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MM

MERIT MEDICAL SYSTEMS INC (MMSI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered top- and bottom-line beats: revenue $382.5M and non-GAAP EPS $1.01, both above internal forecast; GAAP EPS $0.54. Merit raised FY25 revenue to $1.495–$1.507B and non-GAAP EPS to $3.52–$3.72 .
  • Against Wall Street consensus (S&P Global): revenue beat $382.5M vs $375.0M*, and non-GAAP EPS beat $1.01 vs $0.85*. 10 EPS estimates and 9 revenue estimates were included*.
  • Profitability strengthened: non-GAAP operating margin a record 21.2% (+109 bps y/y) on favorable price/mix and lower-than-expected tariff impact; GAAP operating margin 12.3% .
  • Guidance catalysts: FY25 non-GAAP EPS range raised primarily from stronger H1 and lower projected tariff costs at the high end ($7M vs prior $26.3M); Q3 outlook set at non-GAAP EPS $0.76–$0.85 .
  • Key swing factor: reimbursement trajectory for WRAPSODY CIE—CMS proposed NTAP for inpatient from 10/1/25; outpatient add-on payment timeline shifted by ~2 quarters as management clarifies APC vs TPT filings .

What Went Well and What Went Wrong

What Went Well

  • Record non-GAAP operating margin: “the highest…in any quarter in the company’s history” at 21.2%, with ~109 bps y/y expansion, driven by lower tariff impact and favorable product/geographic mix .
  • U.S. demand strong: U.S. revenue +16.7% y/y (constant currency +16.6%); EMEA +16.5% y/y; Rest of World +14.0% y/y .
  • Execution and cash generation: operating cash flow $83.3M in Q2; YTD free cash flow $89.1M; management reiterated FY25 FCF ≥$150M .

What Went Wrong

  • Outpatient reimbursement delay for WRAPSODY CIE: management clarified prior miscommunication (filed for APC, not TPT); now targeting TPT submission by 9/1/25 with decision expected Dec-25, pushing the outpatient add-on by ~two quarters .
  • China softness: sales -6% y/y in Q2 amid macro headwinds; APAC overall -0.4% .
  • OEM ex-U.S. demand below expectations due to macro/international pressures, partially offset by strong U.S. OEM growth (high teens) .

Financial Results

Income statement and margins vs prior periods and estimates

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$338.0 $355.4 $382.5
GAAP Gross Margin (%)47.7% 48.4% 48.2%
Non-GAAP Gross Margin (%)51.5% 53.4% 53.2%
GAAP Operating Margin (%)13.6% 11.5% 12.3%
Non-GAAP Operating Margin (%)20.1% 19.3% 21.2%
GAAP EPS ($)$0.61 $0.49 $0.54
Non-GAAP EPS ($)$0.92 $0.86 $1.01

Actual vs consensus (Q2 2025):

MetricConsensus (Q2 2025)Actual (Q2 2025)
Revenue ($USD)$375,025,310*$382,462,000
Primary EPS ($)$0.85128*$1.01
EPS – # of Estimates10*—
Revenue – # of Estimates9*—

Values with asterisks retrieved from S&P Global.

Segment breakdown (Q2 2025 vs Q2 2024)

Segment / Category ($USD Thousands)Q2 2024Q2 2025% Change
Peripheral Intervention$134,386 $142,847 +6.3%
Cardiac Intervention$93,307 $115,251 +23.5%
Custom Procedural Solutions$50,132 $53,634 +7.0%
OEM$49,990 $52,293 +4.6%
Endoscopy Devices$10,188 $18,437 +81.0%
Total Revenue$338,003 $382,462 +13.2%

Geographic breakdown (Q2 2025 vs Q2 2024)

Region ($USD Thousands)Q2 2024Q2 2025% Change
U.S.$194,664 $227,082 +16.7%
APAC$66,806 $66,566 -0.4%
EMEA$62,322 $72,615 +16.5%
Rest of World$14,211 $16,199 +14.0%
International Total$143,339 $155,380 +8.4%
Total$338,003 $382,462 +13.2%

KPIs and Balance Sheet

MetricDec 31, 2024Jun 30, 2025
Cash & Cash Equivalents ($USD Thousands)$376,715 $341,819
Total Debt Obligations ($USD Thousands)$747,551 $731,795
Total Assets ($USD Thousands)$2,418,603 $2,586,045
Operating Metrics (Q2/YTD)Q2 2025YTD 2025
Operating Cash Flow ($USD Millions)$83.3 $123.9
CapEx – Property & Equipment ($USD Millions)$13.8 $34.8
Free Cash Flow ($USD Millions)—$89.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025$1.480–$1.501B $1.495–$1.507B Raised
Cardiovascular SegmentFY 2025$1.407–$1.426B $1.423–$1.434B Raised
Endoscopy SegmentFY 2025$73–$75M $72–$73M Lowered
Non-GAAP EPSFY 2025$3.28–$3.41 (updated 5/20)$3.52–$3.72 Raised
Q3 2025 Non-GAAP EPSQ3 2025—$0.76–$0.85 New
Tariff impact (COGS) at high endFY 2025~$26.3M ~$7.0M Lowered (assumption at high end)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Tariffs/MacroFY25 EPS initially guided $3.58–$3.70; later cut to $3.29–$3.42 on tariff assumptions; emphasized uncertainty and mitigation plans High-end EPS assumes ~$7M tariff impact vs prior $26.3M; reiterated uncertainty and range-bound guidance Improving projected impact; cautious tone
WRAPSODY CIE reimbursementTargeted NTAP (inpatient) and TPT (outpatient); early US launch expectations $7–$9M FY25 CMS proposed NTAP (~$3,770) effective 10/1/25; outpatient add-on delayed; FY25 US WRAPSODY cut to $2–$4M Inpatient progressing; outpatient delayed
Product performanceCardiac and PI robust; OEM strong esp. US; Endoscopy integrating acquisitions Cardiac Intervention +23.5% y/y; CPS +7.0%; Endoscopy +81.0% Continued strength; integration benefits
Regional trendsUS strength; EMEA mixed; China modest growth; hedging lowers FX impact US +16.7%; EMEA +16.5%; APAC flat; China -6% y/y US/EMEA resilient; APAC/China softer
M&A integrationEGS fully integrated; Cook TSA ongoing; strategic fit and accretive margins Biolife acquired (May); sales converted to direct US; global footprint to be leveraged Portfolio broadening; direct distribution
Supply chainOEM OUS impacted by raw materials; improving confidence Macro still pressuring OUS OEM; US OEM high teens growth Mixed but manageable

Management Commentary

  • “We delivered better-than-expected financial performance… with our top-and-bottom line results exceeding the high-end of our forecast.” — Fred Lampropoulos .
  • “Our second quarter non-GAAP EPS results included incremental dilution related to our convertible debt… approximately $0.01 to Q2 EPS.” — Raul Parra .
  • “Approximately half of the increase in gross margin was driven by lower tariff impact versus what our guidance contemplated, with the balance coming from favorable… mix and improvements in pricing.” — Raul Parra .
  • “We did not communicate the [outpatient reimbursement] strategy effectively… we are correcting our mistake this afternoon… and are focused on executing the strategy.” — Fred Lampropoulos .

Q&A Highlights

  • Reimbursement clarification: APC vs TPT filing mix-up acknowledged; plan to submit TPT by 9/1/25; confidence in product/data; NTAP proposed ~$3,770 inpatient add-on from 10/1/25 .
  • Margin drivers: gross and operating margin upside from price/mix and lower tariff impact; non-GAAP operating margin at 21.2% (+109 bps y/y) .
  • China/APAC: Q2 China -6% y/y amid macro softness; APAC slight decline; full-year APAC low-single-digit growth still expected .
  • Biolife integration: converted US distribution to direct; significant global opportunity leveraging Merit footprint .
  • Cash and capex: strong cash generation; FY25 capex ~$90–$100M for distribution center; FCF ≥$150M reiterated .

Estimates Context

  • Q2 2025 revenue beat: $382.5M vs $375.0M consensus*; EPS beat: $1.01 non-GAAP vs $0.85 consensus*. 10 EPS and 9 revenue estimates underpin the consensus*.
  • Implication: Street models likely revise FY25 EPS up toward the new $3.52–$3.72 range given H1 performance and reduced tariff impact assumptions .
    Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat-and-raise quarter: non-GAAP EPS and margin records, with FY25 EPS guidance raised; the margin trajectory is supported by price/mix and lower anticipated tariffs .
  • Near-term swing factor: WRAPSODY CIE reimbursement—NTAP (inpatient) appears on track for 10/1/25; outpatient add-on depends on TPT decision in Dec-25; management corrected strategy and remains confident .
  • Demand remains broad-based: U.S. and EMEA strength; Cardiac Intervention momentum; Endoscopy growth from acquired assets; watch OEM OUS softness .
  • Cash discipline intact: strong operating cash flow and YTD FCF; capex ramp for distribution center is planned but FY25 FCF ≥$150M target maintained .
  • Modeling updates: incorporate higher FY25 EPS ($3.52–$3.72) and reduced tariff impact at the high end; expect Q3 EPS $0.76–$0.85 .
  • Leadership transition: Martha Aronson named CEO effective 10/3/25; potential for continuity with strategic priorities and commercial execution .
  • Trading lens: Positive catalysts include margin resiliency and guidance raise; risks include macro softness in China/APAC and the timing of outpatient reimbursement decisions .