Merit Medical’s 10.2% Revenue Growth Ambition: Can It Overcome Tariff Headwinds?

Merit Medical (NASDAQ: MMS) has set an ambitious revenue growth target for 2025, aiming for up to 10.2% constant currency net sales growth, despite navigating geopolitical trade tensions and supply chain uncertainties. This goal, announced in April 2025, reflects the Utah-based medical device manufacturer’s confidence in its core cardiovascular business and recent acquisitions. But can Merit sustain this pace amid rising tariff-related risks?

The Revenue Outlook: Strong Start, Ambitious Finish

Merit’s first-quarter 2025 results provided a solid foundation for its full-year guidance. Revenue rose 9.8% year-over-year (YoY) to $355.4 million on a reported basis, while constant currency revenue surged 10.9% YoY, excluding foreign exchange impacts. This outperformance led management to raise the high end of its constant currency growth guidance to 10.2%, up from an earlier range of 8.7% to 10.0%.

The 10.2% figure, however, comes with caveats. The reported GAAP revenue growth is expected to be 8%–10%, as currency fluctuations dilute the constant currency gains by 0.4%. Investors should note that Merit’s “constant currency” metric excludes the drag from foreign exchange, which could mean the actual reported growth lags slightly behind the 10.2% headline number.

Segment Performance: Cardiovascular Strength, Endoscopy Surge

Merit’s cardiovascular segment, its largest division, reported $338.7 million in Q1 revenue, up 8.1% YoY on a reported basis. Constant currency growth was 9.2%, driven by:
- Cardiac Intervention: A 12.0% constant currency increase, fueled by demand for angiography catheters and pressure monitoring systems.
- OEM (Original Equipment Manufacturing): A 20.7% constant currency jump, reflecting partnerships with major medical device players.

Meanwhile, the endoscopy segment, bolstered by acquisitions like EndoGastric Solutions (EGS), delivered a staggering 64.4% constant currency revenue growth YoY. This division, though smaller, has become a key growth driver, contributing $16.6 million in Q1.

The Tariff Challenge: A Double-Edged Sword

The 10.2% target is not without risks. Management explicitly cited “trade policies and related actions” as a headwind, noting that tariffs on Chinese imports and retaliatory measures from trade partners could disrupt supply chains or increase costs.

These pressures have already impacted profitability. While revenue grew, Merit lowered its non-GAAP EPS guidance to $3.29–$3.42, citing tariff-driven margin pressures. This highlights a critical point: even if revenue targets are met, earnings could lag if costs escalate.

The CEO’s Perspective: “Stable Growth Amid Volatility”

CEO Fred Lampropoulos emphasized that the 10.2% target assumes “stable constant currency growth this year”, leveraging Merit’s diversified product portfolio and recent acquisitions. However, he acknowledged that external factors—such as trade disputes between the U.S. and China—are out of the company’s control.

The Bottom Line: A High-Reward, High-Risk Play

Merit’s 10.2% revenue growth target is achievable, but investors must weigh its upside against significant risks:
1. Tariff Exposure: A prolonged trade conflict could erode margins, especially if Merit cannot pass cost increases to customers.
2. Acquisition Integration: The EGS acquisition and other deals have boosted top-line growth, but sustaining organic growth in cardiovascular remains critical.
3. Currency Volatility: The 0.4% drag from currency fluctuations in Q1 hints at potential variability in future quarters.

Conclusion: A Bull Case with Guardrails

Merit Medical’s Q1 performance and updated guidance suggest strong execution in its core markets and strategic acquisitions. The 10.2% constant currency growth target, supported by a 10.9% Q1 surge, is realistic if trade tensions stabilize. However, investors should monitor two key metrics:
- Endoscopy Segment Growth: Can the 64.4% Q1 jump be sustained without overreliance on acquisitions?
- Margin Resilience: Will tariffs force Merit to reduce its 2025 EPS guidance further?

If Merit can navigate these risks, its stock could reward investors with double-digit revenue growth and a diversified product pipeline. But with geopolitical clouds looming, this remains a high-reward, high-risk opportunity.

The stock’s 5-year performance history shows resilience, but the next 12 months will test whether Merit’s growth story can outpace the global economic headwinds. Stay vigilant—and keep an eye on those tariffs.