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Image source: The Motley Fool. Thursday, July 30, 2026 at 4:30 p.m. ET President and Chief Executive Officer - Martha Aronson Executive Vice President and Chief Financial Officer - Raul Parra Chief Legal Officer and Corporate Secretary - Brian Lloyd Operator: Welcome to Merit Medical Systems' Second Quarter 2026 Earnings Conference Call. 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 Martha Aronson, Merit Medical Systems' President and Chief Executive Officer. Martha Aronson: Thank you, operator, and welcome, everyone. I am joined on the call today by Raul Parra, our Chief Financial Officer and Treasurer; and Brian Lloyd, our Chief Legal Officer and Corporate Secretary. Brian, would you mind taking us through the safe harbor statements, please? Brian Lloyd: Thanks, Martha. This presentation contains forward-looking statements that receive safe harbor protection under federal securities laws. Although we believe these forward-looking statements are based upon reasonable assumptions, they are subject to risks and uncertainties. The realization of any of these risks or uncertainties as well as extraordinary events or transactions impacting our company could cause actual results to differ materially from the expectations and projections expressed or implied by our forward-looking statements. In addition, any forward-looking statements represent our views only as of today, July 30, 2026, and should not be relied upon as representing our views as of any other date. We specifically disclaim any obligation to update such statements, except as required by applicable law. Please refer to the sections entitled Cautionary Statement regarding forward-looking statements in today's press release and presentation for important information regarding such statements. For a discussion of factors that could cause actual results to differ from these forward-looking statements, please also refer to our most recent filings with the SEC, which are available on our website. Our financial statements are prepared in accordance with accounting principles, which are generally accepted in the United States. However, we believe certain non-GAAP financial measures provide investors with useful information regarding the underlying business trends and performance of our ongoing operations and can be useful for period-over-period comparisons of such operations. This presentation also contains certain non-GAAP financial measures. A reconciliation of non-GAAP financial measures to the most directly comparable U.S. GAAP measures is included in today's press release and presentation furnished to the SEC under Form 8-K. Please refer to the sections of our press release and presentation entitled Non-GAAP Financial Measures for important information regarding non-GAAP financial measures discussed on this call. Readers should consider non-GAAP financial measures in addition to, not as a substitute for financial reporting measures prepared in accordance with GAAP. Please note that these calculations may not be comparable with similarly titled measures of other companies. Both today's press release and our presentation are available on the Investors page of our website. I will now turn the call back to Martha. Martha Aronson: Let me start with a brief agenda of what we will cover during our prepared remarks. I will begin with a brief summary of the second quarter financial results. Then I will discuss several areas of operating and strategic planning progress in Q2. Raul will then provide a more in-depth review of the quarterly financial results as well as our financial guidance for 2026, which we updated in today's press release. Then we will open the call for your questions. Beginning with a review of our second quarter results. For avoidance of doubt, all growth figures are on a constant currency basis, unless otherwise noted. We reported total revenue of $418.8 million, up 10% year-over-year on a GAAP basis and up 9% year-over-year on a constant currency basis. Our constant currency revenue results exceeded the high end of the expectations that we outlined on the Q1 2026 earnings call. Second quarter total constant currency growth was driven by 9% organic growth and to a lesser extent, contributions from our acquisitions of Biolife and the C2 CryoBalloon device, both of which exceeded the high end of our expectations. Our guidance for Q2 called for an acceleration in organic growth from the 3.7% we reported in Q1. We were pleased to deliver strong organic growth that not only exceeded the high end of our expectations, but also represents the strongest quarterly organic growth the company has delivered in 3 years. With respect to the profitability performance in Q2, we delivered financial results that significantly exceeded expectations. Our non-GAAP operating margin increased 142 basis points year-over-year to 22.6%. Our non-GAAP EPS increased 18% year-over-year. And we generated nearly $52 million of free cash flow. Importantly, our financial results included a benefit from tariff refunds in Q2. Excluding this benefit, our second quarter non-GAAP operating margin and non-GAAP EPS results exceeded the high end of our guidance for the second quarter. I want to congratulate our team members all around the world. The stellar growth and profitability performance delivered in Q2 is a direct result of their efforts. They continue to stay focused on our current 3-year strategic plan, which we refer to as Continued Growth Initiatives, or CGI. And most importantly, they demonstrate a commitment to our customers each day. We have increased our 2026 revenue and non-GAAP earnings per share guidance to reflect the stronger-than-expected results over the first half of 2026. We remain confident in our team's ability to execute, deliver attractive constant currency growth, improve profitability and generate solid cash flow this year. Our organization is aligned around our priorities for 2026, specifically to drive strong execution around the globe and to successfully complete our CGI program, which includes our previously disclosed financial targets for the 3-year period ending December 31, 2026. Turning now to a brief update on our progress with acquisition integrations. First, we have made considerable progress in our integration of View Point Medical, the strategic acquisition in our oncology platform that we announced on April 1st. By way of reminder, View Point Medical manufactures the OneMark detection imaging system and OneMark tissue markers. This unique ultrasound-enhanced technology offers an innovative solution to localize more lesions at the time of biopsy, representing an estimated 1.3 million procedures annually in the United States alone. This acquisition expands our portfolio of therapeutic oncology products dedicated for the diagnosis and localization of breast and soft tissue tumors. The team has managed the multiple work streams we prioritized in preparation for our planned U.S. commercial launch in July, including: building the requisite inventory; finalizing our marketing and sales strategies; and training our U.S. field team. This is an exciting time for our oncology team. The launch of the OneMark System follows the commercial launch of Merit's SCOUT MD technology in late May. The combination of SCOUT and OneMark provides physicians with localization options during the initial diagnostic biopsy, which may reduce the need for a separate procedure to mark the location of the tumor prior to surgery. We are pleased with the initial response from the marketplace following these commercial introductions. The Merit oncology story is resonating with clinicians. And that is you can use OneMark for all biopsies and you can select SCOUT MD when advanced localization is needed. Together, they create a comprehensive breast care offering, spanning diagnosis, localization and surgery. The strategic rationale for this acquisition is compelling. And the financial rationale is both attractive and consistent with our continued growth initiatives program. We believe this acquisition represents another example of Merit selectively investing to expand our product portfolio in key strategic markets that leverage our existing commercial footprint. Importantly, the integrations of Biolife and the C2 CryoBalloon have progressed meaningfully over the first half of 2026 as well. We acquired Biolife in May of 2025, adding unique patented hemostatic devices to our portfolio, most notably StatSeal. These products are effective, differentiated hemostatic solutions for percutaneous devices with a broad range of clinical applications, including vascular closure and indwelling catheter bleeding complications. Adding StatSeal to Merit's hemostatic portfolio is intended to provide health care partners with an additional effective solution that complements a wide range of percutaneous procedures, including interventional radiology and cardiology, dialysis, electrophysiology, biopsy and drainage. Biolife operations have been fully integrated within Merit. And their stand-alone manufacturing facility has requisite capacity to meet our growth objectives. The team continues to execute on our commercial strategy, including launches in markets outside the U.S. Revenue contributions from our acquisition of Biolife exceeded our expectations in the second quarter and first half of 2026. And we now expect annualized revenue of approximately $23 million this year versus our original expectation of $18 million to $20 million. The integration of our acquisition of the C2 CryoBalloon and related technology from PENTAX Medical last November is also progressing well. The C2 CryoBalloon treats Barrett's esophagus as well as a less common vascular disorder known as GAVE, or Gastric Antral Vascular Ectasia syndrome, by freezing and eliminating abnormal cells while still maintaining the integrity of surrounding tissue structures. This acquisition strengthened our position in the multibillion-dollar gastroenterology market and provides opportunities to treat more patients from the effects of chronic gastroesophageal reflux disease, or GERD. Production has been transferred to our South Jordan facility. And we have added an additional production line to support future demand. Revenue contributions from this acquisition exceeded our expectations in the second quarter and first half of 2026. And we continue to expect revenue in the range of approximately $8 million to $9 million on an annualized basis. While relatively small, this acquisition represents an important strategic transaction that not only expands the portfolio of solutions our endoscopy sales team has to offer customers, but also positions the endoscopy platform to accelerate growth and gain market share in the coming years. I would like to highlight three other noteworthy developments from our second quarter before turning the call over to Raul. First, on May 19th, we announced that shareholders elected Scott Ward to the company's Board of Directors at Merit's Annual Meeting. Scott brings more than 40 years of experience in the medical device industry, including nearly three decades at Medtronic, where he held numerous senior leadership roles. He most recently served as CEO, President and Chairman of Cardiovascular Systems, Inc. up until its acquisition by Abbott. Several of his roles were in markets where Merit competes today. Scott also brings extensive experience in both venture capital and private equity. Merit's Board of Directors has appointed Scott to serve on its Governance and Sustainability Committee as well as the Finance and Operating Committee. Scott's deep medical device experience and proven leadership track record will bring an invaluable perspective as we continue to build on our foundation and advance our strategy. Second, as discussed on our recent investor calls, during 2026, in addition to staying focused on delivering each quarter, we are developing our strategic plan for the period of fiscal years 2027 through 2029. While doing this important work, our team remains focused on delivering our continued growth initiative commitments. Specifically, for the 3-year period ending December 31, 2026, we are targeting an organic constant currency revenue CAGR of 5% to 7%, a non-GAAP operating margin in the range of 20% to 22% and cumulative free cash flow generation of more than $400 million. As our 2026 financial guidance indicates, we are tracking nicely toward these CGI financial targets. Let me share with you a bit more about our strategic plan work. During the first quarter, we took time to align with our top global leaders on where we felt our strengths were as a company and where we felt we wanted to devote more focus. We took the pulse of these leaders with belief audits and converged on several key themes. We came away with multiple work streams focused on our drivers of growth for the future, our optimal organizational structure and necessary leadership capabilities for the future and our systems and processes necessary to grow. During the second quarter, our work stream leaders collected additional data on our global markets and engaged in dialogue and debate about our product pipeline. Importantly, each work stream engaged across functions and geographies to capture key stakeholder perspectives. While doing so, we continued our work on SKU rationalization. And we are examining our registrations around the world for additional rationalization opportunities. We also worked on building out our M&A playbook and broader capital allocation strategy. Now in Q3, we are rolling up our global forecast, prioritizing our investment opportunities in both our product pipeline and potential tuck-in acquisitions. Alongside that work, our efforts around optimal organizational structure, productivity and efficiency are well underway. As we mapped our company's core competencies with where we feel our growth opportunities lie, there is a strong correlation. Within each platform, we are highlighting where we feel we have the right to win, whether we are focused on high-growth procedures where we offer foundational products or an entire procedure where we offer a suite of both foundational and therapeutic products. At the same time, we're asking ourselves tough questions about product families and whether they still make sense to be part of our longer term portfolio. In key geographies around the world, we are defining how best to win and what it will take to do so. We look forward to continuing our strategic planning process. And we intend to share the key highlights of this strategy and new 3-year financial targets related to this strategic plan following the completion of our current CGI program. I'm proud of the team for not only delivering strong execution and better-than-expected financial results over the first half of fiscal 2026, but also engaging so fully with this important strategic planning process. Finally, I want to highlight an enhancement to our presentation of revenue in our second quarter earnings press release. As discussed on our first quarter earnings call, we transitioned our revenue reporting to focus on two primary product categories; Foundational; and Therapeutic. This decision aligns how we talk about the business externally with how we plan to execute each of our underlying platforms. It also enables greater ownership and accountability for each platform. As part of this transition in reporting, we provided 4 years of historical revenue for the 8 platforms within the Foundational and Therapeutic categories. We provided this level of detail in the interest of transparency and to help our stakeholders better understand our business today, along with the underlying growth drivers of our business in recent years. As we continue to share the Merit Medical story for both long-standing as well as new investors, we continually look for ways to help people understand our complex business. So we have decided to share the global platform revenue results each quarter. My hope is that investors will see more clearly the value of our various platforms and how they contribute to our steady growth. With that, I'll turn the call over to Raul for an in-depth review of our quarterly financial results and our updated financial guidance for 2026. Raul? Raul Parra: Thank you, Martha. I will start with a detailed review of our revenue results in the second quarter. Note, unless otherwise stated, all growth rates are approximated and presented on both a year-over-year and constant currency basis. Second quarter total revenue increased $33.4 million or 9%, exceeding the high end of the expectations we outlined on our Q1 call. Our total revenue increased 9% on an organic constant currency basis, exceeding the high end of our expectations by approximately 210 basis points. As detailed in our earnings press release, organic constant currency revenue excludes revenue from acquisitions in the second quarter of 2026 of $4.7 million and revenue from our divested DualCap product line of $5.3 million from the second quarter of 2025. By geography, our total revenue in Q2 was primarily driven by growth in the U.S., where sales increased $26.1 million or 12% and international sales increased $7.3 million or 5%. Turning to a review of our revenue results by product category. Second quarter total revenue growth was notably balanced between our two product categories. Sales of Foundational products increased $17 million or 6% and sales of Therapeutic products increased $16.4 million or 14%. In terms of organic growth, in Q2, excluding the contributions from acquired products of $2.4 million in the current period and divested products in the prior year period of $5.3 million, sales of Foundational products increased 7.8%. Excluding $2.3 million of acquired product revenue, sales of Therapeutic products increased 11.7%. Organic growth in the Foundational product category was driven primarily by our Vascular intervention and Access platforms, again in the second quarter. We also experienced notable improvement in OEM growth trends as expected. Organic growth in the Therapeutic product category was driven by strong growth in our cardiac therapies and Endoscopy platforms and contributions from solid growth in our Vascular Interventions and oncology platforms. Growth in the Therapeutic product category also benefited from the improvement in OEM sales trends mentioned earlier. A couple of items to bear in mind when evaluating our constant currency growth results detailed in the presentation of revenue by platform in our earnings release. First, as noted earlier, we were pleased to see improving growth trends in our OEM business in the second quarter. Our total OEM sales increased 15% year-over-year in Q2. We expect to see continued improvement in OEM year-over-year growth trends over the second half of 2026. Second, sales of Procedural Solutions products declined 12% on a constant currency basis. This is entirely due to our divestiture of the DualCap product line. Excluding this impact, Procedural Solutions sales increased 5% on an organic basis in Q2. Finally, sales of Renal Therapies products declined 2%, but increased approximately 10%, excluding the impact to our business resulting from the product recall discussed on our Q1 call. Turning to a review of our P&L performance. For the avoidance of doubt, unless otherwise noted, my commentary will focus on the company's non-GAAP results during the second quarter of 2026. And all growth rates are approximated and presented on a year-over-year basis. We have included reconciliations from our GAAP reported results to the most directly comparable non-GAAP item in our press release and presentation available on our website. Gross profit increased 15%. Gross margin was 55.8%, up 262 basis points year-over-year. Excluding $6.9 million of refunds related to previously paid i.e. for tariffs recognized within cost of sales, gross profit increased 12% and our gross margin was 54.2%, up 98 basis points year-over-year. Gross margin, excluding tariff refunds, exceeded the high end of our expectations. This performance is particularly impressive given the approximately $2 million incremental impact from tariffs incurred year-over-year, representing an approximately 50 basis point impact to gross margin in that period. Operating expenses increased 14%. The increase in operating expenses was driven primarily by a $15.5 million or 16% increase in SG&A expenses and to a lesser extent, a $1.2 million or 5% increase in R&D expense compared to the prior year period. Total operating income was $94.6 million. Excluding the tariff refund, operating income increased $6.8 million or 8% from the prior year period to $87.7 million. Our operating margin, excluding refund, was 20.9% compared to 21.2% in the prior year period, a decrease of 22 basis points year-over-year. Operating margin, excluding refund, exceeded the high end of our expectations by approximately 56 basis points. Second quarter other expense net was $2.3 million compared to $2.3 million for the comparable period last year. Second quarter net income was $71.3 million or $1.19 per share compared to $61 million or $1.01 per share in the prior year period. Excluding the after-tax benefit from tariff refund of approximately $0.09, second quarter EPS was $1.10, exceeding the high end of our guidance range by $0.09. Turning to a review of our balance sheet and financial condition. As of June 30, 2026, we had cash and cash equivalents of $448.7 million, total debt obligations of $747.5 million and available borrowing capacity of approximately $697 million. Our net leverage ratio as of June 30 was 1.6x on an adjusted basis. Our cash and cash equivalents at June 30 were essentially flat year-to-date, driven by a combination of strong free cash flow generation of $76.6 million and $25.5 million of proceeds from our divestiture of the DualCap product line, offset partially by $90 million in cash used for the View Point Medical acquisition. Turning to a review of our fiscal year 2026 financial guidance. For the 12 months ending December 31, 2026, we now expect total GAAP net revenue growth in the range of 7.6% to 8.4% year-over-year and 6.9% to 7.6% year-over-year on a constant currency basis, excluding an expected 80 basis point tailwind to GAAP growth from changes in foreign currency exchange rates. There are a few factors to consider when evaluating our projected constant currency revenue growth range for 2026, including: first, the increase in our revenue guidance range reflects the flow-through of our better-than-expected results in Q2. Second, our constant currency growth range assumes sales of foundational products increase in the mid-single-digits year-over-year and sales of Therapeutic products increase in the high single to low double digits year-over-year. Third, we now expect organic constant currency growth in the range of 6.9% and 7.5% compared to 6% to 7% previously. Our organic growth guidance excludes revenue from acquisitions in the range of approximately $18 million to $20 million compared to $17 million to $20 million previously and product sales and royalty revenue from our divestiture of DualCap of $20.3 million in 2025 and approximately $1.6 million of sales in Q1 2026. Fourth, our total net revenue guidance for fiscal year 2026 continues to assume U.S. revenue from the sales of WRAPSODY CIE of approximately $7 million. With respect to profitability guidance for 2026, we now expect non-GAAP diluted earnings per share in the range of $4.25 to $4.35, up 11% to 14% compared to $4.01 to $4.15 previously. For avoidance of doubt, our 2026 non-GAAP EPS guidance now assumes a 12-month tariff impact of approximately $16 million or $0.21 per share compared to $15 million or $0.19 previously and $9 million or $0.12 per share realized during the last 8 months of 2025. Finally, we would like to provide additional transparency related to our growth and profitability expectations for the third quarter of 2026. 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. Note, our third quarter organic constant currency growth is expected in the range of 7% to 8%, excluding revenue from acquisitions in the range of approximately $2.8 million to $3.8 million and revenue from our divestiture of DualCap of $5.2 million in the prior year period. With respect to our profitability expectations for the third quarter of 2026, we expect non-GAAP operating margins in the range of approximately 19.6% to 21.5% compared to 19.7% last year and non-GAAP EPS in the range of $0.98 to $1.08 compared to $0.92 last year. With that, I will now turn the call back to Martha for closing. Martha Aronson: Thanks, Raul. As I reflect on my 9 months since joining Merit Medical, I continue to be inspired by our global team and their commitment to customers and patients. This team delivered an excellent Q2 and has strong momentum as we move into the second half of the year. I want to reiterate how pleased I am that we are on track to meet our 3-year CGI goals. And while staying focused on that goal, this team is putting the hard work into our global strategic plan. Simultaneously, we are integrating several acquisitions and evaluating additional tuck-in possibilities. Once again, my hat goes off to the team. And I am energized by the opportunities I see ahead to enhance our strong growth profile and to create long-term value for our shareholders. Operator, we would now like to open up the line for questions. Operator: Our first question or comment comes from the line of Jason Bednar from Piper Sandler. Jason Bednar: Congrats on a really impressive quarter for your team. I'll start big picture. There's been a lot of questions across the med tech community with respect to procedure volumes, different data points painting different pictures. With Merit posting such a strong top line result, this seems maybe a little silly question to ask, but I'll ask it anyways. Have you seen any slowdown in procedure volumes tied to ACA subsidy changes across any of your end markets? Or do you anticipate any moderation in volumes tied to this issue when you look at the second half of the year? Martha Aronson: Yes, Jason, thanks very much. And obviously, we've been hearing some of the various reports, as I'm sure you have as well. But we've been doing very regular checks with our field. And at this point, we have not seen a slowdown in procedures. So currently, that's the reports we're getting from the field. And as you said, I think given the strong results from the quarter, that checks. Jason Bednar: All right. Perfect. Very helpful. And then, Raul, just as I think about 2Q guidance, you just put up a smash on margins this quarter, is really impressive. If you try to normalize for EPS, I think you said $1.10, excluding those tariff refunds. Usually, you get a little bit of a step down, maybe $0.05 or so 2Q to 3Q in most normal years when I look back to past years. Your guidance range is maybe a little bit wider than I would think, $0.10 for 3Q. What are you baking in, in terms of the conservatism or the puts and takes on bottom end and top end there? Because it is a little bit of a wide EPS and wide margin range coming off of a really strong 2Q. Raul Parra: Yes, Jason, I think just with the ever-evolving tariffs, right? I mean, we just had an announcement right on Friday. It's just so hard to kind of predict what's going to happen with that and when they're going to be in place, with the Section 122 still out there, obviously, with NAFTA -- USMCA, sorry. There's just a lot of variables. And we thought just in this environment, with that being out there, let's just go a little wider. Obviously, feel super confident about the back half and our guidance for the year and obviously just put up a stellar second quarter. So it's really just more of a reflection of just kind of the changing dynamic in tariffs that seems to come at us like on a weekly basis. And so just a little bit of coverage there. But obviously, feeling pretty optimistic about the third quarter and the fourth quarter. Operator: Our next question or comment comes from the line of Robbie Marcus from JPMorgan. Lilia-Celine Lozada: This is Lilia on for Robbie. 9% organic growth is a really big number. So can you walk through what drove that strength and the sustainability of this sort of growth? How much of that was catch-up following some of the dynamics that pressured growth in the first quarter versus true underlying demand? Martha Aronson: Yes, Lili, thanks very much. Look, I think as we mentioned in the first quarter, our OEM business is a business that fluctuates a bit just by nature of the business. And we were obviously really pleased to see a 15% uplift in the second quarter on the OEM business. And we continue to see that business, right, in the -- annually in the sort of mid to high single-digit range. So that was certainly one of the drivers. I think we also saw our Access platform as well as our VI or Vascular Intervention platforms on the Foundational side, along with Cardiac Therapies and Endoscopy having very strong quarters on the Therapeutic side. So really pretty broad-based results for the second quarter. Raul Parra: Yes. I mean I'll add that it was also very balanced between our two product categories, between Therapeutic and Foundational. So the beat was really broad-based. And again, when our portfolio -- because kind of the index style portfolio that we have when it all kind of is hitting, you get these type of growth rates. So it was really exciting to see. Lilia-Celine Lozada: Great. And maybe just to follow up on that. Last time you were pointing to a continued ramp in organic growth in the back half of the year as some of the trends around supply, the Medtronic agreement, OEM improved. Now it looks like 3Q is going to be a slight step down on an organic basis. So do you think you've seen all of those improvements already? Or is this just some conservatism? Raul Parra: No, that's a great question and thank you for asking it. I always have to remind everybody. There is a level of seasonality in our business with Q3 usually having a step down. Now that wasn't true last year, but most years it is. I'll always just highlight that Q1 and Q3 are typically our softer quarters from a revenue standpoint. Q2 and Q4 are our strongest. And so really, what you're seeing that step down is not that we're not confident. We're very highly confident in the business and how it's performing. It's really just that seasonality we're adjusting for. Operator: Our next question or comment comes from the line of Larry Biegelsen from Wells Fargo. Lei Huang: It's Lei calling in for Larry. Just on the first one, going back to the Q3 guidance, can you dive a little bit more into the 6% to 8% and maybe by business, what slows down a little bit seasonally in Q3 versus Q2 to get you to the 6% to 8% versus the 9% we saw in Q2? And I have a follow-up. Raul Parra: Yes. Again, we're not going to get into the details. We guide on total revenue, obviously, giving you some commentary on what we think Q3 will be, so you guys can work your models. Again, it's really just the seasonality in our business that we're adjusting for. As most of you guys know, it's the summertime. Doctors take time off. Patients don't go in for procedures. That's very typical for us to see a step down and then a pretty strong rebound in the fourth quarter. So from our standpoint, if you look at kind of the back half of the year, we think it's pretty consistent with what we're doing for -- what we did with the first half. So again, really optimistic about how the business is doing. And we see a lot of momentum. It's really just us adjusting for that seasonality. Lei Huang: Got it. That's helpful. And for my follow-up, you're absorbing obviously, tariffs. There's the View Point dilution, the convert dilution. But you're still looking to grow EPS faster than the top line. Can you just remind us what's giving you the operating leverage there? Raul Parra: Yes. I mean, look, it's obviously broad-based, just like our revenue beat, if I'm just being honest. I think when you look at, obviously, the performance that our sales team has put up, it's excellent. I mean, these guys have been delivering for a better part of 30-plus years. So what's another quarter for them. But kudos to them for going out and just performing again. Obviously, we've had -- we're in the last year of our CGI program. The progress that we continue to develop there with the programs that we have in place, you're seeing those kind of come through. Gross margin was a big part of that. When we announced CGI, we said that a big piece of it would come from gross margin. And you're seeing that kind of come through. I think when you look at the gross margin specifically, I typically -- this wouldn't be a Merit Medical earnings call if I didn't throw the kitchen sink comment out there and I'll throw it out there again, but it really is. And I'll give you guys a little more detail, but it's our sales force focusing on pricing. It's them focusing on the right product mix. It's the acquisitions that are ahead of plan from a gross margin standpoint and sales. I mean you guys saw us tick that up a little bit. And our operations group, too, right? I mean I don't think they get as much credit as they should. I mean it's been a really challenging, I would say, 5 years with tariffs and COVID and supply chain issues, labor shortages. I mean you name it, they've had to deal with it. But they've done some really good things. I mean we've moved -- just in the last year or so, we moved one of our largest -- actually the largest manufacturing department that we had to Tijuana. We're starting to see the benefits of that. We've implemented some automation. You're starting to see the labor efficiencies come through on that. We're looking at our supply chain and our distribution network and getting more inventory on the water, which is obviously less cost than freight -- air freight. You're starting to see the benefits of that. So again, it is a kind of a kitchen sink approach and I hate describing it that way. But I just don't know how else to do it other than to say we're looking at everything. We don't want any leakage. And this is kind of the result that you get because we're hyper focused on making sure that we put a ring around the gross margin and we protect it. Even when we see things, or things come our way that we don't anticipate, right, like the tariffs. I mean I don't think anybody anticipated the whipsaw on the tariffs that we're seeing. But again, it's working and we're just going to continue to do it. We've been doing this for a long time. I think when you look at foundations for growth for that matter and CGI, I mean when you look at the operating margin improvement through the end of 2025, almost 850 basis points. If we hit the high end of our guidance for this year, you're looking at almost 950 basis points of operating margin improvement. So that gross margin, we're letting it flow through, while also looking at making the right investments in the business. You can see, operating expenses grew. But we're very specific in how we're investing those dollars. We're very controlled in the way we do it, making sure that the gross margin is coming in where it needs to be and making sure that the sales are coming through, too. So we're just a lot more focused on the entire P&L and it's clearly showing. And obviously, we're doing -- we're neck deep in strategic planning right now. And we continue to look to see what else we can do. And we're excited to announce that when we get done with that. But there is more to be had. And we can't wait to present that. Operator: Our next question or comment comes from the line of Travis Steed from Bank of America Securities. Aidan Lahey: This is Aidan on for Travis. I guess one question on SCOUT MD. I know you said it started shipping. Can you remind us what the clinical benefits are there? If there's a price uplift or a margin benefit? And then I have one follow-up. Martha Aronson: Yes. So the main clinical benefit of SCOUT MD is that you have these 4 distinct shapes of the reflectors. So it makes it super easy to see these on x-ray. So that's really the primary advantage of SCOUT MD. And as we said, I think right now, our Merit Oncology team is just super excited. This has been a platform where we've really only had sort of one product for quite some time. So to have SCOUT and now have the improved SCOUT MD and then combine that with OneMark from the acquisition of View Point, it just provides us with a really comprehensive offering. And I think as you heard me say in the scripted comments that the way we think about it is you can really use the OneMark technology for all biopsies. So that really expands the market. And then when you really want advanced localization, you select SCOUT MD. So our team is super excited. And we just got everybody trained up in the last month and they're ready to go. Aidan Lahey: Great. And then obviously, a great quarter. You're raising by the beat. And from your comments, it sounds like the underlying operating environment is really strong. So I guess why not raise more than the beat if you think that's going to continue into the second half? Raul Parra: Yes. I mean that's just not our style, right? I mean I think we typically will take what we did this quarter, which is we take the first half beat, flow it through. And we typically just leave our back half unchanged and that's essentially what we did. But we obviously remain fully confident in our full year guidance and look forward to a strong finish to our CGI program. Operator: Our next question or comment comes from the line of Mike Matson from Needham & Company. Michael Matson: Yes. So I just wanted to follow up again on the OEM business. So it's good to see it recover. Is there anything you would call out there? Did you get new contract wins? Or -- and is this level of growth sustainable in your view now? Or is there just -- is this just sort of an inherently lumpy business quarter-to-quarter? Martha Aronson: Yes. So yes, OEM is inherently lumpy, definitely, right? And I think, as we shared in the last quarter, we were very confident that we'd have a nice rebound in this quarter. And as you heard, we saw a nice 15% increase in this quarter. So a big shout out to our OEM team. And we believe, though, again, in terms of it being a bit lumpy, that it will -- annually should really perform in our mid to high single-digit range. So I think we shared last quarter. And I know that one of our OEM customers put out a press release that we've done some work with them. So that accounts for some of our growth. But frankly, this team just got out there, did a lot of the hard work. And there was some increase in stocking due to some transfers that we had done in the last 3 to 6 months and that's all come due this quarter, too. So again, just an outstanding result by our OEM team. But you do have to expect that business to go a bit up and down. Raul Parra: We still continue to believe that mid to high single digits. Michael Matson: Yes. Okay. And then just want to ask one on WRAPSODY. I mean I heard you reiterate the $7 million target. Just, what are you hearing, seeing out in the field from the physicians? And is there a potential for that to kind of ramp more aggressively over the next few years? Martha Aronson: Yes. So again, we're really pleased with how WRAPSODY is doing in the U.S. The clinician feedback we're getting continues to be strong. We're continuing -- I think as we've talked about previously, WRAPSODY is being used in the hospital setting as well as nonhospital settings. And our team, frankly, is pursuing both very vigorously and aggressively and frankly, having good success in both locations. And again, we continue to see the competitors not standing still. We knew that, right? So it's a day-to-day battle out there for sure. But again, the feedback on how it's -- the delivery system is working well. All very positive clinical feedback. And we continue to be on track to meet the $7 million guidance that we've given for this year. Operator: Our next question or comment comes from the line of Michael Petusky from Barrington Research. Michael Petusky: So congrats. And I did not hear if you mentioned it. Did you make any comments around how the quarter was in China? And if not, if you could speak to that? Raul Parra: Yes. I mean it essentially came in as expected, right? I mean I don't think there's anything significant there. It was in line with our expectations. VBP was a little bit lower than expected, but still no changes to our expectations for China for this year. It continues to kind of move along. Michael Petusky: I mean was it flat or slightly down? Raul Parra: It was in line. So I think it was slightly up. Michael Petusky: Slightly up. Okay. Raul Parra: Low single digits. Michael Petusky: Yes. Okay. Great. So I guess then turning -- I know that you guys are highly focused on the current CGI and you want to get that done. But I feel like you did open the door talking about the strategic planning starting for the '27-'29 period. And I would just love to ask Martha, if -- just in terms of how you guys think about like key metrics that you may want to attach to any kind of public 3-year plan? I mean, are there different ways that you think about the thing -- sort of the key goals, obviously, currently revenue growth, OP margin, free cash flow. I mean, are there other metrics that you think are important for investors to understand or important goals to target? I'm just wondering if you have a different way of thinking about how to sort of talk about longer term plans and how you might communicate that with investors? Martha Aronson: Yes. Thanks very much. Look, I mean, I'm super excited about the work that this organization has undertaken on our strategic plan. It's a big lift, as you know. And I think for this team to be doing it. We are engaging a pretty large swath of our global leaders to do this work because we really want to get all the input across functions, across geographies. So to do that and deliver the kind of quarter we did, it really is just very thrilling, quite frankly. So -- but to get to your point, to your question, we are talking about various metrics, right? We are in debate and discussion. And I'd say healthy debate and discussion within the management team. We have these discussions with our Board of Directors as well as we do think about what are the possibilities and what makes the most sense just given where we are in our evolution as a company. So again, right now, as we said, we want to keep our teams very focused on finishing out CGI this year. We'll continue these discussions. But tonight it's a little early for me to start listing off some of the other metrics. But suffice to say, it's a very important part of the discussion. Operator: Our next question or comment comes from the line of Sam Eiber from BTIG. Sam Eiber: Congrats on the nice quarter. Maybe I can just get a status check on the endoscopy business. I know it's still relatively small today. But you've done a few deals over the past few years. C2 sounds like it's going well. Are we far enough in the integrations at this point where you feel like you have the right team in place, the right product portfolio to better compete and maybe this is the start of accelerated growth to come from here? Martha Aronson: Yes. Thanks for the question. And I think the answer is it is, right? I mean, again, I think it's fair to say that our endoscopy platform was definitely a contributor to our growth this quarter. So super excited about that. And I think, as you said, the team really has come together. It is a team I've actually spent a decent amount of time with. And it was actually pretty exciting even at the recent DDW meeting. I mean, one of the things, as you all know, during the second quarter, there's a lot of these medical congresses. And during DDW, which is a Digestive Diseases Week, a critical one for that platform, we had some results actually presented from a multicenter RCT that we're comparing the cTIF procedure to the standard of care Nissen Fundoplication procedure. And it really -- the room was packed. And it was really exciting data that shows that the cTIF procedure, which uses our EsophyX product, represents an effective alternative to the Nissen Fundoplication for patients who have chronic GERD. So again, you all know the GERD market is a very big one. So this was a really nice additional bit of clinical evidence for our endoscopy business. And then as you said, the C2 integration is going well. And I think we had just launched our Resilience through the scope product at the end of Q1. And that business -- sorry, that product line has also continued to do very, very nicely for us throughout Q2. So I think there is a lot to be excited about when it comes to that -- to our endoscopy team. Sam Eiber: Okay. Really helpful color there, Martha. And maybe just a follow-up question on the renal. And I know growth was impacted this quarter by the recall. But I guess, does the guidance assume an immediate recapture of any lost revenue there? How should we be thinking about that? Martha Aronson: Yes. I mean, again, so I'd say a couple of things. Again, hats off to our team here. I think we shared last quarter that we would probably resolve the issue in the second half of the year. And we got that resolved before the end of the quarter. So that was some really good work by our internal team. So we are back in the market and it will take some time. I mean we definitely had some accounts that obviously had to go to somebody else in the absence of our product being on the market. So that will definitely take some time. But honestly, we don't feel that, that's really a material impact for the second half. Operator: Our next question or comment comes from the line of David Rescott from Baird. David Rescott: Congrats on the results here. I want to follow up on some of the comments you provided already just on OEM in China and Asia Pac. I know that part of the weaker growth you saw in OEM in part was due to some stuff in Asia and China. And maybe at least it sounds like that's not massively getting better or at least the bigger driver of the outperformance in OEM in this quarter. So when you think about -- if that's true, I'd love to hear that. But when you think about growth in this, what sounds like a reiterated OEM guide for the full year of 2026, does -- what, I guess, are the bigger factors to either, a, just hitting that expectation that you have in the back half of the year? Or b, whether or not this is something that potentially from a mid teens growth number in Q2 is something that likely could sustain in the second half of the year? Raul Parra: Yes. I mean we did see a little bit of better results in China, specifically for our OEM business. But at the end of the day, I mean, I think we feel pretty confident. As you know, we've signed new agreements with customers. We know those are going to be strong in the back half of the year. And the beat was broad-based with customers coming back after kind of some of the destocking that they had. So we're pretty confident. Obviously, OEM beat our expectations. So from our standpoint, they're kind of ahead of where they need to be for that mid to high single-digit expectation that we have for them. And so there was no adjustments. We repeated that. I just repeat it again. It is lumpy business. But we do have visibility and feel confident that we can hit that mid to high single digits. David Rescott: Okay. That's helpful. Martha, I appreciate the comments you made on some of the longer term strategic planning goals. And I know you're not going to comment on that upcoming 3-year outlook. But when you think about the potential M&A, maybe some divestitures in the portfolio, can you help us maybe think about what the goals or metrics are around how you're thinking about that next 3-year plan? Meaning, is this the case where you get some of these slower business segments out and it naturally raises the weighted average market growth of the portfolio? Are there some key segments that even though they are slower growth, are still pretty decent from a contributing operating margin expansion story? How, I guess, should we gauge, I guess, what this longer term strategy, as you're going through the process, ultimately could become? Martha Aronson: Yes. I mean, again, these are all the questions we're asking, right? We're asking ourselves. And I think it's fair to say everything is on the table, right? And there's not really a stone that we're leaving unturned in this process. And we really are looking across the entire portfolio. And we are looking at product families. And yes, asking ourselves those questions, what's the strategic rationale? What's the financial profile of these? Are they part of procedures that are going to continue to be high -- fast-growing procedures around the world? So again, all the things that we're talking about. And again, I'm looking forward to discussing this with all of you when we've completed the work. But we're still a little bit in process here. Raul Parra: Yes. I mean I think we're very pragmatic about the way we approach these long-term plans. I mean you guys saw us execute for Foundations for Growth. We're on target to execute on CGI, obviously, clearly focused on not dropping the ball at the yard line. We want to make sure that we get that across the finish line. But these take a lot of work. And we want to make sure that we get everything right. And then when we come out with our long-range plan that we're giving you something that we think is realistic and achievable. And I'll just highlight again. We've done 850 basis points of operating margin improvement through 2025. Like I said earlier, if we hit the high end of our guidance, we'll be somewhere around 950 basis points. So we still think there's more to be had. But this does take a lot of detailed work. We're neck deep in that. We're all very excited about the work that Martha is leading here. And we're just excited about the opportunity that Merit has on a go-forward basis. Operator: Our next question or comment comes from the line of John Young from Canaccord Genuity. Zachary Day: It's Zachary on for John. When you think about SCOUT MD and OneMark, can you maybe get a little more granular on the cross-selling potential with the 1.3 million soft tissue localization TAM? Martha Aronson: Yes. Thanks for that. So when we only had SCOUT in our bag, we felt like we were looking at probably about 400,000 procedures per year. This is U.S. -- really mostly U.S. data right now. And so when we add in OneMark, that expands by about 3 to 4x, up to maybe 1.3 million procedures because those tend to be the lower risk biopsies that happen. So that's how it really expands the market. We also -- these are 2 separate technologies, right? One uses ultrasound, one uses more radar technology. So part of it is physician preference. And then there is a price differentiation, too. And so in some cases, people want a lower price point and where they feel like it's a higher risk, potentially higher risk biopsy situation, they feel like that's maybe where the SCOUT MD makes more sense to be used. So that's really how it's getting differentiated. And again, I think our team has done an outstanding job. The good news is, right, they already know these customers very, very well. And they know, a, the physician preferences; and b, they understand the various hospitals and sites of service and what their economics tend to look like. And so they're able to sell in the most applicable and useful technology to them. Zachary Day: Great. And for my follow-up, I know you talked about WRAPSODY, you still feel good about it in the long-term. But can you talk more about what you're seeing in terms of sensitivity to pricing in the outpatient setting given that you don't have add-on payment? Martha Aronson: Yes. I mean, look, the outpatient setting, now again, it depends if that outpatient is connected to a hospital or more of a freestanding ASC or OBL type situation, right? And certainly, in office-based labs, you have a far more price-sensitive sites of service. And again, we're not going to share pricing detail, obviously. But I think it's fair to say we have asked our commercial organization to be very competitive. And that's what they're out, there doing. They're being competitive and yet being smart, I would say. So we're not ones to give up on price if we don't -- if we certainly don't need to. So overall, as I said, though, we are seeing a range of prices because we are seeing the range of sites of service. Operator: Our next question or comment comes from the line of Jim Sidoti from Sidoti & Company. James Sidoti: Inventory is up a little over $20 million in the quarter. Is that due to the View Point acquisition? Or are you ramping up inventory in anticipation of higher sales in the second half of the year? Raul Parra: Thanks, Jim. I'll take the opportunity to kind of -- just kind of take a victory lap here on free cash flow, right? So as you guys know, CGI, our goal was $400 million. We hit that essentially at the end of last year. We're still focused on the $200 million for this year. As you just mentioned, we spent a lot of cash on inventory. It's been strategic, I would say. So we had a couple of product lines last year where we thought the inventory could be better. So we increased the inventory there. We talked -- I talked a little bit earlier about moving more -- from a shipping standpoint, moving more to the ocean. So we've done that. That takes more inventory because it just takes a little bit longer. And we've also -- we're strategic as the Middle East kind of conflict plays out about buying resin and certain raw materials to make sure that we had enough on hand for any disruption that may happen. We haven't seen anything yet. We also haven't really seen any pricing increases. So I think we're pretty well managed right now. And I would expect that to taper off the rest of the year, but continue to be excited about shooting for that $200 million for this year. James Sidoti: Okay. Got it. And do you anticipate any additional tariff refunds? Or do you think what you received in the second quarter is what you'll have for the year? Raul Parra: So we've essentially received just about everything that we were expecting. There is still, I'd say, about $1.5 million or so that's going to come from a third-party who's our freight forwarder and they're responsible for submitting -- It's a large shipper. And I'm sure they have a lot of customers that they're kind of dealing with. So I wouldn't expect anything back this year. If we do, great. But I know they have a lot of customers that they're working through. And I know they've tried to keep us up to date. They're working through the process. And so hopefully, we'll get that here in the next year or so. But for the most part, we've gotten everything that we were expecting. Operator: I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Martha Aronson for any closing remarks. Martha Aronson: Well, thanks very much. And again, I just want to thank our global team for delivering the strongest quarterly organic growth in 3 years, just an outstanding result. So hats off to them. And again, I appreciate all of our investors for taking your time today to be with us. We appreciate your attention and your interest in Merit Medical. Thank you very much. Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Before you buy stock in Merit Medical Systems, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Merit Medical Systems wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Merit Medical (MMSI) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Merit Medical Systems (MMSI) is back in focus after releasing second quarter 2026 results and raising its full year outlook, with updated guidance reflecting stronger than expected performance in the first half. See our latest analysis for Merit Medical Systems. Merit Medical Systems’ recent earnings release and higher 2026 guidance have coincided with building momentum, with a 30 day share price return of 22.4% and a 90 day share price return of 37.1%, while the 1 year total shareholder return of 0.3% and 5 year total shareholder return of 25.6% point to a steadier long term picture. If strong execution in medical devices has caught your attention, this could be a good moment to broaden your watchlist and review 41 healthcare AI stocks Bulls see Merit Medical Systems’ recent rally and raised 2026 outlook as confirmation that earnings power is improving. Bears worry the move has already priced in the good news. Does the current valuation still look reasonable? The most widely followed narrative puts Merit Medical Systems’ fair value at $89.55, slightly above the last close of $85.01, which frames today’s valuation debate. Read the complete narrative. Curious what sits behind that fair value for Merit Medical Systems. The narrative leans on measured revenue growth, expanding margins and a future earnings multiple above the wider medical equipment group. Using a 7.84% discount rate, this narrative ties those earnings and margin assumptions together into a fair value anchor of $89.55 compared with the current $85.01 share price. Result: Fair Value of $89.55 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Merit Medical Systems still faces key risks, including potential delays in WRAPSODY CIE reimbursement and ongoing tariff and China pricing pressure that could challenge the current fair value story. Find out about the key risks to this Merit Medical Systems narrative. There is a different read on Merit Medical Systems when looking at the P/E ratio rather than analyst fair value. At 34.9x earnings, the stock trades above the US Medical Equipment industry on 28.8x and above a fair ratio of 23.4x, which points to less room for error if growth or margins disappoint. For investors weighing this richer P/E against the earlier fair value estimate, the key issue is whether current pricing reflects quality and growth or stretches expectations too far. See what the numbers say about this price — find out in our valuation breakdown. With sentiment split on Merit Medical Systems after its latest move, it makes sense to check the numbers yourself and decide where you stand. To see what investors are finding encouraging in the current setup, review the 3 key rewards If Merit Medical Systems has sharpened your focus, do not stop here. The next move could come from widening your search across other high quality opportunities. Spot potential contrarian opportunities by scanning 21 elite penny stocks with strong financials that already show stronger financial profiles than many expect from this corner of the market. Target quality at a reasonable price by reviewing the 55 high quality undervalued stocks that combine solid fundamentals with prices that lag behind their underlying metrics. Prioritise resilience by checking the 81 resilient stocks with low risk scores so you are not only hunting upside but also paying attention to downside protection. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include MMSI. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in Merit Medical Systems, Inc.? Here are five stocks we like better. Merit Medical delivered strong Q2 results: Revenue rose 10% to $418.8 million, with organic constant-currency growth of 9%, driven by broad-based demand across Foundational and Therapeutic products. Non-GAAP EPS increased 18%, while free cash flow reached nearly $52 million. Acquisitions and new products exceeded expectations: BioLife is now expected to generate approximately $23 million in annualized 2026 revenue, while View Point Medical’s OneMark system launched in the U.S. and expanded Merit’s oncology market opportunity. The company raised its 2026 outlook: Merit now expects 6.9%–7.6% constant-currency revenue growth and non-GAAP EPS of $4.25–$4.35, though third-quarter profitability guidance reflects uncertainty around tariffs and typical seasonal procedure softness. Merit Medical Systems (NASDAQ:MMSI) reported second-quarter 2026 revenue of $418.8 million, up 10% on a GAAP basis and 9% on a constant-currency basis from a year earlier, as broad-based demand across its Foundational and Therapeutic product categories lifted organic growth to its strongest quarterly level in three years. President and Chief Executive Officer Martha Aronson said constant-currency revenue exceeded the high end of the company’s prior outlook, driven by 9% organic growth and contributions from the BioLife and C2 CryoBalloon acquisitions. Both acquired businesses surpassed the company’s expectations during the quarter. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now “We were pleased to deliver strong organic growth that not only exceeded the high end of our expectations, but also represents the strongest quarterly organic growth the company has delivered in three years,” Aronson said. Total revenue rose by $33.4 million in the second quarter, according to Chief Financial Officer and Treasurer Raul Parra. U.S. sales increased by $26.1 million, or 12%, while international sales increased by $7.3 million, or 5%. → Microsoft Just Flipped the AI Spending Narrative Overnight Foundational Products revenue increased $17 million, or 6%, while Therapeutic Products revenue rose $16.4 million, or 14%. Excluding acquired and divested products, Foundational Products grew 7.8% organically and Therapeutic Products grew 11.7% organically. Parra said Foundational growth was led by the vascular intervention and access platforms, with improvement in original equipment manufacturer, or OEM, sales trends. Therapeutic growth reflected strong performance in cardiac therapies and endoscopy, as well as growth in vascular interventions and oncology. OEM sales increased 15% year over year in the second quarter. Management said the business is inherently variable quarter to quarter but continues to expect annual growth in the mid- to high-single-digit range. Procedural Solutions sales declined 12% on a constant-currency basis due to the prior divestiture of the DualCap product line. Excluding that impact, Procedural Solutions grew 5% organically. Renal Therapies sales declined 2%, though sales increased about 10% when excluding the effect of a product recall discussed in the prior quarter. → Carrier Earnings Could Send the Stock to a New All-Time High During the question-and-answer session, Aronson said the company had not seen a procedure-volume slowdown tied to changes in Affordable Care Act subsidies. She said Merit has been conducting regular checks with its field organization and had not identified a decline in procedures. Merit reported non-GAAP operating margin of 22.6%, an increase of 142 basis points from the prior-year quarter, and non-GAAP earnings per share growth of 18%. The company generated nearly $52 million in free cash flow during the quarter. Results included $6.9 million in refunds of previously paid tariffs recognized in cost of sales. Excluding the refunds, gross margin was 54.2%, up 98 basis points year over year, while operating margin was 20.9%, compared with 21.2% a year earlier. Parra said the operating-margin result excluding the refund still exceeded the high end of management’s expectations. Net income was $71.3 million, or $1.19 per share, compared with $61 million, or $1.01 per share, a year earlier. Excluding an approximately $0.09-per-share after-tax benefit from tariff refunds, second-quarter EPS was $1.10, which Parra said exceeded the company’s guidance range by $0.09. As of June 30, Merit had $448.7 million in cash and cash equivalents, $747.5 million in total debt obligations and about $697 million in available borrowing capacity. Its adjusted net leverage ratio was 1.6 times. Year-to-date cash was essentially unchanged, as $76.6 million in free cash flow and $25.5 million of DualCap divestiture proceeds were partly offset by $90 million used for the View Point Medical acquisition. Aronson said integration work is progressing on View Point Medical, BioLife and the C2 CryoBalloon technology acquired from PENTAX Medical. View Point Medical’s OneMark Detection Imaging System and tissue markers were scheduled for a U.S. commercial launch in July. The ultrasound-enhanced technology is designed to help localize lesions at the time of biopsy. Aronson said OneMark, together with the SCOUT MD localization system launched in late May, gives clinicians options spanning biopsy, localization and surgery. The company said OneMark expands the addressable U.S. market for its oncology offering to an estimated 1.3 million procedures annually. SCOUT MD offers four distinct reflector shapes intended to make them easier to identify on X-ray, Aronson said. BioLife’s hemostatic-device operations have been fully integrated, and Merit now expects approximately $23 million in annualized BioLife revenue for 2026, above its original $18 million to $20 million expectation. C2 CryoBalloon production has moved to Merit's South Jordan facility, where an additional production line has been added. Merit maintained its expectation for $8 million to $9 million in annualized C2 revenue. Management also highlighted progress in endoscopy, including clinical results presented at Digestive Disease Week comparing the cTIF procedure using Merit's EsophyX product with Nissen fundoplication for chronic gastroesophageal reflux disease. Merit increased its full-year outlook to reflect first-half results. The company now expects 2026 GAAP revenue growth of 7.6% to 8.4%, or constant-currency growth of 6.9% to 7.6%. It raised expected organic constant-currency growth to 6.9% to 7.5%, from 6% to 7% previously. The company now expects non-GAAP diluted EPS of $4.25 to $4.35, representing growth of 11% to 14%, compared with its prior outlook of $4.01 to $4.15. The forecast assumes a full-year tariff impact of roughly $16 million, or $0.21 per share. For the third quarter, Merit forecast revenue of $408 million to $413 million, representing 6% to 8% GAAP growth and about 6% to 7.5% constant-currency growth. Organic constant-currency growth is expected to be 7% to 8%. The company forecast non-GAAP operating margin of about 19.6% to 21.5% and non-GAAP EPS of $0.98 to $1.08. Parra said the wider third-quarter profitability range reflects uncertainty around evolving tariff policies. He also cited the company’s typical seasonal pattern, in which the third quarter is generally softer because of summer procedure trends before a stronger fourth quarter. Merit reiterated its Continued Growth Initiatives targets for the three-year period ending in 2026: organic constant-currency revenue compound annual growth of 5% to 7%, non-GAAP operating margin of 20% to 22%, and cumulative free cash flow of more than $400 million. Management is also developing its strategic plan for 2027 through 2029, including reviews of product portfolios, organizational structure, capital allocation and potential tuck-in acquisitions. Merit Medical Systems, Inc is a global manufacturer and marketer of a broad range of medical devices used in diagnostic and interventional procedures. The company's product portfolio encompasses vascular access, drainage, embolotherapy, and interventional oncology devices, as well as radiofrequency ablation systems and hemostasis solutions. These products serve physicians and hospitals in critical care settings and support minimally invasive treatment options across multiple specialties, including cardiology, radiology, oncology, neurology and endoscopy. Founded in 1987 by Fred Lampropoulos, Merit Medical Systems has grown through both organic development and targeted acquisitions to expand its technology offerings and geographic reach. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Merit Medical Systems Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Revenue: Total revenue of $418.8 million, up 10% year-over-year on a GAAP basis and 9% on a constant currency basis. Organic Growth: Organic constant currency revenue increased 9%, exceeding the high end of expectations by approximately 210 basis points. Revenue by Geography: US sales increased 12% ($26.1 million), while international sales increased 5% ($7.3 million). Revenue by Category: Foundational product sales increased 6% ($17 million), and therapeutic product sales increased 14% ($16.4 million). Gross Margin: Gross margin was 55.8%, up 262 basis points year-over-year. Excluding $6.9 million in tariff refunds, gross margin was 54.2%, up 98 basis points. Operating Margin: Non-GAAP operating margin increased 142 basis points year-over-year to 22.6%. Excluding tariff refunds, operating margin was 20.9%. Net Income: Net income was $71.3 million, or $1.19 per share, compared to $61 million, or $1.01 per share, in the prior year period. Non-GAAP EPS: Non-GAAP EPS increased 18% year-over-year. Excluding the after-tax benefit from tariff refunds of approximately $0.09, EPS was $1.10. Free Cash Flow: Generated nearly $52 million in free cash flow for the second quarter. OEM Sales: Total OEM sales increased 15% year-over-year in Q2. Acquisition Revenue: Revenue from acquisitions (Biolife and C2 CryoBalloon) contributed $4.7 million in Q2, exceeding expectations. Warning! GuruFocus has detected 4 Warning Signs with EXPO. Is MMSI fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Merit Medical Systems Inc (NASDAQ:MMSI) delivered its strongest quarterly organic growth in three years, with total revenue of $418.8 million, up 9% on a constant currency basis, exceeding the high end of expectations. The company reported significant profitability improvements, with non-GAAP operating margin increasing 142 basis points year-over-year to 22.6% and non-GAAP EPS rising 18% year-over-year. Acquisitions are performing well, with Biolife and C2 CryoBalloon both exceeding revenue expectations, leading to increased annualized revenue projections of approximately $23 million and $8-9 million, respectively. The company successfully launched the OneMark system and Scout MD technology, expanding its oncology portfolio and providing a comprehensive breast care offering that is resonating well with clinicians. Merit Medical Systems Inc (NASDAQ:MMSI) raised its full-year 2026 guidance for revenue and non-GAAP EPS, reflecting strong first-half performance and confidence in continued execution. The company generated nearly $52 million in free cash flow during Q2 and maintains a strong balance sheet with a net leverage ratio of 1.6 times, supporting future strategic investments. The company faces ongoing headwinds from tariffs, with a projected $16 million or $0.21 per share impact on 2026 earnings, and the dynamic tariff environment creates uncertainty for future guidance. Sales of Greenall Therapies products declined 2% due to the lingering impact of a product recall, and while resolved, it will take time to recapture lost accounts and revenue. The OEM business, while showing strong 15% growth in Q2, is inherently lumpy, and the company expects it to normalize to mid-to-high single-digit growth annually, which may not be sustainable. Q3 guidance indicates a sequential step-down in organic growth to 7-8% from Q2's 9%, reflecting typical seasonality but also suggesting a moderation in the recent growth pace. The company's strategic planning process for 2027-2029 is ongoing, creating some uncertainty about future portfolio composition, potential divestitures, and long-term financial targets. Inventory levels increased by over $20 million in the quarter due to strategic stocking decisions, which could tie up cash and impact future working capital efficiency. Q: Can you walk through what drove the 9% organic growth and how sustainable this level of growth is? How much was catch-up from Q1 dynamics versus true underlying demand? A: CEO Martha Aronson attributed the strong quarter to a rebound in the OEM business, which saw a 15% uplift in Q2, along with strong performance across the access and vascular intervention platforms on the foundational side, and cardiac therapies and endoscopy on the therapeutic side. The company representative added that the beat was very balanced between the two product categories, and when the "index-style portfolio" is hitting on all cylinders, it produces these types of growth rates. Q: Have you seen any slowdown in procedure volumes tied to ACA subsidy changes, or do you anticipate any moderation in the second half? A: CEO Martha Aronson stated that despite various reports in the market, regular checks with the field have not shown a slowdown in procedures. The strong Q2 results corroborate this, and there is no current expectation of moderation tied to ACA subsidy changes. Q: Why is the Q3 guidance range wider than usual, and what are the puts and takes on the bottom and top end? A: The company representative explained that the wider range reflects the ever-evolving tariff situation, which changes on a weekly basis. They noted the recent announcement on Friday and the uncertainty around Section 122 and USMCA. The wider range is meant to provide coverage in this dynamic environment, while the company remains confident in the back half and full-year guidance. Q: Can you dive into the Q3 guidance of 6% to 8% growth? What closes down seasonally in Q3 versus Q2? A: The company representative explained that the step-down is due to typical seasonality in the business, as Q1 and Q3 are usually softer quarters from a revenue standpoint, while Q2 and Q4 are the strongest. Summertime typically sees doctors taking time off and fewer procedures, but the company expects a strong rebound in Q4 and remains optimistic about momentum. Q: You're absorbing tariffs, Viewpoint dilution, and convert dilution, yet still growing EPS faster than the topline. What's giving you the operating leverage? A: The company representative cited a "kitchen sink" approach to margin improvement, including the sales force focusing on pricing and product mix, acquisitions performing ahead of plan, and operational efficiencies. Specific actions include moving the largest manufacturing department to Tijuana, implementing automation, optimizing the supply chain, and shifting more inventory to ocean freight. This focus has driven significant operating margin improvement, with the company on track for nearly 950 basis points of improvement if it hits the high end of guidance. Q: On Scout MD, what are the clinical benefits, and is there a price uplift or margin benefit? A: CEO Martha Aronson explained that the primary clinical benefit of ScoutMD is the four distinct shapes of reflectors, which make it easy to see on X-ray. The combination of ScoutMD and OneMark from the Viewpoint acquisition provides a comprehensive breast care offering. OneMark can be used for all biopsies, expanding the market, while ScoutMD is selected when advanced localization is needed. Q: You're raising guidance by the beat, but if the environment is strong, why not raise more? A: The company representative stated that it's not their style to raise more than the beat. They typically flow through the first-half beat and leave the back half unchanged. The company remains fully confident in the full-year guidance and looks forward to a strong finish to the CGI program. Q: On the OEM business, did you get new contract wins, and is this level of growth sustainable? A: CEO Martha Aronson acknowledged that OEM is inherently lumpy but noted a nice 15% increase in Q2. The team secured work with a customer that put out a press release, and there was some increase in stocking due to transfers completed in the last three to six months. The company still expects OEM to perform in the mid-to-high single-digit range annually. Q: On Rhapsody, what are you hearing from physicians, and is there potential for a more aggressive ramp? A: CEO Martha Aronson stated that clinician feedback on Rhapsody continues to be strong, and the team is pursuing both hospital and non-hospital settings with good success. While competitors are not standing still, the company remains on track to meet the $7 million guidance for the year. Q: How did the quarter perform in China, and what are your expectations? A: The company representative noted that China came in essentially as expected, slightly up, with VBP slightly lower than expected. There are no changes to expectations for China for the year, and the business continues to move along. Q: On the strategic planning for 2027-2029, are there different metrics you're considering beyond revenue growth, op margin, and free cash flow? A: CEO Martha Aronson stated that the team is engaged in healthy debate about various metrics and having discussions with the board of directors. While it's too early to list specific metrics, it's a very important part of the discussion as the company evolves. Q: On the endoscopy business, do you have the right team and portfolio to compete, and is this the start of accelerated growth? A: CEO Martha Aronson confirmed that the endoscopy platform was a contributor to growth in Q2. The team has come together, and at the recent DDW meeting, results from a multicenter RCT showed that the CTIF procedure using the Esophix product is an effective alternative to Nissen fundoplication for chronic GERD patients. The C2 integration is going well, and the Resilience through-the-scope product launched at the end of Q1 has continued to perform nicely. Q: On the Greenall Therapies recall, does guidance assume immediate recapture of lost revenue? A: CEO Martha Aronson noted that the issue was resolved before the end of the quarter, which was faster than expected. The team is back in the market, but it will take time to win back accounts that had to go to competitors. However, this is not expected to have a material impact on the second half. Q: On the OEM business in China and Asia Pac, what are the bigger factors to hitting the full-year expectation? A: The company representative noted better results in China specifically for the OEM business For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Merit Medical Systems, Inc. MMSI reported second-quarter 2026 adjusted earnings per share (EPS) of $1.19, up 18% year over year. The figure beat the Zacks Consensus Estimate by 23.9%. GAAP EPS for the quarter was 65 cents, up 20% year over year. Shares of MMSI were up 4.4% during after-market trading following the second-quarter results. Year to date, the company’s shares have lost 5.5%, underperforming the industry’s gain of 1.9% and the broader S&P 500 Index’s increase of 8.2%. Image Source: Zacks Investment Research Revenues totaled $418.8 million in the second quarter of 2026, up 9.5% year over year on a reported basis. The metric surpassed the Zacks Consensus Estimate by 3.5%. Total revenues increased 8.7% at constant currency, while organic revenues improved 9% at constant currency. The U.S. sales amounted to $252.1 million, increasing 11% year over year on a reported basis and 11.5% at constant currency. International revenues totaled $166.8 million, up 7.3% on a reported basis and 4.7% at constant currency. Foundational product revenues totaled $280.9 million in the second quarter, up 7% year over year on a reported basis and 6% at constant currency. Excluding contributions from acquired products and the impact of the DualCap divestiture, organic sales increased 7.8%, driven primarily by strength in the Access and Vascular Intervention platforms. OEM sales increased 15% year over year, reflecting a notable improvement from the first quarter. Procedural Solutions revenues declined 12% due to the DualCap divestiture but increased 5% on an organic basis. Renal Therapies revenues fell 2% at constant currency, while increasing approximately 10% excluding the impact of a product recall. Therapeutic product revenues amounted to $137.9 million, increasing 15% year over year on a reported basis and 14% at constant currency. Organic sales advanced 11.7%, supported by solid growth across Cardiac Therapies, Endoscopy, Vascular Intervention and Oncology. Cardiac Therapies and Endoscopy revenues rose 24% and 29%, respectively, on a reported basis. In the quarter under review, Merit Medical’s gross profit increased 16.6% year over year to $215.2 million. The adjusted gross margin expanded 260 basis points (bps) to 55.8%. Excluding tariff refunds recognized during the quarter, the adjusted gross margin was 54.2%, up 98 bps year over year. Management attributed gross-margin progress to pricing, product mix, acquisition performance, manufacturing transfers, automation and lower reliance on air freight. These gains helped offset tariff pressure while supporting continued investment in the business. Selling, general and administrative expenses increased 14.3% year over year to $129.2 million. Research and development expenses rose 4.2% to $25.4 million. Operating profit totaled $60.4 million, reflecting a 28.8% increase from the prior-year quarter. The adjusted operating margin expanded 140 bps to 22.6%. Excluding the tariff refund benefit, the adjusted operating margin was 20.9%, up 22 bps year over year. Merit Medical exited second-quarter 2026 with cash and cash equivalents of $448.7 million compared with $488.1 million at the end of the first quarter of 2026. Total long-term debt at the end of the first quarter was $736.3 million compared with $735.2 million in the previous quarter. Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $109.9 million compared with $123.9 million a year ago. MMSI has initiated its outlook for third quarter 2026 and raised its outlook for 2026. For the third quarter of 2026, management expects revenues of $408-$413 million, an adjusted operating margin of 19.6-21.5% and adjusted earnings of $0.98 to $1.08 per share. For 2026, MMSI raised its revenue guidance to $1.631-$1.643 billion from $1.612-$1.634 billion. The updated range implies reported growth of 7.6-8.4% and constant-currency growth of 6.8-7.6%. Adjusted EPS guidance increased to $4.25-$4.35 from $4.01-$4.15. The Zacks Consensus Estimate for revenues and adjusted EPS is pegged at $1.62 billion and $4.07, respectively. Merit Medical Systems, Inc. price-consensus-eps-surprise-chart | Merit Medical Systems, Inc. Quote Merit Medical continued to advance its oncology platform with the commercial launch of SCOUT MD and preparations for the U.S. rollout of the OneMark Detection Imaging System. Together, the technologies broaden the company’s breast-care offering across diagnosis, localization and surgery. MMSI also progressed with its 2027-2029 strategic planning, focusing on product-pipeline investments, tuck-in acquisitions, portfolio rationalization, productivity and capital allocation. On the positive side, the integrations of Biolife and the C2 CryoBalloon advanced well, with both businesses contributing above expectations in the second quarter. Merit Medical now expects Biolife to generate approximately $23 million in annualized 2026 revenues, above its initial $18-$20 million view, while C2 CryoBalloon revenues remain projected at approximately $8-$9 million. However, execution risks remain. The company must successfully integrate View Point Medical and commercialize OneMark while managing tariff uncertainty, acquisition-related risks and potential supply-chain disruptions. Portfolio rationalization and the development of the next three-year growth plan could also require disciplined investment and operating execution. Merit Medical currently has a Zacks Rank #4 (Sell). Some better-ranked stocks from the broader medical space are West Pharmaceutical WST, McKesson MCK and Cardinal Health CAH, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. West Pharmaceutical reported second-quarter 2026 adjusted earnings per share (EPS) of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%. West Pharmaceutical has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.4%. McKesson reported a fourth-quarter fiscal 2026 adjusted EPS of $11.69, which beat the Zacks Consensus Estimate by 1.1%. Revenues of $96.3 billion missed the Zacks Consensus Estimate by 5.5%. McKesson has an estimated long-term earnings growth rate of 13.7%. MCK’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.1%. Cardinal Health reported a third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%. Cardinal Health has an estimated long-term earnings growth rate of 17%. CAH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 10.3%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report Cardinal Health, Inc. (CAH) : Free Stock Analysis Report McKesson Corporation (MCK) : Free Stock Analysis Report West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Merit Medical (MMSI) came out with quarterly earnings of $1.19 per share, beating the Zacks Consensus Estimate of $0.96 per share. This compares to earnings of $1.01 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +23.96%. A quarter ago, it was expected that this maker of disposable medical devices would post earnings of $0.84 per share when it actually produced earnings of $0.94, delivering a surprise of +11.9%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Merit Medical, which belongs to the Zacks Medical - Dental Supplies industry, posted revenues of $418.84 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.50%. This compares to year-ago revenues of $382.46 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Merit Medical shares have lost about 8.3% since the beginning of the year versus the S&P 500's gain of 6.9%. While Merit Medical has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Merit Medical was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.03 on $408.67 million in revenues for the coming quarter and $4.07 on $1.62 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Dental Supplies is currently in the top 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Staar Surgical (STAA), another stock in the same industry, has yet to report results for the quarter ended June 2026. This maker of implantable lenses is expected to post quarterly earnings of $0.21 per share in its upcoming report, which represents a year-over-year change of +400%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Staar Surgical's revenues are expected to be $90.77 million, up 104.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report STAAR Surgical Company (STAA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Financial Highlights† Reported revenue of $418.8 million, up 10% Constant currency revenue* and constant currency revenue, organic* up 9% and up 9%, respectively GAAP operating margin of 14.4%, compared to 12.3% in prior year period Non-GAAP operating margin* of 22.6%, compared to 21.2% in prior year period GAAP EPS $0.65, up 20% Non-GAAP EPS* $1.19, up 18% Cash flow from operations of $110.0 million year-to-date, down 11% Free cash flow* generation of $76.6 million year-to-date, down 14% † Comparisons above are calculated for the current quarter compared with the second quarter of 2025, unless otherwise specified. Amounts stated in this release are rounded, while percentages are calculated from the underlying amounts. * Constant currency revenue; constant currency revenue, organic; non-GAAP gross profit and margin; non-GAAP operating income and margin; non-GAAP net income; non-GAAP EPS; and free cash flow figures (used here and below) are non-GAAP financial measures. A reconciliation of these financial measures to their most directly comparable GAAP financial measures is included under the heading “Non-GAAP Financial Measures” below. SOUTH JORDAN, Utah, July 30, 2026 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading global manufacturer and marketer of healthcare technology, today announced financial results for the three and six-month periods ended June 30, 2026. “Merit delivered second quarter financial results that exceeded the high end of our expectations, driven primarily by 9% organic, constant currency revenue growth, excluding the impact of a strategic divestiture,” said Martha G. Aronson, Merit’s President and CEO. “We experienced improving revenue growth trends across our global business in Q2, as expected, with notable strength in sales to customers in the U.S. which increased 10% year-over-year, well ahead of our expectations. We also delivered improvement in both our non-GAAP operating margin and our non-GAAP earnings per share, which increased by 140 basis points and 18%, respectively, year-over-year.” Ms. Aronson continued: “We have increased our 2026 revenue and non-GAAP earnings per share guidance to reflect the stronger-than-expected results over the first half of 2026 and remain confident in our team’s ability to execute, with attractive constant currency growth, improving profitability, and solid cash flow generation this year. Our team remains focused on delivering our Continued Growth Initiative financial targets for the three-year period ending December 31, 2026, and, in parallel, we are developing our longer-term strategic plan focused on identifying opportunities to better position the company for sustainable growth, enhanced profitability and value creation for our shareholders.” Merit’s revenue by product category for the three and six-month periods ended June 30, 2026 and 2025 was as follows (unaudited; in thousands, except for percentages): Financial Summary: GAAP gross margin was 51.4%, compared to 48.2% for the second quarter of 2025. Non-GAAP gross margin* was 55.8%, compared to 53.2% for the second quarter of 2025. GAAP operating margin was 14.4%, compared to 12.3% for the second quarter of 2025. Non-GAAP operating margin* was 22.6%, compared to 21.2% for the second quarter of 2025. GAAP net income was $38.8 million, or $0.65 per share, compared to $32.6 million, or $0.54 per share, for the second quarter of 2025. Non-GAAP net income* was $71.3 million, or $1.19 per share, compared to $61.0 million, or $1.01 per share, for the second quarter of 2025. As of June 30, 2026, Merit had cash and cash equivalents of $448.7 million and total debt obligations of $747.5 million, compared to cash and cash equivalents of $446.4 million and total debt obligations of $747.5 million as of December 31, 2025. Merit had available borrowing capacity of approximately $697 million as of June 30, 2026. Fiscal Year 2026 Financial Guidance Based upon the information currently available to Merit’s management, for the twelve-month period ending December 31, 2026, absent the potential impact of trade policies and related actions implemented by the U.S. and other countries subsequent to today’s date, material acquisitions, non-recurring transactions or other factors beyond Merit’s current expectations, Merit anticipates the following financial results: Revenue and Earnings Guidance* *Percentage figures approximated; dollar figures may not foot due to rounding. (1) Merit’s non-GAAP earnings per share reflect the dilutive impact of its 3.00% Convertible Senior Notes due 2029 (the “Convertible Notes”) calculated using the if-converted method of approximately $0.03 per share for the year ending December 31, 2026. Any offsetting impacts of the capped call associated with the Convertible Notes are not considered. (2) “Prior Guidance” reflects Merit’s full-year 2026 financial guidance, previously introduced on April 30, 2026. Merit does not provide guidance for GAAP reported financial measures (other than revenue) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP reported financial measures (other than revenue) because Merit is unable to predict with reasonable certainty the financial impact of various items which could impact Merit’s future financial results, such as expenses attributable to acquisitions or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, certain employee termination benefits, performance-based stock compensation expenses, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, governmental proceedings, and changes in governmental or industry regulations. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. For the same reasons, Merit is unable to address the significance of the unavailable information, which could be material to future results. Specifically, Merit is not, without unreasonable effort, able to reasonably predict the amount and impact of these items and Merit believes inclusion of the most comparable GAAP financial measure, and a reconciliation of these forward-looking non-GAAP measures to their GAAP counterparts could be confusing to investors or cause undue reliance. Merit’s financial guidance for the year ending December 31, 2026 is subject to risks and uncertainties identified in this release and Merit’s filings with the SEC. This guidance is based on information and estimates available to Merit as of July 30, 2026. Should known or unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results will likely vary, and could vary materially, from past results and those anticipated, estimated or projected. CONFERENCE CALL As previously announced, Merit will hold its investor conference call today, Thursday, July 30, 2026, at 4:30 p.m., Eastern Time, to discuss its results for the second quarter and provide an operational update. To access the conference call, please pre-register using the following link. Registrants will receive confirmation with dial-in details. A live webcast and slide deck will also be available at merit.com. Non-GAAP Financial Measures Although Merit’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), Merit’s management believes that the non-GAAP financial measures referenced in this release may provide investors with useful information regarding the underlying business trends and performance of Merit’s ongoing operations and can be useful for period-over-period comparisons of such operations. Non-GAAP financial measures used in this release include: constant currency revenue; constant currency revenue, organic; non-GAAP gross profit and margin; non-GAAP operating income and margin; non-GAAP net income; non-GAAP earnings per share; and free cash flow. Merit’s management team uses these non-GAAP financial measures to evaluate Merit’s profitability and efficiency, to compare operating and financial results to prior periods, to evaluate changes in the results of its operating segments, and to measure and allocate financial resources internally. However, Merit’s management does not consider such non-GAAP measures in isolation or as an alternative to measures determined in accordance with GAAP. Readers should consider non-GAAP measures used in this release in addition to, not as a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures generally exclude some, but not all, items that may affect Merit’s net income. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded. Merit believes it is useful to exclude such items in the calculation of non-GAAP gross profit and margin, non-GAAP operating income and margin, non-GAAP net income, and non-GAAP earnings per share (in each case, as further illustrated in the reconciliation tables below) because such amounts in any specific period may not directly correlate to the underlying performance of Merit’s business operations and can vary significantly between periods as a result of factors such as acquisition or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, certain employee termination benefits, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, governmental proceedings or changes in tax or industry regulations, gains or losses on disposal of certain assets, equity method investment loss (income) from equity investees, and debt issuance costs. Merit may incur similar types of expenses in the future, and the non-GAAP financial information included in this release should not be viewed as a statement or indication that these types of expenses will not recur. Additionally, the non-GAAP financial measures used in this release may not be comparable with similarly titled measures of other companies. Merit urges readers to review the reconciliations of its non-GAAP financial measures to their most directly comparable GAAP financial measures included herein, and not to rely on any single financial measure to evaluate Merit’s business or results of operations. Constant Currency Revenue Merit’s constant currency revenue is prepared by converting the current-period reported revenue of subsidiaries whose functional currency is a currency other than the U.S. dollar at the applicable foreign exchange rates in effect during the comparable prior-year period and adjusting for the effects of hedging transactions on reported revenue, which are recorded in the U.S. dollar. The constant currency revenue adjustment of $(3.0) million and $(10.9) million to reported revenue for the three and six-month periods ended June 30, 2026 was calculated using the applicable average foreign exchange rates for the three and six-month periods ended June 30, 2025. Constant Currency Revenue, Organic Merit’s constant currency revenue, organic, is defined, with respect to prior fiscal year periods, as GAAP revenue less revenue from certain divestitures. For the three and six-month periods ended June 30, 2025, Merit’s constant currency revenue, organic, excludes revenues attributable to the DualCap® product line which Merit sold to Health Line International Corporation (“Health Line”) on February 17, 2026 (the “DualCap Divestiture”). With respect to current fiscal year periods, constant currency revenue, organic, is defined as constant currency revenue (as defined above), less revenue from certain acquisitions and divestitures. For the three and six-month periods ended June 30, 2026, Merit’s constant currency revenue, organic, excludes revenues attributable to products acquired in connection with (i) Merit’s acquisition of View Point Medical, Inc. (“View Point”) in April 2026 (the “View Point Merger”), (ii) the assets acquired from Pentax of America, Inc. related to the C2 CryoBalloon™ device in November 2025 (the “C2 Acquisition”) and (iii) Merit’s acquisition of Biolife Delaware, L.L.C. (“Biolife”) in May 2025 (the “Biolife Merger”). For the six-month period ended June 30, 2026, Merit’s constant currency revenue, organic, excludes revenues attributable to the DualCap Divestiture. Non-GAAP Gross Profit and Margin Non-GAAP gross profit is calculated by reducing GAAP cost of sales by amounts recorded for amortization of intangible assets and inventory mark-up related to acquisitions. Non-GAAP gross margin is calculated by dividing non-GAAP gross profit by reported net sales. Non-GAAP Operating Income and Margin Non-GAAP operating income is calculated by adjusting GAAP operating income for certain items which are deemed by Merit’s management to be outside of core operations and vary in amount and frequency among periods, such as expenses related to acquisitions or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, certain employee termination benefits, performance-based stock compensation expenses, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, governmental proceedings, and changes in governmental or industry regulations, as well as other items referenced in the tables below. Non-GAAP operating margin is calculated by dividing non-GAAP operating income by reported net sales. Non-GAAP Net Income Non-GAAP net income is calculated by adjusting GAAP net income for the items set forth in the definition of non-GAAP operating income above, as well as for expenses related to Merit’s long-term debt, gains or losses on disposal of certain assets, equity method investment loss (income) from equity investees, and other items set forth in the tables below. Non-GAAP EPS Non-GAAP EPS is defined as non-GAAP net income divided by the diluted shares outstanding for the corresponding period. Free Cash Flow Free cash flow is defined as cash flow from operations calculated in accordance with GAAP, less capital expenditures for property and equipment calculated in accordance with GAAP, as set forth in the consolidated statement of cash flows. Other Non-GAAP Financial Measure Reconciliations The following tables set forth supplemental financial data and corresponding reconciliations of non-GAAP financial measures to Merit’s corresponding financial measures prepared in accordance with GAAP, in each case, for the three and six-month periods ended June 30, 2026 and 2025. The non-GAAP income adjustments referenced in the following tables do not reflect non-performance-based stock compensation expense of $6.3 million and $5.0 million for the three-month periods ended June 30, 2026 and 2025, respectively, and $9.5 million and $9.3 million for the six-month periods ended June 30, 2026 and 2025, respectively. Reconciliation of GAAP Net Income to Non-GAAP Net Income(Unaudited, in thousands except per share amounts) Note: Certain per-share impacts may not sum to totals due to rounding. Reconciliation of GAAP Net Income to Non-GAAP Net Income(Unaudited, in thousands except per share amounts) Note: Certain per-share impacts may not sum to totals due to rounding. Reconciliation of Reported Operating Income to Non-GAAP Operating Income (Unaudited, in thousands except percentages) Note: Certain percentages may not sum to totals due to rounding. (a)   Represents performance-based share-based compensation expense, including stock-settled and cash-settled awards. (b)   Includes employee termination benefits associated with activities related to corporate restructuring initiatives and costs to terminate certain distribution contracts from the Biolife Merger. (c)   Represents incremental expenses incurred to comply with the E.U. Medical Device Regulation. (d)   Represents costs to comply with Merit’s corporate integrity agreement with the U.S. Department of Justice. (e)   Represents costs associated with the Convertible Notes including the amortization of debt issuance costs and a one-time charge for additional interest incurred pursuant to Merit's obligation to remove restrictive legends. (f)   Includes equity method investment loss from equity investees. Reconciliation of Reported Revenue to Constant Currency Revenue (Non-GAAP), and Constant Currency Revenue, Organic (Non-GAAP)(Unaudited, in thousands except percentages) (a)   A non-GAAP financial measure. For a definition of this and other non-GAAP financial measures, see the section of this release entitled “Non-GAAP Financial Measures.” (b)   On February 17, 2026, Merit sold certain assets relating to the DualCap product line to Health Line for $28 million, of which $25.5 million was paid to Merit at closing. Reconciliation of Reported Gross Margin to Non-GAAP Gross Margin (Non-GAAP)(Unaudited, as a percentage of reported revenue) Note: Certain percentages may not sum to totals due to rounding. Reconciliation of Reported Cash Flow from Operations to Free Cash Flow (Non-GAAP) (Unaudited, in thousands) Reconciliation of 2026 Net Sales Guidance - % Change from Prior Year (Constant Currency) Note: Certain percentages may not sum to totals due to rounding. (1) “Prior Guidance” reflects Merit’s full-year 2026 financial guidance, previously introduced on April 30, 2026. ABOUT MERIT Founded in 1987, Merit is engaged in the development, manufacture, and distribution of proprietary medical devices used in interventional, diagnostic, and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care, and endoscopy. Merit serves customers worldwide with a domestic and international sales force and clinical support team totaling more than 800 individuals. Merit employs approximately 7,500 people worldwide. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among others: statements preceded or followed by, or that include the words, “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” “seeks,” “believes,” “estimates,” “projects,” “forecasts,” “potential,” “target,” “continue,” “upcoming,” “optimistic” or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology; statements that address Merit’s future operating performance or events or developments that Merit’s management expects or anticipates will occur, including, without limitation, any statements regarding Merit’s projected revenues, earnings or other future financial measures, Merit’s plans and objectives for future operations, Merit’s proposed new products or services, the integration, development or commercialization of the business or any assets acquired from other parties, future economic conditions or performance, the implementation of, and results which may be achieved through, Merit’s Continued Growth Initiatives Program or other business optimization initiatives, and any statements of assumptions underlying any of the foregoing; and statements regarding Merit’s past performance, efforts, or results about which inferences or assumptions may be made, including statements proceeded or followed by the words "preliminary," "initial," "potential," "possible," "diligence," "industry-leading," "compliant," "indications" or "early feedback" or other forms of these words or similar words or expressions, or the negative thereof or other comparable terminology. The forward-looking statements contained in this release are based on Merit management’s current expectations and assumptions regarding future events or outcomes. If underlying expectations or assumptions prove inaccurate, or risks or uncertainties materialize, actual results will likely differ, and may differ materially, from Merit’s expectations reflected in any forward-looking statements. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results. Investors are cautioned not to unduly rely on any such forward-looking statements. The following are some of the important risks and uncertainties that could cause Merit’s actual results to differ from management’s expectations in any forward-looking statements: risks and uncertainties arising from the conflict among the United States, Israel and Iran and related geopolitical instability; risks and uncertainties associated with Merit’s acquisition of View Point and the OneMark® Detection Imaging System and related technology; risks and uncertainties associated with Merit’s integration of the View Point business, assets and operations into its operations and its ability to achieve anticipated financial results, product development and other anticipated benefits of the acquisition; uncertainties as to whether Merit will achieve revenue or other financial performance consistent with its forecasts projected for the View Point Merger; risks and uncertainties associated with Merit’s executive succession planning activities and leadership transition; risks and uncertainties regarding trade policies or related actions implemented by the U.S. or other countries, including existing, proposed, prospective or invalidated tariffs, duties or other measures; risks and uncertainties associated with Merit’s integration of businesses or assets acquired from third parties, including View Point in April 2026, the business and assets acquired in the C2 Acquisition in November 2025 and Biolife in May 2025, and Merit’s ability to achieve the anticipated financial results, product development and other anticipated benefits of such acquisitions; effects of the Convertible Notes on Merit’s net income and earnings per share performance; restrictions and limitations set forth in the Convertible Notes and Indenture, which could affect Merit’s ability to operate its business as well as its liquidity; disruptions in Merit’s supply chain, manufacturing or sterilization processes; U.S. and global political, economic, competitive, reimbursement and regulatory conditions; modification or limitation of, or policies and procedures associated with, governmental or private insurance reimbursement policies; reduced availability of, and price increases associated with, components and other raw materials; increases in transportation expenses; risks relating to Merit’s potential inability to successfully manage growth through acquisitions generally, including the inability to effectively integrate acquired operations or products or commercialize technology developed internally or acquired through completed, proposed or future transactions; prospective financial obligations or other uncertainties associated with the DualCap Divestiture completed in February 2026; fluctuations in interest or foreign currency exchange rates and inflation; cybersecurity events; government scrutiny and regulation of the medical device industry; difficulties relating to development, testing and regulatory approval, clearance and maintenance of Merit’s products; the safety, efficacy and patient and physician adoption of Merit’s products; the ability to fully enroll and the outcomes of ongoing and future clinical trials and market studies relating to Merit’s products; litigation and other legal proceedings affecting Merit; risks and possible effects of Merit’s failure to comply with U.S. and foreign laws and regulations; restrictions on Merit’s liquidity or business operations resulting from its debt agreements; infringement of Merit’s technology or the assertion that Merit’s technology infringes the rights of other parties; product recalls and product liability claims; potential for significant adverse changes in governing regulations; changes in tax laws and regulations in the United States or other jurisdictions or exposure to additional tax liabilities which may adversely affect Merit’s effective tax rate; termination of relationships with Merit’s suppliers, or failure of such suppliers to perform; development of new products and technology that could render Merit’s existing or future products obsolete; market acceptance of new products; failure to comply with applicable environmental laws; changes in key personnel; labor shortages and increases in labor costs; price and product competition; extreme weather events; and geopolitical events. For a further discussion of the risks and uncertainties and other factors that may affect Merit’s business, operations and financial condition, see Part I, Item 1A. “Risk Factors” in Merit’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC, which Merit updated in Part II, Item 1A. “Risk Factors” in Merit’s Quarterly Reports on Form 10-Q for each of the quarters ended March 31, 2026 and June 30, 2026. All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results. Those estimates and all other forward-looking statements included in this release are made only as of the date of this release, and except as otherwise required by applicable law, Merit assumes no obligation to update or disclose revisions to estimates and all other forward-looking statements. TRADEMARKS Unless noted otherwise, trademarks and registered trademarks used in this release are the property of Merit Medical Systems, Inc., its subsidiaries, or its licensors.