UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 0-18592

MERIT MEDICAL SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Utah		87-0447695
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1600 West Merit Parkway, South Jordan, Utah 84095

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (801) 253-1600

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, no par value	MMSI	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒

Accelerated Filer ☐

Non-Accelerated Filer ☐

Smaller Reporting Company ☐

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Title or class		Shares outstanding as of October 28, 2024
Common Stock, no par value		58,279,409

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Income	5

	Consolidated Statements of Comprehensive Income	6

	Consolidated Statements of Stockholders’ Equity	7

	Consolidated Statements of Cash Flows	9

	Condensed Notes to Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

Item 4.	Controls and Procedures	42

PART II.	OTHER INFORMATION	42

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	42

Item 5.	Other information	43

Item 6.	Exhibits	44

SIGNATURES		45


	September 30,		December 31,
ASSETS	2024		2023
		(unaudited)
Current assets:
Cash and cash equivalents	$	523,128	$	587,036
Trade receivables — net of allowance for credit losses — 2024 — $9,266 and 2023 — $9,023		189,831		177,885
Other receivables		15,325		10,517
Inventories		310,527		303,871
Prepaid expenses and other current assets		27,105		24,286
Prepaid income taxes		4,216		4,016
Income tax refund receivables		8,185		859
Total current assets		1,078,317		1,108,470

Property and equipment:
Land and land improvements		26,108		26,017
Buildings		192,323		191,491
Manufacturing equipment		334,787		316,930
Furniture and fixtures		66,593		63,044
Leasehold improvements		59,005		53,638
Construction-in-progress		66,699		61,439
Total property and equipment		745,515		712,559
Less accumulated depreciation		(355,862)		(329,036)
Property and equipment — net		389,653		383,523

Other assets:
Intangible assets:
Developed technology — net of accumulated amortization — 2024 — $361,725 and 2023 — $321,488		322,325		283,999
Other — net of accumulated amortization — 2024 — $82,979 and 2023 — $76,887		49,839		41,884
Goodwill		399,448		382,240
Deferred income tax assets		7,253		7,288
Right-of-use operating lease assets		68,867		63,047
Other assets		62,382		54,793
Total other assets		910,114		833,251

Total assets	$	2,378,084	$	2,325,244


See condensed notes to consolidated financial statements.	(continued)


	September 30,		December 31,
LIABILITIES AND STOCKHOLDERS’ EQUITY	2024		2023
		(unaudited)
Current liabilities:
Trade payables	$	60,808	$	65,944
Accrued expenses		127,255		120,447
Short-term operating lease liabilities		11,469		12,087
Income taxes payable		1,547		5,086
Total current liabilities		201,079		203,564

Long-term debt		750,505		823,013
Deferred income tax liabilities		5,571		5,547
Long-term income taxes payable		347		347
Liabilities related to unrecognized tax benefits		1,912		1,912
Deferred compensation payable		19,218		17,167
Deferred credits		1,527		1,605
Long-term operating lease liabilities		57,178		56,259
Other long-term obligations		17,341		13,830
Total liabilities		1,054,678		1,123,244

Commitments and contingencies

Stockholders' equity:
Preferred stock — 5,000 shares authorized; no shares issued as of September 30, 2024 and December 31, 2023		—		—
Common stock, no par value — 100,000 shares authorized; issued and outstanding as of September 30, 2024 - 58,274 and December 31, 2023 - 57,858		669,207		638,150
Retained earnings		667,594		575,184
Accumulated other comprehensive loss		(13,395)		(11,334)
Total stockholders’ equity		1,323,406		1,202,000

Total liabilities and stockholders’ equity	$	2,378,084	$	2,325,244


See condensed notes to consolidated financial statements.	(concluded)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Net sales	$	339,845	$	315,230	$	1,001,356	$	932,851
Cost of sales		182,310		173,031		531,006		499,508
Gross profit		157,535		142,199		470,350		433,343

Operating expenses:
Selling, general and administrative		99,644		86,854		288,657		277,925
Research and development		20,527		19,646		62,272		61,089
Impairment charges		—		—		—		270
Contingent consideration expense		103		562		292		2,177
Acquired in-process research and development		—		—		—		1,550
Total operating expenses		120,274		107,062		351,221		343,011

Income from operations		37,261		35,137		119,129		90,332

Other income (expense):
Interest income		6,652		181		21,489		533
Interest expense		(7,501)		(4,841)		(23,226)		(10,534)
Other income (expense) — net		245		(255)		(544)		291
Total other expense — net		(604)		(4,915)		(2,281)		(9,710)

Income before income taxes		36,657		30,222		116,848		80,622

Income tax expense		8,213		4,388		24,438		13,840

Net income	$	28,444	$	25,834	$	92,410	$	66,782

Earnings per common share
Basic	$	0.49	$	0.45	$	1.59	$	1.16
Diluted	$	0.48	$	0.44	$	1.57	$	1.14

Weighted average shares outstanding
Basic		58,231		57,682		58,110		57,525
Diluted		59,537		58,375		58,948		58,345


	Common Stock			Retained		Accumulated Other
	Shares	Amount		Earnings		Comprehensive Loss		Total

Balance — January 1, 2024	57,858	$	638,150	$	575,184	$	(11,334)	$	1,202,000
Net income					28,240				28,240
Other comprehensive loss							(1,122)		(1,122)
Stock-based compensation expense			4,934						4,934
Options exercised	213		7,394						7,394
Issuance of common stock under Employee Stock Purchase Plan	5		336						336
Shares issued from time-vested restricted stock units	47		—						—
Shares surrendered in exchange for payment of payroll tax liabilities	(21)		(1,592)						(1,592)
Balance — March 31, 2024	58,102		649,222		603,424		(12,456)		1,240,190
Net income					35,726				35,726
Other comprehensive loss							(2,973)		(2,973)
Stock-based compensation expense			6,301						6,301
Options exercised	66		2,913						2,913
Issuance of common stock under Employee Stock Purchase Plan	4		288						288
Shares issued from time-vested restricted stock units	20		—						—
Balance — June 30, 2024	58,192		658,724		639,150		(15,429)		1,282,445
Net income					28,444				28,444
Other comprehensive income							2,034		2,034
Stock-based compensation expense			5,990						5,990
Options exercised	80		4,247						4,247
Issuance of common stock under Employee Stock Purchase Plan	2		246						246
Balance — September 30, 2024	58,274	$	669,207	$	667,594	$	(13,395)	$	1,323,406


	Three Months Ended						Three Months Ended
	September 30, 2024						September 30, 2023
	United States		International		Total		United States		International		Total
Cardiovascular
Peripheral Intervention	$	84,217	$	53,715	$	137,932	$	78,617	$	49,768	$	128,385
Cardiac Intervention		37,248		53,521		90,769		36,593		52,513		89,106
Custom Procedural Solutions		30,774		19,994		50,768		29,602		19,022		48,624
OEM		38,093		5,293		43,386		34,207		5,762		39,969
Total		190,332		132,523		322,855		179,019		127,065		306,084

Endoscopy
Endoscopy Devices		16,160		830		16,990		8,486		660		9,146

Total	$	206,492	$	133,353	$	339,845	$	187,505	$	127,725	$	315,230


Assets Acquired
Trade receivables	$	2,568
Inventories		3,553
Prepaid expenses and other current assets		99
Property and equipment		258
Intangible assets
Developed technology		72,800
Trademarks		5,400
Customer list		6,600
Goodwill		16,997
Total assets acquired		108,275

Liabilities Assumed
Trade payables		494
Accrued expenses		2,752
Total liabilities assumed		3,246

Total net assets acquired	$	105,029


Assets Acquired
Prepaid expenses	$	2,000
Inventories		5,254
Property and equipment		108
Intangible assets
Developed technology		65,200
Trademarks		4,000
Customer list		5,800
Goodwill		17,638
Total net assets acquired	$	100,000


	Nine Months Ended
	September 30,
	2024		2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	$	15,424	$	11,446
Proceeds from issuance of long-term debt		—		480,499
Payments on long-term debt		(76,063)		(391,624)
Long-term debt issuance costs		—		(5,240)
Contingent payments related to acquisitions		(209)		(3,502)
Payment of taxes related to an exchange of common stock		(1,592)		(5,123)
Net cash, cash equivalents, and restricted cash (used in) provided by financing activities		(62,440)		86,456
Effect of exchange rates on cash, cash equivalents, and restricted cash		724		(2,181)
Net increase (decrease) in cash, cash equivalents and restricted cash		(63,867)		171

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period		589,144		60,558
End of period	$	525,277	$	60,729

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents		523,128		58,673
Restricted cash reported in prepaid expenses and other current assets		2,149		2,056
Total cash, cash equivalents and restricted cash	$	525,277	$	60,729

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of capitalized interest of $712 and $941, respectively)	$	20,977	$	9,572
Income taxes		33,054		24,875

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Property and equipment purchases in accounts payable	$	8,907	$	4,613
Acquisition purchases in accrued expenses and other long-term obligations		4,894		3,674
Merit common stock surrendered (0 and 86 shares, respectively) in exchange for exercise of stock options		—		5,809
Right-of-use operating lease assets obtained in exchange for operating lease liabilities		9,191		7,560


	Nine Months Ended						Nine Months Ended
	September 30, 2024						September 30, 2023
	United States		International		Total		United States		International		Total
Cardiovascular
Peripheral Intervention	$	245,832	$	165,973	$	411,805	$	219,257	$	148,820	$	368,077
Cardiac Intervention		109,431		165,889		275,320		106,588		161,621		268,209
Custom Procedural Solutions		90,564		59,414		149,978		85,556		60,153		145,709
OEM		106,202		20,739		126,941		101,341		21,999		123,340
Total		552,029		412,015		964,044		512,742		392,593		905,335

Endoscopy
Endoscopy Devices		35,221		2,091		37,312		25,705		1,811		27,516

Total	$	587,250	$	414,106	$	1,001,356	$	538,447	$	394,404	$	932,851


	September 30, 2024		December 31, 2023
Finished goods	$	159,647	$	158,893
Work-in-process		37,694		25,420
Raw materials		113,186		119,558
Total inventories	$	310,527	$	303,871


	September 30, 2024
	Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount
Patents	$	30,472	$	(12,315)	$	18,157
Distribution agreements		3,250		(2,975)		275
License agreements		11,599		(8,979)		2,620
Trademarks		40,538		(23,235)		17,303
Customer lists		46,959		(35,475)		11,484
Total	$	132,818	$	(82,979)	$	49,839


	Estimated Amortization Expense
Remaining 2024	$	17,783
2025		69,119
2026		58,484
2027		54,947
2028		53,409


	September 30, 2024		December 31, 2023
Term loans	$	23,000	$	99,063
Revolving credit loans		—		—
Convertible notes		747,500		747,500
Less unamortized debt issuance costs		(19,995)		(23,550)
Total long-term debt		750,505		823,013
Less current portion		—		—
Long-term portion	$	750,505	$	823,013


Years Ending	Future Minimum
December 31,	Principal Payments
Remaining 2024	$	—
2025		—
2026		—
2027		—
2028		23,000
Thereafter		747,500
Total future minimum principal payments	$	770,500


	Covenant Requirement
Consolidated Total Net Leverage Ratio ⁽¹⁾		5.0 to 1.0
Consolidated Senior Secured Net Leverage Ratio ⁽²⁾		3.0 to 1.0
Consolidated Interest Coverage Ratio ⁽³⁾		3.0 to 1.0


Fair Value of Derivative Instruments Designated as Hedging Instruments	Balance Sheet Location	September 30, 2024		December 31, 2023
Assets
Interest rate swap	Prepaid expenses and other assets	$	—	$	1,503
Foreign currency forward contracts	Prepaid expenses and other assets		612		2,061
Foreign currency forward contracts	Other assets (long-term)		137		216

(Liabilities)
Foreign currency forward contracts	Accrued expenses		(2,968)		(1,898)
Foreign currency forward contracts	Other long-term obligations		(1,085)		(499)

Fair Value of Derivative Instruments Not Designated as Hedging Instruments	Balance Sheet Location	September 30, 2024		December 31, 2023
Assets
Foreign currency forward contracts	Prepaid expenses and other assets	$	685	$	828

(Liabilities)
Foreign currency forward contracts	Accrued expenses		(1,753)		(1,463)


	Amount of Gain/(Loss)					Consolidated Statements				Amount of Gain/(Loss)
	Recognized in OCI					of Income				Reclassified from AOCI
	Three Months Ended September 30,					Three Months Ended September 30,				Three Months Ended September 30,
Derivative instrument	2024		2023		Location in statements of income	2024			2023	2024			2023
Interest rate swap	$	1	$	126	Interest expense	$	(7,501)	$	(4,841)	$	255	$	685
Foreign currency forward contracts		(5,443)		1,503	Revenue		339,845		315,230		709		866
					Cost of sales		(182,310)		(173,031)		179		617


		Three Months Ended September 30,				Nine Months Ended September 30,
Derivative Instrument	Location in statements of income	2024		2023		2024		2023
Foreign currency forward contracts	Other income (expense) — net	$	(2,124)	$	(452)	$	(596)	$	2,748


			Fair Value Measurements Using
	Total Fair		Quoted prices in		Significant other		Significant
	Value at		active markets		observable inputs		unobservable inputs
	September 30, 2024		(Level 1)		(Level 2)		(Level 3)
Marketable securities ⁽¹⁾	$	78	$	78	$	—	$	—
Foreign currency contract assets, current and long-term ⁽³⁾	$	1,434	$	—	$	1,434	$	—
Foreign currency contract liabilities, current and long-term ⁽⁴⁾	$	(5,806)	$	—	$	(5,806)	$	—
Contingent consideration liabilities	$	(3,419)	$	—	$	—	$	(3,419)


	Fair value at
	September 30,		Valuation			Weighted
Contingent consideration liability	2024		technique	Unobservable inputs	Range	Average⁽¹⁾
Revenue-based royalty payments contingent liability	$	2,897	Discounted cash flow	Discount rate	11% - 15%	14.4%
				Projected year of payments	2024-2034	2028

Revenue milestones contingent liability	$	98	Monte Carlo simulation	Discount rate	12.0%
				Projected year of payments	2024-2040	2040

Regulatory approval contingent liability	$	424	Scenario-based method	Discount rate	5.4%
				Probability of milestone payment	50.0%
				Projected year of payment	2024-2030	2030


	Cash Flow Hedges		Foreign Currency Translation		Total
Balance as of July 1, 2024	$	2,625	$	(18,054)	$	(15,429)

Other comprehensive income (loss)		(5,442)		7,153		1,711
Income taxes		1,555		(89)		1,466
Reclassifications to:
Revenue		(709)				(709)
Cost of sales		(179)				(179)
Interest expense		(255)				(255)
Net other comprehensive income (loss)		(5,030)		7,064		2,034

Balance as of September 30, 2024	$	(2,405)	$	(10,990)	$	(13,395)

Exhibit No.		Description
2.1*		Asset Purchase Agreement, dated September 16, 2024, by and between Merit Medical Systems, Inc. and Cook Medical Holdings LLC.
3.1†		Second Amended and Restated Articles of Incorporation.
3.2†		Fourth Amended and Restated Bylaws.
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following financial information from the quarterly report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) related Condensed Notes to the Unaudited Consolidated Financial Statements, tagged in detail.
104		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).


	MERIT MEDICAL SYSTEMS, INC.

Date: October 30, 2024	By:	/s/ FRED P. LAMPROPOULOS
		Fred P. Lampropoulos
		Chief Executive Officer

Date: October 30, 2024	By:	/s/ RAUL PARRA
		Raul Parra
		Chief Financial Officer and Treasurer