Merit Medical Systems Eyes New Long-Range Plan as Growth, Margins Gain Momentum

Merit Medical Systems is preparing its next long-range plan as the medical-device company works through a leadership transition, updates its reporting structure and seeks to build on recent revenue and margin momentum. Speaking at Bank of America’s virtual SMID Cap event, Chief Financial Officer and Treasurer Raul Parra said Merit operates primarily across interventional radiology, cardiac, endoscopy and breast oncology. He described the company’s differentiators as customer focus, product development, acquisitions, vertical integration, global reach and product quality. Parra said the company’s organizational changes began more than five years ago under its “Foundations for Growth” initiative, which was designed in part to prepare for founder Fred Lampropoulos’ retirement. With CEO Martha now in place, Merit is placing greater emphasis on accountability across eight business platforms. Merit recently reorganized its external reporting into Foundational and Therapeutic product categories. Parra said the change was intended to better align external disclosures with how the company operates internally and to help investors understand the procedures, call points and sources of growth across the business. The Foundational business, which represents about two-thirds of company revenue, includes therapeutic-enabling products such as access, delivery and closure devices. Therapeutics has been growing faster, according to Parra, but the two portfolios remain complementary rather than competing priorities for investment. Therapeutics posted a three-year compound annual growth rate of about 10%, according to Parra. Foundational products grew at roughly 6% over the same period. Parra said both segments have stronger gross-margin characteristics than investors may expect, with Therapeutics retaining the higher gross margin. The company is conducting a deep review of its operations as it develops its next long-range plan, which Parra said could be announced with the fourth-quarter earnings call or potentially earlier. Management is evaluating whether to present the plan through an earnings call or a separate investor event, potentially in Utah or New York. Merit has focused its prior plans on revenue growth, operating-margin expansion and free cash flow. Parra said operating margin expanded about 850 basis points from December 2019 through December 2025, and could reach roughly 950 basis points if the company achieves the high end of its current CGI goals by the end of 2026. While Parra said the company sees further opportun...