• Q3 revenue of $157.0 million ($158.1 million on a comparable, constant currency basis), up 15.3% as reported (up 16.1% on a comparable, constant currency basis) over Q3 2015
  • Q3 core revenue up 8.9% over Q3 2015
  • Q3 GAAP EPS was $0.02; Q3 non-GAAP EPS was $0.26
  • Q3 2016 GAAP gross margin was 43.2%, compared to 43.5% in Q3 2015; Q3 2016 non-GAAP gross margin was 46.8%, compared to 45.6% for Q3 2015

SOUTH JORDAN, Utah, Oct. 26, 2016 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (NASDAQ:MMSI), a leading manufacturer and marketer of proprietary disposable devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology and endoscopy, today announced sales of $157.0 million for the quarter ended September 30, 2016, an increase of 15.3% over sales of $136.1 million for the quarter ended September 30, 2015.  On a constant currency basis, sales for the quarter ended September 30, 2016 would have been up 16.1% over sales for the comparable quarter of 2015. For the nine months ended September 30, 2016, Merit’s sales were $446.1 million, an increase of 10.5% over sales of $403.7 million, for the nine months ended September 30, 2015.  On a constant currency basis, sales for the nine months ended September 30, 2016 would have been up 11.4% over sales for the comparable period of 2015.

Merit’s GAAP net income for the third quarter of 2016 was $1.0 million, or $0.02 per share, compared to $4.8 million, or $0.11 per share, for the third quarter of 2015, down primarily as a result of restructuring costs related to the acquisition of DFINE, Inc. (“DFINE”) in July 2016. Merit’s non-GAAP net income for the quarter ended September 30, 2016 was $11.5 million, or $0.26 per share, up 28.8% compared to $8.9 million, or $0.20 per share, for the quarter ended September 30, 2015. 

Merit’s GAAP net income for the nine months ended September 30, 2016 was $12.6 million, or $0.28 per share, compared to $17.4 million, or $0.39 per share, for the comparable period of 2015, down primarily as a result of restructuring costs related to the acquisition of DFINE in July 2016.  Merit’s non-GAAP net income for the nine months ended September 30, 2016 was $31.4 million, or $0.70 per share, up 13.0% compared to $27.8 million, or $0.62 per share, for the nine months ended September 30, 2015. 

Merit’s sales by category for the three and nine-month periods ended September 30, 2016, compared to the corresponding periods in 2015, were as follows:

   Three Months Ended   Nine Months Ended
   September 30,   September 30,
 % Change  2016   2015  % Change  2016   2015 
Cardiovascular           
Stand-alone devices 35.0% $51,901  $38,451   23.0% $141,627  $115,125 
Custom kits and procedure trays 0.8%  30,230   29,986   1.6%  89,174   87,738 
Inflation devices* 2.6%  18,364   17,894   -0.9%  54,768   55,284 
Catheters 20.1%  29,529   24,587   14.0%  82,274   72,183 
Embolization devices -1.1%  11,207   11,328   1.8%  33,937   33,323 
CRM/EP 7.5%  9,368   8,711   8.2%  26,888   24,854 
Total 15.0%  150,599   130,957   10.3%  428,668   388,507 
            
Endoscopy           
Endoscopy devices 24.3%  6,376   5,129   14.5%  17,455   15,238 
            
Total 15.3% $156,975  $136,086   10.5% $446,123  $403,745 
            
*The year-over-year sales decrease in inflation devices for the nine months ended September 30, 2016 can be 
 attributed primarily to reduced sales to a large OEM customer and two large distributors.

“The results of the third quarter were outstanding,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer.  “Despite a historically slow summer sales cycle and the integration and training required as a result of the DFINE acquisition, our sales and operations staff executed with precision and professionalism.”

Lampropoulos also reported that Merit received a subpoena from the U.S. Department of Justice requesting documents and other information regarding certain marketing and promotional practices relating to the Company's products.  “We are in the process of responding to the subpoena and intend to cooperate,” Lampropoulos said.  “As we deem appropriate, we intend to provide updates regarding the matter in the future.”

2016 GUIDANCE
Based upon information currently available to Merit's management, Merit estimates that for the year ending December 31, 2016, Merit's GAAP net income per share for 2016 will be in the range of $0.45-$0.51.  This estimate reflects the intangible amortization and one-time reorganization costs related to the acquisition of DFINE.  Merit’s non-GAAP net income per share estimate remains at $0.97-$1.03.

CONFERENCE CALL
Merit will hold its investor conference call (conference ID 86894191) today, Wednesday, October 26, 2016, 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 will also be available for the conference call at merit.com.

     
 BALANCE SHEET    
(In thousands)    
 September 30, December 31, 
  2016   2015  
 (Unaudited)   
ASSETS    
Current Assets    
  Cash and cash equivalents$    17,318   $    4,177   
  Trade receivables, net   79,697      70,292   
  Employee receivables   176      217   
  Other receivables   3,350      6,799   
  Inventories   116,908      105,999   
  Prepaid expenses    7,005      5,634   
  Prepaid income taxes   3,059      2,955   
  Deferred income tax assets   6,408      7,025   
  Income tax refunds receivable   373      905   
Total Current Assets   234,294      204,003   
         
 Property and equipment, net   278,626      267,778   
 Intangibles, net   186,714      109,354   
 Goodwill   212,825      184,472   
 Other assets   16,296      13,121   
Total Assets$    928,755   $    778,728   
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current Liabilities        
  Trade payables   30,192      37,977   
  Accrued expenses   44,927      37,846   
  Current portion of long-term debt   10,000      10,000   
  Advances from employees   544      589   
  Income taxes payable   809      1,498   
   Total Current Liabilities   86,472      87,910   
     
     
Deferred income tax liabilities   22,042      10,985   
Liabilities related to unrecognized tax benefits   402      768   
Deferred compensation payable   9,000      8,500   
Deferred credits   2,593      2,721   
Long-term debt   317,760      197,593   
Other long-term obligations   4,546      4,148   
  Total Liabilities   442,815      312,625   
     
Stockholders' Equity    
  Common stock   204,601      197,826   
  Retained earnings   286,378      273,764   
  Accumulated other comprehensive loss    (5,039)    (5,487) 
  Total stockholders' equity   485,940      466,103   
Total Liabilities and Stockholders' Equity$    928,755   $    778,728   
   


INCOME STATEMENT        
(Unaudited, in thousands except per share amounts)      
 Three Months Ended Nine Months Ended
 September 30,  
 September 30,
  2016   2015   2016   2015 
        
SALES$    156,975   $    136,086   $    446,123   $    403,745  
        
COST OF SALES   89,160      76,881      251,354      228,271  
        
GROSS PROFIT   67,815      59,205      194,769      175,474  
        
OPERATING EXPENSES       
  Selling, general and administrative   53,198      39,201      138,556      115,407  
  Research and development   11,424      10,515      33,440      29,389  
  Contingent consideration expense (benefit)   (94)    (58)    99      185  
  Acquired in-process research and development   300      1,000      400      1,000  
    Total   64,828      50,658      172,495      145,981  
        
INCOME FROM OPERATIONS   2,987      8,547      22,274      29,493  
        
OTHER INCOME (EXPENSE)       
  Interest income   29      78      55      210  
  Interest (expense)   (3,022)    (1,489)    (6,120)    (4,776)
  Other income (expense)   1      (476)    (445)    (281)
    Total other (expense) - net   (2,992)    (1,887)    (6,510)    (4,847)
        
INCOME BEFORE INCOME TAXES   (5)    6,660      15,764      24,646  
        
INCOME TAX EXPENSE (BENEFIT)   (978)    1,842      3,149      7,253  
        
NET INCOME$    973   $    4,818   $    12,615   $    17,393  
              
EARNINGS PER COMMON SHARE-             
  Basic$    0.02   $    0.11   $    0.28   $    0.40  
                
  Diluted$    0.02   $    0.11   $    0.28   $    0.39  
        
AVERAGE COMMON SHARES-       
  Basic   44,447      44,165      44,346      43,976  
        
  Diluted   45,000      44,734      44,763      44,467  
        

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 Merit’s GAAP financial statements for the three and nine-month periods ended September 30, 2016 and 2015.  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 may affect Merit's net income. Additionally, these calculations may not be comparable with similarly titled measures of other companies.  The constant currency revenue adjustments of $1.1 million and $3.6 million for the three and nine-month periods ended September 30, 2016, respectively, were calculated using the average foreign exchange rates for the three and nine-month periods ended September 30, 2015. The non-GAAP income adjustments referenced in the following table do not reflect stock-based compensation expense of approximately $503,000 and approximately $558,000 for the three-month periods ended September 30, 2016 and 2015, respectively, and approximately $1.9 million and approximately $1.6 million for the nine-month periods ended September 30, 2016 and 2015, respectively.

MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES     
CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP    
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 (Unaudited)  
In thousands, except per share data     
 Three Months Ended 
 September 30, 2016 
 Pre-TaxTax Impact (a)After-TaxPer Share Impact 
GAAP net income $  (5)$  978 $  973 $  0.02  
      
Non-GAAP adjustments:     
  Cost of Sales     
  Amortization of intangibles   4,446    (1,653)   2,793    0.06  
  Inventory mark-up related to acquisition   1,202    (468)   734    0.02  
  Severance   56    (22)   34    0.00  
  Selling, General & Administrative     
  Severance   7,644    (2,840)   4,804    0.11  
  Acquisition-related (c)   1,377    (231)   1,146    0.03  
  Fair value adjustment to contingent consideration (d)   (94)   37    (57)   (0.00) 
  Acquired in-process research & development   300    (117)   183    0.00  
  Amortization of intangibles   1,224    (469)   755    0.02  
  Other Income     
  Amortization of long-term debt issuance costs   258    (101)   157    0.00  
      
Adjusted net income$  16,408 $  (4,886)$  11,522 $  0.26  
      
Diluted shares    45,000  
 Three Months Ended 
 September 30, 2015 
 Pre-TaxTax Impact (a)After-TaxPer Share Impact 
GAAP net income $  6,660 $  (1,842)$  4,818 $  0.11  
      
Non-GAAP adjustments:     
  Cost of Sales     
  Amortization of intangibles   2,830    (1,039)   1,791    0.04  
  Selling, General & Administrative     
  Severance   602    (234)   368    0.01  
  Acquisition-related (c)   400    (156)   244    0.01  
  Fair value adjustment to contingent consideration (d)   (58)   23    (35)   (0.00) 
  Long-term asset impairment charge (b)   85    (32)   53    0.00  
  Acquired in-process research & development   1,000    -    1,000    0.02  
  Amortization of intangibles   897    (342)   555    0.01  
  Other Income     
  Amortization of long-term debt issuance costs   247    (96)   151    0.00  
      
Adjusted net income$  12,663 $  (3,718)$  8,945 $  0.20  
      
Diluted shares      44,734  
      


In thousands, except per share data     
 Nine Months Ended 
 September 30, 2016 
 Pre-TaxTax Impact (a)After-TaxPer Share Impact 
GAAP net income $  15,764 $  (3,149)$  12,615 $  0.28  
      
Non-GAAP adjustments:     
  Cost of Sales     
  Amortization of intangibles   10,688    (3,939)   6,749    0.15  
  Inventory mark-up related to acquisition   1,409    (548)   861    0.02  
  Severance   56    (22)   34    0.00  
  Selling, General & Administrative     
  Severance   9,422    (3,532)   5,890    0.13  
  Acquisition-related (c)   3,750    (1,154)   2,596    0.06  
  Fair value adjustment to contingent consideration (d)   99    (38)   61    0.00  
  Long-term asset impairment charge (b)   88    (34)   54    0.00  
  Acquired in-process research & development   400    (156)   244    0.01  
  Amortization of intangibles   2,869    (1,096)   1,773    0.04  
  Other Income     
  Amortization of long-term debt issuance costs   779    (303)   476    0.01  
      
Adjusted net income$  45,324 $  (13,971)$  31,353 $  0.70  
      
Diluted shares    44,763  
      
 Nine Months Ended 
 September 30, 2015 
 Pre-TaxTax Impact (a)After-TaxPer Share Impact 
GAAP net income $  24,646 $  (7,253)$  17,393 $  0.39  
      
Non-GAAP adjustments:     
  Cost of Sales     
  Amortization of intangibles   8,398    (2,980)   5,418    0.12  
  Selling, General & Administrative     
  Severance   1,717    (609)   1,108    0.02  
  Acquisition-related (c)   464    (165)   299    0.01  
  Fair value adjustment to contingent consideration (d)   185    (66)   119    0.00  
  Long-term asset impairment charge (b)   99    (35)   64    0.00  
  Acquired in-process research & development   1,000    (355)   645    0.01  
  Amortization of intangibles   2,653    (941)   1,712    0.04  
  Termination fee (e)   800    (284)   516    0.01  
  Other Income     
  Amortization of long-term debt issuance costs   741    (263)   478    0.01  
      
Adjusted net income$  40,703 $  (12,950)$  27,753 $  0.62  
      
Diluted shares    44,467  
      
(a) Reflects the tax effect of the non-GAAP adjustments 
(b) Represents abandoned patents
 
(c) Represents non-recurring costs related to acquisitions
 
(d) Represents changes in the fair value of contingent consideration liabilities and contingent receivables as a result of acquisitions
 
(e) Costs associated with the termination of our agreement with a third-party contract manufacturer in Tijuana, Mexico
 
  

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, diagnostic and therapeutic procedures, particularly in cardiology, radiology and endoscopy. Merit serves client hospitals worldwide with a domestic and international sales force totaling approximately 200 individuals.  Merit employs approximately 4,100 people worldwide with facilities in South Jordan, Utah; Pearland, Texas; Richmond, Virginia; Malvern, Pennsylvania; Rockland, Massachusetts; San Jose, California; Maastricht and Venlo, The Netherlands; Paris, France; Galway, Ireland; Beijing, China; Tijuana, Mexico; Joinville, Brazil; Markham, Ontario, Canada, and Melbourne, Australia.

Statements contained in this release which are not purely historical, including, without limitation, statements regarding Merit's forecasted plans, revenues, net income, financial results or anticipated or completed 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, 2015. 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 completed, proposed or future transactions (including the recently completed acquisition of DFINE); 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; governmental scrutiny and regulation of the medical device industry, including governmental inquiries, investigations and proceedings involving Merit; reforms to the 510(k) process administered by the U.S. Food and Drug Administration; restrictions on Merit's liquidity or business operations resulting from its current debt agreements; 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 or regulations; laws and regulations targeting fraud and abuse in the healthcare industry; potential for significant adverse changes in governing regulations; changes in tax laws and regulations in the United States or other countries; increases in the prices of commodity components; negative changes in economic and industry conditions in the United States or other countries; termination or interruption of relationships with Merit's suppliers, or failure of such suppliers to perform; fluctuations in exchange rates;  concentration of a substantial portion 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 healthcare policies or markets related to healthcare reform initiatives; failure to comply with applicable environmental laws; changes in key personnel; work stoppage or transportation risks;  introduction of products in a timely fashion; price and product competition; availability of labor and materials; 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, 2015 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 likely 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
Phone:	(801) 208-4167  e-mail: awright@merit.com  Fax: (801) 253-1688