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    MMSI
    Earnings call· Jun 2026(Q2 FY26)

    MERIT MEDICAL SYSTEMS Q2 FY26 earnings call MMSI

    Jul 30, 2026 Source

    Executive summary

    Merit Medical Systems Q2 FY26 — Strong Organic Growth and Profitability Exceed Expectations

    Merit Medical Systems delivered a robust second quarter, marked by its strongest organic growth in three years and significant profitability improvements, largely driven by broad-based strength across product categories and effective cost management. The company raised its full-year guidance, reflecting confidence in continued execution of its strategic initiatives and ongoing operational efficiencies, despite navigating tariff volatility and typical seasonal patterns.

    Highlights

    5

    • Total revenue increased 10% year-over-year on a GAAP basis and 9% on a constant currency basis to $418.8 million, exceeding expectations.

    • Organic constant currency growth was 9%, the strongest quarterly organic growth in 3 years.

    • Non-GAAP operating margin increased 142 basis points year-over-year to 22.6%.

    • Non-GAAP EPS increased 18% year-over-year to $1.19, or $1.10 excluding tariff benefits, exceeding guidance.

    • Generated nearly $52 million of free cash flow in Q2, contributing to $76.6 million year-to-date.

    Concerns

    3

    • Non-GAAP operating margin, excluding tariff refunds, decreased 22 basis points year-over-year to 20.9% compared to 21.2% in the prior year period.

    • Sales of Procedural Solutions products declined 12% on a constant currency basis due to the DualCap divestiture.

    • Renal Therapies products declined 2% due to a product recall, though increased 10% excluding its impact.

    Guidance & targets

    21
    CategoryTargetConfidence
    Full-year 2026 GAAP Net Revenue Growth
    7.6% to 8.4%
    high materiality
    High
    Full-year 2026 Constant Currency Net Revenue Growth
    6.9% to 7.6%
    high materiality
    High
    Full-year 2026 Organic Constant Currency Growth
    6.9% to 7.5%
    high materiality
    High
    Full-year 2026 Non-GAAP Diluted EPS
    $4.25 to $4.35
    high materiality
    High
    Full-year 2026 Foundational Products Sales Growth
    mid-single-digits
    medium materiality
    High
    Full-year 2026 Therapeutic Products Sales Growth
    high single to low double digits
    medium materiality
    High
    Full-year 2026 Acquisition Revenue
    $18 million to $20 million
    low materiality
    High
    Full-year 2026 WRAPSODY CIE US Revenue
    approximately $7 million
    medium materiality
    High
    Q3 2026 Total Revenue
    $408 million to $413 million
    high materiality
    High
    Q3 2026 GAAP Revenue Growth
    6% to 8%
    medium materiality
    High
    Q3 2026 Constant Currency Revenue Growth
    6% to 7.5%
    medium materiality
    High
    Q3 2026 Organic Constant Currency Growth
    7% to 8%
    medium materiality
    High
    Q3 2026 Non-GAAP Operating Margins
    19.6% to 21.5%
    high materiality
    High
    Q3 2026 Non-GAAP EPS
    $0.98 to $1.08
    high materiality
    High
    CGI Organic Constant Currency Revenue CAGR
    5% to 7%
    high materiality
    High
    CGI Non-GAAP Operating Margin
    20% to 22%
    high materiality
    High
    CGI Cumulative Free Cash Flow Generation
    more than $400 million
    high materiality
    High
    Biolife Annualized Revenue
    approximately $23 million
    low materiality
    High
    C2 CryoBalloon Annualized Revenue
    approximately $8 million to $9 million
    low materiality
    High
    Full-year 2026 Tariff Impact
    approximately $16 million
    high materiality
    High
    Full-year 2026 Tariff Impact per Share
    $0.21
    high materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Foundational Products
    Sales increased $17 million or 6% year-over-year. Organic growth was driven primarily by Vascular Intervention and Access platforms, with notable improvement in OEM growth trends.
    Organic growth: 7.8%
    		$255.4M6%——
    Therapeutic Products
    Sales increased $16.4 million or 14% year-over-year. Organic growth was driven by strong growth in Cardiac Therapies and Endoscopy platforms, and contributions from Vascular Interventions and Oncology platforms, also benefiting from improved OEM sales trends.
    Organic growth: 11.7%
    		$163.4M14%——
    U.S. (Geography)
    Sales increased $26.1 million or 12% year-over-year, primarily driving total revenue growth.
    		—12%——
    International (Geography)
    Sales increased $7.3 million or 5% year-over-year.
    		—5%——
    OEM Business
    Total OEM sales increased 15% year-over-year in Q2, showing improving growth trends as expected.
    		—15%——
    Procedural Solutions
    Sales declined 12% on a constant currency basis, entirely due to the divestiture of the DualCap product line. Excluding this impact, sales increased 5% organically.
    Organic growth (excluding DualCap divestiture): 5%
    		—-12%——
    Renal Therapies
    Sales declined 2%, but increased approximately 10% excluding the impact of a product recall discussed in Q1.
    Growth (excluding product recall impact): 10%
    		—-2%——
    China (Geography)
    Came in as expected, slightly up in low single digits. VBP impact was a little lower than expected.
    		—low single digits——

    Operational metrics

    40
    Total Revenue
    $418.8 millionup 10% GAAP YoY, up 9% constant currency YoY
    Q2 FY26

    Exceeded the high end of expectations.

    Total Revenue Increase
    $33.4 millionup 9% YoY
    Q2 FY26

    Total revenue increased by this amount on a constant currency basis.

    Organic Constant Currency Growth
    9%
    Q2 FY26

    Strongest quarterly organic growth in 3 years, exceeding the high end of expectations by approximately 210 basis points.

    Organic Constant Currency Growth
    3.7%
    Q1 FY26

    Baseline for Q2 organic growth acceleration.

    Non-GAAP Operating Margin
    22.6%increased 142 bps YoY
    Q2 FY26

    Significantly exceeded expectations.

    Non-GAAP EPS
    $1.19increased 18% YoY
    Q2 FY26

    Reported non-GAAP EPS.

    Tariff Refunds Benefit
    $6.9 million
    Q2 FY26

    Benefit from previously paid tariffs recognized within cost of sales.

    Non-GAAP Operating Margin (Excluding Tariff Refund)
    20.9%decreased 22 bps YoY
    Q2 FY26

    Compared to 21.2% in the prior year period. Exceeded the high end of expectations by approximately 56 basis points.

    Non-GAAP Operating Margin (Excluding Tariff Refund)
    21.2%
    Q2 FY25

    Prior year period operating margin excluding tariff refund.

    Non-GAAP EPS (Excluding Tariff Refund Benefit)
    $1.10
    Q2 FY26

    Exceeded the high end of guidance range by $0.09.

    Acquisition Revenue Contribution
    $4.7 million
    Q2 FY26

    Revenue from acquisitions in Q2 2026, excluded from organic constant currency revenue.

    Divested DualCap Product Line Revenue
    $5.3 million
    Q2 FY25

    Revenue from divested DualCap product line in Q2 2025, excluded from organic constant currency revenue calculation.

    Acquired Product Revenue (Foundational)
    $2.4 million
    Q2 FY26

    Contribution from acquired products in the current period, excluded for organic growth calculation.

    Acquired Product Revenue (Therapeutic)
    $2.3 million
    Q2 FY26

    Contribution from acquired products in the current period, excluded for organic growth calculation.

    Non-GAAP Gross Margin
    55.8%up 262 bps YoY
    Q2 FY26

    Reported non-GAAP gross margin.

    Non-GAAP Gross Margin (Excluding Tariff Refund)
    54.2%up 98 bps YoY
    Q2 FY26

    Exceeded the high end of expectations.

    Incremental Tariff Impact to Gross Margin
    50 bps
    Q2 FY26

    Incremental impact from tariffs incurred year-over-year.

    Total Operating Income
    $94.6 million
    Q2 FY26

    Reported total operating income.

    Operating Income (Excluding Tariff Refund)
    $87.7 millionincreased $6.8 million or 8% YoY
    Q2 FY26

    Operating income excluding tariff refund.

    Non-GAAP Net Income
    $71.3 million
    Q2 FY26

    Reported non-GAAP net income.

    Non-GAAP Net Income
    $61 million
    Q2 FY25

    Prior year period non-GAAP net income.

    Non-GAAP EPS
    $1.01
    Q2 FY25

    Prior year period non-GAAP EPS.

    Cash and Cash Equivalents
    $448.7 millionessentially flat YTD
    June 30, 2026

    Balance as of quarter end.

    Total Debt Obligations
    $747.5 million
    June 30, 2026

    Balance as of quarter end.

    Available Borrowing Capacity
    $697 million
    June 30, 2026

    Available capacity as of quarter end.

    Net Leverage Ratio
    1.6x
    June 30, 2026

    Net leverage ratio as of quarter end.

    Proceeds from DualCap Divestiture
    $25.5 million
    YTD Q2 FY26

    Contributed to cash and cash equivalents.

    Cash Used for View Point Medical Acquisition
    $90 million
    YTD Q2 FY26

    Offset partially by cash generation.

    Divested DualCap Revenue
    $20.3 million
    FY25

    Product sales and royalty revenue from divestiture in 2025.

    Divested DualCap Revenue
    $1.6 million
    Q1 FY26

    Sales in Q1 2026, excluded from organic growth guidance.

    Tariff Impact (FY26)
    $15 million
    FY26

    Previous assumption for 12-month tariff impact.

    Tariff Impact per Share (FY26)
    $0.19
    FY26

    Previous assumption for 12-month tariff impact per share.

    Tariff Impact (FY25)
    $9 million
    last 8 months of FY25

    Realized tariff impact in the last 8 months of 2025.

    Tariff Impact per Share (FY25)
    $0.12
    last 8 months of FY25

    Realized tariff impact per share in the last 8 months of 2025.

    Q3 2026 Acquisition Revenue
    $2.8 million to $3.8 million
    Q3 FY26

    Revenue from acquisitions, excluded from Q3 organic constant currency growth.

    Q3 2025 Divested DualCap Revenue
    $5.2 million
    Q3 FY25

    Revenue from divestiture of DualCap in prior year period, excluded from Q3 organic constant currency growth.

    SG&A Expenses
    $15.5 millionincreased 16% YoY
    Q2 FY26

    Primary driver of increased operating expenses.

    R&D Expense
    $1.2 millionincreased 5% YoY
    Q2 FY26

    Contributed to increased operating expenses.

    Inventory
    —up a little over $20 million in the quarter
    Q2 FY26

    Inventory increased due to strategic decisions including improving product line inventory, shifting to ocean freight, and building raw material reserves due to Middle East conflict concerns.

    Remaining Tariff Refunds
    approximately $1.5 million
    future

    Expected from a third-party freight forwarder, not expected this year.

    Industry KPIs

    9
    MetricValueDetails
    Tariff impact$16 millionUSD
    Pricing realized price—
    New product launch ramp—
    Procedure volume growth—
    FCF conversion leverage guidance1.6xx
    Segment franchise organic growth9%%
    Sales force commercial capacity build—
    Indicated addressable patient population1.3 million proceduresprocedures
    Pivotal trial clinical evidence milestonesEffective alternative

    Product announcements

    2
    ProductTypeDetails
    OneMark Systemlaunch
    SCOUT MD technologylaunch

    Deals & partnerships

    4
    View Point MedicalAcquisition of View Point Medical, manufacturer of the OneMark detection imaging system and OneMark tissue markers.$90 million

    Strategic acquisition in the oncology platform announced on April 1st. Integration progressing well, with U.S. commercial launch in July. Financial rationale is attractive and consistent with CGI program.

    BiolifeAcquisition of Biolife, adding unique patented hemostatic devices, most notably StatSeal.

    Acquired in May 2025. Products are effective, differentiated hemostatic solutions for percutaneous devices with broad clinical applications. Operations fully integrated, manufacturing facility has requisite capacity. Commercial strategy includes launches outside the U.S.

    PENTAX MedicalAcquisition of the C2 CryoBalloon and related technology.

    Acquired last November. C2 CryoBalloon treats Barrett's esophagus and GAVE syndrome by freezing abnormal cells. Strengthens position in the multibillion-dollar gastroenterology market. Production transferred to South Jordan facility with an additional production line added.

    DualCap product lineDivestiture of the DualCap product line.$25.5 million

    Divestiture completed, impacting reported revenue for Procedural Solutions. Revenue from this line was $5.3 million in Q2 FY25 and $1.6 million in Q1 FY26, and $20.3 million in FY25.

    Risks & headwinds

    4
    Tariff Volatility and UncertaintyOngoing, particularly Q3 and remainder of FY26

    Q3 EPS guidance range widened by $0.10 due to tariff uncertainty; FY26 tariff impact updated to $16 million or $0.21 per share (from $15 million or $0.19 previously).

    Mitigation: Company is hyper-focused on protecting gross margin through a 'kitchen sink' approach including pricing, product mix, and operational efficiencies. Wider guidance range for Q3 to account for unpredictability.

    Seasonality in BusinessQ3 FY26

    Q3 revenue and EPS guidance reflects a step-down from Q2.

    Mitigation: Management accounts for typical seasonality where Q1 and Q3 are softer quarters due to doctors and patients taking time off. No specific mitigation stated beyond adjusting expectations.

    Product Recall Impact (Renal Therapies)Q2 FY26, with some lingering impact in H2 FY26

    Renal Therapies sales declined 2% in Q2 FY26 (but increased 10% excluding recall impact).

    Mitigation: The issue was resolved before the end of Q2. The company is back in the market, but acknowledges it will take time to regain accounts that switched to competitors. Not expected to be a material impact for the second half.

    OEM Business LumpinessQuarter-to-quarter

    OEM sales grew 15% in Q2 FY26, but is inherently lumpy.

    Mitigation: Management expects annual OEM performance to be in the mid to high single-digit range. Visibility from new agreements and broad-based customer demand provides confidence for hitting annual targets despite quarterly fluctuations.

    What to watch in Q3 FY26

    5

    Q3 FY26 Total Revenue

    Q3 FY26
    CurrentQ2 FY26: $418.8 million
    Target$408 million to $413 million

    Why it matters

    Verifying if the company meets its Q3 revenue guidance, which accounts for seasonality and tariff uncertainty🌐, will indicate underlying demand and execution.

    Specifically, we expect our total revenue in the range of $408 million to $413 million, representing growth of 6% to 8% year-over-year on a GAAP basis and up approximately 6% to 7.5% on a constant currency basis.

    Q&A highlights

    8

    Has Merit Medical observed any slowdown in procedure volumes due to ACA subsidy changes, or does it anticipate any moderation in the second half of the year?

    Management has not seen any slowdown in procedures based on regular checks with the field, and the strong Q2 results corroborate this observation.

    “But we've been doing very regular checks with our field. And at this point, we have not seen a slowdown in procedures.”

    asked by Jason Bednar · answered by Martha Aronson

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Planning for 2027-2029

    Merit Medical is actively developing its strategic plan for fiscal years 2027 through 2029, engaging global leaders across functions and geographies. The process involves assessing core competencies, identifying growth opportunities, optimizing organizational structure, and refining capital allocation strategies, including M&A and product pipeline investments. The company aims to share key highlights and new 3-year financial targets after completing its current CGI program.

    02

    Acquisition Integrations and Commercial Launches

    The integration of View Point Medical, acquired April 1st, is progressing well, with the U.S. commercial launch of its OneMark System in July. This expands the oncology portfolio, complementing the recently launched SCOUT MD technology. Integrations of Biolife (acquired May 2025) and C2 CryoBalloon (acquired November 2025) are also ahead of expectations, with Biolife's annualized revenue now projected at $23 million and C2 CryoBalloon's at $8 million to $9 million.

    03

    Enhanced Revenue Reporting Structure

    The company has transitioned its revenue reporting to focus on two primary product categories: Foundational and Therapeutic. This change aligns external communication with internal execution and enhances accountability. Merit has provided four years of historical revenue data for the eight platforms within these categories to increase transparency and help stakeholders understand underlying growth drivers.

    04

    Gross Margin Expansion Drivers

    Gross margin improvement is attributed to a 'kitchen sink' approach, including sales force focus on pricing and product mix, better-than-expected performance from acquisitions, and operational efficiencies. These efficiencies stem from manufacturing transfers (e.g., to Tijuana), automation, labor optimization, and supply chain adjustments like shifting to ocean freight. The company aims to protect gross margin despite external challenges🌐 like tariffs.

    05

    OEM Business Rebound and Outlook

    The OEM business saw a significant rebound, growing 15% year-over-year in Q2, exceeding expectations. This was driven by new contract wins, increased stocking due to transfers, and broad-based customer demand. While inherently lumpy, management expects the OEM business to perform in the mid to high single-digit range annually, with continued improvement in year-over-year growth trends in the second half of 2026.

    06

    Endoscopy Platform Growth and Clinical Evidence

    The endoscopy platform contributed to growth in Q2, with successful integrations and product launches. Clinical evidence from a multicenter RCT presented at DDW demonstrated the cTIF procedure, using the EsophyX product, as an effective alternative for chronic GERD patients. The recent launch of the Resilience through-the-scope product in Q1 also performed well, positioning the platform for accelerated growth.

    AI-generated summary of the company’s earnings call. Not investment advice.