Merit Medical Systems, Inc. (Merit Medical), a developer of medical devices for cardiovascular diseases, has reported revenues of $58.4 million for the first quarter of 2009, up 9%, compared with the sales of $53.6 million in the year-ago quarter. It also reported a net income of $5.5 million, or $0.19 per diluted share, for the first quarter of 2009, up 28%, compared with the net income of $4.3 million, or $0.15 per diluted share, in the year-ago quarter.
During the first quarter we accomplished our goal of closing the Alveolus, Inc. and Biosearch Medical Products, Inc. transactions. We believe the technology and intellectual property acquired in these transactions will facilitate growth and opportunity in our new Merit Endotek(tm) division, said Fred P. Lampropoulos, Merit Medical ‘s chairman and chief executive officer. Despite the worldwide economic slowdown and financial turmoil, Merit posted gains in sales and gross margins. Excluding sales of our largest OEM customer, our OEM sales grew 41%. We believe this was a result of efficient staffing and aggressive marketing of Merit’s broad line of products for customers looking for stability and value.
Gross margins for the first quarter of 2009 were up 220 basis points to 42.5% of sales, against 40.3% of sales for the first quarter of 2008. The improvement in gross margins was primarily the result of overhead and manufacturing efficiencies attributable to higher production volumes, reduced material costs, and a favorable Euro to dollar exchange rate, which reduced costs in Merit’s facility in Galway, Ireland.
Selling, general and administrative expenses for the first quarter of 2009 were 25.4% of sales, against 24.4% of sales for the first quarter of 2008. Approximately 130 basis points of the increase in SG&A expenses were related to acquiring the assets of Alveolus and operating the former Alveolus business during the last three weeks of the quarter ended March 31, 2009. Research and development costs were 3.6% of sales for both the first quarter of 2009 and the first quarter of 2008.
Income from operations for the quarter ended March 31, 2009 was $7.9 million, against $6.6 million for the first quarter of 2008.
For the first quarter of 2009, against the first quarter of 2008, catheter sales up 25%; custom kit and tray sales rose 10%; stand-alone device sales grew 9%; and inflation device sales fell 4%. Inflation device sales were affected by deliveries of inflation devices to an OEM customer.
Merit’s effective tax rate for the first quarter of 2009 was 31.4%, compared with 36.0% for the comparable period of 2008. This lower tax rate is primarily a result of higher profits in Merit’s Irish facility, which are taxed at a lower rate.
Merit’s cash position was $16.4 million on March 31, 2009, against $34.0 million on December 31, 2008. Approximately $20.2 million was paid from cash reserves during the first quarter of 2009 to acquire the assets of Alveolus and Biosearch, and $2.5 million was spent to repurchase outstanding shares of Merit’s common stock.