Merit Medical Reports Results for Quarter Ended June 30, 2020
- Q2 2020 worldwide revenue of $218.4 million, down (14.5)% as reported compared to Q2 2019
- Q2 2020 core revenue on a constant currency basis* down (13.6)% compared to Q2 2019
- Q2 2020 GAAP loss per share was $(0.34), compared to GAAP EPS of $0.12 in Q2 2019
- Q2 2020 non-GAAP EPS* was $0.31, compared to $0.42 in Q2 2019
- Q2 2020 free cash flow* was $32 million, and $47 million YTD
* Core revenue on a constant currency basis, non-GAAP EPS, non-GAAP net income, non-GAAP operating margin, non-GAAP gross margin and free cash flow are non-GAAP financial measures. A reconciliation of these and other non-GAAP financial measures used in this release to their most directly comparable GAAP financial measures is included under the heading “Non-GAAP Financial Measures” below.
SOUTH JORDAN, Utah, July 29, 2020 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading manufacturer and marketer of proprietary disposable medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care and endoscopy, today announced revenue of $218.4 million for the quarter ended June 30, 2020, a decrease of (14.5)% compared to revenue of $255.5 million for the quarter ended June 30, 2019. Core revenue on a constant currency basis* for the second quarter of 2020 was down (13.6)% compared to revenue for the second quarter of 2019.
Merit’s GAAP gross margin for the second quarter of 2020 was 38.6%, compared to GAAP gross margin of 43.8% for the second quarter of 2019. Merit’s non-GAAP gross margin* for the second quarter of 2020 was 44.7%, compared to non-GAAP gross margin* of 48.7% for the second quarter of 2019.
Merit’s GAAP operating margin for the second quarter of 2020 was (8.7)%, compared to GAAP operating margin of 4.8% for the second quarter of 2019. Merit’s non-GAAP operating margin* for the second quarter of 2020 was 11.2%, compared to non-GAAP operating margin* of 13.3% for the second quarter of 2019.
Merit’s GAAP net loss for the second quarter of 2020 was $(19.1) million, or $(0.34) per share, compared to GAAP net income of $6.9 million, or $0.12 per share, for the second quarter of 2019. Merit’s non-GAAP net income* for the quarter ended June 30, 2020 was $17.4 million, or $0.31 per share, compared to non-GAAP net income* of $23.8 million, or $0.42 per share, for the quarter ended June 30, 2019.
Merit’s revenue by category for the three and six-month periods ended June 30, 2020, compared to the corresponding periods in 2019, was as follows (unaudited, in thousands, except for percentages):
|Three Months Ended June 30,||Six Months Ended June 30,|
|% Change||2020||2019||% Change||2020||2019|
|Custom Procedural Solutions||(4.0)||%||45,319||47,216||(0.1)||%||92,940||93,077|
“During the second quarter we continued to make progress on the goals we initiated in early 2019, including the movement of 14 product lines and consolidation of certain facilities,” said Fred P. Lampropoulos, Merit’s Chairman and CEO. “We are particularly pleased with the generation of free cash flow* of $32 million for the quarter and $47 million year to date.”
“We also focused on dealing with the challenges of the COVID-19 pandemic,” Lampropoulos said. “Our priority was the safety of employees. Deemed an ‘essential provider,’ we continued operation in all of our facilities worldwide by implementing CDC recommendations, including temperature testing, social distancing, mask-wearing, frequent hand-washing and installing separation barriers.”
“In order to balance the reduction of incoming sales orders due to the suspension of elective procedures by many facilities we serve, we reduced headcounts, implemented targeted furloughs, and reduced salaries for a number of groups, including all executive positions,” Lampropoulos said. “We also reduced the number of research and development projects to focus on the highest priority projects in order to reach our financial and competitive objectives.”
“During the second quarter, we received the CE mark for the Merit WRAPSODY™ Endoprosthesis Stent System, and we have initiated commercialization in the European Union,” Lampropoulos continued. “We also received approval for the WRAPSODY Arterial Venous access Efficacy (WAVE) IDE trial from the FDA. This approval will allow us to proceed on several cohorts with up to 50 institutions and more than 350 patients, in anticipation of application for the FDA’s consideration of PMA approval for commercialization in the United States. We also introduced new products that address needs in the COVID-19 environment which have had an impact in the second quarter, which we believe will offer additional opportunities.”
“We added three new directors with substantial medical device experience and have formed an Operating Committee to establish future financial and performance objectives that we plan to announce during our third quarter report in October,” Lampropoulos said.
“As recently reported, we reached an agreement with the U.S. Department of Justice to fully resolve its pending investigation,” Lampropoulos said. “Based upon that agreement, we recorded a charge of approximately $18 million during the second quarter. We intend to release additional details regarding the settlement following the finalization of the settlement documents.”
“With COVID-19 cases increasing, the pace of recovery of elective procedures is still uncertain,” Lampropoulos said. “Access to customers and opportunities to pursue clinical trials for new products are still very limited. However, we are still proceeding with new product development, clinical and regulatory activities, and marketing and training programs. Assuming eventual progress in the fight against the COVID-19 pandemic, we believe we are well positioned to provide new products and services as well as reliable supply of our existing products.”
“In order to maintain various departments and prepare to meet the needs of our customers, we plan to reduce certain furloughs and provide guaranteed levels of income for some sales associates, which will add some expense in the third quarter,” Lampropoulos added.
“As we enter the uncertainty of the third quarter, we maintain our guidance suspension for 2020 until we have more visibility into the future,” Lampropoulos continued. “We believe we have substantially balanced the inputs and outputs of revenues and costs, while we strive to maintain a healthy sales force. We anticipate that additional adjustments will be necessary as we navigate these uncharted waters. We remain positive about our prospects for growth and continued profitability as we move forward.”
As of June 30, 2020, Merit had cash on hand of approximately $50 million and net borrowing capacity of approximately $183 million, which was undrawn as of June 30, 2020.
Due to the general uncertainty and rapidly changing global environment related to the COVID-19 pandemic and corresponding economic downturn, Merit’s management has concluded that it cannot issue financial guidance for the remainder of 2020.
Merit will hold its investor conference call (conference ID 6997109) today, Wednesday, July 29, 2020, at 5:00 p.m. Eastern (4:00 p.m. Central, 3:00 p.m. Mountain, and 2:00 p.m. Pacific). The domestic telephone number is (844) 578?9672 and the international number is (508) 637?5656. A live webcast and slide deck will also be available at merit.com.
CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents||$||49,702||$||44,320|
|Trade receivables, net||138,792||155,365|
|Prepaid expenses and other current assets||13,860||12,497|
|Prepaid income taxes||3,493||3,491|
|Income tax refund receivables||10,467||3,151|
|Total current assets||445,945||454,538|
|Property and equipment, net||383,629||378,785|
|Intangible assets, net||413,990||445,312|
|Deferred income tax assets||3,748||3,788|
|Right-of-use operating lease assets||79,051||80,244|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Current portion of long-term debt||7,500||7,500|
|Short-term operating lease liabilities||12,886||11,550|
|Income taxes payable||2,460||2,799|
|Total current liabilities||174,224||181,656|
|Deferred income tax liabilities||45,236||45,236|
|Long-term income taxes payable||347||347|
|Liabilities related to unrecognized tax benefits||1,990||1,990|
|Deferred compensation payable||14,194||14,855|
|Long-term operating lease liabilities||71,785||72,714|
|Other long-term obligations||74,278||56,473|
|Accumulated other comprehensive loss||(12,313||)||(5,294||)|
|Total Stockholders' Equity||928,847||949,944|
|Total Liabilities and Stockholders' Equity||$||1,715,869||$||1,757,321|
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited, in thousands except per share amounts)
|Three Months Ended June 30,||Six Months Ended June 30,|
|COST OF SALES||134,155||143,568||273,896||277,281|
|Selling, general and administrative||
By: GlobenewsWire - 27 Sep 2020Return to news
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