MMSI - Earnings call transcript Q2 2024 | Merit Medical Systems, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Merit Medical Systems Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded, and the recording will be available in 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

everyone. welcome, and you, Thank Secretary. I am Chief President; Raul our and call Brian on Officer and today's Corporate Officer Financial Legal our our by Treasurer; Lloyd, Parra, Chief joined Joe and Wright, statements, Brian, would you reading us please? safe through the mind harbor

Brian Lloyd

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

these subject realization statements company believe based to upon transactions of are these of implied expectations they the The uncertainties. forward-looking or are materially projections or differ well to we could as and by expressed Although assumptions, risks events results uncertainties, as or risks any forward-looking reasonable our and from cause extraordinary actual our impacting statements.

our such section Xst, presentation law. Please information as today, represent relied update disclaim as release In of not views and such be required specifically for forward-looking views XXXX, to Statement as should except other in addition, August press representing our any any applicable upon, Statements statements. Cautionary as Forward-Looking statements of entitled regarding by and statements, today's We only date. obligation the important to refer regarding any

of statements, recent SEC, to actual could that from these available on our differ are which forward-looking discussion cause filings a please For to factors refer the also results most with website. our

principles, generally accepted are which in are accounting States. Our with statements United accordance financial in prepared the

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

Fred Lampropoulos

Brian. it I much. appreciate very Thanks,

summary of with will XXXX, we our a before press in-depth quarter. and results key results more call we your review with to for we Let remarks, of After provide today's turning guidance will call our opening will me cover remarks in will a operating questions. and quarterly start during brief start for today. release. prepared over and the our the I revenue financial the provide in our of open financial what Raul, Then our updated overview will financial my which who a agenda Joe areas an of second results progress call during

X.X% than range we on earnings the our end on growth delivered a our the the was of of we Our quarter, basis. year-over-year revenue currency in The constant X.X% stronger a of second quarter call. high $XXX exceeded expectations up outlined total year-over-year that We and growth in second second a reported basis quarter the expectations. quarter results GAAP up X constant million currency revenue on

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

profit for XXXX, end believe the free notably, most end products, as share, was first the representing $XX the of We which cash in our contributions flow and which growth to guidance confident increase the quarter, expectations organic expansion extent, growth of flow revenue cash growth we primarily XX continued the a currency constant of non-GAAP driven well. Perhaps have points, later we exceeded the basis more financial acquired and the to in year-over-year. results a well. With of in we deliver of XXXX, reflect to strong approximately operating results free generated delivered a ability and than points in momentum million high over in performance revenue generated respect first half $XX in profit nearly lesser that record than high margin non-GAAP of by expectations Merit strong year-over-year And to profitability team's solid of basis leveraged in XX better-than-expected our we and the the growth respectively, more XX% updated respectively. X% million the second our our our review and from second half earnings Importantly, quarter, quarter gross modestly as growth on which will our and second Raul deliver by resulted quarter per exceeded XX%, over call. fivefold the business the are

While year, we first we not of are on half proud of are the resting the results achieved over our the laurels.

solid targets continued We stable XXXX, financial as in progress period program ending constant recent brief continued X-year growth profitability the of December as update XX, a continued would operational share to on for our execution, initiative free in related several -- delivering progress cash are flow areas now like currency focused on growth, well months. XXXX. I currency strong and improving in

Merit's quarter, microsphere United May, Siege of foam launch embolics our First, to new commercial in range and for Australia. FDA These a devices. and announced the in announced a product clearance offering XXX(k) the plug portfolio gelatin and to the clearances Bearing introductions, commercial by catheters nsPVA addition prefilled vascular States and supported Express products, with of other and syringe guidewires of micro complement comprehensive respect enabling particle multiple our we we second in regulatory introductions including

the basixSKY with announced and solution AccessPLUS, which We devices. analog hemostasis inflation available and is to configured and valves. portfolio, the angioplasty device both to Honor complementary the PhD packs latest of Merit digital inflation basixSKY Merit's in comprehensive release commercial also includes kits as in stand-alone basixSKY offer U.S. a addition device The is May.

this Second, this approval circuit. clinical study to XXXX forward combat Cell-Impermeable quarter Endoprosthesis the WRAPSODY the months, application patients access due patency completed the premarket to built and respect are progress our area achieved filed as believe the PMA challenges can in with or the dialysis module engaging of by interventions, expected. clinical need and the the WAVE PMA in of experience the recent for recent study. is We efficiency progress to technology hospital our arteriovenous review for stenosis trips including the innovative with rates repeated the to with second with in for outflow pleased the We to vessel technology. The long-term report for can we WRAPSODY associated in the treatment dialysis existing inclusions inadequate of the final to and reduce FDA today, We validation market with months dialysis pivotal complications frequent options treatments. and our FDA the end often or extend on look

from our September of XXth at Europe, medical Radiology Congress in and at meeting CiDA on are we clinical Cardiovascular sessions WRAPSODY this Lisbon, on CIRSE, studies key featured the and Access including in meetings or Annual the in announce Society Washington, Xth. fall, in the Importantly, scientific excited results will or Portugal, be Controversies at to Interventional D.C. Dialysis October

with assets and announced the this Group, commercial, May, our Merit plan roles our Merit's look in we and central we including therapies expansion position. Joe continuing to of renal forward Joe the continued overseeing engineering closely our team including acquired integration efforts global capabilities ideal leadership initiatives variety business believe we enhancements the work in leader appointment President. to to as company for advanced for XX of teams excellence and directing success, oversees Wright, to important marketing commercialization serving has of and than executing both announced multiple spearheading positioning Directors. Board and our going more from international Joe Third, globally. is been the of the experience important our In regions, our and AngioDynamics of commercial Joe years geographic significant I operations the executive of and he development forward. XXXX I with of a the leadership now strategic with

Commercial management program. XM Company. valuable industry and Her enhanced Merit's leadership and track perspective our Division Board the pursue expertise Board Perez, M. a of also Directors Meeting Annual Transportation May the and selection XXth, We at on Branding our proven of team, at Silvia is Director both continued of record with success as a we President of Shareholders initiatives new XXXX. Silvia of organizational as provide to will our growth and

market few Joe, liabilities. acquisition We Now or We designed a Z+ assumption before assets health reflux consideration relief Solutions the acquisition to EsophyX by the acid disease, opportunity is to Incorporated restoring lower reduce minutes result announced conditions treats for would correctly, the approximately Xst. serious cash of we strategic symptoms a July at such of discuss from of cancer. total and sphincter stomach Z+ call $X is just like certain $XXX is the the reflux EndoGastric turning damage enhances in strategic is suffering can digestive tighten billion global this distract our growth EsophyX doesn't and that portfolio annual consistent gastrointestinal will adds chronic this patients program. Strategically, When cause body's esophagus. and footprint product existing body's it GERD I announced the GERD, a By esophageal to for a over provide believe on estimated this million take acquisition occurs acid enter positives. barrier, not with acquisition from occurs initiatives the device our reflux This endoscopy the innovative market. for GERD multiple long-term the disorder represents this an continued And can and acquisition expanding restoring risk. specialties, in as to acquisition significant and addressable the financial solution complications while clinical chronically, reflux of and annually. GERD esophageal barrier. which us to when importantly, the that gastroesophageal our in allowing The from

patients clinical for Level medical potential evidence societies. X economically that options is and on EsophyX reimbursement, GERD as is accomplished American the under fundoplication, patients. this TIF Association of [ a option update and We in evaluation Now transoral a there practice endoscopic favorable are Z+ each EsophyX clinical and in TIF X.X procedure more currently TIF with incisionless procedure using year. The pharma during management alone Recently, called an by minimally selected represent the or for estimate X.X. million X ] supported advocacy treatment refractory that for carefully X.X Gastroenterology listed GERD U.S. than effective endoscopic strong released Z+ device the visualization invasive candidates

believe room. also device expanding base, and We with while the endoscopy unit and customer existing complementary access highly portfolio the this in interventional is and into gastroenterologists our surgeons operating in

rationale, acquisition addition believe In profile we financial compelling. extremely strategic is the of strong this to the

Now you will share call. color will financial sales you later profile $XX multiyear In in interim, on million our to the Raul and I this we -- forward. to we of range total expect acquisition accretive this give of on me, $XX the million the acquisition additional the going favorable second growth an some half of annualized excuse XXXX, total profile contribution the with that on basis program over company to expect be

me with revenue call the will let quarter over review to performance. second Now Joe, who Joe? that, turn

Joseph Wright

second product unless of detailed categories. both of quarter, our in Thank growth I'll results otherwise revenue year-over-year and you, rates currency the constant basis. beginning review a presented primary all with performance stated, are in each Note, approximated reportable on the and Fred. our a sales provide

reported our reconciliations release to non-GAAP GAAP have from available results website. the item our presentation included We on in our earnings related and

in total Second segment. our was Cardiovascular X% growth and our XX% growth by quarter driven growth in segment Endoscopy revenue

this was segment high revenue driver the total results primary versus the currency Cardiovascular end growth better-than-expected of expectations of constant quarter. the Our again

Cardiovascular the our segment peripheral increased as PI period. segment nearly high total growth intervention end XX% representing our in products, However, Endoscopy sales well or QX. Sales expectations in of the XX%, did of our exceed of

the our an sales basis. currency growth and constant driven our was Excluding increased increased by and sales the in Procedural year-over-year delivery decline QX. growth products, SKU product of kit calls. Cardiac on by sales radar prior PI of in than offset Custom the X.X%, sales from CPS PI of sales slightly of of category represented This performance notably localization ongoing X% X.X% which efforts was acquired resulting products in nearly primarily of sales growth together our organic in of of total intervention expectations, fueled growth our our XX%, QX. on systems of and which products in X/X decline products, sales strong expected of our increased sales more X%, and, discussed rationalization products single-digit sales trades, our OEM end our a in QX. Sales high than products organic fluid PI to X% and better we EP, year-over-year was by sales Organic driven increased of CRM increased products. Sales the intervention Solutions, products product or access growth increased low expected above in extent, lesser strong management

sales While increased OEM quarter. our in business heading mid-teens of the customers our area growth to products on into sales expectations only cardio basis, our that sequential were in OEM the softer a came of than the

improved growth U.S., to in efforts demand, customers of in optimize are levels. Demand U.S. our our We sales OEM result both products the OEM saw and trends just order the work fluctuations We while U.S. customers of OUS timing from expected. to solid of growth inventory sales customers continue as softer-than-expected QX. to outside demand sales through X% and in as drove regions a from product believe from the year-over-year product trends in customers QX

Importantly, OEM XXXX. year growth double-digit full we sales the continue for expect low in to

Lastly, of our high segment Endoscopy exceeded XX%, end sales increased growth which expectations. in the our

We a double-digit XXXX our guidance and this continue endoscopy trends of in expected, this normalization low year. business to assumes updated organic now our growth in growth business as see

to on of performance brief our summary sales Turning geographic a basis. a

X.X% constant in OEM softer-than-expected basis. X% basis point in came had constant assumed as softer Similar customers on QX, mentioned. sales what Our the currency currency and to organic second the our quarter in sales, an experienced increased on U.S. to what previously we roughly sales U.S. X a driven guidance by than

U.S. guidance We the organic QX. With the basis, primarily to organic growth our the sales year-over-year assumed. in an guidance a XX% which continue respect approximately outside our low XXX midpoint to XX% our X% increased to XX% APAC range, and expectations organic high more by the decline to by decline compared in had range on range. International U.S. growth growth constant in stronger-than-expected at XXXX was specifically, than to X% customers basis points sales expect decreased growth of deliver the the of had exceeding assumed currency driven to in in the The X.X% of than end X% year-over-year, guidance better currency in quarter. our constant China X%

will second to that, detailed total balance financial driven in continues to updated headwind World decline in take growth year-over-year driven by related XXth. and over quarter X% XX% in able due half who of reminder, by will our of first to better-than-expected in of is region APAC units a The offset a guidance turn of We guidance increase purchasing. With review EMEA over Raul, assume growth as lower headwinds me results purchasing be guidance see sales sales that growth our range our Rest XXXX, guidance business the the variability the condition assumed to the and decline China constant of volume-based to X.X% expect we growth continue growth in we on X% now increase prior and by to a in XXXX are our results, our partially to China XX% we currency growth to region, related from call midpoint trends at let in pricing year-over-year X% revenue to range. providing messaging, regarding sheet versus X% but through quarter-to-quarter to continued volume-based tenders in our expected. By total assumed basis, country-specific June while assumes international the the way our XXXX. Note, you not assumptions will our of financial guidance APAC

Raul Parra

quarter year performance, Thank doubt, for Beginning with avoidance noted, the unless commentary non-GAAP a focus during Joe. you, of review company's on second will my P&L fiscal our of of results the XXXX. otherwise the

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

basis and year-over-year year-over-year. improvements offset year increase of distribution income in XXXX. period. Total gross of by $X.X quarter SG&A by to expenses quarter expenses prior the X% second increased increased to The increase in prior manufacturing partially was to operating second and up XX.X%, Our second gross driven $XX.X the the expense R&D X% points product The was a was revenue increase and year compared uplift, the from million. compared in a costs, X% the geography in quarter in million XXXX variances expense by or margin year-over-year XX% margin mix, favorable pricing operating increase from freight driven XX period. Operating in

Our XX our by margin a XX XX.X% and XX year to compared operating year basis was point The increase margin prior period. the non-GAAP OpEx in point was basis basis in non-GAAP margin prior to margin operating compared period. XX.X% our the a in decrease point driven increase in gross by

of expense a other partially an offset driven $X.X year. expense $X.X in was increase interest Second interest net quarter associated higher million benefit compared expense last to million associated an increase other in with income balances, by was change expense by increased net borrowings. with in cash our net The of

was per year $X.XX or million share per period. $XX.X million Second or prior $XX.X compared to share $X.XX net quarter in income the

diluted We our the with to leveraged we margins non-GAAP high earnings second results share exceeded performance per expectations. operating are revenue pleased profitability in our stronger-than-expected of end both in expansion drive that where the quarter, and

Turning and balance condition. to a financial our of sheet review

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

Our second flow period. was a leverage improvements generation compared $XX.X primarily to as period. in basis. We the XXth in to used year compared of million $XX.X year the year-over-year adjusted cash ratio, significant generated X.Xx quarter million flow was an of free cash capital The net June free prior prior in on result in of the in improvement cash working

more have $XXX first flow more XXXX of XXXX. will to the than half cash XXst, than program free cash free ending $XX in flow in free -- generation CGI strong cash of and flow continue period our Expect million X-year December the free generated believe million XXXX. We generate over of

For reference, we of have our which a to release, reflect and Solutions. ranges earnings of items how compared formal included our we of table when those our updated guidance our guidance the projected details acquisition of EndoGastric July in XXXX, of Xst, each the financial press ranges, to as prior assets updated impact

Our in GAAP net now guidance in $X.X XX growth growth Endoscopy of basis or exchange of XX% segment a growth points X% approximately of year-over-year, the X% million assumes X% growth our segment year-over-year. our rates X% currency net XX% following: updated revenue headwind revenue net and in approximately to of Cardiovascular range to revenue to approximately to and foreign approximately from changes

impact the total of currency exchange to X.X% the constant revenue in Excluding basis currency X.X% range in expect growth we on changes net in foreign of XXXX. rates, a

guidance in $XX.X million in revenue the our Xst, XXXX, net the to revenue assumes the XXXX Finally, inorganic now acquisitions million announced range on fiscal of and June aggregate. from July total $XX.X XXXX Xth, year contributions for

of approximately contributions our of For in from and Solutions EndoGastric QX. inorganic of QX revenue our to from assets QX, related from and of doubt, range acquisition million assets QX aggregate the $XX.X acquisitions this plus avoidance in of AngioDynamics consists

be range from as to on a $X.XX, total now of of to $X.XX on to of currency EndoGastric to for to of dilution XX% $X.XX organic year-over-year. we share updated to our updated earnings which July [ increase Excluding our in representing discussed the an non-GAAP to expected inorganic assets Solutions, constant Note, guidance of XXXX, this the X.X% revenue, range XX% is respect our in reflects year-over-year. With approximately diluted revenue the ] expect related profitability acquisition X.X% Xst, basis growth guidance expected in the range includes $X.XX. net range

believe profile. attractive earlier, offers discussed Fred As we very a this acquisition financial

balances income the be the While we year year XXXX believe modestly income our gross used contribution lower expect impact million non-GAAP this year will be non-GAAP first non-GAAP we full profitability non-GAAP acquisition to dilutive our interest of of and purchase on post acquisition for EPS net operating to closing. cash in $X.X and approximately consideration, the the partial total margin, given and full to the accretive

now fiscal million $X.X XXX non-GAAP the our and basis purposes, $XX compared up at to net modeling CapEx last $XX.X XX.X%. Diluted points approximately guidance at approximately $XX.X year. expect expense XX.X% Non-GAAP free to outstanding million in $XX least range million $XXX of the tax rate interest basis assumes updated flow and XXXX XX.X%, to to shares points of of to cash range and XXX now operating approximately financial of of million compared previously. For margins million least in year of million, million approximately year-over-year. Non-GAAP we $XXX other

additional transparency growth of like also the will quarter provide third to profitability and for expectations related to XXXX. We our

our quarter U.S. our basis. The expectation markets. increase in currency currency the constant constant expect range the also basis growth year-over-year X% Note, sales X% the approximately midpoint assumes approximately approximately the million constant sales international growth X.X% X.X% quarter we $X.X of and X.X% and in includes GAAP of year-over-year to X.X% growth a approximately inorganic midpoint expectations third year-over-year to a Specifically, in growth year-over-year revenue. our third on currency on of of revenue total to

non-GAAP margins our constant XX.X%, $X.XX. is non-GAAP to of operating XX% approximately inorganic in the year-over-year we and of contributions, $X.XX increase basis. With expected range currency we expectations to range quarter revenue in the of expect profitability third to our organic respect XXXX, for these to Excluding third the an total on expect approximately EPS X% quarter

on again QX of XXth guidance our introduced out press I in call updated our call call QX our EndoGastric our April reaffirmed original when for consideration versus one July release subsequently Solutions XXXX to comparing Finally, Xst. for and item our operating non-GAAP on on earnings assumptions and wanted we margin

expected in FFG quarter of As financial Non-GAAP consulting detailed earnings half no detailed for with XXXX, our XXXX. FFG consulting operating longer measures measures. this ended the updated year as reflect operating first excluding beginning second for XXXX, margin are XX to under XXX in Growth Accordingly, Foundations adjusted, fiscal XX of tables our the the the initiatives fees in our million of fees in release XXX totaled and in conducted XXXX, year-over-year afternoon, XX year-over-year our in associated now consulting the release an X- expansion the period. press range to first previously compared million part of XXXX ended basis approximately the basis of program approximately expected for points FFG range points non-GAAP basis $X expansion the representing expenses for $XX.X XXX point specifically earnings consulting the points XXst, basis periods June X-month reflect of of to the the assumptions that fees, to press margin reconciliation previously. points pretax basis months and removal impact our XXXX in million half non-GAAP non-GAAP December in XXXX, XXth, $X.X and for

our strong. Importantly, throughout X-year the extremely operating non-GAAP for FFG when new fees consulting is performance expansion this margin FFG treatment applying still program,

points. Further, which generated nearly over years we flow $XXX XXXX, million million. cash And this new impact XXst, in beginning of this to free reminder, flow of margin the XXXX, does totaled by to year fiscal not improve in the nearly ending treatment XXX non-GAAP basis December efforts Our of X since operating a XXXX. fiscal generated free cash XX.X% year period in cumulative compared XX.X% [ profitability an of $XXX XXXX increase of way ] over the resulted approximately we

guidance treatment period up new our this Finally, financial would remarks. Operator, end XXXX now for prepared the open we targets CGI XXXX. nor -- turn the our X-year XXst, questions. for our like wraps up That impact December -- line to not does ending

Operator

will Bednar Sandler. [Operator the Instructions] line first Piper from And of from our question come Jason

Jason Bednar

with implied to guidance. like through looks the I outlook XQ quarter flowing another Congrats much It with first here wanted year. of that half you're change for on Not here. overage solid the second the here. mostly in start

but doesn't respect that. how as back year pieces you assuming like you And or sound have specifically within is of wanted within from your for wanted I think your any of the outlook, to on the if as that onerous, really continue see to there's this guidance to It I look you that, your exactly you're the caution business conversation, in think little a within heard the I in China but but overall doesn't I your half. It guide check half range. incremental what with first manage to that assumptions check think typically of momentum don't then doesn't discuss more maybe year. China now your just this

Raul Parra

Yes.

flowing So through increase. yes, we you're right, we're that So first half Jason. This is how typically do right? it,

our $X about end As million you beat the of by guidance. high on we know,

have month Obviously, the we're also did this also -- earlier of so, through. we've were when the did EGS And included that that flowing in that you which that, dynamics we we acquisition. that

was So we're about growth great. outstanding super was optimistic growth business The I doing. again. U.S. the how is think, International generally speaking,

sure some pretty China. China optimistic. feeling And get did better think than to we're So and anticipated, I'm we'll I see on we questions that. continue

So first half putting is we're generally the speaking, in I year together. think the pretty excited how ultimately, and half we're think went pretty a And I how looking. strong about back

Jason Bednar

then and there separate question. follow-up one And a

it's gross on again as it was onerous. previously. quarter But I as comp gross specify your margin pretty like guide Just seems toughest year-over-year a it solid to follow-up. did the this within I -- bring not what if this and often it is here, want the was line. line margin you where was updated can the Again, then considering China versus and just ask margin up --

range how the look just of quarter, could Maybe those wondering or as in third defendable, this just about balance year. trend down a seasonal margin So going but less you're or so from forward, margin the line about thinking more ahead? easier we [ is gross thinking the comps ] over the be I'm be step here. we if XX%

Raul Parra

here hit China, Yes. I'll answer and of on margin. the piece Joe then let and the international I'll kind first gross

Joseph Wright

This Hi, Yes. Joe. Jason. is

sales X.X% basis. organic on currency Our an X% international up constant year-on-year were and

So end this in of quarter. expectations points the approximately high exceeded the XXX our by growth basis

So primarily were X% growth APAC driven -- better-than-expected currency in or a in in only decline those results by QX. OUS constant

range to Our decline assumed guidance range QX. a XX% in in the had of previous XX%

So sales, year-over-year. X% regarding decreased so the sales APAC China

So better guidance XX% low that the was assumed. decline our than had

related expected. quarter-to-quarter as to to variability trends volume-based tenders, is the growth in we see We continue purchasing which

Raul Parra

Yes.

as that margin, operating far improvement, extent the you the end, to it year, it, just gross margin. as Jason, say did gross think comment of that we know, the And on margin. come the at on -- true beginning and we the from I we would So margin the mostly on OpEx. still speaking, holds we this leverage also the Generally gross high as would would don't

the it done gross to So I'd say, margin of it's and excited way is it's happy year. what continue way with been speaking, doing be. -- we're again, And about We've kind to generally this the really the say years want where X we it be performing. last it's happy what I'd

Operator

of Mike question And coming from our Needham. line Matson next the from

Michael Matson

business. on EndoGastric just Endoscopy the I the is imagine so going this deal, into I one guess,

to you Or product? of are sell So combining and a you people the of to force sales both Z+ kind having the specialist selling all the be EsophyX will kind teams going groups endoscopy maintain sales products? of

Fred Lampropoulos

to we over, This we this long assets Yes, that Listen, be combined we've we question. the Mike, looking this What Fred. have in been something product GI time, business able for thanks. would very is the a for forces. difficult. for and with we found cross could that did sales thought been it's Thanks is

balance job. of they're and So we'll there and -- a year, team company the We've going will it to there's way, the there into fit -- and forces combine the with -- we force, to spent time have a something actually all the come was those and technical in we very we how the have pipeline, still very want training, keep more They've for to that's together. doing I well, we well but along, all will should mention. as our been had those that's here, we had And wasn't out this discuss that good Lake, did it Endotek. And and of those people, needed mean, together sales but products utilization This going other that existing as won't very have by we a sales them of specifically, getting combine good then the pleased single be to product nicely sales add a nice serve with think what be I'm efficient. way, be. products X. that We've But that? the as clinical integration. Joe, We've I because we here all we're together. to to business coming some you Salt

Joseph Wright

Yes.

find you overall be first It's a gross just rare very the full accretive not As time. thing been you this to great we've but profile, for mentioned, just profitability profile. Fred, for and our space in margin this looking that that's year. financial was something growth The also something the our in long about to going opportunity

So point. that our was existing it's call very and attractive,

So attractive we are here. basically our market increase footprint very a in able to

the combination, also excited EGS current that we're cross-train we train we about yes, sales hired force. all expect to the and salespeople our of and So Endotek

be product will lines. So both able sell to both

cross-selling expect do some forward. we move as we So opportunities,

Fred Lampropoulos

And instead And into account we same have. footprint the every Joe, as the that think we could more people these one exactly traveling Merit just to add incidentally, so and deeper folks, the smaller of point with focus happens thing. interest, more has of is ability additional accounts. the our they as if single other I just a the Mike, can territories be having thing to far get

not it's these existing like customers. They So their and all are customers. are they're existing new customers,

you to XX that just made excited to we they force that think goes don't we together that the having that lab. were part have we people get couple So person know, every accepted. from notes features This is and opportunity, up not they that dynamic how alluded that We're Joe here had and spent of lot that the were when helps other mentioned make after sales the a we days to I guess, I force I a that offer to is this are. show something team. And with I a sales new know and have it who in pretty of -- probably has that in

Endotek those are leadership I under think leader together, who's and they division. really interesting all the Kennedy, Niki the came facts that that will of together group of that come

be A this very nevertheless, excited of it. quite we're about But done. we're to lot So excited work about opportunity.

Michael Matson

then ablation? negative the positive have impact PFA Yes. business, uptake any on seeing And sounds we're kind It or rapid you just of great. the there, seen from of cardiac

Fred Lampropoulos

No.

We have at all. not seen that

anything We taken you've Joe, that away. haven't seen seen? anything that's

Joseph Wright

No.

enable that devices ablation have We procedures.

tools RF to So it's or if ablation applicable our PFA, procedures. generally both are regardless

So us. been impact for hasn't an it

Fred Lampropoulos

And it's away. get sheath, our them those products. they would that HeartSpan, splittable that there, complement access be our can steerable those in products deliver don't fact, to they take our it's -- so It

Operator

from our the And Fargo. line question Wells coming next of from Biegelsen Larry

Larry Biegelsen

It's wanted too, on Larry. I you, ask Fred, WRAPSODY. to

I one picture more especially little by margins. the Fred, physicians First, and compete a And key here, on do then heard is that one. the in stent view? big price Gore your a graft. component a a congrats to the BD choose expect on one way, What's We've when and space? And bit stent had follow-up. the you quarter graft nice how detailed with

Fred Lampropoulos

Yes.

release CIRSE couple know, early of a XXth September, weeks. the in talk press of I or presented that, you we at up it's August to the Larry, first the think being meeting, made I data about next it's whatever all, coming as think

That's take been have developed We is product. great general my technology, we superior a period. think -- why it. that always just it's we So we

out been a we've it product uptake and the there the for been think I positive. on while, has selling

we're excited the about long term. So very

at in be I those not in forward right in near can any more and performance on is future of about out. near people time lay we well these about we're talking addressable we'll track discuss the it the very to future, all continue be looking We the positive, of more to we and the markets. continue market commissions The really in opportunities. And to And things so call, you we're today, viability have don't intending I of very think future. just tell but have its that the and the the doubt -- can room this have, talk in don't -- this do specifically capabilities. this don't technology We'll I to that

Larry Biegelsen

have mean does to you or significant wanted you ask can come believe gate you price have criteria? you going payment? How And get the to breakthrough I payment a about this the you're pass-through a and luck thinking TPT you you you my the one transitional of you because can so status, to PPT if premium push when likelihood TPT obtain a follow-up. at it meet out can are

Fred Lampropoulos

product have all as will to do Larry, the And we of on talked time, be status Yes. at appropriate this that. breakthrough speaks this revealed. that about, we

So we'll near we're very all -- of in this future, the lay out.

focus primary is filed. has today accepted. been the It's Our PMA been

get then all and done, get and know closer we better. and once that hitting these Let's understand we'll things start other we that

there. be So will it

luck. I be bit to a more pressing going and patient, should little to have you're Just your appreciate

Larry Biegelsen

here, -- to Well, I'm going not we're Fred. be impatient not

Fred Lampropoulos

I know that.

like you've I'm to things going -- teach just me. of taught lot you You're a

you mean, have. thanks have. I Larry, [indiscernible] You

Larry Biegelsen

don't I have.

Fred Lampropoulos

I years, over sir. appreciate have, you So the it. you, Thank and

Operator

the And from of Steve our question line from coming Lichtman next Oppenheimer.

Steven Lichtman

revenue products? see the term And that's is Solutions. accelerate of the I a of in being base EndoGastric And from with in near about bit to I ask business? again current congrats you to about profile here? some appreciate wanted your built the opportunities talk do potential on more little cross-sell you that Can the sort growth quarter. revenue of what the

Raul Parra

Steve. Yes. Great question,

we year. gross this in accretive also year, announced to we to it $XX for margin year and be that revenue, back that for aware, to operating going the the million range integration. you're in of And As first we're be the full the disclosed million would $XX margin half of

than and think I We'll get both about the for can the that other going February. you it. give the to the scale teams are can into have we you and cross-selling. tell So the with endoscopy XXXX that don't think excited I guidance in team But we that, that products there of obviously we're details we get our

be at it that, leave that we'll continue to excited but So asset. about

Steven Lichtman

Free Okay. forward term? And in then, this here headed in were cash cash of should at you're obviously, looking sort terms though. How be flow free about in of the of coming where we you thinking quarter. use stronger, acquisitive near

Raul Parra

and our operations huge benefit been a all, give this of just inventory growing our plan. look, And ahead -- shout to group of we're managing first little on want mean, it's to cash Yes. growth. I'll free I the a out year, to flow I

able manage customer to demand, down. keeping inventory been to flat So with up they've our essentially keeping while also

of $XXX free $XXX continue free XXXX, in cash of flow $XXX program to free we back CGI and we half to generation year, in minimum So that flow. for the our target to importantly, good the that we up minimum expect cash million cash in strong flow And million -- of a position of more we're bumped hit ] million. and to a for and a believe continue [ we lastly took our

quarter. I about more generation couldn't So be the excited strong for super that.

Steven Lichtman

you, Good to with Steve. be

Operator

next from our Rescott the question line And you. Baird. from is coming Thank of David

David Rescott

to the forward is past. the around looking on first quarter seeing Congrats My CIRSE attended definitely the don't I've the Great. question think the WAVE I more haven't CiDA, results strong conference here. that. in

if is us just of clinical I'm there. your maybe wondering maybe for you conferences give flow could to a for at sense at in these to then data presented And look So the tends how view, X into least practice? what kind

Fred Lampropoulos

safety patients the of call is arm primary patency part follow-up results -- of going events. access circuit X-month This the be of and target the lesion Yes. the the from not what this scientific as on sessions, presented the which ABF Well, all, patency randomized by a physicians, to is study, by we Merit. includes first primary cohort,

of scientific this the from is part will be the presented. that the and It the presented in sessions. randomized study, podium So be will

not because it. and we In how doctors terms the to to view or speak specific then happy tune can't Lisbon be come the results the talk date, about to data, have and Merit, it they of we'll until that the in physicians,

I there. just you people be be all will we'll -- room meeting can in to in Portugal. excited we're tell Lisbon, that that this at think I So

David Rescott

medtech, stronger up us Lisbon you was growth driver that obviously, just some a which a next model more the growth. of it's better mean, it general. China it if than from held level Okay. my don't this bit several of and in seems maybe expected. you of you've the to the market than market in -- question second there. into weaker wondering like It make quarters there I like the macro you your in the is operates little components help think year. think in can in strong visibility, But least I'll business comments seems have expected of on about that a at APAC I'm way of I kind

you So into the have? kind those different other maybe out just markets competitors is wondering have of visibility some than your business or what there if medtech any

Raul Parra

that the Yes. as CIRSE be information. Joe to is a China But I going David, just will to take the here. webcast that question. believe point able

out, a that available that I there will all webcast that. We're So it for our is to if you there, I understanding you is make a get trying can't know don't yet. find pass but webcast. the details think a

for can't make So that you it. of those

Joseph Wright

half The a look variability getting country-specific China future. the China of like a our and results still demographic we for we at there this medtech first next new Thanks, are But affected and we is we On as to us just for strong reset very perhaps some baseline, in just based then is purchasing, by great as that. strong from assumptions, things way expect We, China, have year of all us. and the market don't on from growth growth a provide key year other growth reminder, companies the but and still in we Yes. through did volume-based Raul. better-than-expected XXXX. China

Raul Parra

about year-over-year. we total a have did thing even And that I Yes. did too, we're is excited though sales decline, one see we think growth that revenue volume highlight, to

So I we of growth that, because back China. to that's once get mentioned, reset we I can think important think levels then as normalized Joe in

Operator

Jayson our you. Thank James. question coming the next from Raymond line of Bedford And from

Jayson Bedford

okay. Can me you hear

Raul Parra

Jayson. you, got We Yes.

Jayson Bedford

right. All

So a questions. few

update WRAPSODY, did you on FDA up an I Following approval? apologize if missed but this, timing on expected around provide I

Raul Parra

steps. hands. now. just It's said and all for the through done, the aspects completed We're now when their submission, we a as it's We've done. And they're of and there. We'll in go we it. No. hands their PMA, on we but It's We're they're would the prepared back, for respond various prepared sit in in time. we

So it their spoken we to haven't because in it's Jayson. hands,

Jayson Bedford

Got it.

still you're I it OEM kind get to to imply and Okay. strong the confirm if of second a be overly that guide. obvious just could -- fair. to double big in year-to-date, double-digit you have I with the question. pretty visibility think does expecting heard But That's but ramp I do you half to flat the you indeed digit, that's that, growth I don't wonder the say for mean year. if

Raul Parra

growth just all, Yes. our Jayson, of I highlight was U.S. sales and like it to tremendous, continues I'd mean, be. to first

the -- second quarter. contribute OEM in So and did

X% That's So basis. a approximately compared QX, constant about they where were X%. currency they grew at down to on

So rebound. we've a good seen

imply visibility there. would have like that And good We and a the the the does half haven't guidance strong second do obviously, we've math a -- of pretty half. the we changed we what it's because it better feel for feel about OEM back guided to year, we

happy really demand So we're pretty bounce again, strong back, how things think I and some seeing we're there.

we a Spine on included also with nevertheless, was deal OEM was division I'll our with. in but that it there highlight is you their know, guidance, helping business our As Medtronic which announced,

So strong demand for sure.

Fred Lampropoulos

that That back Jayson. filling is pipeline -- up,

visibility to more Those been and to has coming. starting stuff come back the behaviors do that's ups and of kind downs after and back going normalization. coming have are orders are the see general workouts would COVID we the the there to what So probably of we of

Joseph Wright

XX% past Yes. plus And OEM. we have seen in from the growth quarters

of not ordinary So division. the for while sales when that saying the necessarily out will happen, not we're it's

Jayson Bedford

The business pretty obviously Yes. good itself some visibility. to lends Okay.

the just U.S. last is profile Or on international growth for guess, angle me, there. improving Is to Just the one, and driven? an deal strategy? -- EGS and there the I it mostly

Fred Lampropoulos

didn't think just methodically. we're growth we'll the out coming is add and of sales we U.S.-driven, have have pursuing and East. opportunities one that's We is they those it mostly be exploring wisely things And and have Middle that, of think They do very can Europe I bandwidth. to -- and the think Well, however. the they we

Operator

coming Thank of America the you. line of Bijou our And Craig question next from from Bank Securities.

Craig Bijou

the taking quarter. for and congrats guys on questions, strong Thanks, a

QX. couple Just better-than-expected results of and follow-ups a the China on quick had in

you from for -- to maybe products not a that a how the sounds guys like got VBP underlying but think bit was other are the you maybe the you then I expected? wasn't questions, impact in better through medical little just a rest year pricing you underlying And there? And on or on VBP wondered, markets growth couple device coming were Or big as the impact VBPs and you still Just this think alluded as the the market, It of expecting grow. of similar was the the conservative of certain expect the any thoughts side? to China there? volumes question

any positive. there? that's So underlying But thoughts broader market on the

Raul Parra

Yes.

really to that a want of obviously, kind we're than is all, I the changed I really clearly, stay. Joe half And which do assumptions, units done second which think first what going to let we that highlight, there. important of some sales able I we will first we've our to half on better of the volume-based year-over-year to and But important basis, during those I And we that that think about. purchasing think thing expected, of sees overcome one as year, grow continue so, I'll are talked haven't market is VBP the because is he of impact. the say I headwind tackle

our continue an giving is we're units, upside. with So growing bit of it to is definitely of team excellent definitely a VBP. P&L. our hit little seeing getting But in which doing We're job us

what about you think? do China. optimistic So Joe,

Joseph Wright

Yes.

is procedural growth I China the think unit overall in still highlights the growth fact strong. the that

So headwinds, line expectations. while half largely the VBP we're dealing with the first VBP our was in with

right now. guidance. real We even So half plan in our there's -- in our change still it's expect no second

Operator

question from line our of Canaccord. the from And you. coming John Thank next Young

John Young

Thanks here. for squeezing in

it questions to the infrastructure want touch have today, lot for WRAPSODY, commercial of But on Fred First, up ready and the think going at launch? [ you're approvals A on that to been ] it. is building you about too. PMA the here, I maybe product asked back how just just what

Fred Lampropoulos

together that of the had a things therapy together sale. last that of put include are renal like Surfacer number that, and we a Well, They because in that into. we will fall same year put on there that products hemodialysis point our they the same the group physician product and call products

So development ready part this of that been some for time. getting for has under

want comment on further So you Joe, any to that? do

Joseph Wright

Yes.

As have been Fred we renal that group, were, WRAPSODY. for year sales frankly, in as to therapy us thing under we we've good is, The mentioned, and established products renal mentioned, adding Fred this focused other a that therapies for preparation previously.

while time, business, the at markets been this been training that spending in same these the approved experiences on WRAPSODY, products on letting out to them we hear United broke them we they've States. of when time focus of already up So grow team, we've physician other have, a able that outside lot

So we we doing we're can. feel all like

in we're we that how be to team add time, to expect to We that. but going over do judicious

Raul Parra

ahead that of they The Angio too, see that is other we right? thing is anticipated They have to are add, John, well, be. performing where the team can would slightly you clearly which products, that,

so job and the clearly, doing And good integration of things. they're a part

Fred Lampropoulos

sure end all these is focus that point Thanks, And I maybe X that. as seen cognizant the our people last me the on are think performance, think, the guys time budgets at to within add sale we've products really and to pointed Joe sure making the that I we for significant. let we're And same very Again, is, at Raul. just to of ability trained. out, being, X stay that of making

can't the -- we of do. focus. Focus you is without to broad too much bag, hard So a comes this. training Merit's to and important that's when of having market it's because product inventory in, because key The and it can another part go the either

the developed sell we it. we'll some approval, and think just and this, complementary was when call. products with was it, so. It with have XX to the -- be know months And set product So that we're we right get we're when that working people with through all it ago,

John Young

Great. that And maybe on follow-up a approval. just

FDA clock Or any it's the get yet? at On submission, letter deficiency back? stopped the [indiscernible]. you point the that XXX-day Have gotten has for in you I questions heard to this

Fred Lampropoulos

that. but That's They comment, stuff where misconstrued generally it in be misunderstood, have the I'll -- could it The We on is don't -- will I ticking. clock whatever. at comes that and leave because it.

Operator

And coming of Sidoti from from you. Jim line Thank next our question Sidoti & the Company.

James Sidoti

On you think presenting Spain you your an international that any WRAPSODY, on And the for product? international impact the there will think of have do market is sales product? do that data the in

Fred Lampropoulos

it's Well, where the over is And name day. first we're international, you the if that name That in it data every have We Jim, products. lot prove a efficacious. hear game it Where of over how it, is of Where this? of and that physicians. do don't and of the the is data, all, the is game. to is you selling already on

be And It deliver we're to an able in to important. is data this excited will CIRSE. very at So have impact.

James Sidoti

just sales -- the the sales you you with brought that your compared sales you can sense on on the was then had How sales existing in impact And team? team what force? Okay. the EndoGastric acquisition of give some to us big

Joseph Wright

Yes.

XX% was of it about size So our sales the Endotek of force.

but those we areas thought hire strategic selectively So have taken in were where we opportunity. we had decided more, to and we could

So by about force it will overall XX%. grow that

James Sidoti

that was XX% sorry, XX%? or I'm

Joseph Wright

XX%.

James Sidoti

XX%.

that was be then your lot there a And now customers sure overlap, I'm new that core products? of there are you'll also, customer on calling for Okay. but

Fred Lampropoulos

bottom is, customer ours customer the already. every Well, line of a is there

Raul Parra

-- Maybe X customer new customers...

Fred Lampropoulos

Jim, that this, one know new that that we people, don't. they're of of was is they beauties all the don't not So or but

they lab, they we're know are. when on and we are, we calling who know So a who

that never as like have well, something where have this anything there. and account we I've in So seen have, quite they they every

around. Every we're that other the but they go let on, -- So me okay? calling account account an way is already that have

Operator

questions I time. now Thank turn closing Mr. you. in Lampropoulos this any over further for to call queue And will I'm showing no remarks. back the at Fred the

Fred Lampropoulos

lot thought Ladies questions were interest next be questions. of appreciate and for things your call, of to great. hours it's and we answer was for Joe to gentlemen, talk and thank Raul about. so I There the the and for long your I -- a to a around patience. will specific We you couple want

wishes for Lake Salt in much degrees interest, XXX very Good and you evening, Utah. land from your all of the thank heat So Mountain City, best best of wishes.

Operator

conference all concludes Thank you This our for for your today. participation. call

now You disconnect. may

Merit Medical Systems (MMSI) 1 Aug 242024 Q2 Earnings call transcript