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Date of report (Date of earliest event reported)
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(Exact Name of Registrant as Specified in its Charter)
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(State of Incorporation)
|
(Commission File Number)
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(I.R.S. Employer
Identification No.)
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(Address of Principal Executive Offices)
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(Zip Code)
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(
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(Registrant’s Telephone Number, Including Area Code)
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on Which Registered
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Emerging growth company
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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.
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☐
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Exhibit
Number
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Description
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SURMODICS, INC.
|
|
|
|
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|
Date: February 3, 2022
|
/s/Timothy J. Arens
|
|
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Timothy J. Arens
|
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Senior Vice President of Finance and Chief Financial Officer
|
|
EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--February 3, 2022--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 2022 first quarter ended December 31, 2021.
Summary of First Quarter and Recent Highlights
“I am pleased with our first quarter performance. We delivered revenue growth and made critical progress on our SurVeil™ drug-coated balloon PMA submission and early commercialization of our Sublime™ radial and Pounce™ arterial thrombectomy platforms,” said Gary Maharaj, President and CEO of Surmodics, Inc. “I’m optimistic about our ability to deliver on our key strategic objectives this fiscal year.”
First Quarter Fiscal 2022 Financial Results
Total revenue for the first quarter of fiscal 2022 was $23.0 million, compared to $22.3 million in the prior-year period. Medical Device revenue was $16.9 million for the first quarter of fiscal 2022, compared to $16.2 million for the
prior-year period, an increase of 4%. Medical Device revenue in the first quarter of fiscal 2022 includes $1.2 million from our Development and Distribution Agreement with Abbott Vascular, Inc. (“Abbott”) for the SurVeil drug-coated
balloon, compared to $1.3 million in the prior-year quarter. In Vitro Diagnostics revenue was $6.1 million for both the first quarter of fiscal 2022 and 2021.
Diluted GAAP earnings per share in the first quarter of fiscal 2022 was a loss per share of $(0.20), compared to a loss per share of $(0.02) in the same prior-year period. On a non-GAAP basis, loss per share in the first quarter of fiscal 2022 was $(0.13), compared to earnings per share of $0.02 in the same prior-year quarter.
As of December 31, 2021, Surmodics reported cash and investments totaling $32.3 million and $10 million in outstanding borrowings on its $25 million line of credit. Surmodics reported $7.0 million of cash used in operating activities and $0.8 million in capital expenditures in the first quarter of fiscal 2022.
Company Reiterates Fiscal 2022 Guidance
Surmodics expects fiscal year 2022 revenue to range from $97 million to $101 million. The Company expects fiscal 2022 diluted GAAP EPS to range from a loss per share of $(2.05) to $(1.55), which reflects increased investments to
accelerate the Company’s strategy. Non-GAAP diluted EPS for fiscal 2022 is expected to range from a loss per share of $(1.75) to $(1.25).
Surmodics has the potential to receive a $30 million milestone payment during fiscal 2022 or fiscal 2023 related to premarket approval of the SurVeil DCB pursuant to the Abbott Development and Distribution Agreement. The potential revenue associated with this milestone payment would be approximately $25 million. As has been the Company’s practice with past guidance, revenue from regulatory-related milestones is not included in guidance until they are achieved.
Conference Call Today at 7:30 a.m. CT (8:30 a.m. ET)
Surmodics is hosting a webcast at 7:30 a.m. CT (8:30 a.m. ET) today to discuss first 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 first quarter conference call will be available by dialing 888-203-1112 and entering conference call ID passcode 5657051. The audio replay will
be available beginning at 10:30 a.m. CT on Thursday, February 3, 2022, until 10:30 a.m. CT on Thursday, February 10, 2022.
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 our fiscal 2022 strategic objectives and our ability to deliver on our fiscal 2022 financial and strategic objectives; our revenue and loss expectations for fiscal 2022 and beyond, including our fiscal 2022 financial guidance;
expectations regarding the duration of factors impacting our royalty revenues and the return to growth of royalty revenues; expectations regarding medical device product revenue growth; expectations regarding design verification, process
validation, and manufacturing validation related to the Company’s products; the potential for the commercial success or our products; expectations regarding actions related to the U.S. Food and Drug Administration’s (“FDA”) review of the
premarket approval application for, and the potential FDA approval of, our SurVeil DCB; the potential receipt of a premarket approval milestone payment from Abbott; the expected timing of completion and delivery of the SWING
first-in-human clinical trial results; the Company’s strategy; plans for clinical product evaluations; expectations regarding revenue from our Sublime and Pounce product portfolios; expectations regarding the return to growth
of our In Vitro Diagnostics business and its level of growth for fiscal 2022; expectations regarding fiscal 2022 operating expenses; and our anticipated fiscal 2022 year-end cash balance, 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 SurVeil
DCB (including realization of the full potential benefits of our agreement with Abbott), Avess™ DCB, Sundance™ DCB, and other proprietary products; (2) whether and when the FDA grants premarket approval to the SurVeil DCB; (3) 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; (4) possible adverse market conditions and
possible adverse impacts on our cash flows; (5) 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; (6)
our ability to integrate the acquisition of Vetex Medical Limited successfully and realize the anticipated benefits of the acquisition; (7) whether anticipated increases in our operating expenses are effective in generating profitable
revenues; and (8) 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, 2021 and subsequent SEC filings. 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, 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 also are providing guidance on a range of
non-GAAP diluted loss per share for fiscal 2022. 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 |
|||||||
|
|
|||||||
|
|
Three Months Ended |
||||||
|
|
December 31, |
||||||
|
|
2021 |
|
2020 |
||||
|
|
|
|
|
|
|
||
|
Revenue: |
|
|
|
|
|
||
|
Product sales |
$ |
12,344 |
|
|
$ |
10,102 |
|
|
Royalties and license fees |
|
8,099 |
|
|
|
9,334 |
|
|
Research, development and other |
|
2,560 |
|
|
|
2,861 |
|
|
Total revenue |
|
23,003 |
|
|
|
22,297 |
|
|
Operating costs and expenses: |
|
|
|
|
|
||
|
Product costs |
|
4,497 |
|
|
|
3,743 |
|
|
Research and development |
|
11,663 |
|
|
|
10,882 |
|
|
Selling, general and administrative |
|
9,195 |
|
|
|
7,023 |
|
|
Acquired intangible asset amortization |
|
1,089 |
|
|
|
556 |
|
|
Total operating costs and expenses |
|
26,444 |
|
|
|
22,204 |
|
|
Operating (loss) income |
|
(3,441 |
) |
|
|
93 |
|
|
Other expense |
|
(77 |
) |
|
|
(199 |
) |
|
Loss before income taxes |
|
(3,518 |
) |
|
|
(106 |
) |
|
Income tax benefit (provision) |
|
706 |
|
|
|
(168 |
) |
|
Net loss |
$ |
(2,812 |
) |
|
$ |
(274 |
) |
|
|
|
|
|
|
|
||
|
Basic net loss per share |
$ |
(0.20 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
||
|
Diluted net loss per share |
$ |
(0.20 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
||
|
Weighted average number of shares outstanding: |
|
|
|
|
|
||
|
Basic |
|
13,878 |
|
|
|
13,668 |
|
|
Diluted |
|
13,878 |
|
|
|
13,668 |
|
|
Surmodics, Inc. and Subsidiaries |
||||||||
|
|
||||||||
|
|
|
December 31, |
|
September 30, |
||||
|
|
|
2021 |
|
2021 |
||||
|
Assets |
|
(Unaudited) |
|
(See note) |
||||
|
Current Assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
26,650 |
|
|
$ |
31,153 |
|
|
Available-for-sale securities |
|
|
5,693 |
|
|
|
7,717 |
|
|
Accounts receivable, net |
|
|
8,010 |
|
|
|
9,169 |
|
|
Contract assets — royalties and license fees |
|
|
6,668 |
|
|
|
7,091 |
|
|
Inventories, net |
|
|
8,290 |
|
|
|
6,760 |
|
|
Prepaids and other |
|
|
9,605 |
|
|
|
8,365 |
|
|
Total Current Assets |
|
|
64,916 |
|
|
|
70,255 |
|
|
Property and equipment, net |
|
|
29,319 |
|
|
|
30,090 |
|
|
Available-for-sale securities |
|
|
— |
|
|
|
2,002 |
|
|
Deferred tax assets |
|
|
6,372 |
|
|
|
5,867 |
|
|
Intangible assets, net |
|
|
35,238 |
|
|
|
37,054 |
|
|
Goodwill |
|
|
44,900 |
|
|
|
45,606 |
|
|
Other assets |
|
|
4,121 |
|
|
|
3,718 |
|
|
Total Assets |
|
$ |
184,866 |
|
|
$ |
194,592 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
10,000 |
|
|
|
10,000 |
|
|
Deferred revenue |
|
|
4,430 |
|
|
|
4,647 |
|
|
Other current liabilities |
|
|
11,213 |
|
|
|
15,168 |
|
|
Total Current Liabilities |
|
|
25,643 |
|
|
|
29,815 |
|
|
Deferred revenue |
|
|
9,292 |
|
|
|
10,301 |
|
|
Other long-term liabilities |
|
|
13,260 |
|
|
|
14,391 |
|
|
Total Liabilities |
|
|
48,195 |
|
|
|
54,507 |
|
|
Total Stockholders’ Equity |
|
|
136,671 |
|
|
|
140,085 |
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
184,866 |
|
|
$ |
194,592 |
|
|
|
|
|
|
|
|
|
|
|
|
Note: Derived from audited financial statements as of the date indicated. |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
Surmodics, Inc. and Subsidiaries (Unaudited) |
||||||||||||||||||
|
|
|
Three Months Ended December 31, |
|
|
|
|||||||||||||
|
|
|
2021 |
|
2020 |
|
|
|
|||||||||||
|
Revenue: |
|
|
|
% of Total |
|
|
|
% of Total |
|
% Change |
|
|||||||
|
Medical Device |
|
$ |
16,908 |
|
|
|
73.5 |
% |
|
$ |
16,196 |
|
72.6 |
% |
|
4.4 |
% |
|
|
In Vitro Diagnostics |
|
|
6,095 |
|
|
|
26.5 |
% |
|
|
6,101 |
|
27.4 |
% |
|
(0.1 |
)% |
|
|
Total revenue |
|
$ |
23,003 |
|
|
|
|
$ |
22,297 |
|
|
|
3.2 |
% |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||||
|
|
|
December 31, |
|
|
|
|
|
|
|
|||||||||
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|||||||
|
Operating (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Medical Device |
|
$ |
(3,792 |
) |
|
$ |
(593 |
) |
|
|
|
|
|
|
|
|||
|
In Vitro Diagnostics |
|
|
3,155 |
|
|
|
3,220 |
|
|
|
|
|
|
|
|
|||
|
Total segment operating (loss) income |
|
|
(637 |
) |
|
|
2,627 |
|
|
|
|
|
|
|
|
|||
|
Corporate |
|
|
(2,804 |
) |
|
|
(2,534 |
) |
|
|
|
|
|
|
|
|||
|
Total operating (loss) income |
|
$ |
(3,441 |
) |
|
$ |
93 |
|
|
|
|
|
|
|
|
|||
|
|
||||||||||||||||||
|
Surmodics, Inc. and Subsidiaries |
|||||||
|
|
|||||||
|
|
Three Months Ended |
||||||
|
|
December 31, |
||||||
|
|
2021 |
|
2020 |
||||
|
EBITDA and Adjusted EBITDA |
|
|
|
|
|
||
|
Net loss |
$ |
(2,812 |
) |
|
$ |
(274 |
) |
|
Income tax (benefit) provision |
|
(706 |
) |
|
|
168 |
|
|
Depreciation and amortization |
|
2,376 |
|
|
|
1,860 |
|
|
Investment income, net |
|
(26 |
) |
|
|
(41 |
) |
|
Interest expense |
|
136 |
|
|
|
60 |
|
|
EBITDA |
|
(1,032 |
) |
|
|
1,773 |
|
|
|
|
|
|
|
|
||
|
Adjustments: |
|
|
|
|
|
||
|
None |
|
— |
|
|
|
— |
|
|
Adjusted EBITDA |
$ |
(1,032 |
) |
|
$ |
1,773 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Cash Flows from Operations |
|
|
|
|
|
||
|
Net cash used in operating activities |
$ |
(7,026 |
) |
|
$ |
(4,270 |
) |
|
|
|
|
|
|
|
||
|
Guidance Reconciliation: Estimated Non-GAAP Diluted Earnings Per Share |
|||||||
|
|
Fiscal 2022 Full-Year Estimate |
||||||
|
|
Low |
|
High |
||||
|
GAAP diluted EPS |
$ |
(2.05 |
) |
|
$ |
(1.55 |
) |
|
Amortization of acquired intangibles per diluted share (1) |
|
0.30 |
|
|
|
0.30 |
|
|
Non-GAAP diluted EPS |
$ |
(1.75 |
) |
|
$ |
(1.25 |
) |
|
Surmodics, Inc., and Subsidiaries |
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
|
|
|
For the Three Months Ended December 31, 2021 |
|||||||||||||||||||||||||
|
|
|
Total |
|
Operating |
|
Operating |
|
Loss |
|
Net |
|
Diluted |
|
Effective |
|||||||||||||
|
GAAP |
|
$ |
23,003 |
|
$ |
(3,441 |
) |
|
|
(15.0 |
)% |
|
$ |
(3,518 |
) |
|
$ |
(2,812 |
) |
|
$ |
(0.20 |
) |
|
|
20.1 |
% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Amortization of acquired intangible assets (1) |
|
|
— |
|
|
1,089 |
|
|
|
4.8 |
% |
|
|
1,089 |
|
|
|
990 |
|
|
|
0.07 |
|
|
|
|
|
|
Non-GAAP |
|
$ |
23,003 |
|
$ |
(2,352 |
) |
|
|
(10.2 |
)% |
|
$ |
(2,429 |
) |
|
$ |
(1,822 |
) |
|
$ |
(0.13 |
) |
|
|
25.0 |
% |
|
|
|
For the Three Months Ended December 31, 2020 |
|||||||||||||||||||||||||
|
|
|
Total |
|
Operating |
|
Operating |
|
(Loss) |
|
Net (2) |
|
Diluted |
|
Effective |
|||||||||||||
|
GAAP |
|
$ |
22,297 |
|
$ |
93 |
|
|
|
0.4 |
% |
|
$ |
(106 |
) |
|
$ |
(274 |
) |
|
$ |
(0.02 |
) |
|
|
(158.5 |
)% |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Amortization of acquired intangible assets (1) |
|
|
— |
|
|
556 |
|
|
|
2.5 |
% |
|
|
556 |
|
|
|
526 |
|
|
|
0.04 |
|
|
|
|
|
|
Non-GAAP |
|
$ |
22,297 |
|
$ |
649 |
|
|
|
2.9 |
% |
|
$ |
450 |
|
|
$ |
252 |
|
|
$ |
0.02 |
|
|
|
44.0 |
% |
|
(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) |
Net (loss) income includes the effect of the above adjustments on the income tax benefit (provision), taking into account deferred taxes and non-deductible items. Income tax impacts were estimated using the applicable statutory rate (21% in the U.S. and 12.5% in Ireland). |
|
|
|
|
(3) |
Potentially dilutive common shares resulting from dilutive common stock options and non-vested stock relating to restricted stock awards and restricted stock units have been excluded from the calculation of GAAP net loss per share as their effect was antidilutive for three months ended December 31, 2021 and 2020 as a result of the GAAP net loss for these periods. |
Surmodics, Inc.
Tim Arens, 952-500-7000
ir@surmodics.com
Document and Entity Information |
Feb. 03, 2022 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Feb. 03, 2022 |
| Entity Registrant Name | Surmodics, Inc. |
| Entity Incorporation, State or Country Code | MN |
| Entity File Number | 0-23837 |
| Entity Tax Identification Number | 41-1356149 |
| Entity Address, Address Line One | 9924 West 74th Street |
| Entity Address, City or Town | Eden Prairie |
| Entity Address, State or Province | MN |
| Entity Address, Postal Zip Code | 55344 |
| City Area Code | 952 |
| Local Phone Number | 500-7000 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Entity Emerging Growth Company | false |
| Entity Central Index Key | 0000924717 |
| Title of 12(b) Security | Common Stock, $0.05 par value |
| Trading Symbol | SRDX |
| Security Exchange Name | NASDAQ |