MERIT MEDICAL SYSTEMS INC

Previous wording

For the three-month period ended March 31, 2025, we reported sales of $355.4 million, an increase of $31.8 million or 9.8% compared to sales for the three-month period ended March 31, 2024 of $323.5 million. Foreign currency fluctuations (net of hedging) decreased our net sales by $(3.4) million for the three-month period ended March 31, 2025, assuming applicable foreign exchange rates in effect during the comparable prior-year periods.

Current wording

For the three-month period ended June 30, 2025, we reported sales of $382.5 million, an increase of $44.5 million or 13.2% compared to sales for the three-month period ended June 30, 2024 of $338.0 million. For the six-month period ended June 30, 2025, we reported sales of $737.8 million, an increase of $76.3 million or 11.5%% compared to sales for the six-month period ended June 30, 2024 of $661.5 million. Foreign currency fluctuations (net of hedging) increased/(decreased) our net sales by $2.3 million and $(1.1) million for the three and six-month periods ended June 30, 2025, respectively, assuming applicable foreign exchange rates in effect during the comparable prior-year periods.

Previous wording

Sales for the three-month period ended March 31, 2025 increased by 9.8%, or $31.8 million, compared to the corresponding period in 2024. Listed below are the sales by product category within each of our financial reporting segments for the three-month periods ended March 31, 2025 and 2024 (in thousands, other than percentage changes):

Current wording

Sales for the three-month period ended June 30, 2025 increased by 13.2%, or $44.5 million, compared to the corresponding period in 2024. Sales for six-month period ended June 30, 2025 increased by 11.5%, or $76.3 million, compared to the corresponding period in 2024. Listed below are the sales by product category within each of our reportable segments for the three and six-month periods ended June 30, 2025 and 2024 (in thousands, other than percentage changes):

Previous wording

*Commencing January 1, 2025, we reorganized our sales teams and product categories to include the sale of our spine devices under our OEM product categories. Revenue figures for 2024 have been recast to reflect the realignment of Merit’s portfolio of spine products, representing approximately $5.3 million in revenue, within the OEM product category to provide comparability between the reported periods.

Current wording

*Commencing January 1, 2025, we reorganized our sales teams and product categories to include revenues from the sale of our spine devices under our OEM product category. Revenue figures for 2024 have been recast to reflect this realignment of our portfolio of spine products, representing approximately $5.7 million and $11.0 million in revenue for the three and six-month periods ended June 30, 2024, within the OEM product category to provide comparability between the reported periods.

Previous wording

Cardiovascular Sales. Our cardiovascular sales for the three-month period ended March 31, 2025 were $338.7 million, up 8.1% when compared to the corresponding period of 2024 of $313.4 million. Sales for the three-month period ended March 31, 2025 were favorably affected by increased sales of:

Current wording

Cardiovascular Sales. Our cardiovascular sales for the three-month period ended June 30, 2025 were $364.0 million, up 11.0% when compared to the corresponding period of 2024 of $327.8 million. Sales for the three-month period ended June 30, 2025 were favorably affected by increased sales of:

Previous wording

Endoscopy Sales. Our endoscopy sales for the three-month period ended March 31, 2025 were $16.6 million, up 64.2% when compared to sales in the corresponding period of 2024 of $10.1 million. Sales for the three-month period ended March 31, 2025 compared to the corresponding period in 2024 were favorably affected by $6.6 million in sales of the EsophyX® Z+ device acquired from EGS in July 2024.

Current wording

Endoscopy Sales. Our endoscopy sales for the three-month period ended June 30, 2025 were $18.4 million, up 81.0% when compared to sales in the corresponding period of 2024 of $10.2 million. Sales for the three-month period ended June 30, 2025 compared to the corresponding period in 2024 were favorably affected by $8.1 million in sales of the EsophyX® Z+ device acquired from EGS in July 2024.

Previous wording

Listed below are sales by geography for the three-month periods ended March 31, 2025 and 2024 (in thousands, other than percentage changes):

Current wording

Listed below are sales by geography for the three and six-month periods ended June 30, 2025 and 2024 (in thousands, other than percentage changes):

Previous wording

United States Sales.* *U.S. sales for the three-month period ended March 31, 2025 were $213.6 million, or 60.1% of net sales, up 14.8% when compared to the corresponding period of 2024. The increase in our domestic sales for the three-month period ended March 31, 2025, compared to the corresponding period of 2024 was driven primarily by our U.S. Direct, OEM and Endoscopy businesses.

Current wording

United States Sales.* *U.S. sales for the three-month period ended June 30, 2025 were $227.1 million, or 59.4% of net sales, up 16.7% when compared to the corresponding period of 2024. The increase in our domestic sales for the three-month period ended June 30, 2025, compared to the corresponding period of 2024 was driven primarily by our U.S. Direct, OEM and Endoscopy businesses.

Previous wording

International Sales. International sales for the three-month period ended March 31, 2025 were $141.8 million, or 39.9% of net sales, up 3.2% when compared to the corresponding period of 2024 of $137.4 million. The increase in our international sales for the three-month period ended March 31, 2025, compared to the corresponding period of 2024 included increased sales in our ROW operations of $2.4 million or 17.7% and our EMEA operations of $2.3 million or 3.7%, partially offset by decreased sales in our APAC operations of $(0.3) million or (0.5)%.

Current wording

International Sales. International sales for the three-month period ended June 30, 2025 were $155.4 million, or 40.6% of net sales, up 8.4% when compared to the corresponding period of 2024 of $143.3 million. The increase in our international sales for the three-month period ended June 30, 2025, compared to the corresponding period of 2024 included increased sales in our ROW operations of $2.0 million or 14.0% and our EMEA operations of $10.3 million or 16.5%, partially offset by decreased sales in our Asia Pacific (“APAC”) operations of $(0.2) million or (0.4)%.

Previous wording

Our gross profit as a percentage of sales increased to 48.4% for the three-month period ended March 31, 2025, compared to 46.9% for the three-month period ended March 31, 2024. The increase in gross profit percentage was primarily due to an increase in sales combined with favorable changes in product mix, partially offset by higher intangible amortization expense as a percentage of sales associated with acquisitions.

Current wording

Our gross profit as a percentage of sales increased to 48.2% for the three-month period ended June 30, 2025, compared to 47.7% for the three-month period ended June 30, 2024. The increase in gross profit percentage was primarily due to an increase in sales combined with favorable changes in product mix, partially offset by higher intangible amortization expense as a percentage of sales associated with acquisitions.

Previous wording

Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expenses increased $13.1 million, or 13.8%, for the three-month period ended March 31, 2025 compared to the corresponding period of 2024. As a percentage of sales, SG&A expenses were 30.2% for the three-month period ended March 31, 2025, compared to 29.2% for the corresponding period of 2024. For the three-month period ended March 31, 2025, SG&A expenses increased compared to the corresponding period of 2024, primarily due to an increase in labor-related costs associated with headcount additions, including those in connection with the EGS and Cook Acquisitions, and increased advertising and promotional expenses.

Current wording

Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expenses increased $18.5 million, or 19.6%, for the three-month period ended June 30, 2025 compared to the corresponding period of 2024. As a percentage of sales, SG&A expenses were 29.6% for the three-month period ended June 30, 2025, compared to 28.0% for the corresponding period of 2024. SG&A expenses increased $31.6 million, or 16.7%, for the six-month period ended June 30, 2025 compared to the corresponding period of 2024. As a percentage of sales, SG&A expenses were 29.9%% for the six-month period ended June 30, 2025, compared to 28.6%% for the corresponding period of 2024. For the three and six-month periods ended June 30, 2025, SG&A expenses increased compared to the corresponding periods of 2024, primarily due to an increase in labor-related costs associated with headcount additions, including those in connection with the EGS, Cook and Biolife Acquisitions, and increased travel and entertainment and advertising and promotional expenses.

Previous wording

Research and Development Expenses. Research and development (”R&D”) expenses for the three-month period ended March 31, 2025 were $22.5 million, up 4.6%, when compared to R&D expenses in the corresponding period of 2024 of $21.5 million. For the three-month period ended March 31, 2025, R&D expenses increased compared to the corresponding period of 2024 primarily due to increased R&D activity, partially offset by a decrease in regulatory costs associated with clinical trials.

Current wording

Research and Development Expenses. Research and development (”R&D”) expenses for the three-month period ended June 30, 2025 were $24.4 million, up 20.3%, when compared to R&D expenses in the corresponding period of 2024 of $20.3 million. R&D expenses for the six-month period ended June 30, 2025 were $46.8 million, up 12.2%, when compared to R&D expenses in the corresponding period of 2024 of $41.7 million. For the three and six-month periods ended June 30, 2025, R&D expenses increased compared to the corresponding periods of 2024 primarily due to increased R&D activity and regulatory costs associated with clinical trials.

Previous wording

Contingent Consideration Expense (Benefit). For the three-month period ended March 31, 2025, we recognized contingent consideration expense from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions of $1.0 million, compared to contingent consideration benefit of $ (0.1) million for the three-month period ended March 31, 2024. Expense (benefit) in each period related to changes in the probability and timing of achieving certain revenue and operational milestones, as well as expense for the passage of time.

Current wording

Contingent Consideration Expense. For the three and six-month periods ended June 30, 2025, we recognized contingent consideration expense from changes in the estimated fair value of our contingent consideration obligations stemming from our previously disclosed business acquisitions of $0.1 million and $1.2 million, compared to contingent consideration expense of $0.3 million and $0.2 million for the three and six-month periods ended June 30, 2024. Expense in each period related to changes in the probability and timing of achieving certain revenue and operational milestones, as well as expense for the passage of time.

Previous wording

The following table sets forth our operating income by financial reporting segment for the three-month periods ended March 31, 2025 and 2024 (in thousands):

Current wording

The following table sets forth our operating income by financial reporting segment for the three and six-month periods ended June 30, 2025 and 2024 (in thousands):

Previous wording

Cardiovascular Operating Income. Our cardiovascular operating income for the three-month period ended March 31, 2025 was $38.5 million, compared to cardiovascular operating income in the corresponding period of 2024 of $32.9 million. The increase in cardiovascular operating income during the three-month period ended March 31, 2025 compared to the corresponding period of 2024 was primarily a result of higher sales ($338.7 million compared to $313.4 million) and higher gross margin, partially offset by higher SG&A, R&D and contingent consideration expenses.

Current wording

Cardiovascular Operating Income. Our cardiovascular operating income for the three-month period ended June 30, 2025 was $41.2 million, compared to cardiovascular operating income in the corresponding period of 2024 of $42.9 million. The decrease in cardiovascular operating income during the three-month period ended June 30, 2025 compared to the corresponding period of 2024 was primarily a result of increased SG&A and R&D expense, partially offset by increased sales ($364.0 million compared to $327.8 million) and gross margin.

Previous wording

Endoscopy Operating Income*.* Our endoscopy operating income for the three-month period ended March 31, 2025 was $2.5 million, compared to endoscopy operating income of $3.0 million for the corresponding period of 2024. The decrease in endoscopy operating income for the three-month period ended March 31, 2025 compared to the corresponding period of 2024 was primarily a result of a lower gross margin due to increased amortization expense associated with the EGS acquisition and increased SG&A expenses associated with higher labor related costs due to headcount additions in connection with the integration activities for the EGS Acquisition, partially offset by increased sales.

Current wording

Endoscopy Operating Income*.* Our endoscopy operating income for the three-month period ended June 30, 2025 was $5.6 million, compared to endoscopy operating income of $3.0 million for the corresponding period of 2024. Our endoscopy operating income for the six-month period ended June 30, 2025 was $8.1 million, compared to endoscopy operating income of $6.0 million for the corresponding period of 2024. The increase in endoscopy operating income for the three and six-month periods ended June 30, 2025 compared to the corresponding periods of 2024 was primarily a result of increased sales and gross margin, partially offset by increased SG&A expenses associated with higher labor related costs due to headcount additions in connection with the integration activities for the EGS Acquisition.

Previous wording

Our other expense for the three-month periods ended March 31, 2025 and 2024 was $3.1 million and $1.6 million, respectively. The increase in other expense for the three-month period ended March 31, 2025 compared to the corresponding period of 2024 were primarily related to decreased interest income associated with reduced cash and cash equivalent balances, partially offset by a decrease in interest expense as a result of having no outstanding amounts due under the term loan of our Amended Fourth A&R Credit Agreement for the three-month period ended March 31, 2025.

Current wording

Our other expense for the three months ended June 30, 2025 and 2024 was $3.5 million and $0.1 million, respectively. Our other expense for the six-month periods ended June 30, 2025 and 2024 was $6.6 million and $1.7 million, respectively. The increase in other expense for the three and six-month periods ended June 30, 2025 compared to the corresponding periods of 2024 were primarily related to decreased interest income associated with reduced cash and cash equivalent balances, partially offset by a decrease in interest expense as a result of having no outstanding amounts due under the term loan of our Amended Fourth A&R Credit Agreement for the three and six-month periods ended June 30, 2025.

Previous wording

Our provision for income taxes for the three-month periods ended March 31, 2025 and 2024 was a tax expense of $7.8 million and $6.1 million, respectively, which resulted in an effective tax rate of 20.6% and 17.8%, respectively. The increase in the effective income tax rate for the three-month period ended March 31, 2025, when compared to the prior-year period, was primarily due to decreased benefit from discrete items such as deferred compensation and the impact of increased foreign income inclusions.

Current wording

Our provision for income taxes for the three-month periods ended June 30, 2025 and 2024 was a tax expense of $10.8 million and $10.1 million, respectively, which resulted in an effective tax rate of 24.9% and 22.1%, respectively. Our provision for income taxes for the six-month periods ended June 30, 2025 and 2024 was a tax expense of $18.6 million and $16.2 million, respectively, which resulted in an effective tax rate of 22.9% and 20.2%, respectively. The increase in the effective income tax rate and income tax expense for the three and six-month periods ended June 30, 2025, when compared to the prior-year periods, was primarily due to decreased benefit from discrete items such as share-based compensation and contingent liabilities and increased permanent tax differences in foreign jurisdictions.

Previous wording

Our net income for the three-month periods ended March 31, 2025 and 2024 was $30.1 million and $28.2 million, respectively. The increase in our net income for the three-month period ended March 31, 2025 was the result of several principal factors, including higher sales and gross margin, partially offset by higher SG&A and R&D expenses, contingent consideration expense, other expenses and income tax expense.

Current wording

Our net income for the three-month periods ended June 30, 2025 and 2024 was $32.6 million and $35.7 million, respectively. The decrease in our net income for the three-month period ended June 30, 2025 was the result of several principal factors, including increased SG&A and R&D expenses, other expenses, and income tax expense, partially offset by increased sales and gross margin.

Previous wording

As of March 31, 2025 and December 31, 2024, our current assets exceeded current liabilities by $761.8 million and $707.4 million, respectively, and we had cash, cash equivalents and restricted cash of $397.6 million and $378.8 million, respectively, of which $57.2 million and $50.6 million, respectively, were held by foreign subsidiaries. We currently believe future repatriation of cash and other property held by our foreign subsidiaries will generally not be subject to U.S. federal income tax. As a result, we are not permanently reinvested with respect to our historic unremitted foreign earnings. In addition, cash held by our subsidiary in China is subject to local laws and regulations that require government approval for the transfer of such funds to entities located outside of China. As of March 31, 2025, and December 31, 2024, we had cash, cash equivalents and restricted cash of $21.5 million and $18.1 million, respectively, within our subsidiary in China.

Current wording

As of June 30, 2025 and December 31, 2024, our current assets exceeded current liabilities by $697.5 million and $707.4 million, respectively, and we had cash, cash equivalents and restricted cash of $343.9 million and $378.8 million, respectively, of which $69.7 million and $50.6 million, respectively, were held by foreign subsidiaries. We currently believe future repatriation of cash and other property held by our foreign subsidiaries will generally not be subject to U.S. federal income tax. As a result, we are not permanently reinvested with respect to our historic unremitted foreign earnings. In addition, cash held by our subsidiary in China is subject to local laws and regulations that require government approval for the transfer of such funds to entities located outside of China. As of June 30, 2025, and December 31, 2024, we had cash, cash equivalents and restricted cash of $29.2 million and $18.1 million, respectively, within our subsidiary in China.

Previous wording

Cash flows provided by operating activities*.* We generated cash from operating activities of $40.6 million and $36.2 million during the three-month periods ended March 31, 2025 and 2024, respectively. Significant factors affecting operating cash flows during these periods included:

Current wording

Cash flows provided by operating activities*.* We generated cash from operating activities of $123.9 million and $104.7 million during the six-month periods ended June 30, 2025 and 2024, respectively. Significant factors affecting operating cash flows during these periods included:

Previous wording

Cash flows used in investing activities. We used cash in investing activities of $29.6 million and $22.1 million for the three-month periods ended March 31, 2025 and 2024, respectively. We used cash for capital expenditures of property and equipment of $21.1 million and $11.7 million in the three-month periods ended March 31, 2025 and 2024, respectively. Capital expenditures in each period were primarily related to investments in property and equipment to support development and production of our products, and in 2025 includes costs for the construction of a new distribution facility in South Jordan, Utah. Historically, we have incurred significant expenses in connection with facility construction, production automation, product development and the introduction of new products. We anticipate that we will spend approximately $90 to $100 million in 2025 for property and equipment.

Current wording

Cash flows used in investing activities. We used cash in investing activities of $173.0 million and $38.5 million for the six-month periods ended June 30, 2025 and 2024, respectively. We used cash for capital expenditures of property and equipment of $34.8 million and $22.3 million in the six-month periods ended June 30, 2025 and 2024, respectively. Capital expenditures in each period were primarily related to investments in property and equipment to support development and production of our products, and in 2025 includes costs for the construction of a new distribution facility in South Jordan, Utah. Historically, we have incurred significant expenses in connection with facility construction, production automation, product development and the introduction of new products. We anticipate that we will spend approximately $90 to $100 million in 2025 for property and equipment.

Previous wording

Cash outflows for the acquisition of equity investments and issuance of notes receivable were $7.1 million and $6.5 million for the three-month periods ended March 31, 2025 and 2024, respectively. Cash outflows invested in acquisitions were $1.0 million for the three-month period ended March 31, 2025 and were related to the first deferred payment from our asset purchase agreement with SSI. Cash outflows invested in acquisitions were $3.0 million for the three months ended March 31, 2024 and were related to the initial payment for the acquisition of assets from SSI.

Current wording

Cash outflows for the acquisition of equity investments and issuance of notes receivable were $14.6 million and $9.7 million for the six-month periods ended June 30, 2025 and 2024, respectively. Cash outflows invested in acquisitions were $122.6 million for the six-month period ended June 30, 2025 and were primarily related to the acquisition of Biolife in May 2025. Cash outflows invested in acquisitions were $4.9 million for the six-month period ended June 30, 2024 and were related to the initial payment for the acquisition of assets from SSI and a deferred payment for the acquisition of assets from Restore Endosystems.

Previous wording

Cash flows provided by (used in) financing activities. Cash provided by (used in) financing activities for the three-month periods ended March 31, 2025 and 2024 was $7.0 million and $(18.0) million, respectively. For the three-month period ended March 31, 2024, we had cash used in financing activities primarily attributable to repayment of net borrowings under our Amended Fourth A&R Credit Agreement in an aggregate amount of $24.1 million. We had cash proceeds from the issuance of Common Stock of $13.2 million and $7.7 million for the three-month periods ended March 31, 2025 and 2024, respectively, related to the exercise of non-qualified stock options.

Current wording

Cash flows provided by (used in) financing activities. Cash provided by (used in) financing activities for the six-month periods ended June 30, 2025 and 2024 was $11.3 million and $(14.9) million, respectively. For the six-month period ended June 30, 2024, we had cash used in financing activities primarily attributable to repayment of net borrowings under our Amended Fourth A&R Credit Agreement in an aggregate amount of $24.1 million. We had cash proceeds from the issuance of Common Stock of $20.0 million and $10.9 million for the six-month periods ended June 30, 2025 and 2024, respectively, related to the exercise of non-qualified stock options.

Previous wording

Our financial results are affected by the selection and application of accounting policies and methods. In the three-month period ended March 31, 2025 there were no changes to the application of critical accounting policies previously disclosed in Part II, Item 7 of our 2024 Annual Report on Form 10-K.

Current wording

Our financial results are affected by the selection and application of accounting policies and methods. In the six-month period ended June 30, 2025 there were no changes to the application of critical accounting policies previously disclosed in Part II, Item 7 of our 2024 Annual Report on Form 10-K.

Previous wording

The following are some of the important risks and uncertainties that could cause our actual results to differ from our expectations in any forward-looking statements: inherent risks and uncertainties associated with Merit’s integration of businesses or products acquired from third parties, including the businesses and products acquired from Cook Medical Holdings LLC in November 2024 and from EndoGastric Solutions, Inc. in July 2024, and Merit’s ability to achieve the anticipated financial results, product development and other anticipated benefits of such acquisitions; shifts in trade policies in the U.S. or other countries, including new or modified tariffs or other measures; effects of the Convertible Notes on Merit’s net income and earnings per share performance; disruptions in Merit’s supply chain, manufacturing or sterilization processes; U.S. and global political, economic, competitive, reimbursement and regulatory conditions; 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; fluctuations in interest or foreign currency exchange rates and inflation; cybersecurity events; 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 judicial proceedings affecting Merit; consequences associated with a Corporate Integrity Agreement executed between Merit and the U.S. Department of Justice; 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 our 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

Current wording

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; fluctuations in interest or foreign currency exchange rates and inflation; cybersecurity events; 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; modification or limitation of, or policies and procedures associated with, governmental or private insurance reimbursement policies; litigation and other judicial proceedings affecting Merit; consequences associated with a Corporate Integrity Agreement executed between Merit and the U.S. Department of Justice; 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 our 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 affecting our business, see Part I, Item 1A. “Risk Factors” in our 2024 Annual Report on Form 10-K filed with the SEC, which we (i) updated in Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, (ii) update in Part II, Item 1A. “Risk Factors” in this report, and (iii) may further update in subsequent Quarterly Reports on Form 10-Q that we will file hereafter.