SOUTH JORDAN, Utah, Feb. 28, 2007 (PRIME NEWSWIRE) -- Merit Medical Systems, Inc. (Nasdaq:MMSI), a manufacturer and marketer of proprietary disposable devices used primarily in cardiology and radiology procedures, today announced financial results for the fourth quarter and fiscal year ended December 31, 2006.
For the fourth quarter of 2006, the Company reported record revenue of $50.8 million, a 19.1% increase over revenue of $42.7 million for the fourth quarter of 2005. Net income for the fourth quarter of 2006 was $3.1 million, or $0.11 per share. This compares to net income of $3.7 million, or $0.13 per share, reported for the fourth quarter of 2005. Earnings per share for the fourth quarter of 2006 were negatively impacted by an impairment charge of approximately $929,000, or $0.02 per share, which was primarily associated with intellectual property assets acquired from Sub-Q Inc. in March 2005, as well as an expense of approximately $306,000 attributable to the Company's adoption of Statement of Financial Accounting Standards No. 123(R), Share Based Payment, effective January 1, 2006.
For the year ended December 31, 2006, the Company reported record revenue of $190.7 million, a 14.5% increase over revenue of $166.6 million in revenue reported for the year ended December 31, 2005. In addition, the Company reported net income of $12.3 million, or $0.44 per share, for calendar year 2006. This compares to net income of $15.8 million, or $0.57 per share, for calendar year 2005. Earnings per share for 2006 were affected by the impairment charge mentioned above as well as the expense of approximately $1.5 million, or $0.03 per share, attributable to the Company's adoption of SFAS No. 123(R).
Sales in each of the Company's product categories grew for the fourth quarter and year ended December 31, 2006. For the fourth quarter of 2006, compared to the fourth quarter of 2005, stand-alone device sales rose 25%; custom kit and tray sales increased 24%; catheter sales rose 16%; and inflation device sales increased 11%.
For the year ended December 31, 2006, compared to the year ended December 31, 2005, catheter sales rose 20%; stand-alone device sales increased 18%; custom kit and tray sales rose 15%; and inflation device sales rose 9%.
"Across the board sales growth, the acquisition of MCTec, Merit's internal research and development, and product line acquisitions such as the Futura(r) safety scalpel and the Honor(r) hemostasis valve contributed to the increase in our growth rate from 11% in 2005 to 14.5% in 2006," said Fred P. Lampropoulos, Merit's Chairman and Chief Executive Officer. "The Company is engaged in substantial internal cost savings initiatives as well as a stepped-up focus on off-shore manufacturing to improve gross margins."
Gross margins were down from 38.8% of sales in the fourth quarter of 2005 to 37.3% of sales in the fourth quarter of 2006. Gross margins were down from 41.5% of sales for calendar year 2005 to 38.3% of sales for calendar year 2006. The gross margin decline in the fourth quarter and the year ended December 31, 2006 was due primarily to expenses incurred during the second half of 2005 for new facilities and related costs (i.e. utilities, maintenance, cleaning and taxes) and equipment as well as the increased cost of direct labor, increased health insurance costs and the adoption of SFAS No. 123(R).
Selling, general and administrative expenses were 23.4% and 23.9% of sales for the fourth quarter and calendar year 2006, respectively, compared with 22.3% and 23.2% of sales for the comparable periods of 2005. The impairment charge and the adoption of SFAS 123(R) mentioned above increased SG&A expenses by $1.1 million, or 2.2% of sales, and $1.9 million, or 1.0% of sales, for the fourth quarter and calendar year 2006, respectively.
Research and development costs were 4.6% and 4.5% of sales, respectively, for the fourth quarter and year ended December 31, 2006, compared to 4.5% and 4.2% of sales for the comparable periods of 2005.
Merit's effective tax rates for the fourth quarter and calendar year 2006 were 35.5% and 35.9%, respectively, compared to 28.0% and 34.0% for the same periods of 2005. The increase in the effective tax rate for 2006 over 2005 was the result of the reimbursement in 2005 by the Company of costs incurred by its Irish operation for the development of two new products that are taxed at a lower income tax rate than in the United States.
The Company's cash position increased to $9.8 million on December 31, 2006, compared to $4.6 million on December 31, 2005.
Based on the Company's recent acquisition of Datascope Corporation's chronic dialysis catheter product line, its recently announced distribution agreement with Milamy Partners LLC regarding the KanguruWeb(tm) abdominal retraction system, and other potential agreements, the Company has determined it will announce its projected 2007 sales and earnings guidance on or before March 30, 2007.
MERIT MEDICAL SYSTEMS, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ---------------------
2006 2005 2006 2005
----------------------------------------------
SALES $ 50,816 $ 42,682 $190,674 $166,585
COST OF SALES 31,853 26,113 117,596 97,493
---------------------- ---------------------
GROSS PROFIT 18,963 16,569 73,078 69,092
OPERATING EXPENSES
Selling, general
and
administrative 11,909 9,536 45,486 38,579
Research and
development 2,361 1,910 8,582 6,992
---------------------- ---------------------
Total 14,270 11,446 54,068 45,571
INCOME FROM
OPERATIONS 4,693 5,123 19,010 23,521
OTHER INCOME
(EXPENSE)
Interest income 70 67 250 491
Interest expense (6) (1) (12) (18)
Miscellaneous
income (23) (57) (64) (94)
---------------------- ---------------------
Total Other
Income - net 41 9 174 379
INCOME BEFORE
INCOME TAX
EXPENSE 4,734 5,132 19,184 23,900
INCOME TAX EXPENSE 1,681 1,436 6,883 8,122
NET INCOME $ 3,053 $ 3,696 $ 12,301 $15,778
====================== ======================
EARNINGS PER SHARE-
Basic $ 0.11 $ 0.14 $ 0.45 $ 0.59
====================== ======================
Diluted $ 0.11 $ 0.13 $ 0.44 $ 0.57
====================== ======================
AVERAGE COMMON
SHARES -
Basic 27,509,033 27,239,784 27,333,146 26,848,447
====================== ======================
Diluted 28,630,264 28,048,195 28,244,948 27,847,122
====================== ======================
MERIT MEDICAL SYSTEMS, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31,
------------------------
2006 2005
--------- ---------
ASSETS
Current Assets
Cash $ 9,838 $ 4,645
Trade receivables, net 25,745 25,433
Employee receivables 194 116
Other receivables 192 108
Inventories 38,562 32,080
Prepaid and other assets 1,031 1,023
Deferred income tax assets 2 28
Income tax refund receivables 82 977
--------- ---------
Total current assets 75,646 64,410
Property and equipment, net 92,383 85,618
Patents, trademarks and license
agreements, net 4,350 3,342
Goodwill 7,541 6,415
Other assets 2,656 2,363
Deferred income tax assets 2
Deposits 90 99
--------- ---------
Total other assets 107,022 97,837
--------- ---------
Total Assets $ 182,668 $ 162,247
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ -- $ 2
Trade payables 10,598 10,254
Accrued expenses 8,464 8,549
Advances from employees 245 316
Deferred taxes payable 190 1,141
Income taxes payable 1,177 455
--------- ---------
Total Current Liabilities 20,674 20,717
Deferred income tax liabilities 5,469 4,166
Long-term debt 2
Deferred compensation payable 2,869 2,363
Deferred credits 2,239 2,415
Other long-term obligations 205 100
--------- ---------
Total liabilities 31,456 29,763
Stockholders' Equity
Common stock 54,394 48,198
Retained earnings 96,969 84,668
Accumulated other comprehensive
loss (151) (382)
--------- ---------
Total stockholders' equity 151,212 132,484
--------- ---------
Total Liabilities and
Stockholders' Equity $ 182,668 $ 162,247
========= =========
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
2006 2005 2006 2005
---------------------- ----------------------
Non-GAAP ADJUSTMENTS
GAAP net income
before income
taxes $ 4,733 $ 5,132 $ 19,184 $ 23,900
Add back:
Stock-based
compensation 306 -- 1,502 --
---------- ---------- ---------- ----------
Non-GAAP net
income before
income taxes 5,039 5,132 20,686 23,900
Non-GAAP
provision for
income taxes
(36%) (1,814) (1,848) (7,447) (8,604)
---------- ---------- ---------- ----------
Non-GAAP net
income $ 3,225 $ 3,284 $ 13,239 $ 15,296
========== ========== ========== ==========
Non-GAAP net
income per share
Basic $ 0.12 $ 0.12 $ 0.48 $ 0.57
========== ========== ========== ==========
Diluted $ 0.11 $ 0.12 $ 0.47 $ 0.55
========== ========== ========== ==========
Shares used to
compute
Non-GAAP net
income per share
Basic 27,509,033 27,239,784 27,333,146 26,848,447
========== ========== ========== ==========
Diluted 28,630,264 28,048,195 28,244,948 27,847,122
========== ========== ========== ==========
CONFERENCE CALL
Merit Medical invites all interested parties to participate in its fourth quarter and year-end conference call today, February 28, 2007, at 5:00 p.m. Eastern (4:00 p.m. Central, 3:00 p.m. Mountain, and 2:00 p.m. Pacific). The domestic phone number is 800-240-2430, and the international number is 303-262-2137. A live webcast as well as a rebroadcast can be accessed through the webcast tab of the Investors page at www.merit.com or through the webcasts tab at www.fulldisclosure.com.
During the conference call, 2006 results will be discussed in more detail.
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 and radiology. Merit serves client hospitals worldwide with a domestic and international sales force totaling approximately 85 individuals. Merit employs approximately 1,750 people worldwide, with facilities in Salt Lake City and South Jordan, Utah; Santa Clara, California; Angleton, Texas; Richmond, Virginia; Maastricht and Venlo, The Netherlands; and Galway, Ireland.
The Merit Medical Systems, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3282
Statements contained in this release, which are not purely historical, 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, 2005. Such risks and uncertainties include product recalls and product liability claims, termination of relationship with suppliers, or failure of suppliers to perform, infringement of Merit's technology or the assertion that Merit's technology infringes the rights of other parties, unable to successfully manage growth through acquisitions, delays in obtaining regulatory approvals, or the failure to maintain such approvals, significant portion of our revenues are derived from a few products and procedures, development of new products and technology that could render Merit's products obsolete, market acceptance of new products, introduction of products in a timely fashion, price and product competition, availability of labor and materials, cost increases, fluctuations in and obsolescence of inventory, market price of our common stock has been and may continue to be volatile, foreign currency fluctuations, key personnel, modification or limitation of governmental or private insurance reimbursement, changes in health care markets related to health care reform initiatives and other factors referred to in the Company's 10-K and other reports filed with the Securities and Exchange Commission. All subsequent forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results 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.