MMSI Q2 Deep Dive: Execution on Cardiac and Hemostatic Growth, Reimbursement Delay for WRAPSODY

Medical device company Merit Medical Systems (NASDAQ:MMSI) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 13.2% year on year to $382.5 million. The company’s full-year revenue guidance of $1.50 billion at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $1.01 per share was 18.6% above analysts’ consensus estimates.

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StockStory’s Take

Merit Medical Systems delivered a second quarter that exceeded Wall Street’s expectations, driven by strong performances in its Cardiovascular and Endoscopy segments. Management highlighted that U.S. demand, particularly within cardiac intervention products, outpaced expectations, supported by successful integration of recent acquisitions. CEO Fred Lampropoulos pointed to the company’s “continued strong momentum,” attributing the results to effective sales execution and targeted product expansion. This quarter also saw significant contributions from Biolife’s hemostatic portfolio, as Merit continued to broaden its clinical offerings, while ongoing cost discipline helped offset tariff headwinds and margin pressures.

Looking ahead, Merit Medical Systems’ updated guidance reflects confidence in continued organic and acquired growth, while acknowledging a two-quarter delay in outpatient reimbursement for the WRAPSODY CIE device. Management expects commercial traction for this product to accelerate once reimbursement is secured, stating, “We have high confidence in the product and its long-term opportunity.” The company’s outlook is also shaped by ongoing efforts to manage tariff uncertainty, maintain premium pricing strategies, and integrate new acquisitions like Biolife into its broader commercial platform. Investments in sales force training and operational efficiency are expected to support sustained margin performance despite persistent external challenges.

Key Insights from Management’s Remarks

Management attributed the quarter’s revenue outperformance to robust cardiac intervention growth, integration of new acquisitions, and steady execution in the U.S. market. Recent strategic moves and reimbursement delays also shaped both the quarter and forward guidance.

• Cardiac intervention momentum: Internal product development and the Cook Medical acquisition drove double-digit growth in cardiac intervention, with management citing greater presence in hospital labs and strong salesforce engagement as key contributors.
• Biolife acquisition impact: The $120 million acquisition of Biolife added patented hemostatic products like StatSeal and WoundSeal to the portfolio, expanding Merit’s reach in post-procedure care. Management believes these products will benefit from Merit’s broader distribution, especially internationally where Biolife previously had no footprint.
• Endoscopy segment acceleration: Endoscopy sales grew sharply, with both acquired and organic products contributing. The integration of EndoGastric Solutions’ assets provided additional tailwinds, although organic growth in this segment was more modest.
• Tariff management and margin discipline: The company mitigated part of the tariff impact through product mix, pricing strategies, and operational adjustments. While tariffs remain a moving target, CFO Raul Parra highlighted ongoing efforts to offset cost pressures through nimble supply chain actions.
• WRAPSODY CIE reimbursement delay: A misstep in the outpatient reimbursement application process resulted in a two-quarter delay for WRAPSODY CIE add-on payments. Management owned the mistake and is now pursuing the appropriate path, with confidence that the device’s clinical benefits and premium positioning will drive future adoption once reimbursement is secured.

Drivers of Future Performance

Merit Medical’s outlook for the remainder of the year is shaped by product launches, reimbursement milestones, and ongoing tariff and macroeconomic uncertainty.

• WRAPSODY commercial adoption: The timing of add-on reimbursement for WRAPSODY CIE in the outpatient setting will be a key determinant of growth. Management expects accelerated adoption and utilization once reimbursement is approved, but has adjusted guidance to reflect the delay.
• Continued integration of acquisitions: New products from Biolife and Cook Medical are expected to drive incremental revenue, especially as Merit leverages its salesforce to expand distribution both in the U.S. and internationally. The company is focused on maximizing cross-selling opportunities and realizing operational synergies.
• Margin and tariff management: The company’s ability to sustain operating margins will depend on managing unpredictable tariff costs and maintaining pricing discipline. Management noted that ongoing supply chain adjustments and cost control initiatives are designed to provide flexibility against potential regulatory or economic disruptions.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) progress on securing outpatient reimbursement for WRAPSODY CIE and its impact on adoption rates, (2) successful integration and revenue contribution from recent acquisitions like Biolife, and (3) Merit’s ability to sustain margin performance amid ongoing tariff and macroeconomic fluctuations. Execution on pricing strategies and commercial expansion will also be important markers of underlying business health.

Merit Medical Systems currently trades at $84.51, up from $82.91 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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