Yahoo Finance Why Is Merit Medical (MMSI) Down 1% Since Last Earnings Report?
A month has gone by since the last earnings report for Merit Medical (MMSI). Shares have lost about 1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Merit Medical due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Merit Medical Tops Q1 Earnings Estimates, Ups FY23 View
Merit Medical delivered adjusted earnings per share of 64 cents in the first quarter of 2022, up by 20.8% year over year. The figure also surpassed the Zacks Consensus Estimate by 16.4%.
The adjustments include expenses related to the amortization of intangibles, and corporate transformation and restructuring, among others.
Our projection of adjusted earnings per share was 55 cents.
GAAP earnings per share for the quarter was 36 cents a share, up by 100% year over year.
Revenues in Detail
Merit Medical registered revenues of $297.6 million in the first quarter, up 8% year over year. The figure surpassed the Zacks Consensus Estimate by 5.9%.
The first-quarter revenue compares to our estimate of $279.6 million.
Per management, the overall top line was driven by 12% growth in U.S. sales and 3% growth in international sales. Strong performance by both segments and the Cardiovascular segment’s product categories also contributed to the top line.
CER, organic revenues inched up 9.8% year over year.
Segmental Details
Merit Medical operates through two segments — Cardiovascular and Endoscopy.
The Cardiovascular unit reported first-quarter revenues of $287.9 million, up 7.9% year over year on a reported basis. CER, organic revenues inched up 9.7% year over year.
This figure compares to our segmental projection of $270.7 million for the first quarter.
The Cardiovascular segment includes the following product categories: PI, CI, CPS and OEM.
On a reported basis, PI product line revenues were $113.8 million, up 7.6% year over year, whereas CI revenues rose 4.7% to $85.3 million. OEM revenues climbed 23.2% to $41.2 million, whereas CPS revenues improved 3.1% to $47.7 million, both on a reported basis.
This compares to our projections of $109 million, $82.3 million, $33.9 million and $45.4 million, respectively.
Endoscopy devices’ revenues totaled $9.6 million, up 13.1% year over year. CER, organic revenues also jumped 13.6% year over year.
This figure compares to our segmental projection of $8.9 million for the first quarter.
Margins
In the quarter under review, Merit Medical’s gross profit rose 14.4% to $138.4 million. The gross margin expanded 260 basis points (bps) to 46.5%.
We had projected 46.2% of gross margin for the first quarter.
Selling, general & administrative expenses rose 7.3% to $90.1 million. Research and development expenses rose 22.6% year over year to $21.3 million. Adjusted operating expenses of $111.5 million increased 9.9% year over year.
Adjusted operating profit totaled $26.9 million, reflecting a 37.9% increase from the prior-year quarter. Adjusted operating margin in the first quarter expanded by 196 bps to 9%.
Financial Position
Merit Medical exited first-quarter 2023 with cash and cash equivalents of $57.9 million compared with $58.4 million at the end of 2022. Total debt (including the current portion) at the end of first-quarter 2023 was $197.7 million compared with $198 million at the end of 2022.
Net cash flow from operating activities at the end of first-quarter 2023 was $14.5 million compared with $12 million a year ago.
2023 Guidance
Merit Medical has raised its 2023 outlook.
Net revenues for 2023 are now projected to be between $1.217 billion and $1.229 billion, reflecting an increase of approximately 6-7% over the comparable reported figures of 2022. This is up from the earlier guidance of $1.194 billion and $1.210 billion, reflecting an increase of approximately 4-5% over the comparable reported figures of 2022. The Zacks Consensus Estimate for the same is pegged at $1.20 billion.
Net revenues from the cardiovascular segment are now expected to be in the range of $1.179 billion-$1.191 billion, representing an increase of approximately 5-6% over the comparable reported figures of 2022. This is up from the prior outlook of $1.156 billion-$1.172 billion, representing an increase of approximately 3-5% over the comparable reported figures of 2022.
The endoscopy segment’s net revenues are now projected to be between $37.8 million and $38.1 million, representing an increase of approximately 15-16% over the comparable reported figures of 2022. This is up from the prior outlook of $37.5 million-$37.8 million, representing an increase of approximately 14-16% over the comparable reported figures of 2022.
Adjusted earnings per share for 2023 is now projected to be within $2.83-$2.93, up from the earlier projection of $2.80-$2.89. The Zacks Consensus Estimate for the same stands at $2.88.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
Currently, Merit Medical has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Merit Medical has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
