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Merit Medical Reports 2008 Results

Merit Medical Systems, Inc. (Merit Medical) has reported revenues of $227.1 million for the full year of 2008, up 9%, compared with the revenues of $207.8 million in the previous year-end. It also reported a net income of $20.7 million, or $0.73 per diluted share, for the full year of 2008, compared with the net income of $15.6 million, or $0.55 per diluted share, in the previous year-end.

Gross margins improved to 41.1% of sales for the year ended December 31, 2008, against 38.4% of sales for the year ended December 31, 2007, an improvement of 270 basis points.

“Merit’s performance for 2008 exceeded our original estimates for the year and are a reflection of the efforts of many employees during a difficult economic environment,” said Fred P. Lampropoulos, Merit’s chairman and chief executive officer. “The volatile prices of commodities we have experienced during the past year were overcome by our focus on efficiency, new product introductions and productivity.”

Revenues for the quarter ended December 31, 2008 were $58.0 million, compared with revenues of $54.3 million for the quarter ended December 31, 2007, an increase of 7%.

Earnings for the quarter ended December 31, 2008 were $5.4 million, up 14% against $4.7 million for the quarter ended December 31, 2007. Earnings per share for the fourth quarter of 2008 were $0.19, up from $0.17 per share for the fourth quarter of 2007. Earnings for the fourth quarter of 2008 were negatively impacted by an increase in income tax expense of $356,000 for losses in life insurance investments related to Merit’s deferred compensation plan which are not deductible for income tax reporting purposes.

Gross margins for the fourth quarter of 2008 were 40.5% of sales, up from 39.8% of sales for the fourth quarter of 2007.

Sales in each of Merit’s product categories grew for the year ended December 31, 2008, against the year ended December 31, 2007, as catheter sales rose 20%; custom kit and tray sales rose 11%; stand-alone device sales increased 9%; and inflation device sales grew 4%.

For the fourth quarter of 2008, against the fourth quarter of 2007, catheter sales rose 23%; custom kit and tray sales grew 15%; stand-alone device sales increased 4%; and inflation device sales decreased 4%.

Sales during the fourth quarter of 2008 were affected by deliveries of inflation devices to an OEM customer, foreign exchange rates, and the recovery process of Merit’s facility in Angleton, Texas, which was damaged by Hurricane Ike.

Selling, general and administrative expenses were 22.2% and 23.4% of sales for the fourth quarter and year ended December 31, 2008, respectively, compared with 23.1% and 23.2% of sales for the comparable periods of 2007, respectively.

Research and development costs were 4.1% and 4.0% of sales for the fourth quarter and year ended December 31, 2008, respectively, against 3.9% and 4.2% of sales for the comparable periods of 2007, respectively.

Merit’s effective tax rates for the fourth quarter and calendar year 2008 were 36.9% and 34.9%, respectively, against 33.5% and 33.4% for the same periods of 2007, respectively.

Merit earned $28.3 million in cash from operations for the year ended December 31, 2008, against $32.1 million for the year ended December 31, 2007. Merit’s cash position increased to $34.3 million on December 31, 2008, against $17.6 million on December 31, 2007.

During the quarter ended December 31, 2008, Merit received 510(k) clearance from the Food and Drug Administration for its new Maestro microcatheters, and the Miser, a newly designed contrast management system.