UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


November 4, 2020
Date of report (Date of earliest event reported)

Surmodics, Inc.
(Exact Name of Registrant as Specified in its Charter)

Minnesota
 
0-23837
 
41-1356149
(State of Incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)

9924 West 74th Street
Eden Prairie, Minnesota
 
 
55344
(Address of Principal Executive Offices)
 
(Zip Code)

(952) 500-7000
(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8‑K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a‑12 under the Exchange Act (17 CFR 240.14a‑12)
 
Pre‑commencement communications pursuant to Rule 14d‑2(b) under the Exchange Act (17 CFR 240.14d‑2(b))
 
Pre‑commencement communications pursuant to Rule 13e‑4(c) under the Exchange Act (17 CFR 240.13e‑4(c))
 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.05 par value
SRDX
Nasdaq Global Select Market

 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company

   
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 


 
Item 2.02 Results of Operations and Financial Condition.

On November 4, 2020, Surmodics, Inc. (the “Company”) issued a press release (the “Press Release”) announcing the results for the quarter ended September 30, 2020.  A copy of the full text of the Press Release is furnished as Exhibit 99.1 to this report.
 
The information contained in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
s
Item 9.01 Financial Statements and Exhibits.
   
(d) Exhibits.
 
 
 
Exhibit
Number
 
Description
 
99.1
 
Press Release dated November 4, 2020
       
  104
  Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

 
  SURMODICS, INC.
 
       
Date:  November 4, 2020
By:
/s/    Timothy J. Arens
 
   
Timothy J. Arens
 
   
Senior Vice President of Finance and Chief Financial Officer
 
       




EXHIBIT INDEX

Exhibit
Number
 
Description
 
     
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)

Exhibit 99.1


Surmodics Reports Fourth Quarter Fiscal 2020 Results

EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--November 4, 2020--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 2020 fourth quarter ended September 30, 2020.

Summary of Fourth Quarter and Recent Highlights

  • Revenue of $22.5 million, a decrease of 27% year-over-year
  • GAAP EPS of ($0.22), non-GAAP EPS of ($0.18)
  • FDA clearance received for PounceTM Thrombus Retrieval System for non-surgical removal of clots from the peripheral arterial vasculature

“I am proud of the meaningful progress our team made in fiscal 2020 to advance our strategic objectives in spite of this year’s unprecedented challenges,” said Gary Maharaj, President and CEO of Surmodics, Inc. “Our team capped the year by achieving another milestone with the receipt of the 510(k) clearance for our PounceTM Thrombus Retrieval System. As we look ahead to fiscal 2021, we remain confident in our long-term outlook and the ability to accomplish our strategic initiatives to deliver durable growth.”

Fourth Quarter Fiscal 2020 Financial Results

Total revenue for the fourth quarter of fiscal 2020 was $22.5 million, compared to $30.8 million in the prior-year period. Medical Device revenue was $17.2 million in the fourth quarter of fiscal 2020, compared to $24.8 million in the year-ago period, a decrease of 31%. Revenue in the fourth quarter includes $1.6 million from our Development and Distribution Agreement with Abbott Vascular, Inc. (“Abbott”) for the SurVeil DCBTM drug coated balloon (DCB), compared to $7.6 million in the prior-year quarter, which included the impact of the achievement of a milestone. In Vitro Diagnostics revenue was $5.4 million for the fourth quarter of fiscal 2020, compared to $6.0 million in the same prior-year quarter, a decrease of 10%.

GAAP loss per share in the fourth quarter of fiscal 2020 was ($0.22), compared to earnings per share of $0.26 in the year-ago period. On a non-GAAP basis, loss per share in the fourth quarter of fiscal 2020 was ($0.18), compared to earnings per share of $0.37 in the same prior-year quarter.

As of September 30, 2020, Surmodics reported cash and short-term investments totaling $61.1 million and no debt. Surmodics generated $1.3 million of cash from operating activities in the fourth quarter of fiscal 2020. Capital expenditures totaled $1.0 million for the fourth quarter of fiscal 2020.

Fiscal 2021 Guidance

Due to the continued uncertainty surrounding the duration and magnitude of the COVID-19 pandemic, the Company will not provide financial guidance at this time.


Conference Call Today at 4 p.m. CT (5 p.m. ET)

Surmodics will host a webcast at 4 p.m. CT (5 p.m. ET) today to discuss fourth 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 fourth quarter conference call will be available by dialing 888-203-1112 and entering conference call ID passcode 4873909. The audio replay will be available beginning at 7 p.m. CT on Wednesday, November 4, 2020, until 7 p.m. CT on Wednesday, November 11, 2020.

About Surmodics, Inc.

Surmodics is a leading provider of surface modification technologies for intravascular medical devices and chemical components for in vitro diagnostic immunoassay tests and microarrays. Surmodics is pursuing development and commercialization of highly differentiated medical devices that are designed to address unmet clinical needs 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 Securities and Exchange Commission (“SEC”).

Safe Harbor for Forward-looking Statements

This press release, and disclosures related to it, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements regarding the Company’s ability to execute on its strategy, its potential to achieve consistent double-digit revenue growth in fiscal 2022 and beyond, initiatives to deliver durable growth, emerging FDA requirements for premarket approvals of new vascular devices that use Paclitaxel, expectations regarding conduct and timing of clinical studies, expectation regarding the presentations of clinical information regarding our products, target dates and the potential for delay related to regulatory clearances, target dates for regulatory filing, plans for product releases and clinical evaluations, potential future revenue amounts under our Distribution and Development Agreement with Abbott Vascular, expectations regarding the impact of patent expirations on future revenues, expectation regarding future operating expenses, and expectation regarding the Company’s positioning for long-term growth, shareholder value creation, and the adequacy of cash and investments to provide capacity to support the Company’s strategic growth initiatives, 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, without limitation: (1) our ability to successfully develop and commercialize our SurVeilTM DCB (including realization of the full potential benefits of our agreement with Abbott), AvessTM DCB, SundanceTM 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) possible adverse market conditions and possible adverse impacts on our cash flows; (4) the impacts, duration, and severity of the global COVID-19 pandemic and the effects of responses to it on healthcare systems, the general economy, our business partners, and our operations; 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, 2019, 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 (loss) income, non-GAAP operating (loss) income percentage, non-GAAP (loss) income before income taxes, non-GAAP net (loss) income, and non-GAAP diluted (loss) 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 payouts 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.

CONTACT:
Surmodics, Inc.
Tim Arens, 952-500-7000
ir@surmodics.com


 

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)







 

 


Three Months Ended

 

 

Fiscal Year Ended

 

 


September 30,

 

 

September 30,

 

 


2020

 

 

2019

 

 

2020

 

 

2019

 

 


 

 

 

 

 

Revenue:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales


$

10,586

 

 

$

10,711

 

 

$

44,317

 

 

$

40,219

 

Royalties and license fees


 

9,867

 

 

 

16,806

 

 

 

40,634

 

 

 

48,458

 

Research, development and other


 

2,090

 

 

 

3,299

 

 

 

9,913

 

 

 

11,400

 

Total revenue


 

22,543

 

 

 

30,816

 

 

 

94,864

 

 

 

100,077

 

Operating costs and expenses:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product costs


 

3,902

 

 

 

3,659

 

 

 

15,317

 

 

 

13,639

 

Research and development


 

12,787

 

 

 

14,523

 

 

 

50,188

 

 

 

52,885

 

Selling, general and administrative


 

7,300

 

 

 

7,186

 

 

 

28,392

 

 

 

23,950

 

Acquired in-process research and development


 

 

 

 

890

 

 

 

 

 

 

890

 

Acquired intangible asset amortization


 

547

 

 

 

596

 

 

 

2,218

 

 

 

2,405

 

Contingent consideration expense (gain)


 

 

 

 

87

 

 

 

 

 

 

(161

)

Total operating costs and expenses


 

24,536

 

 

 

26,941

 

 

 

96,115

 

 

 

93,608

 

Operating (loss) income


 

(1,993

)

 

 

3,875

 

 

 

(1,251

)

 

 

6,469

 

Other (expense) income, net


 

(85

)

 

 

243

 

 

 

(203

)

 

 

1,089

 

(Loss) income before income taxes


 

(2,078

)

 

 

4,118

 

 

 

(1,454

)

 

 

7,558

 

Income tax (provision) benefit


 

(868

)

 

 

(564

)

 

 

2,577

 

 

 

34

 

Net (loss) income


$

(2,946

)

 

$

3,554

 

 

$

1,123

 

 

$

7,592

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) income per share:


$

(0.22

)

 

$

0.27

 

 

$

0.08

 

 

$

0.57

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) income per share:


$

(0.22

)

 

$

0.26

 

 

$

0.08

 

 

$

0.55

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic


 

13,639

 

 

 

13,400

 

 

 

13,552

 

 

 

13,389

 

Diluted


 

13,639

 

 

 

13,769

 

 

 

13,812

 

 

 

13,779

 


 

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)




 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

30,785

 

 

$

30,361

 

Available-for-sale securities

 

 

30,313

 

 

 

24,931

 

Accounts receivable, net

 

 

7,675

 

 

 

8,993

 

Contract assets — royalties and license fees

 

 

6,108

 

 

 

8,210

 

Inventories, net

 

 

5,966

 

 

 

4,501

 

Prepaids and other

 

 

5,761

 

 

 

4,424

 

Total Current Assets

 

 

86,608

 

 

 

81,420

 

Property and equipment, net

 

 

30,103

 

 

 

29,748

 

Deferred income taxes

 

 

7,315

 

 

 

6,176

 

Intangible assets, net

 

 

13,283

 

 

 

14,226

 

Goodwill

 

 

27,185

 

 

 

26,171

 

Other assets

 

 

4,269

 

 

 

2,124

 

Total Assets

 

$

168,763

 

 

$

159,865

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Contingent consideration

 

 

 

 

 

3,200

 

Deferred revenue

 

 

5,200

 

 

 

5,553

 

Other current liabilities

 

 

13,692

 

 

 

11,456

 

Total Current Liabilities

 

 

18,892

 

 

 

20,209

 

Deferred revenue

 

 

10,796

 

 

 

11,628

 

Other long-term liabilities

 

 

8,020

 

 

 

5,512

 

Total Liabilities

 

 

37,708

 

 

 

37,349

 

Total Stockholders’ Equity

 

 

131,055

 

 

 

122,516

 

Total Liabilities and Stockholders’ Equity

 

$

168,763

 

 

$

159,865

 


 

Surmodics, Inc. and Subsidiaries

Supplemental Segment Information

(in thousands)

(Unaudited)







 

 

 

Three Months Ended September 30,

 

 

 

 

 

 

2020

 

2019

 

 

 

 

Revenue:

 

 

 

% of Total

 

 

 

% of Total

 

% Change

 

Medical Device

 

$

17,179

 

 

 

76.2

%

 

$

24,849

 

 

 

80.6

%

 

(30.9

)%

 

In Vitro Diagnostics

 

 

5,364

 

 

 

23.8

%

 

 

5,967

 

 

 

19.4

%

 

(10.1

)%

 

Total revenue

 

$

22,543

 

 

 

 

$

30,816

 

 

 

 

(26.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended September 30,

 

 

 

 

 

 

2020

 

2019

 

 

 

 

Revenue:

 

 

 

% of Total

 

 

 

% of Total

 

% Change

 

Medical Device

 

$

71,401

 

 

 

75.3

%

 

$

78,353

 

 

 

78.3

%

 

(8.9

)%

 

In Vitro Diagnostics

 

 

23,463

 

 

 

24.7

%

 

 

21,724

 

 

 

21.7

%

 

8.0

%

 

Total revenue

 

$

94,864

 

 

 

 

$

100,077

 

 

 

 

(5.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

 

 

September 30,

 

September 30,

 

 

 

 

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

Operating (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Medical Device

 

$

(1,902

)

 

$

3,707

 

 

$

(3,246

)

 

$

4,794

 

 

 

 

 

In Vitro Diagnostics

 

 

2,456

 

 

 

2,774

 

 

 

11,771

 

 

 

10,620

 

 

 

 

 

Total segment operating (loss) income

 

 

554

 

 

 

6,481

 

 

 

8,525

 

 

 

15,414

 

 

 

 

 

Corporate

 

 

(2,547

)

 

 

(2,606

)

 

 

(9,776

)

 

 

(8,945

)

 

 

 

 

Total (loss) income from operations

 

$

(1,993

)

 

$

3,875

 

 

$

(1,251

)

 

$

6,469

 

 

 

 

 


 

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

 

 

Fiscal Year Ended

 

 


September 30,

 

 

September 30,

 

 


2020

 

 

2019

 

 

2020

 

 

2019

 

Net (loss) income


$

(2,946

)

 

$

3,554

 

 

$

1,123

 

 

$

7,592

 

Income tax provision (benefit)


 

868

 

 

 

564

 

 

 

(2,577

)

 

 

(34

)

Depreciation and amortization


 

1,873

 

 

 

1,850

 

 

 

7,263

 

 

 

7,312

 

Investment income, net


 

(72

)

 

 

(247

)

 

 

(656

)

 

 

(1,097

)

Interest expense


 

34

 

 

 

40

 

 

 

133

 

 

 

152

 

EBITDA


 

(243

)

 

 

5,761

 

 

 

5,286

 

 

 

13,925

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration expense (gain) (2)


 

 

 

 

87

 

 

 

 

 

 

(161

)

Foreign exchange loss (3)


 

 

 

 

 

 

 

 

 

 

(126

)

Loss (gain) on strategic investment (4)


 

 

 

 

 

 

 

479

 

 

 

(7

)

Acquired in-process research and development (5)


 

 

 

 

890

 

 

 

 

 

 

890

 

Claim settlement accrual (6)


 

 

 

 

 

 

 

 

 

 

(650

)

Asset impairment (7)


 

 

 

 

256

 

 

 

 

 

 

256

 

Adjusted EBITDA


$

(243

)

 

$

6,994

 

 

$

5,765

 

 

$

14,127

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Operating Activities


$

1,314

 

 

$

12,520

 

 

$

14,010

 

 

$

8,038

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Surmodics, Inc., and Subsidiaries

Net (Loss) Income and Diluted EPS GAAP to Non-GAAP Reconciliation

(in thousands, except per share data)

(Unaudited)





 

 

 

Three Months Ended September 30, 2020

 

 



 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

Operating

 

 

Before

 

 

Net

 

 

 

 

 

 



 

 

Total

 

 

Operating

 

 

Loss

 

 

Income

 

 

Loss

 

 

Diluted

 

 

Effective

 

 



Revenue

 

 

Loss

 

 

Percentage

 

 

Taxes

 

 

(9)

 

 

EPS

 

 

tax rate



GAAP

 

$

22,543

 

 

$

(1,993

)

 

 

(8.8

)%

 

$

(2,078

)

 

$

(2,946

)

 

$

(0.22

)

 

 

(41.8

)%

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

 

 

 

 

 

547

 

 

 

2.4

%

 

 

547

 

 

 

517

 

 

 

0.04

 

 

 

 

 

 

Non-GAAP

 

$

22,543

 

 

$

(1,446

)

 

 

(6.4

)%

 

$

(1,531

)

 

$

(2,429

)

 

$

(0.18

)

 

 

(58.7

)%

 





 

 

 

Three Months Ended September 30, 2019

 

 



 

 

 

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

Operating

 

 

Before

 

 

Net

 

 

 

 

 

 



 

 

Total

 

 

Operating

 

 

Income

 

 

Income

 

 

Income

 

 

Diluted

 

 

Effective

 

 



Revenue

 

 

Income

 

 

Percentage

 

 

Taxes

 

 

(9)

 

 

EPS

 

 

tax rate



GAAP

 

$

30,816

 

 

$

3,875

 

 

 

12.6

%

 

$

4,118

 

 

$

3,554

 

 

$

0.26

 

 

 

13.7

%

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

 

 

 

 

 

596

 

 

 

1.9

%

 

 

596

 

 

 

551

 

 

 

0.04

 

 

 

 

 

 

Contingent consideration expense (2)

 

 

 

 

 

87

 

 

 

0.3

%

 

 

87

 

 

 

87

 

 

 

0.01

 

 

 

 

 

 

Acquired in-process research and development (5)

 

 

 

 

 

890

 

 

 

2.9

%

 

 

890

 

 

 

703

 

 

 

0.05

 

 

 

 

 

 

Asset impairment (7)

 

 

 

 

 

256

 

 

 

0.8

%

 

 

256

 

 

 

256

 

 

 

0.02

 

 

 

 

 

 

Non-GAAP

 

$

30,816

 

 

$

5,704

 

 

 

18.5

%

 

$

5,947

 

 

$

5,151

 

 

$

0.37

 

 

 

13.4

%

 


 

Surmodics, Inc., and Subsidiaries

Net Income and Diluted EPS GAAP to Non-GAAP Reconciliation – Continued

(in thousands, except per share data)

(Unaudited)





 

 

 

Fiscal Year Ended September 30, 2020

 

 



 

 

 

 

 

 

 

 

 

Loss

 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

Operating

 

 

(Income)

 

 

 

 

 

 

 

 

 





 

 

 

Operating

 

 

Loss

 

 

Before

 

 

Net

 

 

 

 

 

 





Total

 

 

Loss

 

 

(Income)

 

 

Income

 

 

Income

 

 

Diluted

 

 

Effective



 

 

Revenue

 

 

(Income)

 

 

Percentage

 

 

Taxes

 

 

(9)

 

 

EPS

 

 

tax rate

 

 

GAAP

 

$

94,864

 

 

$

(1,251

)

 

 

(1.3

)%

 

$

(1,454

)

 

$

1,123

 

 

$

0.08

 

 

 

177.2

%

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

 

 

 

 

 

2,218

 

 

 

2.3

%

 

 

2,218

 

 

 

2,076

 

 

 

0.15

 

 

 

 

 

 

Loss on strategic investment (4)

 

 

 

 

 

 

 

 

 

 

 

479

 

 

 

378

 

 

 

0.03

 

 

 

 

 

 

Tax impact of CARES Act (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,768

)

 

 

(0.13

)

 

 

 

 

 

Non-GAAP

 

$

94,864

 

 

$

967

 

 

 

1.0

%

 

$

1,243

 

 

$

1,809

 

 

$

0.13

 

 

 

(45.5

)%

 

 

 

Fiscal Year Ended September 30, 2019

 

 



 

 

 

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

Operating

 

 

Before

 

 

Net

 

 

 

 

 

 





Total

 

 

Operating

 

 

Income

 

 

Income

 

 

Income

 

 

Diluted

 

 

Effective



 

 

Revenue

 

 

Income

 

 

Percentage

 

 

Taxes

 

 

(9)

 

 

EPS

 

 

tax rate

 

 

GAAP

 

$

100,077

 

 

$

6,469

 

 

 

6.5

%

 

$

7,558

 

 

$

7,592

 

 

$

0.55

 

 

 

(0.4

)%

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets (1)

 

 

 

 

 

2,405

 

 

 

2.4

%

 

 

2,405

 

 

 

2,226

 

 

 

0.16

 

 

 

 

 

 

Contingent consideration gain (2)

 

 

 

 

 

(161

)

 

 

(0.2

)%

 

 

(161

)

 

 

(161

)

 

 

(0.01

)

 

 

 

 

 

Foreign exchange gain (3)

 

 

 

 

 

 

 

 

 

 

 

(126

)

 

 

(126

)

 

 

(0.01

)

 

 

 

 

 

Gain on strategic investment (4)

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

(7

)

 

 

 

 

 

 

 

 

Acquired in-process research and development (5)

 

 

 

 

 

890

 

 

 

0.9

%

 

 

890

 

 

 

703

 

 

 

0.05

 

 

 

 

 

 

Claim settlement (6)

 

 

 

 

 

(650

)

 

 

(0.6

)%

 

 

(650

)

 

 

(514

)

 

 

(0.04

)

 

 

 

 

 

Asset impairment (7)

 

 

 

 

 

256

 

 

 

0.2

%

 

 

256

 

 

 

256

 

 

 

0.02

 

 

 

 

 

 

Non-GAAP

 

$

100,077

 

 

$

9,209

 

 

 

9.2

%

 

$

10,165

 

 

$

9,969

 

 

$

0.72

 

 

 

1.9

%

 


(1)
Amortization of business acquisition-related intangible assets and associated tax impact. A significant portion of the business acquisition-related amortization is not tax deductible.
(2)
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. These amounts are not taxable or tax deductible.
(3)

Foreign exchange gains and losses are related to marking non-U.S. dollar contingent consideration to period-end or settlement date exchange rates. These gains and losses are not taxable or tax deductible.

(4)
In fiscal 2020, represents the loss recognized on the impairment of a strategic investment for which an effective rate of 21% was used to estimate the income tax impact. In fiscal 2019, represents the gain recognized on the sale of a strategic investment which was not tax-effected as it was offset by previously recognized capital losses.
(5)
Represents acquisition of in-process research and development assets, net of the associated tax impact.
(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 fiscal 2019 for $0.4 million.
(7)
Impairment of indefinite-lived intangible assets which were not tax deductible.
(8)
Represents the income tax benefit recognized from the carryback of net operating losses under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted in March 2020.
(9)
Net (loss) income includes the effect of the above adjustments on the income tax provision (benefit), taking into account deferred taxes and non-deductible items. In both fiscal 2020 and fiscal 2019, an effective rate of 21% was used to estimate the income tax impact of the adjustments, except that expenses occurring in Ireland have not been tax-effected as all tax benefits are offset by a full valuation allowance.

 

Contacts

Surmodics, Inc.
Tim Arens, 952-500-7000
ir@surmodics.com