Merit Medical Systems (MMSI) 25 Jul 232023 Q2 Earnings call transcript

Welcome to the Second 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.

everyone, earnings Medical’s conference welcome, fiscal quarter and XXXX year call. you, to second Merit of Thank I am Brian joined Parra, Legal our on and the call Financial Officer and today Officer Treasurer; Secretary. and Corporate Lloyd, Chief Chief our by Raul taking Brian, safe harbor through statements, would us the please? you mind

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

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

today, as XXXX, relied We by In update not the differ Please statements, be our July representing specifically Statement regarding should statements. such in to such discussion addition, any that as actual forward-looking as for refer and except for XX, statements sections disclaim filings represent any and other upon statements as our views refer required of views obligation the entitled to release to date. law. any to of forward-looking applicable SEC could important regarding also Please factors with statements. results a Cautionary most today’s from presentation recent information these of press our cause only forward-looking

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

refer discussed comparable Financial included measures. regarding furnished of contains presentation operations. provide certain for also the non-GAAP measures measures press and non-GAAP investors GAAP on useful and trends entitled regarding financial measures can call. to U.S. financial useful certain and Please presentation sections operations such non-GAAP Measures reconciliation under SEC in non-GAAP performance This comparisons underlying believe ongoing directly non-GAAP and information financial of for period-over-period presentation today’s Form our of release this However, to is X-K. our we most press the to business with the A the release measures of financial important information be

financial as be Readers today’s Please measures in website. not to, with presentation non-GAAP these may companies. of are Investors not accordance similarly on our substitute the should financial consider measures other our measures titled press release for, addition prepared with calculations GAAP. comparable note page of reporting in that a and available Both

I to back will Fred. the now call turn

Thank you, Brian.

prepared more in-depth a quarter. remarks, review as of our June start XXXX. and sheet updated and quarterly a start me our our of today’s brief agenda release what Raul cover in opening our as for the Let with formal as that we overview of guidance revenue a summary After XX, provide remarks. balance press my we will financial you will second financial the condition with for will an of with I during results results financial of XXXX well

open your for then call questions. will the We

Now a review X% reported quarter total revenue revenue with up $XXX.X performance, beginning of in year-over-year. quarter, second million GAAP the second of our we

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

June basis, contributions Our compared rates X.X% in headwind increased the constant total acquisitions organic on an our year to to the XXXX. on in prior revenue X, changes the exchange related currency excluding revenue period year-over-year to growth announced quarter we two and second GAAP the from

in stronger call. one notably the than our we earnings expectations quarter second Our revenue outlined quarter growth that results were

expectations of in in our currency for shared quarter two. to range revenue X% we Specifically, X% constant year-over-year growth organic the

stated, reportable rates a are detailed that constant our in more review a all in and on unless and Note product of are with second basis. growth beginning you of provide revenue now quarter, otherwise currency the each results performance primary with year-over-year the me Let sales our approximated categories.

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

quarter Second segment, quarter. segment. our exceeded growth Endoscopy expected in currency Cardiovascular our the in driven were sales the and growth second X% in while was Endoscopy than by our in growth our Constant Cardiovascular expectations segment softer X% high total revenue end of

representing our driver of peripheral Sales of quarter. again segment products intervention growth increased cardiovascular the XX%, largest this total

total one our our PI products two. sales localization PI the year-over-year, together category, and growth access, total angiography our represented in nearly Within product and products XX% and increased and and sales represented together increased of quarter of embolic radar of drainage XX% roughly growth quarter of XX% PI

I didn’t our SCOUT of proud our in line. be again are out strong of PI our I category. total remiss radar localization largest continued Though would if two, differentiated the to growth the across in PI call performance key highly product products We quarter a number contributor

pleased response mini the been launch. SCOUT as during reflector post the market well full have to We first with our commercial year

key this growth growth contributors Cardiovascular quarter Continuing total OEM to revenue our products XX% a our two on invention segment with sales X% quarter, and of year-over-year, drivers, respectively. and our discussion our of were Cardiac products increasing both

in by our driven sales line and which low our come in single-digit EP products, more XX% than our increased in roughly mid-single both product Sales offset expectations of CI which and growth our intervention sales the of primarily declines hemostasis of year-over-year. strong end products high of the access in CRM products. with our digits, increased angiography

attribute high larger coatings together CRM, the which our OEM year-over-year expectations, and kits to end multiple principally in including growth demand in exceeded customers which we EP, increased XX% Sales improving products, products two. of continued quarter categories our from of

of ability Merit’s growing track driver meet key Importantly, a to demonstrated demand this record is this of growth

of X%, procedural mid in quarter custom we declines driven expected customers increased outside products our U.S. high demand the single-digit to products better CPS was two. customers offset our our This primarily the sales CPS by our upside stronger-than-expected U.S. in notably products of mid-single-digit to Sales which of declines than from solution was which

second in guidance. sales assumed Finally, our and growth Endoscopy which X% our in quarter segment the range increased below we is

work in expected, Endoscopy growth as we qualifications our business constraints to results While pleased the improve experience for to one, continue a to on continued we shortages, supply see disruption vendor. as new and underlying are Endoscopy business quarter material chain trends navigate in

quarter As and discussed for trends growth year endoscopy mid-teens move one in on we as our improvement we call, XXXX. anticipated had business through our the

results business quarter improving guidance softer-than-expected reflects cautiously we mid-teens will two, and see growth updated optimistic the and in of sales endoscopy trends to half are Our that second in we our XXXX. in the continue

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

of U.S. better-than-expected $X year-over-year. quarter came million period. of second the the expectations, growth to in U.S. million end growth roughly Our in $X increased Sales in high sales above our approximately the was organic this customers X%

reflects May improving overall second the during in market June. performance growth continued strong our months U.S. of quarter U.S. in and execution business the and Our particularly direct trends the during

International the end better-than-expected the results, our of although Rest sales two. World and in the end high both the exceeding year-over-year, increased in APAC quarter. were of of expectations upper driver quarter at growth expectations EMEA was our the regions primary XX% the of

second was in improving as quarter the China, we growth by into trends our call year-over-year XX% in which sales the increased one APAC continued driven that discussed quarter. March on

overall strategic our The plan. are and throughout overall strong extremely In quarter improving and remain is execution first XXXX. focused the team well but second is summary, of executing the environment half the a pleased remains multiyear and challenging, in with we on

the believe results the our hard second commitment quarter, Growth continue the that for work to we Foundations paying to performance financial respect team’s demonstrate program off. With to in are and our

impressive These Non-GAAP XX.X% first are for XX.X% gross half and of and ’XX. the the margins operating quarter of profitability. respectively, our for improvements XX.X%, and XX.X% and in

to ability and and While our in Growth and related our we for the the our continued program we year period guidance the targets are losing not confident for team’s financial fiscal deliver in X-year focus – Foundation in X-year XX, ended financial XXXX. progress December X of for remain year XXXX

like a Now Raul, call before we for month. a AngioDynamics consideration first take products announced the few of to two of cash On discussing $XXX X, which the million. moments and Biopsy from was would Sealant strategic portfolio the System the dialysis BioSentry, over Tract acquisitions, total last a we to catheter announced turning of acquisitions, the time June I

assets growing Surfacer these foundations in the WRAPSODY Graft markets offering expands includes HeRO which Acquiring strengthens our the dialysis Catheter System. broadens our device Inside-Out the position It Access and the platforms. dialysis our Endoprosthesis, and therapeutic specialty Cell-Impermeable of biopsy and

We Many infrastructure multibillion-dollar leverage to dialysis patients that by to solutions therapies. this rely market. dialysis more combining in us believe commercial the within portfolio patients on interventional of vital relationships, receive these our to serve allow solutions will our Merit physician

conventional flow a catheter catheter dialysis catheter resistant Endexo with compared acquired the to a in-vitro accumulation Thrombus Technology, formation proprietary noncoated material dialysis DuraMax can dialysis portfolio preventing adequate dialysis treatment. catheters. through The blood BioFlo thrombus innovative more to block includes

market. in incidence biopsy-related Biopsy then BioSentry AngioDynamics strengthens acquired also which, The quarter we lung designed hospitalization portfolio, we position to Sealant life-threatening in extend of patients dialysis can of biopsy. specifically Pneumothorax the biopsy undergoing occurs again, potentially BioSentry our the reduce approximately believe, and to addition complication a is that is In Tract one System, pneumothorax. the

privately of serving XXXX investment consideration an equity XXXX. acquire held the system company the the knows the distributor of Technologies in Access acquisition cash from is Vascular million. completed a to second Catheter for was Surfacer we exclusive $XX.X system Merit and Bluegrass total announced May The agreement an purchase global having that established company as through asset Inside-Out a from in Vascular Bluegrass well

to designed device rightsized chemotherapy. venous venous patients including obstructions, obtain life-saving population and hemodialysis access unique with therapies, with a central is Surfacer to providing access The in this

and objective in with portfolio Importantly, commercial invest these acquisitions of assets from selectively consistent strategic markets to our Vascular our footprint. our are that Bluegrass to expand product key leverage stated existing AngioDynamics

these the financial In we is the of believe compelling. strategic rationale, strong acquisitions addition to profile

these basis earnings We closing add our revenue post our and first accretive an share gross closing. non-GAAP non-GAAP to and non-GAAP net $XX to expect $XX the on non-GAAP margins, we full accretive year per annualized million net per contribute of $XX fiscal year both approximately income full acquisitions non-GAAP and income post to million million approximately be and these to in to second the and to in The continue expect share earnings of XXXX. is integration to underway, in and assets revenue operating

second call our With me of XXXX guidance, to turn the and Raul, we that release. results detailed you today’s Raul? which who review over financial in financial said, quarter let take updated through our press a will

Thank you, Fred.

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

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

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

profit the XX% approximately quarter. in year-over-year Gross second increased

primarily was XX.X% second margin second FFG-related The highest to company’s the efficiencies. changes the for margin mix, in representing freight other period, gross year distribution margin XX.X% compared gross year-over-year history. expenses improved quarter prior and quarter was the as the as due to Our gross in in favorable product in increase well

prior headwinds primarily expectations year impacted the sales still of expected, higher margins on to increase As our the basis still margin inflationary points in gross and on gross expense are labor quarter in With performance call, cost as basis end QX exceeded better-than-expected XXX in the the point respect to XXX were pre-COVID, freight XX logistics, by leverage year-over-year second The year-over-year margins to called due we’re significantly to to seeing period. improved our headwinds freight, specifically, expenses we for have we are period. raw increase but gross outlined fixed compared freight the which margins than the high gross materials. seeing the to

SG&A post the was as costs period. year Operating marketing quarter. to year-over-year in R&D primarily and by well lift The travel expense continue X% as in labor-related was headcount with a to increase expense increase expenses costs the increase in restrictions operating to promote driven increase increased associated an prior XX% in increased expenses SG&A to The in expenses increased as and second compared due year-over-year sales pandemic. XX%

management better continued to performance operating future of in Our leverage, our and principally our investments on focus was expense to expense growth expected and operating than support prioritization QX due initiatives. reflects strong

or million million. $X.X increased quarter year-over-year to second $XX.X the XX% in income operating Total

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

in unrealized other last $X.X increased borrowings and other increase $X.X quarter was losses. net primarily interest an net related and million rates, compared associated realized to was rising currency foreign The expense in change million expense associated Second to year. with with expense increased interest expense

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

share, net second with year-over-year in XX% our in performance growth in profitability the growth per delivered we non-GAAP high and XX% the pleased year-over-year non-GAAP expectations. are our of diluted exceeding quarter, where We income earnings end

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

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

a net times second the was Our increase in of cash of quarter. of from Cash year-over-year improvement second quarter generated on material for use as net X.X free capital. ratio an We adjusted by the XX $XX.X XX% leverage a as in working and offset operations basis. GAAP in year-over-year million strong flow income June year-over-year was cash decreased

of in is quarters, One we working about nature. increase in that in year-over-year. other two capital the have There drivers were talked primary nonrecurring the recent

milestone that Specifically, in impacted period. of capital expenses This versus million which working payment rule a Cianna the cash related second in the flow this free in required cash to in Medical $XX.X of final cash an final payment of the operating operations result decrease as $XX.X use is million, from to flow flow increase treatment part accrued a specific of and financing. quarter from payment of due accounting was

calls, have invest related The our service to and in levels. on stock in build the of was balances we inventory other strategy notable to proactively ensure use the prior working requisite safety discussed driver high capital QX customer to

We XXXX continue continue the flow over to we expect generation and cash to will be to generate second strong which free half in generated majority the expect year. the of of

table formal year we updated guidance, for ranges of our release, a release, earnings prior each which period. have in today’s the of the press our fiscal items guidance a we those to XXXX and how our review Turning ranges which financial detail press updated in included to compared financial year

expect of of $X Cardiovascular our in net the net foreign to range segment, XX% rates of in net XX% to our year-over-year. guidance revenue GAAP segment, Endoscopy approximately headwind exchange to of revenue The now approximately We approximately and GAAP growth net to in X% currency changes assumes growth continue X% X% approximately X% a revenue growth million. from revenue

rates, X% net constant X.X% and Note, currency changes we total quarter a in revenue the growth respectively, this the X% to X%, midpoint of in growth in impact and the approximately now X% Excluding guidance in year-over-year of on call. foreign provided U.S. our range currency year-over-year and the earnings in range growth compared basis exchange approximately expect X.X% XXXX. to assumed year-over-year of in first on markets assumes the international

guidance The and the stronger-than-expected EMEA Russia versus and from higher specifically China. prior anticipated results U.S. the APAC expectation international driven growth is expectation constant constant contribution prior currency regions, guidance and the in currency versus the acquisitions. reflects The lower second aforementioned growth quarter by

assumed our May over in revenue second sales Russia XXXX Commerce’s has and guidance under in the We The the our what of Russia challenged additional the defined they for approval our Department sanctions are have meet announcement rules we countries of outlook for that strengthening regulations to the in Belarus. these ability versus XXXX. in against Department administration and the had in to export half response late Commerce expectations of by existing original revised process

first to half have With exceeded China, sales XXXX. over modestly the results respect expectations of

related our moderated to for this as expect second have we growth programs the expectations announced later in recently to XXXX China year. VBP headwinds we growth of However, half

the through contributions June their assume $XX closing on and from XXXX from to million. XXXX, to in acquisition announced continues million XX, guidance revenue dates X, December range $XX net total respective Our the of

net Excluding constant revenue revenue X% of from basis currency the on these acquisitions, our X% total range in guidance reflects a approximately to growth organic year-over-year.

to per net have to $XX ranges $XX our per million and income $XX $X.XX $XX updated to XXXX, respect profitability With previously. guidance and million diluted we to GAAP diluted earnings $X.XX to for $X.XX compared and million to share million to $X.XX share

net non-GAAP unchanged. diluted share earnings income per Our ranges remain and

our For range XX% gross Non-GAAP of points compared XXXX of primarily of range of approximately June non-GAAP XXX to previously. $XX million the to in basis guidance incremental million our margins million previously million expense margin compared million financial to year-over-year. points XX.X% GAAP other in to to higher XXXX. borrowings both now the to ranges fiscal $X.X XX.X%, year XXX approximately is the and approximately year-over-year. interest to related The modeling $XX other approximately expense to non-GAAP XX.X%, up related purposes, assumes acquisitions range operating expense XXX up increase to XXX in on in $X basis in $XX

compared approximately Non-GAAP previously to XX.X% XX% the to range tax $XX.X in shares XX% diluted and of XX.X% rate of to outstanding million.

and additional like provide Lastly, related would of to our we to profitability for the quarter transparency XXXX. third expectations growth

X.X% our basis we of constant basis. on X% and to a to on to X.X% Specifically, year-over-year GAAP X% revenue the total increase approximately approximately in currency year-over-year expect a range up

the we the million midpoint respect of to the end and in expectations markets. approximately interest the X.X% the margin XX.X%, low X% XX.X%, the expected third with growth X% to of range including constant acquired to are basis operating expect year-over-year Non-GAAP margins in sales on up to a to higher approximately $X approximately to combined the year-over-year. up year-over-year approximately XXX in in our year-over-year XX.X% international profitability drive the With range range. up year-over-year to the margins range year-over-year expectations growth XX.X% These XX of end in non-GAAP points of year-over-year expense Note, expectations, on XXX currency X% for high basis quarter non-GAAP revenue in our assumes of U.S., of year-over-year. approximately gross third growth EPS points XXX down quarter, the change

prepared up remarks. up questions. now That we open like would to Operator, wraps lines for our the

sir. [Operator Company. First comes & Instructions] you, Oppenheimer from Steve line of of Thank question Lichtman the

Evening, you. Thank guys.

on question quick the sort if accelerate umbrella you a of the what could ? talk now Just those growth the field the and under you opportunities Wondering underlying to key sort products from Merit AngioDynamics acquisition. see product the the about of feedback of early

Fred, is this question. for Steve, the and thanks

strengthen the take for always to all look And First and for and of it. to the ready prepared here align which that all, Surfacer, the products able a a near be in around will and how been then future. the and the get along has strategy to with at then sales be force be HeRO, to of Rhapsody, those

is deal. have we I the wouldn’t basic that thinking, So it’s and sound. done the think we mean

and are, also We to in that room with did product transferring he’s Becton, us, Mexico, guy Fredde, we of Greg and who’s running have the the that Dickinson sitting our course, deal, program. the

think were I that know I So XX% an customers. or are our that existing we customers it’s think area Merit XX%

So we feel strongly.

I the was there the direct from, on and sales to company along as program biopsy Essentially, has criticizing product side, going think planned. growth, question one Merit coming from else. from it we the And broad a without bought is anybody in force. the Angio, of Europe sold

it’s something And Surfacer, chronic, has that like way, is mean, the the now want it to is of wouldn’t the have the to the acute, Rhapsody, that All candidly, have we to the full which HeRO, nobody that. to be have able all else very by I who the we say, have felt portfolio, I that distribution. peritoneal, something

all transitioning immediately, reached pieces We the We’ve of we access I we to and customers. almost facility to to customers So think, in the it. those these process and positive all thing, now out all part is in of our and over it, went we’re Mexico the order cash having love from appreciate

was from to just they you’re optimistic I that, didn’t opportunity focus. So product – of and unfortunately, it, something out they didn’t do be think get Because to about ability the we continue the right, use to it. growth it this

For us, it’s exciting an opportunity.

in hope One the reporting, we’ll that of look in answers forward best your think, the seen, success I’ve of this future. this question. I – the I and to

And end on Yes. on just following Fred. secondly, then comments your Thanks. up the markets,

about end improving talked You markets.

You in about out challenges also having expected talked the than come in to better some here first there half. another point

what back, in Thanks. think As the last of plus? that what are you navigate? you improvements need challenges to are you some over seen still the X biggest the you’ve here end the look markets months And

Yes. a growth think of our I’ll ask There the to weigh in continue the we entire fine. areas. Raul product I hit couple to across of is market U.S. on still would be But gamut I’ll other and in Listen, challenges doing see these lines. these.

Other factor. You OEM have can goes on reliable, People such people see reliability becomes the a an reliable. from had because us And buy they’re again, long numbers important where, we’re shortages. that way.

to and Now seconds sort things. do you minutes we’re give let whatever on not Raul, without a just comment you me or headwinds few or do, want that to of that? you want

Yes. to the I excited be Steve, QX. continue great business, think results for No, obviously, about look, had we

of the important of I we U.S. growth think is look at think revenue that into – back X%, market. let beat did it’s the the half the some we to when X% out through implied I constant flow organic to that currency year, call did you

the previously is had. going go X% we to X% X% versus So to X% that to growth

organic you when currency for it’s we’ve X%. think there, it there really raise noise some X% constant which why And versus still look you But growth, at kind look specific market, a at that’s I we of out two issues. approximately the and to the is guidance. X% due X% international revenue international didn’t if accounted to there’s to

will as for kind China of quarter we this region, the One And could. or of that of Russia into in purchasing APAC the fourth EMEA sell of then which issue, to now the we’ve got year hit additional the Russia, us There’s guide. part volume-based our different right? was accounted requirements out

for We haven’t forecast. good been in our very but accounted at stuff, the it’s guessing

And really the so two are things. those

frankly. the how business We’re excited doing, is quite about

Thanks

Thank you.

Raymond from line of of the Jayson comes question Bedford James. next Our

hear guys. Can morning, Good me, hear Can guys. you afternoon, you okay. Good me.

good to you hear Its Yeah. We you, can Thank you. hear voice. Jason.

Me too.

Strong imagine there probably but on picking of Just comment. commentary. in I just interested was up a the more I’m VBP catch-up maybe China there, bit the XQ, a

So just I’m to in what reflect these in the fourth does assumes place VBP Or think the curious, you VBP guide guess happen an programs? announce quarter. guide may programs are impact now? I the

So they in Chinese programs that will are Jayson. happen announced XXXX, second VBP has government the announced half of the that

So for in is in as you that. an already know, the we guidance guidance have to This did that our impact our we original year, had included out that we QX. put incremental

given our we had strong we to And just so to our that results, a have of really guidance beat we had were again, kind given change that maintain strong we such guidance. able didn’t that

it’s And numbers APAC well. in as reflected our

Exactly.

it’s our model. So in

be XQ, in And the XQ? expectation not starts Okay. to it clear,

tomorrow, second and changes look, will mean, that with will there. just any China, the the for I’ll half, Jayson. I account say In change I Yes. I mean it second half, think

and third down third XQ, for trends is quarter realize very matter? there quarter assets the margin, fourth from weighing acquired I But strong just on the or the then I on that it gross sequentially. quarter And Okay. impact always, that’s think, with GM an

see we third impact got have cost that typically reduced matter. in really, what gross that and happen. Most from in is the think what’s operating earnings We’ve you’re see and always of we driving it’s for margin the in, margin a decrease to always seeing to right, cover. look, For We a in the all And in We decline quarter. fixed what also that’s the also quarter, it. is revenue going just revenue. third

but So as know those Jayson, that’s what’s really – you impact. that, driving that

one maybe Okay. me. And just then from last

it say Endoscopy, XQ, you wrinkle probably kind over of the it’s quarter fixed of issue, have issue of demand confidence that this only of like two? supply under in terms confident next just a the – the In a was or and control more I’d that how here than level sounds

to done, We Yes. the we Listen XX%. more units, be make to of all I things one there’s finished, and I – done. we Jayson. just right. work the sure other In mean, they’re got think, want

extraordinary So mean the work vendor, absolute we I in. this transferring done over. have confidence they’ve and

well think I as we could. it handled we as

last – think what, I what and XX%? XX%, So quarter XX%, was,

really I Jayson. think of on, really, I mean, it’s qualifications we’re that Yes. waiting these just kind final

just this I robust We that bit earlier just a out have pretty with supply still plan. and Steve’s of talking kind was noise there’s we about question, this there good kind product. – one of Fred of – is with the think just And a issues of chain little right? availability

And so of hit areas just – us. of is one the one this that kind

little these lot that a of helps there. I out hope lot A Jayson. you things

you. does. It Thank

You bet.

you. Thank

Larry Wells from question comes Biegelsen Our the next line of of Fargo.

growth numbers. year? organic X Good afternoon a the – X, for the just full confused Thanks I quarter implied X little is I’m isn’t thought I and . it admit, taking a to Raul, question nice still I on to organic heard here. X the the for congrats to on have I’m you say second half

Yes.

Okay.

second X I’m I right? if the X.X that if tell me X%. to think, half, the so wrong, about the about in and Is full X first implies half And for did, year it’s you but

does That’s sequentially. down correct, It Larry. go

Okay.

and China headwinds. the Russia, on So

Russia, us the it for was how last us Merit? second half impact,you So from are Russia and you And a much guidance? And impact on time in area. areas implied percent the had of could – China, what is told which VBP sales the what same you in thing, tell what

what and assuming So you’re can tell for China, in you the areas? what us amount

Yes.

going that We’re Larry. detail, give not to

we ago, did spent we better last of part a that and the $XX million. year this time was the think year explaining I

reflected APAC our I – think helps. can growth of just change it’s you X% in implied guidance, and in if guidance, it’s the our that

remember. sales of you percent a Russia, I disclosed have Okay. And for Merit? can’t

our won’t Yes. yes, that. Again, we baked guidance. into disclose It’s

it. got I

that Okay. Fair areas enough. areas are procedures? Thanks. in procedures that deferred that. the think your Merit deferred catch-up I’m And from what’s Some pandemic? were are just view the of seeing you assuming have benefit during or guidance? Fred, what would Does curious, you

having Larry, not it they’ve I stated areas, in staffing problems time are there properly. someplace that stated in an say, maybe some able Utah, we solve they’re as – areas, to I you example, it. That is it’s Midwest, that’s been problem. the in here Yes. last In other and think Texas let’s think visited OBLs, I a

So it’s spotty, there. but pent-up higher, but there’s we out do of a believe demand lot

questions. taking enough. Fair Thanks the for

Okay. Thank you.

Thank you.

comes line of question Piper the next Sandler. Our Bednar of Jason from

I focus for the on and afternoon. stood congrats here half record a item that companies us margins. is quarter, you’re the And here. moving maybe lot was Thanks but the that of echo strong up Not really on of inflationary just we’ll year, strength of just impressive say gross just a in to on in highs so And And Good taking on given these first in that questions. environment. to I’ll which extremely pressures. gross the can really really one basis, margin, the a out sequential XQ. follow new hitting result just for wanted it’s this aren’t higher

these pricing consider there? additional I understand talk seeing the extent you those for actions sustainability anything also be quarter third of and with beyond the And level what to and line Mexico, margin might about second elaborate in that or gross you’re materialize here could to your from margins upside that? product quarter, this able maybe transfers that but guidance could on levels of benefits here to some quantifying through contributors the like gross additional of year? Anything confidence

great a Yes. Look, question. it’s

there. headwinds are gross all strong despite out ’XX that margin expect expansion in We the

to is about is very way and some happy the and tailwinds also were initial when logistics, It we of lot FFG that and progressing. back which we guidance, it’s vocal pricing. give getting think initiatives, be fixed really with covering vocal the freight A really focused contribution very we that continue can margin we our our we’ve include from coming we’re the our of includes to making then leverage. really get cost sure on the on have gross been ocean. which And things I

we’ll and we’re – as that that. to can far things not happen. work talk things to are imagine, continue you about But continue as to transfers there’s going As beyond XXXX, do and

that. it leave at I’ll So

to comment a all. we’re to on to don’t I it’s But worked, rehash our opening I just that. the business changes, with for or through see a it’s will through overnight just has takes Raul continue that it FFG I system it working of It’s and decision and think comments, starting said some not now to make And work. is you a working. things want a made and of time agree benefits you these it work and what because it

Jason, the month these is been margin I two. a gross certain mean, reason not so in or we’ve working And programs on of the years cases. we’ve confident some in for been because

does months So gross margin call expansion. we another for but to again, plan got the still go, X

little the before approaching upside the nice you’re that here? maybe Okay. Is guys. you has X and comprehensive talk taking you philosophically recent still from probably to Maybe Angio biopsy? next about you operating with like potential to bit, there and certain in to have step. to move, And even through an additional Perfect. the dialysis that helpful, period a that looks fairly low fill you like deal, gears about you with M&A how That’s Angio a too. shift do the talked the really an you you’d some with you’re to a growth M&A for upside identified did about this earlier risk procedural Really call. it as margin executed But Angio, also externally get need of digestion you’re gaps asset able on portion appetite revenue liking, glad transaction can find

you. Well, thank

in people very out sort I our that Mexico to a very our think confident then of guys to the things past in and agreements and find to transition the it know like in in associates had and this execute very lot did we in ability I’m it. these engaged in and the what we’ve as earlier candidly, that of mentioned, do. Greg the I are history work

stuff think shareholders there going And it. be it’s things not work has I the fit there being think there but we’re I want, if – it of think think – what and has us. a set. our technology, not a doing think do I for worked, we’ve opportunities has been looking mean, to patient the criteria frustrating I being out the it’s and we lot wise be out We for might what have that doesn’t I lot are to and and But it people can money. there’s that you going of a key are do patient. that things And but just to that maybe I like is difficult. it to that, do to to the great more

hit the I on think nail the you head.

could the do that when and also big resources capabilities. your the really, product really three transaction we was for or it is that learned we this from transfers, risk But you two, X I’ve digest. past, one out try to think and factor I deals pins felt that

the doing be from having I that that. the and all Commercial aligning a we’ve the Officer learned sales helpful. forces we’ve of last several and very, period about think changes over will we made And time in that Chief years very know

wise and I will good from, that be patience choices. So just rewarded and Raul? think, patience

X.X we’re standpoint. add I’ll capitalized with only sizable that a And we’re well on borrowing leverage Yes. at and capacity, net

I helpful Appreciate If more. in one that, squeeze just really perspective. could

pricing much might you second on of have the Just the the pricing in views have And in how might Thanks. within guidance? any quarter? what be your then half year added

Yes.

having appreciate to We’re pricing discussion, into versus the that. don’t it volume going that question, just but We disclose the impact. know get I to is but an want not

And for it foundations is our of growth pillars. one

Understood. Thanks.

Good. Thank sir. you,

you. Thank

from Needham Our Matson next question & comes the Company. of line of Mike

with the I well. Good guess as afternoon. Yes. acquisitions start I’ll

acquired, that like maybe selling. of of specifically it Merit already was some the that the bit look products was catheters slides, a at products looking the you overlap and the some there in little So the products didn’t acquired dialysis between of

anything is or kind there? the of case? or So And cannibalization that any there is of dissynergies any risk

are thank have the that, couple products. Mike, catheter. has Merit that end all where someone types you. failure, acute out catheters, One, this we an renal in Remember number let with ones of These and Oftentimes point of a one they cuff. products very, me have catheters, have of of up are things are Yes, different accidents but a that chronic. those part that. other Merit’s of a Listen, very you’ll didn’t do these as important.

of an smaller but So that in nevertheless, addition. revenues, a part the is addition, really

at things will I stuff. other we’ll we that think do And and what we’ve go our well. talked product this, all this about, of say through as just lines think will that I like a that is to the look is that any and do that I BioFlo. excited it for a one a of very think The I’m been this We has don’t have just component big Endexo, BioFlo about promoted. deal. the things long I’ll call it is and time of the been but

think I over is up look the to with right that this So else will anything mix something like try we come at and and time.

place, complementary, through I about think And biopsy for it’s Merit customer in talked going work as biopsy done. transition, biopsy way, getting needs, transferred, right by have getting because that this products. to they now, biopsy But our we’ve it’s the products. does meeting have getting didn’t very

add you a to when all issues opportunity. Raul, that look great we at the think overall, to strategy fit we tactical be something? and So want it’s the they little how into going

would it’s I mean, but already if whatsoever, numbers, there’s in overlap we really, any the

it minimal. call

Yes.

that overlaps, So whatever will just something. point, with be to replaced

look revenue. or at as a don’t we of so loss cannibal it And

don’t of mean, a market having just Bluegrass that? I Okay. of this your I kind in overall is Surfacer is opportunity be the I is significantly line of higher it gross product, is margins? Is it of for that the of And margin? kind slides dollars Like, I understand. ultimately tens something on or... revenue. then a the the kind mean Or then like than millions it recall where estimate And of could of also

product years, that answer COVID, was that right and it selling in the done saying in approved get of in it me a contributor is been was Europe margin. gross X this for work we U.S. then some but let the had it Mike, We’ve we to think by middle to and X or

difficult a like So product this. was a it time to introduce

being lot distribution looked how and we that put listened physicians rights what how does what the work so of it as was how candidly, go a of one All and we said, went to away, all will into and and products I very differentiate over looked it’s and it and that they the thought moved fits at of and this what And and our HeRO. to to, back they will on input this did the group we biopsy how strategy And a It’s strategy. the fits lot this said, – at we together, look dialysis market acute want representing into when the complementary years. in it they went and it from these chronic to leads to company. particularly in like there this how

do things that went product, not things, worth is talking it’s the generally lot it. want go products process, about – than all well and work were is So the a versus into that, the is that’s there’s said, because what acute complement is focus a say whole the whole think, that lot public. of it I I much think But investing to the don’t we of a understood I strategy strategy chronic, other on into specific of the which to one but we this will might product very of because like by subtle not one so – be

So I’m come that and we very thought pleased to the did and with the how that conclusion then we it. work to approached

relatively a was it unique think transaction. I

right. All Thanks, okay. guys. Yeah,

you. You bet. Thank

you. Thank

Our & the next of question comes Sidoti line Sidoti of from Jim Company.

Thanks the taking afternoon. for Good questions.

your Yeah. voice, hear Good to Jim.

weeks of guess expense. So ago, million has you’d there? $XX.X transaction – about see everybody while you again, are you I did Six costs, good numbers? later, interest thought since still a what the on $X.X transaction weeks completed about you been because When in focused deal the about is Or you it thinking those million one. six

have on $X.XX which year, Jim. think The interest be the or about portion transaction capturing amortization, for some that’s would will then $X.XX But fair that had the a to about Yes. expected $XX a be million because implied that big costs in obviously million of or you you is $X won’t I assets. And value all as you’re the it amortization comes that significant.

Okay.

the in will like be majority second of million, sounds that So then the half that of the it of year/ $XX

I is million up. $XX about the a as in roughly have And Yes. number just heads

That’s an amortization.

Yes, the in for just amortization. all and expenses

in. all for that’s So

have yes, Jim, show talked, We we that but given the Yeah. might time last since we $XXmillion.

amortization. Including

Yes. Amortization.

quarter, was sorry. how – much first so quarter And in second the

have been $X $X and have million, somewhere then around have probably about we there, would been amortization would It banking It fees. million. some $X would million,

Right.

right. pricing, put you’ve All don’t know that say in specific, Okay. to you place in increases fair that are terms I but it of too price get And the is want to sticking?

Yes.

Yes.

is of increases I plan. you think And Foundations price that the said continued Growth part earlier Okay. for

to and expect and in continue in put ’XX increases So them or – ’XX ’XX? ’XX in to price you’ll

program ongoing pricing that’s have an program. of a We

of is Growth, contracts that will It’s a pillar it to and but Foundations away. various forward. issues and not a pillar Some of it were consideration for go due, come going be these will growth going of

we obviously Yes. things, do When think it the years. this subsequent that pillars obviously don’t Merit Foundations us and what talked on this we additional I about, things those Fred there’s help of . these of is things just in of will those or X I just year. That always a of December at – lot of end for changed, Growth, we that foundational, think how how do we’ve

of then All China the and I through because correctly, If year, they one at beginning didn’t on right. were you pricing the last expecting as me for XXXX, significant went the we the in pretty China. of recall materialize. And volume some hits

And but you’re in confident thing that the there them materialize could year? are happen? they’ll is happen that actually expecting of this you back – they chance what how So again, and a the don’t same

expansion high impacts margin kind it’s all, we execute such obviously, look, bit within because our gross a Well, And base the hitting and P&L. just to a the mean, of we at level I first continue little are continues. feeling volume of of purchasing

up I we are want that to clear seeing So impacts. just make the

things, day the know do we start You’re very at exact these we this Jim, been but of right, China day. they’re haven’t in impacting of from to estimating that changes kind good

By been able everybody planet. We’ve the never way, figure as that else to on about the out. same the

we that accounted transparent just you been we and job think making impacts and sure we’ve know those. guys what pretty know hadn’t there’s just I I that, done trying a have of and with look, good do, about we’re for, we’re think is to letting additional you investors that our

is I I’m quarter. just a very the confused reason had Yes. second you guess good

is for Your as pretty quarter for revenue third good well. the guidance

that or just the China So going quarter get to or significantly I’m what’s to Russia I’m of slower And trying be implies you trying head fourth on. are will it just in conservative? – understand my is growth. that because being Just

that stick have the the to X%. expectations to our kind our Again, really I X% we’ve The not for expect guidance in kind growth versus guidance U.S. APAC. we’ve prior our think changed guidance of is we of growth and EMEA given from impacts assumed. what we’re we and just about It’s those the that rate we’ll which that pretty that feel good year, feeling

right. Thank All you. Okay.

you. thank Jim,

Thank you.

Petusky of the comes Michael next Our of Research. line Barrington question from

Good evening, guys. quarter. Nice

your I So full what that CapEx come for the second are it you for for half, mean and $XX like was wanted year? high. that to comment at thoughts is year, million Raul, CapEx the ask on certainly just expectations the unlikely I on full in guess Can in that the up to on I seems

have in free very seen obviously working focused we’re We target Yes. year. an our for on increase the cash capital, flow and

is $XXX But cash Mike. CapEx, the through shooting slowed down still year, have that some million of still of of rest We the and free will – we’re flow. to the for that feed expectation our

this terms around in CapEx, forgive mean I might wrong, that be misremembering me, maybe or I be million getting think one I said CapEx probably that? hadn’t but I you somewhere at of $XX would point, But mean, may Or... and Okay.

Yes, you’re right.

haven’t that. right? it so We that second we kind I guidance. changed guess slow in did saying through, I’m of the that down haven’t we quarter, will feed changed and But the

free We flow haven’t for guidance any for that changed cash matter.

down haven’t slow for can year, changed Or but the quarter, the It anything. CapEx. we for

to free be cash timing-based There’s general, capital and a happen of honest. with things just in lot flow, expenditures that

Okay.

Okay. right. All

Okay.

maybe essentially. sort a the earnings negative I comp of good Or that big sort or have terms in continues QX, – that the to you really of a couple two? comp part a what whether for possibility is of delta So is the of of of positive pennies of lag? guide meaningful between pennies mean Endoscopy the a around couple sort essentially

that in It’s that’s just drive the gross mean, I the got will right? the increased incrementally think we’ve going the incremental right, margin, up. operating really interest we’ve we’ve revenue from got that expense I quarter-to-quarter, it expenses

up quarter we that perspective much we of every the and high where of impacts third between how – on and our the from low we really guidance an perspective So it’s end is our that year – really margin and end the what the gave. revenue earnings commentary

sort just then and Okay. just I to of I handholding. And figure but able this should want housekeeping be extra probably the X out,

In that in half, the expect the of second expense terms for it... is mean, that is million roughly $X.X I you half, Or second like that? something interest like

it. Yes. I is mean that of year. Mike, the half of $X.XX, to obviously, a in of it’s $X.XX to it’s best big the And going way back kind the portion to put happen

right. All good. it. Okay. Very Thank guys. you Appreciate

Mike. Thanks,

Thank you.

the from Our Canaccord comes Bill of line final question Plovanic Genuity. of

and taking Thank there? CapEx? but there, how just $XXX is first Thank This it given on little cash sort it get on Is can for to on specifically half $XX a goal give just over touched can you question. looking else more you the you the free for the of million, at you. flow, the just you’re Bill. on there provide million anything Again, Zachary Or color year-end for was you’re us? the you the is from really

being some also on There’s Yes. work done inventory.

we’ve tried moving ocean. ocean good or haven’t air to pretty we from freight – As from We’ve tried. move you to of job a our know, actually done our

So inventory. half in to plan to into start the that eat back We a that obviously more inventory. do creates have

becomes free to to in cash flow taking addition So as opposed it away.

that In it value from and the and fair your addition, into a call in moves X financing that that it’s but second is you not fair I’ll when there excuse, actually things happened issue is that the quarter, accounting we’re just that an value out happens – payments,anything contingent operating of kind exceeds an originally of

cash flow.

that million. impact So $XX.X was

cash my we flow. in about free that hit So thing. it’s million to eyes, I call unique $XX of really out want kind because in a

this we contingent can you before fair ago X imagine, years everything As else happened. and payment COVID, that value

environment, what contingent paying because thing we thought we which we’re over as guess, And good a I than in that headwinds I better expenses, we’ve generated But is cetera. did want $XXX chain, good all anticipated, first freight cash pay it’s to X.X is so highlight, flow a supply for million payment doing global Cianna just the And us. of that the and in et that macro the free raw out. distribution years costs, we above FFG means would material that the in call much despite

flow. and So $XXX overall, of cumulative that focused excited, we’re I’m still cash pretty on free million

to that. continue so And we’ll work towards

future. the we flow, this not into think really I of that expect to for free this we’ve but demonstrated, business capable this is year though, generating strong cash and continue only

you much. very Thank Great.

turn to like to now back would I Lampropoulos you. the conference Thank closing Fred for

Sir? remarks.

Yes. busy earnings appreciate preparation. wishes for everybody. you City. on your couple much hours of I for night. you Well, We be for a and staff. the Thank okay, around to Thank and you next Good taking the Raul all our one-on-ones. Salt very time and best will from season do Lake the

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

now disconnect.+ You may