Surmodics Reports Third Quarter of Fiscal Year 2023 Financial Results; Updates Fiscal Year 2023 Financial Guidance
Third Quarter Fiscal 2023 Financial Summary
- Total Revenue of
$52.5 million , an increase of 111% year-over-year - Recognized
$24.6 million in license fee revenue upon receipt of a$27.0 million milestone payment associated with obtaining FDA premarket approval of the SurVeil™ DCB under the company’s Development and Distribution Agreement with Abbott - GAAP Diluted EPS of
$0.52 , compared to$(0.41) in the prior-year period - Non-GAAP Diluted EPS of
$0.52 , compared to$(0.34) in the prior-year period
Third Quarter and Recent Business Highlights
- On
April 19, 2023 ,Surmodics announced the first successful patient use of the Sublime™ radial access microcatheter, the industry’s first suite of torqueable peripheral microcatheters, designed for navigating tortuosity and crossing complex lesions and available for both transradial and transfemoral procedures. - On
April 20, 2023 ,Surmodics announced enrollment of the first patient in PROWL, the Pounce™ Thrombectomy System Retrospective Registry, to collect real-world efficacy and safety outcomes data for endovascular interventions using the Pounce system for the non-surgical removal of emboli and thrombi in the peripheral arterial vasculature. - On
June 14, 2023 ,Surmodics announced the receipt ofU.S. Food and Drug Administration (FDA) 510(k) clearance for its Pounce LP (Low Profile) Thrombectomy System, which will allow for efficient clot removal in below-the-knee peripheral arteries (2 mm to 4 mm in diameter), expanding the addressable market for the Pounce platform. - On
June 20, 2023 ,Surmodics announced the receipt of FDA premarket approval for its SurVeil™ drug-coated balloon (DCB). The SurVeil DCB may now be marketed and sold in theU.S. by the company’s exclusive distribution partner,Abbott Vascular, Inc. (Abbott). The SurVeil DCB is a next-generation device that utilizes best-in-class technology in the treatment of peripheral artery disease, includes a proprietary drug-excipient formulation for a durable balloon coating, and is manufactured using an innovative process to improve coating uniformity.
“Our third quarter was marked by a combination of strong financial performance – including total revenue growth of 111% year-over-year – and notable progress with respect to our key strategic objectives for fiscal 2023,” said
Third Quarter Fiscal 2023 Financial Results
|
Three Months Ended |
|
Increase (Decrease) |
||||||||||
|
2023 |
|
2022 |
|
$ |
|
% |
||||||
Revenue: |
|
|
|
|
|
|
|
|
|
||||
Medical Device |
$ |
46,014 |
|
$ |
17,528 |
|
$ |
28,486 |
|
|
|
163 |
% |
In |
|
6,469 |
|
|
7,326 |
|
|
(857 |
) |
|
|
(12 |
)% |
Total revenue |
$ |
52,483 |
|
$ |
24,854 |
|
$ |
27,629 |
|
|
|
111 |
% |
Total revenue increased
Medical Device revenue increased
Product gross profit (defined as product sales less product costs) was
Operating costs and expenses, excluding product costs, decreased
GAAP net income was
Adjusted EBITDA was
Balance Sheet Summary
As of
Fiscal Year 2023 Financial Guidance
The company now expects fiscal 2023 GAAP diluted loss per share to range from
Non-GAAP diluted loss per share in fiscal 2023 is expected to range from
Conference Call Today at
An audio replay of the conference call will be available beginning at
About
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: expectations of the timing of an initial stocking order for SurVeil DCB products and of Abbott’s commercialization of the product; being well positioned to support Abbott’s commercial launch of the SurVeil DCB; our belief that the SurVeil DCB will complement and enhance Abbott’s existing product portfolio; our expectation about working with the FDA to update the SurVeil DCB product labeling to reflect currently available paclitaxel data; our future prospects; the expected customer base for our Sublime radial and Pounce arterial thrombectomy platforms by year end and their expected year-over-year growth rate for full fiscal 2023; our expectations regarding expanding the addressable market for our Pounce arterial thrombectomy system with the addition of new products and clinical indications; expectations regarding the conduct and timing of limited market introductions of certain products and of commercialization of products; our expectations related to the PROWL
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with
|
|||||||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||||||
(in thousands, except per share data) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales |
$ |
15,667 |
|
|
$ |
13,919 |
|
|
$ |
45,251 |
|
|
$ |
40,227 |
|
Royalties and license fees |
|
34,153 |
|
|
|
8,795 |
|
|
|
52,347 |
|
|
|
26,738 |
|
Research, development and other |
|
2,663 |
|
|
|
2,140 |
|
|
|
7,016 |
|
|
|
6,998 |
|
Total revenue |
|
52,483 |
|
|
|
24,854 |
|
|
|
104,614 |
|
|
|
73,963 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
Product costs |
|
6,921 |
|
|
|
5,141 |
|
|
|
17,926 |
|
|
|
14,745 |
|
Research and development |
|
11,232 |
|
|
|
12,975 |
|
|
|
36,899 |
|
|
|
38,350 |
|
Selling, general and administrative |
|
12,874 |
|
|
|
12,854 |
|
|
|
39,077 |
|
|
|
33,159 |
|
Acquired intangible asset amortization |
|
879 |
|
|
|
1,024 |
|
|
|
2,659 |
|
|
|
3,184 |
|
Restructuring expense |
|
— |
|
|
|
— |
|
|
|
1,282 |
|
|
|
— |
|
Contingent consideration (gain) expense |
|
(835 |
) |
|
|
3 |
|
|
|
(829 |
) |
|
|
9 |
|
Total operating costs and expenses |
|
31,071 |
|
|
|
31,997 |
|
|
|
97,014 |
|
|
|
89,447 |
|
Operating income (loss) |
|
21,412 |
|
|
|
(7,143 |
) |
|
|
7,600 |
|
|
|
(15,484 |
) |
Other expense, net |
|
(763 |
) |
|
|
(38 |
) |
|
|
(2,324 |
) |
|
|
(217 |
) |
Income (loss) before income taxes |
|
20,649 |
|
|
|
(7,181 |
) |
|
|
5,276 |
|
|
|
(15,701 |
) |
Income tax (expense) benefit |
|
(13,303 |
) |
|
|
1,530 |
|
|
|
(13,506 |
) |
|
|
3,155 |
|
Net income (loss) |
$ |
7,346 |
|
|
$ |
(5,651 |
) |
|
$ |
(8,230 |
) |
|
$ |
(12,546 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net income (loss) per share |
$ |
0.52 |
|
|
$ |
(0.41 |
) |
|
$ |
(0.59 |
) |
|
$ |
(0.90 |
) |
Diluted net income (loss) per share |
$ |
0.52 |
|
|
$ |
(0.41 |
) |
|
$ |
(0.59 |
) |
|
$ |
(0.90 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
14,050 |
|
|
|
13,929 |
|
|
|
14,020 |
|
|
|
13,907 |
|
Diluted |
|
14,072 |
|
|
|
13,929 |
|
|
|
14,020 |
|
|
|
13,907 |
|
|
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(in thousands) |
|||||||
|
|
|
|
||||
|
2023 |
|
2022 |
||||
Assets |
(Unaudited) |
|
(See Note) |
||||
Current Assets: |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
44,579 |
|
|
$ |
18,998 |
|
Accounts receivable, net |
|
11,752 |
|
|
|
10,452 |
|
Contract assets — royalties and license fees |
|
7,678 |
|
|
|
7,116 |
|
Inventories, net |
|
14,610 |
|
|
|
11,819 |
|
Prepaids and other |
|
7,231 |
|
|
|
9,202 |
|
Total Current Assets |
|
85,850 |
|
|
|
57,587 |
|
Property and equipment, net |
|
26,571 |
|
|
|
27,148 |
|
Intangible assets, net |
|
27,798 |
|
|
|
28,145 |
|
|
|
43,844 |
|
|
|
40,710 |
|
Other assets |
|
4,838 |
|
|
|
4,769 |
|
Total Assets |
$ |
188,901 |
|
|
$ |
158,359 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
||
Short-term borrowings |
$ |
— |
|
|
$ |
10,000 |
|
Deferred revenue |
|
4,328 |
|
|
|
4,160 |
|
Income tax payable |
|
11,953 |
|
|
|
— |
|
Other current liabilities |
|
15,767 |
|
|
|
17,919 |
|
Total Current Liabilities |
|
32,048 |
|
|
|
32,079 |
|
Long-term debt, net |
|
29,353 |
|
|
|
— |
|
Deferred revenue |
|
3,492 |
|
|
|
5,088 |
|
Other long-term liabilities |
|
11,596 |
|
|
|
12,800 |
|
Total Liabilities |
|
76,489 |
|
|
|
49,967 |
|
Total Stockholders’ Equity |
|
112,412 |
|
|
|
108,392 |
|
Total Liabilities and Stockholders’ Equity |
$ |
188,901 |
|
|
$ |
158,359 |
|
|
|
|
|
|
|
||
Note: Derived from audited financial statements as of the date indicated. |
|
|
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(in thousands) |
|||||||
(Unaudited) |
|||||||
|
Nine Months Ended |
||||||
|
2023 |
|
2022 |
||||
Operating Activities: |
|
|
|
|
|
||
Net loss |
$ |
(8,230 |
) |
|
$ |
(12,546 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
||
Depreciation and amortization |
|
6,365 |
|
|
|
6,902 |
|
Stock-based compensation |
|
5,662 |
|
|
|
5,198 |
|
Deferred taxes |
|
(187 |
) |
|
|
(2,996 |
) |
Other |
|
217 |
|
|
|
636 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
||
Accounts receivable and contract assets |
|
(1,825 |
) |
|
|
(847 |
) |
Inventories |
|
(2,790 |
) |
|
|
(4,167 |
) |
Prepaids and other |
|
(961 |
) |
|
|
(1,998 |
) |
Accounts payable |
|
(669 |
) |
|
|
349 |
|
Accrued liabilities |
|
(2,474 |
) |
|
|
(1,039 |
) |
Income taxes |
|
15,583 |
|
|
|
(676 |
) |
Deferred revenue |
|
(1,427 |
) |
|
|
(3,539 |
) |
Net cash provided by (used in) operating activities |
|
9,264 |
|
|
|
(14,723 |
) |
Investing Activities: |
|
|
|
|
|
||
Purchases of property and equipment |
|
(2,170 |
) |
|
|
(2,798 |
) |
Maturities of available-for-sale securities |
|
— |
|
|
|
7,600 |
|
Net cash (used in) provided by investing activities |
|
(2,170 |
) |
|
|
4,802 |
|
Financing Activities: |
|
|
|
|
|
||
Payments of short-term borrowings |
|
(10,000 |
) |
|
|
— |
|
Proceeds from issuance of long-term debt |
|
29,664 |
|
|
|
— |
|
Payments of debt issuance costs |
|
(614 |
) |
|
|
— |
|
Issuance of common stock |
|
803 |
|
|
|
763 |
|
Payments for taxes related to net share settlement of equity awards |
|
(888 |
) |
|
|
(936 |
) |
Payments for acquisition of in-process research and development |
|
(978 |
) |
|
|
(500 |
) |
Net cash provided by (used in) financing activities |
|
17,987 |
|
|
|
(673 |
) |
Effect of exchange rate changes on cash |
|
500 |
|
|
|
(485 |
) |
Net change in cash and cash equivalents |
|
25,581 |
|
|
|
(11,079 |
) |
Cash and Cash Equivalents: |
|
|
|
|
|
||
Beginning of period |
|
18,998 |
|
|
|
31,153 |
|
End of period |
$ |
44,579 |
|
|
$ |
20,074 |
|
|
|||||||||||||||
Supplemental Segment Information |
|||||||||||||||
(in thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Medical Device Revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales |
$ |
9,299 |
|
|
$ |
6,741 |
|
|
$ |
25,593 |
|
|
$ |
19,970 |
|
Royalties |
|
8,220 |
|
|
|
7,771 |
|
|
|
23,702 |
|
|
|
23,015 |
|
License fees |
|
25,933 |
|
|
|
1,024 |
|
|
|
28,645 |
|
|
|
3,723 |
|
Research, development and other |
|
2,562 |
|
|
|
1,992 |
|
|
|
6,799 |
|
|
|
6,181 |
|
Medical Device revenue |
|
46,014 |
|
|
|
17,528 |
|
|
|
84,739 |
|
|
|
52,889 |
|
In Vitro Diagnostics Revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales |
|
6,368 |
|
|
|
7,178 |
|
|
|
19,658 |
|
|
|
20,257 |
|
Research, development and other |
|
101 |
|
|
|
148 |
|
|
|
217 |
|
|
|
817 |
|
In |
|
6,469 |
|
|
|
7,326 |
|
|
|
19,875 |
|
|
|
21,074 |
|
Total Revenue |
$ |
52,483 |
|
|
$ |
24,854 |
|
|
$ |
104,614 |
|
|
$ |
73,963 |
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
||||
Medical Device |
$ |
21,777 |
|
|
$ |
(7,308 |
) |
|
$ |
7,483 |
|
|
$ |
(16,712 |
) |
In |
|
2,866 |
|
|
|
3,387 |
|
|
|
9,450 |
|
|
|
10,262 |
|
Total segment operating income (loss) |
|
24,643 |
|
|
|
(3,921 |
) |
|
|
16,933 |
|
|
|
(6,450 |
) |
Corporate |
|
(3,231 |
) |
|
|
(3,222 |
) |
|
|
(9,333 |
) |
|
|
(9,034 |
) |
Total operating income (loss) |
$ |
21,412 |
|
|
$ |
(7,143 |
) |
|
$ |
7,600 |
|
|
$ |
(15,484 |
) |
|
|||||||||||||||
Reconciliation of GAAP Measures to Non-GAAP Amounts |
|||||||||||||||
Schedule of EBITDA and Adjusted EBITDA |
|||||||||||||||
(in thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income (loss) |
$ |
7,346 |
|
|
$ |
(5,651 |
) |
|
$ |
(8,230 |
) |
|
$ |
(12,546 |
) |
Income tax expense (benefit) |
|
13,303 |
|
|
|
(1,530 |
) |
|
|
13,506 |
|
|
|
(3,155 |
) |
Depreciation and amortization |
|
2,151 |
|
|
|
2,206 |
|
|
|
6,365 |
|
|
|
6,902 |
|
Interest expense, net |
|
884 |
|
|
|
145 |
|
|
|
2,594 |
|
|
|
410 |
|
Investment income, net |
|
(182 |
) |
|
|
(22 |
) |
|
|
(531 |
) |
|
|
(73 |
) |
EBITDA |
|
23,502 |
|
|
|
(4,852 |
) |
|
|
13,704 |
|
|
|
(8,462 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation expense |
|
1,915 |
|
|
|
1,799 |
|
|
|
5,662 |
|
|
|
5,198 |
|
Restructuring expense (1) |
|
— |
|
|
|
— |
|
|
|
1,282 |
|
|
|
— |
|
Contingent consideration fair value adjustment (2) |
|
(829 |
) |
|
|
— |
|
|
|
(829 |
) |
|
|
— |
|
Adjusted EBITDA |
$ |
24,588 |
|
|
$ |
(3,053 |
) |
|
$ |
19,819 |
|
|
$ |
(3,264 |
) |
|
|||||||
Guidance Reconciliation: Estimated Non-GAAP Diluted EPS |
|||||||
For the Fiscal Year Ending |
|||||||
(Unaudited) |
|||||||
|
Fiscal 2023 Full-Year Estimate |
||||||
|
Low |
|
High |
||||
GAAP Diluted EPS |
$ |
(0.55 |
) |
|
$ |
(0.40 |
) |
Per diluted share: |
|
|
|
|
|
||
Amortization of acquired intangible assets (3) |
|
0.23 |
|
|
|
0.23 |
|
Restructuring expense (1) |
|
0.09 |
|
|
|
0.09 |
|
Contingent consideration fair value adjustment (2) |
|
(0.06 |
) |
|
|
(0.06 |
) |
Non-GAAP Diluted EPS |
$ |
(0.29 |
) |
|
$ |
(0.14 |
) |
Diluted weighted average shares outstanding |
|
14,030 |
|
|
|
|
|
||||||||||||||||||||||
Net Income (Loss) and Diluted EPS GAAP to Non-GAAP Reconciliation |
||||||||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||
|
Three Months Ended |
|||||||||||||||||||||
|
Revenue |
|
Operating Income |
|
Income |
|
Net Income |
|
Diluted |
|||||||||||||
GAAP |
$ |
52,483 |
|
|
$ |
21,412 |
|
40.8 |
% |
|
$ |
20,649 |
|
|
$ |
7,346 |
|
|
$ |
0.52 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Amortization of acquired intangible assets (3) |
|
— |
|
|
|
879 |
|
1.7 |
% |
|
|
879 |
|
|
|
813 |
|
|
|
0.06 |
|
|
Contingent consideration fair value |
|
— |
|
|
|
(829 |
) |
(1.6 |
)% |
|
|
(829 |
) |
|
|
(829 |
) |
|
|
(0.06 |
) |
|
Non-GAAP |
$ |
52,483 |
|
|
$ |
21,462 |
|
40.9 |
% |
|
$ |
20,699 |
|
|
$ |
7,330 |
|
|
$ |
0.52 |
|
|
Diluted weighted average shares outstanding (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
14,072 |
|
|||||||
|
Three Months Ended |
|||||||||||||||||||||
Revenue |
|
Operating Loss |
|
Loss |
|
Net Loss |
|
Diluted |
||||||||||||||
GAAP |
$ |
24,854 |
|
|
$ |
(7,143 |
) |
(28.7 |
)% |
|
$ |
(7,181 |
) |
|
$ |
(5,651 |
) |
|
$ |
(0.41 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Amortization of acquired intangible assets (3) |
|
— |
|
|
|
1,024 |
|
4.1 |
% |
|
|
1,024 |
|
|
|
930 |
|
|
|
0.07 |
|
|
Non-GAAP |
$ |
24,854 |
|
|
$ |
(6,119 |
) |
(24.6 |
)% |
|
$ |
(6,157 |
) |
|
$ |
(4,721 |
) |
|
$ |
(0.34 |
) |
|
Diluted weighted average shares outstanding (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
13,929 |
|
|||||||
|
Nine Months Ended |
|||||||||||||||||||||
|
Revenue |
|
Operating Income |
|
Income |
|
Net Loss |
|
Diluted |
|||||||||||||
GAAP |
$ |
104,614 |
|
|
$ |
7,600 |
|
7.3 |
% |
|
$ |
5,276 |
|
|
$ |
(8,230 |
) |
|
$ |
(0.59 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Amortization of acquired intangible assets (3) |
|
— |
|
|
|
2,659 |
|
2.5 |
% |
|
|
2,659 |
|
|
|
2,467 |
|
|
|
0.18 |
|
|
Restructuring expense (1) |
|
— |
|
|
|
1,282 |
|
1.2 |
% |
|
|
1,282 |
|
|
|
1,282 |
|
|
|
0.09 |
|
|
Contingent consideration fair value |
|
— |
|
|
|
(829 |
) |
(0.8 |
)% |
|
|
(829 |
) |
|
|
(829 |
) |
|
|
(0.06 |
) |
|
Non-GAAP |
$ |
104,614 |
|
|
$ |
10,712 |
|
10.2 |
% |
|
$ |
8,388 |
|
|
$ |
(5,310 |
) |
|
$ |
(0.38 |
) |
|
Diluted weighted average shares outstanding (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
14,020 |
|
|||||||
|
Nine Months Ended |
|||||||||||||||||||||
|
Revenue |
|
Operating Loss |
|
Loss |
|
Net Loss |
|
Diluted |
|||||||||||||
GAAP |
$ |
73,963 |
|
|
$ |
(15,484 |
) |
(20.9 |
)% |
|
$ |
(15,701 |
) |
|
$ |
(12,546 |
) |
|
$ |
(0.90 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of acquired intangible assets (3) |
|
— |
|
|
|
3,184 |
4.3 |
% |
|
|
3,184 |
|
|
|
2,893 |
|
|
|
0.21 |
|
||
Non-GAAP |
$ |
73,963 |
|
|
$ |
(12,300 |
) |
(16.6 |
)% |
|
$ |
(12,517 |
) |
|
$ |
(9,653 |
) |
|
$ |
(0.69 |
) |
|
Diluted weighted average shares outstanding (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
13,907 |
|
|||||||
(1) |
Restructuring expense consists of severance and related costs specifically associated with a workforce restructuring implemented in the second quarter of fiscal 2023. |
|
(2) |
Represents accounting adjustments to state acquisition-related contingent consideration liabilities at their estimated fair value as of the period end date, including adjustments to the liabilities’ fair values related to changes in the timing and/or probability of achieving milestones and accretion expense for the passage of time. |
|
(3) |
Represents amortization of business acquisition-related intangible assets and associated tax impact. A significant portion of the business acquisition-related amortization is not tax deductible. |
|
(4) |
Net income (loss) includes the effect of the above adjustments on income tax (expense) benefit, taking into account deferred taxes net of valuation allowances, as well as non-deductible items. Income tax impacts were estimated using the applicable statutory rate (21% in the |
|
(5) |
Diluted weighted average shares outstanding used in the calculation of EPS was the same for GAAP EPS and Non-GAAP EPS. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802023507/en/
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