Merit Medical Systems Q2 Earnings Call Highlights

Key Points

• Merit Medical delivered strong Q2 results: Revenue rose 10% to $418.8 million, with organic constant-currency growth of 9%, driven by broad-based demand across Foundational and Therapeutic products. Non-GAAP EPS increased 18%, while free cash flow reached nearly $52 million.
• Acquisitions and new products exceeded expectations: BioLife is now expected to generate approximately $23 million in annualized 2026 revenue, while View Point Medical’s OneMark system launched in the U.S. and expanded Merit’s oncology market opportunity.
• The company raised its 2026 outlook: Merit now expects 6.9%–7.6% constant-currency revenue growth and non-GAAP EPS of $4.25–$4.35, though third-quarter profitability guidance reflects uncertainty around tariffs and typical seasonal procedure softness.

Merit Medical Systems NASDAQ: MMSI reported second-quarter 2026 revenue of $418.8 million, up 10% on a GAAP basis and 9% on a constant-currency basis from a year earlier, as broad-based demand across its Foundational and Therapeutic product categories lifted organic growth to its strongest quarterly level in three years.

President and Chief Executive Officer Martha Aronson said constant-currency revenue exceeded the high end of the company’s prior outlook, driven by 9% organic growth and contributions from the BioLife and C2 CryoBalloon acquisitions. Both acquired businesses surpassed the company’s expectations during the quarter.

“We were pleased to deliver strong organic growth that not only exceeded the high end of our expectations, but also represents the strongest quarterly organic growth the company has delivered in three years,” Aronson said.

Revenue Growth Broad-Based Across Categories

Total revenue rose by $33.4 million in the second quarter, according to Chief Financial Officer and Treasurer Raul Parra. U.S. sales increased by $26.1 million, or 12%, while international sales increased by $7.3 million, or 5%.

Foundational Products revenue increased $17 million, or 6%, while Therapeutic Products revenue rose $16.4 million, or 14%. Excluding acquired and divested products, Foundational Products grew 7.8% organically and Therapeutic Products grew 11.7% organically.

Parra said Foundational growth was led by the vascular intervention and access platforms, with improvement in original equipment manufacturer, or OEM, sales trends. Therapeutic growth reflected strong performance in cardiac therapies and endoscopy, as well as growth in vascular interventions and oncology.

• OEM sales increased 15% year over year in the second quarter. Management said the business is inherently variable quarter to quarter but continues to expect annual growth in the mid- to high-single-digit range.
• Procedural Solutions sales declined 12% on a constant-currency basis due to the prior divestiture of the DualCap product line. Excluding that impact, Procedural Solutions grew 5% organically.
• Renal Therapies sales declined 2%, though sales increased about 10% when excluding the effect of a product recall discussed in the prior quarter.

During the question-and-answer session, Aronson said the company had not seen a procedure-volume slowdown tied to changes in Affordable Care Act subsidies. She said Merit has been conducting regular checks with its field organization and had not identified a decline in procedures.

Profitability, Cash Flow and Tariff Effects

Merit reported non-GAAP operating margin of 22.6%, an increase of 142 basis points from the prior-year quarter, and non-GAAP earnings per share growth of 18%. The company generated nearly $52 million in free cash flow during the quarter.

Results included $6.9 million in refunds of previously paid tariffs recognized in cost of sales. Excluding the refunds, gross margin was 54.2%, up 98 basis points year over year, while operating margin was 20.9%, compared with 21.2% a year earlier. Parra said the operating-margin result excluding the refund still exceeded the high end of management’s expectations.

Net income was $71.3 million, or $1.19 per share, compared with $61 million, or $1.01 per share, a year earlier. Excluding an approximately $0.09-per-share after-tax benefit from tariff refunds, second-quarter EPS was $1.10, which Parra said exceeded the company’s guidance range by $0.09.

As of June 30, Merit had $448.7 million in cash and cash equivalents, $747.5 million in total debt obligations and about $697 million in available borrowing capacity. Its adjusted net leverage ratio was 1.6 times. Year-to-date cash was essentially unchanged, as $76.6 million in free cash flow and $25.5 million of DualCap divestiture proceeds were partly offset by $90 million used for the View Point Medical acquisition.

Acquisitions and Product Launches

Aronson said integration work is progressing on View Point Medical, BioLife and the C2 CryoBalloon technology acquired from PENTAX Medical.

View Point Medical’s OneMark Detection Imaging System and tissue markers were scheduled for a U.S. commercial launch in July. The ultrasound-enhanced technology is designed to help localize lesions at the time of biopsy. Aronson said OneMark, together with the SCOUT MD localization system launched in late May, gives clinicians options spanning biopsy, localization and surgery.

The company said OneMark expands the addressable U.S. market for its oncology offering to an estimated 1.3 million procedures annually. SCOUT MD offers four distinct reflector shapes intended to make them easier to identify on X-ray, Aronson said.

BioLife’s hemostatic-device operations have been fully integrated, and Merit now expects approximately $23 million in annualized BioLife revenue for 2026, above its original $18 million to $20 million expectation. C2 CryoBalloon production has moved to Merit's South Jordan facility, where an additional production line has been added. Merit maintained its expectation for $8 million to $9 million in annualized C2 revenue.

Management also highlighted progress in endoscopy, including clinical results presented at Digestive Disease Week comparing the cTIF procedure using Merit's EsophyX product with Nissen fundoplication for chronic gastroesophageal reflux disease.

Raised 2026 Outlook

Merit increased its full-year outlook to reflect first-half results. The company now expects 2026 GAAP revenue growth of 7.6% to 8.4%, or constant-currency growth of 6.9% to 7.6%. It raised expected organic constant-currency growth to 6.9% to 7.5%, from 6% to 7% previously.

The company now expects non-GAAP diluted EPS of $4.25 to $4.35, representing growth of 11% to 14%, compared with its prior outlook of $4.01 to $4.15. The forecast assumes a full-year tariff impact of roughly $16 million, or $0.21 per share.

For the third quarter, Merit forecast revenue of $408 million to $413 million, representing 6% to 8% GAAP growth and about 6% to 7.5% constant-currency growth. Organic constant-currency growth is expected to be 7% to 8%. The company forecast non-GAAP operating margin of about 19.6% to 21.5% and non-GAAP EPS of $0.98 to $1.08.

Parra said the wider third-quarter profitability range reflects uncertainty around evolving tariff policies. He also cited the company’s typical seasonal pattern, in which the third quarter is generally softer because of summer procedure trends before a stronger fourth quarter.

Merit reiterated its Continued Growth Initiatives targets for the three-year period ending in 2026: organic constant-currency revenue compound annual growth of 5% to 7%, non-GAAP operating margin of 20% to 22%, and cumulative free cash flow of more than $400 million. Management is also developing its strategic plan for 2027 through 2029, including reviews of product portfolios, organizational structure, capital allocation and potential tuck-in acquisitions.

About Merit Medical Systems (NASDAQ:MMSI)

Merit Medical Systems, Inc is a global manufacturer and marketer of a broad range of medical devices used in diagnostic and interventional procedures. The company's product portfolio encompasses vascular access, drainage, embolotherapy, and interventional oncology devices, as well as radiofrequency ablation systems and hemostasis solutions. These products serve physicians and hospitals in critical care settings and support minimally invasive treatment options across multiple specialties, including cardiology, radiology, oncology, neurology and endoscopy.

Founded in 1987 by Fred Lampropoulos, Merit Medical Systems has grown through both organic development and targeted acquisitions to expand its technology offerings and geographic reach.

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