GlobeNewswire Inc | Feb 24, 2021 04:05PM EST

February 24, 2021

-- Q4 2020 reported revenue of $258.0 million, approximately equal to Q4 2019 revenue -- Q4 2020 core revenue on a constant currency basis* down (1.0)% compared to Q4 2019 -- Q4 2020 GAAP EPS of $0.27, compared to GAAP loss per share of ($0.08) in Q4 2019 -- Q4 2020 non-GAAP EPS* of $0.54, compared to $0.40 in Q4 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, Feb. 24, 2021 (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 $258.0 million for the quarter ended December31,2020, essentially flat compared to the prior year period. Core revenue on a constant currency basis* for the fourth quarter of 2020 was down (1.0)% compared to the prior year period. For the year ended December 31, 2020, Merit's revenue was $963.9 million, down (3.1)% compared to 2019. Core revenue on a comparable, constant currency basis* for the year ended December 31, 2020 was down (3.1)% when compared to 2019.

Merits GAAP gross margin for the fourth quarter of 2020 was 43.1%, compared to GAAP gross margin of 43.3% for the prior year period. Merits non-GAAP gross margin* for the fourth quarter of 2020 was 47.9%, compared to non-GAAP gross margin* of 48.3% for the prior year period. Merits GAAP gross margin for the year ended December 31, 2020 was 41.6%, compared to GAAP gross margin of 43.5% for the prior year. Merits non-GAAP gross margin* for the year ended December 31, 2020 was 47.1%, compared to non-GAAP gross margin* of 48.6% for the prior year.

Merits GAAP net income for the fourth quarter of 2020 was $15.4 million, or $0.27 per share, compared to a GAAP net loss of ($4.2) million, or ($0.08) per share, for the prior year period. Merits non-GAAP net income* for the fourth quarter of 2020 was $30.8 million, or $0.54 per share, compared to non-GAAP net income* of $22.1 million, or $0.40 per share, for the prior year period. Merits GAAP net loss for the year ended December 31, 2020 was ($9.8) million, or ($0.18) per share, compared to GAAP net income of $5.5 million or $0.10 per share, for 2019. Merits non-GAAP net income* for the year ended December 31, 2020 was $93.3 million, or $1.65 per share, compared to non-GAAP net income* of $82.1 million or $1.46 per share, for 2019.

Merits revenue by operating segment and product category for the three and twelve-month periods ended December 31, 2020 and 2019 was as follows (unaudited, in thousands, except forpercentages):

Three Months Ended Year Ended December31, December31, %Change 2020 2019 %Change 2020 2019Cardiovascular Peripheral 2.0 % $ 95,080 $ 93,192 (2.7 )% $ 341,568 $ 350,936InterventionCardiac (7.4 )% 71,986 77,755 (8.2 )% 279,671 304,797InterventionCustomProcedural 12.1 % 53,827 48,024 8.5 % 203,196 187,359SolutionsOEM (4.2 )% 29,175 30,440 (6.9 )% 109,767 117,889Total 0.3 % 250,068 249,411 (2.8 )% 934,202 960,981 Endoscopy Endoscopy (6.8 )% 7,936 8,511 (12.4 )% 29,673 33,871devices Total 0.0 % $ 258,004 $ 257,922 (3.1 )% $ 963,875 $ 994,852

We delivered fourth quarter revenue results above the high-end of our guidance range, increasing 6% quarter-over-quarter as reported, despite the challenging operating environment and slower-than-expected pace of recovery from the COVID-19 pandemic in many of our primary markets around the world, said Fred P. Lampropoulos, Merits Chairman and Chief Executive Officer. We are proud of the continued improvement in profitability performance in Q4, including a 23% increase in non-GAAP operating profit year-over-year and a 288% increase in free cash flow to more than $26 million in the quarter.

Mr. Lampropoulos continued: Our financial guidance for 2021 reflects cautious optimism on the prospects for an improving operating environment as we progress through the year, with continued COVID-19-related headwinds over the first half of the year, and a return to more normalized growth as the overall global recovery takes shape over the second half of the year. Importantly, while our 2021 guidance reflects total revenue growth, on a constant currency basis, in the low-to-mid single digits year-over-year, excluding the impact of divestitures and product sales that uniquely benefitted from pandemic-related demand trends in 2020, our revenue guidance reflects growth in the mid-to-high single digits year-over-year in 2021. We also expect to report improving non-GAAP gross and operating margins and strong free cash flow in 2021, driven by strong execution and contributions from our multi-year strategic initiatives related to our Foundations for Growth Program.

As of December 31, 2020, Merit had cash on hand of approximately $56.9 million, long term debt obligations of approximately $352 million, and available borrowing capacity of $389 million, compared to cash on hand of approximately $44.3 million, long term debt obligations of $440 million, and available borrowing capacity of $134 million as of December 31, 2019.

Fiscal Year 2021 Financial Guidance:

Based upon information currently available to Merits management, Merit estimates for theyear ending December31, 2021, absent material acquisitions, non-recurring transactions or other factors beyond Merits control,the following:

-- Net revenue in the range of $990 million to $1.01 billion, representing an increase of approximately 2.7% to 4.8% year over year, as compared to net revenue of $963.9 million for the twelve months ended December 31, 2020. The fiscal year 2021 revenue guidance range assumes: Net revenue from the cardiovascular segment of between $959.3 million and $978.6 million, representing an increase of approximately 2.7% to 4.8% year-over-year as compared to net revenue of $934.2 million for the twelve months ended December 31, 2020.Net revenue from the endoscopy segment of between $30.8 million and $31.9 million, representing an increase of approximately 4% to 7% year-over-year as compared to net revenue of $29.7 million for the twelve months ended December 31, 2020. -- GAAP net income in the range of $47.3 million to $55.9 million, or $0.83 to $0.98 per diluted share, compared to GAAP net loss of $(9.8) million, or $(0.18) per diluted share, for the twelve months ended December 31, 2020. -- Non-GAAP net income* in the range of $104.8 million to $112.7 million, or $1.84 to $1.98 per diluted share, compared to non-GAAP net income* of $93.3 million, or $1.65 per diluted share, for the twelve months ended December 31, 2020.

Merits financial guidance for theyear ending December31, 2021 is subject to risks and uncertainties identified in this release and Merits filings with the U.S. Securities and Exchange Commission (the SEC).

CONFERENCE CALL

Merit will hold its investor conference call (conference ID 8889508) today, Wednesday, February 24, 2021, at 5:00p.m. Eastern (4:00p.m. Central, 3:00p.m. Mountain, and 2:00p.m. Pacific). The domestic telephone number is (844) 578-9672 and the international number is (508) 637-5656. A live webcast and slide deck will also be available at merit.com.

CONSOLIDATED BALANCE SHEETS(in thousands)

December31, 2020 December31, (Unaudited) 2019ASSETS Current Assets Cash and cash equivalents $ 56,916 $ 44,320 Trade receivables, net 146,641 155,365 Other receivables 7,774 10,016 Inventories 198,019 225,698 Prepaid expenses and other 13,120 12,497 assetsPrepaid income taxes 3,688 3,491 Income tax refund receivables 3,549 3,151 Total current assets 429,707 454,538 Property and equipment, net 382,728 378,785 Intangible assets, net 367,915 445,312 Goodwill 363,533 353,193 Deferred income tax assets 4,597 3,788 Operating lease right-of-use 78,240 80,244 assetsOther assets 37,676 41,461 Total Assets $ 1,664,396 $ 1,757,321 LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities Trade payables $ 49,837 $ 54,623 Accrued expenses 111,944 105,184 Current portion of long-term 7,500 7,500 debtCurrent operating lease 12,903 11,550 liabilitiesIncome taxes payable 2,820 2,799 Total current liabilities 185,004 181,656 Long-term debt 343,722 431,984 Deferred income tax 33,312 45,236 liabilitiesLong-term income taxes 347 347 payableLiabilities related to 1,016 1,990 unrecognized tax benefitsDeferred compensation payable 16,808 14,855 Deferred credits 1,923 2,122 Long-term operating lease 70,941 72,714 liabilitiesOther long-term obligations 52,748 56,473 Total liabilities 705,821 807,377 Stockholders' Equity Common stock 606,224 587,017 Retained earnings 357,803 368,221 Accumulated other (5,452 ) (5,294 )comprehensive lossTotal stockholders' equity 958,575 949,944 Total Liabilities and $ 1,664,396 $ 1,757,321 Stockholders' Equity

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

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 NET SALES $ 258,004 $ 257,922 $ 963,875 $ 994,852 COST OF SALES 146,841 146,292 562,698 562,486 GROSS PROFIT 111,163 111,630 401,177 432,366 OPERATING EXPENSES:Selling,general and 79,934 82,090 297,724 327,274 administrativeResearch and 15,133 16,254 57,537 65,615 developmentLegal 484 ? 18,684 ? settlementImpairment 8,199 20,500 36,504 23,750 chargesContingentconsideration (8,844 ) (3,805 ) (7,960 ) (232 )(benefit)Acquiredin-process 250 ? 250 525 research anddevelopment Totaloperating 95,156 115,039 402,739 416,932 expenses INCOME (LOSS)FROM 16,007 (3,409 ) (1,562 ) 15,434 OPERATIONS OTHER INCOME (EXPENSE):Interest 370 (1,317 ) 604 (291 )incomeInterest (1,938 ) (3,120 ) (9,994 ) (12,413 )expenseOther expense (1,194 ) (116 ) (2,279 ) (537 )- net Total other (2,762 ) (4,553 ) (11,669 ) (13,241 )expense ? net INCOME (LOSS)BEFORE INCOME 13,245 (7,962 ) (13,231 ) 2,193 TAXES INCOME TAX (2,133 ) (3,757 ) (3,388 ) (3,258 )(BENEFIT) NET INCOME $ 15,378 $ (4,205 ) $ (9,843 ) $ 5,451 (LOSS) EARNINGS(LOSS) PER COMMON SHARE:Basic $ 0.28 $ (0.08 ) $ (0.18 ) $ 0.10 Diluted $ 0.27 $ (0.08 ) $ (0.18 ) $ 0.10 WEIGHTEDAVERAGE SHARES OUTSTANDING:Basic 55,577 55,210 55,434 55,075 Diluted 56,736 55,210 55,434 56,235

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 or other extraordinary transactions, non-cash expenses related to amortization or write-off of previously acquired tangible and intangible assets, certain 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 converting 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, and adjusting for the effects of hedging transactions on reported revenue, which are recorded in the U.S. The constant currency revenue adjustments of ($3.0) million and $1.3 million to reported revenue and to core revenue for the three and twelve-month periods ended December 31, 2020, respectively, were calculated using the applicable average foreign exchange rates for the three and twelve-month periods ended December 31, 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 twelve-month periods ended December 31, 2019, Merits core revenue excludes revenues attributable to the disposition of the assets related to the manufacturing of Merits HypotubeTM product in August 2020 (excluded September 2019 to December 2019).

With respect to current fiscal year periods, core revenue is defined as GAAP revenue, less revenue from certain acquisitions. For the three and twelve-month periods ended December 31, 2020, Merits core revenue excludes revenues attributable to the acquisition of (1) Brightwater Medical, Inc. in June 2019 (excluded through May 2020 only), (2) Fibrovein Holdings Limited in August 2019 (excluded through July 2020 only) and (3) KA Medical, LLC in November 2020. 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, and includes adjustments for the effects of hedging transactions on reported revenue, which are recorded in the U.S.

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, certain 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 twelve-month periods ended December 31, 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 $2.5 million for the three-month periods ended December31,2020 and 2019, respectively, and approximately $10.6 million and $9.4 million for the twelve-month periods ended December 31, 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 December31,2020 Pre-Tax TaxImpact After-Tax PerShareImpactGAAP net income $ 13,245 $ 2,133 $ 15,378 $ 0.27 Non-GAAP adjustments:Cost of Sales Amortization of 12,543 (3,233 ) 9,310 0.16 intangiblesInventory write-off (24 ) 7 (17 ) (0.00 )(a)Inventory mark-uprelated to 4 (1 ) 3 0.00 acquisitionsOperating Expenses Contingentconsideration (8,844 ) (93 ) (8,937 ) (0.16 )benefitImpairment charges 8,199 (2,751 ) 5,448 0.10 Amortization of 1,893 (508 ) 1,385 0.02 intangiblesPerformance-basedshare-based 1,112 (141 ) 971 0.02 compensation (b)Corporatetransformation and 7,890 (1,985 ) 5,905 0.10 restructuring (c)Acquisition-related 393 (101 ) 292 0.01 Medical DeviceRegulation expenses 365 (98 ) 267 0.00 (d)Other (e) 962 (304 ) 658 0.01 Other (Income) ExpenseAmortization oflong-term debt 151 (39 ) 112 0.00 issuance costsGain on disposal of (10 ) 2 (8 ) (0.00 )business unit Non-GAAP net income $ 37,879 $ (7,112 ) $ 30,767 $ 0.54 Diluted shares 56,736

Three Months Ended December31,2019 Pre-Tax TaxImpact After-Tax PerShareImpactGAAP net loss $ (7,962 ) $ 3,757 $ (4,205 ) $ (0.08 ) Non-GAAP adjustments:Cost of Sales Amortization of 12,825 (3,285 ) 9,540 0.17 intangiblesInventory mark-uprelated to 183 (47 ) 136 0.00 acquisitionsOperating Expenses Contingentconsideration (3,805 ) (702 ) (4,507 ) (0.08 )benefitImpairment charges 20,500 (5,277 ) 15,223 0.27 Amortization of 2,675 229 2,904 0.06 intangiblesCorporatetransformation and 1,420 (369 ) 1,051 0.02 restructuring (c)Acquisition-related 600 (154 ) 446 0.01 Medical DeviceRegulation expenses 366 (47 ) 319 0.01 (d)Other (e) 1,476 (380 ) 1,096 0.02 Other (Income) ExpenseAmortization oflong-term debt 151 (39 ) 112 0.00 issuance costs Non-GAAP net income $ 28,429 $ (6,314 ) $ 22,115 $ 0.40 Diluted shares (f) 55,761 Note: Certain pershare impacts may not sum to totalsdue to rounding

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

Year Ended December31,2020 Pre-Tax TaxImpact After-Tax PerShareImpactGAAP net loss $ (13,231 ) $ 3,388 $ (9,843 ) $ (0.18 ) Non-GAAP adjustments:Cost of Sales Amortization of 50,696 (13,065 ) 37,631 0.67 intangiblesInventory write-off 1,752 (465 ) 1,287 0.02 (a)Inventory mark-uprelated to 191 (49 ) 142 0.00 acquisitionsOperating Expenses Contingentconsideration (7,960 ) 466 (7,494 ) (0.13 )benefitImpairment charges 36,504 (7,115 ) 29,389 0.52 Amortization of 7,943 (2,141 ) 5,802 0.10 intangiblesPerformance-basedshare-based 3,735 (475 ) 3,260 0.06 compensation (b)Corporatetransformation and 14,105 (3,683 ) 10,422 0.18 restructuring (c)Acquisition-related 1,299 (334 ) 965 0.02 Medical DeviceRegulation expenses 1,379 (359 ) 1,020 0.02 (d)Other (e) 24,438 (3,815 ) 20,623 0.37 Other (Income) ExpenseAmortization oflong-term debt 604 (155 ) 449 0.01 issuance costsGain on disposal of (517 ) 133 (384 ) (0.01 )business unit Non-GAAP net income $ 120,938 $ (27,669 ) $ 93,269 $ 1.65 Diluted shares (f) 56,374

Year Ended December31,2019 Pre-Tax TaxImpact After-Tax PerShareImpactGAAP net income $ 2,193 $ 3,258 $ 5,451 $ 0.10 Non-GAAP adjustments:Cost of Sales Amortization of 49,707 (12,730 ) 36,977 0.66 intangiblesInventory mark-uprelated to 1,122 (289 ) 833 0.01 acquisitionsOperating Expenses Contingentconsideration (232 ) (47 ) (279 ) (0.00 )benefitImpairment charges 23,750 (6,113 ) 17,637 0.31 Amortization of 10,964 (2,884 ) 8,080 0.14 intangiblesCorporatetransformation and 5,551 (1,433 ) 4,118 0.07 restructuring (c)Acquisition-related 3,497 (743 ) 2,754 0.05 Medical DeviceRegulation expenses 562 (98 ) 464 0.01 (d)Other (e) 7,282 (1,874 ) 5,408 0.10 Other (Income) ExpenseAmortization oflong-term debt 821 (211 ) 610 0.01 issuance costsTax expense relatedto restructuring ? 93 93 0.00 (g) Non-GAAP net income $ 105,217 $ (23,071 ) $ 82,146 $ 1.46 Diluted shares 56,235 Note: Certain pershare impacts may not sum to totalsdue to rounding

Reconciliation of Reported Operating Income (Loss) to Non-GAAP Operating Income

(Unaudited, in thousands except percentages)

Three Months Ended Three Months Ended Year Ended Year Ended December31,2020 December31,2019 December31,2020 December31,2019 Amounts % Amounts % Amounts % Amounts % Sales Sales Sales SalesNet Sales as $ 258,004 $ 257,922 $ 963,875 $ 994,852 Reported GAAP Operating 16,007 6.2 % (3,409 ) (1.3 ) (1,562 ) (0.2 ) 15,434 1.6 %Income (Loss) % %Cost of Sales Amortization of 12,543 4.9 % 12,825 5.0 % 50,696 5.3 % 49,707 5.0 %intangiblesInventory write-off (24 ) (0.0 ) ? ? 1,752 0.2 % ? ? (a) %Inventory mark-uprelated to 4 0.0 % 183 0.1 % 191 0.0 % 1,122 0.1 %acquisitionsOperating Expenses Contingent ) ) ) )consideration (8,844 ) (3.4 % (3,805 ) (1.5 % (7,960 ) (0.8 % (232 ) (0.0 %benefitImpairment charges 8,199 3.2 % 20,500 7.9 % 36,504 3.8 % 23,750 2.4 %Amortization of 1,893 0.7 % 2,675 1.0 % 7,943 0.8 % 10,964 1.1 %intangiblesPerformance-basedshare-based 1,112 0.4 % ? ? 3,735 0.4 % ? ? compensation (b)Corporatetransformation and 7,890 3.1 % 1,420 0.6 % 14,105 1.5 % 5,551 0.6 %restructuring (c)Acquisition-related 393 0.2 % 600 0.2 % 1,299 0.1 % 3,497 0.4 %Medical DeviceRegulation expenses 365 0.1 % 366 0.1 % 1,379 0.1 % 562 0.1 %(d)Other (e) 962 0.4 % 1,476 0.6 % 24,438 2.5 % 7,282 0.7 % Non-GAAP Operating $ 40,500 15.7 % $ 32,831 12.7 % $ 132,520 13.7 % $ 117,637 11.8 %Income

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

-- Represents write-off of inventory related to the closure of theITL Healthcare Pty Ltd. (ITL) procedure pack operations in Australia and suspension of Merits distribution agreement with NinePoint Medical, Inc. -- Represents performance-based share-based compensation expense, including stock-settled and cash-settled awards. -- Includes severance related to corporate initiatives, write-offs and valuation adjustments of other long-term assets associated with restructuring activities, expenses related to Merits Foundations for Growth program, and other transformation costs. -- Represents incremental expenses incurred to comply with the Medical Device Regulation (MDR) in Europe. -- Represents expense from acquired in-process research and development, charges related to abandoned patents, costs incurred in responding to an inquiry from the U.S. Department of Justice (DOJ), and, in 2020 only, fees associated with settlement of a shareholder dispute and $18.7 million of settlement costs related to the DOJ inquiry. -- For the twelve-month period ended December 31, 2020 and the three-month period ended December 31, 2019, the non-GAAP net income per diluted share calculation includes approximately 940,000 and 551,000 shares, respectively, that were excluded from the GAAP net income (loss) per diluted share calculation. -- 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 Year Ended December31, December31, %Change 2020 2019 %Change 2020 2019Reported 0.0 % $ 258,004 $ 257,922 (3.1 )% $ 963,875 $ 994,852Revenue Add:Impactof (2,981 ) ? 1,308 ?foreignexchange(a) ConstantCurrency (1.1 )% $ 255,023 $ 257,922 (3.0 )% $ 965,183 $ 994,852Revenue

Three Months Ended Year Ended December31, December31, %Change 2020 2019 %Change 2020 2019 Reported 0.0 % $ 258,004 $ 257,922 (3.1 )% $ 963,875 $ 994,852 Revenue Less:Revenue fromcertainacquisitions (12 ) (298 ) (1,229 ) (433 )anddispositions(b) Core Revenue 0.1 % $ 257,992 $ 257,624 (3.2 )% $ 962,646 $ 994,419 Add: Impactof foreign (2,981 ) ? 1,308 ? exchange (a) Core Revenueon aConstant (1.0 ) % $ 255,011 $ 257,624 (3.1 ) % $ 963,954 $ 994,419 CurrencyBasis

-- The constant currency revenue adjustments of ($3.0) million and $1.3 million to reported revenue and to core revenue for the three and twelve-month periods ended December 31, 2020, respectively, were calculated using the applicable average foreign exchange rates for the three and twelve-month periods ended December 31, 2019, respectively, and include adjustments for the effects of hedging transactions on reported revenue, which are recorded in the U.S. -- Merits core revenue is defined with respect to prior fiscal year periods, as GAAP revenue, less revenue from certain dispositions. For the three and twelve-month periods ended December 31, 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 to December 2019). With respect to current fiscal year periods, core revenue is defined as GAAP revenue, less revenue from certain acquisitions. For the three and twelve-month periods ended December 31, 2020, Merits core revenue excludes revenues attributable to the acquisition of (1) Brightwater Medical, Inc. in June 2019 (excluded through May 2020 only), (2) Fibrovein Holdings Limited in August 2019 (excluded through July 2020 only) and (3) KA Medical, LLC in November 2020. 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, and includes adjustments for the effects of hedging transactions on reported revenue, which are recorded in the U.S.

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

Three Months Ended Year Ended December31, December31, 2020 2019 2020 2019 Reported Gross Margin 43.1 % 43.3 % 41.6 % 43.5 % Add back impact of: Amortization of intangibles 4.9 % 5.0 % 5.3 % 5.0 %Inventory write-off (a) (0.0 )% ? 0.2 % ? Inventory mark-up related to 0.0 % 0.0 % 0.0 % 0.1 %acquisitions Non-GAAP Gross Margin 47.9 % 48.3 % 47.1 % 48.6 %

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

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

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; 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 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 forecasted economic conditions, or the implementation of, and results achieved through, Merits Foundations for Growth program, or the development and commercialization of new products 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 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