SurModics Reports First Quarter 2009 Results
First Quarter Summary:
-
GAAP results:
-
Revenue of
$63.2 million -
Operating income of
$42.7 million -
Net income of
$27.1 million -
Diluted EPS of
$1.53
-
Revenue of
-
Operating cash flow of
$17.4 million -
Cash and investments of
$69.9 million ; no debt -
Non-GAAP results (adjusting for accounting treatment of Merck
agreement and excluding restructuring charges and IPR&D charge related
to
PR Pharmaceuticals acquisition):-
Adjusted total revenue of
$28.4 million -
Adjusted operating income of
$12.9 million -
Adjusted net income of
$8.4 million -
Adjusted diluted EPS of
$0.48
-
Adjusted total revenue of
-
Revenue by market:
-
Therapeutic:
-
Cardiovascular –
$10.4 million -
Ophthalmology –
$44.8 million -
Other Markets –
$3.7 million
-
Cardiovascular –
-
Diagnostic –
$4.3 million
-
Therapeutic:
-
Acquisition of drug delivery technologies and collaborative programs
from
PR Pharmaceuticals -
Repurchased
$12.8 million ofSurModics stock; cumulative$25.5 million purchased in$35 million program authorized inNovember 2007
-
Eight new licenses with
SurModics customers - Two new customer product classes introduced
“SurModics achieved record revenue and earnings for the first quarter of
fiscal 2009, driven primarily by the recognition of previously deferred
revenue, which was triggered by Merck’s termination of the collaborative
research agreement,” said
“In addition, we met one of our corporate goals during the quarter by signing a license agreement with a new customer using our drug delivery technology outside of the ophthalmology space. We believe we are on track to achieve our remaining fiscal 2009 company goals,” continued Barclay. “In particular, we are making excellent progress in our partner-supported product development programs. In ophthalmology, SurModics’ scientists continue to work on development projects with numerous customers for back-of-the-eye and front-of-the-eye diseases. These projects leverage our multiple drug delivery platforms and polymer matrix technologies for sustained delivery of customers’ proprietary drugs to the eye, including both large and small molecule compounds. Encouragingly, we continue to help our customers advance toward the next stages of their respective programs.”
“Furthermore, we are making excellent progress integrating the
proprietary drug delivery technologies and collaborative programs we
acquired from
On a GAAP basis, revenue for the first quarter of fiscal 2009 was
Included in the results for the first quarter of fiscal 2009 were three
event-specific items. First, in connection with Merck’s termination of
its agreement with
SurModics’ pipeline continues to represent significant potential. The
Company added eight new licenses in the first quarter, against its goal
of signing 18 new licenses in fiscal 2009. SurModics’ customers launched
2 new product classes in the marketplace during the quarter, as the
Company works toward its goal of 10 launches in fiscal 2009. As of
SurModics’ cash and investment balance totaled
“SurModics continues to be in excellent financial health,” said
Live Webcast
About
SurModics’ vision is to extend and improve the lives of patients through
technology innovation. The Company partners with the world’s foremost
medical device, pharmaceutical and life science companies to develop and
commercialize innovative products that result in improved diagnosis and
treatment for patients. Core offerings include: drug delivery
technologies (coatings, microparticles, nanoparticles, and implants);
surface modification coating technologies that impart lubricity,
prohealing, and biocompatibility capabilities; and components for in
vitro diagnostic test kits and specialized surfaces for cell culture and
microarrays.
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, such as our expectations about our pipeline, our
ability to achieve our fiscal 2009 company goals, the benefit of the
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP,
SurModics, Inc. and Subsidiaries | |||||
Condensed Consolidated Statements of Income | |||||
(In thousands, except per share data) | |||||
Three Months Ended
December 31, |
|||||
2008 | 2007 | ||||
(Unaudited) | |||||
Revenue | |||||
Royalties and license fees | $47,747 | $13,178 | |||
Product sales | 3,856 | 5,207 | |||
Research and development | 11,613 | 5,444 | |||
Total revenue | 63,216 | 23,829 | |||
Operating expenses | |||||
Product | 1,515 | 2,782 | |||
Research and development | 9,353 | 8,727 | |||
Selling, general and administrative | 4,683 | 4,749 | |||
Restructuring charges | 1,798 | ― | |||
In-process research and development | 3,200 | ― | |||
Total operating expenses | 20,549 | 16,258 | |||
Income from operations | 42,667 | 7,571 | |||
Investment income | 585 | 1,720 | |||
Income before income taxes | 43,252 | 9,291 | |||
Income tax provision | (16,167 | ) | (3,645 | ) | |
Net income | $27,085 | $5,646 | |||
Basic net income per share | $ 1.53 | $0.31 | |||
Diluted net income per share | $1.53 | $0.31 | |||
Weighted average shares outstanding | |||||
Basic | 17,683 | 18,015 | |||
Diluted | 17,747 | 18,428 |
SurModics, Inc. and Subsidiaries | ||||||
Condensed Consolidated Balance Sheets | ||||||
(In thousands) | ||||||
December 31, | September 30, | |||||
2008 | 2008 | |||||
Assets |
(Unaudited) | |||||
Current assets: | ||||||
Cash and short-term investments | $22,279 | $24,627 | ||||
Accounts receivable | 11,752 | 14,589 | ||||
Inventories | 2,693 | 2,651 | ||||
Other current assets | 2,177 | 4,642 | ||||
Total current assets | 38,901 | 46,509 | ||||
Property and equipment, net | 45,938 | 41,897 | ||||
Long-term investments | 47,596 | 47,351 | ||||
Other assets | 47,966 | 55,271 | ||||
Total assets | $180,401 | $191,028 | ||||
Liabilities and Stockholders’ Equity |
||||||
Current liabilities* | $16,536 | $8,191 | ||||
Deferred revenue (current and long-term) | 1,819 | 37,578 | ||||
Other liabilities | 4,379 | 3,453 | ||||
Total stockholders’ equity | 157,667 | 141,806 | ||||
Total liabilities and stockholders’ equity | $180,401 | $191,028 |
* Current liabilities exclude current portion of deferred revenue.
SurModics, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2008 | 2007 | |||||||
(Unaudited) | ||||||||
Operating Activities | ||||||||
Net income | $27,085 | $5,646 | ||||||
Depreciation and amortization | 1,674 | 1,488 | ||||||
Stock-based compensation | 1,911 | 1,953 | ||||||
Purchased in-process research and development | 3,200 | ― | ||||||
Restructuring charges | 1,798 | ― | ||||||
Deferred taxes | 9,597 | 607 | ||||||
Net other operating activities | 494 | (1,269 | ) | |||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | 2,837 | 89 | ||||||
Accounts payable and accrued liabilities | (1,607 | ) | (1,731 | ) | ||||
Income taxes | 6,438 | (3,275 | ) | |||||
Deferred revenue | (35,759 | ) | 824 | |||||
Net change in other operating assets and liabilities | (255 | ) | 83 | |||||
Net cash provided by operating activities | 17,413 | 4,415 | ||||||
Investing Activities | ||||||||
Net purchases of property and equipment | (4,284 | ) | (1,190 | ) | ||||
Business acquisition | (3,352 | ) | ― | |||||
Net other investing activities | (566 | ) | (1,446 | ) | ||||
Net cash used in investing activities | (8,202 | ) | (2,636 | ) | ||||
Financing Activities | ||||||||
Issuance of common stock | 2 | 335 | ||||||
Purchase of common stock to fund employee taxes | (375 | ) | (1,207 | ) | ||||
Repurchase of common stock | (11,751 | ) | ― | |||||
Net other financing activities | (494 | ) | 279 | |||||
Net cash used in financing activities | (12,618 | ) | (593 | ) | ||||
Net change in cash and cash equivalents | (3,407 | ) | 1,186 | |||||
Cash and Cash Equivalents | ||||||||
Beginning of period | 15,376 | 13,812 | ||||||
End of period | $11,969 | $14,998 |
SurModics, Inc. and Subsidiaries | ||||||||||||||||
Supplemental Non-GAAP Information | ||||||||||||||||
For the Three Months Ended December 31, 2008 | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Merck Agreement |
||||||||||||||||
As |
Deferred |
Billed |
Other |
Adjusted |
||||||||||||
Revenue: | ||||||||||||||||
Royalties and license fees | $47,747 | ($28,578 | ) |
(3) |
$-- | (4) | $19,169 | |||||||||
Product sales | 3,856 | 3,856 | ||||||||||||||
Research and development | 11,613 | (6,200 | ) | (3) | -- | (4) | 5,413 | |||||||||
Total revenue | $63,216 | ($34,778 | ) | $-- | $28,438 | |||||||||||
Income from operations | $42,667 | ($34,778 | ) | $-- | $4,998 | $12,887 | ||||||||||
$27,085 | ($21,778 | ) | $-- | $8,437 | ||||||||||||
Net income | (5) | (5) | $3,130 | (5) | ||||||||||||
Diluted net income per share (6) | $1.53 | $0.48 | ||||||||||||||
Balance at |
Deferred |
Billed |
Balance at |
|||||||||||||
Merck deferred revenue (7) | $34,778 | ($34,778 | ) | $-- | ||||||||||||
$-- |
(1) Reflects operating results in accordance with U.S. generally
accepted accounting principles (GAAP). GAAP revenue includes a
(2) Adjusted Non-GAAP amounts exclude the
(3) Reflects recognition of revenue for the Merck agreement in accordance with GAAP for the period presented that previously had been deferred.
(4) Reflects amounts billed and deferred under the Merck agreement for the period presented.
(5) Reflects the after tax impact of the adjustments utilizing the Company’s effective tax rate for the period presented.
(6) Diluted net income per share is calculated using the diluted weighted average shares outstanding for the period presented.
(7) Reflects the activity for the period presented in the deferred
revenue balance sheet accounts associated with the Merck agreement. This
agreement terminated in
SurModics, Inc. and Subsidiaries | |||||||||||||
Supplemental Non-GAAP Information | |||||||||||||
For the Three Months Ended December 31, 2007 | |||||||||||||
(in thousands, except per share data) | |||||||||||||
(Unaudited) | |||||||||||||
Merck Agreement Adjustments | |||||||||||||
As |
Revenue |
Billed |
Adjusted |
||||||||||
Revenue: | |||||||||||||
Royalties and license fees | $13,178 | ($312 | ) | (3) | $-- | (4) | $12,866 | ||||||
Product sales | 5,207 | 5,207 | |||||||||||
Research and development | 5,444 | (56 | ) | (3) | 1,857 | (4) | 7,245 | ||||||
Total revenue | $23,829 | ($368 | ) | $1,857 | $25,318 | ||||||||
Income from operations | $7,571 | ($368 | ) | $1,857 | $9,060 | ||||||||
$5,646 | ($224 | ) | $1,129 | $6,551 | |||||||||
Net income | (5) | (5) | |||||||||||
Diluted net income per share (6) | $0.31 | $0.36 | |||||||||||
Balance at |
Revenue |
Billed |
Balance at |
||||||||||
Merck deferred revenue (7) | $20,624 | ($368 | ) | $1,857 | |||||||||
$22,113 |
(1) Reflects operating results in accordance with U.S. generally accepted accounting principles (GAAP).
(2) Adjusted Non-GAAP amounts exclude the revenue recognized in the period associated with the Merck agreement under GAAP and include amounts billed associated with the Merck agreement.
(3) Reflects recognition of revenue for the Merck agreement in accordance with GAAP for the period presented.
(4) Reflects amounts billed and deferred under the Merck agreement for the period presented.
(5) Reflects the after tax impact of the adjustments utilizing the Company’s effective tax rate for the period presented.
(6) Diluted net income per share is calculated using the diluted weighted average shares outstanding for the period presented.
(7) Reflects the activity for the period presented in the deferred revenue balance sheet accounts associated with the Merck agreement.
Source:
SurModics, Inc.
Phil Ankeny, Senior Vice President and Chief
Financial Officer
(952) 829-2700