Merit Medical Systems Inc Bank of America SMID Cap Virtual Conference
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Hi, everyone. Thanks for joining. I'm Jill Hall, head of small and mid-cap strategy in BofA Global Research. Welcome to first session of day 2 of our virtual SMID Cap event. Happy you could join us. If you need the schedule for the rest of today or want to sign up for any additional sessions, feel free to reach out to me or to Maddy or Ashley in corporate access. Great to be hosting day 2. We have, over the course of the 2 days, about 20 small and mid-cap companies joining us. Our analysts have really great breadth of coverage in the SMID space. They cover about 1,000 small and mid-caps in the U.S., so feel free to reach out to me or any of the analysts if we can get you subscribed to any research or do any follow-up.
With that, I wanted to pass it over to Travis.
All right, great. Everybody, thanks for joining. Welcome to have Raul Parra, CFO at Merit Medical. Join us for a fireside chat this morning. If there's anything I'm not covering or you want to make sure you ask, just ping me on Bloomberg, and I'll screen questions that way. Otherwise, we'll kick it off here. Raul, maybe just to kick off for investors who are newer to the Merit story, how would you describe the business in kind of simple terms and kind of what makes Merit different from other med tech companies?
Yeah, no, great question. I think first of all, we play mostly in the interventional radiologist space, cardiac and endoscopy and oncology, specifically kind of the breast. I think Merit has a long history of growth, Travis. I think one thing that is hard to understand is the Merit story and how we consistently grow mid to high single digits. We recently changed our reporting, so hopefully we can help you guys better understand that. I think Merit wins in multiple ways. It pays attention to its customers, introduces products that really do help them. We acquire products that we can bring in that supplement the products that we deliver to our customers. We're vertically integrated in everything we do. And we have a global footprint that allows us to deliver product to our customers. That's really kind of the short answer.
We take a lot of pride in our quality, right? You combine all of those, and we can really deliver value to our customers.
Makes sense. Thanks a lot for that. Merit's at an interesting point in its history in a transition from a longtime founder CEO to kind of nearing the end of your LRP, building the next strategic plan. As you step back and look at the company today, what has changed the most over the last year and what remains left to do here?
Yeah, look, I think the changes really started really around Foundations for Growth, right? So say five and a half years ago, as we knew Fred would be retiring, we really started setting up processes and getting the right people in the right place in order for that transition to happen and be smooth. Now that we have Martha here, we've really kind of dove into kind of the platforms. If you look at our revenue reporting, you'll notice we have eight platforms. Really that's how we're going to start running the business. We set those up early on in Foundations for Growth, and have been increasingly giving people responsibility. I think here now with Martha, now it's about accountability and making sure that people follow through on everything they're doing for their platform.
Martha's been a great cultural fit. I think she's asking all the right questions, looking in all the right places, and we're neck deep in strategic planning right now, and we'll get something out here hopefully for you, LRP, sometime probably maybe with our fourth quarter call or maybe earlier. We're still kind of trying to pencil that out. But look forward for more information and we're off to the races right now, just kind of doing a deep dive into the business.
Yep. When you are thinking about putting the new LRP together, anything that we should think about differently versus kind of the last LRP?
It is a good question, right? I think those are the questions we are asking ourselves right now, Travis. I am not sure that I have a good answer for you guys. I think what we have done has really worked, right? The metrics we have really kind of focused on have been revenue, operating margin expansion, free cash flow, and obviously, earnings is the fallout of those. We have really expanded. Through December 2025, we have expanded our operating margin about 850 basis points since December of 2019. If we hit the high end of our CGI goals at the end of 2026, you are looking at somewhere around 950 basis points. Those metrics have been working. When you are neck deep in strategic planning, it is a good time to ask all the questions, right, and leave no stone unturned. Are these the right metrics going forward?
We will continue to look at them, and we will see where we end up.
Okay. Makes sense. There has been some notable board changes as well. Just kind of maybe think about what that brings to Merit, and what does it say about where the company is at today, given some of the seasoned industry leadership you are bringing on the board?
I think it has made a big difference, right? I think with the latest add is Scott. He has got a vast background. Really nice guy. Really knowledgeable about the industry, and we are excited to have him. Obviously, with Fred leaving, he fills, I think, a nice void, just with his expertise and the roles he has done.
Okay. Part of the transitions, the reporting framework to Foundational and Therapeutic products and, for those new to the story, what does that mean and what drove the change on the reporting side?
Yeah, I think what maybe was not understood by the Street and basically because we did not talk about it, I think we should not say you had a different reporting structure internally, right? So the way we reported prior to the change, there was a lot of confusion, not only internally, but externally in how we told the story. When Martha came over, one of the first questions she had was, "Hey Raul, how do I reconcile what we report externally versus what we give to the board versus what the internal reporting is?" I said, "Well, don't bother. We have got a few options for you that I think will clean it up." So we gave her a couple options that we had been kicking around internally.
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