SOUTH JORDAN, Utah, July 29, 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 record revenues of $128.9 million for the quarter ended June 30, 2014, an increase of 17% over revenues of $109.9 million for the quarter ended June 30, 2013. Revenues for the six-month period ended June 30, 2014 were a record $248.1 million, compared with $213.8 million for the corresponding period in 2013, an increase of 16%.
Merit’s non-GAAP net income for the quarter ended June 30, 2014 was $6.4 million, or $0.15 per share, compared to $6.3 million, or $0.15 per share, for the quarter ended June 30, 2013.
Merit’s non-GAAP net income for the six months ended June 30, 2014 was $11.8 million, or $0.27 per share, compared to $10.5 million, or $0.25 per share, for the corresponding period of 2013.
GAAP net income for the quarter ended June 30, 2014 was $3.7 million, or $0.09 per share, compared to $3.8 million, or $0.09 per share, for the comparable quarter of 2013.
GAAP net income for the six-month period ended June 30, 2014 was $6.5 million, or $0.15 per share, compared to $4.4 million, or $0.10 per share, for the corresponding period of 2013.
“We believe the plan for product and sales force focus is clearly working, and we anticipate continued growth going forward,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer. “Although we have incurred some short-term expenses associated with the splitting of our U.S. sales force, thus far we have exceeded our initial sales estimates and we are optimistic that this trend will continue into the future as the subsidies expire. We believe these efforts will allow us to sell deeper into our product offering, provide better in-service and training opportunities, and build our overall branding efforts.”
“Our embolic business (BioSphere) continues to grow as our products are being rolled out and gain acceptance by physicians, especially in international markets,” Lampropoulos said. “We plan to introduce a new embolic product early next year which we expect to further enhance our product offering.”
“While our sales in China grew at 37% from the first six months of 2013 to the first six months of 2014 and our European direct and distributor business increased 30% during the same period, our sales in the United States rose 11%,” Lampropoulos continued. “We believe this is further indication of the success of our sales force split that commenced in January.”
“Our operational plans are proceeding with our move to our new facility in Pearland, Texas, which we expect to be completed by September 1,” Lampropoulos said. “We have frozen hiring throughout the company with the exception of some replacements, and we have directed our 2015 R&D spending to be limited to the base 2014 budget. Although we still have expenses associated with litigation and other subsidies to support the sales split, we are proceeding with great optimism as we prepare for 2015.”
“Recently we introduced several new products, including the PreludeEASE™ hydrophilic sheath introducer, the PhD™ hemostasis valve, the ReSolve® biliary catheter and the HeartSpan® steerable sheath introducer in Europe,” Lampropoulos said.
“We are in the process of converting several new radial customers in Great Britain,” Lampropoulos added. “We expect most of our new radial products to be approved for sale in the United States by year end.”
“As we work to control our expenses while growing sales, recognizing that many of the expenses for product launches, the sales force split, and the new facility startup are anticipated to be short-term, we see great opportunity for earnings growth in the future,” Lampropoulos said. “We have substantial manufacturing capacity and additional products in the pipeline which we believe will support growth without major capital expense.”
In the second quarter of 2014, compared to the second quarter of 2013, BioSphere sales grew 47%; stand-alone device sales were up 20%; inflation device sales increased 18%; catheter sales rose 14%; Malvern sales grew 13%; custom kit and tray sales increased 10%; and Endotek sales rose 7%. Excluding sales to an OEM customer, inflation device sales were up 12%.
For the six-month period ended June 30, 2014, compared to the six-month period ended June 30, 2013, BioSphere sales increased 38%; Malvern sales rose 29%; stand-alone device sales grew 19%; catheter sales were up 15%; inflation device sales rose 14%; custom kit and tray sales grew 7%; and Endotek sales rose 5%. Excluding sales to an OEM customer, inflation device sales were up 9%.
Merit’s non-GAAP gross profit was 45.3% of sales for the quarter ended June 30, 2014, compared to 44.9% of sales for the quarter ended June 30, 2013. Non-GAAP gross profit was 45.6% of sales for the six months ended June 30, 2014, compared to 44.6% of sales for the six months ended June 30, 2013. GAAP gross profit was 43.2% of sales for the quarter ended June 30, 2014, compared to 42.8% of sales for the quarter ended June 30, 2013. GAAP gross profit for the six months ended June 30, 2014 was 43.4% of sales, compared to 42.1% of sales for the six months ended June 30, 2013. The increase in gross profit for both periods was primarily related to lower average fixed overhead unit costs as the result of higher production volumes.
Merit’s non-GAAP selling, general and administrative expenses for the second quarter of 2014 were 29.1% of sales, compared to 27.4% of sales for the second quarter of 2013. Non-GAAP SG&A expenses for the six months ended June 30, 2014 were 29.5%, compared to 27.9% of sales for the six months ended June 30, 2013. GAAP selling, general and administrative expenses for the second quarter of 2014 were 30.0% of sales, compared to 28.7% of sales for the second quarter of 2013, and down from 30.8% of sales for the first quarter of 2014. For the six-month period ended June 30, 2014, SG&A expenses were 30.4% of sales, compared with 29.8% of sales for the first six 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 Merit’s new facility in Pearland, Texas, which are currently being recorded as SG&A expenses during a transition period of approximately six months as Merit completes the movement and qualification of production equipment from the old facility to the new facility.
Research and development costs during the second quarter of 2014 were 7.5% of sales, compared to 7.9% of sales for the second quarter of 2013. R&D costs were 7.4% of sales for the first six months of 2014, compared to 8.3% of sales for the corresponding period of 2013. The decrease in R&D expenses as a percentage of sales for both periods was primarily the result of a higher rate of sales growth, while slowing increases in R&D expenses for the three and six-month periods ended June 30, 2014, when compared to the same periods in 2013. For both periods in 2014, R&D expenses were higher than the corresponding periods in 2013, primarily as a result of headcount additions to support new product launches.
Merit’s effective tax rate for the second quarter of 2014 was 26.9%, compared with 25.0% for the second quarter of 2013. For the six-month period ended June 30, 2014, Merit’s effective tax rate was 27.1%, compared to 15.2% for the same period of 2013. Excluding the reinstatement in 2013 of the 2012 R&D tax credit of approximately $500,000, which was recorded in the first quarter of 2013, Merit’s effective tax rate would have been approximately 24.8% for the six months ended June 30, 2013. The increase in the effective tax rate for both periods, when compared to the prior year periods, was primarily the result of a higher mix of earnings from Merit’s U.S. operations, which are taxed at a higher rate than Merit’s foreign operations.
REVISED 2014 GUIDANCE
Based upon information currently available to Merit’s management, Merit estimates that for the year ending December 31, 2014, absent extraordinary transactions, Merit’s revenues will be in the range of $511-$515 million, an increase of approximately 14-15%, compared to revenues of $449.0 million for the year ended December 31, 2013. Also, based on information currently available to Merit’s management, Merit estimates that, absent non-recurring transactions, Merit’s GAAP earnings per share for 2014 will be in the range of $0.39-$0.43, compared to GAAP earnings per share of $0.39 for the year ended December 31, 2013, and non-GAAP earnings per share will be in the range of $0.61-$0.65, compared to non-GAAP earnings per share of $0.71 for the year ended December 31, 2013.
CONFERENCE CALL
Merit invites all interested parties to participate in its conference call today, July 29th, 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) 397-5352, and the international number is (719) 325-2177. A live webcast as well as a rebroadcast of the call can be accessed at www.merit.com.
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