Utah | 0-18592 | 87-0447695 | ||
(State or other jurisdiction of | (Commission | (I.R.S. Employer | ||
incorporation or organization) | File Number) | Identification No.) |
1600 West Merit Parkway | ||
South Jordan, Utah | 84095 | |
(Address of principal executive offices) | (Zip Code) |
99.1 | Press Release, dated July 26, 2017, entitled "Merit Medical Reports Record Revenue and Non-GAAP Net Income for Second Quarter 2017, Raises 2017 Guidance and Gives Preliminary 2018-2019 Guidance," including unaudited financial information. | |
99.2 | Conference Call Presentation. |
MERIT MEDICAL SYSTEMS, INC. | ||
Date: July 26, 2017 | By: | /s/ Brian G. Lloyd |
Brian G. Lloyd | ||
Chief Legal Officer and Corporate Secretary |
EXHIBIT NUMBER | DESCRIPTION | |
99.1 | Press Release, dated July 26, 2017, entitled "Merit Medical Reports Record Revenue and Non-GAAP Net Income for Second Quarter 2017, Raises 2017 Guidance and Gives Preliminary 2018-2019 Guidance" including unaudited financial information. | |
99.2 | Conference Call Presentation. |
Date: | July 26, 2017 |
Contact: | Anne-Marie Wright, Vice President, Corporate Communications |
Phone: | (801) 208-4167 e-mail: awright@merit.com Fax: (801) 253-1688 |
• | Q2 2017 worldwide revenue of $186.5 million ($188.7 million on a comparable, constant currency* basis), up 23.5% as reported (up 24.9% on a comparable, constant currency* basis) over Q2 2016 |
• | YTD 2017 worldwide revenue of $357.6 million ($361.0 million on a comparable, constant currency* basis), up 23.7% as reported (up 24.9% on a comparable, constant currency* basis) over the same period in 2016 |
• | Q2 2017 core revenue* up 9.3% over Q2 2016 core revenue* (core revenue* up 10.4% on a comparable, constant currency* basis); YTD 2017 core revenue* up 10.5% over core revenue* for the same period of 2016 (core revenue up 11.4% on a comparable, constant currency* basis) |
• | Q2 2017 GAAP EPS was $0.19, compared to $0.16 in Q2 2016; Q2 2017 non-GAAP EPS* was $0.36, compared to $0.26 in Q2 2016. |
• | Q2 2017 GAAP gross margin was 45.1%, compared to 44.3% in Q2 2016; Q2 2017 non-GAAP gross margin* was 48.3%, compared to 46.4% for Q2 2016. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
% Change | 2017 | 2016 | % Change | 2017 | 2016 | ||||||
Cardiovascular | |||||||||||
Stand-alone devices | 54.3% | $71,588 | $46,394 | 51.2% | $135,681 | $89,726 | |||||
Custom kits and procedure trays | 5.8% | 31,797 | 30,065 | 2.9% | 60,672 | 58,944 | |||||
Inflation devices | 11.2% | 20,789 | 18,691 | 7.9% | 39,296 | 36,403 | |||||
Catheters | 10.8% | 31,968 | 28,846 | 17.0% | 61,736 | 52,745 | |||||
Embolization devices | 1.8% | 12,158 | 11,948 | 8.6% | 24,685 | 22,731 | |||||
CRM/EP | 19.3% | 11,434 | 9,581 | 28.1% | 22,451 | 17,520 | |||||
Total | 23.5% | 179,734 | 145,525 | 23.9% | 344,521 | 278,069 | |||||
Endoscopy | |||||||||||
Endoscopy devices | 22.9% | 6,815 | 5,546 | 18.2% | 13,097 | 11,079 | |||||
Total | 23.5% | $186,549 | $151,071 | 23.7% | $357,618 | $289,148 |
June 30, 2017 (Unaudited) | December 31, 2016 | ||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 37,675 | $ | 19,171 | |||
Trade receivables, net | 103,689 | 80,521 | |||||
Employee receivables | 148 | 198 | |||||
Other receivables | 5,560 | 5,445 | |||||
Inventories | 136,684 | 120,695 | |||||
Prepaid expenses and other assets | 9,105 | 6,226 | |||||
Prepaid income taxes | 2,656 | 2,525 | |||||
Deferred income tax assets | — | 8,219 | |||||
Income tax refunds receivable | 43 | 423 | |||||
Total Current Assets | 295,560 | 243,423 | |||||
Property and equipment, net | 285,203 | 276,573 | |||||
Intangibles, net | 211,206 | 182,697 | |||||
Goodwill | 226,829 | 211,927 | |||||
Deferred income tax assets | 1,997 | 171 | |||||
Other assets | 31,056 | 28,012 | |||||
Total Assets | $ | 1,051,851 | $ | 942,803 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities | |||||||
Trade payables | 36,671 | 30,619 | |||||
Accrued expenses | 59,185 | 44,947 | |||||
Current portion of long-term debt | 16,969 | 10,000 | |||||
Advances from employees | 192 | 572 | |||||
Income taxes payable | 1,910 | 2,193 | |||||
Total Current Liabilities | 114,927 | 88,331 | |||||
Deferred income tax liabilities | 23,354 | 25,981 | |||||
Liabilities related to unrecognized tax benefits | 438 | 438 | |||||
Deferred compensation payable | 9,725 | 9,211 | |||||
Deferred credits | 2,474 | 2,550 | |||||
Long-term debt | 224,943 | 314,373 | |||||
Other long-term obligations | 9,508 | 3,730 | |||||
Total Liabilities | 385,369 | 444,614 | |||||
Stockholders' Equity | |||||||
Common stock | 348,051 | 206,186 | |||||
Retained earnings | 318,171 | 293,885 | |||||
Accumulated other comprehensive loss | 260 | (1,882 | ) | ||||
Total stockholders' equity | 666,482 | 498,189 | |||||
Total Liabilities and Stockholders' Equity | $ | 1,051,851 | $ | 942,803 | |||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
SALES | $ | 186,549 | $ | 151,071 | $ | 357,618 | $ | 289,148 | |||||||
COST OF SALES | 102,408 | 84,217 | 197,535 | 162,193 | |||||||||||
GROSS PROFIT | 84,141 | 66,854 | 160,083 | 126,955 | |||||||||||
OPERATING EXPENSES | |||||||||||||||
Selling, general and administrative | 57,409 | 43,653 | 115,180 | 85,358 | |||||||||||
Research and development | 13,313 | 11,429 | 25,838 | 22,016 | |||||||||||
Acquired in-process research and development | 75 | 100 | 75 | 100 | |||||||||||
Contingent consideration expense | (18 | ) | 91 | 19 | 193 | ||||||||||
Total | 70,779 | 55,273 | 141,112 | 107,667 | |||||||||||
INCOME FROM OPERATIONS | 13,362 | 11,581 | 18,971 | 19,288 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest income | 89 | 16 | 172 | 25 | |||||||||||
Interest (expense) | (1,639 | ) | (1,768 | ) | (4,345 | ) | (3,097 | ) | |||||||
Bargain purchase gain (loss) | (669 | ) | — | 11,574 | — | ||||||||||
Other income (expense) | 170 | 33 | 434 | (447 | ) | ||||||||||
Total other income (expense) - net | (2,049 | ) | (1,719 | ) | 7,835 | (3,519 | ) | ||||||||
INCOME BEFORE INCOME TAXES | 11,313 | 9,862 | 26,806 | 15,769 | |||||||||||
INCOME TAX EXPENSE | 1,830 | 2,572 | 2,520 | 4,128 | |||||||||||
NET INCOME | $ | 9,483 | $ | 7,290 | $ | 24,286 | $ | 11,641 | |||||||
EARNINGS PER COMMON SHARE- | |||||||||||||||
Basic | $ | 0.19 | $ | 0.16 | $ | 0.51 | $ | 0.26 | |||||||
Diluted | $ | 0.19 | $ | 0.16 | $ | 0.50 | $ | 0.26 | |||||||
AVERAGE COMMON SHARES- | |||||||||||||||
Basic | 49,957 | 44,308 | 47,406 | 44,297 | |||||||||||
Diluted | 51,188 | 44,703 | 48,516 | 44,647 | |||||||||||
• | constant currency revenue; |
• | core revenue; |
• | core revenue on a constant currency basis; |
• | non-GAAP earnings per share; |
• | non-GAAP gross margin; and |
• | non-GAAP net income. |
CONSOLIDATED STATEMENTS OF INCOME - NON-GAAP | ||||||||||||
FOR THE THREE MONTHS ENDED JUNE 30, 2017 AND 2016 (Unaudited) | ||||||||||||
In thousands, except per share data | ||||||||||||
Three Months Ended | ||||||||||||
June 30, 2017 | ||||||||||||
Pre-Tax | Tax Impact (a) | After-Tax | Per Share Impact | |||||||||
GAAP net income | $ | 11,313 | $ | (1,830 | ) | $ | 9,483 | $ | 0.19 | |||
Non-GAAP adjustments: | ||||||||||||
Cost of Sales | ||||||||||||
Amortization of intangibles | 4,917 | (1,840 | ) | 3,077 | 0.06 | |||||||
Inventory mark-up related to acquisitions | 985 | (383 | ) | 602 | 0.01 | |||||||
Selling, General & Administrative | ||||||||||||
Severance | 128 | (50 | ) | 78 | 0.00 | |||||||
Acquisition-related (c) | 1,736 | (552 | ) | 1,184 | 0.02 | |||||||
Fair value adjustment to contingent consideration (d) | (18 | ) | 7 | (11 | ) | (0.00) | ||||||
Long-term asset impairment charge (b) | 2 | (1 | ) | 1 | 0.00 | |||||||
Acquired in-process research & development | 75 | (29 | ) | 46 | 0.00 | |||||||
Amortization of intangibles | 1,329 | (512 | ) | 817 | 0.02 | |||||||
Special legal expense (e) | 3,657 | (1,422 | ) | 2,235 | 0.04 | |||||||
Other (Income) Expense | ||||||||||||
Gain from bargain purchase (f) | 669 | — | 669 | 0.01 | ||||||||
Amortization of long-term debt issuance costs | 171 | (67 | ) | 104 | 0.00 | |||||||
Non-GAAP net income | $ | 24,964 | $ | (6,679 | ) | $ | 18,285 | $ | 0.36 | |||
Diluted shares | 51,188 | |||||||||||
Three Months Ended | ||||||||||||
June 30, 2016 | ||||||||||||
Pre-Tax | Tax Impact (a) | After-Tax | Per Share Impact | |||||||||
GAAP net income | $ | 9,862 | $ | (2,572 | ) | $ | 7,290 | $ | 0.16 | |||
Non-GAAP adjustments: | ||||||||||||
Cost of Sales | ||||||||||||
Amortization of intangibles | 3,169 | (1,162 | ) | 2,007 | 0.04 | |||||||
Inventory mark-up related to acquisition | 61 | (24 | ) | 37 | 0.00 | |||||||
Selling, General & Administrative | ||||||||||||
Severance | 560 | (218 | ) | 342 | 0.01 | |||||||
Acquisition-related (c) | 1,637 | (637 | ) | 1,000 | 0.02 | |||||||
Fair value adjustment to contingent consideration (d) | 91 | (35 | ) | 56 | 0.00 | |||||||
Long-term asset impairment charge (b) | 88 | (34 | ) | 54 | 0.00 | |||||||
Acquired in-process research & development | 100 | (39 | ) | 61 | 0.00 | |||||||
Amortization of intangibles | 847 | (323 | ) | 524 | 0.01 | |||||||
Other Income | ||||||||||||
Amortization of long-term debt issuance costs | 264 | (103 | ) | 161 | 0.00 | |||||||
Non-GAAP net income | $ | 16,679 | $ | (5,147 | ) | $ | 11,532 | $ | 0.26 | |||
Diluted shares | 44,703 |
CONSOLIDATED STATEMENTS OF INCOME - NON-GAAP | ||||||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (Unaudited) | ||||||||||||
In thousands, except per share data | ||||||||||||
Six Months Ended | ||||||||||||
June 30, 2017 | ||||||||||||
Pre-Tax | Tax Impact (a) | After-Tax | Per Share Impact | |||||||||
GAAP net income | $ | 26,806 | $ | (2,520 | ) | $ | 24,286 | $ | 0.50 | |||
Non-GAAP adjustments: | ||||||||||||
Cost of Sales | ||||||||||||
Amortization of intangibles | 9,743 | (3,646 | ) | 6,097 | 0.13 | |||||||
Inventory mark-up related to acquisitions | 2,878 | (1,120 | ) | 1,758 | 0.04 | |||||||
Selling, General & Administrative | ||||||||||||
Severance | 1,344 | (523 | ) | 821 | 0.02 | |||||||
Acquisition-related (c) | 3,288 | (834 | ) | 2,454 | 0.05 | |||||||
Fair value adjustment to contingent consideration (d) | 19 | (7 | ) | 12 | 0.00 | |||||||
Long-term asset impairment charge (b) | 19 | (7 | ) | 12 | 0.00 | |||||||
Acquired in-process research & development | 75 | (29 | ) | 46 | 0.00 | |||||||
Amortization of intangibles | 2,672 | (1,031 | ) | 1,641 | 0.03 | |||||||
Special legal expense (e) | 8,497 | (3,305 | ) | 5,192 | 0.11 | |||||||
Other (Income) Expense | ||||||||||||
Gain from bargain purchase (f) | (11,574 | ) | — | (11,574 | ) | (0.24 | ) | |||||
Amortization of long-term debt issuance costs | 343 | (133 | ) | 210 | 0.00 | |||||||
Non-GAAP net income | $ | 44,110 | $ | (13,155 | ) | $ | 30,955 | $ | 0.64 | |||
Diluted shares | 48,516 | |||||||||||
Six Months Ended | ||||||||||||
June 30, 2016 | ||||||||||||
Pre-Tax | Tax Impact (a) | After-Tax | Per Share Impact | |||||||||
GAAP net income | $ | 15,769 | $ | (4,128 | ) | $ | 11,641 | $ | 0.26 | |||
Non-GAAP adjustments: | ||||||||||||
Cost of Sales | ||||||||||||
Amortization of intangibles | 6,242 | (2,285 | ) | 3,957 | 0.09 | |||||||
Inventory mark-up related to acquisition | 207 | (80 | ) | 127 | 0.00 | |||||||
Selling, General & Administrative | ||||||||||||
Severance | 1,778 | (692 | ) | 1,086 | 0.02 | |||||||
Acquisition-related (c) | 2,403 | (935 | ) | 1,468 | 0.03 | |||||||
Fair value adjustment to contingent consideration (d) | 162 | (63 | ) | 99 | 0.00 | |||||||
Long-term asset impairment charge (b) | 88 | (34 | ) | 54 | 0.00 | |||||||
Acquired in-process research & development | 100 | (39 | ) | 61 | 0.00 | |||||||
Amortization of intangibles | 1,646 | (627 | ) | 1,019 | 0.02 | |||||||
Other Income | ||||||||||||
Amortization of long-term debt issuance costs | 521 | (203 | ) | 318 | 0.01 | |||||||
Non-GAAP net income | $ | 28,916 | $ | (9,086 | ) | $ | 19,830 | $ | 0.44 | |||
Diluted shares | 44,647 |
(a) | Reflects the tax effect of the non-GAAP adjustments |
(b) | Represents abandoned patents |
(c) | Represents costs related to acquisitions |
(d) | Represents changes in the fair value of contingent consideration liabilities and contingent receivables as a result of acquisitions |
(e) | Costs incurred in responding to an inquiry from the U.S. Department of Justice |
(f) | Represents the bargain purchase gain realized from the acquisition of the critical care division of Argon Medical Devices, Inc. |
Reconciliation of Reported Revenue to Core Revenue (Non-GAAP), Constant Currency Revenue (Non-GAAP), and Core Revenue on a Constant Currency Basis (Non-GAAP) | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
% Change | 2017 | 2016 | % Change | 2017 | 2016 | ||||||||||
Reported Revenue | 23.5% | $ | 186,549 | $ | 151,071 | 23.7% | $ | 357,618 | $ | 289,148 | |||||
Add: Impact of foreign exchange (a) | 2,121 | — | 3,386 | — | |||||||||||
Constant Currency Revenue | 24.9% | $ | 188,670 | $ | 151,071 | 24.9% | $ | 361,004 | $ | 289,148 | |||||
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
% Change | 2017 | 2016 | % Change | 2017 | 2016 | ||||||||||
Reported Revenue | 23.5% | $ | 186,549 | $ | 151,071 | 23.7% | $ | 357,618 | $ | 289,148 | |||||
Less: Revenue from certain acquisitions (b) | 21,483 | — | 38,211 | — | |||||||||||
Core Revenue | 9.3% | $ | 165,111 | $ | 151,071 | 10.5% | $ | 319,407 | $ | 289,148 | |||||
Add: Impact of foreign exchange on core revenue (a) | 1,645 | — | 2,631 | — | |||||||||||
Core revenue on a constant currency basis | 10.4% | $ | 166,756 | $ | 151,071 | 11.4% | $ | 322,038 | $ | 289,148 |
Reconciliation of Reported Gross Margin to Non-GAAP Gross Margin (Non-GAAP) | |||||||
(Unaudited, in thousands) | |||||||
(As a percentage of reported revenue) | |||||||
Three months ended | Six months ended | ||||||
June 30, | June 30, | ||||||
2017 | 2016 | 2017 | 2016 | ||||
Reported Gross Margin | 45.1% | 44.3% | 44.8% | 43.9% | |||
Less: | |||||||
Amortization of intangibles | 2.7 | % | 2.1% | 2.7% | 2.1 | % | |
Inventory mark-up related to acquisitions | 0.5% | 0.0% | 0.8% | 0.1% | |||
Non-GAAP Gross Margin | 48.3% | 46.4% | 48.3% | 46.1% |
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