Please stand by. Welcome to the Merit Medical Systems, Inc. first quarter 2026 earnings conference call. At this time, all participants have been placed in listen-only mode. Please note that this conference call is being recorded and the recording will be available on the company's website for replay shortly. I would now like to turn the call over to Martha Aronson, Merit Medical Systems, Inc.'s president and chief executive officer.

Thank you, operator, and welcome, everyone. I am joined on the call today by Raul Parra, our Chief Financial Officer and Treasurer, and Brian G. Lloyd, our Chief Legal Officer and Corporate Secretary. Brian, would you please take us through the Safe Harbor statements?

Thank you, Martha. This presentation contains forward-looking statements that receive Safe Harbor protection under federal securities laws. Although we believe these forward-looking statements are based upon reasonable assumptions, they are subject to risks and uncertainties. The realization of any of these risks or uncertainties as well as extraordinary events or transactions impacting our company could cause actual results to differ materially from the expectations and projections expressed or implied by our forward-looking statements. In addition, any forward-looking statements represent our views only as of today, 04/30/2026, and should not be relied upon as representing our views as of any other date. We specifically disclaim any obligation to update such statements except as required by applicable law. Please refer to the sections entitled Cautionary Statement Regarding Forward-Looking Statements in today's press release and presentation, for important information regarding such statements. For a discussion of factors that could cause actual results to differ from these forward-looking statements, please also refer to our most recent filings with the SEC, which are available on our website. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. However, we believe certain non-GAAP financial measures provide investors with useful information regarding the underlying business trends and performance of our ongoing operations and can be useful for period-over-period comparisons of such operations. This presentation also contains certain non-GAAP financial measures. A reconciliation of non-GAAP financial measures to the most directly comparable U.S. GAAP measures is included in today's press release and presentation furnished to the SEC under Form 8-Ks. Please refer to the sections of our press release and presentation entitled Non-GAAP Financial Measures for important information regarding non-GAAP financial measures discussed on this call. Readers should consider non-GAAP financial measures in addition to, not as a substitute for, financial reporting measures prepared in accordance with GAAP. Please note that these calculations may not be comparable with similarly titled measures of other companies. Both today's press release and our presentation are available on the Investors page of our website. I will now turn the call back to Martha.

Thank you, Brian. Let me start with a brief agenda of what we will cover during our prepared remarks. I will begin with a brief summary of the first quarter financial results, then I will discuss several areas of operating and strategic progress that we have made in recent months including an important strategic acquisition in the oncology space that we made subsequent to quarter end. Then Raul will provide a more in-depth review of the quarterly financial results as well as our financial guidance for 2026, which we updated in today's press release. We will then open the call for your questions. Beginning with a review of our first quarter results. We reported total revenue of $381.9 million, up 7% year-over-year on a GAAP basis and up 5% year-over-year on a constant currency basis. Our constant currency revenue results exceeded the high end of the expectations that we outlined on the Q4 2025 earnings call. First quarter constant currency growth was driven by 2.7% organic constant currency growth, and contributions from our acquisitions of BioLife and the C2 Cryo Balloon device, both of which exceeded the high end of our expectations. Our organic constant currency growth includes the impact of the strategic divestiture of our DualCap product line in February 2026, which we discussed in our Q4 2025 call. Excluding divested revenue, our organic constant currency growth was 3.7% in the first quarter. With respect to the profitability performance in Q1, we delivered financial results that significantly exceeded expectations. Our non-GAAP operating margin increased 47 basis points year-over-year to 19.7%, representing the highest first quarter operating margin in the company's history. The team delivered 9% growth in non-GAAP EPS, which exceeded the high end of expectations, and we generated $25 million of free cash flow, an increase of 26% year-over-year. We are pleased with the solid start to fiscal year 2026 and I want to thank our team members all around the world for their effort and commitment to our customers. We updated our guidance in today's press release to include the expected financial impacts from our acquisition of Viewpoint Medical on April 1. Importantly, we remain confident in our team's ability to drive stable constant currency growth, improving profitability, and solid free cash flow this year. Our organization is aligned around our priorities for 2026, specifically to drive strong execution around the globe and to successfully complete our Continued Growth Initiatives program which includes our previously disclosed financial targets for the three-year period ending December 31, 2026. Turning now to a discussion on three key operating and strategic announcements we made since our last earnings call. First, on March 16, we announced the U.S. commercial introduction of the Resilience Through-The-Scope, or TTS, esophageal stent. The Resilience stent is indicated for treatment of esophageal fistulas and strictures caused by malignant tumors. Resilience is designed to demonstrate the greatest migration resistance amongst currently available TTS esophageal stents and facilitates physician control and accurate placement. Resilience targets an attractive market opportunity in the United States and we expect adoption and utilization of this differentiated product to contribute nicely to the growth in Merit's endoscopy platform in the coming years. Second, on April 1, building upon our oncology platform, we announced the acquisition of Viewpoint Medical for an aggregate transaction consideration of $140 million, of which $90 million was paid in cash at closing. Viewpoint Medical is based in Carlsbad, California, and manufactures the OneMark detection imaging system and OneMark tissue markers. This unique ultrasound-enhanced technology offers an innovative solution to localize more lesions at the time of biopsy, representing an estimated 1.3 million procedures annually in the United States alone. This represents an expansion of the annual addressed procedure opportunity of approximately three times for our oncology business. Merit has built a market leadership position in wire-free non-radioactive breast localization procedures. Our leadership has been built upon our SCOUT platform, which utilizes the precision and accuracy of radar. The OneMark system is U.S. FDA cleared for percutaneous placement in soft tissue tumors to mark biopsy sites or lesions, and it consists of a surgical detection system and ultrasound-enhanced tissue markers. After placement, the tissue markers are designed to be visible across commonly used imaging modalities and engineered to minimize interference with future imaging studies. This acquisition expands our portfolio of therapeutic oncology products dedicated to the diagnosis and localization of breast and soft tissue tumors. The combination of SCOUT and OneMark provides physicians with localization options during the initial diagnostic biopsy which may reduce the need for a separate procedure to mark the location of the tumor prior to surgery. We believe this acquisition presents multiple strategic and financial positives and importantly, this acquisition is consistent with our Continued Growth Initiatives program. This acquisition represents another example of Merit selectively investing to expand our product portfolio in key strategic markets that leverage our existing commercial footprint. Finally, I want to highlight our new presentation of revenue, which we formally introduced in a Form 8-K filed on April 13. As discussed on our Q4 call, Merit's new executive leadership team and I have been working through a comprehensive analysis of the business and it became clear during this process that we had an opportunity to streamline our internal planning and reporting processes with the goal of aligning how we think about, evaluate, and plan each of our underlying businesses. We also identified an opportunity to streamline how we talk about the business externally as well. We believe there is significant value in aligning how we talk about the business both internally and externally, and we expect these changes to help the investment community not only better understand the composition of our business today, but also the underlying growth drivers of our business going forward. To that end, as disclosed in the Form 8-Ks on April 13, and reported in our earnings press release today, we are now reporting our revenue in two product categories: foundational and therapeutic. Foundational products are used primarily for access and enabling functions in vascular and other procedures. Merit's foundational products comprised about two-thirds of our total revenue in 2025, and sales increased at a 6% compound annual growth rate over the last three years. Therapeutic products are devices and systems that treat disease in a number of very large markets that together represent significant growth potential. Merit's therapeutic products comprised about one-third of our total revenue in 2025, and sales increased at an 11% compound annual growth rate on an organic basis over the last three years. Given that we call on a wide variety of clinicians and our products are a part of so many procedures, we have solidified our new operating model internally around eight platforms: Access, Vascular Intervention, Procedural Solutions, Cardiac Therapies, Renal Therapies, Oncology, Endoscopy, and OEM. The Access and Procedural Solutions platforms are comprised entirely of foundational products. The Vascular Intervention and OEM platforms are comprised of both foundational and therapeutic products. And Cardiac Therapies, Renal Therapies, Oncology, and Endoscopy are comprised entirely of therapeutic products. In the Form 8-Ks, we shared four years of historical revenue in each of these platforms. So to reiterate, going forward, we plan to report revenue results by foundational and therapeutic products. In addition, we intend to continue to highlight additional color on the underlying drivers of growth within the underlying platforms. As I shared last quarter, each of our platforms is being co-led by a marketing lead and a research and development lead, and each team is comprised of cross-functional and cross-geographic members so that we have better alignment on product and commercial priorities, improved communication across functions and geographies, and a team who feels accountable for that platform globally. I am very pleased with how our teams are taking ownership, increasing communication, and thinking about how best to serve our customers in each area. I truly believe that focusing our efforts in this way will enable us to drive even greater growth within each one of these platforms in the years to come. With that, I will turn the call over to Raul for an in-depth review of our quarterly financial results and our updated financial guidance for 2026. Raul?

Thank you, Martha. I will start with a detailed review of our revenue results in the first quarter. Note, unless otherwise stated, all growth rates are approximated and presented on both a year-over-year and constant currency basis. First quarter total revenue increased $18.6 million, or 5%, exceeding the high end of the expectations we outlined on our fourth quarter call. Excluding sales of acquired products, our total revenue growth on an organic constant currency basis was 2.7%, at the high end of our expectations. Excluding divested revenue, organic constant currency growth was 3.7% in the first quarter. By geography, our total revenue in Q1 was primarily driven by growth in the U.S., where sales increased $14.5 million, or 6.8%, and international sales increased $4.1 million, or 3%, both of which modestly exceeded the high end of our expectations in Q1. Turning to a review of our revenue results by product category. First quarter total revenue was driven by a $10.1 million, or 4%, increase in sales of foundational products and an $8.5 million, or 7%, increase in sales of therapeutic products. Including the contributions from acquired products of $6.6 million and $2.5 million, respectively, sales of foundational and therapeutic products increased 1.5% and 5.2%, respectively, on an organic constant currency basis. Organic growth in the foundational product category was driven primarily by our Vascular Intervention and Access platforms, which offset year-over-year declines in sales of OEM and Procedural Solutions products, the latter of which was impacted by our divestiture of the DualCap product line. Organic growth in the therapeutic product category was driven by strong growth in our Cardiac Therapies and Endoscopy platforms and contributions from solid growth in our Vascular Intervention and Oncology platforms, offsetting year-over-year sales declines in our OEM and Renal Therapies platforms. We were pleased with our first quarter total revenue results that exceeded the high end of our expectations despite the notable headwinds to year-over-year revenue growth experienced in our OEM business in Q1. OEM sales declined 14% year-over-year in Q1, significantly lower than what was assumed in our guidance. Sales to OEM customers outside the U.S. continue to see demand trends impacted by the macro environment, particularly in the APAC region, and these headwinds were largely consistent with our expectations. OEM sales to U.S. customers were impacted by inventory destocking dynamics related to product line transfers to Tijuana, Mexico, as expected. That said, customer orders came in lower than expected, which we would characterize as transient or timing-based rather than a reflection of share loss. Our OEM business remains healthy despite the quarter-to-quarter fluctuations in growth rates. We continue to believe the appropriate normalized growth profile of our OEM business is in the mid to high single digits annually. Turning to a review of our P&L performance. For the avoidance of doubt, unless otherwise noted, my commentary will focus on the company's non-GAAP results during 2026 and our growth rates are approximated and presented on a year-over-year basis. We have included reconciliations from our GAAP reported results to the most directly comparable non-GAAP items in our press release and presentation available on our website. Gross profit increased 7% in the first quarter. Our gross margin was 53.2%, down 20 basis points year-over-year, but notably stronger than our internal expectations. Q1 gross margin included a $4.6 million impact from tariffs, compared to no impact in the prior-year period, representing a 120 basis point impact to gross margin in the period. Operating expenses increased 5% in the first quarter. The increase in operating expense was driven primarily by a $5.4 million, or 5%, increase in SG&A expense and, to a lesser extent, a $1.1 million, or 5%, increase in R&D expense compared to the prior-year period. Total operating income in the first quarter increased $6.9 million, or 10%, from the prior-year period to $75.3 million. Our operating margin was 19.7% compared to 19.3% in the prior-year period, an increase of 47 basis points year-over-year. First quarter other expense, net, was $1.2 million compared to $1.7 million for the comparable period last year. The change in other expense, net, was driven primarily by gain/loss on foreign exchange and higher interest income. First quarter net income was $56.7 million, or $0.94 per share, compared to $52.9 million, or $0.86 per share in the prior-year period. First quarter net income and EPS exceeded the high end of our guidance range by $3.7 million and $0.07, respectively. Turning to a review of our balance sheet and financial condition. As of 03/31/2026, we had cash and cash equivalents of $488.1 million, total debt obligations of $747.5 million, and available borrowing capacity of approximately $697 million, compared to cash and cash equivalents of $446.4 million, total debt obligations of $747.5 million, and available borrowing capacity of approximately $697 million as of December 31, 2025. Our net leverage ratio as of March 31 was 1.6 times on an adjusted basis. The increase in cash and cash equivalents in the first quarter was driven by a combination of strong free cash flow generation of $24.7 million and $25.5 million of proceeds from our divestiture and sale of the DualCap product line, offset partially by $6.3 million in cash used for financing activities in the period. Subsequent to quarter end, we acquired Viewpoint Medical for an aggregate consideration of $140 million. Of that amount, $90 million was paid in cash at closing, and two deferred payments of $25 million each are scheduled to be paid no later than the first and second anniversary of the closing date, respectively. In addition to the favorable strategic rationale for this acquisition that Martha outlined earlier, the financial rationale for this transaction is compelling. While we expect the transaction to be $0.05 dilutive to our 2026 non-GAAP EPS, for the twelve months ending 12/31/2027 the acquisition is projected to be accretive to our non-GAAP EPS. Longer term, we project this acquisition to be accretive to Merit's multiyear growth and profitability profile. Specifically, we project sales of Viewpoint Medical's OneMark system to grow at least 20% per year, with 70% non-GAAP gross margins and non-GAAP operating margins above our company average. Turning to a review of our fiscal year 2026 financial guidance. As reported in our earnings press release, we have updated our financial guidance for 2026 to reflect the projected contributions to our total revenue and impact on our non-GAAP EPS previously disclosed on 02/24/2026. Specifically, from the acquisition effective date of 04/01/2026 through 12/31/2026, the acquisition is projected to contribute revenue in the range of $2 million to $4 million and to dilute Merit's initial 2026 guidance for non-GAAP earnings per share by approximately $0.05. This non-GAAP EPS dilution includes approximately $2 million of lower interest income on cash balances used for the total purchase consideration and excludes approximately $5.3 million of non-cash, non-recurring transaction-related expenses. For the twelve months ending 12/31/2026, we now expect total GAAP net revenue growth in the range of 6.3% to 7.8% year-over-year, and 5.6% to 7% year-over-year on a constant currency basis, excluding an expected 80 basis point tailwind to GAAP growth from changes in foreign currency exchange rates. There are a few factors to consider when evaluating our projected constant currency revenue growth range for 2026, including first, our constant currency growth range assumes sales of foundational products increase in the mid-single digits year-over-year and sales of therapeutic products increase in the high-single digits year-over-year. Second, our total net revenue guidance for fiscal year 2026 now assumes inorganic revenue contributions in the range of approximately $17 million to $20 million compared to $13 million to $15 million previously. This increase in inorganic revenue expectation is driven by the combination of $2 million to $4 million of Viewpoint Medical revenue and stronger than expected contributions from our BioLife and C2 acquisitions in the first quarter. Excluding inorganic revenue, our 2026 guidance continues to reflect total net revenue growth on a constant currency organic basis in the range of approximately 4.5% to 6% year-over-year. Third, our total net revenue guidance for fiscal year 2026 continues to assume U.S. revenue from the sales of the Rhapsody CIE of approximately $7 million. Fourth, our total net revenue guidance for fiscal year 2026 reflects the impact of our DualCap divestiture. Product sales and royalty revenue for DualCap totaled approximately $20 million in 2025, and net of approximately $1.6 million of sales in Q1 2026, the divestiture represents an estimated year-over-year headwind of approximately 130 basis points to our total constant currency revenue growth in 2026. With respect to profitability guidance for 2026, we continue to expect non-GAAP diluted earnings per share in the range of $4.10 to $4.15, up 5% to 8%. Note, our non-GAAP EPS range reflects the $0.05 of dilution from the acquisition of Viewpoint Medical, funded by the better-than-expected non-GAAP EPS results we delivered in the first quarter. All of the modeling considerations regarding our profitability and cash flow expectations for 2026 introduced on our fourth quarter call remain unchanged. For avoidance of doubt, our 2026 non-GAAP EPS guidance continues to assume a twelve-month tariff impact of approximately $15 million, or $0.19 per share, compared to a $9 million, or $0.12 per share, impact realized during the last eight months of 2025. As a reminder, the expected twelve-month tariff impact assumed in our 2026 non-GAAP EPS range was based on tariff policies in place prior to the decision of the U.S. Supreme Court in late February. This continues to be an evolving situation. The ultimate impact of the U.S. Supreme Court decision and subsequent new and/or additional tariffs or retaliatory actions or changes to tariffs on our business will depend on the timing, amount, scope, and nature of such tariffs, among other factors, most of which are currently unknown. We intend to review our 2026 financial guidance when we report our financial results for the three and six month periods ending 06/30/2026. We will provide an update on the estimated twelve-month tariff impact and potential gains related to refunded tariff payments in prior periods. Finally, we would like to provide additional transparency related to our growth and profitability expectations for the second quarter of 2026. Specifically, we expect total revenue in the range of $400 million to $410 million, representing growth of 5% to 7% year-over-year on a GAAP basis, and up approximately 4% to 7% on a constant currency basis. Note, our second quarter constant currency sales growth expectations include inorganic revenue in the range of approximately $4 million to $4.5 million; excluding inorganic contributions, total revenue is expected to increase in the range of approximately 3% to 5% on an organic constant currency basis. With respect to our profitability expectations for the second quarter of 2026, we expect non-GAAP operating margins in the range of approximately 18.7% to 20.4% compared to 21.2% last year, and non-GAAP EPS in the range of $0.90 to $1.00 compared to $1.10 last year. With that, I will now turn the call back to Martha for closing comments on the prepared remarks.

Thanks, Raul. As you can hear, we continue to be on a nice trajectory to successfully complete the third and final year of CGI. I want to commend the organization once again for staying focused on delivering these results while also closing a strategic acquisition on April 1 and embarking on our long-range strategy work. I want to add that when our extended leadership team spent several days kicking off our long-range strategy work during the quarter, we had very robust conversations about each platform and there was tremendous energy around this work. We also recommitted ourselves to ensuring that our infrastructure is solid so that we can continue to scale our business globally. As I have said before, we will do that with both organic product development alongside disciplined tuck-in acquisitions focused on our strategic platforms. Finally, as I have continued my global travels and spend time with customers, investors, and employees, I continue to be inspired and excited about the future of Merit Medical Systems, Inc. We will now open the call for questions.

Thank you. Please signal by pressing star 11 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We do ask that you limit yourself to one question and one follow-up. If you would like to ask additional questions, we invite you to add yourself to the queue again by pressing star 11. And our first question will come from Michael Petusky of Barrington Research. Your line is open.

Hi, good evening. Nice results. I wanted to ask: there was not much in the way other than the reaffirmed guide on Rhapsody. Martha, are there any updates you want to share there, whether anecdotal or more quantitative, just on early days progress? Thanks.

Yes. Thanks very much, Mike. To clarify, you are asking about Rhapsody? We are very pleased with how Rhapsody is going. We did a reset on how we are approaching our go-to-market strategy with Rhapsody, which we instituted toward the end of last year. At this point, we are very pleased with how we are doing. We gave revised guidance in 2026 of $7 million for Rhapsody for the fiscal year, and we are tracking right on that.

Okay, great. And then I am not sure who this is for, but I am curious: are you seeking refunds in terms of the tariffs that you had to pay last year and the first part of this year? If so, how does that process work?

I will give an overview because there are a lot of moving parts. For our 2026 guidance, we have left it essentially unchanged from what we did in the first quarter, which is that we have $15 million baked into our guidance for 2026 versus the $9 million that we had in 2025. That is unchanged since the U.S. Supreme Court decision. I think there is still a potential for the administration to challenge that through May, and so we will reevaluate that as part of our second quarter review and discuss it further after the second quarter once we are on firmer ground. It is a moving target, and there is also the Section 232 matter that remains outstanding.

I was just going to ask: have you filed to seek refunds at this point? Is there paperwork to file for reimbursement?

Yes. We have started the process of reimbursement. The administration can still challenge the reimbursement through May. From our perspective, we have started the process of filing and have essentially filed for the majority of that. We hope to have an update on our second quarter call as to how that shakes out. I am optimistic that if things stay as they are today, the $15 million assumption could come down.

Okay. Very good. Thanks, guys.

Thank you. And our next question comes from Jason Bednar of Piper Sandler. Your line is open.

Hey, good afternoon, everyone. Thanks for taking the questions and nice start to the year here. I wanted to start first on Viewpoint, the recent deal. It is a pretty sizable revenue contribution step-up from this year to next. Could you help us out with how you see this coming together—what is supporting the growth ramp going from $2 million to $4 million in revenue this year up to $14 million to $16 million next year? And then should we think about that 20% growth rate you referenced starting in 2028, building on that $14 million to $16 million? And then, looped in here, any considerations around synergies that could be realized with respect to the SCOUT platform?

Thanks, Jason. A couple of comments. First, taking a step back on oncology: it is about a $100 million platform for us, and it has been growing nicely. It has been largely a one-product platform, so we have been looking to add to that because we have an outstanding field organization and we wanted to get additional products in their hands. If you think about the breast cancer market, particularly the biopsy phase—there are 1.6 million breast biopsies done each year in the U.S. For SCOUT, the applicable market has been about 300,000 of those procedures each year. With the addition of OneMark, you expand the market three to four times because the other 1.3 million breast biopsies tend to be done for lower-risk patients; SCOUT tends to be used for higher-risk patients. We see a terrific market expansion opportunity. It comes down to physician choice about whether they prefer radar technology or ultrasound technology. Both approaches happen at the time of biopsy, whereas if you do not do something at time of biopsy, a patient may need an additional localization procedure before surgery. We are excited about what this means for patients. Breast cancer incidence grows about 4% a year, and the wire-free localization market where we play is growing at about 13% a year, so we feel good about the future growth rates.

I will add, Jason, at the midpoint of our 2027 guide, which was around $15 million, you can tack on the 20% that we called out. On synergies, to be clear, in the guide for 2027 on a full-year basis it is accretive on both the top line and the bottom line, with strong gross margins at 70%. We are really excited about it.

Thank you for all that. Super helpful. I want to pivot to the OEM part of the business. I appreciate the extra color in the prepared remarks, Raul. I heard you on the 1Q performance and the normalized growth profile for OEM. But can you say whether the worst is behind you for OEM? Does that performance get sequentially better in 2Q? Does growth return in the second half of this year? And bigger picture on OEM, Martha, we have seen you take actions on portfolio management at Merit. How do you think of the value OEM provides to Merit versus what you could potentially realize through strategic moves like some actions we have seen across other med tech OEM players recently?

I will take the last part first. To level set on our OEM business: we essentially sell capacity. We are different than contract manufacturers; we are selling our own products. Divesting would leave us with extra capacity, so it is not an ideal fit. We like our OEM business; it is a great asset and remains healthy despite quarter-to-quarter fluctuations. We continue to believe the appropriate normalized growth profile is mid to high single digits. We are starting to see orders for Q2 that give us confidence we will be at least that mid single-digit growth profile. Early looks for the quarter are encouraging.

Just to clarify, you are saying mid single-digits is how you are seeing 2Q come together, mid single-digit growth for OEM?

That is right.

Perfect. Thanks so much.

Thank you. And our next question comes from Sam Elber of BTIG. Your line is open.

Hey, good afternoon. Thanks for taking the questions. Maybe I can follow up on some of the dynamics in the Cardiac business that was called out in the prior quarter. Just curious to get an update on how that is shaking out here, and then I will have a quick follow-up.

We continue to be on track. To walk through the issue: when we had our fourth quarter call, it began as a supply chain issue that unfortunately turned into a recall. From a financial perspective, it is immaterial to our 2026 financial results. We continue to be on track to have this product back on the market. It is unfortunate, but to highlight it: it is a Class I recall, and we have not had any of those since 2017.

Just for clarity, Sam.

Okay. That is helpful. And maybe a quick follow-up on some of the geopolitical issues out of the Middle East. Can you quantify or think through any impact on revenue and input costs, whether freight or oil—how should we be thinking about that over the rest of the year?

On the positive side, we have yet to receive price increases from our vendors. We are seeing fuel surcharges; those are typical and we usually see those at least once a year as gas prices fluctuate, so that is not unusual. Right now everything is manageable. If the issue continues, we will reevaluate, but as of now we feel we can manage it. On the sales side, we continue to receive orders from the Middle East region. We did leave about $1.5 million of revenue on the table from shippers that were not able to pick up and deliver product. We are seeing an impact, but it is manageable, and we remain optimistic about our 2026 guidance.

Thank you.

And our next question comes from David Rescott of R.W. Baird. Your line is open.

Great. Thanks for taking the questions. Two from us. First, on the APAC contribution: can you provide color around assumptions for China and APAC at this point and how that compares to prior-year contribution from that region? Second, on operating margin, results were better than expected. Can you help us think about controls on the OpEx side through the rest of the year and any underlying assumptions for better-than-expected operating margins for the year?

On APAC and OEM, performance was essentially in line with our expectations. APAC as a whole was up 1% on a constant currency basis in Q1, which beat the high end of our guidance. China sales increased about 2% year-over-year on a constant currency basis in Q1, essentially in line with our expectations. VBP impact was modestly better than expected. We continue to expect low single-digit growth for China in 2026 as we deal with volume-based purchasing. On operating expenses, we were expecting a lower gross margin, so we controlled operating expenses. When the conflict emerged, we spoke with the executive team about managing OpEx tightly, and they did a very good job. That discipline flowed through to the bottom line with an $0.11 EPS beat and a better operating margin than we had initially indicated on the fourth quarter call. We offset the $0.05 dilution from Viewpoint and were able to increase EPS coverage. Overall, Q1 P&L performance was strong: we beat revenue by over $4 million, gross margin was better than anticipated, and operating expenses were controlled. We are confident in the full-year operating margin guidance and remain focused on our CGI targets.

David, I will add one comment. Hats off to Raul and Travis in our finance team. We have been improving a number of processes across the company and involving finance partners earlier. We are working to ensure discipline throughout the organization on spend. Thanks to our finance team for partnering with engineering and operations on this.

And our next question comes from Aidan Lahey of Bank of America. Your line is open.

Hi, thanks for taking the questions. Two on OneMark. First, how much were you factoring in the deal being complementary versus cannibalistic to SCOUT? Is this a move that can open up broader accounts? Would some accounts have both systems? Do you think there is any impact on SCOUT sales during the inorganic period that could impact growth? Second, I saw OneMark was running a trial head-to-head with SCOUT. Now that both products are yours, do the outcomes of that trial change SCOUT's strategy depending on results, and what are the plans there?

Thanks. We view this as a market expansion play. There could be a handful of accounts where both systems exist and some where one is chosen over the other. There is an opportunity to target accounts specifically; our team has prepared for that. We see this as a total expansion of the time-at-biopsy localization market. Regarding the trial, I spoke earlier today with a OneMark team member. The group is excited to join Merit. At the Society for Breast Surgeons meeting starting today, we had training with fellows and the feedback was that physician preference is key: some prefer the audible radar of SCOUT, others prefer the visual ultrasound approach of OneMark. We are excited to offer both options in our Oncology portfolio.

Got it, really helpful. Thank you.

And our next question comes from James Sidoti of Sidoti & Company. Your line is open.

Good afternoon. Thanks for taking the questions. If I heard you correctly with gross margin, you were able to keep that basically flat despite about $5 million of tariff expense. What drove that? Was that a mix issue? Can you give more color?

It is essentially a 120 basis point impact to gross margin from tariffs. Our salesforce focused on selling the right products at the right price, and our acquisitions contributed to mix. We divested DualCap, a low gross margin product, which helped margin. Our operations group is actively managing costs. So it is a combination of mix, pricing, and operations execution that helped offset the tariff impact.

Inventory was up about $20 million in the quarter. Can you explain that?

We had acquisitions during the period and are building inventories for those businesses. We also replenished safety stock in areas where we were low after supply chain issues, notably in Endoscopy, Oncology, Cardiac, and Renal Therapies. We're positioning inventories to healthy levels to support expected performance and to protect against supply disruptions.

Can you tell us what the distribution looked like for the OneMark system prior to the acquisition, and how many people will be selling it now that it is a Merit product?

We do not share exact sales organization sizes. Viewpoint was a smaller organization and will fold into our team. It is not a major expansion of our commercial footprint, but the integration and the energy from both teams will help drive adoption.

So the big jump to revenue in 2027 is not because of increased distribution, but due to product awareness?

Correct. Increased product awareness, the option of having both technologies available, and targeted account planning are the drivers.

And our next question comes from John Young of Canaccord. Your line is open.

Hi, guys. Thanks for taking the question and congratulations on the quarter. Martha, when you came into the seat there was an emphasis on OUS growth given your background. Any updates on progress or changes you have made there? In the script, you spoke about some alignment changes. Has compensation changed at all for reps?

As we go into 2026, there have not been significant compensation changes for our reps. Over the last several years, the organization has done a nice job guiding the team on product focus, and we are emphasizing higher-margin products. About 40% of our revenue is outside the United States, and our international teams continue to perform well. I am pleased with the progress.

Thanks. Any additional color on the Endoscopy segment and progress integrating and training that sales force? Thanks again.

We are excited about the Endoscopy platform. We brought in the C2 Cryoballoon acquisition, which is performing better than our end expectations so far. We also introduced the Resilience through-the-scope esophageal stent, a strong product for a sub-$100 million market. Initial feedback is that it maintains position after deployment, which addresses a common migration issue. Next week I will be at Digestive Disease Week with the team. Overall, we are pleased with Endoscopy's performance.

To add color, our Endoscopy team improved each quarter after integration. Q1 was mid-teens growth, a really strong performance. The team is energized about their potential.

And our next question comes from Jason Bedford of Raymond James. Your line is open.

Hey, Raul. Hey, Martha. Thanks for taking the question. You have talked about being open to deals that are somewhat larger than historical tuck-ins, and of course we saw the Viewpoint deal. As you look at the pipeline, can you remind us what the key areas are for the next deals? And in terms of sizing, would you say Viewpoint is a good proxy for deal characteristics and size to help us level set expectations on acquisitions?

Doing deals is not a precise exercise where we can pick an exact size every time. We are not putting a specific number around future deals. We are looking at many opportunities. The company has grown through acquisition and we plan to continue. We focus on tuck-ins or bolt-ons, not transformational deals. Every acquisition must have strong strategic fit and meet our financial metrics, including margin accretion. With our platform structure, each platform team must believe in and own any proposed deal.

That makes sense. Appreciate the color. Then, if I can ask a second one: curious on that Medtronic distribution deal you did during the quarter. Is there any stocking tied to that, and is there a material impact for you on growth from this agreement?

They will gear up, and we do not give details on customers' launch plans. It is our practice not to disclose our customers' launch details. We are excited for our OEM division. This agreement is built into our guidance for the year and supports our confidence in mid single-digit OEM growth.

This is an example of why OEM is lumpy. Medtronic has been an OEM customer, and these relationships ebb and flow. We are excited and this contributes to our confidence in the OEM platform for the fiscal year.

Thank you. And our next question comes from Mike Matson of Needham & Company. Your line is open.

I want to ask about capital allocation. I understand M&A is a priority, but the stock is trading cheaply. Would you consider a share repurchase at all?

That is a board-level decision, and I do not want to speak on their behalf. With our net leverage ratio of 1.6 and many M&A opportunities, we continue to conserve cash. We continue to generate strong free cash flow—approximately $25 million in the first quarter, an increase over 2025. For now, we are focused on CGI, our free cash flow goals, and delivering long-term sustainable growth.

Got it. I will leave it there. Thanks.

This concludes our question and answer session. I would like to turn it back to Martha Aronson for closing remarks.

Thank you, everybody. I appreciate you dialing in today. We are pleased with our strong start to 2026 and feel good about tracking nicely to our CGI goals. Most importantly, I want to thank our team who is so committed to helping patients all around the world. Thanks, everyone, for joining us today.

This concludes our conference call for today. Thank you for your participation.