MERIT MEDICAL SYSTEMS INC Earnings Per Share Disclosure
11.EARNINGS PER COMMON SHARE (EPS)
The computation of weighted average shares outstanding and the basic and diluted earnings per common share for the years ended December 31, 2025, 2024 and 2023, consisted of the following (in thousands, except per share amounts):
2025 | 2024 | 2023 | ||||||
Net income | $ | 128,489 | $ | 120,357 | $ | 94,411 | ||
Average common shares outstanding |
| 59,158 |
| 58,218 |
| 57,593 | ||
Basic EPS | $ | 2.17 | $ | 2.07 | $ | 1.64 | ||
Average common shares outstanding | 59,158 | 58,218 | 57,593 | |||||
Effect of dilutive stock awards | 775 | 760 | 763 | |||||
Effect of dilutive convertible notes | 527 | 387 | — | |||||
Total potential shares outstanding | 60,460 | 59,365 | 58,356 | |||||
Diluted EPS | $ | 2.13 | $ | 2.03 | $ | 1.62 | ||
Equity awards excluded as the impact was anti-dilutive (1) | 172 | 672 | 1,143 | |||||
| (1) | Does not reflect the impact of incremental repurchases under the treasury stock method. |
Convertible Notes
For our Convertible Notes issued in December 2023, the dilutive effect is calculated using the if-converted method. Upon surrender of the Convertible Notes for conversion, Merit will pay cash up to the aggregate principal amount of the Notes to be converted and pay or deliver, as the case may be, cash, shares of Merit’s common stock or a combination of cash and shares of Merit’s common stock, at Merit’s election, in respect of the remainder, if any, of Merit’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted. Under the if-converted method, we include the number of shares required to satisfy the remaining conversion obligation, assuming all the Convertible Notes were converted. The Convertible Notes only have an impact on diluted earnings per share when the average share price of our common stock exceeds the conversion price of $86.83. The average closing prices of our common stock for the year ended December 31, 2025 were used as the basis for determining the dilutive effect on EPS.
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.