Merit Medical Announces Results for the Quarter Ended September 30, 2012

Merit Medical Announces Results for the Quarter Ended September 30, 2012

Revenues Up 6% for the Quarter and 9% Year to Date

SOUTH JORDAN, Utah, Oct. 25, 2012 (GLOBE NEWSWIRE) -- Merit Medical Systems,
Inc. (Nasdaq:MMSI), a leading manufacturer and marketer of proprietary
disposable medical devices used in interventional and diagnostic procedures,
particularly in cardiology, radiology and endoscopy, today announced revenues
of $95.9 million for the quarter ended September 30, 2012, an increase of 6%
over revenues of $90.5 million for the third quarter of 2011. Revenues for the
nine-month period ended September 30, 2012 were a record $292.1 million,
compared with $268.4 million for the comparable nine-month period in 2011, an
increase of 9%.

Merit's non-GAAP net income for the quarter ended September 30, 2012, adjusted
to eliminate non-recurring costs and amortization of intangibles, was $8.5
million, up 11%, or $0.20 per share, compared to $7.7 million, or $0.18 per
share, for the quarter ended September 30, 2011.

Merit's non-GAAP net income for the nine months ended September 30, 2012,
adjusted to eliminate non-recurring costs and amortization of intangibles, was
up 5% to a record $24.6 million, or $0.58 per share, compared to $23.5
million, or $0.60 per share, for the corresponding period of 2011.

GAAP net income for the quarter ended September 30, 2012 was a record $7.2
million, or $0.17 per share, compared to $4.6 million, or $0.11 per share, for
the comparable quarter of 2011.

GAAP net income for the nine-month period ended September 30, 2012 was a
record $19.1 million, or $0.45 per share, compared to $18.1 million, or $0.47
per share, for the corresponding period of 2011.

"We experienced our typical summer slowdown in the third quarter, due to a
lower number of procedures and the annual European summer holiday season,"
said Fred P. Lampropoulos, Merit's Chairman and Chief Executive Officer."We
continue to expect growth for the year to be within our previously forecasted
range of 9-12%.Recent 510(k) clearance of our Merit Laureate® hydrophilic
guide wire has reinvigorated our U.S. sales force.With the Merit Laureate
cleared in China and now again in the United States, we expect substantial
growth for the next several years.We have also completed the transfer of our
stent manufacturing to a new vendor, which we expect will save us almost $2
million in 2013.We believe this move will improve both our gross margin and
our competitive position.We also expect to launch a number of new products in
the next few quarters, including the TIO™ three-in-one oral airway bite block,
the One Snare™ single-loop device, the BowTie™ guide wire insertion device,
the PHD™ hemostasis valve, the Concierge® guiding catheter and the Elation™
esophageal dilatation balloon."

"Additionally, we are pleased to announce that we have reached an agreement in
principle to acquire Medigroup, Inc., a manufacturer of peritoneal dialysis
catheters," Lampropoulos continued."The Company, based in Illinois, has a
broad product line of catheters and implantation devices.Medigroup's current
annual sales are approximately $2 million, mostly in the United States, and we
plan to offer the product line immediately on a worldwide basis.While growing
in the United States, peritoneal dialysis is the procedure of choice over
chronic catheters in many international markets. Medigroup is profitable, with
75% gross margins, and we believe the transaction will be immediately
accretive for us.We believe this opportunity will enhance our overall
dialysis business, and we expect to close in the next few weeks."

In the third quarter of 2012, compared to the third quarter of 2011, Merit
Endotek sales were up 29%; catheter sales grew 8%; stand-alone device sales
rose 8%; BioSphere sales increased 7%; inflation device sales were up 6%; and
custom kit and tray sales were essentially flat.Excluding lower sales to an
OEM customer, inflation device sales rose 6%.

For the nine-month period ended September 30, 2012, compared to the nine-month
period ended September 30, 2011, Merit Endotek sales were up 31%; catheter
sales rose 17%; stand-alone device sales grew 13%; BioSphere sales rose 9%;
inflation device sales increased 3%; and custom kit and tray sales were up
2%.Excluding decreased sales to the OEM customer referenced above, inflation
device sales were up 7%.

Gross margin for the third quarter of 2012 was 47.3% of sales, up 190 basis
points, compared to 45.4% of sales for the third quarter of 2011.Gross margin
for the nine-month period ended September 30, 2012 was 46.7% of sales, up 70
basis points, compared to 46.0% of sales for the comparable period of
2011.The improvement in gross margin for both periods can be attributed
primarily to increased overhead and manufacturing efficiencies resulting from
higher production volumes, increased sales of higher-margin products,
including the QuadraSphere® and Merit Endotek products, and increased direct
sales in China.

Selling, general and administrative expenses for the third quarter of 2012
were 30.1% of sales, compared to 28.4% of sales for the third quarter of
2011.For the nine-month period ended September 30, 2012, SG&A expenses were
30.3% of sales, compared to 28.5% of sales for the first nine months of
2011.The SG&A increase for both periods can be attributed primarily to
addition of sales and marketing personnel, both domestically and
internationally, and the development of programs to improve distribution and
increase market share for new and existing products.SG&A expenses for the
third quarter of 2012 decreased sequentially $1.3 million, or 4.4%, when
compared to SG&A expenses for the second quarter of 2012.

Research and development costs during the third quarter of 2012 were 7.4% of
sales, compared to 6.0% of sales for the third quarter of 2011.Research and
development costs were 6.9% of sales for the first nine months of 2012,
compared to 5.9% of sales for the comparable period of 2011.The increase in
R&D costs for both periods can be attributed primarily to the addition of
personnel to perform the HiQuality study and to support new development
projects.

Merit's income from operations was $9.1 million for the third quarter of 2012,
compared to $6.5 million for the third quarter of 2011.For the nine-month
period ended September 30, 2012, income from operations was $25.3 million,
compared to $27.6 million for the comparable period of 2011.

Merit's income tax expense for the third quarter of 2012 reflects an effective
tax rate of 20.0%, compared to an effective tax benefit of 31.7% for the third
quarter of 2011.For the nine-month period ended September 30, 2012, Merit's
effective tax rate was 26.0%, compared to 33.3% for the comparable period of
2011.The decrease in the effective income tax rate for the three-
andnine-month periods ended September 30, 2012, compared to the corresponding
periods of 2011, was primarily attributable to the release of FIN 48 reserves
due to statute of limitation expirations, an increase to the Domestic
Production Activity deduction, and increased research and development credits
in the United States and foreign jurisdictions. Merit's effective income tax
rate was also reduced by a higher mix of earnings in foreign jurisdictions
(primarily Ireland), which are generally taxed at lower rates than Merit's
U.S. operations.

CONFERENCE CALL

Merit Medical invites all interested parties to participate in its conference
call today, (Thursday, October 25^th, 2012) at 5:00 p.m. Eastern (4:00 p.m.
Central, 3:00 p.m. Mountain, and 2:00 p.m. Pacific).The domestic telephone
number is (877) 941-1466, and the international number is (480) 629-9773.A
live webcast will also be available for the conference call at www.merit.com
and www.fulldisclosure.com.

BALANCE SHEET
(Unaudited in thousands)
                                                September 30, December 31,
                                                 2012          2011
ASSETS                                                        
Current Assets                                                
Cash and cash equivalents                        $9,465     $10,128
Trade receivables, net                           47,720      40,550
Employee receivables                             235         154
Other receivables                                3,034       1,750
Inventories                                      78,795      69,911
Prepaid expenses                                 4,371       3,775
Prepaid income taxes                             881         883
Deferred income tax assets                       3,705       3,704
Income tax refunds receivable                    672         2,797
Total Current Assets                             148,878     133,652
                                                             
Property and equipment, net                      215,946     179,140
Intangible assets:                                            
Developed technology, net                        48,723      35,415
Other, net                                       24,293      21,254
Goodwill                                         65,854      61,144
Deferred income tax assets                       5,365       5,366
Marketable Securities                                         2,798
Other assets                                     10,127      8,248
Total Assets                                     $519,186   $447,017
                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY                          
Current Liabilities                                           
Trade payables                                   27,050      22,727
Accrued expenses                                 24,007      20,197
Advances from employees                          630         225
Income taxes payable                             842         646
Total Current Liabilities                        52,529      43,795
                                                             
                                                             
Deferred income tax liabilities                  2,135       2,112
Liabilities related to unrecognized tax benefits 2,495       3,489
Deferred compensation payable                    5,422       4,585
Deferred credits                                 2,971       1,984
Long-term debt                                   64,500      30,737
Other long-term obligations                      8,101       3,226
Total Liabilities                                138,153     89,928
                                                             
Stockholders' Equity                                          
Common stock                                     171,440     166,231
Retained earnings                                209,777     190,708
Accumulated other comprehensive income (loss)    (184)        150
Total stockholders' equity                       381,033     357,089
Total Liabilities and Stockholders' Equity       $519,186   $447,017



INCOME STATEMENT
(Unaudited, in thousands except per share amounts)
                                                     
                                Three Months Ended    Nine Months Ended
                                 September 30,        September 30,
                                2012       2011       2012        2011
                                                               
SALES                            $95,907 $90,477 $292,057 $268,357
                                                               
COST OF SALES                    50,572   49,423   155,528   145,034
                                                               
GROSS PROFIT                     45,335   41,054   136,529   123,323
                                                               
OPERATING EXPENSES                                              
Selling, general and             28,880   25,708   88,638    76,474
administrative
Research and development         7,098    5,401    20,130    15,847
Acquired in-process research and 275      3,438    2,450     3,438
development
Total                            36,253   34,547   111,218   95,759
                                                               
INCOME FROM OPERATIONS           9,082    6,507    25,311    27,564
                                                               
OTHER INCOME (EXPENSE)                                          
Interest income                  57       36       176       52
Interest (expense)               (128)     (19)      (352)      (755)
Other income                     26       159      633       238
Total other income (expense) -   (45)      176      457       (465)
net
                                                               
INCOME BEFORE INCOME TAX EXPENSE 9,037    6,683    25,768    27,099
                                                               
INCOME TAX EXPENSE               1,811    2,120    6,699     9,025
                                                               
NET INCOME                       $7,226  $4,563  $19,069  $18,074
                                                               
EARNINGS PER SHARE--                                            
Basic                            $0.17   $0.11   $0.45    $0.47
                                                               
Diluted                          $0.17   $0.11   $0.45    $0.47
                                                               
AVERAGE COMMON SHARES--                                         
Basic                            42,202     41,909     42,087      38,123
                                                               
Diluted                          42,692     42,502     42,536      38,832

Although Merit's financial statements are prepared in accordance with
accounting principles which are generally accepted in the United States of
America ("GAAP"), Merit's management believes that certain non-GAAP financial
measures provide investors with useful information regarding the underlying
business trends and performance of Merit's ongoing operations and can be
useful for period-over-period comparisons of such operations. The following
table sets forth supplemental financial data and corresponding reconciliations
to GAAP financial statements for the three- and nine-month periods ended
September 30, 2012 and 2011.Readers should consider these non-GAAP measures
in addition to, not as a substitute for, financial reporting measures prepared
in accordance with GAAP.These non-GAAP financial measures exclude some, but
not all, items that affect Merit's net income.Additionally, these
calculations may not be comparable with similarly titled measures of other
companies.

                                    Three Months Ended  Nine Months Ended
                                     September 30,      September 30,
                                    2012      2011      2012       2011
Non-GAAP ADJUSTMENTS                                             
GAAP net income                      $7,226 $4,563 $19,069 $18,074
                                                                
Acquisition costs                                      67       86
Severance                                              252      
Fair value write-up of acquired               117               644
inventory sold (a)
Long-term asset impairment charges   17      42      27       59
(b)
Acquired in-process research and     275     3,438   2,450    3,438
development
Amortization of intangible assets                                
Cost of sales                        1,200   659     3,196    1,900
SG&A expenses                        646     784     2,498    2,603
FV adjustment to contingent          (90)              370      
considerations (c)
Income tax effect of reconciling     (778)    (1,915)  (3,367)   (3,317)
items (d)
                                                                
Non-GAAP net income                  $8,496 $7,688 $24,562 $23,487
                                                                
Non-GAAP net income per share        $0.20  $0.18  $0.58   $0.60
                                                                
Diluted shares used to compute       42,692  42,502  42,536   38,832
Non-GAAP net income per share

Merit's non-GAAP income, after giving effect to the adjustments referenced in
the preceding table, does not reflect stock-based compensation expense of
approximately $429,000 and approximately $436,000 for the three months ended
September 30, 2012 and 2011, respectively, and stock-based compensation of
approximately $1.5 million and approximately $1.1 million for the nine months
ended September 30, 2012 and 2011, respectively.

(a) Increase in cost of goods sold related to the mark-up of finished goods
associated with Merit's acquisition of BioSphere Medical, Inc.

(b) Amounts represent abandoned patents.

(c) Represents changes in the fair value of contingent consideration
liabilities for recent acquisitions.

(d) Reflects an estimated annual income tax rate of 38% on a non-GAAP basis.

ABOUT MERIT

Founded in 1987, Merit Medical Systems, Inc. is engaged in the development,
manufacture and distribution of proprietary disposable medical devices used in
interventional and diagnostic procedures, particularly in cardiology,
radiology and endoscopy.Merit serves client hospitals worldwide with a
domestic and international sales force totaling approximately 170 individuals.
Merit employs approximately 2,600 people worldwide with facilities in Salt
Lake City and South Jordan, Utah; Angleton, Texas; Richmond, Virginia;
Maastricht and Venlo, The Netherlands; Paris, France; Galway, Ireland;
Beijing, China; Copenhagen, Denmark; and Rockland, Massachusetts.

The Merit Medical Systems, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3282

Statements contained in this release which are not purely historical,
including, without limitation, statements regarding Merit's forecasted
revenues, net income, financial results or anticipated acquisitions, are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to risks and uncertainties such
as those described in Merit's Annual Report on Form 10-K for the year ended
December 31, 2011. Such risks and uncertainties include risks relating to
Merit's potential inability to successfully manage growth through
acquisitions, including the inability to commercialize technology acquired
through recent, proposed or future transactions;product recalls and product
liability claims; expenditures relating to research, development, testing and
regulatory approval or clearance of Merit's products and risks that such
products may not be developed successfully or approved for commercial use;
greater governmental scrutiny and regulation of the medical device industry;
reforms to the 510(k) process administered by the U.S. Food and Drug
Administration; compliance with governmental regulations and administrative
procedures; potential restrictions on Merit's liquidity or its ability to
operate its business by its current debt agreements; possible infringement of
Merit's technology or the assertion that Merit's technology infringes the
rights of other parties; the potential of fines, penalties, or other adverse
consequences if Merit's employees or agents violate the U.S. Foreign Corrupt
Practices Act or other laws and regulations; laws targeting fraud and abuse in
the healthcare industry; potential for significant adverse changes in, or
failure to comply with, governing regulations; the effect of changes in tax
laws and regulations in the United States or other countries; increases in the
price of commodity components; negative changes in economic and industry
conditions in the United States and other countries; termination or
interruption of relationships with Merit's suppliers, or failure of such
suppliers to perform; fluctuations in Euro and GBP exchange rates; Merit's
need to generate sufficient cash flow to fund its debt obligations, capital
expenditures, and ongoing operations; concentration of Merit's revenues among
a few products and procedures; development of new products and technology that
could render Merit's existing products obsolete; market acceptance of new
products; volatility in the market price of Merit's common stock; modification
or limitation of governmental or private insurance reimbursement policies;
changes in health care markets related to health care reform initiatives;
failure to comply with applicable environmental laws; changes in key
personnel; work stoppage or transportation risks; uncertainties associated
with potential healthcare policy changes which may have a material adverse
effect on Merit; introduction of products in a timely fashion; price and
product competition; availability of labor and materials; cost increases;
fluctuations in and obsolescence of inventory; and other factors referred to
in Merit's Annual Report on Form 10-K for the year ended December 31, 2011 and
other materials filed with the Securities and Exchange Commission. All
subsequent forward-looking statements attributable to Merit or persons acting
on its behalf are expressly qualified in their entirety by these cautionary
statements. Actual results will differ, and may differ materially, from
anticipated results. Financial estimates are subject to change and are not
intended to be relied upon as predictions of future operating results, and
Merit assumes no obligation to update or disclose revisions to those
estimates.

CONTACT: Anne-Marie Wright, Vice President
         Corporate Communications
         (801) 208-4167
         e-mail: awright@merit.com
         Fax: (801) 253-1688

company logo
 
Press spacebar to pause and continue. Press esc to stop.