Exhibit 99.1

Picture 1

 

FOR IMMEDIATE RELEASE

 

 

Date:

October 30, 2019

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
THIRD QUARTER OF 2019

·

Q3 2019 worldwide revenue of $243.0 million, up 9.6% as reported over Q3 2018

·

Q3 2019 core revenue on a comparable, constant currency basis* up 4.3% over Q3 2018

·

Q3 2019 GAAP loss per share was $(0.06), compared to GAAP EPS of $0.30 in Q3 2018

·

Q3 2019 non-GAAP EPS* was $0.28, compared to $0.47 in Q3 2018

*    Core revenue on a constant currency basis, non-GAAP EPS, non-GAAP net income 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 $243.0 million for the quarter ended September 30, 2019, an increase of 9.6% over revenue of $221.7 million for the quarter ended September 30, 2018. Core revenue on a comparable, constant currency basis* for the third quarter of 2019 increased 4.3% compared to the third quarter of 2018. Additional products, which generated revenue of approximately $4.6 million,  were shipped during the third quarter of 2019, however, due to revenue recognition requirements, revenue attributable to those products will not be recognized until the fourth quarter of 2019.

Merit’s GAAP net loss for the third quarter of 2019 was $(3.4) million, or $(0.06) per share, compared to GAAP net income of $16.6 million, or $0.30 per share, for the third quarter of 2018. Merit’s non-GAAP net income* for the quarter ended September 30, 2019 was $15.7 million, or $0.28 per share, compared to $26.0 million, or $0.47 per share, for the quarter ended September 30, 2018.

Merit’s GAAP gross margin for the third quarter of 2019 was 42.8%, compared to GAAP gross margin of 46.0% for the third quarter of 2018. Merit’s non-GAAP gross margin* for the third quarter of 2019 was 48.1%, compared to non-GAAP gross margin* of 49.8% for the third quarter of 2018.

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Merit’s revenue by category for the three and nine-month periods ended September 30, 2019, compared to the corresponding periods in 2018, was as follows (unaudited, in thousands, except for percentages):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

Three Months Ended September 30, 

 

 

 

Nine Months Ended September 30, 

 

    

% Change

    

2019

    

2018

    

% Change

    

2019

    

2018

Cardiovascular

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stand-alone devices

 

5.9

%  

$

96,326

 

$

90,975

 

10.7

%  

$

295,275

 

$

266,717

Cianna Medical

 

n/a

 

 

11,638

 

 

 —

 

n/a

 

 

35,723

 

 

 —

Custom kits and procedure trays

 

2.6

%  

 

33,972

 

 

33,095

 

0.9

%  

 

101,257

 

 

100,359

Inflation devices

 

(3.1)

%  

 

22,183

 

 

22,893

 

(1.6)

%  

 

68,515

 

 

69,617

Catheters

 

9.4

%  

 

44,426

 

 

40,591

 

16.7

%  

 

132,809

 

 

113,830

Embolization devices

 

(0.5)

%  

 

12,333

 

 

12,395

 

1.2

%  

 

38,168

 

 

37,706

CRM/EP

 

11.0

%  

 

13,548

 

 

12,201

 

10.1

%  

 

39,823

 

 

36,163

Total

 

10.5

%  

 

234,426

 

 

212,150

 

14.0

%  

 

711,570

 

 

624,392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endoscopy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endoscopy devices

 

(9.3)

%  

 

8,623

 

 

9,509

 

1.0

%  

 

25,360

 

 

25,112

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

9.6

%  

$

243,049

 

$

221,659

 

13.5

%  

$

736,930

 

$

649,504

 

“Historically, the summer quarter has generally been the slowest quarter of the year for us, as sales to hospitals, physicians, and even countries delivering health care slowed substantially,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer. “This year was no exception, especially compared to the summer quarter of last year, during which we experienced a $4-5 million bump in sales due to a shortage of inventory experienced by a competitor. Our third quarter results this year were also hampered by our decline in gross margin growth as a result of product sales mix, increased cost, foreign exchange, trade concerns, tariffs and Brexit.”

“Consequently, we have adjusted our 2019 full year guidance to $986 – $995 million in revenue, 43.2% –  43.6% in GAAP gross margins, 48.4% – 48.7% in non-GAAP gross margins and $0.27 – $0.33 in GAAP earnings per share, and $1.40 – $1.46 in non-GAAP earnings per share,” Lampropoulos continued. “We are also pulling 2020 guidance off the table at this time so that we can provide more accurate forecasting as we continue to assess the anticipated impact of our recently-executed Premier GPO opportunity, our negotiation of preferred provider status with a major medical device distributor, which is now in effect, our initiatives to reduce costs and improve operational efficiencies, geopolitical developments and other factors. Our new GPO and distribution agreements provide substantial opportunities, however it must be understood that there is a lag between commencement and conversion which can take several months to utilize existing inventories, conduct proper training and fill the product pipeline. As we look forward to the balance of 2019, we see sales improvements underway. We currently plan to provide 2020 guidance when we report 2019 fourth quarter and year-end results.”

“During the third quarter of 2019 we initiated a number of initiatives to increase efficiency and lower costs,” Lampropoulos said. “We have already completed a headcount reduction of 2% of our total workforce, with a substantial portion coming from our SG&A category.  We closed our research and development facility in San Jose, and absorbed the essential operations conducted in that facility into our Utah facility. We are also exploring the consolidation of additional satellite facilities to our Mexico and Texas facilities during the next several months. All in all, there is substantial effort to reduce costs and increase efficiency throughout the entire organization.”

“We believe we have been through the trough and are now emerging as a leaner, more efficient growth company,” Lampropoulos said. “We are adapting to global conditions, which have been significant, and as previously mentioned, our customers, dealers and vendors are adapting as well. Our goals of improving free cash flow and reducing capital expenditures by at least $20 million from 2019 levels are significant elements of our budget planning process.”

“Our new product pipeline continues to be robust with a number of new products particularly directed towards electrophysiology and vascular access,” Lampropoulos continued. “We have completed our “First in Man” trials of our Wrapsody™ Stent Graft and have filed for Breakthrough Device Designation with the FDA. Additionally, dialogue is

2

underway with the FDA for our pivotal study of the Wrapsody. We also completed the transfer of all activities of the biopsy business we acquired from Becton Dickinson to our facility in Mexico, which was an enormous project completed on time and on budget.”

“We expect future growth to benefit from the 10-15 new products we plan to release over the next six months, as well as continued focus on the areas we excel in,” Lampropoulos said. “We believe new products such as our Arcadia™ Kyphoplasty System, which features advantages exclusive to Merit; the Sync Evo™ and Synch™ Vascular Closure Devices; the new ReSolve® Mini Pigtail Drainage Catheter, which complements our entire drainage product offering; the new Fountain® Infusion Catheter; the GO2™ Wire; and the ConcierGE® Catalyst Specialty Catheter will lead the way.”

“We have been asked about our status regarding sterilization capacity and availability,” Lampropoulos said. “Currently, Merit has in place or is qualifying multiple sterilization sites for each of our manufacturing sites. We expect sterilization capacity will continue to tighten, but Merit has a primary and back-up sterilization site for all of our facilities.”

REVISED 2019 GUIDANCE

Based upon information currently available to Merit’s management, Merit estimates for the year ending December 31, 2019, absent material acquisitions, non-recurring transactions or other factors beyond Merit’s control, the following:

 

 

 

 

 

 

 

Financial Measure

    

Prior Guidance

    

Revised Guidance

 

 

 

 

 

 

 

Net Sales

 

 

$1,007 - $1,029 million

 

 

$986 - $995 million

 

 

 

 

 

 

 

GAAP

 

 

  

 

 

 

Earnings per share

 

 

$0.62 - $0.84

 

 

$0.27 - $0.33

Gross Margin

 

 

44.1% - 44.8%

 

 

43.2% - 43.6%

 

 

 

 

 

 

 

Non-GAAP

 

 

  

 

 

 

Earnings per share

 

 

$1.74 - $1.97

 

 

$1.40 - $1.46

Gross Margin

 

 

49.2% - 49.9%

 

 

48.4% - 48.7%

 

Merit’s financial guidance for the year ending December 31, 2019 is subject to risks and uncertainties identified in Merit’s public filings.

CONFERENCE CALL

Merit will hold its investor conference call (conference ID 9188823) today, Wednesday, October 30, 2019, 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.

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CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

 

 

 

 

 

    

September 30, 

    

 

 

 

2019

 

December 31, 

 

    

(unaudited)

    

2018

ASSETS

 

 

 

 

  

Current Assets

 

 

  

 

 

  

Cash and cash equivalents

 

$

37,315

 

$

67,359

Trade receivables, net

 

 

144,683

 

 

137,174

Other receivables

 

 

11,751

 

 

11,879

Inventories

 

 

216,766

 

 

197,536

Prepaid expenses and current other assets

 

 

17,610

 

 

11,326

Prepaid income taxes

 

 

3,611

 

 

3,627

Income tax refund receivables

 

 

9,566

 

 

933

Total current assets

 

 

441,302

 

 

429,834

 

 

 

 

 

 

 

Property and equipment, net

 

 

366,901

 

 

331,452

Intangible assets, net

 

 

458,907

 

 

462,713

Goodwill

 

 

352,158

 

 

335,433

Deferred income tax assets

 

 

2,944

 

 

3,001

Right-of-use operating lease assets

 

 

79,757

 

 

 —

Other assets

 

 

59,735

 

 

57,579

Total Assets

 

 

1,761,704

 

 

1,620,012

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities

 

 

  

 

 

  

Trade payables

 

$

52,387

 

$

54,024

Accrued expenses

 

 

80,486

 

 

96,173

Current portion of long-term debt

 

 

7,500

 

 

22,000

Short-term operating lease liabilities

 

 

11,652

 

 

 —

Income taxes payable

 

 

1,188

 

 

3,146

Total current liabilities

 

 

153,213

 

 

175,343

 

 

 

 

 

 

 

Long-term debt

 

 

432,456

 

 

373,152

Deferred income tax liabilities

 

 

58,290

 

 

56,363

Long-term income taxes payable

 

 

392

 

 

392

Liabilities related to unrecognized tax benefits

 

 

3,013

 

 

3,013

Deferred compensation payable

 

 

13,497

 

 

11,219

Deferred credits

 

 

2,157

 

 

2,261

Long-term operating lease liabilities

 

 

72,056

 

 

 —

Other long-term obligations

 

 

77,389

 

 

65,494

Total Liabilities

 

 

812,463

 

 

687,237

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

Common stock

 

 

584,161

 

 

571,383

Retained earnings

 

 

373,174

 

 

363,425

Accumulated other comprehensive loss

 

 

(8,094)

 

 

(2,033)

Total Liabilities and Stockholders' Equity

 

$

1,761,704

 

$

1,620,012

 

 

4

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Three Months Ended September 30, 

    

Nine Months Ended September 30, 

 

 

    

2019

    

2018

    

2019

    

2018

 

NET SALES

 

$

243,049

 

$

221,659

 

$

736,930

 

$

649,504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES

 

 

138,913

 

 

119,620

 

 

416,194

 

 

359,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

104,136

 

 

102,039

 

 

320,736

 

 

290,104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

  

 

 

  

 

 

  

 

 

  

 

Selling, general and administrative

 

 

86,936

 

 

66,382

 

 

245,183

 

 

200,389

 

Research and development

 

 

16,987

 

 

14,525

 

 

49,361

 

 

44,163

 

Intangible asset impairment charge

 

 

2,702

 

 

657

 

 

3,250

 

 

657

 

Contingent consideration expense (benefit)

 

 

392

 

 

(661)

 

 

3,573

 

 

(442)

 

Acquired in-process research and development

 

 

 —

 

 

75

 

 

525

 

 

382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

107,017

 

 

80,978

 

 

301,892

 

 

245,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

(2,881)

 

 

21,061

 

 

18,844

 

 

44,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

  

 

 

  

 

 

  

 

 

  

 

Interest income

 

 

328

 

 

359

 

 

1,027

 

 

847

 

Interest expense

 

 

(3,415)

 

 

(2,329)

 

 

(9,295)

 

 

(8,064)

 

Other expense (benefit) - net

 

 

278

 

 

294

 

 

(421)

 

 

(429)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expense — net

 

 

(2,809)

 

 

(1,676)

 

 

(8,689)

 

 

(7,646)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

 

(5,690)

 

 

19,385

 

 

10,155

 

 

37,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE (BENEFIT)

 

 

(2,292)

 

 

2,766

 

 

499

 

 

4,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

(3,398)

 

$

16,619

 

$

9,656

 

$

32,828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER COMMON SHARE:

 

 

  

 

 

  

 

 

  

 

 

  

 

Basic

 

$

(0.06)

 

$

0.31

 

$

0.18

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

(0.06)

 

$

0.30

 

$

0.17

 

$

0.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AVERAGE COMMON SHARES:

 

 

  

 

 

  

 

 

  

 

 

  

 

Basic

 

 

55,152

 

 

53,431

 

 

55,029

 

 

51,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

55,152

 

 

55,103

 

 

56,393

 

 

53,096

 

 

 

 

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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 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 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 $2.4 million and $11.8 million for the three and nine-month periods ended September 30, 2019, respectively, were calculated using the applicable average foreign exchange rates for the three and nine-month periods ended September  30, 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 nine-month periods ended September 30, 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, (4) the assets of Vascular Insights, LLC in December 2018, (5) Brightwater Medical, Inc. in June 2019, and (6) Fibrovein Holdings Limited in August 2019 and (ii) distribution arrangements executed

6

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 Net Income

Non-GAAP net income is calculated by adjusting GAAP net 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 tax or industry regulations, and debt issuance costs, 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 net income and non-GAAP earnings per share to Merit’s net income and earnings per share prepared in accordance with GAAP for the three and nine-month periods ended September 30, 2019 and 2018. The non-GAAP income adjustments referenced in the following table do not reflect stock-based compensation expense of approximately $2.6 million and $1.7 million for the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $6.9 million and $4.5 million for the nine-month periods ended September 30, 2019 and 2018, respectively.

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

(Unaudited, in thousands except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 2019

 

    

Pre-Tax

    

Tax Impact (a)

    

After-Tax

    

Per Share Impact

GAAP net income (loss)

 

$

(5,690)

 

$

2,292

 

$

(3,398)

 

$

(0.06)

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

  

 

 

  

 

 

  

 

 

  

Cost of Sales

 

 

  

 

 

  

 

 

  

 

 

  

Amortization of intangibles

 

 

12,725

 

 

(3,259)

 

 

9,466

 

 

0.17

Inventory mark-up related to acquisitions

 

 

55

 

 

(14)

 

 

41

 

 

0.00

Operating Expenses

 

 

  

 

 

  

 

 

  

 

 

  

Severance

 

 

2,721

 

 

(700)

 

 

2,021

 

 

0.03

Acquisition-related (b)

 

 

1,156

 

 

(154)

 

 

1,002

 

 

0.02

Medical Device Regulation expenses (c)

 

 

83

 

 

(21)

 

 

62

 

 

0.00

Fair value adjustments to contingent consideration (d)

 

 

392

 

 

(91)

 

 

301

 

 

0.01

Long-term asset impairment charges (e)

 

 

196

 

 

(50)

 

 

146

 

 

0.00

Intangible asset impairment charges (f)

 

 

2,702

 

 

(696)

 

 

2,006

 

 

0.04

Amortization of intangibles

 

 

2,783

 

 

(732)

 

 

2,051

 

 

0.04

Special legal expense (g)

 

 

2,362

 

 

(608)

 

 

1,754

 

 

0.03

Other (Income) Expense

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of long-term debt issuance costs

 

 

268

 

 

(69)

 

 

199

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

19,753

 

$

(4,102)

 

$

15,651

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

 

  

 

 

  

 

 

  

 

 

55,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 2018

 

 

Pre-Tax

 

Tax Impact (a)

 

After-Tax

 

Per Share Impact

GAAP net income

    

$

19,385

 

$

(2,766)

 

$

16,619

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

  

 

 

  

 

 

  

 

 

  

Cost of Sales

 

 

  

 

 

  

 

 

  

 

 

  

Amortization of intangibles

 

 

8,150

 

 

(2,083)

 

 

6,067

 

 

0.12

Inventory mark-up related to acquisitions

 

 

216

 

 

(56)

 

 

160

 

 

0.00

Operating Expenses

 

 

 

 

 

 

 

 

  

 

 

  

Severance

 

 

318

 

 

(49)

 

 

269

 

 

0.00

Acquisition-related (b)

 

 

529

 

 

(136)

 

 

393

 

 

0.01

Fair value adjustments to contingent consideration (d)

 

 

(661)

 

 

(32)

 

 

(693)

 

 

(0.01)

Acquired in-process research and development

 

 

75

 

 

(19)

 

 

56

 

 

0.00

Intangible asset impairment charges (f)

 

 

658

 

 

(169)

 

 

489

 

 

0.01

Amortization of intangibles

 

 

2,399

 

 

(636)

 

 

1,763

 

 

0.03

Special legal expense (g)

 

 

946

 

 

(243)

 

 

703

 

 

0.01

Other (Income) Expense

 

 

 

 

 

 

 

 

  

 

 

 

Amortization of long-term debt issuance costs

 

 

201

 

 

(52)

 

 

149

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

32,216

 

$

(6,241)

 

$

25,975

 

$

0.47

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

 

  

 

 

  

 

 

  

 

 

55,103

 

 

8

Reconciliation of GAAP Net Income to Non-GAAP Net Income

(Unaudited, in thousands except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 2019

 

    

Pre-Tax

    

Tax Impact (a)

    

After-Tax

    

Per Share Impact

GAAP net income

 

$

10,155

 

$

(499)

 

$

9,656

 

$

0.17

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

  

 

 

  

 

 

  

 

 

 

Cost of Sales

 

 

  

 

 

  

 

 

  

 

 

 

Amortization of intangibles

 

 

36,882

 

 

(9,444)

 

 

27,438

 

 

0.48

Inventory mark-up related to acquisitions

 

 

939

 

 

(241)

 

 

698

 

 

0.01

Operating Expenses

 

 

 

 

 

 

 

 

  

 

 

 

Severance

 

 

3,543

 

 

(912)

 

 

2,631

 

 

0.05

Acquisition-related (b)

 

 

2,897

 

 

(589)

 

 

2,308

 

 

0.04

Medical Device Regulation expenses (c)

 

 

196

 

 

(50)

 

 

146

 

 

0.00

Fair value adjustments to contingent consideration (d)

 

 

3,573

 

 

(275)

 

 

3,298

 

 

0.06

Long-term asset impairment charges (e)

 

 

829

 

 

(213)

 

 

616

 

 

0.01

Acquired in-process research and development

 

 

525

 

 

(135)

 

 

390

 

 

0.01

Intangible asset impairment charges (f)

 

 

3,250

 

 

(837)

 

 

2,413

 

 

0.04

Amortization of intangibles

 

 

8,289

 

 

(2,182)

 

 

6,107

 

 

0.11

Special legal expense (g)

 

 

5,040

 

 

(1,297)

 

 

3,743

 

 

0.07

Other (Income) Expense

 

 

  

 

 

  

 

 

 

 

 

 

Amortization of long-term debt issuance costs

 

 

670

 

 

(172)

 

 

498

 

 

0.01

Tax expense related to restructuring (h)

 

 

 —

 

 

92

 

 

92

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

76,788

 

$

(16,754)

 

$

60,034

 

$

1.06

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares

 

 

 

 

 

  

 

 

  

 

 

56,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 2018

 

    

Pre-Tax

    

Tax Impact (a)

    

After-Tax

    

Per Share Impact

GAAP net income

 

$

37,309

 

$

(4,481)

 

$

32,828

 

$

0.62

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

  

 

 

  

 

 

  

 

 

  

Cost of Sales

 

 

  

 

 

  

 

 

  

 

 

  

Amortization of intangibles

 

 

22,550

 

 

(5,759)

 

 

16,791

 

 

0.31

Inventory mark-up related to acquisitions

 

 

3,978

 

 

(1,024)

 

 

2,954

 

 

0.06

Operating Expenses

 

 

  

 

 

  

 

 

  

 

 

 

Severance

 

 

480

 

 

(91)

 

 

389

 

 

0.01

Acquisition-related (b)

 

 

3,119

 

 

(803)

 

 

2,316

 

 

0.04

Fair value adjustment to contingent consideration (d)

 

 

(442)

 

 

(88)

 

 

(530)

 

 

(0.01)

Long-term asset impairment charges (e)

 

 

86

 

 

(22)

 

 

64

 

 

 —

Acquired in-process research and development

 

 

381

 

 

(98)

 

 

283

 

 

0.01

Intangible asset impairment charges (f)

 

 

657

 

 

(169)

 

 

488

 

 

0.01

Amortization of intangibles

 

 

6,864

 

 

(1,824)

 

 

5,040

 

 

0.09

Special legal expense (g)

 

 

4,283

 

 

(1,102)

 

 

3,181

 

 

0.06

Other (Income) Expense

 

 

 

 

 

  

 

 

  

 

 

 

Amortization of long-term debt issuance costs

 

 

603

 

 

(155)

 

 

448

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income

 

$

79,868

 

$

(15,616)