- Q4 Revenue Growth: Total revenue reached $393.9M, up 11% YoY GAAP and 10% constant currency, exceeding high-end growth expectations.
- Non-GAAP EPS Outperformed: 12% growth in non-GAAP EPS, surpassing expectations, with a full-year margin of 20.3%.
- Free Cash Flow Record: Generated $74M in Q4 (13% YoY) and $216M annually in 2025 (16% YoY), driven by operational efficiency.
- Cardiovascular Segment Strength: 21% growth in Cardiac Intervention sales, with 12% overall organic growth in the segment.
- 2026 Guidance: Targets 5–7% organic constant currency growth, $4.01–$4.15 non-GAAP EPS, and over $400M cumulative free cash flow.
Segment Performance
The Cardiovascular segment was a key driver of growth, with sales exceeding the high end of expectations, driven by 21% growth in Cardiac Intervention product sales. The Endoscopy segment sales came in at the midpoint of expectations. The company's strong track record of growth is driven by a broad portfolio of products, including foundational products and therapeutic products, with the latter comprising 1/3 of total revenue and growing at a 19% CAGR over the last 3 years.
Guidance and Outlook
For 2026, Merit Medical is 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. The company's guidance assumes total GAAP net revenue growth in the range of 6% to 8% year-over-year and 5% to 7% year-over-year on a constant currency basis, with non-GAAP diluted earnings per share in the range of $4.01 to $4.15.
Valuation and Metrics
With a P/E Ratio of 36.59 and an EV/EBITDA of 17.26, the market appears to be pricing in a certain level of growth and profitability for Merit Medical Systems. The company's ROE of 8.52% and ROIC of 5.65% indicate a reasonable return on equity and invested capital, respectively. The Free Cash Flow Yield of 5.37% is also attractive, suggesting that the company is generating significant cash from its operations.
Key Drivers and Risks
The company's Rhapsody product, launched in the outpatient setting, is expected to contribute to growth, with market data providers reporting 100,000 stents implanted in approximately 77,000 procedures in 2023. However, the company faces risks, including the impact of tariffs on gross margin, with an expected 80 basis point effect. Additionally, the company's OEM business has been choppy, with a significant decline in Q4 due to inventory destocking, but is expected to normalize with a mid- to high single-digit growth rate.