Benzinga | Nov 23, 2021 09:26AM EST

Merit Medical Systems Reports Deal In Principle To Settle Class Action Litigation

Merit Medical Systems, Inc. (NASDAQ:MMSI), a leading manufacturer and marketer of proprietary medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care and endoscopy, announced today that it has reached an agreement in principle to settle the securities class action lawsuit against Merit and its Chief Executive Officer and Chief Financial Officer currently pending in the United States District Court for the Central District of California. The lawsuit was filed in June 2020 after Merit's stock price declined following disclosures made by Merit with respect to its operating and financial performance during 2019. The settlement was reached following a voluntary mediation process.

"We are pleased to resolve this matter and put it behind us in order to focus our attention on the continued growth and development of our business," said Fred P. Lampropoulos, Merit's Chairman and Chief Executive Officer. "While we continue to believe the allegations in the case were without merit, we also believe that eliminating the distraction, expense and risk of continued litigation is in the best interests of Merit and its shareholders."

The proposed settlement calls for a payment of $18.25 million in resolution of all claims asserted against Merit and all other defendants. Approximately $8.5 million of the settlement payment is expected to be satisfied with proceeds of available insurance. Merit anticipates that the settlement will also provide a full release of all claims against all defendants, including Merit and its officers, and will contain no admission of liability, wrongdoing or responsibility by any of the defendants.

The settlement remains subject to final documentation and approval by the court and is subject to satisfaction of customary conditions to effectiveness. A final non-appealable closure of the litigation could take several months.

Fiscal Year 2021 Financial Guidance

Based upon information currently available to Merit's management, for the twelve months ending December 31, 2021, Merit is reaffirming net revenue, non-GAAP net income and non-GAAP earnings per share expectations and updating GAAP net income and earnings per share expectations to reflect the after-tax impact of the settlement payment, net of insurance proceeds, of approximately $7.3 million and $0.13 per share, respectively. Absent material acquisitions, non-recurring transactions or other factors beyond Merit's control, Merit now expects the following:

Financial Measure Prior Guidance Range Updated Guidance Range Net Sales $1,060 - $1,070 million $1,060 - $1,070 million GAAP Net Income $38.1 - $46.4 million $30.7 - $39.0 million Earnings Per Share $0.66 - $0.81 $0.53 - $0.68 Non-GAAP Net Income $118.8 - $127.1 million $118.8 - $127.1 million Earnings Per Share $2.07 - $2.22 $2.07 - $2.22

* Non-GAAP net income and non-GAAP earnings per share are non-GAAP financial measures. A reconciliation of these financial measures to their most directly comparable GAAP financial measures is included under the heading "Non-GAAP Financial Measures" below.