Medical device company Merit Medical Systems (NASDAQ: MMSI) announced better-than-expected revenue in Q3 CY2025, with sales up 13% year on year to $384.2 million. The company’s full-year revenue guidance of $1.51 billion at the midpoint came in 0.6% above analysts’ estimates. Its non-GAAP profit of $0.92 per share was 11.4% above analysts’ consensus estimates.

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“Merit delivered better-than-expected financial performance in the third quarter, with top and bottom-line results exceeding the high-end of the company’s expectations,” said Martha G. Aronson, Merit’s President and CEO.

Company Overview

Founded in 1987 and now offering over 1,700 patented products across global markets, Merit Medical Systems (NASDAQ: MMSI) manufactures and markets specialized medical devices used in minimally invasive procedures for cardiology, radiology, oncology, critical care, and endoscopy.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Merit Medical Systems grew its sales at a decent 8.9% compounded annual growth rate. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Merit Medical Systems’s annualized revenue growth of 9.8% over the last two years aligns with its five-year trend, suggesting its demand was stable.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Merit Medical Systems’s organic revenue averaged 6.6% year-on-year growth. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Merit Medical Systems reported year-on-year revenue growth of 13%, and its $384.2 million of revenue exceeded Wall Street’s estimates by 3.2%.

Looking ahead, sell-side analysts expect revenue to grow 6.4% over the next 12 months, a deceleration versus the last two years. Still, this projection is above the sector average and indicates the market is forecasting some success for its newer products and services.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Merit Medical Systems was profitable over the last five years but held back by its large cost base. Its average operating margin of 9.2% was weak for a healthcare business.

On the plus side, Merit Medical Systems’s operating margin rose by 6.1 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 1.5 percentage points on a two-year basis.

In Q3, Merit Medical Systems generated an operating margin profit margin of 11.1%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Merit Medical Systems’s EPS grew at an astounding 19.8% compounded annual growth rate over the last five years, higher than its 8.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Merit Medical Systems’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Merit Medical Systems’s operating margin was flat this quarter but expanded by 6.1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Merit Medical Systems reported adjusted EPS of $0.92, up from $0.86 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Merit Medical Systems’s full-year EPS of $3.72 to grow 3.2%.

Key Takeaways from Merit Medical Systems’s Q3 Results

We were impressed by how significantly Merit Medical Systems blew past analysts’ organic revenue expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Full-year guidance was also raised for revenue and EPS. Zooming out, we think this was a very good print with some key areas of upside. The stock traded up 7.7% to $89.46 immediately after reporting.

Merit Medical Systems had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.