Surmodics Reports Third Quarter Fiscal 2017 Results and Updates Fiscal 2017 Guidance
EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--Aug. 3, 2017-- 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 2017 third quarter, ended June 30, 2017. Third Quarter Fiscal 2017 Highlights
“We are pleased with our third quarter revenue and earnings performance which reflects continued execution toward our strategic objectives aimed at driving our R&D initiatives forward while simultaneously delivering strong operational results,” said Gary Maharaj, President and CEO of Surmodics. “We are also thrilled that we have recently received FDA approval to begin our SurVeil DCB pivotal study, TRANSCEND. This marks a significant milestone in the development of our drug-coated balloon program, and we expect to begin enrollment by the end of calendar 2017.” Third Quarter Fiscal 2017 Financial Results Total revenue for the third quarter of fiscal 2017 was $17.8 million, as compared with $20.0 million in the prior-year period, which included hydrophilic royalty catch-up payments that netted to a $2.6 million benefit. Excluding these items, revenue increased 2.5% in the current-year quarter as compared with the year-ago period. Medical Device revenue was $12.8 million in the third quarter of fiscal 2017, as compared with $15.7 million the year-ago period. The decrease in revenue reflects the aforementioned net catch-up royalty payments in the prior-year quarter. In Vitro Diagnostics revenue was $5.0 million for the third quarter of fiscal 2017, an increase of 16.1% from the year-ago period. Diluted GAAP earnings per share in the third quarter of fiscal 2017 were $0.05 as compared with $0.30 in the year-ago period. On a non-GAAP basis, earnings per share were $0.09 in the third quarter of fiscal 2017 versus $0.41 last year. The change in earnings per share in the current quarter period reflects planned increased investments in research, development and other operating expenses to support the Company’s whole-product strategy, including the SurVeil DCB and other proprietary products, and lower hydrophilic royalty revenue, partially offset by a net gain from adjusting contingent consideration obligations to fair value. As of June 30, 2017, cash and investments were $43.7 million. Surmodics generated cash from operating activities of $7.7 million in the first nine months of fiscal 2017. Surmodics repurchased 169,868 common shares for $4.0 million during the current quarter under the Company’s share repurchase program. Capital expenditures totaled $4.9 million for the first nine months of fiscal 2017. Fiscal 2017 Outlook As a result of revenue performance in the first nine-months of fiscal 2017, Surmodics increased its fiscal 2017 revenue and earning guidance. Surmodics expects fiscal year 2017 revenue to range from $70.0 million to $72.0 million, up from previous expectations in the range of $65.0 million to $68.0 million. The Company expects diluted earnings (loss) in the range of $0.15 to $0.25 per share as compared with the prior guidance of $(0.02) to $0.08 per share. Non-GAAP diluted earnings per share guidance range is now $0.29 to $0.39 as compared with prior guidance of $0.15 to $0.25 per share. Conference Call Surmodics will host a webcast at 7:30 a.m. CT (8:30 a.m. ET) today to discuss third quarter results. To access the webcast, go to the investor relations portion of the Company’s website at www.surmodics.com and click on the webcast icon. A replay of the third quarter conference call will be available by dialing 888-203-1112 and entering conference call ID passcode 3371788. The audio replay will be available beginning at 10:30 a.m. CT on Thursday, August 3, 2017, until 10:30 a.m. CT on Thursday, August 10, 2017. 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) tests and microarrays. Following two recent acquisitions of Creagh Medical and NorMedix, the Company is executing a key growth strategy for its medical device business by expanding to offer total intravascular product solutions to its medical device customers. The combination of proprietary surface technologies, along with enhanced device design, development and manufacturing capabilities, enables Surmodics to significantly increase the value it offers with highly differentiated intravascular solutions designed and engineered to meet the most demanding requirements. With this focus on offering total solutions, Surmodics’ mission remains to improve the detection and treatment of disease. Surmodics is headquartered in Eden Prairie, Minnesota. For more information about the company, 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, earnings and cash flow expectations for fiscal 2017, and our SurVeil DCB and other proprietary products, including the timing, impact and success of 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, obtain regulatory approval for, and commercialize our SurVeil DCB, 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) our ability to successfully identify, acquire, and integrate target companies, and achieve expected benefits from acquisitions that are consummated; (4) possible adverse market conditions and possible adverse impacts on our cash flows, and (5) 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, 2016, and updated in our subsequent reports filed with the SEC. These reports are available in the Investors section of our website at www.surmodics.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 non-GAAP operating income, non-GAAP income before income taxes, non-GAAP net income, EBITDA and non-GAAP diluted net income per share, and the non-GAAP effective 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.
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