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Share Name | Share Symbol | Market | Type |
---|---|---|---|
SurModics Inc | NASDAQ:SRDX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-2.06 | -5.96% | 32.49 | 27.81 | 40.72 | 35.21 | 32.335 | 35.21 | 90,444 | 01:00:00 |
Surmodics, Inc. (Nasdaq: SRDX), a leading provider of medical device and in vitro diagnostic technologies to the healthcare industry, today announced results for its fiscal 2019 third quarter ended June 30, 2019, and updated its financial outlook for fiscal 2019.
Summary of Third Quarter and Recent Highlights
“Our third quarter results, which demonstrated strong commercial and operational execution, marked our sixth consecutive quarter of year-over-year revenue growth,” said Gary Maharaj, President and CEO of Surmodics, Inc. “This consistent progress demonstrates our ability to simultaneously produce organic revenue growth while continuing to execute on our key strategic goals. Importantly, we are making progress in our TRANSCEND clinical trial and are currently over 90% enrolled and remain confident that we will complete enrollment by the end of calendar 2019.”
Third Quarter Fiscal 2019 Financial Results
Total revenue for the third quarter of fiscal 2019 was $24.3 million, as compared with $22.2 million in the prior-year period. Medical Device revenue was $18.9 million in the third quarter of fiscal 2019, as compared with $16.7 million in the year-ago period, an increase of 13%, and includes $2.0 million from our SurVeil™ agreement with Abbott, as compared with $1.7 million in the prior-year quarter. In Vitro Diagnostics revenue was $5.4 million for the third quarter of fiscal 2019 as compared with $5.5 million in the same prior-year quarter, a decrease of 2%.
Diluted GAAP earnings per share in the third quarter of fiscal 2019 was $0.11 as compared with a loss per share of $(0.20) in the year-ago period. On a non-GAAP basis, earnings per share were $0.15 in the third quarter of fiscal 2019, as compared with $0.27 in the year-ago period.
As of June 30, 2019, cash and investments were $45.0 million. Surmodics used $0.5 million of cash from operating activities in the third quarter of fiscal 2019. Capital expenditures totaled $1.0 million for the third quarter of fiscal 2019.
Fiscal 2019 Guidance Revised
As a result of our operating performance in the first nine months of fiscal 2019, we are raising our full-year revenue and earnings guidance for fiscal 2019. We are increasing our fiscal 2019 revenue expectations to a range of $92.0 million to $94.0 million, from our previous revenue range of $88.5 million to $91.5 million. We are increasing our fiscal 2019 diluted GAAP EPS to a range of $0.24 to $0.32 per share, compared with our previous expectations of $0.14 to $0.24 per share. Diluted non-GAAP EPS is now expected to be in the range of $0.41 to $0.49 per share, compared with previous expectations of $0.26 to $0.36 per share.
Conference Call
Surmodics will host a webcast at 4 p.m. CT (5 p.m. ET) today to discuss third quarter results. To access the webcast, go to the investor relations portion of the Company’s website at https://surmodics.gcs-web.com and click on the webcast icon. The webcast will be archived on the Company’s website for 90 days. A replay of the third quarter conference call will be available by dialing 888-203-1112 and entering conference call ID passcode 6653187. The audio replay will be available beginning at 7 p.m. CT on Wednesday, July 31, 2019, until 7 p.m. CT on Wednesday, August 7, 2019.
About Surmodics, Inc.
Surmodics is the global leader in surface modification technologies for intravascular medical devices and a leading provider of chemical components for in vitro diagnostic (IVD) immunoassay tests and microarrays. Surmodics is pursuing highly differentiated whole-product solutions that are designed to address unmet clinical needs for its medical device customers and engineered to the most demanding requirements. This key growth strategy leverages the combination of the Company’s expertise in proprietary surface technologies, along with enhanced device design, development and manufacturing capabilities. The Company mission remains to improve the detection and treatment of disease. Surmodics is headquartered in Eden Prairie, Minnesota. For more information, visit www.surmodics.com. The content of Surmodics’ website is not part of this press release or part of any filings that the company makes with the SEC.
Safe Harbor for Forward-Looking Statements
This press release contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations regarding the Company’s performance in the near- and long-term, including our revenue and earnings expectations for fiscal 2019, our SurVeil DCB and other proprietary products, and the TRANSCEND clinical trial are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including (1) our ability to successfully develop, timely complete clinical trials for, obtain regulatory approval for, and, if approved, commercialize our SurVeil DCB (including realization of the full potential benefits of our agreement with Abbott), and other proprietary products; (2) our reliance on third parties (including our customers and licensees) and their failure to successfully develop, obtain regulatory approval for, market and sell products incorporating our technologies; (3) possible adverse market conditions and possible adverse impacts on our cash flows, and (4) the factors identified under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2018, and updated in our subsequent reports filed with the SEC. These reports are available in the Investors section of our website at https://surmodics.gcs-web.com and at the SEC website at www.sec.gov. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Surmodics is reporting non-GAAP financial results including EBITDA and Adjusted EBITDA, non-GAAP operating income, non-GAAP income before income taxes, non-GAAP net income, and non-GAAP diluted earnings per share, and the non-GAAP effective income tax rate. We believe that these non-GAAP measures, when read in conjunction with the Company’s GAAP financial statements, provide meaningful insight into our operating performance excluding certain event-specific matters, and provide an alternative perspective of our results of operations. We use non-GAAP measures, including those set forth in this release, to assess our operating performance and to determine payout under our executive compensation programs. We believe that presentation of certain non-GAAP measures allows investors to review our results of operations from the same perspective as management and our board of directors and facilitates comparisons of our current results of operations. The method we use to produce non-GAAP results is not in accordance with GAAP and may differ from the methods used by other companies. Non-GAAP results should not be regarded as a substitute for corresponding GAAP measures but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations in that they do not reflect certain items that may have a material impact on our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with both our financial statements prepared in accordance with GAAP and the reconciliation of the supplemental non-GAAP financial measures to the comparable GAAP results provided for the specific periods presented, which are attached to this release.
Surmodics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended
Nine Months Ended
June 30,
June 30,
2019
2018
2019
2018
(Unaudited)
(Unaudited)
Revenue:
Product sales
$
9,870
$
10,475
$
29,508
$
27,249
Royalties and license fees
11,624
9,597
31,652
25,101
Research, development and other
2,850
2,155
8,101
5,948
Total revenue
24,344
22,227
69,261
58,298
Operating costs and expenses:
Product costs
3,364
4,104
9,980
9,908
Research and development
13,321
9,778
38,362
28,383
Selling, general and administrative
5,939
5,977
16,764
17,606
Acquired in-process research and development
—
7,888
—
7,888
Acquired intangible asset amortization
599
624
1,809
1,878
Contingent consideration expense (gain)
104
106
(248
)
(1,006
)
Total operating costs and expenses
23,327
28,477
66,667
64,657
Operating income (loss)
1,017
(6,250
)
2,594
(6,359
)
Other income, net
189
955
846
856
Income (loss) before income taxes
1,206
(5,295
)
3,440
(5,503
)
Income tax benefit
260
2,613
598
2,799
Net income (loss)
$
1,466
$
(2,682
)
$
4,038
$
(2,704
)
Basic income (loss) per share:
$
0.11
$
(0.20
)
$
0.30
$
(0.21
)
Diluted income (loss) per share:
$
0.11
$
(0.20
)
$
0.29
$
(0.21
)
Weighted average number of shares outstanding:
Basic
13,394
13,203
13,384
13,117
Diluted
13,726
13,203
13,776
13,117
Surmodics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
June 30,
September 30,
2019
2018
Assets
(Unaudited)
Current Assets:
Cash and cash equivalents
$
28,916
$
23,318
Restricted cash
—
350
Available-for-sale securities
16,070
41,352
Accounts receivable, net
8,381
8,877
Contract assets - royalties and license fees
8,235
—
Inventories, net
4,151
4,016
Prepaids and other
3,785
3,614
Total Current Assets
69,538
81,527
Property and equipment, net
29,559
30,143
Deferred tax assets
6,067
6,304
Intangible assets, net
15,480
17,683
Goodwill
26,737
27,032
Other assets
2,960
1,446
Total Assets
$
150,341
$
164,135
Liabilities and Stockholders’ Equity
Current Liabilities:
Contingent consideration, current portion
3,113
11,041
Deferred revenue
5,126
9,646
Other current liabilities
8,988
14,446
Total Current Liabilities
17,227
35,133
Contingent consideration, less current portion
—
3,425
Deferred revenue, less current portion
9,727
11,247
Other long-term liabilities
4,755
5,720
Total Liabilities
31,709
55,525
Total Stockholders’ Equity
118,632
108,610
Total Liabilities and Stockholders’ Equity
$
150,341
$
164,135
Surmodics, Inc. and Subsidiaries
Supplemental Segment Information
(in thousands)
(Unaudited)
Three Months Ended June 30,
2019
2018
Revenue:
% of Total
% of Total
% Change
Medical Device
$
18,945
77.8%
$
16,701
75.1%
13.4%
In Vitro Diagnostics
5,399
22.2%
5,526
24.9%
(2.3%)
Total revenue
$
24,344
$
22,227
9.5%
Nine Months Ended June 30,
2019
2018
Revenue:
% of Total
% of Total
% Change
Medical Device
$
53,504
77.2%
$
43,527
74.7%
22.9%
In Vitro Diagnostics
15,757
22.8%
14,771
25.3%
6.7%
Total revenue
$
69,261
$
58,298
18.8%
Three Months Ended
Nine Months Ended
June 30,
June 30,
2019
2018
2019
2018
Operating income (loss):
Medical Device
$
753
$
(6,193
)
$
1,087
$
(6,351
)
In Vitro Diagnostics
2,475
2,176
7,845
6,269
Total segment operating income
3,228
(4,017
)
8,932
(82
)
Corporate
(2,211
)
(2,233
)
(6,338
)
(6,277
)
Total operating income (loss)
$
1,017
$
(6,250
)
$
2,594
$
(6,359
)
Surmodics, Inc. and Subsidiaries
Reconciliation of GAAP Measures to Non-GAAP Amounts
Schedule of EBITDA, Adjusted EBITDA and Cash Flows from Operations
(in thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
June 30,
June 30,
2019
2018
2019
2018
Net income (loss)
$
1,466
$
(2,682
)
$
4,038
$
(2,704
)
Income tax benefit
(260
)
(2,613
)
(598
)
(2,799
)
Depreciation and amortization
1,887
1,605
5,462
4,711
Investment income, net
(269
)
(303
)
(850
)
(566
)
Interest expense
38
—
112
—
EBITDA
2,862
(3,993
)
8,164
(1,358
)
Adjustments:
Contingent consideration expense (gain) (1)
104
106
(248
)
(1,006
)
Foreign exchange loss (gain) (2)
—
(592
)
(126
)
(74)
Gain on strategic investment (4)
—
—
(7
)
(177
)
Claim settlement (6)
—
—
(650
)
1,000
Acquired in-process research and development (7)
—
7,888
—
7,888
Adjusted EBITDA
$
2,966
$
3,409
$
7,133
$
6,273
Net Cash (Used In) Provided by Operating Activities
$
(543
)
$
1,791
$
(4,482
)
$
29,222
Estimated Non-GAAP Net Earnings per Common Share Guidance Reconciliation
For the Fiscal Year Ended September 30, 2019
(Unaudited)
Full Fiscal Year Estimate
Low
High
GAAP results
$
0.24
$
0.32
Contingent consideration adjustments (1)
0.01
0.01
Foreign exchange gain on contingent consideration (2)
(0.01
)
(0.01
)
Amortization of acquired intangibles (3)
0.16
0.16
Claim settlement (6)
(0.04
)
(0.04
)
Acquired in-process research and development (7)
0.05
0.05
Non-GAAP results
$
0.41
$
0.49
Surmodics, Inc., and Subsidiaries
Net Income (Loss) and Diluted EPS GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
(Unaudited)
For the Three Months Ended June 30, 2019
Total Revenue
Operating Income
Operating
Income
Percentage
Income Before Income Taxes
Net
Income (6)
Diluted EPS
Effective tax rate
GAAP
$
24,344
$
1,017
4.2
%
$
1,206
$
1,466
$
0.11
(21.6
%)
Adjustments:
Contingent consideration expense (1)
―
104
0.4
104
104
0.01
Amortization of acquired intangible assets (3)
―
599
2.5
599
554
0.04
Non-GAAP
$
24,344
$
1,720
7.1
%
$
1,909
$
2,124
$
0.15
(11.3
%)
For the Three Months Ended June 30, 2018
Total Revenue
Operating Income (Loss)
Operating
Income
Percentage
Income Before Income Taxes
Net
Income(6)
Diluted EPS
Effective tax rate
GAAP
$
22,227
$
(6,250
)
(28.1
%)
$
(5,295
)
$
(2,682
)
$
(0.20
)
49.3
%
Adjustments:
Contingent consideration expense (1)
―
106
0.5
106
106
0.01
Foreign exchange gain on contingent consideration (2)
―
—
—
(592
)
(592
)
(0.04
)
Amortization of acquired intangible assets (3)
―
624
2.8
624
584
0.04
Acquired in-process research and development (7)
―
7,888
35.5
7,888
6,232
0.47
Dilutive effect of outstanding stock awards (8)
―
―
―
―
―
(0.01
)
Non-GAAP
$
22,227
$
2,368
10.7
%
$
2,731
$
3,648
$
0.27
(33.6
%)
Surmodics, Inc., and Subsidiaries
Net Income (Loss) and Diluted EPS GAAP to Non-GAAP Reconciliation - Continued
(in thousands, except per share data)
(Unaudited)
For the Nine Months Ended June 30, 2019
Total Revenue
Operating Income
Operating
Income Percentage
Income Before Income Taxes
Net
Income (9)
Diluted EPS
Effective tax rate
GAAP
$
69,261
$
2,594
3.7
%
$
3,440
$
4,038
$
0.29
(17.4
%)
Adjustments:
Contingent consideration gain (1)
―
(248
)
(0.4
)
(248
)
(248
)
(0.02
)
Foreign exchange gain on contingent consideration (2)
―
—
—
(126
)
(126
)
(0.01
)
Amortization of acquired intangible assets (3)
―
1,809
2.6
1,809
1,675
0.12
Gain on strategic investment (4)
―
—
—
(7
)
(7
)
(0.00
)
Claim settlement (6)
―
(650
)
(0.9
)
(650
)
(514
)
(0.04
)
Non-GAAP
$
69,261
$
3,505
5.1
%
$
4,218
$
4,818
$
0.35
(14.2
%)
For the Nine Months Ended June 30, 2018
Total Revenue
Operating (Loss) Income
Operating (Loss) Income Percentage
(Loss) Income Before Income Taxes
Net (Loss)
Income (9)
Diluted
EPS
Effective tax rate
GAAP
$
58,298
$
(6,359
)
(10.9
%)
$
(5,503
)
$
(2,704
)
$
(0.21
)
50.9
%
Adjustments:
Contingent consideration gain (1)
―
(1,006
)
(1.7
)
(1,006
)
(1,006
)
(0.08
)
Foreign exchange gain on contingent consideration (2)
―
―
—
(74
)
(74
)
(0.01
)
Amortization of acquired intangible assets (3)
―
1,878
3.2
1,878
1,721
0.13
Gain on strategic investment (4)
―
—
—
(177
)
(177
)
(0.01
)
Tax reform impact (5)
―
—
—
—
1,246
0.09
Claim settlement accrual (6)
―
1,000
1.7
1,000
755
0.06
Acquired in-process research and development (7)
―
7,888
13.5
7,888
6,232
0.47
Dilutive effect of outstanding stock awards (8)
―
―
―
―
―
(0.01
)
Non-GAAP
$
58,298
$
3,401
5.8
%
$
4,006
$
5,993
$
0.44
(49.6
%)
View source version on businesswire.com: https://www.businesswire.com/news/home/20190731005957/en/
Surmodics, Inc. Tim Arens, 952-500-7000 ir@surmodics.com
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