Merit Medical Systems, Inc. Q4 FY2025 earnings call

Martha Aronson discussed the fourth quarter and full year 2025 financial results, thanked employees, and introduced 2026 guidance. Raul Parra reviewed revenue by product category, P&L performance, balance sheet, and 2026 financial guidance. Martha Aronson provided updates on her first 100 days as CEO, including listening tour, new executive leadership team, platform structure, and focus on growth initiatives and product groups like foundational and therapeutic products.

Fourth quarter total revenue was $393.9 million, up 11% year-over-year on a GAAP basis and 10% on a constant currency basis. Constant currency revenue growth in Q4 was driven by 6.6% organic constant currency growth and acquisitions. Cardiovascular segment sales grew 9%, with Cardiac Intervention up 21% and Peripheral Intervention up 13%. Endoscopy segment sales grew 15%. Full year 2025 total constant currency revenue growth was 11%, non-GAAP operating margin was 20.3%, and free cash flow was over $215 million. 2026 guidance calls for constant currency growth, non-GAAP operating margin expansion, and strong free cash flow, with total GAAP net revenue growth range 6%-8% and constant currency range 5%-7%, excluding inorganic revenue contributions from acquisitions, and expected divestiture of DualCap product line impacting revenue growth.

2026 guidance assumes total GAAP net revenue growth range 6%-8% and constant currency range 5%-7%, excluding 80 basis point tailwind from foreign currency exchange rates. Non-GAAP diluted EPS range $4.01-$4.15, up 5%-8% year-over-year. Non-GAAP operating margins range 20.6%-21%. Expect to generate free cash flow of at least $200 million in 2026, with $90 million capital expenditures. First quarter 2026 total revenue expected $375 million-$380 million, non-GAAP operating margins 16.7%-18.5%, non-GAAP EPS $0.77-$0.87.

Risks include dynamic and uncertain global macro environment impacting business, tariffs and trade policies affecting gross margin, supply chain challenges, and potential impact of U.S. Supreme Court decisions on tariffs and retaliatory actions.

Q: Congrats on another good quarter, question on gross margin drivers.

A: Raul Parra said it's more of the same, focusing on mix, pricing, cost discipline, SKU rationalization, R&D and manufacturing.

Q: Question on Rhapsody, is it where you thought it would be?

A: Martha Aronson said they have high confidence in $7 million revenue number, Rhapsody is a great product but in competitive space.

Q: Question on free cash flow guidance, why 2026 guiding down?

A: Raul Parra said it's a minimum approach with timing-based items.

Q: Question on M&A areas, what are you looking at?

A: Martha Aronson said looking at platforms, strategic and financial criteria, both foundational and therapeutic products.

Q: Question on OEM, Q4 inventory destocking?

A: Raul Parra said U.S. OEM had inventory destocking, international due to macro environment.

Q: Question on Q1 guidance, organic growth and operating margin?

A: Raul Parra said drivers include DualCap divestiture, OUS softness, China VBP impact, supply chain challenges.

Q: Question on China growth in 2026?

A: Raul Parra said China was down in line with expectations.

Q: Question on margin contribution from DualCap sale?

A: Raul Parra said minimal EPS impact, 140 basis point headwind to revenue growth.

Q: Question on Rhapsody sales force feedback, pipeline for 2026?

A: Martha Aronson said sales force is energized, pursuing all sites, will do strategic planning on long-term road maps.

Q: Question on R&D spend, where are dollars going?

A: Raul Parra said R&D as percentage of revenue will be about 6%.

Q: Question on first quarter margin considerations?

A: Raul Parra said tariffs, seasonality, and larger expense base on smaller revenue quarter impact.

Q: Question on capital allocation appetite?

A: Martha Aronson said there is appetite for slightly larger M&A, disciplined approach.