million, or $0.71 per share, for the year ended December 31, 2013.
GAAP net income for the quarter ended December 31, 2014 was a record $8.7 million, up 33%, or $0.20 per share, compared to $6.5 million, or $0.15 per share, for the fourth quarter of 2013. The increase in GAAP earnings for the quarter ended December 31, 2014, when compared to 2013, was primarily affected by higher sales and gross margins as well as lower operating expenses as a percentage of sales, which were offset by a higher effective income tax rate as a result of a higher mix of earnings from Merit's U.S. operations, which are generally taxed at a higher rate than its foreign operations.
GAAP net income for the year ended December 31, 2014 was a record $23.0 million, up 39%, or $0.53 per share, compared to $16.6 million, or $0.39 per share, for the year ended December 31, 2013.
Merit's non-GAAP gross profit was 47.4% of sales for the quarter ended December 31, 2014, compared to 46.7% of sales for the quarter ended December 31, 2013. Non-GAAP gross profit was 46.4% of sales for the year ended December 31, 2014, compared to 45.6% of sales for the year ended December 31, 2013. GAAP gross profit for the fourth quarter of 2014 was 45.3% of sales, compared to 44.5% of sales for the fourth quarter of 2013. GAAP gross profit was 44.2% of sales for the year ended December 31, 2014, compared to 43.3% of sales for the year ended December 31, 2013. The increase in GAAP and non-GAAP gross profit as a percentage of sales for the quarter and year ended December 31, 2014, compared to the quarter and year ended December 31, 2013, related primarily to a more favorable product mix (primarily resulting from sales of BioSphere products) and lower average fixed overhead unit costs as the result of higher production volumes for 2014 when compared to the corresponding periods of 2013.
"Our plan to improve efficiency and profitability continued in the fourth quarter," said Fred P. Lampropoulos, Merit's Chairman and Chief Executive Officer. "Despite a slow operational start early in the year, we gained substantial momentum as the year progressed. Although we anticipate that changes in foreign exchange rates will slow revenues somewhat next year, we believe the associated lower input, labor, overhead and selling expenses will actually improve net income in 2015. With a full new product pipeline and focus on expenses, we are looking forward to continued improvement. We believe our three-year plan will provide valuable insight into our vision of continued growth and profitability in the years to come. We hope you can join us on March 5th for our Investor Day at our headquarters in South Jordan, Utah or listen to our webcast."
For the quarter ended December 31, 2014, compared to the quarter ended December 31, 2013, BioSphere sales increased 27%; Malvern sales rose 25%; catheter sales were up 16%; custom kit and tray sales grew 10%; Endotek sales increased 9%; stand-alone device sales rose 7%; and inflation device sales decreased 2%.
For the year ended December 31, 2014, compared to the year ended December 31, 2013, BioSphere sales grew 31%; Malvern sales rose 17%; catheter sales increased 17%; stand-alone device sales were up 15%; inflation device sales rose 10%; custom kit and tray sales increased 7%; and Endotek sales were up 6%. Merit's core business sales for the year ended December 31, 2014 were up 12% compared to the year ended December 31, 2013.
GAAP selling, general and administrative expenses were 27.3% and 29.0% of Merit's sales for the quarter and year ended December 31, 2014, respectively, compared with 28.0% and 28.6% of Merit's sales for the corresponding periods of 2013, respectively. The decrease in selling, general and administrative expenses as a percentage of sales for fourth quarter of 2014, when compared to the fourth quarter of 2013, was primarily related to year-over-year sales growth of 11% and slower growth in sales expenses of 8% for the fourth quarter of 2014 when compared to the corresponding period of 2013. The increase in the selling, general and administrative expenses as a percentage of sales for the year ended December 31, 2014, when compared to the year ended December 31, 2013, was primarily related to headcount additions to support Merit's domestic sales force reorganization, international sales expansions, and costs of approximately $2.5 million associated with the commencement of operations at Merit's new facility in Pearland, Texas, which were recorded as selling, general and administrative expenses for a majority of the year.
Non-GAAP SG&A expenses for the fourth quarter of 2014 were 26.5% of sales, compared to 26.7% of sales for the fourth quarter of 2013. Non-GAAP SG&A expenses for the year ended December 31, 2014 were 28.1% of sales, compared to 27.1% of sales for the year ended December 31, 2013.
Research and development costs were 7.2% of sales for both the quarter and year ended December 31, 2014, compared to 7.4% and 7.5% of sales for the corresponding periods of 2013, respectively.
Other expense for the quarter and year ended December 31, 2014 was approximately $1.9 million and $8.6 million, respectively, compared with other expense of approximately $2.7 million and $8.0 million, for the corresponding periods of 2013, respectively. The decrease in other expenses for the fourth quarter of 2014 when compared to the fourth quarter of 2013 was primarily related to lower interest expense as the result of a lower average outstanding debt balance and a lower interest rate. The increase in other expenses for the year ended December 31, 2014 when compared to the year ended December 31, 2013 was primarily related to higher interest expenses during the first part of 2014 when compared to the corresponding period of 2013.
Merit's effective income tax rate for the quarter and year ended December 31, 2014 was 29.8% and 27.2%, respectively, compared to 20.1% and 16.5% for the corresponding periods of 2013, respectively. The increase in the effective income tax rate was due primarily to the increased profit of Merit's U.S. operations, which are generally taxed at a higher rate than Merit's foreign operations income.
Merit generated $53.3 million in cash from operations for the year ended December 31, 2014, compared to $51.4 million for the year ended December 31, 2013.
2015 GUIDANCE
Based upon information currently available to Merit's management, Merit estimates that for the year ending December 31, 2015, absent extraordinary transactions, Merit's revenues will be in the range of $535-$545 million, an increase of approximately 5-7%, compared to revenues of $509.7 million for the year ended December 31, 2014. This projected growth rate has been reduced by approximately 2.4% due to the estimated changes in foreign exchanges rates. Also, based on information currently available to Merit's management, Merit estimates that, absent non-recurring transactions, Merit's GAAP earnings per share for 2015 will be in the range of $0.63-$0.67 and non-GAAP earnings per share will be in the range of $0.85-$0.89.
CONFERENCE CALL TODAY
Merit invites all interested parties to participate in its fourth quarter and year-end conference call today, February 24th, 2015, 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) 438-5453, and the international number is (719) 785-1765. A live webcast as well as a rebroadcast can be accessed through the Investors page at www.merit.com.
MERIT'S THREE-YEAR BUSINESS PLAN TO BE PRESENTED AT FIRST-EVER INVESTOR DAY SCHEDULED FOR MARCH 5, 2015
Merit's management intends to provide a three-year business plan at its first-ever Investor Day scheduled for Thursday, March 5th, 2015, at 11:00 a.m. Eastern (10:00 a.m. Central, 9:00 a.m. Mountain, and 8:00 a.m. Pacific). Investors are invited to attend the event at Merit's headquarters in South Jordan, Utah. Please contact Anne-Marie Wright at awright@merit.com if you are interested in attending. A live webcast of the business plan, as well as a rebroadcast of the presentation, can be accessed through the Investors page at www.merit.com.
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