Merit Medical Systems (NASDAQ:MMSI) reported fourth-quarter 2025 results that exceeded its prior expectations, driven by double-digit revenue growth, expanding margins, and record quarterly free cash flow. Management also introduced 2026 guidance that calls for continued constant-currency growth, modest operating-margin expansion, and at least $200 million in free cash flow, while acknowledging headwinds from tariffs, a weaker OEM quarter, and the divestiture of a non-core product line.
Fourth-quarter results topped guidance on revenue, margin, and cash flow
For the fourth quarter, Merit posted total revenue of $393.9 million, up 11% year-over-year on a GAAP basis and up 10% on a constant-currency basis. CEO Martha Aronson said constant-currency revenue growth exceeded the high end of the range shared on the prior quarter’s call, supported by 6.6% organic constant-currency growth and stronger-than-expected acquisition contributions.
Merit generated $74 million of free cash flow in the quarter, a 13% year-over-year increase and a company quarterly record, according to management.
Segment and product performance: strength in cardiovascular and endoscopy, weakness in OEM
Parra said constant-currency revenue growth was driven primarily by 9% growth in the cardiovascular segment and 15% growth in endoscopy. Fourth-quarter revenue included approximately $10.8 million of inorganic contributions from acquired products, including lead management products from Cook Medical, BioLife Delaware, and the C2 CryoBalloon device from Pentax of America.
Within cardiovascular, management highlighted robust growth in multiple categories:
- Cardiac Intervention sales rose 21% (and 12% excluding acquired products). Parra cited demand for the PreludeSNAP and the Ventrax Delivery System, high-teens growth in wires supporting angiography, and growth in access products including the Prelude Radial Sheath and Prelude Wave Hydrophilic Sheath Introducer with SnapFix technology.
- Peripheral Intervention sales increased 13%. Growth was driven by Radar Localization and delivery systems categories, which together increased more than 25% and represented about 45% of total PI growth, along with broad-based strength across embolic therapy, drainage, angiography, and access products.
- Custom Procedural Solutions grew 4%, supported by high-teens kit growth and partially offset by declines in critical care products. Parra said results were impacted in part by the planned divestiture of the DualCap line.
OEM was the primary disappointment in the quarter. OEM sales decreased 15%, well below the company’s expectations. Management attributed the shortfall to continued macro-related demand trends outside the U.S. and customer inventory destocking in the U.S. Despite the quarterly decline, Parra said the OEM business grew 2% on a constant-currency basis for full-year 2025 and reiterated the company’s view that normalized OEM growth should be in the mid- to high-single digits.
By geography in the fourth quarter, U.S. revenue rose 12% year-over-year (and 8% organically on a constant-currency basis), while international revenue increased 6% (and 4% organically).
Margins: record gross margin despite tariff headwinds
On a non-GAAP basis, gross margin was 54.5%, up 103 basis points year-over-year and the highest quarterly gross margin in company history, according to Parra. He said the improvement was driven primarily by mix (product and geography) and pricing versus the prior year period.
Tariffs were a significant headwind in the quarter, with Parra citing a 112 basis point incremental impact year-over-year on gross margin in Q4. Operating expenses increased 10%, including a 10% rise in SG&A and an 8% increase in R&D. Management also discussed ongoing efforts to improve margins through mix, SKU rationalization, pricing, and cost discipline, including shifting production to lower-cost areas and divesting lower-margin products.
Full-year 2025: above original targets and strong cash generation
For full-year 2025, Merit delivered 11% constant-currency revenue growth, including 7% organic growth and $62 million from acquisitions. The company reported a non-GAAP operating margin of 20.3%, up 131 basis points year-over-year, and generated nearly $216 million of free cash flow, up 16% year-over-year.
Management compared this performance to the original 2025 guidance provided a year earlier, noting the company exceeded the prior high-end targets for constant-currency growth (10%), non-GAAP operating margin (19.7%), and free cash flow ($150 million). Parra also noted the company invested $30 million in its new distribution center in Utah during the year.
As of December 31, 2025, Merit had $446.4 million in cash and cash equivalents and total debt of $747.5 million, with available borrowing capacity of approximately $697 million. Net leverage was 1.6x on an adjusted basis.
2026 outlook: growth continues, but divestiture and tariffs create headwinds
For 2026, Merit guided to GAAP revenue growth of 6% to 8% and constant-currency growth of 5% to 7% (excluding an estimated 80 basis point foreign exchange tailwind to GAAP growth). The company expects inorganic revenue from the BioLife and C2 acquisitions of $13 million to $15 million, and organic constant-currency growth of approximately 4.5% to 6% when excluding that inorganic contribution.
Management also incorporated several notable items into the outlook:
- WRAPSODY CIE: U.S. revenue of approximately $7 million in 2026 versus $3 million in 2025. Management said it has “high confidence” in the $7 million target after revisiting expectations following earlier results that “missed the mark,” and emphasized the competitive nature of the market.
- DualCap divestiture: The company sold its DualCap product line for $28 million, effective February 17. DualCap product sales and royalty revenue totaled approximately $20 million in 2025 and represent an estimated 140 basis point headwind to total constant-currency revenue growth in 2026 (and about a 240 basis point headwind to U.S. growth). Management described DualCap as non-core and said the sale frees up manufacturing capacity and commercial resources for higher-margin, higher-growth products.
Merit guided to non-GAAP diluted EPS of $4.01 to $4.15 (up 5% to 8%), with non-GAAP operating margin expected at approximately 20.6% to 21% (versus 20.3% in 2025). The company expects free cash flow of at least $200 million, including roughly $90 million of capital expenditures.
Tariffs were a key variable in the forecast. Parra said the 2026 non-GAAP EPS outlook includes a 12-month tariff impact of approximately $15 million, or $0.19 per share, compared with $9 million, or $0.12 per share, realized during the last eight months of 2025. Management noted its assumptions are based on tariff policies in place prior to a February 20 U.S. Supreme Court decision and do not include potential new or retaliatory tariffs.
For the first quarter of 2026, Merit projected revenue of $375 million to $380 million, representing GAAP growth of 6% to 7% and constant-currency growth of approximately 3% to 5%. Management guided to non-GAAP operating margin of 16.7% to 18.5% (versus 19.3% last year) and non-GAAP EPS of $0.77 to $0.87 (versus $0.86). Parra attributed the margin pressure primarily to tariffs (which were not in effect in Q1 2025), the impact of a larger expense base in a seasonally smaller revenue quarter, and higher expenses tied in part to items such as the company’s first global sales meeting.
During the Q&A, management also discussed ongoing strategic priorities under Aronson, who began as CEO in October 2025, including organizational changes, a platform-based approach to planning, and continued interest in disciplined M&A. Aronson said the company has appetite for “tuck-in or slightly larger than tuck-in” acquisitions, though not a transformative deal, and emphasized maintaining focus on Merit’s existing platforms and product portfolio.
About Merit Medical Systems (NASDAQ:MMSI)
Merit Medical Systems, Inc is a global manufacturer and marketer of a broad range of medical devices used in diagnostic and interventional procedures. The company’s product portfolio encompasses vascular access, drainage, embolotherapy, and interventional oncology devices, as well as radiofrequency ablation systems and hemostasis solutions. These products serve physicians and hospitals in critical care settings and support minimally invasive treatment options across multiple specialties, including cardiology, radiology, oncology, neurology and endoscopy.
Founded in 1987 by Fred Lampropoulos, Merit Medical Systems has grown through both organic development and targeted acquisitions to expand its technology offerings and geographic reach.
