Medical device company Merit Medical Systems (NASDAQ: MMSI) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 13.2% year on year to $382.5 million. The company’s full-year revenue guidance of $1.50 billion at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP profit of $1.01 per share was 18.6% above analysts’ consensus estimates.

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“We delivered better-than-expected financial performance in the second quarter, with our top-and-bottom line results exceeding the high-end of our forecast,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer.

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

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Merit Medical Systems’s sales grew at a decent 8.3% compounded annual growth rate over the last five years. 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 9.4% over the last two years is above its five-year trend, suggesting some bright spots.

We can dig further into 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 6.5% 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 13.2%, and its $382.5 million of revenue exceeded Wall Street’s estimates by 2.4%.

Looking ahead, sell-side analysts expect revenue to grow 7.2% over the next 12 months, a slight deceleration versus the last two years. Still, this projection is above average for the sector and suggests the market is baking in some success for its newer products and services.

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Operating Margin

Merit Medical Systems was profitable over the last five years but held back by its large cost base. Its average operating margin of 8.8% was weak for a healthcare business.

On the plus side, Merit Medical Systems’s operating margin rose by 7.5 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 2.6 percentage points on a two-year basis.

In Q2, Merit Medical Systems generated an operating margin profit margin of 12.3%, down 1.3 percentage points year on year. This reduction is quite minuscule and 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 21.7% compounded annual growth rate over the last five years, higher than its 8.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Merit Medical Systems’s earnings to better understand the drivers of its performance. As we mentioned earlier, Merit Medical Systems’s operating margin declined this quarter but expanded by 7.5 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 Q2, Merit Medical Systems reported adjusted EPS at $1.01, up from $0.92 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 $3.66 to shrink by 5.6%.

Key Takeaways from Merit Medical Systems’s Q2 Results

This was a beat and raise quarter. We were impressed by how significantly Merit Medical Systems blew past analysts’ full-year EPS guidance expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 2.1% to $84.65 immediately following the results.

Sure, Merit Medical Systems had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.