SOUTH JORDAN, Utah - Merit Medical Systems , Inc. (NASDAQ: NASDAQ:MMSI), a company specializing in healthcare technology, has completed the purchase of assets from EndoGastric Solutions, Inc., for a cash consideration of about $105 million.
This acquisition, announced today, is poised to add roughly $30 million in annualized revenue and expand Merit's endoscopy offerings with a minimally invasive treatment for chronic gastroesophageal reflux disease (GERD).
The EsophyX Z+ device, part of the acquired assets, is designed to restore the body's reflux barrier, offering a durable, non-pharmacological option for GERD patients. GERD, a condition where stomach acid frequently flows back into the esophagus, can lead to serious health issues if left untreated.
Fred P. Lampropoulos, Merit’s Chairman and CEO, emphasized the strategic and financial benefits of the acquisition, stating that it aligns with the company's growth initiatives and leverages its existing commercial infrastructure.
Merit expects the deal to be accretive to its non-GAAP gross and operating margins, net income, and earnings per share in the first full year post-closing, despite being modestly dilutive to the full year 2024 non-GAAP profitability due to the partial-year contribution.
The transaction is anticipated to contribute $13 to $15 million in revenue from the closing date through December 31, 2024. However, it is expected to dilute Merit's previously forecasted non-GAAP operating margin, net income, and earnings per share for the full year 2024. The company has reaffirmed its full-year financial guidance on a standalone basis and updated its forecast to include the projected impact of this acquisition.
Merit's updated full-year 2024 financial guidance now includes net sales of $1.324 to $1.340 billion, representing a 5% to 7% year-over-year increase, and non-GAAP earnings per share of $3.22 to $3.31, indicating a 7% to 10% rise. The endoscopy segment is expected to see a significant revenue boost, projecting a 45% to 51% increase.
The company plans to discuss the acquisition and its updated outlook for 2024 during its second-quarter earnings report on August 1, 2024. This news is based on a press release statement.
In other recent news, Merit Medical Systems has been the focus of several significant developments. The company reported a 9.3% increase in revenue to $324 million and earnings per share of $0.77 in the first quarter, surpassing analysts' expectations.
Piper Sandler and Wells Fargo have maintained their Overweight and Equal Weight ratings on Merit Medical's stock, respectively, with Piper Sandler setting a price target of $97.00.
The company also announced the addition of Silvia M. Perez to its board of directors, bringing over two decades of healthcare industry experience to the team. Furthermore, Merit Medical received FDA clearance for its Siege Vascular Plug and launched its Bearing nsPVA Express Prefilled Syringe in the United States and Australia, strengthening its Embolics portfolio.
These developments have been positively received by analysts, with both Piper Sandler and Wells Fargo emphasizing the potential of the company's Wrapsody stent system. Canaccord Genuity, while reducing its stock price target to $102 from $112, continues to recommend a Buy for the stock. These recent developments underline Merit Medical's ongoing growth and strategic direction.
InvestingPro Insights
Merit Medical Systems, Inc. (NASDAQ: MMSI) has shown a commitment to growth through strategic acquisitions, such as the recent purchase of assets from EndoGastric Solutions, Inc. With the aim of enriching its endoscopy offerings, this move is set to bolster Merit's position in the healthcare technology sector. As investors evaluate the implications of this acquisition, it's essential to consider the company's financial health and market performance.
InvestingPro data indicates that Merit Medical Systems has a market capitalization of approximately $4.99 billion, reflecting its significant presence in the market. The company's Price-to-Earnings (P/E) ratio stands at 48.14, which is high, suggesting that the stock is trading at a premium relative to its earnings. This could be attributed to the market's optimism about the company's future growth prospects, especially in light of its recent strategic moves.
The company has also displayed a solid revenue growth of 9.39% over the last twelve months as of Q1 2024, underlining its ability to increase sales and potentially enhance shareholder value. Additionally, Merit's gross profit margin is robust at 46.54%, which is indicative of its ability to maintain profitability amidst operational costs.
InvestingPro Tips for Merit Medical Systems reveal a mixed outlook. While analysts predict the company will be profitable this year, five analysts have revised their earnings downwards for the upcoming period. Moreover, the company is trading at a high earnings multiple and a high P/E ratio relative to near-term earnings growth, which could be a cause for caution among potential investors. Yet, it's worth noting that Merit's stock generally trades with low price volatility, and its liquid assets exceed short-term obligations, providing a degree of financial stability.
For those interested in a deeper analysis, InvestingPro offers additional insights on Merit Medical Systems. There are more InvestingPro Tips available, which could help investors make a more informed decision. To access these additional tips, consider subscribing to InvestingPro and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
As Merit Medical Systems continues to navigate through its growth initiatives, keeping an eye on these financial metrics and expert tips could offer valuable guidance for both current and potential investors.
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