GlobeNewswire Inc | Oct 28, 2020 04:05PM EDT

October 28, 2020

-- Q3 2020 worldwide revenue of $244.0 million, up 0.4% as reported compared to Q3 2019 -- Q3 2020 core revenue on a constant currency basis* down (0.1)% compared to Q3 2019 -- Q3 2020 GAAP loss per share of $(0.05), compared to $(0.06) in Q3 2019 -- Q3 2020 non-GAAP EPS* of $0.42, compared to $0.28 in Q3 2019

*Core revenue on a constant currency basis, non-GAAP EPS, non-GAAP net income, non-GAAP operating margin, non-GAAP gross margin and free cash flow are non-GAAP financial measures. A reconciliation of these and other non-GAAP financial measures used in this release to their most directly comparable GAAP financial measures is included under the heading Non-GAAP Financial Measures below.

SOUTH JORDAN, Utah, Oct. 28, 2020 (GLOBE NEWSWIRE) -- Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading manufacturer and marketer of proprietary disposable medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care and endoscopy, today announced revenue of $244.0 million for the quarter ended September30,2020, an increase of 0.4% compared to revenue of $243.0 million for the quarter ended September30,2019. Core revenue on a constant currency basis* for the third quarter of 2020 was down (0.1)% compared to the third quarter of 2019.

Merits GAAP gross margin for the third quarter of 2020 was 41.8%, compared to GAAP gross margin of 42.8% for the third quarter of 2019. Merits non-GAAP gross margin* for the third quarter of 2020 was 47.0%, compared to non-GAAP gross margin* of 48.1% for the third quarter of 2019.

Merits GAAP operating margin for the third quarter of 2020 was 0.0%, compared to GAAP operating margin of (1.2)% for the third quarter of 2019. Merits non-GAAP operating margin* for the third quarter of 2020 was 15.0%, compared to non-GAAP operating margin* of 9.2% for the third quarter of 2019.

Merits GAAP net loss for the third quarter of 2020 was $(3.0) million, or $(0.05) per share, compared to a GAAP net loss of $(3.4) million, or $(0.06) per share, for the third quarter of 2019. Merits non-GAAP net income* for the third quarter of 2020 was $24.0 million, or $0.42 per share, compared to non-GAAP net income* of $15.7 million, or $0.28 per share, for the third quarter of 2019.

Merits revenue by category for the three and nine-month periods ended September30, 2020, compared to the corresponding periods in 2019, was as follows (unaudited, in thousands, except forpercentages):

Three Months Ended Nine Months Ended September30, September30, %Change 2020 2019 %Change 2020 2019Cardiovascular Peripheral 3.0 % $ 86,778 $ 84,265 (4.4 )% $ 246,488 $ 257,744InterventionCardiac (7.7 )% 69,089 74,859 (8.5 )% 207,685 227,042InterventionCustomProcedural 22.0 % 56,429 46,258 7.2 % 149,369 139,335SolutionsOEM (17.0 )% 24,117 29,044 (7.8 )% 80,592 87,449Total 0.8 % 236,413 234,426 (3.9 )% 684,134 711,570 Endoscopy Endoscopy (12.3 )% 7,562 8,623 (14.3 )% 21,737 25,360devices Total 0.4 % $ 243,975 $ 243,049 (4.2 )% $ 705,871 $ 736,930

Our third quarter revenue results reflect better than expected performance driven by strong execution and discipline despite a fluctuating global recovery, said Fred P. Lampropoulos, Merits Chairman and Chief Executive Officer. We are particularly proud of our profitability performance in the third quarter as we leveraged strong operating expense control to drive impressive growth in our non-GAAP operating profit and our non-GAAP EPS, which increased 65% and 50%, respectively, year over year.

We remain focused on executing our plan to enhance the efficiency of our business in order to be better positioned for profitable growth going forward, Lampropoulos said. We are encouraged by the success we have achieved early in this process as evidenced by the notable improvement in our free cash flow generation this year, which has nearly doubled over our free cash flow generation in the two prior years combined. As promised, we are on track to complete the movement of more than 14 production lines and consolidate several facilities before year end.

We look forward to sharing more about our plans for growth and profitability in the coming years at our Foundations for Growth virtual investor event scheduled on November 10, Lampropoulos added.

As of September 30, 2020, Merit had cash on hand of approximately $44.6 million, long term debt obligations of approximately $358 million, and available borrowing capacity of $327 million, compared to cash on hand of approximately $44.3 million, long term debt obligations of approximately $440 million, and available borrowing capacity of $134 million as of December 31, 2019.

Fiscal Year 2020 Financial Guidance:

The Company is updating its fiscal year 2020 revenue guidance, originally issued on February 24, 2020.

Based upon information currently available to Merits management, Merit estimates for theyear ending December31, 2020, absent material acquisitions, non-recurring transactions or other factors beyond Merits control,the following:

-- Net revenue in the range of $950.0 million to $959.0 million, representing a decrease of approximately 3.5% to 4.5% year over year, as compared to net revenue of $994.9 million for the twelve months ended December 31, 2019. The fiscal year 2020 revenue guidance range assumes:Net revenue from the cardiovascular segment of between $921.0 million and $930.0 million, representing a decrease of approximately 3% to 4% year-over-year as compared to net revenue of $961.0 million for the twelve months ended December 31, 2019.Net revenue from the endoscopy segment of between $28.6 million and $28.9 million, representing a decrease of approximately 14.5% to 15.5% year-over-year as compared to net revenue of $33.9 million for the twelve months ended December 31, 2019. -- GAAP net loss in the range of $(11.8) million to $(15.0) million, or $(0.21) to $(0.27) per diluted share, compared to GAAP net income of $5.5 million, or $0.10 per diluted share, for the twelve months ended December 31, 2019. -- Non-GAAP net income in the range of $85.5 million to $88.5 million, or $1.52 to $1.57 per diluted share, compared to non-GAAP net income of $82.1 million, or $1.46 per diluted share, for the twelve months ended December 31, 2019.

Merits financial guidance for theyear ending December31, 2020 is subject to risks and uncertainties identified in this release and Merits public filings.

CONFERENCE CALL

Merit will hold its investor conference call (conference ID 3195654) today, Wednesday, October 28, 2020, at 5:00p.m. Eastern (4:00p.m. Central, 3:00p.m. Mountain, and 2:00p.m. Pacific). The domestic telephone number is (844) 5789672 and the international number is (508) 6375656. A live webcast and slide deck will also be available at merit.com.

CONSOLIDATED BALANCE SHEETS

September30, 2020 December31, (unaudited) 2019ASSETS Current Assets Cash and cash equivalents $ 44,551 $ 44,320 Trade receivables, net 141,957 155,365 Other receivables 8,073 10,016 Inventories 209,109 225,698 Prepaid expenses and other current 15,579 12,497 assetsPrepaid income taxes 3,545 3,491 Income tax refund receivables 11,812 3,151 Total current assets 434,626 454,538 Property and equipment, net 383,804 378,785 Intangible assets, net 382,815 445,312 Goodwill 353,622 353,193 Deferred income tax assets 3,857 3,788 Right-of-use operating lease assets 76,775 80,244 Other assets 35,011 41,461 Total Assets 1,670,510 1,757,321 LIABILITIES AND STOCKHOLDERS? EQUITY Current Liabilities Trade payables $ 46,634 $ 54,623 Accrued expenses 116,927 105,184 Current portion of long-term debt 7,500 7,500 Short-term operating lease liabilities 12,981 11,550 Income taxes payable 2,005 2,799 Total current liabilities 186,047 181,656 Long-term debt 349,813 431,984 Deferred income tax liabilities 45,439 45,236 Long-term income taxes payable 347 347 Liabilities related to unrecognized tax 1,990 1,990 benefitsDeferred compensation payable 15,396 14,855 Deferred credits 1,948 2,122 Long-term operating lease liabilities 69,407 72,714 Other long-term obligations 66,286 56,473 Total Liabilities 736,673 807,377 Stockholders' Equity Common stock 600,737 587,017 Retained earnings 342,425 368,221 Accumulated other comprehensive loss (9,325 ) (5,294 )Total Stockholders' Equity 933,837 949,944 Total Liabilities and Stockholders' $ 1,670,510 $ 1,757,321 Equity

CONSOLIDATED STATEMENTS OF INCOME (LOSS)(Unaudited, in thousands except per share amounts)

Three Months Ended Nine Months Ended September30, September30, 2020 2019 2020 2019NET SALES $ 243,975 $ 243,049 $ 705,871 $ 736,930 COST OF SALES 141,961 138,913 415,857 416,194 GROSS PROFIT 102,014 104,136 290,014 320,736 OPERATING EXPENSES:Selling,general and 72,215 86,936 217,790 245,183 administrativeResearch and 13,506 16,987 42,404 49,361 developmentLegal ? ? 18,200 ? settlementImpairment 20,585 2,702 28,305 3,250 chargesContingentconsideration (4,356 ) 392 884 3,573 expense(benefit)Acquiredin-process ? ? ? 525 research anddevelopment Totaloperating 101,950 107,017 307,583 301,892 expenses INCOME (LOSS)FROM 64 (2,881 ) (17,569 ) 18,844 OPERATIONS OTHER INCOME (EXPENSE):Interest 67 328 234 1,027 incomeInterest (2,197 ) (3,415 ) (8,056 ) (9,295 )expenseOther income(expense) - (118 ) 278 (1,085 ) (421 )net Total other (2,248 ) (2,809 ) (8,907 ) (8,689 )expense ? net INCOME (LOSS)BEFORE INCOME (2,184 ) (5,690 ) (26,476 ) 10,155 TAXES INCOME TAX(BENEFIT) 825 (2,292 ) (1,255 ) 499 EXPENSE NET INCOME $ (3,009 ) $ (3,398 ) $ (25,221 ) $ 9,656 (LOSS) EARNINGS(LOSS) PER COMMON SHARE:Basic $ (0.05 ) $ (0.06 ) $ (0.46 ) $ 0.18 Diluted $ (0.05 ) $ (0.06 ) $ (0.46 ) $ 0.17 AVERAGE COMMON SHARES:Basic 55,505 55,152 55,386 55,029 Diluted 55,505 55,152 55,386 56,393

Non-GAAP Financial Measures

Although Merits financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), Merits management believes that certain non-GAAP financial measures referenced in this release provide investors with useful information regarding the underlying business trends and performance of Merits ongoing operations and can be useful for period-over-period comparisons of such operations. Non-GAAP financial measures used in this release include:

-- constant currency revenue, -- core revenue, -- core revenue on a constant currency basis, -- non-GAAP gross margin, -- non-GAAP operating margin, -- non-GAAP net income, -- non-GAAP earnings per share, and -- free cash flow.

Merits management team uses these non-GAAP financial measures to evaluate Merits profitability and efficiency, to compare operating results to prior periods, to evaluate changes in the operating results of its operating segments, and to measure and allocate financial resources internally. However, Merits management does not consider such non-GAAP measures in isolation or as an alternative to measures determined in accordance with GAAP.

Readers should consider non-GAAP measures used in this release in addition to, not as a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures generally exclude some, but not all, items that may affect Merits net income. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded. Merit believes it is useful to exclude such items in the calculation of non-GAAP earnings per share, non-GAAP gross margin, non-GAAP operating margin, and non-GAAP net income (in each case, as further illustrated in the reconciliation tables below) because such amounts in any specific period may not directly correlate to the underlying performance of Merits business operations and can vary significantly between periods as a result of factors such as acquisition transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, severance expenses, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, corporate transformation expenses, governmental proceedings or changes in tax or industry regulations, gains or losses on disposal of certain assets, and debt issuance costs. Merit may incur similar types of expenses in the future, and the non-GAAP financial information included in this release should not be viewed as a statement or indication that these types of expenses will not recur. Additionally, the non-GAAP financial measures used in this release may not be comparable with similarly titled measures of other companies. Merit urges investors and potential investors to review the reconciliations of its non-GAAP financial measures to the comparable GAAP financial measures, and not to rely on any single financial measure to evaluate Merits business or results of operations.

Constant Currency Revenue

Merits revenue on a constant currency basis is prepared by translating the current-period reported revenue of subsidiaries whose functional currency is a currency other than the U.S. dollar at the applicable foreign exchange rates in effect during the comparable prior-year period. The constant currency revenue adjustments of $(1.2) million and $4.3 million to reported revenue and to core revenue for the three and nine-month periods ended September30,2020, respectively, were calculated using the applicable average foreign exchange rates for the three and nine-month periods ended September30,2019, respectively.

Core Revenue and Core Revenue on a Constant Currency Basis

Merits core revenue is defined, with respect to prior fiscal year periods, as GAAP revenue less revenue from certain dispositions. For the three and nine-month periods ended September 30, 2019, Merits core revenue excludes revenues attributable to the disposition of the assets related to the manufacturing of Merits Hypotube product in August 2020 (excluded September 2019 only).

With respect to current fiscal year periods, core revenue is defined as GAAP revenue, less revenue from certain acquisitions. For the three and nine-month periods ended September30,2020, Merits core revenue excludes revenues attributable to the acquisition of (1) Brightwater Medical, Inc. in June 2019 (excluded through May 2020 only) and (2) Fibrovein Holdings Limited in August 2019 (excluded through July 2020 only). Core revenue on a constant currency basis is defined as core revenue (as described above) adjusted to eliminate the foreign exchange impact related to that core revenue for the relevant period, using the applicable average foreign exchange rates in effect for the comparable prior-year periods presented.

Non-GAAP Gross Margin

Non-GAAP gross margin is calculated by reducing GAAP cost of sales by amounts recorded for amortization of intangible assets, certain inventory write-offs and inventory mark-up related to acquisitions.

Non-GAAPOperating Margin

Non-GAAP operating margin is calculated by adjusting GAAP operating income (loss) for certain items which are deemed by Merits management to be outside of core operations and vary in amount and frequency among periods, such as expenses related to new acquisitions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, severance expenses, performance-based stock compensation expenses, corporate transformation expenses, expenses resulting from non-ordinary course litigation or administrative proceedings and resulting settlements, governmental proceedings or changes in industry regulations, as well as other items set forth in the tables below.

Non-GAAP Net Income

Non-GAAP net income is calculated by adjusting GAAP net income (loss) for the items set forth in the definition of non-GAAP operating margin above, as well as for expenses related to debt issuance costs, gains or losses on disposal of certain assets, changes in tax regulations, and other items set forth in the tables below.

Non-GAAP EPS

Non-GAAP EPS is defined as non-GAAP net income divided by the diluted shares outstanding for the corresponding period.

Free Cash Flow

Free cash flow is defined as cash flow from operations calculated in accordance with GAAP less capital expenditures calculated in accordance with GAAP, as set forth in the consolidated statement of cash flows.

Other Non-GAAP Financial Measure Reconciliation

The following tables set forth supplemental financial data and corresponding reconciliations of non-GAAP net income and non-GAAP earnings per share to Merits net income and earnings per share prepared in accordance with GAAP, in each case, for the three and nine-month periods ended September30,2020 and 2019. The non-GAAP income adjustments referenced in the following tables do not reflect non-performance-based stock compensation expense of approximately $3.0 million and $2.6 million for the three-month periods ended September30,2020 and 2019, respectively, and approximately $7.6 million and $6.9 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income(Unaudited, in thousands except per share amounts)

Three Months Ended September30,2020 Pre-Tax TaxImpact After-Tax PerShareImpactGAAP net loss $ (2,184 ) $ (825 ) $ (3,009 ) $ (0.05 ) Non-GAAP adjustments:Cost of Sales Amortization of 12,529 (3,229 ) 9,300 0.16 intangiblesInventory mark-uprelated to 41 (11 ) 30 0.00 acquisitionsOperating Expenses Contingentconsideration (4,356 ) 492 (3,864 ) (0.07 )benefitImpairment charges 20,585 (3,170 ) 17,415 0.31 Amortization of 1,893 (508 ) 1,385 0.02 intangiblesPerformance-basedshare-based 1,112 (141 ) 971 0.02 compensation (a)Corporatetransformation and 2,833 (743 ) 2,090 0.04 restructuring (b)Acquisition-related 189 (49 ) 140 0.00 Medical DeviceRegulation expenses 411 (106 ) 305 0.01 (c)Other (d) 1,401 (1,933 ) (532 ) (0.01 )Other (Income) ExpenseAmortization oflong-term debt 151 (39 ) 112 0.00 issuance costs(Gain) loss ondisposal of (508 ) 131 (377 ) (0.01 )business unit Non-GAAP net income $ 34,097 $ (10,131 ) $ 23,966 $ 0.42 Diluted shares (e) 56,456

Three Months Ended September30,2019 Pre-Tax TaxImpact After-Tax PerShareImpactGAAP net loss $ (5,690 ) $ 2,292 $ (3,398 ) $ (0.06 ) Non-GAAP adjustments:Cost of Sales Amortization of 12,725 (3,259 ) 9,466 0.17 intangiblesInventory mark-uprelated to 55 (14 ) 41 0.00 acquisitionsOperating Expenses Contingentconsideration 392 (91 ) 301 0.01 expenseImpairment charges 2,702 (696 ) 2,006 0.04 Amortization of 2,783 (732 ) 2,051 0.04 intangiblesCorporatetransformation and 2,721 (700 ) 2,021 0.03 restructuring (b)Acquisition-related 1,156 (154 ) 1,002 0.02 Medical DeviceRegulation expenses 83 (21 ) 62 0.00 (c)Other (d) 2,558 (658 ) 1,900 0.03 Other (Income) ExpenseAmortization oflong-term debt 268 (69 ) 199 0.00 issuance costs Non-GAAP net income $ 19,753 $ (4,102 ) $ 15,651 $ 0.28 Diluted shares 55,152

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Note: Certain per share impacts may not sum to totals due to rounding

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income(Unaudited, in thousands except per share amounts)

Nine Months Ended September30,2020 Pre-Tax TaxImpact After-Tax PerShareImpactGAAP net loss $ (26,476 ) $ 1,255 $ (25,221 ) $ (0.45 ) Non-GAAP adjustments:Cost of Sales Amortization of 38,154 (9,833 ) 28,321 0.50 intangiblesInventory write-off 1,776 (472 ) 1,304 0.02 (f)Inventory mark-uprelated to 187 (48 ) 139 0.00 acquisitionsOperating Expenses Contingentconsideration 884 559 1,443 0.03 expenseImpairment charges 28,305 (4,363 ) 23,942 0.43 Amortization of 6,049 (1,632 ) 4,417 0.08 intangiblesPerformance-basedshare-based 2,623 (334 ) 2,289 0.04 compensation (a)Corporatetransformation and 6,215 (1,642 ) 4,573 0.08 restructuring (b)Acquisition-related 906 (233 ) 673 0.01 Medical DeviceRegulation expenses 1,013 (261 ) 752 0.01 (c)Other (d) 23,477 (3,567 ) 19,910 0.35 Other (Income) ExpenseAmortization oflong-term debt 453 (117 ) 336 0.01 issuance costs(Gain) loss ondisposal of (508 ) 131 (377 ) (0.01 )business unit Non-GAAP net income $ 83,058 $ (20,557 ) $ 62,501 $ 1.11 Diluted shares (e) 56,241

Nine Months Ended September30,2019 Pre-Tax TaxImpact After-Tax PerShareImpactGAAP net income $ 10,155 $ (499 ) $ 9,656 $ 0.17 Non-GAAP adjustments: Cost of Sales Amortization of 36,882 (9,444 ) 27,438 0.48intangiblesInventory mark-up 939 (241 ) 698 0.01related to acquisitionsOperating Expenses Contingent 3,573 (275 ) 3,298 0.06consideration expenseImpairment charges 3,250 (837 ) 2,413 0.04Amortization of 8,289 (2,182 ) 6,107 0.11intangiblesCorporatetransformation and 4,131 (1,063 ) 3,068 0.05restructuring (b)Acquisition-related 2,897 (589 ) 2,308 0.04Medical Device 196 (50 ) 146 0.00Regulation expenses (c)Other (d) 5,806 (1,494 ) 4,312 0.09Other (Income) Expense Amortization oflong-term debt issuance 670 (172 ) 498 0.01costsTax expense related to ? 92 92 0.00restructuring (g) Non-GAAP net income $ 76,788 $ (16,754 ) $ 60,034 $ 1.06 Diluted shares 56,393

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Note: Certain per share impacts may not sum to totals due to rounding

Reconciliation of Reported Operating Income (Loss) to Non-GAAP Operating Income(Unaudited, in thousands except percentages)

Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September30,2020 September30,2019 September30,2020 September30,2019 Amounts % Amounts % Amounts % Amounts % Sales Sales Sales SalesNet Sales as $ 243,975 $ 243,049 $ 705,871 $ 736,930 Reported GAAP Operating 64 0.0 % (2,881 ) (1.2 ) (17,569 ) (2.5 ) 18,844 2.6 %Income (Loss) % %Cost of Sales Amortization of 12,529 5.1 % 12,725 5.2 % 38,154 5.4 % 36,882 5.0 %intangiblesInventory write-off ? ? ? ? 1,776 0.3 % ? ? (f)Inventory mark-uprelated to 41 0.0 % 55 0.0 % 187 0.0 % 939 0.1 %acquisitionsOperating Expenses Contingent )consideration (4,356 ) (1.8 % 392 0.2 % 884 0.1 % 3,573 0.5 %expense (benefit)Impairment charges 20,585 8.4 % 2,702 1.1 % 28,305 4.0 % 3,250 0.4 %Amortization of 1,893 0.8 % 2,783 1.1 % 6,049 0.9 % 8,289 1.1 %intangiblesPerformance-basedshare-based 1,112 0.5 % ? ? 2,623 0.4 % ? ? compensation (a)Corporatetransformation and 2,833 1.2 % 2,721 1.1 % 6,215 0.9 % 4,131 0.6 %restructuring (b)Acquisition-related 189 0.1 % 1,156 0.5 % 906 0.1 % 2,897 0.4 %Medical DeviceRegulation expenses 411 0.2 % 83 0.0 % 1,013 0.1 % 196 0.0 %(c)Other (d) 1,401 0.6 % 2,558 1.1 % 23,477 3.3 % 5,806 0.8 % Non-GAAP Operating $ 36,702 15.0 % $ 22,294 9.2 % $ 92,020 13.0 % $ 84,807 11.5 %Income

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Note: Certain percentages may not sum to totals due to rounding

a) Represents performance-based share-based compensation expense, including stock-settled and cash-settled awards. b) Includes severance related to corporate initiatives, write-offs and valuation adjustments of other long-term assets associated with restructuring activities, and other transformation costs.c) Represents incremental expenses incurred to comply with the Medical Device Regulation (MDR) in Europe.d) Represents costs incurred in responding to an inquiry from the U.S. Department of Justice, amounts to be paid in settlement of that inquiry of $18.2 million accrued in the nine-month period ended September 30, 2020, fees associated with settlement of a shareholder dispute, acquired in-process research and development, and charges related to abandoned patents.e) For the three and nine-month periods ended September 30, 2020 the non-GAAP net income per diluted share calculation includes approximately 951,000 and 855,000 shares, respectively, that were excluded from the GAAP net income (loss) per diluted share calculation.f) Represents write-off of inventory related to the closure of theITL Healthcare Pty Ltd. (ITL) procedure pack operations in Australia in Q2 2020 and suspension of Merits distribution agreement with NinePoint Medical, Inc. in Q1 2020.g) Net tax expense related to non-recurring tax withholdings in connection with restructuring of certain international subsidiaries.

Reconciliation of Reported Revenue to Core Revenue (Non-GAAP), Constant Currency Revenue (Non-GAAP), and Core Revenue on a Constant Currency Basis (Non-GAAP)(Unaudited; in thousands exceptpercentages)

Three Months Ended Nine Months Ended September30, September30, %Change 2020 2019 %Change 2020 2019Reported 0.4 % $ 243,975 $ 243,049 (4.2 )% $ 705,871 $ 736,930Revenue Add:Impactof (1,207 ) ? 4,289 ?foreignexchange(a) Constant Currency (0.1 )% $ 242,768 $ 243,049 (3.6 )% $ 710,160 $ 736,930Revenue

Three Months Ended Nine Months Ended September30, September30, %Change 2020 2019 %Change 2020 2019Reported 0.4 % $ 243,975 $ 243,049 (4.2 )% $ 705,871 $ 736,930 Revenue Less:Revenue fromcertainacquisitions (45 ) (135 ) (1,216 ) (135 )anddispositions(b) Core Revenue 0.4 % $ 243,930 $ 242,914 (4.4 )% $ 704,655 $ 736,795 Add: Impactof foreign (1,207 ) ? 4,289 ? exchange (a) Core Revenueon aConstant (0.1 )% $ 242,723 $ 242,914 (3.8 )% $ 708,944 $ 736,795 CurrencyBasis

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(a) The constant currency revenue adjustments of $(1.2) million and $4.3 million to reported revenue and to core revenue for the three and nine months ended September 30, 2020, respectively, were calculated using the applicable average foreign exchange rates for the three and nine months ended September30, 2019, respectively.

(b) Merits core revenue is defined with respect to prior fiscal year periods, as GAAP revenue, less revenue from certain dispositions. For the three and nine-month period ended September 30, 2019, Merits core revenue excludes revenues attributable to the disposition of assets related to the manufacturing of Merits Hypotube products in August 2020 (excluded September 2019 only). With respect to current fiscal year periods, core revenue is defined as GAAP revenue, less revenue from certain acquisitions. For the three and nine-month periods ended September 30, 2020, Merits core revenue excludes revenues attributable to the acquisition of (1) Brightwater Medical, Inc. in June 2019 (excluded through May 2020 only) and (2) Fibrovein Holdings Limited in August 2019 (excluded through July 2020 only). Core revenue on a constant currency basis is defined as core revenue (as described above) adjusted to eliminate the foreign exchange impact related to that core revenue for the relevant period, using the applicable average foreign exchange rates in effect for the comparable prior-year periods presented.

Reconciliation of Reported Gross Margin to Non-GAAP Gross Margin (Non-GAAP)(Unaudited, as apercentage of reported revenue)

Three Months Nine Months Ended Ended September30, September30, 2020 2019 2020 2019 Reported Gross Margin 41.8 % 42.8 % 41.1 % 43.5 % Add back impact of: Amortization of intangibles 5.1 % 5.2 % 5.4 % 5.0 %Inventory write-off (a) ? % ? 0.3 % ? Inventory mark-up related to 0.0 % 0.1 % 0.0 % 0.2 %acquisitions Non-GAAP Gross Margin 47.0 % 48.1 % 46.8 % 48.7 %

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Note: Certain percentages may not sum to totals due to rounding

(a) Represents write-off of inventory related to the closure of theITL procedure pack operations in Australia in Q2 2020 and suspension of Merits distribution agreement with NinePoint Medical, Inc in Q1 2020.

ABOUT MERIT

Founded in 1987, Merit Medical Systems,Inc. is a leading manufacturer and marketer of proprietary disposable medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care and endoscopy.Merit serves client hospitals worldwide with a domestic and international sales force and clinical support team totaling in excess of 500 individuals.Merit employs approximately 6,000 people worldwide with facilities in South Jordan, Utah; Pearland, Texas; Richmond, Virginia; Malvern, Pennsylvania; Rockland, Massachusetts; Aliso Viejo, California; Maastricht and Venlo, The Netherlands; Paris, France; Galway, Ireland; Beijing, China; Tijuana, Mexico; Joinville, Brazil; Ontario, Canada; Melbourne, Australia; Tokyo, Japan; Reading, United Kingdom; Johannesburg, South Africa; and Singapore.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this release which are not purely historical, including, without limitation, statements regarding Merits forecasted plans, net sales, net income or loss (GAAP and non-GAAP), gross and operating margins (GAAP and non-GAAP), earnings per share (GAAP and non-GAAP), free cash flow, effective tax rate and other financial results, the potential impact, scope and duration of, and Merits response to, the coronavirus (COVID-19) pandemic and the potential for recovery from that pandemic, consolidation of Merits facilities or other expense reduction initiatives, future growth and profit expectations, or improvements in economic conditions, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to risks and uncertainties such as those described in Merits Annual Report on Form 10-K for the year ended December 31, 2019 (as amended by Amendment No. 1 to Annual Report on Form 10-K/A, the 2019 Annual Report), Merits subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (the SEC). Such risks and uncertainties include inherent risks and uncertainties relating to Merits internal models or the projections in this release; risks and uncertainties associated with the COVID-19 pandemic and Merits response thereto; risks relating to Merits 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; negative changes in economic and industry conditions in the United States or other countries; expenditures relating to research, development, testing and regulatory approval or clearance of Merits products and risks that such products may not be developed successfully or approved for commercial use; governmental scrutiny and regulation of the medical device industry, including governmental inquiries, investigations and proceedings involving Merit; litigation and other judicial proceedings affecting Merit; restrictions on Merits liquidity or business operations resulting from its debt agreements; infringement of Merits technology or the assertion that Merits technology infringes the rights of other parties; actions of activist shareholders; product recalls and product liability claims; changes in customer purchasing patterns or the mix of products Merit sells; risks and uncertainties associated with Merits information technology systems, including the potential for breaches of security and evolving regulations regarding privacy and data protection; increases in the prices of commodity components; the potential of fines, penalties or other adverse consequences if Merits employees or agents violate the U.S. Foreign Corrupt Practices Act or other laws or regulations; laws and regulations targeting fraud and abuse in the healthcare industry; potential for significant adverse changes in governing regulations, including reforms to the procedures for approval or clearance of Merits products by the U.S. Food & Drug Administration or comparable regulatory authorities in other jurisdictions; changes in tax laws and regulations in the United States or other countries; termination or interruption of relationships with Merits suppliers, or failure of such suppliers to perform; fluctuations in exchange rates; concentration of a substantial portion of Merits revenues among a few products and procedures; development of new products and technology that could render Merits existing or future products obsolete; market acceptance of new products; volatility in the market price of Merits common stock; modification or limitation of governmental or private insurance reimbursement policies; changes in healthcare policies or markets related to healthcare reform initiatives; failure to comply with applicable environmental laws; changes in key personnel; work stoppage or transportation risks; introduction of products in a timely fashion; price and product competition; availability of labor and materials; fluctuations in and obsolescence of inventory; and other factors referenced in the 2019 Annual Report and other materials filed with the SEC. All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results. Those estimates and all other forward-looking statements included in this document are made only as of the date of this document, and except as otherwise required by applicable law, Merit assumes no obligation to update or disclose revisions to estimates and all other forward-looking statements.

TRADEMARKS

Unless noted otherwise, trademarks and registered trademarks used in this release are the property of Merit Medical Systems,Inc. and its subsidiaries in the United States and other jurisdictions.

Contacts: PR/Media Inquiries: Investor Inquiries:Teresa Johnson Mike Piccinino, CFA, IRCMerit Medical Westwicke - ICR+1-801-208-4295 +1-443-213-0509tjohnson@merit.com Mike.piccinino@westwicke.com