Merit Medical ((MMSI)) has held its Q4 earnings call. Read on for the main highlights of the call.
Merit Medical’s recent earnings call painted a predominantly positive picture, highlighting significant revenue growth and profitability increases. The company celebrated successful acquisitions and robust free cash flow, although it acknowledged challenges in international sales, particularly in the EMEA and China regions. Increased operating expenses and tariff uncertainties were also noted as potential hurdles.
Strong Revenue Growth
Merit Medical reported an impressive fourth quarter revenue of $355.2 million, marking a 9% increase year-over-year on a GAAP basis and a 10% rise on a constant currency basis. This performance exceeded expectations, underscoring the company’s robust growth trajectory.
Record Profitability
The company achieved a remarkable non-GAAP operating profit growth of 30%, with an operating margin of 19.6%, up 305 basis points from the previous year. This record profitability highlights Merit Medical’s effective cost management and operational efficiency.
Significant Free Cash Flow
Merit Medical generated over $185 million in free cash flow for the year, representing a 67% increase from 2023. This substantial cash flow provides the company with flexibility for future investments and strategic initiatives.
Strong Segment Performance
The company’s cardiovascular segment grew by 8%, while the endoscopy segment saw an impressive 88% growth. Additionally, sales of peripheral intervention products increased by 5.5%, indicating strong performance across key business areas.
Successful Integrations
Merit Medical successfully completed the integrations of EndoGastric Solutions and Cook Medical acquisitions ahead of schedule, demonstrating its capability to effectively manage and integrate new businesses.
International Sales Challenges
International sales grew by only 5% year-over-year, with the EMEA region underperforming due to challenging conditions in Russia and distributor markets. This highlights the need for strategic adjustments in these regions.
China Market Volatility
Sales in China increased by a modest 4%, impacted by volume-based procurement and pricing headwinds. This volatility underscores the complexities of operating in the Chinese market.
Increased Operating Expenses
Operating expenses rose by 9% from the previous year, driven by a 6% increase in SG&A and a 26% rise in R&D expenses. This increase reflects the company’s investment in growth and innovation.
Tariff Uncertainty
Potential impacts of new or modified tariffs were not included in the 2025 guidance, introducing an element of uncertainty that the company will need to navigate.
Positive Guidance for 2025
Looking ahead, Merit Medical has provided optimistic guidance for 2025, with GAAP net revenue growth projected between 8% to 10% year-over-year. The company also anticipates a non-GAAP EPS increase of 4% to 7%, along with plans to generate at least $150 million in free cash flow.
In conclusion, Merit Medical’s earnings call reflected a positive sentiment, driven by strong revenue growth and record profitability. While challenges in international markets and increased expenses present hurdles, the company’s forward-looking guidance suggests continued growth and strategic focus in the coming year.