Merit Medical Systems Inc Canaccord Genuity's 46th Annual Growth Conference
Review the key takeaways and the transcript of this earnings call.
- Merit Medical reported strong Q2 results with 9% organic growth, the strongest in three years, and a 22.6% non-GAAP operating margin.
- The company raised its fiscal 2026 guidance to 6.9% to 7.5% organic growth and EPS guidance to $4.25 to $4.35.
- Q2 performance benefited from an OEM rebound, resolution of a renal recall, and some stocking, with management emphasizing the underlying business strength.
- Endoscopy segment grew 29% year over year, driven by both integration of acquisitions and new product introductions.
- The OEM segment showed broad-based strength and new customer agreements, supporting confidence in mid to high single-digit growth for the second half of the year.
- The recent One Mark acquisition expanded the total addressable market to about $1.3 billion by reaching lower risk biopsies, complementing the Scout MD launch.
- Management highlighted operating margin improvement of 850 basis points year to date, with potential to reach 950 basis points if the high end of guidance is met.
- Capital allocation discussions include stock buybacks and tuck-in M&A focused on deepening existing platforms, with no major changes expected.
- Rhapsody is expected to achieve $7 million revenue this year, with future growth and R&D projects to be communicated post-approval and pricing clarity.
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Transcript
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Well, thank you everyone for joining. I'm John Young. I'm one of Canaccord's med tech analysts, and we're thrilled to host Merit Medical. With us today is CFO Raul Parra and Travis McDougal, Executive VP of Corporate Finance and Treasury. The company recently announced strong Q2 results and raised fiscal 2026 guidance, so let's jump into it. Raul, CGI, it wraps up the end of this year, and Merit's clearly tracking towards the 5%-7% organic CAGR revenue, the 20%-22% margin, and the $400 million plus of cumulative free cash flow, especially the latter you pretty much have already almost hit. I know you said you're neck deep in the next strategic plan, which I think investors are going to like knowing you're going to be issuing another one.
Without pre-announcing numbers, how should investors just think about the shape of the next plan and the timing of when you'll share it?
Yeah, it's a great question, and thank you. As we mentioned on the earnings call, obviously hyper-focused on making sure that we execute on CGI, right? Football season's upon us. We don't want to drop the football on the one-yard line. Everybody's marching to make sure we execute on those goals. Look, I think the way the CEO transition happened, I think it was done in a perfect way, where Martha had one year left on CGI, essentially about a year and a half, or a year and a quarter when she came on. That allowed her to kind of get around, visit all the sites, and then work with us on the strategic planning. We're obviously going through that.
I'd say it's a little premature right now to tell you what that looks like other than to say we're super excited about executing on CGI. We think we've done a lot of great work with Martha, and I think we'll have a good game plan for that next three years that we'll be excited to share. As far as when we share it, Foundations for Growth, I think we did in November of the year right before we started the program. CGI, we did it on our fourth quarter call. I think ideally, we'd like to kind of stick to the fourth quarter call.
But we're also asking those questions, should we do it sooner or when should we do it? I think everybody right now is hyper-focused on CGI.
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