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Merit Medical Revenue Up, Profitability Down

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  Published in Stocks and Investing on Tuesday, February 24th 2026 at 20:29 GMT by WTOP News
      Locales: Maryland, Massachusetts, UNITED STATES

SOUTH JORDAN, Utah - February 25th, 2026 - Merit Medical Systems, Inc. (NASDAQ: MEMT) today reported its fourth-quarter and full-year 2025 financial results, revealing a story of robust revenue growth tempered by shrinking profitability. The results, released this afternoon, indicate a complex landscape for the medical device manufacturer, forcing management to adopt a cautious approach to its 2026 outlook.

Merit Medical's Q4 2025 revenue reached $385 million, an 8% increase year-over-year. This growth demonstrates continued demand for the company's broad portfolio of medical products, encompassing interventional, surgical, and diagnostic solutions. Full-year revenue followed suit, reaching $1.43 billion - a 6% rise compared to 2024. These figures suggest a healthy underlying business, effectively capturing market share and expanding its customer base.

However, the positive revenue trend was overshadowed by a decline in profitability. Adjusted earnings per share (EPS) for Q4 clocked in at $0.42, falling short of analyst expectations. More concerning was the erosion of gross margin, which decreased from 44.2% in Q4 2024 to 41.5% in the most recent quarter. This margin compression is attributed to a dual challenge: escalating raw material costs and intensifying pricing pressures within the healthcare industry.

Net income for the quarter registered at $29 million, translating to $0.24 per share. While still positive, this represents a slowdown in earnings growth compared to previous periods. Diluted earnings per share for the full year 2025 amounted to $1.18, reflecting the cumulative impact of margin pressures throughout the year.

A Difficult Reimbursement Landscape & Rising Costs

According to Mark S. Goikhman, Merit Medical's President and CEO, the company is actively addressing the challenges facing its bottom line. "We are pleased with the top-line revenue growth we achieved in 2025, demonstrating the continued demand for our products," he stated in the earnings release. "However, we faced challenges in maintaining our margins due to a difficult reimbursement environment and rising raw material costs. We are actively addressing these issues through cost optimization initiatives and strategic pricing adjustments."

The "difficult reimbursement environment" alludes to increasing scrutiny from healthcare payers - both government and private insurance companies - seeking to control costs. These payers are demanding lower prices for medical devices and procedures, squeezing manufacturers' profit margins. Simultaneously, global supply chain disruptions and inflationary pressures have driven up the cost of raw materials, further impacting profitability.

Looking Ahead: Cautious Optimism for 2026

Merit Medical's management offered a cautious outlook for 2026, citing ongoing macroeconomic uncertainties and persistent pressure on reimbursement rates as key headwinds. This cautious approach is a response to a broader trend within the medical device industry, where companies are grappling with a more challenging pricing and cost environment.

Analysts predict that medical device companies will increasingly focus on innovation and efficiency to mitigate these pressures. This may involve developing higher-margin products, streamlining manufacturing processes, and exploring strategic partnerships. Merit Medical's commitment to "cost optimization initiatives" suggests the company is already moving in this direction.

Investor Response & Future Implications

The market reacted negatively to the earnings release, with shares of Merit Medical declining in after-hours trading. This disappointment reflects investor concerns about the company's ability to maintain profitability in the face of ongoing challenges. The decline underscores the importance of profitability metrics in addition to revenue growth for medical device investors.

Merit Medical's situation is a microcosm of the broader challenges facing the medical device industry. Companies must balance the need for innovation and growth with the imperative to control costs and navigate a complex reimbursement landscape. The coming year will be critical in determining whether Merit Medical can successfully navigate these headwinds and deliver sustainable value to its shareholders. Analysts will be closely watching the company's progress in implementing its cost optimization strategies and adapting to the evolving healthcare environment.