Merit Medical Systems Inc (NASDAQ: MMSI)

Sector: Healthcare Industry: Medical Instruments & Supplies CIK: 0000856982
Market Cap 5.09 Bn
P/B 3.33
P/E 42.98
P/S 3.45
ROIC (Qtr) 5.17
Div Yield % 0.00
Rev 1y % (Qtr) 13.04
Total Debt (Qtr) 821.15 Mn
Debt/Equity (Qtr) 0.54

About

Merit Medical Systems, Inc. (MMSI) operates in the healthcare industry, specializing in the design, manufacture, and distribution of proprietary medical devices used in interventional, diagnostic, and therapeutic procedures. The company's offerings cater to various clinical areas, including cardiology, radiology, oncology, critical care, and endoscopy. MMSI's products are utilized in diagnostic and interventional cardiology, interventional radiology, neurointerventional radiology, vascular, general, and thoracic surgery, electrophysiology, cardiac...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 392.46M provide 36.98x coverage of short-term debt 10.61M, demonstrating strong liquidity position and minimal refinancing risk.
  • Robust free cash flow of 206.93M exceeds capital expenditure of 60.67M by 3.41x, indicating strong organic growth funding capability.
  • Tangible assets of 1.65B provide exceptional 1162.04x coverage of deferred revenue 1.42M, showing strong service capability backing.
  • Operating cash flow of 267.61M provides strong 187.92x coverage of deferred revenue 1.42M, indicating service delivery capability.
  • Operating cash flow of 267.61M provides solid 1.16x coverage of current liabilities 230.47M, showing strong operational health.

Bear case

  • Operating cash flow of 267.61M barely covers its investment activities of (411.50M), with a coverage ratio of -0.65, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (411.50M) provide weak support for R&D spending of 96M, which is -4.29x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 392.46M provide limited coverage of acquisition spending of (329.02M), which is -1.19x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 181.11M show weak coverage of depreciation charges of 131.92M, with a 1.37 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 131.92M relative to operating cash flow of 267.61M, which is 0.49x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the Medical Instruments & Supplies
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ISRG Intuitive Surgical Inc 209.14 Bn 76.14 21.76 0.00 Bn
2 BDX Becton Dickinson & Co 58.36 Bn 34.78 2.67 19.18 Bn
3 ALC Alcon Inc 39.57 Bn 37.80 3.89 5.24 Bn
4 RMD Resmed Inc 37.01 Bn 25.74 7.04 0.85 Bn
5 WST West Pharmaceutical Services Inc 19.95 Bn 40.58 6.61 0.30 Bn
6 HOLX Hologic Inc 16.94 Bn 29.95 4.13 2.52 Bn
7 COO Cooper Companies, Inc. 16.64 Bn 44.39 4.07 2.51 Bn
8 SOLV Solventum Corp 15.00 Bn 9.84 1.79 5.14 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.12 3.14
EV to Cash from Ops. EV/CFO 20.81 37.60
EV to Debt EV to Debt 6.78 23.10
EV to EBIT EV/EBIT 30.74 50.25
EV to EBITDA EV/EBITDA 18.62 19.58
EV to Free Cash Flow [EV/FCF] EV/FCF 26.91 -19.40
EV to Market Cap EV to Market Cap 1.09 -1.68
EV to Revenue EV/Rev 3.77 171.31
Price to Book Value [P/B] P/B 3.33 6.03
Price to Earnings [P/E] P/E 42.98 204.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -1.11
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 1.52
Dividend per Basic Share Div per Share (Qtr) 0.00 0.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 8.75
Interest Coverage Int. cover (Qtr) 6.45 -119.10
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -56.45 -55.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -24.98 200.65
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -1.49
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -1.89 -56.39
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 14.04 -106.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 2.60 -36.51
EBT Growth (1y) % EBT 1y % (Qtr) 3.17 -47.44
EPS Growth (1y) % EPS 1y % (Qtr) -2.90 -15.70
FCF Growth (1y) % FCF 1y % (Qtr) 17.89 59.41
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 15.30 68.22
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.56 0.54
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 1.70 2.49
Current Ratio Curr Ratio (Qtr) 4.28 7.77
Debt to Equity Ratio Debt/Equity (Qtr) 0.54 0.55
Interest Cover Ratio Int Coverage (Qtr) 6.45 -119.10
Times Interest Earned Times Interest Earned (Qtr) 6.45 -119.10
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 21.20 -2,368.64
EBIT Margin % EBIT Margin % (Qtr) 12.26 -2,472.65
EBT Margin % EBT Margin % (Qtr) 10.36 -2,442.59
Gross Margin % Gross Margin % (Qtr) 48.50 30.07
Net Profit Margin % Net Margin % (Qtr) 8.00 -2,438.52