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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2018
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM TO .
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Commission File Number 0-18592
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Utah
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87-0447695
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Large Accelerated Filer
x
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Accelerated Filer
o
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Non-Accelerated Filer
o
(Do not check if a smaller reporting company)
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Smaller Reporting Company
o
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Emerging Growth Company
o
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Common Stock
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50,413,450
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Title or class
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Number of Shares
Outstanding at May 7, 2018
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|
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Three Months Ended March 31,
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||||||
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2018
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2017
|
||||
Net income
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$
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5,269
|
|
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$
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14,803
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Other comprehensive income (loss):
|
|
|
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||||
Cash flow hedges
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1,992
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|
|
837
|
|
||
Less income tax expense
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(512
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)
|
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(326
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)
|
||
Foreign currency translation adjustment
|
2,592
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780
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||
Less income tax expense
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—
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(252
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)
|
||
Total other comprehensive income
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4,072
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|
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1,039
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|
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Total comprehensive income
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$
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9,341
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$
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15,842
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||||
See condensed notes to consolidated financial statements.
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March 31,
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December 31,
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||||
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2018
|
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2017
|
||||
Finished goods
|
$
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95,485
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|
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$
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86,555
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Work-in-process
|
19,265
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12,799
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Raw materials
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51,966
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55,934
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||
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||||
Total Inventories
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$
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166,716
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$
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155,288
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Three Months Ended March 31,
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||||||
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2018
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2017
|
||||
Cost of sales
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$
|
184
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$
|
96
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Research and development
|
124
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|
|
52
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Selling, general and administrative
|
948
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|
|
429
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|
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Stock-based compensation expense before taxes
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$
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1,256
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$
|
577
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Three Months Ended
|
||
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March 31, 2018
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||
Risk-free interest rate
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2.63%
|
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Expected option life
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5.0 years
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Expected dividend yield
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—
|
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Expected price volatility
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34.32%
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Net
Income
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Shares
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Per Share
Amount
|
|||||
Three-month period ended March 31, 2018:
|
|
|
|
|
|
|
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Basic EPS
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$
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5,269
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50,277
|
|
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$
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0.10
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Effect of dilutive stock options and warrants
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|
|
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1,633
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|
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|||||
Diluted EPS
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$
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5,269
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|
51,910
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|
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$
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0.10
|
|
|
|
|
|
|
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|||||
Stock options excluded from the calculation of common stock equivalents as the impact was anti-dilutive
|
|
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184
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|
|
|
||||
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|||||
Three-month period ended March 31, 2017:
|
|
|
|
|
|
|
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|
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Basic EPS
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$
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14,803
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|
|
44,830
|
|
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$
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0.33
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Effect of dilutive stock options and warrants
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|
|
|
990
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|
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|
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|||||
Diluted EPS
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$
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14,803
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45,820
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$
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0.32
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|
|
|
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|||||
Stock options excluded from the calculation of common stock equivalents as the impact was anti-dilutive
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96
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|
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Net Assets Acquired
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Inventories
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$
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6,039
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Property and equipment
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581
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Intangibles
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|
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Developed technology
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79,900
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Customer list
|
3,500
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Trademarks
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4,700
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Goodwill
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5,387
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Total net assets acquired
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$
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100,107
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Assets Acquired
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Trade receivables
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$
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1,287
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Other receivables
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56
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|
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Inventories
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1,808
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|
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Prepaid expenses and other assets
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65
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|
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Property and equipment
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1,053
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Intangibles
|
|
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Customer lists
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5,940
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|
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Goodwill
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3,740
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Total assets acquired
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13,949
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|
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|
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Liabilities Assumed
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|
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Trade payables
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(216
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)
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Accrued expenses
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(542
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)
|
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Deferred tax liabilities
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(1,901
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)
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Total liabilities assumed
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(2,659
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)
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|
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Total net assets acquired
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$
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11,290
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Net Assets Acquired
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Inventories
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$
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594
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Intangibles
|
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Developed technology
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14,920
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Customer list
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120
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Goodwill
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6,366
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|
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Total net assets acquired
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$
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22,000
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Net Assets Acquired
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Inventories
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$
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979
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Property and equipment
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58
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Intangibles
|
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Developed technology
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5,400
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Customer list
|
200
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Goodwill
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203
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|
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Total net assets acquired
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$
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6,840
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Net Assets Acquired
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Intangibles
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|
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Developed technology
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$
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7,800
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In-process technology
|
920
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Goodwill
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4,281
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Deferred tax liabilities
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(3,101
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)
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Total net assets acquired
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$
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9,900
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Assets Acquired
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Cash and cash equivalents
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$
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1,436
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Trade receivables
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8,351
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Inventories
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11,222
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Prepaid expenses and other assets
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1,275
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Income tax refund receivable
|
165
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|
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Property and equipment
|
2,319
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Deferred tax assets
|
202
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|
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Intangibles
|
|
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Developed technology
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2,200
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Customer lists
|
1,500
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|
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Trademarks
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900
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|
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Total assets acquired
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29,570
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|
|
|
|
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Liabilities Assumed
|
|
||
Trade payables
|
(2,414
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)
|
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Accrued expenses
|
(5,083
|
)
|
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Deferred income tax liabilities
|
(934
|
)
|
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Total liabilities assumed
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(8,431
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)
|
|
|
|
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Total net assets acquired
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21,139
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|
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Gain on bargain purchase
(1)
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(11,039
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)
|
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Total purchase price
|
$
|
10,100
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Assets Acquired
|
|
||
Trade receivables
|
$
|
958
|
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Inventories
|
2,157
|
|
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Prepaid expenses and other assets
|
85
|
|
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Property and equipment
|
1,472
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|
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Intangibles
|
|
||
Developed technology
|
21,100
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|
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Customer lists
|
700
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|
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Trademarks
|
2,900
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|
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Goodwill
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8,989
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|
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Total assets acquired
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38,361
|
|
|
|
|
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Liabilities Assumed
|
|
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Trade payables
|
(338
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)
|
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Accrued expenses
|
(23
|
)
|
|
Total liabilities assumed
|
(361
|
)
|
|
|
|
||
Net assets acquired
|
$
|
38,000
|
|
Assets Acquired
|
|
||
Trade receivables
|
$
|
4,054
|
|
Other receivables
|
6
|
|
|
Inventories
|
8,585
|
|
|
Prepaid expenses and other assets
|
630
|
|
|
Property and equipment
|
1,630
|
|
|
Other long-term assets
|
145
|
|
|
Intangibles
|
|
||
Developed technology
|
67,600
|
|
|
Customer lists
|
2,400
|
|
|
Trademarks
|
4,400
|
|
|
Goodwill
|
24,818
|
|
|
Total assets acquired
|
114,268
|
|
|
|
|
||
Liabilities Assumed
|
|
||
Trade payables
|
(1,790
|
)
|
|
Accrued expenses
|
(5,298
|
)
|
|
Deferred income tax liabilities - current
|
(701
|
)
|
|
Deferred income tax liabilities - noncurrent
|
(10,844
|
)
|
|
Total liabilities assumed
|
(18,633
|
)
|
|
|
|
||
Net assets acquired, net of cash received of $1,327
|
$
|
95,635
|
|
Assets Acquired
|
|
||
Inventories
|
$
|
2,455
|
|
Property and equipment
|
290
|
|
|
Intangibles
|
|
||
Developed technology
|
12,100
|
|
|
Trademarks
|
700
|
|
|
Customers Lists
|
400
|
|
|
Goodwill
|
2,555
|
|
|
|
|
||
Total assets acquired
|
$
|
18,500
|
|
|
Three Months Ended
|
||||||
|
March 31, 2017
|
||||||
|
As Reported
|
|
Pro Forma
|
||||
Net sales
|
$
|
171,069
|
|
|
$
|
173,829
|
|
Net income
|
14,803
|
|
|
1,725
|
|
||
Earnings per common share:
|
|
|
|
||||
Basic
|
$
|
0.33
|
|
|
$
|
0.04
|
|
Diluted
|
$
|
0.32
|
|
|
$
|
0.04
|
|
1.
|
Identify the contract with the customer
. A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods to be transferred and identifies the payment terms related to these goods, (ii) the contract has commercial substance and, (iii) we determine that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We do not have significant costs to obtain contracts with customers. For commissions on product sales, we have elected the practical expedient to expense the costs as incurred if the amortization period would have been one year or less.
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2.
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Identify the performance obligations in the contract
. Generally, our contracts with customers do not include multiple performance obligations to be completed over a period of time. Our performance obligations relate to delivering single-use medical products to a customer, subject to the shipping terms of the contract. Limited warranties are provided, under which we typically accept returns and provide either replacement parts or refunds. We do not have significant returns. We do not typically offer extended warranty or service plans.
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3.
|
Determine the transaction price
. Payment by the customer is due under customary fixed payment terms, and we evaluate if collectability is reasonably assured. None of our contracts as of March 31, 2018 contained a significant financing component. Further, the methodology for which we estimate and recognize variable consideration (e.g. rebates) is consistent with the requirements of ASC 606. Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns, rebates, discounts, and other adjustments. The estimates of variable consideration are based on historical payment experience, historical and projected sales data, and current contract sales terms. Variable consideration is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.
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4.
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Allocate the transaction price to performance obligations in the contract
. We typically do not have multiple performance obligations in our contracts with customers. As such, we recognize revenue upon delivery of the product to the customer's control at contractually stated pricing.
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5.
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Recognize revenue when or as we satisfy a performance obligation.
We satisfy performance obligations at a point in time upon either shipment or delivery of goods, in accordance with the terms of each contract with the customer. We do not have significant service revenue.
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Three months ended March 31, 2018
|
|
Three months ended March 31, 2017
|
||||||||||||||
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United States
|
|
International
|
|
Total
|
|
United States
|
|
International
|
|
Total
|
||||||
Cardiovascular
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stand-alone devices
|
44,010
|
|
|
39,236
|
|
|
83,246
|
|
|
36,164
|
|
|
27,489
|
|
|
63,653
|
|
Custom kits and procedure trays
|
22,318
|
|
|
10,954
|
|
|
33,272
|
|
|
21,466
|
|
|
7,408
|
|
|
28,874
|
|
Inflation devices
|
7,668
|
|
|
14,751
|
|
|
22,419
|
|
|
7,975
|
|
|
10,532
|
|
|
18,507
|
|
Catheters
|
15,270
|
|
|
18,595
|
|
|
33,865
|
|
|
15,129
|
|
|
15,047
|
|
|
30,176
|
|
Embolization devices
|
5,033
|
|
|
7,554
|
|
|
12,587
|
|
|
5,541
|
|
|
6,986
|
|
|
12,527
|
|
CRM/EP
|
8,838
|
|
|
1,628
|
|
|
10,466
|
|
|
9,747
|
|
|
1,270
|
|
|
11,017
|
|
Total
|
103,137
|
|
|
92,718
|
|
|
195,855
|
|
|
96,022
|
|
|
68,732
|
|
|
164,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Endoscopy
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Endoscopy devices
|
6,918
|
|
|
262
|
|
|
7,180
|
|
|
6,095
|
|
|
220
|
|
|
6,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
110,055
|
|
|
92,980
|
|
|
203,035
|
|
|
102,117
|
|
|
68,952
|
|
|
171,069
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net Sales
(1)
|
|
|
|
|
|
||
Cardiovascular
|
$
|
195,855
|
|
|
$
|
164,754
|
|
Endoscopy
|
7,180
|
|
|
6,315
|
|
||
Total net sales
|
203,035
|
|
|
171,069
|
|
||
|
|
|
|
||||
Operating Income
(1)
|
|
|
|
||||
Cardiovascular
|
6,397
|
|
|
3,981
|
|
||
Endoscopy
|
2,384
|
|
|
1,628
|
|
||
Total operating income
|
8,781
|
|
|
5,609
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
2016 Term loan
|
$
|
82,500
|
|
|
$
|
85,000
|
|
2016 Revolving credit loans
|
297,500
|
|
|
187,000
|
|
||
Collateralized debt facility
|
6,983
|
|
|
6,959
|
|
||
Less unamortized debt issuance costs
|
(453
|
)
|
|
(487
|
)
|
||
Total long-term debt
|
386,530
|
|
|
278,472
|
|
||
Less current portion
|
20,733
|
|
|
19,459
|
|
||
Long-term portion
|
$
|
365,797
|
|
|
$
|
259,013
|
|
Years Ending
|
|
Future Minimum
|
||
December 31
|
|
Principal Payments
|
||
Remaining 2018
|
|
$
|
16,983
|
|
2019
|
|
15,000
|
|
|
2020
|
|
17,500
|
|
|
2021
|
|
337,500
|
|
|
Total future minimum principal payments
|
|
$
|
386,983
|
|
Currency
|
Symbol
|
Forward Notional Amount
|
|
Canadian Dollar
|
CAD
|
1,710
|
|
Swiss Franc
|
CHF
|
1,048
|
|
Chinese Renminbi
|
CNY
|
15,000
|
|
Danish Krone
|
DKK
|
11,140
|
|
Euro
|
EUR
|
6,495
|
|
British Pound
|
GBP
|
2,845
|
|
Mexican Peso
|
MXN
|
69,475
|
|
Swedish Krona
|
SEK
|
12,620
|
|
Currency
|
Symbol
|
Forward Notional Amount
|
|
Australian Dollar
|
AUD
|
6,993
|
|
Brazilian Real
|
BRL
|
8,500
|
|
Canadian Dollar
|
CAD
|
2,738
|
|
Swiss Franc
|
CHF
|
255
|
|
Chinese Renminbi
|
CNY
|
24,500
|
|
Danish Krone
|
DKK
|
2,230
|
|
Euro
|
EUR
|
23,966
|
|
British Pound
|
GBP
|
1,497
|
|
Hong Kong Dollar
|
HKD
|
11,000
|
|
Japanese Yen
|
JPY
|
255,000
|
|
Korean Won
|
KRW
|
1,800,000
|
|
Mexican Peso
|
MXN
|
17,860
|
|
Swedish Krona
|
SEK
|
7,987
|
|
Singapore Dollar
|
SGD
|
6,200
|
|
|
|
|
|
Fair Value
|
||||||
|
|
Balance Sheet Location
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Derivatives designated as hedging instruments
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
|
||||
Interest rate swap
|
|
Other assets (long-term)
|
|
$
|
7,657
|
|
|
$
|
5,749
|
|
Foreign currency forward contracts
|
|
Prepaid expenses and other assets
|
|
683
|
|
|
363
|
|
||
Foreign currency forward contracts
|
|
Other assets (long-term)
|
|
73
|
|
|
35
|
|
||
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
|
Accrued expenses
|
|
(536
|
)
|
|
(468
|
)
|
||
Foreign currency forward contracts
|
|
Other long-term obligations
|
|
(43
|
)
|
|
(82
|
)
|
||
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
|
Prepaid expenses and other assets
|
|
$
|
339
|
|
|
$
|
223
|
|
Liabilities
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
|
Accrued expenses
|
|
(480
|
)
|
|
(841
|
)
|
|
Amount of Gain/(Loss) recognized in OCI
|
|
|
Amount of Gain/(Loss) reclassified from AOCI
|
||||||||||
|
Three months ended March 31,
|
|
|
Three months ended March 31,
|
||||||||||
|
2018
|
2017
|
|
|
2018
|
2017
|
||||||||
Derivative instrument
|
|
|
Location in statements of income
|
|||||||||||
Interest rate swaps
|
$
|
2,120
|
|
$
|
385
|
|
|
Interest Expense
|
$
|
213
|
|
$
|
(104
|
)
|
Foreign currency forward contracts
|
174
|
|
388
|
|
|
Revenue
|
(151
|
)
|
1
|
|
||||
|
|
|
|
Cost of sales
|
241
|
|
(65
|
)
|
|
|
|
|
Three months ended March 31,
|
|||||
|
|
|
|
2018
|
2017
|
||||
Derivative Instrument
|
|
Location in statements of income
|
|
|
|
||||
Foreign currency forward contracts
|
|
Other expense
|
|
$
|
(1,115
|
)
|
$
|
(858
|
)
|
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
|
Total Fair
|
|
Quoted prices in
|
|
Significant other
|
|
Significant
|
||||||||
|
|
Value at
|
|
active markets
|
|
observable inputs
|
|
unobservable inputs
|
||||||||
Description
|
|
March 31, 2018
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
(1)
|
|
$
|
7,657
|
|
|
$
|
—
|
|
|
$
|
7,657
|
|
|
$
|
—
|
|
Foreign currency contract assets, current and long-term
(2)
|
|
$
|
1,095
|
|
|
$
|
—
|
|
|
$
|
1,095
|
|
|
$
|
—
|
|
Foreign currency contract liabilities, current and long-term
(3)
|
|
$
|
(1,059
|
)
|
|
$
|
—
|
|
|
$
|
(1,059
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
|
Total Fair
|
|
Quoted prices in
|
|
Significant other
|
|
Significant
|
||||||||
|
|
Value at
|
|
active markets
|
|
observable inputs
|
|
unobservable inputs
|
||||||||
Description
|
|
December 31, 2017
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts
(1)
|
|
$
|
5,749
|
|
|
$
|
—
|
|
|
$
|
5,749
|
|
|
$
|
—
|
|
Foreign currency contract assets, current and long-term
(2)
|
|
$
|
621
|
|
|
$
|
—
|
|
|
$
|
621
|
|
|
$
|
—
|
|
Foreign currency contract liabilities, current and long-term
(3)
|
|
$
|
(1,391
|
)
|
|
$
|
—
|
|
|
$
|
(1,391
|
)
|
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Beginning balance
|
$
|
10,956
|
|
|
$
|
683
|
|
Fair value adjustments recorded to income during the period
|
(13
|
)
|
|
37
|
|
||
Contingent payments made
|
(15
|
)
|
|
(15
|
)
|
||
Ending balance
|
$
|
10,928
|
|
|
$
|
705
|
|
Contingent consideration asset or liability
|
|
Fair value at March 31, 2018
|
|
Valuation technique
|
|
Unobservable inputs
|
|
Range
|
||
Revenue-based payments
|
|
$
|
10,928
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
9.9% - 15%
|
contingent liability
|
|
|
|
|
Probability of milestone payment
|
|
100%
|
|||
|
|
|
|
|
|
Projected year of payments
|
|
2018-2037
|
||
|
|
|
|
|
|
|
|
|
||
Contingent receivable
|
|
$
|
553
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
10%
|
asset
|
|
|
|
|
Probability of milestone payment
|
|
64%
|
|||
|
|
|
|
|
|
Projected year of payments
|
|
2018-2019
|
||
|
|
|
|
|
|
|
|
|
||
Contingent consideration asset or liability
|
|
Fair value at December 31, 2017
|
|
Valuation technique
|
|
Unobservable inputs
|
|
Range
|
||
Revenue-based payments
|
|
$
|
10,956
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
9.9% - 15%
|
contingent liability
|
|
|
|
|
Probability of milestone payment
|
|
100%
|
|||
|
|
|
|
|
|
Projected year of payments
|
|
2018-2037
|
||
|
|
|
|
|
|
|
|
|
||
Contingent receivable
|
|
$
|
760
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
10%
|
asset
|
|
|
|
|
Probability of milestone payment
|
|
75%
|
|||
|
|
|
|
|
|
Projected year of payments
|
|
2018-2019
|
|
2018
|
||
Goodwill balance at January 1
|
$
|
238,147
|
|
Effect of foreign exchange
|
591
|
|
|
Additions as the result of acquisitions
|
5,387
|
|
|
Goodwill balance at March 31
|
$
|
244,125
|
|
|
March 31, 2018
|
||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||
Patents
|
$
|
17,356
|
|
|
$
|
(4,023
|
)
|
|
$
|
13,333
|
|
Distribution agreements
|
7,262
|
|
|
(4,966
|
)
|
|
2,296
|
|
|||
License agreements
|
23,920
|
|
|
(6,077
|
)
|
|
17,843
|
|
|||
Trademarks
|
20,935
|
|
|
(5,079
|
)
|
|
15,856
|
|
|||
Covenants not to compete
|
1,028
|
|
|
(976
|
)
|
|
52
|
|
|||
Customer lists
|
35,297
|
|
|
(19,397
|
)
|
|
15,900
|
|
|||
In-process technology
|
920
|
|
|
—
|
|
|
920
|
|
|||
|
|
|
|
|
|
||||||
Total
|
$
|
106,718
|
|
|
$
|
(40,518
|
)
|
|
$
|
66,200
|
|
|
December 31, 2017
|
||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||
Patents
|
$
|
16,528
|
|
|
$
|
(3,737
|
)
|
|
$
|
12,791
|
|
Distribution agreements
|
7,262
|
|
|
(4,686
|
)
|
|
2,576
|
|
|||
License agreements
|
23,783
|
|
|
(5,568
|
)
|
|
18,215
|
|
|||
Trademarks
|
16,224
|
|
|
(4,686
|
)
|
|
11,538
|
|
|||
Covenants not to compete
|
1,028
|
|
|
(968
|
)
|
|
60
|
|
|||
Customer lists
|
31,935
|
|
|
(18,482
|
)
|
|
13,453
|
|
|||
In-process technology
|
920
|
|
|
—
|
|
|
920
|
|
|||
|
|
|
|
|
|
||||||
Total
|
$
|
97,680
|
|
|
$
|
(38,127
|
)
|
|
$
|
59,553
|
|
•
|
risks relating to managing growth, particularly if accomplished through acquisitions and the integration of acquired businesses;
|
•
|
risks relating to protecting our intellectual property;
|
•
|
claims by third parties that we infringe their intellectual property rights which could cause us to incur significant legal or licensing expenses and prevent us from selling our products;
|
•
|
greater scrutiny and regulation by governmental authorities, including risks relating to the subpoena we received in October 2016 from the U.S. Department of Justice seeking information on our marketing and promotional practices;
|
•
|
risks relating to physicians’ use of our products in unapproved circumstances;
|
•
|
FDA regulatory clearance processes and any failure to obtain and maintain required regulatory clearances and approvals;
|
•
|
disruption of our critical information systems or material breaches in the security of our systems;
|
•
|
failure to comply with export control laws, customs laws, domestic procurement laws, sanctions laws and other laws governing our operations in the U.S. and other countries, which could subject us to civil or criminal penalties, other remedial measures and legal expenses;
|
•
|
risks relating to significant adverse changes in, or our failure to comply with, governing regulations;
|
•
|
restrictions and limitations in our debt agreements and instruments, which could affect our ability to operate our business and our liquidity;
|
•
|
expending significant resources for research, development, testing and regulatory approval or clearance of our products under development and any failure to develop the products, any failure of the products to be effective or any failure to obtain approvals for commercial use;
|
•
|
violations of laws targeting fraud and abuse in the healthcare industry;
|
•
|
risks relating to healthcare reform legislation negatively affecting our financial results, business, operations or financial condition;
|
•
|
changes in the regulatory approval process and requirements in foreign countries, which could force us to incur additional expense or experience delays or uncertainties;
|
•
|
loss of key personnel;
|
•
|
product liability claims;
|
•
|
failure to report adverse medical events to the FDA, which may subject us to sanctions that may materially harm our business;
|
•
|
failure to maintain or establish sales capabilities on our own or through third parties, which may result in our inability to commercialize any of our products in countries where we lack direct sales and marketing capabilities;
|
•
|
the addressable market for our product groups being smaller than our estimates;
|
•
|
demands for price concessions resulting from consolidations in the healthcare industry, group purchasing organizations or public procurement policies;
|
•
|
our inability to compete in markets, particularly if there is a significant change in relevant practices or technology;
|
•
|
the effect of evolving U.S. and international laws and regulations regarding privacy and data protection;
|
•
|
fluctuations in foreign currency exchange rates negatively impacting our financial results;
|
•
|
termination or interruption of, or a failure to monitor, our supply relationships or increases in the price of our component parts, finished products, third-party services or raw materials, particularly petroleum-based products;
|
•
|
our inability to accurately forecast customer demand for our products or manage our inventory;
|
•
|
changes in international and national economic and industry conditions;
|
•
|
inability to generate sufficient cash flow to fund our debt obligations, capital expenditures, and ongoing operations;
|
•
|
risks relating to our revenues being derived from a few products and medical procedures;
|
•
|
volatility of the market price of our common stock;
|
•
|
risks relating to work stoppage, transportation interruptions, severe weather and natural disasters;
|
•
|
fluctuations in our effective tax rate adversely affecting our business, financial condition or results of operations;
|
•
|
limits on reimbursement imposed by governmental and other programs;
|
•
|
failure to comply with applicable environmental laws and regulations; and
|
•
|
other factors referenced in our press releases and in our reports filed with the Securities and Exchange Commission.
|
•
|
In February 2018, we acquired certain divested assets from BD for an aggregate purchase price of
$100.1 million
. The acquired assets include the soft tissue core needle biopsy products sold under the trade names of Achieve® Programmable Automatic Biopsy System, Temno® Biopsy System, Tru-Cut® Biopsy Needles as well as Aspira® Pleural Effusion Drainage Kits, and the Aspira® Peritoneal Drainage System. During the period from February 14, 2018 to March 31, 2018, our net sales of BD products were approximately
$6.3 million
.
|
•
|
In April 2018, we entered into long-term agreements with NinePoint Medical, Inc. (“NinePoint”), pursuant to which, we (a) became the exclusive worldwide distributor for the NvisionVLE® Imaging System with Real-time Targeting™ using Optical Coherence Tomography (OCT), (b) acquired an option to purchase up to
100%
of the outstanding equity in NinePoint, and (c) made a loan to NinePoint, all in exchange for total consideration of
$20.5 million
. We believe the NinePoint products will enhance the product offerings of our Endotek division (in our endoscopy segment) and will be another step to adding therapy and disease-state products to our portfolio. The NinePoint products have 510(k) clearance in the United States, and NinePoint is preparing a CE mark application. We plan to launch the NinePoint products globally on a measured basis. We are currently evaluating the accounting treatment of these transactions.
|
|
Three Months Ended March 31,
|
||
|
2018
|
|
2017
|
Net sales
|
100%
|
|
100%
|
Gross profit
|
43.4
|
|
44.4
|
Selling, general and administrative expenses
|
32.0
|
|
33.8
|
Research and development expenses
|
7.1
|
|
7.3
|
Income from operations
|
4.3
|
|
3.3
|
Other income (expense) - net
|
(1.2)
|
|
5.8
|
Income before income taxes
|
3.1
|
|
9.1
|
Net income
|
2.6
|
|
8.7
|
|
|
|
Three Months Ended March 31,
|
||||||
|
% Change
|
|
2018
|
|
2017
|
||||
Cardiovascular
|
|
|
|
|
|
|
|||
Stand-alone devices
|
31%
|
|
$
|
83,246
|
|
|
$
|
63,653
|
|
Custom kits and procedure trays
|
15%
|
|
33,272
|
|
|
28,874
|
|
||
Inflation devices
|
21%
|
|
22,419
|
|
|
18,507
|
|
||
Catheters
|
12%
|
|
33,865
|
|
|
30,176
|
|
||
Embolization devices
|
—%
|
|
12,587
|
|
|
12,527
|
|
||
CRM/EP
|
(5)%
|
|
10,466
|
|
|
11,017
|
|
||
Total
|
19%
|
|
195,855
|
|
|
164,754
|
|
||
|
|
|
|
|
|
||||
Endoscopy
|
|
|
|
|
|
||||
Endoscopy devices
|
14%
|
|
7,180
|
|
|
6,315
|
|
||
|
|
|
|
|
|
||||
Total
|
19%
|
|
$
|
203,035
|
|
|
$
|
171,069
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Operating Income
|
|
|
|
|
|||
Cardiovascular
|
$
|
6,397
|
|
|
$
|
3,981
|
|
Endoscopy
|
2,384
|
|
|
1,628
|
|
||
Total operating income
|
$
|
8,781
|
|
|
$
|
5,609
|
|
•
|
Euro (EUR)
|
•
|
Chinese Yuan Renminbi (CNY), and
|
•
|
British Pound (GBP).
|
•
|
Hong Kong Dollar (HKD),
|
•
|
Mexican Peso (MXN),
|
•
|
Australian Dollar (AUD),
|
•
|
Canadian Dollar (CAD),
|
•
|
Brazilian Real (BRL),
|
•
|
Swiss Franc (CHF),
|
•
|
Swedish Krona (SEK),
|
•
|
Danish Krone (DKK),
|
•
|
Singapore Dollars (SGD)
|
•
|
South Korean Won (KRW), and
|
•
|
Japanese Yen (JPY).
|
Currency
|
Symbol
|
Forward Notional Amount
|
|
Canadian Dollar
|
CAD
|
1,710
|
|
Swiss Franc
|
CHF
|
1,048
|
|
Chinese Renminbi
|
CNY
|
15,000
|
|
Danish Krone
|
DKK
|
11,140
|
|
Euro
|
EUR
|
6,495
|
|
British Pound
|
GBP
|
2,845
|
|
Mexican Peso
|
MXN
|
69,475
|
|
Swedish Krona
|
SEK
|
12,620
|
|
Currency
|
Symbol
|
Forward Notional Amount
|
|
Australian Dollar
|
AUD
|
6,993
|
|
Brazilian Real
|
BRL
|
8,500
|
|
Canadian Dollar
|
CAD
|
2,738
|
|
Swiss Franc
|
CHF
|
255
|
|
Chinese Renminbi
|
CNY
|
24,500
|
|
Danish Krone
|
DKK
|
2,230
|
|
Euro
|
EUR
|
23,966
|
|
British Pound
|
GBP
|
1,497
|
|
Hong Kong Dollar
|
HKD
|
11,000
|
|
Japanese Yen
|
JPY
|
255,000
|
|
Korean Won
|
KRW
|
1,800,000
|
|
Mexican Peso
|
MXN
|
17,860
|
|
Swedish Krona
|
SEK
|
7,987
|
|
Singapore Dollar
|
SGD
|
6,200
|
|
Exhibit No.
|
|
Description
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
10.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101
|
|
The following financial information from the quarterly report on Form 10-Q of Merit Medical Systems, Inc. for the quarter ended March 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements
|
(1)
|
Incorporated by reference from the Annual Report on Form 10-K filed on March 1, 2017.
|
(2)
|
Incorporated by reference from the Current Report on Form 8-K filed on December 16, 2015.
|
|
|
||
Date: May 10, 2018
|
By:
|
/s/ FRED P. LAMPROPOULOS
|
|
|
|
|
Fred P. Lampropoulos, President and
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date: May 10, 2018
|
By:
|
/s/ BERNARD J. BIRKETT
|
|
|
|
|
Bernard J. Birkett
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
Period
|
Maximum Ratio
|
July 1, 2017 through and including December 31, 2017
|
3.75 to 1.00
|
January 1, 2018 and thereafter
|
3.50 to 1.00
|
MERIT MEDICAL SYSTEMS, INC., as Borrower
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
MERIT HOLDINGS, INC., as Subsidiary Guarantor
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
MERIT SENSOR SYSTEMS, INC., as Subsidiary Guarantor
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
BIOSPHERE MEDICAL, INC., as Subsidiary Guarantor
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
BSMD VENTURES, INC., as Subsidiary Guarantor
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
BIOSPHERE MEDICAL JAPAN, INC., as Subsidiary Guarantor
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
THOMAS MEDICAL PRODUCTS, INC., as Subsidiary Guarantor
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
DFINE, INC., as Subsidiary Guarantor
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
VASCULAR ACCESS TECHNOLOGIES, INC., as Subsidiary Guarantor
|
By:
/s/ Bernard Birkett
|
Name: Bernard Birkett
|
Title: Chief Financial Officer and Treasurer
|
ADMINISTRATIVE AGENT AND LENDERS
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION,
|
as Administrative Agent, Swingline Lender, Issuing Lender and Lender
|
By:
/s/ Jarad Myres
|
Name: Jared Myres
|
Title: Vice President
|
BANK OF AMERICA, N.A., as Lender
|
By:
/s/ Heath B. Lipson
|
Name: Heath B. Lipson
|
Title: Senior Vice President
|
U.S. BANK NATIONAL ASSOCIATION, as Lender
|
By:
/s/ Nicholas J. Hintze
|
Name: Nicholas J. Hintze
|
Title: Vice President
|
HSBC BANK USA, NATIONAL ASSOCIATION, as Lender
|
By:
/s/ R. Stolle
|
Name: Radmila Stolle
|
Title: V..P., Relationship Manager
|
Date: May 10, 2018
|
|
|
|
/s/ Fred P. Lampropoulos
|
|
Fred P. Lampropoulos
|
|
President and Chief Executive Officer
|
|
(principal executive officer)
|
|
Date: May 10, 2018
|
|
|
|
/s/ Bernard J. Birkett
|
|
Bernard J. Birkett
|
|
Chief Financial Officer
|
|
(principal financial officer)
|
|
Date: May 10, 2018
|
/s/ Fred P. Lampropoulos
|
|
Fred P. Lampropoulos
|
|
President and Chief Executive Officer
|
|
(principal executive officer)
|
Date: May 10, 2018
|
/s/ Bernard J. Birkett
|
|
Bernard J. Birkett
|
|
Chief Financial Officer
|
|
(principal financial officer)
|