Merit Medical (NSDQ:MMSI) shares lost more than a quarter of their value today after the medical device maker missed the consensus for its second-quarter sales and earnings and lowered its outlook on the rest of the year.
South Jordan, Utah-based Merit posted profits of $6.9 million, or 12¢ per share, on sales of $255.5 million for the three months ended June 30, amounting to a -37.3% bottom-line slide on sales growth of 13.7% compared with Q2 2018.
Adjusted to exclude one-time items, earnings per share were 42¢, 8¢ below the consensus on Wall Street, where analysts were expecting revenues of $258.6 million.
“There were a number of factors affecting revenues and gross margins during the second quarter,” founder, chairman & CEO Fred Lampropoulos said in prepared remarks. “The shortfall in revenue involved foreign exchange, slower-than-anticipated conversion and uptake of acquired products such as the Vascular Insights (ClariVein) product line and some products from the BD acquisition. Additionally, we saw sales of legacy products increase more than expected. Of course the combination of lower-than-expected revenues and the mix resulted in lower gross margins. The silver lining is the core growth and the management of SG&A expenses which were in line with our expectations.
“We have modified our gross margin projections to reflect the adjustments to various factors that we do not control and also to the expected sales of our legacy products due to the aforementioned GPO and business opportunities for our fluid management business,” Lampropoulos continued. “We believe this is the appropriate manner to serve our customers who have few choices for access to the product lines Merit offers. We cannot imagine telling customers that we cannot help them. Having a long-term strategy has always been the hallmark of our business success. We will continue to serve and meet the demands of our customers.”
Merit said it now expects to report adjusted EPS of $1.74 to $1.97, down from $1.97 to $2.08 previously, on sales of $1.007 billion to $1.029 million, compared with prior guidance of $1.011 billion to $1.03 billion.
MMSI shares were off -26.6% to $40.24 apiece today in late-morning trading.
