MMSI - Earnings call 3 2023 | Merit Medical Systems, Inc.

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Operator

Welcome to the third quarter of fiscal year 2023 earnings conference call for Merit Medical Systems, Inc. [Operator Instructions] Please note that this conference call is being recorded and that the recording will be available on the company's website for replay shortly.I would now like to turn the call over to Mr. Fred Lampropoulos, Merit Medical Systems' Founder, Chairman and Chief Executive Officer. Please go ahead, sir.

Fred Lampropoulos

Thank you, and welcome, everyone, to Merit Medical Systems' Third Quarter of Fiscal Year 2023 Earnings Conference Call. you call Treasurer; Raul Chief please? and and Secretary.Brian, the Financial our Legal on through Corporate and us Officer Brian would joined today harbor Parra, by Chief Officer the I'm safe taking statements, mind Lloyd, our

Brian Lloyd

you, securities to everyone laws. presentation would that safe harbor like that forward-looking statements receive I protection Fred. this Thank remind contains under federal

discussion factors regarding forward-looking with they States. statements and a are believe for these accepted principles, filings statements statements. cause SEC financial information from accordance in are [Technical generally to of we United upon accounting recent assumptions, are refer actual differ Although results the reasonable also risks to prepared subject unknown Difficulty] statements.Our most to which could such Please based forward-looking our these are the with that in

to non-GAAP under most information non-GAAP financial our page turn Fred. our call Both financial that other measures similarly in with on financial for X-K. website.I for will regarding important investors the non-GAAP underlying with these to ongoing release However, prepared today's presentation discussed measures Investors measures. call.Readers the included for SEC be useful measures titled be to a Measures addition of in to Please calculations business in comparable we of certain also non-GAAP and financial contains useful measures non-GAAP the operations performance trends financial accordance Financial to, believe of should our measures such operations.This U.S. period-over-period sections the available note information can regarding and this presentation not press non-GAAP certain press provide comparable consider comparisons back our release reconciliation -- of and and and release not entitled are of the reporting measures A companies. today's GAAP. presentation substitute GAAP the refer financial press Please of on as directly furnished is Form presentation with now measures may

Fred Lampropoulos

on Brian, a you, Thank us day. reporting joining busy very for and thank you

Raul of agenda will cover remarks, the followed we with our and in a in-depth of for with will and me quarterly with opening an for formal XXXX well XXXX. results our operating quarter, few third update an my brief remarks. summary a more sheet a Let noteworthy provide will start on recent months. that prepared of as financial September start the overview by guidance of you revenue in I XX, updated what of results review during After our a we press balance condition as financial release as financial today's our highlights

quarter, your third performance, call revenue then will the for we of our review $XXX.X year-over-year. up of revenue questions.Now million XX% open We in third reported with a the GAAP total quarter beginning

was GAAP growth international revenue a by growth sales. sales Our growth in in total XX% U.S. driven and X%

in revenue delivered QX growth significantly total call. third in point constant to growth earnings related a quarter increased the we than XX% the basis, to prior year Our growth high that of headwind year-over-year exchange third was our of on we the period.The our revenue to the the the XX-basis constant on changes compared GAAP excluding rates currency in expectations currency outlined revenue stronger end quarter range

range in Specifically, the X% of X% constant third in we expected revenue growth currency to quarter the year-over-year.

driven the constant growth, of categories, total U.S. our organic by quarter third was entirely reflecting results across better-than-expected in currency almost Importantly, in particularly primary a each strength broad-based strong the product the revenue

the expectations.Sales Cardiovascular in beginning from are product reported reconciliations now the and stated, also or categories. X, the results our provide total driven while you provided growth of in growth with in earnings in XX%, of quarter on segment intervention non-GAAP the our again to cardiovascular primary quarter results exceeded the XXXX, sales growth earnings rates for expectations and also performance me the with which in came growth otherwise a results We've in increased currency million third end Endoscopy revenue we of our on all more high unless above representing XX% approximated of included each reportable total related of on sales high our Endoscopy our segment, our largest our of quarter, XX% release of of growth portfolio high website.Third the quarter, the Note, total sales segment PI this quarter acquired included and currency available from peripheral products, on revenue AngioDynamics In third growth segment item presented revenue and detailed presentation our basis. call.Let $X.X our segment. from Cardiovascular of interventional the constant GAAP year-over-year the was end we quarter. review second notably in end came Third solutions our range a at our constant driver by June

more total in in sales expectations, in primarily exceeded our XX% which Organic and products, XX% growth Excluding our by together increased notably larger contributors CRM, XX%.Sales EP, decline products segment key end higher increased been CPS respectively, cardiovascular the Cardiac XX% of X/X of respectively.Sales from radar products sales demand solutions our increased increased and outside in currency which quarter, growth growth our have end products, acquired product Sales and to to customers our kit from growth. together our than which of and procedure products, sales drainage expectations, our cardiac attribute increased and we which X%, and our SKU PI increasing localization products low for sales principally that continued PI and driven half growth Sales and driven initiatives. together of increased the OEM of PI products, we demand angiography which basis. constant our were this growth intervention the our both growth our solid from intervention hemostasis products, represented sales which X%, better total high total categories, QX. sales PI QX. strong and sales access systems roughly of the category of on XX% coatings, delivery was growth certain expected OEM And of in by increased which rationalization benefited intervention customers angiography, the together results XX% including U.S. QX. angiography for identified in multiple also of for exceeded organic high a an was lines than XX%, foundations kit we part products, and our represented single-digit custom our X% by or product products, of as little of of the

XXXX segment the half third which to growth to increased to second CPS end the roughly demand category year-over-year of high fourth range year sales at XX%, CPS guidance assume trends We over prior product kit we the in products these our in quarter was a of delivers flattish expect the basis guidance. that But on for our quarter assumed continues our the lines compared Endoscopy decline period.Lastly, sales as in growth normalize.

we see our sales continue sales summary geographic business half quarter, XXXX.Now second to improving on trends basis. third As turning of expected, in to performance a in Endoscopy we of and our growth to the in a continue expect mid-teens the brief

the currency in the and basis, the a sales expectations quarter third organic constant on XX% by basis high of increased an exceeding U.S. XX% basis our constant more than period. in on end XXX currency growth Our points

year the year by the X we paying expected.With areas X, Rest year-over-year year-over-year.Growth our respect efficiency and the profit focused ending to impacted as the results driven organic region the WAVE in third multicenter quarter, a access related of fiscal lower basis, a revenue of end and and and enrollment high XX, fistulas for operational the We which prospective, growth and like trends our non-GAAP specifically, team's currency in overall by performance the XX% in to China constant controlled results sales commitment arteriovenous of to progress Growth Canada, Our the before line comparing to circuit was months. were and was our our believe enrolled brief randomized, call the quarter sales direct share improving flat recent is call of the respectively, WAVE business, grafts quarter financial respectively, for EPS continued increased region, expectations.With in in over growth growth that outside in across our of strong United States. headwinds increased and was the to Foundations XXX modestly high related in study program delivered continued treatment reflects the stenosis and the volume of at for tenders ahead discussed performance Brazil, with in net growth while particularly World Raul, would XXX growth customers hard modestly August operating for region and the of WRAPSODY off. region and of during volume-based team's angioplasty constant QX of in WAVE an market expectations pivotal in on our X-year the financial guidance on Foundations endoprosthesis and completion we in in December impressive cell-impermeable deliver U.S. third currency our financial APAC U.S. of driving EMEA sites sales profitability Merit of program gross hemodialysis.The WRAPSODY, and on constant transluminal patients to study of flat low currency X.X% execution and growth growth period single-digit the Rest income growth XXXX, On to vascular were the update teens EMEA Kingdom as was to quarter, demonstrate study. continued the expectations respect the to arteriovenous announced with our continues and The XXXX.Now World United well.We ability in in ended growth work the products.International profit to third outflow arteriovenous our leveraged undergoing basis our a occlusion XX%, our see APAC in the quarter. and on percutaneous strong deliver patients in the QX. Growth the non-GAAP third in study in XX% or our are the confident Organic X.X% exceeding XX%, end turning in the remain the venous the expectations, several purchasing U.S. was targets patients with we progress in to I for

the premarket acquisitions to follow-up monitoring, for or outcomes in of to the have June, primary early efforts. the enrolled the report in the complete and to of outcomes safety position and expect be and we third the the plan we February cleaning data a second We collecting the customer are approval quarter with that file operations.During patient we analysis in data We currently be clinical FDA endpoint in sales training significant of in completed XXXX.We efficacy end second early last period XXXX. the primary PMA completed engagement of study and throughout and integrating have With expect study to will their phase respect for quarter announced by the X progress quarter, made KOL XXXX.

potential among awareness raise times existing transitioning VEITH the dialysis launching product Merit at with CiDA along marketing forward look sales customers in brand. with exciting events, controversies We and to the for and These opportunity materials or customers branded related packaging Renal business. and are continued the tools are Therapies to under deleveraging symposium. to engagement We including Merit new access industry SKUs all the Merit

items amongst Endoprosthesis, system, catheter strategy Biopsy the catheter including leverage recently the others.Together differentiated innovative Surfacer established built biopsy and Access dialysis a BioSentry growing of commercial We infrastructure the Catheter BioFlo acquired Cell-Impermeable allow longer-term foundation opportunity the dialysis Merit dollar X for a Inside-Out leverage markets.Finally, biopsy Tract compelling relationships are commercialized Endexo solutions. on the and us clear key extremely WRAPSODY in products with HeRO of focus patients dialysis have the to evaluating we That areas I Inside-Out DuraMax share will with an Surfacer graft multibillion our serve physician thoughts our more dialysis intermediate have the Medical. interventional know and we wanted to in on and like position system, our markets System, to Technology, in and few to investment Sealant a the course, and investors portfolio, the to that Access

and is succession something to months. formal Specifically, the and financial very in executive XXXX. recent beyond leadership, year our planning takes leadership With seriously, targets Board initiated process fiscal respect executive was

involved I this directly Importantly, is process a not in. that am

the accomplished has Talent us this engaged announcement outset, Development improvement the as well holistically Foundation pleasure Independent position an transformational having historically challenge on in years.By be of community final Foundations to wanted our Foundations of of to Lead way the enhanced sustainable the has in ambitious initiative year we continues culture for at for of Director profitability Growth leading on to of legacy and while reminder, to the our the served for end across all like a comprehensively profitability. X that and status with as the quo end The for so Merit -- the deliver mind. business, market-leading and the investment be use Board objectives program was company-wide independent and reflect to the important our are able the for of in target many the program.From to I strength involvement shareholders.With long-term to program behalf to all and this share Growth so Compensation clear profile, team of program continue of the of growth aspects to serve Board fully by I in with the of Committee preserving of the of think business targets, would directors. we customer-driven the established with longer-term business XXXX. in Our the and innovation our financial Growth the respect growth approach evaluate better formal company to what to our the Board I active our

in cash the as in million December believe also XX, during we -- exceptionally many fiscal extremely operating innovate our the significantly operating X-year expected of team's ability we second, since drive health non-GAAP XXXX. executed growth financial of the $XXX generation XXXX, deliver earnings proud quarter. were would our free have condition in designed XXXX, flow in financial customers markets.As program changing to may achievement our we significant operations that with more points to our cash organic of the target the our $XXX solutions of margins proven our of operating the flow to when than basis revenue ending million to above well million results $XXX fuel growth; execution each cumulative Foundations including formal First, line continue to to to constant main more fiscal more face the that push on that CAGR We year-end, efforts and we in our we we call, targeted to discussed of XXXX, and since autonomy formal and of improvements than X of November we the evolving exceed capital XXXX, top financial margin XX%.We not market, our where to including our invest formally designed foundation for program in as preserve for in this XXXX a sheet of generated outlined significant this at discussed ending expansion, market the end announced least deliver improve together of and of free has X% million with people, to our balance the cash a $X.X we certain and in and target, while scale respect in billion build profitability with growth flow on expect our exists more sustained or program.With care capabilities headwinds items where will result November matters. announced was cumulative the targets, our cumulative program XXX it generated meet by it are quarter to margins exploit new contemplated than year and to team least strong flexibility we our generating success, currency additional calls in free working $XXX was the Growth targets revenues and than preserving build to of to we continue target and And will not we non-GAAP non-GAAP needs that of unique expect by years as at continue that

let the earnings period ending our for in on call quarter February, Importantly, opportunities have interim, on foundation targets for exclusively focused Merit's to forward -- the Growth Mr. there for program, our me years further targets look X-year XXXX. believe the to will through remain goals, plan who enhance and improvement detailed discussing which not long-term, we efforts a profitability turn current in to review of next we fourth as opportunities financial December third we said, quarter new Accordingly, growth program Parra? XXXX.We continue said financial are in sustainable financial Foundations to release. will the for December press guidance, formal the to updated Raul, year.With Growth XX, on call we future today's introduce throughout for our that our targets and our and our In on end call XXXX for results and over continue financial XX, improving come. delivering to Foundation to take you

Raul Parra

Fred. you, Thank

of Given the will our of begin performance P&L. review Fred's I our of results, with a across financial detailed revenue the discussion rest

For of during the on year commentary results otherwise fiscal the non-GAAP avoidance unless noted, doubt, company's third of quarter the focus my will XXXX.

from year-over-year our items and increased quarter. third results GAAP in our XX% our on profit to presentation reported included approximately non-GAAP press the related have website.Gross in release reconciliations the We available

than in product gross and increase expenses driven revenue gross increase and operating X% year-over-year basis third due margin in a The year-over-year. geography.Operating the third increased SG&A XX.X%, year-over-year period. expense quarter year X% the R&D was year-over-year for the by in increase expenses was to margin in XXX by by prior to lower was primarily The expected points a Our mix XX% in increase quarter. expense compared up

was performance investments operating continued million or $XX.X increased million. Our QX our than focus operating and our better quarter to management prioritization growth on year-over-year expected of in leverage, $XX.X third expense and XX% to due strong in future income the principally initiatives.Total operational reflects expense support to

change interest period. in rising in point associated gross non-GAAP in was currency period.Third XXX unrealized Our foreign The The margin point XX.X% expense basis to operating increased driven QX to in prior income increase per primarily was quarter net other our increase operating XXX period. expense prior realized was basis XX.X% rates year compared as to in expense increase with margin losses related in for point share million margin the the by in other as period.Third year OpEx was $X.XX last income in well to to our margin an year $XX $XX.X and per the with and share net quarter the associated compared borrowings and compared by million net non-GAAP an prior XX basis expense million decrease $X.X to or or compared prior $X.XX million compared $X.X was interest year. year

high expectations.Turning with pleased non-GAAP performance and profitability in the net our XX% our per income condition. of we are non-GAAP growth share, We review exceeding quarter, a delivered financial diluted end balance in of in earnings and sheet our the to XX% third where growth

of of and cash million $XXX.X $XX.X approximately borrowing had capacity of million, equivalents million million and capacity total obligations equivalents December borrowing of compared As obligations and cash of to of $XX.X XXXX. cash $XXX debt available available million, of total XXXX, million approximately $XXX.X of September as XX, cash $XXX XX, and debt we

improvements $XX.X days. free significant sequential the expenses, up areas leverage a inventory cash was and in cash the generated generation XXX% a was quarter uptick free payable September third in primarily Our ratio third year-over-year by quarter, of nearly quarter-over-quarter flow on accrued as offset The XX up an in used working on flow basis. cash and in in in the result basis.We specifically in partially improvement fourfold adjusted of million Xx of capital, net an of

in XXXX updated generation in expect We financial free a guidance, review continue our we to flow of release. generate strong which today's fiscal year cash XXXX.Turning to to press

revenue X% guidance prior a GAAP growth in have details ranges the to assumes approximately to of currency and headwind We segment. foreign X% our approximately year-over-year. press Cardiovascular earnings expect how the table range included growth in the now XX% rates each basis those release, formal year-over-year.The to year net of net guidance our of in a of or which ratings growth period. updated of change net XX items approximately approximately X% Endoscopy million X% our $X.X financial our revenue revenue GAAP revenue approximately We for net in and exchange now compared growth points segment to from

and approximately to to of compared quarter expense The $X.XX $XXX and a share ranges $X.XX X% million share second a the currency prior to driven like to XX.X% and million changes X.X% growth guidance.Excluding and $X.XX to $XX net guidance the approximately borrowings. range on million have $X.XX GAAP compared $XX $XXX compared in X% reflects of diluted to With of the compared primarily in our X% to by to $XXX results prior other approximately estimate ranges the of in diluted higher of earnings million and previously revenue to markets year-over-year. XXX ranges to a million.Lastly, increase better-than-expected expense million guidance a previously; versus per impact revenue growth basis better-than-expected million quarter to approximately assumed and million growth we reflects shares to to interest compared $XX of primarily additional earnings currency rate in year-over-year to million third compared points and to currency U.S. $XXX range in million $XXX we quarter results range up tax this the The to to of approximately to million primarily higher year-over-year. million $X.XX respect to anticipated range of contributions compared approximately X% XX.X%, on compared guidance. million we which $XX $XX in for our million profitability constant expectations driven respectively, by $XX other purposes, and points financial fourth provided of prior and is the the approximately diluted up previously.We $XX.X to to in income now our updated our previously.For to from compared on the in GAAP and transparency in both gross quarter $XX basis XXXX of outstanding a XX% X% margins profitability million to $X.XX approximately rates, XX% stronger-than-expected total provide in the have updated XX% third revenue our would our call. in net expenses now guidance our the the Non-GAAP XX.X%, diluted related XXXX.Note to $XX.X the expectation guidance to acquisition, assumes non-GAAP XXXX, results net non-GAAP previously. in of earnings U.S. in financial XXXX $XX we million in X%, of quarter to outstanding from to of X.X% for and net million $XX.X range growth organic to to related diluted the the constant approximately fiscal million per of and acquisitions, X% XXX fiscal exchange growth $XX.X per XXXX. growth total international assumed third in XX.X% of to financial these per to Non-GAAP non-GAAP now our basis range assumed margins the modeling $XX share income million constant million in our $X.XX guidance Excluding $XXX X% foreign range midpoint year-over-year the to year currency share range range XXX approximately basis to to range expect XXX operating of revenue on assumes $XX the

XXX we respect fourth range U.S., XX.X% -- $X.XX we open the currency constant Specifically, drive of quarter, of prepared a approximately revenue $X.XX lower the now would on currency of we XX.X%, basis XXX to on approximately XX.X%, non-GAAP basis.The to midpoint we range increase X.X% roughly in up what up full unchanged prior up approximately our guidance updated assumed.That to year-over-year revenue year-over-year approximately range in quarter line to year growth XXX the up of the operating what for profitability to the our remarks. like prior These points updated growth margin for XXXX the range quarter questions. X% $X.X expect XXXX of approximately growth what revenue guidance expectations margins to expectations total versus to non-GAAP sales implied fourth our Operator, GAAP ranges constant growth and X% our in up for X.X% X% gross guidance by including a year-over-year range the essentially million are expected the and X% margins the our of and to international expect to XXXX approximately than a acquired non-GAAP to in approximately are expectations markets. assumes XX EPS points in our $X.XX assumed.With XX.X% Note, our wraps year-over-year for basis in basis year-over-year year-over-year. to of fourth

Operator

Piper comes with Petusky Bednar line comes with first first Michael Research. from question Sandler.Our [Operator Jason Instructions] Barrington Our from of the question

Michael Petusky

China. Is that I performance worse? you on half really -- little Can talked Congratulations. real second the of better, anticipated guess had what up aspects. and on death, that you little about about A VBP Was lot comment shaping across quick way to different the sort you for performance just just that? that -- was QX. just of of in a guys -- anticipated? lot quarter been a a curious, has impressive but I'm a

Fred Lampropoulos

Yes.

into based I baked as China numbers changes. don't our is what Raul expected, many think -- into we you've that today's what times, our on now, think talked and it that's we numbers. about with right our -- -- I year-end numbers. was It's do. it about baked our in was But will about what estimates Mike, Again, we've talked this, best it's

Michael Petusky

like obligatory an is possible sort Fred, you loss I GLP-Xs QX. in Okay. serve? any guys you Merit feel on have Medical do longer-term thoughts and on space this drugs, and impact But question almost the the the of weight

Fred Lampropoulos

And don't Listen, think Yes. of all seriously, issues very the appreciate I we these we passing. take and they're question. just

these go talked about you things. talked things like and we front about out stay China, to back in If we MDR, of we like

In market fact, who our Raul areas. in and to several physicians I yesterday, we're are adviser talking

was the In drug. fact, taking one of actually them

So there effect it issues that thought of that have was number a terms in long up came of would term. they the

are And that of procedures. XX% continue do at all these work the feel but It's people on the I things see that in are effect. issues. one They're There all that you if something will of didn't we and was an but interventional about it that before was will using something who complication the are -- immediate in indicated in elderly the is of for think to panels. that that effects. I of of talked or immediate, were least the that, they But and pricing think some drug somewhat types drug.There to the bottom going different patients, things one it. we there. a made all, was hypertensive some they XX the take fact, that of were terms years that of you of line But is the bunch lab in comments be doing I be didn't it terms they that see nephrology in people

meet the best information. think our and out of go will source with customers, and we We that's

question. Raul, do to response that? add you long want anything to a that's the to So

Raul Parra

X would X No. going I mean, that I be diabetes with I type right? things Obviously, the not add, impacted. individuals These guess, are to are is that born disease.

so business. won't impact, to real that have And kind you we'll say stage our of guess, which renal you impact won't would I the get the -- a

We're ahead of as kind when if But as and Fred's they would always the at of would is point, X kind about talking of good what we adjusting out think type an threw of example of be would see we're that's impacted. an kind to really you're So years really see try pivoting XX of in very out these kind they patients stay risk, And of and several aware they did needed. an doctors impact that impact. and diabetes very things.

we'll have an impacted been on is now, eye for these it. market it. But of So in by drugs business our keep These drugs not 'XX. some -- since being the

So they're not new.

an are a now, and necessary. more on adjust they think eye but as we'll we'll I news getting keep it lot

Fred Lampropoulos

affect ability relatively all that patients could that -- gives And who if customers us factors at doing into just go who a procedures at things, just I I are those These unique seeing to talk and think our might various are say, look are business. having physicians reimbursement, our looking the and that advisers. think, to I pricing all our the

So we'll it. of stay top on

Michael Petusky

integrated like you're of me well, to like bit there? summary just little it around that the sort guys It a me, Right. a plan revenue fair terms what to of running it and Is tried particularly of it's you've And acquired you like sounds communicate of -- businesses, let generation. sounds ahead in maybe confirm Angio. sounds commentary the

Fred Lampropoulos

early think doing I think moved of good our We've fully dialysis very last first that maybe And integration. end quarter, portion we're think move of this that, late now. is the week sometimes it just is or a we'll year, by actually I of moved will And fine doing product I actually Mexico week reminder think for thinks And facility. have job and it's integrated.So the a be a to moving think other this I everybody BioSentry just it being is remember, catheters. the And biopsy. so. those I

And potential Raul, think business in to want to think there's do bit better that? on I still quite a side actually. that financial I upside anything expected. we of add it than performing the we're you

Raul Parra

if brought I at you about mean I by look bottom guidance, our the we think million. up $X

And Street. narrowed it again, range and range So at the we given we the up. well within I think we're that brought we the have

going great. So And things Fred, I are integration think on like track. is

Mexico great doing job Lake are Salt team team that City Our the stuff. of and a integrating

Fred Lampropoulos

with our that's I really in think another These with customers. -- who renal finally our products Commercial Joe that, the therapy room are just sitting the in customers Chief Wright, Well contact existing important is group. many the us, of been and buy is is part Officer, who on that

the I reach terms of So wasn't us a who think for it in were. customers

of I already existed customers Merit. was for the XX% think it

So that was another and considered outreach. in really at important factor that the we looked terms of commercial

Operator

from question Oppenheimer with comes & next Our Co. Steve Lichtman

Steven Lichtman

here? of update quarter, thoughts the but on getting time as WRAPSODY. the trial, guys. closer little can filing a of the opportunity we Fred, the and have there, into on Congrats us Obviously, about to to on with here, view, your completion closer bit market you wanted still get ask we sort of closer I particularly

Fred Lampropoulos

a Yes. you that's It's project, years integrated. of know, ago. as started Listen, product we number this vertically a

we But -- to the the it's early complete do say their some the I monitor we're we a enrollment, and again, present going we closed and of next our time. trying and as of get we the And file FDA as the as update to through in up data February Once quarter know, have that able about we by we quarter the rather we've report end get second are lay roll to the in go are plan very with will to we closer going to can PMA and XXXX. wait analysis that the clinical year. the phase February -- in to out without that the study out second to then point, the FDA -- we our data until always we in on think the to what we've the be thoughts our I'd patient been to to process.I you out the laid product. think, question, plan to for what I expect in excited position will of to we'll be think then XXXX, last avoid to cleaning that

Raul Parra

the sure just plan. goes to on making filing focused that according really We're

I think from approval, a about in that about but revenue and excited market opportunity standpoint, quarter we'll talk super and about post-PMA just that, general. I excited super the think,

Fred Lampropoulos

Yes, yes.

Steven Lichtman

free leverage here. And ratios talked low on then net you your secondly, Great. cash and bullishness your remain just flow continued

year-to-date, at about valuations more acquisitive a Just quite or already were little additional but M&A given a you should activity, Merit? we looking ahead thinking forward, expect looking obviously

Fred Lampropoulos

the understand is know what has positive the activity Well, listen, going have down. cost was higher. capital but all saw today. the Values of fed's I which come We think see changed. I world that do, we The that was we mean, economic what to don't I

plan. don't want overpay being But but were opportunities. helpful is, returned in to as I institutions we lot years companies just to now. like lot a than a view ago.Values important All very really said, probably that that a out I we're and we of place, think much into We year even are disciplined as starting want criticized, that very did There come I be a cautious. say TCT. seeing quite ways other to and and of think startups recall, maybe didn't to ago a thing opportunities have would from the different you'll bit have are I activity we're they X some the or We've there.

hit. have that We want requirements we to

can team don't We for WRAPSODY right some in coming. do and have have we to think If can to channels they're commercial do there a products, We have us. are need that the and do fit things product just our and the meet of organic.We anything. the our they that. right We criteria

there active that. of very So but that they opportunities if we're expect have meets do that to those there. necessarily stuff not be going there's at a look doubt about we and discipline and we will be that out it that it no meets and anything, the we'll and require, I lot that

Operator

Raymond with next Our James. question comes from Jayson Bedford

Jayson Bedford

I quarter. some a apologize in missed the this. on result. if growth little I Russia I late. got on to a of Was Nice headwind Congrats XQ?

Fred Lampropoulos

were shipments get in making some our able August, we and approved to we licenses September. late started Listen, in

a the So have benefit, to quarter. small are we roll really, But licenses. our small. into very we is, things fourth this going had But those point

somewhere government. of licenses I Russian been United XX% XX% or by have approved our States think the around

on, online are will extent of And numbers, that Russia, going see things in we those these will Russia to we as things that back now so our in with forward. East, be go the the all Jayson, all there will built come some we into but Middle some

Raul Parra

have just line have Jayson. think we Yes, won't some quarter, did yes, in line I little mix better. in fourth SKU the But, speaking, even rationalization products be sold in in We generally And bit kind generally I expectations. I helped. those EMEA that with with expectations, through third also in Russia so was of came should think we a think the back, which with quarter, coming

Jayson Bedford

Okay, helpful.

gross the York Mexico, margin move gross on acquired did New moving products margin? did from Just impact that upstate the down have to from an on

Raul Parra

No, an until next have won't impact year, those Jayson.

of process the facility. moving months that next go mentioned, device the the build accordingly. bridge the just As last had in Fred you we a can We we are imagine, our over week just to and left move truck, things. Mexican three rest to the things make inventory on as Biopsy of just products sure continue And over to will

you'll it's really see. a So XXXX that impact

Jayson Bedford

is a inflationary Or a the comment you that I Okay. mix? much, margin. Mexico? on but geography of is that gross think dynamics on Is as bit dynamic a that And not of pressure mentioned a in more

Raul Parra

really it's mix. No, mix, Right. product

related So FFG, we business. had our to specifically some products, pack rationalization some SKU

you'll to That CPS that that gross related So were the want we're to margins just that see aren't Normally what products flat. they're because exiting our them business up. we really be.

Jayson Bedford

to to And that a the look kind are margin water as haven't to from we we where of, And talked in a that? while, you just is of Okay. about XXXX? a bit air move tailwind in

Fred Lampropoulos

our has team to think to go, Yes. well it'll be Listen, And team that. but still has executed have Jayson, I more to our forward. plan. moving a executed We us benefit on

Raul Parra

for It's on forecasted. they're our pace included Yes, I I'd in what we mean, say numbers.

Operator

Our Young Genuity. Canaccord with next comes from question Jon

Zachary Day

If I'll of first all about is question. just for you leave It you my file. get the and today. commercial is the bit. guys you.Fred we'll know in whole we'll or color discuss a only then reimbursement actually all, the there's an the on it on the all product product. as file waiting expectation with taking program about you I Zachary like stuff we the have Jon could for the It's on do But at timing we Thank get particular. Congrats of that launch? and think any breakthrough closer quarter. the we on I WRAPSODY reimbursement relying have because talk that. color. and Just LampropoulosYes, this Thank closer as a you're But to we window that talked of any efforts, a of FDA. insight and what on that look

goal year. all So full get product we seen plan. we've the now, and finish Right next a the as year's we'll let's this globally do is, things of into the review

this finish for Let's foundations growth.

we're just As you all we know, of at team, focused we couple go, and have still laser line, a and been have so this, months to the that's but on not proud finish and the focused. where about we're I'm

I in We discuss at the think, time. though, appropriate WRAPSODY will, depth

Operator

Sidoti with & Sidoti Jim Co from comes question next Our

James Sidoti

the SG&A even was pretty of that, payment But like seemed jumped What's with Was that one that refund. it Overall, down me, offsets that? And really is It's out an know a insurance the down one The there, strong was SG&A? driving significantly. things I it expense. down you had quarter-over-quarter. quarter. it two It's to of year-over-year. sustainable?

Raul Parra

back that to added as we non-GAAP added Yes, had clarify on just actually back. it that because we reimbursement, item, a

for reduction. a a that Jim, So basis. credit we basis. On GAAP didn't actually non-GAAP on get just

correct. we've operating leverage making But clarify. I to think our just You're sure been we absolutely about Look, expenses. pretty open that

ahead also spend said We margin we not wouldn't in. that the coming gross of

because we the third a tricky business see for always a little from sequentially decline think in the is I seasonal quarter us do QX.

is the of making just kind to sure so we're we margin what that gross going understand spend cautious always more and little a in And do. bit then the

a giving standpoint. from because are deleveraging revenue Just we

expense up last few the over we I we've So, that think were little exercise cautious, management that built years. continue we a and to just

James Sidoti

the other which the -- down. generation Can And of debt a flow put now for down pay towards the thing Okay. then cash stood was debt the did and out the what's blended you you pay rate debt? you and that that that fact lot

Raul Parra

strong did about we look, a continue half year. we from that the Yes, back That's flow generate. debt cash cash any free goal. to of We free the talk the, having for flow pay down our pretty been

our given of I the low. that for coming a my what goal a out third tell down XX.X And flow flow generated, now can for of free amount at bit is ], next the pay million, our and little you confidence work $XXX minimum the given second we little some do was Just for the of growth cash to into quarter, foundations had heading ahead [ debt. of free number But huge quarter my with here bit is confidence little continue this of time, cash got we've higher. and to still the go we'll

Our the blended ] [ X.X around debt. rates on somewhere

James Sidoti

this of like the issues business business, the me, quarter, then And has for that sounds few thing quarter. past Are was It quarters. past it the a right. last should supply headwind bit a you chain we... been Endoscopy a for All good

Fred Lampropoulos

Yes, small part There's it. on final the Jim, we're a still of part.

which that qualification shifted, a we I that and final have a stopped issue the clearly, coatings. needed to had a right the So the the We was on do, the work vendor back we still product. in of think Remember, we doing the was Company, they're order. thing final just to U.S.

lot in portfolio, a of that helped down And one. other So we're there's our like that things coming I then that. the back on and products balloons have stretch that think other

that business we to nicely see continue grow very expect forward. going to So

Operator

and comes [Operator Instructions] Matson Needham Our from Mike next Company. question with

Michael Matson

questions. little did you've about already one I a Apologize want addressed China. late. my I the but taking ask to did for if thanks call this, join Yes,

to back your Just yet, given headwinds, decent quarter? you not going do are growth what you guidance next for saw fourth know I quarter, to you're XXXX assuming or you slower be think? overall market, third get the you that year outlook the on growth in general is just then giving the for Can And there. there to continue in thoughts but

Raul Parra

XXXX. the Yes, the part so but start with question, I'll of last

our February. that. when We're Mike. not right, guidance You're give our in we going sometime you to talk We'll give about thoughts

far China, some that talked expectations kind one what table. we thought. in the about. I'll still within so we quarter as that But as we'll off came of Obviously, And have in the fourth sort of of the impact take

generally, at say China I'd So, expectations. in came

Michael Matson

gave just of And updates growth but guess, terms then the say foundation Okay, it the what just going not it's around for targets sort giving essentially. the got or that numbers, of of I and with extension, should before, similar I right with of of in revenue kind targets. growth, framework, targets, I now, the look it. terms newer of to know you're is cash just what you mean guidance in to sort flow margin that

Fred Lampropoulos

Well, look. question. Mike. appreciate I Hi, the

just where at. use a analogy Here's to I'm here. going we're football

got XX do at just ball. we to score are yards Right? We not touchdown, drop the the We now. full to not and going a We've a ball. to want sprint right are drop

going business response you about we're punt talk Look, XXXX. we're just we're FFG. for there. Right so to guidance what look, finishing really we'll when how we framework that updated done. to now, is the super And about excited the on thinking the next just on give we're But, quarter focused our and

perfect growth. really gross strong a think cash margin operating and you almost this strong look we really quarter; P&L leveraged organic with free had at We honestly, was We expansion. It I currency expenses. constant flow. XX% had just,

quarter the finish to going next. we're and just to and off on then we're excited fourth focused talk what stay So FFG, about comes to continue

Operator

At like Lampropoulos That closing I this time, remarks. the to the turn Thank Mr. would back to you. for session. Fred concludes call question-and-answer

Fred Lampropoulos

several on busy. of next and day. much. and I you a Salt wishes City, in colder lot for taking it. lot very interest best available evening. with very it's Well, a hours And to and talk Thank clarify the snow in issues will Everybody's Utah. appreciate be trade We have We shows of Raul the you in. to listen, temperatures A busy time. reporting. stuff appreciate that mountains from Good and Lake you going you people the

Operator

That your for our Thank conference participation. you does today. conclude call for

Merit Medical Systems (MMSI) 26 Oct 232023 Q3 Earnings call transcript