Merit Medical Systems, Inc. (NASDAQ:MMSI) Q2 2019 Earnings Conference Call Transcript

Jul 25, 2019 • 05:30 pm ET

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Merit Medical Systems, Inc. (NASDAQ:MMSI) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions] Our first question will come from the line of Jim Sidoti with Sidoti and Company. Your line is now open.

Analyst
James Philip

Good afternoon, Fred. Can you hear me?

Executive
Fred Lampropoulos

I can Jim. Thank you for calling in.

Analyst
James Philip

Great, great. In your text you talked a little bit about the new contract with Premier, but then you said there were some other GPOs that you started to work with. Can you give us any more color on that and how quickly you think that business will ramp up?

Executive
Fred Lampropoulos

Yeah, Jim, as I mentioned in my comments, we're somewhat limited in what we can say, other than, I think we can -- I think it's very evident that whole area is something that there is a lot of that business that's going to come to Merit. And there are a bunch of players out there, but I think this transaction is a great opportunity. I haven't mentioned lot is all the throughput that comes through from the areas of fluid management. So even though it's a lower margin, and I think I've talked quite a bit about this. There's a lot of throughput, there's a lot of gross margin dollars. And again, I think the important part I've tried to make understood is, these are the customers that have built our business and you don't turn away from those. Raul do you have anything on that one?

Executive
Raul Parra

No, I just like to add that, it does improve our operating margin too, because we get to leverage of revenues. There is very little effort on our part as far as expense side.

Executive
Fred Lampropoulos

Yeah, that's right. We don't have to go build new tools, we have capacity, we have things in place. There's not much we have to do. Now, I will say this, Jim and then it will be my last comment on this part of your questions, but these things are one -- one account with Premier is signed and is in effect, but inventory has to be worked out and the transfer and the ramp-up. So you will see this start in the third. It will get stronger in the fourth, and by the time we get to early next year in that first quarter and for the balance of that year, up to 5 years. This is going to be a big, big opportunity.

And remember that this is the business that Merit started out and this is the business that we wanted and felt like we can compete in. So again, much like the Cook opportunity, we think it's the right thing to do the business. And I'll let you know that we debated it, we talked about it. What do you think, should we participate? Or should we not. And we have a lot of conversation with our FP&A guys and ops guys come to that conclusion. Well, listen, that's enough said Jim. Do you have anything else? Then I need to move on.

Analyst
James Philip

Well, I just