Merit Medical Q1 2019 Earnings Report
NOTES TO NON-GAAP FINANCIAL MEASURES (cont.)
Constant Currency Revenue
Merit's revenue on a constant currency basis is prepared by translating the current-period reported sales of subsidiaries whose functional currency is other than the U.S. dollar at the
applicable foreign exchange rates in effect during the comparable prior-year period. The constant currency revenue adjustment of $4.8 million for the three-month period ended
March 31, 2019 was calculated using the applicable average foreign exchange rates for the three-month period ended March 31, 2018.
Core Revenue and Core Revenue on a Constant Currency Basis
Merit's core revenue is defined (a) with respect to prior fiscal year periods, as GAAP revenue, and (b) with respect to current fiscal year periods, as GAAP revenue, less revenue
from certain acquisitions and strategic transactions. For the three-month period ended March 31, 2019, Merit's core revenue excludes revenues attributable to (i) the acquisition of
(1) certain divested assets of Becton, Dickinson and Company in February 2018 (excluded January 2019 only), (2) the assets of DirectACCESS Medical, LLC in May 2018, (3)
Cianna Medical, Inc. in November 2018, and (4) the assets of Vascular Insights, LLC in December 2018, and (ii) distribution arrangements executed with NinePoint Medical, Inc.
in April 2018 and QXMedical, LLC in May 2018. Core revenue on a constant currency basis is defined as core revenue (as described in the first sentence of this paragraph)
adjusted to eliminate the foreign exchange impact related to those core revenues for the relevant period, using the applicable average foreign exchange rates in effect for the
comparable prior-year periods presented.
Non-GAAP Gross Margin
Non-GAAP gross margin is calculated by reducing GAAP cost of sales by amounts recorded for amortization of intangible assets and inventory mark-up related to acquisitions.
Non-GAAP Net Income
Non-GAAP net income is calculated by adjusting GAAP net income for certain items which are deemed by Merit's management to be outside of core operations and vary in
amount and frequency among periods, such as expenses related to new acquisitions, non-cash expenses related to amortization and write-off of previously acquired tangible and
intangible assets, severance expenses, expenses resulting from non-ordinary course litigation, governmental proceedings or changes in tax regulations, and debt issuance costs, as
well as other items set forth in the tables below.
Non-GAAP EPS
Non-GAAP EPS is defined as non-GAAP net income divided by the diluted shares outstanding for the corresponding period.
Other Non-GAAP Financial Measure Reconciliation
The following tables set forth supplemental financial data and corresponding reconciliations of non-GAAP net income and non-GAAP earnings per share to Merit's net income and
earnings per share prepared in accordance with GAAP, in each case, for the three-month periods ended March 31, 2019 and 2018. The non-GAAP income adjustments referenced
in the following tables do not reflect stock-based compensation expense of approximately $1.8 million and $1.3 million for the three-month periods ended March 31, 2019 and
2018, respectively.
MA MERITAEDICA
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