Updates Fiscal 2019 Guidance
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 second
quarter ended March 31, 2019, and updated its financial outlook for
fiscal 2019.
Summary of Second Quarter and Recent Highlights
- Revenue of $22.7 million, an increase
of 19% year-over-year
- GAAP EPS of $0.09, non-GAAP EPS of
$0.07
- TRANSCEND clinical trial enrollment 75%
complete
- FDA Clearance of Sublime™ guide sheath
for radial access
“Our second quarter performance marked our fourth consecutive
quarter of double-digit year-over-year revenue growth as both our
Medical Device and IVD businesses continued to generate meaningful
top-line gains,” said Gary Maharaj, President and CEO of Surmodics.
“Despite the current uncertainty related to paclitaxel-coated
devices, we have appropriately adjusted our TRANSCEND trial to
respond to the FDA’s recommendations and are pleased to have many
of our trial sites actively enrolling and randomizing patients. In
addition, we continue to make progress on our key strategic
initiatives including the recent FDA 510(k) clearance of our
Sublime guide sheath for radial access to the peripheral
arteries.”
Second Quarter Fiscal 2019 Financial Results
Total revenue for the second quarter of fiscal 2019 was $22.7
million, as compared with $19.1 million in the prior-year period.
Medical Device revenue was $17.3 million in the second quarter of
fiscal 2019, as compared with $14.1 million in the year-ago period,
an increase of 23%, and includes $1.6 million from our SurVeil™
agreement with Abbott, as compared with $0.5 million in the
prior-year quarter. In Vitro Diagnostics revenue was $5.4 million
for the second quarter of fiscal 2019 as compared with $5.0 million
in the same prior-year quarter, an increase of 7%.
Diluted GAAP earnings per share in the second quarter of fiscal
2019 was $0.09 as compared with $0.11 in the year-ago period. On a
non-GAAP basis, earnings per share were $0.07 in the second quarter
of fiscal 2019, as compared with $0.07 in the year-ago period.
As of March 31, 2019, cash and investments were $46.5 million.
Surmodics generated $1.5 million of cash from operating activities
in the second quarter of fiscal 2019. Capital expenditures totaled
$1.0 million for the second quarter of fiscal 2019.
Fiscal 2019 Guidance Revised
Although we continue to enroll patients in our TRANSCEND trial,
the current uncertainty related to utilization of paclitaxel-coated
devices has and is expected to continue to impact our recognition
of SurVeil revenue and TRANSCEND clinical trial expense. We are
updating our full-year revenue and earnings guidance for fiscal
2019 to account for this impact, as well as our strong operating
performance in the first half of our fiscal year. We are lowering
our fiscal 2019 revenue expectations by $5.5 million to a range of
$88.5 million to $91.5 million, from our previous revenue range of
$94 million to $97 million. We are increasing our fiscal 2019
diluted GAAP EPS to a range of $0.14 to $0.24 per share compared
with our previous expectations of a diluted loss in the range of
($0.22) to a loss of ($0.02) per share. Diluted non-GAAP EPS is now
expected to be in the range of $0.26 to $0.36 per share compared
with previous expectations of $0.02 to $0.22 per share.
Conference Call
Surmodics will host a webcast at 4 p.m. CT (5 p.m. ET) today to
discuss second 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 second quarter conference call will be available by
dialing 888-203-1112 and entering conference call ID passcode
7350230. The audio replay will be available beginning at
7 p.m. CT on Wednesday, May 1, 2019, until 7 p.m. CT
on Wednesday, May 8, 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 Six Months Ended
March 31, March 31, 2019 2018
2019 2018 (Unaudited)
(Unaudited) Revenue: Product sales $ 9,887 $ 8,686 $ 19,638
$ 16,774 Royalties and license fees 9,932 8,428 20,028 15,504
Research, development and other 2,857 1,944
5,251 3,793 Total revenue 22,676 19,058
44,917 36,071 Operating costs and expenses: Product costs
3,093 2,913 6,616 5,804 Research and development 13,555 10,774
25,041 18,605 Selling, general and administrative 4,876 6,440
10,825 11,628 Acquired intangible asset amortization 604 636 1,210
1,254 Contingent consideration gain (317 ) (2,230 )
(352 ) (1,112 ) Total operating costs and expenses
21,811 18,533 43,340
36,179 Operating income (loss) 865 525 1,577 (108 ) Other
income (loss), net 235 (211 ) 657 (99 )
Income (loss) before income taxes 1,100 314 2,234 (207 ) Income tax
benefit 162 1,220 338 185 Net income
(loss) $ 1,262 $ 1,534 $ 2,572 $ (22 ) Basic income (loss)
per share: $ 0.09 $ 0.12 $ 0.19 $ (0.00 ) Diluted income
(loss) per share: $ 0.09 $ 0.11 $ 0.19 $ (0.00 ) Weighted
average number of shares outstanding: Basic 13,390 13,102 13,379
13,078 Diluted 13,785 13,465 13,816 13,078
Surmodics, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(in thousands)
(Unaudited)
March 31, September 30, 2019
2018 Assets
(Unaudited) Current Assets: Cash and cash
equivalents $ 22,470 $ 23,318 Restricted cash — 350
Available-for-sale securities 24,023 41,352 Accounts receivable,
net 9,312 8,877 Contract assets - royalties and license fees 7,065
— Inventories, net 4,345 4,016 Prepaids and other 4,302
3,614 Total Current Assets 71,517 81,527 Property and
equipment, net 29,512 30,143 Deferred tax assets 5,301 6,304
Intangible assets, net 16,020 17,683 Goodwill 26,549 27,032 Other
assets 2,081 1,446 Total Assets $ 150,980 $ 164,135
Liabilities and Stockholders’ Equity Current Liabilities:
Contingent consideration, current portion 3,009 11,041 Deferred
revenue 6,385 9,646 Other current liabilities 10,950
14,446 Total Current Liabilities 20,344 35,133 Contingent
consideration, less current portion — 3,425 Deferred revenue, less
current portion 10,470 11,247 Other long-term liabilities
4,853 5,720 Total Liabilities 35,667 55,525 Total
Stockholders’ Equity 115,313 108,610 Total
Liabilities and Stockholders’ Equity $ 150,980 $ 164,135
Surmodics, Inc. and
Subsidiaries
Supplemental Segment
Information
(in thousands)
(Unaudited)
Three Months Ended March 31, 2019
2018 Revenue:
% of Total % of
Total % Change Medical Device $ 17,301 76.3% $ 14,052
73.7% 23.1% In Vitro Diagnostics 5,375 23.7% 5,006
26.3% 7.4% Total revenue $ 22,676 $ 19,058 19.0%
Six
Months Ended March 31, 2019 2018 Revenue:
% of
Total % of Total % Change Medical Device $ 34,559
76.9% $ 26,826 74.4% 28.8% In Vitro Diagnostics 10,358 23.1%
9,245 25.6% 12.0% Total revenue $ 44,917 $ 36,071 24.5%
Three Months Ended Six Months Ended March
31, March 31, 2019 2018 2019
2018 Operating income (loss): Medical Device $ (23 ) $ 232 $
334 $ (157 ) In Vitro Diagnostics 2,915 2,423
5,370 4,093 Total segment operating income 2,892 2,655 5,704
3,936 Corporate (2,027 ) (2,130 ) (4,127 )
(4,044 ) Total operating income (loss) $ 865 $ 525 $ 1,577 $
(108 )
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 Six Months Ended
March 31, March 31, 2019 2018
2019 2018 Net income (loss) $ 1,262 $ 1,534 $
2,572 $ (22 ) Income tax benefit (162 ) (1,220 ) (338 ) (185 )
Depreciation and amortization 1,819 1,586 3,575 3,106 Investment
income, net (265 ) (142 ) (581 ) (263 ) Interest expense 37
— 74 — EBITDA 2,691 1,758
5,302 2,636 Adjustments: Contingent consideration
gain (1) (317 ) (2,230 ) (352 ) (1,112 ) Foreign exchange loss
(gain) (2) — 353 (126 ) 539 Gain on strategic investment (4) — — (7
) (177 ) Claim settlement (6) (650 ) 1,000
(650 ) 1,000 Adjusted EBITDA $ 1,724 $ 881 $ 4,167 $ 2,886
Net Cash Provided by (Used In) Operating Activities $
1,467 $ 26,817 $ (3,938 ) $ 27,431
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 $ 0.14 $ 0.24 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 )
Non-GAAP results $ 0.26 $ 0.36
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 March 31, 2019
Income Operating
Before Total Operating Income
Income Net Diluted Effective
Revenue Income Percentage Taxes
Income (7) EPS tax rate GAAP $ 22,676 $
865 3.8 % $ 1,100 $ 1,262 $ 0.09 (14.7 %) Adjustments: Contingent
consideration gain (1) ― (317 ) (1.4 ) (317 ) (317 ) (0.02 )
Amortization of acquired intangible assets (3) ― 604 2.7 604 559
0.04 Gain on strategic investment (4) — — — — — — Claim settlement
(6) — (650 ) (2.9 ) (650 ) (514 )
(0.04 )
Non-GAAP $ 22,676 $ 502 2.2 % $ 737 $
990 $ 0.07 (34.3 %)
For the Three Months Ended
March 31, 2018 Income
Operating Operating Before Total
Income Income Income Net Diluted
Effective Revenue (Loss) Percentage
Taxes Income (7) EPS tax rate
GAAP $ 19,058 $ 525 2.8 % $ 314 $ 1,534 $ 0.11 (388.5 %)
Adjustments: Contingent consideration gain (1) ― (2,230 ) (11.7 )
(2,230 ) (2,230 ) (0.17 ) Foreign exchange loss on contingent
consideration (2) ― — — 338 338 0.03 Amortization of acquired
intangible assets (3) ― 636 3.3 636 584 0.04 Claim settlement (6) ―
1,000 5.2 1,000 755 0.06
Non-GAAP $ 19,058 $ (69 )
(0.4
%)
$ 58 $ 981 $ 0.07 (1591.4 %)
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 Six Months Ended March 31, 2019
Income Operating
Before Total Operating Income
Income Net Diluted Effective
Revenue Income Percentage Taxes
Income (7) EPS tax rate GAAP $ 44,917 $
1,577 3.5 % $ 2,234 $ 2,572 $ 0.19 (15.1 %) Adjustments: Contingent
consideration gain (1) ― (352 ) (0.8 ) (352 ) (352 ) (0.03 )
Foreign exchange gain (2) ― — — (126 ) (126 ) (0.01 ) Amortization
of acquired intangible assets (3) ― 1,210 2.7 1,210 1,121 0.08 Gain
on strategic investment (4) ― — — (7 ) (7 ) (0.00 ) Claim
settlement (6) ― (650 ) (1.4 ) (650 ) (514 )
(0.04 )
Non-GAAP $ 44,917 $ 1,785 4.0 % $
2,309 $ 2,694 $ 0.19 (16.7 %)
For the Six Months
Ended March 31, 2018 (Loss)
Operating Income Operating
(Loss) Before Total (Loss)
Income Income Net (Loss) Diluted
Effective Revenue Income Percentage
Taxes Income (7) EPS tax rate
GAAP $ 36,071 $ (108 ) (0.3 %) $ (207 ) $ (22 ) $ (0.00 )
89.4 % Adjustments: Contingent consideration gain (1) ― (1,112 )
(3.1 ) (1,112 ) (1,112 ) (0.08 ) Foreign exchange loss (2) ― ― —
518 518 0.04 Amortization of acquired intangible assets (3) ― 1,254
3.5 1,254 1,150 0.09 Gain on strategic investment (4) ― — — (177 )
(177 ) (0.01 ) Tax reform impact (5) ― — — — 1,246 0.09 Claim
settlement accrual (6) ― 1,000 2.8 1,000 755
0.06
Non-GAAP $ 36,071 $ 1,034 2.9 % $ 1,276 $
2,358 $ 0.18 (84.8 %) (1) Represents accounting
adjustments to state acquisition-related contingent consideration
liabilities at their estimated fair value, including accretion for
the passage of time as well as adjustments to the liabilities’ fair
values related to changes in the timing and/or probability of
achieving milestones. The tables include contingent consideration
liability adjustments in each respective historical period and do
not include in future-period fair value changes, other than
estimated accretion expense as determined at the end of the current
quarter. These amounts are not taxable or tax deductible. (2)
Foreign exchange gains and losses are related to marking non-U.S.
dollar contingent consideration to period-end or settlement date
exchange rates. The tables include foreign currency exchange loss
or gain recorded in each respective historical period and do not
include forecasted currency fluctuations in future periods. These
gains and losses are not taxable or tax deductible. (3)
Amortization of acquisition-related intangible assets and
associated tax impact. A significant portion of the
acquisition-related amortization is not tax deductible. (4)
Represents the gain recognized on the sale of a strategic
investment which was not tax-affected as it was offset by
previously recognized capital losses. (5) Income tax expense from
the re-measurement of net deferred tax assets recognized after the
enactment of the Tax Cuts and Jobs Act in December 2017. (6)
Represents a royalty-related customer claim accrued at $1.0 million
in the second quarter of fiscal 2018, settled in the second quarter
of 2019 for $0.4 million. (7) Net income (loss) includes the effect
of the above adjustments on the income tax provision, taking into
account deferred taxes and non-deductible items. Effective rates of
21% (fiscal 2019) and 24.5% (fiscal 2018) were used to estimate the
income tax impact of the adjustments, except that expenses
occurring in Ireland have not been tax-affected as all tax benefits
are offset by a full valuation allowance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190501005931/en/
Surmodics, Inc.Tim Arens, 952-500-7000ir@surmodics.com
SurModics (NASDAQ:SRDX)
Historical Stock Chart
From Mar 2024 to Apr 2024
SurModics (NASDAQ:SRDX)
Historical Stock Chart
From Apr 2023 to Apr 2024