Exhibit 99.1

Picture 1

 

FOR IMMEDIATE RELEASE

 

 

Date:

February 24, 2020

Contact:

Anne-Marie Wright, Vice President, Corporate Communications

Phone:

(801) 208‑4167  e-mail: awright@merit.com  Fax: (801) 253‑1688

 

MERIT MEDICAL REPORTS EARNINGS FOR
FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2019,

GIVES FY 2020 GUIDANCE

·

Q4 2019 worldwide revenue of $257.9 million, up 10.6% as reported over Q4 2018

·

Q4 2019 core revenue on a comparable, constant currency basis* up 8.5% over Q4 2018

·

Q4 2019 GAAP loss per share was $(0.08), compared to GAAP EPS of $0.16 in Q4 2018

·

Q4 2019 non-GAAP EPS* was $0.40, compared to $0.48 in Q4 2018

*    Core revenue on a constant currency basis, non-GAAP EPS, non-GAAP net income, non-GAAP operating margin and non-GAAP gross margin 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 - Merit Medical Systems, Inc. (NASDAQ: MMSI), a leading manufacturer and marketer of proprietary disposable devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology, oncology, critical care and endoscopy, today announced revenue of $257.9 million for the quarter ended December 31, 2019, an increase of 10.6% over revenue of $233.2 million for the quarter ended December 31, 2018. Core revenue on a comparable, constant currency basis* for the fourth quarter of 2019 would have been up 8.5% over revenue for the comparable quarter of 2018. For the year ended December 31, 2019, Merit's revenue was $994.9 million, up 12.7% compared to revenue of $882.8 million for the year ended December 31, 2018. Core revenue on a comparable, constant currency basis* for the year ended December 31, 2019 would have been up 8.1% when compared to 2018.

Merit’s GAAP operating margin for the fourth quarter of 2019 was (1.3%), compared to GAAP operating margin of 5.9% for the fourth quarter of 2018. Merit’s non-GAAP operating margin* for the fourth quarter of 2019 was 12.7%, compared to non-GAAP operating margin* of 14.2% for the fourth quarter of 2018. Merit’s GAAP operating margin for the year ended December 31, 2019 was 1.6%, compared to GAAP operating margin of 6.6% for the year ended December 31, 2018. Merit’s non-GAAP operating margin* for the year ended December 31, 2019 was 11.8%, compared to non-GAAP operating margin* of 13.6% for the year ended December 31, 2018.

Merit’s GAAP net loss for the fourth quarter of 2019 was $(4.2) million, or $(0.08) per share, compared to GAAP net income of $9.2 million, or $0.16 per share, for the fourth quarter of 2018. Merit’s non-GAAP net income* for the quarter ended December 31, 2019 was $22.1 million, or $0.40 per share, compared to $27.0 million, or $0.48 per share, for the quarter ended December 31, 2018. For the year ended December 31, 2019, Merit's GAAP net income was $5.5 million, or $0.10 per share, compared to $42.0 million, or $0.78 per share, for 2018. Merit's non-GAAP net income* for the year ended December 31, 2019 was $82.1 million, or $1.46, compared to $91.3 million, or $1.69 per share, for 2018.

1

Merit’s GAAP gross margin for the fourth quarter of 2019 was 43.3%, compared to GAAP gross margin of 44.9% for the fourth quarter of 2018. Merit’s non-GAAP gross margin* for the fourth quarter of 2019 was 48.3%, compared to non-GAAP gross margin* of 49.4% for the fourth quarter of 2018. Merit's GAAP gross margin for the year ended December 31, 2019 was 43.5%, compared to 44.7% for 2018. Merit's non-GAAP gross margin* for the year ended December 31, 2019 was 48.6% compared to 48.9% for 2018.

“We are pleased with the strong performance across our business during the fourth quarter and that the integration of our most recent acquisitions is largely complete,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer. “As noted in our recent press release, we have received a number of important new regulatory approvals. These approvals, along with other internally developed products scheduled for release and a full pipeline of new products in the works, give us confidence in the future growth of the company.”

Merit continues to execute upon several initiatives aimed at driving increased shareholder value. These initiatives include consolidation of manufacturing facilities to drive operating expense reductions and the implementation of programs to incent Merit’s sales force to focus on products that will improve Merit’s financial performance.  As it pertains to the manufacturing consolidation initiatives, Merit plans to move production of 14 products to its facilities in Tijuana, Mexico or Pearland, Texas, and expects to consolidate four facilities from 2020-2021.  Merit projects that these initiatives will result in cost savings of approximately $6 million to $10 million annually.  On the sales force incentive front, Merit specifically identified certain product lines, including biopsy, drainage and Cianna products, where it believes it can drive greater customer focus and ultimately increase revenue growth and margins. 

Merit’s revenue by category for the three and twelve months ended December 31, 2019, compared to the corresponding periods in 2018, was as follows (unaudited, in thousands, except for percentages):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

Three Months Ended December 31, 

 

 

 

Year Ended December 31, 

 

    

% Change

    

2019

    

2018

    

% Change

    

2019

    

2018

Cardiovascular

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stand-alone devices

 

11.9

%  

$

106,191

 

$

94,896

 

11.0

%  

$

401,466

 

$

361,613

Cianna Medical

 

n/a

 

 

13,813

 

 

6,292

 

n/a

 

 

49,536

 

 

6,292

Custom kits and procedure trays

 

0.6

%  

 

34,599

 

 

34,397

 

0.8

%  

 

135,856

 

 

134,756

Inflation devices

 

(2.8)

%  

 

22,166

 

 

22,802

 

(1.9)

%  

 

90,681

 

 

92,419

Catheters

 

8.1

%  

 

45,067

 

 

41,695

 

14.4

%  

 

177,876

 

 

155,525

Embolization devices

 

12.7

%  

 

13,904

 

 

12,332

 

4.1

%  

 

52,072

 

 

50,038

CRM/EP

 

7.9

%  

 

13,671

 

 

12,672

 

9.5

%  

 

53,494

 

 

48,834

Total

 

10.8

%  

 

249,411

 

 

225,086

 

13.1

%  

 

960,981

 

 

849,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endoscopy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endoscopy devices

 

4.3

%  

 

8,511

 

 

8,163

 

1.8

%  

 

33,871

 

 

33,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

10.6

%  

$

257,922

 

$

233,249

 

12.7

%  

$

994,852

 

$

882,753

 

In addition to the commercial, clinical and operational progress discussed above, Merit is also implementing a more simplified manner of characterizing its revenues to more closely reflect the commercial focus of its business by call point and end markets. “We recognize that our historical characterization of our revenues by certain product categories failed to adequately represent the scale of our business at these key call points. We believe this new approach will more clearly reflect how we sell our products to our customers in each of our focused end markets and more adequately reflect the underlying commercial momentum in the business” said Lampropoulos.  Merit plans to provide historical reconciliation of these categories in the future, but has provided a summary of the projected format in its accompanying investor presentation. 

Merit noted that during the fourth quarter of 2019, it recorded an impairment expense of approximately $20.5 million related to its arrangement with NinePoint Medical, Inc., in which Merit fully impaired its loan to NinePoint and its option to purchase the outstanding equity of NinePoint. In addition, Merit recorded a write-off of $1.6 million of accrued interest related to the loan to NinePoint.  

2

2020 GUIDANCE

Based upon information currently available to Merit’s management, Merit estimates for the year ending December 31, 2020, absent material acquisitions, non-recurring transactions or other factors beyond Merit’s control, the following:

 

 

 

 

Financial Measure

    

2020 Guidance (Pre-Coronavirus)

 

 

 

 

Net Sales

 

 

$1,044- $1,064 million

 

 

 

 

GAAP

 

 

  

Earnings per share

 

 

$0.62 - $0.72

Operating margin

 

 

6% - 7%

 

 

 

 

Non-GAAP

 

 

  

Earnings per share

 

 

$1.58 - $1.68

Operating margin

 

 

13% - 14%

 

Not included in Merit’s guidance is any anticipated impact of the coronavirus outbreak on Merit’s business.  While it is too early to adequately forecast the potential impact, or duration, of the outbreak on Merit’s 2020 financial performance, Merit currently estimates that the potential impact of a full quarter of a continued coronavirus outbreak at current levels could result in an impact in the range of $14 million to $19 million in net sales, and $0.08 to $0.12 in non-GAAP EPS.  Merit does not have enough information to estimate any potential impact beyond that point, but intends to disseminate additional information as events unfold.  Importantly, Merit has taken the precautions it believes are necessary to encourage the safety of its employees and its business. Adjustments in inventory and logistics are also being made as necessary.

 

Merit’s financial guidance for the year ending December 31, 2020 is subject to risks and uncertainties identified in Merit’s public filings.

CONFERENCE CALL

Merit will hold its investor conference call (conference ID 4079914) today, Monday, February 24, 2020, at 5:00 p.m. Eastern (4:00 p.m. Central, 3:00 p.m. Mountain, and 2:00 p.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.

3

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

 

 

 

 

    

December 31, 

    

 

 

 

2019

 

December 31, 

 

    

(unaudited)

    

2018

ASSETS

 

 

 

 

  

Current Assets

 

 

  

 

 

  

Cash and cash equivalents

 

$

44,320

 

$

67,359

Trade receivables, net

 

 

155,365

 

 

137,174

Other receivables

 

 

10,016

 

 

11,879

Inventories

 

 

225,698

 

 

197,536

Prepaid expenses and current other assets

 

 

12,497

 

 

11,326

Prepaid income taxes

 

 

3,491

 

 

3,627

Income tax refund receivables

 

 

3,151

 

 

933

Total current assets

 

 

454,538

 

 

429,834

 

 

 

 

 

 

 

Property and equipment, net

 

 

378,785

 

 

331,452

Intangible assets, net

 

 

445,312

 

 

462,713

Goodwill

 

 

353,193

 

 

335,433

Deferred income tax assets

 

 

3,788

 

 

3,001

Right-of-use operating lease assets

 

 

80,244

 

 

 —

Other assets

 

 

41,461

 

 

57,579

Total Assets

 

 

1,757,321

 

 

1,620,012

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities

 

 

  

 

 

  

Trade payables

 

$

54,623

 

$

54,024

Accrued expenses

 

 

105,184

 

 

96,173

Current portion of long-term debt

 

 

7,500

 

 

22,000

Short-term operating lease liabilities

 

 

11,550

 

 

 —

Income taxes payable

 

 

2,799

 

 

3,146

Total current liabilities

 

 

181,656

 

 

175,343

 

 

 

 

 

 

 

Long-term debt

 

 

431,984

 

 

373,152

Deferred income tax liabilities

 

 

45,236

 

 

56,363

Long-term income taxes payable

 

 

347

 

 

392

Liabilities related to unrecognized tax benefits

 

 

1,990

 

 

3,013

Deferred compensation payable

 

 

14,855

 

 

11,219

Deferred credits

 

 

2,122

 

 

2,261

Long-term operating lease liabilities

 

 

72,714

 

 

 —

Other long-term obligations

 

 

56,473

 

 

65,494

Total Liabilities

 

 

807,377

 

 

687,237

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

Common stock

 

 

587,017

 

 

571,383

Retained earnings

 

 

368,221

 

 

363,425

Accumulated other comprehensive loss

 

 

(5,294)

 

 

(2,033)

Total Liabilities and Stockholders' Equity

 

$

1,757,321

 

$

1,620,012

 

 

4

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended December 31, 

    

Year Ended December 31, 

 

 

    

2019

    

2018

    

2019

    

2018

 

NET SALES

 

$

257,922

 

$

233,249

 

$

994,852

 

$

882,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES

 

 

146,292

 

 

128,583

 

 

562,486

 

 

487,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

111,630

 

 

104,666

 

 

432,366

 

 

394,770

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

  

 

 

  

 

 

  

 

 

  

 

Selling, general and administrative

 

 

82,090

 

 

75,630

 

 

327,274

 

 

276,018

 

Research and development

 

 

16,254

 

 

15,368

 

 

65,615

 

 

59,532

 

Impairment and other charges

 

 

20,500

 

 

 —

 

 

23,750

 

 

657

 

Contingent consideration expense (benefit)

 

 

(3,805)

 

 

(256)

 

 

(232)

 

 

(698)

 

Acquired in-process research and development

 

 

 —

 

 

263

 

 

525

 

 

644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

115,039

 

 

91,005

 

 

416,932

 

 

336,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

(3,409)

 

 

13,661

 

 

15,434

 

 

58,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

  

 

 

  

 

 

  

 

 

  

 

Interest income

 

 

(1,317)

 

 

352

 

 

(291)

 

 

1,199

 

Interest expense

 

 

(3,120)

 

 

(2,295)

 

 

(12,413)

 

 

(10,360)

 

Other expense (benefit) - net

 

 

(116)

 

 

492

 

 

(537)

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expense — net

 

 

(4,553)

 

 

(1,451)

 

 

(13,241)

 

 

(9,098)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

(7,962)

 

 

12,210

 

 

2,193

 

 

49,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE (BENEFIT)

 

 

(3,757)

 

 

3,022

 

 

(3,258)

 

 

7,502

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

(4,205)

 

$

9,188

 

$

5,451

 

$

42,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER COMMON SHARE:

 

 

  

 

 

  

 

 

  

 

 

  

 

Basic

 

$

(0.08)

 

$

0.17

 

$

0.10

 

$

0.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

(0.08)

 

$

0.16

 

$

0.10

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES:

 

 

  

 

 

  

 

 

  

 

 

  

 

Basic

 

 

55,210

 

 

54,850

 

 

55,075

 

 

52,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

55,210

 

 

56,514

 

 

56,235

 

 

53,931

 

 

 

 

5

Non-GAAP Financial Measures

Although Merit’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), Merit’s 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 Merit’s 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, and

·

non-GAAP earnings per share.

Merit’s management team uses these non-GAAP financial measures to evaluate Merit’s 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, Merit’s 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 Merit’s 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 Merit’s 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, governmental proceedings or changes in tax or industry regulations, 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 Merit’s business or results of operations.

Constant Currency Revenue

Merit’s revenue on a constant currency basis is prepared by translating the current-period reported revenue of subsidiaries whose functional currency is 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 $1.7 million and $13.5 million for the three and twelve-month periods ended December 31, 2019, respectively, were calculated using the applicable average foreign exchange rates for the three and twelve-month periods ended December 31, 2018, respectively.

Core Revenue and Core Revenue on a Constant Currency Basis

Merit’s core revenue is defined (a) with respect to prior fiscal year periods, as GAAP revenue, and (b) with respect to current fiscal year periods, as GAAP revenue, less revenue from certain acquisitions and strategic transactions. For the three and twelve-month periods ended December 31, 2019, Merit’s core revenue excludes revenues attributable to (i) the acquisition of (1) certain divested assets of Becton, Dickinson and Company in February 2018 (excluded January 2019 only), (2) the assets of DirectACCESS Medical, LLC in May 2018 (excluded through April 2019 only), (3) Cianna Medical, Inc. in November 2018 (excluded through October 2019 only), (4) the assets of Vascular Insights, LLC in December 2018 (excluded through

6

November 2019 only), (5) Brightwater Medical, Inc. in June 2019, and (6) Fibrovein Holdings Limited in August 2019 and (ii) distribution arrangements executed with NinePoint Medical, Inc. in April 2018 (excluded through April 2019 only) and QXMedical, LLC in May 2018 (excluded through May 2019 only). Core revenue on a constant currency basis is defined as core revenue (as described in the first sentence of this paragraph) adjusted to eliminate the foreign exchange impact related to those core revenues 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 and inventory mark-up related to acquisitions.

Non-GAAP Operating Margin

Non-GAAP operating margin is calculated by adjusting GAAP operating income (loss) for certain items which are deemed by Merit’s 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, expenses resulting from non-ordinary course litigation, 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 and changes in tax regulations, as well as 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.

Other Non-GAAP Financial Measure Reconciliation

The tables in this release set forth supplemental financial data and corresponding reconciliations of non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per share to Merit’s operating income, net income and earnings per share prepared in accordance with GAAP, respectively, for the three and twelve-month periods ended December 31, 2019 and 2018. The non-GAAP operating margin and non-GAAP net income adjustments referenced in the following tables do not reflect stock-based compensation expense of approximately $2.5 million and $1.6 million for the three-month periods ended December 31, 2019 and 2018, respectively, and approximately $9.4 million and $6.1 million for the twelve-month periods ended December 31, 2019 and 2018, respectively.

7

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income

(Unaudited, in thousands except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2019

 

    

Pre-Tax

    

Tax Impact (a)

    

After-Tax

    

Per Share Impact

GAAP net income (loss)

 

$

(7,962)

 

$

3,757

 

$

(4,205)

 

$

(0.08)

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

  

 

 

  

 

 

  

 

 

  

Cost of Sales

 

 

  

 

 

  

 

 

  

 

 

  

Amortization of intangibles

 

 

12,825

 

 

(3,285)

 

 

9,540

 

 

0.17

Inventory mark-up related to acquisitions

 

 

183

 

 

(47)

 

 

136

 

 

0.00

Operating Expenses

 

 

 

 

 

 

 

 

  

 

 

  

Severance

 

 

1,420

 

 

(369)

 

 

1,051

 

 

0.02

Acquisition-related (b)

 

 

600

 

 

(154)

 

 

446

 

 

0.01

Medical Device Regulation expenses (c)

 

 

366

 

 

(47)

 

 

319

 

 

0.01

Fair value adjustments to contingent consideration (d)

 

 

(3,805)

 

 

(702)

 

 

(4,507)

 

 

(0.08)

Impairment and other charges (e)

 

 

20,508

 

 

(5,279)

 

 

15,229

 

 

0.27

Amortization of intangibles

 

 

2,675

 

 

229

 

 

2,904

 

 

0.06

Special legal expense (f)

 

 

1,468

 

 

(378)

 

 

1,090

 

 

0.02

Other (Income) Expense

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of long-term debt issuance costs

 

 

151

 

 

(39)

 

 

112

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

28,429

 

$

(6,314)

 

$

22,115

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares (g)

 

 

  

 

 

  

 

 

  

 

 

55,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 2018

 

 

Pre-Tax

 

Tax Impact (a)

 

After-Tax

 

Per Share Impact

GAAP net income

    

$

12,210

 

$

(3,022)

 

$

9,188

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

  

 

 

  

 

 

  

 

 

  

Cost of Sales

 

 

  

 

 

  

 

 

  

 

 

  

Amortization of intangibles

 

 

9,245

 

 

(2,365)

 

 

6,880

 

 

0.13

Inventory mark-up related to acquisitions

 

 

1,255

 

 

(323)

 

 

932

 

 

0.02

Operating Expenses

 

 

 

 

 

 

 

 

  

 

 

  

Severance

 

 

440

 

 

(114)

 

 

326

 

 

0.01

Acquisition-related (b)

 

 

4,465

 

 

(876)

 

 

3,589

 

 

0.06

Fair value adjustments to contingent consideration (d)

 

 

(256)

 

 

68

 

 

(188)

 

 

0.00

Acquired in-process research and development

 

 

263

 

 

(67)

 

 

196

 

 

0.00

Impairment and other charges (e)

 

 

70

 

 

(18)

 

 

52

 

 

0.00

Amortization of intangibles

 

 

2,574

 

 

(679)

 

 

1,895

 

 

0.03

Special legal expense (f)

 

 

1,363

 

 

(351)

 

 

1,012

 

 

0.02

Other (Income) Expense

 

 

 

 

 

 

 

 

  

 

 

 

Amortization of long-term debt issuance costs

 

 

201

 

 

(52)

 

 

149

 

 

0.00

Tax expense related to tax reform (h)

 

 

 —

 

 

3,005

 

 

3,005

 

 

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

31,830

 

$

(4,794)

 

$

27,036

 

$

0.48

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

 

  

 

 

  

 

 

  

 

 

56,514

 

 

8

Reconciliation of GAAP Net Income to Non-GAAP Net Income

(Unaudited, in thousands except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2019

 

    

Pre-Tax

    

Tax Impact (a)

    

After-Tax

    

Per Share Impact

GAAP net income

 

$

2,193

 

$

3,258

 

$

5,451

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

  

 

 

  

 

 

  

 

 

 

Cost of Sales

 

 

  

 

 

  

 

 

  

 

 

 

Amortization of intangibles

 

 

49,707

 

 

(12,730)

 

 

36,977

 

 

0.66

Inventory mark-up related to acquisitions

 

 

1,122

 

 

(289)

 

 

833

 

 

0.01

Operating Expenses

 

 

 

 

 

 

 

 

  

 

 

 

Severance

 

 

4,963

 

 

(1,281)

 

 

3,682

 

 

0.06

Acquisition-related (b)

 

 

3,497

 

 

(743)

 

 

2,754

 

 

0.05

Medical Device Regulation expenses (c)

 

 

562

 

 

(98)

 

 

464

 

 

0.01

Fair value adjustments to contingent consideration (d)

 

 

(232)

 

 

(47)

 

 

(279)

 

 

0.00

Acquired in-process research and development

 

 

525

 

 

(135)

 

 

390

 

 

0.01

Impairment and other charges (e)

 

 

24,587

 

 

(6,329)

 

 

18,258

 

 

0.32

Amortization of intangibles

 

 

10,964

 

 

(2,884)

 

 

8,080

 

 

0.14

Special legal expense (f)

 

 

6,508

 

 

(1,675)

 

 

4,833

 

 

0.09

Other (Income) Expense

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of long-term debt issuance costs

 

 

821

 

 

(211)

 

 

610

 

 

0.01

Tax expense related to restructuring (i)

 

 

 —

 

 

93

 

 

93

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

105,217

 

$

(23,071)

 

$

82,146

 

$

1.46

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

 

 

 

 

  

 

 

  

 

 

56,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2018

 

    

Pre-Tax

    

Tax Impact (a)

    

After-Tax

    

Per Share Impact

GAAP net income

 

$

49,519

 

$

(7,502)

 

$

42,017

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

  

 

 

  

 

 

  

 

 

  

Cost of Sales

 

 

  

 

 

  

 

 

  

 

 

  

Amortization of intangibles

 

 

31,795

 

 

(8,123)

 

 

23,672

 

 

0.43

Inventory mark-up related to acquisitions

 

 

5,233

 

 

(1,347)

 

 

3,886

 

 

0.07

Operating Expenses

 

 

  

 

 

  

 

 

  

 

 

 

Severance

 

 

920

 

 

(205)

 

 

715

 

 

0.01

Acquisition-related (b)

 

 

7,584

 

 

(1,679)

 

 

5,905

 

 

0.11

Fair value adjustment to contingent consideration (d)

 

 

(698)

 

 

(21)

 

 

(719)

 

 

(0.01)

Acquired in-process research and development

 

 

644

 

 

(166)

 

 

478

 

 

0.01

Impairment and other charges (e)

 

 

813

 

 

(209)

 

 

604

 

 

0.01

Amortization of intangibles

 

 

9,438

 

 

(2,503)

 

 

6,935

 

 

0.12

Special legal expense (f)

 

 

5,645

 

 

(1,453)

 

 

4,192

 

 

0.08

Other (Income) Expense

 

 

 

 

 

  

 

 

  

 

 

 

Amortization of long-term debt issuance costs

 

 

804

 

 

(207)

 

 

597

 

 

0.01

Tax expense related to tax reform (h)

 

 

 —

 

 

3,005

 

 

3,005

 

 

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

111,697

 

$

(20,410)

 

$

91,287

 

$

1.69

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

 

 

 

 

  

 

 

  

 

 

53,931

 

9

 

 

 

 

 

Reconciliation of Reported Operating Income to Non-GAAP Operating Income

(Unaudited, in thousands except per share amounts)