Merit Medical stock falls after CMS defers payment approval for WRAPSODY device

Merit Medical Systems (MMSI) shares dropped 7.9% in after-hours trading after the U.S. Centers for Medicare & Medicaid Services (CMS) deferred its application for Transitional Pass-Through incremental payment for the WRAPSODY device until January 2027, impacting reimbursement for outpatient procedures. In response, the company withdrew the application and announced immediate full U.S. commercialization of WRAPSODY, maintaining its 2025 U.S. revenue forecast for the device at $2 million to $4 million despite the regulatory setback.

Analysis

Merit Medical Systems (MMSI) experienced a 7.9% after-hours stock decline following the U.S. Centers for Medicare & Medicaid Services (CMS) deferral of its Transitional Pass-Through incremental payment application for the WRAPSODY device. This deferral pushes the earliest effective date for payment in outpatient and ambulatory surgery settings to January 1, 2027, creating a significant delay in expected reimbursement. The immediate market reaction reflects investor concern over the extended timeline for favorable reimbursement.

In response, Merit Medical has opted to withdraw its application and proceed with immediate full U.S. commercialization of WRAPSODY, which treats hemodialysis patients. CEO Martha G. Aronson characterized this as an "important strategic pivot," acknowledging that prior efforts to secure incremental payment had impacted the pace of the device's U.S. commercialization. This shift indicates a prioritization of market penetration over immediate optimal reimbursement.

Despite the regulatory setback and strategic change, Merit Medical maintained its full-year 2025 U.S. revenue forecast for WRAPSODY sales at $2 million to $4 million. The WRAPSODY device, designed for venous outflow obstructions, has already secured FDA premarket approval in December 2024, alongside regulatory approvals in Canada, the European Union, and Brazil, underscoring its clinical validation and international market acceptance.

Key Decisions for Investors

• Investors should closely monitor the pace and success of WRAPSODY's full U.S. commercialization efforts, particularly its ability to generate sales without the deferred incremental payment.
• Re-evaluate Merit Medical's valuation models, adjusting for the delayed reimbursement timeline and potential impact on WRAPSODY's profitability and market adoption in the near term.
• Assess the implications of this "strategic pivot" on Merit Medical's overall product pipeline and future regulatory strategies for new medical devices.
• Watch for any further communications from Merit Medical regarding alternative reimbursement strategies or renewed engagement with CMS for future payment cycles.