Merit Medical Systems (MMSI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $338 million, up 5.6% year-over-year (6.6% constant currency), with net income up 76.5% to $35.7 million and GAAP EPS rising 75.7% to $0.61; non-GAAP EPS was $0.92, up 16.8%.

• Free cash flow hit a record $58 million for the quarter and exceeded $80 million for the first half; cash and equivalents at June 30, 2024, were $636.7 million.

• Strategic acquisition of EndoGastric Solutions for $105 million closed July 1, 2024, expanding the endoscopy portfolio and expected to be accretive to growth and margins.

• Multiple new product launches and regulatory clearances, including FDA 510(k) and PMA submissions for WrapsodyTM and other devices.

• U.S. revenue led growth, increasing 8.4% year-over-year, while international revenue rose 2.0%; APAC performance was mixed.

Financial highlights

• Q2 2024 GAAP gross margin was 47.7%; non-GAAP gross margin was 51.5%, up 15 basis points year-over-year.

• Q2 2024 GAAP operating margin improved to 13.6%; non-GAAP operating margin was 20.1%, up 92 basis points year-over-year.

• Q2 2024 GAAP net income was $35.7 million ($0.61/share); non-GAAP net income was $53.8 million ($0.92/share).

• Operating cash flow for Q2 2024 was $68.5 million, up from $17.3 million in Q2 2023.

• Cash and equivalents at June 30, 2024, were $636.7 million; total debt was $822.5 million; available borrowing capacity was $680 million.

Outlook and guidance

• FY 2024 revenue guidance raised to $1,335–$1,345 million, up 6–7% year-over-year; constant currency growth projected at 6.9–7.7%.

• Non-GAAP EPS guidance increased to $3.27–$3.35, up 15–17% year-over-year, including $0.04–$0.06 dilution from EndoGastric Solutions.

• Cardiovascular segment expected to grow 5–6%, Endoscopy segment 45–52% for 2024.

• Free cash flow guidance increased to at least $130 million for 2024.

• Q3 2024 revenue expected to grow 5.7–7.1% (GAAP), 6.4–7.8% (constant currency); non-GAAP EPS $0.77–$0.82.