Merit Medical Systems Inc. (MMSI, Financial) filed Annual Report for the period ended 2011-12-31.
Merit Medical has a market cap of $522.3 million; its shares were traded at around $12.61 with a P/E ratio of 15.9 and P/S ratio of 1.5. Merit Medical had an annual average earning growth of 6.3% over the past 10 years. GuruFocus rated Merit Medical the business predictability rank of 2.5-star.
International sales for the year ended December 31, 2011 were approximately $125.9 million, or 35% of total sales; international sales for the year ended December 31, 2010 were approximately $95.2 million, or 32% of total sales; international sales in 2009 were approximately $86.4 million, or 34% of total sales. The increase in our international sales during 2011 was primarily related to increased sales in Europe Direct of approximately $9.7 million, up 31%, China sales of approximately $8.1 million, up 66%, EMEA distributor sales of approximately $5.6 million, up 46%, and Pacific Rim sales (excluding China) of approximately $4.8 million, up 21%. The increase in our international sales during 2010 was primarily related to increased sales in China, Japan, Germany and the U.K. The previous increase in 2009 over 2008 primarily resulted from greater acceptance of our products in international markets, continued growth in our European direct sales, and to a lesser degree, increased sales related to improvement in the exchange rate between the Euro and the U.S. Dollar, as discussed above. Our total European direct sales were approximately $39.9 million, $29.7 million, and $26.3 million in 2011, 2010, and 2009, respectively.
Our selling, general and administrative expenses increased approximately $16.9 million, or 19%, in 2011 compared to 2010; approximately $22.8 million, or 35%, in 2010 compared to 2009; and approximately $11.7 million, or 22%, in 2009 compared to 2008. The increase in selling, general and administrative expenses in 2011 was primarily related to the addition of sales and marketing employees, trade shows, commissions and amortization of intangibles relating to the BioSphere acquisition and starting up our Chinese distribution system. The increase in selling, general and administrative expenses in 2010 was largely the result of our acquisition of BioSphere in September 2010 and subsequent integration expenses (including additional sales representatives, marketing support and advertising costs). In connection with the BioSphere acquisition, we had approximately $2.8 million in non-recurring severance costs and approximately $2.5 million in acquisition costs included in selling, general and administrative expenses. The increased selling, general and administrative expenses in 2009 were primarily due to the increased expense associated with our acquisition and operation of the business and assets acquired from Alveolus of approximately $5.7 million and the hiring of additional domestic and international sales representatives. Selling, general and administrative expenses as a percentage of sales was 29.1%, 29.5% (27.8% without non-recurring BioSphere acquisition costs), and 25.2% in 2011, 2010 and 2009, respectively.
Research and development expenses increased by 43.1% to approximately $21.9 million in 2011, compared to approximately $15.3 million in 2010. This increase was primarily related to headcount additions to support various new product launches, regulatory costs for seeking product approvals from the U.S. Food and Drug Administration (the āFDAā) and international regulatory agencies, additional regulatory costs incurred for the start-up of our Hi-Quality clinical trial and the development of several new products for our endoscopy product line. Research and development expenses increased 37% to approximately $15.3 million in 2010, compared to approximately $11.2 million in 2009. The increase in research and development expenses in 2010 was primarily the result of product development initiatives for the endoscopy business segment and embolization devices acquired from BioSphere, as well as related regulatory support. Research and development increased 22% to approximately $11.2 million in 2009, compared to approximately $9.2 million in 2008. The increase in research and development expenses in 2009 related, in large part, to research and development project expenses for the Alveolus business we acquired in March 2009 and to growth in our traditional organic research and development projects, some of which are nearing completion. Our research and development expenses as a percentage of sales were 6.1% for 2011, 5.2% for 2010, and 4.3% for 2009. We have a pipeline of new products
Our net income for 2011, 2010, and 2009 was approximately $23.0 million, $12.5 million, and $22.5 million respectively. Our 2011 net income included charges related to acquired in-process research and development of approximately $5.8 million, or approximately $3.6 million net of tax, and an increase in the cost of goods sold related to BioSphere s mark-up on finished goods of approximately $724,000, or approximately $442,000 net of tax. Excluding these charges, our 2011 net income would have been approximately $27.0 million, compared to net income for 2010 of approximately $22.0 million, adjusted for non-recurring charges related to goodwill impairment of approximately $5.2 million, net of tax and BioSphere acquisition costs including legal, accounting investment banking, severance and stepped-up inventory costs, net of tax of approximately $4.3 million. This increase in net income was primarily related to increased sales volumes, higher gross margins and a lower effective income tax rate, all of which offset higher selling, general and administrative expenses and research and development expenses and acquired in-process research and development expenses. Net income for 2010 was unfavorably affected by the goodwill impairment of approximately $8.3 million, or approximately $5.2 million net of tax, related to our endoscopy reporting unit. In addition, 2010 net income was negatively affected by BioSphere acquisition costs of approximately $2.5 million, or approximately $1.5 million net of tax, BioSphere severance costs of approximately $2.8 million, or approximately $1.7 million net of tax, and BioSphere s increase in the cost of goods sold related to mark-up on finished goods of approximately $1.7 million, or approximately $1.1 million net of tax. Net income for 2009 was favorably affected by increased sales volumes, higher gross margins and a lower effective income tax rate, all of which offset higher selling, general and administrative expenses and research and development expenses, primarily associated with our acquisition of the Alveolus assets in the first quarter of 2009.
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Merit Medical has a market cap of $522.3 million; its shares were traded at around $12.61 with a P/E ratio of 15.9 and P/S ratio of 1.5. Merit Medical had an annual average earning growth of 6.3% over the past 10 years. GuruFocus rated Merit Medical the business predictability rank of 2.5-star.
Highlight of Business Operations:
Cardiovascular Sales. Our cardiovascular sales for the year ended December 31, 2011 were approximately $347.4 million, up 20.8%, when compared to the comparable period for 2010 of approximately $287.7 million. Sales were favorably affected by an increase in sales of our embolization devices of approximately $22.2 million, or 7.7%; an increase in sales of our stand-alone devices (particularly our Merit LaureateĀ® Hydrophilic guide wire, hemostasis valves and manifolds) of approximately $13.4 million, or 4.7%; and increased sales of catheter devices (particularly our PreludeĀ® sheath product line, aspiration catheter product line and diagnostic catheter product line) of approximately $10.5 million, or 3.6%. Our cardiovascular sales for 2010 of approximately $287.7 million, compared to 2009 cardiovascular sales of $249.8 million, were up $37.9 million or approximately 15%. This improvement was largely the result of an increase in sales of $22.2 million, or 9.5% of sales, related to our base business (which excludes EN SnareĀ® and embolization devices sales); our acquisition of embolization devices from BioSphere of approximately $9.0 million, or 3.6% of sales; and approximately $6.7 million, or 2.7% of sales, related to the EN SnareĀ® products we acquired from Hatch Medical, L.L.C., a Georgia limited liability company, (āHatchā) in June of 2009. Our growth in the cardiovascular business segment was favorably affected by increased sales of our base business growth of custom kits and procedure trays of approximately $8.3 million, or 3.3% of base business sales, catheters (particularly our PreludeĀ® sheath product line, micro access catheter product line and new microcatheter product line) of approximately $6.7 million, or 2.7% of base business sales, and our stand-alone devices (particularly our hemostasis valves and stopcocks) of approximately $5.8 million, or 2.3% of base business sales (excludes approximately $6.7 million in EN SnareĀ® sales). Our sales increased during 2011, 2010, and 2009 notwithstanding the fact that the markets for many of our products experienced slight pricing declines as our customers tried toInternational sales for the year ended December 31, 2011 were approximately $125.9 million, or 35% of total sales; international sales for the year ended December 31, 2010 were approximately $95.2 million, or 32% of total sales; international sales in 2009 were approximately $86.4 million, or 34% of total sales. The increase in our international sales during 2011 was primarily related to increased sales in Europe Direct of approximately $9.7 million, up 31%, China sales of approximately $8.1 million, up 66%, EMEA distributor sales of approximately $5.6 million, up 46%, and Pacific Rim sales (excluding China) of approximately $4.8 million, up 21%. The increase in our international sales during 2010 was primarily related to increased sales in China, Japan, Germany and the U.K. The previous increase in 2009 over 2008 primarily resulted from greater acceptance of our products in international markets, continued growth in our European direct sales, and to a lesser degree, increased sales related to improvement in the exchange rate between the Euro and the U.S. Dollar, as discussed above. Our total European direct sales were approximately $39.9 million, $29.7 million, and $26.3 million in 2011, 2010, and 2009, respectively.
Our selling, general and administrative expenses increased approximately $16.9 million, or 19%, in 2011 compared to 2010; approximately $22.8 million, or 35%, in 2010 compared to 2009; and approximately $11.7 million, or 22%, in 2009 compared to 2008. The increase in selling, general and administrative expenses in 2011 was primarily related to the addition of sales and marketing employees, trade shows, commissions and amortization of intangibles relating to the BioSphere acquisition and starting up our Chinese distribution system. The increase in selling, general and administrative expenses in 2010 was largely the result of our acquisition of BioSphere in September 2010 and subsequent integration expenses (including additional sales representatives, marketing support and advertising costs). In connection with the BioSphere acquisition, we had approximately $2.8 million in non-recurring severance costs and approximately $2.5 million in acquisition costs included in selling, general and administrative expenses. The increased selling, general and administrative expenses in 2009 were primarily due to the increased expense associated with our acquisition and operation of the business and assets acquired from Alveolus of approximately $5.7 million and the hiring of additional domestic and international sales representatives. Selling, general and administrative expenses as a percentage of sales was 29.1%, 29.5% (27.8% without non-recurring BioSphere acquisition costs), and 25.2% in 2011, 2010 and 2009, respectively.
Research and development expenses increased by 43.1% to approximately $21.9 million in 2011, compared to approximately $15.3 million in 2010. This increase was primarily related to headcount additions to support various new product launches, regulatory costs for seeking product approvals from the U.S. Food and Drug Administration (the āFDAā) and international regulatory agencies, additional regulatory costs incurred for the start-up of our Hi-Quality clinical trial and the development of several new products for our endoscopy product line. Research and development expenses increased 37% to approximately $15.3 million in 2010, compared to approximately $11.2 million in 2009. The increase in research and development expenses in 2010 was primarily the result of product development initiatives for the endoscopy business segment and embolization devices acquired from BioSphere, as well as related regulatory support. Research and development increased 22% to approximately $11.2 million in 2009, compared to approximately $9.2 million in 2008. The increase in research and development expenses in 2009 related, in large part, to research and development project expenses for the Alveolus business we acquired in March 2009 and to growth in our traditional organic research and development projects, some of which are nearing completion. Our research and development expenses as a percentage of sales were 6.1% for 2011, 5.2% for 2010, and 4.3% for 2009. We have a pipeline of new products
Our net income for 2011, 2010, and 2009 was approximately $23.0 million, $12.5 million, and $22.5 million respectively. Our 2011 net income included charges related to acquired in-process research and development of approximately $5.8 million, or approximately $3.6 million net of tax, and an increase in the cost of goods sold related to BioSphere s mark-up on finished goods of approximately $724,000, or approximately $442,000 net of tax. Excluding these charges, our 2011 net income would have been approximately $27.0 million, compared to net income for 2010 of approximately $22.0 million, adjusted for non-recurring charges related to goodwill impairment of approximately $5.2 million, net of tax and BioSphere acquisition costs including legal, accounting investment banking, severance and stepped-up inventory costs, net of tax of approximately $4.3 million. This increase in net income was primarily related to increased sales volumes, higher gross margins and a lower effective income tax rate, all of which offset higher selling, general and administrative expenses and research and development expenses and acquired in-process research and development expenses. Net income for 2010 was unfavorably affected by the goodwill impairment of approximately $8.3 million, or approximately $5.2 million net of tax, related to our endoscopy reporting unit. In addition, 2010 net income was negatively affected by BioSphere acquisition costs of approximately $2.5 million, or approximately $1.5 million net of tax, BioSphere severance costs of approximately $2.8 million, or approximately $1.7 million net of tax, and BioSphere s increase in the cost of goods sold related to mark-up on finished goods of approximately $1.7 million, or approximately $1.1 million net of tax. Net income for 2009 was favorably affected by increased sales volumes, higher gross margins and a lower effective income tax rate, all of which offset higher selling, general and administrative expenses and research and development expenses, primarily associated with our acquisition of the Alveolus assets in the first quarter of 2009.
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