Merit Medical Systems: A Medical Stock Poised for Reimbursement-Driven Growth in 2026

Merit Medical Systems, Inc. (MMSI) stands as one of the healthcare sector’s compelling opportunities as the medical stock enters a crucial inflection point. With a market capitalization exceeding $4.8 billion, this medical device manufacturer has demonstrated resilience despite broader market challenges. While the S&P 500 advanced 10.8% over the past six months, MMSI shares declined 2.3% during the same window—though the company’s fundamentals suggest this represents a potential entry opportunity for investors focused on long-term value creation within the medical sector.

The company carries a Zacks Rank #2 (Buy) designation, backed by an impressive track record of exceeding earnings expectations. Over the trailing four quarters, Merit Medical delivered an average earnings surprise of 14.1%, signaling strong operational execution and conservative guidance. Management projects 10.3% growth over the next five years, reflecting confidence in the company’s strategic initiatives and market positioning.

Strong Product Portfolio Anchors Performance

Merit Medical’s competitive advantage stems from a diversified and increasingly innovative product portfolio spanning interventional radiology, oncology, cardiac surgery, and renal therapies. Rather than competing on price, the company’s offerings compete on clinical performance and superior outcomes, enabling the sales force to command premium margins and cross-sell across product categories.

Recent product milestones underscore the company’s commitment to innovation. The Prelude Wave sheath introducer featuring SnapFix securement technology addresses a previously underserved clinical need. The Scout Radar localization platform has now exceeded 750,000 patient treatments globally, establishing market leadership in image-guided interventions. The acquisition of C2 CryoBalloon expands Merit Medical’s presence in endoscopy applications, particularly for Barrett’s esophagus and gastrointestinal ablation therapies.

Particularly noteworthy is the CE Mark approval for Embosphere Microspheres in genicular artery embolization—a nonsurgical solution for knee osteoarthritis that opens entirely new treatment categories. This portfolio breadth positions the medical stock to benefit from multiple growth vectors simultaneously.

WRAPSODY CIE Emerges as Major Growth Catalyst

The company’s most significant near-term driver is WRAPSODY CIE, a breakthrough dialysis solution that represents a substantial commercial opportunity in renal therapies. This product exemplifies Merit Medical’s ability to identify and capitalize on reimbursement gaps in the healthcare system.

Inpatient reimbursement for WRAPSODY CIE became operational following NTAP implementation on October 1, 2025. Management reported encouraging early adoption signals, with over 500 physicians already completing training programs and demonstrating growing interest in the technology. Hospital access has expanded meaningfully, setting the stage for accelerated penetration.

The anticipated transition to outpatient and Ambulatory Surgery Center (ASC) reimbursement under the Transitional Pass-Through (TPT) framework—expected as early as January 2026—removes a critical commercialization barrier. This reimbursement expansion could meaningfully widen WRAPSODY’s addressable market, potentially transforming it from an emerging product into a scaled revenue contributor.

Critically, WRAPSODY’s commercialization is generating pull-through effects across Merit Medical’s broader dialysis portfolio, amplifying its total market impact. As reimbursement friction diminishes, the product is transitioning from early adoption to mainstream utilization, supporting both revenue growth and favorable product mix-driven margin expansion.

Innovation and Margin Expansion Drive Long-Term Value

Beyond individual products, Merit Medical is executing a disciplined strategy to continuously refresh its portfolio with clinically validated, higher-margin innovations. This approach naturally enhances the company’s pricing power and gross margin profile—a strategic advantage that compounds over time.

Management has communicated clear long-term targets, with a specific focus on the CGI (Cumulative Growth Initiatives) objective of generating more than $400 million in cumulative free cash flow through 2026. This ambitious target reflects confidence in sustained margin expansion driven by favorable product mix evolution, disciplined pricing execution, and ongoing manufacturing efficiency improvements.

The investment in R&D remains steady, supporting the pipeline of differentiated innovations expected to fuel growth in coming years. This balanced approach—investing for future growth while delivering near-term financial results—characterizes well-managed medical device companies with sustainable competitive advantages.

Cash Flow Strength Supports Strategic Flexibility

Merit Medical’s financial trajectory demonstrates characteristic strengths of a maturing but growth-oriented medical device manufacturer. The company is transitioning through an inflection point marked by rising free cash flow generation, creating strategic flexibility for targeted acquisitions, R&D investments, and balance sheet optimization.

The gross margin expansion emerging in 2025 is expected to continue escalating into 2026, driven by improved product mix, manufacturing scale, and operational discipline. This cash generation capacity provides the medical stock with multiple paths to create shareholder value: funding organic growth initiatives, making strategic acquisitions to bolt on complementary capabilities, or returning capital to shareholders.

First-quarter 2026 revenue is currently estimated at $379.6 million, representing 6.8% growth from the prior-year period. Consensus EPS for Q1 is projected at $0.89, reflecting 3.5% year-over-year improvement. For the full year 2026, Zacks Consensus Estimate for EPS stands at $4.05, up 1.5% in the past 60 days—indicating positive earnings revision momentum.

Risk Factors to Monitor in 2026

Despite compelling growth drivers, Merit Medical faces meaningful headwinds that could pressure near-term performance. Reimbursement policy uncertainty represents the most material near-term risk. While WRAPSODY’s inpatient reimbursement is now in place, the timing and final terms of outpatient/ASC reimbursement remain subject to regulatory review processes. Government-related administrative delays could defer adoption momentum, particularly outside hospital settings.

International operations present additional complexity. Merit Medical’s China-related revenue has faced headwinds from macroeconomic weakness, most visibly affecting the OEM business segment. OEM revenues demonstrate inherent cyclicality influenced by customer inventory cycles and capital spending patterns. While core China volumes remain adequate, persistent pricing pressure and economic uncertainty could extend into 2026, creating earnings volatility.

Trade policy uncertainty also warrants attention. Potential tariff changes could impact the company’s cost structure and margin profile, introducing unpredictability around long-term guidance. These factors—reimbursement timing, China exposure, and trade policy—represent elements largely outside management control, requiring investors to maintain appropriate risk awareness.

The Investment Case for Merit Medical as a Medical Stock

Merit Medical Systems presents a multifaceted opportunity for investors seeking exposure to high-quality medical device companies positioned at an inflection point. The convergence of WRAPSODY’s reimbursement tailwinds, an increasingly innovative product portfolio, strengthening free cash flow generation, and positive earnings revision momentum creates a compelling medium-term narrative.

The 2.3% decline in share price over six months—underperformance relative to both the broad market and healthcare peers—may represent an attractive entry point for investors with conviction in the company’s strategic direction. The Zacks Rank #2 (Buy) rating reflects fundamental strength despite near-term headwinds.

Healthcare investors monitoring medical stocks should recognize that Merit Medical combines the financial discipline and cash generation of a mature business with the growth profile and innovation velocity of an emerging-stage company. As reimbursement barriers diminish and new products scale, the medical stock offers exposure to multiple growth vectors within the essential medical device space.

The key to success will be execution on commercialization timelines, particularly the WRAPSODY rollout, while managing international headwinds and policy uncertainty. For investors with appropriate risk tolerance and investment horizon, Merit Medical warrants serious consideration within a diversified medical sector allocation.