Merit Medical ((MMSI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Merit Medical’s recent earnings call conveyed a positive sentiment, highlighting robust revenue growth, improved operating margins, and increased cash flow. The company also discussed strategic acquisitions and leadership changes. However, challenges such as reimbursement delays for WRAPSODY CIE, reduced sales in China, and ongoing tariff impacts were acknowledged.
Strong Revenue Growth
Merit Medical reported a total revenue of $382.5 million, marking a 13% increase year-over-year on a GAAP basis and a 12.5% increase on a constant currency basis. Notably, the Cardiovascular segment sales rose by 10%, while the Endoscopy segment experienced a remarkable 81% increase, underscoring the company’s strong market presence.
Record Operating Margin
The company achieved a record non-GAAP operating margin of 21.2%, an increase of nearly 109 basis points year-over-year. This marks the highest operating margin in any quarter since Merit Medical became a public company, reflecting efficient operational management.
Significant Free Cash Flow Increase
Merit Medical generated $70 million in free cash flow, representing a 20% increase year-over-year. This significant cash flow growth highlights the company’s strong financial health and ability to generate cash from its operations.
Biolife Acquisition
The acquisition of Biolife Delaware, L.L.C for $120 million introduces products like StatSeal and WoundSeal to Merit Medical’s portfolio. This acquisition presents a growth opportunity in a $350 million global addressable market, expanding the company’s product offerings.
New CEO Appointment
Martha Aronson has been appointed as the new President and Chief Executive Officer, effective October 3, 2025. Her leadership is anticipated to steer the company through its next phase of growth and strategic development.
Lower-than-Expected Performance in China
Sales in China decreased by 6% due to macroeconomic challenges, affecting the overall performance in the APAC region. This decline highlights the impact of external economic factors on the company’s international sales.
WRAPSODY CIE Reimbursement Delay
A misunderstanding in filing for TPT add-on payment led to a delay in securing reimbursement for WRAPSODY CIE in the outpatient setting. This delay pushes potential contributions from this product to 2026, affecting short-term revenue expectations.
Tariff Impact
Tariffs continue to pose a challenge, with a potential $26.3 million impact on the 2025 cost of goods. However, the company anticipates a lower impact at the high end of the range, estimated at $7 million, mitigating some of the financial strain.
Forward-Looking Guidance
Merit Medical updated its financial guidance for 2025, projecting total revenue growth of 10% to 11% year-over-year and non-GAAP EPS guidance of $3.52 to $3.72. The company attributes this optimistic outlook to lower-than-expected tariff impacts and strong sales performance, indicating confidence in its strategic direction.
In summary, Merit Medical’s earnings call reflected a strong financial performance with notable revenue growth and operational efficiency. Despite challenges such as reimbursement delays and reduced sales in China, the company remains optimistic about its future, supported by strategic acquisitions and leadership changes.