MMSI

Merit Medical Systems, Inc. (MMSI)

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Merit Medical Systems, Inc. (MMSI)

Business Update Conference Call

October 07, 2013 04:00 PM ET

Executives

Fred P. Lampropoulos - Chairman, President, and Chief Executive Officer

Rashelle Perry - Chief Legal Officer

Kent W. Stanger - Chief Financial Officer

Analysts

Thomas J. Gunderson - Piper Jaffray & Co.

Jayson T. Bedford - Raymond James & Associates, Inc.

James P. Sidoti - Sidoti & Co. LLC

Chris Cooley - Stephens, Inc.

Presentation

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the MMSI Business Update Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for any questions. (Operator Instructions) I would now like to turn the conference over to our host Mr. Fred Lampropoulos, Chairman and CEO. Please go ahead, sir.

Fred P. Lampropoulos

Good afternoon, ladies and gentlemen. This is Fred Lampropoulos. I’m assembled here with my staff in Salt Lake City. I have Kent Stanger, our CFO and other members of the staffs who will respond to questions shortly. I’d like to start out by asking our Chief Legal Officer, Rashelle Perry, to recite if you will or read our safe harbor provision. Rashelle?

Rashelle Perry

Thank you. During our discussion today, reference may be made to projections, anticipated events, or other information, which is not purely historical. Please be aware that statements made in this call which are not historical maybe considered forward-looking statements. We caution you that all forward-looking statements involve risks and unanticipated events and uncertainties that could cause our actual results to differ materially from those anticipated in such statements. Many of these risks are discussed in our Annual Report on Form 10-K and other reports and filings with the SEC available on our website. Any forward-looking statements made in this call are made only as of today’s date and we do not assume any obligation to update such statements.

Fred P. Lampropoulos

Rashelle, thank you very much and ladies and gentlemen thank you for taking the time to join us today. I think it’s nice that we can visit with you before earnings season starts in just a few weeks. Just a reminder that our third quarter earnings call is scheduled for the 23rd, and also remind that this is not an earnings call and that our comments today shall be restricted to various issues that are involved with the announcements that we made earlier today.

We announced of course this morning that Merit have acquired the assets of two product lines that we’re really quite exited about. One comes out of the Datascope Maquet Getinge, a company which is a large international company and the other one comes from a smaller family-owned business in Atlanta called Radial Assist. What I’d like to do is talk to you a little bit about those products, discuss our strategies with you and why we think these are very, very important. I don’t want to expressed concern, but we’re questioning why these acquisitions and why now. And I’d like to go through them with some detail and then we will open up little bit later on for questions.

Let me start first with the Datascope acquisition. The products that we acquired were the SAFEGUARD, I’m going to call it compression bandage, but it is a pressure-assisted hemostatic devices, and this product has been in the market for several years. It is patented. It still has 9 years or 10 years of patent life left and is both FDA and CE marked.

The reason at least from my take, the divesture of this product, it is simply a product that the Datascope Maquet sales force do not call on. Many of you are aware of Maquet, and their business is really in the area of intraaortic balloon pumps and the equipment and supplies they are associated with that as well as other hospital and some very capital intensive types of products.

They are not making calls with their sales force in the cath lab in the areas that Merit is, and so they have had this product that Merit has been well aware of for several years, and they are currently doing about $7 million worth of revenues and it’s been pretty steady and I will say also pretty flat over the last several years. But people that use this product, like the product. They just simply have not had the call point, the interest, and the associated products to support interest by their sales force. This is a dilemma that we understand as that you only have so many hours that you can spend and people pick and choose between an expensive and high margin product in which they are the market leader in IABP and/or a smaller product like this.

That being said, there is another product that’s associated with this and it’s called the AIR-BAND, and the AIR-BAND is associated with radial artery procedures. They have essentially taken the existing technology and downsized it, so that it can be used for compression of the radial artery.

Now as many of you know, Merit is very, very focused on this radial artery business. We believe that it is the fastest growing area of interventional cardiology and in an area that’s relatively flat. This area is growing at approximately 33% to 35% per year.

A couple of other points to this, and we do have talked about this from time to time and that is that in the United States if you would go back five years ago, you would find that about 3% of procedures that were done in the United States, interventions or diagnostic procedures were done through the radial artery. The most recent numbers are closer to 16% and some people will tell you 20%.

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