February 21st 2017 / 3pm MT
Category: Company News
SOUTH JORDAN, Utah, July 06, 2016 (GLOBE NEWSWIRE) — Merit Medical Systems, Inc. (NASDAQ:MMSI), a leading manufacturer and marketer of proprietary disposable devices used primarily in cardiology, radiology and endoscopy, today announced that it has acquired DFINE, Inc. headquartered in San Jose, California, in a merger transaction through which DFINE has become a wholly-owned subsidiary of Merit.
The purchase consideration was approximately $97.5 million in cash and was financed by a group of banks led by Wells Fargo and included Bank of America, HSBC and U.S. Bank.
DFINE produced revenues of $33.4 million in 2015, with approximately 75% of revenues generated in the United States and 25% outside the United States. DFINE’s products are directed to vertebral augmentation (kyphoplasty and vertebralplasty), as well as targeted radiofrequency ablation of metastatic spinal tumors. DFINE’s product lines have 510(k) clearance and CE marking.
“We are delighted to have DFINE join Merit,” said Fred P. Lampropoulos, Merit’s Chairman and Chief Executive Officer. “Our relationship began a few years ago when Merit was asked to provide key device components for DFINE’s StabiliT® and StabiliT MX® products. In addition to the spinal compression fracture segment, we believe DFINE’s Star™ Tumor Ablation Kit complements and enhances Merit’s oncology business.”
“We plan to combine Merit’s oncology segments, including embolics, microcatheters and biopsy products into a newly created interventional oncology and spine division (IOS),” Lampropoulos said. “We believe the restructuring of the sales divisions – cardiovascular, peripheral and IOS – will enable us to devote greater focus on Merit’s broad portfolio of products, align our sales and marketing efforts with Merit’s goal of achieving a more therapeutic and disease state centered product offering, and enhance opportunities for future growth.”
“We believe the opportunity for growth with these best-in-class products is substantial in the United States and also in international markets where Merit already has a broad footprint,” Lampropoulos continued. “Although DFINE has a presence in Germany and Austria, as well as limited distribution partners, we believe there are many opportunities in Australia, Canada, Japan, China, the Nordic countries and other regions. We anticipate that DFINE’s IP portfolio of approximately 110 U.S. and international patents will provide substantial coverage for many years ahead.”
The effect of the DFINE acquisition on Merit’s non-GAAP earnings for the balance of 2016 is expected to be neutral due to business restructuring and consolidation expenses and is expected to be dilutive on a GAAP basis by $0.24-$0.26 per share due to intangible amortization and one-time reorganization costs. In 2017, Merit anticipates the effect of the acquisition on Merit’s non-GAAP earnings to be $0.05-$0.08 per share and to be dilutive on a GAAP basis by $0.05-$0.07 per share. Merit believes the acquisition will increase its gross margin by approximately 80 basis points on a non-GAAP basis and 55 basis points on a GAAP basis.
Canaccord Genuity acted as Merit’s financial advisor for this transaction. Piper Jaffray acted as DFINE’s financial advisor.
CONFERENCE CALL TODAY Merit invites all interested parties to participate in its conference call discussing the acquisition (conference ID 41983902) today, Wednesday, July 6, 2016, at 11:00 a.m. Eastern (10:00 a.m. Central, 9:00 a.m. Mountain, and 8:00 a.m. Pacific). The domestic telephone number is (844) 578-9672, and the international number is (508) 637-5656. A live webcast of the call and a slide deck showcasing the products and details of the DFINE acquisition are available at www.merit.com.
ABOUT MERIT Founded in 1987, Merit Medical Systems, Inc. is engaged in the development, manufacture and distribution of proprietary disposable medical devices used in interventional, diagnostic and therapeutic procedures, particularly in cardiology, radiology and endoscopy. Merit serves hospitals, acute care facilities and clinics worldwide, with a domestic and international sales force totaling approximately 200 individuals. Merit employs approximately 4,000 people worldwide with facilities in South Jordan, Utah; Pearland, Texas; Richmond, Virginia; Malvern, Pennsylvania; Rockland, Massachusetts; San Jose, California; Maastricht and Venlo, The Netherlands; Paris, France; Galway, Ireland; Beijing, China; Tijuana, Mexico; Joinville, Brazil; Markham, Ontario, Canada; Melbourne, Australia; and Mannheim, Germany.
Statements contained in this release which are not purely historical, including, without limitation, statements regarding anticipated revenues, earnings or other financial items; Merit’s plans and objectives for future operations; proposed products or services; integration, development or commercialization of the DFINE operations and assumptions underlying any of the foregoing , are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties such as those described in Merit’s Annual Report on Form 10-K for the year ended December 31, 2015. Such risks and uncertainties include risks relating to Merit’s acquisition of DFINE; Merit’s efforts to integrate, manage and develop DFINE’s operations and products; expenses associated with the integration, management and development of those operations and products; product recalls and product liability claims; expenditures relating to research, development, testing and regulatory approval of Merit’s products (including the DFINE products) and risks that such products may not be developed successfully or approved for commercial use; regulation of the medical device industry; Merit’s need to generate sufficient cash flow to fund its debt obligations, capital expenditures, and ongoing operations; restrictions on Merit’s liquidity or Merit’s ability to operate its business in compliance with its debt agreements; possible infringement of its technology (including the DFINE technology) or the assertion that such technology infringes the rights of other parties; changes in the prices or supply of commodity components; changes in economic and industry conditions in the United States and other countries; termination or interruption of relationships with suppliers, or failure of suppliers to perform; fluctuations in exchange rates; development of new products and technology that could render Merit’ products (including the DFINE products) obsolete; changes in key personnel; potential healthcare regulatory and policy changes; and other factors referred to in Merit’s Annual Report on Form 10-K for the year ended December 31, 2015 and other materials filed with the Securities and Exchange Commission. All subsequent forward-looking statements attributable to Merit or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results will likely differ, and may differ materially, from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and Merit assumes no obligation to update or disclose revisions to those estimates.
Contact: Anne-Marie Wright, Vice President, Corporate Communications Phone: (801) 208-4167 e-mail: [email protected] Fax: (801) 253-1688
As Merit Medical’s global footprint continues to grow, Matt Wiker, Merit Medical Director of Global Materials, speaks about his role to ensure that Merit’s customers, and ultimately patients and hospitals, receive high quality products when and where they need them.
My Opportunities in China with Merit:
I started working at Merit 6 years ago as an Operations Supervisor. Before that, I worked at GE Healthcare under the medical system machines division in Beijing. I was promoted to Operations Manager after 1.5 years and was further promoted to my current position of Senior Operations Manager after another 2 years. My operations coverage has also been extended from Mainland China to the rest of the Hong Kong, Taiwan, Southeast Asia areas and Korea. The reason why I stayed at Merit is really simple and straight-forwarded: great people and plenty of opportunities.
Merit in Mainland China:
In 2010, I was one of 3 people working for Merit in a small 700-square-meter warehouse (7534 square feet). Now, I have a team of 10 people with 8 employees working at our newly-established 1800-square-meter (20,000 square feet) warehouse and distribution center handling distribution in Mainland China. One team member looks after the forecast and planning in Mainland China and the final team member is located in Hong Kong and provides operation supports to the region. Over the past 5-6 years Merit has dramatically expanded with a steady double-digit growth rate. We have increased the numbers of sales licenses to over 50. These licenses are issued by the Chinese government to sell medical devices within China. One of the major growth factors can be attributed to Merit’s strong sales team, who work with 400 different distributors in China’s key cities.
Facing the Challenge of Growth:
As a department head leading the Asia operation, I have built up a reliable, responsible and passionate operation team. I lead my team to overview the sales forecasts to establish a proper supply chain, while maintaining a high order fulfillment rate for the entire Asia region. Apart from managing Merit’s warehouse in Beijing, we also have a third party logistics warehouse in Hong Kong as the regional distribution center.
Merit’s Vision in China:
Being customer oriented is the main vision that I focus on. Operation is a supporting function that I have two groups to serve, my internal and external customers. Sales and Marketing teams are my internal customers. Mutual understanding on their specific needs and special requests are the vital elements for me to provide necessary supports to them. Distributors and hospitals, who purchase our products are my external customers. My main focus is to lean the operation process in order to improve the order implementation efficiency; as well as improve the forecast accuracy and the order fulfillment rate.
Friends, Family and Football:
When I’m not analyzing supply/demand numbers, I like to play football with my friends, not American football but European football, “soccer”. I also like to go to gym after work. The majority of my leisure time is spent with my family. I’ve been married for 8 years to my wife Yuanyuan and have two daughters. One is 5-years-old, her name is Sherry and her little sister has just arrived last month on March 29. I call her little beauty at the moment, but still haven’t given her an English name. We are welcome to any suggestion!
Nearly 20 Years at Merit! In 1992 I went to work for Mallinckrodt in Angleton, TX. I was in Production working on the Performa and Trax catheters (now Merit’s Concierge Catheter). In 1998, Merit Medical acquired a small division of Mallinckrodt and that’s when my career with Merit began. We operated in the Angleton facility until 2014, and now our entire operation has been moved to a brand new facility in Pearland, TX.
When Merit acquired Mallinckrodt I moved first into a shipping/receiving role and was then promoted to Planner nearly 15 years ago.
Analyzing Data is my Passion as a Planner. I really enjoy my role as Planner. I am responsible to make sure we can meet the demands of our customers by ensuring adequate inventory of our products. I review sales orders and forecasts and compare them against worldwide inventory, and then work with Production to ensure that they’ve scheduled enough product to meet upcoming orders. If inventory is running low I notify Production and Marketing so that more product is manufactured, and I keep our customers and sales staff informed through the Customer Service teams worldwide. I love analyzing the data, working with the numbers and putting all the pieces together like a puzzle.
My New Role with Merit Endotek. Last year, I moved into a dual Planning and Purchasing role for all Merit Endotek products. So in addition to my Planning responsibilities, I ensure the availability of all raw materials needed to manufacture the Endotek products. If raw material inventory is running low in relation to customer order forecasts, I work with our vendors to order additional raw materials.
New Faces Everywhere. Merit has been a good company for me to work for. I have a great support staff and enjoy my peers and managers. When Merit first bought Mallinckrodt we were a small team. Now I see new faces everywhere. It has been fun to watch the company grow and know that I’ve played a role in all of it.
When I’m not at Work. When I’m not at Merit, I enjoy spending time with my family back in Angleton. I have two children – a daughter who is 23 and attends college and a son in high school.
First things first – Your Name is so Unique! Esko is a family name, it was my grandpa’s name. My grandfather was one of 13 kids. He grew up here in Richmond, Virginia next to a Russian family, and one of their children was named Esko. That’s where my great grandfather got the name for my grandfather and why my parents named me Esko.
Your Role at Merit: I have worked for Merit for 10 years. I landed here because I worked for a company called Medsource Packaging for two years and we were acquired by Merit. I took some time off and returned to Merit six months after the acquisition. I came back as a purchasing and planning agent. Ten years later I now manage the Purchasing and Planning departments.
I am responsible for scheduling all the production and for purchasing the raw materials for Richmond facility.
What happens at Merit’s Richmond Facility? Merit’s Richmond facility is responsible for custom kits, sterile medical procedure trays that carry all the tools a clinician needs to perform a specific procedure. Merit has the unique ability to customize our kits to meet our customers’ needs .
How have you seen the Merit Richmond Facility grow since you started? From the time Merit acquired Medsource through last year, sales at the Richmond facility have grown significantly. This demonstrates that the need for custom kits for physicians is obviously growing. We look at custom kits as a service provided for our customers and not just another product. It’s a service that makes their job easier by saving time and money for the clinicians.
What do you like about Merit: I really like the people at Merit, we are a family group. Everyone works well together. A lot of the employees from Medsource are still here with me for the last ten years. I really enjoy working directly with the Merit sales representatives to look for solutions for their customers.
After Work: When I’m not with my Merit family, I love to run. I’ve run several half-marathons. I’m also married with three kids: my youngest is a daughter, age 11; my middle is my son age 13; and my oldest is another daughter age 19.
In its January issue, Medical Design and Outsourcing features a Spotlight on Leadership by Merit Medical President and CEO Fred Lampropoulos, who describes Merit’s history of and continuous pursuit of innovation. View the full article: http://www.medicaldesignandoutsourcing.com/spotlight-on-leadership-merit-medical-continues-its-history-of-innovation/
Merit has been a great place to start my career. I graduated from the University of Utah in Biomedical Engineering in 2010. My education was the catalyst for my work in the medical industry. I studied advanced mathematics and physics, but my major also focused on engineering principles related to biology, chemistry, biomechanics, biomaterials, etc. It provided me with a solid foundation and Merit hired me out of college as an Engineering Tech. I worked hard in this position and was promoted to Manufacturing Engineer followed by the promotion to my current position, Engineering Project Manager for the last 3 1/2 years.
Engineering Project Manager. I have the responsibility to lead multidisciplinary teams to achieve specific project objectives. This involves initiating, planning, executing, monitoring, controlling, and closing projects. Over the past few years, I’ve been responsible for managing multiple product acquisitions and integrating the products into Merit. I am also responsible for product transfers, new product development, product improvements, product design and material changes.
My part in Merit’s vision. Merit’s vision of being the most customer-focused company in healthcare, has a clear influence on my work. A great example of this would be after the acquisition of the Centros hemodialysis catheter. Merit received multiple requests to include a stiffening stylet to facilitate over-the-wire procedures. My team and I worked with the customers to determine the specific needs, developed prototypes, received feedback, made improvements and repeated this process. The end result was the stiffening stylet currently sold today. My work at Merit is always influenced and focused on fulfilling the needs of the customer.
How my work makes a difference. When I was younger, my grandpa had end stage renal disease and was required to undergo dialysis treatment. I was very close to grandpa and when the doctors only gave him a few years to live, it was really hard for me personally. However, due to the innovative medical devices (like Merit’s Centros) and outstanding treatment, he lived for seven more years. Knowing the work I do at Merit every day improves the lives of others drives me to develop and manufacture the most innovative and highest quality products on the market.
Living life to the fullest. When I’m not working, I spend all of my time with my family in the outdoors enjoying life. My wife Ashlee and I have two kids, Milo 4-year-old boy, Kaylee 2-year-old girl, and #3 (boy) is due in March. We spend a lot of time in the outdoors; camping, fishing, riding 4 wheelers, and boating. Just last summer, we spent 32 nights under the stars camping as a family. My kids love the outdoors and could play in the dirt all day.