MERIT MEDICAL SYSTEMS INC Q4 FY2024 earnings call

• Fourth quarter total revenue of $355.2 million, up 9% GAAP and 10% constant currency year-over-year, exceeding the high end of Q3 growth expectations.
• Profitability in Q4 was strong: non-GAAP operating profit grew 30%, non-GAAP operating margin was 19.6% (up 305 basis points year-over-year), and non-GAAP EPS grew 26%.
• 2024 was an impressive year: over 8% total constant currency revenue growth (6% organic), non-GAAP gross margin 51.7%, non-GAAP operating margin 19%, and free cash flow over $185 million (up 67% year-over-year).
• 2025 guidance: net revenue growth 8%-10% (7%-9% for cardiovascular, 36%-40% for endoscopy), non-GAAP EPS $3.58-$3.70 (4%-7% growth), free cash flow at least $150 million, and CapEx $90 million-$100 million.

Fourth quarter total revenue was $355.2 million, up 9% year-over-year on a GAAP basis and 10% on a constant currency basis. Cardiovascular segment sales grew 8%, with organic constant currency growth of 6.1% excluding acquired products. Endoscopy segment sales grew 88%, with organic constant currency growth of 6.5% excluding acquired products. U.S. sales increased nearly 14% on a constant currency basis and 9% on an organic constant currency basis. International sales increased 5% year-over-year and 2% on an organic constant currency basis.

• Net revenue growth expected 8%-10% in 2025, with cardiovascular at 7%-9% and endoscopy at 36%-40%; currency headwind ~$3 million (20 basis points).
• Non-GAAP EPS expected $3.58-$3.70, up 4%-7% year-over-year.
• Free cash flow at least $150 million in 2025, and CapEx $90 million-$100 million.
• First quarter total revenue expected GAAP 8.2%-9.7% growth, constant currency 8.8%-10.3% growth, non-GAAP operating margin 16.7%-17.1%, and non-GAAP EPS $0.73-$0.76.

• Tariff uncertainties: 2025 guidance does not factor in potential new or modified tariffs; ultimate impact depends on timing, amount, scope, etc., which are currently unclear.

Q: Jason Bednar of Piper Sandler asked about EPS guidance and factors influencing it.

A: Raul Parra responded that interest expense and convertible debt dilution impacted EPS guidance.

Q: Larry Biegelsen of Wells Fargo asked about OEM growth and WRAPSODY.

A: Fred Lampropoulos and Raul Parra talked about OEM strong demand and WRAPSODY's positive market response.

Q: Steve Lichtman of Oppenheimer asked about gross margin and WRAPSODY investments.

A: Raul Parra discussed gross margin execution and Fred Lampropoulos talked about WRAPSODY training and investments.

Q: David Rescott of Baird asked about WRAPSODY revenue impact on EPS and Endoscopy segment guidance.

A: Raul Parra clarified WRAPSODY revenue inclusion and Endoscopy integration.

Q: Mike Matson of Needham & Company asked about currency impact and WRAPSODY international market.

A: Raul Parra talked about hedging and Fred Lampropoulos mentioned WRAPSODY's positive international response.

Q: Jayson Bedford of Raymond James asked about operational integration and SKU rationalization.

A: Raul Parra discussed Endoscopy and Cook integration and Fred Lampropoulos talked about SKU rationalization.

Q: John Young of Canaccord asked about WRAPSODY application deadline, supply chain, and tariffs.

A: Fred Lampropoulos said application was on time, Raul Parra talked about supply chain progress, and both discussed tariff uncertainties.

Q: Michael Petusky of Barrington Research asked about R&D expense and CapEx cadence.

A: Raul Parra talked about R&D investments and CapEx related to distribution center.

Q: Jim Sidoti of Sidoti & Company asked about CapEx and debt paydown.

A: Raul Parra explained distribution center benefits and debt paydown strategy.